UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM 20-F
(Mark
One)
☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For
the fiscal year ended December 31, 2024
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
☐ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date
of event requiring this shell company report
For
the transition period from to
Commission
file number: 001-34153
Global
Ship Lease, Inc.
(Exact
name of Registrant as specified in its charter)
N/A
(Translation
of Registrant’s name into English)
Republic
of The Marshall Islands
(Jurisdiction
of incorporation or organization)
9
Irodou Attikou Street, Kifisia, Athens 14561, Greece
(Address
of principal executive offices)
Anastasios
Psaropoulos, Chief Financial Officer, 9 Irodou Attikou Street, Kifisia, Athens 14561, Greece
Tel
number: +
30 210 6233670
t.psaropoulos@globalshiplease.com
(Name,
Telephone, Email and/or Facsimile Number and Address of Company Contact Person)
Securities
registered or to be registered pursuant to Section 12(b) of the Act.
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Class A Common Shares, par value of $0.01 per share
GSL
New York Stock Exchange
Depositary Shares, each of which represents a 1/100th interest in a share of
8.75% Series B Cumulative Redeemable Perpetual Preferred Shares, par value
$0.01 per share
GSL-B
New York Stock Exchange
8.75% Series B Cumulative Redeemable Perpetual Preferred Shares*
N/A*
N/A*
* Not for trading, but only in connection with the registration of the Depositary Shares representing 1/100th interest in such shares of 8.75% Series B Cumulative Redeemable Perpetual Preferred Shares, pursuant to the requirements of
the Securities and Exchange Commission.
Securities
registered or to be registered pursuant to Section 12(g) of the Act: None
Securities
for which there is a reporting obligation pursuant to Section 15(d) of the Act: None
Indicate
the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered
by the annual report.
35,447,370 Class A
common shares, par value of $0.01 per share
43,592 Series B Cumulative Redeemable Perpetual Preferred
Shares, par value of $0.01 per share
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐
If
this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13
or 15(d) of the Securities Exchange Act of 1934. Yes ☐ No ☒
Note
– Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 from their obligations under those Sections.
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was
required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for
such shorter period that the registrant
was required to submit such files). Yes ☒ No ☐
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging
growth company. See the definitions of “large accelerated filer,” “accelerated filer,” and “emerging
growth
company” in Rule 12b-2 of the Exchange Act.
Large accelerated Filer
☒
Accelerated Filer
☐
Non-accelerated Filer
☐
Emerging growth company
☐
If
an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant
has elected not to use the extended transition period for complying with any new or revised
financial accounting standards† provided
pursuant to Section 13(a) of the Exchange Act. ☐
†
The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards
Board to its Accounting Standards Codification after April 5, 2012.
Indicate
by check mark whether the registrant has filed a report on and attestation to its management’s assessment of effectiveness of its
internal controls over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15
U.S.S. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report. ☒
If
securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements.
☐
Indicate
by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation
received by any of the registrant’s executive officers during the relevant recovery period
pursuant to §240.10D-1(b) ☐
Indicate
by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
U.S. GAAP ☒
International Financial Reporting Standards as Issued
by the International Accounting Standards Board ☐
Other ☐
If
“Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant
has elected to follow.
Item
17 ☐ Item 18 ☐
If
this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange
Act).
Yes ☐ No ☒
GLOBAL SHIP LEASE, INC.
INDEX TO ANNUAL REPORT ON FORM 20-F
PART I
1
Item 1.
Identity of Directors, Senior Management and Advisers
1
Item 2.
Offer Statistics and Expected Timetable
1
Item 3.
Key Information
1
Item 4.
Information on the Company
32
Item 4A.
Unresolved Staff Comments
51
Item 5.
Operating and Financial Review and Prospects
51
Item 6.
Directors, Senior Management and Employees
73
Item 7.
Major Shareholders and Related Party Transactions
79
Item 8.
Financial Information
84
Item 9.
The Offer and Listing
86
Item 10.
Additional Information
86
Item 11.
Quantitative and Qualitative Disclosures About Market Risk
95
Item 12.
Description of Securities Other than Equity Securities
96
PART II
96
Item 13.
Defaults, Dividend Arrearages and Delinquencies
96
Item 14.
Material Modifications to the Rights of Security Holders and Use of Proceeds
96
Item 15.
Controls and Procedures
96
Item 16A.
Audit Committee Financial Expert
97
Item 16B.
Code of Ethics
97
Item 16C.
Principal Accountant Fees and Services
97
Item 16D.
Exemptions from the Listing Standards for Audit Committees
98
Item 16E.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
98
Item 16F.
Change in Registrant’s Certifying Accountant
99
Item 16G.
Corporate Governance
99
Item 16H.
Mine Safety Disclosure
99
Item 16I.
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
99
Item 16J.
Insider Trading Policies
99
Item 16K.
Cybersecurity
99
PART III
101
Item 17.
Financial Statements
101
Item 18.
Financial Statements
101
Item 19.
Exhibits
101
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This
Annual Report contains forward-looking statements. Forward-looking statements provide our current expectations or forecasts of future
events. Forward-looking statements include statements about our expectations, beliefs,
plans, objectives, intentions, assumptions and
other statements that are not historical facts. Words or phrases such as “anticipate”, “believe”, “continue”,
“estimate”, “expect”, “intend”, “may”, “ongoing”, “plan”, “potential”,
“predict”,
“project”, “will” or similar words or phrases, or the negatives of those words or phrases,
may identify forward-looking statements, but the absence of these words does not necessarily mean that a statement is not forward-looking.
Examples of forward-looking statements in this Annual Report include, but are not limited to, statements regarding our disclosure concerning
our operations, cash flows, financial position, dividend policy, the anticipated benefits of
strategic acquisitions, and the likelihood
of success in acquiring additional vessels to expand our business.
Forward-looking
statements appear in a number of places in this Annual Report including, without limitation, in the sections entitled “Business
Overview”, “Management’s Discussion and Analysis of Financial Conditions and
Operations”, and “Dividend
Policy”.
Forward-looking
statements are subject to known and unknown risks and uncertainties and are based on potentially inaccurate assumptions that could cause
actual results to differ materially from those expected or implied by the
forward-looking statements. Our actual results could differ
materially from those anticipated in forward-looking statements for many reasons, including the factors described in “Risk Factors”
in this Annual Report. The risks described
under “Risk Factors” are not exhaustive. Other sections of this Annual Report
describe additional factors that could adversely affect our results of operations, financial condition, liquidity and the development
of the industries in which
we operate. New risks can emerge from time to time, and it is not possible for us to predict all such risks,
nor can we assess the impact of all such risks on our business or the extent to which any risks, or combination of risks and other
factors,
may cause actual results to differ materially from those contained in any forward-looking statements. Accordingly, you should not unduly
rely on these forward-looking statements, which speak only as of the date of this Annual
Report. We undertake no obligation to publicly
update or revise any forward-looking statement to reflect circumstances or events after the date of this Annual Report or to reflect
the occurrence of unanticipated events. You should,
however, review the factors and risks we describe in the reports we will file from
time to time with the Securities and Exchange Commission, or “SEC”, after the date of this Annual Report.
PART
I
Unless
the context otherwise requires, references to the “Company”, “we”, “us”, “our” or “Global
Ship Lease” refer to Global Ship Lease, Inc., “Technomar” refers to Technomar Shipping Inc., our technical ship manager
and
“Conchart” refers to Conchart Commercial Inc., our commercial ship manager, “Managers” refers to Technomar
and Conchart, together. For the definition of certain terms used in this Annual Report, please see “Glossary of Shipping
Terms”
at the end of this Annual Report. Unless otherwise indicated, all references to “$” and “dollars” in this Annual
Report are in U.S. dollars. We use the term “TEU”, meaning twenty-foot equivalent unit, the international standard
measure
of container size, in describing volumes in world container trade and other measures, including the capacity of our containerships, which
we also refer to as vessels or ships. Unless otherwise indicated, we calculate the average
age of our vessels on a weighted average basis,
based on TEU capacity.
Item 1.
Identity
of Directors, Senior Management and Advisers
Not
applicable.
Item 2.
Offer
Statistics and Expected Timetable
Not
applicable.
Item 3.
Key
Information
A.
[Reserved]
B.
Capitalization
and Indebtedness
Not applicable.
C.
Reasons
for the Offer and Use of Proceeds
Not
applicable.
D.
Risk Factors
The risks and uncertainties discussed
below relate principally to the industry in which we operate and our business in general, and others
relate to the market and ownership of our securities. The occurrence of any of the events
described in this section could materially
and adversely affect our business, financial condition and results of operations, cash available for the payment of dividends, and the
market price of our securities. Our business, financial
condition and results of operations and the market price of our securities could
also be materially adversely affected by other matters that are not known to us or that we currently do not consider to be material risks.
Risk Factor Summary
•
We are dependent on our charterers and other counterparties fulfilling their
obligations under agreements with us, and their inability or unwillingness to honor these obligations could significantly reduce our revenues
and cash
flow.
•
Significant demands may be placed on us as a result of possible future
acquisitions of additional vessels. Our growth depends on continued growth in the demand for containerships, and our ability to purchase
additional vessels
and obtain new charters. We may require additional financing to be able to grow and will face substantial competition
to purchase vessels. We may be unable to make or realize expected benefits from acquisitions of vessels or
container shipping-related
assets/enhancements and implementing our growth strategy through acquisitions may harm our business, financial condition and operating
results.
•
Should we expand our business or provide additional services to third parties,
we may need to improve our operating and financial systems, expand our commercial and technical management staff, and recruit suitable
employees
and crew for our vessels.
•
We are exposed to risks associated with the purchase and operation of secondhand
vessels; we may not perform underwater inspections of vessels prior to purchase.
•
We are dependent on third parties, some of which are related parties, to
manage our ships and substantial fees will be payable to our ship managers regardless of our profitability. Our third-party technical
and commercial ship
managers, Technomar and Conchart, are privately held companies and there is little or no publicly available information
about them. Our financial reporting is partly dependent on accounting and financial information provided to
us by Technomar with respect
to our vessels.
•
Our Executive Chairman and our Managers may have conflicts of interest
with us which may make them favor their own interests to our detriment.
•
Due to our lack of diversification, adverse developments in the containership
transportation business could harm our business, results of operations and financial condition. We may be unable to recharter our vessels
at profitable
rates, if at all, upon their time charter expiry.
1
Table of Contents
•
Technological developments which affect global trade flows and supply chains
may affect the demand for our vessels. The volatile container shipping market and difficulty finding profitable charters for our vessels
upon their
expiry.
•
We
have substantial indebtedness. Our substantial indebtedness could adversely affect our ability
to raise additional capital to fund our operations or pursue other business opportunities
and may limit our ability to react to
changes in the economy or our industry. Our debt agreements
contain restrictions that limit our flexibility in operating our business. Volatility of
Secured Overnight Financing Rate (“SOFR”) could affect our profitability,
earnings,
and cash flows.
•
Vessel values may fluctuate, which may adversely affect our financial condition,
result in the incurrence of a loss upon disposal of a vessel or increase the cost of acquiring additional vessels.
•
Our vessels may be subject to extended periods of off-hire, which could
materially adversely affect our business, financial condition and results of operations. The vessels’ mortgagor or other maritime
claimants could arrest our
vessels, which could interrupt the charterers’ or our cash flow. Governments could requisition our vessels
during a period of war or emergency without adequate compensation, which under most of our time charter agreements
would permit the customer
to terminate the charter agreement for that vessel.
•
We may need to make substantial expenditures to maintain our fleet, meet
new regulatory requirements, meet commercial requirements or to acquire vessels.
•
As our fleet ages, we may incur increased operating costs beyond normal
inflation, which would adversely affect our results of operations. Unless we set aside reserves or are able to borrow funds for vessel
replacement, at the
end of the useful lives of our vessels our revenue will decline, which would adversely affect our business, results
of operations and financial condition.
•
Our business depends upon certain individuals who may not necessarily continue
to be affiliated with us in the future. Rising crew and other vessel operating costs may adversely affect our profits. Increased fuel
prices may have
a material adverse effect on our profits.
•
We are a holding company and we depend on the ability of our subsidiaries
to distribute funds to us in order to satisfy our financial and other obligations. Because we generate all of our revenues in U.S. dollars
but incur a portion
of our expenses in other currencies, exchange rate fluctuations could hurt our results of operations.
•
Our insurance may be insufficient to cover losses that may occur to our
property or result from our operations. We may be subject to litigation that, if not resolved in our favor and not sufficiently insured
against, could have a
material adverse effect on us.
•
Our Fourth Amended and Restated Bylaws include forum selection provisions
for certain disputes between us and our shareholders, which could limit our shareholders’ ability to obtain a favorable judicial
forum for disputes
with us or our directors, officers, or other employees. We may not achieve the intended benefits of having forum selection
provisions if they are found to be unenforceable.
•
A cyber-attack could materially disrupt our business.
•
The
current state of the world financial markets and economic conditions and geopolitical conflicts
could have a material adverse impact on our results of operations, financial condition and
cash flows. The container shipping
industry is cyclical and volatile and our growth and long-term
profitability depend mainly upon growth in demand for containerships, the condition of the
charter market and the availability of capital. A decrease in the export
and/or import of
containerized cargo or an increase in trade protectionism may harm our customers’ business
and, in turn, harm our business, results of operations and financial condition. A U.S. proposal
to impose new port fees
on Chinese associated vessels may have a material adverse effect
on our operations and financial results. Adverse economic conditions, especially in the Asia
Pacific region, the European Union or the United States, could harm
our business, results
of operations and financial condition.
•
We may have more difficulty entering into long-term charters if a more
active and cheaper short-term or spot container shipping market develops. An over-supply of containership capacity may lead to reductions
in charter hire
rates and profitability. Increased competition in technology and innovation could reduce our charter hire income and the
value of our vessels.
•
Acts of piracy on ocean-going vessels, terrorist attacks and international
hostilities could affect our results of operations and financial condition.
•
If our vessels call on ports located in countries or territories that are
the subject of sanctions or embargoes, it could lead to monetary fines or penalties and have a material adverse effect on the market for
our securities.
•
Compliance with safety and other vessel requirements imposed by
classification societies may be costly and may adversely affect our business and operating results. We are subject to evolving
regulation and liability under
environmental laws, including those related to emissions and decarbonization, such as the new FEUM
regulation, which may adversely affect our revenues and profitability.
•
Increased inspection procedures, tighter import and export controls
and new security regulations could increase costs and cause disruption of our containership business. Changing industry regulations
may affect our cash flows
and net income.
•
The price of our securities may be volatile. Future sales and the
imbalance of willing sellers and willing buyers of our common stock could cause the market price of our common stock to
decline.
•
We have change of control provisions in our organizational documents.
We are incorporated in the Republic of the Marshall Islands, which does not have a well-developed body of corporate law. It may not
be possible for
investors to serve process on or enforce U.S. judgments against us. We are subject to certain risks relating to the
inability to obtain the minimum quorum established in our Amended and Restated Articles of Incorporation and our
Fourth Amended and
Restated Bylaws for the conduct of business at shareholder meetings.
•
We are a “foreign private issuer” under the NYSE rules, and
as such we are entitled to exemption from certain NYSE corporate governance standards, and you may not have the same protections afforded
to shareholders of
companies that are subject to all of the NYSE corporate governance requirements. Our management is required to devote
substantial time to complying with public company regulations.
•
We cannot guarantee that our Board of Directors will declare dividends
or otherwise return cash to shareholders. We may not have sufficient cash from our operations to enable us to pay dividends on or to redeem
our Series B
Preferred Shares, and accordingly the Depositary Shares, as the case may be. Our ability to pay dividends on and to redeem
our Series B Preferred Shares is limited by the requirements of Marshall Islands law and by our
contractual obligations.
•
We
may be subject to taxes which will reduce our cash flow. Certain adverse U.S. federal income
tax consequences could arise for U.S. holders.
2
Table of Contents
Risks Relating to Our Business
Operating Revenue Risk
We are dependent on our charterers and
other counterparties fulfilling their obligations under agreements with us, and their inability or unwillingness to honor these obligations
could significantly reduce our revenues and cash
flow.
Payments to us by our
charterers under time charters are, and will continue to be, our sole source of operating cash flow. We are consequently dependent
on the performance by our charterers of their obligations under the charters.
The container shipping industry is cyclical and,
whilst financial performance improved from time to time, suffered an extended cyclical downturn lasting from the Global Financial
Crisis in 2008/2009 through 2016, with freight rates,
charter rates, asset values, and liner operator earnings under pressure due to
oversupply of container ship capacity. Industry conditions generally improved from 2017 through 2019. The compound annual growth
rate (“CAGR”) of
containerized trade volumes from 2010 through 2024 was 3.0%, incorporating the impact of negative
growth in 2020 (COVID-19), a rebound in 2021, further negative growth in 2022 and 2023 (geopolitical tensions driving inflationary
macro-economic headwinds), and a further rebound in 2024. The uncertainty concerning the COVID-19 pandemic and its impact on
container shipping and the macro-economic environment has waned significantly over the past 18 –
24 months. However, global
public health threats, pandemics, epidemics, and other disease outbreaks, such as COVID-19, influenza and other highly communicable
diseases or viruses, could adversely impact our operations and our
charterers and other counterparties’ ability or willingness
to fulfill their obligations to us. Additionally, uncertainty exists regarding the broader global economic impact of changes in
tariffs, trade barriers, and embargos, including
recently imposed or announced tariffs by the U.S. and the effects of retaliatory
tariffs and countermeasures from affected countries, geopolitical events, such as the continuing wars between Russia and Ukraine and
Israel and Hamas,
ongoing disputes between China and Taiwan, deteriorating trade relations between the U.S. and China, and ongoing
political unrest and conflicts in the Middle East and other regions throughout the world. Such uncertainty may
adversely impact our
business, and any escalation or spillover effects from these and similar conflicts may lead to further regional and international
conflicts or armed action. It is possible that such conflicts could disrupt supply chains
and cause instability in the global
economy. Equally unpredictable is the impact these uncertainties may have upon our charterers’ operations and cash flows, and
their payment of charter hire to us. If we lose a time charter because the
charterer is unable to pay us or for any other reason, we
may be unable to re-deploy the related vessel on similar terms or at all. Also, we will not receive any revenues from such a vessel
while it is un-chartered, but we will be required
to pay expenses necessary to maintain and insure the vessel and service any
indebtedness on it.
Whilst there were
no delays in receiving charter hire payments in 2023 or 2024, we may experience delays in receiving charter hire payments from some of
our charterers, which under the charter contracts are due to be paid two
weeks or one month in advance. As of December 31, 2024, no charter
hire payments were outstanding.
If any of our charterers ceases
doing business or fails to perform their respective obligations under their charters with us, our business, financial position and results
of operations could be materially adversely affected if we face
difficulties finding immediate replacement charters, or if such replacement
charters were at lower daily rates and for shorter durations. If such events occur, these events may give rise to uncertainty about our
ability to continue as a
going concern. Please also see “—We may be unable to recharter our vessels at profitable rates, if
at all, upon their time charter expiry.” below.
3
Table of Contents
Operational
Growth Risk
Significant
demands may be placed on us as a result of possible future acquisitions of additional vessels.
As
a result of possible future acquisitions of vessels, significant demands may be placed on our managerial, operational and financial personnel
and systems. We cannot assure you that our systems, procedures and controls will be
adequate to support the expansion of our operations.
Our future operating results will be affected by the ability of our officers and key employees to manage changing business conditions
and to implement and expand our operational
and financial controls and reporting systems as a result of future acquisitions.
Our
growth depends on continued growth in the demand for containerships, and our ability to purchase additional vessels and obtain new
charters. We may require additional financing to be able to grow and will face substantial
competition to purchase
vessels.
One
of our objectives is to grow by acquiring additional vessels and chartering them out to container shipping companies. The opportunity
to acquire additional containerships will, in part, depend on the state of and prospects for
container shipping. The container shipping
industry is both cyclical and volatile in terms of supply demand balance, freight rates, charter rates, vessel values and overall profitability.
Although supply-side fundamentals have generally
been improving since 2017, the industry remains vulnerable to an excess of supply of
containership capacity and mediocre demand growth. As at December 31, 2024, idle capacity of the global containership fleet was 0.6%,
and the
global containership orderbook to fleet ratio was 27.4% - weighted heavily towards containerships larger than 10,000 TEU. The
factors affecting the supply and demand for containerships, and the nature, timing and degree of changes
in industry conditions are unpredictable.
Acquisition
of vessels will be challenging as, among other things, we may need to obtain additional financing in order to complete vessel purchases.
In recent years, financing for investment in containerships, whether
newbuildings or existing vessels, has been severely limited. Further,
the cost of available financing is currently high and may increase significantly in the future. In addition, the number of lenders for
shipping companies has fluctuated
and lenders have generally lowered their loan-to-value advance ratios, shortened loan terms and accelerated
repayment schedules. The actual or perceived credit quality of our charterers and proposed charterers, and any defaults by
them, may
materially affect our ability to obtain the additional capital resources that we will require to purchase additional vessels or may significantly
increase our costs of obtaining such capital. These factors may hinder our ability to
access financing and we may be unable to obtain
adequate funding for growth.
The process of obtaining
further vessels and new charters is highly competitive and depends on a variety of factors, including,
among others:
•
competitiveness of overall price;
•
availability of committed financing;
•
containership leasing experience and quality of ship operations (including cost effectiveness);
•
shipping industry relationships and reputation for reliability, customer service and safety;
•
quality and experience of seafaring crew;
•
ability to finance containerships at competitive rates and financial stability generally;
•
relationships with shipyards and the ability to get suitable berths for newbuildings;
•
construction management experience, including the ability to obtain on-time delivery of new vessels
according to customer specifications; and
•
the energy efficiency and carbon profile of ships, including technical advances in vessel design, capacity, propulsion technology
and fuel consumption efficiency, of us and our competitors.
4
Table of Contents
We
will face substantial competition in expanding our business from a number of companies. Many of these competitors may have greater financial
resources and a lower cost of capital than us, may operate larger fleets, may have
been established for longer and may be able to offer
better charter rates. During an industry downturn there are an increased number of vessels available for charter, including many from
owners with strong reputations and experience.
Excess supply of vessels in the container shipping market results in greater price competition
for charters. During strong industry conditions, the value of vessels rises and there is substantially greater competition for purchase
opportunities. As a result of these factors, we may be unable to purchase additional containerships, expand our relationships with our
existing charterers or obtain new charters on a profitable basis, if at all, which would have a material
adverse effect on our business,
results of operations and financial condition.
We
may be unable to make or realize expected benefits from acquisitions of vessels or container shipping-related assets/enhancements and
implementing our growth strategy through acquisitions may harm our business, financial
condition and operating results.
Our
growth strategy includes, among other things, selectively acquiring secondhand and, potentially, newbuilding vessels and possibly seeking
to diversify our asset base if an attractive investment opportunity presents itself.
Growing any business through acquisition presents
numerous risks, such as undisclosed liabilities and obligations, the possibility that indemnification agreements will be unenforceable
or insufficient to cover potential losses and
obtaining the necessary resources to manage an enlarged business. We cannot give any assurance
that we will be successful in executing our growth plans, that we will be able to employ any acquired vessels under charters, that we
will
be able to purchase secondhand vessels or newbuildings at satisfactory prices or obtain ship management agreements with similar
or better terms than those we have obtained from our current ship managers, that we will be able to
purchase container shipping-related
assets and subsequently lease them out at satisfactory prices or that we will not incur significant expenses and losses in connection
with our future growth.
Factors
that may limit our ability to acquire additional vessels and container shipping-related assets include competition from other owners
and lessors, availability of financing, shipyard capacity for newbuildings and the limited
number of modern vessels with appropriate
characteristics not already subject to existing long-term or other charters. Competition from other purchasers could reduce our acquisition
opportunities or cause us to pay higher prices.
Any
acquisition of a vessel or container shipping-related assets may not be profitable to us and may not generate cash flow sufficient to
justify our investment. In addition, our acquisition growth strategy exposes us to risks that
may harm our business, financial condition
and operating results, including risks that we may:
•
fail
to obtain financing, ship management agreements and charters on acceptable terms;
•
be
unable, including through our ship managers, to hire, train or retain qualified shore and
seafaring personnel to manage and operate our enlarged business and fleet;
•
fail
to realize anticipated benefits of cost savings or cash flow enhancements;
•
decrease
our liquidity by using a significant portion of our available cash or borrowing capacity
to finance acquisitions or by additional repayments of debt;
•
significantly
increase our interest expense or financial leverage if we incur additional debt to finance
acquisitions; or
•
incur
or assume unanticipated liabilities, losses or costs associated with the vessels acquired.
Should
we expand our business or provide additional services to third parties, we may need to improve our operating and financial systems, expand
our commercial and technical management staff, and recruit suitable employees
and crew for our vessels.
Our
current operating and financial systems may not be adequate if we further expand the size of our fleet or begin to provide additional
services and attempts to improve those systems may be ineffective. In addition, we may need
to recruit suitable additional administrative
and management personnel to manage any growth. We may not be able to continue to hire suitable employees in such circumstances. If a
shortage of experienced labor exists or if we
encounter business or financial difficulties, we may not be able to adequately staff our
vessels. If we further expand our fleet, or begin to provide additional services, and we are unable to grow our financial and operating
systems or to
recruit suitable employees, our business, results of operations and financial condition may be harmed.
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We
are exposed to risks associated with the purchase and operation of secondhand vessels.
Secondhand
vessels typically do not carry warranties as to their condition at the time of acquisition. While we would generally inspect secondhand
containerships prior to purchase, such an inspection would normally not provide
us with as much knowledge of the vessel’s condition
as if it had been built for and operated by us during its life. Future repairs and maintenance costs for secondhand vessels are difficult
to predict and may be substantially higher than
those for equivalent vessels of which we have had direct experience. These additional
costs could decrease our cash flow and reduce our liquidity. There can be no assurance that market conditions will justify such expenditures
or
enable us to operate our vessels profitably during the remainder of the economic lives of such vessels.
We
may not perform underwater inspections of vessels prior to purchase.
Although
we would perform physical inspections of any vessel prior to its purchase, it may not be possible for us to undertake any underwater
inspections. As a result, we will not be aware of any damage to a vessel that may have
existed at the time of purchase and which could
only be discovered through an underwater inspection. However, if any damage is subsequently found, we could incur substantial costs to
repair the damage which would not be
recoverable from the sellers.
Third
Parties’ Performance Risk
We
are dependent on third parties, some of which are related parties, to manage our ships and substantial fees will be payable to our ship
managers regardless of our profitability.
As
of the date of this annual report, all of our vessels are technically managed by Technomar, a company of which our Executive Chairman
is the Founder, Managing Director, and majority beneficial owner, for an annual
management fee. Technomar provides all day-to-day technical
ship management, including crewing, purchasing stores, lubricating oils and spare parts, paying wages, pensions and insurance for the
crew, and organizing other vessel
operating necessities, such as the arrangement, management of drydocking and services in relation to
compliance with the European Union Emission Trading System (“EU ETS” or “ETS”) and FuelEU Maritime (“FEUM”).
Additionally,
all of our vessels are commercially managed by Conchart, a company of which our Executive Chairman is the sole beneficial owner. The
services provided by Conchart, as our commercial manager, include
chartering, sale and purchase and post-fixture administration.
The
fees and expenses payable pursuant to our technical and commercial ship management agreements with Technomar and Conchart, respectively,
will be payable without regard to our business, results of operation and financial
condition and we have limited rights to terminate
our management agreements. The payment of fees to our managers could adversely affect our results of operations and ability to pay dividends.
For additional information please see
“Item 4. Information on the Company — B. Business Overview —Management of our
Fleet.”
Our
third-party technical and commercial ship managers are privately held companies and there is little or no publicly available information
about them.
The
ability of our third-party ship managers, Technomar and Conchart, to render technical and commercial ship management services will depend
in part on their own financial strength. Circumstances beyond our control could
impair our third-party ship managers’ financial
strength, and because each is a privately held company, information about the financial strength of our third-party ship managers is
not available. As a result, we and our shareholders
might have little or no advance warning of financial or other problems affecting
our third-party ship managers even though their financial or other problems could have a material adverse effect on us.
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Risks Relating to Certain of our Related Parties
Our Executive Chairman and our Managers
may have conflicts of interest with us which may make them favor their own interests to our detriment.
Our Executive Chairman is
the Founder, Managing Director, and majority beneficial owner of Technomar and the sole beneficial owner of Conchart, our third-party
technical and commercial ship managers. Our Executive
Chairman also beneficially owns approximately 6.9% of our Class A common shares.
Accordingly, Technomar, Conchart, and our Executive Chairman (including their affiliates) have the power to exert considerable influence
over our
actions. These relationships could create conflicts of interest between us and our Managers. Such conflicts of interest may result
in transactions on terms not determined by market forces. Any such conflicts of interest could adversely
affect our business, financial
condition and results of operations, and the trading price of our Class A common shares.
Such conflicts of interest
may arise in connection with the chartering, purchase, sale and operations of the vessels in our fleet versus vessels managed or owned
by other companies affiliated with our Managers. As a result of these
conflicts, our Managers may favor their own or their affiliates’
interests over our interests. These conflicts may have unfavorable consequences for us. Although our Executive Chairman and Conchart have
entered into a non-
competition agreement with us, conflicts of interest may arise between us and our Managers, and such conflicts may
not be resolved in our favor and could have an adverse effect on our results of operations.
Our financial reporting is partly dependent
on accounting and financial information provided to us by Technomar with respect to our vessels.
Technomar is obliged to
provide us with requisite financial and accounting information on a timely basis so that we can meet our own reporting obligations under
U.S. securities laws. Technomar is a privately held company with
financial reporting arrangements different from ours. If it is delayed
in providing us with key financial information, or it otherwise fails to meet its contractual obligations to us, we could fail to meet
our financial reporting deadlines,
which could lead to regulatory sanctions being imposed on us and cause us to default on reporting covenants
under our financing agreements. Any such results may have a material adverse effect on our results of operation, financial
condition and
reputation.
Market Related Risks
Due to our lack of diversification, adverse
developments in our containership transportation business could harm our business, results of operations and financial condition.
Nearly all of our cash flow
is generated from our chartering of containerships. Due to our lack of diversification, an adverse development in the containership industry
may harm our business, results of operations and financial
condition more significantly than if we maintained more diverse assets or
lines of business.
In addition, we operate
our vessels in markets that have historically exhibited seasonal, as well as cyclical, variations in demand and, as a result, in charter
hire rates. This seasonality may result in quarter-to-quarter volatility in our
operating results, which could affect the amount of our
cash flow.
We may be unable to recharter our vessels
at profitable rates, if at all, upon their time charter expiry.
According to Maritime Strategies
International Ltd. (“MSI”), as of December 31, 2024, idle capacity of the global containership fleet was 0.6%, and the overall
orderbook-to-fleet ratio stood at 27.4%. Notwithstanding scrapping,
the size of the orderbook will likely result in an increase in the
size of the world containership fleet over the next few years, particularly in the larger vessel sizes (over 10,000 TEU). An over-supply
of containership capacity, combined
with a lack of growth in the demand for containerships, may result in downward pressure on charter
rates. As at December 31, 2024, but adjusted to include the last Newly Acquired Vessel, Czech, delivered on January 9, 2025 and all
charters
agreed through February 28, 2025, and excluding the three vessels agreed to be sold in 2025, Tasman, Akiteta, Keta, the charters for eleven
of our containerships either have expired or could expire before the end of the first
half of 2025 and a further five vessels have charters
which may expire during the second half of 2025.
We cannot be assured that
we will be able to obtain new time charters for our vessels on expiry of existing charters or that if we do, the new rates will be favorable.
If we are unable to obtain new time charters for our containerships
at favorable rates or are unable to secure new charters promptly,
or at all, the vessels would be idle. We would continue to incur certain operating costs but earn no revenue, which would have a material
adverse effect on our business,
financings, results of operations and financial condition. Please also see “—We are dependent
on our charterers and other counterparties fulfilling their obligations under agreements with us, and their inability or unwillingness
to honor
these obligations could significantly reduce our revenues and cash flow” above.
Technological developments which
affect global trade flows and supply chains may affect the demand for our vessels.
By reducing the cost of
labor through automation and digitization and empowering consumers to demand goods whenever and wherever they choose, technology is changing
the business models and production of goods in many
industries. Consequently, supply chains are being pulled closer to the end-customer
and are required to be more responsive to changing demand patterns. As a result, fewer intermediate and raw inputs are traded, which could
lead to a
decrease in shipping activity. If automation and digitization become more commercially viable and/or production becomes more
regional or local, total containerized trade volumes would decrease, which would adversely affect demand
for our services. Supply chain
disruptions caused by geopolitical events, rising tariff barriers and environmental concerns may also accelerate these trends.
Financing/Debt Risks
Our substantial indebtedness could adversely
affect our ability to raise additional capital to fund our operations or pursue other business opportunities and may limit our ability
to react to changes in the economy or our industry.
As of December 31,
2024, we had $691.1 million of outstanding indebtedness, being $231.9 million of publicly rated/investment grade 5.69% Senior Secured
Notes due 2027 (the “2027 Secured Notes”), $87.3 million of finance
leases and $371.9 million of secured credit facilities.
Our leverage could have important consequences, including:
•
increasing our vulnerability to adverse economic, industry or competitive
developments;
•
requiring a substantial portion of our cash flows from operations to be
dedicated to the payment of interest and amortization payments for our indebtedness, therefore reducing our ability to use our cash flows
to fund
operations, capital expenditure and future business opportunities;
•
making it more difficult for us to satisfy our obligations with respect
to our indebtedness, and any failure to comply with the obligations of any of our debt instruments, including restrictive covenants and
borrowing
conditions, could result in an event of default under our 2027 Secured Notes and the agreements governing our other indebtedness;
•
restricting us from making strategic acquisitions or causing us to make
non-strategic divestitures;
•
limiting our ability to obtain additional financing for working capital,
capital expenditures, debt service requirements, acquisitions and general corporate or other purposes; and
•
limiting our flexibility in planning for, or reacting to, changes in our
business or market conditions and placing us at a competitive disadvantage compared to our competitors who are less highly leveraged and
who, therefore,
may be able to take advantage of opportunities that our leverage may prevent us from exploiting.
Despite our indebtedness levels, we may
be able to incur substantially more indebtedness. This could further exacerbate the risks associated with our substantial indebtedness.
We may be able to incur
substantial additional indebtedness in the future. Although certain of our debt agreements contain restrictions on the incurrence of additional
indebtedness, these restrictions are subject to a number of
significant qualifications and exceptions, and under certain circumstances,
the amount of indebtedness that could be incurred in compliance with these restrictions could be substantial. In addition, our debt agreements
will not prevent
us from incurring obligations that do not constitute indebtedness thereunder. If we incur substantially more indebtedness,
the risks associated with our indebtedness as described above could be exacerbated.
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Our debt agreements contain restrictions that limit our flexibility
in operating our business.
Our debt agreements contain
various covenants that limit our ability to engage in specified types of transactions. These covenants limit or restrict our ability and
the ability of certain of our subsidiaries from, among other things:
•
incurring additional indebtedness;
•
making any substantial change to the nature of our business;
•
paying dividends;
•
redeeming or repurchasing capital stock;
•
selling the collateral vessel, if applicable;
•
entering into certain transactions other than arm’s length transactions;
•
acquiring a company, shares or securities or a business or undertaking;
•
effecting a change of control of us, entering into any amalgamation, demerger,
merger, consolidation or corporate reconstruction, or selling all or substantially all of our assets;
•
changing the flag, class or technical or commercial management of the applicable
collateral vessel or terminating or materially amending the management agreements relating to such vessel; and
•
experiencing any change in the position and ownership of our Executive
Chairman.
In
addition, certain of our debt agreements require us and our subsidiaries to satisfy certain financial covenants, including minimum
liquidity, and value adjusted leverage ratio. Our ability to meet those financial covenants and
other tests will depend
on our ongoing financial and operating performance, which, in turn, will be subject to economic conditions and to financial, market,
and competitive factors, many of which are beyond our control.
Due
to restrictions in our debt agreements, we may need to seek consent from our lenders in order to engage in certain corporate and commercial
actions that we believe would be in the best interest of our business, and a denial of
consent may make it difficult for us to successfully
execute our business strategy or effectively compete with companies that are not similarly restricted. For example, our debt agreements
restrict our entry into certain transactions or the
termination or amendment of our third-party ship management agreements with Technomar
and Conchart and require that George Giouroukos remain our Executive Chairman. Our lenders’ interests may be different from ours,
and we
cannot guarantee that we will be able to obtain their permission when needed. This may prevent us from taking actions that we
believe are in our or our shareholders’ best interest. Any future agreements governing our indebtedness may
include similar or
more restrictive restrictions.
A
breach of any of these covenants could result in a default under one or more of our debt agreements, including as a result of cross default
provisions, and may permit the lenders (and other similar counterparties) to cease making
loans to us. Upon the occurrence of an event
of default under our debt agreements, the lenders (or other similar counterparties) could elect to declare all amounts outstanding under
the loan to be immediately due and payable. Such
actions by the lenders (or other similar counterparties) could cause cross defaults
under our other debt agreements.
All
but 18 of the vessels owned by us as of December 31, 2024, serve as security under our secured debt agreements. If our operating
performance declines, we may be required to obtain waivers from our lenders (and other similar
counterparties) to avoid default
thereunder. If we are not able to obtain such waivers, our lenders (and other similar counterparties) could exercise their rights
upon default and we could be forced into bankruptcy or liquidation.
The
vessels’ mortgagor or other maritime claimants could arrest our vessels, which could interrupt the charterers’ or our cash
flow.
If
we default under any of our credit facilities or other indebtedness, lenders under our other credit facilities and indebtedness who hold
mortgages on our vessels could arrest some or all of our vessels and cause them to be sold. We
would not receive any proceeds of such
sale unless and until all amounts outstanding under such indebtedness had been repaid in full. Crew members, suppliers of goods and services
to a vessel, shippers of cargo and other parties may
be entitled to a maritime lien against that vessel for unsatisfied debts, claims
or damages. In many jurisdictions, a maritime lien holder may enforce its lien by arresting a vessel through foreclosure proceedings.
The arrest or attachment
of one or more of our vessels, for valid or invalid reasons, could interrupt the charterers’ or our cash
flow and require the charterer or us or our insurance to pay a significant amount to have the arrest lifted. In addition, in some
jurisdictions,
such as South Africa, under the “sister ship” theory of liability, a claimant may arrest both the vessel that is subject
to the claimant’s maritime lien and any “associated” vessel, which is any vessel owned or controlled by
the same owner.
Claimants could try to assert “sister ship” liability against one vessel in our fleet for claims relating to another vessel
in our fleet. In any event, any lien imposed may adversely affect our results of operations by delaying
the revenue gained from ships.
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Volatility of SOFR could affect our profitability,
earnings, and cash flows.
Our secured credit
facilities and finance lease obligations accrue interest based on SOFR, which, in some cases, adds a credit adjustment spread, or
CAS. An increase in SOFR, including as a result of the interest rate increases
effected by the Federal Reserve and the Federal Reserve’s recent hike of U.S. interest rates in response to rising inflation,
would affect the amount of interest payable under our loan agreements, which, in turn, could have an adverse
effect on our
profitability, earnings, cash flow, and ability to pay dividends. If SOFR performs differently than expected or if our lenders
insist on a different reference rate to replace SOFR, that could increase our borrowing costs (and
administrative costs to reflect
the transaction), which would have an adverse effect on our profitability, earnings, and cash flows. Alternative reference rates may
behave in a similar manner or have other disadvantages or advantages in
relation to our future indebtedness and the transition to
SOFR or other alternative reference rates in the future could have a material adverse effect on us.
In order to manage our exposure
to interest rate fluctuations, we have in the past, and may from time-to-time in the future, use interest rate derivatives to effectively
fix any floating rate debt obligations. As of December 31, 2024,
$459.2 million of our total outstanding debt was floating rate debt across
a number of facilities and sale and leaseback arrangements, bearing interest at SOFR based on interest rate cap agreements that we have
in place that expire in
2026. An increase in interest rates upon expiry of these interest rate cap agreements could cause us to incur
additional costs associated with our debt service, which may materially and adversely affect our results of operations. Further,
no assurance
can be given that the use of these derivative instruments, if any, may effectively protect us from adverse interest rate movements.
Assets’ Fair Value Risks
Vessel values may fluctuate, which may
adversely affect our financial condition, result in the incurrence of a loss upon disposal of a vessel or increase the cost of acquiring
additional vessels.
Vessel values may fluctuate due to a number of different factors,
including:
•
general economic and market conditions affecting the shipping industry;
•
the types, sizes and demand for available vessels;
•
the availability of other modes of transportation;
•
increases in the supply of vessel capacity;
•
the cost of newbuildings;
•
governmental or other regulations; and
•
the need to upgrade second hand and previously owned vessels as a result
of changes in regulations, charterer requirements, technological advances in vessel design or equipment, or otherwise.
In addition, as vessels
grow older, they generally decline in value. If a charter terminates, we may be unable to re-deploy the vessel at attractive rates,
or at all and, rather than continue to incur costs to maintain and finance the
vessel, may seek to dispose of it. Our inability to
dispose of the containership at a reasonable price, or at all, could result in a loss on its sale and harm our business, results of
operations and financial condition. We may be
forced to sell
some of our vessels for a lesser amount because of these constraints. Moreover, if the book value of a vessel is
impaired due to unfavorable market conditions, we may incur a loss that could adversely affect our operating results.
Conversely, if vessel values
are elevated at a time when we wish to acquire additional vessels, the cost of acquisition may increase and this could adversely affect
our business, results of operations, cash flow and financial
condition.
In addition, if we determine
at any time that a vessel’s value has been impaired, we may need to recognize an impairment charge, which could be significant,
that would reduce our earnings and net assets. We review our
containership assets for impairment whenever events or changes in circumstances
indicate that the carrying amount of the assets may not be recoverable, which occurs when the assets’ carrying value is greater
than the undiscounted
future cash flows the asset is expected to generate over its remaining useful life. In our experience, certain assumptions
relating to our estimates of future cash flows are more predictable by their nature, including, estimated revenue
under existing contract
terms and remaining vessel life. Certain assumptions relating to our estimates of future cash flows require more judgement and are inherently
less predictable, such as future charter rates beyond the firm period of
existing contracts, the amount of time a vessel is off-charter,
ongoing operating costs and vessel residual values, due to factors such as the volatility in vessel charter rates, vessel values and inflation
in expenses. We believe that the
assumptions used to estimate future cash flows of our vessels are reasonable at the time they are made.
We can provide no assurances, however, as to whether our estimates of future cash flows, particularly future vessel charter revenues
or
vessel values, will be accurate. Vessels that currently are not considered impaired may become impaired over time if the future estimated
undiscounted cash flows decline at a rate that is faster than the depreciation of our vessels.
Future fluctuations in charter rates and
vessel values may trigger a possible impairment of our vessels as described in “Item 5. Operating and Financial Review and Prospects—
A. Results of Operations—Management’s Discussion and
Analysis of Financial Conditions and Results of Operations—Critical
Accounting Estimates.”
Declining containership
values could affect our ability to raise cash by limiting our ability to refinance vessels or use unencumbered vessels as collateral for
new loans or result in prepayments under certain of our credit facilities.
This could harm our business, results of operations, financial
condition or ability to raise capital.
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If impairment testing is required,
we may need to recognize impairment charges. The determination of the fair value of vessels will depend on various market factors, including
charter and discount rates, ship operating costs and
vessel trading values, and our reasonable assumptions at that time. For example,
we recorded an impairment loss of $18.8 million, in aggregate, in 2023 for two vessels. No impairment loss was recorded in 2024. The amount,
if any,
and timing of any impairment charges we may need to recognize in the future will depend upon the then current and expected future
charter rates, vessel utilization, operating and dry-docking expenditures, vessel residual values,
inflation and the remaining expected
useful lives of our vessels, which may differ materially from those used in our assessments as of December 31, 2024.
Loss of Income Risks
Our vessels may be subject to extended periods of off-hire, which
could materially adversely affect our business, financial condition and results of operations.
Under the time charters
for our vessels, when the vessel is not available for service, it will likely be “off-hire”, in which case the charterer is
generally not required to pay hire, and we will be responsible for all costs unless the
charterer is responsible for the circumstances
giving rise to the lack of availability. Additionally, in many cases the charterer has the option to extend the latest redelivery date
by the off-hire days. A vessel generally will be deemed to be
off-hire if there is an occurrence that affects the full working condition
of the vessel, such as:
•
any drydocking for repairs, maintenance or classification society inspection;
•
any time out of service necessary for owner to upgrade vessels to meet new
regulatory requirements, such as ballast water treatment or emission control or to improve the specification and commercial characteristics
of our
vessels;
•
any damage, defect, breakdown or deficiency of the ship’s hull, machinery
or equipment or repairs or maintenance thereto;
•
any deficiency of the ship’s master, officers and/or crew, including
the failure, refusal or inability of the ship’s master, officers and/or crew to perform the service immediately required, whether
or not within its control;
•
its deviation, other than to save life or property, which results in charterer’s
lost time;
•
crewing labor boycotts or certain vessel arrests;
•
our failure to maintain the vessel in compliance with the charter’s
requirements, such as maintaining operational certificates;
•
the vessel’s declared performance speed is reduced or fuel consumption
is increased by more than 5% over a specified period of time; or
•
the vessel is requisitioned by any government or governmental authority.
Additionally, the charterer may have the right to terminate the charter
agreement under a number of circumstances, such as if:
•
the vessel is off-hire for a specified number of days, subject to
certain conditions;
•
the charterer informs us of a default under the charter, and the default
is not rectified;
•
there is a total (actual or constructive) loss of the vessel;
•
the vessel is requisitioned by any government or governmental authority;
or
•
a vessel’s declared performance speed is reduced or fuel consumption
increased in excess of a pre-agreed percentage over a continuous period of an agreed number of days, (for example, consumption in excess
of 10% of that
declared for a given speed over a continuous period of 30 days) and the reason is within our or the vessel’s control.
Our
business, financial condition and results of operations may be materially adversely affected if our vessels are subject to extended periods
of off-hire. For additional information, please see “Item 4. Information on the Company
—B. Business Overview—Time Charters.”
Vessels’ Operational Risks
We may need to make substantial
expenditures to maintain our fleet, meet new regulatory requirements, meet commercial requirements or to acquire
vessels.
We must make substantial
expenditures to maintain our fleet and we generally expect to finance these expenditures from operating cash flow. In addition, we will
need to make substantial capital expenditures to acquire vessels in
accordance with our growth strategy. Further, we may be obliged to
make substantial expenditures to become compliant with changes in the regulatory environment, particularly concerning decarbonization,
emission control and ballast
water treatment. We may also incur substantial expenditure to improve the specification and commercial characteristics
and competitiveness of some of our vessels. Such expenditures could increase as a result of, among other things,
the cost of labor and
materials, customer requirements and governmental regulations and maritime self-regulatory organization standards relating to safety,
security or the environment. If we are unable to generate sufficient operating
cash flow, we will need to fund these significant expenditures,
including those required to maintain our fleet, with additional borrowings or otherwise find alternative sources of financing.
Such financing arrangements may not be
available on satisfactory economic terms or at all, which could have a material adverse effect
on our business and results of operations.
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As our fleet ages, we may incur increased
operating costs beyond normal inflation, which would adversely affect our results of operations.
In general, the
day-to-day cost of operating and maintaining a vessel increases with age. In addition, older vessels are typically less fuel
efficient and may attract lower charter rates compared to modern, more fuel-efficient vessels.
Governmental regulations and safety
or other equipment standards may also require expenditures for modifications or the addition of new equipment and may restrict the
type of activities in which our vessels may engage. We cannot
assure you that, as our vessels age, market conditions will justify
any such expenditures or expenditures to otherwise improve their operating characteristics, such as fuel efficiency to enable us to
operate our vessels profitably during the
remainder of their useful lives, which could adversely affect our results of operations.
Our fleet of 71 vessels as of December 31, 2024 had an average age weighted by TEU capacity of 17.6 years. In November 2024, we
agreed to
purchase four high-reefer ECO 9,000 TEU vessels (the “Newly Acquired Vessels”), of which three were delivered
in December 2024 and the fourth in January 2025. In addition, during December 2024, we agreed to sell an older vessel
Tasman (5,936
TEU built 2000) and in February 2025, we agreed to sell two more vessels, Akiteta (2,220 TEU built 2002) and Keta (2,207 TEU, built
2003). Akiteta was delivered to her new owners on February 19, 2025 and Tasman
was delivered to her new owners on March 10, 2025.
Keta is scheduled for delivery to her new owners in first half 2025.
Unless we set aside reserves or are able
to borrow funds for vessel replacement, at the end of the useful lives of our vessels our revenue will decline, which would adversely
affect our business, results of operations and financial
condition.
Our fleet of 71 vessels
as of December 31, 2024 had an average age weighted by TEU capacity of 17.6 years. Unless we maintain reserves or are able to borrow
or raise funds for vessel replacement, we will be unable to replace
the older vessels in our fleet. Our cash flows and income are
dependent on the revenues earned by the chartering of our containerships. The inability to replace the vessels in our fleet upon the
expiration of their useful lives could have a
material adverse effect on our business, results of operations and financial
condition. Any reserves set aside by any of our subsidiaries for vessel replacement will not be available for servicing our
indebtedness.
Our business depends upon certain individuals who may
not necessarily continue to be affiliated with us in the future.
Our current performance and
future success depend to a significant extent upon our Executive Chairman, George Giouroukos, our Chief Executive Officer, Thomas A. Lister,
and our Chief Financial Officer, Anastasios
Psaropoulos, who collectively have almost 88 years of experience in the shipping industry
and have worked with several of the world’s largest shipping, ship leasing and ship management companies. They and the members of
our
Board of Directors (our “Board of Directors”) are crucial to the execution of our business strategies and to the growth
and development of our business. Mr. Giouroukos has committed to spend approximately 50% on his time on
matters related to our affairs.
If these individuals were no longer to be affiliated with us, or if we were to otherwise cease to receive advisory services from them,
we may be unable to recruit other employees with equivalent talent and
experience, and our business and financial condition may suffer
as a result.
Rising crew and other vessel operating costs may adversely affect
our profits.
Acquiring and renewing
charters with leading liner companies depends on a number of factors, including our ability to man our containerships with suitably experienced,
high-quality masters, officers and crews. The limited supply
of and increased demand for well-qualified crew, due to the increase in the
size of the global shipping fleet, has from time-to-time created upward pressure on crewing costs, which we generally bear under our time
charters. Increases in
crew costs and other vessel operating costs such as insurance, repairs and maintenance, and lubricants may adversely
affect our profitability. In addition, if we cannot retain a sufficient number of high-quality onboard seafaring
personnel, our fleet
utilization will decrease, which could have a material adverse effect on our business, results of operations and financial condition.
Increased fuel prices may have a material adverse effect on our profits.
The cost of fuel is a significant
factor in negotiating charter rates and can affect us both directly and indirectly. The cost of fuel is borne by us when our vessels are
off-hire, being positioned for and undergoing drydockings,
between charters and when employed on voyage charters or contracts of affreightment.
We currently have no voyage charters or contracts of affreightment, but we may enter into such arrangements in the future, and to the
extent we do
so, an increase in the price of fuel beyond our expectations may adversely affect our profitability. Voyage charter contracts
generally provide that the vessel owner bears the cost of fuel in the form of bunkers, which is a material
operating expense. In such
case, we cannot guarantee that we will hedge our fuel costs on any prospective future voyage charters, and, therefore, an increase in
the price of fuel may affect in a negative way our profitability and our cash
flows. Even where the cost of fuel is ordinarily borne by
the charterer, which is the case with all of our existing time charters, that cost will affect the level of charter rates that charterers
are prepared to pay, depending in part on the fuel
efficiency of a particular vessel. Upon redelivery of any vessels at the end of a time charter,
we may be obligated to repurchase bunkers on board at prevailing market prices, which could be materially higher than fuel prices at the
inception of the charter period.
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The price of fuel is unpredictable
and fluctuates based on events outside our control, including but not limited to conflicts, geopolitical developments, supply and demand
for oil, actions by members of the Organization of the
Petroleum Exporting Countries and other oil and gas producers,
economic or other sanctions levied against oil and gas producing countries, war and unrest in oil producing countries and regions, regional
production patterns and
environmental concerns and regulations.
In addition, since the
implementation of the International Maritime Organization’s regulations limiting sulfur emissions
effective January 1, 2020, our vessels have been and continue to be operated using compliant low sulfur fuels,
the price of which has
increased as a result of increased demand. Fuel may continue to be more expensive, which may reduce our profitability and the competitiveness
of our business compared to other forms of transportation. Further,
as fuel costs are generally paid by our charterers, high fuel prices
may impact their profitability if they are unable to pass these costs through to their customers. High fuel prices could have a material
adverse effect on our business,
results of operations and financial condition.
Subsidiaries’ Performance Risk
We are a holding company and we depend on the
ability of our subsidiaries to distribute funds to us in order to satisfy our financial and other obligations.
We are a holding company and
have no significant assets other than the equity interests in our subsidiaries. Our subsidiaries own all of the vessels and payments under
charters are made to them. As a result, our ability to pay
dividends and meet any debt service obligations and other liabilities depends
on the performance of our subsidiaries and their ability to distribute funds to us. The ability of our subsidiaries to pay dividends or
make other distributions or
payments to us will be subject to the availability of profits or funds for such purpose which, in turn, will
depend on the future performance of the subsidiary concerned which, to a certain extent, is subject to general economic, financial,
competitive,
legislative, regulatory and other factors that may be beyond its control. Additionally, the ability of our subsidiaries to make these
distributions could be affected by the provisions of our financing arrangements or a claim or
other action by a third party, including
a creditor, or by English law, Marshall Islands law or the laws of any jurisdiction which applies to us and regulates the payment of dividends
by companies. Applicable tax laws may also subject
such payments to further taxation. Applicable law may also limit the amounts that some
of our subsidiaries will be permitted to pay as dividends or distributions on their equity interests, or even prevent such payments. Limitations
on
our ability to transfer cash among and within our group may mean that even though we, in aggregate, may have sufficient resources to
meet our obligations, we may not be permitted to make the necessary transfers from one entity in
our group to another entity in our group
in order to make payments on our obligations. Therefore, if we are unable to obtain funds from our subsidiaries, we may not be able to
pay dividends, including on our 8.75% Series B
Cumulative Perpetual Preferred Shares (the “Series B Preferred Shares”), or
meet our debt service obligations or our other liabilities.
Exchange Rates Fluctuation Risk
Because we generate all of our revenues
in U.S. dollars but incur a portion of our expenses in other currencies, exchange rate fluctuations could hurt our results of operations.
We generate all of our revenues
in U.S. dollars and some of our expenses are denominated in currencies other than U.S. dollars. This currency mismatch could lead to
fluctuations in net income due to changes in the value of the
U.S. dollar relative to other currencies. Expenses incurred in foreign
currencies against which the U.S. dollar falls in value could increase, thereby decreasing our net income. On April 4, 2024, we entered
into a foreign exchange option
strip (“FX option”) to purchase €3.0 million, with monthly settlements, starting April
11, 2024, and ending March 13, 2025. The strike price is EURUSD 1.10. We entered to this option to hedge the downside foreign exchange
risk
associated with expenses denominated in EUR against fluctuations between the US Dollar and Euro. This FX option is designated as
a cash flow hedge of anticipated expenses totaling €3.0 million, expected to occur each month. Future
declines in the U.S. dollar
versus other currencies could have a material adverse effect on our operating expenses and net income.
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Insurance and Litigation Related Risks
Our insurance may be insufficient to cover losses that may occur
to our property or result from our operations.
The shipping industry has
inherent operational risks. Although we carry hull and machinery insurance, war risks insurance and protection and indemnity insurance
(which includes coverage for environmental damage and
pollution) and other insurances commonly held by vessel owners, we may not be adequately
insured against all risks or our insurers may not pay every claim. Even if our insurance coverage is adequate to cover our losses, we
may not
be able to obtain a replacement vessel in the event of a total or constructive total loss in a timely manner. Further, under our
financings, we are subject to restrictions on the use of any proceeds we may receive under claims in the event
of a total or constructive
total loss. Furthermore, in the future, we may not be able to obtain adequate insurance coverage at reasonable rates for our fleet. 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,
insurers typically charge additional
premiums if vessels transit certain “excluded areas,” which may be subject to higher
risk of piracy, war or terrorism. We cannot be certain that our insurers will continue to provide such coverage, or that we will be able
to recover these
increased costs from our charterers. Our insurance policies also contain deductibles, limitations and exclusions which,
although we believe are standard in the shipping industry, may nevertheless increase our costs.
In addition, we do not
presently carry loss-of-hire insurance, which covers the loss of revenue during extended vessel off-hire periods, such as those that might
occur during an unscheduled drydocking due to damage to the vessel
from a major accident. Accordingly, any vessel that is off hire for
an extended period of time, due to an accident or otherwise, could have a material adverse effect on our business, results of operations
and financial condition.
We may be subject to litigation that, if
not resolved in our favor and not sufficiently insured against, could have a material adverse effect on us.
We may be, from time to
time, involved in various litigation matters. These matters may include, among other things, contract disputes, personal injury claims,
environmental claims or proceedings, asbestos and other toxic tort
claims, employment matters, governmental claims for taxes or duties,
and other litigation that arises in the ordinary course of our business. Although we intend to defend these matters vigorously, we cannot
predict with certainty the
outcome or effect of any claim or other litigation matter, and the ultimate outcome of any litigation or the
potential costs to resolve them may have a material adverse effect on us. Insurance may not be applicable or sufficient in all cases
and/or
insurers may not remain solvent which may have a material adverse effect on our financial condition. Please see “Item 8. Consolidated
Statements and Other Financial Information—A. Legal Proceedings.”
Risks Relating to Certain Corporate Affairs
We are incorporated in the Republic of the Marshall Islands, which
does not have a well-developed body of corporate law.
Our corporate affairs are governed
by our amended and restated articles of incorporation (the “Amended and Restated Articles of Incorporation”) and fourth amended
and restated bylaws (the “Fourth Amended and Restated
Bylaws”) and by the Business Corporations Act of the Republic of the
Marshall Islands, or 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 very 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 U.S. jurisdictions. Shareholder rights may
differ as well. While the BCA does specifically incorporate the non-statutory law, or
judicial case law, of the State of Delaware and
other states with substantially similar legislative provisions, our shareholders may have more difficulty in protecting their interests
in the face of actions by the management, directors or
controlling shareholders than would shareholders of a corporation incorporated
in a U.S. jurisdiction.
Additionally, the Republic
of the Marshall Islands does not have a legal provision for bankruptcy or a general statutory mechanism for insolvency proceedings. As
such, in the event of a future insolvency or bankruptcy, our
shareholders and creditors may experience delays in their ability to recover
for their claims after any such insolvency or bankruptcy. Further, in the event of any bankruptcy, insolvency, liquidation, dissolution,
reorganization or similar
proceeding involving us or any of our subsidiaries, bankruptcy laws other than those of the United States could
apply. If we become a debtor under U.S. bankruptcy law, bankruptcy courts in the United States may seek to assert
jurisdiction
over all of our assets, wherever located, including property situated in other countries. There can be no assurance, however, that we
would become a debtor in the United States, or that a U.S. bankruptcy court would be
entitled to, or accept, jurisdiction over such a
bankruptcy case, or that courts in other countries that have jurisdiction over us and our operations would recognize a U.S. bankruptcy
court's jurisdiction if any other bankruptcy court would
determine it had jurisdiction.
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It may not be possible for investors to serve process on or enforce
U.S. judgments against us.
We and most of our directors
and officers and those of our subsidiaries are residents of countries other than the United States. Substantially all of our and our subsidiaries’
assets and a substantial portion of the assets of our
directors and officers are located outside the United States. As a result, it may
be difficult or impossible for United States investors to effect service of process within the United States upon us, our directors or
officers, or our
subsidiaries or to realize against us or them judgments obtained in United States courts, including judgments predicated
upon the civil liability provisions of the securities laws of the United States or any state in the United States. In
addition, you should
not assume that courts in the country in which we or our subsidiaries are incorporated or where our assets or the assets of our subsidiaries
are located (1) would enforce judgments of U.S. courts obtained in actions
against us or our subsidiaries based upon the civil liability
provisions of applicable U.S. federal and state securities laws or (2) would enforce, in original actions, liabilities against us or our
subsidiaries based on those laws.
Our Fourth Amended and Restated Bylaws include
forum selection provisions for certain disputes between us and our shareholders, which could limit our shareholders’ ability
to obtain a favorable judicial forum for disputes
with us or our directors, officers, or other employees.
Our Fourth Amended and
Restated Bylaws provide that, unless we consent in writing to the selection of an alternative forum, to the fullest extent permitted by
law, the High Court of the Republic of the Marshall Islands shall be
the sole and exclusive forum for any internal corporate claim, intra-corporate
claim, or claim governed by the internal affairs doctrine, including (i) any derivative action or proceeding brought on behalf of the
Company, (ii) any action
asserting a claim of breach of a fiduciary duty owed by any director, officer, employee or shareholder of the
Company to the Company or the Company’s shareholders, and (iii) any action asserting a claim arising pursuant to any
provision of
the BCA or our Amended and Restated Articles of Incorporation or Fourth Amended and Restated Bylaws. Our Fourth Amended and Restated Bylaws
further provide that, unless we consent in writing to the selection of an
alternative forum and subject to the foregoing, and except as
otherwise provided above, the United States District Court for the Southern District of York (or, if such court does not have jurisdiction
over such claim, any other federal
district court of the United States) shall be the sole and exclusive forum for claims arising under
the U.S. Securities Act of 1933, as amended (the “Securities Act”) or the U.S. Securities Exchange Act of 1934, as amended
(the
“Exchange Act”). These forum selection provisions may increase costs associated with, and/or limit a shareholder’s
ability to, bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers, or other
employees,
which may discourage lawsuits with respect to such claims, although shareholders will not be deemed to have waived our compliance with
federal securities laws and the rules and regulations thereunder.
We may not achieve the intended benefits of
having forum selection provisions if they are found to be unenforceable.
Our Fourth Amended and
Restated Bylaws include forum selection provisions as described above. However, the enforceability of similar forum selection provisions
in other companies’ governing documents has been challenged
in legal proceedings, and it is possible that in connection with any
action a court could find the forum selection provisions contained in our Fourth Amended and Restated Bylaws to be inapplicable or unenforceable
in such action.
Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all suits brought to
enforce any duty or liability created by the Securities Act and the rules and regulations thereunder and Section 27 of the
Exchange Act
creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act and the rules
and regulations thereunder, and accordingly, we cannot be certain that a court would
enforce our forum selection provisions. It
is possible that a court could find our forum selection provisions to be inapplicable or unenforceable, and, accordingly, we could be
required to litigate claims in multiple jurisdictions, incur
additional costs with resolving such claims in other jurisdictions, or otherwise
not receive the benefits that we expect our forum selection provisions to provide, which could adversely affect our business, financial
condition and results
of operations.
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Cybersecurity Risk
A cyber-attack could materially disrupt our business.
We rely on information
technology systems and networks in our operations and administration of our business. Information systems are vulnerable to security breaches
by computer hackers and cyber terrorists. We rely on industry
accepted security measures and technology to securely maintain confidential
and proprietary information maintained on our information systems. However, these measures and technology may not adequately prevent security
breaches.
Our business operations could be targeted by individuals or groups seeking to sabotage or disrupt our information technology
systems and networks, or to steal data. A successful cyber-attack could materially disrupt our operations,
including the safety of our
operations, or lead to unauthorized release of information or alteration of information in our systems. Any such attack or other breach
of our information technology systems could have a material adverse
effect on our business and results of operations. In addition, the
unavailability of the information systems or the failure of these systems to perform as anticipated for any reason could disrupt our business
and could result in decreased
performance and increased operating costs, causing our business and results of operations to suffer. Any
significant interruption or failure of our information systems or any significant breach of security could adversely affect our
business
and results of operations.
Risks Relating to Our Industry
The container shipping industry is cyclical
and volatile and our growth and long-term profitability depend mainly upon growth in demand for containerships, the condition of the charter
market and the availability of capital.
The container shipping industry
is both seasonal and cyclical. According to MSI,
between 2000 and 2008, which included a period of super-cyclical growth partly fueled by a significant increase in trade with China, containerized
trade grew at an annual compound rate of 9.9%. The Global Financial Crisis, from late 2008, prompted a contraction of demand, with 2009
volumes falling by around 8.0%. In 2010, demand rebounded, with volume growth of 15.3%.
From 2010 through 2024, incorporating the impact
of negative growth in 2020 (COVID-19), the rebound in 2021, and further negative growth in 2022 and 2023 (geopolitical tensions driving
inflationary macro-economic headwinds),
and a rebound in 2024, CAGR was 3.0%. On the supply side, between 1995 and 2008, the nominal carrying
capacity of the industry-wide fully cellular fleet grew by a CAGR of 11.4%; and from 2009 through 2020 at 5.7%, as the
industry digested
the legacy of the pre-financial crisis orderbook. Net supply CAGR 2021 through 2024 is estimated at 7.5% and, as of December 31, 2024,
the containership fleet was estimated to be 6,215 ships, with an aggregate
capacity of approximately 30.8 million TEU.
Weak conditions in the
containership sector may affect our ability to generate cash flows and maintain liquidity, as well as adversely affect our ability to
obtain financing.
The factors affecting the
supply and demand for containerships and container shipping services are outside our control, and the nature, timing and degree of changes
in industry conditions are unpredictable.
The primary factors that
influence demand for containership capacity include, among others:
•
supply and demand for products suitable for shipping in containers,
including as a result of technological developments which may affect global trade flows and supply chains;
•
changes in the patterns of global production and consumption of products
transported by containerships;
•
the changing dynamics of globalization, regionalization, or re-shoring of
manufacturing;
•
global and regional economic and political conditions, including weather,
natural or other disasters, including health crises such as the COVID-19 pandemic, armed conflicts (including the conflicts in Ukraine
and in the
Middle East, as well as Houthi attacks in the Red Sea), terrorist activities and strikes;
•
developments in international trade;
•
changes in seaborne and other transportation patterns, including changes
in the distances over which container cargoes are transported, the size of containerships, the extent of trans-shipments and the competitiveness
of other
forms of marine transportation including dry bulk and refrigerated vessels;
•
environmental and other legal and regulatory developments;
•
the price of oil and economics of slow steaming;
•
the availability of trade finance and currency exchange rates; and
•
port and canal congestion.
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The primary factors that
influence the supply of containership capacity include, among others:
•
the containership newbuilding orderbook;
•
the availability of financing;
•
the scrapping rate of containerships;
•
the number of containerships off-hire or otherwise idle including laid-up;
•
the price of steel and other raw materials;
•
changes in environmental and other laws and regulations that may limit the
useful life of containerships;
•
the availability of shipyard capacity;
•
port and canal congestion;
•
the extent of slow steaming; and
•
changes in the environmental and other regulations that may limit the
useful lives of vessels.
The conditions in the containership
sector may also affect our ability to recharter our containerships upon the expiration of their current charters. As at December 31, 2024,
but adjusted to include the last Newly Acquired Vessel,
Czech, delivered on January 9, 2025 and all charters agreed through February 28,
2025, and excluding the three vessels agreed to be sold in 2025, Tasman, Akiteta, Keta, the charters for eleven of our containerships
either have expired
or could expire before the end of the first half of 2025 and a further five vessels have charters which may expire
during the second half of 2025.
Charter
rates receivable under any renewal or replacement charters will depend upon, among other things, the prevailing state of the containership
charter market. If the charter market is depressed when our charters expire, we may
be forced to recharter our containerships at reduced
or even unprofitable rates, or we may not be able to recharter them at all, which may reduce or eliminate our results of operations or
make our results of operations volatile. The same
issues will exist in respect of any additional vessels we may acquire either when obtaining
the initial charters or on rechartering at their expiry.
Global Financial Market Risks
A decrease in the export and/or import
of containerized cargo or an increase in trade protectionism may harm our customers’ business and, in turn, harm our business, results
of operations and financial condition.
Much of our customers’
containership business revenue is derived from the shipment of goods from the Asia Pacific region, primarily China, to various overseas
export markets, including the United States and Europe. Any
reduction in or hindrance to the output of China-based exporters could negatively
affect the growth rate of China’s exports and our customers’ business. For instance, the government of China has implemented
economic policies aimed
at increasing domestic consumption of Chinese-made goods. This may reduce the supply of goods available for export
and may, in turn, result in a decrease in shipping demand. Additionally, though in China there is an increasing level
of autonomy and
a gradual shift in emphasis to a “market economy” and enterprise reform, many of the reforms, particularly some limited price
reforms that result in the prices for certain commodities being principally determined by
market forces, are unprecedented or experimental
and may be subject to revision, change or abolition. The level of imports to and exports from China could be adversely affected by changes
to these economic reforms by the Chinese
government, as well as by changes in political, economic and social conditions or other relevant
policies of the Chinese government. Changes in laws and regulations in China, including with regards to tax matters, and their
implementation
by local authorities could affect our charterers’ business and have a material adverse impact on our business, results of operations
and financial condition.
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Our international
operations expose us to the risk that increased trade protectionism will harm our business. In times of global economic challenge,
governments may turn to trade barriers to protect their domestic industries against
foreign imports, thereby depressing shipping
demand. Protectionist developments, or the perception that they may occur, could have a material adverse effect on global economic
conditions, and may significantly reduce global trade.
Moreover, increasing trade protectionism may cause an increase in (i) the
cost of goods exported from regions globally, (ii) the length of time required to transport goods and (iii) the risks associated
with exporting goods. Such increases
may significantly affect the quantity of goods to be shipped, shipping time schedules, voyage
costs and other associated costs, which could have an adverse impact on our charterers’ business, operating results and
financial condition
and could thereby affect their ability to make timely charter hire payments to us and to renew and increase the
number of their time charters with us. This could have a material adverse effect on our business, results of operations,
financial
condition and our ability to pay any cash distributions to our stockholders. Please also see below, “—Adverse economic
conditions, especially in the Asia Pacific region, the European Union or the United States, could harm
our business, results of
operations and financial condition” and “—The current state of the world financial markets and economic conditions
and geopolitical conflicts could have a material adverse impact on our results of operations,
financial condition and cash
flows.”
Adverse economic conditions, especially
in the Asia Pacific region, the European Union or the United States, could harm our business, results of operations and financial condition.
We anticipate a significant
number of the port calls made by our vessels will involve the loading or discharging of containerships in ports in the Asia Pacific region.
Consequently, economic turmoil in that region may exacerbate
the effect of any economic slowdown on us. Before the global economic financial
crisis that began in 2008, China had one of the world’s fastest growing economies in terms of gross domestic product, or GDP, which
had a significant
impact on shipping demand. China’s GDP growth rate for the year ended December 31, 2024 was approximately 5.0%,
which was a decrease from 5.2% for the year ended December 31, 2023. It is possible that China and other
countries in the Asia Pacific
region will continue to experience volatile, slowed or even negative economic growth in the near future.
The United States has also
implemented more protectionist trade measures in an effort to protect and enhance its domestic economy. Additionally, the European Union,
or the EU, and certain of its member states are facing
significant economic and political challenges, including a risk of increased protectionist
policies and the withdrawal of the United Kingdom from the European Union. Our business, results of operations and financial condition
will
likely be harmed by any significant economic downturn in the Asia Pacific region, including China, or in the EU or the United States.
In recent years, China
and the United States have implemented certain increasingly protective trade measures with continuing trade tensions, including
significant tariff increases, between these countries. In January 2025, during
the initial days of President Trump's second term,
the U.S. announced the imposition of additional substantial tariffs on imports from various countries, including China, Canada and
Mexico, and the subject countries indicated their
intention to impose counter measures. In February 2025, President Trump announced
that the U.S. would impose tariffs of 10% on all imported goods from China, which took effect in February 2025, and 25% on all steel
and aluminum
imports beginning in March 2025. On February 13, 2025, President Trump ordered his trade advisers to come up with
“reciprocal” tariffs on U.S. trade partners to retaliate against taxes, tariffs, regulations and subsidies, thus
increasing
the possibility of a global trade war. On March 4, 2025, the U.S. imposed 25% tariffs on imports from Mexico and Canada
and enacted an extra 10% tariff on Chinese imports, therefore doubling the previously levied tariff from
February to an additional
20% on existing tariffs. In response, Canada plans to immediately impose a 25% tariff on U.S. imports, and Mexico stated that the
country will also retaliate, intending to disclose plans in due time.
Additionally, China announced retaliatory tariffs on U.S.
agricultural goods and export restrictions to the U.S., in addition to filing a lawsuit with the World Trade Organization. On March
5, 2025, President Trump announced that cars
made in North America that comply with the continent's existing free trade agreement
are exempted from tariffs for a month. On March 6, 2025, President Trump announced that the U.S. will pause the 25% tariffs on U.S.
imports from
Mexico and Canada that are covered under a 2020 United States-Mexico-Canada Agreement (USMCA) trade agreement until
April 2, 2025. Goods that are not covered by the agreement remain subject to tariffs. On March 11, 2025,
President Trump announced
higher tariffs on steel and aluminum from Canada; however, hours later, reverted to previous plan to continue with the 25% tariffs
on steel and aluminum products from Canada. On March 12, 2025, Canada
announced new retaliatory trade duties on U.S. goods that took
effect on March 13, 2025. Additionally, on February 26, 2025, President Trump announced a 25% tariff on imports from the European
Union, which was imposed as of
March 12, 2025. The EU announced on March 12, 2025 that it will respond with retaliatory tariffs that
will take effect on U.S. products starting April 1, 2025.
The U.S. implementation of tariffs and related countermeasures
taken by impacted foreign countries further increases the risk of additional trade protectionism. Trade protectionism in the markets that
our charterers serve may
cause an increase in the cost of exported goods, the length of time required to deliver goods and the risks associated
with exporting goods and, which may further result in a decline in the volume of exported goods and demand for
shipping. If significant
tariffs or other restrictions are imposed on imports by the U.S. and related countermeasures are taken by impacted foreign countries,
our business, including operating results, cash flows, and financial condition,
may be adversely affected. Additionally, a decrease in
the level of imports to and exports from China could adversely affect our business, operating results and financial condition.
The current state of the world financial markets and
economic conditions and geopolitical conflicts could have a material adverse impact on our results of operations, financial
condition and cash flows.
The world economy is
facing a number of actual and potential challenges, including the continuing wars between Russia and Ukraine and Israel and Hamas,
ongoing disputes between China and Taiwan, deteriorating trade
relations between the U.S. and China, and ongoing political unrest
and conflicts in the Middle East and other regions throughout the world, changes in tariffs, trade barriers, and embargos, including
recently imposed or announced
tariffs by the U.S. and the effects of retaliatory tariffs and countermeasures from affected
countries, growing tensions between the U.S. and Europe due to the Russia-Ukraine war and U.S. threats of tariffs on European Union
imports,
banking crises or failures, global public health threats, epidemics and pandemics or other disease outbreaks, such as
COVID-19, influenza and other highly communicable diseases or viruses, outbreaks of which from time to time occur
in various parts
of the world in which we operate, including China. For example, due in part to fears associated with the spread of COVID-19 in 2020,
global financial markets experienced significant volatility which may continue as a
new COVID-19 variant or new infectious disease
emerges.
In addition, the continuing
conflict in Ukraine led to increased economic uncertainty amidst fears of a more generalized military conflict or significant inflationary
pressures, due to the increases in fuel and grain prices following
the sanctions imposed on Russia. Whether the present dislocation in
the markets and resultant inflationary pressures will transition to a long-term inflationary environment is uncertain, and the effects
of such a development on charter
rates, vessel demand and operating expenses in the sector in which we operate are uncertain. These issues,
along with the re-pricing of credit risk and the difficulties currently experienced by financial institutions have made, and will
likely
continue to make, it difficult to obtain financing. As a result of the disruptions in the credit markets, many lenders have increased
margins, enacted tighter lending standards, required more restrictive terms (including higher
collateral ratios for advances, shorter
maturities and smaller loan amounts), or refused to refinance existing debt at all or on terms similar to our current debt. Furthermore,
certain banks that have historically been significant lenders to
the shipping industry have announced an intention to reduce or cease
lending activities in the shipping industry. New banking regulations, including larger capital requirements and the resulting policies
adopted by lenders, could reduce
lending activities. We may experience difficulties obtaining financing commitments in the future if current
or future lenders are unwilling to extend financing to us or unable to meet their funding obligations due to their own liquidity,
capital
or solvency issues. The current state of global financial markets and current economic conditions might adversely impact our ability to
issue additional equity at prices that will not be dilutive to our existing shareholders or
preclude us from issuing equity at all.
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We cannot be certain that
financing or refinancing will be available on acceptable terms or at all. If financing or refinancing is not available when needed, or
is available only on unfavorable terms, we may be unable to meet our
future obligations as they come due. Our failure to obtain such funds
could have a material adverse effect on our business, results of operations and financial condition, as well as our cash flows, including
cash available for dividends to
our shareholders. In the absence of available financing, we also may be unable to take advantage of business
opportunities or respond to competitive pressures.
Further, we may not be able
to access our existing cash due to market conditions. If banks and financial institutions enter receivership or become insolvent in the
future in response to financial conditions affecting the banking
system and financial markets, our ability to access our existing cash
may be threatened and could have a material adverse effect on our business and financial condition.
A recent proposal by the U.S. to impose new
port fees on Chinese-operated vessels, Chinese-built vessels, non-Chinese companies operating Chinese-built vessels and companies with
newbuilding orders at Chinese shipyards,
and to restrict a percentage of U.S. products being transported on U.S. vessels could have a
material adverse effect on our operations and financial results.
The United States Trade Representative
(USTR) has recently put forward significant trade actions under Section 301 of the Trade Act of 1974 with the aim of addressing China's
dominance in the maritime, logistics, and
shipbuilding industries. These proposed actions, should they be enacted, have the potential
to dramatically increase the port fees and therefore the overall operating expenses for ships calling at U.S. ports. Specifically, the
USTR is
proposing a series of service fees that would function as direct increases to port-related costs.
The proposal would include
a service fee targeting Chinese operators of up to $1.0 million for each instance a vessel operated by a Chinese entity enters a U.S.
port. Alternatively, the fee could be calculated at a rate of up to $1,000
per dwt of the vessel for each port entrance.
Another proposed service
fee focuses on operators with fleets comprised of Chinese-built vessels. Under this proposal, fees could reach as high as $1.5 million
each time a Chinese-built vessel owned by a non-Chinese operator
enters a U.S. port. Furthermore, a tiered fee structure is under consideration,
based on the proportion of Chinese-built vessels within an operator’s fleet. Operators with fleets that are 50% or more Chinese-built
could face fees of up to
$1.0 million dollars per port call; for operators with fleets that are greater than 25% and less than 50% Chinese-built,
the fee could be up to $750,000 per port call; and for operators whose fleets have greater than 0% and less than 25%
percent Chinese-built
vessels, the port fee could reach up to $500,000 per vessel entrance. Another option being considered is an additional fee of up to $1.0
million per port entrance if 25% or more of an operator’s fleet is composed of
vessels constructed in China.
A further proposed service
fee is aimed at operators with newbuilding orders for Chinese vessels. This fee would be based on the percentage of vessels an operator
has ordered from Chinese shipyards or expects to receive from
them within the next 24 months. Operators with 50% or more of their vessel
orders placed with Chinese shipyards could be charged up to $1.0 million per vessel entrance. For those with greater than 25% to less
than 50% percent of
their orders in Chinese shipyards, the fee could reach $750,000, and for those with greater than 0% to less than 25%,
it could be up to $500,000 per vessel entrance. Another possibility is a flat fee of up to $1.0 million dollars per port
entrance if 25%
or more of an operator’s total vessel orders over the next 24 months are with Chinese shipyards.
The actual implementation
of these proposed actions remains uncertain. The final form, scope, and effective dates of any measures that are ultimately adopted may
significantly differ from the current proposals. Additionally,
specifics, such as applicability to sale leaseback arrangements with Chinese
leasing financiers, has not been clarified. In a sale leaseback arrangement, the Chinese leasing financiers are the formal owners of the
vessels. Furthermore,
retaliatory measures from China or other nations could further compound disruptions and cost increases within the
global shipping industry.
In addition to direct port
fee increases, retaliatory actions by China or other countries could indirectly impact port-related costs. For example, China could impose
retaliatory port fees or restrictions on vessels of non-Chinese origin
calling at Chinese ports, which could disrupt global shipping patterns
and potentially increase congestion and costs at ports worldwide, including U.S. ports.
Given the potential magnitude
of these proposed port-related fees and the many uncertainties surrounding their implementation, it is not possible at this time to fully
predict the ultimate financial impact. However, if measures
similar to those that have been proposed are implemented, port fees for our
vessels or vessels we charter and our operating costs for voyages calling at U.S. ports could materially increase. Even though port fees
are typically borne by
the charterer, if port fees are assessed due to our ownership of the relevant vessel, it is possible that charterers
may demand that we bear these costs or otherwise reduce the applicable charter rate. This, in turn, could significantly reduce
our profitability,
negatively impact our ability to compete effectively, and materially and adversely affect our operations and financial results.
We may have more difficulty entering into long-term charters if a
more active and cheaper short-term or spot container shipping market develops.
At the expiration of our
charters or if a charter terminates early for any reason or if we acquire vessels charter-free, we will need to charter or recharter our
vessels. If an excess of vessels is available on the spot or short-term market
at the time we are seeking to fix new longer-term charters,
we may have difficulty entering into such charters at all or at profitable rates and for any term other than short term and, as a result,
our cash flow may be subject to instability
in the mid to long-term. In addition, it would be more difficult to fix relatively older vessels
should there be an oversupply of younger vessels on the market. A depressed spot market may require us to enter into short-term spot charters
based on prevailing market rates, which could result in a decrease in our cash flow.
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An over-supply of containership capacity may lead to reductions in
charter hire rates and profitability.
While the size of the containership orderbook has declined substantially
since its peak in 2008/2009, the containership newbuilding orderbook as of December 31, 2024 represented approximately 27.4% of the total
on the water
fleet capacity. Further containerships are likely to be ordered. Notwithstanding scrapping, delivery of newly built containerships
will likely result in an increase in the size of the world containership fleet over the next few years. An
over-supply of containership
capacity, combined with any decline in the rate of growth in demand for containerships, would be likely to result in a reduction of charter
hire rates. If such a reduction occurs when we seek to charter
newbuilding vessels, our growth opportunities may be diminished. If such
a reduction occurs upon the expiration or termination of our containerships’ current time charters, we may only be able to recharter
our containerships for
reduced rates or unprofitable rates or we may not be able to recharter our containerships at all, which would
have a material adverse effect on our business, financial condition and results of operation.
Increased competition in technology and innovation could reduce our
charter hire income and the value of our vessels.
The charter rates and the
value and operational life of a vessel are determined by a number of factors, including the vessel’s efficiency, operational flexibility
and physical life. Efficiency includes speed and fuel economy.
Flexibility includes the ability to enter harbors, utilize related docking
facilities and pass through canals and straits together with other vessel specifications such as the capacity to carry temperature controlled
containers (reefers).
Physical life is related to the original design and construction, maintenance and the impact of the stress of operations.
If new ship designs currently promoted by shipyards as being more fuel efficient perform, or if new containerships
built in future that
are more efficient or flexible or have longer physical lives than our vessels, competition from these more technologically advanced containerships
could adversely affect our ability to re-charter, the amount of charter-
hire payments that we receive for our containerships once their
current time charters expire and the resale value of our containerships. This could adversely affect our ability to service our debt or
pay dividends to our shareholders.
Piracy Related Risk
Acts of piracy on ocean-going vessels have increased in frequency,
which could adversely affect our business.
Piracy is an inherent risk
in the operation of ocean-going vessels and particularly affects vessels operating in specific regions of the world such as the South
China Sea, the Gulf of Aden, the Arabian Sea, off the coast of West
Africa and off the coast of Somalia. Generally, we do not control
the routing of our vessels, which is determined by the charterer. Pirate attacks on any of our vessels could result in loss of life, the
kidnapping of crew or the theft,
damage or destruction of vessels or of containers or cargo being transported thereon. In addition, while
we believe the charterer remains liable for charter payments when a vessel is seized by pirates, the charterer may dispute this and
withhold
charter hire until the vessel is released. A charterer may also claim that a vessel seized by pirates was not “on-hire” for
a certain number of days and it is therefore entitled to cancel the charter party, a claim that we would
dispute. We may not be adequately
insured to cover losses from these incidents, which could have a material adverse effect on our business, results of operations and financial
condition. In addition, insurance premiums and costs such
as onboard security guards, should we decide to employ them, could increase
in such circumstances. Further, acts of piracy may materially adversely affect our charterer’s business, impairing its ability to
make payments to us under our
charters.
Terrorist attacks and international hostilities could affect our
results of operations and financial condition.
Terrorist attacks and the
continuing response of the United States and other countries to these attacks, as well as the threat of future terrorist attacks, continue
to cause uncertainty in the world financial markets and may affect our
business, results of operations and financial condition from increased
security costs and more rigorous inspection procedures at borders and ports. From time to time, acts of terrorism, regional conflict and
other armed conflict around
the world may contribute to further economic instability in the global financial markets. These uncertainties
could also adversely affect our ability to obtain additional financing on terms acceptable to us or at all.
Terrorist attacks targeted
at oceangoing vessels may also negatively affect our future operations and financial condition from, for example, increased insurance
costs, and directly impact our containerships or our charterer. Future
terrorist attacks could result in increased market volatility or
even a recession in the United States or elsewhere or negatively affect global financial markets and could further increase inspection
and security requirements and regulation
that could slow our operations and negatively affect our profitability. Any of these occurrences
could have a material adverse impact on our operating results, revenue and costs.
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Vessels’ Trading Risks
If our vessels call on ports located in
countries or territories that are the subject of sanctions or embargoes imposed by the United States government, the European Union, the
United Nations, or other governmental authorities, it
could lead to monetary fines or other penalties and have a material adverse effect
on the market for our securities.
While none of our vessels
called on ports located in countries or territories that are the subject of country-wide or territory-wide sanctions and/or embargoes
imposed by the U.S. government or other authorities or countries
identified by the U.S. government or other authorities as state sponsors
of terrorism (“Sanctioned Jurisdictions”), and we endeavor to take precautions reasonably designed to mitigate such activities,
it is possible that, on charterers’
instructions and without our consent, our vessels may call on ports located in Sanctioned Jurisdictions.
If such activities result in a sanctions violation, we could be subject to monetary fines, penalties, or other sanctions, and our
reputation
and the market for our common shares could be adversely affected.
The applicable sanctions
and embargo laws and regulations vary in their application, as they do not all apply to the same covered persons or proscribe the same
activities and may be amended or strengthened over time. Current or
future counterparties of ours may be affiliated with persons or entities
that are or may be in the future the subject of sanctions imposed by the U.S., the EU, and/or other international bodies. If we determine
that such sanctions require us
to terminate existing or future contracts to which we or our subsidiaries are party or if we are found
to be in violation of such applicable sanctions, our results of operations may be adversely affected or we may suffer reputational harm.
Although we believe that
we have been in compliance with all applicable sanctions and embargo laws and regulations, and intend to maintain such compliance, there
can be no assurance that we will be in compliance in the future,
particularly as the scope of certain laws may be unclear and may be subject
to changing interpretations. Any such violation could result in fines, penalties or other sanctions that could severely impact our ability
to access U.S. capital
markets and conduct our business, and could result in some investors deciding, or being required, to divest their
interest, or not to invest, in us. In addition, certain institutional investors may have investment policies or restrictions that
prevent
them from holding securities of companies that have contracts with Sanctioned Jurisdictions and certain financial institutions may have
policies against lending or extending credit to companies that have contracts with
Sanctioned Jurisdictions. The determination by these
investors not to invest in, or to divest from, our common shares or the determination by these financial institutions not to offer financing
may adversely affect the price at which our
common shares trade. Moreover, our charterers may violate applicable sanctions and embargo
laws and regulations as a result of actions that do not involve us or our vessels, and those violations could in turn negatively affect
our
reputation. In addition, our reputation and the market for our securities may be adversely affected if we engage in certain other
activities, such as entering into charters with individuals or entities in countries or territories subject to U.S.
sanctions and embargo
laws that are not controlled by the governments of those countries or territories, or engaging in operations associated with those countries
or territories pursuant to contracts with third parties that are unrelated to
those countries or territories or entities controlled by
their governments. Investor perception of the value of our common shares may be adversely affected by the consequences of war, the effects
of terrorism, civil unrest and
governmental actions in these and surrounding countries.
The smuggling of drugs, weapons or other contraband and stowaways
on our vessels may lead to governmental claims against us.
We expect that our vessels
will call in areas where smugglers attempt to hide drugs, weapons and other contraband on vessels or stowaways attempt to board, with
or without the knowledge of crew members. To the extent our
vessels are found with contraband or stowaways, whether with or without the
knowledge of any of our crew or charterers, we may face governmental or other regulatory claims, which could have a material adverse effect
on our
business, results of operations, cash flows and financial condition.
We are exposed to significant risks in relation to compliance with
anti-corruption laws and regulations.
Our business entails numerous
interactions with government authorities, including port authorities, health, safety, and environment authorities, labor and tax authorities
and customs and immigration authorities. Furthermore, at our
charterer’s direction, our vessels call at ports throughout the world,
including in some countries where corruption is endemic. Although we have strict and adequate procedures prohibiting our employees or
persons associated with us
from making unlawful payments to government officials, we cannot guarantee that such payments may not be made
despite our procedures and without our approval. In such case, such payments may be deemed to have violated anti-
corruption laws potentially
applicable to us, including the UK Bribery Act 2010, or the Bribery Act, and the U.S. Foreign Corrupt Practices Act, or the FCPA. Both
civil and criminal penalties may be imposed on us as a result of
violations of anti-corruption laws, and such penalties could have a material
adverse impact on our reputation, business and financial condition.
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Risks inherent in the operation of containerships
could impair the ability of the charterer to make payments to us, increase our costs or reduce the value of our assets.
Our containerships and
their cargoes are at risk of being damaged or lost because of events such as marine accidents, bad weather, mechanical failures, human
error, war, terrorism, piracy, environmental accidents and other
circumstances or events. Any of these events connected to our vessels
or other vessels under the charterer’s control, or any other factor which negatively affects the charterer’s business such
as economic downturn and significant
cyclical depression in the container shipping industry, could impair the ability of the charterer
to make payments to us pursuant to our charters. Although the charterer is obligated to pay us charter hire regardless of the amount of
cargo
being carried on board, it is possible that generally low cargo volumes and low freight rates or events noted above may render the
charterer financially unable to pay us its hire. Furthermore, there is a risk that a vessel may become
damaged, lost or destroyed during
normal operations and any such occurrence may cause us additional expenses to repair or substitute the vessel or may render us unable
to provide the vessel for chartering, which will cause us to lose
charter revenue.
These occurrences could
also result in death or injury to persons, loss of property or environmental damage, loss of revenues from or termination of charter contracts,
governmental fines, penalties or restrictions on conducting
business, higher insurance rates, and damage to our reputation and customer
relationships generally. Any of these circumstances or events could increase our costs or lower our revenues, which could result in reduction
in the market
price of our common shares.
Governments could requisition our vessels
during a period of war or emergency without adequate compensation, which under most of our time charter agreements would permit the customer
to terminate the charter agreement
for that vessel.
A government of a vessel’s
registry could requisition one or more of our vessels. Requisition for title occurs when a government takes control of a vessel and becomes
its owner, while requisition for hire occurs when a government
takes control of a vessel and effectively becomes its 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 we would likely be entitled to compensation in the event of a requisition of one or more of our vessels,
the amount and timing of payment would be uncertain. Additionally, under most of our time charter agreements, if a
vessel is requisitioned,
our customer has the option to terminate the charter agreement within 14 days of receipt of notice of the requisition. Government requisition
of one or more of our vessels may negatively impact our revenues and
cash flow.
If labor or other interruptions are not
resolved in a timely manner, they could have an adverse effect on our business, results of operations, cash flows, financial condition
and available cash.
In addition to providing
services to us our technical managers are responsible for recruiting the senior officers and other crew members for our vessels. If not
resolved in a timely and cost-effective manner, industrial action or other
labor unrest or any other labor interruption, could prevent
or hinder our operations from being carried out as we expect and could have an adverse effect on our business, financial condition, operating
results, distribution of dividends or
the trading price of our common shares.
Reliability of suppliers may limit our ability to obtain supplies
and services when needed.
We rely, and will continue
to rely, on a significant supply of consumables, spare parts and equipment to operate, maintain, repair and upgrade our fleet of ships.
Delays in delivery or unavailability of supplies could result in off-hire
days due to consequent delays in the repair and maintenance
of our fleet which would negatively impact our revenues and cash flows. Cost increases could also negatively impact our future operations.
Environmental and Safety Compliance Risks
Compliance with safety and other vessel requirements imposed by classification
societies may be costly and may adversely affect our business and operating results.
The hull and machinery
of every commercial vessel must conform to the rules and standards of a classification society approved by the vessel’s country
of registry. Such societies set the rules and standards for the design,
construction, classification, and surveys of vessels and conduct
surveys to determine whether vessels are in compliance with such rules and standards. A certification by a society is an attestation that
the vessel is in compliance with the
society’s rules and standards. A vessel involved in international trade must also conform to national and international
regulations on safety, environment and security, including (but not limited to) the Safety of Life at Sea Convention,
or SOLAS, and the
International Convention for the Prevention of Pollution from Ships. A vessel conforms to such regulations by obtaining certificates from
its country of registry and/or a classification society authorized by the
country of registry.
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A vessel must undergo annual
surveys, intermediate surveys and special surveys. In lieu of a special or class renewal survey, a vessel’s machinery may be reviewed
on a continuous survey cycle, under which the machinery would
be surveyed over a five-year period. See “Item 4. Information on the
Company—B. Business Overview—Inspection by Classification Societies” for more information regarding annual surveys,
intermediate surveys and special surveys.
Bureau Veritas, DNV & RINA, the classification societies for the vessels in our fleet,
may approve and carry out in-water inspections of the underwater parts of our vessels once every three to five years, in lieu of drydocking
inspections. In-water inspections are typically less expensive than drydocking inspections and we intend to conduct in-water inspections
when that option is available to us.
If a vessel does not maintain
its “in class” certification or fails any annual survey, intermediate survey or special survey, port authorities may detain
the vessel, refuse her entry into port or refuse to allow her to trade resulting in the
vessel being unable to trade and therefore rendering
her unemployable. In the event that a vessel becomes unemployable, we could also be in violation of provisions in our charters, insurance
coverage, covenants in our loan agreements
and ship registration requirements and our revenues and future profitability would be negatively
affected.
We are subject to regulation and liability under environmental laws
that could require significant expenditures and affect our cash flows and net income.
Our business and the operation
of our containerships are materially affected by environmental regulation in the form of international conventions, national, state and
local laws and regulations in force in the jurisdictions in which
our containerships operate, as well as in the countries of their registration,
including those governing the management and disposal of hazardous substances and wastes, the cleanup of oil spills and other contamination,
air emissions,
water discharges, ballast water management and vessel recycling. Because such conventions, laws and regulations are often
revised, we cannot predict the ultimate cost or effect of complying with such requirements or the effect of such
compliance on the current
market value, resale price or useful life of our containerships. Additional conventions, laws and regulations may be adopted that could
limit our ability to do business or increase the cost of our doing business,
which may negatively impact our business, results of operations
and financial condition. In addition, any future decarbonization technologies may increase our costs, or we may be limited in our ability
to apply them to commercial
scale.
Environmental requirements,
including in response to emissions reduction and decarbonization, may also require a reduction in cargo capacity, ship modifications or
operational changes or restrictions, lead to decreased availability
of insurance coverage for environmental matters or result in substantial
penalties, fines or other sanctions, including the denial of access to certain jurisdictional waters or ports or detention in certain
ports. Under local, national and
foreign laws, as well as international treaties and conventions, we could incur material liabilities,
including cleanup obligations and natural resource damages, if there is a release of petroleum or other hazardous materials from our
vessels
or otherwise in connection with our operations. We could also become subject to personal injury or property damage claims relating to
the release of hazardous materials associated with our operations, even if not carried as
cargo.
In
addition, in complying with existing environmental laws and regulations and those that may be adopted, we may incur significant costs
in meeting new maintenance and inspection requirements and new restrictions on air
emissions from our containerships, in managing ballast
water, in developing contingency arrangements for potential spills and in obtaining insurance coverage. Government regulation of vessels,
particularly in the areas of safety,
security and environmental requirements, can be expected to become stricter in the future and require
us to incur significant capital expenditures on our vessels to keep them in compliance, or even to scrap or sell certain vessels
altogether.
Substantial violations of applicable requirements or a catastrophic release of bunker fuel from one or more of our containerships could
harm our business, results of operations and financial condition. For additional
information about the environmental regulations to which
we are subject, please read “Item 4. Information on the Company—B. Business Overview—Environmental and Other Regulations”.
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Increasing scrutiny and changing expectations
from investors, lenders and other market participants with respect to our Environmental, Social and Governance (“ESG”) policies
may impose additional costs on us or expose us to
additional risks.
Environmental impact (including
emissions / decarbonization) is increasingly the subject of regulatory requirement & commercial pressure from our customers. Companies
across all industries are facing increasing scrutiny
relating to their ESG policies. Investor advocacy groups, certain institutional investors,
investment funds, lenders and other market participants are increasingly focused on ESG practices, especially as they relate to the environment
health and safety, diversity, labor conditions and human rights in recent years, and have placed increasing importance on the implications
and social cost of their investments. The expectations of these constituencies vary widely across
nations and industries, and may conflict
with each other in some instances. The increased focus and activism related to ESG and similar matters may hinder access to capital, as
investors and lenders may decide to reallocate capital or to
not commit capital as a result of their assessment of a company’s ESG
practices. Failure to adapt to or comply with evolving investor, lender or other industry shareholder expectations and standards or the
perception of not responding
appropriately to the growing concern for ESG issues, regardless of whether there is a legal requirement to
do so, may damage such a company’s reputation or stock price, resulting in direct or indirect material and adverse effects on the
company’s business and financial condition.
Moreover, from time to time,
in alignment with our sustainability priorities, we may incur additional costs, establish and publicly announce goals and commitments
in respect of certain ESG items. While we may create and publish
voluntary disclosures regarding ESG matters from time to time, many of
the statements in those voluntary disclosures are based on hypothetical expectations and assumptions that may or may not be representative
of current or actual
risks or events or forecasts of expected risks or events, including the costs associated therewith. Such expectations
and assumptions are necessarily uncertain and may be prone to error or subject to misinterpretation given the long
timelines involved
and the lack of an established single approach to identifying, measuring and reporting on many ESG matters. If we fail to achieve or improperly
report on our progress toward achieving our environmental goals and
commitments, the resulting negative publicity could adversely affect
our reputation and/or our access to capital.
Increased inspection procedures, tighter
import and export controls and new security regulations could increase costs and cause disruption of our containership business.
International container
shipping is subject to security and customs inspection and related procedures in countries of origin, destination, and certain trans-shipment
points. These inspection procedures can result in cargo seizure,
delays in the loading, offloading, trans-shipment, or delivery of containers,
and the levying of customs duties, fines and other penalties against us.
Since the events of September
11, 2001, U.S. authorities have substantially increased container inspections. Government investment in non-intrusive container scanning
technology has grown and there is interest in electronic
monitoring technology, including so-called “e-seals” and “smart”
containers, which would enable remote, centralized monitoring of containers during shipment to identify tampering with or opening of the
containers, along with
potentially measuring other characteristics such as temperature, air pressure, motion, chemicals, biological agents
and radiation. Also, as a response to the events of September 11, 2001, additional vessel security requirements have been
imposed, including
the installation of security alert and automatic identification systems on board vessels.
It is unclear what additional
changes, if any, to the existing inspection and security procedures may ultimately be proposed or implemented in the future, or how any
such changes will affect the industry. It is possible that such
changes could impose additional financial and legal obligations on us.
Furthermore, changes to inspection and security procedures could also impose additional costs and obligations on our customers and may,
in certain cases, render
the shipment of certain types of goods in containers uneconomical or impractical. Any such changes or developments
could have a material adverse effect on our business, results of operations and financial condition and our ability to
pay dividends to
our shareholders.
The operation of our vessels
is also affected by the requirements set forth in the International Ship and Port Facilities Security Code, or the ISPS Code. The ISPS
Code requires vessels to develop and maintain a ship security plan
that provides security measures to address potential threats to the
security of ships or port facilities. Although each of our containerships is ISPS Code certified, any failure to comply with the ISPS
Code or maintain such certifications
may subject us to increased liability and may result in denial of access to, or detention in, certain
ports. Furthermore, compliance with the ISPS Code requires us to incur certain costs. Although such costs have not been material to date,
if new or more stringent regulations relating to the ISPS Code are adopted by the International Maritime Organization, the United Nations
agency for maritime safety and the prevention of pollution by vessels (the “IMO”) and the flag
states, these requirements
could require significant additional capital expenditures or otherwise increase the costs of our operations.
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Sulfur regulations to reduce air pollution from ships are likely
to require retrofitting of vessels and may cause us to incur significant costs.
From January 1, 2020, vessels
must comply with the IMO mandated sulfur emission limit of 0.5% m/m on the sulfur in fuel oil used on board. The interpretation of “fuel
oil used on board” includes use in main engine, auxiliary
engines and boilers. This may be achieved by (i) using low sulfur fuel
which may be at a higher cost that standard heavy fuel oil, (ii) installing scrubbers for cleaning of exhaust gas; or (iii) by retrofitting
vessels to be powered by, for
example, liquefied natural gas. The higher cost of low sulfur fuel is, in the first instance, borne by the
vessel operator, our charterer, whereas the installation of scrubbers or retrofitting for an alternative fuel source, would in the first
instance be borne by us as the vessel owner. Contrary to initial concerns, the availability of low sulfur fuel has not been an issue for
the industry and, to date, the pricing spread between high- and low-sulfur fuels has been much tighter
than originally anticipated. Nevertheless,
costs of compliance going forward may be significant and may have a material adverse effect on our future performance, results of operations,
cash flows and financial position.
Climate change risks and greenhouse gas restrictions may adversely
impact our operations.
Due to concerns over the risks associated with climate change, a number of countries, the IMO and other regulatory organizations have
adopted, or are considering the adoption of, regulatory frameworks to reduce greenhouse gas
emission from ships. These regulatory measures
may include the adoption of cap and trade regimes (of which there are currently around forty five world wide), carbon taxes, increased
efficiency standards, and incentives or mandates
for renewable energy.
Maritime shipping is now
included in the EU ETS as of 2024 with a phase-in period. Broadly, it is the “shipping company” which is either the ship
owner or the ISM party contractually mandated to assume responsibility for EU
ETS compliance, that is required to purchase and surrender
emission allowances that represent their MRV-recorded carbon emission exposure for a specific reporting period (the “EU ETS Responsible
Entity”). As part of the phased
approach shipping companies will be required to surrender 40% of their 2024 emissions in 2025;
70% of their 2025 emissions in 2026; and 100% of their 2026 emissions in 2027. An EU ETS costs clause is also being mandated which
enables
the shipping company to contractually pass on costs of EU ETS allowances to commercial operators. Compliance with the Maritime EU ETS
will result in additional compliance and administration costs to properly incorporate
the provisions of the Directive into our business
routines. Additional EU regulations which are part of the EU’s Fit-for-55, such as the new FEUM regulation, will also affect our
financial position in terms of compliance and
administration costs when they take effect (see below). Effective January 1, 2024, we appointed
Technomar, our technical ship manager, as the EU ETS Responsible Entity and amended our technical management agreements with
Technomar
to expand the scope of its responsibilities, accordingly.
FEUM compliance strategy
must be put in place by shipping companies now in order to ensure compliance with Fuel EU which came into effect from January 1,
2025. By August 31, 2024, shipping companies must have already
submitted their FEUM monitoring plans to verifiers demonstrating how
they, in conjunction with the commercial operators plan to meet the greenhouse gas intensity targets set by FEUM Regulation and what
monitoring methods and
fuels they plan to use. The year 2026 will be the first reporting year for shipping companies that fall under
the scope of FEUM and by April 2026 shipping companies will be required to determine whether to comply by entering into
pooling
mechanisms with other shipping companies (including commercial operators) in order to achieve compliance, whether to bank any
surplus emissions, whether to borrow compliance balances from future years, or whether to
submit a penalty payment. FEUM is more
technically challenging and legally complex than EU ETS and aims to increase demand for and use of renewable and low-carbon maritime
fuels and decrease greenhouse gas emissions across
the maritime sector.
The European Union is also intent on raising operational performance standards across the board and has adopted several regulations and
directives requiring, among other things, more frequent inspections of high-risk ships, as
determined by type, age, and flag, as well
as the number of times the ship has been detained. It has also adopted
and extended a ban on substandard ships and enacted a minimum ban period and a definitive ban for repeated offenses.
The regulation also
provided the European Union with greater authority and control over classification societies, by imposing more requirements on classification
societies and providing for fines or penalty payments for organizations
that failed to comply. Furthermore, the EU has implemented regulations
requiring vessels to use reduced sulfur content fuel for their main and auxiliary engines. Since January 1, 2015, vessels have been required
to burn fuel with sulfur
content not exceeding 0.1% while within EU member states’ territorial seas, exclusive economic zones and
pollution control zones that are included in “SOx Emission Control Areas.” EU Directive (EU) 2016/802 establishes limits on
the maximum sulfur content of gas oils and heavy fuel oil and contains fuel-specific requirements for ships calling at EU ports.
On the investment side,
territorial taxonomy regulations in geographies where we are operating and are regulatorily liable, such as EU Taxonomy, might
jeopardize the level of access to capital. For example, EU has already
introduced a set of criteria for economic activities which
should be framed as ‘green’, called EU Taxonomy. As long as we are an EU-based company meeting the NFRD prerequisites,
we will be eligible for reporting our Taxonomy
eligibility and alignment. Based on the current version of the Regulation, companies
that own assets shipping fossil fuels are considered as not aligned with EU Taxonomy. The outcome of such provision might be either
an increase in
the cost of capital and/or gradually reduced access to financing as a result of financial institutions’
compliance with EU Taxonomy.
Change of administration
in the U.S. is also sending waves through the maritime industry’s role in tackling climate change. Emissions of greenhouse
gases from international shipping currently are not subject to the Kyoto Protocol
to the United Nations Framework Convention on
Climate Change, or any amendments or successor agreements. The Paris Agreement adopted under the United Nations Framework Convention
on Climate Change in December 2015,
entered into force in 2016, which contemplates commitments from each nation party thereto to
take action to reduce greenhouse gas emissions and limit increases in global temperatures, did not include any restrictions or other
measures
specific to shipping emissions. However, restrictions on shipping emissions are likely to continue to be considered and a
new treaty may be adopted in the future that includes additional restrictions on shipping emissions to those
already adopted under
MARPOL. In January 2025, President Trump signed an executive order to start the process of withdrawing the United States from the
Paris Agreement; the withdrawal will take at least one year to complete.
Any climate control legislation, or other regulatory initiatives that aim
to reduce greenhouse gases emissions, may affect our business. Compliance with changes in laws, regulations and obligations relating to
climate change may
affect the propulsion options in subsequent vessel designs and could increase our costs related to acquiring new vessels,
operating and maintaining our existing ships and require us to install new emission controls, require that we
acquire allowances or pay
taxes related to our greenhouse gas emissions or that we administer and manage a greenhouse gas emissions program. Among other things,
these risks may also include increases in the pricing of greenhouse
gas emissions, new reporting regulations (such as, for example, the
Corporate Sustainability Reporting Directive, applicable for certain companies from 2024, see below), changes in legislation impacting
existing products and services,
costs of transitioning to lower-emission fuels and technologies, potential substitution or replacement
of existing products and services, and stakeholder concerns and/or shifts in customer preferences which may have financial
implications
for our business and could lead us to retire existing assets prior to the end of the their currently-anticipated economic lives.
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For example, on March 6,
2024, the SEC adopted final rules to require registrants to disclose certain climate-related information in registration statements and
annual reports. The final rules will require us to disclose, among other
things, material climate-related risks, information about our
Board of Directors’ oversight of climate-related risks, management’s role in managing material climate-related risks, and
Scope 1 and Scope 2 greenhouse gas emissions.
These rules were challenged in federal court, and on February 11, 2025, the acting chairperson
of the SEC issued a statement that the rules were deeply flawed and requested the court pause the litigation. The impact of the litigation
on
the content and effectiveness of these rules is uncertain. Although we are in the process of evaluating the new rules, compliance
may result in increased legal, accounting, and other compliance-related costs, as well as place strain on our
personnel, systems, and
resources.
In addition to being exposed
to the risk of legislative and regulatory change, our business is vulnerable to the underlying risks of climate change itself and may
be directly or indirectly affected by climate-related changes such as
rising sea levels, rising temperatures, changes in precipitation
patterns, volatile and extreme weather, demographic change, and heightened risk of conflict—all of which could lead, among other
things, to reduced demand for our
services, increased operating and/or capital costs, and increased insurance premiums.
For further discussion, please
see “Item 4. Information on the Company—B. Business—Environmental and Other Regulations”.
European mandatory non-financial reporting
regulations.
On November 10, 2022, the
EU Parliament adopted the Corporate Sustainability Reporting Directive (“CSRD”). EU member states have 18 months to integrate
it into national law. The CSRD will create new, detailed sustainability
reporting requirements and will significantly expand the number
of EU and non-EU companies subject to the EU sustainability reporting framework. The required disclosures will go beyond environmental
and climate change reporting
to include social and governance matters (for example, respect for employee and human rights, anti-corruption
and bribery, corporate governance and diversity and inclusion). In addition, it will require disclosure regarding the due
diligence processes
implemented by a company in relation to sustainability matters and the actual and potential adverse sustainability impacts of an in-scope
company’s operations and value chain. The CSRD will begin to apply on a
phased basis starting from financial year 2024 through
to 2028 to large EU and non-EU entities, subject to certain financial and employee thresholds being met. If the CSRD is applicable to
us, we may incur significant costs, to prepare
for and manage the administrative aspect of compliance with the CSRD. We note that following
the publication of the Omnibus package of proposals on February 26, 2025 which are designed to simplify EU regulations and cut red
tape,
the application of all reporting requirements in the CSRD for companies that are due to report in 2026 and 2027 is postponed to 2028.
If implemented into law, the Omnibus package will simplify compliance for SMEs and all
companies with up to 1,000 employees and 50 million
turnover will be outside the scope of the CSRD. For the companies in scope (above 1,000 employees and 50 million turnover), the Commission
will adopt a delegated act to revise
and simplify the existing sustainability reporting standards (ESRS). The proposed provisions in
CSRD also create a derogation for companies with more than 1,000 employees and a turnover below EUR 450 million by making the
reporting
of Taxonomy voluntary, and also, put a stronger emphasis on transition finance by introducing the option of reporting on partial Taxonomy-alignment.
Regulations relating to ballast water discharge
that have been in effect since September 2019 may adversely affect our revenues and profitability.
The IMO has imposed updated
guidelines for ballast water management systems specifying the maximum amount of viable organisms allowed to be discharged from a vessel’s
ballast water. Existing vessels constructed before
September 8, 2017, must comply with updated standards on or after September 8, 2019,
with the exact date depending on the date of the next International Oil Pollution Prevention (“IOPP”) renewal survey. For
most vessels,
compliance with the standard will involve installing on-board systems to treat ballast water to eliminate unwanted organisms.
Ships constructed on or after September 8, 2017 have been obligated to comply with the standards on or after
September 8, 2017. Currently
all of our vessels have a ballast water management system fitted.
Furthermore, United States
regulations are currently changing. Although the 2013 Vessel General Permit (“VGP”) program and U.S. National Invasive Species
Act (“NISA”) are currently in effect to regulate ballast discharge,
exchange and installation, the Vessel Incidental Discharge
Act (“VIDA”), which was signed into law on December 4, 2018, requires that the U.S. Environmental Protection Agency (“EPA”)
develop implementation, compliance, and
enforcement regulations regarding ballast water. On October 26, 2020, the EPA published a Notice
of Proposed Rulemaking for Vessel Incident Discharge National Standards of Performance under VIDA, and in November 2020, held
virtual
public meetings. On September 20, 2024, the EPA finalized national standards of performance for non-recreational vessels 79-feet in length
and longer with respect to incidental discharges and on October 9, 2024, the Vessel
Incidental Discharge National Standards of Performance
were published. Within two years of publication, the USCG is required to develop corresponding implementation regulations. If the USCG
spends the full two years to finalize
the corresponding enforcement standards, the current 2013 VGP scheme will remain in force until
2026. Several U.S. states have added specific requirements to the Vessel General Permit including submission of a Notice of Intent, or
NOI, or retention of a permit Authorization and Record of Inspection (PARI) form and submission of annual reports and, in some cases,
may require vessels to install ballast water treatment technology to meet biological performance
standards. Compliance with the EPA, U.S.
Coast Guard and state regulations could require the installation of ballast water treatment equipment on our vessels or the implementation
of other port facility disposal procedures at
potentially substantial cost, or may otherwise restrict our vessels from entering U.S. waters.
The new regulations could
require the installation of new equipment, which may cause us to incur substantial costs.
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Risks Relating to our Common Stock and Depositary Shares Representing
Series B Preferred Shares
We cannot guarantee that our Board of Directors will declare dividends
or otherwise return cash to shareholders.
Our Board of Directors
may, in its sole discretion, from time to time, declare and pay cash dividends in accordance with our dividend policy or determine to
return cash to shareholders in other ways, such as share repurchases. Our
Board of Directors makes determinations regarding the payment
of dividends in its sole discretion, and there is no guarantee that we will continue to declare and pay dividends in the future. The timing
and amount of any dividends
declared will depend on, among other things (a) our results of operations, financial condition, cash flow
and cash requirements, (b) our liquidity, including our ability to obtain debt and equity financing on acceptable terms as
contemplated
by our vessel acquisition strategy, (c) restrictive covenants in our existing and future debt instruments and (d) provisions of Marshall
Islands law. The declaration and payment of dividends is also subject at all times to the
discretion of our Board of Directors.
The international containership
and containership leasing industry is highly volatile, and we cannot predict with certainty the amount of cash, if any, that will be available
for distribution as dividends in any period. Also, there may
be a high degree of variability from period to period in the amount of cash,
if any, that is available for the payment of dividends. The amount of cash we generate from operations and the actual amount of cash we
will have available for
dividends in each quarter will vary based upon, among other things:
•
the charter-hire payments we obtain from our charters as well as the rates
obtained upon the expiration of our existing charters;
•
acquisition of additional vessels;
•
the timing of scheduled drydockings;
•
the timing of interest payments, scheduled debt amortization payments and
other payments that might be due under our debt facilities;
•
delays in the delivery of newbuilding vessels, if any, and the beginning
of payments under charters relating to those vessels;
•
the level of our operating costs, such as the costs of crews, lubricants
and insurance;
•
the number of unscheduled off-hire days for our fleet and the timing of,
and number of days required for, scheduled dry-docking of our containerships;
•
any idle time after one charter expires until a new charter is agreed or
the vessel is disposed of, should a new charter not be agreed;
•
unexpected repairs to, or required expenditures on, vessels or dry-docking
costs in excess of those anticipated;
•
the loss of a vessel;
•
prevailing global and regional economic and geopolitical conditions;
•
changes in interest rates;
•
the effect of governmental regulations and maritime self-regulatory organization
standards on the conduct of our business;
•
changes in the basis of taxation of our activities in various jurisdictions;
•
modification or revocation of our dividend policy by our Board of Directors;
and
•
the amount of any cash reserves established by our Board of Directors.
The amount of cash we generate
from our operations may differ materially from our net income or loss for the period, which will be affected by non-cash items. We may
incur other expenses or liabilities that could reduce or
eliminate the cash available for distribution as dividends or to be returned
to shareholders in other ways.
In addition, Marshall
Islands law generally prohibits the payment of dividends other than from surplus (retained earnings and the excess of consideration received
from the sale of shares above the par value of the shares) or if there
is no surplus, from the net profits for the current and prior
fiscal years, or while a company is insolvent or if it would be rendered insolvent by the payment of such a dividend. We may not have
sufficient surplus or net profits in the
future to pay dividends, and our subsidiaries may not have sufficient funds, surplus or net
profits to make distributions to us. As a result of these and other factors, we may not be able to pay dividends during periods when
we record
losses and may not pay dividends during periods when we record net income. We can give no assurance that dividends will be
paid in the future or that cash will be returned to shareholders in other ways.
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The price of our securities may be volatile.
The price of our common
shares and Depositary Shares representing Series B Preferred Shares may be volatile and may fluctuate due to factors such as:
•
actual or anticipated fluctuations in our quarterly revenues and results
of operations and those of publicly held containership owners or operators;
•
market conditions in the industry;
•
perceived counterparty risk;
•
shortfalls in our operating results from levels forecasted by securities
analysts;
•
announcements concerning us or other containership owners or operators;
•
mergers and strategic alliances in the shipping industry;
•
changes in government regulation including taxation; and
•
the general state of the securities markets.
The international containership
industry has been highly unpredictable and volatile. The market for common shares and Depositary Shares representing Series B Preferred
Shares in companies operating in this industry may be
equally volatile.
We have anti-takeover provisions in our organizational documents
that may discourage a change of control.
Certain provisions of our
Amended and Restated Articles of Incorporation and Fourth Amended and Restated Bylaws may have an anti-takeover effect and may delay,
defer or prevent a tender offer or takeover attempt that a
shareholder might consider in its best interest, including those attempts that
might result in a premium over the market price for the shares held by shareholders.
Certain of these provisions provide for:
•
a classified Board of Directors with staggered three-year terms;
•
restrictions on business combinations with certain interested shareholders;
•
directors only to be removed for cause and only with the affirmative vote
of holders of at least a majority of the common shares entitled to vote in the election of directors;
•
advance notice for nominations of directors by shareholders and for shareholders
to include matters to be considered at annual meetings; and
•
a limited ability for shareholders to call special shareholder meetings.
These anti-takeover provisions
could make it more difficult for a third party to acquire us, even if the third party’s offer may be considered beneficial by many
shareholders. As a result, shareholders may be limited in their ability to
obtain a premium for their shares.
We are subject to certain risks relating to
the inability to obtain the minimum quorum established in our Amended and Restated Articles of Incorporation and our Fourth Amended and
Restated Bylaws for the conduct of business
at shareholder meetings.
Our Amended and Restated
Articles of Incorporation and Fourth Amended and Restated Bylaws require a quorum of the majority of our common stock outstanding in order
to conduct business at any meeting of shareholders
(including our annual meetings of shareholders). Due to the increased size and diversified
nature of our shareholder base, it has become administratively more difficult to obtain the current quorum at shareholder meetings. Preparing
proxy materials, including the printing and mailing of such materials to shareholders, together with proxy solicitation in order to reach
the quorum requirement, is costly. Further, adjourning shareholder meetings for failure to obtain the
requisite quorum also leads to increased
costs. If we are unable to obtain the minimum quorum requirement to conduct business at shareholder meetings, we may be unable to take
effectively conduct certain business.
Our management is required to devote substantial time to complying
with public company regulations.
As a public company, we
incur significant legal, accounting and other expenses. In addition, the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”) as
well as rules subsequently adopted by the SEC and the New York Stock
Exchange (“NYSE”), including the Dodd-Frank Wall Street
Reform and Consumer Protection Act of 2010, have imposed various requirements on public companies, including changes in corporate governance
practices. Our directors,
management and other personnel devote a substantial amount of time to comply with these requirements. Moreover,
these rules and regulations relating to public companies increase our legal and financial compliance costs and make
some activities more
time-consuming and costly.
Sarbanes-Oxley requires,
among other things, that we maintain and periodically evaluate our internal control over financial reporting and disclosure controls and
procedures. In particular, under Section 404 of the Sarbanes-Oxley
Act of 2002, we are required to include in each of our annual reports
on Form 20-F a report containing our management’s assessment of the effectiveness of our internal control over financial reporting
and, if we are an accelerated filer
or a large accelerated filer, a related attestation of our independent registered public accounting
firm. While we did not identify any material weaknesses or significant deficiencies in our internal controls under the current assessment,
we cannot be certain at this time that our internal controls will be considered effective in future assessments and that our independent
registered public accounting firm would reach a similar conclusion. Therefore, we can give no
assurances that our internal control over
financial reporting will satisfy regulatory requirements in the future.
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We
are a “foreign private issuer” under the NYSE rules, and as such we are entitled to exemption from certain NYSE corporate
governance standards, and you may not have the same protections afforded to shareholders of
companies that are subject to all of the
NYSE corporate governance requirements.
We
are a “foreign private issuer” under the securities laws of the United States and the rules of the NYSE. Under the securities
laws of the United States, “foreign private issuers” are subject to different disclosure requirements than
U.S. domiciled
registrants, as well as different financial reporting requirements. Under the NYSE rules, a “foreign private issuer” is subject
to less stringent corporate governance requirements. Subject to certain exceptions, the rules of
the NYSE permit a “foreign private
issuer” to follow its home country practice in lieu of the listing requirements of the NYSE.
Accordingly,
you may not have the same protections afforded to shareholders of companies that are subject to all of the NYSE corporate governance
requirements.
Future
sales of our common stock could cause the market price of our common stock to decline.
Sales
of a substantial number of shares of our common stock in the public market, or the perception that these sales could occur, may depress
the market price for our common stock. These sales could also impair our ability to raise
additional capital through the sale of our
equity securities in the future.
Subject
to the rules of the NYSE, in the future, we may issue additional shares of common stock, and other equity securities of equal or senior
rank, without shareholder approval, in a number of circumstances. The issuance by us
of additional shares of common stock or other equity
securities of equal or senior rank would have the following effects:
•
our
existing shareholders’ proportionate ownership interest in us may decrease;
•
the
dividend amount payable per share on our common stock may be lower;
•
the
relative voting strength of each previously outstanding share may be diminished; and
•
the
market price of our common stock may decline.
Our shareholders also may
elect to sell large numbers of shares held by them from time to time. The number of shares of common stock available for sale in the public
market will be limited by restrictions applicable under
securities laws, and agreements that we and our executive officers, directors
and existing shareholders may enter into with the underwriters at the time of an offering. Subject to certain exceptions, these agreements
generally restrict us
and our executive officers, directors and existing shareholders from directly or indirectly offering, selling, pledging,
hedging or otherwise disposing of our equity securities or any security that is convertible into or exercisable or
exchangeable for our
equity securities and from engaging in certain other transactions relating to such securities for a period of up to 180 days after the
date of an offering prospectus without the prior written consent of the
underwriter(s).
We may not have sufficient cash from our operations
to enable us to pay dividends on or to redeem our Series B Preferred Shares, and accordingly the Depositary Shares, as the case may be.
We pay quarterly dividends
on the Series B Preferred Shares, and accordingly the Depositary Shares, only from funds legally available for such purpose when, as
and if declared by our Board of Directors. We may not have
sufficient cash available each quarter to pay dividends. In addition, if our
Board of Directors does not authorize and declare a dividend for any dividend period prior to the relevant dividend payment date, holders
of the Series B
Preferred Shares and accordingly the Depositary Shares would not be entitled to receive a dividend for that dividend
period. However, any unpaid dividends will accumulate. In addition, we have the option to redeem the Series B
Preferred Shares, and accordingly
the Depositary Shares, although we may have insufficient cash available to do so or may otherwise elect not to do so.
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The amount of cash we can
use to pay dividends or redeem our Series B Preferred Shares and the Depositary Shares depends upon the amount of cash we generate from
our operations, which may fluctuate significantly, and other
factors, including the following:
•
changes in our operating cash flow, capital expenditure requirements, working
capital requirements and other cash needs;
•
the amount of any cash reserves established by our Board of Directors;
•
restrictions under Marshall Islands law as described below;
•
restrictions under our credit facilities and other instruments and agreements
governing our existing and future debt as described below; and
•
our overall financial and operating performance, which, in turn, is subject
to prevailing economic and competitive conditions and to the risks associated with the shipping industry and the other factors (see “—Risks
Relating
to our Business” above), many of which are beyond our control.
The amount of cash we generate
from our operations may differ materially from our net income or loss for the period, which will be affected by noncash items, and our
Board of Directors in its discretion may elect not to declare
any dividends. We may incur other expenses or liabilities that could reduce
or eliminate the cash available for distribution as dividends. As a result of these and the other factors mentioned above, we may pay
dividends during periods
when we record losses and may not pay dividends during periods when we record net income.
Our ability to pay dividends on and to
redeem our Series B Preferred Shares is limited by the requirements of Marshall Islands law and by our contractual obligations.
Marshall Islands law provides
that we may pay dividends on and redeem the Series B Preferred Shares only to the extent that assets are legally available for such purposes.
Legally available assets generally are limited to our
surplus, which essentially represents our retained earnings and the excess of consideration
received by us for the sale of shares above the par value of the shares. In addition, under Marshall Islands law we may not pay dividends
on or
redeem Series B Preferred Shares if we are insolvent or would be rendered insolvent by the payment of such a dividend or the making
of such redemption.
Further, the terms of our
credit facilities may prohibit us from declaring or paying any dividends or distributions on preferred stock, including the Series B Preferred
Shares, or redeeming, purchasing, acquiring or making a
liquidation payment on preferred stock in certain circumstances.
Risks Relating to Tax Matters
Our operating income could fail to qualify for an exemption from
U.S. federal income taxation, which would reduce our cash flow.
We do not expect to be engaged
in a U.S. trade or business. In the case of a foreign corporation that is not so engaged, the Internal Revenue Code of 1986, as amended
(the “Code”), imposes a 4% U.S. federal income tax (without
allowance of any deductions) on 50% of the corporation’s
gross transportation income that is attributable to transportation that begins or ends, but that does not both begin and end, in the
United States, unless the corporation qualifies
for the exemption provided in Section 883 of the Code or an applicable income tax treaty.
The imposition of this tax, to the extent not payable by our charterers, could have a negative effect on our business, financial condition
and
results of operations.
We will qualify for the
exemption under Section 883 if, among other things, our stock is treated as primarily and regularly traded on an established securities
market in the United States. However, under the relevant Treasury
regulations, a class of stock will not be treated as primarily and regularly
traded on an established securities market if, during more than half the number of days during the taxable year, one or more shareholders
who actually or
constructively own at least 5% of the vote and value of the outstanding shares of such class of stock (“5% Shareholders”),
own, in the aggregate, 50% or more of the vote and value of the outstanding shares of such class of stock, unless
a sufficient amount
of stock is owned by 5% Shareholders that are considered to be “qualified shareholders” to preclude non-qualifying 5% Shareholders
from owning 50% or more of the total value of the stock held by the 5%
Shareholders group.
Generally, a 5% Shareholder
is a qualified 5% Shareholder if the 5% Shareholder is an individual who is a resident of a qualified foreign country, the government
of a qualified foreign country, a foreign corporation organized in a
qualified foreign country that meets the “publicly-traded”
test discussed herein, a non-profit organization organized in a qualified foreign country or an individual beneficiary (resident in a
qualified foreign country) of a pension plan
administered in or by a qualified foreign country. Generally, a foreign country is a qualified
foreign country if it grants an equivalent exemption from tax to corporations organized in the United States.
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Based on information that
we have as to our shareholders and other matters, we believe that we qualified for the Section 883 exemption for 2022 through 2024, under
the “publicly-traded” test. Whether we may satisfy the
“publicly-traded” test depends on factors that are outside
of our control, and we cannot provide any assurances that we will or will not satisfy the “publicly-traded” test to claim
exemption from U.S. taxation for 2025 or future taxable
years. See Item “10. Additional Information—E. Taxation—Taxation
of Global Ship Lease—The Section 883 exemption” for a more comprehensive discussion of the U.S. federal income tax rules related
to Section 883.
Certain adverse U.S. federal income tax consequences could arise
for U.S. holders.
Shareholders of a “passive
foreign investment company,” or PFIC, that are U.S. persons within the meaning of the Code (“U.S. shareholders”) are
subject to a disadvantageous U.S. federal income tax regime with respect to the
distributions they receive from a PFIC and the gain, if
any, they derive from the sale or other disposition of their shares in a PFIC (as discussed below). In addition, dividends paid by a PFIC
do not constitute qualified dividend income
and, hence, are ineligible for the preferential rate of tax that applies to qualified dividend
income.
A foreign corporation is
treated as a PFIC if either (1) 75% or more of its gross income for any taxable year consists of certain types of “passive income”
or (2) 50% or more of the average value of the corporation’s assets produce
or are held for the production of those types of “passive
income”. For purposes of these tests, “passive income” includes dividends, interest and gains from the sale or exchange
of investment property and rents and royalties other than
rents and royalties which are received from unrelated parties in connection
with the active conduct of a trade or business; income derived from the performance of services does not, however, constitute “passive
income”.
Based on the projected
composition of our income and valuation of our assets, we do not expect that we will constitute a PFIC with respect to the current or
any future taxable year, although there can be no assurance in this regard.
Our expectation is based principally on the position that,
for purposes of determining whether we are a PFIC, the majority, if not all, of the gross income we derive from our chartering activities
should constitute services income rather
than rental income.
In this regard, we have
been advised by our tax advisor that the income from our time and voyage chartering activities should be classified as services income.
There is, however, no direct legal authority under the PFIC rules
addressing our current and projected future operations or supporting
our position. Accordingly, no assurance can be given that the U.S. Internal Revenue Service (the “IRS”) will not assert that
we are a PFIC with respect to any taxable
year, nor that a court would not uphold any such assertion.
Further, in a case not
concerning PFICs, Tidewater Inc. v. U.S., 2009-1 USTC ¶ 50,337, the Fifth Circuit held that a vessel time charter at issue generated
rental, rather than services, income. However, the court’s ruling was
contrary to the position of the IRS that the time charter
income should be treated as services income. Subsequently, the IRS has stated that it disagrees with and will not acquiesce to the rental
versus services distinction in the Tidewater
decision, and in its discussion stated that the time charters at issue in Tidewater would
be treated as producing services income for PFIC purposes. The IRS’s statement with respect to Tidewater cannot be relied upon or
otherwise cited
as precedent by taxpayers. Further, the facts in Tidewater are not directly analogous to our facts. No assurance can be
given that the IRS or a court of law would accept our position, and there is a risk that the IRS or a court of law could
determine that
the company is a PFIC.
If the IRS were to determine
that we are or have been a PFIC for any taxable year, our U.S. shareholders will face adverse U.S. tax consequences. Distributions paid
by us with respect to our shares will not constitute qualified
dividend income if we were a PFIC in the year we pay a dividend or in
the prior taxable year and, hence, will not be eligible for the preferential rate of tax that applies to qualified dividend income. In
addition, our U.S. shareholders
(other than shareholders who have made a “qualified electing fund” or “mark-to-market”
election) will be subject to special rules relating to the taxation of “excess distributions”—with excess distributions
being defined to include
certain distributions we may make on our Class A common shares as well as gain recognized by a U.S. holder on
a disposition of our Class A common shares. In general, the amount of any “excess distribution” will be allocated ratably
to each day of the U.S. holder’s holding period for our Class A common shares. The amount allocated to the current year and any
taxable year prior to the first taxable year for which we were a PFIC will be included in the U.S. holder’s
gross income for the
current year as ordinary income. With respect to amounts allocated to prior years for which we were a PFIC, the tax imposed for the current
year will be increased by the “deferred tax amount,” which is an amount
calculated with respect to each prior year by multiplying
the amount allocated to such year by the highest rate of tax in effect for such year, together with an interest charge as though the
amounts of tax were overdue. See Item 10.E.
“Additional Information—Taxation —Tax consequences of holding Class A common
shares—Consequences of possible passive foreign investment company classification.” for a more comprehensive discussion of
the U.S. federal
income tax consequences to U.S. shareholders if we were treated as a PFIC (including those applicable to U.S. shareholders
who make a qualified electing fund or mark-to-market election).
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We may be subject to taxation on all or part
of our income in the United Kingdom, which could have a material adverse effect on our results of operations.
If we or our vessel owning
subsidiaries were considered to be a resident of the United Kingdom (or “UK”) or to have a permanent establishment in the
United Kingdom, all or a part of our profits could be subject to UK corporate
tax, which had a maximum rate of 19% for years ended March
31, 2016 until the year ended March 31, 2023. From April 1, 2023, the main rate increased to 25%.
We and our vessel owning
subsidiaries are centrally managed and controlled from outside the United Kingdom and have restricted activities within the United Kingdom.
Certain intra-group services will have been provided from
within the United Kingdom up to March 31, 2024. We may have to calculate the
taxable profit of these services using arm’s-length pricing. The appropriate arm’s-length price in these circumstances may
be subject to discussion with
the UK taxing authorities.
We do not believe that
we or our vessel owning subsidiaries are residents of the United Kingdom for UK tax purposes, or that we or our vessel owning subsidiaries
have permanent establishments in the United Kingdom. However,
because some administrative and executive services are provided to us or
our vessel owning subsidiaries by a subsidiary company located in the United Kingdom and certain of our directors reside in the United
Kingdom, and because
UK statutory and case law does not outline specific activities that constitute a trade being carried on in the United
Kingdom through a permanent establishment, the UK taxing authorities may contend that we or our vessel owning
subsidiaries are subject
to UK corporate tax on all of our income, or on a greater portion of our income than we currently expect to be taxed. If the UK taxing
authorities made such a contention, we could incur substantial legal costs
defending our position, and, if we were unsuccessful in our
defense, our results of operations would be materially adversely affected.
We may be subject to taxes which will reduce our cash flow.
We and our vessel owning
subsidiaries may be subject to tax in certain jurisdictions in which we are organized, own assets or have operations, which would reduce
the amount of our cash available for distribution. In computing
our tax obligations in these jurisdictions, we are required to take various
tax accounting and reporting positions on matters that are not entirely free from doubt and for which we have not received rulings from
the governing authorities.
We cannot assure you that upon review of these positions, the applicable authorities will agree with our positions.
A successful challenge by a tax authority, or a change in law in a jurisdiction in which we operate (including Cyprus and
Hong Kong, where
a number of our vessel owning subsidiaries are entered in the local tonnage tax regime), could result in additional tax imposed on us,
further reducing the cash available for distribution.
Tax laws, including tax rates,
in the jurisdictions in which we operate may change as a result of macroeconomic or other factors outside of our control. For example,
various governments and organizations such as the European
Union and Organization for Economic Co-operation and Development (the “OECD”)
are increasingly focused on tax reform and other legislative or regulatory action to increase tax revenue. In January 2019, the OECD announced
further work in continuation of its Base Erosion and Profit Shifting project, focusing on two “pillars”. Pillar One provides
a framework for the reallocation of certain residual profits of multinational enterprises to market jurisdictions
where goods or services
are used or consumed. Pillar Two consists of two interrelated rules referred to as Global Anti-Base Erosion Rules, which operate to impose
a minimum tax rate of 15% calculated on a jurisdictional basis. In the
third quarter of 2021, more than 130 countries tentatively signed
on to a framework that imposes a minimum tax rate of 15%, among other provisions. Qualifying international shipping income is exempt from
many aspects of this
framework. On December 20, 2021, the OECD published model rules to implement the Pillar Two rules, which are generally
consistent with agreement reached by the framework in October 2021. These changes, when enacted by
various countries in which we do business,
may increase our taxes in these countries. As this framework is subject to implementation by each member country, the timing and ultimate
impact of any such changes on our tax obligations
are uncertain.
31
Table of Contents
Item 4.
Information on the Company
A. History and Development of the Company
Our legal and commercial
name is Global Ship Lease, Inc. We are a Republic of the Marshall Islands corporation that owns a fleet of mid-sized and smaller containerships
which we charter out under fixed-rate charters to reputable
container shipping companies.
The mailing address of our
principal executive office is c/o GSL Enterprises Ltd., 9 Irodou Attikou Street, Kifisia, Athens 14561, Greece and our telephone number
at that address is +30 210 6233670. Our agent in the United
States is Puglisi & Associates, 850 Library Avenue, Suite 204, Newark,
Delaware 19711. The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding
issuers that file
electronically with the SEC. The address of the SEC’s Internet site is www.sec.gov. Our website address is www.globalshiplease.com.
None of the information contained on these websites is incorporated herein by reference or forms a
part of this Annual Report. From time
to time, we may use our website and social media outlets as channels of distribution of material company information.
We were formed in 2007 pursuant
to the Marshall Islands Business Corporations Act to purchase and charter back 17 containerships then owned or to be purchased by CMA
CGM, at that time the third largest containership
operator in the world by number of vessels. On August 14, 2008, we merged indirectly
with Marathon Acquisition Corp. (the “Marathon Merger”) and became listed on the NYSE on August 15, 2008.
On November 15, 2018, we completed
a transformative transaction by which we acquired 20 containerships, one of which was contracted to be sold, which we refer to as the
“Poseidon Transaction.” On the closing of the Poseidon
Transaction, we issued as consideration 3,005,603 Class A common shares
and 250,000 Series C Preferred Shares, which were converted to an aggregate of 12,955,188 Class A common shares in January 2021, and assumed
debt in the
amount of $509.7 million.
Since the Poseidon
Transaction, we have continued to expand our fleet, and have acquired 38 additional vessels; this includes the Newly Acquired
Vessels that we agreed to purchase in November 2024 for an aggregate price of
$274.0 million, of which three were delivered to us in
December 2024 and the fourth in January 2025. In addition, during December 2024, we agreed to sell an older vessel Tasman (5,936 TEU
built 2000) and in February 2025, we
agreed to sell two more vessels, Akiteta (2,220 TEU built 2002) and Keta (2,207 TEU, built
2003). Akiteta was delivered to her new owners on February 19, 2025 and Tasman was delivered on March 10, 2025. Keta is scheduled
for
delivery to her new owners in first half 2025.
As of March 10, 2025,
we owned 70 mid-sized and smaller containerships, ranging from 2,207 to 11,040 TEU, with an aggregate capacity of 404,681 TEU. 39 ships
are wide-beam Post-Panamax. See “Item 4. Information on the
Company-B. Business Overview.”
Class A Common Shares
In March 2022, our
Board of Directors authorized our repurchase of up to $40.0 million common shares, to be utilized on an opportunistic basis (our “Share
Repurchase Program”). During the year ended December 31, 2022, we
repurchased an aggregate of 1,060,640 Class A common shares under
the Share Repurchase Program for an average purchase price of $18.87 per share, for a total of $20.0 million.
During the year ended December
31, 2022, 586,819 Class A common shares were issued under the Global Ship Lease 2019 Omnibus Incentive Plan (the “2019 Plan”).
As at December 31, 2022, there were 35,990,288 Class
A common shares outstanding.
In July 2023, our Board of Directors
replenished our Share Repurchase Program with the authorization of our repurchase of an additional $40.0 million of Class A common shares.
During the year ended December 31, 2023, we
repurchased an aggregate of 1,242,663 Class A common shares at an average price of $17.68
per share, for a total of $22.0 million.
During the year ended December 31, 2023, 440,698 Class
A common shares were issued under the 2019 Plan.
As at December 31, 2023, there were 35,188,323 Class
A common shares outstanding.
During the period from January
1, 2024 through the date of this annual report, we repurchased an aggregate of 251,772 Class A common shares for an average purchase price
of $19.84 per share, for a total of $5.0 million. As of
the date of this annual report, we have remaining approximately $33.0 million
available for repurchases under our Share Repurchase Program.
On August 16, 2024, we entered
into an equity distribution agreement (the “Sales Agreement”) with Evercore Group L.L.C. under which we may, from time to
time, opportunistically offer and sell Class A common shares having
an aggregate offering price of up to $100.0 million. As of December
31, 2024, we issued 27,106 Class A common shares pursuant to the Sales Agreement at an average price of $27.02.
During the year ended December 31, 2024, 483,713 Class
A common shares were issued under the 2019 Plan.
As at December 31, 2024, there were 35,447,370 Class
A common shares outstanding.
32
Table of Contents
Depositary Shares
On August 20, 2014, we
issued 1,400,000 Depositary Shares (the “Depositary Shares”), each of which represents 1/100th of one share of the
Company's Series B Preferred Shares representing an interest in a total of 14,000 Series
B Preferred Shares, par value $0.01 per
share, with a liquidation preference of $2,500.00 per share (equivalent to $25.00 per Depositary Share), priced at $25.00 per
Depositary Share (NYSE:GSL-B). Dividends are payable at 8.75%
per annum in arrears on a quarterly basis. At any time after August
20, 2019 (or within 180 days after the occurrence of a fundamental change), the Series B Preferred Shares may be redeemed, at our
discretion, in whole or in part, at a
redemption price of $2,500.00 per share (equivalent to $25.00 per Depositary Share).
On December 29, 2022, we entered
into a At Market Issuance Sales Agreement with B. Riley Securities, Inc., pursuant to which we may offer and sell, from time to time,
up to $150.0 million of our Depositary Shares (the
“Depositary Shares ATM Program”). During the years ended December 31, 2022,
2023 and 2024, we have not issued or sold any Depositary Shares under the Depositary Shares ATM Program.
As at December 31, 2024, 4,359,190
Depositary Shares were outstanding, representing an interest in 43,592 Series B Preferred Shares.
Other Recent Developments
On
June 26, 2024, we announced updates from three leading credit rating agencies. Our Corporate Credit Rating had been upgraded to Ba2 from
Ba3, with a stable outlook, by Moody’s Investor Service. In addition, S&P Global
Ratings upgraded our long-term issuer credit
rating to BB+ from BB, with a stable outlook, and the Kroll Bond Rating Agency upgraded our corporate rating to BB+ from BB, maintaining
its stable outlook and also affirmed the
BBB/stable investment grade rating and outlook for the $350.0 million 5.69% Senior Secured Notes
due 2027.
On February 12, 2025, we announced
that our Board of Directors declared a dividend of $0.45 per Class A common share for the fourth quarter of 2024, that was paid on March
6, 2025 to common shareholders of record as of
February 24, 2025. This follows dividends of $0.375 per Class A common share paid for the
first quarter of 2024 and $0.45 per Class A common share paid for each of the second and third quarters of 2024.
On March 5, 2025, we announced
an increase in our supplemental quarterly dividend by $0.075 per Class A common share (subject to declaration by our Board of Directors),
representing an 16.7% increase on our quarterly
dividend of $0.45 per Class A common share (taking into account regular and supplemental
quarterly dividend). Following the increase, our total quarterly dividend is expected to be $0.525 per Class A common share, effective
with the
regular quarterly dividend that is declared on our Class A common shares in connection with the first quarter of 2025 and paid
in June 2025.
On March 6, 2025, we announced
that our Board of Directors declared a dividend of $0.546875 per Depositary Share, scheduled to be paid on April 1, 2025 to all Series
B Preferred Shareholders of record as of March 25, 2025.
Please see “Item 8. Financial Information – Dividend Policy.”
33
Table of Contents
B. Business Overview
Our Fleet
As of December 31, 2024, we had 71 containerships in our fleet, with the
fourth Newly Acquired Vessel (Czech) delivered in January 2025. As of February 28, 2025, three of our older vessels (Tasman, Keta, and
Akiteta) were
contracted for sale. Akiteta was delivered to her new owners on February 19, 2025 and Tasman was delivered to her new owners
on March 10, 2025. Keta is scheduled for delivery to her new owners in first half 2025. Charters agreed
up to February 28, 2025 are included
below:
Vessel
Name
Capacity
in TEUs
Lightweight
(tons)
Year
Built
Charterer
Earliest Charter
Expiry Date
Latest Charter
Expiry Date (2)
Daily
Charter
Rate $
CMA
CGM Thalassa
11,040
38,577
2008
CMA
CGM
3Q28
4Q28
47,200
(3)
ZIM
Norfolk (1)
9,115
31,764
2015
ZIM
2Q27
4Q27
65,000
Anthea
Y (1)
9,115
31,890
2015
MSC
3Q25
4Q25
Footnote
(4)
ZIM
Xiamen (1)
9,115
31,820
2015
ZIM
3Q27
4Q27
65,000
Sydney
Express (1)
9,019
31,254
2016
Hapag-Lloyd
(5)
1Q26
4Q29
Footnote
(5)
Istanbul
Express (1)
9,019
31,380
2016
Hapag-Lloyd
(5)
3Q26
2Q30
Footnote
(5)
Bremerhaven
Express (1)
9,019
31,199
2015
Hapag
Lloyd (5)
1Q26
3Q29
Footnote
(5)
Czech
9,019
31,319
2015
Hapag-Lloyd
(5)
4Q26
3Q30
Footnote
(5)
MSC
Tianjin
8,603
34,243
2005
MSC
(6)
3Q27
4Q27
Footnote
(6)
MSC
Qingdao
8,603
34,585
2004
MSC
(6)
3Q27
4Q27
Footnote
(6)
GSL
Ningbo
8,603
34,340
2004
MSC
3Q27
1Q28
Footnote
(7)
GSL
Alexandra
8,544
37,809
2004
Maersk
2Q26
3Q26
Footnote
(8)
GSL
Sofia
8,544
37,777
2003
Maersk
3Q26
3Q26
Footnote
(8)
GSL
Effie
8,544
37,777
2003
Maersk
3Q26
3Q26
Footnote
(8)
GSL
Lydia
8,544
37,777
2003
Maersk
2Q26
3Q26
Footnote
(8)
GSL
Eleni
7,847
29,261
2004
Maersk
4Q27
2Q29
Footnote
(9)
GSL
Kalliopi
7,847
29,261
2004
Maersk
1Q28
2Q29
Footnote
(9)
GSL
Grania
7,847
29,261
2004
Maersk
1Q28
3Q29
17,750
(9)
Colombia
Express (ex Mary) (1)
7,072
23,424
2013
Hapag-Lloyd
(10)
4Q28
1Q31
Footnote
(10)
Panama
Express (ex Kristina) (1)
7,072
23,421
2013
Hapag-Lloyd
(10)
4Q29
4Q31
Footnote
(10)
Costa
Rica Express (ex Katherine) (1)
7,072
23,403
2013
Hapag-Lloyd
(10)
2Q29
3Q31
Footnote
(10)
Nicaragua
Express (ex Alexandra) (1)
7,072
23,348
2013
Hapag-Lloyd
(10)
3Q29
4Q31
Footnote
(10)
CMA
CGM Berlioz
7,023
26,776
2001
CMA
CGM
4Q25
2Q26
37,750
Mexico
Express (ex Alexis) (1)
6,910
23,970
2015
Footnote
(10)
3Q29
4Q31
Footnote
(10)
Jamaica
Express (ex Olivia I) (1)
6,910
23,915
2015
Hapag-Lloyd
(10)
3Q29
4Q31
Footnote
(10)
GSL
Christen
6,858
27,954
2002
Maersk
4Q27
1Q28
Footnote
(11)
GSL
Nicoletta
6,858
28,070
2002
Maersk
1Q28
2Q28
Footnote
(11)
Agios
Dimitrios
6,572
24,931
2011
MSC
(6)
2Q27
3Q27
Footnote
(6)
GSL
Vinia
6,080
23,737
2004
Maersk
1Q28
4Q29
13,250
(12)
GSL
Christel Elisabeth
6,080
23,745
2004
Maersk
1Q28
3Q29
13,250
(12)
GSL
Arcadia
6,008
24,858
2000
Maersk
3Q25
1Q26
12,900
(13)
GSL
Violetta
6,008
24,873
2000
Maersk
2Q25
4Q25
12,900
(13)
GSL
Maria
6,008
24,414
2001
Maersk
4Q25
1Q27
12,900
(13)
GSL
MYNY
6,008
24,876
2000
Maersk
2Q25
1Q26
12,900
(13)
GSL
Melita
6,008
24,859
2001
Maersk
1Q26
3Q26
12,900
(13)
GSL
Tegea
5,994
24,308
2001
Maersk
1Q26
3Q26
12,900
(13)
GSL
Dorothea
5,994
24,243
2001
Maersk
1Q26
3Q26
12,900
(13)
Tasman(20)
5,936
25,010
2000
Maersk
1Q25
1Q25
21,500
Dimitris
Y (ex Zim Europe)
5,936
25,010
2000
ONE
2Q25
3Q25
33,900
Ian
H
5,936
25,128
2000
COSCO
4Q27
4Q27
Footnote
(14)
GSL
Tripoli
5,470
22,109
2009
Maersk
3Q27
4Q27
17,250
GSL
Kithira
5,470
22,259
2009
Maersk
4Q27
1Q28
17,250
GSL
Tinos
5,470
22,068
2010
Maersk
3Q27
4Q27
17,250
GSL
Syros
5,470
22,099
2010
Maersk
4Q27
4Q27
17,250
Dolphin
II
5,095
20,596
2007
OOCL
1Q25
3Q25
53,500
Orca
I
5,095
20,633
2006
Maersk
2Q25
4Q25
21,000
CMA
CGM Alcazar
5,089
20,087
2007
CMA
CGM
3Q26
1Q27
35,500
GSL
Château d’If
5,089
19,994
2007
CMA
CGM
4Q26
1Q27
35,500
GSL
Susan
4,363
17,309
2008
CMA
CGM
3Q27
1Q28
Footnote
(15)
CMA
CGM Jamaica
4,298
17,272
2006
CMA
CGM
1Q28
2Q28
Footnote
(15)
CMA
CGM Sambhar
4,045
17,355
2006
CMA
CGM
1Q28
2Q28
Footnote
(15)
CMA
CGM America
4,045
17,355
2006
CMA
CGM
1Q28
2Q28
Footnote
(15)
GSL
Rossi
3,421
16,420
2012
ZIM
1Q26
3Q26
35,311
(16)
GSL
Alice
3,421
16,543
2014
CMA
CGM
2Q28
3Q28
20,500
(3)
GSL
Eleftheria
3,421
16,642
2013
Maersk
3Q25
4Q25
37,975
GSL
Melina
3,404
16,703
2013
Maersk
4Q26
4Q26
29,900
Athena
2,980
13,538
2003
MSC
2Q25
3Q25
17,500
GSL
Valerie
2,824
11,971
2005
ZIM
3Q27
4Q27
32,000
(17)
GSL
Mamitsa (ex Matson Molokai)
2,824
11,949
2007
Matson
2Q25
3Q25
36,600
GSL
Lalo
2,824
11,950
2006
MSC
2Q25
3Q25
18,000
GSL
Mercer
2,824
11,970
2007
ONE
1Q27
2Q27
35,750
(18)
GSL
Elizabeth
2,741
11,530
2006
Maersk
2Q26
2Q26
20,360
GSL
Chloe (ex Beethoven)
2,546
12,212
2012
ONE
1Q27
2Q27
33,000
(18)
GSL
Maren
2,546
12,243
2014
OOCL
1Q26
2Q26
16,500
Maira
2,506
11,453
2000
CMA
CGM
4Q26
1Q27
26,000
Nikolas
2,506
11,370
2000
CMA
CGM
4Q26
1Q27
26,000
Newyorker
2,506
11,463
2001
Maersk
1Q25
2Q25
17,250
Manet
2,288
11,534
2001
OOCL
3Q26
4Q26
24,000
Kumasi
2,220
11,652
2002
Wan
Hai
1Q25
2Q25
38,000
Akiteta
(20)
2,220
11,592
2002
OOCL
1Q25
1Q25
32,000
Keta
(20)
2,207
11,731
2003
CMA
CGM
1Q25
1Q25
25,000
Julie
2,207
11,731
2002
MSC
2Q25
3Q25
Footnote
(19)
34
Table of Contents
(1) Modern
design, high reefer capacity, fuel-efficient “ECO” vessel.
(2) In
many instances charterers have the option to extend a charter beyond the nominal latest expiry
date by the amount of time that the vessel was off hire during the course of that charter.
This additional charter time (“Offhire
Extension”) is computed at the end of
the initially contracted charter period. The Latest Charter Expiry Dates shown in this table
have been adjusted to reflect offhire accrued up to December 31, 2024, plus estimated offhire
scheduled to occur during the remaining lifetimes of the respective charters. However, as
actual offhire can only be calculated at the end of each charter, in some cases actual Offhire
Extensions – if invoked by charterers – may
exceed the Latest Charter Expiry
Dates indicated.
(3) CMA
CGM Thalassa and GSL Alice were both forward fixed for 36 months +/-45 days. CMA CGM Thalassa
and GSL Alice new charters are expected to commence in 4Q2025 and 2Q2025, respectively.
(4) Anthea
Y. The vessel is chartered at a confidential rate.
(5) Sydney
Express, Istanbul Express, Bremerhaven Express and Czech were contracted for purchase in
4Q2024, with three vessels delivered in December 2024 and the fourth in January 2025. Contract
cover for each vessel is for a
varied median firm duration extending for an average of 1.7
years, or up to an average of 5.1 years if all charterers’ options are exercised. The
vessels are chartered at confidential rates.
(6) MSC
Tianjin, MSC Qingdao and Agios Dimitrios are chartered at confidential rates. MSC Qingdao
& Agios Dimitrios are fitted with Exhaust Gas Cleaning Systems (“scrubbers”).
(7) GSL
Ningbo is chartered at a confidential rate.
(8) GSL
Alexandra, GSL Sofia, GSL Effie and GSL Lydia delivered in 2Q 2023. Contract cover for each
vessel is for a minimum firm period of 24 months from the date each vessel was delivered,
with charterers holding one year
extension options. GSL Sofia and GSL Effie options were
exercised in January 2025. GSL Alexandra and GSL Lydia options were exercised in February
2025. The vessels are chartered at confidential rates.
(9) GSL
Eleni, GSL Kalliopi and GSL Grania, were forward fixed for 35 – 38 months to commence
after drydocking, after which the charterer has the option to extend each charter for a further
12 – 16 months, at confidential rates. As
of December 31, 2024, all three vessels were
under drydocking. Each new charter is expected to commence in 1Q2025.
(10) Colombia
Express (ex Mary), Panama Express (ex Kristina), Costa Rica Express (ex Katherine),
Nicaragua Express (ex Alexandra), Mexico Express (ex Alexis),
Jamaica Express (ex Olivia I) are fixed to Hapag-Lloyd for 60
months +/-45 days, followed
by two periods of 12 months each at the option of the charterer. The vessels are chartered
at confidential rates.
(11) GSL
Nicoletta and GSL Christen are chartered at confidential rates.
(12)GSL
Vinia and GSL Christel Elizabeth were both forward fixed for 36 – 40 months to commence
after drydocking, after which the charterer has the option to extend each charter for a further
12 – 15 months, at confidential rates.
The new charters are both scheduled to commence
in 1Q 2025.
(13)GSL
Maria, GSL Violetta, GSL Arcadia, GSL MYNY, GSL Melita, GSL Tegea and GSL Dorothea. Contract
cover for each ship is for a firm period of at least three years from the date each vessel
was delivered in 2021, with
charterers holding a one-year extension option on each charter
(at a rate of $12,900 per day), followed by a second option (at a rate of $12,700 per day)
with the period determined by – and terminating prior to – each vessel’s
25th year drydocking & special survey. The first extension options have been exercised
for all seven ships. Second extension options were exercised in January 2025 for GSL Dorothea,
GSL Arcadia, GSL Melita and GSL Tegea.
(14)Ian
H charter is chartered at a confidential rate.
(15)GSL
Susan, CMA CGM Jamaica, CMA CGM Sambhar and CMA CGM America are chartered at confidential
rates.
(16)GSL
Rossi. Chartered at an average rate of $35,311 per day, $38,000 to 1Q 2025 and $35,000 for
the remaining period.
(17)GSL
Valerie was forward fixed in direct continuation for 24 – 27 months to commence after
drydocking, at a confidential rate.
(18)GSL
Mercer and GSL Chloe were both forward fixed for 23.5 – 26 months, at confidential
rates. The new charters are both expected to commence in 1Q 2025.
(19)Julie.
Chartered at a confidential rate.
(20)In December 2024, Tasman was contracted to be sold. In February
2025, Keta and Akiteta were also contracted to be sold. Aggregate sale price agreed for all three vessels is $54.5 million, v.
aggregate book value at December 31,
2024 of $24.9 million. Akiteta was delivered to her new owners on February 19, 2025 and Tasman
was delivered to her new owners on March 10, 2025. Keta is scheduled for delivery to her new owners in first half
2025.
Fleet Development
As of December 31, 2024, our
fleet consisted of 72 containerships, including the delivery of the fourth Newly Acquired Vessel (Czech) on January 9, 2025, with an aggregate
capacity of 412,837 TEU and a TEU-weighted average
age of approximately 17.4 years.
Vessel Acquisitions
In 2023, we purchased four containerships,
each with a carrying capacity of 8,544 TEU, for an aggregate purchase price of $123.3 million, which were delivered to us in May and June
2023.
In November 2024, we agreed to
purchase four high-reefer ECO 9,000 TEU vessels, which we refer to as the Newly Acquired Vessels, for an aggregate price of $274.0 million.
Three of the vessels were delivered in December
2024 and the fourth in January 2025.
Vessel Disposals
On March 23, 2023, we sold GSL Amstel, a 2008-built, 1,118 TEU
containership, for net proceeds of $5.9 million.
In December 2024, we agreed
to sell Tasman, a 5,936 TEU vessel for a sale price of $31.5 million. In February 2025, we agreed to sell Akiteta (2,220 TEU) and Keta
(2,207 TEU) for a sale price of $11.0 million and $12.0 million,
respectively. Akiteta was delivered to her new owners on February 19,
2025 and Tasman was delivered to her new owners on March 10, 2025. Keta is scheduled for delivery to her new owners in first half of
2025.
Time Charters
A time charter is a
contract for the use of a vessel for a fixed period of time at a specified daily rate. Under a time charter, the vessel owner
provides crew, lubricating oil, all maintenance and other services related to the vessel’s
operation, the cost of which is
included in the daily rate. The vessel owner is also responsible for insuring its interests in the vessel and liabilities as owner
arising from its use. The charterer is responsible for substantially all of the
vessel’s voyage costs, such as fuel (bunker)
costs, canal fees, port expenses, extra war risk insurance costs if the vessel
is deployed outside normal insurance limits and for entering areas which are specified by the insurance underwriters
as being subject
to additional premiums and cargo handling charges.
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The
initial term for a time charter commences on the vessel’s delivery to the charterer. Time charter agreements may include options,
in favor of the owner or the charterer, to extend the charter on pre-agreed terms. At the end of a
charter, the vessel may be re-delivered
by the charterer within a pre-agreed time window, to allow for operational flexibility. Charters may be extended on mutually agreed terms,
or the vessel is re-delivered, in which case we would
seek alternate employment with another charterer.
Our
charters expire on different dates and over a period of time. We believe the staggered expirations of our charters reduces our exposure
to rechartering risk and may mitigate the impact of the cyclical nature of the container
shipping industry.
Daily Charter Rate
Daily charter rate refers
to the gross amount per day payable by the charterer to the owner for the use of the vessel. It may be reduced by chartering commission
payable to a broker or other party. Under our time charters, hire is
payable to us typically every 15 days in advance and in U.S. dollars.
The daily charter rate is a fixed daily amount that will remain the same for the duration of the charter, although the charter rate can
be reduced in certain
circumstances where there are added costs to the charterer due to vessel performance deficiencies in speed or fuel
consumption. Hire can also be reduced, pro-rata for any cost savings that we may realize, if the vessel is laid up or idled
at the charterers’
request.
Operations and Expenses
As owners, we are required
to maintain each vessel in class and in an efficient state of hull and machinery and are responsible for vessel costs such as crewing,
lubricating oil, maintenance, insurance and drydocking. In general, the
charterer is responsible for the voyage costs, which includes
bunker fuel, stevedoring, port charges, towage, and taxes or dues arising out of cargo carried or ports visited while on charter, and
other costs customarily borne by charterers.
As described below, we have entered into ship management agreements to sub-contract the
day-to-day technical management of our vessels.
Off-hire
Under a time charter, when
the vessel is not available for service, and is “off-hire”, the charterer generally is not required to pay charter hire (unless
the charterer is responsible for the circumstances giving rise to the ship’s
unavailability), and we are responsible for costs during
any off-hire period, and possible additional costs of fuel to regain lost time. Additionally, in many cases the charterer has the option
to extend the latest redelivery date by the off-
hire days. A vessel generally will be deemed to be off-hire if there is an occurrence
that affects the full working condition of the vessel, including, among other things:
•
certain drydocking for repairs, maintenance or classification society inspection;
•
any damage, defect, breakdown or deficiency of the ship’s hull, machinery
or equipment or repairs or maintenance thereto;
•
any deficiency of the ship’s master, officers and/or crew, including
the failure, refusal or inability of the ship’s master, officers and/or crew to perform the service immediately required, whether
or not within its control;
•
its deviation, other than to save life or property, which results in the
charterer’s lost time;
•
crewing labor boycotts, strikes, or certain vessel arrests;
or
•
governmental restrictions, prohibitions, or regulations relating to
the vessel’s flag, ownership, management, or crewing;
•
arrest or detention of the vessel by a third-party; or
•
our failure to maintain the vessel in compliance with the charter’s
requirements, such as maintaining operational certificates.
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Ship Management and Maintenance
Under each of our time
charters, we are responsible for the operation and technical management of each vessel, which includes crewing, lubricating
oils, maintaining the vessel, periodic drydocking and performing work required
by regulations. The day-to-day crewing and technical management
of our vessels are provided by our ship managers pursuant to the terms of ship management agreements.
Termination and Withdrawal
Generally, if a vessel is
off-hire for a significant number of consecutive days, then the charterer may cancel the charter without any further consequential claims
provided the vessel is free of cargo. The number of these days varies
from 40 to 180 days and depends on the relevant charter agreement.
Some of our charters provide that we can in some circumstances provide a substitute vessel during an anticipated extended period of off-hire.
For a number of vessels chartered
to CMA CGM, if a vessel’s fuel consumption exceeds a level specified in the charter over a continuous period of 30 days, and the
reason is within our or the vessel’s control, CMA CGM may
request that we cure the deficiency. If the deficiency is not cured within
30 days after we receive notice, then CMA CGM may terminate the charter.
Generally, if either party
informs the other party of a default under the charter, and the default is not rectified within 60 days of such notice, then the party
giving the notice has the right to terminate the time charter with respect to
that vessel.
The charter will terminate
in the event of a total (actual or constructive) loss of the vessel or if the vessel is requisitioned.
Management of Our Fleet
Our management team supervises
the day-to-day technical ship management of our vessels, which is provided by Technomar, a company of which our Executive Chairman is
the Founder, Managing Director, and majority
beneficial owner, and the commercial ship management, which is provided by Conchart, a company
of which our Executive Chairman is the sole beneficial owner.
Technical Management
Technomar provides us with
all day-to-day technical ship management services, pursuant to a technical management agreement with each of our vessel-owning subsidiaries
(as amended from time to time, the “TTMA”) for all of
the vessels in our fleet. Each TTMA was amended in March 2024 (with
effect from January 1, 2024) to expand Technomar’s responsibilities in view of EU ETS requirements, and again amended in March
2025 to expand Technomar’s
responsibilities in view of FEUM requirements, as detailed below.
Under each TTMA, Technomar
is responsible for all day-to-day ship management, including crewing, purchasing stores, lubricating oils and spare parts, paying wages,
pensions and insurance for the crew, and organizing other
vessel operating necessities, including monitoring and reporting with respect
to EU ETS compliance (including related Emission Trading Scheme Allowances) and FEUM compliance, and the arrangement and management of
drydocking. We reimburse the ship managers for the costs they incur on our behalf. Each ship management agreement provides that we have
the right to audit the accounts of our ship manager to verify the costs incurred. The ship
managers have agreed to maintain our vessels
so that they remain in class with valid certification. In addition, they are responsible for our current fleet’s compliance with
all applicable government and other regulations, and compliance
with class certifications. The ship managers are required to use their
best endeavors to provide the services specified in the ship management agreements. Pursuant to the terms of the ship management agreements,
we provide customary
indemnification to the manager and its employees, agents and sub-contractors.
We pay Technomar a daily
management fee of Euro 820 from January 1, 2025, compared to Euro 785 for 2024, per vessel, payable in U.S. dollars, which, in addition
to the technical ship management services noted above,
includes administrative support services provided to us including accounting and
financial reporting, treasury management and legal services. Commencing January 1, 2024, we also pay Technomar a fee of EUR 7,500, per
annum per
vessel, pro rata, for the provision of additional services relating to our compliance with EU ETS requirements, such services
including, among others, gathering and monitoring emissions data, calculating emissions allowances,
reporting verified emissions data
to the relevant authorities, and managing and monitoring EU ETS trading accounts on our behalf. Each TTMA has a minimum term of twenty-four
months after the later to occur of the expiry of the
charter for the applicable vessel or the credit facility (or other debt agreement)
for which the applicable vessel serves as collateral, unless terminated earlier in accordance with the provisions of the TTMA. The EU
ETS Fee is subject to
a good faith re-appraisal as market standards evolve.
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We expect that additional vessels
that we may acquire in the future will also be managed under a TTMA on substantially similar terms. For additional information on each
TTMA, including term and termination provisions, please
see “Item 7. Major Shareholders and Related Party Transactions — B.
Related Party Transactions—Ship Management Agreements.”
Commercial Management
Commercial management of
vessels includes evaluating possible daily rate and duration of future employment, marketing a vessel for such employment, agreeing the
detailed terms of a new charter or extension of an existing
charter, administering the conduct of the charter including collection of
charter-hire where necessary. Commercial management also includes negotiating sale and purchase transactions.
The commercial management
of all of our vessels is provided by Conchart pursuant to a commercial management agreement (the “CCMA”). Under each CCMA,
we have agreed to pay Conchart a commission of 1.25% on all
monies earned under each charter fixture. No commission is payable on any
charter of a vessel in our fleet to CMA CGM in place as of November 15, 2018, if applicable. However, commission is payable to Conchart
for any extension
of such charters after March 31, 2021. The CCMA also provides for Conchart to be the named broker in each memorandum
of agreement (or equivalent agreement) for the sale of all vessels and purchase of some vessels, at a
commission of 1.00% based on the
sale and purchase price for any sale and purchase of a vessel, which shall be payable upon request of the commercial manager. We expect
that additional vessels that we may acquire in the future will
also be managed under a CCMA on substantially similar terms. For additional
information on the CCMA, including term and termination provisions, please see “Item 7. Major Shareholders and Related Party Transactions
— B. Related
Party Transactions—Ship Management Agreements.”
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Pursuant to a Brokerage
Services Agreement dated February 21, 2020 among the Company, each vessel owning subsidiary and GSL Enterprises Ltd (“GSL Enterprises”),
GSL Enterprises has been engaged by the Company and
the vessel owning subsidiaries to provide various brokerage, administrative and other
services. GSL Enterprises receives a base fee of $1,300 per month per vessel plus supplemental fees. The Brokerage Services Agreement
can be
terminated by mutual agreement at any time or by either party in case of the other party’s breach of the terms of the agreement.
Insurance
We arrange for insurance
coverage for each of our vessels, including hull and machinery insurance, protection and indemnity insurance and war risk insurance. We
are responsible for the payment of all premiums. See “—Risk of
Loss and Liability Insurance.”
Inspection by Classification Societies
The hull and machinery
of every commercial vessel must be classed by a classification society authorized by the vessel’s country of registry. The classification
society certifies that a vessel is safe and seaworthy in accordance with
the applicable rules and regulations of the country of registry
of the vessel and the International Convention for the Safety of Life at Sea of 1974, or SOLAS Convention. Most insurance underwriters
make it a condition for insurance
coverage that a vessel be certified “in class” by a classification society which is a member
of the International Association of Classification Societies, the IACS. All of our vessels are certified as being “in class”
by all the applicable
Classification Societies.
For maintenance of the
class, regular and extraordinary surveys of hull and machinery, including the electrical plant and any special equipment classed, are
required to be performed as follows:
Annual Surveys
For seagoing ships, annual
surveys are conducted for the hull and the machinery, including the electrical plant, and where applicable, on special equipment classed
at intervals of 12 months from the date of commencement of the
class period indicated in the certificate.
Intermediate Surveys
Extended annual surveys
are referred to as intermediate surveys and typically are conducted two and one-half years after commissioning and each class renewal.
Intermediate surveys may be carried out on the occasion of the
second or third annual survey.
Class Renewal Surveys
Class renewal surveys,
also known as special surveys, are carried out on the ship’s hull and machinery, including the electrical plant, and on any special
equipment classed at the intervals indicated by the character of classification
for the hull. During the special survey, the vessel is
thoroughly examined, including audio-gauging to determine the thickness of the steel structures. Should the thickness be found to be less
than class requirements, the classification
society would prescribe steel renewals. Substantial amounts of funds 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, which is
generally
every five years, a shipowner has the option of arranging with the classification society for the vessel’s 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.
At a ship-owner’s
application, the surveys required for class renewal may be split according to an agreed schedule to extend over the entire period of class.
This process is referred to as continuous class renewal. All areas subject to
surveys as defined by the classification society are required
to be surveyed at least once per class period, unless shorter intervals between surveys are otherwise prescribed. The period between two
consecutive surveys of each area must
not exceed five years.
All vessels are also dry-docked
at least once every five years for inspection of their underwater parts and for repairs related to such inspections. If any defects are
found, the classification surveyor will issue a “recommendation”
which must be rectified by the ship-owner within prescribed
time limits.
If any vessel does not
maintain its class and/or fails any annual survey, intermediate survey, drydocking or special survey, the vessel will be unable to carry
cargo between ports and will be unemployable and uninsurable which
could cause us to be in violation of certain covenants in our loan agreements.
Any such inability to carry cargo or be employed, or any such violation of covenants, could have a material adverse impact on our financial
condition and
results of operations.
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The following table shows
the classification societies for our vessels and lists the date by which they need to have completed their next drydocking.
Vessel
Name
Classification
Society
Drydocking
Date(1)
CMA CGM Thalassa
RINA
Jul-27
ZIM Norfolk
DNV
& RINA
Jun-30
Anthea Y
DNV
& RINA
Mar-28
ZIM Xiamen
DNV
& RINA
Aug-25
Sydney Express
DNV
Jan-29
Istanbul Express
DNV
Apr-31
Bremerhaven Express
DNV
Mar-31
Czech
RINA
Oct-25
MSC Tianjin
RINA
Aug-29
MSC Qingdao
BV
Apr-29
GSL Ningbo
BV
May-29
GSL Alexandra
RINA
Jul-28
GSL Sofia
RINA
May-28
GSL Effie
RINA
Sep-28
GSL Lydia
RINA
Mar-28
GSL Eleni
RINA
Jul-29
GSL Kalliopi
RINA
Oct-29
GSL Grania
RINA
In
progress
Colombia Express
RINA
Jan-29
Panama Express
RINA
Nov-29
Costa Rica Express
RINA
Jul-29
Nicaragua Express
RINA
Nov-29
CMA CGM Berlioz
BV
Jul-26
Mexico Express
DNV
& RINA
Sep-29
Jamaica Express
DNV
& RINA
Sep-29
GSL Christen
RINA
Feb-28
GSL Nicoletta
RINA
Nov-27
Agios Dimitrios
BV
Jun-29
GSL Vinia
BV
In
progress
GSL Christel Elisabeth
BV
Sep-29
GSL Arcadia
DNV
Dec-25
GSL Violetta
DNV
Aug-25
GSL Maria
RINA
Dec-26
GSL MYNY
DNV
Oct-25
GSL Melita
RINA
May-26
GSL Tegea
RINA
Jun-26
GSL Dorothea
RINA
May-26
Tasman (2)
BV
Apr-25
Dimitris Y
BV
May-25
Ian H
BV
Dec-29
GSL Tripoli
RINA
May-28
GSL Kithira
RINA
Jan-28
GSL Tinos
RINA
Jul-28
GSL Syros
RINA
Apr-28
Dolphin II
BV
Jan-27
Orca I
BV
Nov-26
CMA CGM Alcazar
BV
Nov-27
GSL Château d’If
BV
Dec-27
GSL Susan
RINA
May-28
CMA CGM Jamaica
DNV
Sep-26
CMA CGM Sambhar
RINA
Jul-26
CMA CGM America
RINA
Sep-26
GSL Rossi
RINA
Mar-27
GSL Alice
RINA
Jan-29
GSL Eleftheria
RINA
May-28
GSL Melina
RINA
Nov-28
Athena
RINA
Feb-28
GSL Valerie
DNV
Jun-25
GSL Mamitsa
RINA
May-25
GSL Lalo
RINA
Aug-26
GSL Mercer
RINA
May-27
GSL Elizabeth
RINA
Mar-26
GSL Chloe
RINA
Feb-30
GSL Maren
RINA
Mar-29
Maira
RINA
Aug-25
Nikolas
RINA
Aug-25
Newyorker
RINA
Jan-26
Manet
BV
Oct-26
Kumasi
BV
Mar-27
Akiteta (2)
BV
Jan-27
Keta (2)
BV
Nov-26
Julie
RINA
Nov-27
(1) Expected date of drydocking assumes that the vessel qualifies for in-water inspections at the
intermediate survey.
(2) During December 2024, we agreed to sell Tasman and in February 2025, we agreed to sell Akiteta
and Keta. Akiteta was delivered to her new owners on February 19, 2025 and Tasman was delivered
to her new owners on March
10, 2025. Keta is scheduled for delivery to her new owners in
first half 2025.
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The table does not take
account of discretionary drydockings to effect vessel upgrades, or in response to proposed or actual regulatory changes such as for ballast
water treatment.
Competition
We operate in markets that
are highly competitive. We expect to compete for vessel purchases and charters based upon price, customer relationships, operating expertise,
professional reputation and size, age and condition of the
vessel. We also expect to compete with many other companies, both other owners
and operators to, among other things, purchase newbuildings and secondhand vessels to grow our fleet.
We expect substantial competition
in obtaining new containership charters from a number of experienced and substantial companies. Many of these competitors may have greater
financial resources than us, may operate larger
fleets, may have been established for longer and may be able to offer better charter rates.
Due to the recent industry downturn, there have been an increased number of vessels available for charter, including many from owners
with
strong reputations and experience. Excess supply of vessels in the container shipping market results in a more active short-term
charter market and greater price competition for charters. As a result of these factors, we may be unable to
purchase additional containerships,
expand our relationships with existing customers or obtain new charterers on a profitable basis, if at all, which would have a material
adverse effect on our business, results of operations and financial
condition.
Permits and Authorizations
We are required by various
governmental and other agencies to obtain certain permits, licenses and certificates with respect to our vessels. The kinds of permits,
licenses and certificates required depend upon several factors,
including the commodities transported, the waters in which the vessel
operates, the nationality of the vessel’s crew and the age of a vessel. Not all of the permits, licenses and certificates currently
required to operate the vessels globally
have been obtained by us or our ship managers. For example, Keta, Julie, Kumasi and Akiteta have
not been certified to comply with all U.S., Canadian and Panama Canal regulations, as our charterers do not intend to operate them in
these waters. However, permits can be obtained in case charterers wish to trade the vessels in USA Canada and/or transit Panama Canal.
Environmental and Other Regulations
Government regulation significantly
affects our business and the operation of our vessels. We are subject to international conventions and codes, and national, state, and
local laws and regulations in the jurisdictions in which our
vessels operate or are registered, including, among others, those governing
the generation, management and disposal of hazardous substances and wastes, the cleanup of oil spills and other contamination,
air emissions and water
discharges. Because such laws and regulations frequently change, we cannot predict the ultimate cost of complying
with these requirements or the impact of these requirements on the resale or current market value or useful lives of our
vessels.
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A variety of government,
quasi-government and private entities require us to obtain permits, licenses or certificates for the operation of our vessels. Failure
to maintain necessary permits or approvals could require us to incur
substantial costs or temporarily suspend the operation of one or
more of our vessels in one or more ports.
Increasing environmental
concerns have created a demand for vessels that conform to the strictest environmental standards. We are required to maintain operating
standards for all of our vessels that emphasize operational safety,
quality maintenance, continuous training of our officers and crews
and compliance with United States and international regulations and with flag state administrations.
The following is an overview
of certain material governmental regulations that affect our business and the operation of our vessels.
International Maritime Organization
The IMO is the United Nations’
agency for maritime safety. The IMO has adopted international conventions that impose liability for pollution in international waters
and a signatory’s territorial waters. For example, the IMO’s
International Convention for the Prevention of Pollution from
Ships, or MARPOL, imposes environmental standards on the shipping industry relating to, among other things, pollution prevention and procedures,
technical standards, oil
spills management, transportation of marine pollutants and air emissions.
Annex VI of MARPOL, which
regulates air pollution from vessels, sets limits on sulfur oxide (or NOx), nitrogen oxide and particulate matter emissions from vessel
exhausts and prohibits deliberate emissions of ozone depleting
substances, such as chlorofluorocarbons. We believe all of our vessels
currently are Annex VI compliant. Annex VI also includes a global cap on the sulfur content of fuel oil with a lower cap (currently 0.1%)
on the sulfur content
applicable inside Emission Control Areas, or ECAs. Existing ECAs include the Baltic Sea, the North Sea, including
the English Channel, the North American area and the U.S. Caribbean Sea area. At the MEPC78, the IMO approved a
proposal for a new ECA
for the Mediterranean. As such, effective May 1, 2025, amendments designating the Mediterranean Sea, as a whole, as an ECA for sulfur
oxides and particular matter enter into effect. MEPC 82 adopted
additional amendments to Annex VI designating the Canadian Arctic and
the Norwegian Sea as ECAs, which will become effective on March 1, 2026. Other areas in China are subject to local regulations that impose
stricter emission
controls. Additional geographical areas may be designated as ECAs in the future. If other ECAs are approved by the
IMO or other new or more stringent requirements relating to emissions from marine diesel engines or port operations
by vessels are adopted
by the U.S. Environmental Protection Agency, or EPA, or the states where we operate, compliance with these regulations could entail significant
capital expenditures or otherwise increase the costs of our
operations.
Annex VI establishes tiers
of stringent nitrogen oxide emissions standards for marine diesel engines, depending on their date of installation. Now Annex VI provides
for a three-tier reduction in NOx emissions from marine diesel
engines, with the final tier (or Tier III) to apply to engines installed
on vessels constructed on or after January 1, 2016 and which operate in the North American ECA or the U.S. Caribbean Sea ECA as well as
ECAs designated in the
future by the IMO (such as the Canadian Arctic and the Norwegian Sea). At MEPC 70 and MEPC 71, the MEPC approved
the North Sea and Baltic Sea as ECAs for nitrogen oxide (also known as NECAs) for ships built after January
1, 2021. The EPA promulgated
equivalent (and in some senses stricter) emissions standards in late 2009. Additionally, amendments to Annex II, which strengthen discharge
requirements for cargo residues and tank washings in
specified sea areas (including North West European waters, Baltic Sea area, Western
European waters and Norwegian Sea), came into effect in January 2021. Additional ECAs could be established in the future.
From January 1, 2020, the
IMO mandated global sulfur cap of 0.5% m/m was implemented. Vessels comply either by being fitted with exhaust gas cleaning systems (“scrubbers”),
allowing the vessel to continue to use less
expensive, higher sulfur content fuel or by burning more expensive, low sulfur fuel. From
March 1, 2020, vessels not fitted with exhaust gas scrubbers cannot have high sulfur content fuel on board.
Our existing time charters
call for our customers to supply fuel that complies with Annex VI. It may be that charterers of certain of our vessels will seek to comply
with Annex VI by agreeing with us to have exhaust gas cleaning
systems installed.
These amendments or other
changes could require modifications to our vessels to achieve compliance, and the cost of compliance may be significant to our operations.
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The IMO has also adopted technical
and operational measures aimed at reducing greenhouse gas emissions from vessels. These include the “Energy Efficiency Design Index,”
(EEDI) which is mandatory for newbuilding vessels,
and the “Ship Energy Efficiency Management Plan,” (SEEMP) which is mandatory
for all vessels. Under these measures, by 2025, all new ships built will be 30% more energy efficient than those built in 2014. The IMO
now requires
ships of 5,000 gross tonnage, or grt, or more to record and report their fuel consumption to their flag state at the end
of each calendar year. The IMO plans to use this data to adopt an initial greenhouse gas emissions reduction strategy.
In 2016 IMO adopted
the mandatory IMO Data Collection System (DCS) for ships to collect and report fuel oil consumption data from ships over 5,000 GT - first
calendar year data collection completed in 2019. The IMO DCS covers
any maritime activity carried out by ships, including dredging, pipeline
laying, and off-shore installations. The SEEMPs of all ships covered by the IMO DCS must include a description of the methodology for
data collection and
reporting. A range of IMO-led global projects initiated since 2012 support developing countries in ratifying MARPOL
Annex VI and implementing the energy efficiency measures and to support and encourage pilot projects, innovation
and R&D. Beginning
in January 2023, Annex VI requires EEXI and CII certification. The first annual reporting was to be completed in 2023, with initial ratings
given in 2024.
The
IMO’s International Convention on Civil Liability for Bunker Oil Pollution Damage, or the Bunker Convention, imposes, subject to
limited exceptions, strict liability on vessel owners for pollution damage in jurisdictional
waters of ratifying states, which does not
include the United States, caused by discharges of “bunker oil.” The Bunker Convention also requires owners of registered
vessels over a certain size to maintain insurance for pollution damage
in an amount generally equal to the limits of liability under
the applicable national or international limitation regime. With respect to non-ratifying states, liability for spills or releases of
oil carried as fuel in a ship’s bunkers typically is
determined by the national or other domestic laws in the jurisdiction where
the events or damages occur on a fault or strict-liability basis. We believe our vessels comply with the Bunker Convention. Ships are
required to maintain a
certificate attesting that they maintain adequate insurance to cover an incident. In jurisdictions such as the
United States where the Bunker Convention has not been adopted, various legislative schemes or common law govern, and
liability is imposed
either on the basis of fault or on a strict-liability basis.
The
IMO’s International Convention for the Control and Management of Ships’ Ballast Water and Sediments, or the BWM
Convention, requires the installation of ballast water treatment systems on certain newbuilding vessels for
which the keel is laid
after September 8, 2017 and for existing vessels at the renewal of their International Oil Pollution Prevention Certificate after
September 8, 2019. The MEPC adopted updated guidelines for approval of ballast
water management systems (G8) at MEPC 70. At MEPC 71,
the schedule regarding the BWM Convention’s implementation dates was also discussed and amendments were introduced to extend
the date existing vessels are subject to
certain ballast water standards. Those changes were adopted at MEPC 72. Ships over 400
gross tons generally must comply with a “D-1 standard,” requiring the exchange of ballast water only in open seas and
away from coastal waters.
The “D-2 standard” specifies the maximum amount of viable organisms allowed to be discharged,
and compliance dates vary depending on the IOPP renewal dates. Depending on the date of the IOPP renewal survey, existing vessels
must comply with the D-2 standard on or after September 8, 2019. For most ships, compliance with the D-2 standard will involve
installing on-board systems to treat ballast water and eliminate unwanted organisms. Ballast water
management systems, which include
systems that make use of chemical, biocides, organisms or biological mechanisms, or which alter the chemical or physical
characteristics of the ballast water, must be approved in accordance with
IMO Guidelines (Regulation D-3). As of October 13, 2019,
MEPC 72’s amendments to the BWM Convention took effect, making the Code for Approval of Ballast Water Management Systems,
which governs assessment of ballast
water management systems, mandatory rather than permissive, and formalized an implementation
schedule for the D-2 standard. Under these amendments, all ships must meet the D-2 standard by September 8, 2024. Costs of
compliance with these regulations may be substantial. The BWM Convention also requires ships to carry an approved ballast water
management plan, record books and statement of compliance. Additionally, in November 2020, MEPC
75 adopted amendments to the BWM
Convention requiring a commissioning test of the ballast water management system for the initial survey or when performing an
additional survey for retrofits. This analysis will not apply to ships
that already have an installed BWM system certified under the
BWM Convention. These amendments became effective on June 1, 2022. Additional amendments to the BWM Convention, concerning the form
of the Ballast Water
Record Book entered into force on February 1, 2025, and additional amendments concerning the use of Ballast
Water Record Books in electronic form are expected to enter into force in October 2025. We will be required to incur
significant
costs to install these ballast water treatment systems on all our vessels before the applicable due dates.
The IMO’s International
Convention on the Control of Harmful Anti-fouling Systems on Ships, or the “Anti-fouling Convention,” prohibits the use of
organotin compound coatings to prevent the attachment of mollusks and other
sea life to the hulls of vessels and requires vessels over
400 grt engaged in international voyages to undergo an initial survey before the vessel is put into service or before an International
Anti fouling System Certificate is issued for the
first time, or subsequent surveys when the anti-fouling systems are altered or replaced.
In 2023, MEPC 75 approved draft amendments to the Anti-fouling Convention will come into effect and will include controls on the biocide
cybutryne; ships shall not apply or re-apply anti-fouling systems containing this substance from January 1, 2023. The amendments require
ships to remove this substance, or apply a coating to anti-fouling systems with this substance at
the next scheduled renewal of the anti-fouling
system after January 1, 2023. We have obtained Anti-fouling System Certificates for all of our vessels that are subject to the Anti-fouling
Convention. MEPC 77 adopted a non-binding
resolution which urges Member States and ship operators to voluntarily use
distillate or other cleaner alternative fuels or methods of propulsion that are safe for ships and could contribute to the reduction of
Black Carbon emissions
from ships when operating in or near the Arctic.
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Amendments to MARPOL Annex
V (regulation for the prevention of pollution by garbage from ships) adopted at MEPC 70 entered into force on March 1, 2018. The changes
include criteria for determining whether cargo residues
are harmful to the marine environment, and a new Garbage Record Book format with
a new garbage category for e-waste. As all our existing containerships are compliant with MARPOL Annex V requirements, the amendments
could
cause us to incur additional operational costs for the handling of garbage produced on our fleet.
The IMO also regulates
vessel safety. The International Safety Management Code, or the ISM Code, provides an international standard for the safe management and
operation of ships and for pollution prevention. The ISM Code
requires our vessels to develop and maintain an extensive “Safety
Management System” that includes the adoption of a safety and environmental protection policy and implementation procedures. A Safety
Management Certificate is
issued under the provisions of the SOLAS Convention to each vessel with a Safety Management System verified
to be in compliance with the ISM Code. No vessel can obtain a safety management certificate unless its manager has
been awarded a document
of compliance, issued by each flag state, under the ISM Code. Failure to comply with the ISM Code may subject a 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. All of the vessels in our fleet are ISM Code-certified. Furthermore, all seafarers are required to meet the standards of
the International Convention on
Standards of Training, Certification and Watchkeeping for Seafarers, or STCW, and be in possession of
a valid STCW certificate. Flag states that have ratified the SOLAS Convention and STCW generally employ the classification
societies to
undertake surveys to confirm compliance.
Furthermore, recent action
by the IMO’s Maritime Safety Committee and United States agencies indicate that cybersecurity regulations for the maritime industry
are likely to be further developed in the near future in an attempt to
combat cybersecurity threats. For example, under the IMO’s
Resolution MSC.428(98), cyber risks must be appropriately addressed in existing safety management systems no later than the first annual
verification of a company’s
Document of Compliance after January 1, 2021. This might cause companies to create additional procedures
for monitoring cybersecurity, which could require additional expenses and/or capital expenditures.
Increasingly, various regions
are adopting additional, unilateral requirements on the operation of vessels in their territorial waters. These regulations, such as those
described below, apply to our vessels when they operate in the
relevant regions’ waters and can add to operational and maintenance
costs, as well as increase the potential liability that applies to violations of the applicable requirements.
United States Regulations
The year 2025 marks a change
in administration in the United States. President Trump has signed a number of executive orders and directives that are likely to have
an impact on U.S. regulations. For example, a regulatory freeze
was issued, which permits the withdrawal of rules sent to be published
and authorizes those in charge of federal agencies to delay for 60 days the effective date of rules that have been published but are
not yet effective. This regulatory
freeze impacts U.S. EPA decisions and proposed amendments. Additionally federal agencies have placed
employees on leave as a result of an executive order regarding diversity, equity and inclusion programs, which may impact
implementation
and enforcement of regulations. This and additional executive orders could impact regulatory requirements.
The
United States Oil Pollution Act of 1990 and CERCLA
The United States Oil Pollution
Act of 1990, (“OPA”), establishes an extensive regulatory and liability regime for the protection and cleanup of the environment
from oil spills. The Comprehensive Environmental Response,
Compensation and Liability Act, (“CERCLA”), governs spills or releases
of hazardous substances other than petroleum or petroleum products. Under OPA and CERCLA, vessel owners, operators and bareboat charterers
whose vessels
trade or operate within the U.S., its territories and possessions or whose vessels operate in U.S. waters, which includes
the U.S.’s territorial sea and its 200 nautical mile exclusive economic zone around the U.S., are jointly and, subject
to limited
exceptions, strictly liable for all containment and clean-up costs and other damages arising from discharges or threatened discharges
of oil or hazardous substances, as applicable, from their vessels. OPA and CERCLA define
these damages broadly to include certain direct
and indirect damages and losses, including but not limited to assessment of damages, remediation, damages to natural resources such as
fish and wildlife habitat, and agency oversight
costs. Although our vessels do not carry oil as cargo, they do carry oil as bunkers, or
fuel.
Under OPA and CERCLA, the
liability of responsible parties is limited to a specified amount, which is periodically updated. Effective March 2023, the USCG adjusted
the limits of OPA liability for non-tank vessels to the greater
of $1,300 per gross ton or $1,076,000 (subject to periodic adjustment
for inflation). These limits of liability do not apply if an incident was proximately caused by the violation of an applicable U.S. federal
safety, construction or
operating regulation by a responsible party (or its agent, employee or a person acting pursuant to a contractual
relationship), or a responsible party's gross negligence or willful misconduct. CERCLA contains a similar liability regime
whereby owners
and operators of vessels are liable for clean-up, removal and remedial costs, as well as damages for injury to, or destruction or loss
of, natural resources, including the reasonable costs associated with assessing the
same, and health assessments or health effects studies.
There is no liability if the discharge of a hazardous substance results solely from the act or omission of a third party, an act of God
or an act of war. Liability under CERCLA is
limited to the greater of $300 per gross ton or $5.0 million for vessels carrying a hazardous
substance as cargo and the greater of $300 per gross ton or $500,000 for any other vessel. Liability limits do not apply under OPA if
the
responsible party fails or refuses to report the incident where the responsible party knows or has reason to know of the incident
or reasonably cooperate and assist as requested in connection with oil removal activities or comply with an
order issued under the U.S.
Federal Water Pollution Act or Intervention of the High Seas Act, or under CERCLA if the responsible person fails or refused to provide
all reasonable cooperation and assistance as requested in connection
with response activities where the vessel is subject to OPA. Under
both OPA and CERCLA, liability is unlimited if the incident is caused by gross negligence, willful misconduct or a violation of certain
regulations.
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We maintain pollution liability
coverage insurance in the amount of $1 billion per incident for each of our vessels. If the damages from a catastrophic spill were to
exceed our insurance coverage it could harm our business,
financial condition and results of operation. Vessel owners and operators must
establish and maintain with the U.S. Coast Guard evidence of financial responsibility sufficient to meet their potential aggregate liabilities
under OPA and
CERCLA. Evidence of financial responsibility may be demonstrated by showing proof of insurance, surety bonds, self-insurance
or guarantees. We have obtained the necessary U.S. Coast Guard financial assurance certificates, or
COFRs, for each of our vessels currently
in service and trading to the United States. Owners or operators of certain vessels operating in U.S. waters also must prepare and submit
to the U.S. Coast Guard a response plan for each vessel,
which plan, among other things, must address a “worst case” scenario
environmental discharge and describe crew training and drills to address any discharge. Each of our vessels has the necessary response
plans in place.
OPA and CERCLA do not prohibit
individual states from imposing their own liability regimes with regard to oil pollution or hazardous substance incidents occurring within
their boundaries, and some states have enacted
legislation providing for unlimited liability for spills. In some cases, states that have
enacted such legislation have not yet issued implementing regulations defining vessel owners’ responsibilities under these laws.
We intend to comply
with all applicable state regulations in the ports where our vessels call. Nevertheless, future changes to OPA, CERCLA
and other United States environmental regulations could adversely affect our operations.
Clean Water Act
The Clean Water Act, or
CWA, establishes the basic structure for regulating discharges of pollutants into the “waters of the United States” and regulating
quality standards for surface waters. The CWA authorizes civil and criminal
penalties for discharging pollutants without a permit, failure
to meet any requirement of a permit, and also allows for citizen suits against violators. The CWA imposes strict liability in the form
of penalties for any unauthorized
discharges, and substantial liability for the costs of removal, remediation and damages and complements
the remedies available under OPA and CERCLA. In 2015, the EPA expanded the definition of waters of the United States
(“WOTUS”),
thereby expanding federal authority under the CWA. On December 30, 2022, the EPA and U.S. Army Corps of Engineers announced the final
revised WOTUS rule, which was published on January 18, 2023. In August
2023, the EPA and Department of the Army issued a final rule to
amend the revised WOTUS definition to conform the definition of WOTUS to the U.S. Supreme Court’s interpretation of the Clean Water
Act in its decision dated May
25, 2023. This final rule became effective September 8, 2023 and operates to limit the Clean Water Act.
The EPA and the USCG have also
enacted rules relating to ballast water discharge, compliance with which requires the installation of equipment on our vessels to treat
ballast water before it is discharged or the implementation of
other port facility disposal arrangements or procedures at potentially
substantial costs, and/or otherwise restrict our vessels from entering U.S. Waters. The EPA will regulate these ballast water discharges
and other discharges incidental
to the normal operation of certain vessels within United States waters pursuant to the Vessel Incidental
Discharge Act (“VIDA”), which was signed into law on December 4, 2018 and requires that the U.S. Coast Guard develop
implementation,
compliance, and enforcement regulations regarding ballast water. On October 26, 2020, the EPA published a Notice of Proposed rulemaking
for Vessel Incidental Discharge National Standards of Performance under
VIDA, and in November 2020, held virtual public meetings. On September
20, 2024, the EPA finalized national standards of performance for non-recreational vessels 79-feet in length and longer with respect to
incidental discharges
and on October 9, 2024, the Vessel Incidental Discharge National Standards of Performance were published. Within
two years of publication, the USCG is required to develop corresponding implementation regulations. If the USCG
spends the full two years
to finalize the corresponding enforcement standards, the current 2013 VGP scheme will remain in force until 2026. Several U.S. states
have added specific requirements to the Vessel General Permit and, in
some cases, may require vessels to install ballast water treatment
technology to meet biological performance standards. In addition, several U.S. states have added specific requirements to the VGP, including
submission of a Notice of
Intent, or NOI, or retention of a PARI form and submission of annual reports. Compliance with the EPA, U.S.
Coast Guard and state regulations could require the installation of ballast water treatment equipment on our vessels or the
implementation
of other port facility disposal procedures at potentially substantial cost, or may otherwise restrict our vessels from entering U.S. waters.
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Non-military, non-recreational
vessels greater than 79 feet in length must continue to comply with the requirements of the VGP. Under the U.S. National Invasive Species
Act, or NISA, newbuilding vessels constructed after
December 1, 2013 are required to have a U.S. Coast Guard-approved ballast water treatment
system installed, and existing vessels, are required to have a ballast water treatment system installed on the first scheduled dry-dock
after
January 1, 2016. Compliance with the EPA, U.S. Coast Guard and state regulations could require the installation of ballast water
treatment equipment on our vessels or the implementation of other port facility disposal procedures at
potentially substantial cost, or
may otherwise restrict our vessels from entering U.S. waters.
In addition, the Act to
Prevent Pollution from Ships, or APPS, implements various provisions of MARPOL and applies to larger foreign-flag ships when operating
in U.S. waters. The regulatory mechanisms established in APPS to
implement MARPOL are separate and distinct from the CWA and other federal
environmental laws. Civil and criminal penalties may be assessed under APPS for non-compliance.
Additional Ballast Water Regulations
The U.S. Coast Guard regulations
also require vessels to maintain a vessel-specific ballast water management plan that addresses training and safety procedures, fouling
maintenance and sediment removal procedures. Individual
U.S. states have also enacted laws to address invasive species through ballast
water and hull cleaning management and permitting requirements.
Clean Air Act
The Clean Air Act, or the
CAA, and its implementing regulations subject our vessels to vapor control and recovery requirements when cleaning fuel tanks and conducting
other operations in regulated port areas and to air emissions
standards for our engines while operating in U.S. waters. The EPA has adopted
standards that apply to certain engines installed on U.S. vessels and to marine diesel fuels produced and distributed in the United States.
These standards
are consistent with Annex VI of MARPOL and establish significant reductions for vessel emissions of particulate matter,
sulfur oxides and nitrogen oxides.
The CAA also requires states
to draft State Implementation Plans, or SIPs, designed to attain national health-based air quality standards in primarily major metropolitan
and industrial areas. Several SIPs regulate emissions from
degassing operations by requiring the installation of vapor control equipment
on vessels. California has enacted regulations which apply to ocean-going vessels’ engines when operating within 24 miles of the
California coast and
require operators to use low sulfur fuels. California also approved regulations to reduce emissions from diesel auxiliary
engines on certain ocean-going vessels while in California ports, including container ship fleets that make 25 or
more annual visits to
California ports, which became effective January 2023 with respect to containerships. These federal and state requirements may increase
our capital expenditures and operating costs while in applicable ports. As
with other U.S. environmental laws, failure to comply with
the Clean Air Act may subject us to enforcement action, including payment of civil or criminal penalties and citizen suits.
European Union Requirements
In waters of the EU, our
vessels are subject to regulation by EU-level legislation, including directives implemented by the various member states through laws
and regulations of these requirements. These laws and regulations
prescribe measures, among others, to prevent pollution, protect the
environment and support maritime safety. For instance, the EU has adopted directives that require member states to refuse access to their
ports to certain sub-standard
vessels, according to various factors, such as the vessel’s condition, flag, and number of previous
detentions (Directive 2009/16 of vessels using their ports annually (based on an inspection “share” of the relevant member
state of the
total number of inspections to be carried out within the EU and the Paris Memorandum of Understanding on Port State Control
region), inspect all vessels which are due for a mandatory inspection (based, among other things, on their
type, age, risk profile and
the time of their last inspection) and carry out more frequent inspections of vessels with a high risk profile. If deficiencies are found
that are clearly hazardous to safety, health or the environment, the state is
required to detain the vessel or stop loading or unloading
until the deficiencies are addressed. Member states are also required to implement their own separate systems of proportionate penalties
for breaches of these standards.
Our vessels are also subject
to inspection by appropriate classification societies. Classification societies typically establish and maintain standards for the construction
and classification of vessels, supervise that construction in
accordance with such standards, and carry out regular surveys of ships in
service to ensure compliance with such standards. The EU has adopted legislation (Regulation (EC) No 391/2009 and Directive 2009/15/EC,
as amended and
supplemented from time to time) that provides member states with greater authority and control over classification societies,
including the ability to seek to suspend or revoke the authority of classification societies that are negligent in
their duties.
The EU requires member states to monitor these organizations’ compliance with EU inspection requirements and to suspend any organization
whose safety and pollution prevention performance becomes unsatisfactory.
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The EU’s directive
on the sulfur content of fuels (Directive (EU) 2016/802, which consolidates Directive 1999/32/EC and its various amendments) restricts
the maximum sulfur content of marine fuels used in vessels operating in
EU member states’ territorial seas, exclusive economic zones
and pollution control zones. The directive provides for more stringent rules on maximum sulfur content of marine fuels applicable in specific
Sulfur Emission Control Areas,
or SECAs, such as the Baltic Sea and the North Sea, including the English Channel. Further sea areas may
be designated as SECAs in the future by the IMO in accordance with Annex VI of MARPOL. Under this directive, we may be
required to make
expenditures to comply with the sulfur fuel content limits in the marine fuel our vessels use in order to avoid delays or other obstructions
to their operations, as well as any enforcement measures which may be imposed
by the relevant member states for non-compliance with the
provisions of the directive. We also may need to make other expenditures (such as expenditures related to washing or filtering exhaust
gases) to comply with relevant sulfur
oxide emissions levels. The directive has been amended to bring the above requirements in line with
Annex VI of MARPOL. It also makes certain of these requirements more stringent. These and other related requirements may require
additional
capital expenditures and increase our operating costs.
Through Directive 2005/35/EC
(as amended by Directive 2009/123/EC and as further amended and supplemented from time to time), the EU requires member states to cooperate
to detect pollution discharges and impose criminal
sanctions for certain pollution discharges committed intentionally, recklessly or by
serious negligence and to initiate proceedings against ships at their next port of call following the discharge. Penalties may include
fines and civil and
criminal penalties. Directive 2000/59/EC (as amended and supplemented from time to time) requires all ships (except
for warships, naval auxiliary or other state-owned or state-operated ships on non-commercial service), irrespective of
flag, calling at,
or operating within, ports of member states to deliver all ship-generated waste and cargo residues to port reception facilities. Under
the directive, a fee is payable by the ships for the use of the port reception facilities,
including the treatment and disposal of the
waste. The ships may be subject to an inspection for verification of their compliance with the requirements of the directive and penalties
may be imposed for their breach.
The EU also authorizes
member states to adopt the IMO’s Bunker Convention, discussed above, that imposes strict liability on shipowners for pollution damage
caused by spills of oil carried as fuel in vessels’ bunkers and requires
vessels of a certain size to maintain financial security
to cover any liability for such damage. Most EU member states have ratified the Bunker Convention.
The EU has adopted a regulation
(EU Ship Recycling Regulation (1257/2013)) which sets forth rules relating to vessel recycling and management of hazardous materials on
vessels. The regulation contains requirements for the
recycling of vessels at approved recycling facilities that must meet certain requirements,
so as to minimize the adverse effects of recycling on human health and the environment. The regulation also contains rules for the control
and
proper management of hazardous materials on vessels and prohibits or restricts the installation or use of certain hazardous materials
on vessels. The regulation seeks to facilitate the ratification of the IMO’s Hong Kong International
Convention for the Safe and
Environmentally Sound Recycling of Ships, 2009. The regulation applies to vessels flying the flag of a member state and certain of its
provisions apply to vessels flying the flag of a third country calling at a
port or anchorage of a member state. For example, when calling
at a port or anchorage of a member state, a vessel flying the flag of a third country will be required, among other things, to have on
board an inventory of hazardous
materials which complies with the requirements of the new regulation and the vessel must be able to submit
to the relevant authorities of that member state a copy of a statement of compliance issued by the relevant authorities of the
country
of the vessel’s flag verifying the inventory. The regulation entered into force on December 30, 2013, although certain of its provisions
are to apply at different stages, with certain of them applicable from December 31, 2020.
Pursuant to this regulation, the EU Commission
adopted the first version of a European List of approved ship recycling facilities meeting the requirements of the regulation, as well
as four further implementing decisions dealing with
certification and other administrative requirements set out in the regulation. Now
that the HKC has been ratified and will enter into force on 26 June 2025, it is expected that the EU Ship Recycling Regulation will be
reviewed in light
of this.
The EU is considering other
proposals to further regulate vessel operations. The EU has adopted an Integrated Maritime Policy for the purposes of achieving a more
coherent approach to maritime issues through coordination
between different maritime sectors and integration of maritime policies. The
Integrated Maritime Policy has sought to promote the sustainable development of the European maritime economy and to protect the marine
environment
through cross-sector and cross-border cooperation of maritime participants. The EU Commission’s proposals included,
among other items, the development of environmentally sound end-of-life ship dismantling requirements (as
described above in respect of
the EU Ship Recycling Regulation (1257/2013)), promotion of the use of shore-side electricity by ships at berth in EU ports to reduce
air emissions, and consideration of options for EU legislation to reduce
greenhouse gas emissions from maritime transport. The European
Maritime Safety Agency has been established to provide technical support to the EU Commission and member states
in respect of EU legislation pertaining to maritime
safety, pollution and security. The EU, any individual country or other competent
authority may adopt additional legislation or regulations applicable to us and our operations.
Additionally, on July 14, 2021,
the European Commission published a package of draft proposals as part of its ‘Fit for 55’ environmental legislative agenda
and as part of the wider EU Green Deal growth strategy. There are two
key initiatives relevant to maritime arising from these proposals:
(a) the EU ETS, a bespoke emissions trading scheme for the maritime sector which commenced in 2024 and applies to all ships above a gross
tonnage of 5,000; and (b)
an FEUM draft regulation which seeks to require all ships above a gross tonnage of 5,000 to carry on board an
FEUM certificate of compliance from 30 June 2025 as evidence of compliance with the limits on the greenhouse gas
intensity of the energy
used on-board by a ship and with the requirements on the use of on-shore power supply (OPS) at berth. EU ETS was agreed in December 2022
and FEUM was passed into law on July 25, 2023 and will apply
from January 2025. More specifically, EU ETS is to apply gradually over the
period from 2024 to 2026. In 2025 shipping companies would have to surrender 40% of EU ETS allowances for 2024 emissions; in 2026 shipping
companies
would have to surrender 70% of EU ETS allowances for the 2025 emissions and 100% in 2027 for 2026 emissions. The cap under the
EU ETS would be set by taking into account EU MRV system emissions data for the years 2018 and
2019, adjusted, from year 2021 and is to
capture 100% of the emissions from intra-EU maritime voyages; 100% of emissions from ships at berth in EU ports; and 50% of emissions
from voyages which start or end at EU ports (but the
other destination is outside the EU). More recent proposed amendments signal that
100% of non-EU emissions may be caught if the IMO does not introduce a global market-based measure by 2028. All maritime allowances will
be
auctioned and there will be no free allocation for the shipping sector. From a risk management perspective, new systems, including,
personnel, data management systems, costs recovery mechanisms, revised service agreement terms and
emissions reporting procedures will
have to be put in place, at significant cost, to prepare for and manage the administrative aspect of EU ETS compliance.
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Other Greenhouse Gas Legislation
Currently, the emissions
of greenhouse gases from international shipping are not subject to the Kyoto Protocol to the United Nations Framework Convention on Climate
Change, which entered into force in 2005 and pursuant to
which adopting countries have been required to implement national programs to
reduce greenhouse gas emissions with targets extended through 2020. International negotiations are continuing with respect to a successor
to the Kyoto
Protocol, and restrictions on shipping emissions may be included in any new treaty. In December 2009, more than 27 nations,
including the U.S. and China, signed the Copenhagen Accord, which includes a non-binding commitment to
reduce greenhouse gas emissions.
The 2015 United Nations Climate Change Conference in Paris resulted in the Paris Agreement, which entered into force on November 4, 2016
and does not directly limit greenhouse gas emissions
from ships. In January 2025, President Trump signed an executive order to start the
process of withdrawing the United States from the Paris Agreement; the withdrawal will take at least one year to complete.
The IMO, EU, the United
States and other individual countries, states and provinces are evaluating various measures to reduce greenhouse gas emissions from international
shipping, which may include some combination of
market-based instruments, a carbon tax or other mandatory reduction measures. The EU adopted
Regulation (EU) 2015/757 concerning the monitoring, reporting and verification of carbon dioxide emissions from vessels, or the MRV
Regulation,
which entered into force in July 2015 (as amended by Regulation (EU) 2016/2071). The MRV Regulation applies to all vessels over 5,000
gross tonnage (except for a few types, including, but not limited to, warships and
fish-catching or fish-processing vessels), irrespective
of flag, in respect of carbon dioxide emissions released during voyages within the EU as well as EU incoming and outgoing voyages. The
first reporting period commenced on
January 1, 2018. The monitoring, reporting and verification system adopted by the MRV Regulation may
be the precursor to a market-based mechanism to be adopted in the future. The EU recently agreed on a Directive on the
inclusion of shipping
in the EU Emissions Trading System and it has been in force since January 1, 2024.
At MEPC 70 and MEPC 71,
a draft outline of the structure of the initial strategy for developing a comprehensive IMO strategy on reduction of greenhouse gas emissions
from ships was approved. Nations at the MEPC 72 adopted
an initial strategy to reduce greenhouse gas emissions from ships. The initial
strategy identified “levels of ambition” to reducing greenhouse gas emissions, including decreasing the carbon intensity
from ships, reducing carbon dioxide
emissions per transport work by at least 40% by 2030, pursuing efforts towards 70% by 2050, compared
to 2008 emission levels, and reducing the total annual greenhouse emissions by at least 50% by 2050 compared to 2008. At
MEPC 80 in July
2023, the IMO adopted the 2023 IMO Strategy on Reduction of GHG Emissions from Ships, which revoked the 2018 initial strategy. The 2023
IMO GHG Strategy identifies a number of levels of ambition, including:
(i) decline of carbon intensity through further improvement of
the energy efficiency for new ships; (ii) decline of carbon intensity of international shipping, to reduce CO2 emissions by at least
40% by 2030, compared to 2008; (iii)
uptake of zero or near-zero Green House Gas (“GHG”) emission technologies, fuels, and/or
energy sources, striving to represent 10% of the energy sources used by international shipping by 2030; and (iv) to reach net-zero GHG
emission by or around 2050. At the conclusion of MEPC 82, a draft legal text was used as a basis for ongoing talks about mid-term GHG
reduction measures, which are expected to be adopted in 2025. The proposed mid-term measures
include a goal-based marine fuel standard,
phasing in the mandatory use of fuels with less GHG intensity, and a global GHG emission pricing mechanism. The latter could be in the form of a global carbon levy or in the form of a global
emissions trading scheme thus removing the need for
the existing fragmented and localized schemes as are present in China, Japan and Singapore. UK too is consulting on introducing a UK based
emissions trading scheme (UK ETS) to
apply from 2026 for ships above 5000GT but for domestic voyages only (i.e voyages taking place between
two UK ports). These regulations could cause
us to incur additional substantial expenses.
The EU made a unilateral
commitment to reduce overall greenhouse gas emissions from its member states from 20% of 1990 levels by 2020. The EU also committed to
reduce its emissions by 20% under the Kyoto Protocol’s
second period from 2013 to 2020. Starting in January 2018, large ships over
5,000 gross tonnage calling at EU ports are required to collect and publish data on carbon dioxide emissions and other information. As
previously discussed,
regulations relating to the inclusion of greenhouse gas emissions from the maritime sector in the European Union’s
carbon market are also forthcoming.
In the United States, the
EPA issued a finding that greenhouse gases endanger the public health and safety, adopted regulations to limit greenhouse gas emissions
from certain mobile sources, and proposed regulations to limit
greenhouse gas emissions from large stationary sources. The EPA or individual
U.S. states could enact environmental regulations that would affect our operations. On November 2, 2021, the EPA issued a proposed rule
under the CAA
designed to reduce methane emissions from oil and gas sources. In November 2022, the EPA issued a supplemental proposal
to that would achieve more comprehensive emissions reductions and add proposed requirements for sources
not previously covered. At COP28,
the United States announced final standards to reduce methane emissions from oil and gas operations to achieve an 80% reduction below
future methane emissions expected without the rule. If these
new regulations are finalized, they could affect our operations.
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Any passage of climate
control legislation or other regulatory initiatives by the IMO, the EU, the U.S. or other countries where we operate, or any treaty adopted
at the international level to succeed the Kyoto Protocol or Paris
Agreement, that restricts emissions of greenhouse gases could require
us to make significant financial expenditures which we cannot predict with certainty at this time. Even in the absence of climate control
legislation, our business
may be indirectly affected to the extent that climate change may result in sea level changes or certain weather
events.
Other Regions
We may be subject to environmental
and other regulations that have been or may become adopted in other regions of the world that may impose obligations on our vessels and
may increase our costs to own and operate them.
Compliance with these requirements may require significant expenditures on our part and
may materially increase our operating costs.
Of particular importance,
due to the trade intensity in these areas, are four ECAs created in Hong Kong and in China (Pearl River Delta, the Yangtze River Delta
and Bohai Sea), aiming to reduce the levels of ship-generated air
pollution and focus on the sulfur content of fuels. As of January 1,
2017, vessels at berth in a core port within an emission control area are required to use fuel with a maximum sulfur content of 0.5% m/m—except
one hour after arrival
and one hour before departure. Since January 1, 2018, all ports within Chinese emission control areas have implemented
this standard. As of January 1, 2019, vessels must switch to fuel with a sulfur content not exceeding 0.5% m/m
prior to entering China’s
territorial sea, in defined areas. From January 1, 2020, vessels entering Inland ECAs (Yangtze River and Xi Jiang River) must use fuel
with a sulfur content not exceeding 0.10% while operating within the
Inland ECA. Looking further ahead, a sulfur cap of 0.1% will apply
to seagoing vessels entering Hainan Waters within the coastal ECA from January 1, 2022. Vessels capable of receiving shore power must
use shore power if they berth
for more than three hours in ports in the coastal ECA that have shore power capabilities (or more than two
hours in ports with such capabilities in the Inland ECAs). Furthermore, ships of 400 gross tonnage or over, or ships powered by
main propulsion
machinery greater than 750 kW of propulsion power, calling at a port in China should report energy consumption data of their last voyage
to China MSA before leaving port (China Regulation on Data Collection for
Energy Consumption of Ships). Hong Kong’s current Fuel
at Berth Regulation requiring ships to burn fuel with a sulfur content not exceeding 0.5% m/m while at berth are expected to be replaced
by a regulation extending the standard
to ships operating in Hong Kong waters. Ships not fitted with scrubbers will be required to burn
fuel with a sulfur content not exceeding 0.5% m/m within Hong Kong waters, irrespective of whether they are sailing or at berth. In
Taiwan,
ships not fitted with exhaust gas scrubbers must burn fuel with a sulfur content not exceeding 0.5% m/m when entering its international
commercial port areas. In December 2021, the member states of the Convention for the
Protection of the Mediterranean Sea Against Pollution
(“Barcelona Convention”) agreed to support the designation of a new ECA in the Mediterranean. The group plans to submit a
formal proposal to the IMO by the end of 2022 with
the goal of having the ECA implemented by 2025.
In connection with the
introduction of the ban of high sulfur fuel for vessels not fitted with exhaust gas scrubbers, a number of countries are introducing rules
as to the type of exhaust gas scrubber that may be acceptable to be
operated on vessels, in effect prohibiting the operation in their
waters of hybrid or open loop type exhaust gas scrubbers and forcing vessels to use more expensive closed loop systems or to burn low
sulfur fuel when sailing in their
waters.
International Labor Organization
The International Labor
Organization is a specialized agency of the UN that has adopted the Maritime Labor Convention 2006 (“MLC 2006”). A Maritime
Labor Certificate and a Declaration of Maritime Labor Compliance is
required to ensure compliance with the MLC 2006 for all ships that
are 500 gross tonnage or over and are either engaged in international trade or flying the flag of a Member and operating from a port,
or between ports, in another
country. We believe that all our vessels are in substantial compliance with and are certified to meet MLC
2006.
Vessel Security Regulations
Since September 2001, there
have been a variety of initiatives intended to enhance vessel security. In November 2002, the U.S Maritime Transportation Security Act
of 2002, or the MTSA, came into effect. To implement certain
portions of the MTSA, the U.S. Coast Guard has issued regulations requiring
the implementation of certain security requirements aboard vessels operating in waters subject to the jurisdiction of the United States
and at certain ports and
facilities, some of which are regulated by the EPA. Similarly, amendments to the SOLAS Convention created a new
chapter of the convention dealing specifically with maritime security, which came into effect in July 2004. To trade
internationally,
a vessel must attain an International Ship Security Certificate, or ISSC, from a recognized security organization approved by the vessel’s
flag state. Ships operating without a valid certificate may be detained, expelled
from, or refused entry at port until they obtain an
ISSC. The new chapter imposes various detailed security obligations on vessels and port authorities, most of which are contained
in the International Ship and Port Facilities Security
Code, or ISPS Code. Among the various requirements are:
•
on-board installation of automatic information systems, to enhance vessel-to-vessel
and vessel-to-shore communications;
•
on-board installation of ship security alert systems;
•
the development of vessel security plans; and
•
compliance with flag state security certification requirements.
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The United States Coast
Guard regulations, intended to align with international maritime security standards, exempt non-U.S. vessels from MTSA vessel security
measures if such vessels have on board a valid International Ship
Security Certificate, that attests to the vessel’s compliance
with the SOLAS Convention security requirements and the ISPS Code. Our existing vessels have implemented the various security measures
addressed by the MTSA, the
SOLAS Convention and the ISPS Code.
Inspection by Classification Societies
The hull and machinery
of every commercial vessel must be classed by a classification society authorized by its country of registry. The classification society
certifies that a vessel is safe and seaworthy in accordance with the
applicable rules and regulations of the country of registry of the
vessel and SOLAS. Most insurance underwriters make it a condition for insurance coverage and lending that a vessel be certified “in
class” by a classification society
which is a member of the International Association of Classification Societies, the IACS. The
IACS has adopted harmonized Common Structural Rules, or “the Rules,” which apply to oil tankers and bulk carriers contracted
for
construction on or after July 1, 2015. The Rules attempt to create a level of consistency between IACS Societies. All of our vessels
are certified as being “in class” by all the applicable Classification Societies.
A vessel must undergo annual
surveys, intermediate surveys, drydockings and special surveys. In lieu of a special survey, a vessel’s machinery may be on a continuous
survey cycle, under which the machinery would be surveyed
periodically over a five-year period. Every vessel is also required to be drydocked
every 30 to 36 months for inspection of the underwater parts of the vessel. If any vessel does not maintain its class and/or fails any
annual survey,
intermediate survey, drydocking or special survey, the vessel will be unable to carry cargo between ports and will be unemployable
and uninsurable which could cause us to be in violation of certain covenants in our loan agreements.
Any such inability to carry cargo
or be employed, or any such violation of covenants, could have a material adverse impact on our financial condition and results of operations.
Risk of Loss and Liability Insurance
General
The operation of any cargo
vessel includes risks such as mechanical failure, physical damage, collision, property loss, cargo loss or damage and business interruption
due to political circumstances in foreign countries, piracy
incidents, hostilities and labor strikes. In addition, there is always an
inherent possibility of marine disaster, including oil spills and other environmental mishaps, and the liabilities arising from owning
and operating vessels in
international trade. OPA, which imposes virtually unlimited liability upon shipowners, operators and bareboat
charterers of any vessel trading in the exclusive economic zone of the United States for certain oil pollution accidents in the
United
States, has made liability insurance more expensive for shipowners and operators trading in the United States market. We carry insurance
coverage as customary in the shipping industry. However, not all risks can be insured,
specific claims may be rejected, and we might not
be always able to obtain adequate insurance coverage at reasonable rates.
Hull & Machinery, Loss of Hire and War Risks Insurance
We maintain marine hull
and machinery, increased value and war risks insurances, which cover the risk of actual or constructive total loss, for all of our vessels.
Our vessels are each covered up to at least fair market value, which
we expect to assess at least annually, with certain deductibles per
vessel per incident. We also maintain freight value coverage for each of our vessels under which in the event of total loss or constructive
total loss of a vessel, we will be
entitled to recover the lost anticipated long term income. As required by the terms of our credit facilities,
we have assigned certain of our insurance policies to our lenders and will be subject to restrictions on our use of any proceeds
therefrom.
We do not have loss-of-hire
insurance covering the loss of revenue during extended off-hire periods. We evaluate obtaining such coverage on an ongoing basis, taking
into account insurance market conditions and the employment
of our vessels.
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Protection and Indemnity Insurance
Protection and indemnity
insurance is provided by mutual protection and indemnity associations, or P&I associations, (“Clubs”) which insure our
third-party and crew liabilities in connection with our shipping activities. Coverage
includes third-party liability, crew liability and
other related expenses resulting from the abandonment, injury or death of crew, and other third parties, the 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 P&I associations. Subject to the limit for pollution discussed below, our coverage is virtually unlimited,
but subject to the rules of the particular protection and indemnity insurer.
Our current protection
and indemnity insurance coverage for pollution is up to $1.0 billion per vessel per incident. The 12 Clubs that comprise the International
Group insure approximately 90% of the world’s commercial blue-
water tonnage and have entered into a pooling agreement to reinsure
each association’s liabilities. The International Group of P&I Clubs maintain a Pool arrangement, which provides a mechanism
for sharing all claims in excess of
$10.0 million up to, currently, $100.0 million. The Clubs are collectively reinsured in the International
Group Excess Loss Programme for $3.0 billion, with an excess of $100.0 million. The overall limit of coverage per vessel, per
incident,
is approximately $7.0 billion. As members of Clubs which are members of the International Group, we are subject to calls payable to the
associations based on our claim records as well as the claim records of all other
members of the individual associations and members of
the shipping pool of Clubs comprising the International Group.
C. Organizational Structure
Our holding company, Global
Ship Lease, Inc., is a Marshall Islands corporation. Each of our vessels is owned by a separate wholly-owned subsidiary. 22 vessels are
owned by companies incorporated in Marshall Islands. 48
vessels are owned by companies incorporated in Liberia; eight of them are under
sale and leaseback transactions and while the disponent owners are Liberian companies, their registered owners are Hong Kong (eight) non
GSL
companies. In addition, GSLS, a company incorporated in England and Wales, provided certain administrative services to the group until
its dissolution on September 24, 2024. GSL Enterprises Ltd., a Marshall Islands corporation
which has established a branch office in Greece
pursuant to the provisions of art. 25 of Law 27/1975 (formerly law 89/1967), provides certain administrative services to the group.
A list of our subsidiaries
and their respective countries of incorporation is provided as Exhibit 8.1 to this Annual Report on Form 20-F.
D. Property, Plants and Equipment
Our only material properties
are the vessels in our fleet, which are described in “Item 4. Information on the Company—B. Business Overview.” The
vessels are affected by environmental and other regulations. See “Item 4.
Information on the Company—B. Business Overview—Environmental
and Other Regulations.” Certain of our vessels serve as security under our debt agreements. See “Item 5. Operating and Financial
Review—B. Liquidity and
Financial Resources —Indebtedness”. We do not own any real property.
Item 4A.
Unresolved Staff Comments
Not applicable.
Item 5.
Operating and Financial Review and Prospects
A. Operating Results
Management’s Discussion and Analysis of Financial Conditions and
Results of Operations
The following discussion
and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements
and the related notes and the financial and other information
included elsewhere in this Annual Report. The term consolidated financial
statements refers to the consolidated financial statements of Global Ship Lease, Inc. and its subsidiaries. This discussion contains forward-looking
statements
based on assumptions about our future business. Our actual results will likely differ materially from those contained in the
forward-looking statements. See “Cautionary Note Regarding Forward-Looking Statements” at the beginning
of this Annual Report.
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Overview
We
are a containership owner, incorporated in the Marshall Islands. We commenced operations in December 2007 with a business of owning and
chartering out containerships under fixed rate charters to container liner companies.
As
of March 10, 2025, we owned 70 mid-sized and smaller containerships, ranging from 2,207 to 11,040 TEU, with an aggregate capacity of
404,681 TEU. 39 ships are wide-beam Post-Panamax.
We
have entered into ship management agreements with third-party ship managers for the day-to-day technical and commercial management of
our current fleet of vessels. See “Item 4. Information on the Company—B. Business
Overview—Management of Our Fleet”
for a more detailed description of our ship management agreements.
Our
financial results are largely driven by the following factors:
•
the
continued performance of the charter agreements;
•
the
number of vessels in our fleet and their charter rates;
•
the
terms under which we recharter our vessels once the existing time charters have expired;
•
the
number of days that our vessels are utilized and not subject to drydocking, special surveys
or otherwise are off-hire;
•
our
ability to control our costs, including ship operating costs, ship management fees, insurance
costs, drydock costs, general, administrative and other expenses and interest and financing
costs. Ship operating costs may vary
from month to month depending on a number of factors,
including the timing of purchases of spares and stores and of crew changes;
•
impairment
of our vessels and other non-current assets; and
•
access
to, and the pricing and other terms of, our financing arrangements.
As of December 31, 2024, including
Czech delivered on January 9, 2025 and all charters agreed during 2024 and through February 28, 2025, the average remaining term of the
Company’s charters, to the mid-point of redelivery,
including options under the Company’s control and other than if a redelivery
notice has been received, was 2.3 years on a TEU-weighted basis. Contracted revenue on the same basis was $1.88 billion. Contracted
revenue was $2.37
billion, including options under charterers’ control and with latest redelivery date, representing a weighted
average remaining term of 2.9 years. The time charters for eleven of our 72 containerships, excluding the charters of the three
vessels
agreed to be sold in 2025, Tasman, Keta and Akiteta), either have expired or could expire before the end of the first half of 2025, and
a further five vessels have charters that could expire during the second half of 2025. The
charter rate that we will be able to achieve
on renewal will be affected by market conditions at that time. As discussed further below, operational matters such as off-hire days for
planned maintenance or for unexpected accidents and
incidents also affect the actual amount of revenues we receive.
The
container shipping industry suffered a cyclical downturn as a result of the Global Financial Crisis in 2008—2009 and many container
shipping companies reported substantial losses. Financial performance of container
shipping companies subsequently improved; however,
the industry remained under pressure due to oversupply of container ship capacity. 2020 saw a substantial downturn, triggered by the
global COVID-19 pandemic. The industry
recovered markedly in 2021, but was followed by negative growth in 2022 and 2023 due to geopolitical
tensions driving inflationary macro-economic headwinds, which placed downward pressure on consumer demand, and as a result,
the container
shipping industry. Container trade volumes rebounded in 2024, expanding by approximately 5.8%.
Charter
payments have been received on a timely basis and, as of December 31, 2024, charter hire was up-to-date. If our charterers are unable
to make charter payments to us, our results of operations and financial condition will be
materially adversely affected. If our existing
charters with our charterers were terminated and we were required to recharter at lower rates or if we were unable to find new charters
due to market conditions, our results of operations and
financial condition would be materially adversely affected.
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Selected
Financial Information and Other Data
The following table sets forth
our selected consolidated financial and other data as of and for the years ended December 31, 2024, 2023, 2022, 2021 and 2020. Consolidated
financial data is derived from our audited consolidated
financial statements which have been prepared in accordance with United States
generally accepted accounting principles (“U.S. GAAP”). Our audited consolidated statements of income and statements of cash
flows for the years ended
December 31, 2024, 2023 and 2022 and our audited consolidated balance sheets as of December 31, 2024 and 2023,
together with the notes thereto, are included in this Annual Report. Our audited consolidated statements of income
and cash flows for
the years ended December 31, 2021 and 2020 and our audited consolidated balance sheets as of December 31, 2022, 2021, and 2020, and the
notes thereto, are not included herein.
2024
2023
2022
2021
2020
(Expressed in millions of U.S. dollars, except for per share data)
Statement
of Income
Operating
revenues:
Time
charter revenue
$ 711.1
$ 674.8
$ 645.6
$ 448.0
$ 282.8
Operating
expenses:
Vessel
operating expenses
(191.4)
(179.2)
(167.4)
(130.3)
(102.8)
Time
charter and voyage expenses
(23.5)
(23.6)
(21.2)
(13.1)
(11.2)
Depreciation
and amortization
(100.0)
(91.7)
(81.3)
(61.6)
(47.0)
General
and administrative expenses
(17.1)
(18.3)
(18.5)
(13.2)
(8.4)
Impairment
of vessels
—
(18.8)
(3.0)
—
(8.5)
Gain/(Loss)
on sale of vessels
—
—
—
7.8
(0.2)
Total
operating expenses
(332.0)
(331.6)
(291.4)
(210.4)
(178.1)
Operating
Income
379.1
343.2
354.2
237.6
104.7
Non-operating
income/(expenses)
Interest
income
16.7
9.8
2.5
0.4
1.0
Interest
and other finance expenses
(40.7)
(44.8)
(75.3)
(69.2)
(65.4)
Other
income, net
3.7
2.1
1.8
2.8
1.3
Fair
value adjustment on derivative asset
(5.2)
(5.4)
9.7
—
—
Income
before income taxes
353.6
304.9
292.9
171.6
41.6
Income
taxes
—
(0.4)
0.0
(0.1)
(0.0)
Net Income
353.6
304.5
292.9
171.5
41.6
Earnings allocated
to Series B Preferred Shares
(9.5)
(9.5)
(9.5)
(8.3)
(4.0)
Net Income available to common
shareholders
344.1
295.0
283.4
163.2
37.6
Net Earnings
per Class A common share in $
Basic
9.74
8.33
7.74
4.65
1.23
Diluted
9.67
8.21
7.62
4.60
1.22
Weighted average number of Class A common shares outstanding
Basic in millions
35.3
35.4
36.6
35.1
17.7
Diluted in
millions
35.6
35.9
37.2
35.5
17.8
Net income
per Class B common share in $
Basic and
diluted
Nil
Nil
Nil
Nil
Nil
Weighted average
number of Class B common shares outstanding
Basic and
diluted in millions
Nil
Nil
Nil
Nil
Nil
Dividend per
Class A common share in $
58.4
53.2
50.5
27.9
—
Statement
of cash flow (1)
Net cash provided
by Operating Activities
430.1
375.0
327.5
247.9
89.7
Net cash used
in Investing Activities
(254.6)
(152.0)
(9.9)
(463.0)
(24.9)
Net cash (used
in)/provided by Financing Activities
(208.6)
(212.2)
(243.3)
318.4
(120.2)
Balance
sheet data (at year end)
Total current
assets
301.2
295.7
237.0
143.4
98.6
Vessels in
operation
1,884.6
1,664.1
1,623.3
1,682.8
1,140.6
Total assets
2,373.2
2,171.8
2,106.2
1,994.1
1,274.2
Debt (current
and non-current portion), net
684.1
812.4
934.4
1,070.5
769.5
Class A
and B common shares
0.4
0.4
0.4
0.4
0.2
Shareholders’
equity
1,463.5
1,184.4
966.5
712.6
464.7
Other data
Number of
vessels in operation at year end
71
68
65
65
43
Ownership
days
24,937
24,285
23,725
19,427
16,044
Utilization
96.1%
95.9%
95.5%
94.3%
93.0%
(1)
As of December 31, 2023, we made reclassifications to our December 31, 2022,
2021 and 2020 statement of cash flows to correct and reclassify payments for drydocking and special survey costs from investing outflows
to
operating outflows which resulted in a decrease in investing outflows and increase in operating outflows of $24.4 million, $19.2 million
and $14.8 million for the years ended December 31, 2022, December 31, 2021 and December
31, 2020, respectively. As of December 31, 2023,
we evaluated the reclassifications from both a quantitative and qualitative perspective and determined the impacts were immaterial to
the previously issued interim and annual
financial statements.
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Table of Contents
Results of Operations
Year ended December 31, 2024 compared
to Year ended December 31, 2023
Year
ended December 31,
2024
2023
(in millions of U.S. dollars)
Operating
Revenues
Time
charter revenue
$ 711.1
$ 674.8
Operating
Expenses
Vessel
operating expenses
(191.4)
(179.2)
Time
charter and voyage expenses
(23.5)
(23.6)
Depreciation
and amortization
(100.0)
(91.7)
Impairment
of vessels
—
(18.8)
General
and administrative expenses
(17.1)
(18.3)
Total
operating expenses
(332.0)
(331.6)
Operating
Income
379.1
343.2
Non-Operating
Income / (Expenses)
Interest
income
16.7
9.8
Interest
and other finance expenses
(40.7)
(44.8)
Other
income, net
3.7
2.1
Fair
value adjustment on derivative asset
(5.2)
(5.4)
Income
taxes
—
(0.4)
Net
Income
353.6
304.5
Earnings
allocated to Series B Preferred Shares
(9.5)
(9.5)
Net
Income available to Common Shareholders
$ 344.1
$ 295.0
Operating Revenues
Operating revenues reflect
income under fixed rate time charters and were $711.1 million in the year ended December 31, 2024, an increase of $36.3 million, or 5.4%,
from operating revenues of $674.8 million for 2023. The
increase in operating revenue was mainly due to (i) the addition of four vessels
which were delivered to us in the second quarter of 2023 (the “Four Vessels”) and the addition of three of the four Newly
Acquired Vessels in December
2024, and (ii) charter renewals at higher rates on a number of vessels partially offset by a non-cash $4.8
million increase in the effect from straight lining time charter modifications. There were 966 days of offhire and idle time in the
year
ended December 31, 2024, of which 807 were for scheduled drydockings, compared to 996 days of offhire and idle time in the prior year
of which 701 were for scheduled drydockings. Utilization for the year ended December 31,
2024 was 96.1% compared to utilization of 95.9%
in the prior year period.
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Total Operating Expenses
Total operating expenses totaled
$332.0 million (or 46.7% of operating revenues) for the year ended December 31, 2024. Total operating expenses totaled $331.6 million
for the year ended December 31, 2023 (or 49.1% of
operating revenues).
Total operating expenses is primarily comprised of:
•
Vessel Operating Expenses: Vessel operating expenses, which relate to the operation of the vessels
themselves, were $191.4 million for the year ended December 31, 2024 (or 26.9% of operating revenues) compared to
$179.2 million for the
year ended December 31, 2023 (or 26.6% of operating revenues). Ownership days in 2024 were 24,937, up 2.7% on 24,285 of 2023. The increase
of $12.2 million was mainly due to (i) the acquisition
of the Four Vessels in the second quarter of 2023 and of three of the four Newly
Acquired Vessels, (ii) an increase in repairs, spares and maintenance expenses for planned main engine maintenance and overhaul of diesel
generators as well as main engine annual spares delivery due to timing of planned schedule, (iii) increased cost of insurance due to increased
premiums as asset values rose over the period, and (iv) the impact of inflation on
fees and expenses, including management fees. The average
cost per ownership day for the year ended December 31, 2024 was $7,670, compared to $7,380 for the prior year period, up $290 per day,
or 3.9%.
•
Time Charter and Voyage Expenses: Time charter and voyage expenses, which comprise mainly of commission
paid to ship brokers, the cost of bunker fuel for owner’s account when a ship is off-hire or idle and
miscellaneous costs associated
with a ship’s voyage for the owner’s account, were $23.5 million for the year ended December 31, 2024 (or 3.3% of operating
revenues) compared to $23.6 million for the year ended
December 31, 2023 (or 3.5% of operating revenues). The decrease was mainly due
to a decrease in voyage administration costs and operational requests from charterers offset by increased commissions on charter renewals
at
higher rates. The average cost per ownership day was $944, a decrease of $27, (or 2.8%), from $971 for 2023.
•
Depreciation and Amortization: Depreciation and Amortization was $100.0 million
(or 14.1% of operating revenues) for the year ended December 31, 2024, up from $91.7 million (or 13.6% of operating revenues) in 2023.
The increase was mainly due to the 12 drydockings completed in 2024, the addition of the three Newly Acquired Vessels in December 2024,
plus the acquisition of the Four Vessels in the second quarter of 2023.
•
Impairment of Vessels: No impairment loss was recorded in 2024. An impairment
loss of $18.8 million was recorded in the fourth quarter of 2023 on two vessels.
•
General and Administrative Expenses: General and administrative expenses were
$17.1 million (or 2.4% of operating revenues) in the year ended December 31, 2024, and were $18.3 million (or 2.7% of operating revenues)
for 2023. The average general and administrative expense per ownership day for the year ended December 31, 2024 was $687, compared to
$750 in the comparative period, a decrease of $63 or 8.4%. The movement was
mainly due to the decrease in the non-cash charge for stock-based
compensation expense.
Operating Income
As a consequence of all preceding
items, operating income was $379.1 million for the year ended December 31, 2024 compared to an operating income of $343.2 million for
the year ended December 31, 2023.
Interest Income
Interest income earned on
cash balances for the year ended December 31, 2024 was $16.7 million compared to $9.8 million for the year ended December 31, 2023 with
the increase being mainly due to net increase in cash and cash
equivalents deposited in time deposits during 2024.
Interest and other finance expenses
Interest
and other finance expenses for the year ended December 31, 2024 was $40.7 million, down from $44.8 million for the prior year. The decrease
was mainly due to our blended cost of debt, which, taking into account our
interest rate caps, has significantly decreased from approximately
4.55% for 2023 to 3.85% for 2024 mainly due to our recent refinancing activity. This decrease was offset by (i) the non-cash write off
of deferred financing costs of $2.7
million on the full repayments of six of our credit facilities and two of our sale and leaseback
agreements, (ii) a prepayment fee of $0.7 million on the full repayment of the sale and leaseback agreement with CMB Financial Leasing
Co.
Ltd. (“CMBFL”) and (iii) a prepayment fee of $0.2 million on the partial repayment of the Macquarie Credit Facility.
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Other income, net
Other income, net represents
miscellaneous revenue mainly from sundry recharges to charterers under our time charters. In the year ended December 31, 2024, other income,
net was $3.7 million, up from $2.1 million in 2023.
Income Taxes
Income taxes for the year ended December 31, 2024 were nil. Income
taxes for the year ended December 31, 2023 were $0.4 million.
Net Income
For the year ended December
31, 2024, net income was $353.6 million, compared to a net income of $304.5 million for the year ended December 31, 2023.
Earnings Allocated to Series B Preferred Shares
The dividends payable on the
$109.0 million of Series B Preferred Shares outstanding as at December 31, 2024, are presented as a reduction of net income, as and when
declared by the Board of Directors. These dividends totaled
$9.5 million for each of the years ended December 31, 2024 and 2023, respectively.
Net Income Available to Common Shareholders
Net income available to common shareholders for
the year ended December 31, 2024 was $344.1 million, compared to a net income available to common shareholders of $295.0 million for the
year ended December 31, 2023.
Year ended December 31, 2023 compared to Year ended December 31,
2022
For a discussion of our results
for the year ended December 31, 2023 compared to the year ended December 31, 2022, please see “Item 5. Operating and Financial Review
and Prospects—A. Operating Results—Results of
Operations—Year Ended December 31, 2023 Compared to the Year Ended December
31, 2022” contained in our Annual Report on Form 20-F for the year ended December 31, 2023, filed with the SEC on March 20, 2024.
B. Liquidity and Capital Resources
Liquidity, Working Capital and Dividends
We anticipate that our principal
sources of funds for our short-term liquidity needs will be our primary operating cash flows, long-term bank borrowings, sale and leaseback
transactions and other debt raisings, proceeds from asset
sales and cash flows from our equity offerings. In addition, our primary short-term
liquidity needs are to fund general working capital requirements, cash reserve requirements including those under our credit facilities
and debt service,
while our long term liquidity needs primarily relate to expansion and investment capital expenditures, other maintenance
capital expenditures, debt repayment, lease payment and payment of quarterly dividends on our outstanding
preferred and common stock.
As of December 31, 2024, our current assets totaled $301.2 million, while current liabilities totaled $264.0 million, resulting in a
positive working capital position of $37.2 million. Since our working
capital is positive, we believe that we have sufficient funds to
meet our short-term and long-term liquidity needs although we cannot assure you that we will be able to secure adequate financing or
to obtain additional funds on favorable
terms, to meet our liquidity needs.
Our net cash flow from
operating activities derives from revenue received under our charter contracts, which varies directly with the number of vessels
under charter, days on-hire and charter rates, less operating expenses including
crew costs, lubricating oil costs, costs of repairs
and maintenance, insurance premiums, and organizing other ship operating necessities, including monitoring and reporting with
respect to EU ETS requirements (including related
Emission Trading Scheme Allowances) and FEUM compliance, general and administrative
expenses, interest and other financing costs. In addition, each of our vessels is subject to a drydock approximately every five
years. 12
drydockings were completed in 2024 for regulatory reasons and 49 vessel upgrades were completed, the total cost of which,
excluding the effect of the associated 807 days of off-hire, was $77.5 million. 13 drydockings were completed
in 2023 for regulatory
reasons and 35 for vessel upgrades, the total cost of which, excluding the effect of the associated 701 days of off-hire, was $48.8
million. The average cost of the 25 drydockings completed on vessels in the current
fleet between January 2023 and December 2024 was
$2.7 million with an average loss of revenue of $1.6 million while the relevant vessel was off-hire. The average cost for vessel
upgrades due to commercial reasons was $0.6 million.
We have included a
schedule of the next anticipated drydocking date for each of our vessels in “Item 4. Information on the Company—B.
Business— Inspection by Classification Societies.” In future years there will be incremental
costs for compliance with
ballast water management regulations and with emission control regulations should we decide, in conjunction with our relevant
charter, to retrofit scrubbers on our vessels. See “Item 4. Information on the
Company—B. Business—Environmental
and Other Regulations”.
The main factor affecting
cash flow in a period is the timing of the receipt of charter hire, which is due to be paid two weeks or one month in advance, proceeds
from any asset sales, costs of any asset purchases, the payments for
costs of drydockings and vessel upgrades, the timing of the payment
of interest, which is mainly quarterly, amortization of our debt including the 2027 Secured Notes, financings and refinancings, purchases
of our Class A common
shares, as of the date of this annual report, we have remaining approximately $33.0 million available authorization
for such purchases and dividends paid on our Class A common shares and Series B Preferred Shares.
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At December 31, 2024, we had
$691.1 million of debt outstanding, comprising $371.9 million of secured bank debt collateralized by vessels, $231.9 million of investment
grade rated 2027 Secured Notes collateralized by vessels,
and $87.3 million under sale and leaseback financing transactions, which have
floating interest rates at SOFR plus a weighted average margin of approximately 2.47%. Assuming SOFR of 5.0%, quarterly interest on total
gross debt at
December 31, 2024, without taking into account amortization of the premium or the effect of the interest rate caps, would
amount to approximately $11.7 million.
Our credit facilities require that we maintain $20.0 million minimum
liquidity at each quarter end on group basis.
As of December 31, 2024 and December 31, 2023, we were in compliance
with our debt covenants.
We intend to declare and make quarterly
dividend payments amounting to approximately $2.4 million per quarter on our Series B Preferred Shares based on the amount outstanding
as of December 31, 2024 on a perpetual basis and
in accordance with the Certificate of Designation governing the terms of our Series B
Preferred Shares. Finally, we may, in the discretion of our Board of Directors, declare and pay dividends on our common shares, subject
to, among
other things, any applicable restrictions contained in our current and future agreements governing our indebtedness, including
our credit facilities, and available cash flow. We paid dividends of $0.375 per Class A common share for the
first quarter of 2024, and
$0.45 per Class A common share for the second, third and fourth quarter of 2024. Effective from first quarter of 2025, we expect that
our quarterly dividend will be $0.525 per Class A common share. Please
see “Item 8. Financial Information – Dividend Policy.”
Other than costs for drydockings
and compliance with environmental regulations, there are no other current material commitments for capital expenditures or other known
and reasonably likely material cash requirements other
than in respect of our growth strategy.
All our revenues are denominated
in U.S. dollars and a portion of our expenses are denominated in currencies other than U.S. dollars. As of December 31, 2024, we had $273.8
million in cash and cash equivalents, including
restricted cash and time deposits. Our cash and cash equivalents are mainly held in U.S.
dollars, with relatively small amounts of UK pounds sterling and Euros. We regularly review the amount of cash and cash equivalents held
in
different jurisdictions to determine the amounts necessary to fund our operations and their growth initiatives and amounts needed to
service our indebtedness and related obligations. If these amounts are moved out of their original
jurisdictions, we may be subject to
taxation.
Due to our charter coverage
and nature of our operating and financial costs, our cashflows are predictable and visible, at least in the near to medium term. We have
policies in place to control treasury activities within the group. For
example, all new funding must be approved by our Board of Directors,
and cash deposits can only be made with institutions meeting certain credit metrics and up to predetermined limits by institution.
Our floating rate debt is
represented by drawings under a number of secured credit facilities. In December 2021, we entered into a USD one-month London Interbank
Offered Rate (“LIBOR”) interest rate cap of 0.75% through
fourth quarter of 2026 on $484.1 million of floating rate debt and
in February 2022 we entered into USD one-month LIBOR interest rate caps of 0.75% though fourth quarter of 2026 on $507.9 million of floating
rate debt to hedge our
cash flows. As a result of the discontinuation of LIBOR, on July 1, 2023, our interest rate caps automatically
transitioned to one-month Compounded SOFR at a net level of 0.64%. We would not enter into derivatives for trading or
speculative purposes.
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Cash Flows
The table below shows our
consolidated cash flows for each of the years ended December 31, 2024, 2023 and 2022:
Year ended December 31,
2024
2023
2022
(in millions of U.S. dollars)
Cash
flows from operating activities
Net
income
$ 353.6
$ 304.5
$ 292.9
Adjustments
to reconcile net income to net cash provided by operating activities
Depreciation
and amortization
100.0
91.7
81.3
Impairment
of vessels
-
18.8
3.0
Amounts
reclassified to/(from) other comprehensive income
0.9
0.2
(1.1)
Amortization
of derivative assets’ premium
4.6
4.3
1.1
Amortization
of deferred financing costs
6.8
5.5
11.2
Amortization
of original issue premium on repurchase of notes
-
-
0.8
Amortization
of intangible liabilities-charter agreements
(5.5)
(8.1)
(41.2)
Fair
value adjustment on derivative asset
5.2
5.4
(9.7)
Prepayment
fees on debt repayment
0.9
-
15.2
Share
based compensation expense
8.7
10.2
10.1
Movement
in working capital
(45.1)
(57.5)
(36.1)
Net
cash provided by operating activities(*)
430.1
375.0
327.5
Cash
flows from investing activities
Acquisition
of vessels and intangibles
(205.5)
(123.3)
-
Net
proceeds from sale of vessels
-
5.9
-
Cash
paid for vessel expenditures
(12.8)
(19.6)
(5.5)
Advances
for vessel acquisitions and other additions
(24.1)
(9.6)
(3.8)
Time
deposits acquired
(12.2)
(5.4)
(0.6)
Net
cash used in investing activities(*)
(254.6)
(152.0)
(9.9)
Cash
flows from financing activities
Deferred
financing costs paid
(3.1)
(1.2)
(9.7)
Repayment
of refinanced debt, including prepayment fees
(292.0)
-
(276.7)
Proceeds
from 2027 Secured Notes
-
-
350.0
Repurchase
of 2024 Notes, including premium
-
-
(119.9)
Proceeds
from drawdown of credit facilities and sale and leaseback
344.5
76.0
60.0
Repayment
of credit facilities and sale and leaseback
(185.4)
(202.3)
(167.0)
Net
proceeds from offering of Class A common shares, net of offering costs
0.3
-
-
Cancellation
of Class A common shares
(5.0)
(22.0)
(20.0)
Class
A common shares-dividend paid
(58.4)
(53.2)
(50.5)
Series
B preferred shares – dividends paid
(9.5)
(9.5)
(9.5)
Net
cash used in financing activities
(208.6)
(212.2)
(243.3)
Net
(decrease)/increase in cash and cash equivalents and restricted cash
(33.1)
10.8
74.3
Cash
and cash equivalents and restricted cash at beginning of the year
280.7
269.9
195.6
Cash
and cash equivalents and restricted cash at end of the year
$ 247.6
$ 280.7
$ 269.9
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Year ended December 31, 2024 compared to Year ended December
31, 2023
(*) Net
cash provided by operating activities was $430.1 million for the year ended December 31, 2024 reflecting mainly net income of $353.6 million,
adjusted for depreciation and amortization of $100.0 million, amounts
reclassified to other comprehensive income of $0.9 million, amortization
of derivative assets premium of $4.6 million, amortization of deferred financing costs of $6.8 million, prepayment fees on debt repayment
of $0.9 million,
amortization of intangible liabilities of $5.5 million, stock-based compensation of $8.7 million, fair value adjustment
on derivative asset of $5.2 million, amortization of derivative assets’ premium of $4.6 million, plus movements in
working capital,
including deferred revenue, of $45.1 million.
Net cash provided by operating activities was
$375.0 million for the year ended December 31, 2023 reflecting mainly net income of $304.5 million, adjusted for depreciation and amortization
of $91.7 million, impairment loss of
$18.8 million, amounts reclassified to other comprehensive income of $0.2 million, amortization of
derivative assets premium of $4.3 million, amortization of deferred financing costs and original issue premium of $9.8 million,
amortization
of intangible liabilities of $8.1 million, stock-based compensation of $10.2 million, fair value adjustment on derivative asset of $5.4
million, plus movements in working capital, including deferred revenue, of $57.5 million.
As of December 31, 2023, we made reclassifications
to the prior year statement of cash flows to correct and reclassify payments for drydocking and special survey costs from investing outflows
to operating outflows which resulted in a
decrease in investing outflows and increase in operating outflows of $24.4 million for the year
ended December 31, 2022. We evaluated the reclassifications from both a quantitative and qualitative perspective and determined the
impacts
were immaterial to the previously issued interim and annual financial statements.
Net cash used in investing
activities for the year ended December 31, 2024 was $254.6 million, including $205.5 million for acquisition of vessels and intangibles,
$36.9 million vessel additions and other advances and $12.2
million cash in time deposits acquired.
Net cash used in investing
activities for the year ended December 31, 2023 was $152.0 million, including $123.3 million for acquisition of vessels and intangibles,
$29.2 million vessel additions and other advances, $5.4 million
cash in time deposits acquired and $5.9 million net proceeds from sale
of vessels.
Net cash used in financing
activities for the year ended December 31, 2024 was $208.6 million, including $3.1 million deferred financing costs paid, $292.0 million
repayment of refinanced debt including prepayment fees, $185.4
million repayment of credit facilities and sale and leaseback, $5.0 million
purchase and retirement of 251,772 Class A common shares, $58.4 million dividends paid on our Class A common shares, $9.5 million dividends
paid on our
Series B Preferred Shares offset by $344.5 million drawdowns of a new credit facility and a new sale and leaseback agreement
and $0.3 million net proceeds from offering of Class A common shares, net of offering costs.
Net cash used in financing
activities for the year ended December 31, 2023 was $212.2 million, including $1.2 million deferred financing costs paid, $202.3 million
repayment of credit facilities and sale and leaseback, $22.0
million purchase and retirement of 1,242,663 Class A common shares, $53.2
million dividends paid on our Class A common shares, $9.5 million dividends paid on our Series B Preferred Shares, which was offset by
$76.0 million that
we drew down under our Macquarie Credit Facility.
Overall, there was
a net decrease in cash and cash equivalents and restricted cash of $33.1 million in the year ended December 31, 2024, resulting in closing
cash and cash equivalents and restricted cash of $247.6 million compared
to closing cash and cash equivalents and restricted cash of $280.7
million at December 31, 2023.
Year ended December 31, 2023 compared to Year ended December 31,
2022
For a discussion of our
cash flows for the year ended December 31, 2023 compared to the year ended December 31, 2022, please see “Item 5. Operating and
Financial Review and Prospects—B. Liquidity and Capital Resources—
Year Ended December 31, 2023 Compared to Year Ended December
31, 2022” contained in our Annual Report on Form 20-F for the year ended December 31, 2023, filed with the SEC on March 20, 2024.
Our Borrowing Activities
During 2023, we amended
and restated the interest rate terms in all of our loan agreements and finance leases for the transition to the SOFR and the relevant
provisions on a replacement rate as a result of the discontinuation of
LIBOR that occurred on June 30, 2023.
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As of December 31, 2024, our indebtedness comprised:
Lender
(in
million USD)
Collateral
vessels
Interest
Rate
Final
maturity
date
E.SUN,
MICB, Cathay, Taishin Credit Facility
8.3
Dolphin
II, Athena,
Orca
SOFR
plus 2.75% plus CAS 0.14%
October,
2025
2027
Secured Notes
231.9
20
vessels
Interpolated
interest rate of 2.84% plus margin of 2.85%
July,
2027
Finance
Lease with CMBFL
42.8
GSL
Tripoli, GSL
Syros, GSL Tinos, GSL
Kithira
SOFR
plus 2.75%
September,
2027
HCOB,
CACIB, ESUN, CTBC, Taishin Credit Facility
52.1
Borealis
vessels
SOFR
plus 3.25% plus CAS 0.14%
July,
2026
Macquarie
Facility
23.5
GSL
Sofia, GSL Effie,
GSL Alexandra, GSL
Lydia
SOFR
plus 3.5%
May,
2026
2024
Senior Secured Term Loan Facility CACIB, ABN, Bank of America, First Citizens Bank,
CTBC
288.0
Costa
Rica Express,
Panama Express, Agios
Dimitrios, Nicaragua
Express, Mexico
Express, Jamaica
Express, Colombia
Express, ZIM Xiamen,
ZIM Norfolk, Anthea Y
SOFR
plus 1.85%
August,
2030
Finance
lease with Minsheng
44.5
Bremerhaven
Express
SOFR
plus 2.50%
December,
2034
691.1
Facilities
$300.0 Million Senior Secured Term Loan Facility
CACIB, ABN, Bank of America, First Citizens Bank, CTBC
On August 7, 2024, we entered
into a $300.0 million senior secured term loan facility (the “2024 Senior Secured Term Loan Facility”). As of December
31, 2024, the banks in this facility were: Credit Agricole Corporate and
Investment Bank (“CACIB”), ABN AMRO Bank N.V. (“ABN”),
Bank of America N.A., First Citizens Bank & Trust Company and CTBC Bank Co. Ltd. (“CTBC”) to refinance, or prepay, in
full or in part, certain of our outstanding
debt facilities.
All three tranches were drawdown
in the third quarter of 2024 and the term loan facility has a maturity in the third quarter of 2030.
The term loan facility is repayable
in 12 equal consecutive quarterly instalments of $12.0 million, four equal consecutive quarterly instalments of $10.0 million, four equal
consecutive quarterly instalments of $8.0 million and four
equal consecutive quarterly instalments of $6.0 million together with a final
balloon payment of $60.0 million on the term loan facility termination date.
This facility’s
interest rate is SOFR plus a margin of 1.85% per annum payable quarterly in arrears.
We
used the net proceeds from the 2024 Senior Secured Term Loan Facility to refinance or prepay, in full or in part, the following: (a)
existing debt facilities (i) Sinopac Credit Facility, (ii) Deutsche Bank AG (“Deutsche”) Credit
Facility, (iii) Hamburg Commercial
Bank AG (“HCOB”) Credit Facility, (iv) CACIB, Bank Sinopac Co. Ltd. (“Bank Sinopac”), CTBC Credit Facility, (v)
Chailease Credit Facility, (vi) Syndicated Senior Secured Credit Facility
(CACIB, ABN, First-Citizens & Trust Company, Siemens Financial
Services, Inc (“Siemens”), CTBC, Bank Sinopac, Banque Palatine (“Palatine”)), (vii) Macquarie Credit Facility
and (viii) E.SUN Commercial Bank Ltd (“E.SUN”),
Mega International Commercial Bank Co. Ltd (“MICB”), Cathay United
Bank (“Cathay”), Taishin International Bank (“Taishin”) Credit Facility and (b) existing sale and lease back
agreements: (i) $54.0 Million Sale and Leaseback
agreement – CMBFL and (ii) $14.7 Million Sale and Leaseback agreement - Neptune
Maritime Leasing (“Neptune”).
As of December 31, 2024, the
aggregate principal amount outstanding under the 2024 Senior Secured Term Loan Facility was $288.0 million.
Macquarie Credit Facility
On May 18, 2023, we entered
into a $76.0 million credit facility with Macquarie Bank Limited to finance part of the acquisition cost of four containerships, each
with a carrying capacity of 8,544 TEU, for an aggregate purchase
price of $123.3 million. This credit facility is divided into four tranches
(one tranche per vessel), has a maturity in May 2026 and was fully drawn in the second quarter of 2023.
The facility is repayable
in two equal consecutive quarterly installments of $5.0 million, six equal consecutive quarterly instalments of $6.0 million, one quarterly
installment of $3.0 million and two equal consecutive quarterly
installments of $1.0 million, with a final balloon payment of $25.0 million
payable three years after the first utilization date.
The facility bears interest
at SOFR plus a margin of 3.50% per annum, payable quarterly in arrears.
On September 10,
2024, we used a portion of the net proceeds from the 2024 Senior Secured Term Loan Facility entered on August 7, 2024, to partially prepay
the amount of $18.5 million under this facility (prepayment was
deducted from the final balloon payment).
As of December 31, 2024,
the outstanding balance of this facility was $23.5 million.
5.69% Senior Secured Notes due 2027
On June 16, 2022, Knausen
Holding LLC (the “Issuer”), an indirect wholly-owned subsidiary of ours, closed on the private placement of $350.0 million
of publicly rated/investment grade 5.69% Senior Secured Notes due 2027
(the “2027 Secured Notes”) to a limited number of accredited
investors. The fixed interest rate was determined on June 1, 2022, based on the interpolated interest rate of 2.84% plus a margin 2.85%.
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We used the net proceeds
from the private placement for the repayment of the remaining outstanding balances on our New Hayfin Credit Facility and the Hellenic
Bank Credit Facility (releasing five unencumbered vessels), and
our 8.00% Senior Unsecured Notes due 2024 (“2024 Notes”).
The remaining amount of net proceeds were allocated for general corporate purposes.
An amount equal to 15%
per annum of the original principal balance of each Note is payable in equal quarterly installments on the 15th day of each of January,
April, July, and October starting October 15, 2022, and the remaining
unpaid principal balance shall be due and payable on the maturity
date of July 15, 2027. Interest accrues on the unpaid balance of the Notes, payable quarterly on the 15th day of January, April, July,
and October in each year, such
interest commencing and accruing on and from June 14, 2022.
The 2027 Secured Notes
are senior obligations of the Issuer, secured by first priority mortgages on 20 identified vessels owned by subsidiaries of the Issuer
(the “Subsidiary Guarantors”) and certain other associated assets and
contract rights, as well as share pledges over the Subsidiary
Guarantors. In addition, the 2027 Secured Notes are fully and unconditionally guaranteed by us.
As of December 31, 2024,
the outstanding balance on the 2027 Secured Notes was $231.9 million.
$60.0 Million E.SUN, Cathay, MICB, Taishin Credit
Facility
On December 30, 2021, we
entered into a syndicated senior secured debt facility with E.SUN, Cathay, MICB and Taishin. We used a portion of the net proceeds from
this credit facility to fully prepay the outstanding balance on
our Blue Ocean Junior Credit Facility at that time, amounting to $26.2
million plus a prepayment fee of $4.0 million. All three tranches were drawn down in January 2022.
The facility was
repayable in eight equal consecutive quarterly instalments of $4.5 million and ten equal consecutive quarterly instalments of $2.4
million.
This facility bears interest
at SOFR plus a margin of 2.75% per annum plus CAS payable quarterly in arrears.
On September 11, 2024,
we used a portion of the net proceeds from the 2024 Senior Secured Term Loan Facility entered on August 7, 2024, to partially prepay
the amount of $8.5 million under this facility. Following the
prepayment, the outstanding balance of the facility is repayable in
four equal consecutive quarterly instalments of $2.4 million and one quarterly instalment of $1.1 million and new maturity will be
in October 2025 from July 2026.
As of December 31, 2024,
the outstanding balance of this facility was $8.3 million.
$12.0 Million Sinopac Capital International Credit Facility
On August 27, 2021, we
entered into a secured credit facility for an amount of $12.0 million with Sinopac Capital International (HK) Limited (“Sinopac
Credit Facility”), which was partially used to fully refinance our Hayfin
Credit Facility at that time. The full amount was drawn
down in September 2021.
The new facility was
repayable in 20 equal consecutive quarterly instalments of $0.4 million with a final balloon of $3.6 million payable together with
the final instalment at maturity in September 2026.
The facility bore interest
at SOFR plus a margin of 3.25% per annum payable quarterly in arrears.
On September 11, 2024, we
used a portion of the net proceeds from the 2024 Senior Secured Term Loan Facility entered on August 7, 2024, to fully prepay the amount
of $7.0 million under this facility.
As of December 31, 2024,
the outstanding balance of this facility was $nil.
$140.0 Million HCOB, CACIB, ESUN, CTBC, Taishin Credit Facility
On July 6, 2021, we entered
into a facility with CACIB, HCOB, ESUN, CTBC and Taishin for a total of $140.0 million to finance the acquisition of 12 containerships
from Borealis Finance LLC. The full amount was drawdown in
July 2021 and the credit facility has a maturity in July 2026.
The facility is repayable
in six equal consecutive quarterly instalments of $8.0 million, eight equal consecutive quarterly instalments of $5.4 million and six
equal consecutive quarterly instalments of $2.2 million with a final
balloon payment of $35.6 million payable together with the final
instalment. On March 23, 2023, due to the sale of the GSL Amstel, we repaid $2.8 million on this facility, of which $1.0 million was deducted
from the final balloon
payment, and the vessel was released as collateral.
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The facility bears interest
at SOFR plus a margin of 3.25% per annum plus CAS payable quarterly in arrears.
As of December 31, 2024,
the outstanding balance of this facility was $52.1 million.
$51.7 million Deutsche Bank AG Credit Facility
On May 6, 2021,
we entered into a secured facility for an amount of $51.7 million with Deutsche in order to refinance one of the three previous tranches
of the $180.5 million Deutsche, CIT, HCOB, Blue Ocean Entrust Credit
Facility, that had a maturity date on June 30, 2022, of an amount
$48.5 million.
The new facility was
repayable in 20 equal consecutive quarterly instalments of $1.2 million with a final balloon of $28.4 million payable together with
the final instalment.
The facility bore interest
at SOFR plus a margin of 3.25% per annum payable quarterly in arrears.
On August 12, 2024, we
used a portion of the net proceeds from the 2024 Senior Secured Term Loan Facility entered on August 7, 2024, to fully prepay the amount
of $36.6 million under this facility.
As of December 31, 2024,
the outstanding balance of this facility was $nil.
$64.2 million Hamburg Commercial Bank AG Credit Facility
On April 15, 2021,
we entered into a Senior Secured term loan facility with HCOB for an amount of up to $64.2 million in order to finance the acquisition
of six out of the Seven Vessels.
Tranche A, E and F amounting
to $32.1 million were drawn down in April 2021 and have a maturity date in April 2025, Tranche B and D amounting to $21.4 million were
drawn down in May 2021 and have a maturity date in
May 2025, and Tranche C amounting to $10.7 million was drawn down in July 2021 and
has a maturity date in July 2025.
Each Tranche of the facility
was repayable in 16 equal consecutive quarterly instalments of $0.7 million.
The facility bore interest
at SOFR plus a margin of 3.50% per annum payable quarterly in arrears.
On September 5, 2024, we
used a portion of the net proceeds from the 2024 Senior Secured Term Loan Facility entered on August 7, 2024, to fully prepay the amount
of $12.7 million under this facility.
As of December 31, 2024,
the outstanding balance of this facility was $nil.
$51.7 million CACIB, Bank Sinopac, CTBC Credit Facility
On April 13, 2021, we entered
into a secured facility for an amount of $51.7 million in order to refinance one of the three tranches of the $180.5 million Deutsche,
CIT, HCOB, Blue Ocean Entrust Credit Facility, that had a
maturity date on June 30, 2022, of an amount $48.6 million. The new secured
credit facility has a maturity in April 2026.
The Lenders were CACIB, Bank Sinopac and CTBC.
The facility was repayable in 20 equal consecutive quarterly instalments of $1.3 million with a final balloon of $26.2 million payable
together with the final instalment.
The facility bore interest
at SOFR plus a margin of 2.75% per annum plus CAS payable quarterly in arrears.
On August 9, 2024, we used
a portion of the net proceeds from the 2024 Senior Secured Term Loan Facility entered on August 7, 2024, to fully prepay the amount of
$35.1 million under this facility.
As of December 31, 2024,
the outstanding balance of this facility was $nil.
$9.0 million Chailease Credit Facility
On February 26, 2020, we
entered into a secured term facility agreement with Chailease International Financial Services Pte., for an amount of $9.0 million. The
Chailease credit facility was used to refinance the credit facility with
DVB Bank SE dated July 18, 2017.
The Facility was to be
repaid in 36 consecutive monthly instalments of $0.2 million and 24 monthly instalments of $0.1 million with a final balloon of $1.3
million payable together with the final instalment.
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This facility bore interest
at SOFR plus a margin of 4.20% per annum.
On September 12, 2024, we
used a portion of the net proceeds from the 2024 Senior Secured Term Loan Facility entered on August 7, 2024, to fully prepay the amount
of $1.8 million under this facility.
As of December 31, 2024,
the outstanding balance of the Chailease Credit Facility was $nil.
$268.0 Million Syndicated Senior Secured
Credit Facility (CACIB, ABN, First-Citizens & Trust Company, Siemens, CTBC, Bank Sinopac, Palatine)
On September 19, 2019,
we entered into a Syndicated Senior Secured Credit Facility in order to refinance existing credit facilities that had a maturity date
in December 2020, of an amount $224.3 million.
The Senior Syndicated
Secured Credit Facility was agreed to be borrowed in two tranches. The Lenders were CACIB, ABN, First-Citizens & Trust Company, Siemens,
CTBC, Bank Sinopac and Palatine.
Tranche A amounting to $230.0
million was drawn down in full on September 24, 2019 and was scheduled to be repaid in 20 consecutive quarterly instalments of $5.2 million
starting from December 12, 2019 and a balloon
payment of $126.0 million payable on September 24, 2024.
Tranche B amounting to
$38.0 million was drawn down in full on February 10, 2020 and was scheduled to be repaid in 20 consecutive quarterly instalments of
$1.0 million and a balloon payment of $18.0 million payable in the
termination date on the fifth anniversary from the utilization
date of Tranche A, in September 24, 2024. In January 2022, we agreed a new senior secured debt facility to refinance its outstanding
Syndicated Senior Secured Credit
Facility, which extended the maturity date from September 2024 to December 2026, amended certain
covenants in our favor at an unchanged rate of LIBOR + 3.00%. On July 1, 2022, the interest rate was SOFR plus a margin of 3.00%
plus
CAS and is payable at each quarter end date.
On August 9, 2024, we
used a portion of the net proceeds from the 2024 Senior Secured Term Loan Facility entered on August 7, 2024, to fully prepay the amount
of $133.2 million under this facility.
As of December 31, 2024,
the outstanding balance of this facility was $nil.
Sale and leaseback agreements (finance leases)
Four Sale and Leaseback agreements
($44.5 million each) – Minsheng Financial Leasing
In December 2024, we
entered into two sale and leaseback agreements, for $44.5 million each, with Minsheng Financial Leasing (“Minsheng”) to
finance two of the Newly Acquired Vessels, Bremerhaven Express having closed in
December 2024 and the other, Czech, in January 2025.
In January 2025, we entered into two additional sale and leaseback agreements, for $44.5 million each, with Minsheng to finance our
purchase of the remaining two Newly
Acquired Vessels.
Each sale and leaseback
agreement is repayable in 40 equal consecutive quarterly instalments of $0.9 million with a repurchase obligation of $10.0 million on
the final repayment date. The sale and leaseback agreements each have
a term of ten years, and bear interest at SOFR plus a margin of
2.5% per annum payable quarterly in arrears.
As of December 31, 2024,
only the sale and leaseback agreement for the Bremerhaven Express had closed, and the outstanding amount thereunder was $44.5 million.
$120.0 million Sale and Leaseback agreement-CMBFL Four vessels
On August 26, 2021, we
entered into four $30.0 million sale and leaseback agreements with CMBFL to finance the acquisition of the Four Vessels. As at September
30, 2021, we had drawdown a total of $90.0 million. The
drawdown for the fourth vessel, amounting to $30.0 million, took place on October
13, 2021 together with the delivery of this vessel. We have a purchase obligation to acquire the Four Vessels at the end of their lease
terms and under
ASC 842-40, the transaction has been accounted for as a failed sale. In accordance with ASC 842-40, we did not derecognize
the respective vessels from our balance sheet and accounted for the amounts received under the sale and
leaseback agreement as financial
liabilities.
Each sale and leaseback
agreement is repayable in 12 equal consecutive quarterly instalments of $1.6 million and 12 equal consecutive quarterly instalments of
$0.3 million with a repurchase obligation of $7.0 million on the final
repayment date.
The sale and leaseback
agreement for the three vessels matures in September 2027 and for the fourth vessel in October 2027 and bear interest at SOFR plus a margin
of 3.25% per annum plus CAS payable quarterly in arrears.
As of December 31, 2024,
the outstanding balance of these sale and lease back agreements was $42.8 million.
$54.0 million Sale and Leaseback agreement-CMBFL
On May 20, 2021, we entered
into a $54.0 million sale and leaseback agreement with CMBFL to refinance one of the three previous tranches of the $180.5 million Deutsche,
CIT, HCOB, Blue Ocean Entrust Credit Facility, that
had a maturity date on June 30, 2022, of an amount $46.6 million. We had a purchase
obligation to acquire the vessel at the end of the lease term and under ASC 842-40, the transaction had been accounted for as a failed
sale. In
accordance with ASC 842-40, we did not derecognize the respective vessel from our balance sheet and accounted for the amount
received under the sale and leaseback agreement as a financial liability.
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The sale and leaseback agreement
was repayable in eight equal consecutive quarterly instalments of $2.0 million each and 20 equal consecutive quarterly instalments of
$0.9 million with a repurchase obligation of $19.9 million on
the final repayment date.
The sale and leaseback agreement
matured in May 2028 and bore interest at SOFR plus a margin of 3.25% per annum plus CAS payable quarterly in arrears.
In May 2021, on delivery
of the vessel, we drew $54.0 million, which represented vessel purchase price $75.0 million less advanced hire of $21.0 million,
which advanced hire neither bore any interest nor was refundable and was
set off against payment of the purchase price payable to us by the unrelated third party under this agreement.
On August 27, 2024, we
used a portion of the net proceeds from the 2024 Senior Secured Term Loan Facility entered on August 7, 2024, to fully prepay the amount
of $33,345 under this facility.
As of December 31, 2024,
the outstanding balance of this sale and leaseback agreement was $nil.
$14.7 million Sale and Leaseback agreement-Neptune Maritime Leasing
On May 12, 2021, we entered
into a $14.7 million sale and leaseback agreement with Neptune to finance the acquisition of GSL Violetta delivered in April 2021. We
had a purchase obligation to acquire the vessel at the end of the
lease term and under ASC 842-40, the transaction had been accounted
for as a failed sale. In accordance with ASC 842-40, we did not derecognize the respective vessel from our balance sheet and accounted
for the amount received
under the sale and leaseback agreement as a financial liability. In May 2021, we drew $14.7 million under this
agreement.
The sale and leaseback
agreement was repayable in 15 equal consecutive quarterly instalments of $0.8 million each and four equal consecutive quarterly instalments
of $0.5 million with a repurchase obligation of $1.0 million on
the last repayment date.
The sale and leaseback
agreement matured in February 2026 and bore interest at SOFR plus a margin of 4.64% per annum payable quarterly in arrears.
On September 12,
2024, we used a portion of the net proceeds from the 2024 Senior Secured Term Loan Facility entered on August 7, 2024, to fully prepay
the amount of $4.4 million under this facility.
As of December 31, 2024, the
outstanding balance of this sale and leaseback agreement was $nil.
Covenants
Financial Covenants
The agreements governing
our indebtedness contain certain financial covenants, which require us to maintain, among other things:
•
minimum liquidity at the borrower (vessel-owner or finance lessor) level
and minimum consolidated liquidity of at least $20.0 million at the group level; and
•
minimum market value of collateral for each debt obligation, such that the
aggregate market value of the vessels collateralizing the particular debt obligation is between 120% and 154%, depending on the particular
debt
obligation, of the aggregate principal amount outstanding under such debt obligation, or, if we do not meet such threshold, to provide
additional security to eliminate the shortfall.
Restrictive
Covenants
The agreements governing
our indebtedness also contain undertakings limiting or restricting us from, among other things:
•
incurring additional indebtedness;
•
making any substantial change to the nature of our business;
•
paying dividends;
•
redeeming or repurchasing capital stock;
•
selling the collateral vessel, if applicable;
•
entering into certain transactions other than arm’s length transactions;
•
acquiring a company, shares or securities or a business or undertaking;
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•
effecting a change of control of us, entering into any amalgamation, demerger,
merger, consolidation or corporate reconstruction, or selling all or substantially all of our assets;
•
changing the flag, class or technical or commercial management of the applicable
collateral vessel or terminating or materially amending the management agreements relating to such vessel; and
•
experiencing any change in the position and ownership of our Executive
Chairman.
Security
Our secured credit facilities and 2027 Secured Notes are generally
secured by, among other things:
•
a first priority mortgage over the relevant collateralized vessels;
•
first priority assignment of earnings and insurances from the mortgaged
vessels;
•
pledge of the earnings account of the mortgaged vessel;
•
pledge of the equity interest of each of the vessel-owning subsidiaries;
and
•
corporate guarantees.
Leverage
As of December 31, 2024,
we had $691.1 million of debt outstanding of which $231.9 million was for our 2027 Secured Notes which carry interest at the fixed rate
5.69% and $459.2 million was floating rate debt across a number
of facilities and sale and leaseback arrangements and bearing interest
at SOFR based on interest rate cap agreements mentioned below plus an average margin of approximately 2.47%. In December 2021, we entered
into a USD one-
month LIBOR interest rate cap of 0.75% through fourth quarter of 2026, on $484.1 million of our floating rate debt, which
reduces over time and represented approximately half of our outstanding floating rate debt as of that date. In
February 2022, we entered
into USD one-month LIBOR interest rate caps of 0.75% through fourth quarter of 2026, on $507.9 million of our floating rate debt, which
reduces over time and represented approximately half of our
outstanding floating rate debt as of that date. As a result of the discontinuation
of LIBOR, on July 1, 2023, our interest rate caps automatically transitioned to one-month Compounded SOFR at a net level of 0.64%.
We believe that funds generated
by the business and retained will be sufficient to meet our operating needs for the next 12 months following the issuance of this Form
20-F, including working capital requirements, drydocking
costs, interest and debt repayment obligations.
As market conditions warrant,
we may from time to time, depending upon market conditions and the provisions on our facilities/notes, seek to repay loans or repurchase
debt securities, in privately-negotiated or open market
transactions.
Working capital and dividends
Our net cash flows from operating
activities depend on the number of vessels under charter, days on-hire, vessel charter rates, operating expenses, drydock and vessel upgrade
costs, interest and other financing costs including
amortization and general and administrative expenses. Pursuant to our ship management
agreements, we have agreed to pay our ship managers an annual management fee per vessel and to reimburse them for operating costs they
incur
on our behalf. Charter hire is payable by our charterers 15 days or monthly in advance and estimated ship management costs are payable
monthly in advance. Although we can provide no assurances (see “Item 3. Key Information—D.
Risk Factors—Risks Relating
to our Business— We are dependent on our charterers and other counterparties
fulfilling their obligations under agreements with us, and their inability or unwillingness to honor these obligations could
significantly
reduce our revenues and cash flow.”), we expect that our cash flow from our chartering arrangements will be sufficient to
cover our ship management costs and fees, interest payments under our borrowings, amortization,
insurance premiums, vessel taxes, general
and administrative expenses, dividends on our Series B Preferred Shares and other costs and any other working capital requirements for
the short and medium term and planned drydocking
expenses.
We estimate that the average
cost of each of the 25 drydockings completed on vessels in the fleet between January 2023 and December 2024 was $2.7 million, with an
average loss of revenue of $1.6 million from off-hire. We have
included a schedule of the next anticipated drydocking date for each of
our vessels in the section of this Annual Report entitled “Item 4. Information on the Company—B. Business Overview—Inspection
by Classification Societies”.
Our other liquidity requirements
include a requirement to pay a minimum of $145.3 million of amortization in 2025 on our secured term loans and minimum amortization of
$157.1 million in 2026. Interest requirements are $23.5
million and $17.4 million, respectively. The dividend on the $109.0 million Series
B Preferred Shares outstanding as at December 31, 2024 amounts to $9.5 million each year. Based on the number of Class A common shares
outstanding as of the date of this annual report, this dividend, which is subject to approval by the Board of Directors, would amount
to $18.6 million per quarter, following the increase in dividend payable in June 2025. In addition to
funds generated by the business,
we may require new borrowings, issuances of equity or other securities, or a combination of the former and the latter to purchase additional
vessels and will likely require such further funding to meet all
of our repayment obligations under the 2027 Secured Notes and other borrowings.
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C. Research and Development
None.
D. Trend Information
All of the information
and data presented in this section, including the analysis of the container shipping industry, has been provided by MSI. MSI has advised
that (i) some information in MSI’s database is derived from estimates
derived from industry sources or subjective judgments, (ii)
the information in the databases of other maritime data collection agencies may differ from the information in MSI’s database, (iii)
whilst MSI 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, (iv) MSI, its agents,
officers
and employees cannot accept liability for any loss suffered in consequence of reliance on such information or in any other manner,
and (v) the provision of such information does not obviate any need to make appropriate further
inquiries.
Container shipping is the most convenient low-carbon and cost-effective
way to transport a wide range of cargoes, predominantly a diverse selection of consumer, manufactured, semi-manufactured, and perishable
goods. It is
estimated that around 90% of non-bulk cargoes traded by sea are carried by containership. Approximately 225 million TEU,
equating to around 2.0 billion tonnes, of containerized cargo are estimated to have been carried in 2024.
Global containerized cargo volumes
have grown every year since the industry’s inception in 1956, with four exceptions: 2009, during the Global Financial Crisis, 2020,
due to the initial impact of COVID-19, 2022, due to the
geopolitical tensions and macro-economic headwinds caused in part by the continuing
wars between Russia and Ukraine, and 2023, due to the normalization of spending patterns post-pandemic and, more recently, continuing
wars
between Russia and Ukraine and Israel and Hamas, ongoing disputes between China and Taiwan, deteriorating trade relations between
the U.S. and China, and ongoing political unrest and conflicts in the Middle East and other regions
throughout the world. Negative growth
of 1.9% was seen in 2020, followed by a strong rebound, with positive growth of 5.8% in 2021. Containerized trade contracted by 1.9% in
2022, was flat-to-marginally-negative in 2023, and is
currently estimated to have expanded by 5.8% in 2024. Containerized trade in 2025
may be affected by any economic downturn, as well as increased barriers to trade from protectionism and tariffs, and in particular, escalating
trade
tensions resulting from the imposition (or threat) of substantial tariffs by the U.S. on imports from other countries, which could
lead to corresponding punitive actions by the countries with which the U.S. trades.
On the supply side: as at December 31, 2024, idle capacity of the global containership fleet was 0.6%, and the overall orderbook-to-fleet
ratio stood at 27.4% - compared to 1.3% and 26.6%, respectively, at the end of 2023.
The containerized supply chain
extends throughout the world. Mainlane trades are those linking the major manufacturing economies in Asia with the major consumer economies
in North America (the Transpacific trades) and
Europe (the Asia-Europe trades), and those linking Europe with the Americas (the Transatlantic
trades). These trades tend to be served by the largest containerships on the water. In 2024, an estimated 74% of global containerized
volumes were on the non-Mainlane trades, with intra-regional trades—of which the largest is Intra-Asia—representing 41%. These
non-Mainlane and intra-regional trades are predominantly served by mid-sized and smaller
containerships (10,000 TEU, or smaller).
Growth in containerized
trade is linked to consumer-led demand for goods and thereby to regional economic growth. Historically, underlying growth was boosted
by both the containerization of breakbulk goods, including
refrigerated cargoes, and the relocation of manufacturing from developed economies,
such as those in Europe and North America, to lower cost regions, most notably in Asia. Of these, the continued containerization of refrigerated
(or
‘reefer’) cargoes is expected to continue to outpace overall container trade growth.
From 2000 through 2008, a period
of super-cyclical growth largely catalyzed by China, the CAGR of global containerized trade was 9.9%. Having contracted by 8.0% in 2009,
during the Global Financial Crisis, growth rebounded
to 15.3% the following year. The CAGR from 2010 through 2019 was 3.8%. From 2010
through 2024, incorporating the impact of negative growth in 2020 (COVID-19), the rebound in 2021, further negative growth in 2022 and
2023
(geopolitical tensions driving inflationary macro-economic headwinds), and a rebound in 2024, CAGR was 3.0%. While economic growth
is expected to remain the primary driver of containerized trade, trade conflicts and tariffs are
emerging as potential disruptive factors
In November 2023, Houthi militias
based in Yemen began to attack ships transiting the Gulf of Aden and the Red Sea, impacting vessels due to transit the Suez Canal. As
the situation escalated, shipping lines and ship owners
began to divert ships around the southern tip of Africa, the Cape of Good Hope
(“COGH”). Under normal circumstances, approximately 20% of global containerized trade volumes transit the Suez Canal, primarily
on long-haul trades
served by around 34% of global containerized fleet capacity. Illustratively, for a voyage between Singapore and Rotterdam,
diverting around COGH increases the sailing distance by 40.5%, and for a voyage between Singapore and
Genova, a COGH diversion increases
the sailing distance by 77.4%. All else equal, on a full-year basis diverting all Suez-related containerized trade around COGH would absorb
around 10% of effective supply for the global
containerized fleet. Over the course of 2024, the resulting reductions in effective supply
of containerized capacity, in combination with a rebound in global containerized trade, reversed previous downward pressure on freight
rates,
charter market rates, and asset values. A ceasefire agreement reached between Israel and Hamas in January 2025, combined with declarations
apparently made by Houthi militias, have raised the prospect of an increase in sailings
through the Red Sea. However, the situation remains
unstable and unpredictable and the majority of containership operators are currently expected to adopt a cautious approach to returning
to Red Sea sailings at scale.
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Expansion in containerized
trade has also led to expansion in the global containership fleet, of which the vast majority of vessels are fully cellular containerships
which are ships specialized for the transport of containers and fitted
with cell guides throughout the ship to optimize container stowage
and significantly enhance the efficiency of load and discharge operations. At the same time, liner shipping companies have sought to reduce
slot costs (unit costs)
through economies of scale achievable with ever larger ships.
Between 1995 and 2008,
the nominal carrying capacity of the industry-wide fully cellular fleet grew by a compound annual rate of 11.4%; and from 2009
through 2020 at 5.7%, as the industry digested the legacy, pre-financial
crisis orderbook. Net supply CAGR from 2021 through 2024,
is estimated at 7.5% and, as of December 31, 2024, the containership fleet was estimated to be 6,215 ships, with an aggregate
capacity estimated at 30.8 million TEU –
around 42% of which is chartered in from containership owners like Global Ship
Lease.
In December 2008, the orderbook
was estimated to represent over 60% of existing global capacity. Since then, however, the industry has been adjusting to lower demand
growth, capital constraints, and consolidation. By the end of
2024, the overall orderbook-to-fleet ratio stood at 27.4%, with scheduled
deliveries divided over various years (2025 through 2029). For ships smaller than 10,000 TEU the orderbook-to-fleet ratio as of January
1, 2025was 10.2%.
Vessel newbuilding prices,
secondhand values, and charter rates have tended to be closely correlated and are all strongly influenced by the dynamics of supply and
demand, combined with sentiment. From 2000 through 2024, the
average newbuilding price for a theoretical 3,500 – 3,600 TEU containership
was around $45.2 million, with prices ranging between $31.5 million (2002) and $65.7 million (2008). During the same period, secondhand
values for a 10
year old ship of similar size averaged around $24.9 million and ranged between $5.0 million (2016) and $64.0 million (2022).
Meantime, charter market rates for short term charters (under 12 months) for such tonnage averaged about
$21,637 per day and ranged between
$5,300 per day (2016) and $102,600 per day (2022). In January 2025, rates prevailing in the market were around $41,000 per day, with newbuilding
prices at approximately $58.8 million and
secondhand values for a 10 year old ship at about $31.3 million.
Containerization is a low-carbon
form of transportation, with GHG emissions per ton-mile of cargo carried significantly lower than that for other common modes of freight
transport such as air, road, and rail. As a key component
of global supply chains, container shipping is also a contributor to the UN’s
Sustainable Development Goals—particularly those associated with poverty alleviation, economic growth, and infrastructure.
The industry’s principal
regulator, the IMO, has set targets for the reduction of GHG emissions from shipping. The key agreed target is to reduce annual GHG emissions
in absolute terms by at least 50% by 2050, compared to
benchmark 2008 levels. Further targets have also been set on carbon intensity:
specifically, a reduction in CO2 emissions “per transport work” by at least 40% by 2030, with efforts towards 70% by 2050.
Emissions-reducing regulations
introduced from January 1, 2023 include EEXI (Energy Efficiency Existing Ship Index), Enhanced SEEMP (Ship
Energy Efficiency Management Plan), and CII (Carbon Intensity Indicator). Among other things, these measures are
intended to reduce emissions
by limiting the power output from vessels’ main engines, which may have the effect of reducing the operating speed of the global
fleet, tightening effective supply. Other national and pan-national regulators
are also implementing regulations, with notable examples
being the inclusion of shipping within the EU ETS from January 1, 2024, and the introduction of FEUM from January 1, 2025, for vessels
trading in waters within the
jurisdiction of the European Union. Regulation focused upon decarbonization and broader emissions reduction
is expected to continue to evolve and tighten over time.
It is not yet clear which (net)
zero emission fuels will become the standard fuels of the future, with potential candidates including, among others, ammonia, green methanol,
hydrogen, and nuclear. Transition fuels are increasingly
perceived to include Liquified Natural Gas (LNG), and bio-fuel blends. The current
consensus view is that 2030 will be the earliest inflection point at which next-generation green fuels (with the considerable infrastructure
required to
support them) will become commercially available, allowing industry adoption to begin to accelerate. In the interim, it is
expected that the industry will continue to rely predominantly on existing, conventionally-fueled containerships
that are optimized for
lower emissions and, in some instances, are equipped to use both conventional and alternate fuels (Dual-Fuel). Although not without its
own challenges, Carbon Capture and Storage (CCS) is receiving increasing
attention as a potentially powerful tool to mitigate emissions
and to support the synthesis and circularity of net zero fuels such as Green Methanol.
For conventionally-fueled containerships,
there is considerable variation in vessel emissions per tonne of cargo carried, with the economies of scale yielded by larger vessels
typically resulting in lower emissions per container
carried. Other factors, such as vessel age and design, fuel saving and energy efficiency
retrofits, sailing speed, time in port, weather routing and other operational differences, can also have a significant impact on the relative
fuel
efficiency of different classes of containership. Logically, there is a strong correlation between ships with low fuel costs per
TEU slot and ships with low emissions per slot. There is a significant increase in efficiency in the transition
from small feeder containerships
(sub-3,000 TEU) to intermediate-sized vessels (4,000 – 10,000 TEU).
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Whilst even larger vessels
offer further efficiencies relative to intermediate vessels, the incremental improvement curve tends to flatten as vessel sizes increase
beyond approximately 12,000 TEU.
While the emissions profile
of a ship during its operating lifetime is comparatively well understood, insufficient work has been done on a full life-cycle basis:
quantifying the material carbon footprints associated with building a
new ship, and subsequently de-commissioning and re-cycling it at
the end of its economic life.
E. Critical Accounting Estimates
The consolidated financial
statements have been prepared in accordance with U.S. GAAP, which requires us to make estimates in the application of certain accounting
policies based on our best assumptions, judgments and
opinions. We base these estimates on the information available to us at the time
and on various other assumptions we believe are reasonable under the circumstances. The following is a discussion of our principal accounting
policies,
some of which involve a high degree of judgment, and the methods of their application.
For a further description
of our material accounting policies, please see note 2 to the consolidated financial statements included at “Item 18. Financial
Statements”.
Revenue Recognition
Our revenue is generated
from time charters for each vessel. The charters are regarded as operating leases and provide for a per vessel fixed daily charter rate.
Revenue is recorded on a straight-line basis. Our charter revenues are
fixed for the period of the current charters, subject to any off-hire,
and, accordingly, little judgment is required to be applied to the amount of revenue recognition. Operating revenue is stated net of address
commissions, which represent
a discount provided directly to the charterer based on a fixed percentage of the agreed upon charter rate.
If a time charter contains
one or more consecutive option periods, then subject to the options being exercisable solely by us, the time charter revenue will be recognized
on a straight-line basis over the total remaining life of the
time charter, including any options which are more likely than not to be
exercised. If a time charter is modified, including the agreement of a direct continuation at a different rate, the time charter revenue
will be recognized on a
straight-line basis over the total remaining life of the time charter from the date of modification. During the
years ended December 31, 2024, 2023 and 2022 amounts of ($8.8) million, ($4.0) million and $10.9 million, respectively, were
recorded
in time charter-revenues for such modifications and revenues recognized on a straight-line basis. Any difference between the charter rate
invoiced and the time charter revenue recognized is classified as, or released from,
deferred revenue.
We elected the practical
expedient which allows us to treat the lease and non-lease components as a single lease component for the leases where the timing and
pattern of transfer for the non-lease component and the associated
lease component to the lessees are the same and the lease component,
if accounted for separately, would be classified as an operating lease. The combined component is therefore accounted for as an operating
lease under ASC 842, as
the lease components are the predominant characteristics.
Vessels in Operation
Vessels are generally recorded
at their historical cost, which consists of the acquisition price and any material expenses incurred upon acquisition, adjusted for the
fair value of intangible assets or liabilities associated with above or
below market charters attached to the vessels at acquisition.
Vessels acquired in a corporate transaction accounted for as an asset acquisition are stated at the acquisition price, which consists of consideration
paid, plus transaction costs,
considering pro rata allocation based on vessels fair value at the acquisition date. Vessels acquired in
a corporate transaction accounted for as a business combination are recorded at fair value. Vessels acquired as part of the Marathon
Merger
in 2008 were accounted for under ASC 805, which required that the vessels be recorded at fair value, less the negative goodwill arising
as a result of the accounting for the merger.
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The Poseidon Transaction
has been accounted for under ASU 2017-01 as an asset acquisition. The vessels acquired on November 15, 2018 were recorded at their fair
value, based on valuations obtained from third party
independent ship brokers, less negative goodwill arising as a result of the accounting
for the overall Poseidon Transaction, allocated pro-rata.
Subsequent expenditures
for major improvements and upgrades are capitalized, provided they appreciably extend the life, increase the earnings capacity or improve
the efficiency or safety of the vessels.
Borrowing costs incurred
during the construction of vessels or as part of the prefinancing of the acquisition of vessels are capitalized. There was no capitalized
interest for the years ended December 31, 2024 or 2023.
Vessels are stated less
accumulated depreciation and impairment, if applicable. Vessels are depreciated to their estimated residual value using the straight-line
method over their estimated useful lives which are reviewed on an
ongoing basis to ensure they reflect current technology, service potential
and vessel structure. The useful lives are estimated to be 30 years from original delivery by the shipyard.
Management estimates the
residual values of our container vessels based on a scrap price of steel times the weight of the vessel noted in lightweight tons (LWT).
Residual values are periodically reviewed and revised to recognize
changes in conditions, new regulations or other reasons. Revision of
residual values affect the depreciable amount of the vessels and affects depreciation expense in the period of the revision and future
periods. Management estimated
the residual values of its vessels based on scrap rate of $400 per LWT.
For any vessel group which
is impaired, the impairment charge is recorded against the cost of the vessel and the accumulated depreciation as at the date of impairment
is removed from the accounts.
The cost and related accumulated
depreciation of assets retired or sold are removed from the accounts at the time of sale or retirement and any gain or loss is included
in the Consolidated Statements of Income.
Deferred dry dock and special survey costs, net
Drydocking costs
are reported in the Consolidated Balance Sheets within “Deferred dry dock and special survey costs, net”, and include planned
major maintenance and overhaul activities for ongoing certification. We follow the
deferral method of accounting for drydocking costs,
whereby actual costs incurred are deferred and amortized on a straight-line basis over the period until the next scheduled drydocking,
which is generally five years. Any remaining
unamortized balance from the previous drydocking is written-off.
The amortization
period reflects the estimated useful economic life of the deferred dry dock and special survey costs, net, which is the period between
each drydocking. Costs incurred during the drydocking relating to routine
repairs and maintenance are expensed. The unamortized portion
of drydocking costs for vessels sold is included as part of the carrying amount of the vessel in determining the gain or (loss) on sale
of the vessel.
Prior to the completion
of the Poseidon Transaction on November 15, 2018, we allocated an element of the purchase price of a vessel to a drydocking component
which was amortized on a straight-line basis to the next anticipated
drydocking date.
Costs capitalized
as part of the drydock include costs directly associated with the special survey of the ship, its hull and its machinery and for the defouling
and repainting of the hull. Any cost of repair to hull or machinery that
extends useful life is capitalized. Other repair costs are expensed.
12 drydockings were completed in 2024 for regulatory reasons and 49 vessel upgrades were completed, the total cost of which, excluding
the effect of the associated 807
days of off-hire, was $77.5 million. 13 drydockings were completed in 2023 for regulatory reasons and
35 vessel upgrades were completed, the total cost of which, excluding the effect of the associated 701 days of off-hire, was $48.8
million.
The duration of drydockings was adversely affected in by severe weather conditions and extensive works requested by our charterers. The
duration of drydockings was adversely affected in 2022 by delays caused by COVID-19
and by continuing congestion at Chinese and other
shipyards. 12 drydockings were completed in 2022 for regulatory reasons and 26 for vessel upgrades, the total cost of which, excluding
the effect of the associated 581 days of off-hire,
was $34.7 million.
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Derivative instruments
We are exposed to interest
rate risk relating to our variable rate borrowings. In December 2021 we purchased interest rate caps with an aggregate notional amount
of $484.1 million (“December 2021 hedging”), which amount
reduces over time as our outstanding debt balances amortize. The
objective of the hedges is to reduce the variability of cash flows associated with the interest relating to its variable rate borrowings.
At the inception of the
transaction, we documented the relationship between hedging instruments and hedged items, as well as our risk management objective and
the strategy for undertaking various hedging transactions. We also
documented our assessment, both at the hedge inception and on an ongoing
basis, of whether the derivative financial instruments that are used in hedging transactions are highly effective in offsetting changes
in fair values or cash flows
of hedged items.
This transaction is designated
as a cash flow hedge, and under ASU 2017-12, cash flow hedge accounting allows all changes in fair value to be recorded through Other
Comprehensive Income once hedge effectiveness has been
established. Under ASC 815-30-35-38, amounts in accumulated other comprehensive
income shall be reclassified into earnings in the same period or periods during which the hedged forecasted transaction affects earnings
(i.e., each
quarter) and shall be presented in the same income statement line item as the earnings effect of the hedged item in accordance
with paragraph 815-20-45-1A.
The premium paid related
to this derivative was classified in the Consolidated Statements of Cash Flows as operating activities in the line item “Derivative
asset”. The premium shall be amortized into earnings “on a systematic and
rational basis over the period in which the hedged
transaction affects earnings” (ASC 815-30-35-41A); that is, we will expense the premium over the life of the interest rate cap in
accordance with the “caplet method,” as described in
Derivatives Implementation Group (DIG) Issue G20. DIG Issue G20 dictates
that the cost of the interest rate cap is recognized on earnings over time, based on the value of each periodic caplet. The cost per period
will change as the
caplet for that period changes in value. Given that the interest rate cap is forward-starting, expensing of the premium
will not begin until the effective start date of the interest rate cap, in order to match potential cap revenue with the cap
expenses
in the period in which they are incurred.
In February 2022,
we further purchased two interest rate caps with an aggregate notional amount of $507.9 million. The first interest rate cap of $253.9
million which has been designated as a cash flow hedge, has the same
accounting treatment as described above for the December 2021 hedging.
The second interest rate cap was not designated as a cash flow hedge and a negative fair value adjustment of $5.2 million as at December
31, 2024, was recorded
through Consolidated Statements of Income ($5.4 million negative fair value adjustment and $9.7 million positive
fair value adjustment for December 31, 2023 and 2022, respectively). ASC 815-20-25-13a stipulates that an entity may
designate either
all or certain future interest payments on variable-rate debt as the hedged exposure in a cash flow hedge relationship. In this case,
we designated only a portion of our outstanding debt (initially, $253.9 million) as the
hedged item, and any interest payments beyond
the notional amount of the interest rate cap in any given period are not designated as being hedged. As of December 31, 2024, all our
loan agreements have been amended and restated to
take into effect the transition from LIBOR to the SOFR and the relevant provisions on
a replacement rate. In addition, our interest rate caps automatically transited to one-month Compounded SOFR on July 1,
2023, at a level of 0.64%.
On April 4, 2024, we entered
into the FX option to purchase €3.0 million, with monthly settlements, starting April 11, 2024, and ending March 13, 2025. The strike
price is EURUSD 1.10. We entered to this option to hedge the
downside foreign exchange risk associated with expenses denominated
in EUR against fluctuations between the US Dollar and Euro. This FX option is designated as a cash flow hedge of anticipated expenses
totaling €3.0 million,
expected to occur each month. Changes in the fair value of the option other than “intrinsic value”
are excluded from the assessment of effectiveness. The effectiveness of the hedging relationship will be periodically assessed during
the
life of the hedge by comparing the terms of the option and the forecasted expenses to ensure that they continue to coincide. Should
the critical terms no longer match exactly, hedge effectiveness (both prospective and retrospective) will
be assessed by evaluating the
dollar-offset ratio of the spot intrinsic value of the actual option contract and a hypothetically perfect option contract.
The amounts included
in accumulated other comprehensive income will be reclassified to interest expense should the hedge no longer be considered effective.
We assess the effectiveness of the hedges on an ongoing basis. As of
December 31, 2024, 2023 and 2022, following a quantitative assessment,
part of the hedge was no longer considered effective and an amount of ($0.9) million, ($0.2) million and $1.1 million, respectively, was
reclassified (to)/from
other comprehensive income to the Consolidated Statements of Income.
The objective of
the hedges is to reduce the variability of cash flows associated with the interest rates relating to our variable rate
borrowings. When derivatives are used, we are exposed to credit loss in the event of non-
performance by the counterparties; however,
non-performance is not anticipated. ASC 815, Derivatives and Hedging, requires companies to recognize all derivative instruments as either
assets or liabilities at fair value in the balance
sheet. The fair values of the interest rate derivatives are based on quoted market
prices for similar instruments from commercial banks (based on significant observable inputs – Level 2 inputs). As of December 31,
2024 and 2023, we
recorded a derivative asset of $6.0 million and $41.5 million, respectively.
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Intangible assets and liabilities-charter agreements
Our intangible assets and
liabilities consist of unfavorable lease terms on charter agreements acquired in assets acquisitions. When intangible assets or liabilities
associated with the acquisition of a vessel are identified, they are
recorded at fair value. Fair value is determined by reference to
market data and the discounted amount of expected future cash flows. Where charter rates are higher than market charter rates, an intangible
asset is recorded, based on the
difference between the acquired charter rate and the market charter rate for an equivalent vessel and
equivalent duration of charter party at the date the vessel is delivered. Where charter rates are less than market charter rates, an
intangible
liability is recorded, based on the difference between the acquired charter rate and the market charter rate for an equivalent vessel.
The determination of the fair value of acquired assets and liabilities requires us to make
significant assumptions and estimates
of many variables including market charter rates (including duration), the level of utilization of its vessels and its weighted average
cost-of capital (WACC). The estimated market charter rate
(including duration) is considered a significant assumption. The
use of different assumptions could result in a material change in the fair value of these items, which could have a material impact on
our financial position and results of
operations. The amortizable value of favorable and unfavorable leases is amortized
over the remaining life of the relevant lease term and the amortization expense or income respectively is included under the caption “Amortization
of
intangible liabilities-charter agreements” in the Consolidated Statements of Income. For any vessel group which is impaired, the
impairment charge is recorded against the cost of the vessel and the accumulated depreciation as at the
date of impairment is removed
from the accounts.
Impairment of Long-lived Assets
Tangible fixed assets,
such as vessels, that are held and used or to be disposed of by us are reviewed for impairment when events or changes in circumstances
indicate that their carrying amounts may not be recoverable. In these
circumstances, we perform step one of the impairment test by comparing
the undiscounted projected net operating cash flows for each vessel group to its carrying value. A vessel group comprises the vessel,
the unamortized portion of
deferred drydocking related to the vessel and the related carrying value of the intangible asset or liability
(if any) with respect to the time charter attached to the vessel at its purchase. If the undiscounted projected net operating cash
flows
of the vessel group are less than its carrying amount, management proceeds to step two of the impairment assessment by comparing the vessel
group’s carrying amount to its fair value, including any applicable charter, and an
impairment loss is recorded equal to the difference
between the vessel group’s carrying value and fair value. Fair value is determined with the assistance from valuations obtained
from third party independent ship brokers.
We use a number of assumptions
in projecting our undiscounted net operating cash flows analysis including, among others, (i) revenue assumptions for charter rates on
expiry of existing charters, which are based on forecast
charter rates, where relevant, in the four years from the date of the impairment
test and a reversion to the historical mean of time charter rates for each vessel thereafter (ii) off-hire days, which are based on actual
off-hire statistics for
our fleet (iii) operating costs, based on current levels escalated over time based on long term
trends (iv) dry docking frequency, duration and cost (v) estimated useful life, which is assessed as a total of 30 years from original
delivery
by the shipyard and (vi) scrap values.
Revenue assumptions are based
on contracted charter rates up to the end of the existing contract of each vessel, and thereafter, estimated time charter rates for the
remaining life of the vessel. The estimated time charter rate used for
non-contracted revenue days of each vessel is considered a significant
assumption. Recognizing that the container shipping industry is cyclical and subject to significant volatility based on factors beyond
our control, management
believes that using forecast charter rates in the four years from the date of the impairment assessment and a
reversion to the historical mean of time charter rates thereafter, represents a reasonable benchmark for the estimated time
charter rates
for the non-contracted revenue days, and takes into account the volatility and cyclicality of the market.
Through the latter part
of 2022, we noted that charter rates in the spot market had come under pressure and accordingly determined that events occurred and circumstances
had changed, which indicated that potential impairment of
our long-lived assets could exist. These indicators included continued volatility
in the spot market and the related impact of the current container sector on management’s expectation for future revenues. As a
result, step one of the
impairment assessment of each of the vessel groups was performed as at December 31, 2022 and step two of the impairment
analysis was required for one vessel group, as its undiscounted projected net operating cash flows did not
exceed
its carrying value. As a result, we recorded an impairment loss of $3.0 million for one vessel asset group with a total aggregate carrying
amount of $9.0 million which was written down to its fair value of $6.0 million.
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Through the latter part
of 2023, we noted that events and circumstances triggered the existence of potential impairment for some of our vessel groups. These indicators
included volatility in the charter market and the vessels’
market values, as well as the potential impact of the current container
sector on management’s expectation for future revenues. As a result, we performed step one of the impairment assessment of each
of our vessel groups by comparing
the undiscounted projected net operating cash flows for each vessel group to their carrying value and
step two of the impairment analysis was required for two vessel groups, as their undiscounted projected net operating cash flows did
not
exceed their carrying value. As a result, we recorded an impairment loss of an aggregate of $18.8 million for two vessel groups with a
total aggregate carrying amount of $43.8 million, which was written down to their fair value of
$25.0 million.
Through the latter
part of 2024, we noted that events and circumstances triggered the existence of potential impairment for some of our vessel groups. These
indicators included the potential impact of the current container sector on
management’s expectation for future revenues, as well
as some volatility in the charter market and the vessels’ market values. As a result, we performed step one of the impairment assessment
of each of our vessel groups by comparing
the undiscounted projected net operating cash flows for each vessel group to their carrying
value and step two of the impairment analysis was not required for any vessel group as their undiscounted projected net operating cash
flows
exceeded their carrying value. Accordingly, no impairment loss was recorded for the year ended December 31, 2024.
Sensitivity analysis as
at December 31, 2024 suggests that a reduction of 10.0% in the charter rates assumed after expiry of the existing charter contracts
under the current methodology would trigger a theoretical impairment charge
of approximately $2.0 million. A reduction of 5.0% in the
assumed charter rates would trigger a theoretical impairment charge of approximately $2.0 million.
Although we currently
intend to continue to hold and operate all of our vessels, the following table presents information with respect to the carrying
value of our vessels, which are after the impairment charges noted above. The
estimated market values, based on charter attached
valuations as at December 31, 2024 with the assistance of an independent ship broking firm totaled $3,207.2 million. The carrying
value of each of the vessels does not necessarily
represent its fair market value or the amount that could be obtained if the
vessels were sold.
The amount, if any, and
timing of any impairment charges we may recognize in the future will depend upon then current and expected future charter rates and vessel
values, which may differ materially from those fair values as at
December 31, 2024. In addition, vessel values are highly volatile; as
such, the estimated market values may not be indicative of the current or future market value of our vessels or prices that we could achieve
if we were to sell them,
with or without charters attached.
The table below sets out
the carrying value of each of the vessel group we owned as of December 31, 2023 and 2024:
Vessel Name
Capacity
in TEUs
Year
Built
Carrying
Value as at December 31,
2023(1) (in millions of U.S. dollars)
Carrying
Value as at December 31, 2024 (1)
(in millions of U.S. dollars)
CMA
CGM Thalassa
11,040
2008
$86.2
$81.7
ZIM
Norfolk
9,115
2015
60.5
58.0
Anthea
Y
9,115
2015
60.7
58.3
ZIM
Xiamen
9,115
2015
59.4
57.2
Sydney
Express
9,019
2016
0.0
70.7
Istanbul
Express
9,019
2016
0.0
70.6
Bremerhaven
Express
9,019
2015
0.0
67.8
MSC
Tianjin
8,603
2005
36.9
39.5
MSC
Qingdao *
8,603
2004
38.9
44.4
GSL
Ningbo
8,603
2004
36.9
38.0
GSL
Alexandra
8,544
2004
33.8
32.0
GSL
Sofia
8,544
2003
32.2
30.5
GSL
Effie
8,544
2003
32.2
30.8
GSL
Lydia
8,544
2003
31.4
30.0
GSL
Eleni
7,847
2004
17.0
18.2
GSL
Kalliopi
7,847
2004
14.8
14.5
GSL
Grania
7,847
2004
14.9
14.7
Colombia
Express (ex Mary)
7,072
2013
42.5
43.5
Panama
Express (ex Kristina)
7,072
2013
41.7
45.1
Costa
Rica Express (Ex Katherine)
7,072
2013
41.7
45.2
Nicaragua
Express (ex Alexandra)
7,072
2013
41.7
44.9
CMA
CGM Berlioz
7,023
2001
27.2
24.7
Mexico
Express (ex Alexis)
6,910
2015
47.0
50.6
Jamaica
Express (ex Olivia I)
6,910
2015
47.1
50.3
GSL
Christen
6,858
2002
15.5
14.9
GSL
Nicoletta
6,858
2002
15.4
14.8
Agios
Dimitrios
6,572
2011
24.8
29.0
GSL
Vinia
6,080
2004
12.2
12.1
GSL
Christel Elisabeth
6,080
2004
12.2
12.4
GSL
Arcadia
6,008
2000
14.7
14.6
GSL
Violetta
6,008
2000
14.8
14.7
GSL
Maria
6,008
2001
17.0
16.0
GSL
MYNY
6,008
2000
17.7
16.9
GSL
Melita *
6,008
2001
17.8
16.7
GSL
Tegea
5,994
2001
17.7
16.7
GSL
Dorothea
5,994
2001
16.2
15.2
Tasman
5,936
2000
11.8
12.5
Dimitris
Y
5,936
2000
11.9
12.8
Ian
H
5,936
2000
11.7
15.0
GSL
Tripoli *
5,470
2009
39.8
38.9
GSL
Kithira *
5,470
2009
39.7
39.0
GSL
Tinos *
5,470
2010
40.6
39.9
GSL
Syros *
5,470
2010
41.0
39.9
Dolphin
II
5,095
2007
13.1
12.5
Orca
I
5,095
2006
12.1
11.7
CMA
CGM Alcazar
5,089
2007
30.1
28.1
GSL
Château d’If
5,089
2007
28.0
26.2
GSL
Susan
4,363
2008
32.5
30.5
CMA
CGM Jamaica
4,298
2006
25.1
23.5
CMA
CGM Sambhar
4,045
2006
23.8
22.2
CMA
CGM America
4,045
2006
24.1
22.5
GSL
Rossi
3,421
2012
25.0
24.6
GSL
Alice (G)
3,421
2014
28.8
27.6
GSL
Eleftheria (G)
3,421
2013
26.3
25.7
GSL
Melina (G)
3,404
2013
26.5
25.9
Athena
2,980
2003
9.7
9.1
GSL
Valerie
2,824
2005
10.3
9.8
GSL
Mamitsa (ex Matson Molokai)
2,824
2007
24.2
23.0
GSL
Lalo
2,824
2006
12.5
12.3
GSL
Mercer
2,824
2007
24.5
23.0
GSL
Elizabeth
2,741
2006
12.5
12.0
GSL
Chloe (ex Beethoven) (G)
2,546
2012
23.3
24.1
GSL
Maren (G) *
2,546
2014
24.8
25.5
Maira
(G)
2,506
2000
6.1
5.8
Nikolas
(G)
2,506
2000
6.4
6.2
Newyorker
(G)
2,506
2001
6.6
6.2
Manet
2,288
2001
9.7
8.9
Kumasi
2,220
2002
8.3
7.6
Akiteta
2,220
2002
8.0
7.5
Keta
(G)
2,207
2003
5.2
4.9
Julie
(G)
2,207
2002
7.5
7.0
$1,732.2
$1,927.1
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(1)
Carrying value includes vessel cost, the unamortized portion of deferred drydocking related to the vessel
and the related carrying value of the intangible asset or liability (if any) with respect to the time charter attached to the
vessel at
its purchase.
(G)
Indicates geared vessel.
(*)
Indicates vessels for which the market value based on charter attached valuations was lower than the carrying value as at December 31, 2024. The aggregate carrying value of these vessels at December 31, 2024 exceeded their
aggregate market value based on charter attached valuations as at December 31, 2024 by approximately $32.2 million.
Stock-Based Compensation
We have awarded restricted
stock units to certain of our employees. The accounting fair value of restricted stock unit grants is determined by reference to the quoted
stock price on the date of grant, as adjusted for estimated
dividends forgone until the restricted stock units vest. Compensation expense
is recognized based on a graded expense model over the expected vesting period.
Recent Accounting Pronouncements
In December 2023, the
FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Taxes Disclosures, which requires greater disaggregation
of income tax disclosures. The new standard requires additional
information to be disclosed with respect to the income tax rate
reconciliation and income taxes paid disaggregated by jurisdiction. This ASU should be applied prospectively for fiscal years
beginning after December 15, 2024, with
retrospective application permitted. We are currently evaluating the impacts of this
guidance on our Consolidated Financial Statements and disclosures.
In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting
Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. The standard
is
intended to enhance transparency of income statement disclosures primarily through additional disaggregation of relevant expense captions.
The standard is effective for annual reporting periods beginning after December 15, 2026 and
interim periods beginning after December
15, 2027, with prospective or retrospective application permitted. We are currently evaluating the potential impact of adopting
this standard on our consolidated financial statements and
disclosures.
Item 6.
Directors, Senior Management and Employees
A. Directors and Senior Management
Our directors and executive
officers as of the date of this Annual Report and their ages as of December 31, 2024 are listed below:
Name
Age
Position
George Giouroukos
59
Executive Chairman
Michael S. Gross
63
Director
Alain Wils
81
Director
Ulrike Helfer
65
Director
Michael Chalkias
54
Director
Yoram (Rami) Neugeborn
63
Director
Alain Pitner
76
Director
Menno van Lacum
54
Director
Ian J. Webber*
67
Director
Thomas A. Lister**
55
Chief Executive Officer
Anastasios Psaropoulos
45
Chief Financial Officer
George Giannopoulos***
42
Chief Compliance Officer
*
Effective as of March 31, 2024, Mr. Ian J. Webber retired from the position of Chief Executive Officer.
Effective as of the same date, Mr. Webber joined the Board of Directors as a Term II Director, thereby increasing the size of the
Board
of Directors from eight to nine members.
** Effective as
of March 31, 2024, Mr. Thomas A. Lister became Chief Executive Officer to succeed Mr. Webber.
***
Effective as of May 2024, Mr. George Giannopoulos became Chief Compliance Officer.
Biographical information concerning the directors
and executive officers listed above is set forth below.
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George Giouroukos: Mr.
Giouroukos has been our Executive Chairman since November 2018 when the strategic combination with Poseidon Containers was completed.
He has been involved in Shipping since 1993, when he
joined a major Greek shipowning company and worked in various departments. He founded
Technomar, an internationally recognized ship management company, in 1994, where he has served as Managing Director. With over 30 years
of experience in the sector, he has negotiated and executed over 385 secondhand and newbuilding ship transactions, creating partnerships
with a number of leading shipping banks and Private Equity firms to jointly invest in container
and dry bulk ships. These collaborations
have yielded a substantial equity co-investment of well over a billion USD, particularly in workout transactions. Mr. Giouroukos serves
as the Chairman of the Hellenic Advisory Committee of
International classification society, RINA and holds a Bachelor in Mechanical Engineering
from University College London and a Master in Engineering from Brunel University.
Michael S. Gross: Mr.
Gross has been a director since inception and was Chairman from September 2008 to November 2018 when the strategic combination with Poseidon
Containers closed. Mr. Gross is the Chairman of the
board of directors and Co-Chief Executive Officer of SLR Investment, a publicly traded
BDC focused on private direct lending and is a co-managing partner of SLR Capital Partners since 2006. From 1990 to 2006 Mr. Gross
was a
senior partner of Apollo Management, a leading alternative asset management firm, which he co-founded in 1990.
Alain Wils: Mr. Wils has been a director
since May 2014. He is a consultant in the shipping and logistics industries, after more than 40 years of experience in the sector. Mr.
Wils joined the CMA CGM group in 1996 as managing
director of the previously state-owned shipping company, CGM, on its acquisition by
CMA. He was appointed an executive board member of CMA CGM in 2001 on the merger of CMA and CGM until his retirement in 2008. From
1992
to 1996, he was chairman and CEO of Sceta International, later renamed Geodis International, a leading European logistics and freight
forwarding company. He was the managing director of the shipping group Delmas Vieljeux,
which he joined in 1971, from 1982 to 1992. Mr.
Wils, who is a graduate of HEC Paris and of Paris University, was appointed Chevalier de la Légion d’Honneur in 1995 and
chaired the French Shipowners’ Association from 1998 to
2000.
Ulrike Helfer: Ms. Helfer
was appointed a director in 2022 and has more than 40 years of experience in the finance industry and more than 20 years of shipping experience.
She commenced her career in international ship
financing in 2000 in Vereins- und Westbank AG (merged into UniCredit). In 2005, Ms. Helfer
joined DVB Bank SE in Hamburg, where she became Deputy Head of the Global Container, Car Carrier, Intermodal & Ferry Group. In
2011,
Ms. Helfer became the Chief Representative of DVB Bank in Greece. She spent the preceding five years in Athens managing DVB’s local
office by reporting directly to the CEO of the bank. From 2016 to 2023, Ms. Helfer was a
member of the board of managing directors of
portfoliomanagement AöR, a company newly established by the Federal State of Schleswig-Holstein and the City of Hamburg. In this
role, Ms. Helfer and her team had the responsibility
of winding down a portfolio of non-performing shipping loans with an amount of EUR
4.7 billion transferred from HSH Nordbank AG to portfoliomanagement AöR. Ms. Helfer was also a member of the advisory board of Deutsche
Bundesbank in Hamburg, Schleswig-Holstein and Mecklenburg-Vorpommern from 2020 to 2023.
Michael Chalkias: Mr. Chalkias has been
a director since November 2018 when the strategic combination with Poseidon Containers was completed. He is the Co-founder and Co-Chief
Executive Officer of the Prime Marine
group, a leading global operator and manager in the seaborne oil and gas transportation space, which
has managed more than 100 ships since its inception, Since March 2018, Mr. Chalkias has also served as non-executive, non-
independent
director of First Ship Lease Trust, a Singapore-based business trust listed on the Mainboard of the Singapore
Exchange Securities Trading Limited. Mr. Chalkias counts more than 25 years in the shipping industry, during
which he has accumulated
extensive in-depth knowledge in all aspects of the business and established strong relationships in the sector. Through Prime Marine,
he has invested in many ships, primarily product tankers and gas carriers
and has partnered with a number of international banks and US
private equity firms. Prior to co-founding Prime Marine’s predecessor in 1999, he was employed by Tufton Oceanic Limited, a specialized
shipping finance and investment
firm in London, where he was actively involved with debt and equity instruments as well as structured
financing. Mr. Chalkias holds an MSc with Distinction in Shipping, Trade & Finance from the Cass Business School at the City
University
of London and a BSc with Honors in Maritime Business and Maritime Law from the University of Plymouth.
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Captain Yoram (Rami)
Neugeborn: Mr. Neugeborn was appointed a director in 2022 and is a Master Mariner with more than 40 years of experience in the
shipping industry. He currently serves as the Chief Executive Officer of
Aquarii Shipping Solutions Ltd., a private shipping
consultant company. Prior to joining our Board of Directors, from 2010 to 2022 he served as Manager of the Chartering and Sale and
Purchase Division at ZIM Integrated Shipping
Services Ltd. and from 2008 to 2010 he served as the Manager of the Shipping Commercial
Division at XT Shipping Ltd. (formerly, Ofer Brothers Shipping, Haifa). Between 2002 – 2007 he served as a Managing Director
of Zim-Ofer
Shipbrokers. Further, from 1994 to 1998 he served as Commanding Captain onboard ocean-going vessels. Mr. Neugeborn
graduated from the Israeli Maritime Institute in Acre, Israel (Haifa University) and has a Certificate of
Competency, Master Mariner
F.G.
Alain Pitner: Mr. Pitner,
who has 30 years of shipping experience, was appointed a director in November 2018. Mr. Pitner commenced his career in 1974 in the Risk
Department of Banque Indosuez, absorbed later by the Credit
Agricole Group. He held various operational commercial responsibilities
within the Bank’s French Export Credit Department. In 1987, Mr. Pitner joined the Shipping Division of the Bank’s Structured
Finance Department, where he
financed newbuildings, second hand vessels and also special projects. He then was entrusted with
increasingly senior roles. In September 2017, after 42 years, Mr. Pitner retired from the bank. He graduated from Reims business school
and holds a MSIA from Krannert Business School—Purdue University, USA in 1974.
Menno van Lacum: Mr. van Lacum was appointed
a director in November 2018. He commenced his career in 1997 by joining the Transportation Group at MeesPierson where he was responsible,
in different capacities, for
arranging and structuring debt capital markets and leasing products predominantly for the Transportation
Equipment Leasing sector. In 2005, Mr. van Lacum became Director of the Fortis Principal Finance Group in the USA,
responsible for holding
equity investments and structuring debt instruments within the Transportation Sector. In 2009, Mr. van Lacum joined the Transportation
Capital Group as a Partner in the Netherlands focusing primarily on
holding investments in the maritime industry.
In 2019, Mr. van Lacum became CEO of Prow Capital, a private debt fund manager focusing on ESG investments in the shipping industry. Mr.
van Lacum holds a Master’s Degree in
Economics from the University of Amsterdam, Netherlands.
Ian
J. Webber: Effective March 31, 2024, Mr. Webber retired from the position of Chief Executive Officer (which he held since August
2008), and joined our Board of Directors. From 1979 to 1996, Mr. Webber worked for
PriceWaterhouse, the last five years of which he was
a partner. From 1996 to 2006, Mr. Webber served as the Chief Financial Officer and a director of CP Ships Limited, a subsidiary of Canadian
Pacific Limited until 2001 and
thereafter a public company listed on the New York and Toronto stock exchanges until its acquisition by
TUI A.G. in 2005. Mr. Webber is a graduate of Cambridge University.
Thomas A. Lister: Mr.
Lister has been our Chief Executive Officer as of March 31, 2024. Mr. Lister had been our Chief Commercial Officer from August 2008 to
March 31, 2024, and, from April 2017 until the Poseidon
Transaction in November 2018, was also our Chief Financial Officer. Since 2019,
Mr. Lister has led our ESG initiatives to ensure close alignment of our commercial and ESG strategies. From 2005 until 2007, Mr. Lister
was a Senior
Vice President at DVB Bank. Before that, from 2004 to 2005, he worked for the German KG financier and ship owning group,
Nordcapital & E.R.Schiffahrt, as Director of Business Development. From 1991 to 2002, Mr. Lister worked
in a number of managerial,
strategic and operational roles for liner shipping companies and their agents. Mr. Lister graduated from Durham University and holds an
MBA from INSEAD.
Anastasios
Psaropoulos: Mr. Psaropoulos became our Chief Financial Officer in November 2018. He has over 15 years of experience in finance
in the shipping sector. He has served as Chief Financial Officer of Poseidon
Containers and Technomar, which he joined in 2011,
participating in more than 200 successful S&P transactions including distressed deals, and from January, 2024, provides limited
advisory services to Technomar when requested.
Prior to Poseidon, he was financial controller in Dolphin Capital, an AIM listed real
estate development fund. He has also worked as an external auditor with PricewaterhouseCoopers, covering shipping and oil & gas
industries. Mr.
Psaropoulos holds a Master in Economics with specialization in Finance and Investments, from the Athens University
of Economics and Business. He has also participated in the Program for Leadership Development (PLDA), in the
program preparing to be
a Corporate Director (PCD), and in the program Private Equity and Venture Capital (PEVC) of Harvard Business School.
George Giannopoulos:
Mr. Giannopoulos became our Chief Compliance Officer in May 2024 and has been our Head of Internal Audit since the Poseidon Transaction
in November 2018. From 2015 until 2018, Mr. Giannopoulos
was Financial Controller at our technical manager, Technomar. Prior to joining
Technomar, from 2010 until 2015, Mr. Giannopoulos was Financial Controller in charge of the South American logistics arm of Navios—a
group of
shipping companies listed on the New York Stock Exchange. From 2006 to 2010, Mr. Giannopoulos worked for PricewaterhouseCoopers
as a senior external auditor covering the shipping and oil & gas industries. Mr. Giannopoulos is a
graduate of Maritime Studies from
the University of Piraeus.
B. Compensation
Compensation of Executive Officers
For the year ended December
31, 2024, we have expensed an aggregate of $2.2 million in compensation to our executive officers, which includes the remuneration of
our Executive Chairman.
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Compensation of Directors
Our directors (other than
our Executive Chairman) receive an annual fee of $105,000. The Chairman of the audit committee receives an additional fee of $15,000 and
each member of the audit committee receives an additional
$7,500. The Chairman of the nominating and corporate governance committee and
the compensation committee each receive an additional $5,000 and each member of those committees receives an additional $2,500. In addition,
each
director is reimbursed for out-of-pocket expenses in connection with attending meetings of our Board of Directors or committees.
Our Executive Chairman receives remuneration as an executive officer and does not receive director
fees.
2019 Omnibus Incentive Plan
On February 4, 2019, our
Board of Directors adopted the Global Ship Lease, Inc. 2019 Omnibus Incentive Plan (the “2019 Plan”).
The purpose of the 2019
Plan is to provide directors, officers and employees, whose initiative and efforts are deemed to be important to the successful conduct
of our business, with incentives to (a) enter into and remain in the
service of our company or our subsidiaries and affiliates, (b) acquire
a proprietary interest in the success of our company, (c) maximize their performance and (d) enhance the long-term performance of our
company. The 2019 Plan is
administered by the compensation committee of our Board of Directors or such other committee of our Board of
Directors as may be designated by them.
Under the terms of the
2019 Plan stock options and appreciation rights granted under the 2019 Plan will have an exercise price equal to the fair market value
of a common share on the date of grant, provided that in no event may
the exercise price be less than the fair market value of a common
share on the date of grant. Options and stock appreciation rights will be exercisable at times and under conditions as determined by the
plan administrator, but in no event
will they be exercisable later than 10 years from the date of grant.
The plan administrator
may grant restricted stock and awards of restricted stock units subject to vesting and forfeiture provisions and other terms and conditions
as determined by the administrator of the 2019 Plan. Upon the
vesting of a restricted stock unit, the award recipient will be paid an
amount equal to the number of restricted stock units that then vest multiplied by the fair market value of a common share on the date
of vesting, which payment may
be paid in the form of cash or common shares or a combination of both, as determined by the administrator
of the 2019 Plan. The 2019 Plan administrator may grant dividend equivalents with respect to grants of restricted stock units.
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Adjustments may be made
to outstanding awards in the event of a corporate transaction or change in capitalization or other extraordinary event. In the event of
a “change in control” (as defined in the 2019 Plan), unless otherwise
provided by the 2019 Plan administrator in an award
agreement, awards then outstanding shall become fully vested and exercisable in full.
Our Board of Directors
may amend or terminate the 2019 Plan and may amend outstanding awards, provided that no such amendment or termination may be made that
would materially impair the rights or materially increase any
obligations, of a grantee under an outstanding award. Shareholders’
approval of 2019 Plan amendments may be required in certain circumstances if required by applicable rules of a national securities exchange
or the SEC. Unless
terminated earlier by our Board of Directors, the 2019 Plan will expire 10 years from the date on which the 2019 Plan
was adopted by the Board of Directors.
Following the adoption
of the 2019 Plan, our previous plans adopted in 2015 and 2008 were terminated.
In 2019, our Board of Directors
approved awards to our executive officers under the 2019 Plan, providing those executive officers with the opportunity to receive up to
1,359,375 Class A common shares in aggregate, in four
tranches, subject to certain vesting criteria. On March 11, 2021, our Board of Directors
approved additional awards of 61,625 of Class A common shares, in four tranches, subject to certain vesting criteria, to two other employees
resulting in a total amount of awards of up to 1,421,000 shares.
In July 2021, Mr. Giouroukos
received an additional 17,720 Class A common shares pursuant to the 2019 Plan as a special bonus.
As at December 31, 2021,
all of the above awards had vested as the criteria had been met. 931,874 shares were settled and issued and 506,846 remained to be issued.
On September 29, 2021,
the compensation committee and the Board of Directors approved an increase in the aggregate number of Class A common shares available
for issuance as awards under the 2019 Plan by 1,600,000 to
3,412,500, and approved new awards to senior management, totaling 1,500,000
shares of incentive stock, in three tranches, subject to certain vesting criteria, with a grant date October 1, 2021. The compensation
committee and Board
of Directors also approved an increase the maximum number of Class A common shares that each non-employee director
may be granted in any one year to 25,000 and subsequently approved stock-based awards to the then seven non-
executive directors totaling
105,000 shares of incentive stock, or 15,000 each, to vest in a similar manner to those awarded to senior management.
During the year ended December
31, 2022, 28,528 unvested share awards were cancelled on the resignation of two directors and an award of 13,780 was made to one new director
to vest in a similar manner to the other awards,
with the first tranche adjusted for the date of appointment of the director.
In March 2023, the Compensation
Committee and the Board of Directors, approved an amendment to the stock-based awards agreed in September 2021 for senior management and
non-employee directors such that 10% of the
second tranche would be forfeit with the remaining 90% vesting from April 2023 and quarterly
thereafter with the last such vesting to be October 2025. The price at which the third tranche is to vest was amended to $21.00, over
a 60-
day period. All other terms of the awards remain unchanged.
During the years ended December
31, 2024, 2023 and 2022, 535,912, 399,727 and 218,366 incentive shares vested, respectively, under the amended September 2021 awards.
A total of 2,647,900 incentive shares under both plans
had vested as at December 31, 2024. Of the total incentive shares which vested
under both plans up to December 31, 2024, 204,797 had not been issued.
On January 2, 2024, we
approved awards to a non-employee director amounting to 4,884 shares of incentive stock which vested and were issued immediately, and
8,311 shares, to vest in a similar manner to the awards to other
non-employee directors, adjusted for the date of appointment of the director,
up to September 30, 2025.
As a result of the Chief Executive
Officer transition in March 2024, the Board of Directors approved a new award of 6,465 shares of incentive stock to the new non-employee
director and 51,750 a new award to the new Chief
Executive Officer, both structured in the same way as existing equivalent awards, adjusted
for the dates of appointment. 155,250 shares were forfeited, due to retirement of the then Chief Executive Officer.
We filed a registration statement
on Form S-8 under the Securities Act registering the Class A common shares under our 2019 Plan. The shares included in such registration
statement are available for sale in the public market,
subject to applicable vesting provisions.
C. Board Practices
Our Board of Directors is divided
into three classes with one class of directors being elected in each year and each class serving a three-year term. The current term of
office of the Term I class of directors consisting of Ms. Helfer,
Mr. Neugeborn and Mr. Pitner, expires at the annual meeting of shareholders
to be held in 2027. The current term of office of the Term II class of directors, consisting of Mr. Chalkias, Mr. Giouroukos and Mr. Webber,
expires at the
annual meeting of shareholders to be held in 2025. The current term of office of the Term III class of directors, consisting
of Mr. Gross, Mr. van Lacum and Mr. Wils, expires at the annual meeting of shareholders to be held in 2026.
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Other than our Executive
Chairman, none of our directors have service contracts with us or any of our subsidiaries providing for benefits upon the termination
of their employment.
For information about the
period during which each director and executive officer has served in such position at our company, see “Item 6. Directors, Senior
Management and Employees – A. Directors and Senior Management.”
Director Independence
Our Board of Directors has
determined that all of our directors in office as of the date hereof, other than Mr. George Giouroukos and Mr. Ian Webber, are “independent
directors” as such term is defined in Rule 10A-3 under the
Exchange Act, and the NYSE rules.
Board Committees
Our Board of Directors
has formed an audit committee, a compensation committee, a nominating and corporate governance committee, a conflicts committee and an
environmental, social and governance committee. Our
committee charters are available on our website (www.globalshiplease.com) and
in print to any investor upon request. The information included on our website is not incorporated herein by reference.
Audit Committee
We have established an
audit committee, comprised of three members of our Board of Directors, which, as directed by our written audit committee charter, is responsible
for overseeing the management’s conduct of our systems of
internal accounting and financial controls, reviewing our financial statements,
recommending to the Board of Directors the engagement of our independent auditors, and pre-approving audit and audit-related services
and fees.
The audit committee will
at all times be composed exclusively of “independent directors” who, as may be required by the NYSE listing standards, are
able to read and understand fundamental financial statements, including a
company’s balance sheet, income statement and cash flow
statement. Our audit committee currently consists of Messrs. Chalkias, van Lacum, Wils and Ms. Helfer, each of whom is “independent”
as defined in Rule 10A-3 under the
Exchange Act and the NYSE rules.
In addition, the audit
committee has at least one member who has past employment experience in finance or accounting, requisite professional certification in
accounting, or other comparable experience or background that results
in the individual’s financial sophistication. Our Board of
Directors has determined that Mr. van Lacum has such financial sophistication and also qualifies as an “audit committee financial
expert” (please refer to Item16A. Audit
Committee Financial Expert).
Compensation Committee
We have established a compensation
committee, consisting of Messrs. Gross, Chalkias and Pitner, that is responsible for and reports to our Board of Directors on the evaluation
and compensation of executives, oversees the
administration of compensation plans, reviews and makes recommendations to the Board of Directors
on director and executive compensation and prepares any report on executive compensation required by the rules and regulations of
the
SEC.
Nominating and Corporate Governance Committee
We have established a nominating
and corporate governance committee, consisting of Messrs. Chalkias, Pitner and Wils, that reports to our Board of Directors on and is
responsible for succession planning and the appointment,
development and performance evaluation of our board members and senior executives.
It also assesses the adequacy and effectiveness of our corporate governance guidelines, reviewing and recommending changes to the Board
of
Directors whenever necessary.
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Conflicts Committee
We have established a Conflicts
Committee to review, evaluate, and approve any transaction or other matter referred or disclosed to it where a conflict of interest or
potential conflict of interest exists or arises, whether real or
perceived. Such matters may include transactions between us on the one
hand, and Technomar, or Conchart, or any of our officers or directors or affiliates of our officers or directors, on the other hand. Our
Conflicts Committee consists
of Messrs. Chalkias, van Lacum, and Wils.
Environment, Social, and Governance (“ESG”) Committee
We have established an
ESG Committee to (i) guide, support, and supervise management in developing, articulating, and continuing to evolve, our ESG strategy,
(ii) evaluate and recommend ESG initiatives for adoption by us, (iii)
assess ESG risks and opportunities, and (iv) promote ESG practices
within our business culture and processes. Our ESG committee consists of Messrs. Neugeborn, van Lacum, Wils, and Giouroukos.
D. Employees
As of December 31, 2024,
we had seven employees.
E. Share Ownership
See “Item 7. Major
Shareholders and Related Party Transactions—A. Major Shareholders” for information regarding beneficial ownership by our directors
and executive officers.
See “Item 6. Directors,
Senior Management and Employees—B. Compensation—2019 Omnibus Incentive Plan” for information regarding our equity incentive
plan.
F. Disclosure of a registrant’s
action to recover erroneously awarded compensation.
Not Applicable.
Item 7.
Major Shareholders and Related Party Transactions
A. Major Shareholders
The following table sets
forth information regarding the beneficial ownership of our Class A common shares as of the date of this annual report by:
•
each person known by us to be the beneficial owner of more than 5% of our
outstanding common shares;
•
each of our officers and directors; and
•
all of our officers and directors as a group.
Except as otherwise indicated,
each person or entity named in the table below has sole voting and investment power with respect to all of our Class A common shares,
shown as beneficially owned, subject to applicable community
property laws. As of the date of this annual report, an aggregate of 35,736,123
Class A common shares were issued and outstanding.
The Class A common shares
each have one vote and vote together as a single class except that any amendment to the articles of incorporation, including those made
pursuant to the terms of any merger, consolidation or similar
transaction, that would increase or decrease the aggregate number of authorized
common shares of a class, increase or decrease the par value of common shares of a class, or alter or change the powers, preferences or
rights of the class
of common shares so as to affect them adversely, must be approved by the holders of not less than a majority of the
votes entitled to be cast by the holders of such class of common shares then outstanding, voting separately as a class.
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Approximate
Percentage
Name
of Beneficial Owner
Class A Common Shares
of Outstanding Class
A
Beneficially
Owned
Common
Shares(1)
5% Shareholders:
Donald
Smith & Co., Inc. (2)
3,139,470
8.8%
George
Gioroukos (3)
2,480,423
6.9%
Other Directors and
Executive Officers:
Michael
Gross
34,917
0.1%
Alain
Wils
7,146
0.0%
Menno
van Lacum
20,625
0.1%
Alain
Pitner
12,834
0.0%
Michael
Chalkias
12,834
0.0%
Rami
Neugeborn
11,608
0.0%
Ulrike
Helfer
11,366
0.0%
Ian
Webber
125,408
0.4%
Thomas
Lister
64,351
0.2%
Anastasios
Psaropoulos
156,582
0.4%
George
Giannopoulos
917
0.0%
All directors and executive
officers as a group (12 individuals) (4)
2,939,011
8.2%
(1)
Calculated
based on 35,736,123 Class A common shares outstanding as of the date of this annual report.
(2)
This
information is derived from a Schedule 13G filed with the SEC on February 13, 2025.
(3)
Mr.
Giouroukos, who serves as our Executive Chairman, owns and controls Shipping Participations
Inc. which is the record holder of 2,075,490 Class A common shares. As a result, Mr. Giouroukos
may be deemed to beneficially
own the shares held by Shipping Participations Inc.
(4)
The
number of shares of Class A common shares beneficially owned by a person and the percentage
ownership of that person, includes Class A common shares under stock-based awards held by
that person that are exercisable,
vested or convertible as of March 10, 2025 or that will
become exercisable, vested or convertible within 60 days after March 10, 2025 and which are
described above under the heading “Item 6. Directors, Senior Management and
Employees-B.
Compensation-2019 Omnibus Incentive Plan”.
As of March 10,
2025, we had 15 registered shareholders of record, two of which were located in the United States holding an aggregate of 34,830,869 of
our Class A common shares, representing 97.5% of our outstanding
common shares. However, one of the U.S. shareholders of record is Cede
& Co., a nominee of The Depository Trust Company, which held 34,830,582 of our Class A common shares as of March 10, 2025, representing
97.5% of our
outstanding shares. We believe that the shares held by Cede & Co. include common shares beneficially owned by both holders
in the United States and non-U.S. beneficial owners.
We are not aware of any
arrangements the operation of which may at a subsequent date result in our change of control.
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B. Related Party Transactions
Registration Rights Agreement
At the time of the Marathon
Merger, we entered into a registration rights agreement with CMA CGM, Marathon Investors, LLC, Marathon Founders, LLC and the other initial
shareholders of Marathon common stock (including
Michael S. Gross), pursuant to which we agreed to register for resale on a registration
statement under the Securities Act and applicable state securities laws, the common shares issued to such shareholders
pursuant to the Marathon
Merger or upon exercise of warrants (the “Marathon Registration Rights Agreement”).
On October 29, 2018, we
entered into an Amended and Restated Registration Rights Agreement (the “Amended and Restated Registration Rights Agreement”),
which amended and restated the Marathon Registration Rights
Agreement, with KEP VI, KIA VIII, CMA CGM, Management Investor Co., Anmani
Consulting Inc., Marathon Founders, LLC, Michael S. Gross and Maas Capital Investments B.V. with respect to all Class A common shares
(and the
Series C Preferred Shares at that time) held by such shareholders on the closing date of the Poseidon Transaction, including
any Class A common shares issued on conversion of the Series C Preferred Shares (the “Registrable
Securities”). The Amended
and Restated Registration Rights Agreement became effective on the closing of the Poseidon Transaction. Pursuant to the Amended and Restated
Registration Rights Agreement, we filed with the SEC a shelf
registration statement to register the offer and resale of all of the Registrable
Securities. The Amended and Restated Registration Rights Agreement also provides certain piggyback and demand registration rights to the
holders of
Registrable Securities and contains customary indemnification and other provisions. Based on information provided to us by
Kelso, KEP VI and KIA VIII no longer hold Registrable Securities. Based on a Schedule 13D/A filed by
CMA CGM with the SEC on September
7, 2022, CMA CGM no longer holds any Registerable Securities.
Non-Compete Agreement
On October 29,
2018, we entered into a Non-Compete Agreement (the “Original Non-Compete Agreement”) with Mr. George Giouroukos and Conchart
reflecting, among others, the provisions described below. The Non-Compete
Agreement became effective on the closing of the Poseidon Transaction.
On March 12, 2025, we entered into a First Amended and Restated Non-Compete Agreement with Mr. George Giouroukos and Conchart amending
the Original
Non-Compete Agreement.
Restricted Business
For so long as Mr. Giouroukos
is our Executive Chairman, Mr. Giouroukos and any entity which he controls will agree not to acquire, own or operate containerships. However,
under certain exceptions, Mr. Giouroukos, and any
entity which he controls, may compete with us, which could affect our business. Specifically,
Mr. Giouroukos, and any entity which he controls, will not be prevented from:
1.
Acquiring, owning, operating or chartering vessels other than containerships;
2.
Acquiring or owning one or more containerships (or an interest in one or more containerships)
if we decide not to exercise our right of first refusal to acquire such containership (or interest in such containership), in accordance
with the terms of the Non-Compete Agreement described below under “Right of First Refusal”;
3.
Acquiring, owning, operating or chartering one or more containerships as part of the acquisition of a
controlling interest in a business or package of assets that owns, operates or charters such containerships; provided, however, that
Mr.
Giouroukos, and any entity which he controls must offer to sell such containership(s) to us at their fair market value plus any additional
tax or other similar costs that Mr. Giouroukos, and any entity which he controls, incurs in
connection with the acquisition and the transfer
of such containership to us separate from the acquired business, if a majority of the value of the business or the package of assets acquired
is attributable to containerships, unless the
acquisition of such controlling interest was otherwise permitted;
4.
Providing vessel management services relating to containerships, or other vessel types, including technical
and commercial management, warehouse transactions for financial institutions and pool management;
5.
Acquiring, owning, operating or chartering any containership that Mr. Giouroukos,
and any entity which he controls, owned or operated or had a contractual arrangement with respect to as of the closing date of the Plan
of Merger
by and among Poseidon Containers Holdings LLC, K&T Marine LLC, us and other parties;
6.
Transferring to Mr. Giouroukos or any entity which he controls, title to
a vessel that Mr. Giouroukos or such entity that he controls or any third party is entitled to acquire, own and operate under the Non-Compete
Agreement,
pursuant to or in connection with the termination of a financing arrangement, including by way of a sale and leaseback or similar
transaction, which is accounted for under United States generally accepted accounting principles as a
financial lease;
7.
Acquiring, owning, operating or chartering any containership that is subject to an offer to purchase
as described in paragraphs (2) and (3) above, in each case pending the offer of such containership to us and our determination
whether
to purchase the containership and, if so, pending the closing of such purchase; and
8.
Increasing ownership interest of Mr. Giouroukos in a containership that was previously subject to an offer
to purchase by us as described in paragraphs (2) or (3) above, that, in each case, our Board of Directors previously elected
not to cause
us to purchase.
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Further to the above, notwithstanding
this agreement, Mr. Giouroukos, and any entity which he controls, may claim business opportunities that would benefit us, and this could
have an adverse effect on our business, results of
operations, cash flows, financial condition and ability to pay dividends.
Right of First Refusal
Mr. Giouroukos, and any
entity he controls, will also agree to grant us a right of first refusal to acquire any containership, after Mr. Giouroukos, or an entity
controlled by him, enters into an agreement that sets forth terms upon
which he or it would acquire such containership. Mr. Giouroukos,
or such entity controlled by him, shall notify us within 30 days of any agreement that he, or his controlled entity, has entered into
to purchase a containership and will
provide a period of seven calendar days in respect of a single vessel transaction, or a period of
14 calendar days in respect of a multi-vessel transaction, from the date that he delivers such notice to us of said opportunity, within
which to
decide whether or not to accept the opportunity and nominate a subsidiary of ours to become the purchaser of such containership,
before Mr. Giouroukos, or any entity he controls, will accept the opportunity or offer it to any of his other
affiliates or entities controlled
by him. The opportunity offered to us will be on no less favorable terms than those offered to Mr. Giouroukos, or entity controlled by
him. The approval of our conflicts committee which is comprised of
independent directors will be required to accept or reject this offer.
Upon a change of control
of us, these rights of first refusal will terminate immediately. In addition, at such time that Mr. Giouroukos ceases to serve as our
Executive Chairman, these rights of first refusal as applicable to Mr.
Giouroukos will terminate immediately.
Right of First Offer on Containerships
Mr. Giouroukos will also
agree to grant a right of first offer to us for any containership he, or any entity controlled by him, owns or acquires, upon any proposed
sale, transfer, or other disposition.
Prior to entering into any
transaction regarding any containership’s disposition with a non-affiliated third party, Mr. Giouroukos, or such entity controlled
by him, will deliver a written notice to us setting forth the material terms
and conditions of the proposed transaction. During the 14-day
period after the delivery of such notice, and at our election we (through our conflicts committee) and Mr. Giouroukos, or such entity
controlled by him, will negotiate in
good faith to reach an agreement on the transaction, which shall be approved by our conflicts committee
which is comprised of independent directors. If we do not reach an agreement within such 14-day period, Mr. Giouroukos, or such
entity
controlled by him, as the case may be, will be able within the next 180 calendar days to sell, transfer, dispose or re-contract the containership
to a third party (or to agree in writing to undertake such transaction with a third party)
on terms generally no less favorable than those
offered pursuant to the written notice. If, however, after receipt of the notice, we elect not to exercise our right of first offer with
respect to the transfer of a containership, then the
procedures shall not be required with respect any future proposed transfer of such
containership occurring on substantially similar terms and conditions as set forth in such notice.
Upon a change of control
of us, these rights of first offer will terminate immediately. In addition, at such time that Mr. Giouroukos ceases to serve as our Executive
Chairman, these rights of first offer as applicable to Mr.
Giouroukos will terminate immediately.
Chartering Opportunities
If Conchart, or any entity
it controls, acquires knowledge of a potential opportunity to enter into a potential charter with or without profit sharing for a particular
containership that it believes in good faith would be suitable for our
vessels, which we refer to as a “Potential Charter Opportunity”,
then Conchart, or such entity that it controls, would be obliged to offer such Potential Charter Opportunity to us and, for a period of
up to two business days, we shall have
the right to elect to pursue such Potential Charter Opportunity for ourselves or allow Conchart
to direct such Potential Charter Opportunity to itself or another person or entity. In determining suitability of a Potential Charter
Opportunity, Conchart shall take into consideration certain factors, such as the availability, suitability and positioning of the relevant
vessel, the potential charterer’s demands for the vessel’s specifications and costs. In the event we do
not elect to accept
the Potential Charter Opportunity, Conchart shall be free to pursue such Potential Charter Opportunity or direct it to another person
or entity for a period of 15 calendar days on the same terms and conditions as
presented to us.
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Ship Management Agreements
Technomar provides us with
all day-to-day technical ship management services, pursuant to the TTMA for all of the vessels in our fleet. Each TTMA was amended in
March 2024 (with effect from January 1, 2024) to expand
Technomar’s responsibilities in view of EU ETS requirements, and again amended
in March 2025 to expand Technomar’s responsibilities in view of FEUM requirements, as detailed below.
Mr. George Giouroukos,
our Executive Chairman, is the Founder, Managing Director, and majority beneficial owner of Technomar. Technical management services
provided under each TTMA include crewing, purchasing stores,
lubricating oils and spare parts, paying wages, pensions and insurance for
the crew, and organizing other vessel operating necessities, including monitoring and reporting with respect to EU ETS requirements (including
related Emission
Trading Scheme Allowances) and FEUM compliance, and the arrangement and management of drydocking. We pay Technomar a
daily management fee of Euro 820 from January 1, 2025, compared to Euro 785 for 2024, per vessel,
payable in U.S. dollars, which, in
addition to covering the technical ship management services being provided, includes administrative support services, including accounting
and financial reporting, treasury management services and
legal services also being provided pursuant to the TTMAs. We also reimburse
the Technomar for the costs it incurs on our behalf, and provide customary indemnification to Technomar and its employees, agents and
sub-contractors.
Commencing January 1, 2024, we also pay Technomar a fee of EUR 7,500, per annum per vessel, pro rata, for the provision
of additional services relating to our compliance with EU ETS requirements, such services including, among
others, gathering and monitoring
emissions data, calculating emissions allowances, reporting verified emissions data to the relevant authorities, and managing and monitoring
EU ETS trading accounts on our behalf. The EU ETS Fee is
subject to a good faith re-appraisal as market standards evolve.
Each TTMA has a minimum
term of twenty-four months after the later to occur of the expiry of the charter for the applicable vessel or the credit facility (or
other debt agreement) for which the applicable vessel serves as collateral,
unless terminated earlier in accordance with the provisions
of the TTMA. Each TTMA may be terminated (a) by either party by giving six months’ written notice, in which case, if such notice
is given at or prior to the termination of the
minimum term, a termination payment of fifty percent of the annual fee is payable by us
if the TTMA is terminated by Technomar and a termination payment of six times the annual fee is payable by us if the TTMA is terminated
by us,
or (b) following the expiry of the minimum term, by either party by giving six months’ written notice to the other party,
in which case, a termination payment of fifty percent of the annual fee is payable by us if the TTMA is terminated
by Technomar and a
termination payment of five times the annual fee is payable by us if the TTMA is terminated by us. In the event of the sale or total loss
of the applicable vessel, a payment equal to one quarter of the annual
management fee will apply, provided that the sale is not part of
a change in control. If the TTMA is terminated as a result of a change of control in us, as provided in the TTMA, then a termination payment
of six times the annual fee
will apply. The TTMA may also be terminated (i) by us, upon a change of control of Technomar, (ii) automatically
on the insolvency of either party, (iii) by one party upon the breach by the other party of the TTMA, among other
reasons, and may result
in a termination payment as provided therein. We expect that additional vessels that we may acquire in the future will also be managed
under a TTMA on substantially similar terms.
The management fees paid by
us to Technomar for the year ended December 31, 2024 amounted to $21.8 million. The management fees paid by us to Technomar for the year
ended December 31, 2023 amounted to $19.1 million.
For the year ended December 31, 2022 management fees paid by us to Technomar amounted
to $16.6 million. GSL has guaranteed certain of the financial obligations of its subsidiaries under each applicable TMA.
Six vessels, which were
purchased by us in July 2021, were previously managed by another third-party ship manager with those management agreements having been
terminated between May and July 2023 (the “Third-Party
Managed Vessels”). Each of our vessel-owning subsidiaries for the
Third-Party Managed Vessels entered into a Supervision Agreement with Technomar, pursuant to which Technomar supervised the third-party
manager. Technomar
also undertook the provision of Technical, Drydock, Insurance, Freight and Claims Handling Services as well as accounting,
administrative & support services. Pursuant to the Supervision Agreements, we paid a supervision fee of
$157.50 per day (effective
from January 1, 2023) per vessel ($150.00 prior to January 1, 2023). The Supervision Agreements terminated when the underlying management
agreement terminated between May and July 2023.
Conchart provides commercial
management services to us on all of our vessels pursuant to the CCMA. Mr. George Giouroukos, our Executive Chairman, is the sole beneficial
owner of Conchart. Under the commercial
management agreements, Conchart is responsible for (i) marketing of our vessels, (ii) seeking
and negotiating employment of our vessels, (iii) advising us on market developments, and on the development of new rules and regulations
with respect to trading and cargo restrictions, (iv) assisting in the calculation of hires, and the collection of any sums related to
the operation of vessels, (v) communicating with agents, and (vi), negotiating memoranda of agreement for
the sale of the vessels. No
commission is payable on any charter of a vessel in our fleet to CMA CGM in place as of November 15, 2018, if applicable. However, commission
is payable to the managers for any extension of such
charters after March 31,2021. We have agreed to pay Conchart a commission of 1.25%
on all monies earned under each charter fixture. Further, we have agreed to pay to the commercial manager, who shall be named broker in
each
memorandum of agreement (or equivalent agreement) providing for the sale of all vessels and purchase of some vessels, a commission
of 1.00% based on the sale and purchase price for any sale and purchase of a vessel, which shall be
payable upon request of the commercial
manager.
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The CCMA, with respect
to a vessel, has a minimum term of twenty-four months after the later to occur of the expiry of the charter for the vessel or the credit
facility (or other debt agreement) for which the vessel serves as
collateral, unless terminated earlier in accordance with the provisions
of the CCMA. The CCMA, with respect to a vessel, may be terminated (a) by either party by giving six months’ written notice, in
which case, if such notice is given
at or prior to the termination of the minimum term, a termination payment is payable by us of six
times the average monthly commission paid by us to Conchart (or which has accrued) in the previous six month period if the agreement
is
terminated by Conchart, and a termination payment is payable by us equal to thirty-six times the average monthly commission paid by us
(or which has accrued) to Conchart in the previous twelve months if the CCMA is terminated
by us, or (b) following the expiry of the minimum
term, by either party giving six months’ written notice to the other party, in which case a termination payment is payable by us
of six times the average monthly commission paid by us
to Conchart (or which has accrued) in the previous six month period if the CCMA
is terminated by Conchart, and a termination payment is payable by us of twelve times the average monthly commission paid by us (or which
has
accrued) to Conchart in the previous twelve months if the CCMA is terminated by us.
If the CCMA is terminated
as a result of a change of control in us, as provided in each CCMA, then a termination payment of thirty-six times the average monthly
commission paid by us with respect to such vessel (or which has
accrued) to Conchart in the previous twelve months period will apply.
The CCMA may also be terminated (i) by us, upon a change of control of Conchart, (ii) automatically on the insolvency of either party,
(iii) by one party upon the
breach by the other party of the CCMA, among other reasons as set forth in the CCMA, and may result in a termination
payment as provided therein. We expect that additional vessels that we may acquire in the future will also be
managed under a CCMA on
substantially similar terms.
The fees paid by us to Conchart
for the year ended December 31, 2024 amounted to $8.6 million. For the year ended December 31, 2023, fees paid to Conchart amounted to
$8.0 million.
For additional information
on our related party transactions, please see the notes to our consolidated financial statements included herein.
C. Interests of Experts and Counsel
Not applicable.
Item 8.
Financial Information
A. Consolidated Statements and Other Financial Information
Please see “Item
18. Financial Statements” below.
Legal Proceedings
We have not been involved
in any legal proceedings that may have, or have had a significant effect on our business, financial position, results of operations or
liquidity, and we are not aware of any proceedings that are pending or
threatened that may have a material adverse effect on our business,
financial position, results of operations or liquidity. From time to time, we may be subject to legal proceedings and claims in the ordinary
course of business,
principally personal injury and property casualty claims associated with operating containerships. We expect that
these claims would be covered by insurance, subject to customary deductibles. Claims, even if lacking merit, could result
in the expenditure
of significant financial and managerial resources.
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Dividend Policy
On January 12, 2021, we announced
that our Board of Directors had initiated a dividend policy under which we intended to pay shareholders a regular quarterly cash dividend
of $0.12 per Class A common share with effect from
the first quarter of 2021. We paid dividends of $0.25 per Class A common share for
the first, second, third and fourth quarter of 2021 and we announced on November 22, 2021 that from first quarter of 2022 the dividend
will increase
by 50% to $0.375 per Class A common share per quarter. We paid dividends of $0.375 per Class A common share for the first,
second, third and fourth quarters of 2022 and 2023 and first quarter of 2024. On August 5, 2024, we
announced an increase in quarterly
dividend by 20% to $0.45 per common share. We paid dividends of $0.45 per Class A common share for the second, third and fourth quarter
of 2024.
On March 5, 2025, we
announced an increase in our supplemental quarterly dividend by $0.075 per Class A common share (subject to declaration by our Board
of Directors), representing an 16.7% increase on our quarterly
dividend of $0.45 per Class A common share (taking into account
regular and supplemental quarterly dividend). Following the increase, our total quarterly dividend is expected to be $0.525 per
Class A common share, effective with the
regular quarterly dividend that is declared on our Class A common shares in connection with
the first quarter of 2025 and paid in June 2025.
Dividends, if any, will
be based on available cash flow, rather than net income, after all relevant cash expenditures, including cash interest expense on borrowings
that finance operating assets, cash income taxes and after an
allowance for the cash cost of future drydockings but not including deductions
for non-cash items including depreciation and amortization and changes in the fair values of financial instruments, if any.
The declaration and payment
of any dividend is always subject at all times to the discretion of our Board of Directors which reviews our dividend policy quarterly,
taking into consideration capital structure, growth opportunities,
industry fundamentals, asset value trends and financial performance
including cash flow, restrictions under our current and future agreements governing our indebtedness, including our credit facilities,
the provisions of Marshall Islands
law affecting the payment of distributions to shareholders, required capital and drydocking expenditures,
reserves established by our Board of Directors, increased or unanticipated expenses, additional borrowings or future issuances of
securities
and other factors, many of which will be beyond our control.
There were 4,359,190 Depositary
Shares outstanding at December 31, 2024, each of which represents 1/100th of one share of our Series B Preferred Shares. Dividends on
the Series B Preferred Shares are payable at 8.75% per
annum in arrears on a quarterly basis, when and if declared by the Board of Directors.
Following the issuance of the Series B Preferred Shares, no dividend may be declared or paid or set apart for payment on our common shares
and
other junior securities, unless full cumulative dividends have been or contemporaneously are being paid or declared and set aside
for payment on all outstanding Series B Preferred Shares, subject to certain exceptions. See “Item 10.
Additional Information—B.
Memorandum and Articles of Association”. Dividends have been declared as scheduled with respect to our Series B Preferred Shares.
Our ability to pay dividends
is also limited by the amount of cash we can generate from operations following the payment of fees and expenses and the establishment
of any reserves as well as additional factors unrelated to our
profitability. We are a holding company, and we will depend on the ability
of our subsidiaries to distribute funds to us in order to satisfy our financial obligations and to pay dividend payments. Further, our
Board of Directors may elect
to not distribute any dividends or may significantly reduce the dividends. As a result, the amount of dividends
actually paid, if any, may vary from the amount previously paid and such variations may be material. See “Item 3. Key
Information—D.
Risk Factors” for a discussion of the risks associated with our ability to pay dividends.
Marshall Islands law generally
prohibits the payment of dividends other than from surplus (retained earnings and the excess of consideration received for the sale of
shares above the par value of the shares) or while a company is
insolvent or would be rendered insolvent by the payment of such a dividend.
We believe that, under current
U.S. federal income tax law, some portion of the distributions you receive from us will constitute dividends and, if you are an individual
that is a citizen or resident of the United States and that meets
certain holding period and other requirements, such dividends will be
treated as “qualified dividend income” subject to tax at preferential rates. See “Item. 10. Additional Information—E.
Taxation—Tax consequences of holding class A
common shares — Taxation of distributions paid on Class A common shares”
for information regarding the eligibility requirements for “qualified dividend income.”
B. Significant Changes
None.
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Item 9.
The Offer and Listing
A. Offer and Listing Details
Please see “Item
9. Offer and the Listing—C. Markets”.
B. Plan of Distribution
Not applicable.
C. Markets
On August 15, 2008, our
Class A common shares began trading on the NYSE under the symbol “GSL”. On August 20, 2014, our Depositary Shares, each of
which represents a 1/100th interest in a share of our Series B Preferred
Shares, began trading on the NYSE under the symbol “GSL-B”.
D. Selling Shareholders
Not applicable.
E. Dilution
Not applicable.
F. Expenses of the Issue
Not applicable.
Item 10.
Additional Information
A. Share Capital
Not applicable.
B. Memorandum and Articles of Association
Our Amended and Restated
Articles of Incorporation have previously been filed as Exhibit 3.1 to Amendment No. 1 to our Registration Statement on Form 8-A (File
No. 001-34153) filed with the SEC on March 26, 2019 and are
hereby incorporated by reference into this Annual Report. Articles of Amendment
to the Amended and Restated Articles of Incorporation have previously been filed as Exhibit 3.3 to our Report on Form 6-K, filed with
the SEC on
March 25, 2019 and are hereby incorporated by reference into this Annual Report. Our Fourth Amended and Restated Bylaws are
filed as Exhibit 1.3 to this Annual Report.
A description of the material
terms of our Amended and Restated Articles of Incorporation and Fourth Amended and Restated Bylaws is included in “Description of
Securities,” attached hereto as Exhibit 2.3 and incorporated by
reference herein.
Registration Rights Agreement
We have a registration
rights agreement with certain of our shareholders that was amended and restated in October 2018 upon closing of the Poseidon Transaction.
For a description of the Amended and Restated Registration Rights
Agreement, please see “Item 7. Major Shareholders and Related
Party Transactions— B. Related Party Transactions.”
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C. Material Contracts
We refer you to “Item
4. Information on the Company—B. Business Overview,” “Item 5. Operating and Financial Review and Prospects—B.
Liquidity and Capital Resources—Liquidity, Working Capital and Dividends—
Indebtedness,” “Item 7. Major Shareholders
and Related Party Transactions—B. Related Party Transactions” for a discussion of the contracts that we consider to be both
material and outside the ordinary course of business during the
two-year period immediately preceding the date of this Annual Report.
Certain of these material agreements that are to be performed in whole or in part after the date of this annual report are attached as
exhibits to this Annual Report.
Other than as discussed
in this Annual Report, we have no material contracts, other than contracts entered into in the ordinary course of business, to which we
are a party.
D. Exchange Controls
We are not aware of any
governmental laws, decrees or regulations in the Republic of the Marshall Islands that restrict the export or import of capital, including
foreign exchange controls, or that affect the remittance of dividends,
interest or other payments to non-resident holders of our securities.
E. Taxation
The following represents
the opinion of our United States and Marshall Islands tax counsel, Watson Farley & Williams LLP, and is a summary of the material
U.S. federal income tax and Marshall Islands tax consequences of the
ownership and disposition of our Class A common shares and Series
B Preferred Shares.
This section is based on
current provisions of the Code, current and proposed Treasury regulations promulgated thereunder, and administrative and judicial decisions
as of the date hereof, all of which are subject to change or
differing interpretation, possibly on a retroactive basis. Changes in these
authorities may cause the tax consequences of share ownership to vary substantially from the consequences described below.
This section does not purport
to be a comprehensive description of all of the tax considerations that may be relevant to us or each investor. This section does not
address all aspects of U.S. federal income taxation that may be
relevant to any particular investor based on such investor’s individual
circumstances. In particular, this section considers only investors that will own Class A common shares or Series B Preferred Shares as
capital assets and does not
address the potential application of the alternative minimum tax or the U.S. federal income tax consequences
to investors that are subject to special treatment, including:
•
broker-dealers;
•
insurance companies;
•
taxpayers who have elected mark-to-market accounting;
•
tax-exempt organizations;
•
regulated investment companies;
•
real estate investment trusts;
•
financial institutions or “financial services entities”;
•
taxpayers who hold our shares as part of a straddle, hedge, conversion transaction
or other integrated transaction;
•
taxpayers required to recognize income for U.S. federal income tax purposes
no later than when such income is reported on an “applicable financial statement”;
•
taxpayers that are subject to the “base-erosion and anti-avoidance”
tax;
•
taxpayers that own 10% or more (by vote or value), directly or constructively, of our shares;
•
certain expatriates or former long-term residents of the United States;
and
•
U.S. holders (as defined herein) whose functional currency is not the U.S.
dollar.
No ruling has been or will
be requested from the IRS regarding any matter affecting us or our shareholders. The statements made herein may be challenged by the IRS
and, if so challenged, may not be sustained upon review in a
court.
The following does not
address any aspect of U.S. federal gift or estate tax laws, or state or local tax laws. Additionally, the section does not consider the
tax treatment of partnerships or other pass-through entities or persons who
hold our shares through such entities. Shareholders should consult their tax
advisors regarding the specific tax consequences to them of the acquisition, holding or disposition of our shares, in light of their particular
circumstances.
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Taxation of Global Ship Lease
Taxation of operating income
Unless exempt from U.S.
federal income taxation under the rules described below in “The Section 883 exemption,” a foreign corporation that earns only
transportation income is generally subject to U.S. federal income taxation
under one of two alternative tax regimes: (1) the 4% gross
basis tax or (2) the net basis tax and branch profits tax.
The 4% gross basis tax
For foreign corporations
not engaged in a U.S. trade or business, the United States imposes a 4% U.S. federal income tax (without allowance of any deductions)
on the corporation’s U.S. source gross transportation income. For this
purpose, transportation income includes income from the use,
hiring or leasing of a vessel, or the performance of services directly related to the use of a vessel (and thus generally includes time
charter and bareboat charter income). The
U.S. source portion of transportation income includes 50% of the income attributable to voyages
that begin or end (but not both) in the United States. Generally, no amount of the income from voyages that begin and end outside the
United States is treated as U.S. source, and consequently none of the transportation income attributable to such voyages is subject to
this 4% tax. Although the entire amount of transportation income from voyages that begin and end in
the United States would be U.S. source,
we do not expect to have any transportation income from voyages that begin and end in the United States.
The net basis tax and branch profits tax
We do not expect to engage
in any activities in the United States or otherwise have a fixed place of business in the United States. Nonetheless, if this situation
were to change or were we to be treated as engaged in a U.S. trade or
business, all or a portion of our taxable income, including gains
from the sale of vessels, could be treated as effectively connected with the conduct of this U.S. trade or business, or effectively connected
income. Any effectively
connected income would be subject to U.S. federal corporate income tax, currently imposed at a rate of 21%. In
addition, an additional 30% branch profits tax would be imposed on us at such time as our after-tax effectively connected
income is viewed
as having been repatriated to our offshore office. The 4% gross basis tax described above is inapplicable to income that is treated as
effectively connected income.
The Section 883 exemption
Both the 4% gross basis
tax and the net basis and branch profits taxes described above are inapplicable to U.S. source transportation income that qualifies for
exemption under Section 883 of the Code.
To qualify for the Section
883 exemption, a foreign corporation must, among other things:
•
be organized in a jurisdiction outside the United States that grants an
equivalent exemption from tax to corporations organized in the United States, which we call an Equivalent Exemption;
•
satisfy one of the following three ownership tests (discussed in more detail
below): (1) the more than 50% ownership test, or 50% Ownership Test, (2) the controlled foreign corporation test, or CFC Test or (3) the
“Publicly
Traded Test”; and
•
meet certain substantiation, reporting and other requirements (that include
the filing of U.S. income tax returns).
We are organized under
the laws of the Marshall Islands. Each of the vessels in the fleet is owned by a separate wholly owned subsidiary that has elected
to be disregarded as separate from us for U.S. federal income tax purposes
(or in the case of one subsidiary, that is organized in
the Marshall Islands). The U.S. Treasury Department recognizes the Marshall Islands as a jurisdiction that grants an Equivalent
Exemption; therefore, we should meet the first
requirement for the Section 883 exemption. Additionally, we intend to comply with the
substantiation, reporting and other requirements that are applicable under Section 883 of the Code. As a result, qualification for
the Section 883
exemption will turn primarily on our ability to satisfy one of the three ownership tests.
(1) The 50% Ownership Test
In order to satisfy the
50% Ownership Test, a non-U.S. corporation must be able to substantiate that more than 50% of the value of its stock is owned, directly
or indirectly, by “qualified shareholders.” For this purpose, qualified
shareholders include: (1) individuals who are residents
(as defined in the regulations promulgated under Section 883 of the Code, or Section 883 Regulations) of countries, other than the United States, that
grant an Equivalent
Exemption, (2) non-U.S. corporations that meet the Publicly Traded Test of the Section 883 Regulations and are organized
in countries that grant an Equivalent Exemption, or (3) certain foreign governments, non-profit organizations,
and certain beneficiaries
of foreign pension funds. A corporation claiming the Section 883 exemption based on the 50% Ownership Test must obtain all the facts necessary
to satisfy the IRS that the 50% Ownership Test has been
satisfied (as detailed in the Section 883 Regulations). Given the widely held
nature of our Class A common shares, we do not currently anticipate circumstances under which we would be able to satisfy the 50% Ownership
Test.
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(2) The CFC Test
The CFC Test requires that
the non-U.S. corporation be treated as a controlled foreign corporation, or CFC, for U.S. federal income tax purposes. We believe that
we are not a CFC but cannot predict whether we will become a
CFC, and satisfaction of the CFC definitional test is outside of our control.
(3) The Publicly Traded Test
The Publicly Traded Test
requires that one or more classes of equity representing more than 50% of the voting power and value in a non-U.S. corporation be “primarily
and regularly traded” on an established securities market
either in the United States or in a foreign country that grants an Equivalent
Exemption.
The Section 883 Regulations
provide, in pertinent part, that stock of a non-U.S. corporation will be considered to be “primarily traded” on an established
securities market in a given country 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. Our Class A common shares are listed on the NYSE and are not listed on any other securities exchange.
Therefore, our Class A common shares should be treated as primarily traded on an established securities market in the
United States.
The Section 883 Regulations
also generally provide that stock will be considered to be “regularly traded” on an established securities market if one or
more classes of stock in the corporation representing in the aggregate more than
50% of the total combined voting power and value of all
classes of stock of the corporation are listed on an established securities market during the taxable year. During 2024, the Class A common
shares represented more than 50% of
the total combined voting power and value of all classes of our stock. However, even if a class of
shares is so listed, it is not treated as regularly traded under the Section 883 Regulations unless (1) trades are made in the shares
on the
established securities 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 (2) the aggregate number of shares traded on the established securities market
during the taxable year is
at least 10% of the average number of outstanding shares of that class during that year (as appropriately adjusted in the case of a short
taxable year). Even if these trading frequency and trading volume tests are
not satisfied with respect to the Class A common shares, however,
the Section 883 Regulations provide that such tests will be deemed satisfied if the Class A common shares are regularly quoted by dealers
making a market in such
Class A common shares. While we anticipate that these trading frequency and trading volume tests will be satisfied
each year, satisfaction of these requirements is outside of our control and, hence, no assurances can be provided that we
will satisfy
the Publicly Traded Test each year. Furthermore, the Class A common shares may not represent more than half of the voting power or value of
all classes of our stock.
In addition, even if the
“primarily and regularly traded” tests described above are satisfied, a class of stock will not be treated as primarily and
regularly traded on an established securities market if, during more than half the
number of days during the taxable year, one or more
shareholders holding, directly or indirectly, at least 5% of the vote and value of that class of stock, or 5% Shareholders, own, in the
aggregate, 50% or more of the vote and value of
that class of stock. This is referred to as the 5% Override Rule. In performing the analysis,
we are entitled to rely on current Schedule 13D and 13G filings with the SEC to identify our 5% Shareholders, without having to make any
independent investigation to determine the identity of the 5% Shareholder. In the event the 5% Override Rule is triggered, the Section
883 Regulations provide that the 5% Override Rule will nevertheless not apply if the company can
establish that among the closely-held
group of 5% Shareholders, sufficient shares are owned by 5% Shareholders that are considered to be “qualified shareholders,”
as defined above, to preclude non-qualified 5% Shareholders in the
closely-held group from owning 50% or more of the total value of the
relevant class of stock held by 5% Shareholders for more than half the number of days during the taxable year.
Based on information that
we have as to our shareholders and other matters, we believe that we qualified for the Section 883 exemption for 2022, 2023 and 2024.
Whether we may satisfy the “publicly-traded” test for 2025 and
future taxable years depends on factors that are outside of our control, and
we cannot provide any assurances that we will or will not satisfy the “publicly-traded” test to claim exemption from U.S.
taxation for 2025 or future taxable
years.
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If
we were not to qualify for the Section 883 exemption in any year, the U.S. income taxes that become payable could have a negative effect
on our business, and could result in decreased earnings available for distribution to our
shareholders. However, under our charter agreements,
our charterers are generally responsible for the payment of any such taxes, as the charterer determines where each vessel trades.
United States taxation of gain on sale of vessels
If we qualify for the Section
883 exemption, then gain from the sale of any vessel may be exempt from tax under Section 883. Even if such gain is not exempt from tax
under Section 883, we will not be subject to U.S. federal
income taxation with respect to such gain, assuming that we are not, and have
never been, engaged in a U.S. trade or business. Under certain circumstances, if we are so engaged, gain on sale of vessels could be subject
to U.S. federal
income tax.
Tax consequences of holding Class A common shares
U.S. holders
For purposes of this
discussion, a U.S. holder is a beneficial owner of our Class A common shares that owns (actually or constructively) less than 10% of
our equity (by vote and value) and that is:
•
an individual who is a citizen or resident of the United States (as determined
for U.S. federal income tax purposes);
•
a corporation (or other entity taxed as a corporation for U.S. federal income
tax purposes) created or organized under the laws of the United States, any state thereof or the District of Columbia;
•
an estate whose income is includible in gross income for U.S. federal income
tax purposes regardless of its source; or
•
a trust if (i) a court within the United States is able to exercise primary
supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions
of the trust, or (ii) it
has in effect a valid election to be treated as a U.S. person.
Taxation of distributions paid on Class A common shares
When we make a distribution
with respect to our Class A common shares, subject to the discussions of the passive foreign investment company, or PFIC rules below,
a U.S. holder will be required to include in gross income as
foreign source dividend income the amount of the distribution to the extent
paid out of our current or accumulated earnings and profits as determined for U.S. federal income tax purposes. Distributions in excess
of such earnings and
profits will be applied against and will reduce the U.S. holder’s tax basis in the Class A common shares and,
to the extent in excess of such basis, will be treated as gain from the sale or exchange of the Class A common shares.
Subject to the discussions
of the PFIC rules below, in the case of a U.S. holder that is a corporation, dividends that we pay will generally be taxable at regular
corporate rates and generally will not qualify for a dividends-received
deduction available for dividends received from U.S. corporations.
In the case of certain non-corporate U.S. holders, dividends that we pay generally will be treated as “qualified dividend income”
subject to tax at preferential rates,
provided that the Class A common shares are listed on an established securities market in the United
States (such as the NYSE), the U.S. holder meets certain holding period and other requirements and we are not a PFIC in the taxable
year
in which the dividends are paid or in the immediately preceding taxable year.
Special rules may apply
to any “extraordinary dividend” paid by us. An extraordinary dividend is, generally, a dividend with respect to a share if
the amount of the dividend is equal to or in excess of 10% of a shareholder’s
adjusted basis (or fair market value in certain circumstances)
in such share. In addition, extraordinary dividends include dividends received within a one-year period that, in the aggregate, equal
or exceed 20% of a U.S. holder’s tax basis
(or fair market value). If we pay an “extraordinary dividend” on our Class
A common shares that is treated as “qualified dividend income,” then any loss derived by certain non-corporate U.S. holders
from the sale or exchange of such
shares will be treated as long-term capital loss to the extent of the amount of such dividend.
Taxation of the disposition of Class A common shares
Subject to the discussions
of the PFIC rules below, upon the sale, exchange or other disposition of Class A common shares, a U.S. holder will recognize capital gain
or loss in an amount equal to the difference between the amount
realized on the disposition and such U.S. holder’s tax basis in
our Class A common shares. The U.S. holder’s initial tax basis in its Class A common shares generally will be the U.S. holder’s
purchase price for the Class A common
shares and that tax basis will be reduced (but not below zero) by the amount of any distributions
on the units that are treated as non-taxable returns of capital, as discussed above under "—Taxation of distributions paid
on Class A
common shares".
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Subject to the discussions
of the PFIC rules below, capital gain from the sale, exchange or other disposition of Class A common shares held more than one year is
long-term capital gain, and is eligible for a reduced rate of taxation
for individuals. Gain recognized by a U.S. holder on a sale, exchange
or other disposition of Class A common shares generally will be treated as U.S. source income. A loss recognized by a U.S. holder on the
sale, exchange or other
disposition of Class A common shares generally will be allocated to U.S. source income. The deductibility of a
capital loss recognized on the sale, exchange or other disposition of Class A common shares may be subject to limitations,
and U.S. holders
should consult their own tax advisors regarding their ability to deduct any such capital loss in light of their particular circumstances.
3.8% tax on net investment income
A U.S. holder that is an
individual, estate, or, in certain cases, a trust, will generally be subject to a 3.8% tax on the lesser of (1) the U.S. holder’s
net investment income (or undistributed net investment income in the case of an
estate or trust) for the taxable year and (2) the excess
of the U.S. holder’s modified adjusted gross income for the taxable year over a certain threshold (which in the case of individuals
is between $125,000 and $250,000). A U.S.
holder’s net investment income will generally include distributions made by us that constitute
dividends and gain upon a sale, exchange or other disposition of our Class A common shares. This tax is in addition to any income taxes
due
on such investment income. Net investment income generally will not include a U.S. holder's pro rata share of our income and gain
if we are a PFIC and that U.S. holder makes a QEF election, as described below in “—Consequences
of possible passive foreign
investment company classification”. However, a U.S. holder may elect to treat inclusions of income and gain from a QEF election
as net investment income. Failure to make this election could result in a
mismatch between a U.S. holder's ordinary income and net investment
income.
If you are a U.S. holder
that is an individual, estate or trust, you are encouraged to consult your tax advisors regarding the applicability of the 3.8% tax on
net investment income to the ownership of our Class A common shares.
Consequences of possible passive foreign investment company classification
A non-U.S. entity treated
as a corporation for U.S. federal income tax purposes will be a PFIC in any taxable year in which, after taking into account the income
and assets of the corporation and certain subsidiaries pursuant to a
“look through” rule, either: (1) 75% or more of its gross
income is “passive” income or (2) 50% or more of the average value of its assets is attributable to assets that produce passive
income or are held for the production 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 which are received
from unrelated
parties in connection with the active conduct of a trade or business; income derived from the performance of services does
not, however, constitute “passive income.” The determination of whether a corporation is a PFIC is made
annually. If a corporation
is a PFIC in any taxable year that a person holds stock in the corporation (and was not a qualified electing fund with respect to such
year, as discussed below), the stock held by such person will be treated as
stock in a PFIC for all future years (absent an election which,
if made, may require the electing person to pay taxes in the year of the election).
Based on the projected
composition of our income and valuation of our assets, we do not expect that we will constitute a PFIC with respect to the current or
any future taxable year, although there can be no assurance in this regard.
Our expectation is based principally on the position that,
for purposes of determining whether we are a PFIC, the majority, if not all, of the gross income we derive from our chartering activities
should constitute services income rather
than rental income.
In this regard, we have
been advised by our tax advisor that the income from our time and voyage chartering activities should be services income. There is, however,
no direct legal authority under the PFIC rules addressing our
current and projected future operations or supporting our position. Accordingly,
no assurance can be given that the IRS will not assert that we are a PFIC with respect to any taxable year, nor that a court would not
uphold any such
assertion.
If we were to be classified
as a PFIC in any year, each U.S. holder of our Class A common shares that does not make a timely qualified electing fund or mark-to-market
election (as discussed below) will be subject (in that year and
all subsequent years) to special rules with respect to: (1) any “excess
distribution” (generally defined as any distribution received by a U.S. holder in a taxable year that is greater than 125% of the average
annual distributions received
by the U.S. holder in the three preceding taxable years or, if shorter, the U.S. holder’s holding
period for the Class A common shares), and (2) any gain realized upon the sale or other disposition of the Class A common shares. Under
these rules:
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•
the excess distribution or gain will be allocated ratably over the U.S.
holder’s holding period for our Class A common shares;
•
the amount allocated to the current taxable year and any year prior to the
first year in which we were a PFIC will be taxed as ordinary income in the current year; and
•
the amount allocated to each of the other taxable years in the U.S. holder’s
holding period for our Class A common shares will be subject to U.S. federal income tax at the highest rate in effect for the applicable
class of
taxpayer for that year, and an interest charge will be added as though the amount of the taxes computed with respect to these
other taxable years were overdue.
In addition, each U.S.
holder of our Class A common shares will generally be required to file an IRS Form 8621 if such U.S. holder holds its shares in any year
in which we were classified as a PFIC.
In order to avoid the application
of the PFIC rules discussed above with respect to excess distributions and realized gains, U.S. holders of our Class A common shares may
make a qualified electing fund, or a QEF, election
provided in Section 1295 of the Code. In lieu of the PFIC rules discussed above, a
U.S. holder that makes a valid QEF election will, in very general terms, be required to include its pro rata share of our ordinary income
and net capital
gains, unreduced by any prior year losses, in income for each taxable year (as ordinary income and long-term capital gain,
respectively) and to pay tax thereon, even if the amount of that income is not the same as the distributions paid
on the Class A common
shares during the year. If we later distribute the income or gain on which the U.S. holder has already paid taxes under the QEF rules,
the amounts so distributed will not again be subject to tax in the hands of the
U.S. holder. A U.S. holder’s tax basis in any Class
A common shares as to which a QEF election has been validly made will be increased by the amount included in such U.S. holder’s
income as a result of the QEF election and
decreased by the amount of nontaxable distributions received by the U.S. holder. On the disposition
of a common share, a U.S. holder making the QEF election generally will recognize capital gain or loss equal to the difference, if any,
between the amount realized upon such disposition and its adjusted tax basis in the common share. In general, a QEF election should be
made on or before the due date for filing a U.S. holder’s federal income tax return for the first
taxable year for which we are
a PFIC or, if later, the first taxable year for which the U.S. holder held common stock. In this regard, a QEF election is effective only
if certain required information is made available by the PFIC.
Subsequent to the date that we first determine that we are a PFIC, we will
use commercially reasonable efforts to provide any U.S. holder of Class A common shares, upon request, with the information necessary
for such U.S. holder to
make the QEF election. If we do not believe that we are a PFIC for a particular year but it is ultimately determined
that we were a PFIC, it may not be possible for a holder to make a QEF election for such year.
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In addition to the QEF
election, Section 1296 of the Code permits U.S. persons to make a “mark-to-market” election with respect to marketable stock
in a PFIC. If a U.S. holder of our Class A common shares makes a mark-to-
market election, such U.S. holder generally would, in each taxable
year that we are a PFIC: (1) include as ordinary income the excess, if any, of the fair market value of the Class A common shares at the
end of the taxable year over
such U.S. holder’s adjusted tax basis in the Class A common shares, and (2) be permitted an ordinary
loss in respect of the excess, if any, of such U.S. holder’s adjusted tax basis in the Class A common shares over their fair market
value at the end of the taxable year, but only to the extent of the net amount previously included in income as a result of the mark-to-market
election (with the U.S. holder’s basis in the Class A common shares being increased and
decreased, respectively, by the amount of
such ordinary income or ordinary loss). If a U.S. holder makes an effective mark-to-market election, any gain such U.S. holder recognizes
upon the sale or other disposition of our Class A
common shares in a year that we are a PFIC will be treated as ordinary income and any
loss will be treated as ordinary loss, but only to the extent of the net amount previously included in income as a result of the mark-to-market
election. The consequences of this election are generally less favorable than those of a QEF election for U.S. holders that are sensitive
to the distinction between ordinary income and capital gain, although this is not necessarily the case.
U.S. holders should consult their
tax advisors as to the consequences to them of making a mark-to-market or QEF election, as well as other U.S. federal income tax consequences
of holding stock in a PFIC in light of their particular
circumstances.
As previously indicated,
if we were to be classified as a PFIC for a taxable year in which we pay a dividend or the immediately preceding taxable year, dividends
paid by us would not constitute “qualified dividend income” and,
hence, would not be eligible for the preferential rates of
U.S. federal income tax that apply to certain non-corporate U.S. holders.
If we are classified as
a PFIC for any taxable year during which a U.S. holder holds our Class A common shares and any of our non-U.S. subsidiaries that is classified
as a corporation for U.S. federal income tax purposes is also
classified as a PFIC, such U.S. holder will be treated as owning a proportionate
amount (by value) of the shares of the lower-tier PFIC for purposes of the application of the PFIC rules. U.S. holders are urged to consult
their tax advisors
about the application of the PFIC rules to any of our subsidiaries.
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Non-U.S. holders
For purposes of this discussion,
a non-U.S. holder is a beneficial owner of our Class A common shares that is neither a U.S. holder nor a partnership (or any other entity
taxed as a partnership for U.S. federal income tax purposes).
A non-U.S. holder will
generally not be subject to U.S. federal income tax on dividends paid in respect of the Class A common shares or on gains recognized in
connection with the sale or other disposition of the Class A common
shares, provided, in each case, that such dividends or gains are not
effectively connected with the non-U.S. holder’s conduct of a U.S. trade or business. However, even if not engaged in a U.S. trade
or business, individual non-U.S.
holders may be subject to tax on gain resulting from the disposition of our Class A common shares if
they are present in the U.S. for 183 days or more during the taxable year in which those Class A common shares are disposed and
meet certain
other requirements.
Dividends or gains that
are effectively connected with a non-U.S. holder’s conduct of a U.S. trade or business (and, if required by an applicable income
tax treaty, are attributable to a U.S. permanent establishment) are subject to
U.S. federal income tax on a net income basis in the same
manner as if the non-U.S. holder were a U.S. holder, and may be subject to an additional “branch profits tax” at a 30% rate
or such lower rate as may be specified by an
applicable income tax treaty.
Information reporting and back-up withholding
U.S. holders generally
are subject to information reporting requirements with respect to dividends paid on Class A common shares, and on the proceeds from the
sale, exchange or disposition of Class A common shares. In
addition, a holder may be subject to back-up withholding (currently at a rate
of 24%) on dividends paid on Class A common shares, and on the proceeds from the sale, exchange or other disposition of Class A common
shares, unless the
holder provides certain identifying information, such as a duly executed IRS Form W-9, W-8BEN or W-8BEN-E, or otherwise
establishes an exemption. Back-up withholding is not an additional tax and the amount of any back-up
withholding will be allowable as
a credit against a holder’s U.S. federal income tax liability and may entitle such holder to a refund, provided that certain required
information is timely furnished to the IRS.
Individuals who are U.S.
holders (and to the extent specified in applicable Treasury regulations, certain individuals who are non-U.S. holders and certain U.S.
entities) who hold “specified foreign financial assets” (as defined in
Section 6038D of the Code) are required to file IRS
Form 8938 with information relating to the asset for each taxable year in which the aggregate value of all such assets exceeds $75,000
at any time during the taxable year or $50,000
on the last day of the taxable year (or such higher dollar amount as prescribed by applicable
Treasury regulations). Specified foreign financial assets would include, among other assets, our Class A common shares, unless the shares
are
held through an account maintained with a U.S. financial institution. Substantial penalties apply to any failure to timely file IRS
Form 8938, unless the failure is shown to be due to reasonable cause and not due to willful neglect.
Additionally, in the event an individual
U.S. holder (and to the extent specified in applicable Treasury regulations, an individual non-U.S. holder or a U.S. entity) that is required
to file IRS Form 8938 does not file such form, the statute
of limitations on the assessment and collection of U.S. federal income taxes
of such holder for the related tax year may not close until three years after the date that the required information is filed. U.S. holders
(including U.S. entities)
and non-U.S. holders are encouraged to consult their own tax advisors regarding their reporting obligations
under this legislation.
Tax consequences of holding 8.75% Series B Cumulative Redeemable Perpetual
Preferred Shares
Our Series B Preferred Shares
are treated as equity rather than debt for U.S. federal income tax purposes. Similar considerations apply as those described above in
“—Tax Consequences of holding class A common shares.” Holders
of Series B Preferred Shares should consult their tax
advisors regarding the specific tax consequences to them of the acquisition, holding or disposition of our Series B Preferred Shares,
in light of their particular circumstances.
Marshall Islands taxation
In the opinion of our Marshall
Islands tax counsel, Watson Farley & Williams LLP, because we do not (and do not expect in the future that we will) conduct business
or operations in the Republic of The Marshall Islands, we are
not subject to income, capital gains, profits or other taxation under current
Marshall Islands law. Distributions on our Class A common shares or on our Series B Preferred Shares will not be subject to Marshall Islands
withholding tax.
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Other taxation
We may be subject to taxation
in certain non-U.S. jurisdictions because we are either organized, or conduct business or operations, in such jurisdictions. We intend
that our business and the business of our subsidiaries will be
conducted and operated in a manner that minimizes taxes imposed upon us
and our subsidiaries. However, we cannot assure this result as tax laws in these or other jurisdictions may change or we may enter into
new business
transactions relating to such jurisdictions, which could affect our tax liability.
F. Dividends and Paying Agents
Not applicable.
G. Statements by Experts
Not applicable.
H. Documents on Display
We filed reports and other
information with the SEC. These materials, including this annual report and the accompanying exhibits, are available from www.sec.gov.
Shareholders may also request a copy of our filings by writing to
us at the following address: c/o GSL Enterprises Ltd., 9 Irodou Attikou
Street, Kifisia, Athens 14561, Greece or telephoning us at +30 2106233670.
I. Subsidiaries
Not applicable.
J. Annual Report to Security Holders
Not applicable.
Item 11.
Quantitative and Qualitative Disclosures About Market Risk
Interest Rate Risk
We are exposed to the impact
of interest rate changes primarily through our floating-rate borrowings under our credit facilities. Significant increases in interest
rates could adversely affect our results of operations and our ability to
service our own debt.
Sensitivity Analysis
In December 2021 and February
2022, we entered into interest rate cap agreements with respect to an aggregate of $992.0 million of our floating rate debt, effective
through the fourth quarter of 2026, for a USD one-month LIBOR
cap of 0.75%. As a result of the discontinuation of LIBOR, on July 1, 2023,
our interest rate caps automatically transitioned to one-month Compounded SOFR at a net level of 0.64%. For additional information, please
see “Item 5.
Management’s Discussion and Analysis of Financial Condition and Results of Operations—B. Liquidity and
Capital Resources—Liquidity, Working Capital and Dividends—Overview.”
Our analysis of the potential
effects of variations in market interest rates is based on a sensitivity analysis, which models the effects of potential market interest
rate changes on our financial condition and results of operations. The
following sensitivity analysis may have limited use as a benchmark
and should not be viewed as a forecast as it does not include a variety of other potential factors that could affect our business as a
result of changes in interest rates.
Currently we are fully
hedged on our floating rate debt of $459.2 million.
Foreign Currency Exchange Risk
The shipping industry’s
functional currency is the U.S. dollar. All of our revenues and the majority of our operating costs are in U.S. dollars. On April 4, 2024,
we entered into the FX option to purchase €3.0 million, with monthly
settlements, starting April 11, 2024, and ending March 13, 2025.
The strike price is EURUSD 1.10. We entered to this option to hedge the downside foreign exchange risk associated with expenses denominated
in EUR against
fluctuations between the US Dollar and Euro. This FX option is designated as a cash flow hedge of anticipated expenses.
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Inflation
Historically, with the
exception of rising costs associated with the employment of international crews for our ships and the impact of global oil prices on
the cost of lubricating oil, we had not experienced a significant impact on
ship operating expenses, drydocking expenses and general
and administrative expenses. Currently, due to the continuing wars between Russia and Ukraine and Israel and Hamas, ongoing disputes
between China and Taiwan,
deteriorating trade relations between the U.S. and China, and ongoing political unrest and conflicts in
the Middle East and other regions throughout the world, and changes in tariffs, trade barriers, and embargos, including recently
imposed or announced tariffs by the U.S. and the effects of retaliatory tariffs and countermeasures from affected countries and the
new macroeconomic environment, among other factors, there is inflationary pressure which may, in turn,
increase certain of our other
operating expenses, such as the cost of spares and supplies, transportation costs and other expenses, in addition to drydocking
expenses and general and administrative expenses.
Item 12.
Description of Securities Other than Equity Securities
Not applicable.
PART II
Item 13.
Defaults, Dividend Arrearages and Delinquencies
None.
Item 14.
Material Modifications to the Rights of Security Holders and Use of Proceeds
None.
Item 15.
Controls and Procedures
Disclosure Controls and Procedures
As required by Rules 13a-15
and 15d-15 under the Exchange Act, management has evaluated, with the participation of our Chief Executive Officer and Chief Financial
Officer, the effectiveness of our disclosure controls and
procedures as of the end of the period covered by this annual report.
Disclosure controls and
procedures refer to controls and other procedures designed to ensure that information required to be disclosed in the reports we file
or submit under the Exchange Act is recorded, processed, summarized and
reported, within the time periods specified in the rules and forms
of the SEC. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information
required to be disclosed by us in
our reports that we file or submit under the Exchange Act is accumulated and communicated to management,
including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding our
required disclosure.
In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter
how well designed and operated, can provide only reasonable assurance of
achieving the desired control objectives, and management was
required to apply its judgment in evaluating and implementing possible controls and procedures.
Based on the foregoing,
our Chief Executive Officer and Chief Financial Officer have concluded that, as of December 31, 2024, the end of the period covered by
this annual report, our disclosure controls and procedures were
effective at the reasonable assurance level.
Management’s Annual Report on Internal Control Over Financial
Reporting
Management acknowledges
its responsibility for establishing and maintaining adequate internal controls over financial reporting. Internal control over financial
reporting refers to a process designed by, or under the supervision of,
our Chief Executive Officer and Chief Financial Officer and effected
by our Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of
financial statements for external purposes in accordance with generally accepted accounting principles and includes
those policies and procedures that:
•
relate to the maintenance of records that in reasonable detail accurately
and fairly reflect the transactions and dispositions of our assets;
•
provide reasonable assurance that transactions are recorded as necessary
to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures
are
being made only in accordance with authorizations of our management and members of our Board of Directors; and
•
provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use, or disposition of our assets that could have a material effect on our financial statements.
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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.
Management evaluated the
effectiveness of our internal control over financial reporting as of December 31, 2024 using the framework established in Internal Control—Integrated
Framework (2013) issued by the Committee of
Sponsoring Organizations of the Treadway Commission. Based on the foregoing, management has
concluded that internal control over financial reporting was effective as of December 31, 2024.
Changes in Internal Control over Financial Reporting
In accordance with Rule
13a-15(d), management has evaluated, with the participation of our Chief Executive Officer and Chief Financial Officer, whether any changes
in our internal control over financial reporting that occurred
during our last fiscal year have materially affected, or are reasonably
likely to materially affect, our internal control over financial reporting.
During the period covered
by this Annual Report on Form 20-F, there have been no changes in our internal control over financial reporting that have materially affected
or are reasonably likely to materially affect our internal
control over financial reporting.
Attestation Report of the Registered Public Accounting Firm
The effectiveness of our internal control over financial reporting as of December 31, 2024 has been audited by PricewaterhouseCoopers S.A., an
independent registered public accounting firm, as stated in their report which appears
herein.
Item 16A. Audit Committee Financial Expert
The Board of Directors
has determined that our director and chairman of the audit committee, Mr. van Lacum, qualifies as an audit committee financial
expert and is independent under applicable NYSE and SEC standards.
Item 16B. Code of Ethics
We have adopted a Code
of Business Conduct and Ethics that applies to our directors, officers and employees. This document is available in the Corporate Governance
section of our website (www.globalshiplease.com). The
information included on our website is not incorporate herein by reference. We also
intend to disclose on our website any waivers to or amendments of our Code of Business Conduct and Ethics for the benefit of our executive
officers
that we may be required to disclose under applicable rules.
Item 16C. Principal Accountant Fees and Services
Our principal accountant
for 2024 and 2023 was PricewaterhouseCoopers S.A., an independent registered public accounting firm.
Fees Incurred by Global Ship Lease for PricewaterhouseCoopers S.A.’s
Services
The
fees for services rendered by the principal accountant in 2024 and 2023 were as follows:
2024
2023
Audit Fees
$
660,100 $
578,200
Audit related fees
26,100
26,367
Tax Fees
39,765
84,855
All other fees
2,094
26,000
Total
$
728,059 $
715,422
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Audit Fees
Audit fees represent professional
services rendered for the audit of our consolidated annual financial statements, the quarterly reviews and services provided by our principal
accountant in connection with statutory and regulatory
filings or engagements.
Audit-Related Fees
Audit-related fees consist
of assurance and related services rendered by the principal accountant related to the performance of the audit or review of our consolidated
financial statements or other filings which have not been
reported under Audit Fees above.
Tax Fees
Tax fees for 2024 and 2023
are primarily for tax compliance and consultation services.
The audit committee has
the authority to pre-approve audit-related and non-audit services not prohibited by law to be performed by our independent auditors and
associated fees. Engagements for proposed services either may be
separately pre-approved by the audit committee or entered into pursuant
to detailed pre-approval policies and procedures established by the audit committee, as long as the audit committee is informed on a timely
basis of any
engagement entered into on that basis. The audit committee has pre-approved all non-audit services, subject to a detailed
pre-approval policy and procedure established by them.
All other fees
All other fees
relate to services not included in the first three categories.
Item 16D. Exemptions from the Listing Standards for Audit Committees
None.
Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers
In March 2022, our Board
of Directors authorized our repurchase of up to $40.0 million of Class A common shares, to be utilized on an opportunistic basis. In July
2023, our Board of Directors authorized our repurchase of an
additional $40.0 million of Class A common shares on the same basis (our
“Share Repurchase Program”). The specific timing and amounts of the repurchases will be in the sole discretion of management
and may vary based on market
conditions and other factors. We are not obligated under the terms of the Share Repurchase Program to repurchase
any of our common shares.
The following table sets
forth our share repurchase activity during 2024, including the number of shares repurchased, the average price paid per share,
the number of shares repurchased as part of publicly announced Share
Repurchase Program and the amount yet to be used on share repurchases
under the Share Repurchase Program.
Period
Total Number of Common Shares
Repurchased
Average Price Paid per Common Share
($)
Total Number of Shares Purchased as
Part of Publicly Announced Plan or
Program
Maximum Amount that May Yet Be
Expected on Share Repurchases Under
the Plan or Program ($ in millions)
Up
to December 31,2023
2,303,303
$18.23
2,303,303
38.0
February 2024
121,252
20.60
2,424,555
35.5
March 2024
130,520
19.13
2,555,075
33.0
Total
2,555,075
18.38
2,555,075
33.0
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Item 16F.
Change in Registrant’s Certifying Accountant
None.
Item 16G. Corporate Governance
As a foreign private issuer,
we are exempt from certain corporate governance rules that apply to domestic companies under NYSE listing standards. Even though we are
not required to do so, we follow certain corporate
governance practices applicable to domestic companies under NYSE listing standards,
such as:
•
we have a compensation committee that consists of four directors, all of
whom satisfy NYSE standards for independence;
•
we have a nominating and corporate governance committee that consists of
three directors, all of whom satisfy NYSE standards for independence; and
•
we hold annual meetings of shareholders under the Business Corporations
Act of the Republic of the Marshall Islands, similar to NYSE requirements. The significant differences between our corporate governance
practices
and the NYSE standards are set forth below.
Shareholder Approval of Equity Compensation Plans
The NYSE requires listed
companies to obtain prior shareholder approval to adopt or materially revise any equity compensation plan. As permitted under Marshall
Islands law and our Fourth Amended and Restated Bylaws, we do
not need prior shareholder approval to adopt or revise equity compensation
plans, including our equity incentive plan.
Share Issuances
In lieu of obtaining shareholder
approval prior to the issuance of designated securities, we will comply with provisions of the Marshall Islands Business Corporations
Act, which allows the Board of Directors to approve share
issuances. However, pursuant to 313.00 of Section 3 of the NYSE Listed Company
Manual, the NYSE will accept any action or issuance relating to the voting rights structure of a non-U.S. company that is in compliance
with the
NYSE’s requirements for domestic companies or that is not prohibited by the company’s home country law. We are not
subject to such restrictions under our home country, Marshall Islands, law.
Executive Sessions
The NYSE requires that
non-management directors meet regularly in executive sessions without management. Marshall Islands law and our Fourth Amended and Restated
Bylaws do not require our non-management directors to
regularly hold executive sessions without management.
Item 16H. Mine Safety Disclosure
Not applicable.
Item 16I.
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
Item 16J.
Insider Trading Policies
Our Board of Directors
has adopted Policies and Procedures to Detect and Prevent Insider Trading (“Insider Trading Policy”) governing the purchase,
sale, and other dispositions of our securities by directors, senior management,
and employees that are reasonably designed to promote
compliance with applicable insider trading laws, rules and regulations, and any listing standards applicable to us. A copy of our Insider
Trading Policy has been filed as Exhibit
11.1 to this Annual Report.
Item 16K. Cybersecurity
Risk Assessment and Management
We believe that cybersecurity
is fundamental in our operations and, as such, we are committed to maintaining robust governance and oversight of cybersecurity risks
and to implementing comprehensive processes and procedures
for identifying, assessing, and managing material risks from cybersecurity
threats as part of our broader risk management system and processes. Our cybersecurity risk management strategy prioritizes detection,
analysis, and response to
known, anticipated or unexpected threats; effective management of security risks; and resiliency against incidents.
With the ever-changing cybersecurity landscape and continual emergence of new cybersecurity threats, our Board of
Directors, audit committee
and senior management team ensure that significant resources are devoted to cybersecurity risk management and the technologies, processes
and people that support it. We implement through our manager
and other third parties, risk-based controls based on ISO 27001 framework,
to protect our information, the information of our customers, suppliers, and other third parties, our information systems, our business
operations, and our
vessels. Our cybersecurity risk management also includes a Security Operations Center (“SOC”) that is
provided by a third-party vendor that conducts ongoing monitoring of networks and systems for potential signs of suspicious
activity.
The SOC monitors security alerts to initiate defensive action, verification, and remediation activities. Additionally, our cybersecurity
program provides mechanisms for employees to report any unusual or potentially malicious
activity they observe.
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Table of Contents
Overall, our approach to
cybersecurity risk management includes the following key elements:
(i)
Continuous monitoring of cybersecurity threats, both internal and external,
using data analytics and network monitoring systems.
(ii)
Engagement of third-party consultants and other advisors to assist in assessing
points of vulnerability of our information security systems.
(iii)
Training and Awareness – We provide employee mandatory training that
is administered on a periodic basis that reinforces our information technology policies, standards, and practices, as well as the expectation
that
employees comply with these policies and identify and report potential cybersecurity risks.
Incident Response
As part of our cybersecurity
risk management system and through our manager we have a dedicated cybersecurity incident response team consisting of internal employees
and third-party consultants who are responsible for
managing and coordinating our cybersecurity incident response efforts. This team also
collaborates closely with other internal teams in identifying, protecting from, detecting, responding to, and recovering from cybersecurity
incidents.
Cybersecurity incidents that meet certain thresholds are escalated to the senior management and cross-functional teams on an
as-needed basis for support and guidance. Additionally, this team tracks cybersecurity incidents to help
identify and analyze them. We
maintain a cybersecurity incident response plan to prepare for and respond to cybersecurity incidents. The incident response plan includes
standard processes for reporting and escalating cybersecurity
incidents to senior management who then consult with our audit committee
and ultimately the Board of Directors if deemed necessary.
Cybersecurity Governance
Our audit committee along with our senior management have oversight responsibility
for risks and incidents relating to cybersecurity threats, including compliance with disclosure requirements, cooperation with law enforcement,
and related effects on financial and other risks, and it reports any findings and recommendations, as appropriate, to our Board of Directors
for consideration. Senior management regularly discusses cyber risks and trends and, should
they arise, any material incidents with our
audit committee.
We continue to invest in
our cybersecurity systems and to enhance our internal controls and processes. Our business strategy, results of operations and financial
condition have not been materially affected by risks from
cybersecurity threats, but we cannot provide assurance that they will not be
materially affected in the future by such risks or any future material incidents. For more information about risks associated with cybersecurity,
see “Item 3. Key
Information. - D. Risk Factors—Company-Specific Risk Factors—A cyber-attack could materially disrupt
our business”.
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Table of Contents
PART III
Item 17.
Financial Statements
Not applicable.
Item 18.
Financial Statements
The following financial
statements, together with the report of PricewaterhouseCoopers S.A. thereon, beginning on page F-1, are filed as part of this Annual Report.
Item 19.
Exhibits
The agreements and other
documents filed as exhibits to this Annual Report are not intended to provide factual information or other disclosure other than with
respect to the terms of the agreements or other documents themselves,
and you should not rely on them for that purpose. In particular,
any representations and warranties made by the registrant in these agreements or other documents were made solely within the specific
context of the relevant agreement or
document and may not describe the actual state of affairs as of the date they were made or at any
other time.
The following exhibits
are filed as part of this Annual Report:
Exhibit
Number
Description
1.1
Amended and Restated Articles of Incorporation of GSL Holdings, Inc. (incorporated by reference to Exhibit 3.1 to Global Ship Lease, Inc.’s Registration Statement on Form 8-A (File No. 001-34153) filed with the
SEC on March 26, 2019).
1.2
Articles of Amendment to the Amended and Restated
Articles of Incorporation of Global Ship Lease, Inc. (incorporated by reference to Exhibit 3.3 to the Company’s Report on Form
6-K, filed with the SEC on
March 25, 2019).
1.3*
Fourth Amended and Restated Bylaws of Global Ship Lease, Inc.
1.4
Certificate of Designation of the 8.75% Series
B Cumulative Redeemable Perpetual Preferred Shares of Global Ship Lease, Inc., filed with the Registrar of Corporations of the Republic
of the Marshall Islands and
effective August 19, 2014 (incorporated by reference to Exhibit 3.1 of the Company’s Report on
Form 6-K filed on August 20, 2014).
1.5
Certificate of Amendment to Certificate of Designation
of the 8.75% Series B Cumulative Redeemable Perpetual Preferred Shares of Global Ship Lease, Inc., filed with the Registrar of Corporations
of the Republic
of the Marshall Islands and effective December 9, 2019 (incorporated by reference to Exhibit 3.1 of the Company’s
Report on Form 6-K filed on December 10, 2019).
1.6
Certificate of Amendment to Certificate of Designation
of the 8.75% Series B Cumulative Redeemable Perpetual Preferred Shares of Global Ship Lease, Inc., filed with the Registrar of Corporations
of the Republic
of the Marshall Islands and effective (incorporated by reference to Exhibit 3.1 of the Company’s Report on
Form 6-K filed on December 29, 2022).
1.7
Certificate of Designation of the Series C Perpetual
Preferred Shares of Global Ship Lease, Inc. filed with the Registrar or Deputy Registrar of Corporations of the Republic of the Marshall
Islands and effective
November 12, 2018 (incorporated by reference to Exhibit 1.5 of the Company’s Annual Report on Form 20-F
filed on March 29, 2019).
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2.1
Form of Common Share Certificate of the Company
(incorporated by reference to Exhibit 4.1 of the Company’s Form 6-K (File No. 001-34153) filed on March 25, 2019).
2.2
Deposit Agreement, dated as of August 20, 2014,
by and among Global Ship Lease, Inc., Computershare Inc. and Computershare Trust Company, N.A., as applicable, as depositary, registrar
and transfer agent, and the
holders from time to time of the depositary receipts described therein (incorporated by reference to
Exhibit 4.1 of the Company’s Report on Form 6-K filed on August 20, 2014).
2.3
Description of Securities Registered Pursuant to Section 12 of the Securities
Exchange Act of 1934 (incorporated by reference to Exhibit 2.3 of the Company’s Annual Report on Form 20-F filed on March 20, 2024).
4.1
Term Loan Facility, dated May 23, 2019, by and
among Global Ship Lease 30 LLC, Global Ship Lease 31 LLC and Global Ship Lease 32 LLC, as joint and several borrowers, Global Ship
Lease, Inc., as parent guarantor,
and Hellenic Bank Public Company Limited, as arranger, facility agent and security agent (incorporated
by reference to Exhibit 10.35 of the Company’s Registration Statement on Form F-1 (File No. 333-233198) filed on
August 9,
2019).
4.2
Deed of Accession, Amendment and Restatement,
dated December 10, 2019, by and among Global Ship Lease 30 LLC, Global Ship Lease 31 LLC and Global Ship Lease 32 LLC, as original
borrowers, Global Ship Lease
33 LLC and Global Ship Lease 34 LLC, as additional borrowers, Global Ship Lease, Inc., as parent guarantor,
and Hellenic Bank Public Company Limited, as arranger, facility agent and security agent, relating to the
facility agreement dated
May 23, 2019 (incorporated by reference to Exhibit 4.19 of the Company’s Annual Report on Form 20-F filed on April 2, 2020).
4.3
Term Loan Facility, dated February 26, 2020, by
and among Athena Marine LLC, Aphrodite Marine LLC and Aris Marine LLC, as joint and several borrowers, Global Ship Lease, Inc., as
parent guarantor and Chailease
International Financial Services Pte. Ltd., as lender. (incorporated by reference to Exhibit 4.23
of the Company’s Annual Report on Form 20-F filed on April 2, 2020).
4.4
$51.7 Million Credit Facility, dated April 13,
2021, by and among Penelope Marine LLC as borrower, the Company and Poseidon Containers Holdings LLC, as guarantors and the banks
and financial institutions listed in
Part B of Schedule 1 as lenders, Crédit Agricole Corporate and Investment Bank as bookrunner
and arranger, Crédit Agricole Corporate and Investment Bank, CTBC Bank Co., LTD and Bank Sinopac Co., LTD as
mandated lead
arrangers and Crédit Agricole Corporate and Investment Bank, as facility agent and security agent (incorporated by reference
to Exhibit 4.9 of the Company’s Annual Report on Form 20-F filed on March
24, 2022).
4.5
$64.2 Million Credit Facility, dated April 15,
2021, by and among GSL Arcadia LLC, GSL Tegea LC, GSL MYNY LLC, GSL Melita LLC, GSL Maria LLC and GSL Dorothea LLC as joint and several
borrowers, the
bank and financial institutions listed in Schedule 1 as lenders and Hamburg Commercial Bank AG as agent, mandated
lead arranger and security trustee (incorporated by reference to Exhibit 4.10 of the Company’s Annual
Report on Form 20-F filed
on March 24, 2022).
4.6
$51.7 Million Credit Facility, dated May 6, 2021,
by and among Laertis Marine LLC as borrower, Poseidon Containers Holdings LLC, Odyssia Containers Holdings LLC, K&T Marine LLC
and the Company as
guarantors and Deutsche Bank AG Filiale Deutschlanddgeschaft as arranger, facility agent and security agent (incorporated
by reference to Exhibit 4.11 of the Company’s Annual Report on Form 20-F filed on March 24,
2022).
4.7
$140.0 Million Credit Facility, dated July 6,
2021, by and among Global Ship Lease 55 LLC, Global Ship Lease 57 LLC, Global Ship Lease 58 LLC, Global Ship Lease 59 LLC, Global
Ship Lease 60 LLC, Global Ship
Lease 61 LLC, Global Ship Lease 62 LLC, Global Ship Lease 63 LLC, Global Ship Lease 64 LLC, Global
Ship Lease 65 LLC, Global Ship Lease 66 LLC and Global Ship Lease 67 LLC as joint and several borrowers, the
Company as guarantor
and the banks and financial institutions listed in Part B of Schedule 1 as lenders, Crédit Agricole Corporate and Investment
Bank and Hamburg Commercial Bank AG as mandated lead arrangers,
Crédit Agricole Corporate and Investment Bank as facility
agent and security agent (incorporated by reference to Exhibit 4.12 of the Company’s Annual Report on Form 20-F filed on March
24, 2022).
4.8
$12.0 Million Credit Facility, dated August 27,
2021, by and among Global Ship Lease 42 LLC as borrower, the Company as guarantor and Sinopac Capital International (HK) Limited
as lender (incorporated by reference
to Exhibit 4.13 of the Company’s Annual Report on Form 20-F filed on March 24, 2022).
4.9
$14.7 Million Sale and Leaseback Agreement, dated
May 12, 2021, by and among NML Violetta Inc. as Lessor and GSL Violetta LLC as Lessee (incorporated by reference to Exhibit 4.14
of the Company’s Annual Report
on Form 20-F filed on March 24, 2022).
4.10
$54.0 Million Sale and Leaseback Agreement, dated
May 20, 2021, by and among SEA 156 Leasing Co. Limited as Lessor and Telemachus Marine LLC as Lessee (incorporated by reference to
Exhibit 4.15 of the
Company’s Annual Report on Form 20-F filed on March 24, 2022).
4.11
$30.0 Million Sale and Leaseback Agreement, dated
August 26, 2021, by and among SEA 253 Leasing Co. Limited as Lessor and Global Ship Lease 70 LLC as Lessee (incorporated by reference
to Exhibit 4.16 of the
Company’s Annual Report on Form 20-F filed on March 24, 2022).
4.12
$30.0 Million Sale and Leaseback Agreement, dated
August 26, 2021, by and among SEA 254 Leasing Co. Limited as Lessor and Global Ship Lease 71 LLC as Lessee (incorporated by reference
to Exhibit 4.17 of the
Company’s Annual Report on Form 20-F filed on March 24, 2022).
4.13
$30.0 Million Sale and Leaseback Agreement, dated
August 26, 2021, by and among SEA 251 Leasing Co. Limited as Lessor and Global Ship Lease 68 LLC as Lessee (incorporated by reference
to Exhibit 4.18 of the
Company’s Annual Report on Form 20-F filed on March 24, 2022).
4.14
$30.0 Million Sale and Leaseback Agreement, dated
August 26, 2021, by and among SEA 252 Leasing Co. Limited as Lessor and Global Ship Lease 69 LLC as Lessee (incorporated by reference
to Exhibit 4.19 of the
Company’s Annual Report on Form 20-F filed on March 24, 2022).
4.15
Note Purchase Agreement, dated June 14, 2022,
by and among Knausen Holding LLC and the purchasers named therein, relating to the 5.69% Senior Secured Notes due 2027 (incorporated
by reference to Exhibit 99.4 of
the Company’s Report on Form 6-K filed on June 21, 2022).
4.16
Form of Indemnification Agreement entered into
between Global Ship Lease, Inc. and each of its directors and officers (incorporated by reference to Exhibit 10.17 of the Company’s
Registration Statement on Form F-1
(File No. 333-147070) filed on November 1, 2007).
4.17
2019 Omnibus Incentive Plan (as amended and restated
on September 29, 2021) (incorporated by reference to Exhibit 4.21 of the Company’s Annual Report on Form 20-F filed on March
24, 2022).
4.18*
Amended and Restated
Non-Compete Agreement, dated as of March 12, 2025, by and among Global Ship Lease, Inc., Georgios Giouroukos and Conchart Commercial,
Inc.
4.19
Amended and Restated Registration Rights Agreement, dated as of October
29, 2018, by and among Global Ship Lease, Inc., KEP VI (Newco Marine), Ltd., KIA VIII (Newco Marine), Ltd., CMA CGM S.A.,
Management Investor
Co., Anmani Consulting Inc., Marathon Founders, LLC, Michael S. Gross and Maas Capital Investments B.V. (incorporated by reference to
Exhibit 10.1 of the Company’s Report on Form 6-K filed
on October 30, 2018).
4.20
Agreement and Plan of Merger, dated as of October 29, 2018, by and among Poseidon Containers Holdings LLC, K&T
Marine LLC, Global Ship Lease, Inc., GSL Sub One LLC, GSL Sub Two LLC and, solely for
purposes of Article III, Article XI and Sections
5.2, 6.2 and 6.9 therein, KEP VI (Newco Marine), Ltd., KIA VIII (Newco Marine), Ltd., Maas Capital Investments B.V., Management Investor
Co. and Anmani Consulting
Inc. (incorporated by reference to Exhibit 2.1 of the Company’s Report on Form 6-K filed on October 30,
2018).
4.21*
Form of Technical Management Agreement by and between Technomar Shipping Inc., on the one hand, and vessel-owning
subsidiaries of Global Ship Lease, Inc.
4.22
Form of Commercial Management Agreement by and between Conchart Commercial Inc., and vessel-owning subsidiaries of
Global Ship Lease, Inc. (incorporated by reference to Exhibit
4.24 of the Company’s
Annual Report on Form 20-F filed on March 23, 2023).
4.23
$60.0 Million Credit Facility, dated December 30, 2021, by and among Zeus One Marine LLC, Hephaestus Marine LLC and
Pericles Marine LLC as joint and several borrowers, the Company as guarantor and the banks
and financial institutions listed in Part B
of Schedule 1 as lenders, E.SUN Commercial Bank, LTD, CATHAY United Bank, Mega International Commercial Bank CO., LTD, Offshore Banking
Branch and Taishin
International Bank as mandated lead arrangers, E.SUN Commercial Bank, LTD as facility agent and security agent.
(incorporated by reference to Exhibit 4.30 of the Company’s Annual Report on Form 20-F filed
on March 23, 2023).
4.24
At Market Issuance Sales Agreement, dated December 29, 2022, by and between
the Company and B. Riley Securities, Inc. (incorporated by reference to Exhibit 1.1 of the Company’s Report on Form 6-K filed on
January
4, 2023).
4.25
$76.0 Million Credit Facility, dated May 18, 2023, by and among Global
Ship Lease 72 LLC, Global Ship Lease 73 LLC, Global Ship Lease 74 LLC and Global Ship Lease 75 LLC and Macquarie Bank Limited.
(incorporated
by reference to Exhibit 4.31 of the Company’s Annual Report on Form 20-F filed on March 20, 2024).
4.26*
$300.0 Million Credit Facility, dated August 7, 2024, by and among Ikaros Marine LLC, Leonidas Marine LLC, Hector
Marine LLC, Aristoteles Marine LLC, Menelaos Marine LLC, Philippos Marine LLC, Alexander
Marine LLC, Penelope Marine LLC, Laertis Marine
LLC, Telemachus Marine LLC, as joint and several borrowers, the Company as guarantor and the banks and financial institutions listed in
Part B of Schedule 1 as
lenders, Crédit Agricole Corporate and Investment Bank, ABN AMRO BANK N.V.and Bank of America N.A., as
mandated lead arrangers, Crédit Agricole Corporate and Investment Bank as facility agent and security
agent.
4.27*
$44.5 Million Sale and Leaseback Agreement, dated December 23, 2024, by and among Ocean Jing Shipping Limited as
Lessor and Global Ship Lease 77 LLC as Lessee.
4.28*
$44.5 Million Sale and Leaseback Agreement, dated December 24, 2024, by and among Ocean Dance Shipping Limited as
Lessor and Global Ship Lease 76 LLC as Lessee.
4.29
Equity Distribution Agreement, dated August 16, 2024, by and between the Company and Evercore Group L.L.C. (incorporated by reference
to Exhibit 1.1 of the Company’s Report on Form 6-K filed on August 20,
2024).
8.1*
List of Subsidiaries of Global Ship Lease, Inc.
11.1
Policies and Procedures to Detect and Prevent Insider Trading (incorporated
by reference to Exhibit 11.1 of the Company’s Annual Report on Form 20-F filed on March 20, 2024).
12.1*
Rule 13a-14(a)/15d-14(a) Certification of Global Ship Lease, Inc.’s
Chief Executive Officer.
12.2*
Rule 13a-14(a)/15d-14(a) Certification of Global Ship Lease, Inc.’s
Chief Financial Officer.
13.1*
Global Ship Lease, Inc. Certification of the Chief Executive Officer,
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
13.2*
Global Ship Lease, Inc. Certification of the Chief Financial Officer,
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
15.1*
Consent of PricewaterhouseCoopers S.A.
15.2*
Consent of Maritime Strategies International Ltd.
15.3*
Consent of Watson Farley & Williams LLP
97.1
Policy for the Recovery of Erroneously Awarded Incentive Compensation (incorporated by reference to Exhibit 97.1 of the Company’s Annual Report on Form 20-F filed on March 20, 2024).
101*
Interactive Data Files (formatted as Inline XBRL).
104*
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
*
Filed herewith.
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SIGNATURES
The registrant hereby certifies that it meets
all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this Annual Report
on its behalf.
GLOBAL SHIP LEASE, INC.
By:/s/Thomas A. Lister
Thomas A. Lister
Chief Executive Officer
Date: March 18, 2025
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GLOSSARY
OF SHIPPING TERMS
Unless
otherwise stated, references to the following terms have the following meaning as used in this Annual Report:
Address
commission. A discount provided directly to a charterer based on a fixed percentage of the agreed upon charter rate
.
Annual
survey. The inspection of a ship pursuant to international conventions, by a classification society surveyor, on behalf of the flag
state, that takes place every year.
Backhaul.
The weaker leg of a round trip voyage with less volume than the stronger headhaul leg or the return movement of a container-often empty-from
a destination of unloading to a point of reloading of cargo.
Ballast.
Weight in solid or liquid form, such as seawater, taken on a ship to increase draught, to change trim, or to improve stability or a voyage
in which a ship is not laden with cargo.
Bareboat
charter. A charter of a ship under which the ship-owner is usually paid a fixed amount of charter hire for a certain period of time
during which the charterer is responsible for all ship operating expenses, including
expenses for crewing, lubricating oil, insurance,
maintenance and drydockings, and for all voyage expenses such as bunker fuel. A bareboat charter is also known as a “demise charter”
or a “time charter by demise.”
Bunkers.
Heavy fuel and diesel oil used to power a ship’s engines and generators.
Capacity.
The nominal carrying capacity of the ship, measured in TEU.
Charter.
The hire of a ship for a specified period of time or a particular voyage to carry a cargo from a loading port to a discharging port.
Charterer.
The party that hires a ship for a period of time or for a voyage.
Charter
hire. A sum of money paid to the ship-owner by a charterer for the use of a ship.
Charter
owner. A company that owns containerships and charters out its ships to container shipping companies rather than operating the ships
for liner services; also known as ship-owner or lessor.
Charter
rate. The rate charged by a Charter owner normally as a daily rate for the use of its containerships by a charterer. Charter rates
can be on a time charter or bareboat charter basis.
Classification
society. An independent organization that certifies that a ship has been built and maintained according to the organization’s
rules for that type of ship and complies with the applicable rules and regulations of the
country of the ship’s registry and the
international conventions of which that country is a member. A ship that receives its certification is referred to as being “in-class.”
Container
shipping company. A shipping company operating liner services using owned or chartered ships with fixed port of call schedules. Also
known as a carrier, liner company or an operator.
Drydocking.
Placing the ship in a drydock in order to check and repair areas and parts below the water line. During drydockings, which are required
to be carried out periodically, certain mandatory classification society inspections
are carried out and relevant certifications are
issued. Under Classification Society rules, drydockings for containerships are generally required once every three to five years or after
an accident resulting in under-water damage.
Freight
rate. The amount charged by container shipping companies for transporting cargo, normally as a rate per 20-foot or 40-foot container.
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Gross tonnage.
A unit of measurement of the entire internal cubic capacity of the ship expressed in tons at 100 cubic feet to the ton.
Headhaul. The stronger
leg of a round trip voyage with greater volume than the weaker backhaul or the outgoing goods to be delivered from a point of origin.
Hull. The main
body of the ship without engines, buildings and cranes.
Liner company or liner.
A container shipping company (also referred to as lines or operators).
KG. Kommanditgesellschaft,
a closed end fund construct broadly analogous to a limited partnership. It has been employed as an investment vehicle for high net worth
individuals (primarily German) in various types of assets,
including shipping assets.
IMO. International
Maritime Organization, a United Nations agency that issues international standards for shipping.
Intermediate survey.
The inspection of a ship by a classification society surveyor that takes place 24 to 36 months after each special survey.
Newbuilding. A
ship on order, under construction or just delivered.
Off-hire. The period
in which a ship is not available for service under a charter and, accordingly, the charterer generally is not required to pay the hire.
Off-hire periods can include days spent on repairs, drydocking and surveys,
whether or not scheduled.
Orderbook-to-fleet
ratio. The ratio of the orderbook for new vessels yet to be delivered to the existing on-the-water fleet determined on the basis of
TEU capacity and expressed as a percentage.
Scrapping. The
sale of a ship for conversion into scrap metal.
Ship management.
The provision of shore-based ship management services related to crewing, technical and safety management and the compliance with all
government, flag state, class certification and international rules and
regulations.
Shipper. Someone
who prepares goods for shipment or arranges seaborne transportation; essentially a customer of a container shipping company.
Sister ships. Ships
of the same class and specification typically built at the same shipyard.
Special survey.
The inspection of a ship by a classification society surveyor that takes place every five years, as part of the recertification of the
ship by a classification society.
Spot market. The
market for immediate chartering of a ship, usually for single voyages or for short periods of time, up to 12 months.
TEU. A 20-foot
equivalent unit, the international standard measure for containers and containership capacity.
Time charter. A
charter under which the ship-owner hires out a ship for a specified period of time. The ship-owner is responsible for providing the crew
and paying vessel operating expenses while the charterer is responsible for
paying the voyage expenses such as fuel and additional voyage
insurance. The ship-owner is paid charter hire, which accrues on a daily basis.
Time charter and voyage expenses.
Expenses incurred including brokerage commission and those for owner’s account attributable to a ship’s voyage, such as bunkers
costs when the vessel is idle or off-hire and expenses incurred
due to a ship’s voyage from a loading port to a discharging port,
such as bunkers costs, port expenses, stevedoring costs, agents’ fees, canal dues, extra war risk insurance and commissions.
Utilization. The percentage
of days for which owner receives charter hire. The difference to 100% or full utilization will be off-hire, both planned for, say, regulatory
drydocking, and unplanned for, say, breakdown, and idle time
between charters.
Vessel operating expenses.
The costs of operating a ship, primarily consisting of crew wages and associated costs, insurance premiums, ship management fees, costs
of lubricants and spare parts, and repair and maintenance costs.
Vessel operating expenses exclude bunker costs, port expenses, stevedoring
costs, agents’ fees, canal dues, extra war risk insurance and commissions, which are included in “voyage expenses.”
Voyage expenses.
Expenses incurred due to a ship’s voyage from a loading port to a discharging port, such as bunkers costs, port expenses, stevedoring
costs, agents’ fees, canal dues, extra war risk insurance and commissions.
105
Table of Contents
Global
Ship Lease, Inc.
Index
to Consolidated Financial Statements
Page
Report of Independent Registered
Public Accounting Firm (PCAOB ID 1387)
F-2
- F-3
Consolidated
Balance Sheets as at December 31, 2024 and 2023
F-4
Consolidated
Statements of Income for the years ended December 31, 2024, 2023 and 2022
F-5
Consolidated
Statements of Comprehensive Income for the years ended December 31, 2024, 2023 and 2022
F-6
Consolidated
Statements of Cash Flows for the years ended December 31, 2024, 2023 and 2022
F-7
Consolidated Statements
of Changes in Shareholders’ Equity for the years ended December 31, 2024, 2023 and 2022
F-8
Notes
to Consolidated Financial Statements
F-9-F-43
F-1
Table of Contents
Report
of Independent Registered Public Accounting Firm
To
the Board of Directors and Shareholders of Global Ship Lease, Inc.
Opinions
on the Financial Statements and Internal Control over Financial Reporting
We
have audited the accompanying consolidated balance sheets of Global Ship Lease, Inc. and its subsidiaries (the “Company”)
as of December 31, 2024 and 2023, and the related consolidated statements of income, comprehensive
income, changes in shareholders’
equity and cash flows for each of the three years in the period ended December 31, 2024, including the related notes (collectively referred
to as the “consolidated financial statements”). We also have
audited the Company's internal control over financial reporting
as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the
Treadway Commission (COSO).
In
our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position
of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows
for each of the three years in
the period ended December 31, 2024 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 December
31, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.
Basis
for Opinions
The
Company's management is responsible for these consolidated 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 Management’s Annual
Report on Internal Control over Financial Reporting appearing under Item 15. Our responsibility is to express opinions on the Company’s
consolidated financial statements and on the
Company's internal control over financial reporting based on our audits. We are a public
accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent
with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities
and Exchange Commission and the PCAOB.
We
conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the consolidated financial statements are free of
material misstatement, whether due to error or fraud,
and whether effective internal control over financial reporting was maintained in all material respects.
Our
audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated
financial statements, whether due to error or fraud, and performing procedures that
respond to those risks. Such procedures included
examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also
included evaluating the accounting principles used
and significant estimates made by management, as well as evaluating the overall presentation
of the consolidated financial statements. Our audit of 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 opinions.
Definition
and Limitations of Internal Control over Financial Reporting
A
company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external purposes in accordance
with generally accepted accounting
principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain
to the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets
of the company; (ii) 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 (iii) provide reasonable assurance regarding
prevention
or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material
effect on the 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.
F-2
Critical
Audit Matters
The
critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that
was communicated or required to be communicated to the audit committee and that (i) relates to
accounts or disclosures that are material
to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication
of critical audit matters does not alter in any way our
opinion on the consolidated financial statements, taken as a whole, and we are
not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or
disclosures to which it
relates.
Impairment
Assessment – Long-lived assets
As
disclosed in Notes 2 and 4 to the consolidated financial statements, as of December 31, 2024 the Company’s fleet consisted
of vessels with a total carrying value of $1.9 billion. Management reviews vessels held and used or to be
disposed of by the Company
for impairment whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. In these circumstances,
the Company performs step one of the impairment test by
comparing the undiscounted projected net operating cash flows for each vessel
group to its carrying value. A vessel group comprises the vessel, the unamortized portion of deferred drydocking related to the vessel
and the related
carrying value of the intangible asset or liability (if any) with respect to the time charter attached to the vessel
at its purchase. If the undiscounted projected net operating cash flows of the vessel group are less than its carrying amount,
management
proceeds to step two of the impairment assessment by comparing the vessel group’s carrying amount to its fair value, including
any applicable charter, and an impairment loss is recorded equal to the difference between the
vessel group’s carrying value and
fair value. Fair value is determined with the assistance from valuations obtained from third party independent ship brokers. The Company
uses a number of assumptions in projecting its undiscounted
net operating cash flows analysis including, among others, (i) revenue
assumptions for charter rates on expiry of existing charters, which are based on forecast charter rates, where relevant, in the four
years from the date of the
impairment test and a reversion to the historical mean of time charter rates for each vessel thereafter, (ii) off-hire
days, which are based on actual off-hire statistics for the Company’s fleet, (iii) operating costs, based on current levels
escalated over time based on long term trends (iv) dry docking frequency, duration and cost, (v) estimated useful life, which
is assessed as a total of 30 years from original delivery by the shipyard and (vi) scrap values. Revenue
assumptions are based on
contracted time charter rates up to the end of the existing contract of each vessel and thereafter, estimated time charter rates for
the remaining life of the vessel. The estimated time charter rate used for non-
contracted revenue days of each vessel is considered a
significant assumption. Recognizing that the container shipping industry is cyclical and subject to significant volatility based on factors
beyond the Company’s control,
management believes that using forecast charter rates in the four years from the date of the impairment
assessment and a reversion to the historical mean of time charter rates thereafter, represents a reasonable benchmark for the
estimated
time charter rates for the non-contracted revenue days, and takes into account the volatility and cyclicality of the market.
The
principal considerations for our determination that performing procedures relating to impairment assessment – long lived assets
is a critical audit matter, is the significant judgement by management in the selection of the forecast
charter rates in the four years
from the date of the impairment test and a reversion to the historical mean of time charter rates for each vessel group thereafter, as
a benchmark for the estimated time charter rates for the non-contracted
revenue days. A high degree of auditor judgement, subjectivity
and significant effort was also required in performing procedures and evaluating audit evidence obtained related to the estimated time
charter rates for the non-contracted
revenue days, which involved the use of professionals with the specialized skill and knowledge.
Addressing
the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the
consolidated financial statements. These procedures included testing the effectiveness
of
controls relating to management’s vessel impairment assessment. These procedures also included, among others, assessing the
step one analysis of the impairment assessments with the relevant accounting framework; testing
completeness, accuracy and relevance
of underlying data used in the analysis; evaluating the appropriateness of the undiscounted cash flow model and the reasonableness
of the significant assumption used by management relating to
estimated time charter rates for non-contracted revenue days. The
reasonableness of the estimated time charter rates was assessed by (i) comparing them to actual historical average time charter
rates of the vessels and (ii) ensuring
consistency with evidence obtained in other areas of the audit. Professionals with
specialized skill and knowledge were used to assist in evaluating the appropriateness of management’s undiscounted cash flow
model and the
reasonableness of the estimated time charter rates used in the model.
/s/
PricewaterhouseCoopers S.A.
Athens,
Greece
March
18, 2025
We
have served as the Company’s auditor since 2018.
F-3
Table of Contents
Global Ship Lease, Inc.
Consolidated Balance Sheets
(Expressed in thousands of U.S. dollars except share data)
As
of
Note
December
31,
2024
December
31,
2023
ASSETS
CURRENT
ASSETS
Cash
and cash equivalents
$
141,375
$
138,640
Time
deposits
26,150
14,000
Restricted
cash
3
55,583
56,803
Accounts
receivable, net
12,501
4,741
Inventories
8
18,905
15,764
Prepaid
expenses and other current assets
7
31,949
40,464
Derivative
assets
9
14,437
24,639
Due
from related
parties
14
342
626
Total
current assets
$
301,242
$
295,677
NON
- CURRENT ASSETS
Vessels
in operation
4
$
1,884,640
$
1,664,101
Advances
for vessels acquisitions and other additions
4
18,634
12,210
Deferred
dry dock and special survey costs, net
5
91,939
73,720
Other
non-current assets
2q
20,155
23,935
Derivative
assets, net of current portion
9
5,969
16,867
Restricted
cash, net of current portion
3
50,666
85,270
Total
non - current assets
2,072,003
1,876,103
TOTAL
ASSETS
$
2,373,245
$
2,171,780
LIABILITIES
AND SHAREHOLDERS' EQUITY
CURRENT
LIABILITIES
Accounts
payable
10
$
26,334
$
17,601
Accrued
liabilities
11
46,926
28,538
Current
portion of long - term debt
12
145,276
193,253
Current
portion of deferred revenue
3
44,742
40,331
Due
to related
parties
14
723
717
Total
current liabilities
$
264,001
$
280,440
LONG
- TERM LIABILITIES
Long
- term debt, net of current portion and deferred financing costs
12
$
538,781
$
619,175
Intangible
liabilities - charter agreements
6
49,431
5,662
Deferred
revenue, net of current portion
3
57,551
82,115
Total
non - current liabilities
645,763
706,952
Total
liabilities
$
909,764
$
987,392
Commitments
and Contingencies
15
—
—
SHAREHOLDERS'
EQUITY
Class
A common shares - authorized
214,000,000
shares with a $0.01
par value
35,447,370
shares issued and outstanding (2023 - 35,188,323
shares)
16
$
355
$
351
Series
B Preferred Shares - authorized
104,000
shares with a $0.01
par value
43,592
shares issued and outstanding (2023 - 43,592
shares)
16
—
—
Additional
paid in capital
680,743
676,592
Retained
Earnings
773,759
488,105
Accumulated
other comprehensive income
8,624
19,340
Total
shareholders' equity
1,463,481
1,184,388
TOTAL
LIABILITIES AND SHAREHOLDERS' EQUITY
$
2,373,245
$
2,171,780
See
accompanying notes to Consolidated Financial Statements
F-4
Table of Contents
Global Ship Lease, Inc.
Consolidated Statements of Income
(Expressed in thousands of U.S. dollars except share and per share data)
OPERATING
REVENUES
Time charter
revenue (include related party revenues of $nil,
$nil and $66,929 for
each of the
years ended December 31, 2024, 2023 and 2022, respectively)
Amortization
of intangible liabilities-charter agreements (includes related party amortization of intangible
liabilities-charter
agreements of
$nil, $nil and $5,385 for
each of the years ended December 31, 2024, 2023 and 2022, respectively)
Total
operating revenues
OPERATING
EXPENSES:
Vessel
operating expenses (include related party vessels operating expenses of $21,804,
$19,086
and
$16,642
for
each
of the years ended December 31, 2024, 2023 and 2022, respectively)
Time
charter and voyages expenses (include related party time charter and voyage expenses of $8,610,
$7,995
and
$6,289
for
each of the years ended December 31, 2024, 2023 and 2022, respectively)
Depreciation
and amortization
Impairment
of vessels
General
and administrative expenses
Operating
Income
NON-OPERATING
INCOME/(EXPENSES)
Interest
income
Interest
and other finance expenses (include $3,627
expenses relating to prepayment fees and
acceleration of deferred financing costs, $108
expenses relating to acceleration of deferred
financing costs and $21,511 expenses
relating to pr
premium and acceleration of premium amortization for each of the years ended December 31, 2024, 2023 and 2022, respectively)
Other
income, net
Fair
value adjustment on derivative asset
Total
non-operating expenses
Income
before income taxes
Income
taxes
Net
Income
Earnings
allocated to Series B Preferred Shares
Net
Income available to Common Shareholders
Earnings
per Share
Weighted
average number of Class A common shares outstanding
Basic
Diluted
Net
Earnings per Class A common share
Basic
Diluted
See
accompanying notes to Consolidated Financial Statements
F-5
Table of Contents
Global Ship Lease, Inc.
Consolidated Statements of Comprehensive Income
(Expressed in thousands of U.S. dollars)
Year
ended December 31,
Note
2024
2023
2022
Net
Income available to Common Shareholders
$
344,092 $
294,964 $
283,389
Other
comprehensive income:
Cash
Flow Hedge:
Unrealized
(loss)/gain on derivative assets/FX option
9
(16,179)
(16,625)
31,221
Amortization
of interest rate cap premium
4,586
4,271
1,123
Amounts
reclassified to/(from) earnings
9
877
214
(1,091)
Total
Other Comprehensive (Loss)/Income
(10,716)
(12,140)
31,253
Total
Comprehensive Income
$
333,376 $
282,824 $
314,642
See
accompanying notes to Consolidated Financial Statements
F-6
Table of Contents
Global Ship Lease, Inc.
Consolidated Statements of Cash Flows
(Expressed in thousands of U.S. dollars)
Year
ended December 31,
Note
2024
2023
2022
Cash
flows from operating activities:
Net
income
$
353,628
$
304,500
$
292,925
Adjustments
to reconcile net income to net cash provided by operating activities:
Depreciation
and amortization
99,991
91,727
81,303
Impairment
of vessels
4
—
18,830
3,033
Amounts
reclassified to/(from) other comprehensive income
9
877
214
(1,091)
Amortization
of derivative assets’ premium
4,586
4,271
1,123
Amortization
of deferred financing costs
12
6,828
5,526
11,233
Amortization
of original issue premium of notes
—
—
762
Amortization
of intangible liabilities - charter agreements
6
(5,526)
(8,080)
(41,158)
Fair
value adjustment on derivative asset
9
5,170
5,372
(9,685)
Prepayment
fees on debt repayment
12
870
—
15,197
Stock
based compensation expense
17
8,704
10,189
10,104
Changes
in operating assets and liabilities:
Decrease/(increase)
in accounts receivable and other assets
4,535
(669)
(26,017)
Increase
in inventories
(3,141)
(3,527)
(827)
Increase
in derivative assets
9
(249)
—
(15,370)
Increase/(decrease)
in accounts payable and other liabilities
16,244
(5,890)
11,835
Decrease
in related parties' balances, net
290
192
2,253
(Decrease)/increase
in deferred revenue
3
(20,153)
(9,306)
21,968
Payments
for drydocking and special survey costs
(42,506)
(38,341)
(30,105)
Unrealized
foreign exchange (gain)/loss
(2)
—
1
Net
cash provided by operating activities
$
430,146
$
375,008
$
327,484
Cash
flows from investing activities:
Acquisition
of vessels
(205,500)
(123,300)
—
Cash
paid for vessel expenditures
(12,840)
(19,586)
(5,460)
Net
proceeds from sale of vessels
—
5,940
—
Advances
for vessel acquisitions and other additions
(24,154)
(9,587)
(3,772)
Time
deposits acquired
(12,150)
(5,450)
(650)
Net
cash used in investing activities
$
(254,644)
$
(151,983)
$
(9,882)
Cash
flows from financing activities:
Repurchase
of 2024 Notes, including premium
12
—
—
(119,871)
Proceeds
from drawdown of credit facilities and sale and leaseback
12
344,500
76,000
60,000
Proceeds
from 2027 Secured Notes
12
—
—
350,000
Repayment
of credit facilities and sale and leaseback
12
(185,438)
(202,348)
(167,056)
Repayment
of refinanced debt, including prepayment fees
12
(292,010)
—
(276,671)
Deferred
financing costs paid
12
(3,120)
(1,140)
(9,655)
Net
proceeds from offering of Class A common shares, net of offering costs
16
445
—
—
Cancellation
of Class A common shares
16
(4,994)
(21,969)
(20,011)
Proceeds
from offering of Series B preferred shares, net of offering costs
16
—
—
(17)
Class
A common shares - dividend paid
16
(58,438)
(53,249)
(50,497)
Series
B Preferred Shares - dividend paid
16
(9,536)
(9,536)
(9,536)
Net
cash used in financing activities
$
(208,591)
$
(212,242)
$
(243,314)
Net
(decrease)/increase in cash and cash equivalents and restricted cash
(33,089)
10,783
74,288
Cash
and cash equivalents and restricted cash at beginning of the year
280,713
269,930
195,642
Cash
and cash equivalents and restricted cash at end of the year
$
247,624
$
280,713
$
269,930
Supplementary
Cash Flow Information:
Cash
paid for interest
$
55,421
$
67,997
$
51,490
Cash
received from interest rate caps
9
27,027
32,549
9,245
Non-cash
investing activities:
Acquisition
of intangibles
6
49,295
—
—
Non-cash
financing activities:
Unpaid
offering costs
—
—
283
Unrealized
(loss)/gain on derivative assets/FX option
9
(16,179)
(16,625)
31,221
See
accompanying notes to Consolidated Financial Statements
F-7
Table of Contents
Global Ship Lease, Inc.
Consolidated Statements of Changes in Shareholders’ Equity
(Expressed in thousands of U.S. dollars except share data)
Number
of
Common
Shares
at
par
value $0.01
Number
of
Series
B
Preferred
Shares
at
par
value $0.01
Number
of
Series
C
Preferred
Shares
at
par
value $0.01
Common
Shares
Series
B
Preferred
Shares
Series
C
Preferred
Shares
Additional
paid-in
capital
Retained
Earnings
Accumu
O
Comprehen
Inc
Balance
at January 1, 2022
36,464,109
43,592
—
$
365
$
—
$
—
$698,463
$
13,498
$
Stock-based
compensation expense (Note 17)
586,819
—
—
5
—
—
10,099
—
Cancellation
of Class A common shares (Note 16)
(1,060,640)
—
—
(11)
—
—
(20,000)
—
Other
comprehensive income
—
—
—
—
—
—
—
—
31
Net
Income for the year
—
—
—
—
—
—
—
292,925
Series
B Preferred Shares dividend (Note 16)
—
—
—
—
—
—
—
(9,536)
Issuance
of Series B Preferred shares, net of offering costs (Note 16)
—
—
—
—
—
—
(300)
—
Class
A common shares dividend (Note 16)
—
—
—
—
—
—
—
(50,497)
Balance
at December 31, 2022
35,990,288
43,592
—
$
359
$
—
$
—
$
688,262
$
246,390
$
31
Stock-based
compensation expense (Note 17)
440,698
—
—
5
—
—
10,184
—
Cancellation
of Class A common shares (Note 16)
(1,242,663)
—
—
(13)
—
—
(21,956)
—
Other
comprehensive loss
—
—
—
—
—
—
—
—
(12,
Net
Income for the year
—
—
—
—
—
—
—
304,500
Series
B Preferred Shares dividend (Note 16)
—
—
—
—
—
—
—
(9,536)
Issuance
of Series B Preferred shares, net of offering costs (Note 16)
—
—
—
—
—
—
102
—
Class
A common shares dividend (Note 16)
—
—
—
—
—
—
—
(53,249)
Balance
at December 31, 2023
35,188,323
43,592
—
$
351
$
—
$
—
$
676,592
$
488,105
$
19
Stock-based
compensation expense (Note 17)
483,713
—
—
6
—
—
8,698
—
Issuance
of Class A common shares, net of offering costs (Note 17)
27,106
—
—
—
—
—
445
—
Cancellation
of Class A common shares (Note 16)
(251,772)
—
—
(2)
—
—
(4,992)
—
Other
comprehensive loss
—
—
—
—
—
—
—
—
(10,
Net
Income for the year
—
—
—
—
—
—
—
353,628
Series
B Preferred Shares dividend (Note 16)
—
—
—
—
—
—
—
(9,536)
Class
A common shares dividend (Note 16)
—
—
—
—
—
—
—
(58,438)
Balance
at December 31, 2024
35,447,370
43,592
—
$
355
$
—
$
—
$
680,743
$
773,759
$
8
See
accompanying notes to Consolidated Financial Statements
F-8
Table of Contents
Global Ship Lease, Inc.
Notes to the Consolidated Financial Statements
(Expressed in thousands of U.S. dollars)
1.
Description of Business
The Company’s business is to own and charter out containerships
to leading liner companies.
On
August 14, 2008, Global Ship Lease, Inc. (the “Company”) merged indirectly with Marathon Acquisition Corp., a company then
listed on The American Stock Exchange, and with the pre-existing Global Ship Lease, Inc. GSL
Holdings, Inc. was the surviving entity
(the “Marathon Merger”), changed its name to Global Ship Lease, Inc. and became listed on The New York Stock Exchange (the
“NYSE”).
On
November 15, 2018, the Company completed a transformative transaction and acquired Poseidon Containers’ 20
containerships, one of which, the Argos, was contracted to be sold, which sale was completed in December 2018, (the
“Poseidon
Transaction”).
In
2021, the Company purchased 23 vessels. The Company purchased seven containerships of approximately 6,000 TEU each (the “Seven
Vessels”), 12 containerships from Borealis Finance LLC (the “Twelve Vessels”) and four 5,470
TEU Panamax containerships
(the “Four Vessels”). Also on June 30, 2021, vessel La Tour was sold.
During
the second quarter of 2023, the Company purchased four 8,544 TEU vessels for an aggregate purchase price of $123,300, which were
delivered on various dates in May and June 2023. Also on March 23, 2023, GSL Amstel was
sold.
During
the fourth quarter of 2024, the Company agreed to purchase four
high-reefer ECO 9,019
TEU vessels for an aggregate price of $274,000,
of which
three were delivered on various dates in December 2024.
The
fourth vessel was
delivered in January 2025.
With
these additions and following the sale of two vessels in 2021 and 2023, the Company’s fleet comprises 71 containerships with average
age as at December 31, 2024, weighted by TEU capacity, of 17.6 years.
The
following table provides information about the 71 vessels owned as at December 31, 2024.
Company
Name (1)
Country of
Incorporation
Vessel
Name
Capacity
in TEUs (2)
Year
Built
Earliest Charter
Expiry Date
Global
Ship Lease 54 LLC
Liberia
CMA
CGM Thalassa
11,040
2008
4Q25
Laertis
Marine LLC
Marshall
Islands
Zim
Norfolk
9,115
2015
2Q27
Penelope
Marine LLC
Marshall
Islands
Zim
Xiamen
9,115
2015
3Q27
Telemachus
Marine LLC
Marshall
Islands
Anthea
Y
9,115
2015
3Q25
Global
Ship Lease 78 LLC
Liberia
Sydney
Express
9,019
2016
1Q26
(4)
Global
Ship Lease 79 LLC
Liberia
Istanbul
Express
9,019
2016
3Q26
(4)
Global
Ship Lease 77 LLC (3)
Liberia
Bremerhaven
Express
9,019
2015
1Q26
(4)
Global
Ship Lease 53 LLC
Liberia
MSC
Tianjin
8,603
2005
3Q27
Global
Ship Lease 52 LLC
Liberia
MSC
Qingdao (5)
8,603
2004
3Q27
Global
Ship Lease 43 LLC
Liberia
GSL
Ningbo
8,603
2004
3Q27
Global
Ship Lease 72 LLC
Liberia
GSL
Alexandra
8,544
2004
3Q25
(6)
Global
Ship Lease 73 LLC
Liberia
GSL
Sofia
8,544
2003
3Q25
(6)
Global
Ship Lease 74 LLC
Liberia
GSL
Effie
8,544
2003
3Q25
(6)
Global
Ship Lease 75 LLC
Liberia
GSL
Lydia
8,544
2003
2Q25
(6)
Global
Ship Lease 30 Limited
Marshall
Islands
GSL
Eleni
7,847
2004
4Q27
(7)
Global
Ship Lease 31 Limited
Marshall
Islands
GSL
Kalliopi
7,847
2004
1Q28
(7)
Global
Ship Lease 32 Limited
Marshall
Islands
GSL
Grania
7,847
2004
1Q28
(7)
Alexander
Marine LLC
Marshall
Islands
Colombia
Express (ex Mary)
7,072
2013
4Q28
(8)
Hector
Marine LLC
Marshall
Islands
Panama
Express (ex Kristina)
7,072
2013
4Q29
(8)
Ikaros
Marine LLC
Marshall
Islands
Costa
Rica Express (ex
Katherine)
7,072
2013
2Q29
(8)
Philippos
Marine LLC
Marshall
Islands
Nicaragua
Express (ex
Alexandra)
7,072
2013
3Q29
(8)
Aristoteles
Marine LLC
Marshall
Islands
Mexico
Express (ex Alexis)
6,910
2015
3Q29
(8)
Menelaos
Marine LLC
Marshall
Islands
Jamaica
Express (ex Olivia I)
6,910
2015
3Q29
(8)
F-9
Table of Contents
Global Ship Lease, Inc.
Notes to the Consolidated Financial Statements (continued)
(Expressed in thousands of U.S. dollars)
1.
Description of Business (continued)
Company
Name (1)
Country
of
Incorporation
Vessel
Name
Capacity
in TEUs (2)
Year
Built
Earliest Charter
Expiry
Date
Global
Ship Lease 35 LLC
Liberia
GSL
Nicoletta
6,858
2002
1Q28
Global
Ship Lease 36 LLC
Liberia
GSL
Christen
6,858
2002
4Q27
Global
Ship Lease 48 LLC
Liberia
CMA
CGM Berlioz
7,023
2001
4Q25
Leonidas
Marine LLC
Marshall
Islands
Agios
Dimitrios (5)
6,572
2011
2Q27
Global
Ship Lease 33 LLC
Liberia
GSL
Vinia
6,080
2004
1Q28
(9)
Global
Ship Lease 34 LLC
Liberia
GSL
Christel Elisabeth
6,080
2004
1Q28
(9)
GSL
Arcadia LLC
Liberia
GSL
Arcadia
6,008
2000
1Q25
(10)
GSL
Melita LLC
Liberia
GSL
Melita
6,008
2001
3Q25
(10)
GSL
Maria LLC
Liberia
GSL
Maria
6,008
2001
4Q25
(10)
GSL
Violetta LLC
Liberia
GSL
Violetta
6,008
2000
2Q25
(10)
GSL
Tegea LLC
Liberia
GSL
Tegea
5,994
2001
3Q25
(10)
GSL
Dorothea LLC
Liberia
GSL
Dorothea
5,992
2001
2Q25
(10)
GSL
MYNY LLC
Liberia
GSL
MYNY
6,008
2000
2Q25
(10)
Tasman
Marine LLC
Marshall
Islands
Tasman
(12)
5,936
2000
1Q25
Hudson
Marine LLC
Marshall
Islands
Dimitris
Y (ex Zim Europe)
5,936
2000
2Q25
Drake
Marine LLC
Marshall
Islands
Ian
H
5,936
2000
4Q27
Global
Ship Lease 68 LLC (3)
Liberia
GSL
Kithira
5,470
2009
4Q27
Global
Ship Lease 69 LLC (3)
Liberia
GSL
Tripoli
5,470
2009
3Q27
Global
Ship Lease 70 LLC (3)
Liberia
GSL
Syros
5,470
2010
4Q27
Global
Ship Lease 71 LLC (3)
Liberia
GSL
Tinos
5,470
2010
3Q27
Hephaestus
Marine LLC
Marshall
Islands
Dolphin
II
5,095
2007
1Q25
Zeus
One Marine LLC
Marshall
Islands
Orca
I
5,095
2006
2Q25
Global
Ship Lease 47 LLC
Liberia
GSL
Château d’If
5,089
2007
4Q26
GSL
Alcazar Inc.
Marshall
Islands
CMA
CGM Alcazar
5,089
2007
3Q26
Global
Ship Lease 55 LLC
Liberia
GSL
Susan
4,363
2008
3Q27
Global
Ship Lease 50 LLC
Liberia
CMA
CGM Jamaica
4,298
2006
1Q28
Global
Ship Lease 49 LLC
Liberia
CMA
CGM Sambhar
4,045
2006
1Q28
Global
Ship Lease 51 LLC
Liberia
CMA
CGM America
4,045
2006
1Q28
Global
Ship Lease 57 LLC
Liberia
GSL
Rossi
3,421
2012
1Q26
Global
Ship Lease 58 LLC
Liberia
GSL
Alice
3,421
2014
2Q25
Global
Ship Lease 59 LLC
Liberia
GSL
Melina
3,404
2013
4Q26
Global
Ship Lease 60 LLC
Liberia
GSL
Eleftheria
3,421
2013
3Q25
Global
Ship Lease 61 LLC
Liberia
GSL
Mercer
2,824
2007
1Q27
(11)
Global
Ship Lease 62 LLC
Liberia
GSL
Mamitsa (ex Matson
Molokai)
2,824
2007
2Q25
Global
Ship Lease 63 LLC
Liberia
GSL
Lalo
2,824
2006
2Q25
Global
Ship Lease 42 LLC
Liberia
GSL
Valerie
2,824
2005
1Q25
Pericles
Marine LLC
Marshall
Islands
Athena
2,980
2003
2Q25
Global
Ship Lease 64 LLC
Liberia
GSL
Elizabeth
2,741
2006
2Q26
Global
Ship Lease 65 LLC
Liberia
GSL
Chloe (ex Beethoven)
2,546
2012
1Q27
(11)
Global
Ship Lease 66 LLC
Liberia
GSL
Maren
2,546
2014
1Q26
Aris
Marine LLC
Marshall
Islands
Maira
2,506
2000
4Q26
Aphrodite
Marine LLC
Marshall
Islands
Nikolas
2,506
2000
4Q26
Athena
Marine LLC
Marshall
Islands
Newyorker
2,506
2001
1Q25
Global
Ship Lease 38 LLC
Liberia
Manet
2,288
2001
1Q25
Global
Ship Lease 40 LLC
Liberia
Keta
(12)
2,207
2003
1Q25
Global
Ship Lease 41 LLC
Liberia
Julie
2,207
2002
2Q25
Global
Ship Lease 45 LLC
Liberia
Kumasi
2,220
2002
1Q25
Global
Ship Lease 44 LLC
Liberia
Akiteta
(12)
2,220
2002
1Q25
F-10
Table of Contents
Global Ship Lease, Inc.
Notes to the Consolidated Financial Statements
(Expressed in thousands of U.S. dollars)
1.
Description of Business (continued)
(1) All subsidiaries
are 100% owned, either directly or indirectly;
(2) Twenty-foot Equivalent Units;
(3) Currently, under a sale
and leaseback transaction (see note 2q);
(4) Sydney Express, Istanbul
Express and Bremerhaven Express delivered in 4Q 2024. Firm charters are followed by three 12 month extension periods at charterer’s
option. Czech, the fourth vessel was delivered on January 9, 2025;
(5) MSC Qingdao & Agios
Dimitrios are fitted with Exhaust Gas Cleaning Systems (“scrubbers”);
(6) GSL Alexandra, GSL Sofia,
GSL Lydia and GSL Effie. Firm charters are followed by one year extension period at charterer’s option;
(7) GSL Eleni, GSL Kalliopi
and GSL Grania were forward fixed for 35 – 38 months to commence after drydocking, after which the charterer has the option
to extend each charter for a further 12 – 16 months. GSL Eleni, GSL
Kalliopi and GSL Grania are all scheduled to commence in
1Q 2025, upon completion of drydocking
(8) Colombia Express (ex
Mary), Panama Express (ex Kristina), Costa Rica Express (ex Katherine), Nicaragua Express (ex Alexandra), Mexico Express (ex Alexis),
Jamaica Express (ex Olivia I). Firm charters are followed by two
twelve month extension periods at charterer’s option;
(9) GSL Vinia and GSL Christel
Elizabeth were both forward fixed for 36 – 40 months to commence after drydocking, after which the charterer has the option
to extend each charter for a further 12 – 15 months. The new charters are
both scheduled to commence in 1Q 2025;
(10) GSL Maria, GSL Violetta,
GSL Arcadia, GSL MYNY, GSL Melita, GSL Tegea and GSL Dorothea. Contract cover for each vessel is for a firm period of at least three
years from the date each vessel was delivered in 2021.
Thereafter, the charterer has the option to extend each charter for a further
12 months, after which they have the option to extend each charter for a second time – for a period concluding immediately
prior to each respective
vessel’s 25th year drydocking and special survey. GSL Arcadia, GSL Dorothea, GSL Tegea,
GSL Melita and GSL MYNY charterer’s first options were exercised in 1H 2024, GSL Maria and GSL Violetta charterer’s first
options
were exercised in 3Q 2024;
(11) GSL Mercer and GSL Chloe
were both forward fixed for 23.5 – 26 months. The new charters are both scheduled to commence in 1Q 2025;
(12) During December 2024, we agreed to sell Tasman and in February 2025, we agreed to sell Akiteta and Keta. Akiteta was delivered to her
new owners on February 19, 2025 and Tasman was delivered to her new owners on March
10, 2025. Keta is scheduled for delivery to her new
owners in first half 2025.
2. Summary of
Significant Accounting Policies
(a) Basis of
Presentation
The
accompanying consolidated financial statements are prepared in accordance with United States Generally Accepted Accounting Principles
(“U.S. GAAP”).
As
of December 31, 2023, the
Company has made reclassifications to its December 31, 2022, statement of cash flows to correct and reclassify payments for
drydocking and special survey costs from investing outflows to operating
outflows which resulted in a decrease in investing outflows
and increase in operating outflows of $24,457 for the year ended December 31, 2022. As of December 31, 2023, the Company
evaluated the reclassifications from both a
quantitative and qualitative perspective and determined the impacts were immaterial to
the previously issued interim and annual financial statements.
F-11
Table of Contents
Global Ship Lease, Inc.
Notes to the Consolidated Financial Statements (continued)
(Expressed in thousands of U.S. dollars)
2. Summary
of Significant Accounting Policies (continued)
(a)
Basis of Presentation (continued)
Adoption
of new accounting standards
On
November 27, 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. This standard
improves reportable segment disclosures by adding and enhancing interim
disclosure requirements, clarifying circumstances in which entities
can disclose multiple segment measures of profit or loss, providing new segment disclosure requirements for entities with a single reportable
segment, and adding other
disclosure requirements. This standard is effective for all entities that are subject to Topic 280, Segment
Reporting for annual periods beginning after December 15, 2023. The adoption of this ASU is reflected in Note 2(x).
(b)
Principles of Consolidation
The
accompanying consolidated financial statements include the financial statements of the Company and its wholly owned subsidiaries; the
Company has no other interests. All significant intercompany balances and transactions have
been eliminated in the Company’s consolidated
financial statements.
(c)
Use of Estimates
The preparation of consolidated financial statements in conformity with U.S. GAAP requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent
assets
and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates under different assumptions and/or
conditions.
(d)
Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at call with banks and other short-term highly liquid investments
with original maturities of three months or less.
(e)
Restricted cash
Restricted
cash consists of retention accounts which are restricted in use and held in order to service debt and interest payments. In addition,
restricted cash consists of pledged cash maintained with lenders and amounts built-up for
future drydockings. Also includes restricted
cash received in advance from charterers for future charter service.
(f)
Insurance claims
Insurance
claims consist of claims submitted and/or claims in the process of compilation or submission. They are recorded on an accrual basis and
represent the claimable expenses, net of applicable deductibles, incurred through
December 31 of each reported period, which are
probable to be recovered from insurers. Any outstanding costs to complete the claims are included in accrued liabilities. The classification
of insurance claims into current and non-
current assets is based on management’s expectation as to the collection dates.
F-12
Table of Contents
Global Ship Lease, Inc.
Notes to the Consolidated Financial Statements (continued)
(Expressed in thousands of U.S. dollars)
2. Summary
of Significant Accounting Policies (continued)
(g)
Inventories
Inventories
consist of bunkers, lubricants, stores and provisions. Inventories are stated at the lower of cost or net realizable value as determined
using the first-in, first-out method. Inventories include also EU Allowances (“EUAs”),
which are also stated at the lower
of cost or net realizable value.
(h)
Accounts receivable, net
The
Company carries its accounts receivable at cost less, if appropriate, an allowance for doubtful accounts, based on a periodic review
of accounts receivable, taking into account past write-offs, collections and current credit
conditions. The Company does not generally
charge interest on past-due accounts. Allowances for doubtful accounts amount to $nil as of December 31, 2024 (2023: $nil). As of December
31, 2024, accounts receivable, net, include
$9,190 relating to EUA’s receivable from charterers.
(i)
Vessels in operation
Vessels
are generally recorded at their historical cost, which consists of the acquisition price and any material expenses incurred upon acquisition,
adjusted for the fair value of intangible assets or liabilities associated with above or
below market charters attached to the vessels
at acquisition. See Intangible Assets and Liabilities at note 2(l) below. Vessels acquired in a corporate transaction accounted for as
an asset acquisition are stated at the acquisition price,
which consists of consideration paid, plus transaction costs, considering pro
rata allocation based on vessels fair value at the acquisition date. Vessels acquired in a corporate transaction accounted for as a business
combination are
recorded at fair value. Vessels acquired as part of the Marathon Merger in 2008 were accounted for under ASC 805, which
required that the vessels be recorded at fair value, less the negative goodwill arising as a result of the accounting
for the merger.
Subsequent
expenditures for major improvements and upgrades are capitalized, provided they appreciably extend the life, increase the earnings capacity
or improve the efficiency or safety of the vessels.
Borrowing
costs incurred during the construction of vessels or as part of the prefinancing of the acquisition of vessels are capitalized. There
was no capitalized interest for the years ended December 31, 2024, 2023 and 2022.
Vessels
are stated less accumulated depreciation and impairment, if applicable. Vessels are depreciated to their estimated residual value using
the straight-line method over their estimated useful lives which are reviewed on an ongoing
basis to ensure they reflect current technology,
service potential and vessel structure. The useful lives are estimated to be 30 years from original delivery by the shipyard.
Management
estimates the residual values of the Company’s container vessels based on a scrap value cost of steel times the weight of the vessel
noted in lightweight tons (LWT). Residual values are periodically reviewed and revised to
recognize changes in conditions, new regulations
or other reasons. Revision of residual values affect the depreciable amount of the vessels and affects depreciation expense in the period
of the revision and future periods. Management
estimated the residual values of its vessels based on scrap rate of $400 per LWT.
For
any vessel group which is impaired, the impairment charge is recorded against the cost of the vessel and the accumulated
depreciation as at the date of impairment is removed from the accounts.
The
cost and related accumulated depreciation of assets retired or sold are removed from the accounts at the time of sale or retirement and
any gain or loss is included in the Consolidated Statements of Income.
F-13
Table of Contents
Global Ship Lease, Inc.
Notes to the Consolidated Financial Statements (continued)
(Expressed in thousands of U.S. dollars)
2.
Summary of Significant Accounting Policies (continued)
(j)
Assets Held for Sale
The
Company classifies assets and disposal groups as being held for sale when the following criteria are met: management has committed to
a plan to sell the asset (disposal group); the asset (disposal group) is available for immediate
sale in its present condition; an active
program to locate a buyer and other actions required to complete the plan to sell the asset (disposal group) have been initiated; the
sale of the asset (disposal group) is probable, and transfer of the
asset (disposal group) is expected to qualify for recognition as
a completed sale within one
year; the asset (disposal group) is being actively
marketed for sale at a price that is reasonable in relation to its current fair value; and actions
required to complete the plan indicate
that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. Long-lived assets or disposal
groups classified as held for sale are measured at the lower of
their carrying amount or fair value less cost to sell. These assets are
not depreciated once they meet the criteria to be held for sale. As of December 31, 2024, Tasman, which was agreed to be sold for a sale
price of $31,500,
does not
meet the criteria as held for sale (see note 19).
(k) Deferred dry dock and special survey costs, net
Drydocking costs are reported in the Consolidated Balance Sheets within “Deferred dry dock and special survey costs, net”,
and include planned major maintenance and overhaul activities for ongoing certification. The Company
follows the deferral method of accounting
for drydocking costs, whereby actual costs incurred are deferred and amortized on a straight-line basis over the period of five years
until approximately the next scheduled drydocking. Any
remaining unamortized balance from the previous drydocking is written-off.
The amortization period reflects the estimated useful economic life of the deferred dry dock and special survey costs, which is the period
between each drydocking. Costs incurred during the drydocking relating to routine repairs and
maintenance are expensed. The unamortized
portion of drydocking costs for vessels sold is included as part of the carrying amount of the vessel in determining the gain or (loss)
on sale of the vessel.
(l)
Intangible assets and liabilities – charter agreements
The Company’s intangible assets and liabilities consist
of unfavorable lease terms on charter agreements acquired in assets acquisitions. When intangible assets or liabilities associated with
the acquisition of a vessel are identified, they
are recorded at fair value. Fair value is determined by reference to market data and
the discounted amount of expected future cash flows. Where charter rates are higher than market charter rates, an intangible asset is
recorded, based on
the difference between the acquired charter rate and the market charter rate for an equivalent vessel and equivalent
duration of charter party at the date the vessel is delivered. Where charter rates are less than market charter rates, an
intangible
liability is recorded, based on the difference between the acquired charter rate and the market charter rate for an equivalent vessel.
The determination of the fair value of acquired assets and liabilities requires the Company to
make significant assumptions and estimates
of many variables including market charter rates (including duration), the level of utilization of its vessels and its weighted average
cost-of capital (“WACC”). The estimated market charter
rate (including duration) is considered a significant assumption.
The use of different assumptions could result in a material change in the fair value of these items, which could have a material impact
on the Company’s financial position
and results of operations. The amortizable value of favorable and unfavorable leases is amortized
over the remaining life of the relevant lease term and the amortization expense or income respectively is included under the caption
“Amortization of intangible liabilities-charter agreements” in the Consolidated Statements of Income. For any vessel group
which is impaired, the impairment charge is recorded against the cost of the vessel and the accumulated
depreciation as at
the date of impairment is removed from the accounts.
F-14
Table of Contents
Global Ship Lease, Inc.
Notes to the Consolidated Financial Statements (continued)
(Expressed in thousands of U.S. dollars)
2. Significant Accounting Policies (continued)
(m) Impairment of Long-lived assets
Tangible
fixed assets, such as vessels, that are held and used or to be disposed of by the Company are reviewed for impairment when events or
changes in circumstances indicate that their carrying amounts may not be recoverable. In
these circumstances, the Company performs step
one of the impairment test by comparing the undiscounted projected net operating cash flows for each vessel group to its carrying value.
A vessel group comprises the vessel, the
unamortized portion of deferred drydocking related to the vessel and the related carrying value
of the intangible asset or liability (if any) with respect to the time charter attached to the vessel at its purchase. If the undiscounted
projected
net operating cash flows of the vessel group are less than its carrying amount, management proceeds to step two of the impairment
assessment by comparing the vessel group’s carrying amount to its fair value, including any applicable
charter, and an impairment
loss is recorded equal to the difference between the vessel group’s carrying value and fair value. Fair value is determined with
the assistance from valuations obtained from third party independent ship
brokers.
The Company uses a
number of assumptions in projecting its undiscounted net operating cash flows analysis including, among others, (i) revenue assumptions
for charter rates on expiry of existing charters, which are based on forecast
charter rates, where relevant, in the four years from the
date of the impairment test and a reversion to the historical mean of time charter rates for each vessel thereafter (ii) off-hire days,
which are based on actual off-hire statistics for
the Company’s fleet (iii) operating costs, based on current levels escalated
over time based on long term trends (iv) dry docking frequency, duration and cost (v) estimated useful life, which is assessed
as a total of 30 years from original
delivery by the shipyard and (vi) scrap values.
Revenue
assumptions are based on contracted charter rates up to the end of the existing contract of each vessel, and thereafter, estimated time
charter rates for the remaining life of the vessel. The estimated time charter rate used for
non-contracted revenue days of each vessel
is considered a significant assumption. Recognizing that the container shipping industry is cyclical and subject to significant volatility
based on factors beyond the Company’s control,
management believes that using forecast charter rates in the four years from the
date of the impairment assessment and a reversion to the historical mean of time charter rates thereafter, represents a reasonable benchmark
for the
estimated time charter rates for the non-contracted revenue days, and takes into account the volatility and cyclicality of the
market.
Through
the latter part of 2024, the Company noted that events and circumstances triggered the existence of potential impairment for some of
Company’s vessel groups. These indicators included the potential impact of the current
container sector on management’s
expectation for future revenues, as well as some volatility in the charter market and the vessels’ market values. As a result,
the Company performed step one of the impairment assessment of each of
the Company’s vessel groups by comparing the
undiscounted projected net operating cash flows for each vessel group to their carrying value and step two of the impairment
analysis was not required for any vessel group, as their
undiscounted projected net operating cash flows
exceeded their carrying value. Accordingly, no impairment recorded for the year ended December 31, 2024.
Through
the latter part of 2023, the Company noted that events and circumstances triggered the existence of potential impairment for some of
the Company’s vessel groups. These indicators included volatility in the charter market and
the vessels’ market values, as
well as the potential impact of the current container sector on management’s expectation for future revenues. As a result, the
Company performed step one of the impairment assessment of each of the
Company’s vessel groups by comparing the undiscounted projected
net operating cash flows for each vessel group to their carrying value and step two of the impairment analysis was required for two vessel
groups, as their
undiscounted projected net operating cash flows did not exceed their carrying value. As a result, the Company recorded
an impairment loss of $18,830 for two vessel groups with a total aggregate carrying amount of $43,830 which was
written down to their
fair value of $25,000 (see note 4).
Through
the latter part of 2022, the Company noted that charter rates in the spot market had come under pressure and accordingly determined that
events occurred, and circumstances had changed, which indicated that potential
impairment of the Company’s long-lived assets could
exist. These indicators included continued volatility in the spot market and the related impact of the current container sector on management’s
expectation for future revenues. As a
result, step one of the impairment assessment of each of the vessel groups was performed as at
December 31, 2022 and step two of the impairment analysis was required for one vessel group, as its undiscounted projected net operating
cash flows did not exceed its carrying value. As a result, the Company recorded an impairment loss of $3,033 for one vessel asset group
with a total aggregate carrying amount of $9,033 which was written down to its fair value of
$6,000 (see note 4).
F-15
Table of Contents
Global Ship Lease, Inc.
Notes to the Consolidated Financial Statements (continued)
(Expressed in thousands of U.S. dollars)
2. Significant
Accounting Policies (continued)
(n)
Deferred financing costs
Costs
incurred in connection with obtaining long-term debt and in obtaining amendments to existing
facilities are recorded as deferred financing costs and are amortized to interest expense
using the effective interest method over the
estimated duration of the related debt. Such
costs include fees paid to the lenders or on the lenders’ behalf and associated legal
and other professional fees. Debt issuance costs, other than any up-front arrangement fee
for revolving
credit facilities, related to a recognized debt liability are presented as
a direct deduction from the carrying amount of that debt.
(o) Preferred shares
The Series B Preferred Shares were originally issued in August 2014 and have been included within Equity in the Consolidated Balance
Sheets since their initial issue in August 2014 and increased in 2019, 2020 and 2021 with the
introduction of ATM program see note 16,
and the dividends are presented as a reduction of Retained Earnings or addition to Accumulated Deficit in the Consolidated Statements
of Changes in Shareholders’ Equity as their nature is
similar to that of an equity instrument rather than a liability. Holders
of these redeemable perpetual preferred shares, which may only be redeemed at the discretion of the Company, are entitled to receive
a dividend equal to 8.75% on
the original issue price, should such dividend be declared, and rank senior to the common shares with respect
to dividend rights and rights upon liquidation, dissolution or winding up of the Company.
The
250,000 Series C Perpetual Convertible Preferred Shares (the “Series C Preferred Shares”) have been included within Equity
in the Consolidated Balance Sheets, from their issue on November 15, 2018. The Series C Preferred
Shares were convertible in certain
circumstances to Class A common shares and they were entitled to a dividend only should such a dividend be declared on Class A common
shares. On January 20, 2021, upon the redemption in full of
the 9.875% First Priority Secured Notes due 2022 (the “2022 Notes”),
Series C Preferred shares converted to Class A common shares see note 16.
On
December 29, 2022, the Company entered into a new At Market Issuance Sales Agreement with B. Riley Securities, Inc. (the “Agent”),
pursuant to which the Company may offer and sell, from time to time, up to $150,000,000
of
its Depositary Shares. This new ATM Agreement
terminated and replaced, in its entirety, the former at-the-market program that the Company had in place with the Agent for the Depositary
Shares. Up to December 31, 2024, no sales
had occurred under the new ATM Agreement.
(p)
Other comprehensive income
Other comprehensive income, which is reported in the Consolidated Statements of Changes in Shareholders’ Equity, consists of net
income and other gains and losses affecting equity that, under U.S. GAAP, are excluded from net
income. Under ASU 2011-05, an entity
reporting comprehensive income in a single continuous financial statement shall present its components in two sections, net income and
other comprehensive income. For the year ended
December 31, 2024, the Company recorded an unrealized loss on the interest rate caps,
amortization of interest rate cap premium and an amount reclassified to earnings of $16,179, $4,586 and $877, respectively. For the year
ended
December 31, 2023, the Company recorded an unrealized loss on the interest rate caps, amortization of interest rate cap premium
and an amount reclassified to earnings of $16,625, $4,271 and $214, respectively. For the year ended
December 31, 2022, unrealized gain
on the interest rate caps, amortization of interest rate cap premium and an amount reclassified from earnings $31,221, $1,123 and ($1,091)
respectively. In all years, unrealized gain/(loss) on the
interest rate caps, amortization of interest rate cap premium and amount reclassified
to/(from) earnings are reported as a component of other comprehensive income and presented in the Consolidated Statements of Comprehensive
Income. (see note 9).
F-16
Table of Contents
Global Ship Lease, Inc.
Notes to the Consolidated Financial Statements (continued)
(Expressed in thousands of U.S. dollars)
2.
Significant Accounting Policies (continued)
(q) Revenue recognition and related expense
The
Company charters out its vessels on time charters which involves placing a vessel at a charterer’s disposal for a specified
period of time during which the charterer uses the vessel in return for the payment of a specified daily hire
rate. Such charters
are accounted for as operating leases and therefore revenue is recognized on a straight-line basis as the average revenues over the
rental periods of such charter agreements, as service is performed. Cash received in
excess of earned revenue is recorded as
deferred revenue. If a time charter contains one or more consecutive option periods, then subject to the options being exercisable
solely by the Company, the time charter revenue will be
recognized on a straight-line basis over the total remaining life of the
time charter, including any options which are more likely than not to be exercised. If a time charter is modified, including the
agreement of a direct continuation at a
different rate, the time charter revenue will be recognized on a straight-line basis
over the total remaining life of the time charter from the date of modification. During the years ended December 31, 2024, 2023
and 2022, amounts of
($8,823), ($4,025) and
$10,899,
respectively, were recorded in time charter-revenues for such modifications and revenues recognized on a straight-line basis. Any
difference between the charter rate invoiced and the time charter
revenue recognized is classified as, or released from, deferred
revenue. As of December 31, 2024, current asset and non-current asset from implementing the straight-line basis, amounting to $9,657 ($9,027 and
$6,487 as
of December
31, 2023, and 2022, respectively) and $19,670 ($15,139 and
$21,144 as
of December 31, 2023, and 2022, respectively), respectively, are presented in the Consolidated Balance Sheets in the line item
“Prepaid expenses and other current
assets” and “Other non-current assets”, respectively. As of December 31,
2024, current liability and non-current liability from implementing the straight-line basis, amounting to $5,310 ($113 and
$143 as
of December 31, 2023, and
2022, respectively) and $9,438 ($651 and
$59 as
of December 31, 2023, and 2022, respectively), are presented in the Consolidated Balance Sheets in the line item “Current
portion of deferred revenue” and “Deferred revenue, net of
current portion”, respectively.
Revenues
are recorded net of address commissions, which represent a discount provided directly to the charterer based on a fixed percentage of
the agreed upon charter rate. Charter revenue received in advance which relates to the
period after a balance sheet date is recorded
as deferred revenue within current liabilities until the respective charter services are rendered.
Under
time charter arrangements the Company, as owner, is responsible for all the operating expenses of the vessels, such as crew costs, insurance,
repairs and maintenance, and such costs are expensed as incurred and are included in
vessel operating expenses.
Commission
paid to brokers to facilitate the agreement of a new charter are included in time charter and voyage expenses as are certain expenses
related to a voyage, such as the costs of bunker fuel consumed when a vessel is off-hire
or idle.
Leases:
In cases of lease agreements where the Company acts as the lessee, the Company recognizes an operating lease asset and a corresponding
lease liability on the Consolidated Balance Sheets. Following initial recognition and
with regards to subsequent measurement the Company
remeasures lease liability and right of use asset at each reporting date.
Leases
where the Company acts as the lessor are classified as either operating or sales-type / direct financing leases.
In
cases of lease agreements where the Company acts as the lessor under an operating lease, the Company keeps the underlying asset on the
Consolidated Balance Sheets and continues to depreciate the assets over its useful life. In cases
of lease agreements where the Company
acts as the lessor under a sales-type / direct financing lease, the Company derecognizes the underlying asset and records a net investment
in the lease. The Company acts as a lessor under
operating leases in connection with all of its charter out - bareboat-out arrangements.
In
cases of sale and leaseback transactions, if the transfer of the asset to the lessor does not qualify as a sale, then the transaction
constitutes a failed sale and leaseback and is accounted for as a financial liability. For a sale to have
occurred, the control of the
asset would need to be transferred to the lessor, and the lessor would need to obtain substantially all the benefits from the use of
the asset. During 2021, the Company entered into six
agreements which
qualified as failed sale and
leaseback transactions as the Company was required to repurchase the vessels at the end of the lease term and the Company had accounted
for the six agreements as financing transactions. During the fourth
quarter of 2024, the Company entered into a new agreement which qualified
as failed sale and leaseback transaction. Following the full prepayment of (i) the $54,000
sale and leaseback agreement with CMBFL on August
27, 2024, and
(ii) the $14,735
sale and leaseback agreement with Neptune on
September 12, 2024, the Company as of December 31, 2024, has accounted for five agreements as financing transactions.
F-17
Table of Contents
Global Ship Lease, Inc.
Notes to the Consolidated Financial Statements (continued)
(Expressed in thousands of U.S. dollars)
2.
Significant Accounting Policies (continued)
(q)
Revenue recognition and related expense (continued)
Leases
(continued)
The
Company elected the practical expedient which allows the Company to treat the lease and non-lease components as a single lease component
for the leases where the timing and pattern of transfer for the non-lease component and
the associated lease component to the lessees
are the same and the lease component, if accounted for separately, would be classified as an operating lease. The combined component
is therefore accounted for as an operating lease under
ASC 842, as the lease components are the predominant characteristics.
(r) Foreign currency transactions
The
Company’s functional currency is the U.S. dollar as substantially all revenues and a majority of expenditures are denominated in
U.S. dollars. Monetary assets and liabilities denominated in foreign currencies are translated at the
rate of exchange at the balance
sheet dates. Expenses paid in foreign currencies are recorded at the rate of exchange at the transaction date. Exchange gains and losses
are included in the determination of Net Income.
(s)
Stock-based compensation
The Company has awarded incentive stock units
to its management and Directors as part of their compensation.
Using the graded vesting method of expensing the incentive stock unit grants, the weighted average fair value of the stock units is recognized
as compensation costs in the Consolidated Statements of Income over the vesting period. The
fair value of the incentive stock units for
this purpose is calculated by multiplying the number of stock units by the fair value of the shares at the grant date. The Company has
not factored any anticipated forfeiture into these calculations
based on the limited number of participants.
(t) Income taxes
The Company and its Marshall Island subsidiaries are exempt
from taxation in the Marshall Islands. Otherwise, the Company’s vessels are liable for tax based on the tonnage of the vessel,
under the regulations applicable to the country
of incorporation of the vessel owning company, which is included within vessels’
operating expenses. Certain inactive Cyprus (all dissolved within 2022) and Hong Kong subsidiaries (two, two and three were dissolved
in 2024, 2022
and 2021, respectively, and three remain inactive as of December 31, 2024) are also liable for income tax on interest income
earned from non-shipping activities.
The
Company had one subsidiary in the United Kingdom that was dissolved on September 24, 2024, and no tax is anticipated.
The
Company recognizes uncertain tax positions only if it is more likely than not that the tax position will be sustained on examination
by the taxing authorities, based solely on the technical merits of the position.
(u) Dividends
Dividends are recorded in the period in which they are declared by the Company’s Board of Directors. Dividends to be paid are presented
in the Consolidated Balance Sheets in the line item “Accrued Liabilities”.
(v)
Earnings per share
Basic earnings per common share are based on income available to common shareholders divided by the weighted average number of common
shares outstanding during the period, excluding unvested restricted stock units. Diluted
income per common share are calculated by applying
the treasury stock method. All unvested restricted stock units that have a dilutive effect are included in the calculation. The basic
and diluted earnings per share for the period are
presented for each category of participating common shares under the two-class method.
F-18
Table of Contents
Global Ship Lease, Inc.
Notes to the Consolidated Financial Statements (continued)
(Expressed in thousands of U.S. dollars)
2.
Significant Accounting Policies (continued)
(w)
Risks Associated with Concentration
The
Company is exposed to certain concentration risks that may adversely affect the Company’s financial position in the near term:
(i) The
Company derives its revenue from liner companies which are exposed to the cyclicality of the container shipping industry. For operating
revenue from significant customers constituting more than 10% of total time charter
revenue, refer to Note 13.
(ii)There
is a minimum concentration of credit risk with respect to cash and cash equivalents at December 31, 2024, to the extent that substantially
all of the amounts are deposited with eight banks (2023: ten banks). The Company
believes this risk is remote as the banks are high
credit quality financial institutions.
(x) Segment
Reporting
The Company derives its revenues from chartering vessels to liner companies. The Company
reports financial information and evaluates its operations by charter revenues and not by the length of ship employment for its
customers.
The Company does not use discrete financial information to evaluate operating results for each vessel or type of charter.
Management does not identify expenses, profitability or other financial information by vessel or charter type. The
Company’s
Executive Chairman, Chief Executive Officer and Chief Financial Officer, collectively, who are the Chief Operating Decision Maker
("CODM"), review operating results solely by revenue per day and consolidated net
income of the fleet and thus the Company
has determined that it operates under one
operating and reportable segment. Consolidated vessel operating expense information presented within the Consolidated Statements of
Income are
considered to be significant expenses. Furthermore, when the Company charters a vessel
to a charterer, the charterer is free to trade the vessel worldwide, subject to restrictions as per the charter agreement, and, as a
result, the disclosure
of geographic information is impracticable.
(y)
Fair Value Measurement and Financial Instruments
Financial instruments carried on the Consolidated Balance Sheets include cash and cash equivalents, restricted cash, time deposits, trade
receivables and payables, other receivables and other liabilities and long-term debt. The particular
recognition methods applicable to
each class of financial instrument are disclosed in the applicable significant policy description of each item or included below as applicable.
Fair
value measurement: Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability
(i.e. the “exit price”) in an orderly transaction between market participants at the measurement date. The
hierarchy is broken
down into three levels based on the observability of inputs as follows:
Level 1
– Valuations based on quoted prices in active markets for identical assets or liabilities that the Company has the ability
to access. Valuation adjustments and block discounts are not applied to Level 1 instruments. Since
valuations are based on quoted
prices that are readily and regularly available in an active market, valuation of these products does not entail a significant degree
of judgment.
Level 2
– Valuations based on one or more quoted prices in markets that are not active or for which all significant inputs are observable,
either directly or indirectly.
Level 3
– Valuations based on inputs that are unobservable and significant to the overall fair value measurement.
F-19
Table of Contents
Global Ship Lease, Inc.
Notes to the Consolidated Financial Statements (continued)
(Expressed in thousands of U.S. dollars)
2.
Significant Accounting Policies (continued)
(y) Fair
Value Measurement and Financial Instruments (continued)
In
December 2021, the Company purchased interest rate caps with an aggregate notional amount of $484,106,
which amortizes over time as the Company’s outstanding debt balances decline. In February 2022, the Company further
hedged its
exposure by putting in place two
USD one-month LIBOR interest rate caps of 0.75%
through fourth
quarter 2026, on $507,891 of
its floating rate debt. The second interest rate cap was not designated as a cash flow hedge
and negative fair value adjustment of $5,170
as at December 31, 2024, was recorded through
Consolidated Statements of Income ($5,372 negative fair value adjustment and $9,685 positive fair value adjustment for December 31, 2023
and 2022, respectively). ASC 815-20-25-13a stipulates that an entity may designate either all or certain future interest payments on
variable-rate debt as the hedged exposure in a cash flow hedge relationship. The Company is
designating certain future interest payments
on its outstanding variable-rate debt as the hedged item in this relationship. Under ASC 815-20-25-106e, “for cash flow hedges
of the interest payments on only a portion of the principal
amount of the interest-bearing asset or liability, the notional amount of
the interest rate cap designated as the hedging instrument matches the principal amount of the portion of the asset or liability on which
the hedged interest payments
are based”. In this case, the
Company has designated only a portion of its outstanding debt (initially, $253,946) as the hedged item, and any interest payments beyond
the notional amount of the interest rate cap in any given period are
not designated as being hedged.
During 2023, all Company’s loan agreements have been amended and restated to take into effect the transition from LIBOR to the
Secured Overnight Financing Rate (“SOFR”) and the relevant
provisions on a replacement rate. In addition, the Company’s
interest rate caps automatically transited to 1-month
Compounded SOFR on July 1, 2023, at a level of
0.64%.
The Company assesses the effectiveness of the hedges on an
ongoing basis. The amounts included in accumulated other comprehensive income
will be reclassified to interest expense should the hedge no longer be considered effective.
As
of December 31, 2024, 2023 and 2022, following a quantitative assessment, part of the hedges were no longer considered effective and
an amount of ($877), ($214) and $1,091, respectively, was reclassified (to)/from other
comprehensive income to the Consolidated Statements
of Income.
The
objective of the hedges is to reduce the variability of cash flows associated with the interest rates relating to the Company’s
variable rate borrowings. When derivatives are used, the Company is exposed to credit loss in the event of
non-performance by the counterparties;
however, non-performance is not anticipated. ASC 815, Derivatives and Hedging, requires companies to recognize all derivative
instruments as either assets or liabilities at fair value in the
balance sheet. The fair values of the interest rate derivatives are
based on quoted market prices for similar instruments from commercial banks (based on significant observable inputs – Level 2 inputs).
On
April 4, 2024, the
Company entered into a foreign exchange option strip (“FX option”) to purchase €3,000, with monthly settlements,
starting April 11, 2024, and ending March 13, 2025. The strike price is EURUSD 1.10. The
Company entered to this option to hedge the downside foreign exchange risk associated with expenses
denominated in EUR against fluctuations between the US Dollar and Euro. This FX option is designated as a cash flow hedge of
anticipated expenses totalling €3,000, expected to occur each month. Changes in the fair value of the option other than
“intrinsic value” are excluded from the assessment of effectiveness. The effectiveness of the hedging relationship
will
be periodically assessed during the life of the hedge by comparing the terms of the option and the forecasted expenses to ensure
that they continue to coincide. Should the critical terms no longer match exactly, hedge effectiveness
(both prospective and
retrospective) will be assessed by evaluating the dollar-offset ratio of the spot intrinsic value of the actual option contract and
a hypothetically perfect option contract.
Financial
Risk Management: The Company activities expose it to a variety of financial risks including fluctuations in, time charter
rates, credit and interest rates risk. Risk management is carried out under policies approved by
executive management. Guidelines are
established for overall risk management, as well as specific areas of operations.
F-20
Table of Contents
Global Ship Lease, Inc.
Notes to the Consolidated Financial Statements (continued)
(Expressed in thousands of U.S. dollars)
2.
Significant Accounting Policies (continued)
(y) Fair
Value Measurement and Financial Instruments (continued)
Credit
Risk: The Company closely monitors its credit exposure to customers and counter-parties for credit risk. The Company has
entered into commercial management agreement with Conchart Commercial Inc. (“Conchart”), pursuant
to which Conchart has agreed
to provide commercial management services to the Company, including the negotiation, on behalf of the Company, of vessel employment contracts
(see note 14). Conchart has policies in place to ensure
that it trades with customers and counterparties with an appropriate credit history.
Financial instruments that potentially subject the Company to concentrations of credit risk are accounts receivable and cash and cash
equivalents and
time deposits. The Company does not believe its exposure to credit risk is likely to have a material adverse effect on
its financial position, results of operations or cash flows.
Liquidity
Risk: Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding
through an adequate amount of committed credit facilities and the ability to close out market
positions. The Company monitors cash balances
appropriately to meet working capital needs.
Foreign
Exchange Risk: Foreign currency transactions are translated into the measurement currency rates prevailing at the dates
of transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and
from the translation of monetary
assets and liabilities denominated in foreign currencies are recognized in the Consolidated Statements of Income.
(z) Derivative
instruments
The
Company is exposed to interest rate risk relating to its variable rate borrowings. In December 2021, the Company purchased interest rate
caps with an aggregate notional amount of $484,106 (“December 2021 hedging”), which
amount reduces over time as the Company’s
outstanding debt balances amortize. The objective of the hedges is to reduce the variability of cash flows associated with the interest
relating to its variable rate borrowings.
At
the inception of the transaction, the Company documents the relationship between hedging instruments and hedged items, as well as its
risk management objective and the strategy for undertaking various hedging transactions. The
Company also documents its assessment, both
at the hedge inception and on an ongoing basis, of whether the derivative financial instruments that are used in hedging transactions
are highly effective in offsetting changes in fair values
or cash flows of hedged items.
This
transaction is designated as a cash flow hedge, and under ASU 2017-12, cash flow hedge accounting allows all changes in fair value to
be recorded through Other Comprehensive Income once hedge effectiveness has been
established. Under ASC 815-30-35-38, amounts in accumulated
other comprehensive income shall be reclassified into earnings in the same period or periods during which the hedged forecasted transaction
affects earnings (i.e., each
quarter) and shall be presented in the same income statement line item as the earnings effect of the hedged
item in accordance with paragraph 815-20-45-1A.
The
premium paid related to this derivative was classified in the Consolidated Statements of Cash Flows as operating activities in the line
item “Derivative asset”. The premium shall be amortized into earnings “on a systematic and
rational basis over the
period in which the hedged transaction affects earnings” (ASC 815-30-35-41A); that is, the Company will expense the premium over
the life of the interest rate cap in accordance with the “caplet method”, as
described in Derivatives Implementation Group
(DIG) Issue G20. DIG Issue G20 dictates that the cost of the interest rate cap is recognized on earnings over time, based on the value
of each periodic caplet. The cost per period will
change as the caplet for that period changes in value. Given that the interest rate
cap is forward-starting, expensing of the premium will not begin until the effective start date of the interest rate cap, in order to
match potential cap
revenue with the cap expenses in the period in which they are incurred.
F-21
Table of Contents
Global Ship Lease, Inc.
Notes to the Consolidated Financial Statements (continued)
(Expressed in thousands of U.S. dollars)
2.
Significant Accounting Policies (continued)
(z) Derivative
instruments (continued)
In
February 2022, the Company further purchased two interest rate caps with an aggregate notional amount of $507,891.
The first interest rate cap of $253,946 which has been designated as a cash flow hedge, has the same accounting
treatment as
described above for the December 2021 hedging. The second interest rate cap was not designated as a cash flow hedge and a negative
fair value adjustment of $5,170 as at December 31, 2024, was recorded through
Consolidated Statements of Income ($5,372 negative
fair value adjustment and $9,685
positive fair value adjustment for December 31, 2023 and 2022, respectively). ASC 815-20-25-13a stipulates that an entity may
designate either all
or certain future interest payments on variable-rate debt as the hedged exposure in a cash flow hedge
relationship. In this case, the
Company has designated only a portion of its outstanding debt (initially, $253,946) as the hedged item,
and any interest payments
beyond the notional amount of the interest rate cap in any given period are not designated as being hedged (see note 9).
As
of December 31, 2024, all Company’s loan agreements have been amended and restated to take into effect the transition from LIBOR
to the Secured Overnight Financing Rate (“SOFR”) and the relevant provisions on a replacement
rate. In addition, the Company’s
interest rate caps automatically transited to 1-month Compounded SOFR on July 1, 2023, at a level of 0.64%.
The
amounts included in accumulated other comprehensive income will be reclassified to interest expense should the hedge no longer be considered
effective. The Company assesses the effectiveness of the hedges on an ongoing basis.
As of December 31, 2024, 2023 and 2022, following
a quantitative assessment, part of the hedge was no longer considered effective and an amount of ($877), ($214) and $1,091, respectively,
was reclassified (to)/from other
comprehensive income to the Consolidated Statements of Income.
(zi)
Recently issued accounting standards
In
December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Taxes Disclosures, which requires greater
disaggregation of income tax disclosures. The new standard requires additional
information to be disclosed with respect to the income
tax rate reconciliation and income taxes paid disaggregated by jurisdiction. This ASU should be applied prospectively for fiscal years
beginning after December 15, 2024, with
retrospective application permitted. The Company is currently evaluating the impacts of this
guidance on the Company’s Consolidated Financial Statements and disclosures.
In
November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures
(Subtopic 220-40): Disaggregation of Income Statement Expenses. The standard is
intended to enhance transparency of income statement
disclosures primarily through additional disaggregation of relevant expense captions. The standard is effective for annual reporting
periods beginning after December 15, 2026 and
interim periods beginning after December 15, 2027, with prospective or retrospective application
permitted. The Company is currently evaluating the potential impact of adopting this standard on the Company’s consolidated financial
statements and disclosures.
F-22
Table of Contents
Global Ship Lease, Inc.
Notes to the Consolidated Financial Statements (continued)
(Expressed in thousands of U.S. dollars)
3. Restricted Cash
Restricted cash as of December 31, 2024, and 2023 consisted of the following:
December
31, 2024
December
31, 2023
Retention
accounts
$
20,724
$
21,443
Restricted
bank deposits/Drydock reserves
2,009
2,420
Cash
collateral(*)
32,850
32,940
Total
Current Restricted Cash
$
55,583
$
56,803
Cash
collateral(*)
$
47,755
$
80,980
Guarantee
deposits
11
21
Restricted
bank deposits/Drydock reserves
2,900
3,769
Cash
in custody
–
500
Total
Non - Current Restricted Cash
50,666
85,270
Total
Current and Non - Current Restricted Cash
$
106,249
$
142,073
(*)Cash received in advance from
charterers.
4.
Vessels in Operation
Vessels
in Operation as of December 31, 2024, 2023 and 2022 consisted of the following:
Vessel
Gross Cost,
as adjusted for
impairment charges
Accumulated
Depreciation
Net
Book Value
As of January 1, 2022
$
1,878,132
$
(195,316)
$
1,682,816
Additions
11,756
—
11,756
Depreciation
—
(68,232)
(68,232)
Impairment
loss
(3,730)
(697)
(3,033)
As of December 31, 2022
$
1,886,158
$
(262,851)
$
1,623,307
Additions
138,802
—
138,802
Depreciation
—
(72,443)
(72,443)
Impairment
loss
(25,544)
6,714
(18,830)
Disposals
(6,803)
68
(6,735)
As of December 31, 2023
$
1,992,613
$
(328,512)
$
1,664,101
Additions
296,242
—
296,242
Depreciation
—
(75,703)
(75,703)
As of December 31, 2024
$
2,288,855
$
(404,215)
$
1,884,640
As
of December 31, 2024, 2023, and 2022, the Company made additions for vessel expenditures, reefers, emissions management, ERP modules,
ballast water treatments and other capitalized vessel expenses. As of December 31, 2024,
2023 and 2022 unpaid capitalized expenses were
$13,556, $2,679, and $9,022, respectively.
F-23
Table of Contents
Global Ship Lease, Inc.
Notes to the Consolidated Financial Statements (continued)
(Expressed in thousands of U.S. dollars)
4.
Vessels in Operation (continued)
2024
Vessels acquisitions
In
December 2024, the Company took delivery of the three high-reefer ECO 9,019 TEU Vessels as per below:
Name
Capacity
in TEUs
Year
Built
Purchase
Price
Delivery
date
Sydney
Express (*)
9,019
2016
$68,500
December
6, 2024
Istanbul Express
(*)
9,019
2016
$68,500
December
11, 2024
Bremerhaven
Express (*)
9,019
2015
$68,500
December
30, 2024
(*)The
charters of the three high-reefer ECO 9,019 TEU Vessels resulted in an intangible liability of $49,295
that was recognized and will be amortized over the remaining useful life of the charters.
The
fourth high-reefer ECO 9,019 TEU was delivered on January 9, 2025, for the same purchase price. As of December 31, 2024, the Company
had paid $6,850
advance for this vessel acquisition.
2024
Sale of Vessel
In
December 2024, the Company agreed to sell Tasman, a 5,936
TEU vessel. In February
2025, the Company agreed to also sell Keta, and Akiteta, each a 2,200
TEU vessel. Akiteta
was delivered on February
19, 2025, and Tasman
was
delivered on March
10, 2025. The remaining
vessel is scheduled for delivery in first
half of 2025.
2023
Vessels acquisitions
In
May and June 2023, the Company took delivery of the four 8,544 TEU Vessels as per below:
Name
Capacity
in TEUs
Year
Built
Purchase
Price
Delivery
date
GSL
Alexandra
8,544
2004
$30,000
June
2, 2023
GSL
Sofia
8,544
2003
$30,000
May
22, 2023
GSL
Effie
8,544
2003
$30,000
May
30, 2023
GSL
Lydia
8,544
2003
$33,300
June
26, 2023
2023
Sale of Vessel
On
March 23, 2023, the Company sold GSL Amstel for net proceeds of $5,940, and the vessel was released as collateral under the Company’s
$140,000 loan facility with Credit Agricole Corporate and Investment Bank, Hamburg
Commercial Bank AG, E.Sun Commercial Bank, Ltd, CTBC
Bank Co. Ltd. and Taishin International Bank.
Impairment
Through
the latter part of 2024, the Company noted that events and circumstances triggered the existence of potential impairment for some of
Company’s vessel groups. These indicators included the potential impact of the current
container sector on management’s
expectation for future revenues, as well as some volatility in the charter market and the vessels’ market values. As a result,
the Company performed step one of the impairment assessment of each of
the Company’s vessel groups by comparing the
undiscounted projected net operating cash flows for each vessel group to their carrying value and step two of the impairment
analysis was not required for any vessel group, as their
undiscounted projected net operating cash flows exceeded their carrying
value. Accordingly, no impairment recorded for the year ended December 31, 2024.
F-24
Table of Contents
Global Ship Lease, Inc.
Notes to the Consolidated Financial Statements (continued)
(Expressed in thousands of U.S. dollars)
4.
Vessels in Operation (continued)
Impairment
(continued)
Through
the latter part of 2023, the Company noted that events and circumstances triggered the existence of potential impairment for some of
the Company’s vessel groups. These indicators included volatility in the charter market and
the vessels’ market values, as
well as the potential impact of the current container sector on management’s expectation for future revenues. As a result, the
Company performed step one of the impairment assessment of each of the
Company’s vessel groups by comparing the undiscounted projected
net operating cash flows for each vessel group to their carrying value and step two of the impairment analysis was required for two vessel
groups, as their
undiscounted projected net operating cash flows did not exceed their carrying value.
As
a result, as of December 31, 2023, the Company recorded an impairment loss of $18,830 for two vessel groups with a total aggregate carrying
amount of $43,830 which was written down to their fair value of $25,000 (see note 4).
Through
the latter part of 2022, the Company noted that charter rates in the spot market had come under pressure and accordingly determined that
events occurred and circumstances had changed, which indicated that potential
impairment of the Company’s long-lived assets could
exist. These indicators included continued volatility in the spot market and the related impact of the current container sector on management’s
expectation for future revenues. As a
result, step one of the impairment assessment of each of the vessel groups was performed as at
December 31, 2022 and step two of the impairment analysis was required for one vessel group, as the undiscounted projected net operating
cash flows did not exceed the carrying value. As a result, the Company recorded an impairment loss of $3,033 for one vessel group with
a total aggregate carrying amount of $9,033 which was written down to its fair value of $6,000.
The
total impairment loss recognized for the years ended December 31, 2024, 2023 and 2022 amounted to $nil, $18,830
and $3,033, respectively.
Collateral
As
of December 31, 2024, 20 vessels were mortgaged as collateral under the 5.69% Senior Secured Notes due 2027 and 33 vessels under the
Company’s loan facilities. Eighteen vessels were unencumbered as of December 31, 2024.
Advances
for vessel acquisitions and other additions
As
of December 31, 2024, the Company made a $6,850
advance for a vessel acquisition, which was delivered
on January 9, 2025. As of December 31, 2023, there were no advances for vessel acquisitions, as all vessels had been
delivered through
December 31, 2023. As of December 31, 2024, and December 31, 2023, the Company had also made advances for other vessel additions totaling
$11,784 and
$12,210,
respectively.
5.
Deferred dry dock and special survey costs, net
Deferred
dry dock and special survey costs, net, as of December 31, 2024, 2023 and 2022 consisted of the following:
Dry - docking
Costs
As of January 1, 2022
$
37,629
Additions
30,105
Amortization
(13,071)
As
of December 31, 2022
$
54,663
Additions
38,341
Amortization
(19,284)
As
of December 31, 2023
$
73,720
Additions
42,506
Amortization
(24,287)
As
of December 31, 2024
$
91,939
F-25
Table of Contents
Global Ship Lease, Inc.
Notes to the Consolidated Financial Statements (continued)
(Expressed in thousands of U.S. dollars)
5. Deferred dry dock and special survey costs, net (continued)
The
Company follows the deferral method of accounting for dry-docking costs in accordance with accounting for planned major maintenance activities,
whereby actual costs incurred are deferred and amortized on a straight-line basis
over the period of five years until approximately the
next scheduled dry-docking, which is generally five years. Any remaining unamortized balance from the previous dry-docking are written-off.
6.
Intangible Liabilities - Charter Agreements
Intangible
Liabilities - Charter Agreements as of December 31, 2024, and 2023 consisted of the following:
December
31, 2024
December
31, 2023
Opening balance
$
5,662
$
14,218
Additions/(disposals)
(*)
49,295
(476)
Amortization
(5,526)
(8,080)
Total
$
49,431
$
5,662
(*)Corresponds to the acceleration of the unamortized portion of GSL Amstel intangible liability-charter agreement when the vessel was sold on March 23, 2023. The charters of the three high-reefer ECO 9,019 TEU Vessels resulted in
an intangible liability of $49,295 that was recognized and will be amortized over the remaining useful life of the charters.
Intangible
liabilities are related to acquisition of the Seven, the Twelve, the Four Vessels (which have all been amortized as of December 31, 2024),
the three high-reefer ECO 9,019 TEU vessels delivered in December 2024 and
management’s estimate of the fair value of below-market
charters on August 14, 2008, the date of the Marathon Merger. These intangible liabilities are being amortized over the remaining life
of the relevant lease terms and the
amortization income is included under the caption “Amortization of intangible liabilities-charter
agreements” in the Consolidated Statements of Income.
Amortization
income of intangible liabilities-charter agreements for the years ended December 31, 2024, 2023 and 2022 was $5,526, $8,080 and $41,158,
including related party amortization of intangible liabilities-charter agreements
of $nil, $nil, and $5,385 for each of the years ended
December 31, 2024, 2023 and 2022, respectively.
The
aggregate amortization of the intangible liabilities in each of the 12-month periods up to December 31, 2030, is estimated to be as follows:
Amount
December 31, 2025
$
10,435
December 31, 2026
9,887
December
31, 2027
9,887
December
31, 2028
9,914
December
31, 2029
8,385
December
31, 2030
923
$
49,431
The
weighted average useful lives are 4.91 years for the remaining intangible liabilities-charter agreements terms.
F-26
Table of Contents
Global Ship Lease, Inc.
Notes to the Consolidated Financial Statements (continued)
(Expressed in thousands of U.S. dollars)
7.
Prepaid Expenses and Other Current Assets
Prepaid
Expenses and Other Current Assets as at December 31, 2024 and December 31, 2023 consisted of the following:
December
31, 2024
December
31, 2023
Insurance
and other claims
$
1,606
$
11,073
Advances
to suppliers and other assets
5,628
11,651
Prepaid
insurances
1,732
3,628
Other
(1)
22,983
14,112
Total
$
31,949
$
40,464
(1)
Includes mainly current portion of the straight-line basis of revenue recognition.
8.
Inventories
Inventories
as at December 31, 2024 and December 31, 2023 consisted of the following:
December
31, 2024
December
31, 2023
Bunkers
$
1,512
$
685
Lubricants
12,354
12,423
EUAs
2,544
—
Stores
1,981
2,025
Victualling
514
631
Total
$
18,905
$
15,764
9.
Derivative Assets
In
December 2021, the Company purchased interest rate caps with an aggregate notional amount of $484,106, which amount reduces over time
as the Company’s outstanding debt balances amortize. The objective of the hedges is to
reduce the variability of cash flows associated
with the interest relating to its variable rate borrowings. The Company receives payments on the caps for any period that the one-month
USD LIBOR rate is above beyond the strike rate,
which is 0.75%. The termination date of the interest rate cap agreements is November
30, 2026. The premium paid to purchase the interest caps was $7,000, which was paid out of cash on December 22, 2021. The premium is
being
amortized over the life of the interest rate cap by using the caplet method.
In
February 2022, the Company further hedged its exposure to a potential rising interest rate environment by putting in place two
USD one-month LIBOR interest rate caps of
0.75% through
fourth quarter 2026, on $507,891
of its
floating rate debt. The second interest rate cap was not designated as a cash flow hedge and therefore the negative fair
value adjustment of $5,170 as at December 31, 2024 ($5,372 negative fair value adjustment and $9,685 positive fair
value adjustment
as at December 31, 2023 and 2022, respectively) was recorded through Consolidated Statements of Income. The premium paid by the
Company to purchase the interest rate caps was $15,370,
which was paid out of
cash on the settlement date. ASC 815-20-25-13a stipulates that an entity may designate either all or certain
future interest payments on variable-rate debt as the hedged exposure in a cash flow hedge relationship. In this case, the
Company has designated only a portion of its outstanding debt (initially, $253,946) as the hedged item, and any interest payments
beyond the notional amount of the interest rate cap in any given period are not designated as being
hedged. Amount received
from interest rate caps for each of the years ended December 31, 2024, 2023 and 2022 was $27,027,
$32,549
and $9,245,
respectively.
On
April 4, 2024, the Company entered into a foreign exchange option strip (“FX option”) to buy €3,000, with monthly settlements
on the 11th calendar day of each month, starting April 11, 2024, and ending March 13, 2025. The
initial value of the excluded component
is equal to the option premium of €417 and is recognized in earnings using the amortization approach as per ASC 815-20-25-83A.
As of December 31, 2024, and December 31, 2023, following a
quantitative assessment, no amount has been reclassified to other comprehensive
income to the Consolidated Statements of Income.
F-27
Table of Contents
Global Ship Lease, Inc.
Notes to the Consolidated Financial Statements (continued)
(Expressed in thousands of U.S. dollars)
9. Derivative Assets (continued)
December
31, 2024
December
31, 2023
Opening
balance
$
41,506
$
63,503
FX
option premium
249
-
Unrealized
loss on derivative assets (interest rate caps)
(15,933)
(16,625)
Unrealized
loss on FX option
(246)
-
Fair
value adjustment on derivative asset
(5,170)
(5,372)
Closing
balance
$
20,406
$
41,506
Less:
Current portion of derivative assets (interest rate caps)
(14,434)
(24,639)
Less:
Current portion of FX option
(3)
-
Non-current
portion of derivative assets (interest rate caps)
$
5,969
$
16,867
The amounts included in accumulated other comprehensive
income will be reclassified to interest expense should the hedge no longer be considered effective. The Company assesses the effectiveness
of the hedges on an ongoing basis.
As of December 31, 2024, 2023 and 2022, following a quantitative assessment, part of the hedge was
no longer considered effective and an amount of ($877), ($214) and $1,091 was reclassified (to)/from other comprehensive income
to the
Consolidated Statements of Income. The Company will continue to assess the effectiveness of the hedge on an ongoing basis.
10. Accounts
Payable
Accounts
payable as of December 31, 2024, and 2023 consisted of the following:
December 31, 2024
December
31, 2023
Suppliers,
repairers
$
8,884
$
12,933
Insurers,
agents and brokers
210
303
Payables
to charterers
3,416
1,967
EUAs
11,708
-
Other
creditors
2,116
2,398
Total
$
26,334
$
17,601
11. Accrued Liabilities
Accrued
liabilities as of December 31, 2024, and 2023 consisted of the following:
December
31, 2024
December
31, 2023
Accrued
expenses (1)
$
40,308
$
20,378
Accrued
interest
6,618
8,160
Total
$
46,926
$
28,538
(1)Includes $8.2 million, as per commercial
management agreements, commission of 1.00% payable to the commercial manager based on the purchase price of already acquired vessels,
that has been deferred and will be paid upon
request of the commercial manager (see note 14).
F-28
Table of Contents
Global Ship Lease, Inc.
Notes to the Consolidated Financial Statements (continued)
(Expressed in thousands of U.S. dollars)
12. Long-Term Debt
Long-term
debt as of December 31, 2024, and 2023 consisted of the following:
Facilities
December
31, 2024
December 31, 2023
2024
Senior Secured Term Loan Facility (a)
$
288,000
$
-
Macquarie
loan (b)
23,500
66,000
2027
Secured Notes (c)
231,875
284,375
E.SUN,
MICB, Cathay, Taishin Credit Facility (d)
8,300
28,500
Sinopac
Credit Facility (e)
-
8,220
HCOB,
CACIB, ESUN, CTBC, Taishin Credit Facility (f)
52,111
73,283
Deutsche
Credit Facility (g)
-
40,046
HCOB
Credit Facility (h)
-
24,744
CACIB,
Bank Sinopac, CTBC Credit Facility (i)
-
38,950
Chailease
Credit Facility (j)
-
2,608
Syndicated
Senior Secured Credit Facility (CACIB, ABN, First-Citizens & Trust Company, Siemens, CTBC, Bank Sinopac, Palatine) (k)
-
149,200
Total
credit facilities
$
603,786
$
715,926
Sale
and Leaseback Agreements
Sale
and Leaseback Agreement Minsheng - $44,500 (l)
44,500
-
Sale
and Leaseback Agreement CMBFL - $120,000 (m)
42,813
64,438
Sale
and Leaseback Agreement CMBFL - $54,000 (n)
-
36,018
Sale
and Leaseback Agreement - Neptune $14,735 (o)
-
6,796
Total
Sale and Leaseback Agreements
$
87,313
$
107,252
Total
borrowings
$
691,099
$
823,178
Less:
Current portion of long-term debt
(136,559)
(164,888)
Less:
Current portion of Sale and Leaseback Agreements (l,m,n,o)
(8,717)
(28,365)
Less:
Deferred financing costs (u)
(7,042)
(10,750)
Non-current
portion of Long-Term Debt
$
538,781
$
619,175
Facilities
a) $300.0 Million Senior Secured Term Loan Facility CACIB,
ABN, Bank of America, First Citizens Bank, CTBC
On
August 7, 2024, the Company entered into a $300,000 senior secured term loan facility (the “2024 Senior Secured Term Loan
Facility”). As of December 31, 2024, the banks in this facility were: Credit Agricole Corporate and
Investment Bank (“CACIB”),
ABN AMRO Bank N.V. (“ABN”), Bank of America N.A. (“BofA”), First Citizens Bank & Trust Company (“First
Citizens”) and CTBC Bank Co. Ltd. (“CTBC”) to refinance, or prepay, in full or in part,
certain of its outstanding
debt facilities.
All
three tranches were drawdown in the third quarter of 2024 and the term loan facility has a maturity in the third quarter of 2030.
The
term loan facility is repayable in 12 equal consecutive quarterly instalments of $12,000, four equal consecutive quarterly instalments
of $10,000, four equal consecutive quarterly instalments of $8,000 and four equal consecutive
quarterly instalments of $6,000 together
with a final balloon payment of $60,000 on the term loan facility termination date.
This facility’s interest rate is SOFR
plus a margin of 1.85%
per annum payable quarterly in arrears.
F-29
Table of Contents
Global Ship Lease, Inc.
Notes to the Consolidated Financial Statements (continued)
(Expressed in thousands of U.S. dollars)
12.
Long-Term Debt (continued)
a) $300.0 Million Senior Secured Term Loan Facility CACIB, ABN, Bank of America, First Citizens Bank,CTBC (continued)
The Company used the net proceeds from the 2024 Senior Secured Term Loan Facility to refinance or prepay, in full or in part, the following
(a) existing debt facilities (i) Sinopac Credit Facility, (ii) Deutsche Credit Facility, (iii) HCOB
Credit Facility, (iv) CACIB, Bank
Sinopac, CTBC Credit Facility, (v) Chailease Credit Facility, (vi) Syndicated Senior Secured Credit Facility (CACIB, ABN, First-Citizens
& Trust Company, Siemens, CTBC, Bank Sinopac, Palatine),
(vii) Macquarie loan and (viii) E.SUN, MICB, Cathay, Taishin Credit Facility
and (b) existing sale and lease back agreements (i) $54,000 Sale and Leaseback agreement – CMBFL and (ii) $14,735 Sale and Leaseback
agreement -
Neptune Maritime Leasing. The refinancing transaction was accounted as a debt extinguishment.
As of December 31, 2024, the aggregate principal amount outstanding under the 2024 Senior Secured Term Loan Facility was $288,000.
b) Macquarie Credit Facility
On
May
18, 2023, the Company entered into a new credit
facility agreement with Macquarie Bank Limited (“Macquarie”) for an amount of $76,000
to
finance part of the acquisition cost of four containership, each with carrying
capacity of, 8,544 TEU vessels for an aggregate purchase
price of $123,300. The vessels were delivered during
the second quarter of 2023.
All
four
tranches were drawdown in the second quarter
of 2023 and the credit facility has a maturity in May
2026.
The
facility is repayable in two
equal consecutive quarterly
instalments of $5,000,
six
equal consecutive quarterly
instalments of $6,000
and one
quarterly
instalments of $3,000
and two
equal consecutive quarterly
instalments of $1,000
with a final balloon payment of $25,000
payable three years after the first utilisation
date.
This facility’s interest rate is SOFR
plus a margin of 3.50%
per annum payable quarterly in arrears.
On September 10, 2024, the Company used a portion of the net proceeds from the 2024 Senior Secured Term Loan Facility entered on August
7, 2024, to partially prepay the amount of $18,500
under this facility (prepayment was
deducted
from the final ballon payment).
As
of December 31, 2024, the outstanding balance of this facility was $23,500.
c) 5.69% Senior Secured Notes due 2027
On
June
16, 2022, Knausen Holding LLC (the "Issuer"),
an indirect wholly-owned subsidiary of the Company, closed on the private placement of $350,000,
led by Goldman Sachs & Co. LLC., of publicly rated/investment grade 5.69%
Senior Secured Notes due 2027 (the “2027 Secured Notes”) to a limited number of accredited investors. The fixed interest
rate was determined on June 1, 2022, based on the interpolated
interest rate of 2.84% plus a margin 2.85%.
The
Company used the net proceeds from the private placement for
the repayment of the remaining outstanding balances on its New Hayfin Credit Facility and the Hellenic Bank Credit Facility (releasing
five unencumbered vessels),
and our 2024 Notes. The remaining amount of net proceeds were allocated for general corporate purposes.
An
amount equal to 15% per annum of the original principal balance of each Note is payable in equal quarterly installments on the 15th day
of each of January, April, July, and October starting October 15, 2022, and the remaining
unpaid principal balance shall be due and payable
on the maturity date of July 15, 2027. Interest accrues
on the unpaid balance of the Notes, payable quarterly on the 15th day of January, April, July, and October in each year, such
interest
commencing and accruing on and from June 14, 2022.
The
2027 Secured Notes are senior obligations of the Issuer, secured by first priority mortgages on 20
identified vessels owned by subsidiaries of the
Issuer (the “Subsidiary Guarantors”) and certain other associated assets and contract
rights, as well as share pledges over
the Subsidiary Guarantors. In addition, the 2027 Secured Notes are fully and unconditionally guaranteed by the Company.
As
of December 31, 2024, the aggregate principal amount outstanding under the 2027 Secured Notes was $231,875.
F-30
Table of Contents
Global Ship Lease, Inc.
Notes to the Consolidated Financial Statements (continued)
(Expressed in thousands of U.S. dollars)
12.
Long-Term Debt (continued)
d) $60.0 Million E.SUN, MICB, Cathay, Taishin Credit Facility
On December
30, 2021, the Company entered into a new syndicated
senior secured debt facility with E.SUN Commercial Bank Ltd (“E.SUN”), Cathay United Bank (“Cathay”), Mega International
Commercial Bank Co. Ltd (“MICB”)
and Taishin International Bank (“Taishin”). The
Company used a portion of the net proceeds from this credit facility to fully prepay the outstanding balance of the Blue Ocean Junior
Credit Facility at that time, amounting to $26,205
plus a prepayment fee of $3,968.
All three
tranches were drawn down in January 2022.
The facility was repayable in eight
equal consecutive quarterly
instalments of $4,500
and ten
equal consecutive quarterly
instalments of $2,400.
This facility’s interest is SOFR
plus a margin of 2.75%
per annum plus Credit Adjustment Spread (“CAS”) payable quarterly in arrears.
On September 11, 2024, the Company used a portion of the net proceeds from the 2024 Senior Secured Term Loan Facility entered on August
7, 2024, to partially prepay the amount of $8,500
under this facility. Following the
prepayment,
the outstanding balance of the facility is repayable in four
equal consecutive quarterly
instalments of $2,400
and one
quarterly instalment of $1,100
and new maturity will be in October 2025 from
July
2026.
As of December 31, 2024, the outstanding balance of this facility was $8,300.
e)
$12.0 Million Sinopac Capital International Credit Facility
On August
27, 2021, the Company entered into a secured
credit facility for an amount of $12,000 with Sinopac Capital International (HK) Limited (“Sinopac Credit Facility”), which
was partially
used to fully refinance the Hayfin
Credit Facility.
The full amount was drawn down in September 2021 and the credit facility has a maturity in September
2026.
The facility was repayable in 20
equal consecutive quarterly
instalments of $420
with a final balloon of $3,600
payable together with the final instalment.
This facility bore interest at SOFR
plus a margin of 3.25%
per annum payable quarterly in arrears.
On September 11, 2024, the Company used a portion of the net proceeds from the
2024 Senior Secured Term Loan Facility entered on August 7, 2024, to fully prepay the amount of $6,960
under this facility.
As of December 31, 2024, the outstanding balance of this facility was $nil.
f) $140.0 Million HCOB, CACIB, ESUN, CTBC, Taishin Credit
Facility
On July
6, 2021, the Company entered into a facility
with CACIB, Hamburg Commercial Bank AG (“HCOB”), ESUN, CTBC and Taishin for a total of $140,000
to
finance the acquisition of the Twelve Vessels. The full
amount was
drawdown in July
2021 and the credit facility has a maturity in
July
2026.
The facility is repayable in six
equal consecutive quarterly
instalments of $8,000,
eight
equal consecutive quarterly
instalments of $5,400
and six
equal consecutive quarterly
instalments of $2,200
with a final balloon payment of
$35,600
payable together with the final instalment. On
March 23, 2023, due to the sale of GSL Amstel, the Company repaid $2,838
on this facility of which $1,000
was deducted from the final balloon payment,
and the vessel was
released as collateral.
This facility’s interest rate is SOFR
plus a margin of 3.25%
per annum plus CAS payable quarterly in arrears.
As of December 31, 2024, the outstanding balance of this facility was $52,111.
F-31
Table of Contents
Global Ship Lease, Inc.
Notes to the Consolidated Financial Statements (continued)
(Expressed in thousands of U.S. dollars)
12.
Long-Term Debt (continued) Long-Term Debt (Narrative II)
g) $51.7 Million Deutsche Bank AG Credit Facility
On May
6, 2021, the Company entered into a secured
facility for an amount of $51,670
with Deutsche Bank AG in
order to refinance one of the three previous tranches of the $180,500 Deutsche, CIT, HCOB, Entrust, Blue Ocean
Credit Facility, that
had a maturity date on June 30, 2022, of an amount $48,527.
The facility was repayable in 20
equal consecutive quarterly
instalments of $1,162.45
with a final balloon of $28,421
payable together with the final instalment.
This facility bore interest at SOFR
plus a margin of 3.25%
per annum payable quarterly in arrears.
On August 12, 2024, the Company used a portion of the net proceeds from the
2024 Senior Secured Term Loan Facility entered on August 7, 2024, to fully prepay the amount of $36,558
under this facility.
As of December 31, 2024, the outstanding balance of this facility was $nil.
0
h) $64.2 Million Hamburg Commercial Bank AG Credit Facility
On
April
15, 2021, the Company entered into a Senior Secured
term loan facility with HCOB “the HCOB Credit Facility” for an amount of up to $64,200
in
order to finance the acquisition of six out of the Seven Vessels.
Tranche A, E and F amounting to $32,100
were drawn down in April 2021 and have a maturity
date in April
2025, Tranche B and D amounting to $21,400
were drawn down in May 2021 and have a maturity
date in May
2025, and
Tranche C amounting to $10,700
was drawn down in July 2021 and has a maturity
date in July
2025.
Each
Tranche of the facility was repayable in 16
equal consecutive quarterly
instalments of $668.75.
This
facility bore interest at SOFR
plus a margin of 3.50%
per annum payable quarterly in arrears.
On
September 5, 2024, the Company used a portion of the net proceeds from the 2024 Senior Secured Term Loan Facility entered on August 7,
2024, to fully prepay the amount of $12,706
under this facility.
As
of December 31, 2024, the outstanding balance of this facility was $nil.
i)
$51.7 Million CACIB, Bank Sinopac, CTBC Credit Facility
On April
13, 2021, the Company entered into a secured
facility for an amount of $51,700
in
order to refinance one of the three previous tranches of the $180,500 Deutsche, CIT, HCOB, Entrust, Blue Ocean Credit Facility, that
had a
maturity date on June 30, 2022, of an outstanding amount of $48,648. The
secured credit facility has a maturity in April
2026.
The lenders were CACIB, Bank Sinopac
Co. Ltd. (“Bank Sinopac”) and CTBC. The facility was repayable in 20
equal consecutive quarterly
instalments of $1,275
with a final balloon of $26,200
payable together with the final
instalment.
This facility bore interest at SOFR
plus a margin of 2.75%
per annum plus CAS payable quarterly in arrears.
On August 9, 2024, the Company used a portion of the net proceeds from the
2024 Senior Secured Term Loan Facility entered on August 7, 2024, to fully prepay the amount of $35,125
under this facility.
As of December
31, 2024, the outstanding balance of this facility was $nil.
F-32
Table of Contents
Global Ship Lease, Inc.
Notes to the Consolidated Financial Statements (continued)
(Expressed in thousands of U.S. dollars)
12. Long-Term Debt (continued)
j)
$9.0 Million Chailease Credit Facility
On February
26, 2020, the Company entered into a secured
term facility agreement with Chailease International Financial Services Pte., Ltd. for an amount of $9,000.
The Chailease Credit Facility was used to
refinance the DVB Credit
Facility.
The
facility was repayable in 36 consecutive monthly
instalments of $156
and 24 monthly
instalments of $86
with a final balloon of $1,314
payable together with the final instalment.
This
facility bore interest at SOFR
plus a margin of 4.20%
per annum.
On
September 12, 2024, the Company used a portion of the net proceeds from the 2024 Senior Secured Term Loan Facility entered on August
7, 2024, to fully prepay the amount of $1,831
under this facility.
As
of December 31, 2024, the outstanding balance of this facility was $nil.
k)
$268.0 Million Syndicated Senior Secured Credit Facility (CACIB, ABN, First-Citizens & Trust Company, Siemens, CTBC, Bank Sinopac,
Palatine)
On September 19,
2019, the Company entered into a Syndicated Senior
Secured Credit Facility in
order to refinance existing credit facilities that had a maturity date in December 2020, of an outstanding amount of $224,310.
The Senior Syndicated Secured Credit Facility was agreed to be borrowed in two
tranches. The Lenders were CACIB, ABN, First-Citizens
& Trust Company, Siemens Financial Services Inc (“Siemens”), CTBC, Bank Sinopac and
Banque Palatine (“Palatine”).
Tranche
A amounting to $230,000 was
drawn down in full on September 24, 2019 and was scheduled to be repaid in 20 consecutive quarterly instalments
of $5,200 starting
from December 12, 2019 and a balloon payment of $126,000
payable
on September 24, 2024.
Tranche B amounting to $38,000 was
drawn down in full on February 10, 2020 and was scheduled to be repaid in 20 consecutive quarterly instalments
of $1,000 and
a balloon payment of $18,000 payable
in the termination date on the
fifth anniversary from the utilization date of Tranche A, which falls in September 24, 2024. In January
2022, the Company agreed a new senior
secured debt facility to
refinance its outstanding Syndicated Senior Secured Credit Facility,
which extended the maturity date from September 2024 to December
2026, amended
certain covenants in the Company’s favor at an unchanged rate of LIBOR + 3.00%. On July 1, 2022, the interest rate was SOFR
plus a margin of
3.00% plus CAS and was payable at each quarter end date.
On August 9, 2024, the Company used a portion of the net proceeds from the 2024 Senior Secured Term Loan Facility entered on August 7,
2024, to fully prepay the amount of $133,200
under this facility.
As
of December 31, 2024, the outstanding balance of this facility was $nil.
Sale
and leaseback agreements (finance leases)
l) Four Sale and Leaseback agreements ($44.5 Million each) – Minsheng Financial Leasing
In
December 2024, the Company entered into two sale
and leaseback agreements with Minsheng Financial Leasing (“Minsheng”) for $44,500,
each, to
finance the acquisition of two of the newly acquired high-reefer ECO 9,019 TEU
vessels, Bremerhaven Express, having closed in
December 2024 and the other, Czech, in January 2025.
The Company has a purchase obligation to acquire the Bremerhaven Express at the end of its lease term and under ASC 842-40,
the
transaction has been accounted for as a failed sale. In accordance with ASC 842-40, the Company did not derecognize the respective
vessel from its balance sheet and accounted for the amount received under the sale and leaseback
agreement as financial liability. In
January 2025, the Company entered into two additional
sale and leaseback agreements, for $44,500 each,
with Minsheng to
finance the purchase of the remaining two newly acquired high-reefer ECO
9,019 TEU vessels.
F-33
Table of Contents
Global Ship Lease, Inc.
Notes to the Consolidated Financial Statements (continued)
(Expressed in thousands of U.S. dollars)
12.
Long-Term Debt (continued)
l) Four Sale and Leaseback agreements ($44.5 Million each) – Minsheng Financial Leasing
(continued)
Each sale and leaseback agreement is repayable in 40 equal
consecutive quarterly instalments
of $862.5 with
a repurchase obligation of $10,000 on
the final repayment date. The sale and leaseback agreements each have a term of ten
years, and bear interest at SOFR plus
a margin of 2.5%
per annum payable quarterly in arrears.
As of December 31, 2024 only the sale and leaseback agreement for the Bremerhaven
Express has closed, and the outstanding amount thereunder was $44,500.
m)
$120.0 Million Sale and Leaseback agreements - CMBFL Four Vessels
On August
26, 2021, the Company entered into four $30,000 sale
and leaseback agreements with CMB Financial Leasing Co. Ltd. (“CMBFL”) to
finance the acquisition of the Four Vessels.
As at September 30, 2021, the Company had
drawdown a total of $90,000.
The drawdown for the fourth vessel, amounting to $30,000,
took place on October 13, 2021 together with the delivery of this vessel. The Company has a purchase obligation to acquire the Four
Vessels at
the end of their lease terms and under ASC 842-40, the transaction has been accounted for as a failed sale. In accordance
with ASC 842-40, the Company did not derecognize the respective vessels from its balance sheet and accounted
for the amounts
received under the sale and leaseback agreement as financial liabilities.
Each sale and leaseback agreement is repayable in 12
equal consecutive quarterly instalments
of $1,587.5 and 12 equal
consecutive quarterly instalments
of $329.2 with
a repurchase obligation of $7,000 on
the final repayment date.
The sale and leaseback agreements for the three vessels mature in September 2027 and for
the fourth vessel in October 2027 and bear interest at SOFR plus
a margin of 3.25%
per annum plus CAS payable quarterly in arrears.
As of December 31, 2024, the outstanding balance of these sale and lease
back agreements was $42,813.
n)
$54.0 Million Sale and Leaseback agreement - CMBFL
On May
20, 2021, the Company entered into a $54,000
sale and leaseback agreement with CMBFL to
refinance one of the three previous tranches of the $180,500 Deutsche, CIT, HCOB, Entrust, Blue Ocean Credit Facility, that had a
maturity
date on June 30, 2022, of an amount $46,624.
The Company had a purchase obligation to acquire the vessel at the end of the lease term and under ASC 842-40, the transaction had been
accounted for as a failed sale. In
accordance with ASC 842-40, the Company did not derecognize the respective vessel from its balance
sheet and accounted for the amount received under the sale and leaseback agreement as a financial liability.
The sale and leaseback agreement was repayable in eight
equal consecutive quarterly
instalments of $2,025
each and 20
equal consecutive quarterly
instalments of $891
with a repurchase obligation of $19,980
on the final repayment
date.
The sale and leaseback agreement matured in May
2028 and bore interest at SOFR
plus a margin of 3.25%
per annum plus CAS payable quarterly in arrears.
In May 2021, on the actual delivery date of the vessel, the Company drew $54,000,
which represented vessel purchase price $75,000
less advanced hire of $21,000,
which advanced hire neither bore any interest nor was refundable and
was set off against payment of the purchase price payable to the
Company by the unrelated third party under this agreement.
On August 27, 2024, the Company used a portion of the net proceeds from the 2024 Senior Secured Term Loan Facility entered on August
7, 2024, to fully prepay the amount of $33,345
under this facility.
As of December 31, 2024, the outstanding balance of this sale and leaseback agreement was $nil.
F-34
Table of Contents
Global Ship Lease, Inc.
Notes to the Consolidated Financial Statements (continued)
(Expressed in thousands of U.S. dollars)
12.
Long-Term Debt (continued)
o)
$14.7 Million Sale and Leaseback agreement - Neptune Maritime Leasing
On May
12, 2021, the Company entered into a $14,735
sale and leaseback agreement with Neptune Maritime
Leasing (“Neptune”) to
finance the acquisition of GSL Violetta delivered in April 2021.
The Company had a purchase
obligation to acquire the vessel at the end of the lease term and under ASC 842-40, the transaction had been
accounted for as a failed sale. In accordance with ASC 842-40, the Company did not derecognize the respective vessel from its
balance
sheet and accounted for the amount received under the sale and leaseback agreement as a financial liability. In May 2021, the Company
drew $14,735
under this agreement.
The sale and leaseback agreement was repayable in 15
equal consecutive quarterly
instalments of $793.87
each and four
equal consecutive quarterly
instalments of $469.12
with a repurchase obligation of $950
on the last repayment
date.
The sale and leaseback agreement matured in February
2026 and bore interest at SOFR
plus a margin of 4.64%
per annum payable quarterly in arrears.
On September 12, 2024, the Company used a portion of the net proceeds from the 2024 Senior Secured Term Loan Facility entered on August
7, 2024, to fully prepay the amount of $4,414
under this facility.
As of December 31, 2024, the outstanding balance of this sale and leaseback agreement was $nil.
p)
$236.2 Million Senior secured loan facility with Hayfin Capital Management, LLP
On January
7, 2021, the Company entered into the New Hayfin
Credit Facility amounting to $236,200,
and on January 19, 2021, the Company drew down the full amount under this facility. The
proceeds from the New Hayfin Credit
Facility, along with cash on hand, were used to optionally redeem in full the outstanding 2022 Notes
on January 20, 2021. The New Hayfin Credit Facility
matured in January
2026 and bore interest at a rate of LIBOR
plus a margin of
7.00%
per annum. It was repayable in twenty
quarterly
instalments of $6,560,
along with a balloon payment at maturity. The
New Hayfin Credit Facility was secured by, among other things, first priority ship mortgages over 21 of the
Company’s vessels,
assignments of earnings and insurances of the mortgaged vessels, pledges over certain bank accounts, as well as share pledges over the
equity interests of each mortgaged vessel-owning subsidiary.
On June 30,
2021, due to the sale of La Tour, the Company additionally repaid $5,831, and the vessel was released as collateral under
the Company’s New Hayfin Credit Facility. On June 16, 2022, the Company used a portion of the proceeds from
the private placement
for the full prepayment of the remaining outstanding balance $197,569
plus a prepayment fee of $11,229.
As of December 31, 2024, the outstanding balance of this facility was $nil.
q)
Redemption of 8.00% Senior Unsecured Notes due 2024
On November 19, 2019, the Company completed the sale of $27,500
aggregate principal amount of its 8.00%
Senior Unsecured Notes (the “2024 Notes”) which matured on December
31, 2024. On November 27, 2019, the Company
sold
an additional $4,125
of 2024 Notes, pursuant the underwriter’s
option to purchase such additional 2024 Notes. Interest on the 2024 Notes was payable on the last day of February, May, August and November
of each year
commencing on February
29, 2020.
The Company had the option to redeem the 2024 Notes for cash, in whole or in part, at any time (i) on or after December 31, 2021 and
prior to December 31, 2022, at a price equal to 102%
of the principal amount, (ii) on or after
December 31, 2022 and prior to December 31, 2023, at a price equal to 101%
of the principal amount and (iii) on or after December 31, 2023 and prior to maturity, at a price equal to 100%
of the principal amount.
On November 27, 2019, the Company entered into an “At Market Issuance Sales Agreement” with B. Riley FBR, Inc. (the “Agent”)
under which and in accordance with the Company’s instructions, the Agent could offer and sell from
time to time newly issued 2024
Notes.
In July 2021, the Company agreed to purchase the Twelve Vessels for an aggregate purchase price of $233,890,
part of which was financed by the issuance of $35,000
2024 Notes to the sellers. The remaining purchase
price was
financed by cash on hand and a new syndicated credit facility for a total of $140,000
(see note 12f).
F-35
Table of Contents
Global Ship Lease, Inc.
Notes to the Consolidated Financial Statements (continued)
(Expressed in thousands of U.S. dollars)
12.
Long-Term Debt (continued)
q)
Redemption of 8.00% Senior Unsecured Notes due 2024 (continued)
On April 5, 2022, the Company completed the partial redemption of $28,500
aggregate principal amount of the Notes (the
“Redeemed Notes”) at a redemption price equal to 102.00%
of the principal amount thereof plus accrued and
unpaid interest. Upon completion of the redemption the outstanding aggregate principal
amount of the 2024 Notes was $89,020.
On July 15, 2022, the 2024 Notes were fully repaid by the Company using a portion of the net proceeds
from the private placement of $350,000
aggregate principal amount of its 2027 Secured Notes, pursuant to a note purchase agreement, dated June 14, 2022. Total loss on redemption
was $2,350
and was recorded within the
Consolidated Statements
of Income for the year ended December 31, 2022, in line “Interest and other finance expenses”.
As of December 31, 2024, the outstanding aggregate principal amount of the 2024 notes was $nil.
r)
$38.5 Million Blue Ocean Junior Credit Facility
On September 19,
2019, the Company entered into a refinancing
agreement with Blue Ocean Income Fund LP, Blue Ocean Onshore Fund LP, and Blue Ocean Investments SPC Blue, holders of the outstanding
debt of $38,500
relevant
to the previous Blue Ocean Credit Facility
in
order to refinance that existing facility with the only substantive change being to extend maturity at the same date with the Syndicated
Senior Secured Credit Facility.
The
Company fully drew down the facility on September 23, 2019, and it was scheduled to be repaid in a single instalment on the termination
date which fell on September
24, 2024. This facility bore interest at 10.00%
per annum.
During the year ended December 31, 2021, the Company used a portion of the net proceeds from the at-the-market issuance programs
to prepay an amount of $12,295
under this facility plus a prepayment fee of
$1,618.
On January 19, 2022, the Company used a portion of the net proceeds from the new facility agreement entered on December 30, 2021,
with E.SUN, MICB, Cathay, Taishin, to fully prepay the amount of $26,205
under this facility, plus
a prepayment fee of
$3,968.
As of December 31, 2024, the outstanding balance of this facility was $nil.
s)
$59.0 Million Hellenic Bank Credit Facility
On May 23, 2019, the Company entered into a facility agreement with Hellenic Bank for an amount up to $37,000.
Borrowings under the Hellenic Bank Facility were available in tranches and were
used in connection with the
acquisition of the vessels GSL Eleni, GSL Grania and GSL Kalliopi.
An initial tranche of $13,000
was drawn on May 24, 2019, in connection
with the acquisition of the GSL Eleni. The Facility was repayable in 20
equal quarterly
instalments of $450
each with a final balloon of $4,000
payable together
with the final instalment.
A second tranche of $12,000
was drawn on September 4, 2019, in connection
with the acquisition of GSL Grania. The Facility was repayable in 20
equal quarterly
instalments of $400
each with a final balloon of $4,000
payable
together with the final instalment.
The third tranche of $12,000
was drawn on October 3, 2019, in connection with
the acquisition of GSL Kalliopi. The Facility was repayable in 20
equal quarterly
instalments of $400
each with a final balloon of $4,000
payable together
with the final instalment.
On December
10, 2019, the Company entered into an amended
and restated loan agreement with Hellenic Bank for an additional facility of amount $22,000
that was to be borrowed in two
tranches and to
be used in connection with the
acquisition of the vessels GSL Vinia and GSL Christel Elisabeth.
Both tranches were drawn on December 10, 2019, and were each repayable in 20
equal quarterly
instalments of $375
each with a final balloon of $3,500
payable
together with the final instalment.
F-36
Table of Contents
Global Ship Lease, Inc.
Notes to the Consolidated Financial Statements (continued)
(Expressed in thousands of U.S. dollars)
12. Long-Term
Debt (continued)
s)
$59.0 Million Hellenic Bank Credit Facility (continued)
This facility bore interest at LIBOR
plus a margin of 3.90%
per annum.
On June
24, 2022, the Hellenic Bank credit Facility was
fully prepaid by the Company using a portion of the net proceeds from the private placement of $350,000 aggregate principal amount of
its 2027 Secured Notes, pursuant to a
note purchase agreement, dated June 14, 2022.
As of December 31, 2024, the outstanding balance of this facility was $nil.
t) Repayment Schedule
Maturities of long-term debt for the years subsequent to December
31, 2024, are as follows:
Payment due by year
ended
Amount
December 31, 2025
145,278
December 31, 2026
157,069
December 31, 2027
208,604
December 31, 2028
41,450
December
31, 2029
33,450
December 31, 2030 and thereafter
105,248
$
691,099
u) Deferred Financing Costs
December 31,
2024
December 31,
2023
Opening
balance
$
10,750
$
15,136
Expenditure
in the period
3,120
1,140
Amortization
included within interest expense
(6,828)
(5,526)
Closing
balance
$
7,042
$
10,750
During
2024, total costs amounting to $2,625 were incurred in connection with 2024 Senior Secured Term Loan Facility (CACIB, ABN, BofA, First
Citizens, CTBC) (see note 12a) and $495 in connection with the Minsheng Sale and
Leaseback agreement (see Note 12l).
During
2023, total costs amounting to $1,140 were incurred in connection with the Macquarie Credit Facility (see note 12b).
During 2022, total costs amounting to $1,066
were incurred in connection with the Syndicated
Senior Secured Credit facility (see note 12k), $1,180
in connection with E.SUN, MICB, Cathay, Taishin
credit facility (see note 12d) and
$7,409
in connection with the 2027 Secured Notes (see
note 12c).
For the years ended December 31, 2024, 2023 and 2022, the Company recognized a total of $6,828,
$5,526,
and $11,233,
respectively, in respect of amortization of deferred financing costs.
v)
Debt covenants-securities
Amounts drawn under the facilities listed above are secured by first priority mortgages on certain of the Company’s vessels and
other collateral. The credit facilities contain a number of restrictive covenants that limit the Company
from, among other things: incurring
or guaranteeing indebtedness; charging, pledging or encumbering the vessels; and changing the flag, class, management or ownership of
the vessel owning entities. The credit facilities also require
the vessels to comply with the ISM Code and ISPS Code and to maintain
valid safety management certificates and documents of compliance at all times. Additionally, specific credit facilities require compliance
with a number of
financial covenants including asset cover ratios and minimum liquidity and corporate guarantor requirements. Among other
events, it will be an event of default under the credit facilities if the financial covenants are not complied with
or remedied.
F-37
Table of Contents
Global Ship Lease, Inc.
Notes to the Consolidated Financial Statements (continued)
(Expressed in thousands of U.S. dollars)
12. Long-Term
Debt (continued)
v) Debt covenants-securities (continued)
As of December 31, 2024, and December 31, 2023, the Company was in compliance with its debt covenants.
13. Time charter revenue
Operating revenue from significant customers (constituting more than 10% of total time charter revenue) was as follows:
Year
Ended December 31,
Charterer
2024
2023
2022
CMA
CGM
22.23%
28.59%
29.62%
MAERSK
33.63%
30.82%
29.79%
ZIM
11.77%
13.49%
10.73%
14.
Related Party Transactions
As of May 27, 2022, CMA CGM, who was presented up to that moment as a related party as it was a shareholder, following the sale of its
shares, is not anymore Company’s shareholder. Related party revenue and expenses recorded in
the Consolidated Statements of Income
for CMA CGM are up to May 27, 2022.
Time Charter Agreements
A number of the Company’s time charter arrangements were with CMA CGM, representing 14.9% of gross revenues for the period
it was considered to be a related party in the year ended December 31, 2022. Under these time charters,
hire is payable in advance and
the daily rate is fixed for the duration of the charter. Revenues generated from charters to CMA CGM are disclosed separately in the
Consolidated Statements of Income.
Ship Management Agreements
Technomar Shipping Inc. (“Technomar”) is presented as a related party, as the Company’s Executive Chairman is a significant
shareholder. The Company has currently a number of ship management agreements with Technomar under
which the ship manager is responsible
for all day-to-day ship management, including crewing, purchasing stores, lubricating oils and spare parts, paying wages, pensions and
insurance for the crew, and organizing other ship operating
necessities, including monitoring and reporting EU Allowances (“EUAs”)
and the arrangement and management of dry-docking. During 2022, Technomar provided all day-to-day technical ship management services
for all but five
(excluding GSL Amstel which was sold in March 23, 2023) of the Twelve Vessels. Management agreements of another third-party
ship manager of these five vessels were terminated between May and July 2023. From those dates and
onwards Technomar manages the five
vessels. The management fees charged to the Company by third party managers for the years ended December 31, 2024, 2023 and 2022 amounted
to $nil, $981 and $1,488, respectively, and are
shown in “Vessel operating expenses” in the Consolidated Statements of Income.
Technomar continued to supervise management for the five outsourced vessels up to the termination of the underlying management agreements
between
May and July 2023.
The management fees charged to the Company by Technomar for the years ended December 31, 2024, 2023 and 2022, amounted to $21,804, $19,086
and $16,642, respectively and are shown under “Vessels operating expenses-related
parties” in the Consolidated Statements
of Income. Additionally, as of December 31, 2024, and 2023, outstanding receivables due from Technomar totaling $342 and $626, respectively,
are presented under “Due from related parties”.
Conchart Commercial Inc. (“Conchart”) provides commercial management services to the Company pursuant to commercial management
agreements. The Company’s Executive Chairman is the sole beneficial owner of Conchart.
Under the management agreements, Conchart
is responsible for (i) marketing of the Company’s vessels, (ii) seeking and negotiating employment of the Company’s vessels,
(iii) advise the Company on market developments and
developments of new rules and regulations, (iv) assisting in calculation of hires,
freights, demurrage and/or dispatch monies and collection any sums related to the operation of vessels, (v) communicating with agents,
and (vi)
negotiating sale and purchase transactions.
F-38
Table of Contents
Global Ship Lease, Inc.
Notes to the Consolidated Financial Statements (continued)
(Expressed in thousands of U.S. dollars)
14.
Related Party Transactions (continued)
Ship
Management Agreements (continued)
The
fees charged to the Company by Conchart for the years ended December 31, 2024, 2023 and 2022, amounted to $8,610, $7,995 and $6,289,
respectively, and are disclosed within “Time charter and voyage expenses-related parties”
in the Consolidated Statements
of Income. Any outstanding fees due to Conchart are presented in the Consolidated Balance Sheets under "Due to related parties"
totaling to $723 and $717 as of December 31, 2024, and 2023,
respectively.
The
Company as per commercial management agreements has agreed to pay to the commercial manager providing for the sale of all vessels and
purchase of some vessels, a commission of 1.00% based on the sale and purchase price
for any sale and purchase of a vessel, which shall
be payable upon request of the commercial manager. The balance is reflected within “Accrued liabilities”, see note 11.
15.
Commitments and Contingencies
Charter
Hire Receivable
The
Company has entered time charters for its vessels. The charter hire is fixed for the duration of the charter. The minimum contracted
future charter hire receivable, net of address commissions, not allowing for any unscheduled off-
hire, assuming expiry at earliest possible
dates and assuming options callable by the Company included in the charters are not exercised, for the 71
vessels as at December 31, 2024 is as follows:
Amount
December
31, 2025
$
634,080
December
31, 2026
462,024
December
31, 2027
327,105
December
31, 2028
108,599
December
31, 2029
47,748
Total
minimum lease revenue, net of address commissions
$
1,579,556
16.
Share Capital
Common
shares
As
of December 31, 2024, the Company has one class of Class A common shares.
Restricted
stock units or incentive stock units have been granted to the Directors and management, under the Company’s Equity Incentive Plans,
as part of their compensation arrangements (see note 17). In April 2020, the Company
issued 184,270 shares under grants made under the
2019 Omnibus Incentive Plan (the “2019 Plan”). In 2024, 2023, 2022 and 2021, 483,713, 440,698, 586,819 and 747,604 Class
A common shares were issued under the 2019 Plan,
respectively.
On
January 26, 2021, the Company completed its underwritten public offering of 5,400,000 Class A common shares, at a public offering price
of $13.00 per share, for gross proceeds to the Company of approximately $70,200, prior to
deducting underwriting discounts, commissions
and other offering expenses. The Company intended to use the net proceeds of the offering for funding the expansion of the Company’s
fleet, general corporate purposes, and working
capital. On February 17, 2021, the Company issued an additional 141,959 Class A common
shares in connection with the underwriters’ partial exercise of their option to purchase additional shares (together, the “January
2021 Equity
Offering”). The net proceeds the Company received in the January 2021 Equity Offering, after underwriting discounts
and commissions and expenses, were approximately $67,549.
F-39
Table of Contents
Global Ship Lease, Inc.
Notes to the Consolidated Financial Statements (continued)
(Expressed in thousands of U.S. dollars)
16.
Share Capital (continued)
Common shares (continued)
On September 1, 2021, the Company purchased 521,650 shares
and retired them, reducing the issued and outstanding shares. In April 2022, September 2022 and October 2022, the Company
repurchased 184,684, 568,835 and 307,121
Class
A common shares, respectively, reducing the issued and outstanding shares. During 2024 and 2023, the Company repurchased 251,772 and 1,242,663 Class
A common shares, reducing the issued and outstanding shares. As at
December 31, 2024, the Company had 35,447,370 Class
A common shares outstanding.
On August 16, 2024, the Company entered into a new equity distribution agreement (the
“Sales Agreement”) with Evercore Group L.L.C. (the “Agent”) under which the Company may offer and sell its
Class A common shares having
an aggregate offering price of up to $100,000.
As of December 31, 2024, the Company has issued 27,106 Class
A common shares at an average price of $27.02.
On May 10, August 3, and November 9, 2023, the Company announced a dividend of $0.375 per
Class A common share from the earnings of the first, second and third quarter of 2023, respectively, each paid on June
2, September
4,
2023, and December
4, 2023, to common shareholders of record as
of May 24, August 23, and November 24, 2023, respectively, each amounting to $13,340,
$13,300 and
$13,258.
On February 12, 2024, the Company announced a dividend of $0.375 per
Class A common share from the earnings of the fourth quarter of 2023 paid on March
6, 2024, to common shareholders of record as
of February
22, 2024,
amounting to $13,214.
On May 10, 2024, the Company announced a dividend of $0.375 per
Class A common share from the earnings of the first quarter of 2024 paid on June
3, 2024, to common shareholders of record as
of May
24, 2024, amounting to
$13,255.
On August 5, 2024, the Company announced a dividend of $0.45 per
Class A common share from the earnings of the second quarter of 2024 paid on September
4, 2024, to common shareholders of record as
of August
23, 2024,
amounting to $15,965.
On November 11, 2024, the Company announced a dividend of $0.45 per
Class A common share from the earnings of the third quarter of 2024, paid on December
4, 2024, to common shareholders of record as
of November
22, 2024
amounting to $16,004.
Preferred
shares
On
August 20, 2014, the Company issued 1,400,000 Depositary Shares (the "Depositary Shares"), each of which represents
1/100th of one share of the Company's 8.75% Series B Cumulative Perpetual Preferred Shares ("Series B
Preferred
Shares") representing an interest in 14,000 Series B Preferred Shares, par value $0.01 per share, with a liquidation preference
of $2,500.00 per share (equivalent to $25.00 per Depositary Share) (NYSE:GSL-B), priced at
$25.00
per Depositary Share. The net proceeds from the offering were $33,497.
Dividends are payable at 8.75%
per annum in arrears on a quarterly basis. At
any time after August 20, 2019 (or within 180 days after the occurrence of a
fundamental change), the Series B Preferred Shares may
be redeemed, at the discretion of the Company, in whole or in part, at a redemption price of $2,500.00
per share (equivalent to $25.00 per depositary share).
These shares are classified as Equity in the Consolidated Balance Sheets. The dividends payable on
the Series B Preferred Shares are presented as a reduction of Retained Earnings in the Consolidated Statements of Changes in
Shareholders’
Equity, when and if declared by the Board of Directors. An initial dividend was declared on September 22, 2014, for the third quarter
2014. Dividends have been declared for all subsequent quarters.
On December 29, 2022, the Company entered into a new ATM agreement
with B. Riley Securities, Inc. (the “Agent”), pursuant to which the Company may offer and sell, from time to time, up to
$150,000,000
of its Depositary Shares.
This new ATM
Agreement terminated and replaced, in its entirety, the former at-the-market program that the Company had in place with the Agent for
the Depositary Shares. No shares were issued under the new ATM Agreement up to
December 31, 2024.
As of December 31, 2024, there
were 4,359,190
Depositary Shares outstanding, representing an
interest in 43,592
Series B Preferred Shares.
F-40
Table of Contents
Global Ship Lease, Inc.
Notes to the Consolidated Financial Statements (continued)
(Expressed in thousands of U.S. dollars)
17. Stock-Based Compensation
On
February 4, 2019, the Board of Directors adopted the 2019 Plan.
The
purpose of the 2019 Plan is to provide directors, officers and employees, whose initiative and efforts are deemed to be important to
the successful conduct of our business, with incentives to (a) enter into and remain in the service of
our company or our subsidiaries
and affiliates, (b) acquire a proprietary interest in the success of the Company, (c) maximize their performance and (d) enhance the
long-term performance of our company. The 2019 Plan is administered
by the Compensation Committee of the Board of Directors, or such
other committee of the Board of Directors as may be designated by them. Unless terminated earlier by the Board of Directors, the 2019
Plan will expire 10 years from
the date on which it was adopted by the Board of Directors.
Following
the adoption of the 2019 Plan, previous plans adopted in 2015 and 2008 were terminated.
In
2019, the Board of Directors approved awards to the Company’s executive officers under the 2019 Plan, providing those executive
officers with the opportunity to receive up to 1,359,375 Class A common shares in aggregate. The
Board of Directors approved additional
awards of 61,625 of Class A common shares to two other employees resulting in a total amount of awards of up to 1,421,000 shares. In
July 2021, the Board of Directors approved the issuance of
17,720 shares to one member of senior management as a special bonus.
The
1,421,000 shares of incentive stock may be issued pursuant to the awards, in four
tranches. The first tranche was to vest conditioned
only on continued service over the three-year period which commenced January 1, 2019.
Tranches two, three and four would vest when the
Company’s stock price exceeded $8.00,
$11.00
and $14.00,
respectively, over a 60-day period. The $8.00 threshold was achieved in January
2020, the $11.00 threshold was achieved in
January
2021 and the $14.00 threshold was achieved in
March
2021. Accordingly, 113,279
incentive shares vested in the year ended December
31, 2019, 317,188
incentive shares vested in the year ended December
31, 2020, and
1,008,253
incentive shares vested in the year ended December
31, 2021. Of the total of 430,467
incentive shares which vested up to December
31, 2020, 184,270
were settled and issued as Class A common shares
in April 2020. A
further 747,604
Class A common shares were settled and issued
during the year ended December 31, 2021. A total of 1,438,720
incentive shares had vested as at December 31,
2021, of which 931,874
and 408,096
had been issued in
2021 and 2022, respectively.
On
September 29, 2021, the Compensation Committee and the Board of Directors approved an increase in the aggregate number of Class A common
shares available for issuance as awards under the 2019 Plan by 1,600,000 to
3,412,500, and approved new awards to senior management,
totaling 1,500,000 shares of incentive stock, in three tranches, with a grant date October 1, 2021. The first tranche, representing 55%
of the total, is to vest quarterly
conditioned only on continued service over the four-year period which commenced October 1, 2021. Tranches
two and three, each representing 22.5% of the total, were to vest quarterly up to September 30, 2025, once the Company’s
stock
price exceeded $27.00 and $30.00, respectively, over a 60-day period. The Compensation Committee and Board of Directors also approved
an increase the maximum number of Class A common shares that each non-employee
director may be granted in any one year to 25,000 and
subsequently approved stock-based awards to the then seven non-executive directors totaling 105,000 shares of incentive stock, or 15,000
each, to vest in a similar manner to those
awarded to senior management.
During
the year ended December 31, 2022, 28,528 unvested share awards were cancelled or withdrawn on the resignations of two directors and an
award of 13,780 was made to one new director to vest in a similar manner to the other
awards, with the first tranche adjusted for the
date of appointment of the director.
In
March 2023, the Compensation Committee and the Board of Directors approved an amendment to the awards agreed in September 2021 for senior
management and non-employee directors such that 10% of the second tranche would
be forfeit with the remaining 90% vesting from April
2023 and quarterly thereafter with the last such vesting to be October 2025. The price at which the third tranche was to vest was amended
to $21.00. All other terms of the awards
remain unchanged. The threshold for the third tranche was met in second quarter 2024.
F-41
Table of Contents
Global Ship Lease, Inc.
Notes to the Consolidated Financial Statements (continued)
(Expressed in thousands of U.S. dollars)
17. Stock-Based Compensation (continued)
During
the years ended December 31, 2024, 2023, 2022 and 2021, 535,912,
399,727,
218,366
and 55,175
incentive shares vested, respectively, under
the amended September 2021 awards. A total of 2,647,900
incentive shares under
both plans had vested
as at December 31, 2024. Of the total incentive shares which vested under both plans up to December 31, 2024, and 2023, 204,797
and 152,598,
respectively, had not been issued.
On
January 2, 2024, the Company approved awards to a non-employee director amounting to 4,884 shares of incentive stock which vested and
were issued immediately, and 8,311 shares, to vest in a similar manner to the awards to
other non-employee directors, adjusted for the
date of appointment of the director, up to September 30, 2025.
As
a result of the Chief Executive Officer (“CEO”) transition in March 2024, the Board of Directors approved a new award of
6,465 shares of incentive stock to the new non-employee director and 51,750 a new award to the new CEO,
both structured in the same way
as existing equivalent awards, adjusted for the dates of appointment. 155,250 unvested shares under previous awards were forfeited due
to retirement of the then CEO.
On
October 9, 2024, the Company filed an amendment to original registration statement of the Company’s 2019 Plan to supplement the
list of selling securityholders and to update the amounts of Class A common shares available to be
resold by them. The file amended prospectus
may be used for reoffers and resales of up to an aggregate of 1,669,533
Class A common shares on a continuous or delayed
basis that were issued, or are issuable, to certain employees,
directors and/or officers of the Company.
Stock-based
awards since January 1, 2023, are summarized as follows:
Restricted
Stock Units
Number
of Units
Number
Weighted
Average
Fair
Value
on
Grant Date
Actual
Fair
Value
on
Vesting
Date
Unvested
as at January 1, 2023
1,316,711
$
22.35
n/a
Vested
in year ended December 31, 2023
(399,727)
n/a
18.87
Forfeit
in March 2023
(35,771)
n/a
n/a
Unvested
as at December 31, 2023
881,213
$
22.35
n/a
Vested
in year ended December 31, 2024
(535,912)
n/a
26.11
Granted
in January 2024
13,195
18.82
n/a
Granted
in March 2024
58,215
17.80
n/a
Forfeit
in March 2024
(155,250)
n/a
n/a
Unvested
as at December 31, 2024
261,461
$
21.92
n/a
Using the graded vesting method of expensing the restricted stock unit grants, the weighted average fair value of the stock units
is recognized as compensation costs in the Consolidated Statements of Income over the vesting period.
The fair value of the restricted
stock units for this purpose is calculated by multiplying the number of stock units by the fair value of the shares at the grant date.
The Company has not factored any anticipated forfeiture into these
calculations based on the limited number of participants.
For
the years ended December 31, 2024, 2023 and 2022, the Company recognized a total of $8,704 (includes $345 positive net effect from
the amendment to the stock-based awards consequent on the CEO transition), $10,189 (includes
$451 effect from the amendment to the stock-based
awards), and $10,104, respectively, in respect of stock-based compensation.
F-42
Table of Contents
Global Ship Lease, Inc.
Notes to the Consolidated Financial Statements (continued)
(Expressed in thousands of U.S. dollars except share data)
18.
Earnings per Share
Under
the two-class method, net income, if any, is first reduced by the amount of dividends declared in respect of common shares for the current
period, if any, and the remaining earnings are allocated to common shares and
participating securities to the extent that each security
can share the earnings assuming all earnings for the period are distributed.
Earnings
are only allocated to participating securities in a period of net income if, based on the contractual terms, the relevant common shareholders
have an obligation to participate in such earnings. As a result, earnings are only being
allocated to the Class A common shareholders.
At December 31, 2024 and 2023, there were 261,461
and 881,213,
respectively, shares of incentive share grants unvested as part of senior management’s and non-executive directors incentive awards
approved on September 29, 2021.
Numerator:
December
31,
2024
December
31,
2023
December
31,
2022
Net
income available to common shareholders:
Class
A, basic and diluted
$
344,092
$
294,964
$
283,389
Denominator:
Class
A Common shares
Basic
weighted average number of common shares outstanding
35,316,495
35,405,458
36,603,134
Plus
weighted average number of RSUs with service conditions
261,461
523,464
601,211
Common
share and common share equivalents, dilutive
35,577,956
35,928,922
37,204,345
Basic
earnings per share:
Class
A
9.74
8.33
7.74
Diluted
earnings per share:
Class
A
9.67
8.21
7.62
19.
Subsequent events
On
March 5, 2025, the Company announced an increase of $0.075
per Class A common share in the quarterly supplemental
dividend for a total quarterly dividend of $0.525
per Class A common share, commencing with the
dividend
payable in June
2025.
On February 12, 2025, the Company
announced a dividend of $0.45
per Class A common share from the earnings of
the fourth quarter of 2024 paid on March
6, 2025, to common shareholders of record as
of February
24, 2025.
On January 9, 2025, the fourth
high-reefer ECO 9,019
TEU was delivered for a purchase price $68,500.
As of December 31, 2024, the Company had paid $6,850
advance for this vessel acquisition.
In December 2024, the Company agreed to sell Tasman, a 5,936 TEU vessel. In February 2025, the Company agreed to also sell Keta,
and Akiteta, each a 2,200
TEU vessel. Akiteta was delivered on February
19, 2025, and Tasman was
delivered on March
10, 2025. The remaining vessel is scheduled for
delivery in first
half of 2025.
In January 2025, the Company entered into two
additional sale and leaseback agreements, for
$44,500
each, with Minsheng to
finance the purchase of the remaining two high-reefer ECO 9,019 TEU Vessels which were delivered in
December 2024 and both at that moment
were fully paid in cash.
F-43
Exhibit
1.3
FOURTH
AMENDED AND RESTATED BYLAWS
OF
GLOBAL
SHIP LEASE, INC.
As
Adopted on March 14, 2024
ARTICLE
I
OFFICES
Section
1.1 Registered Office. The registered office of
Global Ship Lease, Inc. (the “Corporation”) in the Republic of the Marshall Islands is Trust Company Complex, Ajeltake
Road, Ajeltake Island, P.O. Box 1405,
Majuro, Marshall Islands MH 96960.
Section
1.2 Other Offices. The Corporation may also have
an office or offices within or without the Republic of the Marshall Islands at such other place or places as the Board of Directors of
the Corporation (the
“Board of Directors”) may from time to time determine or the business of the Corporation may
require.
ARTICLE
II
SHAREHOLDER MEETINGS
Section
2.1 Place of Meetings. Meetings of the of the shareholders
of the Corporation for any purpose shall be held at such time and place, either within or without the Republic of the Marshall Islands,
as shall be
designated from time to time by the Board of Directors.
Section
2.2 Annual Meeting. The annual meeting of shareholders
of the Corporation shall be held on such day and at such time and place within or without the Republic of the Marshall Islands as the
Board of Directors
may determine for the purpose of electing directors and/or transacting any other proper business. The Chairman of
the Board of Directors (the “Chairman”) or, in the Chairman’s absence, another person designated by the Board
of
Directors, shall act as chairman of all annual meetings of shareholders.
Section
2.3 Nature of Business at Annual Meeting of Shareholders.
No business may be transacted at an annual meeting of shareholders, other than business that is either (i) specified in the notice
of meeting (or any
supplement thereto) given by or at the direction of the Board of Directors (or any duly authorized committee thereof);
(ii) otherwise properly brought before the annual meeting by or at the direction of the Board of Directors (or any
duly authorized
committee thereof); or (iii) otherwise properly brought before the annual meeting by any shareholder of the Corporation who (x) is
a shareholder of record on the date of the giving of the notice provided for in
Section 2.5 of this Article II and has remained
a shareholder of record through the record date for the determination of shareholders entitled to vote at such annual meeting and (y) gives
timely notice thereof in proper written form as set
forth in Section 2.5 of this Article II to the Secretary of the Corporation
(the “Secretary”).
No
business shall be conducted at the annual meeting of shareholders except business brought before the annual meeting in accordance with
the procedures set forth in this Article II, provided, however, that, once business has
been properly brought before the
annual meeting in accordance with such procedures, nothing in this Article II shall be deemed to preclude discussion by any shareholder
of any such business. If the chairman of an annual meeting
determines that business was not properly brought before the annual meeting
in accordance with the foregoing procedures, the chairman of the meeting shall declare to the meeting that the business was not properly
brought before the
meeting and such business shall not be transacted.
Section
2.4 Special Meetings. Unless otherwise required
by law or the Articles of Incorporation of the Corporation, as amended or restated from time to time (the “Articles of Incorporation”),
special meetings of the
shareholders, for any purpose or purposes may be called only by the Chairman or by a resolution of the Board
of Directors. The business transacted at the special meeting is limited to the purposes stated in the notice. The Chairman, or
in the
Chairman’s absence, another person designated by the Board of Directors, shall act as the chairman of all special meetings of the
shareholders. If the chairman of the special meeting determines that business was not properly
brought before the special meeting in
accordance with this Article II, the chairman shall declare to the meeting that the business was not properly brought before the meeting
and such business shall not be transacted.
1
Section
2.5 Shareholder Notice. To be timely, a shareholder’s
notice to the Secretary must be delivered to or mailed and received at the principal executive offices of the Corporation not less than
90 days nor more than
120 days prior to the first anniversary date of the immediately preceding annual meeting of shareholders.
To
be in proper written form, a shareholder’s notice to the Secretary must set forth as to each matter such shareholder proposes to
bring before the annual meeting (i) a brief description of the business desired to be brought
before the annual meeting and the
reasons for conducting such business at the annual meeting, (ii) the name and record address of such shareholder, (iii) the
class or series and number of shares of the Corporation that are owned
beneficially or of record by such shareholder, (iv) a description
of all arrangements or understandings between such shareholder and any other person or persons (including their names) in connection
with the proposal of such business
by such shareholder and any material interest of such shareholder in such business and (v) a
representation that such shareholder intends to appear in person or by proxy at the annual meeting to bring such business before the
meeting.
In addition, notwithstanding anything in this Article II to the contrary, a shareholder intending to nominate one or more persons
for election as a director at an annual meeting must comply with Section 3.4 of these Bylaws for such
nomination or nominations
to be properly brought before such meeting.
Section
2.6 Notice of Meetings. Unless otherwise required
by law or the Articles of Incorporation, notice of every annual and special meeting of shareholders shall state the date, hour, place
and purpose of such
meeting, and in the case of special meetings, shall also include the name of the person or persons at whose direction
the notice is being issued, and shall be given personally or sent by mail, telegraph, cablegram, telex, teleprinter or
electronic transmission
at least fifteen (15) but not more than sixty (60) days before such meeting, to each shareholder of record entitled to vote
thereat and to each shareholder of record who, by reason of any action proposed at such
meeting would be entitled to have his, her or
its shares appraised if such action were taken, and the notice shall include a statement of that purpose and to that effect. If mailed,
notice shall be deemed to have been given when deposited
in the mail, directed to the shareholder at his, her or its address as the same
appears on the record of shareholders of the Corporation or at such address as to which the shareholder has given notice to the Secretary.
Without limiting the
manner by which notice otherwise may be given effectively to shareholders, any notice to shareholders may be given
by mail, facsimile or electronic transmission to his, her or its last known address or facsimile number or by any other
form of electronic
transmission in the manner now or hereafter provided in Section 65 of the Republic of the Marshall Islands Business Corporations
Act (the “BCA”) or any other applicable provision of the BCA.
Section
2.7 Waiver of Notice. A written waiver of any notice,
signed by a shareholder or director, or waiver by electronic transmission by such person, whether given before or after the time of the
event for which notice
is to be given, shall be deemed equivalent to the notice required to be given to such person. Neither the business
nor the purpose of any meeting need be specified in such a waiver. Attendance at any meeting shall constitute waiver of
notice except
attendance for the sole purpose of protesting, prior to the conclusion of the meeting, the lack of notice of such meeting.
Section
2.8 Shareholder List. The Secretary shall prepare,
certify and make a complete list of the shareholders entitled to vote at the meeting, arranged in alphabetical order with the address
of and the number of voting
shares registered in the name of each. Such list shall be produced and kept at the time and place of the
meeting during the whole time thereof, and may be inspected by any shareholder who is present.
Section
2.9 Quorum. Unless otherwise required by law or
the Articles of Incorporation, at all meetings of shareholders there must be present either in person or by proxy shareholders of record
holding at least a
majority of the shares of the Corporation issued and outstanding and entitled to vote at such meetings in order to
constitute a quorum, but if less than a quorum is present, a majority of those shares present either in person or by proxy
shall have
power to adjourn any meeting until a quorum shall be present.
Section
2.10 Adjournments. Any meeting of shareholders, annual or special,
may be adjourned from time to time to reconvene at the same or some other place, and notice need not be given of any such adjourned meeting
if the time and place thereof are announced at the meeting at which the adjournment is taken. At the adjourned meeting, the Corporation
may transact any business that may have been transacted at the original meeting. If the meeting is
adjourned for lack of quorum, notice
of the new meeting shall be given to each shareholder of record entitled to vote at the meeting. If the adjournment is for more than
thirty (30) days, or if after an adjournment a new record date is
fixed for the adjourned meeting, a notice of the adjourned meeting
shall be given to each shareholder of record on the new record date entitled to notice in Section 2.6 of this Article II.
Section
2.11 Vote Required. At any meeting of shareholders at which a quorum
is present, all matters shall be decided by a majority of the votes cast by the shareholders present in person or by proxy and entitled
to vote,
unless the matter is one for which, by express provision of statute, of the Articles of Incorporation or of these Bylaws, a
different vote is required, in which case such express provision shall govern and control the determination of such
matter.
2
Section
2.12 Voting. Except as otherwise provided by the Articles of Incorporation,
every shareholder shall have one vote for each share registered in his, her or its name. Each shareholder may exercise such voting right
either in person or by proxy, provided, however, that no proxy shall be valid after the expiration of eleven (11) months
from the date such proxy was authorized unless otherwise provided in the proxy. A duly executed proxy shall be
irrevocable if it states
that it is irrevocable and if, and only as long as, it is coupled with an interest sufficient in the law of the Republic of the Marshall
Islands to support an irrevocable power. A shareholder may revoke any proxy that
is not irrevocable by attending the meeting and voting
in person or by filing an instrument in writing revoking the proxy or another duly executed proxy bearing a later date with the Secretary
of the Corporation.
Section
2.13 Action by Shareholders Without a Meeting. Any action required
or permitted to be taken by the shareholders of the Corporation, or any action which may be taken at a meeting of the shareholders, may
be
taken without a meeting if a consent in writing, setting forth the action so taken, is signed by all the shareholders entitled to
vote with respect to the subject matter thereof.
The
consent shall be delivered to the Corporation by delivery to its registered office in the Republic of the Marshall Islands, its principal
place of business, or an officer or agent of the Corporation having custody of the book in
which proceedings of meetings of shareholders
are recorded. Delivery made to the Corporation’s registered office shall be made by hand or by certified or registered mail, return
receipt requested.
Section
2.14 Fixing of Record Date. In order that the Corporation may determine
the shareholders entitled to notice of or to vote at any meeting of the shareholders or any adjournment thereof, the Board of Directors
may
fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the
Board of Directors, and which record date shall not be more than sixty (60) nor less than fifteen (15) days
prior to the date
of such meeting. If no record date is fixed by the Board of Directors, the record date for determining shareholders entitled to notice
of or to vote at a meeting of the shareholders shall be at the close of business on the
day next preceding the day on which notice is
given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination
of shareholders of record entitled to notice of or to
vote at a meeting of the shareholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.
ARTICLE
III
DIRECTORS
Section
3.1 Powers. The Board of Directors shall have the
powers set forth in the Articles of Incorporation.
Section
3.2 Number and Class. The number of persons constituting
the Board of Directors shall be as set forth in the Articles of Incorporation.
Section
3.3 Election. Directors shall be elected in the
manner set forth in the Articles of Incorporation.
Section
3.4 Nomination of Directors. Only persons who are
nominated in accordance with the following procedures shall be eligible for election as directors of the Corporation, except as may be
otherwise provided in
the Articles of Incorporation with respect to the right of holders of preferred shares of the Corporation to nominate
and elect a specified number of directors in certain circumstances. Nominations of persons for election to the Board of
Directors may
be made at any annual meeting of shareholders (a) by or at the direction of the Board of Directors (or any duly authorized committee
thereof) or (b) by any shareholder of the Corporation (i) who is a shareholder of record
on the date of the giving of the notice
provided for in this Section 3.4 and on the record date for the determination of shareholder entitled to vote at such meeting and
(ii) who timely complies with the notice procedures in proper written
form to the Secretary as set forth in this Section 3.4.
To
be timely, a shareholder’s notice to the Secretary must be delivered to or mailed and received at the principal executive offices
of the Corporation not less than ninety (90) days nor more than one-hundred twenty (120) days
prior to the anniversary date
of the immediately preceding annual meeting of shareholders.
3
To
be in proper written form, a shareholder’s notice to the Secretary must set forth; (a) as to each person whom the shareholder
proposes to nominate for election as a director (i) the name, age, business address and residence
address of the person, (ii) the
principal occupation or employment of the person, (iii) the class or series and number of shares of the Corporation that are owned
beneficially or of record by the person and (iv) any other information
relating to the person that would be required to be disclosed
in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant
to Section 14 of the Securities Exchange
Act of 1934, as amended (the “Exchange Act”), and the rules and regulations
promulgated thereunder and (b) as to the shareholder giving the notice (i) the name and record address of such shareholder,
(ii) the class or series and number
of shares of the Corporation that are owned beneficially and of record by such shareholder,
(iii) a description of all arrangements or understandings between such shareholder and each proposed nominee and any other person
and
persons (including their names) pursuant to which the nomination(s) are to be made by such shareholder, (iv) a representation
that such shareholder intends to appear in person or by proxy at the meeting to nominate the person or
persons named in its notice and
(v) any other information relating to such shareholder that would be required to be disclosed in a proxy statement or other filings
required to be made in connection with solicitations of proxies for
election of directors pursuant to Section 14 of the Exchange
Act and the rules and regulations promulgated thereunder. Such notice must be accompanied by a written consent of each proposed nominee
to being named as a nominee and
to serve as a director if elected.
No
person shall be eligible for election as a director of the Corporation unless nominated in accordance with the procedures set forth in
this Section 3.4. If the chairman of the meeting determines that a nomination was not
made in accordance with the foregoing procedures,
the chairman shall declare to the meeting that the nomination was defective and such defective nomination shall be disregarded.
Section
3.5 Resignations. Any director of the Corporation
may resign at any time, by giving notice in writing or by electronic transmission to the Board of Directors, the Chairman, the Chief
Executive Officer or the
Secretary of the Corporation. Such resignation shall take effect after receipt of the applicable notice of resignation
by the Board of Directors, the Chairman, the Chief Executive Officer or the Secretary of the Corporation at the time
specified in such
notice or, if no time is specified, immediately upon receipt of such notice by the Board of Directors, the Chairman, the Chief Executive
Officer or the Secretary of the Corporation. Unless otherwise specified in such
notice, the acceptance of such resignation shall not
be necessary to make it effective.
Section
3.6 Removal. Directors shall be removed in the manner
set forth in the Articles of Incorporation.
Section
3.7 Vacancies. Vacancies shall be filled in the
manner set forth in the Articles of Incorporation.
Section
3.8 Chairman of the Board of Directors. The Board
of Directors shall appoint, from time to time, one of the directors to serve as the Chairman. The
Chairman shall preside at all meetings of the shareholders and
of the Board of Directors and shall perform all duties as usually appertain
to the office and such other duties as may be prescribed from time to time by the Board of Directors. The Chairman may enter into and
execute in the name of
the Corporation powers of attorney, contracts, bonds and other obligations which implement policies established
by the Board of Directors. If the directors have elected an Executive Chairman, the Executive Chairman shall be the
Chairman, and the
Chairman shall have the additional authorities and duties described in Section 5.2 of these Bylaws. The Chairman shall be subject to
the control of and may be removed from such office by the Board of Directors.
Section
3.9 Annual Meetings. The Board of Directors shall
meet for the election of officers and the transaction of other business as soon as practicable after each annual meeting of the shareholders,
and/or at such time
and place as specified in the notice for the meeting. No notice of such meeting shall be necessary to the directors
in order legally to constitute the meeting, provided a quorum shall be present. In the event such meeting is not so held, the
meeting
may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the Board
of Directors.
Section
3.10 Regular Meetings. Regular meetings of the Board of Directors
may be held without notice at such time and place, within or without the Republic of the Marshall Islands, as shall from time to time
be
determined by Board of Directors resolution or by consent in writing of all the directors.
Section
3.11 Special Meetings. Special meetings of the Board of Directors
may be called only by the Chairman or by resolution of the Board of Directors. Special meetings of the Board of Directors shall be held
at the
time and place, within or without the Republic of the Marshall Islands, specified in the notices thereof.
4
Section
3.12 Notice of Special Meeting. Notice of the date, time and place
of each special meeting of the Board of Directors shall be given to each director at least forty-eight (48) hours prior to such
meeting, unless the
notice is given orally or delivered in person, in which case it shall be given at least twenty-four (24) hours
prior to such meeting. For the purpose of this section, notice shall be deemed to be duly given to a director if given to him or her
personally (including by telephone) or if such notice be delivered to such director by mail, facsimile or electronic transmission to
his or her last known address or facsimile number. Notice of a meeting need not be given to any director
who submits a signed waiver
of notice, whether before or after the meeting, or who attends the meeting without protesting the lack of notice to him or her prior
to the conclusion of such meeting.
Section
3.13 Quorum. At all meetings of the Board of Directors, a majority
of the directors at the time in office, present in person, by proxy or by means of conference telephone or other communications equipment
by
means of which all persons participating in the meeting can hear each other, shall constitute a quorum for the transaction of business.
If a quorum shall not be present at any meeting of directors, the directors present thereat may adjourn
the meeting from time to time,
without notice other than announcement at the meeting, until a quorum shall be present.
Section
3.14 Organization. Meetings shall be presided over by the Chairman,
or in the absence of the Chairman, by such other person as the directors may select. The Board of Directors shall keep contemporaneous,
full
and accurate written minutes of its meetings. The Secretary shall act as secretary of the meeting, but in the absence of the Secretary,
the chairman of the meeting may appoint any person to act as secretary of the meeting.
Section
3.15 Voting. Except as otherwise provided by applicable law, the Articles
of Incorporation or these Bylaws, all matters presented to the Board of Directors (or a committee thereof) shall be approved by a vote
of
the majority of the directors, present in person, by proxy or by means of conference telephone or other communications equipment by
means of which all persons participating in the meeting can hear each other, at any meeting of the
Board of Directors (or such committee)
at which a quorum is present.
Section
3.16 Action By Directors Without a Meeting. Unless otherwise restricted
by the Articles of Incorporation or these Bylaws, whenever the vote of the directors at a meeting thereof is required or permitted to
be
taken in connection with any corporate action by any provisions of the statutes or of the Articles of Incorporation or of these Bylaws,
the meeting and vote of the directors may be dispensed with if all the directors who would be entitled
to vote upon the action, if such
meeting were held, shall consent in writing to such corporate action being taken.
Section
3.17 Directors’ Meeting by Conference Telephone or Other Communication
Equipment. Any one or more members of the Board of Directors or of any committee thereof may participate in a meeting of such
Board
of Directors or committee, as the case may be, by means of a conference telephone or other communications equipment by means of which
all persons participating in the meeting can hear each other. Participation by such means
shall constitute presence in person at a meeting.
Section
3.18 Compensation. The Board of Directors shall have the authority
to fix the compensation of directors for their services. A director may also serve the Corporation in other capacities and receive compensation
therefor.
Section
3.19 Interested Directors. No contract or other transaction between
the Corporation and one or more of its directors, or between the Corporation and any other corporation, firm, association or other entity
in
which one or more of its directors are directors or officers, or have a substantial financial interest, shall be either void or voidable
solely for this reason, or solely because the director or directors are present at or participate in the
meeting of the Board of Directors
or committee thereof which approves such contract or transaction, or solely because his or her or their votes are counted for such purpose,
if: (i) the material facts as to such director’s interest in such
contract or transaction and as to any such common directorship,
officership or financial interest are disclosed in good faith or known to the Board of Directors or the committee and the Board of Directors
or committee approves such
contract or transaction by a vote sufficient for such purpose without counting the vote of such interested
director, or, if the votes of the disinterested directors are insufficient to constitute an act of the Board of Directors as defined
in
Section 55 of the BCA, by unanimous vote of the disinterested directors or (ii) the material facts as to such director’s
interest in such contract or transaction and as to any such common directorship, officership or financial interest are
disclosed in good
faith or known to the shareholders entitled to vote thereon, and such contract or transaction is approved by vote of the shareholders.
Common or interested directors may be counted in determining the presence of a
quorum at a meeting of the Board of Directors or of a
committee which approves such contract or transaction.
5
ARTICLE
IV
COMMITTEES
Section
4.1 Constitution and Powers. Except as otherwise provided by applicable
law, the Articles of Incorporation or these Bylaws, the Board of Directors may, by resolution adopted by a majority of the Board of
Directors,
designate one or more committees (in addition to the mandatory Standing Committees as defined and as set forth in Section 4.2).
Each committee shall consist of one or more directors of the Corporation and the composition
of each such other committee shall be in
compliance with the applicable Requirements (as defined herein). With respect to all Board of Directors Committees (including Standing
Committees), the Board of Directors may designate one
or more directors as alternate members of any committee, who may replace any absent
or disqualified member at any meeting of any such committee. With respect to all committees of the Board of Directors (including Standing
Committees), in the absence or disqualification of a member of a committee of the Board of Directors, and in the absence of a designation
by the Board of Directors of an alternate member to replace the absent or disqualified member,
the member or members thereof present
at any meeting and not disqualified from voting, whether or not such members or members constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the
meeting in the place of any absent or disqualified member. Any committee (including
any Standing Committee), to the extent permitted by law (including the Requirements (as defined below)) and provided in the resolution
establishing
such committee, shall have and may exercise all the powers and authority of the Board of Directors in the management of
the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all
papers that may require
it. Each committee (including each Standing Committee) shall keep regular, accurate and complete minutes and, when required, report to
the Board of Directors.
Section
4.2 Standing Committees. The Board of Directors
shall have the following standing committees: (a) an Audit Committee, (b) a Compensation Committee and (c) a Nominating/Corporate
Governance
Committee (together, the “Standing Committees”), and such other committees as may be required from time
to time by the stock exchange listing requirements applicable to the Corporation (the “Requirements”). The Audit Committee,
the Compensation Committee and the Nominating/Corporate Governance Committee (and such other Standing Committees as may be mandated by
the Requirements) shall be composed entirely of “independent directors” within the
meaning of the Requirements applicable
to such committee, and the composition of each such Standing Committee shall be in compliance with the applicable Requirements. Each
Standing Committee shall have a written charter, which
shall be approved by the Board of Directors and state the purpose and authority
of such committee.
ARTICLE
V
OFFICERS
Section
5.1 Officers. The Board of Directors shall appoint
a Secretary. The Board of Directors may appoint from time to time such other officers as, in the opinion of the Board of Directors, are
desirable for the conduct
of the business of the Corporation including, without limitation, an Executive Chairman, Chief Executive Officer,
and/or Chief Financial Officer. Any two (2) or more offices may be held by the same person unless otherwise prohibited
by law, the
Articles of Incorporation or these Bylaws. Unless otherwise specified herein, each of the officers
of the Corporation will have such authority and will perform such duties as are customarily incident to their respective offices
or as
may be specified from time to time by the Executive Chairman or the Board of Directors.
Section
5.2 Executive Chairman. The Board of Directors may,
but is not required to, appoint from time to time one of the directors to serve in the role of Executive Chairman. The Executive Chairman,
if one is so
appointed by the Board of Directors, shall act as liaison between the Board of Directors
and the executive officers of the Corporation and shall be responsible for general oversight of such executive officers. The Executive
Chairman
shall formulate and submit to the Board of Directors matters of general policy for the Corporation and shall perform such other
duties as usually appertain to the office as the highest-ranking executive officer of the Corporation or as
may be prescribed by the
Board of Directors, and shall report directly to the Board of Directors.
Section
5.3 Chief Executive Officer. The Chief Executive
Officer, if appointed, shall be the principal executive officer of the Corporation and shall have such
powers and perform such duties as are customarily incident
to the office of the Chief Executive Officer of a corporation, and such other
duties as may, from time to time, be assigned to him or her by the Executive Chairman or the Board of Directors, or as may be provided
by law, provided,
however, that the Chief Executive Officer shall not have supervisory authority over the Executive Chairman. The Chief
Executive Officer shall report directly to the Executive Chairman and the Board of Directors; provided, however,
that if
there is no Executive Chairman, then the Chief Executive Officer shall report directly to the Board
of Directors.
Section
5.4 Chief Financial Officer. The Chief Financial
Officer, if appointed, shall be the principal financial officer of the Corporation and shall have such powers and perform such duties
as are customarily incident to
the office of the Chief Financial Officer of a corporation, and such other duties as may, from time to
time, be assigned to him or her by the Executive Chairman or the Board of Directors, or as may be provided by law, and shall report
directly
to the Executive Chairman and the Board of Directors; provided, however, that if there is no Executive Chairman,
then the Chief Financial Officer shall report directly to the Board of Directors.
6
Section
5.5 Secretary. Unless
otherwise decided by the Board of Directors, the Secretary shall act as secretary of all meetings of the shareholders and of the Board
of Directors at which he or she is present, shall have
supervision over the giving and serving of notices of the Corporation, shall be
the custodian of the corporate records and of the corporate seal of the Corporation, shall be empowered to affix the corporate seal to
those documents, and
shall, in general, have all authority incident to the office of Secretary and shall have such other authority
and perform such other duties as may from time to time be assigned by the Executive Chairman or the Board of Directors.
Section
5.6 Removal. Any officer may be removed, either
with or without cause, by the Board of Directors at any meeting thereof or by any superior officer upon whom such power may be conferred
by the Board of
Directors.
Section
5.7 Resignation. Any officer may resign at any time
by giving notice to the Board of Directors, the Chairman, the Chief Executive Officer or the Secretary in writing or by electronic transmission.
Any such
resignation shall take effect at the time therein specified or if no time is specified, immediately. Unless otherwise specified
in such notice, the acceptance of such resignation shall not be necessary to make it effective.
Section
5.8 Vacancies. A vacancy in any office because of
death, resignation, removal, disqualification or any other cause may be filled at any time by the Board of Directors, or if such officer
was appointed by the
Executive Chairman or the Chief Executive Officer, then by the Executive Chairman or the Chief Executive Officer,
as appropriate.
ARTICLE
VI
FORM OF SHARES; ISSUANCE OF SHARES; SHARE CERTIFICATES
Section
6.1 Registered Form. The shares shall be represented
by certificates in form meeting the requirements of law and approved by the Board of Directors; provided that the Board of Directors
of the Corporation
may provide by resolution or resolutions that some or all of any or all classes or series of its stock shall be uncertificated
shares and adopt a system of issuance, recordation and transfer of its shares by electronic or other means not
involving any issuance
of certificates, including provisions for notice to purchasers in substitution for any required statements on certificates, and as may
be required by applicable corporate securities laws, which system has been
approved by the United States Securities and Exchange Commission.
Any system so adopted shall not become effective as to issued and outstanding certificated securities until the certificates therefor
have been surrendered to the
Corporation.
Section
6.2 Terms and Conditions of Issuance. Subject to
the terms of the Articles of Incorporation, shares of the Corporation may be issued at such times, for such considerations and on such
terms as may be
established from time to time by the Board of Directors in its sole discretion without the approval of the shareholders.
Section
6.3 Number of Shares Represented by Certificates.
Share certificates may be issued to represent more than one share. If shares held by a shareholder are represented by one share certificate,
and if such
shareholder disposes of part of his, her or its shares, such shareholder shall be entitled to request the issuance of a share
certificate representing such shareholder’s remaining shares.
ARTICLE
VII
LOST AND MUTILATED CERTIFICATES
If
any shareholder can prove to the satisfaction of the Board of Directors or any transfer agent or registrar of the Corporation, that any
share certificate has been mutilated, mislaid or destroyed, then, at such shareholder’s
written request, a duplicate may be issued
by the Board of Directors or any transfer agent or registrar of the Corporation on such terms and conditions as the Board of Directors
may deem fit. Upon the issuance of the duplicate share
certificate (on which it shall be noted that such certificate is a duplicate),
the original share certificate shall be null and void vis-à-vis the Corporation. A mutilated share certificate may be exchanged
for a duplicate certificate upon
delivery of the mutilated certificate to the Board of Directors or any transfer agent or registrar of
the Corporation.
7
ARTICLE VIII
SHAREHOLDERS REGISTER; TRANSFER OF SHARES; NOTICES
Section
8.1 Shareholders Register. The Board of Directors,
or registrar or transfer agent designated pursuant to Section 8.4, shall keep a shareholders register (the “Register”),
which contains the names and addresses of
all registered shareholders, the number and class of shares held by each shareholder, and the
dates when the shareholders became owners of record. The Board of Directors shall regularly maintain the Register, including the registration
in the Register of any issue, transfer and cancellation of shares.
Section
8.2 Addresses to be Furnished, Etc. Each shareholder
is required to provide his, her or its address to the Corporation. The Corporation shall be entitled for all purposes to rely on the
name and address of the
aforementioned persons as entered in the Register. Such person may at any time change his, her or its address
as entered in the Register by means of a written notification to the Corporation at its principal office, or any transfer agent or
registrar
of the Corporation.
Section
8.3 Access to Register. At the request of a shareholder,
the Board of Directors shall furnish an extract of the Register, free of charge, insofar as it relates to such person’s interest
in a share.
Section
8.4 Location of Register. The Register shall be
kept by the Board of Directors at the Corporation’s principal office, or by a registrar or transfer agent designated thereto by
the Board of Directors at such other
location as it may deem fit. In case the Register is kept at any location other than the Corporation’s
principal office, then the registrar or transfer agent shall be obligated to send to the principal office of the Corporation a copy thereof
from time to time. In case a registrar or transfer agent is appointed by the Board of Directors, then such registrar or transfer agent
shall be authorized and, as the case may be, obligated to exercise the rights and fulfill the obligations set
out in this Article VIII
with respect to the Register.
Section
8.5 Transfer of Shares. The Board shall have power
and authority to make such rules and regulations as they may deem expedient concerning the issuance, registration and transfer of
certificates representing
shares of the Corporation’s stock, and may appoint transfer agents and registrars thereof.
ARTICLE
IX
BOOKS AND RECORDS
Section
9.1 Books of Account. The Board of Directors shall
cause to be kept proper records of account with respect to all transactions of the Corporation and in particular with respect to all
assets and liabilities of the
Corporation.
Section
9.2 Minutes. The Board of Directors shall cause
minutes to be duly entered in the books provided for the purpose:
(i)
of all elections and appointments of officers;
(ii)
of the names of the directors present at each meeting of the Board of Directors and of any committee appointed by the Board of Directors;
and
(iii)
of all resolutions and proceedings of general and special meetings of the Board of Directors and committees appointed by the Board of
Directors.
Section
9.3 Place Where Books of Account and Minutes are Kept.
The Corporation shall maintain its books of account and minutes at its registered office, or subject to the provisions of the BCA, at
such other place as
the Board of Directors deems fit.
ARTICLE
X
GENERAL PROVISIONS
Section
10.1 Term of Financial Year. The financial year of the Corporation
shall run from the first day of January of each year up to and including the last day of December of such year.
8
Section 10.2 Seal. The seal
of the Corporation, if any, shall be circular in form, with the name of the Corporation in the circumference and such other appropriate
legend as the Board of Directors may from time to time
determine.
Section
10.3 Section Headings. Section headings in these Bylaws are for convenience
of reference only and shall not be given any substantive effect in limiting or otherwise construing any provision herein.
Section
10.4 Inconsistent Provisions. In the event that any provision of these
Bylaws is or becomes inconsistent with any provision of the Articles of Incorporation, the BCA or any other applicable law, the provision
of
these Bylaws shall not be given any effect to the extent of such inconsistency but shall otherwise be given full force and effect.
Section
10.5 Electronic Transmission. For purposes of these Bylaws, “electronic
transmission” means any form of communication, not directly involving the physical transmission of paper, that creates a record
that may
be retained, retrieved and reviewed by a recipient thereof, and that may be directly reproduced in paper form by such a recipient
through an automated process.
ARTICLE
XI
AMENDMENTS
Section
11.1 By the Shareholders. These Bylaws may be amended by the affirmative
vote of the holders of not less than a majority of the outstanding Common Shares entitled to vote at any annual or special meeting of
shareholders at which a quorum is present or represented.
Section
11.2 By the Directors. These Bylaws may, subject to provisions of
applicable law, be adopted, amended and repealed without a vote of the shareholders by the affirmative vote of a majority of the Board
of
Directors at any meeting of the Board of Directors at which a quorum is present, except that the provisions of Section 11.1 may
be amended only by the affirmative vote of holders of not less than a majority of the outstanding Common
Shares entitled to vote at any
annual or special meeting of the shareholders at which a quorum is present or represented.
ARTICLE
XII
EXCLUSIVE FORUM
Section
12.1 Unless the Corporation consents in writing to the selection of an alternative
forum, to the fullest extent permitted by law, the sole and exclusive forum for any Corporate Claim related to the Corporation shall
be the High Court of the Republic of the Marshall Islands. As used herein, “Corporate Claim” means any internal corporate
claim, intra-corporate claim, or claim governed by the internal affairs doctrine including, but not limited to: (i)
any derivative action
or proceeding brought on behalf of the Corporation; (ii) any action asserting a claim of breach of a fiduciary duty owed by any director,
officer, employee or shareholder of the Corporation to the Corporation or the
Corporation’s shareholders; and (iii) any action
asserting a claim arising pursuant to any provision of the BCA or the Articles of Incorporation or these Bylaws (in each case, as amended
from time to time).
Section
12.2 Unless the Corporation consents in writing to the selection of an alternative
forum and subject to Section 12.1, to the fullest extent permitted by law, the sole and exclusive forum for any claim arising under
the
U.S. Securities Act of 1933, as amended, or the Exchange Act and any rule or regulation promulgated thereunder (in each case, as amended
from time to time) shall be the United States District Court for the Southern District of
New York (or if such court does not have jurisdiction
over such claim, any other federal district court of the United States).
Section
12.3 To the fullest extent permitted by law, any person or entity purchasing
or otherwise acquiring or holding any interest in shares of capital stock of the Corporation shall be deemed to have notice of and
consented
to the provisions of this Article XII. If any provision in this Article XII is held to be illegal, invalid or unenforceable under applicable
law, the legality, validity or enforceability of the rest of these Bylaws shall not be affected
and this Article XII shall be interpreted
and construed to the maximum extent possible to apply in the relevant jurisdiction with whatever modification or deletion may be necessary
so as best to give effect to the intention of the
Corporation.
Exhibit
4.18
FIRST
AMENDED AND RESTATED
NON-COMPETE
AGREEMENT
among
Global
Ship Lease, Inc.
and
Georgios
Giouroukos
and
ConChart
Commercial Inc.
Page
ARTICLE
I DEFINITIONS
1
Section
1.1 Definitions
1
ARTICLE
II RESTRICTED BUSINESSES
3
Section
2.1 Containership Restricted Businesses
3
Section
2.2 Permitted Exceptions
3
Section
2.3 Scope of Prohibition
4
ARTICLE
III RIGHTS OF FIRST REFUSAL; PROCEDURES
4
Section
3.1 Rights of First Refusal
4
Section
3.2 Procedures
4
Section
3.3 Enforcement
6
ARTICLE
IV RIGHTS OF FIRST OFFER
6
Section
4.1 Rights of First Offer
6
Section
4.2 Procedures for Rights of First Offer
6
Section
4.3 Enforcement
7
ARTICLE
V CONCHART CHARTERING OPPORTUNITIES
7
Section
5.1 Chartering Opportunities
7
Section
5.2 Procedures for Right of First Refusal on Chartering Opportunities
7
Section
5.3 Enforcement
7
ARTICLE
VI MISCELLANEOUS
7
Section
6.1 Certain Covenants.
7
Section
6.2 Choice of Law
8
Section
6.3 Notice
8
Section
6.4 Entire Agreement
8
Section
6.5 Termination
8
Section
6.6 Waiver; Effect of Waiver or Consent
8
Section
6.7 Amendment or Modification
9
Section
6.8 Assignment
9
Section
6.9 Counterparts
9
Section
6.10 Severability
9
Section
6.11 Gender, Parts, Articles and Sections
9
Section
6.12 Further Assurances
9
Section
6.13 Withholding or Granting of Consent
9
Section
6.14 Laws and Regulations
9
Section
6.15 Negotiation of Rights of the Parties
9
FIRST
AMENDED AND RESTATED NON-COMPETE AGREEMENT
THIS
FIRST AMENDED AND RESTATED NON-COMPETE AGREEMENT, dated as of 12th March, 2025, is entered into by and among Global Ship Lease,
Inc., a corporation organized under the laws of the Republic of
the Marshall Islands (the “Company”), Georgios
Giouroukos, a citizen of Greece (“Giouroukos”) and ConChart Commercial, Inc., a corporation organized under
the laws of the Republic of the Marshall Islands.
R
E C I T A L S
WHEREAS,
the Parties have previously entered into that certain Non-Compete Agreement, dated October 29, 2018 (the “Original Agreement”),
primarily to:
1.
evidence their understanding with respect to (a) those business opportunities that the Giouroukos Group Members may not pursue during
the term of this Agreement and (b) the procedures whereby such business
opportunities are to be offered to the Company.
2.
evidence their understanding with respect to the Company’s right of first refusal relating to containerships that the Giouroukos
Group Members own or might own.
3.
evidence their understanding with respect to the Company’s right of first offer relating to containerships that the Giouroukos
Group Members own or might own.
4.
evidence their understanding with respect to the right of first offer relating to certain time charter opportunities available to ConChart.
WHEREAS,
the Parties desire to enter into this Agreement to, among other things, amend certain terms of Article II and Article IV of the Original
Agreement.
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 to amend and restate the Original Agreement
in its entirety 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 3.2.
“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.
“Agreement”
means this Non-Compete Agreement, as it may be amended, modified, or supplemented from time to time in accordance with Section 6.7.
“Board”
means the Board of Directors of the Company.
“Break-up
Costs” means the aggregate amount of any and all additional taxes and/or duties, flag administration, financing legal and
other similar costs, fees and expenses to the Giouroukos Group Member that would be
required to transfer, or result from the transfer
of the containership acquired, directly or indirectly, by the Giouroukos Group Member as part of a larger transaction to a GSL Group
Member pursuant to Sections 2.2(c) or 3.1.
1
“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 Person’s assets to any other Person, 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 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), 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.
“Charter
Notice” has the meaning given to such term in Section 5.2.
“Closing
Date” means November 15, 2018.
“Company”
has the meaning given such term in the Preamble.
“Company
Vessel” has the meaning given to such term in Section 5.1.
“ConChart”
means ConChart Commercial Inc. or any other commercial or chartering manager that is a Giouroukos Controlled Entity.
“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.
“Exchange
Act” means the Securities Exchange Act of 1934, as amended.
“First
Offer Negotiation Period” has the meaning given such term in Section 4.2(b).
“Giouroukos”
has the meaning given such term in the Preamble.
“Giouroukos
Containership” has the meaning given such term in Section 4.1(a).
“Giouroukos
Controlled Entity” means any corporation, partnership, joint venture, trust, limited liability company, unincorporated
organization or any other entity Controlled by Giouroukos, but shall exclude the Company
and any other GSL Group Member.
“Giouroukos
Group Members” means Giouroukos and the Giouroukos Controlled Entities.
“GSL
Group Member” means the Company and any of its direct or indirect subsidiaries.
“Offer”
has the meaning given such term in Section 3.2.
“Offer
Period” has the meaning given such term in Section 3.2(b)(i).
“Offered
Asset” has the meaning given such term in Section 3.2.
“Offeree”
has the meaning given such term in Section 3.2.
“Other
Vessel” has the meaning given to such term in Section 5.1.
2
“Parties”
means the parties to this Agreement and their respective successors and permitted assigns.
“Person”
means an individual, corporation, partnership, joint venture, trust, limited liability company, unincorporated organization or any other
entity.
“Potential
Charter Opportunity” has the meaning given to such term in Section 5.2.
“Sale
Assets” has the meaning given such term in Section 4.2(a).
“Third
Party Broker” shall mean a mutually-agreed-upon independent investment banking firm, broker, expert advisor or other firm
generally recognized in the shipping industry as qualified to perform the tasks for which
such firm has been engaged.
“Transfer”
means any transfer, assignment, sale or other disposition of any containership by any Giouroukos Group Member; provided, however,
that such term shall not include (i) transfers, assignments, sales or other
dispositions from any Giouroukos Group Member to another
Giouroukos Group Member, (ii) transfers, assignments, sales or other dispositions, pursuant to the terms of any related charter or other
agreement with a contractual
counterparty existing on the Closing Date; (iii) transfers, assignments, sales or other dispositions pursuant
to Article II of this Agreement; (iv) grants of security interests in or mortgages or liens in such containership in favor of
a bona
fide third party lender; (v) the foreclosure of any security interest, mortgage or lien in any such containership, (v) a sale
and leaseback or similar transaction which is accounted for under United States generally accepted accounting
principles as a financial
lease or (vi) the chartering of vessels, including bareboat charters, or the entry of vessels into vessel pools.
“Transfer
Notice” has the meaning given such term in Section 4.2(a).
“Transferring
Party” has the meaning given such term in Section 4.2(a).
“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
RESTRICTED BUSINESSES
Section
2.1 Containership Restricted Businesses. Subject
to Section 6.5 and except as permitted by Section 2.2, each of the Giouroukos Group Members shall be prohibited from acquiring,
owning or operating
containerships.
Section
2.2 Permitted Exceptions. Notwithstanding any provision
of Section 2.1 to the contrary, the restrictions in this Agreement shall not prevent any Giouroukos Group Member from:
(a)
acquiring, owning, operating or chartering vessels, other than containerships;
(b)
acquiring or owning one or more containerships (or an interest in one or more containerships) if such Giouroukos Group Member offers
to sell such containership (or interest in such containership) to the
Company in accordance with the procedures set forth in Section
3.2;
(c)
acquiring, owning, operating or chartering one or more containerships as part of its acquisition of a Controlling interest in a business
or package of assets that owns, operates or charters such containerships;
provided, however; that if a majority of the
value of the business or, as the case may be, the package of assets acquired, is attributable to containerships, the Giouroukos Group
Member must offer to sell such containership(s) to the
Company for their fair market value plus any Break-up Costs in accordance with
the procedures set forth in Section 3.2, unless the acquisition of such Controlling interest was otherwise permitted by paragraph
(h) below;
3
(d)
providing vessel management services relating to containerships, or other vessel types, including, without limitation, technical and
commercial management, warehouse transactions for financial institutions
(including the acquisition and ownership of containerships in
connection with any such warehouse transaction), pool management, and other third-party management of containerships;
(e)
acquiring, owning, operating or chartering any containership that is owned or operated by, or that is under a contractual arrangement
with, a Giouroukos Group Member or the Company as of the Closing
Date;
(f)
transferring to a Giouroukos Group Member title to a vessel that such Giouroukos Group Member or any third party is entitled to acquire,
own and operate under Section 2.1 of this Agreement, pursuant to or
in connection with the termination of a financing arrangement,
including by way of a sale and leaseback or similar transaction, which is accounted for under United States generally accepted accounting
principles as a financial lease;
(g)
acquiring, owning, operating or chartering any containership that is subject to an offer to purchase by a GSL Group Member as described
in paragraphs (b) and (c) above, in each case pending the offer of
such containership to the Company and the Company’s determination
whether to purchase the containership and, if any GSL Group Member has determined to purchase such containership, pending the closing
of such purchase; and
Section
2.3 (h) increasing its ownership interest in a containership
that was previously subject to an offer to purchase by a GSL Group Member as described in paragraphs (b) or (c) above, that, in each
case, the Board
previously elected not to cause a GSL Group Member to purchase. Scope of Prohibition. If any Giouroukos Group
Member engages in the ownership or operation of containerships pursuant to any of the exceptions described in Section
2.2, then
that Giouroukos Group Member may not subsequently expand that portion of its business other than pursuant to the exceptions contained
in such Section 2.2. For the avoidance of doubt, 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 GSL Group Members.
ARTICLE
III
RIGHTS OF FIRST REFUSAL; PROCEDURES
Section
3.1 Rights of First Refusal. Giouroukos hereby grants
the Company a right of first refusal to acquire any containership that a Giouroukos Group Member proposes to acquire after such Giouroukos
Group
Member enters into an agreement that sets forth the terms upon which it would acquire such containership.
Section
3.2 Procedures. In the event that a Giouroukos Group
Member enters an agreement to acquire any containership in accordance with Section 2.2(b), Section 2.2(c) or Section
3.1, as applicable, then as soon as
practicable or in any event not later than 30 calendar days after entering an agreement that
sets forth the terms upon which it would acquire such containership, such Giouroukos Group Member (the “Acquiring Party”)
shall notify the
Company in writing and offer the Company (the “Offeree”) the opportunity for any GSL Group
Member to purchase such containership (the “Offered Asset”), in the case of an acquisition pursuant to Section
2.2(b) or Section 3.1 on
terms no less favorable than those offered to the Giouroukos Group Member, and in the case of an
acquisition pursuant to Section 2.2(c), for its “fair market value,” determined in accordance with this Section 3.2,
plus, in each case, any
applicable Break-up Costs (the “Offer”). The Offer shall set forth the Acquiring Party’s
proposed terms relating to the purchase of the Offered Asset by the applicable GSL Group Member, including any liabilities to be assumed
by the
applicable GSL Group Member 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 Asset
and reasonably requested by the Offeree. The decision to purchase the applicable Offered Asset, the purchase price to be paid for the
applicable Offered Asset, and the other terms of the purchase shall be
approved by the independent directors of the Board and recommended
to the Board for approval. As soon as practicable, but in any event, within 7 calendar days after receipt of the Offer with respect to
a single vessel transaction, or a
period of 14 calendar days with respect to a multi-vessel transaction, the Offeree shall notify the
Acquiring Party in writing that either:
4
(a)
The Board has elected not to cause a GSL Group Member to purchase such Offered Asset, 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 Asset; or
(b)
The Board has elected to cause a GSL Group Member to purchase such Offered Asset. After receipt by the Acquiring Party of the Board’s
election to cause a GSL Group Member to purchase the Offered
Asset, the Board shall cause such GSL Group Member to purchase the Offered
Asset on such terms as soon as commercially practicable after such agreement has been reached.
In
determining the “fair market value” of a containership, 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 regarding 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 GSL Group Member. 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 14
calendar-day period (the “Offer Period”) after receipt by the Acquiring Party of the Board’s election
to cause any GSL Group Member to purchase the Offered Assets, the Board shall cause such GSL Group Member to purchase 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 a Third Party Broker prior to the end of the Offer Period to determine the fair market value of the Offered Assets and/or
the other terms on which
the Acquiring Party and the Offeree are unable to agree (including, for the avoidance of doubt, any applicable
Break-up Costs). In determining the fair market value of the Offered Assets and other terms on which the Offered
Assets are to be sold
(including, for the avoidance of doubt, any applicable Break-up Costs), the Third Party Broker, 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 Third Party
Broker. Such Third Party
Broker will 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 within 14 calendar days of its
engagement and furnish
the Acquiring Party and the Offeree its determination. The fees and expenses of the Third Party Broker, 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)
to cause a GSL Group Member to purchase the Offered Assets for the fair market value (and any applicable Break-up Costs), and on the
other terms determined by the Third Party Broker,
as soon as commercially practicable after such determinations have been made; or
(B)
not to cause a GSL Group Member 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, operate and charter such Offered Assets.
Section
3.3 Enforcement.
Each
Party agrees and acknowledges that the other Parties may not have an adequate remedy at law for the breach by any such Party of its covenants
and agreements set forth in this Article III, and that any breach by any such
Party of its covenants and agreements set forth
in this Article III could 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 III of this Agreement.
5
ARTICLE
IV
RIGHTS OF FIRST OFFER
Section
4.1 Rights of First Offer.
(a)
Giouroukos hereby grants the Company a right of first offer on any proposed Transfer of any containership that any Giouroukos Controlled
Entity owns or acquires (a “Giouroukos Containership”).
(b)
The Parties acknowledge that all potential Transfers of containerships pursuant to this Article IV 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 containerships, as applicable. Each Party shall use its commercially reasonable best efforts to obtain such consents.
Section
4.2 Procedures for Rights of First Offer.
(a)
In the event that any Giouroukos Group Member (each, a “Transferring Party”) proposes to Transfer any Giouroukos
Containership (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 the
Company written notice setting forth all material terms and conditions
(including, without limitation, the purchase price for which such
Transferring Party desires to Transfer the Sale Assets) (the “Transfer Notice”).
(b)
After delivery of the Transfer Notice, and at the Company’s election (following approval by the independent directors of the Board),
the parties then shall be obligated to negotiate in good faith for a 14
calendar-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 Company or any of its subsidiaries on
the terms and conditions set forth in the Transfer Notice. If no such
agreement has been reached between the Transferring Party and the Company during the First Offer Negotiation Period, the Transferring
Party may Transfer the Sale
Assets to a third party; provided that if 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, then the Transferring Party shall
not thereafter Transfer any of such Sale Assets without first offering such assets to the Company in the
manner provided above. If, however,
after receipt of the Transfer Notice, the Company elects not to exercise its right of first offer pursuant to Section 4.1 with respect
to the Transfer of a Giouroukos Containership, then the procedures
set forth in this Section 4.2 shall not be required with respect any
future proposed Transfer of such Giouroukos Containership occurring on substantially similar terms and conditions as set forth in such
Transfer Notice.
Section
4.3 Enforcement.
Each
Party agrees and acknowledges that the other Parties may 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 could 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.
ARTICLE
V
CONCHART CHARTERING OPPORTUNITIES
Section
5.1 Chartering Opportunities. The Parties acknowledge
and agree that during the term of this Agreement, depending on a number of facts and circumstances that may exist at any given time when
a
containership owned by any GSL Group Member (a “Company Vessel”) and a containership owned by a Giouroukos
Controlled Entity or an unaffiliated third party (an “Other Vessel”) are both available for charter, ConChart,
in its
capacity as commercial manager, may have a conflict of interest in pursuing charter opportunities for a Company Vessel and an
Other Vessel.
6
Section
5.2 Procedures for Right of First Refusal on Chartering
Opportunities. Except as set forth in this Article V, ConChart shall grant the Company a right of first refusal to accept
for a Company Vessel any potential
charter opportunity that ConChart believes in good faith would be suitable for both a Company Vessel
and an Other Vessel (each a “Potential Charter Opportunity”) before pursuing such Potential Charter Opportunity
for an Other
Vessel by delivering a notice of the Potential Charter Opportunity (the “Charter Notice”) to the
Company setting forth the material terms of the Potential Charter Opportunity (for purposes of clarity, excluding renewals and extensions
of existing charters). In determining suitability of a Potential Charter Opportunity, ConChart shall take into consideration certain
factors, such as the availability, suitability and positioning of the relevant vessel and the potential
charterer’s demands for
the vessel’s specifications and costs. Upon receipt of a Charter Notice, the Company shall have two business days to consider the
Potential Charter Opportunity and to accept or reject such opportunity. In the
event that the Company does not elect to accept the Potential
Charter Opportunity within two business days, ConChart shall be free to pursue such opportunity for an Other Vessel for a period of 15
calendar days on the same terms and
conditions as set forth in the Charter Notice.
Section
5.3 Enforcement.
Each
Party agrees and acknowledges that the other Parties may not have an adequate remedy at law for the breach by any such Party of its covenants
and agreements set forth in this Article V, and that any breach by any such
Party of its covenants and agreements set forth in
this Article V could 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 V of this Agreement.
ARTICLE
VI
MISCELLANEOUS
Section
6.1 Certain Covenants.
Giouroukos
hereby agrees and covenants to use commercially reasonable best efforts to cause the Giouroukos Controlled Entities to comply with the
provisions of this Agreement.
Section
6.2 Choice of Law.
This
Agreement shall be subject to and governed by the laws of the State of New York, without giving effect to any choice of law or conflict
of law provision or rule (whether of the State of New York or any other jurisdiction)
that would cause the application of the laws of
any jurisdiction other than the State of New York.
Section
6.3 Notice.
All
notices, requests or consents provided for or permitted to be given pursuant to this Agreement must be in writing and must be given by
depositing the 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 prepaid private-courier, telecopier, facsimile or email 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 courier represents
that delivery will occur. Notice given by telecopier, facsimile or email shall be effective upon actual receipt if received during the
recipient’s normal
business hours, or at the beginning of the recipient’s next business day after receipt if not received
during the recipient’s 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 Party’s 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 6.3.
7
Section
6.4
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
6.5 Termination.
Upon
a Change of Control of the Company, the provisions of Articles II, III, IV, and V of this Agreement (but not less than all of such Articles)
shall terminate immediately. Upon a Change of Control of a Giouroukos Group
Member, the provisions of Articles II, III, IV, and V of
this Agreement applicable to such Party (but not less than all of such Articles) shall terminate at the date of the Change of Control
of such Party. Upon a Change of Control of
ConChart, the provisions of Article V of this Agreement applicable to ConChart shall terminate
at the date of the Change of Control of ConChart. In addition, at such time that Giouroukos ceases to serve as Executive Chairman of
the
Company (a) by reason of the termination of Giouroukos’ employment for “cause” or his resignation without “good
reason” (as such terms may be defined in Giouroukos’ employment agreement with a GSL Group Member) and all
management services
agreements between the Giouroukos Controlled Entities and GSL Group Members have been terminated, or (b) by reason of the termination
of Giouroukos’ employment without cause or his resignation for good
reason, in each case the provisions of Articles II, III, IV,
and V (but no less than all of such Articles) and Section 6.1 of this Article VI of this Agreement applicable to a Giouroukos Group Member
and/or ConChart shall terminate
immediately.
Section
6.6 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
6.7 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
6.8 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
6.9 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
6.10 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
8
Section
6.11
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
6.12 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.
Section
6.13 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
6.14 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
6.15 Negotiation of Rights of the Parties.
The
provisions of this Agreement are enforceable solely by the Parties to this Agreement, and no shareholder, member, assignee or other Person
of the Parties shall have the right, separate and apart from the Parties, as
applicable, to enforce any provision of this Agreement or
to compel any Party to this Agreement to comply with the terms of this Agreement.
9
IN
WITNESS WHEREOF, the Parties have executed this Agreement on this 12th day of March, 2025.
GLOBAL
SHIP LEASE, INC.
By:
/s/ Thomas A. Lister
Name: Thomas
A. Lister
Title: Chief
Executive Officer
Address
for Notice:
c/o
GSL Enterprises Ltd.
9
Irodou Attikou Street
Athens 145 61, Greece
Email: info@globalshiplease.com
with a copy to thomas.lister@globalshiplease.com
Attention:
Thomas A. Lister
GEORGIOS
GIOUROUKOS
By:
/s/ Georgios Giouroukos
Name: Georgios
Giouroukos
Address
for Notice:
3-5
Menandrou Str. 14561,
Kifissia,
Athens, Greece
Email:
georgey@technomar.gr
Attention:
Georgios Giouroukos
CONCHART
COMMERCIAL INC.
By: /s/
Dimitrios Tsiaklaganos
Name:
Dimitrios Tsiaklaganos
Title:
Sole Director
Address
for Notice:
3-5
Menandrou Str. 14561,
Kifissia,
Athens, Greece
Email:
georgey@technomar.gr
Attention:
Georgios Giouroukos
Exhibit
4.21
BIMCO
SHIPMAN
2009
STANDARD
SHIP MANAGEMENT
AGREEMENT
PART
I
1.
Place
and date of Agreement (date to be inserted)
[•]
2
Date
of commencement of Agreement (Cls. 2,12, 21 and 27) (date to be inserted)
[Effective
Date 1st January 2025]
3.
Owners
(name, place of registered office and law of registry) (Cl. 1)
3.
(a)
Guarantors (name, place of registered office and law of registry) (Cl.34)
(i) Name: GLOBAL
SHIP LEASE, INC.
(ii) Place
of registered office: Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, MH96960,
Marshall Islands
(iii)
Law of registry: Marshall Islands
(i)
Name:
[•]
(ii)
Place
of registered office: [•]
(iii)
Law
of registry: [•]
4.
Managers
(name, place of registered office and law of registry) (Cl. 1)
(I)
Name: Technomar
Shipping Inc.
(II)
Place of registered office: 80 Broad Street,
Monrovia, Liberia
(III)
Established office
: 3-5 Menandrou Str. 14561, Kifissia
Athens
- Greece
(IV)
Law of registry: LIBERIA
5.
The
Company (with reference to the ISM/ISPS Code) (state name and IMO Unique Company
identification
number. If the Company is a third party then also state registered office and principal
place
of business) (Cls. 1 and 9(c)(i))
(i)
Name: Technomar Shipping Inc.
(ii)
IMO Unique Company identification number: 160528
(iii)
Place of registered office: as per box 4
(iv)
Principal place of business: as per box 4
6. Technical
Management (state “yes” or “no” as agreed) (Cl. 4)
YES
7. Crew
Management (state “yes or no” as agreed (Cl. 5(a))
YES
8. Commercial
Management (state “yes or no” as agreed) (Cl. 6)
NO
9.
Chartering
Services period (only to be filled in if “yes” stated in Box 8) (Cl. 6(a))
N/A
10. Crew Insurance arrangements (state “yes” or “no” as agreed) -
YES
(i)
Crew Insurances* (Cl. 5(b))
(ii)
Insurance for persons proceeding to sea onboard
(Cl 5(b)(i))
*only
to apply if Crew Management (Cl.5(a)) agreed (see Box 7)
11. Insurance arrangements (state “yes” or “no” as agreed) (Cl. 7)
YES
12.
Optional insurances (state optional insurance(s) as agreed, such as piracy, kidnap and ransom,
loss of hire and FD & D)
(Cl 10(a)(iv))
AS
MAY BE INSTRUCTED BY OWNERS
1
13.
Interest (state rate of interest to apply after the due date to outstanding sums) (Cl.9(a))
14.
Annual management fee (Cl. 12(a) and Cl. 23)
N/A
Euro
[•] per day , plus
Euro
(.) per day pro rata ( the “Additional Fee”)
15.
Manager’s nominated account (Cl. 12(a))
TO
BE ADVISED
16.
Daily rate (state rate for days in excess of those agreed in budget) (Cl. 12(c))
N/A
17.
Lay-up period/number of months (Cl. 12(d))
3
(THREE) MONTHS
18.
Minimum contract period (state number of months) (Cl. 21(a))
Twenty
Four (24) months following the termination/expiry of either:
(a)
the Vessel's charterparty (existing at any time and as same may be extended or replaced with a
new charter from time to time), or
(b)
the Vessel’s credit facility or other debt agreement for which the Vessel serves as collateral
(existing at any time and as
same may be financed, refinanced, amended, supplemented and/or
restated from time to time),
whichever
is the latest.
19.
Management fee on termination (state number of months to apply) (Cl. 22(e))
SEE
CLAUSE 22
20.
Severance Costs (state maximum amount) (Cl. 22(c)(ii))
AS
DEFINED
21.
Dispute Resolution
25(a)
22.
Notices (state full style contact details for serving notice and communication to the Owners)
(Cl. 25)
c/o
Technomar Shipping Inc.
AS
PER BOX 4
23.
Notices (state full style contact details for serving notice and communication to the Managers)
(Cl. 26)
AS
PER BOX 4
It
is mutually agreed between the party stated in Box
3 and the party stated in Box 4 that this Agreement consisting of PART I and PART
II as well as Annexes “A”
(Details of Vessel or Vessels), “B” (Details of Crew) and C
(“Budget”) attached hereto, shall be performed
subject to the conditions contained herein. In the event of a conflict of conditions,
the provisions of PART I and Annexes “A” “B” and “C”
shall prevail over those of PART II to the
extent of such conflict but no further.
Signature(s)
(Owners)
[•]
Signature(s)
(Managers)
[•]
Signature(s)
(Parent)
[•]
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PART
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ship management agreement
SECTION
1 – Basis of the Agreement
1.
Definitions
In
this Agreement save where the context otherwise requires, the following words and expressions shall have the meanings hereby assigned
to them:
“Affiliate”
means, with respect to a specified Person, any Person that directly, or indirectly through one or more intermediaries, Controls, is Controlled
by, or is under common Control with the specified Person.
“Change
in Majority Interests or Control” means the occurrence of any one of the following:
(i)
a transaction or series of transactions involving the sale, transfer or other disposition of equity
or voting securities in the Owners or in any of its direct or indirect parent companies (including, without limitation, any
transfer
by the current owners of equity or voting securities in the Parent), to one or more Persons that are not, immediately prior to such sale,
Affiliates of the Parent, of more than 50% of the beneficial equity or voting
securities in the Owners or in any such parent companies;
(ii)
a transaction or series of transactions involving the sale, transfer or other disposition, directly
or indirectly, of all or substantially all of the assets of the Parent or its subsidiaries (taken as a whole) to one or more
Persons
that are not, immediately prior to such sale, transfer, or other disposition, Affiliates of the Parent;
(iii)
any merger, consolidation or other business combination of the Owners or any of its direct or indirect
parent companies (including, without limitation, the Parent) in which the owners of equity or voting securities in
the Parent immediately
before such transaction cease to own more than 50% of the equity or voting securities in the Parent (or equity or voting securities of
its successors) or the Parent ceases to directly or indirectly own more
than 50% of the equity or voting securities in the Owners or
its parent companies (or equity or voting securities of their successors) as a result of such transaction;
(iv)
the consummation of any transaction or a series of transactions (including, without limitation, any merger or consolidation), the result
of which is that any “person”(as such term is used in Section 13(d)(3) of the U.S.
Securities Exchange Act of 1934, as amended)
becomes the beneficial owner, directly or indirectly of more than 50% of the Parent’s voting securities (unless such “person”
is, immediately prior to such acquisition, an Affiliate
of the Parent), measured by voting power rather than number of shares;
(v)
a change in the composition of the Board of Directors of the Parent within any consecutive period of thirty-six (36) months as a result
of which fewer than a majority of the directors are Incumbent Directors;
The
term “Incumbent Director” shall mean a person who either (1) is a member of the Board of Directors of the Parent
(the “Board”) upon conclusion of the Annual Meeting of Shareholders of the Parent for the year
2022 (the
“Effective Date”), and for each term in office commencing after the Effective Date, has been elected, re-elected,
appointed, and/or nominated to the Board, as applicable, in satisfaction of the following subparagraph
(2), or (2) after the Effective
Date, including for each subsequent term in office, has been elected, re-elected, appointed, and/or nominated to the Board, as applicable,
with the affirmative vote of at least a majority of the
Incumbent Directors including the affirmative vote of the Executive Chairman
at the time of such election, re-election, appointment, or nomination, provided that , such person was not elected, re-elected,
appointed, or
nominated to the Board in connection with an actual or threatened proxy contest relating to the election of directors of
the Parent; or
(vi)
the employment of George Giouroukos (the “Executive Chairman”) as the
Executive Chairman of the Parent is terminated by the Parent.
“Commercial
Managers” means Conchart Commercial Inc., a Marshall Islands corporation or Global Ship Lease Services Limited, a company incorporated
in England (as applicable).
“Commercial
Management Agreement” collectively means the agreements with respect to commercial management made between the Parent and/or
its Subsidiaries, on the one hand, and the Commercial Managers, on the
other hand, with respect to each of the Vessels (as defined therein).
3
“Company”
(with reference to the ISM Code and the ISPS Code) means the organization identified in Box 5 or any replacement organization
appointed by the Owners from time to time (see Sub-clauses 9(b)(i) or 9(c) (ii),
whichever is applicable).
"Confidential
Information” means all information (of whatever nature and however recorded or preserved) which:
(a)
was
disclosed by the Owners to the Managers, whether before or after the date of this Agreement,
as a result of the discussions leading up to this Agreement, entering into this Agreement
or the performance of this
Agreement and is designated as “confidential information”
by the Owners at the time of disclosure; or
(b)
is
information which relates to existing or proposed operations, business plans, market opportunities
and business affairs of the Owners or its Affiliates and is clearly confidential from its
nature and/or the
circumstances in which it was imparted would be regarded as being confidential
by a reasonable business person; or
(c)
is
clearly confidential from its nature and/or the circumstances in which it was imparted, and
including information which relates to the commercial affairs, business (including but not
limited to any information
considered to be price sensitive information by the Owners), finances,
infrastructure, products, services, developments, inventions, trade secrets, know-how, personnel,
or contracts of, and any other information
relating to, the Owners or its Affiliates (or
its or their customers); or
(d)
any
information referred to in (a) to (c) above disclosed on the Owners’ behalf by their
Affiliates; and
(e)
information
extracted, copied or derived from information referred to in (a) to (d) above.
“Control”
or “Controlling” or “Controlled by” means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of a Person, whether through ownership of voting
securities, by contract
or otherwise.
“Crew”
means the personnel of the numbers, rank and nationality specified in Annex “B” hereto, including but not limited to the
Master and any officers.
“Crew
Insurances” means insurance of liabilities in respect of crew risks which shall include but not be limited to death, permanent
disability, sickness, injury, repatriation, shipwreck unemployment indemnity and loss of
personal effects (see Sub- clause 5(b)
(Crew Insurances) and Clause 7 (Insurance Arrangements) and Clause 10 (Insurance Policies) and Boxes 10 and 11).
“Crew
Support Costs” means all expenses of a general nature which are not particularly referable to any individual vessel for the
time being managed by the Managers and which are incurred by the Managers for the purpose of
providing an efficient and economic management
service and, without prejudice to the generality of the foregoing, shall include the cost of crew standby pay, training schemes for officers
and ratings, cadet training schemes, sick
pay, study pay, recruitment and interviews.
“Dollars”
and “US$” means the lawful currency of the United States of America.
“Exclusive
Broker” means Conchart Commercial Inc., a Marshall Islands corporation.
“Exclusive
Brokerage Deed” means the Deed of Commercial Advisory Services and Exclusive Brokerage Services entered into on the same date
as this Agreement made between the Parent, Global Ship Lease Services Limited
and the Exclusive Broker with respect to the Vessels (as
defined therein) (if applicable).
“Flag
State” means the State whose flag the Vessel is flying.
“Governmental
Entity” means and includes (whether having a distinct legal personality or not) any national or local government authority,
board, commission, department, division, organ, instrumentality, court or agency and any
association, organisation or institution of
which any of the foregoing is a member or to whose jurisdiction any of the foregoing is subject or in whose activities any of the foregoing
is a participant.
“ISM
Code” means the International Management Code for the Safe Operation of Ships and for Pollution Prevention and any amendment
thereto or substitution therefor.
“ISPS
Code” means the International Code for the Security of Ships and Port Facilities and the relevant amendments to Chapter XI
of SOLAS and any amendment thereto or substitution therefor.
“Managers”
means the party identified in Box 4.
“Management
Services” means the services specified in SECTION 2 - Services (Clauses 4 through 7) as indicated affirmatively
4
in
Boxes 6 through 8, 10 and 11, and all other functions performed by the Managers under the terms of this Agreement.
“Manager
Change of Control” means (i) a transaction or series of transactions involving the sale, transfer or other disposition by George
Giouroukos ( other than by reason of his death or other incapacity in managing his affairs
) to one or more Persons that are not, immediately
prior to such sale, transfer, or other disposition, Affiliates of George Giouroukos, of more than 50% of the equity interests in the
Managers; or (ii) any merger, consolidation or
other business combination of the Managers in which George Giouroukos or his Affiliates
immediately after such transaction ceases to own more than 50% of the equity interests in the Managers (or equity interests of their
successors) as a result of such transaction.
“Owners”
means the party identified in Box 3.
“Parent”
means Global Ship Lease, Inc., a Marshall Islands corporation.
“Parties”
means the Parties to this Agreement.
“Person”
means any individual, corporation, association, partnership (general or limited), joint venture, trust, estate, limited liability company,
or other legal entity or organization.
“Severance
Costs” means the costs which are legally required to be paid to the Crew as a result of the early termination of any contracts
for service on the Vessel.
“SMS”
means the Safety Management System (as defined by the ISM Code).
“STCW
95” means the International Convention on Standards of Training, Certification and Watchkeeping for Seafarers, 1978, as amended
in 1995 and any amendment thereto or substitution therefor.
“Subsidiary(ies)”
means, with respect to any Person, (a) a corporation of which more than 50% of the voting power of shares entitled (without regard
to the occurrence of any contingency) to vote in the election of directors or
other governing body of such corporation is owned, directly
or indirectly, at the date of determination, by such Person, by one or more Persons Controlled by such Person or a combination thereof,
(b) a partnership (whether
general or limited) in which such Person or a Person Controlled by such Person is, at the date of determination,
a general or limited partner of such partnership, but only if more than 50% of the partnership interests of such
partnership (considering
all of the partnership interests of the partnership as a single class) is owned, directly or indirectly, at the date of determination,
by such Person, one or more Persons Controlled by such Person, or a
combination thereof, or (c) any other Person (other than a corporation
or a partnership) in which such Person, one or more Persons Controlled by such Person, or a combination thereof, directly or indirectly,
at the date of
determination, has (i) at least a majority ownership interest or (ii) the power to elect or direct the election
of a majority of the directors or other governing body of such Person.
“TCMC”
means Technomar Crew Management Corporation, a crew manning company affiliated to the Managers
with registered offices in Manila, Philippines.
“Vessel”
means the vessel details of which are set out in Annex “A” attached hereto.
2.
Commencement
and Appointment
With
effect from the date stated in Box 2 for the commencement of the Management Services and continuing unless and until terminated as provided
herein, the Owners hereby appoint the Managers and the Managers hereby
agree to act as the Managers of the Vessel in respect of the Management
Services.
3.
Authority
of the Managers
Subject
to the terms and conditions herein provided, during the period of this Agreement the Managers shall carry out the Management Services
in respect of the Vessel as agents for and on behalf of the Owners. The Managers
shall have
authority to take such actions as they may from time to time in their absolute discretion consider to be necessary to enable them to
perform the Management Services in accordance with sound ship management
practice, including but not limited to compliance with all relevant
rules and regulations.
SECTION
2 – Services
4.
Technical
Management
(only
applicable if agreed according to Box 6).
The
Managers shall provide technical management which includes, but is not limited to, the following services:
(a)
ensuring that the Vessel
complies with the requirements of the law of the Flag State;
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ship management agreement
(b)ensuring
compliance with the ISM Code;
(c)
ensuring compliance with the ISPS Code;
(d)providing
competent personnel to supervise the maintenance and general efficiency of the Vessel;
(e)
arranging and supervising special surveys, dry dockings,
repairs, alterations and the maintenance of the Vessel to the standards agreed with the Owners provided that the Managers shall be entitled
to incur the necessary
expenditure to ensure that the Vessel will comply with all requirements
and recommendations of the classification society. and with the law of the Flag State and
of the places where the Vessel is required to trade;
(f) arranging
the supply of necessary stores, spares and lubricating oil;
(g) appointing
surveyors and technical consultants as the Managers may consider from time to time to be
necessary;
(h)
in accordance with the Owners’ instructions,
arranging and supervising the sale and/or purchase and legal and physical delivery of the Vessel
under the sale and purchase agreement; provided, however services under this
Sub-clause 4(h) shall not include negotiation of
the sale agreement;
(i)
arranging for the supply of provisions;
(j)
arranging for the sampling and testing of bunkers;
(k)
arranging for the provision of bunker fuels as required
for the Vessel’s trade;
(l)
receiving and relaying voyage instructions;
(m) appointing
stevedores;
(n) arranging
surveys associated with the commercial operation of the Vessel;
(o)
accounting and calculation of hire, freights, demurrage
and/or dispatch monies due from or due to charterers of the Vessel; collection of any sums due to the Owners related to the operation
of the Vessel;
(p)
coordinate with the Commercial Managers and the
Exclusive Broker (as applicable) with respect (i) the matters referenced in Clause 4(o) above, (ii) consolidation of accounts, budgets
and other materials as may be
requested by the Commercial Managers, the Exclusive Broker (as applicable) or Owners with respect to the
Vessel and any other vessels subject to the Commercial Management Agreement and/or the Exclusive
Brokerage Deed
(as applicable) and for which the Managers hereunder provide any management services, and (iii) the scope of Management
Services required hereunder in relation to any charterparty for the Vessel negotiated by
the
Commercial Managers or the Exclusive Broker (as applicable) on its behalf or on behalf of the Owners; and
(q)
Perform the Management Services hereunder in compliance
with, and in such a manner as to comply with the requirements of, any charterparty for the Vessel.
5.
Crew
Management and Crew Insurances
(a)Crew
Management
(only
applicable if agreed according to Box 7)
The
Managers shall provide suitably qualified Crew who shall comply with the requirements of STCW 95. The provision of such crew management
services includes, but is not limited to, the following
services:
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ship management agreement
(i)
selecting,
engaging and providing for the administration of the Crew,
including, as applicable, payroll arrangements, pension arrangements, tax, social
security contributions and other mandatory dues related to their
employment payable in each
Crew member’s country of domicile;
(ii)
ensuring
that the applicable requirements of the law of the Flag State in respect of rank, qualification
and certification of the Crew and employment regulations, such as Crew’s tax and social
insurance, are satisfied;
(iii)
ensuring
that all Crew have passed a medical examination with a qualified doctor certifying that they
are fit for the duties for which they are engaged and are in possession of valid medical
certificates issued in accordance
with appropriate Flag State requirements, it being understood
that the Vessel shall always remain flagged
with a Flag State requiring such medical certificates;
(iv)
ensuring
that the Crew shall have a common working language and/or a command of the English language
of a sufficient standard to enable them to perform their duties safely;
(v) arranging
transportation of the Crew including repatriation;
(vi) training
of the Crew;
(vii)
conducting
union negotiations;
(viii) operating
the Manager’s drug and alcohol policy;
(ix)
ensuring
that any complaints with respect to the Master or any of the officers or any other members
of the Crew are promptly investigated, and if such complaints are well-founded ensuring that
changes in appointments are
made without delay in accordance with Clause 15 (Replacement);
(x)
if
the Managers are the Company, ensuring that the Crew,
on joining the Vessel, are given proper familiarization with their duties in relation
to the Vessel’s SMS and that instructions which are essential to the SMS are
identified,
documented and given to the Crew prior to sailing;
(xi)
it
is hereby agreed that for the employment of Filipino crew the Managers may sub-contract with
TCMC or any other manning agent. Where the Mangers have sub-contracted to (i) TCMC for the
employment of Filipino
crew, the Owners will pay to the Managers the actual costs of TCMC
calculated on the basis of crew days on board the Vessel, and there shall be no commission
or other charges payable to TCMC in relation thereto and
(ii) any other manning agent for
the employment of Filipino crew, the Owners will pay to the Managers the costs of such manning
agent calculated on the basis of crew days on board the Vessel and charged to the Manager
along with the customary commission and all other charges in relation thereto;
(xii)
if
the Managers are not the Company: N/A; and
(xiii) where
Managers are not providing technical management services in accordance with Clause 4 (Technical
Management):
N/A
(b)Crew
Insurances
(only
applicable if Sub-clause 5(a) applies and if agreed according to Box 10)
The
Managers shall throughout the period of this Agreement provide the following services:
(i)
arranging
Crew Insurances in accordance with the sound practice of prudent managers of vessels of a
similar type to the Vessel, with sound and reputable insurance companies, underwriters or
associations. Insurances for
any other persons proceeding to sea onboard the Vessel may be
separately agreed by the Owners and the Managers (see Box 10);
(ii)
ensuring
that the Owners are aware of the terms, conditions, exceptions and limits of liability of
the insurances in Sub-clause 5(b)(i);
(iii) ensuring
that all premiums or calls in respect of the insurances in Sub-clause 5(b)(i) are paid by
their due date;
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ship management agreement
(iv)
if
obtainable at no additional cost or as otherwise requested by the Owners, ensuring that insurances
in Sub-clause 5(b)(i) name the Owners as a joint assured with full cover and, unless otherwise
agreed, on terms such that
Owners shall be under no liability in respect of premiums or calls
arising in connection with such insurances;
(v)
providing
written evidence, to the reasonable satisfaction of the Owners, of the Managers’ compliance
with their obligations under Sub-clause 5(b)(ii), and 5(b)(iii) within a reasonable time
of the commencement of this
Agreement, and of each renewal date and, if specifically requested,
of each payment date of the insurances in Sub-clause 5(b)(i).
6.
Commercial
Management
(only
applicable if agreed according to Box 8). – N/A
7.
Insurance
Arrangements
(only
applicable if agreed according to Box 11).
The
Managers shall arrange insurances in accordance with Clause 10 (Insurance Policies), on such terms as the Owners shall have instructed
or agreed, in particular regarding conditions, insured values, deductibles, franchises
and limits of liability.
SECTION
3 – Obligations
8.
Managers’
Obligations
(a)
The Managers undertake to use their best endeavours
to provide the Management Services as agents for and on behalf of the Owners in accordance with sound ship management practice and to
protect and promote the
interests of the Owners in all matters relating to the provision of services hereunder. In performing and discharging
its obligations, duties and liabilities under this Agreement, the Managers shall act in accordance with all
instructions communicated
to it by the Owners and the Managers shall at all times serve the Owners faithfully and diligently.
Notwithstanding
anything herein to the contrary and for the avoidance of doubt, the parties acknowledge that the Managers shall continue to act as a
technical manager with respect to vessels owned or operated by persons or
entities other than the Owners, the Parent, or their respective
Subsidiaries. In addition, and notwithstanding clause 8(a), in the performance of their management responsibilities under this Agreement,
the Managers shall be
entitled to have regard to their overall responsibility in relation to all other vessels as may from time to time
be entrusted to their management and in particular, but without prejudice to the generality of the foregoing, the
Managers shall be entitled
to allocate available supplies, manpower and services in such manner as in the prevailing circumstances they consider in their discretion
(reasonably exercised) to be fair and reasonable, but in no
circumstances shall the Vessel be managed in a manner which is less favourable
to the interests of the Owners.
In
the performance and discharge of its obligations, duties and liabilities under this Agreement, the Managers shall take care not to exceed
the authority given by the Owners under the terms of this Agreement and shall act at all
times in accordance with the Owner’s instructions.
In
the performance and discharge of its obligations, duties and liabilities under this Agreement, the Manager shall act with reasonable
care and skill in accordance with good industry practices and in compliance with all laws
and regulations, and shall provide the Management
Services hereunder and maintain the Vessel at a standard at least equivalent to the standards followed by it with respect to the other
vessel(s) for which the Managers provide
management services.
Notwithstanding
anything contained herein to the contrary, the Managers shall at all times devote a sufficient amount of its time, resources and personnel
to provide the Management Services contemplated by this Agreement.
(b)
Where the Managers are providing technical management
services in accordance with Clause 4 (Technical Management), they shall procure that the
requirements of the Flag State are satisfied and they shall agree to be
appointed as the Company,
assuming the responsibility for the operation of the Vessel and taking over the duties
and responsibilities imposed by the ISM Code and the ISPS Code, if applicable.
(c)
In providing the Management Services, the Managers
will at all times comply with, without limitation, the U.S. Foreign Corrupt Practices Act, any applicable country legislation implementing
the OECD Convention on
combating Bribery of Foreign Public Officials in International Business Transactions, and the UK Bribery Act 2010,
and any other laws or regulations relating to anti-bribery, anti-terrorism, economic sanctions and anti-money
laundering, to the extent
applicable. The Managers shall not engage
8
in
any activity, practice or conduct which constitutes a breach of any of the foregoing; in addition, the Managers shall not employ any
Person, nor subcontract with any person or entity, to perform or discharge any of its
obligations
under this Agreement if that person or entity is designated or identified as a Specially Designated National, a Person subject to sanctions
that prohibit all dealings or restrict dealings with such Person, a foreign
terrorist organization or an organization that provides support
to a foreign terrorist organization by the United States Government or any branch or department thereof (including, but not limited to,
the Office of Foreign Asset
Control).
9.
Owners’
Obligations
(a)
The Owners shall pay all sums due to the Managers
punctually in accordance with the terms of this Agreement.
(b)
Where the Managers are providing technical management
services in accordance with Clause 4 (Technical Management), the Owners shall:
(i)
report
(or where the Owners are not the registered owners of the Vessel
procure that the registered owners report) to the Flag State administration the details
of the Managers as the Company as required to comply with the
ISM and ISPS Codes;
(ii)
procure
that any officers and ratings supplied by them or on their behalf comply with the requirements
of STCW 95; and
(iii)
instruct
such officers and ratings to obey all reasonable orders of the Managers (in their capacity
as the Company) in connection with the operation of the Managers’ safety management
system.
(c) Where
the Managers are providing crew management services in accordance with Sub-clause 5(a) the
Owners shall:
(i)
inform
the Managers, through the Commercial Managers, the Exclusive Broker (if applicable) or otherwise,
prior to any order for the Vessel to any excluded
or additional premium area under any of the Owners’
Insurances by reason of war risks
and/or piracy or like perils and pay whatever additional costs may properly be incurred by
the Managers as a consequence of such orders including, if necessary, the costs of replacing
any
member of the Crew. Any delays resulting
from negotiation with or replacement of any member of the Crew as a result of the Vessel
being ordered to such an area shall be for the Owners’ account. Should the Vessel
be
within an area which becomes an excluded or additional premium area the above provisions
relating to cost and delay shall apply;
(ii)
agree
with the Managers prior to any change of flag of the Vessel and pay whatever additional costs
may properly be incurred by the Managers as a consequence of such change; and
(iii)
provide,
at no cost to the Managers, in accordance with the requirements of the law of the Flag State,
or higher standard, as mutually agreed, adequate Crew accommodation and living standards.
SECTION
4 – Insurance, Budgets, Income, Expenses and Fees
10.
Insurance
Policies
The
Managers shall ensure that throughout the period of this Agreement:
(a)
at the Owners’ expense, the Vessel
is insured for not less than its sound market value or entered for its full gross tonnage, as the case may be for:
(i)
hull
and machinery marine risks (including but not limited to crew negligence) and excess liabilities;
(ii)
protection
and indemnity (“PandI”) risks (including but not limited to pollution risks,
diversion expenses and, except to the extent insured separately by the Managers in accordance
with Sub-clause 5(b)(i), Crew
Insurances;
(iii)Freight,
Demurrage and Defence cover (“FD & D”);
NOTE:
If the Managers are not providing crew management services under Sub-clause 5(a) (Crew Management) or have agreed not to provide Crew
Insurances separately in accordance with Sub-clause 5(b)(i), then such
insurances must be included in the protection and indemnity risks
cover for the Vessel (see Sub-clause 10(a)(ii) above).
(iii)
war
risks (including but not limited to blocking and trapping, protection and indemnity, terrorism
and crew risks); and
(iv)
such optional insurances as may be agreed (such as piracy,
kidnap and ransom, piracy loss of hire, loss of hire ) (see Box 12)
9
Sub-clauses
10(a)(i) through 10(a)(iv) all in accordance with the best practice of prudent owners of vessels of a similar type to the Vessel, with
sound and reputable insurance companies, underwriters or associations (“the
Owners’ Insurances”);
(b)
all premiums and calls on the Owners’ Insurances
are paid by their due date;
(c)
In the event the Vessel is sold or this Agreement
is terminated as per the terms hereunder the Owners will either pay directly, or remit, sufficient funds in the Vessel’s
Earnings Account to cover, the Vessel’s
PandI and FD &
D estimated Release Calls as same will be calculated by the Vessel’s
Protection and Indemnity Association. The Managers will ensure that, in the event of payment from the Vessel’s
Earnings Account, when called by the
Vessel’s Protection and Indemnity Association,
the Vessel’s Release Calls are paid as appropriate and any balance remaining out of
the amount originally remitted by the Owners will be released to the Owners.
(d)
the Owners’ Insurances name the Managers and,
subject to underwriters’ agreement, any third party designated by the Managers as a joint assured, with full cover. It is understood
that in some cases, such as protection and
indemnity, the normal terms for such cover may impose on the Managers and any such third party
a liability in respect of premiums or calls arising in connection with the Owners’ Insurances.
If
obtainable at no additional cost, however, the Managers shall procure such insurances on terms such that neither the Managers nor any
such third party shall be under any liability in respect of premiums or calls arising in
connection with the Owners’ Insurances.
In any event, on termination of this Agreement in accordance with Clause 21 (Duration of the Agreement) and Clause 22 (Termination),
the Owners or Managers shall procure that the
Managers and any third party designated by the Managers as joint assured shall cease
to be joint assured and, if reasonably achievable, that they shall be released from any and all liability for premiums and calls that
may arise
in relation to the period of this Agreement; and
(e)
written evidence is provided, to the reasonable
satisfaction of the Owners, of the Managers’ compliance with their obligations under this Clause 10 within a reasonable time of
the commencement of the Agreement, and of
each renewal date and, if specifically requested, of each payment date of the Owners’
Insurances.
11.
Income
Collected and Expenses Paid on Behalf of Owners
(a)
All monies collected by the Managers under this
Agreement (other than monies payable by the Owners to the Managers) and any interest thereon shall be held to the credit of the Owners
in a separate bank account.
(b)
All expenses incurred by the Managers under the
terms of this Agreement on behalf of the Owners (including expenses as provided in Clause 12(c)) may be debited against the Owners in
the account referred to under Sub-
clause 11(a) but shall in any event remain payable by the Owners to the Managers on demand.
(c)
The Managers shall provide the Owners with (i) monthly
cash flow statements with respect to the Vessel and the Owners, and (ii) quarterly un-audited
accounts and detailed analysis showing all movements and use of
funds held in the separate bank account.
(d)
The Managers shall pay, on behalf of the Owners
and from the bank account referred to in Clause 11(a) above, all expenses of the Commercial Managers under the Commercial Management
Agreement and all expenses
of the Exclusive Broker under the Exclusive Brokerage Deed (as applicable).
12.
Management
Fee and Expenses
(a)
The Owners shall pay to the Managers a daily management
fee as stated in Box 14 for their services as Managers under this Agreement, which shall be due and payable in monthly instalments
in advance, the first instalment
(pro rata if appropriate) being due and payable on the date of delivery of the Vessel
to the Owners and subsequent instalments being due and payable every first New York banking
day of every calendar month. The management
fee shall be payable to the Managers’ nominated account stated in Box 15.
(b)
The management fee shall be subject to an annual
review (at the end of each calendar year) in order to reflect any increases in the salaries of Managers’ employees and other expenses
(inflation). The proposed fee shall be
presented in the annual budget in accordance with Sub-clause 13(a). Subject always to the prior
written approval of the Owners, the management fee may increase annually on January 1 of each year by not more than two and
one-half
percent (2.5%).
(c)
The Managers shall, at no extra cost to the Owners,
provide their own office accommodation, office staff, facilities and stationery. Without limiting the generality of this Clause 12 (Management
Fee and Expenses) the
Owners shall reimburse the Managers for reasonable postage, communication, travelling and accommodation expenses,
and other reasonable out of pocket expenses properly incurred by the Managers in pursuance of the
Management Services including but not
limited to the Vessel
10
apportioned
cost of the Managers’ “flying squad” and the “on board the Vessel” allowances as well as any other sundry
administrative expenses, it being understood that the Managers shall not make any expenditure with
respect to the items described in
this sub-paragraph ( c ) in the aggregate in excess of US$5,000 in any given calendar month, without the prior written consent of the
Owners. Notwithstanding the foregoing, any of the above
items that may be included in the annual budget will not be part of this reimbursement.
(d)
If the Owners decide to layup the Vessel
and such layup lasts for more than the number of months stated in Box 17, the Management Fee is agreed to be Euro [190]
per day and will be applicable for the period exceeding
such period agreed in Box 17 until one month before the Vessel
is again put into service. If the Managers are providing crew management services in accordance with Sub-clause 5(a), consequential
costs of reduction and
reinstatement of the Crew shall be for the Owners’ account.
(e)
Save as otherwise provided in this Agreement, all
discounts and commissions obtained by the Managers in the course of the performance of the Management Services shall be credited to the
Owners.
13.
Budgets
and Management of Funds
(a)
The Managers shall prepare a budget. The budget
shall also provide aggregate forecast expenditure by the Managers for those cost items to be reimbursed by Owners as detailed in Clause
12(c). The Managers’ initial budget
is set out In Annex “C” hereto. Subsequent budgets shall be for twelve month periods
and shall be prepared by the Managers and presented to the Owners not less than one month before the end of the budget year.
(b)
The Owners shall state to the Managers in a timely
manner, but in any event within one month of presentation, whether or not they agree to each proposed annual budget. In the absence of
any such indication by the
Owners, within such one month period, the Managers shall be entitled to assume that the Owners have accepted
the proposed budget.
(c)
Following the agreement of the budget, the Managers
shall prepare and present to the Owners their estimate of the working capital requirement for the Vessel and shall each month request
the Owners in writing to pay the
funds required to run the Vessel for the ensuing month, including the payment of any occasional or extraordinary
item of expenditure, such as emergency repair costs, additional insurance premiums, bunkers or provisions. Such
funds shall be received
by the Managers within ten running days after the receipt by the Owners of the Managers’ written request and shall be held to the
credit of the Owners in a separate bank account.
(d)
The Managers shall (i) establish and maintain an
accounting system which meets the requirements of the Owners and provide regular accounting services, supply regular reports and records,
(ii) maintain the records of all
costs and expenditures incurred as well as data necessary or proper for settlement of accounts, (iii)
prepare yearly operating budgets for the Vessel including any drydocking and special surveys,
(iv) provide back-office
administration and accounting services for the Vessel and the Owners,
and (v) at all times maintain and keep true and correct accounts in respect of the Management Services in accordance with the relevant
International
Financial Reporting Standards or U.S GAAP as required, including records of all costs and expenditure incurred, and produce
a comparison between budgeted and actual income and expenditure of the Vessel in such form
and at
such intervals as shall be mutually agreed. The Managers shall make such accounts available for inspection and auditing by the
Owners and/or their representatives in the Managers’ offices or by electronic means, provided
reasonable notice is given by the
Owners.
(e)
The Managers shall assist the Owners and its Parent
in complying with the requirements of Section 404 of the U.S. Sarbanes Oxley Act 2002, as it may be amended from time to time (“SOX”),
governing the effectiveness
of internal controls of service organizations retained by publicly held companies by taking or causing to
be taken, all actions and doing, or causing to be done, all things and executing any and all documents and instruments
which may reasonably
be required, proper or advisable to conducting an evaluation on the internal controls of the Managers in compliance with SOX. The Managers
agree to take or cause to be taken, all actions and to do, or
cause to be done, all things and to execute any and all documents and instruments
of any kind on an ongoing basis which might be reasonably necessary, proper or advisable to permit the Owners and its Parent to remain
in
compliance with SOX throughout the term of this Agreement, and, with the exception of the costs incurred by the Managers to obtain
SAS 70 reports or any equivalents thereof, if require by the Owners or the Parent, which
shall be payable by either the Owners or the
Parent, each of the parties to this Agreement shall bear their own costs associated with such compliance.
(f)
Notwithstanding anything contained herein, the Managers
shall in no circumstances be required to use or commit their own funds to finance the provision of the Management Services except where
the terms of this
engagement provide that such Management Services are to be provided at no extra or additional cost to the Owners.
14.
Trading
Restrictions
If
the Managers are providing crew management services in accordance with Sub-clause 5(a) (Crew Management), the Owners
11
and
the Managers will, prior to the commencement of this Agreement, agree on any trading restrictions to the Vessel
that may result from the terms and conditions of the Crew’s employment.
15.
Replacement
If
the Managers are providing crew management services in accordance with Sub-clause 5(a) (Crew Management), the Owners may require the
replacement, at their own expense, at the next reasonable opportunity, of any
member of the Crew,
including but not limited to any Master or officer, found on reasonable grounds to
be unsuitable for service. If the Managers have failed to fulfil their obligations in providing suitable qualified Crew within
the meaning
of Sub- clause 5(a) (Crew Management), then such replacement shall be at the Managers’ expense.
16.
Managers’
Right to Sub-Contract
Other
than to its Affiliates or as otherwise set forth in this Agreement, the Managers shall not subcontract any of their obligations hereunder
without the prior written consent of the Owners. In the event of such a sub-contract
the Managers shall remain fully liable for the due
performance of their obligations under this Agreement. Owners hereby agree that the Managers are allowed to sub-contract with TCMC (for
the Filipino crew only) and with
other manning agents as same may be necessary for the due performance of the Managers’ services
under clause 5 (a).
17.
Responsibilities
(a)
Force Majeure - Neither party shall be liable
for any loss, damage or delay due to any of the following force majeure events and/or conditions to the extent that the party invoking
force majeure is prevented or hindered from
performing any or all of their obligations under this Agreement, provided they have made
all reasonable efforts to avoid, minimise or prevent the effect of such events and/or conditions:
(i)
acts
of God;
(ii)any
requisition, control, intervention, requirement or interference by a Governmental Entity;
(iii) any
circumstances arising out of war, threatened
act of war or warlike operations, acts of terrorism, sabotage or piracy,
or the consequences thereof;
(iv)riots,
civil commotion, blockades or embargoes;
(v)
epidemics;
(vi)earthquakes,
landslides, floods or other extraordinary weather conditions;
(vii) strikes,
lockouts or other industrial action, unless limited to the employees (which shall not include
the Crew) of the party seeking to invoke force majeure;
(viii)fire,
accident, explosion except where caused by negligence of the party seeking to invoke force
majeure; and
(ix)any
other similar cause beyond the reasonable control of either party.
(b) Liability
to Owners
Without
prejudice to Sub-Clause 17(a), the Managers shall be under no liability whatsoever to the Owners for any loss, damage, delay or expense
of whatsoever nature, whether direct or indirect (including but not limited
to loss of profit arising out of or in connection with detention
of or delay to the Vessel), and howsoever arising in the course of performance of the Management Services UNLESS the same is proved
to have resulted solely
from:
(i) the
persistent and/or continuing negligence of the Managers which causes material losses and/or
material additional expense to the Owners for a period of 3 (three) calendar months or more
following a written notice from
the Owners that it is dissatisfied with the performance of
the Managers due to such negligence and stating the deficiencies to be remedied, provided
however, that the Managers shall not be deemed to have acted negligently
if the deficiencies
arise or are continuing due to circumstances beyond the control of the Managers, the Exclusive
Broker and TCMC, or if the Managers are taking reasonable steps to remedy such deficiencies;
or
(ii) the
gross negligence or wilful default of the Managers or its employees or agents, or sub-contractors
employed by them in connection with the Vessel,
12
(iii)in
which case (save where loss, damage, delay or expense has resulted from the Managers’
personal act or omission committed with the intent to cause the 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 (A) three (3) times the annual management fee payable
hereunder with
respect to such liability arising under the foregoing sub-clause (i) or (B) ten (10) times
the annual management fee payable hereunder with respect to such liability arising under
the foregoing sub-clause (ii).
(iv)
Acts
or omissions of the Crew – Notwithstanding anything that may appear to the contrary
in this Agreement, the Managers shall not be liable for any acts or omissions of the Crew,
even if such acts or omissions are
negligent, grossly negligent or wilful, except
only to the extent that they are shown to have resulted from a failure by the Managers to
discharge their obligations under Clause 5(a) (Crew Management), in which case their
liability
shall be limited in accordance with the terms of this Clause 17 (Responsibilities).
(c)
Indemnity - Except to the extent and solely
for the amount therein set out that the Managers would be liable under Sub- clause 17(b), the Owners hereby undertake to keep the Managers
and their employees, agents and sub-
contractors indemnified and to hold them harmless against all actions, proceedings, claims, demands
or liabilities whatsoever or howsoever arising which may be brought against them or incurred or suffered by them arising out
of or in
connection with the performance of this Agreement, and against and in respect of all costs, loss, damages and expenses (including legal
costs and expenses on a full indemnity basis) which the Managers may suffer or
incur (either directly or indirectly) in the course of
the performance of this Agreement.
(d)
“Himalaya” - It is hereby expressly
agreed that no employee or agent of the Managers (including every sub-contractor from time to time employed by the Managers) shall in
any circumstances whatsoever be under any
liability whatsoever to the Owners for any loss, damage or delay of whatsoever kind arising
or resulting directly or indirectly from any act, neglect or default on his, her or its part while acting in the course of or in connection
with his, her or its employment and, without prejudice to the generality of the foregoing provisions in this Clause 17 (Responsibilities),
every exemption, limitation, condition and liberty herein contained and every right,
exemption from liability, defence and immunity of
whatsoever nature applicable to the Managers or to which the Managers are entitled hereunder shall also be available and shall extend
to protect every such employee or agent
of the Managers acting as aforesaid and for the purpose of all the foregoing provisions of this
Clause 17 (Responsibilities) the Managers are or shall be deemed to be acting as agent or trustee on behalf of and for the benefit of
all persons who are or might be their servants or agents from time to time (including sub-contractors as aforesaid) and all such persons
shall to this extent be or be deemed to be parties to this Agreement.
18.
General
Administration
(a)
The Managers shall keep the Owners and, if appropriate,
the Company informed in a timely manner of any incident of which the Managers become aware which gives or may give rise to a material
delay to the Vessel or
material claims or disputes involving third parties. Without derogating
from the foregoing, the Managers shall present the Owners with a report at least every six (6) months identifying all claims arising
in or outstanding in such
period, settlement and resolution status, and actions taken with respect thereto.
(b)
The Managers shall handle and settle all claims
and disputes arising out of the Management Services hereunder with respect to such claims or disputes relating to claims in excess of
USD 100,000, unless the Owners
instruct the Managers otherwise. The Managers shall keep the Owners appropriately informed in a timely
manner throughout the handling of such claims and disputes.
(c)
The Owners may request the Managers to bring or
defend other actions, suits or proceedings related to the Management Services, on terms to be agreed.
(d)
At Owners’ cost, the Managers shall have power
to obtain appropriate legal or technical or other outside expert advice in relation to the handling and settlement of claims in relation
to Sub-clauses 18(b) and 18(c) and
disputes and any other matters affecting the interests of the Owners in respect of the Vessel, including
the appointment of auditors or other outside experts as may be necessary in the ordinary course of business.
(e)
On giving reasonable notice with respect to proposed
dates and the scope of inquiry, the Owners may request, and the Managers shall in a timely
manner make available, all documentation, information and records in respect
of the matters covered by this Agreement either related
to mandatory rules or regulations or other obligations applying to the Owners in respect of the Vessel
(including but not limited to STCW 95, the ISM Code and ISPS
Code) to the extent permitted by relevant legislation and the Managers
shall permit the Owners during regular business hours to inspect the Managers’ premises, audit records and accounts and meet with
executive personnel.
(f)
The Managers shall provide the administration and
support services set out in Appendix XX (collectively, the “Administrative
13
&
Support Services”) at their cost; provided, however, that, at the Owners’ sole cost and expense, the Managers may employ
the services of external advisors or other third-party service providers if reasonably necessary for the
Managers to provide the Administrative
& Support Services (including, without limitation, the services of accounting, tax or legal advisors, but expressly excluding day-to-day
accounting services or other Administrative &
Support Services that Managers provide to other clients in the ordinary course utilizing
in-house expertise).
(g)
On giving reasonable notice, the Managers may request,
and the Owners shall in a timely manner make available, all documentation, information and records reasonably required by the Managers
to enable them to perform
the Management Services.
(h)The
Owners shall arrange for the provision of any necessary guarantee bond or other security.
(i)
Any costs reasonably incurred by the Managers in
carrying out their obligations according to this Clause 18 (General Administration) unless otherwise expressly provided or agreed shall
be reimbursed by the Owners.
19.
Inspection
of Vessel
The
Owners may at any time after giving reasonable notice to the Managers inspect the Vessel for any reason they consider necessary.
20.
Compliance
with Laws and Regulations
The
Parties will not do or permit to be done anything which might cause any breach or infringement of the laws and regulations the Flag State,
or of any place where the Vessel trades, nor shall either of the Parties act in any
manner which is prohibited under United States laws
or regulations related to foreign trade controls.
In
performing the Management Services, the Managers shall, and shall use all reasonable endeavours to procure
that its Affiliates and sub-contractors shall, comply in all material respects with the written policies of the Owners,
Global
Ship Lease Services Limited or the Parent that are directly applicable to the Managers’ provision
of the Management Services and are made known to the Managers in advance in writing, which shall include, but not be
limited to, the
Owners’ Anti-slavery and Human Trafficking Policy, Corporate and Social Responsibility Policy, Anti-bribery and Anti-corruption
Policy, Business Ethics Policy, Data and Privacy Policy and Business Conduct
Policy and any other policies of the Owners that
are so applicable from time to time.
21.
Duration
of the Agreement
a.
This Agreement shall come into effect at the date stated
in Box 2 and shall continue for the minimum contract period set out in Box 18. Either party may give not less than six (6) months
written notice to the other during
the minimum contract period that this Agreement is to be terminated at the expiry of the minimum contract
period set out in Box 18.
b.
Following the expiry of the minimum contract period
set out in Box 18, and provided that neither party has issued a termination notice pursuant to Clause 21(a) to terminate this Agreement
at the end of the minimum
contract period, this Agreement may be terminated by either party by giving no less than six (6) months written
notice to the other.
c.
Should the Owners provide notice under either Clauses
21(a) or (b) above on the basis that they are able to secure more competitive terms from a recognized third party ship manager, they
shall provide the Managers in
reasonably documented detail, the more competitive terms offered to the Owners by such third party ship
manager. The Managers shall have the right to send written notice to the Owners agreeing to match all such terms, in
which case this
Agreement shall not terminate and shall be deemed to be amended to incorporate such revised terms, as appropriate.
d.
Notwithstanding Clauses 21(a) and (b) above, this Agreement
may be terminated by either party at any time in accordance with Clause 22 (Termination).)
e.
Where the Vessel
is not at a mutually convenient port or place on the expiry of such period, this Agreement shall terminate on the subsequent arrival
of the Vessel at the next mutually convenient port or place.
22.
Termination
Owners’
or Managers’ default
(a)
If
either Party fails to meet their obligations under this Agreement, the other Party may give
notice to the defaulting Party requiring it to remedy it. In the event that the defaulting
Party fails to remedy within a reasonable
time to the reasonable
14
satisfaction
of the other Party, that other Party shall be entitled to terminate this Agreement with immediate effect by giving notice to the defaulting
Party.
(b)
Notwithstanding
Clause 22(a):
(i)
The Managers shall be entitled to terminate this Agreement with immediate effect by giving notice to the Owners if any monies payable
by the Owners under the terms of this Agreement shall not have been received in
the Managers’ nominated account within thirty (30)
days of receipt by the Owners of the Managers’ written request, or if the Vessel is repossessed by a mortgagee.
(ii)
Unless caused by the act or omission of the Exclusive Broker, if the Owners proceed with the employment of or continue to employ the
Vessel in the carriage of contraband, blockade running, or in an unlawful trade,
or on a voyage which in the reasonable opinion of the
Managers is unduly hazardous or improper, the Managers may give notice of the default to the Owners, requiring them to remedy it as soon
as practically possible. In
the event that the Owners fail to remedy it within a reasonable time to the satisfaction of the Managers,
the Managers shall be entitled to terminate the Agreement with immediate effect by notice.
(iii)
If either party fails to meet their respective obligations under Sub-clause 5(b) (Crew Insurances) and Clause 10 (Insurance
Policies), the other party may give notice to the party in default requiring them to remedy it
within twenty (20) days, failing which
the other party may terminate this Agreement with immediate effective by giving notice to the party in default.
(c)
Extraordinary
Termination
This
Agreement shall be deemed to be terminated in the case of the sale of the Vessel (directly or via a sale of a Controlling interest in
the Owners) or, if the Vessel becomes a total loss or is declared as a constructive or
compromised or arranged total loss or is requisitioned
or has been declared missing, or if bareboat chartered, unless otherwise agreed, when the bareboat charter comes to an end; provided,
however, that the foregoing
shall not apply to (A) the sale of any Vessel pursuant to a sale/leaseback transaction or (B) any termination
or expiration of a bareboat charter of such Vessel by the Owners if such Vessel is purchased (or re-purchased) by
the Owners.
(d)
For
the purpose of Sub-clause 22(c) hereof:
(i)
the
date upon which the Vessel is to be treated as having been sold or otherwise disposed of
shall be the date on which the Vessel’s Owners cease to be the registered owners of
the Vessel;
(ii)
the
Vessel shall be deemed to be lost either when it has become an actual total loss or agreement
has been reached with the Vessel’s underwriters in respect of its constructive total
loss or if such agreement with the
Vessel’s underwriters is not reached it is adjudged
by a component tribunal that a constructive loss of the Vessel has occurred; and
(iii)
the
date upon which the Vessel is to be treated as declared missing shall be ten (10) days after
the Vessel was last reported or when the Vessel is recorded as missing be the Vessel’s
underwriters, whichever occurs
first. A missing Vessel shall be deemed lost in accordance
with the provisions of Sub-clause 22(d)(ii).
The
Managers’ Default
(e)
The
Owner may terminate this Agreement for Cause (as hereinafter defined), but only after the
Owners have provided the Managers with notice of such Cause and such Cause has not been cured
within twenty (20) days of
such notice; provided, however, that if any Cause is incapable
of being cured, then no notice and cure period shall be required.
(f)
Cause
means any of the following:
(i)
The
Managers:
(A)
persist
and/or continue to be negligent in their performance of the Management Services which causes
material losses and/or material additional expense to the Owners for a period of 3 (three)
calendar
months or more following a written notice from the Owners that it is dissatisfied
with the performance of the Managers due to such negligence and stating the deficiencies
to be remedied, provided however,
that the Managers shall not be deemed to have acted negligently
if the deficiencies arise or are continuing due to circumstances beyond the control of the
Managers, the Exclusive Broker and TCMC or if the
Managers are taking reasonable steps to
remedy such deficiencies; and/or
15
(B)
is
or has been grossly negligent in its performance of the Management Services; and/or
(C)
has
engaged in wilful misconduct and/or bad faith and/or fraud;
(ii)
The
Managers wilfully fail to cooperate in any government, agency, regulatory or external self-governing
body investigation that could have a material adverse effect on the Owners;
(iii)
The
Managers or any of their directors, officers or employees are convicted or plead nolo contendere
to a felony or a misdemeanour involving moral turpitude that is reasonably likely to have
a material adverse
effect on the Owners;
(iv)
The
Managers or any of their directors, officers or employees commit any material violation of
any U.S. federal law regulating securities or the business of the Owners or the Parent without
having relied on the
legal advice of the Owners’ or the Parent’s counsel to perform
or omit to perform the act resulting in such violation or the Managers are the subject of
any final order, judicial or administrative, obtained or issued by
the United States Securities
and Exchange Commission, for any securities violation involving fraud that in each case is
reasonably likely to have a material adverse effect on the Owners or the Parent; and
(v)
a
material breach of the obligations of the Managers under this Agreement that is reasonably
likely to have a material adverse effect on the Parent.
(g)
The
Managers shall be entitled to terminate this Agreement with immediate effect by giving notice
to the Owners within a six (6) month period following a Change in Majority Interests or Control.
(h)
Owners
shall be entitled to terminate this Agreement with immediate effect by giving notice to the
Managers within a six (6) month period following a Manager Change of Control.
(i)
This
Agreement shall terminate automatically in the event of an order being made or resolution
passed for the winding up, dissolution, liquidation or bankruptcy of either Party (otherwise
than for the purpose of
reconstruction or amalgamation) or if a receiver or administrator
is appointed, or if it suspends payment, ceases to carry on business or makes any special
arrangement or composition with its creditors (any such event, an
Insolvency).
(j)
In
addition, where the Managers provide Crew for the Vessel in accordance with Clause 5(a) (Crew
Management):
the
Owners shall continue to pay Crew Support Costs during the said further period of ninety (90) days; and
the
Owners shall pay an equitable proportion of any Severance Costs which may be incurred. The Managers shall use their reasonable endeavours
to minimise such Severance Costs.
(k)
On
the termination, for whatever reason, of this Agreement, the Managers shall arrange to deliver
to Owners, if so requested, and upon reasonable notice, the originals where possible, or
otherwise certified copies, of all
contracts, charters and all documents specifically relating
the Vessels and the Management Services provided under this Agreement. The Managers will
ensure that such documents will be available for a period of two (2)
years following the
termination of this Agreement.
(l)
The
termination of this Agreement shall be without prejudice to all rights accrued between the
Parties prior to the date of termination, including for the avoidance of doubt specifically
the right of the Managers to receive
the Management Fee (a) prior to the date of such termination
and (b) in any event up to the expiry of the minimum contract period as per Box 18 provided
that, in the event of termination of this Agreement for Cause by
the Owners pursuant to clause
22 (e), no Management Fee shall be due or payable to the Managers hereunder for any period
after the date of such termination.
16
(m)
In
addition to any other payments contemplated herein, (i) if this Agreement is
terminated by the Managers pursuant to any of Clauses 21(a), 21(b), 22(a), 22(b)(i), 22(b)(ii),
22(b)(iii), 22(c) or 22(g) or (ii) if this
Agreement terminates automatically
pursuant to Clause 22(i) because of the Insolvency of the Owners, upon such termination the
Managers shall be entitled to a lump sum payment in the amount set forth opposite such
Clause
reference in the following table:
Applicable
Clause Reference
Termination
Payment
clause
21(a)
50%
of the annual management fee payable hereunder at the time of such termination
clause
21(b)
50%
of the annual management fee payable hereunder at the time of such termination
clause
22(a)
Five
(5) times the annual management fee payable hereunder at the time of such termination
clause
22(b)(i)
Five
(5) times the annual management fee payable hereunder at the time of such termination
clause
22(b)(ii)
Five
(5) times the annual management fee payable hereunder at the time of such termination
clause
22(b)(iii)
Five
(5) times the annual management fee payable hereunder at the time of such termination
clause
22(c)
25%
of the annual management fee payable hereunder at the time of such termination
clause
22(g)
Six
(6) times the annual management fee payable hereunder at the time of such termination
clause
22(i)
Five
(5) times the annual management fee payable hereunder at the time of such termination
17
(n)
In addition to any other payments contemplated herein, (i) if this Agreement is terminated by the Owners pursuant to any
of clauses 21(a), 21(b), 22(a), 22(b)(iii), 22(c), 22(e) or 22(h) , or (ii) if this Agreement
terminates automatically
pursuant to clause 22(i) because of the Insolvency of the Managers, upon such termination the Managers shall be entitled to a lump sum
payment in the amount set forth opposite such clause
reference in the following table:
Applicable
Clause Reference
Termination
Payment
clause
21(a)
Six
(6) times the annual management fee payable hereunder at the time of such termination
clause
21(b)
Five
(5) times the annual management fee payable hereunder at the time of such termination
clause
22(a)
25%
of the annual management fee payable hereunder at the time of such termination
clause
22(b)(iii)
50%
of the annual management fee payable hereunder at the time of such termination
clause
22(c)
One
quarter of the annual management fee payable hereunder at the time of such termination
clause
22(e)
None
clause
22(h)
The
annual management fee payable hereunder at the time of such termination
clause
22(i)
25%
of the annual management fee payable hereunder at the time of such termination
23.
Emission
Trading Scheme Allowances. Effective 1st January 2024 and notwithstanding
any other provision in this Agreement, the Owners and the Managers (together the "Parties"
and each individually a “Party”) agree as
follows:
“Emission
Allowances” or “EUAs” means an allowance, credit, quota, permit or equivalent, representing a right of a vessel to
emit a specified quantity of greenhouse gas emissions recognized by the Emission Scheme.
“Emission
Data” means data and records of the Vessel’s emissions in the form and manner necessary to calculate its Emission Allowances.
“Emission
Scheme” means a greenhouse gas emissions trading scheme which for the purposes of this Clause shall mean the European Union Emissions
Trading System (“EU ETS”).
“Responsible
Entity” means the party responsible for compliance under the Emission Scheme applicable to the Vessel by law and/or regulation.
“Surrender
Date” means 30 September 2025 and every 30 September thereafter (or as such date may be amended from time to time) which is the
deadline for the surrender of Emission Allowances pursuant to the EU ETS
The
Managers shall be the Responsible Entity under EU ETS applicable to the Vessel and shall assume that responsibility by way of mandated
authority between the Parties in accordance with such Emission Scheme (the
“Mandate”). In consideration of the Managers accepting
such responsibility, the following shall apply (also see the Appendix for the respective specific services to be provided by the Managers
with regard to the EU ETS) :
(i)
The Managers shall provide the Owners with Emission Data together with the calculation of the Emission Allowances required at regular
intervals to be agreed between the Parties. Such Emission Data shall be verified by an
independent verifier, where and when applicable,
at the Owners’ expense.
18
(ii)
The Managers shall monitor and report Emission Data to the administering authority (as determined by the EU) in accordance with the EU
ETS as applicable to the Vessel.
(iii)
The Emission Allowances as calculated by the Managers shall be received by the Managers from the Owners or, if the governing charterparty
at the material time so provides, from the Vessel’s charterers , in the Managers’
nominated Emission Scheme account as agreed
between the Parties having taken into account any applicable respective agreement between the Owners and any charterer of the Vessel
at any time but in any event not later than 20
days prior to the Surrender Date . Notwithstanding that as between Owners and their
charterers from time to time the obligation to provide EUAs is the charterers’ obligation, the primary responsibility for provision
of EUAs to
the Managers shall remain at all times with the Owners.
(iv)
No later than fourteen (14) days prior to termination of this Agreement, the Managers shall prepare and present to the Owners, in writing,
(i) their estimates of the Emission Allowances due for the Vessel for the final month
of validity of this Agreement, or part thereof,
and, (ii) in any event, the total Emission Allowances (including estimated ones) applicable to the Vessel until the date on which the
Managers shall cease to be the Responsible Entity
by reason of such termination, save that where the Agreement is terminated in circumstances
which do not allow the Managers fourteen (14) days’ notification, the Managers shall notify the Owners of the total Emission
Allowances
as soon as possible. Within three (3) days of notification by the Managers of the total Emission Allowances due to the Managers, but
in any event not later than the termination of this Agreement, the Emission
Allowances notified by the Managers shall be transferred
by the Owners or on Owners’ behalf to the Managers. Owners shall fully indemnify the Managers against any liability which the Managers
have for Emission
Allowances, and such indemnity will survive any termination of this Agreement.
(v)
Any difference between (a) the Emission Allowances estimated according to subclause (iv) above and (b) the Emission Allowances actually
due in respect of the Vessel as at the time and date of termination of this Agreement,
shall be reconciled and settled between the Parties
within ten (10) days after the termination of this Agreement.
(vi)
For the avoidance of any doubt, the Owners shall always provide the Managers in a timely manner (and in any event as per the time context
agreed in paragraph (iii) above ), with the Emission Allowances required to fulfil
the Managers’ obligations under EU ETS. It is
expressly agreed that the Owners will immediately and without delay transfer to the Managers any Emission Allowances not transferred
to them by the charterers of the Vessel at
any time or otherwise authorize the Managers to purchase any such Emission Allowances on Owners’
behalf and at Owners’ cost after first having sent to the Managers sufficient funds as per Managers’ request.
(vii)
The Managers shall surrender the Emission Allowances in accordance with the EU ETS as applicable to the Vessel, subject always to the
Owners being/remaining responsible for providing such Emission Allowances to the
Managers.
(viii)
Any Emission Allowances transferred by the Owners or on Owners’ behalf to the Managers shall be held to the credit of the Owners
(but not on trust) until surrendered by the Managers to the administering authority of the
EU ETS applicable to the Vessel.
(ix)
The Managers’ daily management fee shall be increased as per BOX 14. The Parties agree that when the EU ETS market standards become
clearer or in the event of a material change to them, they will review the position
and/or consider the changes and in good faith re-appraise
the level of the Additional Fee with the first such review to take place no later than January 31, 2025.
(x)
The Owners acknowledge that the Managers shall act as the Responsible Entity with respect to vessels owned or operated by persons or
entities other than the Owners, the Parent, or their respective Subsidiaries and to that
effect the Managers may be found as non-compliant
regarding the performance of EU ETS obligations as a consequence of such other vessels and / or owners regarding the performance of EU
ETS obligations (“ Non
Compliance Contagion Event”). In the event of a Non-Compliance Contagion Event, Owners will have the
right to notify the Managers in writing and request them to remedy the Non-Compliance Contagion Event within (90)
days (or such other
greater period as the Parties may agree) following the receipt of such notice from the Owners. Provided that the Managers have been unable
to remedy the Non- Compliance Contagion Event as required by the
Owners, the Owners will have the right to revoke the Mandate and the
Managers shall cease to be the Responsible Entity upon completion of all necessary administrative actions giving effect to such revocation,
subject always to
Owners providing the Managers with all EUAs due and applicable to the Vessel as calculated by the Managers until the
date such revocation becomes effective and the Managers cease to be the Responsible Entity. Such EUAs
will be provided by the Owners
to the Managers not later than five (5) days following the Managers provision to the Owners of the relevant EUAs calculations. For the
avoidance of any doubt, any such Non- Compliance
Contagion Event will never constitute or be construed
as constituting a breach of this Agreement or as Managers’ failure to comply with their obligations under this Agreement in any
manner whatsoever.
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(xi)
The Managers will have the right to revoke the Mandate at any time subject to notifying the Owners in writing and cooperating with the
Owners to ensure a smooth change is effected for the Responsible Entity with regard
to EU ETS. Owners will provide the Managers with
all EUAs due and applicable to the Vessel as calculated by the Managers until the date such revocation becomes effective and the Managers
cease to be the Responsible
Entity. Such EUAs will be provided by the Owners to the Managers not later than five (5) days following the
Managers provision to the Owners of the relevant EUAs calculations.
24.
FuelEU
Maritime Clause for SHIPMAN 2024
Effective
1st January 2025 and notwithstanding any other provision under this Agreement, the Owners and the Managers (the "Parties")
hereby agree as follows:
"Compliance
Balance" means the measure of the Vessel's over- or under-compliance with regard to the limits
of the yearly average GHG Intensity of the energy used on board by the Vessel during Voyages within the scope
of FuelEU Maritime, which
is calculated in accordance with Part A of Annex IV of FuelEU Maritime.
"Compliance
Balance Statement" means the information and calculations for a Reporting Period, and including
(without limitation) the Compliance Balance, as calculated and recorded by the Verifier as set out at Article
16(4) and Article 26 of
Implementing Regulation 2024/2027.
“FuelEU
Database” means any electronic database for the monitoring and recording of compliance with FuelEU
Maritime established by the European Commission.
"FuelEU
Document of Compliance" means the document issued by a Verifier or, where applicable, the competent
authority of the administering State, confirming that the Vessel has complied with FuelEU Maritime for the
applicable Reporting Period.
"FuelEU
Maritime" means Regulation (EU) 2023/1805 of the European Parliament and of the Council, governing
the use of renewable and low-carbon fuels in maritime transport, and amending Directive 2009/16/EC as
amended from time to time, including
all implementing acts and delegated acts and regulations.
"FuelEU
Monitoring Plan" means the Vessel's monitoring plan in accordance with FuelEU Maritime.
“FuelEU
Penalty” means the penalty in respect of a Reporting Period calculated in accordance with FuelEU
Maritime taking into account, where applicable under this Clause, any multiplier as set out in Article 23(2).
"FuelEU
Report" means a report as referred to in Article 15(3) submitted in respect of the Vessel and
recorded in the FuelEU Database.
“FuelEU
Services" means the services provided by the Managers to the Owners under this Clause in performance
of the Agreement.
"FuelEU
Verification Report" means a verification report as referred to in Article 16 in respect of either
a FuelEU Report or Partial FuelEU Report which has been issued by the Verifier and recorded in the FuelEU
Database.
“GHG
Intensity” means the amount of GHG emissions per megajoule (MJ) of the fuels and energy, expressed
in grams of CO2 equivalent units (gCO2eq/MJ), used on board the Vessel under the scope of FuelEU Maritime,
calculated in accordance with
the methodology set out in Annex I of FuelEU Maritime.
“Partial
FuelEU Report” means a report for a Partial Reporting Period as referred to in Article 15(4)
submitted in respect of the Vessel and recorded in the FuelEU Database.
“Partial
Reporting Period” means a part of a Reporting Period where there is a change in the company (as
defined in FuelEU Maritime) during the same calendar year.
"Pool
Verifier" means the legal entity carrying out verification activities and accredited in accordance
with FuelEU Maritime which has been selected to verify the allocation of the total pool compliance balances in a pool
including the Vessel,
and which might not be the Verifier.
"Reporting
Period" means a period from 1 January to 31 December of the year during which information referred
to in FuelEU Maritime is monitored and recorded.
“Verification
Period” means the calendar year following a Reporting Period.
"Verified
Compliance Balance" means the Compliance Balance verified by the Verifier (and the Pool Verifier,
as applicable) and recorded in the FuelEU Database in respect of a Reporting Period after accounting for the
application (as applicable)
of the banking of the Vessel's compliance surplus or borrowing of an advance compliance surplus between Reporting Periods under Article
20 or the pooling of the Compliance Balance under
Article 21.
20
“Verifier”
means the legal entity carrying out verification activities and accredited in accordance with FuelEU Maritime which has been mutually
agreed between the Owners and the Managers to verify the relevant
information and data of the Vessel relevant to the FuelEU Database
and produce the FuelEU Verification Reports, Compliance Balance Statement and the Verified Compliance Balance(other than in respect of
pooling).
“Voyage”
means a voyage as defined in Article 3, point (c), of Regulation (EU) 2015/757.
Unless
specified otherwise, references to Articles and Annexes in this Clause are to those provided for in FuelEU Maritime.
(a)
The Parties acknowledge that the Vessel is required to comply with FuelEU Maritime and that the Managers shall be the responsible compliance
entity for the Vessel in accordance with FuelEU Maritime.
(b)
Where Delivery occurs after 1 January 2025, the Owners shall, by no later than 10 days (or as otherwise the Parties may agree) prior
to Delivery, provide the Managers with estimates of all relevant underlying
information and data to be contained in a Partial FuelEU
Report (where applicable) which shall be complete to the best of the Owners' knowledge together with any relevant information recorded
in the FuelEU Database
including the previous two Reporting Periods (where applicable). Thereafter, the Owners shall provide to the Managers
a copy of the Partial FuelEU Report no later than one month after Delivery and the corresponding
FuelEU Verification Report together
with any supporting information, verification assessment(s), data and documentation latest seven (7) days after receipt from the Verifier.
(c)
In consultation with the Owners, the Managers shall prepare and submit a FuelEU Monitoring Plan for the Verifier’s approval. The
Managers shall review the FuelEU Monitoring Plan regularly and if necessary, update
and/or modify it. The Owners shall promptly notify
the Managers if any fuels or energy to be supplied to the Vessel are not reflected in the FuelEU Monitoring Plan following which the
Managers shall promptly seek to
update and/or modify and re-submit the FuelEU Monitoring Plan to the Verifier for approval.
(d)
The Owners shall provide to the Managers: (i) bunker delivery notes (BDNs) and electricity delivery notes (EDNs) for fuels and energy
supplied to the Vessel; and if applicable, (ii) any associated documentation and/or
certification recognised under FuelEU Maritime to
the satisfaction of the Verifier in order to meet the sustainability and GHG emissions saving criteria set out under FuelEU Maritime
and to obtain any benefit when
applying the emission factors set out in Annex II and calculating the GHG Intensity. The Managers shall
be entitled to rely on and accept no responsibility for the accuracy of the data and information recorded in any of the
BDNs, EDNs and
in any associated documentation and/or certification which are to be submitted to the Verifier as well as for the Owners' failure to
supply the same.
(e)
The Managers shall on a monthly basis provide to the Owners, together with all supporting calculations, the estimates of:
(i)
the aggregated Compliance Balance of the Vessel incurred in the then current Reporting Period; and
(ii)
upon request, the projected aggregated Compliance Balance taking into account any banked compliance surplus or advance compliance surplus
borrowed from a previous Reporting Period based on
information and documentation available at that point in time. Any estimates of the
aggregated Compliance Balance as set out in subclause (e)(i) shall be validated by a third party if required by the Owners
at their expense.
(f)
The Managers shall continuously monitor and record the Vessel's GHG Intensity and all other relevant information and data required under
FuelEU Maritime during a Reporting Period and shall promptly provide the
Verifier with a FuelEU Report (or, where applicable, a Partial
FuelEU Report) in accordance with FuelEU Maritime together with all supporting documents and information as requested by the Verifier.
(g)
The Managers shall promptly notify the Owners of the outcome of the verification of the FuelEU Report (or, where applicable, a Partial
FuelEU Report) by the Verifier and provide the Owners with a copy of the FuelEU
Verification Report together with the Compliance Balance
Statement when available.
(h)
Where this Agreement is terminated, the Managers shall, by no later than 10 days (or as otherwise the Parties may agree) prior to the
Vessel's date of redelivery, provide the Owners upon request with estimates of the
underlying information and data to be contained in
a Partial FuelEU Report together with any relevant information recorded on the FuelEU Database. Thereafter, the Managers shall provide
to the Owners a copy of the
Partial FuelEU Report no later than one month after redelivery and the corresponding FuelEU Verification
Report together with any supporting information, verification assessment(s), data and documentation latest seven
(7) days after receipt
from the Verifier.
(i)
The Managers shall periodically monitor the Managers' potential exposure to a FuelEU Penalty for the Vessel.
(j)
In respect of each Compliance Balance Statement:
(i)
Unless otherwise agreed in writing by the Parties, it is expressly understood that any rights, ownership, entitlements and decisions
in respect of the banking, borrowing and pooling (if applicable) of the
Compliance Balance, as well as to the identity and appointment
of the Pool Verifier (as applicable) shall vest exclusively in the Owners (or the Owners' nominee) who shall be at liberty to direct,
control and
allocate the Compliance Balance as they see fit in accordance with FuelEU Maritime.
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(ii)
No later than 10 days (or as otherwise the Parties may agree) prior to 30 April of the Verification Period, the Owners shall provide
instructions and directions to the Managers as to the application and/or
allocation of the Compliance Balance in respect of borrowing,
banking and/or pooling (if applicable) as well as to the identity and appointment of the Pool Verifier.
(iii)
The Managers shall promptly follow the Owners' instructions and directions in respect of borrowing, banking and/or pooling of the Compliance
Balance in accordance with subclause (j)(ii).
(iv)
The Owners shall bear the risk, liability, benefit and costs arising out of or in connection with the afore-mentioned instructions and
directions including any failure to provide such instructions and directions
under this subclause (j).
(v)
Once the Verified Compliance Balance is available, it shall be communicated by the Managers to the Owners as soon as reasonably practicable.
(k)
Where, in respect of the Verified Compliance Balance, it is determined under FuelEU Maritime that:
(i)
a FuelEU Penalty is payable, the Managers shall promptly notify the Owners of such FuelEU Penalty and the Owners shall transfer a sum
equivalent to the FuelEU Penalty to the Managers by no later than
15 days before the FuelEU Penalty falls due. Subject to the timely
receipt of such funds, the Managers shall pay the FuelEU Penalty promptly thereafter and provide the Owners with a copy of the FuelEU
Document of Compliance as soon as reasonably practicable; or
(ii)
no FuelEU Penalty is payable, the Managers shall provide the Owners with a copy of the FuelEU Document of Compliance as soon as reasonably
practicable.
(l)
Where this Agreement is terminated between 1 January and 30 June of a Verification Period, and the Managers (or the Managers’ nominee)
were the responsible compliance entity on 31 December of the previous
Reporting Period, the Managers shall remain responsible for complying
with its obligations under this Clause and the Owners shall advance the funds required for payment of the estimated FuelEU Penalty and
these funds
shall be received by the Managers on or before termination of this Agreement. Where funds in excess of a FuelEU Penalty have
been paid by the Owners or if no FuelEU Penalty is ultimately payable pursuant to the Verified
Compliance Balance, the Managers shall
promptly return any balance of funds to the Owners.
(m)
The Owners shall pay to the Managers a fee for the FuelEU Services if not included in the annual management fee or in Annex C (Budget):
The Parties have agreed that there will be no additional fee payable to the
Managers for the FuelEU Services, pending further review,
as per subclause (p).
(n)
The Owners are under an absolute obligation at all times to provide the Managers in a timely manner with sufficient funds required to
fulfil the Managers' obligations for the Vessel under FuelEU Maritime. In the event
the Owners fail to provide sufficient funds required
to fulfill the Managers’ obligations for the Vessel under FuelEU Maritime and as a consequence either the Managers are unable to
obtain a FuelEU Document of
Compliance and/or any sanctions are imposed on the Vessel under Article 25 of the FuelEU Maritime , such
inability to obtain a FuelEU Document of Compliance for the Vessel or the imposition of such sanctions on the
Vessel will never constitute
or be construed as constituting a breach of this Agreement or as Managers’ failure to comply with their obligations under this
Agreement in any manner whatsoever. In addition, Owners do
hereby and at all times will indemnify and hold the Managers harmless from
any damage and/or loss of whatsoever nature suffered or to be suffered by the Managers due to any breach of the Owners under this clause.
(o)
It is expressly agreed that the rights and obligations of the Parties set out in this Clause shall survive the expiration or termination
of the Agreement unless or until the Parties have fulfilled or satisfied their respective
obligations under FuelEU Maritime.
(p)
The Parties agree that when the FuelEU Market standards become clearer or in the event of material change of them, they will review the
position and/or consider the changes and in good faith re-appraise the necessity
and level of any additional fee and / or the provision
of an adequate and acceptable security to the Managers, with the first such review to take place no later than 31st January 2026.
*If
number of days is not inserted in subclauses (b), (h), (i)(i), (i)(iii), (j)(ii) and/or (k)(i) the default shall be ten (10) days.
**If
no selection is made under subclause (e), the default shall be “per Voyage”.
***
If no amount is stated in subclause (m), such fee shall be assumed to be included in the annual management fee.
25.
BIMCO
Dispute Resolution Clause
22
(a) This
Agreement shall be governed by and construed in accordance with English law and any dispute
arising out of or in connection with this Agreement shall be referred to arbitration in London
in accordance with the
Arbitration Act 1996 or any statutory modification or re-enactment
thereof save to the extent necessary to give effect to the provisions of this Clause.
The
arbitration shall be conducted in accordance with the London Maritime Arbitrators Association (LMAA) Terms current at the time when the
arbitration proceedings are commenced.
The
reference shall be to three arbitrators. A party wishing to refer a dispute to arbitration shall appoint its arbitrator and send notice
of such appointment in writing to the other party requiring the other party to appoint its
own arbitrator within 14 calendar days of
that notice and stating that it will appoint its arbitrator as sole arbitrator unless the other party appoints its own arbitrator and
gives notice that it has done so within the 14 days
specified. If the other party does not appoint its own arbitrator and gives notice
that it has done so within the 14 days specified, the party referring a dispute to arbitration may,
without the requirement of any further prior
notice to the other party, appoint its
arbitrator as sole arbitrator and shall advise the other party accordingly. The award of a sole arbitrator shall be binding on both parties
as if he had been appointed by agreement.
Nothing
herein shall prevent the parties agreeing in writing to vary these provisions to provide for the appointment of a sole arbitrator.
In
cases where neither the claim nor any counterclaim exceeds the sum of USD50,000 (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.
(b)
Notwithstanding Sub-clauses 25(a) above, the parties
may agree at any time to refer to mediation any difference and/or dispute arising out of or in connection with this Agreement.
(i)
In the case of a dispute in respect of which arbitration
has been commenced under Sub-clauses 25(a) above, the following shall apply:
(ii)
Either party may at any time and from time to time elect
to refer the dispute or part of the dispute to mediation by service on the other party of a written notice (the “Mediation Notice”)
calling on the other party to
agree to mediation.
(iii)
The other party shall thereupon within 14 calendar days
of receipt of the Mediation Notice confirm that they agree to mediation, in which case the parties shall thereafter agree a mediator
within a further 14
calendar days, failing which on the application of either party a mediator will be appointed promptly by the Arbitration
Tribunal (“the Tribunal”) or such person as the Tribunal may designate for that purpose. The
mediation shall be conducted
in such place and in accordance with such procedure and on such terms as the parties may agree or,
in the event of disagreement, as may be set by the mediator.
(iv)
If the other party does not agree to mediate, that fact
may be brought to the attention of the Tribunal and may be taken into account by the Tribunal when allocating the costs of the arbitration
as between the parties.
(v)
The mediation shall not affect the right of either party
to seek such relief or take such steps as it considers necessary to protect its interest.
(vi)
Either party may advise the Tribunal that they have
agreed to mediation. The arbitration procedure shall continue during the conduct of the mediation but the Tribunal may take the mediation
timetable into account
when setting the timetable for steps in the arbitration.
(vii)
Unless otherwise agreed or specified in the mediation
terms, each party shall bear its own costs incurred in the mediation and the parties shall share equally the mediator’s costs and
expenses.
(viii)
The mediation process shall be without prejudice and
confidential and no information or documents disclosed during
it
shall be revealed to the Tribunal except to the extent that they are disclosable under the law and procedure governing the arbitration.
(c)
If
Box 21 in Part I is not appropriately filled in, Sub-clause 25(a) of this Clause shall
apply.
26.
Notices
(a)
A notice or other communication given under this
Agreement (a Notice) shall be:
(i)
in writing;
23
(ii)
in the English language; and
(iii)
sent by the Permitted Method to the Notified Address.
(b)The
Permitted Method means any of the methods set out in the first column below, the second column
setting out the date on which a Notice given by such Permitted Method shall be deemed to
be given provided the Notice is
properly addressed and sent in full to the Notified Address:
(1)
Permitted Method
(2)
Date on which Notice deemed given
Personal
delivery
When
left at the Notified Address
Courier
delivery
When
left at the Notified Address
E-mail
When
actually received by the recipient (or made available to the recipient) in readable form
(c) The
“Notified Address” (including fax number) of each of the Parties is the address
set out below, or as subsequently notified to all Parties in writing:
(i)
to the Owners at: [•]
Attention:
[•]
(ii)
to Managers at: [•]
Attention:
[•]
or
to such other address as is notified by one Party to the other Party under this Agreement.
And
in each case proof of posting, handing in or transmission shall be proof that notice has been given, unless proven to the contrary.
27.
Entire
Agreement
This
Agreement constitutes the entire agreement between the parties and no promise, undertaking, representation, warranty or statement by
either party prior to the date stated in Box 2 shall affect this Agreement. Any
modification of this Agreement shall not be of
any effect unless in writing signed by or on behalf of the parties.
28.
Third
Party Rights
Except
to the extent provided in Sub-clauses 17(c) (Indemnity) and 17(d) (Himalaya), no third parties may enforce any term of this Agreement.
29.
Partial
Validity
If
any provision of this Agreement is or becomes or is held by any arbitrator or other competent body to be illegal, invalid or unenforceable
in any respect under any law or jurisdiction, the provision shall be deemed to be
amended to the extent necessary
24
to
avoid such illegality, invalidity or unenforceability, or, if such amendment is not possible, the provision shall be deemed to be deleted
from this Agreement to the extent of such illegality, invalidity or unenforceability, and the
remaining provisions shall continue in
full force and effect and shall not in any way be affected or impaired thereby.
30.
Confidentiality
(a) The
Managers shall keep confidential the Confidential Information disclosed to it by or on behalf
of the Owners or howsoever otherwise obtained, developed or created by the Managers.
(b)
The Managers shall:
(i)
use the Confidential Information solely in connection with the performance of its obligations under this Agreement; and
(ii)
take all action reasonably necessary to secure the Confidential Information against theft, loss or unauthorised disclosure.
(c) The
restrictions on use or disclosure of Confidential Information in this clause30 do not apply to information which is:
(i)
generally available in the public domain, other than as a result of the Managers’ breach of any obligation under this clause 30;
or
(ii)
lawfully acquired from a third party who owes no obligation of confidentiality in respect of the information; or
(iii)
independently developed by the Managers, or was in the Managers’ lawful possession prior to receipt from the Owners.
(d) The
Managers may disclose the Confidential Information without the prior written consent of the Owners:
(i)
to their Affiliates and subcontractors, to whom disclosure is required for the performance of its obligations under this Agreement, but
only to the extent necessary to perform such obligations (together the Permitted
Disclosees); or
(ii)
if, and to the extent that, such information is required to be disclosed (including by way of an Announcement) by the rules of any stock
exchange or by any governmental, regulatory or supervisory body (including,
without limitation, any taxation authority) or court of competent
jurisdiction (Relevant Authority) to which the Managers are subject, provided that the Managers shall, if it is not so prohibited
by law, provide the
Owners with prompt notice of any such requirement or request.
(e) The
Managers shall:
(i)
before disclosing Confidential Information to a Permitted Disclosee, to the extent reasonably practicable, notify the Owners in writing
of the intended disclosure and the identity of the intended Permitted Disclosee;
(ii)
ensure that such Permitted Disclosee is aware of and complies with the Managers’ obligations under this clause 30 as if it
were the Managers; and
(iii)
be responsible for the acts and omissions of any Permitted Disclosee in relation to the Confidential Information as if they were the
acts or omissions of the Managers.
(f)The
parties agree that damages may not be an adequate remedy for the Managers’ breach of
this clause 30 and (to the extent permitted by the court) the Owners shall be entitled to
seek an injunction or specific performance
in respect of such breach.
31.
Interpretation
In
this Agreement:
(a)
Singular/Plural
25
The
singular includes the plural and vice versa as the context admits or requires.
(b)
Headings
The
index and heading to the clauses and appendices to this Agreement are for convenience only and shall not affect its construction or interpretation.
(c)
Day
“Day”
means a calendar day unless expressly stated to the contrary
32.Acts
of the Commercial Managers and Exclusive Broker (as applicable)
Notwithstanding
anything contained in this Agreement to the contrary, the Owners shall have no liability, through indemnification or otherwise, for any
damages, losses, or claims of any kind whatsoever of the
Managers arising from or in any way related to the acts or omissions of the
Commercial Managers and/or the Exclusive Broker, nor shall the Managers have any right to terminate this Agreement for any circumstance
or event arising out of or in any way related to any acts or omissions of the Commercial Managers and/or the Exclusive Broker.
33.Owners’
Right to Assign
(a) The
Owners may assign all of their rights under this Agreement to any mortgagee of the Vessel
provided that such assignment shall not otherwise prejudice the rights of the Managers
to terminate this Agreement
pursuant to the terms hereof. Upon satisfaction of the condition
set forth in the first sentence of this Clause 32(a), the Managers hereby agree to enter
into an acknowledgment of such assignment in such form as the
mortgagee may reasonably request.
(b)The
Managers may not assign all or any of their rights under this Agreement without the prior
written consent of the Owners;
(c) Neither
party shall be entitled to transfer all or any of its obligations, duties or liabilities
under this Agreement unless:
(i) the
same is expressly permitted under the terms of this Agreement; or
(ii) it
has received the prior written consent of the other party.
34.Guarantee
The
Parent (as primary obligor, and not merely as surety) hereby irrevocably, absolutely and unconditionally guarantees to the Manager the
full and prompt performance by Owners of all of Owners’ liabilities and
obligations under this Agreement, whether as to payment
or otherwise (“the Owners’ Obligations”) when the same are to be paid or performed, as the case may be. Owners’
obligations hereunder shall not be affected
by any facts or circumstances that might constitute a discharge of or defence to any Owners’
Obligation available to the Parent but not available to Owners, and the Parent hereby expressly waives and renounces any
and all such
discharges and defences. This guarantee shall be unaffected by any amendment of or supplement to this Agreement, or by the grant of any
time or indulgence to Owners by the Managers.
26
APPENDIX
Accounting
and Records. The Managers shall, on behalf of the Group, establish an accounting system, including the development, implementation
and maintenance over financial reporting and disclosure controls and
procedures, and maintain Books and Records, with such modifications
as may be necessary to comply with Applicable Laws. The Books and Records shall contain particulars of receipts and disbursements relating
to
the Group’s assets and liabilities and shall be kept pursuant to normal commercial practices that will permit consolidated financial
statements to be prepared for the Parent in accordance with US GAAP and stand-alone
and, if required, consolidated financial statements
for its Subsidiaries under appropriate GAAP. The Books and Records shall be the property of the Group but shall be kept at the Managers’
primary office or such other
place as the Group and the Managers may mutually agree. Upon expiration or termination of this Agreement,
all of the Books and Records shall be provided to the Parent or as the Parent shall direct. The internal control
over financial reporting
and disclosure controls and procedures shall be designed to be effective in the context of the Parent’s management’s obligation
to report annually on such controls.
Reporting
Requirements. The Managers shall prepare and deliver to the Chief Executive Officer and the Chief Financial Officer of the Parent
the following reports, which the Managers shall use its reasonable best
efforts to prepare and deliver within the time periods specified
below or, if not so specified, within the time period requested by the relevant party:
(a)
a quarterly report, including draft Earnings Release, to be delivered within 30 days of the end of each Fiscal Quarter (45 days for the
Fiscal Quarter ending December 31 in each year) setting out the interim financial
results of the Company for such quarter and for the
applicable Fiscal Year through the end of such Fiscal Quarter;
(b)
as and when requested by the Board of Directors, the Chief Executive Officer or the Chief Financial Officer, draft reports regarding
financial and other information required in connection with Applicable Laws
(including annual and other reports that may be required
to be filed under the Exchange Act and all other Applicable Laws); and
(c)
as and when reasonably requested by the Parent from time to time, such other reports with respect to financial and other information
of the Group.
Financial
Statements and Tax Returns. At the instruction of the Chief Financial Officer, the Managers shall prepare and deliver for review
by the Chief Financial Officer and the Audit Committee of the Board of
Directors the following, which the Managers shall use its reasonable
best efforts to prepare and deliver within the time periods specified below or, if not so specified, within the time period requested
by the relevant
party:
(a)
within 30 days of the end of each Fiscal Quarter, unaudited financial statements of the Parent for such Fiscal Quarter, reviewed by the
external auditors of the Parent, prepared in accordance with US GAAP and the
rules and regulations of the SEC, on a consolidated
basis with all Subsidiaries of the Parent;
(b)
within 45 days of the end of each Fiscal Year, financial statements of the Parent for such Fiscal Year, audited by the external auditors
of the Parent, prepared in accordance with US GAAP and the rules and
regulations of the SEC, on a consolidated basis with all Subsidiaries
of the Parent;
(c)
within any deadlines imposed by any regulatory authorities or in order to comply with covenants in borrowing facilities, financial statements
of the Parent and Subsidiaries (included on a sub-consolidated basis if
required) for such Fiscal Year, audited by the external auditors,
prepared in accordance with US GAAP or other GAAP as appropriate; and
(d)
tax returns for the Parent and all of its Subsidiaries required to be filed by Applicable Laws.
Notwithstanding
the foregoing, in the event that the Parent’s reporting obligations are accelerated under the Exchange Act beyond what such obligations
are at the time of the commencement of this Agreement, the
Managers shall use its reasonable best efforts to provide to the Parent the
financial statements referred to in clauses (a) and (b) above within such periods as shall be required for the Parent to comply
with any reporting
requirements under the Exchange Act or other similar applicable laws and regulations.
In
addition, the Managers shall attend to the timely calculation and payment of all taxes payable by the Group. At the instruction of the
Chief Financial Officer, the Managers shall cause the Parent’s external accountants
to review the Parent’s unaudited financial
statements, audit the Parent’s and the Subsidiaries’ annual financial statements, review internal controls and finalize tax
returns. The Managers shall make available to the
Parent’s accountants the relevant Books and Records for the Company and the Subsidiaries
and shall assist the accountants in their duties.
Legal
and Securities Compliance Services.
(a)
Responsibilities of the Managers.
27
The
Managers shall assist the Group with the following items, whether or not related to any of the Vessels:
(i)
compliance with all Applicable Laws, including all relevant securities laws and the rules and regulations of the SEC, the New York Stock
Exchange or any other securities exchange upon which the Parent’s securities
are listed;
(ii)
arranging for the provision of advisory services to the Parent with respect to the Parent’s obligations under applicable securities
laws in the United States and disclosure and reporting obligations under applicable
securities laws, including the preparation for review,
approval and filing by the Parent of reports and other documents with the SEC and all other applicable regulatory authorities;
(iii)
maintaining the Group’s corporate existence and good standing in all necessary jurisdictions and assisting in all other corporate
and regulatory compliance matters;
(iv)
providing information required by any credit rating agencies;
(v)
providing support to the Parent with respect to investor relations including maintenance and monitoring of its website;
(vi)
providing legal support for transactions, including but not limited to negotiation and documentation of Memoranda of Agreement for the
sale and purchase of vessels, new building contracts for vessels, charter
parties, vessel financings; and
(vii)
adjusting and negotiating settlements, with or on behalf of claimants or underwriters, of any claim, damages for which are recoverable
under insurance policies (subject to any applicable deductible).
(b)
Administration and Settlement of Legal Actions.
If
any Legal Action is commenced against or is required to be commenced in favor of the Group or any of the Vessels, the Managers shall
arrange for the commencement or defense of such Legal Action, as the case may
be, in the name of, on behalf of and at the expense of
the Group, including retaining and instructing legal counsel, investigating the substance of the Legal Action and entering pleadings
with respect to the Legal Action.
The Managers shall assist the Group in administering and supervising any such Legal Actions and shall
keep the Group advised of the status thereof. The Managers may settle any Legal Action on behalf of a Group
where the amount of settlement
is less than $500,000 with the approval of the Chief Executive Officer or the Chief Financial Officer and, in excess of such amount,
with the approval of the Board of Directors.
(c)
Interaction with Regulatory Authorities.
Notwithstanding
anything in this Appendix or otherwise, the Managers shall not act for or on behalf of the Group in its relationships with any regulatory
authorities except to the extent specifically authorized by the
Parent from time to time.
Bank
Accounts.
The
Managers shall oversee banking services for the Group and shall, where necessary, establish in the name of the Parent and its Subsidiaries
such bank accounts with such financial institutions as the Parent and its
Subsidiaries may request. The Managers shall administer and
manage all of the Group’s cash and accounts, including making any deposits and withdrawals reasonably necessary for the management
of its business and
day-to-day operations. The Managers shall promptly deposit all moneys payable to the Group and received by the Managers
into a bank account held in the name of the Parent or its Subsidiaries. This provision, and any
and all other provisions required to
give effect to this provision, shall become effective on the Effective Date.
Corporate
Planning.
The
Managers shall:
(a)
oversee preparation of annual budget, including working capital requirements;
(b)
develop forecasts and projections, including profitability analysis; and
(c)
obtain investment appraisals;
28
Emissions
Trading System Process Services.
(i)
Data
Monitoring. The Managers shall capture and review emissions with the assistance of a
consulting company on a per month basis. Emissions data validation to be performed by an
independent verifier on an
annual basis and for any other intermediate period, as necessary
and available. Final verified data to be distributed to all interested parties both internally
and externally as necessary (including the Vessel’s charterers
at any relevant time
with whom the Managers will communicate and share any relevant information and data for the
purposes of EU ETS as required by the Owners).
(ii)
Reporting.
The Managers shall report the verified emissions data to the EU (MRV – emissions metrics
with the EU) and IMO (global emissions). The Managers shall obtain relevant certification
and distribute to
all parties as necessary.
(iii)
Trading.
The Managers shall open / manage / monitor the EU ETS trading account and the EU ETS
compliance account. Upon any collection of EUAs the Managers treasury dept. will inform all
relevant parties
and also will perform an initial reconciliation for EUAs expected and received
for the Vessel basis to identify any discrepancies. Trading of EUAs in order to cover any
potential needs such as off-hire(s) or
as
Owners may otherwise instruct the Managers will be
performed by the Managers subject to Owners’ authorisation on Owners’ behalf
and at Owners’ cost.
(iv)
Reconciliation.
Prior to the final submission of the EUAs to the EU the Managers shall perform a final reconciliation
analysis to verify the EUAs to be agreed between the Owners and the Charterers, EUAs
covering
any off-hires, etc. and shall further confirm that all required EUAs are collected and/or
purchased and are in the relevant compliance account.
(v)
EUAs
Submission. The Managers to surrender verified EUAs to the EU as required by EU ETS
Fuel
EU Process Services.
(i)
Data Monitoring. The Managers shall capture and review GHG intensity of the energy used by the vessels with the assistance of
a consulting company on a per month basis. GHG intensity data validation to be performed by
an independent verifier on an annual basis
and for any other intermediate period, as necessary and available. Final verified data to be distributed to all interested parties both
internally and externally as necessary (including the
Vessel’s charterers at any relevant time with whom the Managers will communicate
and share any relevant information and data for the purposes of Fuel EU as required by the Owners).
(ii)
Reporting. The Managers shall report the verified GHG intensity data to the EU. The Managers shall obtain relevant certification
and distribute to all parties as necessary.
(iii)
Reconciliation. Prior to the final submission the Managers shall perform a final reconciliation analysis to verify the Fuel EU
calculation to be agreed between the Owners and the Charterers.
(v)
Submission. The Managers to pay any resulting penalty after receiving the necessary funds from the Owners taking into consideration
any pooling, borrowing or banking of surpluses in the final calculation.
Other
Services.
The
Managers shall assist the Group to:
(a)
identify, negotiate and secure opportunities for the Group to acquire
vessels or companies which own vessels, or to construct vessels, and to negotiate and carry out the purchase of existing vessels, newbuilding
vessels or companies which are the registered owners of vessels.
(b)
obtain, on behalf of the Group, general insurance, director and officer liability insurance and other insurance of the Group not related
to the Vessels that would normally be obtained for companies in a similar
business to that of the Group;
(c)
if so required by the Group, administer payroll services, for any employee, officer or director of the Parent and its Subsidiaries;
(d)
provide the Group with information technology support including email;
(e)
provide office space and office equipment for personnel of the Group at the location of the Managers or any subsidiary thereof or as
otherwise reasonably designated by the Parent, and clerical, secretarial, accounting
and administrative assistance as may be reasonably
necessary;
(f)
at the request and under the direction of the Parent, handle all administrative and clerical matters in respect of (i) board and
committee meetings of the Parent and its Subsidiaries, (ii) the call and arrangement of all
annual and special meetings of shareholders,
the Parent and any of its subsidiaries, (iii) the preparation of all materials (including notices of meetings and proxy or similar
materials) in respect thereof and (iv) the
submission of all such materials to the Parent in sufficient time prior to the dates
upon which they must be mailed, filed or otherwise relied upon so that the Parent has full opportunity to review, approve, execute and
return them to the Managers for filing or mailing or other disposition as the Parent may require or direct;
(g)
provide, at the request and under the direction of the Parent, such communications to the transfer agent for the Parent as may be necessary
or desirable;
(h)
make recommendations to the Parent for the appointment of auditors, accountants, legal counsel and other
29
accounting,
financial or legal advisers, and technical, commercial, marketing or other independent experts; provided, however, that nothing
herein shall permit the Managers to engage any such adviser or expert for the
Parent without the Parent’s specific approval;
(i)
providing assistance and advice to the Group with respect to financing, including (i) the monitoring and administration of the compliance
with any applicable financing terms and conditions in effect with investors,
banks, lenders or other financial institutions and (ii)
the identification and negotiation of new capital or financings or re-financings; and
(j)
attend to all other administrative matters necessary to ensure the professional management of the Group’s business or as reasonably
requested by the Group from time to time
DEFINITIONS
AND INTERPRETATION
Unless
otherwise defined in this Appendix, capitalized terms used herein but not otherwise defined in this Appendix shall have the meaning given
such term in Clause 1 (Definitions) of Part II of this Agreement.
“Applicable
Laws” means, in respect of any Person, property, transaction or event, all laws, statutes, ordinances, regulations, municipal
by-laws, treaties, judgments and decrees applicable to that Person, property,
transaction or event, all applicable official directives,
rules, consents, approvals, authorizations, guidelines, orders, codes of practice and policies of any Governmental Authority having authority
over that Person,
property, transaction or event and having the force of law, and all general principles of common law and equity.
“Board
of Directors” means the board of directors of the Parent, as the same may be constituted from time to time.
“Books
and Records” means all books of accounts and records, including tax records, sales and purchase records, Vessel records, computer
software, formulae, business reports, plans and projections and all other
documents, files, correspondence and other information of the
Group with respect to the Vessels or the Business (whether or not in written, printed, electronic or computer printout form).
“Business”
means the Group’s business of owning, operating and/or chartering or re-chartering Vessels to other Persons and any other lawful
act or activity customarily conducted in conjunction therewith.
“Chief
Executive Officer” means the chief executive officer of the Parent.
“Chief
Financial Officer” means the chief financial officer of the Parent.
“Disclosing
Party” means a party who has disclosed Confidential Information hereunder to the other party or on whose behalf Confidential
Information has been disclosed to the other party.
“Effective
Date” means the date on which this Agreement shall become effective in accordance with box 2.
“Exchange
Act” means the Securities Exchange Act of 1934, as amended.
“Fiscal
Quarter” means a fiscal quarter for the Group
“Fiscal
Year” means the fiscal year of the Parent, being the twelve-month period ending December 31.
“GAAP”
means the generally accepted accounting principles
“Group”
means the Parent and all of its Subsidiaries, or any one of them as the context might require
“Governmental
Authority” means any domestic or foreign government, including any federal, provincial, state, territorial or municipal government,
any multinational or supranational organization, any government
agency (including the SEC), any tribunal, labor relations board, commission
or stock exchange (including the New York Stock Exchange), and any other authority or organization exercising executive, legislative,
judicial, regulatory or administrative functions of, or pertaining to, government.
“Legal
Action” means any action, suit or other proceeding concerning the Owner and/or the Vessel in any jurisdiction.
“Parent”
means Global Ship Lease, Inc.
30
“Receiving
Party” means a party to whom Confidential Information of a Disclosing Party has been disclosed hereunder.
“SEC”
means the United States Securities and Exchange Commission.
31
Annex
A – Vessel Details
[•]
[•]
32
Annex
B – Crew
Master
and crew to be appointed as appropriate to the trading and operational requirements of the Vessel, always subject to the relevant governing
laws and regulations.
33
Annex
C – Budget
[•]
Exhibit
4.26
Dated
7 August 2024
US$300,000,000
TERM
LOAN FACILITY
THE
COMPANIES
listed
in Part A of Schedule 1
as
joint and several Borrowers
and
GLOBAL
SHIP LEASE, INC.
as
Guarantor
and
THE
BANKS AND FINANCIAL INSTITUTIONS
listed
in Part B of Schedule 1
as
Lenders
and
CRÉDIT
AGRICOLE CORPORATE AND INVESTMENT BANK
ABN
AMRO BANK N.V.
BANK
OF AMERICA, N.A.
as
Bookrunners and Arrangers
and
CRÉDIT
AGRICOLE CORPORATE AND INVESTMENT BANK
ABN
AMRO BANK N.V.
BANK
OF AMERICA, N.A.
as
Mandated Lead Arrangers
and
CRÉDIT
AGRICOLE CORPORATE AND INVESTMENT BANK
as
Facility Agent
and
CRÉDIT
AGRICOLE CORPORATE AND INVESTMENT BANK
as
Security Agent
and
CRÉDIT
AGRICOLE CORPORATE AND INVESTMENT BANK
as
Account Bank
FACILITY
AGREEMENT
relating
to
the refinancing of (i) the Existing Indebtedness secured on the Ships (other than Ship I and Ship J) and (ii) extending finance secured
on Ship I and Ship J, and (iii) for general corporate and working capital purposes
Index
Clause
Page
Section 1
Interpretation
2
1
Definitions
and Interpretation
2
Section 2
The Facility
34
2
The
Facility
34
3
Purpose
35
4
Conditions
of Utilisation
35
Section 3
Utilisation
37
5
Utilisation
37
Section 4
Repayment, Prepayment and Cancellation
39
6
Repayment
39
7
Prepayment
and Cancellation
40
Section 5
Costs of Utilisation
45
8
Interest
45
9
Interest
Periods
46
10
Changes
to the Calculation of Interest
48
11
Fees
50
Section 6
Additional Payment Obligations
51
12
Tax
Gross Up and Indemnities
51
13
Increased
Costs
55
14
Other
Indemnities
56
15
Mitigation
by the Finance Parties
59
16
Costs
and Expenses
60
Section 7
Guarantees and Joint and Several Liability of Borrowers
62
17
Guarantee
and Indemnity – Guarantor
62
18
Joint
and Several Liability of the Borrowers
65
Section 8
Representations, Undertakings and Events of Default
67
19
Representations
67
20
Information
Undertakings
75
21
Financial
Covenants
79
22
General
Undertakings
80
23
Insurance
Undertakings
87
24
General
Ship Undertakings
93
25
Anti-Boycott
Regulations
100
26
Security
Cover
101
27
Accounts,
application of Earnings
103
28
Events
of Default
105
Section 9
Changes to Parties
111
29
Changes
to the Lenders
111
30
Changes
to the Transaction Obligors
116
Section 10
The Finance Parties
118
31
The
Facility Agent and the Arrangers
118
32
The
Security Agent
127
33
Conduct
of Business by the Finance Parties
142
34
Sharing
among the Finance Parties
142
Section 11
Administration
144
35
Payment
Mechanics
144
36
Set-Off
147
37
Bail-In
147
38
Notices
148
39
Calculations
and Certificates
150
40
Partial
Invalidity
150
41
Remedies
and Waivers
150
42
Settlement
or Discharge Conditional
151
43
Irrevocable
Payment
151
44
Amendments
and Waivers
151
45
Confidential
Information
156
46
Confidentiality
of Funding Rates
160
47
Counterparts
162
48
Electronic
Execution
162
Section 12
Governing Law and Enforcement
163
49
Governing
Law
163
50
Enforcement
163
Schedules
Schedule
1 The Parties
164
Part A
The Obligors
164
Part B
The Lenders
167
Part
C The Servicing Parties
171
Part
D The Account Bank
172
Schedule
2 Conditions Precedent
173
Part A
Conditions Precedent to Utilisation Request
173
Part B
Conditions Precedent to Utilisation of aN ADVANCE
176
Schedule
3 Requests
178
Part A
Utilisation Request
178
Part B
Selection Notice
181
Schedule
4 Form of Transfer Certificate
184
Schedule
5 Form of Assignment Agreement
187
Schedule
6 Form of Compliance Certificate
190
Schedule
7 Details of the Ships
191
Schedule
8 Accounts
192
Schedule
9 Timetables
193
Schedule
10 Benchmark Terms
194
Schedule
11 Daily Non-Cumulative Compounded RFR Rate
197
Schedule
12 Cumulative Compounded RFR Rate
199
Execution
Execution
Pages
200
THIS AGREEMENT is made on ____ August 2024
PARTIES
(1)
THE
COMPANIES listed in Part A of Schedule 1 (The Parties) as joint and several borrowers
(the "Borrowers")
(2)
GLOBAL
SHIP LEASE, INC., a corporation incorporated in the Republic of the Marshall Islands,
whose registered address is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro,
Marshall Islands MH96960
as guarantor (the "Guarantor")
(3)
THE
BANKS AND FINANCIAL INSTITUTIONS listed in Part B of Schedule 1 (The Parties)
as lenders (the "Original Lenders")
(4)
CRÉDIT
AGRICOLE CORPORATE AND INVESTMENT BANK,
ABN AMRO BANK N.V. and BANK OF AMERICA, N.A. as bookrunners (the "Bookrunners")
(5)
CRÉDIT
AGRICOLE CORPORATE AND INVESTMENT BANK,
ABN AMRO BANK N.V. and BANK OF AMERICA, N.A. as arrangers (each an "Arranger"
and, together the "Arrangers")
(6)
CRÉDIT
AGRICOLE CORPORATE AND INVESTMENT BANK,
ABN AMRO BANK N.V. and BANK OF AMERICA, N.A. as mandated lead arrangers (each
a "Mandated Lead Arranger" and together the
"Mandated Lead Arrangers")
(7)
CRÉDIT
AGRICOLE CORPORATE AND INVESTMENT BANK as
agent of the other Finance Parties (the "Facility Agent")
(8)
CRÉDIT
AGRICOLE CORPORATE AND INVESTMENT BANK as
security agent for the Secured Parties (the "Security Agent")
(9)
CRÉDIT
AGRICOLE CORPORATE AND INVESTMENT BANK, a French sociéte anonyme, as account bank
for the Secured Parties through its office at 12, place des Etats-Unis, CS 70052, 92547 Montrouge
Cedex,
France, registered under the SIREN No. 304 187 701 of the Registre du Commerce et
des Sociétés of Nanterreor as account bank (the "Account Bank")
BACKGROUND
The
Lenders have agreed to make available to the Borrowers a senior secured term loan facility in an aggregate amount of up to the lower
of (i) $300,000,000 and (ii) 55 per cent. of the aggregate Initial Market Value of the Ships in
three Advances, for the purpose of (i)
refinancing the Existing Indebtedness secured on the Ships (other than Ship I and Ship J), (ii) extending finance secured on Ship I and
Ship J and (iii) for general corporate and working capital
purposes.
OPERATIVE
PROVISIONS
1
SECTION
1
INTERPRETATION
1
DEFINITIONS
AND INTERPRETATION
1.1
Definitions
In
this Agreement:
"Account
Bank" means Crédit Agricole Corporate and Investment Bank, a French sociéte anonyme,
acting in its capacity as account bank for the Secured Parties through its office at 12, place des Etats-Unis, CS 70052, 92547
Montrouge
Cedex, France, registered under the SIREN No. 304 187 701 of the Registre du Commerce et des Sociétés of Nanterreor or
any replacement bank or other financial institution as may be approved by the Facility
Agent acting with the authorisation of the Majority
Lenders.
"Accounts"
means the Earnings Accounts and the Retention Account, as specified in Schedule 8 (Accounts).
"Account
Security" means a document creating Security over any Account in agreed form.
"Advance"
means a borrowing of all or part of the Facility under this Agreement including Advance A, Advance B or Advance C.
"Advance
A" means an amount equal to the lesser of (A) $210,000,000 and (B) 55 per cent. of the aggregate Initial Market Value of the
Ships (other than Ship I and Ship J).
"Advance
B" means an amount equal to the lesser of (A) $45,000,000 and (B) 55 per cent. of the Initial Market Value of Ship I.
"Advance
C" means an amount equal to the lesser of (A) $45,000,000 and (B) 55 per cent. of the Initial Market Value of Ship J.
"Affiliate"
means, in relation to any person, a Subsidiary of that person or a Holding Company of that person or any other Subsidiary of that Holding
Company.
"Annex
VI" means Annex VI of the Protocol of 1997 to amend the International Convention for the Prevention of Pollution from Ships
1973 (Marpol), as modified by the Protocol of 1978 relating thereto.
"Approved
Brokers" means any firm or firms of insurance brokers approved in writing by the Facility Agent, such approval not to be unreasonably
withheld.
"Approved
Classification" means, in relation to a Ship, as at the date of this Agreement, the classification in relation to that Ship
specified in Schedule 7 (Details of the Ships) or the equivalent classification with another
Approved Classification Society.
"Approved
Classification Society" means, in relation to a Ship, as at the date of this Agreement, the classification society in relation
to that Ship specified in Schedule 7 (Details of the Ships) or any other classification society
which is a member of the International
Association of Classification Societies (but excluding the Russian Register of Shipping, China Classification Society and the Indian
Register of Shipping).
2
"Approved
Commercial Manager" means, in relation to a Ship, as at the date of this Agreement, Conchart Commercial Inc. or any other person
approved in writing by the Facility Agent acting with the authorisation of all the
Lenders as the commercial manager of that Ship.
"Approved
Flag" means, in relation to a Ship, as at the date of this Agreement, the flag of the Republic of the Marshall Islands, the
Republic of Liberia, the Republic of Panama, Malta or such other flag approved in writing by
the Facility Agent acting with the authorisation
of all the Lenders (such approval not to be unreasonably withheld).
"Approved
Manager" means, in relation to a Ship, the Approved Commercial Manager or the Approved Technical Manager of that Ship.
"Approved
Technical Manager" means, in relation to a Ship, as at the date of this Agreement, Technomar Shipping Inc. or any other person
or company which is an Affiliate of, or of common controlling interests with,
Technomar Shipping Inc. approved in writing by the Facility
Agent acting with the authorisation of all the Lenders as the technical manager of that Ship.
"Approved
Valuer" means any of Maersk Brokers K/S, Barry Rogliano Salles, Kontiki Shipbrokers Ltd, Howe Robinson and, in the event that
three or more (or, in relation to the proviso contained in the definition of "Market
Value", two or more) of such sale and
purchase shipbrokers cease, or are unable, to provide a valuation:
(a)
in
relation to a Ship, any other firm or firms of independent and reputable sale and purchase
shipbrokers which have knowledge and experience of valuing new design wide beam-high specification-reefers
or
containerships; or
(b)
in
relation to any other vessel which does not have the same characteristics as a Ship, any
other firm or firms of independent and reputable sale and purchase shipbrokers,
which is, or as the case may be, are mutually agreed in writing by the Borrowers and the Facility Agent (with the authorisation of the
Lenders, such approval not to be unreasonably withheld).
"Article
55 BRRD" means Article 55 of Directive 2014/59/EU establishing a framework for the recovery and resolution of credit institutions
and investment firms.
"Assignable
Charter" means a Charter (including the Initial Charter) in respect of a Ship which has or is capable of having, by virtue of
any optional extensions, a duration of 12 months or more or any bareboat charter in
respect of that Ship and any guarantee of the obligations
of the bareboat charterer under such bareboat charter, entered or to be entered into by the relevant Borrower which is the owner thereof
and a charterer or, as the context
may require bareboat charterer in respect of that Ship and, in the plural, means all of them.
"Assignment
Agreement" means an agreement substantially in the form set out in Schedule 5 (Form of Assignment Agreement) or any other
form agreed between the relevant assignor and assignee.
"Authorisation"
means an authorisation, consent, approval, resolution, licence, exemption, filing, notarisation, legalisation or registration.
"Availability
Period" means the period from and including:
(a)
the
date of this Agreement to and including 30 November 2024, or such longer period as the Facility
Agent may accept in writing on the instruction of all the Lenders; or
3
(b)
the
date on which the Lenders' obligation to advance the Loan or any part thereof is cancelled
or terminated.
"Available Commitment" means a Lender's Commitment minus:
(c)
the
amount of its participation in the outstanding Loan; and
(d)
in
relation to any proposed Utilisation, the amount of its participation in any Advance that
is due to be made on or before the proposed Utilisation Date.
"Available
Facility" means the aggregate for the time being of each Lender's Available Commitment.
"Bail-In
Action" means the exercise of any Write-down and Conversion Powers.
"Bail-In
Legislation" means:
(a)
in
relation to an EEA Member Country which has implemented, or which at any time implements,
Article 55 BRRD, the relevant implementing law or regulation as described in the EU Bail-In
Legislation Schedule
from time to time;
(b)
in
relation to any state other than such an EEA Member Country and the United Kingdom, any analogous
law or regulation from time to time which requires contractual recognition of any Write-down
and Conversion
Powers contained in that law or regulation; and
(c)
in
relation to the United Kingdom, the UK Bail-In Legislation.
"Balloon
Instalment" has the meaning given to it in Clause 6.1 (Repayment of Loan).
"Benchmark
Terms" means the terms set out in Schedule 10 (Benchmark Terms) or in any Compounded Rate Supplement.
"Beneficial
Ownership Regulation" means 1 C.F.R. §1010.230.
"Borrower"
means Borrower A, Borrower B, Borrower C, Borrower D, Borrower E, Borrower F, Borrower G, Borrower H, Borrower I or Borrower J, and in
plural means all of them.
"Borrower
A" means the company specified as such in Part A of Schedule 1 (The Parties).
"Borrower
B" means the company specified as such in Part A of Schedule 1 (The Parties).
"Borrower
C" means the company specified as such in Part A of Schedule 1 (The Parties).
"Borrower
D" means the company specified as such in Part A of Schedule 1 (The Parties).
"Borrower
E" means the company specified as such in Part A of Schedule 1 (The Parties).
"Borrower
F" means the company specified as such in Part A of Schedule 1 (The Parties).
"Borrower
G" means the company specified as such in Part A of Schedule 1 (The Parties).
"Borrower
H" means the company specified as such in Part A of Schedule 1 (The Parties).
4
"Borrower I" means the company specified as such in Part A of Schedule 1 (The Parties).
"Borrower
J" means the company specified as such in Part A of Schedule 1 (The Parties).
"Break
Costs" means:
(a)
in
respect of any Term SOFR Loan the amount (if any) by which:
(i)
the
interest which a Lender should have received for the period from the date of receipt of all
or any part of its participation in the Loan or an Unpaid Sum to the last day of the current
Interest Period in
relation to the Loan, the relevant part of the Loan or that Unpaid Sum,
had the principal amount or Unpaid Sum received been paid on the last day of that Interest
Period;
exceeds
(ii)
the
amount which that Lender would be able to obtain by placing an amount equal to the principal
amount or Unpaid Sum received by it on deposit with a leading bank for a period starting
on the Business
Day following receipt or recovery and ending on the last day of the current
Interest Period; and
(b)
in
respect of any Compounded Rate Loan, any amount specified as such in the Benchmark Terms.
"Business Day" means a day (other than a Saturday or Sunday) on which banks are open for general business in London,
Amsterdam, Paris, Athens and New York and, in relation to:
(a)
any
date for payment or purchase of an amount relating to a Compounded Rate Loan;
(b)
the
determination of the first day or the last day of an Interest Period for a Compounded Rate
Loan or otherwise in relation to the determination of the length of such an Interest Period;
(c)
the
fixing of an interest rate for a Term SOFR Loan,
which is an RFR Banking Day relating to that Term SOFR Loan or Compounded Rate Loan (as the case may be).
"Carbon
Intensity and Climate Alignment Certificate" means a certificate from a Recognised Organisation relating to a Ship and a calendar
year setting out:
(a)
the
average efficiency ratio of that Ship for all voyages performed by it over that calendar
year using ship fuel oil consumption data required to be collected and reported in accordance
with Regulation 22A of Annex
VI in respect of that calendar year; and
(b)
the
climate alignment of that Ship for such calendar year,
in
each case as calculated in accordance with the Poseidon Principles.
"Charter"
means, in relation to a Ship, any charter relating to that Ship (including, without limitation, the Initial Charters or any other Assignable
Charter relating to that Ship), or other contract for its employment, whether or
not already in existence.
5
"Charter Guarantee" means any guarantee, bond, letter of credit or other instrument (if any and whether or not already
issued) supporting a Charter, the form of which shall not be subject to the Facility Agent's prior approval.
"Charterparty
Assignment" means, in relation to an Initial Charter, any other Assignable Charter or Charter Guarantee of a Ship, a specific
deed of assignment of the rights, title and interests of the relevant Borrower under
that Initial Charter or that other Assignable Charter
(as the case may be) and any Charter Guarantee relevant thereto in the agreed form.
"Central
Bank Rate" has the meaning given to that term in the Benchmark Terms.
"Central
Bank Rate Adjustment" has the meaning given to that term in the Benchmark Terms.
"Central
Bank Rate Spread" has the meaning given to that term in the Benchmark Terms.
"Code"
means the US Internal Revenue Code of 1986.
"Commercial
Management Agreement" means, in relation to a Ship, the agreement entered into between the relevant
Borrower and the Approved Commercial Manager regarding the commercial management of that Ship.
"Commitment"
means:
(a)
in
relation to an Original Lender, the amount set opposite its name under the heading "Commitment"
in Part B of Schedule 1 (The Parties) and the amount of any other Commitment transferred
to it under this
Agreement; and
(b)
in
relation to any other Lender, the amount of any Commitment transferred to it under this Agreement
pursuant to the relevant Transfer Certificate,
to
the extent not cancelled, reduced or transferred by it under this Agreement.
"Compliance
Certificate" means a certificate in the form set out in Schedule 6 (Form of Compliance Certificate) or in any other form
agreed between the Guarantor and the Facility Agent.
"Compounded
Market Disruption Rate" means the rate specified as such in the Benchmark Terms.
"Compounded
Rate Interest Payment" means the aggregate amount of interest that:
(a)
is,
or is scheduled to become, payable under any Finance Document; and
(b)
relates
to a Compounded Rate Loan.
"Compounded
Rate Loan" means the Loan or part of the Loan, or, if applicable, Unpaid Sum which is, or becomes, a "Compounded Rate Loan"
pursuant to Clause 10.1 (Unavailability of Term SOFR).
"Compounded
Rate Supplement" means a document which:
(a)
is
agreed in writing by the Borrowers and the Facility Agent (in its own capacity) and the Facility
Agent (acting on the instructions of the Majority Lenders);
6
(b)
specifies
the relevant terms which are expressed in this Agreement to be determined by reference to
the Benchmark Terms; and
(c)
has
been made available to the Borrowers and the Finance Parties.
"Compounded Reference Rate" means, in relation to any RFR Banking Day during the Interest Period of a Compounded Rate
Loan, the percentage rate per annum which is the Daily Non-Cumulative Compounded RFR Rate
for that RFR Banking Day.
"Compounding
Methodology Supplement" means, in relation to the Daily Non-Cumulative Compounded RFR Rate or the Cumulative Compounded RFR
Rate, a document which:
(a)
is
agreed in writing by the Borrowers and the Facility Agent (in its own capacity) and the Facility
Agent (acting on the instructions of the Majority Lenders);
(b)
specifies
a calculation methodology for that rate; and
has
been made available to the Borrowers and the Finance Parties.
"Confidential
Information" means all information relating to any Transaction Obligor, the Group, the Finance Documents or the Facility of
which a Finance Party becomes aware in its capacity as, or for the purpose of
becoming, a Finance Party or which is received by a Finance
Party in relation to, or for the purpose of becoming a Finance Party under, the Finance Documents or the Facility from either:
(a)
any
member of the Group or any of its advisers; or
(b)
another
Finance Party, if the information was obtained by that Finance Party directly or indirectly
from any member of the Group or any of its advisers,
in
whatever form, and includes information given orally and any document, electronic file or any other way of representing or recording
information which contains or is derived or copied from such information but
excludes:
(i)
information
that:
(A)
is
or becomes public information other than as a direct or indirect result of any breach by
that Finance Party of Clause 45 (Confidential Information); or
(B)
is
identified in writing at the time of delivery as non-confidential by any member of the Group
or any of its advisers; or
(C)
is
known by that Finance Party before the date the information is disclosed to it in accordance
with paragraphs (a) or (b) above or is lawfully obtained by that Finance Party after that
date, from a
source which is, as far as that Finance Party is aware, unconnected with the
Group and which, in either case, as far as that Finance Party is aware, has not been obtained
in breach of, and is not
otherwise subject to, any obligation of confidentiality; and
(ii)
any
Funding Rate.
7
"Confidentiality Undertaking" means a confidentiality undertaking in substantially the appropriate form recommended
by the LMA from time to time or in any other form agreed between the Borrowers and the Facility
Agent.
"Corresponding
Debt" means any amount, other than any Parallel Debt, which an Obligor owes to a Secured Party under or in connection with the
Finance Documents.
"Cumulative
Compounded RFR Rate" means, in relation to an Interest Period for a Compounded Rate Loan, the percentage rate per annum determined
by the Facility Agent (or by any other Finance Party which agrees to
determine that rate in place of the Facility Agent) in accordance
with the methodology set out in Schedule 12 (Cumulative Compounded RFR Rate) or in any relevant Compounding Methodology Supplement.
"Daily
Non-Cumulative Compounded RFR Rate" means, in relation to any RFR Banking Day during an Interest Period for a Compounded Rate
Loan, the percentage rate per annum determined by the Facility Agent (or by
any other Finance Party which agrees to determine that rate
in place of the Facility Agent) in accordance with the methodology set out in Schedule 11 (Daily Non-Cumulative Compounded RFR Rate)
or in any relevant
Compounding Methodology Supplement.
"Daily
Rate" means the rate specified as such in the Benchmark Terms.
"Deed
of Release" means, in relation to each Existing Agreement, a deed releasing the Existing Security under that Existing Agreement
in a form acceptable to the Facility Agent and, in the plural means, all of them.
"Default"
means an Event of Default or a Potential Event of Default.
"Delegate"
means any delegate, agent, attorney or co-trustee appointed by the Security Agent.
"Disruption
Event" means either or both of:
(a)
a
material disruption to those payment or communications systems or to those financial markets
which are, in each case, required to operate in order for payments to be made in connection
with the Facility (or
otherwise in order for the transactions contemplated by the Finance
Documents to be carried out) which disruption is not caused by, and is beyond the control
of, any of the Parties or, if applicable, any Transaction
Obligor; or
(b)
the
occurrence of any other event which results in a disruption (of a technical or systems-related
nature) to the treasury or payments operations of a Party or, if applicable, any Transaction
Obligor preventing that, or
any other, Party or, if applicable, any Transaction Obligor:
(i)
from
performing its payment obligations under the Finance Documents; or
(ii)
from
communicating with other Parties or, if applicable, any Transaction Obligor in accordance
with the terms of the Finance Documents,
and
which (in either such case) is not caused by, and is beyond the control of, the Party or, if applicable, any Transaction Obligor whose
operations are disrupted.
8
"Dividend Payment" means, in relation to an Obligor, any of the following:
(a)
a
declaration, making or payment of any dividend, charge, fee or other distribution (or interest
on any unpaid dividend, charge, fee or other distribution) (whether in cash or in kind) on
or in respect of its equity
interests;
(b)
a
repayment or distribution of any dividend or share premium reserve; or
(c)
a
redemption, repurchase, defeasance, retirement or repayment of any of its issued shares or
a resolution to do any of the foregoing.
"Document of Compliance" has the meaning given to it in the ISM Code.
"dollars"
and "$" mean the lawful currency, for the time being, of the United States of America.
"Earnings"
means, in relation to a Ship, all moneys whatsoever which are now, or later become, payable (actually or contingently) to a Borrower
or the Security Agent and which arise out of or in connection with or relate to
the use or operation of that Ship, including (but not
limited to):
(a)
the
following, save to the extent that any of them is, with the prior written consent of the
Facility Agent, pooled or shared with any other person:
(i)
all
freight, hire and passage moneys including, without limitation, all moneys payable under,
arising out of or in connection with a Charter or a Charter Guarantee;
(ii)
the
proceeds of the exercise of any lien on sub-freights;
(iii)
compensation
payable to a Borrower or the Security Agent in the event of requisition of that Ship for
hire or use;
(iv)
remuneration
for salvage and towage services;
(v)
demurrage
and detention moneys;
(vi)
without
prejudice to the generality of sub-paragraph (i) above, damages for breach (or payments for
variation or termination) of any charterparty or other contract for the employment of that
Ship;
(vii)
all
moneys which are at any time payable under any Insurances in relation to loss of hire;
(viii)
all
monies which are at any time payable to a Borrower in relation to general average contribution;
and
(b)
if
and whenever that Ship is employed on terms whereby any moneys falling within sub-paragraphs
(i) to (viii) of paragraph (a) above are pooled or shared with any other person, that proportion
of the net receipts of
the relevant pooling or sharing arrangement which is attributable
to that Ship.
"Earnings
Account" means, in relation to a Borrower:
9
(a)
an
account in the name of that Borrower with the Account Bank designated "Earnings Account";
(b)
any
other account in the name of that Borrower with the Account Bank which may, with the prior
written consent of the Facility Agent, be opened in the place of the account referred to
in paragraph (a) above,
irrespective of the number or designation of such replacement account;
or
(c)
any
sub-account of any account referred to in paragraph (a) or (b) above.
"EEA Member Country" means any member state of the European Union, Iceland, Liechtenstein and Norway.
"Environmental
Approval" means any present or future permit, ruling, variance or other Authorisation required under Environmental Law.
"Environmental
Claim" means any claim by any governmental, judicial or regulatory authority or any other person which arises out of an Environmental
Incident or an alleged Environmental Incident or which relates to any
Environmental Law and, for this purpose, "claim"
includes a claim for damages, compensation, contribution, injury, fines, losses and penalties or any other payment of any kind, including
in relation to clean-up and removal,
whether or not similar to the foregoing; an order or direction to take, or not to take, certain
action or to desist from or suspend certain action; and any form of enforcement or regulatory action, including the arrest or attachment
of any asset.
"Environmental
Incident" means:
(a)
any
release, emission, spill or discharge of Environmentally Sensitive Material whether within
a Ship or from a Ship into any other vessel or into or upon the air, water, land or soils
(including the seabed) or surface
water; or
(b)
any
incident in which Environmentally Sensitive Material is released, emitted, spilled or discharged
into or upon the air, water, land or soils (including the seabed) or surface water from a
vessel other than any Ship and
which involves a collision between any Ship and such other
vessel or some other incident of navigation or operation, in either case, in connection with
which a Ship is actually or potentially liable to be arrested,
attached, detained or injuncted
and/or a Ship and/or any Transaction Obligor and/or any operator or manager of a Ship is
at fault or allegedly at fault or otherwise liable to any legal or administrative action;
or
(c)
any
other incident in which Environmentally Sensitive Material is released, emitted, spilled
or discharged into or upon the air, water, land or soils (including the seabed) or surface
water otherwise than from a Ship and
in connection with which a Ship is actually or potentially
liable to be arrested and/or where any Transaction Obligor and/or any operator or manager
of a Ship is at fault or allegedly at fault or otherwise liable to any
legal or administrative
action, other than in accordance with an Environmental Approval.
"Environmental
Law" means any present or future law applicable to a Ship and relating to vessel disposal, energy efficiency, carbon reduction,
emissions, emissions trading, pollution or protection of human health or the
environment, to conditions in the workplace, to the carriage,
generation, handling, storage, use, release or spillage of Environmentally Sensitive Material or to actual or threatened releases of
Environmentally Sensitive
Material.
10
"Environmentally Sensitive Material" means and includes all contaminants, oil, oil products, toxic substances and any
other substance (including any chemical, gas or other hazardous or noxious substance) which is (or is
capable of being or becoming) polluting,
toxic or hazardous.
"EU
Bail-In Legislation Schedule" means the document described as such and published by the LMA from time to time.
"EU
Ship Recycling Regulation" means Regulation (EU) No 1257/2013 of the European Parliament and of the Council of 20 November 2013
on ship recycling and amending Regulation (EC) No 1013/2006 and Directive
2009/16/EC.
"Event
of Default" means any event or circumstance specified as such in Clause 28 (Events of Default).
"Existing
Agreement" means:
(a)
in
respect of Borrower A, Borrower B, Borrower C, Borrower D, Borrower E, Borrower F and Borrower
G the facility agreement dated 19 September 2019 (as from time to time amended, restated
and/or
supplemented) and made between (inter alios) (i) Borrower A, Borrower B, Borrower
C, Borrower D, Borrower E, Borrower F and Borrower G, as joint and several borrowers, (ii)
the banks and financial institutions
listed in part B schedule 1 (the parties) therein
as lenders and (iii) Crédit Agricole Corporate and Investment Bank as facility agent,
arranger, bookrunner and security agent, in respect of a facility of (originally) up to
US$268,000,000;
and
(b)
in
respect of Borrower H, the facility agreement dated 13 April 2021 (as from time to time amended,
restated and/or supplemented) and made between (inter alios) (i) Borrower H as borrower,
(ii) the banks and
financial institutions listed in part B Schedule 1 (the parties)
therein as lenders and (iii) Crédit Agricole Corporate and Investment Bank as facility
agent, arranger, bookrunner and security agent, in respect of a facility
of (originally)
up to $51,700,000.
"Existing
Indebtedness" means, at any date, the outstanding indebtedness of the relevant Borrowers on that date under the relevant Existing
Agreement.
"Existing
Security" means any Security created to secure the Existing Indebtedness.
"Facility"
means the term loan facility made available under this Agreement as described in Clause 2 (The Facility).
"Facility
Office" means the office or offices notified by a Lender to the Facility Agent in writing on or before the date it becomes a
Lender (or, following that date, by not less than 5 Business Days' written notice) as the office
or offices through which it will perform
its obligations under this Agreement.
"FATCA"
means:
(a)
sections
1471 to 1474 of the Code or any associated regulations;
(b)
any
treaty, law or regulation of any other jurisdiction, or relating to an intergovernmental
agreement between the US and any other jurisdiction, which (in either case) facilitates the
implementation of any law or
regulation referred to in paragraph (a) above; or
11
(c)
any
agreement pursuant to the implementation of any treaty, law or regulation referred to in
paragraphs (a) or (b) above with the US Internal Revenue Service, the US government or any
governmental or taxation
authority in any other jurisdiction.
"FATCA Deduction" means a deduction or withholding from a payment under a Finance Document required by FATCA.
"FATCA
Exempt Party" means a Party that is entitled to receive payments free from any FATCA Deduction.
"Fee
Letter" means any letter or letters dated on or about the date of this Agreement between any of the Mandated Lead Arrangers,
the Facility Agent and the Security Agent and any Obligor setting out the amount of any of
the fees referred to in Clause 11 (Fees)
and the time of payment of the same.
"Finance
Document" means:
(a)
this
Agreement;
(b)
any
Fee Letter;
(c)
each
Utilisation Request;
(d)
any
Compounded Rate Supplement;
(e)
any
Compounding Methodology Supplement;
(f)
any
Security Document;
(g)
any
Managers' Undertaking;
(h)
any
Subordination Agreement;
(i)
any
other document which is executed for the purpose of establishing any priority or subordination
arrangement in relation to the Secured Liabilities; or
(j)
any
other document designated as such by the Facility Agent and the Borrowers.
"Finance
Party" means the Facility Agent, the Security Agent, a Bookrunner, an Arranger, a Mandated Lead Arranger, the Account Bank and/or
a Lender.
"Financial
Indebtedness" means any indebtedness for or in relation to:
(a)
moneys
borrowed;
(b)
any
amount raised by acceptance under any acceptance credit facility or dematerialised equivalent;
(c)
any
amount raised pursuant to any note purchase facility or the issue of bonds, notes, debentures,
loan stock or any similar instrument;
(d)
the
amount of any liability in relation to any lease or hire purchase contract which would, in
accordance with GAAP, be treated as a balance sheet liability (other than any liability in
respect of a lease or hire purchase
contract which would, in accordance with GAAP in force
prior to 1 January 2019, have been treated as an operating lease);
12
(e)
receivables
sold or discounted (other than any receivables to the extent they are sold on a non-recourse
basis);
(f)
any
amount raised under any other transaction (including any forward sale or purchase agreement)
of a type not referred to in any other paragraph of this definition having the commercial
effect of a borrowing;
(g)
any
derivative transaction entered into in connection with protection against or benefit from
fluctuation in any rate or price (and, when calculating the value of any derivative transaction,
only the marked to market
value (or, if any actual amount is due as a result of the termination
or close-out of that derivative transaction, that amount) shall be taken into account);
(h)
any
counter-indemnity obligation in relation to a guarantee, indemnity, bond, standby or documentary
letter of credit or any other instrument issued by a bank or financial institution; and
(i)
the
amount of any liability in relation to any guarantee or indemnity for any of the items referred
to in paragraphs (a) to (h) above.
"Funding Rate" means any individual rate notified by a Lender to the Facility Agent pursuant to Clause 10.4(a) (Cost
of funds).
"GAAP"
means generally accepted accounting principles in the United States of America including IFRS.
"General
Assignment" means, in relation to a Ship, the general assignment creating first ranking Security over that Ship's Earnings,
its Insurances and any Requisition Compensation in relation to that Ship, in agreed form.
"Group"
means the Guarantor and its Subsidiaries for the time being from time to time throughout the Security Period.
"GSL
Policy" means the Guarantor's Whistleblower Policy as it is included in the Guarantor's public Code of Business Conduct and
Ethics.
"Holding
Company" means, in relation to a person, any other person in relation to which it is a Subsidiary.
"IFRS"
means international accounting standards within the meaning of the IAS Regulation 1606/2002 to the extent applicable to the relevant
financial statements.
"Indemnified
Person" has the meaning given to it in Clause 14.2 (Other indemnities).
"Initial
Charter" means, in relation to:
(a)
Ship
A, a time charter dated 25 August 2022 (as amended by an
Addendum No 1 dated 2 January 2024 and Addendum No 2 dated 15 April 2024) and made between
Borrower A and the relevant Initial Charterer, for a
period of 60 months with up to 45 days
more or less in that Initial Charterer's option, having an actual commencement date on or
about October 2024 at a gross charter hire rate of $44,375 per day;
13
(b)
Ship
B, a time charter dated 10 May 2023 and made between Borrower
B and the relevant Initial Charterer, for a period of 36 to 38 months, having an actual commencement
date of 23 July 2024 and for a gross charter
hire rate of $31,500 per day;
(c)
Ship
C, a time charter dated 25 August 2022 (as amended by an
Addendum No 1 dated 2 January 2024 and Addendum No 2 dated 15 April 2024) and made between
Borrower C and the relevant Initial Charterer, for a
period of 60 months with up to 45 days
more or less in that Initial Charterer's option, having an actual commencement date of 18
July 2024 and for a gross charter hire rate of $44,375 per day;
(d)
Ship
D, a time charter dated 25 August 2022 (as amended by an
Addendum No 1 dated 2 January 2024 and Addendum No 2 dated 15 April 2024) and made between
Borrower D and the relevant Initial Charterer, for a
period of 60 months with up to 45 days
more or less in that Initial Charterer's option, having an actual commencement date after
its drydocking on or about 10 August 2024 and for a gross charter hire rate of $44,375
per
day;
(e)
Ship
E, a time charter dated 25 August 2022 (as amended by an
Addendum No 1 dated 2 January 2024 and Addendum No 2 dated 15 April 2024) and made between
Borrower E and the relevant Initial Charterer, for a
period of 60 months with up to 45 days
more or less in that Initial Charterer's option, having an actual commencement date on or
about 25 August 2024 and for a gross charter hire rate of $44,375 per day;
(f)
Ship
F, a time charter dated 25 August 2022 (as amended by an
Addendum No 1 dated 2 January 2024 and Addendum No 2 dated 15 April 2024) and made between
Borrower F and the relevant Initial Charterer, for a
period of 60 months with up to 45 days
more or less in that Initial Charterer's option, having an actual commencement date of 15
June 2024 and for a gross charter hire rate of $44,375 per day;
(g)
Ship
G, a time charter dated 25 August 2022 (as amended by an
Addendum No 1 dated 2 January 2024 and Addendum No 2 dated 15 April 2024) and made between
Borrower G and the relevant Initial Charterer, for a
period of 60 months with up to 45 days
more or less in that Initial Charterer's option, having an actual commencement date of 6
January 2024 with an earliest expiration date of January 2029 and for a gross charter hire
rate of $44,375 per day;
(h)
Ship
H, a time charter dated 5 November 2021 (as amended by an
Addendum No 1 dated 5 November 2021) and made between Borrower H and the relevant Initial
Charterer, for a period of minimum 60 months to
maximum 63 months in that Initial Charterer's
option, having an actual commencement date of 11 July 2022 and for a gross charter hire rate
of $65,000 per day;
(i)
Ship
I, a time charter dated 5 November 2021 (as amended by an
Addendum No 1 dated 5 November 2021) and made between Borrower I and the relevant Initial
Charterer, for a period of minimum 60 months to
maximum 63 months in that Initial Charterer's
option, having an actual commencement date of 22 May 2022 and for a gross charter hire rate
of $65,000 per day; and
14
(j)
Ship
J, a time charter dated 4 April 2023 (as amended by an Addendum
No 1 dated 4 April 2023) and made between Borrower J and the relevant Initial Charterer,
for a period of 24 months with up to 30 days more or
less in that Initial Charterer's option,
having an actual commencement date of 17 October 2023 and for a gross charter hire rate of
$42,000 per day.
"Initial Charterer" means, in relation to:
(a)
each
of Ship A, Ship C, Ship D, Ship E, Ship F and Ship G, Hapag-Lloyd AG, of 25
Ballindamm Str., Hamburg, Germany;
(b)
each
of Ship B and Ship J, MSC – Mediterranean Shipping Company S.A., of 12-14 Chemin Rieu,
1208 Geneva, Switzerland; and
(c)
each
of Ship H and Ship I, Zim Integrated Shipping Services, of 9
Andrei Sakharov Street, 3101601, Haifa, Israel.
"Initial Market Value" means, in relation to a Ship, the Market Value thereof determined pursuant to the valuations
relative thereto referred to in paragraph 6.2 of Part A of Schedule 2 (Conditions Precedent).
"Instalment"
has the meaning given to it in Clause 6.1 (Repayment of Loan).
"Insurances"
means, in relation to a Ship:
(a)
all
policies and contracts of insurance and reinsurance, including entries of that Ship in any
protection and indemnity or war risks association, effected in relation to that Ship, that
Ship's Earnings or otherwise in
relation to that Ship whether before, on or after the date
of this Agreement; and
(b)
all
rights (including, without limitation, any and all rights or claims which the Borrower owning
that Ship may have under or in connection with any cut-through clause relative to any reinsurance
contract relating to
the aforesaid policies or contracts of insurance) and other assets relating
to, or derived from, any of such policies, contracts or entries, including any rights to
a return of premium and any rights in relation to any claim
whether or not the relevant policy,
contract of insurance or entry has expired on or before the date of this Agreement.
"Interest
Payment Date" has the meaning given to it in Clause 8.3 (Payment of interest).
"Interest
Period" means, in relation to the Loan or any part of the Loan, each period determined in accordance with Clause 9 (Interest
Periods) and, in relation to an Unpaid Sum, each period determined in accordance with
Clause 8.4 (Default interest).
"Inventory
of Hazardous Materials" means, in relation to a Ship, the inventory of any material or substance which is liable to create hazards
to human health and/or the environment issued by a Class certified company
(prepared in accordance with the requirements of the Hong
Kong Convention 2009 SR/CONF/45 (HKC) and or the EU Ship Recycling Regulation) which includes a list of any and all materials known to
be potentially
hazardous utilised in the construction of such Ship along with their respective location and approximate quantities, also
referred to as list of hazardous materials.
15
"ISM Code" means the International Safety Management Code for the Safe Operation of Ships and for Pollution Prevention
(including the guidelines on its implementation), adopted by the International Maritime
Organisation, as the same may be amended or supplemented
from time to time.
"ISPS
Code" means the International Ship and Port Facility Security (ISPS) Code as adopted by the International Maritime Organization's
(IMO) Diplomatic Conference of December 2002, as the same may be amended or
supplemented from time to time.
"ISSC"
means an International Ship Security Certificate issued under the ISPS Code.
"Legal
Reservations" means:
(a)
the
principle that equitable remedies may be granted or refused at the discretion of a court
and the limitation of enforcement by laws relating to insolvency, reorganisation and other
laws generally affecting the rights of
creditors;
(b)
the
time barring of claims under the Limitation Acts, the possibility that an undertaking to
assume liability for or indemnify a person against non-payment of UK stamp duty may be void
and defences of set-off or
counterclaim;
(c)
similar
principles, rights and defences under the laws of any Relevant Jurisdiction; and
(d)
any
other matters which are set out as qualifications or reservations as to matters of law of
general application in any legal opinion delivered pursuant to Clause 4 (Conditions of
Utilisation).
"Lender"
means:
(a)
any
Original Lender; and
(b)
any
bank, financial institution, trust, fund or other entity which has become a Party as a Lender
in accordance with Clause 29 (Changes to the Lenders),
which
in each case has not ceased to be a Party as such in accordance with this Agreement.
"LLC
Shares" shall have, in respect of each Borrower, the meaning ascribed thereto in that Borrower's limited liability company agreement.
"LMA"
means the Loan Market Association or any successor organisation.
"Loan"
means the loan to be made available under the Facility or the aggregate principal amount outstanding of the borrowings at any relevant
time under the Facility and a "part of the Loan" means any other part of the Loan
as the context may require.
"Lookback
Period" means the number of days specified as such in the Benchmark Terms.
"Major
Casualty" means, in relation to a Ship, any casualty to that Ship in relation to which the claim or the aggregate of the claims
against all insurers, before adjustment for any relevant franchise or deductible, exceeds
$1,000,000 or the equivalent in any other currency.
"Majority
Lenders" means:
16
(a)
if
no Advance has yet been advanced, a Lender or Lenders whose Commitments aggregate more than
66⅔ per cent. of the Total Commitments; or
(b)
at
any other time, a Lender or Lenders whose participations in the Loan aggregate more than
66⅔ per cent. of the amount of the Loan then outstanding or, if the Loan has been repaid
or prepaid in full, a Lender or
Lenders whose participations in the Loan immediately before
repayment or prepayment aggregate more than 66⅔ per cent. of the Loan immediately before
such repayment.
"Management Agreement" means a Technical Management Agreement or a Commercial Management Agreement.
"Manager's
Undertaking" means, in relation to a Ship, the letter of undertaking from its Approved Technical Manager and the letter of undertaking
from its Approved Commercial Manager subordinating the rights of such
Approved Technical Manager and such Approved Commercial Manager
respectively against that Ship and the relevant Borrower to the rights of the Finance Parties in agreed form.
"Margin"
means 1.85 per cent. per annum.
"Market
Disruption Rate" means the Term SOFR Reference Rate.
"Market
Value" means, in relation to a Ship or any other vessel, at any date, an amount equal to the market value of that Ship or that
vessel shown by the arithmetic average of two valuations, addressed and provided to the
Facility Agent and prepared:
(a)
as
at a date not more than 30 days (and in the case of the valuations used to determine the
Initial Market Value of that Ship, not more than 15 days prior to the first Utilisation Date)
previously;
(b)
by
two Approved Valuers;
(c)
with
or without physical inspection of that Ship or that vessel (as the Facility Agent may require
(acting on the instructions of the Majority Lenders)); and
(d)
on
the basis of a sale for prompt delivery for cash on normal arm's length commercial terms
as between a willing seller and a willing buyer, free of any Charter,
provided
that if the higher of the two valuations is more than 110 per cent. of the lower of the two valuations, a third valuation shall be
obtained from an Approved Valuer at the Borrowers' cost and on the same terms
as the first two valuations. The Market Value of that Ship
shall then be determined as the arithmetic average of the three valuations.
"Material
Adverse Effect" means in the reasonable opinion of the Majority Lenders a material adverse effect on:
(a)
the
business, operations, property, condition (financial or otherwise) or prospects of each Obligor
and the Group taken as a whole; or
(b)
the
ability of any Transaction Obligor to perform its obligations under any Finance Document
to which it is a party; or
17
(c)
the
validity or enforceability of, or the effectiveness or ranking of any Security granted or
intended to be granted pursuant to any of, the Finance Documents or the rights or remedies
of any Finance Party under any of
the Finance Documents.
"Month" means a period starting on one day in a calendar month and ending on the numerically corresponding day in the
next calendar month, except that:
(a)
other
than where paragraph (b) applies:
(i)
(subject
to paragraph (iii) below) if the numerically corresponding day is not a Business Day, that
period shall end on the next Business Day in that calendar month in which that period is
to end if there is one,
or if there is not, on the immediately preceding Business Day;
(ii)
if
there is no numerically corresponding day in the calendar month in which that period is to
end, that period shall end on the last Business Day in that calendar month; and
(iii)
if
an Interest Period begins on the last Business Day of a calendar month, that Interest Period
shall end on the last Business Day in the calendar month in which that Interest Period is
to end; and
(b)
in
relation to an Interest Period for any Compounded Rate Loan (or any other period for the
accrual of commission or fees while interest is calculated on the basis of the Compounded
Reference Rate) for which there
are rules specified as "Business Day Conventions"
in the Benchmark Terms, those rules shall apply.
"Mortgage" means, in relation to a Ship, a first preferred or, as the case may be, priority Marshall Islands, Liberian,
Panamanian or Maltese (as applicable) ship mortgage on that Ship in agreed form.
"Obligor"
means a Borrower or the Guarantor.
"Operating
Expenses" means, in relation to a Ship, the aggregate expenditure necessarily incurred by the Borrower which is the owner of
that Ship in operating, insuring, maintaining, repairing and generally trading that Ship
(including, without limitation any crewing fees
paid under a Management Agreement) and general and administrative expenses paid in respect of that Ship.
"Original
Financial Statements" means, in relation to the Guarantor, the audited consolidated financial statements of the Group for its
financial year ended 2023, as publicly available.
"Original
Jurisdiction" means, in relation to an Obligor, the jurisdiction under whose laws that Obligor is formed as at the date of this
Agreement.
"Overseas
Regulations" means the Overseas Companies Regulations 2009 (SI 2009/1801).
"Parallel
Debt" means any amount which an Obligor owes to the Security Agent under Clause 32.2 (Parallel Debt (Covenant to pay
the Security Agent)) or under that Clause as incorporated by reference or in full in any other
Finance Document.
18
"Participating Member State" means any member state of the European Union that has the euro as its lawful currency in
accordance with legislation of the European Union relating to Economic and Monetary Union.
"Party"
means a party to this Agreement.
"Perfection
Requirements" means the making or procuring of filings, stampings, registrations, notarisations, endorsements, translations
and/or notifications of any Finance Document (and/or any Security created under it)
necessary for the validity, enforceability (as against
the relevant Obligor or any relevant third party) and/or perfection of that Finance Document.
"Permitted
Charter" means, in relation to a Ship, a Charter (other than an Initial Charter or any other Assignable Charter relative thereto):
(a)
which
is a time, voyage or consecutive voyage charter;
(b)
the
duration of which does not exceed and is not capable of exceeding, by virtue of any optional
extensions, 12 months plus a redelivery allowance of not more than 30 days unless prior approval
has been obtained
from the Facility Agent;
(c)
which
is entered into on bona fide arm's length terms at the time at which that Ship is
fixed; and
(d)
in
relation to which not more than two months' hire is payable in advance,
and
any other Charter which is approved in writing by the Facility Agent acting with the authorisation of the Majority Lenders which authorisation
no Lender shall unreasonably withhold or delay.
"Permitted
Financial Indebtedness" means:
(a)
until
(and including) the relevant Utilisation Date, any Existing Indebtedness;
(b)
any
Financial Indebtedness incurred under the Finance Documents;
(c)
any
Financial Indebtedness that is subordinated to all Financial Indebtedness incurred under
the Finance Documents pursuant to a Subordination Agreement and which is, in the case of
any such Financial Indebtedness
of a Borrower, the subject of Subordinated Debt Security;
and
(d)
any
normal trading debt of each Borrower incurred in the ordinary course of its business operations
of owning and operating the relevant Ship and issuing guarantees thereunder.
"Permitted
Security" means:
(a)
until
the relevant Utilisation Date, any Existing Security;
(b)
Security
created by the Finance Documents;
(c)
liens
for unpaid master's and crew's wages in accordance with first class ship ownership and management
practice and not being enforced through arrest;
(d)
liens
for salvage;
19
(e)
liens
for master's disbursements incurred in the ordinary course of trading in accordance with
first class ship ownership and management practice; and
(f)
any
other lien arising by operation of law or otherwise in the ordinary course of the operation,
repair or maintenance of any Ship:
(i)
not
as a result of any default or omission by any Borrower; and
(ii)
subject,
in the case of liens for repair or maintenance, to Clause 24.14 (Restrictions on chartering,
appointment of managers etc.),
provided such lien does not secure amounts more than 60 days overdue (unless the overdue amount is being contested in good faith by appropriate
steps and for the payment of which adequate reserves are held and
provided further that such proceedings do not give rise to a material
risk of the relevant Ship or any interest in it being seized, sold, forfeited or lost).
"Poseidon
Principles" means the financial industry framework for assessing and disclosing the climate alignment of ship finance portfolios
as the same may be amended or replaced from time to time.
"Poseidon"
means Poseidon Containers Holdings LLC, a limited liability company formed in the Republic
of the Marshall Islands whose registered address is at Trust Company Complex, Ajeltake Road, Ajeltake Island,
Majuro, Marshall Islands
MH 96960.
"Potential
Event of Default" means any event or circumstance specified in Clause 28 (Events of Default) which would (with the expiry
of a grace period, the giving of notice, the making of any determination under the
Finance Documents or any combination of any of the
foregoing) be an Event of Default.
"Prohibited
Person" means a person that is:
(a)
listed
on, or owned or controlled by a person listed on any Sanctions List;
(b)
located
in, resident, organised or incorporated under the laws of, or owned or controlled by, or
acting on behalf of, a person located in, resident, incorporated or organised under the laws
of a Sanctioned Country; or
(c)
otherwise
a target of Sanctions.
"Protected
Party" has the meaning given to it in Clause 12.1 (Definitions).
"Quotation
Day" means, in relation to any period for which an interest rate is to be determined in relation to a Term SOFR Loan, two (2)
RFR Banking Days before the first day of that period unless market practice differs in
the relevant syndicated loan market in which case
the relevant Quotation Day will be determined by the Facility Agent in accordance with that market practice (and if quotations would
normally be given on more than one day,
the Quotation Day will be the last of those days).
"Quoted
Tenor" means, in relation to a Term SOFR Loan, any period for which Term SOFR is customarily displayed on the relevant page
or screen of an information service.
20
"Receiver" means a receiver or receiver and manager or administrative receiver of the whole or any part of the Security
Assets.
"Recognised
Organisation" means an organisation representing any Ship's flag state and, for the purposes of Clause 24.20 (Poseidon Principles)
duly authorized to determine whether the relevant Borrower has complied with
regulation 22A of Annex VI.
"Related
Fund" in relation to a fund (the "first fund"), means a fund which is managed or advised by the same investment
manager or investment adviser as the first fund or, if it is managed by a different investment manager
or investment adviser, a fund
whose investment manager or investment adviser is an Affiliate of the investment manager or investment adviser of the first fund.
"Relevant
Jurisdiction" means, in relation to a Transaction Obligor:
(a)
its
Original Jurisdiction;
(b)
any
jurisdiction where any asset subject to, or intended to be subject to, any of the Transaction
Security created, or intended to be created, by it is situated;
(c)
any
jurisdiction where it conducts its business; and
(d)
the
jurisdiction whose laws govern the perfection of any of the Security Documents entered into
by it.
"Relevant
Market" means the market for overnight cash borrowing collateralised by US Government Securities.
"Relevant
Percentage" has the meaning given to it in Clause 26.1 (Minimum required security cover).
"Repayment
Date" means each date on which a Repayment Instalment is required to be paid under Clause 6.1 (Repayment of Loan).
"Repayment
Instalment" has the meaning given to it in Clause 6.1 (Repayment of Loan).
"Repeating
Representation" means each of the representations set out in Clause 19 (Representations) except Clause 19.10 (Insolvency),
Clause 19.11 (No filing or stamp taxes), Clause 19.12 (Deduction of Tax), Clause 19.20
(Initial Charter), Clause
19.34(a) (Sanctions Representations), in so far as it relates to an Approved Manager and Clause 19.35 (Validity and Completeness
of the Initial Charters) and any representation of any Transaction
Obligor made in any other Finance Document that is expressed to
be a "Repeating Representation" or is otherwise expressed to be repeated.
"Reporting
Day" means the day (if any) specified as such in the Benchmark Terms.
"Reporting
Time" means the relevant time (if any) specified as such in the Benchmark Terms.
"Representative"
means any delegate, agent, manager, administrator, nominee, attorney, trustee or custodian.
"Requisition"
means in relation to a Ship:
21
(a)
any
expropriation, confiscation, requisition (excluding a requisition for hire or use which does
not involve a requisition for title) or acquisition of that Ship, whether for full consideration,
a consideration less than its
proper value, a nominal consideration or without any consideration,
which is effected (whether de jure or de facto) by any government or official
authority or by any person or persons claiming to be or to represent a
government or official
authority unless it is within 45 days redelivered to the full control of the Borrower owning
that Ship (or any other longer period as the Facility Agent may agree at the request of the
relevant
Borrower); and
(b)
any
capture or seizure of that Ship (including any hijacking or theft) by any person whatsoever
(unless it is within 45 days redelivered to the full control of the Borrower owning that
Ship (or any other longer period as
the Facility Agent may agree at the request of the relevant
Borrower)).
"Requisition Compensation" includes all compensation or other moneys payable to a Borrower by reason of any Requisition
or any arrest or detention of a Ship in the exercise or purported exercise of any lien or claim.
"Resolution
Authority" means any body which has authority to exercise any Write-down and Conversion Powers.
"Retention
Account" means:
(a)
an
account in the joint names of the Borrowers with the Account Bank designated "Ikaros
Marine LLC, Leonidas Marine LLC, Hector Marine LLC, Aristoteles Marine LLC, Menelaos Marine
LLC, Philippos Marine
LLC, Alexander Marine LLC, Penelope Marine LLC, Laertis Marine LLC,
Telemachus Marine LLC - Retention Account";
(b)
any
other account in the name of the Borrowers with the Account Bank which may, with the prior
written consent of the Facility Agent, be opened in the place of the account referred to
in paragraph (a) above,
irrespective of the number or designation of such replacement account;
or
(c)
any
sub-account of any account referred to in paragraphs (a) or (b) above.
"RFR"
means the secured overnight financing rate (SOFR) administered by the Federal Reserve Bank of New York (or any other person which takes
over the administration of that rate) published (before any correction,
recalculation or republication by the administrator) by the Federal
Reserve Bank of New York (or any other person which takes over the publication of that rate).
"RFR
Banking Day" means any day other than:
(a)
a
Saturday or a Sunday; and
(b)
a
day on which the Securities Industry and Financial Markets Association (or any successor
organisation) recommends that the fixed income departments of its members be closed for the
entire day for purposes of
trading in US Government Securities.
"Safety
Management Certificate" has the meaning given to it in the ISM Code.
"Safety
Management System" has the meaning given to it in the ISM Code.
22
"Sanctions" means any trade, economic or financial sanctions laws, regulations, embargoes or restrictive measures administered,
enacted or enforced by a Sanctions Authority.
"Sanctions
Authority" means:
(a)
the
Security Council of the United Nations;
(b)
the
United States;
(c)
the
United Kingdom;
(d)
the
European Union;
(e)
the
Approved Flag state;
(f)
any
member state of the European Union (including, without limitation, The Netherlands and France);
(g)
any
country to which any member of the Group or an Approved Manager is registered or has material
(financial or otherwise) interests or operations; and
(h)
the
governments and official institutions or agencies of any of the foregoing paragraphs, including
without limitation the U.S. Office of Foreign Asset Control ("OFAC"), the
U.S. Department of State, the U.S.
Department of Commerce and His Majesty's Treasury ("HMT").
"Sanctioned
Country" means a country or territory that is the subject or the target of Sanctions (including, without limitation, Cuba, Iran,
North Korea, Syria and Crimea).
"Sanctioned
Ship" means a ship which is the subject of Sanctions.
"Sanctions
List" means the Specially Designated Nationals and Blocked Persons list maintained by OFAC, the Consolidated List of Financial
Sanctions Targets maintained by HMT, or any similar list maintained by, or public
announcement of a Sanctions designation made by, a
Sanctions Authority, each as amended, supplemented or substituted from time to time.
"Secured
Liabilities" means all present and future obligations and liabilities, (whether actual or contingent and whether owed jointly
or severally or in any other capacity whatsoever) of each Transaction Obligor to any
Secured Party under or in connection with each Finance
Document.
"Secured
Party" means each Finance Party from time to time party to this Agreement, a Receiver or any Delegate.
"Security"
means a mortgage, pledge, lien, charge, assignment, hypothecation or security interest or any other agreement or arrangement having the
effect of conferring security.
"Security
Assets" means all of the assets of the Transaction Obligors which from time to time are, or are expressed to be, the subject
of the Transaction Security.
"Security
Cover Ratio" means, at any relevant time, the aggregate of:
(a)
the
aggregate Market Value of the Ships then subject to a Mortgage; plus
23
(b)
the
net realisable value of additional Security previously provided under Clause 26 (Security
Cover),
expressed as a percentage of the Loan, as at that time.
"Security
Document" means:
(a)
any
Shares Security;
(b)
any
Mortgage;
(c)
any
General Assignment;
(d)
any
Charterparty Assignment;
(e)
any
Account Security;
(f)
any
Subordinated Debt Security;
(g)
any
other document (whether or not it creates Security) which is executed as security for the
Secured Liabilities; or
(h)
any
other document designated as such by the Facility Agent and the Borrowers.
"Security
Period" means the period starting on the date of this Agreement and ending on the date on which the Facility Agent is satisfied
that there is no outstanding Commitment in force and that the Secured Liabilities have
been irrevocably and unconditionally paid and
discharged in full.
"Security
Property" means:
(a)
the
Transaction Security expressed to be granted in favour of the Security Agent as trustee for
the Secured Parties and all proceeds of that Transaction Security;
(b)
all
obligations expressed to be undertaken by a Transaction Obligor to pay amounts in relation
to the Secured Liabilities to the Security Agent as trustee for the Secured Parties and secured
by the Transaction Security
together with all representations and warranties expressed to
be given by a Transaction Obligor or any other person in favour of the Security Agent as
trustee for the Secured Parties;
(c)
the
Security Agent's interest in any turnover trust created under the Finance Documents;
(d)
any
other amounts or property, whether rights, entitlements, choses in action or otherwise, actual
or contingent, which the Security Agent is required by the terms of the Finance Documents
to hold as trustee on trust
for the Secured Parties,
except:
(i)
rights
intended for the sole benefit of the Security Agent; and
(ii)
any
moneys or other assets which the Security Agent has transferred to the Facility Agent or
(being entitled to do so) has retained in accordance with the provisions of this Agreement.
24
"Selection Notice" means a notice substantially in the form set out in Part B of Schedule 3 (Requests) given
in accordance with Clause 9 (Interest Periods).
"Servicing
Party" means the Facility Agent or the Security Agent.
"Shareholder"
means, in relation to each Borrower:
(a)
on
and from the date of this Agreement until the Shares Transfer Date, Poseidon or, as applicable,
its relevant Subsidiary which is the direct holder of all the LLC Shares in that Borrower
at the date of this Agreement;
and
(b)
from
the Shares Transfer Date and throughout the rest of the Security Period, the Guarantor.
"Shares
Security" means, in relation to a Borrower, a document creating Security over the LLC Shares in that Borrower in agreed form.
"Shares
Transfer" means the transfer of ownership of all the LLC Shares in each Borrower from Poseidon (or, as applicable, its relevant
Subsidiary) to the Guarantor.
"Shares
Transfer Date" means the date on which the relevant Shares Transfer is completed.
"Ship"
means Ship A, Ship B, Ship C, Ship D, Ship E, Ship F, Ship G, Ship H, Ship I, or Ship J.
"Ship
A" means m.v. "COSTA RICA EXPRESS", details of which are set out opposite its name in Schedule 7 (Details of the
Ships).
"Ship
B" means m.v. "AGIOS DIMITRIOS", details of which are set out opposite its name in Schedule 7 (Details of the Ships).
"Ship
C" means m.v. "KRISTINA", details of which are set out opposite its name in Schedule 7 (Details of the Ships).
"Ship
D" means m.v. "ALEXIS", details of which are set out opposite its name in Schedule 7 (Details of the Ships).
"Ship
E" means m.v. "OLIVIA I", details of which are set out opposite its name in Schedule 7 (Details of the Ships).
"Ship
F" means m.v. "ALEXANDRA", details of which are set out opposite its name in Schedule 7 (Details of the Ships).
"Ship
G" means m.v. "COLOMBIA EXPRESS", details of which are set out opposite its name in Schedule 7 (Details of the
Ships).
"Ship
H" means m.v. "ZIM XIAMEN", details of which are set out opposite its name in Schedule 7 (Details of the Ships).
"Ship
I" means m.v. "ZIM NORFOLK", details of which are set out opposite its name in Schedule 7 (Details of the Ships).
"Ship
J" means m.v. "ANTHEA Y", details of which are set out opposite its name in Schedule 7 (Details of the Ships).
25
"Statement of Compliance" means a Statement of Compliance related to fuel oil consumption pursuant to regulations 6.6
and 6.7 of Annex VI.
"Specified
Time" means a day or time determined in accordance with Schedule 9 (Timetables).
"Subordinated
Creditor" means:
(a)
a
Transaction Obligor (other than the Borrowers); or
(b)
any
other person who becomes a Subordinated Creditor in accordance with this Agreement.
"Subordinated
Debt Security" means a Security over Subordinated Liabilities entered into or to be entered into by a Subordinated Creditor
in favour of the Security Agent in an agreed form.
"Subordinated
Finance Document" means:
(a)
a
Subordinated Loan Agreement; and
(b)
any
other document relating to or evidencing Subordinated Liabilities.
"Subordinated
Liabilities" means all indebtedness owed or expressed to be owed by the Borrowers to a Subordinated Creditor whether under the
Subordinated Finance Documents or otherwise.
"Subordinated
Loan Agreement" means any loan agreement made between (i) a Borrower and (ii) a Subordinated Creditor.
"Subordination
Agreement" means a subordination agreement entered into or to be entered into by a Subordinated Creditor and the Security Agent,
subordinating, inter alia all the Subordinated Creditor's rights and interests
under any Subordinated Loan Agreement to the rights
and interests of the Finance Parties in agreed form.
"Subsidiary"
means a subsidiary undertaking within the meaning of section 1162 of the Companies Act 2006.
"Tax"
means any tax, levy, impost, duty or other charge or withholding of a similar nature (including any penalty or interest payable in connection
with any failure to pay or any delay in paying any of the same).
"Tax
Credit" has the meaning given to it in Clause 12.1 (Definitions).
"Tax
Deduction" has the meaning given to it in Clause 12.1 (Definitions).
"Tax
Payment" has the meaning given to it in Clause 12.1 (Definitions).
"Technical
Management Agreement" means the agreement entered into between a Borrower and the Approved Technical Manager regarding the technical
management of a Ship.
"Term
SOFR" means the term RFR reference rate administered by CME Group Benchmark Administration Limited (or any other person which
takes over the administration of that rate) for the relevant period published
(before any correction, recalculation or republication
by the administrator) by CME Group Benchmark Administration Limited (or any other person which takes over the publication of that rate).
26
"Term
SOFR Loan" means the Loan, any part of the Loan or, if applicable, Unpaid Sum to the extent that it is not, or has not become,
a "Compounded Rate Loan" for its then current Interest Period pursuant to Clause 10.1
(Unavailability of Term SOFR).
"Term
SOFR Reference Rate" means, in relation to any Term SOFR Loan, the applicable Term SOFR as of the Specified Time and for a period
equal in length to the Interest Period of that Term SOFR Loan and if, that rate is
less than zero, the Term SOFR Reference Rate shall
be deemed to be zero.
"Termination
Date" means the date falling on the earlier of (i) the sixth anniversary of the first Utilisation Date to occur and (ii) 30
November 2030.
"Testing
Date" means each date falling on the earlier of (a) the date on which the audited or, as the case may be, unaudited, financial
statements referred to in Clause 20.2 (Financial statements) are actually delivered to the
Facility Agent pursuant to the provisions
of that Clause and (b) the latest date by which each such financial statements are required to be delivered to the Facility Agent pursuant
to Clause 20.2 (Financial statements),
commencing with the financial statements for the 3-month
period ending on 30 September 2024 in relation to the Guarantor.
"Third
Parties Act" has the meaning given to it in Clause 1.5 (Third party rights).
"Total
Commitments" means the aggregate of the Commitments, being $300,000,000 at the date of this Agreement.
"Total
Loss" means, in relation to a Ship:
(a)
actual,
constructive, compromised, agreed or arranged total loss of that Ship; or
(b)
any
Requisition of that Ship unless that Ship is returned to the full control of the relevant
Borrower within 45 days of such Requisition (or such longer period as may be requested by
the Borrowers and agreed to by the
Facility Agent).
"Total
Loss Date" means, in relation to the Total Loss of a Ship:
(a)
in
the case of an actual loss of that Ship, the date on which it occurred or, if that is unknown,
the date when that Ship was last heard of;
(b)
in
the case of a constructive, compromised, agreed or arranged total loss of that Ship, the
earlier of:
(i)
the
date on which a notice of abandonment is given (or deemed or agreed to be given) to the insurers;
and
(ii)
the
date of any compromise, arrangement or agreement made by or on behalf of the relevant Borrower
with that Ship's insurers in which the insurers agree to treat that Ship as a total loss;
and
(c)
in
the case of any other type of Total Loss, the date (or the most likely date) on which it
appears to the Facility Agent that the event constituting the total loss occurred.
27
"Transaction Document" means:
(a)
a
Finance Document;
(b)
a
Subordinated Finance Document;
(c)
any
Assignable Charter; or
(d)
any
other document designated as such by the Facility Agent and a Borrower.
"Transaction Obligor" means an Obligor or any other member of the Group who executes a Transaction Document.
"Transaction
Security" means the Security created or evidenced or expressed to be created or evidenced
under the Security Documents.
"Transfer
Certificate" means a certificate substantially in the form set out in Schedule 4 (Form of Transfer Certificate) or any
other form agreed between the Facility Agent and the Borrowers.
"Transfer
Date" means, in relation to an assignment or a transfer, the later of:
(a)
the
proposed Transfer Date specified in the relevant Assignment Agreement or Transfer Certificate;
and
(b)
the
date on which the Facility Agent executes the relevant Assignment Agreement or Transfer Certificate.
"UK
Bail-In Legislation" means Part 1 of the United Kingdom Banking Act 2009 and any other law or regulation applicable in the United
Kingdom relating to the resolution of unsound or failing banks, investment firms or
other financial institutes or their affiliates (otherwise
than through liquidation, administration or other insolvency proceedings).
"UK
Establishment" means a UK establishment as defined in the Overseas Regulations.
"Unpaid
Sum" means any sum due and payable but unpaid by a Transaction Obligor under the Finance Documents.
"US"
means the United States of America.
"USPP
Notes" means, in relation to the Guarantor, the 5.69% Senior Secured Notes due 15 July 2027 issued by the Guarantor's Subsidiary,
Knausen Holding LLC, upon the terms and subject to the conditions of a note
purchase agreement dated 14 June 2022, by and among (a) Knausen
Holding LLC as issuer, (b) the Guarantor as guarantor, (c) Wilmington Savings Fund Society, FSB as administrative agent, registrar, paying
agent, and
security trustee, and (d) the purchasers named therein.
"US
Tax Obligor" means:
(a)
a
person which is resident for tax purposes in the US; or
(b)
a
person some or all of whose payments under the Finance Documents are from sources within
the US for US federal income tax purposes.
28
"Utilisation" means a utilisation of any part of the Facility.
"Utilisation
Date" means the date of a Utilisation, being the date on which the relevant Advance is to be made.
"Utilisation
Request" means a notice substantially in the form set out in Part A of Schedule 3 (Requests).
"VAT"
means:
(a)
any
value added tax imposed by the Value Added Tax Act 1994;
(b)
any
tax imposed in compliance with the Council Directive of 28 November 2006 on the common system
of value added tax (EC Directive 2006/112); and
(c)
any
other tax of a similar nature, whether imposed in the United Kingdom or a member state of
the European Union in substitution for, or levied in addition to, such tax referred to in
paragraph (a) or (b) above, or
imposed elsewhere.
"Write-down
and Conversion Powers" means:
(a)
in
relation to any Bail-In Legislation described in the EU Bail-In Legislation Schedule from
time to time, the powers described as such in relation to that Bail-In Legislation in the
EU Bail-In Legislation Schedule;
(b)
in
relation to the UK Bail-In Legislation, any powers under that UK Bail-In Legislation to cancel,
transfer or dilute shares issued by a person that is a bank or investment firm or other financial
institution or affiliate of
a bank, investment firm or other financial institution, to cancel,
reduce, modify or change the form of a liability of such a person or any contract or instrument
under which that liability arises, to convert all or part of
that liability into shares,
securities or obligations of that person or any other person, to provide that any such contract
or instrument is to have effect as if a right had been exercised under it or to suspend any
obligation
in respect of that liability or any of the powers under that UK Bail-In Legislation
that are related to or ancillary to any of those powers; and
(c)
in
relation to any other applicable Bail-In Legislation:
(i)
any
powers under that Bail-In Legislation to cancel, transfer or dilute shares issued by a person
that is a bank or investment firm or other financial institution or affiliate of a bank,
investment firm or other
financial institution, to cancel, reduce, modify or change the form
of a liability of such a person or any contract or instrument under which that liability
arises, to convert all or part of that liability into shares,
securities or obligations of
that person or any other person, to provide that any such contract or instrument is to have
effect as if a right had been exercised under it or to suspend any obligation in respect
of
that liability or any of the powers under that Bail-In Legislation that are related to
or ancillary to any of those powers; and
(ii)
any
similar or analogous powers under that Bail-In Legislation.
29
1.2
Construction
(a)
Unless
a contrary indication appears, a reference in this Agreement to:
(i)
the
"Account Bank", any "Arranger", any "Mandated Lead
Arranger", any "Bookrunner", the "Facility Agent",
any "Finance Party", any "Lender", any "Obligor",
any "Party", any "Secured Party", the
"Security
Agent", any "Transaction Obligor" or any other person shall be
construed so as to include its successors in title, permitted assigns and permitted transferees
to, or of, its rights and/or obligations under the
Finance Documents;
(ii)
"assets"
includes present and future properties, revenues and rights of every description;
(iii)
a
liability which is "contingent" means a liability which is not certain to
arise and/or the amount of which remains unascertained;
(iv)
"document"
includes a deed and also a letter, fax, email or telex;
(v)
"expense"
means any kind of cost, charge or expense (including all legal costs, charges and expenses)
and any applicable Tax including VAT;
(vi)
A
Lender's "cost of funds" in relation to its participation in the Loan or
any part of the Loan is a reference to the average cost (determined either on an actual or
a notional basis) which that Lender would incur if it
were to fund, from whoever source(s)
it may reasonably select, an amount equal to the amount of that participation in the Loan
or that part of the Loan for a period equal in length to the Interest Period of the Loan
or
that part of the Loan;
(vii)
a
"Finance Document", a "Security Document" or "Transaction
Document" or any other agreement or instrument is a reference to that Finance Document,
Security Document or Transaction Document or other
agreement or instrument as amended, replaced,
novated, supplemented, extended or restated;
(viii)
a
"group of Lenders" includes all the Lenders;
(ix)
"indebtedness"
includes any obligation (whether incurred as principal or as surety) for the payment or repayment
of money, whether present or future, actual or contingent;
(x)
"law"
includes any order or decree, any form of delegated legislation, any treaty or international
convention and any regulation or resolution of the Council of the European Union, the European
Commission, the
United Nations or its Security Council;
(xi)
"proceedings"
means, in relation to any enforcement provision of a Finance Document, proceedings of any
kind, including an application for a provisional or protective measure;
(xii)
a
"person" includes any individual, firm, company, corporation, government,
state or agency of a state or any association, trust, joint venture, consortium, partnership
or other entity (whether or not having separate
legal personality);
(xiii)
a
"regulation" includes any regulation, rule, official directive, request
or guideline (whether or not having the force of law) of any governmental, intergovernmental
or supranational body, agency, department or
regulatory, self-regulatory or other authority
or organisation;
30
(xiv)
a
provision of law is a reference to that provision as amended or re-enacted from time to time;
(xv)
a
time of day is a reference to London time;
(xvi)
any
English legal term for any action, remedy, method of judicial proceeding, legal document,
legal status, court, official or any legal concept or thing shall, in respect of a jurisdiction
other than England, be deemed to
include that which most nearly approximates in that jurisdiction
to the English legal term;
(xvii)
words
denoting the singular number shall include the plural and vice versa; and
(xviii)
"including"
and "in particular" (and other similar expressions) shall be construed as
not limiting any general words or expressions in connection with which they are used.
(b)
The
determination of the extent to which a rate is "for a period equal in length"
to an Interest Period shall disregard any inconsistency arising from the last day of that
Interest Period being determined pursuant to the terms of
this Agreement.
(c)
Section,
Clause and Schedule headings are for ease of reference only and are not to be used for the
purposes of construction or interpretation of the Finance Documents.
(d)
Unless
a contrary indication appears, a term used in any other Finance Document or in any notice
given under, or in connection with, any Finance Document has the same meaning in that Finance
Document or notice as in this
Agreement.
(e)
A
reference in this Agreement to a page or screen of an information service displaying a rate
shall include:
(i)
any
replacement page of that information service which displays that rate; and
(ii)
the
appropriate page of such other information service which displays that rate from time to
time in place of that information service,
and,
if such page or service ceases to be available, shall include any other page or service displaying that rate specified by the Facility
Agent and agreed to by the Borrowers.
(f)
A
reference in this Agreement to a Central Bank Rate shall include any successor rate to, or
replacement rate for, that rate.
(g)
Any
Compounded Rate Supplement overrides anything in:
(i)
Schedule
10 (Benchmark Terms); or
(ii)
any
earlier Compounded Rate Supplement.
(h)
A
Compounding Methodology Supplement relating to the Daily Non-Cumulative Compounded RFR Rate
or the Cumulative Compounded RFR Rate overrides anything relating to that rate in:
(i)
Schedule
11 (Daily Non-Cumulative Compounded RFR Rate) or Schedule 12 (Cumulative Compounded
RFR Rate); or
31
(i)
any
earlier Compounding Methodology Supplement.
(j)
A
Potential Event of Default is "continuing" if it has not been remedied or
waived and an Event of Default is "continuing" if it has not been waived
or, if the Facility Agent deems that is capable of remedy, has not been
remedied within the
period of time specified by the Facility Agent.
1.3
Construction
of insurance terms
In
this Agreement:
"approved"
means, for the purposes of Clause 23 (Insurance Undertakings), approved in writing by the Facility Agent.
"excess
risks" means, in respect of a Ship, the proportion of claims for general average, salvage and salvage charges not recoverable
under the hull and machinery policies in respect of that Ship in consequence of its insured
value being less than the value at which
that Ship is assessed for the purpose of such claims.
"obligatory
insurances" means all insurances effected, or which any Borrower is obliged to effect, under Clause 23 (Insurance Undertakings)
or any other provision of this Agreement or of another Finance Document.
"policy"
includes a slip, cover note, certificate of entry or other document evidencing the contract of insurance or its terms.
"protection
and indemnity risks" means the usual risks covered by a protection and indemnity association managed in London, including pollution
risks and the proportion (if any) of any sums payable to any other person or
persons in case of collision which are not recoverable under
the hull and machinery policies by reason of the incorporation in them of clause 6 of the International Hull Clauses (1/11/02) (1/11/03),
clause 8 of the Institute Time
Clauses (Hulls) (1/10/83) (1/11/95) or the Institute Amended Running Down Clause (1/10/71) or any equivalent
provision.
"war
risks" includes the risk of mines and all risks excluded by clauses 29, 30 or 31 of the International Hull Clauses (1/11/02),
clauses 29 or 30 of the International Hull Clauses (1/11/03), clauses 24, 25 or 26 of the Institute
Time Clauses (Hulls) (1/11/95) or
clauses 23, 24 or 25 of the Institute Time Clauses (Hulls) (1/10/83) or any equivalent provision.
1.4
Agreed
forms of Finance Documents
References
in Clause 1.1 (Definitions) to any Finance Document being in "agreed form" are to that Finance Document:
(a)
in
a form attached to a certificate dated the same date as this Agreement (and signed by each
Borrower and the Facility Agent); or
(b)
in
any other form agreed in writing between each Borrower and the Facility Agent acting with
the authorisation of the Majority Lenders or, where Clause 44.2 (All Lender matters)
applies, all the Lenders.
32
1.5
Third
party rights
(a)
Unless
expressly provided to the contrary in a Finance Document, a person who is not a Party has
no right under the Contracts (Rights of Third Parties) Act 1999 (the "Third Parties
Act") to enforce or to enjoy the benefit of
any term of this Agreement.
(b)
Notwithstanding
any term of any Finance Document, the consent of any person who is not a Party is not required
to rescind or vary this Agreement at any time.
(c)
Any
Affiliate, Receiver, Delegate or any other person described in paragraph (d) of Clause 14.2
(Other indemnities), paragraph (b) of Clause 31.11 (Exclusion of liability)
or paragraph (b) of Clause 32.11 (Exclusion of
liability), may subject to this Clause
1.5 (Third party rights) and the Third Parties Act, rely on any Clause of this Agreement
which expressly confers rights on it.
33
SECTION 2
THE FACILITY
2
THE
FACILITY
2.1
The
Facility
Subject
to the terms of this Agreement, the Lenders make available to the Borrowers a dollar term loan facility, in three Advances, in an aggregate
amount not exceeding the Total Commitments.
2.2
Finance
Parties' rights and obligations
(a)
The
obligations of each Finance Party under the Finance Documents are several. Failure by a Finance
Party to perform its obligations under the Finance Documents does not affect the obligations
of any other Party under the
Finance Documents. No Finance Party is responsible for the obligations
of any other Finance Party under the Finance Documents.
(b)
The
rights of each Finance Party under or in connection with the Finance Documents are separate
and independent rights and any debt arising under the Finance Documents to a Finance Party
from a Transaction Obligor is a
separate and independent debt in respect of which a Finance
Party shall be entitled to enforce its rights in accordance with paragraph (c) below.
The rights of each Finance Party include any debt owing to that Finance Party
under the Finance
Documents and, for the avoidance of doubt, any part of the Loan or any other amount owed
by a Transaction Obligor which relates to a Finance Party's participation in the Facility
or its role under a Finance
Document (including any such amount payable to the Facility Agent
on its behalf) is a debt owing to that Finance Party by that Transaction Obligor.
(c)
A
Finance Party may, except as specifically provided in the Finance Documents, separately enforce
its rights under or in connection with the Finance Documents.
2.3
Borrowers'
Agent
(a)
Each
Borrower by its execution of this Agreement irrevocably appoints the Guarantor to
act on its behalf as its agent in relation to the Finance Documents and irrevocably authorises:
(i)
the
Guarantor on its behalf to supply all information concerning itself contemplated by this
Agreement to the Finance Parties and to give all notices and instructions (including Utilisation
Requests), to make such
agreements and to effect the relevant amendments, supplements and
variations capable of being given, made or effected by any Borrower notwithstanding that
they may affect that Borrower, without further reference to
or the consent of that Borrower;
and
(ii)
each
Finance Party to give any notice, demand or other communication to that Borrower pursuant
to the Finance Documents to the Guarantor,
and
in each case each Borrower shall be bound as though the Borrowers themselves had given the notices and instructions (including, without
limitation, any Utilisation Requests) or executed or made the agreements or
effected the amendments, supplements or variations, or received
the relevant notice, demand or other communication.
34
(b)
Every
act, omission, agreement, undertaking, settlement, waiver, amendment, supplement, variation,
notice or other communication given or made by the Guarantor or
given to the Guarantor under any Finance Document on
behalf of a Borrower or in connection
with any Finance Document (whether or not known to any Borrower) shall be binding for all
purposes on that Borrower as if that Borrower had expressly made, given or concurred with
it.
In the event of any conflict between any notices or other communications of the Guarantor
and any Borrower, those of the Guarantor shall prevail.
3
PURPOSE
3.1
Purpose
Each
Borrower shall apply all amounts borrowed by it under the Facility only for the purposes stated in the preamble (Background) to this
Agreement.
3.2
Monitoring
No
Finance Party is bound to monitor or verify the application of any amount borrowed pursuant to this Agreement.
4
CONDITIONS
OF UTILISATION
4.1
Initial
conditions precedent
The
Borrowers may not deliver a Utilisation Request unless the Facility Agent has received all of the documents and other evidence listed
in Part A of Schedule 2 (Conditions Precedent) in form and substance satisfactory to
the Facility Agent.
4.2
Further
conditions precedent
The
Lenders will only be obliged to comply with Clause 5.4 (Lenders' participation) if:
(a)
on
the date of a Utilisation Request and on the proposed Utilisation Date and before the relevant
Advance is made available:
(i)
no
Default is continuing or would result from the proposed making of that Advance;
(ii)
the
Repeating Representations to be made by each Obligor on its own behalf or on behalf of any
other Transaction Obligor or any Approved Manager are true;
(iii)
the
know-your-customer checks for each of the Obligors have been conducted to the Facility Agent's
and the Lenders' satisfaction; and
(b)
the
Facility Agent has received on or before the relevant Utilisation Date, or is satisfied it
will receive when the relevant Advance is made available, all of the documents and other
evidence listed in Part B of Schedule 2
(Conditions Precedent) in form and substance
satisfactory to the Facility Agent.
4.3
Notification
of satisfaction of conditions precedent
(a)
The
Facility Agent shall notify the Borrowers and the Lenders promptly upon being satisfied as
to the satisfaction of the conditions precedent referred to in Clause 4.1 (Initial conditions
precedent) and Clause 4.2 (Further
conditions precedent).
35
(b)
Other
than to the extent that the Majority Lenders notify the Facility Agent in writing to the
contrary before the Facility Agent gives the notification described in paragraph (a) above,
the Lenders authorise (but do not require)
the Facility Agent to give that notification.
The Facility Agent shall not be liable for any damages, costs or losses whatsoever as a result
of giving any such notification.
4.4
Waiver
of conditions precedent
If
the Majority Lenders, at their discretion, permit an Advance to be borrowed before any of the conditions precedent referred to in Clause
4.1 (Initial conditions precedent) or Clause 4.2 (Further conditions precedent) has been
satisfied, the Borrowers
shall ensure that that condition is satisfied within 10 Business Days after the relevant Utilisation Date or such later date as the Facility
Agent, acting with the authorisation of the Majority Lenders, may
agree in writing with the Borrowers.
36
SECTION
3
UTILISATION
5
UTILISATION
5.1
DELIVERY
OF UTILISATION REQUEST
(A)
THE
BORROWERS MAY UTILISE THE FACILITY BY DELIVERY TO THE FACILITY AGENT OF A DULY COMPLETED
UTILISATION REQUEST NOT LATER THAN THE SPECIFIED TIME.
(B)
THE
BORROWERS MAY NOT DELIVER MORE THAN ONE UTILISATION REQUEST IN RESPECT OF EACH ADVANCE.
5.2
COMPLETION
OF UTILISATION REQUEST
Each
Utilisation Request is irrevocable and will not be regarded as having been duly completed unless:
(i)
the
proposed Utilisation Date is a Business Day within the Availability Period;
(ii)
the
currency and amount of the Utilisation comply with Clause 5.3 (Currency and amount);
(iii)
all
applicable deductible items have been completed; and
(iv)
the
proposed Interest Period complies with Clause 9 (Interest Periods).
5.3
Currency
and amount
(a)
The
currency specified in a Utilisation Request must be dollars.
(b)
The
aggregate amount of each proposed Advance shall not exceed:
(i)
in
respect of Advance A, the lesser of (i) $210,000,000 and (ii) 55 per cent. of the aggregate
Initial Market Value of the Ships (other than Ship I and Ship J);
(ii)
in
respect of Advance B, the lesser of (i) $45,000,000 and (ii) 55 per cent. of the Initial
Market Value of Ship I; and
(iii)
in
respect of Advance C, the lesser of (i) $45,000,000 and (ii) 55 per cent. of the Initial
Market Value of Ship J.
(c)
The
aggregate amount of the proposed Advances must be an amount which is not more than the Available
Facility and the aggregate amount of the Loan shall not exceed the lesser of (i) $300,000,000
and (ii) 55 per cent. of the
aggregate Initial Market Value of the Ships.
5.4
Lenders'
participation
(a)
If
the conditions set out in this Agreement have been met, each Lender shall make its participation
in each Advance available by the relavant Utilisation Date through its Facility Office.
37
(b)
The
amount of each Lender's participation in each Advance will be equal to the proportion borne
by its Available Commitment to the Available Facility immediately before making that Advance.
(c)
The
Facility Agent shall notify each Lender of the amount of each Advance and the amount of its
participation in that Advance by the Specified Time.
5.5
Cancellation
of Commitments
The Commitments in respect of any Advance which are not utilised at the end of the Availability Period for such Advance shall then be
cancelled.
5.6
Payment
to third parties
Each Borrower irrevocably authorises the Facility Agent on each Utilisation Date, to pay to, or for the account of, the Borrowers the
amounts which the Facility Agent receives from the Lenders in respect of the Loan. That
payment shall be made in like funds as the Facility
Agent received from the Lenders in respect of the Loan to the account which the Borrowers specify in the relevant Utilisation Request.
5.7
Disbursement
of an Advance to third party
Payment by the Facility Agent under Clause 5.6 (Payment to third parties) to a person other than a Borrower shall constitute the
making of the relevant Advance and the Borrowers shall at that time become indebted, as
principal and direct obligors, to each Lender
in an amount equal to that Lender's participation in that Advance.
38
SECTION
4
REPAYMENT, PREPAYMENT AND CANCELLATION
6
REPAYMENT
6.1
Repayment
of Loan
(a)
Advance
A, Advance B and Advance C shall be amalgamated on the Utilisation of the last Advance into
one Loan and the Borrowers shall repay the Loan by:
(i)
24
consecutive quarterly instalments (each an "Instalment" and together, the
"Instalments") in the following amounts:
(A)
the
first 12 such Instalments (1st to 12th (both inclusive)) each in the
amount of $12,000,000,
(B)
the
next 4 such Instalments (13th to 16th (both inclusive)) each in the
amount of $10,000,000;
(C)
the
next 4 such Instalments (17th to the 20th (both inclusive)) each in
the amount of $8,000,000; and
(D)
the
next and final 4 such Instalments (21st to the 24th (both inclusive))
each in the amount of $6,000,000; and
(ii)
a
balloon instalment in the amount of $60,000,000 (the "Balloon Instalment"
and together with the "Instalments", the "Repayment Instalments"
and each a "Repayment Instalment"),
(b)
The
first Instalment shall be repaid on the date falling three Months after the first Utilisation
Date, each subsequent Instalment at three monthly intervals thereafter and the last Instalment
shall be repaid together with the
Balloon Instalment on the Termination Date.
6.2
Effect
of cancellation and prepayment on scheduled repayments
(a)
If
the Borrowers cancel the whole or any part of any Commitment in accordance with Clause 7.6
(Right of repayment and cancellation in relation to a single Lender) or if the Available
Commitment of any Lender is cancelled
under Clause 7.1 (Illegality and Sanctions affecting
a Lender) then the Repayment Instalments for each Repayment Date falling after that cancellation
will be reduced pro rata by the amount of the Available Commitments so
cancelled.
(b)
If
any part of any Commitment is cancelled pursuant to Clause 5.5 (Cancellation of Commitments)
or Clause 7.3 (Voluntary prepayment of Loan), the Repayment Instalments for each Repayment
Date falling after that
cancellation will be reduced pro rata by the amount of the
Commitments so cancelled.
(c)
If
any part of the Loan is repaid or prepaid in accordance with Clause 7.6 (Right of repayment
and cancellation in relation to a single Lender) or Clause 7.1 (Illegality and Sanctions
affecting a Lender) then the Repayment
Instalments for each Repayment Date falling after
that repayment or prepayment will be reduced pro rata by the amount of the Loan repaid
or prepaid.
39
(d)
If
any part of the Loan is prepaid in accordance with:
(i)
Clause
7.3 (Voluntary prepayment of Loan), the prepayment shall be applied against the Loan
in the manner specified by the Borrowers (at their discretion) in their confirmative and
irrevocable prepayment notice
delivered under that Clause; and
(ii)
Clause 7.4
(Mandatory prepayment on sale, refinancing or Total Loss), in the case of a sale, Total Loss
or refinancing of any Ship, or Clause 26.2 (Provision of additional security; prepayment)
the prepayment shall be
applied pro rata against the then outstanding Repayment Instalments
(including for the avoidance of doubt, the Balloon Instalment) in respect of the Loan.
6.3
Termination
Date
On
the Termination Date, the Borrowers shall additionally pay to the Facility Agent for the account of the Finance Parties all other sums
then accrued and owing under the Finance Documents.
6.4
Reborrowing
No
Borrower may reborrow any part of the Facility which is repaid.
7
PREPAYMENT
AND CANCELLATION
7.1
Illegality
and Sanctions affecting a Lender
If:
(a)
it
is or becomes unlawful or contrary to Sanctions in any applicable jurisdiction for a Lender
to perform any of its obligations as contemplated by the Finance Documents or to fund or
maintain its participation in the Loan or
any part of the Loan or to determine or charge
interest rates based upon Term SOFR, or it becomes unlawful for any Affiliate of a Lender
for that Lender to do so; or
(b)
any
Sanction applies to any obligations of a Lender as contemplated by the Finance Documents
or its funding or participation in any part of the Loan or if its Affiliate may be in breach
of any Sanction as a result of that Lender
doing so:
(i)
that
Lender shall promptly notify the Facility Agent upon becoming aware of that event;
(ii)
upon
the Facility Agent notifying the Borrowers, the Available Commitment of that Lender will
be immediately cancelled;
(iii)
the
Borrowers shall prepay that Lender's participation in each part of the Loan on the last day
of the Interest Period applicable to that part of the Loan occurring after the Facility Agent
has notified the Borrowers or, if
earlier, the date specified by that Lender in the notice
delivered to the Facility Agent (being no earlier than the last day of any applicable grace
period permitted by law) and that Lender's corresponding Commitment
shall be immediately
cancelled in the amount of the participation prepaid; and
40
(iv)
accrued
interest and all other amounts accrued for that Lender under the Finance Documents shall
be immediately due and payable.
7.2
Voluntary
and automatic cancellation
(a)
The
Borrowers may, if they give the Facility Agent not less than 5 Business Day's (or such shorter
period as the Majority Lenders may agree) prior notice, cancel the whole or any part (being
a minimum amount of $1,000,000
or a multiple of that amount) of the Available Facility. Any
cancellation under this Clause shall reduce the Commitments of the Lenders rateably and the
amount of the relevant Advances.
(b)
The
unutilised Commitments (if any) of each Lender shall be automatically cancelled at close
of business at the end of the Availability Period.
7.3
Voluntary
prepayment of Loan
The
Borrowers may, if they give the Facility Agent not less than fifteen Business Day's prior indicative notice and ten
Business Days' prior confirmative and irrevocable written notice, prepay the whole or any part of the Loan
(but, if in part, being a
minimum amount of $1,000,000 or a multiple of that amount) on the last day of an Interest Period.
7.4
Mandatory
prepayment on sale, refinancing or Total Loss
(a)
If
a Ship is sold (without prejudice to paragraph (a) of Clause 22.12 (Disposals)) or
becomes a Total Loss or is refinanced, the Borrowers shall, subject to Clause 6.2(d) (Effect
of cancellation and prepayment on scheduled
repayments), prepay the Relevant Amount on
the Relevant Date.
(b)
Provided
that no Default has occurred and is continuing, any remaining proceeds of the sale, refinancing
or, Total Loss of a Ship after the prepayment referred to in paragraph (a) above has been
made, together with all other
amounts that are payable on any such prepayment pursuant to
the Finance Documents, shall be paid to the Borrower that owned the relevant Ship.
(c)
Each
Borrower undertakes, in the case of a sale or Total Loss of the Ship owned by it, to deposit
the sale proceeds relating to such sale or the insurance proceeds relating to such Total
Loss (as the case may be) to the Earnings
Account of that Borrower to be applied towards
the prepayment of the Loan as required to be made by the Borrowers pursuant to paragraph
(a) and (b) above.
In
this Clause 7.4 (Mandatory prepayment on sale, refinancing or Total Loss):
"Relevant
Amount" means, in relation to a Ship that has been sold or has become a Total Loss or is being refinanced, an amount equal to
an amount of the Loan which, after giving effect to the prepayment required to be made
pursuant to this Clause 7.4 (Mandatory prepayment
on sale, refinancing or Total Loss), results in the Security Cover Ratio being equal to the higher of (A) the Security Cover Ratio
maintained immediately prior to the
prepayment made pursuant to this Clause 7.4 (Mandatory prepayment on sale, refinancing or Total
Loss) and (B) the Relevant Percentage.
"Relevant
Date" means:
(a)
in
the case of a sale of a Ship, the date falling on the earlier of:
41
(i)
the
date on which the sale is completed by delivery of that Ship to the buyer of that Ship; and
(ii)
the
date of receipt by the relevant Borrower or the Security Agent of the proceeds relating to
such sale;
(b)
in
the case of a Total Loss of a Ship, the date falling on the earlier of:
(i)
the
date falling 120 days after the Total Loss Date; and
(ii)
the
date of receipt by the Security Agent of the proceeds of insurance relating to such Total
Loss; and
(c)
the
case of a refinancing of a Ship, on the date on which the refinancing or the release (as
applicable) is completed by the discharge of the Mortgage over that Ship.
7.5
Change
of Control
(a)
If
a Change of Control occurs the Borrowers and the Guarantor shall promptly notify the Facility
Agent upon becoming aware of that event and if the Majority Lenders so require, the Facility
Agent shall (acting on the
instructions of the Majority Lenders), by not less than 15 days'
notice to the Borrowers, cancel the Facility and declare the Loan, together with accrued
interest, and all other amounts accrued under the Finance Documents
immediately due and payable,
whereupon the Facility will be cancelled and the Loan and all such outstanding interest and
other amounts will become immediately due and payable.
For
the purpose of this clause, a "Change of Control" occurs if, during the Security Period:
(i)
a
Borrower is not or ceases to be a wholly-owned direct or indirect Subsidiary of the Guarantor
(other than (i) a change in the legal or beneficial ownership or control of any of the Borrowers
pursuant to the Shares
Transfer and (ii) a change in the legal or beneficial ownership or
control of the Guarantor which does not otherwise constitute a Change of Control in accordance
with this definition);
(ii)
Mr
George Giouroukos ceases to own at least 1 per cent. of the shares in the Guarantor (either
directly or through one or more of his affiliates);
(iii)
Mr
George Giouroukos ceases to be the Executive Chairman of (or to hold an equivalent executive
officer position in) the Guarantor other than by reason
of death or other incapacity in managing his affairs; or
(iv)
any
person(s) own(s) more than 15 per cent. of the shares in the
Guarantor, other than Mr George Giouroukos (either
directly or through one or more of his affiliates).
7.6
Right
of repayment and cancellation in relation to a single Lender
(a)
If:
(i)
any
sum payable to any Lender by a Transaction Obligor is required to be increased under paragraph
(c) of Clause 12.2 (Tax gross-up) or under that Clause as incorporated by reference
or in full in any other Finance
Document; or
42
(ii)
any
Lender claims indemnification from a Borrower under Clause 12.3 (Tax indemnity) or
Clause 13.1 (Increased costs),
the
Borrowers may, whilst the circumstance giving rise to the requirement for that increase or indemnification continues, give the Facility
Agent notice of cancellation of the Commitment of that Lender and its intention to
procure the repayment of that Lender's participation
in the Loan.
(b)
On
receipt of a notice of cancellation referred to in paragraph (a) above, the Commitment of
that Lender shall immediately be reduced to zero.
(c)
On
the last day of each Interest Period which ends after the Borrowers have given notice of
cancellation under paragraph (a) above in relation to a Lender (or, if earlier, the date
specified by the Borrowers in that notice), the
Borrowers shall repay that Lender's participation
in the Loan.
43
7.7
Restrictions
(a)
Any
notice of cancellation or prepayment given by any Party under this Clause 7 (Prepayment
and Cancellation) shall be irrevocable and, unless a contrary indication appears in this
Agreement, shall specify the date or dates
upon which the relevant cancellation or prepayment
is to be made, the amount of that cancellation or prepayment and, if relevant, the part of
the Loan to be prepaid or cancelled.
(b)
Any
prepayment under this Agreement shall be made together with accrued interest on the amount
prepaid and, subject to any Break Costs, without premium or penalty.
(c)
No
Borrower may reborrow any part of the Facility which is prepaid.
(d)
No
Borrower shall repay or prepay all or any part of the Loan or cancel all or any part of the
Commitments except at the times and in the manner expressly provided for in this Agreement.
(e)
No
amount of the Total Commitments cancelled under this Agreement may be subsequently reinstated.
(f)
If
the Facility Agent receives a notice under this Clause 7 (Prepayment and Cancellation)
it shall promptly forward a copy of that notice to either the Borrowers and/or the affected
Lenders, as appropriate.
(g)
If
all or part of any Lender's participation in the Loan is repaid or prepaid, an amount of
that Lender's Commitment (equal to the amount of the participation which is repaid or prepaid)
will be deemed to be cancelled on the date
of repayment or prepayment.
7.8
Application
of repayments and prepayments
(a)
Any
prepayment of any part of the Loan (other than a prepayment pursuant to Clause 7.1 (Illegality
and Sanctions affecting a Lender) or Clause 7.6 (Right of repayment and cancellation
in relation to a single Lender)) shall be
applied pro rata to each Lender's participation
in that part of the Loan.
(b)
Any
repayment made in accordance with Clause 6.1 (Repayment of Loan) shall be distributed
by the Facility Agent to each Lender pro rata to that Lender's participation in the Loan.
44
SECTION
5
COSTS OF UTILISATION
8
INTEREST
8.1
Calculation
of interest – Term SOFR Loans
The rate of interest on each Term SOFR Loan for each Interest Period is the percentage rate per annum which is the aggregate of the applicable:
(a)
Margin;
and
(b)
Term
SOFR Reference Rate.
8.2
Calculation
of interest – Compounded Rate Loans
(a)
If
Clause 10.1 (Unavailability of Term SOFR) applies, the rate of interest on each Compounded
Rate Loan for any day during an Interest Period is the percentage rate per annum which is
the aggregate of the applicable:
(i)
Margin;
and
(ii)
Compounded
Reference Rate for that day.
(b)
If
any day during an Interest Period for a Compounded Rate Loan is not a RFR Banking Day, the
rate of interest on that Compounded Rate Loan for that day will be the rate applicable to
the immediately preceding RFR
Banking Day.
8.3
Payment
of interest
Subject to the provisions of Clause 8.5 (Notification of rates of interest), the Borrowers shall pay accrued interest on the Loan
or any part of the Loan on the last day of each Interest Period (each an "Interest Payment Date").
8.4
Default
interest
(a)
If
a Transaction Obligor fails to pay any amount payable by it under a Finance Document on its
due date, interest shall accrue on the Unpaid Sum from the due date up to the date of actual
payment (both before and after
judgment) at a rate which, subject to paragraph (b) below,
is 2.50 per cent. per annum higher than the rate which would
have been payable if the Unpaid Sum had, during the period of non-payment, constituted part
of the Loan
in the currency of the Unpaid Sum for successive Interest Periods, each of a
duration selected by the Facility Agent. Any interest accruing under this Clause 8.4
(Default interest) shall be immediately payable by the Transaction
Obligor on demand
by the Facility Agent.
(b)
If
an Unpaid Sum consists of all or part of a Term SOFR Loan which became due on a day which
was not the last day of an Interest Period relating to that Term SOFR Loan or that part of
the Loan:
(i)
the
first Interest Period for that Unpaid Sum shall have a duration equal to the unexpired portion
of the current Interest Period relating to the Loan or that part of that Term SOFR Loan;
and
45
(ii)
the
rate of interest applying to that Unpaid Sum during that first Interest Period shall be 2.50
per cent. per annum higher than the rate which would have applied if that Unpaid Sum had
not become due.
(c)
Default
interest (if unpaid) arising on an Unpaid Sum will be compounded with the Unpaid Sum at the
end of each Interest Period applicable to that Unpaid Sum but will remain immediately due
and payable.
8.5
Notification
of rates of interest
(a)
The
Facility Agent shall promptly notify the Lenders and the Borrowers of the determination of
a rate of interest relating to a Term SOFR Loan.
(b)
If
Clause 10.1 (Unavailability of Term SOFR) applies, the Facility Agent shall, as soon
as practicable and in any event within 2 Business Days of a Compounded Rate Interest Payment
being determinable, notify:
(i)
the
Lenders and the Borrowers of each rate of interest relating to the determination of that
Compounded Rate Interest Payment;
(ii)
each
Lender of the proportion of that Compounded Rate Interest Payment which relates to that Lender's
participation in the relevant Compounded Rate Loan; and
(iii)
the
Borrowers of that Compounded Rate Interest Payment and, to the extent it is then determinable,
the Compounded Market Disruption Rate (if any) relating to the relevant Compounded Rate Loan.
This
paragraph (b) shall not apply to any Compounded Rate Interest Payment determined pursuant to Clause 10.4 (Cost of funds).
(c)
The
Facility Agent shall promptly notify the Lenders and the Borrowers of the determination of
a rate of interest relating to a Compounded Rate Loan to which Clause 10.4 (Cost of funds)
applies (and, in particular, it shall
advise the Borrowers of such determination of a rate
of interest, as soon as it receives a Lender's notification pursuant to paragraph (a)(ii)
of Clause 10.4 (Cost of funds)).
(d)
The
Facility Agent shall promptly notify the Borrowers of each Funding Rate relating to the Loan,
any part of the Loan or any Unpaid Sum.
(e)
This
Clause 8.5 (Notifications) shall not require the Facility Agent to make any notification
to any Party on a day which is not a Business Day.
9
INTEREST
PERIODS
9.1
Selection
of Interest Periods
(a)
The
Borrowers may select the Interest Period for the Loan in the Utilisation Request for the
first Advance and, subject to paragraphs (f) and (h) below and Clause 9.2 (Changes to
Interest Periods), the Borrowers may select
each subsequent Interest Period for the Loan
in a Selection Notice.
(b)
Each
Selection Notice is irrevocable and must be delivered to the Facility Agent by the Borrowers
not later than the Specified Time.
46
(c)
If
the Borrowers fail to select an Interest Period in the first Utilisation Request or fail
to deliver a Selection Notice to the Facility Agent in accordance with paragraphs (a) and
(b) above, the relevant Interest Period will, subject
to paragraphs (f) and (h) below and
Clause 9.2 (Changes to Interest Periods), be three Months.
(d)
Subject
to this Clause 9 (Interest Periods), the Borrowers may select an Interest Period of
3 Months or any other period more than three Months agreed between the Borrowers and the
Facility Agent (acting on the instructions
of all the Lenders).
(e)
An
Interest Period in respect of the Loan or any part of the Loan shall not extend beyond the
Termination Date.
(f)
In
respect of an Instalment, the Borrowers may request in the relevant Selection Notice that
an Interest Period for a part of the Loan equal to such Instalment shall end on the Repayment
Date relating to it and, subject to
paragraph (d) above, select a longer Interest Period
for the remaining part of the Loan.
(g)
The
first Interest Period for the Loan shall start on the first Utilisation Date and, subject
to paragraph (h) below, each subsequent Interest Period shall start on the last day of its
preceding Interest Period.
(h)
The
first Interest Period for the second and any subsequent Advance shall start on the Utilisation
Date of such Advance and end on the last day of the Interest Period applicable to the Loan
on the date on which such Advance is
made.
(i)
Except
for the purposes of paragraph (f) and (h) above and Clause 9.2 (Changes to Interest Periods),
the Loan shall have one Interest Period only at any time.
(j)
Subject
to paragraph (d) above, no Interest Period for a Term SOFR Loan or a Compounded Rate Loan
shall be longer than three Months.
9.2
Changes
to Interest Periods
(a)
In
respect of an Instalment, prior to commencement of an Interest Period, the Facility Agent
may establish an Interest Period for a part of the Loan equal to such Instalment to end on
the Repayment Date relating to it and the
remaining part of the Loan shall have the Interest
Period selected in the relevant Selection Notice, subject to paragraph (d) of Clause
9.1 (Selection of Interest Periods).
(b)
If
the Facility Agent makes any change to an Interest Period referred to in this Clause 9.2
(Changes to Interest Periods), it shall promptly notify the Borrowers and the Lenders.
9.3
Non-Business
Days
(a)
Other
than where paragraph (b) below applies, if an Interest Period would otherwise end on a day
which is not a Business Day, that Interest Period will instead end on the next Business Day
in that calendar month (if there is
one) or the preceding Business Day (if there is not).
(b)
In
respect of any Compounded Rate Loan, if there are rules specified as "Business Day Conventions"
in the Benchmark Terms, those rules shall apply to each Interest Period for that Compounded
Rate Loan.
47
10
CHANGES
TO THE CALCULATION OF INTEREST
10.1
Unavailability
of Term SOFR
If
no Term SOFR is available on the relevant Quotation Day for the Interest Period of any Term SOFR Loan:
(a)
there
shall be no Term SOFR Reference Rate for the Loan or the relevant part of the Loan and Clause
8.1 (Calculation of interest –Term SOFR Loans) will not apply for that Interest
Period for the Loan or that part of the Loan;
and
(b)
the
Loan or that part of the Loan shall be a "Compounded Rate Loan" for that Interest
Period and Clause 8.2` (Calculation of interest – Compounded Rate Loans) shall
apply to the Loan or that part of the Loan for that Interest
Period.
10.2
Interest
calculation if no RFR or Central Bank Rate
If
Clause 10.1 (Unavailability of Term SOFR) applies and:
(a)
there
is no RFR or Central Bank Rate for the purposes of calculating the Daily Non-Cumulative Compounded
RFR Rate for an RFR Banking Day during an Interest Period for a Compounded Rate Loan; and
(b)
"cost
of funds will apply as a fallback" is specified in the Benchmark Terms,
then
Clause 10.4 (Cost of funds) shall apply to that Compounded Rate Loan for that Interest Period.
10.3
Market
disruption
(a)
In
the case of a Term SOFR Loan, if before close of business in London on the Quotation Day
for the relevant Interest Period, the Facility Agent receives notification from a Lender
or Lenders (whose participations in the Loan
or the relevant part of the Loan exceed 50 per
cent. of the Loan or the relevant part of the Loan as appropriate) that its cost of funds
relating to its participation in the Loan or that part of the Loan would be in excess of
the
Market Disruption Rate then Clause 10.4 (Cost of funds) shall apply to the Term
SOFR Loan or that part of the Term SOFR Loan (as applicable) for the relevant Interest Period.
(b)
In
the case of a Compounded Rate Loan, if:
(i)
a
Compounded Market Disruption Rate is specified in the Benchmark Terms; and
(ii)
before
the Reporting Time for the Loan or any part of the Loan, the Facility Agent receives notifications
from a Lender or Lenders (whose participations in the Loan or the relevant part of the Loan
exceed 33 per cent.
of the Loan or the relevant part of the Loan as appropriate) that its
cost of funds relating to its participation in the Loan or that part of the Loan would be
in excess of that Compounded Market Disruption Rate,
then
Clause 10.4 (Cost of funds) shall apply to the Loan or that part of the Loan (as applicable) for the relevant Interest Period.
48
10.4
Cost
of funds
(a)
If
this Clause 10.4 (Cost of funds) applies to the Loan or part of the Loan for an Interest
Period, neither Clause 8.1 (Calculation of interest – Term SOFR Loans) nor Clause
8.2 (Calculation of interest – Compounded Rate
Loans) shall apply to the Loan
or that part of the Loan for that Interest Period and the rate of interest on each Lender's
share of the Loan or that part of the Loan for the relevant Interest Period shall be the
percentage rate per
annum which is the sum of:
(i)
the
Margin; and
(ii)
the
rate notified to the Facility Agent by that Lender as soon as practicable and in any event:
(A)
in
relation to a Term SOFR Loan, before interest is due to be paid in respect of that Interest
Period; or
(B)
in
relation to a Compounded Rate Loan, by the Reporting Time for that Compounded Rate Loan,
to
be that which expresses as a percentage rate per annum its cost of funds relating to its participation in the Loan or that part of the
Loan.
(b)
If
this Clause 10.4 (Cost of funds) applies and the Facility Agent or the Borrowers so
require, the Facility Agent and the Borrowers shall enter into negotiations (for a period
of not more than 30 days) with a view to agreeing a
substitute basis for determining the
rate of interest or (as the case may be) an alternative basis for funding.
(c)
Subject
to Clause 44.5 (Changes to reference rates), any substitute or alternative basis agreed
pursuant to paragraph (b) above shall, with the prior consent of all the Lenders and the
Borrowers, be binding on all Parties.
(d)
If
paragraph (e) below does not apply and any rate notified
to the Facility Agent under sub-paragraph (ii) of paragraph (a) above is less
than zero, the relevant rate shall be deemed to be zero.
(e)
If
this Clause 10.4 (Cost of funds) applies pursuant to Clause 10.3 (Market Disruption)
and:
(i)
in
relation to a Term SOFR Loan, a Lender's Funding Rate is less than the Market Disruption
Rate, that Lender's cost of funds relating to its participation in the Loan or the relevant
part of the Loan for that Interest
Period shall be deemed, for the purposes of sub-paragraph
(ii) of paragraph (a) above, to be the Market Disruption Rate for that Term SOFR Loan; and
(ii)
in
relation to a Compounded Rate Loan, a Lender's Funding Rate is less than the relevant Compounded
Market Disruption Rate, or a Lender does not notify a rate to the Facility Agent by the time
specified in sub-
paragraph (ii) of paragraph (a) above, that Lender's cost of funds relating
to its participation in the Loan or the relevant part of the Loan for that Interest Period
shall be deemed, for the purposes of sub-paragraph (ii) of
paragraph (a) above, to be the
Compounded Market Disruption Rate for that Compounded Rate Loan.
49
(f)
If
this Clause 10.4 (Cost of funds) applies, the Facility Agent shall, as soon as practicable,
notify the Borrowers.
10.5
Break
Costs
(a)
Subject
to paragraph (b) below, the Borrowers shall, within three Business Days of demand by a Finance
Party, pay to that Finance Party its Break Costs (if any) attributable to all or any part
of the Loan or Unpaid Sum being
paid by the Borrowers on a day prior to the last day of an
Interest Period for the Loan, the relevant part of the Loan or that Unpaid Sum.
(b)
Paragraph
(a) above shall apply in respect of a Compounded Rate Loan if an amount is specified as Break
Costs in the Benchmark Terms.
(c)
Each
Lender shall, as soon as reasonably practicable after a demand by the Facility Agent, provide
a certificate confirming the amount of its Break Costs for any Interest Period (if applicable)
in respect of which they become,
or may become, payable.
11
FEES
11.1
Commitment
fee
(a)
The
Borrowers shall pay to the Facility Agent (for the account of each Lender) a non-refundable
fee computed at the rate of 0.6475 per cent. per annum on
that Lender's Available Commitment from time to time during the
Availability Period.
(b)
The
accrued commitment fee is payable on the last day of each successive period of three Months
which ends during the Availability Period, and in any case not later than, on the last day
of the Availability Period and, if
cancelled, on the cancelled amount of the relevant Lender's
Commitment at the time the cancellation is effective.
11.2
Upfront
fees and other fees
(a)
The
Borrowers shall pay to the Facility Agent (for the account of each Lender, Arranger and Bookrunner,
as applicable) within 3 Business Days from the signing of this Agreement, the upfront fees
and bookrunner fees, each in
the amount agreed in the relevant Fee Letters.
11.3
Agency
and other fees
The
Borrowers shall pay:
(a)
to
the Facility Agent (for its own account) an agency fee in the amount and at the times agreed
in the relevant Fee Letter; and
(b)
any
other fees in accordance with any other Fee Letters.
50
SECTION 6
ADDITIONAL PAYMENT OBLIGATIONS
12
TAX
GROSS UP AND INDEMNITIES
12.1
Definitions
(a)
In
this Agreement:
"Protected
Party" means a Finance Party which is or will be subject to any liability, or required to make any payment, for or on account
of Tax in relation to a sum received or receivable (or any sum deemed for the purposes
of Tax to be received or receivable) under a Finance
Document.
"Tax
Credit" means a credit against, relief or remission for, or repayment of any Tax.
"Tax
Deduction" means a deduction or withholding for or on account of Tax from a payment under a Finance Document, other than a FATCA
Deduction.
"Tax
Payment" means either the increase in a payment made by an Obligor to a Finance Party under Clause 12.2 (Tax gross-up)
or a payment under Clause 12.3 (Tax indemnity).
(b)
Unless
a contrary indication appears, in this Clause 12 (Tax Gross Up and Indemnities) reference
to "determines" or "determined" means a determination made in the absolute
discretion of the person making the determination.
12.2
Tax
gross-up
(a)
Each
Obligor shall make all payments to be made by it without any Tax Deduction, unless a Tax
Deduction is required by law.
(b)
The
Borrowers shall promptly upon becoming aware that an Obligor must make a Tax Deduction (or
that there is any change in the rate or the basis of a Tax Deduction) notify the Facility
Agent accordingly. Similarly, a Lender
shall notify the Facility Agent on becoming so aware
in respect of a payment payable to that Lender. If the Facility Agent receives such notification
from a Lender it shall notify the Borrowers and that Obligor.
(c)
If
a Tax Deduction is required by law to be made by an Obligor, the amount of the payment due
from that Obligor shall be increased to an amount which (after making any Tax Deduction)
leaves an amount equal to the
payment which would have been due if no Tax Deduction had been
required.
(d)
If
an Obligor is required to make a Tax Deduction, that Obligor shall make that Tax Deduction
and any payment required in connection with that Tax Deduction within the time allowed and
in the minimum amount required by
law.
(e)
Within
30 days of making either a Tax Deduction or any payment required in connection with that
Tax Deduction, the Obligor making that Tax Deduction shall deliver to the Facility Agent
for the Finance Party entitled to the
payment evidence reasonably satisfactory to that Finance
Party that the Tax Deduction has been made or (as applicable) any appropriate payment paid
to the relevant taxing authority.
12.3
Tax
indemnity
(a)
The
Obligors shall (within three Business Days of demand by the Facility Agent) pay to a Protected
Party an amount equal to the loss, liability or cost which that Protected Party determines
will be or has been (directly or
indirectly) suffered for or on account of Tax by that Protected
Party in respect of a Finance Document.
(b)
Paragraph
(a) above shall not apply:
(i)
with
respect to any Tax assessed on a Finance Party:
(A)
under
the law of the jurisdiction in which that Finance Party is incorporated or, if different,
the jurisdiction (or jurisdictions) in which that Finance Party is treated as resident for
tax purposes; or
(B)
under
the law of the jurisdiction in which that Finance Party's Facility Office is located in respect
of amounts received or receivable in that jurisdiction,
if
that Tax is imposed on or calculated by reference to the net income received or receivable (but not any sum deemed to be received or
receivable) by that Finance Party; or
(ii)
to
the extent a loss, liability or cost:
(A)
is
compensated for by an increased payment under Clause 12.2 (Tax gross-up); or
(B)
relates
to a FATCA Deduction required to be made by a Party.
(c)
A
Protected Party making, or intending to make, a claim under paragraph (a) above shall promptly
notify the Facility Agent of the event which will give, or has given, rise to the claim,
following which the Facility Agent shall
notify the Obligors.
(d)
A
Protected Party shall, on receiving a payment from an Obligor under this Clause 12.3 (Tax
indemnity), notify the Facility Agent.
12.4
Tax
Credit
If
an Obligor makes a Tax Payment and the relevant Finance Party determines that:
(a)
a
Tax Credit is attributable to an increased payment of which that Tax Payment forms part,
to that Tax Payment or to a Tax Deduction in consequence of which that Tax Payment was received;
and
(b)
that
Finance Party has obtained and utilised that Tax Credit,
the
Finance Party shall pay an amount to the Obligor which that Finance Party determines will leave it (after that payment) in the same after-Tax
position as it would have been in had the Tax Payment not been required to be
made by the Obligor.
12.5
Stamp
taxes
The
Obligors shall pay and, within three Business Days of demand, indemnify each Secured Party against any cost, loss or liability which
that Secured Party incurs in relation to all stamp duty, registration and other similar
Taxes payable in respect of any Finance Document.
51
12.6
VAT
(a)
All
amounts expressed to be payable under a Finance Document by any Party to a Finance Party
which (in whole or in part) constitute the consideration for any supply for VAT purposes
are deemed to be exclusive of any VAT
which is chargeable on that supply, and accordingly,
subject to paragraph (b) below, if VAT is or becomes chargeable on any supply made by any
Finance Party to any Party under a Finance Document and such Finance Party is
required to
account to the relevant tax authority for the VAT, that Party must pay to such Finance Party
(in addition to and at the same time as paying any other consideration for such supply) an
amount equal to the amount of
the VAT (and such Finance Party must promptly provide an appropriate
VAT invoice to that Party).
(b)
If
VAT is or becomes chargeable on any supply made by any Finance Party (the "Supplier")
to any other Finance Party (the "Recipient") under a Finance Document, and
any Party other than the Recipient (the "Relevant
Party") is required by
the terms of any Finance Document to pay an amount equal to the consideration for that supply
to the Supplier (rather than being required to reimburse or indemnify the Recipient in respect
of that
consideration):
(i)
(where
the Supplier is the person required to account to the relevant tax authority for the VAT)
the Relevant Party must also pay to the Supplier (at the same time as paying that amount)
an additional amount equal to
the amount of the VAT. The Recipient must (where this sub-paragraph
(i) applies) promptly pay to the Relevant Party an amount equal to any credit or repayment
the Recipient receives from the relevant tax authority
which the Recipient reasonably determines
relates to the VAT chargeable on that supply; and
(ii)
(where
the Recipient is the person required to account to the relevant tax authority for the VAT)
the Relevant Party must promptly, following demand from the Recipient, pay to the Recipient
an amount equal to the
VAT chargeable on that supply but only to the extent that the Recipient
reasonably determines that it is not entitled to credit or repayment from the relevant tax
authority in respect of that VAT.
(c)
Where
a Finance Document requires any Party to reimburse or indemnify a Finance Party for any cost
or expense, that Party shall reimburse or indemnify (as the case may be) such Finance Party
for the full amount of such cost
or expense, including such part of it as represents VAT,
save to the extent that such Finance Party reasonably determines that it is entitled to credit
or repayment in respect of such VAT from the relevant tax authority.
(d)
Any
reference in this Clause 12.6 (VAT) to any Party shall, at any time when that Party
is treated as a member of a group or unity (or fiscal unity) for VAT purposes, include (where
appropriate and unless the context otherwise
requires) a reference to the person who is treated
at that time as making the supply, or (as appropriate) receiving the supply, under the grouping
rules (provided for in Article 11 of Council Directive 2006/112/EC (or as
implemented by
the relevant member state of the European Union or equivalent provisions imposed elsewhere))
so that a reference to a Party shall be construed as a reference to that Party or the relevant
group or unity (or fiscal
unity) of which that Party is a member for VAT purposes at the
relevant time or the relevant representative member (or representative or head) of that group
or unity at the relevant time (as the case may be).
(e)
In
relation to any supply made by a Finance Party to any Party under a Finance Document, if
reasonably requested by such Finance Party, that Party must promptly provide such Finance
Party with details of that Party's VAT
registration and such other information as is reasonably
requested in connection with such Finance Party's VAT reporting requirements in relation
to such supply.
52
12.7
FATCA
Information
(a)
Subject
to paragraph (c) below, each Party shall, within ten Business Days of a reasonable request
by another Party:
(i)
confirm
to that other Party whether it is:
(A)
a
FATCA Exempt Party; or
(B)
not
a FATCA Exempt Party; and
(ii)
supply
to that other Party such forms, documentation and other information relating to its status
under FATCA as that other Party reasonably requests for the purposes of that other Party's
compliance with FATCA; and
(iii)
supply
to that other Party such forms, documentation and other information relating to its status
as that other Party reasonably requests for the purposes of that other Party's compliance
with any other law, regulation or
exchange of information regime.
(b)
If
a Party confirms to another Party pursuant to sub-paragraph (i) of paragraph (a) above that
it is a FATCA Exempt Party and it subsequently becomes aware that it is not, or has ceased
to be a FATCA Exempt Party, that Party
shall notify that other Party reasonably promptly.
(c)
Paragraph
(a) above shall not oblige any Finance Party to do anything and sub-paragraph (iii) of paragraph
(a) above shall not oblige any other Party to do anything which would or might in its reasonable
opinion constitute a
breach of:
(i)
any
law or regulation;
(ii)
any
fiduciary duty; or
(iii)
any
duty of confidentiality.
(d)
If
a Party fails to confirm whether or not it is a FATCA Exempt Party or to supply forms, documentation
or other information requested in accordance with sub-paragraphs (i) or (ii) of paragraph
(a) above (including, for the
avoidance of doubt, where paragraph (c) above applies), then
such Party shall be treated for the purposes of the Finance Documents (and payments under
them) as if it is not a FATCA Exempt Party until such time as the Party
in question provides
the requested confirmation, forms, documentation or other information.
(e)
The
Facility Agent may rely on any withholding certificate, withholding statement, document,
authorisation or waiver it receives from a Lender without further verification.
12.8
FATCA
Deduction
(a)
Each
Party may make any FATCA Deduction it is required to make by FATCA, and any payment required
in connection with that FATCA Deduction, and no Party shall be required to increase any payment
in respect of which
it makes such a FATCA Deduction or otherwise compensate the recipient
of the payment for that FATCA Deduction.
53
(b)
Each
Party shall promptly, upon becoming aware that it must make a FATCA Deduction (or that there
is any change in the rate or the basis of such FATCA Deduction), notify the Party to whom
it is making the payment and, in
addition, shall notify each Obligor and the Facility Agent
and the Facility Agent shall notify the other Finance Parties.
13
INCREASED
COSTS
13.1
Increased
costs
(a)
Subject
to Clause 13.3 (Exceptions), the Borrowers shall, within five days of a demand by
the Facility Agent, pay for the account of a Finance Party the amount of any Increased Costs
incurred by that Finance Party or any of its
Affiliates as a result of:
(i)
the
introduction of or any change in (or in the interpretation, administration or application
of) any law or regulation; or
(ii)
compliance
with any law or regulation made,
in
each case after the date of this Agreement; or
(iii)
the
implementation, application of or compliance with the Dodd-Frank Wall Street Reform and Consumer
Protection Act, Basel III or CRD IV or any requests, rules, guidelines, directives, law or
regulation that
implements or applies the Dodd-Frank Wall Street Reform and Consumer Protection
Act, Basel III or CRD IV.
(b)
In
this Agreement:
(i)
"Basel
III" means:
(A)
the
agreements on capital requirements, a leverage ratio and liquidity standards contained in
"Basel III: A global regulatory framework for more resilient banks and banking systems",
"Basel III: International
framework for liquidity risk measurement, standards and monitoring"
and "Guidance for national authorities operating the countercyclical capital buffer"
published by the Basel Committee on Banking
Supervision in December 2010, each as amended,
supplemented or restated;
(B)
the
rules for global systemically important banks contained in "Global systemically important
banks: assessment methodology and the additional loss absorbency requirement - Rules text"
published by the
Basel Committee on Banking Supervision in November 2011, as amended, supplemented
or restated; and
(C)
any
further guidance or standards published by the Basel Committee on Banking Supervision relating
to "Basel III".
(ii)
"CRD
IV" means:
(A)
Regulation
(EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential
requirements for credit institutions and investment firms and amending regulation (EU) No.
648/2012, as amended by Regulation (EU) 2019/876;
54
(B)
Directive
2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the
activity of credit institutions and the prudential supervision of credit institutions and
investment firms,
amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC,
as amended by Directive (EU) 2019/878; and
(C)
any
other law or regulation which implements Basel III.
(iii)
"Increased
Costs" means:
(A)
a
reduction in the rate of return from the Facility or on a Finance Party's (or its Affiliate's)
overall capital;
(B)
an
additional or increased cost; or
(C)
a
reduction of any amount due and payable under any Finance Document,
which
is incurred or suffered by a Finance Party or any of its Affiliates to the extent that it is attributable to that Finance Party having
entered into its Commitment or funding or performing its obligations under any
Finance Document.
13.2
Increased
cost claims
(a)
A
Finance Party intending to make a claim pursuant to Clause 13.1 (Increased costs)
shall notify the Facility Agent of the event giving rise to the claim, following which the
Facility Agent shall promptly notify the Borrowers.
(b)
Each
Finance Party shall, as soon as practicable after a demand by the Facility Agent, provide
a certificate confirming the amount of its Increased Costs.
13.3
Exceptions
Clause
13.1 (Increased costs) does not apply to the extent any Increased Cost is:
(a)
attributable
to a Tax Deduction required by law to be made by an Obligor;
(b)
attributable
to a FATCA Deduction required to be made by a Party;
(c)
compensated
for by Clause 12.3 (Tax indemnity) (or would have been compensated for under Clause
12.3 (Tax indemnity) but was not so compensated solely because any of the exclusions
in paragraph (b) of Clause 12.3 (Tax
indemnity) applied);
(d)
compensated
for by any payment made pursuant to Clause 14.3 (Mandatory Cost); or
(e)
attributable
to the wilful breach by the relevant Finance Party or its Affiliates of any law or regulation.
14
OTHER
INDEMNITIES
14.1
Currency
indemnity
(a)
If
any sum due from an Obligor under the Finance Documents (a "Sum"), or any
order, judgment or award given or made in relation to a Sum, has to be converted from the
currency
55
(the
"First Currency") in which that Sum is payable into another currency (the "Second Currency") for the
purpose of:
(i)
making
or filing a claim or proof against that Obligor; or
(ii)
obtaining
or enforcing an order, judgment or award in relation to any litigation or arbitration proceedings,
that
Obligor shall, as an independent obligation, on demand, indemnify each Secured Party to which that Sum is due against any cost, loss
or liability arising out of or as a result of the conversion including any discrepancy
between (A) the rate of exchange used to convert
that Sum from the First Currency into the Second Currency and (B) the rate or rates of exchange available to that person at the time
of its receipt of that Sum.
(b)
Each
Obligor waives any right it may have in any jurisdiction to pay any amount under the Finance
Documents in a currency or currency unit other than that in which it is expressed to be payable.
14.2
Other
indemnities
(a)
Each
Obligor shall within 3 Business Days of any demand, indemnify each Secured Party against
any cost, loss or liability incurred by it as a result of:
(i)
the
occurrence of any Event of Default;
(ii)
a
failure by a Transaction Obligor to pay any amount due under a Finance Document on its due
date, including without limitation, any cost, loss or liability arising as a result of Clause
34 (Sharing among the Finance
Parties);
(iii)
funding,
or making arrangements to fund, its participation in an Advance requested by the Borrowers
in a Utilisation Request but not made by reason of the operation of any one or more of the
provisions of this
Agreement (other than by reason of default or negligence by that Secured
Party alone); or
(iv)
the
Loan (or part of the Loan) not being prepaid in accordance with a notice of prepayment given
by the Borrowers.
(b)
Each
Obligor shall, on demand, indemnify each Finance Party, each Affiliate of a Finance Party
and each officer or employee of a Finance Party or its Affiliate (each such person for the
purposes of this Clause 14.2 (Other
indemnities) an "Indemnified Person"),
against any cost, loss or liability incurred by that Indemnified Person pursuant to or in
connection with any litigation, arbitration or administrative proceedings or regulatory enquiry,
in
connection with or arising out of the entry into and the transactions contemplated by
the Finance Documents, having the benefit of any Security constituted by the Finance Documents
or which relates to the condition or
operation of, or any incident occurring in relation
to, any Ship unless such cost, loss or liability is caused by the gross negligence or wilful
misconduct of that Indemnified Person.
(c)
Without
limiting, but subject to any limitations set out in paragraph (b) above, the indemnity in
paragraph (b) above shall cover any cost, loss or liability incurred by each Indemnified
Person in any jurisdiction:
56
(i)
arising
or asserted under or in connection with any law relating to safety at sea, the ISM Code,
any Environmental Law or any Sanctions; or
(ii)
in
connection with any Environmental Claim.
(d)
Any
Affiliate or any officer or employee of a Finance Party or of any of its Affiliates may rely
on this Clause 14.2 (Other indemnities) subject to Clause 1.5 (Third party rights)
and the provisions of the Third Parties Act.
14.3
Mandatory
Cost
Each
Borrower shall within 3 Business Days of any demand by the Facility Agent, pay to the Facility Agent for the account of the relevant
Lender, such amount which any Lender certifies in a notice to the Facility Agent to be
its good faith determination of the amount necessary
to compensate it for complying with:
(a)
in
the case of a Lender lending from a Facility Office in a Participating Member State, the
minimum reserve requirements (or other requirements having the same or similar purpose) of
the European Central Bank or any other
authority or agency which replaces all or any of its
functions in respect of loans made from that Facility Office; and
(b)
in
the case of any Lender lending from a Facility Office in the United Kingdom, any reserve
asset, special deposit or liquidity requirements (or other requirements having the same or
similar purpose) of the Bank of England (or
any other governmental authority or agency) and/or
paying any fees to the Financial Conduct Authority and/or the Prudential Regulation Authority
(or any other governmental authority or agency which replaces all or any of
their functions),
which,
in each case, is referable to that Lender's participation in the Loan.
14.4
Indemnity
to the Facility Agent
Each
Obligor shall within 3 Business Days of any demand, indemnify the Facility Agent against:
(a)
any
cost, loss or liability incurred by the Facility Agent (acting reasonably) as a result of:
(i)
investigating
any event which it reasonably believes is a Default; or
(ii)
acting
or relying on any notice, request or instruction which it reasonably believes to be genuine,
correct and appropriately authorised; or
(iii)
instructing
lawyers, accountants, tax advisers, surveyors or other professional advisers or experts as
permitted under the Finance Documents; and
(b)
any
cost, loss or liability incurred by the Facility Agent (otherwise than by reason of the Facility
Agent's gross negligence or wilful misconduct) or, in the case of any cost, loss or liability
pursuant to Clause 35.11 (Disruption to
Payment Systems etc.) notwithstanding the
Facility Agent's negligence, gross negligence or any other category of liability whatsoever
but not including any claim based on the fraud of the Facility Agent in acting as Facility
Agent under the Finance Documents.
57
14.5
Indemnity
to the Security Agent
(a)
Each
Obligor shall within 3 Business Days of any demand, indemnify the Security Agent and every
Receiver and Delegate against any cost, loss or liability incurred by any of them:
(i)
in
relation to or as a result of:
(A)
any
failure by a Borrower to comply with its obligations under Clause 16 (Costs and Expenses);
(B)
acting
or relying on any notice, request or instruction which it reasonably believes to be genuine,
correct and appropriately authorised;
(C)
the
taking, holding, protection or enforcement of the Finance Documents and the Transaction Security;
(D)
the
exercise of any of the rights, powers, discretions, authorities and remedies vested in the
Security Agent and each Receiver and Delegate by the Finance Documents or by law;
(E)
any
default by any Transaction Obligor in the performance of any of the obligations expressed
to be assumed by it in the Finance Documents;
(F)
any
action by any Transaction Obligor which vitiates, reduces the value of, or is otherwise prejudicial
to, the Transaction Security; and
(G)
instructing
lawyers, accountants, tax advisers, surveyors or other professional advisers or experts as
permitted under the Finance Documents;
(ii)
acting
as Security Agent, Receiver or Delegate under the Finance Documents or which otherwise relates
to any of the Security Property or the performance of the terms of this Agreement or the
other Finance
Documents (otherwise, in each case, than by reason of the relevant Security
Agent's, Receiver's or Delegate's gross negligence or wilful misconduct).
(b)
The
Security Agent and every Receiver and Delegate may, in priority to any payment to the Secured
Parties, indemnify itself out of the Security Assets in respect of, and pay and retain, all
sums necessary to give effect to the
indemnity in this Clause 14.5 (Indemnity to the Security
Agent) and shall have a lien on the Transaction Security and the proceeds of the enforcement
of the Transaction Security for all monies payable to it.
15
MITIGATION
BY THE FINANCE PARTIES
15.1
Mitigation
(a)
Each
Finance Party shall, in consultation with the Borrowers and following notification to the
Facility Agent, take all reasonable steps to mitigate any circumstances which arise and which
would result in any amount becoming
payable under or pursuant to, or cancelled pursuant to,
any of Clause 7.1 (a) (Illegality and Sanctions affecting a Lender), Clause 12
(Tax Gross Up and Indemnities), Clause 13 (Increased Costs) or paragraph (a)
of Clause 14.3
(Mandatory Cost) including (but not limited to) transferring its rights
and obligations under the Finance Documents to another Affiliate or Facility Office.
58
(b)
Each
Finance party shall, following consultation with the Facility Agent, take any steps that
such Finance Party considers reasonable in its sole discretion, to mitigate any circumstances
which arise, and which would result in
any amount becoming payable under or pursuant to,
or cancelled pursuant to Clause 7.1 (Illegality and Sanctions affecting a Lender).
(c)
Paragraph
(a) above does not in any way limit the obligations of any Transaction Obligor under the
Finance Documents.
15.2
Limitation
of liability
(a)
Each
Obligor shall, on demand, indemnify each Finance Party for all costs and expenses reasonably
incurred by that Finance Party as a result of steps taken by it under Clause 15.1 (Mitigation).
(b)
A
Finance Party is not obliged to take any steps under Clause 15.1 (Mitigation) if either:
(i)
a
Default has occurred and is continuing; or
(ii)
in
the opinion of that Finance Party (acting reasonably), to do so might be prejudicial to it.
59
16
COSTS
AND EXPENSES
16.1
Transaction
expenses
The
Obligors shall, within 3 days of any demand, pay the Facility Agent and the Security Agent the amount of all costs and expenses (including
pre-agreed legal fees) reasonably incurred by any Secured Party in connection
with the negotiation, preparation, printing, execution,
syndication and perfection of:
(a)
this
Agreement and any other documents referred to in this Agreement or in a Security Document;
and
(b)
any
other Finance Documents executed after the date of this Agreement.
16.2
Amendment
costs
Subject
to Clause 17.4 (Reference rate transition costs) if:
(a)
a
Transaction Obligor requests an amendment, waiver or consent; or
(b)
an
amendment is required pursuant to Clause 35.9 (Change of currency); or
(c)
a
Transaction Obligor requests, and the Security Agent agrees to, the release of all or any
part of the Security Assets from the Transaction Security,
the
Obligors shall, within 3 days of demand, reimburse each of the Facility Agent and the Security Agent for the amount of all costs and
expenses (including legal fees) reasonably incurred by each Secured Party in responding
to, evaluating, negotiating or complying with
that request or requirement.
60
16.3
Enforcement
and preservation costs
The
Obligors shall, on demand, pay to each Secured Party the amount of all costs and expenses (including legal fees) incurred by that Secured
Party in connection with the enforcement of, or the preservation of any rights
under, any Finance Document or the Transaction Security
and with any proceedings instituted by or against that Secured Party as a consequence of it entering into a Finance Document, taking
or holding the Transaction
Security, or enforcing those rights.
16.4
Reference
rate transition costs
The
Borrowers shall within 3 days of demand reimburse each of the Facility Agent and the Security Agent for the amount of all costs and expenses
(including legal fees) reasonably incurred by each Secured Party in connection
with:
(a)
the
negotiation or entry into of any Compounded Rate Supplement or Compounding Methodology Supplement;
or
(b)
any
necessary amendment, waiver or consent relating to:
(i)
the
transition to the Compounded Reference Rate; or
(ii)
any
Compounded Rate Supplement or Compounding Methodology Supplement; or
(iii)
any
change arising as a result of an amendment required under Clause 44.5
(Changes to reference rates).
61
SECTION
7
GUARANTEES AND JOINT AND SEVERAL LIABILITY OF BORROWERS
17
GUARANTEE
AND INDEMNITY – GUARANTOR
17.1
Guarantee
and indemnity
The
Guarantor irrevocably and unconditionally:
(a)
guarantees
to each Finance Party punctual performance by each Borrower of all that Borrower's obligations
under the Finance Documents;
(b)
undertakes
with each Finance Party that whenever a Borrower does not pay any amount when due under or
in connection with any Finance Document, the Guarantor shall immediately on demand pay that
amount as if it were
the principal obligor; and
(c)
agrees
with each Finance Party that if any obligation guaranteed by it is or becomes unenforceable,
invalid or illegal, it will, as an independent and primary obligation, indemnify that Finance
Party immediately on demand
against any cost, loss or liability it incurs as a result of
a Borrower not paying any amount which would, but for such unenforceability, invalidity or
illegality, have been payable by it under any Finance Document on the date
when it would
have been due. The amount payable by the Guarantor under this indemnity will not exceed the
amount it would have had to pay under this Clause 17 (Guarantee and Indemnity –
Guarantor) if the amount
claimed had been recoverable on the basis of a guarantee.
17.2
Continuing
guarantee
This
guarantee is a continuing guarantee and will extend to the ultimate balance of sums payable by each Borrower under the Finance Documents,
regardless of any intermediate payment or discharge in whole or in part.
17.3
Reinstatement
If
any discharge, release or arrangement (whether in respect of the obligations of any Transaction Obligor or any security for those obligations
or otherwise) is made by a Secured Party in whole or in part on the basis of any
payment, security or other disposition which is avoided
or must be restored in insolvency, liquidation, administration or otherwise, without limitation, then the liability of the Guarantor
under this Clause 17 (Guarantee and
Indemnity – Guarantor) will continue or be reinstated as if the discharge, release or
arrangement had not occurred.
17.4
Waiver
of defences
The
obligations of the Guarantor under this Clause 17 (Guarantee and Indemnity – Guarantor) and in respect of any Transaction
Security will not be affected or discharged by an act, omission, matter or thing which, but for
this Clause 17.4 (Waiver of defences),
would reduce, release or prejudice any of its obligations under this Clause 17 (Guarantee and Indemnity – Guarantor) or
in respect of any Transaction Security (without limitation and
whether or not known to it or any Secured Party) including:
(a)
any
time, waiver or consent granted to, or composition with, any Transaction Obligor or other
person;
62
(b)
the
release of any other Transaction Obligor or any other person under the terms of any composition
or arrangement with any creditor of any member of the Group;
(c)
the
taking, variation, compromise, exchange, renewal or release of, or refusal or neglect to
perfect or delay in perfecting, or refusal or neglect to take up or enforce, or delay in
taking or enforcing any rights against, or security
over assets of, any Transaction Obligor
or other person or any non-presentation or non-observance of any formality or other requirement
in respect of any instrument or any failure to realise the full value of any security;
(d)
any
incapacity or lack of power, authority or legal personality of or dissolution or change in
the members or status of a Transaction Obligor or any other person;
(e)
any
amendment, novation, supplement, extension, restatement (however fundamental and whether
or not more onerous) or replacement of any Finance Document or any other document or security
including, without limitation,
any change in the purpose of, any extension of or any increase
in any facility or the addition of any new facility under any Finance Document or other document
or security;
(f)
any
unenforceability, illegality or invalidity of any obligation of any person under any Finance
Document or any other document or security; or
(g)
any
insolvency or similar proceedings.
17.5
Immediate
recourse
(a)
The
Guarantor waives any right it may have of first requiring any Secured Party (or any trustee
or agent on its behalf) to proceed against or enforce any other rights or security or claim
payment from any person (including
without limitation to commence any proceedings under any
Finance Document or to enforce any Transaction Security) before claiming or commencing proceedings
under this Clause 17 (Guarantee and Indemnity –
Guarantor). This waiver applies
irrespective of any law or any provision of a Finance Document to the contrary.
(b)
The
Guarantor acknowledges the rights of the Facility Agent pursuant to Clause 28.19 (Acceleration)
to enforce or direct the Security Agent to enforce or exercise any or all of its rights,
remedies powers or directions under any
guarantee or indemnity contained in this Agreement.
17.6
Appropriations
Until
all amounts which may be or become payable by the Transaction Obligors under or in connection with the Finance Documents have been irrevocably
paid in full, each Secured Party (or any trustee or agent on its behalf)
may:
(a)
refrain
from applying or enforcing any other moneys, security or rights held or received by that
Secured Party (or any trustee or agent on its behalf) in respect of those amounts, or apply
and enforce the same in such manner
and order as it sees fit (whether against those amounts
or otherwise) and the Guarantor shall not be entitled to the benefit of the same; and
(b)
hold
in an interest-bearing suspense account any moneys received from the Guarantor or on account
of the Guarantor's liability under this Clause 17 (Guarantee and Indemnity – Guarantor).
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17.7
Deferral
of Guarantor's rights
All
rights which the Guarantor at any time has (whether in respect of this guarantee, a mortgage or any other transaction) against any Borrower,
any other Transaction Obligor or their respective assets shall be fully
subordinated to the rights of the Secured Parties under the Finance
Documents and until the end of the Security Period and unless the Facility Agent otherwise directs, the Guarantor will not exercise any
rights which it may
have (whether in respect of any Finance Document to which it is a Party or any other transaction) by reason of performance
by it of its obligations under the Finance Documents or by reason of any amount being payable, or
liability arising, under this Clause
17 (Guarantee and Indemnity – Guarantor):
(a)
to
be indemnified by a Transaction Obligor;
(b)
to
claim any contribution from any third party providing security for, or any other guarantor
of, any Transaction Obligor's obligations under the Finance Documents;
(c)
to
take the benefit (in whole or in part and whether by way of subrogation or otherwise) of
any rights of the Secured Parties under the Finance Documents or of any other guarantee or
security taken pursuant to, or in connection
with, the Finance Documents by any Secured Party;
(d)
to
bring legal or other proceedings for an order requiring any Transaction Obligor to make any
payment, or perform any obligation, in respect of which the Guarantor has given a guarantee,
undertaking or indemnity under
Clause 17.1 (Guarantee and indemnity);
(e)
to
exercise any right of set-off against any Transaction Obligor; and/or
(f)
to
claim or prove as a creditor of any Transaction Obligor in competition with any Secured Party.
If
the Guarantor receives any benefit, payment or distribution in relation to such rights it shall hold that benefit, payment or distribution
to the extent necessary to enable all amounts which may be or become payable to the
Secured Parties by the Transaction Obligors under
or in connection with the Finance Documents to be repaid in full on trust for the Secured Parties and shall promptly pay or transfer
the same to the Facility Agent or as the
Facility Agent may direct for application in accordance with Clause 35 (Payment Mechanics).
17.8
Additional
security
This
guarantee and any other Security given by the Guarantor is in addition to and is not in any way prejudiced by, and shall not prejudice,
any other guarantee or Security or any other right of recourse now or subsequently held
by any Secured Party or any right of set-off
or netting or right to combine accounts in connection with the Finance Documents.
17.9
Applicability
of provisions of Guarantee to other Security
Clauses
17.2 (Continuing guarantee), 17.3 (Reinstatement), 17.4 (Waiver of defences), 17.5 (Immediate recourse),
17.6 (Appropriations), 17.7 (Deferral of Guarantor's rights) and 17.8 (Additional security) shall apply, with
any
necessary modifications, to any Security which the Guarantor creates (whether at the time at which it signs this Agreement or at any
later time) to secure the Secured Liabilities or any part of them.
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18
JOINT
AND SEVERAL LIABILITY OF THE BORROWERS
18.1
Joint
and several liability
All
liabilities and obligations of the Borrowers under this Agreement shall, whether expressed to be so or not, be joint and several.
18.2
Waiver
of defences
The
liabilities and obligations of a Borrower shall not be impaired by:
(a)
this
Agreement being or later becoming void, unenforceable or illegal as regards any other Borrower;
(b)
any
Lender or the Security Agent entering into any rescheduling, refinancing or other arrangement
of any kind with any other Borrower;
(c)
any
Lender or the Security Agent releasing any other Borrower or any Security created by a Finance
Document; or
(d)
any
time, waiver or consent granted to, or composition with any other Borrower or other person;
(e)
the
release of any other Borrower or any other person under the terms of any composition or arrangement
with any creditor of any member of the Group;
(f)
the
taking, variation, compromise, exchange, renewal or release of, or refusal or neglect to
perfect, take up or enforce, any rights against, or security over assets of, any other Borrower
or other person or any non-presentation or
non-observance of any formality or other requirement
in respect of any instrument or any failure to realise the full value of any security;
(g)
any
incapacity or lack of power, authority or legal personality of or dissolution or change in
the members or status of any other Borrower or any other person;
(h)
any
amendment, novation, supplement, extension, restatement (however fundamental, and whether
or not more onerous) or replacement of a Finance Document or any other document or security
including, without limitation,
any change in the purpose of, any extension of or any increase
in any facility or the addition of any new facility under any Finance Document or other document
or security;
(i)
any
unenforceability, illegality or invalidity of any obligation or any person under any Finance
Document or any other document or security; or
(j)
any
insolvency or similar proceedings.
18.3
Principal
Debtor
Each
Borrower declares that it is and will, throughout the Security Period, remain a principal debtor for all amounts owing under this Agreement
and the Finance Documents and no Borrower shall, in any circumstances, be
construed to be a surety for the obligations of any other Borrower
under this Agreement.
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18.4
Borrower
restrictions
(a)
Subject
to paragraph (b) below, during the Security Period no Borrower shall:
(i)
claim
any amount which may be due to it from any other Borrower whether in respect of a payment
made under, or matter arising out of, this Agreement or any Finance Document, or any matter
unconnected with this
Agreement or any Finance Document; or
(ii)
take
or enforce any form of security from any other Borrower for such an amount, or in any way
seek to have recourse in respect of such an amount against any asset of any other Borrower;
or
(iii)
set
off such an amount against any sum due from it to any other Borrower; or
(iv)
prove
or claim for such an amount in any liquidation, administration, arrangement or similar procedure
involving any other Borrower; or
(v)
exercise
or assert any combination of the foregoing.
(b)
If
during the Security Period, the Facility Agent, by notice to a Borrower, requires it to take
any action referred to in paragraph (a) above in relation to any other Borrower, that Borrower
shall take that action as soon as
practicable after receiving the Facility Agent's notice.
18.5
Deferral
of Borrowers' rights
Until
all amounts which may be or become payable by the Borrowers under or in connection with the Finance Documents have been irrevocably paid
in full and unless the Facility Agent otherwise directs, no Borrower will
exercise any rights which it may have by reason of performance
by it of its obligations under the Finance Documents:
(a)
to
be indemnified by any other Borrower; or
(b)
to
claim any contribution from any other Borrower in relation to any payment made by it under
the Finance Documents.
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SECTION 8
REPRESENTATIONS, UNDERTAKINGS AND EVENTS OF DEFAULT
19
REPRESENTATIONS
19.1
General
Each
Obligor makes the representations and warranties set out in this Clause 19 (Representations) to each Finance Party on the date
of this Agreement.
19.2
Status
(a)
Each
Borrower is a limited liability company formed and validly existing and in good standing
under the law of its Original Jurisdiction.
(b)
The
Guarantor is a corporation incorporated and validly existing and in good standing under the
law of its Original Jurisdiction.
(c)
It
and each other Transaction Obligor has the power to own its assets and carry on its business
as it is being conducted.
19.3
LLC
shares and ownership
(a)
In
the case of Borrower A, the aggregate number of limited liability company interests that
it is authorised to issue is 500 LLC Shares, all of which (being 100 per cent. of its limited
liability company interests) have been issued
to the relevant Shareholder.
(b)
In
the case of Borrower B, the aggregate number of limited liability company interests that
it is authorised to issue is 500 LLC Shares, all of which (being 100 per cent. of its limited
liability company interests) have been issued
to the relevant Shareholder.
(c)
In
the case of Borrower C, the aggregate number of limited liability company interests that
it is authorised to issue is 500 LLC Shares, all of which (being 100 per cent. of its limited
liability company interests) have been issued
to the relevant Shareholder.
(d)
In
the case of Borrower D, the aggregate number of limited liability company interests that
it is authorised to issue is 500 LLC Shares, all of which (being 100 per cent. of its limited
liability company interests) have been issued
to the relevant Shareholder.
(e)
In
the case of Borrower E, the aggregate number of limited liability company interests that
it is authorised to issue is 500 LLC Shares, all of which (being 100 per cent. of its limited
liability company interests) have been issued
to the relevant Shareholder.
(f)
In
the case of Borrower F, the aggregate number of limited liability company interests that
it is authorised to issue is 500 LLC Shares, all of which (being 100 per cent. of its limited
liability company interests) have been issued
to the relevant Shareholder.
(g)
In
the case of Borrower G, the aggregate number of limited liability company interests that
it is authorised to issue is 500 LLC Shares, all of which (being 100 per cent. of its limited
liability company interests) have been issued
to the relevant Shareholder.
67
(h)
In
the case of Borrower H, the aggregate number of limited liability company interests that
it is authorised to issue is 500 LLC Shares, all of which (being 100 per cent. of its limited
liability company interests) have been issued
to the relevant Shareholder.
(i)
In
the case of Borrower I, the aggregate number of limited liability company interests that
it is authorised to issue is 500 LLC Shares, all of which (being 100 per cent. of its limited
liability company interests) have been issued
to the relevant Shareholder.
(j)
In
the case of Borrower J, the aggregate number of limited liability company interests that
it is authorised to issue is 500 LLC Shares, all of which (being 100 per cent. of its limited
liability company interests) have been issued
to the relevant Shareholder.
(k)
The
Guarantor is authorized to issue an aggregate of 249,000,000 common shares and 1,000,000
preferred shares, each with a par value of $0.01.
(l)
The
legal title to and beneficial interest in the LLC Shares in each Borrower is held directly
by the relevant Shareholder free of any Security or any other claim, except for Permitted
Security.
(m)
None
of the LLC Shares in a Borrower is subject to any option to purchase, pre-emption rights
or similar rights.
19.4
Binding
obligations
The
obligations expressed to be assumed by it in each Transaction Document to which it is a party are legal, valid, binding and enforceable
obligations.
19.5
Validity,
effectiveness and ranking of Security
(a)
Each
Finance Document to which it is a party does now or, as the case may be, will upon execution
and delivery create, subject to the Legal Reservations and the Perfection Requirements, the
Security it purports to create over
any assets to which such Security, by its terms, relates,
and such Security will, when created or intended to be created, be valid and effective.
(b)
No
third party has or will have any Security (except for Permitted Security) over any assets
that are the subject of any Transaction Security granted by it.
(c)
Subject
to the Perfection Requirements, the Transaction Security granted by it to the Security Agent
or any other Secured Party has or will when created or intended to be created have first
ranking priority or such other priority
it is expressed to have in the Finance Documents
and is not subject to any prior ranking or pari passu ranking security.
(d)
No
concurrence, consent or authorisation of any person is required for the creation of or otherwise
in connection with any Transaction Security.
19.6
Non-conflict
with other obligations
The
entry into and performance by it of, and the transactions contemplated by, each Transaction Document to which it is a party:
(a)
do
not and will not conflict with:
(i)
any
law or regulation applicable to it;
68
(ii)
its
constitutional documents; or
(iii)
any
agreement or instrument binding upon it or any of its assets or constitute a default or termination
event (however described) under any such agreement or instrument.
(b)
is
for the corporate benefit of that Obligor.
19.7
Power
and authority
(a)
It
has the power to enter into, perform and deliver, and has taken all necessary action to authorise
its entry into, performance and delivery of, each Transaction Document to which it is or
will be a party and the transactions
contemplated by those Transaction Documents.
(b)
No
limit on its powers will be exceeded as a result of the borrowing, granting of security or
giving of guarantees or indemnities contemplated by the Transaction Documents to which it
is a party.
19.8
Validity
and admissibility in evidence
All
Authorisations required or desirable:
(a)
to
enable it lawfully to enter into, exercise its rights and comply with its obligations in
the Transaction Documents to which it is a party; and
(b)
to
make the Transaction Documents to which it is a party admissible in evidence in its Relevant
Jurisdictions,
have
been obtained or effected and are in full force and effect.
19.9
Governing
law and enforcement
(a)
The
choice of governing law of each Transaction Document to which it is a party will be recognised
and enforced in its Relevant Jurisdictions.
(b)
Any
judgment obtained in relation to a Transaction Document to which it is a party in the jurisdiction
of the governing law of that Transaction Document and any arbitral award obtained in relation
to a Transaction Document in
the seat of that arbitral tribunal as specified in that Transaction
Document will be recognised and enforced in its Relevant Jurisdictions.
19.10
Insolvency
No:
(a)
corporate
action, legal proceeding or other similar legal procedure or similar legal step described
in paragraph (a) of Clause 28.8 (Insolvency proceedings); or
(b)
creditors'
process described in Clause 28.9 (Creditors' process),
has
been taken or, to its knowledge, threatened in relation to any Transaction Obligor; and none of the circumstances described in Clause
28.7 (Insolvency) applies to any Transaction Obligor.
69
19.11
No
filing or stamp taxes
Under
the laws of its Relevant Jurisdictions it is not necessary that the Finance Documents to which it is a party be registered, filed, recorded,
notarised or enrolled with any court or other authority in that jurisdiction or that any
stamp, registration, notarial or similar Taxes
or fees be paid on or in relation to the Finance Documents to which it is a party or the transactions contemplated by those Finance Documents
except the registration of a Mortgage at
the applicable ship registry of the relevant Approved Flag; which registration will be made
promptly after the date of the relevant Finance Documents.
19.12
Deduction
of Tax
It
is not required to make any Tax Deduction from any payment it may make under any Finance Document to which it is a party.
19.13
No
default
(a)
No
Event of Default and, on the date of this Agreement and on each Utilisation Date, no Default
is continuing or might reasonably be expected to result from the making of any Utilisation
or the entry into, the performance of,
or any transaction contemplated by, any Transaction
Document.
(b)
No
other event or circumstance is outstanding which constitutes a default or a termination event
(however described) under any other agreement or instrument which is binding on it or to
which its assets are subject.
19.14
No
misleading information
(a)
Any
factual information provided by any member of the Group for the purposes of this Agreement
was true and accurate in all material respects as at the date it was provided or as at the
date (if any) at which it is stated.
(b)
The
financial projections contained in any such information have been prepared on the basis of
recent historical information and on the basis of reasonable assumptions.
(c)
Nothing
has occurred or been omitted from any such information and no information has been given
or withheld that results in any such information being untrue or misleading in any material
respect.
19.15
Financial
Statements
(a)
The
Original Financial Statements were prepared in accordance with GAAP consistently applied.
(b)
The
Original Financial Statements give a true and fair view of its financial condition as at
the end of the relevant financial year and its results of operations during the relevant
financial year.
(c)
Its
most recent financial statements delivered pursuant to Clause 20.2 (Financial statements):
(i)
have
been prepared in accordance with Clause 20.4 (Requirements as to financial statements);
and
70
(ii)
fairly
present its financial condition as at the end of the relevant financial year and operations
during the relevant financial year (consolidated in the case of the Guarantor).
(d)
Since
the date of the most recent financial statements delivered pursuant to Clause 20.2 (Financial
statements) there has been no material adverse change in its business, assets or financial
condition (or the business or
consolidated financial condition of the Group, in the case
of the Guarantor).
19.16
Pari
passu ranking
Its
payment obligations under the Finance Documents to which it is a party rank at least pari passu with the claims of all its other
unsecured and unsubordinated creditors, except for obligations mandatorily preferred by law
applying to companies generally.
19.17
No
proceedings pending or threatened
(a)
No
litigation, arbitration or administrative proceedings or investigations (including proceedings
or investigations relating to any alleged or actual breach of the ISM Code or of the ISPS
Code) of or before any court, arbitral
body or agency which, if adversely determined, might
reasonably be expected to have a Material Adverse Effect have (to the best of its knowledge
and belief (having made due and careful enquiry)) been started or threatened
against it or
any other Transaction Obligor.
(b)
No
judgment or order of a court, arbitral tribunal or other tribunal or any order or sanction
of any governmental or other regulatory body which might reasonably be expected to have a
Material Adverse Effect has (to the best of
its knowledge and belief (having made due and
careful enquiry)) been made against it or any other Transaction Obligor.
19.18
Valuations
(a)
All
information supplied by it or on its behalf to an Approved Valuer for the purposes of a valuation
delivered to the Facility Agent in accordance with this Agreement was true and accurate as
at the date it was supplied or (if
appropriate) as at the date (if any) at which it is stated
to be given.
(b)
It
has not omitted to supply any information to an Approved Valuer which, if disclosed, would
adversely affect any valuation prepared by such Approved Valuer.
(c)
There
has been no change to the factual information provided pursuant to paragraph (a) above in
relation to any valuation between the date such information was provided and the date of
that valuation which, in either case,
renders that information untrue or misleading in any
material respect.
19.19
No
breach of laws
It
has not breached any applicable law or regulation which breach has a Material Adverse Effect.
19.20
Initial
Charter
Each
Ship is subject to the relevant Initial Charter and has been delivered to the respective Initial Charterer (to the extent delivered on
the date of this Agreement).
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19.21
Compliance
with Environmental Laws
All
Environmental Laws relating to the ownership, operation and management of each Ship and, to the best of each Obligor's knowledge, the
business of each other Transaction Obligor (as now conducted and as reasonably
anticipated to be conducted in the future) and the terms
of all Environmental Approvals have been complied with.
19.22
No
Environmental Claim
No
Environmental Claim has been made or threatened against any member of the Group or any Ship which is reasonably expected to have a Material
Adverse Effect.
19.23
No
Environmental Incident
No
Environmental Incident has occurred and no person has claimed that an Environmental Incident has occurred which is reasonably expected
to have a Material Adverse Effect.
19.24
ISM
and ISPS Code compliance
All
requirements of the ISM Code and the ISPS Code as they relate to each Borrower, the Approved Technical Manager and each Ship have been
complied with.
19.25
Taxes
paid
(a)
It
is not and (to the best of its knowledge and belief (having made due and careful enquiry))
no other Transaction Obligor is materially overdue in the filing of any Tax returns and it
is not (and to the best of its knowledge and
belief (having made due and careful enquiry))
no other Transaction Obligor is overdue in the payment of any amount in respect of Tax unless
and only to the extent that (i) such payment is being contested in good faith, (ii)
adequate
reserves are being maintained for those Taxes and the costs required to contest them and
(iii) such payment can be lawfully withheld and failure to file such returns or pay those
Taxes does not have a Material Adverse
Effect.
(b)
No
claims or investigations are being made or conducted against it (or (to the best of its knowledge
and belief (having made due and careful enquiry)) against any other Transaction Obligor)
with respect to Taxes.
19.26
Financial
Indebtedness
No
Borrower has any Financial Indebtedness outstanding other than Permitted Financial Indebtedness.
19.27
Overseas
companies
No
Obligor has delivered particulars, whether in its name stated in the Finance Documents or any other name, of any UK Establishment to
the Registrar of Companies as required under the Overseas Regulations or, if it has so
registered, it has provided to the Facility Agent
sufficient details to enable an accurate search against it to be undertaken by the Lenders at the Companies Registry.
72
19.28
Good
title to assets
It
has good, valid and marketable title to, or valid leases or licences of, and all appropriate Authorisations to use, the assets necessary
to carry on its business as presently conducted.
19.29
Ownership
(a)
Each
Borrower (other than Borrower J) is the sole legal and beneficial owner of the Ship owned
by it, its Earnings and its Insurances.
(b)
With
effect on and from the relevant Utilisation Date, Borrower J will be the sole legal and beneficial
owner of Ship J, its Earnings and its Insurances.
(c)
With
effect on and from the date of its creation or intended creation,
each Transaction Obligor will be the sole legal and beneficial owner of any asset that
is the subject of any Transaction Security created or intended to be
created by such Transaction
Obligor.
(d)
The
constitutional documents of each Obligor do not and could not restrict or inhibit any transfer
of the LLC Shares of the Borrowers on creation or enforcement of the security conferred by
the Security Documents.
19.30
Centre
of main interests and establishments
For
the purposes of The Council of the European Union Regulation No. 2015/848 on Insolvency Proceedings (recast) (the "Regulation"),
its centre of main interest (as that term is used in Article 3(1) of the Regulation) is
situated in Greece
and it has no "establishment" (as that term is used in Article 2(10) of the Regulation) in any other jurisdiction.
19.31
Place
of business
(a)
No
Obligor has a place of management of its business in any country other than Greece.
(b)
No
Borrower is a tax resident in the Republic of the Marshall Islands, the Republic of Liberia
or any other jurisdiction and each Borrower is liable to pay Greek tonnage tax in respect
of the Ship belonging to it as long as that
Ship is managed by an Approved Manager whose
place of management of its business is Greece.
19.32
No
employee or pension arrangements
No
Obligor has any employees or any liabilities under any pension scheme.
19.33
No
immunity
No
Obligor nor any of its respective assets are entitled to immunity on the grounds of sovereignty or otherwise from any legal action or
proceedings (which shall include, without limitation, suit, attachment prior to judgment,
execution or other enforcement).
19.34
Sanctions
Representations
(a)
No
Transaction Obligor or Approved Manager:
(i)
is
a Prohibited Person;
73
(ii)
is
owned or controlled by or acting directly or indirectly on behalf of or for the benefit of,
a Prohibited Person;
(iii)
owns
or controls a Prohibited Person; or
(iv)
has
a Prohibited Person serving as a director, member, LLC manager, officer or, to the best of
its knowledge, employee.
(b)
Each
Transaction Obligor and each Approved Manager which is a member of the Group has instituted
and maintains policies and/or internal procedures designed to prevent violation of Sanctions.
(c)
No
proceeds of any Advance or the Loan shall be made available, directly or indirectly, to or
for the benefit of a Prohibited Person nor shall they be otherwise directly or indirectly,
applied in a manner or for a purpose
prohibited by Sanctions.
(d)
None
of the Ships is a Sanctioned Ship.
19.35
Validity
and completeness of the Initial Charters
(a)
Each
Initial Charter constitutes legal, valid, binding and enforceable obligations of the relevant
Borrower.
(b)
The
copy of each Initial Charter in respect of a Ship delivered to the Facility Agent before
the date of this Agreement is a true and complete copy.
(c)
No
amendments or additions to any of the Initial Charters have been agreed save as otherwise
disclosed to the Facility Agent prior to the execution of this Agreement nor has any Borrower
waived any of its rights under the
Initial Charter to which it is a party.
19.36
Anti-bribery,
anti-corruption and anti-money laundering
No
Transaction Obligor nor any of their Subsidiaries, members, LLC managers, directors or officers, or, to the best of their knowledge,
any affiliate, agent or employee of them, has engaged in any activity or conduct which
would violate any applicable anti-bribery, anti-corruption
or anti-money laundering laws, regulations or rules in any applicable jurisdiction (including, without limitation, the US Foreign Corrupt
Practices Act of 1977, as
amended) and each Transaction Obligor has instituted and maintain policies and/or internal procedures designed
to prevent violation of such laws, regulations and rules.
19.37
Ship
status
Each
Ship is:
(a)
(or,
in the case of Ship J, will be with effect on and from the relevant Utilisation Date) registered
in the name of the relevant Borrower under the laws and flag of the Approved Flag;
(b)
operationally
seaworthy and in every way fit for service;
(c)
classed
with the relevant Approved Classification free of all overdue requirements and recommendations
of the relevant Approved Classification Society affecting class; and
(d)
insured
in the manner required by the Finance Documents.
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19.38
US
Tax Obligor
No
Transaction Obligor is a US Tax Obligor.
19.39
Repetition
The
Repeating Representations are deemed to be made by each Obligor by reference to the facts and circumstances then existing on the date
of each Utilisation Request, each Utilisation Date and the first day of each Interest
Period.
20
INFORMATION
UNDERTAKINGS
20.1
General
The
undertakings in this Clause 20 (Information Undertakings) remain in force throughout the Security Period unless the Facility Agent,
acting with the authorisation of the Majority Lenders (or, where specified, all the
Lenders), may otherwise permit.
20.2
Financial
statements
The
Guarantor shall supply to the Facility Agent in sufficient copies for all the Lenders (and, in respect of paragraphs (a), (b) and (c)
below, prepared in accordance with NYSE rules (as shown and available on the website of
the Guarantor)):
(a)
as
soon as they become available, but in any event within 180 days after the end of each financial
year of the Guarantor, the consolidated audited annual financial statements of the Guarantor
(commencing with the financial
statements for the financial year which ending on 31 December
2024) for that financial year;
(b)
as
soon as they become available, but in any event within 120 days after the 6-month period
ending on 30 June in each financial year of the Guarantor, the semi-annual consolidated unaudited
financial statements of the
Guarantor, for that 6-month period (commencing with the financial
statements for the 6-month period ending on December 2024),
duly certified as to their correctness by the chief financial officer of the Guarantor;
(c)
as
soon as they become available, but in any event within 90 days after the 3-month period ending
on 30 June, 30 September, 31 December and 31 March in each financial year of the Guarantor,
the quarterly consolidated
unaudited financial statements of the Guarantor, for that 3-month
period (commencing with the financial statements for the 3-month period ending on September
2024); and
(d)
promptly
after each request by the Facility Agent, such further financial or other information in
respect of each Borrower, each Ship, the Guarantor and the other Transaction Obligors (including,
without limitation, any
information regarding any sale and purchase agreements, investment
brochures, shipbuilding contracts, charter agreements, operational expenditures for the Ships
and utilisation rates of the Ships) as may be requested by the
Facility Agent.
20.3
Compliance
Certificate
(a)
The
Guarantor shall supply to the Facility Agent, on a quarterly, semi-annual and annual basis
together with each set of financial statements publicly available online pursuant to paragraphs
(a), (b) and (c) of Clause 20.2
(Financial statements), as the case may be, a Compliance
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Certificate
setting out (in reasonable detail) computations as to compliance with Clause 21 (Financial Covenants) as at the date at which
those financial statements were drawn up.
(b)
Each
Compliance Certificate shall be signed by the chief financial officer of the Guarantor.
20.4
Requirements
as to financial statements
(a)
Each
set of financial statements delivered by the Guarantor pursuant to Clause 20.2 (Financial
statements) shall be certified by the chief financial officer of the Guarantor as giving
a true and fair view (if audited) or fairly
representing (if unaudited) its financial condition
and operations as at the date as at which those financial statements were drawn up.
(b)
The
Obligors shall procure that each set of financial statements delivered pursuant to Clause 20.2
(Financial statements) is prepared using GAAP, accounting practices and financial
reference periods consistent with those
applied in the preparation of the Original Financial
Statements unless, in relation to any set of financial statements, they notify the Facility
Agent that there has been a change in GAAP, the accounting practices or reference
periods
and the auditors of the Guarantor deliver to the Facility Agent:
(i)
a
description of any change necessary for those financial statements to reflect the GAAP, accounting
practices and reference periods upon which the Original Financial Statements were prepared;
and
(ii)
sufficient
information, in form and substance as may be reasonably required by the Facility Agent, to
enable the Lenders to determine whether Clause 21 (Financial Covenants) has been complied
with and make an
accurate comparison between the financial position indicated in those financial
statements and the Original Financial Statements.
Any
reference in this Agreement to those financial statements shall be construed as a reference to those financial statements as adjusted
to reflect the basis upon which the Original Financial Statements were prepared.
20.5
Information:
miscellaneous
Each
Obligor shall and shall procure that each other Transaction Obligor shall supply to the Facility Agent (in sufficient copies for all
the Lenders, if the Facility Agent so requests):
(a)
all
documents relevant to this Agreement which are dispatched by it to its members (or any class
of them) or its creditors upon request of the Facility Agent and copies of any relevant press
releases;
(b)
promptly
upon becoming aware of them, the details of any litigation, arbitration or administrative
proceedings or investigations (including proceedings or investigations relating to any alleged
or actual breach of the ISM Code
or of the ISPS Code) which are current, threatened or pending
against any member of the Group, and which might, if adversely determined, have a Material
Adverse Effect and each Borrower shall procure that all reasonable
measures are taken to
defend any such legal or administrative action;
(c)
promptly
upon becoming aware of them, the details of any judgment or order of a court, arbitral body
or agency which is made against any member of the Group and which might have a Material Adverse
Effect;
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(d)
promptly,
its constitutional documents where these have been amended or varied;
(e)
promptly,
such further information and/or documents regarding:
(i)
each
Ship, goods transported on each Ship, its Earnings and its Insurances;
(ii)
the
Security Assets;
(iii)
compliance
of the Transaction Obligors with the terms of the Finance Documents;
(iv)
the
financial condition, business and operations of any other Transaction Obligor;
(v)
the
Initial Charters,
as
any Finance Party (through the Facility Agent) may reasonably request;
(f)
promptly,
information and documentation reasonably requested by any Finance Party for purposes of compliance
with applicable "know your customer" requirements under the Patriot Act, the Beneficial
Ownership Regulation
or other applicable anti-money laundering laws; and
(g)
promptly,
such further information and/or documents as any Finance Party (through the Facility Agent)
may reasonably request so as to enable such Finance Party to comply with any laws applicable
to it or as may be required
by any regulatory authority.
20.6
Notification
of Default
(a)
Each
Obligor shall, and shall procure that each other Transaction Obligor shall, notify the Facility
Agent of any Default (and the steps, if any, being taken to remedy it ) promptly upon becoming
aware of its occurrence (unless
that Obligor is aware that a notification has already been
provided by another Obligor) including, but not limited to, any early indication thereof
that the financial covenants set out in Clause 21 (Financial Covenants) may not
be
met.
(b)
Promptly
upon a request by the Facility Agent, each Borrower shall supply to the Facility Agent a
certificate signed by an officer on its behalf certifying that no Default is continuing (or
if a Default is continuing, specifying the
Default and the steps, if any, being taken to
remedy it).
20.7
Notification
of litigation
(a)
The
Obligors will provide the Facility Agent with details of any legal action (i) involving any
Obligor and any other Transaction Obligor as soon as such action is instituted and (ii) on
becoming aware of the same, involving
any Approved Technical Manager, or any Ship, its Earnings,
its Insurances unless in each case it is clear that the legal action could not reasonably
be expected to have a Material Adverse Effect if adversely determined.
(b)
The
Obligors shall and shall procure that any other Transaction Obligor shall supply to the Facility
Agent promptly, to the extent permitted by law, details of any claim, action, suit, proceedings
or investigation against it with
respect to Sanctions by any Sanctions Authority (in sufficient
copies for all the Lenders, if the Facility Agent so requests).
20.8
Use
of websites
(a)
Each
Obligor may satisfy its obligation under the Finance Documents to which it is a party to
deliver any information in relation to those Lenders (the "Website Lenders")
which accept this method of communication by
posting this information onto an electronic
website designated by the Borrowers and the Facility Agent (the "Designated Website")
if:
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(i)
the
Facility Agent expressly agrees (after consultation with each of the Lenders) that it will
accept communication of the information by this method;
(ii)
both
the relevant Obligor and the Facility Agent are aware of the address of and any relevant
password specifications for the Designated Website; and
(iii)
the
information is in a format previously agreed between the relevant Obligor and the Facility
Agent.
If
any Lender (a "Paper Form Lender") does not agree to the delivery of information electronically then the Facility Agent
shall notify the Obligors accordingly and each Obligor shall supply the information to the Facility
Agent (in sufficient copies for each
Paper Form Lender) in paper form. In any event each Obligor shall supply the Facility Agent with at least one copy in paper form of any
information required to be provided by it.
(b)
The
Facility Agent shall supply each Website Lender with the address of and any relevant password
specifications for the Designated Website following designation of that website by the Obligors
or any of them and the
Facility Agent.
(c)
An
Obligor shall promptly upon becoming aware of its occurrence notify the Facility Agent if:
(i)
the
Designated Website cannot be accessed due to technical failure;
(ii)
the
password specifications for the Designated Website change;
(iii)
any
new information which is required to be provided under this Agreement is posted onto the
Designated Website;
(iv)
any
existing information which has been provided under this Agreement and posted onto the Designated
Website is amended; or
(v)
if
that Obligor becomes aware that the Designated Website or any information posted onto the
Designated Website is or has been infected by any electronic virus or similar software.
If
an Obligor notifies the Facility Agent under sub-paragraph (i) or (v) of paragraph (c) above, all information to be provided by the Obligors
under this Agreement after the date of that notice shall be supplied in paper form
unless and until the Facility Agent and each Website
Lender is satisfied that the circumstances giving rise to the notification are no longer continuing.
(d)
Any
Website Lender may request, through the Facility Agent, one paper copy of any information
required to be provided under this Agreement which is posted onto the Designated Website.
The Obligors shall comply with any
such request within 10 Business Days.
20.9
"Know
your customer" checks
(a)
If:
78
(i)
the
introduction of or any change in (or in the interpretation, administration or application
of) any law or regulation made after the date of this Agreement;
(ii)
any
change in the status of a Transaction Obligor (or of a Holding Company of a Transaction Obligor)
(including, without limitation, a change of ownership of a Transaction Obligor or of a Holding
Company of a
Transaction Obligor) after the date of this Agreement; or
(iii)
a
proposed assignment or transfer by a Lender of any of its rights and obligations under this
Agreement to a party that is not a Lender prior to such assignment or transfer,
obliges
a Finance Party (or, in the case of sub-paragraph (iii) above, any prospective new Lender) to comply with "know your customer"
or similar identification procedures in circumstances where the necessary information is
not already available to it, each Obligor shall
promptly upon the request of any Finance Party supply, or procure the supply of, such documentation and other evidence as is reasonably
requested by a Servicing Party (for itself
or on behalf of any other Finance Party) or any Lender (for itself or, in the case of the
event described in sub-paragraph (iii) above, on behalf of any prospective new Lender) in order for such Finance Party or, in the case
of the
event described in sub-paragraph (iii) above, any prospective new Lender to carry out and be satisfied it has complied with all
necessary "know your customer" or other similar checks under all applicable laws and regulations
pursuant to the transactions
contemplated in the Finance Documents.
(b)
Each
Lender shall promptly upon the request of a Servicing Party supply, or procure the supply
of, such documentation and other evidence as is reasonably requested by the Servicing Party
(for itself) in order for that Servicing
Party to carry out and be satisfied it has complied
with all necessary "know your customer" or other similar checks under all applicable
laws and regulations pursuant to the transactions contemplated in the Finance Documents.
21
FINANCIAL
COVENANTS
21.1
Borrowers'
minimum liquidity
Each
Borrower shall ensure that from the Utilisation Date in respect of the Advance which will finance the relevant Ship owned by it and at
all times throughout the Security Period an amount of not less than $500,000 is
standing to the credit of its Earnings Account (or, alternatively
the Borrowers shall ensure that an aggregate amount of no less than the product of $500,000 and the number of Ships then subject to a
Mortgage is standing to the
credit of all the Earnings Accounts).
21.2
Guarantors'
minimum liquidity and most favoured nations
At
all times during the Security Period, the Guarantor shall:
(a)
maintain
minimum liquidity in the amount of $20,000,000 or, if agreed by all the Lenders, a lesser
minimum liquidity amount; and
(b)
ensure
that the Finance Parties shall receive no less favourable treatment under this Agreement
in relation to any financial covenant relating to it, than any financial covenant provided
or to be provided under any credit, loan
facility or indenture agreement (or guarantee thereof)
creating Financial Indebtedness to which the Guarantor is a party (or by way of amendment
or supplement to that credit, loan facility or indenture agreement (or guarantee
thereof))
or any agreement creating Financial Indebtedness to refinance or otherwise substitute any
existing Financial Indebtedness of, or guarantee by, the Guarantor.
79
Notwithstanding
paragraph (b) above, the Guarantor shall promptly advise the Facility Agent of those arrangements and covenants in advance and shall,
upon the Facility Agent's request (acting on the instructions of the
Majority Lenders), enter into such documentation which amends and
supplements this Agreement and the other Finance Documents, as the Majority Lenders may require in order to achieve parity with the creditors
under the
relevant financing of the Guarantor.
21.3
Compliance
Check
Compliance
with the undertakings contained in this Clause 21 (Financial Covenants) shall be determined on each Testing Date and evidenced
by the Compliance Certificate.
22
GENERAL
UNDERTAKINGS
22.1
General
The
undertakings in this Clause 22 (General Undertakings) remain in force throughout the Security Period except as the Facility Agent,
acting with the authorisation of the Majority Lenders (or, where specified, all the
Lenders) may otherwise permit (and in the case of
Clauses 22.12 (Disposals), 22.13 (Merger), 22.15 (Financial Indebtedness), 22.19 (Other transactions),
22.22 (No amendment to Initial Charters), 22.25 (USPP Notes) and
22.26 (Zim Initial Charters cash account) such
permission not to be unreasonably withheld).
22.2
Authorisations
Each
Obligor shall, and shall procure that each other Transaction Obligor will, promptly:
(a)
obtain,
comply with and do all that is necessary to maintain in full force and effect; and
(b)
supply
certified copies to the Facility Agent of,
any
Authorisation required under any law or regulation of a Relevant Jurisdiction or the state of the Approved Flag at any time of each Ship
to enable it to:
(i)
perform
its obligations under the Transaction Documents to which it is a party;
(ii)
ensure
the legality, validity, enforceability or admissibility in evidence in any Relevant Jurisdiction
or in the state of the Approved Flag at any time of each Ship, of any Transaction Document
to which it is a party; and
(iii)
own
and operate each Ship (in the case of the Borrowers).
22.3
Compliance
with laws
Each
Obligor shall, and shall procure that each other Transaction Obligor will, comply in all respects with all laws (including, without limitation,
Sanctions) and regulations to which it may be subject.
22.4
Environmental
compliance
Each
Obligor shall, and shall procure that each other Transaction Obligor will:
80
(a)
comply
with all Environmental Laws;
(b)
obtain,
maintain and ensure compliance with all requisite Environmental Approvals;
(c)
implement
procedures to monitor compliance with and to prevent liability under any Environmental Law,
where
failure to do so has a Material Adverse Effect.
22.5
Environmental
Claims
Each
Obligor shall, and shall procure that each other Transaction Obligor will, promptly upon becoming aware of the same, inform the Facility
Agent in writing of:
(a)
any
Environmental Claim against any Transaction Obligor which is current, pending or threatened;
and
(b)
any
facts or circumstances which are reasonably likely to result in any Environmental Claim being
commenced or threatened against any Transaction Obligor,
where
the claim, if determined against that Transaction Obligor, has a Material Adverse Effect.
22.6
Taxation
(a)
Each
Obligor shall, and shall procure that each other Transaction Obligor will, pay and discharge
all Taxes imposed upon it or its assets within the time period allowed without incurring
penalties unless and only to the extent
that:
(i)
such
payment is being contested in good faith;
(ii)
adequate
reserves are maintained for those Taxes and the costs required to contest them and both have
been disclosed in its latest financial statements delivered to the Facility Agent under Clause
20.2 (Financial
statements); and
(iii)
such
payment can be lawfully withheld.
(b)
No
Obligor shall and the Obligors shall procure that no other Transaction Obligor will, change
its residence for Tax purposes.
22.7
Overseas
companies
Each
Obligor shall, and shall procure that each other Transaction Obligor will, promptly inform the Facility Agent if it delivers to the Registrar
particulars required under the Overseas Regulations of any UK Establishment and
it shall comply with any directions given to it by the
Facility Agent regarding the recording of any Transaction Security on the register which it is required to maintain under The Overseas
Companies (Execution of Documents
and Registration of Charges) Regulations 2009.
22.8
No
change to centre of main interests
No
Obligor shall change the location of its centre of main interest (as that term is used in Article 3(1) of the Regulation) from that stated
in relation to it in Clause 19.30 (Centre of main interests and establishments) and it will
create no "establishment"
(as that term is used in Article 2(10) of the Regulation) in any other jurisdiction.
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22.9
Pari
passu ranking
Each
Obligor shall, and shall procure that each other Transaction Obligor will, ensure that at all times any unsecured and unsubordinated
claims of a Finance Party against it under the Finance Documents rank at least pari
passu with the claims of all its other unsecured
and unsubordinated creditors except those creditors whose claims are mandatorily preferred by laws of general application to companies.
22.10
Title
(a)
Each
Borrower shall (in the case of Borrower J, with effect on and from the relevant Utilisation
Date) hold the legal title to, and own the entire beneficial interest in the Ship owned by
it, its Earnings and its Insurances.
(b)
With
effect on and from its creation or intended creation, each Obligor shall hold the legal title
to, and own the entire beneficial interest in any other assets which are the subject of any
Transaction Security created or intended
to be created by such Obligor.
22.11
Negative
pledge
(a)
No
Borrower shall create or permit to subsist any Security over any of its assets which is the
subject of the Security created or intended to be created by the Finance Documents.
(b)
No
Borrower shall:
(i)
sell,
transfer or otherwise dispose of any of its assets on terms whereby they are or may be leased
to or re-acquired by a Transaction Obligor;
(ii)
sell,
transfer or otherwise dispose of any of its receivables on recourse terms;
(iii)
enter
into any arrangement under which money or the benefit of a bank or other account may be applied,
set-off or made subject to a combination of accounts; or
(iv)
enter
into any other preferential arrangement having a similar effect,
in
circumstances where the arrangement or transaction is entered into primarily as a method of raising Financial Indebtedness or of financing
the acquisition of an asset.
(c)
Paragraphs
(a) and (b) above do not apply to any Permitted Security.
22.12
Disposals
(a)
No
Borrower shall enter into a single transaction or a series of transactions (whether related
or not) and whether voluntary or involuntary to sell, lease, transfer or otherwise dispose
of any asset (including without limitation any
Ship, its Earnings or its Insurances).
(b)
Paragraph
(a) above does not apply to any Charter as all Charters are subject to Clause 24.14
(Restrictions on chartering, appointment of managers etc.) or to a sale of any Ship
provided the Borrowers comply with the
prepayment obligations of Clause 7 (Prepayment
and Cancellation) and the provisions of Clause 7.4 (Mandatory prepayment on sale,
refinancing or Total Loss).
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22.13
Merger
No
Obligor shall enter into any amalgamation, demerger, merger, consolidation or corporate reconstruction (for the purposes of this Clause
22.13 (Merger), each "a process") Provided that in the case of the Guarantor, such
process is permitted
without restrictions so long as (i) the Guarantor remains the surviving entity of any such process, (ii) no Default has occurred at the
relevant time or would be triggered as a result of such process and (iii)
such process does not have a Material Adverse Effect.
22.14
Change
of business
(a)
The
Guarantor shall procure that no substantial change is made to the general nature of its business
or the Group from that carried on at the date of this Agreement Provided that the
Guarantor may acquire through merger (in
accordance with Clause 22.13 (Merger)) or
otherwise any type of ships so long as (i) such change of its business does not have a Material
Adverse Effect and (ii) no Default has occurred at the relevant time or would be
triggered
as a result of such change of business.
(b)
No
Borrower shall engage in any business other than the ownership and operation of its Ship.
22.15
Financial
Indebtedness
No
Borrower shall incur or permit to be outstanding any Financial Indebtedness (including entering into any investments, any sale or leaseback
agreement or any off-balance sheet transactions) except Permitted Financial
Indebtedness.
22.16
Expenditure
No
Borrower shall incur any expenditure, except for expenditure reasonably incurred in the ordinary course of owning, operating, chartering,
maintaining and repairing its Ship.
22.17
LLC
interests
No
Borrower shall:
(a)
purchase,
cancel or redeem any of its LLC Shares;
(b)
increase
or reduce its authorised share capital;
(c)
issue
any further LLC Shares, except to, from the relevant Shares Transfer Date and throughout
the rest of the Security Period, the Guarantor, and provided such LLC Shares are issued subject
to the terms of the Shares Security
applicable to that Borrower immediately upon the issuance
of such LLC Shares in a manner satisfactory to the Facility Agent and in compliance with
the terms of the Shares Security; or
(d)
appoint
any further officer of that Borrower (unless in accordance with the provisions of the Shares
Security applicable to that Borrower).
22.18
Dividends
(a)
Each
Borrower may declare and make a Dividend Payment only if (i) no Event of Default has
occurred and is continuing or would result from such Dividend Payment and (ii) the Security
Cover Ratio is at the relevant time not
less than the Relevant Percentage.
83
(b)
The
Guarantor may make a Dividend Payment only if all of the following conditions have been met
to the satisfaction of the Facility Agent:
(i)
the
covenants relevant to it as set out in Clause 21 (Financial Covenants) are all complied
with; and
(ii)
no
Event of Default has occurred and is continuing or would result from such Dividend Payment
under this Agreement or no event of default or termination event has occurred and is continuing
under any other credit,
loan facility or indenture agreement (or guarantee thereof) to which
it is a party (in any capacity, including, but not limited to, as guarantor).
(c)
For
the avoidance of doubt, the Dividend Payments allowed to be made pursuant to paragraph (a)
above shall be made quarterly per year.
22.19
Other
transactions
No
Borrower will:
(a)
be
the creditor in respect of any loan or any form of credit to any person other than where
such loan or form of credit is Permitted Financial Indebtedness;
(b)
give
or allow to be outstanding any guarantee or indemnity to or for the benefit of any person
in respect of any obligation of any other person or enter into any document under which that
Borrower assumes any liability of any
other person other than (i) any guarantee or indemnity
given under the Finance Documents or (ii) any guarantee or indemnity issued in the ordinary
course of its business of operating, trading and chartering any of the Ships;
(c)
enter
into any material agreement other than:
(i)
the
Transaction Documents; and/or
(ii)
any
other agreement expressly allowed under any other term of this Agreement; and
(d)
enter
into any transaction on terms which are, in any respect, less favourable to that Borrower
than those which it could obtain in a bargain made at arms' length; or
(e)
acquire
any shares or other securities other than US or UK Treasury bills and certificates of deposit
issued by major North American or European banks.
22.20
Unlawfulness,
invalidity and ranking; Security imperilled
No
Obligor shall do (or fail to do) or cause or permit another person to do (or omit to do) anything which is likely to:
(a)
make
it unlawful or contrary to Sanctions for a Transaction Obligor to perform any of its obligations
under the Transaction Documents;
(b)
cause
any obligation of a Transaction Obligor under the Transaction Documents to cease to be legal,
valid, binding or enforceable;
(c)
cause
any Transaction Document to cease to be in full force and effect;
(d)
cause
any Transaction Security to rank after, or lose its priority to, any other Security; and
84
(e)
imperil
or jeopardise the Transaction Security.
22.21
Further
assurance
(a)
Each
Obligor shall, and shall procure that each other Transaction Obligor will, promptly, and
in any event within the time period specified by the Security Agent do all such acts (including
procuring or arranging any
registration, notarisation or authentication or the giving of
any notice) or execute or procure execution of all such documents (including assignments,
transfers, mortgages, charges, notices, instructions, acknowledgments,
proxies and powers
of attorney), as the Security Agent may specify (and in such form as the Security Agent may
require in favour of the Security Agent or its nominee(s)):
(i)
to
create, perfect, vest in favour of the Security Agent or protect the priority of the Security
or any right of any kind created or intended to be created under or evidenced by the Finance
Documents (which may include
the execution of a mortgage, charge, assignment or other Security
over all or any of the assets which are, or are intended to be, the subject of the Transaction
Security) or for the exercise of any rights, powers and
remedies of any of the Secured Parties
provided by or pursuant to the Finance Documents or by law;
(ii)
to
confer on the Security Agent or confer on the Secured Parties Security over any property
and assets of that Transaction Obligor located in any jurisdiction equivalent or similar
to the Security intended to be
conferred by or pursuant to the Finance Documents;
(iii)
to
facilitate or expedite the realisation and/or sale of, the transfer of title to or the grant
of, any interest in or right relating to the assets which are, or are intended to be, the
subject of the Transaction Security or to
exercise any power specified in any Finance Document
in respect of which the Security has become enforceable; and/or
(iv)
to
enable or assist the Security Agent to enter into any transaction to commence, defend or
conduct any proceedings and/or to take any other action relating to any item of the Security
Property.
(b)
Each
Obligor shall, and shall procure that each other Transaction Obligor will, take all such
action as is available to it (including making all filings and registrations) as may be necessary
for the purpose of the creation,
perfection, protection or maintenance of any Security conferred
or intended to be conferred on the Security Agent or the Secured Parties by or pursuant to
the Finance Documents.
(c)
At
the same time as an Obligor delivers to the Security Agent any document executed by itself
or another Transaction Obligor pursuant to this Clause 22.21 (Further assurance),
that Obligor shall deliver, or shall procure that
such other Transaction Obligor will deliver,
to the Security Agent a certificate signed by one of that Obligor's or Transaction Obligor's
officers which shall:
(i)
set
out the text of a resolution of that Obligor's or Transaction Obligor's directors or members
or LLC manager, as applicable, specifically authorising the execution of the document specified
by the Security Agent; and
(ii)
state
that either the resolution was duly passed at a meeting of the directors or members or LLC
manager, as applicable, validly convened and held, throughout which a quorum of directors
or members or LLC
managers, as applicable, entitled to vote on the resolution was present,
or that the resolution has been signed by all the directors or members or LLC managers and
is valid under that Obligor's or Transaction Obligor's
articles of association, limited liability
company agreement or other constitutional documents.
85
22.22
No
amendment to Assignable Charters
No
Borrower will agree to any material amendment (including, but not limited to, the timing of payments, the governing law, arbitration
provisions and the parties to the Assignable Charter (excluding any novation with an
Affiliate or Subsidiary of an Initial Charterer))
or supplement to, or waive or fail to enforce, any Assignable Charter to which it is a party or any of its provisions (and, without limitation,
any reduction to the charter hire rate or
to the fixed duration of that Assignable Charter (without taking into account any optional
extensions), shall be considered a material amendment for the purposes of this Clause 22.22 (No amendments to Assignable Charters))
provided that that Borrower is permitted at any time to enter into an extension of the relevant Assignable Charter so long as
it is on the same, or more favourable to that Borrower, terms and conditions without material
amendments relating to that Borrower's
rights under the relevant Assignable Charter.
22.23
Sanctions
Undertakings
(a)
Each
Obligor undertakes that it shall, and the Guarantor shall procure that each member of the
Group will, comply with all Sanctions.
(b)
No
Obligor shall, and the Guarantor shall procure that no member of the Group shall, become
a Prohibited Person or act on behalf of, or as an agent of, a Prohibited Person.
(c)
Each
Obligor shall procure, and the Guarantor shall procure that each member of the Group shall
procure, that no proceeds from any activity or dealing with a Prohibited Person are credited
to any bank account held with any
Finance Party or any Affiliate of a Finance Party.
(d)
Each
Obligor shall, and the Guarantor shall procure that each member of the Group will, to the
extent permitted by law, promptly upon becoming aware of them supply to the Facility Agent
details of any claim, action, suit,
proceedings or investigation against it with respect
to Sanctions by any Sanctions Authority.
(e)
No
Obligor shall, and the Guarantor shall procure that no member of the Group will, use any
revenue or benefit derived from any activity or dealing with a Prohibited Person in discharging
any obligation due or owing to the
Finance Parties.
22.24
Use
of proceeds
No
Obligor shall, and the Guarantor shall procure that no other member of the Group shall, directly or indirectly, use, lend, contribute
or otherwise make available any proceeds of the Loan or other transaction contemplated by
this Agreement for the purpose of financing
any trade, business or other activities (i) with any Prohibited Person or (ii) in a Sanctioned Country.
22.25
USPP
Notes
The
Guarantor undertakes that it shall deliver to the Facility Agent, not later than 6 months before the maturity date of the USPP Notes,
its plan on the bullet amount repayment of the USPP Notes (including, without limitation,
cash at hand, ships sale, refinance and scrap
proceeds).
86
22.26
Zim
Initial Charters cash account
The
Guarantor shall:
(a)
remit
the relevant amounts of the charter hire under the Initial Charter in respect of each of
Ship H and Ship I, on the relevant dates twice per month, from the account held by the Guarantor
with UBS (the "Guarantor's UBS
Account") to the Earnings Account of the
Borrower owning that Ship, pursuant to, and subject to, the provisions of the relevant tripartite
agreement made among that Borrower, Zim Integrated Shipping Services and the
Guarantor in
relation to that Ship provided that the Guarantor shall remit such amounts to the
Earnings Account of the relevant Borrower owning such Ship as soon as possible and in no
event no later than three months from
the Utilisation Date relating to that Ship to give
to the Borrower sufficient time to close the existing earnings accounts; and
(b)
provide
to the Facility Agent on a quarterly basis, and upon the Facility Agent's request at any
other times, a statement of the Guarantor's UBS Account showing the outstanding balance of
that account.
23
INSURANCE
UNDERTAKINGS
23.1
General
The
undertakings in this Clause 23 (Insurance Undertakings) remain in force from the date of this Agreement throughout the rest of
the Security Period except as the Facility Agent, acting with the authorisation of the Majority
Lenders (or, where specified, all the
Lenders) may otherwise permit (and in the case of paragraph (a) of Clause 23.13 (Settlement of claims) such permission not to
be unreasonably withheld).
23.2
Maintenance
of obligatory insurances
Each
Borrower shall keep the Ship owned by it (and, in the case of Borrower J and its Ship, as owned by it on and from the relevant Utilisation
Date) insured at its expense against:
(a)
fire
and usual marine risks (including hull and machinery and excess risks);
(b)
war
risks;
(c)
protection
and indemnity risks in each case in the highest amount available as per IG P&I rules;
and
(d)
any
other risks against which the Facility Agent acting on the instructions of all the Lenders
considers, having regard to practices and other circumstances prevailing at the relevant
time, it would be reasonable for that Borrower
to insure and which are specified by the Facility
Agent by notice to that Borrower.
23.3
Terms
of obligatory insurances
Each
Borrower shall effect such insurances:
(a)
in
dollars;
(b)
in
the case of fire and usual marine risks and war risks, in an amount on an agreed value basis
at least the greater of:
87
(i)
an
amount which when aggregated with the amounts for which the other Ships then subject to a
Mortgage are insured for such risks is equal to 120 per cent. of:
(A)
the
Loan; and
(B)
the
aggregate principal amount secured by Permitted Security over the Ships then subject to a
Mortgage which have a prior ranking to the Security created by the Finance Documents; and
(ii)
the
Market Value of that Ship;
(c)
in
the case of oil pollution liability risks, for an aggregate amount equal to the highest level
of cover from time to time available under basic protection and indemnity club entry;
(d)
in
the case of protection and indemnity risks, in respect of the full tonnage of its Ship;
(e)
in
relation to war risks insurance, extended to cover piracy and terrorism where excluded under
the fire and usual marine risks insurance;
(f)
on
approved terms; and
(g)
through
Approved Brokers and with approved insurance companies and/or underwriters or, in the case
of war risks and protection and indemnity risks, in approved war risks and protection and
indemnity risks associations.
23.4
Further
protections for the Finance Parties
In
addition to the terms set out in Clause 23.3 (Terms of obligatory insurances), each Borrower shall procure that the obligatory
insurances effected by it shall:
(a)
subject
always to paragraph (b), name that Borrower as the sole named insured unless the interest
of every other named insured is limited:
(i)
in
respect of any obligatory insurances for hull and machinery and war risks;
(A)
to
any provable out-of-pocket expenses that it has incurred and which form part of any recoverable
claim on underwriters; and
(B)
to
any third party liability claims where cover for such claims is provided by the policy (and
then only in respect of discharge of any claims made against it); and
(ii)
in
respect of any obligatory insurances for protection and indemnity risks, to any recoveries
it is entitled to make by way of reimbursement following discharge of any third party liability
claims made specifically
against it;
and
every other named insured has undertaken in writing to the Security Agent (in such form as it requires) that any deductible shall be
apportioned between that Borrower and every other named
insured in proportion to the gross claims made or paid by each of them and that
it shall do all things necessary and provide all documents, evidence and information to enable the Security Agent to
collect or recover
any moneys which at any time become payable in respect of the obligatory insurances and, if required by the Security Agent, that any
such other named insured shall assign its
rights and interest to the obligatory insurances if they are named as a co-assured party;
88
(b)
whenever
the Facility Agent requires, name (or be amended to name) the Security Agent as additional
named insured for its rights and interests, warranted no operational interest and with full
waiver of rights of subrogation
against the Security Agent, but without the Security Agent
being liable to pay (but having the right to pay) premiums, calls or other assessments in
respect of such insurance;
(c)
name
the Security Agent as loss payee with such directions for payment as the Facility Agent may
specify;
(d)
provide
that all payments by or on behalf of the insurers under the obligatory insurances to the
Security Agent shall be made without set off, counterclaim or deductions or condition whatsoever;
(e)
provide
that the obligatory insurances shall be primary without right of contribution from other
insurances which may be carried by the Security Agent or any other Finance Party; and
(f)
provide
that the Security Agent may make proof of loss if that Borrower fails to do so.
23.5
Renewal
of obligatory insurances
Each
Borrower shall:
(a)
at
least 10 days before the expiry of any obligatory insurance effected by it:
(i)
notify
the Facility Agent of the Approved Brokers (or other insurers) and any protection and indemnity
or war risks association through or with which it proposes to renew that obligatory insurance
and of the proposed
terms of renewal; and
(ii)
obtain
the Facility Agents' approval to the matters referred to in sub-paragraph (i) above;
(b)
at
least 5 days before the expiry of any obligatory insurance, renew that obligatory insurance
in accordance with the Facility Agent's approval pursuant to paragraph (a) above; and
(c)
procure
that the Approved Brokers and/or the approved war risks and protection and indemnity associations
with which such a renewal is effected shall promptly after the renewal notify the Facility
Agent in writing of the
terms and conditions of the renewal.
23.6
Copies
of policies; letters of undertaking
Each
Borrower shall ensure that the Approved Brokers provide the Security Agent with:
(a)
pro
forma copies of all policies relating to the obligatory insurances which they are to
effect or renew; and
(b)
a
letter or letters or undertaking in a form required by the Facility Agent and including undertakings
by the Approved Brokers that:
89
(i)
they
will have endorsed on each policy, immediately upon issue, a loss payable clause and a notice
of assignment complying with the provisions of Clause 23.4 (Further protections for the
Finance Parties);
(ii)
they
will hold such policies, and the benefit of such insurances, to the order of the Security
Agent in accordance with such loss payable clause;
(iii)
they
will advise the Security Agent immediately of any material change to the terms of the obligatory
insurances;
(iv)
they
will, if they have not received notice of renewal instructions from the relevant Borrower
or its agents, notify the Security Agent not less than 14 days before the expiry of the obligatory
insurances;
(v)
if
they receive instructions to renew the obligatory insurances, they will promptly notify the
Facility Agent of the terms of the instructions;
(vi)
they
will not set off against any sum recoverable in respect of a claim relating to the Ship owned
by that Borrower under such obligatory insurances any premiums or other amounts due to them
or any other person
whether in respect of that Ship or otherwise, they waive any lien on
the policies, or any sums received under them, which they might have in respect of such premiums
or other amounts and they will not cancel such
obligatory insurances by reason of non-payment
of such premiums or other amounts;
(vii)
they
will provide notice for any cancellation of policies within the time line standard for industry
guidelines; and
(viii)
they
will arrange for a separate policy to be issued in respect of the Ship owned by that Borrower
forthwith upon being so requested by the Facility Agent.
23.7
Copies
of certificates of entry
Each
Borrower shall ensure that any protection and indemnity and/or war risks associations in which the Ship owned by it is entered provide
the Security Agent with:
(a)
a
certified copy of the certificate of entry for that Ship;
(b)
a
letter or letters of undertaking in such form as may be required by the Facility Agent acting
on the instructions of the Majority Lenders; and
(c)
a
certified copy of each certificate of financial responsibility for pollution by oil or other
Environmentally Sensitive Material issued by the relevant certifying authority in relation
to that Ship.
23.8
Deposit
of original policies
Each
Borrower shall ensure that all policies relating to obligatory insurances effected by it are deposited with the Approved Brokers through
which the insurances are effected or renewed.
23.9
Payment
of premiums
Each
Borrower shall punctually pay all premiums or other sums payable in respect of the obligatory insurances effected by it or the Security
Agent, as the case may be, and produce all relevant receipts when so required by the
Facility Agent or the Security Agent. The Borrowers
shall indemnify the Security Agent in respect of any other insurance cover, including but not limited to cover for port risk, crew liability
or any other cover required in the
Security Agent's sole discretion upon a Default.
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23.10
Guarantees
Each
Borrower shall use its best endeavours to procure that a protection and indemnity or war risks association issues any guarantees as may
be required always in accordance with their respective rules and conditions and shall
further use its best endeavours to procure that
such guarantees are issued as promptly as practically possible and that they remain in full force and effect.
23.11
Compliance
with terms of insurances
(a)
No
Borrower shall do or omit to do (nor permit to be done or not to be done) any act or thing
which would or might render any obligatory insurance invalid, void, voidable or unenforceable
or render any sum payable under an
obligatory insurance repayable in whole or in part.
(b)
Without
limiting paragraph (a) above, each Borrower shall:
(i)
take
all necessary action and comply with all requirements which may from time to time be applicable
to the obligatory insurances, and (without limiting the obligation contained in sub-paragraph
(iii) of paragraph (b)
of Clause 23.6 (Copies of policies; letters of undertaking))
ensure that the obligatory insurances are not made subject to any exclusions or qualifications
to which the Facility Agent has not given its prior approval;
(ii)
not
make any changes relating to the classification or classification society or manager or operator
of the Ship owned by it approved by the underwriters of the obligatory insurances;
(iii)
make
(and promptly supply copies to the Facility Agent of) all quarterly or other voyage declarations
which may be required by the protection and indemnity risks association in which the Ship
owned by it is entered to
maintain cover for trading to the United States of America and
Exclusive Economic Zone (as defined in the United States Oil Pollution Act 1990 or any other
applicable legislation); and
(iv)
not
employ the Ship owned by it, nor allow it to be employed, otherwise than in conformity with
the terms and conditions of the obligatory insurances, without first obtaining the consent
of the insurers and complying
with any requirements (as to extra premium or otherwise) which
the insurers specify.
23.12
Alteration
to terms of insurances
No
Borrower shall make or agree to any alteration to the terms of any obligatory insurance or waive any right relating to any obligatory
insurance.
23.13
Settlement
of claims
Each
Borrower shall:
91
(a)
not
settle, compromise or abandon any claim under any obligatory insurance for Total Loss or
for a Major Casualty; and
(b)
do
all things necessary and provide all documents, evidence and information to enable the Security
Agent to collect or recover any moneys which at any time become payable in respect of the
obligatory insurances.
23.14
Provision
of copies of communications
Each
Borrower shall provide the Security Agent, upon the Security Agent's request, with copies of all written communications between that
Borrower and:
(a)
the
Approved Brokers;
(b)
the
approved protection and indemnity and/or war risks associations; and
(c)
the
approved insurance companies and/or underwriters,
which
relate directly or indirectly to:
(i)
that
Borrower's obligations relating to the obligatory insurances including, without limitation,
all requisite declarations and payments of additional premiums or calls; and
(ii)
any
credit arrangements made between that Borrower and any of the persons referred to in paragraphs
(a) or (b) above relating wholly or partly to the effecting or maintenance of the obligatory
insurances.
23.15
Provision
of information
Each
Borrower shall provide the Facility Agent (or any persons which it may designate) upon the Facility Agent's request with any information
which the Facility Agent (or any such designated person) requests for the purpose
of:
(a)
obtaining
or preparing any report from an independent marine insurance broker as to the adequacy of
the obligatory insurances effected or proposed to be effected; and/or
(b)
effecting,
maintaining or renewing any such insurances as are referred to in Clause 23.16 (Mortgagee's
interest and additional perils insurances) or dealing with or considering any matters
relating to any such insurances,
and
the Borrowers shall, forthwith upon demand, indemnify the Security Agent in respect of all fees and other expenses incurred by or for
the account of the Security Agent in connection with any such report as is referred to in
paragraph (a) above.
23.16
Mortgagee's
interest and additional perils insurances
(a)
The
Security Agent shall be entitled from time to time to effect, maintain and renew all or any
of the following insurances in such amounts, on such terms, through such insurers and generally
in such manner as the Majority
Lenders may from time to time consider appropriate:
(i)
a
mortgagee's interest insurance in respect of each Ship providing for the indemnification
of the Finance Parties for any losses under or in connection with any Finance Document which
directly or indirectly result from
loss of or damage to a Ship or a liability of such Ship
or of the Borrower owning that Ship, such loss or damage being prima facie covered
by an obligatory insurance but in respect of which there is a non-payment (or
reduced payment)
by the underwriters by reason of, or on the basis of, an allegation concerning:
92
(A)
any
act or omission on the part of that Borrower, of any operator, charterer, manager or sub-manager
of that Ship or of any officer, employee or agent of that Borrower or of any such person,
including any
breach of warranty or condition or any non-disclosure relating to such obligatory
insurance;
(B)
any
act or omission, whether deliberate, negligent or accidental, or any knowledge or privity
of that Borrower, any other person referred to in paragraph (A) above, or of any officer,
employee or agent of that
Borrower or of such a person, including the casting away or damaging
of that Ship and/or that Ship being unseaworthy; and/or
(C)
any
other matter capable of being insured against under a mortgagee's interest marine insurance
policy, whether or not similar to the foregoing,
in
an amount of up to 120 per cent. of the aggregate of:
(1)
the
Loan; and
(2)
the
aggregate principal amount secured by Permitted Security over that Ship which have a prior
ranking to the Security created by the Finance Documents,
(the
aggregate of (1) and (2) being the "Aggregate Insurable Amount");
(ii)
a
mortgagee's interest additional perils insurance in respect of each Ship providing for the
indemnification of the Finance Parties against, amongst other things, any possible losses
or other consequences of any
Environmental Claim, including the risk of expropriation, arrest
or any form of detention of that Ship, the imposition of any Security over that Ship and/or
any other matter capable of being insured against under a
mortgagee's interest additional
perils policy, whether or not similar to the foregoing, and in an amount of up to 110 per
cent. of the Aggregate Insurable Amount;
(b)
The
Borrowers shall upon demand fully indemnify the Security Agent in respect of all premiums
and other expenses which are incurred in connection with or with a view to effecting, maintaining
or renewing any insurance
referred to in paragraph (a) above or dealing with, or considering,
any matter arising out of any such insurance.
24
GENERAL
SHIP UNDERTAKINGS
24.1
General
The
undertakings in this Clause 24 (General Ship Undertakings) remain in force on and from the date of this Agreement (an in the case
of Borrower J and its Ship, as owned by it on and from the
relevant Utilisation Date) and throughout the rest of the Security Period
except as the Facility Agent, acting with the authorisation of the Majority Lenders (or, where in the case of paragraphs (a), (b),
(c)
and (e) of Clause 24.14 (Restrictions on chartering, appointment of managers etc.) and where otherwise else specified, all the
Lenders) may otherwise permit (and in the case of Clauses 24.2
(Ship's name and registration), 24.3 (Repair and classification),
24.4 (Modifications), 24.5 (Removal and installation of parts) and 24.14 (Restrictions on chartering, appointment of
managers etc.)
(other than paragraph (a) of Clause 24.14(Restrictions on chartering, appointment of managers etc.)) such permission
not to be unreasonably withheld).
93
24.2
Ships'
name and registration
Each
Borrower shall, in respect of the Ship owned by it:
(a)
keep
that Ship registered in its name under the Approved Flag from time to time at its port of
registration;
(b)
not
do or allow to be done anything as a result of which such registration of that Ship might
be suspended, cancelled or imperilled;
(c)
not
enter into any dual flagging arrangement in respect of that Ship; and
(d)
not
change the name of that Ship,
provided
that any change of flag of a Ship shall be subject to:
(i)
that
Ship remaining subject to Security securing the Secured Liabilities created by a first priority
or preferred ship mortgage on that Ship and, if appropriate, a first priority deed of covenant
collateral to that mortgage
(or equivalent first priority Security) on substantially the
same terms as the Mortgage on that Ship and on such other terms and in such other form as
the Facility Agent, acting with the authorisation of the Majority
Lenders, shall approve
or require; and
(ii)
the
execution of such other documentation amending and supplementing the Finance Documents as
the Facility Agent, acting with the authorisation of the Majority Lenders, shall approve
or require.
24.3
Repair
and classification
Each
Borrower shall keep the Ship owned by it in a good and safe condition and state of repair:
(a)
consistent
with first class ship ownership and management practice; and
(b)
so
as to maintain the Approved Classification free of overdue recommendations and conditions.
24.4
Modifications
No
Borrower shall make any modification or repairs to, or replacement of, any Ship or equipment installed on it which would or might materially
and/or adversely alter the structure, type or performance characteristics of that
Ship or materially reduce its value.
24.5
Removal
and installation of parts
(a)
Subject
to paragraph (b) below, no Borrower shall remove any material part of the Ship owned by it,
or any item of equipment installed on such Ship unless:
(i)
the
part or item so removed is forthwith replaced by a suitable part or item which is in the
same condition as or better condition than the part or item removed;
94
(ii)
the
replacement part or item is free from any Security in favour of any person other than the
Security Agent; and
(iii)
the
replacement part or item becomes, on installation on that Ship, the property of that Borrower
and subject to the security constituted by the Mortgage on that Ship.
(b)
A
Borrower may install equipment owned by a third party if the equipment can be removed without
any risk of damage to the Ship owned by that Borrower.
24.6
Surveys
Each
Borrower shall submit the Ship owned by it regularly to all periodic or other surveys which may be required for classification purposes
and, if so required by the Facility Agent, provide the Facility Agent, with copies of
all survey reports.
24.7
Inspection
Each
Borrower shall permit the Security Agent (acting through surveyors or other persons appointed by it for that purpose) to board the Ship
owned by it at all reasonable times, with prior notice reasonably in advance, without
interfering with the Ship's trading schedule, to
inspect its condition or to satisfy themselves about proposed or executed repairs and shall afford all proper facilities for such inspections.
The costs of such inspections shall be for
the account of the Borrowers Provided that so long as no Event of Default has occurred
and is continuing, the Borrowers shall not be obliged to pay any costs in respect of more than one inspection in relation to a maximum
of
two Ships in each calendar year (starting from the relevant Utilisation Date relating to each Ship).
24.8
Prevention
of and release from arrest
(a)
Each
Borrower shall, in respect of the Ship owned by it, promptly discharge:
(i)
all
liabilities which give or may give rise to maritime or possessory liens on or claims enforceable
against that Ship, its Earnings or its Insurances;
(ii)
all
Taxes, dues and other amounts charged in respect of that Ship, its Earnings or its Insurances;
and
(iii)
all
other outgoings whatsoever in respect of that Ship, its Earnings or its Insurances.
(b)
Each
Borrower shall as promptly as possible after receiving notice of the arrest of the Ship owned
by it or of its detention in exercise or purported exercise of any lien or claim, take all
steps necessary to procure its release by
providing bail or otherwise as the circumstances
may require.
24.9
Compliance
with laws etc.
Each
Borrower shall:
(a)
comply,
or procure compliance with all laws or regulations:
(i)
relating
to its business generally;
(ii)
all
Sanctions; and
95
(iii)
relating
to the Ship owned by it, its ownership, employment, operation, management and registration,
including,
but not limited to, the ISM Code, the ISPS Code, all Environmental Laws, all Sanctions and the laws of the Approved Flag;
(b)
obtain,
comply with and do all that is necessary to maintain in full force and effect any Environmental
Approvals; and
(c)
without
limiting paragraph (a) above, not employ the Ship owned by it nor allow its employment, operation
or management in any manner contrary to any law or regulation including but not limited to
the ISM Code, the ISPS
Code, all Environmental Laws and Sanctions.
24.10
ISPS
Code
Without
limiting paragraph (a) of Clause 24.9 (Compliance with laws etc.), each Borrower shall:
(a)
procure
that the Ship owned by it and the company responsible for that Ship's compliance with the
ISPS Code comply with the ISPS Code; and
(b)
maintain
an ISSC for that Ship; and
(c)
notify
the Facility Agent immediately in writing of any actual or threatened withdrawal, suspension,
cancellation or modification of the ISSC.
24.11
Trading
in war zones
In
the event of hostilities in any part of the world (whether war is declared or not), no Borrower shall cause or permit the Ship owned
by it to enter or trade to any zone which is declared a war zone by any government or by that
Ship's war risks insurers unless:
(a)
the
prior written consent of the underwriters of that Ship has been given; and
(b)
that
Borrower has (at its expense) effected any special, additional or modified insurance cover
(to the extent not covered by that Ship's war risks insurances) which the underwriters of
that Ship may require.
24.12
Provision
of information
Without
prejudice to Clause 20.5 (Information: miscellaneous) each Borrower shall in respect of the Ship owned by it, promptly provide
the Facility Agent with any information which it requests regarding:
(a)
that
Ship, its employment, position and engagements;
(b)
the
Earnings and payments and amounts due to its master and crew;
(c)
any
expenditure incurred, or likely to be incurred, in connection with the operation, maintenance
or repair of that Ship and any payments made by it in respect of that Ship;
(d)
any
towages and salvages; and
(e)
its
compliance, the Approved Manager's compliance and the compliance of that Ship with the ISM
Code and the ISPS Code, and, upon the Facility Agent's request, promptly provide copies of
any current Charter relating to that
Ship, of any current guarantee of any such Charter,
the Ship's Safety Management Certificate and any relevant Document of Compliance.
96
24.13
Notification
of certain events
Each
Borrower shall, in respect of the Ship owned by it, as soon as practically possible (and in respect of sub-paragraphs (a), (c) and (e)
below no later than 10 Business Days) notify the Facility Agent by letter or email, of:
(a)
any
casualty to that Ship which is a Major Casualty;
(b)
any
occurrence as a result of which that Ship has become or is, by the passing of time or otherwise,
likely to become a Total Loss;
(c)
any
requisition of that Ship for hire;
(d)
any
overdue requirement or recommendation made in relation to that Ship by any insurer or classification
society or by any competent authority;
(e)
any
arrest or detention of that Ship or any exercise or purported exercise of any lien on that
Ship or the Earnings;
(f)
any
intended dry docking of that Ship;
(g)
any
deactivation or lay up of that Ship;
(h)
any
Environmental Claim made against that Borrower or in connection with that Ship, or any Environmental
Incident;
(i)
any
claim for breach of the ISM Code or the ISPS Code being made against that Borrower, an Approved
Manager or otherwise in connection with that Ship; or
(j)
any
other matter, event or incident, actual or threatened, the effect of which will or could
lead to the ISM Code or the ISPS Code not being complied with,
and
each Borrower shall keep the Facility Agent advised in writing on a regular basis and in such detail as the Facility Agent shall require
as to that Borrower's, any such Approved Manager's or any other person's response to
any of those events or matters.
24.14
Restrictions
on chartering, appointment of managers etc.
No
Borrower shall, in relation to the Ship owned by it:
(a)
let
that Ship on demise or bareboat charter for any period;
(b)
enter
into any time, voyage or consecutive voyage charter in respect of that Ship other than a
Permitted Charter;
(c)
materially
amend, supplement or terminate a Management Agreement;
(d)
appoint
a manager of that Ship other than the Approved Commercial Manager and the Approved Technical
Manager or agree to any alteration to the terms of an Approved Manager's appointment;
97
(e)
de
activate or layup that Ship; or
(f)
put
that Ship into the possession of any person for the purpose of work being done upon it in
an amount exceeding or likely to exceed $1,000,000 (or the equivalent in any other currency)
unless that person has first given to the
Security Agent and in terms satisfactory to it
a written undertaking not to exercise any lien on that Ship or its Earnings for the cost
of such work or for any other reason.
24.15
Notice
of Mortgage
Each
Borrower shall keep the relevant Mortgage registered against the Ship owned by it as a valid first preferred mortgage or, as the case
may be, priority mortgage, and (if so required by any law or regulation of a Relevant
Jurisdiction or the state of the Approved Flag
of that Ship) carry on board that Ship a certified copy of the relevant Mortgage and place and maintain in a conspicuous place in the
navigation room and the master's cabin of that
Ship a framed printed notice stating that that Ship is mortgaged by that Borrower to the
Security Agent.
24.16
Responsible
Ship Recycling
If
a Ship is sold for scrapping, the Borrower owning that Ship shall ensure that that Ship is sold on the basis of a memorandum of agreement
that contains language that ensures that that Ship shall be dismantled in a safe,
sustainable and socially and environmentally responsible
way and that Borrower shall use its best endeavours to ensure performance and observance by the buyer of that Ship of its obligations
and liabilities under such
memorandum of agreement.
24.17
Charterparty
Assignment
If
a Borrower enters into any Assignable Charter (other than an Initial Charter) and subject to obtaining the prior consent of the Facility
Agent in accordance with paragraph (a) or, as the case may be, paragraph (b), of Clause
24.14 (Restrictions on chartering, appointment
of managers etc.), that Borrower shall promptly after the date of entry into such Assignable Charter:
(a)
provide
the Facility Agent with a certified true copy of such Assignable Charter (or, alternatively
if a copy is not then available, a copy of a binding and unconditional recapitulation of
charterparty terms);
(b)
other
than in respect of a demise or bareboat charter, execute in favour of the Security Agent
a Charterparty Assignment in respect of that Assignable Charter (such Charterparty Assignment
to be notified to the relevant
charterer and any charter guarantor and use its best endeavours
to procure that an executed acknowledgment of such notice from the relevant charterer and
charter guarantor is obtained);
(c)
in
respect of a demise charter or bareboat charter, execute and procure that the charterer executes
in favour of the Security Agent a tripartite assignment in such form and substance acceptable
to the Lenders;
(d)
shall
deliver to the Facility Agent such other documents as it may reasonably require (including,
without limitation, documents equivalent to those referred to at paragraphs 1, 5 and 6.1
of Part A of Schedule 2 (Conditions
Precedent) in respect of such Charterparty Assignment
or, as the case may be, such tripartite assignment).
98
24.18
Sharing
of Earnings
No
Borrower shall enter into any agreement or arrangement for the sharing of any Earnings other than for the purposes of this Agreement.
24.19
Sanctions
and Ship Trading
Without
limiting Clause 24.9 (Compliance with laws etc.), each Borrower shall procure that:
(a)
the
Ship owned by it:
(i)
shall
not be used or operated by or for the benefit of a Prohibited Person;
(ii)
shall
not be used or operated in trading in any manner contrary to Sanctions (or which could be
contrary to Sanctions if Sanctions were binding on each Transaction Obligor); or in any other
manner that will result in a
violation of Sanctions by any Transaction Obligor or any Finance
Party;
(iii)
shall
not be operated used in or make a voyage to or from any Sanctioned Country, Provided that
in the case of an Emergency Event, that Ship can make such voyage until the relevant Borrower
or, as the case may be,
the relevant Approved Manager (in each case, acting in accordance
with best commercial practices in the operation of Ships) considers that there is no longer
an Emergency Event,
For
the purposes of this paragraph (iii) "Emergency Event" means, in relation to that Ship, any event or circumstance that a reasonable
person having experience in the management and operation of ships, would
consider that such event may risk the safety of a Ship or threaten
the life of the crew or any other individual;
(iv)
shall
not be traded in any manner which would trigger the operation of any sanctions limitation
or exclusion clause (or similar) in the Insurances; and
(v)
shall
not be used in trading in any manner that results in such Ship to becoming Sanctioned Ship;
and
(b)
each
charterparty in respect of the Ship owned by it shall contain, for the benefit of that Borrower,
language which gives effect to the provisions of paragraph (c) of Clause 24.9 (Compliance
with laws etc.) as regards Sanctions
and of this Clause 24.19 (Sanctions and Ship Trading)
and which permits refusal of employment or voyage orders if compliance would result in a
breach of Sanctions (or which would result in a breach of Sanctions if Sanctions
were binding
on each Transaction Obligor).
24.20
Poseidon
Principles
Each
Borrower shall, upon the request of any Lender and at the cost of the Borrowers, on or before 31 July in each calendar year, supply or
procure the supply by the relevant Approved Classification Society (as specified by
the relevant Lender) to the Facility Agent of all
information necessary in order for any Lender to comply with its obligations under the Poseidon Principles or otherwise in respect of
the preceding year, including, without
limitation, all ship fuel oil consumption data required to be collected and reported in accordance
with Regulation 22A of Annex VI and any Statement of Compliance, together with a Carbon Intensity and Climate Alignment
Certificate (if
available), in each case relating to the Ship owned by it for the preceding calendar year provided always that no Lender shall publicly
disclose such information with the identity of the relevant Ship without the
prior written consent of that Borrower. For the avoidance
of doubt, such information shall be "Confidential Information" for the purposes of Clause 45 (Disclosure of Confidential
Information) but the Borrowers acknowledge
that, in accordance with the Poseidon Principles, such information will form part of the
information published regarding the relevant Lender's portfolio climate alignment in a manner which will preserve the anonymity of the
information disclosed by the Borrowers.
99
24.21
Inventory
of Hazardous Materials
Each
Borrower shall maintain an Inventory of Hazardous Materials in respect of the Ship owned by it.
24.22
Notification
of compliance
Each
Borrower shall promptly provide the Facility Agent from time to time with evidence (in such form as the Facility Agent requires) that
it is complying with this Clause 23.16(a) (General Ship Undertakings) at the times
and in the manner provided in this Agreement.
25
ANTI-BOYCOTT
REGULATIONS
25.1
Anti-Boycott
Regulations
The
representations, undertakings and Events of Default relating to Sanctions shall not apply in favour of or for the benefit of any Lender
that informs the Facility Agent that it is subject to the EU Blocking Regulation or
Section 7 of the German Foreign Trade Ordinance (§
7 Außenwirtschaftsverordnung) or a similar applicable anti-boycott law or regulation of any applicable jurisdiction (together
with the EU Blocking Regulation and Section 7
of the of the German Foreign Trade Ordinance, and any similar successor EU law, the "Anti-Boycott
Regulations"), to the extent that compliance with those provisions would violate some or all of the Anti-Boycott
Regulations.
25.2
Restricted
Lender
(a)
In
connection with any amendment, waiver, determination or direction relating to any part of
the representations, undertakings or Events of Default relating to Sanctions of which a Lender
does not have the benefit because
such benefit would result in a violation by the Lender
of any Anti-Boycott Regulations (for the purpose of this paragraph (a), each a "Restricted
Lender"), that Restricted Lender will, subject to paragraph (b) below, be
excluded
for the purpose of determining whether the consent of all Lenders or the Majority Lenders
(whichever is required) has been obtained or whether the amendment, waiver, determination
or direction by all the Lenders or
the Majority Lenders (whichever is required) has been
made or given.
(b)
The
Facility Agent is only permitted to exclude the relevant Lender pursuant to paragraph (a),
above for the purpose of determining whether the consent of all the Lenders or the Majority
Lenders (whichever is required) has
been obtained or whether the amendment, waiver, determination
or direction by all the Lenders or the Majority Lenders (whichever is required) has been
made or given, if following the Facility Agent's request for such consent,
amendment, waiver,
determination or direction by all the Lenders or the Majority Lenders (whichever is required)
the respective Lender notifies the Facility Agent that it is a Restricted Lender for such
purpose.
100
26
SECURITY
COVER
26.1
Minimum
required security cover
Clause
26.2 (Provision of additional security; prepayment) applies if the Facility Agent notifies the Borrowers that the Security Cover
Ratio is below the Relevant Percentage.
In
this Clause 26.1 (Minimum required security cover), "Relevant Percentage" means:
(a)
during
the period commencing on the first Utilisation Date and ending on the date falling on the
fifth anniversary of the first Utilisation Date (inclusive) (the "Fifth Anniversary"),
135 per cent. of the Loan; and
(b)
from
the Fifth Anniversary and until the Termination Date, 140 per cent. of the Loan.
26.2
Provision
of additional security; prepayment
(a)
If
the Facility Agent serves a notice on the Borrowers under Clause 26.1 (Minimum required
security cover), the Borrowers shall, on or before the date falling 30 days after the
date (the "Prepayment Date") on which the
Facility Agent's notice is served,
prepay such part of the Loan as shall eliminate the shortfall.
(b)
The
Borrowers may, instead of making a prepayment as described in paragraph (a) above:
(i)
provide,
or ensure that a third party has provided, additional security which, in the opinion of the
Facility Agent acting on the instructions of the Majority Lenders:
(A)
has
a net realisable value at least equal to the shortfall;
(B)
is
in the form of cash and/or Security over a vessel; and
(C)
is
documented in such terms as the Facility Agent may approve or require; or
(ii)
provide,
or ensure that a third party has provided, additional security not of the type set out in
paragraph (b) (i) of this Clause which, in the opinion of the Facility Agent acting on the
instruction of the Lenders:
(A)
has
a net realisable value at least equal to the shortfall; and
(B)
is
documented in such terms as the Facility Agent may approve or require,
before
the Prepayment Date; and conditional upon such security being provided in such manner, it shall satisfy such prepayment obligation.
26.3
Value
of additional vessel security
The
net realisable value of any additional security which is provided under Clause 26.2 (Provision of additional security; prepayment)
and which consists of Security over a vessel shall be the Market Value of the vessel
concerned, determined in accordance with Clause 26.7
(Provision of valuations).
101
26.4
Valuations
binding
Any
valuation under this Clause 26 (Security Cover) shall be binding and conclusive as regards each Borrower, save for any manifest
error.
26.5
Provision
of information
(a)
Each
Borrower shall promptly provide the Facility Agent and any Approved Valuer acting under this
Clause 26 (Security Cover) with any information which the Facility Agent or the Approved
Valuer may request for the
purposes of the valuation.
(b)
If
a Borrower fails to provide the information referred to in paragraph (a) above by the date
specified in the request, the valuation may be made on any basis and assumptions which the
Approved Valuer or the Facility Agent
considers prudent.
26.6
Prepayment
mechanism
Any
prepayment pursuant to Clause 26.2 (Provision of additional security; prepayment) shall be made in accordance with the relevant
provisions of Clause 7 (Prepayment and Cancellation) and shall be applied pro rata against
the then outstanding Repayment Instalments
pursuant to the provisions of Clause 6.2 (Effect of cancellation and prepayment on scheduled prepayments).
26.7
Provision
of valuations
(a)
The
Facility Agent shall obtain the necessary valuations (addressed to it) of a Ship and any
other vessel over which additional Security has been created in accordance with Clause 26.3
(Value of additional vessel security), to
enable it to determine the Market Value
of that Ship or any other vessel, as follows:
(i)
prior
to the first Utilisation Date, to determine the Initial Market Value of that Ship for the
purpose of the Utilisation of the Loan;
(ii)
at
least semi-annually, on each of 30th June and 31st December in each
calendar year; and
(iii)
promptly
following the Facility Agent's (acting on the instructions
of any Lender) request:
(A)
if
an Event of Default has occurred and is continuing; and/or
(B)
if
a mandatory prepayment event has occurred under Clause 7.4 (Mandatory prepayment on sale,
refinancing or Total Loss).
(b)
The
cost of valuations obtained under Clause 26.7(a) (Provision of valuations) above shall
be borne or reimbursed by the Borrowers.
(c)
The
Lenders may at any other time or times instruct the Facility Agent to obtain valuations of
the Ships other than pursuant to paragraph (a) for the purpose of ascertaining the Market
Value of the Ships at such time or times.
Any such further valuations obtained or provided
shall be at the cost of the Lenders.
102
26.8
Release
of additional security
If,
at any time, the Security Agent holds additional security provided under this Clause 26 (Security Cover) and the Market Value
of the Ships disregarding the value of any additional security provided pursuant to Clause 26.2
(Provision of additional security;
prepayment) above exceeds the Security Cover Ratio required pursuant to Clause 26.1 (Minimum required security cover) with
reference to valuations provided no more than 90 days
previously, the Borrowers may, by notice to the Facility Agent, require the release
and discharge of that additional security. The Facility Agent shall then promptly direct the Security Agent to release and discharge
that
additional security if no Event of Default is then continuing or will result from such release and discharge and, upon such release
and discharge and, if so required by the Facility Agent, the Borrowers shall reimburse to the
Facility Agent any costs and expenses payable
under Clause 16 (Costs and Expenses) in relation to that release and discharge.
27
ACCOUNTS,
APPLICATION OF EARNINGS
27.1
Accounts
No
Borrower may, without the prior consent of the Facility Agent, maintain any bank account other than its Earnings Account and, in the
case of all the Borrowers, the Retention Account; for the avoidance of doubt, the
Borrowers may maintain any bank accounts they hold
under the Existing Agreements, which they undertake to close within 3-month period from each relevant Utilisation Date.
27.2
Payment
of Earnings
Each
Borrower shall ensure that, subject only to the provisions of the General Assignment to which it is a party, all the Earnings in respect
of the Ship owned by it are paid in to its Earnings Account.
27.3
Monthly
retentions
The
Borrowers shall ensure that, in each calendar month following (i) the first Utilisation Date relating to the Ships (other than Ship I
and Ship J), (ii) the second Utilisation Date relating to Ship I and (iii) the third Utilisation
Date relating to Ship J, on such dates
as the Facility Agent may from time to time specify, there is transferred to the Retention Account out of the aggregate Earnings received
by the Borrowers in their respective Earnings
Accounts during the preceding calendar month:
(a)
one-third
of the amount of any Instalment falling due under Clause 6.1 (Repayment of Loan) on
the next Repayment Date; and
(b)
the
relevant fraction of the aggregate amount of interest on the Loan which is payable under
this Agreement in respect of any Interest Period then current.
The
"relevant fraction" is a fraction of which:
(i)
the
numerator is one; and
(ii)
the
denominator is:
(A)
the
number of months comprised in the relevant then current Interest Period; or
103
(B)
if
the period is shorter (than that set out in (A)), the number of months from the later of
the commencement of the relevant current Interest Period or the last due date for payment
of interest on the Loan or the
relevant part of the Loan to the next due date for payment
of interest on the Loan or the relevant part of the Loan under this Agreement.
27.4
Shortfall
in Earnings
(a)
If
the aggregate of the credit balances on the Earnings Accounts is insufficient in any calendar
month for the required amount to be transferred to the Retention Account under Clause 27.3
(Monthly retentions), the Borrowers
shall make up the amount of the insufficiency
on demand from the Facility Agent.
(b)
Without
prejudicing the Facility Agent's right to make such demand at any time, the Facility Agent
may, if so authorised by the Majority Lenders, permit the Borrowers to make up all or part
of the insufficiency by increasing
the amount of any transfer under Clause 27.3 (Monthly
retentions) from the Earnings received in the next or subsequent calendar months.
27.5
Application
of Earnings
The
Earnings on the Earnings Accounts shall be used in the following order of application:
(a)
FIRSTLY,
for and towards payment of any unpaid fees, costs and expenses due to a Finance Party under
this Agreement and the Finance Documents;
(b)
SECONDLY,
for and towards payment of all amounts (other than principal and/or interest) due under this
Agreement and the Finance Documents;
(c)
THIRDLY,
for and towards making the transfers to the Retention Account required pursuant to Clause
27.3 (Monthly retentions);
(d)
FOURTHLY,
for and towards payment of the liabilities of the Borrowers (including, but not limited to,
the repayment of principal, interest, default interest and all relevant costs, expenses and
indemnities) under this Agreement
and the other Finance Documents to the extent not already
covered by the retentions set out in paragraph (a) to (c) above;
(e)
FIFTHLY,
for and towards payment of the Operating Expenses of the Ships which are due and payable
at such time; and
(f)
SIXTHLY,
subject to Clause 22.18 (Dividends) and provided that no Event of Default has occurred
and is continuing at that time, any remaining amounts (in excess of the minimum liquidity
required to be maintained pursuant
to Clause 21.1 (Borrowers' Minimum Liquidity))
standing to the credit of each Earnings Account after application pursuant to the foregoing
paragraphs shall be available to the Borrowers.
27.6
Application
of retentions
(a)
The
Security Agent has sole signing rights in relation to the Retention Account.
(b)
Until
an Event of Default occurs, the Facility Agent shall instruct the Security Agent to release
to it, on each Repayment Date and on each Interest Payment Date, for distribution to the
Finance Parties in accordance with Clause
35.2 (Distributions by the Facility Agent)
so much of the then balance on the Retention Account as equals:
104
(i)
any
Repayment Instalment due on that Repayment Date;
(ii)
the
amount of interest payable on that Interest Payment Date;
in
discharge of the Borrowers' liability for that Repayment Instalment or that interest, as the case may be.
27.7
Interest
accrued on Retention Account
Any
credit balance on the Retention Account shall bear interest at the rate from time to time offered by the Account Bank to its customers
for dollar deposits of similar amounts and for periods similar to those for which such
balances appear to the Account Bank likely to
remain on the Retention Account.
27.8
Release
of accrued interest
Interest
accruing under Clause 27.7 (Interest accrued on Retention Account) shall be credited to the Retention Account and, to the extent
not applied previously pursuant to Clause 27.6 (Application of retentions), shall be
released to the Borrowers at the end of the
Security Period.
27.9
Location
of Accounts
Each
Borrower shall promptly:
(a)
comply
with any requirement of the Facility Agent as to the location or relocation of its Earnings
Account and the Retention Account (or either of them); and
(b)
execute
any documents which the Facility Agent specifies to create or maintain in favour of the Security
Agent Security over (and/or rights of set-off, consolidation or other rights in relation
to) the Earnings Accounts and the
Retention Account (or any of them).
27.10
Administration
Whenever
a payment is due to be made from any of the Earnings Accounts or the Retention Account in accordance with this Clause 27, the Borrowers
shall authorise the Account Bank to pay such amounts from the Earnings
Accounts (or any of them) or the Retention Account to the applicable
payee unless the Facility Agent notifies the Account Bank that:
(a)
an
Event of Default has occurred and is continuing or would occur as a result (wholly or partly)
of such withdrawal; or
(b)
any
of Earnings Accounts or the Retention Account is overdrawn or would become overdrawn as a
result of such withdrawal, whereby the Account Bank will act only in accordance with the
instructions given by persons
authorised by the Facility Agent in respect of the Earnings
Accounts and the Retention Account.
28
EVENTS
OF DEFAULT
28.1
General
Each
of the events or circumstances set out in this Clause 28 (Events of Default) is an Event of Default except for Clause 28.19 (Acceleration)
and Clause 28.20 (Enforcement of security).
105
28.2
Non-payment
A
Transaction Obligor does not pay on the due date any amount payable pursuant to a Finance Document at the place at and in the currency
in which it is expressed to be payable unless:
(a)
its
failure to pay is caused by:
(i)
administrative
or technical error; or
(ii)
a
Disruption Event; and
(b)
payment
is made within three Business Days of its due date.
28.3
Specific
obligations
A
breach occurs of Clause 4.4 (Waiver of conditions precedent), paragraph 20.3(a) of Clause 20.3 (Compliance Certificate),
Clause 21 (Financial Covenants), Clause 22.10 (Title), Clause 22.11 (Negative pledge), Clause 22.20
(Unlawfulness,
invalidity and ranking; Security imperilled), Clause 22.22 (No amendment to Assignable Charters), Clause 22.23 (Sanctions
Undertakings), Clause 23.2 (Maintenance of obligatory insurances), Clause 23.3
(Terms of obligatory insurances), Clause
23.5 (Renewal of obligatory insurances), Clause 24.19 (Sanctions and Ship Trading), Clause 22.24 (Use of proceeds)
(in respect of a Transaction Obligor only) or Clause 25 (Security
Cover).
28.4
Other
obligations
(a)
A
Transaction Obligor or an Approved Manager does not comply with any provision of the Finance
Documents to which it is a party (other than those referred to in Clause 28.2 (Non-payment)
and Clause 28.3 (Specific
obligations)).
(b)
No
Event of Default under paragraph (a) above will occur if the failure to comply is capable
of remedy and is remedied within fifteen (15) Business Days of the Facility Agent giving
notice to the Borrowers or (if earlier) any
Transaction Obligor or, as the context may require,
an Approved Manager, becoming aware of the failure to comply.
28.5
Misrepresentation
Any
representation or statement made or deemed to be made by a Transaction Obligor in the Finance Documents or any other document delivered
by or on behalf of any Transaction Obligor under or in connection with any
Finance Document is or proves to have been incorrect or misleading
when made or deemed to be made unless such misrepresentation or statement is determined by the Facility Agent (acting on the instructions
of the Majority
Lenders) to have been made in error and is rectified within five Business Days from the date of such representation or
statement.
28.6
Cross
default
(a)
Any
Financial Indebtedness of any Transaction Obligor is not paid when due (unless contested
in good faith) nor within any originally applicable grace period.
(b)
Any
Financial Indebtedness of any Transaction Obligor is declared to be due and payable prior
to its specified maturity as a result of an event of default (however described).
106
(c)
Any
commitment for any Financial Indebtedness of any Transaction Obligor is cancelled or suspended
by a creditor of any Transaction Obligor as a result of an event of default (however described)
unless the relevant
Transaction Obligor has satisfied the Facility Agent that such cancellation
or suspension will not have any negative impact on the ability of that Transaction Obligor
to satisfy its debts as they fall due.
(d)
Any
creditor of any Transaction Obligor becomes entitled to declare any Financial Indebtedness
of any Transaction Obligor due and payable prior to its specified maturity as a result of
an event of default (however described).
(e)
No
Event of Default will occur under this Clause 28.6 (Cross default) in respect of the
Guarantor if the aggregate amount of Financial Indebtedness or commitment for Financial Indebtedness
falling within paragraphs (a) to (d)
above is less than $15,000,000 (or its equivalent in
any other currency).
28.7
Insolvency
(a)
A
Transaction Obligor:
(i)
is
unable or admits inability to pay its debts as they fall due;
(ii)
is
declared to be unable to pay its debts under applicable law;
(iii)
suspends
or threatens to suspend making payments on any of its debts; or
(iv)
by
reason of actual or anticipated financial difficulties, commences negotiations with one or
more of its creditors (excluding any Finance Party in its capacity as such) with a view to
rescheduling any of its
indebtedness,
Provided
that should such Transaction Obligor, for any reason, including without limitation, any actual or anticipated financial difficulties,
commences, with prior written notice to the Facility Agent, negotiations with one or
more of its creditors (including the Facility Agent
for account of the Lenders) with a view to rescheduling, deferring, re-organising or suspending any of its indebtedness, the negotiations
themselves or the entering, as a result
of such negotiations, into any agreement or contract with one or more of its creditors (including
the Facility Agent for account of the Lenders) setting out terms for any rescheduling, deferral, re-organization or suspension of its
indebtedness, shall not in itself constitute an Event of Default.
(b)
A
moratorium is declared in respect of any indebtedness of any Transaction Obligor. If a moratorium
occurs, the ending of the moratorium will not remedy any Event of Default caused by that
moratorium.
28.8
Insolvency
proceedings
(a)
Any
corporate action, legal proceedings or other procedure or step is taken in relation to:
(i)
the
suspension of payments, a moratorium of any indebtedness, winding-up, dissolution, administration
or reorganisation (by way of voluntary arrangement, scheme of arrangement or otherwise) of
any Transaction
Obligor;
(ii)
a
composition, compromise, assignment or arrangement with any creditor of any Transaction Obligor;
107
(iii)
the
appointment of a liquidator, receiver, administrator, administrative receiver, compulsory
manager or other similar officer in respect of any Transaction Obligor or any of its assets;
or
(iv)
enforcement
of any Security over any assets of any Transaction Obligor,
or
any analogous procedure or step is taken in any jurisdiction.
(b)
Paragraph
(a) above shall not apply to any winding-up petition which is frivolous or vexatious and
is discharged, stayed or dismissed within 30 days of commencement.
28.9
Creditors'
process
Any
expropriation, attachment, sequestration, distress or execution (or any analogous process in any jurisdiction) affects any asset or assets
of a Transaction Obligor (other than an arrest or detention of a Ship referred to in
Clause 28.13 (Arrest)) and is not discharged
within 30 days (or such longer period the Facility Agent, acting on the instructions of the Majority Lenders, may agree to).
28.10
Unlawfulness,
invalidity and ranking
(a)
It
is or becomes unlawful for a Transaction Obligor to perform any of its obligations under
the Finance Documents.
(b)
Any
obligation of a Transaction Obligor under the Finance Documents is not or ceases to be legal,
valid, binding or enforceable.
(c)
Any
Finance Document ceases to be in full force and effect or to be continuing or is or purports
to be determined or any Transaction Security is alleged by a party to it (other than a Finance
Party) to be ineffective.
(d)
Any
Transaction Security proves to have ranked after, or loses its priority to, any other Security.
28.11
Security
imperilled
Any
Security created or intended to be created by a Finance Document is in any way imperilled or in jeopardy.
28.12
Cessation
of business
Any
Transaction Obligor suspends or ceases to carry on (or threatens to suspend or cease to carry on) all or a material part of its business.
28.13
Arrest
Any
arrest of a Ship or its detention in the exercise or the purported exercise of any lien or claim unless it is redelivered to the full
control of the relevant Borrower within 30 days of such arrest or detention (or such longer
period as may be required in the circumstances
based on the assessment of the Facility Agent acting with the authorisation of the Majority Lenders).
28.14
Expropriation
The
authority or ability of any Transaction Obligor to conduct its business is limited or wholly or substantially curtailed by any seizure,
expropriation, nationalisation, intervention, restriction or other
action by or on behalf of any governmental, regulatory or other authority
or other person in relation to any Transaction Obligor or any of its assets other than:
108
(a)
an
arrest or detention of a Ship referred to in Clause 28.13 (Arrest); or
(b)
any
Requisition.
28.15
Repudiation
and rescission of agreements
Any
Obligor (or any other relevant party) rescinds or purports to rescind or repudiates or purports to repudiate a Transaction Document (other
than an Assignable Charter where the prior approval of the Facility Agent has been
obtained for rescission pursuant to the Finance Documents)
or any of the Transaction Security or evidences an intention to rescind or repudiate a Transaction Document or any Transaction Security.
28.16
Litigation
Any
litigation, arbitration or administrative proceedings or investigations of, or before, any court, arbitral body or agency are started
or threatened, or any judgment or order of a court, arbitral body or agency is made, in
relation to any of the Transaction Documents
or the transactions contemplated in any of the Transaction Documents or against any member of the Group or its assets which has a Material
Adverse Effect.
28.17
Material
adverse change
Any
event or circumstance occurs which has a Material Adverse Effect, including, without limitation, the withdrawal of any material license
or governmental or regulatory approval in respect of a Ship, the Guarantor or a
Borrower (unless such withdrawal can be contested with
the effect of suspension and is in fact so contested in good faith by the Borrowers and the Guarantor).
28.18
Approved
Flag
(a)
Any
failure by a Borrower to keep the Ship owned by it registered under an Approved
Flag.
(b)
The
state of the Approved Flag of a Ship or any Relevant Jurisdiction is or becomes involved
in hostilities or civil war or there are events of political risk or instability or there
is a seizure of power in such state by
unconstitutional means, or any other event occurs
in relation to a Ship, the Mortgage on that Ship or its Approved Flag and in the opinion
of the Facility Agent such event is likely to have a Material Adverse Effect and the
Borrower
owning that Ship fails upon the request of the Facility Agent to promptly (and in any case
within such timing as may be reasonably set by the Facility Agent, acting on the instructions
of the Majority Lenders) register
that Ship in its name under another Approved Flag together
with a first priority or first preferred ship mortgage (as the case may be and as required
under the relevant state of the Approved Flag) in favour of the Security Agent
and on such
terms as required by the Facility Agent at the relevant time and in any case on substantially
the same terms as the terms of the Mortgage.
28.19
Acceleration
On
and at any time after the occurrence of an Event of Default the Facility Agent may, and shall if so directed by the Majority Lenders:
109
(a)
by
notice to the Borrowers:
(i)
cancel
the Total Commitments, whereupon they shall immediately be cancelled;
(ii)
declare
that all or part of the Loan, together with accrued interest, and all other amounts accrued
or outstanding under the Finance Documents be immediately due and payable, whereupon it shall
become immediately
due and payable; and/or
(iii)
declare
that all or part of the Loan be payable on demand, whereupon it shall immediately become
payable on demand by the Facility Agent acting on the instructions of the Majority Lenders;
and/or
(b)
exercise
or direct the Security Agent to exercise any or all of its rights, remedies, powers or discretions
under the Finance Documents,
and
the Facility Agent may serve notices under sub-paragraph (i), (ii) or (iii) of paragraph (a) above simultaneously or on different dates
and any Servicing Party may take any action referred to in paragraph (b) above or Clause
28.20 (Enforcement of security) if no
such notice is served or simultaneously with or at any time after the service of any of such notice.
28.20
Enforcement
of security
On
and at any time after the occurrence of an Event of Default the Security Agent may, and shall if so directed by the Majority Lenders,
take any action which, as a result of the Event of Default or any notice served under
Clause 28.19 (Acceleration), the Security
Agent is entitled to take under any Finance Document or any applicable law or regulation.
110
SECTION 9
CHANGES TO PARTIES
29
CHANGES
TO THE LENDERS
29.1
ASSIGNMENTS
AND TRANSFERS BY THE LENDERS
(A)
SUBJECT
TO THIS CLAUSE 29 (CHANGES TO THE LENDERS) AND WITHOUT PREJUDICE TO ANY OTHER RIGHTS
AVAILABLE TO IT AS A MATTER OF APPLICABLE LAW, A LENDER (THE "EXISTING
LENDER")
MAY AT ANY TIME:
(I)
ASSIGN
ANY OF ITS RIGHTS; OR
(II)
TRANSFER
BY NOVATION ANY OF ITS RIGHTS AND OBLIGATIONS (INCLUDING, FOR THE AVOIDANCE OF DOUBT, ITS
COMMITMENT),
under
the Finance Documents to:
(A)
another
Lender;
(B)
any
Affiliate of a Lender;
(C)
any
existing lender of the Guarantor or any Affiliate of that lender;
(D)
any
member of the European System of Central Banks;
(E)
any
fund managed by a Lender or any of its Affiliates; or
(F)
any
other first class bank or financial institution or insurance company which has a minimum
investment grade rating for its long term senior unsecured debt by any two of the rating
agencies Moody's, Fitch
and Standard & Poor's or S&P, Provided that such entity
is regularly engaged in or established for the purpose of making, purchasing or investing
in shipping loans, securities or other financial assets,
(the
"New Lender" and, following the occurrence of an Event of Default which is continuing, a New Lender may be any person
other than an individual).
(b)
Unless
an Event of Default which is continuing, an assignment or transfer by an Existing Lender
under paragraph (a) above is subject to prior consultation with the Obligors by giving the
Obligors no less than 45 days' prior
written notice (the "Notice Period"),
during which the Borrowers will have the right to refinance or otherwise prepay said Lender's
participation in the Facility prior to the expiry of the Notice Period (and subject
to the
Borrowers giving irrevocable written notice to the Facility Agent 21
days prior to the intended prepayment or refinancing).
(c)
Following
the occurrence of an Event of Default which is continuing, the Existing Lender may assign
any of its rights or transfer any of its rights and obligations (including, for the avoidance
of doubt, its Commitment) under
the Finance Documents to any person other than an individual,
without any notification to or consultation with the Obligors.
(d)
For
the avoidance of doubt, the consent of the Obligors is not required for any assignment or
transfer by an Existing Lender.
111
(e)
No
Obligor may be a New Lender.
29.2
Conditions
of assignment or transfer
(a)
An
assignment will only be effective on:
(i)
receipt
by the Facility Agent (whether in the Assignment Agreement or otherwise) of written confirmation
from the New Lender (in form and substance satisfactory to the Facility Agent) that the New
Lender will
assume the same obligations to the other Secured Parties as it would have been
under if it had been an Original Lender; and
(ii)
performance
by the Facility Agent of all necessary "know your customer" or other similar checks
under all applicable laws and regulations in relation to such assignment to a New Lender,
the completion of which the
Facility Agent shall promptly notify to the Existing Lender and
the New Lender.
(b)
Each
Obligor on behalf of itself and each Transaction Obligor agrees that all rights and interests
(present, future or contingent) which the Existing Lender has under or by virtue of the Finance
Documents are assigned to the
New Lender absolutely, free of any defects in the Existing
Lender's title and of any rights or equities which the Borrowers or any other Transaction
Obligor had against the Existing Lender.
(c)
A
transfer will only be effective if the procedure set out in Clause 29.5 (Procedure for
transfer) is complied with.
(d)
If:
(i)
a
Lender assigns or transfers any of its rights or obligations under the Finance Documents
or changes its Facility Office; and
(ii)
as
a result of circumstances existing at the date the assignment, transfer or change occurs,
a Transaction Obligor would be obliged to make a payment to the New Lender or Lender acting
through its new Facility Office
under Clause 12 (Tax Gross Up and Indemnities) or
under that Clause as incorporated by reference or in full in any other Finance Document or
Clause 13 (Increased Costs),
then
the New Lender or Lender acting through its new Facility Office is only entitled to receive payment under those Clauses to the same extent
as the Existing Lender or Lender acting through its previous Facility Office
would have been if the assignment, transfer or change had
not occurred. This paragraph (d) shall not apply in respect of an assignment or transfer made in the ordinary course of the primary syndication
of the Facility.
(e)
Each
New Lender, by executing the relevant Transfer Certificate or Assignment Agreement, confirms,
for the avoidance of doubt, that the Facility Agent has authority to execute on its behalf
any amendment or waiver that has
been approved by or on behalf of the requisite Lender or
Lenders in accordance with this Agreement on or prior to the date on which the transfer or
assignment becomes effective in accordance with this Agreement and that it is
bound by that
decision to the same extent as the Existing Lender would have been had it remained a Lender.
112
29.3
Assignment
or transfer fee
The
New Lender shall, on the date upon which an assignment or transfer takes effect, pay to the Facility Agent (for its own account) a fee
of $5,000 unless otherwise agreed with or waived by the Facility Agent.
29.4
Limitation
of responsibility of Existing Lenders
(a)
Unless
expressly agreed to the contrary, an Existing Lender makes no representation or warranty
and assumes no responsibility to a New Lender for:
(i)
the
legality, validity, effectiveness, adequacy or enforceability of the Transaction Documents,
the Transaction Security or any other documents;
(ii)
the
financial condition of any Transaction Obligor;
(iii)
the
performance and observance by any Transaction Obligor of its obligations under the Transaction
Documents or any other documents; or
(iv)
the
accuracy of any statements (whether written or oral) made in or in connection with any Transaction
Document or any other document,
and
any representations or warranties implied by law are excluded.
(b)
Each
New Lender confirms to the Existing Lender and the other Finance Parties and the Secured
Parties that it:
(i)
has
made (and shall continue to make) its own independent investigation and assessment of the
financial condition and affairs of each Transaction Obligor and its related entities in connection
with its participation in
this Agreement and has not relied exclusively on any information
provided to it by the Existing Lender or any other Finance Party in connection with any Transaction
Document or the Transaction Security; and
(ii)
will
continue to make its own independent appraisal of the creditworthiness of each Transaction
Obligor and its related entities throughout the Security Period.
(c)
Nothing
in any Finance Document obliges an Existing Lender to:
(i)
accept
a re-transfer or re-assignment from a New Lender of any of the rights and obligations assigned
or transferred under this Clause 29 (Changes to the Lenders); or
(ii)
support
any losses directly or indirectly incurred by the New Lender by reason of the non-performance
by any Transaction Obligor of its obligations under the Transaction Documents or otherwise.
29.5
Procedure
for transfer
(a)
Subject
to the conditions set out in Clause 29.2 (Conditions of assignment or transfer), a
transfer is effected in accordance with paragraph (c) below when the Facility Agent executes
an otherwise duly completed Transfer
Certificate delivered to it by the Existing Lender and
the New Lender. The Facility Agent shall, subject to paragraph (b) below as soon as reasonably
practicable after receipt by it of a duly completed Transfer Certificate
appearing on its
face to comply with this Agreement and delivered in accordance with this Agreement, execute
that Transfer Certificate.
113
(b)
The
Facility Agent shall only be obliged to execute a Transfer Certificate delivered to it by
the Existing Lender and the New Lender once it is satisfied it has complied with all necessary
"know your customer" or other similar
checks under all applicable laws and regulations
in relation to the transfer to such New Lender.
(c)
Subject
to Clause 29.10 (Pro rata interest settlement), on the Transfer Date:
(i)
to
the extent that in the Transfer Certificate the Existing Lender seeks to transfer by novation
its rights and obligations under the Finance Documents and in respect of the Transaction
Security, each of the Transaction
Obligors and the Existing Lender shall be released from
further obligations towards one another under the Finance Documents and in respect of the
Transaction Security and their respective rights against one another
under the Finance Documents
and in respect of the Transaction Security shall be cancelled (being the "Discharged
Rights and Obligations");
(ii)
each
of the Transaction Obligors and the New Lender shall assume obligations towards one another
and/or acquire rights against one another which differ from the Discharged Rights and Obligations
only insofar as
that Transaction Obligor and the New Lender have assumed and/or acquired
the same in place of that Transaction Obligor and the Existing Lender;
(iii)
the
Facility Agent, the Security Agent, the Arrangers, the New Lender and other Lenders shall
acquire the same rights and assume the same obligations between themselves and in respect
of the Transaction Security as
they would have acquired and assumed had the New Lender been
an Original Lender with the rights and/or obligations acquired or assumed by it as a result
of the transfer and to that extent the Facility Agent, the
Security Agent, the Arrangers
and the Existing Lenders shall each be released from further obligations to each other under
the Finance Documents; and
(iv)
the
New Lender shall become a Party as a "Lender".
29.6
Procedure
for assignment
(a)
Subject
to the conditions set out in Clause 29.2 (Conditions of assignment or transfer) an
assignment may be effected in accordance with paragraph (c) below when the Facility Agent
executes an otherwise duly completed
Assignment Agreement delivered to it by the Existing
Lender and the New Lender. The Facility Agent shall, subject to paragraph (b) below, as soon
as reasonably practicable after receipt by it of a duly completed Assignment
Agreement appearing
on its face to comply with the terms of this Agreement and delivered in accordance with the
terms of this Agreement, execute that Assignment Agreement.
(b)
The
Facility Agent shall only be obliged to execute an Assignment Agreement delivered to it by
the Existing Lender and the New Lender once it is satisfied it has complied with all necessary
"know your customer" or other
similar checks under all applicable laws and regulations
in relation to the assignment to such New Lender.
(c)
Subject
to Clause 29.10 (Pro rata interest settlement), on the Transfer Date:
114
(i)
the
Existing Lender will assign absolutely to the New Lender its rights under the Finance Documents
and in respect of the Transaction Security expressed to be the subject of the assignment
in the Assignment
Agreement;
(ii)
the
Existing Lender will be released from the obligations (the "Relevant Obligations")
expressed to be the subject of the release in the Assignment Agreement (and any corresponding
obligations by which it is bound
in respect of the Transaction Security); and
(iii)
the
New Lender shall become a Party as a "Lender" and will be bound by obligations
equivalent to the Relevant Obligations.
(d)
Lenders
may utilise procedures other than those set out in this Clause 29.6 (Procedure for assignment)
to assign their rights under the Finance Documents (but not, without the consent of the relevant
Transaction Obligor or
unless in accordance with Clause 29.5 (Procedure for transfer),
to obtain a release by that Transaction Obligor from the obligations owed to that Transaction
Obligor by the Lenders nor the assumption of equivalent obligations
by a New Lender) provided
that they comply with the conditions set out in Clause 29.2 (Conditions of assignment
or transfer).
29.7
Copy
of Transfer Certificate or Assignment Agreement to Borrowers
The
Facility Agent shall, as soon as reasonably practicable after it has executed a Transfer Certificate or an Assignment Agreement, send
to the Borrowers a copy of that Transfer Certificate or Assignment Agreement.
29.8
Security
over Lenders' rights
In
addition to the other rights provided to Lenders under this Clause 29 (Changes to the Lenders), each Lender may without consulting
with or obtaining consent from any Transaction Obligor, at any time charge, assign or
otherwise create Security in or over (whether by
way of collateral or otherwise) all or any of its rights under any Finance Document to secure obligations of that Lender including, without
limitation:
(a)
any
charge, assignment or other Security to secure obligations to a federal reserve or central
bank; and
(b)
any
charge, assignment or other Security granted to any holders (or trustee or representatives
of holders) of obligations owed, or securities issued, by that Lender as security for those
obligations or securities,
except
that no such charge, assignment or Security shall:
(i)
release
a Lender from any of its obligations under the Finance Documents or substitute the beneficiary
of the relevant charge, assignment or Security for the Lender as a party to any of the Finance
Documents; or
(ii)
require
any payments to be made by a Transaction Obligor other than or in excess of, or grant to
any person any more extensive rights than, those required to be made or granted to the relevant
Lender under the
Finance Documents.
115
29.9
Syndication
and Securitisation
The
Obligors shall assist the Mandated Lead Arrangers in achieving a successful syndication or securitisation (or similar transaction) in
respect of the Facility and the Finance Documents. The Obligors shall, if requested by any
Mandated Lead Arranger or the Facility Agent,
provide such information as may be required to produce a customary information memorandum (subject to Clause 45.2 (Disclosure of Confidential
Information)) and also make
available members of senior management for any meetings that potential syndicate lenders may request.
29.10
Pro
rata interest settlement
(a)
If
the Facility Agent has notified the Lenders that it is able to distribute interest payments
on a "pro rata basis" to Existing Lenders and New Lenders then (in respect
of any transfer pursuant to Clause 29.5 (Procedure for
transfer) or any assignment
pursuant to Clause 29.6 (Procedure for assignment) the Transfer Date of which, in
each case, is after the date of such notification and is not on the last day of an Interest
Period):
(i)
any
interest or fees in respect of the relevant participation which are expressed to accrue by
reference to the lapse of time shall continue to accrue in favour of the Existing Lender
up to but excluding the Transfer Date
("Accrued Amounts") and shall become
due and payable to the Existing Lender (without further interest accruing on them) on the
last day of the current Interest Period (or, if the Interest Period is longer than three
Months, on the next of the dates which falls at three Monthly intervals after the first day
of that Interest Period); and
(ii)
the
rights assigned or transferred by the Existing Lender will not include the right to the Accrued
Amounts, so that, for the avoidance of doubt:
(A)
when
the Accrued Amounts become payable, those Accrued Amounts will be payable to the Existing
Lender; and
(B)
the
amount payable to the New Lender on that date will be the amount which would, but for the
application of this Clause 29.10 (Pro rata interest settlement), have been payable
to it on that date, but after
deduction of the Accrued Amounts.
(b)
In
this Clause 29.10 (Pro rata interest settlement) references to "Interest Period"
shall be construed to include a reference to any other period for accrual of fees.
(c)
An
Existing Lender which retains the right to the Accrued Amounts pursuant to this Clause 29.10
(Pro rata interest settlement) but which does not have a Commitment shall be deemed
not to be a Lender for the purposes of
ascertaining whether the agreement of any specified
group of Lenders has been obtained to approve any request for a consent, waiver, amendment
or other vote of Lenders under the Finance Documents.
30
CHANGES
TO THE TRANSACTION OBLIGORS
30.1
Assignment
or transfer by Transaction Obligors
No
Transaction Obligor may assign any of its rights or transfer any of its rights or obligations under the Finance Documents, without the
prior written consent of the Facility Agent.
116
30.2
Release
of security
(a)
If
a disposal of any asset subject to security created by a Security Document is made in the
following circumstances:
(i)
the
disposal is permitted by the terms of any Finance Document;
(ii)
the
Majority Lenders agree to the disposal;
(iii)
the
disposal is being made at the request of the Security Agent in circumstances where any security
created by the Security Documents has become enforceable; or
(iv)
the
disposal is being effected by enforcement of a Security Document,
the
Security Agent may release the asset(s) being disposed of from any security over those assets created by a Security Document. However,
the proceeds of any disposal (or an amount corresponding to them) must be applied
in accordance with the requirements of the Finance
Documents (if any).
(b)
If
the Security Agent is satisfied that a release is allowed under this Clause 30.2 (Release
of security) (at the request and expense of the Borrowers) each Finance Party must enter
into any document and do all such other things
which are reasonably required to achieve that
release. Each other Finance Party irrevocably authorises the Security Agent to enter into
any such document. Any release will not affect the obligations of any other Transaction
Obligor
under the Finance Documents.
30.3
Subordinated
Creditors
(a)
The
Borrowers may request that any person becomes a Subordinated Creditor, with the prior approval
of the Facility Agent, by delivering to the Facility Agent:
(i)
a
duly executed Subordination Agreement;
(ii)
a
duly executed Subordinated Debt Security; and
(iii)
such
constitutional documents, corporate authorisations and other documents and matters as the
Facility Agent may reasonably require, in form and substance satisfactory to the Facility
Agent, to verify that the person's
obligations are legally binding, valid and enforceable
and to satisfy any applicable legal and regulatory requirements.
(b)
A
person referred to in paragraph (a) above will become a Subordinated Creditor on the date
the Security Agent enters into the Subordination Agreement and the Subordinated Debt Security
delivered under paragraph (a)
above.
117
SECTION 10
THE FINANCE PARTIES
31
THE
FACILITY AGENT AND THE ARRANGERS
31.1
APPOINTMENT
OF THE FACILITY AGENT
(A)
EACH
OF THE ARRANGERS AND THE LENDERS APPOINTS THE FACILITY AGENT TO ACT AS ITS AGENT UNDER AND
IN CONNECTION WITH THE FINANCE DOCUMENTS.
(B)
EACH
OF THE ARRANGERS AND THE LENDERS AUTHORISES THE FACILITY AGENT TO PERFORM THE DUTIES, OBLIGATIONS
AND RESPONSIBILITIES AND TO EXERCISE THE RIGHTS, POWERS,
AUTHORITIES AND DISCRETIONS SPECIFICALLY
GIVEN TO THE FACILITY AGENT UNDER, OR IN CONNECTION WITH, THE FINANCE DOCUMENTS TOGETHER
WITH ANY OTHER INCIDENTAL
RIGHTS, POWERS, AUTHORITIES AND DISCRETIONS.
31.2
INSTRUCTIONS
(A)
THE
FACILITY AGENT SHALL:
(I)
UNLESS
A CONTRARY INDICATION APPEARS IN A FINANCE DOCUMENT, EXERCISE OR REFRAIN FROM EXERCISING
ANY RIGHT, POWER, AUTHORITY OR DISCRETION VESTED IN IT AS
FACILITY AGENT IN ACCORDANCE WITH
ANY INSTRUCTIONS GIVEN TO IT BY:
(A)
ALL
LENDERS IF THE RELEVANT FINANCE DOCUMENT STIPULATES THE MATTER IS AN ALL LENDER DECISION;
AND
(B)
IN
ALL OTHER CASES, THE MAJORITY LENDERS; AND
(II)
NOT
BE LIABLE FOR ANY ACT (OR OMISSION) IF IT ACTS (OR REFRAINS FROM ACTING) IN ACCORDANCE WITH
SUB-PARAGRAPH (I) ABOVE (OR, IF THIS AGREEMENT STIPULATES THE
MATTER IS A DECISION FOR ANY
OTHER FINANCE PARTY OR GROUP OF FINANCE PARTIES, IN ACCORDANCE WITH INSTRUCTIONS GIVEN TO
IT BY THAT FINANCE PARTY OR GROUP OF
FINANCE PARTIES).
(B)
THE
FACILITY AGENT SHALL BE ENTITLED TO REQUEST INSTRUCTIONS, OR CLARIFICATION OF ANY INSTRUCTION,
FROM THE MAJORITY LENDERS (OR, IF THE RELEVANT FINANCE
DOCUMENT STIPULATES THE MATTER IS
A DECISION FOR ANY OTHER FINANCE PARTY OR GROUP OF FINANCE PARTIES, FROM THAT FINANCE PARTY
OR GROUP OF FINANCE PARTIES) AS TO
WHETHER, AND IN WHAT MANNER, IT SHOULD EXERCISE OR REFRAIN
FROM EXERCISING ANY RIGHT, POWER, AUTHORITY OR DISCRETION AND THE FACILITY AGENT MAY REFRAIN
FROM
ACTING UNLESS AND UNTIL IT RECEIVES ANY SUCH INSTRUCTIONS OR CLARIFICATION THAT IT HAS
REQUESTED.
(C)
SAVE
IN THE CASE OF DECISIONS STIPULATED TO BE A MATTER FOR ANY OTHER FINANCE PARTY OR GROUP OF
FINANCE PARTIES UNDER THE RELEVANT FINANCE DOCUMENT AND UNLESS
A CONTRARY INDICATION APPEARS
IN A FINANCE DOCUMENT, ANY INSTRUCTIONS GIVEN TO THE FACILITY AGENT BY THE MAJORITY LENDERS
SHALL OVERRIDE ANY CONFLICTING
INSTRUCTIONS GIVEN BY ANY OTHER PARTIES AND WILL BE BINDING
ON ALL FINANCE PARTIES.
(D)
PARAGRAPH
(A) ABOVE SHALL NOT APPLY:
(I)
WHERE
A CONTRARY INDICATION APPEARS IN A FINANCE DOCUMENT;
(II)
WHERE
A FINANCE DOCUMENT REQUIRES THE FACILITY AGENT TO ACT IN A SPECIFIED MANNER OR TO TAKE A
SPECIFIED ACTION;
118
(iii)
in
respect of any provision which protects the Facility Agent's own position in its personal
capacity as opposed to its role of Facility Agent for the relevant Finance Parties.
(e)
If
giving effect to instructions given by the Majority Lenders would in the Facility Agent's
opinion have an effect equivalent to an amendment or waiver referred to in Clause 44 (Amendments
and Waivers), the Facility Agent
shall not act in accordance with those instructions
unless consent to it so acting is obtained from each Party (other than the Facility Agent)
whose consent would have been required in respect of that amendment or waiver.
(f)
In
exercising any discretion to exercise a right, power or authority under the Finance Documents
where it has not received any instructions as to the exercise of that discretion the Facility
Agent shall do so having regard to the
interests of all the Finance Parties.
(g)
The
Facility Agent may refrain from acting in accordance with any instructions of any Finance
Party or group of Finance Parties until it has received any indemnification and/or security
that it may in its discretion require
(which may be greater in extent than that contained
in the Finance Documents and which may include payment in advance) for any cost, loss or
liability (together with any applicable VAT) which it may incur in complying with
those instructions.
(h)
Without
prejudice to the remainder of this Clause 31.2 (Instructions), in the absence of instructions,
the Facility Agent shall not be obliged to take any action (or refrain from taking action)
even if it considers acting or not
acting to be in the best interests of the Finance Parties.
The Facility Agent may act (or refrain from acting) as it considers to be in the best interest
of the Finance Parties.
(i)
The
Facility Agent is not authorised to act on behalf of a Finance Party (without first obtaining
that Finance Party's consent) in any legal or arbitration proceedings relating to any Finance
Document. This paragraph (i) shall not
apply to any legal or arbitration proceeding relating
to the perfection, preservation or protection of rights under the Security Documents or enforcement
of the Transaction Security or Security Documents.
31.3
Duties
of the Facility Agent
(a)
The
Facility Agent's duties under the Finance Documents are solely mechanical and administrative
in nature.
(b)
Subject
to paragraph (c) below, the Facility Agent shall promptly forward to a Party the original
or a copy of any document which is delivered to the Facility Agent for that Party by any
other Party.
(c)
Without
prejudice to Clause 29.7 (Copy of Transfer Certificate or Assignment Agreement to Borrower),
paragraph (b) above shall not apply to any Transfer Certificate or any Assignment Agreement.
(d)
Except
where a Finance Document specifically provides otherwise, the Facility Agent is not obliged
to review or check the adequacy, accuracy or completeness of any document it forwards to
another Party.
(e)
If
the Facility Agent receives notice from a Party referring to any Finance Document, describing
a Default and stating that the circumstance described is a Default, it shall promptly notify
the other Finance Parties.
119
(f)
If
the Facility Agent is aware of the non-payment of any principal, interest, commitment fee
or other fee payable to a Finance Party (other than the Facility Agent, an Arranger or the
Security Agent) under this Agreement, it
shall promptly notify the other Finance Parties.
(g)
The
Facility Agent shall have only those duties, obligations and responsibilities expressly specified
in the Finance Documents to which it is expressed to be a party (and no others shall be implied).
31.4
Role
of an Arranger
Except
as specifically provided in the Finance Documents, no Arranger has any obligations of any kind to any other Party under or in connection
with any Finance Document.
31.5
No
fiduciary duties
(a)
Nothing
in any Finance Document constitutes the Facility Agent or an Arranger as a trustee or fiduciary
of any other person.
(b)
Neither
the Facility Agent nor any Arranger shall be bound to account to other Finance Party for
any sum or the profit element of any sum received by it for its own account.
31.6
Application
of receipts
Except
as expressly stated to the contrary in any Finance Document, any moneys which the Facility Agent receives or recovers in its capacity
as Facility Agent shall be applied by the Facility Agent in accordance with Clause
35.5 (Application of receipts; partial payments).
31.7
Business
with the Group
The
Facility Agent and an Arranger may accept deposits from, lend money to, and generally engage in any kind of banking or other business
with, any member of the Group.
31.8
Rights
and discretions
(a)
The
Facility Agent may:
(i)
rely
on any representation, communication, notice or document believed by it to be genuine, correct
and appropriately authorised;
(ii)
assume
that:
(A)
any
instructions received by it from the Majority Lenders, any Finance Parties or any group of
Finance Parties are duly given in accordance with the terms of the Finance Documents; and
(B)
unless
it has received notice of revocation, that those instructions have not been revoked; and
(iii)
rely
on a certificate from any person:
(A)
as
to any matter of fact or circumstance which might reasonably be expected to be within the
knowledge of that person; or
120
(B)
to
the effect that such person approves of any particular dealing, transaction, step, action
or thing,
as
sufficient evidence that that is the case and, in the case of paragraph (A) above, may assume the truth and accuracy of that certificate.
(b)
The
Facility Agent may assume (unless it has received notice to the contrary in its capacity
as agent for the Finance Parties) that:
(i)
no
Default has occurred (unless it has actual knowledge of a Default arising under Clause 28.2
(Non-payment));
(ii)
any
right, power, authority or discretion vested in any Party or any group of Finance Parties
has not been exercised; and
(iii)
any
notice or request made by any Borrower (other than a Utilisation Request or a Selection Notice)
is made on behalf of and with the consent and knowledge of all the Transaction Obligors.
(c)
The
Facility Agent may engage and pay for the advice or services of any lawyers, accountants,
tax advisers, surveyors or other professional advisers or experts.
(d)
Without
prejudice to the generality of paragraph (c) above or paragraph (e) below, the Facility Agent
may at any time engage and pay for the services of any lawyers to act as independent counsel
to the Facility Agent (and so
separate from any lawyers instructed by the Lenders) if the
Facility Agent in its reasonable opinion deems this to be desirable.
(e)
The
Facility Agent may rely on the advice or services of any lawyers, accountants, tax advisers,
surveyors or other professional advisers or experts (whether obtained by the Facility Agent
or by any other Party) and shall not be
liable for any damages, costs or losses to any person,
any diminution in value or any liability whatsoever arising as a result of its so relying.
(f)
The
Facility Agent may act in relation to the Finance Documents and the Security Property through
its officers, employees and agents and shall not:
(i)
be
liable for any error of judgment made by any such person; or
(ii)
be
bound to supervise, or be in any way responsible for any loss incurred by reason of misconduct,
omission or default on the part of any such person,
unless
such error or such loss was directly caused by the Facility Agent's gross negligence or wilful misconduct.
(g)
Unless
a Finance Document expressly provides otherwise the Facility Agent may disclose to any other
Party any information it reasonably believes it has received as agent under the Finance Documents.
(h)
Notwithstanding
any other provision of any Finance Document to the contrary, neither the Facility Agent nor
any Arranger is obliged to do or omit to do anything if it would or might, in its reasonable
opinion, constitute a
breach of any law or regulation or a breach of a fiduciary duty or
duty of confidentiality.
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(i)
Notwithstanding
any provision of any Finance Document to the contrary, the Facility Agent is not obliged
to expend or risk its own funds or otherwise incur any financial liability in the performance
of its duties, obligations or
responsibilities or the exercise of any right, power, authority
or discretion if it has grounds for believing the repayment of such funds or adequate indemnity
against, or security for, such risk or liability is not reasonably assured
to it.
31.9
Responsibility
for documentation
Neither
the Facility Agent nor any Arranger is responsible or liable for:
(a)
the
adequacy, accuracy or completeness of any information (whether oral or written) supplied
by the Facility Agent, the Security Agent, an Arranger, a Transaction Obligor or any other
person in, or in connection with, any
Transaction Document or the transactions contemplated
in the Transaction Documents or any other agreement, arrangement or document entered into,
made or executed in anticipation of, under or in connection with any
Transaction Document;
(b)
the
legality, validity, effectiveness, adequacy or enforceability of any Transaction Document
or the Security Property or any other agreement, arrangement or document entered into, made
or executed in anticipation of, under or
in connection with, any Transaction Document or
the Security Property; or
(c)
any
determination as to whether any information provided or to be provided to any Finance Party
or Secured Party is non-public information the use of which may be regulated or prohibited
by applicable law or regulation
relating to insider dealing or otherwise.
31.10
No
duty to monitor
The
Facility Agent shall not be bound to enquire:
(a)
whether
or not any Default has occurred;
(b)
as
to the performance, default or any breach by any Transaction Obligor of its obligations under
any Transaction Document; or
(c)
whether
any other event specified in any Transaction Document has occurred.
31.11
Exclusion
of liability
(a)
Without
limiting paragraph (b) below (and without prejudice to paragraph (e) of Clause 35.11
(Disruption to Payment Systems etc.) or any other provision of any Finance Document
excluding or limiting the liability of the
Facility Agent), the Facility Agent will not be
liable for:
(i)
any
damages, costs or losses to any person, any diminution in value, or any liability whatsoever
arising as a result of taking or not taking any action under or in connection with any Transaction
Document or the
Security Property, unless directly caused by its gross negligence or wilful
misconduct;
(ii)
exercising,
or not exercising, any right, power, authority or discretion given to it by, or in connection
with, any Transaction Document, the Security Property or any other agreement, arrangement
or document entered
into, made or executed in anticipation of, under or in connection with,
any Transaction Document or the Security Property; or
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(iii)
any
shortfall which arises on the enforcement or realisation of the Security Property; or
(iv)
without
prejudice to the generality of paragraphs (i) to (iii) above, any damages, costs or losses
to any person, any diminution in value or any liability whatsoever arising as a result of:
(A)
any
act, event or circumstance not reasonably within its control; or
(B)
the
general risks of investment in, or the holding of assets in, any jurisdiction,
including
(in each case and without limitation) such damages, costs, losses, diminution in value or liability arising as a result of nationalisation,
expropriation or other governmental actions; any regulation, currency
restriction, devaluation or fluctuation; market conditions affecting
the execution or settlement of transactions or the value of assets (including any Disruption Event); breakdown, failure or malfunction
of any third
party transport, telecommunications, computer services or systems; natural disasters or acts of God; war, terrorism, insurrection
or revolution; or strikes or industrial action.
(b)
No
Party other than the Facility Agent may take any proceedings against any officer, employee
or agent of the Facility Agent in respect of any claim it might have against the Facility
Agent or in respect of any act or omission
of any kind by that officer, employee or agent
in relation to any Transaction Document or any Security Property and any officer, employee
or agent of the Facility Agent may rely on this Clause subject to Clause 1.5 (Third
party
rights) and the provisions of the Third Parties Act.
(c)
The
Facility Agent will not be liable for any delay (or any related consequences) in crediting
an account with an amount required under the Finance Documents to be paid by the Facility
Agent if the Facility Agent has taken all
necessary steps as soon as reasonably practicable
to comply with the regulations or operating procedures of any recognised clearing or settlement
system used by the Facility Agent for that purpose.
(d)
Nothing
in this Agreement shall oblige the Facility Agent or an Arranger to carry out:
(i)
any
"know your customer" or other checks in relation to any person; or
(ii)
any
check on the extent to which any transaction contemplated by this Agreement might be unlawful
for any Finance Party,
on
behalf of any Finance Party and each Finance Party confirms to the Facility Agent and the Arrangers that it is solely responsible for
any such checks it is required to carry out and that it may not rely on any statement in
relation to such checks made by the Facility
Agent or the Arrangers.
(e)
Without
prejudice to any provision of any Finance Document excluding or limiting the Facility Agent's
liability, any liability of the Facility Agent arising under or in connection with any Transaction
Document or the Security
Property shall be limited to the amount of actual loss which has
been finally judicially determined to have been suffered (as determined by reference to the
date of default of the Facility Agent or, if later, the date on which the
loss arises as
a result of such default) but without reference to any special conditions or circumstances
known to the Facility Agent at any time which increase the amount of that loss. In no event
shall the Facility Agent be
liable for any loss of profits, goodwill, reputation, business
opportunity or anticipated saving, or for special, punitive, indirect or consequential damages,
whether or not the Facility Agent has been advised of the possibility of
such loss or damages.
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31.12
Lenders'
indemnity to the Facility Agent
(a)
Each
Lender shall (in proportion to its share of the Total Commitments or, if the Total Commitments
are then zero, to its share of the Total Commitments immediately prior to their reduction
to zero) indemnify the Facility
Agent, within three Business Days of demand, against any
cost, loss or liability incurred by the Facility Agent (otherwise than by reason of the Facility
Agent's gross negligence or wilful misconduct) (or, in the case of any cost,
loss or liability
pursuant to Clause 35.11 (Disruption to Payment Systems etc.) notwithstanding the
Facility Agent's negligence, gross negligence or any other category of liability whatsoever
but not including any claim based
on the fraud of the Facility Agent) in acting as Facility
Agent under the Finance Documents (unless the Facility Agent has been reimbursed by a Transaction
Obligor pursuant to a Finance Document).
(b)
Subject
to paragraph (c) below, the Borrowers shall immediately on demand reimburse any Lender for
any payment that Lender makes to the Facility Agent pursuant to paragraph (a) above.
(c)
Paragraph
(b) above shall not apply to the extent that the indemnity payment in respect of which the
Lender claims reimbursement relates to a liability of the Facility Agent to an Obligor.
31.13
Resignation
of the Facility Agent
(a)
The
Facility Agent may resign and appoint one of its Affiliates as successor by giving notice
to the other Finance Parties and the Borrowers.
(b)
Alternatively,
the Facility Agent may resign by giving 30 days' notice to the other Finance Parties and
the Borrowers, in which case the Majority Lenders may appoint a successor Facility Agent.
(c)
If
the Majority Lenders have not appointed a successor Facility Agent in accordance with paragraph
(b) above within 20 days after notice of resignation was given, the retiring Facility Agent
may appoint a successor Facility
Agent.
(d)
If
the Facility Agent wishes to resign because (acting reasonably) it has concluded that it
is no longer appropriate for it to remain as agent and the Facility Agent is entitled to
appoint a successor Facility Agent under paragraph
(c) above, the Facility Agent may (if
it concludes (acting reasonably) that it is necessary to do so in order to persuade the proposed
successor Facility Agent to become a party to this Agreement as Facility Agent) agree with
the
proposed successor Facility Agent amendments to this Clause 31 (The Facility Agent
and the Arrangers) and any other term of this Agreement dealing with the rights or obligations
of the Facility Agent consistent with then
current market practice for the appointment and
protection of corporate trustees together with any reasonable amendments to the agency fee
payable under this Agreement which are consistent with the successor Facility
Agent's normal
fee rates and those amendments will bind the Parties.
(e)
The
retiring Facility Agent shall make available to the successor Facility Agent such documents
and records and provide such assistance as the successor Facility Agent may reasonably request
for the purposes of performing its
functions as Facility Agent under the Finance Documents.
The Borrowers shall, within three Business Days of demand, reimburse the retiring Facility
Agent for the amount of all costs and expenses (including legal fees)
properly incurred by
it in making available such documents and records and providing such assistance.
124
(f)
The
Facility Agent's resignation notice shall only take effect upon the appointment of a successor.
(g)
Upon
the appointment of a successor, the retiring Facility Agent shall be discharged from any
further obligation in respect of the Finance Documents (other than its obligations under
paragraph (e) above) but shall remain
entitled to the benefit of Clause 14.4 (Indemnity
to the Facility Agent) and this Clause 31 (The Facility Agent and the Arrangers)
and any other provisions of a Finance Document which are expressed to limit or exclude its
liability (or to indemnify it) in acting as Facility Agent. Any fees for the account of the
retiring Facility Agent shall cease to accrue from (and shall be payable on) that date. Any
successor and each of the other Parties shall
have the same rights and obligations amongst
themselves as they would have had if such successor had been an original Party.
(h)
The
Majority Lenders may, by notice to the Facility Agent, require it to resign in accordance
with paragraph (b) above. In this event, the Facility Agent shall resign in accordance with
paragraph (b) above but the cost referred
to in paragraph (e) above shall be for the account
of the Borrowers.
(i)
The
consent of any Borrower (or any other Transaction Obligor) is not required for an assignment
or transfer of rights and/or obligations by the Facility Agent.
31.14
Confidentiality
(a)
In
acting as Facility Agent for the Finance Parties, the Facility Agent shall be regarded as
acting through its agency division which shall be treated as a separate entity from any other
of its divisions or departments.
(b)
If
information is received by a division or department of the Facility Agent other than the
division or department responsible for complying with the obligations assumed by it under
the Finance Documents, that information
may be treated as confidential to that division or
department, and the Facility Agent shall not be deemed to have notice of it nor shall it
be obliged to disclose such information to any Party.
(c)
Notwithstanding
any other provision of any Finance Document to the contrary, neither the Facility Agent nor
any Arranger is obliged to disclose to any other person (i) any confidential information
or (ii) any other information
if the disclosure would, or might in its reasonable opinion,
constitute a breach of any law or regulation or a breach of a fiduciary duty.
31.15
Relationship
with the other Finance Parties
(a)
Subject
to Clause 29.10 (Pro rata interest settlement), the Facility Agent may treat the person
shown in its records as Lender at the opening of business (in the place of the Facility Agent's
principal office as notified to the
Finance Parties from time to time) as the Lender acting
through its Facility Office:
(i)
entitled
to or liable for any payment due under any Finance Document on that day; and
125
(ii)
entitled
to receive and act upon any notice, request, document or communication or make any decision
or determination under any Finance Document made or delivered on that day,
unless
it has received not less than five Business Days' prior notice from that Lender to the contrary in accordance with the terms of this
Agreement.
(b)
Each
Finance Party shall supply the Facility Agent with any information that the Security Agent
may reasonably specify (through the Facility Agent) as being necessary or desirable to enable
the Security Agent to perform its
functions as Security Agent.
(c)
Any
Lender may by notice to the Facility Agent appoint a person to receive on its behalf all
notices, communications, information and documents to be made or despatched to that Lender
under the Finance Documents. Such
notice shall contain the address and, where communication
by electronic mail or other electronic means is permitted under Clause 38.5 (Electronic
communication), electronic mail address and/or any other information required
to enable
the transmission of information by that means (and, in each case, the department or officer,
if any, for whose attention communication is to be made) and be treated as a notification
of a substitute address, electronic
mail address (or such other information), department
and officer by that Lender for the purposes of Clause 38.2 (Addresses) and sub-paragraph
(ii) of paragraph (a) of Clause 38.5 (Electronic communication) and the Facility
Agent
shall be entitled to treat such person as the person entitled to receive all such notices,
communications, information and documents as though that person were that Lender.
31.16
Credit
appraisal by the Finance Parties
Without
affecting the responsibility of any Transaction Obligor for information supplied by it or on its behalf in connection with any Transaction
Document, each Finance Party confirms to the Facility Agent and each Arranger
that it has been, and will continue to be, solely responsible
for making its own independent appraisal and investigation of all risks arising under, or in connection with, any Transaction Document
including but not limited to:
(a)
the
financial condition, status and nature of each member of the Group;
(b)
the
legality, validity, effectiveness, adequacy or enforceability of any Transaction Document,
the Security Property and any other agreement, arrangement or document entered into, made
or executed in anticipation of, under or
in connection with any Transaction Document or the
Security Property;
(c)
whether
that Finance Party has recourse, and the nature and extent of that recourse, against any
Party or any of its respective assets under, or in connection with, any Transaction Document,
the Security Property, the
transactions contemplated by the Transaction Documents or any
other agreement, arrangement or document entered into, made or executed in anticipation of,
under or in connection with any Transaction Document or the
Security Property;
(d)
the
adequacy, accuracy or completeness of any information provided by the Facility Agent, any
Party or by any other person under, or in connection with, any Transaction Document, the
transactions contemplated by any
Transaction Document or any other agreement, arrangement
or document entered into, made or executed in anticipation of, under or in connection with
any Transaction Document; and
126
(e)
the
right or title of any person in or to or the value or sufficiency of any part of the Security
Assets, the priority of any of the Transaction Security or the existence of any Security
affecting the Security Assets.
31.17
Deduction
from amounts payable by the Facility Agent
If
any Party owes an amount to the Facility Agent under the Finance Documents, the Facility Agent may, after giving notice to that Party,
deduct an amount not exceeding that amount from any payment to that Party which the
Facility Agent would otherwise be obliged to make
under the Finance Documents and apply the amount deducted in or towards satisfaction of the amount owed. For the purposes of the Finance
Documents that Party shall be
regarded as having received any amount so deducted.
31.18
Full
freedom to enter into transactions
Without
prejudice to Clause 31.7 (Business with the Group) or any other provision of a Finance Document and notwithstanding any rule of
law or equity to the contrary, the Facility Agent shall be absolutely entitled:
(a)
to
enter into and arrange banking, derivative, investment and/or other transactions of every
kind with or affecting any Transaction Obligor or any person who is party to, or referred
to in, a Finance Document (including, but not
limited to, any interest or currency swap or
other transaction, whether related to this Agreement or not, and acting as syndicate agent
and/or security agent for, and/or participating in, other facilities to such Transaction
Obligor
or any person who is party to, or referred to in, a Finance Document);
(b)
to
deal in and enter into and arrange transactions relating to:
(i)
any
securities issued or to be issued by any Transaction Obligor or any other person; or
(ii)
any
options or other derivatives in connection with such securities; and
(c)
to
provide advice or other services to any Borrower or any person who is a party to, or referred
to in, a Finance Document,
and,
in particular, the Facility Agent shall be absolutely entitled, in proposing, evaluating, negotiating, entering into and arranging all
such transactions and in connection with all other matters covered by paragraphs (a), (b) and
(c) above, to use (subject only to insider
dealing legislation) any information or opportunity, howsoever acquired by it, to pursue its own interests exclusively, to refrain from
disclosing such dealings, transactions or other
matters or any information acquired in connection with them and to retain for its sole
benefit all profits and benefits derived from the dealings transactions or other matters.
32
THE
SECURITY AGENT
32.1
Trust
(a)
The
Security Agent declares that it holds the Security Property on trust for the Secured Parties
on the terms contained in this Agreement and shall deal with the Security Property in accordance
with this Clause 32 (The Security
Agent) and the other provisions of the Finance Documents.
127
(b)
Each
other Finance Party authorises the Security Agent to perform the duties, obligations and
responsibilities and to exercise the rights, powers, authorities and discretions specifically
given to the Security Agent under, or in
connection with, the Finance Documents together
with any other incidental rights, powers, authorities and discretions.
32.2
Parallel
Debt (Covenant to pay the Security Agent)
(a)
Each
Obligor irrevocably and unconditionally undertakes to pay to the Security Agent its Parallel
Debt which shall be amounts equal to, and in the currency or currencies of, its Corresponding
Debt.
(b)
The
Parallel Debt of an Obligor:
(i)
shall
become due and payable at the same time as its Corresponding Debt;
(ii)
is
independent and separate from, and without prejudice to, its Corresponding Debt.
(c)
For
purposes of this Clause 32.2 (Parallel Debt (Covenant to pay the Security Agent)),
the Security Agent:
(i)
is
the independent and separate creditor of each Parallel Debt;
(ii)
acts
in its own name and not as agent, representative or trustee of the Finance Parties and its
claims in respect of each Parallel Debt shall not be held on trust; and
(iii)
shall
have the independent and separate right to demand payment of each Parallel Debt in its own
name (including, without limitation, through any suit, execution, enforcement of security,
recovery of guarantees and
applications for and voting in any kind of insolvency proceeding).
(d)
The
Parallel Debt of an Obligor shall be:
(i)
decreased
to the extent that its Corresponding Debt has been irrevocably and unconditionally paid or
discharged; and
(ii)
increased
to the extent that its Corresponding Debt has increased,
and
the Corresponding Debt of an Obligor shall be decreased to the extent that its Parallel Debt has been irrevocably and unconditionally
paid or discharged,
in
each case provided that the Parallel Debt of an Obligor shall never exceed its Corresponding Debt.
(e)
All
amounts received or recovered by the Security Agent in connection with this Clause 32.2 (Parallel
Debt (Covenant to pay the Security Agent)) to the extent permitted by applicable law,
shall be applied in accordance with
Clause 35.5 (Application of receipts; partial payments).
(f)
This
Clause 32.2 (Parallel Debt (Covenant to pay the Security Agent)) shall apply, with
any necessary modifications, to each Finance Document.
128
32.3
Enforcement
through Security Agent only
The
Secured Parties shall not have any independent power to enforce, or have recourse to, any of the Transaction Security or to exercise
any right, power, authority or discretion arising under the Security Documents except
through the Security Agent.
32.4
Instructions
(a)
The
Security Agent shall:
(i)
unless
a contrary indication appears in a Finance Document, exercise or refrain from exercising
any right, power, authority or discretion vested in it as Security Agent in accordance with
any instructions given to it by:
(A)
all
Lenders (or the Facility Agent on their behalf) if the relevant Finance Document stipulates
the matter is an all Lender decision; and
(B)
in
all other cases, the Majority Lenders (or the Facility Agent on their behalf); and
(ii)
not
be liable for any act (or omission) if it acts (or refrains from acting) in accordance with
sub-paragraph (i) above (or if this Agreement stipulates the matter is a decision for any
other Finance Party or group of
Finance Parties, in accordance with instructions given to
it by that Finance Party or group of Finance Parties).
(b)
The
Security Agent shall be entitled to request instructions, or clarification of any instruction,
from the Majority Lenders (or the Facility Agent on their behalf) (or, if the relevant Finance
Document stipulates the matter is a
decision for any other Finance Party or group of Finance
Parties, from that Finance Party or group of Finance Parties) as to whether, and in what
manner, it should exercise or refrain from exercising any right, power, authority
or discretion
and the Security Agent may refrain from acting unless and until it receives any such instructions
or clarification that it has requested.
(c)
Save
in the case of decisions stipulated to be a matter for any other Finance Party or group of
Finance Parties under the relevant Finance Document and unless a contrary indication appears
in a Finance Document, any
instructions given to the Security Agent by the Majority Lenders
shall override any conflicting instructions given by any other Parties and will be binding
on all Finance Parties.
(d)
Paragraph
(a) above shall not apply:
(i)
where
a contrary indication appears in a Finance Document;
(ii)
where
a Finance Document requires the Security Agent to act in a specified manner or to take a
specified action;
(iii)
in
respect of any provision which protects the Security Agent's own position in its personal
capacity as opposed to its role of Security Agent for the relevant Secured Parties;
(iv)
in
respect of the exercise of the Security Agent's discretion to exercise a right, power or
authority under any of:
129
(A)
Clause
32.27 (Application of receipts);
(B)
Clause
32.28 (Permitted Deductions); and
(C)
Clause
32.29 (Prospective liabilities).
(e)
If
giving effect to instructions given by the Majority Lenders would in the Security Agent's
opinion have an effect equivalent to an amendment or waiver referred to in Clause 44 (Amendments
and Waivers), the Security Agent
shall not act in accordance with those instructions
unless consent to it so acting is obtained from each Party (other than the Security Agent)
whose consent would have been required in respect of that amendment or waiver.
(f)
In
exercising any discretion to exercise a right, power or authority under the Finance Documents
where either:
(i)
it
has not received any instructions as to the exercise of that discretion; or
(ii)
the
exercise of that discretion is subject to sub-paragraph (iv) of paragraph (d) above,
the
Security Agent shall do so having regard to the interests of all the Secured Parties.
(g)
The
Security Agent may refrain from acting in accordance with any instructions of any Finance
Party or group of Finance Parties until it has received any indemnification and/or security
that it may in its discretion require
(which may be greater in extent than that contained
in the Finance Documents and which may include payment in advance) for any cost, loss or
liability (together with any applicable VAT) which it may incur in complying with
those instructions.
(h)
Without
prejudice to the remainder of this Clause 32.4 (Instructions), in the absence of instructions,
the Security Agent may (but shall not be obliged to) take such action in the exercise of
its powers and duties under the
Finance Documents as it considers in its discretion to be
appropriate.
(i)
The
Security Agent is not authorised to act on behalf of a Finance Party (without first obtaining
that Finance Party's consent) in any legal or arbitration proceedings relating to any Finance
Document. This paragraph (i) shall not
apply to any legal or arbitration proceeding relating
to the perfection, preservation or protection of rights under the Security Documents or enforcement
of the Transaction Security or Security Documents.
32.5
Duties
of the Security Agent
(a)
The
Security Agent's duties under the Finance Documents are solely mechanical and administrative
in nature.
(b)
The
Security Agent shall promptly forward to a Party the original or a copy of any document which
is delivered to the Security Agent for that Party by any other Party.
(c)
Except
where a Finance Document specifically provides otherwise, the Security Agent is not obliged
to review or check the adequacy, accuracy or completeness of any document it forwards to
another Party.
(d)
If
the Security Agent receives notice from a Party referring to any Finance Document, describing
a Default and stating that the circumstance described is a Default, it shall promptly notify
the other Finance Parties.
130
(e)
The
Security Agent shall have only those duties, obligations and responsibilities expressly specified
in the Finance Documents to which it is expressed to be a party (and no others shall be implied).
32.6
No
fiduciary duties
(a)
Nothing
in any Finance Document constitutes the Security Agent as an agent, trustee or fiduciary
of any Transaction Obligor.
(b)
The
Security Agent shall not be bound to account to any other Secured Party for any sum or the
profit element of any sum received by it for its own account.
32.7
Business
with the Group
The
Security Agent may accept deposits from, lend money to, and generally engage in any kind of banking or other business with, any member
of the Group.
32.8
Rights
and discretions
(a)
The
Security Agent may:
(i)
rely
on any representation, communication, notice or document believed by it to be genuine, correct
and appropriately authorised;
(ii)
assume
that:
(A)
any
instructions received by it from the Majority Lenders, any Finance Parties or any group of
Finance Parties are duly given in accordance with the terms of the Finance Documents;
(B)
unless
it has received notice of revocation, that those instructions have not been revoked;
(C)
if
it receives any instructions to act in relation to the Transaction Security, that all applicable
conditions under the Finance Documents for so acting have been satisfied; and
(iii)
rely
on a certificate from any person:
(A)
as
to any matter of fact or circumstance which might reasonably be expected to be within the
knowledge of that person; or
(B)
to
the effect that such person approves of any particular dealing, transaction, step, action
or thing,
as
sufficient evidence that that is the case and, in the case of paragraph (A) above, may assume the truth and accuracy of that certificate.
(b)
The
Security Agent shall be entitled to carry out all dealings with the other Finance Parties
through the Facility Agent and may give to the Facility Agent any notice or other communication
required to be given by the Security
Agent to any Finance Party.
(c)
The
Security Agent may assume (unless it has received notice to the contrary in its capacity
as security agent for the Secured Parties) that:
131
(i)
no
Default has occurred;
(ii)
any
right, power, authority or discretion vested in any Party or any group of Finance Parties
has not been exercised; and
(iii)
any
notice or request made by any Borrower (other than a Utilisation Request or a Selection Notice)
is made on behalf of and with the consent and knowledge of all the Transaction Obligors.
(d)
The
Security Agent may engage and pay for the advice or services of any lawyers, accountants,
tax advisers, surveyors or other professional advisers or experts.
(e)
Without
prejudice to the generality of paragraph (c) above or paragraph (f) below, the Security Agent
may at any time engage and pay for the services of any lawyers to act as independent counsel
to the Security Agent (and so
separate from any lawyers instructed by the Facility Agent
or the Lenders) if the Security Agent in its reasonable opinion deems this to be desirable.
(f)
The
Security Agent may rely on the advice or services of any lawyers, accountants, tax advisers,
surveyors or other professional advisers or experts (whether obtained by the Security Agent
or by any other Party) and shall not
be liable for any damages, costs or losses to any person,
any diminution in value or any liability whatsoever arising as a result of its so relying.
(g)
The
Security Agent may act in relation to the Finance Documents and the Security Property through
its officers, employees and agents and shall not:
(i)
be
liable for any error of judgment made by any such person; or
(ii)
be
bound to supervise, or be in any way responsible for any loss incurred by reason of misconduct,
omission or default on the part of any such person,
unless
such error or such loss was directly caused by the Security Agent's gross negligence or wilful misconduct.
(h)
Unless
a Finance Document expressly provides otherwise the Security Agent may disclose to any other
Party any information it reasonably believes it has received as security agent under the
Finance Documents.
(i)
Notwithstanding
any other provision of any Finance Document to the contrary, the Security Agent is not obliged
to do or omit to do anything if it would or might, in its reasonable opinion, constitute
a breach of any law or
regulation or a breach of a fiduciary duty or duty of confidentiality.
(j)
Notwithstanding
any provision of any Finance Document to the contrary, the Security Agent is not obliged
to expend or risk its own funds or otherwise incur any financial liability in the performance
of its duties, obligations or
responsibilities or the exercise of any right, power, authority
or discretion if it has grounds for believing the repayment of such funds or adequate indemnity
against, or security for, such risk or liability is not reasonably assured
to it.
32.9
Responsibility
for documentation
None
of the Security Agent, any Receiver or Delegate is responsible or liable for:
132
(a)
the
adequacy, accuracy or completeness of any information (whether oral or written) supplied
by the Facility Agent, the Security Agent, an Arranger, a Transaction Obligor or any other
person in, or in connection with, any
Transaction Document or the transactions contemplated
in the Transaction Documents or any other agreement, arrangement or document entered into,
made or executed in anticipation of, under or in connection with any
Transaction Document;
(b)
the
legality, validity, effectiveness, adequacy or enforceability of any Transaction Document
or the Security Property or any other agreement, arrangement or document entered into, made
or executed in anticipation of, under or
in connection with, any Transaction Document or
the Security Property;
(c)
any
determination as to whether any information provided or to be provided to any Secured Party
is non-public information the use of which may be regulated or prohibited by applicable law
or regulation relating to insider
dealing or otherwise.
32.10
No
duty to monitor
The
Security Agent shall not be bound to enquire:
(a)
whether
or not any Default has occurred;
(b)
as
to the performance, default or any breach by any Transaction Obligor of its obligations under
any Transaction Document; or
(c)
whether
any other event specified in any Transaction Document has occurred.
32.11
Exclusion
of liability
(a)
Without
limiting paragraph (b) below (and without prejudice to any other provision of any Finance
Document excluding or limiting the liability of the Security Agent or any Receiver or Delegate),
none of the Security Agent
nor any Receiver or Delegate will be liable for:
(i)
any
damages, costs or losses to any person, any diminution in value, or any liability whatsoever
arising as a result of taking or not taking any action under or in connection with any Transaction
Document or the
Security Property, unless directly caused by its gross negligence or wilful
misconduct;
(ii)
exercising,
or not exercising, any right, power, authority or discretion given to it by, or in connection
with, any Transaction Document, the Security Property or any other agreement, arrangement
or document entered
into, made or executed in anticipation of, under or in connection with,
any Transaction Document or the Security Property; or
(iii)
any
shortfall which arises on the enforcement or realisation of the Security Property; or
(iv)
without
prejudice to the generality of paragraphs (i) to (iii) above, any damages, costs or losses
to any person, any diminution in value or any liability whatsoever arising as a result of:
(A)
any
act, event or circumstance not reasonably within its control; or
133
(B)
the
general risks of investment in, or the holding of assets in, any jurisdiction,
including
(in each case and without limitation) such damages, costs, losses, diminution in value or liability arising as a result of nationalisation,
expropriation or other governmental actions; any regulation, currency
restriction, devaluation or fluctuation; market conditions affecting
the execution or settlement of transactions or the value of assets (including any Disruption Event); breakdown, failure or malfunction
of any third
party transport, telecommunications, computer services or systems; natural disasters or acts of God; war, terrorism, insurrection
or revolution; or strikes or industrial action.
(b)
No
Party other than the Security Agent, that Receiver or that Delegate (as applicable) may take
any proceedings against any officer, employee or agent of the Security Agent, a Receiver
or a Delegate in respect of any claim it
might have against the Security Agent, a Receiver
or a Delegate or in respect of any act or omission of any kind by that officer, employee
or agent in relation to any Transaction Document or any Security Property and any
officer,
employee or agent of the Security Agent, a Receiver or a Delegate may rely on this Clause
subject to Clause 1.5 (Third party rights) and the provisions of the Third Parties
Act.
(c)
The
Security Agent will not be liable for any delay (or any related consequences) in crediting
an account with an amount required under the Finance Documents to be paid by the Security
Agent if the Security Agent has taken
all necessary steps as soon as reasonably practicable
to comply with the regulations or operating procedures of any recognised clearing or settlement
system used by the Security Agent for that purpose.
(d)
Nothing
in this Agreement shall oblige the Security Agent to carry out:
(i)
any
"know your customer" or other checks in relation to any person; or
(ii)
any
check on the extent to which any transaction contemplated by this Agreement might be unlawful
for any Finance Party,
on
behalf of any Finance Party and each Finance Party confirms to the Security Agent that it is solely responsible for any such checks it
is required to carry out and that it may not rely on any statement in relation to such checks
made by the Security Agent.
(e)
Without
prejudice to any provision of any Finance Document excluding or limiting the liability of
the Security Agent or any Receiver or Delegate, any liability of the Security Agent or any
Receiver or Delegate arising under or
in connection with any Transaction Document or the
Security Property shall be limited to the amount of actual loss which has been finally judicially
determined to have been suffered (as determined by reference to the date of
default of the
Security Agent, Receiver or Delegate or, if later, the date on which the loss arises as a
result of such default) but without reference to any special conditions or circumstances
known to the Security Agent, any
Receiver or Delegate at any time which increase the amount
of that loss. In no event shall the Security Agent, any Receiver or Delegate be liable for
any loss of profits, goodwill, reputation, business opportunity or anticipated
saving, or
for special, punitive, indirect or consequential damages, whether or not the Security Agent,
the Receiver or Delegate has been advised of the possibility of such loss or damages.
32.12
Lenders'
indemnity to the Security Agent
(a)
Each
Lender shall (in proportion to its share of the Total Commitments or, if the Total Commitments
are then zero, to its share of the Total Commitments immediately prior to their reduction
to zero) indemnify the Security
Agent and every Receiver, within three Business Days of demand,
against any cost, loss or liability incurred by any of them (otherwise than by reason of
the Security Agent's or Receiver's gross negligence or wilful
misconduct) in acting as Security
Agent or Receiver under the Finance Documents (unless the Security Agent or Receiver has
been reimbursed by a Transaction Obligor pursuant to a Finance Document).
134
(b)
Subject
to paragraph (c) below, the Borrowers shall within three days of any demand reimburse any
Lender for any payment that Lender makes to the Security Agent pursuant to paragraph (a)
above.
(c)
Paragraph
(b) above shall not apply to the extent that the indemnity payment in respect of which the
Lender claims reimbursement relates to a liability of the Security Agent to an Obligor.
32.13
Resignation
of the Security Agent
(a)
The
Security Agent may resign and appoint one of its Affiliates as successor by giving notice
to the other Finance Parties and the Borrowers.
(b)
Alternatively,
the Security Agent may resign by giving 30 days' notice to the other Finance Parties and
the Borrowers, in which case the Majority Lenders may appoint a successor Security Agent.
(c)
If
the Majority Lenders have not appointed a successor Security Agent in accordance with paragraph
(b) above within 20 days after notice of resignation was given, the retiring Security Agent
may appoint a successor Security
Agent.
(d)
The
retiring Security Agent shall make available to the successor Security Agent such documents
and records and provide such assistance as the successor Security Agent may reasonably request
for the purposes of performing
its functions as Security Agent under the Finance Documents.
The Borrowers shall, within three Business Days of demand, reimburse the retiring Security
Agent for the amount of all costs and expenses (including legal fees)
properly incurred by
it in making available such documents and records and providing such assistance.
(e)
The
Security Agent's resignation notice shall only take effect upon:
(i)
the
appointment of a successor; and
(ii)
the
transfer, by way of a document expressed as a deed, of all the Security Property to that
successor.
(f)
Upon
the appointment of a successor, the retiring Security Agent shall be discharged, by way of
a document executed as a deed, from any further obligation in respect of the Finance Documents
(other than its obligations under
paragraph (b) of Clause 32.24 (Winding up of trust)
and paragraph (d) above) but shall remain entitled to the benefit of Clause 14.5 (Indemnity
to the Security Agent) and this Clause 32 (The Security Agent) and any other
provisions
of a Finance Document which are expressed to limit or exclude its liability (or to indemnify
it) in acting as Security Agent. Any fees for the account of the retiring Security Agent
shall cease to accrue from (and shall
be payable on) that date. Any successor and each of
the other Parties shall have the same rights and obligations amongst themselves as they would
have had if such successor had been an original Party.
135
(g)
The
Majority Lenders may, by notice to the Security Agent, require it to resign in accordance
with paragraph (b) above. In this event, the Security Agent shall resign in accordance with
paragraph (b) above but the cost referred
to in paragraph (d) above shall be for the account
of the Borrowers.
(h)
The
consent of any Borrower (or any other Transaction Obligor) is not required for an assignment
or transfer of rights and/or obligations by the Security Agent.
32.14
Confidentiality
(a)
In
acting as Security Agent for the Finance Parties, the Security Agent shall be regarded as
acting through its trustee division which shall be treated as a separate entity from any
other of its divisions or departments.
(b)
If
information is received by a division or department of the Security Agent other than the
division or department responsible for complying with the obligations assumed by it under
the Finance Documents, that information
may be treated as confidential to that division or
department, and the Security Agent shall not be deemed to have notice of it nor shall it
be obliged to disclose such information to any Party.
(c)
Notwithstanding
any other provision of any Finance Document to the contrary, the Security Agent is not obliged
to disclose to any other person (i) any confidential information or (ii) any other information
if the disclosure
would, or might in its reasonable opinion, constitute a breach of any law
or regulation or a breach of a fiduciary duty.
32.15
Credit
appraisal by the Finance Parties
Without
affecting the responsibility of any Transaction Obligor for information supplied by it or on its behalf in connection with any Transaction
Document, each Finance Party confirms to the Security Agent that it has been,
and will continue to be, solely responsible for making
its own independent appraisal and investigation of all risks arising under, or in connection with, any Transaction Document including
but not limited to:
(a)
the
financial condition, status and nature of each member of the Group;
(b)
the
legality, validity, effectiveness, adequacy or enforceability of any Transaction Document,
the Security Property and any other agreement, arrangement or document entered into, made
or executed in anticipation of, under or
in connection with any Transaction Document or the
Security Property;
(c)
whether
that Finance Party has recourse, and the nature and extent of that recourse, against any
Party or any of its respective assets under, or in connection with, any Transaction Document,
the Security Property, the
transactions contemplated by the Transaction Documents or any
other agreement, arrangement or document entered into, made or executed in anticipation of,
under or in connection with any Transaction Document or the
Security Property;
(d)
the
adequacy, accuracy or completeness of any information provided by the Security Agent, any
Party or by any other person under, or in connection with, any Transaction Document, the
transactions contemplated by any
Transaction Document or any other agreement, arrangement
or document entered into, made or executed in anticipation of, under or in connection with
any Transaction Document; and
136
(e)
the
right or title of any person in or to or the value or sufficiency of any part of the Security
Assets, the priority of any of the Transaction Security or the existence of any Security
affecting the Security Assets.
32.16
Reliance
and engagement letters
Each
Secured Party confirms that the Security Agent has authority to accept on its behalf (and ratifies the acceptance on its behalf of any
letters or reports already accepted by the Security Agent) the terms of any reliance letter
or engagement letters or any reports or letters
provided by accountants, auditors or providers of due diligence reports in connection with the Finance Documents or the transactions
contemplated in the Finance Documents and
to bind it in respect of those, reports or letters and to sign such letters on its behalf and
further confirms that it accepts the terms and qualifications set out in such letters.
32.17
No
responsibility to perfect Transaction Security
The
Security Agent shall not be liable for any failure to:
(a)
require
the deposit with it of any deed or document certifying, representing or constituting the
title of any Transaction Obligor to any of the Security Assets;
(b)
obtain
any licence, consent or other authority for the execution, delivery, legality, validity,
enforceability or admissibility in evidence of any Finance Document or the Transaction Security;
(c)
register,
file or record or otherwise protect any of the Transaction Security (or the priority of any
of the Transaction Security) under any law or regulation or to give notice to any person
of the execution of any Finance
Document or of the Transaction Security;
(d)
take,
or to require any Transaction Obligor to take, any step to perfect its title to any of the
Security Assets or to render the Transaction Security effective or to secure the creation
of any ancillary Security under any law or
regulation; or
(e)
require
any further assurance in relation to any Finance Document.
32.18
Insurance
by Security Agent
(a)
The
Security Agent shall not be obliged:
(i)
to
insure any of the Security Assets;
(ii)
to
require any other person to maintain any insurance; or
(iii)
to
verify any obligation to arrange or maintain insurance contained in any Finance Document,
and
the Security Agent shall not be liable for any damages, costs or losses to any person as a result of the lack of, or inadequacy of, any
such insurance.
(b)
Where
the Security Agent is named on any insurance policy as an insured party, it shall not be
liable for any damages, costs or losses to any person as a result of its failure to notify
the insurers of any material fact relating to the
risk assumed by such insurers or any other
information of any kind, unless the Majority Lenders request it to do so in writing and the
Security Agent fails to do so within 14 days after receipt of that request.
137
32.19
Custodians
and nominees
The
Security Agent may appoint and pay any person to act as a custodian or nominee on any terms in relation to any asset of the trust as
the Security Agent may determine, including for the purpose of depositing with a
custodian this Agreement or any document relating to
the trust created under this Agreement and the Security Agent shall not be responsible for any loss, liability, expense, demand, cost,
claim or proceedings incurred by
reason of the misconduct, omission or default on the part of any person appointed by it under this Agreement
or be bound to supervise the proceedings or acts of any person.
32.20
Delegation
by the Security Agent
(a)
Each
of the Security Agent, any Receiver and any Delegate may, at any time, delegate by power
of attorney or otherwise to any person for any period, all or any right, power, authority
or discretion vested in it in its capacity as
such.
(b)
That
delegation may be made upon any terms and conditions (including the power to sub delegate)
and subject to any restrictions that the Security Agent, that Receiver or that Delegate (as
the case may be) may, in its
discretion, think fit in the interests of the Secured Parties.
(c)
No
Security Agent, Receiver or Delegate shall be bound to supervise, or be in any way responsible
for any damages, costs or losses incurred by reason of any misconduct, omission or default
on the part of any such delegate or
sub delegate.
32.21
Additional
Security Agents
(a)
The
Security Agent may at any time appoint (and subsequently remove) any person to act as a separate
trustee or as a co-trustee jointly with it:
(i)
if
it considers that appointment to be in the interests of the Secured Parties; or
(ii)
for
the purposes of conforming to any legal requirement, restriction or condition which the Security
Agent deems to be relevant; or
(iii)
for
obtaining or enforcing any judgment in any jurisdiction,
and
the Security Agent shall give prior notice to the Borrowers and the Finance Parties of that appointment.
(b)
Any
person so appointed shall have the rights, powers, authorities and discretions (not exceeding
those given to the Security Agent under or in connection with the Finance Documents) and
the duties, obligations and
responsibilities that are given or imposed by the instrument
of appointment.
(c)
The
remuneration that the Security Agent may pay to that person, and any costs and expenses (together
with any applicable VAT) incurred by that person in performing its functions pursuant to
that appointment shall, for the
purposes of this Agreement, be treated as costs and expenses
incurred by the Security Agent.
138
32.22
Acceptance
of title
The
Security Agent shall be entitled to accept without enquiry, and shall not be obliged to investigate, any right and title that any Transaction
Obligor may have to any of the Security Assets and shall not be liable for or bound
to require any Transaction Obligor to remedy any
defect in its right or title.
32.23
Releases
Upon
a disposal of any of the Security Assets pursuant to the enforcement of the Transaction Security by a Receiver, a Delegate or the Security
Agent, the Security Agent is irrevocably authorised (at the cost of the Obligors
and without any consent, sanction, authority or further
confirmation from any other Secured Party) to release, without recourse or warranty, that property from the Transaction Security and
to execute any release of the
Transaction Security or other claim over that asset and to issue any certificates of non-crystallisation
of floating charges that may be required or desirable.
32.24
Winding
up of trust
If
the Security Agent, with the approval of the Facility Agent determines that:
(a)
all
of the Secured Liabilities and all other obligations secured by the Security Documents have
been fully and finally discharged; and
(b)
no
Secured Party is under any commitment, obligation or liability (actual or contingent) to
make advances or provide other financial accommodation to any Transaction Obligor pursuant
to the Finance Documents,
then
(i)
the
trusts set out in this Agreement shall be wound up and the Security Agent shall release,
without recourse or warranty, all of the Transaction Security and the rights of the Security
Agent under each of the Security
Documents; and
(ii)
any
Security Agent which has resigned pursuant to Clause 32.13 (Resignation of the Security
Agent) shall release, without recourse or warranty, all of its rights under each Security
Document.
32.25
Powers
supplemental to Trustee Acts
The
rights, powers, authorities and discretions given to the Security Agent under or in connection with the Finance Documents shall be supplemental
to the Trustee Act 1925 and the Trustee Act 2000 and in addition to any
which may be vested in the Security Agent by law or regulation
or otherwise.
32.26
Disapplication
of Trustee Acts
Section
1 of the Trustee Act 2000 shall not apply to the duties of the Security Agent in relation to the trusts constituted by this Agreement
and the other Finance Documents. Where there are any
inconsistencies between (i) the Trustee Acts 1925 and 2000 and (ii) the provisions
of this Agreement and any other Finance Document, the provisions of this Agreement and any other Finance
Document shall, to the extent
permitted by law and regulation, prevail and, in the case of any inconsistency with the Trustee Act 2000, the provisions of this Agreement
and any other Finance
Document shall constitute a restriction or exclusion for the purposes of the Trustee Act 2000.
139
32.27
Application
of receipts
All
amounts from time to time received or recovered by the Security Agent pursuant to the terms of any Finance Document, under Clause 32.2
(Parallel Debt (Covenant to pay the Security Agent)) or in connection with the
realisation or enforcement of all or any part of
the Security Property (for the purposes of this Clause 32 (The Security Agent), the "Recoveries") shall be held
by the Security Agent on trust to apply them at any time as the
Security Agent (in its discretion) sees fit, to the extent permitted
by applicable law and subject to the remaining provisions of this Clause 32 (The Security Agent), in the following order of priority:
(a)
in
discharging any sums owing to the Security Agent (in its capacity as such) (other than pursuant
to Clause 32.2 (Parallel Debt (Covenant to pay the Security Agent))) or any Receiver
or Delegate;
(b)
in
payment or distribution to the Facility Agent, on its behalf and on behalf of the other Secured
Parties, for application towards the discharge of all sums due and payable by any Transaction
Obligor under any of the Finance
Documents in accordance with Clause 35.5 (Application
of receipts; partial payments);
(c)
if
none of the Transaction Obligors is under any further actual or contingent liability under
any Finance Document, in payment or distribution to any person to whom the Security Agent
is obliged to pay or distribute in priority
to any Transaction Obligor; and
(d)
the
balance, if any, in payment or distribution to the relevant Transaction Obligor.
32.28
Permitted
Deductions
The
Security Agent may, in its discretion:
(a)
set
aside by way of reserve amounts required to meet, and to make and pay, any deductions and
withholdings (on account of Taxes or otherwise) which it is or may be required by any applicable
law to make from any
distribution or payment made by it under this Agreement; and
(b)
pay
all Taxes which may be assessed against it in respect of any of the Security Property, or
as a consequence of performing its duties, or by virtue of its capacity as Security Agent
under any of the Finance Documents or
otherwise (other than in connection with its remuneration
for performing its duties under this Agreement).
32.29
Prospective
liabilities
Following
enforcement of any of the Transaction Security, the Security Agent may, in its discretion, or at the request of the Facility Agent, hold
any Recoveries in an interest bearing suspense or impersonal account(s) in the
name of the Security Agent with such financial institution
(including itself) and for so long as the Security Agent shall think fit (the interest being credited to the relevant account) for later
payment to the Facility Agent for
application in accordance with Clause 32.27 (Application of receipts) in respect of:
(a)
any
sum to the Security Agent, any Receiver or any Delegate; and
140
(b)
any
part of the Secured Liabilities,
that
the Security Agent or, in the case of paragraph (b) only, the Facility Agent, reasonably considers, in each case, might become due or
owing at any time in the future.
32.30
Investment
of proceeds
Prior
to the payment of the proceeds of the Recoveries to the Facility Agent for application in accordance with Clause 32.27 (Application
of receipts) the Security Agent may, in its discretion, hold all or part of those proceeds in
an interest bearing suspense or impersonal
account(s) in the name of the Security Agent with such financial institution (including itself) and for so long as the Security Agent
shall think fit (the interest being credited to the
relevant account) pending the payment from time to time of those moneys in the Security
Agent's discretion in accordance with the provisions of Clause 32.27 (Application of receipts).
32.31
Currency
conversion
(a)
For
the purpose of, or pending the discharge of, any of the Secured Liabilities the Security
Agent may convert any moneys received or recovered by the Security Agent from one currency
to another, at a market rate of
exchange.
(b)
The
obligations of any Transaction Obligor to pay in the due currency shall only be satisfied
to the extent of the amount of the due currency purchased after deducting the costs of conversion.
32.32
Good
discharge
(a)
Any
payment to be made in respect of the Secured Liabilities by the Security Agent may be made
to the Facility Agent on behalf of the Secured Parties and any payment made in that way shall
be a good discharge, to the extent
of that payment, by the Security Agent.
(b)
The
Security Agent is under no obligation to make the payments to the Facility Agent under paragraph
(a) above in the same currency as that in which the obligations and liabilities owing to
the relevant Finance Party are
denominated.
32.33
Amounts
received by Obligors
If
any of the Obligors receives or recovers any amount which, under the terms of any of the Finance Documents, should have been paid to
the Security Agent, that Obligor will hold the amount received or recovered on trust for
the Security Agent and promptly pay that amount
to the Security Agent for application in accordance with the terms of this Agreement.
32.34
Full
freedom to enter into transactions
Without
prejudice to Clause 32.7 (Business with the Group) or any other provision of a Finance Document and notwithstanding any rule of
law or equity to the contrary, the Security Agent shall be absolutely entitled:
(a)
to
enter into and arrange banking, derivative, investment and/or other transactions of every
kind with or affecting any Transaction Obligor or any person who is party to, or referred
to in, a Finance Document (including, but not
limited to, any interest or currency swap or
other transaction, whether related to this Agreement or not, and acting as syndicate agent
and/or security agent for, and/or participating in, other facilities to such Transaction
Obligor
or any person who is party to, or referred to in, a Finance Document);
141
(b)
to
deal in and enter into and arrange transactions relating to:
(i)
any
securities issued or to be issued by any Transaction Obligor or any other person; or
(ii)
any
options or other derivatives in connection with such securities; and
(c)
to
provide advice or other services to the Borrowers or any person who is a party to, or referred
to in, a Finance Document,
and,
in particular, the Security Agent shall be absolutely entitled, in proposing, evaluating, negotiating, entering into and arranging all
such transactions and in connection with all other matters covered by paragraphs (a), (b)
and (c) above, to use (subject only to insider
dealing legislation) any information or opportunity, howsoever acquired by it, to pursue its own interests exclusively, to refrain from
disclosing such dealings, transactions or other
matters or any information acquired in connection with them and to retain for its sole
benefit all profits and benefits derived from the dealings transactions or other matters.
33
CONDUCT
OF BUSINESS BY THE FINANCE PARTIES
No
provision of this Agreement will:
(a)
interfere
with the right of any Finance Party to arrange its affairs (tax or otherwise) in whatever
manner it thinks fit;
(b)
oblige
any Finance Party to investigate or claim any credit, relief, remission or repayment available
to it or the extent, order and manner of any claim; or
(c)
oblige
any Finance Party to disclose any information relating to its affairs (tax or otherwise)
or any computations in respect of Tax.
34
SHARING
AMONG THE FINANCE PARTIES
34.1
Payments
to Finance Parties
If
a Finance Party (a "Recovering Finance Party") receives or recovers any amount from a Transaction Obligor other than
in accordance with Clause 35 (Payment Mechanics) (a "Recovered Amount") and applies that
amount to a payment
due to it under the Finance Documents then:
(a)
the
Recovering Finance Party shall, within three Business Days, notify details of the receipt
or recovery, to the Facility Agent;
(b)
the
Facility Agent shall determine whether the receipt or recovery is in excess of the amount
the Recovering Finance Party would have been paid had the receipt or recovery been received
or made by the Facility Agent and
distributed in accordance with Clause 35 (Payment Mechanics),
without taking account of any Tax which would be imposed on the Facility Agent in relation
to the receipt, recovery or distribution; and
142
(c)
the
Recovering Finance Party shall, within three Business Days of demand by the Facility Agent,
pay to the Facility Agent an amount (the "Sharing Payment") equal to such
receipt or recovery less any amount which the
Facility Agent determines may be retained by
the Recovering Finance Party as its share of any payment to be made, in accordance with Clause
35.5 (Application of receipts; partial payments).
34.2
Redistribution
of payments
The
Facility Agent shall treat the Sharing Payment as if it had been paid by the relevant Transaction Obligor and distribute it among the
Finance Parties (other than the Recovering Finance Party) (the "Sharing Finance
Parties") in accordance with Clause
35.5 (Application of receipts; partial payments) towards the obligations of that Transaction Obligor to the Sharing Finance Parties.
34.3
Recovering
Finance Party's rights
On
a distribution by the Facility Agent under Clause 34.2 (Redistribution of payments) of a payment received by a Recovering Finance
Party from a Transaction Obligor, as between the relevant Transaction Obligor and the
Recovering Finance Party, an amount of the Recovered
Amount equal to the Sharing Payment will be treated as not having been paid by that Transaction Obligor.
34.4
Reversal
of redistribution
If
any part of the Sharing Payment received or recovered by a Recovering Finance Party becomes repayable and is repaid by that Recovering
Finance Party, then:
(a)
each
Sharing Finance Party shall, upon request of the Facility Agent, pay to the Facility Agent
for the account of that Recovering Finance Party an amount equal to the appropriate part
of its share of the Sharing Payment
(together with an amount as is necessary to reimburse
that Recovering Finance Party for its proportion of any interest on the Sharing Payment which
that Recovering Finance Party is required to pay) (the "Redistributed
Amount");
and
(b)
as
between the relevant Transaction Obligor and each relevant Sharing Finance Party, an amount
equal to the relevant Redistributed Amount will be treated as not having been paid by that
Transaction Obligor.
34.5
Exceptions
(a)
This
Clause 34 (Sharing among the Finance Parties) shall not apply to the extent that the
Recovering Finance Party would not, after making any payment pursuant to this Clause, have
a valid and enforceable claim against the
relevant Transaction Obligor.
(b)
A
Recovering Finance Party is not obliged to share with any other Finance Party any amount
which the Recovering Finance Party has received or recovered as a result of taking legal
or arbitration proceedings, if:
(i)
it
notified that other Finance Party of the legal or arbitration proceedings; and
(ii)
that
other Finance Party had an opportunity to participate in those legal or arbitration proceedings
but did not do so as soon as reasonably practicable having received notice and did not take
separate legal or arbitration
proceedings.
143
SECTION 11
ADMINISTRATION
35
PAYMENT
MECHANICS
35.1
Payments
to the Facility Agent
(a)
On
each date on which a Transaction Obligor or a Lender is required to make a payment under
a Finance Document, that Transaction Obligor or Lender shall make an amount equal to such
payment available to the Facility
Agent (unless a contrary indication appears in a Finance
Document) for value on the due date at the time and in such funds specified by the Facility
Agent as being customary at the time for settlement of transactions in the
relevant currency
in the place of payment.
(b)
Payment
shall be made to such account in the principal financial centre of the country of that currency
(or, in relation to euro, in a principal financial centre in such Participating Member State
or London, as specified by the
Facility Agent) and with such bank as the Facility Agent,
in each case, specifies.
35.2
Distributions
by the Facility Agent
Each
payment received by the Facility Agent under the Finance Documents for another Party shall, subject to Clause 35.3 (Distributions
to a Transaction Obligor) and Clause 35.4 (Clawback and pre-funding) be made
available by the Facility Agent as soon as practicable
after receipt to the Party entitled to receive payment in accordance with this Agreement (in the case of a Lender, for the account of
its Facility Office), to such account as
that Party may notify to the Facility Agent by not less than five Business Days' notice with
a bank specified by that Party in the principal financial centre of the country of that currency (or, in relation to euro, in the principal
financial centre of a Participating Member State or London), as specified by that Party or, in the case of the Advance, to such account
of such person as may be specified by the Borrowers in a Utilisation Request.
35.3
Distributions
to a Transaction Obligor
The
Facility Agent may (with the consent of the Transaction Obligor or in accordance with Clause 36 (Set-Off)) apply any amount received
by it for that Transaction Obligor in or towards payment (on the date and in the
currency and funds of receipt) of any amount due from
that Transaction Obligor under the Finance Documents or in or towards purchase of any amount of any currency to be so applied.
35.4
Clawback
and pre-funding
(a)
Where
a sum is to be paid to the Facility Agent under the Finance Documents for another Party,
the Facility Agent is not obliged to pay that sum to that other Party (or to enter into or
perform any related exchange contract)
until it has been able to establish to its satisfaction
that it has actually received that sum.
(b)
Unless
paragraph (c) below applies, if the Facility Agent pays an amount to another Party and it
proves to be the case that the Facility Agent had not actually received that amount, then
the Party to whom that amount (or the
proceeds of any related exchange contract) was paid
by the Facility Agent shall on demand refund the same to the Facility Agent together with
interest
144
on
that amount from the date of payment to the date of receipt by the Facility Agent, calculated by the Facility Agent to reflect its cost
of funds.
(c)
If
the Facility Agent has notified the Lenders that it is willing to make available amounts
for the account of the Borrowers before receiving funds from the Lenders then if and to the
extent that the Facility Agent does so but it
proves to be the case that it does not then
receive funds from a Lender in respect of a sum which it paid to the Borrowers:
(i)
the
Facility Agent shall notify the Borrowers of that Lender's identity and the Borrowers shall
on demand refund it to the Facility Agent; and
(ii)
the
Lender by whom those funds should have been made available or, if the Lender fails to do
so, the Borrowers shall on demand pay to the Facility Agent the amount (as certified by the
Facility Agent) which will
indemnify the Facility Agent against any funding cost incurred
by it as a result of paying out that sum before receiving those funds from that Lender.
35.5
Application
of receipts; partial payments
(a)
If
the Facility Agent receives a payment that is insufficient to discharge all the amounts then
due and payable by a Transaction Obligor under the Finance Documents, the Facility Agent
shall apply that payment towards the
obligations of that Transaction Obligor under the Finance
Documents in the following order:
(i)
first,
in or towards payment pro rata of any unpaid fees, costs and expenses of, and any
other amounts owing to, the Facility Agent, the Security Agent, any Receiver or any Delegate
under the Finance Documents;
(ii)
secondly,
in or towards payment pro rata of:
(A)
any
accrued interest and fees due but unpaid to the Lenders under this Agreement;
(iii)
thirdly,
in or towards payment pro rata of:
(A)
any
principal due but unpaid to the Lenders under this Agreement;
(iv)
fourthly,
in or towards payment pro rata of any other sum due but unpaid under the Finance Documents.
(b)
The
Facility Agent shall, if so directed by the Lenders, vary, or instruct the Security Agent
to vary (as applicable), the order set out in sub-paragraphs (ii) to (iv) of paragraph (a)
above.
(c)
Paragraphs
(a) and (b) above will override any appropriation made by a Transaction Obligor.
35.6
No
set-off by Transaction Obligors
All
payments to be made by a Transaction Obligor under the Finance Documents shall be calculated and be made without (and free and clear
of any deduction for) set-off or counterclaim.
145
35.7
Business
Days
(a)
Any
payment under the Finance Documents which is due to be made on a day that is not a Business
Day shall be made on the next Business Day in the same calendar month (if there is one) or
the preceding Business Day (if
there is not).
(b)
During
any extension of the due date for payment of any principal or an Unpaid Sum under this Agreement
interest is payable on the principal or Unpaid Sum at the rate payable on the original due
date.
35.8
Currency
of account
(a)
Subject
to paragraphs (b) and (c) below, dollars is the currency of account and payment for any sum
due from a Transaction Obligor under any Finance Document.
(b)
Each
payment in respect of costs, expenses or Taxes shall be made in the currency in which the
costs, expenses or Taxes are incurred.
(c)
Any
amount expressed to be payable in a currency other than dollars shall be paid in that other
currency.
35.9
Change
of currency
(a)
Unless
otherwise prohibited by law, if more than one currency or currency unit are at the same time
recognised by the central bank of any country as the lawful currency of that country, then:
(i)
any
reference in the Finance Documents to, and any obligations arising under the Finance Documents
in, the currency of that country shall be translated into, or paid in, the currency or currency
unit of that country
designated by the Facility Agent (after consultation with the Borrowers);
and
(ii)
any
translation from one currency or currency unit to another shall be at the official rate of
exchange recognised by the central bank for the conversion of that currency or currency unit
into the other, rounded up or
down by the Facility Agent (acting reasonably).
(b)
If
a change in any currency of a country occurs, this Agreement will, to the extent the Facility
Agent (acting reasonably and after consultation with the Borrowers) specifies to be necessary,
be amended to comply with any
generally accepted conventions and market practice in the Relevant
Market and otherwise to reflect the change in currency.
35.10
Currency
Conversion
(a)
For
the purpose of, or pending any payment to be made by any Servicing Party under any Finance
Document, such Servicing Party may convert any moneys received or recovered by it from one
currency to another, at a market
rate of exchange.
(b)
The
obligations of any Transaction Obligor to pay in the due currency shall only be satisfied
to the extent of the amount of the due currency purchased after deducting the costs of conversion.
146
35.11
Disruption
to Payment Systems etc.
If
either the Facility Agent determines (in its discretion) that a Disruption Event has occurred or the Facility Agent is notified by a
Borrower that a Disruption Event has occurred:
(a)
the
Facility Agent may, and shall if requested to do so by a Borrower, consult with the Borrowers
with a view to agreeing with the Borrowers such changes to the operation or administration
of the Facility as the Facility Agent
may deem necessary in the circumstances;
(b)
the
Facility Agent shall not be obliged to consult with the Borrowers in relation to any changes
mentioned in paragraph (a) above if, in its opinion, it is not practicable to do so in the
circumstances and, in any event, shall have
no obligation to agree to such changes;
(c)
the
Facility Agent may consult with the Finance Parties in relation to any changes mentioned
in paragraph (a) above but shall not be obliged to do so if, in its opinion, it is not practicable
to do so in the circumstances;
(d)
any
such changes agreed upon by the Facility Agent and the Borrowers shall (whether or not it
is finally determined that a Disruption Event has occurred) be binding upon the Parties as
an amendment to (or, as the case may be,
waiver of) the terms of the Finance Documents notwithstanding
the provisions of Clause 44 (Amendments and Waivers);
(e)
the
Facility Agent shall not be liable for any damages, costs or losses to any person, any diminution
in value or any liability whatsoever (including, without limitation for negligence, gross
negligence or any other category of
liability whatsoever but not including any claim based
on the fraud of the Facility Agent) arising as a result of its taking, or failing to take,
any actions pursuant to or in connection with this Clause 35.11 (Disruption to Payment
Systems etc.); and
(f)
the
Facility Agent shall notify the Finance Parties of all changes agreed pursuant to paragraph (d)
above.
36
SET-OFF
A
Finance Party may set off any matured obligation due from a Transaction Obligor under the Finance Documents (to the extent beneficially
owned by that Finance Party) against any matured obligation owed by that Finance
Party to that Transaction Obligor, regardless of the
place of payment, booking branch or currency of either obligation. If the obligations are in different currencies, the Finance Party
may convert either obligation at a market
rate of exchange in its usual course of business for the purpose of the set-off.
37
BAIL-IN
Notwithstanding
any other term of any Finance Document or any other agreement, arrangement or understanding between the parties to a Finance Document,
each Party acknowledges and accepts that any liability of any party
to a Finance Document under or in connection with the Finance Documents
may be subject to Bail-In Action by the relevant Resolution Authority and acknowledges and accepts to be bound by the effect of:
(a)
any
Bail-In Action in relation to any such liability, including (without limitation):
(i)
a
reduction, in full or in part, in the principal amount, or outstanding amount due (including
any accrued but unpaid interest) in respect of any such liability;
147
(ii)
a
conversion of all, or part of, any such liability into shares or other instruments of ownership
that may be issued to, or conferred on, it; and
(iii)
a
cancellation of any such liability; and
(b)
a
variation of any term of any Finance Document to the extent necessary to give effect to any
Bail-In Action in relation to any such liability.
38
NOTICES
38.1
Communications
in writing
Any
communication to be made under or in connection with the Finance Documents shall be made in writing and, unless otherwise stated, may
be made by letter.
38.2
Addresses
The
address (and the department or officer, if any, for whose attention the communication is to be made) of each Party for any communication
or document to be made or delivered under or in connection with the Finance
Documents are:
(a)
in
the case of the Borrowers, that specified in Schedule 1 (The Parties);
(b)
in
the case of each Lender or any other Obligor, that specified in Schedule 1 (The Parties)
or, if it becomes a Party after the date of this Agreement, that notified in writing to the
Facility Agent on or before the date on which it
becomes a Party;
(c)
in
the case of the Facility Agent, that specified in Schedule 1 (The Parties);
(d)
in
the case of the Security Agent, that specified in Schedule 1 (The Parties); and
(e)
in
the case of the Account Bank, that specified in Schedule 1 (The Parties),
or
any substitute address or department or officer as the Party may notify to the Facility Agent (or the Facility Agent may notify to the
other Parties, if a change is made by the Facility Agent) by not less than five Business
Days' notice.
38.3
Delivery
(a)
Any
communication or document made or delivered by one person to another under or in connection
with the Finance Documents will only be effective when it has been left at the relevant address
or five Business Days after
being deposited in the post postage prepaid in an envelope addressed
to it at that address, and, if a particular department or officer is specified as part of
its address details provided under Clause 38.2 (Addresses), if addressed to
that department
or officer.
(b)
Any
communication or document to be made or delivered to a Servicing Party will be effective
only when actually received by that Servicing Party and then only if it is expressly marked
for the attention of the department or
officer of that Servicing Party specified in Schedule
1 (The Parties) (or any substitute department or officer as that Servicing Party shall
specify for this purpose).
148
(c)
All
notices from or to a Transaction Obligor shall be sent through the Facility Agent unless
otherwise specified in any Finance Document.
(d)
Any
communication or document made or delivered to the Borrowers in accordance with this Clause
will be deemed to have been made or delivered to each of the Transaction Obligors.
(e)
Any
communication or document which becomes effective, in accordance with paragraphs (a)
to (d) above, after 5.00 p.m. in the place of receipt shall be deemed only to become effective
on the following day.
38.4
Notification
of address
Promptly
upon receipt of notification of an address or change of address pursuant to Clause 38.2 (Addresses) or changing its own address,
the Facility Agent shall notify the other Parties.
38.5
Electronic
communication
(a)
Any
communication to be made between any two Parties under or in connection with the Finance
Documents may be made by electronic mail or other electronic means (including, without limitation,
by way of posting to a
secure website) if those two Parties:
(i)
notify
each other in writing of their electronic mail address and/or any other information required
to enable the transmission of information by that means; and
(ii)
notify
each other of any change to their address or any other such information supplied by them
by not less than five Business Days' notice.
(b)
Any
such electronic communication as specified in paragraph (a) above to be made between an Obligor
and a Finance Party may only be made in that way to the extent that those two Parties agree
that, unless and until notified
to the contrary, this is to be an accepted form of communication.
(c)
Any
such electronic communication as specified in paragraph (a) above made between any two Parties
will be effective only when actually received (or made available) in readable form and in
the case of any electronic
communication made by a Party to the Facility Agent or the Security
Agent only if it is addressed in such a manner as the Facility Agent or the Security Agent
shall specify for this purpose.
(d)
Any
electronic communication which becomes effective, in accordance with paragraph (c) above,
after 5.00 p.m. in the place in which the Party to whom the relevant communication is sent
or made available has its address for
the purpose of this Agreement shall be deemed only
to become effective on the following day.
(e)
Any
reference in a Finance Document to a communication being sent or received shall be construed
to include that communication being made available in accordance with this Clause 38.5
(Electronic communication).
38.6
English
language
(a)
Any
notice given under or in connection with any Finance Document must be in English.
(b)
All
other documents provided under or in connection with any Finance Document must be:
149
(i)
in
English; or
(ii)
if
not in English, and if so required by the Facility Agent, accompanied by a certified English
translation prepared by a translator approved by the Facility Agent and, in this case, the
English translation will prevail
unless the document is a constitutional, statutory or other
official document.
39
CALCULATIONS
AND CERTIFICATES
39.1
Accounts
In
any litigation or arbitration proceedings arising out of or in connection with a Finance Document, the entries made in the accounts maintained
by a Finance Party are prima facie evidence of the matters to which they relate.
39.2
Certificates
and determinations
Any
certification or determination by a Finance Party of a rate or amount under any Finance Document is, in the absence of manifest error,
conclusive evidence of the matters to which it relates.
39.3
Day
count convention and interest calculation
(a)
Any
interest, commission or fee accruing under a Finance Document will accrue from day to day
and the amount of any such interest, commission or fee is calculated:
(i)
on
the basis of the actual number of days elapsed and a year of 360 days or, in any case where
the practice in the Relevant Market differs, in accordance with that market practice; and
(ii)
subject
to paragraph (b) below, without rounding.
(b)
The
aggregate amount of any accrued interest, commission or fee which is, or becomes, payable
by an Obligor under a Finance Document shall be rounded to 2 decimal places.
40
PARTIAL
INVALIDITY
If,
at any time, any provision of a Finance Document is or becomes illegal, invalid or unenforceable in any respect under any law of any
jurisdiction, neither the legality, validity or enforceability of the remaining provisions
under the law of that jurisdiction nor the
legality, validity or enforceability of such provision under the law of any other jurisdiction will in any way be affected or impaired.
41
REMEDIES
AND WAIVERS
No
failure to exercise, nor any delay in exercising, on the part of any Secured Party, any right or remedy under a Finance Document shall
operate as a waiver of any such right or remedy or constitute an election to affirm any
Finance Document. No election to affirm any Finance
Document on the part of a Secured Party shall be effective unless it is in writing. No single or partial exercise of any right or remedy
shall prevent any further or other
exercise or the exercise of any other right or remedy. The rights and remedies provided in each Finance
Document are cumulative and not exclusive of any rights or remedies provided by law.
150
42
SETTLEMENT
OR DISCHARGE CONDITIONAL
Any
settlement or discharge under any Finance Document between any Finance Party and any Transaction Obligor shall be conditional upon no
security or payment to any Finance Party by any Transaction Obligor or any other
person being set aside, adjusted or ordered to be repaid,
whether under any insolvency law or otherwise.
43
IRREVOCABLE
PAYMENT
If
the Facility Agent considers that an amount paid or discharged by, or on behalf of, a Transaction Obligor or by any other person in purported
payment or discharge of an obligation of that Transaction Obligor to a Secured
Party under the Finance Documents is capable of being
avoided or otherwise set aside on the liquidation or administration of that Transaction Obligor or otherwise, then that amount shall
not be considered to have been
unconditionally and irrevocably paid or discharged for the purposes of the Finance Documents.
44
AMENDMENTS
AND WAIVERS
44.1
Required
consents
(a)
Subject
to Clause 44.2 (All Lender matters) and Clause 44.3 (Other exceptions) any
term of the Finance Documents may be amended or waived only with the consent of the Majority
Lenders and, in the case of an amendment,
the Obligors and any such amendment or waiver will
be binding on all Parties.
(b)
The
Facility Agent may effect, on behalf of any Finance Party, any amendment or waiver permitted
by this Clause 44 (Amendments and Waivers).
(c)
Without
prejudice to the generality of Clause 31.8 (Rights and discretions), the Facility
Agent may engage, pay for and rely on the services of lawyers in determining the consent
level required for and effecting any amendment,
waiver or consent under this Agreement.
(d)
Paragraph
(c) of Clause 29.10 (Pro rata interest settlement) shall apply to this Clause 44 (Amendments
and Waivers).
44.2
All
Lender matters
Subject
to Clause 44.5 (Changes to reference rates), an amendment of or waiver or consent in relation to any term of any Finance Document
that has the effect of changing or which relates to:
(a)
the
definitions of "Majority Lenders" and "Sanctions" in Clause 1.1 (Definitions);
(b)
a
postponement to or extension of the date of payment of any amount under the Finance Documents;
(c)
a
reduction in the Margin or the amount of any payment of principal, interest, fees or commission
payable;
(d)
a
change in currency of payment of any amount under the Finance Documents;
151
(e)
an
increase in any Commitment or the Total Commitments, an extension of any Availability Period
or any requirement that a cancellation of Commitments reduces the Commitments rateably under
the Facility;
(f)
a
change to any Obligor other than in accordance with Clause 30 (Changes to the Transaction
Obligors);
(g)
any
provision which expressly requires the consent of all the Lenders;
(h)
this
Clause 44 (Amendments and Waivers);
(i)
any
change to the preamble (Background), Clause 2 (The Facility), Clause 3 (Purpose),
Clause 5 (Utilisation), Clause 6.2 (Effect of cancellation and prepayment on scheduled
repayments), Clause 7.1 (Illegality and Sanctions
affecting a Lender), Clause
7.4 (Mandatory prepayment on sale, refinancing or Total Loss), Clause 7.5(Change
of Control), Clause 8 (Interest), Clause 19.34 (Sanctions Representations),
Clause 19.36 (Anti-bribery, anti-
corruption and anti-money laundering), Clause 22.24
(Use of Proceeds), Clause 24.9 (Compliance with laws etc.), Clause 22.23 (Sanctions
Undertakings), Clause 23.2 (Maintenance of obligatory insurances), Clause 23.3
(Terms of obligatory insurances), Clause 23.5 (Renewal of obligatory insurances);
Clause 24.19 (Sanctions and Ship trading), Clause 27 (Accounts and application
of Earnings), Clause 29 (Changes to the Lenders), Clause 34
(Sharing among
the Finance Parties), Clause 45.4 (Data Protection), Clause 49 (Governing Law)
or Clause 50 (Enforcement);
(j)
any
release of, or material variation to, any Transaction Security, guarantee, indemnity or subordination
arrangement set out in a Finance Document (except in the case of a release of Transaction
Security as it relates to the
disposal of an asset which is the subject of the Transaction
Security and where such disposal is expressly permitted by the Majority Lenders or otherwise
under a Finance Document);
(k)
(other
than as expressly permitted by the provisions of any Finance Document), the nature or scope
of:
(i)
the
guarantees and indemnities granted under Clause 17 (Guarantee and Indemnity – Guarantor);
(ii)
the
joint and several liability of the Borrowers under Clause 18 (Joint and Several Liability
of the Borrowers);
(iii)
the
Security Assets; or
(iv)
the
manner in which the proceeds of enforcement of the Transaction Security are distributed,
(except
in the case of sub-paragraphs (iii) and (iv) above, insofar as it relates to a sale or disposal of an asset which is the subject of the
Transaction Security where such sale or disposal is expressly permitted under this
Agreement or any other Finance Document);
(l)
the
release of the guarantees and indemnities granted under Clause 17 (Guarantee and Indemnity
– Guarantor) or the release of the joint and several liability of the Borrowers
under Clause 18 (Joint and Several Liability of the
Borrowers) or of any Transaction
Security unless permitted under this Agreement or any other Finance Document or relating
to a sale or disposal of an asset which is the subject of the Transaction Security where
such sale or
disposal is expressly permitted under this Agreement or any other Finance Document,
shall not be made, or given, without the prior consent of all the Lenders.
152
44.3
Excluded
Commitments
(a)
If
any Lender fails to respond to a request for an amendment or waiver described in Clause 44.2
(All Lender matters) above within twenty Business Days (or such longer time period
in relation to any request which the
Borrowers and the Facility Agent may agree) of that
request being made:
(i)
its
Commitment or its participation in the Loan (as the case may be) shall not be taken into
account for the purpose of calculating the Total Commitments or the amount of the Loan (as
applicable) when ascertaining
whether any relevant percentage of Total Commitments or the
aggregate of participations in the Loan (as applicable) has been obtained to approve that
request; and
(ii)
its
status as a Lender shall be disregarded for the purpose of ascertaining whether the agreement
of any specified group of Lenders has been obtained to approve that request.
44.4
Other
exceptions
(a)
An
amendment or waiver which relates to the rights or obligations of a Servicing Party or an
Arranger (its capacity as such) may not be effected without the consent of that Servicing
Party or that Arranger, as the case may be.
(b)
The
Borrowers and the Facility Agent, an Arranger or the Security Agent, as applicable, may amend
or waive a term of a Fee Letter to which they are a party.
44.5
Changes
to reference rates
(a)
Subject
to Clause 44.4 (Other exceptions), if a Published Rate Replacement Event has occurred
in relation to a Published Rate, any amendment or waiver which relates to:
(i)
providing
for the use of a Replacement Reference Rate in place of (or in addition to) that Published
Rate; and
(ii)
(A)
aligning
any provision of any Finance Document to the use of that Replacement Reference Rate;
(B)
enabling
that Replacement Reference Rate to be used for the calculation of interest under this Agreement
(including, without limitation, any consequential changes required to enable that Replacement
Reference Rate to be used for the purposes of this Agreement);
(C)
implementing
market conventions applicable to that Replacement Reference Rate;
(D)
providing
for appropriate fallback (and market disruption) provisions for that Replacement Reference
Rate; or
153
(E)
adjusting
the pricing to reduce or eliminate, to the extent reasonably practicable, any transfer of
economic value from one Party to another as a result of the application of that Replacement
Reference Rate (and
if any adjustment or method for calculating any adjustment has been formally
designated, nominated or recommended by the Relevant Nominating Body, the adjustment shall
be determined on the basis of that
designation, nomination or recommendation),
may
be made with the consent of the Facility Agent (acting on the instructions of the Majority Lenders) and the Borrowers.
(b)
An
amendment or waiver that relates to, or has the effect of, aligning the means of calculation
of interest on a Compounded Rate Loan under this Agreement to any recommendation of a Relevant
Nominating Body which:
(i)
relates
to the use of the RFR on a compounded basis in the international or any relevant domestic
syndicated loan markets; and
(ii)
is
issued on or after the date of this Agreement,
may
be made with the consent of the Facility Agent (acting on the instructions of the Majority Lenders) and the Borrowers.
(c)
If
any Lender fails to respond to a request for an amendment or waiver described in paragraphs
(a) or (b) above within 10 Business Days (or such longer time period in relation to any request
which the Borrowers and the
Facility Agent may agree) of that request being made:
(i)
its
Commitment or its participation in the Loan (as the case may be) shall not be included for
the purpose of calculating the Total Commitments or the amount of the Loan (as applicable)
when ascertaining whether any
relevant percentage of Total Commitments or the aggregate of
participations in the Loan (as applicable) has been obtained to approve that request; and
(ii)
its
status as a Lender shall be disregarded for the purpose of ascertaining whether the agreement
of any specified group of Lenders has been obtained to approve that request.
(d)
In
this Clause 44.5 (Changes to reference rates):
"Published
Rate" means:
(a)
the
RFR; or
(b)
Term
SOFR for any Quoted Tenor.
"Published
Rate Contingency Period" means, in relation to:
(a)
Term
SOFR (all Quoted Tenors), 10 RFR Banking Days; and
(b)
RFR,
10 RFR Banking Days.
154
"Published
Rate Replacement Event" means, in relation to a Published Rate:
(a)
the
methodology, formula or other means of determining that Published Rate has, in the opinion
of the Majority Lenders, and the Borrowers materially changed;
(b)
(i)
(A)
the
administrator of that Published Rate or its supervisor publicly announces that such administrator
is insolvent; or
(B)
information
is published in any order, decree, notice, petition or filing, however described, of or filed
with a court, tribunal, exchange, regulatory authority or similar administrative, regulatory
or
judicial body which reasonably confirms that the administrator of that Published Rate
is insolvent,
provided
that, in each case, at that time, there is no successor administrator to continue to provide that Published Rate;
(ii)
the
administrator of that Published Rate publicly announces that it has ceased or will cease,
to provide that Published Rate permanently or indefinitely and, at that time, there is no
successor administrator to
continue to provide that Published Rate;
(iii)
the
supervisor of the administrator of that Published Rate publicly announces that such Published
Rate has been or will be permanently or indefinitely discontinued; or
(iv)
the
administrator of that Published Rate or its supervisor announces that that Published Rate
may no longer be used; or
(c)
the
administrator of that Published Rate (or the administrator of an interest rate which is a
constituent element of that Published Rate) determines that that Published Rate should be
calculated in accordance with its
reduced submissions or other contingency or fallback policies
or arrangements and either:
(i)
the
circumstance(s) or event(s) leading to such determination are not (in the opinion of the
Majority Lenders and the Borrowers) temporary; or
(ii)
that
Published Rate is calculated in accordance with any such policy or arrangement for a period
which is no less than the applicable Published Rate Contingency Period; or
(d)
in
the opinion of the Majority Lenders and the Borrowers, that Published Rate is otherwise no
longer appropriate for the purposes of calculating interest under this Agreement.
"Relevant
Nominating Body" means any applicable central bank, regulator or other supervisory authority or a group of them, or any working
group or committee sponsored or chaired by, or constituted at the request of, any of
them or the Financial Stability Board.
155
"Replacement
Reference Rate" means a reference rate which is:
(a)
formally
designated, nominated or recommended as the replacement for a Published Rate by:
(i)
the
administrator of that Published Rate (provided that the market or economic reality that such
reference rate measures is the same as that measured by that Published Rate); or
(ii)
any
Relevant Nominating Body,
and
if replacements have, at the relevant time, been formally designated, nominated or recommended under both paragraphs, the "Replacement
Reference Rate" will be the replacement under sub-paragraph (ii) above;
(b)
in
the opinion of the Majority Lenders and the Borrowers, generally accepted in the international
or any relevant domestic syndicated loan markets as the appropriate successor or alternative
to a Published Rate; or
(c)
in
the opinion of the Majority Lenders and the Borrowers, an appropriate successor or alternative
to a Published Rate.
44.6
Obligor
Intent
Without
prejudice to the generality of Clauses 1.2 (Construction) and 17.4 (Waiver of defences), 18.2 (Waiver of defences),
each Obligor expressly confirms that it intends that any guarantee contained in this Agreement or any
other Finance Document and any
Security created by any Finance Document shall extend from time to time to any (however fundamental) variation, increase, extension or
addition of or to any of the Finance Documents and/or
any facility or amount made available under any of the Finance Documents for the
purposes of or in connection with any of the following: business acquisitions of any nature; increasing working capital; enabling investor
distributions to be made; carrying out restructurings; refinancing existing facilities; refinancing any other indebtedness; making facilities
available to new borrowers; any other variation or extension of the purposes for which
any such facility or amount might be made available
from time to time; and any fees, costs and/or expenses associated with any of the foregoing.
45
CONFIDENTIAL
INFORMATION
45.1
Confidentiality
Each
Finance Party agrees to keep all Confidential Information confidential and not to disclose it to anyone, save to the extent permitted
by Clause 45.2 (Disclosure of Confidential Information) and Clause 45.3 (Disclosure to
numbering service providers) and
to ensure that all Confidential Information is protected with security measures and a degree of care that would apply to its own confidential
information.
45.2
Disclosure
of Confidential Information
Any
Finance Party may disclose:
(a)
to
any of its Affiliates and Related Funds and any of its or their officers, directors, employees,
professional advisers, auditors, partners and Representatives such Confidential Information
as that Finance Party shall consider
appropriate if any person to whom the Confidential Information
is to be given pursuant to this paragraph (a) is informed in writing of its confidential
nature and that some or all of such Confidential Information may be price-
sensitive information
except that there shall be no such requirement to so inform if the recipient is subject to
professional obligations to maintain the confidentiality of the information or is otherwise
bound by requirements of
confidentiality in relation to the Confidential Information
156
(b)
to
any person:
(i)
to
(or through) whom it assigns or transfers (or may potentially assign or transfer, including
for the purposes of Clause 29.9 (Syndication and Securitisation)) all or any of its
rights and/or obligations under one or more
Finance Documents or which succeeds (or which
may potentially succeed) it as Facility Agent or Security Agent and, in each case, to any
of that person's Affiliates, Related Funds, Representatives, professional
advisers and broker
or provider for the purpose of credit protection;
(ii)
with
(or through) whom it enters into (or may potentially enter into), whether directly or indirectly,
any sub-participation in relation to, or any other transaction under which payments are to
be made or may be made by
reference to, one or more Finance Documents and/or one or more
Transaction Obligors and to any of that person's Affiliates, Related Funds, Representatives,
professional advisers and broker or provider for the purpose
of credit protection;
(iii)
appointed
by any Finance Party or by a person to whom sub-paragraph (i) or (ii) of paragraph (b) above
applies to receive communications, notices, information or documents delivered pursuant to
the Finance
Documents on its behalf (including, without limitation, any person appointed
under paragraph (c) of Clause 31.15 (Relationship with the other Finance Parties));
(iv)
who
invests in or otherwise finances (or may potentially invest in or otherwise finance), directly
or indirectly, any transaction referred to in sub-paragraph (i) or (ii) of paragraph (b)
above;
(v)
to
whom information is required or requested to be disclosed by any court of competent jurisdiction
or any governmental, banking, taxation or other regulatory authority or similar body, the
rules of any relevant stock
exchange or pursuant to any applicable law or regulation;
(vi)
to
whom information is required to be disclosed in connection with, and for the purposes of,
any litigation, arbitrations, administrative or other investigations, proceedings or disputes;
(vii)
to
whom or for whose benefit that Finance Party charges, assigns or otherwise creates Security
(or may do so) pursuant to Clause 29.8 (Security over Lenders' rights);
(viii)
which
is a classification society or other entity which a Lender has engaged to make the calculations
necessary to enable that Lender to comply with its reporting obligations under the Poseidon
Principles;
(ix)
who
is a Party, a member of the Group or any related entity of a Transaction Obligor;
157
(x)
as
a result of the registration of any Finance Document as contemplated by any Finance Document
or any legal opinion obtained in connection with any Finance Document; or
(xi)
with
the consent of the Guarantor;
in
each case, such Confidential Information as that Finance Party shall consider appropriate if:
(A)
in
relation to sub-paragraphs (i), (ii) and (iii) of paragraph (b) above, the person to whom
the Confidential Information is to be given has entered into a Confidentiality Undertaking
except that there shall be no
requirement for a Confidentiality Undertaking if the recipient
is a professional adviser and is subject to professional obligations to maintain the confidentiality
of the Confidential Information;
(B)
in
relation to sub-paragraphs (iv) and (viii) of paragraph (b) above, the person to whom the
Confidential Information is to be given has entered into a Confidentiality Undertaking or
is otherwise bound by
requirements of confidentiality in relation to the Confidential Information
they receive and is informed that some or all of such Confidential Information may be price-sensitive
information;
(C)
in
relation to sub-paragraphs (v), (vi) and (vii) of paragraph (b) above, the person to whom
the Confidential Information is to be given is informed of its confidential nature and that
some or all of such
Confidential Information may be price-sensitive information except that
there shall be no requirement to so inform if, in the opinion of that Finance Party, it is
not practicable so to do in the circumstances;
(c)
to
any person appointed by that Finance Party or by a person to whom sub-paragraph (i) or (ii)
of paragraph (b) above applies to provide administration or settlement services in respect
of one or more of the Finance Documents
including without limitation, in relation to the
trading of participations in respect of the Finance Documents, such Confidential Information
as may be required to be disclosed to enable such service provider to provide any of
the
services referred to in this paragraph (c) if the service provider to whom the Confidential
Information is to be given has entered in to a confidentiality agreement substantially in
the form of the LMA Master Confidentiality
Undertaking for Use With Administration/ Settlement
Service Providers or such other form of confidentiality undertaking agreed between the Borrowers
and the relevant Finance Party;
(d)
to
any rating agency (including its professional advisers) such Confidential Information as
may be required to be disclosed to enable such rating agency to carry out its normal rating
activities in relation to the Finance
Documents and/or the Transaction Obligors.
45.3
Disclosure
to numbering service providers
(a)
Any
Finance Party may disclose to any national or international numbering service provider appointed
by that Finance Party to provide identification numbering services in respect of this Agreement,
the Facility and/or one or
more Transaction Obligors the following information:
(i)
names
of Transaction Obligors;
(ii)
country
of domicile of Transaction Obligors;
158
(iii)
place
of formation of Transaction Obligors;
(iv)
date
of this Agreement;
(v)
Clause
49 (Governing Law);
(vi)
the
names of the Facility Agent and the Arrangers;
(vii)
date
of each amendment and restatement of this Agreement;
(viii)
amount
of Total Commitments;
(ix)
currency
of the Facility;
(x)
type
of Facility;
(xi)
ranking
of Facility;
(xii)
Termination
Date for Facility;
(xiii)
changes
to any of the information previously supplied pursuant to sub-paragraphs (i) to (xii) above;
and
(xiv)
such
other information agreed between such Finance Party and the Borrowers,
to
enable such numbering service provider to provide its usual syndicated loan numbering identification services.
(b)
The
Parties acknowledge and agree that each identification number assigned to this Agreement,
the Facility and/or one or more Transaction Obligors by a numbering service provider and
the information associated with each
such number may be disclosed to users of its services
in accordance with the standard terms and conditions of that numbering service provider.
(c)
Each
Obligor represents, on behalf of itself and the other Transaction Obligors, that none of
the information set out in sub-paragraphs (i) to (xiv) of paragraph (a) above is, nor will
at any time be, unpublished price-sensitive
information.
45.4
Whistleblower
Policy
For
the avoidance of doubt, nothing herein and in the other Finance Documents prohibits any individual acting on behalf of
an Obligor from (i) communicating or disclosing information regarding suspected violations of laws,
rules, or regulations to a governmental,
regulatory, or self-regulatory authority without any notification to any person and (ii) complying with the GSL Policy.
45.5
Data
protection
45.6
Entire
agreement
This
Clause 45 (Confidential Information) constitutes the entire agreement between the Parties in relation to the obligations of the
Finance Parties under the Finance Documents regarding Confidential Information and
supersedes any previous agreement, whether express
or implied, regarding Confidential Information.
159
45.7
Inside
information
Each
of the Finance Parties acknowledges that some or all of the Confidential Information is or may be price-sensitive information and that
the use of such information may be regulated or prohibited by applicable legislation
including securities law relating to insider dealing
and market abuse and each of the Finance Parties undertakes not to use any Confidential Information for any unlawful purpose.
45.8
Notification
of disclosure
Each
of the Finance Parties agrees (to the extent permitted by law and regulation) to inform the Borrowers:
(a)
of
the circumstances of any disclosure of Confidential Information made pursuant to sub-paragraph
(v) of paragraph (b) of Clause 45.2 (Disclosure of Confidential Information) except
where such disclosure is made to any of
the persons referred to in that paragraph during
the ordinary course of its supervisory or regulatory function; and
(b)
upon
becoming aware that Confidential Information has been disclosed in breach of this Clause 45
(Confidential Information).
45.9
Continuing
obligations
The
obligations in this Clause 45 (Confidential Information) are continuing and, in particular, shall survive and remain binding on
each Finance Party for a period of 12 months from the earlier of:
(a)
the
date on which all amounts payable by the Obligors under or in connection with this Agreement
have been paid in full and all Commitments have been cancelled or otherwise cease to be available;
and
(b)
the
date on which such Finance Party otherwise ceases to be a Finance Party.
46
CONFIDENTIALITY
OF FUNDING RATES
46.1
Confidentiality
and disclosure
(a)
The
Facility Agent and each Obligor agree to keep each Funding Rate confidential and not to disclose
it to anyone, save to the extent permitted by paragraphs (b) and (c) below.
(b)
The
Facility Agent may disclose:
(i)
any
Funding Rate to the Borrowers pursuant to Clause 8.5 (Notification of rates of interest);
and
(ii)
any
Funding Rate to any person appointed by it to provide administration services in respect
of one or more of the Finance Documents to the extent necessary to enable such service provider
to provide those services if
the service provider to whom that information is to be given
has entered into a confidentiality agreement substantially in the form of the LMA Master
Confidentiality Undertaking for Use With
Administration/Settlement Service Providers or such
other form of confidentiality undertaking agreed between the Facility Agent and the relevant
Lender.
160
(c)
The
Facility Agent may disclose any Funding Rate, and each Obligor may disclose any Funding Rate,
to:
(i)
any
of its Affiliates and any of its or their officers, directors, employees, professional advisers,
auditors, partners and Representatives, if any person to whom that Funding Rate is to be
given pursuant to this sub-
paragraph (i) is informed in writing of its confidential nature
and that it may be price sensitive information except that there shall be no such requirement
to so inform if the recipient is subject to professional
obligations to maintain the confidentiality
of that Funding Rate or is otherwise bound by requirements of confidentiality in relation
to it;
(ii)
any
person to whom information is required or requested to be disclosed by any court of competent
jurisdiction or any governmental, banking, taxation or other regulatory authority or similar
body, the rules of any
relevant stock exchange or pursuant to any applicable law or regulation
if the person to whom that Funding Rate is to be given is informed in writing of its confidential
nature and that it may be price sensitive
information except that there shall be no requirement
to so inform if, in the opinion of the Facility Agent or the relevant Obligor, as the case
may be, it is not practicable to do so in the circumstances;
(iii)
any
person to whom information is required to be disclosed in connection with, and for the purposes
of, any litigation, arbitration, administrative or other investigations, proceedings or disputes
if the person to whom
that Funding Rate is to be given is informed in writing of its confidential
nature and that it may be price sensitive information except that there shall be no requirement
to so inform if, in the opinion of the Facility
Agent or the relevant Obligor, as the case
may be, it is not practicable to do so in the circumstances; and
(iv)
any
person with the consent of the relevant Lender.
46.2
Related
obligations
(a)
The
Facility Agent and each Obligor acknowledge that each Funding Rate is or may be price sensitive
information and that its use may be regulated or prohibited by applicable legislation including
securities law relating to
insider dealing and market abuse and the Facility Agent and each
Obligor undertake not to use any Funding Rate for any unlawful purpose.
(b)
The
Facility Agent and each Obligor agree (to the extent permitted by law and regulation) to
inform the relevant Lender:
(i)
of
the circumstances of any disclosure made pursuant to sub-paragraph (ii) of paragraph (c)
of Clause 46.1 (Confidentiality and disclosure) except where such disclosure is made
to any of the persons referred to in that
paragraph during the ordinary course of its supervisory
or regulatory function; and
(ii)
upon
becoming aware that any information has been disclosed in breach of this Clause 46 (Confidentiality
of Funding Rates).
46.3
No
Event of Default
No
Event of Default will occur under Clause 28.4 (Other obligations) by reason only of an Obligor's failure to comply with this Clause
46 (Confidentiality of Funding Rates).
161
47
COUNTERPARTS
Each
Finance Document may be executed in any number of counterparts, and this has the same effect as if the signatures on the counterparts
were on a single copy of the Finance Document.
48
ELECTRONIC
EXECUTION
This
Agreement may be executed and delivered by facsimile signature or other electronic or digital means (including without limitation portable
document format ("PDF")). Any such signature shall be of the same force and
effect as an original signature, it being
the express intent of the Parties to create a valid and legally enforceable contract between them. The exchange and delivery of this
Agreement via facsimile or as an attachment to
electronic mail (including in PDF) shall constitute effective execution and delivery by
the Parties and may be used by the Parties for all purposes. Notwithstanding the foregoing, at the request of either Party, the Parties
hereto
agree to exchange inked original replacement signature pages as soon thereafter as reasonably practicable.
162
SECTION 12
GOVERNING LAW AND ENFORCEMENT
49
GOVERNING
LAW
This
Agreement and any non-contractual obligations arising out of or in connection with it are governed by English law.
50
ENFORCEMENT
50.1
Jurisdiction
(a)
Unless
specifically provided in another Finance Document in relation to that Finance Document, the
courts of England have exclusive jurisdiction to settle any dispute arising out of or in
connection with any Finance Document
(including a dispute regarding the existence, validity
or termination of any Finance Document or any non-contractual obligation arising out of or
in connection with any Finance Document) (a "Dispute").
(b)
The
Obligors accept that the courts of England are the most appropriate and convenient courts
to settle Disputes and accordingly no Obligor will argue to the contrary.
(c)
This
Clause 50.1 (Jurisdiction) is for the benefit of the Secured Parties only. As a result,
no Secured Party shall be prevented from taking proceedings relating to a Dispute in any
other courts with jurisdiction. To the extent
allowed by law, the Secured Parties may take
concurrent proceedings in any number of jurisdictions.
50.2
Service
of process
(a)
Without
prejudice to any other mode of service allowed under any relevant law, each Obligor:
(i)
irrevocably
appoints Saville & Co., currently at 11 Old Jewry, London EC2R 8DU, United Kingdom, as
its agent for service of process in relation to any proceedings before the English courts
in connection with any
Finance Document; and
(ii)
agrees
that failure by a process agent to notify the relevant Obligor of the process will not invalidate
the proceedings concerned.
(b)
If
any person appointed as an agent for service of process is unable for any reason to act as
agent for service of process, the Borrowers (on behalf of all the Obligors) must immediately
(and in any event within three days of
such event taking place) appoint another agent on
terms acceptable to the Facility Agent. Failing this, the Facility Agent may appoint another
agent for this purpose.
This
Agreement has been entered into on the date stated at the beginning of this Agreement.
163
SCHEDULE
1
THE PARTIES
PART
A
THE OBLIGORS
Borrower
Name
of Borrower
Place
of Formation
Registration
number (or
equivalent, if any)
Address
for Communication
Borrower
A
Ikaros
Marine LLC
Marshall
Islands
961979
c/o
Technomar Shipping Inc.
3-5
Menandrou Street
145
61 Kifissia
Greece
Fax
no: +30 210 80 84 224
Email:
legalconfidential@technomar.gr with a copy to: finance@technomar.gr
Borrower
B
Leonidas
Marine LLC
Marshall
Islands (also registered
as a Foreign Maritime Entity in
the Republic of Liberia)
961847
c/o
Technomar Shipping Inc.
3-5
Menandrou Street
145
61 Kifissia
Greece
Fax
no: +30 210 80 84 224
Email:
legalconfidential@technomar.gr with a copy to: finance@technomar.gr
Borrower
C
Hector
Marine LLC
Marshall
Islands
961978
c/o
Technomar Shipping Inc.
3-5
Menandrou Street
145
61 Kifissia
Greece
Fax
no: +30 210 80 84 224
Email:
legalconfidential@technomar.gr with a copy to: finance@technomar.gr
164
Borrower
D
Aristoteles
Marine LLC
Marshall
Islands
962290
c/o
Technomar Shipping Inc.
3-5
Menandrou Street
145
61 Kifissia
Greece
Fax
no: +30 210 80 84 224
Email:
legalconfidential@technomar.gr with a copy to: finance@technomar.gr
Borrower
E
Menelaos
Marine LLC
Marshall
Islands
962291
c/o
Technomar Shipping Inc.
3-5
Menandrou Street
145
61 Kifissia
Greece
Fax
no: +30 210 80 84 224
Email:
legalconfidential@technomar.gr with a copy to: finance@technomar.gr
Borrower
F
Philippos
Marine LLC
Marshall
Islands
961953
c/o
Technomar Shipping Inc.
3-5
Menandrou Street
145
61 Kifissia
Greece
Fax
no: +30 210 80 84 224 Email: legalconfidential@technomar.gr with a copy
to: finance@technomar.gr
Borrower
G
Alexander
Marine LLC
Marshall
Islands
961945
c/o
Technomar Shipping Inc.
3-5
Menandrou Street
145
61 Kifissia
Greece
Fax
no: +30 210 80 84 224 Email: legalconfidential@technomar.gr with a copy
to: finance@technomar.gr
165
Borrower
H
Penelope
Marine LLC
Marshall
Islands (also registered
as a Foreign Maritime Entity in
the Republic of Liberia)
962563
c/o
Technomar Shipping Inc.
3-5
Menandrou Street
145
61 Kifissia
Greece
Fax
no: +30 210 80 84 224
Email:
legalconfidential@technomar.gr with a copy to: finance@technomar.gr
Borrower
I
Laertis
Marine LLC
Marshall
Islands (also registered
as a Foreign Maritime Entity in
the Republic of Liberia)
962564
c/o
Technomar Shipping Inc.
3-5
Menandrou Street
145
61 Kifissia
Greece
Fax
no: +30 210 80 84 224
Email:
legalconfidential@technomar.gr with a copy to: finance@technomar.gr
Borrower
J
Telemachus
Marine LLC
Marshall
Islands (also registered
as a Foreign Maritime Entity in
the Republic of Liberia)
962562
c/o
Technomar Shipping Inc.
3-5
Menandrou Street
145
61 Kifissia
Greece
Fax
no: +30 210 80 84 224
Email:
legalconfidential@technomar.gr with a copy to: finance@technomar.gr
Name
of Guarantor
Place
of Formation
Registration
number (or equivalent, if any)
Address
for Communication
Global
Ship Lease, Inc.
Marshall
Islands
28891
c/o
Technomar Shipping Inc.
3-5
Menandrou Street
145
61 Kifissia
Greece
Fax
no: +30 210 80 84 224
Email:
mdanezi@technomar.gr
tpsaropoulos@technomar.gr
166
PART B
THE LENDERS
Name
of Original Lender
Commitment
Address
for Communication
CRÉDIT
AGRICOLE CORPORATE
AND INVESTMENT BANK
$125,000,000
12
place des Etats-Unis
92547
Montrouge
Cedex
France
Fax:
+33 1 41 89 19 34
Attn:
Ship Finance / Typhaine Hirgorom
Email:
typhaine.hirgorom@ca-cib.com;
Copy:
Ship Finance – Representative Office Piraeus, Greece
Nicoletta
Panayiotopoulos/George Gkanasoulis
Email:
nicoletta.panayiotopoulos@ca-cib.com; george.gkanasoulis@ca-cib.com
ABN
AMRO BANK N.V.
$100,000,000
Gustav
Mahlerlaan 10
1082
PP Amsterdam
The
Netherlands
Attention:
Despoina Pavlidou
despoina.pavlidou@gr.abnamro.com
BANK
OF AMERICA, N.A.
$75,000,000
Bank
of America Corporate Center
100
North Tryon Street
Charlotte
NC 28255
United
States of America
Attention:
Loan Lease and Trade Operations,
Address: Bank of America N.A.
600 Peachtree Street NE
Atlanta, GA 30308-2265
robert.h.thomas@bofa.com
Copy:
Leasing
Ops
bal.emea.agent.notices@bofa.com
alfred.lau@bofa.com
167
THE
BOOKRUNNERS
Name
Address
for Communication
CRÉDIT
AGRICOLE CORPORATE AND INVESTMENT BANK
12
place des Etats-Unis
92547
Montrouge
Cedex
France
Fax:
+33 1 41 89 19 34
Attn:
FCS-ATM / Clementine Costil/Rosine Serra-Joannides/Romy Roussel
Email:
clementine.costil@ca-cib.com;
rosine.serra-joannides@ca-cib.com; romy.roussel@ca-cib.com
Copy:
Ship Finance – Representative Office Piraeus, Greece
Nicoletta
Panayiotopoulos/George Gkanasoulis
Email:
nicoletta.panayiotopoulos@ca-cib.com; george.gkanasoulis@ca-cib.com
ABN
AMRO BANK N.V.
Gustav
Mahlerlaan 10
1082
PP Amsterdam
The
Netherlands
Attention:
Danai Kotsia
danai.kotsia@gr.abnamro.com
BANK
OF AMERICA, N.A.
Bank
of America Corporate Center
100
North Tryon Street
Charlotte
NC 28255
United
States of America
Attention:
Loan Lease and Trade Operations,
Address: Bank of America N.A.
600 Peachtree Street NE
Atlanta, GA 30308-2265
robert.h.thomas@bofa.com
Copy:
Leasing
Ops
bal.emea.agent.notices@bofa.com
alfred.lau@bofa.com
168
THE
ARRANGERS
Name
Address
for Communication
CRÉDIT
AGRICOLE CORPORATE AND INVESTMENT BANK
12
place des Etats-Unis
92547
Montrouge
Cedex
France
Fax:
+33 1 41 89 19 34
Attn:
FCS-ATM / Clementine Costil/Rosine Serra-Joannides/Romy Roussel
Email:
clementine.costil@ca-cib.com;
rosine.serra-joannides@ca-cib.com; romy.roussel@ca-cib.com
Copy:
Ship Finance – Representative Office Piraeus, Greece
Nicoletta
Panayiotopoulos/George Gkanasoulis
Email:
nicoletta.panayiotopoulos@ca-cib.com; george.gkanasoulis@ca-cib.com
ABN
AMRO BANK N.V.
Gustav
Mahlerlaan 10
1082
PP Amsterdam
The
Netherlands
Attention:
Danai Kotsia/Despoina Pavlidou
danai.kotsia@gr.abnamro.com/
lendingsupport.specialized.1@nl.abnamro.com
BANK
OF AMERICA, N.A.
Bank
of America Corporate Center
100
North Tryon Street
Charlotte
NC 28255
United
States of America
Attention:
Loan Lease and Trade Operations,
Address: Bank of America N.A.
600 Peachtree Street NE
Atlanta, GA 30308-2265
robert.h.thomas@bofa.com
Copy:
Leasing
Ops
bal.emea.agent.notices@bofa.com
alfred.lau@bofa.com
169
THE
MANDATED LEAD ARRANGERS
Name
Address
for Communication
CRÉDIT
AGRICOLE CORPORATE AND INVESTMENT BANK
12
place des Etats-Unis
92547
Montrouge
Cedex
France
Fax:
+33 1 41 89 19 34
Attn:
FCS-ATM / Clementine Costil/Rosine Serra-Joannides/Romy Roussel
Email:
clementine.costil@ca-cib.com;
rosine.serra-joannides@ca-cib.com; romy.roussel@ca-cib.com
Copy:
Ship Finance – Representative Office Piraeus, Greece
Nicoletta
Panayiotopoulos/George Gkanasoulis
Email:
nicoletta.panayiotopoulos@ca-cib.com; george.gkanasoulis@ca-cib.com
ABN
AMRO BANK N.V.
Gustav
Mahlerlaan 10
1082
PP Amsterdam
The
Netherlands
Attention:
Danai Kotsia
danai.kotsia@gr.abnamro.com
BANK
OF AMERICA, N.A.
Bank
of America Corporate Center
100
North Tryon Street
Charlotte
NC 28255
United
States of America
Attention:
Loan Lease and Trade Operations,
Address: Bank of America N.A.
600 Peachtree Street NE
Atlanta, GA 30308-2265
robert.h.thomas@bofa.com
Copy:
Leasing
Ops
bal.emea.agent.notices@bofa.com
alfred.lau@bofa.com
170
PART C
THE SERVICING PARTIES
Name
of Facility Agent
Address
for Communication
Crédit
Agricole Corporate and Investment Bank
12
place des Etats-Unis
92547
Montrouge
Cedex
France
Fax:
+33 1 41 89 19 34
Attn:
FCS-ATM / Clementine Costil/Rosine Serra-Joannides/Romy Roussel
Email:
clementine.costil@ca-cib.com;
rosine.serra-joannides@ca-cib.com; romy.roussel@ca-cib.com
Copy:
Ship Finance – Representative Office Piraeus, Greece
Nicoletta
Panayiotopoulos/George Gkanasoulis
Email:
nicoletta.panayiotopoulos@ca-cib.com; george.gkanasoulis@ca-cib.com
Name
of Security Agent
Address
for Communication
Crédit
Agricole Corporate and Investment Bank
12
place des Etats-Unis
92547
Montrouge
Cedex
France
Fax:
+33 1 41 89 19 34
Attn:
FCS-ATM / Clementine Costil/Rosine Serra-Joannides/Romy Roussel
Email:
clementine.costil@ca-cib.com;
rosine.serra-joannides@ca-cib.com; romy.roussel@ca-cib.com
Copy:
Ship Finance, Representative Office Piraeus
Nicoletta
Panayiotopoulos/George Gkanasoulis
Email:
nicoletta.panayiotopoulos@ca-cib.com;
george.gkanasoulis@ca-cib.com
171
PART D
THE ACCOUNT BANK
Name
of Account Bank
Address
for Communication
Crédit
Agricole Corporate and Investment Bank
12
place des Etats-Unis
92547
Montrouge
Cedex
France
Fax:
+33 1 41 89 19 34
Attn:
FCS-ATM / Clementine Costil/Rosine Serra-Joannides/Romy Roussel
Email:
clementine.costil@ca-cib.com;
rosine.serra-joannides@ca-cib.com; romy.roussel@ca-cib.com
Copy:
Ship Finance, Representative Office Piraeus
Nicoletta
Panayiotopoulos/George Gkanasoulis
Email:
nicoletta.panayiotopoulos@ca-cib.com; george.gkanasoulis@ca-cib.com
172
SCHEDULE 2
CONDITIONS PRECEDENT
PART
A
CONDITIONS PRECEDENT TO A UTILISATION REQUEST
1
Obligors
1.1
A
copy of the constitutional documents of each Transaction Obligor (including, without limitation,
any corporate register excerpts and the group structure chart).
1.2
A
copy of a resolution of the members or managers or board of directors, as applicable, of
each Transaction Obligor:
(a)
approving
the terms of, and the transactions contemplated by, the Finance Documents to which it is
a party and resolving that it execute the Finance Documents to which it is a party;
(b)
authorising
a specified person or persons to execute the Finance Documents to which it is a party on
its behalf; and
(c)
authorising
a specified person or persons, on its behalf, to sign and/or despatch all documents and notices
(including, if relevant, a Utilisation Request and each Selection Notice) to be signed and/or
despatched by it under, or in
connection with, the Finance Documents to which it is a party.
1.3
An
original of the power of attorney of any Transaction Obligor authorising a specified person
or persons to execute the Finance Documents to which it is a party.
1.4
A
specimen of the signature of each person authorised by the resolution referred to in paragraph
1.2 above.
1.5
A
copy of a resolution signed by the holder(s) of the issued LLC Shares in each Borrower, approving
the terms of, and the transactions contemplated by, the Finance Documents to which that Borrower
is a party.
1.6
A
certificate of each Transaction Obligor (signed by an officer or an officer or its director
or indirect member and manager) confirming that borrowing or guaranteeing, as appropriate,
the Total Commitments would not cause
any borrowing, guaranteeing or similar limit binding
on that Transaction Obligor to be exceeded.
1.7
A
certificate of each Transaction Obligor that is incorporated outside the UK (signed by an
officer) certifying either that (i) it has not delivered particulars of any UK Establishment
to the Registrar of Companies as required
under the Overseas Regulations or (ii) it has a
UK Establishment and specifying the name and registered number under which it is registered
with the Registrar of Companies.
1.8
A
certificate of an authorised signatory of the relevant Transaction Obligor certifying that
each copy document relating to it specified in this Part A of Schedule 2 (Conditions Precedent)
is correct, complete and in full force and
effect as at a date no earlier than the date of
this Agreement.
173
2
Other
Documents
2.1
A
copy of each Initial Charter (or a binding and unconditional recapitulation of charterparty
terms) certified as true and complete together all documents signed or issued by the relevant
Borrower or the relevant Initial Charterer
(or both of them) under or in connection with
it.
3
Finance
Documents
3.1
A
duly executed original of any Subordination Agreement and copies of any relevant Subordinated
Finance Document (if applicable).
3.2
A
duly executed original of any Finance Document not otherwise referred to in this Schedule
2 (Conditions Precedent).
3.3
A
duly executed original of any other document required to be delivered by each Finance Document
if not otherwise referred to in this Schedule 2 (Conditions Precedent).
4
Security
4.1
A
duly executed original of the Account Security in relation to each Account (and of each document
to be delivered pursuant to it).
4.2
A
duly executed original of the Subordinated Debt Security (if applicable).
5
Legal
opinions
5.1
A
legal opinion of Watson Farley & Williams LLP, legal advisers to the Arrangers, the Facility
Agent and the Security Agent in England, substantially in the form distributed to the Original
Lenders before signing this
Agreement.
5.2
If
a Transaction Obligor is incorporated in a jurisdiction other than England and Wales, a legal
opinion of the legal advisers to the Arrangers, the Facility Agent and the Security Agent
in the relevant jurisdiction, substantially in
the form distributed to the Original Lenders
before signing this Agreement.
6
Other
documents and evidence
6.1
Evidence
that any process agent referred to in Clause 50.2 (Service of process), if not an
Obligor, has accepted its appointment.
6.2
Two
valuations of each Ship, in each case addressed to the Facility Agent on behalf of the Finance
Parties, stated to be for the purposes of this Agreement and dated not later than 15 days
before the first Utilisation Date, each
from an Approved Valuer.
6.3
A
copy of any other Authorisation or other document, opinion or assurance which the Facility
Agent considers to be necessary or desirable (if it has notified the Borrowers accordingly)
in connection with the entry into and
performance of the transactions contemplated by any
Transaction Document or for the validity and enforceability of any Transaction Document.
6.4
The
Original Financial Statements.
6.5
The
original of any mandates or other documents required in connection with the opening or operation
of the Accounts.
174
6.6
Evidence
that the fees, costs and expenses then due from the Borrowers pursuant to Clause 11
(Fees) and Clause 16 (Costs and Expenses) have been paid or will be paid by
the first Utilisation Date (or at any such later date as
the Facility Agent may agree to,
acting on the authorisation of the Majority Lenders).
6.7
Such
evidence as the Facility Agent may require for the Finance Parties to be able to satisfy
each of their "know your customer" or similar identification procedures in relation
to the transactions contemplated by the Finance
Documents.
175
PART
B
CONDITIONS PRECEDENT TO UTILISATION OF AN ADVANCE
References
to a Ship and to a Borrower are references to the Ship being financed by the relevant Advance and to the Borrower that will own such
Ship respectively.
1
Borrowers
A
certificate of an authorised signatory of each Obligor certifying that each copy document which it is required to provide under this
Part B of Schedule 2 (Conditions Precedent) is correct, complete and in full force and effect
as at the relevant Utilisation Date.
2
Release
of Existing Security
An
original of each Deed of Release relating to an Obligor and a Ship and of each document to be delivered under or pursuant to it, together
with evidence satisfactory to the Facility Agent of its due execution by the parties to
it.
3
Shares
Security
A
duly executed original of the Shares Security in relation to a Borrower (and of each document to be delivered pursuant to it).
4
Ship
and other security
4.1
A
duly executed original of the Mortgage, the General Assignment and the Charterparty Assignment
in respect of a Ship and of each document to be delivered under or pursuant to each of them
together with documentary
evidence that the Mortgage has been duly registered as a valid
first preferred or, as the case may, priority ship mortgage in accordance with the laws of
the jurisdiction of its Approved Flag.
4.2
Documentary
evidence that a Ship:
(a)
is
definitively and permanently registered in the name of the relevant Borrower under the Approved
Flag applicable to that Ship;
(b)
is
in the absolute and unencumbered ownership of the relevant Borrower save as contemplated
by the Finance Documents;
(c)
maintains
the Approved Classification with the Approved Classification Society free of all overdue
recommendations and conditions of the Approved Classification Society; and
(d)
is
insured in accordance with the provisions of this Agreement and all requirements in this
Agreement in respect of insurances have been complied with.
4.3
Documents
establishing that a Ship will, as from the Utilisation Date relating to that Ship, be managed
commercially by the Approved Commercial Manager and managed technically by the Approved Technical
Manager on
terms acceptable to the Facility Agent, together with:
(a)
a
Manager's Undertaking for each of the Approved Technical Manager and the Approved Commercial
Manager in relation to a Ship; and
176
(b)
copies
of the Inventory of Hazardous Materials relating to the Ship, the Approved Technical Manager's
Document of Compliance and of a Ship's Safety Management Certificate (together with any other
details of the applicable
Safety Management System which the Facility Agent requires) and
of any other documents required under the ISM Code and the ISPS Code in relation to a Ship
including, without limitation, an ISSC.
4.4
At
the cost of a Borrower, an opinion from an independent insurance consultant acceptable to
the Facility Agent on such matters relating to the Insurances as the Facility Agent may require.
5
Legal
opinions
Legal
opinions of the legal advisers to the Arrangers, the Facility Agent and the Security Agent in the jurisdiction of the Approved Flag of
each Ship and such other relevant jurisdictions as the Facility Agent may require.
6
Other
documents and evidence
6.1
Documentary
evidence satisfactory to the Facility Agent that the Shares Transfer relating to a Borrower
has been completed.
6.2
Evidence
that the fees, costs and expenses then due from the Borrowers pursuant to Clause 11
(Fees) and Clause 16 (Costs and Expenses) have been paid or will be paid by
the Utilisation Date (or at any such later date as the
Facility Agent may agree to, acting
on the authorisation of the Majority Lenders).
6.3
Evidence
satisfactory to the Facility Agent that the minimum liquidity required to be maintained by
the Borrowers pursuant to Clause 21.1 (Borrowers' Minimum Liquidity) is standing to
the credit of the Earnings Accounts.
6.4
A
copy of any other Authorisation or other document, opinion or assurance which the Lenders
consider to be necessary or desirable (if they have notified the Borrowers accordingly) in
connection with the entry into and
performance of the transactions contemplated by any Transaction
Document referred to in paragraph 3 (Ship and other security) above or for the validity
and enforceability of any such Transaction Document.
Each
of the documents specified in paragraphs 1.2, 1.3 and 1.5 of Part A shall be notarised or legalised by a competent authority acceptable
to the Facility Agent and every other copy document delivered under this Schedule shall be
certified as a true and up to date copy by
the secretary (or equivalent officer) of the relevant Borrower.
177
SCHEDULE
3
REQUESTS
PART
A
UTILISATION REQUEST
From: IKAROS
MARINE LLC
LEONIDAS
MARINE LLC
HECTOR
MARINE LLC
ARISTOTELES
MARINE LLC
MENELAOS
MARINE LLC
PHILIPPOS
MARINE LLC
ALEXANDER
MARINE LLC
PENELOPE
MARINE LLC
LAERTIS
MARINE LLC
TELEMACHUS
MARINE LLC
To: Crédit
Agricole Corporate and Investment Bank
Dated:
[●]
Dear
Sirs
IKAROS
MARINE LLC, LEONIDAS MARINE LLC, HECTOR MARINE LLC, ARISTOTELES MARINE LLC, MENELAOS MARINE LLC, PHILIPPOS MARINE LLC, ALEXANDER MARINE
LLC, PENELOPE
MARINE LLC, LAERTIS MARINE LLC and TELEMACHUS MARINE LLC – US$300,000,000 Facility Agreement dated [●] 2024
(the "Agreement")
1
We
refer to the Agreement. This is a Utilisation Request. Terms defined in the Agreement have
the same meaning in this Utilisation Request unless given a different meaning in this Utilisation
Request.
2
We
wish to borrow Advance [A][B][C] on the following terms:
Proposed
Utilisation Date: [●] (or, if that is not a Business Day, the next Business Day)
Amount: $[●]
or, if less, the Available Facility
Interest
Period for the Advance: [●]
3
You
are authorised and requested to deduct from the Advance prior to funds being remitted the
following amounts set out against the following items:
Deductible
Items $
Commitment
Fee
Net
proceeds of Advance _____________
178
4
We
confirm that each condition specified in Clause 4.1 (Initial conditions precedent)
and Clause 4.2 (Further conditions precedent) of the Agreement as they relate
to the Advance to which this Utilisation Request refers is
satisfied on the date of this
Utilisation Request.
5
The
net proceeds of the Advance should be credited to [account].
6
This
Utilisation Request is irrevocable.
Yours
faithfully
____________________
[●]
authorised signatory for
Ikaros
Marine LLC
____________________
[●]
authorised signatory for
Leonidas
Marine LLC
____________________
[●]
authorised signatory for
Hector
Marine LLC
____________________
[●]
authorised signatory for
Aristoteles
Marine LLC
____________________
[●]
authorised signatory for
Menelaos
Marine LLC
179
____________________
[●]
authorised signatory for
Philippos
Marine LLC
____________________
[●]
authorised
signatory for
Alexander
Marine LLC
____________________
[●]
authorised
signatory for
Penelope
Marine LLC
____________________
[●]
authorised
signatory for
Laertis
Marine LLC
____________________
[●]
authorised
signatory for
Telemachus
Marine LLC
180
PART
B
SELECTION NOTICE
From: IKAROS
MARINE LLC
LEONIDAS
MARINE LLC
HECTOR
MARINE LLC
ARISTOTELES
MARINE LLC
MENELAOS
MARINE LLC
PHILIPPOS
MARINE LLC
ALEXANDER
MARINE LLC
PENELOPE
MARINE LLC
LAERTIS
MARINE LLC
TELEMACHUS
MARINE LLC
To: Crédit
Agricole Corporate and Investment Bank
Dated:
[●]
Dear
Sirs
IKAROS
MARINE LLC, LEONIDAS MARINE LLC, HECTOR MARINE LLC, ARISTOTELES MARINE LLC, MENELAOS MARINE LLC, PHILIPPOS MARINE LLC, ALEXANDER MARINE
LLC, PENELOPE
MARINE LLC, LAERTIS MARINE LLC and TELEMACHUS MARINE LLC – US$300,000,000 Facility Agreement dated [●] 2024
(the "Agreement")
1
We
refer to the Agreement. This is a Selection Notice. Terms defined in the Agreement have the
same meaning in this Selection Notice unless given a different meaning in this Selection
Notice.
2
We
request [that the next Interest Period for the Loan be [●]] OR [an Interest Period
for a part of the Loan in an amount equal to [●] (which is the amount of the Repayment
Instalment next due) ending on [●] (which is the
Repayment Date relating to that Repayment
Instalment) and that the Interest Period for the remaining part of the Loan shall be [●]].
3
This
Selection Notice is irrevocable.
Yours
faithfully
____________________
[●]
authorised signatory for
Ikaros
Marine LLC
181
____________________
[●]
authorised signatory for
Leonidas
Marine LLC
____________________
[●]
authorised signatory for
Hector
Marine LLC
____________________
[●]
authorised signatory for
Aristoteles
Marine LLC
____________________
[●]
authorised signatory for
Menelaos
Marine LLC
____________________
[●]
authorised signatory for
Philippos
Marine LLC
____________________
[●]
authorised
signatory for
Alexander
Marine LLC
182
____________________
[●]
authorised
signatory for
Penelope
Marine LLC
____________________
[●]
authorised
signatory for
Laertis
Marine LLC
____________________
[●]
authorised
signatory for
Telemachus
Marine LLC
183
SCHEDULE 4
FORM
OF TRANSFER CERTIFICATE
To: Crédit
Agricole Corporate and Investment Bank as Facility Agent
From: [The
Existing Lender] (the "Existing Lender") and [The New Lender] (the "New Lender")
Dated:
[●]
Dear
Sirs
IKAROS
MARINE LLC, LEONIDAS MARINE LLC, HECTOR MARINE LLC, ARISTOTELES MARINE LLC, MENELAOS MARINE LLC, PHILIPPOS MARINE LLC, ALEXANDER MARINE
LLC, PENELOPE
MARINE LLC, LAERTIS MARINE LLC and TELEMACHUS MARINE LLC – US$300,000,000 Facility Agreement dated [●] 2024(the
"Agreement")
1
We
refer to the Agreement. This is a Transfer Certificate. Terms defined in the Agreement have
the same meaning in this Transfer Certificate unless given a different meaning in this Transfer
Certificate.
2
We
refer to Clause 29.5 (Procedure for transfer) of the Agreement:
(a)
The
Existing Lender and the New Lender agree to the Existing Lender transferring to the New Lender
by novation all of the Existing Lender's rights and obligations under the Agreement and the
other Finance Documents
which relate to that portion of the Existing Lender's Commitment
and participation in the Loan under the Agreement as specified in the Schedule in accordance
with Clause 29.5 (Procedure for transfer) of the Agreement.
(b)
The
proposed Transfer Date is [●].
(c)
The
Facility Office and address, fax number and attention details for notices of the New Lender
for the purposes of Clause 38.2 (Addresses) of the Agreement are set out in the Schedule.
3
The
New Lender expressly acknowledges the limitations on the Existing Lender's obligations set
out in paragraph (c) of Clause 29.4 (Limitation of responsibility of Existing Lenders)
of the Agreement.
4
This
Transfer Certificate may be executed in any number of counterparts and this has the same
effect as if the signatures on the counterparts were on a single copy of this Transfer Certificate.
5
This
Transfer Certificate and any non-contractual obligations arising out of or in connection
with it are governed by English law.
6
This
Transfer Certificate has been entered into on the date stated at the beginning of this Transfer
Certificate.
184
Note:
The execution of this Transfer Certificate may not transfer a proportionate share of the Existing Lender's interest in the Transaction
Security in all jurisdictions. It is the responsibility of the New Lender to ascertain
whether any other documents or other formalities
are required to perfect a transfer of such a share in the Existing Lender's Transaction Security in any jurisdiction and, if so, to arrange
for execution of those documents
and completion of those formalities.
185
THE SCHEDULE
Commitment/rights
and obligations to be transferred
[insert
relevant details]
[Facility
Office address, fax number and attention details
for
notices and account details for payments.]
[Existing
Lender] [New Lender]
By:
[●] By: [●]
This
Transfer Certificate is accepted by the Facility Agent and the Transfer Date is confirmed as [●].
CRÉDIT
AGRICOLE CORPORATE AND INVESTMENT BANK
By:
[●]
186
SCHEDULE 5
FORM
OF ASSIGNMENT AGREEMENT
To: Crédit
Agricole Corporate and Investment Bank as Facility Agent and Ikaros Marine LLC, Leonidas Marine LLC, Hector Marine LLC, Aristoteles Marine
LLC, Menelaos Marine LLC, Philippos Marine LLC, Alexander Marine
LLC, Penelope Marine LLC, Laertis Marine LLC and Telemachus Marine LLC
as Borrowers, for and on behalf of each Transaction Obligor
From: [the
Existing Lender] (the "Existing Lender") and [the New Lender] (the "New Lender")
Dated:
[●]
Dear
Sirs
IKAROS
MARINE LLC, LEONIDAS MARINE LLC, HECTOR MARINE LLC, ARISTOTELES MARINE LLC, MENELAOS MARINE LLC, PHILIPPOS MARINE LLC, ALEXANDER MARINE
LLC, PENELOPE
MARINE LLC, LAERTIS MARINE LLC and TELEMACHUS MARINE LLC – US$300,000,000 Facility Agreement dated [●] 2024
(the "Agreement")
1
We
refer to the Agreement. This is an Assignment Agreement. Terms defined in the Agreement have
the same meaning in this Assignment Agreement unless given a different meaning in this Assignment
Agreement.
2
We
refer to Clause 29.6 (Procedure for assignment) of the Agreement:
(a)
the
Existing Lender assigns absolutely to the New Lender all the rights of the Existing Lender
under the Agreement, the other Finance Documents and in respect of the Transaction Security
which correspond to that portion of
the Existing Lender's Commitment and participations in
the Loan under the Agreement as specified in the Schedule;
(b)
the
Existing Lender is released from all the obligations of the Existing Lender which correspond
to that portion of the Existing Lender's Commitments and participations in the Loan under
the Agreement specified in the
Schedule;
(c)
the
New Lender becomes a Party as a Lender and is bound by obligations equivalent to those from
which the Existing Lender is released under paragraph (b) above;
(d)
all
rights and interests (present, future or contingent) which the Existing Lender has under
or by virtue of the Finance Documents are assigned to the New Lender absolutely, free of
any defects in the Existing Lender's title and
of any rights or equities which the Borrower
or any other Transaction Obligor had against the Existing Lender.
3
The
proposed Transfer Date is [●].
4
On
the Transfer Date the New Lender becomes Party to the Finance Documents as a Lender.
5
The
Facility Office and address, fax, number and attention details for notices of the New Lender
for the purposes of Clause 38.2 (Addresses) of the Agreement are set out in the Schedule.
187
6
The
New Lender expressly acknowledges the limitations on the Existing Lender's obligations set
out in paragraph (c) of Clause 29.4 (Limitation of responsibility of Existing Lenders)
of the Agreement.
7
This
Assignment Agreement acts as notice to the Facility Agent (on behalf of each Finance Party)
and, upon delivery in accordance with Clause 29.7 (Copy of Transfer Certificate or Assignment
Agreement to Borrowers) of the
Agreement, to the Borrowers (on behalf of each Transaction
Obligor) of the assignment referred to in this Assignment Agreement.
8
This
Assignment Agreement may be executed in any number of counterparts and this has the same
effect as if the signatures on the counterparts were on a single copy of this Assignment
Agreement.
9
This
Assignment Agreement and any non-contractual obligations arising out of or in connection
with it are governed by English law.
10
This
Assignment Agreement has been entered into on the date stated at the beginning of this Assignment
Agreement.
Note:
The execution of this Assignment Agreement may not transfer a proportionate share of the Existing Lender's interest in the Transaction
Security in all jurisdictions. It is the responsibility of the New Lender to
ascertain whether any other documents or other formalities
are required to perfect a transfer of such a share in the Existing Lender's Transaction Security in any jurisdiction and, if so, to arrange
for execution of those
documents and completion of those formalities.
188
THE
SCHEDULE
Commitment
rights and obligations to be transferred by assignment, release and accession
[insert
relevant details]
[Facility
office address, fax number and attention details for notices
and account details for payments]
[Existing
Lender] [New Lender]
By:
[●] By: [●]
This
Assignment Agreement is accepted by the Facility Agent and the Transfer Date is confirmed as [●].
Signature
of this Assignment Agreement by the Facility Agent constitutes confirmation by the Facility Agent of receipt of notice of the assignment
referred to herein, which notice the Facility Agent receives on behalf of each Finance
Party.
CRÉDIT
AGRICOLE CORPORATE AND INVESTMENT BANK
By:
189
SCHEDULE
6
FORM
OF COMPLIANCE CERTIFICATE
To: Crédit
Agricole Corporate and Investment Bank as Facility Agent
From: Global
Ship Lease, Inc.
Dated:
[●]
Dear
Sirs
IKAROS
MARINE LLC, LEONIDAS MARINE LLC, HECTOR MARINE LLC, ARISTOTELES MARINE LLC, MENELAOS MARINE LLC, PHILIPPOS MARINE LLC, ALEXANDER MARINE
LLC, PENELOPE
MARINE LLC, LAERTIS MARINE LLC and TELEMACHUS MARINE LLC – US$300,000,000 Facility Agreement dated [●] 2024
(the "Agreement")
1
We
refer to the Agreement. This is a Compliance Certificate. Terms defined in the Agreement
have the same meaning when used in this Compliance Certificate unless given a different meaning
in this Compliance Certificate.
2
We
confirm that:
(a)
the
aggregate minimum liquidity of the Borrowers standing to the credit of the Earnings Accounts
pursuant to clause 21.1 (Borrowers' Minimum Liquidity) of the Agreement, is $[●];
(b)
the
aggregate minimum liquidity of the Guarantor is $[●]; and
(c)
the
Security Cover Ratio is [●] per cent.
3
[We
confirm that no Default is continuing.]
Signed: ________________________
Chief
Financial Officer
of
GLOBAL
SHIP LEASE, INC.
190
SCHEDULE
7
DETAILS
OF THE SHIPS
Ship
name
Name
of the Borrower
Type
IMO
Number
Approved
Flag
Approved
Classification
Society
Approved
Classification
Costa
Rica Express
Ikaros
Marine LLC
Container
ship
9641235
Marshall
Islands
Rina
Services
C
+; Container ship;
unrestricted
navigation; AUT-
UMS; BWM-E –
sequential;
INWATERSURVEY;
LASHING; MON-
SHAFT; ROUTE
DEPENDENT
LASHING
Agios
Dimitrios
Leonidas
Marine LLC
Container
ship
9349605
Liberian
Bureau
Veritas
+
Hull + MACH;
Container ship;
Unrestricted
navigation; +
VeriSTAR-Hull; +
AUT-UMS; + SYS-
NEQ;
INWATERSURVEY;
LASHING-WW;
MON-SHAFT
Kristina
Hector
Marine LLC
Container
ship
9641223
Marshall
Islands
DNV
GL
+
100 A5 IW RSD
BWM(D1) DG IW
LC RSCS RSD +
MC AUT CM-PS
Alexis
Aristoteles
Marine LLC
Container
ship
9686900
Marshall
Islands
DNV
GL
100
A5 Container
ship BWM (D2) DG
IW RSD (F25) +
MC AUT CM-PS
EP-D
Olivia
I
Menelaos
Marine LLC
Container
ship
9686912
Marshall
Islands
DNV
GL
100
A5 Container
ship BWM (D2) DG
IW LC RSCS RSD
(F25) + MC AUT
CM-PS EP-D
Alexandra
Philippos
Marine LLC
Container
ship
9635676
Marshall
Islands
Rina
Services
C
+; Container Ship;
Unrestricted
Navigation; + AUT-
UMS; BWM-E –
sequential;
INWATERSURVEY;
LASHING; MON-
SHAFT; ROUTE
DEPENDENT
LASHING
Colombia
Express
Alexander
Marine LLC
Container
ship
9635664
Marshall
Islands
Rina
Services
C
+; Container Ship;
Unrestricted
Navigation; + AUT-
UMS; BWM-E –
sequential;
INWATERSURVEY;
LASHING; MON-
SHAFT; ROUTE
DEPENDENT
LASHING
Zim
Xiamen
Penelope
Marine LLC
Container
ship
9710232
Liberian
DNV
GL
100
A5 Container
ship BWM (D2) DG
HLP IW LC RSCS
RSD(F25) MC
AUT CM-PS EP-D
Zim
Norfolk
Laertis
Marine LLC
Container
ship
9710220
Liberian
DNV
GL
100
A5 Container
ship BWM (D2) DG
HLP IW LC RSCS
RSD(F25) MC
AUT CM-PS EP-D
Anthea
Y
Telemachus
Marine LLC
Container
ship
9710244
Liberian
DNV
GL
100
A5 Container
ship BWM (D2) DG
HLP IW LC RSCS
RSD(F25) MC
AUT CM-PS EP-D
191
SCHEDULE 8
ACCOUNTS
Account
Account
Number
Party
Earnings
Account
00
260 537 829
IKAROS
MARINE LLC
Earnings
Account
00
260 537 926
LEONIDAS
MARINE LLC
Earnings
Account
00
259 440 274
HECTOR
MARINE LLC
Earnings
Account
00
259 994 144
ARISTOTELES
MARINE LLC
Earnings
Account
00
259 994 241
MENELAOS
MARINE LLC
Earnings
Account
00
259 994 047
PHILIPPOS
MARINE LLC
Earnings
Account
00
260 538 120
ALEXANDER
MARINE LLC
Earnings
Account
00
261 325 857
PENELOPE
MARINE LLC
Earnings
Account
00
263 273 617
LAERTIS
MARINE LLC
Earnings
Account
00
263 273 714
TELEMACHUS
MARINE LLC
Retention
Account
00
263 273 811
Borrowers
192
SCHEDULE 9
TIMETABLES
Delivery
of a duly completed Utilisation Request (Clause 5.1 (Delivery of a Utilisation Request)) or a Selection
Notice (Clause 9.1
(Selection of Interest Periods))
Two
Business Days before the intended Utilisation Date (Clause 5.1 (Delivery of a Utilisation Request)) or the
expiry of the preceding
Interest Period (Clause 9.1 (Selection of Interest Periods))
Facility
Agent notifies the Lenders of the Loan in accordance with Clause 5.4 (Lenders' participation)
Two
Business Days before the intended Utilisation Date.
Term
SOFR is fixed
Noon
on the Quotation Day
193
SCHEDULE 10
BENCHMARK TERMS
Cost
of funds as a fallback
cost
of funds will apply as a fallback.
Definitions
Break
Costs:
Any
cost or amount which is incurred or suffered by a Lender (as reasonably determined by that Lender) to the extent that it is
attributable
to a payment by the Borrowers to the Facility Agent of any amount of principal due or which would have become due
under this Agreement
prior to the date upon which such amount should have been repaid in accordance with the terms and
conditions of this Agreement.
Business
Day Conventions (definition of "Month" and Clause 9.3 (Non-Business Days)):
(a)
If any period is expressed to accrue by reference to a Month or any number of Months then, in respect of the last Month
of that period:
(i)
subject to sub-paragraph (iii) below, if the numerically corresponding day is not a Business Day, that period
shall end on the next
Business Day in that calendar month in which that period is to end if there is one, or if there
is not, on the immediately preceding
Business Day;
(ii)
if there is no numerically corresponding day in the calendar month in which that period is to end, that period
shall end on the last
Business Day in that calendar month; and
(iii)
if an Interest Period begins on the last Business Day of a calendar month, that Interest Period shall end on the
last Business Day
in the calendar month in which that Interest Period is to end.
194
(b)
If an Interest Period would otherwise end on a day which is not a Business Day, that Interest Period will instead end on
the next
Business Day in that calendar month (if there is one) or the preceding Business Day (if there is not).
Central
Bank Rate:
(a)
The short-term interest rate target set by the US Federal Open Market Committee as published
by the Federal Reserve
Bank of New York from time to time; or
(b)
if that target is not a single figure, the arithmetic mean of:
(i)
the upper bound of the short-term interest rate target range set by the US Federal Open Market Committee
and published by the Federal
Reserve Bank of New York; and
(ii)
the lower bound of that target range.
Central
Bank Rate Adjustment:
In
relation to the Central Bank Rate prevailing at close of business on any RFR Banking Day, the 20 per cent trimmed arithmetic
mean
calculated by the Facility Agent (or by any other Finance Party which agrees to determine that mean in place of the Facility
Agent),
of the Central Bank Rate Spreads for the five most immediately preceding RFR Banking Days for which the RFR is
available.
Central
Bank Rate Spread
In
relation to any RFR Banking Day, the difference (expressed as a percentage rate per annum)
calculated by the Facility Agent
(or by any other Finance
Party which agrees to calculate that rate in place of the Facility Agent) of:
(a)
the RFR for that RFR Banking Day; and
(b)
the Central Bank Rate prevailing at close of business on that RFR Banking Day.
Compounded
Market Disruption Rate:
The
percentage rate per annum which is the Cumulative Compounded RFR Rate for the Interest Period of the relevant Compounded
Rate Loan.
Daily
Rate:
The
"Daily Rate" for any RFR Banking Day is:
(a)
the RFR for that RFR Banking Day; or
(b)
if the RFR is not available for that RFR Banking Day, the percentage rate per annum which is the aggregate of:
(i)
the Central Bank Rate for that RFR Banking Day; and
(ii)
the applicable Central Bank Rate Adjustment; or
195
(c)
if paragraph (b) above applies but the Central Bank Rate for that RFR Banking Day is not
available, the percentage rate
per annum which is the aggregate of:
(i)
the most recent Central Bank Rate for a day which is no more than five RFR Banking Days before that
RFR
Banking Day; and
(ii)
the applicable Central Bank Rate Adjustment,
rounded,
in either case, to five decimal places and if, in either case, that rate is less than zero, the Daily Rate shall be deemed to be
zero.
Lookback
Period:
Five
RFR Banking Days.
Reporting
Day:
The
Business Day which follows the day which is the Lookback Period prior to the last day of the Interest Period.
Reporting
Times
Deadline
for Lenders to report market disruption in accordance with Clause 10.3 (Market
disruption)
Close
of business in London on the Reporting Day for the relevant Compounded Rate Loan.
Deadline
for Lenders to report their cost of funds in accordance with Clause 10.4 (Cost of funds)
Close
of business on the date falling two Business Days after the Reporting Day for the relevant Compounded Rate Loan (or, if
earlier,
on the date falling three Business Days before the date on which interest is due to be paid in respect of the Interest Period for
that Compounded Rate Loan).
196
SCHEDULE 11
DAILY NON-CUMULATIVE COMPOUNDED RFR RATE
The
"Daily Non-Cumulative Compounded RFR Rate" for any RFR Banking Day "i" during an Interest Period for
a Compounded Rate Loan is the percentage rate per annum (without rounding, to the extent reasonably practicable for
the Finance Party
performing the calculation, taking into account the capabilities of any software used for that purpose) calculated as set out below:
where:
"UCCDRi"
means the Unannualised Cumulative Compounded Daily Rate for that RFR Banking Day "i";
"UCCDRi-1"
means, in relation to that RFR Banking Day "i", the Unannualised Cumulative Compounded Daily Rate for the immediately
preceding RFR Banking Day (if any) during that Interest Period;
"dcc"
means 360 or, in any case where market practice in the Relevant Market is to use a different number for quoting the number of days in
a year, that number;
"ni"
means the number of calendar days from, and including, that RFR Banking Day "i" up to, but excluding, the following
RFR Banking Day; and
the
"Unannualised Cumulative Compounded Daily Rate" for any RFR Banking Day (the "Cumulated RFR Banking Day")
during that Interest Period is the result of the below calculation (without rounding, to the extent
reasonably practicable for the Finance
Party performing the calculation, taking into account the capabilities of any software used for that purpose):
where:
"ACCDR"
means the Annualised Cumulative Compounded Daily Rate for that Cumulated RFR Banking Day;
"tni"
means the number of calendar days from, and including, the first day of the Cumulation Period to, but excluding, the RFR Banking Day
which immediately follows the last day of the Cumulation Period;
"Cumulation
Period" means the period from, and including, the first RFR Banking Day of that Interest Period to, and including, that Cumulated
RFR Banking Day;
"dcc"
has the meaning given to that term above; and
the
"Annualised Cumulative Compounded Daily Rate" for that Cumulated RFR Banking Day is the percentage rate per annum (rounded
to five decimal places) calculated as set out below:
where:
"d0"
means the number of RFR Banking Days in the Cumulation Period;
197
"Cumulation
Period" has the meaning given to that term above;
"i"
means a series of whole numbers from one to d0, each representing the relevant RFR Banking Day in chronological order in the
Cumulation Period;
"DailyRatei-LP"
means, for any RFR Banking Day "i" in the Cumulation Period, the Daily Rate for the RFR Banking Day which is the applicable
Lookback Period prior to that RFR Banking Day "i";
"ni"
means, for any RFR Banking Day "i" in the Cumulation Period, the number of calendar days from, and including, that RFR
Banking Day "i" up to, but excluding, the following RFR Banking Day;
"dcc"
has the meaning given to that term above; and
"tni"
has the meaning given to that term above
198
SCHEDULE 12
CUMULATIVE COMPOUNDED RFR RATE
The
"Cumulative Compounded RFR Rate" for any Interest Period for a Compounded Rate Loan is the percentage rate per annum
(rounded to the same number of decimal places as is specified in the definition of "Annualised
Cumulative Compounded Daily Rate"
in Schedule 11 (Daily Non-Cumulative Compounded RFR Rate)) calculated as set out below:
where:
"d0"
means the number of RFR Banking Days during the Interest Period;
"i"
means a series of whole numbers from one to d0, each representing the relevant RFR Banking Day in chronological order
during the Interest Period;
"DailyRatei-LP"
means for any RFR Banking Day "i" during the Interest Period, the Daily Rate for the RFR Banking Day which is the applicable
Lookback Period prior to that RFR Banking Day "i";
"ni"
means, for any RFR Banking Day "i", the number of calendar days from, and including, that RFR Banking Day "i"
up to, but excluding, the following RFR Banking Day;
"dcc"
means 360 or, in any case where market practice in the Relevant Market is to use a different number for quoting the number of days in
a year, that number; and
"d"
means the number of calendar days during that Interest Period.
199
EXECUTION PAGES
BORROWERS
SIGNED
/s/
Filanthi Katsafadou
)
by
Filanthi
Katsafadou
)
Attorney-in-fact
)
for and on behalf of
)
IKAROS MARINE LLC
)
in the presence of:
)
Witness' signature:
/s/
Aikaterini C. Emmanouil
)
Witness' name:
Aikaterini
C. Emmanouil
)
Witness' address:
13,
Defteras Merarchias Street Piraeus 18535, Greece
)
SIGNED
/s/
Filanthi Katsafadou
)
by
Filanthi
Katsafadou
)
Attorney-in-fact
)
for and on behalf of
)
LEONIDAS MARINE LLC
)
in the presence of:
)
Witness' signature:
/s/
Aikaterini C. Emmanouil
)
Witness' name:
Aikaterini
C. Emmanouil
)
Witness' address:
13,
Defteras Merarchias Street Piraeus 18535, Greece
)
SIGNED
/s/
Filanthi Katsafadou
)
by
Filanthi
Katsafadou
)
Attorney-in-fact
)
for and on behalf of
)
HECTOR MARINE LLC
)
in the presence of:
)
Witness' signature:
/s/
Aikaterini C. Emmanouil
)
Witness' name:
Aikaterini
C. Emmanouil
)
Witness' address:
13,
Defteras Merarchias Street Piraeus 18535, Greece
)
200
SIGNED
/s/
Filanthi Katsafadou
)
by
Filanthi
Katsafadou
)
Attorney-in-fact
)
for and on behalf of
)
ARISTOTELES MARINE LLC
)
in the presence of:
)
Witness' signature:
/s/
Aikaterini C. Emmanouil
)
Witness' name:
Aikaterini
C. Emmanouil
)
Witness' address:
13,
Defteras Merarchias Street Piraeus 18535, Greece
)
SIGNED
/s/
Filanthi Katsafadou
)
by
Filanthi
Katsafadou
)
Attorney-in-fact
)
for and on behalf of
)
MENELAOS MARINE LLC
)
in the presence of:
)
Witness' signature:
/s/
Aikaterini C. Emmanouil
)
Witness' name:
Aikaterini
C. Emmanouil
)
Witness' address:
13,
Defteras Merarchias Street Piraeus 18535, Greece
)
SIGNED
/s/
Filanthi Katsafadou
)
by
Filanthi
Katsafadou
)
Attorney-in-fact
)
for and on behalf of
)
PHILIPPOS MARINE LLC
)
in the presence of:
)
Witness' signature:
/s/
Aikaterini C. Emmanouil
)
Witness' name:
Aikaterini
C. Emmanouil
)
Witness' address:
13,
Defteras Merarchias Street Piraeus 18535, Greece
)
SIGNED
/s/
Filanthi Katsafadou
)
by
Filanthi
Katsafadou
)
Attorney-in-fact
)
for and on behalf of
)
ALEXANDER MARINE LLC
)
in the presence of:
)
Witness' signature:
/s/
Aikaterini C. Emmanouil
)
Witness' name:
Aikaterini
C. Emmanouil
)
Witness' address:
13,
Defteras Merarchias Street Piraeus 18535, Greece
)
201
SIGNED
/s/
Filanthi Katsafadou
)
by
Filanthi
Katsafadou
)
Attorney-in-fact
)
for and on behalf of
)
PENELOPE MARINE LLC
)
in the presence of:
)
Witness' signature:
/s/
Aikaterini C. Emmanouil
)
Witness' name:
Aikaterini
C. Emmanouil
)
Witness' address:
13,
Defteras Merarchias Street Piraeus 18535, Greece
)
SIGNED
/s/
Filanthi Katsafadou
)
by
Filanthi
Katsafadou
)
Attorney-in-fact
)
for and on behalf of
)
LAERTIS MARINE LLC
)
in the presence of:
)
Witness' signature:
/s/
Aikaterini C. Emmanouil
)
Witness' name:
Aikaterini
C. Emmanouil
)
Witness' address:
13,
Defteras Merarchias Street Piraeus 18535, Greece
)
SIGNED
/s/
Filanthi Katsafadou
)
by
Filanthi
Katsafadou
)
Attorney-in-fact
)
for and on behalf of
)
TELEMACHUS MARINE LLC
)
in the presence of:
)
Witness' signature:
/s/
Aikaterini C. Emmanouil
)
Witness' name:
Aikaterini
C. Emmanouil
)
Witness' address:
13,
Defteras Merarchias Street Piraeus 18535, Greece
)
GUARANTOR
SIGNED
/s/
Filanthi Katsafadou
)
by
Filanthi
Katsafadou
)
Attorney-in-fact
)
for and on behalf of
)
GLOBAL SHIP LEASE, INC.
)
in the presence of:
)
Witness' signature:
/s/
Aikaterini C. Emmanouil
)
Witness' name:
Aikaterini
C. Emmanouil
)
Witness' address:
13,
Defteras Merarchias Street Piraeus 18535, Greece
)
202
ORIGINAL
LENDERS
SIGNED
/s/
Charikleia Mavromati
)
by
Charikleia
Mavromati
)
Attorney-in-fact
)
for and on behalf of
)
CREDIT AGRICOLE CORPORATE AND INVESTMENT BANK
)
in the presence of:
)
Witness' signature:
/s/
Angelos Michas
)
Witness' name:
Angelos
Michas
)
Witness' address:
348
Syngrou Avenue Kallithea 17674 Athens - Greece
)
SIGNED
/s/
Charikleia Mavromati
)
by
Charikleia
Mavromati
)
Attorney-in-fact
)
for and on behalf of
)
ABN AMRO BANK N.V.
)
in the presence of:
)
Witness' signature:
/s/
Angelos Michas
)
Witness' name:
Angelos
Michas
)
Witness' address:
348
Syngrou Avenue Kallithea 17674 Athens - Greece
)
203
ORIGINAL
LENDERS
SIGNED
/s/
Rhys Thomas
)
by
Rhys
Thomas
)
Attorney-in-fact
)
for and on behalf of
)
BANK
OF AMERICA, N.A.
)
in the presence of:
)
Witness' signature:
)
Witness' name:
/s/
Marcus Palmer
)
Witness' address:
19
Knatchbull Road
)
204
BOOKRUNNERS
SIGNED
/s/
Charikleia Mavromati
)
by
Charikleia
Mavromati
)
Attorney-in-fact
)
for and on behalf of
)
CREDIT
AGRICOLE CORPORATE
AND
INVESTMENT BANK
)
in the presence of:
)
Witness' signature:
/s/
Angelos Michas
)
Witness' name:
Angelos
Michas
)
Witness' address:
348
Syngrou Avenue Kallithea 17674 Athens - Greece
)
SIGNED
/s/
Charikleia Mavromati
)
by
Charikleia
Mavromati
)
Attorney-in-fact
)
for and on behalf of
)
ABN
AMRO BANK N.V.
)
in the presence of:
)
Witness' signature:
/s/
Angelos Michas
)
Witness' name:
Angelos
Michas
)
Witness' address:
348
Syngrou Avenue Kallithea 17674 Athens - Greece
)
205
BOOKRUNNERS
SIGNED
/s/
Rhys Thomas
)
by
Rhys
Thomas
)
Attorney-in-fact
)
for and on behalf of
)
BANK
OF AMERICA, N.A.
)
in the presence of:
)
Witness' signature:
)
Witness' name:
/s/
Marcus Palmer
)
Witness' address:
19
Knatchbull Road
)
206
ARRANGERS
SIGNED
/s/
Charikleia Mavromati
)
by
Charikleia
Mavromati
)
Attorney-in-fact
)
for and on behalf of
)
CREDIT
AGRICOLE CORPORATE
AND
INVESTMENT BANK
)
in the presence of:
)
Witness' signature:
/s/
Angelos Michas
)
Witness' name:
Angelos
Michas
)
Witness' address:
348
Syngrou Avenue Kallithea 17674 Athens - Greece
)
SIGNED
/s/
Charikleia Mavromati
)
by
Charikleia
Mavromati
)
Attorney-in-fact
)
for and on behalf of
)
ABN
AMRO BANK N.V.
)
in the presence of:
)
Witness' signature:
/s/
Angelos Michas
)
Witness' name:
Angelos
Michas
)
Witness' address:
348
Syngrou Avenue Kallithea 17674 Athens - Greece
)
MANDATED
LEAD ARRANGERS
SIGNED
/s/
Charikleia Mavromati
)
by
Charikleia
Mavromati
)
Attorney-in-fact
)
for and on behalf of
)
CREDIT
AGRICOLE CORPORATE
AND
INVESTMENT BANK
)
in the presence of:
)
Witness' signature:
/s/
Angelos Michas
)
Witness' name:
Angelos
Michas
)
Witness' address:
348
Syngrou Avenue Kallithea 17674 Athens - Greece
)
207
ARRANGERS
SIGNED
/s/
Rhys Thomas
)
by
Rhys
Thomas
)
Attorney-in-fact
)
for and on behalf of
)
BANK
OF AMERICA, N.A.
)
in the presence of:
)
Witness' signature:
)
Witness' name:
/s/
Marcus Palmer
)
Witness' address:
19
Knatchbull Road
)
MANDATED
LEAD ARRANGERS
SIGNED
/s/
Charikleia Mavromati
)
by
Charikleia
Mavromati
)
Attorney-in-fact
)
for and on behalf of
)
ABN
AMRO BANK N.V.
)
in the presence of:
)
Witness' signature:
/s/
Angelos Michas
)
Witness' name:
Angelos
Michas
)
Witness' address:
348
Syngrou Avenue Kallithea 17674 Athens - Greece
)
FACILITY
AGENT
SIGNED
/s/
Charikleia Mavromati
)
by
Charikleia
Mavromati
)
Attorney-in-fact
)
for and on behalf of
)
CREDIT
AGRICOLE CORPORATE
AND
INVESTMENT BANK
)
in the presence of:
)
Witness' signature:
/s/
Angelos Michas
)
Witness' name:
Angelos
Michas
)
Witness' address:
348
Syngrou Avenue Kallithea 17674 Athens - Greece
)
SIGNED
/s/
Rhys Thomas
)
by
Rhys
Thomas
)
Attorney-in-fact
)
for and on behalf of
)
BANK
OF AMERICA, N.A.
)
in the presence of:
)
Witness' signature:
)
Witness' name:
/s/
Marcus Palmer
)
Witness' address:
19
Knatchbull Road
)
208
SECURITY
AGENT
SIGNED
/s/
Charikleia Mavromati
)
by
Charikleia
Mavromati
)
Attorney-in-fact
)
for and on behalf of
)
CREDIT
AGRICOLE CORPORATE
AND
INVESTMENT BANK
)
in the presence of:
)
Witness' signature:
/s/
Angelos Michas
)
Witness' name:
Angelos
Michas
)
Witness' address:
348
Syngrou Avenue Kallithea 17674 Athens - Greece
)
ACCOUNT
BANK
SIGNED
/s/
Charikleia Mavromati
)
by
Charikleia
Mavromati
)
Attorney-in-fact
)
for and on behalf of
)
CREDIT
AGRICOLE CORPORATE
AND
INVESTMENT BANK
)
in the presence of:
)
Witness' signature:
/s/
Angelos Michas
)
Witness' name:
Angelos
Michas
)
Witness' address:
348
Syngrou Avenue Kallithea 17674 Athens - Greece
)
209
Exhibit
4.27
1. Shipbroker
Not
Applicable
BIMCO
STANDARD BAREBOAT CHARTER
CODE
NAME:"BARECON 2001"
PART
I
2. Place
and date
23
December 2024
3.
Owners/Place of Business (Cl. 1)
OCEAN
JING SHIPPING LIMITED, a company incorporated
and existing under the laws of the Hong Kong
Special Administrative Region of the People’s Republic of China with Business
Registration Number 62833516
and having its registered office at Units 904-907, 9/F, Dah Sing Financial Centre, 248 Queen's Road
East, Hong
Kong, China (also registered as a Foreign Maritime Entity in Liberia)
4. Bareboat
Charterers/Place of business (Cl. 1)
GLOBAL
SHIP LEASE 77 LLC, a limited liability company
incorporated and existing under the
laws of the Republic of Liberia with Registration Number LLC-960401 and having its registered
office at 80 Broad Street, Monrovia, Liberia
5. Vessel's
name, call sign and flag (Cl. 1 and 3)
Name: BREMERHAVEN
EXPRESS
IMO
No.: 9723253
Flag: Republic
of Liberia
6. Type
of Vessel
Container
Ship
7. GT/NT
94684
/ 55975
8. When/Where
built
2015
/ Hanjin Heavy Industries and Construction (Philippines), Zambales, Philippines
9. Total
DWT (abt.) in metric tons on summer freeboard
As
per Class certificates
10. Classification
Society (Cl. 3)
DNV
11. Date
of last special survey by the Vessel's classification society
As
per Class certificates
12. Further
particulars of Vessel (also indicate minimum number of months' validity of class certificates
agreed acc. to Cl. 3)
See
Vessel’s Class certificates
13. Port
or Place of delivery (Cl. 3)
See
Additional Clause 35 (Delivery)
14. Time
for delivery (Cl. 4)
See
Additional Clause 35 (Delivery)
15. Cancelling
date (Cl. 5)
Not
applicable
16. Port
or Place of redelivery (Cl. 15)
See
Additional Clause 42 (Redelivery)
17. No.
of months’ validity of trading and class certificates upon redelivery (Cl. 15)
18. Running
days' notice if other than stated in Cl. 4
Not
Applicable
19. Frequency
of dry-docking (Cl. 10(g))
Not
Applicable
20. Trading
Limits (Cl. 6)
Trading
worldwide, always safe/afloat, always within International Navigation Limits and subject to exclusions as per Joint War Risks Committee
(JWC) Listed Areas (save as in accordance with clause 41 (Insurances) and
any other country, port, place or zone prohibited by the
Flag State and/or any of the Sanction Authorities (as defined in the Rider Clauses).
Cargo
Limits as per Vessel’s classification society’s requirement and the Vessel’s specifications.
Always
subject to the terms and conditions contained in this Charter.
21. Charter
period (Cl. 2)
One
Hundred and Twenty (120) months, subject to terms of this Charter
22. Charter
hire (Cl. 11)
See
Additional Clause 40 (Hire)
23. New
class and other safety requirements (state percentage of Vessel’s insurance value acc.
to Box 29) (Cl. 10(a)(ii))
Not
Applicable
24. Rate
of interest payable acc. to Cl. 11(f) and, if applicable, acc. to PART IV
Default
Interest Rate as defined in the Additional Clauses
See
Additional Clauses
25. Currency
and method of payment (Cl. 11)
US$
See
Additional Clauses
1
(continued)
“BARECON
2001” STANDARD BAREBOAT CHARTER
PART 1
26. Place
of payment; also state beneficiary and bank account (Cl. 11)
See
Additional Clause 40(d) (Payment account information)
27. Bank
guarantee/bond (sum and place) (Cl.24) (optional)
Not
Applicable
28. Mortgage(s),
if any (state whether 12(a) or (b) applies; if 12(b) applies state date of Financial Instrument
and name
of Mortgagee(s)/Place of business)(Cl. 12)
See
Additional Clauses
29. Insurance
(hull and machinery and war risks)(state value acc. to Cl. 13(f) or, if applicable, acc.
to Cl.
14(k)) (also state if Cl. 14 applies)
See
Additional Clause 41 (Insurance)
30. Additional
insurance cover, if any, for Owners' account limited to (Cl. 13(b) or, if applicable, (Cl.
14(g))
Not
Applicable
31. Additional
insurance cover, if any, for Charterers' account limited to (Cl. 13(b)) or, if applicable,
(Cl.
14(g))
See
Additional Clause 41 (Insurance)
32. Latent
defects (only to be filled in if period other than stated in Cl. 3)
Not
Applicable
33. Brokerage
commission and to whom payable (Cl. 27)
Not
Applicable
34. Grace
period (state number of clear banking days)(Cl. 28)
See
Additional Clauses
35. Dispute
Resolution (state 30(a), 30(b) or 30(c); if 30(c) agreed Place of Arbitration must
be stated (Cl.
30)
See
Additional Clause 74 (Arbitration)
36. War
cancellation (indicate countries agreed) (Cl. 26(f))
Not
Applicable
37. Newbuilding
Vessel (indicate with "yes or "no" whether Part III applies) (optional)
No
38. Name
and place of Builders (only to be filled in if Part III applies)
39. Vessel's
Yard Building No. (only to be filled in if Part III applies)
40.
Date of Building Contract (only to be filled in
if Part III applies)
41. Liquidated
damages and costs shall accrue to (state party acc. to Cl. 1)
a)
b)
c)
42.
Hire/Purchase agreement (indicate with "yes"
or "no" whether Part IV applies) (optional)
No (See
Additional Clauses)
43. Bareboat
Charter Registry (indicate with "yes" or "no" whether Part V applies)
(optional)
No
(See Additional Clauses)
44. Flag
and Country of the Bareboat Charter Registry (only to be filled in if Part V applies)
45. Country
of the Underlying Registry (only to be filled in if Part V applies)
46. Number
of additional clauses covering special provisions, if agreed
Additional
Clauses 32 to 77 (both inclusive) and Schedules 1 - 3, as attached hereto, form integral part of this Charter. In the event of any
conflict or inconsistency between the terms of Part I and Part II of this Charter
with the terms of the Additional Clauses, the terms
of the Additional Clauses shall prevail.
PREAMBLE
– it is mutually agreed that this Contract shall be performed subject to the conditions contained in this Charter which shall include
PART I and PART II. In the event of a conflict of conditions, the provisions of PART 1
shall prevail over those of PART II to the extent
of such conflict but no further. It is further mutually agreed that PART III and/or PART IV and/or PART V shall only apply and only form
part of this Charter if expressly agreed and
stated in the Boxes 37, 42 and 43. If PART III and/or PART IV and/or PART V apply, it is
further agreed that in the event of a conflict of conditions, the provisions of PART I and PART II shall prevail over those of PART III
and/or
PART IV and/or PART V to the extent of such conflict but no further.
2
EXECUTION
PAGE
Signature
(Owners)
For
and on behalf of
OCEAN
JING SHIPPING LIMITED
________________________________
Name: Huang
Mei
Title: Director
Signature
(Charterers)
For
and on behalf of
GLOBAL
SHIP LEASE 77 LLC
______________________________
Name:
Title:
3
1. Definitions
(See Also Additional Clauses)
In
this Charter, the following terms shall have the meanings hereby assigned to them:
“The
Owners” shall mean the party identified in Box 3;
“The
Charterers” shall mean the party identified in Box 4;
“The
Vessel” shall mean the vessel named in Box 5 and with particulars as stated in Boxes 6 to 12.
“Financial
Instrument” means the mortgage, deed of covenant or other such financial security instrument as annexed to this Charter
and stated in Box 28 any of the Finance Documents as defined in Additional Clause 32.
Any
other defined terms shall have the meaning given to it in the Additional Clause.
2. Charter
Period (See Additional Clauses)
In
consideration of the hire detailed in Box 22, the Owners have agreed to let and the Charterers have agreed to hire the Vessel for the
period stated in Box 21 (“The Charter Period”)
3. Delivery
(See Additional Clause 35)
(not
applicable when Part III applies, as indicated in Box 37)
(a)
The
Owners shall before and at the time of delivery exercise due diligence to make the Vessel
seaworthy and in every respect ready in hull, machinery and equipment for service under this
Charter.
The
Vessel shall be delivered by the Owners and taken over by the Charterers at the port or place indicated in Box 13 in such ready safe
berth as the Charterers may direct.
(b)
The
Vessel shall be properly documented on delivery in accordance with the laws of the flag State
indicated in Box 5 and the requirements of the classification society stated in Box 10. The
Vessel upon delivery shall have her
survey cycles up to date and trading and class certificates
valid for at least the number of months agreed in Box 12.
(c)
The
delivery of the Vessel by the Owners and the taking over of the Vessel by the charterers
shall constitute a full performance by the Owners of all the Owners’ obligations
under this Clause 3, and thereafter the Charterers
shall not be entitled to make or assert
any claim against the Owners on account of any conditions, representations or warranties
expressed or implied with respect to the Vessel but the Owners shall be liable for
the cost of but
not the time for repairs or renewals occasioned by latent defects in the
Vessel, her machinery or appurtenances, existing at the time of delivery under this Charter,
provided such defects have manifested themselves within
twelve (12) months after delivery
unless otherwise provided in Box 32.
4. Time
for Delivery (See Additional Clause 35)
(not
applicable when Part III applies, as indicated in Box 37).
The
Vessel shall not be delivered before the date indicated in Box 14 without the Charterers’ consent and the Owners shall exercise
due diligence to deliver the Vessel not later than the date indicated in Box 15.
Unless
otherwise agreed in Box 18, the Owners shall give the Charterers not less than thirty (30) running days’ preliminary and not less
than fourteen (14) running days’ definite notice of the date on which the Vessel is expected to
be ready for delivery.
The
Owners shall keep the Charterers closely advised of possible changes in the Vessel’s position.
5. Cancelling
(Not Applicable)
(not
applicable when Part III applies, as indicated in Box 37)
(a)
Should
the Vessel not be delivered latest by the cancelling date indicated in Box 15, the Charterers
shall have the option of cancelling this Charter by giving the Owners notice of cancellation
within thirty-six (36) running
hours after the cancelling date stated in Box 15, failing
which this Charter shall remain in full force and effect.
(b)
If
it appears that the Vessel will be delayed beyond the cancelling, the Owners may, as soon
as they are in a position to state with reasonable certainty the day on which the Vessel
should be ready, give notice thereof to the
Charterers asking whether they will exercise
their option of cancelling, and the option must then be declared within one hundred and sixty
eight (168) running hours of the receipt by the Charterers of such notice or within
thirty
six (36) running hours after the cancelling date, whichever is the earlier. If the Charterers
do not then exercise their option of cancelling, the seventh day after the readiness date
stated in the Owners’ notice shall be
substituted for the cancelling date indicated
in Box 15 for the purpose of this Clause 5.
(c)
Cancellation
under this Clause 5 shall be without prejudice to any claim the Charterers may otherwise
have on the Owners under this Charter.
6. Trading
Restrictions
The
Vessel shall be employed in lawful trades for the carriage of suitable lawful merchandise within the trading limits indicated in Box
20.
The
Charterers undertake not to employ the Vessel or suffer the Vessel to be employed otherwise than in conformity with the terms of the
contracts of insurance (including any warranties expressed or implied therein) without first
obtaining the consent of the insurers to
such employment and complying with such requirements as to extra premium or otherwise as the insurers may prescribe.
The
Charterers also undertake not to employ the Vessel or suffer her employment in any trade or business which is forbidden by the law of
any country to which the Vessel may sail or is otherwise illicit or in carrying illicit or
prohibited goods or in any manner whatsoever
which may render her liable to condemnation, destruction, seizure or confiscation.
Notwithstanding
any other provisions contained in this Charter it is agreed that nuclear fuels or radioactive products or waste are specifically excluded
from the cargo permitted to be loaded or carried under this Charter. This
exclusion does not apply to radio-isotopes used or intended
to be used for any industrial, commercial, agricultural, medical or scientific purposes provided the Vessel's P&I Club Owners’
prior approval has been obtained to loading
thereof and upon the Owners' request the Charterers shall provide the Owners
with a copy of such approval from the Vessel's P&I Club.
7. Surveys
on Delivery and Redelivery (See Additional Clause)
(not
applicable when Part III applies, as indicated in Box 37)
The
Owners and Charterers shall each appoint surveyors for the purpose of determining and agreeing in writing the condition of the Vessel
at the time of delivery and redelivery hereunder. The Owners shall bear all expenses of the
On-hire Survey including loss of time, if
any, and the Charterers shall bear all expenses of the Off-hire Survey including loss of time, if any, at the daily equivalent to the
rate of hire or pro rata thereof.
4
8. Inspection
(See Also Additional Clauses 48(r))
The
Owners shall have the right at any time after giving reasonable notice to the Charterers to inspect or survey the Vessel or instruct
a duly authorised surveyor to carry out such survey on their behalf:-
(a)
to
ascertain the condition of the Vessel and satisfy themselves that the Vessel is being properly
repaired and maintained. The costs and fees for such inspection or survey shall be paid by
the Owners unless the Vessel is found to
require repairs or maintenance in order to achieve
the condition so provided;
(b)
in
dry-dock if the Charterers have not dry-docked her in accordance with Clause 10(g). The costs
and fees for such inspection or survey shall be paid by the Charterers; and
(c)
for
any other commercial reason they consider necessary (provided it does not unduly interfere
with the commercial operation of the Vessel). The costs and fees for such inspection and
survey shall be paid by the Owners.
All
time used in respect of inspection, survey or repairs shall be for the Charterers’ account and form part of the Charter Period.
The
Charterers shall also permit the Owners to inspect the Vessel’s logbooks whenever requested and shall whenever required by the
Owners furnish them with full information regarding any casualties or other accidents or damage
to the Vessel.
9. Inventories,
Oil and Stores (See Additional Clause 37)
A
complete inventory of the Vessel's entire equipment, outfit including spare parts, appliances and of all consumable stores on board the
Vessel shall be made by the Charterers in conjunction with the Owners on delivery and again
on redelivery of the Vessel at the Owners’
request. The Charterers and the Owners, respectively, shall at the time of delivery and redelivery take over and pay for all bunkers,
lubricating oil, unbroached provisions, paints, ropes and
other consumable stores (excluding spare parts) in the said Vessel at the then
current market prices at the ports of delivery and redelivery, respectively. The Charterers shall ensure that all spare parts listed
in the inventory and used
during the Charter Period are replaced at their expense prior to redelivery of the Vessel.
Within
three (3) months from the Actual Delivery Date, the Charterers shall prepare and deliver to the Owners an inventory of the Vessel's major
spare parts for the Main Engine, Diesel Generators and E.R. Auxiliary
Machinery on board the Vessel.
10.Maintenance
and Operation
(a)
(i)
Maintenance and Repairs
During
the Charter Period the Vessel shall be in the full possession and at the absolute disposal for all purposes of the Charterers and under
their complete control in every respect. The Charterers shall maintain the Vessel, her
machinery, boilers, appurtenances and spare parts
in a good state of repair, in efficient operating condition and in accordance with good commercial maintenance practice for vessels
of this type and, except as provided for in
Clause 14(I), if applicable, at their own expense they shall at all
times keep the Vessel's Class fully up to date with the Classification Society indicated in Box 10 free of overdue recommendations
and conditions and
maintain all other necessary certificates in force at all times.
(ii)
New Class and other Safety Requirements
In
the event of any improvement, structural changes or new equipment becoming necessary for the continued operation of the Vessel by reason
of new class requirements or by compulsory legislation, the cost of compliance
and time used in relation thereto shall be for the sale
account of the Charterers. costing (excluding the Charterers' loss of time) more than the percentage stated in Box 23, or if Box 23 is
left blank, 5 per cent. of the Vessel's
insurance value as stated in Box 29, then the extent, if any, to which the rate of hire shall
be varied and the ratio in which the cost of compliance shall be shared between the parties concerned in order to achieve a reasonable
distribution thereof as between the Owners and the Charterers having regard, inter alia, to the length of the period remaining under
this Charter shall, in the absence of agreement, be referred to the dispute resolution method
agreed in Clause 30.
(iii)
Financial Security
The
Charterers shall maintain financial security or responsibility in respect of third party liabilities as required by any government, including
federal, state or municipal or other division or authority thereof, to enable the Vessel,
without penalty or charge, lawfully to enter,
remain at, or leave any port, place, territorial or contiguous waters of any country, state or municipality in performance of this Charter
without any delay. This obligation shall apply
whether or not such requirements have been lawfully imposed by such government or division
or authority thereof.
The
Charterers shall make and maintain all arrangements by bond or otherwise as may be necessary to satisfy such requirements at
the Charterers’ sole expense and the Charterers shall indemnify the Owners against all
consequences whatsoever (including
loss of time) for any failure or inability to do so.
(b)
Operation
of the Vessel
The
Charterers shall at their own expense and by their own procurement man, victual, navigate, operate, supply, fuel and, whenever required,
repair the Vessel during the Charter Period and they shall pay all charges and
expenses of every kind and nature whatsoever incidental
to their use and operation of the Vessel under this Charter, including annual flag State fees and any foreign general municipality and/or
state taxes. The Master, officers
and crew of the Vessel shall be the servants of the Charterers for all purposes whatsoever, even if
for any reason appointed by the Owners.
Charterers
shall comply with the regulations regarding officers and crew in force in the country of the Vessel's flag or any other applicable law.
(c) The
Charterers shall keep the Owners and the mortgagee(s) advised of the intended employment,
planned dry-docking and major repairs of the Vessel, as reasonably required. See also
Additional Clause 57 (Operational
notifiable events).
(d) Flag
and Name of Vessel
During
the Charter Period, the Charterers shall have the liberty to paint the Vessel in their own colours, install and display their funnel
insignia and fly their own house flag. The Charterers shall also have the liberty, with the
Owners' consent, which shall not be unreasonably
withheld, to change the flag and/or the name of the Vessel during the Charter Period. Painting and re-painting, instalment and
re-instalment, registration and re-registration, if
required by the Owners, shall be at the Charterers' expense and time. See also
Additional Clause 39 (Structural changes
and
alterations), paragraph (p) of Additional Clause 47 and Additional Clause 51 (Name of Vessel).
5
(e) Changes
to the Vessel (See Additional Clause 39(a))
Subject
to Clause 10(a)(ii), the Charterers shall make no structural changes in the Vessel or changes in the machinery, boilers, appurtenances
or spare parts thereof without in each instance first securing the Owners' approval
thereof. If the Owners so agree, the Charterers shall,
if the Owners so require, restore the Vessel to its former condition before the termination of this Charter.
(f)
Use
of the Vessel's Outfit, Equipment and Appliances
The
Charterers shall have the use of all outfit, equipment, and appliances on board the Vessel at the time of delivery, provided the same
or their substantial equivalent shall be returned to the Owners on redelivery in the same
good order and condition as when received,
ordinary wear and tear excepted. The Charterers shall from time to time during the Charter Period replace such items of equipment as
shall be so damaged or worn as to be unfit for
use in accordance with the Vessel’s Classification Society’s guidelines.
The Charterers are to procure that all repairs to or replacement of any damaged, worn or lost parts or equipment be effected in such
manner (both as
regards workmanship and quality of materials) as not to diminish the value of the Vessel. The Charterers have the right
to fit additional equipment at their expense and risk but title to such additional equipment shall be
deemed to have automatically
passed to the Owners immediately upon such fitting and the Charterers shall at their expenses remove such equipment without
damage to the Vessel at the time of redelivery end of the
period if requested by the Owners. Any equipment
including radio equipment on hire on the Vessel at time of delivery shall be kept and maintained by the Charterers and the Charterers
shall assume the obligations and
liabilities of the Owners under any lease contracts in connection therewith and shall reimburse
indemnify the Owners for all expenses incurred in connection therewith, also for any new equipment required in order
to comply
with radio regulations.
(g)
Periodical
Dry-Docking
The
Charterers shall dry-dock the Vessel and clean and paint her underwater parts whenever the same may be necessary, but not less
than once during the period stated in Box 19 or, if Box 19 has been left blank, every sixty
(60) calendar months after delivery or such
other period as may be required by the Classification Society or flag State, whichever is shorter.
11. Hire
(See Additional Clause 40)
(a)
The
Charterers shall pay hire due to the Owners punctually in accordance with the terms of this
Charter in respect of which time shall be of the essence.
(b)
The
Charterers shall pay to the Owners for the hire of the Vessel a lump sum in the amount indicated
in Box 22 which shall be payable not later than every thirty (30) running days in advance,
the first lump sum being payable
on the date and hour of the Vessel's delivery to the Charterers.
Hire shall be paid continuously throughout the Charter Period.
(c)
Payment
of hire shall be made in cash without discount in the currency and in the manner indicated
in Box 25 and at the place mentioned in Box 26.
(d)
Final
payment of hire, if for a period of less than thirty (30) running days, shall be calculated
proportionally according to the number of days and hours remaining before redelivery and
advance payment to be effected
accordingly.
(e)
Should
the Vessel be lost or missing, hire shall cease from the date and time when she was lost
or last heard of. The date upon which the Vessel is to be treated as lost or missing shall
be ten (10) days after the Vessel was last
reported or when the Vessel is posted as missing
by Lloyd's, whichever occurs first. Any hire paid in advance to be adjusted accordingly.
(f)
Any
delay in payment of hire shall entitle the Owners to interest at the rate per annum as agreed
in Box 24. If Box 24 has not been filled in, the three months interbank offered rate in London
(LIBOR or its successor) for the
currency stated in Box 25, as quoted by the British Bankers'
Association (BBA) on the date when the hire fell due, increased by 2 per cent., shall apply.
(g)
Payment
of interest due under sub-clause 11(f) shall be made within seven (7) running days of the
date of the Owners' invoice specifying the amount payable or, in the absence of an invoice,
at the time of the next hire payment
date.
12.Mortgage
(See Additional Clause 45)
(only
to apply if Box 28 has been appropriately filled in)
Notwithstanding
anything to the contrary in this Charter, no obligations will be imposed on the Charterers as a result of Owners entering into the Finance
Documents which are more onerous than those imposed on the
Charterers pursuant to this Charter.
*(a) The
Owners warrant that they have not effected any mortgage(s) of the Vessel and that they shall
not effect any mortgage(s) without the prior consent of the Charterers, which shall not be
unreasonably withheld.
*(b) The
Vessel chartered under this Charter is financed by a mortgage according to the Financial
Instrument. The Charterers undertake to comply, and provide such information and documents
to enable the Owners to comply, with
all such instructions or directions in regard to the
employment, insurances, operation, repairs and maintenance of the Vessel as laid down in
the Financial Instrument or as may be directed from time to time during the currency
of the
Charter by the mortgagee(s) in conformity with the Financial Instrument. The Charterers confirm
that, for this purpose, they have acquainted themselves with all relevant terms, conditions
and provisions of the Financial
Instrument and agree to acknowledge this in writing in any
form that may be required by the mortgagee(s). The Owners warrant that they have not effected
any mortgage(s) other than stated in Box 28 and that they shall not
agree to any amendment
of the mortgage(s) referred to in Box 28 or effect any other mortgage(s) without the prior
consent of the Charterers, which shall not be unreasonably withheld.
*(Optional,
Clauses 12(a) and 12(b) are alternatives; indicate alternative agreed in Box 28).
13.Insurance
and Repairs (Also see Additional Clause 41)
(a)
During
the Charter Period the Vessel shall be kept insured by the Charterers at their expense against
hull and machinery, war and Protection and Indemnity risks (and any risks against which it
is compulsory to insure for the
operation of the Vessel, including maintaining financial
security in accordance with sub-clause 10(a)(iii)) in such form as the Owners shall in writing
approve, which approval shall not be unreasonably withheld. Such
insurances shall be arranged
by the Charterers to protect the interests of both the Owners and the Charterers and the
mortgagee(s) (if any), and the Charterers shall be at liberty to protect under such insurances
the interests of
any managers they may appoint. Insurance policies shall cover the Owners
and the Charterers according to their respective interests. Subject to the provisions of
the Financial Instrument, if any, and the approval of the Owners
and the insurers, the Charterers
shall effect all insured repairs and shall undertake settlement and reimbursement from the
insurers of all costs in connection with such repairs as well as insured charges, expenses
and liabilities
to the extent of coverage under the insurances herein provided for.The
Charterers also to shall remain responsible for and to effect repairs
and settlement of costs and expenses incurred thereby in respect of all other repairs not
covered by the insurances and/or not exceeding any possible franchise(s) or deductibles
provided for in the insurances. All time used for repairs under the provisions
of sub clause 13(a) and for repairs of latent defects
according to Clause 3(c) above, including
any deviation, shall be for the Charterers' account.
6
(b)
If
the conditions of the above insurances permit additional insurance to be placed by the parties,
such cover shall be limited to the amount for each party set out in Box 30 and Box 31, respectively.
The Owners or the
Charterers as the case may be shall immediately furnish the other party
with particulars of any additional insurance effected, including copies of any cover notes
or policies and the written consent of the insurers of any such
required insurance in any
case where the consent of such insurers is necessary.
(c)
The
Charterers shall upon the request of the Owners, provide information and promptly execute
such documents as may be reasonably required to enable the Owners to comply with the
insurance provisions of the Financial
Instrument.
(d)
Subject
to the provisions of the Financial lnstrument, if any, should the Vessel become an actual,
constructive, compromised or agreed total loss under the insurances required under sub-clause
13(a), all insurance payments for
such loss shall be paid to the Owners who shall distribute
the moneys between the Owners and Charterers according to their respective interests. The
Charterers undertake to notify the Owners and the mortgagee(s), if any, of
any occurrences
in consequence of which the Vessel is likely to become a total loss as defined in this Clause.
(e)
The
Owners shall upon the request of the Charterers, promptly execute such documents as may be
required to enable the Charterers to abandon the Vessel to insurers and claim a constructive
total loss.
(f)
For
the purpose of insurance coverage against hull and machinery and war risks under the provisions
of sub-clause 13(a), the value of the Vessel is the sum indicated in Box 29.
14.Insurance,
Repairs and Classification (See Additional Clauses)
(Optional,
only to apply if expressly agreed and stated in Box 29, in which event Clause 13 shall be considered deleted).
(a)
During
the Charter Period the Vessel shall be kept insured by the Owners at their expense against
hull and machinery and war risks under the form of policy or policies attached hereto. The
Owners and/or insurers shall not
have any right of recovery or subrogation against the Charterers
on account of loss of or any damage to the Vessel or her machinery or appurtenances covered
by such insurance, or on account of payments made to discharge
claims against or liabilities
of the Vessel or the Owners covered by such insurance. Insurance policies shall cover the
Owners and the Charterers according to their respective interests.
(b)
During
the Charter Period the Vessel shall be kept insured by the Charterers at their expense against
Protection and Indemnity risks (and any risks against which it is compulsory to insure for
the operation of the Vessel,
including maintaining financial security in accordance with
sub-clause 10(a)(iii)) in such form as the Owners shall in writing approve which approval
shall not be unreasonably withheld.
(c)
In
the event that any act or negligence of the Charterers shall vitiate any of the insurance
herein provided, the Charterers shall pay to the Owners all losses and indemnify the Owners
against all claims and demands which
would otherwise have been covered by such insurance.
(d)
The
Charterers shall, subject to the approval of the Owners or Owners' Underwriters, effect all
insured repairs, and the Charterers shall undertake settlement of all miscellaneous expenses
in connection with such repairs as well
as all insured charges, expenses and liabilities,
to the extent of coverage under the insurances provided for under the provisions of sub-clause
14(a). The Charterers to be secured reimbursement through the Owners'
Underwriters for such
expenditures upon presentation of accounts.
(e)
The
Charterers to remain responsible for and to effect repairs and settlement of costs and expenses
incurred thereby in respect of all other repairs not covered by the insurances and/or not
exceeding any possible franchise(s) or
deductibles provided for in the insurances.
(f)
All
time used for repairs under the provisions of sub-clauses 14(d) and 14(e) and for repairs
of latent defects according to Clause 3 above, including any deviation, shall be for the
Charterers' account and shall form part of the
Charter Period.
The
Owners shall not be responsible for any expenses as are incident to the use and operation of the Vessel for such time as may be required
to make such repairs.
(g)
If
the conditions of the above insurances permit additional insurance to be placed by the parties
such cover shall be limited to the amount for each party set out in Box 30 and Box 31, respectively.
The Owners or the Charterers
as the case may be shall immediately furnish the other party
with particulars of any additional insurance effected, including copies of any cover notes
or policies and the written consent of the insurers of any such required
insurance in any
case where the consent of such insurers is necessary.
(h)
Should
the Vessel become an actual, constructive, compromised or agreed total loss under the insurances
required under sub-clause 14(a), all insurance payments for such loss shall be paid to the
Owners, who shall distribute
the moneys between themselves and the Charterers according to
their respective interests.
(i)
If
the Vessel becomes an actual, constructive, compromised or agreed total loss under the insurances
arranged by the Owners in accordance with sub-clause 14(a), this Charter shall terminate
as of the date of such loss.
(j)
The
Charterers shall upon the request of the Owners, promptly execute such documents as may be
required to enable the Owners to abandon the Vessel to the insurers and claim a constructive
total loss.
(k)
For
the purpose of insurance coverage against hull
and machinery and war risks under the provisions of sub-clause 14(a), the value of the Vessel is the sum indicated in Box 29.
7
(l)
Notwithstanding
anything contained in sub-clause 10(a), it is agreed that under the provisions of Clause
14, if applicable, the Owners shall keep the Vessel's Class fully up to date with the Classification
Society indicated in
Box 10 and maintain all other necessary certificates in force at all
times.
15.Redelivery
(See Additional Clauses 42 and 43)
At
the expiration of the Charter Period the Vessel shall be redelivered by the Charterers to the Owners at a safe and ice-free port or place
as indicated in Box 16, in such ready safe berth as the Owners may direct. The Charterers
shall give the Owners not less than thirty
(30) running days' preliminary notice of expected date, range of ports of redelivery or port or place of redelivery and not less than
fourteen (14) running days' definite notice of expected date
and port or place of redelivery. Any changes thereafter in the Vessel's
position shall be notified immediately to the Owners.
The
Charterers warrant that they will not permit the Vessel to commence a voyage (including any preceding ballast voyage) which cannot reasonably
be expected to be completed in time to allow redelivery of the Vessel within the
Charter Period. Notwithstanding the above, should the
Charterers fail to redeliver the Vessel within the Charter Period, the Charterers shall pay the daily equivalent to the rate of hire
stated in Box 22 plus 10 per cent. or to the market
rate, whichever is the higher, for the number of days by which the Charter Period
is exceeded. All other terms, conditions and provisions of this Charter shall continue to apply.
Subject
to the provisions of Clause 10, the Vessel shall be redelivered to the Owners in the same or as good structure, state, condition and
class as that in which she was delivered, fair wear and tear not affecting class excepted.
The
Vessel upon redelivery shall have her survey cycles up to date and trading and class certificates valid for at least the number of months
agreed in Box 17.
16.Non-Lien
(See also Additional Clauses)
The
Charterers will not suffer, nor permit to be continued, any lien or encumbrance incurred by their agents, which might have priority over
the title and interest of the Owners in the Vessel (other than the Permitted
Encumbrances). The Charterers further agree to fasten
to the Vessel in a conspicuous place and to keep so fastened during the Charter Period a notice reading as follows:
'This
Vessel is the property of (name of Owners). It is under charter to (name of Charterers) and by the terms of the Charter Party neither
the Charterers nor the Master have any right, power or authority to create, incur or permit to
be imposed on the Vessel any lien whatsoever."
17.Indemnity
(See Additional Clause 58)
(a)
The
Charterers shall indemnify the Owners against any loss, damage or documented expense
incurred by the Owners arising out of or in relation to the operation of the Vessel by the
Charterers, and against any lien of
whatsoever nature (save for any liens caused directly
by the Owners) arising out of an event occurring during the Charter Period. If the Vessel
be arrested or otherwise detained by reason of claims or liens arising out of her
operation
hereunder by the Charterers, the Charterers shall at their own expense take all reasonable
steps to secure that within a reasonable time the Vessel is released, including the provision
of bail.
Without
prejudice to the generality of the foregoing, the Charterers agree to indemnify the Owners against all consequences or liabilities arising
from the Master, officers or agents signing Bills of Lading or other documents.
(b)
If
the Vessel be arrested or otherwise detained by reason of a claim or claims against the Owners
which is not attributable to any Obligor, the Owners shall at their own expense take
all reasonable steps to secure that within
a reasonable time the Vessel is released, including
the provision of bail.
In
such circumstances the Owners shall indemnify the Charterers against any loss, damage or expense incurred by the Charterers (including
hire paid under this Charter) as a direct consequence of such arrest or detention but,
for the avoidance of doubt, in such
circumstances, the Charterers shall continue to pay Hire.
18.Lien
The
Owners to have a lien upon all cargoes, sub-hires and sub-freights belonging or due to the Charterers or any sub-charterers
and any Bill of Lading freight for all claims under this Charter, and the Charterers to have a lien on the
Vessel for all moneys
paid in advance and not earned.
19.Salvage
All
salvage and towage performed by the Vessel shall be for the Charterers' benefit and the cost of repairing damage occasioned thereby shall
be borne by the Charterers.
20.Wreck
Removal
In
the event of the Vessel becoming a wreck or obstruction to navigation the Charterers shall indemnify the Owners against any sums whatsoever
which the Owners shall become liable to pay and shall pay in consequence of the
Vessel becoming a wreck or obstruction to navigation.
21.General
Average
The
Owners shall not contribute to General Average.
22.Assignment,
Sub-Charter and sale (See Additional Clauses)
(a)
The
Charterers shall not assign this Charter nor sub-charter the Vessel on a bareboat basis
except with the prior consent in writing of the Owners, which shall not be unreasonably withheld,
and subject to such terms and
conditions as the Owners shall approve.
(b)
The
Owners shall not sell the Vessel during the currency of this Charter except with the prior
written consent of the Charterers, which shall not be unreasonably withheld, and subject
to the buyer accepting an assignment of
this Charter.
23.Contracts
of Carriage
*(a) The
Charterers are to procure that all documents issued during the Charter Period evidencing
the terms and conditions agreed in respect of carriage of goods shall contain a paramount
clause incorporating any legislation
relating to carrier's liability for cargo compulsorily
applicable in the trade, if no such legislation exists, the documents shall incorporate the
Hague-Visby Rules the documents shall also contain the New Jason Clause and the
Both-to-Blame
Collision Clause.
*(b) The
Charterers are to procure that all passenger tickets issued during the Charter Period for
the carriage of passengers and their luggage under this Charter shall contain a paramount
clause incorporating any legislation relating
to carrier’s liability for passengers
and their luggage compulsorily applicable in the trade; if no such legislation exists, the
passenger tickets shall incorporate the Athens Convention Relating to the
Carriage of Passengers and
their Luggage by Sea, 1974, and any protocol thereto.
*Delete as applicable.
8
24.Bank
Guarantee
(Optional,
only to apply if Box 27 filled in)
The
Charterers undertake to furnish, before delivery of the Vessel, a first class bank guarantee or bond in the sum and at the place as indicated
in Box 27 as guarantee for full performance of their obligations under this Charter.
25.Requisition/Acquisition
(See Additional Clauses)
(a)
In
the event of the Requisition for Hire of the Vessel by any governmental or other competent
authority (hereinafter referred to as "Requisition for Hire") irrespective of the
date during the Charter Period when "Requisition for
Hire" may occur and irrespective
of the length thereof and whether or not it be for an indefinite or a limited period of time,
and irrespective of whether it may or will remain in force for the remainder of the Charter
Period, this
Charter shall not be deemed thereby or thereupon to be frustrated or otherwise
terminated and the Charterers shall continue to pay the stipulated hire in the manner provided
by this Charter until the time when the Charter
would have terminated pursuant to any of
the provisions hereof always provided however that in the event of "Requisition for
Hire", any Requisition Hire or compensation received or receivable by the Owners shall
be payable
to the Charterers during the remainder of the Charter Period or the period of
the "Requisition for Hire" whichever be the shorter.
(b)
In
the event of the Owners being deprived of their ownership in the Vessel by any Compulsory
Acquisition of the Vessel or requisition for title by any governmental or other competent
authority (hereinafter referred to as
“Compulsory Acquisition”), then, irrespective
of the date during the Charter Period when “Compulsory Acquisition” may occur,
this Charter shall be deemed terminated as of the date of such “Compulsory Acquisition”.
In
such event Charter Hire to be considered as earned and to be paid up to the date and time
of such “Compulsory Acquisition”.
26.War
(See Also Additional Clauses)
(a)
For
the purpose of this Clause, the words 'War Risks" shall include any war (whether actual
or threatened), act of war, civil war, hostilities, revolution, rebellion, civil commotion,
warlike operations, the laying of mines
(whether actual or reported), acts of piracy, acts
of terrorists, acts of hostility or malicious damage, blockades (whether imposed against
all vessels or imposed selectively against vessels of certain flags or ownership, or against
certain cargoes or crews or otherwise howsoever), by any person, body, terrorist or political
group, or the Government of any state whatsoever, which may be dangerous or are likely to
be or to become dangerous to the Vessel,
her cargo, crew or other persons on board the Vessel.
(b)
The
Vessel, provided that copies of such applicable additional insurance cover shall be provided
to the Owners upon the Owners' reasonable request, unless the written consent
of the Owners be first obtained, shall
not continue to or go through any port, place,
area or zone (whether of land or sea), or any waterway or canal, where it reasonably appears
that the Vessel, her cargo, crew or other persons on board the Vessel, in the reasonable
judgement of the Owners, may be, or are likely to be, exposed to War Risks. Should the Vessel
be within any such place as aforesaid, which only becomes dangerous, or is likely to be or
to become dangerous, after her entry
into it, the Owners shall have the right to require
the Vessel to leave such area unless copies of such applicable additional insurance cover
are provided to the Owners upon the Owners' reasonable request.
(c)
The
Vessel shall not load contraband cargo, or to pass through any blockade, whether such blockade
be imposed on all vessels, or is imposed selectively in any way whatsoever against vessels
of certain flags or ownership, or
against certain cargoes or crews or otherwise howsoever,
or to proceed to an area where she shall be subject, or is likely to be subject to a belligerent's
right of search and/or confiscation.
(d)
If
the insurers of the war risks insurance, when Clause 14 is applicable, should require payment
of premiums and/or calls because, pursuant to the Charterers' orders, the Vessel is within,
or is due to enter and remain within,
any area or areas which are specified by such insurers
as being subject to additional premiums because of War Risks, then such premiums and/or calls
shall be reimbursed by the Charterers to the Owners at the same time as
the next payment
of hire is due.
(e)
The
Charterers shall have the liberty:
(i)
to
comply with all orders, directions, recommendations or advice as to departure, arrival, routes,
sailing in convoy, ports of call, stoppages, destinations, discharge of cargo, delivery,
or in any other way whatsoever, which
are given by the Government of the Nation under whose
flag the Vessel sails, or any other Government, body or group whatsoever acting with the
power to compel compliance with their orders or directions;
(ii)
to
comply with the orders, directions or recommendations of any war risks underwriters who have
the authority to give the same under the terms of the war risks insurance;
(iii) to
comply with the terms of any resolution of the Security Council of the United Nations, any
directives of the European Community, the effective orders of any other Supranational body
which has the right to issue and
give the same, and with national laws aimed at enforcing
the same to which the Owners are subject, and to obey the orders and directions of those
who are charged with their enforcement.
(f)
In
the event of outbreak of war (whether there be a declaration of war or not) (i) between any
two or more of the following countries: the United States of America; Russia; the United
Kingdom; France; and the People's
Republic of China, (ii) between any two or more of the
countries stated in Box 36, both the Owners and the Charterers shall have the right to cancel
this Charter, whereupon the Charterers shall redeliver the Vessel to the
Owners in accordance
with Clause 15, if the Vessel has cargo on board after discharge thereof at destination,
or if debarred under this Clause from reaching or entering it at a near, open and safe port
as directed by the Owners,
or if the Vessel has no cargo on board, at the port at which the
Vessel then is or if at sea at a near, open and safe port as directed by the Owners. In all
cases, hire shall continue to be paid in accordance with Clause 11 and
except as aforesaid
all other provisions of this Charter shall apply until redelivery.
27.Commission
The
Owners to pay a commission at the rate indicated in
Box 33 to the Brokers named in Box 33 on any hire paid under the Charter. If no rate is indicated in Box 33, the commission to be paid
by the Owners shall cover the actual
expenses of the Brokers and a reasonable fee for their work. If
the full hire is not paid owing to breach of the Charter by either of the parties the party liable therefor shall indemnify the Brokers
against their loss of commission.
Should the parties agree to cancel the Charter, the Owners shall indemnify the Brokers against any
loss of commission but in such case the commission shall not exceed the brokerage on one year's hire.
9
28.Termination
(See Additional Clauses)
(a)
Charterers'
Default
The
Owners shall be entitled to withdraw the Vessel from the service of the Charterers and terminate the Charter with immediate effect by
written notice to the Charterers if:
(i)
the
Charterers fail to pay hire in accordance with Clause 11. However, where there is a failure
to make punctual payment of hire due to oversight, negligence, errors or omissions on the
part of the Charterers or their
bankers, the Owners shall give the Charterers written notice
of the number of clear banking days stated in Box 34 (as recognised at the agreed place of
payment) in which to rectify the failure, and when so rectified within
such number of days
following the Owners' notice, the payment shall stand as regular and punctual. Failure by
the Charterers to pay hire within the number of days stated in Box 34 of their receiving
the Owners' notice as
provided herein, shall entitle the Owners to withdraw the Vessel from
the service of the Charterers and terminate the Charter without further notice;
(ii)
the
Charterers fail to comply with the requirements of:
(1)
Clause
6 (Trading Restrictions)
(2)
Clause
13(a) (Insurance and Repairs)
provided
that the Owners shall have the option, by written notice to the Charterers, to give the Charterers a specified number of days grace within
which to rectify the failure without prejudice to the Owners’ right to
withdraw and terminate under this Clause if the Charterers
fail to comply with such notice;
(iii) the
Charterers fail to rectify any failure to comply with the requirements of sub-clause 10(a)(i)
(Maintenance and Repairs) as soon as practically possible after the Owners have requested
them in writing so to do and in
any event so that the Vessel's insurance cover is not prejudiced.
(b)
Owners'
Default
If
the Owners shall by any act or omission be in breach of their obligations under this Charter to the extent that the Charterers are deprived
of the use of the Vessel and such breach continues for a period of fourteen (14)
running days after written notice thereof has been given
by the Charterers to the Owners, the Charterers shall be entitled to terminate this Charter with immediate effect by written notice to
the Owners.
(c)
Loss
of Vessel
This
Charter shall be deemed to be terminated if the Vessel becomes a total loss or is declared as a constructive or compromise or arranged
total loss. For the purpose of this sub-clause, the Vessel shall not be deemed to be lost
unless she has either 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.
(d)
Either
party shall be entitled to terminate this Charter with immediate effect by written notice
to the other party in the event of an order being made or resolution passed for the winding
up, dissolution, liquidation or bankruptcy
of the other party (otherwise than for the purpose
of reconstruction or amalgamation) or if a receiver is appointed, or if it suspends payment,
ceases to carry on business or makes any special arrangement or composition with its
creditors.
(e)
The
termination of this Charter shall be without prejudice to all rights accrued due between
the parties prior to the date of termination and to any claim that either party might have.
29.Repossession
(See Additional Clauses)
In
the event of the termination of this Charter in accordance with the applicable provisions of this Charter Clause 28, the Owners shall
have the right to repossess the Vessel from the Charterers at her current or next port of call, or at
a port or place convenient to them
without hindrance or interference by the Charterers, courts or local authorities. Pending physical repossession of the Vessel in accordance
with this Clause 29 and the Additional Clauses, the
Charterers shall hold the Vessel as gratuitous bailee only to the Owners and the
Charterer shall procure that the Master and crew follow the orders and directions of the Owners. The Owners shall arrange for an authorised
representative to board the Vessel as soon as reasonably practicable following the termination of the Charter. The Vessel shall be deemed
to be repossessed by the Owners from the Charterers upon the boarding of the Vessel by the
Owners' representative. All arrangements and
expenses relating to the settling of wages, disembarkation and repatriation of the Charterers' Master, officers and crew shall be the
sole responsibility of the Charterers.
30.Dispute
Resolution (See Additional Clauses)
*(a) This
Contract shall be governed by and construed in accordance with English law and any dispute
arising out of or in connection with this Contract shall be referred to arbitration in London
in accordance with the Arbitration
Act 1996 or any statutory modification or re-enactment
thereof save to the extent necessary to give effect to the provisions of this Clause. The
arbitration shall be conducted in accordance with the London Maritime Arbitrators
Association
(LMAA) Terms current at the time when the arbitration proceedings are commenced. The reference
shall be to three arbitrators. A party wishing to refer a dispute to arbitration shall appoint
its arbitrator and send
notice of such appointment in writing to the other party requiring
the other party to appoint its own arbitrator within 14 calendar days of that notice and
stating that it will appoint its arbitrator as sole arbitrator unless the other
party appoints
its own arbitrator and gives notice that it has done so within the 14 days specified. If
the other party does not appoint its own arbitrator and give notice that it has done so within
the 14 days specified. The party
referring a dispute to arbitration may, without the requirement
of any further prior notice to the other party, appoint its arbitrator as sole arbitrator
and shall advise the other party accordingly. The award of a sole arbitrator shall
be binding
on both parties as if he had been appointed by agreement. Nothing herein shall prevent the
parties agreeing in writing to vary these provisions to provide for the appointment of a
sole arbitrator. In cases where
neither the claim nor any counterclaim exceeds the sum of
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.
10
*(b) This
Contract shall be governed by and construed in accordance with Title 9 of the United States
Code and the Maritime Law of the United States and any dispute arising out of or in connection
with this Contract shall be
referred to three persons at New York, one to be appointed by
each of the parties hereto, and the third by the two so chosen; their decision or that of
any two of them shall be final, and for the purposes of enforcing any award,
judgement may
be entered on an award by any court of competent jurisdiction. The proceedings shall be conducted
in accordance with the rules of the Society of Maritime Arbitrators, Inc.
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 Shortened Arbitration Procedure of the Society of Maritime
Arbitrators, Inc. current at the time when the arbitration
proceedings are commenced.
*(c) This
Contract shall be governed by and construed in accordance with the laws of the place mutually
agreed by the parties and any dispute arising out of or in connection with this Contract
shall be referred to arbitration at a
mutually agreed place, subject to the procedures applicable
there.
*(d) Notwithstanding
(a), (b) or (c) above, the parties may agree at any time to refer to mediation any difference
and/or dispute arising out of or in connection with this Contract.
In
the case of a dispute in respect of which arbitration has been commenced under (a), (b) or (c) above, the following shall apply:-
(i)
Either
Party may at any time and from time to time elect to refer the dispute or part of the dispute
to mediation by service on the other party of a written notice (the "Mediation Notice")
calling on the other party to agree
to mediation.
(ii)
The
other party shall thereupon within 14 calendar days of receipt of the Mediation Notice confirm
that they agree to mediation, in which case the parties shall thereafter agree a mediator
within a further 14 calendar
days, failing which on the application of either party a mediator
will be appointed promptly by the Arbitration Tribunal ("the Tribunal") or such
person as the Tribunal may designate for that purpose. The mediation shall
be conducted in
such place and in accordance with such procedure and on such terms as the parties may agree
or, in the event of disagreement, as may be set by the mediator.
(iii) If
the other party does not agree to mediate, that fact may be brought to the attention of the
Tribunal and may be taken into account by the Tribunal when allocating the costs of the arbitration
as between the parties.
(iv) The
mediation shall not affect the right of either party to seek such relief or take such steps
as it considers necessary to protect its interest.
(v)
Either
party may advise the Tribunal that they have agreed to mediation. The arbitration procedure
shall continue during the conduct of the mediation but the Tribunal may take the mediation
timetable into account when
setting the timetable for steps in the arbitration.
(vi) Unless
otherwise agreed or specified in the mediation terms, each party shall bear its own costs
incurred in the mediation and the parties shall share equally the mediator’s costs
and expenses.
(vii) The
mediation process shall be without prejudice and confidential and no information or documents
disclosed during it shall be revealed to the Tribunal except to the extent that they are
disclosable under the law and
procedure governing the arbitration.
(Note:
The parties should be aware that the mediation process may not necessarily interrupt time limits.)
(e)
If
Box 35 in Part I is not appropriately filled in, sub-clause 30(a) of this Clause shall apply.
Sub-clause 30(d) shall apply in all cases.
*
Sub-clauses 30(a), 30(b) and 30(c) are alternatives; indicate alternative agreed in Box 35.
31.Notices
(See Additional Clauses)
(a)
Any
notice to be given by either party to the other party shall be in writing and may be sent
by fax, telex, registered or recorded mail or by personal service.
(b)
The
address of the Parties for service of such communication shall be as stated in Boxes 3 and
4 respectively
11
1. Specifications
and Building Contract
(a)
The
Vessel shall be constructed in accordance with the Building Contract (hereafter called “the
Building Contract”) as annexed to this Charter, made between the Builders and the Owners
and in accordance with the
specifications and plans annexed thereto, such Building Contract,
specifications and plans having been counter-signed as approved by the Charterers.
(b)
No
change shall be made in the Building Contract or in the specifications or plans of the Vessel
as approved by the Charterers as aforesaid, without the Charterers’ consent.
(c)
The
Charterers shall have the right to send their representative to the Builders’ Yard
to inspect the Vessel during the course of her construction to satisfy themselves that construction
is in accordance with such approved
specifications and plans as referred to under sub-clause
(a) of this Clause.
(d)
The
Vessel shall be built in accordance with the Building Contract and shall be of the description
set out therein. Subject to the provisions of sub-clause 2(c)(ii) hereunder, the Charterers
shall be bound to accept the Vessel
from the Owners, completed and constructed in accordance
with the Building Contract, on the date of delivery by the Builders. The Charterers undertake
that having accepted the Vessel they will not thereafter raise any claims
against the Owners
in respect of the Vessel’s performance or specification or defects, if any. Nevertheless,
in respect of any repairs, replacements or defects which appear within the first 12 months
from delivery by the
Builders, the Owners shall endeavour to compel the Builders to repair,
replace or remedy any defects or to recover from the Builders any expenditure incurred in
carrying out such repairs, replacements or remedies. However,
the Owners’ liability
to the Charterers shall be limited to the extent the Owners have a valid claim against the
Builders under the guarantee clause of the Building Contract (a copy whereof has been supplied
to the Charterers).
The Charterer shall be bound to accept such sums as the Owners are reasonably
able to recover under this Clause and shall make no further claim on the Owners for the difference
between the amount(s) so recovered and the
actual expenditure on repairs, replacement or
remedying defects or for any loss of time incurred.
Any
liquidated damages for physical defects or deficiencies shall accrue to the amount of the party stated in Box 41(a) or if not filled
in shall be shared equally between the parties. The costs of pursuing a claim or claims
against the Builders under this Clause (including
any liability to the Builders) shall be borne by the party stated in Box 41(b) or if not filled in shall be shared equally between the
parties.
2. Time
and Place of Delivery
(a)
(a)
Subject to the Vessel having completed
her acceptance trials including trials of cargo equipment in accordance with the Building Contract and specifications to the satisfaction
of the Charterers, the Owners shall give and the
Charterers shall take delivery of the Vessel afloat when ready for delivery and properly
documented at the Builders’ Yard or some other safe and readily accessible dock, wharf or place as may be agreed between the parties
hereto
and the Builders. Under the Building Contract the Builders have estimated that the Vessel will be ready for delivery to the Owners
as therein provided by the delivery date for the purpose of this Charter shall be the date when the
Vessel is in fact ready for delivery
by the Builders after completion of trials whether that be before or after as indicated in the Building Contract. The Charterers shall
not be entitled to refuse acceptance of delivery of the Vessel
and upon and after such acceptance subject to Clause 1(d), the Charterers
shall not be entitled to make any claim against the Owners in respect of any conditions, representations or warranties, whether express
or implied as to the
seaworthiness of the Vessel or in respect of delay in delivery.
(b)
If
for any reason other than a default by the Owners under the Building Contract, the Builders
become entitled under that Contract not to deliver the Vessel to the Owners, the Owner shall
upon giving to the Charterers written
notice of Builders becoming so entitled, be excused
from giving delivery of the Vessel to the Charterers and upon receipt of such notice by the
Charterers this Charter shall cease to have effect.
(c)
If
for any reason the Owners become entitled under the Building Contract to reject the Vessel
the Owners shall, before exercising such right of rejection, consult the Charterers and thereupon
(i)
If
the Charterers do not wish to take delivery of the Vessel they shall inform the Owners within
seven (7) running days by notice in writing and upon receipt by the Owners of such notice
this Charter shall cease to have
effect; or
(ii)
If
the Charterers wish to take delivery of the Vessel they may by notice in writing within seven
(7) running days require the Owners to negotiate with the Builders as to the terms on which
delivery should be taken and/or
refrain from exercising their right to rejection and upon
receipt of such notice the Owners shall commence such negotiations and/or take delivery of
the Vessel from the Builders and deliver her to the Charterers.
(iii) In
no circumstances shall the Charterers be entitled to reject the Vessel unless the Owners
are able to reject the Vessel from the Builders;
(iv) if
this Charter terminates under sub-clause (b) or (c) of this Clause, the Owners shall thereafter
not be liable to the Charterers for any claim under or arising out of this Charter or its
termination.
(d)
Any
liquidated damages for delay in delivery under the Building Contract and any costs incurred
in pursuing a claim therefor shall accrue to the account of the party stated in Box 41(c)
or if not filled in shall be shared equally
between the parties.
3. Guarantee
Works
If
not otherwise agreed, the Owners authorise the Charterers to arrange for the guarantee works to be performed
in accordance with the building contract terms, and hire to continue during the period of guarantee works. The
Charterers have to advise
the Owners about the performance to the extent the Owners may request.
12
4. Name
of Vessel
The
name of the Vessel shall be mutually agreed between the Owners and the Charterers and the Vessel shall be painted in the colours, display
the funnel insignia and fly the house flag as required by the Charterers.
5. Survey
on Redelivery
The
Owners and the Charterers shall appoint surveyors for the purpose of determining and agreeing in writing the condition of the Vessel
at the time of re-delivery.
Without
prejudice to Clause 15 (Part II), the Charterers shall bear all survey expenses and all other costs, if any, including the cost of docking
and undocking, if required, as well as all repair costs incurred. The Charterers shall also
bear all loss of time spent in connection
with any docking and undocking as well as repairs, which shall be paid at the date of hire per day or pro rata.
13
On
expiration of this Charter and provided the Charterers have fulfilled their obligations according to Part I and II as well as Part III,
if applicable, it is agreed, that on payment of the final payment of hire as per Clause 11 the
Charterers have purchased the Vessel with
everything belonging to her and the Vessel is fully paid for.
In
the following paragraphs the Owners are referred to as the Sellers and the Charterers as the Buyers.
The
Vessel shall be delivered by the Sellers and taken over by the Buyers on expiration of the Charter.
The
Sellers guarantee that the Vessel, at the time of delivery, is free from all encumbrances and maritime liens or any debts whatsoever
other than those arising from anything done or not done by the Buyers or any existing
mortgage agreed not to be paid off by the time
of delivery. Should any claims, which have been incurred prior to the time of delivery be made against the Vessel, the Sellers hereby
undertake to indemnify the Buyers against all
consequences of such claims to the extent it can be proved that the Sellers are responsible
for such claims. Any taxes, notarial, consular and other charges and expenses connected with the purchase and registration under
Buyers'
flag, shall be for Buyers' account. Any taxes, consular and other charges and expenses connected with closing of the Sellers' register,
shall be for Sellers' account.
In
exchange for payment of the last month's hire instalment the Sellers shall furnish the Buyers with a Bill of Sale duly attested and legalized,
together with a certificate setting out the registered encumbrances, if any. On
delivery of the Vessel the Sellers shall provide for
deletion of the Vessel from the Ship's Register and deliver a certificate of deletion to the Buyers.
The
Sellers shall, at the time of delivery, hand to the Buyers all classification certificates (for hull, engines, anchors, chains etc),
as well as all plans which may be in Sellers’ possession
The
Wireless Installation and Nautical Instruments, unless on hire, shall be included in the sale without any extra payment.
The
Vessel with everything belonging to her shall be at Sellers' risk and expense until she is delivered to the Buyers, subject to the conditions
of this Contract and the Vessel with everything belonging to her shall be delivered
and taken over as she is at the time of delivery,
after which the Sellers shall have no responsibility for possible faults or deficiencies of any description.
The
Buyers undertake to pay for the repatriation of the Master, officers and other personnel if appointed by the Sellers to the port where
the Vessel entered the Bareboat Charter as per Clause 3 (Part II) or to pay the equivalent
cost for their journey to any other place.
14
1. Definitions
For
the purpose of this PART V, the following terms shall have the meanings hereby assigned to them:
"The
Bareboat Charter Registry" shall mean the registry of the State whose flag the Vessel will fly and in which
the Charterers are registered as the bareboat charterers during the period of the Bareboat Charter.
“The
Underlying Registry” shall mean the registry of the State in which the Owners of the Vessel are registered
as Owners and to which jurisdiction and control of the Vessel will revert upon termination of the Bareboat Charter
Registration.
2. Mortgage
The
Vessel chartered under this Charter is financed by a mortgage and the provisions of Clause 12(b) (Part II) shall apply.
3. Termination
of Charter by Default
If
the Vessel chartered under this Charter is registered in a Bareboat Charter Registry as stated in Box 44, and if the Owners shall default
in the payment of any amounts due under the mortgage(s) specified in Box 28, the Charterers
shall, if so required by the mortgagee, direct
the Owners to re-register the Vessel in the Underlying Registry as shown in Box 45.
In
the event of the Vessel being deleted from the Bareboat Charter Registry as stated in Box 44, due to a default by the Owners in the payment
of any amounts due under the mortgage(s), the Charterers shall have the right to
terminate this Charter forthwith and without prejudice
to any other claim they may have against the Owners under this Charter.
15
CONTENTS
32. Definitions
1
33. Interpretations
16
34. Background
17
35. Delivery
18
36. Conditions
precedent and conditions subsequent
20
37. Bunkers
and luboils
24
38. Further
maintenance and operation
24
39. Structural
changes and alterations
25
40. Hire
26
41. Insurance
30
42. Redelivery
35
43. Redelivery
conditions
35
44. Diver’s
inspection at redelivery
37
45. Owners’
mortgage
37
46. Financial
covenants
38
47. Charterers;
representations and warranties
38
48. Charterers’
undertakings
41
49. Terminations
Events
49
50. Sub-chartering
and assignment
55
51. Name
of Vessel
55
52. Transfer
of title
56
53. Total
Loss
58
54. Appointment
of Approved Manager
58
55. Fees
and expenses
59
56. Stamp
duties and Taxies
59
57. Operational
notifiable events
60
58. Further indemnities
60
59. Further
assurances and undertakings
62
60. Cumulative
rights
62
61. No waiver
62
62. Entire agreement
62
63. Invalidity
63
64. English language
63
65. No partnership
63
66. Notice
63
67. Conflicts
64
68. Survival
of Charterers’ obligations
64
69. Counterparts
64
70. Third
Parties Act
64
71. Waiver
of immunity
65
72. FATCA
65
73. Governing
Law
66
74. Arbitration
66
75. Confidentiality
67
76. Assignment
and Transfer
68
77. Financing Charter
68
SCHEDULE
1 FORM OF PROTOCOL OF DELIVERY AND ACCEPTANCE
69
SCHEDULE
2 FORM OF TITLE TRANSFER PROTOCOL OF DELIVERY AND ACCEPTANCE
70
SCHEDULE
3 RELATED CHARTER AND RELEVANT INFORMATION
71
ADDITIONAL
CLAUSES
TO
BAREBOAT CHARTER FOR "BREMERHAVEN EXPRESS"
32.
Definitions
In
this Charter:
"Account
Bank" means ABN AMRO Bank N.V. at Gustav Mahlerlaan 10, Postbus 283, 1000 EA Amsterdam (BIC: ABNANL2A) or such other first-class
international bank or financial institution as nominated by the
Charterers and approved by the Owners in writing from time to time (acting
reasonably).
"Account
Security" means the deed of charge or pledge or other legal instrument executed or to be executed by the Charterers in Agreed
Form in favour of the Security Trustee conferring a Security Interest over the Earnings
Account and all amounts from time to time standing
to the credit to the Earnings Account.
"Actual
Delivery Date" means the date of delivery of the Vessel by the Owners to the Charterers under this Charter.
"Affiliate"
means, in relation to any person, a Subsidiary of that person or a Holding Company of that person or any other Subsidiary of that Holding
Company.
"Agreed
Form" means in relation to any document, that document in the form approved in writing by the Owners and agreed with the Charterers.
"Agreement
Term" means the period commencing on the date of this Charter and terminating on
the later of:
(a)
the
expiration of the Charter Period; and
(b)
the
date on which all money of any nature owed by the Obligors to the Owners under the Transaction
Documents or otherwise in connection with the Vessel have been paid in full to the Owners
and no obligations of the
Obligors of any nature to the Owners or otherwise in connection
with the Transaction Documents, the Related Transaction Documents or with the Vessel or the
Related Vessels remain unperformed or undischarged.
"Anniversary"
means each anniversary of the Actual Delivery Date.
"Anti-Money
Laundering Laws" means all applicable financial record-keeping and reporting requirements, anti-money laundering statutes (including
all applicable rules and regulations thereunder) and all applicable related
or similar laws, rules, regulations or guidelines, of all
applicable jurisdictions including and without limitation, the United States of America, the European Union and the People’s Republic
of China and which in each case are:
(a)
issued,
administered or enforced by any governmental agency having jurisdiction over any Obligor,
the Owners or the Security Trustee; and
(b)
of
any jurisdiction in which any Obligor, the Owners or the Trustee conduct business; or Security
Interest to which any Obligor, the Owners or the Security Trustee is subjected or subject
to.
"Anti-Terrorism
Financing Laws" means all applicable anti-terrorism laws, statutes (including all applicable rules and regulations thereunder)
and all applicable related or similar rules, regulations, guidelines, of any
applicable jurisdiction, including and not limited to the
United States of America or the People’s Republic of China which are:
(a)
issued,
administered or enforced by any governmental agency, having jurisdiction over any Obligor,
the Owners or the Security Trustee;
1
(b)
of
any jurisdiction in which any Obligor, the Owners or the Security Trustee conducts business;
or
(c)
to
which any Obligor, the Owners or the Security Trustee is subjected or subject to.
"Approved
Insurer" means, in respect of the Vessel, a first-class international insurance broker, underwriter or association acceptable
to the Owners (acting reasonably).
"Approved
Manager" means:
(a)
with
respect to the technical management of the Vessel, TECHNOMAR
SHIPPING INC., a company incorporated and existing under the laws of the Republic
of Liberia with Registration Number C-76029 and having
its registered office at 80 Broad
Street, Monrovia, Liberia; and
(b)
with
respect to the commercial management of the Vessel, CONCHART COMMERCIAL INC., a company incorporate
and existing under the laws of the Republic of the Marshall Islands having its registered
address
at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Republic of the
Marshall Islands MH 96960; or
(c)
such
other first class reputable ship technical and/or commercial manager acceptable to the Owners.
"Approved
Valuer" means each of BRS Shipbrokers, MB Shipbrokers, Kontiki Shipbrokers, Howe Robinson and any other reputable and independent
ship brokers proposed by the Charterers and approved by the Owners
(acting reasonably).
"Arrangement
Fee" has the meaning given to the term in Clause 55(a)(a)(a), being a sum of US$445,000 (Dollars Four Hundred Forty Five Thousand
only).
"Authorisation"
means an authorisation, consent, approval, resolution, licence, exemption, filing, notarisation or registration.
"Break
Costs" means all costs, losses, premiums or penalties incurred by the Owners as a result of (i) the receipt by the Owners of
any payment under or in relation to the Transaction Documents on a day other than the due
date for payment of the sum in question and/or
(ii) the Termination Payment Date does not fall on a Hire Payment Date (in each case, including any Break Costs incurred under the Finance
Documents.
"Business
Day" means a day (other than a Saturday or Sunday) on which banks and financial markets are open for business:
(a)
in
relation to any date for payment, in Amsterdam, Athens, Beijing and New York; and
(b)
for
all other purposes, in Beijing and Athens.
"Business
Ethics Laws" means any laws, regulations and/or other legally binding requirements or determinations in relation to bribery,
corruption, fraud, money-laundering, terrorism, collusion bid-rigging or anti-trust, human
rights violations (including forced labour
and human trafficking) which are applicable to an Obligor or to any jurisdiction where activities are performed and which shall include:
(i) the United Kingdom Bribery Act 2010, (ii)
the United States Foreign Corrupt Practices Act 1977 and (iii) Prevention of Bribery Ordinance
(Cap. 201) of the Laws of Hong Kong.
"Cancellation
Date" means 31 January 2025 or such later date as the Owners may in their sole discretion approve in writing.
2
"Cash
Collateral" has the meaning given to such term in Clause 4832..1(bb) (Value maintenance).
"Charter
Group" means the Charterers, the Charter Guarantor and, the Subsidiaries of each of them from time to time.
"Charter
Guarantee" means the deed of guarantee and indemnity executed or to be executed by the Charter Guarantor in favour of the Security
Trustee in the Agreed Form.
"Charter
Guarantor" means GLOBAL SHIP LEASE, INC., a corporation incorporated and existing under the laws of the Republic of Marshall
Islands with corporation number 28891 and having its registered office at Trust
Company Complex, Ajeltake Road, Ajeltake Island, Majuro,
Republic of the Marshall Islands MH 96960, being the sole member and manager of the Charterers.
"Charter
Guarantor Change of Control Event" means any of the following events:
(i)
the
Charterer is not or ceases to be a wholly-owned direct or indirect Subsidiary of the Charter
Guarantor;
(ii)
Mr
George Giouroukos ceases to own at least 1 per cent. of the shares in the Charter Guarantor
(either directly or through one or more of his affiliates);
(iii)
Mr
George Giouroukos ceases to be the Executive Chairman of (or to hold an equivalent executive
officer position in) the Charter Guarantor other than by reason of death or other incapacity
in managing his affairs; or
(iv)
any
person(s) own(s) more than 15 per cent. of the shares in the Charter Guarantor, other than
Mr George Giouroukos (either directly or through one or more of his affiliates).
"Charter
Period" means, subject to Clause 40(i) (Illegality), Clauses 49 (Termination Events), 52 (Transfer of title)
and 53 (Total Loss), the period of One Hundred Twenty (120) months commencing from the Actual Delivery
Date.
"Charterers'
Assignment" means the deed of assignment executed or to be executed (as the case may be) by the Charterers in favour of the
Security Trustee in the Agreed Form in relation to certain of the Charterers' rights
and interest in and to (among other things) the
(a) the Earnings, (b) the Insurances, and (c) the Requisition Compensation and (d) the Initial Sub-Charter and any other Sub-Charter
(if any) which have a duration of twelve (12)
months or more (including any option to renew or extend).
"Classification
Society" means the vessel classification society referred to in Box 10 (Classification Society) of this Charter, or such
other reputable classification society which is a member of the International Association of
Classification Societies as the Charterers
may select and the Owners may approve from time to time (acting reasonably).
"Co-Assured
Undertakings" means an undertaking in respect of the Insurances by a party named as an assured or co-assured (as the case may
be) on any of the Insurances (other than the Charterers, the Approved Managers,
the Owners and the Finance Parties) in favour of the
Owners and the Security Trustee.
"Debt"
means the aggregate from time to time of all sums of any nature (together with all accrued unpaid interest on any of those sums) payable
by any Obligor to the Owners under all or any of the Transaction Documents.
"Default
Interest Rate" means a rate equivalent to the applicable Interest Rate plus two per cent. (2%) per annum (on a 360-day year
basis).
"Default
Termination" means a termination of the Charter Period pursuant to the provisions of Clause 49 (Termination Events).
3
"Delivery
Costs" means the aggregate amount of all documented charges, fees, costs (including legal fees) and expenses whatsoever (with
the only exception of the MOA Purchase Price) reasonably incurred and/or arising out
of and/or in relation to:
(i)
the
Owners’ taking delivery of the Vessel under the MOA;
(ii)
the
delivery of the Vessel by the Owners to the Charterers under this Charter; and
(iii)
the
Registration Costs.
"Earnings"
means all hires, freights, pool income and other sums payable to or for the account of the Charterers in respect of the Vessel including
(without limitation) all remuneration for salvage and towage services,
demurrage and detention moneys, contributions in general average,
compensation in respect of any requisition for hire, and damages and other payments (whether awarded by any court or arbitral tribunal
or by agreement or
otherwise) for breach, termination or variation of any contract for the operation, employment or use of the Vessel.
"Earnings
Account" means the account in the name of the Charterers (IBAN: NL73ABNA0139181539) opened with the Account Bank and subject
to the Account Security acceptable to the Owners, and includes any sub-
account thereof and such account which is designated by the Owners
as the earnings account for the purposes of this Charter.
"Environmental
Claim" means any claim by any person which arises out of an Environmental Incident which relates to any Environmental Law.
"Environmental
Incident" means:
(a)
any
release of Environmentally Sensitive Material from the Vessel; or
(b)
any
incident in which Environmentally Sensitive Material is released from a vessel other than
the Vessel and which involves a collision between the Vessel and such other vessel or some
other incident of navigation or
operation, in either case, in connection with which the Vessel
is actually arrested, attached, detained or injuncted and/or the Vessel and/or the Owners
and/or the Charterers and/or any Approved Manager and/or any
operator or manager of the Vessel
is at fault or otherwise liable to any legal action; or
(c)
any
other incident in which Environmentally Sensitive Material is released otherwise than from
the Vessel and in connection with which the Vessel is actually arrested and/or where the
Owners and/or the Charterers
and/or any Approved Manager and/or any operator or manager of
the Vessel is at fault or otherwise liable to any legal action.
"Environmental
Law" means any law or regulation having the force of law applicable to the Vessel or the use and employment of the Vessel by
the Owners and the Charterers relating to pollution or protection of the
environment, to the carriage of Environmentally Sensitive Material
or to actual releases of Environmentally Sensitive Material.
"Environmental
Permits" means any permit and other authorisation and the filing of any notification, report or assessment required under any
Environmental Law for the operation of the Vessel.
"Environmentally
Sensitive Material" means oil, oil products and any other substance (including any chemical, gas or other hazardous or noxious
substance) which is polluting, toxic or hazardous.
"EU
ETS Mandate Letter" means the mandate letter in respect of the Vessel addressed to the relevant entities charged with
administering compliance with the EU-ETS Regulations and duly executed by the Owners and the
Charterers and the Approved Manager
nominated by the Charterers, mandating the Approved Manager as nominated by the Charterers and approved by the Owners as the party
required to comply with and be responsible
for
compliance with the EU-ETS Regulations in place of the Owners.
4
"EU-ETS
Regulations" means:
(a)
EU
Emissions Trading Scheme (Directive 2003/87/EC establishing a system for greenhouse gas emission
allowance trading within the Union and Decision (EU) 2015/1814 concerning the establishment
and operation
of a market stability reserve for the Union greenhouse gas emission trading
system as amended by Directive (EU) 2023/959 of the European Parliament and of the Council
of 10 May 2023) and the Commission
Implementing Regulation (EU) 2023/2599 of 22 November
2023 as the same may be amended, supplemented, superseded or readopted from time to time
(whether with or without modifications); and
(b)
any
applicable law implementing the above Directive and/or Implementing Regulation.
"Finance
Document" means any facility agreement, security document, fee letter and any other document designated as such by the Finance
Parties and the Owners, and which have been or may be (as the case may be)
entered into between the Finance Parties and the Owners for
the purpose of, among other things, financing or (as the case may be) refinancing all or any part of the Outstanding Principal.
"Finance
Party" means any bank or financial institution which is or will be party to a Finance Document (other than the Owners and other
entities which may have agreed or be intended as debtors and/or obligors thereunder)
and "Finance Parties" means two
or more of them.
"Financial
Indebtedness" means any indebtedness for or in respect of:
(a)
moneys
borrowed;
(b)
any
amount raised by acceptance under any acceptance credit facility or dematerialised equivalent;
(c)
any
amount raised pursuant to any note purchase facility or the issue of bonds, notes, debentures,
loan stock or any similar instrument;
(d)
the
amount of any liability in respect of any lease or hire purchase contract which would, in
accordance with GAAP, be treated as a balance sheet liability;
(e)
receivables
sold or discounted (other than any receivables to the extent they are sold on a non-recourse
basis);
(f)
any
amount raised under any other transaction (including any forward sale or hire purchase agreement)
of a type not referred to in any other paragraph of this definition having the commercial
effect of a borrowing;
(g)
any
derivative transaction entered into in connection with protection against or benefit from
fluctuation in any rate or price (and, when calculating the value of any derivative transaction,
only the marked to market
value (or, if any actual amount is due as a result of the termination
or close-out of that derivative transaction, that amount) shall be taken into account);
(h)
any
counter-indemnity obligation in respect of a guarantee, indemnity, bond, standby or documentary
letter of credit or any other instrument issued by a bank or financial institution; and
(i)
the
amount of any liability in respect of any guarantee or indemnity for any of the items referred
to in paragraphs (a) to (h) above.
5
"Financial
Institution" means any bank or financial institution, trust, fund, leasing company or other entity which is regularly engaged
in or established for the purpose of making, purchasing or investing in loans, securities or
other financial assets.
"Fixed
Hire" means in respect of each Hire Payment Date, an amount of US$862,500 (Dollars Eight Hundred Sixty Two Thousand Five Hundred
Only).
"GAAP"
means generally accepted accounting principles in the United States or the International Financial Reporting Standards (IFRS), issued
by the International Accounting Standards Board, in either case as in effect from
time to time.
"Head
MOA" means the memorandum of agreement and its addendum no.1 both dated 29 November 2024 made by and between the Head Selles
as sellers and the Charterers as buyers for the sale and purchase of the Vessel.
"Head
Sellers" means Minsheng Zhi He (Tianjin) Shipping Leasing Company Limited, a company incorporated and existing under the laws
of the People’s Republic of China and having its registered office at Room 202,
No.6262, Australia Road, Dongjiang Free Trade Pilot
Zone, Tianjin (DJBS Free Trade Zone Branch No. 2509), China.
"Hire"
means, in relation to each Hire Period, the aggregate amount of (A) the Fixed Hire and (B) the
Variable Hire for that Hire Period.
"Hire
Payment Date" means in relation to the Hire for each Hire Period, the last day
of that Hire Period.
"Hire
Period" means
(a)
in
relation to the first Hire Period, the period commencing on the MOA Payment Date and ending
on the last day of three (3) months of the Actual Delivery Date; and
(b)
in
relation to each and every successive Hire Period, each and every consecutive three (3)-month
period during the Charter Period commencing forthwith upon the expiration of the immediately
previous Hire Period, provided
that the last and final Hire Period shall end on the last
day of the Charter Period.
"Holding
Company" means, in relation to a person, any other person in respect of which it is a Subsidiary.
"Hong
Kong" means the Hong Kong Special Administrative Region of The People's Republic of China.
"IAPPC"
means a valid international air pollution prevention certificate for the Vessel issued under Annex VI (Regulations for the Prevention
of Air Pollution from Ships) to the International Convention for the Prevention of
Pollution from Ships 1973 (as modified in 1978 and
1997).
"Indemnitee"
has the meaning given to such term in Clause 58 (Further indemnities).
"Initial
Sub-Charter" means the time charterparty dated 8 January 2021 in respect of the Vessel with the Initial Sub-Charterers as charterers,
as amened, supplemented and novated from time to time, in particular, pursuant to
the Initial Sub-Charter Novation Agreement.
"Initial
Sub-Charter Novation Agreement" means the novation agreement to the Initial Sub-Charter entered into or to be entered into by
and between the Initial Sub-Charterers as charterers, the Head Sellers as original
owners and the Charterers as new owners, whereby subject
and pursuant to the terms and conditions therein contained, with effect from the time and date of delivery of the Vessel by the Head
Sellers to the Charterers under the
Head MOA, all the rights and obligations of the Head Sellers (as owners) under the Initial Sub-Charter
shall be novated to and assumed by the Charterers.
6
"Initial
Sub-Charterers" means Hapag-Lloyd Aktiengesellschaft of Ballindamm 25, Hamburg, Germany.
"Innocent
Owners' Interest Insurances" means all policies and contracts of innocent owners' interest insurance and innocent owners' additional
perils insurance from time to time taken out by the Owners in relation to the
Vessel.
"Insurances"
means all policies and contracts of insurance which are from time to time taken out or entered into by the Charterers in respect of the
Vessel or her earnings or otherwise in connection with the Vessel or her
earnings.
"Interest
Rate" means the rate of interest applicable for each Hire Period and any other period for which an interest rate is to be determined
is the percentage rate per annum which is the aggregate of:
(a)
the applicable Reference Rate; and
(b)
the Margin.
"Interpolated
Term SOFR" means, in relation to any Outstanding Principal, the rate (rounded to the same number of decimal places as Term SOFR)
which results from interpolating on a linear basis between:
(a) either:
(i)
the
applicable Term SOFR (as of the Quotation Day) for the longest period (for which Term SOFR
is available) which is less than three (3) months; or
(ii)
if
no such Term SOFR is available for a period less than three (3) months, SOFR for the day
which is three (3) US Government Securities Business Days before the Quotation Day; and
(b)
the
applicable Term SOFR (as of the Quotation Day) for the shortest period (for which Term SOFR
is available) which exceeds three (3) months.
"ISM
Code" means the International Safety Management Code (including the guidelines on its implementation), adopted by the International
Maritime Organisation Assembly as Resolutions A.741 (18) (as amended by MSC
104 (73)) and A.913(22) (superseding Resolution A.788 (19)),
as the same may be amended, supplemented or superseded from time to time (and the terms "safety management system", "Safety
Management Certificate" and
"Document of Compliance" have the same meanings as are given to them in the ISM Code).
"ISPS
Code" means the International Ship and Port Facility Security Code adopted by the International Maritime Organisation (as the
same may be amended, supplemented or superseded from time to time).
"ISSC"
means a valid and current International Ship Security Certificate issued under the ISPS Code.
"Legal
Opinions" means the legal opinions provided to the Owners under Clause 36.(b)(vi) (Conditions precedent and conditions subsequent).
"Legal
Reservations"
(a)
the
principle that equitable remedies may be granted or refused at the discretion of a court
and the limitation of enforcement by laws relating to insolvency, reorganisation and other
laws generally affecting the rights of
creditors;
(b)
the
time barring of claims under the Limitation Acts, the possibility that an undertaking to
assume liability for or indemnify a person against nonpayment of UK stamp duty may be void
and defences of set-off or
counterclaim;
7
(c)
similar
principles, rights and defences under the laws of any Relevant Jurisdiction; and
(d)
any
other matters which are set out as qualifications or reservations as to matters of law of
general application in the Legal Opinions.
"Manager's
Undertakings" means the deed of undertaking executed or to be executed by each Approved Manager in favour of the Owners and
the Security Trustee in the Agreed Form.
"Margin"
means two point five per cent. (2.5%) per annum.
"Market
Value" means the Market Value determined pursuant to Clause 4832..1(bb) (Value maintenance).
"Material
Adverse Effect" means a material adverse effect on:
(a)
the
business, operations, property, financial condition of the Charter Group taken as a whole;
or
(b)
the
ability of any Obligor to perform its or his obligations under the Transaction Documents
to which it is a party; or
(c)
the
effectiveness or ranking of any Security Interest granted pursuant to any of the Transaction
Documents or the rights or remedies of the Owners or the Security Trustee under any Transaction
Document.
"MOA"
has the meaning given to such term in Clause 34 (Background).
"MOA
Payment Date" means the date on which the Owners remit the MOA Purchase Price to the client account of the Escrow Agent (as
defined in the MOA) pursuant to Clause 3.2 (Preposition) of the MOA.
"MOA
Purchase Price" means the purchase price as stated in clause 1 (Purchase price) of the MOA, being US$44,500,000 (Dollars
Forty Four Million Five Hundred Thousand Only).
"month"
means a period starting on one day in a calendar month and ending on the numerically corresponding day in the next calendar month, except
that if there is no numerically corresponding day in the calendar month in
which that period is to end, that period shall end on the
last day in that calendar month.
"Mortgagees'
Interest Insurances" means all policies and contracts of mortgagees' interest insurance, mortgagees’ additional perils
insurance taken out by any Finance Party in relation to the Vessel.
"Obligors"
means the Charterers, the Charter Guarantor and the Related Charterers.
"Original
Principal" means an amount equal to the MOA Purchase Price, being US$44,500,000 (Dollars Forty Four Million Five Hundred Thousand
Only).
"Outstanding
Principal" means, at any relevant time during the Agreement Term, an amount equal to the Original Principal as may be reduced
by payment of Fixed Hire in accordance with Clause 40(a) (Hire) and
prepayment of the Purchase Obligation Price in accordance
with Clause 48(bb) (Value maintenance).
"Owners'
Account" means, subject to Clause 40(d) (Payment account information), the Owner’s bank account described in Box
26 (Place of payment; also state beneficiary and bank account) of this Charter.
"Party"
means each of the Owners and the Charterers.
8
"Perfection
Requirements" means any authorisation, consent, approval, resolution, licence, exemption, filing, notarisation, lodgement or
registration for the relevant Transaction Documents set out as perfection requirements
(howsoever described) for such Transaction Documents
in any legal opinion referred to under Clause 36 (Conditions precedent and conditions subsequent).
"PDA"
means the protocol of delivery and acceptance in relation to the Vessel to be executed between the Owners and the Charterers, substantially
in the form of Schedule 1 (Form of Protocol of Delivery and Acceptance)
hereto.
"Permitted
Security" means:
(a)
any
Security Interest created pursuant to any Finance Document or otherwise created with the
prior written consent of the Owners;
(b)
any
liens for unpaid master's, officer's and crew's wages in accordance with usual maritime practice
and are discharged within thirty (30) days;
(c)
any
liens for salvage;
(d)
any
liens for master's disbursements incurred in the ordinary course of trading and are discharged
within thirty (30) days;
(e)
any
other lien arising (i) by operation of law or (ii) otherwise in the ordinary course of operation,
repair or maintenance of the Vessel and not as a result of any default or omission of any
Obligor not exceeding an
aggregate amount of US$1,500,000 (Dollars One Million Five Hundred
Thousand); or
(f)
any
Security Interest created in favour of a plaintiff or defendant in any action of the court
or tribunal before whom such action is brought as security for costs and expenses where the
Owners are prosecuting or
defending such action in good faith by appropriate steps.
"Potential
Termination Event" means, an event or circumstance specified in Clause 49 (Termination Event) which would, with the expiry
of any applicable grace period, the giving of any notice, the lapse of time, a
determination under the Transaction Documents or any combination
of the foregoing, be a Termination Event.
"PRC"
means the People's Republic of China.
"Purchase
Obligation Price" means the amount due and payable by the Charterers to the Owners pursuant to paragraph (c) of Clause 52 (Transfer
of title), being an amount of US$10,000,000 (Dollars Ten Million only).
"Purchase
Option Date" means any Hire Payment Date as specified in the Purchase Option Notice served in accordance with paragraph (a)
of Clause 52 (Transfer of title), which shall be a Business Day falling on or after the
3rd Anniversary.
"Purchase
Option Notice" has the meaning given to such term in Clause 52 (Transfer of title).
"Purchase
Option Fee" means an amount equal to five per cent. (5%) of the Outstanding Principal as at the Purchase Option Date.
"Purchase
Option Price" means the amount due and payable by the Charterers to the Owners pursuant to paragraph (b) of Clause 52 (Transfer
of title), being the aggregate of:
(a)
the
Outstanding Principal as at the Purchase Option Date;
(b)
the
applicable Purchase Option Fee;
(c)
any
Variable Hire which has accrued but is unpaid up to the Purchase Option Date (inclusive);
and
9
(d)
all
legal costs and expenses and other reasonable documented costs and expenses incurred by the
Owners relating to exercise by the Charterers of their purchase option right pursuant to
Clause 52 (Transfer of title).
"Quotation
Day" means, in relation to any Hire Period and any other period for which an interest rate is to be determined, three (3) US
Government Securities Business Days before the first day of that Hire Period (as the case
may be) (unless the Owners, in their reasonable
opinion, consider market practice differs in the relevant syndicated loan market, in which case the Quotation Day will be determined
by the Owners in accordance with that
market practice).
"Reference
Rate" means, in relation to any Outstanding Principal:
(a)
the
applicable Term SOFR as of the Quotation Day for a period of three (3) months; or
(b)
as
otherwise determined pursuant to Clause 40(l) (Unavailability of Term SOFR),
and
if, in either case, that rate is less than zero, the Reference Rate shall be deemed to be zero.
"Registration
Costs" means any documented costs and expenses (including fees and taxes) in respect of:
(a)
the
registration (or, as the case may be, any re-registration) of title to the Vessel in the
Owners’ name;
(b)
the
registration of the Owners as a foreign maritime entity (or similar) under the laws of the
flag state (if applicable);
(c)
the
financing charter recordation in respect of this Charter with the shipping registry or other
competent authority of the flag state or other relevant jurisdiction (if applicable);
(d)
the
bareboat charter registration in the name of the Charterers with the shipping registry or
other competent authority of the flag state or other relevant jurisdiction (if applicable);
and
(e)
the
maintenance of any of the aforementioned registrations and recordation on the Actual Delivery
Date and for the duration of the Charter Period,
and
without prejudice to the generality of the foregoing, the Registration Costs shall include all documented costs and expenses (including,
not limited to, notarisation and legalisation or apostille cost and reasonable legal fees)
incurred by the Owners in preparing and provision
of instruments and documents required for effecting, maintaining and perfecting the aforesaid registration and recordation and all fees
and charges and tonnage tax charged by
the relevant ship registry or other authorities.
"Relevant
Jurisdiction" means, in relation to an Obligor:
(a)
its
jurisdiction of incorporation or formation (as the case may be);
(b)
any
jurisdiction where any asset subject to or intended to be subject to a Security Document
to be executed by it is situated;
(c)
any
jurisdiction where it principally conducts its business; and
(d)
the
jurisdiction whose laws govern the perfection of any of the Security Documents entered into
by it.
10
"Related
Charter" means,
(a)
each
bareboat charter party entered into or to be entered into the same day as this Charter or
at any time after the date hereof, the details of which are listed in Schedule 3 hereto
(Related Charter and relevant
information); and
(b)
the
bareboat charter party of any ship which may be entered into from time to time between the
Owners or any Affiliate of the Owners (as owners) and a member of the Charter Group (as charterers).
"Related
Charterers" means the charterers under any Related Charter.
"Related
Owners" means the owners under any Related Charter.
"Related
Transaction Document" means any "Transaction Document" as defined in each Related Charter.
"Requisition
Compensation" means all compensation or other money which may from time to time
be payable to the Charterers as a result of the Vessel being requisitioned for title or in any other way compulsorily acquired (other
than by way of requisition for hire).
"Restricted
Countries" means those countries subject to country-wide or territory-wide Sanctions and/or trade embargoes, in particular but
not limited to pursuant to the U.S.'s Office of Foreign Asset Control of the U.S.
Department of Treasury ("OFAC") at
the date of this Charter, Cuba, Crimea, Iran, North Korea and Syria and any additional countries based on respective country-wide or
territory-wide Sanctions being imposed by OFAC or
any of the regulative bodies referred to in the definition of Restricted Person.
"Restricted
Person" means a person or entity that is (a) listed on, or owned or controlled by a person listed on, or acting on behalf of
a person listed on, any Sanctions List; (b) a national of, incorporated under the laws of, or
owned 50% or more or (directly or indirectly)
controlled by, or acting on behalf of, a person organised under the laws of a country or territory that is a Restricted Country; or (c)
otherwise a target of Sanctions ("target of
Sanctions" signifying a person with whom a US person or other national of
Sanctions Authority would be prohibited or restricted by law from engaging in trade, business or other activities); provided that provided
that, in the
case of a person or entity that is targeted only by "sectoral sanctions," or other Sanctions that do not generally
prohibit transactions with such person, such person or entity shall be a Restricted Person with respect to a
transaction only to the
extent that a Party or any other person or entity organised or resident in the jurisdiction of a Sanctions Authority would be prohibited
by the law of any such applicable jurisdiction from entering into,
directly or indirectly, such transaction with such person.
"Sanctions"
means the sanctions, embargoes, freezing provisions, prohibitions or other restrictions relating to trading, doing business, investment,
exporting, financing or making assets available (or other activities similar to or
connected with any of the foregoing):
(a)
imposed
by law or regulation of (i) the United States government; (ii) the United Nations; (iii)
the European Union; (iv) the People's Republic of China; (v) the United Kingdom; or (vi)
the United Nations Security
Council, the Office of Foreign Assets Control of the US Department
of Treasury ("OFAC"), the United States Department of State, the Council
of the European Union, the European Commission, and His Majesty's
Treasury ("HMT")
(together, the "Sanctions Authorities"); or
(b)
otherwise
imposed by any law or regulation by which any Obligor is bound (which shall include without
limitation, any extra-territorial sanctions imposed by law or regulation of the United States
of America) or as
regards a regulation, compliance with which is reasonable in the ordinary
course of business of any Obligor,
against
any state, natural or legal person, body or entity.
"Sanctions
List" means the "Specially Designated Nationals and Blocked Persons" list maintained by the OFAC, the Consolidated
List of Financial Sanctions Targets and the Investment Ban List maintained by HMT, or any
similar list maintained by, or public announcement
of Sanctions designation made by, any of the Sanctions Authorities.
11
"Security
Documents" means, in relation to the Vessel, the following:
(a)
the
Account Security;
(b)
the
Charterers' Assignment;
(c)
any
Manager's Undertaking;
(d)
the
Share Security;
(e)
the
Security Documents under any Related Charter; and
(f)
any
document designated by the Owners and the Charterers as a Security Document;
and
"Security Document" means any one of them.
"Security
Interest" means a mortgage, charge (whether fixed or floating), pledge, lien, hypothecation, assignment, trust arrangement,
title retention or other security interest or arrangement of any kind whatsoever.
"Security
Trust Deed" means the deed executed or to be executed by (amongst others) the Security Trustee, the Owners, the Related Owners,
the Charterers, the Related Charterers and the Charter Guarantor.
"Security
Trustee" means OCEAN RAINBOW SHIPPING LIMITED, a company incorporated and existing under the laws of Hong Kong with Business
Registration Number 62836611 and having its registered office at Units
904-907, 9/F Dah Sing Financial Centre, 248 Queen's Road East,
Wanchai, Hong Kong, China.
"Settlement
Date" means, following a Total Loss of the Vessel, the earliest of:
(a)
the
date which falls One Hundred (100) days after the date of occurrence of the Total Loss or,
if such date is not a Business Day, the immediately preceding Business Day; and
(b)
the
date on which the Owners receive the Total Loss Proceeds in respect of the Total Loss; and
(c)
the
expiry date of the Charter Period.
"Share
Security" means the deed of charge or pledge over all the limited liability company interests in the Charterers executed or
(as the case may be) to be executed by the Charter Guarantor as chargor in favour of the
Security Trustee.
"Ship
Management Agreement" means any agreement made or to be made between the Charterers and any Approved Manager in respect of the
technical and/or commercial management of the Vessel on such terms and
conditions reasonably acceptable to the Owner.
"Sub-Charter"
means, any charterparty in respect of the Vessel entered into by the Charterers (as disponent owners) for the employment of the Vessel.
"Sub-Charterers"
means, in respect of the Vessel, any sub-charterers which are or will be parties to a Sub-Charter.
"Subsidiary"
means, in relation to any company or corporation, a company or corporation:
(a)
which
is controlled, directly or indirectly, by the first mentioned company or corporation;
12
(b)
more
than half the issued equity share capital of which is beneficially owned, directly or indirectly,
by the first mentioned company or corporation; or
(c)
which
is a Subsidiary of another Subsidiary of the first mentioned company or corporation,
and
for this purpose, a company or corporation shall be treated as being "controlled" by another if that other company or corporation
is able to direct its affairs and/or to control the composition of its board of directors or
equivalent body.
"Tax"
or "tax" means, other than taxes imposed on the overall net income of the Owners, their Holding Company, their group
and/or the Finance Parties, any FATCA Deduction, any present and future tax (including, without
limitation, value added tax, consumption
tax or any other tax in respect of added value or any income), levy, impost, duty or other charge or withholding of any nature (including
any penalty or interest payable in connection
with any failure to pay or any delay in paying any of the same); and "Taxes",
"Taxation" and "taxation" shall be construed accordingly.
"Term
SOFR" means the term SOFR reference rate administered by CME Group Benchmark Administration Limited (or any other person which
takes over the administration of that rate) for the relevant period published
(before any correction, recalculation or republication
by the administrator) by CME Group Benchmark Administration Limited (or any other person which takes over the publication of that rate).
"Termination
Event" means each of the events specified in paragraph (a) of Clause 49 (Termination Events).
"Termination
Notice" has the meaning given to such term in 40(i) (Illegality) and Clause 49(b) (Owners' options after occurrence
of a Termination Event).
"Termination
Payment Date" means:
(a)
in
respect of a termination of this Charter in accordance with Clause 40(i) (Illegality),
the date specified in the Termination Notice served on the Charterers pursuant to that Clause;
(b)
in
respect of a termination of this Charter in accordance with Clause 40(j) (Increased Costs),
the date specified in the Termination Notice served on the Charterers pursuant to that Clause;
(c)
in
respect of a Default Termination, fifteen (15) days after the date on which the Termination
Notice is served on the Charterers pursuant to paragraph (b) of Clause 49 (Termination
Events) in respect of such Default
Termination;
(d)
in
respect of a Total Loss Termination, the Settlement Date in respect of the Total Loss which
gives rise to such Total Loss Termination.
"Termination
Sum" means an amount representing the Owners' losses as a result of the early termination of this Charter prior to the expiry
of the Charter Period, which both parties acknowledge as a genuine and reasonable
pre-estimate of the Owners' losses in the event of
such termination and shall consist of the following:
(a)
the
Outstanding Principal as at the Termination Payment Date;
(b)
an
amount equal to six per cent. (6%) of the Outstanding Principal as at the Termination Payment
Date, provided such amount shall not be payable and shall not form part of the Termination
Sum in the event this
Charter is terminated:
(A)
as
a result of a Total Loss Termination; or
(B)
pursuant
to the provisions of Clause 40(i) (Illegality) solely for the reason that it is unlawful
or it is prohibited for the Owners (but not the Charterers) to charter the Vessel under this
Charter; or
13
(C)
pursuant
to the provisions of Clause 40(j) (Increased Costs) at any time on or after the 3rd
Anniversary of the Actual Delivery Date.
(c)
any
Variable Hire which has accrued, but is unpaid, up to (and including) the Termination Payment
Date;
(d)
any
and all Unpaid Sums due and payable together with interest accrued thereon pursuant to Clause
40(g) (Default Interest);
(e)
any
Break Costs; and
(f)
all
liabilities, documented costs and expenses reasonably incurred by the Owners (including,
without limitation, legal expenses).
"Test
Date" means each of the following dates on which the Valuation Reports shall be provided to the Owners in accordance with Clause
4832..1(aa) (Valuation Reports):
(i)
30
June and 31 December in each year during the Charter Period (each such Valuation Report to
be at the Charterers' cost); and
(ii)
following
the occurrence of a Termination Event and whilst the same is continuing, each other date
as the Owners may require in their absolute discretion (with not less than 30 days prior
notice to the Charterers) (each
such additional Valuation Report shall be at the cost of
the Charterers).
"Third
Parties Act" means the Contracts (Rights of Third Parties) Act 1999.
"Threshold
Amount" means US$1,500,000 (Dollars One Million Five Hundred Thousand only) or the equivalent in any other currency.
"Title
Transfer PDA" means the protocol of delivery and acceptance in relation to the Vessel to be executed between the Owners and
the Charterers, substantially in the form of Schedule 2 (Form of Title Transfer Protocol of
Delivery and Acceptance) hereto.
"Total
Loss" means during the Charter Period:
(a)
actual
or constructive or compromised or agreed or arranged total loss of the Vessel and for clarity,
the Vessel shall not be deemed to be lost unless she has either 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
(b)
the
requisition for title or compulsory acquisition of the Vessel by any government or other
competent authority (other than by way of requisition for hire) unless the Vessel is released
and returned to the possession of
the Owners or the Charterers within sixty (60) days after
the requisition for title or compulsory acquisition in question; or
(c)
the
capture, seizure, hijacking, theft, condemnation as prize, confiscation or forfeiture of
the Vessel (not falling within paragraph (b) of this definition), unless the Vessel is released
and returned to the possession of the
Owners or the Charterers within ninety (90) days after
the capture, seizure, arrest, detention, hijacking, theft, condemnation as prize, confiscation
or forfeiture in question (for the avoidance of confusion, always
excluding any arrest or
detention or similar incident through judicial procedures or legal proceedings or, by reason
of or in connection with maritime lien or any claim against an Obligor or arising out of
or in relation
to the use, operation, maintenance or management of the Vessel or, otherwise
caused by or attributable to an Obligor), and for the purpose of this Charter, (i) an actual
Total Loss of the Vessel shall be deemed to have
occurred at the date and time when the Vessel
was lost but if the date of the loss is unknown the actual Total Loss shall be deemed to
have occurred on the date on which the Vessel was last reported, (ii) a constructive
Total
Loss shall be deemed to have occurred at the date and time at which a notice of abandonment
of the Vessel is given to the insurers of the Vessel and (iii) a compromised, agreed or arranged
Total Loss shall be
deemed to have occurred on the date of the relevant compromise, agreement
or arrangement.
14
"Total
Loss Proceeds" means the proceeds of the Insurances or any other compensation of any description in respect of a Total Loss
unconditionally received and retained by or on behalf of the Owners in respect of a Total
Loss.
"Total
Loss Termination" means a termination of the Charter Period pursuant to the provisions of paragraph (a) of Clause 53 (Total
Loss).
"Transaction
Documents" means, together:
(a)
this
Charter;
(b)
the
MOA;
(c)
the
Charter Guarantee;
(d)
any
Co-Assured Undertaking;
(e)
the
Security Trust Deed; and
(f)
the
Security Documents,
and
such other documents as may in good faith be designated as such by the Owners from time to time.
"Unpaid
Sum" means any sum due and payable but unpaid by any Obligor under the Transaction Documents.
"US
Dollars", "Dollars", "USD", "US$" and "$" each means available
and freely transferable and convertible funds in lawful currency of the United States of America.
"Valuation
Report" means, in relation to the Vessel, a valuation report addressed to the Owners and prepared:
(a)
by
an Approved Valuer selected by the Owners; and
(b)
assessed
in Dollars by a desktop valuation on the basis of a charter-free sale for prompt delivery
for cash at arm's length on normal commercial terms as between a willing seller and a willing
buyer.
"Value
Maintenance Ratio" means the ratio (expressed as a percentage) of:
(a)
the
aggregate amount of the Market Value of the Vessel and any Cash Collateral already provided
to restore the Value Maintenance Ratio; to
(b)
the
then Outstanding Principal.
"Value
Maintenance Threshold" means the ratio (expressed as a percentage) of one hundred and thirty per cent. (130%).
"Variable
Hire" means in respect of each Hire Period, the interest accrued on the Outstanding Principal for each day during the
relevant Hire Period and calculated on the basis of a year of three
hundred sixty (360) days at the applicable Interest Rate by
using the
following formula:
15
VH
= (A × B / 360) × C
whereby:
VH
= the amount of Variable Hire for that Hire Period
A
= (in relation to the first Hire Payment Date) the Original Principal; or
(in
relation to any other subsequent Hire Payment Date) the Outstanding Principal on the immediately preceding Hire Payment Date
B
= the Interest Rate applicable to that Hire Period
C
= the actual number of days during that Hire Period.
"Vessel"
means the container ship named "BREMERHAVEN EXPRESS" as more particularly described in Boxes 5 (Vessel's name, call
sign and flag) to 10 (Classification Society) of this Charter.
"Quiet
Enjoyment Letter" means, in relation to the Vessel, a letter which the Finance Parties (or, if any, their authorised agent on
their behalf) shall issue in favour of the Charterers, such letter to be in a form acceptable to the
Charterers, the Owners and the Finance
Parties (each party acting reasonably) under which the Finance Parties (in the absence of any Termination Event) allow (i) the Charterers'
unfettered use and quiet enjoyment without
interruption of the Vessel in accordance with the terms and conditions of this Charter and
(ii) the release of any mortgage over the Vessel following full payment of the relevant amount owed under this Charter at the relevant
time.
33.
Interpretations
(a)
In
this Charter, unless the context otherwise requires, any reference to:
(i)
to
this Charter include the Schedules hereto and references to Clauses and Schedules are, unless
otherwise specified, references to Clauses of and Schedules to this Charter and, in the case
of a Schedule, to
such Schedule as incorporated in this Charter as substituted from time
to time;
(ii)
any
statutory or other legislative provision shall be construed as including any statutory or
legislative modification or re-enactment thereof, or any substitution therefor;
(iii)
the
term "Vessel" includes any part of the Vessel, including, without limitation,
any scrubbers installed on the Vessel;
(iv)
the
"Owners", the "Charterers", the "Charter Guarantor",
any "Approved Manager", any "Obligor", any “Sub-charterer”,
any "Related Owners", any "Related Charterers", the "Security
Trustee", or
any other person include any of their respective successors, permitted
assignees and permitted transferees;
(v)
any
agreement, instrument or document include such agreement, instrument or document as the same
may from time to time by amended, modified, supplemented, novated or substituted;
(vi)
the
"equivalent" in one currency (the "first currency") as
at any date of an amount in another currency (the "second currency") shall
be construed as a reference to the amount of the first currency which
could be purchased
with such amount of the second currency at the spot rate of exchange quoted by the Owners
at or about 11:00 a.m. two (2) Business Days (being a day other than a Saturday or Sunday
on
which banks and foreign exchange markets are generally open for business in Shanghai)
prior to such date for the purchase of the first currency with the second currency for delivery
and value on such date;
16
(vii)
"hereof",
"herein" and "hereunder" and other words of similar import
means this Charter as a whole (including the Schedules) and not any particular part hereof;
(viii)
"indebtedness"
includes any obligation (whether incurred as principal or as surety) for the payment or repayment
of money, whether present or future, actual or contingent;
(ix)
"law"
includes common or customary law and any constitution, decree, judgment, legislation, order,
ordinance, regulation, rule, statute, treaty or other legislative measure in any jurisdiction
or any present or
future directive, regulation, request or requirement, or official or judicial
interpretation of any of the foregoing, in each case having the force of law and, if not
having the force of law, in respect of which
compliance is generally customary;
(x)
the
word "person" or "persons" or to words importing persons
include, without limitation, any state, divisions of a state, government, individuals, partnerships,
corporations, ventures, government agencies,
committees, departments, authorities and other
bodies, corporate or unincorporated, whether having distinct legal personality or not;
(xi)
a
"regulation" includes any regulation, rule, official directive (having the
force of law) of any governmental, intergovernmental or supranational body, agency, department
or of any regulatory authority;
(xii)
the
"winding-up", "dissolution", "administration",
"liquidation", "insolvency", "reorganisation",
"readjustment of debt", "suspension of payments", "moratorium"
or "bankruptcy" (and their
derivatives and cognate expressions) of any person
shall each be construed so as to include the others and any equivalent or analogous proceedings
or event under the laws of any jurisdiction in which such
person is incorporated or any jurisdiction
in which such person carries on business;
(xiii)
"protection
and indemnity risks" means the usual risks covered by a protection and indemnity
association which is a member of the International Group of P&I Club, including pollution
risks and the
proportion (if any) of any sums payable to any other person or persons in case
of collision which are not recoverable under the hull and machinery policies by reason of
the incorporation in them of clause 6 of
the International Hull Clauses (1/11/02 or 1/11/03),
clause 8 of the Institute Time Clauses (Hull)(1/10/83) or clause 8 of the Institute Time
Clauses (Hulls)(1/11/1995) or the Institute Amended Running Down
Clause (1/10/71) or any
equivalent provision;
(xiv)
a
Potential Termination Event is "continuing" if it has not been remedied
or waived and a Termination Event is "continuing" if it has not been remedied
or waived; and
(xv)
words
denoting the plural number include the singular and vice versa.
(b)
Headings
are for the purpose of reference only, have no legal or other significance, and shall be
ignored in the interpretation of this Charter.
(c)
A
time of day (unless otherwise specified) is a reference to Beijing time.
17
34.
Background
(a)
Pursuant
to the Head MOA, the Head Sellers agreed to sell, and the Charterers agreed to purchase the
Vessel subject to the terms and conditions therein contained.
(b)
At
the request of the Charterers, the Owners (as buyers) entered into a memorandum of agreement
of even date herewith (the "MOA") with the Charterers (as sellers) pursuant
to which the Owners have agreed to
purchase, and the Charterers have agreed to sell the Vessel
subject to the terms and conditions therein contained.
(c)
The
Vessel is ultimately intended for use by the Charterers and the Owners will finance the Charterers'
acquisition of the Vessel with the arrangement that the Charterers will repay the Owners
pursuant to the terms and
conditions herein.
(d)
Accordingly,
the parties hereby agree that this Charter is subject to the effective transfer of ownership
of the Vessel to the Owners pursuant to the MOA.
(e)
If,
prior to the Actual Delivery Date, in the absence of any Termination Event:
(i)
it
becomes unlawful for the Owners (as buyers) to perform or comply with any or all of their
obligations under the MOA or any of the obligations of the Owners under the MOA is not or
ceases to be legal,
valid, binding and enforceable; or
(ii)
the
Head MOA expires, is cancelled, terminated, rescinded or suspended or, otherwise ceases to
remain in full force and effect for any reason,
neither
party shall be liable to the other for any claim arising out of this Charter and this Charter shall immediately terminate and be cancelled
(with the exception of Clause 17 (Indemnity) (Part II) and Clause 58
(Further indemnities)) provided (for the avoidance
of any doubt) the Owners shall be entitled to retain the Arrangement Fee and, if the Arrangement Fee has not been paid, the Charterers
shall immediately pay such
amount in full together with interest thereon pursuant to Clause 40(g) (Default Interest).
35.
Delivery
(a)
The
Charterers expressly acknowledge and confirm that the Owners entered into the MOA to purchase
the Vessel solely for the purpose of leasing the Vessel to the Charterers under this Charter
and that the Owners
shall have no obligation or duty whatsoever to survey, investigate or
verify the condition or performance of the Vessel. The Charterers shall be responsible to,
at the Charterers' costs and expenses, make arrangement to
take physical delivery of the
Vessel and all plans, drawings, manuals, technical documents, and certificates pertaining
to the Vessels.
(b)
The
Owners will deliver and the Charterers will take delivery of the Vessel under this Charter
immediately, which to the extent possible shall be deemed to take place simultaneously, after
the Sellers deliver the Vessel
to the Owners under and subject to the terms of the MOA upon
the Actual Delivery Date, subject to which, the Charterers will accept the Vessel on an "as
is where is" basis on delivery under this Charter.
(c)
Notwithstanding
anything to the contrary in this Charter and the MOA, the obligation of the Owners to purchase
the Vessel from the Sellers and charter the Vessel to the Charterers pursuant to this Charter
shall be
subject to the following conditions:
(i)
no
Termination Event having occurred on or prior to the date of this Charter or the Actual Delivery
Date;
18
(ii)
the
representations and warranties referred to in Clause 47 (Charterers' representations and
warranties) being true and correct on the date of this Charter and the Actual Delivery
Date;
(iii)
the
Actual Delivery Date falls on or before the Cancellation Date (or such later date as may
be agreed between the Owners (as buyers under the MOA) and Sellers; and
(iv)
the
Owners shall have received, or are satisfied that they will receive, the documents and evidence
referred to in Clause 36 (Conditions precedent and conditions subsequent), in each
case in all respects in form
and substance satisfactory to them on or before the Actual Delivery
Date.
(d)
Provided
that the conditions referred to in paragraph (c) above have been fulfilled or waived to the
satisfaction of the Owners (which shall be evidenced in writing by the Owners), the Owners
and the Charterers agree
that:
(i)
the
Charterers shall, at their own expense, upon the Actual Delivery Date arrange for the Vessel
to be registered in the name of the Owners under the Liberian flag and duly create and register
a Financing
Charter over the Vessel in favour of the Owners under the Liberian law as security
for the obligations of the Obligors in connection with the Transaction Documents;
(ii)
the
acceptance by the Owners of the Vessel under the MOA shall constitute delivery of the Vessel
to the Charterers under this Charter and the Charterers shall have no right to refuse acceptance
of delivery of
the Vessel under this Charter and such acceptance shall constitute,
(A)
irrevocable,
final and conclusive acceptance of the Vessel by the Charterers for all purposes of this
Charter;
(B)
irrevocable,
final and conclusive evidence that, for the purposes of the obligations and liabilities of
the Owners hereunder or in connection herewith, the Vessel is at the time of delivery to
the
Charterers seaworthy, in accordance with the provisions of this Charter, in good working
order and repair and without defect or inherent vice whether or not discoverable by the Charterers
and free
and clear of all Security Interest and debts of whatsoever nature; and
(C)
irrevocable,
final and conclusive evidence that the Vessel is satisfactory in all respects and complies
with the requirements of this Charter; and
(iii)
the
acceptance of delivery of the Vessel by the Charterers from the Owners pursuant to this Charter
shall take place simultaneously with the acceptance of delivery of the Vessel by the Owners
from the Sellers
pursuant to the MOA;
(iv)
the
Charterers will accept (without reservation) the Vessel:
(A)
on
an "as is where is" basis in exactly the same form and state as the Vessel is delivered
to the Owners pursuant to the MOA;
(B)
in
such form and state with any faults, deficiencies and errors of any description; and
(C)
for
the avoidance of doubt, no underwater inspection shall be performed at the time of commencement
of this Charter on the basis that any repairs required at the next scheduled dry-docking
are the
responsibility of the Charterers;
19
(v)
Notwithstanding
and without prejudice to the foregoing, the Owners and the Charterers nonetheless agree to
enter into and execute the PDA on Delivery.
(e)
The
Charterers acknowledge and agree that the Owners are not the manufacturer or original supplier
of the Vessel which has been purchased by the Owners pursuant to the MOA, and have therefore
made no
representations or warranties in respect of the Vessel or any part thereof, and hereby
waive all their rights in respect of any warranty or condition implied (whether statutory
or otherwise) on the part of the Owners and
all claims against the Owners howsoever the same
might arise at any time in respect of the Vessel, and/or arising out of the construction,
operation or performance of the Vessel and the chartering thereof under this
Charter (including,
without limitation, in respect of the seaworthiness or otherwise of the Vessel).
(f)
In
particular, and without prejudice to the generality of paragraph (e) above, the Owners shall
be under no liability whatsoever, howsoever arising, in respect of the injury, death, loss,
damage or delay of or to or in
connection with the Vessel or any person or property whatsoever,
whether onboard the Vessel or elsewhere, and irrespective of whether such injury, death,
loss, damage or delay shall arise from the unseaworthiness of
the Vessel. For the purpose
of this paragraph (f), "delay" shall include delay to the Vessel (whether in respect
of delivery under this Charter or thereafter and any other delay whatsoever).
36.
Conditions
precedent and conditions subsequent
(a)
Initial
Conditions
Notwithstanding
anything to the contrary in this Charter or the MOA, the performance by the Owners of any of the obligations of under this Charter and
the MOA (including, without limitation to, preposition or
payment of the MOA Purchase Price (or a part hereof) under the MOA) are subject
to and conditional upon the Owners' receipt of following documents and evidence (in each case in form and substance acceptable to
the
Owners) prior to or contemporaneously with the execution of this Charter (or such other date as the Owners and the Charterers may agree):
(i)
the
following documents duly executed by the parties thereto:
(A)
this
Charter;
(B)
the
MOA;
(C)
the
Charter Guarantee;
(D)
the
Security Trust Deed; and
(E)
the
Share Security,
each
together with all documents required by any of them, including without limitation to the original Certificate of Limited Liability Company
Interest and other ancillary documents required under the Share
Security (or, in case the Actual Delivery Date would occur within ten
(10) Business Days of the date of this Charter, undertaking that the original certificate and documents shall be delivered to the Owners
within ten (10) Business Days of the date hereof);
(ii)
the
following documents in relation to each Obligor which is a party to the documents listed
in above paragraph (i):
(A)
Copies
of its constitutional documents including Certificate of Incorporation, Business Registration
Certificate, Memorandum and Articles of Association (or equivalent in its place of incorporation);
20
(B)
Certificate
of Goodstanding or other certification or documents of similar nature dated on or around
the date of this Charter;
(C)
Certificate
of Incumbency issued by relevant authority or company secretary or registered agent (as the
case may be) dated on or around the date of this Charter showing its members/shareholders,
directors and officers;
(D)
Resolutions
of the board of directors and/or resolutions of shareholders/members (whichever is applicable),
approving the execution of this Charter and any other Transaction Document to which it is
a party and authorizing a person or persons to execute the same under seal (where appropriate),
and any other notices and documents required in connection therewith;
(E)
Power
of attorney of each person authorised to execute on its behalf this Charter and any other
Transaction Document to which it is a party; and
(F)
Certificate
of Director or Company Secretary dated the date of this Charter certifying that each copy
document relating to it specified in this paragraph (ii) is correct, complete and in full
force and
effect and setting out the names of its directors, officers and shareholders and
the proportion of shares held by each shareholder and the specimen signature(s) of each of
the directors, officers and (if
power of attorney is granted) the persons authorised under
the power of attorney.
(iii)
evidence
satisfactory to the Owners that:
(A)
the
Registration Costs and the Arrangement Fee have been paid in full;
(B)
on
or immediately after the Actual Delivery Date,
(1)
the
Vessel will be registered in the name of the Owners; and
(2)
a
Financing Charter over the Vessel granted by the Charterers in favour of the Owners will
be duly registered with the Liberian ship registry;
(C)
the
Vessel is or will on the Actual Delivery Date insured in the manner required by the Transaction
Documents.
The
conditions precedent set out in paragraph (a) are for the sole benefit of the Owners and may be waived by the Owners in whole or in part,
with or without conditions, without prejudicing the right of the Owners to
require fulfilment of such conditions in whole or in part
at any time thereafter.
(b)
Conditions
Precedent
Notwithstanding
anything to the contrary in this Charter, the obligations of the Owners to charter the Vessel to the Charterers under this Charter are
subject to and conditional upon the Owners' receipt of following
documents and evidence (in each case in form and substance acceptable
to the Owners) on or before the Actual Delivery Date:
(i)
each
of the following:
(A)
copies
of the duly executed:
21
(1)
Charterers'
Assignment;
(2)
Manager's
Undertakings,
(3)
any
Co-Assured Undertaking (if applicable); and
(4)
any
other Security Documents (if any),
each
together with all documents required by any of them (other than the documents set out in paragraph (d) of this Clause 36) including,
without limitation, all notices of assignment and/or charge;
and
(B)
(if
applicable) the duly executed Finance Document to which the Obligors are parties, together
with all notices, consents, letters and other documents required to be received (in each
case in form and
substance acceptable to the Owners and the Finance Parties) other than the
documents set out in paragraph (d) of this Clause 36;
(ii)
the
following documents in relation to the Charterers:
(A)
Certificate
of Goodstanding or other certification or documents of similar nature dated on or around
the Actual Delivery Date; and
(B)
Certificate
of Director or Company Secretary dated the Actual Delivery Date certifying that none of the
documents and evidence delivered to the Owners pursuant to Clause 36(a) (Initial Conditions)
has been amended, modified or revoked in any way since its delivery to the Owners; and
(iii)
if
applicable, copies of all governmental and other consents, licences, approvals and authorisations
as may be necessary to authorise the performance by each of the Obligors of its obligations
under the
Transaction Documents to which it or he is, or (as the case may be) will be a party,
and the execution, validity and enforceability of such Transaction Documents;
(iv)
a
copy of the following:
(A)
the
current Document of Compliance (DOC) under the ISM Code of the Approved Manager with respect
to technical management of the Vessel; and
(B)
the
Ship Management Agreement;
in
each case together with all addenda, amendments or supplements;
(v)
not
later than two (2) Business Days prior to the Actual Delivery Date, evidence that:
(A)
the
Initial Sub-Charter Novation Agreement has been duly executed by all parties thereto;
(B)
all
fees, costs and expenses due from the Charterers under the MOA and/or Clause 55 (Fees
and expenses) have been paid or will be paid by the Actual Delivery Date;
(C)
letters
of undertaking (together with attachments) from relevant insurers in respect of Insurances
as required by the Charterers’ Assignment will, on or immediately after the Actual
Delivery Date, be
duly executed in the agreed forms and delivered to the Security Trustee;
and
22
(D)
all
notices, consents, acknowledgements and other documents required to be received, given or
exchanged pursuant to the Transaction Documents having been duly executed and delivered pursuant
to
the terms thereof.
(vi)
a
legal opinion of the legal advisers to the Owners in each relevant jurisdiction (being England,
the Marshall Islands and the Republic of Liberia as at the date of this Charter), or confirmation
satisfactory to the
Owners that such an opinion will be given in such form and substance
satisfactory to the Owners;
(vii)
such
documentation and other evidence as is reasonably requested by the Owners in order for them
to comply with all necessary "know your customer" or similar identification procedures
in relation the
transactions contemplated in the Transaction Documents; and
(viii)
such
other consent, licence, approval, authorisation or other document, opinion or assurance which
the Owners consider to be necessary or desirable in connection with their entry into and
performance of the
transactions contemplated by any of the Transaction Documents or for the
validity and enforceability thereof (including, without limitation in relation to or for
the purposes of any financing by the Owners),
provided
that if the Owners (as buyers) have already received documents corresponding to the above provided by the Sellers (as sellers) pursuant
to the MOA, this shall pro tanto satisfy the Charterers' obligation to
provide the same documents under this Clause 36(b).
(c)
Owners
Right to Waive
If
the Owners in their sole discretion agree to deliver the Vessel under this Charter to the Charterers before all of the documents and
evidence required under paragraph (a) (Initial Conditions) or (b) (Conditions
Precedent) of this Clause 36 have been delivered
to or to the order of the Owners, the Charterers undertake to deliver all outstanding documents and evidence to or to the order of the
Owners no later than ten (10)
Business Days after the Actual Delivery Date or such other later date as specified by the Owners, acting
in their sole discretion. The delivery of the Vessel by the Owners to the Charterers under this Charter shall not,
unless otherwise notified
by the Owners (acting in their sole discretion) to the Charterers in writing, be taken as a waiver of the Owners' right to require production
of all the documents and evidenced required by this
Clause 36.
(d)
Conditions
Subsequent
Without
prejudice to the foregoing, the Charterers undertake to deliver or cause to be delivered to the Owners, the following documents and evidence
(in each case in form and substance acceptable to the Owners):
(i)
within
three (3) Business Days from the Actual Delivery Date:
(A)
the
letters of undertaking (together with attachments) from relevant insurers (or by the brokers
through whom the Insurances are placed, or, in the case of entries in protection and indemnity
or war
risks associations, by their managers) in respect of Insurance as required under this
Charter, the Charterers’ Assignment and the Manager’s Undertaking, in each case,
in such form and substances in
compliance with the requirements of the relevant Transaction
Documents; and
(B)
evidence
that notice of assignment in respect of the Initial Sub-Charter required under the Charterers'
Assignment has been served to the Initial Sub-Charterers and, the written acknowledgement
thereof by the Initial Sub-Charterers, in each case, in such form and substances in compliance with the requirements of the Charterers'
Assignment;
23
(ii)
within
three (3) Business Days from the Actual Delivery Date, the following certification with respect
to the Vessel (showing the Owners as the owner of the Vessel):
(A)
the
Vessel's Safety Management Certificate (as such term is defined pursuant to the ISM Code);
(B)
the
Vessel's ISSC; and
(C)
the
Vessel's IAPPC;
(iii)
within
ten (10) Business Days from the Actual Delivery Date, the originals of the Transaction Documents
and other documents set out in Clauses 36(a) and 36(b) and the originals of the sellers'
delivery
documents set out in schedule 1 (Seller's Delivery Documents) of the MOA;
and
(iv)
within
two (2) months of the Actual Delivery Date,
(A)
the
duly executed Account Security;
(B)
evidence
that notice of charge required under the Account Security has been served to the Account
Bank and, the written acknowledgement thereof by the Account Bank in such form and substance
satisfactory to the Owners; and
(C)
a
Dutch law legal opinion of the legal advisers to the Owners in respect of the Account Security.
Notwithstanding
anything to the contrary in this Charter, the obligations of the Owners to charter, or continue to charter, the Vessel to the Charterers
under this Charter shall be subject to the condition that any and all
undertakings stipulated in the preceding paragraph are, and will
be, fully complied with.
37.
Bunkers
and luboils
(a)
At
delivery the Charterers shall take over and pay for all lubricating oil, hydraulic oil, greases,
water and unbroached stores and provisions in the Vessel in accordance with the Head MOA.
(b)
In
the case the Vessel shall be redelivered to the Owners, at delivery the Charterers shall
be responsible to arrange, pay for and deliver to the Owners all bunkers (to the extent belonging
to the Charterers), lubricating
oil, hydraulic oil, greases, water and unbroached stores
and provisions in the Vessel and, the Owners shall take over at no costs all such bunkers
(to the extent belonging to the Charterers), lubricating oil, hydraulic oil,
greases, water
and provisions onboard the Vessel.
38.
Further
maintenance and operation
(a)
The
good commercial maintenance practice under Clause 10 (Maintenance and Operation) (Part
II) of this Charter shall be deemed to include:
(i)
the
maintenance and operation of the Vessel by the Charterers in accordance with:
(A)
the
relevant regulations, requirements and recommendations of the Classification Society and
free of all overdue recommendations and requirements from the Classification Society;
24
(B)
the
relevant regulations, requirements and recommendations of the country and flag of the Vessel's
registry;
(C)
any
applicable IMO regulations (including but not limited to the ISM Code, the ISPS Code and
MARPOL);
(D)
all
other applicable regulations, requirements and recommendations; and
(E)
the
Charterers' and the Charter's Guarantor's operations and maintenance standards;
(ii)
the
maintenance and operation of the Vessel by the Charterers taking into account:
(A)
engine
manufacturers' recommended maintenance and service schedules;
(B)
builder's
operations and maintenance manuals; and
(iii)
recommended
maintenance and service schedules of all installed equipment and pipework.
(b)
In
addition to the above, the Charterers covenant with the Owners to provide, upon request,
copies of the Vessel's class records, plans and drawing and all technical documents to the
Owners as available to the
Charterers.
(c)
The
title to any equipment (or part thereof):
(i)
placed
on board as a result of operational requirements of the Charterers (whether due to the Charterers'
requirement or by reason of new class requirements or compulsory legislation applicable to
the Vessel)
shall automatically be deemed to belong to the Owners immediately upon such placement,
and such equipment may only be removed: (i) with the Owners' prior written consent (such
consent not to be
unreasonably withheld), (ii) at the Charterers' own expense, and (iii)
without damage to the Vessel; and
(ii)
replaced,
renewed or substituted shall remain with the Owners until the part or equipment which replaced
it or the new or substitute part or equipment becomes property of the Owners.
(d)
Without
prejudice to any other provisions under this Charter, the Charterers shall maintain, use
and operate the Vessel with commercially reasonable care as if the Charterers were the owner
of the same.
39.
Structural
changes and alterations
(a)
The
Charterers shall make no structural changes in the Vessel or changes in the machinery, engines,
appurtenances or spare parts thereof without in each instance first securing the Owners'
written consent thereto (such
consent not to be unreasonably withheld). Under any and all
circumstances, the Charterers shall procure that:
(i)
any
such changes do not have a material adverse effect on the Vessel's certification or the Vessel's
fitness for purpose; and
(ii)
the
Charterers shall bear all time, costs and expenses in relation to any such changes; and
25
(iii)
none
of the changes will diminish the value of the Vessel and/or have a material adverse effect
on the safety, performance, value or marketability of the Vessel.
If
a Termination Event occurs and is continuing and the Owners exercise their right to retake possession of the Vessel pursuant to Clause
49(f) (Owners' rights reserved), the Charterers shall, without prejudice to their
obligations under Clause 43 (Redelivery conditions),
at their expense restore the Vessel to its former condition if so requested by the Owners (fair wear and tear excepted) unless the changes
made are carried out:
(i)
with
the prior written consent of the Owners (such consent not to be unreasonably withheld); or
(ii)
to
improve the performance, operation or marketability of the Vessel; or
(iii)
as
a result of mandatory law or a regulatory compliance.
(b)
Notwithstanding
anything to the contrary in this Charter, no prior approval shall be required for any structural
changes or other changes described in paragraph (a) of this Clause 39 which are carried out
(i) as a result
of mandatory law or regulatory compliance, or (ii) to improve the performance,
operation or marketability of the Vessel in each case, at the Charterers’ time and
cost and for which written notice shall be provided to
the Owners upon such structural change.
(c)
Any
improvement, structural changes or new equipment becoming necessary for the continued operation
of the Vessel by reason of new class requirements or by compulsory legislation shall be undertaken
by the
Charterers and be for the Charterers' account and the Charterers shall not have any
right to recover from the Owners any part of the cost for such improvements, changes or new
equipment either during the Charter
Period or at redelivery of the Vessel. The Charterers
shall give written notice to the Owners of any such improvement, structural changes or new
equipment.
40.
Hire
(a)
Hire
In consideration of the Owners' agreement to charter the Vessel to the Charterers
pursuant to the terms hereof, the Charterers shall pay to the Owners:
(x)
on
each and every Hire Payment Date, the Hire applicable to each such Hire Payment Date; and
(y)
on
the last day of the Charter Period, the Purchase Obligation Price.
(b)
Time
of payment The Hire shall be paid by the Charterers and received by the Owners on
each Hire Payment Date (Beijing time).
(c)
Non-Business
Days Any payment provided herein due on any day which is not a Business Day shall
be payable on the immediately preceding Business Day.
(d)
Payment
account information All payments under this Charter shall be made to the Owners'
Account or such other account as the Owners may notify the Charterers from time to time.
(e)
Charterers'
Hire payment obligation absolute: Following delivery of the Vessel to, and acceptance
by, the Charterers under this Charter, the Charterers' obligation to pay Hire in accordance
with this Clause 40 and to
pay the Purchase Obligation Price in accordance with Clause 52
(Transfer of Title) shall be absolute irrespective of any contingency whatsoever including
but not limited to:
(i)
any
set-off, counterclaim, recoupment, defence or other right which either party to this Charter
may have against the other;
26
(ii)
any
unavailability of the Vessel, for any reason, including but not limited to the Total Loss,
any action or inaction by the Sub-Charterer, seaworthiness, condition, design, operation,
merchantability or fitness
for use or purpose of the Vessel or any apparent or latent defects
in the Vessel or its machinery and equipment or the ineligibility of the Vessel for any particular
use or trade or for registration of
documentation under the laws of any relevant jurisdiction
or lack of registration or the absence or withdrawal of any consent required under the applicable
law of any relevant jurisdiction for the ownership,
chartering, use or operation of the Vessel
or any damage to the Vessel;
(iii)
any
failure or delay on the part of either party to this Charter, whether with or without fault
on its part, in performing or complying with any of the terms, conditions or other provisions
of this Charter;
(iv)
any
damage to or loss (including a Total Loss), destruction, capture, seizure, judicial attachment
or arrest, forfeiture or marshal's or other sale of the Vessel;
(v)
any
insolvency, bankruptcy, reorganisation, arrangement, readjustment of debt, dissolution, administration,
liquidation or similar proceedings by or against the Owners, the Charterers or any Sub-Charterer,
or
any change in the constitution of the Owners, the Charterers or the Sub-Charterer;
(vi)
any
invalidity or unenforceability or lack of due authorisation of or any defect in this Charter
or any Sub-Charter; or
(vii)
any
other cause which would but for this provision have the effect of terminating or in any way
affecting the obligations of the Charterers hereunder,
it
being the intention of the parties that the provisions of this Clause 40, and the obligation of the Charterers to pay Hire and all other
amounts under this Charter, shall (save as expressly provided in this Clause 40)
survive any frustration and that, save as expressly
provided in this Charter, no moneys paid under this Charter by the Charterers to the Owners shall in any event or circumstance be repayable
to the Charterers.
(f)
All
payments free from deductions
(i)
All
payments of Hire and all other Unpaid Sums to the Owners pursuant to this Charter and the
other relevant Transaction Documents shall be made in immediately available funds in US dollars,
free and clear
of, and without deduction for or on account of, any bank charges or Taxes,
unless the Charterers are required by law or regulation to make any such payment of Hire
subject to such Taxes.
(ii)
In
the event that the Charterers are required by any law or regulation to make any deduction
or withholding on account of any Taxes which arise as a consequence of any payment due under
this Charter, then:
(A)
the
Charterers shall notify the Owners promptly after they become aware of such requirement;
(B)
the
Charterers shall remit the amount of such Taxes to the appropriate taxation authority within
five (5) Business Days or any other shorter time period as required under any applicable
law or
regulation and in any event prior to the date on which penalties attach thereto; and
(C)
such
payment shall be increased by such amount as may be necessary to ensure that the Owners receive
a net amount which, after deducting or withholding such Taxes, is equal to the full amount
which the Owners would have received had such payment not been subject to such Taxes.
27
(iii)
The
Charterers shall forward to the Owners evidence reasonably satisfactory to the Owners that
any such Taxes have been remitted to the appropriate taxation authority within thirty (30)
days of the expiry of
any time limit within which such Taxes must be so remitted or, if earlier,
the date on which such Taxes are so remitted.
(g)
Default
interest If the Charterers fail to pay any amount payable by it under a Transaction
Document on its due date, interest shall accrue on the Unpaid Sum from the due date up to
the date of actual payment (both
before and after judgment) at a rate of the Default Interest
Rate over the amount of such Unpaid Sum for the period of such non-payment. Any interest
accruing under this paragraph (g) shall be immediately payable by
the Charterers on demand
by the Owners. Default interest (if unpaid) arising on an Unpaid Sum will be compounded with
the Unpaid Sum at the end of each period selected by the Owners but will remain immediately
due and payable.
(h)
Hire
payment obligation to survive termination In the event that this Charter is terminated
for whatever reason, the Charterers' obligation to pay Hire and such other Unpaid Sum which
(in each case) has accrued due
before, and which remains unpaid, at the date of such termination
shall continue notwithstanding such termination.
(i)
Illegality
In the event that it becomes unlawful or it is prohibited for either the Owners or
the Charterers to charter the Vessel pursuant to this Charter, then the Owners and Charterers
shall notify the other party of the
relevant event and negotiate in good faith for a period
of thirty (30) days from the date of the receipt of the relevant notice by the other party
(or such shorter period as required by the relevant laws) to agree an
alternative arrangement.
If such agreement is not reached within such thirty (30)-day period or such shorter period
as applicable, the Charterers agree that, in such circumstances, the Owners shall have the
right to
terminate this Charter by delivering to the Charterers a Termination Notice, whereupon
the Charterers shall be obliged to pay to the Owners the Termination Sum in accordance with
paragraph (c) (Payment of
Termination Sum) of Clause 49 (Termination Events).
Upon payment of the Termination Sum in full, the Owners shall transfer the title to the Charterers
in accordance with Clause 52 (Transfer of title).
(j)
Increased
Costs
(i)
Subject
to sub-paragraphs (iii) and (iv) below, the Charterers shall, within three (3) Business Days
of a demand by the Owners, pay to the Owners the amount of any Increased Costs incurred by
the Owners as
a result of (i) the introduction of or any change in (or in the interpretation,
administration or application of) any law or regulation made after the date of this Charter,
or (ii) compliance with any law or
regulation made after the date of this Charter.
In
this Clause:
"Increased
Costs" means:
(A)
a
reduction in the rate of return from the Hire or on the Owners' overall capital;
(B)
an
additional or increased cost; or
(C)
a
reduction of any amount due and payable under any Transaction Document, which is incurred
or suffered by the Owners to the extent that it is attributable to the Owners having entered
into any
Transaction Document or funding or performing its obligations under any Transaction
Document.
28
(ii)
The
Owners shall notify the Charterers of any claim arising from sub-paragraph (i) above (and
of the event giving rise to such claim). The Owners shall, as soon as practicable after having
made a demand in
respect of such claim, provide a certificate confirming the amount of its
Increased Costs.
(iii)
Sub-paragraph
(i) above does not apply to the extent any Increased Costs is:
(A)
compensated
for by a payment made under sub-paragraph (i)(C) above; or
(B)
attributable
to a change in the rate of tax on the overall net income of the Owners (or a parent company
of them) or an item covered by the additional payment in Clause 40(e) or a FATCA Deduction;
or
(C)
attributable
to the wilful breach by the Owners of any law or regulation.
(iv)
In
the event the Owners are entitled to an Increased Cost pursuant to the preceding provisions,
the Parties shall negotiate in good faith for a period of thirty (30) days from the date
of the receipt of the Owners'
demand for the Increased Cost to agree an alternative arrangement.
If such agreement is not reached within such thirty (30)-day period, the Charterers may notify
the Owners in writing of their intention to
terminate this Charter. Upon the Owners' receipt
of the aforesaid Charterers' written notice of their intention to terminate, without prejudice
to the Owners' entitlement to any Increased Cost prior to the
Termination Payment Date, the
Owners shall within (30) days of its receipt of such notice by the Charterers, terminate
this Charter by delivering to the Charterers a Termination Notice, whereupon the
Charterers
shall be obliged to pay to the Owners the Termination Sum in accordance with paragraph of
Clause 49(c) (Payment of Termination Sum). Upon payment of the Termination Sum in
full, the Owners
shall transfer the title to the Charterers in accordance with Clause 52
(Transfer of title).
(k)
Break
Costs The Charterers shall, within five (5) Business Days of demand by the Owners,
pay to the Owners their Break Costs.
(l)
Unavailability
of Term SOFR
(i)
Interpolated
Term SOFR: If no Term SOFR is available for any Hire Period, the applicable Reference
Rate shall be the Interpolated Term SOFR for three (3) months.
(ii)
Cost
of funds: If sub-paragraph (i) above applies but it is not possible to calculate the
Interpolated Term SOFR for that Hire Period, the Interest Rate applicable for that Hire Period
shall be the percentage rate
per annum which is the sum of:
(A)
the
Margin; and
(B)
the
rate notified to the Charterers by the Owners which expresses as a percentage rate per annum
as the Owners' cost of funds relating to the Outstanding Principal from whatever source it
may
reasonably select.
(m)
Certificate
conclusive Any certificate or statement signed by an authorised signatory of the
Owners purporting to show the amount of the Debt (or any part of the Debt) or any other amount
referred to in any Transaction
Document shall, save for manifest error or on any question
of law, be conclusive evidence as against the Charterers of that amount.
29
41.
Insurance
(a)
Charterers'
obligation to place insurance During the Agreement Term, the Charterers shall at
their expense keep the Vessel insured against fire and usual marine risks (including hull
and machinery, excess and
increased value risks), oil pollution liability risks, war risks
(including blocking and trapping and additional premium for war risks), protection and indemnity
risks and any other risks against which is compulsory to
insure for the operation for the
Vessel or in the Owners' reasonable opinion it is common market practice to insure for the
operation, trading, management and/or for safety purposes for the Vessel in such market (but
excluding loss of hire insurance)and all Insurances shall be:
(i)
in
US Dollars; and
(ii)
in
such market and on such terms as are customary for owners of similar tonnage.
(b)
Beneficiaries
of Insurances Such insurances shall be arranged by the Charterers to protect the
interests of the Owners, the Charterers and (if any) the mortgagee of the Vessel or such
other relevant Finance Party, and
the Charterers shall be at liberty to protect under such
insurances the interests of (i) any Approved Managers provided the Approved Manager shall
first execute and deliver to the Owners the Manager’s Undertaking
and/or (ii) any crewing
agent provided the crew agent shall first execute and deliver to the Owners a Co-Assured
Undertaking substantially in the Agreed Form.
(c)
Scope
of insurance Insurance policies shall cover the Owners, the Charterers and (if any)
the Finance Parties according to their respective interests. The Charterers shall effect
all insured repairs and shall undertake
settlement and reimbursement from the Approved Insurer
of all costs in connection with such repairs as well as insured charges, expenses and liabilities
to the extent of coverage under the insurances herein provided
for.
(d)
Repairs
etc. not covered by Insurances The Charterers shall also remain responsible for and
to effect repairs and settlement of costs and expenses incurred thereby in respect of all
other repairs not covered by the
insurances and/or not exceeding any possible franchise(s)
or deductibles provided for in the insurances
(e)
H&M
and war risks coverage The Charterers shall arrange that, the hull and machinery
and war risks (including blocking and trapping and additional premium for war risks) insurance
shall be at any time in an
amount not less than one hundred ten per cent. (110%) of the higher
of (x) the Outstanding Principal applicable as at the relevant time and (y) the latest Market
Value of the Vessel (the "Minimum Insured Value").
The
terms of the hull and machinery insurance and the identity of the Approved Insurer shall be acceptable to the Owners and (if any) the
Finance Parties (such acceptance not to be unreasonably withheld or delayed).
(f)
Protection
and indemnity coverage The Vessel shall be entered with China P&I Club or in
a P&I Club which is a member of the International Group Association on customary terms,
shall include freight, demurrage
and defence cover and shall be covered against liability
for pollution claims in an amount not less than the highest level of cover from time to time
available under basic protection and indemnity club entry (currently
US$1,000,000,000).
(g)
Named
assureds, no alteration to terms of Insurances and insurance report The Charterers:
30
(i)
undertake
to place the Insurances in such markets, in such currency, on such terms and conditions,
and with such brokers, underwriters and associations as are customary for owners of similar
tonnage and are
satisfactory to the Owners;
(ii)
shall
name the Owners, the Charterers, the Approved Managers (provided the same is assigned in
favour of the Security Trustee) and its crewing agent (provided the Co-Assured Undertaking
shall have been
delivered to the Owners) and if requested in writing by the Owners, any of
the Finance Parties as the only named assureds;
(iii)
shall
not alter the terms of any of the Insurances nor allow any person to be co-assured under
any of the Insurances without the prior written consent of the Owners (such consent not to
be unreasonably
withheld or delayed) and, if applicable, the Finance Parties, and will supply
the Owners and, if applicable, the Finance Parties or procure that the Owners and, if applicable,
the Finance Parties are supplied
from time to time on request with such information as the
Owners and, if applicable, any Finance Party may in their discretion require with regard
to the Insurances and the brokers, underwriters or
associations through or with which the
Insurances are placed; and
(iv)
shall
reimburse within ten (10) Business Days of demand, not more than once per calendar year during
the Agreement Term, the Owners and/or (if applicable) any finance Party for all documented
costs and
expenses reasonably incurred by the Owners and/or such Finance Party in obtaining
a report on the adequacy of the Insurances from an insurance adviser instructed by the Owners
and/or such Finance Party.
(h)
Payment
of Premiums etc. The Charterers undertake duly and punctually to pay all premiums,
calls and contributions, and all other sums at any time payable in connection with the Insurances,
and, at their own
expense, to arrange and provide any guarantees from time to time required
by any protection and indemnity or war risks association. From time to time upon the Owners'
request, the Charterers shall provide the
Owners with (i) copies of all invoices issued by
the brokers, underwriters or associations in respect of such premiums calls, contributions
and other sums, and (ii) evidence satisfactory to the Owners and/or such
Finance Party that
such premiums, calls, contributions and other sums have been duly and punctually paid; that
any such guarantees have been duly given; and that all declarations and notices required
by the terms of
any of the Insurances to be made or given by or on behalf of the Charterers
to brokers, underwriters or associations have been duly and punctually made or given. Without
prejudice to the generality of the foregoing, if
the insurers of the war risks insurance
require payment of premiums and/or calls because the Vessel is within, or is due to enter
and remain within, any area or areas which are specified by such insurers as being subject
to additional premiums because of War Risks, then the Charterers shall be obligated to procure
the Insurances shall cover war risks areas subject to additional premium or call and such
premiums and/or calls shall be
paid and borne by the Charterers.
(i)
Compliance
with Insurances The Charterers will comply in all respects with all terms and conditions
of the Insurances and will make all such declarations to brokers, underwriters and associations
as may be required
to enable the Vessel to operate in accordance with the terms and conditions
of the Insurances. The Charterers will not do, nor permit to be done, any act, nor make,
nor permit to be made, any omission, as a result of
which any of the Insurances may become
liable to be suspended, cancelled or avoided, or may become unenforceable, or as a result
of which any sums payable under or in connection with any of the Insurances may be
reduced
or become liable to be repaid or rescinded in whole or in part. In particular, but without
limitation, the Charterers will not permit the Vessel to be employed other than in conformity
with the Insurances without
first taking out additional insurance cover in respect of that
employment and, if applicable, the Finance Parties, and the Charterers, upon request, will
promptly notify the Owners and, if applicable, the Finance Parties
of any new requirement
imposed by any broker, underwriter or association in relation to any of the Insurances.
31
(j)
Renewal
of Insurances The Charterers will, no later than ten (10) Business Days before the
expiry of any of the Insurances renew them and shall immediately give the Owners and, if
applicable, the Finance Parties
such details of those renewals to the Owners' and, if applicable,
the Finance Parties' satisfaction.
(k)
Delivery
of documents relating to Insurances The Charterers shall:
(i)
upon
the Owners' request, deliver to the Owners and, if applicable, the Finance Parties copies
of all policies, certificates of entry (endorsed with the appropriate loss payable clauses
as may be required by the
Owners and the Finance Parties from time to time) and other documents
relating to the Insurances (including, without limitation, receipts for premiums, calls or
contributions); and
(ii)
procure
that letters of undertaking (in such form and substance as are customary for the market)
shall be issued to the Owners and, if applicable, the Finance Parties by the brokers through
which the
Insurances are placed (or, in the case of protection and indemnity or war risks
associations, by their managers).
(l)
Fleet
cover If the Vessel is at any time during the Agreement Term insured under any form
of fleet cover, the Charterers shall procure that those letters of undertaking contain confirmation
that the brokers, underwriters
or association (as the case may be) will not set off claims
relating to the Vessel against premiums, calls or contributions in respect of any other vessel
or other insurance, and that the insurance cover of the Vessel will
not be cancelled by reason
of non-payment of premiums, calls or contributions relating to any other vessel or other
insurance. Failing receipt of those confirmations, the Charterers will instruct the brokers,
underwriters
or association concerned to issue a separate policy or certificate for the Vessel.
(m)
Provision
of information on casualty, accidents or damage The Charterers shall promptly notify
the Owners and upon request, provide the Owners with sufficient information regarding any
casualty or other accident
or damage to the Vessel, detention of the Vessel or any Environmental
Incident including, without limitation, any material communication with all parties involved
in case of a claim under any of the Insurances,
provided such casualty, accident, damage,
detention of the Vessel or Environmental Incident exceeds the Threshold Amount.
(n)
Step-in
rights of Owners and Finance Parties The Charterers agree that, at any time after
the occurrence of a Termination Event which is continuing, the Owners and, if applicable,
the Finance Parties shall be entitled
to:
(i)
collect,
sue for, recover and give a good discharge for all claims in respect of any of the Insurances;
(ii)
to
pay collecting brokers the customary commission on all sums collected in respect of those
claims;
(iii)
to
compromise all such claims or refer them to arbitration or any other form of judicial or
non-judicial determination; and
(iv)
otherwise
to deal with such claims in such manner as the Owners and, if applicable, the Finance Parties
shall in their discretion think fit.
(o)
Total
loss insurance proceeds Whether or not a Termination Event shall have occurred, the
proceeds of any claim under any of the Insurances in respect of a Total Loss shall be paid
and applied in accordance with
Clause 53 (Total Loss).
32
(p)
Payment
of insurance proceeds
(i)
The
Owners agree that any amounts which may become due and payable to the Charterers under any
protection and indemnity entry shall be paid to the Charterers to reimburse the Charterers
for, and in
discharge of, the loss, damage or expense in respect of which they shall have
become due, unless, at the time the amount in question becomes due, a Termination Event shall
have occurred and be continuing,
in which event the Owners shall be entitled to receive the
amounts in question and to apply them either in reduction of the Termination Sum owed by
the Charterers pursuant to paragraph (c) of Clause 49
(Termination Events) or, at
the option of the Owners, to the discharge of the liability in respect of which they were
paid. For the avoidance of doubt, any amount which may become due and payable to the
Owners
under any protection and indemnity entry or insurance shall be paid to the Owners or to the
Owners' order.
(ii)
Without
prejudice to the forgoing and subject to the terms of the Finance Documents (if any), all
claims (other than in respect of a Total Loss) in relation to other Insurances, shall, unless
and during the
occurrence of a continuing Termination Event, in which event all claims under
the relevant policy shall be payable directly to the Owners, be payable as follows:
(A)
a
claim in respect of any one casualty where the aggregate claim against all Approved Insurers
does not exceed the Threshold Amount, prior to adjustment for any franchise or deductible
under the
terms of the relevant policy, shall be paid directly to the Charterers (as agent
for the Owners) for the repair, salvage or other charges involved or as a reimbursement if
the Charterers fully repaired the
damage to the satisfaction of the Owners (acting reasonably)
and paid all of the salvage or other charges;
(B)
a
claim in respect of any one casualty where the aggregate claim against all Approved Insurers
exceeds the Threshold Amount prior to adjustment for any franchise or deductible under the
terms of
the relevant policy, shall, subject to the prior written consent of the Owners (such
consent not to be unreasonably withheld or delayed), be paid to the Charterers as and when
the Vessel is restored to
her former state and condition and the liability in respect of
which the insurance loss is payable is discharged, and provided that the Approved Insurers
may with such consent make payment on
account of repairs in the course of being effected,
but, in the absence of such prior written consent shall be payable directly to the Owners.
(q)
Settlement,
compromise or abandonment of claims The Charterers shall not settle, compromise
or abandon any claim under or in connection with any of the Insurances (other than in the
absence of any Termination
Event that is continuing a claim of less than the Threshold Amount,
prior to adjustment for any franchise or deductible under the terms of policy, arising other
than from a Total Loss) without the prior written consent
of the Owners (such consent not
to be unreasonably withheld or delayed) and, if applicable, the Finance Parties.
(r)
Owners'
rights to maintain Insurances If the Charterers fail to effect or keep in force the
Insurances, the Owners may (but shall not be obliged to) effect and/or keep in force such
insurances on the Vessel and such
entries in protection and indemnity or war risks associations
as the Owners in their discretion consider desirable, and the Owners may (but shall not be
obliged to) pay any unpaid premiums, calls or contributions. The
Charterers will reimburse
the Owners from time to time within ten (10) Business Days of demand for all such premiums,
calls or contributions paid by the Owners.
33
(s)
Environmental
protection issues The Charterers shall comply strictly with the requirements of any
legislation relating to pollution or protection of the environment which may from time to
time be applicable to the
Vessel in any jurisdiction in which the Vessel shall trade and
in particular the Charterers shall comply strictly with the requirements of the United States
Oil Pollution Act 1990 (the "Act") if the Vessel is to trade in the
United
States of America and Exclusive Economic Zone (as defined in the Act). Before any such trade
is commenced and during the entire period during which such trade is carried on, the Charterers
shall:
(i)
pay
any additional premiums required to maintain protection and indemnity cover for oil pollution
up to the limit available to the Charterers for the Vessel in the market; and
(ii)
make
all such quarterly or other voyage declarations as may from time to time be required by the
Vessel's protection and indemnity association in order to maintain such cover, and promptly
deliver to the
Owners and, if applicable, the Finance Parties copies of such declarations;
and
(iii)
submit
the Vessel to such additional periodic, classification, structural or other surveys which
may be required by the Vessel's protection and indemnity insurers to maintain cover for such
trade and promptly
deliver to the Owners and, if applicable, the Finance Parties copies of
reports made in respect of such surveys; and
(iv)
implement
any recommendations contained in the reports issued following the surveys referred to in
sub-paragraph (s)(iii) above within the relevant time limits; and
(v)
in
addition to the foregoing (if such trade is in the United States of America and Exclusive
Economic Zone):
(A)
obtain
and retain a certificate of financial responsibility under the Act in form and substance
satisfactory to the United States Coast Guard and provide the Owners with evidence of the
same; and
(B)
procure
that the protection and indemnity insurances do not contain a US Trading Exclusion Clause
or any other analogous provision and provide the Owners with evidence that this is so; and
(C)
comply
strictly with any operational or structural regulations issued from time to time by any relevant
authorities under the Act so that at all times the Vessel falls within the provisions which
limit
strict liability under the Act for oil pollution.
(t)
Innocent Owners' Interest Insurance The Owners shall be at liberty to take out an Innocent Owners' Interest Insurance and
an Innocent Owners' Additional Perils (Oil Pollution) Insurance in relation to the Vessel in
an amount up to the Minimum Insured Value
and on such terms and conditions as the Owners may from time to time decide, and the Charterers shall from time to time upon the Owners'
demand, reimburse the Owners
for all costs, premiums and expenses paid or incurred by the Owners in connection with any Innocent Owners'
Interest Insurance or Innocent Owners' Additional Perils (Oil Pollution) Insurance (or, if so request by the
Owners, directly pay all
such costs, premiums and expenses).
(u)
Cooperation
by the Charterers The Charterers agree and undertake that:
(i)
in
the event that the Charterers receive any payment in relation to the Insurances in contravention
of this Charter, the Charterers will hold such payment on trust and on behalf of the Owners;
34
(ii)
the
Charterers will not refuse, withhold (or otherwise delay giving) consent to the payment of
any amount which becomes payable to the Owners under the Insurances (to the extent that such
payment is
payable to the Owners in accordance with terms of this Charter); and
(iii)
from
time to time on the written request of the Owners, the Charterers will promptly execute and
deliver to the Owners all documents which the Owners may require for the purpose of obtaining
any payment
in relation to the Insurances (to the extent that such payment is payable to
the Owners in accordance with the terms of this Charter).
(v)
Freight,
demurrage and defence To the extent not already covered under the Vessel's Insurances,
the Owners shall be at liberty to, in relation to the Vessel, take out freight, demurrage
and defence cover on such terms
and conditions as the Owners may from time to time decide.
The Charterers shall from time to time upon the Owners' demand reimburse the Owners for all
costs, premiums and expenses paid or incurred by the
Owners in connection with such cover.
(w)
Separate
Insurance Interest Notwithstanding that the interests of the Owners and Charterers
are both covered under the Insurances, the provisions of this Clause 41 (Insurance)
shall neither exclude nor discharge
liability between the Owners and the Charterers under
this Charter. Any payment of insurance proceeds is no bar to a claim by the Owners and/or
their insurers against the Charterers to seek indemnity by way of
subrogation. For the avoidance
of any doubt, the Innocent Owners' Interest Insurances, Mortgagees' Interest Insurances and
any other insurances taken out by the Owners and/or any Finance Party (as the case may be)
are for the sole benefit of the Owners and/or any Finance Party (as the case may be), and
any sum recoverable under such insurances shall not in any way exclude or discharge the obligations
and liabilities of the
Obligors under the Transaction Documents. Nothing herein shall prejudice
any rights of recovery of the Owners or the Charterers (or their insurers) against third
parties.
42.
Redelivery
(a)
Following
the occurrence of any Termination Event and while the same is continuing and subject to lapse
of the Termination Payment Date, if the Owners decide to retake possession of the Vessel
pursuant to
paragraph (c) of Clause 49 (Termination Events), the Charterers shall,
at their own cost and expense, redeliver or cause to be redelivered the Vessel to the Owners
at the Vessel's current or next port of call, afloat at all
times in a ready safe berth or
anchorage, in accordance with Clause 43 (Redelivery conditions).
(b)
Without
prejudice to the Owners’ rights and remedies under or pursuant to any provision of
this Charter, the Charterers shall continue to perform all the obligations, undertakings
and liabilities with respect to the
management, maintenance and insurance in respect of the
Vessel under and pursuant to the terms of this Charter until redelivery of the Vessel.
43.
Redelivery
conditions
(a)
In
addition to what has been agreed in Clauses 15 (Redelivery) (Part II) and 42 (Redelivery),
the condition of the Vessel shall at redelivery be as follows:
(i)
the
Vessel shall be free of any overdue class and statutory recommendations affecting its trading
certificates;
(ii)
the
Vessel must be redelivered with all equipment and spares or replacement items listed in the
delivery inventory carried out pursuant to Clause 9 (Inventories, Oil and Stores) (Part II)
unless such items have
been consumed or used during the Agreement Term (or part thereof)
and any spare parts on board or on order for any equipment installed on the Vessel following
delivery (provided that any such items which
are on lease or hire purchase shall be replaced
with items of an equivalent standard and condition fair wear and tear excepted); all records,
logs, plans, operating manuals and drawings, spare parts onboard
shall be included at the
time of redelivery in connection with a transfer of the Vessel or such other items as are
then in the possession of the Charterers shall be delivered to the Owners;
35
(iii)
the
Vessel must be redelivered with all national and international trading certificates and hull/machinery
survey positions for both class and statutory surveys free of any overdue recommendation
and
qualifications valid and un-extended for a period of at least three (3) months beyond
the redelivery date;
(iv)
all
of the Vessel's ballast tank coatings to be maintained in "Fair" (as such term
(or its equivalent) may be defined and/or interpreted in the relevant survey report) condition
as appropriate for the Vessel's age at
the time of redelivery, fair wear and tear excepted;
(v)
the
Vessel shall have passed any flag or class surveys or inspections due within three (3) months
after the date of redelivery and have its continuous survey system up to date;
(vi)
the
Vessel must be re-delivered with accommodation and common spaces for crew and officers substantially
in the same condition as at the Actual Delivery Date, free of damage over and above fair
wear and
tear; with cargo spaces generally fit to carry the cargoes originally designed and
intended for the Vessel; with main propulsion equipment, auxiliary equipment, cargo handling
equipment, navigational
equipment, etc., in such operating condition as provided for in this
Charter (fair wear and tear excepted) unless used or disposed of in the ordinary course of
business and trading of the Vessel and subject to
such spare parts and equipment not belonging
to a third party;
(vii)
the
Vessel shall be free and clear of all liens other than those created by or on the instructions
of the Owners;
(viii)
the
condition of the cargo holds to be in accordance with the maintenance regime undertaken by
the Charterers during the Charter Period since delivery; and
(ix)
the
anti-fouling coating system applied at the last scheduled dry-docking shall be in accordance
with prevailing regulations at the time of application.
(b)
At
redelivery, the Charterers shall ensure that the Vessel shall meet the following performance
levels (which where relevant shall be determined by reference to the Vessel's log books):
(i)
all
remaining bunkers shall be in compliance with all applicable laws, including without limitation,
the global sulphur limit imposed by the International Maritime Organization (IMO) for vessels
of this type;
(ii)
available
bunkers shall be sufficient to cover at least a voyage to a port for refueling;
(iii)
all
equipment controlling the habitability of the accommodation and service areas to be in proper
working order, fair wear and tear excepted; and
(iv)
available
deadweight to be within one per cent (1%) of that achieved at delivery (as the same may be
adjusted as a result of any upgrading of the Vessel carried out in accordance with this Charter
(such
adjustment to be agreed between the Owners and Charterers at the time such upgrading
work is to be undertaken)).
36
(c)
The
Owners and the Charterers shall be each appoint (at the Charterers’ expense) an independent
surveyor for the purpose of determining and agreeing in writing the condition of the Vessel
at redelivery.
(d)
If
the Vessel is not in the condition or does not meet the performance criteria required by
this Clause 43, a list of deficiencies together with the costs of repairing/remedying such
deficiencies shall be agreed by the
respective surveyors.
(e)
The
Charterers shall be obliged to repair any class items restricting the operation or trading
of the Vessel prior to redelivery.
(f)
The
Charterers shall be obliged to repair/remedy all such other deficiencies as are necessary
to put the Vessel into the return condition required by this Clause 43.
44.
Diver's
inspection at redelivery
(a)
Unless
the Vessel is returned in dry-dock, if the Owners so request, a diver's inspection is required
to be performed at the time of redelivery and the following provisions shall apply:
(i)
The
Charterers shall, at the written request of the Owners, arrange at the Charterers' time and
expense for an underwater inspection by a diver approved by the Classification Society immediately
prior to the
redelivery.
(ii)
A
video film of the inspection shall be made. The extent of the inspection and the conditions
under which it is performed shall be to the satisfaction of the Classification Society.
(iii)
If
damage to the underwater parts is found, the Charterers shall arrange, at their time and
costs, for the Vessel to be dry-docked (if required by the Classification Society) and repairs
carried out to the satisfaction
of the Classification Society.
(iv)
If
the conditions at the port of redelivery are unsuitable for such diver's inspection, the
Charterers shall take the Vessel (in Charterers' time and at Charterers' expense) to a suitable
alternative place nearest to the
redelivery port unless an alternative solution is agreed.
(v)
Without
limiting the generality of sub-paragraph 55 (Fees and expenses), all costs relating
to any diver's inspection shall be borne by the Charterers.
45.
Owners'
mortgage
(a)
The
Charterers:
(i)
acknowledge
that the Owners are entitled and do intend to enter or have entered into certain funding
arrangements with the Finance Parties in order to finance part of the Outstanding Principal,
which funding
arrangements may be secured, inter alia, by ship mortgages over the Vessel
and (along with other related matters) the relevant Finance Documents provided that simultaneously
with the Owners' execution of
any such ship mortgages, the Owners shall ensure that the relevant
Finance Parties execute and deliver to the Charterers a Quiet Enjoyment Letter in favour
of the Charterers in a form mutually acceptable to
the Finance Party and the Charterer (both
acting reasonably);
(ii)
irrevocably
consent to any assignment, transfer and/or novation of the Owners' rights, interests and
benefits in and to the Insurances, the Earnings and the Requisition Compensation and any
Transaction
Document to which it is a party in favour of the Finance Parties pursuant to
the relevant Finance Documents or any Financial Institution; and
37
(iii)
without
limiting the generality of Clause 48(m) (Further assurance), undertake to execute,
provide or procure the execution or provision (as the case may be) of such document as is
necessary to effect the
assignment transfer and/or novation referred to in sub-paragraph
(ii) above, provided that any related costs shall be on the Owners' account.
Provided
that no Termination Event has occurred and is continuing, the Owners shall not, and shall procure that no-one claiming through them (as
mortgagee, assignee or otherwise but in each case subject to the terms
of the relevant Quiet Enjoyment Letter) will interfere with the
Charterers' quiet use and possession of the Vessel throughout the Charter Period.
(b)
The
Owners acknowledge and undertake that, subject to the Quiet Enjoyment Letter, no term of
a Finance Document will prejudice or alter the rights of the Charterers under this Charter
or any of the other Transaction
Document.
46.
Financial
covenants
(a)
The
Charterers shall procure that throughout the Charter Period,
(i)
the
Charterers shall maintain a minimum Liquidity of not less than US$300,000 (Dollars Three
Hundred Thousand) for each ship owned, operated or chartered by it; and
(ii)
the
Charter Guarantor shall maintain a minimum Liquidity of not less than US$20,000,000 (Dollars
Twenty Million).
(b)
For
the purpose of this Clause 46 (Financial covenants), "Liquidity" means:
(i)
in
relation to the Charterers, the total cash or cash equivalent of the Charterers as shown
in its most recent financial statements provided to the Owners in accordance with Clause
4832..1(a) (Financial
Statements); and
(ii)
in
relation to the Charterer Guarantor, the total cash or cash equivalent of the Charterer Guarantor
as shown in its most recent consolidated financial statements provided to the Owners in accordance
with
Clause 4832..1(a) (Financial Statements).
(c)
If
at any time any other Financial Indebtedness of the Charter Guarantor and/or any of its Subsidiaries
shall include any financial covenant in respect of the Charter Guarantor (whether set forth
as a covenant,
undertaking, event of default, restriction or other such provision) (a "Financial
Covenant") that would be more beneficial to the Owners than any analogous provision
contained in this Charter (an "Additional
Financial Covenant"), then such
Additional Financial Covenant shall be deemed automatically incorporated into the terms of
this Charter (an "MFN Amendment"). Such MFN Amendment shall be reversed
and the
financial covenants restored to those that were in effect immediately prior to an
MFN Amendment when (i) such other financial indebtedness containing the Additional Financial
Covenant is repaid in full other than as
a result of or in connection with an actual event
of default (howsoever defined); or (ii) the original terms of an Additional Financial Covenant
provided that it has ceased to apply. The Charterers shall promptly notify
the Owners of
any change or event that requires the incorporation or reverse of an MFN Amendment. The Charterers
agree that it will, and will procure that the Charter Guarantor will, promptly enter into
such
necessary documentation as may be required to amend and supplement the Charter Guarantee
and this Charter so as to reflect and incorporate such new or amended financial covenants
that are more favourable to the
Owners in accordance with this clause.
47.
Charterers'
representations and warranties
(a)
The
Charterers make the representations and warranties set out in this Clause 47 to the Owners
on the date of this Charter and on the Actual Delivery Date:
38
(i)
Status:
each Obligor is a company or (as applicable) corporation, duly incorporated and validly
existing under the laws of its jurisdiction of incorporation, in good standing and has the
power to own its assets
and carry on its business as it is being conducted;
(ii)
Binding
obligations: Subject to the Legal Reservations, the obligations expressed to be assumed
by each Obligor in each Transaction Document to which it or he/she is a party are legal,
valid, binding and
enforceable obligations and no limit on any of their powers will be exceeded
as a result of the borrowings, granting of security or giving of guarantees contemplated
by the Transaction Documents or the
performance by any of them of any of their obligations
thereunder;
(iii)
No
breach: the entry into and performance by each Obligor of, and the transactions contemplated
by, each Transaction Document to which it or he is a party do not conflict with:
(A)
any
applicable law or regulation (including Anti-Money Laundering Laws, anti-corruption and anti-bribery
laws, Anti-Terrorism Financing Laws, Sanctions);
(B)
its
constitutional documents; or
(C)
any
document binding on it, or any of its or his/her assets;
(iv)
Due
authorisation: each Obligor has the power to enter into, perform and deliver, and
has taken all necessary action to authorise its or his/her entry into, performance and delivery
of, each Transaction
Document to which it or he/she is a party and the transactions contemplated
thereunder;
(v)
Validity
and admissibility in evidence: all consents, licences, approvals, authorisations,
filings and registrations required:
(A)
to
enable each Obligor to lawfully enter into, exercise its or his/her rights and comply with
its or his/her obligations in each Transaction Document to which it or he/she is a party;
(B)
to
ensure the obligations expressed to be assumed by each of the Obligors in the Transaction
Documents are legal, valid and binding; and
(C)
to
make each Transaction Document to which each Obligor is a party admissible in evidence in
its jurisdiction of incorporation,
have
been obtained or effected and are in full force and effect;
(vi)
Governing
law and judgments: Subject to the Legal Reservations, in any proceedings taken in
any of the Obligors' jurisdiction of incorporation or residence in relation to any of the
Transaction Documents in
which there is any express choice of the law of a particular country
as the governing law thereof, that choice of law and any judgment or (if applicable) arbitral
award obtained in that country will be
recognised and enforced;
(vii)
No
deductions or withholding: no Obligor is required under the laws of its jurisdiction
of incorporation or residence to make any deduction for or on account of tax from any payment
it may make under each
Transaction Document to which it or he is a party;
(viii)
No
filing or stamp Taxes: under the laws of the jurisdiction of incorporation of each
Obligor and subject to any Perfection Requirements, it is not necessary that any of the Transaction
Documents to which
such Obligor is a party be filed, recorded or enrolled with any court
or other authority in that jurisdiction or that any stamp, registration or similar tax be
paid on or in relation thereto or the transactions
contemplated thereby (other than any filing
or recording or enrolling of any tax which is referred to in the legal opinions delivered
to the Owner);
39
(ix)
No
default: no Termination Event has occurred and is continuing or might reasonably
be expected to result from any Obligor's entry into and performance of each Transaction Document
to which such
Obligor is a party;
(x)
No
misleading information: subject to any qualification (if applicable) set out in such
information, any factual information provided by the Charterers to the Owners was true and
accurate in all material
respects as at the date it was provided or as the date at which
such information was stated;
(xi)
Claims
pari passu: Subject to the Legal Reservations, the payment obligations of each Obligor
under each Transaction Document to which it or he/she is a party rank at least pari passu
with the claims of all
other unsecured and unsubordinated creditors of such Obligor,
except for obligations mandatorily preferred by law applying to companies generally;
(xii)
No
material proceedings: no litigation, arbitration or administrative proceedings of
or before any court, arbitral body or agency have (to the best of the Charterers' knowledge)
been started against an Obligor
which, if adversely determined, has a Material Adverse Effect;
(xiii)
No
immunity: none of the Obligors nor any of its or his assets has any right to immunity
from set-off, legal proceedings, attachment prior to judgment, other attachment or execution
of judgment on the
grounds of sovereign immunity or otherwise;
(xiv)
No
winding-up: none of the Obligors is insolvent or in liquidation or administration
or subject to any other formal or informal insolvency procedure, and no receiver, administrative
receiver, administrator,
liquidator, trustee or analogous officer has been appointed in respect
of it, or all or any part of its/his/her assets;
(xv)
Anti-Money
Laundering Laws etc.: each Obligor is not in breach of Anti-Money Laundering Laws,
Anti-Terrorism Financing Laws and/or Business Ethics Laws and each of the Obligor has instituted
and
maintained systems, controls, policies or procedures designed to:
(A)
prevent
and detect incidences of bribery and corruption, money laundering and terrorism financing;
and
(B)
promote
and achieve compliance with Anti-Money Laundering Laws, Anti-Terrorism Financing Laws and
Business Ethics Laws;
(xvi)
Sanctions:
(A)
no
Obligor nor any of their respective directors, officers, and to the best of the Charterers'
knowledge and belief, employees;
(B)
each
Obligor and their respective directors, officers, and to the best of the Charterers' knowledge
and belief, employees, is in compliance with all Sanctions laws, and none of them have been
or are
currently being investigated on compliance with Sanctions, they have not received
notice or are aware of any claim, action, suit or proceeding against any of them with respect
to Sanctions and they
have not taken any action to evade the application of Sanctions;
40
(C)
in
the case a Sub-Charterer becomes a Restricted Persoon or acts in breach of any Sanctions,
the Charterers shall, upon becoming aware of such event, (i) immediately terminate the Sub-Charter
with
such Sub-Charterer and (ii) procure a replacement Sub-Charter (reasonably acceptable
to the Owners) as soon as practicable and in any case within 60 days; and
(D)
in
the case an Approved Manager becomes a Restricted Person or acts in breach of any Sanctions,
the Charterers shall, upon becoming aware of such event, immediately terminate its appointment
and
appoint a substitute Approved Manager (reasonably acceptable to the Owners) as soon as
practicable and in any case within one month.
(xvii)
Security:
each of the Obligors is the legal and beneficial owner of all assets and other property
which it or he/she purports to charge, pledge, assign or otherwise secure pursuant to each
Transaction Document
and those Transaction Documents to which it or he/she is a party create
and give rise to valid and effective security having the ranking expressed in those Transaction
Documents;
(xviii)
Environmental
Law:
(A)
no
circumstances have occurred which would prevent the compliance by the Obligors in a manner
or to an extent which has a Material Adverse Effect; and
(B)
no
Environmental Claim has been commenced against any Obligor where, if determined against such
Obligor, has a Material Adverse Effect;
(xix)
Taxation:
(A)
no
Obligor is overdue in the filing of any Tax returns and no Obligor is overdue in the payment
of any Taxes, save in the case of Taxes which are being contested on bona fide grounds or
in the case
the overdue payment amount does not exceeds US$50,000 and the relevant Obligor
is taking steps to make prompt payment of the same;
(B)
no
claims or investigations are being made or conducted against any Obligor with respect to
Taxes;
(xx)
No
Material Adverse Effect: no event or circumstance has occurred which has a Material
Adverse Effect;
(b)
Each
representation and warranty in Clause 47(a) (other than in sub-paragraphs (a)(xii) (No
material proceedings) and (a)(vii) (No deductions or withholding)) above is deemed
to be repeated by the Charterers by
reference to the facts and circumstances then existing
on each day on which Hire or any other amount is payable under this Charter and, the representation
and warranty in Clause 47(a)(xvi) (Sanctions) above (other
than in relation to any
Approved Manager) shall be deemed to be made and repeated on the date when the Owners shall
transfer the title of the Vessel under Clause 52 (Transfer of title).
48.
Charterers'
undertakings
The
Charterers hereby undertake to the Owners that they will comply in full and procure compliance (where applicable) with the following
undertakings throughout the Agreement Term:
41
(a)
Financial
Statements The Charterers shall supply, and shall procure the Charter Guarantor will
supply, to the Owners as soon as the same become available, but in any event within:
(i)
one
hundred and eighty (180) days after the end of the Charter Guarantor's financial year, the
Charter Guarantor's audited consolidated financial statements for that financial year; and
(ii)
one
hundred and twenty (120) days after the 6-month period ending on 30 June in each financial
year of the Charter Guarantor, the semi-annual consolidated unaudited financial statements
of the Charter
Guarantor, for that 6-month period;
So
long as such financial statements are available at the Charter Guarantor’s website, the relevant obligation will be deemed to have
been met.
(b)
Requirements
as to financial statements Each set of financial statements delivered to the Owners
under Clause 48(a) (Financial Statements):
(i)
shall
be in English;
(ii)
shall
be certified by an authorised signatory of the relevant Obligor as fairly representing its
financial condition as at the date at which those financial statements were drawn up; and
(iii)
shall
be prepared in accordance with GAAP.
(c)
Information:
miscellaneous The Charterers shall:
(i)
immediately
notify the Owners of the occurrence of any Charter Guarantor Change of Control Event;
(ii)
promptly
upon becoming aware of them, supply to the Owners details of any litigation, arbitration
or administrative proceedings which are current or pending against any Obligor provided such
litigation,
arbitration or administrative proceeding if adversely determined has a Material
Adverse Effect;
(iii)
promptly,
supply to the Owners such further information regarding the financial condition, business
and operations of any of the Obligor as the Owners or any Finance Party may reasonably request;
(iv)
if
the Owners so request, provide to the Owners a copy of such Sub-Charter which the Owners
may reasonably request; and
(v)
supply
to the Owners, or procure that the Approved Managers supply to the Owners, management report
on a quarterly basis (including an estimate/budget of the Vessel's OPEX, such as crewing
costs,
insurances, repair and maintenance, stores, spares, lubricants and dry-docking expenses).
(d)
Notification
of Termination Event The Charterers shall, and shall procure the Charter Guarantor
will, promptly, upon becoming aware of the same, inform the Owners in writing of the occurrence
of any Termination
Event (and the steps, if any, being taken to remedy this) and, upon the
Owners' request, confirm to the Owners that, save as previously notified to the Owners or
as notified in such confirmation, no Potential
Termination Event or Termination Event is
continuing and, if applicable, specifying the steps being taken to remedy it.
42
(e)
Maintenance
of legal validity Each Obligor will comply with the terms of and do all that is necessary
to maintain in full force and effect all Perfection Requirements and Authorizations required
under any applicable
law or regulation to enable it to perform its obligations under this
Charter and the Transaction Documents to which it is a party and to ensure the legality,
validity, enforceability or admissibility in evidence of such
Transaction Documents in their
jurisdiction of incorporation and all other applicable jurisdictions;
(f)
Taxation
Each Obligor will pay and discharge all Taxes applicable to, or imposed on or in
relation to, it, its business and its assets within the time period allowed without incurring
penalties unless and only to the
extent that:
(i)
such
payment is being contested in good faith;
(ii)
adequate
reserves are being maintained for those Taxes and the costs required to contest them which
have been disclosed in its latest financial statements delivered to the Owners under Clause
54.1 (Financial
statements); and
(iii)
such
payment can be lawfully withheld.
(g)
Negative
pledge The Charterers will not create or permit to subsist any Security Interest
(other than Permitted Security) or other third party rights over any of their present or
future rights and interests in or towards any
Transaction Document or the Vessel other than
a Security Interest created by the Transaction Documents, the Finance Documents or otherwise
with the written consent of the Owners.
(h)
Environmental
compliance The Charterers shall, and shall procure each Obligor to:
(i)
comply
with all Environmental Laws;
(ii)
obtain,
maintain and ensure compliance with all requisite Environmental Approvals; and
(iii)
implement
procedures to monitor compliance with and to prevent liability under any Environmental Law
applicable to it where failure to do so has a Material Adverse Effect.
(i)
Environmental
Claims The Charterers shall, promptly inform the Owners in writing of any Environmental
Claim against any Obligor which is current or pending which, if adversely determined against,
such Obligor
shall have a Material Adverse Effect or, the claim amount of which exceeds US$1,500,000
(Dollars One Million Five Hundred Thousand only).
(d)
Compliance
with laws etc. The Charterers shall:
(i)
and
shall procure that each other Obligor will:
(A)
comply
with all applicable laws, including Anti-Money Laundering Laws, Anti-Terrorism Financing
Laws and Business Ethics Laws;
(B)
maintain
systems, controls, policies or procedures designed to promote and achieve ongoing compliance
with Anti-Money Laundering Laws, Anti-Terrorism Financing Laws and Business Ethics
Laws;
and
(ii)
not
use, or permit or authorize any person to directly use, the MOA Purchase Price for any purpose
that would breach any Sanctions, Anti-Money Laundering Laws, Anti-Terrorism Financing Laws
or
Business Ethics Laws; and
43
(iii)
not
lend, invest, contribute or otherwise make available the MOA Purchase Price to or for any
other person in a manner which would result in a violation of any Sanctions, Anti-Money Laundering
Laws,
Anti-Terrorism Financing Laws or Business Ethics Laws.
(j)
Sanctions
The Charterers shall comply and shall procure that each other Obligor comply with
all laws and regulations in respect of Sanctions, and in particular, they shall effect and
maintain a sanctions compliance
policy or procedure to ensure compliance with all such laws
and regulations implemented from time to time.
Without
prejudice to the generality of the preceding, the Charterers shall comply or procure compliance with the following undertakings commencing
from the date hereof and up to the last day of the Agreement Term
that:
(i)
they
shall comply, and will procure that each other Obligor, each other member of the Charter
Group and their respective directors, officers, materially comply with all laws and regulations
in respect of
Sanctions and is not a Restricted Person and does not act directly or indirectly
on behalf of a Restricted Person, and in particular, they shall effect and maintain a sanctions
compliance policy or procedure to
ensure compliance with all such laws and regulations implemented
from time to time;
(ii)
the
Vessel shall not be employed, operated or managed in any manner which (x) is contrary to
any Sanctions and in particular, the Vessel shall not be used by or to benefit any party
which is a target of
Sanctions and/or is a Restricted Person or call any port in North Korea,
Iran, Syria, Cuba or Crimea or trade to any area or country where trading the Vessel to such
area or country would constitute a breach of
any Sanctions, (y) would result in any Obligor
or the Owners becoming a Restricted Person or (z) would trigger the operation of any sanctions
limitation or exclusion clause in any insurance documentation;
(iii)
they
shall, and shall procure that each other Obligor shall promptly notify the Owners of any
non-compliance, by any Obligor or their respective officers, directors, with all laws and
regulations relating to
Sanctions, Anti-Money Laundering Laws, Anti-Terrorism Financing Laws
and/or Business Ethics Laws (including but not limited to notifying the Owners in writing
immediately upon being aware that any
Obligor or its directors or officers is a Restricted
Person or has otherwise become a target of Sanctions) as well as, in the case of an Obligor,
provide upon request all information (once available) in relation to
its business and operations
which may be relevant for the purposes of ascertaining whether any of the aforesaid parties
are in compliance with such laws;
(iv)
the
Charterers will, and will use best endeavours to procure that each other Obligor will provide
all information in relation to its business and operations which may be relevant for the
purposes of ascertaining
whether it is in compliance with all laws and regulations and Sanctions,
Anti-Money Laundering Laws, Anti-Terrorism Financing Laws or Business Ethics Laws applicable
to and/or binding on it, and in
particular, the Charterers shall notify the Owners in writing
immediately upon being aware that any of the Charterers' shareholders, directors and officers
is a Restricted Person or has otherwise become a
target of any Sanctions;
(v)
The
Charterers undertake to procure that no Obligor shall use any revenue or benefit derived
from any activity or dealing with a Restricted Person in discharging any obligation due or
owing to the Owners;
44
(vi)
The
Charterers will not, and will not permit or authorise any other person to, utilise or employ
the Vessel or to use, lend, make payments of, contribute or otherwise make available, all
or any part of the
proceeds of any transactions contemplated by the Transaction Documents
to fund any trade, business or other activities (x) involving or for the benefit of any Restricted
Party or (y) in any manner that would
result in the Obligor or, the Owners being in breach
of ant Sanctions or becoming a Restricted Person; and
(vii)
The
Charterers shall procure that each Obligor shall, promptly upon becoming aware of them supply
to the Owners details of any claim action, suit or proceedings against it with respect to
Sanctions by any
Sanctions Authority.
(k)
Loans
or other financial commitments Other than as necessarily required in the ordinary
course of business, trading and operation of the Vessel, the Charterers shall not make any
loan or enter in any guarantee and
indemnity or otherwise voluntarily assume any actual or
contingent liability in respect of any obligation of any other person except pursuant to
the Transaction Documents and the Related Transaction Documents.
(l)
Earnings
and Earnings Account
(i)
Following
the occurrence of a Termination Event which is continuing when directed by the Owners to
do so, the Charterers shall procure that each of the Sub-Charterers shall, on each Hire Payment
Date,
credit all payments of "Hire" (as such term is described in each Sub-Charter)
and all other amounts payable thereunder directly to the Owners' Account;
(ii)
throughout
the Agreement Term, the Charterers shall:
(A)
promptly
upon receipt supply to the Owners monthly bank statements of the Earnings Account and shall
promptly supply such other financial information and explanations as the Owners may from
time to time reasonably require in connection with the Charterers; and
(B)
ensure
that any and all of the Earnings are deposited into the Earnings Account.
(m)
Further
assurance The Charterers shall at their own expense,
(i)
promptly
take all such action as the Owners may reasonably require for the purpose of perfecting or
protecting any of the Owners' rights with respect to the Security Interest created or evidenced
by the
Transaction Documents; and
(ii)
do
and perform such other and further acts and execute and deliver any and all such other agreements,
instruments and documents as may be required by law to establish, maintain and protect the
rights and
remedies of the Owners and/or the Finance Parties (as the case may be) and to
carry out and effect the intent and purpose of this Charter, the other Transaction Documents
and, to the extent consistent with the
terms of this Charter, the Finance Documents (as applicable).
(n)
Change
of business The Charterers shall not and will procure no Obligor will, without the
prior written consent of the Owners, make any substantial change to the general nature of
their respective businesses form that
carried on at the date of this Charter.
(o)
Certificate
of financial responsibility The Charterers shall, if required, obtain and maintain
a certificate of financial responsibility in relation to the Vessel which is to call at the
United States of America.
45
(p)
Registration
The Charterers shall not change or permit a change to the flag of the Vessel throughout
the duration of this Charter without the prior written consent of the Owners or the Finance
Parties (if applicable)
(such consent not to be unreasonably withheld or delayed). Any change
to the flag of the Vessel shall be at the cost of the Charterers (which shall include any
reasonable costs of the Finance Parties (if applicable)).
(q)
ISM
and ISPS Compliance The Charterers shall ensure that each ISM Company and ISPS Company
complies in all material respects with the ISM Code and the ISPS Code, respectively, or any
replacements thereof
and in particular (without prejudice to the generality of the foregoing)
shall ensure that such company holds (i) a valid and current Document of Compliance issued
pursuant to the ISM Code, (ii) a valid and current
SMC issued in respect of the Vessel pursuant
to the ISM Code, and (iii) an ISSC in respect of the Vessel, and the Charterers shall promptly,
upon request, supply the Owners with copies of the same.
(r)
Inspection
of Vessel and inspection reports In the absence of a Termination Event which is continuing,
subject to there being no undue interference with the operation of the Vessel,
(iii)
the
Owners shall be entitled to, once a year, (at the Charterers' cost) inspect or survey the
Vessel or instruct a duly authorised surveyor to carry out such survey on their behalf (in
each case at the Charterers'
cost) in order to ascertain the condition of the Vessel and
the Charterers shall provide all necessary assistance and facilities in connection with such
inspection or survey; and,
(iv)
the
Charterers shall further, if so requested in writing by the Owners and at the Charterers'
cost, provide to the Owners one inspection report each year as to the condition of the Vessel,
provided
always however that if a Termination Event has occurred and the same be continuing, the Owners may at any time and at the Charterers'
cost conduct such inspection without prior notice to the Charterers
and the Charterers shall be deemed to have granted such permission
and shall provide such necessary assistance to the Owners in respect of such inspection.
(s)
"Know
your customer" checks If:
(i)
the
introduction of or any change in (or in the interpretation, administration or applicable
of) any law or regulation made after the dates of this Charter;
(ii)
any
change in the status of the Charterers after the date of this Charter;
(iii)
a
proposed assignment or transfer by Owners of any of their rights and obligations under this
Charter,
obliges
the Owners to comply with "know your customer" or similar identification procedures in circumstances where the necessary information
is not already available to it, the Charterers shall promptly upon the
request of the Owners supply, or procure the supply of, such documentation
and other evidence as is reasonably requested by the Owners to carry out and be satisfied they have complied with all necessary "know
your
customer" or other similar checks under all applicable laws and regulations pursuant to the transactions contemplated in the
Transaction Documents.
(t)
Dividends
and share redemption
(i)
The
Charterers shall not make or pay (nor is the Charter Guarantor entitled to receive) any dividend
or other distribution (in cash or in kind) following the occurrence of any Termination Event
and while it is
continuing;
46
(ii)
The
Charterers shall not effect any form of redemption or return in respect of its limited liability
company interests; and
(iii)
Unless
the Owners shall approve otherwise in writing, the Charterers shall not admit any new member
or members or issue any further shares (certificated or uncertificated) unless issued to
the Charter
Guarantor and being charged in favour the Security Trustee and will procure that
the Charter Guarantor will not consent to the admission of any new member of the Charterers.
(u)
Claims
pari passu The Charterers shall ensure that at all times any unsecured and unsubordinated
claims of the Owners against it under the Transaction Documents rank at least pari passu
with the claims of all its
other unsecured and unsubordinated creditors except those creditors
whose claims are preferred by laws of general application to companies.
(v)
Merger
and demerger The Charterers shall not enter into any amalgamation, merger, demerger
or corporate restructuring without the prior written consent of the Owners, which shall not
be unreasonably withheld.
(w)
Subordination
The Charterers acknowledge to and undertake with the Owners that, throughout the
Agreement Term, any Financial Indebtedness incurred by the Charterers including all shareholder's
and intercompany
loans from time to time granted by the shareholders of the Charterers, any
Obligor or any other member of the Charterer Group:
(i)
are
and shall at all times be subordinated to the Owners' rights under the Transaction Documents;
(ii)
are
and shall be subordinated in all respects to all amounts owing and which may in future become
owing by the Charterers under the Transaction Documents;
(iii)
following
the occurrence of a Termination Event and while the same is continuing, shall not be repaid
or be subject to payment of interest (although interest may accrue);and
(iv)
are
and shall remain unsecured by any Security Interest over the whole or any part of the assets
of the Charterers,
and
the Charterers shall and shall procure that the Obligors and the relevant Affiliate to the Charterers and/or the Charter Guarantor shall
upon the Owners' request, enter into a subordination agreement in favour of the
Owners or such other arrangement acceptable to the Owners
and such other counterparty.
(x)
Management
Agreement The Charterers shall not and shall procure neither of the Approved Managers
to materially amend, vary, novate, supplement, supersede, waive or terminate any term of
any Ship Management
Agreement without the prior written consent of the Owners.
(y)
Greenhouse gas emissions The Charterers shall:
(i)
upon
request of the Owners, provide a duly executed and, if required by the Owners, notarised
and apostilled original of the EU ETS Mandate Letter and take such action as the Owners may
require for such
EU ETS Mandate Letter to be submitted to and recorded by the relevant authorities;
(ii)
do
all that is reasonably required of them to comply with the EU-ETS Regulations; and
47
(iii)
whenever
requested by Owners, promptly provide to the Owners particulars of all and any outstanding
charges due or collectable by the relevant entities charged with administering compliance
with the EU-
ETS Regulations applicable to it or in respect of the Vessel.
The
Charterers will pay or cause to be paid all amounts reasonably required to be paid by it or the Owners in respect of the Vessel arising
out of or in connection with the EU-ETS Regulations, and the Charterers will
promptly, and in any event within fifteen (15) Business
Days of demand, indemnify the Owners for any and all amounts required to be paid by the Owners in connection with any EU-ETS Regulations
in respect of the
Vessel, together with (i) all losses, costs and expenses suffered or incurred by the Owners in connection with compliance
by them with any EU-ETS Regulations in respect of the Vessel, and (ii) any penalties, charges
or other amounts levied against the Owners
due to any breach by the Charterers of its obligations under this Clause 48(y).
(z)
Other
negative undertakings The Charterers shall not, without the prior written consent
of the Owners,
(i)
enter
into any transactions other than on arms’ length commercial terms; or
(ii)
enter
into a single transaction or a series of transactions (whether related or not) and whether
voluntary or involuntary to sell, lease, transfer or otherwise dispose of any of its assets
(save and except as
provided under the terms of this Charter and other Transaction Documents);
or
(iii)
conduct
any business or activity other than the chartering and operation of vessels and other ancillary
activities; or
(i)
sell,
transfer or otherwise dispose of any of its assets or its receivables on recourse terms or
enter into or permit to subsist any other preferential arrangement having a similar effect.
(aa)
Valuation
Reports The Charterers will, on or before each Test Date, deliver or procure the
delivery to the Owners of the Valuation Reports (as required under Clause 48(bb) (Value
maintenance) to determine the
Market Value) dated note earlier than ten (10) days before
the Test Date.
(bb)
Value
maintenance
(i)
In
order to determine the Market Value on a Test Date for the purposes of testing the Value
Maintenance Ratio, the Market Value shall be determined by the Owners to be (x) the mathematic
average of two
valuations from the Valuation Reports obtained in accordance with Clause 48(aa)
(Valuation Reports) or, in the event the difference between the two Valuation Reports
obtained is greater than 5%, the
arithmetic average of the three Valuation Reports, the third
Valuation Report being obtained from a further Approved Valuer selected by the Owners or,
(y) if the Charterers fail to deliver or procure the
delivery of the Valuation Reports to
the Owners in accordance with Clause 48(aa) (Valuation Reports), the valuation from
one Valuation Report arranged by the Owners (each such Valuation Report shall be at
the costs
of the Charterers); and in either case; if the valuation given by an Approved Valuer comes
up with a value range, the lowest value within the range shall be taken to determine the
Market Value.
(ii)
If,
after conducting the Value Maintenance Ratio test on the relevant Test Date, the Owners determine
that the Value Maintenance Ratio is less than the Value Maintenance Threshold, then the Charterers
shall,
within thirty (30) days of the Owners' demand, provide cash collateral in the amount
of the shortfall (the "Cash Collateral") and deposit the same in the Owners'
Account in order to restore the Value
Maintenance Ratio to comply with the Value Maintenance
Threshold.
48
(iii)
Any
Cash Collateral paid to the Owners in accordance with paragraph (ii) above shall secure the
due observance and performance by the Obligors of their obligations and undertakings contained
in the
Transaction Documents. Following the occurrence of a Termination Event which is continuing
in respect of any failure in payment of Hire, the Owners shall have the right to utilise
the Cash Collateral or a part
thereof to pay any outstanding Hire, whereupon the Charterers
shall forthwith, and in any event within five (5) Business Days, pay and deposit with the
Owners such additional amount as may be required to
make up the Cash Collateral. Any remaining
Cash Collateral shall only be returned to the Charterers if, (A) on a Test Date after the
provision of such Cash Collateral, the Value Maintenance Ratio is no less
than the Value
Maintenance Threshold and (B) immediately following the return of such Cash Collateral, the
Value Maintenance Ratio remains no less than the Value Maintenance Threshold provided that
the
Charterers may at any time after the expiration of the Agreement Term request for release
and return of the remaining Cash Collateral.
(iv)
Without
prejudice to paragraph (ii) above, the Charterers shall have the option (instead of providing
the Cash Collateral), within (30) days of the Owners’ request:
(a)
to
pay such amount to the Owners to prepay the Purchase Obligation Price, or provided the Purchase
Obligation Price has been prepaid in full, any undue Fixed Hire in inverse order of maturity,
to
enable compliance with the Value Maintenance Ratio; or
(b)
to
provide additional security satisfactory to the Owners (acting reasonably).
49.
Termination
Events
(a)
Each
of the following events shall constitute a Termination Event:
(i)
Failure
to pay an Obligor fails to pay on the due date any sum payable pursuant to the Transaction
Document to which it or he is a party; provided no Termination Event shall occur under Clause
49(a)(i) in
relation to a failure to pay any Hire on the relevant due date if such Obligor
can demonstrate to the reasonable satisfaction of the Owners that all necessary instructions
were given to effect such payment and
the non-receipt thereof is attributable solely to an
administrative or technical error or an error in the banking system and payment of such Hire
is made within three (3) Business Days of its original due date; or
(ii)
Specific
covenants an Obligor fails comply with Clause 46 (Financial covenants); or
(iii)
Other
obligations an Obligor fails duly to perform or comply with any of the obligations
expressed to be assumed by it in any Transaction Document (other than those referred to in
Clause 49(a)(ii)(Specific
covenants)) and where, in the opinion of the Owners, such
default is capable of remedy, such default is not remedied to the Owners' satisfaction within
seven (7) Business Days after written notice from the
Owners requesting action to remedy
the same; or
(iv)
Misrepresentation
any representation or statement made by any Obligor in or pursuant to a Transaction
Document to which it or he is a party or in any notice, certificate, instrument or statement
contemplated
thereby or made or delivered pursuant hereto or thereto is, or proves to be,
untrue or incorrect in any material respect when made or deemed to be repeated unless such
misrepresentation is in the opinion of the
Owners capable of remedy and is remedied to the
Owners' satisfaction within thirty (30) days of the earlier of the relevant Obligor becoming
aware of any such misrepresentation or the Owners' notice to the
relevant Obligor of such
misrepresentation; or
49
(v)
Cross
default any of the following events:
(A)
any
Financial Indebtedness of an Obligor is not paid when due nor within any originally applicable
grace period;
(B)
any
Financial Indebtedness of an Obligor is declared to be, or otherwise becomes, due and payable
prior to its specified maturity as a result of an event of default (however described);
(C)
any
commitment for any Financial Indebtedness of an Obligor is cancelled or suspended by a creditor
of an Obligor as a result of an event of default (however described); and
(D)
any
creditor of an Obligor becomes entitled to declare any Financial Indebtedness of an Obligor
due and payable prior to its specified maturity as a result of an event of default (however
described),
provided
that no Termination Event will occur under this Clause49(a)(iii) if, the aggregate amount of such Financial Indebtedness referred
to in this Clause 49(a)(v) (x) in respect of the Charter Guarantor, is
less than ten million Dollars (US$10,000,000) and (y) in respect
of the Charterers, is less than five hundred thousand Dollars (US$500,000); or
(vi)
Insolvency
(A)
an
Obligor:
(x)
is
unable or admits inability to pay its debts as they fall due;
(y)
is
deemed to, or is declared to, be unable to pay its debts under applicable law;
(z)
suspends
or threatens to suspend making payments on any of its debts; or
other
than the Charter Guarantor, by reason of actual or anticipated financial difficulties, commences negotiations with one or more of its
creditors with a view to rescheduling any of its indebtedness;
or
(B)
the
Charter Guarantor, any of it Subsidiaries or any of their respective directors or authorised
representatives by reason of actual or anticipated financial difficulties take any steps
(whether by
submitting or presenting a document setting out a proposal or proposed terms
or otherwise) with more than 35% (by value) of creditors of the Charter Group (taken as a
whole) with a view to
obtaining any form of moratorium, suspension or deferral of payments
or reorganisation of debt (or certain debt), provided that this Clause 49(a)(vi)(B) shall
not apply where the relevant steps are
being taken solely with the Owners or any of the Owners
Subsidiaries; or
(C)
the
value of the assets of an Obligor is less than its liabilities (taking into account contingent
and prospective liabilities); or
(D)
a
moratorium is declared in respect of any indebtedness of an Obligor. If a moratorium occurs,
the ending of the moratorium will not remedy any Termination Event caused by that moratorium;
or
50
(vii)
Winding-up
any corporate action, legal proceedings or other procedure or step is taken in relation
to:
(A)
the
suspension of payments, a moratorium of any indebtedness, winding-up, dissolution, administration,
bankruptcy or reorganisation (by way of voluntary arrangement, scheme of arrangement or
otherwise)
of an Obligor;
(B)
a
composition, compromise, assignment or arrangement with any creditor of an Obligor;
(C)
the
appointment of a liquidator, receiver, administrative receiver, administrator, compulsory
manager, trustee or other similar officer in respect of an Obligor or any of its assets;
(D)
enforcement
of any Security Interest over any assets of an Obligor;
or
any analogous procedure or step is taken in any jurisdiction. This Clause 49(a)(vii) shall not apply to (x) any winding-up petition which
is frivolous or vexatious and is discharged, stayed or dismissed
within twenty one (21) days of commencement or (y) any arrest or detention
of the Vessel from which the Vessel is released within twenty one (21) days from the date of that arrest or detention; or
(viii)
Cessation
of business any Obligor ceases or threatens to cease, to carry on all or, any material
part of such Obligor's business; or
(ix)
Unlawfulness
at any time:
(A)
it
is or becomes unlawful for any Obligor to perform or comply with any or all of its obligations
under the Transaction Documents to which it or he is a party;
(B)
any
of the obligations of the Charterers under the Transaction Documents to which they are parties
are not or cease to be legal, valid and binding; or
(C)
any
Transaction Documents or any Encumbrance created or purported to be created by the Transaction
Documents ceases to be legal, valid, binding, enforceable or effective or is alleged by a
party to
such Transaction Document (other than the Owners) to be ineffective,
and
no agreement is reached between the Owners and the Charterers to agree an alternative arrangement within thirty (30) days from the date
of occurrence of any of the events stated above; or
(x)
Repudiation
an Obligor repudiates any Transaction Document to which it is a party or does or
causes to be done any act or thing evidencing an intention to repudiate any such Transaction
Document; or
(xi)
Validity
and admissibility at any time any act, condition or thing required to be done, fulfilled
or performed in order:
(A)
to
enable any Obligor lawfully to enter into, exercise its rights under and perform the respective
obligations expressed to be assumed by it in the Transaction Documents;
(B)
to
ensure that the obligations expressed to be assumed by each of the Obligors in the Transaction
Documents are legal, valid and binding; or
51
(C)
to
make the Transaction Documents admissible in evidence in any applicable jurisdiction,
is
not done, fulfilled or performed within thirty (30) days after notification from the Owners to the relevant Obligor requiring the same
to be done, fulfilled or performed; or
(xii)
ISM
Code and ISPS Code for any reason whatsoever, the Vessel ceases to:
(A)
comply
with the ISM Code or the ISPS Code; or
(B)
be
managed by an Approved Manager on terms in all respects approved by the Owners,
in
each case, which is not remedied within three (3) Business Days after the earlier of written notice from the Owners requesting action
to remedy the same or the Charterers becoming aware of the same; or
(xiii)
Sanctions
and AML laws etc.,
(A)
any
Obligor is in breach of any Sanctions, Anti-Money Laundering Laws, Anti-Terrorism Financing
Laws or Business Ethics Laws; or
(B)
any
Obligor becomes a Restricted Person, or is owned or controlled by a Restricted Person, or
owns or controls a Restricted Person; or
(C)
if
as a result of any Sanctions, the Owners are prohibited from performing any of their obligations
under the Transaction Documents or the transactions contemplated under the Transaction
Documents;
or
(D)
a
Sub-Charterer becomes a Restricted Person and the Owners fail to effect immediate termination
of the Sub-Charter with such Sub-Charterer or fail to procure (within 60 days) a replacement
Sub-
Charter reasonably satisfactory to the Owners; or
(xiv)
Arrest
the Vessel is arrested or seized for any reason whatsoever (other than caused solely
and directly by any action or omission from the Owners) unless the Vessel is released and
returned to the possession
of the Charterers within sixty (60) days of such arrest or seizure;
or
(xv)
Registration
the registration of the Vessel becomes void or voidable or liable to cancellation
or termination, or the country of registration of the Vessel becomes involved in war (whether
or not declared) or
civil war or is occupied by any other power and the Owners consider that,
as a result, safety of Owners' title to the Vessel is materially prejudiced other than caused
directly or indirectly by the actions of the
Owners; or
(xvi)
Material
adverse change at any time there shall occur any event or change which has a Material
Adverse Effect; or
(xvii)
Material
litigation any litigation, arbitration or administrative proceedings of or before
any court, arbitral body or agency have been started or threatened in connection with any
Obligor which, if adversely
determined, has a Material Adverse Effect; or
(xviii)
MOA
and Initial Sub-Charter
(A)
any
of the Sellers' default (as such term is described in the MOA) occurs under the MOA; or
52
(B)
the
Initial Sub-Charteris is terminated, cancelled, repudiated or otherwise ceases to remain
in full force and effect before the end of its agreed term, provided that no Termination
Event will occur
under this sub-paragraph, if a replacement Sub-Charter with material terms
and conditions satisfactory to the Owners is entered into by the Charterers and assigned
to the Owners in form and
substance acceptable the Owners within 60 days after the termination,
cancellation, repudiation or cessation of effectiveness of the Initial Sub-Charter; or
(xix)
Related
Charter a "Termination Event" (as such term is defined in each Related
Charter) occurs under any Related Charter which is continuing.
(b)
Owners'
options after occurrence of a Termination Event At any time after a Termination Event
shall have occurred and be continuing and if applicable, following the lapse of any applicable
grace period, the Owners
may:
(i)
at
their option and by delivering to the Charterers a Termination Notice, terminate this Charter
with immediate effect or on the date specified in such Termination Notice, and withdraw the
Vessel from the
service of the Charterers without noting any protest and without interference
by any court or any other formality whatsoever, whereupon the Vessel shall no longer be in
the possession of the Charterers with
the consent of the Owners, and the Charterers shall
redeliver the Vessel to the Owners in accordance with Clauses 42 (Redelivery) and
43 (Redelivery conditions), whereupon the Owners may:
(A)
(in
the event that the Charterers fail to pay the Termination Sum in full on the Termination
Payment Date) at their option (but shall be under no obligation to), sell the Vessel to such
party, at such time
and on such terms and conditions as they may, in their absolution discretion,
think fit; and/or
(B)
generally,
use or dispose of the Vessel as the Owners may see fit subject only to the terms of this
Charter; and/or
(ii)
apply
any amount then standing to the credit to the Earnings Account against any Unpaid Sum or
such other amounts which the Charterer or other Obligors may owe under the Transaction Documents;
and/or
(iii)
(without
prejudice to sub-paragraph (ii) above) enforce any Security Interest created pursuant to
the relevant Transaction Documents.
(c)
Payment
of Termination Sum On the Termination Payment Date in respect of any termination
of the chartering of the Vessel under this Charter in accordance with paragraph (b) above,
the Charterers shall pay to the
Owners an amount equal to the Termination Sum.
(d)
Owners'
application of Termination Sum Following any termination to which this Clause 49
applies, all sums payable in accordance with paragraph (c) above shall be paid to such account
or accounts as the Owners
may direct and shall be applied pursuant to Clause 4.2 (Application
of Transaction Documents Proceeds) of the Security Trust Deed.
(e)
Transfer
of title If the chartering of the Vessel or, as the case may be, the obligation
of the Owners to deliver and charter the Vessel to the Charterers is terminated in accordance
with the terms of this Charter, the
obligation of the Charterers to pay Hire shall cease
once the Charterers have made the payment pursuant to paragraph (c) above to the satisfaction
of the Owners, whereupon the Owners shall arrange for title of the
Vessel to be transferred
to the Charterers in accordance with paragraphs (d) to (h) of Clause 52 (Transfer of title).
53
(f)
Sale
of Vessel Following any termination to which this Clause 49 applies, if the Charterers
have not paid to the Owners the Termination Sum on the applicable Termination Payment Date
(and consequently the Owners
have not transferred title to the Vessel to the Charterers in
accordance with Clause 52 (Transfer of title)), the Owners shall be entitled (but
not obliged) to sell the Vessel and apply the proceeds of a sale of the Vessel
received or
receivable, net of any fees, commissions, documented costs, disbursements or other expenses
incurred by the Owners as a result of the Owners arranging the proposed sale (the "Net
Proceeds"), against the
Termination Sum and:
(i)
if
the Net Proceeds do not exceed the Termination Sum, the Owners claim from the Charterers
for any shortfall together with interest accrued thereon pursuant to paragraph (g) (Default
interest) of Clause 40
(Hire) from the due date for payment thereof to the date
of actual payment; or
(ii)
if
the Net Proceeds exceed the Termination Sum, any surplus shall be applied in the order set
out in clause 4.2 (Application of Transaction Document Proceeds) of the Security Trust
Deed,
provided
that in the event:
(A)
the
Owners have not yet entered into any agreement for the sale, charter or employment of the
Vessel;
(B)
the
Charterers furnish the Owners with an Offer no later than the date falling thirty (30) days
after the Termination Payment Date (or such later date as may be agreed by the Owners, the
"Latest MOA Date");
and
(C)
the
potential buyer which has made the Offer (the "Potential Buyer") is acceptable
to the Owners (acting reasonably, such acceptance not to be unreasonably withheld or delayed),
the Owners shall, subject to
the entry into of a memorandum of agreement for the Vessel between
the Potential Buyer and the Owners which shall be on terms acceptable to the Owners (the
"Potential Buyer MOA") by the Latest MOA
Date, sell the Vessel to the Potential
Buyer in accordance with the terms of the Potential Buyer MOA. For the avoidance of doubt,
the Owners may at its sole discretion (acting reasonably) proceed to complete
any sale, charter
or employment of the Vessel arranged by the Owners notwithstanding the Offer furnished by
the Charterers. The proceeds of such sale shall, for the avoidance of any doubt, be applied
in
accordance with this Clause 49(f)(i) and (ii) as above.
For
the purposes of this Clause 49(f):
"Offer"
means a firm offer for the purchase of the Vessel:
(i)
for
a purchase price in cash (payable on delivery and acceptance of the Vessel) not less than
the Relevant Amount; and
(ii)
on
customary terms for sale and purchase of commercial vessels of similar type.
"Relevant
Amount" means the aggregate of the Termination Sum to be determined by the Owners payable on the delivery date of the Vessel
under any Potential Buyer MOA and to the extent not already included
within such Termination Sum, any actual or estimated costs associated
with the entry into the Potential Buyer MOA by the Potential Buyer and the conclusion of the transaction and the delivery of the Vessel
thereunder, including any brokers' fees or commission.
(g)
Owners'
rights reserved Without prejudice to the forgoing or to any other rights of the Owners
under the Charter, at any time after a Termination Notice is served under paragraph (b) above,
the Owners may, acting in
their sole discretion without prejudice to the Charterers' obligations
under Clause 43 (Redelivery conditions), retake possession of the Vessel and, the
Charterers agree that the Owners, for such purpose, may put into
force and exercise all their
rights and entitlements at law and may enter upon any premises belonging to or in the occupation
or under the control of the Charterers where the Vessel may be located as well as giving
instructions to the Charterers' servants or agents for this purpose.
54
(h)
Cumulative
rights The rights conferred upon the Owners by the provisions of this Clause 49 are
cumulative and in addition to any rights which they may otherwise have in law or in equity
or by virtue of the
provisions of this Charter.
50.
Sub-chartering
and assignment
(a)
the
Charterers shall not without the prior written consent of the Owners (such consent not to
be unreasonably withheld or delayed):
(i)
let
the Vessel on demise charter for any period;
(ii)
enter
into any consecutive time charter in respect of the Vessel for a term which exceeds, or which
by virtue of any optional extension may exceed, twelve (12) months, or which would expire
after the end of
the Charter Period (except for the Initial Sub-Charter or as may be permitted
under any Sub-Charter);
(iii)
de-activate
or lay up the Vessel; or
(iv)
assign
their rights under this Charter.
(b)
The
Charterers acknowledge that the Owners' consent to any sub-bareboat chartering may be subject
(amongst other things) to the Owners being satisfied as to the intended flag during such
sub-bareboat chartering.
(c)
Without
prejudice to anything contained in this Clause 50, the Charterers shall only enter into a
Sub-Charter which is for a purpose for which the Vessel is suited and with a Sub-Charterer
who is not a Restricted
Person and in each case, the Charterers shall assign to the Owners
all their earnings arising out of and in connection with any Sub-Charter and, subject to
the Charterers' Assignment, all their rights and interest of any
Sub-charter (as such term
is defined in the Charterers' Assignment) upon such terms and conditions as the Owners may
require and the Charterers shall serve a notice on any Sub-Charterer (subject to the Charterers'
Assignment) and shall use reasonable commercial endeavors to obtain a written acknowledgement
of such earnings assignment from such Sub-Charterer in such form as is required in good faith
by the Owners or any
Finance Party (as the case may be).
(d)
Without
prejudice to paragraph (c) above, the Vessel shall not be employed, operated or managed in
any manner which:
(i)
is
contrary to any Sanctions and in particular, the Vessel shall not be used by or to benefit
any party which is a target of Sanctions and/or is a Restricted Person or trade to any Restricted
Country;
(ii)
would
result or reasonably be expected to result in any Obligor, the Sub-Charterers, or the Owners
becoming a Restricted Person; or
(iii)
would
trigger the operation of any Sanctions limitation or exclusion clause in any insurance documentation.
(e)
The
Charterers shall, at the Charterers' costs, provide the Owners with copies of the Vessel's
contracts of employment (including contracts of employment entered into by the Sub-Charterer)
and reasonable details
relating to performance of such employment contracts every twelve
(12) months from the Actual Delivery Date and from time to time, in each case, upon the Owners'
written request.
55
51.
Name
of Vessel
(a)
Provided that the prior written consent has been given by the Owners (such approval not to be unreasonably withheld or delayed):
(i)
the
name of the Vessel may be chosen by the Charterers; and
(ii)
the
Vessel may be painted in the colours, display the funnel insignia and fly the house flag
as required by the Charterers.
(b)
Following
the termination of this Charter (other than a Default Termination), the Charterers shall
have the right to require the Owners to change the name of the Vessel so that the Charterers
can use the name.
52.
Transfer
of title
Purchase
option
(a)
The
Charterers shall, from the date falling after and including the 3rd Anniversary,
have the option to elect to purchase the Vessel from the Owners for the Purchase Option Price
on the Purchase Option Date, subject to
satisfaction of the following conditions:
(i)
the
Charterers have notified the Owners by serving an irrevocable written notice at least forty-five
(45) days prior to the proposed Purchase Option Date of the Charterers' intention to exercise
the option to
purchase the Vessel on a Purchase Option Date (the "Purchase Option
Notice"),
(ii)
the
proposed Purchase Option Date is a Hire Payment Date falling on or after the 3rd
Anniversary;
(iii)
no
Total Loss having occurred under Clause 53 (Total Loss); and
(iv)
no
Termination Event having occurred and which is continuing or would occur as a result of such
early termination.
(b)
The
Purchase Option Notice, once given, shall be irrevocable and, unless with the Owners approve
otherwise in writing, the Charterers shall have absolute obligation to pay the Purchase Option
Price on the declared
Purchase Option Date. Upon receipt of full payment of the Purchase
Option Price on the Purchase Option Date, the Owners shall arrange for the title of the Vessel
to be transferred to the Charterers in accordance with
paragraphs (d) to (h) below.
Purchase
obligation
(c)
In
the event the Charterers do not exercise the option to purchase the Vessel prior to the expiry
of the Charter Period in accordance with the preceding provisions of this Clause 52, the
Charterers shall be obligated to
pay the Purchase Obligation Price and purchase the Vessel
from the Owners on the last day of the Charter Period in accordance with paragraphs (d) to
(h) below against the full payment of the Purchase Obligation
Price and all other amounts
payable to the Owners under the Transaction Documents.
Transfer
of title
(d)
(A)
(as and where applicable) upon the Owners’ receipt in full of the Termination Sum,
or
56
(B)
(in
the absence of a Termination Event) upon (i) the Owners’ receipt of the full payment
of the Purchase Option Price on the Purchase Option Date or (ii) full payment of the Purchase
Obligation Price on the
last day of the Charter Period,
and
subject to payment of all Unpaid Sum under the Transaction Documents and Unpaid Sum (as such terms is defined in each Related Charter)
under the Related Transaction Documents and the Charterers’
compliance with the other terms and conditions set out in this Clause,
the Owners shall do the following:
(i)
transfer
the title to and ownership of the Vessel to the Charterers by delivering to the Charterers
(in each case at the Charterers' costs):
(A)
a
duly executed and acknowledged, notarised, legalised and/or apostilled (each to the extent
compulsorily required by the Charterers' nominated flag state and as applicable) bill of
sale; and
(B)
the
Title Transfer PDA and such other documents as the Charterers may in good faith require to
register the Vessel in their name; and
(ii)
to
procure the deletion of any mortgage or prior Encumbrance created by the Owners in relation
to the Vessel at the Charterers' cost and provide a copy of the Vessel's certificate of ownership
and
encumbrance from the registries dated the date of delivery evidencing that the Vessel
is free from registered encumbrances and mortgages,
provided
always that prior to such transfer or deletion (as the case may be), the Owners shall have received the letter of indemnity as referred
to in paragraph (g) below from the Charterers and the Charter Guarantor,
and the Charterers shall have performed all their obligations
in connection herewith and with the Vessel, including without limitation the full payment of all Unpaid Sums, Taxes, charges, duties,
costs and
disbursements (including reasonable and documented legal fees) in relation to the Vessel.
(e)
The
transfer in accordance with paragraph (d) above shall be made in all respects at the Charterers'
expense on an "as is, where is" basis and the Owners shall give the Charterers
no representations, warranties,
agreements or guarantees whatsoever concerning or in connection
with the Vessel, the Insurances, the Vessel's condition, state or class or anything related
to the Vessel, expressed or implied, statutory or otherwise save
that the Vessel is free
of mortgages, liens and encumbrances created by the Owners.
(f)
The
Owners shall have no responsibility for the registrability of a bill of sale referred to
in paragraph (d) above executed by the Owners, as far as such bill of sale is prescribed
in forms generally acceptable to the
Vessel's registry at the date of execution of such bill
of sale.
(g)
The
Charterers shall, immediately prior to the receipt of the bill of sale referred to in paragraph
(d) above, furnish the Owners with a letter of indemnity (in a form satisfactory to the Owners
in good faith and with a
validity period not less than 12 months from delivery of the Vessel
evidenced by the duly executed Title Transfer PDA) duly executed by the Charter Guarantor
whereby the Charter Guarantor shall state that, among
other things, the Owners have and will
have no interest, concern or connection with the Vessel after the date of such letter and
that the Charter Guarantor shall indemnify the Owners and keep the Owners indemnified
against
any claims made by any person arising in connection with the Vessel.
(h)
If
the chartering of the Vessel is terminated in accordance with this Clause 52, the obligation
of the Charterers to pay the Hire shall cease once the Charterers have paid the relevant
Purchase Option Price, Purchase
Obligation Price, or the Termination Sum (as applicable)
and any other sums payable by the Charterers to the Owners as required hereunder.
57
Early
Prepayment Event
(i)
If,
at any time during the Agreement Term, a Charter Guarantor Change of Control Event occurs,
then:
(A)
the
Charterers shall immediately notify the Owners;
(B)
subject
to no Total Loss under Clause 53 (Total Loss) having occurred and no Termination Event
under Clause 49 (Termination Events) having occurred and being continuing, and regardless
of whether the
notice referred to in paragraph (A) above has been received by the Owners,
the Owners may (but shall not be obliged to) notify the Charterers of its intention to terminate
the Charter and require the transfer of
title to the Vessel from the Owners to the Charterers
in exchange for payment by the Charterers to the Owners of the Termination Sum within 15
days from receipt of such Owners’ notification or on such later
date specified by the
Owners in writing; and
(C)
the
Charterers shall pay to the Owners the Termination Sum pursuant to the above.
For
the avoidance of doubt, Hire shall in any event continue to be payable for the full period and this Charter shall otherwise continue
to be in full force and effect until the Termination Sum has been received in full by
the Owners.
53.
Total
Loss
(a)
If
circumstances exist giving rise to a Total Loss, the Charterers shall promptly notify the
Owners of the facts of such Total Loss. If the Charterers wish to proceed on the basis of
a Total Loss and advise the Owners
thereof, the Owners shall agree to the Vessel being treated
as a Total Loss for all purposes of this Charter. The Owners shall thereupon abandon the
Vessel to the Charterers and/or execute such documents as may be
required to enable the Charterers
to abandon the Vessel to insurers and claim a Total Loss. Without prejudice to the obligations
of the Charterers to pay to the Owners all monies then due or thereafter to become due
under
this Charter, if the Vessel shall become a Total Loss during the Charter Period, the Charter
Period shall end on the Settlement Date.
(b)
If
the Vessel becomes a Total Loss during the Charter Period, the Charterers shall, on the Settlement
Date, pay to the Owners the amount calculated in accordance with paragraph (c) below.
(c)
On
the Settlement Date, the Charterers shall pay to the Owners an amount equal to the Termination
Sum as at the applicable Termination Payment Date. The foregoing obligations of the Charterers
under this paragraph
(c) shall apply regardless of whether or not any moneys are payable
under any Insurances in respect of the Vessel, regardless of the amount payable thereunder,
regardless of the cause of the Total Loss and regardless
of whether or not any of the said
compensation shall become payable.
(d)
All
Total Loss Proceeds shall be paid to such account or accounts as the Owners may direct and
shall be applied pursuant to Clause 4.2 (Application of Transaction Documents Proceeds)
of the Security Trust Deed.
(e)
The
Charterers shall, at the Owners' request, provide satisfactory evidence, in the reasonable
opinion of the Owners, as to the date on which the constructive total loss of the Vessel
occurred pursuant to the definition of
Total Loss.
(f)
The
Charterers shall continue to pay Hire on the days and in the amounts required under this
Charter notwithstanding that the Vessel shall become a Total Loss provided always that no
further instalments of Hire shall
become due and payable after the Charterers have made the
payment pursuant to paragraph (c) above.
58
54.
Appointment
of Approved Manager
(a)
The
Charterers shall not and shall procure the Approved Managers will not appoint anyone other
than the Approved Managers as managers or sub-manager of the Vessel without the prior written
consent of the Owners
(such consent not to be unreasonably withheld or delayed).
(b)
The
Charterers shall ensure that the Vessel is at all times managed by the Approved Managers
pursuant to the Ship Management Agreements as approved by the Owners in writing in advance.
(c)
the
Approved Managers shall provide a Manager's Undertaking (in such form as the Owners may reasonably
require) and, unless the Owners approve otherwise, the Manager's Undertaking shall in express
terms
confirm and undertake (among other things) that all claims of the Approved Managers
against the Charterers (other than any Permitted Credit as such term is defined in the relevant
Manager's Undertakings) shall be
subordinated to the claims of the Owners under the Transaction
Documents.
(d)
Upon
the occurrence of a Termination Event and while the same is continuing, the Owners reserves
the right to appoint such other ship management company as replacement for any Approved Manager
which the
Charterers may appoint.
55.
Fees
and expenses
(a)
Immediately
upon signing of this Charter, the Charterers shall pay to the Owners a non-refundable arrangement
fee in an amount of US$445,000 (Dollars Four Hundred Forty Five Thousand only), which equals
to one
percent (1%) of the Original Principle (the "Arrangement Fee").
(b)
The
Charterers shall bear all costs, fees (including documented legal fees) and disbursements
reasonably incurred by the Owners and the Charterers in connection with:
(i)
the
negotiation, preparation and execution of this Charter and the other Transaction Documents
or any Related Transaction Documents (in respect of the Related Charter listed in Schedule
3 hereto) and any
amendment thereto (in an aggregate amount not exceeding US$100,000);
(ii)
the
delivery of the Vessel under the MOA and this Charter, including, without limitation, the
Registration Costs, the initial and annual registration fees and tonnage tax payable to the
relevant ship registry;
(iii)
subject
to the remaining terms of this Charter, preparation or procurement of any survey, inspection,
Valuation Report, tax or insurance advice;
(iv)
the
Charterers’ exercising their purchase option right pursuant to Clause 52 (Transfer
of title); and
(v)
such
other activities relevant to the transaction contemplated herein, subject to any terms which
may be agreed between the Owners and the Charterers in relation to any fees.
(c)
The
Charterers shall:
(i)
pay
to the Owners or to its order any of the Delivery Costs from time to time; and
(ii)
pay
to the Owners or to its order promptly on the Owners' written demand the amount of all costs
and expenses (including legal fees) incurred by the Owners in connection with the enforcement
of, or the
preservation of any rights under, any Transaction Document.
59
56.
Stamp
duties and Taxes
The
Charterers shall pay promptly but in any event within ten (10) Business Days (or other period as may be agreed by both parties) of demand
all stamp, documentary or other like duties and Taxes to which the Charter, the
MOA and the other Transaction Documents may be subject
or give rise and shall indemnify the Owners within ten (10) Business Days of demand against any and all liabilities directly arising
with respect to or resulting from
any delay on the part of the Charterers to pay such duties or Taxes.
57.
Operational
notifiable events
(a)
The
Owners are to be advised as soon as possible after the occurrence of any of the following
events:
(i)
when
a material condition of class is applied by the Classification Society which is not promptly
complied with taking into account any applicable grace period;
(ii)
whenever
the Vessel is arrested, confiscated, seized, requisitioned, impounded, forfeited or detained
by any government or other competent authorities or any other persons for a period of at
least two (2) days;
(iii)
whenever
a class or flag authority refuses to issue or withdraw trading certification;
(iv)
in
the event of a fire requiring the use of fixed fire systems or collision / grounding provided
such events exceed the Threshold Amount;
(v)
whenever
the Vessel is planned for dry-docking, whether in accordance with Clause 10(g) (Part II)
or any Sub-Charter and whether routine or emergency;
(vi)
in
the event of any material alteration and/or damage to the Vessel in excess of the Threshold
Amount;
(vii)
the
Vessel is taken under tow save for any routine towage (including when leaving or entering
a port);
(viii)
any
death or serious injury on board; or
(ix)
any
Environmental Incident provided such incident has a Material Adverse Effect.
(b)
The
Charterers shall, upon the Owners' written request, supply to the Owners annual in-house
full ship inspection report by the end of each calendar year.
58.
Further
indemnities
(a)
Whether
or not any of the transactions contemplated hereby are consummated, the Charterers shall,
in addition to the provisions under Clause 17 (Indemnity) (Part II) of this Charter,
indemnify, protect, defend and
hold harmless the Owners, the Security Trustee and the Finance
Parties and their respective officers, directors, agents and employees (collectively, the
"Indemnitees") (without duplication with any payment or
insurance proceeds
paid to the Indemnitees) throughout the Agreement Term from, against and in respect of, any
and all liabilities, obligations, losses, damages, penalties, fines, documented fees, claims,
actions,
proceedings, judgement, order or other sanction, lien, salvage, general average,
suits, documented costs, expenses and disbursements, including reasonable legal fees and
expenses, of whatsoever kind and nature, other
than taxes imposed on the overall gross income
of the Indemnitees, (collectively, the "Expenses"), imposed on, suffered
or incurred by or asserted against any Indemnitee, in any way relating to, resulting from
or
arising out of or in connection with, in each case, directly or indirectly, any one or
more of the following:
60
(i)
this
Charter and any other Transaction Documents and any amendment, supplement or modification
thereof or thereto pursuant to the terms of this Charter or requested by the Charterers;
(ii)
the
Vessel or any part thereof, including with respect to:
(A)
the
manufacture, design, possession, use or non-use, operation, maintenance, testing, repair,
overhaul, condition, alteration, modification, addition, improvement, storage, seaworthiness,
replacement,
repair of the Vessel or any part (including, in each case, latent or other defects,
whether or not discoverable and any claim for patent, trademark, or copyright infringement
and all liabilities,
obligations, losses, damages and claims in any way relating to or arising
out of spillage of cargo or fuel, out of injury to persons, properties or the environment
or strict liability in tort);
(B)
any
claim or penalty arising out of violations of applicable law by the Charterers, the Sub-Charterers
or any other sub-charterers;
(C)
death
or property damage of shippers or others;
(D)
any
liens in respect of the Vessel or any part thereof including, without limitation, liens arising
out of or in connection with any cargo claims (whether or not such claims arose prior to
or during the
Charter Period) but excluding any liens arising out of or in connection with
a direct act or omission of the Owners;
(E)
any
registration and/or tonnage fees (whether periodic or not) in respect of the Vessel payable
to any registry of ships and any service fees payable to any service provider in relation
to maintaining
such registration at any registry of ships; or
(F)
any
claims in relation to any loss or damage to cargo on board the Vessel during the Charter
Period; or
(G)
all
expenses suffered or incurred by the Owners which arise under or in connection with any applicable
Environmental Law or any applicable Sanctions or any claim or penalty arising out of
Sanctions
or violations of applicable law by any of the Obligors, or any Sub-charterers;
(iii)
any
breach of or failure to perform or observe, or any other non-compliance with, any covenant
or agreement or other obligation to be performed by the Charterers under any Transaction
Document to which it
is a party or the falsity of any representation or warranty of the Charterers
in any Transaction Document to which it is a party or the occurrence of any Termination Event;
(iv)
in
preventing or attempting to prevent the arrest, confiscation, seizure, taking and execution,
requisition, impounding, forfeiture or detention of the Vessel, or in securing or attempting
to secure the release of
the Vessel in connection with the exercise of the rights of a holder
of a lien created by the Charterers;
(v)
incurred
or suffered by the Owners in:
(A)
procuring
the delivery of the Vessel to the Charterers under Clause 35 (Delivery);
(B)
any
non-delivery to or acceptance by the Charterers of the Vessel under this Charter;
61
(C)
recovering
possession of the Vessel following termination of this Charter under Clause 49 (Termination
Events);
(D)
taking
redelivery of the Vessel at the expiry of the Charter Period;
(E)
the
Registration Costs;
(vi)
arising
from the Master or officers of the Vessel or the Charterers' agents signing bills of lading
or other documents;
(vii)
in
connection with:
(A)
the
arrest, seizure, taking into custody or other detention by any court or other tribunal or
by any governmental entity; or
(B)
subjection
to distress by reason of any process, claim, exercise of any rights conferred by a lien or
by any other action whatsoever, of the Vessel which are expended, suffered or incurred as
a result of
or in connection with any claim or against, or liability of, the Charterers or
any other member of the Charter Group, together with any documented costs and expenses or
other outgoings which may
be paid or incurred by the Owners in releasing the Vessel from
any such arrest, seizure, custody, detention or distress.
(b)
The
Charterers shall pay to the Owners promptly on the Owners written demand within ten (10)
Business Days the amount of all documented costs and expenses (including legal fees) incurred
by the Owners in
connection with the enforcement of, or the preservation of any rights under,
any Transaction Document including (without limitation) (i) any documented losses, costs
and expenses which the Owners may from time to
time sustain, incur or become liable for by
reason of the Owners being deemed by any court or authority to be an operator, or in any
way concerned in the operation, of the Vessel and (ii) collecting and recovering the
proceeds
of any claim under any of the Insurances.
(c)
Without
prejudice to any right to damages or other claim which either party may, at any time, have
against the other hereunder, it is hereby agreed and declared that the indemnities of the
Owners by the Charterers
contained in this Charter shall continue to have full force and
effect notwithstanding any termination, cancellation or expiration of this Charter for a
further period of 12 months following such termination, cancellation
or expiration.
59.
Further
assurances and undertakings
(a)
The
Charterers shall, and shall procure each of the other Obligor will, make all applications
and execute all other documents and do all other acts and things as may be necessary to implement
and to carry out their
obligations under, and the intent of, this Charter.
(b)
The
parties shall act in good faith to each other in respect of any dealings or matters under,
or in connection with, this Charter.
60.
Cumulative
rights
The
rights, powers and remedies provided in this Charter are cumulative and not exclusive of any rights, powers or remedies at law or in
equity unless specifically otherwise stated.
61.
No
waiver
No
delay, failure or forbearance by a party to exercise (in whole or in part) any right, power or remedy under, or in connection with, this
Charter will operate as a waiver. No waiver of any breach of any provision of this Charter
will be effective unless that waiver is in
writing and signed by the party against whom that waiver is claimed. No waiver of any breach will be, or be deemed to be, a waiver of
any other or subsequent breach.
62
62.
Entire
agreement
(a)
Save
for the other Transaction Documents and the Quiet Enjoyment Letter, this Charter contains
all the understandings and agreements of whatsoever kind and nature existing between the
parties in respect of this
Charter, the rights, interests, undertakings agreements and obligations
of the parties to this Charter and shall supersede all previous and contemporaneous negotiations
and agreements.
(b)
This
Charter may not be amended, altered or modified except by a written instrument executed by
each of the parties to this Charter.
63.
Invalidity
If
any term or provision of this Charter or the application thereof to any person or circumstances shall to any extent be invalid or unenforceable
the remainder of this Charter or application of such term or provision to persons
or circumstances (other than those as to which it is
already invalid or unenforceable) shall (to the extent that such invalidity or unenforceability does not materially affect the operation
of this Charter) not be affected thereby
and each term and provision of this Charter shall be valid and be enforceable to the fullest
extent permitted by law.
64.
English
language
All
notices, communications and financial statements and reports under or in connection with this Charter and the other Transaction Documents
shall be in English language or, if in any other language, shall be accompanied by
a translation into English. In the event of any conflict
between the English text and the text in any other language, the English text shall prevail.
65.
No
partnership
Nothing
in this Charter creates, constitutes or evidences any partnership, joint venture, agency, trust or employer/employee relationship between
the parties, and neither party may make, or allow to be made any representation
that any such relationship exists between the parties.
Neither party shall have the authority to act for, or incur any obligation on behalf of, the other party, except as expressly provided
in this Charter.
66.
Notices
(a)
Any
notices to be given to the Owners under this Charter shall be sent in writing by courier,
registered letter or email and addressed to:
Address:
3F,
Building No.8, Beijing Friendship Hotel, Haidian District, Beijing, 100873, China
Email:
Fang
Zhao Qing / Zhu Xin
Attention:
fangzhaoqing@msfl.com.cn
/ zhuxin@msfl.com.cn
or
to such other address or email address as the Owners may notify to the Charterers in accordance with this Clause 66.
(b)
Any
notices to be given to the Charterers under this Charter shall be sent in writing by courier,
registered letter or email and addressed to:
Address: 3-5
Menandrou street, Kifissia, Athens, 14561
Email: legalconfidential@technomar.gr
Tel: +30
2106233670
Attention: Mrs.
Maria Danezi
or
to such other address, phone number or email address as the Charterers may notify to the Owners in accordance with this Clause 66.
63
(c)
Any
such notice shall be deemed to have reached the party to whom it was addressed, when dispatched
and acknowledged received (in case of a facsimile or an email) or when delivered (in case
of courier or a
registered letter). A notice or other such communication received on a non-working
day or after business hours in the place of receipt shall be deemed to be served on the next
following working day in such place.
(d)
Any
communication or document to be made or delivered by one party to another under or in connection
with the Transaction Documents may be made or delivered by electronic mail or other electronic
means
(including, without limitation, by way of posting to a secure website) if those two
parties:
(i)
notify
each other in writing of their electronic mail address and/or any other information required
to enable the transmission of information by that means; and
(ii)
notify
each other of any change to their address or any other such information supplied by them
by not less than five Business Days' notice.
(e)
Any
such electronic communication or delivery as specified in paragraph (d) above to be made
between an Obligor and the Owners may only be made in that way to the extent that those two
parties agree that, unless
and until notified to the contrary, this is to be an accepted
form of communication or delivery.
(f)
Any
such electronic communication or delivery as specified in paragraph (d) above made or delivered
by one party to another will be effective only when actually received (or made available)
in readable form and in
the case of any electronic communication or document made or delivered
by a party to the Owners only if it is addressed in such a manner as the Owners shall specify
for this purpose.
(g)
Any
electronic communication or document which becomes effective, in accordance with paragraph
(iv) above, after 5:00 p.m. in the place in which the party to whom the relevant communication
or document is sent
or made available has its address for the purpose of this.
67.
Conflicts
Unless
stated otherwise, in the event of there being any conflict between the provisions of Clauses 1 (Definitions) (Part II) to 31 (Notices)
(Part II) and the provisions of Clauses 32 (Definitions) to 76 (Assignment and Transfer),
the provisions of Clauses 32
(Definitions) to 76 (Assignment and Transfer) shall prevail.
68.
Survival
of Charterers' obligations
The
termination of this Charter for any cause whatsoever shall not affect the rights of the Owners under the Transaction Documents to recover
from the Charterers any money due to the Owners in consequence thereof pursuant
and subject to the terms hereof and all other rights
of the Owners (including but not limited to any rights, benefits or indemnities which are provided to continue after the termination
of this Charter, always subject to any
applicable validity limitation stipulated in the relevant provisions of this Charter) are reserved
hereunder pursuant and subject to the terms hereof.
69.
Counterparts
This
Charter may be executed in any number of counterparts and any single counterpart or set of counterparts signed, in either case, by all
the parties hereto shall be deemed to constitute a full and original agreement for all
purposes.
64
70.
Third
Parties Act
(a)
Any
person which is an Indemnitee or a Finance Party from time to time and is not a party to
this Charter shall be entitled to enforce such terms of this Charter as provided for in this
Charter in relation to the
obligations of the Charterers to such Indemnitee or (as the case
may be) Finance Party, subject to the provisions of Clause 30 (Dispute Resolution),
Clause 74 (Arbitration) and the Third Parties Act. The Third Parties
Act applies to
this Charter as set out in this Clause 70.
(b)
Save
as provided above, a person who is not a party to this Charter has no right under the Third
Parties Act to enforce or to enjoy the benefit of any term of this Charter.
71.
Waiver
of immunity
(a)
To
the extent that the parties may in any jurisdiction claim for themselves or their assets
or revenues immunity from any proceedings, suit, execution, attachment (whether in aid of
execution, before judgment or
otherwise) or other legal process and to the extent that such
immunity (whether or not claimed) may be attributed in any such jurisdiction to the parties
or their assets or revenues, the parties agree not to claim and
irrevocably waive such immunity
to the full extent permitted by the laws of such jurisdiction.
(b)
The
parties consent generally in respect of any proceedings to the giving of any relief and the
issue of any process in connection with such proceedings including (without limitation) the
making, enforcement or
execution against any property whatsoever (irrespective of its use
or intended use) of any order or judgment which is made or given in such proceedings. The
Parties agree that in any proceedings in England this
waiver shall have the fullest scope
permitted by the English State Immunity Act 1978 and that this waiver is intended to be irrevocable
for the purposes of such Act.
72.
FATCA
(a)
Subject
to paragraph (d) below, each Party shall, within ten Business Days of a reasonable request
by another Party:
(i) confirm
to that other Party whether it is:
(A) a
FATCA Exempt Party; or
(B) not
a FATCA Exempt Party;
(ii)
supply
to that other Party such forms, documentation and other information relating to its status
under FATCA as that other Party reasonably requests for the purposes of that other Party's
compliance with
FATCA; and
(iii)
supply
to that other Party such forms, documentation and other information relating to its status
as that other Party reasonably requests for the purposes of that other Party's compliance
with any other law,
regulation, or exchange of information regime.
(b)
If
a Party confirms to another Party pursuant to paragraph (b)(i) above that it is a FATCA
Exempt Party and it subsequently becomes aware that it is not or has ceased to be a FATCA
Exempt Party, that Party shall
notify that other Party reasonably promptly.
65
(c)
Paragraph (b)
above shall not oblige the Owners to do anything, and paragraph (b)(iii) above shall
not oblige any other Party to do anything, which would or might in its reasonable opinion
constitute a breach of:
(i)
any
law or regulation;
(ii)
any
fiduciary duty; or
(iii)
any
duty of confidentiality.
(d)
If
a Party fails to confirm whether or not it is a FATCA Exempt Party or to supply forms, documentation
or other information requested in accordance with paragraph (b)(i) or (ii) above
(including, for the avoidance of
doubt, where paragraph (d) above applies), then such
Party shall be treated for the purposes of this Charter and the other Transaction Documents
(and payments under them) as if it is not a FATCA Exempt Party until
such time as the Party
in question provides the requested confirmation, forms, documentation or other information.
(e)
Each
Party, Obligor may make any FATCA Deduction it is required by FATCA to make, and any payment
required in connection with that FATCA Deduction, no Party or Obligor shall be required to
increase any
payment in respect of which it makes such a FATCA Deduction or otherwise compensate
the recipient of the payment for that FATCA Deduction.
(f)
Each
Party or Obligor (if applicable) shall promptly, upon becoming aware that it must make a
FATCA Deduction (or that there is any change in the rate or the basis of such FATCA Deduction)
notify the Party or
Obligor (if applicable) to whom it is making the payment.
(g)
For
the purpose of this Clause 72, the following terms shall have the following meanings:
"Code"
means the United States Internal Revenue Code of 1986, as amended.
"FATCA"
means:
(i)
sections
1471 through 1474 of the Code or any associated regulations;
(ii)
any
treaty, law or regulation of any other jurisdiction, or relating to an intergovernmental
agreement between the US and any other jurisdiction, which (in either case) facilitates the
implementation of any law
or regulation referred to in paragraph (i) above; or
(iii)
any
agreement pursuant to the implementation of any treaty, law or regulation referred to in
paragraphs (i) or (ii) above with the US Internal Revenue Service, the US government or any
governmental or
taxation authority in any other jurisdiction.
"FATCA
Deduction" means a deduction or withholding from a payment under this Charter or the other Transaction Documents required by
FATCA.
"FATCA
Exempt Party" means a Party that is entitled to receive payments free from any FATCA Deduction.
73.
Governing
Law
This
Charter and any non-contractual obligations arising out of or in connection with it shall in all respect be governed by and construed
in accordance with English law.
74.
Arbitration
(a)
Any
dispute arising out of or in connection with this Charter shall be referred to arbitration
in London in accordance with the Arbitration Act 1996 or any statutory modification or re-enactment
thereof save to the
extent necessary to give effect to the provisions of this Clause.
66
(b)
The
arbitration shall be conducted in accordance with the London Maritime Arbitrators Association
(LMAA) Terms current at the time when the arbitration proceedings are commenced.
(c)
The
reference shall be to three arbitrators, one to be appointed by each party and the third,
subject to the provisions of the LMAA Terms, by the two so appointed. A party wishing to
refer a dispute to arbitration shall
appoint its arbitrator and send notice of such appointment
in writing to the other party requiring the other party to appoint its own arbitrator within
fourteen (14) calendar days of that notice and stating that it will
appoint its arbitrator
as sole arbitrator unless the other party appoints its own arbitrator and gives notice that
it has done so within the fourteen (14) days specified. If the other party does not appoint
its own arbitrator
and give notice that it has done so within the fourteen (14) days specified,
the party referring a dispute to arbitration may, without the requirement of any further
prior notice to the other party, appoint its arbitrator as
sole arbitrator and shall advise
the other party accordingly. The award of a sole arbitrator shall be binding on both Parties
as if the sole arbitrator had been appointed by agreement.
(d)
In
cases where neither the claim nor any counterclaim exceeds the sum of US$100,000 the arbitration
shall be conducted in accordance with the LMAA Small Claims Procedure current at the time
when the arbitration
proceedings are commenced.
75.
Confidentiality
(a)
The
Parties shall maintain the information provided in connection with the Transaction Documents
strictly confidential and agree to disclose to no person other than:
(i)
its
board of directors, employees (only on a need to know basis), and shareholders, professional
advisors (including the legal and accounting advisors and auditors) and rating agencies;
(ii)
as
may be required to be disclosed under applicable law or regulations or for the purpose of
legal proceedings;
(iii)
in
the case of the Owners, (1) to any of its Affiliate (more than one of them, collectively,
the “Permitted Parties”), any Finance Party or other actual or potential
financier providing funding for the acquisition
or refinancing of the Vessel (provided the
same have entered into similar confidentiality arrangements), (2) to professional advisers,
auditors, insurers or insurance brokers and service providers of the
Permitted Parties who
are under a duty of confidentiality to the Permitted Parties and (3) as required by any law
or any government, quasi-government, administrative, regulatory or supervisory body or
authority,
court or tribunal with jurisdiction over any of the Permitted Parties;
(iv)
in
the case of the Charterers, to any Sub-Charterers (but subject always to paragraph (b) below)
in respect of obtaining any consent required under the terms of any relevant Sub-Charter;
(v)
any
Approved Managers, the classification society and flag authorities, in each case as may be
necessary in connection with the transactions contemplated hereunder; and
(vi)
any
person which is a classification society or other entity which the Owners, any of their Affiliates
or a Finance Party has engaged to make the calculations necessary to enable the Owners, any
of their
Affiliates or a Finance Party to comply with their reporting obligations under the
Poseidon Principles.
67
(b)
Any
other disclosure by each Party shall be subject to the prior written consent of the other
Party, provided that the Charterers may disclose any information provided in connection with
the Transaction Documents to
their subcontractors and any Sub-Charterers, in each case subject
to the procurement of a confidentiality undertaking (in form and substance satisfactory to
the Owners) from such sub-contractor or Sub-Charterers.
76.
Assignment
and Transfer
(a)
The
Charterers shall not be permitted to assign or transfer any of their rights or obligations
under this Charter without the Owners’ written approval. The Owners shall have the
right to assign or transfer any or all of
their rights under this Charter in accordance with
the provisions of Clause 5 of the Security Trust Deed.
(b)
Without
limiting the generality of Clause 48(m) (Further assurance), the Charterer undertakes
to execute, provide or procure the execution or provision (as the case may be) of such further
information or document as
is necessary to effect the assignment and/or transfer referred
to in sub-paragraph (a) above.
77.
Financing
Charter
(a)
The
Owners and the Charterers hereto acknowledge and agree that this Charter shall be construed
as a "financing charter" for all purposes under the Liberian Maritime Law, and
this Charter is intended to be treated as
a preferred mortgage over the whole of the Vessel
in favour of the Owners under any provision of law now existing or hereafter coming into
force in the Republic of Liberia. The Charterers grant to the Owners, and the
Owners retain
as security for the payment and performance of all the Obligors their respective obligations
under and in connection with the Transaction Documents, whether now or hereafter incurred,
all of the
Charterers’ interest in and to the whole of the Vessel. The Charterers shall
cause this Charter to be recorded in accordance with said Law.
(b)
For
the purpose of recording this Charter as a Financing Charter under the laws of the Republic
of Liberia, the maximum aggregate of the nominal amount of all charter hire payments, termination
payments, purchase
or put option amounts payable, or which may become payable, is United
States Dollars Forty Four Million Five Hundred Thousand (US$44,500,000), plus interest, liabilities,
indemnities, costs, expenses, fees and
performance of the Charterers’ covenants.
[Execution
page and scheduled to follow]
68
SCHEDULE
1
FORM OF PROTOCOL OF DELIVERY AND ACCEPTANCE
PROTOCOL
OF DELIVERY AND ACCEPTANCE
It
is hereby certified that pursuant to a bareboat charter dated ___________________ and made between OCEAN
JING SHIPPING LIMITED, a company incorporated and existing under the laws the laws of the Hong Kong Special
Administrative
Region of the People’s Republic of China and having its registered office at Units 904-907, 9/F, Dah Sing Financial Centre, 248
Queen's Road East, Hong Kong, China (the "Owners") as owner and GLOBAL SHIP
LEASE 77 LLC, a limited liability
company incorporated and existing under the laws of the Republic of Liberia and having its registered office at 80 Broad Street, Monrovia,
Liberia (the "Bareboat Charterer") as bareboat charterer
(as may be amended and supplemented from time to time, the
"Bareboat Charter") in respect of one (1) bulk carrier named "BREMERHAVEN EXPRESS" with IMO Number
9723253 (the "Vessel"), the Vessel is delivered for
charter by the Owner to the Bareboat Charterer, and accepted
by the Bareboat Charterer from the Owner at __________ hours (Beijing time) on the date hereof in accordance with the terms and conditions
of the Bareboat Charter.
IN
WITNESS WHEREOF, the Owner and the Bareboat Charterer have caused this PROTOCOL OF DELIVERY AND ACCEPTANCE to be executed by their duly
authorised representative on this _______ day of _____________ .
THE
OWNER
THE
BAREBOAT CHARTERER
OCEAN
JING SHIPPING LIMITED
GLOBAL
SHIP LEASE 77 LLC
by:
by:
________________________________
________________________________
Name:
Name:
Title:
Title:
69
SCHEDULE
2
FORM OF TITLE TRANSFER PROTOCOL OF DELIVERY AND ACCEPTANCE
PROTOCOL
OF DELIVERY AND ACCEPTANCE
"[VESSEL
NAME]"
OCEAN
JING SHIPPING LIMITED of [registered address],
Hong Kong, China (the "Owners") deliver to GLOBAL SHIP LEASE 77 LLC of 80 Broad Street, Monrovia, Liberia (the
"Bareboat Charterers") the Vessel described
below and the Bareboat Charterers accept delivery of, title and risk to
the Vessel pursuant to the terms and conditions of the bareboat charterer dated [●] (as may be amended and supplemented from time
to time) and made between (1)
the Owners and (2) the Bareboat Charterers.
Name
of Vessel:
[●]
Flag:
[●]
Place
of Registration:
[●]
IMO
Number:
[●]
Gross
Registered Tonnage:
[●]
Net
Registered Tonnage:
[●]
Dated:
_____________________
20[●]
At:
_____________ hours
(Beijing time)
THE
OWNER
THE
BAREBOAT CHARTERER
OCEAN
JING SHIPPING LIMITED
GLOBAL
SHIP LEASE 77 LLC
by:
by:
________________________________
________________________________
Name:
Name:
Title:
Title:
70
SCHEDULE
3
RELATED CHARTER AND RELEVANT INFORMATION
Name
of Ship
IMO
Number
Related
Owners
Related
Charterers
CZECH
9723241
OCEAN
DANCE SHIPPING LIMITED
GLOBAL
SHIP LEASE 76 LLC
SYDNEY
EXPRESS
9723265
OCEAN
RAINBOW SHIPPING LIMITED
GLOBAL
SHIP LEASE 78 LLC
ISTANBUL
EXPRESS
9723277
OCEAN
TIANXIU SHIPPING LIMITED
GLOBAL
SHIP LEASE 79 LLC
71
SIGNATURE
PAGE
THE
OWNER
THE
BAREBOAT CHARTERER
OCEAN
JING SHIPPING LIMITED
GLOBAL
SHIP LEASE 77 LLC
by:
by:
/s/
Huang Mei
/s/
Aglaia Lida
Papadi
Name:
Huang Mei
Name:
Aglaia Lida Papadi
Title: Director
Title:
Attorney-in-fact
Exhibit
4.28
1. Shipbroker
Not
Applicable
BIMCO
STANDARD BAREBOAT CHARTER
CODE
NAME:"BARECON 2001"
PART
I
2. Place
and date
24 December 2024
3.
Owners/Place of Business (Cl. 1)
OCEAN
DANCE SHIPPING LIMITED, a company incorporated
and existing under the laws of the Hong Kong
Special Administrative Region of the People’s Republic of China with Business Registration
Number 62837853
and having its registered office at Units 904-907, 9/F, Dah Sing Financial Centre, 248 Queen's Road East, Hong
Kong,
China (also registered as a Foreign Maritime Entity in Liberia)
4. Bareboat
Charterers/Place of business (Cl. 1)
GLOBAL
SHIP LEASE 76 LLC, a limited liability company
incorporated and existing under the
laws of the Republic of Liberia with Registration Number LLC-960400 and having its registered
office at 80 Broad Street, Monrovia, Liberia
5. Vessel's
name, call sign and flag (Cl. 1 and 3)
Name: CZECH
IMO
No.: 9723241
Flag: Republic
of Liberia
6. Type
of Vessel
Container
Ship
7. GT/NT
94684
/ 59902
8. When/Where
built
2015
/ Hanjin Heavy Industries and Construction (Philippines), Zambales, Philippines
9. Total
DWT (abt.) in metric tons on summer freeboard
As
per Class certificates
10. Classification
Society (Cl. 3)
DNV on delivery; the Charterers may
change to the Vessel's Classification Society to RINA at the Charterers'
time and cost
11. Date
of last special survey by the Vessel's classification society
As
per Class certificates
12. Further
particulars of Vessel (also indicate minimum number of months' validity of class certificates
agreed acc. to Cl. 3)
See
Vessel’s Class certificates
13. Port
or Place of delivery (Cl. 3)
See
Additional Clause 35 (Delivery)
14. Time
for delivery (Cl. 4)
See
Additional Clause 35 (Delivery)
15. Cancelling
date (Cl. 5)
Not
applicable
16. Port
or Place of redelivery (Cl. 15)
See
Additional Clause 42 (Redelivery)
17. No.
of months’ validity of trading and class certificates upon redelivery (Cl. 15)
18. Running
days' notice if other than stated in Cl. 4
Not
Applicable
19. Frequency
of dry-docking (Cl. 10(g))
Not
Applicable
20. Trading
Limits (Cl. 6)
Trading
worldwide, always safe/afloat, always within International Navigation Limits and subject to exclusions as per Joint War Risks Committee
(JWC) Listed Areas (save as in accordance with clause 41 (Insurances) and
any other country, port, place or zone prohibited by the
Flag State and/or any of the Sanction Authorities (as defined in the Rider Clauses).
Cargo
Limits as per Vessel’s classification society’s requirement and the Vessel’s specifications.
Always
subject to the terms and conditions contained in this Charter.
21. Charter
period (Cl. 2)
One
Hundred and Twenty (120) months, subject to terms of this Charter
22. Charter
hire (Cl. 11)
See
Additional Clause 40 (Hire)
23. New
class and other safety requirements (state percentage of Vessel’s insurance value acc.
to Box 29) (Cl. 10(a)(ii))
Not
Applicable
24. Rate
of interest payable acc. to Cl. 11(f) and, if applicable, acc. to PART IV
Default
Interest Rate as defined in the Additional Clauses
See
Additional Clauses
25. Currency
and method of payment (Cl. 11)
US$
See
Additional Clauses
1
(continued)
“BARECON
2001” STANDARD BAREBOAT CHARTER
PART 1
26. Place
of payment; also state beneficiary and bank account (Cl. 11)
See
Additional Clause 40(d) (Payment account information)
27. Bank
guarantee/bond (sum and place) (Cl.24) (optional)
Not
Applicable
28. Mortgage(s),
if any (state whether 12(a) or (b) applies; if 12(b) applies state date of Financial Instrument
and name
of Mortgagee(s)/Place of business)(Cl. 12)
See
Additional Clauses
29. Insurance
(hull and machinery and war risks)(state value acc. to Cl. 13(f) or, if applicable, acc.
to Cl.
14(k)) (also state if Cl. 14 applies)
See
Additional Clause 41 (Insurance)
30. Additional
insurance cover, if any, for Owners' account limited to (Cl. 13(b) or, if applicable, (Cl.
14(g))
Not
Applicable
31. Additional
insurance cover, if any, for Charterers' account limited to (Cl. 13(b)) or, if applicable,
(Cl.
14(g))
See
Additional Clause 41 (Insurance)
32. Latent
defects (only to be filled in if period other than stated in Cl. 3)
Not
Applicable
33. Brokerage
commission and to whom payable (Cl. 27)
Not
Applicable
34. Grace
period (state number of clear banking days)(Cl. 28)
See
Additional Clauses
35. Dispute
Resolution (state 30(a), 30(b) or 30(c); if 30(c) agreed Place of Arbitration must
be stated (Cl.
30)
See
Additional Clause 74 (Arbitration)
36. War
cancellation (indicate countries agreed) (Cl. 26(f))
Not
Applicable
37. Newbuilding
Vessel (indicate with "yes or "no" whether Part III applies) (optional)
No
38. Name
and place of Builders (only to be filled in if Part III applies)
39. Vessel's
Yard Building No. (only to be filled in if Part III applies)
40.
Date of Building Contract (only to be filled in
if Part III applies)
41. Liquidated
damages and costs shall accrue to (state party acc. to Cl. 1)
a)
b)
c)
42.
Hire/Purchase agreement (indicate with "yes"
or "no" whether Part IV applies) (optional)
No (See
Additional Clauses)
43. Bareboat
Charter Registry (indicate with "yes" or "no" whether Part V applies)
(optional)
No
(See Additional Clauses)
44. Flag
and Country of the Bareboat Charter Registry (only to be filled in if Part V applies)
45. Country
of the Underlying Registry (only to be filled in if Part V applies)
46. Number
of additional clauses covering special provisions, if agreed
Additional
Clauses 32 to 77 (both inclusive) and Schedules 1 - 3, as attached hereto, form integral part of this Charter. In the event of any
conflict or inconsistency between the terms of Part I and Part II of this Charter
with the terms of the Additional Clauses, the terms
of the Additional Clauses shall prevail.
PREAMBLE
– it is mutually agreed that this Contract shall be performed subject to the conditions contained in this Charter which shall include
PART I and PART II. In the event of a conflict of conditions, the provisions of PART 1
shall prevail over those of PART II to the extent
of such conflict but no further. It is further mutually agreed that PART III and/or PART IV and/or PART V shall only apply and only form
part of this Charter if expressly agreed and
stated in the Boxes 37, 42 and 43. If PART III and/or PART IV and/or PART V apply, it is
further agreed that in the event of a conflict of conditions, the provisions of PART I and PART II shall prevail over those of PART III
and/or
PART IV and/or PART V to the extent of such conflict but no further.
2
EXECUTION
PAGE
Signature
(Owners)
For
and on behalf of
OCEAN
DANCE SHIPPING LIMITED
________________________________
Name: Huang
Mei
Title: Director
Signature
(Charterers)
For
and on behalf of
GLOBAL
SHIP LEASE 76 LLC
______________________________
Name:
Title:
3
1. Definitions
(See Also Additional Clauses)
In
this Charter, the following terms shall have the meanings hereby assigned to them:
“The
Owners” shall mean the party identified in Box 3;
“The
Charterers” shall mean the party identified in Box 4;
“The
Vessel” shall mean the vessel named in Box 5 and with particulars as stated in Boxes 6 to 12.
“Financial
Instrument” means the mortgage, deed of covenant or other such financial security instrument as annexed to this Charter
and stated in Box 28 any of the Finance Documents as defined in Additional Clause 32.
Any
other defined terms shall have the meaning given to it in the Additional Clause.
2. Charter
Period (See Additional Clauses)
In
consideration of the hire detailed in Box 22, the Owners have agreed to let and the Charterers have agreed to hire the Vessel for the
period stated in Box 21 (“The Charter Period”)
3. Delivery
(See Additional Clause 35)
(not
applicable when Part III applies, as indicated in Box 37)
(a)
The
Owners shall before and at the time of delivery exercise due diligence to make the Vessel
seaworthy and in every respect ready in hull, machinery and equipment for service under this
Charter.
The
Vessel shall be delivered by the Owners and taken over by the Charterers at the port or place indicated in Box 13 in such ready safe
berth as the Charterers may direct.
(b)
The
Vessel shall be properly documented on delivery in accordance with the laws of the flag State
indicated in Box 5 and the requirements of the classification society stated in Box 10. The
Vessel upon delivery shall have her
survey cycles up to date and trading and class certificates
valid for at least the number of months agreed in Box 12.
(c)
The
delivery of the Vessel by the Owners and the taking over of the Vessel by the charterers
shall constitute a full performance by the Owners of all the Owners’ obligations
under this Clause 3, and thereafter the Charterers
shall not be entitled to make or assert
any claim against the Owners on account of any conditions, representations or warranties
expressed or implied with respect to the Vessel but the Owners shall be liable for
the cost of but
not the time for repairs or renewals occasioned by latent defects in the
Vessel, her machinery or appurtenances, existing at the time of delivery under this Charter,
provided such defects have manifested themselves within
twelve (12) months after delivery
unless otherwise provided in Box 32.
4. Time
for Delivery (See Additional Clause 35)
(not
applicable when Part III applies, as indicated in Box 37).
The
Vessel shall not be delivered before the date indicated in Box 14 without the Charterers’ consent and the Owners shall exercise
due diligence to deliver the Vessel not later than the date indicated in Box 15.
Unless
otherwise agreed in Box 18, the Owners shall give the Charterers not less than thirty (30) running days’ preliminary and not less
than fourteen (14) running days’ definite notice of the date on which the Vessel is expected to
be ready for delivery.
The
Owners shall keep the Charterers closely advised of possible changes in the Vessel’s position.
5. Cancelling
(Not Applicable)
(not
applicable when Part III applies, as indicated in Box 37)
(a)
Should
the Vessel not be delivered latest by the cancelling date indicated in Box 15, the Charterers
shall have the option of cancelling this Charter by giving the Owners notice of cancellation
within thirty-six (36) running
hours after the cancelling date stated in Box 15, failing
which this Charter shall remain in full force and effect.
(b)
If
it appears that the Vessel will be delayed beyond the cancelling, the Owners may, as soon
as they are in a position to state with reasonable certainty the day on which the Vessel
should be ready, give notice thereof to the
Charterers asking whether they will exercise
their option of cancelling, and the option must then be declared within one hundred and sixty
eight (168) running hours of the receipt by the Charterers of such notice or within
thirty
six (36) running hours after the cancelling date, whichever is the earlier. If the Charterers
do not then exercise their option of cancelling, the seventh day after the readiness date
stated in the Owners’ notice shall be
substituted for the cancelling date indicated
in Box 15 for the purpose of this Clause 5.
(c)
Cancellation
under this Clause 5 shall be without prejudice to any claim the Charterers may otherwise
have on the Owners under this Charter.
6. Trading
Restrictions
The
Vessel shall be employed in lawful trades for the carriage of suitable lawful merchandise within the trading limits indicated in Box
20.
The
Charterers undertake not to employ the Vessel or suffer the Vessel to be employed otherwise than in conformity with the terms of the
contracts of insurance (including any warranties expressed or implied therein) without first
obtaining the consent of the insurers to
such employment and complying with such requirements as to extra premium or otherwise as the insurers may prescribe.
The
Charterers also undertake not to employ the Vessel or suffer her employment in any trade or business which is forbidden by the law of
any country to which the Vessel may sail or is otherwise illicit or in carrying illicit or
prohibited goods or in any manner whatsoever
which may render her liable to condemnation, destruction, seizure or confiscation.
Notwithstanding
any other provisions contained in this Charter it is agreed that nuclear fuels or radioactive products or waste are specifically excluded
from the cargo permitted to be loaded or carried under this Charter. This
exclusion does not apply to radio-isotopes used or intended
to be used for any industrial, commercial, agricultural, medical or scientific purposes provided the Vessel's P&I Club Owners’
prior approval has been obtained to loading
thereof and upon the Owners' request the Charterers shall provide the Owners
with a copy of such approval from the Vessel's P&I Club.
7. Surveys
on Delivery and Redelivery (See Additional Clause)
(not
applicable when Part III applies, as indicated in Box 37)
The
Owners and Charterers shall each appoint surveyors for the purpose of determining and agreeing in writing the condition of the Vessel
at the time of delivery and redelivery hereunder. The Owners shall bear all expenses of the
On-hire Survey including loss of time, if
any, and the Charterers shall bear all expenses of the Off-hire Survey including loss of time, if any, at the daily equivalent to the
rate of hire or pro rata thereof.
4
8. Inspection
(See Also Additional Clauses 48(r))
The
Owners shall have the right at any time after giving reasonable notice to the Charterers to inspect or survey the Vessel or instruct
a duly authorised surveyor to carry out such survey on their behalf:-
(a)
to
ascertain the condition of the Vessel and satisfy themselves that the Vessel is being properly
repaired and maintained. The costs and fees for such inspection or survey shall be paid by
the Owners unless the Vessel is found to
require repairs or maintenance in order to achieve
the condition so provided;
(b)
in
dry-dock if the Charterers have not dry-docked her in accordance with Clause 10(g). The costs
and fees for such inspection or survey shall be paid by the Charterers; and
(c)
for
any other commercial reason they consider necessary (provided it does not unduly interfere
with the commercial operation of the Vessel). The costs and fees for such inspection and
survey shall be paid by the Owners.
All
time used in respect of inspection, survey or repairs shall be for the Charterers’ account and form part of the Charter Period.
The
Charterers shall also permit the Owners to inspect the Vessel’s logbooks whenever requested and shall whenever required by the
Owners furnish them with full information regarding any casualties or other accidents or damage
to the Vessel.
9. Inventories,
Oil and Stores (See Additional Clause 37)
A
complete inventory of the Vessel's entire equipment, outfit including spare parts, appliances and of all consumable stores on board the
Vessel shall be made by the Charterers in conjunction with the Owners on delivery and again
on redelivery of the Vessel at the Owners’
request. The Charterers and the Owners, respectively, shall at the time of delivery and redelivery take over and pay for all bunkers,
lubricating oil, unbroached provisions, paints, ropes and
other consumable stores (excluding spare parts) in the said Vessel at the then
current market prices at the ports of delivery and redelivery, respectively. The Charterers shall ensure that all spare parts listed
in the inventory and used
during the Charter Period are replaced at their expense prior to redelivery of the Vessel.
Within
three (3) months from the Actual Delivery Date, the Charterers shall prepare and deliver to the Owners an inventory of the Vessel's major
spare parts for the Main Engine, Diesel Generators and E.R. Auxiliary
Machinery on board the Vessel.
10.Maintenance
and Operation
(a)
(i)
Maintenance and Repairs
During
the Charter Period the Vessel shall be in the full possession and at the absolute disposal for all purposes of the Charterers and under
their complete control in every respect. The Charterers shall maintain the Vessel, her
machinery, boilers, appurtenances and spare parts
in a good state of repair, in efficient operating condition and in accordance with good commercial maintenance practice for vessels
of this type and, except as provided for in
Clause 14(I), if applicable, at their own expense they shall at all
times keep the Vessel's Class fully up to date with the Classification Society indicated in Box 10 free of overdue recommendations
and conditions and
maintain all other necessary certificates in force at all times.
(ii)
New Class and other Safety Requirements
In
the event of any improvement, structural changes or new equipment becoming necessary for the continued operation of the Vessel by reason
of new class requirements or by compulsory legislation, the cost of compliance
and time used in relation thereto shall be for the sale
account of the Charterers. costing (excluding the Charterers' loss of time) more than the percentage stated in Box 23, or if Box 23 is
left blank, 5 per cent. of the Vessel's
insurance value as stated in Box 29, then the extent, if any, to which the rate of hire shall
be varied and the ratio in which the cost of compliance shall be shared between the parties concerned in order to achieve a reasonable
distribution thereof as between the Owners and the Charterers having regard, inter alia, to the length of the period remaining under
this Charter shall, in the absence of agreement, be referred to the dispute resolution method
agreed in Clause 30.
(iii)
Financial Security
The
Charterers shall maintain financial security or responsibility in respect of third party liabilities as required by any government, including
federal, state or municipal or other division or authority thereof, to enable the Vessel,
without penalty or charge, lawfully to enter,
remain at, or leave any port, place, territorial or contiguous waters of any country, state or municipality in performance of this Charter
without any delay. This obligation shall apply
whether or not such requirements have been lawfully imposed by such government or division
or authority thereof.
The
Charterers shall make and maintain all arrangements by bond or otherwise as may be necessary to satisfy such requirements at
the Charterers’ sole expense and the Charterers shall indemnify the Owners against all
consequences whatsoever (including
loss of time) for any failure or inability to do so.
(b)
Operation
of the Vessel
The
Charterers shall at their own expense and by their own procurement man, victual, navigate, operate, supply, fuel and, whenever required,
repair the Vessel during the Charter Period and they shall pay all charges and
expenses of every kind and nature whatsoever incidental
to their use and operation of the Vessel under this Charter, including annual flag State fees and any foreign general municipality and/or
state taxes. The Master, officers
and crew of the Vessel shall be the servants of the Charterers for all purposes whatsoever, even if
for any reason appointed by the Owners.
Charterers
shall comply with the regulations regarding officers and crew in force in the country of the Vessel's flag or any other applicable law.
(c) The
Charterers shall keep the Owners and the mortgagee(s) advised of the intended employment,
planned dry-docking and major repairs of the Vessel, as reasonably required. See also
Additional Clause 57 (Operational
notifiable events).
(d) Flag
and Name of Vessel
During
the Charter Period, the Charterers shall have the liberty to paint the Vessel in their own colours, install and display their funnel
insignia and fly their own house flag. The Charterers shall also have the liberty, with the
Owners' consent, which shall not be unreasonably
withheld, to change the flag and/or the name of the Vessel during the Charter Period. Painting and re-painting, instalment and
re-instalment, registration and re-registration, if
required by the Owners, shall be at the Charterers' expense and time. See also
Additional Clause 39 (Structural changes
and
alterations), paragraph (p) of Additional Clause 47 and Additional Clause 51 (Name of Vessel).
5
(e) Changes
to the Vessel (See Additional Clause 39(a))
Subject
to Clause 10(a)(ii), the Charterers shall make no structural changes in the Vessel or changes in the machinery, boilers, appurtenances
or spare parts thereof without in each instance first securing the Owners' approval
thereof. If the Owners so agree, the Charterers shall,
if the Owners so require, restore the Vessel to its former condition before the termination of this Charter.
(f)
Use
of the Vessel's Outfit, Equipment and Appliances
The
Charterers shall have the use of all outfit, equipment, and appliances on board the Vessel at the time of delivery, provided the same
or their substantial equivalent shall be returned to the Owners on redelivery in the same
good order and condition as when received,
ordinary wear and tear excepted. The Charterers shall from time to time during the Charter Period replace such items of equipment as
shall be so damaged or worn as to be unfit for
use in accordance with the Vessel’s Classification Society’s guidelines.
The Charterers are to procure that all repairs to or replacement of any damaged, worn or lost parts or equipment be effected in such
manner (both as
regards workmanship and quality of materials) as not to diminish the value of the Vessel. The Charterers have the right
to fit additional equipment at their expense and risk but title to such additional equipment shall be
deemed to have automatically
passed to the Owners immediately upon such fitting and the Charterers shall at their expenses remove such equipment without
damage to the Vessel at the time of redelivery end of the
period if requested by the Owners. Any equipment
including radio equipment on hire on the Vessel at time of delivery shall be kept and maintained by the Charterers and the Charterers
shall assume the obligations and
liabilities of the Owners under any lease contracts in connection therewith and shall reimburse
indemnify the Owners for all expenses incurred in connection therewith, also for any new equipment required in order
to comply
with radio regulations.
(g)
Periodical
Dry-Docking
The
Charterers shall dry-dock the Vessel and clean and paint her underwater parts whenever the same may be necessary, but not less
than once during the period stated in Box 19 or, if Box 19 has been left blank, every sixty
(60) calendar months after delivery or such
other period as may be required by the Classification Society or flag State, whichever is shorter.
11. Hire
(See Additional Clause 40)
(a)
The
Charterers shall pay hire due to the Owners punctually in accordance with the terms of this
Charter in respect of which time shall be of the essence.
(b)
The
Charterers shall pay to the Owners for the hire of the Vessel a lump sum in the amount indicated
in Box 22 which shall be payable not later than every thirty (30) running days in advance,
the first lump sum being payable
on the date and hour of the Vessel's delivery to the Charterers.
Hire shall be paid continuously throughout the Charter Period.
(c)
Payment
of hire shall be made in cash without discount in the currency and in the manner indicated
in Box 25 and at the place mentioned in Box 26.
(d)
Final
payment of hire, if for a period of less than thirty (30) running days, shall be calculated
proportionally according to the number of days and hours remaining before redelivery and
advance payment to be effected
accordingly.
(e)
Should
the Vessel be lost or missing, hire shall cease from the date and time when she was lost
or last heard of. The date upon which the Vessel is to be treated as lost or missing shall
be ten (10) days after the Vessel was last
reported or when the Vessel is posted as missing
by Lloyd's, whichever occurs first. Any hire paid in advance to be adjusted accordingly.
(f)
Any
delay in payment of hire shall entitle the Owners to interest at the rate per annum as agreed
in Box 24. If Box 24 has not been filled in, the three months interbank offered rate in London
(LIBOR or its successor) for the
currency stated in Box 25, as quoted by the British Bankers'
Association (BBA) on the date when the hire fell due, increased by 2 per cent., shall apply.
(g)
Payment
of interest due under sub-clause 11(f) shall be made within seven (7) running days of the
date of the Owners' invoice specifying the amount payable or, in the absence of an invoice,
at the time of the next hire payment
date.
12.Mortgage
(See Additional Clause 45)
(only
to apply if Box 28 has been appropriately filled in)
Notwithstanding
anything to the contrary in this Charter, no obligations will be imposed on the Charterers as a result of Owners entering into the Finance
Documents which are more onerous than those imposed on the
Charterers pursuant to this Charter.
*(a) The
Owners warrant that they have not effected any mortgage(s) of the Vessel and that they shall
not effect any mortgage(s) without the prior consent of the Charterers, which shall not be
unreasonably withheld.
*(b) The
Vessel chartered under this Charter is financed by a mortgage according to the Financial
Instrument. The Charterers undertake to comply, and provide such information and documents
to enable the Owners to comply, with
all such instructions or directions in regard to the
employment, insurances, operation, repairs and maintenance of the Vessel as laid down in
the Financial Instrument or as may be directed from time to time during the currency
of the
Charter by the mortgagee(s) in conformity with the Financial Instrument. The Charterers confirm
that, for this purpose, they have acquainted themselves with all relevant terms, conditions
and provisions of the Financial
Instrument and agree to acknowledge this in writing in any
form that may be required by the mortgagee(s). The Owners warrant that they have not effected
any mortgage(s) other than stated in Box 28 and that they shall not
agree to any amendment
of the mortgage(s) referred to in Box 28 or effect any other mortgage(s) without the prior
consent of the Charterers, which shall not be unreasonably withheld.
*(Optional,
Clauses 12(a) and 12(b) are alternatives; indicate alternative agreed in Box 28).
13.Insurance
and Repairs (Also see Additional Clause 41)
(a)
During
the Charter Period the Vessel shall be kept insured by the Charterers at their expense against
hull and machinery, war and Protection and Indemnity risks (and any risks against which it
is compulsory to insure for the
operation of the Vessel, including maintaining financial
security in accordance with sub-clause 10(a)(iii)) in such form as the Owners shall in writing
approve, which approval shall not be unreasonably withheld. Such
insurances shall be arranged
by the Charterers to protect the interests of both the Owners and the Charterers and the
mortgagee(s) (if any), and the Charterers shall be at liberty to protect under such insurances
the interests of
any managers they may appoint. Insurance policies shall cover the Owners
and the Charterers according to their respective interests. Subject to the provisions of
the Financial Instrument, if any, and the approval of the Owners
and the insurers, the Charterers
shall effect all insured repairs and shall undertake settlement and reimbursement from the
insurers of all costs in connection with such repairs as well as insured charges, expenses
and liabilities
to the extent of coverage under the insurances herein provided for.The
Charterers also to shall remain responsible for and to effect repairs
and settlement of costs and expenses incurred thereby in respect of all other repairs not
covered by the insurances and/or not exceeding any possible franchise(s) or deductibles
provided for in the insurances. All time used for repairs under the provisions
of sub clause 13(a) and for repairs of latent defects
according to Clause 3(c) above, including
any deviation, shall be for the Charterers' account.
6
(b)
If
the conditions of the above insurances permit additional insurance to be placed by the parties,
such cover shall be limited to the amount for each party set out in Box 30 and Box 31, respectively.
The Owners or the
Charterers as the case may be shall immediately furnish the other party
with particulars of any additional insurance effected, including copies of any cover notes
or policies and the written consent of the insurers of any such
required insurance in any
case where the consent of such insurers is necessary.
(c)
The
Charterers shall upon the request of the Owners, provide information and promptly execute
such documents as may be reasonably required to enable the Owners to comply with the
insurance provisions of the Financial
Instrument.
(d)
Subject
to the provisions of the Financial lnstrument, if any, should the Vessel become an actual,
constructive, compromised or agreed total loss under the insurances required under sub-clause
13(a), all insurance payments for
such loss shall be paid to the Owners who shall distribute
the moneys between the Owners and Charterers according to their respective interests. The
Charterers undertake to notify the Owners and the mortgagee(s), if any, of
any occurrences
in consequence of which the Vessel is likely to become a total loss as defined in this Clause.
(e)
The
Owners shall upon the request of the Charterers, promptly execute such documents as may be
required to enable the Charterers to abandon the Vessel to insurers and claim a constructive
total loss.
(f)
For
the purpose of insurance coverage against hull and machinery and war risks under the provisions
of sub-clause 13(a), the value of the Vessel is the sum indicated in Box 29.
14.Insurance,
Repairs and Classification (See Additional Clauses)
(Optional,
only to apply if expressly agreed and stated in Box 29, in which event Clause 13 shall be considered deleted).
(a)
During
the Charter Period the Vessel shall be kept insured by the Owners at their expense against
hull and machinery and war risks under the form of policy or policies attached hereto. The
Owners and/or insurers shall not
have any right of recovery or subrogation against the Charterers
on account of loss of or any damage to the Vessel or her machinery or appurtenances covered
by such insurance, or on account of payments made to discharge
claims against or liabilities
of the Vessel or the Owners covered by such insurance. Insurance policies shall cover the
Owners and the Charterers according to their respective interests.
(b)
During
the Charter Period the Vessel shall be kept insured by the Charterers at their expense against
Protection and Indemnity risks (and any risks against which it is compulsory to insure for
the operation of the Vessel,
including maintaining financial security in accordance with
sub-clause 10(a)(iii)) in such form as the Owners shall in writing approve which approval
shall not be unreasonably withheld.
(c)
In
the event that any act or negligence of the Charterers shall vitiate any of the insurance
herein provided, the Charterers shall pay to the Owners all losses and indemnify the Owners
against all claims and demands which
would otherwise have been covered by such insurance.
(d)
The
Charterers shall, subject to the approval of the Owners or Owners' Underwriters, effect all
insured repairs, and the Charterers shall undertake settlement of all miscellaneous expenses
in connection with such repairs as well
as all insured charges, expenses and liabilities,
to the extent of coverage under the insurances provided for under the provisions of sub-clause
14(a). The Charterers to be secured reimbursement through the Owners'
Underwriters for such
expenditures upon presentation of accounts.
(e)
The
Charterers to remain responsible for and to effect repairs and settlement of costs and expenses
incurred thereby in respect of all other repairs not covered by the insurances and/or not
exceeding any possible franchise(s) or
deductibles provided for in the insurances.
(f)
All
time used for repairs under the provisions of sub-clauses 14(d) and 14(e) and for repairs
of latent defects according to Clause 3 above, including any deviation, shall be for the
Charterers' account and shall form part of the
Charter Period.
The
Owners shall not be responsible for any expenses as are incident to the use and operation of the Vessel for such time as may be required
to make such repairs.
(g)
If
the conditions of the above insurances permit additional insurance to be placed by the parties
such cover shall be limited to the amount for each party set out in Box 30 and Box 31, respectively.
The Owners or the Charterers
as the case may be shall immediately furnish the other party
with particulars of any additional insurance effected, including copies of any cover notes
or policies and the written consent of the insurers of any such required
insurance in any
case where the consent of such insurers is necessary.
(h)
Should
the Vessel become an actual, constructive, compromised or agreed total loss under the insurances
required under sub-clause 14(a), all insurance payments for such loss shall be paid to the
Owners, who shall distribute
the moneys between themselves and the Charterers according to
their respective interests.
(i)
If
the Vessel becomes an actual, constructive, compromised or agreed total loss under the insurances
arranged by the Owners in accordance with sub-clause 14(a), this Charter shall terminate
as of the date of such loss.
(j)
The
Charterers shall upon the request of the Owners, promptly execute such documents as may be
required to enable the Owners to abandon the Vessel to the insurers and claim a constructive
total loss.
(k)
For
the purpose of insurance coverage against hull
and machinery and war risks under the provisions of sub-clause 14(a), the value of the Vessel is the sum indicated in Box 29.
7
(l)
Notwithstanding
anything contained in sub-clause 10(a), it is agreed that under the provisions of Clause
14, if applicable, the Owners shall keep the Vessel's Class fully up to date with the Classification
Society indicated in
Box 10 and maintain all other necessary certificates in force at all
times.
15.Redelivery
(See Additional Clauses 42 and 43)
At
the expiration of the Charter Period the Vessel shall be redelivered by the Charterers to the Owners at a safe and ice-free port or place
as indicated in Box 16, in such ready safe berth as the Owners may direct. The Charterers
shall give the Owners not less than thirty
(30) running days' preliminary notice of expected date, range of ports of redelivery or port or place of redelivery and not less than
fourteen (14) running days' definite notice of expected date
and port or place of redelivery. Any changes thereafter in the Vessel's
position shall be notified immediately to the Owners.
The
Charterers warrant that they will not permit the Vessel to commence a voyage (including any preceding ballast voyage) which cannot reasonably
be expected to be completed in time to allow redelivery of the Vessel within the
Charter Period. Notwithstanding the above, should the
Charterers fail to redeliver the Vessel within the Charter Period, the Charterers shall pay the daily equivalent to the rate of hire
stated in Box 22 plus 10 per cent. or to the market
rate, whichever is the higher, for the number of days by which the Charter Period
is exceeded. All other terms, conditions and provisions of this Charter shall continue to apply.
Subject
to the provisions of Clause 10, the Vessel shall be redelivered to the Owners in the same or as good structure, state, condition and
class as that in which she was delivered, fair wear and tear not affecting class excepted.
The
Vessel upon redelivery shall have her survey cycles up to date and trading and class certificates valid for at least the number of months
agreed in Box 17.
16.Non-Lien
(See also Additional Clauses)
The
Charterers will not suffer, nor permit to be continued, any lien or encumbrance incurred by their agents, which might have priority over
the title and interest of the Owners in the Vessel (other than the Permitted
Encumbrances). The Charterers further agree to fasten
to the Vessel in a conspicuous place and to keep so fastened during the Charter Period a notice reading as follows:
'This
Vessel is the property of (name of Owners). It is under charter to (name of Charterers) and by the terms of the Charter Party neither
the Charterers nor the Master have any right, power or authority to create, incur or permit to
be imposed on the Vessel any lien whatsoever."
17.Indemnity
(See Additional Clause 58)
(a)
The
Charterers shall indemnify the Owners against any loss, damage or documented expense
incurred by the Owners arising out of or in relation to the operation of the Vessel by the
Charterers, and against any lien of
whatsoever nature (save for any liens caused directly
by the Owners) arising out of an event occurring during the Charter Period. If the Vessel
be arrested or otherwise detained by reason of claims or liens arising out of her
operation
hereunder by the Charterers, the Charterers shall at their own expense take all reasonable
steps to secure that within a reasonable time the Vessel is released, including the provision
of bail.
Without
prejudice to the generality of the foregoing, the Charterers agree to indemnify the Owners against all consequences or liabilities arising
from the Master, officers or agents signing Bills of Lading or other documents.
(b)
If
the Vessel be arrested or otherwise detained by reason of a claim or claims against the Owners
which is not attributable to any Obligor, the Owners shall at their own expense take
all reasonable steps to secure that within
a reasonable time the Vessel is released, including
the provision of bail.
In
such circumstances the Owners shall indemnify the Charterers against any loss, damage or expense incurred by the Charterers (including
hire paid under this Charter) as a direct consequence of such arrest or detention but,
for the avoidance of doubt, in such
circumstances, the Charterers shall continue to pay Hire.
18.Lien
The
Owners to have a lien upon all cargoes, sub-hires and sub-freights belonging or due to the Charterers or any sub-charterers
and any Bill of Lading freight for all claims under this Charter, and the Charterers to have a lien on the
Vessel for all moneys
paid in advance and not earned.
19.Salvage
All
salvage and towage performed by the Vessel shall be for the Charterers' benefit and the cost of repairing damage occasioned thereby shall
be borne by the Charterers.
20.Wreck
Removal
In
the event of the Vessel becoming a wreck or obstruction to navigation the Charterers shall indemnify the Owners against any sums whatsoever
which the Owners shall become liable to pay and shall pay in consequence of the
Vessel becoming a wreck or obstruction to navigation.
21.General
Average
The
Owners shall not contribute to General Average.
22.Assignment,
Sub-Charter and sale (See Additional Clauses)
(a)
The
Charterers shall not assign this Charter nor sub-charter the Vessel on a bareboat basis
except with the prior consent in writing of the Owners, which shall not be unreasonably withheld,
and subject to such terms and
conditions as the Owners shall approve.
(b)
The
Owners shall not sell the Vessel during the currency of this Charter except with the prior
written consent of the Charterers, which shall not be unreasonably withheld, and subject
to the buyer accepting an assignment of
this Charter.
23.Contracts
of Carriage
*(a) The
Charterers are to procure that all documents issued during the Charter Period evidencing
the terms and conditions agreed in respect of carriage of goods shall contain a paramount
clause incorporating any legislation
relating to carrier's liability for cargo compulsorily
applicable in the trade, if no such legislation exists, the documents shall incorporate the
Hague-Visby Rules the documents shall also contain the New Jason Clause and the
Both-to-Blame
Collision Clause.
*(b) The
Charterers are to procure that all passenger tickets issued during the Charter Period for
the carriage of passengers and their luggage under this Charter shall contain a paramount
clause incorporating any legislation relating
to carrier’s liability for passengers
and their luggage compulsorily applicable in the trade; if no such legislation exists, the
passenger tickets shall incorporate the Athens Convention Relating to the
Carriage of Passengers and
their Luggage by Sea, 1974, and any protocol thereto.
*Delete as applicable.
8
24.Bank
Guarantee
(Optional,
only to apply if Box 27 filled in)
The
Charterers undertake to furnish, before delivery of the Vessel, a first class bank guarantee or bond in the sum and at the place as indicated
in Box 27 as guarantee for full performance of their obligations under this Charter.
25.Requisition/Acquisition
(See Additional Clauses)
(a)
In
the event of the Requisition for Hire of the Vessel by any governmental or other competent
authority (hereinafter referred to as "Requisition for Hire") irrespective of the
date during the Charter Period when "Requisition for
Hire" may occur and irrespective
of the length thereof and whether or not it be for an indefinite or a limited period of time,
and irrespective of whether it may or will remain in force for the remainder of the Charter
Period, this
Charter shall not be deemed thereby or thereupon to be frustrated or otherwise
terminated and the Charterers shall continue to pay the stipulated hire in the manner provided
by this Charter until the time when the Charter
would have terminated pursuant to any of
the provisions hereof always provided however that in the event of "Requisition for
Hire", any Requisition Hire or compensation received or receivable by the Owners shall
be payable
to the Charterers during the remainder of the Charter Period or the period of
the "Requisition for Hire" whichever be the shorter.
(b)
In
the event of the Owners being deprived of their ownership in the Vessel by any Compulsory
Acquisition of the Vessel or requisition for title by any governmental or other competent
authority (hereinafter referred to as
“Compulsory Acquisition”), then, irrespective
of the date during the Charter Period when “Compulsory Acquisition” may occur,
this Charter shall be deemed terminated as of the date of such “Compulsory Acquisition”.
In
such event Charter Hire to be considered as earned and to be paid up to the date and time
of such “Compulsory Acquisition”.
26.War
(See Also Additional Clauses)
(a)
For
the purpose of this Clause, the words 'War Risks" shall include any war (whether actual
or threatened), act of war, civil war, hostilities, revolution, rebellion, civil commotion,
warlike operations, the laying of mines
(whether actual or reported), acts of piracy, acts
of terrorists, acts of hostility or malicious damage, blockades (whether imposed against
all vessels or imposed selectively against vessels of certain flags or ownership, or against
certain cargoes or crews or otherwise howsoever), by any person, body, terrorist or political
group, or the Government of any state whatsoever, which may be dangerous or are likely to
be or to become dangerous to the Vessel,
her cargo, crew or other persons on board the Vessel.
(b)
The
Vessel, provided that copies of such applicable additional insurance cover shall be provided
to the Owners upon the Owners' reasonable request, unless the written consent
of the Owners be first obtained, shall
not continue to or go through any port, place,
area or zone (whether of land or sea), or any waterway or canal, where it reasonably appears
that the Vessel, her cargo, crew or other persons on board the Vessel, in the reasonable
judgement of the Owners, may be, or are likely to be, exposed to War Risks. Should the Vessel
be within any such place as aforesaid, which only becomes dangerous, or is likely to be or
to become dangerous, after her entry
into it, the Owners shall have the right to require
the Vessel to leave such area unless copies of such applicable additional insurance cover
are provided to the Owners upon the Owners' reasonable request.
(c)
The
Vessel shall not load contraband cargo, or to pass through any blockade, whether such blockade
be imposed on all vessels, or is imposed selectively in any way whatsoever against vessels
of certain flags or ownership, or
against certain cargoes or crews or otherwise howsoever,
or to proceed to an area where she shall be subject, or is likely to be subject to a belligerent's
right of search and/or confiscation.
(d)
If
the insurers of the war risks insurance, when Clause 14 is applicable, should require payment
of premiums and/or calls because, pursuant to the Charterers' orders, the Vessel is within,
or is due to enter and remain within,
any area or areas which are specified by such insurers
as being subject to additional premiums because of War Risks, then such premiums and/or calls
shall be reimbursed by the Charterers to the Owners at the same time as
the next payment
of hire is due.
(e)
The
Charterers shall have the liberty:
(i)
to
comply with all orders, directions, recommendations or advice as to departure, arrival, routes,
sailing in convoy, ports of call, stoppages, destinations, discharge of cargo, delivery,
or in any other way whatsoever, which
are given by the Government of the Nation under whose
flag the Vessel sails, or any other Government, body or group whatsoever acting with the
power to compel compliance with their orders or directions;
(ii)
to
comply with the orders, directions or recommendations of any war risks underwriters who have
the authority to give the same under the terms of the war risks insurance;
(iii) to
comply with the terms of any resolution of the Security Council of the United Nations, any
directives of the European Community, the effective orders of any other Supranational body
which has the right to issue and
give the same, and with national laws aimed at enforcing
the same to which the Owners are subject, and to obey the orders and directions of those
who are charged with their enforcement.
(f)
In
the event of outbreak of war (whether there be a declaration of war or not) (i) between any
two or more of the following countries: the United States of America; Russia; the United
Kingdom; France; and the People's
Republic of China, (ii) between any two or more of the
countries stated in Box 36, both the Owners and the Charterers shall have the right to cancel
this Charter, whereupon the Charterers shall redeliver the Vessel to the
Owners in accordance
with Clause 15, if the Vessel has cargo on board after discharge thereof at destination,
or if debarred under this Clause from reaching or entering it at a near, open and safe port
as directed by the Owners,
or if the Vessel has no cargo on board, at the port at which the
Vessel then is or if at sea at a near, open and safe port as directed by the Owners. In all
cases, hire shall continue to be paid in accordance with Clause 11 and
except as aforesaid
all other provisions of this Charter shall apply until redelivery.
27.Commission
The
Owners to pay a commission at the rate indicated in
Box 33 to the Brokers named in Box 33 on any hire paid under the Charter. If no rate is indicated in Box 33, the commission to be paid
by the Owners shall cover the actual
expenses of the Brokers and a reasonable fee for their work. If
the full hire is not paid owing to breach of the Charter by either of the parties the party liable therefor shall indemnify the Brokers
against their loss of commission.
Should the parties agree to cancel the Charter, the Owners shall indemnify the Brokers against any
loss of commission but in such case the commission shall not exceed the brokerage on one year's hire.
9
28.Termination
(See Additional Clauses)
(a)
Charterers'
Default
The
Owners shall be entitled to withdraw the Vessel from the service of the Charterers and terminate the Charter with immediate effect by
written notice to the Charterers if:
(i)
the
Charterers fail to pay hire in accordance with Clause 11. However, where there is a failure
to make punctual payment of hire due to oversight, negligence, errors or omissions on the
part of the Charterers or their
bankers, the Owners shall give the Charterers written notice
of the number of clear banking days stated in Box 34 (as recognised at the agreed place of
payment) in which to rectify the failure, and when so rectified within
such number of days
following the Owners' notice, the payment shall stand as regular and punctual. Failure by
the Charterers to pay hire within the number of days stated in Box 34 of their receiving
the Owners' notice as
provided herein, shall entitle the Owners to withdraw the Vessel from
the service of the Charterers and terminate the Charter without further notice;
(ii)
the
Charterers fail to comply with the requirements of:
(1)
Clause
6 (Trading Restrictions)
(2)
Clause
13(a) (Insurance and Repairs)
provided
that the Owners shall have the option, by written notice to the Charterers, to give the Charterers a specified number of days grace within
which to rectify the failure without prejudice to the Owners’ right to
withdraw and terminate under this Clause if the Charterers
fail to comply with such notice;
(iii) the
Charterers fail to rectify any failure to comply with the requirements of sub-clause 10(a)(i)
(Maintenance and Repairs) as soon as practically possible after the Owners have requested
them in writing so to do and in
any event so that the Vessel's insurance cover is not prejudiced.
(b)
Owners'
Default
If
the Owners shall by any act or omission be in breach of their obligations under this Charter to the extent that the Charterers are deprived
of the use of the Vessel and such breach continues for a period of fourteen (14)
running days after written notice thereof has been given
by the Charterers to the Owners, the Charterers shall be entitled to terminate this Charter with immediate effect by written notice to
the Owners.
(c)
Loss
of Vessel
This
Charter shall be deemed to be terminated if the Vessel becomes a total loss or is declared as a constructive or compromise or arranged
total loss. For the purpose of this sub-clause, the Vessel shall not be deemed to be lost
unless she has either 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.
(d)
Either
party shall be entitled to terminate this Charter with immediate effect by written notice
to the other party in the event of an order being made or resolution passed for the winding
up, dissolution, liquidation or bankruptcy
of the other party (otherwise than for the purpose
of reconstruction or amalgamation) or if a receiver is appointed, or if it suspends payment,
ceases to carry on business or makes any special arrangement or composition with its
creditors.
(e)
The
termination of this Charter shall be without prejudice to all rights accrued due between
the parties prior to the date of termination and to any claim that either party might have.
29.Repossession
(See Additional Clauses)
In
the event of the termination of this Charter in accordance with the applicable provisions of this Charter Clause 28, the Owners shall
have the right to repossess the Vessel from the Charterers at her current or next port of call, or at
a port or place convenient to them
without hindrance or interference by the Charterers, courts or local authorities. Pending physical repossession of the Vessel in accordance
with this Clause 29 and the Additional Clauses, the
Charterers shall hold the Vessel as gratuitous bailee only to the Owners and the
Charterer shall procure that the Master and crew follow the orders and directions of the Owners. The Owners shall arrange for an authorised
representative to board the Vessel as soon as reasonably practicable following the termination of the Charter. The Vessel shall be deemed
to be repossessed by the Owners from the Charterers upon the boarding of the Vessel by the
Owners' representative. All arrangements and
expenses relating to the settling of wages, disembarkation and repatriation of the Charterers' Master, officers and crew shall be the
sole responsibility of the Charterers.
30.Dispute
Resolution (See Additional Clauses)
*(a) This
Contract shall be governed by and construed in accordance with English law and any dispute
arising out of or in connection with this Contract shall be referred to arbitration in London
in accordance with the Arbitration
Act 1996 or any statutory modification or re-enactment
thereof save to the extent necessary to give effect to the provisions of this Clause. The
arbitration shall be conducted in accordance with the London Maritime Arbitrators
Association
(LMAA) Terms current at the time when the arbitration proceedings are commenced. The reference
shall be to three arbitrators. A party wishing to refer a dispute to arbitration shall appoint
its arbitrator and send
notice of such appointment in writing to the other party requiring
the other party to appoint its own arbitrator within 14 calendar days of that notice and
stating that it will appoint its arbitrator as sole arbitrator unless the other
party appoints
its own arbitrator and gives notice that it has done so within the 14 days specified. If
the other party does not appoint its own arbitrator and give notice that it has done so within
the 14 days specified. The party
referring a dispute to arbitration may, without the requirement
of any further prior notice to the other party, appoint its arbitrator as sole arbitrator
and shall advise the other party accordingly. The award of a sole arbitrator shall
be binding
on both parties as if he had been appointed by agreement. Nothing herein shall prevent the
parties agreeing in writing to vary these provisions to provide for the appointment of a
sole arbitrator. In cases where
neither the claim nor any counterclaim exceeds the sum of
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.
10
*(b) This
Contract shall be governed by and construed in accordance with Title 9 of the United States
Code and the Maritime Law of the United States and any dispute arising out of or in connection
with this Contract shall be
referred to three persons at New York, one to be appointed by
each of the parties hereto, and the third by the two so chosen; their decision or that of
any two of them shall be final, and for the purposes of enforcing any award,
judgement may
be entered on an award by any court of competent jurisdiction. The proceedings shall be conducted
in accordance with the rules of the Society of Maritime Arbitrators, Inc.
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 Shortened Arbitration Procedure of the Society of Maritime
Arbitrators, Inc. current at the time when the arbitration
proceedings are commenced.
*(c) This
Contract shall be governed by and construed in accordance with the laws of the place mutually
agreed by the parties and any dispute arising out of or in connection with this Contract
shall be referred to arbitration at a
mutually agreed place, subject to the procedures applicable
there.
*(d) Notwithstanding
(a), (b) or (c) above, the parties may agree at any time to refer to mediation any difference
and/or dispute arising out of or in connection with this Contract.
In
the case of a dispute in respect of which arbitration has been commenced under (a), (b) or (c) above, the following shall apply:-
(i)
Either
Party may at any time and from time to time elect to refer the dispute or part of the dispute
to mediation by service on the other party of a written notice (the "Mediation Notice")
calling on the other party to agree
to mediation.
(ii)
The
other party shall thereupon within 14 calendar days of receipt of the Mediation Notice confirm
that they agree to mediation, in which case the parties shall thereafter agree a mediator
within a further 14 calendar
days, failing which on the application of either party a mediator
will be appointed promptly by the Arbitration Tribunal ("the Tribunal") or such
person as the Tribunal may designate for that purpose. The mediation shall
be conducted in
such place and in accordance with such procedure and on such terms as the parties may agree
or, in the event of disagreement, as may be set by the mediator.
(iii) If
the other party does not agree to mediate, that fact may be brought to the attention of the
Tribunal and may be taken into account by the Tribunal when allocating the costs of the arbitration
as between the parties.
(iv) The
mediation shall not affect the right of either party to seek such relief or take such steps
as it considers necessary to protect its interest.
(v)
Either
party may advise the Tribunal that they have agreed to mediation. The arbitration procedure
shall continue during the conduct of the mediation but the Tribunal may take the mediation
timetable into account when
setting the timetable for steps in the arbitration.
(vi) Unless
otherwise agreed or specified in the mediation terms, each party shall bear its own costs
incurred in the mediation and the parties shall share equally the mediator’s costs
and expenses.
(vii) The
mediation process shall be without prejudice and confidential and no information or documents
disclosed during it shall be revealed to the Tribunal except to the extent that they are
disclosable under the law and
procedure governing the arbitration.
(Note:
The parties should be aware that the mediation process may not necessarily interrupt time limits.)
(e)
If
Box 35 in Part I is not appropriately filled in, sub-clause 30(a) of this Clause shall apply.
Sub-clause 30(d) shall apply in all cases.
*
Sub-clauses 30(a), 30(b) and 30(c) are alternatives; indicate alternative agreed in Box 35.
31.Notices
(See Additional Clauses)
(a)
Any
notice to be given by either party to the other party shall be in writing and may be sent
by fax, telex, registered or recorded mail or by personal service.
(b)
The
address of the Parties for service of such communication shall be as stated in Boxes 3 and
4 respectively
11
1. Specifications
and Building Contract
(a)
The
Vessel shall be constructed in accordance with the Building Contract (hereafter called “the
Building Contract”) as annexed to this Charter, made between the Builders and the Owners
and in accordance with the
specifications and plans annexed thereto, such Building Contract,
specifications and plans having been counter-signed as approved by the Charterers.
(b)
No
change shall be made in the Building Contract or in the specifications or plans of the Vessel
as approved by the Charterers as aforesaid, without the Charterers’ consent.
(c)
The
Charterers shall have the right to send their representative to the Builders’ Yard
to inspect the Vessel during the course of her construction to satisfy themselves that construction
is in accordance with such approved
specifications and plans as referred to under sub-clause
(a) of this Clause.
(d)
The
Vessel shall be built in accordance with the Building Contract and shall be of the description
set out therein. Subject to the provisions of sub-clause 2(c)(ii) hereunder, the Charterers
shall be bound to accept the Vessel
from the Owners, completed and constructed in accordance
with the Building Contract, on the date of delivery by the Builders. The Charterers undertake
that having accepted the Vessel they will not thereafter raise any claims
against the Owners
in respect of the Vessel’s performance or specification or defects, if any. Nevertheless,
in respect of any repairs, replacements or defects which appear within the first 12 months
from delivery by the
Builders, the Owners shall endeavour to compel the Builders to repair,
replace or remedy any defects or to recover from the Builders any expenditure incurred in
carrying out such repairs, replacements or remedies. However,
the Owners’ liability
to the Charterers shall be limited to the extent the Owners have a valid claim against the
Builders under the guarantee clause of the Building Contract (a copy whereof has been supplied
to the Charterers).
The Charterer shall be bound to accept such sums as the Owners are reasonably
able to recover under this Clause and shall make no further claim on the Owners for the difference
between the amount(s) so recovered and the
actual expenditure on repairs, replacement or
remedying defects or for any loss of time incurred.
Any
liquidated damages for physical defects or deficiencies shall accrue to the amount of the party stated in Box 41(a) or if not filled
in shall be shared equally between the parties. The costs of pursuing a claim or claims
against the Builders under this Clause (including
any liability to the Builders) shall be borne by the party stated in Box 41(b) or if not filled in shall be shared equally between the
parties.
2. Time
and Place of Delivery
(a)
(a)
Subject to the Vessel having completed
her acceptance trials including trials of cargo equipment in accordance with the Building Contract and specifications to the satisfaction
of the Charterers, the Owners shall give and the
Charterers shall take delivery of the Vessel afloat when ready for delivery and properly
documented at the Builders’ Yard or some other safe and readily accessible dock, wharf or place as may be agreed between the parties
hereto
and the Builders. Under the Building Contract the Builders have estimated that the Vessel will be ready for delivery to the Owners
as therein provided by the delivery date for the purpose of this Charter shall be the date when the
Vessel is in fact ready for delivery
by the Builders after completion of trials whether that be before or after as indicated in the Building Contract. The Charterers shall
not be entitled to refuse acceptance of delivery of the Vessel
and upon and after such acceptance subject to Clause 1(d), the Charterers
shall not be entitled to make any claim against the Owners in respect of any conditions, representations or warranties, whether express
or implied as to the
seaworthiness of the Vessel or in respect of delay in delivery.
(b)
If
for any reason other than a default by the Owners under the Building Contract, the Builders
become entitled under that Contract not to deliver the Vessel to the Owners, the Owner shall
upon giving to the Charterers written
notice of Builders becoming so entitled, be excused
from giving delivery of the Vessel to the Charterers and upon receipt of such notice by the
Charterers this Charter shall cease to have effect.
(c)
If
for any reason the Owners become entitled under the Building Contract to reject the Vessel
the Owners shall, before exercising such right of rejection, consult the Charterers and thereupon
(i)
If
the Charterers do not wish to take delivery of the Vessel they shall inform the Owners within
seven (7) running days by notice in writing and upon receipt by the Owners of such notice
this Charter shall cease to have
effect; or
(ii)
If
the Charterers wish to take delivery of the Vessel they may by notice in writing within seven
(7) running days require the Owners to negotiate with the Builders as to the terms on which
delivery should be taken and/or
refrain from exercising their right to rejection and upon
receipt of such notice the Owners shall commence such negotiations and/or take delivery of
the Vessel from the Builders and deliver her to the Charterers.
(iii) In
no circumstances shall the Charterers be entitled to reject the Vessel unless the Owners
are able to reject the Vessel from the Builders;
(iv) if
this Charter terminates under sub-clause (b) or (c) of this Clause, the Owners shall thereafter
not be liable to the Charterers for any claim under or arising out of this Charter or its
termination.
(d)
Any
liquidated damages for delay in delivery under the Building Contract and any costs incurred
in pursuing a claim therefor shall accrue to the account of the party stated in Box 41(c)
or if not filled in shall be shared equally
between the parties.
3. Guarantee
Works
If
not otherwise agreed, the Owners authorise the Charterers to arrange for the guarantee works to be performed
in accordance with the building contract terms, and hire to continue during the period of guarantee works. The
Charterers have to advise
the Owners about the performance to the extent the Owners may request.
12
4. Name
of Vessel
The
name of the Vessel shall be mutually agreed between the Owners and the Charterers and the Vessel shall be painted in the colours, display
the funnel insignia and fly the house flag as required by the Charterers.
5. Survey
on Redelivery
The
Owners and the Charterers shall appoint surveyors for the purpose of determining and agreeing in writing the condition of the Vessel
at the time of re-delivery.
Without
prejudice to Clause 15 (Part II), the Charterers shall bear all survey expenses and all other costs, if any, including the cost of docking
and undocking, if required, as well as all repair costs incurred. The Charterers shall also
bear all loss of time spent in connection
with any docking and undocking as well as repairs, which shall be paid at the date of hire per day or pro rata.
13
On
expiration of this Charter and provided the Charterers have fulfilled their obligations according to Part I and II as well as Part III,
if applicable, it is agreed, that on payment of the final payment of hire as per Clause 11 the
Charterers have purchased the Vessel with
everything belonging to her and the Vessel is fully paid for.
In
the following paragraphs the Owners are referred to as the Sellers and the Charterers as the Buyers.
The
Vessel shall be delivered by the Sellers and taken over by the Buyers on expiration of the Charter.
The
Sellers guarantee that the Vessel, at the time of delivery, is free from all encumbrances and maritime liens or any debts whatsoever
other than those arising from anything done or not done by the Buyers or any existing
mortgage agreed not to be paid off by the time
of delivery. Should any claims, which have been incurred prior to the time of delivery be made against the Vessel, the Sellers hereby
undertake to indemnify the Buyers against all
consequences of such claims to the extent it can be proved that the Sellers are responsible
for such claims. Any taxes, notarial, consular and other charges and expenses connected with the purchase and registration under
Buyers'
flag, shall be for Buyers' account. Any taxes, consular and other charges and expenses connected with closing of the Sellers' register,
shall be for Sellers' account.
In
exchange for payment of the last month's hire instalment the Sellers shall furnish the Buyers with a Bill of Sale duly attested and legalized,
together with a certificate setting out the registered encumbrances, if any. On
delivery of the Vessel the Sellers shall provide for
deletion of the Vessel from the Ship's Register and deliver a certificate of deletion to the Buyers.
The
Sellers shall, at the time of delivery, hand to the Buyers all classification certificates (for hull, engines, anchors, chains etc),
as well as all plans which may be in Sellers’ possession
The
Wireless Installation and Nautical Instruments, unless on hire, shall be included in the sale without any extra payment.
The
Vessel with everything belonging to her shall be at Sellers' risk and expense until she is delivered to the Buyers, subject to the conditions
of this Contract and the Vessel with everything belonging to her shall be delivered
and taken over as she is at the time of delivery,
after which the Sellers shall have no responsibility for possible faults or deficiencies of any description.
The
Buyers undertake to pay for the repatriation of the Master, officers and other personnel if appointed by the Sellers to the port where
the Vessel entered the Bareboat Charter as per Clause 3 (Part II) or to pay the equivalent
cost for their journey to any other place.
14
1. Definitions
For
the purpose of this PART V, the following terms shall have the meanings hereby assigned to them:
"The
Bareboat Charter Registry" shall mean the registry of the State whose flag the Vessel will fly and in which
the Charterers are registered as the bareboat charterers during the period of the Bareboat Charter.
“The
Underlying Registry” shall mean the registry of the State in which the Owners of the Vessel are registered
as Owners and to which jurisdiction and control of the Vessel will revert upon termination of the Bareboat Charter
Registration.
2. Mortgage
The
Vessel chartered under this Charter is financed by a mortgage and the provisions of Clause 12(b) (Part II) shall apply.
3. Termination
of Charter by Default
If
the Vessel chartered under this Charter is registered in a Bareboat Charter Registry as stated in Box 44, and if the Owners shall default
in the payment of any amounts due under the mortgage(s) specified in Box 28, the Charterers
shall, if so required by the mortgagee, direct
the Owners to re-register the Vessel in the Underlying Registry as shown in Box 45.
In
the event of the Vessel being deleted from the Bareboat Charter Registry as stated in Box 44, due to a default by the Owners in the payment
of any amounts due under the mortgage(s), the Charterers shall have the right to
terminate this Charter forthwith and without prejudice
to any other claim they may have against the Owners under this Charter.
15
CONTENTS
32. Definitions
1
33. Interpretations
16
34. Background
17
35. Delivery
18
36. Conditions precedent and conditions subsequent
20
37. Bunkers and luboils
24
38. Further maintenance and operation
24
39. Structural changes and alterations
25
40. Hire
26
41. Insurance
30
42. Redelivery
35
43. Redelivery conditions
35
44. Diver’s inspection at redelivery
37
45. Owners’ mortgage
37
46. Financial covenants
38
47. Charterers; representations and warranties
38
48. Charterers’ undertakings
41
49. Terminations Events
49
50. Sub-chartering and assignment
55
51. Name of Vessel
55
52. Transfer of title
56
53. Total Loss
58
54. Appointment of Approved Manager
58
55. Fees and expenses
59
56. Stamp duties and Taxies
59
57. Operational notifiable events
60
58. Further indemnities
60
59. Further assurances and undertakings
62
60. Cumulative rights
62
61. No waiver
62
62. Entire agreement
62
63. Invalidity
63
64. English language
63
65. No partnership
63
66. Notice
63
67. Conflicts
64
68. Survival of Charterers’ obligations
64
69. Counterparts
64
70. Third Parties Act
64
71. Waiver of immunity
65
72. FATCA
65
73. Governing Law
66
74. Arbitration
66
75. Confidentiality
67
76. Assignment and Transfer
68
77. Financing Charter
68
SCHEDULE 1 FORM OF PROTOCOL OF DELIVERY AND ACCEPTANCE
69
SCHEDULE 2 FORM OF TITLE TRANSFER PROTOCOL OF DELIVERY AND ACCEPTANCE
70
SCHEDULE 3 RELATED CHARTER AND RELEVANT INFORMATION
71
ADDITIONAL CLAUSES
TO BAREBOAT CHARTER FOR "CZECH"
32.
Definitions
In this Charter:
"Account Bank"
means ABN AMRO Bank N.V. at Gustav Mahlerlaan 10, Postbus 283, 1000 EA Amsterdam (BIC: ABNANL2A) or such other first-class international
bank or financial institution as nominated by the
Charterers and approved by the Owners in writing from time to time (acting reasonably).
"Account Security"
means the deed of charge or pledge or other legal instrument executed or to be executed by the Charterers in Agreed Form in favour of
the Security Trustee conferring a Security Interest over the Earnings
Account and all amounts from time to time standing to the credit
to the Earnings Account.
"Actual Delivery
Date" means the date of delivery of the Vessel by the Owners to the Charterers under this Charter.
"Affiliate"
means, in relation to any person, a Subsidiary of that person or a Holding Company of that person or any other Subsidiary of that Holding
Company.
"Agreed Form"
means in relation to any document, that document in the form approved in writing by the Owners and agreed with the Charterers.
"Agreement
Term" means the period commencing on the date of this Charter and terminating on
the later of:
(a)
the expiration of the Charter Period; and
(b)
the date on which all money of any nature owed by the Obligors to the Owners under the Transaction Documents or otherwise in connection with the Vessel have been paid in full to the Owners and no obligations of the
Obligors of any nature to the Owners or otherwise in connection with the Transaction Documents, the Related Transaction Documents or with the Vessel or the Related Vessels remain unperformed or undischarged.
"Anniversary" means
each anniversary of the Actual Delivery Date.
"Anti-Money Laundering Laws"
means all applicable financial record-keeping and reporting requirements, anti-money laundering statutes (including all applicable rules
and regulations thereunder) and all applicable related
or similar laws, rules, regulations or guidelines, of all applicable jurisdictions
including and without limitation, the United States of America, the European Union and the People’s Republic of China and which
in each case are:
(a)
issued, administered or enforced by any governmental agency having jurisdiction over any Obligor, the Owners or the Security Trustee; and
(b)
of any jurisdiction in which any Obligor, the Owners or the Trustee conduct business; or Security Interest to which any Obligor, the Owners or the Security Trustee is subjected or subject to.
"Anti-Terrorism Financing Laws"
means all applicable anti-terrorism laws, statutes (including all applicable rules and regulations thereunder) and all applicable related
or similar rules, regulations, guidelines, of any
applicable jurisdiction, including and not limited to the United States of America or
the People’s Republic of China which are:
(a)
issued, administered or enforced by any governmental agency, having jurisdiction over any Obligor, the Owners or the Security Trustee;
1
(b)
of any jurisdiction in which any Obligor, the Owners or the Security Trustee conducts business; or
(c)
to which any Obligor, the Owners or the Security Trustee is subjected or subject to.
"Approved Insurer"
means, in respect of the Vessel, a first-class international insurance broker, underwriter or association acceptable to the Owners (acting
reasonably).
"Approved Manager"
means:
(a)
with respect to the technical management of the Vessel, TECHNOMAR SHIPPING INC., a company incorporated and existing under the laws of the Republic of Liberia with Registration Number C-76029 and having
its registered office at 80 Broad Street, Monrovia, Liberia; and
(b)
with respect to the commercial management of the Vessel, CONCHART COMMERCIAL INC., a company incorporate and existing under the laws of the Republic of the Marshall Islands having its registered address
at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Republic of the Marshall Islands MH 96960; or
(c)
such other first class reputable ship technical and/or commercial manager acceptable to the Owners.
"Approved Valuer"
means each of BRS Shipbrokers, MB Shipbrokers, Kontiki Shipbrokers, Howe Robinson and any other reputable and independent ship brokers
proposed by the Charterers and approved by the Owners
(acting reasonably).
"Arrangement Fee"
has the meaning given to the term in Clause 55(a)(a)(a), being a sum of US$445,000 (Dollars Four Hundred Forty Five Thousand only).
"Authorisation" means
an authorisation, consent, approval, resolution, licence, exemption, filing, notarisation or registration.
"Break Costs" means
all costs, losses, premiums or penalties incurred by the Owners as a result of (i) the receipt by the Owners of any payment under or in
relation to the Transaction Documents on a day other than the due
date for payment of the sum in question and/or (ii) the Termination
Payment Date does not fall on a Hire Payment Date (in each case, including any Break Costs incurred under the Finance Documents.
"Business Day" means
a day (other than a Saturday or Sunday) on which banks and financial markets are open for business:
(a)
in relation to any date for payment, in Amsterdam, Athens, Beijing and New York; and
(b)
for all other purposes, in Beijing and Athens.
"Business Ethics Laws"
means any laws, regulations and/or other legally binding requirements or determinations in relation to bribery, corruption, fraud, money-laundering,
terrorism, collusion bid-rigging or anti-trust, human
rights violations (including forced labour and human trafficking) which are applicable
to an Obligor or to any jurisdiction where activities are performed and which shall include: (i) the United Kingdom Bribery Act 2010,
(ii)
the United States Foreign Corrupt Practices Act 1977 and (iii) Prevention of Bribery Ordinance (Cap. 201) of the Laws of Hong Kong.
"Cancellation Date"
means 31 January 2025 or such later date as the Owners may in their sole discretion approve in writing.
2
"Cash Collateral"
has the meaning given to such term in Clause 4832..1(bb) (Value maintenance).
"Charter Group" means
the Charterers, the Charter Guarantor and, the Subsidiaries of each of them from time to time.
"Charter Guarantee"
means the deed of guarantee and indemnity executed or to be executed by the Charter Guarantor in favour of the Security Trustee in the
Agreed Form.
"Charter Guarantor"
means GLOBAL SHIP LEASE, INC., a corporation incorporated and existing under the laws of the Republic of Marshall Islands with corporation
number 28891 and having its registered office at Trust
Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Republic of the Marshall
Islands MH 96960, being the sole member and manager of the Charterers.
"Charter Guarantor
Change of Control Event" means any of the following events:
(i)
the Charterer is not or ceases to be a wholly-owned direct or indirect Subsidiary of the Charter Guarantor;
(ii)
Mr George Giouroukos ceases to own at least 1 per cent. of the shares in the Charter Guarantor (either directly or through one or more of his affiliates);
(iii)
Mr George Giouroukos ceases to be the Executive Chairman of (or to hold an equivalent executive officer position in) the Charter Guarantor other than by reason of death or other incapacity in managing his affairs; or
(iv)
any person(s) own(s) more than 15 per cent. of the shares in the Charter Guarantor, other than Mr George Giouroukos (either directly or through one or more of his affiliates).
"Charter Period"
means, subject to Clause 40(i) (Illegality), Clauses 49 (Termination Events), 52 (Transfer of title) and 53 (Total
Loss), the period of One Hundred Twenty (120) months commencing from the Actual Delivery
Date.
"Charterers' Assignment"
means the deed of assignment executed or to be executed (as the case may be) by the Charterers in favour of the Security Trustee in the
Agreed Form in relation to certain of the Charterers' rights
and interest in and to (among other things) the (a) the Earnings, (b) the
Insurances, and (c) the Requisition Compensation and (d) the Initial Sub-Charter and any other Sub-Charter (if any) which have a duration
of twelve (12)
months or more (including any option to renew or extend).
"Classification Society"
means the vessel classification society referred to in Box 10 (Classification Society) of this Charter, or such other reputable
classification society which is a member of the International Association of
Classification Societies as the Charterers may select and
the Owners may approve from time to time (acting reasonably).
"Co-Assured Undertakings"
means an undertaking in respect of the Insurances by a party named as an assured or co-assured (as the case may be) on any of the Insurances
(other than the Charterers, the Approved Managers,
the Owners and the Finance Parties) in favour of the Owners and the Security Trustee.
"Debt" means the aggregate
from time to time of all sums of any nature (together with all accrued unpaid interest on any of those sums) payable by any Obligor to
the Owners under all or any of the Transaction Documents.
"Default Interest Rate"
means a rate equivalent to the applicable Interest Rate plus two per cent. (2%) per annum (on a 360-day year basis).
"Default Termination"
means a termination of the Charter Period pursuant to the provisions of Clause 49 (Termination Events).
3
"Delivery Costs" means
the aggregate amount of all documented charges, fees, costs (including legal fees) and expenses whatsoever (with the only exception of
the MOA Purchase Price) reasonably incurred and/or arising out
of and/or in relation to:
(i)
the Owners’ taking delivery of the Vessel under the MOA;
(ii)
the delivery of the Vessel by the Owners to the Charterers under this Charter; and
(iii)
the Registration Costs.
"Earnings" means all
hires, freights, pool income and other sums payable to or for the account of the Charterers in respect of the Vessel including (without
limitation) all remuneration for salvage and towage services,
demurrage and detention moneys, contributions in general average, compensation
in respect of any requisition for hire, and damages and other payments (whether awarded by any court or arbitral tribunal or by agreement
or
otherwise) for breach, termination or variation of any contract for the operation, employment or use of the Vessel.
"Earnings Account" means
the account in the name of the Charterers (IBAN: NL35ABNA0139181253) opened with the Account Bank and subject to the Account Security
acceptable to the Owners, and includes any sub-
account thereof and such account which is designated by the Owners as the earnings account
for the purposes of this Charter.
"Environmental Claim"
means any claim by any person which arises out of an Environmental Incident which relates to any Environmental Law.
"Environmental Incident"
means:
(a)
any release of Environmentally Sensitive Material from the Vessel; or
(b)
any incident in which Environmentally Sensitive Material is released from a vessel other than the Vessel and which involves a collision between the Vessel and such other vessel or some other incident of navigation or
operation, in either case, in connection with which the Vessel is actually arrested, attached, detained or injuncted and/or the Vessel and/or the Owners and/or the Charterers and/or any Approved Manager and/or any
operator or manager of the Vessel is at fault or otherwise liable to any legal action; or
(c)
any other incident in which Environmentally Sensitive Material is released otherwise than from the Vessel and in connection with which the Vessel is actually arrested and/or where the Owners and/or the Charterers
and/or any Approved Manager and/or any operator or manager of the Vessel is at fault or otherwise liable to any legal action.
"Environmental Law"
means any law or regulation having the force of law applicable to the Vessel or the use and employment of the Vessel by the Owners and
the Charterers relating to pollution or protection of the
environment, to the carriage of Environmentally Sensitive Material or to actual
releases of Environmentally Sensitive Material.
"Environmental Permits"
means any permit and other authorisation and the filing of any notification, report or assessment required under any Environmental Law
for the operation of the Vessel.
"Environmentally Sensitive Material"
means oil, oil products and any other substance (including any chemical, gas or other hazardous or noxious substance) which is polluting,
toxic or hazardous.
"EU ETS Mandate Letter"
means the mandate letter in respect of the Vessel addressed to the relevant entities charged with administering compliance with the EU-ETS
Regulations and duly executed by the Owners and the
Charterers and the Approved Manager nominated by the Charterers, mandating the Approved
Manager as nominated by the Charterers and approved by the Owners as the party required to comply with and be responsible for
compliance
with the EU-ETS Regulations in place of the Owners.
4
"EU-ETS Regulations"
means:
(a)
EU Emissions Trading Scheme (Directive 2003/87/EC establishing a system for greenhouse gas emission allowance trading within the Union and Decision (EU) 2015/1814 concerning the establishment and operation
of a market stability reserve for the Union greenhouse gas emission trading system as amended by Directive (EU) 2023/959 of the European Parliament and of the Council of 10 May 2023) and the Commission
Implementing Regulation (EU) 2023/2599 of 22 November 2023 as the same may be amended, supplemented, superseded or readopted from time to time (whether with or without modifications); and
(b)
any applicable law implementing the above Directive and/or Implementing Regulation.
"Finance Document" means
any facility agreement, security document, fee letter and any other document designated as such by the Finance Parties and the Owners,
and which have been or may be (as the case may be)
entered into between the Finance Parties and the Owners for the purpose of, among other
things, financing or (as the case may be) refinancing all or any part of the Outstanding Principal.
"Finance Party" means
any bank or financial institution which is or will be party to a Finance Document (other than the Owners and other entities which may
have agreed or be intended as debtors and/or obligors thereunder)
and "Finance Parties" means two or more of them.
"Financial Indebtedness"
means any indebtedness for or in respect of:
(a)
moneys borrowed;
(b)
any amount raised by acceptance under any acceptance credit facility or dematerialised equivalent;
(c)
any amount raised pursuant to any note purchase facility or the issue of bonds, notes, debentures, loan stock or any similar instrument;
(d)
the amount of any liability in respect of any lease or hire purchase contract which would, in accordance with GAAP, be treated as a balance sheet liability;
(e)
receivables sold or discounted (other than any receivables to the extent they are sold on a non-recourse basis);
(f)
any amount raised under any other transaction (including any forward sale or hire purchase agreement) of a type not referred to in any other paragraph of this definition having the commercial effect of a borrowing;
(g)
any derivative transaction entered into in connection with protection against or benefit from fluctuation in any rate or price (and, when calculating the value of any derivative transaction, only the marked to market
value (or, if any actual amount is due as a result of the termination or close-out of that derivative transaction, that amount) shall be taken into account);
(h)
any counter-indemnity obligation in respect of a guarantee, indemnity, bond, standby or documentary letter of credit or any other instrument issued by a bank or financial institution; and
(i)
the amount of any liability in respect of any guarantee or indemnity for any of the items referred to in paragraphs (a) to (h) above.
5
"Financial Institution"
means any bank or financial institution, trust, fund, leasing company or other entity which is regularly engaged in or established for
the purpose of making, purchasing or investing in loans, securities or
other financial assets.
"Fixed Hire" means
in respect of each Hire Payment Date, an amount of US$862,500 (Dollars Eight Hundred Sixty Two Thousand Five Hundred Only).
"GAAP" means generally
accepted accounting principles in the United States or the International Financial Reporting Standards (IFRS), issued by the International
Accounting Standards Board, in either case as in effect from
time to time.
"Head MOA"
means the memorandum of agreement and its addendum no.1 both dated 29 November 2024 made by and between the Head Selles as sellers and
the Charterers as buyers for the sale and purchase of the Vessel.
"Head Sellers" means
Minsheng Zhi Qian (Tianjin) Shipping Leasing Company Limited, a company incorporated and existing under the laws of the People’s
Republic of China and having its registered office at Room 202,
No.6262, Australia Road, Dongjiang Free Trade Pilot Zone, Tianjin (DJBS
Free Trade Zone Branch No. 2519), China.
"Hire"
means, in relation to each Hire Period, the aggregate amount of (A) the Fixed Hire and (B) the Variable
Hire for that Hire Period.
"Hire
Payment Date" means in relation to the Hire for each Hire Period, the last day of
that Hire Period.
"Hire
Period" means
(a)
in relation to the first Hire Period, the period commencing on the MOA Payment Date and ending on the last day of three (3) months of the Actual Delivery Date; and
(b)
in relation to each and every successive Hire Period, each and every consecutive three (3)-month period during the Charter Period commencing forthwith upon the expiration of the immediately previous Hire Period, provided
that the last and final Hire Period shall end on the last day of the Charter Period.
"Holding
Company" means, in relation to a person, any other person in respect of which it is a Subsidiary.
"Hong Kong"
means the Hong Kong Special Administrative Region of The People's Republic of China.
"IAPPC" means a valid
international air pollution prevention certificate for the Vessel issued under Annex VI (Regulations for the Prevention of Air Pollution
from Ships) to the International Convention for the Prevention of
Pollution from Ships 1973 (as modified in 1978 and 1997).
"Indemnitee" has the
meaning given to such term in Clause 58 (Further indemnities).
"Initial Sub-Charter"
means the time charterparty dated 15 December 2020 in respect of the Vessel with the Initial Sub-Charterers as charterers, as amened,
supplemented and novated from time to time, in particular, pursuant
to the Initial Sub-Charter Novation Agreement.
"Initial Sub-Charter Novation
Agreement" means the novation agreement to the Initial Sub-Charter entered into or to be entered into by and between the Initial
Sub-Charterers as charterers, the Head Sellers as original
owners and the Charterers as new owners, whereby subject and pursuant to the
terms and conditions therein contained, with effect from the time and date of delivery of the Vessel by the Head Sellers to the Charterers
under the
Head MOA, all the rights and obligations of the Head Sellers (as owners) under the Initial Sub-Charter shall be novated to and
assumed by the Charterers.
6
"Initial Sub-Charterers"
means Hapag-Lloyd Aktiengesellschaft of Ballindamm 25, Hamburg, Germany.
"Innocent Owners' Interest
Insurances" means all policies and contracts of innocent owners' interest insurance and innocent owners' additional perils insurance
from time to time taken out by the Owners in relation to the
Vessel.
"Insurances" means
all policies and contracts of insurance which are from time to time taken out or entered into by the Charterers in respect of the Vessel
or her earnings or otherwise in connection with the Vessel or her
earnings.
"Interest Rate" means
the rate of interest applicable for each Hire Period and any other period for which an interest rate is to be determined is the percentage
rate per annum which is the aggregate of:
(a) the
applicable Reference Rate; and
(b) the
Margin.
"Interpolated Term SOFR"
means, in relation to any Outstanding Principal, the rate (rounded to the same number of decimal places as Term SOFR) which results from
interpolating on a linear basis between:
(a) either:
(i)
the applicable Term SOFR (as of the Quotation Day) for the longest period (for which Term SOFR is available) which is less than three (3) months; or
(ii)
if no such Term SOFR is available for a period less than three (3) months, SOFR for the day which is three (3) US Government Securities Business Days before the Quotation Day; and
(b)
the applicable Term SOFR (as of the Quotation Day) for the shortest period (for which Term SOFR is available) which exceeds three (3) months.
"ISM Code" means the
International Safety Management Code (including the guidelines on its implementation), adopted by the International Maritime Organisation
Assembly as Resolutions A.741 (18) (as amended by MSC
104 (73)) and A.913(22) (superseding Resolution A.788 (19)), as the same may be
amended, supplemented or superseded from time to time (and the terms "safety management system", "Safety Management Certificate"
and
"Document of Compliance" have the same meanings as are given to them in the ISM Code).
"ISPS Code" means
the International Ship and Port Facility Security Code adopted by the International Maritime Organisation (as the same may be amended,
supplemented or superseded from time to time).
"ISSC" means a valid
and current International Ship Security Certificate issued under the ISPS Code.
"Legal Opinions"
means the legal opinions provided to the Owners under Clause 36.(b)(vi) (Conditions precedent and conditions subsequent).
"Legal Reservations"
(a)
the principle that equitable remedies may be granted or refused at the discretion of a court and the limitation of enforcement by laws relating to insolvency, reorganisation and other laws generally affecting the rights of
creditors;
(b)
the time barring of claims under the Limitation Acts, the possibility that an undertaking to assume liability for or indemnify a person against nonpayment of UK stamp duty may be void and defences of set-off or
counterclaim;
7
(c)
similar principles, rights and defences under the laws of any Relevant Jurisdiction; and
(d)
any other matters which are set out as qualifications or reservations as to matters of law of general application in the Legal Opinions.
"Manager's
Undertakings" means the deed of undertaking executed or to be executed by each Approved Manager in favour of the Owners and the
Security Trustee in the Agreed Form.
"Margin"
means two point five per cent. (2.5%) per annum.
"Market Value"
means the Market Value determined pursuant to Clause 4832..1(bb) (Value maintenance).
"Material
Adverse Effect" means a material adverse effect on:
(a)
the business, operations, property, financial condition of the Charter Group taken as a whole; or
(b)
the ability of any Obligor to perform its or his obligations under the Transaction Documents to which it is a party; or
(c)
the effectiveness or ranking of any Security Interest granted pursuant to any of the Transaction Documents or the rights or remedies of the Owners or the Security Trustee under any Transaction Document.
"MOA"
has the meaning given to such term in Clause 34 (Background).
"MOA Payment
Date" means the date on which the Owners remit the MOA Purchase Price to the client account of the Escrow Agent (as defined in
the MOA) pursuant to Clause 3.2 (Preposition) of the MOA.
"MOA Purchase
Price" means the purchase price as stated in clause 1 (Purchase price) of the MOA, being US$44,500,000 (Dollars Forty
Four Million Five Hundred Thousand Only).
"month"
means a period starting on one day in a calendar month and ending on the numerically corresponding day in the next calendar month, except
that if there is no numerically corresponding day in the calendar month in
which that period is to end, that period shall end on the last
day in that calendar month.
"Mortgagees' Interest Insurances"
means all policies and contracts of mortgagees' interest insurance, mortgagees’ additional perils insurance taken out by any Finance
Party in relation to the Vessel.
"Obligors"
means the Charterers, the Charter Guarantor and the Related Charterers.
"Original Principal"
means an amount equal to the MOA Purchase Price, being US$44,500,000 (Dollars Forty Four Million Five Hundred Thousand Only).
"Outstanding Principal"
means, at any relevant time during the Agreement Term, an amount equal to the Original Principal as may be reduced by payment of Fixed
Hire in accordance with Clause 40(a) (Hire) and
prepayment of the Purchase Obligation Price in accordance with Clause 48(bb) (Value
maintenance).
"Owners' Account"
means, subject to Clause 40(d) (Payment account information), the Owner’s bank account described in Box 26 (Place of payment;
also state beneficiary and bank account) of this Charter.
"Party" means each
of the Owners and the Charterers.
8
"Perfection Requirements"
means any authorisation, consent, approval, resolution, licence, exemption, filing, notarisation, lodgement or registration for the relevant
Transaction Documents set out as perfection requirements
(howsoever described) for such Transaction Documents in any legal opinion referred
to under Clause 36 (Conditions precedent and conditions subsequent).
"PDA" means the protocol
of delivery and acceptance in relation to the Vessel to be executed between the Owners and the Charterers, substantially in the form of
Schedule 1 (Form of Protocol of Delivery and Acceptance)
hereto.
"Permitted Security"
means:
(a)
any Security Interest created pursuant to any Finance Document or otherwise created with the prior written consent of the Owners;
(b)
any liens for unpaid master's, officer's and crew's wages in accordance with usual maritime practice and are discharged within thirty (30) days;
(c)
any liens for salvage;
(d)
any liens for master's disbursements incurred in the ordinary course of trading and are discharged within thirty (30) days;
(e)
any other lien arising (i) by operation of law or (ii) otherwise in the ordinary course of operation, repair or maintenance of the Vessel and not as a result of any default or omission of any Obligor not exceeding an
aggregate amount of US$1,500,000 (Dollars One Million Five Hundred Thousand); or
(f)
any Security Interest created in favour of a plaintiff or defendant in any action of the court or tribunal before whom such action is brought as security for costs and expenses where the Owners are prosecuting or
defending such action in good faith by appropriate steps.
"Potential Termination Event"
means, an event or circumstance specified in Clause 49 (Termination Event) which would, with the expiry of any applicable grace
period, the giving of any notice, the lapse of time, a
determination under the Transaction Documents or any combination of the foregoing,
be a Termination Event.
"PRC" means the People's
Republic of China.
"Purchase Obligation Price"
means the amount due and payable by the Charterers to the Owners pursuant to paragraph (c) of Clause 52 (Transfer of title), being
an amount of US$10,000,000 (Dollars Ten Million only).
"Purchase Option Date"
means any Hire Payment Date as specified in the Purchase Option Notice served in accordance with paragraph (a) of Clause 52 (Transfer
of title), which shall be a Business Day falling on or after the
3rd Anniversary.
"Purchase Option Notice"
has the meaning given to such term in Clause 52 (Transfer of title).
"Purchase Option Fee"
means an amount equal to five per cent. (5%) of the Outstanding Principal as at the Purchase Option Date.
"Purchase Option Price"
means the amount due and payable by the Charterers to the Owners pursuant to paragraph (b) of Clause 52 (Transfer of title), being
the aggregate of:
(a)
the Outstanding Principal as at the Purchase Option Date;
(b)
the applicable Purchase Option Fee;
(c)
any Variable Hire which has accrued but is unpaid up to the Purchase Option Date (inclusive); and
9
(d)
all legal costs and expenses and other reasonable documented costs and expenses incurred by the Owners relating to exercise by the Charterers of their purchase option right pursuant to Clause 52 (Transfer of title).
"Quotation Day" means,
in relation to any Hire Period and any other period for which an interest rate is to be determined, three (3) US Government Securities
Business Days before the first day of that Hire Period (as the case
may be) (unless the Owners, in their reasonable opinion, consider
market practice differs in the relevant syndicated loan market, in which case the Quotation Day will be determined by the Owners in accordance
with that
market practice).
"Reference Rate" means,
in relation to any Outstanding Principal:
(a)
the applicable Term SOFR as of the Quotation Day for a period of three (3) months; or
(b)
as otherwise determined pursuant to Clause 40(l) (Unavailability of Term SOFR),
and if, in either case, that rate is
less than zero, the Reference Rate shall be deemed to be zero.
"Registration Costs"
means any documented costs and expenses (including fees and taxes) in respect of:
(a)
the registration (or, as the case may be, any re-registration) of title to the Vessel in the Owners’ name;
(b)
the registration of the Owners as a foreign maritime entity (or similar) under the laws of the flag state (if applicable);
(c)
the financing charter recordation in respect of this Charter with the shipping registry or other competent authority of the flag state or other relevant jurisdiction (if applicable);
(d)
the bareboat charter registration in the name of the Charterers with the shipping registry or other competent authority of the flag state or other relevant jurisdiction (if applicable); and
(e)
the maintenance of any of the aforementioned registrations and recordation on the Actual Delivery Date and for the duration of the Charter Period,
and without prejudice to the generality
of the foregoing, the Registration Costs shall include all documented costs and expenses (including, not limited to, notarisation and
legalisation or apostille cost and reasonable legal fees)
incurred by the Owners in preparing and provision of instruments and documents
required for effecting, maintaining and perfecting the aforesaid registration and recordation and all fees and charges and tonnage tax
charged by
the relevant ship registry or other authorities.
"Relevant Jurisdiction"
means, in relation to an Obligor:
(a)
its jurisdiction of incorporation or formation (as the case may be);
(b)
any jurisdiction where any asset subject to or intended to be subject to a Security Document to be executed by it is situated;
(c)
any jurisdiction where it principally conducts its business; and
(d)
the jurisdiction whose laws govern the perfection of any of the Security Documents entered into by it.
10
"Related Charter"
means,
(a)
each bareboat charter party entered into or to be entered into the same day as this Charter or at any time after the date hereof, the details of which are listed in Schedule 3 hereto (Related Charter and relevant
information); and
(b)
the bareboat charter party of any ship which may be entered into from time to time between the Owners or any Affiliate of the Owners (as owners) and a member of the Charter Group (as charterers).
"Related Charterers"
means the charterers under any Related Charter.
"Related Owners" means
the owners under any Related Charter.
"Related Transaction Document"
means any "Transaction Document" as defined in each Related Charter.
"Requisition
Compensation" means all compensation or other money which may from time to time be
payable to the Charterers as a result of the Vessel being requisitioned for title or in any other way compulsorily acquired (other
than
by way of requisition for hire).
"Restricted Countries"
means those countries subject to country-wide or territory-wide Sanctions and/or trade embargoes, in particular but not limited to pursuant
to the U.S.'s Office of Foreign Asset Control of the U.S.
Department of Treasury ("OFAC") at the date of this Charter,
Cuba, Crimea, Iran, North Korea and Syria and any additional countries based on respective country-wide or territory-wide Sanctions being
imposed by OFAC or
any of the regulative bodies referred to in the definition of Restricted Person.
"Restricted Person"
means a person or entity that is (a) listed on, or owned or controlled by a person listed on, or acting on behalf of a person listed on,
any Sanctions List; (b) a national of, incorporated under the laws of, or
owned 50% or more or (directly or indirectly) controlled by,
or acting on behalf of, a person organised under the laws of a country or territory that is a Restricted Country; or (c) otherwise a target
of Sanctions ("target of
Sanctions" signifying a person with whom a US person or other national of Sanctions Authority
would be prohibited or restricted by law from engaging in trade, business or other activities); provided that provided that, in the
case
of a person or entity that is targeted only by "sectoral sanctions," or other Sanctions that do not generally prohibit transactions
with such person, such person or entity shall be a Restricted Person with respect to a
transaction only to the extent that a Party or
any other person or entity organised or resident in the jurisdiction of a Sanctions Authority would be prohibited by the law of any such
applicable jurisdiction from entering into,
directly or indirectly, such transaction with such person.
"Sanctions" means the
sanctions, embargoes, freezing provisions, prohibitions or other restrictions relating to trading, doing business, investment, exporting,
financing or making assets available (or other activities similar to or
connected with any of the foregoing):
(a)
imposed by law or regulation of (i) the United States government; (ii) the United Nations; (iii) the European Union; (iv) the People's Republic of China; (v) the United Kingdom; or (vi) the United Nations Security
Council, the Office of Foreign Assets Control of the US Department of Treasury ("OFAC"), the United States Department of State, the Council of the European Union, the European Commission, and His Majesty's
Treasury ("HMT") (together, the "Sanctions Authorities"); or
(b)
otherwise imposed by any law or regulation by which any Obligor is bound (which shall include without limitation, any extra-territorial sanctions imposed by law or regulation of the United States of America) or as
regards a regulation, compliance with which is reasonable in the ordinary course of business of any Obligor,
against any state, natural
or legal person, body or entity.
"Sanctions
List" means the "Specially Designated Nationals and Blocked Persons" list maintained by the OFAC, the Consolidated
List of Financial Sanctions Targets and the Investment Ban List maintained by HMT, or any
similar list maintained by, or public announcement
of Sanctions designation made by, any of the Sanctions Authorities.
11
"Security Documents"
means, in relation to the Vessel, the following:
(a)
the Account Security;
(b)
the Charterers' Assignment;
(c)
any Manager's Undertaking;
(d)
the Share Security;
(e)
the Security Documents under any Related Charter; and
(f)
any document designated by the Owners and the Charterers as a Security Document;
and "Security
Document" means any one of them.
"Security Interest"
means a mortgage, charge (whether fixed or floating), pledge, lien, hypothecation, assignment, trust arrangement, title retention or other
security interest or arrangement of any kind whatsoever.
"Security Trust Deed"
means the deed executed or to be executed by (amongst others) the Security Trustee, the Owners, the Related Owners, the Charterers, the
Related Charterers and the Charter Guarantor.
"Security Trustee" means
OCEAN RAINBOW SHIPPING LIMITED, a company incorporated and existing under the laws of Hong Kong with Business Registration Number 62836611
and having its registered office at Units
904-907, 9/F Dah Sing Financial Centre, 248 Queen's Road East, Wanchai, Hong Kong, China.
"Settlement Date"
means, following a Total Loss of the Vessel, the earliest of:
(a)
the date which falls One Hundred (100) days after the date of occurrence of the Total Loss or, if such date is not a Business Day, the immediately preceding Business Day; and
(b)
the date on which the Owners receive the Total Loss Proceeds in respect of the Total Loss; and
(c)
the expiry date of the Charter Period.
"Share Security" means
the deed of charge or pledge over all the limited liability company interests in the Charterers executed or (as the case may be) to be
executed by the Charter Guarantor as chargor in favour of the
Security Trustee.
"Ship Management Agreement"
means any agreement made or to be made between the Charterers and any Approved Manager in respect of the technical and/or commercial management
of the Vessel on such terms and
conditions reasonably acceptable to the Owner.
"Sub-Charter" means,
any charterparty in respect of the Vessel entered into by the Charterers (as disponent owners) for the employment of the Vessel.
"Sub-Charterers" means,
in respect of the Vessel, any sub-charterers which are or will be parties to a Sub-Charter.
"Subsidiary" means,
in relation to any company or corporation, a company or corporation:
(a)
which is controlled, directly or indirectly, by the first mentioned company or corporation;
12
(b)
more than half the issued equity share capital of which is beneficially owned, directly or indirectly, by the first mentioned company or corporation; or
(c)
which is a Subsidiary of another Subsidiary of the first mentioned company or corporation,
and for this purpose, a company or corporation
shall be treated as being "controlled" by another if that other company or corporation is able to direct its affairs and/or
to control the composition of its board of directors or
equivalent body.
"Tax" or "tax"
means, other than taxes imposed on the overall net income of the Owners, their Holding Company, their group and/or the Finance Parties,
any FATCA Deduction, any present and future tax (including, without
limitation, value added tax, consumption tax or any other tax in respect
of added value or any income), levy, impost, duty or other charge or withholding of any nature (including any penalty or interest payable
in connection
with any failure to pay or any delay in paying any of the same); and "Taxes", "Taxation"
and "taxation" shall be construed accordingly.
"Term SOFR" means the
term SOFR reference rate administered by CME Group Benchmark Administration Limited (or any other person which takes over the administration
of that rate) for the relevant period published
(before any correction, recalculation or republication by the administrator) by CME Group
Benchmark Administration Limited (or any other person which takes over the publication of that rate).
"Termination Event"
means each of the events specified in paragraph (a) of Clause 49 (Termination Events).
"Termination Notice"
has the meaning given to such term in 40(i) (Illegality) and Clause 49(b) (Owners' options after occurrence of a Termination
Event).
"Termination Payment Date"
means:
(a)
in respect of a termination of this Charter in accordance with Clause 40(i) (Illegality), the date specified in the Termination Notice served on the Charterers pursuant to that Clause;
(b)
in respect of a termination of this Charter in accordance with Clause 40(j) (Increased Costs), the date specified in the Termination Notice served on the Charterers pursuant to that Clause;
(c)
in respect of a Default Termination, fifteen (15) days after the date on which the Termination Notice is served on the Charterers pursuant to paragraph (b) of Clause 49 (Termination Events) in respect of such Default
Termination;
(d)
in respect of a Total Loss Termination, the Settlement Date in respect of the Total Loss which gives rise to such Total Loss Termination.
"Termination Sum" means
an amount representing the Owners' losses as a result of the early termination of this Charter prior to the expiry of the Charter Period,
which both parties acknowledge as a genuine and reasonable
pre-estimate of the Owners' losses in the event of such termination and shall
consist of the following:
(a)
the Outstanding Principal as at the Termination Payment Date;
(b)
an amount equal to six per cent. (6%) of the Outstanding Principal as at the Termination Payment Date, provided such amount shall not be payable and shall not form part of the Termination Sum in the event this
Charter is terminated:
(A)
as a result of a Total Loss Termination; or
(B)
pursuant to the provisions of Clause 40(i) (Illegality) solely for the reason that it is unlawful or it is prohibited for the Owners (but not the Charterers) to charter the Vessel under this Charter; or
13
(C)
pursuant to the provisions of Clause 40(j) (Increased Costs) at any time on or after the 3rd Anniversary of the Actual Delivery Date.
(c)
any Variable Hire which has accrued, but is unpaid, up to (and including) the Termination Payment Date;
(d)
any and all Unpaid Sums due and payable together with interest accrued thereon pursuant to Clause 40(g) (Default Interest);
(e)
any Break Costs; and
(f)
all liabilities, documented costs and expenses reasonably incurred by the Owners (including, without limitation, legal expenses).
"Test Date" means each
of the following dates on which the Valuation Reports shall be provided to the Owners in accordance with Clause 4832..1(aa) (Valuation
Reports):
(i)
30 June and 31 December in each year during the Charter Period (each such Valuation Report to be at the Charterers' cost); and
(ii)
following the occurrence of a Termination Event and whilst the same is continuing, each other date as the Owners may require in their absolute discretion (with not less than 30 days prior notice to the Charterers) (each
such additional Valuation Report shall be at the cost of the Charterers).
"Third Parties Act"
means the Contracts (Rights of Third Parties) Act 1999.
"Threshold Amount" means
US$1,500,000 (Dollars One Million Five Hundred Thousand only) or the equivalent in any other currency.
"Title Transfer PDA"
means the protocol of delivery and acceptance in relation to the Vessel to be executed between the Owners and the Charterers, substantially
in the form of Schedule 2 (Form of Title Transfer Protocol of
Delivery and Acceptance) hereto.
"Total Loss" means during
the Charter Period:
(a)
actual or constructive or compromised or agreed or arranged total loss of the Vessel and for clarity, the Vessel shall not be deemed to be lost unless she has either 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
(b)
the requisition for title or compulsory acquisition of the Vessel by any government or other competent authority (other than by way of requisition for hire) unless the Vessel is released and returned to the possession of
the Owners or the Charterers within sixty (60) days after the requisition for title or compulsory acquisition in question; or
(c)
the capture, seizure, hijacking, theft, condemnation as prize, confiscation or forfeiture of the Vessel (not falling within paragraph (b) of this definition), unless the Vessel is released and returned to the possession of the
Owners or the Charterers within ninety (90) days after the capture, seizure, arrest, detention, hijacking, theft, condemnation as prize, confiscation or forfeiture in question (for the avoidance of confusion, always
excluding any arrest or detention or similar incident through judicial procedures or legal proceedings or, by reason of or in connection with maritime lien or any claim against an Obligor or arising out of or in relation
to the use, operation, maintenance or management of the Vessel or, otherwise caused by or attributable to an Obligor), and for the purpose of this Charter, (i) an actual Total Loss of the Vessel shall be deemed to have
occurred at the date and time when the Vessel was lost but if the date of the loss is unknown the actual Total Loss shall be deemed to have occurred on the date on which the Vessel was last reported, (ii) a constructive
Total Loss shall be deemed to have occurred at the date and time at which a notice of abandonment of the Vessel is given to the insurers of the Vessel and (iii) a compromised, agreed or arranged Total Loss shall be
deemed to have occurred on the date of the relevant compromise, agreement or arrangement.
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"Total Loss Proceeds"
means the proceeds of the Insurances or any other compensation of any description in respect of a Total Loss unconditionally received
and retained by or on behalf of the Owners in respect of a Total
Loss.
"Total Loss Termination"
means a termination of the Charter Period pursuant to the provisions of paragraph (a) of Clause 53 (Total Loss).
"Transaction Documents"
means, together:
(a)
this Charter;
(b)
the MOA;
(c)
the Charter Guarantee;
(d)
any Co-Assured Undertaking;
(e)
the Security Trust Deed; and
(f)
the Security Documents,
and such other documents
as may in good faith be designated as such by the Owners from time to time.
"Unpaid Sum" means any
sum due and payable but unpaid by any Obligor under the Transaction Documents.
"US Dollars", "Dollars",
"USD", "US$" and "$" each means available and freely transferable and convertible funds
in lawful currency of the United States of America.
"Valuation Report" means,
in relation to the Vessel, a valuation report addressed to the Owners and prepared:
(a)
by an Approved Valuer selected by the Owners; and
(b)
assessed in Dollars by a desktop valuation on the basis of a charter-free sale for prompt delivery for cash at arm's length on normal commercial terms as between a willing seller and a willing buyer.
"Value Maintenance Ratio"
means the ratio (expressed as a percentage) of:
(a)
the aggregate amount of the Market Value of the Vessel and any Cash Collateral already provided to restore the Value Maintenance Ratio; to
(b)
the then Outstanding Principal.
"Value Maintenance Threshold"
means the ratio (expressed as a percentage) of one hundred and thirty per cent. (130%).
"Variable Hire" means
in respect of each Hire Period, the interest accrued on the Outstanding Principal for each day during the relevant Hire Period and calculated
on the basis of a year of three hundred sixty (360) days at the
applicable Interest Rate by using the following formula:
15
VH = (A × B / 360)
× C
whereby:
VH = the amount of Variable
Hire for that Hire Period
A = (in relation to the first
Hire Payment Date) the Original Principal; or
(in relation
to any other subsequent Hire Payment Date) the Outstanding Principal on the immediately preceding Hire Payment Date
B = the Interest Rate applicable
to that Hire Period
C = the actual number of days
during that Hire Period.
"Vessel" means the container
ship named "CZECH" as more particularly described in Boxes 5 (Vessel's name, call sign and flag) to 10 (Classification
Society) of this Charter.
"Quiet Enjoyment Letter"
means, in relation to the Vessel, a letter which the Finance Parties (or, if any, their authorised agent on their behalf) shall issue
in favour of the Charterers, such letter to be in a form acceptable to the
Charterers, the Owners and the Finance Parties (each party
acting reasonably) under which the Finance Parties (in the absence of any Termination Event) allow (i) the Charterers' unfettered use
and quiet enjoyment without
interruption of the Vessel in accordance with the terms and conditions of this Charter and (ii) the release
of any mortgage over the Vessel following full payment of the relevant amount owed under this Charter at the relevant
time.
33.
Interpretations
(a)
In this Charter, unless the context otherwise requires, any reference to:
(i)
to this Charter include the Schedules hereto and references to Clauses and Schedules are, unless otherwise specified, references to Clauses of and Schedules to this Charter and, in the case of a Schedule, to
such Schedule as incorporated in this Charter as substituted from time to time;
(ii)
any statutory or other legislative provision shall be construed as including any statutory or legislative modification or re-enactment thereof, or any substitution therefor;
(iii)
the term "Vessel" includes any part of the Vessel, including, without limitation, any scrubbers installed on the Vessel;
(iv)
the "Owners", the "Charterers", the "Charter Guarantor", any "Approved Manager", any "Obligor", any “Sub-charterer”, any "Related Owners", any "Related Charterers", the "Security Trustee", or
any other person include any of their respective successors, permitted assignees and permitted transferees;
(v)
any agreement, instrument or document include such agreement, instrument or document as the same may from time to time by amended, modified, supplemented, novated or substituted;
(vi)
the "equivalent" in one currency (the "first currency") as at any date of an amount in another currency (the "second currency") shall be construed as a reference to the amount of the first currency which
could be purchased with such amount of the second currency at the spot rate of exchange quoted by the Owners at or about 11:00 a.m. two (2) Business Days (being a day other than a Saturday or Sunday on
which banks and foreign exchange markets are generally open for business in Shanghai) prior to such date for the purchase of the first currency with the second currency for delivery and value on such date;
16
(vii)
"hereof", "herein" and "hereunder" and other words of similar import means this Charter as a whole (including the Schedules) and not any particular part hereof;
(viii)
"indebtedness" includes any obligation (whether incurred as principal or as surety) for the payment or repayment of money, whether present or future, actual or contingent;
(ix)
"law" includes common or customary law and any constitution, decree, judgment, legislation, order, ordinance, regulation, rule, statute, treaty or other legislative measure in any jurisdiction or any present or
future directive, regulation, request or requirement, or official or judicial interpretation of any of the foregoing, in each case having the force of law and, if not having the force of law, in respect of which
compliance is generally customary;
(x)
the word "person" or "persons" or to words importing persons include, without limitation, any state, divisions of a state, government, individuals, partnerships, corporations, ventures, government agencies,
committees, departments, authorities and other bodies, corporate or unincorporated, whether having distinct legal personality or not;
(xi)
a "regulation" includes any regulation, rule, official directive (having the force of law) of any governmental, intergovernmental or supranational body, agency, department or of any regulatory authority;
(xii)
the "winding-up", "dissolution", "administration", "liquidation", "insolvency", "reorganisation", "readjustment of debt", "suspension of payments", "moratorium" or "bankruptcy" (and their
derivatives and cognate expressions) of any person shall each be construed so as to include the others and any equivalent or analogous proceedings or event under the laws of any jurisdiction in which such
person is incorporated or any jurisdiction in which such person carries on business;
(xiii)
"protection and indemnity risks" means the usual risks covered by a protection and indemnity association which is a member of the International Group of P&I Club, including pollution risks and the
proportion (if any) of any sums payable to any other person or persons in case of collision which are not recoverable under the hull and machinery policies by reason of the incorporation in them of clause 6 of
the International Hull Clauses (1/11/02 or 1/11/03), clause 8 of the Institute Time Clauses (Hull)(1/10/83) or clause 8 of the Institute Time Clauses (Hulls)(1/11/1995) or the Institute Amended Running Down
Clause (1/10/71) or any equivalent provision;
(xiv)
a Potential Termination Event is "continuing" if it has not been remedied or waived and a Termination Event is "continuing" if it has not been remedied or waived; and
(xv)
words denoting the plural number include the singular and vice versa.
(b)
Headings are for the purpose of reference only, have no legal or other significance, and shall be ignored in the interpretation of this Charter.
(c)
A time of day (unless otherwise specified) is a reference to Beijing time.
34.
Background
(a)
Pursuant to the Head MOA, the Head Sellers agreed to sell, and the Charterers agreed to purchase the Vessel subject to the terms and conditions therein contained.
17
(b)
At the request of the Charterers, the Owners (as buyers) entered into a memorandum of agreement of even date herewith (the "MOA") with the Charterers (as sellers) pursuant to which the Owners have agreed to
purchase, and the Charterers have agreed to sell the Vessel subject to the terms and conditions therein contained.
(c)
The Vessel is ultimately intended for use by the Charterers and the Owners will finance the Charterers' acquisition of the Vessel with the arrangement that the Charterers will repay the Owners pursuant to the terms and
conditions herein.
(d)
Accordingly, the parties hereby agree that this Charter is subject to the effective transfer of ownership of the Vessel to the Owners pursuant to the MOA.
(e)
If, prior to the Actual Delivery Date, in the absence of any Termination Event:
(i)
it becomes unlawful for the Owners (as buyers) to perform or comply with any or all of their obligations under the MOA or any of the obligations of the Owners under the MOA is not or ceases to be legal,
valid, binding and enforceable; or
(ii)
the Head MOA expires, is cancelled, terminated, rescinded or suspended or, otherwise ceases to remain in full force and effect for any reason,
neither party shall be
liable to the other for any claim arising out of this Charter and this Charter shall immediately terminate and be cancelled (with the
exception of Clause 17 (Indemnity) (Part II) and Clause 58
(Further indemnities)) provided (for the avoidance of any doubt)
the Owners shall be entitled to retain the Arrangement Fee and, if the Arrangement Fee has not been paid, the Charterers shall immediately
pay such
amount in full together with interest thereon pursuant to Clause 40(g) (Default Interest).
35.
Delivery
(a)
The Charterers expressly acknowledge and confirm that the Owners entered into the MOA to purchase the Vessel solely for the purpose of leasing the Vessel to the Charterers under this Charter and that the Owners
shall have no obligation or duty whatsoever to survey, investigate or verify the condition or performance of the Vessel. The Charterers shall be responsible to, at the Charterers' costs and expenses, make arrangement to
take physical delivery of the Vessel and all plans, drawings, manuals, technical documents, and certificates pertaining to the Vessels.
(b)
The Owners will deliver and the Charterers will take delivery of the Vessel under this Charter immediately, which to the extent possible shall be deemed to take place simultaneously, after the Sellers deliver the Vessel
to the Owners under and subject to the terms of the MOA upon the Actual Delivery Date, subject to which, the Charterers will accept the Vessel on an "as is where is" basis on delivery under this Charter.
(c)
Notwithstanding anything to the contrary in this Charter and the MOA, the obligation of the Owners to purchase the Vessel from the Sellers and charter the Vessel to the Charterers pursuant to this Charter shall be
subject to the following conditions:
(i)
no Termination Event having occurred on or prior to the date of this Charter or the Actual Delivery Date;
(ii)
the representations and warranties referred to in Clause 47 (Charterers' representations and warranties) being true and correct on the date of this Charter and the Actual Delivery Date;
18
(iii)
the Actual Delivery Date falls on or before the Cancellation Date (or such later date as may be agreed between the Owners (as buyers under the MOA) and Sellers; and
(iv)
the Owners shall have received, or are satisfied that they will receive, the documents and evidence referred to in Clause 36 (Conditions precedent and conditions subsequent), in each case in all respects in form
and substance satisfactory to them on or before the Actual Delivery Date.
(d)
Provided that the conditions referred to in paragraph (c) above have been fulfilled or waived to the satisfaction of the Owners (which shall be evidenced in writing by the Owners), the Owners and the Charterers agree
that:
(i)
the Charterers shall, at their own expense, upon the Actual Delivery Date arrange for the Vessel to be registered in the name of the Owners under the Liberian flag and duly create and register a Financing
Charter over the Vessel in favour of the Owners under the Liberian law as security for the obligations of the Obligors in connection with the Transaction Documents;
(ii)
the acceptance by the Owners of the Vessel under the MOA shall constitute delivery of the Vessel to the Charterers under this Charter and the Charterers shall have no right to refuse acceptance of delivery of
the Vessel under this Charter and such acceptance shall constitute,
(A)
irrevocable, final and conclusive acceptance of the Vessel by the Charterers for all purposes of this Charter;
(B)
irrevocable, final and conclusive evidence that, for the purposes of the obligations and liabilities of the Owners hereunder or in connection herewith, the Vessel is at the time of delivery to the
Charterers seaworthy, in accordance with the provisions of this Charter, in good working order and repair and without defect or inherent vice whether or not discoverable by the Charterers and free
and clear of all Security Interest and debts of whatsoever nature; and
(C)
irrevocable, final and conclusive evidence that the Vessel is satisfactory in all respects and complies with the requirements of this Charter; and
(iii)
the acceptance of delivery of the Vessel by the Charterers from the Owners pursuant to this Charter shall take place simultaneously with the acceptance of delivery of the Vessel by the Owners from the Sellers
pursuant to the MOA;
(iv)
the Charterers will accept (without reservation) the Vessel:
(A)
on an "as is where is" basis in exactly the same form and state as the Vessel is delivered to the Owners pursuant to the MOA;
(B)
in such form and state with any faults, deficiencies and errors of any description; and
(C)
for the avoidance of doubt, no underwater inspection shall be performed at the time of commencement of this Charter on the basis that any repairs required at the next scheduled dry-docking are the
responsibility of the Charterers;
(v)
Notwithstanding and without prejudice to the foregoing, the Owners and the Charterers nonetheless agree to enter into and execute the PDA on Delivery.
19
(e)
The Charterers acknowledge and agree that the Owners are not the manufacturer or original supplier of the Vessel which has been purchased by the Owners pursuant to the MOA, and have therefore made no
representations or warranties in respect of the Vessel or any part thereof, and hereby waive all their rights in respect of any warranty or condition implied (whether statutory or otherwise) on the part of the Owners and
all claims against the Owners howsoever the same might arise at any time in respect of the Vessel, and/or arising out of the construction, operation or performance of the Vessel and the chartering thereof under this
Charter (including, without limitation, in respect of the seaworthiness or otherwise of the Vessel).
(f)
In particular, and without prejudice to the generality of paragraph (e) above, the Owners shall be under no liability whatsoever, howsoever arising, in respect of the injury, death, loss, damage or delay of or to or in
connection with the Vessel or any person or property whatsoever, whether onboard the Vessel or elsewhere, and irrespective of whether such injury, death, loss, damage or delay shall arise from the unseaworthiness of
the Vessel. For the purpose of this paragraph (f), "delay" shall include delay to the Vessel (whether in respect of delivery under this Charter or thereafter and any other delay whatsoever).
36.
Conditions precedent and conditions subsequent
(a)
Initial Conditions
Notwithstanding anything
to the contrary in this Charter or the MOA, the performance by the Owners of any of the obligations of under this Charter and the MOA
(including, without limitation to, preposition or
payment of the MOA Purchase Price (or a part hereof) under the MOA) are subject to and
conditional upon the Owners' receipt of following documents and evidence (in each case in form and substance acceptable to
the Owners)
prior to or contemporaneously with the execution of this Charter (or such other date as the Owners and the Charterers may agree):
(i)
the following documents duly executed by the parties thereto:
(A)
this Charter;
(B)
the MOA;
(C)
the Charter Guarantee;
(D)
the Security Trust Deed; and
(E)
the Share Security,
each together with
all documents required by any of them, including without limitation to the original Certificate of Limited Liability Company Interest
and other ancillary documents required under the Share
Security (or, in case the Actual Delivery Date would occur within ten (10) Business
Days of the date of this Charter, undertaking that the original certificate and documents shall be delivered to the Owners
within ten
(10) Business Days of the date hereof);
(ii)
the following documents in relation to each Obligor which is a party to the documents listed in above paragraph (i):
(A)
Copies of its constitutional documents including Certificate of Incorporation, Business Registration Certificate, Memorandum and Articles of Association (or equivalent in its place of incorporation);
(B)
Certificate of Goodstanding or other certification or documents of similar nature dated on or around the date of this Charter;
20
(C)
Certificate of Incumbency issued by relevant authority or company secretary or registered agent (as the case may be) dated on or around the date of this Charter showing its members/shareholders,
directors and officers;
(D)
Resolutions of the board of directors and/or resolutions of shareholders/members (whichever is applicable), approving the execution of this Charter and any other Transaction Document to which it is
a party and authorizing a person or persons to execute the same under seal (where appropriate), and any other notices and documents required in connection therewith;
(E)
Power of attorney of each person authorised to execute on its behalf this Charter and any other Transaction Document to which it is a party; and
(F)
Certificate of Director or Company Secretary dated the date of this Charter certifying that each copy document relating to it specified in this paragraph (ii) is correct, complete and in full force and
effect and setting out the names of its directors, officers and shareholders and the proportion of shares held by each shareholder and the specimen signature(s) of each of the directors, officers and (if
power of attorney is granted) the persons authorised under the power of attorney.
(iii)
evidence satisfactory to the Owners that:
(A)
the Registration Costs and the Arrangement Fee have been paid in full;
(B)
on or immediately after the Actual Delivery Date,
(1)
the Vessel will be registered in the name of the Owners; and
(2)
a Financing Charter over the Vessel granted by the Charterers in favour of the Owners will be duly registered with the Liberian ship registry;
(C)
the Vessel is or will on the Actual Delivery Date insured in the manner required by the Transaction Documents.
The conditions precedent
set out in paragraph (a) are for the sole benefit of the Owners and may be waived by the Owners in whole or in part, with or without conditions,
without prejudicing the right of the Owners to
require fulfilment of such conditions in whole or in part at any time thereafter.
(b)
Conditions Precedent
Notwithstanding anything
to the contrary in this Charter, the obligations of the Owners to charter the Vessel to the Charterers under this Charter are subject
to and conditional upon the Owners' receipt of following
documents and evidence (in each case in form and substance acceptable to the
Owners) on or before the Actual Delivery Date:
(i)
each of the following:
(A)
copies of the duly executed:
(1)
Charterers' Assignment;
(2)
Manager's Undertakings,
21
(3)
any Co-Assured Undertaking (if applicable); and
(4)
any other Security Documents (if any),
each together with
all documents required by any of them (other than the documents set out in paragraph (d) of this Clause 36) including, without limitation,
all notices of assignment and/or charge;
and
(B)
(if applicable) the duly executed Finance Document to which the Obligors are parties, together with all notices, consents, letters and other documents required to be received (in each case in form and
substance acceptable to the Owners and the Finance Parties) other than the documents set out in paragraph (d) of this Clause 36;
(ii)
the following documents in relation to the Charterers:
(A)
Certificate of Goodstanding or other certification or documents of similar nature dated on or around the Actual Delivery Date; and
(B)
Certificate of Director or Company Secretary dated the Actual Delivery Date certifying that none of the documents and evidence delivered to the Owners pursuant to Clause 36(a) (Initial Conditions)
has been amended, modified or revoked in any way since its delivery to the Owners; and
(iii)
if applicable, copies of all governmental and other consents, licences, approvals and authorisations as may be necessary to authorise the performance by each of the Obligors of its obligations under the
Transaction Documents to which it or he is, or (as the case may be) will be a party, and the execution, validity and enforceability of such Transaction Documents;
(iv)
a copy of the following:
(A)
the current Document of Compliance (DOC) under the ISM Code of the Approved Manager with respect to technical management of the Vessel; and
(B)
the Ship Management Agreement;
in each case together
with all addenda, amendments or supplements;
(v)
not later than two (2) Business Days prior to the Actual Delivery Date, evidence that:
(A)
the Initial Sub-Charter Novation Agreement has been duly executed by all parties thereto;
(B)
all fees, costs and expenses due from the Charterers under the MOA and/or Clause 55 (Fees and expenses) have been paid or will be paid by the Actual Delivery Date;
(C)
letters of undertaking (together with attachments) from relevant insurers in respect of Insurances as required by the Charterers’ Assignment will, on or immediately after the Actual Delivery Date, be
duly executed in the agreed forms and delivered to the Security Trustee; and
(D)
all notices, consents, acknowledgements and other documents required to be received, given or exchanged pursuant to the Transaction Documents having been duly executed and delivered pursuant to
the terms thereof.
22
(vi)
a legal opinion of the legal advisers to the Owners in each relevant jurisdiction (being England, the Marshall Islands and the Republic of Liberia as at the date of this Charter), or confirmation satisfactory to the
Owners that such an opinion will be given in such form and substance satisfactory to the Owners;
(vii)
such documentation and other evidence as is reasonably requested by the Owners in order for them to comply with all necessary "know your customer" or similar identification procedures in relation the
transactions contemplated in the Transaction Documents; and
(viii)
such other consent, licence, approval, authorisation or other document, opinion or assurance which the Owners consider to be necessary or desirable in connection with their entry into and performance of the
transactions contemplated by any of the Transaction Documents or for the validity and enforceability thereof (including, without limitation in relation to or for the purposes of any financing by the Owners),
provided that if the
Owners (as buyers) have already received documents corresponding to the above provided by the Sellers (as sellers) pursuant to the MOA,
this shall pro tanto satisfy the Charterers' obligation to
provide the same documents under this Clause 36(b).
(c)
Owners Right to Waive
If the Owners in their
sole discretion agree to deliver the Vessel under this Charter to the Charterers before all of the documents and evidence required under
paragraph (a) (Initial Conditions) or (b) (Conditions
Precedent) of this Clause 36 have been delivered to or to the order
of the Owners, the Charterers undertake to deliver all outstanding documents and evidence to or to the order of the Owners no later than
ten (10)
Business Days after the Actual Delivery Date or such other later date as specified by the Owners, acting in their sole discretion.
The delivery of the Vessel by the Owners to the Charterers under this Charter shall not,
unless otherwise notified by the Owners (acting
in their sole discretion) to the Charterers in writing, be taken as a waiver of the Owners' right to require production of all the documents
and evidenced required by this
Clause 36.
(d)
Conditions Subsequent
Without prejudice to
the foregoing, the Charterers undertake to deliver or cause to be delivered to the Owners, the following documents and evidence (in each
case in form and substance acceptable to the Owners):
(i)
within three (3) Business Days from the Actual Delivery Date:
(A)
the letters of undertaking (together with attachments) from relevant insurers (or by the brokers through whom the Insurances are placed, or, in the case of entries in protection and indemnity or war
risks associations, by their managers) in respect of Insurance as required under this Charter, the Charterers’ Assignment and the Manager’s Undertaking, in each case, in such form and substances in
compliance with the requirements of the relevant Transaction Documents; and
(B)
evidence that notice of assignment in respect of the Initial Sub-Charter required under the Charterers' Assignment has been served to the Initial Sub-Charterers and, the written acknowledgement
thereof by the Initial Sub-Charterers, in each case, in such form and substances in compliance with the requirements of the Charterers' Assignment;
(ii)
within three (3) Business Days from the Actual Delivery Date, the following certification with respect to the Vessel (showing the Owners as the owner of the Vessel):
23
(A)
the Vessel's Safety Management Certificate (as such term is defined pursuant to the ISM Code);
(B)
the Vessel's ISSC; and
(C)
the Vessel's IAPPC;
(iii)
within ten (10) Business Days from the Actual Delivery Date, the originals of the Transaction Documents and other documents set out in Clauses 36(a) and 36(b) and the originals of the sellers' delivery
documents set out in schedule 1 (Seller's Delivery Documents) of the MOA; and
(iv)
within two (2) months of the Actual Delivery Date,
(A)
the duly executed Account Security;
(B)
evidence that notice of charge required under the Account Security has been served to the Account Bank and, the written acknowledgement thereof by the Account Bank in such form and substance
satisfactory to the Owners; and
(C)
a Dutch law legal opinion of the legal advisers to the Owners in respect of the Account Security.
Notwithstanding anything
to the contrary in this Charter, the obligations of the Owners to charter, or continue to charter, the Vessel to the Charterers under
this Charter shall be subject to the condition that any and all
undertakings stipulated in the preceding paragraph are, and will be, fully
complied with.
37.
Bunkers and luboils
(a)
At delivery the Charterers shall take over and pay for all lubricating oil, hydraulic oil, greases, water and unbroached stores and provisions in the Vessel in accordance with the Head MOA.
(b)
In the case the Vessel shall be redelivered to the Owners, at delivery the Charterers shall be responsible to arrange, pay for and deliver to the Owners all bunkers (to the extent belonging to the Charterers), lubricating
oil, hydraulic oil, greases, water and unbroached stores and provisions in the Vessel and, the Owners shall take over at no costs all such bunkers (to the extent belonging to the Charterers), lubricating oil, hydraulic oil,
greases, water and provisions onboard the Vessel.
38.
Further maintenance and operation
(a)
The good commercial maintenance practice under Clause 10 (Maintenance and Operation) (Part II) of this Charter shall be deemed to include:
(i)
the maintenance and operation of the Vessel by the Charterers in accordance with:
(A)
the relevant regulations, requirements and recommendations of the Classification Society and free of all overdue recommendations and requirements from the Classification Society;
(B)
the relevant regulations, requirements and recommendations of the country and flag of the Vessel's registry;
24
(C)
any applicable IMO regulations (including but not limited to the ISM Code, the ISPS Code and MARPOL);
(D)
all other applicable regulations, requirements and recommendations; and
(E)
the Charterers' and the Charter's Guarantor's operations and maintenance standards;
(ii)
the maintenance and operation of the Vessel by the Charterers taking into account:
(A)
engine manufacturers' recommended maintenance and service schedules;
(B)
builder's operations and maintenance manuals; and
(iii)
recommended maintenance and service schedules of all installed equipment and pipework.
(b)
In addition to the above, the Charterers covenant with the Owners to provide, upon request, copies of the Vessel's class records, plans and drawing and all technical documents to the Owners as available to the
Charterers.
(c)
The title to any equipment (or part thereof):
(i)
placed on board as a result of operational requirements of the Charterers (whether due to the Charterers' requirement or by reason of new class requirements or compulsory legislation applicable to the Vessel)
shall automatically be deemed to belong to the Owners immediately upon such placement, and such equipment may only be removed: (i) with the Owners' prior written consent (such consent not to be
unreasonably withheld), (ii) at the Charterers' own expense, and (iii) without damage to the Vessel; and
(ii)
replaced, renewed or substituted shall remain with the Owners until the part or equipment which replaced it or the new or substitute part or equipment becomes property of the Owners.
(d)
Without prejudice to any other provisions under this Charter, the Charterers shall maintain, use and operate the Vessel with commercially reasonable care as if the Charterers were the owner of the same.
39.
Structural changes and alterations
(a)
The Charterers shall make no structural changes in the Vessel or changes in the machinery, engines, appurtenances or spare parts thereof without in each instance first securing the Owners' written consent thereto (such
consent not to be unreasonably withheld). Under any and all circumstances, the Charterers shall procure that:
(i)
any such changes do not have a material adverse effect on the Vessel's certification or the Vessel's fitness for purpose; and
(ii)
the Charterers shall bear all time, costs and expenses in relation to any such changes; and
(iii)
none of the changes will diminish the value of the Vessel and/or have a material adverse effect on the safety, performance, value or marketability of the Vessel.
If a Termination Event
occurs and is continuing and the Owners exercise their right to retake possession of the Vessel pursuant to Clause 49(f) (Owners' rights
reserved), the Charterers shall, without prejudice to their
obligations under Clause 43 (Redelivery conditions), at their expense
restore the Vessel to its former condition if so requested by the Owners (fair wear and tear excepted) unless the changes made are carried
out:
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(i)
with the prior written consent of the Owners (such consent not to be unreasonably withheld); or
(ii)
to improve the performance, operation or marketability of the Vessel; or
(iii)
as a result of mandatory law or a regulatory compliance.
(b)
Notwithstanding anything to the contrary in this Charter, no prior approval shall be required for any structural changes or other changes described in paragraph (a) of this Clause 39 which are carried out (i) as a result
of mandatory law or regulatory compliance, or (ii) to improve the performance, operation or marketability of the Vessel in each case, at the Charterers’ time and cost and for which written notice shall be provided to
the Owners upon such structural change.
(c)
Any improvement, structural changes or new equipment becoming necessary for the continued operation of the Vessel by reason of new class requirements or by compulsory legislation shall be undertaken by the
Charterers and be for the Charterers' account and the Charterers shall not have any right to recover from the Owners any part of the cost for such improvements, changes or new equipment either during the Charter
Period or at redelivery of the Vessel. The Charterers shall give written notice to the Owners of any such improvement, structural changes or new equipment.
40.
Hire
(a)
Hire In consideration of the Owners' agreement to charter the Vessel to the Charterers pursuant to the terms hereof, the Charterers shall pay to the Owners:
(x)
on each and every Hire Payment Date, the Hire applicable to each such Hire Payment Date; and
(y)
on the last day of the Charter Period, the Purchase Obligation Price.
(b)
Time of payment The Hire shall be paid by the Charterers and received by the Owners on each Hire Payment Date (Beijing time).
(c)
Non-Business Days Any payment provided herein due on any day which is not a Business Day shall be payable on the immediately preceding Business Day.
(d)
Payment account information All payments under this Charter shall be made to the Owners' Account or such other account as the Owners may notify the Charterers from time to time.
(e)
Charterers' Hire payment obligation absolute: Following delivery of the Vessel to, and acceptance by, the Charterers under this Charter, the Charterers' obligation to pay Hire in accordance with this Clause 40 and to
pay the Purchase Obligation Price in accordance with Clause 52 (Transfer of Title) shall be absolute irrespective of any contingency whatsoever including but not limited to:
(i)
any set-off, counterclaim, recoupment, defence or other right which either party to this Charter may have against the other;
(ii)
any unavailability of the Vessel, for any reason, including but not limited to the Total Loss, any action or inaction by the Sub-Charterer, seaworthiness, condition, design, operation, merchantability or fitness
for use or purpose of the Vessel or any apparent or latent defects in the Vessel or its machinery and equipment or the ineligibility of the Vessel for any particular use or trade or for registration of
documentation under the laws of any relevant jurisdiction or lack of registration or the absence or withdrawal of any consent required under the applicable law of any relevant jurisdiction for the ownership,
chartering, use or operation of the Vessel or any damage to the Vessel;
26
(iii)
any failure or delay on the part of either party to this Charter, whether with or without fault on its part, in performing or complying with any of the terms, conditions or other provisions of this Charter;
(iv)
any damage to or loss (including a Total Loss), destruction, capture, seizure, judicial attachment or arrest, forfeiture or marshal's or other sale of the Vessel;
(v)
any insolvency, bankruptcy, reorganisation, arrangement, readjustment of debt, dissolution, administration, liquidation or similar proceedings by or against the Owners, the Charterers or any Sub-Charterer, or
any change in the constitution of the Owners, the Charterers or the Sub-Charterer;
(vi)
any invalidity or unenforceability or lack of due authorisation of or any defect in this Charter or any Sub-Charter; or
(vii)
any other cause which would but for this provision have the effect of terminating or in any way affecting the obligations of the Charterers hereunder,
it being the intention of the parties that
the provisions of this Clause 40, and the obligation of the Charterers to pay Hire and all other amounts under this Charter, shall (save
as expressly provided in this Clause 40)
survive any frustration and that, save as expressly provided in this Charter, no moneys paid
under this Charter by the Charterers to the Owners shall in any event or circumstance be repayable to the Charterers.
(f)
All payments free from deductions
(i)
All payments of Hire and all other Unpaid Sums to the Owners pursuant to this Charter and the other relevant Transaction Documents shall be made in immediately available funds in US dollars, free and clear
of, and without deduction for or on account of, any bank charges or Taxes, unless the Charterers are required by law or regulation to make any such payment of Hire subject to such Taxes.
(ii)
In the event that the Charterers are required by any law or regulation to make any deduction or withholding on account of any Taxes which arise as a consequence of any payment due under this Charter, then:
(A)
the Charterers shall notify the Owners promptly after they become aware of such requirement;
(B)
the Charterers shall remit the amount of such Taxes to the appropriate taxation authority within five (5) Business Days or any other shorter time period as required under any applicable law or
regulation and in any event prior to the date on which penalties attach thereto; and
(C)
such payment shall be increased by such amount as may be necessary to ensure that the Owners receive a net amount which, after deducting or withholding such Taxes, is equal to the full amount
which the Owners would have received had such payment not been subject to such Taxes.
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(iii)
The Charterers shall forward to the Owners evidence reasonably satisfactory to the Owners that any such Taxes have been remitted to the appropriate taxation authority within thirty (30) days of the expiry of
any time limit within which such Taxes must be so remitted or, if earlier, the date on which such Taxes are so remitted.
(g)
Default interest If the Charterers fail to pay any amount payable by it under a Transaction Document on its due date, interest shall accrue on the Unpaid Sum from the due date up to the date of actual payment (both
before and after judgment) at a rate of the Default Interest Rate over the amount of such Unpaid Sum for the period of such non-payment. Any interest accruing under this paragraph (g) shall be immediately payable by
the Charterers on demand by the Owners. Default interest (if unpaid) arising on an Unpaid Sum will be compounded with the Unpaid Sum at the end of each period selected by the Owners but will remain immediately
due and payable.
(h)
Hire payment obligation to survive termination In the event that this Charter is terminated for whatever reason, the Charterers' obligation to pay Hire and such other Unpaid Sum which (in each case) has accrued due
before, and which remains unpaid, at the date of such termination shall continue notwithstanding such termination.
(i)
Illegality In the event that it becomes unlawful or it is prohibited for either the Owners or the Charterers to charter the Vessel pursuant to this Charter, then the Owners and Charterers shall notify the other party of the
relevant event and negotiate in good faith for a period of thirty (30) days from the date of the receipt of the relevant notice by the other party (or such shorter period as required by the relevant laws) to agree an
alternative arrangement. If such agreement is not reached within such thirty (30)-day period or such shorter period as applicable, the Charterers agree that, in such circumstances, the Owners shall have the right to
terminate this Charter by delivering to the Charterers a Termination Notice, whereupon the Charterers shall be obliged to pay to the Owners the Termination Sum in accordance with paragraph (c) (Payment of
Termination Sum) of Clause 49 (Termination Events). Upon payment of the Termination Sum in full, the Owners shall transfer the title to the Charterers in accordance with Clause 52 (Transfer of title).
(j)
Increased Costs
(i)
Subject to sub-paragraphs (iii) and (iv) below, the Charterers shall, within three (3) Business Days of a demand by the Owners, pay to the Owners the amount of any Increased Costs incurred by the Owners as
a result of (i) the introduction of or any change in (or in the interpretation, administration or application of) any law or regulation made after the date of this Charter, or (ii) compliance with any law or
regulation made after the date of this Charter.
In this Clause:
"Increased
Costs" means:
(A)
a reduction in the rate of return from the Hire or on the Owners' overall capital;
(B)
an additional or increased cost; or
(C)
a reduction of any amount due and payable under any Transaction Document,
which is incurred
or suffered by the Owners to the extent that it is attributable to the Owners having entered into any Transaction Document or funding
or performing its obligations under any Transaction
Document.
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(ii)
The Owners shall notify the Charterers of any claim arising from sub-paragraph (i) above (and of the event giving rise to such claim). The Owners shall, as soon as practicable after having made a demand in
respect of such claim, provide a certificate confirming the amount of its Increased Costs.
(iii)
Sub-paragraph (i) above does not apply to the extent any Increased Costs is:
(A)
compensated for by a payment made under sub-paragraph (i)(C) above; or
(B)
attributable to a change in the rate of tax on the overall net income of the Owners (or a parent company of them) or an item covered by the additional payment in Clause 40(e) or a FATCA Deduction;
or
(C)
attributable to the wilful breach by the Owners of any law or regulation.
(iv)
In the event the Owners are entitled to an Increased Cost pursuant to the preceding provisions, the Parties shall negotiate in good faith for a period of thirty (30) days from the date of the receipt of the Owners'
demand for the Increased Cost to agree an alternative arrangement. If such agreement is not reached within such thirty (30)-day period, the Charterers may notify the Owners in writing of their intention to
terminate this Charter. Upon the Owners' receipt of the aforesaid Charterers' written notice of their intention to terminate, without prejudice to the Owners' entitlement to any Increased Cost prior to the
Termination Payment Date, the Owners shall within (30) days of its receipt of such notice by the Charterers, terminate this Charter by delivering to the Charterers a Termination Notice, whereupon the
Charterers shall be obliged to pay to the Owners the Termination Sum in accordance with paragraph of Clause 49(c) (Payment of Termination Sum). Upon payment of the Termination Sum in full, the Owners
shall transfer the title to the Charterers in accordance with Clause 52 (Transfer of title).
(k)
Break Costs The Charterers shall, within five (5) Business Days of demand by the Owners, pay to the Owners their Break Costs.
(l)
Unavailability of Term SOFR
(i)
Interpolated Term SOFR: If no Term SOFR is available for any Hire Period, the applicable Reference Rate shall be the Interpolated Term SOFR for three (3) months.
(ii)
Cost of funds: If sub-paragraph (i) above applies but it is not possible to calculate the Interpolated Term SOFR for that Hire Period, the Interest Rate applicable for that Hire Period shall be the percentage rate
per annum which is the sum of:
(A)
the Margin; and
(B)
the rate notified to the Charterers by the Owners which expresses as a percentage rate per annum as the Owners' cost of funds relating to the Outstanding Principal from whatever source it may
reasonably select.
(m)
Certificate conclusive Any certificate or statement signed by an authorised signatory of the Owners purporting to show the amount of the Debt (or any part of the Debt) or any other amount referred to in any Transaction
Document shall, save for manifest error or on any question of law, be conclusive evidence as against the Charterers of that amount.
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41.
Insurance
(a)
Charterers' obligation to place insurance During the Agreement Term, the Charterers shall at their expense keep the Vessel insured against fire and usual marine risks (including hull and machinery, excess and
increased value risks), oil pollution liability risks, war risks (including blocking and trapping and additional premium for war risks), protection and indemnity risks and any other risks against which is compulsory to
insure for the operation for the Vessel or in the Owners' reasonable opinion it is common market practice to insure for the operation, trading, management and/or for safety purposes for the Vessel in such market (but
excluding loss of hire insurance)and all Insurances shall be:
(i)
in US Dollars; and
(ii)
in such market and on such terms as are customary for owners of similar tonnage.
(b)
Beneficiaries of Insurances Such insurances shall be arranged by the Charterers to protect the interests of the Owners, the Charterers and (if any) the mortgagee of the Vessel or such other relevant Finance Party, and
the Charterers shall be at liberty to protect under such insurances the interests of (i) any Approved Managers provided the Approved Manager shall first execute and deliver to the Owners the Manager’s Undertaking
and/or (ii) any crewing agent provided the crew agent shall first execute and deliver to the Owners a Co-Assured Undertaking substantially in the Agreed Form.
(c)
Scope of insurance Insurance policies shall cover the Owners, the Charterers and (if any) the Finance Parties according to their respective interests. The Charterers shall effect all insured repairs and shall undertake
settlement and reimbursement from the Approved Insurer of all costs in connection with such repairs as well as insured charges, expenses and liabilities to the extent of coverage under the insurances herein provided
for.
(d)
Repairs etc. not covered by Insurances The Charterers shall also remain responsible for and to effect repairs and settlement of costs and expenses incurred thereby in respect of all other repairs not covered by the
insurances and/or not exceeding any possible franchise(s) or deductibles provided for in the insurances
(e)
H&M and war risks coverage The Charterers shall arrange that, the hull and machinery and war risks (including blocking and trapping and additional premium for war risks) insurance shall be at any time in an
amount not less than one hundred ten per cent. (110%) of the higher of (x) the Outstanding Principal applicable as at the relevant time and (y) the latest Market Value of the Vessel (the "Minimum Insured Value").
The terms of the hull
and machinery insurance and the identity of the Approved Insurer shall be acceptable to the Owners and (if any) the Finance Parties (such
acceptance not to be unreasonably withheld or delayed).
(f)
Protection and indemnity coverage The Vessel shall be entered with China P&I Club or in a P&I Club which is a member of the International Group Association on customary terms, shall include freight, demurrage
and defence cover and shall be covered against liability for pollution claims in an amount not less than the highest level of cover from time to time available under basic protection and indemnity club entry (currently
US$1,000,000,000).
(g)
Named assureds, no alteration to terms of Insurances and insurance report The Charterers:
(i)
undertake to place the Insurances in such markets, in such currency, on such terms and conditions, and with such brokers, underwriters and associations as are customary for owners of similar tonnage and are
satisfactory to the Owners;
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(ii)
shall name the Owners, the Charterers, the Approved Managers (provided the same is assigned in favour of the Security Trustee) and its crewing agent (provided the Co-Assured Undertaking shall have been
delivered to the Owners) and if requested in writing by the Owners, any of the Finance Parties as the only named assureds;
(iii)
shall not alter the terms of any of the Insurances nor allow any person to be co-assured under any of the Insurances without the prior written consent of the Owners (such consent not to be unreasonably
withheld or delayed) and, if applicable, the Finance Parties, and will supply the Owners and, if applicable, the Finance Parties or procure that the Owners and, if applicable, the Finance Parties are supplied
from time to time on request with such information as the Owners and, if applicable, any Finance Party may in their discretion require with regard to the Insurances and the brokers, underwriters or
associations through or with which the Insurances are placed; and
(iv)
shall reimburse within ten (10) Business Days of demand, not more than once per calendar year during the Agreement Term, the Owners and/or (if applicable) any finance Party for all documented costs and
expenses reasonably incurred by the Owners and/or such Finance Party in obtaining a report on the adequacy of the Insurances from an insurance adviser instructed by the Owners and/or such Finance Party.
(h)
Payment of Premiums etc. The Charterers undertake duly and punctually to pay all premiums, calls and contributions, and all other sums at any time payable in connection with the Insurances, and, at their own
expense, to arrange and provide any guarantees from time to time required by any protection and indemnity or war risks association. From time to time upon the Owners' request, the Charterers shall provide the
Owners with (i) copies of all invoices issued by the brokers, underwriters or associations in respect of such premiums calls, contributions and other sums, and (ii) evidence satisfactory to the Owners and/or such
Finance Party that such premiums, calls, contributions and other sums have been duly and punctually paid; that any such guarantees have been duly given; and that all declarations and notices required by the terms of
any of the Insurances to be made or given by or on behalf of the Charterers to brokers, underwriters or associations have been duly and punctually made or given. Without prejudice to the generality of the foregoing, if
the insurers of the war risks insurance require payment of premiums and/or calls because the Vessel is within, or is due to enter and remain within, any area or areas which are specified by such insurers as being subject
to additional premiums because of War Risks, then the Charterers shall be obligated to procure the Insurances shall cover war risks areas subject to additional premium or call and such premiums and/or calls shall be
paid and borne by the Charterers.
(i)
Compliance with Insurances The Charterers will comply in all respects with all terms and conditions of the Insurances and will make all such declarations to brokers, underwriters and associations as may be required
to enable the Vessel to operate in accordance with the terms and conditions of the Insurances. The Charterers will not do, nor permit to be done, any act, nor make, nor permit to be made, any omission, as a result of
which any of the Insurances may become liable to be suspended, cancelled or avoided, or may become unenforceable, or as a result of which any sums payable under or in connection with any of the Insurances may be
reduced or become liable to be repaid or rescinded in whole or in part. In particular, but without limitation, the Charterers will not permit the Vessel to be employed other than in conformity with the Insurances without
first taking out additional insurance cover in respect of that employment and, if applicable, the Finance Parties, and the Charterers, upon request, will promptly notify the Owners and, if applicable, the Finance Parties
of any new requirement imposed by any broker, underwriter or association in relation to any of the Insurances.
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(j)
Renewal of Insurances The Charterers will, no later than ten (10) Business Days before the expiry of any of the Insurances renew them and shall immediately give the Owners and, if applicable, the Finance Parties
such details of those renewals to the Owners' and, if applicable, the Finance Parties' satisfaction.
(k)
Delivery of documents relating to Insurances The Charterers shall:
(i)
upon the Owners' request, deliver to the Owners and, if applicable, the Finance Parties copies of all policies, certificates of entry (endorsed with the appropriate loss payable clauses as may be required by the
Owners and the Finance Parties from time to time) and other documents relating to the Insurances (including, without limitation, receipts for premiums, calls or contributions); and
(ii)
procure that letters of undertaking (in such form and substance as are customary for the market) shall be issued to the Owners and, if applicable, the Finance Parties by the brokers through which the
Insurances are placed (or, in the case of protection and indemnity or war risks associations, by their managers).
(l)
Fleet cover If the Vessel is at any time during the Agreement Term insured under any form of fleet cover, the Charterers shall procure that those letters of undertaking contain confirmation that the brokers, underwriters
or association (as the case may be) will not set off claims relating to the Vessel against premiums, calls or contributions in respect of any other vessel or other insurance, and that the insurance cover of the Vessel will
not be cancelled by reason of non-payment of premiums, calls or contributions relating to any other vessel or other insurance. Failing receipt of those confirmations, the Charterers will instruct the brokers, underwriters
or association concerned to issue a separate policy or certificate for the Vessel.
(m)
Provision of information on casualty, accidents or damage The Charterers shall promptly notify the Owners and upon request, provide the Owners with sufficient information regarding any casualty or other accident
or damage to the Vessel, detention of the Vessel or any Environmental Incident including, without limitation, any material communication with all parties involved in case of a claim under any of the Insurances,
provided such casualty, accident, damage, detention of the Vessel or Environmental Incident exceeds the Threshold Amount.
(n)
Step-in rights of Owners and Finance Parties The Charterers agree that, at any time after the occurrence of a Termination Event which is continuing, the Owners and, if applicable, the Finance Parties shall be entitled
to:
(i)
collect, sue for, recover and give a good discharge for all claims in respect of any of the Insurances;
(ii)
to pay collecting brokers the customary commission on all sums collected in respect of those claims;
(iii)
to compromise all such claims or refer them to arbitration or any other form of judicial or non-judicial determination; and
(iv)
otherwise to deal with such claims in such manner as the Owners and, if applicable, the Finance Parties shall in their discretion think fit.
(o)
Total loss insurance proceeds Whether or not a Termination Event shall have occurred, the proceeds of any claim under any of the Insurances in respect of a Total Loss shall be paid and applied in accordance with
Clause 53 (Total Loss).
(p)
Payment of insurance proceeds
(i)
The Owners agree that any amounts which may become due and payable to the Charterers under any protection and indemnity entry shall be paid to the Charterers to reimburse the Charterers for, and in
discharge of, the loss, damage or expense in respect of which they shall have become due, unless, at the time the amount in question becomes due, a Termination Event shall have occurred and be continuing,
in which event the Owners shall be entitled to receive the amounts in question and to apply them either in reduction of the Termination Sum owed by the Charterers pursuant to paragraph (c) of Clause 49
(Termination Events) or, at the option of the Owners, to the discharge of the liability in respect of which they were paid. For the avoidance of doubt, any amount which may become due and payable to the
Owners under any protection and indemnity entry or insurance shall be paid to the Owners or to the Owners' order.
32
(ii)
Without prejudice to the forgoing and subject to the terms of the Finance Documents (if any), all claims (other than in respect of a Total Loss) in relation to other Insurances, shall, unless and during the
occurrence of a continuing Termination Event, in which event all claims under the relevant policy shall be payable directly to the Owners, be payable as follows:
(A)
a claim in respect of any one casualty where the aggregate claim against all Approved Insurers does not exceed the Threshold Amount, prior to adjustment for any franchise or deductible under the
terms of the relevant policy, shall be paid directly to the Charterers (as agent for the Owners) for the repair, salvage or other charges involved or as a reimbursement if the Charterers fully repaired the
damage to the satisfaction of the Owners (acting reasonably) and paid all of the salvage or other charges;
(B)
a claim in respect of any one casualty where the aggregate claim against all Approved Insurers exceeds the Threshold Amount prior to adjustment for any franchise or deductible under the terms of
the relevant policy, shall, subject to the prior written consent of the Owners (such consent not to be unreasonably withheld or delayed), be paid to the Charterers as and when the Vessel is restored to
her former state and condition and the liability in respect of which the insurance loss is payable is discharged, and provided that the Approved Insurers may with such consent make payment on
account of repairs in the course of being effected, but, in the absence of such prior written consent shall be payable directly to the Owners.
(q)
Settlement, compromise or abandonment of claims The Charterers shall not settle, compromise or abandon any claim under or in connection with any of the Insurances (other than in the absence of any Termination
Event that is continuing a claim of less than the Threshold Amount, prior to adjustment for any franchise or deductible under the terms of policy, arising other than from a Total Loss) without the prior written consent
of the Owners (such consent not to be unreasonably withheld or delayed) and, if applicable, the Finance Parties.
(r)
Owners' rights to maintain Insurances If the Charterers fail to effect or keep in force the Insurances, the Owners may (but shall not be obliged to) effect and/or keep in force such insurances on the Vessel and such
entries in protection and indemnity or war risks associations as the Owners in their discretion consider desirable, and the Owners may (but shall not be obliged to) pay any unpaid premiums, calls or contributions. The
Charterers will reimburse the Owners from time to time within ten (10) Business Days of demand for all such premiums, calls or contributions paid by the Owners.
(s)
Environmental protection issues The Charterers shall comply strictly with the requirements of any legislation relating to pollution or protection of the environment which may from time to time be applicable to the
Vessel in any jurisdiction in which the Vessel shall trade and in particular the Charterers shall comply strictly with the requirements of the United States Oil Pollution Act 1990 (the "Act") if the Vessel is to trade in the
United States of America and Exclusive Economic Zone (as defined in the Act). Before any such trade is commenced and during the entire period during which such trade is carried on, the Charterers shall:
33
(i)
pay any additional premiums required to maintain protection and indemnity cover for oil pollution up to the limit available to the Charterers for the Vessel in the market; and
(ii)
make all such quarterly or other voyage declarations as may from time to time be required by the Vessel's protection and indemnity association in order to maintain such cover, and promptly deliver to the
Owners and, if applicable, the Finance Parties copies of such declarations; and
(iii)
submit the Vessel to such additional periodic, classification, structural or other surveys which may be required by the Vessel's protection and indemnity insurers to maintain cover for such trade and promptly
deliver to the Owners and, if applicable, the Finance Parties copies of reports made in respect of such surveys; and
(iv)
implement any recommendations contained in the reports issued following the surveys referred to in sub-paragraph (s)(iii) above within the relevant time limits; and
(v)
in addition to the foregoing (if such trade is in the United States of America and Exclusive Economic Zone):
(A)
obtain and retain a certificate of financial responsibility under the Act in form and substance satisfactory to the United States Coast Guard and provide the Owners with evidence of the same; and
(B)
procure that the protection and indemnity insurances do not contain a US Trading Exclusion Clause or any other analogous provision and provide the Owners with evidence that this is so; and
(C)
comply strictly with any operational or structural regulations issued from time to time by any relevant authorities under the Act so that at all times the Vessel falls within the provisions which limit
strict liability under the Act for oil pollution.
(t)
Innocent Owners' Interest Insurance The Owners shall be at liberty to take out an Innocent Owners' Interest Insurance and
an Innocent Owners' Additional Perils (Oil Pollution) Insurance in relation to the Vessel in
an amount up to the Minimum Insured Value
and on such terms and conditions as the Owners may from time to time decide, and the Charterers shall from time to time upon the Owners'
demand, reimburse the Owners
for all costs, premiums and expenses paid or incurred by the Owners in connection with any Innocent Owners'
Interest Insurance or Innocent Owners' Additional Perils (Oil Pollution) Insurance (or, if so request by the
Owners, directly pay all
such costs, premiums and expenses).
(u)
Cooperation by the Charterers The Charterers agree and undertake that:
(i)
in the event that the Charterers receive any payment in relation to the Insurances in contravention of this Charter, the Charterers will hold such payment on trust and on behalf of the Owners;
(ii)
the Charterers will not refuse, withhold (or otherwise delay giving) consent to the payment of any amount which becomes payable to the Owners under the Insurances (to the extent that such payment is
payable to the Owners in accordance with terms of this Charter); and
(iii)
from time to time on the written request of the Owners, the Charterers will promptly execute and deliver to the Owners all documents which the Owners may require for the purpose of obtaining any payment
in relation to the Insurances (to the extent that such payment is payable to the Owners in accordance with the terms of this Charter).
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(v)
Freight, demurrage and defence To the extent not already covered under the Vessel's Insurances, the Owners shall be at liberty to, in relation to the Vessel, take out freight, demurrage and defence cover on such terms
and conditions as the Owners may from time to time decide. The Charterers shall from time to time upon the Owners' demand reimburse the Owners for all costs, premiums and expenses paid or incurred by the
Owners in connection with such cover.
(w)
Separate Insurance Interest Notwithstanding that the interests of the Owners and Charterers are both covered under the Insurances, the provisions of this Clause 41 (Insurance) shall neither exclude nor discharge
liability between the Owners and the Charterers under this Charter. Any payment of insurance proceeds is no bar to a claim by the Owners and/or their insurers against the Charterers to seek indemnity by way of
subrogation. For the avoidance of any doubt, the Innocent Owners' Interest Insurances, Mortgagees' Interest Insurances and any other insurances taken out by the Owners and/or any Finance Party (as the case may be)
are for the sole benefit of the Owners and/or any Finance Party (as the case may be), and any sum recoverable under such insurances shall not in any way exclude or discharge the obligations and liabilities of the
Obligors under the Transaction Documents. Nothing herein shall prejudice any rights of recovery of the Owners or the Charterers (or their insurers) against third parties.
42.
Redelivery
(a)
Following the occurrence of any Termination Event and while the same is continuing and subject to lapse of the Termination Payment Date, if the Owners decide to retake possession of the Vessel pursuant to
paragraph (c) of Clause 49 (Termination Events), the Charterers shall, at their own cost and expense, redeliver or cause to be redelivered the Vessel to the Owners at the Vessel's current or next port of call, afloat at all
times in a ready safe berth or anchorage, in accordance with Clause 43 (Redelivery conditions).
(b)
Without prejudice to the Owners’ rights and remedies under or pursuant to any provision of this Charter, the Charterers shall continue to perform all the obligations, undertakings and liabilities with respect to the
management, maintenance and insurance in respect of the Vessel under and pursuant to the terms of this Charter until redelivery of the Vessel.
43.
Redelivery conditions
(a)
In addition to what has been agreed in Clauses 15 (Redelivery) (Part II) and 42 (Redelivery), the condition of the Vessel shall at redelivery be as follows:
(i)
the Vessel shall be free of any overdue class and statutory recommendations affecting its trading certificates;
(ii)
the Vessel must be redelivered with all equipment and spares or replacement items listed in the delivery inventory carried out pursuant to Clause 9 (Inventories, Oil and Stores) (Part II) unless such items have
been consumed or used during the Agreement Term (or part thereof) and any spare parts on board or on order for any equipment installed on the Vessel following delivery (provided that any such items which
are on lease or hire purchase shall be replaced with items of an equivalent standard and condition fair wear and tear excepted); all records, logs, plans, operating manuals and drawings, spare parts onboard
shall be included at the time of redelivery in connection with a transfer of the Vessel or such other items as are then in the possession of the Charterers shall be delivered to the Owners;
35
(iii)
the Vessel must be redelivered with all national and international trading certificates and hull/machinery survey positions for both class and statutory surveys free of any overdue recommendation and
qualifications valid and un-extended for a period of at least three (3) months beyond the redelivery date;
(iv)
all of the Vessel's ballast tank coatings to be maintained in "Fair" (as such term (or its equivalent) may be defined and/or interpreted in the relevant survey report) condition as appropriate for the Vessel's age at
the time of redelivery, fair wear and tear excepted;
(v)
the Vessel shall have passed any flag or class surveys or inspections due within three (3) months after the date of redelivery and have its continuous survey system up to date;
(vi)
the Vessel must be re-delivered with accommodation and common spaces for crew and officers substantially in the same condition as at the Actual Delivery Date, free of damage over and above fair wear and
tear; with cargo spaces generally fit to carry the cargoes originally designed and intended for the Vessel; with main propulsion equipment, auxiliary equipment, cargo handling equipment, navigational
equipment, etc., in such operating condition as provided for in this Charter (fair wear and tear excepted) unless used or disposed of in the ordinary course of business and trading of the Vessel and subject to
such spare parts and equipment not belonging to a third party;
(vii)
the Vessel shall be free and clear of all liens other than those created by or on the instructions of the Owners;
(viii)
the condition of the cargo holds to be in accordance with the maintenance regime undertaken by the Charterers during the Charter Period since delivery; and
(ix)
the anti-fouling coating system applied at the last scheduled dry-docking shall be in accordance with prevailing regulations at the time of application.
(b)
At redelivery, the Charterers shall ensure that the Vessel shall meet the following performance levels (which where relevant shall be determined by reference to the Vessel's log books):
(i)
all remaining bunkers shall be in compliance with all applicable laws, including without limitation, the global sulphur limit imposed by the International Maritime Organization (IMO) for vessels of this type;
(ii)
available bunkers shall be sufficient to cover at least a voyage to a port for refueling;
(iii)
all equipment controlling the habitability of the accommodation and service areas to be in proper working order, fair wear and tear excepted; and
(iv)
available deadweight to be within one per cent (1%) of that achieved at delivery (as the same may be adjusted as a result of any upgrading of the Vessel carried out in accordance with this Charter (such
adjustment to be agreed between the Owners and Charterers at the time such upgrading work is to be undertaken)).
(c)
The Owners and the Charterers shall be each appoint (at the Charterers’ expense) an independent surveyor for the purpose of determining and agreeing in writing the condition of the Vessel at redelivery.
(d)
If the Vessel is not in the condition or does not meet the performance criteria required by this Clause 43, a list of deficiencies together with the costs of repairing/remedying such deficiencies shall be agreed by the
respective surveyors.
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(e)
The Charterers shall be obliged to repair any class items restricting the operation or trading of the Vessel prior to redelivery.
(f)
The Charterers shall be obliged to repair/remedy all such other deficiencies as are necessary to put the Vessel into the return condition required by this Clause 43.
44.
Diver's inspection at redelivery
(a)
Unless the Vessel is returned in dry-dock, if the Owners so request, a diver's inspection is required to be performed at the time of redelivery and the following provisions shall apply:
(i)
The Charterers shall, at the written request of the Owners, arrange at the Charterers' time and expense for an underwater inspection by a diver approved by the Classification Society immediately prior to the
redelivery.
(ii)
A video film of the inspection shall be made. The extent of the inspection and the conditions under which it is performed shall be to the satisfaction of the Classification Society.
(iii)
If damage to the underwater parts is found, the Charterers shall arrange, at their time and costs, for the Vessel to be dry-docked (if required by the Classification Society) and repairs carried out to the satisfaction
of the Classification Society.
(iv)
If the conditions at the port of redelivery are unsuitable for such diver's inspection, the Charterers shall take the Vessel (in Charterers' time and at Charterers' expense) to a suitable alternative place nearest to the
redelivery port unless an alternative solution is agreed.
(v)
Without limiting the generality of sub-paragraph 55 (Fees and expenses), all costs relating to any diver's inspection shall be borne by the Charterers.
45.
Owners' mortgage
(a)
The Charterers:
(i)
acknowledge that the Owners are entitled and do intend to enter or have entered into certain funding arrangements with the Finance Parties in order to finance part of the Outstanding Principal, which funding
arrangements may be secured, inter alia, by ship mortgages over the Vessel and (along with other related matters) the relevant Finance Documents provided that simultaneously with the Owners' execution of
any such ship mortgages, the Owners shall ensure that the relevant Finance Parties execute and deliver to the Charterers a Quiet Enjoyment Letter in favour of the Charterers in a form mutually acceptable to
the Finance Party and the Charterer (both acting reasonably);
(ii)
irrevocably consent to any assignment, transfer and/or novation of the Owners' rights, interests and benefits in and to the Insurances, the Earnings and the Requisition Compensation and any Transaction
Document to which it is a party in favour of the Finance Parties pursuant to the relevant Finance Documents or any Financial Institution; and
(iii)
without limiting the generality of Clause 48(m) (Further assurance), undertake to execute, provide or procure the execution or provision (as the case may be) of such document as is necessary to effect the
assignment transfer and/or novation referred to in sub-paragraph (ii) above, provided that any related costs shall be on the Owners' account. Provided that no Termination Event has occurred and is continuing,
the Owners shall not, and shall procure that no-one claiming through them (as mortgagee, assignee or otherwise but in each case subject to the terms of the relevant Quiet Enjoyment Letter) will interfere with
the Charterers' quiet use and possession of the Vessel throughout the Charter Period.
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(b)
The Owners acknowledge and undertake that, subject to the Quiet Enjoyment Letter, no term of a Finance Document will prejudice or alter the rights of the Charterers under this Charter or any of the other Transaction
Document.
46.
Financial covenants
(a)
The Charterers shall procure that throughout the Charter Period,
(i)
the Charterers shall maintain a minimum Liquidity of not less than US$300,000 (Dollars Three Hundred Thousand) for each ship owned, operated or chartered by it; and
(ii)
the Charter Guarantor shall maintain a minimum Liquidity of not less than US$20,000,000 (Dollars Twenty Million).
(b)
For the purpose of this Clause 46 (Financial covenants), "Liquidity" means:
(i)
in relation to the Charterers, the total cash or cash equivalent of the Charterers as shown in its most recent financial statements provided to the Owners in accordance with Clause 4832..1(a) (Financial
Statements); and
(ii)
in relation to the Charterer Guarantor, the total cash or cash equivalent of the Charterer Guarantor as shown in its most recent consolidated financial statements provided to the Owners in accordance with
Clause 4832..1(a) (Financial Statements).
(c)
If at any time any other Financial Indebtedness of the Charter Guarantor and/or any of its Subsidiaries shall include any financial covenant in respect of the Charter Guarantor (whether set forth as a covenant,
undertaking, event of default, restriction or other such provision) (a "Financial Covenant") that would be more beneficial to the Owners than any analogous provision contained in this Charter (an "Additional
Financial Covenant"), then such Additional Financial Covenant shall be deemed automatically incorporated into the terms of this Charter (an "MFN Amendment"). Such MFN Amendment shall be reversed and the
financial covenants restored to those that were in effect immediately prior to an MFN Amendment when (i) such other financial indebtedness containing the Additional Financial Covenant is repaid in full other than as
a result of or in connection with an actual event of default (howsoever defined); or (ii) the original terms of an Additional Financial Covenant provided that it has ceased to apply. The Charterers shall promptly notify
the Owners of any change or event that requires the incorporation or reverse of an MFN Amendment. The Charterers agree that it will, and will procure that the Charter Guarantor will, promptly enter into such
necessary documentation as may be required to amend and supplement the Charter Guarantee and this Charter so as to reflect and incorporate such new or amended financial covenants that are more favourable to the
Owners in accordance with this clause.
47.
Charterers' representations and warranties
(a)
The Charterers make the representations and warranties set out in this Clause 47 to the Owners on the date of this Charter and on the Actual Delivery Date:
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(i)
Status: each Obligor is a company or (as applicable) corporation, duly incorporated and validly existing under the laws of its jurisdiction of incorporation, in good standing and has the power to own its assets
and carry on its business as it is being conducted;
(ii)
Binding obligations: Subject to the Legal Reservations, the obligations expressed to be assumed by each Obligor in each Transaction Document to which it or he/she is a party are legal, valid, binding and
enforceable obligations and no limit on any of their powers will be exceeded as a result of the borrowings, granting of security or giving of guarantees contemplated by the Transaction Documents or the
performance by any of them of any of their obligations thereunder;
(iii)
No breach: the entry into and performance by each Obligor of, and the transactions contemplated by, each Transaction Document to which it or he is a party do not conflict with:
(A)
any applicable law or regulation (including Anti-Money Laundering Laws, anti-corruption and anti-bribery laws, Anti-Terrorism Financing Laws, Sanctions);
(B)
its constitutional documents; or
(C)
any document binding on it, or any of its or his/her assets;
(iv)
Due authorisation: each Obligor has the power to enter into, perform and deliver, and has taken all necessary action to authorise its or his/her entry into, performance and delivery of, each Transaction
Document to which it or he/she is a party and the transactions contemplated thereunder;
(v)
Validity and admissibility in evidence: all consents, licences, approvals, authorisations, filings and registrations required:
(A)
to enable each Obligor to lawfully enter into, exercise its or his/her rights and comply with its or his/her obligations in each Transaction Document to which it or he/she is a party;
(B)
to ensure the obligations expressed to be assumed by each of the Obligors in the Transaction Documents are legal, valid and binding; and
(C)
to make each Transaction Document to which each Obligor is a party admissible in evidence in its jurisdiction of incorporation,
have been obtained
or effected and are in full force and effect;
(vi)
Governing law and judgments: Subject to the Legal Reservations, in any proceedings taken in any of the Obligors' jurisdiction of incorporation or residence in relation to any of the Transaction Documents in
which there is any express choice of the law of a particular country as the governing law thereof, that choice of law and any judgment or (if applicable) arbitral award obtained in that country will be
recognised and enforced;
(vii)
No deductions or withholding: no Obligor is required under the laws of its jurisdiction of incorporation or residence to make any deduction for or on account of tax from any payment it may make under each
Transaction Document to which it or he is a party;
(viii)
No filing or stamp Taxes: under the laws of the jurisdiction of incorporation of each Obligor and subject to any Perfection Requirements, it is not necessary that any of the Transaction Documents to which
such Obligor is a party be filed, recorded or enrolled with any court or other authority in that jurisdiction or that any stamp, registration or similar tax be paid on or in relation thereto or the transactions
contemplated thereby (other than any filing or recording or enrolling of any tax which is referred to in the legal opinions delivered to the Owner);
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(ix)
No default: no Termination Event has occurred and is continuing or might reasonably be expected to result from any Obligor's entry into and performance of each Transaction Document to which such
Obligor is a party;
(x)
No misleading information: subject to any qualification (if applicable) set out in such information, any factual information provided by the Charterers to the Owners was true and accurate in all material
respects as at the date it was provided or as the date at which such information was stated;
(xi)
Claims pari passu: Subject to the Legal Reservations, the payment obligations of each Obligor under each Transaction Document to which it or he/she is a party rank at least pari passu with the claims of all
other unsecured and unsubordinated creditors of such Obligor, except for obligations mandatorily preferred by law applying to companies generally;
(xii)
No material proceedings: no litigation, arbitration or administrative proceedings of or before any court, arbitral body or agency have (to the best of the Charterers' knowledge) been started against an Obligor
which, if adversely determined, has a Material Adverse Effect;
(xiii)
No immunity: none of the Obligors nor any of its or his assets has any right to immunity from set-off, legal proceedings, attachment prior to judgment, other attachment or execution of judgment on the
grounds of sovereign immunity or otherwise;
(xiv)
No winding-up: none of the Obligors is insolvent or in liquidation or administration or subject to any other formal or informal insolvency procedure, and no receiver, administrative receiver, administrator,
liquidator, trustee or analogous officer has been appointed in respect of it, or all or any part of its/his/her assets;
(xv)
Anti-Money Laundering Laws etc.: each Obligor is not in breach of Anti-Money Laundering Laws, Anti-Terrorism Financing Laws and/or Business Ethics Laws and each of the Obligor has instituted and
maintained systems, controls, policies or procedures designed to:
(A)
prevent and detect incidences of bribery and corruption, money laundering and terrorism financing; and
(B)
promote and achieve compliance with Anti-Money Laundering Laws, Anti-Terrorism Financing Laws and Business Ethics Laws;
(xvi)
Sanctions:
(A)
no Obligor nor any of their respective directors, officers, and to the best of the Charterers' knowledge and belief, employees;
(B)
each Obligor and their respective directors, officers, and to the best of the Charterers' knowledge and belief, employees, is in compliance with all Sanctions laws, and none of them have been or are
currently being investigated on compliance with Sanctions, they have not received notice or are aware of any claim, action, suit or proceeding against any of them with respect to Sanctions and they
have not taken any action to evade the application of Sanctions;
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(C)
in the case a Sub-Charterer becomes a Restricted Persoon or acts in breach of any Sanctions, the Charterers shall, upon becoming aware of such event, (i) immediately terminate the Sub-Charter with
such Sub-Charterer and (ii) procure a replacement Sub-Charter (reasonably acceptable to the Owners) as soon as practicable and in any case within 60 days; and
(D)
in the case an Approved Manager becomes a Restricted Person or acts in breach of any Sanctions, the Charterers shall, upon becoming aware of such event, immediately terminate its appointment and
appoint a substitute Approved Manager (reasonably acceptable to the Owners) as soon as practicable and in any case within one month.
(xvii)
Security: each of the Obligors is the legal and beneficial owner of all assets and other property which it or he/she purports to charge, pledge, assign or otherwise secure pursuant to each Transaction Document
and those Transaction Documents to which it or he/she is a party create and give rise to valid and effective security having the ranking expressed in those Transaction Documents;
(xviii)
Environmental Law:
(A)
no circumstances have occurred which would prevent the compliance by the Obligors in a manner or to an extent which has a Material Adverse Effect; and
(B)
no Environmental Claim has been commenced against any Obligor where, if determined against such Obligor, has a Material Adverse Effect;
(xix)
Taxation:
(A)
no Obligor is overdue in the filing of any Tax returns and no Obligor is overdue in the payment of any Taxes, save in the case of Taxes which are being contested on bona fide grounds or in the case
the overdue payment amount does not exceeds US$50,000 and the relevant Obligor is taking steps to make prompt payment of the same;
(B)
no claims or investigations are being made or conducted against any Obligor with respect to Taxes;
(xx)
No Material Adverse Effect: no event or circumstance has occurred which has a Material Adverse Effect;
(b)
Each representation and warranty in Clause 47(a) (other than in sub-paragraphs (a)(xii) (No material proceedings) and (a)(vii) (No deductions or withholding)) above is deemed to be repeated by the Charterers by
reference to the facts and circumstances then existing on each day on which Hire or any other amount is payable under this Charter and, the representation and warranty in Clause 47(a)(xvi) (Sanctions) above (other
than in relation to any Approved Manager) shall be deemed to be made and repeated on the date when the Owners shall transfer the title of the Vessel under Clause 52 (Transfer of title).
48.
Charterers' undertakings
The Charterers hereby
undertake to the Owners that they will comply in full and procure compliance (where applicable) with the following undertakings throughout
the Agreement Term:
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(a)
Financial Statements The Charterers shall supply, and shall procure the Charter Guarantor will supply, to the Owners as soon as the same become available, but in any event within:
(i)
one hundred and eighty (180) days after the end of the Charter Guarantor's financial year, the Charter Guarantor's audited consolidated financial statements for that financial year; and
(ii)
one hundred and twenty (120) days after the 6-month period ending on 30 June in each financial year of the Charter Guarantor, the semi-annual consolidated unaudited financial statements of the Charter
Guarantor, for that 6-month period;
So long as such
financial statements are available at the Charter Guarantor’s website, the relevant obligation will be deemed to have been met.
(b)
Requirements as to financial statements Each set of financial statements delivered to the Owners under Clause 48(a) (Financial Statements):
(i)
shall be in English;
(ii)
shall be certified by an authorised signatory of the relevant Obligor as fairly representing its financial condition as at the date at which those financial statements were drawn up; and
(iii)
shall be prepared in accordance with GAAP.
(c)
Information: miscellaneous The Charterers shall:
(i)
immediately notify the Owners of the occurrence of any Charter Guarantor Change of Control Event;
(ii)
promptly upon becoming aware of them, supply to the Owners details of any litigation, arbitration or administrative proceedings which are current or pending against any Obligor provided such litigation,
arbitration or administrative proceeding if adversely determined has a Material Adverse Effect;
(iii)
promptly, supply to the Owners such further information regarding the financial condition, business and operations of any of the Obligor as the Owners or any Finance Party may reasonably request;
(iv)
if the Owners so request, provide to the Owners a copy of such Sub-Charter which the Owners may reasonably request; and
(v)
supply to the Owners, or procure that the Approved Managers supply to the Owners, management report on a quarterly basis (including an estimate/budget of the Vessel's OPEX, such as crewing costs,
insurances, repair and maintenance, stores, spares, lubricants and dry-docking expenses).
(d)
Notification of Termination Event The Charterers shall, and shall procure the Charter Guarantor will, promptly, upon becoming aware of the same, inform the Owners in writing of the occurrence of any Termination
Event (and the steps, if any, being taken to remedy this) and, upon the Owners' request, confirm to the Owners that, save as previously notified to the Owners or as notified in such confirmation, no Potential
Termination Event or Termination Event is continuing and, if applicable, specifying the steps being taken to remedy it.
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(e)
Maintenance of legal validity Each Obligor will comply with the terms of and do all that is necessary to maintain in full force and effect all Perfection Requirements and Authorizations required under any applicable
law or regulation to enable it to perform its obligations under this Charter and the Transaction Documents to which it is a party and to ensure the legality, validity, enforceability or admissibility in evidence of such
Transaction Documents in their jurisdiction of incorporation and all other applicable jurisdictions;
(f)
Taxation Each Obligor will pay and discharge all Taxes applicable to, or imposed on or in relation to, it, its business and its assets within the time period allowed without incurring penalties unless and only to the
extent that:
(i)
such payment is being contested in good faith;
(ii)
adequate reserves are being maintained for those Taxes and the costs required to contest them which have been disclosed in its latest financial statements delivered to the Owners under Clause 54.1 (Financial
statements); and
(iii)
such payment can be lawfully withheld.
(g)
Negative pledge The Charterers will not create or permit to subsist any Security Interest (other than Permitted Security) or other third party rights over any of their present or future rights and interests in or towards any
Transaction Document or the Vessel other than a Security Interest created by the Transaction Documents, the Finance Documents or otherwise with the written consent of the Owners.
(h)
Environmental compliance The Charterers shall, and shall procure each Obligor to:
(i)
comply with all Environmental Laws;
(ii)
obtain, maintain and ensure compliance with all requisite Environmental Approvals; and
(iii)
implement procedures to monitor compliance with and to prevent liability under any Environmental Law applicable to it where failure to do so has a Material Adverse Effect.
(i)
Environmental Claims The Charterers shall, promptly inform the Owners in writing of any Environmental Claim against any Obligor which is current or pending which, if adversely determined against, such Obligor
shall have a Material Adverse Effect or, the claim amount of which exceeds US$1,500,000 (Dollars One Million Five Hundred Thousand only).
(d)
Compliance with laws etc. The Charterers shall:
(i)
and shall procure that each other Obligor will:
(A)
comply with all applicable laws, including Anti-Money Laundering Laws, Anti-Terrorism Financing Laws and Business Ethics Laws;
(B)
maintain systems, controls, policies or procedures designed to promote and achieve ongoing compliance with Anti-Money Laundering Laws, Anti-Terrorism Financing Laws and Business Ethics
Laws; and
(ii)
not use, or permit or authorize any person to directly use, the MOA Purchase Price for any purpose that would breach any Sanctions, Anti-Money Laundering Laws, Anti-Terrorism Financing Laws or
Business Ethics Laws; and
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(iii)
not lend, invest, contribute or otherwise make available the MOA Purchase Price to or for any other person in a manner which would result in a violation of any Sanctions, Anti-Money Laundering Laws,
Anti-Terrorism Financing Laws or Business Ethics Laws.
(j)
Sanctions The Charterers shall comply and shall procure that each other Obligor comply with all laws and regulations in respect of Sanctions, and in particular, they shall effect and maintain a sanctions compliance
policy or procedure to ensure compliance with all such laws and regulations implemented from time to time.
Without prejudice to
the generality of the preceding, the Charterers shall comply or procure compliance with the following undertakings commencing from the
date hereof and up to the last day of the Agreement Term
that:
(i)
they shall comply, and will procure that each other Obligor, each other member of the Charter Group and their respective directors, officers, materially comply with all laws and regulations in respect of
Sanctions and is not a Restricted Person and does not act directly or indirectly on behalf of a Restricted Person, and in particular, they shall effect and maintain a sanctions compliance policy or procedure to
ensure compliance with all such laws and regulations implemented from time to time;
(ii)
the Vessel shall not be employed, operated or managed in any manner which (x) is contrary to any Sanctions and in particular, the Vessel shall not be used by or to benefit any party which is a target of
Sanctions and/or is a Restricted Person or call any port in North Korea, Iran, Syria, Cuba or Crimea or trade to any area or country where trading the Vessel to such area or country would constitute a breach of
any Sanctions, (y) would result in any Obligor or the Owners becoming a Restricted Person or (z) would trigger the operation of any sanctions limitation or exclusion clause in any insurance documentation;
(iii)
they shall, and shall procure that each other Obligor shall promptly notify the Owners of any non-compliance, by any Obligor or their respective officers, directors, with all laws and regulations relating to
Sanctions, Anti-Money Laundering Laws, Anti-Terrorism Financing Laws and/or Business Ethics Laws (including but not limited to notifying the Owners in writing immediately upon being aware that any
Obligor or its directors or officers is a Restricted Person or has otherwise become a target of Sanctions) as well as, in the case of an Obligor, provide upon request all information (once available) in relation to
its business and operations which may be relevant for the purposes of ascertaining whether any of the aforesaid parties are in compliance with such laws;
(iv)
the Charterers will, and will use best endeavours to procure that each other Obligor will provide all information in relation to its business and operations which may be relevant for the purposes of ascertaining
whether it is in compliance with all laws and regulations and Sanctions, Anti-Money Laundering Laws, Anti-Terrorism Financing Laws or Business Ethics Laws applicable to and/or binding on it, and in
particular, the Charterers shall notify the Owners in writing immediately upon being aware that any of the Charterers' shareholders, directors and officers is a Restricted Person or has otherwise become a
target of any Sanctions;
(v)
The Charterers undertake to procure that no Obligor shall use any revenue or benefit derived from any activity or dealing with a Restricted Person in discharging any obligation due or owing to the Owners;
(vi)
The Charterers will not, and will not permit or authorise any other person to, utilise or employ the Vessel or to use, lend, make payments of, contribute or otherwise make available, all or any part of the
proceeds of any transactions contemplated by the Transaction Documents to fund any trade, business or other activities (x) involving or for the benefit of any Restricted Party or (y) in any manner that would
result in the Obligor or, the Owners being in breach of ant Sanctions or becoming a Restricted Person; and
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(vii)
The Charterers shall procure that each Obligor shall, promptly upon becoming aware of them supply to the Owners details of any claim action, suit or proceedings against it with respect to Sanctions by any
Sanctions Authority.
(k)
Loans or other financial commitments Other than as necessarily required in the ordinary course of business, trading and operation of the Vessel, the Charterers shall not make any loan or enter in any guarantee and
indemnity or otherwise voluntarily assume any actual or contingent liability in respect of any obligation of any other person except pursuant to the Transaction Documents and the Related Transaction Documents.
(l)
Earnings and Earnings Account
(i)
Following the occurrence of a Termination Event which is continuing when directed by the Owners to do so, the Charterers shall procure that each of the Sub-Charterers shall, on each Hire Payment Date,
credit all payments of "Hire" (as such term is described in each Sub-Charter) and all other amounts payable thereunder directly to the Owners' Account;
(ii)
throughout the Agreement Term, the Charterers shall:
(A)
promptly upon receipt supply to the Owners monthly bank statements of the Earnings Account and shall promptly supply such other financial information and explanations as the Owners may from
time to time reasonably require in connection with the Charterers; and
(B)
ensure that any and all of the Earnings are deposited into the Earnings Account.
(m)
Further assurance The Charterers shall at their own expense,
(i)
promptly take all such action as the Owners may reasonably require for the purpose of perfecting or protecting any of the Owners' rights with respect to the Security Interest created or evidenced by the
Transaction Documents; and
(ii)
do and perform such other and further acts and execute and deliver any and all such other agreements, instruments and documents as may be required by law to establish, maintain and protect the rights and
remedies of the Owners and/or the Finance Parties (as the case may be) and to carry out and effect the intent and purpose of this Charter, the other Transaction Documents and, to the extent consistent with the
terms of this Charter, the Finance Documents (as applicable).
(n)
Change of business The Charterers shall not and will procure no Obligor will, without the prior written consent of the Owners, make any substantial change to the general nature of their respective businesses form that
carried on at the date of this Charter.
(o)
Certificate of financial responsibility The Charterers shall, if required, obtain and maintain a certificate of financial responsibility in relation to the Vessel which is to call at the United States of America.
(p)
Registration The Charterers shall not change or permit a change to the flag of the Vessel throughout the duration of this Charter without the prior written consent of the Owners or the Finance Parties (if applicable)
(such consent not to be unreasonably withheld or delayed). Any change to the flag of the Vessel shall be at the cost of the Charterers (which shall include any reasonable costs of the Finance Parties (if applicable)).
45
(q)
ISM and ISPS Compliance The Charterers shall ensure that each ISM Company and ISPS Company complies in all material respects with the ISM Code and the ISPS Code, respectively, or any replacements thereof
and in particular (without prejudice to the generality of the foregoing) shall ensure that such company holds (i) a valid and current Document of Compliance issued pursuant to the ISM Code, (ii) a valid and current
SMC issued in respect of the Vessel pursuant to the ISM Code, and (iii) an ISSC in respect of the Vessel, and the Charterers shall promptly, upon request, supply the Owners with copies of the same.
(r)
Inspection of Vessel and inspection reports In the absence of a Termination Event which is continuing, subject to there being no undue interference with the operation of the Vessel,
(iii)
the Owners shall be entitled to, once a year, (at the Charterers' cost) inspect or survey the Vessel or instruct a duly authorised surveyor to carry out such survey on their behalf (in each case at the Charterers'
cost) in order to ascertain the condition of the Vessel and the Charterers shall provide all necessary assistance and facilities in connection with such inspection or survey; and,
(iv)
the Charterers shall further, if so requested in writing by the Owners and at the Charterers' cost, provide to the Owners one inspection report each year as to the condition of the Vessel,
provided always however
that if a Termination Event has occurred and the same be continuing, the Owners may at any time and at the Charterers' cost conduct such
inspection without prior notice to the Charterers
and the Charterers shall be deemed to have granted such permission and shall provide
such necessary assistance to the Owners in respect of such inspection.
(s)
"Know your customer" checks If:
(i)
the introduction of or any change in (or in the interpretation, administration or applicable of) any law or regulation made after the dates of this Charter;
(ii)
any change in the status of the Charterers after the date of this Charter;
(iii)
a proposed assignment or transfer by Owners of any of their rights and obligations under this Charter,
obliges the Owners to comply with "know
your customer" or similar identification procedures in circumstances where the necessary information is not already available to
it, the Charterers shall promptly upon the
request of the Owners supply, or procure the supply of, such documentation and other evidence
as is reasonably requested by the Owners to carry out and be satisfied they have complied with all necessary "know your
customer"
or other similar checks under all applicable laws and regulations pursuant to the transactions contemplated in the Transaction Documents.
(t)
Dividends and share redemption
(i)
The Charterers shall not make or pay (nor is the Charter Guarantor entitled to receive) any dividend or other distribution (in cash or in kind) following the occurrence of any Termination Event and while it is
continuing;
(ii)
The Charterers shall not effect any form of redemption or return in respect of its limited liability company interests; and
46
(iii)
Unless the Owners shall approve otherwise in writing, the Charterers shall not admit any new member or members or issue any further shares (certificated or uncertificated) unless issued to the Charter
Guarantor and being charged in favour the Security Trustee and will procure that the Charter Guarantor will not consent to the admission of any new member of the Charterers.
(u)
Claims pari passu The Charterers shall ensure that at all times any unsecured and unsubordinated claims of the Owners against it under the Transaction Documents rank at least pari passu with the claims of all its
other unsecured and unsubordinated creditors except those creditors whose claims are preferred by laws of general application to companies.
(v)
Merger and demerger The Charterers shall not enter into any amalgamation, merger, demerger or corporate restructuring without the prior written consent of the Owners, which shall not be unreasonably withheld.
(w)
Subordination The Charterers acknowledge to and undertake with the Owners that, throughout the Agreement Term, any Financial Indebtedness incurred by the Charterers including all shareholder's and intercompany
loans from time to time granted by the shareholders of the Charterers, any Obligor or any other member of the Charterer Group:
(i)
are and shall at all times be subordinated to the Owners' rights under the Transaction Documents;
(ii)
are and shall be subordinated in all respects to all amounts owing and which may in future become owing by the Charterers under the Transaction Documents;
(iii)
following the occurrence of a Termination Event and while the same is continuing, shall not be repaid or be subject to payment of interest (although interest may accrue);and
(iv)
are and shall remain unsecured by any Security Interest over the whole or any part of the assets of the Charterers,
and the Charterers shall
and shall procure that the Obligors and the relevant Affiliate to the Charterers and/or the Charter Guarantor shall upon the Owners' request,
enter into a subordination agreement in favour of the
Owners or such other arrangement acceptable to the Owners and such other counterparty.
(x)
Management Agreement The Charterers shall not and shall procure neither of the Approved Managers to materially amend, vary, novate, supplement, supersede, waive or terminate any term of any Ship Management
Agreement without the prior written consent of the Owners.
(y)
Greenhouse gas emissions The Charterers shall:
(i)
upon request of the Owners, provide a duly executed and, if required by the Owners, notarised and apostilled original of the EU ETS Mandate Letter and take such action as the Owners may require for such
EU ETS Mandate Letter to be submitted to and recorded by the relevant authorities;
(ii)
do all that is reasonably required of them to comply with the EU-ETS Regulations; and
(iii)
whenever requested by Owners, promptly provide to the Owners particulars of all and any outstanding charges due or collectable by the relevant entities charged with administering compliance with the EU-
ETS Regulations applicable to it or in respect of the Vessel.
47
The Charterers will pay
or cause to be paid all amounts reasonably required to be paid by it or the Owners in respect of the Vessel arising out of or in connection
with the EU-ETS Regulations, and the Charterers will
promptly, and in any event within fifteen (15) Business Days of demand, indemnify
the Owners for any and all amounts required to be paid by the Owners in connection with any EU-ETS Regulations in respect of the
Vessel,
together with (i) all losses, costs and expenses suffered or incurred by the Owners in connection with compliance by them with any EU-ETS
Regulations in respect of the Vessel, and (ii) any penalties, charges
or other amounts levied against the Owners due to any breach by
the Charterers of its obligations under this Clause 48(y).
(z)
Other negative undertakings The Charterers shall not, without the prior written consent of the Owners,
(i)
enter into any transactions other than on arms’ length commercial terms; or
(ii)
enter into a single transaction or a series of transactions (whether related or not) and whether voluntary or involuntary to sell, lease, transfer or otherwise dispose of any of its assets (save and except as
provided under the terms of this Charter and other Transaction Documents); or
(iii)
conduct any business or activity other than the chartering and operation of vessels and other ancillary activities; or
(i)
sell, transfer or otherwise dispose of any of its assets or its receivables on recourse terms or enter into or permit to subsist any other preferential arrangement having a similar effect.
(aa)
Valuation Reports The Charterers will, on or before each Test Date, deliver or procure the delivery to the Owners of the Valuation Reports (as required under Clause 48(bb) (Value maintenance) to determine the
Market Value) dated note earlier than ten (10) days before the Test Date.
(bb)
Value maintenance
(i)
In order to determine the Market Value on a Test Date for the purposes of testing the Value Maintenance Ratio, the Market Value shall be determined by the Owners to be (x) the mathematic average of two
valuations from the Valuation Reports obtained in accordance with Clause 48(aa) (Valuation Reports) or, in the event the difference between the two Valuation Reports obtained is greater than 5%, the
arithmetic average of the three Valuation Reports, the third Valuation Report being obtained from a further Approved Valuer selected by the Owners or, (y) if the Charterers fail to deliver or procure the
delivery of the Valuation Reports to the Owners in accordance with Clause 48(aa) (Valuation Reports), the valuation from one Valuation Report arranged by the Owners (each such Valuation Report shall be at
the costs of the Charterers); and in either case; if the valuation given by an Approved Valuer comes up with a value range, the lowest value within the range shall be taken to determine the Market Value.
(ii)
If, after conducting the Value Maintenance Ratio test on the relevant Test Date, the Owners determine that the Value Maintenance Ratio is less than the Value Maintenance Threshold, then the Charterers shall,
within thirty (30) days of the Owners' demand, provide cash collateral in the amount of the shortfall (the "Cash Collateral") and deposit the same in the Owners' Account in order to restore the Value
Maintenance Ratio to comply with the Value Maintenance Threshold.
(iii)
Any Cash Collateral paid to the Owners in accordance with paragraph (ii) above shall secure the due observance and performance by the Obligors of their obligations and undertakings contained in the
Transaction Documents. Following the occurrence of a Termination Event which is continuing in respect of any failure in payment of Hire, the Owners shall have the right to utilise the Cash Collateral or a part
thereof to pay any outstanding Hire, whereupon the Charterers shall forthwith, and in any event within five (5) Business Days, pay and deposit with the Owners such additional amount as may be required to
make up the Cash Collateral. Any remaining Cash Collateral shall only be returned to the Charterers if, (A) on a Test Date after the provision of such Cash Collateral, the Value Maintenance Ratio is no less
than the Value Maintenance Threshold and (B) immediately following the return of such Cash Collateral, the Value Maintenance Ratio remains no less than the Value Maintenance Threshold provided that the
Charterers may at any time after the expiration of the Agreement Term request for release and return of the remaining Cash Collateral.
48
(iv)
Without prejudice to paragraph (ii) above, the Charterers shall have the option (instead of providing the Cash Collateral), within (30) days of the Owners’ request:
(a)
to pay such amount to the Owners to prepay the Purchase Obligation Price, or provided the Purchase Obligation Price has been prepaid in full, any undue Fixed Hire in inverse order of maturity, to
enable compliance with the Value Maintenance Ratio; or
(b)
to provide additional security satisfactory to the Owners (acting reasonably).
49.
Termination Events
(a)
Each of the following events shall constitute a Termination Event:
(i)
Failure to pay an Obligor fails to pay on the due date any sum payable pursuant to the Transaction Document to which it or he is a party; provided no Termination Event shall occur under Clause 49(a)(i) in
relation to a failure to pay any Hire on the relevant due date if such Obligor can demonstrate to the reasonable satisfaction of the Owners that all necessary instructions were given to effect such payment and
the non-receipt thereof is attributable solely to an administrative or technical error or an error in the banking system and payment of such Hire is made within three (3) Business Days of its original due date; or
(ii)
Specific covenants an Obligor fails comply with Clause 46 (Financial covenants); or
(iii)
Other obligations an Obligor fails duly to perform or comply with any of the obligations expressed to be assumed by it in any Transaction Document (other than those referred to in Clause 49(a)(ii)(Specific
covenants)) and where, in the opinion of the Owners, such default is capable of remedy, such default is not remedied to the Owners' satisfaction within seven (7) Business Days after written notice from the
Owners requesting action to remedy the same; or
(iv)
Misrepresentation any representation or statement made by any Obligor in or pursuant to a Transaction Document to which it or he is a party or in any notice, certificate, instrument or statement contemplated
thereby or made or delivered pursuant hereto or thereto is, or proves to be, untrue or incorrect in any material respect when made or deemed to be repeated unless such misrepresentation is in the opinion of the
Owners capable of remedy and is remedied to the Owners' satisfaction within thirty (30) days of the earlier of the relevant Obligor becoming aware of any such misrepresentation or the Owners' notice to the
relevant Obligor of such misrepresentation; or
49
(v)
Cross default any of the following events:
(A)
any Financial Indebtedness of an Obligor is not paid when due nor within any originally applicable grace period;
(B)
any Financial Indebtedness of an Obligor is declared to be, or otherwise becomes, due and payable prior to its specified maturity as a result of an event of default (however described);
(C)
any commitment for any Financial Indebtedness of an Obligor is cancelled or suspended by a creditor of an Obligor as a result of an event of default (however described); and
(D)
any creditor of an Obligor becomes entitled to declare any Financial Indebtedness of an Obligor due and payable prior to its specified maturity as a result of an event of default (however described),
provided that
no Termination Event will occur under this Clause49(a)(iii) if, the aggregate amount of such Financial Indebtedness referred to in this
Clause 49(a)(v) (x) in respect of the Charter Guarantor, is
less than ten million Dollars (US$10,000,000) and (y) in respect of the Charterers,
is less than five hundred thousand Dollars (US$500,000); or
(vi)
Insolvency
(A)
an Obligor:
(x)
is unable or admits inability to pay its debts as they fall due;
(y)
is deemed to, or is declared to, be unable to pay its debts under applicable law;
(z)
suspends or threatens to suspend making payments on any of its debts; or
other than the Charter
Guarantor, by reason of actual or anticipated financial difficulties, commences negotiations with one or more of its creditors with a
view to rescheduling any of its indebtedness;
or
(B)
the Charter Guarantor, any of it Subsidiaries or any of their respective directors or authorised representatives by reason of actual or anticipated financial difficulties take any steps (whether by
submitting or presenting a document setting out a proposal or proposed terms or otherwise) with more than 35% (by value) of creditors of the Charter Group (taken as a whole) with a view to
obtaining any form of moratorium, suspension or deferral of payments or reorganisation of debt (or certain debt), provided that this Clause 49(a)(vi)(B) shall not apply where the relevant steps are
being taken solely with the Owners or any of the Owners Subsidiaries; or
(C)
the value of the assets of an Obligor is less than its liabilities (taking into account contingent and prospective liabilities); or
(D)
a moratorium is declared in respect of any indebtedness of an Obligor. If a moratorium occurs, the ending of the moratorium will not remedy any Termination Event caused by that moratorium; or
(vii)
Winding-up any corporate action, legal proceedings or other procedure or step is taken in relation to:
50
(A)
the suspension of payments, a moratorium of any indebtedness, winding-up, dissolution, administration, bankruptcy or reorganisation (by way of voluntary arrangement, scheme of arrangement or
otherwise) of an Obligor;
(B)
a composition, compromise, assignment or arrangement with any creditor of an Obligor;
(C)
the appointment of a liquidator, receiver, administrative receiver, administrator, compulsory manager, trustee or other similar officer in respect of an Obligor or any of its assets;
(D)
enforcement of any Security Interest over any assets of an Obligor;
or any analogous procedure
or step is taken in any jurisdiction. This Clause 49(a)(vii) shall not apply to (x) any winding-up petition which is frivolous or vexatious
and is discharged, stayed or dismissed
within twenty one (21) days of commencement or (y) any arrest or detention of the Vessel from which
the Vessel is released within twenty one (21) days from the date of that arrest or detention; or
(viii)
Cessation of business any Obligor ceases or threatens to cease, to carry on all or, any material part of such Obligor's business; or
(ix)
Unlawfulness at any time:
(A)
it is or becomes unlawful for any Obligor to perform or comply with any or all of its obligations under the Transaction Documents to which it or he is a party;
(B)
any of the obligations of the Charterers under the Transaction Documents to which they are parties are not or cease to be legal, valid and binding; or
(C)
any Transaction Documents or any Encumbrance created or purported to be created by the Transaction Documents ceases to be legal, valid, binding, enforceable or effective or is alleged by a party to
such Transaction Document (other than the Owners) to be ineffective,
and no agreement is reached between the
Owners and the Charterers to agree an alternative arrangement within thirty (30) days from the date of occurrence of any of the events
stated above; or
(x)
Repudiation an Obligor repudiates any Transaction Document to which it is a party or does or causes to be done any act or thing evidencing an intention to repudiate any such Transaction Document; or
(xi)
Validity and admissibility at any time any act, condition or thing required to be done, fulfilled or performed in order:
(A)
to enable any Obligor lawfully to enter into, exercise its rights under and perform the respective obligations expressed to be assumed by it in the Transaction Documents;
(B)
to ensure that the obligations expressed to be assumed by each of the Obligors in the Transaction Documents are legal, valid and binding; or
(C)
to make the Transaction Documents admissible in evidence in any applicable jurisdiction,
51
is not done, fulfilled or performed within
thirty (30) days after notification from the Owners to the relevant Obligor requiring the same to be done, fulfilled or performed; or
(xii)
ISM Code and ISPS Code for any reason whatsoever, the Vessel ceases to:
(A)
comply with the ISM Code or the ISPS Code; or
(B)
be managed by an Approved Manager on terms in all respects approved by the Owners,
in each case, which
is not remedied within three (3) Business Days after the earlier of written notice from the Owners requesting action to remedy the same
or the Charterers becoming aware of the same; or
(xiii)
Sanctions and AML laws etc.,
(A)
any Obligor is in breach of any Sanctions, Anti-Money Laundering Laws, Anti-Terrorism Financing Laws or Business Ethics Laws; or
(B)
any Obligor becomes a Restricted Person, or is owned or controlled by a Restricted Person, or owns or controls a Restricted Person; or
(C)
if as a result of any Sanctions, the Owners are prohibited from performing any of their obligations under the Transaction Documents or the transactions contemplated under the Transaction
Documents; or
(D)
a Sub-Charterer becomes a Restricted Person and the Owners fail to effect immediate termination of the Sub-Charter with such Sub-Charterer or fail to procure (within 60 days) a replacement Sub-
Charter reasonably satisfactory to the Owners; or
(xiv)
Arrest the Vessel is arrested or seized for any reason whatsoever (other than caused solely and directly by any action or omission from the Owners) unless the Vessel is released and returned to the possession
of the Charterers within sixty (60) days of such arrest or seizure; or
(xv)
Registration the registration of the Vessel becomes void or voidable or liable to cancellation or termination, or the country of registration of the Vessel becomes involved in war (whether or not declared) or
civil war or is occupied by any other power and the Owners consider that, as a result, safety of Owners' title to the Vessel is materially prejudiced other than caused directly or indirectly by the actions of the
Owners; or
(xvi)
Material adverse change at any time there shall occur any event or change which has a Material Adverse Effect; or
(xvii)
Material litigation any litigation, arbitration or administrative proceedings of or before any court, arbitral body or agency have been started or threatened in connection with any Obligor which, if adversely
determined, has a Material Adverse Effect; or
(xviii)
MOA and Initial Sub-Charter
(A)
any of the Sellers' default (as such term is described in the MOA) occurs under the MOA; or
(B)
the Initial Sub-Charteris is terminated, cancelled, repudiated or otherwise ceases to remain in full force and effect before the end of its agreed term, provided that no Termination Event will occur
under this sub-paragraph, if a replacement Sub-Charter with material terms and conditions satisfactory to the Owners is entered into by the Charterers and assigned to the Owners in form and
substance acceptable the Owners within 60 days after the termination, cancellation, repudiation or cessation of effectiveness of the Initial Sub-Charter; or
52
(xix)
Related Charter a "Termination Event" (as such term is defined in each Related Charter) occurs under any Related Charter which is continuing.
(b)
Owners' options after occurrence of a Termination Event At any time after a Termination Event shall have occurred and be continuing and if applicable, following the lapse of any applicable grace period, the Owners
may:
(i)
at their option and by delivering to the Charterers a Termination Notice, terminate this Charter with immediate effect or on the date specified in such Termination Notice, and withdraw the Vessel from the
service of the Charterers without noting any protest and without interference by any court or any other formality whatsoever, whereupon the Vessel shall no longer be in the possession of the Charterers with
the consent of the Owners, and the Charterers shall redeliver the Vessel to the Owners in accordance with Clauses 42 (Redelivery) and 43 (Redelivery conditions), whereupon the Owners may:
(A)
(in the event that the Charterers fail to pay the Termination Sum in full on the Termination Payment Date) at their option (but shall be under no obligation to), sell the Vessel to such party, at such time
and on such terms and conditions as they may, in their absolution discretion, think fit; and/or
(B)
generally, use or dispose of the Vessel as the Owners may see fit subject only to the terms of this Charter; and/or
(ii)
apply any amount then standing to the credit to the Earnings Account against any Unpaid Sum or such other amounts which the Charterer or other Obligors may owe under the Transaction Documents; and/or
(iii)
(without prejudice to sub-paragraph (ii) above) enforce any Security Interest created pursuant to the relevant Transaction Documents.
(c)
Payment of Termination Sum On the Termination Payment Date in respect of any termination of the chartering of the Vessel under this Charter in accordance with paragraph (b) above, the Charterers shall pay to the
Owners an amount equal to the Termination Sum.
(d)
Owners' application of Termination Sum Following any termination to which this Clause 49 applies, all sums payable in accordance with paragraph (c) above shall be paid to such account or accounts as the Owners
may direct and shall be applied pursuant to Clause 4.2 (Application of Transaction Documents Proceeds) of the Security Trust Deed.
(e)
Transfer of title If the chartering of the Vessel or, as the case may be, the obligation of the Owners to deliver and charter the Vessel to the Charterers is terminated in accordance with the terms of this Charter, the
obligation of the Charterers to pay Hire shall cease once the Charterers have made the payment pursuant to paragraph (c) above to the satisfaction of the Owners, whereupon the Owners shall arrange for title of the
Vessel to be transferred to the Charterers in accordance with paragraphs (d) to (h) of Clause 52 (Transfer of title).
(f)
Sale of Vessel Following any termination to which this Clause 49 applies, if the Charterers have not paid to the Owners the Termination Sum on the applicable Termination Payment Date (and consequently the Owners
have not transferred title to the Vessel to the Charterers in accordance with Clause 52 (Transfer of title)), the Owners shall be entitled (but not obliged) to sell the Vessel and apply the proceeds of a sale of the Vessel
received or receivable, net of any fees, commissions, documented costs, disbursements or other expenses incurred by the Owners as a result of the Owners arranging the proposed sale (the "Net Proceeds"), against the
Termination Sum and:
53
(i)
if the Net Proceeds do not exceed the Termination Sum, the Owners claim from the Charterers for any shortfall together with interest accrued thereon pursuant to paragraph (g) (Default interest) of Clause 40
(Hire) from the due date for payment thereof to the date of actual payment; or
(ii)
if the Net Proceeds exceed the Termination Sum, any surplus shall be applied in the order set out in clause 4.2 (Application of Transaction Document Proceeds) of the Security Trust Deed,
provided that
in the event:
(A)
the Owners have not yet entered into any agreement for the sale, charter or employment of the Vessel;
(B)
the Charterers furnish the Owners with an Offer no later than the date falling thirty (30) days after the Termination Payment Date (or such later date as may be agreed by the Owners, the "Latest MOA Date");
and
(C)
the potential buyer which has made the Offer (the "Potential Buyer") is acceptable to the Owners (acting reasonably, such acceptance not to be unreasonably withheld or delayed), the Owners shall, subject to
the entry into of a memorandum of agreement for the Vessel between the Potential Buyer and the Owners which shall be on terms acceptable to the Owners (the "Potential Buyer MOA") by the Latest MOA
Date, sell the Vessel to the Potential Buyer in accordance with the terms of the Potential Buyer MOA. For the avoidance of doubt, the Owners may at its sole discretion (acting reasonably) proceed to complete
any sale, charter or employment of the Vessel arranged by the Owners notwithstanding the Offer furnished by the Charterers. The proceeds of such sale shall, for the avoidance of any doubt, be applied in
accordance with this Clause 49(f)(i) and (ii) as above.
For the purposes of this
Clause 49(f):
"Offer"
means a firm offer for the purchase of the Vessel:
(i)
for a purchase price in cash (payable on delivery and acceptance of the Vessel) not less than the Relevant Amount; and
(ii)
on customary terms for sale and purchase of commercial vessels of similar type.
"Relevant Amount"
means the aggregate of the Termination Sum to be determined by the Owners payable on the delivery date of the Vessel under any Potential
Buyer MOA and to the extent not already included
within such Termination Sum, any actual or estimated costs associated with the entry
into the Potential Buyer MOA by the Potential Buyer and the conclusion of the transaction and the delivery of the Vessel
thereunder, including
any brokers' fees or commission.
(g)
Owners' rights reserved Without prejudice to the forgoing or to any other rights of the Owners under the Charter, at any time after a Termination Notice is served under paragraph (b) above, the Owners may, acting in
their sole discretion without prejudice to the Charterers' obligations under Clause 43 (Redelivery conditions), retake possession of the Vessel and, the Charterers agree that the Owners, for such purpose, may put into
force and exercise all their rights and entitlements at law and may enter upon any premises belonging to or in the occupation or under the control of the Charterers where the Vessel may be located as well as giving
instructions to the Charterers' servants or agents for this purpose.
54
(h)
Cumulative rights The rights conferred upon the Owners by the provisions of this Clause 49 are cumulative and in addition to any rights which they may otherwise have in law or in equity or by virtue of the
provisions of this Charter.
50.
Sub-chartering and assignment
(a)
the Charterers shall not without the prior written consent of the Owners (such consent not to be unreasonably withheld or delayed):
(i)
let the Vessel on demise charter for any period;
(ii)
enter into any consecutive time charter in respect of the Vessel for a term which exceeds, or which by virtue of any optional extension may exceed, twelve (12) months, or which would expire after the end of
the Charter Period (except for the Initial Sub-Charter or as may be permitted under any Sub-Charter);
(iii)
de-activate or lay up the Vessel; or
(iv)
assign their rights under this Charter.
(b)
The Charterers acknowledge that the Owners' consent to any sub-bareboat chartering may be subject (amongst other things) to the Owners being satisfied as to the intended flag during such sub-bareboat chartering.
(c)
Without prejudice to anything contained in this Clause 50, the Charterers shall only enter into a Sub-Charter which is for a purpose for which the Vessel is suited and with a Sub-Charterer who is not a Restricted
Person and in each case, the Charterers shall assign to the Owners all their earnings arising out of and in connection with any Sub-Charter and, subject to the Charterers' Assignment, all their rights and interest of any
Sub-charter (as such term is defined in the Charterers' Assignment) upon such terms and conditions as the Owners may require and the Charterers shall serve a notice on any Sub-Charterer (subject to the Charterers'
Assignment) and shall use reasonable commercial endeavors to obtain a written acknowledgement of such earnings assignment from such Sub-Charterer in such form as is required in good faith by the Owners or any
Finance Party (as the case may be).
(d)
Without prejudice to paragraph (c) above, the Vessel shall not be employed, operated or managed in any manner which:
(i)
is contrary to any Sanctions and in particular, the Vessel shall not be used by or to benefit any party which is a target of Sanctions and/or is a Restricted Person or trade to any Restricted Country;
(ii)
would result or reasonably be expected to result in any Obligor, the Sub-Charterers, or the Owners becoming a Restricted Person; or
(iii)
would trigger the operation of any Sanctions limitation or exclusion clause in any insurance documentation.
(e)
The Charterers shall, at the Charterers' costs, provide the Owners with copies of the Vessel's contracts of employment (including contracts of employment entered into by the Sub-Charterer) and reasonable details
relating to performance of such employment contracts every twelve (12) months from the Actual Delivery Date and from time to time, in each case, upon the Owners' written request.
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51.
Name of Vessel
(a)
Provided that the prior written consent has been given by the Owners (such approval not to be unreasonably withheld or delayed):
(i)
the name of the Vessel may be chosen by the Charterers; and
(ii)
the Vessel may be painted in the colours, display the funnel insignia and fly the house flag as required by the Charterers.
(b)
Following the termination of this Charter (other than a Default Termination), the Charterers shall have the right to require the Owners to change the name of the Vessel so that the Charterers can use the name.
52.
Transfer of title
Purchase option
(a)
The Charterers shall, from the date falling after and including the 3rd Anniversary, have the option to elect to purchase the Vessel from the Owners for the Purchase Option Price on the Purchase Option Date, subject to
satisfaction of the following conditions:
(i)
the Charterers have notified the Owners by serving an irrevocable written notice at least forty-five (45) days prior to the proposed Purchase Option Date of the Charterers' intention to exercise the option to
purchase the Vessel on a Purchase Option Date (the "Purchase Option Notice"),
(ii)
the proposed Purchase Option Date is a Hire Payment Date falling on or after the 3rd Anniversary;
(iii)
no Total Loss having occurred under Clause 53 (Total Loss); and
(iv)
no Termination Event having occurred and which is continuing or would occur as a result of such early termination.
(b)
The Purchase Option Notice, once given, shall be irrevocable and, unless with the Owners approve otherwise in writing, the Charterers shall have absolute obligation to pay the Purchase Option Price on the declared
Purchase Option Date. Upon receipt of full payment of the Purchase Option Price on the Purchase Option Date, the Owners shall arrange for the title of the Vessel to be transferred to the Charterers in accordance with
paragraphs (d) to (h) below.
Purchase obligation
(c)
In the event the Charterers do not exercise the option to purchase the Vessel prior to the expiry of the Charter Period in accordance with the preceding provisions of this Clause 52, the Charterers shall be obligated to
pay the Purchase Obligation Price and purchase the Vessel from the Owners on the last day of the Charter Period in accordance with paragraphs (d) to (h) below against the full payment of the Purchase Obligation
Price and all other amounts payable to the Owners under the Transaction Documents.
Transfer of title
(d)
(A) (as and where applicable) upon the Owners’ receipt in full of the Termination Sum, or
(B)
(in the absence of a Termination Event) upon (i) the Owners’ receipt of the full payment of the Purchase Option Price on the Purchase Option Date or (ii) full payment of the Purchase Obligation Price on the
last day of the Charter Period,
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and subject to payment
of all Unpaid Sum under the Transaction Documents and Unpaid Sum (as such terms is defined in each Related Charter) under the Related
Transaction Documents and the Charterers’
compliance with the other terms and conditions set out in this Clause, the Owners shall
do the following:
(i)
transfer the title to and ownership of the Vessel to the Charterers by delivering to the Charterers (in each case at the Charterers' costs):
(A)
a duly executed and acknowledged, notarised, legalised and/or apostilled (each to the extent compulsorily required by the Charterers' nominated flag state and as applicable) bill of sale; and
(B)
the Title Transfer PDA and such other documents as the Charterers may in good faith require to register the Vessel in their name; and
(ii)
to procure the deletion of any mortgage or prior Encumbrance created by the Owners in relation to the Vessel at the Charterers' cost and provide a copy of the Vessel's certificate of ownership and
encumbrance from the registries dated the date of delivery evidencing that the Vessel is free from registered encumbrances and mortgages,
provided always
that prior to such transfer or deletion (as the case may be), the Owners shall have received the letter of indemnity as referred to in
paragraph (g) below from the Charterers and the Charter Guarantor,
and the Charterers shall have performed all their obligations in connection
herewith and with the Vessel, including without limitation the full payment of all Unpaid Sums, Taxes, charges, duties, costs and
disbursements
(including reasonable and documented legal fees) in relation to the Vessel.
(e)
The transfer in accordance with paragraph (d) above shall be made in all respects at the Charterers' expense on an "as is, where is" basis and the Owners shall give the Charterers no representations, warranties,
agreements or guarantees whatsoever concerning or in connection with the Vessel, the Insurances, the Vessel's condition, state or class or anything related to the Vessel, expressed or implied, statutory or otherwise save
that the Vessel is free of mortgages, liens and encumbrances created by the Owners.
(f)
The Owners shall have no responsibility for the registrability of a bill of sale referred to in paragraph (d) above executed by the Owners, as far as such bill of sale is prescribed in forms generally acceptable to the
Vessel's registry at the date of execution of such bill of sale.
(g)
The Charterers shall, immediately prior to the receipt of the bill of sale referred to in paragraph (d) above, furnish the Owners with a letter of indemnity (in a form satisfactory to the Owners in good faith and with a
validity period not less than 12 months from delivery of the Vessel evidenced by the duly executed Title Transfer PDA) duly executed by the Charter Guarantor whereby the Charter Guarantor shall state that, among
other things, the Owners have and will have no interest, concern or connection with the Vessel after the date of such letter and that the Charter Guarantor shall indemnify the Owners and keep the Owners indemnified
against any claims made by any person arising in connection with the Vessel.
(h)
If the chartering of the Vessel is terminated in accordance with this Clause 52, the obligation of the Charterers to pay the Hire shall cease once the Charterers have paid the relevant Purchase Option Price, Purchase
Obligation Price, or the Termination Sum (as applicable) and any other sums payable by the Charterers to the Owners as required hereunder.
Early Prepayment
Event
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(i)
If, at any time during the Agreement Term, a Charter Guarantor Change of Control Event occurs, then:
(A)
the Charterers shall immediately notify the Owners;
(B)
subject to no Total Loss under Clause 53 (Total Loss) having occurred and no Termination Event under Clause 49 (Termination Events) having occurred and being continuing, and regardless of whether the
notice referred to in paragraph (A) above has been received by the Owners, the Owners may (but shall not be obliged to) notify the Charterers of its intention to terminate the Charter and require the transfer of
title to the Vessel from the Owners to the Charterers in exchange for payment by the Charterers to the Owners of the Termination Sum within 15 days from receipt of such Owners’ notification or on such later
date specified by the Owners in writing; and
(C)
the Charterers shall pay to the Owners the Termination Sum pursuant to the above.
For the avoidance of
doubt, Hire shall in any event continue to be payable for the full period and this Charter shall otherwise continue to be in full force
and effect until the Termination Sum has been received in full by
the Owners.
53.
Total Loss
(a)
If circumstances exist giving rise to a Total Loss, the Charterers shall promptly notify the Owners of the facts of such Total Loss. If the Charterers wish to proceed on the basis of a Total Loss and advise the Owners
thereof, the Owners shall agree to the Vessel being treated as a Total Loss for all purposes of this Charter. The Owners shall thereupon abandon the Vessel to the Charterers and/or execute such documents as may be
required to enable the Charterers to abandon the Vessel to insurers and claim a Total Loss. Without prejudice to the obligations of the Charterers to pay to the Owners all monies then due or thereafter to become due
under this Charter, if the Vessel shall become a Total Loss during the Charter Period, the Charter Period shall end on the Settlement Date.
(b)
If the Vessel becomes a Total Loss during the Charter Period, the Charterers shall, on the Settlement Date, pay to the Owners the amount calculated in accordance with paragraph (c) below.
(c)
On the Settlement Date, the Charterers shall pay to the Owners an amount equal to the Termination Sum as at the applicable Termination Payment Date. The foregoing obligations of the Charterers under this paragraph
(c) shall apply regardless of whether or not any moneys are payable under any Insurances in respect of the Vessel, regardless of the amount payable thereunder, regardless of the cause of the Total Loss and regardless
of whether or not any of the said compensation shall become payable.
(d)
All Total Loss Proceeds shall be paid to such account or accounts as the Owners may direct and shall be applied pursuant to Clause 4.2 (Application of Transaction Documents Proceeds) of the Security Trust Deed.
(e)
The Charterers shall, at the Owners' request, provide satisfactory evidence, in the reasonable opinion of the Owners, as to the date on which the constructive total loss of the Vessel occurred pursuant to the definition of
Total Loss.
(f)
The Charterers shall continue to pay Hire on the days and in the amounts required under this Charter notwithstanding that the Vessel shall become a Total Loss provided always that no further instalments of Hire shall
become due and payable after the Charterers have made the payment pursuant to paragraph (c) above.
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54.
Appointment of Approved Manager
(a)
The Charterers shall not and shall procure the Approved Managers will not appoint anyone other than the Approved Managers as managers or sub-manager of the Vessel without the prior written consent of the Owners
(such consent not to be unreasonably withheld or delayed).
(b)
The Charterers shall ensure that the Vessel is at all times managed by the Approved Managers pursuant to the Ship Management Agreements as approved by the Owners in writing in advance.
(c)
the Approved Managers shall provide a Manager's Undertaking (in such form as the Owners may reasonably require) and, unless the Owners approve otherwise, the Manager's Undertaking shall in express terms
confirm and undertake (among other things) that all claims of the Approved Managers against the Charterers (other than any Permitted Credit as such term is defined in the relevant Manager's Undertakings) shall be
subordinated to the claims of the Owners under the Transaction Documents.
(d)
Upon the occurrence of a Termination Event and while the same is continuing, the Owners reserves the right to appoint such other ship management company as replacement for any Approved Manager which the
Charterers may appoint.
55.
Fees and expenses
(a)
Immediately upon signing of this Charter, the Charterers shall pay to the Owners a non-refundable arrangement fee in an amount of US$445,000 (Dollars Four Hundred Forty Five Thousand only), which equals to one
percent (1%) of the Original Principle (the "Arrangement Fee").
(b)
The Charterers shall bear all costs, fees (including documented legal fees) and disbursements reasonably incurred by the Owners and the Charterers in connection with:
(i)
the negotiation, preparation and execution of this Charter and the other Transaction Documents or any Related Transaction Documents (in respect of the Related Charter listed in Schedule 3 hereto) and any
amendment thereto (in an aggregate amount not exceeding US$100,000);
(ii)
the delivery of the Vessel under the MOA and this Charter, including, without limitation, the Registration Costs, the initial and annual registration fees and tonnage tax payable to the relevant ship registry;
(iii)
subject to the remaining terms of this Charter, preparation or procurement of any survey, inspection, Valuation Report, tax or insurance advice;
(iv)
the Charterers’ exercising their purchase option right pursuant to Clause 52 (Transfer of title); and
(v)
such other activities relevant to the transaction contemplated herein, subject to any terms which may be agreed between the Owners and the Charterers in relation to any fees.
(c)
The Charterers shall:
(i)
pay to the Owners or to its order any of the Delivery Costs from time to time; and
(ii)
pay to the Owners or to its order promptly on the Owners' written demand the amount of all costs and expenses (including legal fees) incurred by the Owners in connection with the enforcement of, or the
preservation of any rights under, any Transaction Document.
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56.
Stamp duties and Taxes
The Charterers shall pay promptly but
in any event within ten (10) Business Days (or other period as may be agreed by both parties) of demand all stamp, documentary or other
like duties and Taxes to which the Charter, the
MOA and the other Transaction Documents may be subject or give rise and shall indemnify
the Owners within ten (10) Business Days of demand against any and all liabilities directly arising with respect to or resulting from
any delay on the part of the Charterers to pay such duties or Taxes.
57.
Operational notifiable events
(a)
The Owners are to be advised as soon as possible after the occurrence of any of the following events:
(i)
when a material condition of class is applied by the Classification Society which is not promptly complied with taking into account any applicable grace period;
(ii)
whenever the Vessel is arrested, confiscated, seized, requisitioned, impounded, forfeited or detained by any government or other competent authorities or any other persons for a period of at least two (2) days;
(iii)
whenever a class or flag authority refuses to issue or withdraw trading certification;
(iv)
in the event of a fire requiring the use of fixed fire systems or collision / grounding provided such events exceed the Threshold Amount;
(v)
whenever the Vessel is planned for dry-docking, whether in accordance with Clause 10(g) (Part II) or any Sub-Charter and whether routine or emergency;
(vi)
in the event of any material alteration and/or damage to the Vessel in excess of the Threshold Amount;
(vii)
the Vessel is taken under tow save for any routine towage (including when leaving or entering a port);
(viii)
any death or serious injury on board; or
(ix)
any Environmental Incident provided such incident has a Material Adverse Effect.
(b)
The Charterers shall, upon the Owners' written request, supply to the Owners annual in-house full ship inspection report by the end of each calendar year.
58.
Further indemnities
(a)
Whether or not any of the transactions contemplated hereby are consummated, the Charterers shall, in addition to the provisions under Clause 17 (Indemnity) (Part II) of this Charter, indemnify, protect, defend and
hold harmless the Owners, the Security Trustee and the Finance Parties and their respective officers, directors, agents and employees (collectively, the "Indemnitees") (without duplication with any payment or
insurance proceeds paid to the Indemnitees) throughout the Agreement Term from, against and in respect of, any and all liabilities, obligations, losses, damages, penalties, fines, documented fees, claims, actions,
proceedings, judgement, order or other sanction, lien, salvage, general average, suits, documented costs, expenses and disbursements, including reasonable legal fees and expenses, of whatsoever kind and nature, other
than taxes imposed on the overall gross income of the Indemnitees, (collectively, the "Expenses"), imposed on, suffered or incurred by or asserted against any Indemnitee, in any way relating to, resulting from or
arising out of or in connection with, in each case, directly or indirectly, any one or more of the following:
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(i)
this Charter and any other Transaction Documents and any amendment, supplement or modification thereof or thereto pursuant to the terms of this Charter or requested by the Charterers;
(ii)
the Vessel or any part thereof, including with respect to:
(A)
the manufacture, design, possession, use or non-use, operation, maintenance, testing, repair, overhaul, condition, alteration, modification, addition, improvement, storage, seaworthiness, replacement,
repair of the Vessel or any part (including, in each case, latent or other defects, whether or not discoverable and any claim for patent, trademark, or copyright infringement and all liabilities,
obligations, losses, damages and claims in any way relating to or arising out of spillage of cargo or fuel, out of injury to persons, properties or the environment or strict liability in tort);
(B)
any claim or penalty arising out of violations of applicable law by the Charterers, the Sub-Charterers or any other sub-charterers;
(C)
death or property damage of shippers or others;
(D)
any liens in respect of the Vessel or any part thereof including, without limitation, liens arising out of or in connection with any cargo claims (whether or not such claims arose prior to or during the
Charter Period) but excluding any liens arising out of or in connection with a direct act or omission of the Owners;
(E)
any registration and/or tonnage fees (whether periodic or not) in respect of the Vessel payable to any registry of ships and any service fees payable to any service provider in relation to maintaining
such registration at any registry of ships; or
(F)
any claims in relation to any loss or damage to cargo on board the Vessel during the Charter Period; or
(G)
all expenses suffered or incurred by the Owners which arise under or in connection with any applicable Environmental Law or any applicable Sanctions or any claim or penalty arising out of
Sanctions or violations of applicable law by any of the Obligors, or any Sub-charterers;
(iii)
any breach of or failure to perform or observe, or any other non-compliance with, any covenant or agreement or other obligation to be performed by the Charterers under any Transaction Document to which it
is a party or the falsity of any representation or warranty of the Charterers in any Transaction Document to which it is a party or the occurrence of any Termination Event;
(iv)
in preventing or attempting to prevent the arrest, confiscation, seizure, taking and execution, requisition, impounding, forfeiture or detention of the Vessel, or in securing or attempting to secure the release of
the Vessel in connection with the exercise of the rights of a holder of a lien created by the Charterers;
(v)
incurred or suffered by the Owners in:
(A)
procuring the delivery of the Vessel to the Charterers under Clause 35 (Delivery);
(B)
any non-delivery to or acceptance by the Charterers of the Vessel under this Charter;
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(C)
recovering possession of the Vessel following termination of this Charter under Clause 49 (Termination Events);
(D)
taking redelivery of the Vessel at the expiry of the Charter Period;
(E)
the Registration Costs;
(vi)
arising from the Master or officers of the Vessel or the Charterers' agents signing bills of lading or other documents;
(vii)
in connection with:
(A)
the arrest, seizure, taking into custody or other detention by any court or other tribunal or by any governmental entity; or
(B)
subjection to distress by reason of any process, claim, exercise of any rights conferred by a lien or by any other action whatsoever, of the Vessel which are expended, suffered or incurred as a result of
or in connection with any claim or against, or liability of, the Charterers or any other member of the Charter Group, together with any documented costs and expenses or other outgoings which may
be paid or incurred by the Owners in releasing the Vessel from any such arrest, seizure, custody, detention or distress.
(b)
The Charterers shall pay to the Owners promptly on the Owners written demand within ten (10) Business Days the amount of all documented costs and expenses (including legal fees) incurred by the Owners in
connection with the enforcement of, or the preservation of any rights under, any Transaction Document including (without limitation) (i) any documented losses, costs and expenses which the Owners may from time to
time sustain, incur or become liable for by reason of the Owners being deemed by any court or authority to be an operator, or in any way concerned in the operation, of the Vessel and (ii) collecting and recovering the
proceeds of any claim under any of the Insurances.
(c)
Without prejudice to any right to damages or other claim which either party may, at any time, have against the other hereunder, it is hereby agreed and declared that the indemnities of the Owners by the Charterers
contained in this Charter shall continue to have full force and effect notwithstanding any termination, cancellation or expiration of this Charter for a further period of 12 months following such termination, cancellation
or expiration.
59.
Further assurances and undertakings
(a)
The Charterers shall, and shall procure each of the other Obligor will, make all applications and execute all other documents and do all other acts and things as may be necessary to implement and to carry out their
obligations under, and the intent of, this Charter.
(b)
The parties shall act in good faith to each other in respect of any dealings or matters under, or in connection with, this Charter.
60.
Cumulative rights
The rights, powers
and remedies provided in this Charter are cumulative and not exclusive of any rights, powers or remedies at law or in equity unless specifically
otherwise stated.
61.
No waiver
No delay, failure
or forbearance by a party to exercise (in whole or in part) any right, power or remedy under, or in connection with, this Charter will
operate as a waiver. No waiver of any breach of any provision of this Charter
will be effective unless that waiver is in writing and signed
by the party against whom that waiver is claimed. No waiver of any breach will be, or be deemed to be, a waiver of any other or subsequent
breach.
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62.
Entire agreement
(a)
Save for the other Transaction Documents and the Quiet Enjoyment Letter, this Charter contains all the understandings and agreements of whatsoever kind and nature existing between the parties in respect of this
Charter, the rights, interests, undertakings agreements and obligations of the parties to this Charter and shall supersede all previous and contemporaneous negotiations and agreements.
(b)
This Charter may not be amended, altered or modified except by a written instrument executed by each of the parties to this Charter.
63.
Invalidity
If any term or provision of this Charter
or the application thereof to any person or circumstances shall to any extent be invalid or unenforceable the remainder of this Charter
or application of such term or provision to persons
or circumstances (other than those as to which it is already invalid or unenforceable)
shall (to the extent that such invalidity or unenforceability does not materially affect the operation of this Charter) not be affected
thereby
and each term and provision of this Charter shall be valid and be enforceable to the fullest extent permitted by law.
64.
English language
All notices, communications and financial
statements and reports under or in connection with this Charter and the other Transaction Documents shall be in English language or, if
in any other language, shall be accompanied by
a translation into English. In the event of any conflict between the English text and the
text in any other language, the English text shall prevail.
65.
No partnership
Nothing in this Charter
creates, constitutes or evidences any partnership, joint venture, agency, trust or employer/employee relationship between the parties,
and neither party may make, or allow to be made any representation
that any such relationship exists between the parties. Neither party
shall have the authority to act for, or incur any obligation on behalf of, the other party, except as expressly provided in this Charter.
66.
Notices
(a)
Any notices to be given to the Owners under this Charter shall be sent in writing by courier, registered letter or email and addressed to:
Address:
3F, Building No.8, Beijing Friendship Hotel, Haidian District, Beijing, 100873, China
Email:
Fang Zhao Qing / Zhu Xin
Attention:
fangzhaoqing@msfl.com.cn / zhuxin@msfl.com.cn
or to such other address
or email address as the Owners may notify to the Charterers in accordance with this Clause 66.
(b)
Any notices to be given to the Charterers under this Charter shall be sent in writing by courier, registered letter or email and addressed to:
Address: 3-5 Menandrou
street, Kifissia, Athens, 14561
Email: legalconfidential@technomar.gr
Tel: +30 2106233670
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Attention: Mrs.
Maria Danezi
or to such other address,
phone number or email address as the Charterers may notify to the Owners in accordance with this Clause 66.
(c)
Any such notice shall be deemed to have reached the party to whom it was addressed, when dispatched and acknowledged received (in case of a facsimile or an email) or when delivered (in case of courier or a
registered letter). A notice or other such communication received on a non-working day or after business hours in the place of receipt shall be deemed to be served on the next following working day in such place.
(d)
Any communication or document to be made or delivered by one party to another under or in connection with the Transaction Documents may be made or delivered by electronic mail or other electronic means
(including, without limitation, by way of posting to a secure website) if those two parties:
(i)
notify each other in writing of their electronic mail address and/or any other information required to enable the transmission of information by that means; and
(ii)
notify each other of any change to their address or any other such information supplied by them by not less than five Business Days' notice.
(e)
Any such electronic communication or delivery as specified in paragraph (d) above to be made between an Obligor and the Owners may only be made in that way to the extent that those two parties agree that, unless
and until notified to the contrary, this is to be an accepted form of communication or delivery.
(f)
Any such electronic communication or delivery as specified in paragraph (d) above made or delivered by one party to another will be effective only when actually received (or made available) in readable form and in
the case of any electronic communication or document made or delivered by a party to the Owners only if it is addressed in such a manner as the Owners shall specify for this purpose.
(g)
Any electronic communication or document which becomes effective, in accordance with paragraph (iv) above, after 5:00 p.m. in the place in which the party to whom the relevant communication or document is sent
or made available has its address for the purpose of this.
67.
Conflicts
Unless stated otherwise, in the event
of there being any conflict between the provisions of Clauses 1 (Definitions) (Part II) to 31 (Notices) (Part II) and the
provisions of Clauses 32 (Definitions) to 76 (Assignment and Transfer),
the provisions of Clauses 32 (Definitions)
to 76 (Assignment and Transfer) shall prevail.
68.
Survival of Charterers' obligations
The termination of this Charter for any
cause whatsoever shall not affect the rights of the Owners under the Transaction Documents to recover from the Charterers any money due
to the Owners in consequence thereof pursuant
and subject to the terms hereof and all other rights of the Owners (including but not limited
to any rights, benefits or indemnities which are provided to continue after the termination of this Charter, always subject to any
applicable
validity limitation stipulated in the relevant provisions of this Charter) are reserved hereunder pursuant and subject to the terms hereof.
69.
Counterparts
This Charter may be executed in any number
of counterparts and any single counterpart or set of counterparts signed, in either case, by all the parties hereto shall be deemed to
constitute a full and original agreement for all
purposes.
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70.
Third Parties Act
(a)
Any person which is an Indemnitee or a Finance Party from time to time and is not a party to this Charter shall be entitled to enforce such terms of this Charter as provided for in this Charter in relation to the
obligations of the Charterers to such Indemnitee or (as the case may be) Finance Party, subject to the provisions of Clause 30 (Dispute Resolution), Clause 74 (Arbitration) and the Third Parties Act. The Third Parties
Act applies to this Charter as set out in this Clause 70.
(b)
Save as provided above, a person who is not a party to this Charter has no right under the Third Parties Act to enforce or to enjoy the benefit of any term of this Charter.
71.
Waiver of immunity
(a)
To the extent that the parties may in any jurisdiction claim for themselves or their assets or revenues immunity from any proceedings, suit, execution, attachment (whether in aid of execution, before judgment or
otherwise) or other legal process and to the extent that such immunity (whether or not claimed) may be attributed in any such jurisdiction to the parties or their assets or revenues, the parties agree not to claim and
irrevocably waive such immunity to the full extent permitted by the laws of such jurisdiction.
(b)
The parties consent generally in respect of any proceedings to the giving of any relief and the issue of any process in connection with such proceedings including (without limitation) the making, enforcement or
execution against any property whatsoever (irrespective of its use or intended use) of any order or judgment which is made or given in such proceedings. The Parties agree that in any proceedings in England this
waiver shall have the fullest scope permitted by the English State Immunity Act 1978 and that this waiver is intended to be irrevocable for the purposes of such Act.
72.
FATCA
(a)
Subject to paragraph (d) below, each Party shall, within ten Business Days of a reasonable request by another Party:
(i) confirm
to that other Party whether it is:
(A) a
FATCA Exempt Party; or
(B) not
a FATCA Exempt Party;
(ii)
supply to that other Party such forms, documentation and other information relating to its status under FATCA as that other Party reasonably requests for the purposes of that other Party's compliance with
FATCA; and
(iii)
supply to that other Party such forms, documentation and other information relating to its status as that other Party reasonably requests for the purposes of that other Party's compliance with any other law,
regulation, or exchange of information regime.
(b)
If a Party confirms to another Party pursuant to paragraph (b)(i) above that it is a FATCA Exempt Party and it subsequently becomes aware that it is not or has ceased to be a FATCA Exempt Party, that Party shall
notify that other Party reasonably promptly.
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(c)
Paragraph (b) above shall not oblige the Owners to do anything, and paragraph (b)(iii) above shall not oblige any other Party to do anything, which would or might in its reasonable opinion constitute a breach of:
(i)
any law or regulation;
(ii)
any fiduciary duty; or
(iii)
any duty of confidentiality.
(d)
If a Party fails to confirm whether or not it is a FATCA Exempt Party or to supply forms, documentation or other information requested in accordance with paragraph (b)(i) or (ii) above (including, for the avoidance of
doubt, where paragraph (d) above applies), then such Party shall be treated for the purposes of this Charter and the other Transaction Documents (and payments under them) as if it is not a FATCA Exempt Party until
such time as the Party in question provides the requested confirmation, forms, documentation or other information.
(e)
Each Party, Obligor may make any FATCA Deduction it is required by FATCA to make, and any payment required in connection with that FATCA Deduction, no Party or Obligor shall be required to increase any
payment in respect of which it makes such a FATCA Deduction or otherwise compensate the recipient of the payment for that FATCA Deduction.
(f)
Each Party or Obligor (if applicable) shall promptly, upon becoming aware that it must make a FATCA Deduction (or that there is any change in the rate or the basis of such FATCA Deduction) notify the Party or
Obligor (if applicable) to whom it is making the payment.
(g)
For the purpose of this Clause 72, the following terms shall have the following meanings:
"Code" means the United
States Internal Revenue Code of 1986, as amended.
"FATCA" means:
(i)
sections 1471 through 1474 of the Code or any associated regulations;
(ii)
any treaty, law or regulation of any other jurisdiction, or relating to an intergovernmental agreement between the US and any other jurisdiction, which (in either case) facilitates the implementation of any law
or regulation referred to in paragraph (i) above; or
(iii)
any agreement pursuant to the implementation of any treaty, law or regulation referred to in paragraphs (i) or (ii) above with the US Internal Revenue Service, the US government or any governmental or
taxation authority in any other jurisdiction.
"FATCA Deduction" means
a deduction or withholding from a payment under this Charter or the other Transaction Documents required by FATCA.
"FATCA Exempt Party"
means a Party that is entitled to receive payments free from any FATCA Deduction.
73.
Governing Law
This Charter and any non-contractual
obligations arising out of or in connection with it shall in all respect be governed by and construed in accordance with English law.
74.
Arbitration
(a)
Any dispute arising out of or in connection with this Charter shall be referred to arbitration in London in accordance with the Arbitration Act 1996 or any statutory modification or re-enactment thereof save to the
extent necessary to give effect to the provisions of this Clause.
66
(b)
The arbitration shall be conducted in accordance with the London Maritime Arbitrators Association (LMAA) Terms current at the time when the arbitration proceedings are commenced.
(c)
The reference shall be to three arbitrators, one to be appointed by each party and the third, subject to the provisions of the LMAA Terms, by the two so appointed. A party wishing to refer a dispute to arbitration shall
appoint its arbitrator and send notice of such appointment in writing to the other party requiring the other party to appoint its own arbitrator within fourteen (14) calendar days of that notice and stating that it will
appoint its arbitrator as sole arbitrator unless the other party appoints its own arbitrator and gives notice that it has done so within the fourteen (14) days specified. If the other party does not appoint its own arbitrator
and give notice that it has done so within the fourteen (14) days specified, the party referring a dispute to arbitration may, without the requirement of any further prior notice to the other party, appoint its arbitrator as
sole arbitrator and shall advise the other party accordingly. The award of a sole arbitrator shall be binding on both Parties as if the sole arbitrator had been appointed by agreement.
(d)
In cases where neither the claim nor any counterclaim exceeds the sum of US$100,000 the arbitration shall be conducted in accordance with the LMAA Small Claims Procedure current at the time when the arbitration
proceedings are commenced.
75.
Confidentiality
(a)
The Parties shall maintain the information provided in connection with the Transaction Documents strictly confidential and agree to disclose to no person other than:
(i)
its board of directors, employees (only on a need to know basis), and shareholders, professional advisors (including the legal and accounting advisors and auditors) and rating agencies;
(ii)
as may be required to be disclosed under applicable law or regulations or for the purpose of legal proceedings;
(iii)
in the case of the Owners, (1) to any of its Affiliate (more than one of them, collectively, the “Permitted Parties”), any Finance Party or other actual or potential financier providing funding for the acquisition
or refinancing of the Vessel (provided the same have entered into similar confidentiality arrangements), (2) to professional advisers, auditors, insurers or insurance brokers and service providers of the
Permitted Parties who are under a duty of confidentiality to the Permitted Parties and (3) as required by any law or any government, quasi-government, administrative, regulatory or supervisory body or
authority, court or tribunal with jurisdiction over any of the Permitted Parties;
(iv)
in the case of the Charterers, to any Sub-Charterers (but subject always to paragraph (b) below) in respect of obtaining any consent required under the terms of any relevant Sub-Charter;
(v)
any Approved Managers, the classification society and flag authorities, in each case as may be necessary in connection with the transactions contemplated hereunder; and
(vi)
any person which is a classification society or other entity which the Owners, any of their Affiliates or a Finance Party has engaged to make the calculations necessary to enable the Owners, any of their
Affiliates or a Finance Party to comply with their reporting obligations under the Poseidon Principles.
67
(b)
Any other disclosure by each Party shall be subject to the prior written consent of the other Party, provided that the Charterers may disclose any information provided in connection with the Transaction Documents to
their subcontractors and any Sub-Charterers, in each case subject to the procurement of a confidentiality undertaking (in form and substance satisfactory to the Owners) from such sub-contractor or Sub-Charterers.
76.
Assignment and Transfer
(a)
The Charterers shall not be permitted to assign or transfer any of their rights or obligations under this Charter without the Owners’ written approval. The Owners shall have the right to assign or transfer any or all of
their rights under this Charter in accordance with the provisions of Clause 5 of the Security Trust Deed.
(b)
Without limiting the generality of Clause 48(m) (Further assurance), the Charterer undertakes to execute, provide or procure the execution or provision (as the case may be) of such further information or document as
is necessary to effect the assignment and/or transfer referred to in sub-paragraph (a) above.
77.
Financing Charter
(a)
The Owners and the Charterers hereto acknowledge and agree that this Charter shall be construed as a "financing charter" for all purposes under the Liberian Maritime Law, and this Charter is intended to be treated as
a preferred mortgage over the whole of the Vessel in favour of the Owners under any provision of law now existing or hereafter coming into force in the Republic of Liberia. The Charterers grant to the Owners, and the
Owners retain as security for the payment and performance of all the Obligors their respective obligations under and in connection with the Transaction Documents, whether now or hereafter incurred, all of the
Charterers’ interest in and to the whole of the Vessel. The Charterers shall cause this Charter to be recorded in accordance with said Law.
(b)
For the purpose of recording this Charter as a Financing Charter under the laws of the Republic of Liberia, the maximum aggregate of the nominal amount of all charter hire payments, termination payments, purchase
or put option amounts payable, or which may become payable, is United States Dollars Forty Four Million Five Hundred Thousand (US$44,500,000), plus interest, liabilities, indemnities, costs, expenses, fees and
performance of the Charterers’ covenants.
[Execution page and scheduled to follow]
68
SCHEDULE
1
FORM OF PROTOCOL OF DELIVERY AND ACCEPTANCE
PROTOCOL OF DELIVERY AND ACCEPTANCE
It is hereby certified that pursuant to a bareboat
charter dated ___________________ and made between OCEAN DANCE SHIPPING LIMITED,
a company incorporated and existing under the laws the laws of the Hong Kong
Special Administrative Region of the People’s Republic
of China and having its registered office at Units 904-907, 9/F, Dah Sing Financial Centre, 248 Queen's Road East, Hong Kong, China (the
"Owners") as owner and GLOBAL
SHIP LEASE 76 LLC, a limited liability company incorporated and existing under the
laws of the Republic of Liberia and having its registered office at 80 Broad Street, Monrovia, Liberia (the "Bareboat Charterer")
as bareboat
charterer (as may be amended and supplemented from time to time, the "Bareboat Charter") in respect of one
(1) bulk carrier named "CZECH" with IMO Number 9723241 (the "Vessel"), the Vessel is delivered
for charter by the
Owner to the Bareboat Charterer, and accepted by the Bareboat Charterer from the Owner at __________ hours (Beijing
time) on the date hereof in accordance with the terms and conditions of the Bareboat Charter.
IN WITNESS WHEREOF, the Owner and the Bareboat
Charterer have caused this PROTOCOL OF DELIVERY AND ACCEPTANCE to be executed by their duly authorised representative on this _______
day of _____________ .
THE OWNER
THE BAREBOAT CHARTERER
OCEAN DANCE SHIPPING LIMITED
GLOBAL SHIP LEASE 76 LLC
by:
by:
________________________________
________________________________
Name:
Name:
Title:
Title:
69
SCHEDULE
2
FORM OF TITLE TRANSFER PROTOCOL OF DELIVERY AND ACCEPTANCE
PROTOCOL OF DELIVERY AND ACCEPTANCE
"[VESSEL
NAME]"
OCEAN DANCE
SHIPPING LIMITED of [registered address], Hong Kong, China (the "Owners") deliver to GLOBAL SHIP
LEASE 76 LLC of 80 Broad Street, Monrovia, Liberia (the "Bareboat Charterers") the Vessel
described below and the
Bareboat Charterers accept delivery of, title and risk to the Vessel pursuant to the terms and conditions of the bareboat charterer dated
[●] (as may be amended and supplemented from time to time) and made
between (1) the Owners and (2) the Bareboat Charterers.
Name of Vessel:
[●]
Flag:
[●]
Place of Registration:
[●]
IMO Number:
[●]
Gross Registered Tonnage:
[●]
Net Registered Tonnage:
[●]
Dated:
_____________________ 20[●]
At:
_____________ hours (Beijing time)
THE OWNER
THE BAREBOAT CHARTERER
OCEAN DANCE SHIPPING LIMITED
GLOBAL SHIP LEASE 76 LLC
by:
by:
________________________________
________________________________
Name:
Name:
Title:
Title:
70
SCHEDULE
3
RELATED CHARTER AND RELEVANT INFORMATION
Name of Ship
IMO Number
Related Owners
Related Charterers
BREMERHAVEN EXPRESS
9723253
OCEAN JING SHIPPING LIMITED
GLOBAL SHIP LEASE 77 LLC
SYDNEY EXPRESS
9723265
OCEAN RAINBOW SHIPPING LIMITED
GLOBAL SHIP LEASE 78 LLC
ISTANBUL EXPRESS
9723277
OCEAN TIANXIU SHIPPING LIMITED
GLOBAL SHIP LEASE 79 LLC
71
SIGNATURE PAGE
THE OWNER
THE BAREBOAT CHARTERER
OCEAN DANCE SHIPPING LIMITED
GLOBAL SHIP LEASE 76 LLC
by:
by:
/s/
Huang Mei
/s/
Aglaia Lida
Papadi
Name:
Huang Mei
Name:
Aglaia Lida Papadi
Title: Director
Title:
Attorney-in-fact
Exhibit
8.1
No.
Name
Business
Jurisdiction
1
Global
Ship Lease, Inc.
Holding
Republic
of Marshall Islands
2
GSL
Rome LLC
Sub-holding
Republic
of Marshall Islands
3
Poseidon
Containers Holdings LLC
Sub-holding
Republic
of Marshall Islands
4
K&T
Marine LLC (dissolved 30/10/2024)
Sub-holding
Republic
of Marshall Islands
5
GSL
Enterprises Ltd.
Service
company
Republic
of Marshall Islands
6
GSL
Legacy Holding LLC
Sub-holding
Republic
of Marshall Islands
7
Knausen
Holding LLC
Sub-holding
Republic
of Marshall Islands
8
GSL
Alcazar Inc.
Owns
CMA CGM Alcazar
Republic
of Marshall Islands
9
GSL
Holdings, Inc. (dissolved 30/10/2024)
Sub-holding
Republic
of Marshall Islands
10
Global
Ship Lease Investments, Inc. (dissolved 30/10/2024)
Sub-holding
Republic
of Marshall Islands
11
Aris
Marine LLC
Owns
Maira
Republic
of Marshall Islands
12
Aphrodite
Marine LLC
Owns
Nikolas
Republic
of Marshall Islands
13
Athena
Marine LLC
Owns
Newyorker
Republic
of Marshall Islands
14
Hephaestus
Marine LLC
Owns
Dolphin II
Republic
of Marshall Islands
15
Pericles
Marine LLC
Owns
Athena
Republic
of Marshall Islands
16
Zeus
One Marine LLC
Owns
Orca I
Republic
of Marshall Islands
17
Leonidas
Marine LLC
Owns
Agios Dimitrios
Republic
of Marshall Islands
18
Odysseus
Marine LLC (dissolved 30/10/2024)
Sub-holding
Republic
of Marshall Islands
19
Alexander
Marine LLC
Owns Colombia Express
(ex Mary)
Republic
of Marshall Islands
20
Hector
Marine LLC
Owns Panama Express
(ex Kristina)
Republic
of Marshall Islands
21
Ikaros
Marine LLC
Owns Costa Rica Express
(Katherine)
Republic
of Marshall Islands
22
Tasman
Marine LLC
Owns
Tasman
Republic
of Marshall Islands
23
Hudson
Marine LLC
Owns Dimitris Y (ex
Zim Europe)
Republic
of Marshall Islands
24
Drake
Marine LLC
Owns
Ian H
Republic
of Marshall Islands
25
Triton
Containers Holdings LLC (dissolved 30/10/2024)
Sub-holding
Republic
of Marshall Islands
26
Triton
NB LLC (dissolved 30/10/2024)
Sub-holding
Republic
of Marshall Islands
27
Philippos
Marine LLC
Owns Nicaragua Express
(ex Alexandra)
Republic
of Marshall Islands
28
Aristoteles
Marine LLC
Owns Mexico Express
(ex Alexis)
Republic
of Marshall Islands
29
Menelaos
Marine LLC
Owns Jamaica Express
(ex Olivia I)I
Republic
of Marshall Islands
30
Odyssia
Containers Holdings LLC (dissolved 30/10/2024)
Sub-holding
Republic
of Marshall Islands
31
Odyssia
NB LLC (dissolved
30/10/2024)
Sub-holding
Republic
of Marshall Islands
32
Laertis
Marine LLC
Owns
ZIM Norfolk
Republic
of Marshall Islands
33
Penelope
Marine LLC
Owns
ZIM Xiamen
Republic
of Marshall Islands
34
Telemachus
Marine LLC
Owns
Anthea Y
Republic
of Marshall Islands
35
Global
Ship Lease 30 LLC
Owns
GSL Eleni
Republic
of Marshall Islands
36
Global
Ship Lease 31 LLC
Owns
GSL Kalliopi
Republic
of Marshall Islands
37
Global
Ship Lease 32 LLC
Owns
GSL Grania
Republic
of Marshall Islands
38
Global
Ship Lease 33 LLC
Owns
GSL Vinia
Liberia
39
Global
Ship Lease 34 LLC
Owns
GSL Christel Elisabeth
Liberia
40
Global
Ship Lease 35 LLC
Owns
GSL Nicoletta
Liberia
41
Global
Ship Lease 36 LLC
Owns
GSL Christen
Liberia
42
Global
Ship Lease 38 LLC
Owns
Manet
Liberia
43
Global
Ship Lease 40 LLC
Owns
Keta
Liberia
44
Global
Ship Lease 41 LLC
Owns
Julie
Liberia
45
Global
Ship Lease 42 LLC
Owns
GSL Valerie
Liberia
46
Global
Ship Lease 43 LLC
Owns
GSL Ningbo
Liberia
47
Global
Ship Lease 44 LLC
Owns
Marie Delmas
Liberia
48
Global
Ship Lease 45 LLC
Owns
Kumasi
Liberia
49
Global
Ship Lease 47 LLC
Owns
GSL Chateau d 'If
Liberia
50
Global
Ship Lease 48 LLC
Owns
CMA CGM Berlioz
Liberia
51
Global
Ship Lease 49 LLC
Owns
CMA CGM Sambhar
Liberia
52
Global
Ship Lease 50 LLC
Owns
CMA CGM Jamaica
Liberia
53
Global
Ship Lease 51 LLC
Owns
CMA CGM America
Liberia
54
Global
Ship Lease 52 LLC
Owns
MSC Qingdao
Liberia
55
Global
Ship Lease 53 LLC
Owns
MSC Tianjin
Liberia
56
Global
Ship Lease 54 LLC
Owns
CMA CGM Thalassa
Liberia
57
Global
Ship Lease 20 Limited
Inactive
Hong
Kong
58
Global
Ship Lease 21
Inactive
Hong
Kong
59
Global
Ship Lease 22 Limited (dissolved March 8, 2024)
Inactive
Hong
Kong
60
Global
Ship Lease 23 Limited
Inactive
Hong
Kong
61
Global
Ship Lease 26 Limited (dissolved March 8, 2024)
Inactive
Hong
Kong
62
Global
Ship Lease Services Limited (dissolved September 24, 2024)
Service
company
UK
63
GSL
Arcadia LLC
Owns
GSL Arcadia
Liberia
64
GSL
Tegea LLC
Owns
GSL Tegea
Liberia
65
GSL
MYNY LLC
Owns
GSL MYNY
Liberia
66
GSL
Melita LLC
Owns
GSL Melita
Liberia
67
GSL
Maria LLC
Owns
GSL Maria
Liberia
68
GSL
Violetta LLC
Owns
GSL Violetta
Liberia
69
GSL
Dorothea LLC
Owns
GSL Dorothea
Liberia
70
Global
Ship Lease 55 LLC
Owns
GSL Susan
Liberia
71
Global
Ship Lease 57 LLC
Owns
GSL Rossi
Liberia
72
Global
Ship Lease 58 LLC
Owns
GSL Alice
Liberia
73
Global
Ship Lease 59 LLC
Owns
GSL Melina
Liberia
74
Global
Ship Lease 60 LLC
Owns
GSL Eleftheria
Liberia
75
Global
Ship Lease 61 LLC
Owns
GSL Mercer
Liberia
76
Global
Ship Lease 62 LLC
Owns GSL Mamitsa (ex
Matson Molokai)
Liberia
77
Global
Ship Lease 63 LLC
Owns
GSL Lalo
Liberia
78
Global
Ship Lease 64 LLC
Owns
GSL Elizabeth
Liberia
79
Global
Ship Lease 65 LLC
Owns
GSL Chloe
Liberia
80
Global
Ship Lease 66 LLC
Owns
GSL Maren
Liberia
81
Global
Ship Lease 67 LLC
Owned
GSL Amstel (sold March 23, 2023)
Liberia
82
Global
Ship Lease 68 LLC (1)
Owns
GSL Kithira
Liberia
83
Global
Ship Lease 69 LLC (1)
Owns
GSL Tripoli
Liberia
84
Global
Ship Lease 70 LLC (1)
Owns
GSL Syros
Liberia
85
Global
Ship Lease 71 LLC (1)
Owns
GSL Tinos
Liberia
86
Global
Ship Lease 72 LLC
Owns
GSL Alexandra
Liberia
87
Global
Ship Lease 73 LLC
Owns
GSL Sofia
Liberia
88
Global
Ship Lease 74 LLC
Owns
GSL Effie
Liberia
89
Global
Ship Lease 75 LLC
Owns
GSL Lydia
Liberia
90
GSL
KALAMATA LLC
Sub-holding
Liberia
91
GSL
KITHIRA HOLDING LLC
Sub-holding
Liberia
92
Global Ship Lease 78
LLC (1)
Owns Sydney Express
(delivered December 6, 2024)
Liberia
93
Global Ship Lease 79
LLC (1)
Owns Istanbul Express
(delivered December 11, 2024)
Liberia
94
Global Ship Lease 77
LLC (1)
Owns Bremerhaven Express
(delivered December 30, 2024)
Liberia
95
Global Ship Lease 76
LLC (1)
Owns Czech (delivered
January 9, 2025)
Liberia
(1) Currently,
under a sale and leaseback transaction.
Exhibit
12.1
CERTIFICATION
OF THE PRINCIPAL EXECUTIVE OFFICER
I,
Thomas A. Lister, Chief Executive Officer of the Company, certify that:
1.
I
have reviewed this Annual Report on Form 20-F of Global Ship Lease, Inc.;
2.
Based
on my knowledge, this report does not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements made, in light of the circumstances
under which such statements
were made, not misleading with respect to the period covered
by this report;
3.
Based
on my knowledge, the financial statements, and other financial information included in this
report, fairly present in all material respects the financial condition, results of operations
and cash flows of the company as
of, and for, the periods presented in this report;
4.
The
company’s other certifying officer(s) and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e))
and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f)
and 15d-15(f)) for the company and have:
a)
Designed
such disclosure controls and procedures, or caused such disclosure controls and procedures
to be designed under our supervision, to ensure that material information relating to the
company, including its
consolidated subsidiaries,
is made known to us by others within those entities, particularly during the period in which
this report is being prepared;
b)
Designed
such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding
the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles;
c)
Evaluated
the effectiveness of the company’s disclosure controls and procedures and presented
in this report our conclusions about the effectiveness of the disclosure controls and procedures,
as of the end of the period
covered by this report based on such evaluation; and
d)
Disclosed
in this report any change in the company’s internal control over financial reporting
that occurred during the period covered by the annual report that has materially affected,
or is reasonably likely to materially
affect, the company’s internal control over financial
reporting; and
5.
The
company’s other certifying officer(s) and I have disclosed, based on our most recent
evaluation of internal control over financial reporting, to the company’s auditors
and the audit committee of the company’s board of
directors (or persons performing
the equivalent functions):
a)
All
significant deficiencies and material weaknesses in the design or operation of internal control
over financial reporting which are reasonably likely to adversely affect the company’s
ability to record, process,
summarize and report financial information; and
b)
Any
fraud, whether or not material, that involves management or other employees who have a significant
role in the company’s internal control over financial reporting.
Dated: March 18,
2025
By: /s/
Thomas A. Lister
Thomas A. Lister
Chief Executive Officer
(Principal Executive Officer)
Exhibit
12.2
CERTIFICATION
OF THE PRINCIPAL FINANCIAL OFFICER
I,
Anastasios Psaropoulos, Chief Financial Officer of the Company, certify that:
1.
I
have reviewed this Annual Report on Form 20-F of Global Ship Lease, Inc.;
2.
Based
on my knowledge, this report does not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements made, in light of the circumstances
under which such statements
were made, not misleading with respect to the period covered
by this report;
3.
Based
on my knowledge, the financial statements, and other financial information included in this
report, fairly present in all material respects the financial condition, results of operations
and cash flows of the company as
of, and for, the periods presented in this report;
4.
The
company’s other certifying officer(s) and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e))
and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f)
and 15d-15(f)) for the company and have:
a)
Designed
such disclosure controls and procedures, or caused such disclosure controls and procedures
to be designed under our supervision, to ensure that material information relating to the
company, including its
consolidated subsidiaries,
is made known to us by others within those entities, particularly during the period in which
this report is being prepared;
b)
Designed
such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding
the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles;
c)
Evaluated
the effectiveness of the company’s disclosure controls and procedures and presented
in this report our conclusions about the effectiveness of the disclosure controls and procedures,
as of the end of the period
covered by this report based on such evaluation; and
d)
Disclosed
in this report any change in the company’s internal control over financial reporting
that occurred during the period covered by the annual report that has materially affected,
or is reasonably likely to materially
affect, the company’s internal control over financial
reporting; and
5.
The
company’s other certifying officer(s) and I have disclosed, based on our most recent
evaluation of internal control over financial reporting, to the company’s auditors
and the audit committee of the company’s board of
directors (or persons performing
the equivalent functions):
a)
All
significant deficiencies and material weaknesses in the design or operation of internal control
over financial reporting which are reasonably likely to adversely affect the company’s
ability to record, process,
summarize and report financial information; and
b)
Any
fraud, whether or not material, that involves management or other employees who have a significant
role in the company’s internal control over financial reporting.
Dated: March 18,
2025
By: /s/
Anastasios Psaropoulos
Anastasios Psaropoulos
Chief Financial Officer
(Principal Financial Officer)
Exhibit
13.1
CERTIFICATION
PURSUANT TO
18
U.S.C. SECTION 1350,
AS
ADOPTED PURSUANT TO SECTION 906
OF
THE SARBANES-OXLEY ACT OF 2002
In
connection with the Annual Report of Global Ship Lease, Inc. (the “Company”) on Form 20-F for the year ended December 31,
2024 as filed with the Securities and Exchange Commission on the date hereof (the “Form 20-F”),
I, Thomas A. Lister, Chief
Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act
of 2002, that:
(1)
The
Form 20-F fully complies with the requirements of Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and
(2)
The
information contained in the Form 20-F fairly presents, in all material respects, the financial
condition and results of operations of the Company.
Dated: March 18, 2025
By: /s/ Thomas A. Lister
Thomas A. Lister
Chief Executive Officer
(Principal Executive Officer)
Exhibit
13.2
CERTIFICATION
PURSUANT TO
18
U.S.C. SECTION 1350,
AS
ADOPTED PURSUANT TO SECTION 906
OF
THE SARBANES-OXLEY ACT OF 2002
In
connection with the Annual Report of Global Ship Lease, Inc. (the “Company”) on Form 20-F for the year ended December 31,
2024 as filed with the Securities and Exchange Commission on the date hereof (the “Form 20-F”),
I, Anastasios Psaropoulos,
Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted
pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:
(1)
The
Form 20-F fully complies with the requirements of Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and
(2)
The
information contained in the Form 20-F fairly presents, in all material respects, the financial
condition and results of operations of the Company.
Dated: March 18, 2025
By: /s/
Anastasios Psaropoulos
Anastasios Psaropoulos
Chief Financial Officer
(Principal Financial Officer)
Exhibit
15.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We
hereby consent to the incorporation by reference in the Registration Statements on Form F-3 (Nos. 333-267468, 333-231509 and 333-258800)
and Form S-8 (Nos. 333-264113 and 333-258992) of Global Ship Lease, Inc. of our
report dated March 18, 2025 relating to the consolidated
financial statements and the effectiveness of internal control over financial reporting, which appears in this Form 20-F.
/s/
PricewaterhouseCoopers S.A.
Athens,
Greece
March
18, 2025
Exhibit
15.2
c/o
GSL Enterprises Ltd.
9
Irodou Attikou Street
Kifisia,
Athens 14561
Greece
March
17, 2025
Ladies
and Gentlemen:
Reference
is made to the Annual Report on Form 20-F of Global Ship Lease, Inc. (the “Company”) for the year ended December 31,
2024 (the “Annual Report”) and the registration statements on Form F-3 (File Nos. 333-
267468, 333-231509 and 333-258800)
and Form S-8 (File Nos. 333-258992 and 333-264113) of the Company, as may be amended, including the prospectuses contained therein (together,
the “Registration Statements”). We hereby
consent to all references to our name in the Annual Report and to the use
of the statistical information and industry and market data supplied by us as set forth in the Annual Report and to the incorporation
by reference of the same into
the Registration Statements. We further advise the Company that our role has been limited to the provision
of such statistical information and industry and market data supplied by us. With respect to such information and data, we
advise you
that:
(1)
we have accurately described the information and data of the container shipping industry, subject to the availability and reliability
of the data supporting the statistical and graphical information presented; and
(2)
our methodologies for collecting information and data may differ from those of other sources and does not reflect all or even necessarily
a comprehensive set of the actual transactions occurring in the container shipping
industry.
We
hereby consent to the filing of this letter as an exhibit to the Annual Report, which is incorporated by reference into the Registration
Statements.
Yours
faithfully,
Maritime Strategies International Ltd.
Managing Director
Adam Kent
Exhibit
15.3
CONSENT
OF WATSON FARLEY & WILLIAMS LLP
Reference
is made to the annual report on Form 20-F of Global Ship Lease, Inc. (the “Company”) for the year ended December 31,
2024 (the “Annual Report”) and the Registration Statements on Form F-3 (File Nos. 333-231509,
333-258800, and 333-267468)
and Form S-8 (File Nos. 333-258992 and 333-264113) of the Company including the prospectuses contained therein (together, the “Registration
Statements”). We hereby consent to (i) the filing of this
letter as an exhibit to the Annual Report, which is incorporated
by reference into the Registration Statements and (ii) each reference to us and the discussions of advice provided by us in the
Annual Report under the section “Item 10.
Additional Information—E. Taxation” and to the incorporation by reference
of the same in the Registration Statements, in each case, without admitting we are “experts” within the meaning of the Securities
Act of 1933, as amended, or
the rules and regulations of the U.S. Securities and Exchange Commission promulgated thereunder with respect
to any part of the Registration Statements.
/s/
Watson Farley & Williams LLP
Watson Farley & Williams LLP
New York, New York
March 18, 2025