e6vk
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13A-16 OR 15D-16 OF THE
SECURITIES EXCHANGE ACT OF 1934
DATED: April 8, 2010
Commission File No. 001-33311
NAVIOS MARITIME HOLDINGS INC.
85 AKTI MIAOULI STREET, PIRAEUS, GREECE 185 38
(Address of Principal Executive Offices)
Indicate by check mark whether the registrant files or will file annual reports under cover of
Form 20-F or Form 40-F.
Form 20-F þ Form 40-F o
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by
Regulation S-T Rule 101(b)(1):
Yes o No þ
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by
Regulation S-T Rule 101(b)(7):
Yes o No þ
Indicate by check mark whether the registrant by furnishing the information contained in this
Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under
the Securities Exchange Act of 1934.
Yes o No þ
If Yes is marked, indicate below the file number assigned to the registrant in connection
with Rule 12g3-2(b):
N/A
Vessel Acquisitions; Credit Agreements; Share Purchase Program; Resignation of Director
On April 6 and April 8, 2010, Navios Maritime Holdings Inc. (Navios Holdings) through certain of
its wholly owned subsidiaries, executed certain shipbuilding contracts and memoranda of agreement
with respect to 13 vessels (11 product tankers and two chemical tankers) (collectively, the
Vessels) and options to purchase two additional product tankers.
On April 8, 2010, Navios Holdings entered into an Acquisition Agreement with Navios Maritime
Acquisition Corporation (Navios Acquisition), pursuant to which, upon approval by the
stockholders of Navios Acquisition, Navios Acquisition will consummate the acquisition of the
Vessels and options (the Vessel Acquisition) by purchasing the stock of the Navios Holdings
subsidiary holding directly or indirectly the rights to the shipbuilding contracts and the memoranda of agreement. In
addition, Navios Acquisition will be substituted for Navios Holdings as guarantor of certain Credit
Agreements discussed below.
The Vessel Acquisition is being undertaken as an accommodation to Navios Acquisition in order to
provide certainty to the transaction while Navios Acquisition seeks stockholder approval. If
Navios Acquisition is unable to obtain stockholder approval, Navios Holdings will proceed with the
Vessel Acquisition for its own account. In connection with this transaction, Navios Holdings is
acting as guarantor for certain debt arrangements, as described below, entered into by the
vessel-owning subsidiaries of Navios Holdings, and, as indicated above, Navios Acquisition will
substitute for Navios Holdings if Navios Acquisitions shareholders approve the Vessel Acquisition.
Navios Holdings entered into the following agreements: (a) a Credit Agreement, dated April 7, 2010,
between certain vessel-owning subsidiaries and Deutsche Schiffsbank AG, Alpha Bank A.E. and Credit
Agricole Corporate and Investment Bank; and (b) a Credit Agreement, dated April 8, 2010 between
certain vessel-owning subsidiaries and DVB Bank SE and Fortis Bank (collectively, the Credit
Agreements).
The material terms of the Credit Agreements are as follows:
Interest Rate: interest margin of 2.50% over the applicable base rate;
Term: six years;
Amortization: approximately 17-year amortization profile ($16.0 million balloon payment per vessel
against a loan of $25.0 million per vessel); and
Covenants:
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loan to value ratio covenants (post-delivery of the Vessels) initially of 125%; |
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financial covenants generally inapplicable until after delivery of the Vessels; |
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ability to distribute up to 50% of net profits; and |
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no negative covenants restricting the incurrence of additional debt or preventing
Navios Acquisition from acquiring additional vessels. |
Each of the Credit Agreements are attached hereto as Exhibits 10.1 and 10.2 and are incorporated
herein by reference. Navios Holdings is also in advanced negotiations regarding a $52.0 million
credit agreement, to be executed upon completion of negotiations and filed by amendment.
The aggregate purchase price for the Vessel Acquisition is $457.7 million payable in several
installments: an initial installment of $191.8 million; and the remaining portion of the purchase
price, aggregating $265.9 million, will be paid in installments as Vessels are delivered.
In addition, upon the closing of the transactions contemplated by the Acquisition Agreement, Navios
Holdings, or its affiliate, will enter into: (i) an Acquisition Omnibus Agreement, whereby Navios
Holdings will provide Navios Acquisition with a right of first refusal for the purchase and chartering of all
liquid shipment tanker vessels, including product and chemical tankers but excluding container
vessels and vessels that will be employed primarily in operations in South
America, which right will expire five years from the date of such agreement; (ii) a Management
Agreement, whereby a subsidiary of Navios Holdings will provide commercial and technical ship
management services to Navios Acquisition for a period of five years from the date of such
agreement and (iii) an Administrative Services Agreement, whereby a subsidiary of Navios Holdings
will provide certain administrative management services to Navios Acquisition,
including bookkeeping, audit and accounting services, legal and insurance services, administrative
and clerical services, banking and financial services, advisory services, and client and investor
relationship management For a more complete description of the Acquisition Agreement and related
transactions and agreements, see the copy of Navios Acquisitions Preliminary Proxy dated April 8,
2010 attached hereto as Exhibit 99.1.
On April 8, 2010, Navios Holdings and an affiliate of Angeliki Frangou, Navios Holdings
Chairman and Chief Executive Officer, agreed to acquire through J.P. Morgan Securities Inc. or a
third party, $60.0 million of Navios Acquisitions common stock in open market purchases or
privately negotiated purchases. Of this amount, Navios Holdings has agreed to purchase up to $45.0
million, and an affiliate of Angeliki Frangou has agreed to purchase up to $15.0 million of common
stock. Navios Holdings and Angeliki Frangou, or their respective affiliates, may make purchases in
excess of such amounts. Such share purchases may commence on April 12, 2010, two business days
after filing of Navios Acquisitions Preliminary Proxy dated April 8, 2010, and will end on the
date of Navios Acquisitions stockholder meeting. If at least $30.0 million is not spent by
Navios Holdings in making such purchases, Navios Holdings will invest the difference in Navios
Acquisition at $9.91 per share immediately before cosummating the transactions contemplated by the
Acquisition Agreement.
On March 30, 2010, Mr. Rex W. Harrington resigned as a director of Navios Holdings. If Navios
Acquisitions stockholders approve the Vessel Acquisition, it is expected that Mr. Harrington will
be appointed to the board of directors of Navios Acquisition as an independent director, with a term
expiring at the annual meeting of stockholders in 2012. In addition, it is expected that Mr.
Harrington will also join Navios Acquisitions Audit and Nominating Committees.
This information contained in this Report is hereby incorporated by reference into the Navios
Registration Statements on Form F-3, File Nos. 333-136936 and 333-129382 and on Form S-8, File No.
333-147186.
Exhibits
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Exhibit No. |
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Exhibit |
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10.1
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Credit Agreement, dated April 7, 2010 among certain vessel-owning subsidiaries of Navios
Holdings, Deutsche Schiffsbank AG, Alpha Bank A.E. and Credit Agricole Corporate and
Investment Bank |
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10.2
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Credit Agreement, dated April 8, 2010 among certain vessel-owning subsidiaries of Navios
Holdings, DVB Bank SE and Fortis Bank |
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99.1
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Preliminary Proxy Statement of Navios Maritime Acquisition Corporation dated April 8, 2010. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
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NAVIOS MARITIME HOLDINGS INC.
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By: |
/s/ Angeliki Frangou
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Date: April 8, 2010 |
Angeliki Frangou
Chairman and Chief Executive Officer
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exv10w1
Private
and Confidential
DATED
7 April 2010
AMORGOS
SHIPPING CORPORATION
ANDROS SHIPPING CORPORATION
ANTIPAROS SHIPPING CORPORATION
IKARIA SHIPPING CORPORATION
KOS SHIPPING CORPORATION
and
MYTILENE SHIPPING CORPORATION
as Borrowers
DEUTSCHE
SCHIFFSBANK AG
ALPHA BANK AE
CREDIT AGRICOLE CORPORATE AND INVESTMENT BANK
as Lenders
DEUTSCHE
SCHIFFSBANK AG
as Arranger, Swap Bank, Agent, Account Bank
and Security Trustee
and
ALPHA BANK AE
as Account Bank
FACILITY
AGREEMENT FOR A USD 150,000,000
TERM LOAN
FACILITY
IN SIX
TRANCHES
PIRAEUS
THIS AGREEMENT dated 7 April 2010 is made BY and
BETWEEN:
(1) AMORGOS SHIPPING CORPORATION, ANDROS SHIPPING
CORPORATION, ANTIPAROS SHIPPING CORPORATION, IKARIA SHIPPING
CORPORATION, KOS SHIPPING CORPORATION and MYTILENE
SHIPPING CORPORATION as Borrowers;
(2) DEUTSCHE SCHIFFSBANK AG, ALPHA BANK AE and CREDIT
AGRIDOLE CORPORATE AND INVESTMENT BANK as Lenders; and
(3) DEUTSCHE SCHIFFSBANK AG as Arranger, Account
Bank, Agent and Security Trustee;
(4) DEUTSCHE SCHIFFSBANK AG as Swap Bank; and
(5) ALPHA BANK AE as Account Bank.
NOW IT IS HEREBY AGREED AS FOLLOWS:
1 PURPOSE,
DEFINITIONS, CONSTRUCTION & MAJORITY LENDERS
1.1 Purpose
This Agreement sets out the terms and conditions on which
Deutsche Schiffsbank AG, Alpha Bank AE and Credit Agricole
Corporate and Investment Bank agree to make available to the
Borrowers a loan of up to one hundred and fifty million Dollars
(USD 150,000,000) in 6 equal Tranches, for the purpose of
part-financing the purchase price of two IMO II/III Chemical
Carriers and 4 MR Product Tankers which are to be constructed by
the Builder.
1.2 Definitions
In this Agreement, unless the context otherwise requires:
Account Bank means, (i) in
relation to the DSB Equity Deposit Account, Deutsche Schiffsbank
AG acting through its office at Domshof 17 D-28195 Bremen,
Germany and (ii) in relation to the Alpha Equity Deposit
Account, the Earnings Accounts and the Retention Account, Alpha
Bank AE acting through its office at 81 Akti Miaouli, Piraeus,
Greece, or, in each case, such other Lender as may be designated
by the Agent as an Account Bank for the purposes of this
Agreement;
Advance means the principal amount of
each drawing in respect of the Loan to be made pursuant to
Clause 2.5;
Agent means Deutsche Schiffsbank AG
acting through its office at Domshof 17 D-28195 Bremen, Germany
(or of such other address as may last have been notified to the
other parties to this Agreement pursuant to clause 17.2.3)
or such other person as may be appointed as agent by the Lenders
pursuant to clause 16.13;
Alpha Equity Deposit Account means an
interest bearing USD Account required to be opened hereunder
with the relevant Account Bank in the joint names of the
Borrowers designated Navios Equity Deposit
Account and includes any other account designated in
writing by the Agent to be an Equity Deposit Account for the
purposes of this Agreement;
Alpha Equity Deposit Account Pledge
means a first priority charge required to be executed hereunder
between the Borrowers and the Security Trustee in respect of the
Alpha Equity Deposit Account in such form as the Agent and the
Majority Lenders may require in their sole discretion;
Approved Broker means each of
Fearnleys A.S., Oslo Shipbrokers A.S., Clarkson Valuations
Limited, Simpson Spence & Young Shipbrokers Ltd., E.A.
Gibson Shipbrokers Ltd., Allied Shipbroking, Greece, RS Platou
ASA, ICAP Shipping Limited, ACM Ltd., London, or such other
reputable, independent and first class firm of shipbrokers
specialising in the valuation of vessels of the relevant type
appointed by the Lenders and agreed with the Borrowers;
Arranger means Deutsche Schiffsbank AG
acting through its office at Domshof 17, D-28195, Bremen,
Germany;
Banking Day means a day on which
dealings in deposits in USD are carried on in the London
Interbank Eurocurrency Market and (other than Saturday or
Sunday) on which banks are open for business in Athens, London,
Bremen, Piraeus, Paris and New York City (or any other relevant
place of payment under clause 6);
Banks means, together, the Arranger,
the Agent, the Security Trustee, the Account Banks, the Lenders,
the Swap Bank and any Transferee Lenders;
Borrowed Money means Indebtedness in
respect of (i) money borrowed or raised and debit balances
at banks, (ii) any bond, note, loan stock, debenture or
similar debt instrument, (iii) acceptance or documentary
credit facilities, (iv) receivables sold or discounted
(otherwise than on a non-recourse basis), (v) deferred
payments for assets or services acquired, (vi) finance
leases and hire purchase contracts, (vii) swaps, forward
exchange contracts, futures and other derivatives,
(viii) any other transaction (including without limitation
forward sale or purchase agreements) having the commercial
effect of a borrowing or raising of money or of any of
(ii) to (vii) above and (ix) guarantees in
respect of Indebtedness of any person falling within any of
(i) to (viii) above;
Borrower means each of AMORGOS
SHIPPING CORPORATION (Amorgos), ANDROS
SHIPPING CORPORATION (Andros), ANTIPAROS
SHIPPING CORPORATION (Antiparos), IKARIA
SHIPPING CORPORATION (Ikaria), KOS SHIPPING
CORPORATION (Kos) and MYTILENE SHIPPING
CORPORATION (Mytilene) each having its
registered office at Trust Company Complex, Ajeltake Road,
Ajeltake Island, Majuro, Marshall Islands, MH96960 and in the
plural means all of them;
Break Costs means the aggregate amount
of all losses, premiums, penalties, costs and expenses
whatsoever certified by the Agent at any time and from time to
time as having been incurred by the Lenders or any of them in
maintaining or funding their Contributions or in liquidating or
re-employing fixed deposits acquired to maintain the same as a
result of either:
(a) any repayment or prepayment of the Loan or any part
thereof otherwise than (i) in accordance with
clause 4.1 or (ii) on an Interest Payment Date whether
on a voluntary or involuntary basis or otherwise
howsoever; or
(b) as a result of the Borrowers failing or being incapable
of drawing an Advance after a relevant Drawdown Notice has been
given;
Certified Copy means in relation to
any document delivered or issued by or on behalf of any company,
a copy of such document certified as a true, complete and up to
date copy of the original by any of the directors or officers
for the time being of such company or by such companys
attorneys or solicitors;
Charter Assignment means a specific
assignment of each Extended Employment Contract required to be
executed hereunder by any Borrower in favour of the Security
Trustee (including any notices
and/or
acknowledgements
and/or
undertakings associated therewith) in such form as the Agent and
the Majority Lenders may require in their sole discretion;
Charter Insurances means all policies
and contracts of insurance which are from time to time during
the Facility Period in place or taken out or entered into by or
for the benefit of the Owners in respect of loss of earnings and
all benefits thereof (including claims of whatsoever nature and
return of premiums);
Charter Insurance Assignment means a
first priority assignment of the Charter Insurances executed or
to be executed by such named insured as the Agent may require in
favour of the Security Trustee, in such form as the Agent and
the Majority Lenders may in their sole discretion require;
Classification means, in relation to
each Vessel, the highest class available for a vessel of her
type with the relevant Classification Society;
Classification Society means, in
relation to each Vessel, any IACS classification society which
the Lenders shall, at the request of the Borrowers, have agreed
in writing shall be treated as the classification society in
relation to such Vessel for the purposes of the relevant Ship
Security Documents;
Commitment means, in relation to the
Loan in relation to each Lender, the sum set out opposite its
name in schedule 1 or any replacement thereof and in
relation to each Tranche in relation to each Lender one sixth of
the sum set out opposite its name in schedule 1 or any
replacement thereof, or otherwise pursuant to the terms of any
relevant Transfer Certificate as the amount which, subject to
the terms of this Agreement, it is obliged to advance to the
Borrowers hereunder in respect of the Loan Facility, in each
case as such amount may have been reduced
and/or
cancelled under this Agreement;
Compliance Certificate means a
certificate substantially in the form set out in schedule 6
signed by the chief financial officer of the Corporate Guarantor;
Compulsory Acquisition means, in
respect of a Vessel, requisition for title or other compulsory
acquisition including, if that ship is not released therefrom
within the Relevant Period, capture, appropriation, forfeiture,
seizure, detention, deprivation or confiscation howsoever for
any reason (but excluding requisition for use or hire) by or on
behalf of any Government Entity or other competent authority or
by pirates, hijackers, terrorists or similar persons;
Relevant Period means for the purposes of this
definition of Compulsory Acquisition either (i) thirty (30)
(or in the respect of pirates, hijackers, terrorists or similar
persons, ninety (90)) days or, (ii) in the respect of
pirates, hijackers, terrorists or similar persons, if relevant
underwriters confirm in writing (in customary terms) prior to
the end of such ninety (90) day period that such capture
will be covered by the relevant Owners war risks insurance
if continuing for a further period exceeding six
(6) calendar months, the shorter of eight (8) months
and such period at the end of which cover is confirmed to attach;
Contribution means, at any relevant
time, in relation to each Lender, the principal amount of the
Loan owing to such Lender at such time;
Corporate Guarantee means the
guarantee required to be executed hereunder by the relevant
Corporate Guarantor in such form as the Agent and the Majority
Lenders may require in their sole discretion;
Corporate Guarantor means
(a) prior to the Share Acquisition Date, Navios Maritime
Holdings Inc., a company incorporated in the Marshall Islands
and having its registered office at Trust Company Complex,
Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands,
MH96960 and (b) thereafter, Navios Acquisition;
Default means any Event of Default or
any event or circumstance 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;
Delivered Tranche means each Tranche
which has been applied in financing a Vessel which has been
transferred and delivered by the Builder to its Owner;
Delivery Date means, in relation to a
Vessel, the date on which title to and possession of that Vessel
is transferred from the Builder to the relevant Borrower;
Deutscher Rahmenvertrag means the
Master Agreement for Financial Derivatives Transactions
(Rahmenvertrag für Finanztermingeschäfte)
made or to be made between the Borrowers and the Swap Bank and
includes all Transactions from time to time entered into by the
Borrowers for the purpose of hedging the Borrowers
exposure under this Agreement to fluctuations in LIBOR arising
from the funding of the Loan (or any part thereof) and
Confirmations from time to time exchanged thereunder;
Deutscher Rahmenvertrag Assignment
means the deed of assignment of the Deutscher Rahmenvertrag
executed or (as the context may require) to be each executed by
the Borrowers in favour
of the Security Trustee in such form as the Agent and the
Majority Lenders may require in their sole discretion;
Dollars and
USD mean the lawful currency of the
USA and in respect of all payments to be made under any of the
Security Documents means funds which are for same day settlement
in the New York Clearing House Interbank Payments System (or
such other US dollar funds as may at the relevant time be
customary for the settlement of international banking
transactions denominated in US dollars);
Drawdown Date means, in relation to
each Advance, any date being a Banking Day falling during the
Drawdown Period, on which the relevant Advance is, or is to be,
made available;
Drawdown Notice means, in relation to
each Advance, a notice substantially in the form of
schedule 2;
Drawdown Period means the period
commencing on the Execution Date and ending in respect of:
(i) Tranche A on 29 March 2011;
(ii) Tranche B on 29 May 2011;
(iii) Tranche C on 25 January 2013;
(iv) Tranche D on 27 June 2013;
(v) Tranche E on 26 May 2013; and
(vi) Tranche F on 27 June 2013
or, in each case, on the latest date the Vessel to be
financed by the relevant Tranche may be delivered in accordance
with the Shipbuilding Contract relating thereto or on the date
on which the Commitment in respect of that Tranche is finally
cancelled or no longer available under the terms of this
Agreement;
DSB Equity Deposit Account means an
interest bearing USD Account required to be opened hereunder
with the relevant Account Bank in the joint names of the
Borrowers designated Navios Equity Deposit
Account and includes any other account designated in
writing by the Agent to be an Equity Deposit Account for the
purposes of this Agreement;
DSB Equity Deposit Account Pledge
means a first priority charge required to be executed hereunder
between the Borrowers and the Lenders in respect of the DSB
Equity Deposit Account in such form as the Lenders may require
in their sole discretion;
Earnings Account means, in respect of
each Borrower, an interest bearing USD Account required to be
opened hereunder with the relevant Account Bank in the name of
that Borrower designated [NAME OF BORROWER]
Earnings Account and includes any other account designated
in writing by the Agent to be an Earnings Account for the
purposes of this Agreement;
Earnings Account Pledge means, in
respect of each Earnings Account, a first priority charge
required to be executed hereunder between the relevant Borrower
and the Security Trustee in respect of its Earnings Account in
such form as the Agent and the Majority Lenders may require in
their sole discretion, and in the plural means all of them;
Encumbrance means any mortgage,
charge, pledge, lien, hypothecation, assignment, title
retention, preferential right, option, trust arrangement or
security interest or other encumbrance, security or arrangement
conferring howsoever a priority of payment in respect of any
obligation of any person;
Environmental Affiliate means any
agent or employee of any Borrower, the Manager, or any other
Group Member or any other person having a contractual
relationship with any Borrower, the Manager, or any other Group
Member in connection with any Relevant Ship or its operation or
the carriage of cargo
and/or
passengers thereon
and/or the
provision of goods
and/or
services on or from any Relevant Ship;
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 its operation or the carriage of cargo
and/or
passengers thereon
and/or the
provision of goods
and/or
services on or from any Relevant Ship required under any
Environmental Law;
Environmental Claim means (i) any
claim by any applicable Government Entity alleging breach of, or
non-compliance with, any Environmental Laws or Environmental
Approvals or otherwise howsoever relating to or arising out of
an Environmental Incident or (ii) any claim by any other
third party howsoever relating to or arising out of an
Environmental Incident (and, in each such case,
claim shall include a claim for damages
and/or
direction for
and/or
enforcement relating to
clean-up
costs, removal, compliance, remedial action or otherwise) or
(iii) any Proceedings arising from any of the foregoing;
Environmental Incident means,
regardless of cause, (i) any discharge or release of
Environmentally Sensitive Material from any Relevant Ship;
(ii) any incident in which Environmentally Sensitive
Material is discharged or released from a vessel other than a
Relevant Ship which involves collision between a Relevant Ship
and such other vessel or some other incident of navigation or
operation, in either case, where the Relevant Ship, the Manager
and/or the
relevant Owner
and/or the
relevant Group Member
and/or the
relevant Operator are actually, contingently or allegedly at
fault or otherwise howsoever liable (in whole or in part) or
(iii) any incident in which Environmentally Sensitive
Material is discharged or released from a vessel other than a
Relevant Ship and where such Relevant Ship is actually or
reasonably likely to be arrested as a result
and/or where
the Manager
and/or the
relevant Owner
and/or other
Group Member
and/or the
relevant Operator are actually or contingently at fault or
allegedly and reasonably likely to be found at fault or
otherwise howsoever liable to any administrative or legal action;
Environmental Laws means all laws,
regulations, conventions and agreements whatsoever relating to
pollution, human or wildlife well-being or protection of the
environment (including, without limitation, the United States
Oil Pollution Act of 1990 and any comparable laws of the
individual States of the USA);
Environmentally Sensitive Material
means oil, oil products or any other products or substance which
are polluting, toxic or hazardous or any substance the release
of which into the environment is howsoever regulated, prohibited
or penalised by or pursuant to any Environmental Law;
Equity Deposit Accounts means,
together, the Alpha Equity Deposit Account and the DSB Equity
Deposit Account;
Event of Default means any of the
events or circumstances listed in clause 10.1;
Execution Date means the date on which
this Agreement has been executed by all the parties hereto;
Extended Employment Contract means, in
respect of a Vessel, any time charterparty, contract of
affreightment or other contract of employment of such ship
(including the entry of any Vessel in any pool) which has a
tenor exceeding twenty four (24) months (including any
options to renew or extend such tenor);
Facility Period means the period
starting on the date of this Agreement and ending on such date
as all obligations whatsoever of all of the Security Parties
under or pursuant to the Security Documents whensoever arising,
actual or contingent, have been irrevocably paid, performed
and/or
complied with;
Final Delivery Date means the date on
which all of the Vessels shall have been transferred and
delivered by the Builder to the Borrowers;
Flag State means Panama or any other
country acceptable to the Lenders;
General Assignment means, in respect
of each Vessel, the deed of assignment of its earnings,
insurances and requisition compensation executed or to be
executed by the relevant Owner in favour of
the Security Trustee in such form as the Agent and the Majority
Lenders may require in their sole discretion and in the plural
means all of them;
Government Entity means any national
or local government body, tribunal, court or regulatory or other
agency and any organisation of which such body, tribunal, court
or agency is a part or to which it is subject;
Group means at any relevant time the
Corporate Guarantor whose Corporate Guarantee is in force and
effect at that time and its subsidiaries but not including any
subsidiary which is listed on any public stock exchange;
Group Member means any member of the
Group;
Indebtedness means any obligation
howsoever arising (whether present or future, actual or
contingent, secured or unsecured as principal, surety or
otherwise) for the payment or repayment of money;
Interest Payment Date means, in
relation to each Tranche, the last day of an Interest Period
and, if an Interest Period is longer than 6 months, the
date falling at the end of each successive period of
6 months during such Interest Period starting from its
commencement;
Interest Period means each period for
the calculation of interest in respect of the Loan or, as the
case may be, Tranche ascertained in accordance with the
provisions of clause 3;
ISM Code Documentation means, in
relation to a Vessel, the document of compliance (DOC) and
safety management certificate (SMC) issued by a Classification
Society pursuant to the ISM Code in relation to that Vessel
within the periods specified by the ISM Code;
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
Organisation and includes any amendments or extensions thereto
and any regulations issued pursuant thereto;
ISSC means an International Ship
Security Certificate issued in respect of a Vessel pursuant to
the ISPS Code;
Latest Accounts means, in respect of
any financial quarter or year of the Group, the latest unaudited
(in respect of each financial quarter) or audited (in respect of
each financial year) financial statements required to be
prepared pursuant to clause 8.1.6;
Lenders means the banks listed in
schedule 1 and Transferee Lenders;
Lending Branch means, in respect of
each Lender, its office or branch at the address set out beneath
its name in schedule 1 (or, in the case of a Transferee, in
the Transfer Certificate to which it is a party as Transferee)
or such other office or branch as any Lender shall from time to
time select and notify through the Agent to the other parties to
this Agreement;
LIBOR means, the greater of
(i) and (ii) below:
(i) the rate equal to the offered quotation for deposits in
USD in an amount comparable with the amount in relation to which
LIBOR is to be determined for a period equal to, or as near as
possible equal to, the relevant period which appears on Reuters
Screen LIBOR01 at or about 11 a.m. on the second Banking
Day before the first day of such period (and, for the purposes
of this Agreement, Reuters Screen LIBOR01 means the
display designated as LIBOR01 on the Reuters Service
or such other page as may replace LIBOR01 on that service for
the purpose of displaying rates comparable to that rate or on
such other service as may be nominated by the British
Bankers Association as the information vendor for the
purpose of displaying the British Bankers Association
Interest Settlement Rates for USD); and
(ii) the rate per annum reasonably determined by the Agent
from any source the Agent may reasonably select to be the rate
which reflects the actual cost to the Lenders of funding their
respective Contributions (or the relevant part thereof) during
the relevant Interest Period;
Liquidity means the aggregate of all
cash deposits legally and beneficially owned by any Group Member
and which are deposited with any of the Banks which:
(a) are free from any Encumbrance other than, in respect of
any deposit with a Bank, any Encumbrance given as security for
the obligations of the Borrowers under this Agreement; and
(b) are otherwise at the free and unrestricted disposal of
the relevant Group Member by which it is owned
but excluding any sums on the Equity Deposit Accounts;
Loan means the aggregate principal
amount in respect of the Loan Facility owing to the Lenders
under this Agreement at any relevant time;
Loan Facility means the loan facility
provided by the Lenders on the terms and subject to the
conditions of this Agreement in the amount of
USD 150,000,000;
Majority Lenders means at any relevant
time when there are two Lenders, both of them, and at any time
when there are more than two Lenders, the Lenders whose
Contributions exceed 75% of the Loan;
Management Agreement means, in respect
of each Vessel, the agreement between the relevant Owner and the
Manager, in a form previously approved in writing by the Agent
(acting on the instructions of the Majority Lenders);
Manager means Navios ShipManagement
Inc., a company incorporated in the Marshall Islands and having
its registered office at Trust Company Complex, Ajeltake
Road, Ajeltake Island, Majuro, Marshall Islands, MH96960 or
(without the need for thew Agents consent) any other
subsidiary of Navios Maritime Holdings Inc. or any other person
appointed by an Owner, with the prior written consent of the
Agent, as the manager of the relevant Mortgaged Vessel;
Managers Undertakings means,
collectively, the undertakings and assignments required to be
executed hereunder by the Manager in favour of the Security
Trustee in respect of each of the Vessels each in such form as
the Agent and the Majority Lenders may require in their sole
discretion (and Managers Undertakings
means all of them);
Margin means, in relation to each
Interest Period 2.50% per annum;
Material Adverse Effect means any
event or occurrence which the Majority Lenders reasonably
determine has had or could reasonably be expected to have a
material adverse effect on (i) the Banks rights
under, or the security provided by, any Security Document,
(ii) the ability of any Security Party to perform or comply
with any of its obligations under any Security Document or
(iii) the value or nature of the property, assets,
operations, liabilities or financial condition of any Security
Party;
Maturity Date means in respect of each
Tranche, the date falling 6 years after the Delivery Date
of the Vessel which is being financed by that Tranche;
MII & MAP Policy means a
mortgagees interest and pollution risks insurance policy
(including additional perils (pollution) cover) in respect of
each Mortgaged Vessel to be effected by the Security Trustee on
or before the first Drawdown Date to cover the Mortgaged Vessels
as the same may be renewed or replaced annually thereafter and
maintained throughout the Facility Period through such brokers,
with such underwriters and containing such coverage as may be
acceptable to the Security Trustee in its sole discretion,
insuring a sum of at least one hundred and ten per cent (110%)
of the Loan in respect of mortgagees interest insurance
and one hundred and ten per cent (110%) of the Loan in respect
of additional perils cover;
Minimum Liquidity means
(i) during 2010 and 2011 and up to the Final Delivery Date
USD40,000,000 and (ii) thereafter, USD35,000,000;
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 (a) 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 (b) 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 means, in respect of each
Vessel, the first preferred Ship mortgage thereof required to be
executed hereunder by the Owner thereof in favour of the
Security Trustee, each in such form as the Agent and the
Majority Lenders may require in their sole discretion and in the
plural means all of them;
Mortgaged Vessel means, at any
relevant time, any Vessel which is at such time subject to a
Mortgage and a Vessel shall, for the purposes of this Agreement,
be regarded as a Mortgaged Vessel as from the date on which the
Mortgage of that Vessel has been executed and registered in
accordance with this Agreement until whichever shall be the
earlier of (i) the payment in full of the amount required
to be paid to the Agent pursuant to clause 4.3 or 4.5
following the Total Loss or sale respectively of such Vessel and
(ii) the end of the Facility Period;
Navios Acquisition means Navios
Maritime Acquisition Corporation a company incorporated in the
Marshall Islands and having its registered office at
Trust Company Complex, Ajeltake Road, Ajeltake Island,
Majuro, Marshall Islands, MH96960;
Negative Pledge means negative pledge
of the shares of and in each Borrower to be executed by the
Shareholder in favour of the Security Trustee in such form as
the Agent and the Majority Lenders may require in their sole
discretion and in the plural means all of them;
Net Profit means for each financial
year of the Corporate Guarantor, the Net Profit as set out in
the relevant Latest Accounts;
Net Worth means by reference to the
Latest Accounts, the Total Assets (based on book values) less
Total Liabilities of the Group;
Novation Agreement means each of the
Vessel A Novation Agreement, the Vessel B Novation Agreement,
the Vessel C Novation Agreement, the Vessel D Novation
Agreement, the Vessel E Novation Agreement and the Vessel F
Novation Agreement and in the plural means all of them;
Operator means any person who is from
time to time during the Facility Period concerned in the
operation of a Relevant Ship and falls within the definition of
Company set out in rule 1.1.2 of the ISM Code;
Owner means, in relation to:
(i) Vessel A, Amorgos;
(ii) Vessel B, Andros;
(iii) Vessel C, Antiparos;
(iv) Vessel D, Ikaria;
(v) Vessel E, Kos; and
(vi) Vessel F, Mytilene
and in the plural means all of them;
Permitted Encumbrance means any
Encumbrance in favour of the Banks or any of them created
pursuant to the Security Documents and Permitted Liens;
Permitted Liens means any lien on any
Vessel for masters, officers or crews wages
outstanding in the ordinary course of trading, any lien for
salvage and any ship repairers or outfitters
possessory lien for a sum not (except with the prior written
consent of the Agent) exceeding the Casualty Amount (as defined
in the Ship Security Documents for such Vessel);
Pertinent Jurisdiction means any
jurisdiction in which or where any Security Party is
incorporated, resident, domiciled, has a permanent establishment
or assets, carries on, or has a place of business or is
otherwise howsoever effectively connected;
Predelivery Security Assignment means,
in respect of each Vessel, a deed of assignment of the
Shipbuilding Contract and of the Refund Guarantee in respect
thereof in such form as the Agent and the Majority Lenders may
require in their sole discretion and in the plural means all of
them;
Prepayment Ratio means in respect of
the sale or Total Loss of a Mortgaged Vessel the Valuation
Amount of such Mortgaged Vessel immediately prior to such sale
or Total Loss divided by the Security Value immediately prior to
such sale or Total Loss and for these purposes any valuation of
a Vessel (calculated in accordance with Clause 8.2.2) may be no
more than two months old;
Proceedings means any litigation,
arbitration, legal action or complaint or judicial,
quasi-judicial or administrative proceedings whatsoever arising
or instigated by anyone (private or governmental) in any court,
tribunal, public office or other forum whatsoever and
wheresoever (including, without limitation, any action for
provisional or permanent attachment of any thing or for
injunctive remedies or interim relief and any action instigated
on an ex parte basis);
Refund Guarantee means each of the
Vessel A Refund Guarantee, the Vessel B Refund Guarantee, the
Vessel C Refund Guarantee, the Vessel D Refund Guarantee, the
Vessel E Refund Guarantee and the Vessel F Refund Guarantee and
in the plural means all of them;
Refund Guarantor means, in relation to
each Vessel, the issuer of the Refund Guarantee in respect
thereof;
Registry means, in relation to each
Vessel, the office of the registrar, commissioner or
representative of the Flag State, who is duly empowered to
register such Vessel, the relevant Owners title thereto
and the relevant Mortgage under the laws and flag of the Flag
State;
Relevant Tranche means, in respect of
Vessel A, Tranche A, in respect of Vessel B,
Tranche B, in respect of Vessel C, Tranche C, in
respect of Vessel D, Tranche D, in respect of Vessel E,
Tranche E and in respect of Vessel F, Tranche F;
Relevant Ship means each of the
Vessels and any other ship from time to time (whether before or
after the date of this Agreement) owned, managed or crewed by,
or chartered to, any Group Member;
Relevant Vessel means the Vessel in
respect of which the relevant Advance is being made available;
Repayment Dates means, in respect of
each Tranche, subject to clause 6.3, each of the dates falling
at six-monthly intervals after the Delivery Date in respect of
the Vessel which that Tranche finances, up to and including the
date falling 72 months after such date;
Required Authorisation means any
authorisation, consent, declaration, licence, permit, exemption,
approval or other document, whether imposed by or arising in
connection with any law, regulation, custom, contract, security
or otherwise howsoever which must be obtained at any time from
any person, Government Entity, central bank or other
self-regulating or supra-national authority in order to enable
the Borrowers lawfully to borrow the loan or draw any Advance
and/or to
enable any Security Party lawfully and continuously to continue
its corporate existence
and/or
perform all its obligations whatsoever whensoever arising
and/or grant
security under the relevant Security Documents
and/or to
ensure the continuous validity and enforceability thereof;
Required Security Amount means the
amount in USD (as certified by the Agent) which is at any
relevant time the Relevant Percentage of the aggregate of the
Delivered Tranches and any Swap Exposure where Relevant
Percentage means:
(i) during 2010 and 2011, 80%;
(ii) during 2012, 100%;
(iii) during 2013, 110%
(iv) thereafter, 115%;
Retention Account an interest bearing
USD Account required to be opened hereunder with the relevant
Account Bank in the name of the Borrowers designated
Navios Retention Account and includes
any other account designated in writing by the Agent to be the
Retention Account for the purposes of this Agreement;
Retention Account Pledge means a first
priority charge required to be executed hereunder between the
Borrowers and the Security Trustee in respect of the Retention
Account in such form as the Agent and the Majority Lenders may
require in their sole discretion;
Retention Amount means, in relation to
any Retention Date, such sum as shall be the aggregate of:
(a) one sixth (1/6th) of the repayment instalment in
respect of the relevant Tranche falling due for payment pursuant
to clause 4.1.1 (as the same may have been reduced by any
prepayment) on the next Repayment Date after the relevant
Retention Date in respect of that Tranche; and
(b) the applicable fraction (as hereinafter defined) of the
aggregate amount of interest falling due for payment in respect
of each part of the Loan during and at the end of each Interest
Period current at the relevant Retention Date and, for this
purpose, the expression applicable fraction
in relation to each Interest Period shall mean a fraction having
a numerator of one and a denominator equal to the number of
Retention Dates falling within the relevant Interest Period;
Retention Dates means the date falling
thirty (30) days after the final Drawdown Date in respect
of a Tranche and each of the dates falling at monthly intervals
after such date and prior to the Maturity Date in respect of
that Tranche;
Security Documents means this
Agreement, the Predelivery Security Assignments, the Deutscher
Rahmenvertrag, the Deutscher Rahmenvertrag Security Deed, the
Mortgages, the Corporate Guarantee, the General Assignments, the
Charter Assignments, the Earnings Account Pledges, the
Managers Undertakings, the Charter Insurance Assignments,
the Shares Pledges, the Negative Pledges, and any other
documents as may have been or shall from time to time after the
date of this Agreement be executed to guarantee
and/or to
govern
and/or
secure all or any part of the Loan, interest thereon and other
moneys from time to time owing by the Borrowers pursuant to this
Agreement
and/or the
Deutscher Rahmenvertrag (whether or not any such document also
secures moneys from time to time owing pursuant to any other
document or agreement);
Security Party means the Borrowers,
the Manager, the Corporate Guarantor, the Shareholder or any
other person who may at any time be a party to any of the
Security Documents (other than the Banks);
Security Trustee means Deutsche
Schiffsbank AG acting through its through its office at Domshof
17, D-28195, Bremen, Germany (or of such other address as may
last have been notified to the other parties to this Agreement
pursuant to clause 17.2.3) or such other person as may be
appointed as Security Trustee and trustee by the Lenders, the
Arranger, Account Banks, the Swap Bank and the Agent pursuant to
clause 16.14;
Security Value means the amount in USD
(as certified by the Agent) which is, at any relevant time, the
aggregate of (a) the Valuation Amounts of the Mortgaged
Vessels as most recently determined
in accordance with clause 8.2.2 and (b) the net
realizable market value of any additional security for the time
being actually provided to the Lenders pursuant to
clause 8.2.1(b) and (c) and cash (excluding amounts on
the Equity Deposit Accounts) over which there is an Encumbrance
as security for the obligations of the Borrowers under this
Agreement;
Share Acquisition Date means the date
on which Navios Acquisition acquires, directly or indirectly,
all of the shares of and in the Shareholder;
Shareholder means Aegean Sea Maritime
Holdings Inc., a company incorporated in the Marshall Islands
and having its registered office at Trust Company Complex,
Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands,
MH96960;
Shares Pledge means the first priority
pledge of the shares of and in each Borrower to be executed by
the Shareholder in favour of the Security Trustee in such form
as the Agent and the Majority Lenders may require in their sole
discretion and in the plural means all of them;
Ship Security Documents means, in
relation to each Vessel, the relevant Mortgage, the relevant
General Assignment, any relevant Charter Assignment and the
relevant Managers Undertakings;
Shipbuilding Contract means each of
the Vessel A Shipbuilding Contract, the Vessel B Shipbuilding
Contract, the Vessel C Shipbuilding Contract, the Vessel D
Shipbuilding Contract, the Vessel E Shipbuilding Contract and
the Vessel F Shipbuilding Contract and in the plural means all
of them;
Shipbuilding Contract Addendum means,
in respect of each Shipbuilding Contract, an addendum thereto
pursuant to which the relevant Borrower and the Builder agree to
vary the terms of the relevant Shipbuilding Contract, including,
inter alia, a reduction of the purchase price;
subsidiary of a person means any
company or entity directly or indirectly controlled by such
person, and for this purpose control means either
the ownership of more than fifty per cent (50%) of the voting
share capital (or equivalent rights of ownership) of such
company or entity or the power to direct its policies and
management, whether by contract or otherwise;
Swap Bank means Deutsche Schiffsbank
AG acting through its through its office at Domshof 17, D-28195,
Bremen, Germany;
Swap Exposure means, as at any
relevant date the amount certified by the Swap Bank to be the
aggregate net amount in Dollars which would be payable by the
Borrowers to the Swap Bank under (and calculated in accordance
with) section 6(e) (Payments on Early Termination) of the
Deutscher Rahmenvertrag if an Early Termination Date (as therein
defined) had occurred on the relevant date in relation to all
continuing Transactions (as therein defined) entered into
between the Borrowers and the Swap Bank;
Taxes includes all present and future
income, corporation, capital or value-added taxes and all stamp
and other taxes and levies, imposts, deductions, duties, charges
and withholdings whatsoever together with interest thereon and
penalties in respect thereto, if any, and charges, fees or other
amounts made on or in respect thereof (and Taxation
shall be construed accordingly);
Total Assets and Total
Liabilities mean, respectively, the total assets
and total liabilities of the Group as evidenced at any relevant
time by the Latest Accounts, in which they shall have been
calculated by reference to the meanings assigned to them in
accordance with US GAAP provided that cash shall be deducted
from Total Assets and Total Liabilities;
Total Commitment means, at any
relevant time, the aggregate of the Commitments of all the
Lenders at such time (being the aggregate of the sums set out
opposite their names in schedule 1);
Total Loss means, in relation to each
Vessel:
(a) actual, constructive, compromised or arranged total
loss of such Vessel; or
(b) Compulsory Acquisition; or
(c) any hijacking, theft, condemnation, capture, seizure,
arrest, detention or confiscation of such Vessel not falling
within the definition of Compulsory Acquisition by any
Government Entity, or by persons allegedly acting or purporting
to act on behalf of any Government Entity, unless such Vessel be
released and restored to the relevant Owner within ninety
(90) days after such incident;
Tranche A means the amount of up
to USD25,000,000, being the aggregate of all of the Advances to
be made available by the Lender to the Borrowers to assist
Amorgos in its acquisition of Vessel A or, as the context
requires, the amount thereof outstanding from time to time;
Tranche B means the amount of up
to USD25,000,000, being the aggregate of all of the Advances to
be made available by the Lender to the Borrowers to assist
Andros in its acquisition of Vessel B or, as the context
requires, the amount thereof outstanding from time to time;
Tranche C means the amount of up
to USD25,000,000, being the aggregate of all of the Advances to
be made available by the Lender to the Borrowers to assist
Antiparos in its acquisition of Vessel C or, as the context
requires, the amount thereof outstanding from time to time;
Tranche D means the amount of up
to USD25,000,000, being the aggregate of all of the Advances to
be made available by the Lender to the Borrowers to assist
Ikaria in its acquisition of Vessel D or, as the context
requires, the amount thereof outstanding from time to time;
Tranche E means the amount of up
to USD25,000,000, being the aggregate of all of the Advances to
be made available by the Lender to the Borrowers to assist Kos
in its acquisition of Vessel E or, as the context requires, the
amount thereof outstanding from time to time;
Tranche F means the amount of up
to USD25,000,000, being the aggregate of all of the Advances to
be made available by the Lender to the Borrowers to assist
Mytilene in its acquisition of Vessel F or, as the context
requires, the amount thereof outstanding from time to time;
Tranche means any of Tranche A,
Tranche B, Tranche C, Tranche D, Tranche E
or Tranche F and in the plural means all of them;
Transaction means a Transaction as
defined in the Deutscher Rahmenvertrag;
Transfer Certificate means a
certificate in substantially the form set out in schedule 4;
Transferee Lender has the meaning
ascribed thereto in clause 15.3;
Transferor Lender has the meaning
ascribed thereto in clause 15.3;
Trust Deed means a trust deed in
the form, or substantially in the form, set out in
schedule 5;
Trust Property means (i) the
security, powers, rights, titles, benefits and interests (both
present and future) constituted by and conferred on the Banks or
any of them under or pursuant to the Security Documents
(including, without limitation, the benefit of all covenants,
undertakings, representations, warranties and obligations given,
made or undertaken to any Bank in the Security Documents),
(ii) all moneys, property and other assets paid or
transferred to or vested in any Bank (or anyone else on such
Banks behalf) or received or recovered by any Bank (or
anyone else on such Banks behalf) pursuant to, or in
connection with, any of the Security Documents whether from any
Security Party or any other person and (iii) all moneys,
investments, property and other assets at any time representing
or deriving from any of the foregoing, including all interest,
income and other sums at any time received or receivable by any
Bank (or anyone else on such Banks behalf) in respect of
the same (or any part thereof);
Underlying Documents means, together,
the Shipbuilding Contracts, the Shipbuilding Contract Addenda,
the Novation Agreements, the Refund Guarantees and the
Management Agreement;
Unlawfulness means any event or
circumstance which either is or, as the case may be, might in
the opinion of the Agent become the subject of a notification by
the Agent to the Borrowers under clause 12.1;
USA means the United States of America;
Valuation Amount means, in respect of
each Mortgaged Vessel, the value thereof as most recently
determined under clause 8.2.2; and
Vessel means each of Vessel A, Vessel
B, Vessel C, Vessel D, Vessel E and Vessel F and in the plural
means all of them.
Words and expressions defined in Schedule 7 (Vessel
Details) shall have the meanings given to them therein as if the
same were set out in full in this clause 1.2.
1.3 Construction
In this Agreement, unless the context otherwise requires:
1.3.1 clause headings and the index are inserted for
convenience of reference only and shall be ignored in the
construction of this Agreement;
1.3.2 references to clauses and schedules are to be
construed as references to clauses of, and schedules to, this
Agreement and references to this Agreement include its schedules
and any supplemental agreements executed pursuant hereto;
1.3.3 references to (or to any specified provision of) this
Agreement or any other document shall be construed as references
to this Agreement, that provision or that document as in force
for the time being and as duly amended
and/or
supplemented
and/or
novated;
1.3.4 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 Government Entity, central bank or any self-regulatory or
other supra-national authority;
1.3.5 references to any person in or party to this
Agreement shall include reference to such persons lawful
successors and assigns and references to a Lender shall also
include a Transferee Lender;
1.3.6 words importing the plural shall include the singular
and vice versa;
1.3.7 references to a time of day are, unless otherwise
stated, to London time;
1.3.8 references to a person shall be construed as
references to an individual, firm, company, corporation or
unincorporated body of persons or any Government Entity;
1.3.9 references to a guarantee include
references to an indemnity or any other kind of assurance
whatsoever (including, without limitation, any kind of
negotiable instrument, bill or note) against financial loss or
other liability including, without limitation, an obligation to
purchase assets or services as a consequence of a default by any
other person to pay any Indebtedness and guaranteed
shall be construed accordingly;
1.3.10 references to any statute or other legislative
provision are to be construed as references to any such statute
or other legislative provision as the same may be re enacted or
modified or substituted by any subsequent statute or legislative
provision (whether before or after the date hereof) and shall
include any regulations, orders, instruments or other
subordinate legislation issued or made under such statute or
legislative provision;
1.3.11 a certificate by the Agent or the Security Trustee
as to any amount due or calculation made or any matter
whatsoever determined in connection with this Agreement shall be
conclusive and binding on the Borrowers except for manifest
error;
1.3.12 if any document, term or other matter or thing is
required to be approved, agreed or consented to by any of the
Banks such approval, agreement or consent must be obtained in
writing unless the contrary is stated;
1.3.13 time shall be of the essence in respect of all
obligations whatsoever of the Borrowers under this Agreement,
howsoever and whensoever arising;
1.3.14 and the words other and
otherwise shall not be construed eiusdem generis
with any foregoing words where a wider construction is possible.
1.4 Accounting
terms and references to currencies
Currencies are referred to in this Agreement by the three letter
currency codes (ISO 4217) allocated to them by the
International Organisation for Standardisation.
1.5 Contracts
(Rights of Third Parties Act) 1999
Except for clause 20, no part of this Agreement shall be
enforceable under the Contracts (Rights of Third Parties) Act
1999 by a person who is not a party to this Agreement.
1.6 Majority
Lenders
Where this Agreement or any other Security Document provides for
any matter to be determined by reference to the opinion of the
Majority Lenders or to be subject to the consent or request of
the Majority Lenders or for any decision or action to be taken
on the instructions in writing of the Majority Lenders, such
opinion, consent, request or instructions shall (as between the
Lenders) only be regarded as having been validly given or issued
by the Majority Lenders if all the Lenders with a Commitment
and/or
Contribution shall have received prior notice of the matter on
which such opinion, consent, request or instructions are
required to be obtained and the relevant majority of such
Lenders shall have given or issued such opinion, consent,
request or instructions but so that (as between the Borrowers
and the Banks) the Borrowers shall be entitled (and bound) to
assume that such notice shall have been duly received by each
relevant Lender and that the relevant majority shall have been
obtained to constitute Majority Lenders whether or not this is
in fact the case.
2 THE
AVAILABLE COMMITMENT AND CANCELLATION
2.1 Agreement
to lend
The Lenders, relying upon each of the representations and
warranties in clause 7, agree to provide to the Borrowers
upon and subject to the terms of this Agreement, the Tranches,
for the purposes of financing part of the purchase price of the
Vessels. Subject to the terms of this Agreement, the obligations
of the Lenders shall be to contribute to each Advance, the
proportion of the relevant Advance which their respective
Commitments bear to the Total Commitment on any relevant
Drawdown Date.
2.2 Obligations
several
The obligations of the Lenders under this Agreement are several
according to their respective Commitments
and/or
Contributions. The failure of any Lender to perform such
obligations shall not relieve any other party to this Agreement
of any of its respective obligations or liabilities under this
Agreement nor shall any Bank be responsible for the obligations
of any other Bank (except for its own obligations, if any, as a
Lender) under this Agreement.
2.3 Interests
several
Notwithstanding any other term of this Agreement (but without
prejudice to the provisions of this Agreement relating to or
requiring action by the Majority Lenders) the interests of the
Banks are several and the amount due to any Bank is a separate
and independent debt. Each Bank shall have the right to protect
and enforce its rights arising out of this Agreement and it
shall not be necessary for any other Bank to be joined as an
additional party in any Proceedings for this purpose.
2.4 Drawdown
2.4.1 On the terms and subject to the conditions of this
Agreement, (i) Tranche A and Tranche B shall be
advanced in up to four (4) Advances each and
(ii) Tranche C, Tranche D, Tranche E and
Tranche F shall be
advanced in up to six (6) Advances each on the relevant
Drawdown Dates following receipt by the Agent from the Borrowers
of Drawdown Notices not later than 10 a.m. on the third
Banking Day before each proposed Drawdown Date.
2.4.2 A Drawdown Notice shall be effective on actual
receipt by the Agent and, once given, shall, subject as provided
in clause 3.6, be irrevocable.
2.5 Amount
2.5.1 The principal amount specified in each Drawdown
Notice for borrowing on the Drawdown Dates shall, subject to the
terms of this Agreement, in respect of Tranche A and
Tranche B not exceed:
(a) USD7,467,472 payable to the relevant seller or its
financiers under the relevant Novation Agreement;
(b) USD10,582,966 in respect of the instalment payable to
the Builder on the relevant Shipbuilding Contract Addendum
becoming effective;
(c) USD3,474,781 to the Builder under the relevant
Shipbuilding Contract in respect of the launching
instalment; and
(d) USD3,474,781 to the Builder under the relevant
Shipbuilding Contract in respect of the delivery instalment.
2.5.2 The principal amount specified in each Drawdown
Notice for borrowing on the Drawdown Dates shall, subject to the
terms of this Agreement, in respect of Tranche C,
Tranche D, Tranche E and Tranche F not exceed:
(a) USD6,023,472 payable to the relevant seller or its
financiers under the relevant Novation Agreement;
(b) USD9,154,103 in respect of the instalment payable to
the Builder on the relevant Shipbuilding Contract Addendum
becoming effective;
(c) USD2,455,607 to the Builder under the relevant
Shipbuilding Contract in respect of the steel-cutting instalment;
(d) USD2,455,607 to the Builder under the relevant
Shipbuilding Contract in respect of the keel-laying instalment;
(e) USD2,455,607 to the Builder under the relevant
Shipbuilding Contract in respect of the launching
instalment; and
(f) USD2,455,604 to the Builder under the relevant
Shipbuilding Contract in respect of the delivery instalment.
2.6 Availability
Upon receipt of a Drawdown Notice complying with the terms of
this Agreement, the Agent shall promptly notify each Lender and
each Lender shall make available to the Agent its portion of the
relevant Advance for payment by the Agent in accordance with
clause 6.2. The Borrowers acknowledge that payment of any
Advance to the account referred to in the relevant Drawdown
Notice shall satisfy the obligation of the Lenders to lend that
Advance to the Borrowers under this Agreement.
2.7 Voluntary
cancellation of Facility
The Borrowers may at any time during the Drawdown Period by
notice to the Agent (effective only on actual receipt) cancel
with effect from a date not less than five Banking Days after
the receipt by the Agent of such notice the whole or any part
(being two million five hundred thousand Dollars (USD 2,500,000)
or any larger sum which is an integral multiple of two million
five hundred thousand Dollars (USD 2,500,000)) of the
Total Commitment. Any such notice of cancellation, once given,
shall be irrevocable and the Total Commitment shall be reduced
accordingly and each Lenders Commitment shall be reduced
pro rata according to the proportion which its Commitment bears
to the Total Commitment.
2.8 Cancellation
in changed circumstances
The Borrowers may also at any time during the Facility Period by
notice to the Agent (effective only on actual receipt) prepay
and cancel with effect from a date not less than fifteen
(15) days after receipt by the Agent of such notice, the
whole but not part only, but without prejudice to the
Borrowers obligations under clauses 6.6 and 12, of
the Contribution and Commitment (if any) of any Lender to which
the Borrowers shall have become obliged to pay additional
amounts under clause 12 or clause 6.6. Upon any notice
of such prepayment and cancellation being given, the Commitment
of the relevant Lender shall be reduced to zero, the Borrowers
shall be obliged to prepay the Contribution of such Lender and
such Lenders related costs (including but not limited to
Break Costs) on such date and such Lender shall be under no
obligation to participate in the Loan or any further Advances.
2.9 Use
of proceeds
Without prejudice to the Borrowers obligations under
clause 8.1.4, no Bank shall have any responsibility for the
application of the proceeds of any Advance or any part thereof
by the Borrowers.
3 INTEREST
AND INTEREST PERIODS
3.1 Normal
interest rate
The Borrowers must pay interest on each Tranche in respect of
each Interest Period relating thereto on each Interest Payment
Date at the rate per annum determined by the Agent to be the
aggregate of (a) the Margin and (b) LIBOR.
3.2 Selection
of Interest Periods
Subject to clause 3.3, the Borrowers may by notice received
by the Agent not later than 10:00 a.m. on the fourth
Banking Day before the beginning of each Interest Period specify
whether such Interest Period shall have a duration of three (3),
six (6) or twelve (12) months or such other period as
the Borrowers may select and the Agent (acting on the
instructions of the Lenders) may agree, and if the Borrowers
wishes to specify an Interest Period of more than
12 months, it must give at least 5 Banking Days prior
notice thereof.
3.3 Determination
of Interest Periods
Subject to Clause 3.3.1 every Interest Period shall be of
the duration specified by the Borrowers pursuant to
clause 3.2 but so that:
3.3.1 the first Interest Period in respect of each Tranche
shall start on the Drawdown Date in respect of the first Advance
in respect of that Tranche, and each subsequent Interest Period
shall start on the last day of the previous Interest Period;
3.3.2 the first Interest Period in respect of each
subsequent Advance shall commence on its Drawdown Date and
terminate simultaneously with the Interest Period which is then
current for the Tranche under which the Advance is made
available;
3.3.3 if any Interest Period of a Tranche would otherwise
overrun a relevant Repayment Date, then the relevant Tranche
shall be divided into parts so that there is one part in the
amount of the repayment instalment due on such Repayment Date
and having an Interest Period ending on the relevant Repayment
Date and another part in the amount of the balance of that
Tranche having an Interest Period ascertained in accordance with
clause 3.2 and the other provisions of this
clause 3.3; and
3.3.4 if the Borrowers fail to specify the length of an
Interest Period in accordance with the provisions of
clause 3.2 and this clause 3.3 such Interest Period
shall last three months or such other period as complies with
this clause 3.3.
3.4 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 Security Documents,
the Borrowers must pay interest on such sum on demand from the
due date up to the date of actual payment (as well after as
before judgment) at a rate determined by the Agent pursuant to
this clause 3.4. The period starting on such due date and
ending on such date of payment shall be divided into successive
periods of not more than three (3) months as selected by
the Agent each of which (other than the first, which shall start
on such due date) shall start 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 Agent) of
(a) two per cent (2%) per annum, (b) the Margin
and (c) LIBOR for such periods. Such interest shall be due
and payable on demand, or, if no demand is made, then on the
last day of each such period as determined by the Agent and on
the day on which all amounts in respect of which interest is
being paid under this Clause are paid, and each such day shall,
for the purposes of this Agreement, be treated as an Interest
Payment Date, provided that if the relevant unpaid sum is
(i) an amount of principal which became due and payable by
reason of a declaration by the Agent under clause 10.2.2 or
(ii) a prepayment pursuant to clauses 4.3, 4.5,
8.2.1(a) or 12.1 on a date other than an Interest Payment Date
relating thereto, the first such period selected by the Agent
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 of two per cent (2%) above the rate
applicable thereto immediately before it shall have become so
due and payable. If, for the reasons specified in
clause 3.6.1, the Agent is unable to determine a rate in
accordance with the foregoing provisions of this
clause 3.4, each Lender shall promptly notify the Agent of
the cost of funds to such Lender and interest on any sum not
paid on its due date for payment shall be calculated at a rate
determined by the Agent to be two per cent (2%) per annum
above the aggregate of the Margin and the arithmetic mean of the
cost of funds to the Lenders compounded at such intervals as the
Agent selects.
3.5 Notification
of Interest Periods and interest rate
The Agent agrees to notify (i) the Lenders promptly of the
duration of each Interest Period and (ii) the Borrowers and
the Lenders promptly of each rate of interest determined by it
under this clause 3.
3.6 Market
disruption; non-availability
3.6.1 Whenever, at any time prior to the commencement of
any Interest Period:
(a) the Agent shall have determined that adequate and fair
means do not exist for ascertaining LIBOR during such Interest
Period; or
(b) the Agent shall have received notification from a
Lender or Lenders that deposits in USD are not available to such
Lender or Lenders in the London InterBank Market in the ordinary
course of business to fund their Contributions to the Loan for
such Interest Period the Agent must promptly give notice (a
Determination Notice) thereof to the
Borrowers and to each of the Lenders. A Determination Notice
shall contain particulars of the relevant circumstances giving
rise to its issue. After the giving of any Determination Notice,
regardless of any other provision of this Agreement, any undrawn
Commitment shall not be borrowed until notice to the contrary is
given to the Borrowers by the Agent.
3.6.2 Within two (2) days of any Determination Notice
being given by the Agent under clause 3.6.1, each Lender
must certify an alternative basis (the Alternative
Basis) for maintaining its Contribution. The
Alternative Basis may at the relevant Lenders sole
discretion include (without limitation) alternative interest
periods, alternative currencies or alternative rates of interest
but shall include a Margin above the cost of funds to such
Lender. The Agent shall calculate the arithmetic mean of the
Alternative Bases provided by the relevant Lenders (the
Substitute Basis) and certify the same to the
Borrowers and the Lenders. The
Substitute Basis so certified shall be binding upon the
Borrowers, and shall take effect in accordance with its terms
from the date specified in the Determination Notice until such
time as the Agent notifies the Borrowers that none of the
circumstances specified in clause 3.6.1 continues to exist
whereupon the normal interest rate fixing provisions of this
Agreement shall again apply and, subject to the other provisions
of this Agreement, the Commitment may again be borrowed.
3.7 Interest
Rate Swaps
If the Borrowers wish to enter into any interest rate swaps in
respect of the Loan or any part thereof, they must, provided
that the Swap Bank is offering competitive rate and provided
that the Lenders agree, do so with the Swap Bank under the
Deutscher Rahmenvertrag.
4 REPAYMENT
AND PREPAYMENT
4.1 Repayment
4.1.1 Subject as otherwise provided in this Agreement, the
Borrowers must repay each Tranche by 12 equal semi-annual
instalments of USD750,000 each, one such instalment to be repaid
on each of the Repayment Dates and a balloon instalment of
USD16,000,000 to be repaid on the relevant final Repayment Date.
If the Commitment in respect of any Tranche is not drawn in
full, the amount of each repayment instalments including the
said balloon instalment for that Tranche shall be reduced
proportionately.
4.1.2 The Borrowers shall on the Maturity Date in respect
of the last Tranche to be repaid also pay to the Agent and the
Lenders all other amounts in respect of interest or otherwise
then due and payable under this Agreement and the Security
Documents.
4.2 Voluntary
prepayment
Subject to clauses 4.6 and 4.7 the Borrowers may, subject
to having given 15 Banking Days prior notice thereof to the
Agent, prepay any specified amount (such part being in an amount
of two million five hundred thousand Dollars (USD 2,500,000) or
any larger sum which is an integral multiple of such amount) of
any Tranche on any relevant Interest Payment Date without
premium or penalty.
4.3 Mandatory
Prepayment on Total Loss
On the date falling one hundred and eighty (180) days after
that on which a Mortgaged Vessel became a Total Loss or, if
earlier, on the date upon which the relevant insurance proceeds
are, or Requisition Compensation (as defined in the Mortgage for
such Vessel) is, received by the relevant Borrower (or the
Security Trustee pursuant to the Security Documents), the
Borrowers must prepay the Loan by an amount equal to the
greatest of (i) the Relevant Tranche, (ii) the amount
of the Loan on the date on which such prepayment is required to
be made multiplied by the Prepayment Ratio and (iii) such
amount as would be required to ensure that the Security Value
after such prepayment exceeds the Required Security Amount.
4.3.1 Interpretation
For the purpose of this Agreement, a Total Loss shall be deemed
to have occurred:
(a) in the case of an actual total loss of a Vessel, on the
actual date and at the time such Vessel was lost or, if such
date is not known, on the date on which such Vessel was last
reported;
(b) in the case of a constructive total loss of a Vessel,
upon the date and at the time notice of abandonment of the ship
is given to the then insurers of such Vessel (provided a claim
for total loss is admitted by such insurers) or, if such
insurers do not immediately admit such a claim, at the date and
at the time at which either a total loss is subsequently
admitted by such insurers or a total loss is subsequently
adjudged by a competent court of law or arbitration tribunal to
have occurred;
(c) in the case of a compromised or arranged total loss of
a Vessel, on the date upon which a binding agreement as to such
compromised or arranged total loss has been entered into by the
then insurers of such Vessel;
(d) in the case of Compulsory Acquisition, on the date upon
which the relevant requisition of title or other compulsory
acquisition occurs; and
(e) in the case of hijacking, theft, condemnation, capture,
seizure, arrest, detention or confiscation of a Vessel (other
than within the definition of Compulsory Acquisition) by any
Government Entity, or by persons allegedly acting or purporting
to act on behalf of any Government Entity, which deprives an
Owner of the use of such Vessel for more than thirty
(30) days, upon the expiry of the period of thirty
(30) days after the date upon which the relevant incident
occurred.
4.4 Mandatory
prepayment on sale of Mortgaged Vessel
On the date of completion of the sale of a Mortgaged Vessel the
Borrowers must prepay the Loan by an amount equal to the
greatest of (i) the Relevant Tranche, (ii) the amount
of the Loan on the date on which such prepayment is required to
be made multiplied by the Prepayment Ratio and (iii) such
amount as would be required to ensure that the Security Value
after such prepayment exceeds the Required Security Amount.
4.5 Mandatory
prepayment on termination of a Shipbuilding
Contract
If a Shipbuilding Contract is terminated, cancelled, revoked,
suspended, rescinded, transferred, novated or otherwise ceases
to remain in full force and effect for any reason except with
the consent of the Agent, the Borrowers must upon the
Agents demand prepay the Tranche financing the relevant
Borrowers obligations under that Shipbuilding Contract and
the Commitment in respect of such Tranche shall be irrevocably
cancelled upon such demand being made.
4.6 Amounts
payable on prepayment
Any prepayment of all or part of the Loan under this Agreement
shall be made together with:
4.6.1 accrued interest on the amount to be prepaid to the
date of such prepayment;
4.6.2 any additional amount payable under clauses 3.6,
6.6 or 12.2; and
4.6.3 all other sums payable by the Borrowers to the Banks
under this Agreement or any of the other Security Documents
including, without limitation any Break Costs and, if the whole
Loan is being prepaid, any accrued commitment commission payable
under clause 5.1.
4.7 Notice
of prepayment; reduction of maximum loan amount
4.7.1 Every notice of prepayment shall be effective only on
actual receipt by the Agent, shall be irrevocable, shall specify
the amount to be prepaid and the Tranche which is to be prepaid
and shall oblige the Borrowers to make such prepayment on the
date specified. Subject to the other provisions of this
Agreement and in particular Clause 2.6, no amount prepaid
under this Clause 4 in respect of the Loan may be
reborrowed.
4.7.2 Any amounts prepaid pursuant to clause 4.2 shall
be applied against the relevant Tranche in reducing the Balloon
Instalment and other outstanding repayment instalments pro rata.
4.7.3 Any amounts prepaid pursuant to clauses 4.3, 4.4
or 4.5 shall be applied against the Relevant Tranche and
thereafter against the Loan pro rata against the remaining
Tranches in accordance with clause 4.7.2.
4.7.4 The Borrowers obligations set out in
Clause 4.1.1 shall not be affected by any prepayment in
respect of the Loan pursuant to clause 4.2.
4.7.5 The Borrowers may not prepay any part of the Loan
except as expressly provided in this Agreement.
5 FEES
AND EXPENSES
5.1 Commission
5.1.1 The Borrowers agree to pay to the Agent for the
account of the Lenders pro rata in accordance with their
Commitments quarterly in arrears from the Execution Date until
the end of the Drawdown Period and on the last day of the
Drawdown Period commitment commission computed from the
Execution Date at a rate of zero point six per cent (0.60%) per
annum on the daily amount of the undrawn Loan Facility.
5.1.2 The commission referred to in clause 5.1.1 must be
paid by the Borrowers to the Agent, whether or not any part of
the Total Commitment is ever advanced and shall be
non-refundable.
5.2 Arrangement
Fee
The Borrowers shall pay to the Agent on the first Drawdown Date
an arrangement fee of USD1,125,000 for the account of the
Lenders pro rata in accordance with their Commitments.
5.3 Expenses
The Borrowers agree to reimburse the Banks on a full indemnity
basis within ten (10) days of demand all expenses
and/or
disbursements whatsoever (including without limitation legal,
printing, travel and out of pocket expenses and expenses related
to the provision of legal and insurance opinions referred to in
schedule 3) certified by the Banks or any of them as
having been incurred by them from time to time:
5.3.1 in connection howsoever with the syndication of the
Loan Facility and with the negotiation, preparation, execution
and, where relevant, registration of the Security Documents and
of any contemplated or actual amendment, or indulgence or the
granting of any waiver or consent howsoever in connection with,
any of the Security Documents (including legal fees and any
travel expenses); and
5.3.2 in contemplation or furtherance of, or otherwise
howsoever in connection with, the exercise or enforcement of, or
preservation of any rights, powers, remedies or discretions
under any of the Security Documents, or in consideration of the
Banks rights thereunder or any action proposed or taken
following the occurrence of a Default or otherwise in respect of
the moneys owing under any of the Security Documents, together
with interest at the rate referred to in clause 3.4 from
the date on which reimbursement of such expenses
and/or
disbursements were due following demand to the date of payment
(as well after as before judgment).
5.4 Value
added tax
All fees and expenses payable pursuant to this Agreement must be
paid together with value added tax or any similar tax (if any)
properly chargeable thereon in any jurisdiction. Any value added
tax chargeable in respect of any services supplied by the Banks
or any of them under this Agreement shall, on delivery of the
value added tax invoice, be paid in addition to any sum agreed
to be paid hereunder.
5.5 Stamp
and other duties
The Borrowers must pay all stamp, documentary, registration or
other like duties or taxes (including any duties or taxes
payable by any of the Banks) imposed on or in connection with
any of the Underlying Documents, the Security Documents or the
Loan or any Advance and agree to indemnify the Banks or any of
them against any liability arising by reason of any delay or
omission by the Borrowers to pay such duties or taxes.
6 PAYMENTS
AND TAXES; ACCOUNTS AND CALCULATIONS
6.1 No
set-off or counterclaim
All payments to be made by the Borrowers under any of the
Security Documents must be made in full, without any set off or
counterclaim whatsoever and, subject as provided in
clause 6.6, free and clear of any
deductions or withholdings, in USD on or before 11:00 am on the
due date in freely available funds to such account at such bank
and in such place as the Agent may from time to time specify for
this purpose. Save as otherwise provided in this Agreement or
any other relevant Security Documents, such payments shall be
for the account of all Lenders and the Agent shall distribute
such payments in like funds as are received by the Agent to the
Lenders rateably, in the proportions which their respective
Contributions bear to the aggregate of the Loan and the Advances
on the date on which such payment is made.
6.2 Payment
by the Lenders
All sums to be advanced by the Lenders to the Borrowers under
this Agreement shall be remitted in USD on the relevant Drawdown
Date to the account of the Agent at such bank as the Agent may
have notified to the Lenders and shall be paid by the Agent on
such date in like funds as are received by the Agent to the
account specified in the relevant Drawdown Notice.
6.3 Non-Banking
Days
When any payment under any of the Security Documents would
otherwise be due on a day which is not a Banking Day, the due
date for payment shall be extended to the next following Banking
Day unless such Banking Day falls in the next calendar month in
which case payment shall be made on the immediately preceding
Banking Day.
6.4 Calculations
All interest and other payments of an annual nature under any of
the Security Documents shall accrue from day to day and be
calculated on the basis of actual days elapsed and a three
hundred and sixty (360) day year.
6.5 Currency
of account
If any sum due from the Borrowers under any of the Security
Documents, or under any order or judgment given or made in
relation thereto, must be converted from the currency (the
first currency) in which the same is payable thereunder
into another currency (the second currency) for the
purpose of (i) making or filing a claim or proof against
the Borrowers, (ii) obtaining an order or judgment in any
court or other tribunal or (iii) enforcing any order or
judgment given or made in relation thereto, the Borrowers
undertake to indemnify and hold harmless the Lender from and
against any loss suffered as a result of any discrepancy 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,
judgment, claim or proof. Any amount due from the Borrowers
under this clause 6.5 shall be due as a separate debt and
shall not be affected by judgment being obtained for any other
sums due under or in respect of any of the Security Documents
and 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.
6.6 Grossing-up
for Taxes by the Borrowers
If at any time the Borrowers must make any deduction or
withholding in respect of Taxes or deduction in respect of any
royalty payment, duty, assessment or other charge or otherwise
from any payment due under any of the Security Documents for the
account of any Bank or if the Agent or the Security Trustee must
make any deduction or withholding from a payment to another Bank
or withholding in respect of Taxes from any payment due under
any of the Security Documents, the sum due from the Borrowers in
respect of such payment must be increased to the extent
necessary to ensure that, after the making of such deduction or
withholding, the relevant Bank receives on the due date for such
payment (and retains, free from any liability in respect of such
deduction or withholding), a net sum equal to the sum which it
would have received had no such deduction or withholding been
required to be made and the Borrowers must indemnify each Bank
against
any losses or costs incurred by it 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 Provided however that if any Bank or the Agent
or the Security Trustee shall be or become entitled to any Tax
credit or relief in respect of any Tax which is deducted from
any payment by the Borrowers and it actually receives a benefit
from such Tax credit or relief in its country of domicile,
incorporation or residence, the relevant Bank or the Agent or
the Security Trustee, as the case may be, shall, subject to any
laws or regulations applicable thereto, pay to the Borrowers
after such benefit is effectively received by the relevant Bank
or the Agent or the Security Trustee, as the case may be, such
amounts (which shall be conclusively certified by the Agent) as
shall ensure that the net amount actually retained by the
relevant Bank or the Agent or the Security Trustee, as the case
may be, is equal to the amount which would have been retained if
there had been no such deduction provided that
(i) nothing in this Clause shall prevent the Banks from
arranging their respective tax affairs in whichever manner they
deem suitable, (ii) the declaration by any Bank of a rebate
shall be conclusive and binding and (iii) no Bank shall be
required to disclose its tax affairs to the Borrowers. The
Borrowers must promptly deliver to the Agent any receipts,
certificates or other proof evidencing the amounts (if any) paid
or payable in respect of any deduction or withholding as
aforesaid.
6.7 Grossing-up
for Taxes by the Lenders
If at any time a Lender must make any deduction or withholding
in respect of Taxes from any payment due under any of the
Security Documents for the account of the Agent or the Security
Trustee, the sum due from such Lender in respect of such payment
must be increased to the extent necessary to ensure that, after
the making of such deduction or withholding, the Agent or, as
the case may be, the Security Trustee receives on the due date
for such payment (and retains free from any liability in respect
of such deduction or withholding) a net sum equal to the sum
which it would have received had no such deduction or
withholding been required to be made and each Lender must
indemnify the Agent and the Security Trustee against any losses
or costs incurred by it by reason of any failure of such Lender
to make any such deduction or withholding or by reason of any
increased payment not being made on the due date for such
payment.
6.8 Loan
account
Each Lender shall maintain, in accordance with its usual
practice, an account evidencing the amounts from time to time
lent by, owing to and paid to it under the Security Documents.
The Agent
and/or the
Security Trustee shall maintain a control account showing the
Loan, the Advances and other sums owing by the Borrowers under
the Security Documents and all payments in respect thereof being
made from time to time. The control account shall, in the
absence of manifest error, be prima facie evidence of the amount
from time to time owing by the Borrowers under the Security
Documents.
6.9 Agent
may assume receipt
Where any sum is to be paid under the Security Documents to the
Agent or, as the case may be, the Security Trustee for the
account of another person, the Agent or, as the case may be, the
Security Trustee may assume that the payment will be made when
due and the Agent or, as the case may be, the Security Trustee
may (but shall not be obliged to) make such sum available to the
person so entitled. If it proves to be the case that such
payment was not made to the Agent or, as the case may be, the
Security Trustee, then the person to whom such sum was so made
available must on request refund such sum to the Agent or, as
the case may be, the Security Trustee together with interest
thereon sufficient to compensate the Agent or, as the case may
be, the Security Trustee for the cost of making available such
sum up to the date of such repayment and the person by whom such
sum was payable must indemnify the Agent or, as the case may be,
the Security Trustee for any and all loss or expense which the
Agent or, as the case may be, the Security Trustee may sustain
or incur as a consequence of such sum not having been paid on
its due date.
6.10 Partial
payments
If, on any date on which a payment is due to be made by the
Borrowers under any of the Security Documents, the amount
received by the Agent from the Borrowers falls short of the
total amount of the
payment due to be made by the Borrowers on such date then,
without prejudice to any rights or remedies available to the
Agent, the Security Trustee, the Security Trustee and the
Lenders under any of the Security Documents, the Agent must
apply the amount actually received from the Borrowers in or
towards discharge of the obligations of the Borrowers under the
Security Documents in the following order, notwithstanding any
appropriation made, or purported to be made, by the Borrowers:
6.10.1 first, in or towards payment, on a pro-rata basis,
of any unpaid costs and expenses of the Agent and the Security
Trustee under any of the Security Documents;
6.10.2 secondly, in or towards payment of any fees payable
to the Arranger, the Agent or any of the other Banks under, or
in relation to, the Security Documents which remain unpaid;
6.10.3 thirdly, in or towards payment to the Lenders, on a
pro rata basis, of any accrued interest owing in respect of the
Loan which shall have become due under any of the Security
Documents but remains unpaid;
6.10.4 fourthly, in or towards repayment of the Loan which
have become due and payable and in or towards payment to the
Swap Bank of any sum which shall have become due under the
Deutscher Rahmenvertrag but remains unpaid;
6.10.5 fifthly, in or towards payment to the Lenders, on a
pro rata basis, of any Break Costs and any other sum relating to
the Loan which shall have become due under any of the Security
Documents but remains unpaid; and
The order of application set out in clauses 6.10.1 to
6.10.5 may be varied by the Agent if the Majority Lenders so
direct, without any reference to, or consent or approval from,
the Borrowers.
7 REPRESENTATIONS
AND WARRANTIES
7.1 Continuing
representations and warranties
The Borrowers represent and warrant to each Bank that:
7.1.1 Due incorporation
each of the Security Parties is duly incorporated and validly
existing in good standing, under the laws of its respective
country of incorporation, in each case, as a corporation and has
power to carry on its respective businesses as it is now being
conducted and to own their respective property and other assets
to which it has unencumbered legal and beneficial title except
as disclosed to the Agent in writing;
7.1.2 Corporate power
each of the Security Parties has power to execute, deliver and
perform its obligations and, as the case may be, to exercise its
rights under the Underlying Documents and the Security Documents
to which it is a party; all necessary corporate, shareholder and
other action has been taken to authorise the execution, delivery
and on the execution of the Security Documents performance of
the same and no limitation on the powers of the Borrowers to
borrow or any other Security Party to howsoever incur liability
and/or to
provide or grant security will be exceeded as a result of
borrowing any part of the Loan;
7.1.3 Binding obligations
the Underlying Documents and the Security Documents, when
executed, will constitute valid and legally binding obligations
of the relevant Security Parties enforceable in accordance with
their respective terms;
7.1.4 No conflict with other obligations
the execution and delivery of, the performance of their
obligations under, and compliance with the provisions of, the
Underlying Documents and the Security 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 any Security Party or other member of
the Group 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 any Security Party or
any other member of the Group is a party or is subject or by
which it or any of its property is bound,
(iii) contravene or conflict with any provision of the
constitutional documents of any Security Party or
(iv) result in the creation or imposition of, or oblige any
of the Security Parties to create, any Encumbrance (other than a
Permitted Encumbrance) on any of the undertakings, assets,
rights or revenues of any of the Security Parties;
7.1.5 No default
no Default has occurred;
7.1.6 No litigation or judgments
no Proceedings are current, pending or, to the knowledge of the
officers of any Borrower, threatened against any of the Security
Parties or any other Group Members or their assets which could
have a Material Adverse Effect and there exist no judgments,
orders, injunctions which would materially affect the
obligations of the Security Parties under the Security Documents;
7.1.7 No filings required
except for the registration of the Mortgages in the relevant
register under the laws of the relevant Flag State through the
relevant Registry, it is not necessary to ensure the legality,
validity, enforceability or admissibility in evidence of any of
the Underlying Documents or any of the Security Documents that
they or any other instrument be notarised, filed, recorded,
registered or enrolled in any court, public office or elsewhere
in any Pertinent Jurisdiction or that any stamp, registration or
similar tax or charge be paid in any Pertinent Jurisdiction on
or in relation to any of the Underlying Documents or the
Security Documents and each of the Underlying Documents and the
Security Documents is in proper form for its enforcement in the
courts of each Pertinent Jurisdiction;
7.1.8 Required Authorisations and legal compliance
all Required Authorisations have been obtained or effected and
are in full force and effect and no Security Party has in any
way contravened any applicable law, statute, rule or regulation
(including all such as relate to money laundering);
7.1.9 Choice of law
the choice of English law to govern the Underlying Documents and
the Security Documents (other than the Mortgages and the
Earnings Account Pledges, the Retention Account Pledge, the
Alpha Equity Deposit Account Pledge and the DSB Equity Deposit
Account Pledge), the choice of the law of the Flag State to
govern the Mortgages, the choice of Greek law to govern the
Earnings Account Pledges, the Alpha Equity Deposit Account
Pledge and the Retention Account Pledge, the choice of German
law to govern the DSB Equity Deposit Account Pledge and the
submissions by the Security Parties to the jurisdiction of the
English courts and the obligations of such Security Parties
associated therewith, are valid and binding;
7.1.10 No immunity
no Security Party nor any of their assets is entitled to
immunity on the grounds of sovereignty or otherwise from any
Proceedings whatsoever;
7.1.11 Financial statements correct and complete
the latest audited and unaudited consolidated financial
statements of the Corporate Guarantor in respect of the relevant
financial year as delivered to the Agent present or will present
fairly and accurately the financial position of the Corporate
Guarantor and the consolidated financial position of the Group
as at the date thereof and the results of the operations of the
Corporate Guarantor and the consolidated results of the
operations of the Group for the financial year ended on such
date and, as at such date, neither the Corporate Guarantor nor
any of its subsidiaries have any significant liabilities
(contingent or otherwise) or any unrealised or anticipated
losses which are not disclosed by, or reserved against or
provided for in, such financial statements;
7.1.12 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 Indebtedness of the Borrowers
except for obligations which are mandatorily preferred by
operation of law and not by contract;
7.1.13 Information/ Material Adverse Effect
all information, whatsoever provided by any Security Party to
the Agent in connection with the negotiation and preparation of
the Security Documents or otherwise provided hereafter in
relation to, or pursuant to this Agreement is, or will be, true
and accurate in all material respects and not misleading, does
or will not omit material facts and all reasonable enquiries
have been, or shall have been, made to verify the facts and
statements contained therein and there has not occurred any
event which could have a Material Adverse Effect on any Security
Party since such information was provided to the Agent; there
are, or will be, no other facts the omission of which would make
any fact or statement therein misleading;
7.1.14 No withholding Taxes
no Taxes anywhere are imposed whatsoever by withholding or
otherwise on any payment to be made by any Security Party under
the Underlying Documents or the Security Documents to which such
Security Party is or is to be a party or are imposed on or by
virtue of the execution or delivery by the Security Parties of
the Underlying Documents or the Security Documents or any other
document or instrument to be executed or delivered under any of
the Security Documents;
7.1.15 Use of proceeds
the Borrowers shall apply the Loan only for the purposes
specified in clauses 1.1 and 2.1;
7.1.16 The Mortgaged Vessels
throughout the Facility Period, each Mortgaged Vessel will,
following its Delivery Date, be:
(a) in the absolute sole, legal and beneficial ownership of
the relevant Owner;
(b) registered through the offices of the relevant Registry
as a ship under the laws and flag of the relevant Flag State;
(c) in compliance with the ISM Code and the ISPS Code and
operationally seaworthy and in every way fit for service;
(d) in good and sea-worthy and cargo-worthy
condition; and
(e) classed with the relevant Classification free of all
requirements and recommendations of the relevant Classification
Society.
7.1.17 Mortgaged Vessels employment
Except with the prior written consent of the Lenders there will
not be any agreement or arrangement in respect of the employment
of any Mortgaged Vessel whereby the Earnings (as defined in the
relevant Ship Security Documents) of any Mortgaged Vessel may be
shared howsoever with any other person provided that no such
consent shall be required if (i) the aggregate Earnings of
the Mortgaged Vessels are sufficient to cover the aggregate of
the Borrowers payment obligations under this Agreement and
vessel operating expenses as they fall due and (ii) no
Event of Default has occurred which is continuing;
7.1.18 Freedom from Encumbrances
no Mortgaged Vessel nor its Earnings, Insurances or Requisition
Compensation (each as defined in the relevant Ship Security
Documents) nor the Earnings Accounts, Retention Account, Equity
Deposit Accounts nor any Extended Employment Contract in respect
of such Mortgaged Vessel 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 be subject to any
Encumbrance except Permitted Encumbrances;
7.1.19 Environmental Matters
except as may already have been disclosed by the Borrowers in
writing to, and acknowledged and accepted in writing by, the
Agent:
(a) the Borrowers and, to the best of the Borrowers
knowledge and belief (having made due enquiry), their respective
Environmental Affiliates, have complied with the provisions of
all Environmental Laws;
(b) the Borrowers and, to the best of the Borrowers
knowledge and belief (having made due enquiry), their respective
Environmental Affiliates have obtained all Environmental
Approvals and are in compliance with all such Environmental
Approvals;
(c) no Environmental Claim has been made or threatened or
pending against any Borrower, or, to the best of the
Borrowers knowledge and belief (having made due enquiry),
any of their respective Environmental Affiliates; and
(d) there has been no Environmental Incident;
7.1.20 ISM and ISPS Code
With effect from the Delivery Date of its Vessel, each of the
Borrowers will comply with and continue to comply with and
procure that the Manager complies with and continues to comply
with the ISM Code, the ISPS Code and all other statutory and
other requirements relative to its business and in particular
each Borrower or the Manager will obtain and maintain a valid
DOC and SMC for each Mortgaged Vessels and that it and the
Manager will implement and continue to implement an ISM SMS;
7.1.21 Copies true and complete
the Certified Copies or originals of the Underlying Documents
delivered or to be delivered to the Agent pursuant to
clause 8.1 are, or will when delivered be, true and
complete copies or, as the case may be, originals of such
documents; and such documents constitute valid and binding
obligations of the parties thereto enforceable in accordance
with their respective terms and there have been no amendments or
variations thereof or defaults thereunder;
7.1.22 the Borrowers are the ultimate beneficiaries of the
Loan;
7.1.23 no Security Party has incurred any Indebtedness save
under this Agreement or as otherwise disclosed to the Agent in
writing or as disclosed in the Groups public filings;
7.1.24 the Corporate Guarantor and all Borrowers have filed
all tax and other fiscal returns required to be filed by any tax
authority to which they are subject;
7.1.25 no Borrower has an office in England.
7.2 Repetition
of representations and warranties
On each day throughout the Facility Period, the Borrowers shall
be deemed to repeat the representations and warranties in
clause 7 updated mutatis mutandis as if made with reference
to the facts and circumstances existing on such day.
8 UNDERTAKINGS
8.1 General
The Borrowers undertake with each Bank that, from the Execution
Date until the end of the Facility Period, they will:
8.1.1 Notice of Default and Proceedings
promptly inform the Agent of (a) any Default and of any
other circumstances or occurrence which might adversely affect
the ability of any Security Party to perform its obligations
under any of the Security Documents
and (b) as soon as the same is instituted or threatened,
details of any Proceedings involving any Security Party which
could have a material adverse effect on that Security Party
and/or the
operation of any of the Vessels (including, but not limited to
any Total Loss of a Vessel or the occurrence of any
Environmental Incident) and will from time to time, if so
requested by the Agent, confirm to the Agent in writing that,
save as otherwise stated in such confirmation, no Default has
occurred and is continuing and no such Proceedings are on foot
or threatened;
8.1.2 Authorisation
obtain or cause to be obtained, maintain in full force and
effect and comply fully with all Required Authorisations,
provide the Agent with Certified Copies of the same and do, or
cause to be done, all other acts and things which may from time
to time be necessary or desirable under any applicable law
(whether or not in the Pertinent Jurisdiction) for the continued
due performance of all the obligations of the Security Parties
under each of the Security Documents;
8.1.3 Corporate Existence/Ownership
ensure that each Security Party maintains its corporate
existence as a body corporate duly organised and validly
existing and in good standing under the laws of the Pertinent
Jurisdiction and ensure that each Borrower is owned, directly or
through other companies, by the Corporate Guarantor for the time
being;
8.1.4 Use of proceeds
use the Advances exclusively for the purposes specified in
clauses 1.1 and 2.1;
8.1.5 Pari passu
ensure that their obligations under this Agreement shall at all
times rank at least pari passu with all their other present and
future unsecured and unsubordinated Indebtedness with the
exception of any obligations which are mandatorily preferred by
law and not by contract;
8.1.6 Financial statements
send to the Agent (or procure that is sent):
(a) as soon as possible, but in no event later than
180 days after the end of each of its Financial Years,
annual audited (prepared in accordance with US GAAP by a firm of
accountants acceptable to the Agent) consolidated balance sheet
and profit and loss accounts of the Corporate Guarantor and all
companies which are owned, directly or indirectly, or controlled
by it (commencing with the Financial Year ending
31 December 2010); and
(b) as soon as possible, but in no event later than
75 days after the end of each 3 month period in each
of its Financial Years, the Corporate Guarantors unaudited
consolidated balance sheet and profit and loss accounts for that
3 month period certified as to their correctness by its
chief financial officer.
8.1.7 Reimbursement of MII & MAP Policy premiums
Whether or not any amount is borrowed under this Agreement,
reimburse the Agent on the Agents written demand the
amount of the premium payable by the Agent for the inception or,
as the case may be, extension
and/or
continuance of the MII & MAP Policy (including any
insurance tax thereon);
8.1.8 Compliance Certificates
deliver to the Agent on the earlier of (i) the date on
which the quarterly reports are delivered under
clause 8.1.6 and (ii) the date falling 75 days
after the end of the financial quarter to which they refer, a
Compliance Certificate together with such supporting information
as the Agent may require.
8.1.9 Provision of further information
provide the Agent, and procure that the Corporate Guarantor
provide the Agent, with such financial or other information
concerning any Borrower and their respective affairs,
activities, financial standing, Indebtedness and operations and
the performance of the Mortgaged Vessels as the Agent or any
Lender (acting through the Agent) may from time to time
reasonably require and all other documentation and information
as
any Lender may from time to time require in order to comply with
its, and all other relevant, know-your-customer regulations;
8.1.10 Obligations under Security Documents
duly and punctually perform each of the obligations expressed to
be imposed or assumed by them under the Security Documents and
Underlying Documents and will procure that each of the other
Security Parties will, duly and punctually perform each of the
obligations expressed to be assumed by it under the Security
Documents and the Underlying Documents to which it is a party;
8.1.11 Compliance with ISM Code
comply with, and will procure that any Operator will comply
with, and ensure that the Mortgaged Vessels and any Operator
comply 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 (as defined in
the Mortgages);
8.1.12 Withdrawal of DOC and SMC
immediately inform the Agent if there is any actual withdrawal
of their or any Operators DOC or the SMC of any Mortgaged
Vessel;
8.1.13 Issuance of DOC and SMC
and will procure that any Operator will promptly inform the
Agent of the receipt by any Borrower or any Operator of
notification that its application for a DOC or any application
for an SMC for any Mortgaged Vessel has been refused;
8.1.14 ISPS Code Compliance
and will procure that the Manager or any Operator will:
(a) maintain at all times a valid and current ISSC in
respect of each Mortgaged Vessel;
(b) immediately notify the Agent in writing of any actual
or threatened withdrawal, suspension, cancellation or
modification of the ISSC in respect of a Mortgaged
Vessel; and
(c) procure that each Mortgaged Vessel will comply at all
times with the ISPS Code;
8.1.15 Compliance with Laws and payment of taxes
and will comply with all relevant Environmental Laws, laws,
statutes and regulations and pay all taxes for which it is
liable as they fall due;
8.1.16 Charters etc.
(i) deliver to the Agent a Certified Copy of each Extended
Employment Contract upon its execution, (ii) forthwith on
the Agents request execute (a) a Charter Assignment
in respect thereof and (b) any notice of assignment
required in connection therewith and use reasonable efforts to
procure the acknowledgement of any such notice of assignment by
the relevant charterer (provided that any failure to procure the
same shall not constitute an Event of Default) and
(iii) pay all legal and other costs incurred by the Agent
in connection with any such Charter Assignments, forthwith
following the Agents demand.
8.1.17 Financial Covenants of the Corporate
Guarantors Group
procure that
(a) at no time shall the Liquidity of the Group be less
than the Minimum Liquidity;
(b) as of the earlier of (i) the Final Delivery Date
and (ii) 1 January 2013, the Net Worth of the Group
will at all times exceed USD75,000,000;
(c) as of the earlier of (i) the Final Delivery Date
and (ii) 1 January 2013, the Total Liabilities divided
by the Total Assets (adjusted for market values of vessels
calculated in accordance with Clause 8.2.2) shall be less
than 75%.
8.1.18 Inspection
the Agent, at the cost of the Borrowers and upon receipt of at
least 15 days written notice, by surveyors or other persons
appointed by it for such purpose, to board any Mortgaged Vessel
at all other reasonable times for the purpose of inspecting her
and to afford all proper facilities for such inspections and for
this purpose to give the Agent reasonable advance notice of any
intended drydocking of each Vessel (whether for the purpose of
classification, survey or otherwise) and to pay the costs in
respect of one inspection in each calendar year; and
8.1.19 Delivery
Pay to the Builder all amounts payable on delivery of the
Vessels in accordance with the relevant Shipbuilding Contract
and take, or as the case may be, ensure that the relevant
Borrower, takes delivery of the relevant Vessel.
8.1.20 Subordination
Ensure that all Indebtedness of any Borrower to its shareholders
or to any other Group Member is fully subordinated, and to
subordinate any Indebtedness issued to it by the Corporate
Guarantor, all in a form acceptable to the Agent (acting on the
instructions of the Majority Lenders).
8.1.21 Dividends
The Borrowers and Corporate Guarantor may declare or pay
dividends or distribute any of their present or future assets,
undertakings, rights or revenues in an amount not exceeding 50%
of the Net Profits for any relevant financial year to any of
their partners, members or shareholders, and the Corporate
Guarantor may make such other investments as it may require,
only if there has not occurred any Event of Default.
8.1.22 Corporate Guarantee
On the Share Acquisition Date the Borrowers shall procure the
delivery to the Security Trustee of:
(a) the Corporate Guarantee duly executed by Navios
Acquisition (and upon receipt thereof by the Security Trustee
the Corporate Guarantee which was executed on the first Drawdown
Date shall terminate and cease to be enforceable, which the
Security Trustee shall confirm in writing at that time) ;
(b) such documentation equivalent to that set out in
Schedule 3 Part A items (a)-(d) inclusive in respect
of Navios Acquisition as the Agent may require;
(c) within 10 Banking Days of the Share Acquisition Date,
the opening balance sheet of Navios Acquisition duly audited by
a firm of accountants acceptable the Lenders;
(d) a copy of the presentation given to the investors in
Navios Acquisition;
(e) a cashflow forecast for the Group for the 3 years
following the Share Acquisition Date; and
(f) evidence that Navios Acquisition is the sole
shareholder of the Shareholder and the Shareholder is the sole
shareholder of each of the Borrowers.
8.2 Security
value maintenance
8.2.1 Security shortfall
If, at any time after the first Delivery Date, the Security
Value shall be less than the Required Security Amount, the Agent
(acting on the instructions of the Majority Lenders) shall give
notice to the Borrowers requiring that such deficiency be
remedied and then the Borrowers must either:
(a) prepay within a period of thirty (30) days of the
date of receipt by the Borrowers of the Agents said notice
such part of the Delivered Tranches as will result in the
Security Value after such prepayment (taking into account any
other repayment of the Delivered Tranches made between the date
of the notice and the date of such prepayment) being equal to or
higher than the Required Security Amount; or
(b) within thirty (30) days of the date of receipt by
the Borrowers of the Agents said notice constitute to the
satisfaction of the Agent such further security for the Loan as
shall be acceptable to the
Majority Lenders having a value for security purposes (as
determined by the Agent 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
Required Security Amount as at such date.
The provisions of clauses 4.6 and 4.7 shall apply to
prepayments under clause 8.2.1(a) provided that the Agent
shall apply such prepayments (i) pro rata against the
Tranches, (ii) in reduction of the repayment instalments
under clause 4.1 pro rata and the amounts of the Loan
prepaid hereunder shall not be available to be re-borrowed.
8.2.2 Valuation of Mortgaged Vessels
Each Mortgaged Vessel shall, for the purposes of this Agreement,
be valued (at the Borrowers expense) in USD by taking a
valuation prepared by any Approved Broker appointed by the
Agent, such valuation to be made without physical inspection,
and on the basis of a sale for prompt delivery for cash at
arms length, on normal commercial terms, as between a
willing buyer and a willing seller without taking into account
the benefit or burden of any charterparty or other engagement
concerning the relevant Mortgaged Vessel to be obtained (in
addition to (a) above) at any other time as the Agent
(acting on the instructions of the Majority Lenders) shall
additionally require, at the cost of the Lenders.
The Approved Brokers valuations for each Mortgaged Vessel
on each such occasion shall constitute the Valuation Amount of
such Mortgaged Vessel for the purposes of this Agreement until
superceded by the next such valuation.
8.2.3 Information
The Borrowers undertake with the Banks to supply to the Agent
and to the Approved Broker such information concerning the
relevant Mortgaged Vessel and its condition as such shipbrokers
may require for the purpose of determining any Valuation Amount.
8.2.4 Costs
All costs in connection with the obtaining and any determining
of any Valuation Amount pursuant to Clause 8.2.2(a) and any
valuation either 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 8.2.1(b), must be paid by the Borrowers.
8.2.5 Valuation of additional security
For the purposes of this clause 8.2, the market value
(i) of any additional security over a ship (other than the
Vessels) shall be determined in accordance with
clause 8.2.2 and (ii) of any other additional security
provided or to be provided to the Banks or any of them shall be
determined by the Agent after consultation with the Lenders.
8.2.6 Documents and evidence
In connection with any additional security provided in
accordance with this clause 8.2, the Agent shall be
entitled to receive (at the Borrowers expense) such
evidence and documents of the kind referred to in
schedule 3 as may in the Agents opinion be
appropriate and such favourable legal opinions as the Agent
shall in its absolute discretion require.
8.3 Negative
undertakings
The Borrowers jointly and severally undertake with each Bank
that, from the Execution Date until the end of the Facility
Period, they will not, without the prior written consent of the
Agent (acting on the instructions of the Majority Banks):
8.3.1 Negative pledge
permit any Encumbrance (other than a Permitted Encumbrance) to
subsist, arise or be created or extended over all or any part of
their respective present or future undertakings, assets, rights
or revenues to secure or prefer any present or future
Indebtedness or other liability or obligation of any Group
Member or any other person;
8.3.2 No merger or transfer
merge or consolidate with any other person or permit any change
to the legal or beneficial ownership of their shares from that
existing at the Execution Date;
8.3.3 Disposals
sell, transfer, assign, create security or option over, pledge,
pool, abandon, lend or otherwise dispose of or cease to exercise
direct control over any part of their present or future
undertaking, assets, rights or revenues (otherwise than by
transfers, sales or disposals for full consideration in the
ordinary course of trading) whether by one or a series of
transactions related or not;
8.3.4 Other business or manager
undertake any business other than the ownership and operation of
the Ships or employ anyone other than the Manager as commercial
and technical manager of the Vessels;
8.3.5 Acquisitions
acquire any further assets other than the Vessels and rights
arising under contracts entered into by or on behalf of the
Borrowers in the ordinary course of their businesses of owning,
operating and chartering the Vessels;
8.3.6 Other obligations
incur any obligations except for obligations arising under the
Underlying Documents or the Security Documents or contracts
entered into in the ordinary course of their business of owning,
operating and chartering the Vessels;
8.3.7 No borrowing
incur any Borrowed Money except for Borrowed Money pursuant to
the Security Documents;
8.3.8 Repayment of borrowings
repay or prepay the principal of, or pay interest on or any
other sum in connection with any of their Borrowed Money except
for Borrowed Money pursuant to the Security Documents;
8.3.9 Guarantees
issue any guarantees or otherwise become directly or
contingently liable for the obligations of any person, firm, or
corporation except pursuant to the Security Documents and except
for guarantees from time to time required in the ordinary course
by any protection and indemnity or war risks association with
which a Vessel is entered, guarantees required to procure the
release of such Vessel from any arrest, detention, attachment or
levy or guarantees required for the salvage of a Vessel;
8.3.10 Loans
make any loans or grant any credit (save for normal trade credit
in the ordinary course of business) to any person or agree to do
so;
8.3.11 Sureties
permit any Indebtedness of any Borrower to any person (other
than the Banks pursuant to the Security Documents) to be
guaranteed by any person (except for guarantees from time to
time required in the ordinary course of business and in the
ordinary course by any protection and indemnity or war risks
association with which a Vessel is entered, guarantees required
to procure the release of such Vessel from any arrest,
detention, attachment or levy or guarantees or undertakings
required for the salvage of a Vessel and guarantees in favour of
the Builder in respect of any Shipbuilding Contract); or
8.3.12 Subsidiaries
form or acquire any Subsidiaries.
9 CONDITIONS
9.1 Advance
of any Advance
The obligation of each Lender to make its Commitment available
in respect of any Advance is conditional upon:
9.1.1 that, on or before the service of the first Drawdown
Notice hereunder, the Agent has received the documents described
in Part A of Schedule 3 in form and substance
satisfactory to the Agent and its lawyers;
9.1.2 that, on or before the service of the Drawdown Notice
in respect of the Advances referred to in clauses 2.5.1(a)
and 2.5.2(a), the Agent has received the documents described in
Part B of Schedule 3 in respect of the Relevant Vessel
(as defined in Schedule 3) in form and substance
satisfactory to the Agent and its lawyers;
9.1.3 that, on or before the service of the Drawdown Notice
in respect of the Advances referred to in clauses 2.5.1(b)
and 2.5.2(b), the Agent has received the documents described in
Part C of Schedule 3 in respect of the Relevant Vessel
in form and substance satisfactory to the Agent and its lawyers;
9.1.4 that, on or before service of the Drawdown Notice in
respect of Advances referred to in clause 2.5.2(c), the
Agent has received the documents described in Part D of
Schedule 3 in respect of the Relevant Vessel in form and
substance satisfactory to the Agent and its lawyers;
9.1.5 that, on or before service of the Drawdown Notice in
respect of Advances referred to in clause 2.5.2(d), the
Agent has received the documents described in Part E of
Schedule 3 in respect of the Relevant Vessel in form and
substance satisfactory to the Agent and its lawyers;
9.1.6 that, on or before service of the Drawdown Notice in
respect of Advances referred to in clauses 2.5.1(c) and
2.5.2(e), the Agent has received the documents described in
Part F of Schedule 3 in respect of the Relevant Vessel
in form and substance satisfactory to the Agent and its lawyers;
9.1.7 that, on or before service of the Drawdown Notice in
respect of Advances referred to in clauses 2.5.1(d) and
2.5.2(f), the Agent has received the documents described in
Part G of Schedule 3 in respect of the Relevant Vessel
in form and substance satisfactory to the Agent and its lawyers;
9.1.8 the representations and warranties contained in
clause 7 and clauses 4.1 and 4.2 of the Corporate
Guarantee being then true and correct as if each was made with
respect to the facts and circumstances existing at such
time; and
9.1.9 no Default having occurred and being continuing and
there being no Default which would result from the making of the
Loan.
9.2 Waiver
of conditions precedent
The conditions specified in this clause 9 are inserted
solely for the benefit of the Lenders and may be waived by the
Agent in whole or in part and with or without conditions only
with the consent of the Majority Lenders.
9.3 Further
conditions precedent
Not later than five (5) Banking Days prior to the Drawdown
Date of an Advance and not later than five (5) Banking Days
prior to any Interest Payment Date, the Agent (acting on the
instructions of the Majority Lenders) may request and the
Borrowers must, not later than two (2) Banking Days prior
to such date, deliver to the Agent (at the Borrowers
expense) on such request further favourable certificates
and/or
opinions as to any or all of the matters which are the subject
of clauses 7, 8, 9 and 10.
9.4 Release
of Shares Pledges
The Lenders agree that upon the drawdown of the final Advance in
respect of a Tranche, and receipt of a Negative Pledge in
respect of the Owner of the Vessel financed by that Tranche, the
Security Trustee shall (provided no Event of Default has
occurred) release the Shares Pledge in respect of that Owner.
10 EVENTS
OF DEFAULT
10.1 Events
Each of the following events shall constitute an Event of
Default (whether such event shall occur voluntarily or
involuntarily or by operation of law or regulation or in
connection with any judgment, decree or order of any court or
other authority or otherwise, howsoever):
10.1.1 Non-payment: any Security
Party fails to pay any sum payable by it under any of the
Security Documents at the time, in the currency and in the
manner stipulated in the Security Documents or the Underlying
Documents (and so that, for this purpose, sums payable
(i) under clauses 3.1 and 4.1 shall be treated as
having been paid at the stipulated time if (aa) received by the
Agent within two (2) days of the dates therein referred to
and (bb) such delay in receipt is caused by administrative or
other delays or errors within the banking system and
(ii) on demand shall be treated as having been paid at the
stipulated time if paid within two (2) Banking Days of
demand); or
10.1.2 Breach of Insurance and certain other
obligations: any Owner or, as the context may
require, the Manager or any other person fails to obtain
and/or
maintain the Insurances (as defined in, and in accordance with
the requirements of, the Ship Security Documents) for any of the
Mortgaged Vessels 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 a Borrower commits any
breach of or omits to observe any of the obligations or
undertakings expressed to be assumed by them under
clause 8; or
10.1.3 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
Security Documents (other than those referred to in
clauses 10.1.1 and 10.1.2 above) unless such breach or
omission, in the opinion of the Agent (following consultation
with the Banks) is capable of remedy, in which case the same
shall constitute an Event of Default if it has not been remedied
within fifteen (15) days of the occurrence thereof; or
10.1.4 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 Security Documents or in any notice, certificate or
statement referred to in or delivered under any of the Security
Documents is or proves to have been incorrect or misleading in
any material respect; or
10.1.5 Cross-default: any
Indebtedness of any Borrower or any Indebtedness of any Security
Party in an amount exceeding three million Dollars
(USD3,000,000) is not paid when due (subject to applicable grace
periods) or any such Indebtedness of any Borrower or any
Security Party becomes (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 Borrower or Security Party of a
voluntary right of prepayment), or any creditor of a Borrower or
any Security Party becomes entitled to declare any such
Indebtedness due and payable or any facility or commitment
available to any Borrower or any Security Party relating to
Indebtedness is withdrawn, suspended or cancelled by reason of
any default (however described) of the person concerned; or
10.1.6 Execution: any uninsured
judgment or order made against any Security Party is not stayed,
appealed against or complied with within fifteen (15) days
or a creditor attaches or takes possession of, or a distress,
execution, sequestration or other 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
within thirty (30) days; or
10.1.7 Insolvency: any Security
Party is unable or admits inability to pay its debts as they
fall due; suspends making payments on any of its debts or
announces an intention to do so; becomes insolvent; or any
Security Party has negative net worth (taking into account
contingent liabilities); or suffers the declaration by any
court, liquidator, receiver or administrator of a moratorium in
respect of any of its Indebtedness; or
10.1.8 Reduction or loss of
capital: a meeting is convened by any
Security Party (other than the Corporate Guarantor) without the
Agents prior written consent, for the purpose of passing
any resolution to purchase, reduce or redeem any of its share
capital without the Agents prior written consent; or
10.1.9 Dissolution: any corporate
action, Proceedings or other steps are taken to dissolve or
wind-up any
Security Party or an order is made or resolution passed for the
dissolution or winding up of any Security Party or a notice is
issued convening a meeting for such purpose; or
10.1.10 Administration: any
petition is presented, notice given or other steps are taken
anywhere to appoint an administrator of any Security Party or
the Agent reasonably believes that any such petition or other
step is imminent or an administration order is made in relation
to any Security Party; or
10.1.11 Appointment of receivers and
managers: any administrative or other
receiver is appointed anywhere of any Security Party or any part
of its assets
and/or
undertaking or any other steps are taken to enforce any
Encumbrance over all or any part of the assets of any Security
Party; or
10.1.12 Compositions: any
corporate action, legal proceedings or other procedures or steps
are taken, or negotiations commenced, by any Security Party or
by any of its creditors (other than the Corporate Guarantor) or
any legal proceedings are taken in respect of the Corporate
Guarantor, 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; or
10.1.13 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
reasonable opinion of the Agent, appears in that country or
territory to correspond with, or have an effect equivalent or
similar to, any of those mentioned in clauses 10.1.6 to
10.1.12 (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
10.1.14 Cessation of business: any
Security Party suspends or ceases or threatens to suspend or
cease to carry on its business without the prior written consent
of the Agent, such consent not to be unreasonably
withheld; or
10.1.15 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 Entity; or
10.1.16 Invalidity: any of the
Security Documents and the Underlying 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 Security Documents and
the Underlying 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
10.1.17 Unlawfulness: any
Unlawfulness occurs or 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 Security
Documents or for a Bank to exercise the rights or any of them
vested in it under any of the Security Documents or
otherwise; or
10.1.18 Repudiation: any Security
Party repudiates any of the Security Documents or does or causes
or permits to be done any act or thing evidencing an intention
to repudiate any of the Security Documents; or
10.1.19 Encumbrances
enforceable: any Encumbrance (other than
Permitted Liens) in respect of any of the property (or part
thereof) which is the subject of any of the Security Documents
becomes enforceable; or
10.1.20 Arrest: a Mortgaged Vessel
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 that Owner shall fail to procure the
release of such Mortgaged Vessel within a period of thirty
(30) days thereafter (this clause does not include capture
of a Vessel by pirates); or
10.1.21 Registration: the
registration of a Mortgaged Vessel under the laws and flag of
the relevant Flag State is cancelled or terminated without the
prior written consent of the Majority Banks; or
10.1.22 Unrest: the Flag State of
a Mortgaged Vessel or the country in which any Security Party is
incorporated or domiciled becomes involved in hostilities or
civil war or there is a seizure of power in the Flag State by
unconstitutional means unless the Owner of the Vessel registered
in such Flag State shall have transferred its Vessel onto a new
flag acceptable to the Banks within sixty (60) days of the
start of such hostilities or civil war or seizure of
power; or
10.1.23 Environmental
Incidents: an Environmental Incident occurs
which gives rise, or may give rise, to an Environmental Claim
which could, in the opinion of the Agent be expected to have a
material adverse effect (i) on the business, assets or
financial condition of any Security Party or the Group taken as
a whole or (ii) on the security constituted by any of the
Security Documents or the enforceability of that security in
accordance with its terms; or
10.1.24 P&I: an Owner or the
Manager or any other person fails or omits to comply with any
requirements of the protection and indemnity association or
other insurer with which a Mortgaged Vessel is entered for
insurance or insured against protection and indemnity risks
(including oil pollution risks) to the effect that any cover
(including, without limitation, any cover in respect of
liability for Environmental Claims arising in jurisdictions
where such Mortgaged Vessel operates or trades) is or may be
liable to cancellation, qualification or exclusion at any
time; or
10.1.25 Material events: any other
event occurs or circumstance arises which, in the opinion of the
Agent (following consultation with the Banks), is likely
materially and adversely to affect either (i) the ability
of any Security Party to perform all or any of its obligations
under or otherwise to comply with the terms of any of the
Security Documents or (ii) the security created by any of
the Security Documents; or
10.1.26 Required
Authorisations: any Required Authorisation is
revoked or withheld or modified or is otherwise not granted or
fails to remain in full force and effect or if any exchange
control or other law or regulation shall exist which would make
any transaction under the Security Documents or the continuation
thereof, unlawful or would prevent the performance by any
Security Party of any term of any of the Security Documents;
10.1.27 Ownership: there is any
change in the ownership of any Borrower without the prior
written consent of the Agent or (following the Share Acquisition
Date) the number of shares of and in Navios Acquisition owned by
Navios Maritime Holdings Inc., Mrs. Angeliki Frangou and
their respective affiliates in aggregate falls below 30% of the
issued shares of Navios Acquisition; or
10.1.28 Money Laundering: any
Security Party is in breach of or fails to observe any law,
requirement, measure or procedure implemented to combat
money laundering as defined in Article 1 of the
Directive (91/308 EEC) of the Council of the European
Communities; or
10.1.29 eutscher
Rahmenvertrag: (i) an Event of Default
or Potential Event of Default (or the equivalent under the
Deutscher Rahmenvertrag) has occurred and is continuing under
the Deutscher Rahmenvertrag or (ii) an Early Termination
Date (as defined in the Deutscher Rahmenvertrag) has occurred or
been effectively designated under the Deutscher Rahmenvertrag or
(iii) a person entitled to do so gives notice of an Early
Termination Date (as defined in the Deutscher Rahmenvertrag) or
(iv) the Deutscher Rahmenvertrag is terminated, cancelled,
suspended, rescinded or revoked or otherwise ceases to remain in
full force and effect for any reason.
10.2 Acceleration
The Agent may, and if so requested by the Majority Lenders
shall, without prejudice to any other rights of the Lenders, at
any time after the happening of an Event of Default by notice to
the Borrowers declare that:
10.2.1 the obligation of each Lender to make its Commitment
available shall be terminated, whereupon the Commitment shall be
reduced to zero forthwith; and/or
10.2.2 the Loan and all interest accrued and all other sums
payable whatsoever under the Security Documents have become due
and payable, whereupon the same shall, immediately or in
accordance with the terms of such notice, become due and payable.
10.3 Demand
Basis
If, under clause 10.2.2, the Agent has declared the Loan to
be due and payable on demand, at any time thereafter the Agent
may (and if so instructed by the Majority Lenders shall) by
written notice to the Borrowers (a) demand repayment of the
Loan on such date as may be specified whereupon, regardless of
any other provision of this Agreement, 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.
11 INDEMNITIES
11.1 General
indemnity
The Borrowers agree to indemnify each Bank on demand, without
prejudice to any of such Banks other rights under any of
the Security Documents, against any loss (including loss of
Margin) or expense (including, without limitation, Break Costs)
which such Bank shall certify as sustained by it as a
consequence of any Default, any prepayment of the Loan being
made under clauses 4.2, 4.3, 4.4, 4.5, 8.2.1(a) or 12.1 or
any other repayment or prepayment 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;
and/or any
Advance not being made for any reason (excluding any default by
the Agent, the Security Trustee or any Lender) after the
Drawdown Notice for such Advance has been given.
11.2 Environmental
indemnity
The Borrowers shall indemnify each Bank on demand and hold it
harmless from and against all costs, claims, expenses, payments,
charges, losses, demands, liabilities, actions, Proceedings,
penalties, fines, damages, judgements, orders, sanctions or
other outgoings of whatever nature which may be incurred or made
or asserted whensoever against such Bank at any time, whether
before or after the repayment in full of principal and interest
under this Agreement, arising howsoever out of an Environmental
Claim made or asserted against such Bank which would not have
been, or been capable of being, made or asserted against such
Bank had it not entered into any of the Security Documents or
been involved in any of the resulting or associated transactions.
11.3 Capital
adequacy and reserve requirements indemnity
The Borrowers shall promptly indemnify each Lender on demand
against any cost incurred or loss suffered by such Lender as a
result of its complying with (i) the minimum reserve
requirements from time to time of the European Central Bank
(ii) any capital adequacy directive of the European Union
and/or
(iii) any revised framework for international convergence
of capital measurements and capital standards
and/or any
regulation imposed by any Government Entity in connection
therewith,
and/or in
connection with maintaining required reserves with a relevant
national central bank to the extent that such compliance or
maintenance relates to such Lenders Commitment
and/or
Contribution or deposits obtained by it to fund the whole or
part thereof and to the extent such cost or loss is not
recoverable by such Lender under clause 12.2.
12 UNLAWFULNESS
AND INCREASED COSTS
12.1 Unlawfulness
If it is or becomes contrary to any law, directive or regulation
for any Lender to contribute to an Advance or to maintain its
Commitment or fund its Contribution to the Loan or any Advance,
such Lender shall promptly, through the Agent, give notice to
the Borrowers whereupon (a) such Lenders Contribution
and Commitment shall be reduced to zero and (b) the
Borrowers shall be obliged to prepay such Lenders
Contribution either (i) forthwith or (ii) on a future
specified date not being earlier than the latest date permitted
by the relevant law, directive or regulation together with
interest accrued to the date of prepayment and all other sums
payable by the Borrowers under this Agreement.
12.2 Increased
costs
If the result of any change in, or in the interpretation or
application of, or the introduction of, any law or any
regulation, request or requirement (whether or not having the
force of law, but, if not having the force of law, with which a
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, is to:
12.2.1 subject any Lender to Taxes or change the basis of
Taxation of any Lender with respect to any payment under any of
the Security Documents (other than Taxes or Taxation on the
overall net income, profits or gains of such Lender imposed in
the jurisdiction in which its principal or lending office under
this Agreement is located); and/or
12.2.2 increase the cost to, or impose an additional cost
on, any Lender or its holding company in making or keeping such
Lenders Commitment available or maintaining or funding all
or part of such Lenders Contribution; and/or
12.2.3 reduce the amount payable or the effective return to
any Lender under any of the Security Documents; and/or
12.2.4 reduce any Lenders or its holding
companys 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 such Lenders obligations under any of
the Security Documents; and/or
12.2.5 require any Lender or its holding company to make a
payment or forgo a return on or calculated by reference to any
amount received or receivable by such Lender under any of the
Security Documents; and/or
12.2.6 require any 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 its
Contribution or the Loan from its capital for regulatory
purposes,
then and in each such case (subject to clause 12.3):
(a) such Lender shall notify, via the Agent, the Borrowers
in writing of such event promptly upon its becoming aware of the
same; and
(b) the Borrowers shall on demand made at any time whether
or not such Lenders Contribution has been repaid, pay to
the Agent for the account of such Lender the amount which such
Lender specifies (in a certificate setting forth the basis of
the computation of such amount but not including any matters
which such Lender or its holding company regards as
confidential) is required to compensate such Lender
and/or (as
the case may be) its holding company for such liability to
Taxes, cost, reduction, payment , forgone return or loss.
For the purposes of this clause 12.2 holding
company means the company or entity (if any) within the
consolidated supervision of which a Lender is included.
12.3 Exception
Nothing in clause 12.2 shall entitle any 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 the
subject of an additional payment under clause 6.6.
13 APPLICATION
OF MONEYS, SET OFF, PRO-RATA PAYMENTS AND
MISCELLANEOUS
13.1 Application
of moneys
All moneys received by the Agent
and/or the
Security Trustee under or pursuant to any of the Security
Documents and expressed to be applicable in accordance with the
provisions of this clause 13.1 or in a manner determined in
the Security Trustees or (as the case may be) the
Agents discretion, shall be applied in the following
manner:
13.1.1 first, in or towards payment, on a pro-rata basis,
of any unpaid costs and expenses of the Banks or any of them
under any of the Security Documents;
13.1.2 secondly, in or towards payment of any fees payable
to the Arranger, the Agent or any of the other Banks under, or
in relation to, the Security Documents which remain unpaid;
13.1.3 thirdly, in or towards payment to the Banks, on a
pro rata basis, of any accrued interest owing in respect of the
Loan which shall have become due under any of the Security
Documents but remains unpaid;
13.1.4 fourthly, in or towards repayment of the Loan
(whether the same is due and payable or not); and
13.1.5 fifthly, in or towards payment to the Lenders, on a
pro rata basis any Break Costs and any other sum relating to the
Loan which shall have become due under any of the Security
Documents but remains unpaid;
13.1.6 sixthly, in or towards payment to the Swap Bank of
any sum which shall have become due under the Deutscher
Rahmenvertrag but remains unpaid;
13.1.7 seventhly, the surplus (if any) shall be paid to the
Borrowers or to whomsoever else may then be entitled to receive
such surplus.
13.2 Set-off
13.2.1 Each Borrower irrevocably authorises each Bank
(without prejudice to any of such Banks rights at law, in
equity or otherwise), at any time and without notice to the
Borrowers, to apply any credit balance to which any Borrower is
then entitled standing upon any account of any Borrower with any
branch of such Bank in or towards satisfaction of any sum due
and payable from the Borrowers to such Bank under any of the
Security Documents. For this purpose, each Bank is authorised to
purchase with the moneys standing to the credit of such account
such other currencies as may be necessary to effect such
application.
13.2.2 No Bank shall be obliged to exercise any right given
to it by this clause 13.2. Each Bank shall notify the
Borrowers through the Agent forthwith upon the exercise or
purported exercise of any right of set off giving full details
in relation thereto and the Agent shall inform the other Banks.
13.2.3 Nothing in this clause 13.2 shall be effective
to create a charge or other security interest.
13.3 Pro
rata payments
13.3.1 If at any time any Lender (the Recovering
Lender) receives or recovers any amount owing to it by
the Borrowers under this Agreement (other than pursuant to any
other Security Document) by direct payment, set-off or in any
manner other than by payment through the Agent pursuant to
clauses 6.1 or 6.9 (not being a payment received from a
Transferee Bank or a sub-participant in such Lenders
Contribution or any other payment of an amount due to the
Recovering Lender for its sole account pursuant to
clauses 3.6, 5, 6.6, 11.1, 11.2, 11.3, 12.1, or 12.2), the
Recovering Lender shall, within two (2) Banking Days of
such receipt or recovery (a Relevant Receipt)
notify the Agent of the amount of the Relevant Receipt. If the
Relevant
Receipt exceeds the amount which the Recovering Lender would
have received if the Relevant Receipt had been received by the
Agent and distributed pursuant to clause 6.1 or 6.10 (as
the case may be) then:
(a) within two (2) Banking Days of demand by the
Agent, the Recovering Lender shall pay to the Agent an amount
equal (or equivalent) to the excess;
(b) the Agent shall treat the excess amount so paid by the
Recovering Lender as if it were a payment made by the Borrowers
and shall distribute the same to the Lenders (other than the
Recovering Lenders) in accordance with clause 6.10; and
(c) as between the Borrowers and the Recovering Lender the
excess amount so re-distributed shall be treated as not having
been paid but the obligations of the Borrowers to the other
Lenders shall, to the extent of the amount so re-distributed to
them, be treated as discharged.
13.3.2 If any part of the Relevant Receipt subsequently has
to be wholly or partly refunded by the Recovering Lender
(whether to a liquidator or otherwise) each Lender to which any
part of such Relevant Receipt was so re-distributed shall on
request from the Recovering Lender repay to the Recovering
Lender such Lenders pro-rata share of the amount which has
to be refunded by the Recovering Lender.
13.3.3 Each Lender shall on request supply to the Agent
such information as the Agent may from time to time request for
the purposes of this clause 13.3.
13.3.4 Notwithstanding the foregoing provisions of this
clause 13.3, no Recovering Lender shall be obliged to share
any Relevant Receipt which it receives or recovers pursuant to
Proceedings taken by it to recover any sums owing to it under
this Agreement with any other party which has a legal right to,
but does not, either join in such Proceedings or commence and
diligently pursue separate Proceedings to enforce its rights in
the same or another court (unless the Proceedings instituted by
the Recovering Lender are instituted by it without prior notice
having been given to such party through the Agent).
13.4 No
release
For the avoidance of doubt it is hereby declared that failure by
any Recovering Lender to comply with the provisions of
clause 13.3 shall not release any other Recovering Lender
from any of its obligations or liabilities under
clause 13.3.
13.5 No
charge
The provisions of this clause 13 shall not, and shall not
be construed so as to, constitute a charge or create or declare
a trust by a Lender over all or any part of a sum received or
recovered by it in the circumstances mentioned in
clause 13.3.
13.6 Further
assurance
Each Borrower undertakes with each Bank that the Security
Documents shall both at the date of execution and delivery
thereof and throughout the Facility Period be valid and binding
obligations of the respective parties thereto which, with the
rights of each Lender thereunder, are enforceable in accordance
with their respective terms and that they will, at their
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
Majority Lenders may be necessary or desirable for perfecting
the security contemplated or constituted by the Security
Documents.
13.7 Conflicts
In the event of any conflict between this Agreement and any of
the other Security Documents, the provisions of this Agreement
shall prevail.
13.8 No
implied waivers, remedies cumulative
No failure or delay on the part of any of the Banks to exercise
any power, right or remedy under any of the Security Documents
shall operate as a waiver thereof, nor shall any single or
partial exercise by any Bank of any power, right or remedy
preclude any other or further exercise thereof or the exercise
of any other power, right or remedy. The remedies provided in
the Security Documents are cumulative and are not exclusive of
any remedies provided by law. No waiver by any Bank shall be
effective unless it is in writing.
13.9 Severability
If any provision of this Agreement is prohibited, invalid,
illegal or unenforceable in any jurisdiction, such prohibition,
invalidity, illegality or unenforceability shall not affect or
impair howsoever the remaining provisions thereof or affect the
validity, legality or enforceability of such provision in any
other jurisdiction.
13.10 Force
Majeure
Regardless of any other provision of this Agreement, none of the
Banks shall be liable for any failure to perform the whole or
any part of this Agreement resulting directly or indirectly from
(i) the action or inaction or purported action of any
governmental or local authority (ii) any strike, lockout,
boycott or blockade (including any strike, lockout, boycott or
blockade effected by or upon any Bank or any of its
representatives or employees) (iii) any act of God
(iv) any act of war (whether declared or not) or terrorism
(v) any failure of any information technology or other
operational systems or equipment affecting any Bank or
(vi) any other circumstances whatsoever outside any
Banks control.
13.11 Amendments
This Agreement may be amended or varied only by an instrument in
writing executed by all parties hereto who irrevocably agree
that the provisions of this clause 13.11 may not be waived
or modified except by an instrument in writing to that effect
signed by all of them.
13.12 Counterparts
This Agreement may be executed in any number of counterparts and
all such counterparts taken together shall be deemed to
constitute one and the same agreement which may be sufficiently
evidenced by one counterpart.
13.13 English
language
All documents required to be delivered under
and/or
supplied whensoever in connection howsoever with any of the
Security Documents and all notices, communications, information
and other written material whatsoever given or provided in
connection howsoever therewith must either be in the English
language or accompanied by an English translation certified by a
notary, lawyer or consulate acceptable to the Agent.
14 ACCOUNTS
AND RETENTIONS
14.1 General
Each Borrower undertakes with each Bank that it will ensure that:
14.1.1 it will on or before the Delivery Date in respect of
its Vessel, open an Earnings Account in its name; and
14.1.2 all moneys payable to any Owner in respect of the
Earnings (as defined in the relevant Mortgage) of its Vessel
shall, unless and until the Agent (acting on the instructions of
the Majority Lenders) directs to the contrary pursuant to the
provisions of the relevant Mortgage, be paid to the Earnings
Account, Provided however that if any of the moneys paid to any
Earnings Account are payable in a currency other than USD, they
shall be paid to a sub-account of that Earnings Account
denominated in such currency (except that if the Shareholder
fails to open such a sub-account, the relevant Account Bank
shall then convert such moneys into
USD at that Account Banks spot rate of exchange at the
relevant time for the purchase of USD with such currency and the
term spot rate of exchange shall include any premium
and costs of exchange payable in connection with the purchase of
USD with such currency).
14.2 Earnings
Accounts: withdrawals
Any sums standing to the credit of the Earnings Accounts may be
applied from time to time (i) firstly to make the payments
required under this Agreement, (ii) secondly, subject to
there being no breach of Clause 14.3 and to no Event of Default
having occurred, in the operation of the Mortgaged Vessels and
(iii) subject to no Event of Default having occurred and to
there being at any time sufficient funds to pay amounts due
under (i) and (ii) above as they fall due, thirdly for
the general corporate purposes of the Borrowers.
14.3 Retention
Account: credits and withdrawals
14.3.1 The Borrowers undertake with each Bank that,
throughout the Facility Period, they will procure that, on each
Retention Date there is paid (whether from the Earnings Accounts
or elsewhere) to the Retention Account, the Retention Amount for
such date.
14.3.2 Unless and until there shall occur an Event of
Default (whereupon the provisions of clause 14.5 shall
apply), all Retention Amounts credited to the Retention Account
together with interest from time to time accruing or at any time
accrued thereon must be applied by the relevant Account Bank
(and the Borrowers hereby irrevocably authorise that Account
Bank so to apply the same) upon each Repayment Date
and/or on
each day that interest is payable on the Loan or a Tranche
pursuant to clause 3.1, in or towards payment to the Agent
of the instalment then falling due for repayment or, as the case
may be, the amount of interest then due. Each such application
by such Account Bank shall constitute a payment in or towards
satisfaction of the Borrowers corresponding payment
obligations under this Agreement but shall be strictly without
prejudice to the obligations of the Borrowers to make any such
payment to the extent that the aforesaid application by the said
Account Bank is insufficient to meet the same.
14.3.3 Unless the Agent (acting on the instructions of the
Majority Banks) otherwise agrees in writing and subject to this
clause 14.3.2, Borrowers shall not be entitled to withdraw
any moneys from the Retention Account at any time during the
Facility Period.
14.4 Application
of accounts
At any time after the occurrence of an Event of Default, the
Agent may (and on the instructions of the Majority Lenders
shall), without notice to the Borrowers, instruct the Account
Banks to apply all moneys then standing to the credit of the
Earnings Accounts
and/or the
Retention Account
and/or the
Equity Deposit Accounts (together with interest from time to
time accruing or accrued thereon) in or towards satisfaction of
any sums due to the Banks or any of them under the Security
Documents in the manner specified in clause 13.1.
14.5 Charging
of accounts
The Earnings Accounts, the Retention Account and the Equity
Deposit Accounts and all amounts from time to time standing to
the credit thereof shall be subject to the security constituted
and the rights conferred by the Earnings Account Pledges, the
Retention Account Pledge and the Equity Deposit Account Pledges
respectively.
14.6 Equity
Deposit Accounts
The aggregate credit balances on the Equity Deposit Accounts
shall at no time be less than the difference between
(i) the aggregate of unpaid instalments under the
Shipbuilding Contracts and (ii) the aggregate of the
undrawn Commitments and the Borrowers may on each Drawdown Date
apply sums from the Equity Deposit Accounts equally in payment
of the balance (after taking into account the relevant Advance)
of the instalment then payable to the Builder.
15 ASSIGNMENT,
TRANSFER AND LENDING OFFICE
15.1 Benefit
and burden
This Agreement shall be binding upon, and enure for the benefit
of, the Banks and the Borrowers and their respective successors
in title.
15.2 No
assignment by Borrowers
No Borrower may assign or transfer any of its rights or
obligations under this Agreement.
15.3 Transfers
by Banks
any Lender (the Transferor Lender) may at any
time cause all or any part of its rights, benefits
and/or
obligations under this Agreement and the other Security
Documents to be transferred to another first class international
bank or financial institution (in either case a
Transferee Lender) (i) if such transfer
is to another branch, a subsidiary or affiliate of such Lender
and (ii) otherwise reasonably acceptable to the Borrowers,
in each case by delivering to the Agent a Transfer Certificate
duly completed and duly executed by the Transferor Lender and
the Transferee Lender provided that any Transferee Lender
shall, before transferring its right, benefits and obligations
to any other bank or financial institution, give notice thereof
to the other Lenders, who shall have the option, to be exercised
by notice in writing, to acquire all its part of the rights,
benefits and obligations of the Transferee Lender, in which case
the Transferor Lender shall transfer the same to that Lender or
Lenders in accordance with this Clause 15.3. No such
transfer is binding on, or effective in relation to, the
Borrowers or the Agent unless (i) it is effected or
evidenced by a Transfer Certificate which complies with the
provisions of this clause 15.3 and is signed by or on
behalf of the Transferor Lender, the Transferee Lender and the
Agent (on behalf of itself, the Borrowers and the other Banks)
and (ii) such transfer of rights under the other Security
Documents has been effected and registered. Upon signature of
any such Transfer Certificate by the Agent, which signature
shall be effected as promptly as is practicable after such
Transfer Certificate has been delivered to the Agent, and
subject to the terms of such Transfer Certificate, such Transfer
Certificate shall have effect as set out below.
The following further provisions shall have effect in relation
to any Transfer Certificate:
15.3.1 a Transfer Certificate may be in respect of a
Lenders rights in respect of all, or part of, its
Commitment and shall be in respect of the same proportion of its
Contribution;
15.3.2 a Transfer Certificate shall only be in respect of
rights and obligations of the Transferor Lender in its capacity
as a Lender and shall not transfer its rights and obligations
(if applicable) as the Agent
and/or
Security Trustee, or in any other capacity, as the case may be
and such other rights and obligations may only be transferred in
accordance with any applicable provisions of this Agreement;
15.3.3 a Transfer Certificate shall take effect in
accordance with English law as follows:
(a) to the extent specified in the Transfer Certificate,
the Transferor Lenders payment rights and all its other
rights (other than those referred to in clause 15.3.2
above) under this Agreement are assigned to the Transferee
Lender absolutely, free of any defects in the Transferor
Lenders title and of any rights or equities which the
Borrowers had against the Transferor Lender and the Transferee
Lender assumes all obligations of the Transferor Lender as are
transferred by such Transfer Certificate;
(b) the Transferor Lenders Commitment is discharged
to the extent specified in the Transfer Certificate;
(c) the Transferee Lender becomes a Lender with a
Contribution
and/or a
Commitment in respect of the Loan Facility of the amounts
specified in the Transfer Certificate;
(d) the Transferee Lender becomes bound by all the
provisions of this Agreement and the Security Documents which
are applicable to the Lenders generally, including those about
pro-rata sharing and the exclusion of liability on the part of,
and the indemnification of, the Agent and the Security Trustee
and to
the extent that the Transferee Lender becomes bound by those
provisions, the Transferor Lender ceases to be bound by them;
(e) an Advance or part of an Advance which the Transferee
Lender makes after the Transfer Certificate comes into effect
ranks in point of priority and security in the same way as it
would have ranked had it been made by the Transferor Lender,
assuming that any defects in the Transferor Lenders title
and any rights or equities of any Security Party against the
Transferor Lender had not existed; and
(f) the Transferee Lender becomes entitled to all the
rights under this Agreement which are applicable to the Lenders
generally, including but not limited to those relating to the
Majority Lenders and those under clauses 3.6, 5 and 12 and
to the extent that the Transferee Lender becomes entitled to
such rights, the Transferor Lender ceases to be entitled to them;
15.3.4 the rights and equities of the Borrowers or of any
other Security Party referred to above include, but are not
limited to, any right of set-off and any other kind of
cross-claim; and
15.3.5 the Borrowers, the Account Banks, the Security
Trustee, the Agent and the Lenders hereby irrevocably authorise
and instruct the Agent to sign any such Transfer Certificate on
their behalf and undertake not to withdraw, revoke or qualify
such authority or instruction at any time. Promptly upon its
signature of any Transfer Certificate, the Agent shall notify
the Borrowers, the Transferor Lender and the Transferee Lender.
15.4 Reliance
on Transfer Certificate
15.4.1 The Agent shall be entitled to rely on any Transfer
Certificate believed by it to be genuine and correct and to have
been presented or signed by the persons by whom it purports to
have been presented or signed, and shall not be liable to any of
the parties to this Agreement and the Security Documents for the
consequences of such reliance.
15.4.2 The Agent shall at all times during the continuation
of this Agreement maintain a register in which it shall record
the name, Commitments, Contributions and administrative details
(including the lending office) from time to time of the Lenders
holding a Transfer Certificate and the date at which the
transfer referred to in such Transfer Certificate held by each
Lender was transferred to such Lender, and the Agent shall make
the said register available for inspection by any Lender or the
Borrowers during normal banking hours upon receipt by the Agent
of reasonable prior notice requesting the Agent to do so.
15.4.3 The entries on the said register shall, in the
absence of manifest error, be conclusive in determining the
identities of the Commitments, the Contributions and the
Transfer Certificates held by the Lenders from time to time and
the principal amounts of such Transfer Certificates and may be
relied upon by all parties to this Agreement.
15.5 Transfer
fees and expenses
Any Transferor Lender who causes the transfer of all or any part
of its rights, benefits
and/or
obligations under the Security Documents in accordance with the
foregoing provisions of this clause 15, must, on each
occasion, pay to the Agent a transfer fee of one thousand five
hundred Dollars (USD 1,500) and, in addition, be responsible for
all other costs and expenses (including, but not limited to,
reasonable legal fees and expenses) associated therewith and all
value added tax thereon, as well as those of the Agent (in
addition to its fee as aforesaid) in connection with such
transfer.
15.6 Documenting
transfers
If any Lender assigns all or any part of its rights or transfers
all or any part of its rights, benefits
and/or
obligations as provided in clause 15.3, each Borrower
undertakes, immediately on being requested to do so by the Agent
and at the cost of the Transferor Lender, to enter into, and
procure that the other Security Parties shall (at the cost of
the Transferor Lender) enter into, such documents as may be
necessary or desirable to transfer to the Transferee Lender all
or the relevant part of such Lenders interest in the
Security Documents
and all relevant references in this Agreement to such Lender
shall thereafter be construed as a reference to the Transferor
Lender
and/or its
Transferee Lender (as the case may be) to the extent of their
respective interests.
15.7 Sub-Participation
A Lender may sub-participate all or any part of its rights
and/or
obligations under the Security Documents at its own expense
without the consent of, or notice to, the Borrowers but with
prior written notice to the other Lenders.
15.8 Lending
office
Each Lender shall lend through its office at the address
specified in schedule 1 or, as the case may be, in any
relevant Transfer Certificate or through any other office of
such Lender selected from time to time by it through which such
Lender wishes to lend for the purposes of this Agreement. If the
office through which a Lender is lending is changed pursuant to
this clause 15.8, such Lender shall notify the Agent
promptly of such change and the Agent shall notify the
Borrowers, the Security Trustee, the Agent, the Account Banks
and the other Lenders.
15.9 Disclosure
of information
A Bank may disclose to any of its branches and affiliates, its
head office, any relevant fiscal authorities a prospective
assignee, transferee or to any other person who may propose
entering into contractual relations with such Bank in relation
to this Agreement
and/or the
Deutscher Rahmenvertrag such information about the Borrowers
and/or the
other Security Parties
and/or the
Loan and/or
the Security Documents as such Bank shall consider appropriate
in relation to any transfer
and/or
enforcement hereunder.
16 ARRANGER,
AGENT AND SECURITY TRUSTEE
16.1 Appointment
of the Agent
The Swap Bank and each Lender irrevocably appoints the Agent as
its agent for the purposes of this Agreement and such of the
Security Documents to which it may be appropriate for the Agent
to be party. Accordingly each of the Lenders and the Swap Bank
hereby authorise the Agent:
16.1.1 to execute such documents as may be approved by the
Majority Lenders for execution by the Agent; and
16.1.2 (whether or not by or through employees or agents)
to take such action on such Lenders behalf and to exercise
such rights, remedies, powers and discretions as are
specifically delegated to the Agent by any Security Document,
together with such powers and discretions as are reasonably
incidental thereto.
16.2 Agents
actions
Any action taken by the Agent under or in relation to any of the
Security Documents whether with requisite authority or on the
basis of appropriate instructions received from the Majority
Lenders (or as otherwise duly authorised) shall be binding on
all the Banks.
16.3 Agents
and Agents duties
16.3.1 The Agent shall promptly notify each Lender of
(i) the contents of each notice, certificate or other
document received by it from the Borrowers under or pursuant to
clauses 8.1.1, 8.1.6, 8.1.9, 8.1.10, 8.1.13 and 8.1.17 and
(ii) any information it receives which is material to the
Borrowers ability to repay the Loan; and
16.3.2 The Agent shall (subject to the other provisions of
this clause 16) take (or instruct the Security Trustee
to take) such action or, as the case may be, refrain from taking
(or authorise the Security Trustee to refrain from taking) such
action with respect to the exercise of any of its rights,
remedies, powers and discretions as agent, as the Majority
Lenders may direct.
16.4 Security
Trustees and Agents rights
The Security Trustee and the Agent may:
16.4.1 in the exercise of any right, remedy, power or
discretion in relation to any matter, or in any context, not
expressly provided for by this Agreement or any of the other
Security Documents, act or, as the case may be, refrain from
acting (or authorise the Security Trustee to act or refrain from
acting) in accordance with the instructions of the Lenders, and
shall be fully protected in so doing;
16.4.2 unless and until it has received directions from the
Majority Lenders, take such action or, as the case may be,
refrain from taking such action (or authorise the Security
Trustee to take or refrain from taking such action) in respect
of a Default of which the Agent has actual knowledge as it shall
consider advisable in the best interests of the Lenders (but
shall not be obliged to do so);
16.4.3 refrain from acting (or authorise the Security
Trustee to refrain from acting) in accordance with any
instructions of the Lenders to institute any Proceedings arising
out of or in connection with any of the Security Documents until
it and/or
the Security Trustee has been indemnified
and/or
secured to its satisfaction against any and all costs, expenses
or liabilities (including legal fees) which it would or might
incur as a result;
16.4.4 deem and treat (i) each Lender as the person
entitled to the benefit of the Contribution of such Lender for
all purposes of this Agreement unless and until a notice shall
have been filed with the Agent pursuant to clause 15.3 and shall
have become effective, and (ii) the office set opposite the
name of each of the Lenders in schedule 1 as its lending
office unless and until a written notice of change of lending
office shall have been received by the Agent and the Agent may
act upon any such notice unless and until the same is superseded
by a further such notice;
16.4.5 rely as to matters of fact which might reasonably be
expected to be within the knowledge of any Security Party upon a
certificate signed by any director or officer of the relevant
Security Party on behalf of the relevant Security Party; and
16.4.6 do anything which is in its opinion necessary or
desirable to comply with any law or regulation in any
jurisdiction.
16.5 No
Liability of Agent or Arranger
None of the Security Trustee, the Agent, the Arranger nor any of
their respective employees and agents shall:
16.5.1 be obliged to make any enquiry as to the use of any
of the proceeds of the Loan unless (in the case of the Agent) so
required in writing by a Lender, in which case the Agent shall
promptly make the appropriate request to the Borrowers; or
16.5.2 be obliged to make any enquiry as to any breach or
default by the Borrowers or any other Security Party in the
performance or observance of any of the provisions of the
Security Documents or as to the existence of a Default unless
(in the case of the Agent) the Agent has actual knowledge
thereof or has been notified in writing thereof by a Bank, in
which case the Agent shall promptly notify the Banks of the
relevant event or circumstance; or
16.5.3 be obliged to enquire whether or not any
representation or warranty made by the Borrowers or any other
Security Party pursuant to this Agreement or any of the other
Security Documents is true; or
16.5.4 be obliged to do anything (including, without
limitation, disclosing any document or information) which would,
or might in its opinion, be contrary to any law or regulation or
be a breach of any duty of confidentiality or otherwise be
actionable or render it liable to any person; or
16.5.5 be obliged to account to any Lender for any sum or
the profit element of any sum received by it for its own
account; or
16.5.6 be obliged to institute any Proceedings arising out
of or in connection with any of the Security Documents other
than on the instructions of the Majority Lenders; or
16.5.7 be liable to any Lender for any action taken or
omitted under or in connection with any of the Security
Documents unless caused by its gross negligence or wilful
misconduct.
For the purposes of this clause 16, none of the Security
Trustee, the Arranger or the Agent shall be treated as having
actual knowledge of any matter of which the corporate finance or
any other division outside the agency or loan administration
department of the Arranger, the Security Trustee or the Agent or
the person for the time being acting as the Arranger, the
Security Trustee or the Agent may become aware in the context of
corporate finance, advisory or lending activities from time to
time undertaken by the Arranger, the Security Trustee or the
Agent or, as the case may be, the Security Trustee or Agent for
any Security Party or any other person which may be a trade
competitor of any Security Party or may otherwise have
commercial interests similar to those of any Security Party.
16.6 Non
reliance on Arranger, Security Trustee or Agent
Each Lender and the Swap Bank acknowledges that it has not
relied on any statement, opinion, forecast or other
representation made by the Arranger, the Security Trustee or the
Agent to induce it to enter into any of the Security Documents
and that it has made and will continue to make, without reliance
on the Arranger, the Security Trustee or the Agent and based on
such documents as it considers appropriate, its own appraisal of
the creditworthiness of the Security Parties and its own
independent investigation of the financial condition, prospects
and affairs of the Security Parties in connection with the
making and continuation of such Lenders Commitment or
Contribution under this Agreement. Neither of the Arranger, the
Security Trustee and the Agent shall have any duty or
responsibility, either initially or on a continuing basis, to
provide any Lender or the Swap Bank with any credit or other
information with respect to any Security Party whether coming
into its possession before the making of any Advance or the Loan
or at any time or times thereafter other than as provided in
clause 16.3.1.
16.7 No
responsibility on the Arranger, the Security Trustee or Agent
for Borrowers performance
None of the Arranger, the Security Trustee or the Agent shall
have any responsibility or liability to any Lender or the Swap
Bank:
16.7.1 on account of the failure of any Security Party to
perform its obligations under any of the Security
Documents; or
16.7.2 for the financial condition of any Security
Party; or
16.7.3 for the completeness or accuracy of any statements,
representations or warranties in any of the Security Documents
or any document delivered under any of the Security
Documents; or
16.7.4 for the execution, effectiveness, adequacy,
genuineness, validity, enforceability or admissibility in
evidence of any of the Security Documents or of any certificate,
report or other document executed or delivered under any of the
Security Documents; or
16.7.5 to investigate or make any enquiry into the title of
the Borrowers or any other Security Party to the Vessels or any
other security or any part thereof; or
16.7.6 for taking or omitting to take any other action
under or in relation to any of the Security Documents or any
aspect of any of the Security Documents; or
16.7.7 on account of the failure of the Security Trustee to
perform or discharge any of its duties or obligations under the
Security Documents; or
16.7.8 otherwise in connection with the Security Documents
or their negotiation or for acting (or, as the case may be,
refraining from acting) in accordance with the instructions of
the Lenders.
16.8 Reliance
on documents and professional advice
Each of the Arranger, the Security Trustee and the Agent shall
be entitled to rely on any communication, instrument or document
believed by it to be genuine and correct and to have been signed
or sent by the proper person and shall be entitled to rely as to
legal or other professional matters on opinions and statements
of any legal or other professional advisers selected or approved
by it (including those in the Arrangers, the Security
Trustees or Agents employment).
16.9 Other
dealings
Each of the Arranger, the Security Trustee and the Agent may,
without any liability to account to the Lenders, accept deposits
from, and generally engage in any kind of banking or other
business with, and provide advisory or other services to, any
Security Party or any company in the same group of companies as
such Security Party or any of the Lenders as if it were not the
Arranger, the Security Trustee or Agent.
16.10 Rights
of Agent, Agent as Lender; no partnership
With respect to its own Commitment and Contribution (if any) the
Security Trustee and the Agent shall have the same rights and
powers under the Security Documents as any other Lender and may
exercise the same as though it were not performing the duties
and functions delegated to it under this Agreement and the term
Lenders shall, unless the context clearly otherwise
indicates, include the Security Trustee and the Agent in their
respective individual capacity as a Lender. This Agreement shall
not be construed so as to constitute a partnership between the
parties or any of them.
16.11 Amendments
and waivers
16.11.1 Subject to clause 16.11, the Arranger, the
Security Trustee
and/or the
Agent (as the case may be) may, with the consent of the Majority
Lenders (or if and to the extent expressly permitted by the
other provisions of any of the Security Documents) and, if so
instructed by the Majority Lenders, shall:
16.11.2 agree (or authorise the Security Trustee to agree)
amendments or modifications to any of the Security Documents
with the Borrowers
and/or any
other Security Party; and/or
16.11.3 vary or waive breaches of, or defaults under, or
otherwise excuse performance of, any provision of any of the
other Security Documents by the Borrowers
and/or any
other Security Party (or authorise the Security Trustee to do
so).
Any such action so authorised and effected by the Agent shall be
documented in such manner as the Security Trustee
and/or the
Agent (as the case may be) shall (with the approval of the
Majority Lenders) determine, shall be promptly notified to the
Lenders by the Security Trustee
and/or the
Agent (as the case may be) and (without prejudice to the
generality of clause 16.2) shall be binding on the Lenders.
16.11.4 Except with the prior written consent of the
Lenders, the Security Trustee and the Agent shall have no
authority on behalf of the Lenders to agree (or authorise the
Security Trustee to agree) with the Borrowers
and/or any
other Security Party any amendment or modification to any of the
Security Documents or to grant (or authorise the Security
Trustee to grant) waivers in respect of breaches or defaults or
to vary or excuse (or authorise the Security Trustee to vary or
excuse) performance of or under any of the Security Documents by
the Borrowers
and/or any
other Security Party, if the effect of such amendment,
modification, waiver or excuse would be to:
(a) reduce the Margin, postpone the due date or reduce the
amount of any payment of principal, interest or other amount
payable by any Security Party under any of the Security
Documents;
(b) change the currency in which any amount is payable by
any Security Party under any of the Security Documents;
(c) increase any Lenders Commitment;
(d) extend any Maturity Date;
(e) change any provision of any of the Security Documents
which expressly or impliedly requires the approval or consent of
all the Lenders such that the relevant approval or consent may
be given otherwise than with the sanction of all the Lenders;
(f) change the order of distribution under
clauses 6.10 and 13.1;
(g) change this clause 16.11;
(h) change the definition of Majority
Lenders in clause 1.2;
(i) release any Security Party from the security
constituted by any Security Document (except as required by the
terms thereof or by law) or change the terms and conditions upon
which such security or guarantee may be, or is required to be,
released.
16.12 Reimbursement
and indemnity by Lenders
Each Lender shall reimburse the Security Trustee and the Agent
(rateably in accordance with such Lenders Commitment or,
after the first Advance or the Loan has been drawn, its
Contribution,) to the extent that the Security Trustee or the
Agent is not reimbursed by the Borrowers, for the costs, charges
and expenses incurred by the Security Trustee or the Agent which
are expressed to be payable by the Borrowers under
clause 5.3 including (in each case), without limitation,
the fees and expenses of legal or other professional advisers
provided that, if following any payment to the Security Trustee
or the Agent by a Lender under this clause the Security Trustee
or the Agent receives payment from the Borrowers in respect of
the same costs, fees or expenses, the Security Trustee or the
Agent shall upon receipt thereof reimburse the relevant Lender.
Each Lender must on demand indemnify the Security Trustee or the
Agent (rateably in accordance with such Lenders Commitment
or, after the first Advance or the Loan has been drawn, its
Contribution) against all liabilities, damages, costs and claims
whatsoever incurred by the Security Trustee in connection with
any of the Security Documents or the performance of its duties
under any of the Security Documents or any action taken or
omitted by the Security Trustee or, as the case may be, the
Agent, under any of the Security Documents, unless such
liabilities, damages, costs or claims arise from the Security
Trustees or as the case may be, the Agents own gross
negligence or wilful misconduct.
16.13 Retirement
of the Agent
16.13.1 The Agent may, having given to the Borrowers and
each of the Lenders not less than fifteen (15) days
notice of its intention to do so, retire from its appointment as
the Agent under this Agreement, provided that no such retirement
shall take effect unless there has been appointed by the Lenders
as a successor agent:
(a) a company in the same group of companies as the Agent,
(b) a Lender nominated by the Majority Lenders or, failing
such a nomination,
(c) any reputable and experienced bank or financial
institution nominated by the retiring Agent.
and written confirmation (in a form acceptable to the Lenders)
of such acceptance agreeing to be bound by this Agreement in the
capacity of the Agent as if it had been an original party to
this Agreement.
Any corporation into which the retiring Agent
and/or the
retiring Security Trustee (as the case may be) may be merged or
converted or any corporation with which the Security Trustee
and/or the
Agent (as the case may be) may be consolidated or any
corporation resulting from any merger, conversion, amalgamation,
consolidation or other reorganisation to which the Security
Trustee or the Agent (as the case may be) shall be a party
shall, to the extent permitted by applicable law, be the
successor Agent or Security Trustee under this Agreement and the
other Security Documents without the execution or filing of any
document or any further act on the part of any of the parties to
the Security Documents save that notice of any such merger,
conversion, amalgamation, consolidation or other reorganisation
shall forthwith be given to each Security Party and the Lenders.
Prior to any such successor being appointed, the Agent agrees to
consult with the Borrowers
and the Lenders as to the identity of the proposed successor and
to take account of any reasonable objections which the Borrowers
and the Lenders may raise to such successor being appointed.
16.13.2 If the Majority Lenders, acting reasonably, are of
the opinion that the Security Trustee or Agent is unable to
fulfil its respective obligations under this Agreement in a
professional and acceptable manner, then they may require the
Security Trustee or Agent, by written notice, to resign in
accordance with clause 16.13.1, which the Agent shall
promptly do, and the terms of clause 16.13.1 shall apply to
the appointment of any substitute Security Trustee or Agent,
save that the same shall be appointed by the Majority Lenders
and not by all of the Lenders.
16.13.3 Upon any such successor as aforesaid being
appointed, the retiring Agent or, as the case may be, the
Security Trustee shall be discharged from any further obligation
under the Security Documents (but shall continue to have the
benefit of this clause 16 in respect of any action it has
taken or refrained from taking prior to such discharge) and its
successor and each of the other parties to this Agreement shall
have the same rights and obligations among themselves as they
would have had if such successor had been a party to this
Agreement in place of the retiring Agent or Security Trustee.
The retiring Agent or Agent shall (at its own expense) provide
its successor with copies of such of its records as its
successor reasonably requires to carry out its functions under
the Security Documents.
16.14 Appointment
and retirement of Security Trustee
16.14.1 Appointment
Each of the Lenders, the Swap Bank and the Agent irrevocably
appoints the Security Trustee as its Security Trustee and
trustee for the purposes of the Security Documents, in each case
on the terms set out in this Agreement. Accordingly, each of the
Lenders, the Swap Bank and the Agent hereby authorises the
Security Trustee (whether or not by or through employees or
agents) to take such action on its behalf and to exercise such
rights, remedies, powers and discretions as are specifically
delegated to the Security Trustee by this Agreement
and/or the
Security Documents, together with such powers and discretions as
are reasonably incidental thereto.
16.14.2 Retirement
Without prejudice to clause 16.13, the Security Trustee
may, having given to the Borrowers and each of the Lenders and
the Swap Bank not less than fifteen (15) days notice
of its intention to do so, retire from its appointment as
Security Trustee under this Agreement and any Trust Deed,
provided that no such retirement shall take effect unless there
has been appointed by the Lenders and the Agent as a successor
Security Trustee and trustee:
(a) a company in the same group of companies of the
Security Trustee nominated by the Security Trustee which the
Lenders hereby irrevocably and unconditionally agree to appoint
or, failing such nomination,
(b) a Lender or trust corporation nominated by the Majority
Lenders or, failing such a nomination,
(c) any bank or trust corporation nominated by the retiring
Security Trustee,
and, in any case, such successor Security Trustee and trustee
shall have duly accepted such appointment by delivering to the
Agent (i) written confirmation (in a form acceptable to the
Agent) of such acceptance agreeing to be bound by this Agreement
in the capacity of Security Trustee as if it had been an
original party to this Agreement and (ii) a duly executed
Trust Deed.
Any corporation into which the retiring Security Trustee may be
merged or converted or any corporation with which the Security
Trustee may be consolidated or any corporation resulting from
any merger, conversion, amalgamation, consolidation or other
reorganisation to which the Security Trustee shall be a party
shall, to the extent permitted by applicable law, be the
successor Security Trustee under this Agreement, any
Trust Deed and the other Security Documents without the
execution or filing of any document or any further act on the
part of any of the parties to this Agreement, any
Trust Deed and the other Security Documents save
that notice of any such merger, conversion, amalgamation,
consolidation or other reorganisation shall forthwith be given
to each Security Party, the Swap Bank and the Lenders. Prior to
any such successor being appointed, the Security Trustee agrees
to consult with the Borrowers as to the identity of the proposed
successor and to take account of any reasonable objections which
the Borrowers may raise to such successor being appointed.
Upon any such successor as aforesaid being appointed, the
retiring Security Trustee shall be discharged from any further
obligation under the Security Documents (but shall continue to
have the benefit of this clause 16 in respect of any action
it has taken or refrained from taking prior to such discharge)
and its successor and each of the other parties to this
Agreement shall have the same rights and obligations among
themselves as they would have had if such successor had been a
party to this Agreement in place of the retiring Security
Trustee. The retiring Security Trustee shall (at its own
expense) provide its successor with copies of such of its
records as its successor reasonably requires to carry out its
functions under the Security Documents.
16.15 Powers
and duties of the Security Trustee
16.15.1 The Security Trustee shall have no duties,
obligations or liabilities to any of the Lenders and the Agent
beyond those expressly stated in any of the Security Documents.
Each of the Agent and the Swap Bank, the Lenders hereby
authorises the Security Trustee to enter into and execute:
(a) each of the Security Documents to which the Security
Trustee is or is intended to be a party; and
(b) any and all such other Security Documents as may be
approved by the Agent in writing (acting on the instructions of
the Majority Lenders) for entry into by the Security Trustee,
and, in each and every case, to hold any and all security
thereby created upon trust for the Lenders, the Swap Bank and
the Agent for the time being in the manner contemplated by this
Agreement.
16.15.2 Subject to clause 16.15.3 the Security Trustee
may, with the prior consent of the Majority Lenders communicated
in writing by the Agent, concur with any of the Security Parties
to:
(a) amend, modify or otherwise vary any provision of the
Security Documents to which the Security Trustee is or is
intended to be a party; or
(b) waive breaches of, or defaults under, or otherwise
excuse performance of, any provision of the Security Documents
to which the Security Trustee is or is intended to be a
party; or
(c) give any consents to any Security Party in respect of
any provision of any Security Document.
Any such action so authorised and effected by the Security
Trustee shall be promptly notified to the Lenders, the Swap Bank
and the Agent by the Security Trustee and shall be binding on
the other Banks.
16.15.3 The Security Trustee shall not concur with any
Security Party with respect to any of the matters described in
clause 16.11.4 without the consent of the Lenders
communicated in writing by the Agent.
16.15.4 The Security Trustee shall (subject to the other
provisions of this clause 16) take such action or, as
the case may be, refrain from taking such action, with respect
to any of its rights, powers and discretions as Security Trustee
and trustee, as the Agent may direct. Subject as provided in the
foregoing provisions of this clause, unless and until the
Security Trustee has received such instructions from the Agent,
the Security Trustee may, but shall not be obliged to, take (or
refrain from taking) such action under or pursuant to the
Security Documents referred to in clause 16.14 as the
Security Trustee shall deem advisable in the best interests of
the Banks provided that (for the avoidance of doubt), to the
extent that this clause might otherwise be construed as
authorising the Security Trustee to take, or refrain from
taking, any action of the nature referred to in
clause 16.15.2 and for which the prior consent
of the Lenders is expressly required under
clause 16.15.3 clauses 16.15.2 and 16.15.3
shall apply to the exclusion of this clause.
16.15.5 None of the Lenders, the Swap Bank nor the Agent
shall have any independent power to enforce any of the Security
Documents referred to in clause 16.14 or to exercise any
rights, discretions or powers or to grant any consents or
releases under or pursuant to such Security Documents or any of
them or otherwise have
direct recourse to the security
and/or
guarantees constituted by such Security Documents or any of them
except through the Security Trustee.
16.15.6 For the purpose of this clause 16, the
Security Trustee may, rely and act in reliance upon any
information from time to time furnished to the Security Trustee
by the Agent (whether pursuant to clause 16.15.7 or
otherwise) unless and until the same is superseded by further
such information, so that the Security Trustee shall have no
liability or responsibility to any party as a consequence of
placing reliance on and acting in reliance upon any such
information unless the Security Trustee has actual knowledge
that such information is inaccurate or incorrect.
16.15.7 Without prejudice to the foregoing each of the
Agent, the Swap Bank and the Lenders (whether directly or
through the Agent) shall provide the Security Trustee with such
written information as it may reasonably require for the purpose
of carrying out its duties and obligations under the Security
Documents referred to in clause 16.14.
16.16 Trust
provisions
16.16.1 The trusts constituted or evidenced in or by this
Agreement and the Trust Deed shall remain in full force and
effect until whichever is the earlier of:
(a) the expiration of a period of eighty (80) years
from the date of this Agreement; and
(b) receipt by the Security Trustee of confirmation in
writing by the Agent that there is no longer outstanding any
Indebtedness (actual or contingent) which is secured or
guaranteed or otherwise assured by or under any of the Security
Documents,
and the parties to this Agreement declare that the perpetuity
period applicable to this Agreement and the trusts declared by
the Trust Deed shall for the purposes of the Perpetuities
and Accumulations Act 1964 be the period of eighty
(80) years from the date of this Agreement.
16.16.2 In its capacity as trustee in relation to the
Security Documents specified in clause 16.14, the Security
Trustee shall, without prejudice to any of the powers,
discretions and immunities conferred upon trustees by law (and
to the extent not inconsistent with the provisions of any of
those Security Documents), have all the same powers and
discretions as a natural person acting as the beneficial owner
of such property
and/or as
are conferred upon the Security Trustee by any of those Security
Documents.
16.16.3 It is expressly declared that, in its capacity as
trustee in relation to the Security Documents specified in
clause 16.14, the Security Trustee shall be entitled,
subject to the consent of the Lenders, to invest moneys forming
part of the security and which, in the opinion of the Security
Trustee, may not be paid out promptly following receipt in the
name or under the control of the Security Trustee in any of the
investments for the time being authorised by law for the
investment by trustees of trust moneys or in any other property
or investments whether similar to the aforesaid or not or by
placing the same on deposit in the name or under the control of
the Security Trustee as the Security Trustee may think fit
without being under any duty to diversify its investments and
the Security Trustee may at any time vary or transpose any such
property or investments for or into any others of a like nature
and shall not be responsible for any loss due to depreciation in
value or otherwise of such property or investments. Any
investment of any part or all of the security may, at the
discretion of the Security Trustee, be made or retained in the
names of nominees.
16.17 Independent
action by Banks
None of the Banks shall enforce, exercise any rights, remedies
or powers or grant any consents or releases under or pursuant
to, or otherwise have a direct recourse to the security
and/or
guarantees constituted by any of the Security Documents without
the prior written consent of the Majority Lenders but, provided
such consent has been obtained, it shall not be necessary for
any other Bank to be joined as an additional party in any
Proceedings for this purpose.
16.18 Common
Agent and Security Trustee
The Agent and the Security Trustee have entered into the
Security Documents in their separate capacities (a) as
agent for the Lenders under and pursuant to this Agreement (in
the case of the Agent) and (b) as Security Trustee and
trustee for the Lenders, the Swap Bank and the Agent under and
pursuant to this Agreement, to hold the guarantees
and/or
security created by the Security Documents specified in clause
16.14 on the terms set out in such Security Documents (in the
case of the Security Trustee). If and when the Agent and the
Security Trustee are the same entity and any Security Document
provides for the Agent to communicate with or provide
instructions to the Security Trustee (and vice versa), all
parties to this Agreement agree that any such communications or
instructions on such occasions are unnecessary and are hereby
waived.
16.19 Co-operation
to achieve agreed priorities of application
The Lenders and the Agent shall co-operate with each other and
with the Security Trustee and any receiver under the Security
Documents in realising the property and assets subject to the
Security Documents and in ensuring that the net proceeds
realised under the Security Documents after deduction of the
expenses of realisation are applied in accordance with
clause 13.1.
16.20 The
Prompt distribution of proceeds
Moneys received by any of the Banks (whether from a receiver or
otherwise) pursuant to the exercise of (or otherwise by virtue
of the existence of) any rights and powers under or pursuant to
any of the Security Documents shall (after providing for all
costs, charges, expenses and liabilities and other payments
ranking in priority) be paid to the Agent for distribution (in
the case of moneys so received by any of the Banks other than
the Agent or the Security Trustee) and shall be distributed by
the Agent or, as the case may be, the Security Trustee (in the
case of moneys so received by the Agent or, as the case may be,
the Security Trustee) in each case in accordance with
clause 13.1. The Agent or, as the case may be, the Security
Trustee shall make each such application
and/or
distribution as soon as is practicable after the relevant moneys
are received by, or otherwise become available to, the Agent or,
as the case may be, the Security Trustee save that (without
prejudice to any other provision contained in any of the
Security Documents) the Agent or, as the case may be, the
Security Trustee (acting on the instructions of the Majority
Lenders) or any receiver may credit any moneys received by it to
a suspense account for so long and in such manner as the Agent
or such receiver may from time to time determine with a view to
preserving the rights of the Agent
and/or the
Security Trustee
and/or the
Account Banks
and/or the
Arranger
and/or the
Lenders, the Swap Bank or any of them to provide for the whole
of their respective claims against the Borrowers or any other
person liable.
16.21 Reconventioning
After consultation with the Borrowers and the Lenders and
notwithstanding clause 16.11, the Agent shall be entitled
to make such amendments to this Agreement as it may determine to
be necessary to take account of any changes in market practices
as a consequence of the European Monetary Union (whether as to
the settlement or rounding of obligations, business days, the
calculation of interest or otherwise whatsoever). So far as
possible such amendments shall be such as to put the parties in
the same position as if the event or events giving rise to the
need to amend this Agreement had not occurred. Any amendment so
made to this Agreement by the Agent shall be promptly notified
to the other parties hereto and shall be binding on all parties
hereto.
16.22 Exclusivity
Without prejudice to the Borrowers rights, in certain
instances, to give their consent thereunder, clauses 15 and
16 are for the exclusive benefit of the Banks.
17 NOTICES
AND OTHER MATTERS
17.1 Notices
17.1.1 unless otherwise specifically provided herein, every
notice under or in connection with this Agreement shall be given
in English by letter delivered personally
and/or sent
by post
and/or
transmitted by fax
and/or
electronically;
17.1.2 in this clause notice includes any
demand, consent, authorisation, approval, instruction,
certificate, request, waiver or other communication.
17.2 Addresses
for communications, effective date of notices
17.2.1 Subject to clause 17.2.2, clause 17.2.5
and 17.3 notices to the Borrowers shall be deemed to have been
given and shall take effect when received in full legible form
by the Borrowers at the address
and/or the
fax number appearing below (or at such other address or fax
number as the Borrowers may hereafter specify for such purpose
to the Agent by notice in writing);
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Address
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c/o Navios
ShipManagement Inc.
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85 Akti Miaouli
Piraeus
Greece
Fax no: + 30 210 453 2070
17.2.2 notwithstanding the provisions of clause 17.2.1
or clause 17.2.5, a notice of Default
and/or a
notice given pursuant to clause 10.2 or clause 10.3 to the
Borrowers shall be deemed to have been given and shall take
effect when delivered, sent or transmitted by the Banks or any
of them to the Borrowers to the address or fax number referred
to in clause 17.2.1;
17.2.3 subject to clause 17.2.5, notices to the Agent
and/or the
Arranger
and/or
Account Banks
and/or
Security Trustee
and/or the
Swap Bank shall be deemed to be given, and shall take effect,
when received in full legible form by the Agent
and/or the
Security Trustee at the address
and/or the
fax number address appearing below (or at any such other address
or fax number as the Agent
and/or the
Security Trustee (as appropriate) may hereafter specify for such
purpose to the Borrowers and the other Lenders by notice in
writing);
Agent: DEUTSCHE SCHIFFSBANK AG
D-28195 Bremen
Germany
Fax: +49 421
3609-293
Attn: International Loans
17.2.4 subject to clause 17.2.5 and 17.3, notices to a
Lender shall be deemed to be given and shall take effect when
received in full legible form by such Lender at its address
and/or fax
number specified in schedule 1 or in any relevant Transfer
Certificate (or at any other address or fax number as such
Lender may hereafter specify for such purpose to the other
Banks); and
17.2.5 if under clause 17.2.1 or clause 17.2.3 a
notice would be deemed to have been given and been effective on
a day which is not a working day in the place of receipt or is
outside the normal business hours in the place of receipt, the
notice shall be deemed to have been given and to have taken
effect at the opening of business on the next working day in
such place.
17.3 Electronic
Communication
17.3.1 Any communication to be made by
and/or
between the Banks or any of them and the Security Parties or any
of them under or in connection with the Security Documents or
any of them may be made by electronic mail or other electronic
means, if and provided that all such parties:
(a) 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
(b) notify each other of any change to their electronic
mail address or any other such information supplied by them.
17.3.2 Any electronic communication made by
and/or
between the Banks or any of them and the Security Parties or any
of them will be effective only when actually received in
readable form and, in the case of any electronic communication
made by the Borrowers or the Lenders to the Agent, only if it is
addressed in such manner as the Agent shall specify for this
purpose.
17.4 Notices
through the Agent
Every notice under this Agreement or (unless otherwise provided
therein) any other Security Document to be given by the
Borrowers to any other party, shall be given to the Agent for
onward transmission as appropriate and every notice under this
Agreement to be given to the Borrowers shall (except as
otherwise provided in the Security Documents) be given to the
Borrowers by the Agent.
18 BORROWERS
OBLIGATIONS
18.1 Joint
and several
Regardless of any other provision in any of the Security
Documents, all obligations and liabilities whatsoever of the
Borrowers herein contained are joint and several and shall be
construed accordingly. Each of the Borrowers agrees and consents
to be bound by the Security Documents to which it becomes a
party notwithstanding that the other Borrower may not do so or
be effectually bound and notwithstanding that any of the
Security Documents may be invalid or unenforceable against the
other Borrower, whether or not the deficiency is known to any
Bank.
18.2 Borrowers
as principal debtors
Each Borrower acknowledges that it is a principal and original
debtor in respect of all amounts which may become payable by the
Borrowers in accordance with the terms of any of the Security
Documents and agrees that each Bank may continue to treat it as
such, whether or not such Bank is or becomes aware that such
Borrower is or has become a surety for the other Borrower.
18.3 Indemnity
The Borrowers undertake to keep the Banks fully indemnified on
demand against all claims, damages, losses, costs and expenses
arising from any failure of any Borrower to perform or discharge
any purported obligation or liability of that Borrower which
would have been the subject of this Agreement or any other
Security Document had it been valid and enforceable and which is
not or ceases to be valid and enforceable against the other
Borrower on any ground whatsoever, whether or not known to any
Bank including, without limitation, any irregular exercise or
absence of any corporate power or lack of authority of, or
breach of duty by, any person purporting to act on behalf of the
other Borrower (or any legal or other limitation, whether under
the Limitation Acts or otherwise or any disability or death,
bankruptcy, unsoundness of mind, insolvency, liquidation,
dissolution, winding up, administration, receivership,
amalgamation, reconstruction or any other incapacity of any
person whatsoever (including, in the case of a partnership, a
termination or change in the composition of the partnership) or
any change of name or style or constitution of any Security
Party)).
18.4 Liability
unconditional
None of the obligations or liabilities of the Borrowers under
any Security Document shall be discharged or reduced by reason
of:
18.4.1 the death, bankruptcy, unsoundness of mind,
insolvency, liquidation, dissolution,
winding-up,
administration, receivership, amalgamation, reconstruction or
other incapacity of any person whatsoever (including, in the
case of a partnership, a termination or change in the
composition of the partnership) or any change of name or style
or constitution of any Borrower or any other person liable;
18.4.2 any Bank granting any time, indulgence or concession
to, or compounding with, discharging, releasing or varying the
liability of, any Borrower or any other person liable or
renewing, determining, varying or increasing any accommodation,
facility or transaction or otherwise dealing with the same in
any manner whatsoever or concurring in, accepting, varying any
compromise, arrangement or settlement or omitting to claim or
enforce payment from any Borrower or any other person
liable; or
18.4.3 anything done or omitted which but for this
provision might operate to exonerate the Borrowers or all of
them.
18.5 Recourse
to other security
No Bank shall be obliged to make any claim or demand or to
resort to any security or other means of payment now or
hereafter held by or available to them for enforcing any of the
Security Documents against any Borrower or any other person
liable and no action taken or omitted by any Bank in connection
with any such security or other means of payment will discharge,
reduce, prejudice or affect the liability of the Borrowers under
the Security Documents to which any of them is, or is to be, a
party.
18.6 Waiver
of Borrowers rights
Each Borrower agrees with the Banks that, throughout the
Facility Period, it will not, without the prior written consent
of the Agent:
18.6.1 exercise any right of subrogation, reimbursement and
indemnity against the other Borrower or any other person liable
under the Security Documents;
18.6.2 demand or accept repayment in whole or in part of
any Indebtedness now or hereafter due to such Borrower from the
other Borrower or from any other person liable for such
Indebtedness or demand or accept any guarantee against financial
loss or any document or instrument created or evidencing an
Encumbrance in respect of the same or dispose of the same;
18.6.3 take any steps to enforce any right against the
other Borrower or any other person liable in respect of any such
moneys; or
18.6.3 claim any set-off or counterclaim against the other
Borrower or any other person liable or claim or prove in
competition with any Bank in the liquidation of the other
Borrower or any other person liable or have the benefit of, or
share in, any payment from or composition with, the other
Borrower or any other person liable or any security granted
under any Security Document now or hereafter held by any Bank
for any moneys owing under this Agreement or for the obligations
or liabilities of any other person liable but so that, if so
directed by the Agent, it will prove for the whole or any part
of its claim in the liquidation of the other Borrower or other
person liable on terms that the benefit of such proof and all
money received by it in respect thereof shall be held on trust
for the Banks and applied in or towards discharge of any moneys
owing under this Agreement in such manner as the Agent shall
require.
19 GOVERNING
LAW
This Agreement is governed by and shall be construed in
accordance with English law.
20 JURISDICTION
20.1 Exclusive
Jurisdiction
For the benefit of the Banks, and subject to clause 20.4
below, the Borrowers hereby irrevocably agree that the courts of
England shall have exclusive jurisdiction:
20.1.1 to settle any disputes or other matters whatsoever
arising under or in connection with this Agreement and any
disputes or other such matters arising in connection with the
negotiation, validity or enforceability of this Agreement or any
part thereof, whether the alleged liability shall arise under
the laws of England or under the laws of some other country and
regardless of whether a particular cause of action may
successfully be brought in the English courts; and
20.1.2 to grant interim remedies or other provisional or
protective relief.
20.2 Submission
and service of process
Each Borrower accordingly irrevocably and unconditionally
submits to the jurisdiction of the English courts. Without
prejudice to any other mode of service each Borrower:
20.2.1 irrevocably empowers and appoints HFW Nominees Ltd
at present of Friary Court, 65 Crutched Friars, London EC3N 2AE,
England as its agent to receive and accept on its behalf any
process or other document relating to any proceedings before the
English courts in connection with this Agreement;
20.2.2 agrees to maintain such an agent for service of
process in England from the date hereof until the end of the
Facility Period;
20.2.3 agrees that failure by a process agent to notify the
Borrowers of service of process will not invalidate the
proceedings concerned;
20.2.4 without prejudice to the effectiveness of service of
process on its agent under clause 20.2.1 above but as an
alternative method, consents to the service of process relating
to any such proceedings by mailing or delivering a copy of the
process to its address for the time being applying under
clause 17.2;
20.2.5 agrees that if the appointment of any person
mentioned in clause 20.2.1 ceases to be effective, the
Borrowers shall immediately appoint a further person in England
to accept service of process on its behalf in England and,
failing such appointment within seven (7) days the Agent
shall thereupon be entitled and is hereby irrevocably authorised
by the Borrowers in those circumstances to appoint such person
by notice to the Borrowers.
20.3 Forum
non conveniens and enforcement abroad
Each Borrower:
20.3.1 waives any right and agrees not to apply to the
English court or other court in any jurisdiction whatsoever to
stay or strike out any proceedings commenced in England on the
ground that England is an inappropriate forum
and/or that
Proceedings have been or will be started in any other
jurisdiction in connection with any dispute or related matter
falling within clause 20.1; and
20.3.2 agrees that a judgment or order of an English court
in a dispute or other matter falling within clause 20.1
shall be conclusive and binding on the Borrowers and may be
enforced against them in the courts of any other jurisdiction.
20.4 Right
of Security Trustee, but not Borrowers, to bring proceedings in
any other jurisdiction
20.4.1 Nothing in this clause 20 limits the right of
any Lender to bring Proceedings, including third party
proceedings, against any one or all Borrowers, or to apply for
interim remedies, in connection with this Agreement in any other
court and/or
concurrently in more than one jurisdiction;
20.4.2 the obtaining by any Lender of judgment in one
jurisdiction shall not prevent such Lender from bringing or
continuing proceedings in any other jurisdiction, whether or not
these shall be founded on the same cause of action.
20.5 Enforceability
despite invalidity of Agreement
Without prejudice to the generality of clause 13.9, the
jurisdiction agreement contained in this clause 20 shall be
severable from the rest of this Agreement and shall remain
valid, binding and in full force and shall continue to apply
notwithstanding this Agreement or any part thereof being held to
be avoided, rescinded, terminated, discharged, frustrated,
invalid, unenforceable, illegal
and/or
otherwise of no effect for any reason.
20.6 Effect
in relation to claims by and against non-parties
20.6.1 For the purpose of this clause Foreign
Proceedings shall mean any Proceedings except proceedings
brought or pursued in England arising out of or in connection
with (i) or in any way related to any of the Security
Documents or any assets subject thereto or (ii) any action
of any kind whatsoever taken by any Bank pursuant thereto or
which would, if brought by any or all of the Borrowers against
the Banks, have been required to be brought in the English
courts;
20.6.2 no Borrower shall bring or pursue any Foreign
Proceedings against any Bank and shall use its best endeavours
to prevent persons not party to this Agreement from bringing or
pursuing any Foreign Proceedings against any Bank;
20.6.3 If, for any reason whatsoever, any Security Party
and/or any
person connected howsoever with any Security Party brings or
pursues against any Bank any Foreign Proceedings, the Borrowers
shall indemnify such Bank on demand in respect of any and all
claims, losses, damages, demands, causes of action, liabilities,
costs and expenses (including, but not limited to, legal costs)
of whatsoever nature howsoever arising from or in connection
with such Foreign Proceedings which such Bank (or the Agent on
its behalf) certifies as having been incurred by it;
20.6.4 the Banks and the Borrowers hereby agree and declare
that the benefit of this clause 20 shall extend to and may
be enforced by any officer, employee, agent or business
associate of any of the Banks against whom a Borrower brings a
claim in connection howsoever with any of the Security Documents
or any assets subject thereto or any action of any kind
whatsoever taken by, or on behalf of or for the purported
benefit of any Bank pursuant thereto or which, if it were
brought against any Bank, would fall within the material scope
of clause 20.1. In those circumstances this clause 20
shall be read and construed as if references to any Bank were
references to such officer, employee, agent or business
associate, as the case may be.
Execution Pages
IN WITNESS whereof the parties to this Agreement have
caused this Agreement to be duly executed on the date first
above written.
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SIGNED as a deed for and on behalf of
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/s/ Alexandros
Laios
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AMORGOS SHIPPING CORPORATION
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by Alexandros Laios
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(as Borrower under and pursuant to
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a power of attorney dated
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30 March 2010) in the presence of
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/s/ Ronan
Le Dû
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SIGNED as a deed for and on behalf of
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/s/ Alexandros
Laios
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ANDROS SHIPPING CORPORATION
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by Alexandros Laios
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(as Borrower under and pursuant to
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a power of attorney dated
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30 March 2010) in the presence of
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/s/ Ronan
Le Dû
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SIGNED as a deed for and on behalf of
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/s/ Alexandros
Laios
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ANTIPAROS SHIPPING CORPORATION
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by Alexandros Laios
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(as Borrower under and pursuant to
|
|
)
|
a power of attorney dated
|
|
)
|
30 March 2010) in the presence of
|
|
)
/s/ Ronan
Le Dû
|
|
|
|
SIGNED as a deed for and on behalf of
|
|
)
/s/ Alexandros
Laios
|
IKARIA SHIPPING CORPORATION
|
|
)
|
by Alexandros Laios
|
|
|
(as Borrower under and pursuant to
|
|
)
|
a power of attorney dated
|
|
)
|
30 March 2010) in the presence of
|
|
)
/s/ Ronan
Le Dû
|
|
|
|
SIGNED as a deed for and on behalf of
|
|
)
/s/ Alexandros
Laios
|
KOS SHIPPING CORPORATION
|
|
)
|
by Alexandros Laios
|
|
|
(as Borrower under and pursuant to
|
|
)
|
a power of attorney dated
|
|
)
|
30 March 2010) in the presence of
|
|
)
/s/ Ronan
Le Dû
|
|
|
|
SIGNED as a deed for and on behalf of
|
|
)
/s/ Alexandros
Laios
|
MYTILENE SHIPPING CORPORATION
|
|
)
|
by Alexandros Laios
|
|
|
(as Borrower under and pursuant to
|
|
)
|
a power of attorney dated
|
|
)
|
30 March 2010) in the presence of
|
|
)
/s/ Ronan
Le Dû
|
|
|
|
SIGNED by Victoria Liaou
|
|
)
/s/ Victoria
Liaou
|
for and on behalf of
|
|
)
|
DEUTSCHE SCHIFFSBANK AG
|
|
)
|
(as a Lender) in the presence of
|
|
)
/s/ Ronan
Le Dû
|
|
|
|
SIGNED by
|
|
)
/s/ Konstantinos
Sotiriou
|
for and on behalf of
|
|
)
/s/ Constantinos
Flokos
|
ALPHA BANK AE
|
|
)
|
(as a Lender) in the presence of
|
|
)
/s/ Ronan
Le Dû
|
|
|
|
SIGNED by Victoria Liaou
|
|
)
/s/ Victoria
Liaou
|
for and on behalf of
|
|
)
|
CREDIT AGRICOLE CORPORATE
|
|
)
|
AND INVESTMENT BANK
|
|
)
|
(as a Lender) in the presence of
|
|
)
/s/ Ronan
Le Dû
|
|
|
|
SIGNED by Victoria Liaou
|
|
)
/s/ Victoria
Liaou
|
for and on behalf of
|
|
)
|
DEUTSCHE SCHIFFSBANK AG
|
|
)
|
(as Account Bank, Arranger, Agent,
|
|
)
|
Swap Bank and Security Trustee
|
|
)
|
in the presence of
|
|
)
/s/ Ronan
Le Dû
|
|
|
|
SIGNED by
|
|
)
/s/ Konstantinos
Sotiriou
|
for and on behalf of
|
|
)
/s/ Constantinos
Flokos
|
ALPHA BANK AE
|
|
)
|
(as Account Bank) in the presence of
|
|
)
/s/ Ronan
Le Dû
|
exv10w2
Private
and Confidential
DATED
8 April 2010
SIFNOS
SHIPPING CORPORATION
SKIATHOS SHIPPING CORPORATION
and
SYROS SHIPPING CORPORATION
as Borrowers
FORTIS
BANK
and
DVB BANK SE
as Lenders
and
FORTIS BANK
as Arranger, Swap Bank, Payment Agent
and Security Trustee
and
DVB Bank SE
as Agent
FACILITY
AGREEMENT FOR A USD 75,000,000
TERM LOAN
FACILITY
IN THREE
TRANCHES
PIRAEUS
Index
|
|
|
|
|
|
|
Clause
|
|
Page
|
|
1
|
|
Purpose, Definitions, Construction & Majority Lenders
|
|
|
1
|
|
2
|
|
The Available Commitment and Cancellation
|
|
|
23
|
|
3
|
|
Interest and Interest Periods
|
|
|
26
|
|
4
|
|
Repayment and Prepayment
|
|
|
29
|
|
5
|
|
Fees and Expenses
|
|
|
32
|
|
6
|
|
Payments and Taxes; Accounts and Calculations
|
|
|
34
|
|
7
|
|
Representations and Warranties
|
|
|
38
|
|
8
|
|
Undertakings
|
|
|
44
|
|
9
|
|
Conditions
|
|
|
54
|
|
10
|
|
Events of Default
|
|
|
56
|
|
11
|
|
Indemnities
|
|
|
62
|
|
12
|
|
Unlawfulness and Increased Costs
|
|
|
63
|
|
13
|
|
Application of moneys, set off, pro-rata payments and
miscellaneous
|
|
|
65
|
|
14
|
|
Accounts
|
|
|
70
|
|
15
|
|
Assignment, transfer and lending office
|
|
|
72
|
|
16
|
|
Arranger, Agent and Security Trustee
|
|
|
77
|
|
17
|
|
Notices and other matters
|
|
|
92
|
|
19
|
|
Governing law
|
|
|
95
|
|
20
|
|
Jurisdiction
|
|
|
97
|
|
Schedule 1 The Lenders and their Commitments
|
|
|
|
|
Schedule 2 Form of Drawdown Notice
|
|
|
|
|
Schedule 3 Conditions precedent
|
|
|
|
|
Schedule 4 Form of Transfer Certificate
|
|
|
|
|
Schedule 5 Form of Trust Deed
|
|
|
|
|
Schedule 6 Form of Compliance Certificate
|
|
|
|
|
Schedule 7 Vessel details
|
|
|
|
|
Execution Pages
|
|
|
119
|
|
THIS
AGREEMENT dated April 2010 is made BY and
BETWEEN:
(1) SIFNOS SHIPPING CORPORATION, SKIATHOS SHIPPING
CORPORATION and SYROS SHIPPING CORPORATION as
Borrowers;
(2) FORTIS BANK and DVB BANK SE as Lenders;
(3) DVB BANK SE as Agent;
(4) FORTIS BANK as Arranger, Account Bank, Payment
Agent and Security Trustee; and
(5) FORTIS BANK as Swap Bank.
NOW IT IS
HEREBY AGREED AS FOLLOWS:
1 PURPOSE,
DEFINITIONS, CONSTRUCTION & MAJORITY LENDERS
1.1 Purpose
This Agreement sets out the terms and conditions on which Fortis
Bank and DVB Bank SE agree to make available to the Borrowers a
loan of up to seventy five million Dollars (USD 75,000,000) in
three equal Tranches, for the purpose of part-financing the
purchase price of three MR Product Tankers which are to be
constructed by the Builder.
1.2 Definitions
In this Agreement, unless the context otherwise requires:
Account Bank means Fortis Bank acting
through its office at Vas Sofias 94 & Kerasourtos 115 28
Athens, Greece or such other Lender as may be designated by the
Agent as the Account Bank for the purposes of this Agreement;
Advance means the principal amount of
each drawing in respect of the Loan to be made pursuant to
Clause 2.5;
Agent means DVB Bank SE, Nordic Branch
acting for the purposes of this Agreement through its branch at
Strandgaten 18, P.O. Box 701 S, 5807 Bergen, Norway (or of such
other address as may last have been notified to the other
parties to this Agreement) or such other person as may be
appointed as agent by the Banks pursuant to clause 16.13;
Approved Broker means each of
Fearnleys A.S., Oslo Shipbrokers A.S., Clarkson Valuations
Limited, Simpson Spence & Young Shipbrokers Ltd., E.A.
Gibson Shipbrokers Ltd., Jacq. Pierot Jr. & Sons, Allied
Shipbroking, Greece, RS Platou ASA, ICAP Shipping Limited, ACM
Ltd., London, Island Shipbrokers PTE LTD, Singapore or such
other reputable, independent and first class firm of shipbrokers
specialising in the valuation of vessels of the relevant type
appointed by the Agent and agreed with the Borrowers;
Arranger means Fortis Bank acting
through its office at Vas Sofias 94 & Kerasountos 1, 115 28
Athens, Greece;
Banking Day means a day on which
dealings in deposits in USD are carried on in the London
Interbank Eurocurrency Market and (other than Saturday or
Sunday) on which banks are open for business in London,
Frankfurt, Piraeus and New York City (or any other relevant
place of payment under clause 6);
Banks means, together, the Arranger,
the Agent, the Payment Agent, the Security Trustee, the Account
Bank, the Lenders, the Swap Bank and any Transferee Lenders;
Borrower means each of SIFNOS SHIPPING
CORPORATION (Sifnos), SKIATHOS SHIPPING
CORPORATION (Skiathos) and SYROS SHIPPING
CORPORATION (Syros) each
having its registered office at Trust Company Complex,
Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands,
MH96960 and in the plural means all of them;
Break Costs means the aggregate amount
of all losses, premiums, penalties, costs and expenses
whatsoever certified by the Payment Agent at any time and from
time to time as having been incurred by the Lenders or any of
them in maintaining or funding their Contributions or in
liquidating or re-employing fixed deposits acquired to maintain
the same as a result of either:
(a) any repayment or prepayment of the Loan or any part
thereof otherwise than (i) in accordance with
clause 4.1 or (ii) on an Interest Payment Date whether
on a voluntary or involuntary basis or otherwise
howsoever; or
(b) as a result of the Borrowers failing or being incapable
of drawing an Advance after a relevant Drawdown Notice has been
given;
Certified Copy means in relation to
any document delivered or issued by or on behalf of any company,
a copy of such document certified as a true, complete and up to
date copy of the original by any of the directors or officers
for the time being of such company or by such companys
attorneys or solicitors;
Charter Assignment means a specific
assignment of each Extended Employment Contract required to be
executed hereunder by any Borrower in favour of the Security
Trustee (including any notices
and/or
acknowledgements
and/or
undertakings associated therewith) in such form as the Agent and
the Majority Lenders may require in their sole discretion;
Charter Insurances means all policies
and contracts of insurance which are from time to time during
the Facility Period in place or taken out or entered into by or
for the benefit of the Owners in respect of loss of earnings and
all benefits thereof (including claims of whatsoever nature and
return of premiums);
Charter Insurance Assignment means a
first priority assignment of the Charter Insurances executed or
to be executed by such named insured as the Agent may require in
favour of the Security Trustee, in such form as the Agent and
the Majority Lenders may in their sole discretion require;
Classification means, in relation to
each Vessel, the highest class available for a vessel of her
type with the relevant Classification Society;
Classification Society means, in
relation to each Vessel, any IACS classification society which
the Lenders shall, at the request of the Borrowers, have agreed
in writing shall be treated as the classification society in
relation to such Vessel for the purposes of the relevant Ship
Security Documents;
Commitment means, in relation to the
Loan in relation to each Lender, the sum set out opposite its
name in schedule 1 or any replacement thereof and in
relation to each Tranche in relation to each Lender one third of
the sum set out opposite its name in schedule 1 or any
replacement thereof, or otherwise pursuant to the terms of any
relevant Transfer Certificate as the amount which, subject to
the terms of this Agreement, it is obliged to advance to the
Borrowers hereunder in respect of the Loan Facility, in each
case as such amount may have been reduced
and/or
cancelled under this Agreement;
Compliance Certificate means a
certificate substantially in the form set out in schedule 6
signed by the chief financial officer of the Corporate Guarantor;
Compulsory Acquisition means, in
respect of a Vessel, requisition for title or other compulsory
acquisition including, if that ship is not released therefrom
within the Relevant Period, capture, appropriation, forfeiture,
seizure, detention, deprivation or confiscation howsoever for
any reason (but excluding requisition for use or hire) by or on
behalf of any Government Entity or other competent authority or
by pirates, hijackers, terrorists or similar persons;
Relevant Period means for the purposes of this
definition of Compulsory Acquisition either (i) ninety
(90) days or, (ii) if relevant underwriters confirm in
writing (in customary terms) prior to the end of such ninety
(90) day period that such capture, seizure, detention or
confiscation will be covered by the relevant Owners war
risks insurance if
continuing for a further period exceeding ten (10) calendar
months, the shorter of twelve (12) months and such period
at the end of which cover is confirmed to attach;
Contribution means, at any relevant
time, in relation to each Lender, the principal amount of the
Loan owing to such Lender at such time;
Corporate Guarantee means the
guarantee required to be executed hereunder by the relevant
Corporate Guarantor in such form as the Agent and the Majority
Lenders may require in their sole discretion;
Default means any Event of Default or
any event or circumstance 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;
Delivered Tranche means each Tranche
which has been applied in financing a Vessel which has been
transferred and delivered by the Builder to its Owner;
Delivery Date means, in relation to a
Vessel, the date on which title to and possession of that Vessel
is transferred from the Builder to the relevant Borrower;
Dollars and
USD mean the lawful currency of the
USA and in respect of all payments to be made under any of the
Security Documents means funds which are for same day settlement
in the New York Clearing House Interbank Payments System (or
such other US dollar funds as may at the relevant time be
customary for the settlement of international banking
transactions denominated in US dollars);
Drawdown Date means, in relation to
each Advance, any date being a Banking Day falling during the
Drawdown Period, on which the relevant Advance is, or is to be,
made available;
Drawdown Notice means, in relation to
each Advance, a notice substantially in the form of
schedule 2;
Drawdown Period means the period
commencing on the Execution Date and ending in respect of:
(i) Tranche A on 26 September 2013;
(ii) Tranche B on 25 November 2013; and
(iii) Tranche C on 26 December 2013
or, in each case, on the latest date the Vessel to be
financed by the relevant Tranche may be delivered in accordance
with the Shipbuilding Contract relating thereto or on the date
on which the Commitment in respect of that Tranche is finally
cancelled or no longer available under the terms of this
Agreement;
Earnings Account means, in respect of
each Borrower, an interest bearing USD Account required to be
opened hereunder with the Account Bank in the name of that
Borrower designated [NAME OF BORROWER]
Earnings Account and includes any other account designated
in writing by the Payment Agent to be an Earnings Account for
the purposes of this Agreement;
Earnings Account Pledge means, in
respect of each Earnings Account, a first priority charge
required to be executed hereunder between the relevant Borrower
and the Security Trustee in respect of its Earnings Account in
such form as the Agent and the Majority Lenders may require in
their sole discretion, and in the plural means all of them;
Encumbrance means any mortgage,
charge, pledge, lien, hypothecation, assignment, title
retention, preferential right, option, trust arrangement or
security interest or other encumbrance, security or arrangement
conferring howsoever a priority of payment in respect of any
obligation of any person;
Environmental Affiliate means any
agent or employee of any Borrower, the Manager, or any other
Group Member or any other person having a contractual
relationship with any Borrower, the Manager, or any other Group
Member in connection with any Relevant Ship or its operation or
the
carriage of cargo
and/or
passengers thereon
and/or the
provision of goods
and/or
services on or from any Relevant Ship;
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 its operation or the carriage of cargo
and/or
passengers thereon
and/or the
provision of goods
and/or
services on or from any Relevant Ship required under any
Environmental Law;
Environmental Claim means (i) any
claim by any applicable Government Entity alleging breach of, or
non-compliance with, any Environmental Laws or Environmental
Approvals or otherwise howsoever relating to or arising out of
an Environmental Incident or (ii) any claim by any other
third party howsoever relating to or arising out of an
Environmental Incident (and, in each such case,
claim shall include a claim for damages
and/or
direction for
and/or
enforcement relating to
clean-up
costs, removal, compliance, remedial action or otherwise) or
(iii) any Proceedings arising from any of the foregoing;
Environmental Incident means,
regardless of cause, (i) any discharge or release of
Environmentally Sensitive Material from any Relevant Ship;
(ii) any incident in which Environmentally Sensitive
Material is discharged or released from a vessel other than a
Relevant Ship which involves collision between a Relevant Ship
and such other vessel or some other incident of navigation or
operation, in either case, where the Relevant Ship, the Manager
and/or the
relevant Owner
and/or the
relevant Group Member
and/or the
relevant Operator are actually, contingently or allegedly at
fault or otherwise howsoever liable (in whole or in part) or
(iii) any incident in which Environmentally Sensitive
Material is discharged or released from a vessel other than a
Relevant Ship and where such Relevant Ship is actually or
reasonably likely to be arrested as a result
and/or where
the Manager
and/or the
relevant Owner
and/or other
Group Member
and/or the
relevant Operator are actually or contingently at fault or
allegedly and reasonably likely to be found at fault or
otherwise howsoever liable to any administrative or legal action;
Environmental Laws means all laws,
regulations, conventions and agreements whatsoever relating to
pollution, human or wildlife well-being or protection of the
environment (including, without limitation, the United States
Oil Pollution Act of 1990 and any comparable laws of the
individual States of the USA);
Environmentally Sensitive Material
means oil, oil products or any other products or substance which
are polluting, toxic or hazardous or any substance the release
of which into the environment is howsoever regulated, prohibited
or penalised by or pursuant to any Environmental Law;
Equity Deposit Account means an
interest bearing USD Account required to be opened hereunder
with the Account Bank in the joint names of the Borrowers
designated Navios Equity Deposit Account
and includes any other account designated in writing by the
Agent to be the Equity Deposit Account for the purposes of this
Agreement;
Event of Default means any of the
events or circumstances listed in clause 10.1;
Execution Date means the date on which
this Agreement has been executed by all the parties hereto;
Extended Employment Contract means, in
respect of a Vessel, any time charterparty, contract of
affreightment or other contract of employment of such ship
(including the entry of any Vessel in any pool) which has a
tenor exceeding twenty four (24) months (including any
options to renew or extend such tenor);
Facility Period means the period
starting on the date of this Agreement and ending on such date
as all obligations whatsoever of all of the Security Parties
under or pursuant to the Security Documents whensoever arising,
actual or contingent, have been irrevocably paid, performed
and/or
complied with;
Final Delivery Date means the date on
which all of the Vessels shall have been transferred and
delivered by the Builder to the Borrowers;
Flag State means Panama or any other
country acceptable to the Lenders;
General Assignment means, in respect
of each Vessel, the deed of assignment of its earnings,
insurances and requisition compensation executed or to be
executed by the relevant Owner in favour of the Security Trustee
in such form as the Agent and the Majority Lenders may require
in their sole discretion and in the plural means all of them;
Government Entity means any national
or local government body, tribunal, court or regulatory or other
agency and any organisation of which such body, tribunal, court
or agency is a part or to which it is subject;
Group means at any relevant time the
Corporate Guarantor whose Corporate Guarantee is in force and
effect at that time and its subsidiaries but not including any
subsidiary which is listed on any public stock exchange;
Group Member means any member of the
Group;
Indebtedness means any obligation
howsoever arising (whether present or future, actual or
contingent, secured or unsecured as principal, surety or
otherwise) for the payment or repayment of money;
Interest Payment Date means, in
relation to each Tranche, the last day of an Interest Period
and, if an Interest Period is longer than 6 months, the
date falling at the end of each successive period of
6 months during such Interest Period starting from its
commencement;
Interest Period means each period for
the calculation of interest in respect of the Loan or, as the
case may be, Tranche ascertained in accordance with the
provisions of clause 3;
ISM Code Documentation means, in
relation to a Vessel, the document of compliance (DOC) and
safety management certificate (SMC) issued by a Classification
Society pursuant to the ISM Code in relation to that Vessel
within the periods specified by the ISM Code;
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
Organisation and includes any amendments or extensions thereto
and any regulations issued pursuant thereto;
ISSC means an International Ship
Security Certificate issued in respect of a Vessel pursuant to
the ISPS Code;
Latest Accounts means, in respect of
any financial quarter or year of the Group, the latest unaudited
(in respect of each financial quarter) or audited (in respect of
each financial year) financial statements required to be
prepared pursuant to clause 8.1.6;
Lenders means the banks listed in
schedule 1 and Transferee Lenders;
Lending Branch means, in respect of
each Lender, its office or branch at the address set out beneath
its name in schedule 1 (or, in the case of a Transferee, in
the Transfer Certificate to which it is a party as Transferee)
or such other office or branch as any Lender shall from time to
time select and notify through the Payment Agent to the other
parties to this Agreement;
LIBOR means, the greater of
(i) and (ii) below:
(i) the rate equal to the offered quotation for deposits in
USD in an amount comparable with the amount in relation to which
LIBOR is to be determined for a period equal to, or as near as
possible equal to, the relevant period which appears on Reuters
Screen LIBOR01 at or about 11 a.m.
on the second Banking Day before the first day of such period
(and, for the purposes of this Agreement, Reuters Screen
LIBOR01 means the display designated as
LIBOR01 on the Reuters Service or such other page as
may replace LIBOR01 on that service for the purpose of
displaying rates comparable to that rate or on such other
service as may be nominated by the British Bankers
Association as the information vendor for the purpose of
displaying the British Bankers Association Interest
Settlement Rates for USD); and
(ii) the rate per annum reasonably determined by the Agent
from any source the Agent may reasonably select to be the rate
which reflects the actual cost to the Lenders of funding their
respective Contributions (or the relevant part thereof) during
the relevant Interest Period;
Liquidity means the aggregate of all
cash deposits legally and beneficially owned by any Group Member
which:
(a) are free from any Encumbrance other than, in respect of
any deposit with a Bank, any Encumbrance given as security for
the obligations of the Borrowers under this Agreement; and
(b) are otherwise at the free and unrestricted disposal of
the relevant Group Member by which it is owned
but excluding any sums on the Equity Deposit Account;
Loan means the aggregate principal
amount in respect of the Loan Facility owing to the Lenders
under this Agreement at any relevant time;
Loan Facility means the loan facility
provided by the Lenders on the terms and subject to the
conditions of this Agreement in the amount of
USD 75,000,000;
Majority Lenders means at any relevant
time when there are two Lenders, both of them, and at any time
when there are more than two Lenders, the Lenders whose
Contributions exceed 75% of the Loan;
Management Agreement means, in respect
of each Vessel, the agreement between the relevant Owner and the
Manager, in a form previously approved in writing by the Agent
(acting on the instructions of the Majority Lenders);
Manager means Navios ShipManagement
Inc., a company incorporated in the Marshall Islands and having
its registered office at Trust Company Complex, Ajeltake
Road, Ajeltake Island, Majuro, Marshall Islands, MH96960 or
(without the need for the Agents consent) any other
subsidiary of Navios Maritime Holdings Inc. or any other person
appointed by an Owner, with the prior written consent of the
Agent, as the manager of the relevant Mortgaged Vessel;
Managers Undertakings means,
collectively, the undertakings and assignments required to be
executed hereunder by the Manager in favour of the Security
Trustee in respect of each of the Vessels each in such form as
the Agent and the Majority Lenders may require in their sole
discretion (and Managers Undertakings
means all of them);
Margin means, in relation to each
Interest Period 2.50% per annum;
Master Agreement means together
(i) an ISDA Master Agreement made or to be made between the
Swap Bank and the Borrowers;
Master Agreement Security Deed means
the security deed in respect of the Master Agreement executed or
(as the context may require) to be each executed by the
Borrowers in favour of the Security Trustee in such form as the
Agent and the Majority Lenders may require in their sole
discretion;
Material Adverse Effect means any
event or occurrence which the Majority Lenders reasonably
determine has had or could reasonably be expected to have a
material adverse effect on (i) the Banks rights
under, or the security provided by, any Security Document,
(ii) the ability of any Security Party to
perform or comply with any of its obligations under any Security
Document or (iii) the value or nature of the property,
assets, operations, liabilities or financial condition of any
Security Party;
Maturity Date means in respect of each
Tranche, the date falling 6 years after the Delivery Date
of the Vessel which is being financed by that Tranche;
MII & MAP Policy means a
mortgagees interest and pollution risks insurance policy
(including additional perils (pollution) cover) in respect of
each Mortgaged Vessel to be effected by the Security Trustee on
or before the first Drawdown Date to cover the Mortgaged Vessels
as the same may be renewed or replaced annually thereafter and
maintained throughout the Facility Period through such brokers,
with such underwriters and containing such coverage as may be
acceptable to the Security Trustee in its sole discretion,
insuring a sum of at least one hundred and ten per cent (110%)
of the Loan in respect of mortgagees interest insurance
and one hundred and ten per cent (110%) of the Loan in respect
of additional perils cover;
Minimum Liquidity means
(i) during 2010 and 2011 and up to the Final Delivery Date
USD40,000,000 and (ii) thereafter, USD35,000,000;
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 (a) 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 (b) 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 means, in respect of each
Vessel, the first preferred Ship mortgage thereof required to be
executed hereunder by the Owner thereof in favour of the
Security Trustee, each in such form as the Agent and the
Majority Lenders may require in their sole discretion and in the
plural means all of them;
Mortgaged Vessel means, at any
relevant time, any Vessel which is at such time subject to a
Mortgage and a Vessel shall, for the purposes of this Agreement,
be regarded as a Mortgaged Vessel as from the date on which the
Mortgage of that Vessel has been executed and registered in
accordance with this Agreement until whichever shall be the
earlier of (i) the payment in full of the amount required
to be paid to the Agent pursuant to clause 4.3 or 4.5 following
the Total Loss or sale respectively of such Vessel and
(ii) the end of the Facility Period;
Navios Acquisition means Navios
Maritime Acquisition Corporation a company incorporated in the
Marshall Islands and having its registered office at
Trust Company Complex, Ajeltake Road, Ajeltake Island,
Majuro, Marshall Islands, MH96960;
Negative Pledge means negative pledge
of the shares of and in each Borrower to be executed by the
Shareholder in favour of the Security Trustee in such form as
the Agent and the Majority Lenders may require in their sole
discretion and in the plural means all of them;
Net Profit means for each financial
year of the Corporate Guarantor, the Net Profit as set out in
the relevant Latest Accounts;
Net Worth means by reference to the
Latest Accounts, the Total Assets (based on book values) less
Total Liabilities of the Group;
Novation Agreement means each of the
Vessel A Novation Agreement, the Vessel B Novation Agreement and
the Vessel C Novation Agreement and in the plural means all of
them;
Operator means any person who is from
time to time during the Facility Period concerned in the
operation of a Relevant Ship and falls within the definition of
Company set out in rule 1.1.2 of the ISM Code;
Owner means, in relation to:
(i) Vessel A, Sifnos;
(ii) Vessel B, Skiathos; and
(iii) Vessel C, Syros,
and in the plural means all of them;
Payment Agent means Fortis Bank acting
through its office at Vas Sofias 94 & Kerasountos 1, 115 28
Athens, Greece (or of such other address as may last have been
notified to the other parties to this Agreement pursuant to
clause 17.2.3) or such other person as may be appointed as agent
by the Lenders pursuant to clause 16.13;
Permitted Encumbrance means any
Encumbrance in favour of the Banks or any of them created
pursuant to the Security Documents and Permitted Liens;
Permitted Liens means any lien on any
Vessel for masters, officers or crews wages
outstanding in the ordinary course of trading, any lien for
salvage and any ship repairers or outfitters
possessory lien for a sum not (except with the prior written
consent of the Agent) exceeding the Casualty Amount (as defined
in the Ship Security Documents for such Vessel);
Pertinent Jurisdiction means any
jurisdiction in which or where any Security Party is
incorporated, resident, domiciled, has a permanent establishment
or assets, carries on, or has a place of business or is
otherwise howsoever effectively connected;
Predelivery Security Assignment means,
in respect of each Vessel, a deed of assignment of the
Shipbuilding Contract and of the Refund Guarantee in respect
thereof in such form as the Agent and the Majority Lenders may
require in their sole discretion and in the plural means all of
them;
Prepayment Ratio means in respect of
the sale or Total Loss of a Mortgaged Vessel the Valuation
Amount of such Mortgaged Vessel immediately prior to such sale
or Total Loss divided by the Security Value immediately prior to
such sale or Total Loss and for these purposes any valuation of
a Vessel (calculated in accordance with Clause 8.2.2) may
be no more than two months old;
Proceedings means any litigation,
arbitration, legal action or complaint or judicial,
quasi-judicial or administrative proceedings whatsoever arising
or instigated by anyone (private or governmental) in any court,
tribunal, public office or other forum whatsoever and
wheresoever (including, without limitation, any action for
provisional or permanent attachment of any thing or for
injunctive remedies or interim relief and any action instigated
on an ex parte basis);
Refund Guarantee means each of the
Vessel A Refund Guarantee, the Vessel B Refund Guarantee and the
Vessel C Refund Guarantee and in the plural means all of them;
Refund Guarantor means, in relation to
each Vessel, the issuer of the Refund Guarantee in respect
thereof;
Registry means, in relation to each
Vessel, the office of the registrar, commissioner or
representative of the Flag State, who is duly empowered to
register such Vessel, the relevant Owners title thereto
and the relevant Mortgage under the laws and flag of the Flag
State;
Relevant Tranche means, in respect of
Vessel A, Tranche A, in respect of Vessel B, Tranche B
and in respect of Vessel C, Tranche C;
Relevant Ship means each of the
Vessels and any other ship from time to time (whether before or
after the date of this Agreement) owned, managed or crewed by,
or chartered to, any Group Member;
Repayment Dates means, in respect of
each Tranche, subject to clause 6.3, each of the dates
falling at six-monthly intervals after the Delivery Date in
respect of the Vessel which that Tranche finances, up to and
including the date falling 72 months after such date;
Required Authorisation means any
authorisation, consent, declaration, licence, permit, exemption,
approval or other document, whether imposed by or arising in
connection with any law, regulation, custom, contract, security
or otherwise howsoever which must be obtained at any time from
any person, Government Entity, central bank or other
self-regulating or supra-national authority in order to enable
the Borrowers lawfully to borrow the loan or draw any Advance
and/or to
enable any Security Party lawfully and continuously to continue
its corporate existence
and/or
perform all its obligations whatsoever whensoever arising
and/or grant
security under the relevant Security Documents
and/or to
ensure the continuous validity and enforceability thereof;
Required Security Amount means the
amount in USD (as certified by the Agent) which is at any
relevant time the Relevant Percentage of the aggregate of the
Delivered Tranches and any Swap Exposure where Relevant
Percentage means:
(i) during 2013, 110%;
(ii) thereafter, 115%;
Retention Account an interest bearing
USD Account required to be opened hereunder with the Account
Bank in the name of the Borrowers designated
Navios Retention Account and includes
any other account designated in writing by the Payment Agent to
be the Retention Account for the purposes of this Agreement;
Retention Account Pledge means a first
priority charge required to be executed hereunder between the
Borrowers and the Security Trustee in respect of the Retention
Account in such form as the Agent and the Majority Lenders may
require in their sole discretion;
Retention Amount means, in relation to
any Retention Date, such sum as shall be the aggregate of:
(a) One sixth (1/6th) of the repayment instalment in
respect of the relevant Tranche falling due for payment pursuant
to clause 4.1.1 (as the same may have been reduced by any
prepayment) on the next Repayment Date after the relevant
Retention Date in respect of that Tranche; and
(b) the applicable fraction (as hereinafter defined) of the
aggregate amount of interest falling due for payment in respect
of each part of the Loan during and at the end of each Interest
Period current at the relevant Retention Date and, for this
purpose, the expression applicable fraction
in relation to each Interest Period shall mean a fraction having
a numerator of one and a denominator equal to the number of
Retention Dates falling within the relevant Interest Period;
Retention Dates means the date falling
thirty (30) days after the final Drawdown Date in respect
of a Tranche and each of the dates falling at monthly intervals
after such date and prior to the Maturity Date in respect of
that Tranche;
Security Documents means this
Agreement, the Predelivery Security Assignments, the Master
Agreement, the Master Agreement Security Deed, the Mortgages,
the Corporate Guarantee, the General Assignments, the Charter
Assignments, the Earnings Account Pledge, the Managers
Undertakings, the Charter Insurance Assignments, the
Shares Pledges, the Negative Pledges, and any other
documents as may have been or shall from time to time after the
date of this Agreement be executed to guarantee
and/or to
govern
and/or
secure all or any part of the Loan, interest thereon and other
moneys from time to time owing by the Borrowers pursuant to this
Agreement
and/or the
Master Agreement (whether or not any such document also secures
moneys from time to time owing pursuant to any other document or
agreement);
Security Party means the Borrowers,
the Corporate Guarantor, the Shareholder or any other person who
may at any time be a party to any of the Security Documents
(other than the Banks);
Security Trustee means Fortis Bank
acting through its office at Vas Sofias 94 & Kerasountos
1,115 28 Athens, Greece (or of such other address as may last
have been notified to the other parties to this Agreement
pursuant to clause 17.2.3) or such other person as may be
appointed as Security Trustee
and trustee by the Lenders, the Arranger, Account Bank, Swap
Bank, the Payment Agent, and the Agent pursuant to
clause 16.14;
Security Value means the amount in USD
(as certified by the Agent) which is, at any relevant time, the
aggregate of (a) the Valuation Amounts of the Mortgaged
Vessels as most recently determined in accordance with
clause 8.2.2 and (b) the net realizable market value
of any additional security for the time being actually provided
to the Lenders pursuant to clause 8.2.1(b) and (c) and
cash over which there is an Encumbrance as security for the
obligations of the Borrowers under this Agreement;
Share Acquisition Date means the date
on which Navios Acquisition acquires, directly or indirectly,
all of the shares of and in the Shareholder;
Shareholder means Aegean Sea Maritime
Holdings Inc., a company incorporated in the Marshall Islands
and having its registered office at Trust Company Complex,
Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands,
MH96960;
Shares Pledge means the first
priority pledge of the shares of and in each Borrower to be
executed by the Shareholder in favour of the Security Trustee in
such form as the Agent and the Majority Lenders may require in
their sole discretion and in the plural means all of them;
Ship Security Documents means, in
relation to each Vessel, the relevant Mortgage, the relevant
General Assignment, any relevant Charter Assignment and the
relevant Managers Undertakings;
Shipbuilding Contract means each of
the Vessel A Shipbuilding Contract, the Vessel B Shipbuilding
Contract and the Vessel C Shipbuilding Contract and in the
plural means all of them;
Shipbuilding Contract Addendum means,
in respect of each Shipbuilding Contract, an addendum thereto
pursuant to which the relevant Borrower and the Builder agree to
vary the terms of the relevant Shipbuilding Contract, including,
inter alia, a reduction of the purchase price;
subsidiary of a person means any
company or entity directly or indirectly controlled by such
person, and for this purpose control means either
the ownership of more than fifty per cent (50%) of the voting
share capital (or equivalent rights of ownership) of such
company or entity or the power to direct its policies and
management, whether by contract or otherwise;
Swap Bank means Fortis Bank acting
through its through its office at Vas Sofias 94 &
Kerasountos 1, 115 28 Athens, Greece;
Swap Exposure means, as at any
relevant date the amount certified by the Swap Bank to be the
aggregate net amount in Dollars which would be payable by the
Borrowers to the Swap Bank under (and calculated in accordance
with) section 6(e) (Payments on Early Termination) of the
Master Agreement if an Early Termination Date (as therein
defined) had occurred on the relevant date in relation to all
continuing Transactions (as therein defined) entered into
between the Borrowers and the Swap Bank;
Taxes includes all present and future
income, corporation, capital or value-added taxes and all stamp
and other taxes and levies, imposts, deductions, duties, charges
and withholdings whatsoever together with interest thereon and
penalties in respect thereto, if any, and charges, fees or other
amounts made on or in respect thereof (and Taxation
shall be construed accordingly);
Total Assets and Total
Liabilities mean, respectively, the total assets
and total liabilities of the Group as evidenced at any relevant
time by the Latest Accounts, in which they shall have been
calculated by reference to the meanings assigned to them in
accordance with US GAAP provided that cash shall be deducted
from Total Assets and Total Liabilities;
Total Commitment means, at any
relevant time, the aggregate of the Commitments of all the
Lenders at such time (being the aggregate of the sums set out
opposite their names in schedule 1);
Total Loss means, in relation to each
Vessel:
(a) actual, constructive, compromised or arranged total
loss of such Vessel; or
(b) Compulsory Acquisition; or
(c) any hijacking, theft, condemnation, capture, seizure,
arrest, detention or confiscation of such Vessel not falling
within the definition of Compulsory Acquisition by any
Government Entity, or by persons allegedly acting or purporting
to act on behalf of any Government Entity, unless such Vessel be
released and restored to the relevant Owner within ninety
(90) days after such incident;
Tranche A means the amount of up
to USD25,00,000, being the aggregate of all of the Advances to
be made available by the Lender to the Borrowers to assist
Sifnos in its acquisition of Vessel A or, as the context
requires, the amount thereof outstanding from time to time;
Tranche B means the amount of up
to USD25,000,000, being the aggregate of all of the Advances to
be made available by the Lender to the Borrowers to assist
Skiathos in its acquisition of Vessel B or, as the context
requires, the amount thereof outstanding from time to time;
Tranche C means the amount of up
to USD25,000,000, being the aggregate of all of the Advances to
be made available by the Lender to the Borrowers to assist Syros
in its acquisition of Vessel C or, as the context requires, the
amount thereof outstanding from time to time;
Tranche means any of Tranche A,
Tranche B or Tranche C and in the plural means all of
them;
Transaction means a Transaction as
defined in the Master Agreement;
Transfer Certificate means a
certificate in substantially the form set out in schedule 4;
Transferee Lender has the meaning
ascribed thereto in clause 15.3;
Transferor Lender has the meaning
ascribed thereto in clause 15.3;
Trust Deed means a trust deed in
the form, or substantially in the form, set out in
schedule 5;
Trust Property means (i) the
security, powers, rights, titles, benefits and interests (both
present and future) constituted by and conferred on the Banks or
any of them under or pursuant to the Security Documents
(including, without limitation, the benefit of all covenants,
undertakings, representations, warranties and obligations given,
made or undertaken to any Bank in the Security Documents),
(ii) all moneys, property and other assets paid or
transferred to or vested in any Bank (or anyone else on such
Banks behalf) or received or recovered by any Bank (or
anyone else on such Banks behalf) pursuant to, or in
connection with, any of the Security Documents whether from any
Security Party or any other person and (iii) all moneys,
investments, property and other assets at any time representing
or deriving from any of the foregoing, including all interest,
income and other sums at any time received or receivable by any
Bank (or anyone else on such Banks behalf) in respect of
the same (or any part thereof);
Underlying Documents means, together,
the Shipbuilding Contracts, the Shipbuilding Contract Addenda,
the Novation Agreements, the Refund Guarantees and the
Management Agreement;
Unlawfulness means any event or
circumstance which either is or, as the case may be, might in
the opinion of the Agent become the subject of a notification by
the Agent to the Borrowers under clause 12.1;
USA means the United States of America;
Valuation Amount means, in respect of
each Mortgaged Vessel, the value thereof as most recently
determined under clause 8.2.2; and
Vessel means each of Vessel A, Vessel
B and Vessel C and in the plural means all of them.
Words and expressions defined in Schedule 7 (Vessel
Details) shall have the meanings given to them therein as if the
same were set out in full in this clause 1.2.
1.3 Construction
In this Agreement, unless the context otherwise requires:
1.3.1 clause headings and the index are inserted for
convenience of reference only and shall be ignored in the
construction of this Agreement;
1.3.2 references to clauses and schedules are to be
construed as references to clauses of, and schedules to, this
Agreement and references to this Agreement include its schedules
and any supplemental agreements executed pursuant hereto;
1.3.3 references to (or to any specified provision of) this
Agreement or any other document shall be construed as references
to this Agreement, that provision or that document as in force
for the time being and as duly amended
and/or
supplemented
and/or
novated;
1.3.4 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 Government Entity, central bank or any self-regulatory or
other supra-national authority;
1.3.5 references to any person in or party to this
Agreement shall include reference to such persons lawful
successors and assigns and references to a Lender shall also
include a Transferee Lender;
1.3.6 words importing the plural shall include the singular
and vice versa;
1.3.7 references to a time of day are, unless otherwise
stated, to London time;
1.3.8 references to a person shall be construed as
references to an individual, firm, company, corporation or
unincorporated body of persons or any Government Entity;
1.3.9 references to a guarantee include
references to an indemnity or any other kind of assurance
whatsoever (including, without limitation, any kind of
negotiable instrument, bill or note) against financial loss or
other liability including, without limitation, an obligation to
purchase assets or services as a consequence of a default by any
other person to pay any Indebtedness and guaranteed
shall be construed accordingly;
1.3.10 references to any statute or other legislative
provision are to be construed as references to any such statute
or other legislative provision as the same may be re enacted or
modified or substituted by any subsequent statute or legislative
provision (whether before or after the date hereof) and shall
include any regulations, orders, instruments or other
subordinate legislation issued or made under such statute or
legislative provision;
1.3.11 a certificate by the Agent, the Payment Agent or the
Security Trustee as to any amount due or calculation made or any
matter whatsoever determined in connection with this Agreement
shall be conclusive and binding on the Borrowers except for
manifest error;
1.3.12 if any document, term or other matter or thing is
required to be approved, agreed or consented to by any of the
Banks such approval, agreement or consent must be obtained in
writing unless the contrary is stated;
1.3.13 time shall be of the essence in respect of all
obligations whatsoever of the Borrowers under this Agreement,
howsoever and whensoever arising;
1.3.14 and the words other and
otherwise shall not be construed eiusdem generis
with any foregoing words where a wider construction is possible.
1.4 Accounting
terms and references to currencies
Currencies are referred to in this Agreement by the three letter
currency codes (ISO 4217) allocated to them by the
International Organisation for Standardisation.
1.5 Contracts
(Rights of Third Parties Act) 1999
Except for clause 20, no part of this Agreement shall be
enforceable under the Contracts (Rights of Third Parties) Act
1999 by a person who is not a party to this Agreement.
1.6 Majority
Lenders
Where this Agreement or any other Security Document provides for
any matter to be determined by reference to the opinion of the
Majority Lenders or to be subject to the consent or request of
the Majority Lenders or for any decision or action to be taken
on the instructions in writing of the Majority Lenders, such
opinion, consent, request or instructions shall (as between the
Lenders) only be regarded as having been validly given or issued
by the Majority Lenders if all the Lenders with a Commitment
and/or
Contribution shall have received prior notice of the matter on
which such opinion, consent, request or instructions are
required to be obtained and the relevant majority of such
Lenders shall have given or issued such opinion, consent,
request or instructions but so that (as between the Borrowers
and the Banks) the Borrowers shall be entitled (and bound) to
assume that such notice shall have been duly received by each
relevant Lender and that the relevant majority shall have been
obtained to constitute Majority Lenders whether or not this is
in fact the case.
2 THE
AVAILABLE COMMITMENT AND CANCELLATION
2.1 Agreement
to lend
The Lenders, relying upon each of the representations and
warranties in clause 7, agree to provide to the Borrowers
upon and subject to the terms of this Agreement, the Tranches,
for the purposes of financing part of the purchase price of the
Vessels. Subject to the terms of this Agreement, the obligations
of the Lenders shall be to contribute to each Advance, the
proportion of the relevant Advance which their respective
Commitments bear to the Total Commitment on any relevant
Drawdown Date.
2.2 Obligations
several
The obligations of the Lenders under this Agreement are several
according to their respective Commitments
and/or
Contributions. The failure of any Lender to perform such
obligations shall not relieve any other party to this Agreement
of any of its respective obligations or liabilities under this
Agreement nor shall any Bank be responsible for the obligations
of any other Bank (except for its own obligations, if any, as a
Lender) under this Agreement.
2.3 Interests
several
Notwithstanding any other term of this Agreement (but without
prejudice to the provisions of this Agreement relating to or
requiring action by the Majority Lenders) the interests of the
Banks are several and the amount due to any Bank is a separate
and independent debt. Each Bank shall have the right to protect
and enforce its rights arising out of this Agreement and it
shall not be necessary for any other Bank to be joined as an
additional party in any Proceedings for this purpose.
2.4 Drawdown
2.4.1 On the terms and subject to the conditions of this
Agreement, each Tranche shall be advanced in up to six
(6) Advances each on the relevant Drawdown Dates following
receipt by the Payment Agent from the Borrowers of Drawdown
Notices not later than 10 a.m. on the third Banking Day
before each proposed Drawdown Date.
2.4.2 A Drawdown Notice shall be effective on actual
receipt by the Payment Agent and, once given, shall, subject as
provided in clause 3.6, be irrevocable.
2.5 Amount
2.5.1 The principal amount specified in each Drawdown
Notice for borrowing on the Drawdown Dates shall, subject to the
terms of this Agreement, in respect of each Tranche not exceed:
(a) USD6,512,000 payable to the relevant seller or its
financiers under the relevant Novation Agreement;
(b) USD5,546,400 in respect of the instalment payable to
the Builder on the relevant Shipbuilding Contract Addendum
becoming effective;
(c) USD3,697,600 to the Builder under the relevant
Shipbuilding Contract in respect of the steel-cutting instalment;
(d) USD3,697,600 to the Builder under the relevant
Shipbuilding Contract in respect of the
keel-laying
instalment;
(e) USD3,697,600 to the Builder under the relevant
Shipbuilding Contract in respect of the launching
instalment; and
(f) USD1,848,800 to the Builder under the relevant
Shipbuilding Contract in respect of the delivery instalment.
2.6 Availability
Upon receipt of a Drawdown Notice complying with the terms of
this Agreement, the Payment Agent shall promptly notify each
Lender and each Lender shall make available to the Payment Agent
its portion of the relevant Advance for payment by the Payment
Agent in accordance with clause 6.2. The Borrowers
acknowledge that payment of any Advance to the account referred
to in the relevant Drawdown Notice shall satisfy the obligation
of the Lenders to lend that Advance to the Borrowers under this
Agreement.
2.7 Voluntary
cancellation of Facility
The Borrowers may at any time during the Drawdown Period by
notice to the Payment Agent (effective only on actual receipt)
cancel with effect from a date not less than five Banking Days
after the receipt by the Payment Agent of such notice the whole
or any part (being two million Dollars (USD 2,000,000) or any
larger sum which is an integral multiple of two million Dollars
(USD 2,000,000)) of the Total Commitment. Any such notice of
cancellation, once given, shall be irrevocable and the Total
Commitment shall be reduced accordingly and each Lenders
Commitment shall be reduced pro rata according to the proportion
which its Commitment bears to the Total Commitment.
2.8 Cancellation
in changed circumstances
The Borrowers may also at any time during the Facility Period by
notice to the Payment Agent (effective only on actual receipt)
prepay and cancel with effect from a date not less than fifteen
(15) days after receipt by the Payment Agent of such
notice, the whole but not part only, but without prejudice to
the Borrowers obligations under clauses 6.6 and 12,
of the Contribution and Commitment (if any) of any Lender to
which the Borrowers shall have become obliged to pay additional
amounts under clause 12 or clause 6.6. Upon any notice
of such prepayment and cancellation being given, the Commitment
of the relevant Lender shall be reduced to zero, the Borrowers
shall be obliged to prepay the Contribution of such Lender and
such Lenders related costs (including but not limited to
Break Costs) on such date and such Lender shall be under no
obligation to participate in the Loan or any further Advances.
2.9 Use
of proceeds
Without prejudice to the Borrowers obligations under
clause 8.1.4, no Bank shall have any responsibility for the
application of the proceeds of any Advance or any part thereof
by the Borrowers.
3 INTEREST
AND INTEREST PERIODS
3.1 Normal
interest rate
The Borrowers must pay interest on each Tranche in respect of
each Interest Period relating thereto on each Interest Payment
Date at the rate per annum determined by the Payment Agent to be
the aggregate of (a) the Margin and (b) LIBOR.
3.2 Selection
of Interest Periods
Subject to clause 3.3, the Borrowers may by notice received
by the Payment Agent not later than 10:00 a.m. on the
fourth Banking Day before the beginning of each Interest Period
specify whether such Interest Period shall have a duration of
three (3), six (6) or twelve (12) months or such other
period as the Borrowers may select and the Payment Agent (acting
on the instructions of the Lenders) may agree, and if the
Borrowers wishes to specify an Interest Period of more than
12 months, it must give at least 5 Banking Days prior
notice thereof.
3.3 Determination
of Interest Periods
Subject to Clause 3.3.1 every Interest Period shall be of
the duration specified by the Borrowers pursuant to
clause 3.2 but so that:
3.3.1 the first Interest Period in respect of each Tranche
shall start on the Drawdown Date in respect of the first Advance
in respect of that Tranche, and each subsequent Interest Period
shall start on the last day of the previous Interest Period;
3.3.2 the first Interest Period in respect of each
subsequent Advance shall commence on its Drawdown Date and
terminate simultaneously with the Interest Period which is then
current for the Tranche under which the Advance is made
available;
3.3.3 if any Interest Period would otherwise overrun a
relevant Repayment Date, then the relevant Tranche shall be
divided into parts so that there is one part in the amount of
the repayment instalment due on such Repayment Date and having
an Interest Period ending on the relevant Repayment Date and
another part in the amount of the balance of that Tranche having
an Interest Period ascertained in accordance with
clause 3.2 and the other provisions of this
clause 3.3; and
3.3.4 if the Borrowers fail to specify the length of an
Interest Period in accordance with the provisions of
clause 3.2 and this clause 3.3 such Interest Period
shall last three months or such other period as complies with
this clause 3.3.
3.4 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 Security Documents,
the Borrowers must pay interest on such sum on demand from the
due date up to the date of actual payment (as well after as
before judgment) at a rate determined by the Payment Agent
pursuant to this clause 3.4. The period starting on such
due date and ending on such date of payment shall be divided
into successive periods of not more than three (3) months
as selected by the Payment Agent each of which (other than the
first, which shall start on such due date) shall start 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 Payment Agent) of (a) two per cent
(2%) per annum, (b) the Margin and (c) LIBOR
for such periods. Such interest shall be due and payable on
demand, or, if no demand is made, then on the last day of each
such period as determined by the Payment Agent and on the day on
which all amounts in respect of which interest is being paid
under this Clause are paid, 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 an amount of principal
which became due and payable by reason of a declaration by the
Payment Agent under clause 10.2.2 or a prepayment pursuant
to clauses 4.3, 4.5, 8.2.1(a) or 12.1, on a date other than
an Interest Payment Date relating thereto, the first such period
selected by the Payment Agent 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 of two per cent
(2%) above the rate applicable thereto immediately before
it shall have become so due and payable. If, for the reasons
specified in clause 3.6.1, the Payment Agent is unable to
determine a rate in accordance with the foregoing provisions of
this clause 3.4, each Lender shall promptly notify the
Payment Agent of the cost of funds to such Lender and interest
on any sum not paid on its due date for payment shall be
calculated at a rate determined by the Payment Agent to be two
per cent (2%) per annum above the aggregate of the Margin
and the arithmetic mean of the cost of funds to the Lenders
compounded at such intervals as the Payment Agent selects.
3.5 Notification
of Interest Periods and interest rate
The Payment Agent agrees to notify (i) the Lenders promptly
of the duration of each Interest Period and (ii) the
Borrowers and the Lenders promptly of each rate of interest
determined by it under this clause 3.
3.6 Market
disruption; non-availability
3.6.1 Whenever, at any time prior to the commencement of
any Interest Period:
(a) the Payment Agent shall have determined that adequate
and fair means do not exist for ascertaining LIBOR during such
Interest Period; or
(b) the Payment Agent shall have received notification from
a Lender or Lenders that deposits in USD are not available to
such Lender or Lenders in the London InterBank Market in the
ordinary course of business to fund their Contributions to the
Loan for such Interest Period
(c) the Payment Agent must promptly give notice (a
Determination Notice) thereof to the
Borrowers and to each of the Lenders. A Determination Notice
shall contain particulars of the relevant circumstances giving
rise to its issue. After the giving of any Determination Notice,
regardless of any other provision of this Agreement, the
Commitment shall not be borrowed until notice to the contrary is
given to the Borrowers by the Payment Agent.
3.6.2 Within ten (10) days of any Determination Notice
being given by the Payment Agent under clause 3.6.1, each
Lender must certify an alternative basis (the
Alternative Basis) for maintaining its
Contribution. The Alternative Basis may at the relevant
Lenders sole discretion include (without limitation)
alternative interest periods, alternative currencies or
alternative rates of interest but shall include a Margin above
the cost of funds to such Lender. The Payment Agent shall
calculate the arithmetic mean of the Alternative Bases provided
by the relevant Lenders (the Substitute
Basis) and certify the same to the Borrowers and the
Lenders. The Substitute Basis so certified shall be binding upon
the Borrowers, and shall take effect in accordance with its
terms from the date specified in the Determination Notice until
such time as the Payment Agent notifies the Borrowers that none
of the circumstances specified in clause 3.6.1 continues to
exist whereupon the normal interest rate fixing provisions of
this Agreement shall again apply and, subject to the other
provisions of this Agreement, the Commitment may again be
borrowed.
3.7 Interest
Rate Swaps
If the Borrowers wish to enter into any interest rate swaps in
respect of the Loan or any part thereof, they must do so with
the Swap Bank under the Master Agreement.
4 REPAYMENT
AND PREPAYMENT
4.1 Repayment
4.1.1 Subject as otherwise provided in this Agreement, the
Borrowers must repay each Tranche by 12 equal semi-annual
instalments of USD750,000 each, one such instalment to be repaid
on each of the Repayment Dates and a balloon instalment of
USD16,000,000 to be repaid on the relevant final Repayment Date.
If the Commitment in respect of any Tranche is not drawn in
full, the amount of each repayment instalments for that Tranche
shall be reduced proportionately.
4.1.2 The Borrowers shall on the Maturity Date in respect
of the last Tranche to be repaid also pay to the Payment Agent
and the Lenders all other amounts in respect of interest or
otherwise then due and payable under this Agreement and the
Security Documents.
4.2 Voluntary
prepayment
Subject to clauses 4.6 and 4.7 the Borrowers may, subject
to having given 15 Banking Days prior notice thereof to the
Payment Agent, prepay any specified amount (such part being in
an amount of two million five hundred thousand Dollars (USD
2,500,000) or any larger sum which is an integral multiple of
such amount) of any Tranche on any relevant Interest Payment
Date without premium or penalty.
4.3 Mandatory
Prepayment on Total Loss
On the date falling one hundred and eighty (180) days after
that on which a Mortgaged Vessel became a Total Loss or, if
earlier, on the date upon which the relevant insurance proceeds
are, or Requisition Compensation (as defined in the Mortgage for
such Vessel) is, received by the relevant Borrower (or the
Security Trustee pursuant to the Security Documents), the
Borrowers must prepay the Loan by an amount equal to the greater
of (i) the Relevant Tranche and (ii) the amount of the
Loan on the date on which such prepayment is required to be made
multiplied by the Prepayment Ratio.
4.3.1 Interpretation
For the purpose of this Agreement, a Total Loss shall be deemed
to have occurred:
(a) in the case of an actual total loss of a Vessel, on the
actual date and at the time such Vessel was lost or, if such
date is not known, on the date on which such Vessel was last
reported;
(b) in the case of a constructive total loss of a Vessel,
upon the date and at the time notice of abandonment of the ship
is given to the then insurers of such Vessel (provided a claim
for total loss is admitted by such insurers) or, if such
insurers do not immediately admit such a claim, at the date and
at the time at which either a total loss is subsequently
admitted by such insurers or a total loss is subsequently
adjudged by a competent court of law or arbitration tribunal to
have occurred;
(c) in the case of a compromised or arranged total loss of
a Vessel, on the date upon which a binding agreement as to such
compromised or arranged total loss has been entered into by the
then insurers of such Vessel;
(d) in the case of Compulsory Acquisition, on the date upon
which the relevant requisition of title or other compulsory
acquisition occurs; and
(e) in the case of hijacking, theft, condemnation, capture,
seizure, arrest, detention or confiscation of a Vessel (other
than within the definition of Compulsory Acquisition) by any
Government Entity, or by persons allegedly acting or purporting
to act on behalf of any Government Entity, which deprives an
Owner of the use of such Vessel for more than ninety
(90) days, upon the expiry of the period of ninety
(90) days after the date upon which the relevant incident
occurred.
4.4 Mandatory
prepayment on sale of Mortgaged Vessel
On the date of completion of the sale of a Mortgaged Vessel the
Borrowers must prepay the Loan by an amount equal to the greater
of (i) the Relevant Tranche and (ii) the amount of the
Loan on the date on which such prepayment is required to be made
multiplied by the Prepayment Ratio.
4.5 Mandatory
prepayment on termination of a Shipbuilding
Contract
If a Shipbuilding Contract is terminated, cancelled, revoked,
suspended, rescinded, transferred, novated or otherwise ceases
to remain in full force and effect for any reason except with
the consent of the Agent, the Borrowers must upon the
Agents demand prepay the Tranche financing the relevant
Borrowers obligations
under that Shipbuilding Contract and the Commitment in respect
of such Tranche shall be irrevocably cancelled upon such demand
being made.
4.6 Amounts
payable on prepayment
Any prepayment of all or part of the Loan under this Agreement
shall be made together with:
4.6.1 accrued interest on the amount to be prepaid to the
date of such prepayment;
4.6.2 any additional amount payable under clauses 3.6,
6.6 or 12.2; and
4.6.3 all other sums payable by the Borrowers to the Banks
under this Agreement or any of the other Security Documents
including, without limitation any Break Costs and, if the whole
Loan is being prepaid, any accrued commitment commission payable
under clause 5.1.
4.7 Notice
of prepayment; reduction of maximum loan amount
4.7.1 Every notice of prepayment shall be effective only on
actual receipt by the Payment Agent, shall be irrevocable, shall
specify the amount to be prepaid and the Tranche which is to be
prepaid and shall oblige the Borrowers to make such prepayment
on the date specified. Subject to the other provisions of this
Agreement and in particular Clause 2.6, no amount prepaid
under this Clause 4 in respect of the Loan may be
reborrowed.
4.7.2 Any amounts prepaid pursuant to clause 4.2 shall
be applied against the relevant Tranche in reducing the Balloon
Instalment and other outstanding repayment instalments pro rata.
4.7.3 Any amounts prepaid pursuant to clauses 4.3, 4.4
or 4.5 shall be applied against the Relevant Tranche and
thereafter against the Loan in accordance with clause 4.7.2.
4.7.4 The Borrowers obligations set out in
Clause 4.1.1 shall not be affected by any prepayment in
respect of the Loan pursuant to clause 4.2.
4.7.5 The Borrowers may not prepay any part of the Loan
except as expressly provided in this Agreement.
5 FEES
AND EXPENSES
5.1 Commission
5.1.1 The Borrowers agree to pay to the Payment Agent for
the account of the Lenders pro rata in accordance with their
Total Commitments quarterly in arrears from the Execution Date
until the end of the Drawdown Period and on the last day of the
Drawdown Period commitment commission computed from the
Execution Date at a rate of zero point six per cent (0.60%) per
annum on the daily amount of the undrawn Loan Facility.
5.1.2 The commission referred to in clause 5.1.1 must
be paid by the Borrowers to the Payment Agent, whether or not
any part of the Total Commitment is ever advanced and shall be
non-refundable.
5.2 Arrangement
Fee
The Borrowers shall pay to the Payment Agent on the first
Drawdown Date an arrangement fee of USD562,500 for the account
of the Lenders in such proportion as they shall agree between
them.
5.3 Expenses
The Borrowers agree to reimburse the Banks on a full indemnity
basis within ten (10) days of demand all expenses
and/or
disbursements whatsoever (including without limitation legal,
printing, travel and out of
pocket expenses and expenses related to the provision of legal
and insurance opinions referred to in
schedule 3) certified by the Banks or any of them as
having been incurred by them from time to time:
5.3.1 in connection howsoever with the syndication of the
Loan Facility and with the negotiation, preparation, execution
and, where relevant, registration of the Security Documents and
of any contemplated or actual amendment, or indulgence or the
granting of any waiver or consent howsoever in connection with,
any of the Security Documents (including legal fees and any
travel expenses); and
5.3.2 in contemplation or furtherance of, or otherwise
howsoever in connection with, the exercise or enforcement of, or
preservation of any rights, powers, remedies or discretions
under any of the Security Documents, or in consideration of the
Banks rights thereunder or any action proposed or taken
following the occurrence of a Default or otherwise in respect of
the moneys owing under any of the Security Documents, together
with interest at the rate referred to in clause 3.4 from
the date on which reimbursement of such expenses
and/or
disbursements were due following demand to the date of payment
(as well after as before judgment).
5.4 Value
added tax
All fees and expenses payable pursuant to this Agreement must be
paid together with value added tax or any similar tax (if any)
properly chargeable thereon in any jurisdiction. Any value added
tax chargeable in respect of any services supplied by the Banks
or any of them under this Agreement shall, on delivery of the
value added tax invoice, be paid in addition to any sum agreed
to be paid hereunder.
5.5 Stamp
and other duties
The Borrowers must pay all stamp, documentary, registration or
other like duties or taxes (including any duties or taxes
payable by any of the Banks) imposed on or in connection with
any of the Underlying Documents, the Security Documents or the
Loan or any Advance and agree to indemnify the Banks or any of
them against any liability arising by reason of any delay or
omission by the Borrowers to pay such duties or taxes.
6 PAYMENTS
AND TAXES; ACCOUNTS AND CALCULATIONS
6.1 No
set-off or counterclaim
All payments to be made by the Borrowers under any of the
Security Documents must be made in full, without any set off or
counterclaim whatsoever and, subject as provided in
clause 6.6, free and clear of any deductions or
withholdings, in USD on or before 11:00 am on the due date in
freely available funds to such account at such bank and in such
place as the Payment Agent may from time to time specify for
this purpose. Save as otherwise provided in this Agreement or
any other relevant Security Documents, such payments shall be
for the account of all Lenders and the Payment Agent shall
distribute such payments in like funds as are received by the
Payment Agent to the Lenders rateably, in the proportions which
their respective Contributions bear to the aggregate of the Loan
and the Advances on the date on which such payment is made.
6.2 Payment
by the Lenders
All sums to be advanced by the Lenders to the Borrowers under
this Agreement shall be remitted in USD on the relevant Drawdown
Date to the account of the Payment Agent at such bank as the
Payment Agent may have notified to the Lenders and shall be paid
by the Payment Agent on such date in like funds as are received
by the Payment Agent to the account specified in the relevant
Drawdown Notice.
6.3 Non-Banking
Days
When any payment under any of the Security Documents would
otherwise be due on a day which is not a Banking Day, the due
date for payment shall be extended to the next following Banking
Day unless such Banking Day falls in the next calendar month in
which case payment shall be made on the immediately preceding
Banking Day.
6.4 Calculations
All interest and other payments of an annual nature under any of
the Security Documents shall accrue from day to day and be
calculated on the basis of actual days elapsed and a three
hundred and sixty (360) day year.
6.5 Currency
of account
If any sum due from the Borrowers under any of the Security
Documents, or under any order or judgment given or made in
relation thereto, must be converted from the currency (the
first currency) in which the same is payable thereunder
into another currency (the second currency) for the
purpose of (i) making or filing a claim or proof against
the Borrowers, (ii) obtaining an order or judgment in any
court or other tribunal or (iii) enforcing any order or
judgment given or made in relation thereto, the Borrowers
undertake to indemnify and hold harmless the Lender from and
against any loss suffered as a result of any discrepancy 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,
judgment, claim or proof. Any amount due from the Borrowers
under this clause 6.5 shall be due as a separate debt and
shall not be affected by judgment being obtained for any other
sums due under or in respect of any of the Security Documents
and 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.
6.6 Grossing-up
for Taxes by the Borrowers
If at any time the Borrowers must make any deduction or
withholding in respect of Taxes or deduction in respect of any
royalty payment, duty, assessment or other charge or otherwise
from any payment due under any of the Security Documents for the
account of any Bank or if the Payment Agent or the Security
Trustee must make any deduction or withholding from a payment to
another Bank or withholding in respect of Taxes from any payment
due under any of the Security Documents, the sum due from the
Borrowers in respect of such payment must be increased to the
extent necessary to ensure that, after the making of such
deduction or withholding, the relevant Bank receives on the due
date for such payment (and retains, free from any liability in
respect of such deduction or withholding), a net sum equal to
the sum which it would have received had no such deduction or
withholding been required to be made and the Borrowers must
indemnify each Bank against any losses or costs incurred by it
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. Provided
however that if any Bank or the Agent or the Security Trustee
shall be or become entitled to any Tax credit or relief in
respect of any Tax which is deducted from any payment by the
Borrowers and it actually receives a benefit from such Tax
credit or relief in its country of domicile, incorporation or
residence, the relevant Bank or the Agent or the Security
Trustee, as the case may be, shall, subject to any laws or
regulations applicable thereto, pay to the Borrowers after such
benefit is effectively received by the relevant Bank or the
Agent or the Security Trustee, as the case may be, such amounts
(which shall be conclusively certified by the Agent) as shall
ensure that the net amount actually retained by the relevant
Bank or the Agent or the Security Trustee, as the case may be,
is equal to the amount which would have been retained if there
had been no such deduction. The Borrowers must promptly deliver
to the Payment Agent any receipts, certificates or other proof
evidencing the amounts (if any) paid or payable in respect of
any deduction or withholding as aforesaid.
6.7 Grossing-up
for Taxes by the Lenders
If at any time a Lender must make any deduction or withholding
in respect of Taxes from any payment due under any of the
Security Documents for the account of the Payment Agent or the
Security Trustee, the sum due from such Lender in respect of
such payment must be increased to the extent necessary to ensure
that, after the making of such deduction or withholding, the
Payment Agent or, as the case may be, the Security Trustee
receives on the due date for such payment (and retains free from
any liability in respect of
such deduction or withholding) a net sum equal to the sum which
it would have received had no such deduction or withholding been
required to be made and each Lender must indemnify the Payment
Agent and the Security Trustee against any losses or costs
incurred by it by reason of any failure of such Lender to make
any such deduction or withholding or by reason of any increased
payment not being made on the due date for such payment.
6.8 Loan
account
Each Lender shall maintain, in accordance with its usual
practice, an account evidencing the amounts from time to time
lent by, owing to and paid to it under the Security Documents.
The Payment Agent
and/or the
Security Trustee shall maintain a control account showing the
Loan, the Advances and other sums owing by the Borrowers under
the Security Documents and all payments in respect thereof being
made from time to time. The control account shall, in the
absence of manifest error, be prima facie evidence of the amount
from time to time owing by the Borrowers under the Security
Documents.
6.9 Payment
Agent may assume receipt
Where any sum is to be paid under the Security Documents to the
Payment Agent or, as the case may be, the Security Trustee for
the account of another person, the Payment Agent or, as the case
may be, the Security Trustee may assume that the payment will be
made when due and the Payment Agent or, as the case may be, the
Security Trustee may (but shall not be obliged to) make such sum
available to the person so entitled. If it proves to be the case
that such payment was not made to the Payment Agent or, as the
case may be, the Security Trustee, then the person to whom such
sum was so made available must on request refund such sum to the
Payment Agent or, as the case may be, the Security Trustee
together with interest thereon sufficient to compensate the
Payment Agent or, as the case may be, the Security Trustee for
the cost of making available such sum up to the date of such
repayment and the person by whom such sum was payable must
indemnify the Payment Agent or, as the case may be, the Security
Trustee for any and all loss or expense which the Payment Agent
or, as the case may be, the Security Trustee may sustain or
incur as a consequence of such sum not having been paid on its
due date.
6.10 Partial
payments
If, on any date on which a payment is due to be made by the
Borrowers under any of the Security Documents, the amount
received by the Payment Agent from the Borrowers falls short of
the total amount of the payment due to be made by the Borrowers
on such date then, without prejudice to any rights or remedies
available to the Payment Agent, the Security Trustee and the
Lenders under any of the Security Documents, the Payment Agent
must apply the amount actually received from the Borrowers in or
towards discharge of the obligations of the Borrowers under the
Security Documents in the following order, notwithstanding any
appropriation made, or purported to be made, by the Borrowers:
6.10.1 first, in or towards payment, on a pro-rata basis,
of any unpaid costs and expenses of the Payment Agent, the Agent
and the Security Trustee under any of the Security Documents;
6.10.2 secondly, in or towards payment of any fees payable
to the Arranger, the Agent or any of the other Banks under, or
in relation to, the Security Documents which remain unpaid;
6.10.3 thirdly, in or towards payment to the Lenders, on a
pro rata basis, of any accrued interest owing in respect of the
Loan which shall have become due under any of the Security
Documents but remains unpaid;
6.10.4 fourthly, in or towards repayment of the Loan which
have become due and payable and in or towards payment to the
Swap Bank of any sum which shall have become due under the
Master Agreement but remains unpaid;
6.10.5 fifthly, in or towards payment to the Lenders, on a
pro rata basis, any Break Costs and any other sum relating to
the Loan which shall have become due under any of the Security
Documents but remains unpaid; and
The order of application set out in clauses 6.10.1 to
6.10.5 may be varied by the Payment Agent if the Majority
Lenders so direct, without any reference to, or consent or
approval from, the Borrowers.
7 REPRESENTATIONS
AND WARRANTIES
7.1 Continuing
representations and warranties
The Borrowers represent and warrant to each Bank that:
7.1.1 Due incorporation
each of the Security Parties is duly incorporated and validly
existing in good standing, under the laws of its respective
country of incorporation, in each case, as a corporation and has
power to carry on its respective businesses as it is now being
conducted and to own their respective property and other assets
to which it has unencumbered legal and beneficial title except
as disclosed to the Agent in writing;
7.1.2 Corporate power
each of the Security Parties has power to execute, deliver and
perform its obligations and, as the case may be, to exercise its
rights under the Underlying Documents and the Security Documents
to which it is a party; all necessary corporate, shareholder and
other action has been taken to authorise the execution, delivery
and on the execution of the Security Documents performance of
the same and no limitation on the powers of the Borrowers to
borrow or any other Security Party to howsoever incur liability
and/or to
provide or grant security will be exceeded as a result of
borrowing any part of the Loan;
7.1.3 Binding obligations
the Underlying Documents and the Security Documents, when
executed, will constitute valid and legally binding obligations
of the relevant Security Parties enforceable in accordance with
their respective terms;
7.1.4 No conflict with other obligations
the execution and delivery of, the performance of their
obligations under, and compliance with the provisions of, the
Underlying Documents and the Security 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 any Security Party or other member of
the Group 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 any Security Party or
any other member of the Group is a party or is subject or by
which it or any of its property is bound, (iii) contravene
or conflict with any provision of the constitutional documents
of any Security Party or (iv) result in the creation or
imposition of, or oblige any of the Security Parties to create,
any Encumbrance (other than a Permitted Encumbrance) on any of
the undertakings, assets, rights or revenues of any of the
Security Parties;
7.1.5 No default
no Default has occurred;
7.1.6 No litigation or judgments
no Proceedings are current, pending or, to the knowledge of the
officers of any Borrower, threatened against any of the Security
Parties or any other Group Members or their assets which could
have a Material Adverse Effect and there exist no judgments,
orders, injunctions which would materially affect the
obligations of the Security Parties under the Security Documents;
7.1.7 No filings required
except for the registration of the Mortgages in the relevant
register under the laws of the relevant Flag State through the
relevant Registry, it is not necessary to ensure the legality,
validity, enforceability or admissibility in evidence of any of
the Underlying Documents or any of the Security Documents that
they or any other instrument be notarised, filed, recorded,
registered or enrolled in any court, public office or elsewhere
in any Pertinent Jurisdiction or that any stamp, registration or
similar tax or charge be paid in any
Pertinent Jurisdiction on or in relation to any of the
Underlying Documents or the Security Documents and each of the
Underlying Documents and the Security Documents is in proper
form for its enforcement in the courts of each Pertinent
Jurisdiction;
7.1.8 Required Authorisations and legal compliance
all Required Authorisations have been obtained or effected and
are in full force and effect and no Security Party has in any
way contravened any applicable law, statute, rule or regulation
(including all such as relate to money laundering);
7.1.9 Choice of law
the choice of English law to govern the Underlying Documents and
the Security Documents (other than the Mortgages and the
Earnings Account Pledge and the Retention Account Pledge), the
choice of the law of the Flag State to govern the Mortgages, the
choice of greek law to govern the Earnings Account Pledge and
the Retention Account Pledge and the submissions by the Security
Parties to the jurisdiction of the English courts and the
obligations of such Security Parties associated therewith, are
valid and binding;
7.1.10 No immunity
no Security Party nor any of their assets is entitled to
immunity on the grounds of sovereignty or otherwise from any
Proceedings whatsoever;
7.1.11 Financial statements correct and complete
the latest audited and unaudited consolidated financial
statements of the Corporate Guarantor in respect of the relevant
financial year as delivered to the Agent present or will present
fairly and accurately the financial position of the Corporate
Guarantor and the consolidated financial position of the Group
as at the date thereof and the results of the operations of the
Corporate Guarantor and the consolidated results of the
operations of the Group for the financial year ended on such
date and, as at such date, neither the Corporate Guarantor nor
any of its subsidiaries had any significant liabilities
(contingent or otherwise) or any unrealised or anticipated
losses which are not disclosed by, or reserved against or
provided for in, such financial statements;
7.1.12 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 Indebtedness of the Borrowers
except for obligations which are mandatorily preferred by
operation of law and not by contract;
7.1.13 Information/ Material Adverse Effect
all information, whatsoever provided by any Security Party to
the Agent in connection with the negotiation and preparation of
the Security Documents or otherwise provided hereafter in
relation to, or pursuant to this Agreement is, or will be, true
and accurate in all material respects and not misleading, does
or will not omit material facts and all reasonable enquiries
have been, or shall have been, made to verify the facts and
statements contained therein and there has not occurred any
event which could have a Material Adverse Effect on any Security
Party since such information was provided to the Agent; there
are, or will be, no other facts the omission of which would make
any fact or statement therein misleading;
7.1.14 No withholding Taxes
no Taxes anywhere are imposed whatsoever by withholding or
otherwise on any payment to be made by any Security Party under
the Underlying Documents or the Security Documents to which such
Security Party is or is to be a party or are imposed on or by
virtue of the execution or delivery by the Security Parties of
the Underlying Documents or the Security Documents or any other
document or instrument to be executed or delivered under any of
the Security Documents;
7.1.15 Use of proceeds
the Borrowers shall apply the Loan only for the purposes
specified in clauses 1.1 and 2.1;
7.1.16 The Mortgaged Vessels
throughout the Facility Period, each Mortgaged Vessel will,
following its Delivery Date, be :
(a) in the absolute sole, legal and beneficial ownership of
the relevant Owner;
(b) registered through the offices of the relevant Registry
as a ship under the laws and flag of the relevant Flag State;
(c) in compliance with the ISM Code and the ISPS Code and
operationally seaworthy and in every way fit for service;
(d) in good and sea-worthy and cargo-worthy
condition; and
(e) classed with the relevant Classification free of all
requirements and recommendations of the relevant Classification
Society.
7.1.17 Mortgaged Vessels employment
except with prior notice to the Lenders, there will not be any
agreement or arrangement whereby the Earnings (as defined in the
relevant Ship Security Documents) of any Mortgaged Vessel may be
shared howsoever with any other person;
7.1.18 Freedom from Encumbrances
no Mortgaged Vessel nor its Earnings, Insurances or Requisition
Compensation (each as defined in the relevant Ship Security
Documents) nor the Earnings Account nor any Extended Employment
Contract in respect of such Mortgaged Vessel 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 be subject
to any Encumbrance except Permitted Encumbrances;
7.1.19 Environmental Matters
except as may already have been disclosed by the Borrowers in
writing to, and acknowledged and accepted in writing by, the
Agent:
(a) the Borrowers and, to the best of the Borrowers
knowledge and belief (having made due enquiry), their respective
Environmental Affiliates, have complied with the provisions of
all Environmental Laws;
(b) the Borrowers and, to the best of the Borrowers
knowledge and belief (having made due enquiry), their respective
Environmental Affiliates have obtained all Environmental
Approvals and are in compliance with all such Environmental
Approvals;
(c) no Environmental Claim has been made or threatened or
pending against any Borrower, or, to the best of the
Borrowers knowledge and belief (having made due enquiry),
any of their respective Environmental Affiliates; and
(d) there has been no Environmental Incident;
7.1.20 ISM and ISPS Code
With effect from the Delivery Date of its Vessel, each of the
Borrowers will comply with and continue to comply with and
procure that the Manager complies with and continues to comply
with the ISM Code, the ISPS Code and all other statutory and
other requirements relative to its business and in particular
each Borrower or the Manager will obtain and maintain a valid
DOC and SMC for each Mortgaged Vessels and that it and the
Manager will implement and continue to implement an ISM SMS;
7.1.21 Copies true and complete
the Certified Copies or originals of the Underlying Documents
delivered or to be delivered to the Agent pursuant to
clause 8.1 are, or will when delivered be, true and
complete copies or, as the case may be, originals of such
documents; and such documents constitute valid and binding
obligations of the parties thereto enforceable in accordance
with their respective terms and there have been no amendments or
variations thereof or defaults thereunder;
7.1.22 the Borrowers are the ultimate beneficiaries of the
Loan;
7.1.23 no Security Party has incurred any Indebtedness save
under this Agreement or as otherwise disclosed to the Agent in
writing or as disclosed in the Groups public filings;
7.1.24 the Corporate Guarantor and all Borrowers have filed
all tax and other fiscal returns required to be filed by any tax
authority to which they are subject;
7.1.25 no Borrower has an office in England.
7.2 Repetition
of representations and warranties
On each day throughout the Facility Period, the Borrowers shall
be deemed to repeat the representations and warranties in
clause 7 updated mutatis mutandis as if made with reference
to the facts and circumstances existing on such day.
8 UNDERTAKINGS
8.1 General
The Borrowers undertake with each Bank that, from the Execution
Date until the end of the Facility Period, they will:
8.1.1 Notice of Default and Proceedings
promptly inform the Agent of (a) any Default and of any
other circumstances or occurrence which might adversely affect
the ability of any Security Party to perform its obligations
under any of the Security Documents and (b) as soon as the
same is instituted or threatened, details of any Proceedings
involving any Security Party which could have a material adverse
effect on that Security Party
and/or the
operation of any of the Vessels (including, but not limited to
any Total Loss of a Vessel or the occurrence of any
Environmental Incident) and will from time to time, if so
requested by the Agent, confirm to the Agent in writing that,
save as otherwise stated in such confirmation, no Default has
occurred and is continuing and no such Proceedings are on foot
or threatened;
8.1.2 Authorisation
obtain or cause to be obtained, maintain in full force and
effect and comply fully with all Required Authorisations,
provide the Agent with Certified Copies of the same and do, or
cause to be done, all other acts and things which may from time
to time be necessary or desirable under any applicable law
(whether or not in the Pertinent Jurisdiction) for the continued
due performance of all the obligations of the Security Parties
under each of the Security Documents;
8.1.3 Corporate Existence/Ownership
ensure that each Security Party maintains its corporate
existence as a body corporate duly organised and validly
existing and in good standing under the laws of the Pertinent
Jurisdiction and ensure that each Borrower is owned, directly or
through other companies, by the Corporate Guarantor for the time
being;
8.1.4 Use of proceeds
use the Advances exclusively for the purposes specified in
clauses 1.1 and 2.1;
8.1.5 Pari passu
ensure that their obligations under this Agreement shall at all
times rank at least pari passu with all their other present and
future unsecured and unsubordinated Indebtedness with the
exception of any obligations which are mandatorily preferred by
law and not by contract;
8.1.6 Financial statements
send to the Agent (or procure that is sent):
(a) as soon as possible, but in no event later than
180 days after the end of each of its Financial Years,
annual audited (prepared in accordance with US GAAP by a firm of
accountants acceptable to the Agent) consolidated balance sheet
and profit and loss accounts of the Corporate Guarantor and all
companies which are owned, directly or indirectly, or controlled
by it (commencing with the Financial Year ending
31 December 2010); and
(b) as soon as possible, but in no event later than
60 days after the end of each 3 month period in each
of its Financial Years, the Corporate Guarantors unaudited
consolidated balance sheet and profit and loss accounts for that
3 month period certified as to their correctness by its
chief financial officer.
8.1.7 Reimbursement of MII & MAP Policy premiums
Whether or not any amount is borrowed under this Agreement,
reimburse each Bank on the Agents written demand the
amount of the premium payable by such Bank for the inception or,
as the case may be, extension
and/or
continuance of the MII & MAP Policy (including any
insurance tax thereon);
8.1.8 Compliance Certificates
deliver to the Agent on the earlier of (i) the date on
which the quarterly reports are delivered under
clause 8.1.6 and (ii) the date falling 75 days
after the end of the financial quarter to which they refer, a
Compliance Certificate together with such supporting information
as the Agent may require.
8.1.9 Provision of further information
provide the Agent, and procure that the Corporate Guarantor
provide the Agent, with such financial or other information
concerning any Borrower and their respective affairs,
activities, financial standing, Indebtedness and operations and
the performance of the Mortgaged Vessels as the Agent or any
Lender (acting through the Agent) may from time to time
reasonably require and all other documentation and information
as any Lender may from time to time require in order to comply
with its, and all other relevant, know-your-customer regulations;
8.1.10 Obligations under Security Documents
duly and punctually perform each of the obligations expressed to
be imposed or assumed by them under the Security Documents and
Underlying Documents and will procure that each of the other
Security Parties will, duly and punctually perform each of the
obligations expressed to be assumed by it under the Security
Documents and the Underlying Documents to which it is a party;
8.1.11 Compliance with ISM Code
comply with, and will procure that any Operator will comply
with, and ensure that the Mortgaged Vessels and any Operator
comply 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 (as defined in
the Mortgages);
8.1.12 Withdrawal of DOC and SMC
immediately inform the Agent if there is any actual withdrawal
of their or any Operators DOC or the SMC of any Mortgaged
Vessel;
8.1.13 Issuance of DOC and SMC
and will procure that any Operator will promptly inform the
Agent of the receipt by any Borrower or any Operator of
notification that its application for a DOC or any application
for an SMC for any Mortgaged Vessel has been refused;
8.1.14 ISPS Code Compliance
and will procure that the Manager or any Operator will:
(a) maintain at all times a valid and current ISSC in
respect of each Mortgaged Vessel;
(b) immediately notify the Agent in writing of any actual
or threatened withdrawal, suspension, cancellation or
modification of the ISSC in respect of a Mortgaged
Vessel; and
(c) procure that each Mortgaged Vessel will comply at all
times with the ISPS Code;
8.1.15 Compliance with Laws and payment of taxes
and will comply with all relevant Environmental Laws, laws,
statutes and regulations and pay all taxes for which it is
liable as they fall due;
8.1.16 Charters etc.
(i) deliver to the Agent a Certified Copy of each Extended
Employment Contract upon its execution, (ii) forthwith on
the Agents request execute (a) a Charter Assignment
in respect thereof and (b) any notice of assignment
required in connection therewith and use reasonable efforts to
procure the acknowledgement of any such notice of assignment by
the relevant charterer (provided that any failure to procure the
same shall not constitute an Event of Default) and
(iii) pay all legal and other costs incurred by the Agent
in connection with any such Charter Assignments, forthwith
following the Agents demand.
8.1.17 Financial Covenants of the Corporate
Guarantors Group
procure that
(a) at no time shall the Liquidity of the Group be less
than the Minimum Liquidity;
(b) as of the earlier of (i) the Final Delivery Date
and (ii) 1 January 2013, the Net Worth of the Group
will at all times exceed USD75,000,000;
(c) as of the earlier of (i) the Final Delivery Date
and (ii) 1 January 2013, the Total Liabilities divided
by the Total Assets (adjusted for market values of vessels
calculated in accordance with Clause 8.2.2) shall be less
than 75%.
8.1.18 Inspection
the Agent, at the cost of the Borrowers and upon receipt of at
least 15 days written notice, by surveyors or other persons
appointed by it for such purpose, to board any Mortgaged Vessel
at all other reasonable times for the purpose of inspecting her
and to afford all proper facilities for such inspections and for
this purpose to give the Agent reasonable advance notice of any
intended drydocking of each Vessel (whether for the purpose of
classification, survey or otherwise) and to pay the costs in
respect of one inspection in each calendar year; and
8.1.19 Delivery
Pay to the Builder all amounts payable on delivery of the
Vessels in accordance with the relevant Shipbuilding Contract
and take, or as the case may be, ensure that the relevant
Borrower, takes delivery of the relevant Vessel.
8.1.20 Subordination
Ensure that all Indebtedness of any Borrower to its shareholders
or to any other Group Member is fully subordinated, and to
subordinate any Indebtedness issued to it by the Corporate
Guarantor, all in a form acceptable to the Agent (acting on the
instructions of the Majority Lenders).
8.1.21 Dividends
The Borrowers and Corporate Guarantor may declare or pay
dividends or distribute any of their present or future assets,
undertakings, rights or revenues in an amount not exceeding 50%
of the Net Profits for any relevant financial year to any of
their partners, members or shareholders, and the Corporate
Guarantor may make such other investments as it may require,
only if there has not occurred any Event of Default.
8.1.22 Corporate Guarantees
On the Share Acquisition Date the Borrowers shall procure the
delivery to the Security Trustee of:
(a) the Corporate Guarantee duly executed by Navios
Acquisition (and upon receipt thereof by the Security Trustee
the Corporate Guarantee which was executed on the first Drawdown
Date shall terminate and cease to be enforceable, which the
Security Trustee shall confirm in writing at that time) ;
(b) such documentation equivalent to that set out in
Schedule 3 Part A items (a)-(d) inclusive in respect
of Navios Acquisition as the Agent may require;
(c) within 10 Banking Days of the Share Acquisition Date,
the opening balance sheet of Navios Acquisition duly audited by
a firm of accountants acceptable the Lenders;
(d) a copy of the presentation given to the investors in
Navios Acquisition;
(e) a cashflow forecast for the Group for the 3 years
following the Share Acquisition Date;
(f) evidence that Navios Acquisition is the sole
shareholder of the Shareholder and the Shareholder is the sole
shareholder of each of the Borrower; and
(g) if required by the Lenders, Shares Pledges duly
executed by the Shareholder in respect of each Borrower together
with all documents required to be delivered pursuant thereto.
8.2 Security
value maintenance
8.2.1 Security shortfall
If, at any time after the first Delivery Date, the Security
Value shall be less than the Required Security Amount, the Agent
(acting on the instructions of the Majority Lenders) shall give
notice to the Borrowers requiring that such deficiency be
remedied and then the Borrowers must either:
(a) prepay within a period of thirty (30) days of the
date of receipt by the Borrowers of the Agents said notice
such part of the Delivered Tranches as will result in the
Security Value after such prepayment (taking into account any
other repayment of the Delivered Tranches made between the date
of the notice and the date of such prepayment) being equal to or
higher than the Required Security Amount; or
(b) within thirty (30) days of the date of receipt by
the Borrowers of the Agents said notice constitute to the
satisfaction of the Agent such further security for the Loan as
shall be acceptable to the Majority Lenders having a value for
security purposes (as determined by the Agent 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 Required Security Amount as at such date.
The provisions of clauses 4.6 and 4.7 shall apply to
prepayments under clause 8.2.1(a) provided that the Agent
shall apply such prepayments (i) pro rata against the
Tranches, (ii) in reduction of the repayment instalments under
clause 4.1 pro rata and the amounts of the Loan prepaid
hereunder shall not be available to be re-borrowed.
8.2.2 Valuation of Mortgaged Vessels
Each Mortgaged Vessel shall, for the purposes of this Agreement,
be valued (at the Borrowers expense) in USD by taking
either (i) the valuation prepared by an Approved Broker or
(ii) if requested by the Lenders, the arithmetic mean of
valuations prepared by any two Approved Brokers appointed by the
Agent, in each case such valuations to be made without physical
inspection, and on the basis of a sale for prompt delivery for
cash at arms length, on normal commercial terms, as
between a willing buyer and a willing seller without taking into
account the benefit or burden of any charterparty or other
engagement concerning the relevant Mortgaged Vessel to be
obtained (in addition to (a) above) at any other time as
the Agent (acting on the instructions of the Majority Lenders)
shall additionally require, at the cost of the Lenders.
The Approved Brokers valuations for each Mortgaged Vessel
on each such occasion shall constitute the Valuation Amount of
such Mortgaged Vessel for the purposes of this Agreement until
superceded by the next such valuation.
8.2.3 Information
The Borrowers undertake with the Banks to supply to the Agent
and to the Approved Broker such information concerning the
relevant Mortgaged Vessel and its condition as such shipbrokers
may require for the purpose of determining any Valuation Amount.
8.2.4 Costs
All costs in connection with the obtaining and any determining
of any Valuation Amount pursuant to Clause 8.2.2(a) and any
valuation either 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 8.2.1(b), must be paid by the Borrowers.
8.2.5 Valuation of additional security
For the purposes of this clause 8.2, the market value
(i) of any additional security over a ship (other than the
Vessels) shall be determined in accordance with
clause 8.2.2 and (ii) of any other additional security
provided or to be provided to the Banks or any of them shall be
determined by the Agent in its absolute discretion.
8.2.6 Documents and evidence
In connection with any additional security provided in
accordance with this clause 8.2, the Agent shall be
entitled to receive (at the Borrowers expense) such
evidence and documents of the kind referred to in
schedule 3 as may in the Agents opinion be
appropriate and such favourable legal opinions as the Agent
shall in its absolute discretion require.
8.3 Negative
undertakings
The Borrowers jointly and severally undertake with each Bank
that, from the Execution Date until the end of the Facility
Period, they will not, without the prior written consent of the
Agent (acting on the instructions of the Majority Banks):
8.3.1 Negative pledge
permit any Encumbrance (other than a Permitted Encumbrance) to
subsist, arise or be created or extended over all or any part of
their respective present or future undertakings, assets, rights
or revenues to secure or prefer any present or future
Indebtedness or other liability or obligation of any Group
Member or any other person;
8.3.2 No merger or transfer
merge or consolidate with any other person or permit any change
to the legal or beneficial ownership of their shares from that
existing at the Execution Date;
8.3.3 Disposals
sell, transfer, assign, create security or option over, pledge,
pool, abandon, lend or otherwise dispose of or cease to exercise
direct control over any part of their present or future
undertaking, assets, rights or revenues (otherwise than by
transfers, sales or disposals for full consideration in the
ordinary course of trading) whether by one or a series of
transactions related or not;
8.3.4 Other business or manager
undertake any business other than the ownership and operation of
the Ships or employ anyone other than the Manager as commercial
and technical manager of the Vessels;
8.3.5 Acquisitions
acquire any further assets other than the Vessels and rights
arising under contracts entered into by or on behalf of the
Borrowers in the ordinary course of their businesses of owning,
operating and chartering the Vessels;
8.3.6 Other obligations
incur any obligations except for obligations arising under the
Underlying Documents or the Security Documents or contracts
entered into in the ordinary course of their business of owning,
operating and chartering the Vessels;
8.3.7 No borrowing
incur any Borrowed Money except for Borrowed Money pursuant to
the Security Documents;
8.3.8 Repayment of borrowings
repay or prepay the principal of, or pay interest on or any
other sum in connection with any of their Borrowed Money except
for Borrowed Money pursuant to the Security Documents;
8.3.9 Guarantees
issue any guarantees or otherwise become directly or
contingently liable for the obligations of any person, firm, or
corporation except pursuant to the Security Documents and except
for (i) guarantees from time to time required in the
ordinary course by any protection and indemnity or war risks
association with which a Vessel is entered, guarantees required
to procure the release of such Vessel from any arrest,
detention, attachment or levy or guarantees required for the
salvage of a Vessel and (ii) such other guarantees to which
the Agent shall have consented in writing on behalf of the Banks;
8.3.10 Loans
make any loans or grant any credit (save for normal trade credit
in the ordinary course of business) to any person or agree to do
so;
8.3.11 Sureties
permit any Indebtedness of any Borrower to any person (other
than the Banks pursuant to the Security Documents) to be
guaranteed by any person (except for guarantees from time to
time required in the ordinary course of business and in the
ordinary course by any protection and indemnity or war risks
association with which a Vessel is entered, guarantees required
to procure the release of such Vessel from any arrest,
detention, attachment or levy or guarantees or undertakings
required for the salvage of a Vessel and guarantees in favour of
the Builder in respect of any Shipbuilding Contract); or
8.3.12 Subsidiaries
form or acquire any Subsidiaries.
9 CONDITIONS
9.1 Advance
of any Advance
The obligation of each Lender to make its Commitment available
in respect of any Advance is conditional upon:
9.1.1 that, on or before the service of the first Drawdown
Notice hereunder, the Agent has received the documents described
in Part A of Schedule 3 in form and substance
satisfactory to the Agent and its lawyers;
9.1.2 that, on or before the service of the Drawdown Notice
in respect of the Advances referred to in clause 2.5.1(a)
the Agent has received the documents described in Part B of
Schedule 3 in respect of the Relevant Vessel (as defined in
Schedule 3) in form and substance satisfactory to the
Agent and its lawyers;
9.1.3 that, on or before the service of the Drawdown Notice
in respect of the Advances referred to in clause 2.5.1(b),
the Agent has received the documents described in Part C of
Schedule 3 in respect of the Relevant Vessel in form and
substance satisfactory to the Agent and its lawyers
9.1.4 that, on or before service of the Drawdown Notice in
respect of Advances referred to in clause 2.5.1(c), the
Agent has received the documents described in Part D of
Schedule 3 in respect of the Relevant Vessel in form and
substance satisfactory to the Agent and its lawyers;
9.1.5 that, on or before service of the Drawdown Notice in
respect of Advances referred to in clause 2.5.1(d), the
Agent has received the documents described in Part E of
Schedule 3 in respect of the Relevant Vessel in form and
substance satisfactory to the Agent and its lawyers;
9.1.6 that, on or before service of the Drawdown Notice in
respect of Advances referred to in clause 2.5.1(e), the
Agent has received the documents described in Part F of
Schedule 3 in respect of the Relevant Vessel in form and
substance satisfactory to the Agent and its lawyers;
9.1.7 that, on or before service of the Drawdown Notice in
respect of Advances referred to in clause 2.5.1(f), the
Agent has received the documents described in Part G of
Schedule 3 in respect of the Relevant Vessel in form and
substance satisfactory to the Agent and its lawyers;
9.1.8 the representations and warranties contained in
clause 7 and clauses 4.1 and 4.2 of the Corporate
Guarantee being then true and correct as if each was made with
respect to the facts and circumstances existing at such
time; and
9.1.9 no Default having occurred and being continuing and
there being no Default which would result from the making of the
Loan.
9.2 Waiver
of conditions precedent
The conditions specified in this clause 9 are inserted
solely for the benefit of the Lenders and may be waived by the
Agent in whole or in part and with or without conditions only
with the consent of the Majority Lenders.
9.3 Further
conditions precedent
Not later than five (5) Banking Days prior to the Drawdown
Date of an Advance and not later than five (5) Banking Days
prior to any Interest Payment Date, the Agent (acting on the
instructions of the Majority Lenders) may request and the
Borrowers must, not later than two (2) Banking Days prior
to such date, deliver to the Agent (at the Borrowers
expense) on such request further favourable certificates
and/or
opinions as to any or all of the matters which are the subject
of clauses 7, 8, 9 and 10.
9.4 Release
of Shares Pledges
The Lenders agree that upon the drawdown of the final Advance in
respect of a Tranche, and receipt of a Negative Pledge in
respect of the Owner of the Vessel financed by that Tranche, the
Security Trustee shall (provided no Event of Default has
occurred) release the Shares Pledge in respect of that
Owner.
10 EVENTS
OF DEFAULT
10.1 Events
Each of the following events shall constitute an Event of
Default (whether such event shall occur voluntarily or
involuntarily or by operation of law or regulation or in
connection with any judgment, decree or order of any court or
other authority or otherwise, howsoever):
10.1.1 Non-payment: any Security
Party fails to pay any sum payable by it under any of the
Security Documents at the time, in the currency and in the
manner stipulated in the Security Documents or the Underlying
Documents (and so that, for this purpose, sums payable
(i) under clauses 3.1 and 4.1 shall be treated as
having been paid at the stipulated time if (aa) received by the
Agent within two (2) days of the dates therein referred to
and (bb) such delay in receipt is caused by administrative or
other delays or errors within the banking system and
(ii) on demand shall be treated as having been paid at the
stipulated time if paid within two (2) Banking Days of
demand); or
10.1.2 Breach of Insurance and certain other
obligations: any Owner or, as the context may
require, the Manager or any other person fails to obtain
and/or
maintain the Insurances (as defined in, and in accordance with
the requirements of, the Ship Security Documents) for any of the
Mortgaged Vessels 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 a Borrower commits any
breach of or omits to observe any of the obligations or
undertakings expressed to be assumed by them under
clause 8; or
10.1.3 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
Security Documents (other than those referred to in
clauses 10.1.1 and 10.1.2 above) unless such breach or
omission, in the opinion of the Agent (following consultation
with the Banks) is capable of remedy, in which case the same
shall constitute an Event of Default if it has not been remedied
within fifteen (15) days of the occurrence thereof; or
10.1.4 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 Security Documents or in any notice, certificate or
statement referred to in or delivered under any of the Security
Documents is or proves to have been incorrect or misleading in
any material respect; or
10.1.5 Cross-default: There shall
occur a default (howsoever therein described) under the any
Indebtedness in an amount exceeding five million Dollars
(USD5,000,000) of any Borrower or any Indebtedness of any
Security Party is not paid when due (subject to applicable grace
periods) or any such Indebtedness of any Borrower or any
Security Party becomes (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 Borrower or Security Party of a
voluntary right of prepayment), or any creditor of a Borrower or
any Security Party becomes entitled to declare any such
Indebtedness due and payable or any facility or commitment
available to any Borrower or any Security Party relating to
Indebtedness is withdrawn, suspended or cancelled by reason of
any default (however described) of the person concerned; or
10.1.6 Execution: any uninsured
judgment or order made against any Security Party is not stayed,
appealed against or complied with within fifteen (15) days
or a creditor attaches or takes possession of, or a distress,
execution, sequestration or other 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
within thirty (30) days; or
10.1.7 Insolvency: any Security
Party is unable or admits inability to pay its debts as they
fall due; suspends making payments on any of its debts or
announces an intention to do so; becomes insolvent; or any
Security Party (other than the Corporate Guarantor) has negative
net worth (taking into account contingent liabilities); or
suffers the declaration by any court, liquidator, receiver or
administrator of a moratorium in respect of any of its
Indebtedness; or
10.1.8 Reduction or loss of
capital: a meeting is convened by any
Security Party (other than the Corporate Guarantor) without the
Agents prior written consent, for the purpose of passing
any resolution to purchase, reduce or redeem any of its share
capital without the Agents prior written consent; or
10.1.9 Dissolution: any corporate
action, Proceedings or other steps are taken to dissolve or
wind-up any
Security Party or an order is made or resolution passed for the
dissolution or winding up of any Security Party or a notice is
issued convening a meeting for such purpose; or
10.1.10 Administration: any
petition is presented, notice given or other steps are taken
anywhere to appoint an administrator of any Security Party or
the Agent reasonably believes that any such petition or other
step is imminent or an administration order is made in relation
to any Security Party; or
10.1.11 Appointment of receivers and
managers: any administrative or other
receiver is appointed anywhere of any Security Party or any part
of its assets
and/or
undertaking or any other steps are taken to enforce any
Encumbrance over all or any part of the assets of any Security
Party; or
10.1.12 Compositions: any
corporate action, legal proceedings or other procedures or steps
are taken, or negotiations commenced, by any Security Party or
by any of its creditors (other than the Corporate Guarantor) or
any legal proceedings are taken in respect of the Corporate
Guarantor, 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; or
10.1.13 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
reasonable opinion of the Agent, appears in that country or
territory to correspond with, or have an effect equivalent or
similar to, any of those mentioned in clauses 10.1.6 to
10.1.12 (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
10.1.14 Cessation of business: any
Security Party suspends or ceases or threatens to suspend or
cease to carry on its business without the prior written consent
of the Agent, such consent not to be unreasonably
withheld; or
10.1.15 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 Entity; or
10.1.16 Invalidity: any of the
Security Documents and the Underlying 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 Security Documents and
the Underlying 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
10.1.17 Unlawfulness: any
Unlawfulness occurs or 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 Security
Documents or for a Bank to exercise the rights or any of them
vested in it under any of the Security Documents or
otherwise; or
10.1.18 Repudiation: any Security
Party repudiates any of the Security Documents or does or causes
or permits to be done any act or thing evidencing an intention
to repudiate any of the Security Documents; or
10.1.19 Encumbrances
enforceable: any Encumbrance (other than
Permitted Liens) in respect of any of the property (or part
thereof) which is the subject of any of the Security Documents
becomes enforceable; or
10.1.20 Arrest: a Mortgaged Vessel
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 that Owner shall fail to procure the
release of such Mortgaged Vessel within a period of fifteen
(15) days thereafter (this clause does not include capture
of a Vessel by pirates); or
10.1.21 Registration: the
registration of a Mortgaged Vessel under the laws and flag of
the relevant Flag State is cancelled or terminated without the
prior written consent of the Majority Banks; or
10.1.22 Unrest: the Flag State of
a Mortgaged Vessel or the country in which any Security Party is
incorporated or domiciled becomes involved in hostilities or
civil war or there is a seizure of power in the Flag State by
unconstitutional means unless the Owner of the Vessel registered
in such Flag State shall have transferred its Vessel onto a new
flag acceptable to the Banks within sixty (60) days of the
start of such hostilities or civil war or seizure of
power; or
10.1.23 Environmental
Incidents: an Environmental Incident occurs
which gives rise, or may give rise, to an Environmental Claim
which could, in the opinion of the Agent be expected to have a
material adverse effect (i) on the business, assets or
financial condition of any Security Party or the Group taken as
a whole or (ii) on the security constituted by any of the
Security Documents or the enforceability of that security in
accordance with its terms; or
10.1.24 P&I: an Owner or the
Manager or any other person fails or omits to comply with any
requirements of the protection and indemnity association or
other insurer with which a Mortgaged Vessel is entered for
insurance or insured against protection and indemnity risks
(including oil pollution risks) to the effect that any cover
(including, without limitation, any cover in respect of
liability for Environmental Claims arising in jurisdictions
where such Mortgaged Vessel operates or trades) is or may be
liable to cancellation, qualification or exclusion at any
time; or
10.1.25 Material events: any other
event occurs or circumstance arises which, in the opinion of the
Agent (following consultation with the Banks), is likely
materially and adversely to affect either (i) the ability
of any Security Party to perform all or any of its obligations
under or otherwise to comply with the terms of any of the
Security Documents or (ii) the security created by any of
the Security Documents; or
10.1.26 Required
Authorisations: any Required Authorisation is
revoked or withheld or modified or is otherwise not granted or
fails to remain in full force and effect or if any exchange
control or other law or regulation shall exist which would make
any transaction under the Security Documents or the continuation
thereof, unlawful or would prevent the performance by any
Security Party of any term of any of the Security Documents;
10.1.27 Ownership: there is any
change in the ownership of any Borrower without the prior
written consent of the Agent or (following the Share Acquisition
Date) the number of shares of and in Navios Acquisition owned by
Navios Maritime Holdings Inc., Mrs. Angeliki Frangou and
their respective affiliates in aggregate falls below 30% of the
issued shares of Navios Acquisition; or
10.1.28 Money Laundering: any
Security Party is in breach of or fails to observe any law,
requirement, measure or procedure implemented to combat
money laundering as defined in Article 1 of the
Directive (91/308 EEC) of the Council of the European
Communities; or
10.1.28 Master
Agreement: (i) an Event of Default or
Potential Event of Default (or the equivalent under the Master
Agreement) has occurred and is continuing under the Master
Agreement or (ii) an Early Termination Date (as defined in
the Master Agreement) has occurred or been effectively
designated under the Master Agreement or (iii) a person
entitled to do so gives notice of an Early Termination Date (as
defined in the Master Agreement) or (iv) the Master
Agreement is terminated, cancelled, suspended, rescinded or
revoked or otherwise ceases to remain in full force and effect
for any reason.
10.2 Acceleration
The Agent may, and if so requested by the Majority Lenders
shall, without prejudice to any other rights of the Lenders, at
any time after the happening of an Event of Default by notice to
the Borrowers declare that:
10.2.1 the obligation of each Lender to make its Commitment
available shall be terminated, whereupon the Commitment shall be
reduced to zero forthwith; and/or
10.2.2 the Loan and all interest accrued and all other sums
payable whatsoever under the Security Documents have become due
and payable, whereupon the same shall, immediately or in
accordance with the terms of such notice, become due and payable.
10.3 Demand
Basis
If, under clause 10.2.2, the Agent has declared the Loan to
be due and payable on demand, at any time thereafter the Agent
may (and if so instructed by the Majority Lenders shall) by
written notice to the Borrowers (a) demand repayment of the
Loan on such date as may be specified whereupon, regardless of
any other provision of this Agreement, 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.
11 INDEMNITIES
11.1 General
indemnity
The Borrowers agree to indemnify each Bank on demand, without
prejudice to any of such Banks other rights under any of
the Security Documents, against any loss (including loss of
Margin) or expense (including, without limitation, Break Costs)
which such Bank shall certify as sustained by it as a
consequence of any Default, any prepayment of the Loan being
made under clauses 4.2, 4.3, 4.4, 4.5, 8.2.1(a) or 12.1 or
any other repayment or prepayment 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;
and/or any
Advance not being made for any reason (excluding any default by
the Payment Agent, the Agent, the Security Trustee or any
Lender) after the Drawdown Notice for such Advance has been
given.
11.2 Environmental
indemnity
The Borrowers shall indemnify each Bank on demand and hold it
harmless from and against all costs, claims, expenses, payments,
charges, losses, demands, liabilities, actions, Proceedings,
penalties, fines, damages, judgements, orders, sanctions or
other outgoings of whatever nature which may be incurred or made
or asserted whensoever against such Bank at any time, whether
before or after the repayment in full of principal and interest
under this Agreement, arising howsoever out of an Environmental
Claim made or asserted against such Bank which would not have
been, or been capable of being, made or asserted against such
Bank had it not entered into any of the Security Documents or
been involved in any of the resulting or associated transactions.
11.3 Capital
adequacy and reserve requirements indemnity
The Borrowers shall promptly indemnify each Lender on demand
against any cost incurred or loss suffered by such Lender as a
result of its complying with (i) the minimum reserve
requirements from time to time of the European Central Bank
(ii) any capital adequacy directive of the European Union
and/or
(iii) any revised framework for international convergence
of capital measurements and capital standards
and/or any
regulation imposed by any Government Entity in connection
therewith,
and/or in
connection with maintaining required reserves with a relevant
national central bank to the extent that such compliance or
maintenance relates to such Lenders Commitment
and/or
Contribution or deposits obtained by it to fund the whole or
part thereof and to the extent such cost or loss is not
recoverable by such Lender under clause 12.2.
12 UNLAWFULNESS
AND INCREASED COSTS
12.1 Unlawfulness
If it is or becomes contrary to any law, directive or regulation
for any Lender to contribute to an Advance or to maintain its
Commitment or fund its Contribution to the Loan or any Advance,
such Lender shall promptly, through the Agent, give notice to
the Borrowers whereupon (a) such Lenders Contribution
and Commitment shall be reduced to zero and (b) the
Borrowers shall be obliged to prepay such Lenders
Contribution either (i) forthwith or (ii) on a future
specified date not being earlier than the latest date permitted
by the relevant law, directive or regulation together with
interest accrued to the date of prepayment and all other sums
payable by the Borrowers under this Agreement.
12.2 Increased
costs
If the result of any change in, or in the interpretation or
application of, or the introduction of, any law or any
regulation, request or requirement (whether or not having the
force of law, but, if not having the force of law, with which a
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, is to:
12.2.1 subject any Lender to Taxes or change the basis of
Taxation of any Lender with respect to any payment under any of
the Security Documents (other than Taxes or Taxation on the
overall net income, profits or gains of such Lender imposed in
the jurisdiction in which its principal or lending office under
this Agreement is located); and/or
12.2.2 increase the cost to, or impose an additional cost
on, any Lender or its holding company in making or keeping such
Lenders Commitment available or maintaining or funding all
or part of such Lenders Contribution; and/or
12.2.3 reduce the amount payable or the effective return to
any Lender under any of the Security Documents; and/or
12.2.4 reduce any Lenders or its holding
companys 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 such Lenders obligations under any of
the Security Documents; and/or
12.2.5 require any Lender or its holding company to make a
payment or forgo a return on or calculated by reference to any
amount received or receivable by such Lender under any of the
Security Documents; and/or
12.2.6 require any 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 its
Contribution or the Loan from its capital for regulatory
purposes,
then and in each such case (subject to clause 12.3):
(a) such 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 made at any time whether
or not such Lenders Contribution has been repaid, pay to
the Payment Agent for the account of such Lender the amount
which such Lender specifies (in a certificate setting forth the
basis of the computation of such amount but not including any
matters which such Lender or its holding company regards as
confidential) is required to compensate such Lender
and/or (as
the case may be) its holding company for such liability to
Taxes, cost, reduction, payment , forgone return or loss.
For the purposes of this clause 12.2 holding
company means the company or entity (if any) within the
consolidated supervision of which a Lender is included.
12.3 Exception
Nothing in clause 12.2 shall entitle any 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 the
subject of an additional payment under clause 6.6.
13 APPLICATION
OF MONEYS, SET OFF, PRO-RATA PAYMENTS AND
MISCELLANEOUS
13.1 Application
of moneys
All moneys received by the Payment Agent
and/or the
Security Trustee under or pursuant to any of the Security
Documents and expressed to be applicable in accordance with the
provisions of this clause 13.1 or in a manner determined in
the Security Trustees or (as the case may be) the Payment
Agents discretion, shall be applied in the following
manner:
13.1.1 first, in or towards payment, on a pro-rata basis,
of any unpaid costs and expenses of the Banks or any of them
under any of the Security Documents;
13.1.2 secondly, in or towards payment of any fees payable
to the Arranger, the Payment Agent or any of the other Banks
under, or in relation to, the Security Documents which remain
unpaid;
13.1.3 thirdly, in or towards payment to the Banks, on a
pro rata basis, of any accrued interest owing in respect of the
Loan which shall have become due under any of the Security
Documents but remains unpaid;
13.1.4 fourthly, in or towards repayment of the Loan
(whether the same is due and payable or not) and in or towards
payment to the Swap Bank of any sum which shall have become due
under the Master Agreement but remains unpaid;
13.1.5 fifthly, in or towards payment to the Lenders, on a
pro rata basis any Break Costs and any other sum relating to the
Loan which shall have become due under any of the Security
Documents but remains unpaid;
13.1.6 sixthly, the surplus (if any) shall be paid to the
Borrowers or to whomsoever else may then be entitled to receive
such surplus.
13.2 Set-off
13.2.1 Each Borrower irrevocably authorises each Bank
(without prejudice to any of such Banks rights at law, in
equity or otherwise), at any time and without notice to the
Borrowers, to apply any credit balance to which any Borrower is
then entitled standing upon any account of any Borrower with any
branch of such Bank in or towards satisfaction of any sum due
and payable from the Borrowers to such Bank under any of the
Security Documents. For this purpose, each Bank is authorised to
purchase with the moneys standing to the credit of such account
such other currencies as may be necessary to effect such
application.
13.2.2 No Bank shall be obliged to exercise any right given
to it by this clause 13.2. Each Bank shall notify the
Borrowers through the Agent forthwith upon the exercise or
purported exercise of any right of set off giving full details
in relation thereto and the Agent shall inform the other Banks.
13.2.3 Nothing in this clause 13.2 shall be effective
to create a charge or other security interest.
13.3 Pro
rata payments
13.3.1 If at any time any Lender (the Recovering
Lender) receives or recovers any amount owing to it by
the Borrowers under this Agreement (other than pursuant to any
other Security Document) by direct payment, set-off or in any
manner other than by payment through the Payment Agent pursuant
to clauses 6.1 or 6.9 (not being a payment received from a
Transferee Bank or a
sub-participant
in such Lenders Contribution or any other payment of an
amount due to the Recovering Lender for its sole account
pursuant to clauses 3.6, 5, 6.6, 11.1, 11.2, 11.3, 12.1, or
12.2), the Recovering Lender shall, within two (2) Banking
Days of such receipt or recovery (a Relevant
Receipt) notify the Payment Agent of the amount of the
Relevant Receipt. If the Relevant Receipt exceeds the amount
which the Recovering Lender would have received if the Relevant
Receipt had been received by the Payment Agent and distributed
pursuant to clause 6.1 or 6.10 (as the case may be) then:
(a) within two (2) Banking Days of demand by the
Payment Agent, the Recovering Lender shall pay to the Payment
Agent an amount equal (or equivalent) to the excess;
(b) the Payment Agent shall treat the excess amount so paid
by the Recovering Lender as if it were a payment made by the
Borrowers and shall distribute the same to the Lenders (other
than the Recovering Lenders) in accordance with
clause 6.10; and
(c) as between the Borrowers and the Recovering Lender the
excess amount so re-distributed shall be treated as not having
been paid but the obligations of the Borrowers to the other
Lenders shall, to the extent of the amount so re-distributed to
them, be treated as discharged.
13.3.2 If any part of the Relevant Receipt subsequently has
to be wholly or partly refunded by the Recovering Lender
(whether to a liquidator or otherwise) each Lender to which any
part of such Relevant Receipt was so re-distributed shall on
request from the Recovering Lender repay to the Recovering
Lender such Lenders pro-rata share of the amount which has
to be refunded by the Recovering Lender.
13.3.3 Each Lender shall on request supply to the Agent
such information as the Agent may from time to time request for
the purposes of this clause 13.3.
13.3.4 Notwithstanding the foregoing provisions of this
clause 13.3, no Recovering Lender shall be obliged to share
any Relevant Receipt which it receives or recovers pursuant to
Proceedings taken by it to recover any sums owing to it under
this Agreement with any other party which has a legal right to,
but does not, either join in such Proceedings or commence and
diligently pursue separate Proceedings to enforce its rights in
the same or another court (unless the Proceedings instituted by
the Recovering Lender are instituted by it without prior notice
having been given to such party through the Agent).
13.4 No
release
For the avoidance of doubt it is hereby declared that failure by
any Recovering Lender to comply with the provisions of
clause 13.3 shall not release any other Recovering Lender
from any of its obligations or liabilities under
clause 13.3.
13.5 No
charge
The provisions of this clause 13 shall not, and shall not
be construed so as to, constitute a charge or create or declare
a trust by a Lender over all or any part of a sum received or
recovered by it in the circumstances mentioned in
clause 13.3.
13.6 Further
assurance
Each Borrower undertakes with each Bank that the Security
Documents shall both at the date of execution and delivery
thereof and throughout the Facility Period be valid and binding
obligations of the respective parties thereto which, with the
rights of each Lender thereunder, are enforceable in accordance
with their respective terms and that they will, at their
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
Majority Lenders may be necessary or desirable for perfecting
the security contemplated or constituted by the Security
Documents.
13.7 Conflicts
In the event of any conflict between this Agreement and any of
the other Security Documents, the provisions of this Agreement
shall prevail.
13.8 No
implied waivers, remedies cumulative
No failure or delay on the part of any of the Banks to exercise
any power, right or remedy under any of the Security Documents
shall operate as a waiver thereof, nor shall any single or
partial exercise by any Bank of any power, right or remedy
preclude any other or further exercise thereof or the exercise
of any other power, right or remedy. The remedies provided in
the Security Documents are cumulative and are not exclusive of
any remedies provided by law. No waiver by any Bank shall be
effective unless it is in writing.
13.9 Severability
If any provision of this Agreement is prohibited, invalid,
illegal or unenforceable in any jurisdiction, such prohibition,
invalidity, illegality or unenforceability shall not affect or
impair howsoever the remaining provisions thereof or affect the
validity, legality or enforceability of such provision in any
other jurisdiction.
13.10 Force
Majeure
Regardless of any other provision of this Agreement, none of the
Banks shall be liable for any failure to perform the whole or
any part of this Agreement resulting directly or indirectly from
(i) the action or inaction or purported action of any
governmental or local authority (ii) any strike, lockout,
boycott or blockade (including any strike, lockout, boycott or
blockade effected by or upon any Bank or any of its
representatives or employees) (iii) any act of God
(iv) any act of war (whether declared or not) or terrorism
(v) any failure of any information technology or other
operational systems or equipment affecting any Bank or
(vi) any other circumstances whatsoever outside any
Banks control.
13.11 Amendments
This Agreement may be amended or varied only by an instrument in
writing executed by all parties hereto who irrevocably agree
that the provisions of this clause 13.11 may not be waived
or modified except by an instrument in writing to that effect
signed by all of them.
13.12 Counterparts
This Agreement may be executed in any number of counterparts and
all such counterparts taken together shall be deemed to
constitute one and the same agreement which may be sufficiently
evidenced by one counterpart.
13.13 English
language
All documents required to be delivered under
and/or
supplied whensoever in connection howsoever with any of the
Security Documents and all notices, communications, information
and other written material whatsoever given or provided in
connection howsoever therewith must either be in the English
language or accompanied by an English translation certified by a
notary, lawyer or consulate acceptable to the Agent.
14 ACCOUNTS
AND RETENTIONS
14.1 General
Each Borrower undertakes with each Bank that it will ensure that:
14.1.1 it will on or before the Delivery Date in respect of
its Vessel, open an Earnings Account in its name; and
14.1.2 all moneys payable to any Owner in respect of the
Earnings (as defined in the relevant Mortgage) of its Vessel
shall, unless and until the Agent (acting on the instructions of
the Majority Lenders) directs to the contrary pursuant to the
provisions of the relevant Mortgage, be paid to the Earnings
Account, Provided however that if any of the moneys paid to any
Earnings Account are payable in a currency other than USD, they
shall be paid to a
sub-account
of that Earnings Account denominated in such currency (except
that if the Shareholder fails to open such a
sub-account,
the Account Bank shall then convert such moneys into USD at the
Account Banks spot rate of exchange at the relevant time
for the purchase of USD with such currency and the term
spot rate of exchange shall include any premium and
costs of exchange payable in connection with the purchase of USD
with such currency).
14.2 Earnings
Accounts: withdrawals
Any sums standing to the credit of the Earnings Accounts may be
applied from time to time (i) firstly to make the payments
required under this Agreement, (ii) secondly, subject to
there being no breach of
Clause 14.3 and to no Event of Default having occurred, in
the operation of the Mortgaged Vessels and (iii) subject to
there being at any time sufficient funds to pay amounts due
under (i) and (ii) above as they fall due, thirdly for
the general corporate purposes of the Borrowers.
14.3 Retention
Account: credits and withdrawals
14.3.1 The Borrowers undertake with each Bank that,
throughout the Facility Period, they will procure that, on each
Retention Date there is paid (whether from the Earnings Accounts
or elsewhere) to the Retention Account, the Retention Amount for
such date.
14.3.2 Unless and until there shall occur an Event of
Default (whereupon the provisions of clause 14.5 shall
apply), all Retention Amounts credited to the Retention Account
together with interest from time to time accruing or at any time
accrued thereon must be applied by the Account Bank (and the
Borrowers hereby irrevocably authorise the Account Bank so to
apply the same) upon each Repayment Date
and/or on
each day that interest is payable on the Loan or a Tranche
pursuant to clause 3.1, in or towards payment to the
Payment Agent of the instalment then falling due for repayment
or, as the case may be, the amount of interest then due. Each
such application by the Account Bank shall constitute a payment
in or towards satisfaction of the Borrowers corresponding
payment obligations under this Agreement but shall be strictly
without prejudice to the obligations of the Borrowers to make
any such payment to the extent that the aforesaid application by
the Account Bank is insufficient to meet the same.
14.3.3 Unless the Agent (acting on the instructions of the
Majority Banks) otherwise agrees in writing and subject to this
clause 14.3.2, Borrowers shall not be entitled to withdraw
any moneys from the Retention Account at any time during the
Facility Period
14.4 Application
of accounts
At any time after the occurrence of an Event of Default, the
Payment Agent may (and on the instructions of the Majority
Lenders shall), without notice to the Borrowers, instruct the
Account Bank to apply all moneys then standing to the credit of
the Earnings Accounts
and/or the
Retention Account
and/or the
Equity Deposit Account (together with interest from time to time
accruing or accrued thereon) in or towards satisfaction of any
sums due to the Banks or any of them under the Security
Documents in the manner specified in clause 13.1.
14.5 Charging
of accounts
The Earnings Accounts and the Retention Account and all amounts
from time to time standing to the credit thereof shall be
subject to the security constituted and the rights conferred by
the Earnings Account Pledges and the Retention Account Pledge
respectively.
14.6 Equity
Deposit Account
The credit balance on the Equity Deposit Account shall at no
time be less than the difference between (i) the aggregate
of unpaid instalments under the Shipbuilding Contracts and
(ii) the aggregate of the undrawn Commitments and the
Borrowers may on each Drawdown Date apply sums from the Equity
Deposit Account in payment of the balance (after taking into
account the relevant Advance) of the instalment then payable to
the Builder and the Borrowers hereby irrevocably authorise the
Account Bank to refuse to make any payment from the Equity
Deposit Account except to the Builder.
15 ASSIGNMENT,
TRANSFER AND LENDING OFFICE
15.1 Benefit
and burden
This Agreement shall be binding upon, and enure for the benefit
of, the Banks and the Borrowers and their respective successors
in title.
15.2 No
assignment by Borrowers
|
No Borrower may assign or transfer any of its rights or
obligations under this Agreement.
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15.3 Transfers
by Banks
any Lender (the Transferor Lender) may at any
time cause all or any part of its rights, benefits
and/or
obligations under this Agreement and the other Security
Documents to be transferred to another first class international
bank or financial institution or other person (in either case a
Transferee Lender) (i) if such transfer
is to another branch, a subsidiary or affiliate of such Lender
and (ii) otherwise reasonably acceptable to the Borrowers,
in each case by delivering to the Agent a Transfer Certificate
duly completed and duly executed by the Transferor Lender and
the Transferee Lender. No such transfer is binding on, or
effective in relation to, the Borrowers or the Agent unless
(i) it is effected or evidenced by a Transfer Certificate
which complies with the provisions of this clause 15.3 and
is signed by or on behalf of the Transferor Lender, the
Transferee Lender and the Agent (on behalf of itself, the
Borrowers and the other Banks) and (ii) such transfer of
rights under the other Security Documents has been effected and
registered. Upon signature of any such Transfer Certificate by
the Agent, which signature shall be effected as promptly as is
practicable after such Transfer Certificate has been delivered
to the Agent, and subject to the terms of such Transfer
Certificate, such Transfer Certificate shall have effect as set
out below.
The following further provisions shall have effect in relation
to any Transfer Certificate:
15.3.1 a Transfer Certificate may be in respect of a
Lenders rights in respect of all, or part of, its
Commitment and shall be in respect of the same proportion of its
Contribution;
15.3.2 a Transfer Certificate shall only be in respect of
rights and obligations of the Transferor Lender in its capacity
as a Lender and shall not transfer its rights and obligations
(if applicable) as the Payment Agent and/or the Agent
and/or the
Security Trustee, or in any other capacity, as the case may be
and such other rights and obligations may only be transferred in
accordance with any applicable provisions of this Agreement;
15.3.3 a Transfer Certificate shall take effect in
accordance with English law as follows:
(a) to the extent specified in the Transfer Certificate,
the Transferor Lenders payment rights and all its other
rights (other than those referred to in clause 15.3.2
above) under this Agreement are assigned to the Transferee
Lender absolutely, free of any defects in the Transferor
Lenders title and of any rights or equities which the
Borrowers had against the Transferor Lender and the Transferee
Lender assumes all obligations of the Transferor Lender as are
transferred by such Transfer Certificate;
(b) the Transferor Lenders Commitment is discharged
to the extent specified in the Transfer Certificate;
(c) the Transferee Lender becomes a Lender with a
Contribution
and/or a
Commitment in respect of the Loan Facility of the amounts
specified in the Transfer Certificate;
(d) the Transferee Lender becomes bound by all the
provisions of this Agreement and the Security Documents which
are applicable to the Lenders generally, including those about
pro-rata sharing and the exclusion of liability on the part of,
and the indemnification of, the Payment Agent and the Agent and
the Security Trustee and to the extent that the Transferee
Lender becomes bound by those provisions, the Transferor Lender
ceases to be bound by them;
(e) an Advance or part of an Advance which the Transferee
Lender makes after the Transfer Certificate comes into effect
ranks in point of priority and security in the same way as it
would have ranked had it been made by the Transferor Lender,
assuming that any defects in the Transferor Lenders title
and any rights or equities of any Security Party against the
Transferor Lender had not existed; and
(f) the Transferee Lender becomes entitled to all the
rights under this Agreement which are applicable to the Lenders
generally, including but not limited to those relating to the
Majority Lenders
and those under clauses 3.6, 5 and 12 and to the extent
that the Transferee Lender becomes entitled to such rights, the
Transferor Lender ceases to be entitled to them;
15.3.4 the rights and equities of the Borrowers or of any
other Security Party referred to above include, but are not
limited to, any right of set-off and any other kind of
cross-claim; and
15.3.5 the Borrowers, the Account Bank, the Security
Trustee, the Payment Agent and the Lenders hereby irrevocably
authorise and instruct the Agent to sign any such Transfer
Certificate on their behalf and undertake not to withdraw,
revoke or qualify such authority or instruction at any time.
Promptly upon its signature of any Transfer Certificate, the
Agent shall notify the Borrowers, the Transferor Lender and the
Transferee Lender.
15.4 Reliance
on Transfer Certificate
15.4.1 The Agent shall be entitled to rely on any Transfer
Certificate believed by it to be genuine and correct and to have
been presented or signed by the persons by whom it purports to
have been presented or signed, and shall not be liable to any of
the parties to this Agreement and the Security Documents for the
consequences of such reliance.
15.4.2 The Payment Agent shall at all times during the
continuation of this Agreement maintain a register in which it
shall record the name, Commitments, Contributions and
administrative details (including the lending office) from time
to time of the Lenders holding a Transfer Certificate and the
date at which the transfer referred to in such Transfer
Certificate held by each Lender was transferred to such Lender,
and the Payment Agent shall make the said register available for
inspection by any Lender or the Borrowers during normal banking
hours upon receipt by the Payment Agent of reasonable prior
notice requesting the Payment Agent to do so.
15.4.3 The entries on the said register shall, in the
absence of manifest error, be conclusive in determining the
identities of the Commitments, the Contributions and the
Transfer Certificates held by the Lenders from time to time and
the principal amounts of such Transfer Certificates and may be
relied upon by all parties to this Agreement.
15.5 Transfer
fees and expenses
Any Transferor Lender who causes the transfer of all or any part
of its rights, benefits
and/or
obligations under the Security Documents in accordance with the
foregoing provisions of this clause 15, must, on each
occasion, pay to the Agent a transfer fee of one thousand five
hundred Dollars (USD 1,500) and, in addition, be responsible for
all other costs and expenses (including, but not limited to,
reasonable legal fees and expenses) associated therewith and all
value added tax thereon, as well as those of the Agent (in
addition to its fee as aforesaid) in connection with such
transfer.
15.6 Documenting
transfers
If any Lender assigns all or any part of its rights or transfers
all or any part of its rights, benefits
and/or
obligations as provided in clause 15.3, each Borrower
undertakes, immediately on being requested to do so by the Agent
and at the cost of the Transferor Lender, to enter into, and
procure that the other Security Parties shall (at the cost of
the Transferor Lender) enter into, such documents as may be
necessary or desirable to transfer to the Transferee Lender all
or the relevant part of such Lenders interest in the
Security Documents and all relevant references in this Agreement
to such Lender shall thereafter be construed as a reference to
the Transferor Lender
and/or its
Transferee Lender (as the case may be) to the extent of their
respective interests.
15.7 Sub-Participation
A Lender may
sub-participate
all or any part of its rights
and/or
obligations under the Security Documents at its own expense
without the consent of, or notice to, the Borrowers.
15.8 Lending
office
Each Lender shall lend through its office at the address
specified in schedule 1 or, as the case may be, in any
relevant Transfer Certificate or through any other office of
such Lender selected from time to time by it through which such
Lender wishes to lend for the purposes of this Agreement. If the
office through which a Lender is lending is changed pursuant to
this clause 15.8, such Lender shall notify the Agent
promptly of such change and the Agent shall notify the
Borrowers, the Security Trustee, the Payment Agent, the Account
Bank and the other Lenders.
15.9 Disclosure
of information
A Bank may disclose to any of its branches and affiliates, its
head office, any relevant fiscal authorities. a prospective
assignee, transferee or to any other person who may propose
entering into contractual relations with such Bank in relation
to this Agreement
and/or the
Master Agreement such information about the Borrowers
and/or the
other Security Parties
and/or the
Loan and/or
the Security Documents as such Bank shall consider appropriate
in relation to any transfer
and/or
enforcement hereunder.
16 ARRANGER,
AGENT AND SECURITY TRUSTEE
16.1 Appointment
of the Agent
The Swap Bank and each Lender irrevocably appoints the Agent and
the Payment Agent as its agent and payment agent, respectively,
for the purposes of this Agreement and such of the Security
Documents to which it may be appropriate for the Agent to be
party. Accordingly each of the Lenders and the Swap Bank hereby
authorise the Agent and the Payment Agent:
16.1.1 to execute such documents as may be approved by the
Majority Lenders for execution by the Agent and/or (as the case
may be) the Payment Agent; and
16.1.2 (whether or not by or through employees or agents)
to take such action on such Lenders behalf and to exercise
such rights, remedies, powers and discretions as are
specifically delegated to the Agent and/or the Payment Agent by
any Security Document, together with such powers and discretions
as are reasonably incidental thereto.
16.2 Payment
Agents/Agents actions
Any action taken by the Agent or the Payment Agent under or in
relation to any of the Security Documents whether with requisite
authority or on the basis of appropriate instructions received
from the Majority Lenders (or as otherwise duly authorised)
shall be binding on all the Banks.
16.3 Agents
and Payment Agents duties
16.3.1 The Agent and the Payment Agent shall promptly
notify each Lender of the contents of each notice, certificate
or other document received by it from the Borrowers under or
pursuant to clauses 8.1.1, 8.1.6, 8.1.9, 8.1.10, 8.1.13 and
8.1.17; and
16.3.2 The Agent shall (subject to the other provisions of
this clause 16) take (or instruct the Security Trustee
to take) such action or, as the case may be, refrain from taking
(or authorise the Security Trustee to refrain from taking) such
action with respect to the exercise of any of its rights,
remedies, powers and discretions as agent, as the Majority
Lenders may direct.
16.4 Security
Trustees, Payment Agents and Agents
rights
The Security Trustee, Payment Agents and the Agent may:
16.4.1 in the exercise of any right, remedy, power or
discretion in relation to any matter, or in any context, not
expressly provided for by this Agreement or any of the other
Security Documents, act or, as the
case may be, refrain from acting (or authorise the Security
Trustee to act or refrain from acting) in accordance with the
instructions of the Lenders, and shall be fully protected in so
doing;
16.4.2 unless and until it has received directions from the
Majority Lenders, take such action or, as the case may be,
refrain from taking such action (or authorise the Security
Trustee to take or refrain from taking such action) in respect
of a Default of which the Agent and/or the Payment Agent has
actual knowledge as it shall consider advisable in the best
interests of the Lenders (but shall not be obliged to do so);
16.4.3 refrain from acting (or authorise the Security
Trustee to refrain from acting) in accordance with any
instructions of the Lenders to institute any Proceedings arising
out of or in connection with any of the Security Documents until
it and/or
the Security Trustee has been indemnified
and/or
secured to its satisfaction against any and all costs, expenses
or liabilities (including legal fees) which it would or might
incur as a result;
16.4.4 deem and treat (i) each Lender as the person
entitled to the benefit of the Contribution of such Lender for
all purposes of this Agreement unless and until a notice shall
have been filed with the Agent pursuant to clause 15.3 and
shall have become effective, and (ii) the office set
opposite the name of each of the Lenders in schedule 1 as
its lending office unless and until a written notice of change
of lending office shall have been received by the Agent and the
Agent may act upon any such notice unless and until the same is
superseded by a further such notice;
16.4.5 rely as to matters of fact which might reasonably be
expected to be within the knowledge of any Security Party upon a
certificate signed by any director or officer of the relevant
Security Party on behalf of the relevant Security Party; and
16.4.6 do anything which is in its opinion necessary or
desirable to comply with any law or regulation in any
jurisdiction.
16.5 No
Liability of Agent or Arranger or Payment Agent
None of the Security Trustee, the Agent, the Payment Agent the
Arranger nor any of their respective employees and agents shall:
16.5.1 be obliged to make any enquiry as to the use of any
of the proceeds of the Loan unless (in the case of the Agent) so
required in writing by a Lender, in which case the Agent shall
promptly make the appropriate request to the Borrowers; or
16.5.2 be obliged to make any enquiry as to any breach or
default by the Borrowers or any other Security Party in the
performance or observance of any of the provisions of the
Security Documents or as to the existence of a Default unless
(in the case of the Agent) the Agent has actual knowledge
thereof or has been notified in writing thereof by a Bank, in
which case the Agent shall promptly notify the Banks of the
relevant event or circumstance; or
16.5.3 be obliged to enquire whether or not any
representation or warranty made by the Borrowers or any other
Security Party pursuant to this Agreement or any of the other
Security Documents is true; or
16.5.4 be obliged to do anything (including, without
limitation, disclosing any document or information) which would,
or might in its opinion, be contrary to any law or regulation or
be a breach of any duty of confidentiality or otherwise be
actionable or render it liable to any person; or
16.5.5 be obliged to account to any Lender for any sum or
the profit element of any sum received by it for its own
account; or
16.5.6 be obliged to institute any Proceedings arising out
of or in connection with any of the Security Documents other
than on the instructions of the Majority Lenders; or
16.5.7 be liable to any Lender for any action taken or
omitted under or in connection with any of the Security
Documents unless caused by its gross negligence or wilful
misconduct.
For the purposes of this clause 16, none of the Security
Trustee, the Arranger the Payment Agent or the Agent shall be
treated as having actual knowledge of any matter of which the
corporate finance or any other division outside the agency or
loan administration department of the Arranger, the Security
Trustee the Payment Agent or the Agent or the person for the
time being acting as the Arranger, the Security Trustee Payment
Agent or the Agent may become aware in the context of corporate
finance, advisory or lending activities from time to time
undertaken by the Arranger, the Security Trustee or the Agent
or, as the case may be, the Security Trustee or Agent for any
Security Party or any other person which may be a trade
competitor of any Security Party or may otherwise have
commercial interests similar to those of any Security Party.
16.6 Non
reliance on Arranger, Security Trustee, Agent or Payment
Agent
Each Lender and the Swap Bank acknowledges that it has not
relied on any statement, opinion, forecast or other
representation made by the Arranger, the Security Trustee, the
Payment Agent or the Agent to induce it to enter into any of the
Security Documents and that it has made and will continue to
make, without reliance on the Arranger, the Security Trustee,
the Payment Agent or the Agent and based on such documents as it
considers appropriate, its own appraisal of the creditworthiness
of the Security Parties and its own independent investigation of
the financial condition, prospects and affairs of the Security
Parties in connection with the making and continuation of such
Lenders Commitment or Contribution under this Agreement.
None of the Arranger, the Security Trustee, the Payment Agent
and the Agent shall have any duty or responsibility, either
initially or on a continuing basis, to provide any Lender or the
Swap Bank with any credit or other information with respect to
any Security Party whether coming into its possession before the
making of any Advance or the Loan or at any time or times
thereafter other than as provided in clause 16.3.1.
16.7 No
responsibility on the Arranger, the Security Trustee, Agent or
Payment Agent for Borrowers performance
None of the Arranger, the Security Trustee, the Payment Agent or
the Agent shall have any responsibility or liability to any
Lender or the Swap Bank:
16.7.1 on account of the failure of any Security Party to
perform its obligations under any of the Security
Documents; or
16.7.2 for the financial condition of any Security
Party; or
16.7.3 for the completeness or accuracy of any statements,
representations or warranties in any of the Security Documents
or any document delivered under any of the Security
Documents; or
16.7.4 for the execution, effectiveness, adequacy,
genuineness, validity, enforceability or admissibility in
evidence of any of the Security Documents or of any certificate,
report or other document executed or delivered under any of the
Security Documents; or
16.7.5 to investigate or make any enquiry into the title of
the Borrowers or any other Security Party to the Vessels or any
other security or any part thereof; or
16.7.6 for the failure to register any of the Security
Documents with any official or regulatory body or office or
elsewhere; or
16.7.7 for taking or omitting to take any other action
under or in relation to any of the Security Documents or any
aspect of any of the Security Documents; or
16.7.8 on account of the failure of the Security Trustee to
perform or discharge any of its duties or obligations under the
Security Documents; or
16.7.9 otherwise in connection with the Security Documents
or their negotiation or for acting (or, as the case may be,
refraining from acting) in accordance with the instructions of
the Lenders.
16.8 Reliance
on documents and professional advice
Each of the Arranger, the Security Trustee, the Payment Agent
and the Agent shall be entitled to rely on any communication,
instrument or document believed by it to be genuine and correct
and to have been signed or sent by the proper person and shall
be entitled to rely as to legal or other professional matters on
opinions and statements of any legal or other professional
advisers selected or approved by it (including those in the
Arrangers, the Security Trustees, the Payment Agent
or Agents employment).
16.9 Other
dealings
Each of the Arranger, the Security Trustee, the Payment Agent
and the Agent may, without any liability to account to the
Lenders, accept deposits from, lend money to, and generally
engage in any kind of banking or other business with, and
provide advisory or other services to, any Security Party or any
company in the same group of companies as such Security Party or
any of the Lenders as if it were not the Arranger, the Security
Trustee, the Payment Agent or the Agent.
16.10 Rights
of Agent, Payment Agent as Lender; no partnership
With respect to its own Commitment and Contribution (if any) the
Security Trustee, the Payment Agent and the Agent shall have the
same rights and powers under the Security Documents as any other
Lender and may exercise the same as though it were not
performing the duties and functions delegated to it under this
Agreement and the term Lenders shall, unless the
context clearly otherwise indicates, include the Security
Trustee, the Payment Agent and the Agent in their respective
individual capacity as a Lender. This Agreement shall not be
construed so as to constitute a partnership between the parties
or any of them.
16.11 Amendments
and waivers
16.11.1 Subject to clause 16.11, the Arranger, the
Security Trustee, the Payment Agent
and/or the
Agent (as the case may be) may, with the consent of the Majority
Lenders (or if and to the extent expressly authorised by the
other provisions of any of the Security Documents) and, if so
instructed by the Majority Lenders, shall:
16.11.2 agree (or authorise the Security Trustee to agree)
amendments or modifications to any of the Security Documents
with the Borrowers
and/or any
other Security Party; and/or
16.11.3 vary or waive breaches of, or defaults under, or
otherwise excuse performance of, any provision of any of the
other Security Documents by the Borrowers
and/or any
other Security Party (or authorise the Security Trustee to do
so).
Any such action so authorised and effected by the Agent shall be
documented in such manner as the Security Trustee
and/or the
Payment Agent and/or the Agent (as the case may be) shall (with
the approval of the Majority Lenders) determine, shall be
promptly notified to the Lenders by the Security Trustee
and/or the
Payment Agent and/or the Agent (as the case may be) and (without
prejudice to the generality of clause 16.2) shall be
binding on the Lenders.
16.11.4 Except with the prior written consent of the
Lenders, the Security Trustee, the Payment Agent and the Agent
shall have no authority on behalf of the Lenders to agree (or
authorise the Security Trustee to agree) with the Borrowers
and/or any
other Security Party any amendment or modification to any of the
Security Documents or to grant (or authorise the Security
Trustee to grant) waivers in respect of breaches or defaults or
to vary or excuse (or authorise the Security Trustee to vary or
excuse) performance of or under any of the Security Documents by
the Borrowers
and/or any
other Security Party, if the effect of such amendment,
modification, waiver or excuse would be to:
(a) reduce the Margin, postpone the due date or reduce the
amount of any payment of principal, interest or other amount
payable by any Security Party under any of the Security
Documents;
(b) change the currency in which any amount is payable by
any Security Party under any of the Security Documents;
(c) increase any Lenders Commitment;
(d) extend any Maturity Date;
(e) change any provision of any of the Security Documents
which expressly or impliedly requires the approval or consent of
all the Lenders such that the relevant approval or consent may
be given otherwise than with the sanction of all the Lenders;
(f) change the order of distribution under
clauses 6.10 and 13.1;
(g) change this clause 16.11;
(h) change the definition of Majority
Lenders in clause 1.2;
(i) release any Security Party from the security
constituted by any Security Document (except as required by the
terms thereof or by law) or change the terms and conditions upon
which such security or guarantee may be, or is required to be,
released.
16.12 Reimbursement
and indemnity by Lenders
Each Lender shall reimburse the Security Trustee, the Payment
Agent and the Agent (rateably in accordance with such
Lenders Commitment or, after the first Advance or the Loan
has been drawn, its Contribution,) to the extent that the
Security Trustee, the Payment Agent or the Agent is not
reimbursed by the Borrowers, for the costs, charges and expenses
incurred by the Security Trustee, the Payment Agent or the Agent
which are expressed to be payable by the Borrowers under
clause 5.3 including (in each case), without limitation,
the fees and expenses of legal or other professional advisers
provided that, if following any payment to the Security Trustee,
the Payment Agent or the Agent by a Lender under this clause the
Security Trustee, the Payment Agent or the Agent receives
payment from the Borrowers in respect of the same costs, fees or
expenses, the Security Trustee or the Agent shall upon receipt
thereof reimburse the relevant Lender. Each Lender must on
demand indemnify the Security Trustee, the Payment Agent or the
Agent (rateably in accordance with such Lenders Commitment
or, after the first Advance or the Loan has been drawn, its
Contribution) against all liabilities, damages, costs and claims
whatsoever incurred by the Security Trustee in connection with
any of the Security Documents or the performance of its duties
under any of the Security Documents or any action taken or
omitted by the Security Trustee or, as the case may be, the
Payment Agent or the Agent, under any of the Security Documents,
unless such liabilities, damages, costs or claims arise from the
Security Trustees or as the case may be, the Payment
Agents or the Agents own gross negligence or wilful
misconduct.
16.13 Retirement
of the Security Trustee /Agent Payment Agent
16.13.1 The Agent and the Payment Agent may, having given
to the Borrowers and each of the Lenders not less than fifteen
(15) days notice of its intention to do so, retire
from its appointment as the Security Trustee, the Payment Agent
or the Agent (as the case may be) under this Agreement, provided
that no such retirement shall take effect unless there has been
appointed by the Lenders as a successor agent:
(a) a company in the same group of companies as the
Security Trustee or, as the case may be, the Payment Agent or
the Agent nominated by the Security Trustee or, as the case may
be, the Payment Agent or the Agent,
(b) a Lender nominated by the Majority Lenders or, failing
such a nomination,
(c) any reputable and experienced bank or financial
institution nominated by the retiring Payment Agent or the
retiring Agent or, as the case may be, the retiring Security
Trustee.
Any corporation into which the retiring Agent
and/or the
retiring Payment Agent and/or the retiring Security Trustee (as
the case may be) may be merged or converted or any corporation
with which the Security Trustee and/or the Payment Agent
and/or the
Agent (as the case may be) may be consolidated or any
corporation resulting from any merger, conversion, amalgamation,
consolidation or other reorganisation to which the Security
Trustee or the Payment Agent or the Agent (as the case may be)
shall be a party shall, to
the extent permitted by applicable law, be the successor Agent
or Security Trustee under this Agreement and the other Security
Documents without the execution or filing of any document or any
further act on the part of any of the parties to the Security
Documents save that notice of any such merger, conversion,
amalgamation, consolidation or other reorganisation shall
forthwith be given to each Security Party and the Lenders. Prior
to any such successor being appointed, the Agent agrees to
consult with the Borrowers and the Lenders as to the identity of
the proposed successor and to take account of any reasonable
objections which the Borrowers and the Lenders may raise to such
successor being appointed.
16.13.2 If the Majority Lenders, acting reasonably, are of
the opinion that the Security Trustee or Payment Agent or Agent
is unable to fulfil its respective obligations under this
Agreement in a professional and acceptable manner, then they may
require the Security Trustee or Payment Agent or Agent, by
written notice, to resign in accordance with
clause 16.13.1, which the Agent shall promptly do, and the
terms of clause 16.13.1 shall apply to the appointment of
any substitute Security Trustee or Payment Agent or Agent, save
that the same shall be appointed by the Majority Lenders and not
by all of the Lenders.
16.13.3 Upon any such successor as aforesaid being
appointed, the retiring Agent or, as the case may be, the
Security Trustee or the Payment Agent shall be discharged from
any further obligation under the Security Documents (but shall
continue to have the benefit of this clause 16 in respect
of any action it has taken or refrained from taking prior to
such discharge) and its successor and each of the other parties
to this Agreement shall have the same rights and obligations
among themselves as they would have had if such successor had
been a party to this Agreement in place of the retiring Agent or
Payment Agent or Security Trustee. The retiring Agent or Payment
Agent shall (at its own expense) provide its successor with
copies of such of its records as its successor reasonably
requires to carry out its functions under the Security Documents.
16.14 Appointment
and retirement of Security Trustee
16.14.1 Appointment
Each of the Lenders, the Swap Bank and the Agent irrevocably
appoints the Security Trustee as its Security Trustee and
trustee for the purposes of the Security Documents, in each case
on the terms set out in this Agreement. Accordingly, each of the
Lenders, the Swap Bank and the Agent hereby authorises the
Security Trustee (whether or not by or through employees or
agents) to take such action on its behalf and to exercise such
rights, remedies, powers and discretions as are specifically
delegated to the Security Trustee by this Agreement
and/or the
Security Documents, together with such powers and discretions as
are reasonably incidental thereto.
16.14.2 Retirement
Without prejudice to clause 16.13, the Security Trustee
may, having given to the Borrowers and each of the Lenders and
the Swap Bank not less than fifteen (15) days notice
of its intention to do so, retire from its appointment as
Security Trustee under this Agreement and any Trust Deed,
provided that no such retirement shall take effect unless there
has been appointed by the Lenders and the Agent as a successor
Security Trustee and trustee:
(a) a company in the same group of companies of the
Security Trustee nominated by the Security Trustee which the
Lenders hereby irrevocably and unconditionally agree to appoint
or, failing such nomination,
(b) a Lender or trust corporation nominated by the Majority
Lenders or, failing such a nomination,
(c) any bank or trust corporation nominated by the retiring
Security Trustee,
and, in any case, such successor Security Trustee and trustee
shall have duly accepted such appointment by delivering to the
Agent (i) written confirmation (in a form acceptable to the
Agent) of such acceptance agreeing to be bound by this Agreement
in the capacity of Security Trustee as if it had been an
original party to this Agreement and (ii) a duly executed
Trust Deed.
Any corporation into which the retiring Security Trustee may be
merged or converted or any corporation with which the Security
Trustee may be consolidated or any corporation resulting from
any merger,
conversion, amalgamation, consolidation or other reorganisation
to which the Security Trustee shall be a party shall, to the
extent permitted by applicable law, be the successor Security
Trustee under this Agreement, any Trust Deed and the other
Security Documents without the execution or filing of any
document or any further act on the part of any of the parties to
this Agreement, any Trust Deed and the other Security
Documents save that notice of any such merger, conversion,
amalgamation, consolidation or other reorganisation shall
forthwith be given to each Security Party, the Swap Bank and the
Lenders. Prior to any such successor being appointed, the
Security Trustee agrees to consult with the Borrowers as to the
identity of the proposed successor and to take account of any
reasonable objections which the Borrowers may raise to such
successor being appointed.
Upon any such successor as aforesaid being appointed, the
retiring Security Trustee shall be discharged from any further
obligation under the Security Documents (but shall continue to
have the benefit of this clause 16 in respect of any action
it has taken or refrained from taking prior to such discharge)
and its successor and each of the other parties to this
Agreement shall have the same rights and obligations among
themselves as they would have had if such successor had been a
party to this Agreement in place of the retiring Security
Trustee. The retiring Security Trustee shall (at its own
expense) provide its successor with copies of such of its
records as its successor reasonably requires to carry out its
functions under the Security Documents.
16.15 Powers
and duties of the Security Trustee
16.15.1 The Security Trustee shall have no duties,
obligations or liabilities to any of the Lenders and the Agent
beyond those expressly stated in any of the Security Documents.
Each of the Agent and the Swap Bank, the Lenders hereby
authorises the Security Trustee to enter into and execute:
(a) each of the Security Documents to which the Security
Trustee is or is intended to be a party; and
(b) any and all such other Security Documents as may be
approved by the Agent in writing (acting on the instructions of
the Majority Lenders) for entry into by the Security Trustee,
and, in each and every case, to hold any and all security
thereby created upon trust for the Lenders, the Swap Bank and
the Agent for the time being in the manner contemplated by this
Agreement.
16.15.2 Subject to clause 16.15.3 the Security Trustee
may, with the prior consent of the Majority Lenders communicated
in writing by the Agent, concur with any of the Security Parties
to:
(a) amend, modify or otherwise vary any provision of the
Security Documents to which the Security Trustee is or is
intended to be a party; or
(b) waive breaches of, or defaults under, or otherwise
excuse performance of, any provision of the Security Documents
to which the Security Trustee is or is intended to be a
party; or
(c) give any consents to any Security Party in respect of
any provision of any Security Document
Any such action so authorised and effected by the Security
Trustee shall be promptly notified to the Lenders, the Swap Bank
and the Agent by the Security Trustee and shall be binding on
the other Banks.
16.15.3 The Security Trustee shall not concur with any
Security Party with respect to any of the matters described in
clause 16.11.4 without the consent of the Lenders
communicated in writing by the Agent.
16.15.4 The Security Trustee shall (subject to the other
provisions of this clause 16) take such action or, as
the case may be, refrain from taking such action, with respect
to any of its rights, powers and discretions as Security Trustee
and trustee, as the Agent may direct. Subject as provided in the
foregoing provisions of this clause, unless and until the
Security Trustee has received such instructions from the Agent,
the Security Trustee may, but shall not be obliged to, take (or
refrain from taking) such action under or pursuant to the
Security Documents referred to in clause 16.14 as the
Security Trustee shall deem advisable in the best interests of
the Banks provided that (for the avoidance of doubt), to the
extent that this clause might otherwise be construed as
authorising the Security Trustee to take, or refrain from
taking, any action of the nature referred to in
clause 16.15.2 and for which the prior consent
of the Lenders is expressly required under
clause 16.15.3 clauses 16.15.2 and 16.15.3
shall apply to the exclusion of this clause.
16.15.5 None of the Lenders, the Swap Bank nor the Agent
shall have any independent power to enforce any of the Security
Documents referred to in clause 16.14 or to exercise any
rights, discretions or powers or to grant any consents or
releases under or pursuant to such Security Documents or any of
them or otherwise have direct recourse to the security
and/or
guarantees constituted by such Security Documents or any of them
except through the Security Trustee.
16.15.6 For the purpose of this clause 16, the
Security Trustee may, rely and act in reliance upon any
information from time to time furnished to the Security Trustee
by the Agent (whether pursuant to clause 16.15.7 or
otherwise) unless and until the same is superseded by further
such information, so that the Security Trustee shall have no
liability or responsibility to any party as a consequence of
placing reliance on and acting in reliance upon any such
information unless the Security Trustee has actual knowledge
that such information is inaccurate or incorrect.
16.15.7 Without prejudice to the foregoing each of the
Agent, the Swap Bank and the Lenders (whether directly or
through the Agent) shall provide the Security Trustee with such
written information as it may reasonably require for the purpose
of carrying out its duties and obligations under the Security
Documents referred to in clause 16.14.
16.16 Trust
provisions
16.16.1 The trusts constituted or evidenced in or by this
Agreement and the Trust Deed shall remain in full force and
effect until whichever is the earlier of:
(a) the expiration of a period of eighty (80) years
from the date of this Agreement; and
(b) receipt by the Security Trustee of confirmation in
writing by the Agent that there is no longer outstanding any
Indebtedness (actual or contingent) which is secured or
guaranteed or otherwise assured by or under any of the Security
Documents,
and the parties to this Agreement declare that the perpetuity
period applicable to this Agreement and the trusts declared by
the Trust Deed shall for the purposes of the Perpetuities
and Accumulations Act 1964 be the period of eighty
(80) years from the date of this Agreement.
16.16.2 In its capacity as trustee in relation to the
Security Documents specified in clause 16.14, the Security
Trustee shall, without prejudice to any of the powers,
discretions and immunities conferred upon trustees by law (and
to the extent not inconsistent with the provisions of any of
those Security Documents), have all the same powers and
discretions as a natural person acting as the beneficial owner
of such property
and/or as
are conferred upon the Security Trustee by any of those Security
Documents.
16.16.3 It is expressly declared that, in its capacity as
trustee in relation to the Security Documents specified in
clause 16.14, the Security Trustee shall be entitled to
invest moneys forming part of the security and which, in the
opinion of the Security Trustee, may not be paid out promptly
following receipt in the name or under the control of the
Security Trustee in any of the investments for the time being
authorised by law for the investment by trustees of trust moneys
or in any other property or investments whether similar to the
aforesaid or not or by placing the same on deposit in the name
or under the control of the Security Trustee as the Security
Trustee may think fit without being under any duty to diversify
its investments and the Security Trustee may at any time vary or
transpose any such property or investments for or into any
others of a like nature and shall not be responsible for any
loss due to depreciation in value or otherwise of such property
or investments. Any investment of any part or all of the
security may, at the discretion of the Security Trustee, be made
or retained in the names of nominees.
16.17 Independent
action by Banks
None of the Banks shall enforce, exercise any rights, remedies
or powers or grant any consents or releases under or pursuant
to, or otherwise have a direct recourse to the security
and/or
guarantees constituted by any of the Security Documents without
the prior written consent of the Majority Lenders but, provided
such consent has been obtained, it shall not be necessary for
any other Bank to be joined as an additional party in any
Proceedings for this purpose.
16.18 Common
Agent and Security Trustee
The Agent and the Security Trustee have entered into the
Security Documents in their separate capacities (a) as
agent for the Lenders under and pursuant to this Agreement (in
the case of the Agent) and (b) as Security Trustee and
trustee for the Lenders, the Swap Bank and the Agent under and
pursuant to this Agreement, to hold the guarantees
and/or
security created by the Security Documents specified in
clause 16.14 on the terms set out in such Security
Documents (in the case of the Security Trustee). If and when the
Agent and the Security Trustee are the same entity and any
Security Document provides for the Agent to communicate with or
provide instructions to the Security Trustee (and vice versa),
all parties to this Agreement agree that any such communications
or instructions on such occasions are unnecessary and are hereby
waived.
16.19 Co-operation
to achieve agreed priorities of application
The Lenders and the Agent shall co-operate with each other and
with the Security Trustee and any receiver under the Security
Documents in realising the property and assets subject to the
Security Documents and in ensuring that the net proceeds
realised under the Security Documents after deduction of the
expenses of realisation are applied in accordance with
clause 13.1.
16.20 The
Prompt distribution of proceeds
Moneys received by any of the Banks (whether from a receiver or
otherwise) pursuant to the exercise of (or otherwise by virtue
of the existence of) any rights and powers under or pursuant to
any of the Security Documents shall (after providing for all
costs, charges, expenses and liabilities and other payments
ranking in priority) be paid to the Agent for distribution (in
the case of moneys so received by any of the Banks other than
the Agent or the Security Trustee) and shall be distributed by
the Agent or, as the case may be, the Security Trustee (in the
case of moneys so received by the Agent or, as the case may be,
the Security Trustee) in each case in accordance with
clause 13.1. The Agent or, as the case may be, the Security
Trustee shall make each such application
and/or
distribution as soon as is practicable after the relevant moneys
are received by, or otherwise become available to, the Agent or,
as the case may be, the Security Trustee save that (without
prejudice to any other provision contained in any of the
Security Documents) the Agent or, as the case may be, the
Security Trustee (acting on the instructions of the Majority
Lenders) or any receiver may credit any moneys received by it to
a suspense account for so long and in such manner as the Agent
or such receiver may from time to time determine with a view to
preserving the rights of the Agent
and/or the
Security Trustee
and/or the
Account Bank
and/or the
Arranger
and/or the
Lenders, the Swap Bank or any of them to provide for the whole
of their respective claims against the Borrowers or any other
person liable.
16.21 Reconventioning
After consultation with the Borrowers and the Lenders and
notwithstanding clause 16.11, the Agent shall be entitled
to make such amendments to this Agreement as it may determine to
be necessary to take account of any changes in market practices
as a consequence of the European Monetary Union (whether as to
the settlement or rounding of obligations, business days, the
calculation of interest or otherwise whatsoever). So far as
possible such amendments shall be such as to put the parties in
the same position as if the event or events giving rise to the
need to amend this Agreement had not occurred. Any amendment so
made to this Agreement by the Agent shall be promptly notified
to the other parties hereto and shall be binding on all parties
hereto.
16.22 Exclusivity
Without prejudice to the Borrowers rights, in certain
instances, to give their consent thereunder, clauses 15 and
16 are for the exclusive benefit of the Banks.
17 NOTICES
AND OTHER MATTERS
17.1 Notices
17.1.1 unless otherwise specifically provided herein, every
notice under or in connection with this Agreement shall be given
in English by letter delivered personally
and/or sent
by post
and/or
transmitted by fax
and/or
electronically;
17.1.2 in this clause notice includes any
demand, consent, authorisation, approval, instruction,
certificate, request, waiver or other communication.
17.2 Addresses
for communications, effective date of notices
17.2.1 Subject to clause 17.2.2, clause 17.2.5
and 17.3 notices to the Borrowers shall be deemed to have been
given and shall take effect when received in full legible form
by the Borrowers at the address
and/or the
fax number appearing below (or at such other address or fax
number as the Borrowers may hereafter specify for such purpose
to the Agent by notice in writing);
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Address
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c/o Navios
ShipManagement Inc.
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85 Akti Miaouli
Piraeus
Greece
Fax no: + 30 210 453 2070
17.2.2 notwithstanding the provisions of clause 17.2.1
or clause 17.2.5, a notice of Default and/or a notice given
pursuant to clause 10.2 or clause 10.3 to the
Borrowers shall be deemed to have been given and shall take
effect when delivered, sent or transmitted by the Banks or any
of them to the Borrowers to the address or fax number referred
to in clause 17.2.1;
17.2.3 subject to clause 17.2.5, notices to Payment
Agent and/or the Agent and/or the Security Trustee and/or
Account Bank and/or Security Trustee and/or the Swap Bank shall
be deemed to be given, and shall take effect, when received in
full legible form by the Payment Agent and/or Agent and/or the
Security Trustee at the address and/or the fax number address
appearing below (or at any such other address or fax number as
the Payment Agent and/or Agent and/or the Security Trustee (as
appropriate) may hereafter specify for such purpose to the
Borrowers and the other Lenders by notice in writing);
2-14 Friedrich-Ebert-Anlage
60325 Frankfurt-Am-Main
Germany
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Attn:
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Loan Administration Dept.
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with a copy to:
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DVB Bank AG
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95 Akti Miaouli
Piraeus 185 38
Greece
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Attn:
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Loans Administration
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Fax no:
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+30210 429 1284
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Payment Agent:
Vas Sofias 94& Kerasountos 1
115 28 Athens, Greece
Fax:
Attn: Yiannis
Karamanolis/Domna Dimitriadou
17.2.4 subject to clause 17.2.5 and 17.3, notices to a
Lender shall be deemed to be given and shall take effect when
received in full legible form by such Lender at its address
and/or fax
number specified in schedule 1 or in any relevant Transfer
Certificate (or at any other address or fax number as such
Lender may hereafter specify for such purpose to the other
Banks); and
17.2.5 if under clause 17.2.1 or clause 17.2.3 a
notice would be deemed to have been given and effective on a day
which is not a working day in the place of receipt or is outside
the normal business hours in the place of receipt, the notice
shall be deemed to have been given and to have taken effect at
the opening of business on the next working day in such place.
17.3 Electronic
Communication
17.3.1 Any communication to be made by
and/or
between the Banks or any of them and the Security Parties or any
of them under or in connection with the Security Documents or
any of them may be made by electronic mail or other electronic
means, if and provided that all such parties:
(a) 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
(b) notify each other of any change to their electronic
mail address or any other such information supplied by them.
17.3.2 Any electronic communication made by
and/or
between the Banks or any of them and the Security Parties or any
of them will be effective only when actually received in
readable form and, in the case of any electronic communication
made by the Borrowers or the Lenders to the Agent, only if it is
addressed in such manner as the Agent shall specify for this
purpose.
17.4 Notices
through the Agent
Every notice under this Agreement or (unless otherwise provided
therein) any other Security Document to be given by the
Borrowers to any other party, shall be given to the Agent for
onward transmission as appropriate and every notice under this
Agreement to be given to the Borrowers shall (except as
otherwise provided in the Security Documents) be given to the
Borrowers by the Agent.
18 BORROWERS
OBLIGATIONS
18.1 Joint
and several
Regardless of any other provision in any of the Security
Documents, all obligations and liabilities whatsoever of the
Borrowers herein contained are joint and several and shall be
construed accordingly. Each of the Borrowers agrees and consents
to be bound by the Security Documents to which it becomes a
party notwithstanding that the other Borrower may not do so or
be effectually bound and notwithstanding that any of the
Security Documents may be invalid or unenforceable against the
other Borrower, whether or not the deficiency is known to any
Bank.
18.2 Borrowers
as principal debtors
Each Borrower acknowledges that it is a principal and original
debtor in respect of all amounts which may become payable by the
Borrowers in accordance with the terms of any of the Security
Documents and agrees that each Bank may continue to treat it as
such, whether or not such Bank is or becomes aware that such
Borrower is or has become a surety for the other Borrower.
18.3 Indemnity
The Borrowers undertake to keep the Banks fully indemnified on
demand against all claims, damages, losses, costs and expenses
arising from any failure of any Borrower to perform or discharge
any purported obligation or liability of that Borrower which
would have been the subject of this Agreement or any other
Security Document had it been valid and enforceable and which is
not or ceases to be valid and enforceable against the other
Borrower on any ground whatsoever, whether or not known to any
Bank including, without limitation, any irregular exercise or
absence of any corporate power or lack of authority of, or
breach of duty by, any person purporting to act on behalf of the
other Borrower (or any legal or other limitation, whether under
the Limitation Acts or otherwise or any disability or death,
bankruptcy, unsoundness of mind, insolvency, liquidation,
dissolution, winding up, administration, receivership,
amalgamation, reconstruction or any other incapacity of any
person whatsoever (including, in the case of a partnership, a
termination or change in the composition of the partnership) or
any change of name or style or constitution of any Security
Party)).
18.4 Liability
unconditional
None of the obligations or liabilities of the Borrowers under
any Security Document shall be discharged or reduced by reason
of:
18.4.1 the death, bankruptcy, unsoundness of mind,
insolvency, liquidation, dissolution,
winding-up,
administration, receivership, amalgamation, reconstruction or
other incapacity of any person whatsoever (including, in the
case of a partnership, a termination or change in the
composition of the partnership) or any change of name or style
or constitution of any Borrower or any other person liable;
18.4.2 any Bank granting any time, indulgence or concession
to, or compounding with, discharging, releasing or varying the
liability of, any Borrower or any other person liable or
renewing, determining, varying or increasing any accommodation,
facility or transaction or otherwise dealing with the same in
any manner whatsoever or concurring in, accepting, varying any
compromise, arrangement or settlement or omitting to claim or
enforce payment from any Borrower or any other person
liable; or
18.4.3 anything done or omitted which but for this
provision might operate to exonerate the Borrowers or all of
them.
18.5 Recourse
to other security
No Bank shall be obliged to make any claim or demand or to
resort to any security or other means of payment now or
hereafter held by or available to them for enforcing any of the
Security Documents against any Borrower or any other person
liable and no action taken or omitted by any Bank in connection
with any such security or other means of payment will discharge,
reduce, prejudice or affect the liability of the Borrowers under
the Security Documents to which any of them is, or is to be, a
party.
18.6 Waiver
of Borrowers rights
Each Borrower agrees with the Banks that, throughout the
Facility Period, it will not, without the prior written consent
of the Agent:
18.6.1 exercise any right of subrogation, reimbursement and
indemnity against the other Borrower or any other person liable
under the Security Documents;
18.6.2 demand or accept repayment in whole or in part of
any Indebtedness now or hereafter due to such Borrower from the
other Borrower or from any other person liable for such
Indebtedness or demand or accept any guarantee against financial
loss or any document or instrument created or evidencing an
Encumbrance in respect of the same or dispose of the same;
18.6.3 take any steps to enforce any right against the
other Borrower or any other person liable in respect of any such
moneys; or
18.6.3 claim any set-off or counterclaim against the other
Borrower or any other person liable or claim or prove in
competition with any Bank in the liquidation of the other
Borrower or any other person liable or have the benefit of, or
share in, any payment from or composition with, the other
Borrower or any other person liable or any security granted
under any Security Document now or hereafter held by any Bank
for any moneys owing under this Agreement or for the obligations
or liabilities of any other person liable but so that, if so
directed by the Agent, it will prove for the whole or any part
of its claim in the liquidation of the other Borrower or other
person liable on terms that the benefit of such proof and all
money received by it in respect thereof shall be held on trust
for the Banks and applied in or towards discharge of any moneys
owing under this Agreement in such manner as the Agent shall
require.
19 GOVERNING
LAW
This Agreement is governed by and shall be construed in
accordance with English law.
20 JURISDICTION
20.1 Exclusive
Jurisdiction
For the benefit of the Banks, and subject to clause 20.4
below, the Borrowers hereby irrevocably agree that the courts of
England shall have exclusive jurisdiction:
20.1.1 to settle any disputes or other matters whatsoever
arising under or in connection with this Agreement and any
disputes or other such matters arising in connection with the
negotiation, validity or enforceability of this Agreement or any
part thereof, whether the alleged liability shall arise under
the laws of England or under the laws of some other country and
regardless of whether a particular cause of action may
successfully be brought in the English courts; and
20.1.2 to grant interim remedies or other provisional or
protective relief.
20.2 Submission
and service of process
Each Borrower accordingly irrevocably and unconditionally
submits to the jurisdiction of the English courts. Without
prejudice to any other mode of service each Borrower:
20.2.1 irrevocably empowers and appoints HFW Nominees Ltd
at present of Friary Court, 65 Crutched Friars, London EC3N 2AE,
England as its agent to receive and accept on its behalf any
process or other document relating to any proceedings before the
English courts in connection with this Agreement;
20.2.2 agrees to maintain such an agent for service of
process in England from the date hereof until the end of the
Facility Period;
20.2.3 agrees that failure by a process agent to notify the
Borrowers of service of process will not invalidate the
proceedings concerned;
20.2.4 without prejudice to the effectiveness of service of
process on its agent under clause 20.2.1 above but as an
alternative method, consents to the service of process relating
to any such proceedings by mailing or delivering a copy of the
process to its address for the time being applying under
clause 17.2;
20.2.5 agrees that if the appointment of any person
mentioned in clause 20.2.1 ceases to be effective, the
Borrowers shall immediately appoint a further person in England
to accept service of process on its behalf in England and,
failing such appointment within seven (7) days the Agent
shall thereupon be entitled and is hereby irrevocably authorised
by the Borrowers in those circumstances to appoint such person
by notice to the Borrowers.
20.3 Forum
non conveniens and enforcement abroad
Each Borrower:
20.3.1 waives any right and agrees not to apply to the
English court or other court in any jurisdiction whatsoever to
stay or strike out any proceedings commenced in England on the
ground that England is an inappropriate forum
and/or that
Proceedings have been or will be started in any other
jurisdiction in connection with any dispute or related matter
falling within clause 20.1; and
20.3.2 agrees that a judgment or order of an English court
in a dispute or other matter falling within clause 20.1
shall be conclusive and binding on the Borrowers and may be
enforced against it in the courts of any other jurisdiction.
20.4 Right
of Agent, but not Borrowers, to bring proceedings in any other
jurisdiction
20.4.1 Nothing in this clause 20 limits the right of
any Lender to bring Proceedings, including third party
proceedings, against any one or all Borrowers, or to apply for
interim remedies, in connection with this Agreement in any other
court and/or
concurrently in more than one jurisdiction;
20.4.2 the obtaining by any Lender of judgment in one
jurisdiction shall not prevent such Lender from bringing or
continuing proceedings in any other jurisdiction, whether or not
these shall be founded on the same cause of action.
20.5 Enforceability
despite invalidity of Agreement
Without prejudice to the generality of clause 13.9, the
jurisdiction agreement contained in this clause 20 shall be
severable from the rest of this Agreement and shall remain
valid, binding and in full force and shall continue to apply
notwithstanding this Agreement or any part thereof being held to
be avoided, rescinded, terminated, discharged, frustrated,
invalid, unenforceable, illegal
and/or
otherwise of no effect for any reason.
20.6 Effect
in relation to claims by and against non-parties
20.6.1 For the purpose of this clause Foreign
Proceedings shall mean any Proceedings except proceedings
brought or pursued in England arising out of or in connection
with (i) or in any way related to any of the Security
Documents or any assets subject thereto or (ii) any action
of any kind whatsoever taken by any Bank pursuant thereto or
which would, if brought by any or all of the Borrowers against
any Bank, have been required to be brought in the English courts;
20.6.2 no Borrower shall bring or pursue any Foreign
Proceedings against any Bank and shall use its best endeavours
to prevent persons not party to this Agreement from bringing or
pursuing any Foreign Proceedings against any Bank;
20.6.3 If, for any reason whatsoever, any Security Party
and/or any
person connected howsoever with any Security Party brings or
pursues against any Bank any Foreign Proceedings, the Borrowers
shall indemnify such Bank on demand in respect of any and all
claims, losses, damages, demands, causes of action, liabilities,
costs and expenses (including, but not limited to, legal costs)
of whatsoever nature howsoever arising from or in connection
with such Foreign Proceedings which such Bank (or the Agent on
its behalf) certifies as having been incurred by it;
20.6.4 the Banks and the Borrowers hereby agree and declare
that the benefit of this clause 20 shall extend to and may
be enforced by any officer, employee, agent or business
associate of any of the Banks against whom a Borrower brings a
claim in connection howsoever with any of the Security Documents
or any assets subject thereto or any action of any kind
whatsoever taken by, or on behalf of or for the purported
benefit of any Bank pursuant thereto or which, if it were
brought against any Bank, would fall within the material scope
of clause 20.1. In those circumstances this clause 20
shall be read and construed as if references to any Bank were
references to such officer, employee, agent or business
associate, as the case may be.
Execution Pages
IN WITNESS whereof the parties to this Agreement have
caused this Agreement to be duly executed on the date first
above written.
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SIGNED as a deed for and on behalf of
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/s/ Alexandros Laios
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SIFNOS SHIPPING CORPORATION
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)
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(as Borrower under and pursuant to
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a power of attorney dated
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)
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30 March 2010) in the presence of
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/s/ Ronan Le Dû
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SIGNED as a deed for and on behalf of
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/s/ Alexandros Laios
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SKIATHOS SHIPPING CORPORATION
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)
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(as Borrower under and pursuant to
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)
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a power of attorney dated
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)
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30 March 2010) in the presence of
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)
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/s/ Ronan Le Dû
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SIGNED as a deed for and on behalf of
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/s/ Alexandros Laios
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SYROS SHIPPING CORPORATION
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)
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(as Borrower under and pursuant to
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a power of attorney dated
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)
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30 March 2010) in the presence of
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/s/ Ronan Le Dû
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SIGNED by
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/s/ Dimitris Christacopoulos
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for and on behalf of
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/s/ Promodus Papatheodorou
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FORTIS BANK
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)
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(as a Lender) in the presence of
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/s/ Ronan Le Dû
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SIGNED by
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/s/ Robin Parry
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for and on behalf of
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)
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DVB BANK SE
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)
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(as a Lender) in the presence of
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/s/ Ronan Le Dû
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SIGNED by
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/s/ Robin Parry
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for and on behalf of
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)
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DVB BANK SE
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)
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(as a Agent) in the presence of
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/s/ Ronan Le Dû
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SIGNED by
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/s/ Dimitris Christacopoulos
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for and on behalf of
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)
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/s/ Prodromos Papatheodorou
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FORTIS BANK
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)
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(as Account Bank, Arranger, Payment Agent,
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)
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Swap Bank and Security Trustee
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)
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in the presence of
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)
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/s/ Ronan Le Dû
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exv99w1
The
information in this proxy statement is subject to completion or
amendment and may be changed.
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SUBJECT TO COMPLETION, APRIL 8,
2010
PRELIMINARY PROXY STATEMENT
NAVIOS
MARITIME ACQUISITION CORPORATION
85
Akti Miaouli Street
Piraeus,
Greece 185 38
To the Stockholders of Navios Maritime Acquisition Corporation:
You are cordially invited to attend a special meeting of the
stockholders of Navios Maritime Acquisition Corporation, a
Marshall Islands company (Navios
Acquisition), which will be held at 10:00 a.m.,
Eastern Standard Time, on
[ ],
2010, at the offices of Mintz, Levin, Cohn, Ferris, Glovsky and
Popeo, P.C., The Chrysler Center, 666 Third Avenue, New
York, New York 10017 (the Special Meeting).
At this meeting, you will be asked to consider and vote upon the
following proposals:
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The vessel acquisition proposal to
approve the acquisition of 13 vessels (11 product tankers
and two chemical tankers) plus options to purchase two
additional product tankers (the vessel
acquisition), for an aggregate purchase price of
$457.7 million, of which $123.4 million will be from
existing cash and the $334.3 million balance from debt
financing. Upon stockholder approval of the vessel acquisition,
(a) Navios Maritime Holdings Inc. (Navios
Holdings) will transfer to Navios Acquisition the
stock of the Navios Holdings subsidiary holding directly or
indirectly the rights to the vessels, and (b) Navios
Acquisition will guarantee approximately $334.3 million of debt
financing. To the extent Navios Holdings has made payments in
connection with the vessel acquisition, Navios Acquisition will
also reimburse Navios Holdings for such payments if the proposal
is approved (vessel acquisition proposal or
Proposal 1);
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The amendment proposal to approve
amendments to Navios Acquisitions amended and restated
articles of incorporation to (i) change Navios
Acquisitions corporate existence to perpetual, and
(ii) remove provisions that will no longer be applicable to
Navios Acquisition after the business combination
(amendment proposal or Proposal
2); and
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to transact such other business as may properly come before the
Special Meeting or any adjournment or postponement thereof.
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Recommendation
After careful consideration, the board of directors of Navios
Acquisition has unanimously approved each of the above proposals
and determined that the proposals (and transactions contemplated
thereby) are in the best interests of Navios Acquisition and its
stockholders and unanimously recommends that you vote or give
instruction to vote FOR each proposal.
NAVIOS HOLDINGS BELIEVES THAT THE VESSEL ACQUISITION IS A
VALUABLE OPPORTUNITY; IF THE STOCKHOLDERS OF NAVIOS ACQUISITION
DO NOT APPROVE THE VESSEL ACQUISITION, NAVIOS HOLDINGS WILL
CONSUMMATE THE ACQUISITION OF THE VESSELS FOR ITS OWN
ACCOUNT.
Navios Holdings and an affiliate of Angeliki Frangou have agreed
to acquire through J.P. Morgan Securities Inc., or a third
party, $60.0 million of Navios Acquisitions common
stock in open market purchases or privately negotiated
purchases. Of this amount, Navios Holdings has agreed to
purchase up to $45.0 million, and an affiliate of Angeliki
Frangou has agreed to purchase up to $15.0 million of
common stock. Navios Holdings and Angeliki Frangou, or their
respective affiliates, may make purchases in excess of such
amounts. Share purchases may commence two business days after
Navios Acquisition files a preliminary proxy statement with the
Securities Exchange Commission and will end on the date of the
special meeting. If at least $30.0 million is not spent by
Navios Holdings in making such purchases, Navios Holdings will
invest the difference in Navios Acquisition immediately before
consummating the vessel acquisition.
Of the $60.0 million, Navios Holdings has agreed to
purchase up to $45.0 million, and an affiliate of Angeliki
Frangou, the Chairman and Chief Executive Officer of both Navios
Acquisition and Navios Holdings, has agreed to purchase up to
$15.0 million of common stock, respectively, in open market
purchases or privately negotiated
purchases. Any such purchases will be made in compliance with
all applicable securities laws. Navios Holdings, Angeliki
Frangou, our other officers and directors,
and/or their
respective affiliates have agreed to vote all of such shares
acquired by them in such purchases in favor of the vessel
acquisition proposal.
Voting
Procedure
A list of stockholders as of April 26, 2010 (the
record date) entitled to vote at the Special
Meeting will be open to the examination of any stockholder, for
any purpose germane to the Special Meeting, during ordinary
business hours for a period of 10 calendar days before the
Special Meeting at Navios Acquisitions offices at 85 Akti
Miaouli Street, Piraeus, Greece 185 38, and at the time and
place of the Special Meeting.
The vessel acquisition proposal will be approved if: (a) a
majority of the shares of Navios Acquisitions common stock
issued in its initial public offering and outstanding as of the
record date that are present or represented at the meeting vote
in favor of the vessel acquisition proposal, and (b) no
more than approximately 39.99% of Navios Acquisitions
common stock issued in its initial public offering (or
10,119,999 shares) both vote against the vessel acquisition
proposal and properly exercise their conversion rights.
The amendment proposal will be approved if a majority of the
shares of Navios Acquisitions common stock issued and
outstanding as of the record date vote in favor of the amendment
proposal.
Each public stockholder may vote against the vessel acquisition
proposal and demand that Navios Acquisition convert such
stockholders shares into cash in an amount equal to a
pro rata portion of the amount held in the trust account,
which amounted to $250.8 million as of April 7, 2010.
As more fully described in the section of the proxy statement
entitled The Navios Acquisition Special
Meeting Conversion Rights, a stockholder,
together with any affiliate or any person with whom it is acting
in concert or as a partnership, syndicate or other group for the
purpose of acquiring, holding, disposing, or voting Navios
Acquisitions securities, will be restricted from seeking
conversion rights with respect to more than 10% of the public
shares.
Navios Acquisitions initial stockholders presently own an
aggregate of 20% of the outstanding shares of common stock.
These initial stockholders have agreed to vote: (i) all of
the shares of common stock they acquired before the initial
public offering in the same way as the majority of the shares of
common stock voted by the public stockholders regarding to the
vessel acquisition proposal, and (ii) any shares of common
stock they have acquired since the initial public offering in
favor of the vessel acquisition proposal.
Enclosed are a notice of Special Meeting and proxy statement
containing detailed information concerning the proposals and the
transactions contemplated thereby. Whether or not you plan to
attend the Special Meeting, we urge you to read this material
carefully.
Sincerely,
Angeliki Frangou
Chairman of the Board
The
information in this proxy statement is subject to completion or
amendment and may be changed.
|
SUBJECT TO COMPLETION, APRIL 8,
2010
PRELIMINARY PROXY STATEMENT
NAVIOS
MARITIME ACQUISITION CORPORATION
85
Akti Miaouli Street
Piraeus,
Greece 185 38
NOTICE OF SPECIAL MEETING OF
STOCKHOLDERS
TO BE HELD ON
[ ],
2010
TO THE STOCKHOLDERS OF NAVIOS MARITIME ACQUISITION CORPORATION:
NOTICE IS HEREBY GIVEN that a special meeting of stockholders,
including any adjournments or postponements thereof, of Navios
Maritime Acquisition Corporation, a Marshall Islands corporation
(Navios Acquisition), will be held at
10:00 a.m., Eastern Standard Time, on
[ ],
2010, at the offices of Mintz, Levin, Cohn, Ferris, Glovsky and
Popeo, P.C., The Chrysler Center, 666 Third Avenue, New
York, New York 10017, for the following purposes:
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The vessel acquisition proposal to
approve the acquisition of 13 vessels (11 product tankers
and two chemical tankers) plus options to purchase two
additional product tankers (the vessel
acquisition), for an aggregate purchase price of
$457.7 million, of which $123.4 million will be from
existing cash and the $334.3 million balance from debt
financing. Upon stockholder approval of the vessel acquisition,
(a) Navios Maritime Holdings Inc. (Navios
Holdings) will transfer to Navios Acquisition the
stock of the Navios Holdings subsidiary holding directly or
indirectly the rights to the vessels, and (b) Navios
Acquisition will guarantee approximately $334.3 million of
debt financing. To the extent Navios Holdings has made payments
in connection with the vessel acquisition, Navios Acquisition
will also reimburse Navios Holdings for such payments if the
proposal is approved (vessel acquisition
proposal or Proposal 1);
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The amendment proposal to approve
amendments to Navios Acquisitions amended and restated
articles of incorporation to (i) change Navios
Acquisitions corporate existence to perpetual, and
(ii) remove provisions that will no longer be applicable to
Navios Acquisition after the business combination
(amendment proposal or Proposal
2); and
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to consider and vote upon such other business as may properly
come before the special meeting or any adjournment or
postponement thereof.
|
After careful consideration, the board of directors of Navios
Acquisition has unanimously approved each of the above proposals
and determined that the proposals (and transactions contemplated
thereby) are in the best interests of Navios Acquisition and its
stockholders and unanimously recommends that you vote or give
instruction to vote FOR each proposal.
NAVIOS HOLDINGS BELIEVES THAT THE VESSEL ACQUISITION IS A
VALUABLE OPPORTUNITY; IF THE STOCKHOLDERS OF NAVIOS ACQUISITION
DO NOT APPROVE THE VESSEL ACQUISITION, NAVIOS HOLDINGS WILL
CONSUMMATE THE ACQUISITION OF THE VESSELS FOR ITS OWN
ACCOUNT.
The board of directors of Navios Acquisition has fixed the close
of business on April 26, 2010 as the record date (the
record date) for the determination of
stockholders entitled to receive notice of and to vote at the
special meeting and any adjournments or postponements thereof.
Only the holders of record of Navios Acquisition common stock on
the record date are entitled to have their votes counted at the
special meeting and any adjournments or postponements thereof.
Navios Acquisition will not transact any other business at the
special meeting, except for business properly brought before the
special meeting, or any adjournment or postponement thereof, by
Navios Acquisitions board of directors.
YOUR VOTE IS IMPORTANT. WHETHER YOU PLAN TO ATTEND THE
SPECIAL MEETING, PLEASE SIGN, DATE AND RETURN THE ENCLOSED PROXY
CARD AS SOON AS POSSIBLE IN THE ENVELOPE PROVIDED. IF YOU RETURN
YOUR PROXY CARD WITHOUT AN INDICATION OF HOW YOU WISH TO VOTE,
YOUR SHARES WILL BE VOTED BY THE PROXY HOLDERS IN FAVOR OF
EACH PROPOSAL. IF YOU ABSTAIN, YOUR VOTE WILL HAVE THE EFFECT OF
A VOTE AGAINST THE OUTCOME OF THE APPROVAL OF THE
PROPOSAL FROM WHICH YOU ABSTAIN VOTING. A VOTE AGAINST THE
VESSEL ACQUISITION PROPOSAL WILL NOT HAVE THE EFFECT OF
CONVERTING YOUR SHARES UNLESS YOU ALSO DEMAND CONVERSION
AND COMPLY WITH THE OTHER REQUIREMENTS APPLICABLE THERETO.
SEE THE SECTION TITLED RISK FACTORS
BEGINNING ON PAGE 119 FOR A DISCUSSION OF VARIOUS FACTORS THAT
YOU SHOULD CONSIDER IN CONNECTION WITH THE PROPOSED VESSEL
ACQUISITION AND THE AMENDMENTS TO THE AMENDED AND RESTATED
ARTICLES OF INCORPORATION.
This proxy statement incorporates important business and
financial information about Navios Acquisition that is not
included in or delivered with this document. This information is
available without charge to security holders upon written or
oral request. The request should be sent to: Vasiliki
Papaefthymiou, 85 Akti Miaouli Street, Piraeus, Greece 185 38,
(011) +30-210-4595000.
To obtain timely delivery of requested information, security
holders must request the information no later than five days
before the date they submit their proxies or attend the Special
Meeting. The latest date to request the information to be
received timely is
[ ],
2010.
We are soliciting the proxy represented by the enclosed proxy
card on behalf of the board of directors, and we will pay all
costs of preparing, assembling and mailing the proxy materials.
In addition to mailing our proxy materials, our officers may
solicit proxies by telephone or fax, without receiving any
additional compensation for their services. We have requested
brokers, banks and nominees to forward proxy materials to the
beneficial owners of our common stock. We have retained the
proxy-soliciting firm of Morrow & Co., LLC to assist
in the solicitation of proxies and provide related advice and
informational support, at a cost of approximately $30,000. If
you have any questions or need assistance in voting your shares,
please contact Morrow & Co., LLC toll free at
(800) 662-5200;
banks and brokers may call
(203) 658-9400.
This proxy statement is dated
[ ],
2010 and is first being mailed to Navios Acquisition
stockholders on or about
[ ],
2010.
Your vote is important regardless of the number of shares you
own. Please sign, date and return your proxy card as soon as
possible to make sure that your shares are represented at the
special meeting. If you wish to attend the special meeting in
person, please so indicate where requested on the accompanying
proxy card.
By Order of the Board of Directors,
Angeliki Frangou
Chairman of the Board
[ ],
2010
The
information in this proxy statement is subject to completion or
amendment and may be changed.
|
SUBJECT TO COMPLETION, APRIL 8,
2010
PRELIMINARY PROXY STATEMENT
PROXY
STATEMENT FOR SPECIAL MEETING OF
STOCKHOLDERS OF NAVIOS MARITIME ACQUISITION CORPORATION
TO BE HELD ON
[ ],
2010
[ ],
2010
INTRODUCTION
After careful consideration, the board of directors of Navios
Acquisition has unanimously approved each of the proposals
discussed herein and determined that the proposals (and
transactions contemplated thereby) are in the best interests of
Navios Acquisition and its stockholders and unanimously
recommends that you vote or give instruction to vote
FOR each proposal.
NAVIOS HOLDINGS BELIEVES THAT THE VESSEL ACQUISITION IS A
VALUABLE OPPORTUNITY; IF THE STOCKHOLDERS OF NAVIOS ACQUISITION
DO NOT APPROVE THE VESSEL ACQUISITION, NAVIOS HOLDINGS WILL
CONSUMMATE THE ACQUISITION OF THE VESSELS FOR ITS OWN
ACCOUNT.
If the vessel acquisition is completed and you vote your shares
for the vessel acquisition proposal, you will continue to hold
the Navios Acquisition securities that you currently own. If the
vessel acquisition is completed but you have voted your shares
against the vessel acquisition proposal and have properly
exercised your conversion rights, your Navios Acquisition shares
will be cancelled and you will receive cash equal to the
conversion price per share, which amount as of April 7,
2010 was equal to approximately $9.91 per share.
This proxy statement provides you with detailed information
about the proposals, the transactions contemplated thereby and
the special meeting of stockholders. We encourage you to read
carefully this entire document and the documents incorporated by
reference, including the Acquisition Agreement and the related
transaction documents, the Credit Agreements, the Acquisition
Omnibus Agreement, the Administrative Services Agreement, and
the Management Agreement, attached as annexes hereto. YOU
SHOULD ALSO CAREFULLY CONSIDER THE RISK FACTORS BEGINNING ON
PAGE 119.
The vessel acquisition proposal will be approved if: (a) a
majority of the shares of Navios Acquisitions common stock
issued in its initial public offering and outstanding as of the
record date that are present or represented at the meeting vote
in favor of the vessel acquisition proposal, and (b) no
more than approximately 39.99% of the public shares (or
10,119,999 shares of common stock) both vote against the
vessel acquisition proposal and properly exercise their
conversion rights.
The amendment proposal will be approved if a majority of the
shares of Navios Acquisitions common stock issued and
outstanding as of the record date vote in favor of the amendment
proposal. The approval of the amendment proposal is conditioned
upon the approval of the vessel acquisition proposal. In the
event the vessel acquisition proposal does not receive the
necessary vote to approve such proposal, the amendment proposal
will not be presented to vote at the special meeting for
adoption.
We believe that, generally, for U.S. federal income tax
purposes, the proposals will have no direct tax effect on
stockholders of Navios Acquisition. However, if you vote against
the acquisition proposal and properly convert your shares of
Navios Acquisition common stock into cash at the conversion
price per share, there may be certain tax consequences, such as
realizing a gain or loss on your investment in Navios
Acquisitions securities. In certain cases, realized gain
may be taxed as ordinary income, and losses realized may not be
recognized. WE URGE YOU TO CONSULT YOUR OWN TAX ADVISORS
REGARDING YOUR PARTICULAR TAX CONSEQUENCES.
Navios Acquisitions common stock, warrants and units are
currently listed on the New York Stock Exchange under the
symbols NNA, NNA.WS and NNA.U, respectively.
This proxy statement may incorporate important business and
financial information about Navios Acquisition that is not
included in or delivered with this document. This information is
available without charge to security holders upon written or
oral request. The request should be sent to:
Vasiliki
Papaefthymiou
Navios Maritime Acquisition Corporation
85 Akti Miaouli Street
Piraeus, Greece 185 38
(011) +30-210-4595000
To obtain timely delivery of requested information, security
holders must request the information no later than five days
before the date they submit their proxies or attend the special
meeting. The latest date to request the information to be
received timely is
[ ],
2010.
i
We are soliciting the proxy represented by the enclosed proxy
card on behalf of the board of directors, and we will pay all
costs of preparing, assembling and mailing the proxy materials.
In addition to mailing our proxy materials, our officers may
solicit proxies by telephone or fax, without receiving any
additional compensation for their services. We have requested
brokers, banks and nominees to forward proxy materials to the
beneficial owners of our common stock. We have retained the
proxy-soliciting firm of Morrow & Co., LLC to assist
in the solicitation of proxies and provide related advice and
informational support. If you have any questions or need
assistance in voting your shares, please contact
Morrow & Co., LLC toll free at
(800) 662-5200;
banks and brokers may call
(203) 658-9400.
THIS PROXY STATEMENT IS DATED
[ ],
2010, AND IS FIRST BEING MAILED TO NAVIOS ACQUISITION
STOCKHOLDERS ON OR ABOUT
[ ],
2010.
ii
TABLE OF
CONTENTS
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1
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3
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10
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14
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17
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18
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22
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36
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37
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68
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77
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83
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85
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109
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110
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113
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114
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119
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147
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148
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152
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153
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160
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160
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160
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161
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161
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F-1
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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F-2
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Certain
terms used herein are defined in the section titled
Definitions beginning on page 148.
iii
ANNEXES
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Annex A
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Acquisition Agreement, dated April 8, 2010 between Navios
Acquisition and Navios Holdings.
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Annex B
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Credit Agreement, dated April 7, 2010 between certain
vessel-owning subsidiaries and Deutsche Schiffsbank AG, Alpha
Bank A.E. and Credit Agricole Corporate and Investment Bank.
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Annex C
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Credit Agreement, dated April 8, 2010 between certain
vessel-owning subsidiaries and DVB Bank SE and Fortis Bank.
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Annex D
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Revolving Credit Facility with Marfin Egnatia Bank.*
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Annex E
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$52.0 Million Credit Agreement.*
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Annex F
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Form of Management Agreement.
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Annex G
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Form of Administrative Services Agreement.
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Annex H
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Form of Acquisition Omnibus Agreement.
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Annex I
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Form of Amended and Restated Articles of Incorporation.
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Annex J
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Form of Proxy Card.
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* |
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To be filed with the definitive proxy statement. |
iv
SUMMARY
OF THE MATERIAL TERMS OF THE BUSINESS COMBINATION
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Navios Acquisition is a blank check company formed for the
purpose of acquiring, through a merger, capital stock exchange,
asset acquisition, stock purchase or other similar business
combination, one or more assets or operating businesses in the
marine transportation and logistics industries. Its principal
executive offices are located in Piraeus, Greece. See the
section entitled Information About Navios
Acquisition.
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Pursuant to the terms and conditions of the Acquisition
Agreement, dated as of April 8, 2010, by and between Navios
Acquisition and Navios Holdings, Navios Acquisition will acquire
13 vessels (11 product tankers and two chemical tankers)
plus options to purchase two additional product tankers for an
aggregate purchase price of $457.7 million, of which
$334.3 million will be financed with debt. The
$334.3 million debt includes a loan facility of
$52.0 million, which is currently in advanced negotiations.
Each vessel will be commercially and technically managed under a
management agreement with a subsidiary of Navios Holdings. See
the section entitled Proposal 1 The
Vessel Acquisition Proposal.
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To fund the vessel acquisition and related fees and expenses,
Navios Acquisition will use $334.3 million of debt
financing, and the balance of the purchase price and such
expenses will be funded with available cash. The purchase price
for the vessels is payable in several installments: the initial
installment of $191.8 million will be funded through
$30.1 million from Navios Acquisitions cash and
$161.7 million from debt financing; the balance,
aggregating to $265.9 million, will be paid using
$93.3 million of cash and $172.6 million from debt
financing, all of which will be paid in installments as vessels
are delivered. After payment of the initial installment,
deferred underwriters fees (approximately
$8.9 million) and estimated transaction expenses
(approximately $1.6 million), Navios Acquisition will be
left with approximately $208.3 million of cash, assuming
that no investors exercise their conversion rights, and
$108.0 million of such cash, assuming that approximately
39.99% of investors do so exercise such conversion rights. Such
amount could be further reduced if Navios Acquisition chooses to
enter into any Forward Contracts (as defined in
Definitions on page 148). See the section
entitled Proposal 1 The Vessel
Acquisition Proposal Acquisition Debt
Financing.
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After careful consideration, Navios Acquisitions board of
directors has determined that the proposed vessel acquisition
meets all of the conditions to the consummation of a business
combination described in the prospectus for Navios
Acquisitions initial public offering. See the section
entitled Proposal 1 The Vessel
Acquisition Proposal Navios Acquisitions
Reasons for the Acquisition and Recommendation of the Navios
Acquisition Board.
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The vessel acquisition will be approved if: (a) a majority
of the shares of Navios Acquisitions common stock issued
in its initial public offering and outstanding as of the record
date that are present or represented at the meeting vote in
favor of the vessel acquisition proposal, and (b) no more
than approximately 39.99% of the public shares (or
10,119,999 shares) both vote against the vessel acquisition
proposal and properly exercise their conversion rights. See the
section entitled Proposal 1 The Vessel
Acquisition Proposal Required Vote.
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Prior to the special meeting and depending on the timing of the
installments, Navios Holdings (a) may be required to fund
up to approximately $79.8 million, representing part of the
equity portion of the purchase price for the vessel acquisition,
and (b) has agreed to guarantee the debt related to the
vessel acquisition, including indebtedness to be incurred of up
to $190.3 million. If Navios Acquisitions
stockholders approve the vessel acquisition, (x) Navios
Holdings will transfer to Navios Acquisition the stock of the
Navios Holdings subsidiary holding directly or indirectly the
rights for the vessels and (y) Navios Acquisition will
guarantee approximately $334.3 million of debt financing. In
addition, Navios Acquisition will also reimburse Navios Holdings
for any installment payments made or
out-of-pocket
expenses incurred by Navios Holdings prior to such stockholder
approval.
After careful consideration, the board of directors of Navios
Acquisition has unanimously approved each of the proposals
discussed herein and determined that the proposals (and
transactions
1
contemplated thereby) are in the best interests of Navios
Acquisition and its stockholders and unanimously recommends that
you vote or give instruction to vote FOR each
proposal.
NAVIOS HOLDINGS BELIEVES THAT THE VESSEL ACQUISITION IS A
VALUABLE OPPORTUNITY; IF THE STOCKHOLDERS OF NAVIOS ACQUISITION
DO NOT APPROVE THE VESSEL ACQUISITION, NAVIOS HOLDINGS WILL
CONSUMMATE THE ACQUISITION OF THE VESSELS FOR ITS OWN
ACCOUNT.
2
QUESTIONS
AND ANSWERS ABOUT THE PROPOSALS
What is
the vessel acquisition?
The vessel acquisition is the acquisition of 13 vessels (11
product tankers and two chemical tankers) plus options to
purchase two additional product tankers under the terms of the
Acquisition Agreement, dated as of April 8, 2010, by and
between Navios Acquisition and Navios Holdings, pursuant to
which Navios Holdings will transfer to Navios Acquisition the
stock of the Navios Holdings subsidiary holding directly or
indirectly the rights to the vessels. Navios Acquisition will
also have options to acquire two additional newbuild product
tankers. Pursuant to the terms and conditions of the Acquisition
Agreement, Navios Acquisition will acquire the vessels to be
delivered from the Shipbuilders and the Sellers for an aggregate
purchase price of $457.7 million. The purchase price for
the vessels is payable in several installments: the initial
installment of $191.8 million is payable $30.1 million
from Navios Acquisitions existing cash and the
$161.7 million balance from debt financing; the balance of
the total purchase price, aggregating $265.9 million, will
be paid using $93.3 million of available cash and the
$172.6 million balance from debt financing, all of which
will be paid in installments as vessels are delivered.
Information concerning the 15 vessels that are part of the
vessel acquisition (including the vessels subject to the two
options) is presented below:
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Type
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DWT
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Delivery
Date(1)
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Purchase Price
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LR1 Product Tanker
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74,671
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May 2010
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$
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43.5 million
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LR1 Product Tanker
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74,671
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May 2010
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$
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43.5 million
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Chemical Tanker
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25,000
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9/30/2010
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$
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28.7 million
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Chemical Tanker
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25,000
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11/30/2010
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$
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28.7 million
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LR1 Product Tanker
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75,000
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Q4 2011
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$
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40.0 million
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LR1 Product Tanker
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75,000
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Q4 2011
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$
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40.0 million
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MR2 Product Tanker
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50,000
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Q1 2012
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$
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33.6 million
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MR2 Product Tanker
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50,000
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Q2 2012
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$
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33.6 million
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MR2 Product Tanker
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50,000
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Q3 2012
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$
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33.6 million
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MR2 Product Tanker
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50,000
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Q3 2012
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$
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33.6 million
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MR2 Product Tanker
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50,000
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Q4 2012
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$
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32.9 million
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MR2 Product Tanker
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50,000
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Q4 2012
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$
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32.9 million
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MR2 Product Tanker
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50,000
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Q4 2012
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$
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32.9 million
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Options
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LR1 Product Tanker
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75,000
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Q4 2012(2
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$
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40.5 million
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(2)
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LR1 Product Tanker
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75,000
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Q4 2012(2
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$
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40.5 million
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(2)
|
|
|
|
(1) |
|
Estimated. |
|
(2) |
|
Subject to the exercise by Navios Acquisition of an option to
acquire the vessel which expires in November 2010. |
Why is
Navios Acquisition proposing the vessel acquisition?
We believe that the recent financial crisis and developments in
the marine transportation industry, particularly in the product
and chemical tanker sectors, have created significant
opportunities to acquire vessels near historically low
(inflation-adjusted) prices and employ them in a manner that
will provide attractive returns on capital. We also believe that
the recent financial crisis continues to adversely affect the
availability of credit to shipping industry participants,
creating opportunities for well-capitalized companies with
committed available financing such as ours, to enter the product
and chemical tanker sectors at this advantageous time.
Our business strategy is to develop a world-leading operator and
charterer of modern, high-quality product and chemical tankers.
Our principal focus is the transportation of refined petroleum
products (clean and dirty) and bulk liquid chemicals. We will
seek to establish a leadership position by leveraging the
established reputation of Navios Holdings for maintaining high
standards of performance, risk management, reliability and
3
the safety of its crews, vessels and the environment. We are
committed to creating long-term stockholder value by executing
on a growth strategy designed to maximize returns in all
economic cycles. We believe the vessel acquisition will be the
first step to our becoming a world leader in the product and
chemical tanker sectors.
Does
Navios Acquisitions board of directors recommend voting
for the proposals?
Yes. After careful consideration, Navios Acquisitions
board of directors has determined that the vessel acquisition
and the amendments to the amended and restated articles of
incorporation are in the best interests of Navios Acquisition
and its stockholders and that the vessel acquisition is fair,
from a financial point of view, to its stockholders. The board
unanimously recommends that Navios Acquisition stockholders vote
(i) FOR the vessel acquisition proposal, and
(ii) FOR the amendment proposal. The members of
the board have interests in the vessel acquisition that are
different from, or in addition to, your interests as a
stockholder. For a description of such interests, please see the
section entitled Proposal 1 The Vessel
Acquisition Proposal Interests of Navios
Acquisitions Directors and Officers in the
Acquisition. See the section entitled Risk
Factors on page 119 for a further discussion with
respect to the interests of the members of the board in the
vessel acquisition.
Why has
this been structured as a sale by Navios Holdings to Navios
Acquisition? Is Navios Holdings receiving any extra benefit for
doing so?
The structure was devised solely to accommodate Navios
Acquisition. Navios Holdings is providing certainty to the
transaction while Navios Acquisition seeks consent of its
stockholders. Navios Holdings is not receiving any extra benefit
by virtue of being the seller in this transaction.
What
happens if stockholders do not approve the vessel
acquisition?
If we are unable to obtain stockholder approval of the vessel
acquisition, Navios Holdings will proceed with its acquisition
of such vessels for its own account. See the section entitled
Risk Factors on page 120 for a further
discussion of the interests of our officers and directors and
Navios Holdings in the proposed vessel acquisition.
How is
Navios Acquisition paying for the acquisition?
Navios Acquisition plans to finance the $457.7 million
vessel acquisition with $123.4 million from available cash
and $334.3 million from new debt financing.
Who is
the senior management of Navios Acquisition?
Angeliki Frangou is the Chairman and Chief Executive Officer,
Ted C. Petrone is President and a director and Leonidas Korres
is Chief Financial Officer of Navios Acquisition.
Ms. Frangou is also the Chairman and Chief Executive
Officer of Navios Holdings, our sponsor, and Mr. Petrone is
a director of Navios Holdings.
Who is
Navios Holdings and what is their relationship to Navios
Acquisition?
Navios Holdings is a global, vertically integrated seaborne
shipping and logistics company. For over 55 years, Navios
Holdings has worked with producers of raw materials,
agricultural traders and exporters, industrial end-users, ship
owners, and charterers. Navios Holdings also has a vast network
of relationships with banks and shipbuilders. Navios
Holdings current core fleet consists of a total of
59 vessels, aggregating approximately 6.4 million
deadweight tons (dwt). Navios Holdings is listed on
the New York Stock Exchange under the symbol NM.
Navios Holdings is the sponsor and a principal stockholder of
Navios Acquisition, and Angeliki Frangou, our Chairman and Chief
Executive Officer, and Ted C. Petrone, our President and a board
member, are also officers and directors of Navios Holdings.
What is
the advantage to the existing and continued relationship with
Navios Holdings?
One of our key competitive advantages is our relationship with
Navios Holdings. Navios Holdings has developed a
well-established record of using its relationships with
shipbuilders, banks and other key players in the shipping
industry to acquire vessels: (i) at favorable prices,
(ii) using creative financing structures (such as
4
mandatory convertible preferred stock), and (iii) with
greater access to favorable debt financing. Access to favorable
debt financing is evidenced by the credit arrangements for the
vessel acquisition, which finance up to approximately 73% of the
vessels purchase price at favorable interest rates and
amortization profiles. In addition, we believe that our
relationship with Navios Holdings will allow us to continue to
obtain debt financing, as well as charter arrangements with high
quality, highly rated counterparties and have access to charter
party insurance. We also believe that our relationship with
Navios Holdings will continue to provide us with proprietary
deal flow. Furthermore, as described below, Navios Holdings has
agreed to give us a right of first refusal for the purchase of
tankers, including product and chemical tankers.
Since August 2005, when control of Navios Holdings changed
to its current management, Navios Holdings fleet has grown
from six owned vessels and 22 chartered-in vessels,
representing 1.8 million dwt, to a fleet of 32 owned
vessels and 27 chartered-in vessels as of April 7,
2010, representing 6.4 million dwt. In terms of vessel
growth, Navios Holding has enlarged its fleet by 256% on a
deadweight ton basis over this period. In addition, during this
period, Navios Holdings established Navios Partners, which today
controls 13 vessels, representing 1.1 million dwt.
Today, the Navios group of companies controls 72 vessels,
weighing an aggregate of 7.5 million dwt, which represents
a 317% growth on a deadweight ton basis since 2005. In addition,
the Navios group has a combined current enterprise value of
$3.0 billion as compared to Navios Holdings
enterprise value in August 2005 of $0.6 billion,
representing 414% growth.
What is
Navios Holdings experience in the product and chemical
tanker sectors?
From time to time over its more than
55-year
history, Navios Holdings has had extensive operations in the
tanker sector. Currently, Navios Holdings owns and operates
several tankers for its cabotage business along the coastal
waters of South America. These operations are part of Navios
Holdings South American logistics business, which also
transports liquid cargo products through its oil barges on the
Hydrovia river system of South America and stores such products
at its river port in Paraguay. As a result of these operations,
Navios Holdings has developed strong relationships with oil
majors such as Exxon, Esso, Glencore, Petrobras, and Repsol, all
of whom are customers. Navios Holdings also has a joint venture
with Vitol for four product tankers that serve the coastal areas
in South America.
Given the
overlap in senior management, how do Navios Holdings and Navios
Acquisition plan to manage potential conflicts of interest in
pursuing business opportunities after Navios Acquisitions
business combination?
At the closing of the vessel acquisition, Navios Acquisition
will enter into agreements with Navios Holdings and its
affiliates that are based on substantially similar agreements
with Navios Maritime Partners L.P. (Navios
Partners), another of Navios Holdings sponsored
public companies. Among such agreements is an omnibus agreement
among Navios Acquisition, Navios Holdings and Navios Partners
(the Acquisition Omnibus Agreement), pursuant to
which, among other things, Navios Acquisition will be granted a
right of first refusal for business opportunities with Liquid
Shipment Vessels (as defined in the Acquisition Omnibus
Agreement), and Navios Holdings and Navios Partners will be
granted a right of first refusal for business opportunities in
the drybulk sector of the shipping industry, subject to certain
permitted exceptions as outlined in the Acquisition Omnibus
Agreement attached hereto as Annex H.
What are
the interests of Navios Acquisitions directors and
officers, and of Navios Holdings in the transaction?
Because each of our independent directors is entitled to receive
$50,000 in cash per year for their board service, accruing
pro rata from the start of their service on our board of
directors and payable only upon the successful completion of a
business combination, the financial interest of our independent
directors could influence their motivation in supporting the
vessel acquisition. Further, our independent directors will
continue to serve as independent directors of Navios Acquisition
and Angeliki Frangou will continue to serve as our Chairman and
Chief Executive Officer. Therefore, the financial interests of
such individuals may influence their motivation to support the
vessel acquisition and their determination as to whether the
vessel acquisition is in our stockholders best interest.
If such conflicts arise, they may not necessarily be resolved in
our favor.
5
Since Navios Holdings owns shares of our common stock that will
be released from escrow only if a business combination is
successfully completed and owns warrants that will have value
only if a business combination is consummated, our board may
have a conflict of interest in determining whether the vessel
acquisition is appropriate. The financial interests of Navios
Holdings may influence the motivation of our common officers and
directors in supporting the vessel acquisition. For more
information on such agreements, see the section entitled
Navios Acquisition Management and Operations After the
Business Combination The Management Agreement.
All of Navios Holdings investment in us will be lost if we
do not consummate a business combination. Such investment is
comprised of consideration paid for the sponsor units and
sponsor warrants. These amounts are in addition to (i) fees
and expenses for our dissolution and liquidation, which Navios
Holdings has agreed to pay in the event we do not have
sufficient funds outside of the trust account to pay for such
expenses, and (ii) claims made against the trust account by
creditors who have not executed waivers of claims.
What is
being voted on?
The first proposal is to approve the acquisition of
13 vessels (11 product tankers and two chemical tankers)
plus options to purchase two additional product tankers under
the terms of the Acquisition Agreement, dated as of April 8,
2010, by and between Navios Acquisition and Navios Holdings,
pursuant to which Navios Holdings will transfer to Navios
Acquisition the stock of the Navios Holdings subsidiary holding
directly or indirectly the rights to the vessels. We refer to
this proposal as the vessel acquisition proposal.
The second proposal is to approve the following amendments to
Navios Acquisitions amended and restated articles of
incorporation: (i) change Navios Acquisitions
corporate existence to perpetual, and (ii) remove
provisions that will no longer be applicable to Navios
Acquisition after the business combination. We refer to this
proposal as the amendment proposal.
What vote
is required to approve the vessel acquisition
proposal?
The vessel acquisition will be approved if: (a) a majority
of the shares of Navios Acquisitions common stock issued
in its initial public offering and outstanding as of the record
date that are present or represented at the meeting vote in
favor of the vessel acquisition proposal, and (b) no more
than approximately 39.99% of the public shares (or
10,119,999 shares of common stock) both vote against the
vessel acquisition proposal and properly exercise their
conversion rights. Each stockholder may vote against the vessel
acquisition proposal and demand that Navios Acquisition convert
such stockholders shares into cash at the conversion price
per share, which amount as of April 7, 2010 was equal to
approximately $9.91 per share.
Navios Acquisitions initial stockholders, including all of
its directors and officers and their affiliates and related
parties who purchased shares of common stock prior to Navios
Acquisitions initial public offering, presently own an
aggregate of approximately 20% of Navios Acquisitions
outstanding shares of common stock. All of these stockholders
have agreed to vote: (i) all of the shares of common stock
they acquired prior to the initial public offering in the same
way as the majority of the shares of common stock voted by the
public stockholders regarding the vessel acquisition proposal,
and (ii) any shares of common stock they have acquired
since the initial public offering in favor of the vessel
acquisition proposal.
6
The table below illustrates the number of shares of our common
stock that (i) are outstanding, (ii) are held by
public stockholders, and (iii) will be required
to approve the vessel acquisition proposal, as well as
(iv) the number of votes sufficient to veto the vessel
acquisition proposal:
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
|
Percentage
|
|
|
Shares of common stock outstanding (common shares)
|
|
|
31,625,000
|
|
|
|
100
|
%
|
Outstanding common stock held by public stockholders
(public shares)
|
|
|
25,300,000
|
|
|
|
80
|
%
|
Number of public shares required to approve the vessel
acquisition proposal
|
|
|
12,652,530
|
|
|
|
50.01
|
%
|
Number of public shares sufficient to veto the vessel
acquisition proposal
|
|
|
10,200,000
|
|
|
|
40.00
|
%
|
Will I
receive anything in the vessel acquisition?
If you vote your shares for the vessel acquisition proposal and
the vessel acquisition is completed, you will continue to hold
your Navios Acquisition securities. If the vessel acquisition is
completed but you have voted your shares against the vessel
acquisition proposal and have properly exercised your conversion
rights, your Navios Acquisition shares will be cancelled and you
will receive cash at the conversion price per share, which, as
of April 7, 2010, was equal to approximately $9.91 per share.
What
happens to the funds deposited in the trust account on
consummation of the vessel acquisition?
On consummation of the vessel acquisition, any funds remaining
in the trust account after payment of amounts, if any, to
stockholders properly exercising their conversion rights, will
be used to partially fund the vessel acquisition. We anticipate
that a maximum amount of approximately $208.3 million may
be available on consummation of the acquisition (net of all fees
and expenses, and after giving effect to the initial
installment), assuming that none of the public stockholders vote
against the vessel acquisition proposal and convert their shares
into cash. A minimum amount of $108.0 million would be
available on consummation of the vessel acquisition (net of all
fees and expenses, and after giving effect to the initial
installment), assuming that public stockholders owning
10,119,999 shares, the maximum number of shares that can be
converted, both vote against the vessel acquisition proposal and
convert their shares into cash at the conversion price per
share. In each case, this assumes no Forward Contract
arrangements have been made.
Why is
Navios Acquisition proposing the amendments to the amended and
restated articles of incorporation?
If the vessel acquisition has been approved, then we will amend
the provisions of Navios Acquisitions amended and restated
articles of incorporation to (i) change Navios
Acquisitions corporate existence to perpetual, and
(ii) remove provisions that will no longer be applicable to
Navios Acquisition after the business combination.
What vote
is required in order to approve the amendment
proposal?
The approval of the amendments to the amended and restated
articles of incorporation will require the affirmative vote of a
majority of the shares of Navios Acquisitions common stock
issued and outstanding as of the record date.
The table below illustrates the number of shares of our common
stock that (i) are outstanding, (ii) are held by
public stockholders, and (iii) will be required
to approve the amendment proposal:
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
|
Percentage
|
|
|
Common shares outstanding
|
|
|
31,625,000
|
|
|
|
100
|
%
|
Public shares outstanding
|
|
|
25,300,000
|
|
|
|
80
|
%
|
Number of common shares required to approve the amendment
proposal
|
|
|
15,815,663
|
|
|
|
50.01
|
%
|
7
How do I
vote?
As all of our public shares are held in street name,
which means your shares are held of record by a broker, bank or
nominee, you must provide the record holder of your shares with
instructions on how to vote your shares by completing, signing,
dating and returning the enclosed proxy card in the accompanying
pre-addressed postage paid envelope or by obtaining a proxy from
the record holder authorizing you to vote your shares, attending
the special meeting in person and voting your shares by
submitting a ballot at the meeting.
What will
happen if I abstain from voting or fail to vote?
An abstention, is not an affirmative vote for a respective
proposal but adds to the number of shares present in person or
by proxy, (i) will have the same effect as a vote against
the vessel acquisition proposal but will not have the effect of
converting your shares into a pro rata portion of the
trust account.
A failure to vote and broker non-votes will have no impact upon
the approval of the vessel acquisition proposal, but as the
amendment proposal requires a majority of all outstanding shares
of common stock, a failure to vote and broker non-votes will
have the effect of a vote against such proposal.
What do I
do if I want to change my vote or revoke my proxy?
You may change your vote by ensuring the bank, broker, or other
nominee who is the record owner of your shares sends a
later-dated, signed proxy card to Vasiliki Papaefthymiou at
Navios Acquisition, but such later-dated proxy must be received
by Navios Acquisition no later than 5:00 p.m., Eastern
Standard Time, on
[ ],
2010 (the business day prior to the date of the special meeting
of Navios Acquisition stockholders).
You also may revoke your proxy by ensuring your bank, broker or
nominee sends a notice of revocation to Vasiliki Papaefthymiou
at Navios Acquisition, but such revocation must be received by
Navios Acquisition no later than 5:00 p.m., Eastern
Standard Time, on
[ ],
2010 (the business day prior to the date of the special meeting
of Navios Acquisition stockholders). You may also change your
vote or revoke your proxy by obtaining a proxy from the record
holder of your shares authorizing you to vote your shares or
revoke your proxy, attending the special meeting in person,
requesting a ballot and voting at the special meeting or
requesting return of your proxy, as applicable.
What are
my conversion rights in connection with the
acquisition?
You have the right to vote against the vessel acquisition
proposal and demand that Navios Acquisition convert all (and not
less than all) of your public shares into cash at the conversion
price per share.
Notwithstanding the foregoing, a stockholder, together with any
affiliate or any person with whom it is acting in concert or as
a partnership, syndicate or other group for the purpose of
acquiring, holding, disposing, or voting Navios
Acquisitions securities, will be restricted from seeking
conversion rights for more than 10% of the public shares. If the
vessel acquisition is not completed, then your shares will not
be converted at this time, even if you so demanded. See
The Navios Acquisition Special Meeting
Conversion Rights.
How do I
exercise my conversion rights?
If you wish to exercise your conversion rights, you must vote
against the vessel acquisition proposal and, prior or
contemporaneously with your vote against the vessel acquisition
proposal, affirmatively demand that Navios Acquisition convert
all (and not less than all) of your shares. Any action that does
not include a vote against the vessel acquisition proposal will
prevent you from exercising your conversion rights. If,
notwithstanding your vote, the acquisition is completed, then
you will be entitled to receive cash at the conversion price per
share, which, as of April 7, 2010, was approximately $9.91. If
you exercise your conversion rights, then you will be
irrevocably exchanging your shares of common stock for cash and
will no longer own those shares of common stock. You may only
demand that Navios Acquisition convert your shares by checking
the box on the proxy card and, at the same time, ensuring your
bank or broker complies with the requirements identified below.
You will only be entitled to receive cash for those shares if
you continue to own those shares through the closing date of the
vessel acquisition. If the vessel acquisition is not completed,
then your shares will not be converted at this time, even if you
so demanded. See the section entitled The Navios
Acquisition Special Meeting Conversion
Procedures.
8
What
additional conversion procedures are required if my shares are
held in street name?
All of our public shares are held in street name.
Accordingly, your bank or broker must, by 5:00 p.m.,
Eastern Standard Time, on
[ ],
2010, the business day prior to the special meeting,
electronically deliver your shares to Navios Acquisitions
transfer agent using Depository Trust Companys DWAC
(Deposit Withdrawal at Custodian) System, and provide
Continental Stock Transfer & Trust Company with
the necessary stock powers, written instructions that you want
to convert your shares and a written certificate addressed to
Continental Stock Transfer & Trust Company
stating that you were the owner of such shares as of the record
date, you have owned such shares since the record date and you
will continue to own such shares through the closing of the
vessel acquisition. If your bank or broker does not provide each
of these documents to Continental Stock Transfer &
Trust Company, 17 Battery Place, New York, NY 10004, attn:
Mark Zimkind, tel.
212-845-3287,
fax
212-616-7616
by 5:00 p.m., Eastern Standard Time, on
[ ],
2010, the business day prior to the special meeting, your shares
will not be converted.
If you demand conversion of your shares, and later decide that
you do not want to convert such shares, your bank or broker must
make arrangements with Continental Stock Transfer &
Trust Company, at the telephone number stated above, to
withdraw the conversion. To be effective, withdrawals of shares
previously submitted for conversion must be completed prior to
the commencement of the special meeting.
Continental Stock Transfer & Trust Company can
assist with this process. We urge stockholders who may wish to
exercise their conversion rights to promptly contact the account
executive at the organization holding their account to
accomplish these additional procedures. If such stockholders
fail to act promptly, they may be unable to timely satisfy the
conversion requirements.
If I
exercise my conversion rights, may I still exercise my
warrants?
If you convert your shares of common stock, you will still have
the right to exercise any warrants you own in accordance with
their terms.
What are
the U.S. federal income tax consequences of exercising my
conversion rights?
Subject to the discussion of passive foreign investment
companies (PFIC) below, if you properly exercise
your conversion rights and the acquisition is completed, you
will generally be required to recognize capital gain or loss
upon the conversion of your shares of common stock into cash if
such shares were held as a capital asset on the date of
acquisition. Such gain or loss will be measured by the
difference between the amount of cash you receive and your tax
basis in your converted shares of common stock.
Navios Acquisition was treated as a PFIC for its 2008 and 2009
taxable years. Based upon its expected income, assets and
activities, Navios Acquisition believes that it will be treated
for United States federal income tax purposes as a PFIC for the
2010 taxable year. Accordingly, special rules will apply to
U.S. Holders (as defined in Tax
Considerations Material U.S. Federal Income Tax
Consequences United States Federal Income Taxation
of U.S. Holders Passive Foreign Investment
Company Status and Significant Tax Consequences) owning
Navios Acquisition common stock who properly exercise their
conversion rights and who have not made a timely QEF election or
a timely
mark-to-market
election (as defined in Tax Considerations
Material U.S. Federal Income Tax Consequences
United States Federal Income Taxation of
U.S. Holders Passive Foreign Investment Company
Status and Significant Tax Consequences) where the taxable
year in which the U.S. Holders holding period
commences was 2008 or 2009. In such case, any gain recognized on
the conversion of the common stock will be treated as an
excess distribution and will be taxed as ordinary
income, and any loss realized will not be recognized. See the
discussion in Tax Considerations Material
U.S. Federal Income Tax Consequences United
States Federal Income Taxation of U.S. Holders
Passive Foreign Investment Company Status and Significant Tax
Consequences.
Who can
help answer my questions?
If you have questions about the proposals or the special
meeting, you may write or call Navios Maritime Acquisition
Corporation at 85 Akti Miaouli Street, Piraeus, Greece 185 38,
telephone: (011) +30-210-4595000, Attention: Vasiliki
Papaefthymiou.
9
SUMMARY
OF THE PROXY STATEMENT
This summary is being provided to discuss the material items
with respect to the proposals, which are described in detail
elsewhere in this proxy statement. You should carefully read
this entire proxy statement and the other documents to which
this proxy statement refers. Unless otherwise described herein,
information in this proxy statement assumes the execution of a
$52.0 million credit agreement, which is currently in
advanced negotiations. See the section entitled Where You
Can Find More Information.
The
Company (page 68)
Navios Acquisition is a blank check company formed for the
purpose of acquiring, through a merger, capital stock exchange,
asset acquisition, stock purchase or other similar business
combination, one or more assets or operating businesses in the
marine transportation and logistics industries. If the vessel
acquisition is approved and completed, we will have a fleet of
13 tankers, consisting of 11 product tankers and two chemical
tankers plus options to purchase two additional product tankers.
Following the vessel acquisition, our business strategy is to
become a world-leading operator and charterer of modern,
high-quality product and chemical tankers. Our principal focus
is the transportation of refined petroleum products (clean and
dirty) and bulk liquid chemicals.
The principal executive office of Navios Acquisition is located
at 85 Akti Miaouli Street, Piraeus, Greece 185 38, telephone:
(011) +30-210-4595000.
Market
Opportunity and Business Strategy (page 25)
We believe that the recent financial crisis and developments in
the marine transportation industry, particularly in the product
and chemical tanker sectors, have created significant
opportunities to acquire vessels near historically low
(inflation-adjusted) prices and employ them in a manner that
will provide attractive returns on capital. We also believe that
the recent financial crisis continues to adversely affect the
availability of credit to shipping industry participants,
creating opportunities for well-capitalized companies with
committed available financing such as ours, to enter the product
and chemical tanker sectors at this advantageous time.
Our business strategy is to develop a world-leading operator and
charterer of modern, high-quality product and chemical tankers.
Our principal focus is the transportation of refined petroleum
products (clean and dirty) and bulk liquid chemicals. We will
seek to establish a leadership position by leveraging the
established reputation of Navios Holdings for maintaining high
standards of performance, risk management, reliability and the
safety of its crews, vessels and the environment. We are
committed to creating long-term stockholder value by executing
on a growth strategy designed to maximize returns in all
economic cycles. We believe the vessel acquisition will be the
first step to our becoming a world leader in the product and
chemical tanker sectors.
Our business strategy will be to:
|
|
|
|
|
Capitalize on near-historic low (inflation-adjusted) vessel
prices in building a fleet of high quality, modern,
double-hulled vessels;
|
|
|
|
Strategically manage sector exposure in product and chemical
tankers;
|
|
|
|
Maintain an optimum charter mix;
|
|
|
|
Maintain a strong balance sheet and flexible capital structure;
|
|
|
|
Implement and sustain a competitive cost structure; and
|
|
|
|
Leverage the experience, brand name, global network of
relationships and risk management expertise of Navios Holdings.
|
10
For more information on our market opportunity and business
strategy, see the section entitled
Proposal 1 The Vessel Acquisition
Proposal Navios Acquisitions Reasons for the
Vessel Acquisition and Recommendation of Navios
Acquisitions Board of Directors.
Our
Relationship with Navios Holdings (page 25)
One of our key competitive advantages is our relationship with
Navios Holdings. Navios Holdings, our sponsor and principal
stockholder, has a well-established record of using its
relationships with shipbuilders, banks and other key players in
the shipping industry to acquire vessels: (i) at favorable
prices, (ii) using creative financing structures (such as
mandatorily convertible preferred stock), and (iii) with
greater access to favorable debt financing than most others can
achieve. We believe that through our relationship with Navios
Holdings, we will continue to receive favorable debt financing,
charter arrangements, and access to charter party insurance for
the vessels we acquire. In addition, we believe our relationship
to Navios Holdings will continue to provide us with proprietary
deal flow. Furthermore, Navios Holdings has agreed to give us a
right of first refusal for the purchase of Liquid Shipment
Vessels, including product and chemical tankers. In addition, we
will enter into a five-year Management Agreement with a
subsidiary of Navios Holdings, pursuant to which such subsidiary
will provide certain commercial and technical ship management
services to us.
Attractive
Debt Financing (page 28)
We believe that our relationship with Navios Holdings will
enable us to access favorable debt financing, as evidenced by
the Credit Agreements, which contain favorable features,
including:
Advanced
Rate
|
|
|
|
|
73% financing of the aggregate purchase price of the vessels;
|
Interest
Rate
|
|
|
|
|
for $334.3 million of the debt, interest margin ranging
from 2.50% to 2.75% over the applicable base rate;
|
Term
|
|
|
|
|
six-year term for $277.0 million of debt;
|
Favorable
Amortization
|
|
|
|
|
for $225.0 million of the debt, approximately
17-year
amortization profile ($16.0 million balloon payment per
vessel against a loan of $25.0 million per vessel);
|
|
|
|
for $52.0 million installment, approximately 14.5-year
amortization profile ($15.24 million balloon payment per
vessel against a loan of $26.0 million per vessel);
|
Favorable
Covenants
|
|
|
|
|
loan to value ratio covenants (post-delivery of vessel)
initially of 125%;
|
|
|
|
financial covenants generally inapplicable until after delivery
of the vessels;
|
|
|
|
ability to distribute up to 50% of net profits; and
|
|
|
|
no negative covenants restricting the incurrence of additional
debt or preventing us from acquiring additional vessels.
|
The above reflects three
six-year
term loans (one of which is in advanced stages of negotiation)
for an aggregate of $277.0 million of indebtedness, and a
two-year,
$57.3 million revolving credit facility for general corporate
purposes, repayable in one installment in March 2012 (with
available
one-year
extensions). The covenants described above apply only to the
term loans of $225.0 million. See Managements
Discussion and Analysis of Financial Condition and Results of
Operations Recent Developments for a more
detailed discussion of the Credit Agreements.
11
See the section entitled Risk Factors beginning on
page 119 for a discussion of risks associated with our debt
financing.
The
Vessel Acquisition Proposal (page 22)
Navios Acquisition is proposing to acquire 13 vessels (11
product tankers and two chemical tankers) plus options to
purchase two additional product tankers pursuant to the
Acquisition Agreement between Navios Acquisition and Navios
Holdings for an aggregate purchase price of $457.7 million.
Navios Acquisition plans to complete the vessel acquisition as
soon as practicable, provided that:
|
|
|
|
|
Navios Acquisitions stockholders have approved the vessel
acquisition proposal;
|
|
|
|
public stockholders owning no more than approximately 39.99% of
the Navios Acquisition public shares, or 10,119,999 shares
of common stock, vote against the vessel acquisition proposal
and properly exercise their conversion rights; and
|
|
|
|
the other conditions specified in the Acquisition Agreement have
been satisfied or waived.
|
The Acquisition Agreement and related transaction agreements are
included as Annex A through Annex H,
attached to this proxy statement. We encourage you to read the
Acquisition Agreement in its entirety. See the section entitled
Proposal 1 The Vessel Acquisition
Proposal The Vessel Acquisition Agreements.
The
Amendment Proposal (page 36)
Navios Acquisition is seeking stockholder approval to amend
Navios Acquisitions amended and restated articles of
incorporation. Any amendment will become effective only if and
when the vessel acquisition is completed. The amendment
proposal, if approved, will provide for the amendment of Navios
Acquisitions amended and restated articles of
incorporation to: (i) change the period of its corporate
existence to perpetual, and (ii) delete the preamble and
sections A through E, inclusive, of Article Sixth and
to redesignate section F of Article Sixth as
Article Sixth, as such provisions will no longer be
applicable to Navios Acquisition after the business combination.
Navios
Acquisitions Board of Directors Recommendations
(pages 35 and 36)
After careful consideration, the board of directors of Navios
Acquisition has unanimously approved each of the proposals
discussed herein and determined that the proposals (and
transactions contemplated thereby) are in the best interests of
Navios Acquisition and its stockholders and unanimously
recommends that you vote or give instruction to vote
FOR each proposal.
NAVIOS HOLDINGS BELIEVES THAT THE VESSEL ACQUISITION IS A
VALUABLE OPPORTUNITY; IF THE STOCKHOLDERS OF NAVIOS ACQUISITION
DO NOT APPROVE THE VESSEL ACQUISITION, NAVIOS HOLDINGS WILL
CONSUMMATE THE ACQUISITION OF THE VESSELS FOR ITS OWN
ACCOUNT.
Conversion
Rights (page 20)
Pursuant to Navios Acquisitions amended and restated
articles of incorporation, a public stockholder who votes
against the acquisition may demand that Navios Acquisition
convert all (and not less than all) of their public shares into
cash at the conversion price per share. If you properly exercise
your conversion rights, then you will be irrevocably exchanging
your shares of common stock for cash and will no longer own
those shares of common stock. Based on the amount of cash held
in the trust account as of April 7, 2010, without taking
into account any interest accrued after such date, you will be
entitled to convert each public share that you own into
approximately $9.91. You may only demand that Navios Acquisition
convert your shares by checking the box on the proxy card and,
at the same time, ensuring your bank or broker complies with the
requirements identified elsewhere herein. You will only be
entitled to receive cash for those shares if you continue to own
those shares through the closing date of the acquisition.
12
Notwithstanding the foregoing, a stockholder, together with any
affiliate or any person with whom it is acting in concert or as
a partnership, syndicate or other group for the purpose of
acquiring, holding, disposing, or voting Navios
Acquisitions securities, will be restricted from seeking
conversion rights with respect to more than 10% of the public
shares.
If you convert your shares of common stock, you will still have
the right to exercise any warrants you own in accordance with
their terms.
If the vessel acquisition is not completed, then your shares
will not be converted at this time, even if you so demanded. The
acquisition will not be completed if public stockholders owning
more than approximately 39.99% of the public shares (or
10,119,999 shares of common stock) both vote against the
vessel acquisition proposal and properly exercise their
conversion rights.
Risk
Factors (page 119)
In evaluating the proposal and the acquisition, you should
carefully read this proxy statement and especially consider the
factors discussed in the section entitled Risk
Factors beginning on page 119.
13
The acquisition of the 13 vessels by Navios Acquisition
will be accounted for as an asset acquisition. The initial
measurement of the asset acquisition will be based upon the fair
value of the consideration exchanged.
We have presented the selected unaudited pro forma condensed
combined financial information that reflects the results of the
vessel acquisition had the transition occurred as of
December 31, 2009. The unaudited pro forma combined
information is for illustrative purposes only. You should not
rely on the unaudited pro forma combined balance sheet as being
indicative of the historical financial position that would have
been achieved had the vessel acquisition been consummated as of
the date of this proxy statement.
UNAUDITED
PRO FORMA CONDENSED COMBINED BALANCE SHEET
AS OF DECEMBER 31, 2009
(In U.S. dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro-Forma
|
|
|
|
|
|
|
|
|
|
Pro-forma
|
|
|
|
|
|
Adjustments (with
|
|
|
|
|
|
|
As at
|
|
|
Adjustments
|
|
|
Combined
|
|
|
10,199,999 Shares
|
|
|
Combined
|
|
|
|
December 31,
|
|
|
(Assuming No Stock
|
|
|
(Before Stock
|
|
|
of Common Stock
|
|
|
(After Stock
|
|
|
|
2009
|
|
|
Conversion)(1)
|
|
|
Conversion)(1)
|
|
|
Conversion)(1)
|
|
|
Conversion)(1)
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
|
87,099
|
|
|
|
|
|
|
|
87,099
|
|
|
|
|
|
|
|
87,099
|
|
Cash receipt of funds from loan
|
|
|
|
|
|
|
158,996,126
|
(2)
|
|
|
158,996,126
|
|
|
|
|
|
|
|
158,996,126
|
|
Cash payment of deferred underwriters fees
|
|
|
|
|
|
|
(8,855,000
|
)(3)
|
|
|
(8,855,000
|
)
|
|
|
|
|
|
|
(8,855,000
|
)
|
Cash payment for the vessel acquisition
|
|
|
|
|
|
|
(191,748,944
|
)(4)
|
|
|
(191,748,944
|
)
|
|
|
|
|
|
|
(191,748,944
|
)
|
Cash payment of transaction costs
|
|
|
|
|
|
|
(1,613,000
|
)(5)
|
|
|
(1,613,000
|
)
|
|
|
|
|
|
|
(1,613,000
|
)
|
Cash release of the trust account
|
|
|
|
|
|
|
251,493,295
|
(6)
|
|
|
251,493,295
|
|
|
|
|
|
|
|
251,493,295
|
|
Cash payment to convert stock into cash
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(100,289,190
|
)(8)
|
|
|
(100,289,190
|
)
|
Prepaid expenses
|
|
|
55,295
|
|
|
|
|
|
|
|
55,295
|
|
|
|
|
|
|
|
55,295
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
142,394
|
|
|
|
208,272,477
|
|
|
|
208,414,871
|
|
|
|
(100,289,190
|
)
|
|
|
108,125,681
|
|
Other assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits for vessel acquisitions
|
|
|
|
|
|
|
191,748,944
|
(4)
|
|
|
191,748,944
|
|
|
|
|
|
|
|
191,748,944
|
|
Deferred transaction costs
|
|
|
|
|
|
|
1,613,000
|
(5)
|
|
|
1,613,000
|
|
|
|
|
|
|
|
1,613,000
|
|
Investment in trust account, including restricted cash
|
|
|
251,493,295
|
|
|
|
(251,493,295
|
)(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred finance costs
|
|
|
|
|
|
|
2,690,250
|
(2)
|
|
|
2,690,250
|
|
|
|
|
|
|
|
2,690,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other assets
|
|
|
251,493,295
|
|
|
|
(55,441,101
|
)
|
|
|
196,052,194
|
|
|
|
|
|
|
|
196,052,194
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
|
251,635,689
|
|
|
|
152,831,376
|
|
|
|
404,467,065
|
|
|
|
(100,289,190
|
)
|
|
|
304,177,875
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
|
56,479
|
|
|
|
|
|
|
|
56,479
|
|
|
|
|
|
|
|
56,479
|
|
Accrued expenses
|
|
|
414,215
|
|
|
|
|
|
|
|
414,215
|
|
|
|
|
|
|
|
414,215
|
|
14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro-Forma
|
|
|
|
|
|
|
|
|
|
Pro-forma
|
|
|
|
|
|
Adjustments (with
|
|
|
|
|
|
|
As at
|
|
|
Adjustments
|
|
|
Combined
|
|
|
10,199,999 Shares
|
|
|
Combined
|
|
|
|
December 31,
|
|
|
(Assuming No Stock
|
|
|
(Before Stock
|
|
|
of Common Stock
|
|
|
(After Stock
|
|
|
|
2009
|
|
|
Conversion)(1)
|
|
|
Conversion)(1)
|
|
|
Conversion)(1)
|
|
|
Conversion)(1)
|
|
|
Amount due to related parties
|
|
|
30,119
|
|
|
|
|
|
|
|
30,119
|
|
|
|
|
|
|
|
30,119
|
|
Long-term debt, current portion
|
|
|
|
|
|
|
3,000,000
|
(2)
|
|
|
3,000,000
|
|
|
|
|
|
|
|
3,000,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
500,813
|
|
|
|
3,000,000
|
|
|
|
3,500,813
|
|
|
|
|
|
|
|
3,500,813
|
|
Long term liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt, net of current portion
|
|
|
|
|
|
|
158,686,376
|
(2)
|
|
|
158,686,376
|
|
|
|
|
|
|
|
158,686,376
|
|
Deferred underwriters fees
|
|
|
8,855,000
|
|
|
|
(8,855,000
|
)(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock subject to redemption,
10,119,999 shares at redemption value, $9.91 per share
|
|
|
100,289,190
|
|
|
|
(100,289,190
|
)(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
109,645,003
|
|
|
|
52,542,186
|
|
|
|
162,187,189
|
|
|
|
|
|
|
|
162,187,189
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred Stock, $.0001 par value; 1,000,000 shares
authorized; none issued
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock, $.0001 par value, authorized
100,000,000 shares; 31,625,000 shares issued and
outstanding (includes the 10,199,999 shares subject to
redemption)
|
|
|
3,163
|
|
|
|
|
|
|
|
3,163
|
|
|
|
(1,020
|
)(8)
|
|
|
2,143
|
|
Additional paid-in capital
|
|
|
141,588,151
|
|
|
|
100,289,190
|
(6)
|
|
|
241,877,341
|
|
|
|
(100,288,170
|
)(8)
|
|
|
141,589,171
|
|
Earnings accumulated during the development stage
|
|
|
399,372
|
|
|
|
|
|
|
|
399,372
|
|
|
|
|
|
|
|
399,372
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders equity
|
|
|
141,990,686
|
|
|
|
100,289,190
|
|
|
|
242,279,876
|
|
|
|
(100,289,190
|
)
|
|
|
141,990,686
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders equity
|
|
|
251,635,689
|
|
|
|
152,831,376
|
|
|
|
404,467,065
|
|
|
|
(100,289,190
|
)
|
|
|
304,177,875
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Assumes no Forward Contracts. |
|
(2) |
|
To record the receipt of proceeds from the debt financing in
order to finance the vessel acquisition. Navios Acquisition will
pay to the Lenders upfront fees depending on the available loan
amount under each facility. |
|
(3) |
|
To record the payment of the deferred underwriters fees,
payable upon consummation of Navios Acquisitions initial
business combination. |
|
(4) |
|
To record the payment to the Shipbuilders and the Sellers of the
initial installment or the deposit of the vessel acquisition, as
applicable. |
15
|
|
|
(5) |
|
To record the transaction expenses, which consist of
approximately (a) $490,000 for travelling and road show
expenses, annual meeting and other expenses, (b) $245,000
for consulting expenses, (c) $763,000 for legal expenses,
(d) $10,000 for audit fees, and (e) $105,000 for
printing expenses. These fees will be capitalized on the balance
sheet and amortized over future periods. |
|
(6) |
|
To record the release of the cash held in the trust account. |
|
(7) |
|
If all stockholders approve the vessel acquisition, the
10,199,999 shares of temporary equity will become permanent
equity. |
|
(8) |
|
To record the conversion of the 10,199,999 shares of common
stock (shares to be cancelled after the conversion), if 39.99%
of the public holders of Navios Acquisitions common stock
both vote against the vessel acquisition proposal and properly
exercise their conversion rights. |
16
PER SHARE
MARKET PRICE INFORMATION
Navios Acquisition common stock, warrants and units are
currently quoted on the New York Stock Exchange under the
symbols NNA, NNA.WS and
NNA.U, respectively. The closing prices of the
common stock, warrants, and units, on April 7, 2010, the
last trading day before the announcement of the execution of the
Acquisition Agreement, were $9.84 per share, $0.68 per warrant
and $10.26 per unit, respectively. Each unit of Navios
Acquisition consists of one share of common stock and one
warrant. The warrants became separable from the common stock on
July 7, 2008. Each warrant entitles the holder to purchase
from Navios Acquisition one share of common stock at an exercise
price of $7.00 upon the completion of an initial business
combination. The warrants will expire at 5:00 p.m., Eastern
Standard Time, on June 25, 2013, or earlier upon
redemption. Prior to July 1, 2008, there was no established
public trading market for Navios Acquisitions common
stock, warrants or units.
The following table sets forth, for the calendar quarter
indicated, the quarterly high and low closing sales prices of
Navios Acquisitions units, common stock and warrants on
the New York Stock Exchange.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Price Range
|
|
|
Price Range
|
|
|
Price Range
|
|
|
|
Units
|
|
|
Common stock
|
|
|
Warrants
|
|
|
|
High
|
|
|
Low
|
|
|
High
|
|
|
Low
|
|
|
High
|
|
|
Low
|
|
|
Quarter Ended:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2010 (through April 7, 2010)
|
|
$
|
10.26
|
|
|
$
|
10.26
|
|
|
$
|
9.89
|
|
|
$
|
9.84
|
|
|
$
|
0.68
|
|
|
$
|
0.64
|
|
March 31, 2010
|
|
$
|
10.32
|
|
|
$
|
10.11
|
|
|
$
|
9.90
|
|
|
$
|
9.79
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|
|
$
|
0.68
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|
|
$
|
0.45
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|
December 31, 2009
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$
|
10.55
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|
|
$
|
9.73
|
|
|
$
|
9.90
|
|
|
$
|
9.61
|
|
|
$
|
0.76
|
|
|
$
|
0.52
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|
September 30, 2009
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|
$
|
10.05
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|
|
$
|
9.64
|
|
|
$
|
9.60
|
|
|
$
|
9.37
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|
|
$
|
0.81
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|
|
$
|
0.40
|
|
June 30, 2009
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|
$
|
9.47
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|
|
$
|
9.10
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|
|
$
|
9.36
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|
|
$
|
9.03
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|
|
$
|
0.48
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|
|
$
|
0.18
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March 31, 2009
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$
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9.20
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|
$
|
8.61
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|
$
|
9.07
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|
|
$
|
8.57
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|
|
$
|
0.20
|
|
|
$
|
0.16
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|
December 31, 2008
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|
$
|
9.20
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|
|
$
|
8.40
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|
|
$
|
8.70
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|
|
$
|
8.08
|
|
|
$
|
0.44
|
|
|
$
|
0.14
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|
September 30, 2008*
|
|
$
|
10.20
|
|
|
$
|
9.26
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|
|
$
|
9.40
|
|
|
$
|
8.79
|
|
|
$
|
1.05
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|
$
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0.44
|
|
|
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(*) |
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Period beginning July 1, 2008. |
Holders
As of April 7, 2010, there was one holder of record of our
units, seven holders of record of our common stock and seven
holders of record of our warrants. The units (and the shares of
common stock included in the units) issued in our initial public
offering were available initially only in book-entry form and
are currently represented by one or more global certificates,
which were deposited with, or on behalf of, DTC and registered
in its name or in the name of its nominee. Accordingly, all of
the public shares are held in street name. Navios
Acquisition believes that the aggregate number of beneficial
holders of its units, common stock and warrants is in excess of
400 persons.
Dividend
Policy
We have never declared nor paid any cash dividends on our
capital stock. We currently intend to retain all available funds
and any future earnings to support our operations and finance
the growth and development of our business. We do not intend to
pay cash dividends on our common stock for the foreseeable
future. Any future determination related to dividend policy will
be made at the discretion of our board of directors. In
addition, the terms of the Credit Agreements permit distribution
of up to 50% of net profits without the Lenders consent.
17
THE
NAVIOS ACQUISITION SPECIAL MEETING
The
Special Meeting
Navios Acquisition is furnishing this proxy statement to you as
part of the solicitation of proxies by the Navios Acquisition
board of directors for use at the special meeting in connection
with the proposed vessel acquisition. This proxy statement
provides you with the information you need to be able to vote or
instruct your vote to be cast at the special meeting.
Date,
Time and Place
The special meeting will be held at 10:00 a.m., Eastern
Standard Time, on
[ ],
2010, at the offices of Mintz, Levin, Cohn, Ferris, Glovsky and
Popeo, P.C., The Chrysler Center, 666 Third Avenue,
New York, New York 10017.
Purpose
of the Special Meeting
At the special meeting, the holders of Navios Acquisition common
stock are being asked to:
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approve the acquisition of 13 vessels (11 product tankers
and two chemical tankers) plus options to purchase two
additional product tankers pursuant to the terms and conditions
of the Acquisition Agreement, dated as of April 8, 2010, by and
between Navios Acquisition and Navios Holdings; and
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approve the amendment of Navios Acquisitions amended and
restated articles of incorporation to (i) change the period
of its corporate existence to perpetual, and (ii) delete
the preamble and sections A through E, inclusive, of
Article Sixth and to redesignate section F of
Article Sixth as Article Sixth, as such provisions
will no longer be applicable to Navios Acquisition after the
business combination.
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Navios Acquisitions board of directors:
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has unanimously determined that the vessel acquisition is, from
a financial point of view, fair to, and in the best interests
of, Navios Acquisition and its stockholders;
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has unanimously determined that the consideration to be paid by
Navios Acquisition in connection with the vessel acquisition is
fair to its current stockholders from a financial point of view
and the aggregate fair market value of the 13 vessels being
acquired plus options to purchase two additional product tankers
is greater than 80% of the value of the net assets of Navios
Acquisition at the time of the execution of the Acquisition
Agreement;
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has unanimously approved the vessel acquisition, the amendments
to the amended and restated articles of incorporation and all
transaction agreements required to consummate such
transactions; and
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unanimously recommends that the holders of Navios Acquisition
common stock vote (i) FOR the vessel
acquisition proposal, and (ii) FOR the
amendment proposal.
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Record
Date; Who is Entitled to Vote
The record date for the special meeting is April 26, 2010.
Record holders of Navios Acquisition common stock at the close
of business on the record date are entitled to vote or have
their votes cast at the special meeting. On the record date,
there were 31,625,000 issued and outstanding shares of Navios
Acquisition common stock.
Each share of Navios Acquisition common stock is entitled to one
vote at the special meeting.
The initial stockholders have agreed to vote: (i) all of
the shares of common stock they acquired before to the initial
public offering in the same way as the majority of the shares of
common stock voted by the public stockholders regarding the
vessel acquisition proposal, and (ii) any shares of common
stock they have acquired since the initial public offering in
favor of the vessel acquisition proposal. The public
stockholders are free to vote their shares as they see fit.
18
The quorum for the special meeting is the presence, in person or
by proxy, of holders of a majority of the issued and outstanding
shares of common stock. A quorum is the minimum number of issued
and outstanding shares of common stock, the holders of which
must be present at a meeting in order to duly convene the
meeting. Shares held by stockholders who are present in person
at the meeting but who do not vote or who mark their proxy cards
to show abstentions, and shares represented by broker non-votes,
are included for purposes of determining the presence of a
quorum. In the absence of a quorum, stockholders representing a
majority of the votes present in person or represented by proxy
at such meeting, may adjourn the meeting until a quorum is
present.
Navios Acquisitions issued and outstanding warrants do not
have voting rights and holders of Navios Acquisition warrants
will not be entitled to vote at the special meeting.
Navios
Acquisition Shares
The units (and the shares of common stock included in the units)
issued in our initial public offering were available initially
only in book-entry form and are currently represented by one or
more global certificates, which were deposited with, or on
behalf of, The Depository Trust Company, or DTC, and
registered in its name or in the name of its nominee.
Accordingly, all of the public shares are held in street
name.
Voting
Your Shares
Your proxy card shows the number of shares of Navios Acquisition
common stock that you own.
There are two ways to vote your shares of Navios Acquisition
common stock at the special meeting:
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You can vote by signing and returning the enclosed proxy card.
If you vote by proxy card, your proxy, whose name is
listed on the proxy card, will vote your shares as you instruct
on the proxy card. If you sign and return the proxy card, but do
not give instructions on how to vote your shares, your shares
will be voted, as recommended by the Navios Acquisition board,
FOR the vessel acquisition proposal and
FOR the amendment proposal.
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You can attend the special meeting and vote in person. Navios
Acquisition will give you a ballot when you arrive, however, you
must get a proxy from the broker, bank or other nominee that is
the record holder of your shares. That is the only way Navios
Acquisition can be sure that your broker, bank or other nominee
has not already voted your shares.
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Who can
answer your questions about voting your shares
If you have any questions about how to vote or direct a vote in
respect of your Navios Acquisition common stock, you may call
Vasiliki Papaefthymiou at (011) +30-210-4595000 or
Morrow & Co., LLC at
(800) 607-0088.
No
additional matters may be presented at the special
meeting
This special meeting has been called only to consider the vessel
acquisition proposal and the amendment proposal. Under Navios
Acquisitions bylaws, other than procedural matters
incident to the conduct of the meeting, no other matters may be
considered at the special meeting.
Changing
your vote or revoking your proxy
You may change your vote by ensuring your bank, broker or other
nominee sends a later-dated, signed proxy card to Vasiliki
Papaefthymiou at Navios Acquisition, but such later-dated proxy
must be received by Navios Acquisition no later than
12:00 p.m., Eastern Standard Time, on
[ ],
2010 (the business day prior to the date of the special meeting
of Navios Acquisition stockholders).
You also may revoke your proxy by ensuring your bank, broker or
other nominee sends a notice of revocation to Vasiliki
Papaefthymiou at Navios Acquisition, but such revocation must be
received by Navios
19
Acquisition no later than 12:00 p.m., Eastern Standard
Time, on
[ ],
2010 (the business day prior to the date of the special meeting
of Navios Acquisition stockholders).
You may also change your vote or revoke your proxy by obtaining
a proxy from the record holder of your shares authorizing you to
vote your shares or revoke your proxy, attending the special
meeting and requesting a ballot and voting at the special
meeting or requesting return of your proxy, as applicable.
Vote
required
The vessel acquisition will be approved if: (a) a majority
of the shares of Navios Acquisitions common stock issued
in its initial public offering and outstanding as of the record
date that are present or represented at the meeting vote in
favor of the vessel acquisition proposal, and (b) no more
than approximately 39.99% of the public shares (or
10,119,999 shares of common stock) both vote against the
vessel acquisition proposal and properly exercise their
conversion rights.
The approval of the amendments to the amended and restated
articles of incorporation will require the affirmative vote of a
majority of the shares of Navios Acquisitions common stock
issued and outstanding as of the record date.
Abstentions
and broker non-votes
An abstention is not an affirmative vote for a respective
proposal but adds to the number of shares present in person or
by proxy, (i) will have the same effect as a vote against
the vessel acquisition proposal but will not have the effect of
converting your shares into a pro rata portion of the
trust account.
A failure to vote and broker non-votes will have no impact upon
the approval of the vessel acquisition proposal but as the
amendment proposal requires a majority of all outstanding shares
of common stock, a failure to vote and broker non-votes will
have the effect of a vote against such proposal.
Conversion
Rights
Pursuant to Navios Acquisitions amended and restated
articles of incorporation, Navios Acquisitions public
stockholders may vote against the vessel acquisition proposal
and demand that Navios Acquisition convert all (and not less
than all) of their public shares into cash at the conversion
price per share. If you properly exercise your conversion
rights, then you will be irrevocably exchanging your shares of
common stock for cash and will no longer own those shares of
common stock. Based on the amount of cash held in the trust
account as of April 7, 2010, without taking into account any
interest accrued after such date, you will be entitled to
convert each public share that you own into approximately $9.91
per share. You may only demand that Navios Acquisition convert
your shares by checking the box on the proxy card and, at the
same time, ensuring your bank or broker complies with the
requirements described elsewhere herein. You will only be
entitled to receive cash for those shares if you continue to
hold those shares through the closing date of the vessel
acquisition.
Notwithstanding the foregoing, a stockholder, together with any
affiliate of theirs or any person with whom they are acting in
concert or as a partnership, syndicate or other group for the
purpose of acquiring, holding, disposing, or voting Navios
Acquisitions securities, will be restricted from seeking
conversion rights with respect to more than 10% of the public
shares. If the vessel acquisition is not completed, then your
shares will not be converted at this time, even if you so
demanded.
If you convert your shares of common stock, you will still have
the right to exercise any warrants you own in accordance with
their terms.
Prior to exercising conversion rights, Navios Acquisition
stockholders should verify the market price of Navios
Acquisitions common stock, as they may receive higher
proceeds from the sale of their shares in the public market than
from exercising their conversion rights. The closing price of
Navios Acquisitions common stock on April 7, 2010,
the last trading day before the date of this proxy statement,
was $9.84.
20
Conversion
Procedures
If you wish to exercise your conversion rights, you must:
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affirmatively vote against approval of the vessel acquisition
proposal;
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demand that your shares of Navios Acquisition common stock be
converted into cash in accordance with the procedures described
in this proxy statement; and
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ensure that your bank or broker complies with the procedures
described in the next paragraph.
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Your bank or broker must, by 5:00 p.m., Eastern Standard
Time, on
[ ],
2010, the business day prior to the special meeting,
electronically deliver your shares to Navios Acquisitions
transfer agent using Depository Trust Companys DWAC
(Deposit Withdrawal at Custodian) System, and provide
Continental Stock Transfer & Trust Company with
the necessary stock powers, written instructions that you want
to convert your shares and a written certificate addressed to
Continental Stock Transfer & Trust Company
stating that you were the owner of such shares as of the record
date, you have owned such shares since the record date and you
will continue to own such shares through the closing of the
acquisition. If your bank or broker does not provide each of
these documents to Continental Stock Transfer &
Trust Company, 17 Battery Place, New York, NY 10004,
attention: Mark Zimkind, tel.
212-845-3287,
fax
212-616-7616,
by 5:00 p.m., Eastern Standard Time, on
[ ],
2010, the business day prior to the special meeting, your shares
will not be converted.
If you demand conversion of your shares, and later decide that
you do not want to convert such shares, your bank or broker must
make arrangements with Continental Stock Transfers &
Trust Company, at the telephone number stated above, to
withdraw the conversion. To be effective, withdrawals of shares
previously submitted for conversion must be completed prior to
the commencement of the special meeting.
Continental Stock Transfer & Trust Company can
assist with this process. We urge stockholders who may wish to
exercise their conversion rights to promptly contact the account
executive at the organization holding their account to
accomplish these additional procedures. If such stockholders
fail to act promptly, they may be unable to timely satisfy the
conversion requirements.
Any action that does not include a vote against the vessel
acquisition proposal will prevent you from exercising your
conversion rights.
Solicitation
Costs
Navios Acquisition is soliciting proxies on behalf of the Navios
Acquisition board of directors, and Navios Acquisition will pay
all costs of preparing, assembling and mailing the proxy
materials. This solicitation is being made by mail. Navios
Acquisition and its directors and officers may also solicit
proxies in person, by telephone, by fax or by other electronic
means and, in the event of such solicitations, the information
provided will be consistent with this proxy statement and
enclosed proxy card. These persons will not receive any
additional compensation for these services. Navios Acquisition
will ask banks, brokers and nominees to forward its proxy
materials to their beneficial owners and to obtain their
authority to execute proxies and voting instructions. Navios
Acquisition will reimburse them for their reasonable expenses.
We have retained the proxy-soliciting firm of Morrow &
Co., LLC to assist in the solicitation of proxies and provide
related advice and informational support, at a cost of
approximately $30,000.
Stock
Ownership
There are 31,625,000 outstanding shares of Navios Acquisition
common stock. Our common stock ownership is described elsewhere
in this proxy statement under Principal Stockholders.
21
PROPOSAL 1
THE VESSEL ACQUISITION PROPOSAL
The discussion in this proxy statement of the vessel acquisition
and the principal terms of the Acquisition Agreement, dated as
of April 8, 2010, by and between Navios Acquisition and
Navios Holdings is subject to, and is qualified in its entirety
by reference to, the Acquisition Agreement. A copy of the
Acquisition Agreement is attached as Annex A to this
proxy statement and is incorporated in this proxy statement by
this reference. See the section entitled Risk
Factors beginning on page 119 for a further
discussion of risks related to the vessel acquisition proposal.
General
Description of the Vessel Acquisition
Pursuant to the Acquisition Agreement, Navios Acquisition will
acquire 13 vessels (11 product tankers and two chemical
tankers), plus options to purchase two additional product
tankers, by purchasing the stock of the Navios Holdings
subsidiary holding directly or indirectly the rights to the
Shipbuilding Contracts or the MOAs for the vessels. The
aggregate purchase price is $457.7 million. The aggregate
fair market value of the vessels is equal at least to 80% of
Navios Acquisitions net assets (excluding deferred
underwriting discounts and commissions in the amount of
$8.9 million).
The proposed vessel acquisition consists of three separate
transactions. The largest transaction, involving nine vessels,
results from a prospective purchasers financial inability
to continue making required payments under the related nine
Shipbuilding Contracts. Our purchase price for these vessels
under the Shipbuilding Contracts reflects price concessions by
the Shipbuilder of approximately $57.3 million as compared
to the prior contract price, including a $14.6 million
credit for amounts already paid by the original purchaser. The
original purchaser (an unaffiliated party) has been released
from any obligation to make any further payment under the
original agreements and will have no rights to the Shipbuilding
Contracts. The Shipbuilder of the nine vessels is Dae Sun
Shipbuilding & Engineering Co., Ltd., a South Korean
shipyard established in 1945.
The second transaction is the acquisition of two LR1 product
tankers for $43.5 million per vessel ($87.0 million in
total) that are currently in the water and will enter time
charters upon delivery. The charters will be three-year time
charters, at a hire rate of $17,000 net per vessel per day,
or $18.6 million minimum contracted revenue, plus a 50/50
profit sharing arrangement with the charterer on charter revenue
exceeding $17,000 per day. STX Shipbuilding Co., Ltd. was the
builder of these LR1 product tankers.
The third transaction is the acquisition of two newbuild LR1
product tankers for $40.0 million per vessel
($80.0 million in total) plus two options, each of which is
exercisable until November 2010, to acquire an LR1 product
tanker for $40.5 million ($81.0 million if both
options are exercised) with delivery dates in the fourth quarter
of 2012. The Shipbuilder of these tankers (including the two
that may be purchased pursuant to the exercise of options) is
Sungdong Shipbuilding & Marine Engineering Co., Ltd.,
of South Korea.
All vessels are being designed, constructed, inspected and
tested in accordance with the rules and regulations of and under
special survey of the American Bureau of Shipping.
All of these transactions result from Navios Holdings
network of business and commercial relationships, providing
access to acquire the vessels, and Navios Holdings providing
relationships to obtain favorable debt financing for such
vessels.
Prior to the special meeting and depending on the timing of the
installments, Navios Holdings (a) may be required to fund
up to approximately $79.8 million, representing part of the
equity portion of the purchase price for the vessel acquisition,
and (b) has agreed to guarantee the debt related to the
vessel acquisition, including indebtedness to be incurred of up
to $190.3 million. If Navios Acquisitions
stockholders approve the vessel acquisition, (x) Navios
Holdings will transfer to Navios Acquisition the stock of Navios
Holdings subsidiary holding directly or indirectly the
rights to the vessels, and (y) Navios Acquisition will
guarantee approximately $334.3 million of debt financing.
The Lenders have consented to replacing Navios Holdings with
Navios Acquisition as guarantor of the Credit Agreements
guaranteed by Navios Holdings. In addition, Navios Acquisition
will also reimburse Navios Holdings for any installment payments
made or
out-of-pocket
expenses incurred by Navios Holdings prior to such stockholder
approval. If Navios Acquisition is unable to
22
obtain stockholder approval of the vessel acquisition, Navios
Holdings will consummate the acquisition of the vessels for its
own account.
After the closing, a subsidiary of Navios Holdings will provide
commercial and technical management services to Navios
Acquisitions fleet.
Background
of the Acquisition
Subsequent to the initial public offering, the officers and
directors of Navios Acquisition commenced an active search for a
business combination candidate. The effort included contacting
ship brokers, investment bankers and commercial banks and other
institutions and doing diligence on a number of fleets of
varying types and sizes and other business opportunities.
In early February 2010, a major European commercial bank
contacted Angeliki Frangou, our Chairman and Chief Executive
Officer, with a proposal for the sale of a number of newbuilding
product and chemical tankers under construction, including a
proposal for their financing. After several discussions
concerning the specifications of the vessels, the terms of the
Shipbuilding Contracts, the terms that would be made available
to Navios Acquisition, and negotiations concerning the debt
financing, Navios Acquisition determined to proceed with the
transaction.
Because the first installment payment might have been required
before the date of our stockholder meeting, Navios Holdings
agreed, as an accommodation to us and to provide certainty to
the transaction, to enter into the Shipbuilding Contracts and to
make payments in connection with the vessel acquisition pending
the approval of the vessel acquisition by the Navios Acquisition
stockholders.
During February and March, the senior management of Navios
Acquisition continued their active search for additional assets
in the product and chemical tanker sectors with a focus on such
vessels that:
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would further strengthen Navios Acquisitions balance sheet;
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provide secure revenue with creditworthy counterparties; and
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complement the existing portfolio of committed vessels within
the product tanker sector with different types and sizes of
vessels.
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This search resulted in the addition of (i) the acquisition
from the Sellers of the two LR1 product tankers for
$43.5 million per vessel and (ii) the acquisition of
two newbuild product tankers for $40.0 million per vessel,
plus the acquisition from the Sungdong Shipbuilding &
Marine Engineering Co., Ltd. of two options, each exercisable
until November 2010 to acquire an LR1 product tanker for
$40.5 million.
The initial acquisition opportunity and acquisition of
additional assets were facilitated by Navios Holdings
relationships with the major shipyards, financing banks and
other market contacts, which allowed us to identify, negotiate
and conclude within a relatively short period of time both the
purchase contracts and the required financing on favorable terms.
When we determined to proceed with the vessel acquisition, we
had already considered several other potential business
combination transactions. These candidates were in various
sectors of the shipping industry, including oil tankers,
container vessels, and drybulk carriers. All prospective
business combinations were accorded serious consideration by
Navios Acquisitions executive officers but were rejected
for a number of reasons including:
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Navios Acquisitions negative view as to prospects for the
opportunity generally, including perceptions concerning
positioning in the business cycle;
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desirability of asset pricing;
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small transaction sizes;
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uncertain corporate or financing structures;
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creditworthiness of counterparties; and
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23
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undesirable vessel ages or specifications.
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Navios Acquisitions board of directors considered a wide
variety of factors in connection with its evaluation and
recommendation to approve the vessel acquisition proposal. The
board relied on an analysis or review of various factors,
including, but not limited to, the following:
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the high quality and young age of the vessels;
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the diversity of the vessel types comprising the fleet;
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the purchase price of the vessels near historically low
(inflation-adjusted) prices;
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the availability of flexible and attractive debt financing;
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the sectors in which the vessels operate and managements
belief as to the point of the business cycle at which it is
making the acquisition;
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the strong demand for refined petroleum products (clean and
dirty) and bulk liquid chemicals in recent years by developing
countries, particularly China and India, that has resulted in
robust growth for tanker shipping, as well as increased charter
rates;
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the industry data that supported the vessel values and purchase
price; and
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the fact that the Acquisition Agreement was the result of a
comprehensive review conducted by Navios Acquisitions
board (with the assistance of its financial and legal advisors)
of the strategic alternatives available to Navios Acquisition.
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Navios Acquisitions board of directors also considered
potential risks relating to the vessel acquisition, including
the following:
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the Shipbuilders may fail to deliver a vessel or vessels to
Navios Acquisition;
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the volatility of charter rates and vessel values in the product
and chemical tanker sectors; and
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the risks and costs to Navios Acquisition if the vessel
acquisition is not completed, including the need to locate
another suitable business combination or arrangement before it
is required to liquidate.
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Navios Acquisition decided to pursue the vessel acquisition
because it concluded that:
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the product and chemical tanker sectors have favorable industry
dynamics over the long term;
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modern product and chemical tankers of the highest
specifications were available at near historically low
(inflation-adjusted) prices;
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the vessel acquisition provided a conservative entry into the
product and chemical tanker sectors with medium-size tonnage
subject to less volatility;
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the financing terms were favorable in terms of cost and
amortization, and allowed significant flexibility to Navios
Acquisition to pursue its growth strategy without restrictive
covenants that have otherwise been required by financing banks
since the beginning of the worldwide financial crisis; and
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there was an opportunity to deal with reliable counterparties
with whom Navios Holdings had successfully pursued similar deals
in the past.
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Following meetings of our board of directors on March 24
and April 6, 2010, and following receipt of a fairness
opinion from an organization affiliated with the Financial
Industry Regulatory Authority, Inc. (FINRA), the
board of directors unanimously approved the vessel acquisition.
For further potential risks relating to the vessel acquisition,
see the section entitled Risk Factors beginning on
page 119.
24
Navios
Acquisitions Reasons for the Vessel Acquisition and
Recommendation of Navios Acquisitions Board of
Directors
Navios Acquisitions board of directors has concluded that
the vessel acquisition is in the best interests of Navios
Acquisition and its stockholders and that the vessel acquisition
is fair, from a financial point of view, to Navios
Acquisitions stockholders. The board of directors based
this decision in part on a fairness opinion delivered by an
organization affiliated with the FINRA. The Navios Acquisition
board of directors also concluded that the aggregate fair market
value of the 13 vessels is equal to at least 80% of Navios
Acquisitions net assets (excluding deferred underwriting
discounts and commissions held in the trust account in the
amount of $8.9 million) at the time of the execution of the
definitive agreements for the vessel acquisition and that all
other conditions to the consummation of the vessel acquisition
set forth in the prospectus for Navios Acquisitions
initial public offering have been met. The total consideration
for the vessel acquisition is $457.7 million. Eighty
percent of Navios Acquisitions net assets, as of
April 7, 2010 (excluding deferred underwriting discounts
and commissions held in the trust account in the amount of $8.9
million) is approximately $120.7 million. Set forth below
are all of the material reasons why Navios Acquisition chose to
engage in the contemplated vessel acquisition.
Market
Opportunity
We believe that the recent financial crisis and developments in
the marine transportation industry, particularly in the product
and chemical tanker sectors, have created significant
opportunities to acquire vessels near historically low
(inflation-adjusted) prices and employ them in a manner that
will provide attractive returns on capital. We also believe that
the recent financial crisis continues to adversely affect the
availability of credit to shipping industry participants,
creating opportunities for well-capitalized companies with
committed available financing such as ours, to enter the product
and chemical tanker sectors at this advantageous time.
Relationship
with Navios Holdings
One of our key competitive advantages is our relationship with
Navios Holdings.
Navios Holdings has developed considerable experience and a
global network of relationships during its
55-year
history of investing and operating in the maritime industry. We
believe we will be able to leverage Navios Holdings global
network of relationships to source attractive acquisitions,
obtain competitive debt financing, and engage in innovative
financing (such as the mandatorily convertible preferred stock
Navios Holdings issued in acquiring certain newbuild vessels).
In addition, we believe we will be able to use Navios
Holdings established market contacts intelligence to
attract high quality charter parties and to obtain insurance
from an AA+ rated governmental agency of an European
Union member state. Furthermore, we will enter into a five-year
Management Agreement with a subsidiary of Navios Holdings,
pursuant to which such subsidiary will provide certain
commercial and technical ship management services to us.
Navios Holdings long involvement and reputation for
reliability in the Asia Pacific region have also allowed it to
develop privileged relationships with many of the largest
institutions in Asia. Through these institutional relationships,
Navios Holdings has obtained relatively low-cost, long-term
charter-in deals, with options both to extend time charters and
purchase vessels. Through its established reputation and
relationships, Navios Holdings has had access to opportunities
not readily available to most other industry participants that
lack Navios Holdings brand recognition, credibility, and
track record.
Our relationship with Navios Holdings is also expected to enable
us to access debt financing on favorable terms, as evidenced by
the approximately 73% financing of the purchase price for the
vessel acquisition and the favorable interest rates on such debt
financing, as well as flexible financial and other covenants
that will allow us to pursue our growth strategy.
25
Business
Strategy
We believe that the recent financial crisis and developments in
the marine transportation industry, particularly in the product
and chemical tanker sectors, have created significant
opportunities to acquire vessels near historically low
(inflation-adjusted) prices and employ them in a manner that
will provide attractive returns on capital. We also believe that
the recent financial crisis continues to adversely affect the
availability of credit to shipping industry participants,
creating opportunities for well-capitalized companies with
committed available financing such as ours, to enter the product
and chemical tanker sectors at this advantageous time.
Our business strategy is to develop a world-leading operator and
charterer of modern, high-quality product and chemical tankers.
Our principal focus is the transportation of refined petroleum
products (clean and dirty) and bulk liquid chemicals. We will
seek to establish a leadership position by leveraging the
established reputation of Navios Holdings for maintaining high
standards of performance, risk management, reliability and the
safety of its crews, vessels and the environment. We are
committed to creating long-term stockholder value by executing
on a growth strategy designed to maximize returns in all
economic cycles. We believe that acquiring vessels in both the
product and chemical tanker sectors will provide us with more
balanced exposure to commodities, and more diverse opportunities
to generate revenues than would a focus on any single shipping
sector. We believe the vessel acquisition will be the first step
to our becoming a world leader in these sectors. Should the
opportunity present itself, we would also consider entering the
oil tanker sector for transporting crude oil.
Our business strategy is based primarily upon the following
principles:
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Capitalize on near-historic low (inflation-adjusted) vessel
prices in building a fleet of high quality, modern,
double-hulled vessels;
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Strategically manage sector exposure in product and chemical
tankers;
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Maintain an optimum charter mix;
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Maintain a strong balance sheet and flexible capital structure;
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Implement and sustain a competitive cost structure; and
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Leverage the experience, brand name, global network of
relationships and risk management expertise of Navios Holdings.
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Capitalize
on Near-Historic Low (Inflation-Adjusted) Vessel
Prices
We intend to grow our fleet using Navios Holdings global
network of relationships and long experience in the marine
transportation industry, coupled with our financial resources
and financing capability, to make selective acquisitions of
young, high quality, modern, double-hulled vessels in the
product and chemical tanker sectors. Vessel prices in these
sectors have been severely affected by the continuing scarcity
of debt financing available to shipping industry participants
resulting from the recent worldwide financial crisis and because
of the depressed charter rates for tankers that have persisted
since the fall of 2008. We believe the most attractive
opportunity in the maritime industry is acquiring modern tonnage
in the product and chemical tanker sectors that are currently at
cyclically low levels.
Strategically
Manage Sector Exposure
We intend to operate a fleet of product and chemical tankers, as
we believe that operating a fleet that carries refined petroleum
products (clean and dirty) and bulk liquid chemicals provides us
with diverse opportunities with a range of producers and
consumers. As we grow our fleet, we expect to adjust our
relative emphasis among the product and chemical tanker sectors
over time according to our view of the relative opportunities in
these sectors. We believe that having a mixed fleet of product
and chemical tankers will give us the flexibility to adapt to
changing market conditions, to capitalize on sector-specific
opportunities and to
26
manage our business successfully throughout varying economic
cycles. We will also consider entering the crude oil
transportation sector opportunistically.
Maintain
Optimum Charter Mix
Depending on market conditions, we intend to deploy our vessels
to leading charterers on a mix of short-, medium- and long-term
time charters, including spot charters. We believe that this
chartering strategy will afford us opportunities to capture
increased profits during strong charter markets, while
benefiting from the relatively stable cash flows and high
utilization rates associated with longer term time charters. We
will also seek profit sharing arrangements in our long-term time
charters, to provide us with potential incremental revenue above
the contracted minimum charter rates in the event of a strong
spot market. We initially intend to limit the duration of the
charters for the newbuilding product and chemical tankers we
expect to acquire, as we believe this will give us the
flexibility to take advantage of rising charter rates if the
charter markets improve as the global economy strengthens.
Maintain
a Strong Balance Sheet and Flexible Capital
Structure
We believe our strong balance sheet and relationships with
commercial and other banks provide significant financial
flexibility. We have been able to fund approximately 73% of the
vessel acquisition purchase price through favorable long-term
financing. This financial flexibility permits us to pursue
attractive business opportunities.
The $457.7 million aggregate purchase price of the vessels
will be paid in several installments. The first installment of
$191.8 million will require $30.1 million of equity,
and $161.7 million from debt financing. The
$265.9 million balance will be paid as vessels are
delivered. Of this amount, approximately $172.6 million
will be financed from debt financing and the $93.3 million
balance will be funded from available cash. Thus, after giving
effect to the first installment, payment of deferred
underwriters fees (approximately $8.9 million), and
estimated transaction expenses (approximately $1.6 million), we
will have a cash balance of $208.3 million (assuming no
conversion of shares and no Forward Contracts transactions),
which will be available for us to implement our growth strategy.
We expect that our strong balance sheet and significant cash
balances will allow competitive bank financing for acquisitions.
As a result, we believe we will be well-positioned to grow our
fleet by pursuing selective acquisitions of product and chemical
tankers.
Implement
and Sustain a Competitive Cost Structure
Pursuant to the Management Agreement and Administrative Services
Agreement (as more fully described below under
Proposal 1 The Vessel Acquisition
Proposal), a subsidiary of Navios Holdings will coordinate
and oversee the commercial, technical and administrative
management of our fleet. We believe that such subsidiary of
Navios Holdings will be able to do so at rates competitive with
those that would be available to us through independent vessel
management companies. We believe this external management
arrangement will enhance the scalability of our business by
allowing us to grow our fleet without incurring significant
additional overhead costs.
We believe that we will be able to leverage the economies of
scale of Navios Holdings and manage operating and maintenance
costs. At the same time, we believe the young age and high
quality of the vessels in our fleet, coupled with Navios
Holdings safety and environmental record, will position us
favorably within the product and chemical tanker sectors with
our customers and for future business opportunities.
Leverage
Navios Holdings Experience, Brand, Network and Risk
Management Expertise
Experience
and Relationships
We intend to capitalize on the global network of relationships
that Navios Holdings has developed during its long history of
investing and operating in the marine transportation industry.
This includes decades-long relationships with leading
charterers, financing sources and key shipping industry players.
When charter markets and vessel prices are depressed and vessel
financing is difficult to obtain, as is currently the case, we
believe the relationships and experience of Navios Holdings and
its management enhances our ability to acquire young,
technically advanced vessels at cyclically low prices and employ
them under attractive charters with leading charterers.
27
Navios Holdings long involvement and reputation for
reliability in the Asia Pacific region have also allowed it to
develop privileged relationships with many of the largest
institutions in Asia. Through these institutional relationships,
Navios Holdings has obtained relatively low-cost, long-term
charter-in deals, with options to extend time charters and
options to purchase the majority of the vessels. Through its
established reputation and relationships, Navios Holdings has
had access to opportunities not readily available to most other
industry participants that lack Navios Holdings brand
recognition, credibility, and track record.
Access to
Attractive Debt Financing
We believe that our relationship with Navios Holdings will
enable us to access favorable debt financing, as evidenced by
the Credit Agreements, which contain favorable features,
including:
Advanced
Rate
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73% financing of the aggregate purchase price of the vessels;
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Interest
Rate
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for $334.3 million of the debt, interest margin ranging from
2.50% to 2.75% over the applicable base rate;
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Term
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six-year term for $277.0 million of debt;
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Favorable
Amortization
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for $225.0 million of the debt, approximately
17-year
amortization profile ($16.0 million balloon payment per
vessel against a loan of $25.0 million per vessel);
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for $52.0 million installment, approximately 14.5-year
amortization profile ($15.24 million balloon payment per
vessel against a loan of $26.0 million per vessel);
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Favorable
Covenants
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loan to value ratio covenants (post-delivery of vessel)
initially of 125%;
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financial covenants generally inapplicable until after delivery
of the vessels;
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ability to distribute up to 50% of net profits; and
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no negative covenants restricting the incurrence of additional
debt or preventing us from acquiring additional vessels.
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The above reflects three
six-year
term loans (one of which is in advanced stages of negotiation)
for an aggregate of $277.0 million of indebtedness, and a
two-year,
$57.3 million revolving credit facility for general corporate
purposes, repayable in one installment in March 2012 (with
available
one-year
extensions). The covenants described above apply only to the
term loans of $225.0 million. See Managements
Discussion and Analysis of Financial Condition and Results of
Operations Recent Developments for a more
detailed discussion of the Credit Agreements.
See the section entitled Risk Factors beginning on
page 119 for a discussion of risks associated with our debt
financing.
Benefit
from Navios Holdings Leading Risk Management
Practices
Risk management requires the balancing of a number of factors in
a cyclical and potentially volatile environment. Fundamentally,
the challenge is to appropriately allocate capital to competing
opportunities of owning or chartering vessels. In part, this
requires a view of the overall health of the market, as well as
an understanding of capital costs and returns. Navios Holdings
actively engages in assessing financial and other risks
associated with fluctuating market rates, fuel prices, credit
risks, interest rates and foreign exchange rates.
Navios Holdings closely monitors credit exposure to charterers
and other counterparties. Navios Holdings has established
policies designed to ensure that contracts are entered into with
counterparties that have appropriate credit history.
Counterparties and cash transactions are limited to high-credit,
quality-collateralized corporations and financial institutions.
Navios Holdings has strict guidelines and policies that are
designed to limit the amount of credit exposure. Most
importantly, Navios Holdings has insured its charter-out
contracts through a AA+ rated
28
governmental agency of an European Union member state, which
provides that if the charterer goes into payment default, the
insurer will reimburse us for the charter payments under the
terms of the policy for the remaining term of the charter-out
contract (subject to applicable deductibles and other customary
limitations for insurance). Navios Acquisition will benefit from
these established policies, as well as seek to benefit from the
credit risk insurance available to Navios Holdings, although no
assurance can be provided that it will so qualify.
Reasons
for Entering the Product and Chemical Tanker Sectors
We believe that the product and chemical tanker sectors are
attractive because of the current opportunity to acquire tankers
in those sectors near historically low (inflation-adjusted)
prices, and given the likely future demand for these services.
The recent financial turmoil, and the more restrictive lending
practices that have resulted, has had a significant impact on
new vessel pricing. As can be seen in the charts below, newbuild
product tanker values have declined significantly from the
recent peak in 2008, with newbuild tanker values for 50,000
deadweight ton vessels declining from an average of
$52.1 million in 2008 to $34.5 million in 2010.
Chemical tanker prices are also near their inflation-adjusted
historical low, with newbuild tanker values for 25,000 dwt
vessels declining to $42.0 million in 2010.
Product
Tankers Newbuild Pricing
(50,000 dwt)
Source:
Drewry
Chemical
Tankers Newbuild Pricing
(25,000 dwt)
Source:
Drewry
Product and chemical tankers are also attractive sectors because
of the significant growth in demand during the period between
2000 through 2009 and the macro drivers suggesting continued
growth as the global recession eases. During the period between
2000 through 2009, demand for transporting refined petroleum
29
products increased by almost 110%, or a compound annual growth
rate of about 8.6%. The demand for transporting bulk liquid
chemicals increased during this same period by approximately
5.7% annually. Emerging markets were significant demand drivers
for both sectors and are expected to continue as emerging
markets, particularly Asia and the Middle East, build
refineries. As the global economies exit the recent recession,
emerging markets and countries of the Organization for Economic
Co-operation and Development (OECD) will likely
create significant additional demand for tanker services.
We believe as the global market improves, we will be positioned
to take advantage of accompanying rate increases.
The
Vessel Acquisition Agreements
The summary of the material terms of the Acquisition Agreement
and related agreements, the Management Agreement, the
Acquisition Omnibus Agreement, and the Administrative Services
Agreement appearing below and elsewhere in this proxy statement
is subject to the terms and conditions of all such agreements,
forms of which are attached to this proxy statement as
Annex A through Annex H. These summaries
may not contain all of the information about the foregoing
agreements that is important to you. We encourage you to read
carefully all such agreements in their entirety.
The
Acquisition Agreement
As more fully described above under the caption
General Description of the Vessel
Acquisition, pursuant to the Acquisition Agreement, Navios
Acquisition, will acquire 13 vessels (11 product tankers
and two chemical tankers), plus options to purchase two
additional product tankers, by purchasing the stock of the
Navios Holdings subsidiary holding directly or indirectly the
rights to the Shipbuilding Contracts or the MOAs for the
vessels, for an aggregate purchase price of $457.7 million.
Prior to the special meeting and depending on the timing of the
installments, Navios Holdings (a) may be required to fund
up to approximately $79.8 million, representing part of the
equity portion of the purchase price for the vessel acquisition,
and (b) has agreed to guarantee the debt related to the
vessel acquisition, including indebtedness to be incurred of up
to $190.3 million. To the extent Navios Holdings has made
payments in connection with the vessel acquisition, Navios
Acquisition will reimburse Navios Holdings for any such payments
upon approval of the vessel acquisition proposal. Following the
vessel acquisition, Navios Holdings will have no further
liability under the Credit Agreements, the Shipbuilding
Contracts or the MOAs.
The construction and delivery of 11 of the vessels are governed
by the terms and conditions of the respective Shipbuilding
Contract. Each of the contracts includes customary terms and
provisions for (a) the description of each vessel,
(b) the payment terms, (c) approval of plans and
drawings, (d) inspection during construction, (e) sea
trials, (f) delivery condition, and (g) termination of
the contracts. The purchase price of the vessels under
construction is payable in installments that are connected with
certain shipbuilding milestones and upon delivery of each
vessel. The remaining two vessels are governed by the terms and
conditions of the MOAs. Upon signing of the MOAs, 10% of the
purchase price thereunder is payable, and the balance of 90% is
payable upon delivery of the vessels.
Information about the 15 vessels that are part of the vessel
acquisition (including the vessels subject to the two options),
and the purchase price payable by the nominated subsidiaries
under the Shipbuilding Contracts and MOAs, are described in the
table below:
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Type
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DWT
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Delivery
Date(1)
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Purchase Price
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LR1 Product Tanker
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74,671
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May 2010
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$43.5 million
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LR1 Product Tanker
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74,671
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May 2010
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$43.5 million
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Chemical Tanker
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25,000
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9/30/2010
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$28.7 million
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Chemical Tanker
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25,000
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11/30/2010
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$28.7 million
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LR1 Product Tanker
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75,000
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Q4 2011
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$40.0 million
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LR1 Product Tanker
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75,000
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Q4 2011
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$40.0 million
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MR2 Product Tanker
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50,000
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Q1 2012
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$33.6 million
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MR2 Product Tanker
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50,000
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Q2 2012
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$33.6 million
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30
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Type
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DWT
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Delivery
Date(1)
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Purchase Price
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MR2 Product Tanker
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50,000
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Q3 2012
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$33.6 million
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MR2 Product Tanker
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50,000
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Q3 2012
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$33.6 million
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MR2 Product Tanker
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50,000
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Q4 2012
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$32.9 million
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MR2 Product Tanker
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50,000
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Q4 2012
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$32.9 million
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MR2 Product Tanker
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50,000
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Q4 2012
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$32.9 million
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Options
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LR1 Product Tanker
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75,000
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Q4 2012(2)
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$40.5
million(2)
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LR1 Product Tanker
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75,000
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Q4 2012(2)
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$40.5
million(2)
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(1) |
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Estimated. |
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(2) |
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Subject to the exercise by Navios Acquisition of an option to
acquire the vessel which expires in November 2010. |
The
Management Agreement
As more fully described above under the caption Navios
Acquisition Management and Operations After the Business
Combination The Management Agreement, at the
closing of the vessel acquisition, we will enter into a
five-year Management Agreement with a subsidiary of Navios
Holdings, pursuant to which such subsidiary will provide certain
commercial and technical ship management services to us,
including commercial and technical management of vessels, vessel
maintenance and crewing, supply purchasing and insurance
arrangement.
The
Administrative Services Agreement
As more fully described above under the caption Navios
Acquisition Management and Operations After the Business
Combination The Administrative Services
Agreement, at the closing of the vessel acquisition, we
will enter into a five-year Administrative Services Agreement
with a subsidiary of Navios Holdings, pursuant to which it will
provide certain administrative management services to us,
including bookkeeping, audit and accounting services; legal and
insurance services; administrative and clerical services;
banking and financial services; advisory services; and client
and investor relationship management.
The
Acquisition Omnibus Agreement
As more fully described above under the caption Navios
Acquisition Management and Operations After the Business
Combination The Acquisition Omnibus Agreement,
at the closing of the vessel acquisition, we will enter into the
Acquisition Omnibus Agreement with Navios Holdings, our
principal stockholder, and Navios Partners, another New York
Stock Exchange publicly traded company sponsored by Navios
Holdings, pursuant to which, subject to certain limited
exceptions, Navios Acquisition will have a priority to own,
charter-in or acquire Liquid Shipment Vessels (as defined in the
Acquisition Omnibus Agreement) and Navios Holdings and Navios
Partners will have first right to Drybulk Carriers (as defined
in the Acquisition Omnibus Agreement).
Anticipated
Accounting Treatment
The acquisition of the 13 vessels by Navios Acquisition
will be accounted for as an asset acquisition. The initial
measurement of the asset acquisition will be based upon the fair
value of the consideration exchanged.
Deferred
Underwriting Fees for Navios Acquisitions Initial Public
Offering
In connection with Navios Acquisitions initial public
offering, the underwriters agreed to defer fees equal to 3.5% of
the gross proceeds from the sale of the units to the public
stockholders, or $8,855,000, until the consummation of Navios
Acquisitions initial business combinations. S. Goldman
Advisors LLC may act as a proxy solicitor for Navios
Acquisition, for which it may receive a separate fee that has
not yet been negotiated. Except as described in the prior
sentence and with respect to any fees received for purchases
made during the buyback period, the underwriters will not
receive any additional compensation in connection with the
proposed acquisition.
31
Interests
of Navios Acquisitions Directors and Officers in the
Acquisition
In considering the recommendation of the board of directors of
Navios Acquisition to vote for the vessel acquisition proposal,
you should be aware that certain of Navios Acquisitions
directors and officers have interests in the acquisition that
differ from, or are in addition to, those of Navios Acquisition
stockholders generally. See Certain Relationships and
Related Party Transactions Conflicts of
Interest and Risk Factors. In particular:
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Navios Holdings owns approximately 19.1% of our outstanding
shares of common stock and warrants to purchase an aggregate of
13,925,000 shares of our common stock at an exercise price
of $7.00 per share. These warrants become exercisable only upon
our consummation of a business combination and Navios Holdings
shares of our common stock will be released from escrow only if
a business combination is successfully completed. In addition,
Navios Holdings will earn fees through arrangements between us
and one of its subsidiaries for providing commercial and
technical ship management services. Thus, as discussed below,
our board may have a conflict of interest in determining whether
a particular target acquisition is appropriate to effect a
business combination.
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All of Navios Holdings investment in us will be lost if we
do not consummate a business combination. Such investment is
comprised of consideration paid for the sponsor units and
sponsor warrants. These amounts are in addition to (i) fees
and expenses for our dissolution and liquidation, which Navios
Holdings has agreed to pay in the event we do not have
sufficient funds outside of the trust account to pay for such
expenses, and (ii) claims made against the trust account by
creditors who have not executed waivers of claims.
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Navios Holdings and an affiliate of Angeliki Frangou have agreed
to acquire through J.P. Morgan Securities Inc., or a third
party, $60.0 million of Navios Acquisitions common
stock in open market purchases or privately negotiated
purchases. Of this amount, Navios Holdings has agreed to
purchase up to $45.0 million, and an affiliate of Angeliki
Frangou has agreed to purchase up to $15.0 million of
common stock. Navios Holdings and Angeliki Frangou, or their
respective affiliates, may make purchases in excess of such
amounts. Share purchases may commence two business days after
Navios Acquisition files a preliminary proxy statement with the
Securities Exchange Commission (SEC) and will end on
the date of the special stockholders meeting (the buyback
period). If at least $30.0 million is not spent by
Navios Holdings in making such purchases, Navios Holdings will
invest the difference in Navios Acquisition at $9.91 per
share immediately before consummating the vessel acquisition.
Other affiliates may make such purchases as well. Any such
purchases will be made in compliance with all applicable
securities laws. Navios Holdings, Angeliki Frangou, our other
officers and directors,
and/or their
respective affiliates, have agreed to vote all of such shares
acquired by them in such purchases in favor of the vessel
acquisition proposal. The commitment described above is in
substitution for a $30.0 million commitment made by
Angeliki Frangou in connection with our initial public offering.
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In addition, Navios Acquisition, the initial stockholders
(including Navios Holdings) and their respective affiliates may
purchase, or negotiate Forward Contracts to provide for the
purchase of, public shares from holders who indicate their
intention to vote against the vessel acquisition proposal and
seek conversion, or who otherwise wish to sell their public
shares. Any such open market purchases would be made in private
transactions in specific individual instances with institutional
or sophisticated investors, and carried out in full compliance
with applicable state laws and federal securities laws. It is
anticipated that Navios Acquisition would approach a limited
number of its large stockholders that have voted against the
vessel acquisition proposal and demanded conversion of their
shares, or that have indicated an intention to do so, and engage
in direct negotiations for the purchase of such holders
positions. Arrangements of such nature would only be entered
into and effected in accordance with applicable law at a time
when Navios Acquisition, the initial stockholders
and/or their
respective affiliates are not aware of any material nonpublic
information regarding Navios Acquisition and its securities or
pursuant to Forward Contracts between the buyer and seller of
such shares in a form that would not violate insider trading
rules. Definitive arrangements have not yet been determined but
might include the arrangements described under
Definitions Forward Contracts.
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32
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Angeliki Frangou and Ted C. Petrone are officers and directors
of both Navios Holdings and Navios Acquisition. Under Marshall
Islands law, each of these individuals has a fiduciary duty to
us, and not to Navios Holdings or any of our other stockholders
or affiliates, in acting as our officer
and/or
director. These fiduciary duties include the duty of loyalty,
which requires that an officer or director must exercise his or
her powers in good faith in the best interests of the
corporation he or she serves and not in the directors or
officers own interest or in the interest of another person
or an organization with which the officer or director is
associated. Thus, except for the significant, indirect influence
as it may derive from the overlap in our management or being a
principal stockholder of Navios Acquisition, Navios Holdings is
not entitled to any input or influence with respect to our
affairs.
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The table below shows the dollar value and the unrealized profit
on all of the shares and warrants currently owned by Navios
Holdings, our directors and officers, based on closing prices of
our common stock and warrants of $9.84 and $0.68, respectively,
as of April 7, 2010. The portion of the table below headed
Common Stock does not include the common stock
underlying warrants covered in the portion of the table below
headed Warrants.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock
|
|
|
Warrants
|
|
|
|
|
|
|
Amount
|
|
|
Current
|
|
|
Unrealized
|
|
|
|
|
|
Amount
|
|
|
Current
|
|
|
Unrealized
|
|
|
|
Owned
|
|
|
Paid(2)
|
|
|
Value(2)
|
|
|
Profit(2)
|
|
|
Owned
|
|
|
Paid(2)
|
|
|
Value(2)(3)(4)
|
|
|
Profit(2)
|
|
|
Navios Maritime Holdings
Inc.(1)
|
|
|
6,035,000
|
|
|
$
|
25,000
|
|
|
$
|
59,384,400
|
|
|
$
|
59,359,400
|
|
|
|
13,635,000
|
|
|
$
|
7,600,000
|
|
|
$
|
38,723,400
|
|
|
$
|
31,123,400
|
|
Angeliki Frangou
|
|
|
200,000
|
|
|
|
|
|
|
|
1,968,000
|
|
|
|
1,968,000
|
|
|
|
200,000
|
|
|
|
|
|
|
|
568,000
|
|
|
|
568,000
|
|
Ted C. Petrone
|
|
|
50,000
|
|
|
|
|
|
|
|
492,000
|
|
|
|
492,000
|
|
|
|
50,000
|
|
|
|
|
|
|
|
142,000
|
|
|
|
142,000
|
|
Nikolaos Veraros
|
|
|
10,000
|
|
|
|
|
|
|
|
98,400
|
|
|
|
98,400
|
|
|
|
10,000
|
|
|
|
|
|
|
|
28,400
|
|
|
|
28,400
|
|
Julian David Brynteson
|
|
|
15,000
|
|
|
|
|
|
|
|
147,600
|
|
|
|
147,600
|
|
|
|
15,000
|
|
|
|
|
|
|
|
42,600
|
|
|
|
42,600
|
|
John Koilalous
|
|
|
15,000
|
|
|
|
|
|
|
$
|
147,600
|
|
|
$
|
147,600
|
|
|
|
15,000
|
|
|
|
|
|
|
$
|
42,600
|
|
|
$
|
42,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
6,325,000
|
|
|
$
|
25,000
|
|
|
$
|
62,238,000
|
|
|
$
|
62,213,000
|
|
|
|
13,925,000
|
|
|
$
|
7,600,000
|
|
|
$
|
39,547,000
|
|
|
$
|
31,947,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Navios Holdings is a U.S. public company controlled by its board
of directors, which consists of the following seven members:
Angeliki Frangou (our Chairman and Chief Executive Officer),
Vasiliki Papaefthymiou, Ted C. Petrone (our president), Spyridon
Magoulas, John Stratakis and Allan Shaw. In addition, we have
been informed by Navios Maritime Holdings Inc. that, based upon
documents filed with the SEC that are publicly available, it
believes that the beneficial owners of greater than 5% of the
common stock of Navios Holdings are: Angeliki Frangou, who has
filed a Schedule 13D amendment indicating that she intends,
subject to market conditions, to purchase up to
$20.0 million of common stock of Navios Holdings, and, as
of October 10, 2005, she had purchased approximately
$10.0 million worth of common stock. Any such additional
purchases would change the percentage owned by the initial
stockholders and Ms. Frangou (23.2%) and FMR LLC (6.8%). We
have been informed by Navios Holdings that, other than Angeliki
Frangou, the President, Chief Executive Officer and a director
of Navios Maritime Holdings Inc., no beneficial owner of greater
than 5% of Navios Holdings common stock is an affiliate of
Navios Holdings. |
|
(2) |
|
These amounts are rounded to the nearest dollar. |
|
(3) |
|
The current value of the warrants represents their intrinsic
value (share price less exercise price). |
|
(4) |
|
These warrants have an exercise price of $7.00 per share. |
|
(5) |
|
Based on the closing sale price on the New York Stock Exchange
on April 7, 2010. |
If a business combination is not consummated within the required
time period and Navios Acquisition is dissolved, the value of
each of the shares and warrants set forth in the table above
would be $0.
|
|
|
|
|
If Navios Acquisition dissolves and liquidates prior to the
consummation of a business combination, Navios Holdings,
pursuant to a written agreement executed in connection with the
initial public offering, will be personally liable to ensure
that the proceeds in the trust account are not reduced by the
claims of any vendor or other party with which Navios
Acquisition has contracted for services rendered or products
sold to Navios Acquisition and claims of target businesses to
the extent such claim actually reduces the amount of funds in
the trust account. However, Navios Holdings has agreed to
indemnify
|
33
|
|
|
|
|
only if such party has not executed a valid and enforceable
waiver of any rights or claims to the trust account. This
agreement was entered into to reduce the risk that, in the event
of Navios Acquisitions dissolution and liquidation, the
trust account is reduced by claims of creditors. However, we
cannot assure you that Navios Holdings will be able to satisfy
these indemnification obligations. If the vessel acquisition is
completed, such obligations will terminate.
|
|
|
|
|
|
Because each of our independent directors will be entitled to
receive $50,000 in cash per year for their board service,
accruing pro rata from the start of their service on our
board of directors and payable only upon the successful
completion of a business combination, the financial interest of
our independent directors could influence their motivation in
selecting a target business. Therefore, the financial interests
of such individuals may influence their motivation to support
the vessel acquisition and determination as to whether the
vessel acquisition is in our stockholders best interest.
If conflicts arise, they may not necessarily be resolved in our
favor.
|
|
|
|
In addition, if we are unable to obtain stockholder approval of
the vessel acquisition, Navios Holdings will proceed with its
acquisition of such vessels on the same terms and conditions as
set forth in the Acquisition Agreement, including the purchase
price.
|
|
|
|
At the closing of the vessel acquisition, Navios Acquisition
will enter into agreements with Navios Holdings and its
affiliates that are based on substantially similar agreements
with Navios Partners, another of Navios Holdings sponsored
public companies. Such agreements include: a Management
Agreement, pursuant to which a subsidiary of Navios Holdings
will provide the vessels owned by Navios Acquisition with
commercial and technical ship management services; an
Administrative Services Agreement, pursuant to which a
subsidiary of Navios Holdings will provide the vessels owned by
Navios Acquisition with certain administrative, back office and
advisory services; and the Acquisition Omnibus Agreement among
Navios Acquisition, Navios Holdings and Navios Partners,
pursuant to which Navios Acquisition will be granted a right of
first refusal for business opportunities with Liquid Shipment
Vessels (as defined in the Acquisition Omnibus Agreement), and
Navios Holdings and Navios Partners will be granted a right of
first refusal for business opportunities in the drybulk sector
of the shipping industry, subject to certain permitted
exceptions as outlined in the Acquisition Omnibus Agreement. For
more information on these agreements, please see the section
entitled Proposal 1 The Vessel
Acquisition Proposal The Vessel Acquisition
Agreements and review the agreements attached hereto as
Annexes F, G and H, respectively.
|
Required
Vote
The vessel acquisition will be approved if: (a) a majority
of the shares of Navios Acquisitions common stock issued
in its initial public offering and outstanding as of the record
date that are present or represented at the meeting vote in
favor of the vessel acquisition proposal, and (b) no more
than approximately 39.99% of the public stockholders (or
10,119,999 shares) both vote against the vessel acquisition
proposal and properly exercise their conversion rights.
If you abstain your vote, it will have the same effect as a vote
against the vessel acquisition proposal but will not have the
effect of converting your shares into a pro rata portion
of the trust account in which a substantial portion of Navios
Acquisitions initial public offering and held, unless an
affirmative election voting against the vessel acquisition
proposal is made and an affirmative election to convert such
shares of common stock is made on the proxy card.
If your broker holds your shares in its name and you do not give
the broker voting instructions, your broker cannot vote your
shares. Broker non-votes are not deemed to be present and
represented and are not entitled to vote, and, therefore, will
have no effect on the outcome of this proposal.
Recommendation
After careful consideration of the terms and conditions of the
proposed vessel acquisition, the board of directors of Navios
Acquisition has determined that the vessel acquisition and the
transactions contemplated
34
thereby are in the best interests of Navios Acquisition and its
stockholders and that the vessel acquisition is fair, from a
financial point of view, to its stockholders. Navios
Acquisitions board of directors unanimously recommends
that you vote or give instructions to vote
FOR the vessel acquisition proposal.
NAVIOS HOLDINGS BELIEVES THAT THE VESSEL ACQUISITION IS A
VALUABLE OPPORTUNITY; IF THE STOCKHOLDERS OF NAVIOS ACQUISITION
DO NOT APPROVE THE VESSEL ACQUISITION, NAVIOS HOLDINGS WILL
CONSUMMATE THE ACQUISITION OF THE VESSELS FOR ITS OWN
ACCOUNT.
The foregoing discussion of the information and factors
considered by the Navios Acquisition board of directors is not
meant to be exhaustive, but includes the material information
and factors considered by Navios Acquisitions board of
directors.
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE
FOR THE VESSEL ACQUISITION PROPOSAL.
35
PROPOSAL 2
THE AMENDMENT PROPOSAL
Background
This proposal to amend our amended and restated articles of
incorporation is conditioned upon and subject to the approval of
the vessel acquisition proposal.
The amendment proposal, if approved, will provide for the
amendment of Navios Acquisitions amended and restated
articles of incorporation to:
|
|
|
|
|
change the period of its corporate existence to
perpetual; and
|
|
|
|
delete the preamble and sections A through E, inclusive, of
Article Sixth and to redesignate section F of
Article Sixth as Article Sixth, as such provisions
will no longer be applicable to Navios Acquisition after the
business combination.
|
In the judgment of Navios Acquisitions board of directors,
the amendment proposal is desirable for the following reasons:
|
|
|
|
|
The present amended and restated articles of incorporation
provides that Navios Acquisitions corporate existence will
terminate on July 1, 2010. In order to continue in
existence after the consummation of the vessel acquisition
subsequent to such date, this provision must be amended.
Perpetual existence is the usual period of existence for
corporations and Navios Acquisitions board of directors
believes it is the most appropriate period for its existence
following the vessel acquisition.
|
|
|
|
The preamble and sections A through E of the present
Article Sixth relate to the operation of Navios Acquisition
as a blank check company prior to the consummation of its
initial business combination and will not be applicable after
consummation of the vessel acquisition. Accordingly, they will
serve no further purpose.
|
If the amendment proposal is approved, Navios Acquisitions
amended and restated articles of incorporation that will be in
the form as attached hereto as Annex I.
Required
Vote
The approval of the amendments to the amended and restated
articles of incorporation requires the affirmative vote of
holders of at least a majority of the outstanding shares of our
common stock. If you abstain your vote will be treated as a vote
against this proposal. If your broker holds your shares in its
name and you do not give the broker voting instructions, your
broker cannot vote your shares. Broker non-votes are not deemed
to be present and represented and are not entitled to vote, and
like failing to vote, will have no effect on this proposal.
Recommendation
The board of directors believes that it is in the best interests
of Navios Acquisition that the stockholders approve the proposal
to authorize the board of directors to amend our articles of
incorporation.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS OF
NAVIOS ACQUISITION VOTE FOR THE AMENDMENT
PROPOSAL TO AUTHORIZE THE BOARD OF DIRECTORS, IN ITS
DISCRETION, TO AMEND NAVIOS ACQUISITIONS AMENDED AND
RESTATED ARTICLES OF INCORPORATION.
36
THE
INTERNATIONAL PRODUCT AND CHEMICAL TANKER SECTORS OF
THE SHIPPING INDUSTRY
The information and data contained in this section relating
to the international product and chemical tanker shipping
industries has been provided by Drewry, and is taken from
Drewrys database and other sources available in the public
domain. We do not have any knowledge that the information
provided by Drewry is inaccurate in any material respect. Drewry
has advised us that (i) some information in Drewrys
database is derived from estimates or subjective judgments,
(ii) the information in the databases of other maritime
data collection agencies may differ from the information in
Drewrys database, and (iii) while Drewry has taken
reasonable care in the compilation of the statistical and
graphical information and believes it to be accurate and
correct, data compilation is subject to limited audit and
validation procedures and may accordingly contain errors. The
source of all tables and charts in this section is Drewry unless
otherwise indicated.
Introduction
The seaborne transportation industry is a vital link in
international trade, with oceangoing vessels representing the
most efficient, and often the only means of transporting large
volumes of basic commodities and finished products. Seaborne
cargo is broadly categorized as either liquid or dry cargo.
Liquid cargo includes crude oil, refined petroleum products,
bulk liquid chemicals, vegetable oils, and liquefied gases. Dry
cargo includes drybulk cargo, container cargo, non-container
cargo and other cargo.
The following table presents the breakdown of global seaborne
trade by type of cargo in 2000 and 2009.
World
Seaborne Trade: 2000 & 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CAGR(1)
|
|
|
|
|
|
|
Trade Tons
|
|
|
2000-09
|
|
|
% Total Trade
|
|
|
|
2000
|
|
|
2009
|
|
|
%
|
|
|
2000
|
|
|
2009
|
|
|
Liquid Cargo
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crude Oil
|
|
|
1,661
|
|
|
|
1,952
|
|
|
|
1.81
|
|
|
|
28.2
|
|
|
|
24.8
|
|
Refined Petroleum Products
|
|
|
451
|
|
|
|
724
|
|
|
|
5.40
|
|
|
|
7.6
|
|
|
|
9.2
|
|
Liquid Chemicals
|
|
|
128
|
|
|
|
211
|
|
|
|
5.68
|
|
|
|
2.2
|
|
|
|
2.7
|
|
Liquefied Gases
|
|
|
168
|
|
|
|
258
|
|
|
|
4.91
|
|
|
|
2.8
|
|
|
|
3.3
|
|
Total Liquid Cargo
|
|
|
2,408
|
|
|
|
3,145
|
|
|
|
3.01
|
|
|
|
40.8
|
|
|
|
39.9
|
|
Dry Cargo
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Major Bulks
|
|
|
1,249
|
|
|
|
1,894
|
|
|
|
4.73
|
|
|
|
21.2
|
|
|
|
24.0
|
|
Iron Ore
|
|
|
489
|
|
|
|
928
|
|
|
|
7.37
|
|
|
|
8.3
|
|
|
|
11.8
|
|
Coal
|
|
|
539
|
|
|
|
753
|
|
|
|
3.78
|
|
|
|
9.1
|
|
|
|
9.6
|
|
Grain
|
|
|
221
|
|
|
|
213
|
|
|
|
(0.43
|
)
|
|
|
3.8
|
|
|
|
2.7
|
|
Minor Bulks
|
|
|
901
|
|
|
|
1,076
|
|
|
|
1.98
|
|
|
|
15.3
|
|
|
|
13.6
|
|
Total Drybulk
|
|
|
2,151
|
|
|
|
2,969
|
|
|
|
3.65
|
|
|
|
36.5
|
|
|
|
37.6
|
|
Container Cargo
|
|
|
620
|
|
|
|
1,183
|
|
|
|
7.43
|
|
|
|
10.5
|
|
|
|
15.0
|
|
Non-container/General Cargo
|
|
|
720
|
|
|
|
590
|
|
|
|
(2.19
|
)
|
|
|
12.2
|
|
|
|
7.5
|
|
Total Dry Cargo
|
|
|
3,491
|
|
|
|
4,742
|
|
|
|
3.46
|
|
|
|
59.2
|
|
|
|
60.1
|
|
Total Seaborne Trade
|
|
|
5,899
|
|
|
|
7,887
|
|
|
|
3.28
|
|
|
|
100.0
|
|
|
|
100.0
|
|
|
|
|
(1) |
|
Compound annual growth rate. |
In 2009, approximately 7.9 billion tons of cargo of all
types was transported by sea, compared with 5.9 billion
tons in 2000. Over this period the compound average annual
growth rate (CAGR) in seaborne trade was 3.3%.
37
Refined
Petroleum Products
Refined petroleum products are oil-based products, which can be
obtained from primary distillation of crude oil and are normally
used outside the refinery industry. The main products are
sometimes classed as clean gasoline,
kerosene, gas/diesel oil and naphtha, while dirty
products consist of fuel oil, bitumen, and paraffin waxes. Both
clean and dirty products are carried mainly in dedicated product
tankers, although crude oil tankers can carry fuel oil.
World Oil
Demand and Supply
Demand for crude oil and refined petroleum products is in turn
affected by a number of factors including general economic
conditions (including increases and decreases in industrial
production), oil prices, environmental concerns, weather
conditions, and competition from alternative energy sources. The
following table sets out information regarding annual crude oil
consumption in each region or country indicated in the table
between 2000 and 2009.
World Oil
Consumption: 2000 to 2009
(Million Barrels Per Day)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CAGR%
|
|
|
|
2000
|
|
|
2001
|
|
|
2002
|
|
|
2003
|
|
|
2004
|
|
|
2005
|
|
|
2006
|
|
|
2007
|
|
|
2008
|
|
|
2009
|
|
|
00-09
|
|
|
North America
|
|
|
24.0
|
|
|
|
24.0
|
|
|
|
24.1
|
|
|
|
24.5
|
|
|
|
25.3
|
|
|
|
25.5
|
|
|
|
25.4
|
|
|
|
25.5
|
|
|
|
24.2
|
|
|
|
23.2
|
|
|
|
(0.38
|
)%
|
Europe
|
|
|
15.1
|
|
|
|
15.3
|
|
|
|
15.3
|
|
|
|
15.4
|
|
|
|
15.6
|
|
|
|
15.5
|
|
|
|
15.5
|
|
|
|
15.3
|
|
|
|
15.4
|
|
|
|
14.6
|
|
|
|
(0.37
|
)%
|
Pacific
|
|
|
8.6
|
|
|
|
8.7
|
|
|
|
8.6
|
|
|
|
8.7
|
|
|
|
8.5
|
|
|
|
8.6
|
|
|
|
8.5
|
|
|
|
8.4
|
|
|
|
8.1
|
|
|
|
7.7
|
|
|
|
(1.22
|
)%
|
Total
OECD(1)
|
|
|
47.7
|
|
|
|
48.0
|
|
|
|
48.0
|
|
|
|
48.6
|
|
|
|
49.4
|
|
|
|
49.6
|
|
|
|
49.4
|
|
|
|
49.2
|
|
|
|
47.7
|
|
|
|
45.5
|
|
|
|
(0.52
|
)%
|
China
|
|
|
4.8
|
|
|
|
4.7
|
|
|
|
5.0
|
|
|
|
5.6
|
|
|
|
6.4
|
|
|
|
6.6
|
|
|
|
7.0
|
|
|
|
7.6
|
|
|
|
7.9
|
|
|
|
8.5
|
|
|
|
6.56
|
%
|
Middle East
|
|
|
4.7
|
|
|
|
5.2
|
|
|
|
5.4
|
|
|
|
5.4
|
|
|
|
5.8
|
|
|
|
6.1
|
|
|
|
6.5
|
|
|
|
6.5
|
|
|
|
7.1
|
|
|
|
7.2
|
|
|
|
4.85
|
%
|
Asia (excluding China)
|
|
|
7.3
|
|
|
|
7.6
|
|
|
|
7.9
|
|
|
|
8.1
|
|
|
|
8.6
|
|
|
|
8.8
|
|
|
|
8.9
|
|
|
|
9.5
|
|
|
|
9.7
|
|
|
|
9.9
|
|
|
|
3.44
|
%
|
Africa
|
|
|
2.4
|
|
|
|
2.6
|
|
|
|
2.7
|
|
|
|
2.7
|
|
|
|
2.8
|
|
|
|
2.9
|
|
|
|
3.0
|
|
|
|
3.1
|
|
|
|
3.2
|
|
|
|
3.2
|
|
|
|
3.25
|
%
|
Latin America
|
|
|
4.9
|
|
|
|
4.9
|
|
|
|
4.8
|
|
|
|
4.7
|
|
|
|
4.9
|
|
|
|
5.0
|
|
|
|
5.2
|
|
|
|
5.7
|
|
|
|
5.9
|
|
|
|
6.0
|
|
|
|
2.28
|
%
|
FSU(2)
|
|
|
3.6
|
|
|
|
3.7
|
|
|
|
3.5
|
|
|
|
3.6
|
|
|
|
3.7
|
|
|
|
3.8
|
|
|
|
3.9
|
|
|
|
4.2
|
|
|
|
4.2
|
|
|
|
3.9
|
|
|
|
0.89
|
%
|
Europe
|
|
|
0.7
|
|
|
|
0.8
|
|
|
|
0.7
|
|
|
|
0.7
|
|
|
|
0.7
|
|
|
|
0.7
|
|
|
|
0.7
|
|
|
|
0.8
|
|
|
|
0.7
|
|
|
|
0.7
|
|
|
|
0.00
|
%
|
Total Non-OECD
|
|
|
28.4
|
|
|
|
29.5
|
|
|
|
30.0
|
|
|
|
30.8
|
|
|
|
32.9
|
|
|
|
33.9
|
|
|
|
35.2
|
|
|
|
37.4
|
|
|
|
38.7
|
|
|
|
39.4
|
|
|
|
3.70
|
%
|
World Total
|
|
|
76.1
|
|
|
|
77.5
|
|
|
|
78.0
|
|
|
|
79.4
|
|
|
|
82.3
|
|
|
|
83.5
|
|
|
|
84.6
|
|
|
|
86.6
|
|
|
|
86.4
|
|
|
|
84.9
|
|
|
|
1.22
|
%
|
|
|
|
(1) |
|
Organization for Economic Co-operation and Development. |
|
(2) |
|
Former Soviet Union. |
World oil consumption has generally experienced sustained growth
since 2000, but it declined in 2009 due to the slowdown in the
global economy. As demonstrated by the table above, the main
driver for the growth in consumption has been increased demand
from Asian economies, in particular China. World oil consumption
estimates for 2009 were 84.9 million barrels per day, an
increase of 11.4% over the 76.2 million barrels per day
consumption in 2000. Oil consumption in China over the same
period grew by 77% to 8.5 million barrels per day.
In early 2010, the preliminary signs are that world oil
consumption is once again rising strongly after being relatively
weak in 2009. In the first quarter of 2010, it is provisionally
estimated at 86.1 million barrels per day.
Seasonal trends also affect world oil consumption and
consequently oil tanker demand. While trends in consumption do
vary with season, peaks in tanker demand quite often precede
seasonal consumption peaks, as refiners and suppliers anticipate
consumer demand. Seasonal peaks in oil demand can broadly be
classified
38
into two main categories: increased demand prior to Northern
Hemisphere winters as heating oil consumption increases and
increased demand for gasoline prior to the summer driving season
in the United States
In recent years, Asia has been the main generator of additional
demand for oil, with this demand largely supplied from
traditional sources such as the Middle East. Production and
exports from the Middle East have historically had a significant
impact on the demand for tanker capacity, and, consequently, on
tanker charter hire rates, due to the relatively long distances
between this supply source and typical destination ports. Oil
exports from short-haul regions, such as Latin America and the
North Sea, are significantly closer to ports used by the primary
consumers of such exports, which results in shorter average
voyage length as compared to oil exports from the Middle East.
Therefore, production in short-haul regions historically has had
less of an impact on the demand for larger vessels while
increasing the demand for vessels in the Handy, Panamax and
Aframax market segments.
There are also some pronounced differences in demand for oil by
type of product. The following table indicates that demand is
growing fastest for middle distillates.
Oil
Consumption by Main Product Type: 2000 to 2009
(Million Barrels Per Day)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CAGR
|
|
World
|
|
2000
|
|
|
2001
|
|
|
2002
|
|
|
2003
|
|
|
2004
|
|
|
2005
|
|
|
2006
|
|
|
2007
|
|
|
2008
|
|
|
2009
|
|
|
00-09
|
|
|
Light distillates
|
|
|
23.8
|
|
|
|
24.0
|
|
|
|
24.5
|
|
|
|
25.0
|
|
|
|
25.7
|
|
|
|
25.9
|
|
|
|
26.1
|
|
|
|
26.6
|
|
|
|
26.4
|
|
|
|
26.2
|
|
|
|
1.1
|
%
|
Middle distillates
|
|
|
26.6
|
|
|
|
27.1
|
|
|
|
27.1
|
|
|
|
27.8
|
|
|
|
29.0
|
|
|
|
29.8
|
|
|
|
30.4
|
|
|
|
30.7
|
|
|
|
31.2
|
|
|
|
30.8
|
|
|
|
1.6
|
%
|
Fuel oil
|
|
|
10.5
|
|
|
|
10.2
|
|
|
|
9.8
|
|
|
|
9.9
|
|
|
|
9.9
|
|
|
|
10.1
|
|
|
|
9.7
|
|
|
|
9.6
|
|
|
|
9.3
|
|
|
|
9.2
|
|
|
|
(1.5
|
)%
|
Others
|
|
|
15.2
|
|
|
|
16.2
|
|
|
|
16.6
|
|
|
|
16.7
|
|
|
|
17.7
|
|
|
|
17.7
|
|
|
|
18.4
|
|
|
|
19.7
|
|
|
|
19.5
|
|
|
|
18.7
|
|
|
|
2.3
|
%
|
Total World
|
|
|
76.1
|
|
|
|
77.5
|
|
|
|
78.0
|
|
|
|
79.4
|
|
|
|
82.3
|
|
|
|
83.5
|
|
|
|
84.6
|
|
|
|
86.6
|
|
|
|
86.4
|
|
|
|
84.9
|
|
|
|
1.2
|
%
|
The transportation of crude oil is typically unidirectional, in
that most oil is transported from a few areas of production to
many regions of consumption, where it is refined into petroleum
products. Conversely, the transportation of refined petroleum
products and associated cargoes is multi-directional, in that
there are several areas of both production and consumption. The
multi-directional nature of the product tanker market is
enhanced by the competitive, complex and technical nature of the
refining business, which requires any surplus or deficit of
product to be dealt with promptly.
World Oil
Production: 2000 to 2009
(Million Barrels Per Day)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CAGR%
|
|
|
|
2000
|
|
|
2001
|
|
|
2002
|
|
|
2003
|
|
|
2004
|
|
|
2005
|
|
|
2006
|
|
|
2007
|
|
|
2008
|
|
|
2009
|
|
|
00-09
|
|
|
North America
|
|
|
14.3
|
|
|
|
14.4
|
|
|
|
14.5
|
|
|
|
14.6
|
|
|
|
14.6
|
|
|
|
14.1
|
|
|
|
14.2
|
|
|
|
14.3
|
|
|
|
13.9
|
|
|
|
14.1
|
|
|
|
(0.16
|
)%
|
Europe
|
|
|
6.8
|
|
|
|
6.7
|
|
|
|
6.6
|
|
|
|
6.3
|
|
|
|
6.1
|
|
|
|
5.6
|
|
|
|
5.2
|
|
|
|
5.0
|
|
|
|
4.7
|
|
|
|
4.5
|
|
|
|
(4.48
|
)%
|
Pacific
|
|
|
0.8
|
|
|
|
0.8
|
|
|
|
0.8
|
|
|
|
0.7
|
|
|
|
0.6
|
|
|
|
0.6
|
|
|
|
0.6
|
|
|
|
0.6
|
|
|
|
0.6
|
|
|
|
0.7
|
|
|
|
(1.47
|
)%
|
Total OECD
|
|
|
21.9
|
|
|
|
21.8
|
|
|
|
21.9
|
|
|
|
21.6
|
|
|
|
21.3
|
|
|
|
20.3
|
|
|
|
20.0
|
|
|
|
19.8
|
|
|
|
19.3
|
|
|
|
19.3
|
|
|
|
(1.39
|
)%
|
FSU(1)
|
|
|
7.9
|
|
|
|
8.6
|
|
|
|
9.4
|
|
|
|
10.3
|
|
|
|
11.2
|
|
|
|
11.6
|
|
|
|
12.1
|
|
|
|
12.8
|
|
|
|
12.8
|
|
|
|
13.2
|
|
|
|
5.87
|
%
|
Other Asia
|
|
|
2.3
|
|
|
|
2.3
|
|
|
|
2.5
|
|
|
|
2.6
|
|
|
|
2.8
|
|
|
|
2.7
|
|
|
|
2.7
|
|
|
|
2.7
|
|
|
|
2.6
|
|
|
|
3.6
|
|
|
|
5.10
|
%
|
China
|
|
|
3.2
|
|
|
|
3.3
|
|
|
|
3.4
|
|
|
|
3.4
|
|
|
|
3.5
|
|
|
|
3.6
|
|
|
|
3.7
|
|
|
|
3.7
|
|
|
|
3.8
|
|
|
|
3.8
|
|
|
|
1.93
|
%
|
Latin America
|
|
|
3.8
|
|
|
|
3.8
|
|
|
|
3.9
|
|
|
|
4.0
|
|
|
|
4.1
|
|
|
|
4.3
|
|
|
|
4.4
|
|
|
|
4.3
|
|
|
|
4.0
|
|
|
|
4.4
|
|
|
|
1.64
|
%
|
Africa
|
|
|
2.8
|
|
|
|
2.8
|
|
|
|
3.0
|
|
|
|
3.1
|
|
|
|
3.4
|
|
|
|
3.7
|
|
|
|
4.0
|
|
|
|
2.5
|
|
|
|
2.6
|
|
|
|
2.5
|
|
|
|
(1.25
|
)%
|
Middle East
|
|
|
2.0
|
|
|
|
2.2
|
|
|
|
2.1
|
|
|
|
2.0
|
|
|
|
1.9
|
|
|
|
1.9
|
|
|
|
1.7
|
|
|
|
1.6
|
|
|
|
1.6
|
|
|
|
1.6
|
|
|
|
(2.45
|
)%
|
Europe
|
|
|
0.2
|
|
|
|
0.2
|
|
|
|
0.2
|
|
|
|
0.2
|
|
|
|
0.2
|
|
|
|
0.2
|
|
|
|
0.1
|
|
|
|
0.1
|
|
|
|
0.1
|
|
|
|
0.1
|
|
|
|
(7.41
|
)%
|
Processing Gains
|
|
|
1.7
|
|
|
|
1.7
|
|
|
|
1.8
|
|
|
|
1.8
|
|
|
|
1.8
|
|
|
|
1.9
|
|
|
|
1.9
|
|
|
|
2.1
|
|
|
|
2.2
|
|
|
|
2.3
|
|
|
|
3.42
|
%
|
Total Non-OPEC
|
|
|
45.8
|
|
|
|
46.7
|
|
|
|
48.1
|
|
|
|
49.0
|
|
|
|
50.1
|
|
|
|
50.2
|
|
|
|
50.8
|
|
|
|
50.1
|
|
|
|
49.8
|
|
|
|
51.3
|
|
|
|
1.27
|
%
|
39
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CAGR%
|
|
|
|
2000
|
|
|
2001
|
|
|
2002
|
|
|
2003
|
|
|
2004
|
|
|
2005
|
|
|
2006
|
|
|
2007
|
|
|
2008
|
|
|
2009
|
|
|
00-09
|
|
|
Opec Crude
|
|
|
27.9
|
|
|
|
27.0
|
|
|
|
25.1
|
|
|
|
26.8
|
|
|
|
29.1
|
|
|
|
29.8
|
|
|
|
29.7
|
|
|
|
30.7
|
|
|
|
32.2
|
|
|
|
28.7
|
|
|
|
0.31
|
%
|
NGLs(2)
|
|
|
2.9
|
|
|
|
3.1
|
|
|
|
3.5
|
|
|
|
3.9
|
|
|
|
3.9
|
|
|
|
4.5
|
|
|
|
4.7
|
|
|
|
4.8
|
|
|
|
4.8
|
|
|
|
5.0
|
|
|
|
6.24
|
%
|
Total Opec
|
|
|
30.8
|
|
|
|
30.1
|
|
|
|
28.6
|
|
|
|
30.7
|
|
|
|
33.0
|
|
|
|
34.2
|
|
|
|
34.4
|
|
|
|
35.5
|
|
|
|
37.0
|
|
|
|
33.7
|
|
|
|
1.00
|
%
|
World Total
|
|
|
76.6
|
|
|
|
76.8
|
|
|
|
76.6
|
|
|
|
79.7
|
|
|
|
83.1
|
|
|
|
84.5
|
|
|
|
85.2
|
|
|
|
85.6
|
|
|
|
86.5
|
|
|
|
85.0
|
|
|
|
1.16
|
%
|
|
|
|
(1) |
|
Former Soviet Union. |
|
(2) |
|
Natural gas liquids. |
Oil
Refinery Capacity
Oil refineries also vary greatly in the quantity, variety and
specification of products that they produce, and it is common
for tankers to take products into and out of the same refinery.
This global multi-directional trade pattern enables owners and
operators of product tankers to engage in charters of
triangulation, and thereby maximize the revenue.
The distribution of refinery throughput by region in the period
2000 to 2008 is shown in the following chart.
Changes in refinery throughput are to a certain extent driven by
changes in the location of capacity and capacity increases are
taking place mostly in the developing world, especially in Asia.
In turn this is leading to changes in voyage patterns and longer
voyages.
Oil
Refinery Throughput By Region: 2000 to 2008
(Million Barrels Per Day)
40
Oil
Refinery Throughput By Region: Growth Rates 2000 to 2008
(CAGR Percent)
As the chart above indicates, in response to growing domestic
demand, Chinese refinery throughput has grown at the fastest
rate of any global region in the last decade, with the Middle
East and other developing regions following behind. By contrast,
refinery throughput in North America has actually declined in
the last decade. The shift in global refinery capacity from the
developed to the developing world is likely to continue as
refinery development plans are heavily focused on areas such as
Asia and the Middle East, with relatively little capacity
additions planned for regions such as North America and Europe.
World Oil
Trades
As a result of the increases in world oil consumption, oil
production and refinery throughput, world oil trades have also
grown. The chart below illustrates changes in global seaborne
movements of crude oil and refined petroleum products (expressed
in millions of tons) between 2000 and 2009.
Oil Trade
Development: 2000 to 2009
(Million Tons)
41
The volume of crude oil moved by sea each year also reflects the
underlying changes in world oil consumption and production.
Seaborne trade in crude oil in 2009 is provisionally
1.95 billion tons, approximately 17.5% higher than 2000. In
the case of refined petroleum products, seaborne movements in
2009 are provisionally estimated at 724.0 million tons
(excluding intra-regional trades), representing an increase of
60% from 2000. The graph below illustrates average growth rates
for global seaborne movements of crude oil and refined petroleum
products (expressed in millions of tons) in the periods
1980-89,
1990-99 and
2000 to 2009.
Oil
Trade* Growth Rates by Period
(CAGR Percent)
The chart below shows the main routes where large volumes of
refined petroleum products are transported by sea.
Major
Seaborne Refined Products Trades
Demand for oil tankers is primarily determined by the volume of
crude oil and refined petroleum products transported and the
distances over which they are transported. Tanker demand is
generally expressed
42
in ton miles and is measured as the product of the volume of oil
carried (measured in metric tons) multiplied by the distance
over which it is carried (measured in miles). Among the factors
that affect demand for tankers is the volume of demand for crude
oil and refined petroleum products, as well as the geographical
pattern of oil movements.
Oil
Tanker Demand: 2000 to 2009
(Million Tons/Billion Ton Miles)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CAGR%
|
|
|
|
2000
|
|
|
2001
|
|
|
2002
|
|
|
2003
|
|
|
2004
|
|
|
2005
|
|
|
2006
|
|
|
2007
|
|
|
2008
|
|
|
2009
|
|
|
00-09
|
|
|
Seaborne Trade Million Tons
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Refined Products
|
|
|
451
|
|
|
|
475
|
|
|
|
486
|
|
|
|
491
|
|
|
|
526
|
|
|
|
576
|
|
|
|
658
|
|
|
|
717
|
|
|
|
728
|
|
|
|
724
|
|
|
|
5.40
|
%
|
Crude Oil
|
|
|
1,661
|
|
|
|
1,684
|
|
|
|
1,667
|
|
|
|
1,770
|
|
|
|
1,855
|
|
|
|
1,885
|
|
|
|
1,933
|
|
|
|
1,984
|
|
|
|
1,970
|
|
|
|
1,952
|
|
|
|
1.80
|
%
|
Total Seaborne Trade
|
|
|
2,112
|
|
|
|
2,159
|
|
|
|
2,153
|
|
|
|
2,261
|
|
|
|
2,381
|
|
|
|
2,461
|
|
|
|
2,591
|
|
|
|
2,701
|
|
|
|
2,698
|
|
|
|
2,676
|
|
|
|
2.70
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand Billion Ton Miles
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Refined Products
|
|
|
1,583
|
|
|
|
1,733
|
|
|
|
1,572
|
|
|
|
1,853
|
|
|
|
2,226
|
|
|
|
2,886
|
|
|
|
3,021
|
|
|
|
3,233
|
|
|
|
3,380
|
|
|
|
3,320
|
|
|
|
8.60
|
%
|
Crude Oil
|
|
|
7,220
|
|
|
|
7,528
|
|
|
|
7,140
|
|
|
|
7,814
|
|
|
|
8,504
|
|
|
|
9,299
|
|
|
|
9,562
|
|
|
|
9,719
|
|
|
|
9,149
|
|
|
|
8,976
|
|
|
|
2.50
|
%
|
Total Ton Mile Demand
|
|
|
8,803
|
|
|
|
9,261
|
|
|
|
8,712
|
|
|
|
9,667
|
|
|
|
10,730
|
|
|
|
12,185
|
|
|
|
12,583
|
|
|
|
12,952
|
|
|
|
12,529
|
|
|
|
12,296
|
|
|
|
3.80
|
%
|
In the products sector demand for transportation (expressed in
terms of ton miles) increased by almost 110% in the period 2000
to 2009, equivalent to a CAGR of 8.6%. The increase in the
demand for shipping was greater than the increase in overall
trade, due to the growth in long-haul product tanker trades. The
following table shows the main trade routes on which selected
sizes of tankers are likely to be employed.
Product
Tankers Typical Deployment By Size
Category
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Refined Petroleum Products
|
|
|
|
|
|
|
Voyage
|
|
|
|
|
|
|
|
|
|
|
|
|
Area
|
|
|
Trade Route
|
|
|
Length
|
|
|
MR1
|
|
|
MR2
|
|
|
LR1
|
|
|
LR2
|
Inter-Regional
|
|
|
MEG(1)/Far
East
|
|
|
Long
|
|
|
|
|
|
|
|
|
X
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MEG/North America
|
|
|
|
|
|
|
|
|
X
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MEG/Europe
|
|
|
|
|
|
|
|
|
X
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NS(2)/North
America
|
|
|
|
|
|
|
|
|
X
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MEG/Pacific Rim
|
|
|
|
|
|
|
|
|
X
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intra-Regional
|
|
|
North Sea Caribbean Mediterranean Indo-Pacific
|
|
|
Medium
|
|
|
X
|
|
|
X
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Local
|
|
|
Various
|
|
|
Short
|
|
|
X
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Middle East Gulf. |
|
(2) |
|
North Sea. |
43
There are primarily two types of tanker operators that provide
international seaborne transportation of crude oil and refined
petroleum products: major integrated oil companies with captive
fleets (both private and state-owned) and independent
shipowners. Both types of operators transport oil under
short-term contracts (including single-voyage spot charters) and
long-term time charters with oil companies, oil traders,
petroleum product producers and government agencies. Oil
companies use their fleets not only to transport their own oil,
but also to transport oil for third-party charterers in direct
competition with independent shipowners and operators in the
tanker charter market.
In recent years, as regulators and charterers have increasingly
focused on safety and protection of the environment, there has
been a significant and continuing movement within the tanker
industry towards higher quality vessels and vessel operations.
Long seen as a commodity market with little degree of
differentiation between vessels and owners, the industry began
to change during the early 1990s. The Exxon Valdez incident in
1989 started the movement towards tighter industry regulations
and an increasing emphasis on environmental protection through
legislation and regulations. These included the Oil Pollution
Act (OPA) protocols established by the International Maritime
Organization (IMO) and procedures established by classification
societies, demanding higher-quality tanker construction,
maintenance, repair and operations. In addition, oil companies
acting as charterers, other shippers and receivers of oil, and
terminal operators have become increasingly selective in their
acceptance of tankers, periodically inspecting and vetting
vessels as well as their owners and operators.
Although such regulatory changes increase the costs and
potential liabilities of vessel owners and operators, they also
serve as barriers to entry and underscore the strengths of
shipowners with quality fleets and operations. Oil companies
continue to periodically inspect and vet vessels and monitor
independent shipowners and operators for compliance with their
quality and safety standards. A more stringent regulatory
environment, and an increasing emphasis on quality and
environmental protection, will accelerate the obsolescence of
older, lower quality tankers and provide a competitive advantage
to those companies with high quality management that operate
modern tankers.
Product
Tanker Supply
Types
of Vessel
The oil tanker fleet is divided between crude tankers that carry
crude oil or residual fuel oil (dirty products), and
product tankers that carry refined petroleum products
(clean products) such as gasoline, jet fuel,
kerosene, naphtha and gas oil. While product tankers can carry
dirty products, they generally do not switch between clean and
dirty cargoes, as a vessels tank must be cleaned prior to
loading a different cargo type. The world oil product tanker
fleet is divided into four major types of vessel based on vessel
size, which are as follows:
|
|
|
|
|
LR2 (long range 2) tankers, with a product
cargo carrying capacity in excess of 80,000 dwt. LR2 tankers
typically operate on long-haul voyages, although port
constraints limit their trading routes. LR2s generally trade on
long-haul routes from the Middle East to Asia, Europe and the
Gulf of Mexico or the Caribbean.
|
|
|
|
LR1 (long range 1) tankers, with an oil cargo
carrying capacity of approximately 50,000 to 79,999 dwt. LR1
tankers are engaged in a range of product trades, generally from
Europe to the United States, the Gulf of Mexico, or back. They
also trade within the Mediterranean, or within Asia as well as
between the Middle East and Asia.
|
|
|
|
MR2 (medium range 2) tankers, with an oil
cargo carrying capacity of approximately 30,000 to 49,999 dwt.
MR2 tankers are employed in shorter regional trades, mainly in
North West Europe, the Caribbean, the Mediterranean and Asia. A
typical cargo size would be between
45-50,000
tons.
|
|
|
|
MR1 (medium range 1), or Handysize, tankers, with
an oil-carrying capacity of 10,000 to 29,999 dwt. Handysize
tankers trade on a variety of regional trade routes carrying
refined petroleum products on trade routes not suitable for
larger vessels.
|
44
A number of tankers also have the capability to carry chemicals
as well as refined petroleum products. These ships are sometimes
referred to as product/chemical tankers and they move between
the carriage of chemicals or refined petroleum products
depending on market conditions and employment opportunities. The
following analysis however focuses on straight product tankers
and the ships with product/chemical capability are covered in
the section dealing with chemical tankers which follows.
The
Product Tanker Fleet
The supply of tankers is measured in deadweight tons, or dwt.
The supply of tanker capacity is determined by the age and size
of the existing global fleet, the number of vessels on order,
also known as newbuildings, the number of ships removed from the
fleet by scrapping and international regulations. Other factors
which can affect the short-term supply of tankers include the
number of combined carriers (vessels capable of trading wet and
dry cargoes) trading in the oil market and the number of tankers
in storage, dry-docked, awaiting repairs or otherwise not
available or out of commission (collectively,
lay-up
or total inactivity). The current product tanker fleet by the
above definition comprises 1,112 ships of 52.0 million dwt.
World
Product Tanker Fleet* (as of February 2010)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
Size Range
|
|
Number of
|
|
|
|
|
|
Capacity
|
|
|
% of Fleet
|
|
Size Category
|
|
Deadweight Tons
|
|
Vessels
|
|
|
% of Fleet
|
|
|
(million dwt)
|
|
|
(dwt)
|
|
|
LR2
|
|
>80,000
|
|
|
107
|
|
|
|
9.6
|
|
|
|
11.2
|
|
|
|
21.5
|
|
LR1
|
|
50,000-79,999
|
|
|
242
|
|
|
|
21.8
|
|
|
|
16.6
|
|
|
|
31.9
|
|
MR2
|
|
30,000-49,999
|
|
|
420
|
|
|
|
37.7
|
|
|
|
18.0
|
|
|
|
34.6
|
|
MR1
|
|
10,000-29,999
|
|
|
343
|
|
|
|
30.9
|
|
|
|
6.2
|
|
|
|
11.9
|
|
Total
|
|
|
|
|
1,112
|
|
|
|
100.0
|
|
|
|
52.0
|
|
|
|
100.0
|
|
|
|
|
* |
|
Excludes chemical tankers. |
Over the years, the supply of the smallest product tanker
category
(10-29,999
dwt) fleet has declined in favor of the larger ships that are
more suited to the long-haul routes. The development of the
fleet between 2000 and February 2010 is shown in the table below.
World
Product Tanker Fleet Development: 2000 to 2010
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
Size
|
|
End Period
|
|
No.
|
|
|
(000 dwt)
|
|
|
2000
|
|
|
878
|
|
|
|
30,712
|
|
2001
|
|
|
866
|
|
|
|
30,587
|
|
2002
|
|
|
829
|
|
|
|
29,694
|
|
2003
|
|
|
785
|
|
|
|
28,803
|
|
2004
|
|
|
833
|
|
|
|
31,952
|
|
2005
|
|
|
882
|
|
|
|
35,260
|
|
2006
|
|
|
926
|
|
|
|
38,555
|
|
2007
|
|
|
976
|
|
|
|
42,429
|
|
2008
|
|
|
1,038
|
|
|
|
46,348
|
|
2009
|
|
|
1,115
|
|
|
|
51,765
|
|
2010*
|
|
|
1,112
|
|
|
|
52,016
|
|
|
|
|
* |
|
Through February 28, 2010. |
45
As the tanker fleet ages, a number of vessels are scrapped as
they become uneconomical to operate or prohibited to trade
because of environmental laws, which effectively limit the
trading life of single-hull tankers. Some countries have in fact
talked of introducing age restrictions which would prevent old
single hulled tankers from calling at their ports, but to date
China/Hong Kong are the only major oil importers to introduce
such legislation.
Vessel owners often conclude that it is more economical to scrap
a vessel that has exhausted its useful life than to upgrade the
vessel to maintain it in-class. A vessel is deemed
to be in-class if the surveyors of a classification
society determine that the vessel conforms to the standards and
rules of that classification society. Customers, insurance
companies and other industry participants use the survey and
classification regime to obtain reasonable assurance of a
vessels seaworthiness, and vessels must be certified as
in-class in order to continue to trade and be admitted to ports
worldwide. In many cases, particularly when tankers reach
approximately 25 years of age, the costs of conducting the
special survey and performing associated repairs, such as the
replacement of steel plate, in order to maintain a vessel
in-class may not be economically efficient. In recent years,
most oil tankers that have been scrapped were between 25 and
30 years of age.
The average age of the ships in each major class are shown
below, while the average age for the fleet as a whole is
10.8 years.
World
Product Tanker Fleet: Average Age (as of February
2010)
|
|
|
|
|
|
|
|
|
Average
|
Size
|
|
Deadweight
|
|
Age
|
Category
|
|
Tons
|
|
(Years)
|
|
LR2
|
|
>80,000
|
|
8.7
|
LR1
|
|
50,000-79,999
|
|
5.5
|
MR2
|
|
30,000-49,999
|
|
9.8
|
MR1
|
|
10,000-29,999
|
|
16.4
|
Fleet Average
|
|
10.8
|
The graph below illustrates the age profile of the worlds
product tanker fleet as of February 28, 2010.
World
Product Tanker Fleet: Age Profile (as of February
2010)
Left Hand
Scale = Million Dwt; Right Hand Scale = Number of
Ships
Besides age, the removal of ships from the trading fleet can be
influenced by legislation. According to the revised MARPOL (the
IMO International Convention for the Prevention of Pollution
from Ships, 1973, as
46
modified by the Protocol of 1978 relating thereto (MARPOL
73/78)) Regulation 13G, single-hull tankers should be
phased out or converted to a double-hull by the dates
established by the revised regulation.
Despite the legislative changes there still exists the potential
to use single-hull, double-side or double-bottom tankers beyond
2010, as there is flexibility allowed by the IMO for flag and
state exemptions. As per the exemptions mentioned under MARPOL
Regulation 13H for the prevention of oil pollution from oil
tankers, when carrying heavy grade oil (HGOs) such as heavy
crude oils and fuel oils of density higher than 900
kg/m3 at
15°C), the IMO has the discretion to allow continued
operation of single-hull, double-side or double-bottom tankers
beyond the set phase-out dates (April 5, 2005 for
single-hull tankers of 5,000 dwt and above; and the anniversary
date in 2008 for single-hull tankers of 600 dwt and above but
less than 5,000 dwt), depending upon size, age, operational
area, structural conditions of the ship and results of the
IMOs Condition Assessment Scheme (CAS),
provided that the operation does not go beyond the date on which
the ship reaches 25 years after the date of its delivery.
Product
Tanker Orderbook
As of the end of February 2010, the product tanker orderbook
amounted to 266 ships of 16.1 million dwt, equivalent to
30.9% of the current fleet. Other tankers within these size
ranges that do not have protective coatings and are thus
suitable for carrying only crude cargoes have been excluded from
this table.
World
Product Tanker Orderbook (as of February 2010)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
% of
|
Size
|
|
Deadweight
|
|
Number of
|
|
% of
|
|
Capacity
|
|
Orderbook
|
Category
|
|
Tons
|
|
Vessels
|
|
Orderbook
|
|
(million dwt)
|
|
(dwt)
|
|
LR2
|
|
>80,000
|
|
|
47
|
|
|
|
17.7
|
|
|
|
5.3
|
|
|
|
32.9
|
|
LR1
|
|
50,000-79,999
|
|
|
92
|
|
|
|
34.5
|
|
|
|
6.1
|
|
|
|
37.9
|
|
MR2
|
|
30,000-49,999
|
|
|
88
|
|
|
|
33.1
|
|
|
|
4.0
|
|
|
|
24.8
|
|
MR1
|
|
10,000-29,999
|
|
|
39
|
|
|
|
14.7
|
|
|
|
0.7
|
|
|
|
4.4
|
|
Total
|
|
|
|
|
266
|
|
|
|
100.0
|
|
|
|
16.1
|
|
|
|
100.0
|
|
World
Product Tanker Orderbook Delivery Schedule (as of February
2010)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2010
|
|
|
2011
|
|
|
2012
|
|
|
2013
|
|
|
2014
|
|
|
Total
|
|
Size
|
|
No.
|
|
|
Dwt
|
|
|
No.
|
|
|
Dwt
|
|
|
No.
|
|
|
Dwt
|
|
|
No.
|
|
|
Dwt
|
|
|
No.
|
|
|
Dwt
|
|
|
No.
|
|
|
Dwt
|
|
|
10,000-29,999
|
|
|
13
|
|
|
|
234,057
|
|
|
|
25
|
|
|
|
454,118
|
|
|
|
1
|
|
|
|
24,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
39
|
|
|
|
712,175
|
|
30,000-49,999
|
|
|
45
|
|
|
|
2,035,814
|
|
|
|
33
|
|
|
|
1,507,812
|
|
|
|
10
|
|
|
|
462,598
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
88
|
|
|
|
4,006,224
|
|
50,000-79,999
|
|
|
34
|
|
|
|
2,250,191
|
|
|
|
48
|
|
|
|
3,196,904
|
|
|
|
5
|
|
|
|
297,000
|
|
|
|
3
|
|
|
|
172,000
|
|
|
|
2
|
|
|
|
144,000
|
|
|
|
92
|
|
|
|
6,060,095
|
|
80,000+
|
|
|
24
|
|
|
|
2,613,943
|
|
|
|
21
|
|
|
|
2,439,680
|
|
|
|
2
|
|
|
|
239,900
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
47
|
|
|
|
5,293,523
|
|
Total
|
|
|
116
|
|
|
|
7,134,005
|
|
|
|
127
|
|
|
|
7,598,514
|
|
|
|
18
|
|
|
|
1,023,498
|
|
|
|
3
|
|
|
|
172,000
|
|
|
|
2
|
|
|
|
144,000
|
|
|
|
266
|
|
|
|
16,072,017
|
|
Deliveries
and Slippage
If all the ships currently on order are delivered on time and on
schedule, there would be a large influx of newbuildings in 2010
and 2011 in the product tanker sector. However, it is likely
that not all ships currently on order will be delivered on time
for a number of reasons, including the following:
|
|
|
|
|
In the most recent new ordering spree, which peaked in early
2008, shipowners were often quoted unrealistic delivery times by
some of the less experienced and newly emerging shipyards.
Delays in deliveries from these shipyards have been varied, but
the evidence available suggests that slippage rates have been
considerable, with some shipyards only delivering two-thirds of
what they were due to deliver in 2009.
|
|
|
|
The current economic and financial crisis and the steep
depression in shipping markets generally may lead to further
orderbook cancellations.
|
47
|
|
|
|
|
Financing is not in place for all of the ships on order and in
the current climate some owners will find it difficult to secure
adequate funding. In addition, orders have been placed at
greenfield shipyards, some of which are also finding
it difficult to secure funding for yard development. A
greenfield yard is a shipyard with no prior experience of
building ships for international account.
|
Delays in deliveries are often referred to as slippage.
Historically, slippage rates have tended to be less than 10%,
which means that 10% of the ships due to be delivered in any
year are in fact delivered in subsequent years. However, in 2008
and 2009 slippage rates rose, as the high level of new ordering
that occurred, across all market sectors meant that the
commercial vessel orderbook reached its highest point in history
in 2008. This placed pressure on shipbuilding capacity, which in
turn has forced shipowners to place orders for new ships in
countries or yards which have little or no experience in
building ships for international customers. Indeed, in some
cases the orders have been placed with new shipyards which have
yet to construct the actual shipbuilding facilities. In the
tanker sector as a whole, the evidence suggests that the
slippage rate was just below 20% in 2009.
Scheduled
Deliveries vs. Actual Deliveries
2008-2009*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10-50k
|
|
|
50-80k
|
|
|
80-120k
|
|
|
120-200k
|
|
|
200k+
|
|
|
Total
|
|
|
|
|
|
No.
|
|
|
Dwt
|
|
|
No.
|
|
|
Dwt
|
|
|
No.
|
|
|
Dwt
|
|
|
No.
|
|
|
Dwt
|
|
|
No.
|
|
|
Dwt
|
|
|
No.
|
|
|
Dwt
|
|
|
|
|
Actual Deliveries
|
|
|
44
|
|
|
|
1.44
|
|
|
|
51
|
|
|
|
3.47
|
|
|
|
68
|
|
|
|
7.43
|
|
|
|
14
|
|
|
|
2.21
|
|
|
|
41
|
|
|
|
12.74
|
|
|
|
218
|
|
|
|
27.30
|
|
2008
|
|
Scheduled Deliveries
|
|
|
73
|
|
|
|
3.06
|
|
|
|
58
|
|
|
|
3.78
|
|
|
|
70
|
|
|
|
7.66
|
|
|
|
20
|
|
|
|
3.14
|
|
|
|
37
|
|
|
|
11.31
|
|
|
|
258
|
|
|
|
28.95
|
|
|
|
Slippage
(% of OB**)
|
|
|
39.7
|
%
|
|
|
52.9
|
%
|
|
|
12
|
%
|
|
|
8.2
|
%
|
|
|
2.9
|
%
|
|
|
3
|
%
|
|
|
30
|
%
|
|
|
29.6
|
%
|
|
|
(10.8
|
)%
|
|
|
(12.6
|
)%
|
|
|
15.5
|
%
|
|
|
5.7
|
%
|
|
|
Actual Deliveries
|
|
|
69
|
|
|
|
2.54
|
|
|
|
49
|
|
|
|
3.31
|
|
|
|
90
|
|
|
|
9.87
|
|
|
|
40
|
|
|
|
6.40
|
|
|
|
51
|
|
|
|
15.74
|
|
|
|
299
|
|
|
|
37.86
|
|
2009
|
|
Scheduled Deliveries
|
|
|
76
|
|
|
|
2.94
|
|
|
|
65
|
|
|
|
4.25
|
|
|
|
101
|
|
|
|
11.08
|
|
|
|
61
|
|
|
|
9.54
|
|
|
|
62
|
|
|
|
18.79
|
|
|
|
365
|
|
|
|
46.60
|
|
|
|
Slippage
(% of OB**)
|
|
|
9.2
|
%
|
|
|
12.7
|
%
|
|
|
24.6
|
%
|
|
|
22.1
|
%
|
|
|
10.9
|
%
|
|
|
10.9
|
%
|
|
|
34.4
|
%
|
|
|
32.9
|
%
|
|
|
17.7
|
%
|
|
|
16.2
|
%
|
|
|
18.1
|
%
|
|
|
18.8
|
%
|
|
|
|
* |
|
Dwt in millions. |
|
** |
|
Orderbook. |
Vessel
Prices
Higher tanker freight rates during 2005 to 2007 stimulated
significant new vessel ordering and similar conditions occurred
in other shipping sectors, notably in the drybulk and container
sectors. In addition, newbuilding demand was also strong for
liquefied natural gas, or LNG, carriers and other specialized
ship categories. As a result, the orderbook for all commercial
cargo carrying vessels at the start of 2010 was at near record
levels, although very few orders were placed in 2009 due to the
weak state of most shipping markets.
Newbuilding prices for all vessel types increased significantly
during 2005 to 2008, due to a combination of rising demand,
shortage in berth space and rising raw material costs,
especially the price of steel. However, in 2009, newbuilding
prices weakened in the face of the downturn in the freight
markets, although the lack of new orders makes it very difficult
to gauge exact price levels. The trend in indicative newbuilding
prices for a
48
range of product tankers is shown in the following table and on
an inflation adjusted basis in the accompanying chart.
Product
Tanker Newbuilding Prices: 2000 to 2010
(US$ Million Period Averages)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Size Category/Dwt
|
|
|
MR1
|
|
MR2(1)
|
|
LR1(2)
|
Year
|
|
30,000
|
|
50,000*
|
|
75,000*
|
|
2000
|
|
|
n/a
|
|
|
|
28.4
|
|
|
|
33.2
|
|
2001
|
|
|
n/a
|
|
|
|
29.8
|
|
|
|
35.8
|
|
2002
|
|
|
n/a
|
|
|
|
26.3
|
|
|
|
31.1
|
|
2003
|
|
|
26.3
|
|
|
|
28.3
|
|
|
|
32.3
|
|
2004
|
|
|
32.5
|
|
|
|
35.4
|
|
|
|
38.9
|
|
2005
|
|
|
36.9
|
|
|
|
41.8
|
|
|
|
43.6
|
|
2006
|
|
|
40.0
|
|
|
|
46.8
|
|
|
|
48.0
|
|
2007
|
|
|
41.9
|
|
|
|
49.5
|
|
|
|
56.0
|
|
2008
|
|
|
44.8
|
|
|
|
52.1
|
|
|
|
63.6
|
|
2009
|
|
|
34.8
|
|
|
|
40.3
|
|
|
|
47.5
|
|
2010(3)
|
|
|
30.0
|
|
|
|
34.5
|
|
|
|
41.0
|
|
|
|
|
(1) |
|
45-50,000
dwt prior to 2008. |
|
(2) |
|
70-75,000
dwt prior to 2008. |
|
(3) |
|
Through February 28, 2010. |
Product
Tanker Newbuilding Price: 2000 to 2010
(MR2 50,000 Dwt US$ Million
Period Averages)
|
|
|
* |
|
Through February 28, 2010 |
|
** |
|
A GDP deflator figure for Emerging and Developing
Nations published in World Economic Outlook, has been used
to derive inflation adjusted figures. The GDP deflator figure
from the IMF is defined as the weighted average of CPI and house
price indices. |
49
Product
Tanker Newbuilding Price: 2000 to 2010
(LR1 75,000 Dwt US$ Million
Period Averages)
|
|
|
* |
|
Through February 28, 2010. |
|
|
|
** |
|
A GDP deflator figure for Emerging and Developing
Nations published in World Economic Outlook, has been used
to derive inflation adjusted figures. The GDP deflator figure
from the IMF is defined as the weighted average of CPI and house
price indices. |
The steep increase in newbuilding prices and the strength in the
charter market have also affected vessel prices in the
secondhand vessel market. The chart illustrates the movements of
prices (expressed in US$ million) for secondhand
(five-year-old)
oil tankers between 2000 and February 2010.
With vessel earnings running at high levels and a dearth of
available newbuilding berths, demand for oil tankers available
for early delivery was at a premium and secondhand prices rose
steadily from 2004 until the middle of 2008. In some instances,
the market witnessed secondhand prices for
five-year-old
oil tankers reaching levels higher than those for comparably
sized newbuildings. However, this situation was temporary and
with the downturn in freight rates secondhand values for tankers
fell throughout the whole of 2009.
50
Product
Tanker* Secondhand Prices: 2000 to 2010
(US$ Million
Five-Year-Old
Tankers Period Averages)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Size Category/Dwt
|
|
|
MR1*
|
|
MR2*
|
|
LR1*
|
Year
|
|
30,000(1)
|
|
45,000(2)
|
|
70,000(3)
|
|
2000
|
|
|
16.9
|
|
|
|
22.0
|
|
|
|
30.1
|
|
2001
|
|
|
17.0
|
|
|
|
25.6
|
|
|
|
33.2
|
|
2002
|
|
|
15.5
|
|
|
|
21.8
|
|
|
|
26.5
|
|
2003
|
|
|
21.8
|
|
|
|
25.4
|
|
|
|
27.7
|
|
2004
|
|
|
29.9
|
|
|
|
34.8
|
|
|
|
36.3
|
|
2005
|
|
|
36.6
|
|
|
|
44.3
|
|
|
|
45.9
|
|
2006
|
|
|
37.6
|
|
|
|
47.1
|
|
|
|
47.9
|
|
2007
|
|
|
40.4
|
|
|
|
50.0
|
|
|
|
54.8
|
|
2008
|
|
|
42.5
|
|
|
|
51.0
|
|
|
|
58.0
|
|
2009
|
|
|
26.2
|
|
|
|
30.2
|
|
|
|
35.8
|
|
2010**
|
|
|
21.5
|
|
|
|
25.5
|
|
|
|
34.0
|
|
|
|
|
* |
|
Coated Tankers. |
|
** |
|
Through February 28, 2010. |
|
(1) |
|
35-40,000
dwt prior to 2007. |
|
(2) |
|
45-50,000
dwt prior to 2007. |
|
(3) |
|
70-75,000
dwt prior to 2007. |
Product
Tanker Secondhand Price: 2000 to 2010
(MR2 45,000 Dwt US$ Million Period
Averages)
|
|
|
* |
|
Through February 28, 2010. |
51
Product
Tanker Secondhand Price: 2000 to 2010
(LR1 70,000 Dwt US$ Million Period
Averages)
|
|
|
* |
|
Through February 28, 2010. |
Freight
Market
Types
of Charter
Oil tankers are employed in the market through a number of
different chartering options. The general terms typically found
in these types of contracts are described below.
|
|
|
|
|
A bareboat charter involves the use of a vessel usually
over longer periods of time ranging up to several years. In this
case, all voyage related costs, including vessel fuel, or
bunker, and port dues as well as all vessel operating expenses,
such as
day-to-day
operations, maintenance, crewing and insurance, transfer to the
charterers account. The owner of the vessel receives
monthly charter hire payments on a per day basis and is
responsible only for the payment of capital costs related to the
vessel.
|
|
|
|
A time charter involves the use of the vessel, either for
a number of months or years or for a trip between specific
delivery and redelivery positions, known as a trip charter. The
charterer pays all voyage related costs. The owner of the vessel
receives semi-monthly charter hire payments on a per day basis
and is responsible for the payment of all vessel operating
expenses and capital costs of the vessel.
|
|
|
|
A single or spot voyage charter involves the carriage of
a specific amount and type of cargo on a load-port to
discharge-port basis, subject to various cargo handling terms.
Most of these charters are of a single or spot voyage nature, as
trading patterns do not encourage round voyage trading. The
owner of the vessel receives one payment derived by multiplying
the tons of cargo loaded on board by the agreed upon freight
rate expressed on a per cargo ton basis. The owner is
responsible for the payment of all expenses including voyage,
operating and capital costs of the vessel.
|
|
|
|
A contract of affreightment, or COA, relates to the
carriage of multiple cargoes over the same route and enables the
COA holder to nominate different ships to perform individual
voyages. Essentially, it constitutes a number of voyage charters
to carry a specified amount of cargo during the term of the COA,
which usually spans a number of years. All of the ships
operating, voyage and capital costs are borne by the ship owner.
The freight rate normally is agreed on a per cargo ton basis.
|
52
Worldscale is the tanker industrys standard reference for
calculating freight rates, and its aim is to make the business
of fixing tankers quicker, easier and more flexible. Worldscale
is used because it gives the flexibility required for the oil
trade. Oil is a fairly homogenous commodity, it does not vary
too much in quality and it is relatively easy to transport by a
variety of methods. This, combined with the volatility of the
world oil markets, means that an oil cargo may be bought and
sold many times while at sea. The cargo owner therefore requires
great flexibility in its choice of discharge options. If tanker
fixtures were priced in the same way as dry cargo fixtures this
would involve the shipowner calculating separate individual
freights for a wide variety of discharge points. Worldscale
provides a solution to this problem by providing a set of
nominal rates designed to provide roughly the same daily income
irrespective of discharge point.
TCE, or time charter equivalent, is the figure that describes
the earnings potential of any voyage based on the quoted
Worldscale rate. As described above, the Worldscale rate is set
and can then be converted into dollars per cargo ton. A voyage
calculation is then performed which takes all expenses (port
costs, bunkers and commission) from the gross revenue. This
leaves a net profit which is divided by the total voyage days
(at sea and in port) to give a daily TCE.
Charter
Rates
Tanker charter hire rates and vessel values for all tankers are
influenced by the supply and demand for tanker capacity.
However, the product segment generally appears less volatile
than other crude market segments because these vessels mainly
transport refined petroleum products that are not subject to the
same degree of volatility as the crude oil market.
Also, in general terms time charter rates are less volatile than
spot rates, because they reflect the fact that the vessel is
fixed for a longer period of time. In the spot market, rates
will reflect the immediate underlying conditions in vessel
supply and demand and are thus prone to more volatility. The
recent trends in rates in the time charter equivalent of spot
rates and time charter rates) are shown in the tables below and
in the case of time charter rates in both nominal and inflation
adjusted terms in the accompanying chart.
Product
Tanker Spot Charter Rates: 2000 to 2010
(US$/Day Period Averages)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Caribbean
|
|
|
|
|
|
|
Arabian GulfJapan
|
|
USES(1),(2)
|
|
MediterraneanNW Europe
|
Routes
|
|
(50-60,000 dwct*)
|
|
(35-40,000 dwct*)
|
|
(25-35,000 dwct*)
|
Dwt
|
|
WS(3)
|
|
($/day)TCE(4)
|
|
WS
|
|
($/day)TCE
|
|
WS
|
|
($/day)TCE
|
|
2000
|
|
|
237
|
|
|
|
24,390
|
|
|
|
276
|
|
|
|
14,415
|
|
|
|
234
|
|
|
|
10,750
|
|
2001
|
|
|
249
|
|
|
|
32,835
|
|
|
|
267
|
|
|
|
18,040
|
|
|
|
260
|
|
|
|
14,625
|
|
2002
|
|
|
152
|
|
|
|
16,515
|
|
|
|
182
|
|
|
|
10,100
|
|
|
|
185
|
|
|
|
8,610
|
|
2003
|
|
|
218
|
|
|
|
25,390
|
|
|
|
270
|
|
|
|
17,240
|
|
|
|
238
|
|
|
|
14,975
|
|
2004
|
|
|
251
|
|
|
|
31,800
|
|
|
|
337
|
|
|
|
24,000
|
|
|
|
304
|
|
|
|
14,800
|
|
2005
|
|
|
276
|
|
|
|
37,675
|
|
|
|
272
|
|
|
|
23,925
|
|
|
|
297
|
|
|
|
11,925
|
|
2006
|
|
|
214
|
|
|
|
26,525
|
|
|
|
233
|
|
|
|
21,575
|
|
|
|
259
|
|
|
|
7,600
|
|
2007
|
|
|
181
|
|
|
|
24,150
|
|
|
|
203
|
|
|
|
22,000
|
|
|
|
242
|
|
|
|
17,775
|
|
2008
|
|
|
250
|
|
|
|
34,600
|
|
|
|
234
|
|
|
|
23,400
|
|
|
|
287
|
|
|
|
21,325
|
|
2009
|
|
|
93
|
|
|
|
14,050
|
|
|
|
93
|
|
|
|
9,450
|
|
|
|
114
|
|
|
|
6,275
|
|
2010(5)
|
|
|
139
|
|
|
|
14,400
|
|
|
|
139
|
|
|
|
11,000
|
|
|
|
235
|
|
|
|
16,900
|
|
|
|
|
* |
|
dwct refers to the cargo parcel size and in the case of a fully
loaded ship is normally equivalent to approximately 97% of the
vessels deadweight. |
|
(1) |
|
25-35,000
dwct prior to January 2005. |
|
(2) |
|
United States Eastern Seaboard. |
|
(3) |
|
Worldscale. |
53
|
|
|
(4) |
|
Time Charter Equivalent. |
|
(5) |
|
Through February 28, 2010. |
Product
Tanker One Year Time Charter Rates: 2000 to 2010
(US$/Day Period Averages)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Size Category/Dwt
|
|
|
MR1
|
|
MR2
|
|
LR1
|
|
|
30,000
|
|
45,000
|
|
75,000*
|
Year
|
|
(5-years old)
|
|
(5-years old)
|
|
(5-years old)
|
|
2000
|
|
|
12,454
|
|
|
|
13,958
|
|
|
|
17,284
|
|
2001
|
|
|
15,583
|
|
|
|
17,563
|
|
|
|
22,064
|
|
2002
|
|
|
11,417
|
|
|
|
13,288
|
|
|
|
16,677
|
|
2003
|
|
|
13,267
|
|
|
|
14,846
|
|
|
|
15,891
|
|
2004
|
|
|
15,629
|
|
|
|
19,029
|
|
|
|
24,485
|
|
2005
|
|
|
18,854
|
|
|
|
25,271
|
|
|
|
28,933
|
|
2006
|
|
|
21,417
|
|
|
|
26,792
|
|
|
|
29,100
|
|
2007
|
|
|
22,200
|
|
|
|
25,367
|
|
|
|
30,408
|
|
2008
|
|
|
21,438
|
|
|
|
23,092
|
|
|
|
28,525
|
|
2009
|
|
|
13,675
|
|
|
|
14,850
|
|
|
|
18,617
|
|
2010(1)
|
|
|
9,900
|
|
|
|
11,300
|
|
|
|
16,100
|
|
|
|
|
* |
|
70-75,000
Dwt prior to 2007. |
|
(1) |
|
Through February 28, 2010. |
Product
Tanker One Year Time Charter Rates: 2000 to 2010
(MR2 45,000 Dwt US$/Day)
|
|
|
* |
|
Through February 28, 2010. |
54
Government
Regulations
Government regulation significantly affects the ownership and
operation of vessels including international conventions,
national, state and local laws and regulations in force in the
countries in which vessels may operate or are registered.
A variety of governmental and private entities subject vessels
to both scheduled and unscheduled inspections. These entities
include the local port authorities (U.S. Coast Guard,
harbor master or equivalent), classification societies, flag
state administration (country of registry) and charterers,
particularly terminal operators. Certain of these entities
require vessel owners to obtain permits, licenses and
certificates for the operation of their vessels. Failure to
maintain necessary permits or approvals could require a vessel
owner to incur substantial costs or temporarily suspend
operation of one or more of its vessels.
Tanker
Regulations
National authorities and international conventions have
historically regulated the seaborne transportation of crude oil
and refined petroleum products. Legislation and regulations,
such as the United States Oil Pollution Act of 1990, or OPA 90,
United Nations-backed IMO protocols and classification society
procedures, demand higher-quality vessel construction,
maintenance, repair and operations. This development has
accelerated in recent years in the wake of several high-profile
accidents involving
1970s-built
ships of single-hull construction first the
Erika in 1999 and then the Prestige in
November 2002. For example, in 2003 the IMO amended regulations
to accelerate the phase-out of certain pre-1982 built
single-hull tankers to 2005, with all remaining single-hull
tankers removed by 2015 at the latest. In addition to IMO
regulations, OPA 90 requires that all oil tankers entering
U.S. waterways be exclusively double-hull by 2015.
Successive regulations place increasingly stringent age limits
and quality requirements on vessels accepted at various ports
around the world, with a view to protecting the environment.
Charterers, port authorities, terminal operators, insurers and
shippers have sought to enforce such regulations through the
periodic inspection and vetting of vessels. A summary of
selected regulations pertaining to the operations of tankers is
shown below.
International
Tanker Regulations
|
|
|
|
|
|
|
Regulation
|
|
Introduced
|
|
|
Features
|
|
OPA 90
|
|
|
1989
|
|
|
Single-hull ships banned by 2010 in the U.S.
|
|
|
|
|
|
|
Double-sided and double-bottom ships banned by 2015.
|
IMO MARPOL Regulation 13G
|
|
|
1992
|
|
|
Single-hull ships banned from trading by their 25th anniversary.
|
|
|
|
|
|
|
All single-hull ships fitted with segregated ballast tanks may
continue trading to their 30th anniversary after selected
inspections.
|
|
|
|
|
|
|
Newbuildings must be double-hull.
|
IMO MARPOL Regulation 13G
|
|
|
2001
|
|
|
Phase out of pre-MARPOL tankers as of 2007. Remaining
single-hull tankers phased out by 2015.
|
IMO MARPOL Regulations 13G & 13H
|
|
|
2003
|
|
|
Phase out of pre-MARPOL tankers as of 2005. Remaining
single-hull tankers phased out by 2010 or 2015, depending on
port and flag states.
|
|
|
|
|
|
|
Single-hull ships over 15 years subject to Conditional
Assessment Scheme.
|
|
|
|
|
|
|
Single-hull tankers banned from carrying heavy oil grades as of
2005, or as of 2008 for tankers between 600-5,000 dwt.
|
55
|
|
|
|
|
|
|
Regulation
|
|
Introduced
|
|
|
Features
|
|
EU 417/2002
|
|
|
1999
|
|
|
25-year-old single-hull ships to cease trading as of 2007 unless
they apply hydrostatic balance methods or segregated ballast
tanks.
|
|
|
|
|
|
|
Single-hull tankers fitted with segregated ballast tanks phased
out by 2015.
|
EU 1723/2003
|
|
|
2003
|
|
|
Pre-MARPOL single-hull tankers banned after 2005. Remaining
single-hull vessels banned after 2010.
|
|
|
|
|
|
|
Single-hull tankers banned from carrying heavy oil grades by
2003.
|
MARPOL Annex II, International Bulk Chemical Code (IBC)
|
|
|
2004
|
|
|
Beginning January 1, 2007, vegetable oils which were previously
categorized as being unrestricted will now be required to be
carried in IMO II chemical tankers, or certain IMO III tankers
that meet the environmental protection requirements of an IMO II
tanker with regard to hull type (double hull) and cargo tank
location.
|
We believe that the heightened level of environmental and
quality concerns among insurance placing agents, regulators and
charterers is leading to greater inspection and safety
requirements on all vessels and may accelerate the scrapping of
older vessels throughout the industry. Increasing environmental
concerns have created a demand for vessels that conform to the
stricter environmental standards. Vessel owners are required to
maintain operating standards for all vessels that will emphasize
operational safety, quality maintenance, continuous training of
officers and crews and compliance with United States and
international regulations. Because these laws and regulations
are frequently changed and may impose increasingly stricter
requirements, we cannot predict the ultimate cost of complying
with these requirements, or the impact of these requirements on
our proposed business. For more details on government
regulations, see the section entitled Navios Acquisition
Management and Operations After the Business
Combination Governmental and Other Regulations.
Bulk
Liquid Chemicals
Introduction
Liquid chemicals moved in bulk by chemical tankers can normally
be classed under one of four main product groups: organic
chemicals; inorganic chemicals; vegetable oils and animal fats;
and other products.
Organic chemicals, or petrochemicals, are
characterized as being derived from petroleum products and are
carbon-based. Six base chemicals provide the building blocks for
almost the whole of the organics industry. These six chemicals
are split into two groups:
|
|
|
|
|
|
|
(A)
|
|
Olefins
|
|
(1)
|
|
Ethylene
|
|
|
|
|
(2)
|
|
Propylene
|
|
|
|
|
(3)
|
|
Butadiene
|
(B)
|
|
Aromatics
|
|
(4)
|
|
Benzene
|
|
|
|
|
(5)
|
|
Toluene
|
|
|
|
|
(6)
|
|
Xylene
|
Aromatics are produced in liquid form and are an important cargo
group for chemical tankers. Olefins are in gaseous form and are
transported in specialized gas carriers. Olefins require further
processing before they are carried in chemical parcel tankers
(i.e., in the form of intermediates like ethylene
glycol, ethylene dichloride). Around 90% of these base chemicals
are derived from oil fractions (products) and natural gas. The
56
remaining 10% are produced from cellulose and coal. Nearly all
other organic chemicals are produced from a combination of these
six building blocks.
Base chemicals derived from oil fractions and natural gas are
produced in refineries through a process called
cracking. This procedure splits the complex
molecules of the oil fraction and natural gas
feedstocks into the simpler molecules of the base
chemicals.
Any petroleum fraction can be used as a feedstock, but certain
fractions gasoline, kerosene, fuel oil
are in demand in their own right and are not widely used for
chemical manufacture. Natural gas, liquid petroleum gas and
naphtha are the most commonly used feedstocks.
In addition, there is a wide range of chemicals that can be
regarded as intermediates, in that they represent
intermediary steps on the way to converting base chemicals into
usable chemical products.
Inorganic chemicals, as the name suggests, are the
opposite of organic chemicals. In other words, they are
chemicals of mineral origin, not necessarily having carbon
structures. The main inorganics include phosphoric acid,
sulphuric acid and caustic soda.
Vegetable oils and animal fats include products
such as palm oil and tallow. Historically, the average share of
this category in the total chemical trades has been between
25-30% of
total trade.
Other products include items such as molasses and
urea ammonium nitrate.
Chemical
Tanker Demand
Trade in bulk liquid cargoes carried by chemical tankers has
grown at a steady pace since the early 1980s, driven largely by
growth in organic or petrochemical movements, and lately by
increases in vegetable oil trades. In the period 2000 to 2009
the average annual increase in chemical seaborne trade was 5.7%,
taking total trade in all four main product groups to
approximately 211 million tons.
Seaborne
Chemical Trade: 2000 to 2009
(Million Tons)
As with other commodities, geographic imbalances exist between
the main areas of production and the main areas of consumption.
The United States and Europe are both major exporters and
importers of chemicals, while the Middle East is a major export
zone and South East Asia/Far East (including China) a
57
major import zone. Chinese imports of chemicals have grown
rapidly in the last decade as the following figures indicate.
Chinese
Chemical Imports: 2000 to 2008
(000 Tons)
In both Europe and South East Asia/Far East considerable
intra-regional trade takes place, which provides employment for
small chemical tankers. Major flows of bulk liquid also occur in
the Atlantic both east and west bound, from the
U.S. to China and from the Middle East to markets in
South-East Asia and the Far East. To meet the pattern of trade,
many of the major chemical shipping companies offer
liner type services, with ships sailing on
pre-determined routes and at a stated frequency.
The approximately 211 million tons of cargo movements in
2009 generated some 742 billion ton miles of employment for
chemical tankers in 2009. Ton mile demand has grown at a
slightly faster rate than total trade, due to an increase in
average haul lengths.
Chemical
Tanker Demand: 2000 to 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CAGR%
|
|
|
|
2000
|
|
|
2001
|
|
|
2002
|
|
|
2003
|
|
|
2004
|
|
|
2005
|
|
|
2006
|
|
|
2007
|
|
|
2008
|
|
|
2009
|
|
|
00-09
|
|
|
Total Trade Million Tons
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Organics
|
|
|
72.4
|
|
|
|
72.5
|
|
|
|
75.8
|
|
|
|
80.5
|
|
|
|
86.0
|
|
|
|
94.9
|
|
|
|
97.8
|
|
|
|
103.2
|
|
|
|
95.3
|
|
|
|
96.5
|
|
|
|
3.24
|
%
|
Inorganics
|
|
|
23.0
|
|
|
|
23.4
|
|
|
|
26.5
|
|
|
|
27.3
|
|
|
|
29.7
|
|
|
|
31.9
|
|
|
|
32.8
|
|
|
|
35.3
|
|
|
|
37.8
|
|
|
|
38.3
|
|
|
|
5.83
|
%
|
Veg & Animal Oils & Fats
|
|
|
34.2
|
|
|
|
37.6
|
|
|
|
41.0
|
|
|
|
42.2
|
|
|
|
46.1
|
|
|
|
50.7
|
|
|
|
56.8
|
|
|
|
58.7
|
|
|
|
57.9
|
|
|
|
59.3
|
|
|
|
6.31
|
%
|
Other Products
|
|
|
14.8
|
|
|
|
15.2
|
|
|
|
15.3
|
|
|
|
15.6
|
|
|
|
15.7
|
|
|
|
16.0
|
|
|
|
16.3
|
|
|
|
16.3
|
|
|
|
16.6
|
|
|
|
16.6
|
|
|
|
1.28
|
%
|
Total
|
|
|
144.4
|
|
|
|
148.7
|
|
|
|
158.6
|
|
|
|
165.6
|
|
|
|
177.5
|
|
|
|
193.5
|
|
|
|
203.7
|
|
|
|
213.5
|
|
|
|
207.6
|
|
|
|
210.7
|
|
|
|
4.29
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand Billion Ton Miles
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Organics
|
|
|
210.3
|
|
|
|
210.4
|
|
|
|
220.1
|
|
|
|
233.7
|
|
|
|
249.7
|
|
|
|
275.7
|
|
|
|
283.9
|
|
|
|
299.7
|
|
|
|
277.9
|
|
|
|
270.5
|
|
|
|
2.84
|
%
|
Inorganics
|
|
|
58.6
|
|
|
|
59.7
|
|
|
|
67.7
|
|
|
|
69.7
|
|
|
|
75.8
|
|
|
|
81.3
|
|
|
|
83.6
|
|
|
|
89.9
|
|
|
|
119.7
|
|
|
|
121.2
|
|
|
|
8.41
|
%
|
Veg & Animal Oils & Fats
|
|
|
158.7
|
|
|
|
174.2
|
|
|
|
190.3
|
|
|
|
195.5
|
|
|
|
213.6
|
|
|
|
235.0
|
|
|
|
263.3
|
|
|
|
272.3
|
|
|
|
266.3
|
|
|
|
273.0
|
|
|
|
6.21
|
%
|
Other Products
|
|
|
69.1
|
|
|
|
70.3
|
|
|
|
71.1
|
|
|
|
72.1
|
|
|
|
73.0
|
|
|
|
74.4
|
|
|
|
75.5
|
|
|
|
75.4
|
|
|
|
76.7
|
|
|
|
76.9
|
|
|
|
1.20
|
%
|
Total
|
|
|
496.7
|
|
|
|
514.6
|
|
|
|
549.2
|
|
|
|
571.0
|
|
|
|
612.1
|
|
|
|
666.4
|
|
|
|
706.3
|
|
|
|
737.3
|
|
|
|
740.6
|
|
|
|
741.6
|
|
|
|
4.55
|
%
|
58
Chemical
Tanker Supply
The cargoes carried by chemical tankers are regulated under the
International Bulk Chemical Code (IBC) chapters 17 and 18
and MARPOL Annex II.
Within the overall chemical fleet there are four main categories
of ship:
|
|
|
|
|
IMO II: A vessel with all its space IMO I
and/or IMO II
|
|
|
|
IMO II/III: A vessel with a combination of IMO
I/II and IMO III space
|
|
|
|
IMO III DH: A vessel with all IMO III space
and with a double hull
|
|
|
|
IMO III Non DH: A vessel with all IMO III
space and with no double hull
|
A ship which is designated IMO II has the ability to carry
liquid cargoes that are listed as Category II chemicals by
the IMO. In general terms, Category II chemicals are more
difficult to carry than Category III products. In this
context, in January 2007, the IMO introduced changes to its
cargo categories that necessitated greater use of the more
sophisticated chemicals tankers, while at the same time
preventing some of the lesser grade ships, particularly non-IMO
vessels, from operating in chemical trades.
There are very few cargoes requiring IMO I space and most of
that space is actually used for IMO II cargo, hence the
classification. Non-IMO ships are able to carry ethanol, which
is becoming an increasingly important cargo due to the increase
in biofuels business. However, almost all ethanol is carried in
IMO-class ships for quality reasons, as ethanol is an ideal last
or previous cargo for all the IMO-classed products.
The above categories represent the fleet by widest possible
definition and in doing so include product tankers that may not
necessarily be trading in chemicals and related products.
Product tankers are less sophisticated ships that are primarily
designed to carry cargoes such as gasoline. Some of the ships in
the product tanker fleet also possess the capability to
transport what are known as easy chemicals. Hence
these ships represent a swing element in supply as they move
from chemical to product markets, depending on market conditions.
However, the potential impact of such ships may be somewhat
limited as most chemicals are moved in small lots which are not
economical for larger ships to carry. Also, the types of
chemicals that are actually listed in such ships
certificate of fitness are usually also limited. For instance,
although a pure IMO II chemical tanker appears to be able to
carry all cargoes rated IMO II, in practice this depends on the
actual coating, the cargo equipment of the ship and last cargo
carried as well as the cargo lot such that in many cases,
especially with the larger ships. By the same token, a ship
rated IMO III may also not be able to carry the full range of
IMO III cargoes and is restricted to only a few chemical types.
Clean petroleum products (e.g., gasoline, gas oil, aviation
fuel, including distillates) are mostly carried by non-IMO
tankers (also termed as product tankers) in the clean petroleum
tanker trade and are regulated under MARPOL Annex I.
In general terms, the fleet has increased in size to reflect the
underlying growth in vessel demand and in February 2010
consisted of 3,802 ships of 76.0 million dwt. The fleet has
grown significantly in size in the last few years, although the
changes in vessel classifications make it impossible to draw any
comparisons over a long period of time.
59
The
Chemical Tanker Fleet* (as of February 2010)
|
|
|
|
|
|
|
|
|
Dwt
|
|
No.
|
|
000 Dwt
|
|
1-4,999
|
|
|
694
|
|
|
|
2,183
|
|
5-9,999
|
|
|
853
|
|
|
|
6,224
|
|
10-19,999
|
|
|
951
|
|
|
|
14,304
|
|
20-29,999
|
|
|
160
|
|
|
|
4,087
|
|
30-39,999
|
|
|
433
|
|
|
|
15,692
|
|
40,000+
|
|
|
711
|
|
|
|
33,494
|
|
Total
|
|
|
3,802
|
|
|
|
75,983
|
|
|
|
|
* |
|
Includes product/chemical tankers. |
It should also be noted that some of the ships included in the
table above are effectively product tankers and are therefore
also included in the product tanker fleet shown previously.
These ships cannot be isolated to one fleet or the other, as
they move from sector to sector depending on market conditions.
The supply of ships going forward will be influenced by the
amount of tonnage that is on order. In February 2010, the
chemical tanker orderbook (by wide definition) consisted of 735
ships of 17.6 million dwt, equivalent to 23% of the
existing fleet. Most of the ships on order will be delivered to
the fleet by the end of 2012.
The
Chemical Tanker Orderbook* (as of February 2010)
(Yearly tabulations and total in 000 dwt)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Size Category
|
|
2010
|
|
|
2011
|
|
|
2012
|
|
|
2013
|
|
|
2014
|
|
|
Total
|
|
|
% of
|
|
Dwt
|
|
No.
|
|
|
Dwt
|
|
|
No.
|
|
|
Dwt
|
|
|
No.
|
|
|
Dwt
|
|
|
No.
|
|
|
Dwt
|
|
|
No.
|
|
|
Dwt
|
|
|
No.
|
|
|
Dwt
|
|
|
Fleet
|
|
|
1-4,999
|
|
|
24
|
|
|
|
99
|
|
|
|
6
|
|
|
|
28
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
30
|
|
|
|
127
|
|
|
|
5.8
|
|
5-9,999
|
|
|
152
|
|
|
|
1,054
|
|
|
|
24
|
|
|
|
169
|
|
|
|
6
|
|
|
|
46
|
|
|
|
1
|
|
|
|
7
|
|
|
|
0
|
|
|
|
0
|
|
|
|
183
|
|
|
|
1,276
|
|
|
|
20.5
|
|
10-19,999
|
|
|
137
|
|
|
|
2,094
|
|
|
|
46
|
|
|
|
734
|
|
|
|
14
|
|
|
|
246
|
|
|
|
2
|
|
|
|
40
|
|
|
|
0
|
|
|
|
0
|
|
|
|
199
|
|
|
|
3,114
|
|
|
|
21.8
|
|
20-29,999
|
|
|
50
|
|
|
|
1,243
|
|
|
|
26
|
|
|
|
667
|
|
|
|
5
|
|
|
|
125
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
81
|
|
|
|
2,035
|
|
|
|
49.8
|
|
30-39,999
|
|
|
32
|
|
|
|
1,169
|
|
|
|
17
|
|
|
|
612
|
|
|
|
2
|
|
|
|
67
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
51
|
|
|
|
1,848
|
|
|
|
11.8
|
|
40,000+
|
|
|
98
|
|
|
|
4,732
|
|
|
|
69
|
|
|
|
3,316
|
|
|
|
23
|
|
|
|
1,085
|
|
|
|
1
|
|
|
|
43
|
|
|
|
0
|
|
|
|
0
|
|
|
|
191
|
|
|
|
9,176
|
|
|
|
27.4
|
|
Total
|
|
|
493
|
|
|
|
10,391
|
|
|
|
188
|
|
|
|
5,526
|
|
|
|
50
|
|
|
|
1,569
|
|
|
|
4
|
|
|
|
90
|
|
|
|
0
|
|
|
|
0
|
|
|
|
735
|
|
|
|
17,576
|
|
|
|
23.1
|
|
|
|
|
* |
|
Includes product/chemical tankers. |
While the orderbook is large in relation to the size of the
existing fleet it is clear that with the general downturn in all
shipping markets in the second half of 2008, the level of new
ordering declined very quickly over a short space of time, to
the extent that virtually no new orders were placed for chemical
tankers in 2009, as the following chart indicates.
60
Chemical
Tanker New Orders: January 2007-February 2010
The other factor that will affect future supply is the level of
vessel scrapping associated with ships reaching the end of their
useful trading lives, or technical obsolescence brought about by
legislative change. Typically, chemical tankers will trade for
25-30 years
before being sent for demolition. As ships become older they
normally become less efficient, while there is a tendency for
repairs and maintenance expenditure to increase with vessel age.
The age profile of the fleet as of February 28, 2010 is
shown below.
Chemical
Tanker Fleet Age Profile (as of February 2010)
The chemical fleet is comparatively young, but weak freight
market conditions in 2008 and 2009 have prompted an increase in
vessel scrapping as the following chart indicates.
61
Chemical
Tanker Scrapping: 2000 to 2009
(000 dwt)
Vessel
Prices
Due to the fact that it is a comparatively small fleet, the
level of new ordering is such that any assessment of actual
newbuilding prices must be viewed as indicative only.
Furthermore, differences in the complexity of ships of the same
size can lead to significant variations in price. Caveats aside,
newbuilding prices for chemical tankers increased significantly
in the period 2003 to 2008 due to a combination of shortage in
berth space and raw material costs for shipyards, especially the
price of steel. In 2009, the fact that few new orders were
placed makes any assessment of price trends difficult, but based
on the evidence from other sectors it is clear that prices have
fallen in the face of weak demand.
In 2010, there have been few reported newbuilding orders for
chemical tanker, and as there is currently no significant
newbuilding market, the 2010 assessed newbuilding price could
have a plus or minus variance of 10% given criteria such as
yard/country/stainless type/specifications. Therefore, in 2010,
if we take the IMO II
22-25,000
dwt vessel in the table below, the representative newbuilding
price could range between US$38.0 to $46.0 million.
62
Chemical
Tanker IMO II Stainless Steel Newbuilding Prices :
2000 to 2010
(Period Averages US$ Million)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Type/Dwt
|
|
|
IMO 11
|
|
IMO 11
|
|
IMO 11
|
Year
|
|
22-25,000
|
|
35-37,000
|
|
40-45,000
|
|
2000
|
|
|
36.0
|
|
|
|
57.6
|
|
|
|
62.0
|
|
2001
|
|
|
34.0
|
|
|
|
52.0
|
|
|
|
58.0
|
|
2002
|
|
|
32.0
|
|
|
|
50.0
|
|
|
|
54.0
|
|
2003
|
|
|
28.0
|
|
|
|
52.0
|
|
|
|
53.0
|
|
2004
|
|
|
31.2
|
|
|
|
55.0
|
|
|
|
60.0
|
|
2005
|
|
|
37.0
|
|
|
|
57.0
|
|
|
|
68.5
|
|
2006
|
|
|
42.8
|
|
|
|
62.8
|
|
|
|
79.0
|
|
2007
|
|
|
46.0
|
|
|
|
66.6
|
|
|
|
87.3
|
|
2008
|
|
|
52.0
|
|
|
|
69.9
|
|
|
|
93.5
|
|
2009
|
|
|
46.4
|
|
|
|
67.5
|
|
|
|
88.8
|
|
2010*
|
|
|
42.0
|
|
|
|
66.0
|
|
|
|
87.2
|
|
|
|
|
* |
|
Through February 28, 2010. |
Chemical
Tanker
22-25,000
Dwt IMO II Stainless Steel
Newbuilding Prices : 2000 to 2010
(Period Averages US$ Million)
|
|
|
* |
|
Through February 28, 2010. |
Sales activity in the secondhand market is quite sporadic, so
any assessments on values are also indicative. The combination
of a rising freight market and firmer newbuilding prices pushed
up secondhand values for chemical tankers in the period 2003 to
2007. However, with the downturn in the freight market in 2008
and 2009 the value of secondhand vessels also declined.
63
Chemical
Tanker IMO II Secondhand Prices : 2000 to 2010
(10-Year-Old
Vessels Period Averages US$
Million)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dwt
|
Year
|
|
22-25,000
|
|
35-37,000
|
|
40-45,000
|
|
2000
|
|
|
16.9
|
|
|
|
29.8
|
|
|
|
31.0
|
|
2001
|
|
|
18.0
|
|
|
|
27.0
|
|
|
|
29.0
|
|
2002
|
|
|
17.8
|
|
|
|
26.0
|
|
|
|
28.0
|
|
2003
|
|
|
16.6
|
|
|
|
27.0
|
|
|
|
33.0
|
|
2004
|
|
|
20.0
|
|
|
|
29.0
|
|
|
|
35.0
|
|
2005
|
|
|
22.9
|
|
|
|
33.7
|
|
|
|
40.2
|
|
2006
|
|
|
26.3
|
|
|
|
38.8
|
|
|
|
45.9
|
|
2007
|
|
|
33.6
|
|
|
|
40.7
|
|
|
|
49.5
|
|
2008
|
|
|
36.9
|
|
|
|
44.5
|
|
|
|
53.2
|
|
2009
|
|
|
25.8
|
|
|
|
38.3
|
|
|
|
44.5
|
|
2010*
|
|
|
25.0
|
|
|
|
34.7
|
|
|
|
43.8
|
|
|
|
|
* |
|
Through February 28, 2010. |
Chemical
Tanker
22-25,000
Dwt IMO II
Secondhand Prices : 2000 to 2010
(10-Year-Old
Vessels Period Averages US$
Million)
* Through February 28, 2010.
The
Freight Market
Chemical tanker chartering arrangements are based on the
established practice of the tanker market, with some variations.
Hence cargoes are moved in tonnage working single voyage, or
spot charters, time charters (including bareboat charters),
consecutive voyages and contracts of affreightment
(COAs). The general terms typically found in these
types of contracts are the same as those describe above under
Types of Charter.
64
Some 50% of all chemical movements are covered by COAs, while
the spot market covers 35% to 40%. The remainder is made up by
other charter arrangements and cargoes moved in tonnage
controlled by exporters or importers. In the short sea chemical
trades, contracts may cover periods up to one year, but in the
deep sea trades a commitment for two/three years is not uncommon
with commercial terms renewed each year. In the chemical tanker
freight market, the level of reporting of fixture information is
far less widespread than for the oil tanker market. Furthermore,
it is not always possible to establish a monthly series of rates
for an individual cargo, on a given route, as fixing is often
sporadic, or more often than not covered by contract business.
For these reasons, the assessment of rate trends in the freight
market is made by using a small number of routes where there is
sufficient fixture volume to produce meaningful measurements.
These routes in question represent a benchmark or bell
weather indicator of the state of the market as a whole,
and generally regarded as a very reliable guide to prevailing
trends. The routes in question shown in this analysis are
Transatlantic-Westbound (Rotterdam to Houston) and
Transatlantic-Eastbound (Houston to Rotterdam).
Chemical
Spot Rates Transatlantic Eastbound: 2000 to 2010
($/Ton Cargo Size)
* Through February 28, 2010.
Although there are some differences by route, rates generally
rose in the period 2000 to 2007, but thereafter have been
adversely affected by the downturn in the global economy.
65
Chemical
Spot Rates Transatlantic Westbound: 2000 to 2010
($/Ton Cargo Size)
*Through February 28, 2010.
The chemical tanker time charter market is fairly inactive,
particularly in the stainless IMO II/III range, as these vessels
are traditionally built by owners for their core fleet
requirements which are dedicated to liner type trades. That
being said, indicative rates do show a relationship to the spot
market, and thus showed an upward trend from 2003 as market
conditions improved, but with a steep decline in rates in 2009.
Chemical
Tanker One Year Time Charter Rates: 2000 to 2010
(Period Averages US$ per Day)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dwt/Type/Age
|
|
|
25,000
|
|
30,000
|
|
37,000
|
|
|
IMO II
|
|
IMO II
|
|
IMO II
|
Year
|
|
0-10 yrs
|
|
0-10 yrs
|
|
0-10 yrs
|
|
2000
|
|
|
14,500
|
|
|
|
21,150
|
|
|
|
n/a
|
|
2001
|
|
|
16,117
|
|
|
|
22,567
|
|
|
|
n/a
|
|
2002
|
|
|
16,117
|
|
|
|
22,567
|
|
|
|
n/a
|
|
2003
|
|
|
15,553
|
|
|
|
21,834
|
|
|
|
n/a
|
|
2004
|
|
|
16,526
|
|
|
|
22,078
|
|
|
|
28,961
|
|
2005
|
|
|
19,472
|
|
|
|
25,332
|
|
|
|
33,022
|
|
2006
|
|
|
22,125
|
|
|
|
28,063
|
|
|
|
33,875
|
|
2007
|
|
|
23,000
|
|
|
|
31,875
|
|
|
|
37,250
|
|
2008
|
|
|
22,250
|
|
|
|
30,566
|
|
|
|
37,500
|
|
2009
|
|
|
16,725
|
|
|
|
24,500
|
|
|
|
29,000
|
|
2010*
|
|
|
15,800
|
|
|
|
21,900
|
|
|
|
27,000
|
|
|
|
|
* |
|
Through February 28, 2010. |
66
Chemical
Tanker 25,000 Dwt IMO II
One Year Time Charter Rates: 2000 to 2010
(Period Averages US$
per Day)
|
|
|
* |
|
Through
February 28, 2010. |
67
INFORMATION
ABOUT NAVIOS ACQUISITION
Business
of Navios Acquisition
General
Navios Acquisition was incorporated in the Republic of the
Marshall Islands on March 14, 2008. Navios Acquisition was
formed to acquire through a merger, capital stock exchange,
asset acquisition, stock purchase or other similar business
combination one or more assets or operating businesses in the
marine transportation and logistics industries. Other than the
completion of our initial public offering, we have neither
engaged in any operations nor generated significant revenue to
date. We are considered to be in the development stage as
defined in the guidance issued by the Financial Accounting
Standards Board (FASB) for Accounting and Reporting
by Development Stage Enterprises, and are subject to the risks
associated with activities of development stage companies.
On March 18, 2008, Navios Holdings purchased an aggregate
of 8,625,000 sponsor units for an aggregate purchase price of
$25,000, of which an aggregate of 290,000 were transferred to
our officers and directors. Subsequently, on June 16, 2008,
Navios Holdings agreed to return to us an aggregate of 2,300,000
sponsor units, which, upon receipt, we cancelled. Accordingly,
the initial stockholders own 6,325,000 sponsor units. Each
sponsor unit consists of one share of common stock, and one
warrant to purchase one share of our common stock.
On July 1, 2008, we consummated our initial public offering
of 25,300,000 units, including 3,300,000 units issued
upon exercise of the underwriters over-allotment option at
a price of $10.00 per unit in the offering. Each unit consists
of one share of our common stock, $0.0001 par value per
share, and one warrant that entitles the holder to purchase one
share of our common stock. Each warrant entitles the holder to
purchase from us one share of common stock at an exercise price
of $7.00 commencing on the completion of a business combination,
and will expire on June 25, 2013, or earlier upon
redemption. The warrants will be redeemable at a price of $0.01
per warrant upon 30 days prior notice after the warrants
become exercisable, only in the event that the last sale price
of the common stock is at least $13.75 per share for any 20
trading days within a 30 trading day period ending on the third
business day prior to the date on which notice of redemption is
given.
Additionally, on July 1, 2008, Navios Holdings purchased
7,600,000 warrants from us at a price of $1.00 per warrant
($7.6 million in the aggregate) in the private placement
that occurred simultaneously with the completion of the initial
public offering. The proceeds from the private placement were
added to the proceeds of the initial public offering and placed
in the trust account. If we do not consummate a business
combination by July 1, 2010 (or up to July 1, 2011 if
our stockholders approve an extension period), the
$7.6 million proceeds from the sale of the sponsor warrants
will be part of the liquidating distribution to the public
stockholders and the warrants will expire worthless. The sponsor
warrants are identical to the warrants included in the units
sold in the initial public offering except that: (i) the
sponsor warrants are subject to certain transfer restrictions
until after the consummation of our initial business
combination; (ii) the sponsor warrants may be exercised on
a cashless basis, while the warrants included in the units sold
in the initial public offering cannot be exercised on a cashless
basis; (iii) the sponsor warrants are not redeemable by us
so long as they are held by Navios Holdings or its permitted
transferees; and (iv) none of the sponsor warrants
purchased by Navios Holdings are transferable or salable, except
to another entity controlled by Navios Holdings, which entity
will be subject to the same transfer restrictions until after
our initial business combination is consummated.
Proceeds of $250,770,000 from the initial public offering and
the private placement were placed in the trust account
maintained by Continental Stock Transfer &
Trust Company, as trustee and invested in
U.S. government debt securities (U.S. Treasury
Bills). Our agreement with the trustee requires that the
trustee will invest and reinvest the proceeds in the trust
account only in United States government debt
securities within the meaning of Section 2(a)(16) of
the Investment Company Act of 1940, as amended (the
Investment Company Act) having a maturity of
180 days or less, or in money market funds meeting the
conditions under
Rule 2a-7
promulgated under the Investment Company Act. Except with
respect to interest
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income that may be released to us consisting of (i) up to
$3,000,000 to fund working capital requirements, and
(ii) any additional amounts needed to pay our income and
other tax obligations, the proceeds will not be released from
the trust account until the earlier of the completion of a
business combination or our liquidation, or for payments with
respect to shares of common stock converted in connection with
the vote to approve an extension period. The proceeds held in
the trust account may be used as consideration to pay sellers of
a business combination target with which we complete a business
combination. Any amounts not paid as consideration to the
sellers of the business combination target (excluding taxes and
amounts permitted to be disbursed for expenses as well as the
amount held in the trust account representing deferred
underwriting discounts and commissions), or returned to
stockholders, will be used to finance our continued growth and
operations.
Our executive officers and directors have experience in the
international maritime shipping industry as leading managers,
principals or directors of some of the most prominent worldwide
shipping companies, including our principal stockholder and
sponsor, Navios Holdings, an established, publicly traded
shipping company listed on the New York Stock Exchange (NYSE:
NM). In addition, our management team has collectively over
50 years of experience owning, operating and growing
successful businesses within the marine transportation and
logistics industries. This experience includes all aspects of
the business, including commercial and technical management,
operations, engineering and finance. The management teams
experience also includes identifying acquisition targets and
realizing value from assets and businesses in different business
cycles and sectors within the marine transportation and
logistics industries. We took advantage of the industry
experience of Navios Holdings, as well as our officers and
directors, in connection with our efforts to identify
prospective target businesses in the shipping industry.
Until we consummate a business combination, our officers and
directors will not receive any compensation other than
reimbursement for
out-of-pocket
expenses incurred by them on our behalf, except that our
independent directors each will be entitled to receive $50,000
in cash per year, accruing pro rata from the start of
their service on our board of directors and payable only upon
the successful completion of a business combination. However,
all of these individuals will be reimbursed for any
out-of-pocket
expenses incurred in connection with activities on our behalf,
such as identifying potential target businesses and performing
due diligence on suitable business combinations.
Our amended and restated articles of incorporation provide that
we will continue in existence only until July 1, 2010 (or
up to July 1, 2011 if an extension period is approved by
our stockholders). This provision may not be amended except in
connection with the consummation of a business combination. If
we have not consummated a business combination by such date, our
corporate existence will cease except for the purposes of
winding up our affairs and liquidating, pursuant to
Section 106 of the Marshall Islands Business Corporations
Act (BCA).
Our offices are located at 85 Akti Miaouli Street, Piraeus,
Greece 185 38 and our telephone number is (011) +30-210-4595000.
See the section entitled Risk Factors beginning on
page 119 for a further discussion on risks associated with
our status as a blank check company.
Periodic
Reporting and Audited Financial Statements
We have registered our units, common stock and warrants under
the Securities Exchange Act of 1934, as amended (the
Exchange Act), and have reporting obligations,
including the requirement that we file annual reports with the
SEC. In accordance with the requirements of the Exchange Act,
our annual reports will contain financial statements audited and
reported on by our independent accountants. As a foreign private
issuer, we are exempt from certain rules under the Exchange Act
regarding proxy statements. Because of this exemption, when we
seek approval from our stockholders of our initial business
combination, we are not required to file preliminary proxy
solicitation materials regarding our initial business
combination with the SEC and, accordingly, such materials will
not be reviewed by the SEC. However, we will furnish to the SEC
any final proxy solicitation materials that we deliver to our
stockholders.
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Legal
Proceedings
To the knowledge of management, there is no litigation currently
pending or contemplated against us or any of our officers or
directors in their capacities as such.
Navios Maritime Holdings Inc. and Navios Maritime Partners
L.P.
Our affiliates are:
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Navios Holdings. Navios Holdings is a global
and vertically integrated seaborne shipping and logistics
company that specializes in a wide range of drybulk commodities,
including iron ore, coal, and grain. Although Navios Holdings
derives a portion of its revenue from its logistics operations,
most of Navios Holdings revenue and net income are from
vessel operations, which are virtually exclusively in the
drybulk shipping sector. Navios Holdings policy for vessel
operations has led Navios Holdings to time charter-out many of
its vessels for short- to medium-term charters.
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Navios Partners. Navios Partners operates
drybulk vessels that are chartered-out for a minimum of three
years. Navios Partners fleet currently consists of ten
active Panamax vessels, two Capesize vessels and one
Ultra-Handymax vessel. All of Navios Partners current
fleet operates under long-term charter-out contracts with an
average remaining charter duration of approximately
4.2 years. All of Navios Partners vessels are
currently managed by Navios ShipManagement Inc.
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As a controlled affiliate of Navios Holdings, we are subject to
an omnibus agreement between Navios Holdings and Navios Partners
(the Partners Omnibus Agreement) that governs
business opportunities within the drybulk shipping sector. Under
the Partners Omnibus Agreement, Navios Holdings agreed (and
agreed to cause its controlled affiliates, including us, to
agree) to grant a right of first offer to Navios Partners for
any Panamax or Capesize drybulk vessel subject to a charter for
three or more years that it acquires or may own. In June 2009,
Navios Holdings was released from the Partners Omnibus Agreement
restrictions for two years in connection with acquiring such
vessels from third parties (but not from the requirement to
offer to sell to Navios Partners qualifying vessels in Navios
Holdings existing fleet). Navios Partners and its
subsidiaries granted to Navios Holdings a similar right of first
offer on any proposed sale, transfer or other disposition of any
of its Panamax or Capesize drybulk carriers and related charters
or any of its drybulk vessels that is not a Panamax or Capesize
drybulk vessel and related charters owned or acquired by it. To
resolve this conflict of interest, we have entered into a right
of first refusal agreement that grants us the first opportunity
to consider any business opportunity outside of the drybulk
shipping sector. In June 2009, Navios Partners waived its rights
of first refusal with respect to an acquisition opportunity
relating to such vessels until (a) the consummation of our
initial business combination, (b) our liquidation, and
(c) June 2011. See Conflicts of Interest. In
light of the fact that our business strategy is to operate
outside of the drybulk sector, these agreements will be less
meaningful and, if the vessel acquisition is consummated, will
be superseded by a new agreement. The new agreement is described
under the heading Navios Acquisition Management and
Operations After the Business Combination The
Acquisition Omnibus Agreement.
Upon a change of control of Navios Holdings or Navios Partners,
the noncompetition and right of first offer provisions of the
Partners Omnibus Agreement, and hence our obligations
thereunder, will terminate within a specified period of time
after such change in control. Our obligations under the Partners
Omnibus Agreement will also be terminated whenever we are deemed
no longer to be a controlled affiliate of Navios Holdings.
Because of the overlap between Navios Holdings, Navios Partners
and Navios Acquisition with respect to possible acquisitions
under the terms of the Partners Omnibus Agreement, as amended,
we have entered into a business opportunity right of first
refusal agreement, which provides that Navios Acquisition,
Navios Holdings and Navios Partners will share business
opportunities in the marine transportation and logistics
industries, commencing on the date of the prospectus related to
our initial public offering and extending until the earlier
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of the consummation of our initial business combination or our
liquidation, as follows (subject to the amended Partners Omnibus
Agreement and the waiver as previously disclosed):
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We will have the first opportunity to consider any business
opportunities within the product and chemical tanker sectors of
the shipping industry.
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Navios Holdings will have the first opportunity to consider any
business opportunities within the drybulk shipping sector, with
the exception of any Panamax or Capesize drybulk carrier under
charter for three or more years it might own.
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Navios Partners has the first opportunity to consider any
acquisition opportunity relating to any Panamax or Capesize
drybulk carrier under charter for three or more years.
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In light of the fact that our business strategy is to operate
outside of the drybulk sector, these agreements will be less
meaningful. As described elsewhere herein, we will enter into a
new Acquisition Omnibus Agreement upon consummation of the
vessel acquisition.
Directors
and Executive Officers
Our board of directors and our executive officers will remain
the same following the vessel acquisition, except that we expect
that Rex W. Harrington will be added to the board as an
independent director. Information about our board of directors
and our executive officers is set forth under Navios
Acquisition Management and Operations After the Business
Combination.
Board
Classes
Our board of directors is divided into three classes with only
one class of directors being elected in each year and each class
serving a three-year term. The term of office of the first class
of directors, consisting of John Koilalous and Julian David
Brynteson, will expire at our 2012 annual meeting of
stockholders. The term of office of the second class of
directors, consisting of Ted C. Petrone and Nikolaos Veraros,
will expire at our 2010 annual meeting of stockholders. The term
of office of the third class of directors, consisting of
Angeliki Frangou, will expire at our 2011 annual meeting. Rex
Harrington is expected to be appointed as one of the first class
directors, with a term of office that will expire at our 2012
annual meeting of stockholders.
Director
Independence
Our board of directors has determined that Messrs. Veraros,
Koilalous and Brynteson are independent directors as
defined in the New York Stock Exchange listing standards and
Rule 10A-3
of the Exchange Act. Although the decision of whether our
independent directors will remain with us after the vessel
acquisition is reserved for each such director, we will always
seek to have a board of directors comprising of a majority of
independent directors.
Executive
Compensation
No executive officer has received any cash compensation for
services rendered and no compensation of any kind, including
finders and consulting fees, will be paid to our initial
stockholders, officers, directors or any of their respective
affiliates unless and until the vessel acquisition is completed.
Furthermore, neither Navios Holdings nor any of our officers,
directors or any of their respective affiliates will receive any
cash compensation for services rendered prior to or in
connection with a business combination, except that our
independent directors will be entitled to receive $50,000 in
cash per year, accruing pro rata from the respective
start of their service on our board of directors and payable
only upon the successful consummation of a business combination.
However, all of these individuals will be reimbursed for any
out-of-pocket
expenses incurred in connection with activities on our behalf,
such as identifying potential business combination opportunities
and performing due diligence on suitable business combinations.
Pursuant to an agreement between us and Navios Holdings, the
compensation of Leonidas Korres, our Chief Financial Officer, is
to be paid by Navios Holdings up to the amount of 65,000,
provided that if we complete a
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business combination, we will reimburse such amounts to Navios
Holdings immediately following the completion of the business
combination. In the event that we are unable to complete a
business combination, then we will not be obligated to make any
payments to Navios Holdings or Mr. Korres with respect to
his employment.
Our Chairman and any of our independent directors may continue
to serve on our board of directors after the consummation of our
initial business combination. In that event, such individuals
may be paid consulting or other fees from the target business as
a result of the business combination, with any and all amounts
being fully disclosed to stockholders, to the extent then known,
in the proxy solicitation materials furnished to the
stockholders. It is unlikely the amount of such compensation
will be known at the time of a stockholder meeting held to
consider a business combination, as it will be up to the
directors of the post-combination business to determine
executive and director compensation. In this event, such
compensation will be publicly disclosed at the time of its
determination in a current report on a
Form 6-K.
Board
Committees
Our board of directors has an audit committee and a nominating
committee. Our board of directors has adopted a charter for the
audit committee as well as a code of conduct and ethics that
governs the conduct of our directors and officers.
Audit
Committee
Our audit committee consists of Messrs. Veraros and
Koilalous, and Mr. Harrington is expected to join the Audit
Committee after consummation of the vessel acquisition and his
appointment to the board. Each member of our audit committee is
financially literate under the current listing standards of the
New York Stock Exchange, and our board of directors has
determined that Mr. Veraros qualifies as an audit
committee financial expert, as such term is defined by SEC
rules.
The audit committee reviews the professional services and
independence of our independent registered public accounting
firm and our accounts, procedures and internal controls. The
audit committee also selects our independent registered public
accounting firm, reviews and approves the scope of the annual
audit, reviews and evaluates with the independent public
accounting firm our annual audit and annual consolidated
financial statements, reviews with management the status of
internal accounting controls, evaluates problem areas having a
potential financial impact on us that may be brought to the
committees attention by management, the independent
registered public accounting firm or the board of directors, and
evaluates all of our public financial reporting documents.
In addition, the audit committee reviews and approves all
expense reimbursements made to our officers or directors. Any
expense reimbursements payable to members of our audit committee
are reviewed and approved by our board of directors, with the
interested director or directors abstaining from such review and
approval.
Nominating
Committee
A nominating committee of the board of directors has been
established, which consists of Messrs. Veraros, Koilalous
and Brynteson, each of whom is an independent director. In
addition, Mr. Harrington is expected to join the Nominating
Committee after consummation of the vessel acquisition and his
appointment to the board as an independent director. The
nominating committee is responsible for overseeing the selection
of persons to be nominated to serve on our board of directors.
The nominating committee considers persons identified by its
members, management, stockholders, investment bankers and others.
Code of
Conduct and Ethics
We have adopted a code of conduct and ethics applicable to our
directors and officers in accordance with applicable federal
securities laws and the rules of the New York Stock Exchange.
72
Conflicts
of Interest
Stockholders and potential investors should be aware of the
following potential conflicts of interest:
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None of our officers and directors is required to commit their
full time to our affairs and, accordingly, they will have
conflicts of interest in allocating management time among
various business activities, including those related to Navios
Holdings and Navios Partners.
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Angeliki Frangou, our Chairman and Chief Executive Officer, is
the Chairman and Chief Executive Officer of Navios Holdings and
Navios Partners, an affiliate of Navios Holdings. In addition,
Ms. Frangou is the Chairman of the board of directors of
IRF European Finance Investments, Ltd. Ted C. Petrone, our
president and a member of our board of directors, is the
president of Navios Corporation, a subsidiary of Navios
Holdings, and a director of Navios Holdings. In the course of
their business activities for Navios Holdings, our common
officers and directors may become aware of investment and
business opportunities that may be appropriate for presentation
to us as well as to Navios Holdings and Navios Partners. For
this reason, we have entered into a business opportunity right
of first refusal agreement with Navios Holdings and Navios
Partners, the terms of which are discussed elsewhere herein.
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The financial interests of our initial stockholders, including
our officers and directors, certain of whom are also members of
the board of Navios Holdings, may influence their motivation to
support the vessel acquisition and determination as to whether
the vessel acquisition is in our stockholders best
interest because:
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our initial stockholders own sponsor units that will be released
from escrow (or from transfer restrictions in the case of the
sponsor warrants) only if a business combination is successfully
consummated; and
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Navios Holdings owns sponsor warrants that will expire worthless
if a business combination is not consummated.
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Upon consummating the vessel acquisition, we will enter into a
five-year Management Agreement with a subsidiary of Navios
Holdings, pursuant to which such subsidiary will provide certain
commercial and technical ship management services for a fixed
daily fee of $6,000 per owned MR2 product tanker and chemical
tanker vessel and $7,000 per owned LR1 product
tanker vessel for the first two years of the term of that
agreement.
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Other than with respect to the vessel acquisition, we have not
adopted a policy that expressly prohibits our directors,
officers, security holders or affiliates from having a direct or
indirect pecuniary interest in any investment to be acquired or
disposed of by us or in any transaction to which we are a party
or have an interest. Nor do we have a policy that expressly
prohibits any such persons from engaging for their own account
in business activities of the types conducted by us.
Accordingly, such parties may have an interest in certain
transactions in which we are involved, and may also compete with
us.
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Because (a) each of our independent directors will be
entitled to receive $50,000 in cash per year for their board
service, accruing pro rata from the respective start of
their service on our board of directors and payable only upon
the successful consummation of a business combination, and
(b) all of our directors will continue to serve on our
board following the vessel acquisition and may be entitled to
compensation for their services, the financial interest of our
independent directors could influence their motivation to
support the vessel acquisition and determination as to whether
the vessel acquisition is in our stockholders best
interest.
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H. Clarkson & Company Ltd., a wholly owned subsidiary
of leading worldwide shipbroker Clarkson PLC, has received
customary fees for advising unaffiliated third parties in
relation to the sale of certain of the vessels that are part of
the vessel acquisition. Mr. Julian Brynteson, a member of
our board, is a managing director of sales and purchases at H.
Clarkson & Company Ltd.
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All of Navios Holdings investment in us will be lost if we
do not consummate a business combination. This amount is
comprised of consideration paid for the sponsor units and
sponsor warrants. These
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amounts are in addition to claims made against the trust account
by creditors that have not executed waivers of claims. In
addition, Navios Holdings has agreed to pay fees and expenses
for our dissolution and liquidation in the event we do not have
sufficient funds outside of the trust account to pay for such
expenses.
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We cannot assure you that any of the above mentioned conflicts
will be resolved in our favor.
Each of our directors has, or may come to have other fiduciary
obligations. Angeliki Frangou, our Chairman and Chief Executive
Officer, is the Chairman and Chief Executive Officer of Navios
Holdings and Navios Partners. In addition, Ms. Frangou is
the Chairman of the board of directors of IRF European Finance
Investments, Ltd. Ted C. Petrone, our president and a member of
our board of directors, is the president of Navios Corporation,
a subsidiary of Navios Holdings, and a director of Navios
Holdings. Mr. Veraros is a senior analyst at
Investments & Finance, Ltd., an investment banking
firm specializing in the shipping industry. Mr. Koilalous
is the founder and managing director of Pegasus Adjusting
Services, Ltd., an adjusting firm in the shipping industry.
Mr. Brynteson is a managing director for sales and
purchases at H. Clarkson & Company, Ltd., a subsidiary
of leading worldwide shipbroker Clarkson PLC. To minimize
potential conflicts of interest, our directors and officers have
agreed, until the earlier of the consummation of our initial
business combination or our liquidation, that they will not
become affiliated as an officer, director or stockholder of a
blank check or blind pool company operating in or intending to
acquire a business in the marine transportation and logistics
industries.
In addition, each of Navios Holdings and Navios Partners have
agreed, for the period commencing on the date of our initial
public offering and extending until the earlier of the
consummation of our initial business combination or our
liquidation, that they will not form, invest in or become
affiliated with a blank check or blind pool company operating in
or intended to acquire a business in the marine transportation
and logistics industries.
In connection with the vote required for any business
combination, our initial stockholders have agreed to vote their
respective shares of common stock that were owned prior to our
initial public offering in accordance with the vote of the
public stockholders owning a majority of the shares of our
common stock sold in the initial public offering and to vote any
shares they acquired in the initial public offering or
subsequently in the open market in favor of any business
combination they negotiate and present to the stockholders.
Each independent director will receive $50,000 in cash per year,
accruing pro rata from the respective start of their
service on our board of directors and payable only upon the
successful consummation of a business combination. They will
also receive reimbursement for
out-of-pocket
expenses incurred by them in connection with activities on our
behalf such as identifying potential target businesses and
performing due diligence on suitable business combinations.
There is no limit on the amount of these
out-of-pocket
expenses, but such expenses will be subject to the review and
approval of the audit committee, and any expense reimbursements
payable to members of our audit committee will be reviewed and
approved by our board of directors, with the interested director
or directors abstaining from such review and approval. Although
we believe that all actions taken by our directors on our behalf
will be in our best interests, we cannot assure you that this
will be the case.
Navios Holdings has a significant ownership interest in us. As a
result of Navios Holdings significant ownership stake in
us and our common management, there are certain potential
conflicts of interest, including potential competition as to
acquisition targets and, after an acquisition has been
consummated, potential competition and business relationships
with each other.
In order to minimize potential conflicts of interest that may
arise from multiple affiliations, each of our officers and
directors (other than our independent directors) has agreed,
until the earliest of (a) the consummation of our initial
business combination, (b) July 1, 2010 (or up to
July 1, 2011 if our stockholders approve an extension
period), and (c) such time as they cease to be an officer
or director, to present to us for our consideration, before
presenting to any other entity, any business combination
opportunity involving the potential acquisition of a controlling
interest in a marine transportation or logistics business
outside of the drybulk shipping sector, subject to (i) any
fiduciary duties or contractual obligations they may have
currently
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or in the future in respect of Navios Holdings or Navios
Partners and any businesses in which either such company
invests, and (ii) any other pre-existing fiduciary duties
or contractual obligations they may have.
As a controlled affiliate of Navios Holdings, we are subject to
the Partners Omnibus Agreement between Navios Holdings and
Navios Partners that governs business opportunities within the
drybulk shipping sector, as described above. In June 2009,
Navios Holdings was released from the Partners Omnibus Agreement
restrictions for two years in connection with acquiring such
vessels from third parties (but not from the requirement to
offer to sell to Navios Partners qualifying vessels in Navios
Holdings existing fleet). Navios Partners and its
subsidiaries granted to Navios Holdings a similar right of first
offer on any proposed sale, transfer or other disposition of any
of its Panamax or Capesize drybulk carriers and related charters
or any of its drybulk vessels that is not a Panamax or Capesize
drybulk vessel and related charters owned or acquired by it. To
resolve this conflict of interest, we have entered into a right
of first refusal agreement that grants us the first opportunity
to consider any business opportunity outside of the drybulk
shipping sector. In June 2009, Navios Partners waived its rights
of first refusal with respect to an acquisition opportunity
relating to such vessels until (a) the consummation of our
initial business combination, (b) our liquidation, and
(c) June 2011.
Upon a change of control of Navios Holdings or Navios Partners,
the noncompetition and right of first offer provisions of the
Partners Omnibus Agreement, and hence our obligations
thereunder, will terminate within a specified period of time
after such change in control. Our obligations under the Partners
Omnibus Agreement will also be terminated whenever we are deemed
no longer to be a controlled affiliate of Navios Holdings.
Because of the overlap between Navios Holdings, Navios Partners
and Navios Acquisition with respect to possible acquisitions
under the terms of the Partners Omnibus Agreement, as amended,
we have entered into a business opportunity right of first
refusal agreement, which provides that Navios Acquisition,
Navios Holdings and Navios Partners will share business
opportunities in the marine transportation and logistics
industries, commencing on the date of the prospectus related to
our initial public offering and extending until the earlier of
the consummation of our initial business combination or our
liquidation, as follows (subject to the amended Partners Omnibus
Agreement and the waiver as previously disclosed):
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We will have the first opportunity to consider any business
opportunities outside of the drybulk shipping sector.
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Navios Holdings will have the first opportunity to consider any
business opportunities within the drybulk shipping sector, with
the exception of any Panamax or Capesize drybulk carrier under
charter for three or more years it might own.
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Navios Partners has the first opportunity to consider an
acquisition opportunity relating to any Panamax or Capesize
drybulk carrier under charter for three or more years.
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Decisions by us to release Navios Holdings and Navios Partners
to pursue any corporate opportunity outside of the drybulk
sector will be made by a majority of our independent directors.
We are permitted to, and will, consider suitable opportunities
both within and outside the drybulk shipping sector of the
marine transportation and logistics industries. Although we have
entered into the business opportunity right of first refusal
agreement, we have done so primarily to (i) provide greater
certainty to the process by which we manage any potential
conflicts of interest, and (ii) provide each of our and
Navios Holdings and Navios Partners management with
guidelines to permit each of them to fully and properly
discharge their respective duties to each of us, Navios Holdings
and Navios Partners, where implicated.
Given that we have now settled on entering the product and
chemical tanker sectors, we are entering into a new agreement,
the Acquisition Omnibus Agreement, as described under the
heading Navios Acquisition Management and Operations After
the Business Combination The Acquisition Omnibus
Agreement below which will supersede the above described
agreement.
Further, all ongoing and future transactions between us and any
of our officers and directors or their respective affiliates,
including Navios Holdings, will be on terms believed by us to be
no less favorable than are available from unaffiliated third
parties, and such transactions will require prior approval, in
each instance,
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by a unanimous vote of our disinterested independent
directors or the members of our board who do not have an
interest in the transaction. In addition, we will not pursue a
business combination with an entity affiliated with us, Navios
Holdings, or our officers and directors unless we obtain an
opinion from an independent investment banking firm that is a
member of the Financial Industry Regulatory Authority, Inc. that
the business combination is fair to our unaffiliated
stockholders from a financial point of view, and all of our
disinterested, independent directors approve the transaction.
See the section entitled Risk Factors beginning on
page 119 for a further discussion on potential conflicts of
interest.
Facilities
We do not own any real estate or other physical property. Our
headquarters are located at 85 Akti Miaouli Street, Piraeus,
Greece 185 38. The cost of this space is included in the monthly
fee of $10,000 that Navios Holdings charges us for general and
administrative services pursuant to a services agreement between
us and it. We believe that our office facilities are suitable
and adequate for our business as it is presently conducted. Upon
consummation of the vessel acquisition, we will enter into an
Administrative Services Agreement with a subsidiary of Navios
Holdings to provide administrative services and office space, as
described below under Navios Acquisition Management and
Operations After the Business Combination The
Administrative Services Agreement.
Employees
We have three officers, two of whom are also members of our
board of directors. These two directors are not obligated to
contribute any specific number of hours per week but intend to
devote approximately five to ten percent of their time per week
to our affairs, which could increase significantly during
periods of negotiation for business opportunities.
76
MANAGEMENT
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
You should read the following discussion and analysis of Navios
Acquisitions consolidated financial condition and results
of operations together with Navios Acquisitions condensed
financial statements and notes thereto that appear elsewhere in
this proxy statement. This discussion and analysis contains
forward-looking statements that involve risks, uncertainties,
and assumptions. Actual results may differ materially from those
anticipated in these forward-looking statements.
The historical condensed financial results of Navios Acquisition
described below are presented in United States dollars.
Overview
Navios Acquisition was incorporated in the Republic of the
Marshall Islands on March 14, 2008. We were formed to
acquire through a merger, capital stock exchange, asset
acquisition, stock purchase or other similar business
combination one or more assets or operating businesses in the
marine transportation and logistics industries. We have neither
engaged in any operations nor generated significant revenue to
date. We are considered to be in the development stage as
defined in the FASB-issued guidance for Accounting and Reporting
by Development Stage Enterprises, and are subject to the risks
associated with activities of development stage companies. We
have selected December 31st as our fiscal year end. To
date, our efforts have been limited to organizational
activities, our initial public offering and the search for and
negotiations with potential target businesses for a business
combination. As of the date of this proxy statement, we have not
acquired any business operations and have no operations
generating revenue.
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On March 18, 2008, we issued 8,625,000 sponsor units to
Navios Holdings for $25,000 in cash, at a purchase price of
approximately $0.003 per unit. Each sponsor unit consists of one
share of our common stock and one warrant.
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On June 11, 2008, Navios Holdings transferred an aggregate
of 290,000 sponsor units to our officers and directors (200,000
to Angeliki Frangou, 50,000 to Ted C. Petrone, 15,000 to Julian
David Brynteson, 15,000 to John Koilalous and 10,000 to Nikolaos
Veraros).
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On June 16, 2008, Navios Holdings returned to us an
aggregate of 2,300,000 sponsor units, which, upon receipt, we
cancelled. Accordingly, the initial stockholders own 6,325,000
sponsor units.
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On July 1, 2008, we consummated our initial public
offering. Simultaneously with the closing of the initial public
offering, Navios Holdings purchased 7,600,000 sponsor warrants
from us in the private placement. The proceeds from the private
placement were added to the proceeds of the initial public
offering and placed in the trust account. The net proceeds of
our initial public offering, including amounts in the trust
account, have been invested in U.S. Treasury Bills with a
maturity of 180 days or less or in money market funds
meeting certain conditions under
Rule 2a-7
promulgated under the Investment Company Act. As of
December 31, 2009, the trust account had a balance of
$251.5 million, including short-term investments.
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Navios Holdings loaned us a total of $0.5 million for the
payment of offering expenses. This loan was payable on the
earlier of March 31, 2009 or the completion of our initial
public offering. On December 31, 2009, the balance of the
loan was zero, as we fully repaid the loan in November 2008.
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Trends
and Factors Affecting Our Future Results of Operations
We have neither engaged in any operations nor generated any
revenues to date and we will not generate any operating revenues
until after consummation of a business combination. We generate
non-operating income in the form of interest income on cash and
cash equivalents following the completion of our initial public
offering. Since our initial public offering, we have paid
monthly fees of $10,000 per month to Navios Holdings for office
and secretarial services, and we incur increased expenses as a
result of being a public
77
company (for legal, financial reporting, accounting and auditing
compliance), as well as for due diligence expenses.
Year to year comparisons and historical results of operations
are not necessarily meaningful as they show Navios Acquisition
as a company without operations, which will change if the vessel
acquisition is consummated.
Results
of Operations
For
the year ended December 31, 2009 compared to the year ended
December 31, 2008:
The following table presents consolidated revenue and expense
information for the year ended December 31, 2009, for the
period from March 14, 2008 (date of inception) to
December 31, 2008 and for the period from March 14,
2008 (date of inception) to December 31,2009. This
information was derived from the audited consolidated revenue
and expense accounts of the Company for the year ended
December 31, 2009 and for the period from March 14,
2008 to December 31, 2008.
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Period from
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Period from
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March 14, 2008
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March 14, 2008
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(Date of
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(Date of
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Year Ended
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Inception) to
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Inception) to
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December 31,
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December 31,
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December 31,
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2009
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2008
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2009
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Revenue
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$
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$
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$
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Expenses
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General and administrative expenses
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(120,000
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)
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(60,000
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)
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(180,000
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Formation and operating costs
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(874,377
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)
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(332,771
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)
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(1,207,148
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)
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Loss from operations
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$
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(994,377
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)
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$
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(392,771
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)
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(1,387,148
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)
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Interest income
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331,656
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1,435,550
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1,767,206
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Other income
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14,909
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4,405
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19,314
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Net income/(loss) applicable to common stockholders
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$
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(647,812
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)
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$
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1,047,184
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$399,372
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General and administrative expenses. General
and administrative expenses increased by $0.06 million to
$0.12 million for the year ended December 31, 2009 as
compared to $0.06 million for the period from
March 14, 2008 (date of inception) to December 31,
2008. We presently occupy office space provided by Navios
Holdings. Navios Holdings has agreed that, until the
consummation of a business combination, it will make such office
space, as well as certain office and secretarial services,
available to us, as may be required by us from time to time. We
have agreed to pay such Navios Holdings $0.01 million per
month for such services. As of December 31, 2009, we
accrued $0.03 million for administrative services rendered
by Navios Holdings.
Formation and operating costs. Formation and
operating costs increased by $0.6 million to
$0.9 million for the year ended December 31, 2009 as
compared to $0.3 million for the period from March 14,
2008 (date of inception) to December 31, 2008. This is due
to an increase of $0.6 million in professional and other
services.
Interest from trust account. Interest from the
trust account decreased by $1.1 million to
$0.33 million for the year ended December 31, 2009
from $1.4 million for the period from March 14, 2008
(date of inception) to December 31, 2008. The net proceeds
of our initial public offering, including amounts in the trust
account, have been invested in U.S. Treasury Bills with a
maturity of 180 days or less or in money market funds
meeting certain conditions under
Rule 2a-7
promulgated under the Investment Company Act. The decrease is
mainly due to the significant drop in interest rates during 2009.
Other income. Other income is considered
immaterial and is related to the unrealized gain that derives
from valuation of U.S. Treasury Bills as of
December 31, 2009.
78
Liquidity
and Capital Resources
Net income decreased by $1.7 million to $0.6 million
expense for the year ended December 31, 2009 from
$1.1 million for the period from March 14, 2008 (date
of inception) to December 31, 2008. Net income derived from
interest income less general and administrative expenses and
formation costs and the reasons for the decrease are discussed
above. For the period presented, Earnings Before Interest and
Tax (EBITDA) is zero.
Our liquidity needs have been satisfied to date through receipt
of $25,000 in unit subscriptions from our initial stockholders,
through a loan of $0.5 million from Navios Holdings, both
of which are described below, and the proceeds of our investing
activities. As of December 31, 2009, the balance of the
loan was zero, as we fully repaid the loan in November 2008.
Unless and until a business combination is consummated, the
proceeds held in the trust account will not be available for our
use for any purpose, including the payment of any expenses
related to our initial public offering or expenses that we may
incur related to the investigation and selection of a target
business or the negotiation of an agreement to effect the
business combination.
On March 18, 2008, we issued 8,625,000 sponsor units to
Navios Holdings for $25,000 in cash, at a purchase price of
approximately $0.003 per unit.
On June 16, 2008, Navios Holdings returned to us an
aggregate of 2,300,000 sponsor units, which we have cancelled.
Accordingly, our initial stockholders own 6,325,000 sponsor
units.
On July 1, 2008, we closed our initial public offering.
Simultaneously with the closing of the initial public offering,
we consummated the private placement of 7,600,000 warrants at a
purchase price of $1.00 per warrant to Navios Holdings. The
initial public offering and the private placement generated
gross proceeds to us in the aggregate of $260.6 million. To
the extent that our capital stock is used in whole or in part as
consideration to effect a business combination, the proceeds
held in the trust account, as well as any other net proceeds not
expended, will be used to finance the operations of the target
business.
In order to meet expenditures required for operating our
business prior to our initial business combination, we are also
relying on interest, in an amount of up to $3.0 million,
earned on the trust account balance to fund such expenditures
and to the extent that the interest earned is below our
expectation, we may have insufficient funds available to operate
our business prior to our initial business combination. In 2009,
we drew an amount of $1.0 million out of the interest
earned on the trust account that was used as working capital.
Moreover, we will need to obtain additional financing to the
extent such financing is required to consummate our initial
business combination or the extended period, as the case may be,
or because we become obligated to convert into cash a
significant number of shares from dissenting stockholders, in
which case we may issue additional securities or incur debt in
connection with such business combination.
Cash
Flow for the year ended December 31, 2009 compared to the
year ended December 31, 2008:
The following table presents cash flow information for the year
ended December 31, 2009, for the period from March 14,
2008 (date of inception) through December 31, 2008 and for
the period from March 14, 2008 (date of inception) through
December 31, 2009. This information was derived from Navios
Acquisitions audited consolidated statement of cash flows
for the year ended December 31, 2009 and for the period
from March 14, 2008 (date of inception) through
December 31, 2008.
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March 14, 2008
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(Date of
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Year Ended
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Year Ended
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Inception) to
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December 31,
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December 31,
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December 31,
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2009
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2008
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2009
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Net cash provided by/(used in) operating activities
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$
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(622,629
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)
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$
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1,467,518
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$
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844,889
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Net cash provided by/(used in) investing activities
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707,713
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(252,201,007
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)
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(251,493,294
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)
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Net cash provided by financing activities
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250,735,504
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250,735,504
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Net increase cash and cash equivalents
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$
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85,084
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$
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2,015
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$
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87,099
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79
Cash
provided by/(used in) operating activities for the year ended
December 31, 2009 as compared to the year ended
December 31, 2008:
Net cash provided by/(used in) operating activities decreased by
$2.1 million to $(0.6) million for the year ended
December 31, 2009 as compared to $1.5 million for the
period from March 14, 2008 (date of inception) to
December 31, 2008. The increase is analyzed as follows:
The net income for the year ended December 31, 2009,
decreased to $(0.6) million from $1.5 million for the
period from March 14, 2008 to December 31, 2008. The
decrease is analyzed as follows:
Amounts due to related parties decreased by $0.11 million
to $0.03 million as of December 31, 2009 from
$0.14 million as of December 31, 2008. This decrease
is mainly due to offering costs reimbursed to Navios Holdings as
well as the payment of administrative fees. We presently occupy
office space provided by Navios Holdings. Navios Holdings has
agreed that, until the consummation of a business combination,
it will make such office space, as well as certain office and
secretarial services, available to us, as may be required by us
from time to time. We have agreed to pay Navios Holdings
$0.01 million per month for such services. As of
December 31, 2009, we accrued $0.03 million for
administrative services rendered by Navios Holdings. This amount
is included under amounts due to related parties in the balance
sheet.
Prepaid expenses and other current assets remained the same at
$0.05 million for both December 31, 2009 and 2008.
This amount is related to directors and officers insurance that
covers the
12-month
period ended June 25, 2010 and 2009, respectively.
Accrued expenses increased by $0.1 million from
$0.3 million at December 31, 2008 to $0.4 million
at December 31, 2009. This amount is related to accrued
legal and professional fees and to fees charged by bank for
services provided relating to U.S. Treasury Bills.
Accounts payable increased by $0.03 million from
$0.03 million at December 31, 2008 to
$0.06 million at December 31, 2009. This amount
concerns payables mainly for professional fees, legal fees,
filing expenses and fees charged by bank for services provided
relating to U.S. Treasury Bills.
Cash
provided by/(used in) investing activities for the year ended
December 31, 2009 as compared to the year ended
December 31, 2008:
Net cash provided by investing activities decreased by
$251.5 million from $252.2 million at
December 31, 2008 to $0.7 million at December 31,
2009.
Restricted cash held in the trust account, including short-term
investments, had a balance of $251.5 million and
$252.2 million as of December 31, 2009 and 2008,
respectively. Out of this amount, cash held in the trust account
amounted to $0 as of December 31, 2009 and 2008,
respectively, and the balance amount is related to
U.S. Treasury Bills. Following the completion of the
initial public offering, at least 99.1% of the gross proceeds,
after payment of certain amounts to the underwriters, were held
in the trust account and invested in U.S. Treasury Bills.
Our agreement with the trustee requires that the trustee will
invest and reinvest the proceeds in the trust account only in
United States government debt securities within the
meaning of Section 2(a)(16) of the Investment Company Act
having a maturity of 180 days or less, or in money market
funds meeting the conditions under
Rule 2a-7
promulgated under the Investment Company Act. Except with
respect to interest income that may be released to us
(i) up to $3.0 million to fund working capital
requirements, and (ii) any additional amounts needed to pay
our income and other tax obligations, the proceeds will not be
released from the trust account until the earlier of the
completion of a business combination or liquidation, or for
payments with respect to shares of common stock converted in
connection with the vote to approve an extension period. For the
years ended December 31, 2009 and 2008, the amount of
$1.0 million and $0, respectively, was released to us out
of the interest income earned, with the purpose to fund working
capital requirements.
80
Cash
provided by financing activities for the year ended
December 31, 2009 as compared to the year ended
December 31, 2008:
Net cash provided by financing activities decreased by
$250.7 million from $250.7 million at
December 31, 2008 to $0 at December 31, 2009.
During the corresponding period of 2009, we did not have any
investing activities.
Cash provided by financing activities of $250.7 million for
the year ended December 31, 2008 resulted from the
following: (a) proceeds from issuance of warrants from us
amounting to $7.6 million (these warrants were purchased by
Navios Holdings at a price of $1.00 per warrant
(7.6 million warrants in the aggregate) in the private
placement. The proceeds from the private placement were added to
the proceeds of the initial public offering and placed in the
trust account); (b) gross proceeds of $253 million
from the sale of 25,300,000 units on July 1, 2008 at a
price of $10.00 per unit (including 10,119,999 shares of
common stock subject to possible redemption); (c) proceeds
from a loan of $0.5 million that we received from Navios
Holdings on March 31, 2008 (the loan evidenced thereby was
non-interest bearing, unsecured, and was due upon the earlier of
March 31, 2009 or the completion of the initial public
offering. We fully repaid the loan in November 2008.);
(d) proceeds from issuance of 8,625,000 sponsor units to
Navios Holdings for an aggregate purchase price of $25,000, of
which an aggregate of 290,000 were transferred to our officers
and directors (subsequently, on June 16, 2008, Navios
Holdings agreed to return to the us an aggregate of 2,300,000
sponsor units, which, upon receipt, we cancelled. Accordingly,
the initial stockholders own 6,325,000 sponsor units.); and
(e) payments for underwriters discount and offering
cost of $9.9 million.
Controls
and Procedures
We are required to comply with the internal control requirements
of the Sarbanes-Oxley Act. A target business may not be in
compliance with the provisions of the Sarbanes-Oxley Act
regarding adequacy of their internal controls. The development
of the internal controls of any such entity to achieve
compliance with the Sarbanes-Oxley Act may increase the time and
costs necessary to consummate any such acquisition.
Quantitative
and Qualitative Disclosures About Market Risk
Market risk is the sensitivity of income to changes in interest
rates, foreign exchanges, commodity prices, equity prices, and
other market-driven rates or prices. We are not presently
engaged in and, if a suitable business target is not identified
by us prior to the prescribed liquidation date of the trust
fund, we may not engage in, any substantive commercial business.
Accordingly, we are not and, until such time as we consummate a
business combination, we will not be, exposed to risks
associated with foreign exchange rates, commodity prices, equity
prices or other market-driven rates or prices. The net proceeds
of our initial public offering held in the trust fund have been
invested only in money market funds meeting certain conditions
under
Rule 2a-7
promulgated under the Investment Company Act. Given our limited
risk in our exposure to money market funds, we do not view the
interest rate risk to be significant.
Off-balance
Sheet Arrangements; Commitments and Contractual Obligations;
Quarterly Results
As of April 7, 2010, we did not have any off-balance sheet
arrangements as defined in Item 303(a)(4)(ii) of
Regulation S-K
and did not have any commitments or contractual obligations. No
unaudited quarterly operating data is included in this proxy
statement as we have conducted no operations to date.
Recent
Developments
As described elsewhere herein, we have entered into the
Acquisition Agreement for the vessel acquisition.
In connection with the vessel acquisition, we would become the
guarantor of the obligations under the Credit Agreements
described below.
Navios Acquisition is in advanced negotiations with commercial
banks for a credit facility of up to $52.0 million to be
used to partially finance the acquisition of the two currently
operating LR1 vessels. Such
81
Credit Agreement is expected to have a six-year term, with a
14.5-year profile due to a $15.24 million per vessel
balloon payment against a loan of $26.0 million per vessel.
The credit facility is expected to bear interest at a margin
ranging from 2.50% to 2.75% over the applicable base rate per
annum.
Pursuant to a credit agreement with Deutsche Schiffsbank AG,
Alpha Bank A.E., and Credit Agricole Corporate and Investment
Bank, as lenders, a credit facility of up to $150.0 million
will be used to partially finance the construction of two
chemical tankers and four product tankers. In addition, pursuant
to a credit agreement with DVB Bank SE and Fortis Bank, as
lenders, a credit facility of up to $75.0 million will be
used to partially finance the construction of three product
tankers. Financing of up to $25.0 million is available for
each of the nine vessels. In addition, such Credit Agreements
each have a six-year term, but a
17-year
profile ($16.0 million per vessel balloon payment against a
loan of $25.0 million per vessel). Both loans bear interest
at a margin of 2.50% over the applicable base rate per annum.
These term facilities provide for payment of commitment fees at
60 basis points per annum, payable quarterly in arrears, on
the committed but undrawn portion of the loan and an upfront fee
of 0.75% on the date of first drawn down under the agreements.
Pursuant to a commitment letter with Marfin Egnatia Bank, as
lender, a revolving credit facility of up to $57.3 million
will be made available for general corporate purposes and is
currently anticipated to be drawn down to pay for a portion of
the vessel acquisition purchase price. Such Credit Agreement is
interest only until maturity subject to one year extension
periods. Such Credit Agreement interest at a margin of 2.75%
over the applicable base rate per annum.
The term Credit Agreements contain favorable covenants including
(a) minimum liquidity, (b) maximum total net
liabilities over total net assets (effective in general after
delivery of the vessels), (c) minimum net worth (effective
after delivery of the vessels, but in no case no later than
2013), (d) pari passu ranking of the loans with all
Navios Acquisition credit undertakings, (d) loan to value
ratio covenants applicable after delivery of the vessels
initially of 125% for $225.0 million of the debt, (e)
deposit of the unpaid equity portion to be released in
conjunction with the loan advances at each construction stage,
and (f) the ability to distribute up to 50% of net profits
without the Lenders consent. In addition, the Credit
Agreements contain no covenants that would impede our ability to
grow our fleet, including no negative covenants restricting the
incurrence of additional debt or preventing us from acquiring
additional vessels. The Credit Agreements also require that
Navios Holdings, Angeliki Frangou and their respective
affiliates maintain, directly or indirectly, control over an
aggregate of at least 30% of our outstanding securities.
We expect to draw down the maximum principal amount of
$334.3 million available under the Credit Agreements to
partially fund the vessel acquisition. Pursuant to the
Acquisition Agreement, the guarantees of Navios Holdings to the
Lenders will terminate and be replaced by guarantees of Navios
Acquisition. The Lenders have consented to such replacement of
guarantees of the Credit Agreements, and upon termination of its
guarantees, Navios Holdings will have no further liability under
the Credit Agreements.
82
The acquisition of the 13 vessels by Navios Acquisition
will be accounted for as an asset acquisition. The initial
measurement of the asset acquisition will be based upon the fair
value of the consideration exchanged.
We have presented the selected unaudited pro forma condensed
combined financial information that reflects the results of the
vessel acquisition had the transition occurred as of
December 31, 2009. The unaudited pro forma combined
information is for illustrative purposes only. You should not
rely on the unaudited pro forma combined balance sheet as being
indicative of the historical financial position that would have
been achieved had the vessel acquisition been consummated as of
the date of this proxy statement.
UNAUDITED
PRO FORMA CONDENSED COMBINED BALANCE SHEET
AS OF DECEMBER 31, 2009
(In U.S. dollars)
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Additional
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pro-forma
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Pro-forma
|
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Adjustments
|
|
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Adjustments
|
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(with 10,199,999
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As at
|
|
|
(Assuming
|
|
|
Combined
|
|
|
Shares of
|
|
|
Combined
|
|
|
|
December 31,
|
|
|
No Stock
|
|
|
(Before Stock
|
|
|
Common Stock
|
|
|
(After Stock
|
|
|
|
2009
|
|
|
Conversion)(1)
|
|
|
Conversion)(1)
|
|
|
Conversion)(1)
|
|
|
Conversion)(1)
|
|
|
ASSETS
|
Current assets
|
|
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|
|
|
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|
|
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Cash
|
|
|
87,099
|
|
|
|
|
|
|
|
87,099
|
|
|
|
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|
87,099
|
|
Cash receipt of funds from loan
|
|
|
|
|
|
|
158,996,126
|
(2)
|
|
|
158,996,126
|
|
|
|
|
|
|
|
158,996,126
|
|
Cash payment of deferred underwriters fees
|
|
|
|
|
|
|
(8,855,000
|
)(3)
|
|
|
(8,855,000
|
)
|
|
|
|
|
|
|
(8,855,000
|
)
|
Cash payment for the vessel acquisition
|
|
|
|
|
|
|
(191,748,944
|
)(4)
|
|
|
(191,748,944
|
)
|
|
|
|
|
|
|
(191,748,944
|
)
|
Cash payment of transaction costs
|
|
|
|
|
|
|
(1,613,000
|
)(5)
|
|
|
(1,613,000
|
)
|
|
|
|
|
|
|
(1,613,000
|
)
|
Cash release of the trust account
|
|
|
|
|
|
|
251,493,295
|
(6)
|
|
|
251,493,295
|
|
|
|
|
|
|
|
251,493,295
|
|
Cash payment to convert stock into cash
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(100,289,190
|
)(8)
|
|
|
(100,289,190
|
)
|
Prepaid expenses
|
|
|
55,295
|
|
|
|
|
|
|
|
55,295
|
|
|
|
|
|
|
|
55,295
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
142,394
|
|
|
|
208,272,477
|
|
|
|
208,414,871
|
|
|
|
(100,289,190
|
)
|
|
|
108,125,681
|
|
Other assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits for vessel acquisitions
|
|
|
|
|
|
|
191,748,944
|
(4)
|
|
|
191,748,944
|
|
|
|
|
|
|
|
191,748,944
|
|
Deferred transaction costs
|
|
|
|
|
|
|
1,613,000
|
(5)
|
|
|
1,613,000
|
|
|
|
|
|
|
|
1,613,000
|
|
Investment in trust account, including restricted cash
|
|
|
251,493,295
|
|
|
|
(251,493,295
|
)(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred finance costs
|
|
|
|
|
|
|
2,690,250
|
(2)
|
|
|
2,690,250
|
|
|
|
|
|
|
|
2,690,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other assets
|
|
|
251,493,295
|
|
|
|
(55,441,101
|
)
|
|
|
196,052,194
|
|
|
|
|
|
|
|
196,052,194
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
|
251,635,689
|
|
|
|
152,831,376
|
|
|
|
404,467,065
|
|
|
|
(100,289,190
|
)
|
|
|
304,177,875
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
|
56,479
|
|
|
|
|
|
|
|
56,479
|
|
|
|
|
|
|
|
56,479
|
|
Accrued expenses
|
|
|
414,215
|
|
|
|
|
|
|
|
414,215
|
|
|
|
|
|
|
|
414,215
|
|
Amount due to related parties
|
|
|
30,119
|
|
|
|
|
|
|
|
30,119
|
|
|
|
|
|
|
|
30,119
|
|
Long-term debt, current portion
|
|
|
|
|
|
|
3,000,000
|
(2)
|
|
|
3,000,000
|
|
|
|
|
|
|
|
3,000,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
500,813
|
|
|
|
3,000,000
|
|
|
|
3,500,813
|
|
|
|
|
|
|
|
3,500,813
|
|
Long term liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt, net of current portion
|
|
|
|
|
|
|
158,686,376
|
(2)
|
|
|
158,686,376
|
|
|
|
|
|
|
|
158,686,376
|
|
Deferred underwriters fees
|
|
|
8,855,000
|
|
|
|
(8,855,000
|
)(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock subject to redemption,
10,119,999 shares at redemption value, $9.91 per share
|
|
|
100,289,190
|
|
|
|
(100,289,190
|
)(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
109,645,003
|
|
|
|
52,542,186
|
|
|
|
162,187,189
|
|
|
|
|
|
|
|
162,187,189
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
83
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
pro-forma
|
|
|
|
|
|
|
|
|
|
Pro-forma
|
|
|
|
|
|
Adjustments
|
|
|
|
|
|
|
|
|
|
Adjustments
|
|
|
|
|
|
(with 10,199,999
|
|
|
|
|
|
|
As at
|
|
|
(Assuming
|
|
|
Combined
|
|
|
Shares of
|
|
|
Combined
|
|
|
|
December 31,
|
|
|
No Stock
|
|
|
(Before Stock
|
|
|
Common Stock
|
|
|
(After Stock
|
|
|
|
2009
|
|
|
Conversion)(1)
|
|
|
Conversion)(1)
|
|
|
Conversion)(1)
|
|
|
Conversion)(1)
|
|
|
Commitments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred Stock, $.0001 par value; 1,000,000 shares
authorized; none issued Common stock, $.0001 par value,
authorized 100,000,000 shares; 31,625,000 shares
issued and outstanding (includes the 10,199,999 shares
subject to redemption)
|
|
|
3,163
|
|
|
|
|
|
|
|
3,163
|
|
|
|
(1,020
|
)(8)
|
|
|
2,143
|
|
Additional paid-in capital
|
|
|
141,588,151
|
|
|
|
100,289,190
|
(6)
|
|
|
241,877,341
|
|
|
|
(100,288,170
|
)(8)
|
|
|
141,589,171
|
|
Earnings accumulated during the development stage
|
|
|
399,372
|
|
|
|
|
|
|
|
399,372
|
|
|
|
|
|
|
|
399,372
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders equity
|
|
|
141,990,686
|
|
|
|
100,289,190
|
|
|
|
242,279,876
|
|
|
|
(100,289,190
|
)
|
|
|
141,990,686
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders equity
|
|
|
251,635,689
|
|
|
|
152,831,376
|
|
|
|
404,467,065
|
|
|
|
(100,289,190
|
)
|
|
|
304,177,875
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Assumes no Forward Contracts. |
|
(2) |
|
To record the receipt of proceeds from the debt financing in
order to finance the vessel acquisition. Navios Acquisition will
pay to the Lenders upfront fees depending on the available loan
amount under each facility. |
|
(3) |
|
To record the payment of the deferred underwriters fees,
payable upon consummation of Navios Acquisitions initial
business combination. |
|
(4) |
|
To record the payment to the Shipbuilders and the Sellers of the
initial installment or the deposit of the vessel acquisition, as
applicable. |
|
(5) |
|
To record the transaction expenses, which consist of
approximately (a) $490,000 for travelling and road show
expenses, annual meeting and other expenses, (b) $245,000
for consulting expenses, (c) $763,000 for legal expenses,
(d) $10,000 for audit fees, and (e) $105,000 for
printing expenses. These fees will be capitalized on the balance
sheet and amortized over future periods. |
|
(6) |
|
To record the release of the cash held in the trust account. |
|
(7) |
|
If all stockholders approve the vessel acquisition, the
10,199,999 shares of temporary equity will become permanent
equity. |
|
(8) |
|
To record the conversion of the 10,199,999 shares of common
stock (shares to be cancelled after the conversion), if 39.99%
of the public holders of Navios Acquisitions common stock
both vote against the vessel acquisition proposal and properly
exercise their conversion rights. |
84
NAVIOS
ACQUISITION MANAGEMENT AND OPERATIONS AFTER THE BUSINESS
COMBINATION
General
Navios Acquisition was formed on March 14, 2008 under the
laws of the Republic of the Marshall Islands and has its
principal offices located in Piraeus, Greece. Upon consummation
of the proposed vessel acquisition, Navios Acquisitions
principal focus will be the transportation of refined petroleum
products (clean and dirty) and bulk liquid chemicals through its
vessel-owning subsidiaries. See the section entitled Risk
Factors beginning on page 119 for a further
discussion on the potential risks of our business following the
vessel acquisition.
Navios
Acquisitions Fleet
Upon delivery of the vessels, Navios Acquisition will own and
operate 13 newly built vessels (11 product tankers and two
chemical tankers) and will have options for two additional
product tankers that will transport refined petroleum products
(clean and dirty) and bulk liquid chemicals. After the closing,
Navios Acquisition will be a holding company that will own its
vessels or hold the rights to the Shipbuilding Contracts or the
MOAs, as the case may be, through separate wholly owned
subsidiaries. The following table provides summary information
about Navios Acquisitions fleet, once delivered, and the
purchase price payable by the nominated subsidiaries under the
Shipbuilding Contracts and the MOAs:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Type
|
|
DWT
|
|
|
Delivery
date(1)
|
|
|
Purchase Price
|
|
|
|
LR1 Product Tanker
|
|
|
|
74,671
|
|
|
|
May 2010
|
|
|
$
|
43.5 million
|
|
|
LR1 Product Tanker
|
|
|
|
74,671
|
|
|
|
May 2010
|
|
|
$
|
43.5 million
|
|
|
Chemical Tanker
|
|
|
|
25,000
|
|
|
|
9/30/2010
|
|
|
$
|
28.7 million
|
|
|
Chemical Tanker
|
|
|
|
25,000
|
|
|
|
11/30/2010
|
|
|
$
|
28.7 million
|
|
|
LR1 Product Tanker
|
|
|
|
75,000
|
|
|
|
Q4 2011
|
|
|
$
|
40.0 million
|
|
|
LR1 Product Tanker
|
|
|
|
75,000
|
|
|
|
Q4 2011
|
|
|
$
|
40.0 million
|
|
|
MR2 Product Tanker
|
|
|
|
50,000
|
|
|
|
Q1 2012
|
|
|
$
|
33.6 million
|
|
|
MR2 Product Tanker
|
|
|
|
50,000
|
|
|
|
Q2 2012
|
|
|
$
|
33.6 million
|
|
|
MR2 Product Tanker
|
|
|
|
50,000
|
|
|
|
Q3 2012
|
|
|
$
|
33.6 million
|
|
|
MR2 Product Tanker
|
|
|
|
50,000
|
|
|
|
Q3 2012
|
|
|
$
|
33.6 million
|
|
|
MR2 Product Tanker
|
|
|
|
50,000
|
|
|
|
Q4 2012
|
|
|
$
|
32.9 million
|
|
|
MR2 Product Tanker
|
|
|
|
50,000
|
|
|
|
Q4 2012
|
|
|
$
|
32.9 million
|
|
|
MR2 Product Tanker
|
|
|
|
50,000
|
|
|
|
Q4 2012
|
|
|
$
|
32.9 million
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LR1 Product Tanker
|
|
|
|
75,000
|
|
|
|
Q4 2012(2)
|
|
|
$
|
40.5 million
|
(2)
|
|
LR1 Product Tanker
|
|
|
|
75,000
|
|
|
|
Q4 2012(2)
|
|
|
$
|
40.5 million
|
(2)
|
|
|
|
(1) |
|
Estimated. |
|
(2) |
|
Subject to the exercise by Navios Acquisition of an option to
acquire the vessel which expires in November 2010. |
The
Shipbuilding Contracts
The construction and delivery of each of the 11 newbuilds,
including the two under options, is governed by the terms and
conditions of the respective Shipbuilding Contracts, as novated
and amended. Each of the contracts includes customary terms and
provisions for (a) the description of each vessel,
(b) the payment terms, (c) approval of plans and
drawings, (d) inspection during construction, (e) sea
trials, (f) delivery condition, and (g) termination of
the contracts.
Pursuant to the Acquisition Agreement and following Navios
Holdings transfer of the stock of its subsidiaries that
hold directly or indirectly the rights to the Shipbuilding
Contracts, Navios Acquisition will acquire 11 vessels (9
product tankers and two chemical tankers) from the Shipbuilders
for an aggregate purchase price of $370.7 million. The
purchase price is payable in installments that are connected
with certain
85
shipbuilding milestones and upon delivery of each vessel. Navios
Acquisition will also have options for two additional product
tankers at $40.5 million each ($81.0 million in
aggregate).
Representations
and Warranties
Under each of the Shipbuilding Contracts, the Shipbuilder
warrants that each vessel, at the time of its delivery, will be
free of all encumbrances, mortgages, claims, charges, taxes and
liens. The Shipbuilder will indemnify Navios Acquisition against
all claims made against each vessel incurred prior to delivery.
Termination
and Waiver
The Shipbuilder will have a fixed legal obligation under the
respective Shipbuilding Contracts to deliver each respective
vessel to Navios Acquisition on or before the agreed delivery
date subject to permissible delays under certain conditions. If
the Shipbuilder does not deliver the vessel within the
permissible period, the terms of the Shipbuilding Contracts
provide that any payments advanced (inclusive of the interest at
7%) would be refunded to Navios Acquisition and the Shipbuilding
Contracts would become null and void.
Navios Acquisition may waive its right to terminate the
Shipbuilding Contract for its own respective benefit and
consummate the acquisition, even though one or more of these
conditions have not been met. We cannot assure you that all of
the conditions will be satisfied or waived or that each vessel
acquisition will occur.
Guarantee
Under each of the Shipbuilding Contracts, for a
12-month
period that begins once each vessel has been delivered to Navios
Acquisition, each Shipbuilder guarantees the vessel in its
entirety against all defects in the vessel that are due to
defective material
and/or poor
workmanship on the part of the Shipbuilder
and/or its
subcontractors.
Expenses
Each Shipbuilder and each of the nominated subsidiaries is
responsible for its own expenses in connection with the
preparation, negotiation, execution and delivery of the
Shipbuilding Contracts and the related transactions. Any
expenses incurred by Navios Holdings in connection with the
preparation, negotiation, execution and delivery of the
Shipbuilding Contracts, including any installment payments made
or
out-of-pocket
expenses incurred by Navios Holdings, will be reimbursed by
Navios Acquisition upon approval of the vessel acquisition
proposal.
Governing
Law; Dispute Resolution
Each of the Shipbuilding Contracts is governed by and construed
under the laws of England without regard to conflicts of laws
principles.
The
Options
Navios Acquisition will have options exercisable until November
2010 to purchase up to two LR1 newbuild vessels at
$40.5 million per vessel. If the options are exercised, the
construction and delivery of each vessel will be governed by the
terms and conditions of a shipbuilding contract substantially
the same to the ones described above.
The
Memoranda of Agreement
The sale and delivery of each of the two LR1 tanker vessels from
the Sellers, each for a purchase price of $43.5 million, is
governed by the terms and conditions of a standard Memorandum of
Agreement approved by the Baltic and International Maritime
Council, or BIMCO, under code name SALEFORM 1993, as further
negotiated by the parties. The MOA calls for a 10% deposit on
the sales price with the balance to be paid on delivery of the
vessels.
86
Distinguishing
Factors and Business Strategy
Market
Opportunity
We believe that the recent financial crisis and developments in
the marine transportation industry, particularly in the product
and chemical tanker sectors, have created significant
opportunities to acquire vessels near historically low
(inflation-adjusted) prices and employ them in a manner that
will provide attractive returns on capital. We also believe that
the recent financial crisis continues to adversely affect the
availability of credit to shipping industry participants,
creating opportunities for well-capitalized companies with
committed available financing such as ours, to enter the product
and chemical tanker sectors at this advantageous time.
Relationship
with Navios Holdings
One of our key competitive advantages is our relationship with
Navios Holdings.
Navios Holdings has developed considerable experience and a
global network of relationships during its
55-year
history of investing and operating in the maritime industry. We
believe we will be able to leverage Navios Holdings global
network of relationships to source attractive acquisitions,
obtain competitive debt financing, and engage in innovative
financing (such as the mandatorily convertible preferred stock
Navios Holdings issued in acquiring certain newbuild vessels).
In addition, we believe we will be able to use Navios
Holdings established market contacts intelligence to
attract high quality charter parties and to obtain insurance
from an AA+ rated governmental agency of an European
Union member state. Furthermore, we will enter into a five-year
Management Agreement with a subsidiary of Navios Holdings,
pursuant to which such subsidiary will provide certain
commercial and technical ship management services to us.
Navios Holdings long involvement and reputation for
reliability in the Asia Pacific region have also allowed it to
develop privileged relationships with many of the largest
institutions in Asia. Through these institutional relationships,
Navios Holdings has obtained relatively low-cost, long-term
charter-in deals, with options both to extend time charters and
purchase vessels. Through its established reputation and
relationships, Navios Holdings has had access to opportunities
not readily available to most other industry participants that
lack Navios Holdings brand recognition, credibility, and
track record.
Our relationship with Navios Holdings is also expected to enable
us to access debt financing on favorable terms, as evidenced by
the approximately 73% financing of the purchase price for the
vessel acquisition and the favorable interest rates on such debt
financing, as well as flexible covenants that will allow us to
pursue our growth strategy.
Business
Strategy
We believe that the recent financial crisis and developments in
the marine transportation industry, particularly in the product
and chemical tanker sectors, have created significant
opportunities to acquire vessels near historically low
(inflation-adjusted) prices and employ them in a manner that
will provide attractive returns on capital. We also believe that
the recent financial crisis continues to adversely affect the
availability of credit to shipping industry participants,
creating opportunities for well-capitalized companies with
committed available financing such as ours, to enter the product
and chemical tanker sectors at this advantageous time.
Our business strategy is to develop a world-leading operator and
charterer of modern, high-quality product and chemical tankers.
Our principal focus is the transportation of refined petroleum
products (clean and dirty) and bulk liquid chemicals. We will
seek to establish a leadership position by leveraging the
established reputation of Navios Holdings for maintaining high
standards of performance, risk management, reliability and the
safety of its crews, vessels and the environment. We are
committed to creating long-term stockholder value by executing
on a growth strategy designed to maximize returns in all
economic cycles. We believe that acquiring vessels in both the
product and chemical tanker sectors will provide us with more
balanced exposure to commodities, and provide more diverse
opportunities to generate revenues than would a focus on any
single shipping sector. We believe the vessel acquisition will
be the first step to our becoming a world leader in these
sectors. Should the opportunity present itself, we would also
consider entering the oil tanker sector for transporting crude
oil.
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Our business strategy is based primarily upon the following
principles:
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Capitalize on near-historic low (inflation-adjusted) vessel
prices in building a fleet of high quality, modern,
double-hulled vessels;
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Strategically manage sector exposure in product and chemical
tankers;
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Maintain an optimum charter mix;
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Maintain a strong balance sheet and flexible capital structure;
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Implement and sustain a competitive cost structure; and
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Leverage the experience, brand name, global network of
relationships and risk management expertise of Navios Holdings.
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Capitalize
on Near-Historic Low (Inflation-Adjusted) Vessel
Prices
We intend to grow our fleet using Navios Holdings global
network of relationships and long experience in the marine
transportation industry, coupled with our financial resources
and financing capability, to make selective acquisitions of
young, high quality, modern, double-hulled vessels in the
product and chemical tanker sectors. Vessel prices in these
sectors have been severely affected by the continuing scarcity
of debt financing available to shipping industry participants
resulting from the recent worldwide financial crisis and because
of the depressed charter rates for tankers that have persisted
since the fall of 2008. We believe the most attractive
opportunity in the maritime industry is acquiring modern tonnage
in the product and chemical tanker sectors that are currently at
cyclically low levels.
Strategically
Manage Sector Exposure
We intend to operate a fleet of product and chemical tankers, as
we believe that operating a fleet that carries refined petroleum
products (clean and dirty) and bulk liquid chemicals provides us
with diverse opportunities with a range of producers and
consumers. As we grow our fleet, we expect to adjust our
relative emphasis among the product and chemical tanker sectors
over time according to our view of the relative opportunities in
these sectors. We believe that having a mixed fleet of product
and chemical tankers will give us the flexibility to adapt to
changing market conditions, to capitalize on sector-specific
opportunities and to manage our business successfully throughout
varying economic cycles. We will also consider entering the
crude oil transportation sector opportunistically.
Maintain
Optimum Charter Mix
Depending on market conditions, we intend to deploy our vessels
to leading charterers on a mix of short-, medium- and long-term
time charters, including spot charters. We believe that this
chartering strategy will afford us opportunities to capture
increased profits during strong charter markets, while
benefiting from the relatively stable cash flows and high
utilization rates associated with longer term time charters. We
will also seek profit sharing arrangements in our long-term time
charters, to provide us with potential incremental revenue above
the contracted minimum charter rates in the event of a strong
spot market. We initially intend to limit the duration of the
charters for the newbuilding product and chemical tankers we
expect to acquire, as we believe this will give us the
flexibility to take advantage of rising charter rates if the
charter markets improve as the global economy strengthens.
Maintain
a Strong Balance Sheet and Flexible Capital
Structure
We believe our strong balance sheet and relationships with
commercial and other banks provide significant financial
flexibility. We have been able to fund approximately 73% of the
vessel acquisition purchase price through favorable long-term
financing. This financial flexibility permits us to pursue
attractive business opportunities.
The $457.7 million aggregate purchase price of the vessels
will be paid in several installments. The first installment of
$191.8 million will require $30.1 million of equity,
and $161.7 million from debt financing. The
$265.9 million balance will be paid until 2012 as vessels
are delivered. Of this amount, approximately $172.6 million
will be financed from debt financing and the $93.3 million
balance will be funded from available cash. Thus after giving
effect to the first installment, payment of deferred
underwriters fees (approximately $8.9 million), and
estimated transaction expenses (approximately
$1.6 million), we will have a
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cash balance of $208.3 million (assuming no conversion of
shares and no Forward Contracts transactions), which will be
available for us to implement our growth strategy. We expect
that our strong balance sheet and significant cash balances will
allow competitive bank financing for acquisitions. As a result,
we believe we will be well-positioned to grow our fleet by
pursuing selective acquisitions of product and chemical tankers.
Implement
and Sustain a Competitive Cost Structure
Pursuant to the Management Agreement and Administrative Services
Agreement (as more fully described below under
Proposal 1 The Vessel Acquisition
Proposal), a subsidiary of Navios Holdings will coordinate
and oversee the commercial, technical and administrative
management of our fleet. We believe that such subsidiary of
Navios Holdings will be able to do so at rates competitive with
those that would be available to us through independent vessel
management companies. We believe this external management
arrangement will enhance the scalability of our business by
allowing us to grow our fleet without incurring significant
additional overhead costs.
We believe that we will be able to leverage the economies of
scale of Navios Holdings and manage operating and maintenance
costs. At the same time, we believe the young age and high
quality of the vessels in our fleet, coupled with Navios
Holdings safety and environmental record, will position us
favorably within the product and chemical tanker sectors with
our customers and for future business opportunities.
Leverage
Navios Holdings Experience, Brand, Network and Risk
Management Expertise
Experience
and Relationships
We intend to capitalize on the global network of relationships
that Navios Holdings has developed during its long history of
investing and operating in the marine transportation industry.
This includes decades-long relationships with leading
charterers, financing sources and key shipping industry players.
When charter markets and vessel prices are depressed and vessel
financing is difficult to obtain, as is currently the case, we
believe the relationships and experience of Navios Holdings and
its management enhances our ability to acquire young,
technically advanced vessels at cyclically low prices and employ
them under attractive charters with leading charterers.
Navios Holdings long involvement and reputation for
reliability in the Asia Pacific region have also allowed it to
develop privileged relationships with many of the largest
institutions in Asia. Through these institutional relationships,
Navios Holdings has obtained relatively low-cost, long-term
charter-in deals, with options to extend time charters and
options to purchase the majority of the vessels. Through its
established reputation and relationships, Navios Holdings has
had access to opportunities not readily available to most other
industry participants that lack Navios Holdings brand
recognition, credibility, and track record.
Access to
Attractive Debt Financing
We believe that our relationship with Navios Holdings will
enable us to access favorable debt financing, as evidenced by
the Credit Agreements, which contain favorable features,
including:
Advanced
Rate
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73% financing of the aggregate purchase price of the vessels;
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Interest
Rate
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for $334.3 million of the debt, interest margin ranging from
2.50% to 2.75% over the applicable base rate;
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Term
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six-year term for $277.0 million of debt;
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Favorable
Amortization
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for $225.0 million of the debt, approximately
17-year
amortization profile ($16.0 million balloon payment per
vessel against a loan of $25.0 million per vessel);
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for $52.0 million installment, approximately 14.5-year
amortization profile ($15.24 million balloon payment per
vessel against a loan of $26.0 million per vessel);
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Favorable
Covenants
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loan to value ratio covenants (post-delivery of vessel)
initially of 125%;
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financial covenants generally inapplicable until after delivery
of the vessels;
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ability to distribute up to 50% of net profits; and
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no negative covenants restricting the incurrence of additional
debt or preventing us from acquiring additional vessels.
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The above reflects three
six-year
term loans (one of which is in advanced stages of negotiation)
for an aggregate of $277.0 million of indebtedness, and a
two-year,
$57.3 million revolving credit facility for general corporate
purposes, repayable in one installment in March 2012 (with
available
one-year
extensions). The covenants described above apply only to the
term loans of $225.0 million. See Managements
Discussion and Analysis of Financial Condition and Results of
Operations Recent Developments for a more
detailed discussion of the Credit Agreements.
See the section entitled Risk Factors beginning on
page 119 for a discussion of risks associated with our debt
financing.
Benefit
from Navios Holdings Leading Risk Management
Practices
Risk management requires the balancing of a number of factors in
a cyclical and potentially volatile environment. Fundamentally,
the challenge is to appropriately allocate capital to competing
opportunities of owning or chartering vessels. In part, this
requires a view of the overall health of the market, as well as
an understanding of capital costs and returns. Navios Holdings
actively engages in assessing financial and other risks
associated with fluctuating market rates, fuel prices, credit
risks, interest rates and foreign exchange rates.
Navios Holdings closely monitors credit exposure to charterers
and other counterparties. Navios Holdings has established
policies designed to ensure that contracts are entered into with
counterparties that have appropriate credit history.
Counterparties and cash transactions are limited to high-credit,
quality-collateralized corporations and financial institutions.
Navios Holdings has strict guidelines and policies that are
designed to limit the amount of credit exposure. Most
importantly, Navios Holdings has insured its charter-out
contracts through a AA+ rated governmental agency of
an European Union member state, which provides that if the
charterer goes into payment default, the insurer will reimburse
us for the charter payments under the terms of the policy for
the remaining term of the charter-out contract (subject to
applicable deductibles and other customary limitations for
insurance). Navios Acquisition will benefit from these
established policies, as well as seek to benefit from the credit
risk insurance available to Navios Holdings, although no
assurance can be provided that it will so qualify.
Reasons
for Entering the Product and Chemical Tanker Sectors
We believe that the product and chemical tanker sectors are
attractive because of the current opportunity to acquire tankers
in those sectors near historically low (inflation-adjusted)
prices, and given the likely future demand for these services.
The recent financial turmoil, and the more restrictive lending
practices that have resulted, has had a significant impact on
new vessel pricing. As can be seen in the charts below, newbuild
product tanker values have declined significantly from the
recent peak in 2008, with newbuild tanker values for 50,000
deadweight ton vessels declining from an average of
$52.1 million in 2008 to $34.5 million in 2010. Chemical
tanker prices are also near their inflation-adjusted historical
low, with newbuild tanker values for 25,000 dwt vessels
declining to $42.0 million in 2010.
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Product
Tankers Newbuild Pricing
(50,000 dwt)
Source:
Drewry
Chemical
Tankers Newbuild Pricing
(25,000 dwt)
Source:
Drewry
Product and chemical tankers are also attractive sectors because
of the significant growth in demand during the period between
2000 through 2009 and the macro drivers suggesting continued
growth as the global recession eases. During the period between
2000 through 2009, demand for transporting refined petroleum
products increased by almost 110%, or a compound annual growth
rate of about 8.6%. The demand for transporting bulk liquid
chemicals increased during this same period by approximately
5.7% annually. Emerging markets were significant demand drivers
for both sectors and are expected to continue as emerging
markets, particularly Asia and the Middle East, build
refineries. As the global economies exit the recent recession,
emerging markets and countries of the Organization for Economic
Co-operation and Development (OECD) will likely
create significant additional demand for tanker services.
We believe as the global market improves, we will be positioned
to take advantage of accompanying rate increases.
Customers
We plan to leverage Navios Holdings extensive experience
and vast shipping industry network to attract high quality,
highly rated counterparties, including oil majors and other
prominent and reputable companies.
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Management
of the Fleet
Navios Acquisition will outsource the commercial and technical
management of its fleet to a subsidiary of Navios Holdings.
The
Management Agreement
At the closing of the vessel acquisition, we will enter into a
five-year Management Agreement with a subsidiary of Navios
Holdings, pursuant to which such subsidiary (the
Manager) will provide certain commercial and
technical ship management services to us. These services will be
provided in a commercially reasonable manner in accordance with
customary ship management practice and under our direction. The
Manager will provide these services to us directly but may
subcontract for certain of these services with other entities,
including other Navios Holdings subsidiaries.
The commercial and technical management services will include:
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the commercial and technical management of vessels:
managing
day-to-day
vessel operations including negotiating charters and other
employment contracts for the vessels and monitoring payments
thereunder, ensuring regulatory compliance, arranging for the
vetting of vessels, procuring and arranging for port entrance
and clearance, appointing counsel and negotiating the settlement
of all claims in connection with the operation of each vessel,
appointing adjusters and surveyors and technical consultants as
necessary, and providing technical support;
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vessel maintenance and crewing: including the supervision
of the maintenance and general efficiency of vessels and
ensuring the vessels are in seaworthy and good operating
condition, arranging our hire of qualified officers and crew,
arranging for all transportation, board and lodging of the crew,
negotiating the settlement and payment of all wages; and
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purchasing and insurance: purchasing stores, supplies and
parts for vessels, arranging insurance for vessels (including
marine hull and machinery insurance, protection and indemnity
insurance and war risk and oil pollution insurance).
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The initial term of the Management Agreement will be five years
from the closing of the vessel acquisition. Pursuant to the
terms of the Management Agreement, we will pay the Manager a
fixed daily fee of $6,000 per owned MR2 product tanker and
chemical tanker vessel, and $7,000 per owned LR1 product
tanker vessel for the first two years of the term of that
agreement, with the fixed daily fees adjusted for the remainder
of the term based on
then-current
market fees. This fixed daily fee will cover all of our vessel
operating expenses, other than certain extraordinary fees and
costs. During the remaining three years of the term of the
Management Agreement, we expect that we will reimburse the
Manager for all of the actual operating costs and expenses it
incurs in connection with the management of our fleet. Actual
operating costs and expenses will be determined in a manner
consistent with how the initial $6,000 and $7,000 fixed fees
were determined. Drydocking expenses will be fixed under this
agreement at $300,000 per vessel.
The Management Agreement may be terminated prior to the end of
its initial term by us upon
120-days
notice if there is a change of control of the Manager or by the
Manager upon
120-days
notice if there is a change of control of Navios Acquisition. In
addition, the Management Agreement may be terminated by us or by
the Manager upon
120-days
notice if:
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the other party breaches the agreement;
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a receiver is appointed for all or substantially all of the
property of the other party;
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an order is made to wind up the other party;
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a final judgment or order that materially and adversely affects
the other partys ability to perform the Management
Agreement is obtained or entered and not vacated or
discharged; or
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the other party makes a general assignment for the benefit of
its creditors, files a petition in bankruptcy or liquidation or
commences any reorganization proceedings.
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Furthermore, at any time after the first anniversary of the
Management Agreement, the Management Agreement may be terminated
prior to the end of its initial term by us or by the Manager
upon
365-days
notice for any reason other than those described above.
In addition to the fixed daily fees payable under the Management
Agreement, the Management Agreement provides that the Manager
will be entitled to reasonable supplementary remuneration for
extraordinary fees and costs resulting from:
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time spent on insurance and salvage claims;
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time spent vetting and pre-vetting the vessels by any charterers
in excess of 10 days per vessel per year;
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the deductible of any insurance claims relating to the vessels
or for any claims that are within such deductible range;
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the significant increase in insurance premiums which are due to
factors such as acts of God outside the control of
the Manager;
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repairs, refurbishment or modifications, including those not
covered by the guarantee of the Shipbuilders or by the insurance
covering the vessels, resulting from maritime accidents,
collisions, other accidental damage or unforeseen events (except
to the extent that such accidents, collisions, damage or events
are due to the fraud, gross negligence or willful misconduct of
the Manager, its employees or its agents, unless and to the
extent otherwise covered by insurance);
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expenses imposed due to any improvement, upgrade or modification
to, structural changes with respect to the installation of new
equipment aboard any vessel that results from a change in, an
introduction of new, or a change in the interpretation of,
applicable laws, at the recommendation of the classification
society for that vessel or otherwise;
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costs associated with increases in crew employment expenses
resulting from an introduction of new, or a change in the
interpretation of, applicable laws or resulting from the early
termination of the charter of any vessel;
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any taxes, dues or fines imposed on the vessels or the Manager
due to the operation of the vessels;
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expenses incurred in connection with the sale or acquisition of
a vessel such as inspections and technical assistance; and
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any similar costs, liabilities and expenses that were not
reasonably contemplated by us and the Manager as being
encompassed by or a component of the fixed daily fees at the
time the fixed daily fees were determined.
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Under the Management Agreement, neither we nor the Manager will
be liable for failure to perform any of our or its obligations,
respectively, under the Management Agreement by reason of any
cause beyond our or its reasonable control.
In addition, the Manager will have no liability for any loss
arising in the course of the performance of the commercial and
technical management services under the Management Agreement
unless and to the extent that such loss is proved to have
resulted solely from the fraud, gross negligence or willful
misconduct of the Manager or its employees, in which case
(except where such loss has resulted from the Managers
intentional personal act or omission and with knowledge that
such loss would probably result) the Managers liability
will be limited to $3.0 million for each incident or series
of related incidents.
Further, under our Management Agreement, we have agreed to
indemnify the Manager and its employees and agents against all
actions that may be brought against them under the Management
Agreement including, without limitation, all actions brought
under the environmental laws of any jurisdiction, or otherwise
relating to pollution or the environment, and against and in
respect of all costs and expenses they may suffer or incur due
to defending or settling such action; provided, however, that
such indemnity excludes any or all losses
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which may be caused by or due to the fraud, gross negligence or
willful misconduct of the Manager or its employees or agents, or
any breach of the Management Agreement by the Manager.
The
Administrative Services Agreement
At the closing of the vessel acquisition, we will enter into a
five-year Administrative Services Agreement with the Manager,
pursuant to which the Manager will provide certain
administrative management services to us.
The Administrative Services Agreement may be terminated prior to
the end of its term by us upon
120-days
notice if there is a change of control of the Manager or by the
Manager upon
120-days
notice if there is a change of control of us. In addition, the
Administrative Services Agreement may be terminated by us or by
the Manager upon
120-days
notice if:
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the other party breaches the agreement;
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a receiver is appointed for all or substantially all of the
property of the other party;
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an order is made to wind up the other party;
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a final judgment or order that materially and adversely affects
the other partys ability to perform the Administrative
Services Agreement is obtained or entered and not vacated or
discharged; or
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the other party makes a general assignment for the benefit of
its creditors, files a petition in bankruptcy or liquidation or
commences any reorganization proceedings.
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Furthermore, at any time after the first anniversary of the
Administrative Services Agreement, the Administrative Services
Agreement may be terminated by us or by the Manager upon
365-days
notice for any reason other than those described above.
The administrative services will include:
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bookkeeping, audit and accounting
services: assistance with the maintenance of our
corporate books and records, assistance with the preparation of
our tax returns and arranging for the provision of audit and
accounting services;
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legal and insurance services: arranging for
the provision of legal, insurance and other professional
services and maintaining our existence and good standing in
necessary jurisdictions;
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administrative and clerical
services: providing office space, arranging
meetings for our security holders, arranging the provision of IT
services, providing all administrative services required for
subsequent debt and equity financings and attending to all other
administrative matters necessary to ensure the professional
management of our business;
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banking and financial services: providing cash
management including assistance with preparation of budgets,
overseeing banking services and bank accounts, arranging for the
deposit of funds, negotiating loan and credit terms with lenders
and monitoring and maintaining compliance therewith;
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advisory services: assistance in complying
with United States and other relevant securities laws;
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client and investor relations: arranging for
the provision of, advisory, clerical and investor relations
services to assist and support us in our communications with our
security holders; and client and investor relations; and
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integration of any acquired businesses.
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We will reimburse the Manager for reasonable costs and expenses
incurred in connection with the provision of these services
within 15 days after the Manager submits to us an invoice
for such costs and expenses, together with any supporting detail
that may be reasonably required.
Under the Administrative Services Agreement, we will agree to
indemnify the Manager and its employees against all actions
which may be brought against them under the Administrative
Services Agreement
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including, without limitation, all actions brought under the
environmental laws of any jurisdiction, and against and in
respect of all costs and expenses they may suffer or incur due
to defending or settling such actions; provided, however, that
such indemnity excludes any or all losses that may be caused by
or due to the fraud, gross negligence or willful misconduct of
the Manager or its employees or agents.
The
Acquisition Omnibus Agreement
At the closing of the vessel acquisition, we will enter into the
Acquisition Omnibus Agreement with Navios Holdings and Navios
Partners. The following discussion describes certain provisions
of the Acquisition Omnibus Agreement.
Noncompetition
Navios Holdings and Navios Partners will agree not to acquire,
charter-in or own Liquid Shipment Vessels (as hereinafter
defined). For purposes of the Acquisition Omnibus Agreement,
Liquid Shipment Vessels means vessels intended
primarily for the sea going shipment of liquid products,
including chemical and petroleum-based products, except for
container vessels and vessels that will be employed primarily in
operations in South America. This restriction will not prevent
Navios Holdings or any of its controlled affiliates or Navios
Partners (other than us and our subsidiaries) from:
(1) acquiring a Liquid Shipment Vessel(s) from us for fair
market value;
(2) acquiring a Liquid Shipment Vessel(s) as part of the
acquisition of a controlling interest in a business or package
of assets and owning those vessels; provided, however, that:
(a) if less than a majority of the value of the total
assets or business acquired is attributable to a Liquid Shipment
Vessel(s) and related charters, as determined in good faith by
the board of directors of Navios Holdings or Navios Partners, as
the case may be, Navios Holdings or Navios Partners, as the case
may be, must offer to sell a Liquid Shipment Vessel(s) and
related charters to us for their fair market value plus any
additional tax or other similar costs to Navios Holdings that
would be required to transfer a Liquid Shipment Vessel(s) and
related charters to us separately from the acquired
business; and
(b) if a majority or more of the value of the total assets
or business acquired is attributable to a Liquid Shipment
Vessel(s) and related charters, as determined in good faith by
the board of directors of Navios Holdings or Navios Partners, as
the case may be, Navios Holdings or Partners, as the case may
be, shall notify us in writing, of the proposed acquisition. We
shall, not later than the 15th calendar day following
receipt of such notice, notify Navios Holdings or Navios
Partners, as the case may be, if we wish to acquire such a
Liquid Shipment Vessel(s) and related charters forming part of
the business or package of assets in cooperation and
simultaneously with Navios Holdings or Navios Partners, as the
case may be, acquiring a Liquid Shipment Vessel(s) and related
charters forming part of that business or package of assets. If
we do not notify Navios Holdings of our intent to pursue the
acquisition within 15 calendar days, Navios Holdings may proceed
with the acquisition as provided in (a) above.
(3) acquiring a non-controlling interest in any company,
business or pool of assets;
(4) acquiring or owning a Liquid Shipment Vessel(s) and
related charter if we do not fulfill our obligation, under any
existing or future written agreement, to purchase such vessel in
accordance with the terms of any such agreement;
(5) acquiring or owning a Liquid Shipment Vessel(s) subject
to the offers to us described in paragraphs (3) and
(4) above pending our determination whether to accept such
offers and pending the closing of any offers we accept;
(6) providing ship management services relating to any
vessel whatsoever, including to a Liquid Shipment Vessel(s)
owned by the controlled affiliates of Navios Holdings; or
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(7) acquiring or owning a Liquid Shipment Vessel(s) if we
have previously advised Navios Holdings or Navios Partners, as
the case may be, that we consent to such acquisition, or if we
have been offered the opportunity to purchase such vessel
pursuant to the Acquisition Omnibus Agreement and failed to do
so.
If Navios Holdings or Navios Partners, as the case may be, or
any of their respective controlled affiliates (other than us or
our subsidiaries) acquires or owns a Liquid Shipment Vessel(s)
pursuant to any of the exceptions described above, it may not
subsequently expand that portion of its business other than
pursuant to those exceptions.
In addition, under the Acquisition Omnibus Agreement we will
agree, and will cause our subsidiaries to agree, not to acquire,
own, operate or charter drybulk carriers (Drybulk
Carriers). Pursuant to an agreement between them, Navios
Holdings and Navios Partners may be entitled to a priority over
each other depending on the class and charter length of any
Drybulk Carrier. This restriction will not:
(1) prevent us or any of our subsidiaries from acquiring a
Drybulk Carrier(s) and any related charters as part of the
acquisition of a controlling interest in a business or package
of assets and owning and operating or chartering those vessels;
provided, however, that:
(a) if less than a majority of the value of the total
assets or business acquired is attributable to a Drybulk
Carrier(s) and related charter(s), as determined in good faith
by us, we must offer to sell such Drybulk Carrier(s) and related
charter to Navios Holdings or Navios Partners, as the case may
be, for their fair market value plus any additional tax or other
similar costs to us that would be required to transfer the
Drybulk Carrier(s) and related charter(s) to Navios Holdings or
Navios Partners, as the case may be, separately from the
acquired business; and
(b) if a majority or more of the value of the total assets
or business acquired is attributable to a Drybulk Carrier(s) and
related charter(s), as determined in good faith by us, we shall
notify Navios Holdings or Navios Partners, as the case may be,
in writing of the proposed acquisition. Navios Holdings or
Navios Partners, as the case may be, shall, not later than the
15th calendar day following receipt of such notice, notify
us if it wishes to acquire the Drybulk Carrier(s) forming part
of the business or package of assets in cooperation and
simultaneously with us acquiring the Non-Drybulk Carrier assets
forming part of that business or package of assets. If Navios
Holdings and Navios Partners do not notify us of its intent to
pursue the acquisition within 15 calendar days, we may proceed
with the acquisition as provided in (a) above.
(2) prevent us or any of our subsidiaries from owning,
operating or chartering a Drybulk Carrier(s) subject to the
offer to Navios Holdings or Navios Partners described in
paragraph (1) above, pending its determination whether to
accept such offer and pending the closing of any offer it
accepts; or
(3) prevent us or any of our subsidiaries from acquiring,
operating or chartering a Drybulk Carrier(s) if Navios Holdings
and Navios Partners has previously advised us that it consents
to such acquisition, operation or charter, or if they have
previously been offered the opportunity to purchase such Drybulk
Carrier(s) and have declined to do so.
If we or any of our subsidiaries owns, operates and charters
Drybulk Carriers pursuant to any of the exceptions described
above, neither we nor such subsidiary may subsequently expand
that portion of our business other than pursuant to those
exceptions.
Rights
of First Offer
Under the Acquisition Omnibus Agreement, we and our subsidiaries
will grant to Navios Holdings and Navios Partners, as the case
may be, a right of first offer on any proposed sale, transfer or
other disposition of any of our Drybulk Carriers and related
charters owned or acquired by us. Likewise, Navios Holdings and
Navios Partners will agree (and will cause its subsidiaries to
agree) to grant a similar right of first offer to us for any
Liquid Shipment Vessels it might own. These rights of first
offer will not apply to a (a) sale, transfer or other
disposition of vessels between any affiliated subsidiaries, or
pursuant to the terms of any charter or other agreement with a
counterparty, or (b) merger with or into, or sale of
substantially all of the assets to, an unaffiliated third party.
96
Prior to engaging in any negotiation regarding any vessel
disposition with respect to a Liquid Shipment Vessel(s) with a
non-affiliated third party or any Drybulk Carrier(s) and related
charter, we, Navios Holdings, or Navios Partners, as the case
may be, will deliver a written notice to the other parties
setting forth the material terms and conditions of the proposed
transaction. During the
15-day
period after the delivery of such notice, we, Navios Holdings or
Navios Partners, as the case may be, will negotiate in good
faith to reach an agreement on the transaction. If we do not
reach an agreement within such
15-day
period, we or Navios Holdings or Navios Partners, as the case
may be, will be able within the next 180 calendar days to sell,
transfer or dispose of the vessel to a third party (or to agree
in writing to undertake such transaction with a third party) on
terms generally no less favorable to us or Navios Holdings, as
the case may be, than those offered pursuant to the written
notice.
Upon a change of control of Navios Partners, the noncompetition
and the right of first offer provisions of the Acquisition
Omnibus Agreement will terminate immediately as to Navios
Partners, but shall remain binding on us and Navios Holdings.
Upon a change of control of Navios Holdings, the noncompetition
and the right of first offer provisions of the Acquisition
Omnibus Agreement shall terminate; provided, however, that in no
event shall the noncompetition and the rights of first refusal
terminate upon a change of control of Navios Holdings prior to
the fourth anniversary of the Acquisition Omnibus Agreement.
Upon change of control of us, the noncompetition and the right
of first offer provisions of the Acquisition Omnibus Agreement
will terminate immediately as to all parties of the Acquisition
Omnibus Agreement.
The
Credit Agreements
Pursuant to a credit agreement with Deutsche Schiffsbank AG,
Alpha Bank A.E., and Credit Agricole Corporate and Investment
Bank, as lenders, a credit facility of up to $150.0 million
will be used to partially finance the construction of two
chemical tankers and four product tankers. In addition, pursuant
to a credit agreement with DVB Bank SE and Fortis Bank, as
lenders, a credit facility of up to $75.0 million will be
used to partially finance the construction of three product
tankers. Financing of up to $25.0 million is available for
each of the nine vessels. In addition, such Credit Agreements
each have a six-year term, but a
17-year
profile ($16.0 million per vessel balloon payment against a
loan of $25.0 million per vessel). Both loans bear interest
at a margin of 2.50% over the applicable base rate per annum.
These term facilities provide for payment of commitment fees at
60 basis points per annum, payable quarterly in arrears, on
the committed but undrawn portion of the loan and an upfront fee
of 0.75% on the date of first drawn down under the agreements.
Pursuant to a commitment letter with Marfin Egnatia Bank, as
lender, a revolving credit facility of up to $57.3 million
will be made available for general corporate purposes and is
currently anticipated to be drawn down to pay for a portion of
the vessel acquisition purchase price. Such Credit Agreement is
interest only until maturity subject to one year extension
periods. Such Credit Agreement bears interest at a margin of
2.75% over the applicable base rate per annum.
Navios Acquisition is in advanced negotiations with commercial
banks for a credit facility of up to $52.0 million to be
used to partially finance the acquisition of the two currently
operating LR1 vessels. Such Credit Agreement is expected to
have a six-year term, with a 14.5-year profile due to a
$15.24 million per vessel balloon payment against a loan of
$26.0 million per vessel. The credit facility is expected
to bear interest at a margin of 2.50% over the applicable base
rate per annum.
The term Credit Agreements contain favorable covenants including
(a) minimum liquidity, (b) maximum total net
liabilities over total net assets (effective in general after
delivery of the vessels), (c) minimum net worth (effective
after delivery of the vessels, but in no case no later than
2013), (d) pari passu ranking of the loans with all
Navios Acquisition credit undertakings, (d) loan to value
ratio covenants applicable after delivery of the vessels
initially of 125%, (e) deposit of the unpaid equity portion
to be released in conjunction with the loan advances at each
construction stage, and (f) the ability to distribute up to
50% of net profits without the Lenders consent. In
addition, the Credit Agreements contain no covenants that would
impede our ability to grow our fleet, including no negative
covenants restricting the incurrence of additional debt or
preventing us from acquiring additional vessels. The Credit
Agreements also require that Navios Holdings, Angeliki Frangou
and their respective affiliates maintain, directly or
indirectly, control over an aggregate of at least 30% of our
outstanding securities.
97
We expect to draw down the maximum principal amount of
$334.3 million available under the Credit Agreements to
partially fund the vessel acquisition. Pursuant to the
Acquisition Agreement, the guarantees of Navios Holdings to the
Lenders will terminate and be replaced by guarantees of Navios
Acquisition. The Lenders have consented to such replacement of
guarantees of the Credit Agreements, and upon termination of its
guarantees, Navios Holdings will have no further liability under
the Credit Agreements.
Directors
and Executive Officers
Set forth below are the names, ages and positions of Navios
Acquisitions directors, executive officers and key
employees as of the date of this proxy statement and immediately
following the closing date of the vessel acquisition.
|
|
|
|
|
|
|
Name
|
|
Age
|
|
Position
|
|
Angeliki Frangou
|
|
|
44
|
|
|
Chairman, Chief Executive Officer and Director
|
Ted C. Petrone
|
|
|
54
|
|
|
President and Director
|
Nikolaos Veraros, CFA
|
|
|
39
|
|
|
Director
|
Julian David Brynteson
|
|
|
42
|
|
|
Director
|
John Koilalous
|
|
|
79
|
|
|
Director
|
Leonidas Korres
|
|
|
34
|
|
|
Chief Financial Officer
|
Rex W. Harrington*
|
|
|
77
|
|
|
Director
|
|
|
|
* |
|
Mr. Harrington has agreed to join our Board upon
consummation of the vessel acquisition. |
Angeliki Frangou has been our Chairman and Chief
Executive Officer since inception. Ms. Frangou is also the
Chairman and Chief Executive Officer of Navios Holdings, our
sponsor, and, since August 2007, Navios Partners, an affiliated
limited partnership trading on the New York Stock Exchange.
Previously, Ms. Frangou was Chairman, Chief Executive
Officer and President of International Shipping Enterprises
Inc., which acquired Navios Holdings. During the period 1990
through August 2005, Ms. Frangou was the Chief Executive
Officer of Maritime Enterprises Management S.A., and its
predecessor company, which specialized in the management of dry
cargo vessels. Ms. Frangou is the Chairman of IRF European
Finance Investments Ltd., listed on the SFM of the London Stock
Exchange. During the period April 2004 to July 2005,
Ms. Frangou served on the board of directors of Emporiki
Bank of Greece (then, the second largest retail bank in Greece).
From June 2006 until September 2008, Ms. Frangou also
served as Chairman of Proton Bank, based in Athens, Greece.
Ms. Frangou is a member of the Mediterranean Committee of
the China Classification Society and a member of the Hellenic
and Black Sea Committee of Bureau Veritas as well as a member of
Greek Committee of Nippon Kaiji Kyokai. Ms. Frangou
received a bachelors degree in mechanical engineering from
Fairleigh Dickinson University (summa cum laude) and a
masters degree in mechanical engineering from Columbia
University.
Ted C. Petrone has been our President and a member
of our board of directors since March 2008. He has also been a
director of Navios Holdings since May 2007, having become
President of Navios Corporation (Navios Holdings
predecessor entity) in September 2006. He heads Navios
Holdings worldwide commercial operations. Mr. Petrone
has served in the maritime industry for 31 years, 28 of
which he has spent with Navios Holdings. After joining Navios
Holdings as an assistant vessel operator, Mr. Petrone
worked there in various operational and commercial positions.
For the last 15 years, Mr. Petrone has been
responsible for all the aspects of the daily commercial Panamax
activity, encompassing the trading of tonnage, derivative hedge
positions and cargoes. Mr. Petrone graduated from New York
Maritime College at Fort Schuyler with a B.S. in Maritime
Transportation. He has also served aboard U.S. Navy
(Military Sealift Command) tankers.
Nikolaos Veraros, CFA, has been a member of our
board of directors since June 2008. Mr. Veraros is a senior
analyst at Investments & Finance Ltd., where he has
worked since August 2001, and also from June 1997 to February
1999. From March 1999 to August 2001, Mr. Veraros worked as
a senior equity analyst for National Securities, S.A, a
subsidiary of National Bank of Greece. He is a Chartered
Financial Analyst (CFA), a Certified Market Maker for
Derivatives in the Athens Stock Exchange, and a Certified
Analyst from the
98
Hellenic Capital Market Commission. Mr. Veraros received
his Bachelor of Science degree in Business Administration from
the Athens University of Economics and Business and his Master
of Business Administration degree in Finance/Accounting from the
William E. Simon Graduate School of Business Administration at
the University of Rochester.
Julian David Brynteson has been a member of our
Board of Directors since June 2008. Since November 2006, Mr.
Brynteson has been a managing director for sales and purchases
at H. Clarkson & Company Ltd., a wholly owned
subsidiary of Clarkson PLC, a London Stock Exchange-listed and
leading worldwide shipbroker. Mr. Brynteson was a member of
the board of directors of ISE from September 2004 until October
2005. From March 1987 to November 2006, Mr. Brynteson
was employed in various capacities with Braemar Seascope Ltd.
(the surviving entity following the merger between Seascope
Shipping Ltd. and Braemar Shipbrokers Ltd.), a London Stock
Exchange-listed shipbroker, becoming a director in the sales and
purchase department in 2001.
John Koilalous has been a member of our board of
directors since June 2008. Mr. Koilalous began his career
in the shipping industry in the City of London in 1949, having
worked for various firms both in London and Piraeus. He entered
the adjusting profession in 1969, having worked for Francis and
Arnold for some 18 years and then with Pegasus Adjusting
Services Ltd., of which he was the founder and, until his
retirement at the end of 2008, the managing director. He still
remains active in an advisory capacity on matters of marine
insurance claims.
Leonidas Korres has been our Chief Financial
Officer since April 2010, and previously our Senior Vice
President for Business Development since January 2010.
Mr. Korres served as the Special Secretary for Public
Private Partnerships in the Ministry of Economy and Finance of
the Hellenic Republic from October 2005 until November 2009.
Prior to that, from April 2004 to October 2005, Mr. Korres
served as Special Financial Advisor to the Minister of Economy
and Finance of the Hellenic Republic and as liquidator of the
Organizational Committee for the Olympic Games Athens 2004 S.A.
From 2001 to 2004, Mr. Korres worked as a Senior Financial
Advisor for KPMG Corporate Finance. From October 2007 until
January 2010, Mr. Korres was a member of the board of
directors of Navios Partners. From May 2003 to December 2006,
Mr. Korres was Chairman of the Center for Employment and
Entrepreneurship, a Non-Profit Company. From June 2008 until
February 2009, Mr. Korres served as a board member and
audit committee member of Hellenic Telecommunications
Organization S.A. (trading on the Athens and New York Stock
Exchanges). From June 2004 until November 2009, Mr. Korres
served on the board of Hellenic Olympic Properties S.A., which
was responsible for exploiting the Olympic venues.
Mr. Korres earned his Bachelors degree in Economics
from the Athens University of Economics and Business and his
Masters degree in Finance from the University of London.
Rex W. Harrington served as a member of the board
of directors of Navios Holdings from October 2005 to March 2010.
Mr. Harrington served as shipping advisor to the Royal Bank
of Scotland plc from 1998 until 2001. In addition,
Mr. Harrington served as Director of Shipping of the Royal
Bank of Scotland plc from 1990 to 1998, Assistant General
Manager, Shipping from 1980 to 1990 and Senior Manager, Shipping
from 1973 to 1980. From 1969 to 1973, Mr. Harrington served
as an executive of Baring Bothers & Co., Ltd., an
international merchant banking firm, and, from 1957 to 1969,
served in various capacities in the Bank of England.
Mr. Harrington currently serves as a director of General
Maritime Corporation, a company listed on the New York Stock
Exchange, and is a senior consultant to the Bank of America on
shipping. He is a member of the General Committee of Lloyds
Register, the London Advisory Panel of InterCargo, the Baltic
Exchange and the Steering Committee of the London Shipping Law
Centre. Mr. Harrington is a Deputy Chairman of the
International Maritime Industries Forum. He was a director of
Dampskibsselskabet TORM, a company listed on the NASDAQ National
Market and the Copenhagen Stock Exchange from 2003 to 2006,
Clarksons (International Shipbrokers) quoted on the London Stock
Exchange from 1995 to 1998, and a director of Lloyds
Register from 1994 to 1999. Mr. Harrington has a
Masters degree from the University of Oxford.
99
Governmental
and Other Regulations
Sources
of applicable rules and standards
Shipping is one of the worlds most heavily regulated
industries, and in addition it is subject to many industry
standards. Government regulation significantly affects the
ownership and operation of vessels. These regulations consist
mainly of rules and standards established by international
conventions, but they also include national, state, and local
laws and regulations in force in jurisdictions where vessels may
operate or are registered, and which are commonly more stringent
than international rules and standards. This is the case
particularly in the United States and, increasingly, in Europe.
A variety of governmental and private entities subject vessels
to both scheduled and unscheduled inspections. These entities
include local port authorities (the U.S. Coast Guard,
harbor masters or equivalent entities), classification
societies, flag state administration (country vessel of
registry), state and local governmental pollution control
agencies and charterers, particularly terminal operators.
Certain of these entities require vessel owners to obtain
permits, licenses, and certificates for the operation of their
vessels. Failure to maintain necessary permits or approvals
could require a vessel owner to incur substantial costs or
temporarily suspend operation of one or more of its vessels.
Heightened levels of environmental and quality concerns among
insurance underwriters, regulators, and charterers continue to
lead to greater inspection and safety requirements on all
vessels and may accelerate the scrapping of older vessels
throughout the industry. Increasing environmental concerns have
created a demand for vessels that conform to and comply with
stricter environmental standards and regulations. Vessel owners
are required to maintain operating standards for all vessels
that will emphasize operational safety, quality maintenance,
continuous training of officers and crews and compliance with
U.S. and international regulations.
International
environmental regulations
The International Maritime Organization, or IMO, has negotiated
a number of international conventions concerned with preventing,
reducing or controlling pollution from ships. These fall into
two main categories: conventions regarding ship safety
standards, and conventions regarding measures to prevent
pollution.
Ship
safety regulation
In the former category, the primary international instrument is
the Safety of Life at Sea Convention 1974, as amended, (SOLAS),
together with the regulations and codes of practice that form
part of its regime. Much of SOLAS is not directly concerned with
preventing pollution, but some of its safety provisions are
intended to prevent pollution as well as promote safety of life
and preservation of property. These regulations have been and
continue to be regularly amended as new and higher safety
standards are introduced with which we are required to comply.
An amendment of SOLAS introduced the International Safety
Management (ISM) Code, which has been effective since July 1998.
Under the ISM Code the party with operational control of a
vessel is required 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. The ISM
Code requires that vessel operators obtain a safety management
certificate for each vessel they operate. This certificate
evidences compliance by a vessels management with code
requirements for a safety management system. No vessel can
obtain a certificate unless its manager has been awarded a
document of compliance, issued by the respective flag state for
the vessel, under the ISM Code. Noncompliance with the ISM Code
and other IMO regulations may subject a shipowner 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. For example, the U.S. Coast
Guard and European Union authorities have indicated that vessels
not in compliance with the ISM Code will be prohibited from
trading in ports in the United States and European Union.
Another amendment of SOLAS, made after the terrorist attacks in
the United States on September 11, 2001, introduced special
measures to enhance maritime security, including the
International Ship and Port
100
Facilities Security (ISPS) Code. If we consummate the vessel
acquisition, our owned fleet should maintain ISM and ISPS
certifications for safety and security of operations.
Pollution
prevention from ships
In the second main category of international regulation,
pollution prevention, the primary instrument is the
International Convention for the Prevention of Pollution from
Ships, or MARPOL, which imposes environmental standards on the
shipping industry set out in
Annexes I-VI
of the convention. These annexes regulate the prevention of
pollution by oil (Annex I), by noxious liquid substances in
bulk (Annex II), by harmful substances in packaged forms
within the scope of the International Maritime Dangerous Goods
Code (Annex III), by sewage (Annex IV), by garbage
(Annex V), and by air emissions (Annex VI).
These regulations have been and continue to be regularly amended
as new and higher standards of pollution prevention are
introduced with which we are required to comply.
For example, MARPOL Annex VI, together with the NOx
Technical Code established thereunder, sets limits on sulfur
oxide and nitrogen oxide emissions from ship exhausts and
prohibits deliberate emissions of ozone depleting substances,
such as chlorofluorocarbons. It 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.
Originally adopted in September 1997, Annex VI came into
force in May 2005 and was amended in October 2008 (as was the
NOx Technical Code) to provide for progressively more stringent
limits on such emissions from 2010 onwards. These regulations
are enforced by the member states. We anticipate incurring costs
in complying with these more stringent standards.
Revised Annex I to the MARPOL Convention entered into force
in January 2007. It incorporates various amendments to the
MARPOL Convention and imposes construction requirements for oil
tankers delivered on or after January 1, 2010. On
August 1, 2007, Regulation 12A (an amendment to
Annex I) came into force imposing performance
standards for accidental oil fuel outflow and requiring oil fuel
tanks to be located inside the double-hull in all ships with an
aggregate oil fuel capacity of 600 cubic meters and above, and
which are delivered on or after August 1, 2010, including
ships for which the building contract is entered into on or
after August 1, 2007 or, in the absence of a contract, for
which keel is laid on or after February 1, 2008. All of our
newbuild tanker vessels will comply with Regulation 12A.
Greenhouse
gas emissions
In February 2005, the Kyoto Protocol to the United Nations
Framework Convention on Climate Change, referred to as the Kyoto
Protocol, entered into force. Pursuant to the Kyoto Protocol,
adopting countries are required to implement national programs
to reduce emissions of certain gases, generally referred to as
greenhouse gases, which are suspected of contributing to global
warming. Currently, the emissions of greenhouse gases from
international shipping are not subject to the Kyoto Protocol.
Although there was some expectation that a new climate change
treaty would be adopted at the December 2009 United Nations
Copenhagen climate change conference, it did not result in any
legally binding commitments. Instead, the participating
countries developed an accord on a framework for negotiations in
2010 that includes emission reduction targets for developed
countries and goals for limiting increases in atmospheric
temperature. The implementation of the Copenhagen accord could
lead to restrictions on the emissions of greenhouse gases from
shipping. International or multinational bodies or individual
countries may adopt their own climate change regulatory
initiatives. The IMOs second study of greenhouse gas
emissions from the global shipping fleet (2009) predicts that
greenhouse emissions from ships international shipping may
increase 150% to 200% by 2050 due to expected growth in
international seaborne trade. The IMO recently announced its
intention to develop limits on greenhouse gases from
international shipping and is working on proposed mandatory
technical and operational measures. The European Union has
indicated that it intends to propose an expansion of the
existing European Union emissions trading scheme to include
emissions of greenhouse gases from vessels. In the United
States, the EPA has issued a finding that greenhouse gases
endanger public health and safety and is considering a petition
from the California Attorney General and a coalition of
environmental groups to regulate greenhouse gas emissions from
ocean-going vessels under the Clean Air Act. Federal
101
regulations relating to the control of greenhouse gas emissions
are likely to follow, and the U.S. Congress is also
considering climate change initiatives. Any passage of climate
control legislation or other regulatory initiatives by the IMO,
European Union, the United States or other countries where we
operate that restrict emissions of greenhouse gases could
require us to make significant financial expenditures we cannot
predict with certainty at this time.
Other
international regulations to prevent pollution
In addition to MARPOL, other more specialized international
instruments have been adopted to prevent different types of
pollution or environmental harm from ships. In February 2004,
the IMO adopted an International Convention for the Control and
Management of Ships Ballast Water and Sediments, or the
BWM Convention. The BWM Conventions implementing
regulations call for a phased introduction of mandatory ballast
water exchange requirements (beginning in 2009), to be replaced
in time with mandatory concentration limits. The BWM Convention
will not enter into force until 12 months after it has been
adopted by 30 states, the combined merchant fleets of which
represent not less than 35% of the gross tonnage of the
worlds merchant shipping. To date, there has not been
sufficient adoption of this standard by governments that are
members of the convention for it to take force. As of February
2010, the BWM Convention had been adopted by 22 states
representing approximately 23% of the gross tonnage of the
worlds merchant shipping. Moreover, the IMO has supported
deferring the requirements of this convention that would first
come into effect on December 31, 2011, even if it were to
be adopted earlier.
European
regulations
European regulations in the maritime sector are, in general,
based on international law. However, since the Erika
incident in 1999, the European Community has become
increasingly active in the field of regulation of maritime
safety and protection of the environment. It has been the
driving force behind a number of amendments of MARPOL
(including, for example, changes to accelerate the time-table
for the phase-out of single hull tankers, and to prohibit the
carriage in such tankers of heavy grades of oil), and if
dissatisfied either with the extent of such amendments or with
the time-table for their introduction it has been prepared to
legislate on a unilateral basis. In some instances where it has
done so, international regulations have subsequently been
amended to the same level of stringency as that introduced in
Europe, but the risk is well established that EU regulations may
from time to time impose burdens and costs on shipowners and
operators which are additional to those associated with
compliance with international rules and standards.
In some areas of regulation, the EU has introduced new laws
without attempting to procure a corresponding amendment of
international law. Notably, the EU adopted in 2005, and amended
in 2009, a directive on ship-source pollution, imposing criminal
sanctions for pollution not only where this is caused by intent
or recklessness (which would be an offence under MARPOL), but
also where it is caused by serious negligence. The
directive could therefore result in criminal liability being
incurred in circumstances where it would not be incurred under
international law. Criminal liability for a pollution incident
could not only result in us incurring substantial penalties or
fines but may also, in some jurisdictions, facilitate civil
liability claims for greater compensation than would otherwise
have been payable.
United
States environmental regulations and laws governing civil
liability for pollution
Environmental law in the United States merits particular mention
as it is in many respects more onerous than international laws,
representing a high-water mark of regulation with which
shipowners and operators must comply, and of liability likely to
be incurred in the event of non-compliance or an incident
causing pollution. Additionally, pursuant to the U.S. federal
laws, each state may enact more stringent regulations, thus
subjecting shipowners to dual liability. Notably, California has
adopted regulations that parallel most, if not all of the
federal regulations explained below. We intend to comply with
all applicable state regulations in the ports where our vessels
will call.
U.S. federal law, including notably the Oil Pollution Act
of 1990, or the OPA, establishes an extensive regulatory and
liability regime for the protection and cleanup of the
environment from oil spills, including
102
bunker oil spills from drybulk vessels as well as cargo or
bunker oil spills from tankers. The OPA affects all owners and
operators whose vessels trade in the United States, its
territories and possessions or whose vessels operate in United
States waters, which includes the United States
territorial sea and its 200 nautical mile exclusive economic
zone. Under the OPA, vessel owners, operators and bareboat
charterers 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 substantial
threats of discharges, of oil from their vessels. In addition to
potential liability under the OPA as the relevant federal law,
vessel owners may in some instances incur liability on an even
more stringent basis under state law in the particular state
where the spillage occurred. For example, California regulates
oil spills pursuant to California Government Code
section 8670, et seq. This law prohibits the discharge of
oil, requires an oil contingency plan be filed with the state,
requires that the shipowner contract with an oil response
organization and requires a valid certificated of financial
responsibility, all prior to the vessel entering state waters.
Title VII of the Coast Guard and Maritime Transportation
Act of 2004, or the CGMTA, amended the OPA to require the owner
or operator of any non-tank vessel of 400 gross tons or
more, that carries oil of any kind as a fuel for main
propulsion, including bunkers, to prepare and submit a response
plan for each vessel on or before August 8, 2005. Prior to
this amendment, these provisions of the OPA applied only to
vessels that carry oil in bulk as cargo. However, before the
federal requirements took effect, many of the individual states
had previously adopted requirements for response plans for both
non-tank and vessels. The vessel response plans must include
detailed information on actions to be taken by vessel personnel
to prevent or mitigate any discharge or substantial threat of
such a discharge of ore from the vessel due to operational
activities or casualties. The OPA had historically limited
liability of responsible parties to the greater of $600 per
gross ton or $0.5 million per containership that is over
300 gross tons (subject to possible adjustment for
inflation). Amendments to the OPA and its regulations, which
came into effect on July 31, 2009, increased the liability
limits for responsible parties for any vessel other than a tank
vessel to $1,000 per gross ton or $854,400, whichever is
greater. For tank vessels, the liability limit depends on the
size and construction of the vessel, and can be up to $3,200 per
gross ton or $23,496,000, whichever is greater.
These limits of liability do not apply if an incident was
directly caused by violation of applicable United States federal
safety, construction or operating regulations or by a
responsible partys gross negligence or willful misconduct,
or if the responsible party fails or refuses to report the
incident or to cooperate and assist in connection with oil
removal activities. In addition, liability under some state laws
do not include any limits, and thus, while limitation may be
available under federal law, liability under state law is
considered unlimited forcing a vessel owner or operator to first
pay under state law and then possibly seek reimbursement from
the federal government under the limitation provisions of the
OPA.
In addition, the Comprehensive Environmental Response,
Compensation and Liability Act, or CERCLA, which applies to the
discharge of hazardous substances (other than oil) whether on
land or at sea, contains a similar liability regime and provides
for cleanup, removal and natural resource damages. Liability
under CERCLA is limited to the greater of $300 per gross ton or
$0.5 million for vessels not carrying hazardous substances
as cargo or residue, unless the incident is caused by gross
negligence, willful misconduct, or a violation of certain
regulations, in which case liability is unlimited. For vessels
carrying hazardous substances as cargo or residue, the limit of
liability is $300 per gross ton or $5 million, whichever is
greater.
The OPA requires owners and operators of all vessels over
300 gross tons, even those that do not carry hazardous
substances as cargo, to establish and maintain with the
U.S. Coast Guard evidence of financial responsibility
sufficient to meet their potential liabilities under both the
OPA and CERCLA. Accordingly, pursuant to the newly-increased OPA
liability limits and the CERCLA liability limits discussed
above, the required amounts of such financial assurance have
increased as well. For example, the required amounts of
financial responsibility for a non-tank vessel over
300 gross tons that is not carrying hazardous substances as
cargo is $1300 per gross ton, which includes the OPA liability
limit of $1,000 per gross ton and the CERCLA liability limit of
$300 per gross ton. Vessel owners and operators may evidence
their financial responsibility by showing proof of insurance,
surety bond, self-insurance or guaranty, through instruments
known as Certificates of Financial Responsibility or COFRs.
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Under the OPA, an owner or operator of a fleet of vessels is
required only to demonstrate evidence of financial
responsibility in an amount sufficient to cover the vessel in
the fleet having the greatest maximum liability under the OPA.
Under the self-insurance provisions, the shipowner or operator
must have a net worth and working capital, measured in assets
located in the United States against liabilities located
anywhere in the world, that exceeds the applicable amount of
financial responsibility. We would comply with the
U.S. Coast Guard regulations by providing a certificate of
responsibility from third-party entities that are acceptable to
the U.S. Coast Guard evidencing sufficient self-insurance.
The U.S. Coast Guards regulations concerning COFRs
provide, in accordance with OPA, that claimants may bring suit
directly against an insurer or guarantor that furnishes COFRs.
In the event that such insurer or guarantor is sued directly, it
is prohibited from asserting any contractual defense that it may
have had against the responsible party and is limited to
asserting those defenses available to the responsible party and
the defense that the incident was caused by the willful
misconduct of the responsible party. Certain organizations that
had typically provided COFRs under pre-OPA laws, including the
major protection and indemnity organizations, have declined to
furnish evidence of insurance for vessel owners and operators if
they are subject to direct actions or required to waive
insurance policy defenses. This requirement may have the effect
of limiting the availability of the type of coverage required by
the U.S. Coast Guard and could increase our costs of
obtaining this insurance as well as the costs of our competitors
that also require such coverage. In addition to these
liabilities, the vessel owner or operator may incur the costs of
response and
clean-up, as
well as damages to natural resources.
The United States Clean Water Act, or the Clean Water Act,
prohibits the discharge of pollutants in U.S. navigable
waters and imposes strict liability for unauthorized discharges
in the form of administrative or civil penalties or possible
criminal liability. The Clean Water Act also imposes substantial
liability for the costs of removal, remediation and damages and
complements the remedies available under CERCLA. Pursuant to
regulations promulgated by the EPA, in the early 1970s, the
discharge of sewage and effluent from properly functioning
marine engines was exempted from the permit requirements of the
National Pollution Discharge Elimination System. This exemption
allowed vessels in U.S. ports to discharge certain
substances, including ballast water, without obtaining a permit
to do so. However, on March 30, 2005, a U.S. District
Court for the Northern District of California granted summary
judgment to certain environmental groups and U.S. states
that had challenged the EPA regulations, finding that the EPA
exceeded its authority in promulgating them. On
September 18, 2006, the U.S. District Court issued an
order invalidating the exemption in the EPAs regulations
for all discharges incidental to the normal operation of a
vessel and directing the EPA to develop a system for regulating
all discharges from vessels.
To comply with this court mandate, the EPA issued a final vessel
general permit, or VGP, that establishes effluent discharge
limits for 26 specific vessel discharges. If the vessel
acquisition is consummated, we will be required to comply with
the terms of the permit, including the including the
state-specific conditions imposed by the individual states in
certifying the permit. In addition, we will be required to file
a notice of intent to continue operations under the VGP, or file
for an individual permit. We would be required to install the
necessary controls to meet these limitations
and/or
otherwise restrict our vessel traffic in U.S. waters. The
installation, operation and upkeep of these systems increase the
costs of operating in the United States and other jurisdictions
where similar requirements might be adopted. In addition, states
have enacted legislation or regulations to address invasive
species through ballast water and hull cleaning management and
permitting requirements
The Federal Clean Air Act, or the CAA, requires the EPA to
promulgate standards applicable to emissions of volatile organic
compounds and other air contaminants. Our vessels would be
subject to CAA vapor control and recovery standards for cleaning
fuel tanks and conducting other operations in regulated port
areas and emissions standards for so-called Category
3 marine diesel engines operating in U.S. waters. The
marine diesel engine emission standards are currently limited to
new engines beginning with the 2004 model year. On
October 9, 2008, the United States ratified the amended
Annex VI to the MARPOL Convention, addressing air pollution
from ships, which went into effect on January 8, 2009.
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The EPA and the State of California, however, have each proposed
more stringent regulations of air emissions from ocean-going
vessels. In December 2009, the EPA concluded its regulatory rule
regarding stricter NOx, hydrocarbon and carbon monoxide
emissions limits for new Category 3 marine diesel engines
installed on vessels flagged or registered in the U.S. The
final rule is expected to be published in the Federal Register
in April 2010 and go into effect 60 days later. On
July 24, 2008, the California Air Resources Board of the
State of California, or CARB, approved clean-fuel regulations
applicable to all vessels sailing within 24 miles of the
California coastline whose itineraries call for them to enter
any California ports, terminal facilities, or internal or
estuarine waters. The new CARB regulations require such vessels
to use low sulfur marine fuels rather than bunker fuel. By
July 1, 2009, such vessels are required to switch either to
marine gas oil with a sulfur content of no more than 1.5% or
marine diesel oil with a sulfur content of no more than 0.5%. By
2012, only marine gas oil and marine diesel oil fuels with 0.1%
sulfur will be allowed. Although the more stringent CARB regime
was technically superseded when the United States ratified and
implemented the amended Annex VI, on March 27, 2009,
the United States and Canada jointly requested the IMO to
designate the area extending 200 miles from their
territorial sea baseline adjacent to the Atlantic/Gulf and
Pacific coasts and the eight main Hawaiian Islands as Emissions
Control Areas (ECA) under the new Annex VI
amendments. The IMO adopted the U.S. and Canada ECA
designation in March 2010 through an amendment to Annex VI
of MARPOL. Accordingly, from the effective date in 2012 until
2015, vessels in ECAs cannot use fuel that exceeds 1.0% sulfur
and beginning in 2015 cannot use fuel that exceeds
0.1 percent sulfur. In 2016, nitrogen oxide after-treatment
requirements go into effect in ECAs. Compliance with these new
requirements will cause us to incur further costs.
On February 4, 2009, the U.S. Coast Guard issued a
policy letter outlining the steps it will take to enforce MARPOL
Annex VI, or the Annex. In addition to reviewing the
certificates, fuels sales records and logs that the Annex
requires, the U.S. Cost Guard intends to conduct onboard
inspections of relevant systems, as well as take fuel samples.
These increased inspection and sampling requirements may add
cost to the current compliance costs for the Annex.
The last few years have seen an increase in air pollution
regulations by U.S. state and local authorities applying to
the shipping industry. California, in particular, has adopted
regulations requiring the use of shoreside power for shipping
fleets, banning incineration within local waters, requiring the
use of low sulfur fuels, and proposals to reduce vessel speeds.
These regulations impose standards and monitoring requirements
on vessel owners and operators. These regulations require
expenditures to add controls or operating methods as well as
liabilities for noncompliance.
As noted above, in the United States, the California Attorney
General and a coalition of environmental groups petitioned the
EPA in October 2007 to regulate greenhouse gas emissions from
ocean going ships under the CAA. Any passage of climate control
legislation or other regulatory initiatives by the IMO, European
Union, or individual countries where we operate, including the
U.S., that restrict emissions of greenhouse gases from vessels
could require us to make significant financial expenditures the
amount of which we cannot predict with certainty at this time.
Security
Regulations
Since the terrorist attacks of September 11, 2001, there
have been a variety of initiatives intended to enhance vessel
security. On November 25, 2002, MTSA came into effect. To
implement certain portions of the MTSA, in July 2003, the
U.S. Coast Guard issued regulations requiring the
implementation of certain security requirements aboard vessels
operating in waters subject to the jurisdiction of the United
States. Similarly, in December 2002, amendments to SOLAS created
a new chapter of the convention dealing specifically with
maritime security. The new chapter went into effect on
July 1, 2004, and imposes various detailed security
obligations on vessels and port authorities, most of which are
contained in the newly created ISPS Code. Among the various
requirements are:
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on-board installation of automatic information systems to
enhance
vessel-to-vessel
and
vessel-to-shore
communications;
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on-board installation of ship security alert systems;
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the development of vessel security plans; and
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compliance with flag state security certification requirements.
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The U.S. Coast Guard regulations, intended to be aligned
with international maritime security standards, exempt
non-U.S. vessels
from MTSA vessel security measures, provided such vessels had on
board, by July 1, 2004, a valid ISSC that attests to the
vessels compliance with SOLAS security requirements and
the ISPS Code.
International
Laws Governing Civil Liability to Pay Compensation or
Damages
When a tanker is carrying a cargo of persistent oil
as defined by the Civil Liability Convention 1992 (CLC), her
owner bears strict liability for any pollution damage caused in
a contracting state by an escape or discharge from her cargo or
from her bunker tanks. This liability is subject to a financial
limit calculated by reference to the tonnage of the ship, and
the right to limit liability may be lost if the spill is caused
by the shipowners intentional or reckless conduct.
Liability may also be incurred under CLC for a bunker spill from
the vessel even when she is not carrying such a cargo, but is in
ballast. CLC applies in over 100 states around the world,
but it does not apply in the United States of America, where the
corresponding liability laws are noted for being particularly
stringent.
When a tanker is carrying clean oil products which do not
constitute persistent oil for the purposes of CLC,
liability for any pollution damage will generally fall outside
the Convention and will depend on national or other domestic
laws in the jurisdiction where the spillage occurs. The same
applies to any pollution from the vessel in a jurisdiction which
is not a party to the Convention.
Outside the United States, national or other domestic laws of
this kind generally provide for the owner to bear strict
liability for pollution, subject to a right to limit liability
under applicable national or international regimes for
limitation of liability. The most widely applicable
international regime limiting maritime pollution liability is
the 1976 Convention. Rights to limit liability under the 1976
Convention are forfeited where a spill is caused by a
shipowners intentional or reckless conduct. Some states
have ratified the IMOs Protocol of 1996 to the 1976
Convention, which provides for liability limits substantially
higher than those set forth in the 1976 Convention to apply in
such states. Finally, some jurisdictions are not a party to
either the 1976 Convention or the Protocol of 1996, and,
therefore, shipowners rights to limit liability for
maritime pollution in such jurisdictions may be uncertain.
We may decide to acquire and operate one or more non-tank
vessels, which in certain circumstances may be subject to
national and international laws governing pollution. In 2001,
the IMO adopted the International Convention on Civil Liability
for Bunker Oil Pollution Damage, or the Bunkers Convention,
which imposes strict liability on shipowners for pollution
damage in jurisdictional waters of ratifying states caused by
discharges of bunker oil. The Bunkers Convention
defines bunker oil as any hydrocarbon mineral
oil, including lubricating oil, used or intended to be used for
the operation or propulsion of the ship, and any residues of
such oil. The Bunkers Convention also requires registered
owners of ships over a certain size 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
Convention on Limitation of Liability for Maritime Claims of
1976, as amended, or the 1976 Convention). The Bunkers
Convention entered into force on November 21, 2008, and in
early 2009 2010 it was in effect in 47 states. In other
jurisdictions liability for spills or releases of oil from
ships bunkers continues to be determined by the national
or other domestic laws in the jurisdiction where the events or
damages occur.
Inspection
by Classification Societies
Every sea going vessel must be classed by a
classification society. The classification society certifies
that the vessel is in class, signifying that the
vessel has been built and maintained in accordance with the
rules of the classification society and complies with applicable
rules and regulations of the vessels country of registry
and the international conventions of which that country is a
member. In addition, where surveys are
106
required by international conventions and corresponding laws and
ordinances of a flag state, the classification society will
undertake them on application or by official order, acting on
behalf of the authorities concerned.
The classification society also undertakes, on request, other
surveys and checks that are required by regulations and
requirements of the flag state. These surveys are subject to
agreements made in each individual case or to the regulations of
the country concerned. For maintenance of the class, regular and
extraordinary surveys of hull, machinery (including the
electrical plant) and any special equipment classed are required
to be performed as follows:
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Annual Surveys: For ocean-going ships, annual
surveys are conducted for the hull and the machinery (including
the electrical plant) and, where applicable, for special
equipment classed, at intervals of 12 months from the date
of commencement of the class period indicated in the certificate.
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Intermediate Surveys: Extended annual surveys
are referred to as intermediate surveys and typically are
conducted two and a half years after commissioning and each
class renewal. Intermediate surveys may be carried out on the
occasion of the second or third annual survey.
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Class Renewal Surveys: Class renewal
surveys, also known as special surveys, are carried out for the
ships hull, machinery (including the electrical plant),
and for any special equipment classed, at the intervals
indicated by the character of classification for the hull. At
the special survey, the vessel is thoroughly examined, including
audio-gauging, to determine the thickness of its steel
structure. Should the thickness be found to be less than class
requirements, the classification society would prescribe steel
renewals. The classification society may grant a one-year grace
period for completion of the special survey. Substantial amounts
of money may have to be spent for steel renewals to pass a
special survey if the vessel experiences excessive wear and
tear. In lieu of the special survey every four or five years,
depending on whether a grace period was granted, a shipowner has
the option of arranging with the classification society for the
vessels integrated hull or machinery to be on a continuous
survey cycle, in which every part of the vessel would be
surveyed within a five-year cycle.
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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, 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. The OPA, which imposes virtually
unlimited liability upon owners, operators and demise charterers
of any vessel trading in the United States exclusive economic
zone for certain oil pollution accidents in the United States,
has made liability insurance more expensive for ship owners and
operators trading in the United States market. While Navios
Acquisition believes that its expected insurance coverage is
adequate, not all risks can be insured, and there can be no
guarantee that any specific claim will be paid, or that it will
always be able to obtain adequate insurance coverage at
reasonable rates.
Hull
and Machinery Insurance
Navios Acquisition expects to obtain marine hull and machinery
and war risk insurance, which includes the risk of actual or
constructive total loss, for all of its vessels. The vessels
will each be covered up to at least fair market value, with
deductibles in amounts of approximately $75,000.
Navios Acquisition will arrange, as necessary, increased value
insurance for its vessels. With the increased value insurance,
in case of total loss of the vessel, Navios Acquisition 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
that are not recoverable in full by the hull and machinery
policies by reason of under insurance. Navios Acquisition does
not expect to maintain loss of hire insurance for certain of its
vessels. Loss of hire insurance covers business interruptions
that result in the loss of use of a vessel.
107
Protection
and Indemnity Insurance
Protection and indemnity insurance is expected to be provided by
mutual protection and indemnity associations, or P&I
Associations, which will cover Navios Acquisitions
third-party liabilities in connection with the operation of its
ships. This includes third-party liability and other related
expenses of injury 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,
pollution arising from oil or other substances, and 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.
Navios Acquisitions protection and indemnity insurance
coverage for pollution is expected to be $1.0 billion in
the aggregate per incident. The 13 P&I Associations that
comprise the International Group insure approximately 90% of the
worlds commercial tonnage and have entered into a pooling
agreement to reinsure each associations liabilities. Each
vessel that Navios Acquisition acquires in the acquisition will
be entered with P&I Associations of the International
Group. Under the International Group reinsurance program, each
P&I club in the International Group is responsible for the
first $8.0 million of every claim. In every claim the
amount in excess of $8.0 million and up to
$50.0 million is shared by the clubs under a pooling
agreement. In every claim the amount in excess of
$50.0 million is reinsured by the International Group under
the General Excess of Loss Reinsurance Contract. This policy
currently provides an additional $3.0 billion of coverage.
Claims which exceed this amount are pooled by way of
overspill calls, except for liabilities in respect
of passengers and crew, which is capped at $3.0 billion,
with a lower limit of $2.0 billion for passengers.
As a member of a P&I Association, which is a member of the
International Group, Navios Acquisition will be subject to calls
payable to the associations based on its claim records as well
as the claim records of all other members of the individual
associations, and members of the pool of P&I Associations
comprising the International Group. The P&I
Associations policy year commences on February 20th.
Calls are levied by means of Estimated Total Premiums (ETP) and
the amount of the final installment of the ETP varies according
to the actual total premium ultimately required by the club for
a particular policy year. Members have a liability to pay
supplementary calls which might be levied by the board of
directors of the club if the ETP is insufficient to cover
amounts paid out by the club.
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
Navios Acquisitions shares.
108
CERTAIN
RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
On March 18, 2008, Navios Acquisition issued 8,625,000
sponsor units to its sponsor, Navios Holdings, for $25,000 in
cash, at a purchase price of approximately $0.003 per unit, of
which 825,000 sponsor units were subject to mandatory forfeiture
if and to the extent the underwriters over-allotment
option was not executed in full. However, such sponsor units
were not forfeited, as the underwriters fully exercised their
over-allotment option. Each sponsor unit consists of one share
of common stock and one warrant.
On June 11, 2008, Navios Holdings transferred an aggregate
of 290,000 sponsor units to our officers and directors.
On June 16, 2008, Navios Holdings returned to us an
aggregate of 2,300,000 sponsor units, which we have cancelled.
Accordingly, our initial stockholders own 6,325,000 sponsor
units.
On July 1, 2008, we closed our initial public offering of
25,300,000 units, including 3,300,000 units issued
upon the full exercise of the underwriters over-allotment
option. Each unit consists of one share of our common stock and
one warrant that entitles the holder to purchase one share of
common stock. The units were sold at an offering price of $10.00
per unit, generating gross proceeds to us of
$253.0 million. Simultaneously with the closing of the
initial public offering, we consummated the private placement of
7,600,000 warrants at a purchase price of $1.00 per warrant to
our sponsor, Navios Holdings. The initial public offering and
the private placement generated gross proceeds to us in an
aggregate amount of $260.6 million.
Navios Holdings loaned us a total of $0.5 million for the
payment of offering expenses. This loan was payable on the
earlier of March 31, 2009 or the completion of our initial
public offering. We fully repaid the loan in November 2008.
We presently occupy office space provided by Navios Holdings.
Navios Holdings has agreed that, until the consummation of our
initial business combination, it will make such office space, as
well as certain office and secretarial services, available to
us, as may be required by us from time to time. We have paid
Navios Holdings $10,000 per month for such services since the
consummation of our initial public offering. As of
December 31, 2009 and 2008, we accrued $30,000 and $60,000,
respectively, for administrative services rendered by Navios
Holdings. These amounts are included under amounts due to
related parties in the balance sheet together with offering
costs amounting to $0 and $76,323 as of December 31 2009 and
2008, respectively, paid by Navios Holdings.
We have also agreed to pay each of the independent directors
$50,000 in cash per year for their board service, accruing
pro rata from the respective start of their service on
the board of directors and payable only upon the successful
consummation of a business combination. As of December 31,
2009 and 2008, there were three independent directors appointed
and the total amounts accrued were $150,000 and $85,890,
respectively.
H. Clarkson & Company Ltd., a wholly owned subsidiary
of leading worldwide shipbroker Clarkson PLC, has received
customary fees for advising unaffiliated third parties in
relation to the sale of certain of the vessels that are part of
the vessel acquisition. Mr. Julian Brynteson, a member of
our board, is a managing director of sales and purchases at H.
Clarkson & Company Ltd.
Pursuant to an agreement between us and Navios Holdings, the
compensation of Leonidas Korres, our Chief Financial
Officer, is to be paid by Navios Holdings up to the amount of
65,000, provided that if we complete a business
combination, we will reimburse such amounts to Navios Holdings
immediately following the completion of the business
combination. In the event that we are unable to complete a
business combination, then we will not be obligated to make any
payments to Navios Holdings or Mr. Korres with respect to
his employment.
As described in more detailed elsewhere herein, we have entered
into the Acquisition Agreement with Navios Holdings pursuant to
which we will reimburse Navios Holdings for any
out-of-pocket
expenses incurred by Navios Holdings prior to stockholder
approval in connection with the vessel acquisition.
Post-Business
Combination Related Party Transactions
At the closing of the vessel acquisition, Navios Acquisition
will enter into agreements with Navios Holdings and its
affiliates that are based on substantially similar agreements
with Navios Partners, another of Navios Holdings sponsored
public companies. Such agreements include the Management
Agreement, the Administrative Services Agreement and the
Acquisition Omnibus Agreement and are more fully described under
Navios Acquisition Management and Operations After the
Business Combination.
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PRINCIPAL
STOCKHOLDERS
The following table sets forth certain information regarding
beneficial ownership, as of April 7, 2010, of our common
stock by Navios Holdings, each of our officers and directors and
by all of our directors and officers as a group. The information
is not necessarily indicative of beneficial ownership for any
other purposes.
Unless otherwise indicated, we believe that all persons named in
the table have sole voting and investment power with respect to
all shares of common stock beneficially owned by them.
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Amount
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of Beneficial
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Percentage of
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Name and Address of Beneficial
Owner(1)
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Ownership
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Common Stock
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Navios Maritime Holdings
Inc.(2)
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6,035,000(2
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19.1
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%
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Angeliki Frangou
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200,000
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*
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Ted C. Petrone
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50,000
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*
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Nikolaos Veraros
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10,000
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*
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Julian David Brynteson
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15,000
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*
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John Koilalous
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15,000
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*
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Rex W.
Harrington(3)
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*
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All of our officers and directors as a group
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290,000
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*
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* |
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less than one (1%) percent. |
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(1) |
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Unless otherwise indicated, the business address of each of the
individuals is
c/o Navios
Maritime Holdings Inc., 85 Akti Miaouli Street, Piraeus, Greece. |
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(2) |
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Does not include 6,035,000 shares of common stock issuable
upon exercise of warrants underlying the sponsor units, which
are not currently exercisable nor will they become exercisable
within 60 days. Also, does not include
7,600,000 shares of common stock issuable upon exercise of
the private placement warrants, which are not currently
exercisable, but which may become exercisable within the next
60 days if the vessel acquisition proposal is approved and
the vessel acquisition is consummated. If the vessel acquisition
is consummated, Navios Holdings will beneficially own
13,635,000 shares of common stock, which would represent
34.7% of our outstanding common stock as of April 7, 2010.
Navios Holdings is a U.S. public company controlled by its board
of directors, which consists of the following seven members:
Angeliki Frangou (our Chairman and Chief Executive Officer),
Vasiliki Papaefthymiou, Ted C. Petrone (our president), Spyridon
Magoulas, John Stratakis, and Allan Shaw. In addition, we have
been informed by Navios Holdings that, based upon documents
filed with the SEC that are publicly available, it believes that
the beneficial owners of greater than 5% of the common stock of
Navios Holdings are: Angeliki Frangou, who has filed a
Schedule 13D amendment indicating that she intends, subject
to market conditions, to purchase up to $20.0 million of
common stock and as of October 10, 2005, she has purchased
approximately $10.0 million in value of common stock. Any
such additional purchases would change the percentage owned by
the initial stockholders and Ms. Frangou (23.2%) and FMR
LLC (6.8%). We have been informed by Navios Holdings that, other
than Angeliki Frangou, the President, Chief Executive Officer
and a director of Navios Holdings, no beneficial owner of
greater than 5% of Navios Holdings common stock is an
affiliate of Navios Holdings. |
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(3) |
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Mr. Harrington has agreed to join our Board upon
consummation of the vessel acquisition. |
The following table sets forth the beneficial ownership, as of
April 7, 2010, of our common stock by each person we know
to beneficially own more than 5% of our common stock based upon
the amounts and percentages as are contained in the public
filings of such persons. The number of shares of common stock
beneficially owned by each person is determined under SEC rules
and the information is not necessarily indicative of beneficial
ownership for any other purpose. Under SEC rules, a person
beneficially owns any units as to which the person has or shares
voting or investment power. In addition, a person beneficially
owns
110
any shares of common stock that the person or entity has the
right to acquire as of April 7, 2010 through the exercise
of any right.
|
|
|
|
|
|
|
|
|
|
|
Amount
|
|
|
|
|
|
|
of Beneficial
|
|
|
Percentage of
|
|
Name of Beneficial Owner
|
|
Ownership
|
|
|
Common Stock
|
|
|
Navios Maritime Holdings
Inc.(1)
|
|
|
6,035,000
|
|
|
|
19.1
|
%
|
Arrowgrass Capital Partners (US)
LP(2)
|
|
|
3,130,864
|
|
|
|
9.9
|
%
|
Royal Bank of
Canada(3)
|
|
|
2,270,600
|
|
|
|
7.2
|
%
|
L3 Capital Advisors,
LLC(4)
|
|
|
2,127,976
|
|
|
|
6.7
|
%
|
Integrated Core Strategies (US)
LLC(5)
|
|
|
2,058,835
|
|
|
|
6.5
|
%
|
Bulldog
Investors(6)
|
|
|
1,957,538
|
|
|
|
6.2
|
%
|
Genesis Capital Advisors
LLC(7)
|
|
|
1,950,800
|
|
|
|
6.2
|
%
|
Highbridge International
LLC(8)
|
|
|
1,699,580
|
|
|
|
5.1
|
%
|
Fir Tree,
Inc.(9)
|
|
|
1,800,000
|
|
|
|
5.7
|
%
|
|
|
|
(1) |
|
Does not include 6,035,000 shares of common stock issuable
upon exercise of warrants underlying the sponsor units, which
are not currently exercisable nor will they become exercisable
within 60 days. Also, does not include
7,600,000 shares of common stock issuable upon exercise of
the private placement warrants, which are not currently
exercisable, but which may become exercisable within the next
60 days if the vessel acquisition proposal is approved and
the vessel acquisition is consummated. If the vessel acquisition
is consummated, Navios Holdings will beneficially own
13,635,000 shares of common stock, which would represent
34.7% of our outstanding common stock as of April 7, 2010.
The business address of the reporting person is 85 Akti Miaouli
Street, Piraeus, Greece 185 38. The foregoing information was
derived from a Schedule 13G filed with the SEC on
February 23, 2010. |
|
(2) |
|
Represents shares held by Arrowgrass Capital Partners (US) LP
(ACP) and Arrowgrass Capital Services (US) Inc.
(ACS). ACS serves as the general partner of ACP and
has power with respect to the disposition of the proceeds of the
sale of common stock. The business address of the reporting
persons is 245 Park Avenue, New York, New York 10167. The
foregoing information was derived from a
Schedule 13G/A
filed with the SEC on February 12, 2010. |
|
(3) |
|
Represents shares held by Royal Bank of Canada (Royal Bank
of Canada) and RBC Capital Markets Corporation, an
indirect wholly owned subsidiary of Royal Bank of Canada
(RBC). The business address of Royal Bank of Canada
is 200 Bay Street, Toronto, Ontario M5J 2J5 Canada and the
business address of RBC is One Liberty Plaza, 165 Broadway, New
York, New York 10006. The foregoing information was derived from
a Schedule 13G filed with the SEC on February 16, 2010. |
|
(4) |
|
The business address of the reporting person is 2601 Ocean Park
Blvd, Suite 320, Santa Monica, CA 90405. The foregoing
information was derived from a Schedule 13G/A filed with the SEC
on February 24, 2010. |
|
(5) |
|
Does not include 5,202,425 warrants to purchase common stock
owned by Integrated Core Strategies (US) LLC (Integrated
Core Strategies) that will become exercisable upon Navios
Acquisitions completion of a business combination.
Represents shares held jointly by Integrated Core Strategies,
Millennium Management LLC (Millennium Management)
and Israel A. Englander (Englander). Millennium
Management is the general partner of the managing member of
Integrated Core Strategies, and may be deemed to have shared
voting control and investment discretion over securities owned
by Integrated Core Strategies. Englander is the managing member
of Millennium Management. Consequently, Englander may also be
deemed to have shared voting control and investment discretion
over securities beneficially owned by Integrated Core
Strategies. Englander and Millennium Management disclaim
beneficial ownership of the securities owned by Integrated Core
Strategies. The business address for the reporting persons is
666 Fifth Avenue, New York, NY 10103. The foregoing
information was derived from a Schedule 13G/A filed with
the SEC on January 25, 2010. |
|
(6) |
|
Phillip Goldstein and Andrew Dakos are the principals of Bulldog
Investors. The business address of the reporting persons is Park
80 West, 250 Pehle Ave. Suite 708, Saddle Brook, NJ
07663. The foregoing information was derived from a
Schedule 13G filed with the SEC on April 1, 2010. |
111
|
|
|
(7) |
|
Does not include 1,950,800 warrants to purchase common stock
owned by Genesis Capital Advisors LLC (Genesis) that
will become exercisable upon Navios Acquisitions
completion of a business combination. Represents shares owned by
Genesis, Jaime Hartman (Hartman), Ethan Benovitz
(Benovitz) and Daniel Saks (Saks).
Hartman, Benovitz and Saks are the managing members of Genesis.
As a result, Hartman, Benovitz and Saks may be deemed to have
shared voting control and investment discretion over securities
deemed to be beneficially owned by Genesis. Hartman, Benovitz
and Saks disclaim beneficial ownership of shares owned by
Genesis. The business address for the reporting persons is 255
Huguenot Street, Suite 1103, New Rochelle, NY 10801. The
foregoing information was derived from a Schedule 13G/A
filed with the SEC on February 17, 2009. |
|
(8) |
|
Includes 1,699,580 warrants to purchase common stock owned
Highbridge International LLC (Highbridge
International). Represents shares owned by Highbridge
International, Highbridge Capital Management, LLC
(Highbridge Capital Management) and Glenn Dubin
(Dubin). Highbridge Capital Management is the
trading manager of Highbridge International. Dubin is the Chief
Executive Officer of Highbridge Capital Management. Each of
Highbridge Capital Management and Dubin disclaims beneficial
ownership of shares of common stock held by Highbridge
International. The business address for Highbridge International
is
c/o Harmonic
Fund Services, The Cayman Corporate Centre, 4th Floor, 27
Hospital Road, Grand Cayman, Cayman Islands, British West Indies
and the business address for Highbridge Capital Management and
Dubin is 40 West 57th Street, 33rd Floor, New York, New
York 10019. The foregoing information was derived from a
Schedule 13G/A filed with the SEC on February 16, 2010. |
|
(9) |
|
Represents 285,892 shares held by Fir Tree Capital
Opportunity Master Fund, L.P. (Capital Fund),
1,514,108 shares held by Fir Tree Value Master Fund, L.P.
(Value Fund) and 1,800,000 shares held by Fir
Tree, Inc. (Fir Tree). Fir Tree is the investment
manager for each of Capital Fund and Value Fund, and may be
deemed to be deemed to beneficially own the shares of common
stock held by Capital Fund and Value Fund. The business address
for Capital Fund and Value Fund is
c/o Admiral
Administration Ltd., Admiral Financial Center, 5th Floor, 90
Fort Street, Box 32021 SMB, Grand Cayman, Cayman Islands
and the business address for Fir Tree is 505 Fifth Avenue,
23rd
Floor, New York, New York 10017. The foregoing information was
derived from a Schedule 13G/A filed with the SEC on
February 12, 2010. |
Escrow of
Shares Held by Initial stockholders
Our initial stockholders, including Navios Holdings and its
affiliates, have deposited their shares of common stock into an
escrow account maintained by Continental Stock
Transfer & Trust Company, as escrow agent, to be
held in escrow until 180 days after the consummation of our
initial business combination.
During the escrow period, the holders of these shares will not
be able to sell or transfer their securities except to another
entity that is controlled by Navios Holdings or by Angeliki
Frangou, or in the case of individuals, to family members or
trusts established for their benefit or otherwise as provided in
the stock escrow agreement, but will retain all other rights as
our stockholders, including, without limitation, the right to
vote their shares of common stock and the right to receive cash
dividends, if declared. If dividends are declared and payable in
shares of common stock, such dividends will also be placed in
escrow. If we are unable to effect a business combination and
liquidate, none of our initial stockholders will receive any
portion of the liquidation proceeds with respect to common stock
owned by them prior to the our initial public offering.
112
PRICE
RANGE OF SECURITIES
Navios Acquisition common stock, warrants and units are
currently quoted on the New York Stock Exchange under the
symbols NNA, NNA.WS and
NNA.U, respectively. The closing prices of the
common stock, warrants, and units, on April 7, 2010, the
last trading day before the announcement of the execution of the
Acquisition Agreement, were $9.84 per share, $0.68 per warrant
and $10.26 per unit, respectively. Each unit of Navios
Acquisition consists of one share of common stock and one
warrant. The warrants became separable from the common stock on
July 7, 2008. Each warrant entitles the holder to purchase
from Navios Acquisition one share of common stock at an exercise
price of $7.00 upon the completion of an initial business
combination. The warrants will expire at 5:00 p.m., Eastern
Standard Time, on June 25, 2013, or earlier upon
redemption. Prior to July 1, 2008, there was no established
public trading market for Navios Acquisitions common
stock, warrants or units.
The following table sets forth, for the calendar quarter
indicated, the quarterly high and low closing sales prices of
Navios Acquisitions units, common stock and warrants on
the New York Stock Exchange.
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|
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|
|
Price Range
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|
|
Price Range
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|
|
Price Range
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|
|
|
Units
|
|
|
Common Stock
|
|
|
Warrants
|
|
|
|
High
|
|
|
Low
|
|
|
High
|
|
|
Low
|
|
|
High
|
|
|
Low
|
|
|
Quarter Ended:
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2010 (through April 7, 2010)
|
|
$
|
10.26
|
|
|
$
|
10.26
|
|
|
$
|
9.89
|
|
|
$
|
9.84
|
|
|
$
|
0.68
|
|
|
$
|
0.64
|
|
March 31, 2010
|
|
$
|
10.32
|
|
|
$
|
10.11
|
|
|
$
|
9.90
|
|
|
$
|
9.79
|
|
|
$
|
0.68
|
|
|
$
|
0.45
|
|
December 31, 2009
|
|
$
|
10.55
|
|
|
$
|
9.73
|
|
|
$
|
9.90
|
|
|
$
|
9.61
|
|
|
$
|
0.76
|
|
|
$
|
0.52
|
|
September 30, 2009
|
|
$
|
10.05
|
|
|
$
|
9.64
|
|
|
$
|
9.60
|
|
|
$
|
9.37
|
|
|
$
|
0.81
|
|
|
$
|
0.40
|
|
June 30, 2009
|
|
$
|
9.47
|
|
|
$
|
9.10
|
|
|
$
|
9.36
|
|
|
$
|
9.03
|
|
|
$
|
0.48
|
|
|
$
|
0.18
|
|
March 31, 2009
|
|
$
|
9.20
|
|
|
$
|
8.61
|
|
|
$
|
9.07
|
|
|
$
|
8.57
|
|
|
$
|
0.20
|
|
|
$
|
0.16
|
|
December 31, 2008
|
|
$
|
9.20
|
|
|
$
|
8.40
|
|
|
$
|
8.70
|
|
|
$
|
8.08
|
|
|
$
|
0.44
|
|
|
$
|
0.14
|
|
September 30, 2008*
|
|
$
|
10.20
|
|
|
$
|
9.26
|
|
|
$
|
9.40
|
|
|
$
|
8.79
|
|
|
$
|
1.05
|
|
|
$
|
0.44
|
|
|
|
|
(*) |
|
Period beginning July 1, 2008. |
Holders
As of April 7, 2010, there was one holder of record of our
units, seven holders of record of our common stock and seven
holders of record of our warrants. The units (and the shares of
common stock included in the units) issued in our initial public
offering were available initially only in book-entry form and
are currently represented by one or more global certificates,
which were deposited with, or on behalf of, DTC and registered
in its name or in the name of its nominee. Accordingly, all of
the public shares are held in street name. Navios
Acquisition believes that the aggregate number of beneficial
holders of its units, common stock and warrants is in excess of
400 persons.
Dividend
Policy
We have never declared nor paid any cash dividends on our
capital stock. We currently intend to retain all available funds
and any future earnings to support our operations and finance
the growth and development of our business. We do not intend to
pay cash dividends on our common stock for the foreseeable
future. Any future determination related to dividend policy will
be made at the discretion of our board of directors. In
addition, the terms of the Credit Agreements permit distribution
of up to 50% of net profits without the Lenders consent.
113
DESCRIPTION
OF SECURITIES
General
We are authorized to issue 100,000,000 shares of common
stock, par value $0.0001, and 1,000,000 shares of preferred
stock, par value $0.0001. As of April 7, 2010,
31,625,000 shares of common stock are outstanding, held by
seven holders of record. No shares of preferred stock are
currently outstanding.
Units
Public
stockholders units
Each unit consists of one share of common stock and one warrant.
Each warrant entitles the holder to purchase one share of common
stock at an exercise price of $7.00 per share.
Sponsor
units
On March 18, 2008, Navios Holdings purchased 8,625,000
sponsor units for a purchase price of $25,000, or approximately
$0.003 per unit. On June 11, 2008, Navios Holdings
transferred an aggregate of 290,000 sponsor units to our
officers and directors (200,000 to Ms. Frangou, 50,000 to
Mr. Petrone, 15,000 to Mr. Brynteson, 15,000 to
Mr. Koilalous and 10,000 to Mr. Veraros). On
June 16, 2008, Navios Holdings returned to us an aggregate
of 2,300,000 sponsor units, which we have cancelled.
Accordingly, our initial stockholders own 6,325,000 sponsor
units. Each sponsor unit consists of one share of common stock
and one warrant. The common stock and warrants comprising the
sponsor units are identical to the common stock and warrants
comprising the units sold in our initial public offering, except
that:
|
|
|
|
|
our initial stockholders and their permitted transferees are not
able to exercise conversion rights, as described below, with
respect to the common stock;
|
|
|
|
our initial stockholders have agreed, and any permitted
transferees will agree, to vote the shares of common stock in
the same manner as a majority of the shares of common stock
voted by the public stockholders at the special or annual
stockholders meeting called for the purpose of
(i) approving our initial business combination, or
(ii) the extended period;
|
|
|
|
our initial stockholders have waived, and their permitted
transferees will waive, their right to participate in any
liquidating distribution with respect to the common stock if we
fail to consummate a business combination;
|
|
|
|
the warrants may not be exercised unless and until the last sale
price of our common stock equals or exceeds $13.75 for any
20 days within any 30-trading day period beginning
90 days after our initial business combination;
|
|
|
|
the warrants will not be redeemable by us as long as they are
held by our initial stockholders or their permitted transferees;
|
|
|
|
the warrants may be exercised by the holders by paying cash or
on a cashless basis; and
|
|
|
|
the sponsor units, and the underlying common stock and the
warrants (including the common stock issuable upon exercise of
the warrants) will not be transferable or salable, except to
another entity controlled by Navios Holdings or Angeliki
Frangou, or, in the case of individuals, family members and
trusts for estate planning purposes, until 180 days after
the consummation of our initial business combination.
|
Common
stock
Our stockholders are entitled to one vote for each share held of
record on all matters to be voted on by stockholders. In
connection with the vote required for any business combination,
our initial stockholders have agreed to vote the shares of
common stock owned by them prior to our initial public offering
in accordance with the majority of the public stockholders and
to vote any shares they acquired in the private placement, in
114
the initial public offering and, subsequent to the initial
public offering, the aftermarket to approve the extended period,
if any, and in favor of any proposed business combination.
Additionally, Navios Holdings and our officers and directors
will vote all of their respective shares in any manner they
determine, in their sole discretion, with respect to any other
items that come before a vote of our stockholders.
We will proceed with a business combination only if a majority
of the shares of common stock voted by the public stockholders
are voted in favor of the business combination and public
stockholders owning less than 40% of the shares sold in our
initial public offering exercise their conversion rights on a
cumulative basis, taking into consideration stockholders
converting their shares in connection with the proposal that may
be presented to our stockholders in connection with the extended
period.
Our board of directors is divided into three classes, each of
which will generally serve for a term of three years with only
one class of directors being elected in each year. There is no
cumulative voting with respect to the election of directors,
with the result that the holders of more than 50% of the shares
voted for the election of directors can elect all of the
directors.
If we are forced to liquidate our trust account because we have
not consummated a business combination within the required time
periods, our public stockholders are entitled to share ratably
in the trust fund, inclusive of any interest not previously
released to us to fund working capital requirements, and net of
any income taxes due on such interest, which income taxes, if
any, shall be paid from the trust account, as part of any plan
of dissolution and liquidation, and any net assets remaining
available for distribution to them after payment of liabilities.
If we do not consummate an initial business combination and the
trustee must distribute the balance of the trust account, the
underwriters have agreed that: (i) they will forfeit any
rights or claims to their deferred underwriting discounts and
commissions, including any accrued interest thereon, then in the
trust account, and (ii) the deferred underwriters
discounts and commission will be distributed on a pro rata
basis among the public stockholders, together with any
accrued interest thereon and net of income taxes payable on such
interest. Navios Holdings has agreed to waive its right to
participate in any liquidating distribution occurring upon our
failure to consummate a business combination, but only with
respect to those shares of common stock acquired by it prior to
the initial public offering.
Our stockholders have no conversion, preemptive or other
subscription rights and there are no sinking fund or conversion
provisions applicable to the common stock, except that public
stockholders have the right to have their shares of common stock
converted for cash equal to their pro rata share of the
trust fund if they vote (i) against the extended period,
and it is approved, or (ii) against our initial business
combination and our initial business combination is approved and
consummated. Public stockholders who redeem their stock into
their share of the trust fund still have the right to exercise
the warrants that they received as part of the units that they
have not previously sold.
Co-investment
shares
Navios Holdings will purchase up to an aggregate of
$30.0 million of shares of common stock from us at a price
equal to the per-share amount held in our trust account as
reported in our definitive proxy statement filed with the SEC
immediately prior to the consummation of our initial business
combination, to the extent such funds are not used to purchase
shares of our common stock by Navios Holdings in open market or
privately negotiated purchases or in other purchases made prior
to the consummation of the vessel acquisition, which would occur
if our shares are offered for sale above a price equal to the
per-share value of the funds in the trust account during the
period when the limit order arrangement is in effect and Navios
Holdings does not purchase any shares between the period the
limit order arrangement terminates and such consummation. The
co-investment shares may not be transferred, subject to certain
limited exceptions, until 180 days after the consummation
of our business combination.
Preferred
stock
Our amended and restated articles of incorporation authorizes
the issuance of 1,000,000 shares of blank check preferred
stock with such designation, rights and preferences as may be
determined from time to time by our board of directors.
Accordingly, our board of directors is empowered, without
stockholder approval, to
115
issue preferred stock with dividend, liquidation, conversion,
voting or other rights that could adversely affect the voting
power or other rights of the holders of common stock, although
the underwriting agreement entered into in connection with our
initial public offering prohibits us, prior to a business
combination, from issuing preferred stock that participates in
any manner in the proceeds of the trust fund, or that votes as a
class with the common stock on a business combination. We may
issue some or all of the preferred stock to effect a business
combination. In addition, the preferred stock could be utilized
as a method of discouraging, delaying or preventing a change in
control of us. Although we do not currently intend to issue, nor
have we issued as of the date of this proxy statement, any
shares of preferred stock, we cannot assure you that we will not
do so in the future.
Warrants
Warrants
issued as part of public units
Each warrant issued in connection with the initial public
offering entitles the registered holder to purchase one share of
our common stock at a price of $7.00 per share, subject to
adjustment as discussed below, at any time commencing on the
later of:
|
|
|
|
|
the consummation of a business combination; or
|
|
|
|
one year from the date of the initial public offering prospectus.
|
The warrants will expire on June 25, 2013 at
5:00 p.m., Eastern Standard Time, or earlier upon
redemption.
Once the warrants become exercisable, we may redeem the
outstanding warrants (except for the warrants included in the
sponsor units and sponsor warrants, which are not redeemable so
long as they are held by Navios Holdings or its permitted
transferees) at any time:
|
|
|
|
|
in whole and not in part;
|
|
|
|
at a price of $0.01 per warrant at any time after the warrants
become exercisable;
|
|
|
|
upon not less than 30 days prior written notice of
redemption to each warrant holder;
|
|
|
|
if, and only if, a business combination has been
consummated; and
|
|
|
|
if, and only if, the reported last sale price of the common
stock equals or exceeds $13.75 per share for any 20 trading days
within a 30 trading day period ending on the third business day
prior to the notice of redemption to warrant holders.
|
In addition, we may not call the warrants for redemption unless
the shares of common stock underlying the warrants purchased as
part of the units in our initial public offering are covered by
an effective registration statement and a current prospectus
from the date of the call notice through the date fixed for
redemption.
We have established these criteria to provide warrant holders
with a reasonable premium to the initial warrant exercise price
as well as a reasonable cushion against a negative market
reaction, if any, to our redemption call. If the foregoing
conditions are satisfied and we call the warrants for
redemption, each warrant holder shall then be entitled to
exercise their warrant prior to the date scheduled for
redemption; however, there can be no assurance that the price of
the common stock will exceed the call trigger price or the
warrant exercise price after the redemption call is made.
The warrants have been issued in registered form under a warrant
agreement between Continental Stock Transfer &
Trust Company, as warrant agent, and us.
If we call the warrants for redemption as described above, we
will have the option to require all holders that exercise
warrants thereafter to do so on a cashless basis,
although the public stockholders are not eligible to do so at
their own option. Otherwise, a public warrant may only be
exercised for cash. In the event we choose to require a
cashless exercise, each exercising holder must pay
the exercise price by surrendering the warrants for that number
of shares of common stock equal to the quotient obtained by
dividing (x) the
116
product of the number of shares of common stock underlying the
warrants, multiplied by the difference between the exercise
price of the warrants and the fair market value
(defined below) by (y) the fair market value. The
fair market value shall mean the average reported
last sale price of the common stock for the 10 trading days
ending on the third trading day prior to the date on which the
notice of redemption is sent to the holders of warrants.
The exercise price and number of shares of common stock issuable
on exercise of the warrants may be adjusted in certain
circumstances including in the event of a stock dividend, or our
recapitalization, reorganization, merger or consolidation or
other similar event. However, the warrants will not be adjusted
for issuances of common stock at a price below their exercise
price.
The warrants may be exercised upon surrender of the warrant
certificate on or prior to the expiration date at the offices of
the warrant agent, with the exercise form on the reverse side of
the warrant certificate completed and executed as indicated,
accompanied by full payment of the exercise price, by certified
check payable to us, for the number of warrants being exercised.
The warrant holders do not have the rights or privileges of
holders of common stock and any voting rights until they
exercise their warrants and receive shares of common stock.
After the issuance of shares of common stock upon exercise of
the warrants, each holder will be entitled to one vote for each
share held of record on all matters to be voted on by
stockholders.
No warrants will be exercisable and we will not be obligated to
issue shares of common stock unless at the time a holder seeks
to exercise such warrant, a prospectus relating to the common
stock issuable upon exercise of the warrants is current and the
common stock has been registered or qualified or deemed to be
exempt under the securities laws of the state of residence of
the holder of the warrants. Under the terms of the warrant
agreement entered into in connection with the initial public
offering, we agreed to use our best efforts to meet these
conditions and to maintain a current prospectus relating to the
common stock issuable upon exercise of the warrants until the
expiration of the warrants. However, we cannot assure you that
we will be able to do so and, if we do not maintain a current
prospectus relating to the common stock issuable upon exercise
of the warrants, holders will be unable to exercise their
warrants and we will not be required to settle any such warrant
exercise. If the prospectus relating to the common stock
issuable upon the exercise of the warrants is not current or if
the common stock is not qualified or exempt from qualification
in the jurisdictions in which the holders of the warrants
reside, the warrants may have no value, the market for the
warrants may be limited and the warrants may expire and be
worthless.
No fractional shares will be issued upon exercise of the
warrants. If, upon exercise of the warrants, a holder would be
entitled to receive a fractional interest in a share, we will,
upon exercise, round up to the nearest whole number the number
of shares of common stock to be issued to the warrant holder.
Warrants
included in the sponsor units
The warrants included in the sponsor units are identical to the
warrants included in the units that were sold in our initial
public offering, except as described above under
Sponsor units.
Sponsor
warrants
In the private placement, we sold Navios Holdings 7,600,000
sponsor warrants, at $1.00 per warrant, to purchase
7,600,000 shares of our common stock at a per-share
exercise price of $7.00. The sponsor warrants are identical to
the warrants included in the units sold in the initial public
offering, except that:
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the sponsor warrants are subject to certain transfer
restrictions until after the consummation of our initial
business combination;
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the sponsor warrants may be exercised on a cashless basis;
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the sponsor warrants will not be redeemable by us so long as
they are held by Navios Holdings or its permitted
transferees, and
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none of the sponsor warrants purchased by Navios Holdings are
transferable or salable, except to another entity controlled by
Navios Holdings, which will be subject to the same transfer
restrictions until after we consummate a business combination.
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Exercise of the sponsor warrants on a cashless basis enables the
holder to convert the value in the warrant (the fair market
value of the common stock minus the exercise price of the
warrant) into shares of common stock. We will establish the
value to be converted into shares of our common
stock upon exercise of the warrants on a cashless basis and
provide such information in the notice of exercise. The
value will be determined using the average reported
last sale price of the common stock for the 10 trading days
ending on the third business day prior to the notice of exercise
by warrant holders.
The warrants included in the sponsor units and the sponsor
warrants are differentiated from warrants, if any, purchased in
or following the initial public offering through the legending
of certificates representing the warrants included in the
sponsor units and the sponsor warrants indicating the
restrictions and rights specifically applicable to such warrants.
Registration
Rights
Pursuant to a registration rights agreement between us and our
initial stockholders entered into in connection with the initial
public offering, the holders of the sponsor units (and the
common stock and warrants comprising such units and the common
stock issuable upon exercise of such warrants), the sponsor
warrants (and the common stock issuable upon exercise of such
warrants), the co-investment shares and any shares of common
stock purchased pursuant to the limit orders described above
will be entitled to three demand registration rights,
piggy-back registration rights and short-form resale
registration rights commencing after the consummation of our
initial business combination, in the case of the sponsor
warrants, and 180 days after the consummation of our
initial business combination, in the case of the sponsor units.
We will bear the expenses incurred in connection with any such
registration statements other than underwriting discounts or
commissions for shares not sold by us.
Dividends
We have not paid any dividends on our common stock to date and
will not pay dividends prior to the consummation of a business
combination. The payment of dividends in the future will be
contingent upon our revenues and earnings, if any, capital
requirements and general financial condition subsequent to
consummation of a business combination. The payment of any
dividends subsequent to a business combination will be within
the discretion of our then board of directors. In addition, the
terms of the Credit Agreements permit distribution of up to 50%
of net profits without the Lenders consent.
Transfer
Agent and Warrant Agent
The transfer agent for Navios Acquisitions securities and
warrant agent for Navios Acquisitions warrants is
Continental Stock Transfer & Trust Company, 17
Battery Place, New York, New York 10004.
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RISK
FACTORS
You should carefully consider the following risk factors,
together with all of the other information included in this
proxy statement, before you decide whether to vote or instruct
your vote to be cast to approve the proposals.
Risk
Factors Relating to Navios Acquisition After the Business
Combination
We are
a development stage company with no operating history and there
is no operating history to as to the vessels we are acquiring.
Accordingly, you will not have any basis on which to evaluate
our ability to achieve our business objectives.
We are a blank check company with no operating
results to date other than completing our initial public
offering. Since we do not have an operating history and since
the vessels we are acquiring have no operating history, you will
have no basis upon which to evaluate our ability to achieve our
business objectives. Accordingly, our financial statements do
not provide a meaningful basis for you to evaluate our
operations and ability to be profitable in the future. We cannot
assure you that we will be able to implement our business
strategy and thus we may not be profitable in the future.
Most
of the vessels will be delivered over time, which will impact
our operating results. If any of the purchased vessels are not
delivered on time or delivered with significant defects, our
proposed business, results of operations and financial condition
could suffer.
Upon approval of the vessel acquisition proposal, Navios
Holdings will transfer to us the stock of the Navios Holdings
subsidiary holding directly or indirectly the rights to the
Shipbuilding Contracts or the MOAs for the vessels. With the
exception of the two LR1 vessels that will be in the water
upon consummation of the vessel acquisition, the vessels will be
delivered over a period of time from 2010 to 2012. Accordingly,
generation of revenues from these assets will be deferred until
we have taken delivery of them. A delay in the delivery of any
of these vessels to us or the failure of the Shipbuilders to
deliver a vessel at all could adversely affect our business,
results of operations and financial condition. The delivery of
these vessels could be delayed or certain events may arise that
could result in our not taking delivery of a vessel, such as a
total loss of a vessel, a constructive loss of a vessel, or
substantial damage to a vessel prior to delivery. In addition,
the delivery of any of these vessels with substantial defects
could have similar consequences.
Our
business plan is based on acquiring vessels in a distressed
environment at what we believe is near the low end of the cycle
and, if we misjudge the cycle, we would be materially adversely
affected.
Our business plan is predicated on buying vessels in a
distressed market at what we believe is near the low end of the
cycle in what has typically been a cyclical industry. However,
there is no assurance that the shipping rates and vessel asset
values will not sink lower, or that there will be an upswing in
shipping rates or vessel asset values in the near-term or at
all, in which case, our business plan may not succeed in the
near-term or at all.
If we
fail to manage our planned growth properly, we may not be able
to expand our fleet successfully, which may adversely affect our
overall financial position.
While we have no immediate plans to expand our fleet, we do
intend to continue to expand our fleet in the future. Our growth
will depend on:
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locating and acquiring suitable vessels;
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identifying and consummating acquisitions or joint ventures;
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identifying reputable shipyards with available capacity and
contracting with them for the construction of new vessels;
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integrating any acquired vessels successfully with our existing
operations;
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enhancing our customer base;
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managing our expansion; and
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obtaining required financing, which could include debt, equity
or combinations thereof.
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Growing any business by acquisition presents numerous risks such
as undisclosed liabilities and obligations, difficulty
experienced in obtaining additional qualified personnel and
managing relationships with customers and suppliers and
integrating newly acquired operations into existing
infrastructures. We have not identified expansion opportunities,
the nature and timing of any such expansion is uncertain. We may
not be successful in growing and may incur significant expenses
and losses.
Risks
Related to Our Indebtedness
We may
not be able to secure our debt financing, which may affect our
ability to purchase the vessels.
Our ability to borrow amounts under the Credit Agreements will
be subject to the satisfaction of customary conditions precedent
and compliance with terms and conditions included in the loan
documents, and to circumstances that may be beyond our control
such as world events, economic conditions, the financial
standing of the bank or its willingness to lend to shipping
companies such as us. Prior to each drawdown, we will be
required, among other things, to provide our Lenders with
satisfactory evidence that certain conditions precedent have
been met. To the extent that we are not able to satisfy these
requirements, including as a result of a decline in the value of
our vessels, we may not be able to draw down the full amount
under our credit facility without obtaining a waiver or consent
from the Lenders.
Servicing
debt will limit funds available for other purposes, including
capital expenditures and payment of dividends.
We expect to incur up to a maximum of $334.3 million of
indebtedness in connection with the purchase of the vessels. We
will be required to dedicate a portion of our cash flow from
operations to pay the interest on our debt. These payments limit
funds otherwise available for working capital expenditures and
other purposes, including payment of dividends. We have not yet
determined whether to purchase additional vessels or incur debt
in the near future for additional vessel acquisitions. If we are
unable to service our debt, it could have a material adverse
effect our financial condition and results of operations.
We
will have substantial debt and may incur substantial additional
debt, which could adversely affect our financial health and our
ability to obtain financing in the future, react to changes in
its business and make debt service payments.
We expect to incur up to a maximum of $334.3 million of
indebtedness in connection with the acquisition of the vessels.
We may also increase the amount of our indebtedness in the
future. The terms of the Credit Agreements do not prohibit us
from doing so. In addition, to the extent that public
stockholders elect to exercise their conversion rights in
connection with the vote to approve the vessel acquisition
proposal, our cash reserves in our trust account will be
diminished correspondingly, thereby increasing our debt to
equity ratio. Our substantial debt could have important
consequences to stockholders.
Because of our substantial debt:
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our ability to obtain additional financing for working capital,
capital expenditures, debt service requirements, vessel or other
acquisitions or general corporate purposes may be impaired in
the future;
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if new debt is added to our debt levels after the vessel
acquisition, the related risks that we now face would increase
and we may not be able to meet all of our debt obligations;
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a substantial portion of our cash flow from operations must be
dedicated to the payment of principal and interest on our
indebtedness, thereby reducing the funds available to us for
other purposes;
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we will be exposed to the risk of increased interest rates
because our borrowings under the Credit Agreements will be at
variable rates of interest;
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it may be more difficult for us to satisfy our obligations to
our Lenders, resulting in possible defaults on and acceleration
of such indebtedness;
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we may be more vulnerable to general adverse economic and
industry conditions;
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we may be at a competitive disadvantage compared to our
competitors with less debt or comparable debt at more favorable
interest rates;
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our ability to refinance indebtedness may be limited or the
associated costs may increase; and
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our flexibility to adjust to changing market conditions and
ability to withstand competitive pressures could be limited, or
we may be prevented from carrying out capital spending that is
necessary or important to our growth strategy and efforts to
improve operating margins or our business.
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If the
recent volatility in LIBOR continues, it could affect our
profitability, earnings and cash flow.
Amounts borrowed under our credit facilities may bear interest
at a margin of
250-275 basis
points above LIBOR. LIBOR has recently been volatile, with the
spread between LIBOR and the prime lending rate widening
significantly at times. These conditions are the result of the
recent disruptions in the international credit markets. Because
the interest rates borne by our outstanding indebtedness may
fluctuate with changes in LIBOR, if this volatility were to
continue, 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.
Furthermore, interest in most loan agreements in our industry
has been based on published LIBOR rates. Recently, however,
lenders have insisted on provisions that entitle the lenders, in
their discretion, to replace published LIBOR as the base for the
interest calculation with their
cost-of-funds
rate. Such provisions could significantly increase our lending
costs, which would have an adverse effect on our profitability,
earnings and cash flow.
Risks
Related to Our Relationship with Navios Holdings and Its
Affiliates
After
the consummation of the vessel acquisition, Navios Holdings may
compete directly with us causing certain officers to have a
conflict of interest.
Angeliki Frangou and Ted C. Petrone are each officers
and/or
directors of both Navios Holdings and Navios Acquisition. After
the consummation of the vessel acquisition, we will operate in
the product and chemical tanker sectors of the shipping
industry. Although Navios Holdings does not currently operate in
those sectors, there is no assurance it will not enter them,
and, accordingly, we may compete directly with Navios Holdings
for business opportunities. Although we will enter into the
Acquisition Omnibus Agreement with Navios Holdings and Navios
Partners at the consummation of the vessel acquisition, in which
Navios Holdings has granted us a right of first refusal with
respect to Liquid Shipment Vessels, we cannot assure you that
Navios Holdings will comply with this agreement.
Navios
Holdings and Navios Acquisition share certain officers and
directors who may not be able to devote sufficient time to our
affairs, which may affect our ability to conduct operations and
generate revenues.
Angeliki Frangou and Ted C. Petrone are each officers
and/or
directors of both Navios Holdings and Navios Acquisition. As a
result, demands for our officers time and attention as
required from both Navios Acquisition and from Navios Holdings
may conflict from time to time and their limited devotion of
time and attention to our business may hurt the operation of our
business.
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We
will be dependent on a subsidiary of Navios Holdings for the
technical and commercial management of our fleet.
As we subcontract the technical and commercial management of our
fleet, including crewing, maintenance and repair, to a
subsidiary of Navios Holdings, the loss of services of or the
failure of such subsidiary to perform could materially and
adversely affect the results of our operations. Although we may
have rights against Navios Holdings subsidiary if it
defaults on its obligations to us, you will have no recourse
directly against it. Further, we expect that we will need to
seek approval from our Lenders to change our commercial and
technical managers.
We
will outsource the management and commercial brokerage of our
fleet to a subsidiary of Navios Holdings, our principal
corporate stockholder, which may create conflicts of
interest.
We will outsource the management and commercial brokerage of our
fleet to a subsidiary of Navios Holdings, our principal
corporate stockholder Navios Holdings, and companies affiliated
with Navios Holdings, own and acquire vessels that compete with
our fleet. Navios Holdings has responsibilities and
relationships to owners other than Navios Acquisition that could
create conflicts of interest between us and Navios Holdings.
These conflicts may arise in connection with the chartering of
the vessels in our fleet versus carriers managed by Navios
Holdings subsidiary or other companies affiliated with
Navios Holdings.
Risk
Factors Relating to Navios Acquisition as a Blank Check
Company
We
will dissolve and liquidate if we do not consummate a business
combination, and our stockholders may be held liable for claims
by third parties against us to the extent of distributions
received by them. Such liability could extend indefinitely
because we do not intend to comply with the liquidation
procedures set forth in Section 106 of the Marshall Islands
Business Corporations Act.
Our amended and restated articles of incorporation provide that
we will continue in existence only until July 1, 2010 (or
up to July 1, 2011 if an extension period is approved by
our stockholders). If we have not consummated a business
combination by such date, and amended this provision in
connection thereto, pursuant to the BCA, our corporate existence
will cease except for the purposes of winding up our affairs and
liquidating. Under Marshall Islands law, stockholders may be
held liable for claims by third parties against a corporation to
the extent of distributions received by them in dissolution. If
we complied with the procedures set forth in Section 106 of
the BCA, which are intended to ensure that we make reasonable
provision for all claims against us, including a six-month
notice period during which any third-party claims can be brought
against us before any liquidating distributions are made to
stockholders, any liability of a stockholder with respect to a
liquidating distribution is limited to the lesser of such
stockholders pro rata share of the claim or the
amount distributed to the stockholder, and any liability of the
stockholder would be barred after the period set forth in such
notice. However, it is our intention to make liquidating
distributions to our stockholders as soon as reasonably possible
after dissolution and we do not intend to comply with the
six-month notice period (which would result in our executive
officers being liable for claims for which we did not provide).
As such, to the extent our executive officers cannot cover such
liabilities, our stockholders could potentially be liable for
any claims to the extent of distributions received by them in
dissolution and any such liability of our stockholders will
likely extend beyond the third anniversary of such dissolution.
Accordingly, we cannot assure you that third parties will not
seek to recover from our stockholders amounts owed to them by us.
If we are forced to file a bankruptcy case or an involuntary
bankruptcy case is filed against us that is not dismissed, any
distributions received by stockholders could be viewed under
applicable debtor/creditor
and/or
bankruptcy laws as either a preferential transfer or
a fraudulent conveyance. As a result, a bankruptcy
court could seek to recover all amounts received by our
stockholders. Furthermore, because we intend to distribute the
proceeds held in the trust account to our public stockholders
promptly after July 1, 2010 (or July 1, 2011, if the
extended period is approved), this may be viewed or interpreted
as giving preference to our public stockholders over any
potential creditors with respect to access to or distributions
from our assets. Furthermore, our board of directors may be
viewed as having breached their fiduciary duties to our
creditors
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and/or may
have acted in bad faith, thereby exposing itself and our company
to claims of punitive damages, by paying public stockholders
from the trust account prior to addressing the claims of
creditors
and/or
complying with certain provisions of the BCA with respect to our
dissolution and liquidation. We cannot assure you that claims
will not be brought against us for these reasons.
If
third parties bring claims against us, the proceeds held in the
trust account could be reduced and the per-share liquidation
price received by stockholders as part of our plan of
dissolution and liquidation will be less than $9.91 per
share.
The funds currently held in the trust account may not be
protected from third-party claims against us. Although we will
seek to have all significant vendors and service providers and
all prospective target businesses waive any right, title,
interest or claim of any kind in or to any monies held in the
trust account for the benefit of our public stockholders, they
would not be prevented from bringing claims against the trust
account including, but not limited to, fraudulent inducement,
breach of fiduciary responsibility or other similar claims, as
well as claims challenging the enforceability of the waiver, in
each case in order to gain an advantage with a claim against our
assets, including the funds held in the trust account.
Accordingly, the proceeds held in the trust account could be
subject to claims that could take priority over the claims of
our public stockholders and due to claims of such creditors, the
per share liquidation price could be less than the approximately
$9.91 per share. If we are unable to consummate a business
combination and are forced to liquidate, Navios Holdings has
agreed that it will be liable to ensure that the proceeds in the
trust account are not reduced by the claims of target businesses
or claims of vendors or other entities that are owed money by us
for services rendered or contracted for or products sold to us,
except (i) as to any claims by a third party who executed a
waiver of any and all rights to seek access to the trust
account, to the extent such waiver is subsequently found to be
invalid or unenforceable, (ii) as to any engagement of, or
agreement with, a third party that does not execute a waiver and
Navios Holdings has not consented to such engagement or contract
with such third party, and (iii) as to any claims under our
indemnity of the underwriters of the offering against certain
liabilities under the Securities Act of 1933, as amended,
referred to herein as the Securities Act. Additionally, in the
case of a vendor, service provider or prospective target
business that did not execute a waiver, Navios Holdings will be
liable to the extent it consents to the transaction, only to the
extent necessary to ensure that public stockholders receive no
less than approximately $9.91 per share upon liquidation. Based
on our review of the financial statements of Navios Holdings in
its most recent
Form 20-F,
we believe that Navios Holdings will have sufficient funds to
meet any indemnification obligations that arise. However,
because Navios Holdings circumstances may change in the
future, we cannot assure investors that Navios Holdings will be
able to satisfy such indemnification obligations if and when
they arise. We will endeavor to have all vendors and prospective
target businesses, as well as other entities, execute agreements
with us waiving any right, title, interest or claim of any kind
in or to monies held in the trust account. If Navios Holdings
refused to satisfy its indemnification obligations, we would be
required to bring a claim against it to enforce our
indemnification rights.
Additionally, if we are forced to file a bankruptcy case or an
involuntary bankruptcy case is filed against us that is not
dismissed, the funds held in our trust account will be subject
to applicable bankruptcy law, and may be included in our
bankruptcy estate and subject to the claims of third parties
with priority over the claims of our stockholders. To the extent
any bankruptcy claims deplete the trust account we cannot assure
you we will be able to return to our public stockholders the
liquidation amounts due them. An involuntary bankruptcy
proceeding cannot be filed in the United States since the trust
funds will not be maintained within the United States. Because
we have no assets in the United States and are organized in the
Marshall Islands, any bankruptcy claim would have to be
initiated elsewhere. The Marshall Islands has no bankruptcy act.
It does have a little-used device pursuant to which, at the
request of a judgment creditor, a court can appoint a receiver
either to run or wind up the affairs of a corporation. A court
can also appoint a trustee if the corporation files for
dissolution to wind up the affairs. Finally, it would be
possible for a Marshall Islands court to apply the law of any
jurisdiction with laws similar to that of the Marshall Islands,
such as those of the United States.
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We may
choose to redeem our outstanding warrants included in the units
sold in our initial public offering at a time that is
disadvantageous to our warrant holders.
We may redeem the warrants issued as part of our units sold in
our initial public offering at any time after the warrants
become exercisable in whole and not in part, at a price of $0.01
per warrant, upon a minimum of 30 days prior written
notice of redemption, if and only if, the last sales price of
our common stock equals or exceeds $13.75 per share for any 20
trading days within a 30 trading day period ending three
business days before we send the notice of redemption, provided,
however, a current registration statement under the Securities
Act relating to the shares of our common stock underlying the
warrants is then effective. Redemption of the warrants could
force the warrant holders: (i) to exercise the warrants and
pay the exercise price therefore at a time when it may be
disadvantageous for the holders to do so; (ii) to sell the
warrants at the then-current market price when they might
otherwise wish to hold the warrants; or (iii) to accept the
nominal redemption price that, at the time the warrants are
called for redemption, is likely to be substantially less than
the market value of the warrants. We may not redeem any warrant
if it is not exercisable.
Our
initial stockholders control a substantial interest in us and,
thus, may influence certain actions requiring stockholder
vote.
Our initial stockholders own 20% of our issued and outstanding
shares, which permits them to influence the outcome of
effectively all matters requiring approval by our stockholders
at such time, including the election of directors and approval
of significant corporate transactions, following the
consummation of our initial business combination. In addition,
Navios Holdings and an affiliate of Angeliki Frangou have agreed
to acquire through J.P. Morgan Securities Inc., or a third
party, $60.0 million of our common stock in open market
purchases or privately negotiated purchases during the buyback
period. Of this amount, Navios Holdings has agreed to purchase
up to $45.0 million, and an affiliate of Angeliki Frangou
has agreed to purchase up to $15.0 million of common stock.
Navios Holdings and Angeliki Frangou, or their respective
affiliates, may make purchases in excess of such amounts.
Furthermore, we, the initial stockholders (including Navios
Holdings) and our respective affiliates may purchase, or
negotiate Forward Contracts to provide for the purchase of,
public shares from holders who indicate their intention to vote
against the vessel acquisition proposal and seek conversion, or
who otherwise wish to sell their public shares. Any such
purchases will be made in compliance with all applicable
securities laws. Navios Holdings, Angeliki Frangou, our other
officers and directors,
and/or their
respective affiliates, have agreed to vote any shares acquired
by them since the initial public offering in favor of the vessel
acquisition proposal.
Further, our board of directors is divided into three classes,
each of which will generally serve for a term of three years
with only one class of directors being elected in each year. It
is unlikely that there will be an annual meeting of stockholders
to elect new directors prior to the consummation of a business
combination, in which case all of the current directors will
continue in office at least until the consummation of the
business combination. If there is an annual meeting, as a
consequence of our staggered board of directors,
only a minority of the board of directors will be considered for
election and our initial stockholders, because of their
ownership position, will have considerable influence regarding
the outcome of such election. Accordingly, Angeliki Frangou and
our initial stockholders will continue to exert control at least
until the consummation of a business combination.
The
purchase of common stock in the aftermarket by Navios Holdings,
Angeliki Frangou or their affiliates as described above, or by
us, the initial stockholders or our respective affiliates
pursuant to the potential Forward Contract arrangements
discussed above, may support the market price of the common
stock and/or warrants during the buyback period, and
accordingly, the termination of the support provided by such
purchases may materially and adversely affect the market price
of the common stock and/or warrants.
Navios Holdings and an affiliate Angeliki Frangou have agreed to
acquire through J.P. Morgan Securities Inc., or a third
party, $60.0 million of our common stock, of this amount,
Navios Holdings has agreed to purchase up to $45.0 million,
and an affiliate of Angeliki Frangou has agreed to purchase up
to $15.0 million of common stock. Navios Holdings and
Angeliki Frangou, or their respective affiliates, may make
purchases in excess of such amounts. If the market does not view
our initial business combination positively, these purchases may
have the effect of counteracting the markets view of our
initial business combination, which will otherwise be reflected
by a decline in the market price of our securities. Furthermore,
Navios Holdings, our officers and directors
and/or their
respective affiliates, at any time prior to the special meeting,
during a
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period when they are not then aware of any material nonpublic
information regarding Navios Acquisition or its securities, may
enter into open market or private purchases of our securities.
The termination of the support provided by these purchases
during the buyback period may materially and adversely affect
the market price of our securities.
Our
ability to effect a business combination successfully and to
operate successfully thereafter will be dependent upon the
efforts of our key personnel, some of whom may join us following
a business combination and whom we would have only a limited
ability to evaluate.
Our ability to effect a business combination successfully and to
operate successfully thereafter will be dependent upon the
efforts of our key personnel. However, the future role of our
key personnel following a business combination cannot be fully
ascertained presently. Although we expect Angeliki Frangou, our
Chairman and Chief Executive Officer, to remain associated with
us following a business combination, it is possible that
Ms. Frangou will not remain with the company after the
consummation of a business combination. Thus, we may employ
other personnel following the business combination. While we
intend to scrutinize closely any additional individuals we
engage after a business combination, we cannot assure you that
our assessment of these individuals will prove to be correct.
These individuals may be unfamiliar with the requirements of
operating a public company, as well as with United States
securities laws, which could cause us to have to expend time and
resources helping them become familiar with such laws. This
could be expensive and time consuming, and could lead to various
regulatory issues that hinder our operations.
Our
initial stockholders beneficially own shares of our common stock
that will not participate in liquidating distributions and
therefore our executive officers and directors may have a
conflict of interest in determining whether the vessel
acquisition is in the best interest of our
stockholders.
Our initial stockholders have waived their right to receive
distributions upon our liquidation if we fail to consummate a
business combination, with respect to the shares of common stock
included in the sponsor units they own. The shares of common
stock and warrants included in the sponsor units and the sponsor
warrants owned by our initial stockholders will be worthless if
we do not consummate a business combination. Angeliki Frangou,
our Chairman and Chief Executive Officer, has a 23.2% beneficial
interest in Navios Holdings and is also its Chairman and Chief
Executive Officer. Accordingly, the financial interests of our
executive officers and directors may influence their motivation
to support the vessel acquisition and determination as to
whether the vessel acquisition is in the best interest of our
stockholders. Such conflicts of interest may not be resolved in
our or our stockholders favor.
Our
directors and officers interests in obtaining
reimbursement for any
out-of-pocket
expenses incurred by them may lead to a conflict of interest in
determining whether the vessel acquisition is appropriate for a
business combination and in the public stockholders best
interest.
Our directors and officers will not receive reimbursement for
any
out-of-pocket
expenses incurred by them to the extent that such expenses
exceed the amount of available proceeds not deposited in the
trust account and the amount of interest income from the trust
account, net of income taxes on such interest, of up to a
maximum of $3.0 million, unless a business combination is
consummated. These amounts were based on managements
estimates of the funds needed to fund our operations for the
24 months following our initial public offering and
consummate a business combination. Those estimates may prove to
be inaccurate, especially if a portion of the available proceeds
is used to make a down payment in connection with business
combination or pay exclusivity or similar fees or if we expend a
significant portion in pursuit of an acquisition that is not
consummated. The financial interest of our directors and
officers could influence their motivation to support the vessel
acquisition and, therefore, there may be a conflict of interest
in their determination as to whether the vessel acquisition is
in the stockholders best interest. In addition, pursuant
to an agreement between the us and Navios Holdings, the
compensation of Leonidas Korres, our Chief Financial Officer is
to be paid by Navios Holdings up to the amount of 65,000,
provided that if we complete a business combination, we will
reimburse such amounts to Navios Holdings immediately following
the completion of
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the business combination. If we are unable to complete a
business combination, then we will not be obligated to make any
payments to Navios Holdings or Mr. Korres with respect to
his employment.
Each
of our independent directors will be entitled to receive $50,000
compensation annually upon the successful consummation of a
business combination and, therefore, they may be faced with a
conflict of interest when determining whether the vessel
acquisition is in the public stockholders best
interest.
Each of our independent directors will be entitled to receive
$50,000 in cash per year for their board service, accruing
pro rata from the respective start of their service on
our board of directors and payable only upon the successful
consummation of a business combination. The financial interest
of our directors could negatively affect their independence and
influence their determination as to whether the vessel
acquisition is in our stockholders best interest. If
conflicts arise, they may not necessarily be resolved in our
favor.
Our
Chairman and other directors will continue to serve on our board
of directors following the consummation of the vessel
acquisition and may be paid fees for such services. Thus, such
financial interest may influence their motivation to support the
vessel acquisition and they may be faced with a conflict of
interest when determining whether the vessel acquisition is in
our stockholders best interest.
Because our Chairman and our directors will continue to serve on
our board of directors after the consummation of the vessel
acquisition, and such individuals may be paid fees for their
services, the financial interest of such individuals may
influence their motivation to support the vessel acquisition and
their determination as to whether the vessel acquisition is in
our stockholders best interest. Thus, they may be faced
with a conflict of interest. If conflicts arise, they may not
necessarily be resolved in our favor.
Since
our initial stockholders, including Navios Holdings, will lose
their entire investment in us if a business combination is not
consummated, and Navios Holdings may be required to pay costs
associated with our liquidation, our initial stockholders might
purchase shares of our common stock from stockholders who would
otherwise choose to vote against a proposed business combination
or exercise their conversion rights in connection with such
business combination.
Our initial stockholders own sponsor units that will be
worthless if we do not consummate a business combination. The
actual per unit value of the sponsor units would be less than
$10.00, because unlike the shares of our common stock held by
our public stockholders, the sponsor units are restricted and
may not be transferred until 180 days after the
consummation of our initial business combination. In addition,
on July 1, 2008, Navios Holdings purchased sponsor warrants
that will also be worthless if we do not consummate a business
combination. We believe the current equity value for the sponsor
units is significantly lower than the $10.00 per unit initial
public offering price because the holder of these units will not
be able to sell or transfer them while sponsor units remain in
escrow, except in certain limited circumstances (such as
transfers to entities controlled by Navios Holdings or Angeliki
Frangou, or, in the case of individuals, family members and
trusts for estate planning purposes) and these sponsor units are
not entitled to any proceeds in case we liquidate if we do not
consummate a business combination. In addition, in the event we
are forced to liquidate, Navios Holdings has agreed to advance
us the entire amount of the funds necessary to complete such
liquidation and has agreed not to seek repayment for such
expenses.
Given the interest that Navios Holdings has in a business
combination being consummated, it is possible that it (and/or
our officers and directors) will acquire securities from public
stockholders who have elected to redeem their shares of our
common stock in order to change their vote and insure that the
business combination will be approved (which could result in a
business combination being approved even if, after the
announcement of the business combination, 40% or more of our
public stockholders would have elected their conversion rights,
or a majority of the shares of common stock voted by the public
stockholders would have voted against the business combination,
but for the purchases made by Navios Holdings (and/or our
officers and directors)).
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The
New York Stock Exchange may delist our securities from quotation
on its exchange, which could limit your ability to trade our
securities and subject us to additional trading
restrictions.
Our securities are listed on the New York Stock Exchange
(NYSE), a national securities exchange. Although we
currently satisfy the NYSE minimum listing standards, which only
requires that we meet certain requirements relating to
stockholders equity, number of round-lot holders, market
capitalization, aggregate market value of publicly held shares
and distribution requirements, we cannot assure you that our
securities will continue to be listed on NYSE in the future.
Additionally, in connection with the vessel acquisition, it is
likely that NYSE will require us to file a new initial listing
application and meet its initial listing requirements as opposed
to its more lenient continued listing requirements. Even if such
application is accepted, we may be unable to maintain the
listing of our securities in the future.
If NYSE delists our securities from trading on its exchange, we
could face significant material adverse consequences, including:
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a limited availability of market quotations for our securities;
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a limited amount of news and analyst coverage for us;
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a decreased ability for us to issue additional securities or
obtain additional financing in the future; and
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limited liquidity for our stockholders due to thin trading.
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Industry
Risk Factors Relating to Navios Acquisition
The
cyclical nature of the tanker industry may lead to volatility in
charter rates and vessel values, which could adversely affect
our future earnings.
Oil has been one of the worlds primary energy sources for
a number of decades. The global economic growth of previous
years had a significant impact on the demand for oil and
subsequently on the oil trade and shipping demand. However,
during the second half of 2008 and throughout 2009, the
worlds economies have experienced a major economic
slowdown that is ongoing, the duration of which is very
difficult to forecast and which has, and is expected to continue
to have, a significant impact on world trade, including the oil
trade. If the tanker market, which has historically been
cyclical, is depressed in the future, our earnings and available
cash flow may be materially adversely affected. Our ability to
employ vessels we acquire profitably will depend upon, among
other things, economic conditions in the tanker market.
Fluctuations in charter rates and tanker values result from
changes in the supply and demand for tanker capacity and changes
in the supply and demand for liquid cargoes, including petroleum
and petroleum products.
Historically, the crude oil markets have been volatile as a
result of the many conditions and events that can affect the
price, demand, production and transport of oil, including
competition from alternative energy sources. Decreased demand
for oil transportation may have a material adverse effect on our
revenues, cash flows and profitability. The factors affecting
the supply and demand for tankers are outside of our control,
and the nature, timing and degree of changes in industry
conditions are unpredictable. The current global financial
crisis has intensified this unpredictability.
The factors that influence demand for tanker capacity include:
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demand for and supply of liquid cargoes, including petroleum and
petroleum products;
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waiting days in ports;
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regional availability of petroleum refining capacity;
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environmental and other regulatory developments;
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global and regional economic conditions;
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the distance chemicals, petroleum and petroleum products are to
be moved by sea;
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changes in seaborne and other transportation patterns; and
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competition from alternative sources of energy.
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The factors that influence the supply of tanker capacity include:
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the number of newbuilding deliveries;
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the scrapping rate of older vessels;
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conversion of tankers to other uses;
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the phasing out of single-hull tankers due to legislation and
environmental concerns;
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the price of steel;
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the number of vessels that are out of service; and
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environmental concerns and regulations.
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Furthermore, the extension of refinery capacity in India and the
Middle East up to 2011 is expected to exceed the immediate
consumption in these areas, and an increase in exports of
refined oil products is expected as a result. Historically, the
tanker markets have been volatile as a result of the many
conditions and factors that can affect the price, supply and
demand for tanker capacity. The recent global economic crisis
may further reduce demand for transportation of oil over long
distances and supply of tankers that carry oil, which may
materially affect our future revenues, profitability and cash
flows.
We believe that the current order book for tanker vessels
represents a significant percentage of the existing fleet. An
over-supply of tanker capacity may result in a reduction of
charter hire rates. If a reduction in charter rates occurs, we
may only be able to charter vessels we acquire at unprofitable
rates or we may not be able to charter these vessels at all,
which could lead to a material adverse effect on our results of
operations.
Charter
rates in the product and chemical tanker sectors of the seaborne
transportation industry in which we will operate have
significantly declined from historically high levels in 2008 and
may remain depressed or decline further in the future, which, if
we consummate the vessel acquisition, may adversely affect our
earnings and ability to pay dividends.
Charter rates in the product and chemical tanker sectors have
significantly declined from historically high levels in 2008 and
may remain depressed or decline further. For example, the Baltic
Dirty Tanker Index declined from a high of 2,347 in July 2008 to
655 in mid-November 2009, which represents a decline of
approximately 72%. The Baltic Clean Tanker Index has fallen from
1,509 in the early summer of 2008 to 457 in mid-November
2009, or approximately 70%. In addition, the Baltic Drybulk
Index, or BDI, declined from a high of 11,793 in May 2008 to a
low of 663 in December 2008, which represents a decline of 94%
within a single calendar year. The BDI fell over 70% during
October 2008 alone. During 2009, the BDI has remained volatile,
reaching peaks of 4,291 on June 3, 2009 and 4,661 on
November 19, 2009, and dipping to troughs of 772 on
January 5, 2009 and 2,163 on September 24, 2009. If
the tanker sector of the seaborne transportation industry, which
has been highly cyclical, is depressed in the future when we
consummate the vessel acquisition or at a time when we may want
to sell a vessel, our earnings and available cash flow may be
adversely affected. We cannot assure you that we will be able to
successfully charter our vessels in the future at rates
sufficient to allow us to operate our business profitably, to
meet our obligations, including payment of debt service to our
Lenders, or to pay dividends to our stockholders. Our ability to
renew the charters on vessels that we may acquire in the future,
the charter rates payable under any replacement charters and
vessel values will depend upon, among other things, economic
conditions in the sector in which our vessels operate at that
time, changes in the supply and demand for vessel capacity and
changes in the supply and demand for the seaborne transportation
of energy resources and commodities.
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Spot
market rates for tanker vessels are highly volatile and are
currently at relatively low levels historically and may further
decrease in the future, which may adversely affect our earnings
and ability to make cash distributions in the event that our
vessels are chartered in the spot market.
We intend to deploy at least some of our vessels in the spot
market. Although spot chartering is common in the product and
chemical tanker sectors, product and chemical tanker charter
hire rates are highly volatile and may fluctuate significantly
based upon demand for seaborne transportation of crude oil and
oil products and chemicals, as well as tanker supply. The world
oil demand is influenced by many factors, including
international economic activity; geographic changes in oil
production, processing, and consumption; oil price levels;
inventory policies of the major oil and oil trading companies;
and strategic inventory policies of countries such as the United
States and China. The successful operation of our vessels in the
spot charter market will depend 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. Furthermore, as charter
rates for spot charters are fixed for a single voyage that 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.
The spot market is highly volatile, and, in the past, there have
been periods when spot rates have declined below the operating
cost of vessels. Currently charterhire rates are at relatively
low rates historically and there is no assurance that the
product and chemical tanker charter market will recover over the
next several months or will not continue to decline further.
Delays
in deliveries of the vessel acquisition vessels, or our decision
to cancel or our inability to otherwise complete the
acquisitions of any newbuildings we may decide to acquire in the
future, could harm our operating results and lead to the
termination of any related charters.
The vessels to be purchased pursuant to the Acquisition
Agreement, as well as any newbuildings we may contract to
acquire or order in the future could be delayed, not completed
or canceled, which would delay or eliminate our expected receipt
of revenues under any charters for such vessels. The shipbuilder
or third party seller could fail to deliver the newbuilding
vessel or any other vessels we acquire or order as may be
agreed, or Navios Holdings, or relevant third party, could
cancel a purchase or a newbuilding contract because the
shipbuilder has not met its obligations, including its
obligation to maintain agreed refund guarantees in place for our
benefit. For prolonged delays, the customer may terminate the
time charter.
Our receipt of newbuildings could be delayed, canceled, or
otherwise not completed because of:
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quality or engineering problems;
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changes in governmental regulations or maritime self-regulatory
organization standards;
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work stoppages or other labor disturbances at the shipyard;
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bankruptcy or other financial or liquidity problems of the
shipbuilder;
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a backlog of orders at the shipyard;
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political or economic disturbances in the country or region
where the vessel is being built;
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weather interference or catastrophic event, such as a major
earthquake or fire;
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the shipbuilder failing to deliver the vessel in accordance with
our vessel specifications;
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our requests for changes to the original vessel specifications;
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shortages of or delays in the receipt of necessary construction
materials, such as steel;
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our inability to finance the purchase of the vessel;
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a deterioration in Navios Holdings relations with the
relevant shipbuilder; or
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our inability to obtain requisite permits or approvals.
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If delivery of any vessel acquisition vessel, or any vessel we
contract to acquire in the future is materially delayed, it
could adversely affect our results of operations and financial
condition and our ability to make cash distributions.
Navios
Acquisitions vessels may suffer damage and it may face
unexpected drydocking costs, which could adversely affect its
cash flow and financial condition.
If Navios Acquisitions vessels suffer damage, they may
need to be repaired at a drydocking facility. The costs of
drydock repairs are unpredictable and can be substantial. Navios
Acquisition may have to pay drydocking costs that its insurance
does not cover. The loss of earnings while these vessels are
being repaired and reconditioned, as well as the actual cost of
these repairs, would decrease its earnings.
Two of
the vessels Navios Acquisition intends to acquire are secondhand
vessels, and it may acquire more secondhand vessels in the
future. The acquisition and operation of such vessels may result
in increased operating costs and vessel off-hire, which could
adversely affect Navios Acquisitions
earnings.
Two of the LR1 product tanker vessels Navios Acquisition will be
acquiring are secondhand vessels, and Navios Acquisition may
acquire more secondhand vessels in the future. Navios
Acquisitions inspection of secondhand vessels prior to
purchase does not provide it with the same knowledge about their
condition and cost of any required or anticipated repairs that
it would have had if these vessels had been built for and
operated exclusively by Navios Acquisition. Generally, Navios
Acquisition will not receive the benefit of warranties on
secondhand vessels.
In general, the costs to maintain a vessel in good operating
condition increase with the age of the vessel. Older vessels are
typically less fuel efficient and more costly to maintain than
more recently constructed vessels. Cargo insurance rates
increase with the age of a vessel, making older vessels less
desirable to charterers.
Governmental regulations, safety or other equipment standards
related to the age of vessels may require expenditures for
alterations, or the addition of new equipment, to Navios
Acquisitions vessels and may restrict the type of
activities in which the vessels may engage. As Navios
Acquisitions vessels age, market conditions may not
justify those expenditures or enable Navios Acquisition to
operate its vessels profitably during the remainder of their
useful lives.
Although Navios Acquisition has considered the age and condition
of the LR1 vessels in budgeting for operating, insurance
and maintenance costs, it may encounter higher operating and
maintenance costs due to the age and condition of these vessels,
or any additional vessels it acquires in the future.
Our
growth depends on continued growth in demand for refined
petroleum products (clean and dirty) and bulk liquid chemicals
and the continued demand for seaborne transportation of such
cargoes.
Our growth strategy focuses on expansion in the product and
chemical tanker sectors. Accordingly, our growth depends on
continued growth in world and regional demand for refined
petroleum (clean and dirty) products and bulk liquid chemicals
and the transportation of such cargoes by sea, which could be
negatively affected by a number of factors, including:
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the economic and financial developments globally, including
actual and projected global economic growth;
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fluctuations in the actual or projected price of refined
petroleum (clean and dirty) products or bulk liquid chemicals;
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refining capacity and its geographical location;
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increases in the production of oil in areas linked by pipelines
to consuming areas, the extension of existing, or the
development of new, pipeline systems in markets we may serve, or
the conversion of existing non-oil pipelines to oil pipelines in
those markets;
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decreases in the consumption of oil due to increases in its
price relative to other energy sources, other factors making
consumption of oil less attractive or energy conservation
measures;
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availability of new, alternative energy sources; and
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negative or deteriorating global or regional economic or
political conditions, particularly in oil-consuming regions,
which could reduce energy consumption or its growth.
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The refining and chemical industries may respond to the economic
downturn and demand weakness by reducing operating rates and by
reducing or cancelling certain investment expansion plans,
including plans for additional refining capacity, in the case of
the refining industry. Continued reduced demand for refined
petroleum (clean and dirty) products and bulk liquid chemicals
and the shipping of such cargoes or the increased availability
of pipelines used to transport refined petroleum (clean and
dirty) products, would have a material adverse effect on our
future growth and could harm our business, results of operations
and financial condition.
Our
growth depends on our ability to obtain customers, for which we
will face substantial competition.
Medium- to long-term time charters and bareboat charters have
the potential to provide income at pre-determined rates over
more extended periods of time. However, the process for
obtaining longer term time charters and bareboat charters is
highly competitive and generally involves a lengthy, intensive
and continuous screening and vetting process and the submission
of competitive bids that often extends for several months. In
addition to the quality, age and suitability of the vessel,
longer term shipping contracts tend to be awarded based upon a
variety of other factors relating to the vessel operator.
In addition to having to meet the stringent requirements set out
by charterers, it is likely that we will also face substantial
competition from a number of competitors who may have greater
financial resources, stronger reputation or experience than we
do when we try to recharter our vessels. It is also likely that
we will face increased numbers of competitors entering into the
product and chemical tanker sectors, including in the ice class
sector. Increased competition may cause greater price
competition, especially for medium- to long-term charters.
As a result of these factors, we may be unable to obtain
customers for medium- to long-term time charters or bareboat
charters on a profitable basis, if at all. Even if we are
successful in employing our vessels under longer term time
charters or bareboat charters, our vessels will not be available
for trading in the spot market during an upturn in the product
and chemical tanker market cycle, when spot trading may be more
profitable. If we cannot successfully employ our vessels in
profitable time charters our results of operations and operating
cash flow could be adversely affected.
Vessel
values have decreased significantly, and may remain at these
depressed levels, or decrease further, and over time may
fluctuate substantially. If we consummate the vessel
acquisition, depressed vessel values could cause us to incur
impairment charges.
Due to the sharp decline in world trade and tanker charter
rates, the market values of our contracted newbuildings, and of
tankers generally, are currently significantly lower than prior
to the downturn in the second half of 2008. Vessel values may
remain at current low, or lower, levels for a prolonged period
of time and can fluctuate substantially over time due to a
number of different factors, including:
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prevailing level of charter rates;
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general economic and market conditions affecting the shipping
industry;
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competition from other shipping companies;
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types and sizes of vessels;
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supply and demand for vessels;
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other modes of transportation;
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cost of newbuildings;
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governmental or other regulations; and
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technological advances.
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In addition, as vessels grow older, they generally decline in
value. If we consummate the vessel acquisition, we will review
our vessels for impairment whenever events or changes in
circumstances indicate that the carrying amount of the assets
may not be recoverable. We will review certain indicators of
potential impairment, such as undiscounted projected operating
cash flows expected from the future operation of the vessels,
which can be volatile for vessels employed on short-term
charters or in the spot market. Any impairment charges incurred
as a result of declines in charter rates could negatively affect
our financial condition and results of operations. In addition,
if we sell any vessel at a time when vessel prices have fallen
and before we have recorded an impairment adjustment to our
financial statements, the sale may be at less than the
vessels carrying amount on our financial statements,
resulting in a loss and a reduction in earnings.
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 beyond our
expectations 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, actions by members of the
Organization of the Petroleum Exporting Countries and other oil
and gas producers, war, terrorism and unrest in oil producing
countries and regions, regional production patterns and
environmental concerns and regulations.
The
product and chemical tanker sectors are subject to seasonal
fluctuations in demand and, therefore, may cause volatility in
our operating results.
The product and chemical tanker sectors of the shipping industry
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 product and chemical
tanker markets are typically stronger in the fall and winter
months in anticipation of increased consumption of oil and
natural gas in the northern hemisphere. In addition,
unpredictable weather patterns in these months tend to disrupt
vessel scheduling and supplies of certain commodities. As a
result, revenues are typically weaker during the fiscal quarters
ended June 30 and September 30, and, conversely, typically
stronger in fiscal quarters ended December 31 and March 31.
Our operating results, therefore, may be subject to seasonal
fluctuations.
The
current global economic downturn may negatively impact our
business.
In recent years, there has been a significant adverse shift in
the global economy, with operating businesses facing tightening
credit, weakening demand for goods and services, deteriorating
international liquidity conditions, and declining markets. Lower
demand for tanker cargoes as well as diminished trade credit
available for the delivery of such cargoes may create downward
pressure on charter rates. If the current global economic
environment persists or worsens, we may be negatively affected
in the following ways:
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We may not be able to employ vessels we acquire at charter rates
as favorable to us as historical rates or operate such vessels
profitably.
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The market value of vessels we acquire could decrease
significantly, which may cause us to recognize losses if any of
our vessels are sold or if their values are impaired. In
addition, such a decline in the market value of our vessels
could prevent us from borrowing under our credit facilitates or
trigger a default under one of their covenants.
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Charterers could have difficulty meeting their payment
obligations to us.
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If the contraction of the global credit markets and the
resulting volatility in the financial markets continues or
worsens that could have a material adverse impact on our results
of operations, financial condition and cash flows, and could
cause the market price of our common stock to decline.
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The
economic slowdown in the Asia Pacific region has markedly
reduced demand for shipping services and has decreased shipping
rates, which may adversely affect our results of operations and
financial condition.
Currently, the economies of China, Japan, other Pacific Asian
countries and India are the main driving force behind the
development in seaborne transportation. Reduced demand from such
economies has driven decreased rates and vessel values. A
further negative change in economic conditions in any Asia
Pacific country, but particularly in China, Japan or India, may
have a material adverse effect on our business, financial
condition and results of operations, as well as our future
prospects, by reducing demand and the resultant charter rates
further.
The
employment of vessels we acquire could be adversely affected by
an inability to clear the oil majors risk assessment
process.
The shipping industry, and especially the shipment of crude oil,
refined petroleum products (clean and dirty) and bulk liquid
chemicals, has been, and will remain, heavily regulated. The so
called oil majors companies, together with a number
of commodities traders, represent a significant percentage of
the production, trading and shipping logistics (terminals) of
crude oil and refined products worldwide. Concerns for the
environment have led the oil majors to develop and implement a
strict ongoing due diligence process when selecting their
commercial partners. This vetting process has evolved into a
sophisticated and comprehensive risk assessment of both the
vessel operator and the vessel, including physical ship
inspections, completion of vessel inspection questionnaires
performed by accredited inspectors and the production of
comprehensive risk assessment reports. In the case of term
charter relationships, additional factors are considered when
awarding such contracts, including:
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office assessments and audits of the vessel operator;
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the operators environmental, health and safety record;
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compliance with the standards of the International Maritime
Organization (the IMO), a United Nations agency that
issues international trade standards for shipping;
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compliance with heightened industry standards that have been set
by several oil companies;
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shipping industry relationships, reputation for customer
service, technical and operating expertise;
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shipping experience and quality of ship operations, including
cost-effectiveness;
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quality, experience and technical capability of crews;
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the ability to finance vessels at competitive rates and overall
financial stability;
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relationships with shipyards and the ability to obtain suitable
berths;
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construction management experience, including the ability to
procure on-time delivery of new vessels according to customer
specifications;
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willingness to accept operational risks pursuant to the charter,
such as allowing termination of the charter for force majeure
events; and
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competitiveness of the bid in terms of overall price.
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Should we not be able to successfully clear the oil majors
risk assessment processes on an ongoing basis, the future
employment of vessels we acquire, as well as our ability to
obtain charterers, whether medium- or long-term, could be
adversely affected. Such a situation may lead to the oil
majors terminating existing charters and refusing to use
our vessels in the future, which would adversely affect our
results of operations and cash flows.
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In the
highly competitive product and chemical tanker sectors of the
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 will employ our vessels in the product and chemical tanker
sectors, highly competitive markets that are capital intensive
and highly fragmented. Competition arises primarily from other
vessel owners, some of whom have substantially greater resources
than us. Competition for the transportation of refined petroleum
products (clean and dirty) and bulk liquid chemicals can be
intense and depends on price, location, size, age, condition and
the acceptability of the vessel and our managers to the
charterers. Due in part to the highly fragmented markets,
competitors with greater resources could operate larger fleets
through consolidations or acquisitions that may be able to offer
better prices and fleets than ours.
Poor
performance of our charters may lead to decreased revenues and a
reduction in earnings.
We intend to enter into time charters for a number vessels we
are acquiring and two of the LR1 tankers we will acquire will
enter into time charters upon delivery. Our revenues may be
dependent on the performance of our charterers and, as a result,
defaults by our charterers may materially adversely affect our
revenues.
Charterers
may terminate or default on their obligations to us, which could
adversely affect our results of operations and cash
flow.
Even after a charter contract is entered, charterers may
terminate charters early under certain circumstances. The events
or occurrences that will cause a charter to terminate or give
the charterer the option to terminate the charter generally
include a total or constructive total loss of the related
vessel, the requisition for hire of the related vessel or the
failure of the related vessel to meet specified performance
criteria. In addition, the ability of a charterer to perform its
obligations under a charter will depend on a number of factors
that are beyond our control. These factors may include general
economic conditions, the condition of the product and chemical
tanker sectors of the shipping industry, the charter rates
received for specific types of vessels and various operating
expenses. We intend to purchase credit default insurance against
our charterers; however, there can be no assurance that such
insurance will be available at commercially reasonable rates or
at all. The costs and delays associated with the default by a
charterer of a vessel may be considerable and may adversely
affect our business, results of operations, cash flows and
financial condition and our ability to pay dividends.
We cannot predict whether our charterers will, upon the
expiration of their charters, re-charter our vessels on
favorable terms or at all. If our charterers decide not to
re-charter our vessels, we may not be able to re-charter them on
terms similar to our current charters or at all. In the future,
we may also employ our vessels on the spot charter market, which
is subject to greater rate fluctuation than the time charter
market.
If we receive lower charter rates under replacement charters or
are unable to re-charter all of our vessels, our results of
operations and financial condition could be materially adversely
affected.
We may
not have adequate insurance to compensate us for damage to or
loss of our vessels, which may have material adverse effect on
our financial condition and results of operation.
We are expected to procure hull and machinery insurance,
protection and indemnity insurance, which includes environmental
damage and pollution insurance coverage and war risk insurance
for our fleet. We do not expect to maintain for all of our
vessels insurance against loss of hire, which covers business
interruptions that result from the loss of use of a vessel. We
may not be adequately insured against all risks. We may not be
able to obtain adequate insurance coverage for our fleet in the
future. The insurers may not pay particular claims. Our
insurance policies may contain deductibles for which we will be
responsible and limitations and exclusions that may increase our
costs or lower our revenue. Moreover, insurers may default on
claims they are required to pay. If our insurance is not enough
to cover claims that may arise, the deficiency may have a
material adverse effect on our financial condition and results
of operations.
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If we
experienced a catastrophic loss and our insurance is not
adequate to cover such loss, it could lower our profitability
and be detrimental to operations.
The ownership and operation of vessels in international trade is
affected by a number of inherent risks, including mechanical
failure, personal injury, vessel and cargo loss or damage,
business interruption due to political conditions in foreign
countries, hostilities, piracy, terrorism, labor strikes
and/or
boycotts adverse weather conditions and catastrophic marine
disaster, including environmental accidents and collisions. All
of these risks could result in liability, loss of revenues,
increased costs and loss of reputation. We intend to maintain
insurance, consistent with industry standards, against these
risks on any vessels and other business assets we may acquire
upon consummation of the vessel acquisition. However, we cannot
assure you that we will be able to insure against all risks
adequately, that any particular claim will be paid out of our
insurance, or that we will be able to procure adequate insurance
coverage at commercially reasonable rates in the future. Our
insurers will also require us to pay certain deductible amounts,
before they will pay claims, and insurance policies may contain
limitations and exclusions, which, although we believe will be
standard for the shipping industry, may nevertheless increase
our costs and lower our profitability. Additionally, any
increase in environmental and other regulations may also result
in increased costs for, or the lack of availability of,
insurance against the risks of environmental damage, pollution
and other claims for damages that may be asserted against us. A
catastrophic oil spill or marine disaster could exceed our
insurance coverage. Our inability to obtain insurance sufficient
to cover potential claims or the failure of insurers to pay any
significant claims, could lower our profitability and be
detrimental to our operations.
Furthermore, even if insurance coverage is adequate to cover our
losses, we may not be able to timely obtain a replacement ship
in the event of a loss. We may also be 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. In addition, our
protection and indemnity associations may not have enough
resources to cover claims made against them. Our payment of
these calls could result in significant expenses to us which
could reduce our cash flows and place strains on our liquidity
and capital resources.
If we
acquire or charter any vessels, we will become subject to
various laws, regulations and conventions, including
environmental laws that could require significant expenditures
both to maintain compliance with such laws and to pay for any
uninsured environmental liabilities resulting from a spill or
other environmental disaster.
The shipping business and vessel operation 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 vessels operate, as well as
in the country or countries of their registration. 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 fair market
price or useful life of our vessels. Changes in governmental
regulations, safety or other equipment standards, as well as
compliance with standards imposed by maritime self-regulatory
organizations and customer requirements or competition, may
require us to make capital and other expenditures. In order to
satisfy any such requirements we may be required to take any of
our vessels out of service for extended periods of time, with
corresponding losses of revenues. In the future, market
conditions may not justify these expenditures or enable us to
operate our vessels profitably, particularly older vessels,
during the remainder of their economic lives. This could lead to
significant asset write-downs.
Additional conventions, laws and regulations may be adopted that
could limit our ability to do business, require capital
expenditures or otherwise increase our cost of doing business,
which may materially adversely affect our operations, as well as
the shipping industry generally. For example, in various
jurisdictions are considering legislation has been enacted, or
is under consideration, that would impose more stringent
requirements on air pollution and other ship emissions,
including emissions of greenhouse gases and ballast water
discharged from vessels. We would be required by various
governmental and quasi-governmental agencies to obtain certain
permits, licenses and certificates with respect to our
operations.
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The operation of vessels is also affected by the requirements
set forth in the International Safety Management (ISM) Code. The
ISM Code requires shipowners and bareboat charterers to develop
and maintain an extensive Safety Management System
that includes the adoption of a safety and environmental
protection policy setting forth instructions and procedures for
safe vessel operation and describing procedures for dealing with
emergencies. The failure of a shipowner 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. If the acquisition is consummated,
we anticipate that each of the vessels in our owned fleet will
be ISM Code-certified. However, there can be no assurance that
such certification will be secured or, if secured, maintained
indefinitely.
For all vessels, including those that would be operated under
our fleet, at present, international liability for oil pollution
is governed by the International Convention on Civil Liability
for Bunker Oil Pollution Damage, or the Bunker Convention. In
2001, the IMO adopted the Bunker Convention, which imposes
strict liability on shipowners for pollution damage and response
costs incurred in contracting states as a result of caused by
discharges, or threatened discharges of bunker oil from all
classes of ships. The Bunker Convention also requires registered
owners of ships over a certain size to maintain insurance to
cover their liability 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 Convention on Limitation of
Liability for Maritime Claims 1976, as amended, or the 1976
Convention). The Bunker Convention became effective in
contracting states on November 21, 2008 and by early 2010
it was in effect in 47 states. In non-contracting states,
liability for such bunker oil pollution typically is determined
by the national or other domestic laws in the jurisdiction where
the spillage occurs.
If the vessel acquisition is consummated, we will operate a
fleet of product and chemical tankers, which in certain
circumstances may be subject to national and international laws
governing pollution from such vessels. When a tanker is carrying
a cargo of persistent oil as defined by the Civil
Liability Convention 1992 (CLC) her owner bears strict
liability for any pollution damage caused in a contracting state
by an escape or discharge from her cargo or from her bunker
tanks. This liability is subject to a financial limit calculated
by reference to the tonnage of the ship, and the right to limit
liability may be lost if the spill is caused by the
shipowners intentional or reckless conduct. Liability may
also be incurred under CLC for a bunker spill from the vessel
even when she is not carrying such a cargo, but is in ballast.
When a tanker is carrying clean oil products that do not
constitute persistent oil for the purposes of CLC,
liability for any pollution damage will generally fall outside
the Bunker Convention and will depend on national or other
domestic laws in the jurisdiction where the spillage occurs. The
same applies to any pollution from the vessel in a jurisdiction
which is not a party to the Bunker Convention. The CLC applies
in over 100 states around the world, but it does not apply
in the United States, where the corresponding liability laws are
noted for being particularly stringent.
Environmental legislation in the United States merits particular
mention as it is in many respects more onerous than
international laws, representing a high-water mark of regulation
with which ship owners and operators must comply, and of
liability likely to be incurred in the event of non-compliance
or an incident causing pollution. Additionally, pursuant to the
federal laws, each state may enact more stringent regulations,
thus subjecting ship owners to dual liability. Notably,
California has adopted regulations that parallel most, if not
all of the federal regulations explained below. We intend to
comply with all applicable state regulations in the ports where
our vessels call.
In the United States, the Oil Pollution Act of 1990, or OPA,
establishes an extensive regulatory and liability regime for the
protection and cleanup of the environment from oil spills,
including cargo or bunker oil spills from tankers. The OPA
affects all owners and operators whose vessels trade in the
United States, its territories and possessions or whose vessels
operate in United States waters, which includes the United
States territorial sea and its 200 nautical mile exclusive
economic zone. Under the OPA, vessel owners, operators and
bareboat charterers 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 substantial
threats of discharges, of oil from their
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vessels. In addition to potential liability under the OPA as the
relevant federal legislation, vessel owners may in some
instances incur liability on an even more stringent basis under
state law in the particular state where the spillage occurred.
For example, California regulates oil spills pursuant to
California Government Code section 8670 et seq. These
regulations prohibit the discharge of oil, require an oil
contingency plan be filed with the state, require that the ship
owner contract with an oil response organization and require a
valid certificated of financial responsibility, all prior to the
vessel entering state waters.
Outside of the United States, other national laws generally
provide for the owner to bear strict liability for pollution,
subject to a right to limit liability under applicable national
or international regimes for limitation of liability. The most
widely applicable international regime limiting maritime
pollution liability is the 1976 Convention referred to above.
Rights to limit liability under the 1976 Convention are
forfeited where a spill is caused by a shipowners
intentional or reckless conduct. Certain states jurisdictions
have ratified the IMOs Protocol of 1996 to the 1976
Convention, referred to herein as the Protocol of 1996. The
Protocol of 1996 provides for substantially higher liability
limits in those jurisdictions than the limits set forth in the
1976 Convention. Finally, some jurisdictions are not a party to
either the 1976 Convention or the Protocol of 1996, and,
therefore, a shipowners rights to limit liability for
maritime pollution in such jurisdictions may be uncertain.
In some areas of regulation the EU has introduced new laws
without attempting to procure a corresponding amendment of
international law. Notably it adopted in 2005 a directive on
ship-source pollution, imposing criminal sanctions for pollution
not only where this is caused by intent or recklessness (which
would be an offence under the International Convention for the
Prevention of Pollution from Ships, or MARPOL), but also where
it is caused by serious negligence. The directive
could therefore result in criminal liability being incurred in
circumstances where it would not be incurred under international
law. Experience has shown that in the emotive atmosphere often
associated with pollution incidents, retributive attitudes
towards ship interests have found expression in negligence being
alleged by prosecutors and found by courts on grounds which the
international maritime community has found hard to understand.
Moreover, there is skepticism that the notion of serious
negligence is likely to prove any narrower in practice
than ordinary negligence. Criminal liability for a pollution
incident could not only result in us incurring substantial
penalties or fines, but may also, in some jurisdictions,
facilitate civil liability claims for greater compensation than
would otherwise have been payable.
If the vessel acquisition is approved, for each owned vessel we
expect to maintain insurance coverage against pollution
liability risks in the amount of $1.0 billion in the aggregate
for any one event. The insured risks would include penalties and
fines as well as civil liabilities and expenses resulting from
accidental pollution. However, this insurance coverage may be
subject to exclusions, deductibles and other terms and
conditions. If any liabilities or expenses fall within an
exclusion from coverage, or if damages from a catastrophic
incident exceed the aggregate liability of $1.0 billion
for any one event, our cash flow, profitability and financial
position would be adversely impacted.
If we
acquire or charter any vessels, we will become subject to vessel
security regulations and will incur costs to comply with adopted
regulations and may be subject to costs to comply with similar
regulations that may be adopted in the future in response to
terrorism.
Since the terrorist attacks of September 11, 2001, there
have been a variety of initiatives intended to enhance vessel
security. On November 25, 2002, the Maritime Transportation
Security Act of 2002, or MTSA, came into effect. To implement
certain portions of the MTSA, in July 2003, the U.S. Coast
Guard issued regulations requiring the implementation of certain
security requirements aboard vessels operating in waters subject
to the jurisdiction of the United States. Similarly, in December
2002, amendments to the International Convention for the Safety
of Life at Sea, or SOLAS, created a new chapter of the
convention dealing specifically with maritime security. The new
chapter went into effect in July 2004, and imposes various
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detailed security obligations on vessels and port authorities,
most of which are contained in the International Ship and Port
Facilities Security (ISPS) Code. Among the various requirements
are:
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on-board installation of automatic information systems, or AIS,
to enhance
vessel-to-vessel
and
vessel-to-shore
communications;
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on-board installation of ship security alert systems;
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the development of vessel security plans; and
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compliance with flag state security certification requirements.
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The U.S. Coast Guard regulations, intended to be aligned
with international maritime security standards, exempt
non-U.S. vessels
from MTSA vessel security measures, provided such vessels have
on board a valid International Ship Security Certificate (ISSC)
that attests to the vessels compliance with SOLAS security
requirements and the ISPS Code. We will implement the various
security measures addressed by the MTSA, SOLAS and the ISPS Code
and take measures for any vessels we may acquire or charter to
attain compliance with all applicable security requirements
within the prescribed time periods. Although management does not
believe these additional requirements will have a material
financial impact on our operations, there can be no assurance
that there will not be an interruption in operations to bring
vessels into compliance with the applicable requirements and any
such interruption could cause a decrease in charter revenues.
Furthermore, additional security measures could be required in
the future that could have significant financial impact on us.
If our
vessels call on ports located in countries that are subject to
restrictions imposed by the U.S. government, that could
adversely affect our reputation and the market for our common
stock.
From time to time, vessels in our fleet may call on ports
located in countries subject to sanctions and embargoes imposed
by the U.S. government and countries identified by the
U.S. government as state sponsors of terrorism. Although
these sanctions and embargoes may not prevent our vessels from
making calls to ports in these countries, potential investors
could view such port calls negatively, which could adversely
affect our reputation and the market for our common stock.
Investor perception of the value of our common stock may be
adversely affected by the consequences of war, the effects of
terrorism, civil unrest and governmental actions in these and
surrounding countries.
Increased
inspection procedures and tighter import and export controls
could increase costs and disrupt our business.
International shipping is subject to various security and
customs inspections and related procedures in countries of
origin and destination. Inspection procedures can result in the
seizure of contents of vessels, delays in the loading,
offloading or delivery and the levying of customs, duties, fines
and other penalties.
It is possible that changes to inspection procedures could
impose additional financial and legal obligations on us.
Furthermore, changes to inspection procedures could also impose
additional costs and obligations on our future customers and
may, in certain cases, render the shipment of certain types of
cargo impractical. Any such changes or developments may have a
material adverse effect on our business, financial condition,
and results of operations.
A
failure to pass inspection by classification societies could
result in any vessels we may acquire becoming unemployable
unless and until they pass inspection, resulting in a loss of
revenues from such vessels for that period and a corresponding
decrease in operating cash flows.
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 with
SOLAS. A vessel must undergo an annual survey, an intermediate
survey and a special survey. In lieu of a Special Survey, a
vessels 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 dry-docked
every two to three years
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for inspection of the underwater parts of such vessel. If any
vessel we acquire fails any annual survey, intermediate survey,
or special survey, the vessel may be unable to trade between
ports and, therefore, would be unemployable, potentially causing
a negative impact on our revenues due to the loss of revenues
from such vessel until it was able to trade again.
The
operation of ocean-going vessels entails the possibility of
marine disasters including damage or destruction of a vessel due
to accident, the loss of a vessel due to piracy, terrorism or
political conflict, damage or destruction of cargo and similar
events that are inherent operational risks of the tanker
industry may cause a loss of revenue from affected vessels and
damage our business reputation and condition, which may in turn
lead to loss of business.
The operation of ocean-going vessels entails certain inherent
risks that may adversely affect our business and reputation,
including:
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damage or destruction of vessel due to marine disaster such as a
collision;
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the loss of a vessel due to piracy and terrorism;
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cargo and property losses or damage as a result of the foregoing
or less drastic causes such as human error, mechanical failure
and bad weather;
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environmental accidents as a result of the foregoing; and
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business interruptions and delivery delays caused by mechanical
failure, human error, acts of piracy, war, terrorism, political
action in various countries, labor strikes or adverse weather
conditions.
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Any of these circumstances or events could substantially
increase our costs. For instance, if any vessels we may acquire
or charter suffer damage, they may need to be repaired at a
dry-docking facility. The costs of dry-dock repairs are
unpredictable and can be substantial. We may have to pay
dry-docking costs that insurance does not cover. The loss of
earnings while these vessels are being repaired and
repositioned, as well as the actual cost of these repairs, could
decrease our revenues and earnings substantially, particularly
if a number of vessels are damaged or dry-docked at the same
time. The involvement of any vessels we may acquire or charter
in a disaster or delays in delivery or damages or loss of cargo
may harm our reputation as a safe and reliable vessel operator
and cause us to lose business. Vessels we acquire could be
arrested by maritime claimants, which could result in the
interruption of business and decrease revenue and lower
profitability.
Crew members, tort claimants, claimants for breach of certain
maritime contracts, vessel mortgagees, suppliers of goods and
services to a vessel, shippers of cargo and other persons may be
entitled to a maritime lien against a vessel for unsatisfied
debts, claims or damages, and in many circumstances a maritime
lien holder may enforce its lien by arresting a
vessel through court processes. Additionally, in certain
jurisdictions, such as South Africa, under the sister
ship theory of liability, a claimant may arrest not only
the vessel with respect to which the claimants lien has
arisen, but also any associated vessel owned or
controlled by the legal or beneficial owner of that vessel. If
any vessel ultimately owned and operated by us is
arrested, this could result in a material loss of
revenues, or require us to pay substantial amounts to have the
arrest lifted.
The
smuggling of drugs or other contraband onto our vessels may lead
to governmental claims against us.
We expect that our vessels will 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. 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 of our crew, we may face
governmental or other regulatory claims which could have an
adverse effect on our business, results of operations, cash
flows, financial condition and ability to pay dividends.
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Acts
of piracy on ocean-going vessels have increased recently in
frequency and magnitude, which could adversely affect our
business.
The shipping industry has historically been affected by acts of
piracy in regions such as the South China Sea and the Gulf of
Aden. Beginning in 2008 and continuing through 2009, acts of
piracy saw a steep rise, particularly off the coast of Somalia
in the Gulf of Aden. One of the most significant examples of the
increase in piracy came in November 2008 when the M/V Sirius
Star, a crude oil tanker that was not affiliated with us, was
captured by pirates in the Indian Ocean while carrying crude oil
estimated to be worth approximately $100 million.
Additionally, in December 2009, the M/V Navios Apollon, a vessel
owned by our affiliate, Navios Partners, was seized by pirates
800 miles off the coast of Somalia while transporting
fertilizer from Tampa, Florida to Rozi, India. The Navios
Apollon was released on February 27, 2010. If these piracy
attacks result in regions (in which our vessels are deployed)
being characterized by insurers as war risk zones or
Joint War Committee (JWC) war and strikes listed
areas, premiums payable for such insurance coverage could
increase significantly and such insurance coverage may be more
difficult to obtain. Crew costs, including those due to
employing onboard security guards, could increase in such
circumstances. In addition, while we believe the charterer would
remain liable for charter payments when a vessel is seized by
pirates, the charterer could 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 it is therefore entitled to cancel
the charter party, a claim that we would dispute. The target
business may not be adequately insured to cover losses from
these incidents, which could have a material adverse effect on
us. In addition, detention hijacking as a result of an act of
piracy against any vessels we acquire or charter, or an increase
in cost, or unavailability of insurance for any vessels we
acquire or charter, could have a material adverse impact on our
business, financial condition, results of operations and cash
flows. Acts of piracy on ocean-going vessels have recently
increased in frequency, which could adversely affect our
business.
Terrorist
attacks, increased hostilities or war could lead to further
economic instability, increased costs and disruption of our
business.
Terrorist attacks, such as the attacks in the United States on
September 11, 2011 and the United States continuing
response to these attacks, the attacks in London on July 7,
2005, as well as the threat of future terrorist attacks,
continue to cause uncertainty in the world financial markets,
including the energy markets. The continuing conflicts in Iraq
and Afghanistan and other current and future conflicts, may
adversely affect our business, operating results, financial
condition, ability to raise capital and future growth.
Continuing hostilities in the Middle East may lead to additional
armed conflicts or to further acts of terrorism and civil
disturbance in the United States or elsewhere, which may
contribute further to economic instability.
In addition, oil facilities, shipyards, vessels, pipelines and
oil and gas fields could be targets of future terrorist attacks.
Any such attacks could lead to, among other things, bodily
injury or loss of life, vessel or other property damage,
increased vessel operational costs, including insurance costs,
and the inability to transport oil and other refined products to
or from certain locations. Terrorist attacks, war or other
events beyond our control that adversely affect the
distribution, production or transportation of oil and other
refined products to be shipped by us could entitle our customers
to terminate our charter contracts, which would harm our cash
flow and our business.
Terrorist attacks on vessels, such as the October 2002 attack on
the M/V Limburg, a very large crude carrier not related to us,
may in the future also negatively affect our operations and
financial condition and directly impact vessels we acquire or
our customers. Future terrorist attacks could result in
increased volatility and turmoil in the financial markets in the
United States and globally. Any of these occurrences could have
a material adverse impact on our revenues and costs.
Governments
could requisition vessels of a target business during a period
of war or emergency, resulting in a loss of
earnings.
A government could requisition a business vessels for
title or hire. Requisition for title occurs when a government
takes control of a vessel and becomes her owner, while
requisition for hire occurs when a
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government takes control of a vessel and effectively becomes her
charterer at dictated charter rates. Generally, requisitions
occur during periods of war or emergency, although governments
may elect to requisition vessels in other circumstances.
Although a target business would be entitled to compensation in
the event of a requisition of any of its vessels, the amount and
timing of payment would be uncertain.
Disruptions
in world financial markets and the resulting governmental action
in the United States and in other parts of the world could have
a material adverse impact on our ability to obtain financing
required to acquire vessels or new businesses. Furthermore, such
a disruption would adversely affect our results of operations,
financial condition and cash flows, causing the market price of
our common stock to decline.
The United States and other parts of the world are exhibiting
deteriorating economic trends and are currently in a recession.
For example, the credit markets worldwide and in the
U.S. have experienced significant contraction,
de-leveraging and reduced liquidity, and the U.S. federal
government, state governments and foreign governments have
implemented and are considering a broad variety of governmental
action
and/or new
regulation of the financial markets. Securities and futures
markets and the credit markets are subject to comprehensive
statutes, regulations and other requirements. The SEC, other
regulators, self-regulatory organizations and exchanges are
authorized to take extraordinary actions in the event of market
emergencies, and may effect changes in law or interpretations of
existing laws. Recently, a number of financial institutions have
experienced serious financial difficulties and, in some cases,
have entered bankruptcy proceedings or are in regulatory
enforcement actions. The uncertainty surrounding the future of
the credit markets in the U.S. and the rest of the world
has resulted in reduced access to credit worldwide. Due to the
fact that we would possibly cover all or a portion of the cost
of any new vessel acquisition with debt financing, such
uncertainty could hamper our ability to finance such
acquisitions.
We could face risks attendant to changes in economic
environments, changes in interest rates, and instability in
certain securities markets, among other factors. Major market
disruptions and the current adverse changes in market conditions
and regulatory climate in the U.S. and worldwide could
adversely affect a target business or impair our ability to
borrow amounts under any future financial arrangements. The
current market conditions may last longer than we anticipate.
These recent and developing economic and governmental factors
could have a material adverse effect on our results of
operations, financial condition or cash flows and could cause
the price of our common stock to decline significantly.
Because
international tanker companies often generate most or all of
their revenues in U.S. dollars but incur a portion of their
expenses in other currencies, upon the consummation of the
vessel acquisition, exchange rate fluctuations could cause us to
suffer exchange rate losses thereby increasing expenses and
reducing income.
Upon the consummation of vessel acquisition, it is likely that
we will engage in worldwide commerce with a variety of entities.
Although our operations may expose us to certain levels of
foreign currency risk, our transactions may be predominantly
U.S. dollar-denominated. Transactions in currencies other
than the functional currency are translated at the exchange rate
in effect at the date of each transaction. Expenses incurred in
foreign currencies against which the U.S. dollar falls in
value can increase, decreasing our income. For example, for the
year ended December 31, 2009, the value of the
U.S. dollar decreased by approximately 2.7% as compared to
the Euro. A greater percentage of our transactions and expenses
in the future may be denominated in currencies other than
U.S. dollar. As part of our overall risk management policy,
we will attempt to hedge these risks in exchange rate
fluctuations from time to time. We may not always be successful
in such hedging activities and, as a result, our operating
results could suffer as a result of un-hedged losses incurred as
a result of exchange rate fluctuations.
Navios
Holdings has limited recent experience in the product and
chemical tanker sectors.
Navios Holdings, Navios Acquisitions corporate sponsor and
the entity whose subsidiary will provide the management and
commercial brokerage of Navios Acquisitions fleet
subsequent to the vessel acquisition, is a vertically-integrated
seaborne shipping and logistics company with over 55 years
of operating history in the shipping industry. Other than with
respect to limited South American operations, Navios Holdings
has limited
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recent experience in the chemical and product tanker sectors.
Such limited experience could cause Navios Holdings to make an
error in judgment that a more experienced operator in the sector
might not make. If Navios Holdings management is not able
to properly assess or ascertain a particular aspect of the
product or chemical tanker sectors, it could have a material
adverse affect on its operations.
Risks
Related to Our Common Stock and Capital Structure
We are
incorporated in the Republic of the Marshall Islands, a country
that does not have a well-developed body of corporate law, which
may negatively affect the ability of public stockholders to
protect their interests.
Our corporate affairs are governed by our amended and restated
articles of incorporation and bylaws, and by the BCA. The
provisions of the BCA resemble provisions of the corporation
laws of a number of states in the United States. However, there
have been few judicial cases in the Republic of the Marshall
Islands interpreting the BCA. The rights and fiduciary
responsibilities of directors under the law of the Republic of
the Marshall Islands are not as clearly established as the
rights and fiduciary responsibilities of directors under
statutes or judicial precedent in existence in certain United
States jurisdictions. Stockholder 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, public
stockholders may have more difficulty in protecting their
interests in the face of actions by the management, directors or
controlling stockholders than would stockholders of a
corporation incorporated in a United States jurisdiction.
We are
incorporated under the laws of the Marshall Islands and our
directors and officers are
non-U.S.
residents, and although you may bring an original action in the
courts of the Marshall Islands or obtain a judgment against us,
our directors or our management based on U.S. laws in the event
you believe your rights as a stockholder have been infringed, it
may be difficult to enforce judgments against us, our directors
or our management.
We are incorporated under the laws of the Republic of the
Marshall Islands, and all of our assets are located outside of
the United States. Our business will be operated primarily from
our offices in Athens, Greece. In addition, our directors and
officers, following the closing, will be non-residents of the
United States, and all or a substantial portion of the assets of
these non-residents are located outside the United States. As a
result, it may be difficult or impossible for you to bring an
action against us or against these individuals in the United
States if you believe that your rights have been infringed under
securities laws or otherwise. Even if you are successful in
bringing an action of this kind, the laws of the Marshall
Islands and of other jurisdictions may prevent or restrict you
from enforcing a judgment against our assets or the assets of
our directors and officers. Although you may bring an original
action against us, our affiliates or any expert named in this
proxy statement in the courts of the Marshall Islands based on
U.S. laws, and the courts of the Marshall Islands may
impose civil liability, including monetary damages, against us,
its affiliates or any expert named in this proxy statement for a
cause of action arising under Marshall Islands law, it may
impracticable for you to do so given the geographic location of
the Marshall Islands. For more information regarding the
relevant laws of the Marshall Islands, please read
Enforceability of Civil Liabilities.
Anti-takeover
provisions in our amended and restated articles of incorporation
could make it difficult for our stockholders 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
stock.
Several provisions of our amended and restated articles of
incorporation and bylaws could make it difficult for our
stockholders 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,
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delay or prevent a merger or acquisition that stockholders may
consider favorable. These provisions include those that:
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authorize our board of directors to issue blank
check preferred stock without stockholder approval;
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provide for a classified board of directors with staggered,
three-year terms;
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require a super-majority vote in order to amend the provisions
regarding our classified board of directors with staggered,
three-year terms; and
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prohibit cumulative voting in the election of directors;
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These anti-takeover provisions could substantially impede the
ability of stockholders to benefit from a change in control and,
as a result, may adversely affect the market price of our common
stock and your ability to realize any potential change of
control premium.
We may
have to pay tax on United States source income, which would
reduce our earnings.
Under the U.S. Internal Revenue Code (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 is characterized as
U.S.-source
shipping income and such income is subject to a 4%
U.S. federal income tax without allowance for deduction,
unless that corporation qualifies for exemption from tax under
Section 883 of the Code and the treasury regulations
promulgated thereunder (Treasury Regulations). In
general, the exemption from U.S. federal income taxation
under Section 883 of the Code provides that if a
non-U.S. corporation
satisfies the requirements of Section 883 of the Code and
the Treasury Regulations, it will not be subject to the net
basis and branch profit taxes or the 4% gross basis tax
described below on its
U.S.-Source
International Transportation Income (as defined below under
Tax Considerations U.S. Federal Income
Taxation of Navios Acquisition Exemption of
Operating Income From U.S. Federal Income Taxation).
We expect that we and each of our vessel-owning subsidiaries
will qualify for this statutory tax exemption and we will take
this position for U.S. federal income tax return reporting
purposes. However, there are factual circumstances beyond our
control that could cause us to lose the benefit of this tax
exemption and thereby become subject to U.S. federal income
tax on our
U.S.-source
income.
If we or our vessel-owning subsidiaries are not entitled to this
exemption under Section 883 for any taxable year, we or our
subsidiaries would be subject for those years to a 4%
U.S. federal income tax on its
U.S.-source
shipping income. The imposition of this taxation could have a
negative effect on our business and would result in decreased
earnings.
U.S.
tax authorities could treat us as a passive foreign
investment company, which could have adverse U.S. federal
income tax consequences to U.S. holders.
We 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
its assets produce or are held for the production of those types
of passive income. For purposes of these tests,
passive income includes dividends, interest, and
gains from the sale or exchange of investment property and rents
and royalties other than rents and royalties that are received
from unrelated parties in connection with the active conduct or
a trade or business. For purposes of these tests, income derived
from the performance of services does not constitute
passive income. U.S. stockholders of a PFIC may
be 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 projected income, assets and activities, we
expect that we will be treated for United States federal income
tax purposes as a PFIC for the 2010 taxable year (we were
treated as a PFIC for the 2008 and 2009 taxable years), though
we do not expect to be treated as a PFIC for the 2011 and
subsequent taxable years. Commencing in 2010, we intend to treat
the gross income we will derive or will be deemed to
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derive from our time chartering activities as services income,
rather than rental income. Accordingly, we intend to take the
position that its income from its time chartering activities
does not constitute passive income, and the assets
that it will own and operate in connection with the production
of that income do not constitute passive assets. There is,
however, no direct legal authority under the PFIC rules
addressing our proposed method of operation. In addition, we
have not received an opinion of counsel with respect to these
issues. Accordingly, no assurance can be given that the
U.S. Internal Revenue Service, or the IRS, or a court of
law will accept our position, and there is a risk that the IRS
or a court of law could determine that we are a PFIC in future
years. Moreover, no assurance can be given that we would not
constitute a PFIC for any future taxable year if there were to
be changes in the nature and extent of its operations. For
example, if we were treated as earning rental income from its
chartering activities rather than services income, we would be
treated as a PFIC.
Under the PFIC rules, unless U.S. Holders of our common
stock make timely elections available under the Code (which
elections could in each case have adverse consequences for such
stockholders), such stockholders would be liable to pay
U.S. federal income tax at the then highest income tax
rates on ordinary income plus interest upon excess distributions
and upon any gain from the disposition of our common stock, as
if the excess distribution or gain had been recognized ratably
over the stockholders holding period of our common stock.
If we are treated as a PFIC for any taxable year during the
holding period of a U.S. Holder (we expect that we will be
treated as a PFIC for the 2008, 2009 and 2010 taxable years, but
not for future years), unless the U.S. Holder makes a QEF
election for the first taxable year in which they hold the stock
and in which we are a PFIC, or makes the
mark-to-market
election, we will continue to be treated as a PFIC for all
succeeding years during which the U.S. Holder is treated as
a direct or indirect U.S. Holder even if we are not a PFIC
for such years. A U.S. Holder is encouraged to consult
their tax adviser with respect to any available elections that
may be applicable in such a situation. In addition,
U.S. Holders should consult their tax advisers regarding
the IRS information reporting and filing obligations that may
arise as a result of the ownership of shares in a PFIC. These
consequences are discussed in more detail under the heading
Tax Considerations Material U.S. Federal
Income Tax Consequences United States Federal Income
Taxation of U.S. Holders Passive Foreign
Investment Company Status and Significant Tax Consequences.
Since
we are a foreign private issuer, we are not subject to certain
SEC regulations that companies incorporated in the United States
would be subject to.
We are a foreign private issuer within the meaning
of the rules promulgated under the Exchange Act. As such, we are
exempt from certain provisions applicable to United States
public companies including:
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the rules under the Exchange Act requiring the filing with the
SEC of quarterly reports on
Form 10-Q
or current reports on
Form 8-K;
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the sections of the Exchange Act regulating the solicitation of
proxies, consents or authorizations in respect of a security
registered under the Exchange Act;
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the provisions of Regulation FD aimed at preventing issuers
from making selective disclosures of material
information; and
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the sections of the Exchange Act requiring insiders to file
public reports of their stock ownership and trading activities
and establishing insider liability for profits realized from any
short-swing trading transaction (i.e., a purchase
and sale, or sale and purchase, of the issuers equity
securities within less than six months).
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Because of these exemptions, our stockholders will not be
afforded the same protections or information generally available
to investors holding shares in public companies organized in the
United States.
As a
foreign private issuer, we are exempt from SEC proxy rules, and
the contents of this proxy statement may not have all of the
material disclosures required under U.S. proxy
rules.
As a foreign private issuer, we are exempt from the proxy rules
promulgated under the Exchange Act that prescribe the form and
content of proxy statements. Because of this exemption, we are
not required to file
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with the SEC preliminary proxy solicitation materials regarding
the vessel acquisition proposal and the amendment proposal.
Although this proxy statement has been prepared in accordance
with Marshall Islands law and has been furnished to the SEC, it
has not been reviewed by the SEC and may not have all of the
material disclosures required under U.S. proxy rules or
otherwise required by the SEC.
If the
business combination is consummated, our public warrants will
become exercisable and you may experience
dilution.
Under the terms of our warrants, the warrants become exercisable
upon the completion of a business combination transaction. If
all of the proposals submitted to stockholders are approved, we
expect to complete the business combination during the second
quarter of 2010. We have 25,300,000 public warrants to purchase
common stock issued and outstanding at an exercise price of
$7.00 per share. In addition, we have 6,325,000 warrants issued
as part of the sponsor units and 7,600,000 sponsor warrants
issued and outstanding. Our warrants will become exercisable
upon our completion of a business combination and, as a result,
you may experience dilution.
Registration
rights held by our initial stockholders may have an adverse
effect on the market price of our common stock.
Our initial stockholders are entitled to demand that we register
the resale of their shares and the shares of common stock
underlying their founding warrants at any time after they are
released from escrow, which, except in limited circumstances,
will not be before the first year anniversary of the
consummation of our initial business combination. If such
stockholders exercise their registration rights with respect to
all of their shares, there will be an additional
6,325,000 shares of common stock eligible for trading in
the public market. In addition, Navios Holdings, which purchased
sponsor units and sponsor warrants in our private placement in
June 2008, is entitled to demand the registration of the
securities underlying the 6,325,000 sponsor units and 7,600,000
sponsor warrants at any time after we consummate our initial
business combination. If all of these stockholders exercise
their registration rights with respect to all of their shares of
common stock, there will be an additional 20,250,000 shares
of common stock eligible for trading in the public market. The
presence of these additional shares may have an adverse effect
on the market price of our common stock.
Our
directors and executive officers have interests in the vessel
acquisition that are different from yours.
In considering the recommendation of our directors to vote to
approve the vessel acquisition proposal, you should be aware
that they have agreements or arrangements that provide them with
interests in the vessel acquisition proposal that differ from,
or are in addition to, those of our stockholders generally. If
the vessel acquisition is not approved, we will be liquidated
and we will distribute to all of the holders of our shares
issued in our initial public offering in proportion to their
respective equity interests, an aggregate amount equal to funds
on deposit in the trust account in which the net proceeds of our
initial public offering are held, including any interest (net of
any taxes payable) not previously released to us, plus any
remaining net assets. If we fail to consummate a business
combination transaction, Navios Holdings and our officers and
directors have waived their respective rights to participate in
any liquidation distribution with respect to the all of the
shares of common stock issued to them prior to our initial
public offering. The personal and financial interests of the
members of our board of directors and executive officers may
have influenced their motivation in identifying and selecting a
target business and completing a business combination in a
timely manner. Consequently, their discretion in identifying and
selecting a suitable target business may result in a conflict of
interest when determining whether the terms, conditions and
timing of a particular business combination are appropriate and
in our stockholders best interest.
Ownership
and further purchases by Navios Holdings, our directors and
officers and/or their respective affiliates may influence the
outcome of the stockholder vote and could result in the approval
of the vessel acquisition.
With respect to the proposal for approval of the vessel
acquisition, each of our initial stockholders have agreed to
vote all of their respective founding shares in accordance with
the majority of the votes cast with
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respect to the vessel acquisition by the holders of the shares
issued in the initial public offering, and any shares acquired
in or after the initial public offering in favor of the vessel
acquisition. This voting arrangement does not apply to any
proposal other than the vessel acquisition. Furthermore, Navios
Holdings, our officers and directors
and/or their
respective affiliates, at any time prior to the special meeting,
during a period when they are not then aware of any material
nonpublic information regarding us or our securities, may enter
into open market purchases, as well as private purchases, of our
securities.
Navios Holdings and an affiliate of Angeliki Frangou have agreed
to acquire through J.P. Morgan Securities Inc., or a third
party, $60.0 million of our common stock in open market
purchases or privately negotiated purchases. Of this amount,
Navios Holdings has agreed to purchase up to $45.0 million,
and an affiliate of Angeliki Frangou has agreed to purchase up
to $15.0 million of common stock. Navios Holdings and
Angeliki Frangou, or their respective affiliates, may make
purchases in excess of such amounts. Share purchases may
commence two business days after we file a preliminary proxy
statement with the SEC and will end on the date of the special
stockholders meeting. If at least $30.0 million is not
spent by Navios Holdings in making such purchases, Navios
Holdings will invest the difference in Navios Acquisition
immediately before consummating the vessel acquisition. In
addition, we, the initial stockholders and our respective
affiliates may purchase, or enter into Forward Contract
arrangements to provide for the purchase of, public shares from
holders who indicate their intention to vote against the vessel
acquisition proposal and seek conversion, or who otherwise wish
to sell their public shares. If the market does not view our
initial business combination positively, these purchases may
have the effect of counteracting the markets view of our
initial business combination, which will otherwise be reflected
by a decline in the market price of our securities. The
termination of the support provided by these purchases during
the buyback period and, if such purchases are continued
afterwards, the termination of such purchases, may materially
and adversely affect the market price of our securities.
If Navios Holdings, our officers and directors
and/or their
respective affiliates purchase securities from our existing
stockholders that are likely to vote against the transaction, or
that are likely to elect to convert their shares, the
probability that the business combination will succeed
increases, since the number of shares held by public
stockholders will be reduced and the number of shares held by
insiders will be increased. Therefore, the number of shares that
will be voted in favor of the vessel acquisition proposal
increases and the number of shares that are converted may
decrease.
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FORWARD-LOOKING
STATEMENTS
We believe that some of the information in this proxy statement
constitutes forward-looking statements. You can identify these
statements by forward-looking words such as may,
expect, anticipate,
contemplate, believe,
estimate, intend, and
continue or similar words. You should read
statements that contain these words carefully because they:
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discuss future expectations;
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contain projections of future results of operations or financial
condition; or
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state other forward-looking information.
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Navios Acquisition believes it is important to communicate its
expectations to its stockholders. However, there may be events
in the future that Navios Acquisition is not able to accurately
predict or over which Navios Acquisition has no control. The
risk factors and cautionary language discussed in this proxy
statement provide examples of risks, uncertainties and events
that may cause actual results to differ materially from the
expectations described by Navios Acquisition in its
forward-looking statements, including among other things:
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the number and percentage of Navios Acquisition stockholders
voting against the vessel acquisition proposal;
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future operating or financial results;
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expectations regarding the strength of the future growth of the
shipping industry, including the rate of annual demand growth in
the product and chemical tanker sectors of the shipping industry;
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future acquisitions, business strategy and expected capital
spending;
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operating expenses, availability of crew, number of off-hire
days, drydocking (beyond the disclosed reserve), survey
requirements and insurance costs;
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general market conditions and shipping industry trends,
including charter rates and factors affecting supply and demand;
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Navios Acquisitions ability to repay its credit facilities
and grow using the available funds under its credit facilities;
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Navios Acquisitions financial condition and liquidity,
including its ability to obtain additional financing in the
future (from warrant exercises or outside services) to fund
capital expenditures, acquisitions and other general corporate
activities;
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Navios Acquisitions ability to enter into long-term,
fixed-rate charters;
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changing interpretations of generally accepted accounting
principles;
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outcomes of litigation, claims, inquiries or investigations;
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continued compliance with government regulations;
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statements about industry trends;
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general economic conditions; and
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geopolitical events and regulatory changes.
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You are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date of
this proxy statement.
All forward-looking statements included herein attributable to
Navios Acquisition or any person acting on our behalf are
expressly qualified in their entirety by the cautionary
statements contained or referred to in this section. Except to
the extent required by applicable laws and regulations, Navios
Acquisition undertakes no obligation to update these
forward-looking statements to reflect events or circumstances
after the date of this proxy statement or to reflect the
occurrence of unanticipated events.
Before you grant your proxy or instruct how your vote should be
cast or vote on the approval of the acquisition you should be
aware that the occurrence of the events described in the
Risk Factors section and elsewhere in this proxy
statement could have a material adverse effect on Navios
Acquisition upon completion of the vessel acquisition.
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DEFINITIONS
Unless otherwise stated, references to the following terms have
the following meaning as used in this proxy statement:
Acquisition Agreement means the
agreement, dated April 8, 2010, between Navios Holdings and
Navios Acquisition, pursuant to which (a) Navios Holdings
will transfer to Navios Acquisition the stock of the Navios
Holdings subsidiary holding directly or indirectly the rights to
the Shipbuilding Contracts or the MOAs for the 13 vessels,
plus options to purchase two additional product tankers, and
(b) Navios Acquisition will be substituted for Navios
Holdings as guarantor of certain Credit Agreements used to
finance the debt portion of the purchase price of the vessel
acquisition. The Acquisition Agreement is included as
Annex A to this proxy statement.
Co-investment shares refer to up to
$30,000,000 of shares of common stock that our principal
stockholder, Navios Holdings, may purchase from Navios
Acquisition at a price equal to the per-share amount held in our
trust account as reported in our definitive proxy statement
filed with the SEC, immediately prior to the consummation of our
business combination, to the extent such funds are not used to
purchase shares of our common stock by Navios Holdings following
the announcement of the contemplated vessel acquisition.
Common stock means common stock, par
value $0.0001 per share, of Navios Acquisition, and
shares mean shares of common stock.
Conversion right means the right of a
public stockholder who affirmatively votes against the vessel
acquisition proposal, to convert each of their shares into cash
in an amount equal to the conversion price per share, and
conversion price per share means an
amount equal to the aggregate amount then on deposit in the
trust account, before payment of deferred underwriting discounts
and commissions of $8,855,000 and including accrued interest on
the trust account, net of income taxes on such interest, after
distribution of $3,000,000 of interest income on the trust
account balance released to us, calculated as of the close of
business on the second business day prior to the closing date,
divided by the 25,300,000 shares of common stock sold in
the initial public offering, which conversion will be effected
only if the vessel acquisition is approved as described in this
proxy statement and consummated.
Credit Agreements mean the agreements
between the vessel-owning subsidiaries and (a) Deutsche
Schiffsbank AG, Alpha Bank A.E. and Credit Agricole Corporate
and Investment Bank dated April 7, 2010, (b) DVB Bank
SE and Fortis Bank dated April 8, 2010, (c) a Credit
Agreement for up to $52.0 million that is currently in
advanced negotiations, and (d) a revolving credit facility
with Marfin Egnatia Bank, pursuant to which the debt financing
for the vessel acquisition will be obtained. If the vessel
acquisition is approved, Navios Acquisition will become the
guarantor of the debt under the Credit Agreements listed in (a),
(b) and (c).
Debt financing means the debt
financing from the Lenders, in the maximum aggregate principal
amount of $334.3 million.
Forward Contracts refer to
arrangements that may be negotiated between any of Navios
Acquisition, its initial stockholders, or their respective
affiliates to provide for the purchase of the public shares from
holders who indicate their intention to vote against the vessel
acquisition and seek conversion or who otherwise wish to sell
their public shares. Such arrangements have not yet been
determined but might include:
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Agreements between Navios Acquisition and the holders of public
shares pursuant to which Navios Acquisition would agree to
purchase public shares from such holders immediately after the
closing of the vessel acquisition from funds held in the trust
account.
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Agreements with third parties to be identified pursuant to which
the third parties would purchase public shares during the period
beginning on the date of this proxy statement. Such arrangements
would also provide for Navios Acquisition, immediately after the
closing of the vessel acquisition, to purchase from the third
parties all of the public shares purchased by them for the price
and fees specified in the arrangements.
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Agreements with third parties pursuant to which the initial
stockholders and their respective affiliates would borrow funds
to make purchases of public shares for their own account. Navios
Acquisition would then purchase the shares from such parties
upon closing of the vessel acquisition and such parties would
repay the borrowings with the funds received from Navios
Acquisition.
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Founding shares mean the shares of
common stock included in the sponsor units acquired by initial
stockholders prior to the private placement and our initial
public offering.
Founding warrants means the warrants
included in the sponsor units acquired by initial stockholders
prior to the private placement and our initial public offering.
IPO or initial public
offering means the initial public offering of
Navios Acquisition consummated on July 1, 2008.
Initial stockholders mean persons and
entities that held shares immediately prior to the private
placement and Navios Acquisitions initial public offering
(including such persons family members, and companies,
partnerships, trusts and other entities established by them for
estate and tax planning purposes).
Lenders means, collectively, Deutsche
Schiffsbank AG, Alpha Bank A.E., Credit Agricole Corporate and
Investment Bank, DVB Bank SE, Fortis Bank and Marfin Egnatia
Bank.
Liquid Shipment Vessels means vessels
intended primarily for the sea going shipment of liquid
products, including chemical and petroleum-based products,
except for container vessels and vessels that will be employed
primarily in operations in South America.
Marfin means Marfin Egnatia Bank.
MOA means the memoranda of agreement,
each dated April 8, 2010, pursuant to which two of the
nominated subsidiaries are purchasing one LR1 product tanker
from each of the Sellers.
Navios Holdings or
corporate stockholder means Navios
Maritime Holdings Inc. (NYSE: NM), a Marshall Islands company,
which owns 6,035,000 shares of Navios Acquisitions
common stock as of the date of this proxy statement.
Nominated subsidiaries or
vessel-owning subsidiaries means each
of the 16 corporations, listed in the table below, holding
directly or indirectly the rights to the Shipbuilding Contracts
or the MOAs for the vessels (consisting of 15 corporations
owning the vessels, once delivered, or holding the rights to the
respective Shipbuilding Contracts or the MOAs, as the case may
be, and one corporation holding 100% of the capital stock of
each of the 15 other corporations), and which entities will
become direct or indirect, wholly owned subsidiaries of Navios
Acquisition upon approval of the vessel acquisition proposal
pursuant to the Acquisition Agreement.
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Aegean Sea Maritime Holdings Inc.
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Subsidiary Holding Company
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Amorgos Shipping Corporation
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Vessel Owner/Shipbuilding Contract Counterparty
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Andros Shipping Corporation
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Vessel Owner/Shipbuilding Contract Counterparty
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Antiparos Shipping Corporation
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Vessel Owner/Shipbuilding Contract Counterparty
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Crete Shipping Corporation
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Vessel Owner/Shipbuilding Contract Counterparty
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Ios Shipping Corporation
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Vessel Owner/MOA Counterparty
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Ikaria Shipping Corporation
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Vessel Owner/Shipbuilding Contract Counterparty
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Kos Shipping Corporation
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Vessel Owner/Shipbuilding Contract Counterparty
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Mytilene Shipping Corporation
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Vessel Owner/Shipbuilding Contract Counterparty
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Rhodes Shipping Corporation
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Vessel Owner/Shipbuilding Contract Counterparty
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Skopelos Shipping Corporation
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Vessel Owner/MOA Counterparty
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Sifnos Shipping Corporation
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Vessel Owner/Shipbuilding Contract Counterparty
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Skiathos Shipping Corporation
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Vessel Owner/Shipbuilding Contract Counterparty
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Syros Shipping Corporation
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Vessel Owner/Shipbuilding Contract Counterparty
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Tinos Shipping Corporation
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Vessel Owner/Shipbuilding Contract Counterparty
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Thera Shipping Corporation
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Vessel Owner/Shipbuilding Contract Counterparty
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Private placement means the purchase
by Navios Holdings of the sponsor warrants in the private
placement consummated prior to Navios Acquisitions initial
public offering.
Public stockholders mean persons who
acquired shares included in the units sold in Navios
Acquisitions initial public offering, whether in such
offering or in the open market after such offering.
Public shares mean shares included in
the units sold in Navios Acquisitions initial public
offering, whether the holder thereof acquired such shares in
such offering or in the open market after such offering.
Sellers mean HHSI Fuenfte
Beteiligungsgesellschaft mbH & Co. KG, of Hamburg, Germany
and HHSI Vierte Beteiligungsgesellschaft mbH & Co. KG, of
Hamburg, Germany.
Shipbuilder means Dae Sun
Shipbuilding & Engineering Co., Ltd. of South Korea or
Sungdong Shipbuilding & Marine Engineering Co., Ltd.,
of South Korea, and Shipbuilders means
each Shipbuilder collectively.
Shipbuilding Contracts means
(i) the contracts, as novated and amended, each dated April
6, 2010, pursuant to which one of the Shipbuilders will build
and deliver to nominated subsidiaries the nine vessels,
including seven MR2 product tankers and two chemical tankers,
(ii) the two contracts, each dated April 6 2010,
pursuant to which the other Shipbuilder will build and deliver
to nominated subsidiaries two LR1 product tankers, and
(iii) the two option contracts, each dated April 6,
2010, to purchase two additional LR1 product tankers.
Sponsor warrants refer to 7,600,000
warrants to purchase an aggregate of 7,600,000 shares of
Navios Acquisitions common stock purchased by Navios
Holdings in the private placement.
Sponsor units refer to the
6,325,000 units previously acquired by Navios
Acquisitions initial stockholders before the initial
public offering and the private placement.
Trust account means the trust account
maintained by Continental Stock Transfer &
Trust Company, as trustee, in which $250,770,000 of the
proceeds of Navios Acquisitions initial public offering
(or $9.91 per unit sold in the initial public offering,
including the deferred underwriters discount and
commissions of $8,855,000) were deposited and will be held
(except for that portion of the interest income earned thereon
that is disbursed to Navios Acquisition (i) in the amount
of $3,000,000 for working capital purposes, and (ii) to
enable Navios Acquisition to pay income taxes on such interest
income, if any) until the earlier of the consummation of Navios
Acquisitions initial business combination within the time
period and on the terms described in its amended and restated
articles of incorporation or, if Navios Acquisition fails to
consummate such a combination, its dissolution and liquidation
as required by its amended and restated articles of
incorporation.
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Vessel or
vessels means (i) two LR1 product
tankers that are currently in the water and chartered for a
period of three years (each approximately 74,671 deadweight tons
(dwt)), (ii) seven MR2 product tankers (each approximately
50,000 dwt) that are currently under construction in South
Korea, (iii) two LR1 product tankers (each approximately
75,000 dwt) that are currently under construction in South Korea
and (iv) the two chemical tankers (each approximately
25,000 dwt) that are currently under construction in South Korea.
Vessel acquisition or
acquisition means the proposed
acquisition of 13 vessels, including 11 product tankers and
two chemical tankers, plus options to purchase two additional
product tankers, under the terms and conditions of the
Acquisition Agreement.
We, us,
our, the
Company or Navios
Acquisition means Navios Maritime Acquisition
Corporation.
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STOCKHOLDER
PROPOSALS
If the vessel acquisition is consummated, the Navios Acquisition
2010 annual meeting of stockholders will be held on or about
[ ]
[ ], 2010, unless the date is changed by
the board of directors. If you are a stockholder and you want to
include a proposal in the proxy statement for the 2010 annual
meeting, you need to provide it to us by no later than
[ ]
[ ], 2010.
152
TAX
CONSIDERATIONS
Marshall
Islands Tax Considerations
Navios Acquisition is incorporated in the Marshall Islands.
Under current Marshall Islands law, Navios Acquisition is not
subject to tax on income or capital gains, and no Marshall
Islands withholding tax will be imposed upon payments of
dividends by Navios Acquisition to its stockholders.
Material
U.S. Federal Income Tax Consequences
The following discussion addresses the U.S. federal income
tax consequences relating to the purchase, ownership and
disposition of Navios Acquisition common stock by
U.S. Holders (as defined below) that hold such shares. This
discussion is based on current provisions of the Internal
Revenue Code of 1986, as amended (the Code),
Treasury regulations promulgated under the Code, Internal
Revenue Service (IRS) rulings and pronouncements,
and judicial decisions now in effect, all of which are subject
to change at any time by legislative, judicial or administrative
action. Any such changes may be applied retroactively. No party
has sought or will seek any rulings from the IRS with respect to
the U.S. federal income tax consequences discussed below.
The discussion below is not in any way binding on the IRS or the
courts or in any way constitutes an assurance that the
U.S. federal income tax consequences discussed herein will
be accepted by the IRS or the courts.
The U.S. federal income tax consequences to a holder of
Navios Acquisition common stock may vary depending upon such
stockholders particular situation or status. This
discussion is limited to holders of Navios Acquisition common
stock who hold such shares as capital assets, and it does not
address aspects of U.S. federal income taxation that may be
relevant to holders of shares who are subject to special
treatment under U.S. federal income tax laws, including but
not limited to:
Non-U.S. Holders
(as defined below); dealers in securities; banks and other
financial institutions; insurance companies; tax-exempt
organizations, plans or accounts; persons holding their Navios
Acquisition shares as part of a hedge,
straddle or other risk reduction transaction;
persons holding their Navios Acquisition shares through
partnerships, trusts or other entities; U.S. persons whose
functional currency is not the U.S. dollar; stockholders
who will be restricted from seeking conversion rights with
respect to more than 10% of the public shares; and controlled
foreign corporations or passive foreign investment companies, as
those terms are defined in the Code. In addition, this
discussion does not consider the effects of any applicable
foreign, state, local or other tax laws, or estate or gift tax
considerations, or the alternative minimum tax.
For purposes of this discussion, a U.S. Holder
is a beneficial owner of Navios Acquisition shares that is, for
U.S. federal income tax purposes: a citizen or resident of
the United States; a corporation created or organized in or
under the laws of the United States or any state thereof
(including the District of Columbia); an estate the income of
which is subject to United States federal income tax regardless
of its source; or a trust, if a court within the United States
can exercise primary supervision over its administration, and
one or more U.S. persons have the authority to control all
of the substantial decisions of that trust (or the trust was in
existence on August 20, 1996, was treated as a
U.S. trust on August 19, 1996 and validly elected to
continue to be treated as a U.S. trust). Stockholders
may want to consult their own tax advisers as to the particular
tax considerations applicable to them relating to the purchase,
ownership and disposition of Navios Acquisition shares,
including the applicability of U.S. federal, state and
local tax laws and
non-U.S. tax
laws.
For purposes of this discussion, a
Non-U.S. Holder
is, for U.S. federal income tax purposes, an individual,
trust, or corporation that is a beneficial owner of Navios
Acquisition shares, who is not a U.S. Holder.
153
U.S.
Federal Income Taxation of Navios Acquisition
Taxation
of Operating Income: In General
Unless exempt from U.S. federal income taxation under the
rules discussed below, a foreign corporation is subject to
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 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 shipping income that is
attributable to transportation that begins or ends, but that
does not both begin and end, in the United States constitutes
income from sources within the United States, which we refer to
as
U.S.-source
shipping income.
Shipping income attributable to transportation that both begins
and ends in the United States is considered to be 100% from
sources within the United States. Navios Acquisition is not
permitted by law to engage in transportation that produces
income which is considered to be 100% from sources within the
United States.
Shipping income attributable to transportation exclusively
between
non-U.S. ports
will be considered to be 100% derived from sources outside the
United States. Shipping income derived from sources outside the
United States will not be subject to any United States federal
income tax. In the absence of exemption from tax under
Section 883 of the Code, Navios Acquisitions gross
U.S.-source
shipping income would be subject to a 4% tax imposed without
allowance for deductions as described below.
Exemption
of Operating Income From U.S. Federal Income Taxation
In general, the exemption from U.S. federal income taxation
under Section 883 of the Code provides that if a
non-U.S. corporation
satisfies the requirements of Section 883 of the Code and
the Treasury Regulations thereunder, it will not be subject to
the net basis and branch profit taxes or the 4% gross basis tax
described below on its
U.S.-source
shipping income.
Under Section 883 of the Code, Navios Acquisition will be
exempt from U.S. federal income taxation on its
U.S.-source
shipping income if:
1. Navios Acquisition and each of its vessel-owning
subsidiaries is organized in a foreign country (country of
organization) that grants an equivalent
exemption to corporations organized in the United
States; and
2. either:
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more than 50% of the value of Navios Acquisitions stock is
owned, directly or indirectly, by individuals who are
residents of Navios Acquisitions country of
organization or of another foreign country that grants an
equivalent exemption to corporations organized in
the United States, which Navios Acquisition refers to as the
50% Ownership Test, or
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Navios Acquisitions stock is primarily and regularly
traded on an established securities market in Navios
Acquisitions country of organization, in another country
that grants an equivalent exemption to
U.S. corporations, or in the United States, which Navios
Acquisition refers to as the Publicly-Traded Test.
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Currently, the Republic of the Marshall Islands, the
jurisdiction where Navios Acquisition is incorporated, as well
as the jurisdictions where Navios Acquisitions
vessel-owning subsidiaries will be incorporated, namely, the
Republic of the Marshall Islands and the Cayman Islands, grant
an equivalent exemption to U.S. corporations.
Therefore, at present, Navios Acquisition will be exempt from
U.S. federal income taxation with respect to its
U.S.-source
shipping income if it satisfies either the 50% Ownership Test or
the Publicly-Traded Test. It may be difficult for Navios
Acquisition to satisfy the 50% Ownership Test for each taxable
154
year due to the widely-held ownership of its stock. Navios
Acquisitions ability to satisfy the Publicly-Traded Test
is discussed below.
The regulations provide, in pertinent part, that stock of a
foreign corporation will be considered to be primarily
traded on an established securities market if the number
of shares of each class of stock that are traded during any
taxable year on all established securities markets in that
country exceeds the number of shares in each such class that are
traded during that year on established securities markets in any
other single country. Navios Acquisitions common stock is
primarily traded on the New York Stock Exchange.
Under the regulations, Navios Acquisitions stock is
considered to be regularly traded on an established
securities market if one or more classes of its stock
representing more than 50% of its outstanding shares, by total
combined voting power of all classes of stock entitled to vote
and total value, is listed on the market, which Navios
Acquisition refers to as the listing threshold. Since Navios
Acquisitions common stock, which represents more than 50%
of its outstanding shares by vote and value, is listed on the
New York Stock Exchange, Navios Acquisition currently satisfies
the listing requirement.
It is further required that with respect to each class of stock
relied upon to meet the listing threshold (i) such class of
the stock is traded on the market, other than in minimal
quantities, on at least 60 days during the taxable year or
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. Navios Acquisition
currently satisfies the trading frequency and trading volume
tests. Even if this were not the case, 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, which condition Navios Acquisitions common
stock meets.
Notwithstanding the foregoing, the regulations provide, in
pertinent part, Navios Acquisitions common 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 outstanding shares of its common stock 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 its common stock, which
Navios Acquisition refers to as the 5% Override Rule.
For purposes of being able to determine the persons who owns 5%
or more of Navios Acquisition common stock, or 5%
Stockholders, the regulations permit Navios Acquisition to
rely on Schedule 13G and Schedule 13D filings with the
SEC to identify persons who have a 5% or more beneficial
interest in its common stock. The regulations further provide
that an investment company that is registered under the
Investment Company Act will not be treated as a 5% Stockholder
for such purposes.
Navios Acquisition does not anticipate that its 5% Stockholders
will own 50% or more of its common stock in 2010 (the first year
in which it expects to derive shipping income) or in subsequent
years. However, if Navios Acquisitions 5% Stockholders did
own more than 50% of Navios Acquisitions common stock,
then Navios Acquisition would be subject to the 5% Override Rule
unless it were able to establish that among the closely-held
group of 5% Stockholders, there are sufficient 5% Stockholders
that are qualified stockholders for purposes of Section 883
to preclude non-qualified 5% Stockholders in the closely-held
group from owning 50% or more of each class of our stock for
more than half the number of days during the taxable year. In
order to establish this, sufficient 5% Stockholders that are
qualified stockholders would have to comply with certain
documentation and certification requirements designed to
substantiate their identity as qualified stockholders. These
requirements are onerous and there is no guarantee that Navios
Acquisition would be able to satisfy them.
Taxation
in Absence of Exemption
To the extent the benefits of Section 883 are unavailable,
Navios Acquisitions
U.S.-source
shipping income, to the extent not considered to be
effectively connected with the conduct of a
U.S. trade or business, as described below, would be
subject to a 4% tax imposed by Section 887 of the Code on a
gross
155
basis, without the benefit of deductions. Since under the
sourcing rules described above, no more than 50% of Navios
Acquisitions shipping income would be treated as being
derived from U.S. sources, the maximum effective rate of
U.S. federal income tax on Navios Acquisitions
shipping income would never exceed 2% under the 4% gross basis
tax regime.
To the extent the benefits of the Section 883 exemption are
unavailable and Navios Acquisitions
U.S.-source
shipping income is considered to be effectively
connected with the conduct of a U.S. trade or
business, as described below, any such effectively
connected
U.S.-source
shipping income, net of applicable deductions, would be subject
to the U.S. federal corporate income tax currently imposed
at rates of up to 35%. In addition, Navios Acquisition may be
subject to the 30% branch profits taxes on earnings
effectively connected with the conduct of such trade or
business, as determined after allowance for certain adjustments,
and on certain interest paid or deemed paid attributable to the
conduct of its U.S. trade or business.
Navios Acquisitions
U.S.-source
shipping income would be considered effectively
connected with the conduct of a U.S. trade or
business only if:
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Navios Acquisition has, or is considered to have, a fixed place
of business in the United States involved in the earning of
shipping income; and
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substantially all of Navios Acquisitions
U.S.-source
shipping income is attributable to regularly scheduled
transportation, such as the operation of a vessel that follows a
published schedule with repeated sailings at regular intervals
between the same points for voyages that begin or end in the
United States.
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Navios Acquisition does not intend to have, or permit
circumstances that would result in having any vessel operating
to the United States on a regularly scheduled basis. Based on
the foregoing and on the expected mode of Navios
Acquisitions shipping operations and other activities,
Navios Acquisition believes that none of its
U.S.-source
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 Navios Acquisition will qualify for
exemption under Section 883, Navios Acquisition will not be
subject to U.S. federal income taxation with respect to
gain realized on a sale of a vessel, provided the sale is
considered to occur outside of the United States under
U.S. federal income tax principles. In general, a sale of a
vessel will be considered to occur outside of the United States
for this purpose if title to the vessel, and risk of loss with
respect to the vessel, pass to the buyer outside of the United
States. It is expected that any sale of a vessel by Navios
Acquisition will be considered to occur outside of the United
States.
United
States Federal Income Taxation of U.S. Holders
Distributions
Subject to the discussion of passive foreign investment
companies below, any distributions made by Navios Acquisition
with respect to Navios Acquisitions common stock to a
U.S. Holder will constitute dividends, which will be
taxable as ordinary income, to the extent of Navios
Acquisitions current or accumulated earnings and profits,
as determined under United States federal income tax principles.
Distributions in excess of Navios Acquisitions earnings
and profits will be treated first as a nontaxable return of
capital to the extent of the U.S. Holders tax basis
in their common stock on a
dollar-for-dollar
basis and thereafter as capital gain. Because Navios Acquisition
is not a U.S. corporation, U.S. Holders that are
corporations will not be entitled to claim a dividends received
deduction with respect to any distributions they receive from
Navios Acquisition. Dividends paid with respect to Navios
Acquisitions common stock will be treated as passive
category income or, in the case of certain types of
U.S. Holders, as general category income for
purposes of computing allowable foreign tax credits for
U.S. foreign tax credit purposes.
156
Based upon its projected income, assets and activities, Navios
Acquisition expects that it will be treated as a passive foreign
investment company for the 2010 taxable year. Accordingly, the
preferential tax rates for qualified dividend income
would not be available with respect to dividends paid by Navios
Acquisition to a U.S. Holder who is an individual, trust or
estate (a U.S. Individual Holder) in 2010.
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 stockholders adjusted
basis (or fair market value in certain definitive,
pre-determined circumstances) in a share of common stock paid by
Navios Acquisition.
Sale,
Exchange or Other Disposition of Common Stock
Subject to the discussion of passive foreign investment
companies below, a U.S. Holder will recognize taxable gain
or loss upon a sale, exchange or other disposition (including
U.S. Holders who exercise their conversion rights) of
Navios Acquisition common stock 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. Holders tax basis in such stock. Such gain or
loss will be treated as long-term capital gain or loss if the
U.S. Holders holding period is greater than one year
at the time of the sale, exchange or other disposition. Such
capital gain or loss will generally be treated as
U.S.-source
income or loss, as applicable, for U.S. foreign tax credit
purposes. A U.S. Holders ability to deduct capital
losses is subject to certain limitations.
Passive
Foreign Investment Company Status and Significant Tax
Consequences
Special U.S. federal income tax rules apply to a
U.S. Holder that holds stock in a foreign corporation
classified as a passive foreign investment company for United
States federal income tax purposes. These consequences are
discussed in more detail below. In general, Navios Acquisition
will be treated as a passive foreign investment company with
respect to a U.S. Holder if, for any taxable year in which
such holder held Navios Acquisition common stock, either:
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at least 75% of Navios Acquisitions 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
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at least 50% of the average value of the assets held by the
corporation during such taxable year produce, or are held for
the production of, passive income.
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For purposes of determining whether Navios Acquisition is a
passive foreign investment company, Navios Acquisition will be
treated as earning and owning its proportionate share of the
income and assets, respectively, of any of its subsidiary
corporations in which it owns at least 25% of the value of the
subsidiarys stock. Income earned, or deemed earned, by
Navios Acquisition in connection with the performance of
services would not constitute passive income. By contrast,
rental income would constitute passive income unless
Navios Acquisition was treated under specific rules as deriving
its rental income in the active conduct of a trade or business.
Based upon its actual and projected income, assets and
activities, Navios Acquisition expects that it will be treated
for United States federal income tax purposes as a passive
foreign investment company for the 2010 taxable year, that it
was a PFIC for the 2008 and 2009 taxable years, and that it does
not expect to be treated as a PFIC for the 2011 and subsequent
taxable years. No assurances can be given as to such PFIC
status, because such status requires an annual factual
determination based upon the composition of Navios
Acquisitions income and assets for the entire taxable
year. Although there is no legal authority directly on point,
Navios Acquisitions position with respect to future years
is based principally on the view that, for purposes of
determining whether Navios Acquisition is a passive foreign
investment company, the gross income Navios Acquisition derives
or is deemed to derive from the chartering activities of its
wholly owned subsidiaries should constitute services income,
rather than rental income. Correspondingly, Navios Acquisition
intends to take the position that such income does not
constitute passive income, and the assets that Navios
Acquisition or its wholly owned subsidiaries will 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 Navios
157
Acquisition is a passive foreign investment company. Navios
Acquisition believes there is substantial analogous legal
authority supporting its position consisting of case law and IRS
pronouncements concerning the characterization of income that
Navios Acquisition anticipates to derive from time charters and
voyage charters as services income for other tax purposes.
However, in the absence of any direct legal authority
specifically relating to the statutory provisions governing
passive foreign investment companies, the IRS or a court could
disagree with Navios Acquisitions position. The IRS or a
court could take the position that the income anticipated to be
derived by Navios Acquisition from its chartering activities
will properly be treated as rental income rather than as
services income. This position could be taken if the services
provided by Navios Acquisition were insufficient to support the
characterization of its chartering income as services income. If
Navios Acquisitions income were treated as rental income,
then such income would be treated as passive income for purposes
of the passive foreign investment company rules. In addition,
although Navios Acquisition intends to conduct its affairs in a
manner to avoid being classified as a passive foreign investment
company with respect to any future taxable year, Navios
Acquisition cannot assure you that the nature of its operations
will not change in the future. The remainder of this summary
assumes that Navios Acquisition will be treated as a PFIC for
its 2010 taxable year but not for subsequent taxable years.
U.S. Holders should be aware of certain tax consequences of
investing directly or indirectly in Navios Acquisition common
stock. As discussed more fully below, if Navios Acquisition is
treated as a passive foreign investment company for the 2010
taxable year (which treatment is expected), or for any future
year, a U.S. Holder would be subject to different taxation
rules depending on whether the U.S. Holder makes a timely
filed election to treat us as a Qualified Electing
Fund, which election Navios Acquisition refers 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 Navios Acquisitions common stock,
as discussed below.
Taxation
of U.S. Holders Making a Timely QEF Election
If a U.S. Holder makes a timely QEF election, which
U.S. Holder we refer to as an Electing Holder,
the Electing Holder must report each year for U.S. federal
income tax purposes their pro rata share of Navios
Acquisition ordinary earnings and Navios Acquisitions net
capital gain, if any, for Navios Acquisitions taxable year
that ends with or within the taxable year of the Electing
Holder, regardless of whether or not distributions were received
from Navios Acquisition by the Electing Holder. The Electing
Holders adjusted tax basis in the common stock 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 stock 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 Navios Acquisition common stock. A
U.S. Holder would make a QEF election with respect to any
year that Navios Acquisition is a passive foreign investment
company by filing IRS Form 8621 with their
U.S. federal income tax return. For any taxable year which
Navios Acquisition is aware that it is to be treated as a
passive foreign investment company, upon request, Navios
Acquisition will provide a U.S. Holder with all necessary
information in order to make the QEF election described above. A
QEF election will not apply to any taxable year during which
Navios Acquisition is not a PFIC, but will remain in effect with
respect to any subsequent taxable year in which Navios
Acquisition becomes a PFIC. Each U.S. Holder is encouraged
to consult its own tax adviser with respect to tax consequences
of a QEF election with respect to Navios Acquisition.
Taxation
of U.S. Holders Making a
Mark-to-Market
Election
Alternatively, if Navios Acquisition is treated as a passive
foreign investment company for future taxable years (Navios
Acquisition expects that it will be treated as a PFIC in 2010,
as it was in 2008 and 2009) and, as Navios Acquisition
anticipates, its stock is treated as marketable
stock, a U.S. Holder would be allowed to make a
mark-to-market
election with respect to Navios Acquisition common stock,
provided the U.S. Holder completes and files IRS
Form 8621 in accordance with the relevant instructions and
related Treasury Regulations. 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 stock at the end of the taxable year over such
holders adjusted tax basis in the common stock. The
U.S. Holder would also be permitted an
158
ordinary loss in respect of the excess, if any, of the
U.S. Holders adjusted tax basis in the common stock
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. Holders tax basis in their common
stock would be adjusted to reflect any such income or loss
amount. Gain realized on the sale, exchange or other disposition
of Navios Acquisition common stock would be treated as ordinary
income, and any loss realized on the sale, exchange or other
disposition of the common stock 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. A
mark-to-market
election will not apply to Navios Acquisition common stock held
by a U.S. Holder for any taxable year during which it is
not a PFIC, but will remain in effect with respect to any
subsequent taxable year in which it becomes a PFIC. Each
U.S. Holder is encouraged to consult its own tax adviser
with respect to the availability and tax consequences of a
mark-to-market
election with respect to Navios Acquisition common stock.
Taxation
of U.S. Holders Not Making a Timely QEF or
Mark-to-Market
Election
Finally, if Navios Acquisition is treated as a passive foreign
investment company for any taxable year (Navios Acquisition was
a PFIC for its 2008 and 2009 taxable years and expects that it
will be so treated for its 2010 taxable year, but not in
subsequent years), a U.S. Holder who does not make either a
timely QEF election or a
mark-to-market
election for that year (i.e., the taxable year in which the
U.S. Holders holding period commences), 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 Navios Acquisition common stock 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
Holders holding period for the common stock), and
(2) any gain realized on the sale, exchange or other
disposition of our common stock, including any gain realized by
a Non-Electing Holder who exercises his conversion rights. 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;
|
|
|
|
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 Navios Acquisition common stock. If a Non-Electing Holder who
is an individual dies while owning Navios Acquisition common
stock, such holders successor generally would not receive
a step-up in
tax basis with respect to such stock. Non-electing
U.S. Holders are encouraged to consult their tax advisers
regarding the application of the PFIC rules to their specific
situation.
A Non-Electing U.S. Holder who wishes to make a QEF
election for a subsequent year, but who did not make a timely
QEF election for the first year holding period, may be able to
make a special purging election pursuant to
Section 1291(d) of the Code. Pursuant to this election, a
Non-Electing U.S. Holder would be treated as selling their
stock for fair market value on the first day of the taxable year
for which the subsequent year QEF election is made. Any gain on
such deemed sale would be subject to tax as discussed above.
Non-Electing U.S. Holders are encouraged to consult their
tax advisers regarding the availability of a purging
election as well as other available elections.
If Navios Acquisition is treated as a PFIC for any taxable
year during the holding period of a U.S. Holder (Navios
Acquisition was a PFIC for its 2008 and 2009 taxable years, and
expects that it will be so treated for taxable year 2010, but
not in subsequent years), unless the U.S. Holder makes a
timely
159
QEF election for the first taxable year in which they hold
the stock and in which Navios Acquisition is a PFIC, or makes
the
mark-to-market
election, Navios Acquisition will continue to be treated as a
PFIC for all succeeding years during which the U.S. Holder
is treated as a direct or indirect U.S. Holder even if
Navios Acquisition is not a PFIC for such years. A
U.S. Holder is encouraged to consult their tax advisers
with respect to any available elections that may be applicable
in such a situation, including the deemed sale
election of code section 1298(b)(1). In addition,
U.S. Holders should consult their tax advisers regarding
the IRS information reporting and filing obligations that may
arise as a result of the ownership of shares in a PFIC.
Backup
Withholding and Information Reporting
In general, dividend payments, or other taxable distributions,
made within the United States to you will be subject to
information reporting requirements. Such payments will also be
subject to backup withholding tax if you are a non-corporate
U.S. Holder and you:
|
|
|
|
|
fail to provide an accurate taxpayer identification number;
|
|
|
|
are notified by the IRS that you have failed to report all
interest or dividends required to be shown on your federal
income tax returns; or
|
|
|
|
in certain definitive, pre-determined circumstances, fail to
comply with applicable certification requirements.
|
Backup withholding tax is not an additional tax. Rather, you
generally may obtain a refund of any amounts withheld under
backup withholding rules that exceed your income tax liability
by filing a refund claim with the IRS.
DELIVERY
OF DOCUMENTS TO STOCKHOLDERS SHARING AN ADDRESS
Only one copy of this proxy statement is delivered to two or
more stockholders who share an address unless Navios Acquisition
or its agent has received contrary instructions from one or more
of the stockholders. To request that separate copies of these
documents be delivered, stockholders can contact Navios
Acquisitions transfer agent by mail at: Continental Stock
Transfer & Trust Company, 17 Battery Place, New
York, New York 10004. You may also contact Navios
Acquisitions transfer agent if you received multiple copes
of the proxy statement and would prefer to receive a single copy
in the future.
EXPERTS
The financial statements included in this proxy statement have
been audited by Rothstein, Kass & Company, P.C., Roseland,
New Jersey, independent registered public accounting firm, to
the extent and for the period set forth in their report
appearing elsewhere in this proxy statement. The financial
statements and the report of Rothstein, Kass & Company,
P.C. are included in reliance upon their report given upon the
authority of Rothstein, Kass & Company, P.C. as experts in
auditing and accounting.
INDUSTRY
AND MARKET DATA
The industry-related statistical and graphical information we
use in this proxy statement has been compiled by Drewry Shipping
Consultants Ltd., or Drewry, from its database. Some of the
industry information in this proxy statement is based on
estimates or subjective judgments in circumstances where data
for actual market transactions either does not exist or is not
publicly available, and consequently, Drewry cannot assure us
that it reflects actual industry and market experience. Drewry
compiles and publishes data for the benefit of its customers.
Its methodologies for collecting data, and therefore the data
collected, may differ from those of other sources, and its data
does not reflect all or even necessarily a comprehensive set of
the actual transactions occurring in the market. The published
information of other maritime data collection experts may differ
from the data presented in this proxy statement.
160
WHERE YOU
CAN FIND MORE INFORMATION
We file reports and other information with the SEC as required
by the Exchange Act. We file these documents electronically with
the SEC. You may access information about us at the SEC web
site, which contains reports and other information at
www.sec.gov.
You may obtain copies of the materials described above at
prescribed rates by writing to the SEC, Public Reference
Section, 100 F Street, N.E., Washington, D.C.
20549-1004.
You may obtain information on the operation of the SECs
Public Reference Room by calling the SEC at
1-800-SEC-0330.
This proxy statement describes the material elements of our
relevant contracts, exhibits and other information. Information
and statements contained in this proxy statement are qualified
in all respects by reference to the copy of the relevant
contract or other document included as an annex to this proxy
statement.
All information contained or incorporated by reference in this
proxy statement relating to Navios Acquisition, the vessel
acquisition proposal and the amendment proposal has been
supplied by us, and all information contained in this proxy
statement relating to the vessels has been supplied by the
seller. Information provided by either Navios Acquisition or the
seller does not constitute any representation, estimate or
projection of the other.
If you would like additional copies of this proxy statement, or
if you have questions about the acquisition or the debt
financing, you should contact:
Navios Maritime Acquisition Corporation
Attn: Vasiliki Papaefthymiou
85 Akti Miaouli Street
Piraeus, Greece 185 38
(011) +30-210-4595000
ENFORCEABILITY
OF CIVIL LIABILITIES
Navios Acquisition is a Marshall Islands company and its
executive offices are located outside of the United States in
Piraeus, Greece. A majority of Navios Acquisitions
directors, officers and experts named in this proxy statement
reside outside the United States. In addition, a substantial
portion of Navios Acquisitions assets and the assets of
its directors, officers and experts are located outside of the
United States. As a result, you may have difficulty serving
legal process within the United States upon Navios Acquisition
or any of these persons. You may also have difficulty enforcing,
both within and outside the United States, judgments you may
obtain in U.S. courts against Navios Acquisition or these
persons in any action, including actions based upon the civil
liability provisions of U.S. federal or state securities
laws.
Furthermore, there is substantial doubt that the courts of the
Marshall Islands or Greece would enter judgments in original
actions brought in those courts predicated on U.S. federal or
state securities laws.
161
Report of
Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of
Navios Maritime Acquisition Corporation
We have audited the accompanying balance sheets of Navios
Maritime Acquisition Corp. (a corporation in the development
stage) (the Company) as of December 31, 2009
and 2008, and the related statements of operations,
stockholders equity and cash flows for the year ended
December 31, 2009 and the periods from March 14, 2008
(date of inception) to December 31, 2008 and from
March 14, 2008 (date of inception) through
December 31, 2009. We have also audited the Companys
internal control over financial reporting as of
December 31, 2009 based on criteria established in Internal
Control Integrated Framework issued by the Committee
of Sponsoring Organizations of the Treadway Commission (COSO).
The Companys management is responsible for these financial
statements, 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 Managements Annual Report on Internal Control
over Financial Reporting. Our responsibility is to express an
opinion on these financial statements and an opinion on the
Companys internal control over financial reporting based
on our audits.
We conducted our audits in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are
free of material misstatement and whether effective internal
control over financial reporting was maintained in all material
respects. Our audit of the financial statements included
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. Our audit over internal control over
financial reporting included obtaining an understanding of
internal control over financial reporting, assessing the risk
that a material weakness exists, and testing and evaluating the
design and operating effectiveness of internal control based on
the assessed risk. Our audits also included performing such
other procedures as we considered necessary in the
circumstances. We believe that our audits provide a reasonable
basis for our opinion.
A companys 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 companys
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
companys 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.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of the Company as of December 31, 2009 and 2008, and the
results of its operations and its cash flows for the year ended
December 31, 2009 and the periods from March 14, 2008
(date of inception) to December 31, 2008 and from
March 14, 2008 (date of inception) through
December 31, 2009 in conformity with accounting principles
generally accepted in the United States of America. Also in our
opinion, the Company maintained, in all material respects,
effective internal control over financial reporting as of
F-2
December 31, 2009, based on criteria established in
Internal Control Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission
(COSO).
The accompanying financial statements have been prepared
assuming that Navios Acquisition Corporation will continue as a
going concern. As discussed in Note 8 to the financial
statements, Navios Acquisition Corporation will face a mandatory
liquidation if a business combination is not consummated by
July 1, 2010, which raises substantial doubt about its
ability to continue as a going concern. The financial statements
do not include any adjustments that might result from the
outcome of this uncertainty.
/s/ Rothstein,
Kass & Company, P.C.
Roseland, New Jersey
January 29, 2010
F-3
NAVIOS
MARITIME ACQUISITION CORPORATION
(a corporation in the development stage)
BALANCE SHEETS
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
ASSETS
|
Current assets
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
87,099
|
|
|
$
|
2,015
|
|
Prepaid expenses
|
|
|
55,295
|
|
|
|
55,137
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
142,394
|
|
|
|
57,152
|
|
Other assets
|
|
|
|
|
|
|
|
|
Investment in trust account, including restricted cash
|
|
|
251,493,295
|
|
|
|
252,201,007
|
|
|
|
|
|
|
|
|
|
|
Total other assets
|
|
|
251,493,295
|
|
|
|
252,201,007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
251,635,689
|
|
|
|
252,258,159
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS EQUITY
|
Current liabilities
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
56,479
|
|
|
$
|
29,821
|
|
Accrued expenses
|
|
|
414,215
|
|
|
|
309,327
|
|
Amount due to related parties
|
|
|
30,119
|
|
|
|
136,323
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
500,813
|
|
|
|
475,471
|
|
Long term liabilities, deferred underwriters fees
|
|
|
8,855,000
|
|
|
|
8,855,000
|
|
|
|
|
|
|
|
|
|
|
Common stock subject to redemption,
10,119,999 shares at redemption value, $9.91 per share
|
|
|
100,289,190
|
|
|
|
100,289,190
|
|
Commitments
|
|
|
|
|
|
|
|
|
Stockholders equity
|
|
|
|
|
|
|
|
|
Preferred stock, $.0001 par value; 1,000,000 shares
authorized; none issued
|
|
|
|
|
|
|
|
|
Common stock, $.0001 par value, authorized
100,000,000 shares; 31,625,000 shares issued and
outstanding (includes the 10,119,999 shares subject to
redemption)
|
|
|
3,163
|
|
|
|
3,163
|
|
Additional paid-in capital
|
|
|
141,588,151
|
|
|
|
141,588,151
|
|
Earnings accumulated during the development stage
|
|
|
399,372
|
|
|
|
1,047,184
|
|
|
|
|
|
|
|
|
|
|
Total stockholders equity
|
|
|
141,990,686
|
|
|
|
142,638,498
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders equity
|
|
$
|
251,635,689
|
|
|
$
|
252,258,159
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these financial
statements.
F-4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period from
|
|
|
Period From
|
|
|
|
|
|
|
March 14, 2008
|
|
|
March 14, 2008
|
|
|
|
Year Ended
|
|
|
(Date of Inception) to
|
|
|
(Date of Inception) to
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
Revenue
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative expenses
|
|
|
(120,000
|
)
|
|
|
(60,000
|
)
|
|
|
(180,000
|
)
|
Formation and operating costs
|
|
|
(874,377
|
)
|
|
|
(332,771
|
)
|
|
|
(1,207,148
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
|
(994,377
|
)
|
|
|
(392,771
|
)
|
|
|
(1,387,148
|
)
|
Interest income from trust account
|
|
|
331,656
|
|
|
|
1,435,550
|
|
|
|
1,767,206
|
|
Other interest
|
|
|
14,909
|
|
|
|
4,405
|
|
|
|
19,314
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income/(loss) applicable to common stockholders
|
|
|
(647,812
|
)
|
|
|
1,047,184
|
|
|
|
399,372
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income/(loss) per ordinary share (excluding shares subject
to possible redemption), basic
|
|
$
|
(0.03
|
)
|
|
$
|
0.08
|
|
|
$
|
0.02
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of ordinary shares (excluding shares
subject to possible redemption), basic
|
|
|
21,505,001
|
|
|
|
12,801,234
|
|
|
|
17,636,660
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income/(loss) per ordinary share (excluding shares subject
to possible redemption), diluted
|
|
$
|
(0.02
|
)
|
|
$
|
0.06
|
|
|
$
|
0.02
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of ordinary shares (excluding shares
subject to possible redemption), diluted
|
|
|
21,505,001
|
|
|
|
18,075,777
|
|
|
|
25,568,868
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income/(loss) per ordinary share for shares subject to
possible redemption
|
|
$
|
(0.02
|
)
|
|
$
|
0.10
|
|
|
$
|
0.04
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of ordinary shares subject to possible
redemption
|
|
|
10,119,999
|
|
|
|
10,119,999
|
|
|
|
10,119,999
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these financial
statements.
F-5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
During the
|
|
|
Total
|
|
|
|
Common
|
|
|
|
|
|
Paid-in
|
|
|
Development
|
|
|
Stockholders
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Stage
|
|
|
Equity
|
|
|
Sale of units issued to the sponsor at approximately $0.003 per
unit on March 18, 2008
|
|
|
|
|
|
|
8,625,000
|
|
|
$
|
863
|
|
|
$
|
24,137
|
|
|
$
|
|
|
|
$
|
25,000
|
|
Forfeiture of units issued to the sponsor on June 16, 2008
|
|
|
|
|
|
|
(2,300,000
|
)
|
|
|
(230
|
)
|
|
|
230
|
|
|
|
|
|
|
|
|
|
Sale of 25,300,000 units on July 1, 2008 at a price of
$10 per (including 10,119,999 shares of common stock
subject to possible redemption)
|
|
|
|
|
|
|
25,300,000
|
|
|
|
2,530
|
|
|
|
252,997,470
|
|
|
|
|
|
|
|
253,000,000
|
|
Proceeds from public offering subject to redemption
(10,119,999 shares at redemption value) redemption value,
$9.91 per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(100,289,190
|
)
|
|
|
|
|
|
|
(100,289,190
|
)
|
Underwriters discount and offering costs related to the
public offering
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(18,744,496
|
)
|
|
|
|
|
|
|
(18,744,496
|
)
|
Sale of 7,600,000 warrants on July 1, 2008 at a price of $1
per warrant to the sponsors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,600,000
|
|
|
|
|
|
|
|
7,600,000
|
|
Net income for the period from March 14, 2008 (date of
inception) to December 31, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,047,184
|
|
|
|
1,047,184
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance December 31, 2008
|
|
|
|
|
|
|
31,625,000
|
|
|
$
|
3,163
|
|
|
$
|
141,588,151
|
|
|
$
|
1,047,184
|
|
|
$
|
142,638,498
|
|
Net loss for the year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(647,812
|
)
|
|
|
(647,812
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance December 31, 2009
|
|
|
|
|
|
|
31,625,000
|
|
|
$
|
3,163
|
|
|
$
|
141,588,151
|
|
|
$
|
399,372
|
|
|
$
|
141,990,686
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these financial
statements.
F-6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period from
|
|
|
Period from
|
|
|
|
Year Ended
|
|
|
March 14, 2008
|
|
|
March 14, 2008
|
|
|
|
December
|
|
|
(Date of Inception) to
|
|
|
(Inception Date) to
|
|
|
|
31, 2009
|
|
|
December 31, 2008
|
|
|
December 31, 2009
|
|
|
Cash flows from operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income/(loss)
|
|
$
|
(647,812
|
)
|
|
$
|
1,047,184
|
|
|
$
|
399,372
|
|
Adjustment to reconcile net income to net cash provided by
operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid expenses
|
|
|
(158
|
)
|
|
|
(55,137
|
)
|
|
|
(55,295
|
)
|
Accrued expenses
|
|
|
104,888
|
|
|
|
309,327
|
|
|
|
414,215
|
|
Amounts due to related parties
|
|
|
(106,204
|
)
|
|
|
136,323
|
|
|
|
30,118
|
|
Accounts payable
|
|
|
26,657
|
|
|
|
29,821
|
|
|
|
56,479
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by/(used in) operating activities
|
|
|
(622,629
|
)
|
|
|
1,467,518
|
|
|
|
844,889
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted cash held in trust account
|
|
|
4,958
|
|
|
|
(7,338
|
)
|
|
|
(2,380
|
)
|
Investments in trust account
|
|
|
702,755
|
|
|
|
(252,193,669
|
)
|
|
|
(251,490,914
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by/(used in) investing activities
|
|
|
707,713
|
|
|
|
(252,201,007
|
)
|
|
|
(251,493,294
|
)
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from issuance of warrants in private placement
|
|
|
|
|
|
|
7,600,000
|
|
|
|
7,600,000
|
|
Gross proceeds from public offering
|
|
|
|
|
|
|
253,000,000
|
|
|
|
253,000,000
|
|
Payment for underwriters discount and offering cost
|
|
|
|
|
|
|
(9,889,496
|
)
|
|
|
(9,889,496
|
)
|
Proceeds from loan payable, stockholder
|
|
|
|
|
|
|
500,000
|
|
|
|
500,000
|
|
Loan payment to stockholder
|
|
|
|
|
|
|
(500,000
|
)
|
|
|
(500,000
|
)
|
Proceeds from issuance of common stock
|
|
|
|
|
|
|
25,000
|
|
|
|
25,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by financing activities
|
|
|
|
|
|
|
250,735,504
|
|
|
|
250,735,504
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase in cash
|
|
|
85,084
|
|
|
|
2,015
|
|
|
|
87,099
|
|
Cash, beginning of period
|
|
|
2,015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash, end of period
|
|
$
|
87,099
|
|
|
$
|
2,015
|
|
|
$
|
87,099
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental schedule of non-cash financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred underwriters fee
|
|
$
|
8,855,000
|
|
|
$
|
8,855,000
|
|
|
$
|
8,855,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued offering costs
|
|
$
|
|
|
|
$
|
97,247
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount due to related party, offering costs
|
|
$
|
|
|
|
$
|
76,323
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these financial
statements.
F-7
NAVIOS
MARITIME ACQUISITION CORPORATION
(a corporation in the development stage)
Notes to Financial Statements
|
|
NOTE 1
|
DESCRIPTION
OF ORGANIZATION AND BUSINESS OPERATIONS
|
Navios Maritime Acquisition Corporation (a corporation in the
development stage) (the Company) was incorporated in
the Republic of the Marshall Islands on March 14, 2008. The
Company was formed to acquire through a merger, capital stock
exchange, asset acquisition, stock purchase or other similar
business combination one or more assets or operating businesses
in the marine transportation and logistics industries. The
Company has neither engaged in any operations nor generated
significant revenue to date. The Company is considered to be in
the development stage as defined in the Financial Accounting
Standards Board (FASB) issued guidance for
Accounting and Reporting By Development Stage Enterprises, and
is subject to the risks associated with activities of
development stage companies. The Company has selected December
31st as its fiscal year end.
All activity from March 14, 2008 (inception) through
December 31, 2009 relates to the Companys formation,
capital raising and initial public offering described below.
Proceeds of $250,770,000 from the initial public offering (the
Offering) of 25,300,000 units including
3,300,000 units issued upon exercise of the
underwriters over-allotment option and the private
placement of 7,600,000 of the Companys insider warrants to
purchase common stock (the Private Placement), were
placed in a trust account (the Trust Account)
maintained by Continental Stock Transfer and Trust Company,
as trustee. The amount of proceeds from the Offering also
includes 3.5% of the underwriters underwriting discounts
and commissions, or $8,855,000 payable to the underwriter in the
Offering. At closing of the Offering, $250,770,000 of the gross
proceeds, after payment of certain amounts to the underwriters,
are held in the Trust Account and invested in
U.S. government debt securities (U.S. Treasury
Bills). The Companys agreement with the trustee
requires that the trustee will invest and reinvest the proceeds
in the Trust Account only in United States government
debt securities within the meaning of Section 2(a)
(16) of the Investment Company Act of 1940 having a
maturity of 180 days or less, or in money market funds
meeting the conditions under
Rule 2a-7
promulgated under the Investment Company Act of 1940. Except
with respect to interest income that may be released to the
Company (i) up to $3,000,000 to fund working capital
requirements, and (ii) any additional amounts needed to pay
the Companys income and other tax obligations, the
proceeds will not be released from the Trust Account until
the earlier of the completion of a business combination or
liquidation, or for payments with respect to shares of common
stock converted in connection with the vote to approve an
extension period. The proceeds held in the Trust Account
may be used as consideration to pay sellers of a target business
or businesses with which the Company completes a business
combination. Any amounts not paid as consideration to the
sellers of the target business (excluding taxes and amounts
permitted to be disbursed for expenses as well as the amount
held in the Trust Account representing deferred
underwriting discounts and commissions), may be used to finance
operations of the target business.
The initial business combination must occur with one or more
target businesses that have a fair market value of at least 80%
of the balance in the Trust Account (exclusive of deferred
underwriter discounts and commissions). The Company, after
signing a definitive agreement for the acquisition of a target
business, will submit such transaction for stockholder approval.
The Company will proceed with the initial business combination
only if the following two conditions are met: (i) a
majority of the shares of common stock voted by the holders of
the shares of common stock sold in the Offering (Public
Stockholders) are voted in favor of the business
combination, and (ii) conversion rights have been exercised
with respect to less than 40% of the shares sold in the
Offering. All of the Companys stockholders prior to the
Offering, including all of the officers and directors of the
Company (Initial Stockholders), have agreed to vote
their respective shares of common stock owned by them in
accordance with the majority of the shares of common stock voted
by the Public Stockholders with respect to any business
combination. After consummation of the Companys first
business combination, all of these voting safeguards will no
longer be applicable. This voting arrangement shall not apply to
shares included in the units purchased in the Offering or
purchased following the Offering in
F-8
NAVIOS
MARITIME ACQUISITION CORPORATION
(a corporation in the development stage)
Notes to Financial Statements (Continued)
the open market by any of the Companys existing
stockholders, officers and directors. However, there is no
assurance that the Company will be able to effect a business
combination successfully.
Voting against the business combination, or the extended period
will not result in conversion of a stockholders shares for
a pro rata share of the Trust Account. Such Public
Stockholders must have also exercised their conversion rights
described below. If Public Stockholders representing 40% or more
of the shares sold in the Offering exercise their conversion
rights, the Company will be unable to consummate a business
combination (or to extend the time period within which it can
consummate a business combination, as applicable) and no
stockholders will receive a distribution from the
Trust Account.
Public Stockholders voting against (i) a business
combination that is subsequently approved, or (ii) an
extended period that is subsequently approved will be entitled
to convert their stock into a pro rata share of the
Trust Account, including any interest earned on their
pro rata share, net of interest that may be released to
the Company as described above to fund working capital
requirements and pay any tax obligations, if the business
combination is approved and consummated. If (i) the
business combination is not approved or consummated, or
(ii) the extended period is not approved, then the Public
Stockholders voting against the business combination or the
extended period, as applicable, will not be entitled to convert
their shares of common stock into a pro rata share of the
aggregate amount then on deposit in the Trust Account. The
Company views this requirement as an obligation to its
stockholders and will not take any action to amend or waive this
provision in its amended and restated certificate of
incorporation. Neither Navios Maritime Holdings Inc.
(Navios Holdings), the Companys existing
stockholders nor their permitted transferees will be able to
exercise conversion rights with respect to their shares of
common stock, even shares acquired in the Offering or the
open-market.
Public Stockholders who convert their common stock into a pro
rata share of the Trust Account will be paid promptly
their conversion price following their exercise of conversion
rights and will continue to have the right to exercise any
warrants they own. The initial conversion price is approximately
$9.91 per share. Since this amount may be lower than the market
price of the common stock on the date of conversion, there may
be a disincentive on the part of Public Stockholders to exercise
their conversion rights.
If the Company has not consummated a business combination within
24 months (or up to 36 months if a letter of intent,
agreement in principle or definitive agreement with respect to a
proposed business combination has been executed and not
terminated within such
24-month
period and the extended period has been approved) from the
closing of the Offering, the Company will promptly take all
action necessary to distribute only to its Public Stockholders
(including its Initial Stockholders to the extent they have
purchased shares in the Offering or in the open-market) the
amount in its Trust Account including (i) all accrued
interest net of income taxes paid or payable on such interest
(less interest income of up to $3,000,000 earned on the
Trust Account balance previously released to us to fund the
Companys working capital requirements), and (ii) all
deferred underwriting discounts and commissions plus any of the
Companys remaining net assets. In the event of
liquidation, it is possible that the per share value of the
residual assets remaining available for distribution will be
less than the initial public offering price per share in the
Offering (assuming no value is attributed to the warrants
contained in the units offered in the Offering discussed in
Note 3).
The Companys operations, if a business combination is
consummated outside the United States, will be subject to local
government regulations and to the uncertainties of the economic
and political conditions of those areas.
F-9
NAVIOS
MARITIME ACQUISITION CORPORATION
(a corporation in the development stage)
Notes to Financial Statements (Continued)
|
|
NOTE 2
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
|
Basis
of presentation:
The accompanying financial statements are presented in
U.S. dollars and have been prepared in accordance with
accounting principles generally accepted in the United States of
America and pursuant to the rules and pursuant to the accounting
and disclosure rules and regulations of the Securities and
Exchange Commission (the SEC).
Development
Stage Company:
The Company complies with the reporting requirements issued from
FASB for Accounting and Reporting by Development Stage
Enterprises, and is subject to the risks associated with
activities of development stage companies.
Income/loss
per common share:
The Company complies with accounting and disclosure requirements
as defined in the FASB issued guidance for Earnings Per Share.
Basic net income/loss per common share is computed by dividing
net income/loss applicable to common stock by the weighted
average number of common shares outstanding for the period.
Income/loss per share of common stock, assuming dilution,
reflects the maximum potential dilution that could occur if
securities or other contracts to issue common stock were
exercised or converted into common stock and would then share in
the net income of the Company, except where the results would be
antidilutive. At December 31, 2009, the Company had
warrants outstanding to purchase 32,900,000 shares of
common stock.
The Company uses the treasury stock method to calculate
potentially dilutive shares, as if they were converted into
common stock at the beginning of the period. For the period
ended December 31, 2009 and March 14, 2008 (date of
inception) to December 31, 2008, dilutive securities
include 39,225,000 and 27,684,247, respectively, weighted
average number of warrants that represent incremental common
shares, based on their assumed conversion to common stock, to be
included in the weighted average number of common shares for the
calculation of diluted income/loss per common share.
The Companys statement of operations includes a
presentation of income/loss per share for common stock subject
to possible conversion in a manner similar to the two-class
method of income per share. Net income/loss per common share,
basic and diluted amount for the maximum number of shares
subject to possible conversion is calculated by dividing the
interest income, net of applicable income taxes, attributable to
common shares subject to conversion by the weighted average
number of common shares subject to possible conversion.
Ordinary
shares subject to possible redemption:
As discussed in Note 1, the Company will only proceed with
a business combination if: (1) it is approved by a majority
of the votes cast by the Public Stockholders; and
(2) Public Stockholders holding less than 40% of the
ordinary shares sold in the Offering, choose to exercise their
redemption rights thereby receiving their per share interest in
the Trust Account. In accordance with guidance issued by
FASB for Classification and Measurement of Redeemable
Securities, the Company has classified 10,119,999 shares of
its ordinary shares outside of permanent equity as
Ordinary shares subject to redemption, at a
redemption price of $9.91 per share as of December 31, 2009
and 2008. The Company will recognize changes in the conversion
value as they occur and will adjust the carrying value of the
ordinary shares subject to conversion to be equal to its
conversion value at the end of each reporting period.
F-10
NAVIOS
MARITIME ACQUISITION CORPORATION
(a corporation in the development stage)
Notes to Financial Statements (Continued)
Concentration
of Credit Risk
Financial instruments that potentially subject the Company to a
significant concentration of credit risk consist primarily of
U.S. Treasury Bills. However, management believes the
Company is not exposed to significant credit risk due to the
financial position of the depository institutions in which those
deposits are held.
Fair
value of financial instruments:
The fair value of the Companys other current assets and
accrued expenses, which qualify as financial instruments under
guidance by FASB for Disclosure About Fair Value of Financial
Instruments, approximates the carrying amounts represented in
the accompanying balance sheet.
Use of
estimates:
The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of
America requires the Companys 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 financial statements and the reported amounts
of revenues and expenses during the reporting period. Actual
results could differ from those estimates. If the Company were
to consummate an initial business combination with an operating
business, estimates and assumptions made by the Company will be
based on current circumstances and the experience and judgment
of the Companys management, and will be evaluated on an
ongoing basis, and may employ outside experts to assist in the
Companys evaluations.
Cash
and Cash equivalents:
Cash and cash equivalents consist of cash on hand, and other
short-term liquid investments with original maturities of three
months or less, excluding funds held in Trust Account.
Securities
held in trust:
Investment securities consist of U.S. Treasury Bills. The
Company classifies its securities as
held-to-maturity
as defined in the FASB issued guidance for Accounting for
Certain Debt and Equity Securities.
Held-to-maturity
securities are those securities which the Company has the
ability and intent to hold until maturity.
Held-to-maturity
treasury securities are recorded at amortized cost and adjusted
for the amortization or accretion of premiums or discounts.
A decline in the market value of
held-to-maturity
securities below cost that is deemed to be other than temporary,
results in an impairment that reduces the carrying costs to such
securities fair value. The impairment is charged to
earnings and a new cost basis for the security is established.
To determine whether an impairment is other than temporary, the
Company considers whether it has the ability and intent to hold
the investment until a market price recovery and considers
whether evidence indicating the cost of the investment is
recoverable outweighs evidence to the contrary. Evidence
considered in this assessment includes the reasons for the
impairment, the severity and the duration of the impairment,
changes in value subsequent to year-end, forecasted performance
of the investee, and the general market condition in the
geographic area or industry the investee operates in.
Premiums and discounts are amortized or accreted over the life
of the related
held-to-maturity
security as an adjustment to yield using the effective-interest
method. Such amortization and accretion is included in the
interest Income line item in the statement of
operations. Interest income is recognized when earned.
F-11
NAVIOS
MARITIME ACQUISITION CORPORATION
(a corporation in the development stage)
Notes to Financial Statements (Continued)
Income
taxes:
The Company complies with FASB issued guidance for Accounting
for Income Taxes, which requires an asset and liability approach
to financial accounting and reporting for income taxes. Deferred
income tax assets and liabilities are computed for differences
between the financial statement and tax bases of assets and
liabilities that will result in future taxable or deductible
amounts, based on enacted tax laws and rates applicable to the
periods in which the differences are expected to affect taxable
income. Valuation allowances are established, when necessary, to
reduce deferred tax assets to the amount expected to be realized.
The Company also complies with FASB issued guidance relating to
Accounting for Uncertainty in Income Taxes, which provides
criteria for the recognition, measurement, presentation and
disclosure of uncertain tax positions. A tax benefit from an
uncertain position may be recognized only if it is more
likely than not that the position is sustainable based on
its technical merits. Management is currently unaware of any
issues that could result in significant payments, accruals, or
material deviations from its position.
The Company adopted the provisions of guidance issued by FASB
relating to Accounting for Income Taxes and to Accounting for
Uncertainty in Income at inception on March 14, 2008.
Foreign
currency translation:
The Companys reporting currency is the U.S. dollar.
Although the Company maintains a cash account with a foreign
bank, its expenditures to date have been and are expected to
continue to be denominated in U.S. dollars. Accordingly,
the Company has designated its functional currency as the
U.S. dollar.
As defined in the FASB issued guidance for Foreign Currency
Translation, foreign currency balance sheets will be translated
into U.S. dollars using the exchange rate in effect rate in
effect as of the balance sheet date and the statements of
operations will be translated at the average exchange rates for
each period. The resulting translation adjustments to the
balance sheet will be recorded in accumulated other
comprehensive income (loss) within stockholders equity.
Foreign currency transaction gains and losses will be included
in the statement of operations as they occur.
Recently
adopted accounting standards:
Business
Combinations
In December 2007, the FASB issued guidance which establishes
principles and requirements for how an acquirer recognizes and
measures in its financial statements the identifiable assets
acquired, the liabilities assumed any non controlling interest
in the acquiree and the goodwill acquired. The guidance also
establishes disclosure requirements which will enable users to
evaluate the nature and financial effects of the business
combination. The guidance was effective for Navios Acquisition
for business combinations after January 1, 2009 and it did
not have a material affect on the Companys financial
statements.
Noncontrolling
Interests in Consolidated Financial Statements
In December 2007, the FASB issued guidance which states that
accounting and reporting for minority interests will be
recharacterized as noncontrolling interests and classified as a
component of equity. The guidance also establishes reporting
requirements that provide sufficient disclosures that clearly
identify and distinguish between the interests of the parent and
the interests of the noncontrolling owners. Guidance applies to
all entities that prepare consolidated financial statements,
except
not-for-profit
organizations, but will affect only those entities that have an
outstanding noncontrolling interest in one or more subsidiaries
or that
F-12
NAVIOS
MARITIME ACQUISITION CORPORATION
(a corporation in the development stage)
Notes to Financial Statements (Continued)
deconsolidate a subsidiary. The guidance was effective as of
January 1, 2009 and the financial statements were updated
to reflect the reporting and disclosure requirements.
Nonfinancial
Assets and Nonfinancial Liabilities
In February 2008, the FASB issued guidance which delays the
effective date of the guidance application for nonfinancial
assets and nonfinancial liabilities, except for items that are
recognized or disclosed at fair value in the financial
statements on a recurring basis (at least annually). For
purposes of applying this guidance, nonfinancial assets and
nonfinancial liabilities would include all assets and
liabilities other that those meeting the definition of a
financial asset or financial liability as defined in guidance
The Fair Value Option for Financial Assets and Financial
Liabilities. This guidance defers the effective date of relative
guidance to fiscal years beginning after November 15, 2008,
and the interim periods within those fiscal years for items
within the scope of this guidance. The application of this
guidance did not have a material effect on the financial
statements of the Company.
In May 2009, the Financial Accounting Standards Board
(FASB) updated its guidance in ASC 855 (formerly
SFAS No. 165) regarding subsequent events,
establishing principles and requirements for subsequent events.
In particular, ASC 855 sets forth the period after the balance
sheet date during which management shall evaluate events or
transactions that may occur for potential recognition or
disclosure in the financial statements, the circumstances under
which an entity shall recognize events or transactions occurring
after the balance sheet date in its financial statements, and
the disclosures that an entity shall make about events or
transactions that occurred after the balance sheet date. This
updated guidance is effective for interim periods ending after
June 15, 2009. The adoption of ASC 855 did not have a
material impact on the Companys financial condition or
results of operation.
In June 2009, the FASB approved the FASB Accounting
Standards Codification (Codification) as the
single source of authoritative, nongovernmental,
U.S. Generally Accepted Accounting Principles
(GAAP). The Codification does not change current
U.S. GAAP or how the Company accounts for its transactions
or the nature of related disclosures made; instead it is
intended to simplify user access to all authoritative
U.S. GAAP by providing all the authoritative literature
related to a particular topic in one place. All existing
accounting standard documents will be superseded, and all other
accounting literature not included in the Codification will be
considered non-authoritative. The Codification is effective for
interim and annual periods ending after September 15, 2009.
The Codification is effective for the Company beginning with the
year ended December 31, 2009 and did not have an impact on
its financial condition or results of operations.
On July 1, 2008, the Company consummated its initial public
offering of 25,300,000 units including 3,300,000 units
issued upon exercise of the underwriters over-allotment
option at a price of $10.00 per unit in the Offering. Each unit
consists of one share of the Companys common stock,
$0.0001 par value per share, and one redeemable common
stock purchase warrant. Each warrant will entitle the holder to
purchase from the Company one share of common stock at an
exercise price of $7.00 commencing on the later of (a) the
completion of a business combination, or (b) one year from
the date of the final prospectus for the Offering and will
expire five years from the date of the prospectus. The warrants
will be redeemable at a price of $0.01 per warrant upon
30 days prior notice after the warrants become exercisable,
only in the event that the last sale price of the common stock
is at least $13.75 per share for any 20 trading days within a 30
trading day period ending on the third business day prior to the
date on which notice of redemption is given.
No warrants will be exercisable and the Company will not be
obligated to issue shares of common stock unless at the time a
holder seeks to exercise such warrant, a prospectus relating to
the common stock issuable upon exercise of the warrants is
current and the common stock has been registered or qualified or
deemed to
F-13
NAVIOS
MARITIME ACQUISITION CORPORATION
(a corporation in the development stage)
Notes to Financial Statements (Continued)
be exempt under the securities laws of the state of residence of
the holder of the warrants. Under the terms of the warrant
agreement, the Company has agreed to use its best efforts to
meet these conditions and to maintain a current prospectus
relating to the common stock issuable upon exercise of the
warrants until the expiration of the warrants. However, if the
Company does not maintain a current prospectus relating to the
common stock issuable upon exercise of the warrants, holders
will be unable to exercise their warrants. In no circumstance
will the Company be required to settle any such warrant exercise
for cash. If the prospectus relating to the common stock
issuable upon the exercise of the warrants is not current or if
the common stock is not qualified or exempt from qualification
in the jurisdiction in which the holders of the warrants reside,
the warrants may have no value, the market for the warrants may
be limited and the warrants may expire worthless.
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NOTE 4
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INVESTMENT
IN TRUST ACCOUNT; MARKETABLE SECURITIES
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Since the closing of the Offering, an amount equal to
approximately 99.1% of the gross proceeds has been held in the
Trust Account. The Trust Account may be invested in
U.S. government securities, defined as any
Treasury Bill or equivalent securities issued by the United
States government having a maturity of one hundred and eighty
(180) days or less or money market funds meeting the
conditions specified in
Rule 2a-7
under the Investment Company Act of 1940, until the earlier of
(i) the consummation of its first Business Combination, or
(ii) the distribution of the Trust Account as
described below. The proceeds in the Trust Account includes
$8,855,000 of the gross proceeds representing deferred
underwriting discounts and commissions that will be released to
the underwriters on completion of a business combination.
Investment securities in the Companys Trust Account
consist of direct U.S. Treasury Bills. The Company
classifies its U.S. Treasury bills as
held-to-maturity
as defined in the FASB issued guidance for Accounting for
Certain Investments in Debt and Equity Securities.
Held-to-maturity
securities are those securities which the Company has the
ability and intent to hold until maturity.
Held-to-maturity
treasury securities are recorded at amortized cost and adjusted
for the amortization or accretion of premiums or discounts. Any
dividend and interest income, including any amortization of the
premium and discount arising at acquisition shall continue to be
included in earnings. Realized gains and losses for securities
classified as either
held-to-maturity
also shall continue to be reported in earnings. The
Companys investment in the U.S. Treasury Bills
(approximately $251,491,000 and $252,194,000 at
December 31, 2009 and 2008, respectively) is recorded at
cost and adjusted for income distributions which occur monthly.
The carrying amount, including accrued interest, gross
unrealized holding gains, and fair value of
held-to-maturity
securities at December 31, 2009 were as follows:
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Gross
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Unrealized
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Carrying Amount
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Holding Gains
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Fair Value
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Held-to-maturity:
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U. S. Treasury securities
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$
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251,493,565
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$
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(2,651
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)
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$
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251,490,914
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The carrying amount, including accrued interest, gross
unrealized holding gains, and fair value of
held-to-maturity
securities at December 31, 2008 were as follows:
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Gross
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Unrealized
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Carrying Amount
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Holding Gains
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Fair Value
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Held-to-maturity:
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U. S. Treasury securities
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$
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251,964,599
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$
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229,070
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$
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252,193,669
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At December 31, 2009 and 2008, investment in trust account,
as presented in financial statements, includes also restricted
cash amounting to $2,380 and $7,338, respectively.
F-14
NAVIOS
MARITIME ACQUISITION CORPORATION
(a corporation in the development stage)
Notes to Financial Statements (Continued)
For the year ended December 31, 2009, for the period from
March 14, 2008 (date of inception) to December 31,
2008 and for the period March 14,2008 to December 31,
2009 the amounts of $331,656, $1,426,829 and $1,767,206
respectively, are included in the statements of operations
representing interest income from Trust Account. An amount
up to $3,000,000 of interest earned in the Trust Account is
available to the Company for working capital purposes. As of
December 31, 2009 and 2008 the amount of interest earned in
the Trust Account that was released to the Company for
working capital purposes was $1,000,000 and $0, respectively.
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NOTE 5
|
RELATED
PARTY TRANSACTIONS
|
Navios Holdings had purchased an aggregate of
8,625,000 units for an aggregate purchase price of $25,000
(the Sponsor Units) of which an aggregate of 290,000
were transferred to the Companys officers and directors.
Subsequently, on June 16, 2008, Navios Holdings agreed to
return to the Company an aggregate of 2,300,000 Sponsor Units,
which, upon receipt, the Company cancelled. Accordingly, the
Initial Stockholders own 6,325,000 Sponsor Units. Each Sponsor
Unit consists of one share of common stock and one warrant.
The common stock and warrants comprising the Sponsor Units are
identical to the common stock and warrants comprising the units
sold in the Offering, except that (i) Initial Stockholders
and their permitted transferees will not be able to exercise
conversion rights, as described below, with respect to the
common stock underlying the Sponsor Units; (ii) Initial
Stockholders have agreed, and any permitted transferees will
agree, to vote the shares of common stock in the same manner as
a majority of the shares of common stock voted by the Public
Stockholders at the special or annual stockholders meeting
called for the purpose of approving (i) a business
combination or (ii) the extended period; (iii) Initial
Stockholders have waived, and their permitted transferees will
waive, their right to participate in any liquidating
distribution with respect to the common stock if the Company
fails to consummate a business combination; (iv) the
warrants may not be exercised unless and until the last sale
price of the Companys common stock equals or exceeds
$13.75 for any 20 days within any 30-trading day period
beginning 90 days after the business combination;
(v) the warrants will not be redeemable by the Company as
long as they are held by Initial Stockholders or their permitted
transferees; (vi) the warrants may be exercised by the
holders by paying cash or on a cashless basis; and
(vii) the Sponsor Units, and the underlying common stock
and the warrants (including the common stock issuable upon
exercise of the warrants) will not be transferable or salable,
except to another entity controlled by Navios Holdings or
Angeliki Frangou, or, in the case of individuals, family members
and trusts for estate planning purposes, until 180 days
after the consummation of the Companys business
combination.
On July 1, 2008 Navios Holdings purchased 7,600,000
warrants from the Company at a price of $1.00 per warrant
($7,600,000 in the aggregate) in the Private Placement that
occurred simultaneously with the completion of the Offering (the
Sponsor Warrants). The proceeds from the Private
Placement were added to the proceeds of the Offering and placed
in the Trust Account. If a business combination is not
consummated within 24 months (or up to 36 months if
the Companys stockholders approve an extended period)
after the closing of the Offering, the $7,600,000 proceeds from
the sale of the Sponsor Warrants will be part of the liquidating
distribution to the Public Stockholders and the Sponsor Warrants
will expire worthless. The Sponsor Warrants are identical to the
warrants included in the units sold in the offering except that:
(i) the Sponsor Warrants will be subject to certain
transfer restrictions until after the consummation of the
Companys initial business combination; (ii) the
Sponsor Warrants may be exercised on a cashless basis, while the
warrants included in the units sold in the Offering cannot be
exercised on a cashless basis; (iii) the Sponsor Warrants
will not be redeemable by the Company so long as they are held
by Navios Holdings or its permitted transferees; and
(iv) none of the Sponsor Warrants purchased by Navios
Holdings will be transferable or salable, except to another
entity controlled by Navios Holdings, which will be subject to
the same transfer restrictions until after a business
combination is consummated. The Company does not believe that
the sale of
F-15
NAVIOS
MARITIME ACQUISITION CORPORATION
(a corporation in the development stage)
Notes to Financial Statements (Continued)
the Sponsor Warrants will result in the recognition of any
stock-based compensation expense, as the Company believes that
the Sponsor Warrants were being sold at or above fair value.
The Company received a $500,000 loan from Navios Holdings on
March 31, 2008. The loan evidenced thereby is non-interest
bearing, unsecured, and was due upon the earlier of
March 31, 2009 or the completion of the Offering. On
December 31, 2009, the balance of the loan was zero, as the
Company fully repaid the loan in November 2008.
The Company presently occupies office space provided by Navios
Holdings. Navios Holdings has agreed that, until the
consummation of a business combination, it will make such office
space, as well as certain office and secretarial services,
available to the Company, as may be required by the Company from
time to time. The Company has agreed to pay Navios Holdings
$10,000 per month for such services. As of December 31,
2009 and 2008, the Company accrued $30,000 and $60,000 for
administrative services rendered by Navios Holdings. This amount
is included under amounts due to related parties in the balance
sheet together with offering costs amounting to $0 and $76,323
as of December 31, 2009 and 2008, respectively, paid by
Navios Holdings and will be reimbursed to Navios Holdings.
The Company has also agreed to pay each of the independent
directors $50,000 in cash per year for their board service,
accruing pro rata from the respective start of their
service on the Companys board of directors and payable
only upon the successful consummation of a business combination.
As of December 31, 2009 and 2008, there were three
independent directors appointed and the total amounts accrued
were $150,000 and $85,890, respectively.
Pursuant to an agreement between the Company and Navios
Holdings, the compensation of Leonidas Korres, the
Companys Chief Financial Officer, is to be paid by Navios
Holdings up to the amount of EURO 65,000, provided that if
the Company completes a business combination, the Company will
reimburse such amounts to Navios Holdings immediately following
the completion of the business combination. In the event that
the Company is unable to complete a business combination, then
the Company will not be obligated to make any payments to Navios
Holdings or Mr. Korres with respect to his employment.
The Company is authorized to issue 1,000,000 shares of
$.0001 par value preferred stock with such designations,
voting and other rights and preferences as may be determined
from time to time by the Board of Directors. No shares of
preferred stock were issued and outstanding as at
December 31, 2009.
The Company paid an underwriting discount and commission of 3.5%
of the public unit offering price to the underwriters at the
completion of the Offering, with an additional 3.5% deferred
underwriting discount and commission of the gross offering
proceeds payable upon the Companys consummation of a
business combination. If an initial business combination is not
consummated, the underwriters have agreed that (i) upon
liquidation, they will forfeit any rights or claims to their
deferred underwriting discounts and commissions, including any
income earned thereon, then in the Trust Account, and
(ii) the deferred underwriting discounts and commission
will be distributed on a pro rata basis, together with
any income earned thereon and net of taxes payable on such
income, to the Public Stockholders.
NOTE 8
GOING CONCERN
The consummation of the business combination is subject to,
among other things, execution of a definitive agreement and
required stockholder approval. There can be no assurance that a
business combination will be consummated. However, if the
Company anticipates that it will not be able to
F-16
NAVIOS
MARITIME ACQUISITION CORPORATION
(a corporation in the development stage)
Notes to Financial Statements (Continued)
consummate a business combination by July 1, 2010, it may
seek stockholder approval to extend the period of time to
consummate a business combination until July 10, 2011. If
the Company is unable to complete the business combination by
July 1, 2010, or July 1, 2011 if extension period
approved, its purposes and powers will be limited to dissolving,
liquidating and winding up. Also contained in the Companys
articles of association is the requirement that its board of
directors, to the fullest extent permitted by law, consider a
resolution to dissolve the Company at that time. Consistent with
such obligations, the Companys board of directors will
seek stockholder approval for any such plan of distribution, and
the Companys pre-initial public offering stockholders and
directors have agreed to vote in favor of such dissolution and
liquidation. This provision will be amended only in connection
with, and upon consummation of, the Companys initial
business combination by such date. The accompanying financial
statements do not include any adjustments that might be
necessary if the Company is unable to continue as a going
concern and is required to liquidate.
F-17
ANNEX A
SHARE
ACQUISITION AGREEMENT
SHARE ACQUISITION AGREEMENT (the Agreement),
dated as of April 8, 2010, by and between NAVIOS MARITIME
HOLDINGS INC. (NMH), a corporation organized
under the laws of the Republic of the Marshall Islands and
NAVIOS MARITIME ACQUISITION CORPORATION
(NMAC), a corporation organized under the
laws of the Republic of the Marshall Islands.
RECITAL
WHEREAS, NMH is a significant shareholder in NMAC;
WHEREAS, pursuant to that certain Right of First Refusal and
Corporate Opportunities Agreement, dated as of June 25,
2008, by and among, NMH, NMAC and Navios Maritime Partners L.P.
(the ROFR Agreement), NMAC has a right of
first refusal with respect to certain corporate opportunities in
the shipping industry;
WHEREAS, in accordance with the ROFR Agreement, NMAC wishes to
acquire from NMH, and NMH wishes to assign, transfer and sell to
NMAC, the shares of common stock as set forth on
Schedule B to this Agreement (the
Shares) representing all of the issued and
outstanding shares of common stock of Aegean Sea Maritime
Holdings Inc. (Aegean Sea Holdings), a wholly
owned subsidiary of NMH and the owner of the entities listed on
Schedule A (the Vessel-Owning
Subsidiaries), which Vessel-Owning Subsidiaries will
take delivery, or hold an option for the delivery, as the case
may be, of the vessels (the Vessels). The
name (or, in the case of newbuild vessels, the vessel type) and
the delivery date of each Vessel is set forth opposite the
Vessel-Owning Subsidiarys name on Schedule A
hereto; and
WHEREAS, the Vessel-Owning Subsidiaries are each a party to an
agreement for the purchase and delivery, or with respect to an
option for the delivery, of a Vessel (each, a Vessel
Agreement).
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
Interpretation
Section 1.01 Definitions. In
this Agreement, unless the context requires otherwise or unless
otherwise specifically provided herein, the following terms
shall have the respective meanings set out below and grammatical
variations of such terms shall have corresponding meanings:
Agreement means this Agreement,
including its recitals and schedules, as amended and
supplemented;
Applicable Law in respect of any
Person, property, transaction or event, means all laws,
statutes, ordinances, regulations, municipal by-laws, treaties,
judgments and decrees applicable to that Person, property,
transaction or event and, whether or not having the force of
law, all applicable official directives, rules, consents,
approvals, authorizations, guidelines, orders, codes of practice
and policies of any Governmental Authority having or purporting
to have authority over that Person, property, transaction or
event and all general principles of common law and equity;
Business Day means any day other than
a Saturday, Sunday or any statutory holiday on which banks in
London, Greece and New York are required to close;
Closing has the meaning given to it in
Section 2.02;
Closing Date means the day on which
the Closing takes place;
Contracts has the meaning given to it
in Section 5.08;
Annex A-1
Credit Agreements mean the agreements
between the Vessel-Owning Subsidiaries and (a) Deutsche
Schiffsbank Aktiengesellschaft, Alpha Bank A.E. and Credit
Agricole Corporate and Investment Bank dated April 7, 2010
(b) DVB Bank SE and Fortis Bank dated April 8, 2010
and (c) a credit facility of up to $52 million to be
used to partially finance the acquisition of two currently
operating LR1 vessels, which is currently in advanced
negotiations;
Encumbrance means any mortgage, lien,
charge, assignment, adverse claim, hypothecation, restriction,
option, covenant, condition or encumbrance, whether fixed or
floating, on, or any security interest in, any property whether
real, personal or mixed, tangible or intangible, any pledge or
hypothecation of any property, any deposit arrangement,
priority, conditional sale agreement, other title retention
agreement or equipment trust, capital lease or other security
arrangements of any kind;
Governmental Authority means any
domestic or foreign government, including federal, provincial,
state, municipal, county or regional government or governmental
or regulatory authority, domestic or foreign, and includes any
department, commission, bureau, board, administrative agency or
regulatory body of any of the foregoing and any multinational or
supranational organization;
Initial Public Offering means the
initial public offering of NMAC pursuant to the Registration
Statement;
Losses means, with respect to any
matter, all losses, claims, damages, liabilities, deficiencies,
costs, expenses (including all costs of investigation, legal and
other professional fees and disbursements, interest, penalties
and amounts paid in settlement) or diminution of value, whether
or not involving a claim from a third party, however
specifically excluding consequential, special and indirect
losses, loss of profit and loss of opportunity;
NMAC Indemnitees has the meaning given
to it in Section 9.01;
NMH Indemnities has the meaning given
to it in Section 9.02;
Notice means any notice, citation,
directive, order, claim, litigation, investigation, proceeding,
judgment, letter or other communication, written or oral, actual
or threatened, from any Person;
Parties means all parties to this
Agreement and Party means any one of them;
Person means an individual, legal
personal representative, corporation, body corporate, firm,
partnership, trust, trustee, syndicate, joint venture,
unincorporated organization or Governmental Authority;
Registration Statement means the
registration statement on
Form F-1
filed by NMAC in connection with the Initial Public Offering, as
it may be amended.
Shares has the meaning given to it in
the recitals;
Taxes means all income, franchise,
business, property, sales, use, goods and services or value
added, withholding, excise, alternate minimum capital, transfer,
excise, customs, anti-dumping, stumpage, countervail, net worth,
stamp, registration, franchise, payroll, employment, health,
education, business, school, property, local improvement,
development, education development and occupation taxes,
surtaxes, duties, levies, imposts, rates, fees, assessments,
dues and charges and other taxes required to be reported upon or
paid to any domestic or foreign jurisdiction and all interest
and penalties thereon;
Time of Closing has the meaning given
to it in Section 2.02;
Vessel Agreement has the meaning given
to it in the recitals;
Vessel-Owning Subsidiary has the
meaning given to it in the recitals; and
Vessel has the meaning given to it in
the recitals.
Annex A-2
ARTICLE II
Transfer
of Shares; Closing
Section 2.01 Transfer
of Shares. NMH agrees to assign, sell and
transfer to NMAC, and NMAC agrees to accept from NMH and in
accordance with and subject to the terms and conditions set
forth in this Agreement, the Shares.
Section 2.02 Closing. On
the terms and subject to the conditions of this Agreement, the
transfer of the Shares of Aegean Sea Holdings shall take place
within five Business Days after the date on which the
stockholders of NMAC approve the transactions contemplated by
this Agreement or on such other date as may be agreed upon in
writing by NMH and NMAC (the Time of
Closing). The assignment and transfer of Shares of
Aegean Sea Holdings is hereinafter referred to as the
Closing.
Section 2.03 Place
of Closing. The Closing shall occur at a
place agreed upon in writing by NMH and NMAC.
ARTICLE III
Representations
and Warranties of NMAC
NMAC represents and warrants to the NMH that as of the date
hereof and on the Closing Date:
Section 3.01 Organization
and Limited Partnership Authority. NMAC is
duly formed, validly existing and in good standing under the
laws of the Republic of the Marshall Islands, and has all
requisite corporate power and authority to enter into this
Agreement and to consummate the transaction contemplated hereby.
This Agreement has been duly executed and delivered by NMAC, has
been effectively authorized by all necessary action, corporate
or otherwise, and constitutes legal, valid and binding
obligations of NMAC. No meeting has been convened or resolution
proposed or petition presented and no order has been made to
wind up NMAC.
Section 3.02 Agreement
Not in Breach of Other Instruments. The
execution and delivery of this Agreement, the consummation of
the transaction contemplated hereby and the fulfillment of the
terms hereof will not result in a breach of any of the terms or
provisions of, or constitute a default under, or conflict with,
any agreement or other instrument to which NMAC is a party or by
which it is bound, its articles of incorporation and by-laws,
any judgment, decree, order or award of any court, governmental
body or arbitrator by which NMAC is bound, or any law, rule or
regulation applicable to NMAC which would have a material effect
on the transaction contemplated hereby.
Section 3.03 No
Legal Bar. NMAC is not prohibited by any
order, writ, injunction or decree of any body of competent
jurisdiction from consummating the transaction contemplated by
this Agreement and no such action or proceeding is pending or,
to the best of its knowledge and belief, threatened against NMAC
that questions the validity of this Agreement, the transaction
contemplated hereby or any action that has been taken by any of
the parties in connection herewith or in connection with the
transaction contemplated hereby.
ARTICLE IV
Representations
and Warranties of NMH
NMH represents and warrants to NMAC that as of the date hereof
and on the Closing Date:
Section 4.01 Organization
and Corporate Authority. NMH is duly
incorporated, validly existing and in good standing under the
laws of the Republic of the Marshall Islands, and has all
requisite corporate power and authority to enter into this
Agreement and to consummate the transaction contemplated hereby.
This Agreement has been duly executed and delivered by NMH, has
been effectively authorized by all necessary action, corporate
or otherwise, and constitutes legal, valid and binding
obligations of NMH. No meeting has been convened or resolution
proposed or petition presented and no order has been made to
wind up NMH.
Annex A-3
Section 4.02 Agreement
Not in Breach of Other Instruments. The
execution and delivery of this Agreement, the consummation of
the transaction contemplated hereby and the fulfillment of the
terms hereof will not result in a breach of any of the terms or
provisions of, or constitute a default under, or conflict with,
any agreement or other instrument to which NMH is a party or by
which it is bound, the Articles of Incorporation and Bylaws of
NMH, any judgment, decree, order or award of any court,
governmental body or arbitrator by which NMH is bound, or any
law, rule or regulation applicable to NMH.
Section 4.03 No
Legal Bar. NMH is not prohibited by any
order, writ, injunction or decree of any body of competent
jurisdiction from consummating the transaction contemplated by
this Agreement and no such action or proceeding is pending or,
to the best of its knowledge and belief, threatened against NMH
that questions the validity of this Agreement, the transaction
contemplated hereby or any action that has been taken by any of
the parties in connection herewith or in connection with the
transaction contemplated hereby.
Section 4.04 Good
and Marketable Title to Shares. NMH is the
registered owner of all of the Shares and now has, and at the
Closing will have and convey to NMAC, good and marketable title
to the Shares, free and clear of any and all Encumbrances.
Section 4.05 Right
to Enter Agreement. NMH has the full right,
power and authority to enter into this Agreement and to
transfer, convey and sell to NMAC at the Time of Closing the
Shares and upon consummation of the purchase contemplated
hereby, NMAC will acquire from NMH good and marketable title to
the Shares, free and clear of all covenants, conditions,
restrictions, voting trust arrangements, liens, charges,
encumbrances, options and adverse claims or rights whatsoever.
ARTICLE V
Representations
and Warranties of
NMH
Regarding Aegean Sea Holdings and the Vessel-Owning
Subsidiaries
NMH represents and warrants to NMAC that as of the date hereof
and on the Closing Date:
Section 5.01 Organization
Good Standing and Authority. Each of Aegean
Sea Holdings and each Vessel-Owning Subsidiary is a corporation
duly incorporated, validly existing and in good standing under
the laws of the Republic of the Marshall Islands and the Cayman
Islands. Each of Aegean Sea Holdings and each Vessel-Owning
Subsidiary has full corporate power and authority to carry on
its business as it is now, and has since its incorporation been,
conducted, and is entitled to own, lease or operate the
properties and assets it now owns, leases or operates and to
enter into legal and binding contracts. Each of Aegean Sea
Holdings and each Vessel-Owning Subsidiary is qualified to do
business, is in good standing and has all required and
appropriate licenses and authorizations in each jurisdiction in
which its failure to obtain or maintain such qualification, good
standing, licensing or authorization would have a material
adverse effect on the condition (financial or otherwise),
assets, properties, business or prospects of such entity taken
as a whole. No meeting has been convened or resolution proposed
or petition presented and no order has been made to wind up
Aegean Sea Holdings or any Vessel-Owning Subsidiary.
Section 5.02 Capitalization. (a) The
Shares consist of the shares listed next to Aegean Sea Holdings
in Schedule B. The Shares have been duly
authorized and validly issued and are fully paid and
non-assessable, and constitute the total authorized, issued and
outstanding capital stock of Aegean Sea Holdings. There are not,
and on the Closing Date there will not be, outstanding
(i) any options, warrants or other rights to purchase from
Aegean Sea Holdings any capital stock of Aegean Sea Holdings,
(ii) any securities convertible into or exchangeable for
shares of such capital stock or (iii) any other commitments
of any kind for the issuance of additional shares of capital
stock or options, warrants or other securities of Aegean Sea
Holdings.
(b) All of the issued and outstanding shares of capital
stock of, or other equity interests in, each Vessel-Owning
Subsidiary are: (i) duly authorized, validly issued, fully
paid, non-assessable; (ii) owned by Aegean Sea Holdings
free and clear of all liens and encumbrances except for those
liens and encumbrances under the Credit Agreements; and
(iii) free of any restriction, including, without
limitation, any restriction which
Annex A-4
restricts the right to vote, sell or otherwise dispose of such
capital stock or other ownership interest except for
restrictions under the Credit Agreements. There are no
outstanding or authorized options, warrants, rights, agreements
or commitments to which any Vessel-Owning Subsidiary is a party
or which are binding on any of them providing for the issuance,
disposition or acquisition of any capital stock of any
Vessel-Owning Subsidiary. There are no voting trusts, proxies or
other agreements or understandings with respect to the voting of
any capital stock of any Vessel-Owning Subsidiary.
Section 5.03 Organizational
Documents. NMH has supplied to NMAC true and
correct copies of the organizational documents of Aegean Sea
Holdings and each Vessel-Owning Subsidiary, as in effect on the
Closing Date (the Organizational
Documents) and no amendments will be made to the
Organizational Documents prior to the Closing Date without the
prior written consent of NMAC (such consent not to be
unreasonably withheld).
Section 5.04 Agreement
Not in Breach of Other Instruments. Neither
the execution and delivery of this Agreement nor the
consummation of the transaction contemplated hereby will
violate, or result in a breach of, any of the terms and
provisions of, or constitute a default under, or conflict with,
or give any other party thereto a right to terminate any
agreement or other instrument to which Aegean Sea Holdings or
any Vessel-Owning Subsidiary is a party or by which it is bound
including, without limitation, its articles of incorporation and
bylaws or any judgment, decree, order or award of any court,
governmental body or arbitrator applicable to Aegean Sea
Holdings or any Vessel-Owning Subsidiary.
Section 5.05 Litigation.
(a) There is no action, suit or proceeding to which Aegean
Sea Holdings or any Vessel-Owning Subsidiary is a party (either
as a plaintiff or defendant) pending before any court or
governmental agency, authority or body or arbitrator; there is
no action, suit or proceeding threatened against Aegean Sea
Holdings or any Vessel-Owning Subsidiary; and, to the best
knowledge of NMH, there is no basis for any such action, suit or
proceeding;
(b) Neither Aegean Sea Holdings nor any Vessel-Owning
Subsidiary has been permanently or temporarily enjoined by any
order, judgment or decree of any court or any governmental
agency, authority or body from engaging in or continuing any
conduct or practice in connection with the business, assets, or
properties of Aegean Sea Holdings or any Vessel-Owning
Subsidiary; and
(c) There is not in existence any order, judgment or decree
of any court or other tribunal or other agency enjoining or
requiring Aegean Sea Holdings or any Vessel-Owning Subsidiary to
take any action of any kind with respect to its business, assets
or properties.
Section 5.06 Indebtedness
to and from Officers, etc. Neither Aegean Sea
Holdings nor any Vessel-Owning Subsidiary will be indebted,
directly or indirectly, to any person who is an officer,
director, stockholder or employee of any of NMH or any spouse,
child, or other relative or any affiliate of any such person,
nor shall any such officer, director, stockholder, employee,
relative or affiliate be indebted to Aegean Sea Holdings or any
Vessel-Owning Subsidiary.
Section 5.07 Contracts
and Agreements. All contracts and agreements,
written or oral, to which Aegean Sea Holdings or any
Vessel-Owning Subsidiary is a party or by which any of its
assets are bound, including each Vessel Agreement (the
Contracts), have been disclosed to NMAC. No
other contracts or agreements, written or oral, will be entered
into by Aegean Sea Holdings or any Vessel-Owning Subsidiary
prior to the Closing Date without the prior consent of NMAC
(such consent not to be unreasonably withheld).
(a) Each of the Contracts is a valid and binding agreement
of Aegean Sea Holdings and of each Vessel-Owning Subsidiary, as
applicable, and to the best knowledge of NMH, of all other
parties thereto;
(b) Aegean Sea Holdings and each Vessel-Owning Subsidiary
has fulfilled all material obligations required pursuant to its
Contracts to have been performed by it prior to the date hereof
and has not waived any material rights thereunder; and
Annex A-5
(c) There has not occurred any material default under any
of the Contracts, or to the best knowledge of NMH, on the part
of any other party thereto nor has any event occurred that with
the giving of notice or the lapse of time, or both, would
constitute any material default on the part of Aegean Sea
Holdings or any Vessel-Owning Subsidiary, as applicable, under
any of the Contracts nor, to the best knowledge of NMH, has any
event occurred that with the giving of notice or the lapse of
time, or both, would constitute any material default on the part
of any other party to any of the Contracts.
Section 5.08 Compliance
with Law. The conduct of business by each of
Aegean Sea Holdings and each Vessel-Owning Subsidiary on the
date hereof does not violate any laws, statutes, ordinances,
rules, regulations, decrees, orders, permits or other similar
items in force on the date hereof (including, but not limited
to, any of the foregoing relating to employment discrimination,
environmental protection or conservation) of any country,
province, state or other governing body, the enforcement of
which would materially and adversely affect the business,
assets, condition (financial or otherwise) or prospects of
Aegean Sea Holdings or any Vessel-Owning Subsidiary, nor has
Aegean Sea Holdings or any Vessel-Owning Subsidiary received any
notice of any such violation.
Section 5.09 No
Undisclosed Liabilities. Other than
obligations under the Credit Agreements and the legal fees and
other expenses relating to the negotiation and execution of the
Contracts and the Credit Agreements , neither Aegean Sea
Holdings nor any Vessel-Owning Subsidiary (or the Vessel owned
by it) has any other liabilities or obligations of any nature,
whether absolute, accrued, contingent or otherwise, and whether
due or to become due (including, without limitation, any
liability for taxes and interest, penalties and other charges
payable with respect to any such liability or obligation).
Section 5.10 Title
to Vessels. Upon delivery, each Vessel-Owning
Subsidiary will be the registered owner of the applicable Vessel.
Section 5.11 No
Encumbrances. Each Vessel-Owning Subsidiary
and its applicable Vessel will be free of all Encumbrances other
than the Encumbrances appearing in the ship registry of the
Vessel and those arising under the applicable Credit Agreements
and the Contracts.
Section 5.12 Condition. Each
Vessel will be (i) adequate and suitable for use by the
applicable Vessel-Owning Subsidiary in its business, ordinary
wear and tear excepted; (ii) seaworthy in all material
respects for hull and machinery insurance warranty purposes and
in good running order and repair; (iii) insured against all
risks, and in amounts, consistent with common industry
practices; (iv) in compliance with maritime laws and
regulations; (v) in compliance in all material respects
with the requirements of its class and classification society;
and (vi) all class certificates of the Vessel will be clean
and valid and free of recommendations affecting class.
Section 5.13 Disclosure
of Information. NMH has disclosed to NMAC all
material information on, and about, Aegean Sea Holdings and each
Vessel-Owning Subsidiary and the Vessels and all such
information is true, accurate and not misleading in any material
respect. Nothing has been withheld from the material provided to
NMAC that would render such information untrue or misleading.
ARTICLE VI
Pre-Closing
Matters
Section 6.01 Covenants
of NMH Prior to the Closing. From the date of
this Agreement to the Closing Date, NMH shall cause Aegean Sea
Holdings and each Vessel-Owning Subsidiary to conduct its
businesses in the usual, regular and ordinary course in
substantially the same manner as previously conducted. NMH shall
not, and shall not permit Aegean Sea Holdings or any
Vessel-Owning Subsidiary to, take any action that would result
in any of the conditions to the assignment and transfer of
Shares set forth in Article VII not being satisfied. In
addition, NMH hereby agrees and covenants that it:
(a) shall cooperate with NMAC and use its reasonable best
efforts to obtain, at or prior to the Closing Date, any consents
required in respect of the transfer of the rights and benefits
under the Contracts;
Annex A-6
(b) shall use its reasonable best efforts to take or cause
to be taken promptly all actions and to do or cause to be done
all things necessary, proper and advisable to consummate and
make effective as promptly as practicable the transaction
contemplated by this Agreement and to cooperate with NMAC in
connection with the foregoing, including using all reasonable
best efforts to obtain all necessary consents, approvals and
authorizations from each Governmental Authority and each other
Person that are required to consummate the transaction
contemplated under this Agreement;
(c) shall take or cause to be taken all necessary corporate
action, steps and proceedings to approve or authorize validly
and effectively the assignment and transfer of the Shares and
the execution and delivery of this Agreement and the other
agreements and documents contemplated hereby;
(d) shall not amend, alter or otherwise modify or permit
any amendment, alteration or modification of any material
provision of or terminate the Vessel Agreements without the
prior written consent of NMAC, not to be unreasonably withheld
or delayed;
(e) shall not exercise or permit any exercise of any rights
or options contained in the Vessel Agreements, without the prior
written consent of NMAC, not to be unreasonably withheld or
delayed;
(f) shall consult with NMAC regarding all material
decisions to be made pursuant to each Vessel Agreement, and
shall make such decisions only with the prior approval of NMAC,
not to be unreasonably withheld or delayed;
(g) shall cause Aegean Sea Holdings and each Vessel-Owning
Subsidiary to observe and perform in a timely manner, all of its
covenants and obligations under its Vessel Agreement, if any,
and (i) in the case of a default by another party thereto,
it shall forthwith advise NMAC of such default and shall, if
requested by NMAC, enforce all of Aegean Sea Holdings and any
Vessel-Owning Subsidiarys rights under such Vessel
Agreement in respect of such default; and (ii) in the case
of a breach or anticipated breach of any Vessel Agreement by any
Vessel-Owning Subsidiary, it shall permit NMAC to cure on its
behalf such breach or anticipated breach and shall promptly
reimburse NMAC for any and all costs that NMAC may expend in
order to effect such cure; and
(h) shall not cause or, to the extent reasonably within its
control, permit any Encumbrances to attach to any Vessel except
for Encumbrances under the Credit Agreements.
Section 6.02 Covenant
of NMAC Prior to the Closing. NMAC hereby
agrees and covenants that during the period of time after the
date of the Agreement and prior to the Closing Date, NMAC shall,
in respect of the Shares to be transferred on the Closing Date,
take, or cause to be taken, all necessary corporate action,
steps and proceedings to approve or authorize validly and
effectively the acceptance of the Shares and the execution and
delivery of this Agreement and the other agreements and
documents contemplated hereby.
ARTICLE VII
Conditions
Of Closing
Section 7.01 Conditions
of NMH. The obligation of NMH to assign and
transfer the Shares is subject to the satisfaction (or waiver by
NMH) on or prior to the Closing Date of the following conditions:
(a) the representations and warranties of NMAC made in this
Agreement shall be true and correct in all material respects as
of the Closing Date as though made on the Closing Date, except
to the extent such representations and warranties expressly
relate to an earlier date (in which case such representations
and warranties shall be true and correct in all material
respects, on and as of such earlier date);
(b) NMAC shall have performed or complied in all material
respects with all obligations and covenants required by this
Agreement to be performed or complied with by NMAC by the
Closing Date;
(c) no legal or regulatory action or proceeding shall be
pending or threatened by any Governmental Authority to enjoin,
restrict or prohibit the purchase and sale of the Shares;
Annex A-7
(e) NMAC shall have replaced NMH as a guarantor of
(i) the Credit Agreements relating to financing for the
purchase of the Vessels and (ii) any performance or similar
guaranties to any shipbuilder or seller relating to the Vessels,
each in form and substance reasonably satisfactory to each of
NMH and NMAC;
(f) NMAC shall have reimbursed NMH for all out of pocket
costs and expenses incurred in connection with the transactions
contemplated hereby, including, but not limited to, all costs
and expenses incurred in forming and maintaining Aegean Sea
Holdings and the Vessel-Owning Subsidiaries, costs and expenses
incurred in connection with the negotiation, execution and
delivery of the Credit Agreements and the Vessel Agreements and
any payments made by NMH, Aegean Sea Holdings or the
Vessel-Owning Subsidiaries under the Vessel Agreements, except
to the extent such payments were funded by funds drawn from the
Credit Agreements; and
(g) all proceedings to be taken in connection with the
transaction contemplated by this Agreement and all documents
incidental thereto shall be reasonably satisfactory in form and
substance to NMH, and NMH shall have received copies of all such
documents and other evidence as it may reasonably request in
order to establish the consummation of such transaction and the
taking of all proceedings in connection therewith.
Section 7.02 Conditions
of NMAC. The obligation of NMAC to accept
delivery of the Shares is subject to the satisfaction (or waiver
by NMAC) on or prior to the Closing Date of the following
conditions:
(a) the representations and warranties of NMH in this
Agreement shall be true and correct in all material respects as
of the Closing Date as though made on the Closing Date, except
to the extent such representations and warranties expressly
relate to an earlier date (in which case such representations
and warranties shall be true and correct in all material
respects, on and as of such earlier date);
(b) NMH shall have performed or complied in all material
respects with all obligations and covenants required by this
Agreement to be performed or complied with by NMH by the Closing
Date;
(c) no legal or regulatory action or proceeding shall be
pending or threatened by any Governmental Authority to enjoin,
restrict or prohibit the assignment and transfer of the Shares;
(d) the stockholders of NMAC shall have approved of the
transactions contemplated hereby and less than 40% of the shares
of common stock sold in the Initial Public Offering both vote
against the vessel acquisition proposal and properly exercise
their conversion rights;
(e) NMAC shall have received written consents from all
third parties necessary or appropriate to effect the purchase
and sale of the Shares, if any; and
(f) all proceedings to be taken in connection with the
transactions contemplated by this Agreement and all documents
incidental thereto shall be reasonably satisfactory in form and
substance to NMAC and its counsel, and NMAC shall have received
copies of all such documents and other evidence as it or its
counsel may reasonably request in order to establish the
consummation of such transaction and the taking of all
proceedings in connection therewith.
ARTICLE VIII
Termination,
Amendment and Waiver
Section 8.01 Termination
of Agreement. Notwithstanding anything to the
contrary in this Agreement, this Agreement may be terminated and
the assignment and transfer of the Shares contemplated by this
Agreement abandoned at any time prior to the Closing:
(a) by mutual written consent of NMH and NMAC; or
(b) by NMH if any of the conditions set forth in
Section 7.01 shall have become incapable of fulfillment,
and shall not have been waived by NMH; or
Annex A-8
(c) by NMAC if any of the conditions set forth in
Section 7.02 shall have become incapable of fulfillment,
and shall not have been waived by NMAC; or
(d) by written notice by either NMAC or NMH, if, at the
meeting of NMACs stockholders to vote upon the approval of
this Agreement and the transactions contemplated hereby
(including any adjournment or postponement thereof at which this
Agreement is voted upon), the approval by the stockholders of
NMAC shall not have been obtained.
provided, however, that the party seeking
termination pursuant to clause (b), (c) or (d) is not
then in material breach of any of its representations,
warranties, covenants or agreements contained in this Agreement.
Section 8.02 Amendments
and Waivers. This Agreement may not be
amended except by an instrument in writing signed on behalf of
each Party hereto. By an instrument in writing NMAC, on the one
hand, or NMH, on the other hand, may waive compliance by the
other with any term or provision of this Agreement that such
other party was or is obligated to comply with or perform.
ARTICLE IX
Indemnification;
Trust Fund Waiver
Section 9.01 Indemnity
by NMH. NMH shall be liable for, and shall
indemnify NMAC and each of its directors, employees, agents and
representatives (the NMAC Indemnitees)
against and hold them harmless from, any Losses, suffered or
incurred by such NMAC Indemnitee by reason of, arising out of or
otherwise in respect of any inaccuracy in, breach of any
representation or warranty, or a failure to perform or observe
fully any covenant, agreement or obligation of, NMH in or under
this Agreement or in or under any document, instrument or
agreement delivered pursuant to this Agreement by NMH.
Section 9.02 Indemnity
by NMAC. NMAC shall indemnify NMH and its
affiliates and each of their respective officers, directors,
employees, agents and representatives (the NMH
Indemnitees) against and hold them harmless from, any
Losses, suffered or incurred by such NMH Indemnitee by reason
of, arising out of or otherwise in respect of any inaccuracy in,
breach of any representation or warranty, or a failure to
perform or observe fully any covenant, agreement or obligation
of, NMAC in or under this Agreement or in or under any document,
instrument or agreement delivered pursuant to this Agreement by
NMAC.
Section 9.03 Trust Fund Waiver. NMH
acknowledges that NMAC is a blank check company formed for the
purpose of acquiring one or more businesses or assets (an
Initial Business Combination). NMH further
acknowledges that NMACs sole assets consist of the cash
proceeds of the IPO and private placements of its securities, in
each case, consummated on July 1, 2008, and that
substantially all of those proceeds have been deposited in a
trust account with a third party (the
Trust Fund) for the benefit of NMAC,
certain of its public stockholders and the underwriters of the
IPO. The monies in the Trust Fund may be disbursed only
(1) to NMAC in limited amounts from time to time (and in no
event more than $3,600,000 in total) in order to
fund NMACs working capital requirements; (2) if
NMAC completes an Initial Business Combination, to certain
dissenting public shareholders, to the underwriters in the
amount of underwriting discounts and commissions they earned in
the IPO but whose payment they have deferred, and then to NMAC;
and (3) if NMAC fails to complete an Initial Business
Combination within the allotted time period, or within an
extended period such extended period is approved, and
liquidates, subject to the terms of the agreement governing the
Trust Account, to NMAC in limited amounts to permit NMAC to
pay the costs and expenses of its liquidation and dissolution,
and then to NMACs public shareholders (as such term is
defined in the agreement governing the Trust Account). For
and in consideration of NMACs entering into this
Agreement, the receipt and sufficiency of which is hereby
acknowledged, NMH hereby irrevocably waives any right, title,
interest or claim of any kind (any Claim)
they have or may have in the future in or to any monies in the
Trust Fund and agree not to seek recourse against
NMACs directors or officers, the Trust Fund or any
funds distributed therefrom (except amounts released to NMAC as
described in clause (1) of the preceding sentence), as a
result of, or arising out of, any Claims against NMAC arising
under this Agreement and the other transactions and transaction
documents contemplated thereunder.
Annex A-9
ARTICLE X
Miscellaneous
Section 10.01 Governing
Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the Republic of the
Marshall Islands applicable to contracts made and to be
performed wholly within such jurisdiction without giving effect
to conflict of law principles thereof.
Section 10.02 Counterparts. This
Agreement may be executed simultaneously in one or more
counterparts, each of which shall be deemed an original, but all
of which shall constitute but one and the same instrument.
Section 10.03 Complete
Agreement. This Agreement and Schedules
hereto contain the entire agreement between the parties hereto
with respect to the transaction contemplated herein and, except
as provided herein, supersede all previous oral and written and
all contemporaneous oral negotiations, commitments, writings and
understandings.
Section 10.04 Interpretation. The
headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 10.05 Severability. If
any of the provisions of this Agreement are held by any court of
competent jurisdiction to contravene, or to be invalid under,
the laws of any governmental body having jurisdiction over the
subject matter hereof, such contravention or invalidity shall
not invalidate the entire Agreement. Instead, this Agreement
shall be construed as if it did not contain the particular
provision or provisions held to be invalid, and an equitable
adjustment shall be made and necessary provision added so as to
give effect, as nearly as possible, to the intention of the
Parties as expressed in this Agreement at the time of execution
of this Agreement.
Section 10.06 Third
Party Rights. A person who is not a party to
this Agreement has no right to enforce or to enjoy the benefit
of any term of this Agreement.
Section 10.07 Notices. Any
notice, claim or demand in connection with this Agreement shall
be delivered to the parties at the following addresses (or at
such other address or facsimile number for a party as may be
designated by notice by such party to the other party):
(a) if to Navios Maritime Holdings Inc., as follows:
85 Akti Miaouli Street, Piraeus, Greece 185 38
(b) if to Navios Maritime Acquisition Corporation, as
follows:
85 Akti Miaouli Street, Piraeus, Greece 185 38
Attention: Vasiliki Papaefthymiou
and any such notice shall be deemed to have been received
(i) on the next working day in the place to which it is
sent, if sent by facsimile or (ii) forty eight
(48) hours from the time of dispatch, if sent by courier.
[Remainder
of page intentionally left blank; signature page to
follow.]
Annex A-10
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be signed as of the date first above written.
NAVIOS MARITIME HOLDINGS INC.
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By:
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/s/ Vasiliki
Papaefthymiou
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Name: Vasiliki Papaefthymiou
Title: Director
NAVIOS MARITIME ACQUISITION CORPORATION
Name: Angeliki Frangou
Title: Director
Annex A-11
SCHEDULE A
VESSEL-OWNING
SUBSIDIARY AND VESSEL
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Vessel-Owning Subsidiary
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Jurisdiction
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Vessel Name or Type
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Delivery
Date(1)
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Amorgos Shipping Corporation
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Marshall Islands
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Chemical Tanker
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9/30/2010
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Andros Shipping Corporation
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Marshall Islands
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Chemical Tanker
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11/30/2010
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Antiparos Shipping Corporation
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Marshall Islands
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MR2 Product Tanker
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Q1 2012
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Ikaria Shipping Corporation
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Marshall Islands
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MR2 Product Tanker
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Q2 2012
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Kos Shipping Corporation
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Marshall Islands
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MR2 Product Tanker
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Q3 2012
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Mytilene Shipping Corporation
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Marshall Islands
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MR2 Product Tanker
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Q3 2012
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Sifnos Shipping Corporation
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Marshall Islands
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MR2 Product Tanker
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Q4 2012
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Skiathos Shipping Corporation
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Marshall Islands
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MR2 Product Tanker
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Q4 2012
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Syros Shipping Corporation
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Marshall Islands
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MR2 Product Tanker
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Q4 2012
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Ios Shipping Corporation
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Cayman Islands
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LR1 Product Tanker
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May 2010
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Skopelos Shipping Corporation
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Cayman Islands
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LR1 Product Tanker
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May 2010
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Rhodes Shipping Corporation
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Marshall Islands
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LR1 Product Tanker
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Q4 2011
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Crete Shipping Corporation
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Marshall Islands
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LR1 Product Tanker
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Q4 2011
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Tinos Shipping Corporation
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Marshall Islands
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LR1 Product Tanker
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Q4 2012(2)
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Thera Shipping Corporation
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Marshall Islands
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LR1 Product Tanker
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Q4 2012(2)
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(1) |
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Estimated. |
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(2) |
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Subject to the exercise by NMAC of an option to acquire the
Vessel, which expires in November 2010. |
Annex AA-1
SCHEDULE B
CAPITALIZATION
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Number of Shares
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Aegean Sea Maritime Holdings Inc.
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500
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Annex AB-1
ANNEX B
Private
and Confidential
DATED
7 April 2010
AMORGOS
SHIPPING CORPORATION
ANDROS SHIPPING CORPORATION
ANTIPAROS SHIPPING CORPORATION
IKARIA SHIPPING CORPORATION
KOS SHIPPING CORPORATION
and
MYTILENE SHIPPING CORPORATION
as Borrowers
DEUTSCHE
SCHIFFSBANK AG
ALPHA BANK AE
CREDIT AGRICOLE CORPORATE AND INVESTMENT BANK
as Lenders
DEUTSCHE
SCHIFFSBANK AG
as Arranger, Swap Bank, Agent, Account Bank
and Security Trustee
and
ALPHA BANK AE
as Account Bank
FACILITY
AGREEMENT FOR A USD 150,000,000
TERM LOAN
FACILITY
IN SIX
TRANCHES
PIRAEUS
THIS AGREEMENT dated 7 April 2010 is made BY and
BETWEEN:
(1) AMORGOS SHIPPING CORPORATION, ANDROS SHIPPING
CORPORATION, ANTIPAROS SHIPPING CORPORATION, IKARIA SHIPPING
CORPORATION, KOS SHIPPING CORPORATION and MYTILENE
SHIPPING CORPORATION as Borrowers;
(2) DEUTSCHE SCHIFFSBANK AG, ALPHA BANK AE and CREDIT
AGRIDOLE CORPORATE AND INVESTMENT BANK as Lenders; and
(3) DEUTSCHE SCHIFFSBANK AG as Arranger, Account
Bank, Agent and Security Trustee;
(4) DEUTSCHE SCHIFFSBANK AG as Swap Bank; and
(5) ALPHA BANK AE as Account Bank.
NOW IT IS HEREBY AGREED AS FOLLOWS:
1 PURPOSE,
DEFINITIONS, CONSTRUCTION & MAJORITY LENDERS
1.1 Purpose
This Agreement sets out the terms and conditions on which
Deutsche Schiffsbank AG, Alpha Bank AE and Credit Agricole
Corporate and Investment Bank agree to make available to the
Borrowers a loan of up to one hundred and fifty million Dollars
(USD 150,000,000) in 6 equal Tranches, for the purpose of
part-financing the purchase price of two IMO II/III Chemical
Carriers and 4 MR Product Tankers which are to be constructed by
the Builder.
1.2 Definitions
In this Agreement, unless the context otherwise requires:
Account Bank means, (i) in
relation to the DSB Equity Deposit Account, Deutsche Schiffsbank
AG acting through its office at Domshof 17 D-28195 Bremen,
Germany and (ii) in relation to the Alpha Equity Deposit
Account, the Earnings Accounts and the Retention Account, Alpha
Bank AE acting through its office at 81 Akti Miaouli, Piraeus,
Greece, or, in each case, such other Lender as may be designated
by the Agent as an Account Bank for the purposes of this
Agreement;
Advance means the principal amount of
each drawing in respect of the Loan to be made pursuant to
Clause 2.5;
Agent means Deutsche Schiffsbank AG
acting through its office at Domshof 17 D-28195 Bremen, Germany
(or of such other address as may last have been notified to the
other parties to this Agreement pursuant to clause 17.2.3)
or such other person as may be appointed as agent by the Lenders
pursuant to clause 16.13;
Alpha Equity Deposit Account means an
interest bearing USD Account required to be opened hereunder
with the relevant Account Bank in the joint names of the
Borrowers designated Navios Equity Deposit
Account and includes any other account designated in
writing by the Agent to be an Equity Deposit Account for the
purposes of this Agreement;
Alpha Equity Deposit Account Pledge
means a first priority charge required to be executed hereunder
between the Borrowers and the Security Trustee in respect of the
Alpha Equity Deposit Account in such form as the Agent and the
Majority Lenders may require in their sole discretion;
Approved Broker means each of
Fearnleys A.S., Oslo Shipbrokers A.S., Clarkson Valuations
Limited, Simpson Spence & Young Shipbrokers Ltd., E.A.
Gibson Shipbrokers Ltd., Allied Shipbroking, Greece, RS Platou
ASA, ICAP Shipping Limited, ACM Ltd., London, or such other
reputable, independent and first class firm of shipbrokers
specialising in the valuation of vessels of the relevant type
appointed by the Lenders and agreed with the Borrowers;
Annex B-3
Arranger means Deutsche Schiffsbank AG
acting through its office at Domshof 17, D-28195, Bremen,
Germany;
Banking Day means a day on which
dealings in deposits in USD are carried on in the London
Interbank Eurocurrency Market and (other than Saturday or
Sunday) on which banks are open for business in Athens, London,
Bremen, Piraeus, Paris and New York City (or any other relevant
place of payment under clause 6);
Banks means, together, the Arranger,
the Agent, the Security Trustee, the Account Banks, the Lenders,
the Swap Bank and any Transferee Lenders;
Borrowed Money means Indebtedness in
respect of (i) money borrowed or raised and debit balances
at banks, (ii) any bond, note, loan stock, debenture or
similar debt instrument, (iii) acceptance or documentary
credit facilities, (iv) receivables sold or discounted
(otherwise than on a non-recourse basis), (v) deferred
payments for assets or services acquired, (vi) finance
leases and hire purchase contracts, (vii) swaps, forward
exchange contracts, futures and other derivatives,
(viii) any other transaction (including without limitation
forward sale or purchase agreements) having the commercial
effect of a borrowing or raising of money or of any of
(ii) to (vii) above and (ix) guarantees in
respect of Indebtedness of any person falling within any of
(i) to (viii) above;
Borrower means each of AMORGOS
SHIPPING CORPORATION (Amorgos), ANDROS
SHIPPING CORPORATION (Andros), ANTIPAROS
SHIPPING CORPORATION (Antiparos), IKARIA
SHIPPING CORPORATION (Ikaria), KOS SHIPPING
CORPORATION (Kos) and MYTILENE SHIPPING
CORPORATION (Mytilene) each having its
registered office at Trust Company Complex, Ajeltake Road,
Ajeltake Island, Majuro, Marshall Islands, MH96960 and in the
plural means all of them;
Break Costs means the aggregate amount
of all losses, premiums, penalties, costs and expenses
whatsoever certified by the Agent at any time and from time to
time as having been incurred by the Lenders or any of them in
maintaining or funding their Contributions or in liquidating or
re-employing fixed deposits acquired to maintain the same as a
result of either:
(a) any repayment or prepayment of the Loan or any part
thereof otherwise than (i) in accordance with
clause 4.1 or (ii) on an Interest Payment Date whether
on a voluntary or involuntary basis or otherwise
howsoever; or
(b) as a result of the Borrowers failing or being incapable
of drawing an Advance after a relevant Drawdown Notice has been
given;
Certified Copy means in relation to
any document delivered or issued by or on behalf of any company,
a copy of such document certified as a true, complete and up to
date copy of the original by any of the directors or officers
for the time being of such company or by such companys
attorneys or solicitors;
Charter Assignment means a specific
assignment of each Extended Employment Contract required to be
executed hereunder by any Borrower in favour of the Security
Trustee (including any notices
and/or
acknowledgements
and/or
undertakings associated therewith) in such form as the Agent and
the Majority Lenders may require in their sole discretion;
Charter Insurances means all policies
and contracts of insurance which are from time to time during
the Facility Period in place or taken out or entered into by or
for the benefit of the Owners in respect of loss of earnings and
all benefits thereof (including claims of whatsoever nature and
return of premiums);
Charter Insurance Assignment means a
first priority assignment of the Charter Insurances executed or
to be executed by such named insured as the Agent may require in
favour of the Security Trustee, in such form as the Agent and
the Majority Lenders may in their sole discretion require;
Annex B-4
Classification means, in relation to
each Vessel, the highest class available for a vessel of her
type with the relevant Classification Society;
Classification Society means, in
relation to each Vessel, any IACS classification society which
the Lenders shall, at the request of the Borrowers, have agreed
in writing shall be treated as the classification society in
relation to such Vessel for the purposes of the relevant Ship
Security Documents;
Commitment means, in relation to the
Loan in relation to each Lender, the sum set out opposite its
name in schedule 1 or any replacement thereof and in
relation to each Tranche in relation to each Lender one sixth of
the sum set out opposite its name in schedule 1 or any
replacement thereof, or otherwise pursuant to the terms of any
relevant Transfer Certificate as the amount which, subject to
the terms of this Agreement, it is obliged to advance to the
Borrowers hereunder in respect of the Loan Facility, in each
case as such amount may have been reduced
and/or
cancelled under this Agreement;
Compliance Certificate means a
certificate substantially in the form set out in schedule 6
signed by the chief financial officer of the Corporate Guarantor;
Compulsory Acquisition means, in
respect of a Vessel, requisition for title or other compulsory
acquisition including, if that ship is not released therefrom
within the Relevant Period, capture, appropriation, forfeiture,
seizure, detention, deprivation or confiscation howsoever for
any reason (but excluding requisition for use or hire) by or on
behalf of any Government Entity or other competent authority or
by pirates, hijackers, terrorists or similar persons;
Relevant Period means for the purposes of this
definition of Compulsory Acquisition either (i) thirty (30)
(or in the respect of pirates, hijackers, terrorists or similar
persons, ninety (90)) days or, (ii) in the respect of
pirates, hijackers, terrorists or similar persons, if relevant
underwriters confirm in writing (in customary terms) prior to
the end of such ninety (90) day period that such capture
will be covered by the relevant Owners war risks insurance
if continuing for a further period exceeding six
(6) calendar months, the shorter of eight (8) months
and such period at the end of which cover is confirmed to attach;
Contribution means, at any relevant
time, in relation to each Lender, the principal amount of the
Loan owing to such Lender at such time;
Corporate Guarantee means the
guarantee required to be executed hereunder by the relevant
Corporate Guarantor in such form as the Agent and the Majority
Lenders may require in their sole discretion;
Corporate Guarantor means
(a) prior to the Share Acquisition Date, Navios Maritime
Holdings Inc., a company incorporated in the Marshall Islands
and having its registered office at Trust Company Complex,
Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands,
MH96960 and (b) thereafter, Navios Acquisition;
Default means any Event of Default or
any event or circumstance 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;
Delivered Tranche means each Tranche
which has been applied in financing a Vessel which has been
transferred and delivered by the Builder to its Owner;
Delivery Date means, in relation to a
Vessel, the date on which title to and possession of that Vessel
is transferred from the Builder to the relevant Borrower;
Deutscher Rahmenvertrag means the
Master Agreement for Financial Derivatives Transactions
(Rahmenvertrag für Finanztermingeschäfte)
made or to be made between the Borrowers and the Swap Bank and
includes all Transactions from time to time entered into by the
Borrowers for the purpose of hedging the Borrowers
exposure under this Agreement to fluctuations in LIBOR arising
from the funding of the Loan (or any part thereof) and
Confirmations from time to time exchanged thereunder;
Deutscher Rahmenvertrag Assignment
means the deed of assignment of the Deutscher Rahmenvertrag
executed or (as the context may require) to be each executed by
the Borrowers in favour
Annex B-5
of the Security Trustee in such form as the Agent and the
Majority Lenders may require in their sole discretion;
Dollars and
USD mean the lawful currency of the
USA and in respect of all payments to be made under any of the
Security Documents means funds which are for same day settlement
in the New York Clearing House Interbank Payments System (or
such other US dollar funds as may at the relevant time be
customary for the settlement of international banking
transactions denominated in US dollars);
Drawdown Date means, in relation to
each Advance, any date being a Banking Day falling during the
Drawdown Period, on which the relevant Advance is, or is to be,
made available;
Drawdown Notice means, in relation to
each Advance, a notice substantially in the form of
schedule 2;
Drawdown Period means the period
commencing on the Execution Date and ending in respect of:
(i) Tranche A on 29 March 2011;
(ii) Tranche B on 29 May 2011;
(iii) Tranche C on 25 January 2013;
(iv) Tranche D on 27 June 2013;
(v) Tranche E on 26 May 2013; and
(vi) Tranche F on 27 June 2013
or, in each case, on the latest date the Vessel to be
financed by the relevant Tranche may be delivered in accordance
with the Shipbuilding Contract relating thereto or on the date
on which the Commitment in respect of that Tranche is finally
cancelled or no longer available under the terms of this
Agreement;
DSB Equity Deposit Account means an
interest bearing USD Account required to be opened hereunder
with the relevant Account Bank in the joint names of the
Borrowers designated Navios Equity Deposit
Account and includes any other account designated in
writing by the Agent to be an Equity Deposit Account for the
purposes of this Agreement;
DSB Equity Deposit Account Pledge
means a first priority charge required to be executed hereunder
between the Borrowers and the Lenders in respect of the DSB
Equity Deposit Account in such form as the Lenders may require
in their sole discretion;
Earnings Account means, in respect of
each Borrower, an interest bearing USD Account required to be
opened hereunder with the relevant Account Bank in the name of
that Borrower designated [NAME OF BORROWER]
Earnings Account and includes any other account designated
in writing by the Agent to be an Earnings Account for the
purposes of this Agreement;
Earnings Account Pledge means, in
respect of each Earnings Account, a first priority charge
required to be executed hereunder between the relevant Borrower
and the Security Trustee in respect of its Earnings Account in
such form as the Agent and the Majority Lenders may require in
their sole discretion, and in the plural means all of them;
Encumbrance means any mortgage,
charge, pledge, lien, hypothecation, assignment, title
retention, preferential right, option, trust arrangement or
security interest or other encumbrance, security or arrangement
conferring howsoever a priority of payment in respect of any
obligation of any person;
Environmental Affiliate means any
agent or employee of any Borrower, the Manager, or any other
Group Member or any other person having a contractual
relationship with any Borrower, the Manager, or any other Group
Member in connection with any Relevant Ship or its operation or
the carriage of cargo
and/or
passengers thereon
and/or the
provision of goods
and/or
services on or from any Relevant Ship;
Annex B-6
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 its operation or the carriage of cargo
and/or
passengers thereon
and/or the
provision of goods
and/or
services on or from any Relevant Ship required under any
Environmental Law;
Environmental Claim means (i) any
claim by any applicable Government Entity alleging breach of, or
non-compliance with, any Environmental Laws or Environmental
Approvals or otherwise howsoever relating to or arising out of
an Environmental Incident or (ii) any claim by any other
third party howsoever relating to or arising out of an
Environmental Incident (and, in each such case,
claim shall include a claim for damages
and/or
direction for
and/or
enforcement relating to
clean-up
costs, removal, compliance, remedial action or otherwise) or
(iii) any Proceedings arising from any of the foregoing;
Environmental Incident means,
regardless of cause, (i) any discharge or release of
Environmentally Sensitive Material from any Relevant Ship;
(ii) any incident in which Environmentally Sensitive
Material is discharged or released from a vessel other than a
Relevant Ship which involves collision between a Relevant Ship
and such other vessel or some other incident of navigation or
operation, in either case, where the Relevant Ship, the Manager
and/or the
relevant Owner
and/or the
relevant Group Member
and/or the
relevant Operator are actually, contingently or allegedly at
fault or otherwise howsoever liable (in whole or in part) or
(iii) any incident in which Environmentally Sensitive
Material is discharged or released from a vessel other than a
Relevant Ship and where such Relevant Ship is actually or
reasonably likely to be arrested as a result
and/or where
the Manager
and/or the
relevant Owner
and/or other
Group Member
and/or the
relevant Operator are actually or contingently at fault or
allegedly and reasonably likely to be found at fault or
otherwise howsoever liable to any administrative or legal action;
Environmental Laws means all laws,
regulations, conventions and agreements whatsoever relating to
pollution, human or wildlife well-being or protection of the
environment (including, without limitation, the United States
Oil Pollution Act of 1990 and any comparable laws of the
individual States of the USA);
Environmentally Sensitive Material
means oil, oil products or any other products or substance which
are polluting, toxic or hazardous or any substance the release
of which into the environment is howsoever regulated, prohibited
or penalised by or pursuant to any Environmental Law;
Equity Deposit Accounts means,
together, the Alpha Equity Deposit Account and the DSB Equity
Deposit Account;
Event of Default means any of the
events or circumstances listed in clause 10.1;
Execution Date means the date on which
this Agreement has been executed by all the parties hereto;
Extended Employment Contract means, in
respect of a Vessel, any time charterparty, contract of
affreightment or other contract of employment of such ship
(including the entry of any Vessel in any pool) which has a
tenor exceeding twenty four (24) months (including any
options to renew or extend such tenor);
Facility Period means the period
starting on the date of this Agreement and ending on such date
as all obligations whatsoever of all of the Security Parties
under or pursuant to the Security Documents whensoever arising,
actual or contingent, have been irrevocably paid, performed
and/or
complied with;
Final Delivery Date means the date on
which all of the Vessels shall have been transferred and
delivered by the Builder to the Borrowers;
Flag State means Panama or any other
country acceptable to the Lenders;
General Assignment means, in respect
of each Vessel, the deed of assignment of its earnings,
insurances and requisition compensation executed or to be
executed by the relevant Owner in favour of
Annex B-7
the Security Trustee in such form as the Agent and the Majority
Lenders may require in their sole discretion and in the plural
means all of them;
Government Entity means any national
or local government body, tribunal, court or regulatory or other
agency and any organisation of which such body, tribunal, court
or agency is a part or to which it is subject;
Group means at any relevant time the
Corporate Guarantor whose Corporate Guarantee is in force and
effect at that time and its subsidiaries but not including any
subsidiary which is listed on any public stock exchange;
Group Member means any member of the
Group;
Indebtedness means any obligation
howsoever arising (whether present or future, actual or
contingent, secured or unsecured as principal, surety or
otherwise) for the payment or repayment of money;
Interest Payment Date means, in
relation to each Tranche, the last day of an Interest Period
and, if an Interest Period is longer than 6 months, the
date falling at the end of each successive period of
6 months during such Interest Period starting from its
commencement;
Interest Period means each period for
the calculation of interest in respect of the Loan or, as the
case may be, Tranche ascertained in accordance with the
provisions of clause 3;
ISM Code Documentation means, in
relation to a Vessel, the document of compliance (DOC) and
safety management certificate (SMC) issued by a Classification
Society pursuant to the ISM Code in relation to that Vessel
within the periods specified by the ISM Code;
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
Organisation and includes any amendments or extensions thereto
and any regulations issued pursuant thereto;
ISSC means an International Ship
Security Certificate issued in respect of a Vessel pursuant to
the ISPS Code;
Latest Accounts means, in respect of
any financial quarter or year of the Group, the latest unaudited
(in respect of each financial quarter) or audited (in respect of
each financial year) financial statements required to be
prepared pursuant to clause 8.1.6;
Lenders means the banks listed in
schedule 1 and Transferee Lenders;
Lending Branch means, in respect of
each Lender, its office or branch at the address set out beneath
its name in schedule 1 (or, in the case of a Transferee, in
the Transfer Certificate to which it is a party as Transferee)
or such other office or branch as any Lender shall from time to
time select and notify through the Agent to the other parties to
this Agreement;
LIBOR means, the greater of
(i) and (ii) below:
(i) the rate equal to the offered quotation for deposits in
USD in an amount comparable with the amount in relation to which
LIBOR is to be determined for a period equal to, or as near as
possible equal to, the relevant period which appears on Reuters
Screen LIBOR01 at or about 11 a.m. on the second Banking
Day before the first day of such period (and, for the purposes
of this Agreement, Reuters Screen LIBOR01 means the
display designated as LIBOR01 on the Reuters Service
or such other page as may replace LIBOR01 on that service for
the purpose of displaying rates comparable to that rate or on
such other service as may be nominated by the British
Bankers Association as the information vendor for the
purpose of displaying the British Bankers Association
Interest Settlement Rates for USD); and
Annex B-8
(ii) the rate per annum reasonably determined by the Agent
from any source the Agent may reasonably select to be the rate
which reflects the actual cost to the Lenders of funding their
respective Contributions (or the relevant part thereof) during
the relevant Interest Period;
Liquidity means the aggregate of all
cash deposits legally and beneficially owned by any Group Member
and which are deposited with any of the Banks which:
(a) are free from any Encumbrance other than, in respect of
any deposit with a Bank, any Encumbrance given as security for
the obligations of the Borrowers under this Agreement; and
(b) are otherwise at the free and unrestricted disposal of
the relevant Group Member by which it is owned
but excluding any sums on the Equity Deposit Accounts;
Loan means the aggregate principal
amount in respect of the Loan Facility owing to the Lenders
under this Agreement at any relevant time;
Loan Facility means the loan facility
provided by the Lenders on the terms and subject to the
conditions of this Agreement in the amount of
USD 150,000,000;
Majority Lenders means at any relevant
time when there are two Lenders, both of them, and at any time
when there are more than two Lenders, the Lenders whose
Contributions exceed 75% of the Loan;
Management Agreement means, in respect
of each Vessel, the agreement between the relevant Owner and the
Manager, in a form previously approved in writing by the Agent
(acting on the instructions of the Majority Lenders);
Manager means Navios ShipManagement
Inc., a company incorporated in the Marshall Islands and having
its registered office at Trust Company Complex, Ajeltake
Road, Ajeltake Island, Majuro, Marshall Islands, MH96960 or
(without the need for thew Agents consent) any other
subsidiary of Navios Maritime Holdings Inc. or any other person
appointed by an Owner, with the prior written consent of the
Agent, as the manager of the relevant Mortgaged Vessel;
Managers Undertakings means,
collectively, the undertakings and assignments required to be
executed hereunder by the Manager in favour of the Security
Trustee in respect of each of the Vessels each in such form as
the Agent and the Majority Lenders may require in their sole
discretion (and Managers Undertakings
means all of them);
Margin means, in relation to each
Interest Period 2.50% per annum;
Material Adverse Effect means any
event or occurrence which the Majority Lenders reasonably
determine has had or could reasonably be expected to have a
material adverse effect on (i) the Banks rights
under, or the security provided by, any Security Document,
(ii) the ability of any Security Party to perform or comply
with any of its obligations under any Security Document or
(iii) the value or nature of the property, assets,
operations, liabilities or financial condition of any Security
Party;
Maturity Date means in respect of each
Tranche, the date falling 6 years after the Delivery Date
of the Vessel which is being financed by that Tranche;
MII & MAP Policy means a
mortgagees interest and pollution risks insurance policy
(including additional perils (pollution) cover) in respect of
each Mortgaged Vessel to be effected by the Security Trustee on
or before the first Drawdown Date to cover the Mortgaged Vessels
as the same may be renewed or replaced annually thereafter and
maintained throughout the Facility Period through such brokers,
with such underwriters and containing such coverage as may be
acceptable to the Security Trustee in its sole discretion,
insuring a sum of at least one hundred and ten per cent (110%)
of the Loan in respect of mortgagees interest insurance
and one hundred and ten per cent (110%) of the Loan in respect
of additional perils cover;
Annex B-9
Minimum Liquidity means
(i) during 2010 and 2011 and up to the Final Delivery Date
USD40,000,000 and (ii) thereafter, USD35,000,000;
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 (a) 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 (b) 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 means, in respect of each
Vessel, the first preferred Ship mortgage thereof required to be
executed hereunder by the Owner thereof in favour of the
Security Trustee, each in such form as the Agent and the
Majority Lenders may require in their sole discretion and in the
plural means all of them;
Mortgaged Vessel means, at any
relevant time, any Vessel which is at such time subject to a
Mortgage and a Vessel shall, for the purposes of this Agreement,
be regarded as a Mortgaged Vessel as from the date on which the
Mortgage of that Vessel has been executed and registered in
accordance with this Agreement until whichever shall be the
earlier of (i) the payment in full of the amount required
to be paid to the Agent pursuant to clause 4.3 or 4.5
following the Total Loss or sale respectively of such Vessel and
(ii) the end of the Facility Period;
Navios Acquisition means Navios
Maritime Acquisition Corporation a company incorporated in the
Marshall Islands and having its registered office at
Trust Company Complex, Ajeltake Road, Ajeltake Island,
Majuro, Marshall Islands, MH96960;
Negative Pledge means negative pledge
of the shares of and in each Borrower to be executed by the
Shareholder in favour of the Security Trustee in such form as
the Agent and the Majority Lenders may require in their sole
discretion and in the plural means all of them;
Net Profit means for each financial
year of the Corporate Guarantor, the Net Profit as set out in
the relevant Latest Accounts;
Net Worth means by reference to the
Latest Accounts, the Total Assets (based on book values) less
Total Liabilities of the Group;
Novation Agreement means each of the
Vessel A Novation Agreement, the Vessel B Novation Agreement,
the Vessel C Novation Agreement, the Vessel D Novation
Agreement, the Vessel E Novation Agreement and the Vessel F
Novation Agreement and in the plural means all of them;
Operator means any person who is from
time to time during the Facility Period concerned in the
operation of a Relevant Ship and falls within the definition of
Company set out in rule 1.1.2 of the ISM Code;
Owner means, in relation to:
(i) Vessel A, Amorgos;
(ii) Vessel B, Andros;
(iii) Vessel C, Antiparos;
(iv) Vessel D, Ikaria;
(v) Vessel E, Kos; and
(vi) Vessel F, Mytilene
and in the plural means all of them;
Permitted Encumbrance means any
Encumbrance in favour of the Banks or any of them created
pursuant to the Security Documents and Permitted Liens;
Annex B-10
Permitted Liens means any lien on any
Vessel for masters, officers or crews wages
outstanding in the ordinary course of trading, any lien for
salvage and any ship repairers or outfitters
possessory lien for a sum not (except with the prior written
consent of the Agent) exceeding the Casualty Amount (as defined
in the Ship Security Documents for such Vessel);
Pertinent Jurisdiction means any
jurisdiction in which or where any Security Party is
incorporated, resident, domiciled, has a permanent establishment
or assets, carries on, or has a place of business or is
otherwise howsoever effectively connected;
Predelivery Security Assignment means,
in respect of each Vessel, a deed of assignment of the
Shipbuilding Contract and of the Refund Guarantee in respect
thereof in such form as the Agent and the Majority Lenders may
require in their sole discretion and in the plural means all of
them;
Prepayment Ratio means in respect of
the sale or Total Loss of a Mortgaged Vessel the Valuation
Amount of such Mortgaged Vessel immediately prior to such sale
or Total Loss divided by the Security Value immediately prior to
such sale or Total Loss and for these purposes any valuation of
a Vessel (calculated in accordance with Clause 8.2.2) may be no
more than two months old;
Proceedings means any litigation,
arbitration, legal action or complaint or judicial,
quasi-judicial or administrative proceedings whatsoever arising
or instigated by anyone (private or governmental) in any court,
tribunal, public office or other forum whatsoever and
wheresoever (including, without limitation, any action for
provisional or permanent attachment of any thing or for
injunctive remedies or interim relief and any action instigated
on an ex parte basis);
Refund Guarantee means each of the
Vessel A Refund Guarantee, the Vessel B Refund Guarantee, the
Vessel C Refund Guarantee, the Vessel D Refund Guarantee, the
Vessel E Refund Guarantee and the Vessel F Refund Guarantee and
in the plural means all of them;
Refund Guarantor means, in relation to
each Vessel, the issuer of the Refund Guarantee in respect
thereof;
Registry means, in relation to each
Vessel, the office of the registrar, commissioner or
representative of the Flag State, who is duly empowered to
register such Vessel, the relevant Owners title thereto
and the relevant Mortgage under the laws and flag of the Flag
State;
Relevant Tranche means, in respect of
Vessel A, Tranche A, in respect of Vessel B,
Tranche B, in respect of Vessel C, Tranche C, in
respect of Vessel D, Tranche D, in respect of Vessel E,
Tranche E and in respect of Vessel F, Tranche F;
Relevant Ship means each of the
Vessels and any other ship from time to time (whether before or
after the date of this Agreement) owned, managed or crewed by,
or chartered to, any Group Member;
Relevant Vessel means the Vessel in
respect of which the relevant Advance is being made available;
Repayment Dates means, in respect of
each Tranche, subject to clause 6.3, each of the dates falling
at six-monthly intervals after the Delivery Date in respect of
the Vessel which that Tranche finances, up to and including the
date falling 72 months after such date;
Required Authorisation means any
authorisation, consent, declaration, licence, permit, exemption,
approval or other document, whether imposed by or arising in
connection with any law, regulation, custom, contract, security
or otherwise howsoever which must be obtained at any time from
any person, Government Entity, central bank or other
self-regulating or supra-national authority in order to enable
the Borrowers lawfully to borrow the loan or draw any Advance
and/or to
enable any Security Party lawfully and continuously to continue
its corporate existence
and/or
perform all its obligations whatsoever whensoever arising
and/or grant
security under the relevant Security Documents
and/or to
ensure the continuous validity and enforceability thereof;
Annex B-11
Required Security Amount means the
amount in USD (as certified by the Agent) which is at any
relevant time the Relevant Percentage of the aggregate of the
Delivered Tranches and any Swap Exposure where Relevant
Percentage means:
(i) during 2010 and 2011, 80%;
(ii) during 2012, 100%;
(iii) during 2013, 110%
(iv) thereafter, 115%;
Retention Account an interest bearing
USD Account required to be opened hereunder with the relevant
Account Bank in the name of the Borrowers designated
Navios Retention Account and includes
any other account designated in writing by the Agent to be the
Retention Account for the purposes of this Agreement;
Retention Account Pledge means a first
priority charge required to be executed hereunder between the
Borrowers and the Security Trustee in respect of the Retention
Account in such form as the Agent and the Majority Lenders may
require in their sole discretion;
Retention Amount means, in relation to
any Retention Date, such sum as shall be the aggregate of:
(a) one sixth (1/6th) of the repayment instalment in
respect of the relevant Tranche falling due for payment pursuant
to clause 4.1.1 (as the same may have been reduced by any
prepayment) on the next Repayment Date after the relevant
Retention Date in respect of that Tranche; and
(b) the applicable fraction (as hereinafter defined) of the
aggregate amount of interest falling due for payment in respect
of each part of the Loan during and at the end of each Interest
Period current at the relevant Retention Date and, for this
purpose, the expression applicable fraction
in relation to each Interest Period shall mean a fraction having
a numerator of one and a denominator equal to the number of
Retention Dates falling within the relevant Interest Period;
Retention Dates means the date falling
thirty (30) days after the final Drawdown Date in respect
of a Tranche and each of the dates falling at monthly intervals
after such date and prior to the Maturity Date in respect of
that Tranche;
Security Documents means this
Agreement, the Predelivery Security Assignments, the Deutscher
Rahmenvertrag, the Deutscher Rahmenvertrag Security Deed, the
Mortgages, the Corporate Guarantee, the General Assignments, the
Charter Assignments, the Earnings Account Pledges, the
Managers Undertakings, the Charter Insurance Assignments,
the Shares Pledges, the Negative Pledges, and any other
documents as may have been or shall from time to time after the
date of this Agreement be executed to guarantee
and/or to
govern
and/or
secure all or any part of the Loan, interest thereon and other
moneys from time to time owing by the Borrowers pursuant to this
Agreement
and/or the
Deutscher Rahmenvertrag (whether or not any such document also
secures moneys from time to time owing pursuant to any other
document or agreement);
Security Party means the Borrowers,
the Manager, the Corporate Guarantor, the Shareholder or any
other person who may at any time be a party to any of the
Security Documents (other than the Banks);
Security Trustee means Deutsche
Schiffsbank AG acting through its through its office at Domshof
17, D-28195, Bremen, Germany (or of such other address as may
last have been notified to the other parties to this Agreement
pursuant to clause 17.2.3) or such other person as may be
appointed as Security Trustee and trustee by the Lenders, the
Arranger, Account Banks, the Swap Bank and the Agent pursuant to
clause 16.14;
Security Value means the amount in USD
(as certified by the Agent) which is, at any relevant time, the
aggregate of (a) the Valuation Amounts of the Mortgaged
Vessels as most recently determined
Annex B-12
in accordance with clause 8.2.2 and (b) the net
realizable market value of any additional security for the time
being actually provided to the Lenders pursuant to
clause 8.2.1(b) and (c) and cash (excluding amounts on
the Equity Deposit Accounts) over which there is an Encumbrance
as security for the obligations of the Borrowers under this
Agreement;
Share Acquisition Date means the date
on which Navios Acquisition acquires, directly or indirectly,
all of the shares of and in the Shareholder;
Shareholder means Aegean Sea Maritime
Holdings Inc., a company incorporated in the Marshall Islands
and having its registered office at Trust Company Complex,
Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands,
MH96960;
Shares Pledge means the first priority
pledge of the shares of and in each Borrower to be executed by
the Shareholder in favour of the Security Trustee in such form
as the Agent and the Majority Lenders may require in their sole
discretion and in the plural means all of them;
Ship Security Documents means, in
relation to each Vessel, the relevant Mortgage, the relevant
General Assignment, any relevant Charter Assignment and the
relevant Managers Undertakings;
Shipbuilding Contract means each of
the Vessel A Shipbuilding Contract, the Vessel B Shipbuilding
Contract, the Vessel C Shipbuilding Contract, the Vessel D
Shipbuilding Contract, the Vessel E Shipbuilding Contract and
the Vessel F Shipbuilding Contract and in the plural means all
of them;
Shipbuilding Contract Addendum means,
in respect of each Shipbuilding Contract, an addendum thereto
pursuant to which the relevant Borrower and the Builder agree to
vary the terms of the relevant Shipbuilding Contract, including,
inter alia, a reduction of the purchase price;
subsidiary of a person means any
company or entity directly or indirectly controlled by such
person, and for this purpose control means either
the ownership of more than fifty per cent (50%) of the voting
share capital (or equivalent rights of ownership) of such
company or entity or the power to direct its policies and
management, whether by contract or otherwise;
Swap Bank means Deutsche Schiffsbank
AG acting through its through its office at Domshof 17, D-28195,
Bremen, Germany;
Swap Exposure means, as at any
relevant date the amount certified by the Swap Bank to be the
aggregate net amount in Dollars which would be payable by the
Borrowers to the Swap Bank under (and calculated in accordance
with) section 6(e) (Payments on Early Termination) of the
Deutscher Rahmenvertrag if an Early Termination Date (as therein
defined) had occurred on the relevant date in relation to all
continuing Transactions (as therein defined) entered into
between the Borrowers and the Swap Bank;
Taxes includes all present and future
income, corporation, capital or value-added taxes and all stamp
and other taxes and levies, imposts, deductions, duties, charges
and withholdings whatsoever together with interest thereon and
penalties in respect thereto, if any, and charges, fees or other
amounts made on or in respect thereof (and Taxation
shall be construed accordingly);
Total Assets and Total
Liabilities mean, respectively, the total assets
and total liabilities of the Group as evidenced at any relevant
time by the Latest Accounts, in which they shall have been
calculated by reference to the meanings assigned to them in
accordance with US GAAP provided that cash shall be deducted
from Total Assets and Total Liabilities;
Total Commitment means, at any
relevant time, the aggregate of the Commitments of all the
Lenders at such time (being the aggregate of the sums set out
opposite their names in schedule 1);
Total Loss means, in relation to each
Vessel:
(a) actual, constructive, compromised or arranged total
loss of such Vessel; or
(b) Compulsory Acquisition; or
Annex B-13
(c) any hijacking, theft, condemnation, capture, seizure,
arrest, detention or confiscation of such Vessel not falling
within the definition of Compulsory Acquisition by any
Government Entity, or by persons allegedly acting or purporting
to act on behalf of any Government Entity, unless such Vessel be
released and restored to the relevant Owner within ninety
(90) days after such incident;
Tranche A means the amount of up
to USD25,000,000, being the aggregate of all of the Advances to
be made available by the Lender to the Borrowers to assist
Amorgos in its acquisition of Vessel A or, as the context
requires, the amount thereof outstanding from time to time;
Tranche B means the amount of up
to USD25,000,000, being the aggregate of all of the Advances to
be made available by the Lender to the Borrowers to assist
Andros in its acquisition of Vessel B or, as the context
requires, the amount thereof outstanding from time to time;
Tranche C means the amount of up
to USD25,000,000, being the aggregate of all of the Advances to
be made available by the Lender to the Borrowers to assist
Antiparos in its acquisition of Vessel C or, as the context
requires, the amount thereof outstanding from time to time;
Tranche D means the amount of up
to USD25,000,000, being the aggregate of all of the Advances to
be made available by the Lender to the Borrowers to assist
Ikaria in its acquisition of Vessel D or, as the context
requires, the amount thereof outstanding from time to time;
Tranche E means the amount of up
to USD25,000,000, being the aggregate of all of the Advances to
be made available by the Lender to the Borrowers to assist Kos
in its acquisition of Vessel E or, as the context requires, the
amount thereof outstanding from time to time;
Tranche F means the amount of up
to USD25,000,000, being the aggregate of all of the Advances to
be made available by the Lender to the Borrowers to assist
Mytilene in its acquisition of Vessel F or, as the context
requires, the amount thereof outstanding from time to time;
Tranche means any of Tranche A,
Tranche B, Tranche C, Tranche D, Tranche E
or Tranche F and in the plural means all of them;
Transaction means a Transaction as
defined in the Deutscher Rahmenvertrag;
Transfer Certificate means a
certificate in substantially the form set out in schedule 4;
Transferee Lender has the meaning
ascribed thereto in clause 15.3;
Transferor Lender has the meaning
ascribed thereto in clause 15.3;
Trust Deed means a trust deed in
the form, or substantially in the form, set out in
schedule 5;
Trust Property means (i) the
security, powers, rights, titles, benefits and interests (both
present and future) constituted by and conferred on the Banks or
any of them under or pursuant to the Security Documents
(including, without limitation, the benefit of all covenants,
undertakings, representations, warranties and obligations given,
made or undertaken to any Bank in the Security Documents),
(ii) all moneys, property and other assets paid or
transferred to or vested in any Bank (or anyone else on such
Banks behalf) or received or recovered by any Bank (or
anyone else on such Banks behalf) pursuant to, or in
connection with, any of the Security Documents whether from any
Security Party or any other person and (iii) all moneys,
investments, property and other assets at any time representing
or deriving from any of the foregoing, including all interest,
income and other sums at any time received or receivable by any
Bank (or anyone else on such Banks behalf) in respect of
the same (or any part thereof);
Underlying Documents means, together,
the Shipbuilding Contracts, the Shipbuilding Contract Addenda,
the Novation Agreements, the Refund Guarantees and the
Management Agreement;
Unlawfulness means any event or
circumstance which either is or, as the case may be, might in
the opinion of the Agent become the subject of a notification by
the Agent to the Borrowers under clause 12.1;
Annex B-14
USA means the United States of America;
Valuation Amount means, in respect of
each Mortgaged Vessel, the value thereof as most recently
determined under clause 8.2.2; and
Vessel means each of Vessel A, Vessel
B, Vessel C, Vessel D, Vessel E and Vessel F and in the plural
means all of them.
Words and expressions defined in Schedule 7 (Vessel
Details) shall have the meanings given to them therein as if the
same were set out in full in this clause 1.2.
1.3 Construction
In this Agreement, unless the context otherwise requires:
1.3.1 clause headings and the index are inserted for
convenience of reference only and shall be ignored in the
construction of this Agreement;
1.3.2 references to clauses and schedules are to be
construed as references to clauses of, and schedules to, this
Agreement and references to this Agreement include its schedules
and any supplemental agreements executed pursuant hereto;
1.3.3 references to (or to any specified provision of) this
Agreement or any other document shall be construed as references
to this Agreement, that provision or that document as in force
for the time being and as duly amended
and/or
supplemented
and/or
novated;
1.3.4 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 Government Entity, central bank or any self-regulatory or
other supra-national authority;
1.3.5 references to any person in or party to this
Agreement shall include reference to such persons lawful
successors and assigns and references to a Lender shall also
include a Transferee Lender;
1.3.6 words importing the plural shall include the singular
and vice versa;
1.3.7 references to a time of day are, unless otherwise
stated, to London time;
1.3.8 references to a person shall be construed as
references to an individual, firm, company, corporation or
unincorporated body of persons or any Government Entity;
1.3.9 references to a guarantee include
references to an indemnity or any other kind of assurance
whatsoever (including, without limitation, any kind of
negotiable instrument, bill or note) against financial loss or
other liability including, without limitation, an obligation to
purchase assets or services as a consequence of a default by any
other person to pay any Indebtedness and guaranteed
shall be construed accordingly;
1.3.10 references to any statute or other legislative
provision are to be construed as references to any such statute
or other legislative provision as the same may be re enacted or
modified or substituted by any subsequent statute or legislative
provision (whether before or after the date hereof) and shall
include any regulations, orders, instruments or other
subordinate legislation issued or made under such statute or
legislative provision;
1.3.11 a certificate by the Agent or the Security Trustee
as to any amount due or calculation made or any matter
whatsoever determined in connection with this Agreement shall be
conclusive and binding on the Borrowers except for manifest
error;
1.3.12 if any document, term or other matter or thing is
required to be approved, agreed or consented to by any of the
Banks such approval, agreement or consent must be obtained in
writing unless the contrary is stated;
1.3.13 time shall be of the essence in respect of all
obligations whatsoever of the Borrowers under this Agreement,
howsoever and whensoever arising;
Annex B-15
1.3.14 and the words other and
otherwise shall not be construed eiusdem generis
with any foregoing words where a wider construction is possible.
1.4 Accounting
terms and references to currencies
Currencies are referred to in this Agreement by the three letter
currency codes (ISO 4217) allocated to them by the
International Organisation for Standardisation.
1.5 Contracts
(Rights of Third Parties Act) 1999
Except for clause 20, no part of this Agreement shall be
enforceable under the Contracts (Rights of Third Parties) Act
1999 by a person who is not a party to this Agreement.
1.6 Majority
Lenders
Where this Agreement or any other Security Document provides for
any matter to be determined by reference to the opinion of the
Majority Lenders or to be subject to the consent or request of
the Majority Lenders or for any decision or action to be taken
on the instructions in writing of the Majority Lenders, such
opinion, consent, request or instructions shall (as between the
Lenders) only be regarded as having been validly given or issued
by the Majority Lenders if all the Lenders with a Commitment
and/or
Contribution shall have received prior notice of the matter on
which such opinion, consent, request or instructions are
required to be obtained and the relevant majority of such
Lenders shall have given or issued such opinion, consent,
request or instructions but so that (as between the Borrowers
and the Banks) the Borrowers shall be entitled (and bound) to
assume that such notice shall have been duly received by each
relevant Lender and that the relevant majority shall have been
obtained to constitute Majority Lenders whether or not this is
in fact the case.
2 THE
AVAILABLE COMMITMENT AND CANCELLATION
2.1 Agreement
to lend
The Lenders, relying upon each of the representations and
warranties in clause 7, agree to provide to the Borrowers
upon and subject to the terms of this Agreement, the Tranches,
for the purposes of financing part of the purchase price of the
Vessels. Subject to the terms of this Agreement, the obligations
of the Lenders shall be to contribute to each Advance, the
proportion of the relevant Advance which their respective
Commitments bear to the Total Commitment on any relevant
Drawdown Date.
2.2 Obligations
several
The obligations of the Lenders under this Agreement are several
according to their respective Commitments
and/or
Contributions. The failure of any Lender to perform such
obligations shall not relieve any other party to this Agreement
of any of its respective obligations or liabilities under this
Agreement nor shall any Bank be responsible for the obligations
of any other Bank (except for its own obligations, if any, as a
Lender) under this Agreement.
2.3 Interests
several
Notwithstanding any other term of this Agreement (but without
prejudice to the provisions of this Agreement relating to or
requiring action by the Majority Lenders) the interests of the
Banks are several and the amount due to any Bank is a separate
and independent debt. Each Bank shall have the right to protect
and enforce its rights arising out of this Agreement and it
shall not be necessary for any other Bank to be joined as an
additional party in any Proceedings for this purpose.
2.4 Drawdown
2.4.1 On the terms and subject to the conditions of this
Agreement, (i) Tranche A and Tranche B shall be
advanced in up to four (4) Advances each and
(ii) Tranche C, Tranche D, Tranche E and
Tranche F shall be
Annex B-16
advanced in up to six (6) Advances each on the relevant
Drawdown Dates following receipt by the Agent from the Borrowers
of Drawdown Notices not later than 10 a.m. on the third
Banking Day before each proposed Drawdown Date.
2.4.2 A Drawdown Notice shall be effective on actual
receipt by the Agent and, once given, shall, subject as provided
in clause 3.6, be irrevocable.
2.5 Amount
2.5.1 The principal amount specified in each Drawdown
Notice for borrowing on the Drawdown Dates shall, subject to the
terms of this Agreement, in respect of Tranche A and
Tranche B not exceed:
(a) USD7,467,472 payable to the relevant seller or its
financiers under the relevant Novation Agreement;
(b) USD10,582,966 in respect of the instalment payable to
the Builder on the relevant Shipbuilding Contract Addendum
becoming effective;
(c) USD3,474,781 to the Builder under the relevant
Shipbuilding Contract in respect of the launching
instalment; and
(d) USD3,474,781 to the Builder under the relevant
Shipbuilding Contract in respect of the delivery instalment.
2.5.2 The principal amount specified in each Drawdown
Notice for borrowing on the Drawdown Dates shall, subject to the
terms of this Agreement, in respect of Tranche C,
Tranche D, Tranche E and Tranche F not exceed:
(a) USD6,023,472 payable to the relevant seller or its
financiers under the relevant Novation Agreement;
(b) USD9,154,103 in respect of the instalment payable to
the Builder on the relevant Shipbuilding Contract Addendum
becoming effective;
(c) USD2,455,607 to the Builder under the relevant
Shipbuilding Contract in respect of the steel-cutting instalment;
(d) USD2,455,607 to the Builder under the relevant
Shipbuilding Contract in respect of the keel-laying instalment;
(e) USD2,455,607 to the Builder under the relevant
Shipbuilding Contract in respect of the launching
instalment; and
(f) USD2,455,604 to the Builder under the relevant
Shipbuilding Contract in respect of the delivery instalment.
2.6 Availability
Upon receipt of a Drawdown Notice complying with the terms of
this Agreement, the Agent shall promptly notify each Lender and
each Lender shall make available to the Agent its portion of the
relevant Advance for payment by the Agent in accordance with
clause 6.2. The Borrowers acknowledge that payment of any
Advance to the account referred to in the relevant Drawdown
Notice shall satisfy the obligation of the Lenders to lend that
Advance to the Borrowers under this Agreement.
2.7 Voluntary
cancellation of Facility
The Borrowers may at any time during the Drawdown Period by
notice to the Agent (effective only on actual receipt) cancel
with effect from a date not less than five Banking Days after
the receipt by the Agent of such notice the whole or any part
(being two million five hundred thousand Dollars (USD 2,500,000)
or any larger sum which is an integral multiple of two million
five hundred thousand Dollars (USD 2,500,000)) of the
Annex B-17
Total Commitment. Any such notice of cancellation, once given,
shall be irrevocable and the Total Commitment shall be reduced
accordingly and each Lenders Commitment shall be reduced
pro rata according to the proportion which its Commitment bears
to the Total Commitment.
2.8 Cancellation
in changed circumstances
The Borrowers may also at any time during the Facility Period by
notice to the Agent (effective only on actual receipt) prepay
and cancel with effect from a date not less than fifteen
(15) days after receipt by the Agent of such notice, the
whole but not part only, but without prejudice to the
Borrowers obligations under clauses 6.6 and 12, of
the Contribution and Commitment (if any) of any Lender to which
the Borrowers shall have become obliged to pay additional
amounts under clause 12 or clause 6.6. Upon any notice
of such prepayment and cancellation being given, the Commitment
of the relevant Lender shall be reduced to zero, the Borrowers
shall be obliged to prepay the Contribution of such Lender and
such Lenders related costs (including but not limited to
Break Costs) on such date and such Lender shall be under no
obligation to participate in the Loan or any further Advances.
2.9 Use
of proceeds
Without prejudice to the Borrowers obligations under
clause 8.1.4, no Bank shall have any responsibility for the
application of the proceeds of any Advance or any part thereof
by the Borrowers.
3 INTEREST
AND INTEREST PERIODS
3.1 Normal
interest rate
The Borrowers must pay interest on each Tranche in respect of
each Interest Period relating thereto on each Interest Payment
Date at the rate per annum determined by the Agent to be the
aggregate of (a) the Margin and (b) LIBOR.
3.2 Selection
of Interest Periods
Subject to clause 3.3, the Borrowers may by notice received
by the Agent not later than 10:00 a.m. on the fourth
Banking Day before the beginning of each Interest Period specify
whether such Interest Period shall have a duration of three (3),
six (6) or twelve (12) months or such other period as
the Borrowers may select and the Agent (acting on the
instructions of the Lenders) may agree, and if the Borrowers
wishes to specify an Interest Period of more than
12 months, it must give at least 5 Banking Days prior
notice thereof.
3.3 Determination
of Interest Periods
Subject to Clause 3.3.1 every Interest Period shall be of
the duration specified by the Borrowers pursuant to
clause 3.2 but so that:
3.3.1 the first Interest Period in respect of each Tranche
shall start on the Drawdown Date in respect of the first Advance
in respect of that Tranche, and each subsequent Interest Period
shall start on the last day of the previous Interest Period;
3.3.2 the first Interest Period in respect of each
subsequent Advance shall commence on its Drawdown Date and
terminate simultaneously with the Interest Period which is then
current for the Tranche under which the Advance is made
available;
3.3.3 if any Interest Period of a Tranche would otherwise
overrun a relevant Repayment Date, then the relevant Tranche
shall be divided into parts so that there is one part in the
amount of the repayment instalment due on such Repayment Date
and having an Interest Period ending on the relevant Repayment
Date and another part in the amount of the balance of that
Tranche having an Interest Period ascertained in accordance with
clause 3.2 and the other provisions of this
clause 3.3; and
Annex B-18
3.3.4 if the Borrowers fail to specify the length of an
Interest Period in accordance with the provisions of
clause 3.2 and this clause 3.3 such Interest Period
shall last three months or such other period as complies with
this clause 3.3.
3.4 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 Security Documents,
the Borrowers must pay interest on such sum on demand from the
due date up to the date of actual payment (as well after as
before judgment) at a rate determined by the Agent pursuant to
this clause 3.4. The period starting on such due date and
ending on such date of payment shall be divided into successive
periods of not more than three (3) months as selected by
the Agent each of which (other than the first, which shall start
on such due date) shall start 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 Agent) of
(a) two per cent (2%) per annum, (b) the Margin
and (c) LIBOR for such periods. Such interest shall be due
and payable on demand, or, if no demand is made, then on the
last day of each such period as determined by the Agent and on
the day on which all amounts in respect of which interest is
being paid under this Clause are paid, and each such day shall,
for the purposes of this Agreement, be treated as an Interest
Payment Date, provided that if the relevant unpaid sum is
(i) an amount of principal which became due and payable by
reason of a declaration by the Agent under clause 10.2.2 or
(ii) a prepayment pursuant to clauses 4.3, 4.5,
8.2.1(a) or 12.1 on a date other than an Interest Payment Date
relating thereto, the first such period selected by the Agent
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 of two per cent (2%) above the rate
applicable thereto immediately before it shall have become so
due and payable. If, for the reasons specified in
clause 3.6.1, the Agent is unable to determine a rate in
accordance with the foregoing provisions of this
clause 3.4, each Lender shall promptly notify the Agent of
the cost of funds to such Lender and interest on any sum not
paid on its due date for payment shall be calculated at a rate
determined by the Agent to be two per cent (2%) per annum
above the aggregate of the Margin and the arithmetic mean of the
cost of funds to the Lenders compounded at such intervals as the
Agent selects.
3.5 Notification
of Interest Periods and interest rate
The Agent agrees to notify (i) the Lenders promptly of the
duration of each Interest Period and (ii) the Borrowers and
the Lenders promptly of each rate of interest determined by it
under this clause 3.
3.6 Market
disruption; non-availability
3.6.1 Whenever, at any time prior to the commencement of
any Interest Period:
(a) the Agent shall have determined that adequate and fair
means do not exist for ascertaining LIBOR during such Interest
Period; or
(b) the Agent shall have received notification from a
Lender or Lenders that deposits in USD are not available to such
Lender or Lenders in the London InterBank Market in the ordinary
course of business to fund their Contributions to the Loan for
such Interest Period the Agent must promptly give notice (a
Determination Notice) thereof to the
Borrowers and to each of the Lenders. A Determination Notice
shall contain particulars of the relevant circumstances giving
rise to its issue. After the giving of any Determination Notice,
regardless of any other provision of this Agreement, any undrawn
Commitment shall not be borrowed until notice to the contrary is
given to the Borrowers by the Agent.
3.6.2 Within two (2) days of any Determination Notice
being given by the Agent under clause 3.6.1, each Lender
must certify an alternative basis (the Alternative
Basis) for maintaining its Contribution. The
Alternative Basis may at the relevant Lenders sole
discretion include (without limitation) alternative interest
periods, alternative currencies or alternative rates of interest
but shall include a Margin above the cost of funds to such
Lender. The Agent shall calculate the arithmetic mean of the
Alternative Bases provided by the relevant Lenders (the
Substitute Basis) and certify the same to the
Borrowers and the Lenders. The
Annex B-19
Substitute Basis so certified shall be binding upon the
Borrowers, and shall take effect in accordance with its terms
from the date specified in the Determination Notice until such
time as the Agent notifies the Borrowers that none of the
circumstances specified in clause 3.6.1 continues to exist
whereupon the normal interest rate fixing provisions of this
Agreement shall again apply and, subject to the other provisions
of this Agreement, the Commitment may again be borrowed.
3.7 Interest
Rate Swaps
If the Borrowers wish to enter into any interest rate swaps in
respect of the Loan or any part thereof, they must, provided
that the Swap Bank is offering competitive rate and provided
that the Lenders agree, do so with the Swap Bank under the
Deutscher Rahmenvertrag.
4 REPAYMENT
AND PREPAYMENT
4.1 Repayment
4.1.1 Subject as otherwise provided in this Agreement, the
Borrowers must repay each Tranche by 12 equal semi-annual
instalments of USD750,000 each, one such instalment to be repaid
on each of the Repayment Dates and a balloon instalment of
USD16,000,000 to be repaid on the relevant final Repayment Date.
If the Commitment in respect of any Tranche is not drawn in
full, the amount of each repayment instalments including the
said balloon instalment for that Tranche shall be reduced
proportionately.
4.1.2 The Borrowers shall on the Maturity Date in respect
of the last Tranche to be repaid also pay to the Agent and the
Lenders all other amounts in respect of interest or otherwise
then due and payable under this Agreement and the Security
Documents.
4.2 Voluntary
prepayment
Subject to clauses 4.6 and 4.7 the Borrowers may, subject
to having given 15 Banking Days prior notice thereof to the
Agent, prepay any specified amount (such part being in an amount
of two million five hundred thousand Dollars (USD 2,500,000) or
any larger sum which is an integral multiple of such amount) of
any Tranche on any relevant Interest Payment Date without
premium or penalty.
4.3 Mandatory
Prepayment on Total Loss
On the date falling one hundred and eighty (180) days after
that on which a Mortgaged Vessel became a Total Loss or, if
earlier, on the date upon which the relevant insurance proceeds
are, or Requisition Compensation (as defined in the Mortgage for
such Vessel) is, received by the relevant Borrower (or the
Security Trustee pursuant to the Security Documents), the
Borrowers must prepay the Loan by an amount equal to the
greatest of (i) the Relevant Tranche, (ii) the amount
of the Loan on the date on which such prepayment is required to
be made multiplied by the Prepayment Ratio and (iii) such
amount as would be required to ensure that the Security Value
after such prepayment exceeds the Required Security Amount.
4.3.1 Interpretation
For the purpose of this Agreement, a Total Loss shall be deemed
to have occurred:
(a) in the case of an actual total loss of a Vessel, on the
actual date and at the time such Vessel was lost or, if such
date is not known, on the date on which such Vessel was last
reported;
(b) in the case of a constructive total loss of a Vessel,
upon the date and at the time notice of abandonment of the ship
is given to the then insurers of such Vessel (provided a claim
for total loss is admitted by such insurers) or, if such
insurers do not immediately admit such a claim, at the date and
at the time at which either a total loss is subsequently
admitted by such insurers or a total loss is subsequently
adjudged by a competent court of law or arbitration tribunal to
have occurred;
Annex B-20
(c) in the case of a compromised or arranged total loss of
a Vessel, on the date upon which a binding agreement as to such
compromised or arranged total loss has been entered into by the
then insurers of such Vessel;
(d) in the case of Compulsory Acquisition, on the date upon
which the relevant requisition of title or other compulsory
acquisition occurs; and
(e) in the case of hijacking, theft, condemnation, capture,
seizure, arrest, detention or confiscation of a Vessel (other
than within the definition of Compulsory Acquisition) by any
Government Entity, or by persons allegedly acting or purporting
to act on behalf of any Government Entity, which deprives an
Owner of the use of such Vessel for more than thirty
(30) days, upon the expiry of the period of thirty
(30) days after the date upon which the relevant incident
occurred.
4.4 Mandatory
prepayment on sale of Mortgaged Vessel
On the date of completion of the sale of a Mortgaged Vessel the
Borrowers must prepay the Loan by an amount equal to the
greatest of (i) the Relevant Tranche, (ii) the amount
of the Loan on the date on which such prepayment is required to
be made multiplied by the Prepayment Ratio and (iii) such
amount as would be required to ensure that the Security Value
after such prepayment exceeds the Required Security Amount.
4.5 Mandatory
prepayment on termination of a Shipbuilding
Contract
If a Shipbuilding Contract is terminated, cancelled, revoked,
suspended, rescinded, transferred, novated or otherwise ceases
to remain in full force and effect for any reason except with
the consent of the Agent, the Borrowers must upon the
Agents demand prepay the Tranche financing the relevant
Borrowers obligations under that Shipbuilding Contract and
the Commitment in respect of such Tranche shall be irrevocably
cancelled upon such demand being made.
4.6 Amounts
payable on prepayment
Any prepayment of all or part of the Loan under this Agreement
shall be made together with:
4.6.1 accrued interest on the amount to be prepaid to the
date of such prepayment;
4.6.2 any additional amount payable under clauses 3.6,
6.6 or 12.2; and
4.6.3 all other sums payable by the Borrowers to the Banks
under this Agreement or any of the other Security Documents
including, without limitation any Break Costs and, if the whole
Loan is being prepaid, any accrued commitment commission payable
under clause 5.1.
4.7 Notice
of prepayment; reduction of maximum loan amount
4.7.1 Every notice of prepayment shall be effective only on
actual receipt by the Agent, shall be irrevocable, shall specify
the amount to be prepaid and the Tranche which is to be prepaid
and shall oblige the Borrowers to make such prepayment on the
date specified. Subject to the other provisions of this
Agreement and in particular Clause 2.6, no amount prepaid
under this Clause 4 in respect of the Loan may be
reborrowed.
4.7.2 Any amounts prepaid pursuant to clause 4.2 shall
be applied against the relevant Tranche in reducing the Balloon
Instalment and other outstanding repayment instalments pro rata.
4.7.3 Any amounts prepaid pursuant to clauses 4.3, 4.4
or 4.5 shall be applied against the Relevant Tranche and
thereafter against the Loan pro rata against the remaining
Tranches in accordance with clause 4.7.2.
4.7.4 The Borrowers obligations set out in
Clause 4.1.1 shall not be affected by any prepayment in
respect of the Loan pursuant to clause 4.2.
4.7.5 The Borrowers may not prepay any part of the Loan
except as expressly provided in this Agreement.
Annex B-21
5 FEES
AND EXPENSES
5.1 Commission
5.1.1 The Borrowers agree to pay to the Agent for the
account of the Lenders pro rata in accordance with their
Commitments quarterly in arrears from the Execution Date until
the end of the Drawdown Period and on the last day of the
Drawdown Period commitment commission computed from the
Execution Date at a rate of zero point six per cent (0.60%) per
annum on the daily amount of the undrawn Loan Facility.
5.1.2 The commission referred to in clause 5.1.1 must be
paid by the Borrowers to the Agent, whether or not any part of
the Total Commitment is ever advanced and shall be
non-refundable.
5.2 Arrangement
Fee
The Borrowers shall pay to the Agent on the first Drawdown Date
an arrangement fee of USD1,125,000 for the account of the
Lenders pro rata in accordance with their Commitments.
5.3 Expenses
The Borrowers agree to reimburse the Banks on a full indemnity
basis within ten (10) days of demand all expenses
and/or
disbursements whatsoever (including without limitation legal,
printing, travel and out of pocket expenses and expenses related
to the provision of legal and insurance opinions referred to in
schedule 3) certified by the Banks or any of them as
having been incurred by them from time to time:
5.3.1 in connection howsoever with the syndication of the
Loan Facility and with the negotiation, preparation, execution
and, where relevant, registration of the Security Documents and
of any contemplated or actual amendment, or indulgence or the
granting of any waiver or consent howsoever in connection with,
any of the Security Documents (including legal fees and any
travel expenses); and
5.3.2 in contemplation or furtherance of, or otherwise
howsoever in connection with, the exercise or enforcement of, or
preservation of any rights, powers, remedies or discretions
under any of the Security Documents, or in consideration of the
Banks rights thereunder or any action proposed or taken
following the occurrence of a Default or otherwise in respect of
the moneys owing under any of the Security Documents, together
with interest at the rate referred to in clause 3.4 from
the date on which reimbursement of such expenses
and/or
disbursements were due following demand to the date of payment
(as well after as before judgment).
5.4 Value
added tax
All fees and expenses payable pursuant to this Agreement must be
paid together with value added tax or any similar tax (if any)
properly chargeable thereon in any jurisdiction. Any value added
tax chargeable in respect of any services supplied by the Banks
or any of them under this Agreement shall, on delivery of the
value added tax invoice, be paid in addition to any sum agreed
to be paid hereunder.
5.5 Stamp
and other duties
The Borrowers must pay all stamp, documentary, registration or
other like duties or taxes (including any duties or taxes
payable by any of the Banks) imposed on or in connection with
any of the Underlying Documents, the Security Documents or the
Loan or any Advance and agree to indemnify the Banks or any of
them against any liability arising by reason of any delay or
omission by the Borrowers to pay such duties or taxes.
6 PAYMENTS
AND TAXES; ACCOUNTS AND CALCULATIONS
6.1 No
set-off or counterclaim
All payments to be made by the Borrowers under any of the
Security Documents must be made in full, without any set off or
counterclaim whatsoever and, subject as provided in
clause 6.6, free and clear of any
Annex B-22
deductions or withholdings, in USD on or before 11:00 am on the
due date in freely available funds to such account at such bank
and in such place as the Agent may from time to time specify for
this purpose. Save as otherwise provided in this Agreement or
any other relevant Security Documents, such payments shall be
for the account of all Lenders and the Agent shall distribute
such payments in like funds as are received by the Agent to the
Lenders rateably, in the proportions which their respective
Contributions bear to the aggregate of the Loan and the Advances
on the date on which such payment is made.
6.2 Payment
by the Lenders
All sums to be advanced by the Lenders to the Borrowers under
this Agreement shall be remitted in USD on the relevant Drawdown
Date to the account of the Agent at such bank as the Agent may
have notified to the Lenders and shall be paid by the Agent on
such date in like funds as are received by the Agent to the
account specified in the relevant Drawdown Notice.
6.3 Non-Banking
Days
When any payment under any of the Security Documents would
otherwise be due on a day which is not a Banking Day, the due
date for payment shall be extended to the next following Banking
Day unless such Banking Day falls in the next calendar month in
which case payment shall be made on the immediately preceding
Banking Day.
6.4 Calculations
All interest and other payments of an annual nature under any of
the Security Documents shall accrue from day to day and be
calculated on the basis of actual days elapsed and a three
hundred and sixty (360) day year.
6.5 Currency
of account
If any sum due from the Borrowers under any of the Security
Documents, or under any order or judgment given or made in
relation thereto, must be converted from the currency (the
first currency) in which the same is payable thereunder
into another currency (the second currency) for the
purpose of (i) making or filing a claim or proof against
the Borrowers, (ii) obtaining an order or judgment in any
court or other tribunal or (iii) enforcing any order or
judgment given or made in relation thereto, the Borrowers
undertake to indemnify and hold harmless the Lender from and
against any loss suffered as a result of any discrepancy 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,
judgment, claim or proof. Any amount due from the Borrowers
under this clause 6.5 shall be due as a separate debt and
shall not be affected by judgment being obtained for any other
sums due under or in respect of any of the Security Documents
and 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.
6.6 Grossing-up
for Taxes by the Borrowers
If at any time the Borrowers must make any deduction or
withholding in respect of Taxes or deduction in respect of any
royalty payment, duty, assessment or other charge or otherwise
from any payment due under any of the Security Documents for the
account of any Bank or if the Agent or the Security Trustee must
make any deduction or withholding from a payment to another Bank
or withholding in respect of Taxes from any payment due under
any of the Security Documents, the sum due from the Borrowers in
respect of such payment must be increased to the extent
necessary to ensure that, after the making of such deduction or
withholding, the relevant Bank receives on the due date for such
payment (and retains, free from any liability in respect of such
deduction or withholding), a net sum equal to the sum which it
would have received had no such deduction or withholding been
required to be made and the Borrowers must indemnify each Bank
against
Annex B-23
any losses or costs incurred by it 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 Provided however that if any Bank or the Agent
or the Security Trustee shall be or become entitled to any Tax
credit or relief in respect of any Tax which is deducted from
any payment by the Borrowers and it actually receives a benefit
from such Tax credit or relief in its country of domicile,
incorporation or residence, the relevant Bank or the Agent or
the Security Trustee, as the case may be, shall, subject to any
laws or regulations applicable thereto, pay to the Borrowers
after such benefit is effectively received by the relevant Bank
or the Agent or the Security Trustee, as the case may be, such
amounts (which shall be conclusively certified by the Agent) as
shall ensure that the net amount actually retained by the
relevant Bank or the Agent or the Security Trustee, as the case
may be, is equal to the amount which would have been retained if
there had been no such deduction provided that
(i) nothing in this Clause shall prevent the Banks from
arranging their respective tax affairs in whichever manner they
deem suitable, (ii) the declaration by any Bank of a rebate
shall be conclusive and binding and (iii) no Bank shall be
required to disclose its tax affairs to the Borrowers. The
Borrowers must promptly deliver to the Agent any receipts,
certificates or other proof evidencing the amounts (if any) paid
or payable in respect of any deduction or withholding as
aforesaid.
6.7 Grossing-up
for Taxes by the Lenders
If at any time a Lender must make any deduction or withholding
in respect of Taxes from any payment due under any of the
Security Documents for the account of the Agent or the Security
Trustee, the sum due from such Lender in respect of such payment
must be increased to the extent necessary to ensure that, after
the making of such deduction or withholding, the Agent or, as
the case may be, the Security Trustee receives on the due date
for such payment (and retains free from any liability in respect
of such deduction or withholding) a net sum equal to the sum
which it would have received had no such deduction or
withholding been required to be made and each Lender must
indemnify the Agent and the Security Trustee against any losses
or costs incurred by it by reason of any failure of such Lender
to make any such deduction or withholding or by reason of any
increased payment not being made on the due date for such
payment.
6.8 Loan
account
Each Lender shall maintain, in accordance with its usual
practice, an account evidencing the amounts from time to time
lent by, owing to and paid to it under the Security Documents.
The Agent
and/or the
Security Trustee shall maintain a control account showing the
Loan, the Advances and other sums owing by the Borrowers under
the Security Documents and all payments in respect thereof being
made from time to time. The control account shall, in the
absence of manifest error, be prima facie evidence of the amount
from time to time owing by the Borrowers under the Security
Documents.
6.9 Agent
may assume receipt
Where any sum is to be paid under the Security Documents to the
Agent or, as the case may be, the Security Trustee for the
account of another person, the Agent or, as the case may be, the
Security Trustee may assume that the payment will be made when
due and the Agent or, as the case may be, the Security Trustee
may (but shall not be obliged to) make such sum available to the
person so entitled. If it proves to be the case that such
payment was not made to the Agent or, as the case may be, the
Security Trustee, then the person to whom such sum was so made
available must on request refund such sum to the Agent or, as
the case may be, the Security Trustee together with interest
thereon sufficient to compensate the Agent or, as the case may
be, the Security Trustee for the cost of making available such
sum up to the date of such repayment and the person by whom such
sum was payable must indemnify the Agent or, as the case may be,
the Security Trustee for any and all loss or expense which the
Agent or, as the case may be, the Security Trustee may sustain
or incur as a consequence of such sum not having been paid on
its due date.
6.10 Partial
payments
If, on any date on which a payment is due to be made by the
Borrowers under any of the Security Documents, the amount
received by the Agent from the Borrowers falls short of the
total amount of the
Annex B-24
payment due to be made by the Borrowers on such date then,
without prejudice to any rights or remedies available to the
Agent, the Security Trustee, the Security Trustee and the
Lenders under any of the Security Documents, the Agent must
apply the amount actually received from the Borrowers in or
towards discharge of the obligations of the Borrowers under the
Security Documents in the following order, notwithstanding any
appropriation made, or purported to be made, by the Borrowers:
6.10.1 first, in or towards payment, on a pro-rata basis,
of any unpaid costs and expenses of the Agent and the Security
Trustee under any of the Security Documents;
6.10.2 secondly, in or towards payment of any fees payable
to the Arranger, the Agent or any of the other Banks under, or
in relation to, the Security Documents which remain unpaid;
6.10.3 thirdly, in or towards payment to the Lenders, on a
pro rata basis, of any accrued interest owing in respect of the
Loan which shall have become due under any of the Security
Documents but remains unpaid;
6.10.4 fourthly, in or towards repayment of the Loan which
have become due and payable and in or towards payment to the
Swap Bank of any sum which shall have become due under the
Deutscher Rahmenvertrag but remains unpaid;
6.10.5 fifthly, in or towards payment to the Lenders, on a
pro rata basis, of any Break Costs and any other sum relating to
the Loan which shall have become due under any of the Security
Documents but remains unpaid; and
The order of application set out in clauses 6.10.1 to
6.10.5 may be varied by the Agent if the Majority Lenders so
direct, without any reference to, or consent or approval from,
the Borrowers.
7 REPRESENTATIONS
AND WARRANTIES
7.1 Continuing
representations and warranties
The Borrowers represent and warrant to each Bank that:
7.1.1 Due incorporation
each of the Security Parties is duly incorporated and validly
existing in good standing, under the laws of its respective
country of incorporation, in each case, as a corporation and has
power to carry on its respective businesses as it is now being
conducted and to own their respective property and other assets
to which it has unencumbered legal and beneficial title except
as disclosed to the Agent in writing;
7.1.2 Corporate power
each of the Security Parties has power to execute, deliver and
perform its obligations and, as the case may be, to exercise its
rights under the Underlying Documents and the Security Documents
to which it is a party; all necessary corporate, shareholder and
other action has been taken to authorise the execution, delivery
and on the execution of the Security Documents performance of
the same and no limitation on the powers of the Borrowers to
borrow or any other Security Party to howsoever incur liability
and/or to
provide or grant security will be exceeded as a result of
borrowing any part of the Loan;
7.1.3 Binding obligations
the Underlying Documents and the Security Documents, when
executed, will constitute valid and legally binding obligations
of the relevant Security Parties enforceable in accordance with
their respective terms;
7.1.4 No conflict with other obligations
the execution and delivery of, the performance of their
obligations under, and compliance with the provisions of, the
Underlying Documents and the Security 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 any Security Party or other member of
the Group 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 any Security Party or
any other member of the Group is a party or is subject or by
which it or any of its property is bound,
Annex B-25
(iii) contravene or conflict with any provision of the
constitutional documents of any Security Party or
(iv) result in the creation or imposition of, or oblige any
of the Security Parties to create, any Encumbrance (other than a
Permitted Encumbrance) on any of the undertakings, assets,
rights or revenues of any of the Security Parties;
7.1.5 No default
no Default has occurred;
7.1.6 No litigation or judgments
no Proceedings are current, pending or, to the knowledge of the
officers of any Borrower, threatened against any of the Security
Parties or any other Group Members or their assets which could
have a Material Adverse Effect and there exist no judgments,
orders, injunctions which would materially affect the
obligations of the Security Parties under the Security Documents;
7.1.7 No filings required
except for the registration of the Mortgages in the relevant
register under the laws of the relevant Flag State through the
relevant Registry, it is not necessary to ensure the legality,
validity, enforceability or admissibility in evidence of any of
the Underlying Documents or any of the Security Documents that
they or any other instrument be notarised, filed, recorded,
registered or enrolled in any court, public office or elsewhere
in any Pertinent Jurisdiction or that any stamp, registration or
similar tax or charge be paid in any Pertinent Jurisdiction on
or in relation to any of the Underlying Documents or the
Security Documents and each of the Underlying Documents and the
Security Documents is in proper form for its enforcement in the
courts of each Pertinent Jurisdiction;
7.1.8 Required Authorisations and legal compliance
all Required Authorisations have been obtained or effected and
are in full force and effect and no Security Party has in any
way contravened any applicable law, statute, rule or regulation
(including all such as relate to money laundering);
7.1.9 Choice of law
the choice of English law to govern the Underlying Documents and
the Security Documents (other than the Mortgages and the
Earnings Account Pledges, the Retention Account Pledge, the
Alpha Equity Deposit Account Pledge and the DSB Equity Deposit
Account Pledge), the choice of the law of the Flag State to
govern the Mortgages, the choice of Greek law to govern the
Earnings Account Pledges, the Alpha Equity Deposit Account
Pledge and the Retention Account Pledge, the choice of German
law to govern the DSB Equity Deposit Account Pledge and the
submissions by the Security Parties to the jurisdiction of the
English courts and the obligations of such Security Parties
associated therewith, are valid and binding;
7.1.10 No immunity
no Security Party nor any of their assets is entitled to
immunity on the grounds of sovereignty or otherwise from any
Proceedings whatsoever;
7.1.11 Financial statements correct and complete
the latest audited and unaudited consolidated financial
statements of the Corporate Guarantor in respect of the relevant
financial year as delivered to the Agent present or will present
fairly and accurately the financial position of the Corporate
Guarantor and the consolidated financial position of the Group
as at the date thereof and the results of the operations of the
Corporate Guarantor and the consolidated results of the
operations of the Group for the financial year ended on such
date and, as at such date, neither the Corporate Guarantor nor
any of its subsidiaries have any significant liabilities
(contingent or otherwise) or any unrealised or anticipated
losses which are not disclosed by, or reserved against or
provided for in, such financial statements;
Annex B-26
7.1.12 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 Indebtedness of the Borrowers
except for obligations which are mandatorily preferred by
operation of law and not by contract;
7.1.13 Information/ Material Adverse Effect
all information, whatsoever provided by any Security Party to
the Agent in connection with the negotiation and preparation of
the Security Documents or otherwise provided hereafter in
relation to, or pursuant to this Agreement is, or will be, true
and accurate in all material respects and not misleading, does
or will not omit material facts and all reasonable enquiries
have been, or shall have been, made to verify the facts and
statements contained therein and there has not occurred any
event which could have a Material Adverse Effect on any Security
Party since such information was provided to the Agent; there
are, or will be, no other facts the omission of which would make
any fact or statement therein misleading;
7.1.14 No withholding Taxes
no Taxes anywhere are imposed whatsoever by withholding or
otherwise on any payment to be made by any Security Party under
the Underlying Documents or the Security Documents to which such
Security Party is or is to be a party or are imposed on or by
virtue of the execution or delivery by the Security Parties of
the Underlying Documents or the Security Documents or any other
document or instrument to be executed or delivered under any of
the Security Documents;
7.1.15 Use of proceeds
the Borrowers shall apply the Loan only for the purposes
specified in clauses 1.1 and 2.1;
7.1.16 The Mortgaged Vessels
throughout the Facility Period, each Mortgaged Vessel will,
following its Delivery Date, be:
(a) in the absolute sole, legal and beneficial ownership of
the relevant Owner;
(b) registered through the offices of the relevant Registry
as a ship under the laws and flag of the relevant Flag State;
(c) in compliance with the ISM Code and the ISPS Code and
operationally seaworthy and in every way fit for service;
(d) in good and sea-worthy and cargo-worthy
condition; and
(e) classed with the relevant Classification free of all
requirements and recommendations of the relevant Classification
Society.
7.1.17 Mortgaged Vessels employment
Except with the prior written consent of the Lenders there will
not be any agreement or arrangement in respect of the employment
of any Mortgaged Vessel whereby the Earnings (as defined in the
relevant Ship Security Documents) of any Mortgaged Vessel may be
shared howsoever with any other person provided that no such
consent shall be required if (i) the aggregate Earnings of
the Mortgaged Vessels are sufficient to cover the aggregate of
the Borrowers payment obligations under this Agreement and
vessel operating expenses as they fall due and (ii) no
Event of Default has occurred which is continuing;
7.1.18 Freedom from Encumbrances
no Mortgaged Vessel nor its Earnings, Insurances or Requisition
Compensation (each as defined in the relevant Ship Security
Documents) nor the Earnings Accounts, Retention Account, Equity
Deposit Accounts nor any Extended Employment Contract in respect
of such Mortgaged Vessel 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 be subject to any
Encumbrance except Permitted Encumbrances;
Annex B-27
7.1.19 Environmental Matters
except as may already have been disclosed by the Borrowers in
writing to, and acknowledged and accepted in writing by, the
Agent:
(a) the Borrowers and, to the best of the Borrowers
knowledge and belief (having made due enquiry), their respective
Environmental Affiliates, have complied with the provisions of
all Environmental Laws;
(b) the Borrowers and, to the best of the Borrowers
knowledge and belief (having made due enquiry), their respective
Environmental Affiliates have obtained all Environmental
Approvals and are in compliance with all such Environmental
Approvals;
(c) no Environmental Claim has been made or threatened or
pending against any Borrower, or, to the best of the
Borrowers knowledge and belief (having made due enquiry),
any of their respective Environmental Affiliates; and
(d) there has been no Environmental Incident;
7.1.20 ISM and ISPS Code
With effect from the Delivery Date of its Vessel, each of the
Borrowers will comply with and continue to comply with and
procure that the Manager complies with and continues to comply
with the ISM Code, the ISPS Code and all other statutory and
other requirements relative to its business and in particular
each Borrower or the Manager will obtain and maintain a valid
DOC and SMC for each Mortgaged Vessels and that it and the
Manager will implement and continue to implement an ISM SMS;
7.1.21 Copies true and complete
the Certified Copies or originals of the Underlying Documents
delivered or to be delivered to the Agent pursuant to
clause 8.1 are, or will when delivered be, true and
complete copies or, as the case may be, originals of such
documents; and such documents constitute valid and binding
obligations of the parties thereto enforceable in accordance
with their respective terms and there have been no amendments or
variations thereof or defaults thereunder;
7.1.22 the Borrowers are the ultimate beneficiaries of the
Loan;
7.1.23 no Security Party has incurred any Indebtedness save
under this Agreement or as otherwise disclosed to the Agent in
writing or as disclosed in the Groups public filings;
7.1.24 the Corporate Guarantor and all Borrowers have filed
all tax and other fiscal returns required to be filed by any tax
authority to which they are subject;
7.1.25 no Borrower has an office in England.
7.2 Repetition
of representations and warranties
On each day throughout the Facility Period, the Borrowers shall
be deemed to repeat the representations and warranties in
clause 7 updated mutatis mutandis as if made with reference
to the facts and circumstances existing on such day.
8 UNDERTAKINGS
8.1 General
The Borrowers undertake with each Bank that, from the Execution
Date until the end of the Facility Period, they will:
8.1.1 Notice of Default and Proceedings
promptly inform the Agent of (a) any Default and of any
other circumstances or occurrence which might adversely affect
the ability of any Security Party to perform its obligations
under any of the Security Documents
Annex B-28
and (b) as soon as the same is instituted or threatened,
details of any Proceedings involving any Security Party which
could have a material adverse effect on that Security Party
and/or the
operation of any of the Vessels (including, but not limited to
any Total Loss of a Vessel or the occurrence of any
Environmental Incident) and will from time to time, if so
requested by the Agent, confirm to the Agent in writing that,
save as otherwise stated in such confirmation, no Default has
occurred and is continuing and no such Proceedings are on foot
or threatened;
8.1.2 Authorisation
obtain or cause to be obtained, maintain in full force and
effect and comply fully with all Required Authorisations,
provide the Agent with Certified Copies of the same and do, or
cause to be done, all other acts and things which may from time
to time be necessary or desirable under any applicable law
(whether or not in the Pertinent Jurisdiction) for the continued
due performance of all the obligations of the Security Parties
under each of the Security Documents;
8.1.3 Corporate Existence/Ownership
ensure that each Security Party maintains its corporate
existence as a body corporate duly organised and validly
existing and in good standing under the laws of the Pertinent
Jurisdiction and ensure that each Borrower is owned, directly or
through other companies, by the Corporate Guarantor for the time
being;
8.1.4 Use of proceeds
use the Advances exclusively for the purposes specified in
clauses 1.1 and 2.1;
8.1.5 Pari passu
ensure that their obligations under this Agreement shall at all
times rank at least pari passu with all their other present and
future unsecured and unsubordinated Indebtedness with the
exception of any obligations which are mandatorily preferred by
law and not by contract;
8.1.6 Financial statements
send to the Agent (or procure that is sent):
(a) as soon as possible, but in no event later than
180 days after the end of each of its Financial Years,
annual audited (prepared in accordance with US GAAP by a firm of
accountants acceptable to the Agent) consolidated balance sheet
and profit and loss accounts of the Corporate Guarantor and all
companies which are owned, directly or indirectly, or controlled
by it (commencing with the Financial Year ending
31 December 2010); and
(b) as soon as possible, but in no event later than
75 days after the end of each 3 month period in each
of its Financial Years, the Corporate Guarantors unaudited
consolidated balance sheet and profit and loss accounts for that
3 month period certified as to their correctness by its
chief financial officer.
8.1.7 Reimbursement of MII & MAP Policy premiums
Whether or not any amount is borrowed under this Agreement,
reimburse the Agent on the Agents written demand the
amount of the premium payable by the Agent for the inception or,
as the case may be, extension
and/or
continuance of the MII & MAP Policy (including any
insurance tax thereon);
8.1.8 Compliance Certificates
deliver to the Agent on the earlier of (i) the date on
which the quarterly reports are delivered under
clause 8.1.6 and (ii) the date falling 75 days
after the end of the financial quarter to which they refer, a
Compliance Certificate together with such supporting information
as the Agent may require.
8.1.9 Provision of further information
provide the Agent, and procure that the Corporate Guarantor
provide the Agent, with such financial or other information
concerning any Borrower and their respective affairs,
activities, financial standing, Indebtedness and operations and
the performance of the Mortgaged Vessels as the Agent or any
Lender (acting through the Agent) may from time to time
reasonably require and all other documentation and information
as
Annex B-29
any Lender may from time to time require in order to comply with
its, and all other relevant, know-your-customer regulations;
8.1.10 Obligations under Security Documents
duly and punctually perform each of the obligations expressed to
be imposed or assumed by them under the Security Documents and
Underlying Documents and will procure that each of the other
Security Parties will, duly and punctually perform each of the
obligations expressed to be assumed by it under the Security
Documents and the Underlying Documents to which it is a party;
8.1.11 Compliance with ISM Code
comply with, and will procure that any Operator will comply
with, and ensure that the Mortgaged Vessels and any Operator
comply 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 (as defined in
the Mortgages);
8.1.12 Withdrawal of DOC and SMC
immediately inform the Agent if there is any actual withdrawal
of their or any Operators DOC or the SMC of any Mortgaged
Vessel;
8.1.13 Issuance of DOC and SMC
and will procure that any Operator will promptly inform the
Agent of the receipt by any Borrower or any Operator of
notification that its application for a DOC or any application
for an SMC for any Mortgaged Vessel has been refused;
8.1.14 ISPS Code Compliance
and will procure that the Manager or any Operator will:
(a) maintain at all times a valid and current ISSC in
respect of each Mortgaged Vessel;
(b) immediately notify the Agent in writing of any actual
or threatened withdrawal, suspension, cancellation or
modification of the ISSC in respect of a Mortgaged
Vessel; and
(c) procure that each Mortgaged Vessel will comply at all
times with the ISPS Code;
8.1.15 Compliance with Laws and payment of taxes
and will comply with all relevant Environmental Laws, laws,
statutes and regulations and pay all taxes for which it is
liable as they fall due;
8.1.16 Charters etc.
(i) deliver to the Agent a Certified Copy of each Extended
Employment Contract upon its execution, (ii) forthwith on
the Agents request execute (a) a Charter Assignment
in respect thereof and (b) any notice of assignment
required in connection therewith and use reasonable efforts to
procure the acknowledgement of any such notice of assignment by
the relevant charterer (provided that any failure to procure the
same shall not constitute an Event of Default) and
(iii) pay all legal and other costs incurred by the Agent
in connection with any such Charter Assignments, forthwith
following the Agents demand.
8.1.17 Financial Covenants of the Corporate
Guarantors Group
procure that
(a) at no time shall the Liquidity of the Group be less
than the Minimum Liquidity;
(b) as of the earlier of (i) the Final Delivery Date
and (ii) 1 January 2013, the Net Worth of the Group
will at all times exceed USD75,000,000;
(c) as of the earlier of (i) the Final Delivery Date
and (ii) 1 January 2013, the Total Liabilities divided
by the Total Assets (adjusted for market values of vessels
calculated in accordance with Clause 8.2.2) shall be less
than 75%.
Annex B-30
8.1.18 Inspection
the Agent, at the cost of the Borrowers and upon receipt of at
least 15 days written notice, by surveyors or other persons
appointed by it for such purpose, to board any Mortgaged Vessel
at all other reasonable times for the purpose of inspecting her
and to afford all proper facilities for such inspections and for
this purpose to give the Agent reasonable advance notice of any
intended drydocking of each Vessel (whether for the purpose of
classification, survey or otherwise) and to pay the costs in
respect of one inspection in each calendar year; and
8.1.19 Delivery
Pay to the Builder all amounts payable on delivery of the
Vessels in accordance with the relevant Shipbuilding Contract
and take, or as the case may be, ensure that the relevant
Borrower, takes delivery of the relevant Vessel.
8.1.20 Subordination
Ensure that all Indebtedness of any Borrower to its shareholders
or to any other Group Member is fully subordinated, and to
subordinate any Indebtedness issued to it by the Corporate
Guarantor, all in a form acceptable to the Agent (acting on the
instructions of the Majority Lenders).
8.1.21 Dividends
The Borrowers and Corporate Guarantor may declare or pay
dividends or distribute any of their present or future assets,
undertakings, rights or revenues in an amount not exceeding 50%
of the Net Profits for any relevant financial year to any of
their partners, members or shareholders, and the Corporate
Guarantor may make such other investments as it may require,
only if there has not occurred any Event of Default.
8.1.22 Corporate Guarantee
On the Share Acquisition Date the Borrowers shall procure the
delivery to the Security Trustee of:
(a) the Corporate Guarantee duly executed by Navios
Acquisition (and upon receipt thereof by the Security Trustee
the Corporate Guarantee which was executed on the first Drawdown
Date shall terminate and cease to be enforceable, which the
Security Trustee shall confirm in writing at that time) ;
(b) such documentation equivalent to that set out in
Schedule 3 Part A items (a)-(d) inclusive in respect
of Navios Acquisition as the Agent may require;
(c) within 10 Banking Days of the Share Acquisition Date,
the opening balance sheet of Navios Acquisition duly audited by
a firm of accountants acceptable the Lenders;
(d) a copy of the presentation given to the investors in
Navios Acquisition;
(e) a cashflow forecast for the Group for the 3 years
following the Share Acquisition Date; and
(f) evidence that Navios Acquisition is the sole
shareholder of the Shareholder and the Shareholder is the sole
shareholder of each of the Borrowers.
8.2 Security
value maintenance
8.2.1 Security shortfall
If, at any time after the first Delivery Date, the Security
Value shall be less than the Required Security Amount, the Agent
(acting on the instructions of the Majority Lenders) shall give
notice to the Borrowers requiring that such deficiency be
remedied and then the Borrowers must either:
(a) prepay within a period of thirty (30) days of the
date of receipt by the Borrowers of the Agents said notice
such part of the Delivered Tranches as will result in the
Security Value after such prepayment (taking into account any
other repayment of the Delivered Tranches made between the date
of the notice and the date of such prepayment) being equal to or
higher than the Required Security Amount; or
(b) within thirty (30) days of the date of receipt by
the Borrowers of the Agents said notice constitute to the
satisfaction of the Agent such further security for the Loan as
shall be acceptable to the
Annex B-31
Majority Lenders having a value for security purposes (as
determined by the Agent 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
Required Security Amount as at such date.
The provisions of clauses 4.6 and 4.7 shall apply to
prepayments under clause 8.2.1(a) provided that the Agent
shall apply such prepayments (i) pro rata against the
Tranches, (ii) in reduction of the repayment instalments
under clause 4.1 pro rata and the amounts of the Loan
prepaid hereunder shall not be available to be re-borrowed.
8.2.2 Valuation of Mortgaged Vessels
Each Mortgaged Vessel shall, for the purposes of this Agreement,
be valued (at the Borrowers expense) in USD by taking a
valuation prepared by any Approved Broker appointed by the
Agent, such valuation to be made without physical inspection,
and on the basis of a sale for prompt delivery for cash at
arms length, on normal commercial terms, as between a
willing buyer and a willing seller without taking into account
the benefit or burden of any charterparty or other engagement
concerning the relevant Mortgaged Vessel to be obtained (in
addition to (a) above) at any other time as the Agent
(acting on the instructions of the Majority Lenders) shall
additionally require, at the cost of the Lenders.
The Approved Brokers valuations for each Mortgaged Vessel
on each such occasion shall constitute the Valuation Amount of
such Mortgaged Vessel for the purposes of this Agreement until
superceded by the next such valuation.
8.2.3 Information
The Borrowers undertake with the Banks to supply to the Agent
and to the Approved Broker such information concerning the
relevant Mortgaged Vessel and its condition as such shipbrokers
may require for the purpose of determining any Valuation Amount.
8.2.4 Costs
All costs in connection with the obtaining and any determining
of any Valuation Amount pursuant to Clause 8.2.2(a) and any
valuation either 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 8.2.1(b), must be paid by the Borrowers.
8.2.5 Valuation of additional security
For the purposes of this clause 8.2, the market value
(i) of any additional security over a ship (other than the
Vessels) shall be determined in accordance with
clause 8.2.2 and (ii) of any other additional security
provided or to be provided to the Banks or any of them shall be
determined by the Agent after consultation with the Lenders.
8.2.6 Documents and evidence
In connection with any additional security provided in
accordance with this clause 8.2, the Agent shall be
entitled to receive (at the Borrowers expense) such
evidence and documents of the kind referred to in
schedule 3 as may in the Agents opinion be
appropriate and such favourable legal opinions as the Agent
shall in its absolute discretion require.
8.3 Negative
undertakings
The Borrowers jointly and severally undertake with each Bank
that, from the Execution Date until the end of the Facility
Period, they will not, without the prior written consent of the
Agent (acting on the instructions of the Majority Banks):
8.3.1 Negative pledge
permit any Encumbrance (other than a Permitted Encumbrance) to
subsist, arise or be created or extended over all or any part of
their respective present or future undertakings, assets, rights
or revenues to secure or prefer any present or future
Indebtedness or other liability or obligation of any Group
Member or any other person;
Annex B-32
8.3.2 No merger or transfer
merge or consolidate with any other person or permit any change
to the legal or beneficial ownership of their shares from that
existing at the Execution Date;
8.3.3 Disposals
sell, transfer, assign, create security or option over, pledge,
pool, abandon, lend or otherwise dispose of or cease to exercise
direct control over any part of their present or future
undertaking, assets, rights or revenues (otherwise than by
transfers, sales or disposals for full consideration in the
ordinary course of trading) whether by one or a series of
transactions related or not;
8.3.4 Other business or manager
undertake any business other than the ownership and operation of
the Ships or employ anyone other than the Manager as commercial
and technical manager of the Vessels;
8.3.5 Acquisitions
acquire any further assets other than the Vessels and rights
arising under contracts entered into by or on behalf of the
Borrowers in the ordinary course of their businesses of owning,
operating and chartering the Vessels;
8.3.6 Other obligations
incur any obligations except for obligations arising under the
Underlying Documents or the Security Documents or contracts
entered into in the ordinary course of their business of owning,
operating and chartering the Vessels;
8.3.7 No borrowing
incur any Borrowed Money except for Borrowed Money pursuant to
the Security Documents;
8.3.8 Repayment of borrowings
repay or prepay the principal of, or pay interest on or any
other sum in connection with any of their Borrowed Money except
for Borrowed Money pursuant to the Security Documents;
8.3.9 Guarantees
issue any guarantees or otherwise become directly or
contingently liable for the obligations of any person, firm, or
corporation except pursuant to the Security Documents and except
for guarantees from time to time required in the ordinary course
by any protection and indemnity or war risks association with
which a Vessel is entered, guarantees required to procure the
release of such Vessel from any arrest, detention, attachment or
levy or guarantees required for the salvage of a Vessel;
8.3.10 Loans
make any loans or grant any credit (save for normal trade credit
in the ordinary course of business) to any person or agree to do
so;
8.3.11 Sureties
permit any Indebtedness of any Borrower to any person (other
than the Banks pursuant to the Security Documents) to be
guaranteed by any person (except for guarantees from time to
time required in the ordinary course of business and in the
ordinary course by any protection and indemnity or war risks
association with which a Vessel is entered, guarantees required
to procure the release of such Vessel from any arrest,
detention, attachment or levy or guarantees or undertakings
required for the salvage of a Vessel and guarantees in favour of
the Builder in respect of any Shipbuilding Contract); or
8.3.12 Subsidiaries
form or acquire any Subsidiaries.
Annex B-33
9 CONDITIONS
9.1 Advance
of any Advance
The obligation of each Lender to make its Commitment available
in respect of any Advance is conditional upon:
9.1.1 that, on or before the service of the first Drawdown
Notice hereunder, the Agent has received the documents described
in Part A of Schedule 3 in form and substance
satisfactory to the Agent and its lawyers;
9.1.2 that, on or before the service of the Drawdown Notice
in respect of the Advances referred to in clauses 2.5.1(a)
and 2.5.2(a), the Agent has received the documents described in
Part B of Schedule 3 in respect of the Relevant Vessel
(as defined in Schedule 3) in form and substance
satisfactory to the Agent and its lawyers;
9.1.3 that, on or before the service of the Drawdown Notice
in respect of the Advances referred to in clauses 2.5.1(b)
and 2.5.2(b), the Agent has received the documents described in
Part C of Schedule 3 in respect of the Relevant Vessel
in form and substance satisfactory to the Agent and its lawyers;
9.1.4 that, on or before service of the Drawdown Notice in
respect of Advances referred to in clause 2.5.2(c), the
Agent has received the documents described in Part D of
Schedule 3 in respect of the Relevant Vessel in form and
substance satisfactory to the Agent and its lawyers;
9.1.5 that, on or before service of the Drawdown Notice in
respect of Advances referred to in clause 2.5.2(d), the
Agent has received the documents described in Part E of
Schedule 3 in respect of the Relevant Vessel in form and
substance satisfactory to the Agent and its lawyers;
9.1.6 that, on or before service of the Drawdown Notice in
respect of Advances referred to in clauses 2.5.1(c) and
2.5.2(e), the Agent has received the documents described in
Part F of Schedule 3 in respect of the Relevant Vessel
in form and substance satisfactory to the Agent and its lawyers;
9.1.7 that, on or before service of the Drawdown Notice in
respect of Advances referred to in clauses 2.5.1(d) and
2.5.2(f), the Agent has received the documents described in
Part G of Schedule 3 in respect of the Relevant Vessel
in form and substance satisfactory to the Agent and its lawyers;
9.1.8 the representations and warranties contained in
clause 7 and clauses 4.1 and 4.2 of the Corporate
Guarantee being then true and correct as if each was made with
respect to the facts and circumstances existing at such
time; and
9.1.9 no Default having occurred and being continuing and
there being no Default which would result from the making of the
Loan.
9.2 Waiver
of conditions precedent
The conditions specified in this clause 9 are inserted
solely for the benefit of the Lenders and may be waived by the
Agent in whole or in part and with or without conditions only
with the consent of the Majority Lenders.
9.3 Further
conditions precedent
Not later than five (5) Banking Days prior to the Drawdown
Date of an Advance and not later than five (5) Banking Days
prior to any Interest Payment Date, the Agent (acting on the
instructions of the Majority Lenders) may request and the
Borrowers must, not later than two (2) Banking Days prior
to such date, deliver to the Agent (at the Borrowers
expense) on such request further favourable certificates
and/or
opinions as to any or all of the matters which are the subject
of clauses 7, 8, 9 and 10.
Annex B-34
9.4 Release
of Shares Pledges
The Lenders agree that upon the drawdown of the final Advance in
respect of a Tranche, and receipt of a Negative Pledge in
respect of the Owner of the Vessel financed by that Tranche, the
Security Trustee shall (provided no Event of Default has
occurred) release the Shares Pledge in respect of that Owner.
10 EVENTS
OF DEFAULT
10.1 Events
Each of the following events shall constitute an Event of
Default (whether such event shall occur voluntarily or
involuntarily or by operation of law or regulation or in
connection with any judgment, decree or order of any court or
other authority or otherwise, howsoever):
10.1.1 Non-payment: any Security
Party fails to pay any sum payable by it under any of the
Security Documents at the time, in the currency and in the
manner stipulated in the Security Documents or the Underlying
Documents (and so that, for this purpose, sums payable
(i) under clauses 3.1 and 4.1 shall be treated as
having been paid at the stipulated time if (aa) received by the
Agent within two (2) days of the dates therein referred to
and (bb) such delay in receipt is caused by administrative or
other delays or errors within the banking system and
(ii) on demand shall be treated as having been paid at the
stipulated time if paid within two (2) Banking Days of
demand); or
10.1.2 Breach of Insurance and certain other
obligations: any Owner or, as the context may
require, the Manager or any other person fails to obtain
and/or
maintain the Insurances (as defined in, and in accordance with
the requirements of, the Ship Security Documents) for any of the
Mortgaged Vessels 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 a Borrower commits any
breach of or omits to observe any of the obligations or
undertakings expressed to be assumed by them under
clause 8; or
10.1.3 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
Security Documents (other than those referred to in
clauses 10.1.1 and 10.1.2 above) unless such breach or
omission, in the opinion of the Agent (following consultation
with the Banks) is capable of remedy, in which case the same
shall constitute an Event of Default if it has not been remedied
within fifteen (15) days of the occurrence thereof; or
10.1.4 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 Security Documents or in any notice, certificate or
statement referred to in or delivered under any of the Security
Documents is or proves to have been incorrect or misleading in
any material respect; or
10.1.5 Cross-default: any
Indebtedness of any Borrower or any Indebtedness of any Security
Party in an amount exceeding three million Dollars
(USD3,000,000) is not paid when due (subject to applicable grace
periods) or any such Indebtedness of any Borrower or any
Security Party becomes (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 Borrower or Security Party of a
voluntary right of prepayment), or any creditor of a Borrower or
any Security Party becomes entitled to declare any such
Indebtedness due and payable or any facility or commitment
available to any Borrower or any Security Party relating to
Indebtedness is withdrawn, suspended or cancelled by reason of
any default (however described) of the person concerned; or
10.1.6 Execution: any uninsured
judgment or order made against any Security Party is not stayed,
appealed against or complied with within fifteen (15) days
or a creditor attaches or takes possession of, or a distress,
execution, sequestration or other 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
within thirty (30) days; or
10.1.7 Insolvency: any Security
Party is unable or admits inability to pay its debts as they
fall due; suspends making payments on any of its debts or
announces an intention to do so; becomes insolvent; or any
Annex B-35
Security Party has negative net worth (taking into account
contingent liabilities); or suffers the declaration by any
court, liquidator, receiver or administrator of a moratorium in
respect of any of its Indebtedness; or
10.1.8 Reduction or loss of
capital: a meeting is convened by any
Security Party (other than the Corporate Guarantor) without the
Agents prior written consent, for the purpose of passing
any resolution to purchase, reduce or redeem any of its share
capital without the Agents prior written consent; or
10.1.9 Dissolution: any corporate
action, Proceedings or other steps are taken to dissolve or
wind-up any
Security Party or an order is made or resolution passed for the
dissolution or winding up of any Security Party or a notice is
issued convening a meeting for such purpose; or
10.1.10 Administration: any
petition is presented, notice given or other steps are taken
anywhere to appoint an administrator of any Security Party or
the Agent reasonably believes that any such petition or other
step is imminent or an administration order is made in relation
to any Security Party; or
10.1.11 Appointment of receivers and
managers: any administrative or other
receiver is appointed anywhere of any Security Party or any part
of its assets
and/or
undertaking or any other steps are taken to enforce any
Encumbrance over all or any part of the assets of any Security
Party; or
10.1.12 Compositions: any
corporate action, legal proceedings or other procedures or steps
are taken, or negotiations commenced, by any Security Party or
by any of its creditors (other than the Corporate Guarantor) or
any legal proceedings are taken in respect of the Corporate
Guarantor, 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; or
10.1.13 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
reasonable opinion of the Agent, appears in that country or
territory to correspond with, or have an effect equivalent or
similar to, any of those mentioned in clauses 10.1.6 to
10.1.12 (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
10.1.14 Cessation of business: any
Security Party suspends or ceases or threatens to suspend or
cease to carry on its business without the prior written consent
of the Agent, such consent not to be unreasonably
withheld; or
10.1.15 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 Entity; or
10.1.16 Invalidity: any of the
Security Documents and the Underlying 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 Security Documents and
the Underlying 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
10.1.17 Unlawfulness: any
Unlawfulness occurs or 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 Security
Documents or for a Bank to exercise the rights or any of them
vested in it under any of the Security Documents or
otherwise; or
10.1.18 Repudiation: any Security
Party repudiates any of the Security Documents or does or causes
or permits to be done any act or thing evidencing an intention
to repudiate any of the Security Documents; or
10.1.19 Encumbrances
enforceable: any Encumbrance (other than
Permitted Liens) in respect of any of the property (or part
thereof) which is the subject of any of the Security Documents
becomes enforceable; or
Annex B-36
10.1.20 Arrest: a Mortgaged Vessel
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 that Owner shall fail to procure the
release of such Mortgaged Vessel within a period of thirty
(30) days thereafter (this clause does not include capture
of a Vessel by pirates); or
10.1.21 Registration: the
registration of a Mortgaged Vessel under the laws and flag of
the relevant Flag State is cancelled or terminated without the
prior written consent of the Majority Banks; or
10.1.22 Unrest: the Flag State of
a Mortgaged Vessel or the country in which any Security Party is
incorporated or domiciled becomes involved in hostilities or
civil war or there is a seizure of power in the Flag State by
unconstitutional means unless the Owner of the Vessel registered
in such Flag State shall have transferred its Vessel onto a new
flag acceptable to the Banks within sixty (60) days of the
start of such hostilities or civil war or seizure of
power; or
10.1.23 Environmental
Incidents: an Environmental Incident occurs
which gives rise, or may give rise, to an Environmental Claim
which could, in the opinion of the Agent be expected to have a
material adverse effect (i) on the business, assets or
financial condition of any Security Party or the Group taken as
a whole or (ii) on the security constituted by any of the
Security Documents or the enforceability of that security in
accordance with its terms; or
10.1.24 P&I: an Owner or the
Manager or any other person fails or omits to comply with any
requirements of the protection and indemnity association or
other insurer with which a Mortgaged Vessel is entered for
insurance or insured against protection and indemnity risks
(including oil pollution risks) to the effect that any cover
(including, without limitation, any cover in respect of
liability for Environmental Claims arising in jurisdictions
where such Mortgaged Vessel operates or trades) is or may be
liable to cancellation, qualification or exclusion at any
time; or
10.1.25 Material events: any other
event occurs or circumstance arises which, in the opinion of the
Agent (following consultation with the Banks), is likely
materially and adversely to affect either (i) the ability
of any Security Party to perform all or any of its obligations
under or otherwise to comply with the terms of any of the
Security Documents or (ii) the security created by any of
the Security Documents; or
10.1.26 Required
Authorisations: any Required Authorisation is
revoked or withheld or modified or is otherwise not granted or
fails to remain in full force and effect or if any exchange
control or other law or regulation shall exist which would make
any transaction under the Security Documents or the continuation
thereof, unlawful or would prevent the performance by any
Security Party of any term of any of the Security Documents;
10.1.27 Ownership: there is any
change in the ownership of any Borrower without the prior
written consent of the Agent or (following the Share Acquisition
Date) the number of shares of and in Navios Acquisition owned by
Navios Maritime Holdings Inc., Mrs. Angeliki Frangou and
their respective affiliates in aggregate falls below 30% of the
issued shares of Navios Acquisition; or
10.1.28 Money Laundering: any
Security Party is in breach of or fails to observe any law,
requirement, measure or procedure implemented to combat
money laundering as defined in Article 1 of the
Directive (91/308 EEC) of the Council of the European
Communities; or
10.1.29 eutscher
Rahmenvertrag: (i) an Event of Default
or Potential Event of Default (or the equivalent under the
Deutscher Rahmenvertrag) has occurred and is continuing under
the Deutscher Rahmenvertrag or (ii) an Early Termination
Date (as defined in the Deutscher Rahmenvertrag) has occurred or
been effectively designated under the Deutscher Rahmenvertrag or
(iii) a person entitled to do so gives notice of an Early
Termination Date (as defined in the Deutscher Rahmenvertrag) or
(iv) the Deutscher Rahmenvertrag is terminated, cancelled,
suspended, rescinded or revoked or otherwise ceases to remain in
full force and effect for any reason.
Annex B-37
10.2 Acceleration
The Agent may, and if so requested by the Majority Lenders
shall, without prejudice to any other rights of the Lenders, at
any time after the happening of an Event of Default by notice to
the Borrowers declare that:
10.2.1 the obligation of each Lender to make its Commitment
available shall be terminated, whereupon the Commitment shall be
reduced to zero forthwith; and/or
10.2.2 the Loan and all interest accrued and all other sums
payable whatsoever under the Security Documents have become due
and payable, whereupon the same shall, immediately or in
accordance with the terms of such notice, become due and payable.
10.3 Demand
Basis
If, under clause 10.2.2, the Agent has declared the Loan to
be due and payable on demand, at any time thereafter the Agent
may (and if so instructed by the Majority Lenders shall) by
written notice to the Borrowers (a) demand repayment of the
Loan on such date as may be specified whereupon, regardless of
any other provision of this Agreement, 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.
11 INDEMNITIES
11.1 General
indemnity
The Borrowers agree to indemnify each Bank on demand, without
prejudice to any of such Banks other rights under any of
the Security Documents, against any loss (including loss of
Margin) or expense (including, without limitation, Break Costs)
which such Bank shall certify as sustained by it as a
consequence of any Default, any prepayment of the Loan being
made under clauses 4.2, 4.3, 4.4, 4.5, 8.2.1(a) or 12.1 or
any other repayment or prepayment 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;
and/or any
Advance not being made for any reason (excluding any default by
the Agent, the Security Trustee or any Lender) after the
Drawdown Notice for such Advance has been given.
11.2 Environmental
indemnity
The Borrowers shall indemnify each Bank on demand and hold it
harmless from and against all costs, claims, expenses, payments,
charges, losses, demands, liabilities, actions, Proceedings,
penalties, fines, damages, judgements, orders, sanctions or
other outgoings of whatever nature which may be incurred or made
or asserted whensoever against such Bank at any time, whether
before or after the repayment in full of principal and interest
under this Agreement, arising howsoever out of an Environmental
Claim made or asserted against such Bank which would not have
been, or been capable of being, made or asserted against such
Bank had it not entered into any of the Security Documents or
been involved in any of the resulting or associated transactions.
11.3 Capital
adequacy and reserve requirements indemnity
The Borrowers shall promptly indemnify each Lender on demand
against any cost incurred or loss suffered by such Lender as a
result of its complying with (i) the minimum reserve
requirements from time to time of the European Central Bank
(ii) any capital adequacy directive of the European Union
and/or
(iii) any revised framework for international convergence
of capital measurements and capital standards
and/or any
regulation imposed by any Government Entity in connection
therewith,
and/or in
connection with maintaining required reserves with a relevant
national central bank to the extent that such compliance or
maintenance relates to such Lenders Commitment
and/or
Contribution or deposits obtained by it to fund the whole or
part thereof and to the extent such cost or loss is not
recoverable by such Lender under clause 12.2.
Annex B-38
12 UNLAWFULNESS
AND INCREASED COSTS
12.1 Unlawfulness
If it is or becomes contrary to any law, directive or regulation
for any Lender to contribute to an Advance or to maintain its
Commitment or fund its Contribution to the Loan or any Advance,
such Lender shall promptly, through the Agent, give notice to
the Borrowers whereupon (a) such Lenders Contribution
and Commitment shall be reduced to zero and (b) the
Borrowers shall be obliged to prepay such Lenders
Contribution either (i) forthwith or (ii) on a future
specified date not being earlier than the latest date permitted
by the relevant law, directive or regulation together with
interest accrued to the date of prepayment and all other sums
payable by the Borrowers under this Agreement.
12.2 Increased
costs
If the result of any change in, or in the interpretation or
application of, or the introduction of, any law or any
regulation, request or requirement (whether or not having the
force of law, but, if not having the force of law, with which a
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, is to:
12.2.1 subject any Lender to Taxes or change the basis of
Taxation of any Lender with respect to any payment under any of
the Security Documents (other than Taxes or Taxation on the
overall net income, profits or gains of such Lender imposed in
the jurisdiction in which its principal or lending office under
this Agreement is located); and/or
12.2.2 increase the cost to, or impose an additional cost
on, any Lender or its holding company in making or keeping such
Lenders Commitment available or maintaining or funding all
or part of such Lenders Contribution; and/or
12.2.3 reduce the amount payable or the effective return to
any Lender under any of the Security Documents; and/or
12.2.4 reduce any Lenders or its holding
companys 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 such Lenders obligations under any of
the Security Documents; and/or
12.2.5 require any Lender or its holding company to make a
payment or forgo a return on or calculated by reference to any
amount received or receivable by such Lender under any of the
Security Documents; and/or
12.2.6 require any 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 its
Contribution or the Loan from its capital for regulatory
purposes,
then and in each such case (subject to clause 12.3):
(a) such Lender shall notify, via the Agent, the Borrowers
in writing of such event promptly upon its becoming aware of the
same; and
(b) the Borrowers shall on demand made at any time whether
or not such Lenders Contribution has been repaid, pay to
the Agent for the account of such Lender the amount which such
Lender specifies (in a certificate setting forth the basis of
the computation of such amount but not including any matters
which such Lender or its holding company regards as
confidential) is required to compensate such Lender
and/or (as
the case may be) its holding company for such liability to
Taxes, cost, reduction, payment , forgone return or loss.
For the purposes of this clause 12.2 holding
company means the company or entity (if any) within the
consolidated supervision of which a Lender is included.
Annex B-39
12.3 Exception
Nothing in clause 12.2 shall entitle any 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 the
subject of an additional payment under clause 6.6.
13 APPLICATION
OF MONEYS, SET OFF, PRO-RATA PAYMENTS AND
MISCELLANEOUS
13.1 Application
of moneys
All moneys received by the Agent
and/or the
Security Trustee under or pursuant to any of the Security
Documents and expressed to be applicable in accordance with the
provisions of this clause 13.1 or in a manner determined in
the Security Trustees or (as the case may be) the
Agents discretion, shall be applied in the following
manner:
13.1.1 first, in or towards payment, on a pro-rata basis,
of any unpaid costs and expenses of the Banks or any of them
under any of the Security Documents;
13.1.2 secondly, in or towards payment of any fees payable
to the Arranger, the Agent or any of the other Banks under, or
in relation to, the Security Documents which remain unpaid;
13.1.3 thirdly, in or towards payment to the Banks, on a
pro rata basis, of any accrued interest owing in respect of the
Loan which shall have become due under any of the Security
Documents but remains unpaid;
13.1.4 fourthly, in or towards repayment of the Loan
(whether the same is due and payable or not); and
13.1.5 fifthly, in or towards payment to the Lenders, on a
pro rata basis any Break Costs and any other sum relating to the
Loan which shall have become due under any of the Security
Documents but remains unpaid;
13.1.6 sixthly, in or towards payment to the Swap Bank of
any sum which shall have become due under the Deutscher
Rahmenvertrag but remains unpaid;
13.1.7 seventhly, the surplus (if any) shall be paid to the
Borrowers or to whomsoever else may then be entitled to receive
such surplus.
13.2 Set-off
13.2.1 Each Borrower irrevocably authorises each Bank
(without prejudice to any of such Banks rights at law, in
equity or otherwise), at any time and without notice to the
Borrowers, to apply any credit balance to which any Borrower is
then entitled standing upon any account of any Borrower with any
branch of such Bank in or towards satisfaction of any sum due
and payable from the Borrowers to such Bank under any of the
Security Documents. For this purpose, each Bank is authorised to
purchase with the moneys standing to the credit of such account
such other currencies as may be necessary to effect such
application.
13.2.2 No Bank shall be obliged to exercise any right given
to it by this clause 13.2. Each Bank shall notify the
Borrowers through the Agent forthwith upon the exercise or
purported exercise of any right of set off giving full details
in relation thereto and the Agent shall inform the other Banks.
13.2.3 Nothing in this clause 13.2 shall be effective
to create a charge or other security interest.
13.3 Pro
rata payments
13.3.1 If at any time any Lender (the Recovering
Lender) receives or recovers any amount owing to it by
the Borrowers under this Agreement (other than pursuant to any
other Security Document) by direct payment, set-off or in any
manner other than by payment through the Agent pursuant to
clauses 6.1 or 6.9 (not being a payment received from a
Transferee Bank or a sub-participant in such Lenders
Contribution or any other payment of an amount due to the
Recovering Lender for its sole account pursuant to
clauses 3.6, 5, 6.6, 11.1, 11.2, 11.3, 12.1, or 12.2), the
Recovering Lender shall, within two (2) Banking Days of
such receipt or recovery (a Relevant Receipt)
notify the Agent of the amount of the Relevant Receipt. If the
Relevant
Annex B-40
Receipt exceeds the amount which the Recovering Lender would
have received if the Relevant Receipt had been received by the
Agent and distributed pursuant to clause 6.1 or 6.10 (as
the case may be) then:
(a) within two (2) Banking Days of demand by the
Agent, the Recovering Lender shall pay to the Agent an amount
equal (or equivalent) to the excess;
(b) the Agent shall treat the excess amount so paid by the
Recovering Lender as if it were a payment made by the Borrowers
and shall distribute the same to the Lenders (other than the
Recovering Lenders) in accordance with clause 6.10; and
(c) as between the Borrowers and the Recovering Lender the
excess amount so re-distributed shall be treated as not having
been paid but the obligations of the Borrowers to the other
Lenders shall, to the extent of the amount so re-distributed to
them, be treated as discharged.
13.3.2 If any part of the Relevant Receipt subsequently has
to be wholly or partly refunded by the Recovering Lender
(whether to a liquidator or otherwise) each Lender to which any
part of such Relevant Receipt was so re-distributed shall on
request from the Recovering Lender repay to the Recovering
Lender such Lenders pro-rata share of the amount which has
to be refunded by the Recovering Lender.
13.3.3 Each Lender shall on request supply to the Agent
such information as the Agent may from time to time request for
the purposes of this clause 13.3.
13.3.4 Notwithstanding the foregoing provisions of this
clause 13.3, no Recovering Lender shall be obliged to share
any Relevant Receipt which it receives or recovers pursuant to
Proceedings taken by it to recover any sums owing to it under
this Agreement with any other party which has a legal right to,
but does not, either join in such Proceedings or commence and
diligently pursue separate Proceedings to enforce its rights in
the same or another court (unless the Proceedings instituted by
the Recovering Lender are instituted by it without prior notice
having been given to such party through the Agent).
13.4 No
release
For the avoidance of doubt it is hereby declared that failure by
any Recovering Lender to comply with the provisions of
clause 13.3 shall not release any other Recovering Lender
from any of its obligations or liabilities under
clause 13.3.
13.5 No
charge
The provisions of this clause 13 shall not, and shall not
be construed so as to, constitute a charge or create or declare
a trust by a Lender over all or any part of a sum received or
recovered by it in the circumstances mentioned in
clause 13.3.
13.6 Further
assurance
Each Borrower undertakes with each Bank that the Security
Documents shall both at the date of execution and delivery
thereof and throughout the Facility Period be valid and binding
obligations of the respective parties thereto which, with the
rights of each Lender thereunder, are enforceable in accordance
with their respective terms and that they will, at their
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
Majority Lenders may be necessary or desirable for perfecting
the security contemplated or constituted by the Security
Documents.
13.7 Conflicts
In the event of any conflict between this Agreement and any of
the other Security Documents, the provisions of this Agreement
shall prevail.
Annex B-41
13.8 No
implied waivers, remedies cumulative
No failure or delay on the part of any of the Banks to exercise
any power, right or remedy under any of the Security Documents
shall operate as a waiver thereof, nor shall any single or
partial exercise by any Bank of any power, right or remedy
preclude any other or further exercise thereof or the exercise
of any other power, right or remedy. The remedies provided in
the Security Documents are cumulative and are not exclusive of
any remedies provided by law. No waiver by any Bank shall be
effective unless it is in writing.
13.9 Severability
If any provision of this Agreement is prohibited, invalid,
illegal or unenforceable in any jurisdiction, such prohibition,
invalidity, illegality or unenforceability shall not affect or
impair howsoever the remaining provisions thereof or affect the
validity, legality or enforceability of such provision in any
other jurisdiction.
13.10 Force
Majeure
Regardless of any other provision of this Agreement, none of the
Banks shall be liable for any failure to perform the whole or
any part of this Agreement resulting directly or indirectly from
(i) the action or inaction or purported action of any
governmental or local authority (ii) any strike, lockout,
boycott or blockade (including any strike, lockout, boycott or
blockade effected by or upon any Bank or any of its
representatives or employees) (iii) any act of God
(iv) any act of war (whether declared or not) or terrorism
(v) any failure of any information technology or other
operational systems or equipment affecting any Bank or
(vi) any other circumstances whatsoever outside any
Banks control.
13.11 Amendments
This Agreement may be amended or varied only by an instrument in
writing executed by all parties hereto who irrevocably agree
that the provisions of this clause 13.11 may not be waived
or modified except by an instrument in writing to that effect
signed by all of them.
13.12 Counterparts
This Agreement may be executed in any number of counterparts and
all such counterparts taken together shall be deemed to
constitute one and the same agreement which may be sufficiently
evidenced by one counterpart.
13.13 English
language
All documents required to be delivered under
and/or
supplied whensoever in connection howsoever with any of the
Security Documents and all notices, communications, information
and other written material whatsoever given or provided in
connection howsoever therewith must either be in the English
language or accompanied by an English translation certified by a
notary, lawyer or consulate acceptable to the Agent.
14 ACCOUNTS
AND RETENTIONS
14.1 General
Each Borrower undertakes with each Bank that it will ensure that:
14.1.1 it will on or before the Delivery Date in respect of
its Vessel, open an Earnings Account in its name; and
14.1.2 all moneys payable to any Owner in respect of the
Earnings (as defined in the relevant Mortgage) of its Vessel
shall, unless and until the Agent (acting on the instructions of
the Majority Lenders) directs to the contrary pursuant to the
provisions of the relevant Mortgage, be paid to the Earnings
Account, Provided however that if any of the moneys paid to any
Earnings Account are payable in a currency other than USD, they
shall be paid to a sub-account of that Earnings Account
denominated in such currency (except that if the Shareholder
fails to open such a sub-account, the relevant Account Bank
shall then convert such moneys into
Annex B-42
USD at that Account Banks spot rate of exchange at the
relevant time for the purchase of USD with such currency and the
term spot rate of exchange shall include any premium
and costs of exchange payable in connection with the purchase of
USD with such currency).
14.2 Earnings
Accounts: withdrawals
Any sums standing to the credit of the Earnings Accounts may be
applied from time to time (i) firstly to make the payments
required under this Agreement, (ii) secondly, subject to
there being no breach of Clause 14.3 and to no Event of Default
having occurred, in the operation of the Mortgaged Vessels and
(iii) subject to no Event of Default having occurred and to
there being at any time sufficient funds to pay amounts due
under (i) and (ii) above as they fall due, thirdly for
the general corporate purposes of the Borrowers.
14.3 Retention
Account: credits and withdrawals
14.3.1 The Borrowers undertake with each Bank that,
throughout the Facility Period, they will procure that, on each
Retention Date there is paid (whether from the Earnings Accounts
or elsewhere) to the Retention Account, the Retention Amount for
such date.
14.3.2 Unless and until there shall occur an Event of
Default (whereupon the provisions of clause 14.5 shall
apply), all Retention Amounts credited to the Retention Account
together with interest from time to time accruing or at any time
accrued thereon must be applied by the relevant Account Bank
(and the Borrowers hereby irrevocably authorise that Account
Bank so to apply the same) upon each Repayment Date
and/or on
each day that interest is payable on the Loan or a Tranche
pursuant to clause 3.1, in or towards payment to the Agent
of the instalment then falling due for repayment or, as the case
may be, the amount of interest then due. Each such application
by such Account Bank shall constitute a payment in or towards
satisfaction of the Borrowers corresponding payment
obligations under this Agreement but shall be strictly without
prejudice to the obligations of the Borrowers to make any such
payment to the extent that the aforesaid application by the said
Account Bank is insufficient to meet the same.
14.3.3 Unless the Agent (acting on the instructions of the
Majority Banks) otherwise agrees in writing and subject to this
clause 14.3.2, Borrowers shall not be entitled to withdraw
any moneys from the Retention Account at any time during the
Facility Period.
14.4 Application
of accounts
At any time after the occurrence of an Event of Default, the
Agent may (and on the instructions of the Majority Lenders
shall), without notice to the Borrowers, instruct the Account
Banks to apply all moneys then standing to the credit of the
Earnings Accounts
and/or the
Retention Account
and/or the
Equity Deposit Accounts (together with interest from time to
time accruing or accrued thereon) in or towards satisfaction of
any sums due to the Banks or any of them under the Security
Documents in the manner specified in clause 13.1.
14.5 Charging
of accounts
The Earnings Accounts, the Retention Account and the Equity
Deposit Accounts and all amounts from time to time standing to
the credit thereof shall be subject to the security constituted
and the rights conferred by the Earnings Account Pledges, the
Retention Account Pledge and the Equity Deposit Account Pledges
respectively.
14.6 Equity
Deposit Accounts
The aggregate credit balances on the Equity Deposit Accounts
shall at no time be less than the difference between
(i) the aggregate of unpaid instalments under the
Shipbuilding Contracts and (ii) the aggregate of the
undrawn Commitments and the Borrowers may on each Drawdown Date
apply sums from the Equity Deposit Accounts equally in payment
of the balance (after taking into account the relevant Advance)
of the instalment then payable to the Builder.
Annex B-43
15 ASSIGNMENT,
TRANSFER AND LENDING OFFICE
15.1 Benefit
and burden
This Agreement shall be binding upon, and enure for the benefit
of, the Banks and the Borrowers and their respective successors
in title.
15.2 No
assignment by Borrowers
No Borrower may assign or transfer any of its rights or
obligations under this Agreement.
15.3 Transfers
by Banks
any Lender (the Transferor Lender) may at any
time cause all or any part of its rights, benefits
and/or
obligations under this Agreement and the other Security
Documents to be transferred to another first class international
bank or financial institution (in either case a
Transferee Lender) (i) if such transfer
is to another branch, a subsidiary or affiliate of such Lender
and (ii) otherwise reasonably acceptable to the Borrowers,
in each case by delivering to the Agent a Transfer Certificate
duly completed and duly executed by the Transferor Lender and
the Transferee Lender provided that any Transferee Lender
shall, before transferring its right, benefits and obligations
to any other bank or financial institution, give notice thereof
to the other Lenders, who shall have the option, to be exercised
by notice in writing, to acquire all its part of the rights,
benefits and obligations of the Transferee Lender, in which case
the Transferor Lender shall transfer the same to that Lender or
Lenders in accordance with this Clause 15.3. No such
transfer is binding on, or effective in relation to, the
Borrowers or the Agent unless (i) it is effected or
evidenced by a Transfer Certificate which complies with the
provisions of this clause 15.3 and is signed by or on
behalf of the Transferor Lender, the Transferee Lender and the
Agent (on behalf of itself, the Borrowers and the other Banks)
and (ii) such transfer of rights under the other Security
Documents has been effected and registered. Upon signature of
any such Transfer Certificate by the Agent, which signature
shall be effected as promptly as is practicable after such
Transfer Certificate has been delivered to the Agent, and
subject to the terms of such Transfer Certificate, such Transfer
Certificate shall have effect as set out below.
The following further provisions shall have effect in relation
to any Transfer Certificate:
15.3.1 a Transfer Certificate may be in respect of a
Lenders rights in respect of all, or part of, its
Commitment and shall be in respect of the same proportion of its
Contribution;
15.3.2 a Transfer Certificate shall only be in respect of
rights and obligations of the Transferor Lender in its capacity
as a Lender and shall not transfer its rights and obligations
(if applicable) as the Agent
and/or
Security Trustee, or in any other capacity, as the case may be
and such other rights and obligations may only be transferred in
accordance with any applicable provisions of this Agreement;
15.3.3 a Transfer Certificate shall take effect in
accordance with English law as follows:
(a) to the extent specified in the Transfer Certificate,
the Transferor Lenders payment rights and all its other
rights (other than those referred to in clause 15.3.2
above) under this Agreement are assigned to the Transferee
Lender absolutely, free of any defects in the Transferor
Lenders title and of any rights or equities which the
Borrowers had against the Transferor Lender and the Transferee
Lender assumes all obligations of the Transferor Lender as are
transferred by such Transfer Certificate;
(b) the Transferor Lenders Commitment is discharged
to the extent specified in the Transfer Certificate;
(c) the Transferee Lender becomes a Lender with a
Contribution
and/or a
Commitment in respect of the Loan Facility of the amounts
specified in the Transfer Certificate;
(d) the Transferee Lender becomes bound by all the
provisions of this Agreement and the Security Documents which
are applicable to the Lenders generally, including those about
pro-rata sharing and the exclusion of liability on the part of,
and the indemnification of, the Agent and the Security Trustee
and to
Annex B-44
the extent that the Transferee Lender becomes bound by those
provisions, the Transferor Lender ceases to be bound by them;
(e) an Advance or part of an Advance which the Transferee
Lender makes after the Transfer Certificate comes into effect
ranks in point of priority and security in the same way as it
would have ranked had it been made by the Transferor Lender,
assuming that any defects in the Transferor Lenders title
and any rights or equities of any Security Party against the
Transferor Lender had not existed; and
(f) the Transferee Lender becomes entitled to all the
rights under this Agreement which are applicable to the Lenders
generally, including but not limited to those relating to the
Majority Lenders and those under clauses 3.6, 5 and 12 and
to the extent that the Transferee Lender becomes entitled to
such rights, the Transferor Lender ceases to be entitled to them;
15.3.4 the rights and equities of the Borrowers or of any
other Security Party referred to above include, but are not
limited to, any right of set-off and any other kind of
cross-claim; and
15.3.5 the Borrowers, the Account Banks, the Security
Trustee, the Agent and the Lenders hereby irrevocably authorise
and instruct the Agent to sign any such Transfer Certificate on
their behalf and undertake not to withdraw, revoke or qualify
such authority or instruction at any time. Promptly upon its
signature of any Transfer Certificate, the Agent shall notify
the Borrowers, the Transferor Lender and the Transferee Lender.
15.4 Reliance
on Transfer Certificate
15.4.1 The Agent shall be entitled to rely on any Transfer
Certificate believed by it to be genuine and correct and to have
been presented or signed by the persons by whom it purports to
have been presented or signed, and shall not be liable to any of
the parties to this Agreement and the Security Documents for the
consequences of such reliance.
15.4.2 The Agent shall at all times during the continuation
of this Agreement maintain a register in which it shall record
the name, Commitments, Contributions and administrative details
(including the lending office) from time to time of the Lenders
holding a Transfer Certificate and the date at which the
transfer referred to in such Transfer Certificate held by each
Lender was transferred to such Lender, and the Agent shall make
the said register available for inspection by any Lender or the
Borrowers during normal banking hours upon receipt by the Agent
of reasonable prior notice requesting the Agent to do so.
15.4.3 The entries on the said register shall, in the
absence of manifest error, be conclusive in determining the
identities of the Commitments, the Contributions and the
Transfer Certificates held by the Lenders from time to time and
the principal amounts of such Transfer Certificates and may be
relied upon by all parties to this Agreement.
15.5 Transfer
fees and expenses
Any Transferor Lender who causes the transfer of all or any part
of its rights, benefits
and/or
obligations under the Security Documents in accordance with the
foregoing provisions of this clause 15, must, on each
occasion, pay to the Agent a transfer fee of one thousand five
hundred Dollars (USD 1,500) and, in addition, be responsible for
all other costs and expenses (including, but not limited to,
reasonable legal fees and expenses) associated therewith and all
value added tax thereon, as well as those of the Agent (in
addition to its fee as aforesaid) in connection with such
transfer.
15.6 Documenting
transfers
If any Lender assigns all or any part of its rights or transfers
all or any part of its rights, benefits
and/or
obligations as provided in clause 15.3, each Borrower
undertakes, immediately on being requested to do so by the Agent
and at the cost of the Transferor Lender, to enter into, and
procure that the other Security Parties shall (at the cost of
the Transferor Lender) enter into, such documents as may be
necessary or desirable to transfer to the Transferee Lender all
or the relevant part of such Lenders interest in the
Security Documents
Annex B-45
and all relevant references in this Agreement to such Lender
shall thereafter be construed as a reference to the Transferor
Lender
and/or its
Transferee Lender (as the case may be) to the extent of their
respective interests.
15.7 Sub-Participation
A Lender may sub-participate all or any part of its rights
and/or
obligations under the Security Documents at its own expense
without the consent of, or notice to, the Borrowers but with
prior written notice to the other Lenders.
15.8 Lending
office
Each Lender shall lend through its office at the address
specified in schedule 1 or, as the case may be, in any
relevant Transfer Certificate or through any other office of
such Lender selected from time to time by it through which such
Lender wishes to lend for the purposes of this Agreement. If the
office through which a Lender is lending is changed pursuant to
this clause 15.8, such Lender shall notify the Agent
promptly of such change and the Agent shall notify the
Borrowers, the Security Trustee, the Agent, the Account Banks
and the other Lenders.
15.9 Disclosure
of information
A Bank may disclose to any of its branches and affiliates, its
head office, any relevant fiscal authorities a prospective
assignee, transferee or to any other person who may propose
entering into contractual relations with such Bank in relation
to this Agreement
and/or the
Deutscher Rahmenvertrag such information about the Borrowers
and/or the
other Security Parties
and/or the
Loan and/or
the Security Documents as such Bank shall consider appropriate
in relation to any transfer
and/or
enforcement hereunder.
16 ARRANGER,
AGENT AND SECURITY TRUSTEE
16.1 Appointment
of the Agent
The Swap Bank and each Lender irrevocably appoints the Agent as
its agent for the purposes of this Agreement and such of the
Security Documents to which it may be appropriate for the Agent
to be party. Accordingly each of the Lenders and the Swap Bank
hereby authorise the Agent:
16.1.1 to execute such documents as may be approved by the
Majority Lenders for execution by the Agent; and
16.1.2 (whether or not by or through employees or agents)
to take such action on such Lenders behalf and to exercise
such rights, remedies, powers and discretions as are
specifically delegated to the Agent by any Security Document,
together with such powers and discretions as are reasonably
incidental thereto.
16.2 Agents
actions
Any action taken by the Agent under or in relation to any of the
Security Documents whether with requisite authority or on the
basis of appropriate instructions received from the Majority
Lenders (or as otherwise duly authorised) shall be binding on
all the Banks.
16.3 Agents
and Agents duties
16.3.1 The Agent shall promptly notify each Lender of
(i) the contents of each notice, certificate or other
document received by it from the Borrowers under or pursuant to
clauses 8.1.1, 8.1.6, 8.1.9, 8.1.10, 8.1.13 and 8.1.17 and
(ii) any information it receives which is material to the
Borrowers ability to repay the Loan; and
16.3.2 The Agent shall (subject to the other provisions of
this clause 16) take (or instruct the Security Trustee
to take) such action or, as the case may be, refrain from taking
(or authorise the Security Trustee to refrain from taking) such
action with respect to the exercise of any of its rights,
remedies, powers and discretions as agent, as the Majority
Lenders may direct.
Annex B-46
16.4 Security
Trustees and Agents rights
The Security Trustee and the Agent may:
16.4.1 in the exercise of any right, remedy, power or
discretion in relation to any matter, or in any context, not
expressly provided for by this Agreement or any of the other
Security Documents, act or, as the case may be, refrain from
acting (or authorise the Security Trustee to act or refrain from
acting) in accordance with the instructions of the Lenders, and
shall be fully protected in so doing;
16.4.2 unless and until it has received directions from the
Majority Lenders, take such action or, as the case may be,
refrain from taking such action (or authorise the Security
Trustee to take or refrain from taking such action) in respect
of a Default of which the Agent has actual knowledge as it shall
consider advisable in the best interests of the Lenders (but
shall not be obliged to do so);
16.4.3 refrain from acting (or authorise the Security
Trustee to refrain from acting) in accordance with any
instructions of the Lenders to institute any Proceedings arising
out of or in connection with any of the Security Documents until
it and/or
the Security Trustee has been indemnified
and/or
secured to its satisfaction against any and all costs, expenses
or liabilities (including legal fees) which it would or might
incur as a result;
16.4.4 deem and treat (i) each Lender as the person
entitled to the benefit of the Contribution of such Lender for
all purposes of this Agreement unless and until a notice shall
have been filed with the Agent pursuant to clause 15.3 and shall
have become effective, and (ii) the office set opposite the
name of each of the Lenders in schedule 1 as its lending
office unless and until a written notice of change of lending
office shall have been received by the Agent and the Agent may
act upon any such notice unless and until the same is superseded
by a further such notice;
16.4.5 rely as to matters of fact which might reasonably be
expected to be within the knowledge of any Security Party upon a
certificate signed by any director or officer of the relevant
Security Party on behalf of the relevant Security Party; and
16.4.6 do anything which is in its opinion necessary or
desirable to comply with any law or regulation in any
jurisdiction.
16.5 No
Liability of Agent or Arranger
None of the Security Trustee, the Agent, the Arranger nor any of
their respective employees and agents shall:
16.5.1 be obliged to make any enquiry as to the use of any
of the proceeds of the Loan unless (in the case of the Agent) so
required in writing by a Lender, in which case the Agent shall
promptly make the appropriate request to the Borrowers; or
16.5.2 be obliged to make any enquiry as to any breach or
default by the Borrowers or any other Security Party in the
performance or observance of any of the provisions of the
Security Documents or as to the existence of a Default unless
(in the case of the Agent) the Agent has actual knowledge
thereof or has been notified in writing thereof by a Bank, in
which case the Agent shall promptly notify the Banks of the
relevant event or circumstance; or
16.5.3 be obliged to enquire whether or not any
representation or warranty made by the Borrowers or any other
Security Party pursuant to this Agreement or any of the other
Security Documents is true; or
16.5.4 be obliged to do anything (including, without
limitation, disclosing any document or information) which would,
or might in its opinion, be contrary to any law or regulation or
be a breach of any duty of confidentiality or otherwise be
actionable or render it liable to any person; or
16.5.5 be obliged to account to any Lender for any sum or
the profit element of any sum received by it for its own
account; or
Annex B-47
16.5.6 be obliged to institute any Proceedings arising out
of or in connection with any of the Security Documents other
than on the instructions of the Majority Lenders; or
16.5.7 be liable to any Lender for any action taken or
omitted under or in connection with any of the Security
Documents unless caused by its gross negligence or wilful
misconduct.
For the purposes of this clause 16, none of the Security
Trustee, the Arranger or the Agent shall be treated as having
actual knowledge of any matter of which the corporate finance or
any other division outside the agency or loan administration
department of the Arranger, the Security Trustee or the Agent or
the person for the time being acting as the Arranger, the
Security Trustee or the Agent may become aware in the context of
corporate finance, advisory or lending activities from time to
time undertaken by the Arranger, the Security Trustee or the
Agent or, as the case may be, the Security Trustee or Agent for
any Security Party or any other person which may be a trade
competitor of any Security Party or may otherwise have
commercial interests similar to those of any Security Party.
16.6 Non
reliance on Arranger, Security Trustee or Agent
Each Lender and the Swap Bank acknowledges that it has not
relied on any statement, opinion, forecast or other
representation made by the Arranger, the Security Trustee or the
Agent to induce it to enter into any of the Security Documents
and that it has made and will continue to make, without reliance
on the Arranger, the Security Trustee or the Agent and based on
such documents as it considers appropriate, its own appraisal of
the creditworthiness of the Security Parties and its own
independent investigation of the financial condition, prospects
and affairs of the Security Parties in connection with the
making and continuation of such Lenders Commitment or
Contribution under this Agreement. Neither of the Arranger, the
Security Trustee and the Agent shall have any duty or
responsibility, either initially or on a continuing basis, to
provide any Lender or the Swap Bank with any credit or other
information with respect to any Security Party whether coming
into its possession before the making of any Advance or the Loan
or at any time or times thereafter other than as provided in
clause 16.3.1.
16.7 No
responsibility on the Arranger, the Security Trustee or Agent
for Borrowers performance
None of the Arranger, the Security Trustee or the Agent shall
have any responsibility or liability to any Lender or the Swap
Bank:
16.7.1 on account of the failure of any Security Party to
perform its obligations under any of the Security
Documents; or
16.7.2 for the financial condition of any Security
Party; or
16.7.3 for the completeness or accuracy of any statements,
representations or warranties in any of the Security Documents
or any document delivered under any of the Security
Documents; or
16.7.4 for the execution, effectiveness, adequacy,
genuineness, validity, enforceability or admissibility in
evidence of any of the Security Documents or of any certificate,
report or other document executed or delivered under any of the
Security Documents; or
16.7.5 to investigate or make any enquiry into the title of
the Borrowers or any other Security Party to the Vessels or any
other security or any part thereof; or
16.7.6 for taking or omitting to take any other action
under or in relation to any of the Security Documents or any
aspect of any of the Security Documents; or
16.7.7 on account of the failure of the Security Trustee to
perform or discharge any of its duties or obligations under the
Security Documents; or
16.7.8 otherwise in connection with the Security Documents
or their negotiation or for acting (or, as the case may be,
refraining from acting) in accordance with the instructions of
the Lenders.
Annex B-48
16.8 Reliance
on documents and professional advice
Each of the Arranger, the Security Trustee and the Agent shall
be entitled to rely on any communication, instrument or document
believed by it to be genuine and correct and to have been signed
or sent by the proper person and shall be entitled to rely as to
legal or other professional matters on opinions and statements
of any legal or other professional advisers selected or approved
by it (including those in the Arrangers, the Security
Trustees or Agents employment).
16.9 Other
dealings
Each of the Arranger, the Security Trustee and the Agent may,
without any liability to account to the Lenders, accept deposits
from, and generally engage in any kind of banking or other
business with, and provide advisory or other services to, any
Security Party or any company in the same group of companies as
such Security Party or any of the Lenders as if it were not the
Arranger, the Security Trustee or Agent.
16.10 Rights
of Agent, Agent as Lender; no partnership
With respect to its own Commitment and Contribution (if any) the
Security Trustee and the Agent shall have the same rights and
powers under the Security Documents as any other Lender and may
exercise the same as though it were not performing the duties
and functions delegated to it under this Agreement and the term
Lenders shall, unless the context clearly otherwise
indicates, include the Security Trustee and the Agent in their
respective individual capacity as a Lender. This Agreement shall
not be construed so as to constitute a partnership between the
parties or any of them.
16.11 Amendments
and waivers
16.11.1 Subject to clause 16.11, the Arranger, the
Security Trustee
and/or the
Agent (as the case may be) may, with the consent of the Majority
Lenders (or if and to the extent expressly permitted by the
other provisions of any of the Security Documents) and, if so
instructed by the Majority Lenders, shall:
16.11.2 agree (or authorise the Security Trustee to agree)
amendments or modifications to any of the Security Documents
with the Borrowers
and/or any
other Security Party; and/or
16.11.3 vary or waive breaches of, or defaults under, or
otherwise excuse performance of, any provision of any of the
other Security Documents by the Borrowers
and/or any
other Security Party (or authorise the Security Trustee to do
so).
Any such action so authorised and effected by the Agent shall be
documented in such manner as the Security Trustee
and/or the
Agent (as the case may be) shall (with the approval of the
Majority Lenders) determine, shall be promptly notified to the
Lenders by the Security Trustee
and/or the
Agent (as the case may be) and (without prejudice to the
generality of clause 16.2) shall be binding on the Lenders.
16.11.4 Except with the prior written consent of the
Lenders, the Security Trustee and the Agent shall have no
authority on behalf of the Lenders to agree (or authorise the
Security Trustee to agree) with the Borrowers
and/or any
other Security Party any amendment or modification to any of the
Security Documents or to grant (or authorise the Security
Trustee to grant) waivers in respect of breaches or defaults or
to vary or excuse (or authorise the Security Trustee to vary or
excuse) performance of or under any of the Security Documents by
the Borrowers
and/or any
other Security Party, if the effect of such amendment,
modification, waiver or excuse would be to:
(a) reduce the Margin, postpone the due date or reduce the
amount of any payment of principal, interest or other amount
payable by any Security Party under any of the Security
Documents;
(b) change the currency in which any amount is payable by
any Security Party under any of the Security Documents;
(c) increase any Lenders Commitment;
(d) extend any Maturity Date;
Annex B-49
(e) change any provision of any of the Security Documents
which expressly or impliedly requires the approval or consent of
all the Lenders such that the relevant approval or consent may
be given otherwise than with the sanction of all the Lenders;
(f) change the order of distribution under
clauses 6.10 and 13.1;
(g) change this clause 16.11;
(h) change the definition of Majority
Lenders in clause 1.2;
(i) release any Security Party from the security
constituted by any Security Document (except as required by the
terms thereof or by law) or change the terms and conditions upon
which such security or guarantee may be, or is required to be,
released.
16.12 Reimbursement
and indemnity by Lenders
Each Lender shall reimburse the Security Trustee and the Agent
(rateably in accordance with such Lenders Commitment or,
after the first Advance or the Loan has been drawn, its
Contribution,) to the extent that the Security Trustee or the
Agent is not reimbursed by the Borrowers, for the costs, charges
and expenses incurred by the Security Trustee or the Agent which
are expressed to be payable by the Borrowers under
clause 5.3 including (in each case), without limitation,
the fees and expenses of legal or other professional advisers
provided that, if following any payment to the Security Trustee
or the Agent by a Lender under this clause the Security Trustee
or the Agent receives payment from the Borrowers in respect of
the same costs, fees or expenses, the Security Trustee or the
Agent shall upon receipt thereof reimburse the relevant Lender.
Each Lender must on demand indemnify the Security Trustee or the
Agent (rateably in accordance with such Lenders Commitment
or, after the first Advance or the Loan has been drawn, its
Contribution) against all liabilities, damages, costs and claims
whatsoever incurred by the Security Trustee in connection with
any of the Security Documents or the performance of its duties
under any of the Security Documents or any action taken or
omitted by the Security Trustee or, as the case may be, the
Agent, under any of the Security Documents, unless such
liabilities, damages, costs or claims arise from the Security
Trustees or as the case may be, the Agents own gross
negligence or wilful misconduct.
16.13 Retirement
of the Agent
16.13.1 The Agent may, having given to the Borrowers and
each of the Lenders not less than fifteen (15) days
notice of its intention to do so, retire from its appointment as
the Agent under this Agreement, provided that no such retirement
shall take effect unless there has been appointed by the Lenders
as a successor agent:
(a) a company in the same group of companies as the Agent,
(b) a Lender nominated by the Majority Lenders or, failing
such a nomination,
(c) any reputable and experienced bank or financial
institution nominated by the retiring Agent.
and written confirmation (in a form acceptable to the Lenders)
of such acceptance agreeing to be bound by this Agreement in the
capacity of the Agent as if it had been an original party to
this Agreement.
Any corporation into which the retiring Agent
and/or the
retiring Security Trustee (as the case may be) may be merged or
converted or any corporation with which the Security Trustee
and/or the
Agent (as the case may be) may be consolidated or any
corporation resulting from any merger, conversion, amalgamation,
consolidation or other reorganisation to which the Security
Trustee or the Agent (as the case may be) shall be a party
shall, to the extent permitted by applicable law, be the
successor Agent or Security Trustee under this Agreement and the
other Security Documents without the execution or filing of any
document or any further act on the part of any of the parties to
the Security Documents save that notice of any such merger,
conversion, amalgamation, consolidation or other reorganisation
shall forthwith be given to each Security Party and the Lenders.
Prior to any such successor being appointed, the Agent agrees to
consult with the Borrowers
Annex B-50
and the Lenders as to the identity of the proposed successor and
to take account of any reasonable objections which the Borrowers
and the Lenders may raise to such successor being appointed.
16.13.2 If the Majority Lenders, acting reasonably, are of
the opinion that the Security Trustee or Agent is unable to
fulfil its respective obligations under this Agreement in a
professional and acceptable manner, then they may require the
Security Trustee or Agent, by written notice, to resign in
accordance with clause 16.13.1, which the Agent shall
promptly do, and the terms of clause 16.13.1 shall apply to
the appointment of any substitute Security Trustee or Agent,
save that the same shall be appointed by the Majority Lenders
and not by all of the Lenders.
16.13.3 Upon any such successor as aforesaid being
appointed, the retiring Agent or, as the case may be, the
Security Trustee shall be discharged from any further obligation
under the Security Documents (but shall continue to have the
benefit of this clause 16 in respect of any action it has
taken or refrained from taking prior to such discharge) and its
successor and each of the other parties to this Agreement shall
have the same rights and obligations among themselves as they
would have had if such successor had been a party to this
Agreement in place of the retiring Agent or Security Trustee.
The retiring Agent or Agent shall (at its own expense) provide
its successor with copies of such of its records as its
successor reasonably requires to carry out its functions under
the Security Documents.
16.14 Appointment
and retirement of Security Trustee
16.14.1 Appointment
Each of the Lenders, the Swap Bank and the Agent irrevocably
appoints the Security Trustee as its Security Trustee and
trustee for the purposes of the Security Documents, in each case
on the terms set out in this Agreement. Accordingly, each of the
Lenders, the Swap Bank and the Agent hereby authorises the
Security Trustee (whether or not by or through employees or
agents) to take such action on its behalf and to exercise such
rights, remedies, powers and discretions as are specifically
delegated to the Security Trustee by this Agreement
and/or the
Security Documents, together with such powers and discretions as
are reasonably incidental thereto.
16.14.2 Retirement
Without prejudice to clause 16.13, the Security Trustee
may, having given to the Borrowers and each of the Lenders and
the Swap Bank not less than fifteen (15) days notice
of its intention to do so, retire from its appointment as
Security Trustee under this Agreement and any Trust Deed,
provided that no such retirement shall take effect unless there
has been appointed by the Lenders and the Agent as a successor
Security Trustee and trustee:
(a) a company in the same group of companies of the
Security Trustee nominated by the Security Trustee which the
Lenders hereby irrevocably and unconditionally agree to appoint
or, failing such nomination,
(b) a Lender or trust corporation nominated by the Majority
Lenders or, failing such a nomination,
(c) any bank or trust corporation nominated by the retiring
Security Trustee,
and, in any case, such successor Security Trustee and trustee
shall have duly accepted such appointment by delivering to the
Agent (i) written confirmation (in a form acceptable to the
Agent) of such acceptance agreeing to be bound by this Agreement
in the capacity of Security Trustee as if it had been an
original party to this Agreement and (ii) a duly executed
Trust Deed.
Any corporation into which the retiring Security Trustee may be
merged or converted or any corporation with which the Security
Trustee may be consolidated or any corporation resulting from
any merger, conversion, amalgamation, consolidation or other
reorganisation to which the Security Trustee shall be a party
shall, to the extent permitted by applicable law, be the
successor Security Trustee under this Agreement, any
Trust Deed and the other Security Documents without the
execution or filing of any document or any further act on the
part of any of the parties to this Agreement, any
Trust Deed and the other Security Documents save
Annex B-51
that notice of any such merger, conversion, amalgamation,
consolidation or other reorganisation shall forthwith be given
to each Security Party, the Swap Bank and the Lenders. Prior to
any such successor being appointed, the Security Trustee agrees
to consult with the Borrowers as to the identity of the proposed
successor and to take account of any reasonable objections which
the Borrowers may raise to such successor being appointed.
Upon any such successor as aforesaid being appointed, the
retiring Security Trustee shall be discharged from any further
obligation under the Security Documents (but shall continue to
have the benefit of this clause 16 in respect of any action
it has taken or refrained from taking prior to such discharge)
and its successor and each of the other parties to this
Agreement shall have the same rights and obligations among
themselves as they would have had if such successor had been a
party to this Agreement in place of the retiring Security
Trustee. The retiring Security Trustee shall (at its own
expense) provide its successor with copies of such of its
records as its successor reasonably requires to carry out its
functions under the Security Documents.
16.15 Powers
and duties of the Security Trustee
16.15.1 The Security Trustee shall have no duties,
obligations or liabilities to any of the Lenders and the Agent
beyond those expressly stated in any of the Security Documents.
Each of the Agent and the Swap Bank, the Lenders hereby
authorises the Security Trustee to enter into and execute:
(a) each of the Security Documents to which the Security
Trustee is or is intended to be a party; and
(b) any and all such other Security Documents as may be
approved by the Agent in writing (acting on the instructions of
the Majority Lenders) for entry into by the Security Trustee,
and, in each and every case, to hold any and all security
thereby created upon trust for the Lenders, the Swap Bank and
the Agent for the time being in the manner contemplated by this
Agreement.
16.15.2 Subject to clause 16.15.3 the Security Trustee
may, with the prior consent of the Majority Lenders communicated
in writing by the Agent, concur with any of the Security Parties
to:
(a) amend, modify or otherwise vary any provision of the
Security Documents to which the Security Trustee is or is
intended to be a party; or
(b) waive breaches of, or defaults under, or otherwise
excuse performance of, any provision of the Security Documents
to which the Security Trustee is or is intended to be a
party; or
(c) give any consents to any Security Party in respect of
any provision of any Security Document.
Any such action so authorised and effected by the Security
Trustee shall be promptly notified to the Lenders, the Swap Bank
and the Agent by the Security Trustee and shall be binding on
the other Banks.
16.15.3 The Security Trustee shall not concur with any
Security Party with respect to any of the matters described in
clause 16.11.4 without the consent of the Lenders
communicated in writing by the Agent.
16.15.4 The Security Trustee shall (subject to the other
provisions of this clause 16) take such action or, as
the case may be, refrain from taking such action, with respect
to any of its rights, powers and discretions as Security Trustee
and trustee, as the Agent may direct. Subject as provided in the
foregoing provisions of this clause, unless and until the
Security Trustee has received such instructions from the Agent,
the Security Trustee may, but shall not be obliged to, take (or
refrain from taking) such action under or pursuant to the
Security Documents referred to in clause 16.14 as the
Security Trustee shall deem advisable in the best interests of
the Banks provided that (for the avoidance of doubt), to the
extent that this clause might otherwise be construed as
authorising the Security Trustee to take, or refrain from
taking, any action of the nature referred to in
clause 16.15.2 and for which the prior consent
of the Lenders is expressly required under
clause 16.15.3 clauses 16.15.2 and 16.15.3
shall apply to the exclusion of this clause.
16.15.5 None of the Lenders, the Swap Bank nor the Agent
shall have any independent power to enforce any of the Security
Documents referred to in clause 16.14 or to exercise any
rights, discretions or powers or to grant any consents or
releases under or pursuant to such Security Documents or any of
them or otherwise have
Annex B-52
direct recourse to the security
and/or
guarantees constituted by such Security Documents or any of them
except through the Security Trustee.
16.15.6 For the purpose of this clause 16, the
Security Trustee may, rely and act in reliance upon any
information from time to time furnished to the Security Trustee
by the Agent (whether pursuant to clause 16.15.7 or
otherwise) unless and until the same is superseded by further
such information, so that the Security Trustee shall have no
liability or responsibility to any party as a consequence of
placing reliance on and acting in reliance upon any such
information unless the Security Trustee has actual knowledge
that such information is inaccurate or incorrect.
16.15.7 Without prejudice to the foregoing each of the
Agent, the Swap Bank and the Lenders (whether directly or
through the Agent) shall provide the Security Trustee with such
written information as it may reasonably require for the purpose
of carrying out its duties and obligations under the Security
Documents referred to in clause 16.14.
16.16 Trust
provisions
16.16.1 The trusts constituted or evidenced in or by this
Agreement and the Trust Deed shall remain in full force and
effect until whichever is the earlier of:
(a) the expiration of a period of eighty (80) years
from the date of this Agreement; and
(b) receipt by the Security Trustee of confirmation in
writing by the Agent that there is no longer outstanding any
Indebtedness (actual or contingent) which is secured or
guaranteed or otherwise assured by or under any of the Security
Documents,
and the parties to this Agreement declare that the perpetuity
period applicable to this Agreement and the trusts declared by
the Trust Deed shall for the purposes of the Perpetuities
and Accumulations Act 1964 be the period of eighty
(80) years from the date of this Agreement.
16.16.2 In its capacity as trustee in relation to the
Security Documents specified in clause 16.14, the Security
Trustee shall, without prejudice to any of the powers,
discretions and immunities conferred upon trustees by law (and
to the extent not inconsistent with the provisions of any of
those Security Documents), have all the same powers and
discretions as a natural person acting as the beneficial owner
of such property
and/or as
are conferred upon the Security Trustee by any of those Security
Documents.
16.16.3 It is expressly declared that, in its capacity as
trustee in relation to the Security Documents specified in
clause 16.14, the Security Trustee shall be entitled,
subject to the consent of the Lenders, to invest moneys forming
part of the security and which, in the opinion of the Security
Trustee, may not be paid out promptly following receipt in the
name or under the control of the Security Trustee in any of the
investments for the time being authorised by law for the
investment by trustees of trust moneys or in any other property
or investments whether similar to the aforesaid or not or by
placing the same on deposit in the name or under the control of
the Security Trustee as the Security Trustee may think fit
without being under any duty to diversify its investments and
the Security Trustee may at any time vary or transpose any such
property or investments for or into any others of a like nature
and shall not be responsible for any loss due to depreciation in
value or otherwise of such property or investments. Any
investment of any part or all of the security may, at the
discretion of the Security Trustee, be made or retained in the
names of nominees.
16.17 Independent
action by Banks
None of the Banks shall enforce, exercise any rights, remedies
or powers or grant any consents or releases under or pursuant
to, or otherwise have a direct recourse to the security
and/or
guarantees constituted by any of the Security Documents without
the prior written consent of the Majority Lenders but, provided
such consent has been obtained, it shall not be necessary for
any other Bank to be joined as an additional party in any
Proceedings for this purpose.
Annex B-53
16.18 Common
Agent and Security Trustee
The Agent and the Security Trustee have entered into the
Security Documents in their separate capacities (a) as
agent for the Lenders under and pursuant to this Agreement (in
the case of the Agent) and (b) as Security Trustee and
trustee for the Lenders, the Swap Bank and the Agent under and
pursuant to this Agreement, to hold the guarantees
and/or
security created by the Security Documents specified in clause
16.14 on the terms set out in such Security Documents (in the
case of the Security Trustee). If and when the Agent and the
Security Trustee are the same entity and any Security Document
provides for the Agent to communicate with or provide
instructions to the Security Trustee (and vice versa), all
parties to this Agreement agree that any such communications or
instructions on such occasions are unnecessary and are hereby
waived.
16.19 Co-operation
to achieve agreed priorities of application
The Lenders and the Agent shall co-operate with each other and
with the Security Trustee and any receiver under the Security
Documents in realising the property and assets subject to the
Security Documents and in ensuring that the net proceeds
realised under the Security Documents after deduction of the
expenses of realisation are applied in accordance with
clause 13.1.
16.20 The
Prompt distribution of proceeds
Moneys received by any of the Banks (whether from a receiver or
otherwise) pursuant to the exercise of (or otherwise by virtue
of the existence of) any rights and powers under or pursuant to
any of the Security Documents shall (after providing for all
costs, charges, expenses and liabilities and other payments
ranking in priority) be paid to the Agent for distribution (in
the case of moneys so received by any of the Banks other than
the Agent or the Security Trustee) and shall be distributed by
the Agent or, as the case may be, the Security Trustee (in the
case of moneys so received by the Agent or, as the case may be,
the Security Trustee) in each case in accordance with
clause 13.1. The Agent or, as the case may be, the Security
Trustee shall make each such application
and/or
distribution as soon as is practicable after the relevant moneys
are received by, or otherwise become available to, the Agent or,
as the case may be, the Security Trustee save that (without
prejudice to any other provision contained in any of the
Security Documents) the Agent or, as the case may be, the
Security Trustee (acting on the instructions of the Majority
Lenders) or any receiver may credit any moneys received by it to
a suspense account for so long and in such manner as the Agent
or such receiver may from time to time determine with a view to
preserving the rights of the Agent
and/or the
Security Trustee
and/or the
Account Banks
and/or the
Arranger
and/or the
Lenders, the Swap Bank or any of them to provide for the whole
of their respective claims against the Borrowers or any other
person liable.
16.21 Reconventioning
After consultation with the Borrowers and the Lenders and
notwithstanding clause 16.11, the Agent shall be entitled
to make such amendments to this Agreement as it may determine to
be necessary to take account of any changes in market practices
as a consequence of the European Monetary Union (whether as to
the settlement or rounding of obligations, business days, the
calculation of interest or otherwise whatsoever). So far as
possible such amendments shall be such as to put the parties in
the same position as if the event or events giving rise to the
need to amend this Agreement had not occurred. Any amendment so
made to this Agreement by the Agent shall be promptly notified
to the other parties hereto and shall be binding on all parties
hereto.
16.22 Exclusivity
Without prejudice to the Borrowers rights, in certain
instances, to give their consent thereunder, clauses 15 and
16 are for the exclusive benefit of the Banks.
Annex B-54
17 NOTICES
AND OTHER MATTERS
17.1 Notices
17.1.1 unless otherwise specifically provided herein, every
notice under or in connection with this Agreement shall be given
in English by letter delivered personally
and/or sent
by post
and/or
transmitted by fax
and/or
electronically;
17.1.2 in this clause notice includes any
demand, consent, authorisation, approval, instruction,
certificate, request, waiver or other communication.
17.2 Addresses
for communications, effective date of notices
17.2.1 Subject to clause 17.2.2, clause 17.2.5
and 17.3 notices to the Borrowers shall be deemed to have been
given and shall take effect when received in full legible form
by the Borrowers at the address
and/or the
fax number appearing below (or at such other address or fax
number as the Borrowers may hereafter specify for such purpose
to the Agent by notice in writing);
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Address
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c/o Navios
ShipManagement Inc.
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85 Akti Miaouli
Piraeus
Greece
Fax no: + 30 210 453 2070
17.2.2 notwithstanding the provisions of clause 17.2.1
or clause 17.2.5, a notice of Default
and/or a
notice given pursuant to clause 10.2 or clause 10.3 to the
Borrowers shall be deemed to have been given and shall take
effect when delivered, sent or transmitted by the Banks or any
of them to the Borrowers to the address or fax number referred
to in clause 17.2.1;
17.2.3 subject to clause 17.2.5, notices to the Agent
and/or the
Arranger
and/or
Account Banks
and/or
Security Trustee
and/or the
Swap Bank shall be deemed to be given, and shall take effect,
when received in full legible form by the Agent
and/or the
Security Trustee at the address
and/or the
fax number address appearing below (or at any such other address
or fax number as the Agent
and/or the
Security Trustee (as appropriate) may hereafter specify for such
purpose to the Borrowers and the other Lenders by notice in
writing);
Agent: DEUTSCHE SCHIFFSBANK AG
D-28195 Bremen
Germany
Fax: +49 421
3609-293
Attn: International Loans
17.2.4 subject to clause 17.2.5 and 17.3, notices to a
Lender shall be deemed to be given and shall take effect when
received in full legible form by such Lender at its address
and/or fax
number specified in schedule 1 or in any relevant Transfer
Certificate (or at any other address or fax number as such
Lender may hereafter specify for such purpose to the other
Banks); and
17.2.5 if under clause 17.2.1 or clause 17.2.3 a
notice would be deemed to have been given and been effective on
a day which is not a working day in the place of receipt or is
outside the normal business hours in the place of receipt, the
notice shall be deemed to have been given and to have taken
effect at the opening of business on the next working day in
such place.
Annex B-55
17.3 Electronic
Communication
17.3.1 Any communication to be made by
and/or
between the Banks or any of them and the Security Parties or any
of them under or in connection with the Security Documents or
any of them may be made by electronic mail or other electronic
means, if and provided that all such parties:
(a) 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
(b) notify each other of any change to their electronic
mail address or any other such information supplied by them.
17.3.2 Any electronic communication made by
and/or
between the Banks or any of them and the Security Parties or any
of them will be effective only when actually received in
readable form and, in the case of any electronic communication
made by the Borrowers or the Lenders to the Agent, only if it is
addressed in such manner as the Agent shall specify for this
purpose.
17.4 Notices
through the Agent
Every notice under this Agreement or (unless otherwise provided
therein) any other Security Document to be given by the
Borrowers to any other party, shall be given to the Agent for
onward transmission as appropriate and every notice under this
Agreement to be given to the Borrowers shall (except as
otherwise provided in the Security Documents) be given to the
Borrowers by the Agent.
18 BORROWERS
OBLIGATIONS
18.1 Joint
and several
Regardless of any other provision in any of the Security
Documents, all obligations and liabilities whatsoever of the
Borrowers herein contained are joint and several and shall be
construed accordingly. Each of the Borrowers agrees and consents
to be bound by the Security Documents to which it becomes a
party notwithstanding that the other Borrower may not do so or
be effectually bound and notwithstanding that any of the
Security Documents may be invalid or unenforceable against the
other Borrower, whether or not the deficiency is known to any
Bank.
18.2 Borrowers
as principal debtors
Each Borrower acknowledges that it is a principal and original
debtor in respect of all amounts which may become payable by the
Borrowers in accordance with the terms of any of the Security
Documents and agrees that each Bank may continue to treat it as
such, whether or not such Bank is or becomes aware that such
Borrower is or has become a surety for the other Borrower.
18.3 Indemnity
The Borrowers undertake to keep the Banks fully indemnified on
demand against all claims, damages, losses, costs and expenses
arising from any failure of any Borrower to perform or discharge
any purported obligation or liability of that Borrower which
would have been the subject of this Agreement or any other
Security Document had it been valid and enforceable and which is
not or ceases to be valid and enforceable against the other
Borrower on any ground whatsoever, whether or not known to any
Bank including, without limitation, any irregular exercise or
absence of any corporate power or lack of authority of, or
breach of duty by, any person purporting to act on behalf of the
other Borrower (or any legal or other limitation, whether under
the Limitation Acts or otherwise or any disability or death,
bankruptcy, unsoundness of mind, insolvency, liquidation,
dissolution, winding up, administration, receivership,
amalgamation, reconstruction or any other incapacity of any
person whatsoever (including, in the case of a partnership, a
termination or change in the composition of the partnership) or
any change of name or style or constitution of any Security
Party)).
Annex B-56
18.4 Liability
unconditional
None of the obligations or liabilities of the Borrowers under
any Security Document shall be discharged or reduced by reason
of:
18.4.1 the death, bankruptcy, unsoundness of mind,
insolvency, liquidation, dissolution,
winding-up,
administration, receivership, amalgamation, reconstruction or
other incapacity of any person whatsoever (including, in the
case of a partnership, a termination or change in the
composition of the partnership) or any change of name or style
or constitution of any Borrower or any other person liable;
18.4.2 any Bank granting any time, indulgence or concession
to, or compounding with, discharging, releasing or varying the
liability of, any Borrower or any other person liable or
renewing, determining, varying or increasing any accommodation,
facility or transaction or otherwise dealing with the same in
any manner whatsoever or concurring in, accepting, varying any
compromise, arrangement or settlement or omitting to claim or
enforce payment from any Borrower or any other person
liable; or
18.4.3 anything done or omitted which but for this
provision might operate to exonerate the Borrowers or all of
them.
18.5 Recourse
to other security
No Bank shall be obliged to make any claim or demand or to
resort to any security or other means of payment now or
hereafter held by or available to them for enforcing any of the
Security Documents against any Borrower or any other person
liable and no action taken or omitted by any Bank in connection
with any such security or other means of payment will discharge,
reduce, prejudice or affect the liability of the Borrowers under
the Security Documents to which any of them is, or is to be, a
party.
18.6 Waiver
of Borrowers rights
Each Borrower agrees with the Banks that, throughout the
Facility Period, it will not, without the prior written consent
of the Agent:
18.6.1 exercise any right of subrogation, reimbursement and
indemnity against the other Borrower or any other person liable
under the Security Documents;
18.6.2 demand or accept repayment in whole or in part of
any Indebtedness now or hereafter due to such Borrower from the
other Borrower or from any other person liable for such
Indebtedness or demand or accept any guarantee against financial
loss or any document or instrument created or evidencing an
Encumbrance in respect of the same or dispose of the same;
18.6.3 take any steps to enforce any right against the
other Borrower or any other person liable in respect of any such
moneys; or
18.6.3 claim any set-off or counterclaim against the other
Borrower or any other person liable or claim or prove in
competition with any Bank in the liquidation of the other
Borrower or any other person liable or have the benefit of, or
share in, any payment from or composition with, the other
Borrower or any other person liable or any security granted
under any Security Document now or hereafter held by any Bank
for any moneys owing under this Agreement or for the obligations
or liabilities of any other person liable but so that, if so
directed by the Agent, it will prove for the whole or any part
of its claim in the liquidation of the other Borrower or other
person liable on terms that the benefit of such proof and all
money received by it in respect thereof shall be held on trust
for the Banks and applied in or towards discharge of any moneys
owing under this Agreement in such manner as the Agent shall
require.
19 GOVERNING
LAW
This Agreement is governed by and shall be construed in
accordance with English law.
Annex B-57
20 JURISDICTION
20.1 Exclusive
Jurisdiction
For the benefit of the Banks, and subject to clause 20.4
below, the Borrowers hereby irrevocably agree that the courts of
England shall have exclusive jurisdiction:
20.1.1 to settle any disputes or other matters whatsoever
arising under or in connection with this Agreement and any
disputes or other such matters arising in connection with the
negotiation, validity or enforceability of this Agreement or any
part thereof, whether the alleged liability shall arise under
the laws of England or under the laws of some other country and
regardless of whether a particular cause of action may
successfully be brought in the English courts; and
20.1.2 to grant interim remedies or other provisional or
protective relief.
20.2 Submission
and service of process
Each Borrower accordingly irrevocably and unconditionally
submits to the jurisdiction of the English courts. Without
prejudice to any other mode of service each Borrower:
20.2.1 irrevocably empowers and appoints HFW Nominees Ltd
at present of Friary Court, 65 Crutched Friars, London EC3N 2AE,
England as its agent to receive and accept on its behalf any
process or other document relating to any proceedings before the
English courts in connection with this Agreement;
20.2.2 agrees to maintain such an agent for service of
process in England from the date hereof until the end of the
Facility Period;
20.2.3 agrees that failure by a process agent to notify the
Borrowers of service of process will not invalidate the
proceedings concerned;
20.2.4 without prejudice to the effectiveness of service of
process on its agent under clause 20.2.1 above but as an
alternative method, consents to the service of process relating
to any such proceedings by mailing or delivering a copy of the
process to its address for the time being applying under
clause 17.2;
20.2.5 agrees that if the appointment of any person
mentioned in clause 20.2.1 ceases to be effective, the
Borrowers shall immediately appoint a further person in England
to accept service of process on its behalf in England and,
failing such appointment within seven (7) days the Agent
shall thereupon be entitled and is hereby irrevocably authorised
by the Borrowers in those circumstances to appoint such person
by notice to the Borrowers.
20.3 Forum
non conveniens and enforcement abroad
Each Borrower:
20.3.1 waives any right and agrees not to apply to the
English court or other court in any jurisdiction whatsoever to
stay or strike out any proceedings commenced in England on the
ground that England is an inappropriate forum
and/or that
Proceedings have been or will be started in any other
jurisdiction in connection with any dispute or related matter
falling within clause 20.1; and
20.3.2 agrees that a judgment or order of an English court
in a dispute or other matter falling within clause 20.1
shall be conclusive and binding on the Borrowers and may be
enforced against them in the courts of any other jurisdiction.
20.4 Right
of Security Trustee, but not Borrowers, to bring proceedings in
any other jurisdiction
20.4.1 Nothing in this clause 20 limits the right of
any Lender to bring Proceedings, including third party
proceedings, against any one or all Borrowers, or to apply for
interim remedies, in connection with this Agreement in any other
court and/or
concurrently in more than one jurisdiction;
Annex B-58
20.4.2 the obtaining by any Lender of judgment in one
jurisdiction shall not prevent such Lender from bringing or
continuing proceedings in any other jurisdiction, whether or not
these shall be founded on the same cause of action.
20.5 Enforceability
despite invalidity of Agreement
Without prejudice to the generality of clause 13.9, the
jurisdiction agreement contained in this clause 20 shall be
severable from the rest of this Agreement and shall remain
valid, binding and in full force and shall continue to apply
notwithstanding this Agreement or any part thereof being held to
be avoided, rescinded, terminated, discharged, frustrated,
invalid, unenforceable, illegal
and/or
otherwise of no effect for any reason.
20.6 Effect
in relation to claims by and against non-parties
20.6.1 For the purpose of this clause Foreign
Proceedings shall mean any Proceedings except proceedings
brought or pursued in England arising out of or in connection
with (i) or in any way related to any of the Security
Documents or any assets subject thereto or (ii) any action
of any kind whatsoever taken by any Bank pursuant thereto or
which would, if brought by any or all of the Borrowers against
the Banks, have been required to be brought in the English
courts;
20.6.2 no Borrower shall bring or pursue any Foreign
Proceedings against any Bank and shall use its best endeavours
to prevent persons not party to this Agreement from bringing or
pursuing any Foreign Proceedings against any Bank;
20.6.3 If, for any reason whatsoever, any Security Party
and/or any
person connected howsoever with any Security Party brings or
pursues against any Bank any Foreign Proceedings, the Borrowers
shall indemnify such Bank on demand in respect of any and all
claims, losses, damages, demands, causes of action, liabilities,
costs and expenses (including, but not limited to, legal costs)
of whatsoever nature howsoever arising from or in connection
with such Foreign Proceedings which such Bank (or the Agent on
its behalf) certifies as having been incurred by it;
20.6.4 the Banks and the Borrowers hereby agree and declare
that the benefit of this clause 20 shall extend to and may
be enforced by any officer, employee, agent or business
associate of any of the Banks against whom a Borrower brings a
claim in connection howsoever with any of the Security Documents
or any assets subject thereto or any action of any kind
whatsoever taken by, or on behalf of or for the purported
benefit of any Bank pursuant thereto or which, if it were
brought against any Bank, would fall within the material scope
of clause 20.1. In those circumstances this clause 20
shall be read and construed as if references to any Bank were
references to such officer, employee, agent or business
associate, as the case may be.
Annex B-59
Execution Pages
IN WITNESS whereof the parties to this Agreement have
caused this Agreement to be duly executed on the date first
above written.
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SIGNED as a deed for and on behalf of
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/s/ Alexandros
Laios
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AMORGOS SHIPPING CORPORATION
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)
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by Alexandros Laios
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)
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(as Borrower under and pursuant to
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)
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a power of attorney dated
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)
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30 March 2010) in the presence of
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/s/ Ronan
Le Dû
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SIGNED as a deed for and on behalf of
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)
/s/ Alexandros
Laios
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ANDROS SHIPPING CORPORATION
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)
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by Alexandros Laios
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(as Borrower under and pursuant to
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)
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a power of attorney dated
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)
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30 March 2010) in the presence of
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/s/ Ronan
Le Dû
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SIGNED as a deed for and on behalf of
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)
/s/ Alexandros
Laios
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ANTIPAROS SHIPPING CORPORATION
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)
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by Alexandros Laios
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(as Borrower under and pursuant to
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)
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a power of attorney dated
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)
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30 March 2010) in the presence of
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/s/ Ronan
Le Dû
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SIGNED as a deed for and on behalf of
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/s/ Alexandros
Laios
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IKARIA SHIPPING CORPORATION
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)
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by Alexandros Laios
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(as Borrower under and pursuant to
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)
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a power of attorney dated
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30 March 2010) in the presence of
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/s/ Ronan
Le Dû
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SIGNED as a deed for and on behalf of
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)
/s/ Alexandros
Laios
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KOS SHIPPING CORPORATION
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)
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by Alexandros Laios
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(as Borrower under and pursuant to
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)
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a power of attorney dated
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)
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30 March 2010) in the presence of
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/s/ Ronan
Le Dû
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SIGNED as a deed for and on behalf of
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)
/s/ Alexandros
Laios
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MYTILENE SHIPPING CORPORATION
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)
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by Alexandros Laios
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(as Borrower under and pursuant to
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)
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a power of attorney dated
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)
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30 March 2010) in the presence of
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/s/ Ronan
Le Dû
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SIGNED by Victoria Liaou
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)
/s/ Victoria
Liaou
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for and on behalf of
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DEUTSCHE SCHIFFSBANK AG
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)
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(as a Lender) in the presence of
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/s/ Ronan
Le Dû
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Annex B-60
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SIGNED by
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/s/ Konstantinos
Sotiriou
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for and on behalf of
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/s/ Constantinos
Flokos
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ALPHA BANK AE
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)
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(as a Lender) in the presence of
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/s/ Ronan
Le Dû
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SIGNED by Victoria Liaou
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)
/s/ Victoria
Liaou
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for and on behalf of
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)
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CREDIT AGRICOLE CORPORATE
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)
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AND INVESTMENT BANK
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)
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(as a Lender) in the presence of
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/s/ Ronan
Le Dû
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SIGNED by Victoria Liaou
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)
/s/ Victoria
Liaou
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for and on behalf of
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DEUTSCHE SCHIFFSBANK AG
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)
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(as Account Bank, Arranger, Agent,
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)
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Swap Bank and Security Trustee
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)
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in the presence of
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/s/ Ronan
Le Dû
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SIGNED by
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)
/s/ Konstantinos
Sotiriou
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for and on behalf of
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)
/s/ Constantinos
Flokos
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ALPHA BANK AE
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)
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(as Account Bank) in the presence of
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)
/s/ Ronan
Le Dû
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Annex B-61
ANNEX C
Private
and Confidential
DATED
8 April 2010
SIFNOS
SHIPPING CORPORATION
SKIATHOS SHIPPING CORPORATION
and
SYROS SHIPPING CORPORATION
as Borrowers
FORTIS
BANK
and
DVB BANK SE
as Lenders
and
FORTIS BANK
as Arranger, Swap Bank, Payment Agent
and Security Trustee
and
DVB Bank SE
as Agent
FACILITY
AGREEMENT FOR A USD 75,000,000
TERM LOAN
FACILITY
IN THREE
TRANCHES
PIRAEUS
Index
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Clause
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|
Page
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|
1
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|
Purpose, Definitions, Construction & Majority Lenders
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|
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1
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|
2
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The Available Commitment and Cancellation
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|
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23
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|
3
|
|
Interest and Interest Periods
|
|
|
26
|
|
4
|
|
Repayment and Prepayment
|
|
|
29
|
|
5
|
|
Fees and Expenses
|
|
|
32
|
|
6
|
|
Payments and Taxes; Accounts and Calculations
|
|
|
34
|
|
7
|
|
Representations and Warranties
|
|
|
38
|
|
8
|
|
Undertakings
|
|
|
44
|
|
9
|
|
Conditions
|
|
|
54
|
|
10
|
|
Events of Default
|
|
|
56
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|
11
|
|
Indemnities
|
|
|
62
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|
12
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|
Unlawfulness and Increased Costs
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|
|
63
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|
13
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|
Application of moneys, set off, pro-rata payments and
miscellaneous
|
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65
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|
14
|
|
Accounts
|
|
|
70
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|
15
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|
Assignment, transfer and lending office
|
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72
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16
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Arranger, Agent and Security Trustee
|
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77
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17
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Notices and other matters
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92
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19
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Governing law
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95
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20
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Jurisdiction
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97
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Schedule 1 The Lenders and their Commitments
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Schedule 2 Form of Drawdown Notice
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Schedule 3 Conditions precedent
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Schedule 4 Form of Transfer Certificate
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Schedule 5 Form of Trust Deed
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Schedule 6 Form of Compliance Certificate
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Schedule 7 Vessel details
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Execution Pages
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119
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THIS
AGREEMENT dated April 2010 is made BY and
BETWEEN:
(1) SIFNOS SHIPPING CORPORATION, SKIATHOS SHIPPING
CORPORATION and SYROS SHIPPING CORPORATION as
Borrowers;
(2) FORTIS BANK and DVB BANK SE as Lenders;
(3) DVB BANK SE as Agent;
(4) FORTIS BANK as Arranger, Account Bank, Payment
Agent and Security Trustee; and
(5) FORTIS BANK as Swap Bank.
NOW IT IS
HEREBY AGREED AS FOLLOWS:
1 PURPOSE,
DEFINITIONS, CONSTRUCTION & MAJORITY LENDERS
1.1 Purpose
This Agreement sets out the terms and conditions on which Fortis
Bank and DVB Bank SE agree to make available to the Borrowers a
loan of up to seventy five million Dollars (USD 75,000,000) in
three equal Tranches, for the purpose of part-financing the
purchase price of three MR Product Tankers which are to be
constructed by the Builder.
1.2 Definitions
In this Agreement, unless the context otherwise requires:
Account Bank means Fortis Bank acting
through its office at Vas Sofias 94 & Kerasourtos 115 28
Athens, Greece or such other Lender as may be designated by the
Agent as the Account Bank for the purposes of this Agreement;
Advance means the principal amount of
each drawing in respect of the Loan to be made pursuant to
Clause 2.5;
Agent means DVB Bank SE, Nordic Branch
acting for the purposes of this Agreement through its branch at
Strandgaten 18, P.O. Box 701 S, 5807 Bergen, Norway (or of such
other address as may last have been notified to the other
parties to this Agreement) or such other person as may be
appointed as agent by the Banks pursuant to clause 16.13;
Approved Broker means each of
Fearnleys A.S., Oslo Shipbrokers A.S., Clarkson Valuations
Limited, Simpson Spence & Young Shipbrokers Ltd., E.A.
Gibson Shipbrokers Ltd., Jacq. Pierot Jr. & Sons, Allied
Shipbroking, Greece, RS Platou ASA, ICAP Shipping Limited, ACM
Ltd., London, Island Shipbrokers PTE LTD, Singapore or such
other reputable, independent and first class firm of shipbrokers
specialising in the valuation of vessels of the relevant type
appointed by the Agent and agreed with the Borrowers;
Arranger means Fortis Bank acting
through its office at Vas Sofias 94 & Kerasountos 1, 115 28
Athens, Greece;
Banking Day means a day on which
dealings in deposits in USD are carried on in the London
Interbank Eurocurrency Market and (other than Saturday or
Sunday) on which banks are open for business in London,
Frankfurt, Piraeus and New York City (or any other relevant
place of payment under clause 6);
Banks means, together, the Arranger,
the Agent, the Payment Agent, the Security Trustee, the Account
Bank, the Lenders, the Swap Bank and any Transferee Lenders;
Borrower means each of SIFNOS SHIPPING
CORPORATION (Sifnos), SKIATHOS SHIPPING
CORPORATION (Skiathos) and SYROS SHIPPING
CORPORATION (Syros) each
Annex C-1
having its registered office at Trust Company Complex,
Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands,
MH96960 and in the plural means all of them;
Break Costs means the aggregate amount
of all losses, premiums, penalties, costs and expenses
whatsoever certified by the Payment Agent at any time and from
time to time as having been incurred by the Lenders or any of
them in maintaining or funding their Contributions or in
liquidating or re-employing fixed deposits acquired to maintain
the same as a result of either:
(a) any repayment or prepayment of the Loan or any part
thereof otherwise than (i) in accordance with
clause 4.1 or (ii) on an Interest Payment Date whether
on a voluntary or involuntary basis or otherwise
howsoever; or
(b) as a result of the Borrowers failing or being incapable
of drawing an Advance after a relevant Drawdown Notice has been
given;
Certified Copy means in relation to
any document delivered or issued by or on behalf of any company,
a copy of such document certified as a true, complete and up to
date copy of the original by any of the directors or officers
for the time being of such company or by such companys
attorneys or solicitors;
Charter Assignment means a specific
assignment of each Extended Employment Contract required to be
executed hereunder by any Borrower in favour of the Security
Trustee (including any notices
and/or
acknowledgements
and/or
undertakings associated therewith) in such form as the Agent and
the Majority Lenders may require in their sole discretion;
Charter Insurances means all policies
and contracts of insurance which are from time to time during
the Facility Period in place or taken out or entered into by or
for the benefit of the Owners in respect of loss of earnings and
all benefits thereof (including claims of whatsoever nature and
return of premiums);
Charter Insurance Assignment means a
first priority assignment of the Charter Insurances executed or
to be executed by such named insured as the Agent may require in
favour of the Security Trustee, in such form as the Agent and
the Majority Lenders may in their sole discretion require;
Classification means, in relation to
each Vessel, the highest class available for a vessel of her
type with the relevant Classification Society;
Classification Society means, in
relation to each Vessel, any IACS classification society which
the Lenders shall, at the request of the Borrowers, have agreed
in writing shall be treated as the classification society in
relation to such Vessel for the purposes of the relevant Ship
Security Documents;
Commitment means, in relation to the
Loan in relation to each Lender, the sum set out opposite its
name in schedule 1 or any replacement thereof and in
relation to each Tranche in relation to each Lender one third of
the sum set out opposite its name in schedule 1 or any
replacement thereof, or otherwise pursuant to the terms of any
relevant Transfer Certificate as the amount which, subject to
the terms of this Agreement, it is obliged to advance to the
Borrowers hereunder in respect of the Loan Facility, in each
case as such amount may have been reduced
and/or
cancelled under this Agreement;
Compliance Certificate means a
certificate substantially in the form set out in schedule 6
signed by the chief financial officer of the Corporate Guarantor;
Compulsory Acquisition means, in
respect of a Vessel, requisition for title or other compulsory
acquisition including, if that ship is not released therefrom
within the Relevant Period, capture, appropriation, forfeiture,
seizure, detention, deprivation or confiscation howsoever for
any reason (but excluding requisition for use or hire) by or on
behalf of any Government Entity or other competent authority or
by pirates, hijackers, terrorists or similar persons;
Relevant Period means for the purposes of this
definition of Compulsory Acquisition either (i) ninety
(90) days or, (ii) if relevant underwriters confirm in
writing (in customary terms) prior to the end of such ninety
(90) day period that such capture, seizure, detention or
confiscation will be covered by the relevant Owners war
risks insurance if
Annex C-2
continuing for a further period exceeding ten (10) calendar
months, the shorter of twelve (12) months and such period
at the end of which cover is confirmed to attach;
Contribution means, at any relevant
time, in relation to each Lender, the principal amount of the
Loan owing to such Lender at such time;
Corporate Guarantee means the
guarantee required to be executed hereunder by the relevant
Corporate Guarantor in such form as the Agent and the Majority
Lenders may require in their sole discretion;
Default means any Event of Default or
any event or circumstance 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;
Delivered Tranche means each Tranche
which has been applied in financing a Vessel which has been
transferred and delivered by the Builder to its Owner;
Delivery Date means, in relation to a
Vessel, the date on which title to and possession of that Vessel
is transferred from the Builder to the relevant Borrower;
Dollars and
USD mean the lawful currency of the
USA and in respect of all payments to be made under any of the
Security Documents means funds which are for same day settlement
in the New York Clearing House Interbank Payments System (or
such other US dollar funds as may at the relevant time be
customary for the settlement of international banking
transactions denominated in US dollars);
Drawdown Date means, in relation to
each Advance, any date being a Banking Day falling during the
Drawdown Period, on which the relevant Advance is, or is to be,
made available;
Drawdown Notice means, in relation to
each Advance, a notice substantially in the form of
schedule 2;
Drawdown Period means the period
commencing on the Execution Date and ending in respect of:
(i) Tranche A on 26 September 2013;
(ii) Tranche B on 25 November 2013; and
(iii) Tranche C on 26 December 2013
or, in each case, on the latest date the Vessel to be
financed by the relevant Tranche may be delivered in accordance
with the Shipbuilding Contract relating thereto or on the date
on which the Commitment in respect of that Tranche is finally
cancelled or no longer available under the terms of this
Agreement;
Earnings Account means, in respect of
each Borrower, an interest bearing USD Account required to be
opened hereunder with the Account Bank in the name of that
Borrower designated [NAME OF BORROWER]
Earnings Account and includes any other account designated
in writing by the Payment Agent to be an Earnings Account for
the purposes of this Agreement;
Earnings Account Pledge means, in
respect of each Earnings Account, a first priority charge
required to be executed hereunder between the relevant Borrower
and the Security Trustee in respect of its Earnings Account in
such form as the Agent and the Majority Lenders may require in
their sole discretion, and in the plural means all of them;
Encumbrance means any mortgage,
charge, pledge, lien, hypothecation, assignment, title
retention, preferential right, option, trust arrangement or
security interest or other encumbrance, security or arrangement
conferring howsoever a priority of payment in respect of any
obligation of any person;
Environmental Affiliate means any
agent or employee of any Borrower, the Manager, or any other
Group Member or any other person having a contractual
relationship with any Borrower, the Manager, or any other Group
Member in connection with any Relevant Ship or its operation or
the
Annex C-3
carriage of cargo
and/or
passengers thereon
and/or the
provision of goods
and/or
services on or from any Relevant Ship;
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 its operation or the carriage of cargo
and/or
passengers thereon
and/or the
provision of goods
and/or
services on or from any Relevant Ship required under any
Environmental Law;
Environmental Claim means (i) any
claim by any applicable Government Entity alleging breach of, or
non-compliance with, any Environmental Laws or Environmental
Approvals or otherwise howsoever relating to or arising out of
an Environmental Incident or (ii) any claim by any other
third party howsoever relating to or arising out of an
Environmental Incident (and, in each such case,
claim shall include a claim for damages
and/or
direction for
and/or
enforcement relating to
clean-up
costs, removal, compliance, remedial action or otherwise) or
(iii) any Proceedings arising from any of the foregoing;
Environmental Incident means,
regardless of cause, (i) any discharge or release of
Environmentally Sensitive Material from any Relevant Ship;
(ii) any incident in which Environmentally Sensitive
Material is discharged or released from a vessel other than a
Relevant Ship which involves collision between a Relevant Ship
and such other vessel or some other incident of navigation or
operation, in either case, where the Relevant Ship, the Manager
and/or the
relevant Owner
and/or the
relevant Group Member
and/or the
relevant Operator are actually, contingently or allegedly at
fault or otherwise howsoever liable (in whole or in part) or
(iii) any incident in which Environmentally Sensitive
Material is discharged or released from a vessel other than a
Relevant Ship and where such Relevant Ship is actually or
reasonably likely to be arrested as a result
and/or where
the Manager
and/or the
relevant Owner
and/or other
Group Member
and/or the
relevant Operator are actually or contingently at fault or
allegedly and reasonably likely to be found at fault or
otherwise howsoever liable to any administrative or legal action;
Environmental Laws means all laws,
regulations, conventions and agreements whatsoever relating to
pollution, human or wildlife well-being or protection of the
environment (including, without limitation, the United States
Oil Pollution Act of 1990 and any comparable laws of the
individual States of the USA);
Environmentally Sensitive Material
means oil, oil products or any other products or substance which
are polluting, toxic or hazardous or any substance the release
of which into the environment is howsoever regulated, prohibited
or penalised by or pursuant to any Environmental Law;
Equity Deposit Account means an
interest bearing USD Account required to be opened hereunder
with the Account Bank in the joint names of the Borrowers
designated Navios Equity Deposit Account
and includes any other account designated in writing by the
Agent to be the Equity Deposit Account for the purposes of this
Agreement;
Event of Default means any of the
events or circumstances listed in clause 10.1;
Execution Date means the date on which
this Agreement has been executed by all the parties hereto;
Extended Employment Contract means, in
respect of a Vessel, any time charterparty, contract of
affreightment or other contract of employment of such ship
(including the entry of any Vessel in any pool) which has a
tenor exceeding twenty four (24) months (including any
options to renew or extend such tenor);
Facility Period means the period
starting on the date of this Agreement and ending on such date
as all obligations whatsoever of all of the Security Parties
under or pursuant to the Security Documents whensoever arising,
actual or contingent, have been irrevocably paid, performed
and/or
complied with;
Annex C-4
Final Delivery Date means the date on
which all of the Vessels shall have been transferred and
delivered by the Builder to the Borrowers;
Flag State means Panama or any other
country acceptable to the Lenders;
General Assignment means, in respect
of each Vessel, the deed of assignment of its earnings,
insurances and requisition compensation executed or to be
executed by the relevant Owner in favour of the Security Trustee
in such form as the Agent and the Majority Lenders may require
in their sole discretion and in the plural means all of them;
Government Entity means any national
or local government body, tribunal, court or regulatory or other
agency and any organisation of which such body, tribunal, court
or agency is a part or to which it is subject;
Group means at any relevant time the
Corporate Guarantor whose Corporate Guarantee is in force and
effect at that time and its subsidiaries but not including any
subsidiary which is listed on any public stock exchange;
Group Member means any member of the
Group;
Indebtedness means any obligation
howsoever arising (whether present or future, actual or
contingent, secured or unsecured as principal, surety or
otherwise) for the payment or repayment of money;
Interest Payment Date means, in
relation to each Tranche, the last day of an Interest Period
and, if an Interest Period is longer than 6 months, the
date falling at the end of each successive period of
6 months during such Interest Period starting from its
commencement;
Interest Period means each period for
the calculation of interest in respect of the Loan or, as the
case may be, Tranche ascertained in accordance with the
provisions of clause 3;
ISM Code Documentation means, in
relation to a Vessel, the document of compliance (DOC) and
safety management certificate (SMC) issued by a Classification
Society pursuant to the ISM Code in relation to that Vessel
within the periods specified by the ISM Code;
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
Organisation and includes any amendments or extensions thereto
and any regulations issued pursuant thereto;
ISSC means an International Ship
Security Certificate issued in respect of a Vessel pursuant to
the ISPS Code;
Latest Accounts means, in respect of
any financial quarter or year of the Group, the latest unaudited
(in respect of each financial quarter) or audited (in respect of
each financial year) financial statements required to be
prepared pursuant to clause 8.1.6;
Lenders means the banks listed in
schedule 1 and Transferee Lenders;
Lending Branch means, in respect of
each Lender, its office or branch at the address set out beneath
its name in schedule 1 (or, in the case of a Transferee, in
the Transfer Certificate to which it is a party as Transferee)
or such other office or branch as any Lender shall from time to
time select and notify through the Payment Agent to the other
parties to this Agreement;
LIBOR means, the greater of
(i) and (ii) below:
(i) the rate equal to the offered quotation for deposits in
USD in an amount comparable with the amount in relation to which
LIBOR is to be determined for a period equal to, or as near as
possible equal to, the relevant period which appears on Reuters
Screen LIBOR01 at or about 11 a.m.
Annex C-5
on the second Banking Day before the first day of such period
(and, for the purposes of this Agreement, Reuters Screen
LIBOR01 means the display designated as
LIBOR01 on the Reuters Service or such other page as
may replace LIBOR01 on that service for the purpose of
displaying rates comparable to that rate or on such other
service as may be nominated by the British Bankers
Association as the information vendor for the purpose of
displaying the British Bankers Association Interest
Settlement Rates for USD); and
(ii) the rate per annum reasonably determined by the Agent
from any source the Agent may reasonably select to be the rate
which reflects the actual cost to the Lenders of funding their
respective Contributions (or the relevant part thereof) during
the relevant Interest Period;
Liquidity means the aggregate of all
cash deposits legally and beneficially owned by any Group Member
which:
(a) are free from any Encumbrance other than, in respect of
any deposit with a Bank, any Encumbrance given as security for
the obligations of the Borrowers under this Agreement; and
(b) are otherwise at the free and unrestricted disposal of
the relevant Group Member by which it is owned
but excluding any sums on the Equity Deposit Account;
Loan means the aggregate principal
amount in respect of the Loan Facility owing to the Lenders
under this Agreement at any relevant time;
Loan Facility means the loan facility
provided by the Lenders on the terms and subject to the
conditions of this Agreement in the amount of
USD 75,000,000;
Majority Lenders means at any relevant
time when there are two Lenders, both of them, and at any time
when there are more than two Lenders, the Lenders whose
Contributions exceed 75% of the Loan;
Management Agreement means, in respect
of each Vessel, the agreement between the relevant Owner and the
Manager, in a form previously approved in writing by the Agent
(acting on the instructions of the Majority Lenders);
Manager means Navios ShipManagement
Inc., a company incorporated in the Marshall Islands and having
its registered office at Trust Company Complex, Ajeltake
Road, Ajeltake Island, Majuro, Marshall Islands, MH96960 or
(without the need for the Agents consent) any other
subsidiary of Navios Maritime Holdings Inc. or any other person
appointed by an Owner, with the prior written consent of the
Agent, as the manager of the relevant Mortgaged Vessel;
Managers Undertakings means,
collectively, the undertakings and assignments required to be
executed hereunder by the Manager in favour of the Security
Trustee in respect of each of the Vessels each in such form as
the Agent and the Majority Lenders may require in their sole
discretion (and Managers Undertakings
means all of them);
Margin means, in relation to each
Interest Period 2.50% per annum;
Master Agreement means together
(i) an ISDA Master Agreement made or to be made between the
Swap Bank and the Borrowers;
Master Agreement Security Deed means
the security deed in respect of the Master Agreement executed or
(as the context may require) to be each executed by the
Borrowers in favour of the Security Trustee in such form as the
Agent and the Majority Lenders may require in their sole
discretion;
Material Adverse Effect means any
event or occurrence which the Majority Lenders reasonably
determine has had or could reasonably be expected to have a
material adverse effect on (i) the Banks rights
under, or the security provided by, any Security Document,
(ii) the ability of any Security Party to
Annex C-6
perform or comply with any of its obligations under any Security
Document or (iii) the value or nature of the property,
assets, operations, liabilities or financial condition of any
Security Party;
Maturity Date means in respect of each
Tranche, the date falling 6 years after the Delivery Date
of the Vessel which is being financed by that Tranche;
MII & MAP Policy means a
mortgagees interest and pollution risks insurance policy
(including additional perils (pollution) cover) in respect of
each Mortgaged Vessel to be effected by the Security Trustee on
or before the first Drawdown Date to cover the Mortgaged Vessels
as the same may be renewed or replaced annually thereafter and
maintained throughout the Facility Period through such brokers,
with such underwriters and containing such coverage as may be
acceptable to the Security Trustee in its sole discretion,
insuring a sum of at least one hundred and ten per cent (110%)
of the Loan in respect of mortgagees interest insurance
and one hundred and ten per cent (110%) of the Loan in respect
of additional perils cover;
Minimum Liquidity means
(i) during 2010 and 2011 and up to the Final Delivery Date
USD40,000,000 and (ii) thereafter, USD35,000,000;
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 (a) 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 (b) 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 means, in respect of each
Vessel, the first preferred Ship mortgage thereof required to be
executed hereunder by the Owner thereof in favour of the
Security Trustee, each in such form as the Agent and the
Majority Lenders may require in their sole discretion and in the
plural means all of them;
Mortgaged Vessel means, at any
relevant time, any Vessel which is at such time subject to a
Mortgage and a Vessel shall, for the purposes of this Agreement,
be regarded as a Mortgaged Vessel as from the date on which the
Mortgage of that Vessel has been executed and registered in
accordance with this Agreement until whichever shall be the
earlier of (i) the payment in full of the amount required
to be paid to the Agent pursuant to clause 4.3 or 4.5 following
the Total Loss or sale respectively of such Vessel and
(ii) the end of the Facility Period;
Navios Acquisition means Navios
Maritime Acquisition Corporation a company incorporated in the
Marshall Islands and having its registered office at
Trust Company Complex, Ajeltake Road, Ajeltake Island,
Majuro, Marshall Islands, MH96960;
Negative Pledge means negative pledge
of the shares of and in each Borrower to be executed by the
Shareholder in favour of the Security Trustee in such form as
the Agent and the Majority Lenders may require in their sole
discretion and in the plural means all of them;
Net Profit means for each financial
year of the Corporate Guarantor, the Net Profit as set out in
the relevant Latest Accounts;
Net Worth means by reference to the
Latest Accounts, the Total Assets (based on book values) less
Total Liabilities of the Group;
Novation Agreement means each of the
Vessel A Novation Agreement, the Vessel B Novation Agreement and
the Vessel C Novation Agreement and in the plural means all of
them;
Operator means any person who is from
time to time during the Facility Period concerned in the
operation of a Relevant Ship and falls within the definition of
Company set out in rule 1.1.2 of the ISM Code;
Annex C-7
Owner means, in relation to:
(i) Vessel A, Sifnos;
(ii) Vessel B, Skiathos; and
(iii) Vessel C, Syros,
and in the plural means all of them;
Payment Agent means Fortis Bank acting
through its office at Vas Sofias 94 & Kerasountos 1, 115 28
Athens, Greece (or of such other address as may last have been
notified to the other parties to this Agreement pursuant to
clause 17.2.3) or such other person as may be appointed as agent
by the Lenders pursuant to clause 16.13;
Permitted Encumbrance means any
Encumbrance in favour of the Banks or any of them created
pursuant to the Security Documents and Permitted Liens;
Permitted Liens means any lien on any
Vessel for masters, officers or crews wages
outstanding in the ordinary course of trading, any lien for
salvage and any ship repairers or outfitters
possessory lien for a sum not (except with the prior written
consent of the Agent) exceeding the Casualty Amount (as defined
in the Ship Security Documents for such Vessel);
Pertinent Jurisdiction means any
jurisdiction in which or where any Security Party is
incorporated, resident, domiciled, has a permanent establishment
or assets, carries on, or has a place of business or is
otherwise howsoever effectively connected;
Predelivery Security Assignment means,
in respect of each Vessel, a deed of assignment of the
Shipbuilding Contract and of the Refund Guarantee in respect
thereof in such form as the Agent and the Majority Lenders may
require in their sole discretion and in the plural means all of
them;
Prepayment Ratio means in respect of
the sale or Total Loss of a Mortgaged Vessel the Valuation
Amount of such Mortgaged Vessel immediately prior to such sale
or Total Loss divided by the Security Value immediately prior to
such sale or Total Loss and for these purposes any valuation of
a Vessel (calculated in accordance with Clause 8.2.2) may
be no more than two months old;
Proceedings means any litigation,
arbitration, legal action or complaint or judicial,
quasi-judicial or administrative proceedings whatsoever arising
or instigated by anyone (private or governmental) in any court,
tribunal, public office or other forum whatsoever and
wheresoever (including, without limitation, any action for
provisional or permanent attachment of any thing or for
injunctive remedies or interim relief and any action instigated
on an ex parte basis);
Refund Guarantee means each of the
Vessel A Refund Guarantee, the Vessel B Refund Guarantee and the
Vessel C Refund Guarantee and in the plural means all of them;
Refund Guarantor means, in relation to
each Vessel, the issuer of the Refund Guarantee in respect
thereof;
Registry means, in relation to each
Vessel, the office of the registrar, commissioner or
representative of the Flag State, who is duly empowered to
register such Vessel, the relevant Owners title thereto
and the relevant Mortgage under the laws and flag of the Flag
State;
Relevant Tranche means, in respect of
Vessel A, Tranche A, in respect of Vessel B, Tranche B
and in respect of Vessel C, Tranche C;
Relevant Ship means each of the
Vessels and any other ship from time to time (whether before or
after the date of this Agreement) owned, managed or crewed by,
or chartered to, any Group Member;
Repayment Dates means, in respect of
each Tranche, subject to clause 6.3, each of the dates
falling at six-monthly intervals after the Delivery Date in
respect of the Vessel which that Tranche finances, up to and
including the date falling 72 months after such date;
Annex C-8
Required Authorisation means any
authorisation, consent, declaration, licence, permit, exemption,
approval or other document, whether imposed by or arising in
connection with any law, regulation, custom, contract, security
or otherwise howsoever which must be obtained at any time from
any person, Government Entity, central bank or other
self-regulating or supra-national authority in order to enable
the Borrowers lawfully to borrow the loan or draw any Advance
and/or to
enable any Security Party lawfully and continuously to continue
its corporate existence
and/or
perform all its obligations whatsoever whensoever arising
and/or grant
security under the relevant Security Documents
and/or to
ensure the continuous validity and enforceability thereof;
Required Security Amount means the
amount in USD (as certified by the Agent) which is at any
relevant time the Relevant Percentage of the aggregate of the
Delivered Tranches and any Swap Exposure where Relevant
Percentage means:
(i) during 2013, 110%;
(ii) thereafter, 115%;
Retention Account an interest bearing
USD Account required to be opened hereunder with the Account
Bank in the name of the Borrowers designated
Navios Retention Account and includes
any other account designated in writing by the Payment Agent to
be the Retention Account for the purposes of this Agreement;
Retention Account Pledge means a first
priority charge required to be executed hereunder between the
Borrowers and the Security Trustee in respect of the Retention
Account in such form as the Agent and the Majority Lenders may
require in their sole discretion;
Retention Amount means, in relation to
any Retention Date, such sum as shall be the aggregate of:
(a) One sixth (1/6th) of the repayment instalment in
respect of the relevant Tranche falling due for payment pursuant
to clause 4.1.1 (as the same may have been reduced by any
prepayment) on the next Repayment Date after the relevant
Retention Date in respect of that Tranche; and
(b) the applicable fraction (as hereinafter defined) of the
aggregate amount of interest falling due for payment in respect
of each part of the Loan during and at the end of each Interest
Period current at the relevant Retention Date and, for this
purpose, the expression applicable fraction
in relation to each Interest Period shall mean a fraction having
a numerator of one and a denominator equal to the number of
Retention Dates falling within the relevant Interest Period;
Retention Dates means the date falling
thirty (30) days after the final Drawdown Date in respect
of a Tranche and each of the dates falling at monthly intervals
after such date and prior to the Maturity Date in respect of
that Tranche;
Security Documents means this
Agreement, the Predelivery Security Assignments, the Master
Agreement, the Master Agreement Security Deed, the Mortgages,
the Corporate Guarantee, the General Assignments, the Charter
Assignments, the Earnings Account Pledge, the Managers
Undertakings, the Charter Insurance Assignments, the
Shares Pledges, the Negative Pledges, and any other
documents as may have been or shall from time to time after the
date of this Agreement be executed to guarantee
and/or to
govern
and/or
secure all or any part of the Loan, interest thereon and other
moneys from time to time owing by the Borrowers pursuant to this
Agreement
and/or the
Master Agreement (whether or not any such document also secures
moneys from time to time owing pursuant to any other document or
agreement);
Security Party means the Borrowers,
the Corporate Guarantor, the Shareholder or any other person who
may at any time be a party to any of the Security Documents
(other than the Banks);
Security Trustee means Fortis Bank
acting through its office at Vas Sofias 94 & Kerasountos
1,115 28 Athens, Greece (or of such other address as may last
have been notified to the other parties to this Agreement
pursuant to clause 17.2.3) or such other person as may be
appointed as Security Trustee
Annex C-9
and trustee by the Lenders, the Arranger, Account Bank, Swap
Bank, the Payment Agent, and the Agent pursuant to
clause 16.14;
Security Value means the amount in USD
(as certified by the Agent) which is, at any relevant time, the
aggregate of (a) the Valuation Amounts of the Mortgaged
Vessels as most recently determined in accordance with
clause 8.2.2 and (b) the net realizable market value
of any additional security for the time being actually provided
to the Lenders pursuant to clause 8.2.1(b) and (c) and
cash over which there is an Encumbrance as security for the
obligations of the Borrowers under this Agreement;
Share Acquisition Date means the date
on which Navios Acquisition acquires, directly or indirectly,
all of the shares of and in the Shareholder;
Shareholder means Aegean Sea Maritime
Holdings Inc., a company incorporated in the Marshall Islands
and having its registered office at Trust Company Complex,
Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands,
MH96960;
Shares Pledge means the first
priority pledge of the shares of and in each Borrower to be
executed by the Shareholder in favour of the Security Trustee in
such form as the Agent and the Majority Lenders may require in
their sole discretion and in the plural means all of them;
Ship Security Documents means, in
relation to each Vessel, the relevant Mortgage, the relevant
General Assignment, any relevant Charter Assignment and the
relevant Managers Undertakings;
Shipbuilding Contract means each of
the Vessel A Shipbuilding Contract, the Vessel B Shipbuilding
Contract and the Vessel C Shipbuilding Contract and in the
plural means all of them;
Shipbuilding Contract Addendum means,
in respect of each Shipbuilding Contract, an addendum thereto
pursuant to which the relevant Borrower and the Builder agree to
vary the terms of the relevant Shipbuilding Contract, including,
inter alia, a reduction of the purchase price;
subsidiary of a person means any
company or entity directly or indirectly controlled by such
person, and for this purpose control means either
the ownership of more than fifty per cent (50%) of the voting
share capital (or equivalent rights of ownership) of such
company or entity or the power to direct its policies and
management, whether by contract or otherwise;
Swap Bank means Fortis Bank acting
through its through its office at Vas Sofias 94 &
Kerasountos 1, 115 28 Athens, Greece;
Swap Exposure means, as at any
relevant date the amount certified by the Swap Bank to be the
aggregate net amount in Dollars which would be payable by the
Borrowers to the Swap Bank under (and calculated in accordance
with) section 6(e) (Payments on Early Termination) of the
Master Agreement if an Early Termination Date (as therein
defined) had occurred on the relevant date in relation to all
continuing Transactions (as therein defined) entered into
between the Borrowers and the Swap Bank;
Taxes includes all present and future
income, corporation, capital or value-added taxes and all stamp
and other taxes and levies, imposts, deductions, duties, charges
and withholdings whatsoever together with interest thereon and
penalties in respect thereto, if any, and charges, fees or other
amounts made on or in respect thereof (and Taxation
shall be construed accordingly);
Total Assets and Total
Liabilities mean, respectively, the total assets
and total liabilities of the Group as evidenced at any relevant
time by the Latest Accounts, in which they shall have been
calculated by reference to the meanings assigned to them in
accordance with US GAAP provided that cash shall be deducted
from Total Assets and Total Liabilities;
Total Commitment means, at any
relevant time, the aggregate of the Commitments of all the
Lenders at such time (being the aggregate of the sums set out
opposite their names in schedule 1);
Total Loss means, in relation to each
Vessel:
(a) actual, constructive, compromised or arranged total
loss of such Vessel; or
Annex C-10
(b) Compulsory Acquisition; or
(c) any hijacking, theft, condemnation, capture, seizure,
arrest, detention or confiscation of such Vessel not falling
within the definition of Compulsory Acquisition by any
Government Entity, or by persons allegedly acting or purporting
to act on behalf of any Government Entity, unless such Vessel be
released and restored to the relevant Owner within ninety
(90) days after such incident;
Tranche A means the amount of up
to USD25,00,000, being the aggregate of all of the Advances to
be made available by the Lender to the Borrowers to assist
Sifnos in its acquisition of Vessel A or, as the context
requires, the amount thereof outstanding from time to time;
Tranche B means the amount of up
to USD25,000,000, being the aggregate of all of the Advances to
be made available by the Lender to the Borrowers to assist
Skiathos in its acquisition of Vessel B or, as the context
requires, the amount thereof outstanding from time to time;
Tranche C means the amount of up
to USD25,000,000, being the aggregate of all of the Advances to
be made available by the Lender to the Borrowers to assist Syros
in its acquisition of Vessel C or, as the context requires, the
amount thereof outstanding from time to time;
Tranche means any of Tranche A,
Tranche B or Tranche C and in the plural means all of
them;
Transaction means a Transaction as
defined in the Master Agreement;
Transfer Certificate means a
certificate in substantially the form set out in schedule 4;
Transferee Lender has the meaning
ascribed thereto in clause 15.3;
Transferor Lender has the meaning
ascribed thereto in clause 15.3;
Trust Deed means a trust deed in
the form, or substantially in the form, set out in
schedule 5;
Trust Property means (i) the
security, powers, rights, titles, benefits and interests (both
present and future) constituted by and conferred on the Banks or
any of them under or pursuant to the Security Documents
(including, without limitation, the benefit of all covenants,
undertakings, representations, warranties and obligations given,
made or undertaken to any Bank in the Security Documents),
(ii) all moneys, property and other assets paid or
transferred to or vested in any Bank (or anyone else on such
Banks behalf) or received or recovered by any Bank (or
anyone else on such Banks behalf) pursuant to, or in
connection with, any of the Security Documents whether from any
Security Party or any other person and (iii) all moneys,
investments, property and other assets at any time representing
or deriving from any of the foregoing, including all interest,
income and other sums at any time received or receivable by any
Bank (or anyone else on such Banks behalf) in respect of
the same (or any part thereof);
Underlying Documents means, together,
the Shipbuilding Contracts, the Shipbuilding Contract Addenda,
the Novation Agreements, the Refund Guarantees and the
Management Agreement;
Unlawfulness means any event or
circumstance which either is or, as the case may be, might in
the opinion of the Agent become the subject of a notification by
the Agent to the Borrowers under clause 12.1;
USA means the United States of America;
Valuation Amount means, in respect of
each Mortgaged Vessel, the value thereof as most recently
determined under clause 8.2.2; and
Vessel means each of Vessel A, Vessel
B and Vessel C and in the plural means all of them.
Words and expressions defined in Schedule 7 (Vessel
Details) shall have the meanings given to them therein as if the
same were set out in full in this clause 1.2.
Annex C-11
1.3 Construction
In this Agreement, unless the context otherwise requires:
1.3.1 clause headings and the index are inserted for
convenience of reference only and shall be ignored in the
construction of this Agreement;
1.3.2 references to clauses and schedules are to be
construed as references to clauses of, and schedules to, this
Agreement and references to this Agreement include its schedules
and any supplemental agreements executed pursuant hereto;
1.3.3 references to (or to any specified provision of) this
Agreement or any other document shall be construed as references
to this Agreement, that provision or that document as in force
for the time being and as duly amended
and/or
supplemented
and/or
novated;
1.3.4 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 Government Entity, central bank or any self-regulatory or
other supra-national authority;
1.3.5 references to any person in or party to this
Agreement shall include reference to such persons lawful
successors and assigns and references to a Lender shall also
include a Transferee Lender;
1.3.6 words importing the plural shall include the singular
and vice versa;
1.3.7 references to a time of day are, unless otherwise
stated, to London time;
1.3.8 references to a person shall be construed as
references to an individual, firm, company, corporation or
unincorporated body of persons or any Government Entity;
1.3.9 references to a guarantee include
references to an indemnity or any other kind of assurance
whatsoever (including, without limitation, any kind of
negotiable instrument, bill or note) against financial loss or
other liability including, without limitation, an obligation to
purchase assets or services as a consequence of a default by any
other person to pay any Indebtedness and guaranteed
shall be construed accordingly;
1.3.10 references to any statute or other legislative
provision are to be construed as references to any such statute
or other legislative provision as the same may be re enacted or
modified or substituted by any subsequent statute or legislative
provision (whether before or after the date hereof) and shall
include any regulations, orders, instruments or other
subordinate legislation issued or made under such statute or
legislative provision;
1.3.11 a certificate by the Agent, the Payment Agent or the
Security Trustee as to any amount due or calculation made or any
matter whatsoever determined in connection with this Agreement
shall be conclusive and binding on the Borrowers except for
manifest error;
1.3.12 if any document, term or other matter or thing is
required to be approved, agreed or consented to by any of the
Banks such approval, agreement or consent must be obtained in
writing unless the contrary is stated;
1.3.13 time shall be of the essence in respect of all
obligations whatsoever of the Borrowers under this Agreement,
howsoever and whensoever arising;
1.3.14 and the words other and
otherwise shall not be construed eiusdem generis
with any foregoing words where a wider construction is possible.
1.4 Accounting
terms and references to currencies
Currencies are referred to in this Agreement by the three letter
currency codes (ISO 4217) allocated to them by the
International Organisation for Standardisation.
Annex C-12
1.5 Contracts
(Rights of Third Parties Act) 1999
Except for clause 20, no part of this Agreement shall be
enforceable under the Contracts (Rights of Third Parties) Act
1999 by a person who is not a party to this Agreement.
1.6 Majority
Lenders
Where this Agreement or any other Security Document provides for
any matter to be determined by reference to the opinion of the
Majority Lenders or to be subject to the consent or request of
the Majority Lenders or for any decision or action to be taken
on the instructions in writing of the Majority Lenders, such
opinion, consent, request or instructions shall (as between the
Lenders) only be regarded as having been validly given or issued
by the Majority Lenders if all the Lenders with a Commitment
and/or
Contribution shall have received prior notice of the matter on
which such opinion, consent, request or instructions are
required to be obtained and the relevant majority of such
Lenders shall have given or issued such opinion, consent,
request or instructions but so that (as between the Borrowers
and the Banks) the Borrowers shall be entitled (and bound) to
assume that such notice shall have been duly received by each
relevant Lender and that the relevant majority shall have been
obtained to constitute Majority Lenders whether or not this is
in fact the case.
2 THE
AVAILABLE COMMITMENT AND CANCELLATION
2.1 Agreement
to lend
The Lenders, relying upon each of the representations and
warranties in clause 7, agree to provide to the Borrowers
upon and subject to the terms of this Agreement, the Tranches,
for the purposes of financing part of the purchase price of the
Vessels. Subject to the terms of this Agreement, the obligations
of the Lenders shall be to contribute to each Advance, the
proportion of the relevant Advance which their respective
Commitments bear to the Total Commitment on any relevant
Drawdown Date.
2.2 Obligations
several
The obligations of the Lenders under this Agreement are several
according to their respective Commitments
and/or
Contributions. The failure of any Lender to perform such
obligations shall not relieve any other party to this Agreement
of any of its respective obligations or liabilities under this
Agreement nor shall any Bank be responsible for the obligations
of any other Bank (except for its own obligations, if any, as a
Lender) under this Agreement.
2.3 Interests
several
Notwithstanding any other term of this Agreement (but without
prejudice to the provisions of this Agreement relating to or
requiring action by the Majority Lenders) the interests of the
Banks are several and the amount due to any Bank is a separate
and independent debt. Each Bank shall have the right to protect
and enforce its rights arising out of this Agreement and it
shall not be necessary for any other Bank to be joined as an
additional party in any Proceedings for this purpose.
2.4 Drawdown
2.4.1 On the terms and subject to the conditions of this
Agreement, each Tranche shall be advanced in up to six
(6) Advances each on the relevant Drawdown Dates following
receipt by the Payment Agent from the Borrowers of Drawdown
Notices not later than 10 a.m. on the third Banking Day
before each proposed Drawdown Date.
2.4.2 A Drawdown Notice shall be effective on actual
receipt by the Payment Agent and, once given, shall, subject as
provided in clause 3.6, be irrevocable.
Annex C-13
2.5 Amount
2.5.1 The principal amount specified in each Drawdown
Notice for borrowing on the Drawdown Dates shall, subject to the
terms of this Agreement, in respect of each Tranche not exceed:
(a) USD6,512,000 payable to the relevant seller or its
financiers under the relevant Novation Agreement;
(b) USD5,546,400 in respect of the instalment payable to
the Builder on the relevant Shipbuilding Contract Addendum
becoming effective;
(c) USD3,697,600 to the Builder under the relevant
Shipbuilding Contract in respect of the steel-cutting instalment;
(d) USD3,697,600 to the Builder under the relevant
Shipbuilding Contract in respect of the
keel-laying
instalment;
(e) USD3,697,600 to the Builder under the relevant
Shipbuilding Contract in respect of the launching
instalment; and
(f) USD1,848,800 to the Builder under the relevant
Shipbuilding Contract in respect of the delivery instalment.
2.6 Availability
Upon receipt of a Drawdown Notice complying with the terms of
this Agreement, the Payment Agent shall promptly notify each
Lender and each Lender shall make available to the Payment Agent
its portion of the relevant Advance for payment by the Payment
Agent in accordance with clause 6.2. The Borrowers
acknowledge that payment of any Advance to the account referred
to in the relevant Drawdown Notice shall satisfy the obligation
of the Lenders to lend that Advance to the Borrowers under this
Agreement.
2.7 Voluntary
cancellation of Facility
The Borrowers may at any time during the Drawdown Period by
notice to the Payment Agent (effective only on actual receipt)
cancel with effect from a date not less than five Banking Days
after the receipt by the Payment Agent of such notice the whole
or any part (being two million Dollars (USD 2,000,000) or any
larger sum which is an integral multiple of two million Dollars
(USD 2,000,000)) of the Total Commitment. Any such notice of
cancellation, once given, shall be irrevocable and the Total
Commitment shall be reduced accordingly and each Lenders
Commitment shall be reduced pro rata according to the proportion
which its Commitment bears to the Total Commitment.
2.8 Cancellation
in changed circumstances
The Borrowers may also at any time during the Facility Period by
notice to the Payment Agent (effective only on actual receipt)
prepay and cancel with effect from a date not less than fifteen
(15) days after receipt by the Payment Agent of such
notice, the whole but not part only, but without prejudice to
the Borrowers obligations under clauses 6.6 and 12,
of the Contribution and Commitment (if any) of any Lender to
which the Borrowers shall have become obliged to pay additional
amounts under clause 12 or clause 6.6. Upon any notice
of such prepayment and cancellation being given, the Commitment
of the relevant Lender shall be reduced to zero, the Borrowers
shall be obliged to prepay the Contribution of such Lender and
such Lenders related costs (including but not limited to
Break Costs) on such date and such Lender shall be under no
obligation to participate in the Loan or any further Advances.
2.9 Use
of proceeds
Without prejudice to the Borrowers obligations under
clause 8.1.4, no Bank shall have any responsibility for the
application of the proceeds of any Advance or any part thereof
by the Borrowers.
Annex C-14
3 INTEREST
AND INTEREST PERIODS
3.1 Normal
interest rate
The Borrowers must pay interest on each Tranche in respect of
each Interest Period relating thereto on each Interest Payment
Date at the rate per annum determined by the Payment Agent to be
the aggregate of (a) the Margin and (b) LIBOR.
3.2 Selection
of Interest Periods
Subject to clause 3.3, the Borrowers may by notice received
by the Payment Agent not later than 10:00 a.m. on the
fourth Banking Day before the beginning of each Interest Period
specify whether such Interest Period shall have a duration of
three (3), six (6) or twelve (12) months or such other
period as the Borrowers may select and the Payment Agent (acting
on the instructions of the Lenders) may agree, and if the
Borrowers wishes to specify an Interest Period of more than
12 months, it must give at least 5 Banking Days prior
notice thereof.
3.3 Determination
of Interest Periods
Subject to Clause 3.3.1 every Interest Period shall be of
the duration specified by the Borrowers pursuant to
clause 3.2 but so that:
3.3.1 the first Interest Period in respect of each Tranche
shall start on the Drawdown Date in respect of the first Advance
in respect of that Tranche, and each subsequent Interest Period
shall start on the last day of the previous Interest Period;
3.3.2 the first Interest Period in respect of each
subsequent Advance shall commence on its Drawdown Date and
terminate simultaneously with the Interest Period which is then
current for the Tranche under which the Advance is made
available;
3.3.3 if any Interest Period would otherwise overrun a
relevant Repayment Date, then the relevant Tranche shall be
divided into parts so that there is one part in the amount of
the repayment instalment due on such Repayment Date and having
an Interest Period ending on the relevant Repayment Date and
another part in the amount of the balance of that Tranche having
an Interest Period ascertained in accordance with
clause 3.2 and the other provisions of this
clause 3.3; and
3.3.4 if the Borrowers fail to specify the length of an
Interest Period in accordance with the provisions of
clause 3.2 and this clause 3.3 such Interest Period
shall last three months or such other period as complies with
this clause 3.3.
3.4 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 Security Documents,
the Borrowers must pay interest on such sum on demand from the
due date up to the date of actual payment (as well after as
before judgment) at a rate determined by the Payment Agent
pursuant to this clause 3.4. The period starting on such
due date and ending on such date of payment shall be divided
into successive periods of not more than three (3) months
as selected by the Payment Agent each of which (other than the
first, which shall start on such due date) shall start 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 Payment Agent) of (a) two per cent
(2%) per annum, (b) the Margin and (c) LIBOR
for such periods. Such interest shall be due and payable on
demand, or, if no demand is made, then on the last day of each
such period as determined by the Payment Agent and on the day on
which all amounts in respect of which interest is being paid
under this Clause are paid, 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 an amount of principal
which became due and payable by reason of a declaration by the
Payment Agent under clause 10.2.2 or a prepayment pursuant
to clauses 4.3, 4.5, 8.2.1(a) or 12.1, on a date other than
an Interest Payment Date relating thereto, the first such period
selected by the Payment Agent 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
Annex C-15
such principal sum during such period at a rate of two per cent
(2%) above the rate applicable thereto immediately before
it shall have become so due and payable. If, for the reasons
specified in clause 3.6.1, the Payment Agent is unable to
determine a rate in accordance with the foregoing provisions of
this clause 3.4, each Lender shall promptly notify the
Payment Agent of the cost of funds to such Lender and interest
on any sum not paid on its due date for payment shall be
calculated at a rate determined by the Payment Agent to be two
per cent (2%) per annum above the aggregate of the Margin
and the arithmetic mean of the cost of funds to the Lenders
compounded at such intervals as the Payment Agent selects.
3.5 Notification
of Interest Periods and interest rate
The Payment Agent agrees to notify (i) the Lenders promptly
of the duration of each Interest Period and (ii) the
Borrowers and the Lenders promptly of each rate of interest
determined by it under this clause 3.
3.6 Market
disruption; non-availability
3.6.1 Whenever, at any time prior to the commencement of
any Interest Period:
(a) the Payment Agent shall have determined that adequate
and fair means do not exist for ascertaining LIBOR during such
Interest Period; or
(b) the Payment Agent shall have received notification from
a Lender or Lenders that deposits in USD are not available to
such Lender or Lenders in the London InterBank Market in the
ordinary course of business to fund their Contributions to the
Loan for such Interest Period
(c) the Payment Agent must promptly give notice (a
Determination Notice) thereof to the
Borrowers and to each of the Lenders. A Determination Notice
shall contain particulars of the relevant circumstances giving
rise to its issue. After the giving of any Determination Notice,
regardless of any other provision of this Agreement, the
Commitment shall not be borrowed until notice to the contrary is
given to the Borrowers by the Payment Agent.
3.6.2 Within ten (10) days of any Determination Notice
being given by the Payment Agent under clause 3.6.1, each
Lender must certify an alternative basis (the
Alternative Basis) for maintaining its
Contribution. The Alternative Basis may at the relevant
Lenders sole discretion include (without limitation)
alternative interest periods, alternative currencies or
alternative rates of interest but shall include a Margin above
the cost of funds to such Lender. The Payment Agent shall
calculate the arithmetic mean of the Alternative Bases provided
by the relevant Lenders (the Substitute
Basis) and certify the same to the Borrowers and the
Lenders. The Substitute Basis so certified shall be binding upon
the Borrowers, and shall take effect in accordance with its
terms from the date specified in the Determination Notice until
such time as the Payment Agent notifies the Borrowers that none
of the circumstances specified in clause 3.6.1 continues to
exist whereupon the normal interest rate fixing provisions of
this Agreement shall again apply and, subject to the other
provisions of this Agreement, the Commitment may again be
borrowed.
3.7 Interest
Rate Swaps
If the Borrowers wish to enter into any interest rate swaps in
respect of the Loan or any part thereof, they must do so with
the Swap Bank under the Master Agreement.
4 REPAYMENT
AND PREPAYMENT
4.1 Repayment
4.1.1 Subject as otherwise provided in this Agreement, the
Borrowers must repay each Tranche by 12 equal semi-annual
instalments of USD750,000 each, one such instalment to be repaid
on each of the Repayment Dates and a balloon instalment of
USD16,000,000 to be repaid on the relevant final Repayment Date.
If the Commitment in respect of any Tranche is not drawn in
full, the amount of each repayment instalments for that Tranche
shall be reduced proportionately.
Annex C-16
4.1.2 The Borrowers shall on the Maturity Date in respect
of the last Tranche to be repaid also pay to the Payment Agent
and the Lenders all other amounts in respect of interest or
otherwise then due and payable under this Agreement and the
Security Documents.
4.2 Voluntary
prepayment
Subject to clauses 4.6 and 4.7 the Borrowers may, subject
to having given 15 Banking Days prior notice thereof to the
Payment Agent, prepay any specified amount (such part being in
an amount of two million five hundred thousand Dollars (USD
2,500,000) or any larger sum which is an integral multiple of
such amount) of any Tranche on any relevant Interest Payment
Date without premium or penalty.
4.3 Mandatory
Prepayment on Total Loss
On the date falling one hundred and eighty (180) days after
that on which a Mortgaged Vessel became a Total Loss or, if
earlier, on the date upon which the relevant insurance proceeds
are, or Requisition Compensation (as defined in the Mortgage for
such Vessel) is, received by the relevant Borrower (or the
Security Trustee pursuant to the Security Documents), the
Borrowers must prepay the Loan by an amount equal to the greater
of (i) the Relevant Tranche and (ii) the amount of the
Loan on the date on which such prepayment is required to be made
multiplied by the Prepayment Ratio.
4.3.1 Interpretation
For the purpose of this Agreement, a Total Loss shall be deemed
to have occurred:
(a) in the case of an actual total loss of a Vessel, on the
actual date and at the time such Vessel was lost or, if such
date is not known, on the date on which such Vessel was last
reported;
(b) in the case of a constructive total loss of a Vessel,
upon the date and at the time notice of abandonment of the ship
is given to the then insurers of such Vessel (provided a claim
for total loss is admitted by such insurers) or, if such
insurers do not immediately admit such a claim, at the date and
at the time at which either a total loss is subsequently
admitted by such insurers or a total loss is subsequently
adjudged by a competent court of law or arbitration tribunal to
have occurred;
(c) in the case of a compromised or arranged total loss of
a Vessel, on the date upon which a binding agreement as to such
compromised or arranged total loss has been entered into by the
then insurers of such Vessel;
(d) in the case of Compulsory Acquisition, on the date upon
which the relevant requisition of title or other compulsory
acquisition occurs; and
(e) in the case of hijacking, theft, condemnation, capture,
seizure, arrest, detention or confiscation of a Vessel (other
than within the definition of Compulsory Acquisition) by any
Government Entity, or by persons allegedly acting or purporting
to act on behalf of any Government Entity, which deprives an
Owner of the use of such Vessel for more than ninety
(90) days, upon the expiry of the period of ninety
(90) days after the date upon which the relevant incident
occurred.
4.4 Mandatory
prepayment on sale of Mortgaged Vessel
On the date of completion of the sale of a Mortgaged Vessel the
Borrowers must prepay the Loan by an amount equal to the greater
of (i) the Relevant Tranche and (ii) the amount of the
Loan on the date on which such prepayment is required to be made
multiplied by the Prepayment Ratio.
4.5 Mandatory
prepayment on termination of a Shipbuilding
Contract
If a Shipbuilding Contract is terminated, cancelled, revoked,
suspended, rescinded, transferred, novated or otherwise ceases
to remain in full force and effect for any reason except with
the consent of the Agent, the Borrowers must upon the
Agents demand prepay the Tranche financing the relevant
Borrowers obligations
Annex C-17
under that Shipbuilding Contract and the Commitment in respect
of such Tranche shall be irrevocably cancelled upon such demand
being made.
4.6 Amounts
payable on prepayment
Any prepayment of all or part of the Loan under this Agreement
shall be made together with:
4.6.1 accrued interest on the amount to be prepaid to the
date of such prepayment;
4.6.2 any additional amount payable under clauses 3.6,
6.6 or 12.2; and
4.6.3 all other sums payable by the Borrowers to the Banks
under this Agreement or any of the other Security Documents
including, without limitation any Break Costs and, if the whole
Loan is being prepaid, any accrued commitment commission payable
under clause 5.1.
4.7 Notice
of prepayment; reduction of maximum loan amount
4.7.1 Every notice of prepayment shall be effective only on
actual receipt by the Payment Agent, shall be irrevocable, shall
specify the amount to be prepaid and the Tranche which is to be
prepaid and shall oblige the Borrowers to make such prepayment
on the date specified. Subject to the other provisions of this
Agreement and in particular Clause 2.6, no amount prepaid
under this Clause 4 in respect of the Loan may be
reborrowed.
4.7.2 Any amounts prepaid pursuant to clause 4.2 shall
be applied against the relevant Tranche in reducing the Balloon
Instalment and other outstanding repayment instalments pro rata.
4.7.3 Any amounts prepaid pursuant to clauses 4.3, 4.4
or 4.5 shall be applied against the Relevant Tranche and
thereafter against the Loan in accordance with clause 4.7.2.
4.7.4 The Borrowers obligations set out in
Clause 4.1.1 shall not be affected by any prepayment in
respect of the Loan pursuant to clause 4.2.
4.7.5 The Borrowers may not prepay any part of the Loan
except as expressly provided in this Agreement.
5 FEES
AND EXPENSES
5.1 Commission
5.1.1 The Borrowers agree to pay to the Payment Agent for
the account of the Lenders pro rata in accordance with their
Total Commitments quarterly in arrears from the Execution Date
until the end of the Drawdown Period and on the last day of the
Drawdown Period commitment commission computed from the
Execution Date at a rate of zero point six per cent (0.60%) per
annum on the daily amount of the undrawn Loan Facility.
5.1.2 The commission referred to in clause 5.1.1 must
be paid by the Borrowers to the Payment Agent, whether or not
any part of the Total Commitment is ever advanced and shall be
non-refundable.
5.2 Arrangement
Fee
The Borrowers shall pay to the Payment Agent on the first
Drawdown Date an arrangement fee of USD562,500 for the account
of the Lenders in such proportion as they shall agree between
them.
5.3 Expenses
The Borrowers agree to reimburse the Banks on a full indemnity
basis within ten (10) days of demand all expenses
and/or
disbursements whatsoever (including without limitation legal,
printing, travel and out of
Annex C-18
pocket expenses and expenses related to the provision of legal
and insurance opinions referred to in
schedule 3) certified by the Banks or any of them as
having been incurred by them from time to time:
5.3.1 in connection howsoever with the syndication of the
Loan Facility and with the negotiation, preparation, execution
and, where relevant, registration of the Security Documents and
of any contemplated or actual amendment, or indulgence or the
granting of any waiver or consent howsoever in connection with,
any of the Security Documents (including legal fees and any
travel expenses); and
5.3.2 in contemplation or furtherance of, or otherwise
howsoever in connection with, the exercise or enforcement of, or
preservation of any rights, powers, remedies or discretions
under any of the Security Documents, or in consideration of the
Banks rights thereunder or any action proposed or taken
following the occurrence of a Default or otherwise in respect of
the moneys owing under any of the Security Documents, together
with interest at the rate referred to in clause 3.4 from
the date on which reimbursement of such expenses
and/or
disbursements were due following demand to the date of payment
(as well after as before judgment).
5.4 Value
added tax
All fees and expenses payable pursuant to this Agreement must be
paid together with value added tax or any similar tax (if any)
properly chargeable thereon in any jurisdiction. Any value added
tax chargeable in respect of any services supplied by the Banks
or any of them under this Agreement shall, on delivery of the
value added tax invoice, be paid in addition to any sum agreed
to be paid hereunder.
5.5 Stamp
and other duties
The Borrowers must pay all stamp, documentary, registration or
other like duties or taxes (including any duties or taxes
payable by any of the Banks) imposed on or in connection with
any of the Underlying Documents, the Security Documents or the
Loan or any Advance and agree to indemnify the Banks or any of
them against any liability arising by reason of any delay or
omission by the Borrowers to pay such duties or taxes.
6 PAYMENTS
AND TAXES; ACCOUNTS AND CALCULATIONS
6.1 No
set-off or counterclaim
All payments to be made by the Borrowers under any of the
Security Documents must be made in full, without any set off or
counterclaim whatsoever and, subject as provided in
clause 6.6, free and clear of any deductions or
withholdings, in USD on or before 11:00 am on the due date in
freely available funds to such account at such bank and in such
place as the Payment Agent may from time to time specify for
this purpose. Save as otherwise provided in this Agreement or
any other relevant Security Documents, such payments shall be
for the account of all Lenders and the Payment Agent shall
distribute such payments in like funds as are received by the
Payment Agent to the Lenders rateably, in the proportions which
their respective Contributions bear to the aggregate of the Loan
and the Advances on the date on which such payment is made.
6.2 Payment
by the Lenders
All sums to be advanced by the Lenders to the Borrowers under
this Agreement shall be remitted in USD on the relevant Drawdown
Date to the account of the Payment Agent at such bank as the
Payment Agent may have notified to the Lenders and shall be paid
by the Payment Agent on such date in like funds as are received
by the Payment Agent to the account specified in the relevant
Drawdown Notice.
6.3 Non-Banking
Days
When any payment under any of the Security Documents would
otherwise be due on a day which is not a Banking Day, the due
date for payment shall be extended to the next following Banking
Day unless such Banking Day falls in the next calendar month in
which case payment shall be made on the immediately preceding
Banking Day.
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6.4 Calculations
All interest and other payments of an annual nature under any of
the Security Documents shall accrue from day to day and be
calculated on the basis of actual days elapsed and a three
hundred and sixty (360) day year.
6.5 Currency
of account
If any sum due from the Borrowers under any of the Security
Documents, or under any order or judgment given or made in
relation thereto, must be converted from the currency (the
first currency) in which the same is payable thereunder
into another currency (the second currency) for the
purpose of (i) making or filing a claim or proof against
the Borrowers, (ii) obtaining an order or judgment in any
court or other tribunal or (iii) enforcing any order or
judgment given or made in relation thereto, the Borrowers
undertake to indemnify and hold harmless the Lender from and
against any loss suffered as a result of any discrepancy 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,
judgment, claim or proof. Any amount due from the Borrowers
under this clause 6.5 shall be due as a separate debt and
shall not be affected by judgment being obtained for any other
sums due under or in respect of any of the Security Documents
and 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.
6.6 Grossing-up
for Taxes by the Borrowers
If at any time the Borrowers must make any deduction or
withholding in respect of Taxes or deduction in respect of any
royalty payment, duty, assessment or other charge or otherwise
from any payment due under any of the Security Documents for the
account of any Bank or if the Payment Agent or the Security
Trustee must make any deduction or withholding from a payment to
another Bank or withholding in respect of Taxes from any payment
due under any of the Security Documents, the sum due from the
Borrowers in respect of such payment must be increased to the
extent necessary to ensure that, after the making of such
deduction or withholding, the relevant Bank receives on the due
date for such payment (and retains, free from any liability in
respect of such deduction or withholding), a net sum equal to
the sum which it would have received had no such deduction or
withholding been required to be made and the Borrowers must
indemnify each Bank against any losses or costs incurred by it
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. Provided
however that if any Bank or the Agent or the Security Trustee
shall be or become entitled to any Tax credit or relief in
respect of any Tax which is deducted from any payment by the
Borrowers and it actually receives a benefit from such Tax
credit or relief in its country of domicile, incorporation or
residence, the relevant Bank or the Agent or the Security
Trustee, as the case may be, shall, subject to any laws or
regulations applicable thereto, pay to the Borrowers after such
benefit is effectively received by the relevant Bank or the
Agent or the Security Trustee, as the case may be, such amounts
(which shall be conclusively certified by the Agent) as shall
ensure that the net amount actually retained by the relevant
Bank or the Agent or the Security Trustee, as the case may be,
is equal to the amount which would have been retained if there
had been no such deduction. The Borrowers must promptly deliver
to the Payment Agent any receipts, certificates or other proof
evidencing the amounts (if any) paid or payable in respect of
any deduction or withholding as aforesaid.
6.7 Grossing-up
for Taxes by the Lenders
If at any time a Lender must make any deduction or withholding
in respect of Taxes from any payment due under any of the
Security Documents for the account of the Payment Agent or the
Security Trustee, the sum due from such Lender in respect of
such payment must be increased to the extent necessary to ensure
that, after the making of such deduction or withholding, the
Payment Agent or, as the case may be, the Security Trustee
receives on the due date for such payment (and retains free from
any liability in respect of
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such deduction or withholding) a net sum equal to the sum which
it would have received had no such deduction or withholding been
required to be made and each Lender must indemnify the Payment
Agent and the Security Trustee against any losses or costs
incurred by it by reason of any failure of such Lender to make
any such deduction or withholding or by reason of any increased
payment not being made on the due date for such payment.
6.8 Loan
account
Each Lender shall maintain, in accordance with its usual
practice, an account evidencing the amounts from time to time
lent by, owing to and paid to it under the Security Documents.
The Payment Agent
and/or the
Security Trustee shall maintain a control account showing the
Loan, the Advances and other sums owing by the Borrowers under
the Security Documents and all payments in respect thereof being
made from time to time. The control account shall, in the
absence of manifest error, be prima facie evidence of the amount
from time to time owing by the Borrowers under the Security
Documents.
6.9 Payment
Agent may assume receipt
Where any sum is to be paid under the Security Documents to the
Payment Agent or, as the case may be, the Security Trustee for
the account of another person, the Payment Agent or, as the case
may be, the Security Trustee may assume that the payment will be
made when due and the Payment Agent or, as the case may be, the
Security Trustee may (but shall not be obliged to) make such sum
available to the person so entitled. If it proves to be the case
that such payment was not made to the Payment Agent or, as the
case may be, the Security Trustee, then the person to whom such
sum was so made available must on request refund such sum to the
Payment Agent or, as the case may be, the Security Trustee
together with interest thereon sufficient to compensate the
Payment Agent or, as the case may be, the Security Trustee for
the cost of making available such sum up to the date of such
repayment and the person by whom such sum was payable must
indemnify the Payment Agent or, as the case may be, the Security
Trustee for any and all loss or expense which the Payment Agent
or, as the case may be, the Security Trustee may sustain or
incur as a consequence of such sum not having been paid on its
due date.
6.10 Partial
payments
If, on any date on which a payment is due to be made by the
Borrowers under any of the Security Documents, the amount
received by the Payment Agent from the Borrowers falls short of
the total amount of the payment due to be made by the Borrowers
on such date then, without prejudice to any rights or remedies
available to the Payment Agent, the Security Trustee and the
Lenders under any of the Security Documents, the Payment Agent
must apply the amount actually received from the Borrowers in or
towards discharge of the obligations of the Borrowers under the
Security Documents in the following order, notwithstanding any
appropriation made, or purported to be made, by the Borrowers:
6.10.1 first, in or towards payment, on a pro-rata basis,
of any unpaid costs and expenses of the Payment Agent, the Agent
and the Security Trustee under any of the Security Documents;
6.10.2 secondly, in or towards payment of any fees payable
to the Arranger, the Agent or any of the other Banks under, or
in relation to, the Security Documents which remain unpaid;
6.10.3 thirdly, in or towards payment to the Lenders, on a
pro rata basis, of any accrued interest owing in respect of the
Loan which shall have become due under any of the Security
Documents but remains unpaid;
6.10.4 fourthly, in or towards repayment of the Loan which
have become due and payable and in or towards payment to the
Swap Bank of any sum which shall have become due under the
Master Agreement but remains unpaid;
6.10.5 fifthly, in or towards payment to the Lenders, on a
pro rata basis, any Break Costs and any other sum relating to
the Loan which shall have become due under any of the Security
Documents but remains unpaid; and
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The order of application set out in clauses 6.10.1 to
6.10.5 may be varied by the Payment Agent if the Majority
Lenders so direct, without any reference to, or consent or
approval from, the Borrowers.
7 REPRESENTATIONS
AND WARRANTIES
7.1 Continuing
representations and warranties
The Borrowers represent and warrant to each Bank that:
7.1.1 Due incorporation
each of the Security Parties is duly incorporated and validly
existing in good standing, under the laws of its respective
country of incorporation, in each case, as a corporation and has
power to carry on its respective businesses as it is now being
conducted and to own their respective property and other assets
to which it has unencumbered legal and beneficial title except
as disclosed to the Agent in writing;
7.1.2 Corporate power
each of the Security Parties has power to execute, deliver and
perform its obligations and, as the case may be, to exercise its
rights under the Underlying Documents and the Security Documents
to which it is a party; all necessary corporate, shareholder and
other action has been taken to authorise the execution, delivery
and on the execution of the Security Documents performance of
the same and no limitation on the powers of the Borrowers to
borrow or any other Security Party to howsoever incur liability
and/or to
provide or grant security will be exceeded as a result of
borrowing any part of the Loan;
7.1.3 Binding obligations
the Underlying Documents and the Security Documents, when
executed, will constitute valid and legally binding obligations
of the relevant Security Parties enforceable in accordance with
their respective terms;
7.1.4 No conflict with other obligations
the execution and delivery of, the performance of their
obligations under, and compliance with the provisions of, the
Underlying Documents and the Security 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 any Security Party or other member of
the Group 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 any Security Party or
any other member of the Group is a party or is subject or by
which it or any of its property is bound, (iii) contravene
or conflict with any provision of the constitutional documents
of any Security Party or (iv) result in the creation or
imposition of, or oblige any of the Security Parties to create,
any Encumbrance (other than a Permitted Encumbrance) on any of
the undertakings, assets, rights or revenues of any of the
Security Parties;
7.1.5 No default
no Default has occurred;
7.1.6 No litigation or judgments
no Proceedings are current, pending or, to the knowledge of the
officers of any Borrower, threatened against any of the Security
Parties or any other Group Members or their assets which could
have a Material Adverse Effect and there exist no judgments,
orders, injunctions which would materially affect the
obligations of the Security Parties under the Security Documents;
7.1.7 No filings required
except for the registration of the Mortgages in the relevant
register under the laws of the relevant Flag State through the
relevant Registry, it is not necessary to ensure the legality,
validity, enforceability or admissibility in evidence of any of
the Underlying Documents or any of the Security Documents that
they or any other instrument be notarised, filed, recorded,
registered or enrolled in any court, public office or elsewhere
in any Pertinent Jurisdiction or that any stamp, registration or
similar tax or charge be paid in any
Annex C-22
Pertinent Jurisdiction on or in relation to any of the
Underlying Documents or the Security Documents and each of the
Underlying Documents and the Security Documents is in proper
form for its enforcement in the courts of each Pertinent
Jurisdiction;
7.1.8 Required Authorisations and legal compliance
all Required Authorisations have been obtained or effected and
are in full force and effect and no Security Party has in any
way contravened any applicable law, statute, rule or regulation
(including all such as relate to money laundering);
7.1.9 Choice of law
the choice of English law to govern the Underlying Documents and
the Security Documents (other than the Mortgages and the
Earnings Account Pledge and the Retention Account Pledge), the
choice of the law of the Flag State to govern the Mortgages, the
choice of greek law to govern the Earnings Account Pledge and
the Retention Account Pledge and the submissions by the Security
Parties to the jurisdiction of the English courts and the
obligations of such Security Parties associated therewith, are
valid and binding;
7.1.10 No immunity
no Security Party nor any of their assets is entitled to
immunity on the grounds of sovereignty or otherwise from any
Proceedings whatsoever;
7.1.11 Financial statements correct and complete
the latest audited and unaudited consolidated financial
statements of the Corporate Guarantor in respect of the relevant
financial year as delivered to the Agent present or will present
fairly and accurately the financial position of the Corporate
Guarantor and the consolidated financial position of the Group
as at the date thereof and the results of the operations of the
Corporate Guarantor and the consolidated results of the
operations of the Group for the financial year ended on such
date and, as at such date, neither the Corporate Guarantor nor
any of its subsidiaries had any significant liabilities
(contingent or otherwise) or any unrealised or anticipated
losses which are not disclosed by, or reserved against or
provided for in, such financial statements;
7.1.12 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 Indebtedness of the Borrowers
except for obligations which are mandatorily preferred by
operation of law and not by contract;
7.1.13 Information/ Material Adverse Effect
all information, whatsoever provided by any Security Party to
the Agent in connection with the negotiation and preparation of
the Security Documents or otherwise provided hereafter in
relation to, or pursuant to this Agreement is, or will be, true
and accurate in all material respects and not misleading, does
or will not omit material facts and all reasonable enquiries
have been, or shall have been, made to verify the facts and
statements contained therein and there has not occurred any
event which could have a Material Adverse Effect on any Security
Party since such information was provided to the Agent; there
are, or will be, no other facts the omission of which would make
any fact or statement therein misleading;
7.1.14 No withholding Taxes
no Taxes anywhere are imposed whatsoever by withholding or
otherwise on any payment to be made by any Security Party under
the Underlying Documents or the Security Documents to which such
Security Party is or is to be a party or are imposed on or by
virtue of the execution or delivery by the Security Parties of
the Underlying Documents or the Security Documents or any other
document or instrument to be executed or delivered under any of
the Security Documents;
7.1.15 Use of proceeds
Annex C-23
the Borrowers shall apply the Loan only for the purposes
specified in clauses 1.1 and 2.1;
7.1.16 The Mortgaged Vessels
throughout the Facility Period, each Mortgaged Vessel will,
following its Delivery Date, be :
(a) in the absolute sole, legal and beneficial ownership of
the relevant Owner;
(b) registered through the offices of the relevant Registry
as a ship under the laws and flag of the relevant Flag State;
(c) in compliance with the ISM Code and the ISPS Code and
operationally seaworthy and in every way fit for service;
(d) in good and sea-worthy and cargo-worthy
condition; and
(e) classed with the relevant Classification free of all
requirements and recommendations of the relevant Classification
Society.
7.1.17 Mortgaged Vessels employment
except with prior notice to the Lenders, there will not be any
agreement or arrangement whereby the Earnings (as defined in the
relevant Ship Security Documents) of any Mortgaged Vessel may be
shared howsoever with any other person;
7.1.18 Freedom from Encumbrances
no Mortgaged Vessel nor its Earnings, Insurances or Requisition
Compensation (each as defined in the relevant Ship Security
Documents) nor the Earnings Account nor any Extended Employment
Contract in respect of such Mortgaged Vessel 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 be subject
to any Encumbrance except Permitted Encumbrances;
7.1.19 Environmental Matters
except as may already have been disclosed by the Borrowers in
writing to, and acknowledged and accepted in writing by, the
Agent:
(a) the Borrowers and, to the best of the Borrowers
knowledge and belief (having made due enquiry), their respective
Environmental Affiliates, have complied with the provisions of
all Environmental Laws;
(b) the Borrowers and, to the best of the Borrowers
knowledge and belief (having made due enquiry), their respective
Environmental Affiliates have obtained all Environmental
Approvals and are in compliance with all such Environmental
Approvals;
(c) no Environmental Claim has been made or threatened or
pending against any Borrower, or, to the best of the
Borrowers knowledge and belief (having made due enquiry),
any of their respective Environmental Affiliates; and
(d) there has been no Environmental Incident;
7.1.20 ISM and ISPS Code
With effect from the Delivery Date of its Vessel, each of the
Borrowers will comply with and continue to comply with and
procure that the Manager complies with and continues to comply
with the ISM Code, the ISPS Code and all other statutory and
other requirements relative to its business and in particular
each Borrower or the Manager will obtain and maintain a valid
DOC and SMC for each Mortgaged Vessels and that it and the
Manager will implement and continue to implement an ISM SMS;
7.1.21 Copies true and complete
Annex C-24
the Certified Copies or originals of the Underlying Documents
delivered or to be delivered to the Agent pursuant to
clause 8.1 are, or will when delivered be, true and
complete copies or, as the case may be, originals of such
documents; and such documents constitute valid and binding
obligations of the parties thereto enforceable in accordance
with their respective terms and there have been no amendments or
variations thereof or defaults thereunder;
7.1.22 the Borrowers are the ultimate beneficiaries of the
Loan;
7.1.23 no Security Party has incurred any Indebtedness save
under this Agreement or as otherwise disclosed to the Agent in
writing or as disclosed in the Groups public filings;
7.1.24 the Corporate Guarantor and all Borrowers have filed
all tax and other fiscal returns required to be filed by any tax
authority to which they are subject;
7.1.25 no Borrower has an office in England.
7.2 Repetition
of representations and warranties
On each day throughout the Facility Period, the Borrowers shall
be deemed to repeat the representations and warranties in
clause 7 updated mutatis mutandis as if made with reference
to the facts and circumstances existing on such day.
8 UNDERTAKINGS
8.1 General
The Borrowers undertake with each Bank that, from the Execution
Date until the end of the Facility Period, they will:
8.1.1 Notice of Default and Proceedings
promptly inform the Agent of (a) any Default and of any
other circumstances or occurrence which might adversely affect
the ability of any Security Party to perform its obligations
under any of the Security Documents and (b) as soon as the
same is instituted or threatened, details of any Proceedings
involving any Security Party which could have a material adverse
effect on that Security Party
and/or the
operation of any of the Vessels (including, but not limited to
any Total Loss of a Vessel or the occurrence of any
Environmental Incident) and will from time to time, if so
requested by the Agent, confirm to the Agent in writing that,
save as otherwise stated in such confirmation, no Default has
occurred and is continuing and no such Proceedings are on foot
or threatened;
8.1.2 Authorisation
obtain or cause to be obtained, maintain in full force and
effect and comply fully with all Required Authorisations,
provide the Agent with Certified Copies of the same and do, or
cause to be done, all other acts and things which may from time
to time be necessary or desirable under any applicable law
(whether or not in the Pertinent Jurisdiction) for the continued
due performance of all the obligations of the Security Parties
under each of the Security Documents;
8.1.3 Corporate Existence/Ownership
ensure that each Security Party maintains its corporate
existence as a body corporate duly organised and validly
existing and in good standing under the laws of the Pertinent
Jurisdiction and ensure that each Borrower is owned, directly or
through other companies, by the Corporate Guarantor for the time
being;
8.1.4 Use of proceeds
use the Advances exclusively for the purposes specified in
clauses 1.1 and 2.1;
8.1.5 Pari passu
Annex C-25
ensure that their obligations under this Agreement shall at all
times rank at least pari passu with all their other present and
future unsecured and unsubordinated Indebtedness with the
exception of any obligations which are mandatorily preferred by
law and not by contract;
8.1.6 Financial statements
send to the Agent (or procure that is sent):
(a) as soon as possible, but in no event later than
180 days after the end of each of its Financial Years,
annual audited (prepared in accordance with US GAAP by a firm of
accountants acceptable to the Agent) consolidated balance sheet
and profit and loss accounts of the Corporate Guarantor and all
companies which are owned, directly or indirectly, or controlled
by it (commencing with the Financial Year ending
31 December 2010); and
(b) as soon as possible, but in no event later than
60 days after the end of each 3 month period in each
of its Financial Years, the Corporate Guarantors unaudited
consolidated balance sheet and profit and loss accounts for that
3 month period certified as to their correctness by its
chief financial officer.
8.1.7 Reimbursement of MII & MAP Policy premiums
Whether or not any amount is borrowed under this Agreement,
reimburse each Bank on the Agents written demand the
amount of the premium payable by such Bank for the inception or,
as the case may be, extension
and/or
continuance of the MII & MAP Policy (including any
insurance tax thereon);
8.1.8 Compliance Certificates
deliver to the Agent on the earlier of (i) the date on
which the quarterly reports are delivered under
clause 8.1.6 and (ii) the date falling 75 days
after the end of the financial quarter to which they refer, a
Compliance Certificate together with such supporting information
as the Agent may require.
8.1.9 Provision of further information
provide the Agent, and procure that the Corporate Guarantor
provide the Agent, with such financial or other information
concerning any Borrower and their respective affairs,
activities, financial standing, Indebtedness and operations and
the performance of the Mortgaged Vessels as the Agent or any
Lender (acting through the Agent) may from time to time
reasonably require and all other documentation and information
as any Lender may from time to time require in order to comply
with its, and all other relevant, know-your-customer regulations;
8.1.10 Obligations under Security Documents
duly and punctually perform each of the obligations expressed to
be imposed or assumed by them under the Security Documents and
Underlying Documents and will procure that each of the other
Security Parties will, duly and punctually perform each of the
obligations expressed to be assumed by it under the Security
Documents and the Underlying Documents to which it is a party;
8.1.11 Compliance with ISM Code
comply with, and will procure that any Operator will comply
with, and ensure that the Mortgaged Vessels and any Operator
comply 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 (as defined in
the Mortgages);
8.1.12 Withdrawal of DOC and SMC
immediately inform the Agent if there is any actual withdrawal
of their or any Operators DOC or the SMC of any Mortgaged
Vessel;
8.1.13 Issuance of DOC and SMC
Annex C-26
and will procure that any Operator will promptly inform the
Agent of the receipt by any Borrower or any Operator of
notification that its application for a DOC or any application
for an SMC for any Mortgaged Vessel has been refused;
8.1.14 ISPS Code Compliance
and will procure that the Manager or any Operator will:
(a) maintain at all times a valid and current ISSC in
respect of each Mortgaged Vessel;
(b) immediately notify the Agent in writing of any actual
or threatened withdrawal, suspension, cancellation or
modification of the ISSC in respect of a Mortgaged
Vessel; and
(c) procure that each Mortgaged Vessel will comply at all
times with the ISPS Code;
8.1.15 Compliance with Laws and payment of taxes
and will comply with all relevant Environmental Laws, laws,
statutes and regulations and pay all taxes for which it is
liable as they fall due;
8.1.16 Charters etc.
(i) deliver to the Agent a Certified Copy of each Extended
Employment Contract upon its execution, (ii) forthwith on
the Agents request execute (a) a Charter Assignment
in respect thereof and (b) any notice of assignment
required in connection therewith and use reasonable efforts to
procure the acknowledgement of any such notice of assignment by
the relevant charterer (provided that any failure to procure the
same shall not constitute an Event of Default) and
(iii) pay all legal and other costs incurred by the Agent
in connection with any such Charter Assignments, forthwith
following the Agents demand.
8.1.17 Financial Covenants of the Corporate
Guarantors Group
procure that
(a) at no time shall the Liquidity of the Group be less
than the Minimum Liquidity;
(b) as of the earlier of (i) the Final Delivery Date
and (ii) 1 January 2013, the Net Worth of the Group
will at all times exceed USD75,000,000;
(c) as of the earlier of (i) the Final Delivery Date
and (ii) 1 January 2013, the Total Liabilities divided
by the Total Assets (adjusted for market values of vessels
calculated in accordance with Clause 8.2.2) shall be less
than 75%.
8.1.18 Inspection
the Agent, at the cost of the Borrowers and upon receipt of at
least 15 days written notice, by surveyors or other persons
appointed by it for such purpose, to board any Mortgaged Vessel
at all other reasonable times for the purpose of inspecting her
and to afford all proper facilities for such inspections and for
this purpose to give the Agent reasonable advance notice of any
intended drydocking of each Vessel (whether for the purpose of
classification, survey or otherwise) and to pay the costs in
respect of one inspection in each calendar year; and
8.1.19 Delivery
Pay to the Builder all amounts payable on delivery of the
Vessels in accordance with the relevant Shipbuilding Contract
and take, or as the case may be, ensure that the relevant
Borrower, takes delivery of the relevant Vessel.
8.1.20 Subordination
Ensure that all Indebtedness of any Borrower to its shareholders
or to any other Group Member is fully subordinated, and to
subordinate any Indebtedness issued to it by the Corporate
Guarantor, all in a form acceptable to the Agent (acting on the
instructions of the Majority Lenders).
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8.1.21 Dividends
The Borrowers and Corporate Guarantor may declare or pay
dividends or distribute any of their present or future assets,
undertakings, rights or revenues in an amount not exceeding 50%
of the Net Profits for any relevant financial year to any of
their partners, members or shareholders, and the Corporate
Guarantor may make such other investments as it may require,
only if there has not occurred any Event of Default.
8.1.22 Corporate Guarantees
On the Share Acquisition Date the Borrowers shall procure the
delivery to the Security Trustee of:
(a) the Corporate Guarantee duly executed by Navios
Acquisition (and upon receipt thereof by the Security Trustee
the Corporate Guarantee which was executed on the first Drawdown
Date shall terminate and cease to be enforceable, which the
Security Trustee shall confirm in writing at that time) ;
(b) such documentation equivalent to that set out in
Schedule 3 Part A items (a)-(d) inclusive in respect
of Navios Acquisition as the Agent may require;
(c) within 10 Banking Days of the Share Acquisition Date,
the opening balance sheet of Navios Acquisition duly audited by
a firm of accountants acceptable the Lenders;
(d) a copy of the presentation given to the investors in
Navios Acquisition;
(e) a cashflow forecast for the Group for the 3 years
following the Share Acquisition Date;
(f) evidence that Navios Acquisition is the sole
shareholder of the Shareholder and the Shareholder is the sole
shareholder of each of the Borrower; and
(g) if required by the Lenders, Shares Pledges duly
executed by the Shareholder in respect of each Borrower together
with all documents required to be delivered pursuant thereto.
8.2 Security
value maintenance
8.2.1 Security shortfall
If, at any time after the first Delivery Date, the Security
Value shall be less than the Required Security Amount, the Agent
(acting on the instructions of the Majority Lenders) shall give
notice to the Borrowers requiring that such deficiency be
remedied and then the Borrowers must either:
(a) prepay within a period of thirty (30) days of the
date of receipt by the Borrowers of the Agents said notice
such part of the Delivered Tranches as will result in the
Security Value after such prepayment (taking into account any
other repayment of the Delivered Tranches made between the date
of the notice and the date of such prepayment) being equal to or
higher than the Required Security Amount; or
(b) within thirty (30) days of the date of receipt by
the Borrowers of the Agents said notice constitute to the
satisfaction of the Agent such further security for the Loan as
shall be acceptable to the Majority Lenders having a value for
security purposes (as determined by the Agent 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 Required Security Amount as at such date.
The provisions of clauses 4.6 and 4.7 shall apply to
prepayments under clause 8.2.1(a) provided that the Agent
shall apply such prepayments (i) pro rata against the
Tranches, (ii) in reduction of the repayment instalments under
clause 4.1 pro rata and the amounts of the Loan prepaid
hereunder shall not be available to be re-borrowed.
8.2.2 Valuation of Mortgaged Vessels
Each Mortgaged Vessel shall, for the purposes of this Agreement,
be valued (at the Borrowers expense) in USD by taking
either (i) the valuation prepared by an Approved Broker or
(ii) if requested by the Lenders, the arithmetic mean of
valuations prepared by any two Approved Brokers appointed by the
Agent, in each case such valuations to be made without physical
inspection, and on the basis of a sale for prompt delivery for
Annex C-28
cash at arms length, on normal commercial terms, as
between a willing buyer and a willing seller without taking into
account the benefit or burden of any charterparty or other
engagement concerning the relevant Mortgaged Vessel to be
obtained (in addition to (a) above) at any other time as
the Agent (acting on the instructions of the Majority Lenders)
shall additionally require, at the cost of the Lenders.
The Approved Brokers valuations for each Mortgaged Vessel
on each such occasion shall constitute the Valuation Amount of
such Mortgaged Vessel for the purposes of this Agreement until
superceded by the next such valuation.
8.2.3 Information
The Borrowers undertake with the Banks to supply to the Agent
and to the Approved Broker such information concerning the
relevant Mortgaged Vessel and its condition as such shipbrokers
may require for the purpose of determining any Valuation Amount.
8.2.4 Costs
All costs in connection with the obtaining and any determining
of any Valuation Amount pursuant to Clause 8.2.2(a) and any
valuation either 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 8.2.1(b), must be paid by the Borrowers.
8.2.5 Valuation of additional security
For the purposes of this clause 8.2, the market value
(i) of any additional security over a ship (other than the
Vessels) shall be determined in accordance with
clause 8.2.2 and (ii) of any other additional security
provided or to be provided to the Banks or any of them shall be
determined by the Agent in its absolute discretion.
8.2.6 Documents and evidence
In connection with any additional security provided in
accordance with this clause 8.2, the Agent shall be
entitled to receive (at the Borrowers expense) such
evidence and documents of the kind referred to in
schedule 3 as may in the Agents opinion be
appropriate and such favourable legal opinions as the Agent
shall in its absolute discretion require.
8.3 Negative
undertakings
The Borrowers jointly and severally undertake with each Bank
that, from the Execution Date until the end of the Facility
Period, they will not, without the prior written consent of the
Agent (acting on the instructions of the Majority Banks):
8.3.1 Negative pledge
permit any Encumbrance (other than a Permitted Encumbrance) to
subsist, arise or be created or extended over all or any part of
their respective present or future undertakings, assets, rights
or revenues to secure or prefer any present or future
Indebtedness or other liability or obligation of any Group
Member or any other person;
8.3.2 No merger or transfer
merge or consolidate with any other person or permit any change
to the legal or beneficial ownership of their shares from that
existing at the Execution Date;
8.3.3 Disposals
sell, transfer, assign, create security or option over, pledge,
pool, abandon, lend or otherwise dispose of or cease to exercise
direct control over any part of their present or future
undertaking, assets, rights or revenues (otherwise than by
transfers, sales or disposals for full consideration in the
ordinary course of trading) whether by one or a series of
transactions related or not;
Annex C-29
8.3.4 Other business or manager
undertake any business other than the ownership and operation of
the Ships or employ anyone other than the Manager as commercial
and technical manager of the Vessels;
8.3.5 Acquisitions
acquire any further assets other than the Vessels and rights
arising under contracts entered into by or on behalf of the
Borrowers in the ordinary course of their businesses of owning,
operating and chartering the Vessels;
8.3.6 Other obligations
incur any obligations except for obligations arising under the
Underlying Documents or the Security Documents or contracts
entered into in the ordinary course of their business of owning,
operating and chartering the Vessels;
8.3.7 No borrowing
incur any Borrowed Money except for Borrowed Money pursuant to
the Security Documents;
8.3.8 Repayment of borrowings
repay or prepay the principal of, or pay interest on or any
other sum in connection with any of their Borrowed Money except
for Borrowed Money pursuant to the Security Documents;
8.3.9 Guarantees
issue any guarantees or otherwise become directly or
contingently liable for the obligations of any person, firm, or
corporation except pursuant to the Security Documents and except
for (i) guarantees from time to time required in the
ordinary course by any protection and indemnity or war risks
association with which a Vessel is entered, guarantees required
to procure the release of such Vessel from any arrest,
detention, attachment or levy or guarantees required for the
salvage of a Vessel and (ii) such other guarantees to which
the Agent shall have consented in writing on behalf of the Banks;
8.3.10 Loans
make any loans or grant any credit (save for normal trade credit
in the ordinary course of business) to any person or agree to do
so;
8.3.11 Sureties
permit any Indebtedness of any Borrower to any person (other
than the Banks pursuant to the Security Documents) to be
guaranteed by any person (except for guarantees from time to
time required in the ordinary course of business and in the
ordinary course by any protection and indemnity or war risks
association with which a Vessel is entered, guarantees required
to procure the release of such Vessel from any arrest,
detention, attachment or levy or guarantees or undertakings
required for the salvage of a Vessel and guarantees in favour of
the Builder in respect of any Shipbuilding Contract); or
8.3.12 Subsidiaries
form or acquire any Subsidiaries.
9 CONDITIONS
9.1 Advance
of any Advance
The obligation of each Lender to make its Commitment available
in respect of any Advance is conditional upon:
9.1.1 that, on or before the service of the first Drawdown
Notice hereunder, the Agent has received the documents described
in Part A of Schedule 3 in form and substance
satisfactory to the Agent and its lawyers;
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9.1.2 that, on or before the service of the Drawdown Notice
in respect of the Advances referred to in clause 2.5.1(a)
the Agent has received the documents described in Part B of
Schedule 3 in respect of the Relevant Vessel (as defined in
Schedule 3) in form and substance satisfactory to the
Agent and its lawyers;
9.1.3 that, on or before the service of the Drawdown Notice
in respect of the Advances referred to in clause 2.5.1(b),
the Agent has received the documents described in Part C of
Schedule 3 in respect of the Relevant Vessel in form and
substance satisfactory to the Agent and its lawyers
9.1.4 that, on or before service of the Drawdown Notice in
respect of Advances referred to in clause 2.5.1(c), the
Agent has received the documents described in Part D of
Schedule 3 in respect of the Relevant Vessel in form and
substance satisfactory to the Agent and its lawyers;
9.1.5 that, on or before service of the Drawdown Notice in
respect of Advances referred to in clause 2.5.1(d), the
Agent has received the documents described in Part E of
Schedule 3 in respect of the Relevant Vessel in form and
substance satisfactory to the Agent and its lawyers;
9.1.6 that, on or before service of the Drawdown Notice in
respect of Advances referred to in clause 2.5.1(e), the
Agent has received the documents described in Part F of
Schedule 3 in respect of the Relevant Vessel in form and
substance satisfactory to the Agent and its lawyers;
9.1.7 that, on or before service of the Drawdown Notice in
respect of Advances referred to in clause 2.5.1(f), the
Agent has received the documents described in Part G of
Schedule 3 in respect of the Relevant Vessel in form and
substance satisfactory to the Agent and its lawyers;
9.1.8 the representations and warranties contained in
clause 7 and clauses 4.1 and 4.2 of the Corporate
Guarantee being then true and correct as if each was made with
respect to the facts and circumstances existing at such
time; and
9.1.9 no Default having occurred and being continuing and
there being no Default which would result from the making of the
Loan.
9.2 Waiver
of conditions precedent
The conditions specified in this clause 9 are inserted
solely for the benefit of the Lenders and may be waived by the
Agent in whole or in part and with or without conditions only
with the consent of the Majority Lenders.
9.3 Further
conditions precedent
Not later than five (5) Banking Days prior to the Drawdown
Date of an Advance and not later than five (5) Banking Days
prior to any Interest Payment Date, the Agent (acting on the
instructions of the Majority Lenders) may request and the
Borrowers must, not later than two (2) Banking Days prior
to such date, deliver to the Agent (at the Borrowers
expense) on such request further favourable certificates
and/or
opinions as to any or all of the matters which are the subject
of clauses 7, 8, 9 and 10.
9.4 Release
of Shares Pledges
The Lenders agree that upon the drawdown of the final Advance in
respect of a Tranche, and receipt of a Negative Pledge in
respect of the Owner of the Vessel financed by that Tranche, the
Security Trustee shall (provided no Event of Default has
occurred) release the Shares Pledge in respect of that
Owner.
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10 EVENTS
OF DEFAULT
10.1 Events
Each of the following events shall constitute an Event of
Default (whether such event shall occur voluntarily or
involuntarily or by operation of law or regulation or in
connection with any judgment, decree or order of any court or
other authority or otherwise, howsoever):
10.1.1 Non-payment: any Security
Party fails to pay any sum payable by it under any of the
Security Documents at the time, in the currency and in the
manner stipulated in the Security Documents or the Underlying
Documents (and so that, for this purpose, sums payable
(i) under clauses 3.1 and 4.1 shall be treated as
having been paid at the stipulated time if (aa) received by the
Agent within two (2) days of the dates therein referred to
and (bb) such delay in receipt is caused by administrative or
other delays or errors within the banking system and
(ii) on demand shall be treated as having been paid at the
stipulated time if paid within two (2) Banking Days of
demand); or
10.1.2 Breach of Insurance and certain other
obligations: any Owner or, as the context may
require, the Manager or any other person fails to obtain
and/or
maintain the Insurances (as defined in, and in accordance with
the requirements of, the Ship Security Documents) for any of the
Mortgaged Vessels 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 a Borrower commits any
breach of or omits to observe any of the obligations or
undertakings expressed to be assumed by them under
clause 8; or
10.1.3 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
Security Documents (other than those referred to in
clauses 10.1.1 and 10.1.2 above) unless such breach or
omission, in the opinion of the Agent (following consultation
with the Banks) is capable of remedy, in which case the same
shall constitute an Event of Default if it has not been remedied
within fifteen (15) days of the occurrence thereof; or
10.1.4 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 Security Documents or in any notice, certificate or
statement referred to in or delivered under any of the Security
Documents is or proves to have been incorrect or misleading in
any material respect; or
10.1.5 Cross-default: There shall
occur a default (howsoever therein described) under the any
Indebtedness in an amount exceeding five million Dollars
(USD5,000,000) of any Borrower or any Indebtedness of any
Security Party is not paid when due (subject to applicable grace
periods) or any such Indebtedness of any Borrower or any
Security Party becomes (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 Borrower or Security Party of a
voluntary right of prepayment), or any creditor of a Borrower or
any Security Party becomes entitled to declare any such
Indebtedness due and payable or any facility or commitment
available to any Borrower or any Security Party relating to
Indebtedness is withdrawn, suspended or cancelled by reason of
any default (however described) of the person concerned; or
10.1.6 Execution: any uninsured
judgment or order made against any Security Party is not stayed,
appealed against or complied with within fifteen (15) days
or a creditor attaches or takes possession of, or a distress,
execution, sequestration or other 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
within thirty (30) days; or
10.1.7 Insolvency: any Security
Party is unable or admits inability to pay its debts as they
fall due; suspends making payments on any of its debts or
announces an intention to do so; becomes insolvent; or any
Security Party (other than the Corporate Guarantor) has negative
net worth (taking into account contingent liabilities); or
suffers the declaration by any court, liquidator, receiver or
administrator of a moratorium in respect of any of its
Indebtedness; or
Annex C-32
10.1.8 Reduction or loss of
capital: a meeting is convened by any
Security Party (other than the Corporate Guarantor) without the
Agents prior written consent, for the purpose of passing
any resolution to purchase, reduce or redeem any of its share
capital without the Agents prior written consent; or
10.1.9 Dissolution: any corporate
action, Proceedings or other steps are taken to dissolve or
wind-up any
Security Party or an order is made or resolution passed for the
dissolution or winding up of any Security Party or a notice is
issued convening a meeting for such purpose; or
10.1.10 Administration: any
petition is presented, notice given or other steps are taken
anywhere to appoint an administrator of any Security Party or
the Agent reasonably believes that any such petition or other
step is imminent or an administration order is made in relation
to any Security Party; or
10.1.11 Appointment of receivers and
managers: any administrative or other
receiver is appointed anywhere of any Security Party or any part
of its assets
and/or
undertaking or any other steps are taken to enforce any
Encumbrance over all or any part of the assets of any Security
Party; or
10.1.12 Compositions: any
corporate action, legal proceedings or other procedures or steps
are taken, or negotiations commenced, by any Security Party or
by any of its creditors (other than the Corporate Guarantor) or
any legal proceedings are taken in respect of the Corporate
Guarantor, 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; or
10.1.13 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
reasonable opinion of the Agent, appears in that country or
territory to correspond with, or have an effect equivalent or
similar to, any of those mentioned in clauses 10.1.6 to
10.1.12 (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
10.1.14 Cessation of business: any
Security Party suspends or ceases or threatens to suspend or
cease to carry on its business without the prior written consent
of the Agent, such consent not to be unreasonably
withheld; or
10.1.15 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 Entity; or
10.1.16 Invalidity: any of the
Security Documents and the Underlying 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 Security Documents and
the Underlying 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
10.1.17 Unlawfulness: any
Unlawfulness occurs or 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 Security
Documents or for a Bank to exercise the rights or any of them
vested in it under any of the Security Documents or
otherwise; or
10.1.18 Repudiation: any Security
Party repudiates any of the Security Documents or does or causes
or permits to be done any act or thing evidencing an intention
to repudiate any of the Security Documents; or
10.1.19 Encumbrances
enforceable: any Encumbrance (other than
Permitted Liens) in respect of any of the property (or part
thereof) which is the subject of any of the Security Documents
becomes enforceable; or
10.1.20 Arrest: a Mortgaged Vessel
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 that Owner shall fail to procure the
release of such Mortgaged Vessel within a period of fifteen
(15) days thereafter (this clause does not include capture
of a Vessel by pirates); or
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10.1.21 Registration: the
registration of a Mortgaged Vessel under the laws and flag of
the relevant Flag State is cancelled or terminated without the
prior written consent of the Majority Banks; or
10.1.22 Unrest: the Flag State of
a Mortgaged Vessel or the country in which any Security Party is
incorporated or domiciled becomes involved in hostilities or
civil war or there is a seizure of power in the Flag State by
unconstitutional means unless the Owner of the Vessel registered
in such Flag State shall have transferred its Vessel onto a new
flag acceptable to the Banks within sixty (60) days of the
start of such hostilities or civil war or seizure of
power; or
10.1.23 Environmental
Incidents: an Environmental Incident occurs
which gives rise, or may give rise, to an Environmental Claim
which could, in the opinion of the Agent be expected to have a
material adverse effect (i) on the business, assets or
financial condition of any Security Party or the Group taken as
a whole or (ii) on the security constituted by any of the
Security Documents or the enforceability of that security in
accordance with its terms; or
10.1.24 P&I: an Owner or the
Manager or any other person fails or omits to comply with any
requirements of the protection and indemnity association or
other insurer with which a Mortgaged Vessel is entered for
insurance or insured against protection and indemnity risks
(including oil pollution risks) to the effect that any cover
(including, without limitation, any cover in respect of
liability for Environmental Claims arising in jurisdictions
where such Mortgaged Vessel operates or trades) is or may be
liable to cancellation, qualification or exclusion at any
time; or
10.1.25 Material events: any other
event occurs or circumstance arises which, in the opinion of the
Agent (following consultation with the Banks), is likely
materially and adversely to affect either (i) the ability
of any Security Party to perform all or any of its obligations
under or otherwise to comply with the terms of any of the
Security Documents or (ii) the security created by any of
the Security Documents; or
10.1.26 Required
Authorisations: any Required Authorisation is
revoked or withheld or modified or is otherwise not granted or
fails to remain in full force and effect or if any exchange
control or other law or regulation shall exist which would make
any transaction under the Security Documents or the continuation
thereof, unlawful or would prevent the performance by any
Security Party of any term of any of the Security Documents;
10.1.27 Ownership: there is any
change in the ownership of any Borrower without the prior
written consent of the Agent or (following the Share Acquisition
Date) the number of shares of and in Navios Acquisition owned by
Navios Maritime Holdings Inc., Mrs. Angeliki Frangou and
their respective affiliates in aggregate falls below 30% of the
issued shares of Navios Acquisition; or
10.1.28 Money Laundering: any
Security Party is in breach of or fails to observe any law,
requirement, measure or procedure implemented to combat
money laundering as defined in Article 1 of the
Directive (91/308 EEC) of the Council of the European
Communities; or
10.1.28 Master
Agreement: (i) an Event of Default or
Potential Event of Default (or the equivalent under the Master
Agreement) has occurred and is continuing under the Master
Agreement or (ii) an Early Termination Date (as defined in
the Master Agreement) has occurred or been effectively
designated under the Master Agreement or (iii) a person
entitled to do so gives notice of an Early Termination Date (as
defined in the Master Agreement) or (iv) the Master
Agreement is terminated, cancelled, suspended, rescinded or
revoked or otherwise ceases to remain in full force and effect
for any reason.
10.2 Acceleration
The Agent may, and if so requested by the Majority Lenders
shall, without prejudice to any other rights of the Lenders, at
any time after the happening of an Event of Default by notice to
the Borrowers declare that:
10.2.1 the obligation of each Lender to make its Commitment
available shall be terminated, whereupon the Commitment shall be
reduced to zero forthwith; and/or
Annex C-34
10.2.2 the Loan and all interest accrued and all other sums
payable whatsoever under the Security Documents have become due
and payable, whereupon the same shall, immediately or in
accordance with the terms of such notice, become due and payable.
10.3 Demand
Basis
If, under clause 10.2.2, the Agent has declared the Loan to
be due and payable on demand, at any time thereafter the Agent
may (and if so instructed by the Majority Lenders shall) by
written notice to the Borrowers (a) demand repayment of the
Loan on such date as may be specified whereupon, regardless of
any other provision of this Agreement, 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.
11 INDEMNITIES
11.1 General
indemnity
The Borrowers agree to indemnify each Bank on demand, without
prejudice to any of such Banks other rights under any of
the Security Documents, against any loss (including loss of
Margin) or expense (including, without limitation, Break Costs)
which such Bank shall certify as sustained by it as a
consequence of any Default, any prepayment of the Loan being
made under clauses 4.2, 4.3, 4.4, 4.5, 8.2.1(a) or 12.1 or
any other repayment or prepayment 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;
and/or any
Advance not being made for any reason (excluding any default by
the Payment Agent, the Agent, the Security Trustee or any
Lender) after the Drawdown Notice for such Advance has been
given.
11.2 Environmental
indemnity
The Borrowers shall indemnify each Bank on demand and hold it
harmless from and against all costs, claims, expenses, payments,
charges, losses, demands, liabilities, actions, Proceedings,
penalties, fines, damages, judgements, orders, sanctions or
other outgoings of whatever nature which may be incurred or made
or asserted whensoever against such Bank at any time, whether
before or after the repayment in full of principal and interest
under this Agreement, arising howsoever out of an Environmental
Claim made or asserted against such Bank which would not have
been, or been capable of being, made or asserted against such
Bank had it not entered into any of the Security Documents or
been involved in any of the resulting or associated transactions.
11.3 Capital
adequacy and reserve requirements indemnity
The Borrowers shall promptly indemnify each Lender on demand
against any cost incurred or loss suffered by such Lender as a
result of its complying with (i) the minimum reserve
requirements from time to time of the European Central Bank
(ii) any capital adequacy directive of the European Union
and/or
(iii) any revised framework for international convergence
of capital measurements and capital standards
and/or any
regulation imposed by any Government Entity in connection
therewith,
and/or in
connection with maintaining required reserves with a relevant
national central bank to the extent that such compliance or
maintenance relates to such Lenders Commitment
and/or
Contribution or deposits obtained by it to fund the whole or
part thereof and to the extent such cost or loss is not
recoverable by such Lender under clause 12.2.
12 UNLAWFULNESS
AND INCREASED COSTS
12.1 Unlawfulness
If it is or becomes contrary to any law, directive or regulation
for any Lender to contribute to an Advance or to maintain its
Commitment or fund its Contribution to the Loan or any Advance,
such Lender shall promptly, through the Agent, give notice to
the Borrowers whereupon (a) such Lenders Contribution
and Commitment shall be reduced to zero and (b) the
Borrowers shall be obliged to prepay such Lenders
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Contribution either (i) forthwith or (ii) on a future
specified date not being earlier than the latest date permitted
by the relevant law, directive or regulation together with
interest accrued to the date of prepayment and all other sums
payable by the Borrowers under this Agreement.
12.2 Increased
costs
If the result of any change in, or in the interpretation or
application of, or the introduction of, any law or any
regulation, request or requirement (whether or not having the
force of law, but, if not having the force of law, with which a
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, is to:
12.2.1 subject any Lender to Taxes or change the basis of
Taxation of any Lender with respect to any payment under any of
the Security Documents (other than Taxes or Taxation on the
overall net income, profits or gains of such Lender imposed in
the jurisdiction in which its principal or lending office under
this Agreement is located); and/or
12.2.2 increase the cost to, or impose an additional cost
on, any Lender or its holding company in making or keeping such
Lenders Commitment available or maintaining or funding all
or part of such Lenders Contribution; and/or
12.2.3 reduce the amount payable or the effective return to
any Lender under any of the Security Documents; and/or
12.2.4 reduce any Lenders or its holding
companys 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 such Lenders obligations under any of
the Security Documents; and/or
12.2.5 require any Lender or its holding company to make a
payment or forgo a return on or calculated by reference to any
amount received or receivable by such Lender under any of the
Security Documents; and/or
12.2.6 require any 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 its
Contribution or the Loan from its capital for regulatory
purposes,
then and in each such case (subject to clause 12.3):
(a) such 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 made at any time whether
or not such Lenders Contribution has been repaid, pay to
the Payment Agent for the account of such Lender the amount
which such Lender specifies (in a certificate setting forth the
basis of the computation of such amount but not including any
matters which such Lender or its holding company regards as
confidential) is required to compensate such Lender
and/or (as
the case may be) its holding company for such liability to
Taxes, cost, reduction, payment , forgone return or loss.
For the purposes of this clause 12.2 holding
company means the company or entity (if any) within the
consolidated supervision of which a Lender is included.
12.3 Exception
Nothing in clause 12.2 shall entitle any 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 the
subject of an additional payment under clause 6.6.
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13 APPLICATION
OF MONEYS, SET OFF, PRO-RATA PAYMENTS AND
MISCELLANEOUS
13.1 Application
of moneys
All moneys received by the Payment Agent
and/or the
Security Trustee under or pursuant to any of the Security
Documents and expressed to be applicable in accordance with the
provisions of this clause 13.1 or in a manner determined in
the Security Trustees or (as the case may be) the Payment
Agents discretion, shall be applied in the following
manner:
13.1.1 first, in or towards payment, on a pro-rata basis,
of any unpaid costs and expenses of the Banks or any of them
under any of the Security Documents;
13.1.2 secondly, in or towards payment of any fees payable
to the Arranger, the Payment Agent or any of the other Banks
under, or in relation to, the Security Documents which remain
unpaid;
13.1.3 thirdly, in or towards payment to the Banks, on a
pro rata basis, of any accrued interest owing in respect of the
Loan which shall have become due under any of the Security
Documents but remains unpaid;
13.1.4 fourthly, in or towards repayment of the Loan
(whether the same is due and payable or not) and in or towards
payment to the Swap Bank of any sum which shall have become due
under the Master Agreement but remains unpaid;
13.1.5 fifthly, in or towards payment to the Lenders, on a
pro rata basis any Break Costs and any other sum relating to the
Loan which shall have become due under any of the Security
Documents but remains unpaid;
13.1.6 sixthly, the surplus (if any) shall be paid to the
Borrowers or to whomsoever else may then be entitled to receive
such surplus.
13.2 Set-off
13.2.1 Each Borrower irrevocably authorises each Bank
(without prejudice to any of such Banks rights at law, in
equity or otherwise), at any time and without notice to the
Borrowers, to apply any credit balance to which any Borrower is
then entitled standing upon any account of any Borrower with any
branch of such Bank in or towards satisfaction of any sum due
and payable from the Borrowers to such Bank under any of the
Security Documents. For this purpose, each Bank is authorised to
purchase with the moneys standing to the credit of such account
such other currencies as may be necessary to effect such
application.
13.2.2 No Bank shall be obliged to exercise any right given
to it by this clause 13.2. Each Bank shall notify the
Borrowers through the Agent forthwith upon the exercise or
purported exercise of any right of set off giving full details
in relation thereto and the Agent shall inform the other Banks.
13.2.3 Nothing in this clause 13.2 shall be effective
to create a charge or other security interest.
13.3 Pro
rata payments
13.3.1 If at any time any Lender (the Recovering
Lender) receives or recovers any amount owing to it by
the Borrowers under this Agreement (other than pursuant to any
other Security Document) by direct payment, set-off or in any
manner other than by payment through the Payment Agent pursuant
to clauses 6.1 or 6.9 (not being a payment received from a
Transferee Bank or a
sub-participant
in such Lenders Contribution or any other payment of an
amount due to the Recovering Lender for its sole account
pursuant to clauses 3.6, 5, 6.6, 11.1, 11.2, 11.3, 12.1, or
12.2), the Recovering Lender shall, within two (2) Banking
Days of such receipt or recovery (a Relevant
Receipt) notify the Payment Agent of the amount of the
Relevant Receipt. If the Relevant Receipt exceeds the amount
which the Recovering Lender would have received if the Relevant
Receipt had been received by the Payment Agent and distributed
pursuant to clause 6.1 or 6.10 (as the case may be) then:
(a) within two (2) Banking Days of demand by the
Payment Agent, the Recovering Lender shall pay to the Payment
Agent an amount equal (or equivalent) to the excess;
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(b) the Payment Agent shall treat the excess amount so paid
by the Recovering Lender as if it were a payment made by the
Borrowers and shall distribute the same to the Lenders (other
than the Recovering Lenders) in accordance with
clause 6.10; and
(c) as between the Borrowers and the Recovering Lender the
excess amount so re-distributed shall be treated as not having
been paid but the obligations of the Borrowers to the other
Lenders shall, to the extent of the amount so re-distributed to
them, be treated as discharged.
13.3.2 If any part of the Relevant Receipt subsequently has
to be wholly or partly refunded by the Recovering Lender
(whether to a liquidator or otherwise) each Lender to which any
part of such Relevant Receipt was so re-distributed shall on
request from the Recovering Lender repay to the Recovering
Lender such Lenders pro-rata share of the amount which has
to be refunded by the Recovering Lender.
13.3.3 Each Lender shall on request supply to the Agent
such information as the Agent may from time to time request for
the purposes of this clause 13.3.
13.3.4 Notwithstanding the foregoing provisions of this
clause 13.3, no Recovering Lender shall be obliged to share
any Relevant Receipt which it receives or recovers pursuant to
Proceedings taken by it to recover any sums owing to it under
this Agreement with any other party which has a legal right to,
but does not, either join in such Proceedings or commence and
diligently pursue separate Proceedings to enforce its rights in
the same or another court (unless the Proceedings instituted by
the Recovering Lender are instituted by it without prior notice
having been given to such party through the Agent).
13.4 No
release
For the avoidance of doubt it is hereby declared that failure by
any Recovering Lender to comply with the provisions of
clause 13.3 shall not release any other Recovering Lender
from any of its obligations or liabilities under
clause 13.3.
13.5 No
charge
The provisions of this clause 13 shall not, and shall not
be construed so as to, constitute a charge or create or declare
a trust by a Lender over all or any part of a sum received or
recovered by it in the circumstances mentioned in
clause 13.3.
13.6 Further
assurance
Each Borrower undertakes with each Bank that the Security
Documents shall both at the date of execution and delivery
thereof and throughout the Facility Period be valid and binding
obligations of the respective parties thereto which, with the
rights of each Lender thereunder, are enforceable in accordance
with their respective terms and that they will, at their
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
Majority Lenders may be necessary or desirable for perfecting
the security contemplated or constituted by the Security
Documents.
13.7 Conflicts
In the event of any conflict between this Agreement and any of
the other Security Documents, the provisions of this Agreement
shall prevail.
13.8 No
implied waivers, remedies cumulative
No failure or delay on the part of any of the Banks to exercise
any power, right or remedy under any of the Security Documents
shall operate as a waiver thereof, nor shall any single or
partial exercise by any Bank of any power, right or remedy
preclude any other or further exercise thereof or the exercise
of any other power, right or remedy. The remedies provided in
the Security Documents are cumulative and are not exclusive of
any remedies provided by law. No waiver by any Bank shall be
effective unless it is in writing.
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13.9 Severability
If any provision of this Agreement is prohibited, invalid,
illegal or unenforceable in any jurisdiction, such prohibition,
invalidity, illegality or unenforceability shall not affect or
impair howsoever the remaining provisions thereof or affect the
validity, legality or enforceability of such provision in any
other jurisdiction.
13.10 Force
Majeure
Regardless of any other provision of this Agreement, none of the
Banks shall be liable for any failure to perform the whole or
any part of this Agreement resulting directly or indirectly from
(i) the action or inaction or purported action of any
governmental or local authority (ii) any strike, lockout,
boycott or blockade (including any strike, lockout, boycott or
blockade effected by or upon any Bank or any of its
representatives or employees) (iii) any act of God
(iv) any act of war (whether declared or not) or terrorism
(v) any failure of any information technology or other
operational systems or equipment affecting any Bank or
(vi) any other circumstances whatsoever outside any
Banks control.
13.11 Amendments
This Agreement may be amended or varied only by an instrument in
writing executed by all parties hereto who irrevocably agree
that the provisions of this clause 13.11 may not be waived
or modified except by an instrument in writing to that effect
signed by all of them.
13.12 Counterparts
This Agreement may be executed in any number of counterparts and
all such counterparts taken together shall be deemed to
constitute one and the same agreement which may be sufficiently
evidenced by one counterpart.
13.13 English
language
All documents required to be delivered under
and/or
supplied whensoever in connection howsoever with any of the
Security Documents and all notices, communications, information
and other written material whatsoever given or provided in
connection howsoever therewith must either be in the English
language or accompanied by an English translation certified by a
notary, lawyer or consulate acceptable to the Agent.
14 ACCOUNTS
AND RETENTIONS
14.1 General
Each Borrower undertakes with each Bank that it will ensure that:
14.1.1 it will on or before the Delivery Date in respect of
its Vessel, open an Earnings Account in its name; and
14.1.2 all moneys payable to any Owner in respect of the
Earnings (as defined in the relevant Mortgage) of its Vessel
shall, unless and until the Agent (acting on the instructions of
the Majority Lenders) directs to the contrary pursuant to the
provisions of the relevant Mortgage, be paid to the Earnings
Account, Provided however that if any of the moneys paid to any
Earnings Account are payable in a currency other than USD, they
shall be paid to a
sub-account
of that Earnings Account denominated in such currency (except
that if the Shareholder fails to open such a
sub-account,
the Account Bank shall then convert such moneys into USD at the
Account Banks spot rate of exchange at the relevant time
for the purchase of USD with such currency and the term
spot rate of exchange shall include any premium and
costs of exchange payable in connection with the purchase of USD
with such currency).
14.2 Earnings
Accounts: withdrawals
Any sums standing to the credit of the Earnings Accounts may be
applied from time to time (i) firstly to make the payments
required under this Agreement, (ii) secondly, subject to
there being no breach of
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Clause 14.3 and to no Event of Default having occurred, in
the operation of the Mortgaged Vessels and (iii) subject to
there being at any time sufficient funds to pay amounts due
under (i) and (ii) above as they fall due, thirdly for
the general corporate purposes of the Borrowers.
14.3 Retention
Account: credits and withdrawals
14.3.1 The Borrowers undertake with each Bank that,
throughout the Facility Period, they will procure that, on each
Retention Date there is paid (whether from the Earnings Accounts
or elsewhere) to the Retention Account, the Retention Amount for
such date.
14.3.2 Unless and until there shall occur an Event of
Default (whereupon the provisions of clause 14.5 shall
apply), all Retention Amounts credited to the Retention Account
together with interest from time to time accruing or at any time
accrued thereon must be applied by the Account Bank (and the
Borrowers hereby irrevocably authorise the Account Bank so to
apply the same) upon each Repayment Date
and/or on
each day that interest is payable on the Loan or a Tranche
pursuant to clause 3.1, in or towards payment to the
Payment Agent of the instalment then falling due for repayment
or, as the case may be, the amount of interest then due. Each
such application by the Account Bank shall constitute a payment
in or towards satisfaction of the Borrowers corresponding
payment obligations under this Agreement but shall be strictly
without prejudice to the obligations of the Borrowers to make
any such payment to the extent that the aforesaid application by
the Account Bank is insufficient to meet the same.
14.3.3 Unless the Agent (acting on the instructions of the
Majority Banks) otherwise agrees in writing and subject to this
clause 14.3.2, Borrowers shall not be entitled to withdraw
any moneys from the Retention Account at any time during the
Facility Period
14.4 Application
of accounts
At any time after the occurrence of an Event of Default, the
Payment Agent may (and on the instructions of the Majority
Lenders shall), without notice to the Borrowers, instruct the
Account Bank to apply all moneys then standing to the credit of
the Earnings Accounts
and/or the
Retention Account
and/or the
Equity Deposit Account (together with interest from time to time
accruing or accrued thereon) in or towards satisfaction of any
sums due to the Banks or any of them under the Security
Documents in the manner specified in clause 13.1.
14.5 Charging
of accounts
The Earnings Accounts and the Retention Account and all amounts
from time to time standing to the credit thereof shall be
subject to the security constituted and the rights conferred by
the Earnings Account Pledges and the Retention Account Pledge
respectively.
14.6 Equity
Deposit Account
The credit balance on the Equity Deposit Account shall at no
time be less than the difference between (i) the aggregate
of unpaid instalments under the Shipbuilding Contracts and
(ii) the aggregate of the undrawn Commitments and the
Borrowers may on each Drawdown Date apply sums from the Equity
Deposit Account in payment of the balance (after taking into
account the relevant Advance) of the instalment then payable to
the Builder and the Borrowers hereby irrevocably authorise the
Account Bank to refuse to make any payment from the Equity
Deposit Account except to the Builder.
15 ASSIGNMENT,
TRANSFER AND LENDING OFFICE
15.1 Benefit
and burden
This Agreement shall be binding upon, and enure for the benefit
of, the Banks and the Borrowers and their respective successors
in title.
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15.2 No
assignment by Borrowers
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No Borrower may assign or transfer any of its rights or
obligations under this Agreement.
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15.3 Transfers
by Banks
any Lender (the Transferor Lender) may at any
time cause all or any part of its rights, benefits
and/or
obligations under this Agreement and the other Security
Documents to be transferred to another first class international
bank or financial institution or other person (in either case a
Transferee Lender) (i) if such transfer
is to another branch, a subsidiary or affiliate of such Lender
and (ii) otherwise reasonably acceptable to the Borrowers,
in each case by delivering to the Agent a Transfer Certificate
duly completed and duly executed by the Transferor Lender and
the Transferee Lender. No such transfer is binding on, or
effective in relation to, the Borrowers or the Agent unless
(i) it is effected or evidenced by a Transfer Certificate
which complies with the provisions of this clause 15.3 and
is signed by or on behalf of the Transferor Lender, the
Transferee Lender and the Agent (on behalf of itself, the
Borrowers and the other Banks) and (ii) such transfer of
rights under the other Security Documents has been effected and
registered. Upon signature of any such Transfer Certificate by
the Agent, which signature shall be effected as promptly as is
practicable after such Transfer Certificate has been delivered
to the Agent, and subject to the terms of such Transfer
Certificate, such Transfer Certificate shall have effect as set
out below.
The following further provisions shall have effect in relation
to any Transfer Certificate:
15.3.1 a Transfer Certificate may be in respect of a
Lenders rights in respect of all, or part of, its
Commitment and shall be in respect of the same proportion of its
Contribution;
15.3.2 a Transfer Certificate shall only be in respect of
rights and obligations of the Transferor Lender in its capacity
as a Lender and shall not transfer its rights and obligations
(if applicable) as the Payment Agent and/or the Agent
and/or the
Security Trustee, or in any other capacity, as the case may be
and such other rights and obligations may only be transferred in
accordance with any applicable provisions of this Agreement;
15.3.3 a Transfer Certificate shall take effect in
accordance with English law as follows:
(a) to the extent specified in the Transfer Certificate,
the Transferor Lenders payment rights and all its other
rights (other than those referred to in clause 15.3.2
above) under this Agreement are assigned to the Transferee
Lender absolutely, free of any defects in the Transferor
Lenders title and of any rights or equities which the
Borrowers had against the Transferor Lender and the Transferee
Lender assumes all obligations of the Transferor Lender as are
transferred by such Transfer Certificate;
(b) the Transferor Lenders Commitment is discharged
to the extent specified in the Transfer Certificate;
(c) the Transferee Lender becomes a Lender with a
Contribution
and/or a
Commitment in respect of the Loan Facility of the amounts
specified in the Transfer Certificate;
(d) the Transferee Lender becomes bound by all the
provisions of this Agreement and the Security Documents which
are applicable to the Lenders generally, including those about
pro-rata sharing and the exclusion of liability on the part of,
and the indemnification of, the Payment Agent and the Agent and
the Security Trustee and to the extent that the Transferee
Lender becomes bound by those provisions, the Transferor Lender
ceases to be bound by them;
(e) an Advance or part of an Advance which the Transferee
Lender makes after the Transfer Certificate comes into effect
ranks in point of priority and security in the same way as it
would have ranked had it been made by the Transferor Lender,
assuming that any defects in the Transferor Lenders title
and any rights or equities of any Security Party against the
Transferor Lender had not existed; and
(f) the Transferee Lender becomes entitled to all the
rights under this Agreement which are applicable to the Lenders
generally, including but not limited to those relating to the
Majority Lenders
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and those under clauses 3.6, 5 and 12 and to the extent
that the Transferee Lender becomes entitled to such rights, the
Transferor Lender ceases to be entitled to them;
15.3.4 the rights and equities of the Borrowers or of any
other Security Party referred to above include, but are not
limited to, any right of set-off and any other kind of
cross-claim; and
15.3.5 the Borrowers, the Account Bank, the Security
Trustee, the Payment Agent and the Lenders hereby irrevocably
authorise and instruct the Agent to sign any such Transfer
Certificate on their behalf and undertake not to withdraw,
revoke or qualify such authority or instruction at any time.
Promptly upon its signature of any Transfer Certificate, the
Agent shall notify the Borrowers, the Transferor Lender and the
Transferee Lender.
15.4 Reliance
on Transfer Certificate
15.4.1 The Agent shall be entitled to rely on any Transfer
Certificate believed by it to be genuine and correct and to have
been presented or signed by the persons by whom it purports to
have been presented or signed, and shall not be liable to any of
the parties to this Agreement and the Security Documents for the
consequences of such reliance.
15.4.2 The Payment Agent shall at all times during the
continuation of this Agreement maintain a register in which it
shall record the name, Commitments, Contributions and
administrative details (including the lending office) from time
to time of the Lenders holding a Transfer Certificate and the
date at which the transfer referred to in such Transfer
Certificate held by each Lender was transferred to such Lender,
and the Payment Agent shall make the said register available for
inspection by any Lender or the Borrowers during normal banking
hours upon receipt by the Payment Agent of reasonable prior
notice requesting the Payment Agent to do so.
15.4.3 The entries on the said register shall, in the
absence of manifest error, be conclusive in determining the
identities of the Commitments, the Contributions and the
Transfer Certificates held by the Lenders from time to time and
the principal amounts of such Transfer Certificates and may be
relied upon by all parties to this Agreement.
15.5 Transfer
fees and expenses
Any Transferor Lender who causes the transfer of all or any part
of its rights, benefits
and/or
obligations under the Security Documents in accordance with the
foregoing provisions of this clause 15, must, on each
occasion, pay to the Agent a transfer fee of one thousand five
hundred Dollars (USD 1,500) and, in addition, be responsible for
all other costs and expenses (including, but not limited to,
reasonable legal fees and expenses) associated therewith and all
value added tax thereon, as well as those of the Agent (in
addition to its fee as aforesaid) in connection with such
transfer.
15.6 Documenting
transfers
If any Lender assigns all or any part of its rights or transfers
all or any part of its rights, benefits
and/or
obligations as provided in clause 15.3, each Borrower
undertakes, immediately on being requested to do so by the Agent
and at the cost of the Transferor Lender, to enter into, and
procure that the other Security Parties shall (at the cost of
the Transferor Lender) enter into, such documents as may be
necessary or desirable to transfer to the Transferee Lender all
or the relevant part of such Lenders interest in the
Security Documents and all relevant references in this Agreement
to such Lender shall thereafter be construed as a reference to
the Transferor Lender
and/or its
Transferee Lender (as the case may be) to the extent of their
respective interests.
15.7 Sub-Participation
A Lender may
sub-participate
all or any part of its rights
and/or
obligations under the Security Documents at its own expense
without the consent of, or notice to, the Borrowers.
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15.8 Lending
office
Each Lender shall lend through its office at the address
specified in schedule 1 or, as the case may be, in any
relevant Transfer Certificate or through any other office of
such Lender selected from time to time by it through which such
Lender wishes to lend for the purposes of this Agreement. If the
office through which a Lender is lending is changed pursuant to
this clause 15.8, such Lender shall notify the Agent
promptly of such change and the Agent shall notify the
Borrowers, the Security Trustee, the Payment Agent, the Account
Bank and the other Lenders.
15.9 Disclosure
of information
A Bank may disclose to any of its branches and affiliates, its
head office, any relevant fiscal authorities. a prospective
assignee, transferee or to any other person who may propose
entering into contractual relations with such Bank in relation
to this Agreement
and/or the
Master Agreement such information about the Borrowers
and/or the
other Security Parties
and/or the
Loan and/or
the Security Documents as such Bank shall consider appropriate
in relation to any transfer
and/or
enforcement hereunder.
16 ARRANGER,
AGENT AND SECURITY TRUSTEE
16.1 Appointment
of the Agent
The Swap Bank and each Lender irrevocably appoints the Agent and
the Payment Agent as its agent and payment agent, respectively,
for the purposes of this Agreement and such of the Security
Documents to which it may be appropriate for the Agent to be
party. Accordingly each of the Lenders and the Swap Bank hereby
authorise the Agent and the Payment Agent:
16.1.1 to execute such documents as may be approved by the
Majority Lenders for execution by the Agent and/or (as the case
may be) the Payment Agent; and
16.1.2 (whether or not by or through employees or agents)
to take such action on such Lenders behalf and to exercise
such rights, remedies, powers and discretions as are
specifically delegated to the Agent and/or the Payment Agent by
any Security Document, together with such powers and discretions
as are reasonably incidental thereto.
16.2 Payment
Agents/Agents actions
Any action taken by the Agent or the Payment Agent under or in
relation to any of the Security Documents whether with requisite
authority or on the basis of appropriate instructions received
from the Majority Lenders (or as otherwise duly authorised)
shall be binding on all the Banks.
16.3 Agents
and Payment Agents duties
16.3.1 The Agent and the Payment Agent shall promptly
notify each Lender of the contents of each notice, certificate
or other document received by it from the Borrowers under or
pursuant to clauses 8.1.1, 8.1.6, 8.1.9, 8.1.10, 8.1.13 and
8.1.17; and
16.3.2 The Agent shall (subject to the other provisions of
this clause 16) take (or instruct the Security Trustee
to take) such action or, as the case may be, refrain from taking
(or authorise the Security Trustee to refrain from taking) such
action with respect to the exercise of any of its rights,
remedies, powers and discretions as agent, as the Majority
Lenders may direct.
16.4 Security
Trustees, Payment Agents and Agents
rights
The Security Trustee, Payment Agents and the Agent may:
16.4.1 in the exercise of any right, remedy, power or
discretion in relation to any matter, or in any context, not
expressly provided for by this Agreement or any of the other
Security Documents, act or, as the
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case may be, refrain from acting (or authorise the Security
Trustee to act or refrain from acting) in accordance with the
instructions of the Lenders, and shall be fully protected in so
doing;
16.4.2 unless and until it has received directions from the
Majority Lenders, take such action or, as the case may be,
refrain from taking such action (or authorise the Security
Trustee to take or refrain from taking such action) in respect
of a Default of which the Agent and/or the Payment Agent has
actual knowledge as it shall consider advisable in the best
interests of the Lenders (but shall not be obliged to do so);
16.4.3 refrain from acting (or authorise the Security
Trustee to refrain from acting) in accordance with any
instructions of the Lenders to institute any Proceedings arising
out of or in connection with any of the Security Documents until
it and/or
the Security Trustee has been indemnified
and/or
secured to its satisfaction against any and all costs, expenses
or liabilities (including legal fees) which it would or might
incur as a result;
16.4.4 deem and treat (i) each Lender as the person
entitled to the benefit of the Contribution of such Lender for
all purposes of this Agreement unless and until a notice shall
have been filed with the Agent pursuant to clause 15.3 and
shall have become effective, and (ii) the office set
opposite the name of each of the Lenders in schedule 1 as
its lending office unless and until a written notice of change
of lending office shall have been received by the Agent and the
Agent may act upon any such notice unless and until the same is
superseded by a further such notice;
16.4.5 rely as to matters of fact which might reasonably be
expected to be within the knowledge of any Security Party upon a
certificate signed by any director or officer of the relevant
Security Party on behalf of the relevant Security Party; and
16.4.6 do anything which is in its opinion necessary or
desirable to comply with any law or regulation in any
jurisdiction.
16.5 No
Liability of Agent or Arranger or Payment Agent
None of the Security Trustee, the Agent, the Payment Agent the
Arranger nor any of their respective employees and agents shall:
16.5.1 be obliged to make any enquiry as to the use of any
of the proceeds of the Loan unless (in the case of the Agent) so
required in writing by a Lender, in which case the Agent shall
promptly make the appropriate request to the Borrowers; or
16.5.2 be obliged to make any enquiry as to any breach or
default by the Borrowers or any other Security Party in the
performance or observance of any of the provisions of the
Security Documents or as to the existence of a Default unless
(in the case of the Agent) the Agent has actual knowledge
thereof or has been notified in writing thereof by a Bank, in
which case the Agent shall promptly notify the Banks of the
relevant event or circumstance; or
16.5.3 be obliged to enquire whether or not any
representation or warranty made by the Borrowers or any other
Security Party pursuant to this Agreement or any of the other
Security Documents is true; or
16.5.4 be obliged to do anything (including, without
limitation, disclosing any document or information) which would,
or might in its opinion, be contrary to any law or regulation or
be a breach of any duty of confidentiality or otherwise be
actionable or render it liable to any person; or
16.5.5 be obliged to account to any Lender for any sum or
the profit element of any sum received by it for its own
account; or
16.5.6 be obliged to institute any Proceedings arising out
of or in connection with any of the Security Documents other
than on the instructions of the Majority Lenders; or
16.5.7 be liable to any Lender for any action taken or
omitted under or in connection with any of the Security
Documents unless caused by its gross negligence or wilful
misconduct.
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For the purposes of this clause 16, none of the Security
Trustee, the Arranger the Payment Agent or the Agent shall be
treated as having actual knowledge of any matter of which the
corporate finance or any other division outside the agency or
loan administration department of the Arranger, the Security
Trustee the Payment Agent or the Agent or the person for the
time being acting as the Arranger, the Security Trustee Payment
Agent or the Agent may become aware in the context of corporate
finance, advisory or lending activities from time to time
undertaken by the Arranger, the Security Trustee or the Agent
or, as the case may be, the Security Trustee or Agent for any
Security Party or any other person which may be a trade
competitor of any Security Party or may otherwise have
commercial interests similar to those of any Security Party.
16.6 Non
reliance on Arranger, Security Trustee, Agent or Payment
Agent
Each Lender and the Swap Bank acknowledges that it has not
relied on any statement, opinion, forecast or other
representation made by the Arranger, the Security Trustee, the
Payment Agent or the Agent to induce it to enter into any of the
Security Documents and that it has made and will continue to
make, without reliance on the Arranger, the Security Trustee,
the Payment Agent or the Agent and based on such documents as it
considers appropriate, its own appraisal of the creditworthiness
of the Security Parties and its own independent investigation of
the financial condition, prospects and affairs of the Security
Parties in connection with the making and continuation of such
Lenders Commitment or Contribution under this Agreement.
None of the Arranger, the Security Trustee, the Payment Agent
and the Agent shall have any duty or responsibility, either
initially or on a continuing basis, to provide any Lender or the
Swap Bank with any credit or other information with respect to
any Security Party whether coming into its possession before the
making of any Advance or the Loan or at any time or times
thereafter other than as provided in clause 16.3.1.
16.7 No
responsibility on the Arranger, the Security Trustee, Agent or
Payment Agent for Borrowers performance
None of the Arranger, the Security Trustee, the Payment Agent or
the Agent shall have any responsibility or liability to any
Lender or the Swap Bank:
16.7.1 on account of the failure of any Security Party to
perform its obligations under any of the Security
Documents; or
16.7.2 for the financial condition of any Security
Party; or
16.7.3 for the completeness or accuracy of any statements,
representations or warranties in any of the Security Documents
or any document delivered under any of the Security
Documents; or
16.7.4 for the execution, effectiveness, adequacy,
genuineness, validity, enforceability or admissibility in
evidence of any of the Security Documents or of any certificate,
report or other document executed or delivered under any of the
Security Documents; or
16.7.5 to investigate or make any enquiry into the title of
the Borrowers or any other Security Party to the Vessels or any
other security or any part thereof; or
16.7.6 for the failure to register any of the Security
Documents with any official or regulatory body or office or
elsewhere; or
16.7.7 for taking or omitting to take any other action
under or in relation to any of the Security Documents or any
aspect of any of the Security Documents; or
16.7.8 on account of the failure of the Security Trustee to
perform or discharge any of its duties or obligations under the
Security Documents; or
16.7.9 otherwise in connection with the Security Documents
or their negotiation or for acting (or, as the case may be,
refraining from acting) in accordance with the instructions of
the Lenders.
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16.8 Reliance
on documents and professional advice
Each of the Arranger, the Security Trustee, the Payment Agent
and the Agent shall be entitled to rely on any communication,
instrument or document believed by it to be genuine and correct
and to have been signed or sent by the proper person and shall
be entitled to rely as to legal or other professional matters on
opinions and statements of any legal or other professional
advisers selected or approved by it (including those in the
Arrangers, the Security Trustees, the Payment Agent
or Agents employment).
16.9 Other
dealings
Each of the Arranger, the Security Trustee, the Payment Agent
and the Agent may, without any liability to account to the
Lenders, accept deposits from, lend money to, and generally
engage in any kind of banking or other business with, and
provide advisory or other services to, any Security Party or any
company in the same group of companies as such Security Party or
any of the Lenders as if it were not the Arranger, the Security
Trustee, the Payment Agent or the Agent.
16.10 Rights
of Agent, Payment Agent as Lender; no partnership
With respect to its own Commitment and Contribution (if any) the
Security Trustee, the Payment Agent and the Agent shall have the
same rights and powers under the Security Documents as any other
Lender and may exercise the same as though it were not
performing the duties and functions delegated to it under this
Agreement and the term Lenders shall, unless the
context clearly otherwise indicates, include the Security
Trustee, the Payment Agent and the Agent in their respective
individual capacity as a Lender. This Agreement shall not be
construed so as to constitute a partnership between the parties
or any of them.
16.11 Amendments
and waivers
16.11.1 Subject to clause 16.11, the Arranger, the
Security Trustee, the Payment Agent
and/or the
Agent (as the case may be) may, with the consent of the Majority
Lenders (or if and to the extent expressly authorised by the
other provisions of any of the Security Documents) and, if so
instructed by the Majority Lenders, shall:
16.11.2 agree (or authorise the Security Trustee to agree)
amendments or modifications to any of the Security Documents
with the Borrowers
and/or any
other Security Party; and/or
16.11.3 vary or waive breaches of, or defaults under, or
otherwise excuse performance of, any provision of any of the
other Security Documents by the Borrowers
and/or any
other Security Party (or authorise the Security Trustee to do
so).
Any such action so authorised and effected by the Agent shall be
documented in such manner as the Security Trustee
and/or the
Payment Agent and/or the Agent (as the case may be) shall (with
the approval of the Majority Lenders) determine, shall be
promptly notified to the Lenders by the Security Trustee
and/or the
Payment Agent and/or the Agent (as the case may be) and (without
prejudice to the generality of clause 16.2) shall be
binding on the Lenders.
16.11.4 Except with the prior written consent of the
Lenders, the Security Trustee, the Payment Agent and the Agent
shall have no authority on behalf of the Lenders to agree (or
authorise the Security Trustee to agree) with the Borrowers
and/or any
other Security Party any amendment or modification to any of the
Security Documents or to grant (or authorise the Security
Trustee to grant) waivers in respect of breaches or defaults or
to vary or excuse (or authorise the Security Trustee to vary or
excuse) performance of or under any of the Security Documents by
the Borrowers
and/or any
other Security Party, if the effect of such amendment,
modification, waiver or excuse would be to:
(a) reduce the Margin, postpone the due date or reduce the
amount of any payment of principal, interest or other amount
payable by any Security Party under any of the Security
Documents;
(b) change the currency in which any amount is payable by
any Security Party under any of the Security Documents;
Annex C-46
(c) increase any Lenders Commitment;
(d) extend any Maturity Date;
(e) change any provision of any of the Security Documents
which expressly or impliedly requires the approval or consent of
all the Lenders such that the relevant approval or consent may
be given otherwise than with the sanction of all the Lenders;
(f) change the order of distribution under
clauses 6.10 and 13.1;
(g) change this clause 16.11;
(h) change the definition of Majority
Lenders in clause 1.2;
(i) release any Security Party from the security
constituted by any Security Document (except as required by the
terms thereof or by law) or change the terms and conditions upon
which such security or guarantee may be, or is required to be,
released.
16.12 Reimbursement
and indemnity by Lenders
Each Lender shall reimburse the Security Trustee, the Payment
Agent and the Agent (rateably in accordance with such
Lenders Commitment or, after the first Advance or the Loan
has been drawn, its Contribution,) to the extent that the
Security Trustee, the Payment Agent or the Agent is not
reimbursed by the Borrowers, for the costs, charges and expenses
incurred by the Security Trustee, the Payment Agent or the Agent
which are expressed to be payable by the Borrowers under
clause 5.3 including (in each case), without limitation,
the fees and expenses of legal or other professional advisers
provided that, if following any payment to the Security Trustee,
the Payment Agent or the Agent by a Lender under this clause the
Security Trustee, the Payment Agent or the Agent receives
payment from the Borrowers in respect of the same costs, fees or
expenses, the Security Trustee or the Agent shall upon receipt
thereof reimburse the relevant Lender. Each Lender must on
demand indemnify the Security Trustee, the Payment Agent or the
Agent (rateably in accordance with such Lenders Commitment
or, after the first Advance or the Loan has been drawn, its
Contribution) against all liabilities, damages, costs and claims
whatsoever incurred by the Security Trustee in connection with
any of the Security Documents or the performance of its duties
under any of the Security Documents or any action taken or
omitted by the Security Trustee or, as the case may be, the
Payment Agent or the Agent, under any of the Security Documents,
unless such liabilities, damages, costs or claims arise from the
Security Trustees or as the case may be, the Payment
Agents or the Agents own gross negligence or wilful
misconduct.
16.13 Retirement
of the Security Trustee /Agent Payment Agent
16.13.1 The Agent and the Payment Agent may, having given
to the Borrowers and each of the Lenders not less than fifteen
(15) days notice of its intention to do so, retire
from its appointment as the Security Trustee, the Payment Agent
or the Agent (as the case may be) under this Agreement, provided
that no such retirement shall take effect unless there has been
appointed by the Lenders as a successor agent:
(a) a company in the same group of companies as the
Security Trustee or, as the case may be, the Payment Agent or
the Agent nominated by the Security Trustee or, as the case may
be, the Payment Agent or the Agent,
(b) a Lender nominated by the Majority Lenders or, failing
such a nomination,
(c) any reputable and experienced bank or financial
institution nominated by the retiring Payment Agent or the
retiring Agent or, as the case may be, the retiring Security
Trustee.
Any corporation into which the retiring Agent
and/or the
retiring Payment Agent and/or the retiring Security Trustee (as
the case may be) may be merged or converted or any corporation
with which the Security Trustee and/or the Payment Agent
and/or the
Agent (as the case may be) may be consolidated or any
corporation resulting from any merger, conversion, amalgamation,
consolidation or other reorganisation to which the Security
Trustee or the Payment Agent or the Agent (as the case may be)
shall be a party shall, to
Annex C-47
the extent permitted by applicable law, be the successor Agent
or Security Trustee under this Agreement and the other Security
Documents without the execution or filing of any document or any
further act on the part of any of the parties to the Security
Documents save that notice of any such merger, conversion,
amalgamation, consolidation or other reorganisation shall
forthwith be given to each Security Party and the Lenders. Prior
to any such successor being appointed, the Agent agrees to
consult with the Borrowers and the Lenders as to the identity of
the proposed successor and to take account of any reasonable
objections which the Borrowers and the Lenders may raise to such
successor being appointed.
16.13.2 If the Majority Lenders, acting reasonably, are of
the opinion that the Security Trustee or Payment Agent or Agent
is unable to fulfil its respective obligations under this
Agreement in a professional and acceptable manner, then they may
require the Security Trustee or Payment Agent or Agent, by
written notice, to resign in accordance with
clause 16.13.1, which the Agent shall promptly do, and the
terms of clause 16.13.1 shall apply to the appointment of
any substitute Security Trustee or Payment Agent or Agent, save
that the same shall be appointed by the Majority Lenders and not
by all of the Lenders.
16.13.3 Upon any such successor as aforesaid being
appointed, the retiring Agent or, as the case may be, the
Security Trustee or the Payment Agent shall be discharged from
any further obligation under the Security Documents (but shall
continue to have the benefit of this clause 16 in respect
of any action it has taken or refrained from taking prior to
such discharge) and its successor and each of the other parties
to this Agreement shall have the same rights and obligations
among themselves as they would have had if such successor had
been a party to this Agreement in place of the retiring Agent or
Payment Agent or Security Trustee. The retiring Agent or Payment
Agent shall (at its own expense) provide its successor with
copies of such of its records as its successor reasonably
requires to carry out its functions under the Security Documents.
16.14 Appointment
and retirement of Security Trustee
16.14.1 Appointment
Each of the Lenders, the Swap Bank and the Agent irrevocably
appoints the Security Trustee as its Security Trustee and
trustee for the purposes of the Security Documents, in each case
on the terms set out in this Agreement. Accordingly, each of the
Lenders, the Swap Bank and the Agent hereby authorises the
Security Trustee (whether or not by or through employees or
agents) to take such action on its behalf and to exercise such
rights, remedies, powers and discretions as are specifically
delegated to the Security Trustee by this Agreement
and/or the
Security Documents, together with such powers and discretions as
are reasonably incidental thereto.
16.14.2 Retirement
Without prejudice to clause 16.13, the Security Trustee
may, having given to the Borrowers and each of the Lenders and
the Swap Bank not less than fifteen (15) days notice
of its intention to do so, retire from its appointment as
Security Trustee under this Agreement and any Trust Deed,
provided that no such retirement shall take effect unless there
has been appointed by the Lenders and the Agent as a successor
Security Trustee and trustee:
(a) a company in the same group of companies of the
Security Trustee nominated by the Security Trustee which the
Lenders hereby irrevocably and unconditionally agree to appoint
or, failing such nomination,
(b) a Lender or trust corporation nominated by the Majority
Lenders or, failing such a nomination,
(c) any bank or trust corporation nominated by the retiring
Security Trustee,
and, in any case, such successor Security Trustee and trustee
shall have duly accepted such appointment by delivering to the
Agent (i) written confirmation (in a form acceptable to the
Agent) of such acceptance agreeing to be bound by this Agreement
in the capacity of Security Trustee as if it had been an
original party to this Agreement and (ii) a duly executed
Trust Deed.
Any corporation into which the retiring Security Trustee may be
merged or converted or any corporation with which the Security
Trustee may be consolidated or any corporation resulting from
any merger,
Annex C-48
conversion, amalgamation, consolidation or other reorganisation
to which the Security Trustee shall be a party shall, to the
extent permitted by applicable law, be the successor Security
Trustee under this Agreement, any Trust Deed and the other
Security Documents without the execution or filing of any
document or any further act on the part of any of the parties to
this Agreement, any Trust Deed and the other Security
Documents save that notice of any such merger, conversion,
amalgamation, consolidation or other reorganisation shall
forthwith be given to each Security Party, the Swap Bank and the
Lenders. Prior to any such successor being appointed, the
Security Trustee agrees to consult with the Borrowers as to the
identity of the proposed successor and to take account of any
reasonable objections which the Borrowers may raise to such
successor being appointed.
Upon any such successor as aforesaid being appointed, the
retiring Security Trustee shall be discharged from any further
obligation under the Security Documents (but shall continue to
have the benefit of this clause 16 in respect of any action
it has taken or refrained from taking prior to such discharge)
and its successor and each of the other parties to this
Agreement shall have the same rights and obligations among
themselves as they would have had if such successor had been a
party to this Agreement in place of the retiring Security
Trustee. The retiring Security Trustee shall (at its own
expense) provide its successor with copies of such of its
records as its successor reasonably requires to carry out its
functions under the Security Documents.
16.15 Powers
and duties of the Security Trustee
16.15.1 The Security Trustee shall have no duties,
obligations or liabilities to any of the Lenders and the Agent
beyond those expressly stated in any of the Security Documents.
Each of the Agent and the Swap Bank, the Lenders hereby
authorises the Security Trustee to enter into and execute:
(a) each of the Security Documents to which the Security
Trustee is or is intended to be a party; and
(b) any and all such other Security Documents as may be
approved by the Agent in writing (acting on the instructions of
the Majority Lenders) for entry into by the Security Trustee,
and, in each and every case, to hold any and all security
thereby created upon trust for the Lenders, the Swap Bank and
the Agent for the time being in the manner contemplated by this
Agreement.
16.15.2 Subject to clause 16.15.3 the Security Trustee
may, with the prior consent of the Majority Lenders communicated
in writing by the Agent, concur with any of the Security Parties
to:
(a) amend, modify or otherwise vary any provision of the
Security Documents to which the Security Trustee is or is
intended to be a party; or
(b) waive breaches of, or defaults under, or otherwise
excuse performance of, any provision of the Security Documents
to which the Security Trustee is or is intended to be a
party; or
(c) give any consents to any Security Party in respect of
any provision of any Security Document
Any such action so authorised and effected by the Security
Trustee shall be promptly notified to the Lenders, the Swap Bank
and the Agent by the Security Trustee and shall be binding on
the other Banks.
16.15.3 The Security Trustee shall not concur with any
Security Party with respect to any of the matters described in
clause 16.11.4 without the consent of the Lenders
communicated in writing by the Agent.
16.15.4 The Security Trustee shall (subject to the other
provisions of this clause 16) take such action or, as
the case may be, refrain from taking such action, with respect
to any of its rights, powers and discretions as Security Trustee
and trustee, as the Agent may direct. Subject as provided in the
foregoing provisions of this clause, unless and until the
Security Trustee has received such instructions from the Agent,
the Security Trustee may, but shall not be obliged to, take (or
refrain from taking) such action under or pursuant to the
Security Documents referred to in clause 16.14 as the
Security Trustee shall deem advisable in the best interests of
the Banks provided that (for the avoidance of doubt), to the
extent that this clause might otherwise be construed as
authorising the Security Trustee to take, or refrain from
taking, any action of the nature referred to in
clause 16.15.2 and for which the prior consent
of the Lenders is expressly required under
clause 16.15.3 clauses 16.15.2 and 16.15.3
shall apply to the exclusion of this clause.
Annex C-49
16.15.5 None of the Lenders, the Swap Bank nor the Agent
shall have any independent power to enforce any of the Security
Documents referred to in clause 16.14 or to exercise any
rights, discretions or powers or to grant any consents or
releases under or pursuant to such Security Documents or any of
them or otherwise have direct recourse to the security
and/or
guarantees constituted by such Security Documents or any of them
except through the Security Trustee.
16.15.6 For the purpose of this clause 16, the
Security Trustee may, rely and act in reliance upon any
information from time to time furnished to the Security Trustee
by the Agent (whether pursuant to clause 16.15.7 or
otherwise) unless and until the same is superseded by further
such information, so that the Security Trustee shall have no
liability or responsibility to any party as a consequence of
placing reliance on and acting in reliance upon any such
information unless the Security Trustee has actual knowledge
that such information is inaccurate or incorrect.
16.15.7 Without prejudice to the foregoing each of the
Agent, the Swap Bank and the Lenders (whether directly or
through the Agent) shall provide the Security Trustee with such
written information as it may reasonably require for the purpose
of carrying out its duties and obligations under the Security
Documents referred to in clause 16.14.
16.16 Trust
provisions
16.16.1 The trusts constituted or evidenced in or by this
Agreement and the Trust Deed shall remain in full force and
effect until whichever is the earlier of:
(a) the expiration of a period of eighty (80) years
from the date of this Agreement; and
(b) receipt by the Security Trustee of confirmation in
writing by the Agent that there is no longer outstanding any
Indebtedness (actual or contingent) which is secured or
guaranteed or otherwise assured by or under any of the Security
Documents,
and the parties to this Agreement declare that the perpetuity
period applicable to this Agreement and the trusts declared by
the Trust Deed shall for the purposes of the Perpetuities
and Accumulations Act 1964 be the period of eighty
(80) years from the date of this Agreement.
16.16.2 In its capacity as trustee in relation to the
Security Documents specified in clause 16.14, the Security
Trustee shall, without prejudice to any of the powers,
discretions and immunities conferred upon trustees by law (and
to the extent not inconsistent with the provisions of any of
those Security Documents), have all the same powers and
discretions as a natural person acting as the beneficial owner
of such property
and/or as
are conferred upon the Security Trustee by any of those Security
Documents.
16.16.3 It is expressly declared that, in its capacity as
trustee in relation to the Security Documents specified in
clause 16.14, the Security Trustee shall be entitled to
invest moneys forming part of the security and which, in the
opinion of the Security Trustee, may not be paid out promptly
following receipt in the name or under the control of the
Security Trustee in any of the investments for the time being
authorised by law for the investment by trustees of trust moneys
or in any other property or investments whether similar to the
aforesaid or not or by placing the same on deposit in the name
or under the control of the Security Trustee as the Security
Trustee may think fit without being under any duty to diversify
its investments and the Security Trustee may at any time vary or
transpose any such property or investments for or into any
others of a like nature and shall not be responsible for any
loss due to depreciation in value or otherwise of such property
or investments. Any investment of any part or all of the
security may, at the discretion of the Security Trustee, be made
or retained in the names of nominees.
16.17 Independent
action by Banks
None of the Banks shall enforce, exercise any rights, remedies
or powers or grant any consents or releases under or pursuant
to, or otherwise have a direct recourse to the security
and/or
guarantees constituted by any of the Security Documents without
the prior written consent of the Majority Lenders but, provided
such consent has been obtained, it shall not be necessary for
any other Bank to be joined as an additional party in any
Proceedings for this purpose.
Annex C-50
16.18 Common
Agent and Security Trustee
The Agent and the Security Trustee have entered into the
Security Documents in their separate capacities (a) as
agent for the Lenders under and pursuant to this Agreement (in
the case of the Agent) and (b) as Security Trustee and
trustee for the Lenders, the Swap Bank and the Agent under and
pursuant to this Agreement, to hold the guarantees
and/or
security created by the Security Documents specified in
clause 16.14 on the terms set out in such Security
Documents (in the case of the Security Trustee). If and when the
Agent and the Security Trustee are the same entity and any
Security Document provides for the Agent to communicate with or
provide instructions to the Security Trustee (and vice versa),
all parties to this Agreement agree that any such communications
or instructions on such occasions are unnecessary and are hereby
waived.
16.19 Co-operation
to achieve agreed priorities of application
The Lenders and the Agent shall co-operate with each other and
with the Security Trustee and any receiver under the Security
Documents in realising the property and assets subject to the
Security Documents and in ensuring that the net proceeds
realised under the Security Documents after deduction of the
expenses of realisation are applied in accordance with
clause 13.1.
16.20 The
Prompt distribution of proceeds
Moneys received by any of the Banks (whether from a receiver or
otherwise) pursuant to the exercise of (or otherwise by virtue
of the existence of) any rights and powers under or pursuant to
any of the Security Documents shall (after providing for all
costs, charges, expenses and liabilities and other payments
ranking in priority) be paid to the Agent for distribution (in
the case of moneys so received by any of the Banks other than
the Agent or the Security Trustee) and shall be distributed by
the Agent or, as the case may be, the Security Trustee (in the
case of moneys so received by the Agent or, as the case may be,
the Security Trustee) in each case in accordance with
clause 13.1. The Agent or, as the case may be, the Security
Trustee shall make each such application
and/or
distribution as soon as is practicable after the relevant moneys
are received by, or otherwise become available to, the Agent or,
as the case may be, the Security Trustee save that (without
prejudice to any other provision contained in any of the
Security Documents) the Agent or, as the case may be, the
Security Trustee (acting on the instructions of the Majority
Lenders) or any receiver may credit any moneys received by it to
a suspense account for so long and in such manner as the Agent
or such receiver may from time to time determine with a view to
preserving the rights of the Agent
and/or the
Security Trustee
and/or the
Account Bank
and/or the
Arranger
and/or the
Lenders, the Swap Bank or any of them to provide for the whole
of their respective claims against the Borrowers or any other
person liable.
16.21 Reconventioning
After consultation with the Borrowers and the Lenders and
notwithstanding clause 16.11, the Agent shall be entitled
to make such amendments to this Agreement as it may determine to
be necessary to take account of any changes in market practices
as a consequence of the European Monetary Union (whether as to
the settlement or rounding of obligations, business days, the
calculation of interest or otherwise whatsoever). So far as
possible such amendments shall be such as to put the parties in
the same position as if the event or events giving rise to the
need to amend this Agreement had not occurred. Any amendment so
made to this Agreement by the Agent shall be promptly notified
to the other parties hereto and shall be binding on all parties
hereto.
16.22 Exclusivity
Without prejudice to the Borrowers rights, in certain
instances, to give their consent thereunder, clauses 15 and
16 are for the exclusive benefit of the Banks.
Annex C-51
17 NOTICES
AND OTHER MATTERS
17.1 Notices
17.1.1 unless otherwise specifically provided herein, every
notice under or in connection with this Agreement shall be given
in English by letter delivered personally
and/or sent
by post
and/or
transmitted by fax
and/or
electronically;
17.1.2 in this clause notice includes any
demand, consent, authorisation, approval, instruction,
certificate, request, waiver or other communication.
17.2 Addresses
for communications, effective date of notices
17.2.1 Subject to clause 17.2.2, clause 17.2.5
and 17.3 notices to the Borrowers shall be deemed to have been
given and shall take effect when received in full legible form
by the Borrowers at the address
and/or the
fax number appearing below (or at such other address or fax
number as the Borrowers may hereafter specify for such purpose
to the Agent by notice in writing);
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Address
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c/o Navios
ShipManagement Inc.
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85 Akti Miaouli
Piraeus
Greece
Fax no: + 30 210 453 2070
17.2.2 notwithstanding the provisions of clause 17.2.1
or clause 17.2.5, a notice of Default and/or a notice given
pursuant to clause 10.2 or clause 10.3 to the
Borrowers shall be deemed to have been given and shall take
effect when delivered, sent or transmitted by the Banks or any
of them to the Borrowers to the address or fax number referred
to in clause 17.2.1;
17.2.3 subject to clause 17.2.5, notices to Payment
Agent and/or the Agent and/or the Security Trustee and/or
Account Bank and/or Security Trustee and/or the Swap Bank shall
be deemed to be given, and shall take effect, when received in
full legible form by the Payment Agent and/or Agent and/or the
Security Trustee at the address and/or the fax number address
appearing below (or at any such other address or fax number as
the Payment Agent and/or Agent and/or the Security Trustee (as
appropriate) may hereafter specify for such purpose to the
Borrowers and the other Lenders by notice in writing);
2-14 Friedrich-Ebert-Anlage
60325 Frankfurt-Am-Main
Germany
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Attn:
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Loan Administration Dept.
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with a copy to:
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DVB Bank AG
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95 Akti Miaouli
Piraeus 185 38
Greece
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Attn:
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Loans Administration
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Fax no:
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+30210 429 1284
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Payment Agent:
Vas Sofias 94& Kerasountos 1
Annex C-52
115 28 Athens, Greece
Fax:
Attn: Yiannis
Karamanolis/Domna Dimitriadou
17.2.4 subject to clause 17.2.5 and 17.3, notices to a
Lender shall be deemed to be given and shall take effect when
received in full legible form by such Lender at its address
and/or fax
number specified in schedule 1 or in any relevant Transfer
Certificate (or at any other address or fax number as such
Lender may hereafter specify for such purpose to the other
Banks); and
17.2.5 if under clause 17.2.1 or clause 17.2.3 a
notice would be deemed to have been given and effective on a day
which is not a working day in the place of receipt or is outside
the normal business hours in the place of receipt, the notice
shall be deemed to have been given and to have taken effect at
the opening of business on the next working day in such place.
17.3 Electronic
Communication
17.3.1 Any communication to be made by
and/or
between the Banks or any of them and the Security Parties or any
of them under or in connection with the Security Documents or
any of them may be made by electronic mail or other electronic
means, if and provided that all such parties:
(a) 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
(b) notify each other of any change to their electronic
mail address or any other such information supplied by them.
17.3.2 Any electronic communication made by
and/or
between the Banks or any of them and the Security Parties or any
of them will be effective only when actually received in
readable form and, in the case of any electronic communication
made by the Borrowers or the Lenders to the Agent, only if it is
addressed in such manner as the Agent shall specify for this
purpose.
17.4 Notices
through the Agent
Every notice under this Agreement or (unless otherwise provided
therein) any other Security Document to be given by the
Borrowers to any other party, shall be given to the Agent for
onward transmission as appropriate and every notice under this
Agreement to be given to the Borrowers shall (except as
otherwise provided in the Security Documents) be given to the
Borrowers by the Agent.
18 BORROWERS
OBLIGATIONS
18.1 Joint
and several
Regardless of any other provision in any of the Security
Documents, all obligations and liabilities whatsoever of the
Borrowers herein contained are joint and several and shall be
construed accordingly. Each of the Borrowers agrees and consents
to be bound by the Security Documents to which it becomes a
party notwithstanding that the other Borrower may not do so or
be effectually bound and notwithstanding that any of the
Security Documents may be invalid or unenforceable against the
other Borrower, whether or not the deficiency is known to any
Bank.
18.2 Borrowers
as principal debtors
Each Borrower acknowledges that it is a principal and original
debtor in respect of all amounts which may become payable by the
Borrowers in accordance with the terms of any of the Security
Documents and agrees that each Bank may continue to treat it as
such, whether or not such Bank is or becomes aware that such
Borrower is or has become a surety for the other Borrower.
Annex C-53
18.3 Indemnity
The Borrowers undertake to keep the Banks fully indemnified on
demand against all claims, damages, losses, costs and expenses
arising from any failure of any Borrower to perform or discharge
any purported obligation or liability of that Borrower which
would have been the subject of this Agreement or any other
Security Document had it been valid and enforceable and which is
not or ceases to be valid and enforceable against the other
Borrower on any ground whatsoever, whether or not known to any
Bank including, without limitation, any irregular exercise or
absence of any corporate power or lack of authority of, or
breach of duty by, any person purporting to act on behalf of the
other Borrower (or any legal or other limitation, whether under
the Limitation Acts or otherwise or any disability or death,
bankruptcy, unsoundness of mind, insolvency, liquidation,
dissolution, winding up, administration, receivership,
amalgamation, reconstruction or any other incapacity of any
person whatsoever (including, in the case of a partnership, a
termination or change in the composition of the partnership) or
any change of name or style or constitution of any Security
Party)).
18.4 Liability
unconditional
None of the obligations or liabilities of the Borrowers under
any Security Document shall be discharged or reduced by reason
of:
18.4.1 the death, bankruptcy, unsoundness of mind,
insolvency, liquidation, dissolution,
winding-up,
administration, receivership, amalgamation, reconstruction or
other incapacity of any person whatsoever (including, in the
case of a partnership, a termination or change in the
composition of the partnership) or any change of name or style
or constitution of any Borrower or any other person liable;
18.4.2 any Bank granting any time, indulgence or concession
to, or compounding with, discharging, releasing or varying the
liability of, any Borrower or any other person liable or
renewing, determining, varying or increasing any accommodation,
facility or transaction or otherwise dealing with the same in
any manner whatsoever or concurring in, accepting, varying any
compromise, arrangement or settlement or omitting to claim or
enforce payment from any Borrower or any other person
liable; or
18.4.3 anything done or omitted which but for this
provision might operate to exonerate the Borrowers or all of
them.
18.5 Recourse
to other security
No Bank shall be obliged to make any claim or demand or to
resort to any security or other means of payment now or
hereafter held by or available to them for enforcing any of the
Security Documents against any Borrower or any other person
liable and no action taken or omitted by any Bank in connection
with any such security or other means of payment will discharge,
reduce, prejudice or affect the liability of the Borrowers under
the Security Documents to which any of them is, or is to be, a
party.
18.6 Waiver
of Borrowers rights
Each Borrower agrees with the Banks that, throughout the
Facility Period, it will not, without the prior written consent
of the Agent:
18.6.1 exercise any right of subrogation, reimbursement and
indemnity against the other Borrower or any other person liable
under the Security Documents;
18.6.2 demand or accept repayment in whole or in part of
any Indebtedness now or hereafter due to such Borrower from the
other Borrower or from any other person liable for such
Indebtedness or demand or accept any guarantee against financial
loss or any document or instrument created or evidencing an
Encumbrance in respect of the same or dispose of the same;
18.6.3 take any steps to enforce any right against the
other Borrower or any other person liable in respect of any such
moneys; or
Annex C-54
18.6.3 claim any set-off or counterclaim against the other
Borrower or any other person liable or claim or prove in
competition with any Bank in the liquidation of the other
Borrower or any other person liable or have the benefit of, or
share in, any payment from or composition with, the other
Borrower or any other person liable or any security granted
under any Security Document now or hereafter held by any Bank
for any moneys owing under this Agreement or for the obligations
or liabilities of any other person liable but so that, if so
directed by the Agent, it will prove for the whole or any part
of its claim in the liquidation of the other Borrower or other
person liable on terms that the benefit of such proof and all
money received by it in respect thereof shall be held on trust
for the Banks and applied in or towards discharge of any moneys
owing under this Agreement in such manner as the Agent shall
require.
19 GOVERNING
LAW
This Agreement is governed by and shall be construed in
accordance with English law.
20 JURISDICTION
20.1 Exclusive
Jurisdiction
For the benefit of the Banks, and subject to clause 20.4
below, the Borrowers hereby irrevocably agree that the courts of
England shall have exclusive jurisdiction:
20.1.1 to settle any disputes or other matters whatsoever
arising under or in connection with this Agreement and any
disputes or other such matters arising in connection with the
negotiation, validity or enforceability of this Agreement or any
part thereof, whether the alleged liability shall arise under
the laws of England or under the laws of some other country and
regardless of whether a particular cause of action may
successfully be brought in the English courts; and
20.1.2 to grant interim remedies or other provisional or
protective relief.
20.2 Submission
and service of process
Each Borrower accordingly irrevocably and unconditionally
submits to the jurisdiction of the English courts. Without
prejudice to any other mode of service each Borrower:
20.2.1 irrevocably empowers and appoints HFW Nominees Ltd
at present of Friary Court, 65 Crutched Friars, London EC3N 2AE,
England as its agent to receive and accept on its behalf any
process or other document relating to any proceedings before the
English courts in connection with this Agreement;
20.2.2 agrees to maintain such an agent for service of
process in England from the date hereof until the end of the
Facility Period;
20.2.3 agrees that failure by a process agent to notify the
Borrowers of service of process will not invalidate the
proceedings concerned;
20.2.4 without prejudice to the effectiveness of service of
process on its agent under clause 20.2.1 above but as an
alternative method, consents to the service of process relating
to any such proceedings by mailing or delivering a copy of the
process to its address for the time being applying under
clause 17.2;
20.2.5 agrees that if the appointment of any person
mentioned in clause 20.2.1 ceases to be effective, the
Borrowers shall immediately appoint a further person in England
to accept service of process on its behalf in England and,
failing such appointment within seven (7) days the Agent
shall thereupon be entitled and is hereby irrevocably authorised
by the Borrowers in those circumstances to appoint such person
by notice to the Borrowers.
Annex C-55
20.3 Forum
non conveniens and enforcement abroad
Each Borrower:
20.3.1 waives any right and agrees not to apply to the
English court or other court in any jurisdiction whatsoever to
stay or strike out any proceedings commenced in England on the
ground that England is an inappropriate forum
and/or that
Proceedings have been or will be started in any other
jurisdiction in connection with any dispute or related matter
falling within clause 20.1; and
20.3.2 agrees that a judgment or order of an English court
in a dispute or other matter falling within clause 20.1
shall be conclusive and binding on the Borrowers and may be
enforced against it in the courts of any other jurisdiction.
20.4 Right
of Agent, but not Borrowers, to bring proceedings in any other
jurisdiction
20.4.1 Nothing in this clause 20 limits the right of
any Lender to bring Proceedings, including third party
proceedings, against any one or all Borrowers, or to apply for
interim remedies, in connection with this Agreement in any other
court and/or
concurrently in more than one jurisdiction;
20.4.2 the obtaining by any Lender of judgment in one
jurisdiction shall not prevent such Lender from bringing or
continuing proceedings in any other jurisdiction, whether or not
these shall be founded on the same cause of action.
20.5 Enforceability
despite invalidity of Agreement
Without prejudice to the generality of clause 13.9, the
jurisdiction agreement contained in this clause 20 shall be
severable from the rest of this Agreement and shall remain
valid, binding and in full force and shall continue to apply
notwithstanding this Agreement or any part thereof being held to
be avoided, rescinded, terminated, discharged, frustrated,
invalid, unenforceable, illegal
and/or
otherwise of no effect for any reason.
20.6 Effect
in relation to claims by and against non-parties
20.6.1 For the purpose of this clause Foreign
Proceedings shall mean any Proceedings except proceedings
brought or pursued in England arising out of or in connection
with (i) or in any way related to any of the Security
Documents or any assets subject thereto or (ii) any action
of any kind whatsoever taken by any Bank pursuant thereto or
which would, if brought by any or all of the Borrowers against
any Bank, have been required to be brought in the English courts;
20.6.2 no Borrower shall bring or pursue any Foreign
Proceedings against any Bank and shall use its best endeavours
to prevent persons not party to this Agreement from bringing or
pursuing any Foreign Proceedings against any Bank;
20.6.3 If, for any reason whatsoever, any Security Party
and/or any
person connected howsoever with any Security Party brings or
pursues against any Bank any Foreign Proceedings, the Borrowers
shall indemnify such Bank on demand in respect of any and all
claims, losses, damages, demands, causes of action, liabilities,
costs and expenses (including, but not limited to, legal costs)
of whatsoever nature howsoever arising from or in connection
with such Foreign Proceedings which such Bank (or the Agent on
its behalf) certifies as having been incurred by it;
20.6.4 the Banks and the Borrowers hereby agree and declare
that the benefit of this clause 20 shall extend to and may
be enforced by any officer, employee, agent or business
associate of any of the Banks against whom a Borrower brings a
claim in connection howsoever with any of the Security Documents
or any assets subject thereto or any action of any kind
whatsoever taken by, or on behalf of or for the purported
benefit of any Bank pursuant thereto or which, if it were
brought against any Bank, would fall within the material scope
of clause 20.1. In those circumstances this clause 20
shall be read and construed as if references to any Bank were
references to such officer, employee, agent or business
associate, as the case may be.
Annex C-56
Execution Pages
IN WITNESS whereof the parties to this Agreement have
caused this Agreement to be duly executed on the date first
above written.
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SIGNED as a deed for and on behalf of
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)
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/s/ Alexandros Laios
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SIFNOS SHIPPING CORPORATION
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)
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(as Borrower under and pursuant to
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)
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a power of attorney dated
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)
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30 March 2010) in the presence of
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)
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/s/ Ronan Le Du
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SIGNED as a deed for and on behalf of
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/s/ Alexandros Laios
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SKIATHOS SHIPPING CORPORATION
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)
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(as Borrower under and pursuant to
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)
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a power of attorney dated
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)
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30 March 2010) in the presence of
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)
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/s/ Ronan Le Du
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SIGNED as a deed for and on behalf of
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/s/ Alexandros Laios
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SYROS SHIPPING CORPORATION
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)
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(as Borrower under and pursuant to
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)
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a power of attorney dated
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)
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30 March 2010) in the presence of
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)
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/s/ Ronan Le Du
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SIGNED by
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/s/ Dimitris Christacopoulos
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for and on behalf of
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)
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/s/ Promodus Papatheodorou
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FORTIS BANK
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)
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(as a Lender) in the presence of
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/s/ Ronan Le Du
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SIGNED by
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/s/ Robin Parry
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for and on behalf of
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)
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DVB BANK SE
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)
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(as a Lender) in the presence of
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)
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/s/ Ronan Le Du
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SIGNED by
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)
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/s/ Robin Parry
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for and on behalf of
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)
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DVB BANK SE
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)
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(as a Agent) in the presence of
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/s/ Ronan Le Du
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SIGNED by
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/s/ Dimitris Christacopoulos
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for and on behalf of
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)
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/s/ Prodromos Papatheodorou
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FORTIS BANK
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)
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(as Account Bank, Arranger, Payment Agent,
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Swap Bank and Security Trustee
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)
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in the presence of
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)
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/s/ Ronan Le Du
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Annex C-57
ANNEX D
Revolving
Credit Facility
[To be
filed with the definitive proxy statement]
Annex D-1
ANNEX E
Form of
$52.0 Million Credit Agreement
[To be
filed with the definitive proxy statement]
Annex E-1
ANNEX F
MANAGEMENT
AGREEMENT
THIS AGREEMENT is entered into on, and effective as of, the
Closing Date (as defined herein) by and between NAVIOS MARITIME
ACQUISITION CORPORATION, a corporation duly organized and
existing under the laws of the Marshall Islands with its
registered office at 85 Akti Miaouli Street, Piraeus, Greece 185
38 (Navios Acquisition) and NAVIOS SHIPMANAGEMENT
INC., a company duly organized and existing under the laws of
the Marshall Islands with its registered office at 85 Akti
Miaouli Street, Piraeus, Greece 185 38 (the Manager).
WHEREAS:
A. Navios Acquisition, a corporation whose common stock is
listed and trades on the New York Stock Exchange, will own
vessels and require certain commercial and technical management
services for the operation of its fleet; and
B. Navios Acquisition wishes to engage the Manager to
provide such commercial and technical management services to
Navios Acquisition on the terms set out herein.
NOW THEREFORE, the parties agree that, in consideration for the
Manager providing the commercial and technical management
services set forth in Schedule A to this
Agreement (the Services), and subject to the
Terms and Conditions set forth in Article I attached
hereto, Navios Acquisition shall (i) during the first two
(2) years of the initial term of this Agreement, pay to the
Manager the fees set forth in Schedule B to
this Agreement (the Fees) and, if applicable,
the Extraordinary Fees and Costs and (ii) during the
remaining three (3) years of the initial term of this
Agreement, reimburse the Manager for the actual costs and
expenses incurred by the Manager in the manner provided for in
Schedule B to this Agreement (the
Costs and Expenses).
IN WITNESS WHEREOF the Parties have executed this Agreement by
their duly authorized signatories with effect on the date first
above written.
NAVIOS MARITIME ACQUISITION CORPORATION
Name: Angeliki Frangou
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Title:
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Chief Executive Officer
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NAVIOS SHIPMANAGEMENT INC.
Name: Angeliki Frangou
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Title:
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Chief Executive Officer
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Annex F-1
ARTICLE I
TERMS AND
CONDITIONS
Section 1. Definitions. In
this Agreement, the term:
Change of Control means with respect
to any entity, an event in which securities of any class
entitling the holders thereof to elect a majority of the members
of the board of directors or other similar governing body of the
entity are acquired, directly or indirectly, by a
person or group (within
the meaning of Sections 13(d) or 14(d)(2) of the Exchange
Act), who did not immediately before such acquisition own
securities of the entity entitling such person or group to elect
such majority (and for the purpose of this definition, any such
securities held by another person who is related to such person
shall be deemed to be owned by such person);
Closing Date means the closing date of
the acquisition by Navios Acquisition of the stock of Aegean Sea
Maritime Holdings Inc.
Extraordinary Fees and Costs means the
fees and costs listed in Schedule C to this
Agreement;
Navios Acquisition Group means Navios
Acquisition and subsidiaries of Navios Acquisition
Vessels means all vessels that are
owned, from time to time by Navios Acquisition Group.
Section 2. General. The
Manager shall provide the Services, in a commercially reasonable
manner, as Navios Acquisition, may from time to time direct, all
under the supervision of Navios Acquisition. The Manager shall
perform the Services to be provided hereunder in accordance with
customary ship management practice and with the care, diligence
and skill that a prudent manager of vessels such as the Vessels
would possess and exercise.
Section 3. Covenants. During
the term of this Agreement the Manager shall:
(a) diligently provide or subcontract for the provision of
(in accordance with Section 18 hereof) the Services to
Navios Acquisition as an independent contractor, and be
responsible to Navios Acquisition for the due and proper
performance of same;
(b) retain at all times a qualified staff so as to maintain
a level of expertise sufficient to provide the Services; and
(c) keep full and proper books, records and accounts
showing clearly all transactions relating to its provision of
Services in accordance with established general commercial
practices and in accordance with United States generally
accepted accounting principles.
Section 4. Non-exclusivity. The
Manager and its employees may provide services of a nature
similar to the Services to any other person. There is no
obligation for the Manager to provide the Services to Navios
Acquisition on an exclusive basis.
Section 5. Confidential
Information. The Manager shall be obligated
to keep confidential, both during and after the term of this
Agreement, all information it has acquired or developed in the
course of providing Services under this Agreement, except to the
extent disclosure of such information is required by applicable
law, including without limitation applicable securities laws.
Navios Acquisition shall be entitled to any equitable remedy
available at law or equity, including specific performance,
against a breach by the Manager of this obligation. The Manager
shall not resist such application for relief on the basis that
Navios Acquisition has an adequate remedy at law, and the
Manager shall waive any requirement for the securing or posting
of any bond in connection with such remedy.
Section 6. Service
Fee/Reimbursement of Costs and Expenses. In
consideration for the Manager providing the Services,
(i) during the first two (2) years of the initial term
of this Agreement, Navios Acquisition shall pay the Manager the
Fees as set out in Schedule B to this
Agreement and the Extraordinary Fees and Costs, if applicable,
and (ii) during the remaining three (3) years of the
initial term of
Annex F-2
this Agreement, Navios Acquisition shall reimburse the Manager
for the actual costs and expenses incurred by the Manager in the
manner provided for in Schedule B.
Section 7. General
Relationship Between The Parties. The
relationship between the parties is that of independent
contractor. The parties to this Agreement do not intend, and
nothing herein shall be interpreted so as, to create a
partnership, joint venture, employee or agency relationship
between the Manager and any one or more of Navios Acquisition or
any member of the Navios Acquisition Group.
Section 8. Force
Majeure and Indemnity.
(i) Neither Navios Acquisition nor the Manager shall be
under any liability for any failure to perform any of their
obligations hereunder by reason of any cause whatsoever of any
nature or kind beyond their reasonable control.
(ii) The Manager shall be under no liability whatsoever to
Navios Acquisition 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 Vessels) and howsoever arising
in the course of performance of the Services, unless and to the
extent that such loss, damage, delay or expense is proved to
have resulted solely from the fraud, gross negligence or willful
misconduct of the Manager or their employees in connection with
the Vessels, in which case (save where such loss, damage, delay
or expense has resulted from the Managers personal act or
omission committed with the intent to cause same or recklessly
and with knowledge that such loss, damage, delay or expense
would probably result) the Managers liability for each
incident or series of incidents giving rise to a claim or claims
shall never exceed a total of US$3,000,000.
(iii) Notwithstanding anything that may appear to the
contrary in this Agreement, the Manager shall not be responsible
for any of the actions of the crew of the Vessels even if such
actions are negligent, grossly negligent or willful.
(iv) Navios Acquisition shall indemnify and hold harmless
the Manager and its employees and agents against all actions,
proceedings, claims, demands or liabilities which may be brought
against them arising out of, relating to or based upon this
Agreement including, without limitation, all actions,
proceedings, claims, demands or liabilities brought under or
relating to the environmental laws, regulations or conventions
of any jurisdiction (Environmental Laws), or
otherwise relating to pollution or the environment, and against
and in respect of all costs and expenses (including legal costs
and expenses on a full indemnity basis) they may suffer or incur
due to defending or settling same, provided however that such
indemnity shall exclude any or all losses, actions, proceedings,
claims, demands, costs, damages, expenses and liabilities
whatsoever which may be caused by or due to (A) the fraud,
gross negligence or willful misconduct of the Manager or its
employees or agents, or (B) any breach of this Agreement by
the Manager.
(v) Without prejudice to the general indemnity set out in
this Section, Navios Acquisition hereby undertakes to indemnify
the Manager, their employees, agents and sub-contractors against
all taxes, imposts and duties levied by any government as a
result of the operations of Navios Acquisition or the Vessels,
whether or not such taxes, imposts and duties are levied on
Navios Acquisition or the Manager. For the avoidance of doubt,
such indemnity shall not apply to taxes imposed on amounts paid
to the Manager as consideration for the performance of Services
for Navios Acquisition. Navios Acquisition shall pay all taxes,
dues or fines imposed on the Vessels or the Manager as a result
of the operation of the Vessels.
(vi) It is hereby expressly agreed that no employee or
agent of the Manager (including any sub-contractor from time to
time employed by the Manager and the employees of such
sub-contractors) shall in any circumstances whatsoever be under
any liability whatsoever to Navios Acquisition for any loss,
damage or delay of whatsoever kind arising or resulting directly
or indirectly from any act, neglect or default on his part while
acting in the course of or in connection with his employment
and, without prejudice to the generality of the foregoing
provisions in this Section, every exemption, limitation,
condition and liberty herein contained and every right,
exemption from liability, defense and immunity of whatsoever
nature applicable to the Manager or to which the Manager are
entitled hereunder shall also be available and shall extend to
protect every such employee or agent of the Manager acting as
aforesaid.
Annex F-3
(vii) Navios Acquisition acknowledges that it is aware that
the Manager is unable to confirm that the Vessels, their
systems, equipment and machinery are free from defects, and
agrees that the Manager shall not under any circumstances be
liable for any losses, costs, claims, liabilities and expenses
which Navios Acquisition may suffer or incur resulting from
pre-existing or latent deficiencies in the Vessels, their
systems, equipment and machinery.
The provisions of this Section 8 shall remain in force
notwithstanding termination of this Agreement.
Section 9. Term
And Termination. With respect to each of the
Vessels, this Agreement shall commence on the Closing Date and
shall continue for five (5) years (as more specifically
described on Schedule D to this Agreement),
unless terminated by either party hereto on not less than one
hundred and twenty (120) days notice if:
(a) in the case of Navios Acquisition, there is a Change of
Control of the Manager;
(b) in the case of the Manager, there is a Change of
Control of Navios Acquisition;
(c) the other party breaches a material provision of this
Agreement;
(d) a receiver is appointed for all or substantially all of
the property of the other party;
(e) an order is made to
wind-up the
other party;
(f) a final judgment, order or decree which materially and
adversely affects the ability of the other party to perform this
Agreement shall have been obtained or entered against that party
and such judgment, order or decree shall not have been vacated,
discharged or stayed; or
(g) the other party makes a general assignment for the
benefit of its creditors, files a petition in bankruptcy or for
liquidation, is adjudged insolvent or bankrupt, commences any
proceeding for a reorganization or arrangement of debts,
dissolution or liquidation under any law or statute or of any
jurisdiction applicable thereto or if any such proceeding shall
be commenced.
This Agreement may be terminated by either party hereto on not
less than three hundred and sixty-five (365) days notice
for any reason other than any of the reasons set forth in the
immediately preceding paragraph. This Agreement shall not become
effective unless and until the Closing Date has occurred.
This Agreement shall be deemed to be terminated with respect to
a particular Vessel in the case of the sale of such Vessel or if
such Vessel becomes a total loss or is declared as a
constructive or compromised or arranged total loss or is
requisitioned. Notwithstanding such deemed termination, any Fees
outstanding at the time of the sale or loss shall be paid in
accordance with the provisions of this Agreement.
For the purpose of this clause:
(i) the date upon which a Vessel is to be treated as having
been sold or otherwise disposed of shall be the date on which
Navios Acquisition ceases to be the legal owner of the Vessel;
(ii) a Vessel shall not be deemed to be lost until either
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 adjudged by a competent
tribunal that a constructive loss of the Vessel has occurred or
the Vessels owners issue a notice of abandonment to the
underwriters.
The termination of this Agreement shall be without prejudice to
all rights accrued due between the parties prior to the date of
termination.
Section 10. Fees
Upon Termination with respect to a
Vessel. Upon termination of this Agreement,
the Fee or Costs and Expenses, as may be the case, shall be
adjusted with respect to a Vessel as at the effective date of
termination of this Agreement, based on the amounts set forth in
Schedule B. Any overpayment shall
forthwith be refunded to Navios Acquisition and any underpayment
shall forthwith be paid to the Manager.
Annex F-4
Section 11. Surrender
Of Books And Records. Upon termination of
this Agreement, the Manager shall forthwith surrender to Navios
Acquisition any and all books, records, documents and other
property in the possession or control of the Manager relating to
this Agreement and to the business, finance, technology,
trademarks or affairs of Navios Acquisition and any member of
the Navios Acquisition Group and, except as required by law,
including federal securities laws, shall not retain any copies
of same.
Section 12. Entire
Agreement. This Agreement constitutes the
entire agreement and understanding between the parties with
respect to the subject matter of this Agreement and (in relation
to such subject matter) supersedes and replaces all prior
understandings and agreements, written or oral, between the
parties.
Section 13. Amendments
to Agreement. The Manager reserves the right
to make such changes to this Agreement as it shall consider
necessary to take account of regulatory changes which come into
force after the date hereof and which affect the operation of
the Vessels. Such changes will be conveyed in writing to Navios
Acquisition and will come into force on intimation or on the
date on which such regulatory or other changes come into effect
(whichever shall be the later).
Section 14. Severability. If
any provision herein is held to be void or unenforceable, the
validity and enforceability of the remaining provisions herein
shall remain unaffected and enforceable.
Section 15. Currency. Unless
stated otherwise, all currency references herein are to United
States Dollars.
Section 16. Law
And Arbitration. This Agreement shall be
governed by the laws of England. Any dispute under this
Agreement shall be referred to arbitration in London in
accordance with the Arbitration Act 1996 or any statutory
modification or re-enactment then in force. The arbitration
shall be conducted in accordance with the London Maritime
Arbitrators (LMAA) Terms current at the time when the
arbitration is commenced.
Save as after mentioned, the reference shall be to three
arbitrators, one to be appointed by each party and the third by
the two arbitrators so appointed. A party wishing to refer a
dispute to arbitration shall appoint its arbitrator and send
notice of such appointment to the other party requiring the
other party to appoint its 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) calendar days specified. If the
other party does not appoint its own arbitrator and give notice
that it has done so within the fourteen (14) calendar days
specified, the party referring the 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 as binding as if he had been appointed by
agreement.
In cases where neither the claim nor any counterclaim exceeds
the sum of US$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.
Section 17. Notice. Notice
under this Agreement shall be given (via hand delivery or
facsimile) as follows:
If to Navios Acquisition:
85 Akti Miaouli Street
Piraeus, Greece 185 38
Attn: Vasiliki Papaefthymiou
Fax: +(30) 210
453-1984
If to the Manager:
85 Akti Miaouli Street
Piraeus, Greece 185 38
Attn: Vasiliki Papaefthymiou
Fax: +(30) 210
453-1984
Annex F-5
Section 18. Subcontracting
And Assignment. The Manager shall not assign
this Agreement to any party that is not a subsidiary or
affiliate of the Manager except upon written consent of Navios
Acquisition. The Manager may freely sub-contract and sub-license
this Agreement to any party, so long as the Manager remains
liable for performance of the Services and its other obligations
under this Agreement.
Section 19. Waiver. The
failure of either party to enforce any term of this Agreement
shall not act as a waiver. Any waiver must be specifically
stated as such in writing.
Section 20. Counterparts. This
Agreement may be executed in one or more signed counterparts,
facsimile or otherwise, which shall together form one instrument.
Annex F-6
SCHEDULE A
SERVICES
The Manager shall provide such of the following commercial and
technical management services (the Services)
to Navios Acquisition, as Navios Acquisition may from time to
time request and direct the Manager to provide:
(1) Negotiating on behalf of Navios Acquisition time
charters, bareboat charters and other employment contracts with
respect to the Vessels and monitor payments thereunder;
(2) Exercising of due diligence to:
(i) maintain and preserve each Vessel and her equipment in
full compliance with applicable rules and regulations, including
Environmental Laws, good condition, running order and repair, so
that each Vessel shall be, insofar as due diligence can make her
in every respect seaworthy and in good operating condition;
(ii) keep each Vessel in such condition as will entitle her
to the highest classification and rating from the classification
society chosen by her owner or charter for vessels of the class,
age and type;
(iii) prepare and obtain all necessary approvals for a
shipboard oil pollution emergency plan
(SOPEP) in a form approved by the Marine
Environment Protection Committee of the International Maritime
Organization pursuant to the requirements of Regulation 26
of Annex I of the International Convention for the
Prevention of Pollution from Ships, 1973, as modified by the
Protocol of 1978 relating thereto, as amended (MARPOL
73/78), and provide assistance with respect to such
other documentation and record-keeping requirements pursuant to
applicable Environmental Laws;
(iv) arrange for the preparation, filing and updating of a
contingency Vessel Response Plan in accordance with the
requirements of the U.S. Oil Pollution Act of 1990 as
amended (OPA), and instruct the crew in all
aspects of the operation of such plan;
(v) inform Navios Acquisition promptly of any major release
or discharge of oil or other hazardous material in compliance
with law and identify and ensure the availability by contract or
otherwise of a Qualified Individual, a Spill Management Team, an
Oil Spill Removal Organization (as such terms are defined by
applicable Environmental Laws), and any other individual or
entity required by Environmental Laws, resources having salvage,
firefighting, lightering and, if applicable, dispersant
capabilities, and public relations/media personnel to assist
Navios Acquisition to deal with the media in the event of
discharges of oil;
(vi) arrange and procure for the vetting of the Vessels and
Navios Acquisition or the Manager by major charterers and
arranging and attending relevant inspections of the Vessels,
including pre-vetting inspections, or visits at the premises of
the Manager up to a maximum number of five inspection visits per
Vessel per year to be attended by the Manager, with additional
visits to be for the account of Navios Acquisition; and
(vii) provide copies of any vessel inspection reports,
valuations, surveys or similar reports upon request.
The Manager is expressly authorized as agents for Navios
Acquisition to enter into such arrangements by contract or
otherwise as are required to ensure the availability of the
Services outlined above. The Manager is further expressly
authorized as agents for Navios Acquisition to enter into such
other arrangements as may from time to time be necessary to
satisfy the requirements of OPA or other Federal or State laws.
(3) Storing, victualing and supplying of each Vessel and
the arranging for the purchase of certain day to day stores,
supplies and parts;
Annex F-7
(4) Procuring and arrangement for port entrance and
clearance, pilots, vessel agents, consular approvals, and other
services necessary or desirable for the management and safe
operation of each Vessel;
(5) Preparing, issuing or causing to be issued to shippers
the customary freight contract, cargo receipts
and/or bills
of lading;
(6) Performance of all usual and customary duties concerned
with the loading and discharging of cargoes at all ports;
(7) Naming of vessel agents for the transaction of each
Vessels business;
(8) Arrangement and retention in full force and effect of
all customary insurance pertaining to each Vessel as instructed
by the owner or charterer and all such policies of insurance,
including but not limited to protection and indemnity, hull and
machinery, war risk and oil pollution covering each Vessel; if
requested by the owner or charterer, making application for
certificates of financial responsibility on behalf of the
Vessels covered hereunder;
(9) Adjustment and the negotiating of settlements, with or
on behalf of claimants or underwriters, of any claim, damages
for which are recoverable under policies of insurance;
(10) If requested, provide Navios Acquisition with
technical assistance in connection with any sale of any Vessel.
The Manager will, if requested in writing by Navios Acquisition,
comment on the terms of any proposed Memorandum of Agreement,
but Navios Acquisition will remain solely responsible for
agreeing the terms of any Memorandum of Agreement regulating any
sale;
(11) Arrangement or the prompt dispatch of each Vessel from
loading and discharging ports and for transit through canals;
(12) Arrangement for employment of counsel, and the
investigation,
follow-up
and negotiating of the settlement of all claims arising in
connection with the operation of each Vessel; it being
understood that Navios Acquisition will be responsible for the
payment of such counsels fees and expenses;
(13) Arrangement for the appointment of an adjuster and
assistance in preparing the average account, taking proper
security for the cargos and freights proportion of
average, and in all ways reasonably possible protecting the
interest of each Vessel and her owner; it being understood that
Navios Acquisition will be responsible for the payment of such
adjusters fees and expenses;
(14) Arrangement for the appointment of surveyors and
technical consultants as necessary; it being understood that
Navios Acquisition will be responsible for the payment of such
surveyors or technical consultants fees and expenses
outside the ordinary course of business;
(15) Negotiating of the settlement of insurance claims of
Vessel owners or charterers protection and indemnity
insurance and the arranging for the making of disbursements
accordingly for owners or charterers account; Navios
Acquisition shall arrange for the provision of any necessary
guarantee bond or other security;
(16) Attendance to all matters involving each Vessels
crew, including, but not limited to, the following:
(i) arranging for the procurement and enlistment for each
Vessel, as required by applicable law, of competent, reliable
and duly licensed personnel (hereinafter referred to as
crew members) in accordance with the
requirements of International Maritime Organization Convention
on Standards of Training Certification and Watchkeeping for
Seafarers 1978 and as subsequently amended, and all replacements
therefore as from time to time may be required;
(ii) arranging for all transportation, board and lodging
for the crew members as and when required at rates and types of
accommodations as customary in the industry;
Annex F-8
(iii) keeping and maintaining full and complete records of
any labour agreements which may be entered into between owner or
disponent owner and the crew members and the prompt reporting to
owner or disponent owner as soon as notice or knowledge thereof
is received of any change or proposed change in labour
agreements or other regulations relating to the master and the
crew members;
(iv) negotiating the settlement and payment of all wages
with the crew members during the course of and upon termination
of their employment;
(v) the handling of all details and negotiating the
settlement of any and all claims of the crew members including,
but not limited to, those arising out of accidents, sickness, or
death, loss of personal effects, disputes under articles or
contracts of enlistment, policies of insurance and fines;
(vi) keeping and maintaining all administrative and
financial records relating to the crew members as required by
law, labour agreements, owner or charterer, and rendering to
owner or charterer any and all reports when, as and in such form
as requested by owner or charterer;
(vii) the performance of any other function in connection
with crew members as may be requested by owner or charterer; and
(viii) negotiating with unions, if required.
(17) Payment of all charges incurred in connection with the
management of each Vessel, including, but not limited to, the
cost of the items listed in (2) to (16) above, canal
tolls, repair charges and port charges, and any amounts due to
any governmental agency with respect to the Vessel crews;
(18) In such form and on such terms as may be requested by
Navios Acquisition, the prompt reporting to Navios Acquisition
of each Vessels movement, position at sea, arrival and
departure dates, casualties and damages received or caused by
each Vessel;
(19) In case any of the Vessels is employed under a voyage
charter, Navios Acquisition shall pay for all voyage related
expenses (including bunkers, canal tolls and port dues) and the
Manager shall arrange for the provision of bunker fuel of the
quality agreed with Navios Acquisition as required for any
Vessels trade. The Manager shall be entitled to order
bunker fuel through such brokers or suppliers as Navios
Acquisition deem appropriate unless Navios Acquisition instruct
the Manager to utilize a particular supplier which the Manager
will be obliged to do provided that the Navios Acquisition have
made prior credit arrangements with such supplier. Navios
Acquisition shall comply with the terms of any credit
arrangements made by the Manager on their behalf with Navios
Acquisitions consent;
(20) The Manager shall not in any circumstances have any
liability for any bunkers which do not meet the required
specification. the Manager will, however, take such action, on
behalf of Navios Acquisition, against the supplier of the
bunkers, as is agreed with Navios Acquisition.
(21) The Manager shall make arrangements as instructed by
the Classification Society of each Vessel for the intermediate
and special survey of each Vessel and all costs in connection
with passing such surveys (including dry-docking) and
satisfactory compliance with class requirements will be borne by
the Manager.
Annex F-9
SCHEDULE B
FEES AND
COSTS AND EXPENSES
In consideration for the provision of the Services listed in
Schedule A by the Manager to Navios
Acquisition, Navios Acquisition shall, during the first two
(2) years of the initial term of this Agreement, pay the
Manager a fixed daily fee of US$7,000 per owned LR 1 product
tanker vessel and $6,000 per owned MR2 product tanker
vessel and chemical tanker vessel, payable on the last day of
each month, as set forth in the table below. Dry-docking
expenses are fixed at $300,000 per vessel during the first
two (2) years of the initial term of this Agreement.
During the remaining three (3) years of the initial term of
this Agreement, within forty-five (45 days after the end of
each month), the Manager shall submit to Navios Acquisition for
payment an invoice for reimbursement of the Costs and Expenses
in connection with the provision of the Services listed in
Schedule A by the Manager to Navios
Acquisition for such month. Costs and Expenses shall be
determined in a manner consistent with how the fixed daily fee
payable during the first two (2) years of the initial term
of this Agreement was calculated and each statement will contain
such supporting detail as may be reasonably required to validate
such amounts due. Navios Acquisition shall make payment within
fifteen (15) days of the date of each invoice. All invoices
for Services are payable in U.S. dollars.
Annex F-10
SCHEDULE C
EXTRAORDINARY
FEES AND COSTS
Notwithstanding anything to the contrary in this Agreement, the
Manager will not be responsible for paying any costs liabilities
and expenses in respect of a Vessel, to the extent that such
costs, liabilities and expenses are extraordinary,
which shall consist of the following:
(1) repairs, refurbishment or modifications, including
those not covered by the guarantee of the shipbuilder or by the
insurance covering the Vessels, resulting from maritime
accidents, collisions, other accidental damage or unforeseen
events (except to the extent that such accidents, collisions,
damage or events are due to the fraud, gross negligence or
willful misconduct of the Manager, its employees or its agents,
unless and to the extent otherwise covered by insurance).
(2) any improvement, upgrade or modification to, structural
changes with respect to the installation of new equipment aboard
any Vessel that results from a change in, an introduction of
new, or a change in the interpretation of, applicable laws, at
the recommendation of the classification society for that Vessel
or otherwise.
(3) any increase in administrative costs and expenses or
crew employment expenses resulting from an introduction of new,
or a change in the interpretation of, applicable laws or
resulting from the early termination of the charter of any
Vessel.
(4) the Manager shall be entitled to receive additional
remuneration for time spent on the insurance, average and
salvage claims (charged at the rate of US$800 per man per
day of eight (8) hours) in respect of the preparation and
prosecution of claims, the supervision of repairs and the
provision of documentation relating to adjustments).
(5) the Manager shall be entitled to receive additional
remuneration for time (charged at the rate of US$750 per
man per day of 8 hours) for any time of over 10 days
per year that the personnel of the Manager will spend during
vetting inspections and attendance on the Vessels in connection
with the pre-vetting and vetting of the Vessels by any
charterers. In addition Navios Acquisition will pay any
reasonable travel and accommodation expenses of the Manager
personnel incurred in connection with such additional time spent.
(6) Navios Acquisition shall pay the deductible of any
insurance claims relating to the Vessels or for any claims that
are within such deductible range.
(7) Navios Acquisition shall pay any significant increase
in insurance premiums which are due to factors such as
acts of God outside of the control of the Manager.
(8) Navios Acquisition shall pay any tax, dues or fines
imposed on the Vessels or the Manager due to the operation of
the Vessels.
(9) Navios Acquisition shall pay for any expenses incurred
in connection with the sale or acquisition of a Vessel, such as
in connection with inspections and technical assistance.
(10) Navios Acquisition shall pay for any costs,
liabilities and expenses similar to those set forth in
clauses (1) through (9) above that were not reasonably
contemplated by Navios Acquisition and the Manager as being
encompassed by or a component of the Fees at the time the Fees
were determined.
Annex F-11
ANNEX G
ADMINISTRATIVE
SERVICES AGREEMENT
THIS AGREEMENT is entered into on, and effective as of, the
Closing Date (as defined herein), by and between NAVIOS MARITIME
ACQUISITION CORPORATION, a company duly organized and existing
under the laws of the Marshall Islands with its registered
office at 85 Akti Miaouli Street, Piraeus, Greece 185 38
(Navios Acquisition) and NAVIOS SHIPMANAGEMENT INC.,
a company duly organized and existing under the laws of the
Marshall Islands with its registered office at 85 Akti Miaouli
Street, Piraeus, Greece 185 38 (NSM).
WHEREAS:
A. Navios Acquisition, whose common stock is listed and
trades on the New York Stock Exchange, will own vessels and
require certain administrative support services for the
operation of its fleet; and
B. Navios Acquisition wishes to engage NSM to provide such
administrative support services to Navios Acquisition on the
terms set out herein.
NOW THEREFORE, the parties agree that, in consideration for NSM
providing the administrative support services set forth in
Schedule A to this Agreement (the
Services), and subject to the Terms and
Conditions set forth in Article I attached hereto,
Navios Acquisition shall reimburse NSM including reasonably
allocable overhead for the costs and expenses reasonably
incurred by NSM in the manner provided for in Schedule
B to this Agreement (the Costs and
Expenses).
IN WITNESS WHEREOF the Parties have executed this Agreement by
their duly authorized signatories with effect on the date first
above written.
NAVIOS MARITIME ACQUISITION CORPORATION
Name: Angeliki Frangou
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Title:
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Chief Executive Officer
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NAVIOS SHIPMANAGEMENT INC.
Name: Angeliki Frangou
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Title:
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Chief Executive Officer
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Annex G-1
ARTICLE I
TERMS AND
CONDITIONS
Section 1. Definitions. In
this Agreement, the term:
Change of Control means with respect
to any entity, an event in which securities of any class
entitling the holders thereof to elect a majority of the members
of the board of directors or other similar governing body of the
entity are acquired, directly or indirectly, by a
person or group (within
the meaning of Sections 13(d) or 14(d)(2) of the Exchange
Act), who did not immediately before such acquisition own
securities of the entity entitling such person or group to elect
such majority (and for the purpose of this definition, any such
securities held by another person who is related to such person
shall be deemed to be owned by such person);
Closing Date means the closing date of
the acquisition by Navios Acquisition of the stock of Aegean Sea
Maritime Holdings Inc.
Costs and Expenses has the meaning set
forth on the signature page to this Agreement;
Navios Acquisition Group means Navios
Acquisition and subsidiaries of Navios Acquisition; and
Section 2. General. NSM
shall provide all or such portion of the Services, in a
commercially reasonable manner, as Navios Acquisition may from
time to time direct, all under the supervision of Navios
Acquisition.
Section 3. Covenants. During
the term of this Agreement NSM shall:
(a) diligently provide or sub-contract for the provision of
(in accordance with Section 19 hereof) the Services to
Navios Acquisition as an independent contractor, and be
responsible to Navios Acquisition for the due and proper
performance of same;
(b) retain at all times a qualified staff so as to maintain
a level of expertise sufficient to provide the Services; and
(c) keep full and proper books, records and accounts
showing clearly all transactions relating to its provision of
Services in accordance with established general commercial
practices and in accordance with United States generally
accepted accounting principles, and allow Navios Acquisition and
its representatives and its auditors to audit and examine such
books, records and accounts at any time during customary
business hours.
Section 4. Non-exclusivity. NSM
and its employees may provide services of a nature similar to
the Services to any other person. There is no obligation for NSM
to provide the Services to Navios Acquisition on an exclusive
basis.
Section 5. Confidential
Information. NSM shall be obligated to keep
confidential, both during and after the term of this Agreement,
all information it has acquired or developed in the course of
providing Services under this Agreement, except to the extent
disclosure of such information is required by applicable law,
including without limitation U.S. securities laws. Navios
Acquisition shall be entitled to any equitable remedy available
at law or equity, including specific performance, against a
breach by NSM of this obligation. NSM shall not resist such
application for relief on the basis that Navios Acquisition has
an adequate remedy at law, and NSM shall waive any requirement
for the securing or posting of any bond in connection with such
remedy.
Section 6. Reimbursement
of Costs and Expenses. In consideration for
NSM providing the Services, Navios Acquisition shall reimburse
NSM the Costs and Expenses in the manner provided in Schedule
B to this Agreement.
Section 7. General
Relationship Between The Parties. The
relationship between the parties is that of independent
contractor. The parties to this Agreement do not intend, and
nothing herein shall be interpreted so
Annex G-2
as, to create a partnership, joint venture, employee or agency
relationship between NSM and any one or more of Navios
Acquisition or any member of the Navios Acquisition Group.
Section 8. Indemnity. Navios
Acquisition shall indemnify and hold harmless NSM and its
employees and agents against all actions, proceedings, claims,
demands or liabilities which may be brought against them due to
this Agreement including, without limitation, all actions,
proceedings, claims, demands or liabilities brought under the
environmental laws of any jurisdiction, and against and in
respect of all costs and expenses (including legal costs and
expenses on a full indemnity basis) they may suffer or incur due
to defending or settling same, provided however that such
indemnity shall exclude any or all losses, actions, proceedings,
claims, demands, costs, damages, expenses and liabilities
whatsoever which may be caused by or due to the fraud, gross
negligence or willful misconduct of NSM or its employees or
agents.
Section 9. NO
CONSEQUENTIAL DAMAGES. NEITHER NSM NOR ANY OF
ITS AFFILIATES SHALL BE LIABLE FOR INDIRECT, INCIDENTAL OR
CONSEQUENTIAL DAMAGES SUFFERED BY NAVIOS ACQUISITION, OR FOR
PUNITIVE DAMAGES, WITH RESPECT TO ANY TERM OR THE SUBJECT MATTER
OF THIS AGREEMENT, EVEN IF INFORMED OF THE POSSIBILITY THEREOF
IN ADVANCE. THIS LIMITATION APPLIES TO ALL CAUSES OF ACTION,
INCLUDING, WITHOUT LIMITATION, BREACH OF CONTRACT, BREACH OF
WARRANTY, NEGLIGENCE, STRICT LIABILITY, FRAUD, MISREPRESENTATION
AND OTHER TORTS.
Section 10. Term
And Termination. This Agreement shall have an
initial term of five (5) years unless terminated by either
party hereto on not less than one hundred and twenty
(120) days notice if:
(a) in the case of Navios Acquisition, there is a Change of
Control of NSM;
(b) in the case of NSM, there is a Change of Control of
Navios Acquisition;
(c) the other party breaches this Agreement;
(d) a receiver is appointed for all or substantially all of
the property of the other party;
(e) an order is made to
wind-up the
other party;
(f) a final judgment, order or decree which materially and
adversely affects the ability of the other party to perform this
Agreement shall have been obtained or entered against that party
and such judgment, order or decree shall not have been vacated,
discharged or stayed; or
(g) the other party makes a general assignment for the
benefit of its creditors, files a petition in bankruptcy or for
liquidation, is adjudged insolvent or bankrupt, commences any
proceeding for a reorganization or arrangement of debts,
dissolution or liquidation under any law or statute or of any
jurisdiction applicable thereto or if any such proceeding shall
be commenced.
This Agreement may be terminated by either party hereto on not
less than three hundred and sixty-five (365) days notice
for any reason other than any of the reasons set forth in the
immediately preceding paragraph. This Agreement shall not become
effective unless and until the Closing Date has occurred.
Section 11. Costs
and Expenses Upon Termination. Upon
termination of this Agreement in accordance with Section 10
hereof, Navios Acquisition shall be obligated to pay NSM any and
all amounts payable pursuant to Section 6 hereof for
Services provided prior to the time of termination.
Section 12. Surrender
Of Books And Records. Upon termination of
this Agreement, NSM shall forthwith surrender to Navios
Acquisition any and all books, records, documents and other
property in the possession or control of NSM relating to this
Agreement and to the business, finance, technology, trademarks
or affairs of Navios Acquisition and any member of the Navios
Acquisition and, except as required by law, including, without
limitation, U.S. securities laws, shall not retain any
copies of same.
Section 13. Force
Majeure. Neither party shall be liable for
any failure to perform this Agreement due to any cause beyond
its reasonable control.
Annex G-3
Section 14. Entire
Agreement. This Agreement forms the entire
agreement between the parties with respect to the subject matter
hereof and supersedes and replaces all previous agreements,
written or oral, with respect to the subject matter hereof.
Section 15. Severability. If
any provision herein is held to be void or unenforceable, the
validity and enforceability of the remaining provisions herein
shall remain unaffected and enforceable.
Section 16. Currency. Unless
stated otherwise, all currency references herein are to United
States Dollars.
Section 17. Law
And Arbitration. This Agreement shall be
governed by the laws of England. Any dispute under this
Agreement shall be put to arbitration in England, a jurisdiction
to which the parties hereby irrevocably submit.
Section 18. Notice. Notice
under this Agreement shall be given (via hand delivery or
facsimile) as follows:
If to Navios Acquisition:
85 Akti Miaouli Street
Piraeus, Greece 185 38
Attn: Vasiliki Papaefthymiou
Fax: +(30) 210
453-1984
If to NSM:
85 Akti Miaouli Street
Piraeus, Greece 185 38
Attn: Vasiliki Papaefthymiou
Fax: +(30) 210
453-1984
Section 19. Sub-contracting
And Assignment. NSM shall not assign this
Agreement to any party that is not a subsidiary or affiliate of
NSM except upon written consent of Navios Acquisition. NSM may
freely sub-contract or sub-license this Agreement, so long as
NSM remains liable for performance of the Services and its
obligations under this Agreement.
Section 20. Waiver. The
failure of either party to enforce any term of this Agreement
shall not act as a waiver. Any waiver must be specifically
stated as such in writing.
Section 21. Counterparts. This
Agreement may be executed in one or more signed counterparts,
facsimile or otherwise, which shall together form one instrument.
Annex G-4
SCHEDULE A
SERVICES
NSM shall provide such of the following administrative support
services (the Services) to Navios
Acquisition, as Navios Acquisition may from time to time request
and direct NSM to provide pursuant to Section 1.02:
(a) Keep and maintain at all times books, records and
accounts which shall contain particulars of receipts and
disbursements relating to the assets and liabilities of Navios
Acquisition and such books, records and accounts shall be kept
pursuant to normal commercial practices that will permit Navios
Acquisition to prepare or cause to be prepared financial
statements in accordance with U.S. generally accepted
accounting principles and in each case shall also be in
accordance with those required to be kept by Navios Acquisition
under applicable federal securities laws and regulations in the
United States and as Navios Acquisition is required to keep and
file under applicable foreign taxing regulations and the
U.S. Internal Revenue Code of 1986 and the regulations
applicable with respect thereto, all as amended from time to
time;
(b) Prepare all such returns, filings and documents, for
review and approval by Navios Acquisition as may be from time to
time be requested or instructed by Navios Acquisition; and file
such documents, as applicable, as directed by Navios Acquisition
with the relevant authority;
(c) Provide, or arrange for the provision of, advisory
services to Navios Acquisition with respect to Navios
Acquisitions obligations under applicable securities laws
and regulations in the United States and assist Navios
Acquisition in arranging for compliance with continuous
disclosure obligations under applicable securities laws and
regulations and the rules and regulations of the New York Stock
Exchange and any other securities exchange upon which Navios
Acquisitions securities are listed, including the
preparation for review, approval and filing by Navios
Acquisition of reports and other documents with all applicable
regulatory authorities, providing that nothing herein shall
permit or authorize NSM to act for or on behalf of Navios
Acquisition in its relationship with regulatory authorities
except to the extent that specific authorization may from time
to time be given by Navios Acquisition;
(d) Provide, or arrange for the provision of, advisory,
clerical and investor relations services to assist and support
Navios Acquisition in its communications with its security
holders, including in connection with disclosures that may be
required for regulatory compliance to its security holders and
the wider financial markets, as Navios Acquisition may from time
to time request or direct, provided that nothing herein shall
permit or authorize NSM to determine the content of any such
communications by Navios Acquisition to its security holders and
the wider financial markets;
(e) At the request and under the direction of Navios
Acquisition, handle, or arrange for the handling of, all
administrative and clerical matters in respect of (i) the
call and arrangement of all meetings of the security holders,
(ii) the preparation of all materials (including notices of
meetings and information circulars) in respect thereof and
(iii) the submission of all such materials to Navios
Acquisition in sufficient time prior to the dates upon which
they must be mailed, filed or otherwise relied upon so that
Navios Acquisition has full opportunity to review them, approve
them, execute them and return them to NSM for filing or mailing
or other disposition as Navios Acquisition may require or direct;
(f) Provide, or arrange for the provision of, or secure
sufficient and necessary office space, equipment and personnel
including all accounting, clerical, secretarial, corporate and
administrative services as may be reasonably necessary for the
performance of Navios Acquisitions business;
(g) Arrange for the provision of such audit, accounting,
legal, insurance and other professional services as are
reasonably required by Navios Acquisition from time to time in
connection with the discharge of its responsibilities as a
U.S. public company, to the extent such advice and analysis
can be reasonably provided or arranged by NSM, provided that
nothing herein shall permit NSM to select the auditor of Navios
Acquisition, which shall be selected by the audit committee of
Navios Acquisition or to communicate with the auditor other than
in the ordinary course of making such books and records
Annex G-5
available for review as the auditors may require and to respond
to queries from the auditors with respect to the accounts and
statements prepared by, or arranged by, NSM, and in particular
NSM will not have any of the authorities, rights or
responsibilities of the audit committee of Navios Acquisition,
but shall provide, or arrange for the provision of, information
to such committee as may from time to time be required or
requested; and provided further that nothing herein shall
entitle NSM to retain legal counsel for Navios Acquisition
unless such selection is specifically approved by Navios
Acquisition;
(h) Provide, or arrange for the provision of, such
assistance and support as Navios Acquisition may from time to
time request in connection with any new or existing financing
for Navios Acquisition, such assistance and support to be
provided in accordance with the direction, and under the
supervision of Navios Acquisition;
(i) Provide, or arrange for the provision of, such
administrative and clerical services as may be required by
Navios Acquisition to support and assist Navios Acquisition in
considering any future acquisitions or divestments of assets of
Navios Acquisition, all under the direction and under the
supervision of Navios Acquisition;
(j) Provide, or arrange for the provision of, such support
and assistance to Navios Acquisition as Navios Acquisition may
from time to time request in connection with any future
offerings of securities that Navios Acquisition may at any time
determine is desirable for Navios Acquisition, all under the
direction and supervision of Navios Acquisition;
(k) Provide, or arrange for the provision of, at the
request and under the direction of Navios Acquisition, such
communications to the transfer agent for Navios Acquisition as
may be necessary or desirable;
(l) Prepare and provide, or arrange for the preparation and
provision of, regular cash reports and other accounting
information for review by Navios Acquisition, so as to permit
and enable Navios Acquisition to make all determinations of
financial matters, including the determination of amounts
available for distribution by Navios Acquisition to its security
holders, and to assist Navios Acquisition in making arrangements
with the transfer agent for Navios Acquisition for the payment
of distributions to its security holders;
(m) Provide, or arrange for the provision of, such
assistance to Navios Acquisition N as Navios Acquisition may
request or direct with respect to the performance of the
obligations, and to provide monitoring of various obligations
and rights, under agreements entered into by Navios Acquisition
and provide advance reports on a timely basis to Navios
Acquisition advising of steps, procedures and compliance issues
under such agreements, so as to enable Navios Acquisition to
make all such decisions as would be necessary or desirable
thereunder;
(n) Provide, or arrange for the provision of, such
additional administrative and clerical services pertaining to
Navios Acquisition, the assets and liabilities of Navios
Acquisition and its security holders and matters incidental
thereto as may be reasonably requested by Navios Acquisition
from time to time;
(o) Negotiate and arrange, at the request and under the
direction of Navios Acquisition, for interest rate swap
agreements, foreign currency contracts, forward exchange
contracts and any other hedging arrangements;
(p) Provide, or arrange for the provision of, IT services;
(q) Maintain, or arrange for the maintenance of, Navios
Acquisitions and Navios Acquisitions
subsidiaries
(r) Negotiate, at the request and under the direction of
Navios Acquisition, loan and credit terms with lenders and
monitor and maintain compliance therewith;
(s) Provide, or arrange for the provision of, at the
request and under the direction of Navios Acquisition, cash
management and services, including assistance with preparation
of budgets, overseeing banking services and bank accounts and
arranging for the deposit of funds; and
(t) Monitor the performance of investment managers.
Annex G-6
SCHEDULE B
COSTS AND
EXPENSES
Within forty-five (45) days after the end of each month,
NSM shall submit to Navios Acquisition for payment an invoice
for reimbursement of all Costs and Expenses in connection with
the provision of the Services listed in Schedule
A by NSM to Navios Acquisition for such month.
Each statement will contain such supporting detail as may be
reasonably required to validate such amounts due.
Navios Acquisition shall make payment within fifteen
(15) days of the date of each invoice (any such day on
which a payment is due, the Due Date). All
invoices for Services are payable in U.S. dollars. All
amounts not paid within 10 days after the Due Date shall
bear interest at the rate of 1.00% per annum over US$ LIBOR
from such Due Date until the date payment is received in full by
NSM.
Annex G-7
ANNEX H
OMNIBUS
AGREEMENT
AMONG
NAVIOS
MARITIME HOLDINGS INC.
NAVIOS
MARITIME ACQUISITION CORPORATION
AND
NAVIOS
MARITIME PARTNERS L.P.
Annex H-1
TABLE OF
CONTENTS
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Page
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ARTICLE I DEFINITIONS
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Annex H-3
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Section 1.1
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Definitions
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Annex H-3
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ARTICLE II LIQUID SHIPMENT CARRIER RESTRICTED BUSINESS
OPPORTUNITIES
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Annex H-5
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Section 2.1
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Liquid Shipment Vessels Restricted Businesses
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Annex H-5
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Section 2.2
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Permitted Exceptions
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Annex H-5
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ARTICLE III DRYBULK CARRIER RESTRICTED BUSINESS
OPPORTUNITIES
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Annex H-6
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Section 3.1
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Drybulk Carrier Restricted Businesses
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Annex H-6
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Section 3.2
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Permitted Exceptions
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Annex H-6
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ARTICLE IV BUSINESS OPPORTUNITIES PROCEDURES
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Annex H-7
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Section 4.1
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Procedures
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Annex H-7
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Section 4.2
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Scope of Prohibition
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Annex H-8
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Section 4.3
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Enforcement
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Annex H-8
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ARTICLE V RIGHTS OF FIRST OFFER
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Annex H-9
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Section 5.1
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Rights of First Offer
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Annex H-9
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Section 5.2
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Procedures For Rights of First Offer
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Annex H-9
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ARTICLE VI MISCELLANEOUS
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Annex H-9
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Section 6.1
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Choice Of Law; Submission To Jurisdiction
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Annex H-9
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Section 6.2
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Notice
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Annex H-9
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Section 6.3
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Entire Agreement
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Annex H-10
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Section 6.4
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Termination
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Annex H-10
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Section 6.5
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Waiver; Effect of Waiver or Consent
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Annex H-10
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Section 6.6
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Amendment or Modification
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Annex H-10
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Section 6.7
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Assignment
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Annex H-10
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Section 6.8
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Counterparts
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Annex H-10
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Section 6.9
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Severability
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Annex H-10
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Section 6.10
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Gender, Parts, Articles and Sections
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Annex H-10
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Section 6.11
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Further Assurances
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Annex H-10
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Section 6.12
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Withholding or Granting of Consent
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Annex H-11
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Section 6.13
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Laws and Regulations
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Annex H-11
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Section 6.14
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Negotiation of Rights of Navios Maritime, Navios Acquisition,
the MLP: Limited Partners, Assignees, and Third Parties
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Annex H-11
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Annex H-2
OMNIBUS
AGREEMENT
THIS OMNIBUS AGREEMENT is entered into on, and effective as of,
the Closing Date (as defined herein), among Navios Maritime
Holdings Inc., a Marshall Islands corporation (Navios
Maritime), Navios Maritime Acquisition Corporation, a
Marshall Island corporation (Navios
Acquisition), and Navios Maritime Partners L.P., a
Marshall Islands limited partnership (the
MLP).
R E C I T
A L S:
1. The Parties desire by their execution of this Agreement
to evidence their understanding, as more fully set forth in
Articles II and IV, with respect to (a) those business
opportunities that the Navios Maritime Entities (as defined
herein) will not pursue during the term of this Agreement,
unless permitted to do in accordance with the terms of this
Agreement and (b) the procedures whereby such business
opportunities are to be offered to Navios Acquisition.
2. The Parties desire by their execution of this Agreement
to evidence their understanding, as more fully set forth in
Articles III and IV, with respect to (a) those
business opportunities that Navios Acquisition will not pursue
during the term of this Agreement, unless permitted to do in
accordance with the terms of this Agreement and (b) the
procedures whereby such business opportunities are to be offered
to Navios Maritime or the MLP, as the case may be.
3. The Parties desire by their execution of this Agreement
to evidence their understanding, as more fully set forth in
Article V, with respect to certain rights of first offer.
In consideration of the premises and the covenants, conditions,
and agreements contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. As
used in this Agreement, the following terms shall have the
respective meanings set forth below:
Acquiring Party has the meaning given
such term in Section 4.1(a).
Affiliate means, with respect to any
Person, any other Person that directly or indirectly through one
or more intermediaries controls, is controlled by or is under
common control with, the Person in question. As used herein, the
term control means the possession, direct or
indirect, of the power to direct or cause the direction of the
management and policies of a Person, whether through ownership
of voting securities, by contract or otherwise.
Agreement means this Omnibus
Agreement, as it may be amended, modified, or supplemented from
time to time in accordance with Section 6.6 hereof.
Break-up
Costs means the aggregate amount of any and all
additional taxes, flag administration, financing, legal and
other similar costs to (a) the Navios Maritime Entities
that would be required to transfer Liquid Shipment Vessels
acquired by the Navios Maritime Entities as part of a larger
transaction to a Navios Acquisition Entity pursuant to
Section 2.2(b), or (b) Navios Acquisition
Entities that would be required to transfer Drybulk Carriers
acquired by Navios Acquisition Entities as part of a larger
transaction to a Navios Maritime Entity pursuant to
Section 3.2(a) or Section 6.15.
Change of Control means, with respect
to any Person (the Applicable Person), any of
the following events: (a) any sale, lease, exchange or
other transfer (in one transaction or a series of related
transactions) of all or substantially all of the Applicable
Persons assets to any other Person (except to Angeliki
Frangou), unless immediately following such sale, lease,
exchange or other transfer such assets are owned, directly or
indirectly, by the Applicable Person; (b) the consolidation
or merger of the
Annex H-3
Applicable Person with or into another Person pursuant to a
transaction in which the outstanding Voting Securities of the
Applicable Person are changed into or exchanged for cash,
securities or other property, other than any such transaction
where (i) the outstanding Voting Securities of the
Applicable Person are changed into or exchanged for Voting
Securities of the surviving Person or its parent and
(ii) the holders of the Voting Securities of the Applicable
Person immediately prior to such transaction own, directly or
indirectly, not less than a majority of the outstanding Voting
Securities of the surviving Person or its parent immediately
after such transaction; and (c) a person or
group (within the meaning of
Sections 13(d) or 14(d)(2) of the Exchange Act),
other than (A) Navios Maritime, or its Affiliates
(including Angeliki Frangou) with respect to the MLP or Navios
Acquisition and (B) Angeliki Frangou, with respect to
Navios Maritime, being or becoming the beneficial
owner (as defined in
Rules 13d-3
and 13d-5
under the Exchange Act) of more than 50% of all of the then
outstanding Voting Securities of the Applicable Person, except
in a merger or consolidation which would not constitute a Change
of Control under clause (b) above.
Closing Date means the closing date of
the acquisition by Navios Acquisition of the stock of Aegean Sea
Maritime Holdings Inc.
Control means the possession, direct
or indirect, of the power to direct or cause the direction of
the management and policies of a Person, whether through
ownership of voting securities, by contract or otherwise.
Drybulk Carrier means vessels intended
primarily for the shipment of non-liquid commodities and shall
include, without limitation, Panamax, Capesize, Handysize and
Handymax vessels.
Exchange Act means the Securities
Exchange Act of 1934, as amended.
First Offer Negotiation Period has the
meaning given such term in Section 5.2.
Liquid Shipment Vessels means vessels
intended primarily for the sea going shipment of liquid
products, including chemical and petroleum based products,
except for container vessels and vessels which will be employed
primarily in operations in South America.
MLP is defined in the introduction to
this Agreement.
Navios Maritime Entities means Navios
Maritime, the MLP and any Person controlled, directly or
indirectly, by Navios Maritime or the MLP.
Navios Acquisition Entities means
Navios Acquisition and any Person controlled, directly or
indirectly by Navios Acquisition.
Offer has the meaning given such term
in Section 4.1.
Offered Assets has the meaning given
such term in Section 4.1.
Offeree has the meaning given such
term in Section 4.1.
Offer Period has the meaning given
such term in Section 4.1.
Parties means the parties to this
Agreement and their successors and permitted assigns.
Person means an individual,
corporation, partnership, joint venture, trust, limited
liability company, unincorporated organization or any other
entity.
Potential Transferee has the meaning
given such term in Section 5.2.
Public Company means an entity the
securities of which are actively traded on a stock exchange.
Sale Assets has the meaning given such
term in Section 5.2.
Transfer means any transfer,
assignment, sale or other disposition; provided, however, that
such term shall not include: (a) transfers, assignments,
sales or other dispositions from a Navios Maritime Entity to
another Navios Maritime Entity, or from a Navios Acquisition
Entity to another Navios
Annex H-4
Acquisition Entity; (b) transfers, assignments, sales or
other dispositions pursuant to the terms of any related charter
or other agreement with a counter party; (c) transfers,
assignments, sales or other dispositions pursuant to
Article II or III of this Agreement; (d) grants
of security interests in or mortgages or liens in favor of a
bona fide third party lender; or (e) the merger by Navios
Maritime, Navios Acquisition or the MLP with or into, or sale of
substantially all of the assets by Navios Maritime, Navios
Acquisition or the MLP to, an unaffiliated third party.
Transfer Notice has the meaning given
such term in Section 5.2.
Transferring Party has the meaning
given such term in Section 5.2.
Voting Securities means securities of
any class of Person entitling the holders thereof to vote in the
election of members of the board of directors or other similar
governing body of the Person.
ARTICLE II
LIQUID
SHIPMENT CARRIER RESTRICTED BUSINESS OPPORTUNITIES
Section 2.1 Liquid
Shipment Vessels Restricted
Businesses. Subject to
Section 6.4 and except as permitted by
Section 2.2, each of the Navios Maritime Entities
shall be prohibited from acquiring, chartering-in, or owning any
Liquid Shipment Vessels.
Section 2.2 Permitted
Exceptions. Notwithstanding any provision of
Section 2.1 to the contrary, the Navios Maritime
Entities may engage in the following:
(a) acquiring any Liquid Shipment Vessels if the Navios
Maritime Entity offers to sell it Navios Acquisition for fair
market value (including the value of any related charter);
(b) acquiring any Liquid Shipment Vessels as part of the
acquisition of a controlling interest in a business or package
of assets; provided, however, that:
(i) if less than a majority of the value of the total
assets or business acquired is attributable to Liquid Shipment
Vessels, as determined in good faith by the board of directors
of Navios Maritime (or if the Navios Maritime Entity is the MLP
or any other Navios Maritime Entity that is a Public Company or
a subsidiary thereof, the board of directors of such Public
Company), then the Navios Maritime Entity must offer to sell to
the Navios Acquisition such Liquid Shipment Vessels for fair
market value (including the value of any related charter) plus
any applicable
Break-up
Costs in accordance with the procedures set forth in
Section 4.1.
(ii) if a majority or more of the value of the total assets
or business acquired is attributable to those Liquid Shipment
Vessels, as determined in good faith by the board of directors
of Navios Maritime (or, if the Navios Maritime Entity is the MLP
or any other Navios Maritime Entity that is a Public Company or
a subsidiary thereof, the board of directors of such Public
Company); Navios Maritime (or the relevant Navios Maritime
Entity) shall notify Navios Acquisition in writing, of the
proposed acquisition. Navios Acquisition shall, not later than
the 15th calendar day following receipt of such notice,
notify Navios Maritime (or the relevant Navios Maritime Entity)
if Navios Acquisition will acquire the Liquid Shipping Vessel or
Liquid Shipment Vessels forming part of the business or package
of assets. If Navios Acquisition does not notify Navios Maritime
of its intent to pursue the acquisition within 15 calendar days,
Navios Maritime (or the relevant Navios Maritime Entity) may
proceed with the acquisition as provided in subsection (i)
above.
(c) acquiring a non-controlling interest in any company,
business or pool of assets;
(d) acquiring or owning any Liquid Shipment Vessels if
Navios Acquisition does not fulfill its obligations under any
written agreement between Navios Maritime (or the relevant
Navios Maritime Entity) and Navios Acquisition requiring Navios
Acquisition to purchase such Liquid Shipment Vessels or if
Navios Acquisition declines to purchase such Liquid Shipment
Vessels after being offered the right to purchase it pursuant to
this Agreement.
Annex H-5
(e) acquiring, chartering-in, or owning any Liquid Shipment
Vessels that are subject to an offer to sell to Navios
Acquisition by a Navios Maritime Entity, as described in
Section 2.2, in each case pending Navios
Acquisitions determination pursuant to
Section 4.1 whether to purchase the Liquid Shipment
Vessels (and, if Navios Acquisition determines to purchase such
Liquid Shipment Vessels, pending the closing of such purchase);
(f) providing ship management services relating to any
vessel whatsoever; or acquiring or owning any Liquid Shipment
Vessels if Navios Acquisition has previously advised Navios
Maritime (or the relevant Navios Maritime Entity) that it
consents to such acquisition or ownership.
ARTICLE III
DRYBULK
CARRIER
RESTRICTED BUSINESS OPPORTUNITIES
Section 3.1 Drybulk
Carrier Restricted Businesses. Subject to
Section 6.4 and except as permitted by
Section 3.2, each of the Navios Acquisition Entities
shall be prohibited from acquiring, owning, operating or
chartering-in any Drybulk Carrier.
Section 3.2 Permitted
Exceptions. Notwithstanding any provision of
Section 3.1 to the contrary, the Navios Acquisition
Entities may engage in the following activities under any of the
following circumstances:
(a) acquiring any Drybulk Carriers as part of the
acquisition of a controlling interest in a business or package
of assets and owning and operating or chartering those vessels,
provided, however, that:
(i) if less than a majority of the value of the total
assets or business acquired is attributable to any Drybulk
Carriers, as determined in good faith by the Board of Directors
of Navios Acquisition, Navios Acquisition must offer to sell
such Drybulk Carriers and related charters to Navios Maritime or
any other Navios Maritime Entity for their fair market value
(including the value of any related charter) plus any applicable
Break-up
Costs in accordance with the procedures set forth in
Section 4.1.
(ii) if a majority or more of the value of the total assets
or business acquired is attributable to Drybulk Carriers, as
determined in good faith by Navios Acquisition; Navios
Acquisition shall notify Navios Maritime and the MLP in writing
of the proposed acquisition. Navios Maritime and the MLP shall,
not later than the 15th calendar day following receipt of
such notice, notify Navios Acquisition if any Navios Maritime
Entity wishes to acquire the Drybulk Carriers forming part of
the business or package of assets. If Navios Maritime or the MLP
does not notify Navios Acquisition of its intent to pursue the
acquisition within 15 calendar days, Navios Acquisition may
proceed with the acquisition as provided in subsection (i)
above.
(b) owning, operating or chartering any Drybulk Carriers
that is subject to an offer to purchase by Navios Maritime or
the MLP as described in Section 3.2(a) pending the
applicable offer of any such Drybulk Carriers to Navios Maritime
or the MLP and Navios Maritimes and the MLPs
determination pursuant to Section 4.1 whether to
purchase the Drybulk Carriers and, if Navios Maritime or the MLP
elect to purchase or cause any Navios Maritime Entity to
purchase any such Drybulk Carriers, pending the closing of such
purchase; and
(c) acquiring, operating or chartering any Drybulk Carrier
if Navios Maritime and the MLP have previously advised Navios
Acquisition that it consents to such acquisition, operation or
charter or if Navios Entities decline to purchase such Drybulk
Carrier after being offered the right to purchase it pursuant to
this Agreement.
(d) The respective rights of Navios Maritime and the MLP to
purchase any Drybulk Carriers pursuant to this section shall be
governed by the Omnibus Agreement among Navios Maritime, Navios
GP L.L.C., Navios Maritime Operating L.L.C. and the MLP dated as
of November 16, 2007 (as amended from time to time, the
2007 Agreement) and, notwithstanding anything to the
contrary contained
Annex H-6
herein, if Navios Maritime advises Navios Acquisition in writing
that its obligation to offer the MLP certain Drybulk Carriers
has been terminated or that the rights of Navios Maritime take
precedence over the rights of the MLP, either in a particular
case or in all cases, Navios Acquisition shall have no
obligation to continue to offer Drybulk Carriers to the MLP
pursuant to this Agreement in such case or any case, as the case
may be. Navios Acquisition shall be entitled to rely on a
written communication from Navios Maritime as to the MLPs
rights and, if such communication is in error, the MLP agrees
that the sole recourse of the MLP shall be against Navios
Maritime and not against Navios Acquisition.
ARTICLE IV
BUSINESS
OPPORTUNITIES PROCEDURES
Section 4.1 Procedures. If
(a) Navios Acquisition acquires any Drybulk Carriers in
accordance with Section 3.2(a), or (b) a Navios
Maritime Entity acquires any Liquid Carrier Vessels in
accordance with Section 2.2(a) or (b)(i), then
(i) not later than 30 calendar days after the consummation
of the acquisition (in the case of clause (a) or
(b) above), such acquiring Party (the Acquiring
Party) shall notify (a) Navios Maritime and the
MLP, in the case of an acquisition by Navios Acquisition or
(b) Navios Acquisition in the case of an acquisition by a
Navios Maritime Entity and offer such party to be notified (each
an Offeree) the opportunity for any Navios
Maritime Entity or Navios Acquisition, as applicable, to
purchase such Drybulk Carrier or Liquid Shipment Vessel, as
applicable (the Offered Assets), for their
fair market value, including the value of any charters (plus, in
the case of an acquisition in accordance with
Section 2.2(b) or 3.2(a), any applicable
Break-up
Costs), in each case on commercially reasonable terms in
accordance with this Section (the Offer). The
Offer shall set forth the Acquiring Partys proposed terms
relating to the purchase of the Offered Assets by the applicable
Navios Maritime Entity or Navios Acquisition, including any
liabilities to be assumed by the applicable Navios Maritime
Entity or Navios Acquisition as part of the Offer. As soon as
practicable after the Offer is made, the Acquiring Party will
deliver to the Offeree all information prepared by or on behalf
of or in the possession of such Acquiring Party relating to the
Offered Assets and reasonably requested by the Offeree. Within
30 calendar days after receipt of such notification, the Offeree
shall notify the Acquiring Party in writing that either:
(a) If the Offeree elects not to purchase the Offered
Assets, then the Acquiring Party and its Affiliates shall,
subject to the other terms of this Agreement (including
Section 2.2(b)(ii)), be forever free, subject to the
provisions of this Agreement, to continue to own, operate and
charter such Offered Assets; or
(b) If the Offeree elects to purchase the Offered Assets,
then the following procedures shall be followed:
(i) After the receipt of the Offer by the Offeree, the
Acquiring Party and the Offeree shall negotiate in good faith,
the fair market value (and any applicable
Break-up
Costs), of the Offered Assets that are subject to the Offer and
the other terms of the Offer on which the Offered Assets will be
sold to the applicable Navios Maritime Entity or Navios
Acquisition. If the Acquiring Party and the Offeree agree on the
fair market value (and any applicable
Break-up
Costs), of the Offered Assets that are subject to the Offer and
the other terms of the Offer during the
30-day
period (the Offer Period) after receipt by
the Acquiring Party of Navios Maritimes or the MLPs
election to purchase (or election to cause any of its permitted
Affiliates to purchase) or of Navios Acquisitions election
to cause any Navios Acquisition Entity to purchase, as
applicable, the Offered Assets, Navios Maritime or the MLP, as
the case may be, shall purchase (or cause any of its permitted
Affiliates to purchase) or Navios Acquisition shall cause any
Navios Acquisition Entity to purchase, as applicable, the
Offered Assets on such terms as soon as commercially practicable
after such agreement has been reached.
(ii) If the Acquiring Party and the Offeree are unable to
agree on the fair market value (and any applicable
Break-up
Costs), of the Offered Assets that are subject to the Offer or
on any other terms of the Offer during the Offer Period, the
Acquiring Party and the Offeree will engage an
Annex H-7
independent ship broker
and/or an
independent investment banking firm prior to the end of the
Offer Period to determine the fair market value (and any
applicable
Break-up
Costs), of the Offered Assets
and/or the
other terms on which the Acquiring Party and the Offeree are
unable to agree. In determining the fair market value of the
Offered Assets and other terms on which the Offered Assets are
to be sold, the ship broker or investment banking firm, as
applicable, will have access to the proposed sale and purchase
values and terms for the Offer submitted by the Acquiring Party
and the Offeree, respectively, and to all information prepared
by or on behalf of the Acquiring Party relating to the Offered
Assets and reasonably requested by such ship broker or
investment banking firm. Such ship broker or investment banking
firm will determine the fair market value, including the value
of any related charter (and any applicable
Break-up
Costs) of the Offered Assets
and/or the
other terms on which the Acquiring Party and the Offeree are
unable to agree within 30 calendar days of its engagement and
furnish the Acquiring Party and the Offeree its determination.
The fees and expenses of the ship broker or investment banking
firm, as applicable, will be divided equally between the
Acquiring Party and the Offeree. Upon receipt of such
determination, the Offeree will have the option, but not the
obligation:
(A) in the case that the Offeree is Navios Maritime or the
MLP, to purchase or cause any of its permitted Affiliates to
purchase, or in the case that the Offeree is Navios Acquisition,
to cause any Navios Acquisition Entity to purchase the Offered
Assets for the fair market value (and any applicable
Break-up
Costs), and on the other terms determined by the ship broker or
investment banking firm, as soon as commercially practicable
after determinations have been made; or
(B) in the case that the Offeree is Navios Maritime, to
elect not to cause any of its permitted Affiliates to purchase,
or in the case that the Offeree is the MLP, to elect not to
cause any of its permitted Affiliates to purchase such Offered
Assets, in which event the Acquiring Party and its Affiliates
shall, subject to the other terms of this Agreement, be forever
free to continue to own and operate such Offered Assets.
(C) The respective rights of Navios Maritime and the MLP to
purchase any Drybulk Carriers pursuant to this section shall be
governed by the 2007 Agreement and, notwithstanding anything to
the contrary contained herein, if Navios Maritime advises Navios
Acquisition in writing that its obligation to offer the MLP
certain Drybulk Carriers has been terminated or that the rights
of Navios Maritime take precedence over the rights of the MLP,
either as a particular case or in all cases, Navios Acquisition
shall have no obligation to continue to offer Drybulk Carriers
to the MLP pursuant to this Agreement in such case or any case,
as the case may be. Navios Acquisition shall be entitled to rely
on a written communication from Navios Maritime as to the
MLPs rights and, if such communication is in error, the
MLP agrees that the sole recourse of the MLP shall be against
Navios Maritime and not against Navios Acquisition.
Section 4.2 Scope
of Prohibition. Except as otherwise provided
in this Agreement, each party and its Affiliates shall be free
to engage in any business activity whatsoever, including those
that may be in direct competition with the Navios Maritime
Entities or Navios Acquisition.
Section 4.3 Enforcement. Each
Party agrees and acknowledges that the other Parties do not have
an adequate remedy at law for the breach by any such Party of
its covenants and agreements set forth in this Article IV,
and that any breach by any such Party of its covenants and
agreements set forth in this Article IV would result in
irreparable injury to such other Parties. Each Party further
agrees and acknowledges that any other Party may, in addition to
the other remedies which may be available to such other Party,
file a suit in equity to enjoin such Party from such breach, and
consent to the issuance of injunctive relief to enforce the
provisions of Article IV of this Agreement.
Annex H-8
ARTICLE V
RIGHTS OF
FIRST OFFER
Section 5.1 Rights
of First Offer.
(a) Navios Acquisition hereby grants Navios Maritime and
the MLP a right of first offer on any proposed Transfer by any
Navios Acquisition Entity of any Drybulk Carriers owned or
acquired by any Navios Acquisition Entity. The Navios Maritime
Entities hereby grant Navios Acquisition a right of first offer
on any proposed Transfer of any Liquid Shipment Vessels owned or
acquired by any Navios Maritime Entity.
(b) The Parties acknowledge that all potential Transfers
pursuant to this Article V are subject to obtaining any and
all written consents of governmental authorities and other
non-affiliated third parties and to the terms of all existing
agreements in respect of such Drybulk Carriers or Liquid
Shipment Vessels, as the case may be.
Section 5.2 Procedures
For Rights of First Offer. In the event that
Navios Acquisition or a Navios Maritime Entity (as applicable,
the Transferring Party) proposes to Transfer
Drybulk Carrier assets (the Sale Assets),
prior to engaging in any negotiation for such Transfer with any
non-affiliated third party or otherwise offering to Transfer the
Sale Assets to any non-affiliated third party, such Transferring
Party shall give Navios Maritime and the MLP or Navios
Acquisition, as applicable (the Potential
Transferee), written notice setting forth all material
terms and conditions (including, without limitation, the
purchase price and a description of the Sale Asset(s)) on which
such Transferring Party desires to Transfer the Sale Assets (the
Transfer Notice). The Transferring Party then
shall be obligated to negotiate in good faith for a
15-day
period following the delivery by the Transferring Party of the
Transfer Notice (the First Offer Negotiation
Period) to reach an agreement for the Transfer of such
Sale Assets to the Potential Transferee or any of its Affiliates
on the terms and conditions set forth in the Transfer Notice. If
no such agreement with respect to the Sale Assets is reached
during the First Offer Negotiation Period, and the Transferring
Party has not Transferred, or agreed in writing to Transfer,
such Sale Assets to a third party within 180 calendar days after
the end of the First Offer Negotiation Period on terms generally
no less favorable to the Transferring Party than those included
in the Transfer Notice (except to the extent that market
conditions during the 180 calendar days after the end of the
First Offer Negotiation Period have resulted in a material
change in the fair market value of such Sale Assets), then the
Transferring Party shall not thereafter Transfer any of the Sale
Assets without first offering such assets to the applicable
Potential Transferee in the manner provided above.
Section 5.3 2007
Agreement Procedure. The respective rights of
Navios Maritime and the MLP to purchase any Drybulk Carriers
pursuant to this section shall be governed by the 2007 Agreement
and, notwithstanding anything to the contrary contained herein,
if Navios Maritime advises Navios Acquisition in writing that
its obligation to offer the MLP certain Drybulk Carriers has
been terminated or that the rights of Navios Maritime take
precedence over the rights of the MLP, either as a particular
case or in all cases, Navios Acquisition shall have no
obligation to continue to offer Drybulk Carriers to the MLP
pursuant to this Agreement in such case or any case, as the case
may be. Navios Acquisition shall be entitled to rely on a
written communication from Navios Maritime as to the MLPs
rights and, if such communication is in error, the MLP agrees
that the sole recourse of the MLP shall be against Navios
Maritime and not against Navios Acquisition.
ARTICLE VI
MISCELLANEOUS
Section 6.1 Choice
Of Law; Submission To Jurisdiction. This
Agreement shall be subject to and governed by the laws of the
State of New York.
Section 6.2 Notice. All
notices or requests or consents provided for or permitted to be
given pursuant to this Agreement must be in writing and must be
given by depositing same in the mail, addressed to the Person to
be notified, postpaid, and registered or certified with return
receipt requested or by delivering such notice in person or by
private courier, prepaid, or by facsimile to such party. Notice
given by personal delivery or mail shall be effective upon
actual receipt. Couriered notices shall be deemed delivered on
the date the
Annex H-9
courier represents that delivery will occur. Notice given by
facsimile shall be effective upon actual receipt if received
during the recipients normal business hours, or at the
beginning of the recipients next business day after
receipt if not received during the recipients normal
business hours. All notices to be sent to a party pursuant to
this Agreement shall be sent to or made at the address set forth
below such partys signature to this Agreement, or at such
other address as such party may stipulate to the other parties
in the manner provided in this Section.
Section 6.3 Entire
Agreement. This Agreement constitutes the
entire agreement of the parties relating to the matters
contained herein, superseding all prior contracts or agreements,
whether oral or written, relating to the matters contained
herein.
Section 6.4 Termination. Upon
a Change of Control of the MLP, the provisions of
Articles II, III, IV and V of this Agreement (but not
less than all of such Articles) shall terminate immediately as
to the MLP, but shall remain binding on Navios Acquisition and
Navios Maritime unless otherwise terminated as to them. Upon a
Change of Control of Navios Maritime, the provisions of
Articles II, III, IV and V of this Agreement (but not
less than all of such Articles) shall terminate; provided,
however, that in no event shall the provisions of
Articles II, III, IV and V of this Agreement terminate
upon a Change of Control of Navios Maritime prior to the fourth
anniversary of this Agreement. Upon a Change of Control of
Navios Acquisition, the provisions of
Articles II, III, IV and V of this Agreement, but not
less than all such Articles) shall terminate as to all parties
hereto.
Section 6.5 Waiver;
Effect of Waiver or Consent. Any party hereto
may (a) extend the time for the performance of any
obligation or other act of any other party hereto or
(b) waive compliance with any agreement or condition
contained herein. Except as otherwise specifically provided
herein, any such extension or waiver shall be valid only if set
forth in a written instrument duly executed by the party or
parties to be bound thereby. No waiver or consent, express or
implied, by any party of or to any breach or default by any
Person in the performance by such Person of its obligations
hereunder shall be deemed or construed to be a waiver or consent
of or to any other breach or default in the performance by such
Person of the same or any other obligations of such Person
hereunder. Failure on the part of a party to complain of any act
of any Person or to declare any Person in default, irrespective
of how long such failure continues, shall not constitute a
waiver by such party of its rights hereunder until the
applicable statute of limitations period has run.
Section 6.6 Amendment
or Modification. This Agreement may be
amended or modified from time to time only by the written
agreement of all the parties hereto.
Section 6.7 Assignment. No
party shall have the right to assign its rights or obligations
under this Agreement without the consent of the other parties
hereto.
Section 6.8 Counterparts. This
Agreement may be executed in any number of counterparts with the
same effect as if all signatory parties had signed the same
document. All counterparts shall be construed together and shall
constitute one and the same instrument.
Section 6.9 Severability. If
any provision of this Agreement or the application thereof to
any Person or circumstance shall be held invalid or
unenforceable to any extent, the remainder of this Agreement and
the application of such provision to other Persons or
circumstances shall not be affected thereby and shall be
enforced to the greatest extent permitted by law.
Section 6.10 Gender,
Parts, Articles and Sections. Whenever the
context requires, the gender of all words used in this Agreement
shall include the masculine, feminine and neuter, and the number
of all words shall include the singular and plural. All
references to Article numbers and Section numbers refer to
Articles and Sections of this Agreement.
Section 6.11 Further
Assurances. In connection with this Agreement
and all transactions contemplated by this Agreement, each
signatory party hereto agrees to execute and deliver such
additional documents and instruments and to perform such
additional acts as may be necessary or appropriate to
effectuate, carry out and perform all of the terms, provisions
and conditions of this Agreement and all such transactions.
Annex H-10
Section 6.12 Withholding
or Granting of Consent. Each party may, with
respect to any consent or approval that it is entitled to grant
pursuant to this Agreement, grant or withhold such consent or
approval in its sole and uncontrolled discretion, with or
without cause, and subject to such conditions as it shall deem
appropriate.
Section 6.13 Laws
and Regulations. Notwithstanding any
provision of this Agreement to the contrary, no party to this
Agreement shall be required to take any act, or fail to take any
act, under this Agreement if the effect thereof would be to
cause such party to be in violation of any applicable law,
statute, rule or regulation.
Section 6.14 Negotiation
of Rights of Navios Maritime, Navios Acquisition, the MLP:
Limited Partners, Assignees, and Third
Parties. The provisions of this Agreement are
enforceable solely by the parties to this Agreement, and no
shareholder of Navios Maritime or of Navios Acquisition and no
limited partner, member, assignee or other Person of the MLP
shall have the right, separate and apart from Navios Maritime,
Navios Acquisition, the MLP, to enforce any provision of this
Agreement or to compel any party to this Agreement to comply
with the terms of this Agreement.
Section 6.15 2007
Agreement. Navios Acquisition acknowledges
and agrees that it is subject to the 2007 Agreement as if it
were a Navios Maritime Entity (as defined therein). Accordingly,
Navios Acquisition acknowledges and agrees that it may be
required to offer opportunities to the MLP not otherwise
contemplated by this Agreement, including if it places a new
charter on any Panamax or Capesize vessel it owns or may
acquire, for so long as the 2007 Agreement remains in effect as
to Navios Maritime.
[SIGNATURE PAGE FOLLOWS]
Annex H-11
IN WITNESS WHEREOF, the Parties have executed this Agreement on,
and effective as of, the Closing Date.
NAVIOS MARITIME HOLDINGS, INC.
Name: Angeliki Frangou
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Title:
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Chairman of the Board and
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Chief Executive Officer
Address for Notice:
85 Atki Miaouli Street
Piraeus, Greece 185 38
Phone: +30
(210) 459-5000
Fax: +30
(210) 417-2070
Attention: Vasiliki Papaefthymiou
NAVIOS MARITIME ACQUISITION CORPORATION
By:
Name: Angeliki Frangou
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Title:
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Chairman of the Board and
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Chief Executive Officer
Address for Notice:
85 Atki Miaouli Street
Piraeus, Greece 185 38
Phone: +30
(210) 459-5000
Fax: +30
(210) 417-2070
Attention: Vasiliki Papaefthymiou
SIGNATURE PAGE
OMNIBUS AGREEMENT
Annex H-12
NAVIOS MARITIME PARTNERS, L.P.,
Name: Angeliki Frangou
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Title:
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Chairman of the Board and
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Chief Executive Officer
Address for Notice:
85 Atki Miaouli Street
Piraeus, Greece 185 38
Phone: +30
(210) 459-5000
Fax: +30
(210) 417-2070
Attention: Vasiliki Papaefthymiou
SIGNATURE PAGE
OMNIBUS AGREEMENT
Annex H-13
ANNEX I
FORM OF
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
NAVIOS MARITIME ACQUISITION CORPORATION
Pursuant
to the Marshall Islands Business Corporations Act
First: The name of the corporation is Navios
Maritime Acquisition Corporation (the Corporation).
Second: The registered address of the
Corporation in the Marshall Islands is Trust Company
Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall
Islands MH96960. The name of the Corporations registered
agent at such address is The Trust Company of the Marshall
Islands, Inc.
Third: Subject to the conditions set forth in
this Article Third, the purposes for which the Corporation
is formed are to engage in any lawful act or activity for which
corporations may be organized under the Marshall Islands
Business Corporations Act (the BCA). In addition to
the powers and privileges conferred upon the Corporation by law
and those incidental thereto, the Corporation shall possess and
may exercise all the powers and privileges which are necessary
or convenient to the conduct, promotion or attainment of the
business or purposes of the Corporation.
Fourth: The total number of shares of all
classes of capital stock which the Corporation shall have
authority to issue is 101,000,000 of which
100,000,000 shares shall be Common Stock of the par value
of $0.0001 per share and 1,000,000 shares shall be
Preferred Stock of the par value of $0.0001 per share.
(A) Preferred Stock. The Board of
Directors is expressly granted authority to issue shares of the
Preferred Stock, in one or more series, and to fix for each such
series such voting powers, full or limited, and such
designations, preferences and relative, participating, optional
or other special rights and such qualifications, limitations or
restrictions thereof as shall be stated and expressed in the
resolution or resolutions adopted by the Board of Directors
providing for the issue of such series (a Preferred Stock
Designation) and as may be permitted by the BCA. The
number of authorized shares of Preferred Stock may be increased
or decreased (but not below the number of shares thereof then
outstanding) by Articles of Amendment to these Articles of
Incorporation authorized by the affirmative vote of the holders
of a majority of the voting power of all of the then outstanding
shares of the capital stock of the Corporation entitled to vote
generally in the election of directors, voting together as a
single class, without a separate vote of the holders of the
Preferred Stock, or any series thereof, unless a vote of any
such holders is required pursuant to any Preferred Stock
Designation.
(B) Common Stock. Except as otherwise
required by law or as otherwise provided in any Preferred Stock
Designation, the holders of the Common Stock shall exclusively
possess all voting power and each share of Common Stock shall
have one vote.
Fifth: The name and mailing address of the
sole incorporator of the Corporation are as follows:
Raymond E. Simpson
8, Karaiskaki Street
183 45 Moschaton
Greece
Sixth: The Board of Directors shall be divided
into three classes: Class A, Class B and Class C.
The number of directors in each class shall be as nearly equal
as possible. At the first election of directors by the
incorporator, the incorporator shall elect a Class C
director for a term expiring at the Corporations third
Annual Meeting of Shareholders. The Class C director shall
then elect additional Class A, Class B and
Class C directors. The directors in Class A shall be
elected for a term expiring at the first Annual Meeting of
Shareholders, the directors in Class B shall be elected for
a term expiring at the second Annual Meeting of Shareholders and
the directors in Class C shall be elected for a term
expiring at the third Annual Meeting of Shareholders. Commencing
at the first Annual Meeting of Shareholders, and at each annual
meeting thereafter, directors elected to succeed
Annex I-1
those directors whose terms expire shall be elected for a term
of office to expire at the third succeeding annual meeting of
shareholders after their election. Except as the BCA may
otherwise require, in the interim between annual meetings of
shareholders or special meetings of shareholders called for the
election of directors
and/or the
removal of one or more directors and the filling of any vacancy
in that connection, newly created directorships and any
vacancies in the Board of Directors, including unfilled
vacancies resulting from the removal of directors for cause, may
be filled by the vote of a majority of the remaining directors
then in office, although less than a quorum (as defined in the
Corporations Bylaws), or by the sole remaining director.
All directors shall hold office until the expiration of their
respective terms of office and until their successors shall have
been elected and qualified. A director elected to fill a vacancy
resulting from the death, resignation or removal of a director
shall serve for the remainder of the full term of the director
whose death, resignation or removal shall have created such
vacancy and until his successor shall have been elected and
qualified.
Seventh: The following provisions are inserted
for the management of the business and for the conduct of the
affairs of the Corporation, and for further definition,
limitation and regulation of the powers of the Corporation and
of its directors and shareholders:
(A) Election of directors need not be by written ballot
unless the by-laws of the Corporation so provide.
(B) The Board of Directors shall have the power, without
the assent or vote of the shareholders, to make, alter, amend,
change, add to or repeal the by-laws of the Corporation.
(C) The directors in their discretion may submit any
contract or act for approval or ratification at any annual
meeting of the shareholders or at any meeting of the
shareholders called for the purpose of considering any such act
or contract, and any contract or act that shall be approved or
be ratified by the vote of the holders of a majority of the
stock of the Corporation that is represented in person or by
proxy at such meeting and entitled to vote thereat (provided
that a lawful quorum of shareholders be there represented in
person or by proxy) shall be as valid and binding upon the
Corporation and upon all the shareholders as though it had been
approved or ratified by every shareholder of the Corporation,
whether or not the contract or act would otherwise be open to
legal attack because of directors interests, or for any
other reason.
(D) In addition to the powers and authorities hereinbefore
or by statute expressly conferred upon them, the directors are
hereby empowered to exercise all such powers and do all such
acts and things as may be exercised or done by the Corporation;
subject, nevertheless, to the provisions of the statutes of the
Marshall Islands, of these Articles of Incorporation, and to any
by-laws from time to time made by the shareholders; provided,
however, that no by-law so made shall invalidate any prior act
of the directors which would have been valid if such by-law had
not been made.
(E) A director of the Corporation shall not be personally
liable to the Corporation or its shareholders for monetary
damages for breach of fiduciary duty as a director, except for
liability (i) for any breach of the directors duty of
loyalty to the Corporation or its shareholders, (ii) for
acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, or (iii) for any
transaction from which the director derived an improper personal
benefit. If the BCA is amended to authorize corporate action
further eliminating or limiting the personal liability of
directors, then the liability of a director of the Corporation
shall be eliminated or limited to the fullest extent permitted
by the BCA, as so amended. Any repeal or modification of this
paragraph E by the shareholders of the Corporation shall
not adversely affect any right or protection of a director of
the Corporation with respect to events occurring prior to the
time of such repeal or modification.
(F) The Corporation, to the full extent permitted by
Section 60 of the BCA, as amended from time to time, shall
indemnify all persons whom it may indemnify pursuant thereto.
Expenses (including attorneys fees) incurred by an officer
or director in defending any civil, criminal, administrative, or
investigative action, suit or proceeding for which such officer
or director may be entitled to indemnification hereunder shall
be paid by the Corporation in advance of the final disposition
of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such director or officer to repay
such amount if it shall ultimately be determined that they are
not entitled to be indemnified by the Corporation as authorized
hereby.
Eighth: The Corporation shall have perpetual existence.
Annex I-2
ANNEX J
NAVIOS
MARITIME ACQUISITION CORPORATION
85 Akti Miaouli Street
Piraeus, Greece 185 38
SPECIAL MEETING IN LIEU OF ANNUAL MEETING OF
STOCKHOLDERS
THIS
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
NAVIOS MARITIME ACQUISITION CORPORATION
The undersigned appoints ANGELIKI FRANGOU and TED C. PETRONE as
proxies, and each of them with full power to act without the
other, each with the power to appoint a substitute, and hereby
authorizes either of them to represent and to vote, as
designated on the reverse side, all shares of common stock of
Navios Maritime Acquisition Corporation (Navios
Acquisition) held of record by the undersigned on
[ ],
2010, at the Special Meeting In Lieu of Annual Meeting of
Stockholders to be held on
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2010, or any postponement or adjournment thereof.
THIS
PROXY REVOKES ALL PRIOR PROXIES GIVEN BY THE UNDERSIGNED.
(Continued and to be signed on reverse side)
Annex J-1
PROXY
THIS PROXY WILL BE VOTED AS DIRECTED. IF NO DIRECTIONS ARE
GIVEN, THIS PROXY WILL BE VOTED FOR PROPOSALS 1
AND 2. THE NAVIOS ACQUISITION BOARD OF DIRECTORS RECOMMENDS A
VOTE FOR THE FOLLOWING PROPOSALS.
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1.
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To approve the Acquisition Agreement between Navios Acquisition
and Navios Holdings, pursuant to which Navios Acquisition will
acquire 13 product tanker vessels (11 product tankers and two
chemical tankers) plus options to purchase two additional
product tankers.
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FOR
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AGAINST
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ABSTAIN
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If you voted AGAINST Proposal 1 and you hold
shares of Navios Acquisition common stock issued in the Navios
Acquisition initial public offering, you may exercise your
conversion rights and demand that Navios Acquisition convert
your shares of common stock into a pro rata portion of the trust
account by marking the Exercise Conversion Rights
box below. If you exercise your conversion rights, then you will
be exchanging your shares of Navios Acquisition common stock for
cash and will no longer own these shares. You will only be
entitled to receive cash for these shares if the acquisition is
completed and you affirmatively vote against the
Proposal 1, demand that Navios Acquisition convert your
shares into cash and deliver your stock to Navios
Acquisitions transfer agent physically or electronically
prior to the meeting. Failure to (a) vote against
Proposal 1, (b) check the following box,
(c) deliver your stock certificate to Navios
Acquisitions transfer agent or deliver your shares
electronically through the Depository Trust Company prior
to the meeting, and (d) submit this proxy in a timely
manner will result in the loss of your conversion rights.
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I HEREBY EXERCISE MY CONVERSION RIGHTS
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2.
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To approve amendments to Navios Acquisitions amended and
restated articles of incorporation to (i) change Navios
Acquisitions corporate existence to perpetual, and
(ii) delete the preamble and sections A through E,
inclusive, of Article Sixth and to redesignate
section F of Article Sixth as Article Sixth, as
such provisions will no longer be applicable to Navios
Acquisition after the business combination.
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FOR
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AGAINST
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ABSTAIN
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MARK HERE FOR ADDRESS CHANGE AND NOTE AT RIGHT
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PLEASE MARK,
DATE AND RETURN THIS PROXY PROMPTLY.
ANY VOTES RECEIVED AFTER A MATTER HAS BEEN VOTED UPON WILL
NOT BE COUNTED.
Sign exactly as name appears on this proxy card. If shares
are held jointly, each holder should sign. Executors,
administrators, trustees, guardians, attorneys and agents should
give their full titles. If stockholder is a corporation, sign in
full name by an authorized officer, giving full title as such.
If stockholder is a partnership, please sign in partnership name
by authorized person.
Annex J-2