UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________________________
FORM
_________________________________
(Mark One)
OR
For the fiscal year ended
For the transition period from ___________ to __________
Date of event requiring this shell company report ______________
Commission file number
_________________________________
(Exact name of Registrant as specified in its charter)
_________________________________
Not Applicable
(Translation of Registrant's Name into English)
(Jurisdiction of incorporation or organization)
(Address of Principal Executive Offices)
Thompson Hine LLP
todd.mason@thompsonhine.com
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act.
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| |
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
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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: Common Units
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐
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 ☐
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 reporting requirements for the past 90 days.
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).
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 ☐ | Non-Accelerated Filer ☐ | Emerging Growth Company |
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ☐
† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15
U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
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:
| 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 ☐
TABLE OF CONTENTS
| 1 |
FORWARD-LOOKING STATEMENTS
This Annual Report should be read in conjunction with the consolidated financial statements and accompanying notes included in this report.
Statements included in this annual report which are not historical facts (including our statements concerning plans and objectives of management for future operations or economic performance, or assumptions related thereto) are forward-looking statements. In addition, we and our representatives may from time to time make other oral or written statements which are also forward-looking statements. Such statements include, in particular, statements about our plans, strategies, business prospects, changes and trends in our business, and the markets in which we operate as described in this annual report. In some cases, you can identify the forward-looking statements by the use of words such as “may,” “could,” “should,” “would,” “expect,” “plan,” “anticipate,” “intend,” “forecast,” “believe,” “estimate,” “predict,” “propose,” “potential,” “continue” or the negative of these terms or other comparable terminology.
Forward-looking statements appear in a number of places and include statements with respect to, among other things:
| • | our ability to pay quarterly cash distributions on our common units; |
| • | our future financial condition or results of operations and our future revenues and expenses; |
| • | future levels of operating surplus and levels of distributions, as well as our future cash distribution policy; |
| • | our current and future business and growth strategies and other plans and objectives for future operations; |
| • | our ability to take delivery of, integrate into our fleet, and employ additional vessels, whether secondhand, as the fleets acquired in the Navios Maritime Containers L.P. (“Navios Containers”) and the Navios Maritime Acquisition Corporation (“Navios Acquisition”) mergers and the 36-vessel drybulk fleet acquisition from Navios Maritime Holdings Inc. (“Navios Holdings”), or any newbuildings we may order in the future; |
| • | future charter hire rates and vessel values; |
| • | the repayment of debt; |
| • | our ability to access debt and equity markets; |
| • | planned capital expenditures and availability of capital resources to fund capital expenditures; |
| • | future supply of, and demand for, liquid and dry cargo commodities; |
| • | volatility in interest rates, including Secured Overnight Financing Rate (“SOFR”); |
| • | our ability to maintain long-term relationships with major commodity traders, oil majors, operators and liner companies; |
| • | our ability to leverage the scale, experience, reputation and relationships of our managers, namely Navios Shipmanagement Inc. (the “Manager”), and Navios Tankers Management Inc. (“Tankers Manager” and together with the Manager, the “Managers”) and our affiliates, including Navios Holdings; |
| • | our continued ability to enter into long-term, fixed-rate time charters; |
| • | our ability to maximize the use of our vessels, including the re-deployment or disposition of vessels no longer under long-term time charters; |
| • | timely purchases and deliveries of newbuilding vessels; |
| • | future purchase prices of newbuildings and secondhand vessels; |
| • | our ability to compete successfully for future chartering and newbuilding opportunities; |
| • | our future financial condition or results of operations and our future revenues and expenses, including revenues from any profit sharing arrangements, and required levels of reserves; |
| • | potential liability and costs due to environmental, safety and other incidents involving our vessels; |
| • | our track record, and past and future performance, in safety, environmental and regulatory matters; |
| • | our anticipated incremental general and administrative expenses as a publicly traded limited partnership and our expenses under the management agreements, (the “Management Agreements”) with the Managers and the administrative services agreement (the “Administrative Services Agreement”) with the Manager and for reimbursements for fees and costs of our general partner; |
| • | estimated future maintenance and replacement capital expenditures; |
| • | future sales of our common units in the public market; |
| • | the cyclical nature of the international shipping industry; |
| • | fluctuations in charter rates for tanker vessels, dry bulk carriers and containerships (“Dry Cargo”); |
| • | the number of newbuildings currently under construction; |
| • | changes in the market values of our vessels and the vessels for which we have purchase options; |
| • | an inability to expand relationships with existing customers and obtain new customers; |
| • | the loss of any customer or charter or vessel; |
| • | the aging of our fleet and resultant increases in operations costs; |
| • | damage to our vessels; |
| • | global economic outlook and growth and changes in general economic and business conditions; |
| • | domestic and international political conditions, including wars, pandemics, terrorism and piracy; |
| • | public health threats; |
| • | increases in costs and expenses, including but not limited to: crew wages, insurance, provisions, port expenses, lube oil, bunkers, repairs, maintenance and general and administrative expenses; |
| • | the adequacy of our insurance arrangements and our ability to obtain insurance and required certifications; |
| • | the expected cost of, and our ability to comply with, governmental regulations and maritime self-regulatory organization standards, as well as standard regulations imposed by our charterers applicable to our business; |
| • | the changes to the regulatory requirements applicable to the shipping industry, including, without limitation, stricter requirements adopted by international organizations, such as the International Maritime Organization (the “IMO”) and the European Union (sometimes referred to as “EU”), or by individual countries or charterers and actions taken by regulatory authorities and governing such areas as safety and environmental compliance; |
| • | the anticipated taxation of our partnership and our unitholders; |
| • | expected demand in the shipping sectors in which we operate in general and the demand for our Drybulk, Container and Tanker vessels in particular; |
| • | our ability to retain key executive officers; |
| • | customers' increasing emphasis on environmental and safety concerns; |
| • | changes in the availability and costs of funding due to conditions in the bank market, capital markets and other factors; and |
| • | other factors detailed from time to time in our periodic reports filed with the U.S. Securities and Exchange Commission (the “SEC”). |
These and other forward-looking statements are made based upon management's current plans, expectations, estimates, assumptions and beliefs concerning future events impacting us and therefore involve a number of risks and uncertainties, including those set forth below, as well as those risks discussed in “Item 3. Key Information”.
The risks and assumptions are inherently subject to significant uncertainties and contingencies, many of which are beyond our control and many of which have been and many further be, exacerbated by the COVID-19 pandemic, the Ukrainian/Russian conflict and the impact they have had on the global economy. We caution that forward-looking statements are not guarantees and that actual results could differ materially from those expressed or implied in the forward-looking statements.
We undertake no obligation to update any forward-looking statement or statements to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time, and it is not possible for us to predict all of these factors. Further, we cannot assess the impact of each such factor on our business or the extent to which any factor, or combination of factors, may cause actual results to be materially different from those contained in any forward-looking statement.
PART I
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
Risks Relating to Our Business and our Industry
| · | Our growth depends on continued growth in demand for drybulk commodities, liquid cargo, finished or semi-finished goods, and the shipping of drybulk cargoes, containers, as well as crude oil, petroleum products and other liquid cargoes. |
| · | The cyclical nature of the international shipping industry may lead to decreases in charter rates and lower vessel values. Charter hire rates have significantly declined from historically high levels recently, are volatile and may remain depressed or reach low levels or decrease in the future, which may adversely affect our earnings, revenue and our profitability. |
| · | A decrease in the level of China's imports of raw materials, exports of goods, or a decrease in trade globally could have a material adverse impact on our charterers' business and, in turn, could cause a material adverse impact on our results of operations, financial condition and cash flows. |
| · | Any decrease in shipments of crude oil from the Arabian Gulf or the Atlantic basin may adversely affect our financial performance. |
| · | Increasing energy self-sufficiency in the United States could lead to a decrease in imports of oil to that country, which to date has been one of the largest importers of oil worldwide. |
| · | An increase in trade protectionism and the unraveling of multilateral trade agreements could have a material adverse impact on our charterers' business and, in turn, could cause a material adverse impact on our results of operations, financial condition and cash flows. |
| · | We are focused on employing vessels on long-term charters and we may have difficulties in doing so if a more active short-term or spot market develops. |
| · | While we favor longer term charters for all the tanker, dry bulk and container vessels we own or control, we may from time to time have to rely on chartering our vessels in the spot market either because our charter ended during a period of weak demand or we need to reposition a vessel out of a geographically or seasonally disadvantaged position. Additionally some of the longer term charters we have are indexed to spot rates. Spot market rates for tanker, dry bulk and container vessels are highly volatile and may decrease in the future, which may materially adversely affect our earnings in the event that our vessels are chartered in the spot market or those that may be chartered under index linked charters. |
| · | Our growth depends on our ability to expand relationships with existing customers and obtain new customers, for which we will face substantial competition from new entrants and established companies with significant resources.
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| · | As we expand our business, we may have difficulty managing our growth, which could increase expenses. |
| · | We may be unable to make or realize expected benefits from acquisitions, and implementing our growth strategy through acquisitions may harm our business, financial condition and operating results. |
| · | Delays in deliveries of secondhand vessels, our decision to cancel an order for purchase of a vessel or our inability to otherwise complete the acquisitions of additional vessels for our fleet, could harm our business, financial condition and results of operations. |
| · | If we purchase any newbuilding vessels, delays, cancellations or non-completion of deliveries of newbuilding vessels could harm our operating results. |
| · | The loss of a customer, charter or vessel could result in a loss of revenues and cash flow in the event we are unable to replace such customer, charter or vessel. |
| · | The aging of our vessels may result in increased operating costs in the future, which could adversely affect our earnings. |
| · | A number of third party owners have ordered so-called “eco-type” vessel designs or have retrofitted scrubbers to remove sulfur from exhaust gases, which may offer substantial bunker savings as compared to older designs or vessels without exhaust gas scrubbers. Increased demand for and supply of “eco-type” or scrubber retrofitted vessels could reduce demand for our vessels that are not classified as such and expose us to lower vessel utilization and/or decreased charter rates. |
| · | Our vessels may be subject to unbudgeted periods of off-hire, which could materially adversely affect our business, financial condition and results of operations. |
| · | Vessels may suffer damage and we may face unexpected drydocking costs, which could affect our cash flow and financial condition. |
| · | The market value of our vessels may fluctuate significantly, which could cause us to breach covenants in our financing arrangements, resulting in the foreclosure of certain of our vessels, limit the amount of funds that we can borrow and adversely affect our ability to purchase new vessels and our operating results. Depressed vessel values could also cause us to incur impairment charges. If vessel values are low at a time when we are attempting to dispose of a vessel, we could incur a loss. |
| · | We must make substantial capital expenditures to maintain the operating capacity of our fleet, which will reduce our cash available for distribution. In addition, each quarter our board of directors is required to deduct estimated maintenance and replacement capital expenditures from operating surplus, which may result in less or no cash available to unitholders than if actual maintenance and replacement capital expenditures were deducted. |
| · | We may be subject to litigation that, if not resolved in our favor or not sufficiently insured against, could have a material adverse effect on us. |
| · | 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 cause us to suffer exchange rate losses thereby increasing expenses and reducing income. |
| · | Security breaches and disruptions to our information technology infrastructure could interfere with our operations and expose us to liability which could have a material adverse effect on our business, financial condition, cash flows and results of operations. |
| · | We may not have adequate insurance to compensate us if we lose our vessels or to compensate third parties. |
| · | Our growth depends on continued growth in demand for crude oil, refined petroleum products (clean and dirty) and bulk liquid chemicals and the continued demand for seaborne transportation of such cargoes. |
| · | Increasing growth of electric vehicles and other measures intended to reduce CO2 emissions could lead to a decrease in trading and the movement of crude oil and petroleum products worldwide. |
| · | We conduct a substantial amount of business in China. The legal system in China has inherent uncertainties that could limit the legal protections available to us and could have a material adverse impact on our business, results of operations, financial condition and cash flows. |
| · | An oversupply of vessel capacity may depress rates, which may affect our ability to operate our vessels profitably. |
| · | Fuel price fluctuations may have an adverse effect on our profits. |
| · | If we expand the size of our fleet in the future, we generally will be required to make significant installment payments for acquisitions of vessels even prior to their delivery and generation of revenue. Depending on whether we finance our expenditures through cash from operations or by issuing debt or equity securities, our ability to make cash distributions to unitholders, to the extent we are making distributions, may be diminished or our financial leverage could increase or our unitholders could be diluted. |
| · | We are subject to various laws, regulations, and international conventions, particularly environmental and safety laws, that could require significant expenditures both to maintain compliance with such laws and to pay for any uninsured environmental liabilities, including any resulting from a spill or other environmental incident. |
| · | Climate change and government laws and regulations related to climate change could negatively impact our financial condition. |
| · | We are subject to vessel security regulations and we incur costs to comply with adopted regulations. We may be subject to costs to comply with similar regulations that may be adopted in the future in response to terrorism. |
| · | Changing laws and evolving reporting requirements could have an adverse effect on our business, including the pending SEC Environmental, Social and Governance (“ESG”) disclosure rules in the U.S. and European Union.. |
| · | Our international activities increase the compliance risks associated with economic and trade sanctions imposed by the United States, the EU, the UK and other jurisdictions/authorities. |
| · | We could be materially adversely affected by violations of the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act and anti-corruption laws in other applicable jurisdictions. |
| · | The operation of ocean-going vessels entails the possibility of marine disasters including damage or destruction of the vessel due to accident, the loss of a vessel due to piracy or terrorism, damage or destruction of cargo and similar events that may cause a loss of revenue from affected vessels and damage our business reputation, which may in turn lead to loss of business. |
| · | Maritime claimants could arrest or attach one or more of our vessels, which could interrupt our cash flow. |
| · | The smuggling of drugs or other contraband onto our vessels may lead to governmental claims against us. |
| · | A failure to pass inspection by classification societies could result in one or more vessels being unemployable unless and until they pass inspection, resulting in a loss of revenues from such vessels for that period and a corresponding decrease in operating cash flows. |
| · | Disruptions in global financial markets, terrorist attacks, regional armed conflicts, general political unrest, economic crisis, the emergence of a pandemic crisis and the resulting governmental action could have a material adverse impact on our results of operations, financial condition and cash flows. |
| · | Our financial and operating performance may be adversely affected by the COVID-19 pandemic and related governmental responses.. |
| · | Governments could requisition our vessels during a period of war or emergency, resulting in a loss of earnings. |
Risks Relating to Our Indebtedness
| · | The market value of our vessels may fluctuate significantly, which could cause us to breach covenants in our credit facilities and certain financial liabilities and result in foreclosure on our mortgaged vessels. |
| · | We may be unable to obtain additional financing and our debt levels may limit our ability to do so and pursue other business opportunities, and our interest rates under our financing arrangements may fluctuate and may impact our operations. |
| · | We are exposed to volatility in interest rates, including SOFR. |
| · | Our financing arrangements contain restrictive covenants, which may limit our business and financing activities and may prevent us from paying distributions to unitholders, if our board of directors determines to do so again in the future. |
Risks Relating to Our Units
| · | Our board of directors may not declare cash distributions in the foreseeable future. |
| · | Any dividend payments on our common units would be declared in U.S. dollars, and any unit holder whose principal currency is not the U.S. dollar would be subject to risks of exchange rate fluctuations. |
| · | The New York Stock Exchange may delist our securities from trading on its exchange, which could limit your ability to trade our securities and subject us to additional trading restrictions. |
| · | The price of our common units may be volatile. |
| · | Increases in interest rates may cause the market price of our common units to decline. |
| · | Substantial future issuance and sale of our common units in the public market, including through our continuous offering sales program, could cause the price of our common units to fall, and would dilute your ownership interests. |
| · | Unitholders may be liable for repayment of distributions. |
| · | Common unitholders have limited voting rights and our partnership agreement restricts the voting rights of common unitholders owning more than 4.9% of our common units. |
Risks Relating to Our Organizational Structure, Taxes and Other Legal Matters
| · | Navios Holdings and their affiliates may compete with us. |
| · | 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 obligations and to make distributions. |
| · | We depend on the Managers to assist us in operating and expanding our business. |
| · | The loss of key members of our senior management team could disrupt the management of our business. |
| · | The Managers may be unable to attract and retain qualified, skilled employees or crew necessary to operate our vessels and business or may have to pay increased costs for its employees and crew and other vessel operating costs.
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| · | We may be subject to taxes, which may reduce our cash available for distribution to our unitholders. |
| · | U.S. tax authorities could treat us as a “passive foreign investment company,” which could have adverse U.S. federal income tax consequences to U.S. unitholders. |
| · | We may have to pay tax on U.S.-source income, which would reduce our earnings. |
| · | Actions taken by holders of our common units could result in our (and certain of our non-U.S. subsidiaries) being treated as a “controlled foreign corporation,” which could have adverse U.S. federal income tax consequences to certain U.S. holders. |
| · | You may be subject to income tax in one or more non-U.S. countries, including Greece, as a result of owning our common units if, under the laws of any such country, we are considered to be carrying on business there. Such laws may require you to file a tax return with and pay taxes to those countries. |
| · | We have been organized as a limited partnership under the laws of the Republic of the Marshall Islands, which does not have a well-developed body of partnership law; as a result, unitholders may have more difficulty in protecting their interests than would unitholders of a similarly organized limited partnership in the United States. |
| · | Because we are organized under the laws of the Marshall Islands and our business is operated primarily from our office in Monaco, it may be difficult to serve us with legal process or enforce judgments against us, our directors or our management. |
| · | We rely on the master limited partnership (“MLP”) structure and its appeal to investors for accessing debt and equity markets to finance our growth and repay or refinance our debt. The depressed trading price of our common units may affect our ability to access capital markets and, as a result, our ability to pay distributions or repay our debt. |
| · | Our partnership agreement limits our general partners and our directors fiduciary duties to our unitholders and restricts the remedies available to unitholders for actions taken by our general partner or our directors. |
| · | Our general partner has a limited call right that may require unitholders to sell their common units at an undesirable time or price. |
| · | Our general partner may transfer its general partner interest to, and the control of our general partner may be transferred to a third party without common unitholder consent. |
| · | Our partnership agreement contains provisions that may have the effect of discouraging a person or group from attempting to remove our current management or our general partner, and even if our public unitholders are dissatisfied, they will need a qualified majority to remove our general partner |
| · | Unitholders may not have limited liability if a court finds that unitholder action constitutes control of our business. |
| · | We can borrow money to pay distributions, it would reduce the amount of credit available to operate our business. |
| · | Our management will have broad discretion with respect to the use of the proceeds resulting from the issuance of common units whether under a continuous offering program or a secondary offering. |
| · | Our general partner and its affiliates, including Navios Holdings, own a significant interest in us and may have conflicts of interest and limited fiduciary and contractual duties, which may permit them to favor their own interests to the detriment of unitholders. |
| · | Our officers face conflicts of interest and conflicts in the allocation of their time to our business. |
| · | Fees and cost reimbursements, which the Managers determines for services provided to us, represent significant percentage of our revenues, are payable regardless of profitability and reduce our cash available for distributions. |
Risks Relating to Our Business and our Industry
Our growth depends on continued growth in demand for dry bulk commodities, liquid cargo, finished or semi-finished goods, and the shipping of drybulk cargoes, containers as well as crude oil, petroleum products and other liquid cargoes.
Our growth strategy focuses on expansion in the Dry Cargo, container and tanker shipping sectors. Accordingly, our growth depends on continued growth in world and regional demand for dry and liquid bulk commodities, finished or semi-finished goods and the shipping of containers, dry and liquid cargoes, which could be negatively affected by a number of factors, such as declines in prices for dry or liquid bulk commodities or containerized cargoes, or general political, social and economic conditions.
We anticipate that the future demand for our drybulk carriers, container and tanker vessels and their charter rates will be dependent upon demand for imported commodities, economic growth in the emerging markets, including the Asia Pacific region, India and Brazil. In past years, China and India have had two of the world’s fastest growing economies in terms of gross domestic product and have been the main driving force behind increases in marine drybulk and tanker trades and the demand for drybulk vessels and tankers. The Asia Pacific and Indian economies have also been significant suppliers of manufactured goods currently shipped by container to the developed markets of the Organisation for Economic Cooperation and Development (“OECD”) and worldwide. If economic growth declines in China, Japan, India and other countries in the Asia Pacific region, we may face decreases in demand of such drybulk, tanker and container shipping trades. For example, recent slowdowns of the Chinese economy have adversely affected demand for bulk carriers and, as a result, spot and period rates, as well as asset values, are currently at levels below their peaks in the fall of 2021. Global economic conditions, while somewhat more stable than in the immediate aftermath of the financial crisis, remain uncertain with respect to long-term economic growth. In particular, the uncertainty surrounding the future of the Eurozone; the economic prospects of the United States (sometimes referred to as the “U.S.”); the future economic growth of China, Brazil, India, and other emerging markets; the current armed conflict between Russia and Ukraine; and changing oil production and consumption patterns due to pandemics, war, efficiencies, environmental concerns, new technologies and government policy changes are all expected to affect demand for drybulk carriers, container vessels, and product and crude tankers going-forward.
The past global financial crisis, the continuing U.S. shale production expansion and the effects of COVID-19 have intensified the unpredictability of tanker rates. Furthermore, the extension of refinery capacity in China, India and particularly the Middle East through 2022 and 2023 is expected to exceed the immediate consumption in these areas, and an increase in exports of refined oil products is expected as a result. Changes in product trading patterns due to the implementation of the IMO 2020 sulfur reduction rules and closure of refineries due to the pandemic should increase trade in refined oil products. Changes in crude and product trading patterns due to the armed conflict between Russia and the Ukraine may remain long after the conflict is resolved and sanctions are removed, which should increase ton miles and therefore the demand for such vessels.
If oil demand grows in the future, it is expected to come primarily from emerging markets which have been historically volatile, such as China and India, and a slowdown in these countries’ economies may severely affect global oil demand growth, and may result in protracted, reduced consumption of oil products and a decreased demand for our vessels and lower charter rates, which could have a material adverse effect on our business, results of operations, cash flows, financial condition and ability to make cash distributions.
Should the Organization of the Petroleum Exporting Countries (“OPEC”) significantly reduce oil production or should there be significant declines in non-OPEC oil production, that may result in a protracted period of reduced oil shipments and a decreased demand for our vessels and lower charter rates, which could have a material adverse effect on our business, results of operations, cash flows, financial condition and ability to make cash distributions.
While containership rates have fallen from their all time highs in the beginning of 2022 due to governments’ removal of pandemic related restrictions on travel and business, and the reduction or elimination of supply chain disruptions, there is no guarantee that they will remain at levels that are still elevated above pre-pandemic rates and could return to levels at or below their long term averages.
A slowdown in the economies of the U.S. or the EU, or certain other Asian countries may also adversely affect economic growth in the Asia Pacific region and India. A decline in demand for commodities transported in drybulk carriers, tankers and/or containerships, or an increase in supply of drybulk vessels, tankers or containerships could cause a further decline in charter rates,which could materially adversely affect our cashflows, profitability and our results of operations and financial condition.
The cyclical nature of the international shipping industry may lead to decreases in charter rates and lower vessel values. Charter hire rates have significantly declined from historically high levels recently, are volatile and may remain depressed or reach low levels or decrease in the future, which may adversely affect our earnings, revenue, profitability and ability to pay distributions.
The drybulk shipping industry is cyclical with attendant volatility in charter hire rates and profitability. The degree of charter hire rate volatility among different types of drybulk vessels has varied widely, and charter hire rates for drybulk vessels have declined significantly from historically high levels. For example, in the past time charter and spot market rates for drybulk vessels have declined below operating costs of vessels. The Baltic Dry Index, or BDI, an index published by the Baltic Exchange Limited of shipping rates for 26 key drybulk routes, fell 97% from a peak of 11,793 in May 2008 to a low of 290 in February 2016. While the BDI showed improvement since then, in the last two years it has ranged from a low of 530 in February 2023 to a high of 5,650 in October 2021, and at 1,535 on March 17, 2023 it remains at low levels compared to historical highs and there can be no assurance that the drybulk charter market will not decline further.
The ocean-going container shipping industry is both cyclical and volatile in terms of charter rates, profitability and, consequently, vessel values. According to industry data, containership charter rates peaked in 2005, with the Containership Timecharter Rate Index (a $/day per twenty-foot equivalent units (“TEU”) weighted average of 6-12 month time charter rates of Panamax and smaller vessels (1993=100)) reaching 172 points in March and April 2005, and generally stayed above 100 points until the middle of 2008, when the effects of the economic crisis began to affect global container trade, driving the Containership Timecharter Rate Index to a 10-year low of 32 points in the period from November 2009 to January 2010. As of the end of January 2020, the Containership Timecharter Rate Index stood at 61 points, hit a bottom of 41 points as of the end of June 2020 and then rose to an all time high of 434 as of the beginning of April 2022. Since then the Containership Timecharter Rate Index has fallen to 95 at the end of February 2023. Current container charter rates are at rates that are above pre-pandemic levels but there is no guarantee that they will remain elevated and could return to average or below average levels when they fall.
Charter rates in the crude oil, product and chemical tanker sectors have significantly declined from historically high levels in 2008 and may remain depressed or decline further. For example, the Baltic Exchange Dirty Tanker Index (BDTI) declined from a high of 2,347 in July 2008 to 453 in mid-April 2009, which represents a decline of approximately 81%. Since January 2021, it has traded between a low of 492 and a high of 2,496; as of March 17, 2023, it stood at 1,579. The Baltic Exchange Clean Tanker Index (BCTI) fell from 1,509 in the early summer of 2008 to 345 in April 2009, or an approximate 77% decline. It has traded between a low of 432 and a high of 2,143 since January 2021 and stood at 1,070 as of March 17, 2023. Tanker charter rates for VLCCs, LR1s and MR2s experienced the lowest annual average time charter earnings on record in 2021, although current rates are higher than those recorded lows. Of note is that Chinese imports of crude oil have steadily increased from three million barrels per day in 2008 to a record 13 million barrels per day in June 2020 and stood at 11.4 million barrels per day in December 2022. Additionally, since the U.S. removed its ban at the end of 2015, U.S. crude oil exports increased by over 900% from 0.4 million barrels per day to a record 4.1 million barrels per day in October 2022; and averaged 3.5 MBPD in January 2023. The U.S. has steadily increased its total petroleum product exports by about 500% to a record 6.3 million barrels per day in June 2022 from one million barrels per day in January 2006. Exports remained elevated in November 2022 at 5.9 million barrels per day.
If the drybulk, tanker or container shipping industries, which have been highly cyclical and volatile, are depressed in the future when our charters expire or when we are otherwise seeking new charters, we may be forced to re-charter our vessels at reduced or even unprofitable rates, or we may not be able to re-charter them at all and/or we may be forced to scrap them, which may reduce or eliminate our earnings, make our earnings volatile, affect our ability to generate cash flows and maintain liquidity. However, the drybulk, tanker and containership rate cycles have peaked and have fallen to low points at different times, which may mitigate overall cash flow reductions. We cannot give any assurance that we will be able to successfully charter our vessels in the future or renew our existing charters at rates sufficient to allow us to operate our business profitably, to meet our obligations, including payment of debt service to our lenders, or to pay dividends to our unitholders. Our ability to re-charter our vessels upon the expiration or termination of their current charters, or on vessels that we may acquire in the future, as well as, the charter rates payable under any replacement charters will depend upon, among other things, economic conditions in the sectors in which our vessels operate at that time, changes in the supply and demand for vessel capacity and changes in the supply and demand for the transportation of commodities or manufactured goods.
Additionally, if the spot market rates or short-term time charter rates become significantly lower than the time charter equivalent rates that some of our charterers are obligated to pay us under our existing charters, the charterers may have incentive to default under that charter or attempt to renegotiate the charter. If our charterers fail to pay their obligations, we would have to attempt to re-charter our vessels at lower charter rates, which would affect our ability to comply with our loan covenants and operate our vessels profitably. If we are not able to comply with our loan covenants and our lenders choose to accelerate our indebtedness and foreclose their liens, we could be required to sell vessels in our fleet and our ability to continue to conduct our business would be impaired.
Fluctuations in charter rates result from changes in the supply and demand for vessel capacity and changes in the supply and demand for the major commodities and finished goods carried by water internationally. Because the factors affecting the supply and demand for vessels are outside of our control and are unpredictable, the nature, timing, direction and degree of changes in charter rates are also unpredictable.
Furthermore, a significant decrease in charter rates would cause asset values to decline, and we may have to record an impairment charge in our consolidated financial statements which could adversely affect our financial results. Because the market value of our vessels may fluctuate significantly, we may also incur losses when we sell vessels, which may adversely affect our earnings. If we sell vessels at a time when vessel prices have fallen and before we have recorded an impairment adjustment to our financial statements, the sale may be at less than the vessel's carrying amount in our financial statements, resulting in a loss and a reduction in earnings.
Factors that influence demand for vessels capacity include:
| • | global and regional economic and political conditions, including armed conflicts, wars and terrorist activities (including piracy), embargoes and strikes; |
| • | global or local health related issues including disease outbreaks or pandemics, such as the COVID-19 pandemic; |
| • | disruptions and developments in international trade, including the effects of currency exchange rate changes and any differences in supply and demand between regions; |
| • | changes in seaborne and other transportation patterns; |
| • | supply and demand for energy resources, drybulk products, commodities, semi-finished and finished consumer and industrial products; |
| • | changes in the exploration or production of energy resources, commodities, semi-finished and finished consumer and industrial products; |
| • | supply and demand for products shipped in containers; |
| • | supply and demand for commodities shipped in Dry Cargo vessels; |
| • | supply and demand of liquid cargoes, including petroleum and petroleum products; |
| • | changes in global production of raw materials, semi-finished or finished goods and products transported by containerships; |
| • | changes in oil production and refining capacity and regional availability of petroleum refining capacity; |
| • | the distance drybulk, liquid cargo or containers are to be moved by sea, including changes in the distances over which cargo is transported due to geographic changes where commodities are produced, manufactured, refined or used or due to sanctions or restrictions due to geopolitical issues, embargoes, wars or other conflicts; |
| • | fuel prices for the bunker fuel used aboard ships; |
| • | whether the vessel is equipped with scrubbers or not; |
| • | natural or man-made disasters that affect the ability of our vessels to use certain waterways; |
| • | waiting days in ports or port congestion generally due to any causes; |
| • | the globalization of manufacturing and all developments in international trade; |
| • | carrier alliances, vessel sharing or container slot sharing that seek to allocate container ship capacity on routes; |
| • | any weather events affecting production or consumption or movements at sea and crop yields; |
| • | political, environmental and other regulatory developments, including but not limited to governmental macroeconomic policy changes (including the application of stimulus programs or withdrawal of same), import and export restrictions, including sanctions, trade wars, central bank policies and pollution conventions or protocols, including any limits on CO2 emissions or the consumption of carbon based fuels due to climate change agreements or protocols; |
| • | political developments, including changes to trade policies and or trade wars, including the provision or removal of economic stimulus measures meant to counteract the effects of sudden market disruptions due to conflicts, wars, banking, financial, economic or health crises; |
| • | domestic and foreign tax policies; |
| • | armed conflicts and terrorist activities; |
| • | competition from alternative sources of energy and/or governmental policies encouraging the use of such alternatives (including the replacement of fossil fuels, such as coal or oil, with renewables for industrial or consumer use); |
| • | international sanctions, embargoes, strikes and nationalizations; and |
| • | technical advances in ship design and construction. |
The supply of vessel capacity has generally been influenced by, among other factors:
| • | the number of vessels that are out of service (including any held in quarantine or waiting for crew changes due to health related or other restrictions or those vessels impounded or restricted from movement due to any war, lockout, lack of insurance or other political measure), namely those that are laid-up, drydocked, awaiting or undergoing repairs or otherwise not available or prevented from being available for hire; |
| • | the scrapping rate of older vessels; |
| • | the availability of finance or lack thereof for ordering newbuildings or for facilitating ship sale and purchase transactions; |
| • | port and canal traffic and congestion, including canal improvements that can affect employment of ships designed for older canals or closure or blockage due to accidents, war or any other reason; |
| • | the number of shipyards and ability of shipyards to deliver vessels; |
| • | the number of newbuilding deliveries; |
| • | vessel casualties; |
| • | weather; |
| • | the number of vessels that are used for storage or as floating storage offloading service vessels; |
| • | the conversion of tankers to drybulk cargo and the reverse conversion; |
| • | the phasing out of single-hull tankers due to legislation and environmental concerns; |
| • | national or international regulations that may effectively cause reductions in the carrying capacity of vessels or early obsolescence of tonnage; |
| • | changes in environmental and other regulations and standards (including IMO rules requiring a reduction in the use of high sulfur fuels, the fitting of additional ballast water treatment systems and rules intended to reduce CO2 emissions) that limit the profitability, operations or useful lives of vessels; |
| • | the price of steel, fuel and other raw materials; and |
| • | the economics of slow steaming. |
In addition to the prevailing and anticipated charter rates, factors that affect the rate of newbuilding, scrapping and laying-up include newbuilding prices, secondhand vessel values in relation to newbuilding and scrap prices, costs of bunkers and other operating costs, costs associated with classification society surveys, normal maintenance and insurance coverage costs, the efficiency and age profile of the existing drybulk, tanker and container fleets in the market and government and industry regulation of maritime transportation practices, particularly environmental protection laws and regulations. These and other factors influencing the supply of and demand for shipping capacity are outside of our control, and we may not be able to correctly assess the nature, timing and degree of changes in industry conditions.
Historically, the drybulk, tanker and containership markets have been volatile as a result of the many conditions and factors that can affect the price, supply and demand for tanker capacity. The consequences of any future global economic crisis may further reduce demand for transportation of dry and liquid commodities over long distances and supply of ships that carry those dry and liquid commodities and finished goods, which may materially affect our future revenues, profitability and cash flows. In addition, public health threats, such as the coronavirus, influenza and other highly communicable diseases or viruses, outbreaks of which have from time to time occurred in various parts of the world in which we operate, including China, could adversely impact our operations, and the operations of our customers. Armed conflicts, wars and insurrections could also adversely impact our operations and the operations of our customers. We anticipate that the future demand for our vessels will be dependent upon economic growth in all of the world's economies, particularly China and India, seasonal and regional changes in demand, changes in the capacity of the global dry, tanker and container fleets and the sources and supply of drybulk, liquid or containerized cargo to be transported by sea.
A decrease in the level of China's imports of raw materials, exports of goods, or a decrease in trade globally could have a material adverse impact on our charterers' business and, in turn, could cause a material adverse impact on our results of operations, financial condition and cash flows.
China imports significant quantities of raw materials, and exports significant amounts of finished or semi-finished goods. For example, in 2022, China imported 1.093 billion tons of iron ore by sea out of a total of 1.479 billion tons shipped globally, accounting for about 74% of the global seaborne iron ore trade. While it accounted for approximately 19% of seaborne coal movements of coal in 2022 according to current estimates (234 million tons imported compared to 1.224 billion tons of seaborne coal traded globally), and 23% of all crude oil shipped globally in 2022 (453 million tons imported compared to 1.967 billion tons of seaborne crude oil traded globally). Our drybulk vessels, tankers and containerships are deployed by our charterers on routes involving trade in and out of emerging markets, and our charterers' revenue may be derived from the shipment of goods within the Asia Pacific region and to or from various overseas export markets. Any reduction in or hindrance to China-based importers or exporters could have a material adverse effect on the growth rate of China's imports and exports and on our charterers' business. For instance, the government of China has implemented economic policies aimed at reducing pollution, increasing consumption of domestically produced Chinese coal and Chinese-made goods, or promoting the export of Chinese coal or increasing consumption of natural gas or banning imports of coal or other commodities from certain countries to China or increasing the production of electricity from renewable resources or changing any policy to promote domestic consumption which decreases imports or exports of raw materials or finished goods.
This may have the effect of (i) reducing the demand for imported raw materials and may, in turn, result in a decrease in demand for drybulk or tanker shipping, and (ii) reducing the supply of goods available for export and may, in turn, result in a decrease of demand for drybulk, tanker or container shipping. 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, reversal 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. The conflict between Ukraine and Russia and any sanctions resulting therefrom, the pandemic and ongoing global trade war between the U.S. and China may contribute to an economic slowdown in China.
In recent years, China has been one of the world's fastest growing economies in terms of gross domestic product, which has had a significant impact on shipping demand. However, if China's growth in gross domestic product declines and other countries in the Asia Pacific region experience slower or negative economic growth in the future, this may negatively affect the fragile recovery of the economies of the United States and the European Union, and thus, may negatively impact the shipping industry. For example, the possibility of the introduction of impediments (including any sanctions) to trade with or within the European Union member countries in response to wars, conflicts or increasing terrorist activities, and the possibility of market reforms to float the Chinese renminbi, either of which development could weaken the euro against the Chinese renminbi, could adversely affect consumer demand in the European Union. Moreover, the revaluation of the renminbi may negatively impact the United States' demand for imported goods, many of which are shipped from China. Political events such as a global trade war or any moves by either China, the United States or the European Union to levy additional tariffs on imported goods as part of protectionist measures or otherwise, could decrease shipping demand. Such weak economic conditions or protectionist measures could have a material adverse effect on our business, results of operations and financial condition, as well as our cash flows, including cash available for distributions to our unitholders.
China has enacted a tax for non-resident international transportation enterprises engaged in the provision of services of passengers or cargo, among other items, in and out of China using their own, chartered or leased vessels, including any stevedore, warehousing and other services connected with the transportation. The regulation broadens the range of international transportation companies which may find themselves liable for Chinese enterprise income tax on profits generated from international transportation services passing through Chinese ports. This tax or similar regulations by China may reduce our operating results and may also result in an increase in the cost of goods exported from China and the risks associated with exporting goods from China, as well as a decrease in the quantity of goods to be shipped from or through China, which would 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.
Similarly, an extension or expansion of the current worldwide pandemic, or withdrawals or changes to economic stimulus packages or initiations or endings to local lockdowns or quarantines by China or other nations to combat the pandemic may reduce our operating results and may also result in an increase in the cost of goods exported from China and the risks associated with exporting goods from China, as well as a decrease in the quantity of goods including petroleum products and manufactured products to be shipped from or through China or imports of commodities including iron ore, coal, grain and crude oil to China, which would 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.
Any sanctions levied against Russia or any other country involved in a conflict that affect or begin to affect China or other nations involved in commodity or manufactured goods trades which have the effect of raising prices for such goods or causing economic downturns due to such price rises which would 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.
For a description of the economic and trade sanctions and other compliance requirements under which we operate please see “Item 4. Information on the Partnership – B. Business Overview - Economic Sanctions and Compliance”.
Any decrease in shipments of crude oil from the Arabian Gulf or the Atlantic basin may adversely affect our financial performance.
The demand for VLCC oil tankers derives primarily from demand for Arabian Gulf and Atlantic basin (West Africa, United States, Brazil, North Sea, Guyana and other) crude oils, which, in turn, primarily depend on the economies of the world’s industrial countries and competition from alternative energy sources. A wide range of economic, social and other factors can significantly affect the strength of the world’s industrial economies and their demand for Arabian Gulf and Atlantic basin crude oil.
Among the factors that could lead to a decrease in demand for exported Arabian Gulf and Atlantic basin crude oil are:
| • | increased use of existing and future crude oil pipelines in the Arabian Gulf or Atlantic basin regions; |
| • | increased demand for crude oil in the Arabian Gulf or Atlantic basin regions; |
| • | a decision by OPEC or other petroleum exporters to increase their crude oil prices or to further decrease or limit their crude oil production; |
| • | any increase in refining of crude into petroleum products for domestic consumption or export; |
| • | armed conflict or acts of piracy in the Arabian Gulf or Atlantic basin including West Africa and political or armed conflicts or sanctions anywhere that affect demand for crude oil from these regions or other factors; |
| • | economic and pandemic related crises that decrease oil demand generally; |
| • | changes to oil production in other regions, such as the United States, Russia and Latin America, including those production changes caused by war, conflict or sanctions; and |
| • | the development and the relative costs of nuclear power, natural gas, coal, renewables and other alternative sources of energy. |
Any significant decrease in shipments of crude oil from the Arabian Gulf or Atlantic basin may materially adversely affect our financial performance.
Increasing energy self-sufficiency in the United States could lead to a decrease in imports of oil to that country, which to date has been one of the largest importers of oil worldwide.
According to the 2023 Annual Energy Outlook published in March 2023 by the US Energy Information Agency (“EIA”): Although domestic consumption of petroleum and other liquids does not increase through 2040 across most cases, U.S. petroleum and other liquids production remains high because of increased exports of finished products in response to growing international demand. In all cases, the EIA projected that the United States will remain a net exporter of petroleum products through 2050. Crude oil imports remain relatively flat in the Reference case but vary widely in the side cases. This wide range in imports is mainly due to the tradeoff between domestic production and imports. In the Low Oil and Gas Supply case, crude oil imports increase significantly, partially to account for falling domestic crude oil production. The opposite occurs in the High Oil and Gas Supply case, in which increased domestic production balances lower crude oil imports. Similarly in the annual World Energy Outlook (October 2022), the International Energy Agency (“IEA”) forecast that U.S. crude oil output will expand by 3.9 million barrels per day (“MBPD”) to 20.7 MBPD by 2030 from 16.8 MBPD in 2021 in their Stated Policies Scenario (STEPS) while Saudi Arabia increases production by about 2.5 MBPD by 2030 (from 11.0 to 13.5 MBPD), making the U.S. the world’s largest oil producer from now until 2030 ahead of both Saudi Arabia and Russia. Brazil and Guyana will increase oil net exports by 3.0 MBPD by 2030 adding to Atlantic Basin supply. Russian production will fall by 2.1 MBPD while other Middle Eastern countries produce an additional 3.5 MBPD to 2030. Global oil demand surpasses 2019 levels by 2023 and increases to 102 MBPD in 2030, with China, India and Southeast Asia together accounting for more than 60% of the increase in global demand while demand in advanced economies falls by 3 MBPD to 2030 which will continue the trend of shipping more Atlantic Basin oil to China, India and Other Asian countries.
In recent years the share of total U.S. consumption met by net imports, including both crude oil and products (excluding biofuels), has been decreasing since peaking at over 68% in 2008 according to BP’s 2022 Statistical Review and stood at 45% for 2021. EIA statistics for 2020 show that U.S. crude oil imports fell 14% to an average of 5.9 MBPD under the 7.3 MBPD for 2019 but rose slightly in 2021 to 6.1 MBPD (4%) and in 2022 to 6.3 MBPD (3%), and the average imports are still below the June 2005 peak of 10.8 MBPD. EIA statistics note that U.S. crude oil exports have risen steadily since the ban on exports was lifted in 2015 reaching an all-time high of 4.1 MBPD in October 2022 and stood at 3.5 MBPD in January 2023, which was a very significant increase over the most recent low of 9,100 barrels per day exported in 2002 on average. A slowdown in oil imports to or exports from the United States, one of the most important oil trading nations worldwide, may result in decreased demand for our vessels and lower charter rates, which could have a material adverse effect on our business, results of operations, cash flows, financial condition and ability to make cash distributions.
An increase in trade protectionism and the unraveling of multilateral trade agreements could have a material adverse impact on our charterers' business and, in turn, could cause a material adverse impact on our results of operations, financial condition and cash flows.
Our operations expose us to the risk that increased trade protectionism will adversely affect our business. In past years, government leaders have declared that their countries may turn to trade barriers to protect or revive their domestic industries in the face of foreign imports, thereby depressing the demand for shipping. Concerns regarding terrorist threats from groups in Europe and the refugee crisis or any investment legislation that favors domestic production or production from friendly nations may advance protectionist policies and may negatively impact globalization and global economic growth, which could disrupt financial markets, and may lead to weaker consumer demand in the European Union, the United States, and other parts of the world which could have a material adverse effect on our business. Deteriorations in the global economy have caused, and may continue to cause, decreases in worldwide demand for dry and liquid cargoes and certain goods shipped in containerized form.
Uncertainty has been created about the future relationship between the United States, China, Russia and other importing and exporting countries, including with respect to trade policies, treaties, government regulations and tariffs. Protectionist developments, or the perception that they may occur, may have a material adverse effect on global economic conditions, and may significantly reduce global trade. Restrictions on imports, including in the form of tariffs, could have a major impact on global trade and demand for shipping. Specifically, increasing trade protectionism in the markets that our charterers serve may cause an increase in (i) the cost of goods exported from exporting countries, (ii) the length of time required to deliver goods from exporting countries, the costs of such delivery and (iv) the risks associated with exporting or importing goods. These factors may result in a decrease in the quantity of goods to be shipped and the distances those goods travel. Protectionist developments, or the perception they may occur, may have a material adverse effect on global economic conditions, and may significantly reduce global trade, including trade between the United States and China or between Russia and other countries. These developments would have an adverse impact on our charterers' business, operating results and financial condition. This could, in turn, affect our charterers' ability to make timely charter hire payments to us and impair our ability to renew charters and grow our business. This could have a material adverse effect on our business, results of operations and financial condition, as well as our cash flows, including cash available for distributions to our unitholders.
We are focused on employing vessels on long-term charters and we may have difficulties in doing so if a more active short-term or spot market develops.
One of our principal strategies is to enter into long-term charters, although we believe it is impractical to determine the typical charter length for vessels in our sectors due to factors such as market dynamics, charter strategy and the private nature of charter agreements. If a market for long-term time charters in the sectors in which we operate does not develop, we may have increased difficulty entering into long-term time charters upon expiration or early termination of the time charters for our vessels. As a result, our revenues and cash flows may become more volatile. In addition, an active short-term or spot charter market may require us to enter into charters based on changing market prices or indices, as opposed to contracts based on fixed rates, which could result in a decrease in our revenues and cash flows, including cash available for distribution to unitholders, if we enter into charters during periods when the market price for shipping dry or liquid cargoes or containerships is depressed or these markets become depressed during the period of any adjustable rate charter.
While we favor longer term charters for all the tanker, dry bulk and container vessels we own or control, we may from time to time have to rely on chartering our vessels in the spot market either because our charter ended during a period of weak demand or we need to reposition a vessel out of a geographically or seasonally disadvantaged position. Additionally some of the longer term charters we have are indexed to spot rates. Spot market rates for tanker, dry bulk and container vessels are highly volatile and may decrease in the future, which may materially adversely affect our earnings in the event that our vessels are chartered in the spot market or those that may be chartered under index linked charters.
We may deploy at least some of our product tankers, chemical tankers and Very Large Crude Carriers (“VLCCs”) in the spot market directly or in pools. Although spot chartering is common in the product, chemical and VLCC sectors, product tankers, chemical tankers and VLCC charter hire rates are highly volatile and may fluctuate significantly based upon demand for seaborne transportation of crude oil and oil products and chemicals, as well as tanker supply. World oil demand is influenced by many factors, including international economic activity (including reactions to any economic or health crises or conflicts); geographic changes in oil production, weather and seasonal demand, processing, and consumption; oil price levels; inventory policies of the major oil and oil trading companies; and strategic inventory policies of countries such as the United States and China.
We may deploy our dry bulk vessels on term charters either at fixed rates or rates that vary with an index of spot voyages such as those published by the Baltic Exchange. Some of these charters have the ability to fix rates for succeeding quarters or for longer durations into the future and we have exercised those options when we believe it is advantageous to do so to maximize earnings or to defend against a perceived market weakness. If we do not fix rates going forward or the index charter does not have an ability to do so or a long term charter ends during a period of market weakness, we may be exposed to volatile spot rates that can be lower than the rates in the existing term charters on our other dry bulk vessels which may materially adversely affect our earnings.
The container ship market generally favors longer term charters so that liner companies can establish set schedules for deliveries of containerized cargoes and we may deploy our container vessels on longer term charters at fixed rates or in some instances at rates linked to a spot index such as the Contex. Should term charters on our container vessels end during periods of market weakness, we may be exposed to charters of shorter duration or charters linked to a spot index, which would expose our container ships to volatile spot rates that can be lower than the existing rates in the term charters on our other container ships, which may materially adversely affect our earnings.
The successful operation of our vessels in the spot charter market depends upon, among other things, obtaining profitable spot charters and minimizing, to the extent possible, time spent waiting for charters and time spent traveling unladen to pick up cargo. Furthermore, as charter rates for spot charters are fixed for a single voyage that may last up to several weeks, during periods in which spot charter rates are rising, we will generally experience delays in realizing the benefits from such increases. The spot market is highly volatile, and, in the past, there have been periods when spot rates have declined below the operating cost of vessels.
Currently, spot charter hire rates are above operating costs for all tanker, dry bulk and container vessel sizes and there is no assurance that the crude oil, product and chemical tanker charter market will rise over the next several months or will not decline. A decrease in spot rates may decrease the revenues and cash flow we derive from vessels employed in pools or on index linked charters. Such volatility in pool or index linked charters may be mitigated by any minimum rate due to us that we negotiate with our charterers.
Additionally, if the spot market rates or short-term time charter rates become significantly lower than the time charter equivalent rates that some of our charterers are obligated to pay us under our existing charters, the charterers may have incentive to default under that charter or attempt to renegotiate the charter. If our charterers fail to pay their obligations, we would have to attempt to re-charter our vessels at lower charter rates, which would affect our ability to comply with our loan covenants and operate our vessels profitably. If we are not able to comply with our loan covenants and our lenders choose to accelerate our indebtedness and foreclose their liens, we could be required to sell vessels in our fleet and our ability to continue to conduct our business would be impaired.
Certain of our tanker, dry bulk and container vessels are contractually committed to time charters. We are not permitted to unilaterally terminate the charter agreements of these vessels due to upswings in industry cycles, when spot market voyages might be more profitable. We may also decide to sell a vessel in the future. In such a case, should we sell a vessel that is committed to a long-term charter, we may not be able to realize the full charter free fair market value of the vessel during a period when spot market charters are more profitable than the charter agreement under which the vessel operates. We may re-charter our vessels on long term charters or charter them in the spot market or place them in pools upon expiration or termination of the vessels’ current charters.
Our growth depends on our ability to expand relationships with existing customers, obtain new customers and enter new shipping sectors, for which we will face substantial competition from new entrants and established companies with significant resources.
Long-term time charters have the potential to provide income at pre-determined rates over more extended periods of time. However, the process for obtaining longer term time charters is highly competitive and generally involves a lengthy, intensive and continuous screening and vetting process and the submission of competitive bids that often extends for several months. In addition to the quality, age and suitability of the vessel, longer term shipping contracts tend to be awarded based upon a variety of other factors relating to the vessel operator, including:
| • | the operator's environmental, health and safety record and acceptability to charterers; |
| • | the acceptability of the vessel due to its history; |
| • | compliance with the IMO or carbon intensity rules or standards and the heightened industry standards that have been set by some energy companies; |
| • | shipping industry relationships, reputation for customer service, technical and operating expertise; |
| • | shipping experience and quality of ship operations, including cost-effectiveness; |
| • | quality, experience and technical capability of crews; |
| • | the ability to finance vessels at competitive rates and overall financial stability; |
| • | relationships with shipyards and the ability to obtain suitable berths; |
| • | construction management experience, including the ability to procure on-time delivery of new vessels according to customer specifications; |
| • | willingness to accept operational risks pursuant to the charter, such as allowing termination of the charter for force majeure events; and |
| • | competitiveness of the bid in terms of overall price. |
It is likely that we will face substantial competition for long-term charter business from a number of experienced companies. We may not be able to compete profitably as we expand our business into new geographic regions or provide new services. New markets may require different skills, knowledge or strategies than we use in our current markets. Many of these competitors have significantly greater financial resources than we do. It is also likely that we will face increased numbers of competitors entering into our transportation sectors, including in the tanker, containership and drybulk sectors. Many of these competitors have strong reputations and extensive resources and experience. Increased competition may cause greater price competition, especially for long-term charters, as well as for the acquisition of high-quality secondhand vessels and newbuilding vessels. Further, since the charter rate is generally considered to be one of the principal factors in a charterer's decision to charter a vessel, the rates offered by our competitors can place downward pressure on rates throughout the charter market.
Additionally, the consolidation among liner companies and the creation of alliances among liner companies have increased their negotiation power and oil companies facing declining fossil fuel use in the developed world may decrease the number of long term charters that they hold. However, participation in three shipping sectors should mitigate some of the volatility inherent in a focus on one particular market and allow us access to long term charter deals or asset purchases when single market competitors maybe constrained.
As a result of these factors, we may be unable to expand our relationships with existing customers or obtain new customers for long-term charters on a profitable basis, if at all. However, even if we are successful in employing our vessels under longer term charters, our vessels will not be available for trading in the spot market during an upturn in the Dry Cargo, tanker or container market cycles, when spot trading may be more profitable. If we cannot successfully employ our vessels in profitable time charters our results of operations and financial condition, as well as operating cash flow could be adversely affected.
As we expand our business, we may have difficulty managing our growth, which could increase expenses.
We intend to continue growing our fleet, either through purchases, ordering newbuilt vessels, the increase of the number of chartered-in vessels or through the acquisitions of businesses, as is the case with the acquisitions of Navios Containers’ and Navios Acquisition’s fleets or through the acquisitions of assets, as is the case with the acquisition of 36-vessel drybulk fleet from Navios Holdings. The addition of vessels to our fleet or the acquisition of new businesses will impose significant additional responsibilities on our management. We will also have to increase our customer base to provide continued employment for the new vessels. Our growth will depend on our success in locating and acquiring suitable vessels, identifying and entering into shipbuilding contracts at acceptable prices and consummating acquisitions or joint ventures, integrating any acquired business successfully with our existing operations, enhancing our customer base, managing our expansion, and obtaining required financing.
During periods in which charter rates are high, vessel values are generally high as well, and it may be difficult to consummate ship acquisitions or potentially enter into shipbuilding contracts at favorable prices. During periods in which charter rates are low and employment is scarce, vessel values are low and any vessel acquired without time charter attached will automatically incur additional expenses to operate, insure, maintain and finance the vessel thereby significantly increasing the acquisition cost. In addition, any vessel acquisition may not be profitable at or after the time of acquisition and may not generate cash flows sufficient to justify the investment. We may not be successful in executing any future growth plans and we cannot give any assurance that we will not incur significant expenses and losses in connection with such growth efforts.
Growing any business by acquisition presents numerous risks such as undisclosed liabilities and obligations, difficulty in obtaining additional qualified personnel, continuing to meet technical and safety performance standards, managing relationships with customers and suppliers, dealing with potential delays in deliveries of newbuilding vessels, and integrating newly acquired operations into existing infrastructures. We may not be successful in executing our growth plans. We may incur significant expenses and losses in connection therewith or our acquisitions may not perform as expected, which could materially adversely affect our results of operations and financial condition.
We may be unable to make or realize expected benefits from acquisitions, and implementing our growth strategy through acquisitions may harm our business, financial condition and operating results.
Our growth strategy depends, in part, on a gradual expansion of our fleet. Any acquisition of a vessel or a fleet may not be profitable to us at or after the time we acquire it and may not generate cash flow sufficient to justify our investment. We may also fail to realize anticipated benefits of our growth, such as new customer relationships, cost-savings or cash flow enhancements, or we may be unable to hire, train or retain qualified shore and seafaring personnel to manage and operate our growing business and fleet.
Our growth strategy could decrease our liquidity by using a significant portion of our available cash or borrowing capacity to finance acquisitions. To the extent that we incur additional debt to finance acquisitions, it could significantly increase our interest expense or financial leverage. We may also incur other significant charges, such as impairment of goodwill or other intangible assets, asset devaluation or restructuring charges.
Additionally, the marine transportation and logistics industries are capital intensive, traditionally using substantial amounts of indebtedness to finance vessel acquisitions, capital expenditures and working capital needs. If we finance the purchase of our vessels through the issuance of debt securities, it could result in:
• default and foreclosure on our assets if our operating cash flow after a business combination or asset acquisition were insufficient to pay our debt obligations;
• acceleration of our obligations to repay the indebtedness even if we have made all principal and interest payments when due if the debt security contained covenants that required the maintenance of certain financial ratios or reserves and any such covenant were breached without a waiver or renegotiation of that covenant;
• our immediate payment of all principal and accrued interest, if any, if the debt security was payable on demand; and
• our inability to obtain additional financing, if necessary, if the debt security contained covenants restricting our ability to obtain additional financing while such security was outstanding.
In addition, our business plan and strategy is predicated on buying vessels at what we believe is near the low end of the cycle in what has typically been a cyclical industry. However, charter rates and vessel asset values may sink lower, and shipping costs or vessel asset values may not increase in the near-term or at all.
Delays in deliveries of secondhand vessels, our decision to cancel an order for purchase of a vessel or our inability to otherwise complete the acquisitions of additional vessels for our fleet, could harm our business, financial condition and results of operations.
We expect to purchase secondhand vessels from time to time. The delivery of these vessels could be delayed, not completed or cancelled, which would delay or eliminate our expected receipt of revenues from the employment of these vessels. The seller could fail to deliver these vessels to us as agreed, or we could cancel a purchase contract because the seller has not met its obligations. The ability and willingness of each of our counterparties to perform its obligations under a contract with us will depend upon a number of factors that are beyond our control and may include, among other things, general economic conditions, the state of the capital markets, the condition of the dry and container shipping industry and charter hire rates.
If the delivery of any vessel is materially delayed or cancelled, especially if we have committed the vessel to a charter for which we become responsible for substantial liquidated damages to the customer as a result of the delay or cancellation, we could sustain significant losses and our business, financial condition and results of operations could be adversely affected.
If we purchase any newbuilding vessels, delays, cancellations or non-completion of deliveries of newbuilding vessels could harm our operating results.
If we purchase any newbuilding vessels, the shipbuilder could fail to deliver the newbuilding vessel as agreed. In addition, under charters that are related to a newbuilding, delays in our delivery of the newbuilding to our customer could result in liquidated damages payable to a customer, and for prolonged delays, the customer may terminate the charter and, in addition to the resulting loss of revenues, we may be responsible for additional, substantial liquidated damages. We do not derive any revenue from a vessel until after its delivery and will be required to pay substantial sums as progress payments during construction of a newbuilding. While we expect to have refund guarantees from financial institutions with respect to such progress payments in the event the vessel is not delivered by the shipyard or is otherwise not accepted by us, there is the potential that we may not be able to collect all portion of such refund guarantees, in which case we would lose the amounts of monies we have advanced to the shipyards for such progress payments.
The completion and delivery of newbuildings could be delayed, cancelled or otherwise not completed because of:
• quality or engineering problems;
• changes in governmental regulations or maritime self-regulatory organization standards;
• work stoppages or other labor disturbances at the shipyard;
• bankruptcy or other financial crisis of the shipbuilder;
• a backlog of orders at the shipyard;
• epidemics, pandemics, natural or man-made disasters;
• political, economic or military disturbances;
• weather interference or catastrophic event, such as a major earthquake or fire;
• requests for changes to the original vessel specifications;
• shortages of or delays in the receipt of necessary construction materials, such as steel;
• shortages of or delays in the receipt of necessary component machinery or equipment;
• inability to finance the construction or conversion of the vessels; or
• inability to obtain requisite permits or approvals.
If delivery of a vessel is materially delayed, it could materially adversely affect our results of operations and financial condition and our ability to make cash distributions.
The loss of a customer, charter or vessel could result in a loss of revenues and cash flow in the event we are unable to replace such customer, charter or vessel.
Payments to us by our charterers under time charters are and will be our main source of operating cash flow. Weaknesses in demand for our shipping services, increased operating costs due to changes in environmental or other regulations and the oversupply of vessels increase the likelihood of one or more of our customers being unable or unwilling to pay us contracted charter rates or going bankrupt.
For the year ended December 31, 2022, no customer accounted for 10.0% or more of our total revenues. For the year ended December 31, 2021, Singapore Marine Pte. Ltd (“Singapore Marine”) represented approximately 14.5% of our total revenues. For the year ended December 31, 2020, Hyundai Merchant Marine Co. (“HMM”), Singapore Marine, and Cargill International S.A. (“Cargill”), represented approximately 23.4%, 19.5% and 11.4%, respectively, of our total revenues. The charterers in the containership sector consist of a limited number of liner companies and the charterers in the tanker sector consist of a limited number of oil companies and oil traders. The combination of any surplus of vessel capacity, the expected entry into service of new technologically advanced vessels, and the expected increase in the size of the world dry bulk, tanker and container fleets over the next few years may make it difficult to secure substitute employment for any of our vessels if our counterparties fail to perform their obligations under the currently arranged time charters, and any new charter arrangements we are able to secure may be at lower rates. Furthermore, the surplus of capacity available at lower charter rates and lack of demand for our customers could negatively affect our charterers' willingness to perform their obligations under our time charters, which in many cases provide for charter rates significantly above current market rates. The number of leading liner companies which are part of our client base may continue to shrink and we may depend on an even more limited number of customers to generate a substantial portion of our revenues. The cessation of business with these liner companies or their failure to fulfill their obligations under the time charters for our containerships could have a material adverse effect on our financial condition and results of operations, as well as our cash flows, including cash available for distributions to our unitholders.
We could lose a customer or the benefits of our time charter arrangements for many different reasons, including if the customer is unable or unwilling to make charter hire or other payments to us because of a deterioration in its financial condition, disagreements with us or if the charterer exercises certain termination rights or otherwise. Our customers may go bankrupt or fail to perform their obligations under the contracts, they may delay payments or suspend payments altogether, they may terminate the contracts prior to the agreed-upon expiration date or they may attempt to renegotiate the terms of the contracts. If any of these customers terminates its charters, chooses not to re-charter our ships after charters expire or is unable to perform under its charters and we are not able to find replacement charters on similar terms or are unable to re-charter our ships at all, we will suffer a loss of revenues that could have a material adverse effect on our business, results of operations and financial condition and our ability to make distributions to our unitholders, as 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. Accordingly we may have to grant concessions to our charterers in the form of lower charter rates for the remaining duration of the relevant charter or part thereof, or to agree to re-charter vessels coming off charter at reduced rates compared to the charter then ended.
For example, in 2016, HMM faced financial difficulties and developed a restructuring plan, which included restructuring agreements for five of our containerships. In addition, Navios Partners has filed claims for lost revenues in connection with the 2016 filing by Hanjin Shipping Co. (“Hanjin”) for rehabilitation, which was later followed by entry into liquidation in 2017. The Company had fully provided for these amounts in its books.
All of our drybulk time charters are scheduled to expire on dates ranging from April 2023 to March 2028. All of our tanker time charters are scheduled to expire on dates ranging from April 2023 to February 2031. All of our containerships are scheduled to expire on dates ranging from April 2023 to December 2036.
If, upon expiration or termination of these or other contracts, long-term recharter rates are lower than existing rates, particularly considering that we intend to enter into long-term charters, or if we are unable to obtain replacement charters, our earnings, cash flow and our ability to make cash distributions to our unitholders could be materially adversely affected.
The loss of any of our charterers, time charters or vessels, or a decline in payments under our time charters, could have a material adverse effect on our business, results of operations and financial condition, as well as our cash flows, including cash available for distributions to our unitholders.
The aging of our vessels may result in increased operating costs in the future, which could adversely affect our earnings.
As of March 13, 2023, the vessels in our fleet had an average age of approximately 9.5 years, basis fully delivered fleet, when drybulk and tanker vessels have an expected life of approximately 25 years and containerships have an expected life of approximately 30 years and we may acquire older vessels in the future. Older vessels are typically more costly to maintain than more recently constructed vessels due to improvements in engine technology. As our fleet ages, we will incur increased costs. In some instances, charterers prefer newer vessels that are more fuel efficient than older vessels. Cargo insurance rates also increase with the age of a vessel, making older vessels less desirable to charterers as well. Therefore, as vessels age it can be more difficult to employ them on profitable time charters, particularly during periods of decreased demand in the charter market. Accordingly, we may find it difficult to continue to find profitable employment for our vessels as they age. Governmental regulations, safety or other equipment standards related to the age of the vessels may require expenditures for alterations or the addition of new equipment to our vessels and may restrict the type of activities in which these vessels may engage. Older vessels may require longer and more expensive dry-dockings, resulting in more off-hire days and reduced revenue. We cannot assure you that as our vessels age, market conditions will justify those expenditures or enable us to operate our vessels profitably during the remainder of their useful lives. If we sell vessels, we may have to sell them at a loss, and if charterers no longer charter our vessels due to their age, it could materially adversely affect our earnings.
A number of third party owners have ordered so-called “eco-type” vessel designs or have retrofitted scrubbers to remove sulfur from exhaust gases, which may offer substantial bunker savings as compared to older designs or vessels without exhaust gas scrubbers. Increased demand for and supply of “eco-type” or scrubber retrofitted vessels could reduce demand for our vessels that are not classified as such and expose us to lower vessel utilization and/or decreased charter rates.
New eco-type vessel designs or scrubber retrofits purport to offer material bunker savings compared to older designs, including certain of our vessels. Fitting scrubbers will allow a ship to consume high sulfur fuel oil (“HSFO”) which, to date, has been cheaper than the low sulfur fuel oil (“LSFO”) that ships without scrubbers must consume to comply with the IMO 2020 low sulfur emission requirements. Depending on the magnitude of the difference in prices between LSFO and HSFO, such savings could result in a substantial reduction of bunker cost for charterers compared to such vessels of our fleet which may not have scrubbers. As the supply of such “eco-type” or scrubber retrofitted vessels increases, if the differential between the cost of HSFO and LSFO remains high, or if charterers prefer such vessels over our vessels that are not classified as such, this may reduce demand for our non-”eco-type”, non-scrubber retrofitted vessels, impair our ability to re-charter such vessels at competitive rates and have a material adverse effect on our business, financial condition, cash flows and results of operations.
Our vessels may be subject to unbudgeted periods of off-hire, which could materially adversely affect our business, financial condition and results of operations.
Under the terms of the charter agreements under which our vessels operate, when a vessel is “off-hire,” or not available for service or otherwise deficient in its condition or performance, the charterer generally is not required to pay the hire rate, and we will be responsible for all costs (including the cost of bunker fuel) unless the charterer is responsible for the circumstances giving rise to the lack of availability.
As we do not maintain off-hire insurance except in cases of loss of hire up to a limited number of days due to war or piracy events any extended off-hire period could have a material adverse effect on our results of operations, cash flows and financial condition.
For more information on “off-hire” see “Item 4. Information on the Partnership - B. Business Overview – Off-hire.”
Vessels may suffer damage and we may face unexpected drydocking costs, which could affect our cash flow and financial condition.
If our owned vessels suffer damage, they may need to be repaired at a drydocking facility. The costs of drydock repairs are unpredictable and can be substantial. We may have to pay drydocking costs that insurance does not cover. The loss of earnings while these vessels are being repaired and repositioned, as well as the actual cost of these repairs, could decrease our revenues and earnings substantially, particularly if a number of vessels are damaged or drydocked at the same time. Under the terms of the Management Agreements with the Managers, the costs of drydocking repairs are not included in the daily management fee, but are be reimbursed at cost upon occurrence.
In addition, we often purchase secondhand vessels that, unlike newbuilt vessels, typically do not carry warranties as to their condition, and our vessel inspections would not normally provide us with as much knowledge of a vessel's condition as we would possess if it had been built for us and operated by us during its life. Repairs and maintenance costs for secondhand vessels are difficult to predict and may be substantially higher than for vessels we have operated since they were built. These costs could decrease our cash flows, liquidity and our ability to pay dividends to our unitholders.
The market value of our vessels may fluctuate significantly, which could cause us to breach covenants in our financing arrangements, resulting in the foreclosure of certain of our vessels, limit the amount of funds that we can borrow and adversely affect our ability to purchase new vessels and our operating results. Depressed vessel values could also cause us to incur impairment charges. If vessel values are low at a time when we are attempting to dispose of a vessel, we could incur a loss.
The factors that influence vessel values include:
| • | the number of newbuilding deliveries; |
| • | prevailing economic conditions in the markets in which drybulk, tanker or containerships operate, including all economic, conflict or pandemic related crises; |
| • | reduced demand for drybulk, tanker or containerships, including as a result of a substantial or extended decline in world trade or energy use; |
| • | the number of vessels scrapped or otherwise removed from the total fleet; |
| • | competition from other shipping companies; |
| • | sophistication and condition of the vessels; |
| • | supply and demand for vessels; |
| • | technological advances since the vessel was constructed; |
| • | whether the vessel is equipped with scrubbers or not; |
| • | changes in environmental and other regulations, including carbon intensity rules, that may limit the useful life of vessels; |
| • | changes in global dry or liquid cargo commodity supply or sources and destinations of containerized cargoes; |
| • | types, sizes and age of vessels; |
| • | advances in efficiency, such as the introduction of remote or autonomous vessels; |
| • | the development of an increase in use of other modes of transportation; |
| • | where the ship was built and as-built specification; |
| • | lifetime maintenance record; |
| • | the cost of vessel acquisitions including the cost of new buildings; |
| • | governmental or other regulations (including the application of any IMO rules, including those regarding any reduction in CO2 emissions or carbon intensity); |
| • | prevailing level of charter rates; |
| • | the availability of financing, or lack thereof, for ordering newbuildings or for facilitating ship sale and purchase transactions; |
| • | general economic and market conditions affecting the shipping industry; and |
| • | the cost of retrofitting or modifying existing ships to respond to technological advances in vessel design or equipment, changes in applicable environmental or other regulations or standards, or otherwise. |
If the book value of a vessel is impaired due to unfavorable market conditions, or a vessel is sold at a price below its book value, we would incur a loss. If a charter expires or is terminated, we may be unable to re-charter the vessel at an acceptable rate and, rather than continue to incur costs to maintain the vessel, may seek to dispose it. Our inability to dispose of a vessel at a reasonable price could result in a loss on her sale and could materially and adversely affect our business, results of operations and financial condition, as well as our cash flows, including cash available for distributions to our unitholders.
If the market value of our vessels decreases, we may breach some of the covenants contained in the financing agreements relating to our indebtedness at the time. Our financing arrangements contain covenants including maximum total net liabilities over total net assets (effective in general after delivery of the vessels), minimum net worth and loan to value ratio covenants. As of December 31, 2022, Navios Partners was in compliance with the financial covenants and/or the prepayments and/or the cure provisions, as applicable, in each of its credit facilities and certain financial liabilities. If we breach any such covenants in the future and we are unable to remedy the relevant breach, our lenders could accelerate or require us to prepay a portion of our debt and foreclose on our vessels. In addition, if the book value of a vessel is impaired due to unfavorable market conditions, we would incur a loss that could have a material adverse effect on our business, financial condition and results of operations.
In addition, as vessels grow older, they generally decline in value. We will review our vessels for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable.
We review certain indicators of potential impairment, such as undiscounted projected operating cash flows expected from the future operation of the vessels, which can be volatile for vessels employed on short-term charters or in the spot market. Any impairment charges incurred as a result of declines in charter rates would negatively affect our financial condition and results of operations. In addition, if we sell any vessel at a time when vessel prices have fallen and before we have recorded an impairment adjustment to our financial statements, the sale may be at less than the vessel’s carrying amount on our financial statements, resulting in a loss and a reduction in earnings. 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 materially adversely affect our business, financial condition and results of operations.
We must make substantial capital expenditures to maintain the operating capacity of our fleet, which will reduce our cash available for distribution. In addition, each quarter our board of directors is required to deduct estimated maintenance and replacement capital expenditures from operating surplus, which may result in less or no cash available to unitholders than if actual maintenance and replacement capital expenditures were deducted.
We must make substantial capital expenditures to maintain and replace, over the long term, the operating capacity of our fleet. We generally expect to finance these maintenance capital expenditures with cash balances or financing arrangements. These maintenance and replacement capital expenditures include capital expenditures associated with drydocking a vessel, modifying an existing vessel or acquiring a new vessel to the extent these expenditures are incurred to maintain the operating capacity of our fleet. These expenditures could increase as a result of changes in the cost of our labor and materials, the cost of suitable replacement vessels, customer/market requirements, increases in the size of our fleet, the length of charters, governmental regulations and maritime self-regulatory organization standards relating to safety, security or the environment, competitive standards, and the age of our ships. In addition, we will need to make substantial capital expenditures to acquire vessels in accordance with our growth strategy. 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, as well as our cash flows, including cash available for distributions to our unitholders.
Our significant maintenance and replacement capital expenditures, including without limitation the vessel operating expenses paid to the Managers pursuant to the Management Agreements, to maintain and replace, over the long-term, the operating capacity of our fleet, as well as to comply with environmental and safety regulations, may reduce or eliminate the amount of cash we have available for distribution to our unitholders. Our partnership agreement requires our board of directors to deduct estimated, rather than actual, maintenance and replacement capital expenditures from operating surplus each quarter in an effort to reduce fluctuations in operating surplus. The amount of estimated capital expenditures deducted from operating surplus is subject to review and change by the Conflicts Committee of our board of directors at least once a year. If our board of directors underestimates the appropriate level of estimated maintenance and replacement capital expenditures, we may have less, if any, cash available for distribution in future periods when actual capital expenditures begin to exceed previous estimates.
For detailed information on the amount of vessel operating expenses owed under the Management Agreements, please see the section entitled, “Item 5.Operating and Financial Review and Prospects - A. Operating results – Vessel operating expenses”.
We may be subject to litigation that, if not resolved in our favor or not sufficiently insured against, could have a material adverse effect on us.
We have been and 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, potential costs due to environmental damage and vessel collisions, and other tort claims, employment matters, governmental claims for taxes or duties, and other litigation that arises in the ordinary course of our business. 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.
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 cause us to suffer exchange rate losses thereby increasing expenses and reducing income.
We engage in worldwide commerce with a variety of entities. Although our operations may expose us to certain levels of foreign currency risk, our transactions are at present predominantly U.S. dollar-denominated. Transactions in currencies other than the functional currency are translated at the exchange rate in effect on the date of each transaction. Expenses incurred in foreign currencies against which the U.S. dollar falls in value can increase thereby decreasing our income or vice versa if the U.S. dollar increases in value. For example, as of December 31, 2022, the value of the U.S. dollar as compared to the Euro increased by approximately 6.2% compared with the respective value as of December 31, 2021. A greater percentage of our transactions and expenses in the future may be denominated in currencies other than the U.S. dollar.
Security breaches and disruptions to our information technology infrastructure could interfere with our operations and expose us to liability which could have a material adverse effect on our business, financial condition, cash flows and results of operations.
In the ordinary course of business, we rely on information technology networks and systems to process, transmit, and store electronic information, and to manage or support a variety of business processes and activities.
Additionally, we collect and store certain data, including proprietary business information and customer and employee data, and may have access to other confidential information in the ordinary course of our business. Despite our cybersecurity measures, which includes active monitoring, training, reporting and other activities designed to protect and secure our data, our information technology networks and infrastructure may be vulnerable to damage, disruptions, or shutdowns due to attack by hackers or breaches, employee error or malfeasance, data leakage, power outages, computer viruses and malware, telecommunication or utility failures, systems failures, natural disasters, or other catastrophic events. Any such events could result in legal claims or proceedings, liability or penalties under privacy or other laws, disruption in operations, and damage to our reputation, which could have a material adverse effect on our business, financial condition, cash flows and results of operations.
In addition, some of our technology networks and systems are managed by third-party service providers (including cloud-service providers) for a variety of reasons, and such providers also may have access to proprietary business information and customer and employee data, and may have access to confidential information on the conduct of our business. Like us, these third-party providers are subject to risks imposed by data breaches and disruptions to their technology infrastructure. A cyber-attack could defeat one or more of our third-party service providers' security measures, allowing an attacker access to proprietary information from our company including our employees', customers' and suppliers' data. Most recently, the Russia/Ukraine conflict has been accompanied by cyber-attacks, including other countries in the region, which could adversely affect our operations. Any such security breach or disruption to our third-party service providers could result in a disruption in operations and damage to our reputation and liability claims, which could have a material adverse effect on our business, financial condition, cash flows and results of operations.
We may not have adequate insurance to compensate us if we lose our vessels or to compensate third parties.
There are a number of risks associated with the operation of ocean-going vessels, including mechanical failure, collision, fire, human error, war, terrorism, piracy, loss of life, contact with floating objects, property loss, cargo loss or damage and business interruption due to political circumstances in foreign countries, hostilities and labor strikes. Any of these events may result in loss of revenues, increased costs and decreased cash flows. In addition, the operation of any vessel is subject to the inherent possibility of marine disaster, including oil spills and other environmental mishaps, and the associated liabilities.
There are also liabilities arising from owning and operating vessels in international trade. We procure insurance for our fleet in relation to risks commonly insured against by vessel owners and operators. Our current insurance includes (i) hull and machinery and war risk insurance covering damage to our vessels' hulls and machinery from, among other things, collisions and contact with fixed and floating objects, (ii) war risks insurance covering losses associated with the outbreak or escalation of hostilities and (iii) protection and indemnity insurance (which includes environmental damage) covering, among other things, third-party and crew liabilities such as expenses resulting from the injury or death of crew members, passengers and other third parties, the loss or damage to cargo, third-party claims arising from collisions with other vessels, damage to other third-party property and pollution arising from oil or other substances, and salvage, towing and other related costs, including wreck removal.
We do not currently maintain strike or off-hire insurance, which would cover the loss of revenue during extended vessel off-hire periods, such as those that occur during an unscheduled drydocking due to damage to the vessel from accidents except in cases of loss of hire up to a limited number of days due to war or a piracy event.
Other events that may lead to off-hire periods include natural or man-made disasters that result in the closure of certain waterways and prevent vessels from entering or leaving certain ports. Accordingly, any extended vessel off-hire, due to an accident or otherwise, could have a material adverse effect on our business and our ability to pay distributions to our unitholders.
We can give no assurance that we are adequately insured against all risks or that our insurers will pay a particular claim. Even if our insurance coverage is adequate to cover our losses, we may not be able to obtain a timely replacement vessel in the event of a vessel loss. Under the terms of our financing arrangements, we are subject to restrictions on the use of any proceeds we may receive from claims under our insurance policies.
Because we obtain some of our insurance through protection and indemnity associations, 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. There is no cap on our liability exposure for such calls or premiums payable to our protection and indemnity association. Our payment of these calls could result in significant expenses to us, which could have a material adverse effect on our business, results of operations and financial condition. In addition, we cannot assure you that we will be able to renew our insurance policies on the same or commercially reasonable terms, or at all, in the future. For example, more stringent environmental regulations have led in the past to increased costs for, and in the future may result in the lack of availability of, protection and indemnity insurance against risks of environmental damage or pollution. Any uninsured or underinsured loss could harm our business, financial condition, cash flows and results of operations. In addition, our insurance may be voidable by the insurers as a result of certain of our actions, such as our vessels failing to maintain certification with applicable maritime self-regulatory organizations. Further, we cannot assure you that our insurance policies will cover all losses that we incur, or that disputes over insurance claims will not arise with our insurance carriers. Any claims covered by insurance would be subject to deductibles, and since it is possible that a large number of claims may be brought, the aggregate amount of these deductibles could be material. In addition, our insurance policies are subject to limitations and exclusions, which may increase our costs or lower our revenues, and could have a material adverse effect on our business, financial condition, cash flows and results of operations. A catastrophic oil spill or marine disaster could exceed our insurance coverage, which could have a material adverse effect on our business, results of operations and financial condition and our ability to make distributions to our unitholders. Any uninsured or underinsured loss could harm our business and financial condition. In addition, the insurance may be voidable by the insurers as a result of certain actions, such as vessels failing to maintain required certification.
Our charterers may in the future engage in legally permitted trading in locations or with persons which may still be subject to restrictions due to sanctions or boycott. However, no vessels in our fleet have called on ports in sanctioned countries or in countries designated as state sponsors of terrorism by the U.S. State Department like Iran or Syria. Our insurers may be contractually or by operation of law prohibited from honoring our insurance contract for such trading on such locations or countries or trading with such persons, which could result in reduced insurance coverage for losses incurred by the related vessels. Changes in the insurance markets attributable to the risk of terrorism in certain locations around the world could make it difficult for us to obtain certain types of coverage. In addition, the insurance that may be available to us may be significantly more expensive than our existing coverage. Furthermore, our insurers and we may be prohibited from posting or otherwise be unable to post security in respect of any incident in such locations or countries or as a result of trading with such persons, resulting in the loss of use of the relevant vessel and negative publicity for our Company which could negatively impact our business, results of operations, cash flows and unit price.
Our growth depends on continued growth in demand for crude oil, refined petroleum products (clean and dirty) and bulk liquid chemicals and the continued demand for seaborne transportation of such cargoes.
Our growth strategy depends in part on expansion in the crude oil, product and chemical tanker sectors. Accordingly, our growth depends on continued growth in world and regional demand for crude oil, refined petroleum (clean and dirty) products and bulk liquid chemicals and the transportation of such cargoes by sea, which could be negatively affected by a number of factors, including:
| • | the economic and financial developments globally, including actual and projected global economic growth; |
| • | fluctuations in the actual or projected price of crude oil, refined petroleum products or bulk liquid chemicals; |
| • | refining or production capacity and its geographical location; |
| • | increases in the production of oil in areas linked by pipelines to consuming areas, the extension of existing, or the development of new, pipeline systems in markets we may serve, or the conversion of existing non-oil pipelines to oil pipelines in those markets; |
| • | decreases in the consumption of oil due to increases in its price relative to other energy sources, other factors making consumption of oil less attractive or energy conservation measures or pollution reduction measures or those intended to reduce global warming; |
| • | availability of new, alternative energy sources; and |
| • | negative or deteriorating global or regional economic or political conditions or health conditions (including changes to trade policies, decreases or withdrawals of stimulus measures meant to counteract the effect of economic or health or other crises), wars or other conflicts and any resulting sanctions), particularly in oil-consuming or producing regions, which could reduce energy consumption or its growth or affect trading patterns negatively. |
The refining and chemical industries may respond to any economic downturn and demand weakness by reducing operating rates, partially or completely reducing crude oil production, closing refineries or bulk liquid chemical production facilities and by reducing or cancelling certain investment expansion plans, including plans for additional crude oil production, refining or finished product or chemical production capacity. Continued reduced demand for crude, refined petroleum products and bulk liquid chemicals and the shipping of such cargoes or the increased availability of pipelines used to transport crude, refined petroleum products, and bulk liquid chemicals would have a material adverse effect on our future growth and could harm our business, results of operations and financial condition.
Increasing growth of electric vehicles and other measures intended to reduce CO2 emissions could lead to a decrease in trading and the movement of coal, crude oil and petroleum products worldwide.
The IEA noted in its Global EV Outlook 2022 (published May 2022) that total electric cars registered worldwide grew from about 17,000 in 2010 to 16.5 million at the end of 2021. Electric car sales in 2021 were 6.6 million (almost double sales in 2020) and that represented nearly 10% of global car sales in 2021 which was nearly four times the market in 2019. IEA forecasts are for all electric vehicles (“EVs”) to grow from 18 million in 2021 to about 200 million by 2030 under currently stated government policies, which the IEA forecasts would reduce worldwide demand for oil products by about 3.4 million barrels per day in 2030. IEA stated that EV operations in 2020 avoided the consumption of 0.5 million barrels per day of oil products. According to the OECD, there were about 1 billion cars registered in 2015 and there will be about 1.7 billion cars registered by 2030 and 2.4 billion by 2050.
In the World Energy Outlook 2022, published in October 2022, the IEA states that current governmental pledges to reduce emissions will cover about 36% of the gap in emissions reductions that need to be closed by 2030 to get to Net Zero Emissions by 2050 and keep a 1.5 degree C path within reach (the rise of global mean surface temperatures above pre-industrial levels). While the gap has narrowed since the IEA’s prior report, the IEA stated that this shows the need not only to implement existing pledges but also to raise the overall level of ambition. Closing the gap between current practice and net zero emissions will depend on the world’s ability to scale up resilient clean energy supply chains, which has clear implications for the need for investment in traditional elements of supply. In all of the IEA’s scenarios, the largest contribution to reducing emissions is replacing coal-fired generation with renewable energy sources.
A growth in EVs or a speed up in climate goals aimed to reduce CO2 and other emissions or a slowdown in imports or exports of coal, crude or petroleum products worldwide may result in decreased demand for our vessels and lower charter rates, which could have a material adverse effect on our business, results of operations, cash flows, financial condition and ability to make cash distributions.
We conduct a substantial amount of business in China. The legal system in China has inherent uncertainties that could limit the legal protections available to us and could have a material adverse impact on our business, results of operations, financial condition and cash flows.
Many of our vessels regularly call to ports in China and we may enter into sale and leaseback transactions with Chinese financial institutions. Although our charters and sale and leaseback agreements are governed by English law, we may have difficulties enforcing a judgment rendered by an English court (or other non-Chinese court) in China. Such charters and any additional agreements that we enter into with Chinese counterparties, may be subject to new regulations in China that may require us to incur new or additional compliance or other administrative costs and pay new taxes or other fees to the Chinese government. Changes in laws and regulations, including with regards to tax matters, and their implementation by local authorities could affect our vessels chartered to Chinese customers as well as our vessels calling to Chinese ports and could have a material adverse effect on our business, results of operations and financial condition, as well as our cash flows, including cash available for distributions to our unitholders.
An oversupply of vessel capacity may depress charter rates, which may affect our ability to operate our vessels profitably.
The market supply of drybulk carriers has been increasing as a result of the delivery of numerous newbuilding orders over the last few years. Newbuildings have been delivered in significant numbers over the last few years and, as of March 2023, newbuilding orders had been placed for an aggregate of about 7% of the existing global drybulk fleet, with deliveries expected during the next three years. That 7% is an all-time low since records began in January 1996, but there is no guarantee that the orderbook will continue at these low levels in the future. While vessel supply will continue to be affected by the delivery of new vessels and the removal of vessels from the global fleet, either through scrapping or accidental losses, an over-supply of drybulk carrier capacity could exacerbate decreases in charter rates or prolong the period during which low charter rates prevail which may have a material adverse effect on our business, results of operations, cash flows, financial condition and ability to pay dividends.
From 2005 through 2010, the containership orderbook was at historically high levels as a percentage of the in-water fleet reaching a high of 61% in November 2007, according to industry data. Since that time, deliveries of previously ordered containerships increased substantially and ordering momentum slowed somewhat with the total orderbook declining as a percentage of the existing fleet to an all-time low of 8% as of October 2020, but has since increased to 29% as of March 2023. The orderbook remains significantly skewed towards vessels over 8,000 TEU. An oversupply of large newbuilding vessel and/or re-chartered containership capacity entering the market, combined with any decline in the demand for containerships, may prolong or further depress current charter rates and may decrease our ability to charter our containerships when we are seeking new or replacement charters other than for unprofitable or reduced rates, or we may not be able to charter our containerships at all.
Similarly the market supply of tankers has been increasing as a result of the delivery of numerous newbuilding orders over the last few years; however the percentage of the total tanker fleet on order as a percent of the total fleet declined from 20% at the start of 2016 to 4% at the beginning of March 2023. From 2004 through 2010, the tanker orderbook was at historically high levels as a percentage of the in-water fleet reaching a high of 48% in September 2008, according to industry data. Since that time, deliveries of previously ordered tankers increased substantially and ordering momentum slowed with the total orderbook declining as a percentage of the existing fleet to an all-time low of 4% in March 2023. An oversupply of newbuilding vessels entering the market, combined with any decline in the demand for crude or product tankers, may prolong or further depress current charter rates and may decrease our ability to charter our tankers when we are seeking new or replacement charters other than for unprofitable or reduced rates, or we may not be able to charter our tankers at all.
Fuel price fluctuations may have an adverse effect on our profits.
The cost of fuel is a significant factor in negotiating charter rates and can affect us in both direct and indirect ways. This cost will be borne by us when our vessels are not employed or are employed on voyage charters or contracts of affreightment so an increase in the price of fuel beyond our expectations may adversely affect our profitability. Even where the cost of fuel is borne by the charterer, which is the case with all of our existing time charters that cost may affect the level of charter rates that charterers are prepared to pay. Rising costs of fuel for any reason or as occurred following the Russian invasion of Ukraine in February 2022 will make our older and less fuel efficient vessels less competitive compared to the more fuel efficient newer vessels or compared with vessels which can utilize less expensive fuel and may reduce their charter hire, limit their employment opportunities and force us to employ them at a discount compared to the charter rates commanded by more fuel efficient vessels or not at all.
Falling costs of fuel may lead our charterers to abandon slow steaming, thereby releasing additional capacity into the market and exerting downward pressure on charter rates or may lead our charterers to employ older, less fuel efficient vessels which may drive down charter rates and make it more difficult for us to secure employment for our newer vessels.
The price and supply of fuel is unpredictable and fluctuates based on events outside our control, including geo-political 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 generally and in oil producing countries and regions, regional production patterns and environmental concerns and regulations.
If we expand the size of our fleet in the future, we generally will be required to make significant installment payments for acquisitions of vessels even prior to their delivery and generation of revenue. Depending on whether we finance our expenditures through cash from operations or by issuing debt or equity securities, our ability to make cash distributions to unitholders, to the extent we are making distributions, may be diminished or our financial leverage could increase or our unitholders could be diluted.
The actual cost of a vessel varies significantly depending on the market price, the size and specifications of the vessel, governmental regulations and maritime self-regulatory organization standards. If we purchase additional vessels in the future, we generally will be required to make installment payments prior to their delivery. If we finance these acquisition costs by issuing debt or equity securities, we will increase the aggregate amount of interest payments or distributions, to the extent we are making distributions, prior to generating cash from the operation of the vessel.
To fund the remaining portion of these and other capital expenditures, we will be required to use cash from operations or raise capital through the sale of debt or additional equity securities. Use of cash from operations may reduce or eliminate cash available for distributions to unitholders. Our ability to obtain bank financing or to access the capital markets for future offerings may be limited by our financial condition at the time of any such financing or offering as well as by adverse market conditions resulting from, among other things, general economic conditions and contingencies and uncertainties that are beyond our control. Our failure to obtain the funds for necessary future capital expenditures could have a material adverse effect on our business, results of operations and financial condition and on our ability to make cash distributions. Even if we successfully obtain necessary funds, the terms of such financings could limit our ability to pay cash distributions to unitholders. In addition, incurring additional debt may significantly increase our interest expense and financial leverage, and issuing additional preferred and common equity securities may result in significant unitholder dilution and would increase the aggregate amount of cash required to make distributions to our common unitholders, to the extent we are making distributions, which could have a material adverse effect on our ability to make cash distributions to all of our unitholders.
We are subject to various laws, regulations, and international conventions, particularly environmental and safety laws, that could require significant expenditures both to maintain compliance with such laws and to pay for any uninsured environmental liabilities, including any resulting from a spill or other environmental incident.
Vessel owners and operators are subject to government regulation in the form of international conventions, and national, state, and local laws and regulations in the jurisdictions in which their vessels operate, in international waters, as well as in the country or countries where their vessels are registered. Such laws and regulations include those governing the management and disposal of hazardous substances and wastes, ship recycling, the cleanup of oil spills and other contamination, air emissions, discharges of operational and other wastes into the water, and ballast water management. In particular, ballast water management requirements will likely result in compliance costs relating to the installation of equipment on our vessels to treat ballast water before it is discharged and other additional ballast water management and reporting requirements. Investments in ballast water treatment may have a material adverse effect on our future performance, results of operations, cash flows and financial position.
Port State regulation significantly affects the operation of vessels, as it commonly is more stringent than international rules and standards. This is the case particularly in the United States and, increasingly, in Europe. Non-compliances with such laws and regulations can give rise to civil or criminal liability, and/or vessel delays and detentions in the jurisdictions in which we operate.
Our vessels are subject to scheduled and unscheduled inspections by regulatory and enforcement authorities, as well as private maritime industry entities. This includes inspections by Port State Control authorities, including the U.S. Coast Guard, harbor masters or equivalent entities, classification societies, flag Administrations (country in which the vessel is registered), charterers, and terminal operators. Certain of these entities require vessel owners to obtain permits, licenses, and certificates for the operation of their vessels. Failure to maintain necessary permits or approvals could limit our ability to do business, result in the imposition of substantial penalties which could increase the cost of doing business, or require a vessel owner to incur substantial costs or temporarily suspend operation of one or more of its vessels. Failure to maintain necessary permits or approvals could result in the imposition of substantial penalties or require a vessel owner to incur substantial costs or temporarily suspend operation of one or more of its vessels.
Heightened levels of environmental and quality concerns among insurance underwriters, regulators, and charterers continue to lead to greater inspection and safety requirements on all vessels and may accelerate the scrapping of older vessels throughout the industry. Increasing environmental concerns and regulations have created a demand for vessels that conform to stricter environmental standards. Vessel owners are required to maintain operating standards for all vessels that will emphasize operational safety, quality maintenance, continuous training of officers and crews, and compliance with U.S. and international regulations.
The legal requirements and maritime industry standards to which we and our vessels are subject are set forth below, along with the risks associated therewith. We may be required to make substantial capital and other expenditures to ensure that we remain in compliance with these requirements and standards, as well as with standards imposed by our customers, including costs for ship modifications and changes in operating procedures. We also maintain insurance coverage against pollution liability risks for all of our vessels in the amount of $1.0 billion in the aggregate for any one event. The insured risks include penalties and fines, as well as civil liabilities and expenses resulting from accidental pollution. However, this insurance coverage is subject to exclusions, deductibles, and other terms and conditions. In addition, claims relating to pollution incidents for international or knowing violations of U.S. environmental laws or the International Convention for the Prevention of Pollution from Ships may be considered by our protection and indemnity associations on a discretionary basis only. If any liabilities or expenses fall within an exclusion from coverage, or if damages from a catastrophic incident exceed the aggregate liability of $1.0 billion for any one event, our cash flow, profitability and financial position could be adversely impacted.
Because international conventions, laws, regulations, and other requirements are often revised, we cannot predict the ultimate cost of compliance or the impact on the fair market price or useful life of our vessels. Nor can we assure that our vessels will be able to attain and maintain certifications of compliance with various regulatory requirements.
Similarly, governmental regulation of the shipping industry, particularly in the areas of safety and environmental requirements, is expected to become stricter in the future. We believe that the heightened environmental, quality, and security concerns of insurance underwriters, regulators, and charterers will lead to additional requirements, including enhanced risk assessment and security requirements, greater inspection and safety requirements, and heightened due diligence obligations. We also may be required to take certain of our vessels out of service for extended periods of time to address changing legal requirements, which would result in lost revenue. In the future, market conditions may not justify these expenditures or enable us to operate our vessels, particularly older vessels, profitably during the remainder of their economic lives. This could lead to significant asset write-downs.
Specific examples of expected changes that could have a significant, and potentially material, impact on our business include:
| • | Limitations on sulfur oxides and nitrogen oxides emissions from ships could cause increased demand and higher prices for low sulfur fuel due to supply constraints, as well as significant cost increases due to the implementation of measures including fuel switching, vessel modifications such as adding distillate fuel storage capacity, or installation of exhaust gas cleaning systems or scrubbers; |
| • | Environmental requirements can affect the resale value or useful lives of our vessels, require a reduction in cargo capacity, vessel modifications or operational changes or restrictions, lead to decreased availability of, or more costly insurance coverage for, environmental matters or result in the denial of access to certain jurisdictional waters or ports. |
| • | Under local and national laws, as well as international treaties and conventions, we could incur material liabilities, including cleanup obligations and claims for natural resource damages, personal injury and/or property damages in the event that there is a release of oil or other hazardous materials from our vessels or otherwise in connection with our operations. |
Climate change and government laws and regulations related to climate change could negatively impact our financial condition.
We are and will be, directly and indirectly, subject to the effects of climate change and may, directly or indirectly, be affected by local and national laws, as well as international treaties and conventions, and implementing regulations related to climate change. Any passage of climate control treaties, legislation, or other regulatory initiatives by the IMO, the European Union, the United States or other countries where we operate that restrict emissions of greenhouse gases (“GHGs”) could require us to make significant financial expenditures that we cannot predict with certainty at this time. This could include, for example, the adoption of regulatory frameworks to reduce GHG emissions, such as carbon dioxide, methane and nitrogen oxides. The climate change efforts undertaken to date are detailed below.
We cannot predict with any degree of certainty what effect, if any, possible climate change and legal requirements relating to climate change will have on our operations. However, we believe that climate change, including the possible increases in severe weather events, and legal requirements relating to climate change may affect, directly or indirectly, (i) the cost of the vessels we may acquire in the future, (ii) our ability to continue to operate as we have in the past, (iii) the cost of operating our vessels, and (iv) insurance premiums and deductibles, and the availability of insurance coverage. As a result, our financial condition could be materially impacted by climate change and related legal requirements.
We are subject to vessel security regulations and we incur costs to comply with adopted regulations. We may be subject to costs to comply with similar regulations that may be adopted in the future in response to terrorism.
We are subject to local and national laws, including in the United States, as well as international treaties and conventions, intended to enhance and ensure vessel security. The Managers have and will continue to implement the various security measures addressed by all applicable laws and will take measures for our vessels or vessels that we charter to attain compliance with all applicable security requirements within the prescribed time periods. Although we do not believe that these additional requirements will have a material financial impact on our operations, there can be no assurance that there will not be an interruption in operations to bring vessels into compliance with the applicable requirements and any such interruption could cause a decrease in charter revenues. Furthermore, additional security measures could be required in the future that could have significant financial impact on us.
Changing laws and evolving reporting requirements could have an adverse effect on our business, including the pending SEC Environmental, Social and Governance (“ESG”) disclosure rules in the U.S. and European Union.
Changing laws, regulations and standards relating to reporting requirements, including the European Union General Data Protection Regulation (“GDPR”), GHG and additional climate disclosure rules proposed by the SEC in March 2022 and expected to be finalized in 2023, along with other anticipated ESG reporting rules which are expected in 2023, may create additional compliance requirements for us. We may receive pressure from investors, lenders and other market participants, who are focused on climate change, to prioritize sustainable energy practices, reduce our carbon footprint and promote sustainability. To maintain high standards of corporate governance and public disclosure, we have invested in, and intend to continue to invest in, reasonably necessary resources to comply with evolving standards.
Companies that do not adapt to, or comply with, investor, lender, or other industry shareholder expectations and standards which are evolving, or which are perceived to have not responded appropriately to the growing concern for ESG issues, regardless of whether there is a legal requirement to do so, may suffer from reputational damage and the business, financial condition, and/or stock price of such a accompany could be materially and adversely affected.
Our international activities increase the compliance risks associated with economic and trade sanctions imposed by the United States, the EU, the UK and other jurisdictions/authorities.
Our international operations and activities could expose us to risks associated with trade and economic sanctions, prohibitions or other restrictions imposed by the United States or other governments or organizations, including the United Nations, the EU (and its member countries) and the UK.
Under economic and trade sanctions laws, governments may seek to impose or modify existing prohibitions/restrictions on business practices and activities, which require modifications to compliance programs, which may increase compliance costs, and, in the event of a violation, may subject us to fines and other penalties and result in us being excluded or restricted in our access to international banking and finance markets. Action may also be taken against individuals if they act in a manner which breaches sanctions applicable to them. Considering U.S., EU and UK sanctions (the latter because the law of England & Wales frequently governs relations with our contractual counterparts and applies to our UK based insurers and reinsurers) and the nature of our business, there is a constant sanctions-related risk for us due to the worldwide trade of our vessels and the wide-ranging nationality of our counterparties. We seek to reduce the risk of violating economic sanctions and ensure our compliance with all applicable sanctions and embargo laws and regulations by the implementation of our corporate Economic Sanctions Compliance Policy and Procedures which we seek to diligently follow.
Although we intend to maintain such Economic Sanctions Compliance Policy and Procedures, there can be no assurance that we will be in compliance in the future, particularly as the scope of certain laws and regulations may be unclear and may be subject to changing interpretations by relevant authorities, and the underlying laws and regulations may change. Moreover, despite, for example, relevant provisions in charter parties forbidding the use of our vessels in trade that would or may violate economic sanctions, our charterers may nevertheless violate applicable sanctions and embargo laws and regulations and those violations could in turn negatively affect our reputation with any breaches imputed to us.
We continually monitor developments in the United States, the EU, UK and other jurisdictions that maintain economic sanctions against various countries and regions including, Iran, Russia, Crimea, Venezuela, and other sanctions targets, including guidance on the implementation and enforcement of such sanctions programs. Expansion of sanctions programs, embargoes and other restrictions in the future (including additional designations of countries and persons subject to sanctions), or modifications in how existing sanctions are interpreted or enforced, could prevent our vessels from calling in ports in sanctioned countries, being chartered to certain parties or for certain trade, or could restrict the cargoes carried onboard our vessels.
In addition, given our relationship with Navios Holdings (listed on the NYSE) we cannot give any assurance that an adverse finding against them by a governmental, legal, or other authority, with respect to sanctions matters, or any future matter related to regulatory compliance by Navios Holdings, would not have a material adverse impact on our business, reputation or the market price of our securities.
If any of the risks described herein materializes, it could have a material adverse impact on our business and results of operations.
For a description of the economic and trade sanctions and other compliance requirements under which we operate please see “Item 4. Information on the Partnership – B. Business Overview - Economic Sanctions and Compliance”
We could be materially adversely affected by violations of the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act and anti-corruption laws in other applicable jurisdictions.
As an international shipping company, we may operate in countries known to have a reputation for corruption. The U.S. Foreign Corrupt Practices Act of 1977 (the “FCPA”) and other anti-corruption laws and regulations in applicable jurisdictions generally prohibit companies registered with the SEC and their intermediaries from making improper payments to government officials for the purpose of obtaining or retaining business. Under the FCPA, U.S. companies may be held liable for some actions taken by strategic or local partners or representatives.
Legislation in other countries includes the U.K. Bribery Act 2010 (the “U.K. Bribery Act”) which is broader in scope than the FCPA because it does not contain an exception for facilitation payments. We and our customers may be subject to these and similar anti-corruption laws in other applicable jurisdictions. Failure to comply with legal requirements could expose us to civil and/or criminal penalties, including fines, prosecution and significant reputational damage, all of which could materially and adversely affect our business and the results of operations, including our relationships with our customers, and our financial results. Compliance with the FCPA, the U.K. Bribery Act and other applicable anti-corruption laws and related regulations and policies impose potentially significant costs and operational burdens on us. Moreover, the compliance and monitoring mechanisms that we have in place including our Code of Ethics and our anti-bribery and anti-corruption policy, may not adequately prevent or detect all possible violations under applicable anti-bribery and anti-corruption legislation.
The operation of ocean-going vessels entails the possibility of marine disasters including damage or destruction of the vessel due to accident, the loss of a vessel due to piracy or terrorism, damage or destruction of cargo and similar events that may cause a loss of revenue from affected vessels and damage our business reputation, which may in turn lead to loss of business.
The operation of ocean-going vessels in international trade is inherently risky. The ownership and operation of ocean-going vessels in international trade is affected by a number of inherent risks, including mechanical failure, personal injury, vessel and cargo loss or damage, business interruption due to political conditions in foreign countries, unexpected port closures, hostilities, piracy, terrorism, labor strikes and/or boycotts, adverse weather conditions and catastrophic marine disaster, including environmental accidents and collisions. All of these risks could result in liability, loss of revenues, increased costs and loss of reputation.
The operation of drybulk carriers has certain unique risks. With a drybulk carrier, the cargo itself and its interaction with the vessel can be an operational risk. By their nature, certain drybulk cargoes are often heavy, dense, easily shifted, and may react badly to water exposure. In addition, drybulk carriers are often subjected to battering treatment during unloading operations with grabs, jackhammers (to pry encrusted cargoes out of the hold), and small bulldozers. This treatment may cause damage to the vessel. Vessels damaged due to harsh treatment during unloading procedures may be more susceptible to breach at sea. Hull breaches in drybulk carriers may lead to the flooding of the vessels' holds. For example, if a drybulk carrier suffers flooding in its forward holds, the bulk cargo may become so dense and waterlogged that its pressure may buckle the vessel's bulkheads leading to the loss of a vessel. Damage and loss could also arise as a consequence of a failure in the services required to support the industry, for example, due to inadequate dredging. We have procedures and policies in place to ameliorate these risks, including a robust inspection system.
In addition, increased operational risks arise as a consequence of the complex nature of the crude oil, product and chemical tanker industry, the nature of services required to support the industry, including maintenance and repair services, and the mechanical complexity of the tankers themselves. Compared to other types of vessels, tankers are exposed to a higher risk of damage and loss by fire, whether ignited by a terrorist attack, collision or other cause, due to the high flammability and high volume of the oil transported in tankers. Damage and loss could also arise as a consequence of a failure in the services required to support the industry, for example, due to inadequate dredging. Inherent risks also arise due to the nature of the product transported by our vessels. Any damage to, or accident involving, our vessels while carrying crude oil could give rise to environmental damage or lead to other adverse consequences. Each of these inherent risks may also result in death or injury to persons, loss of revenues or property, higher insurance rates, damage to our customer relationships, delay or rerouting.
Similarly, the operation of containerships has certain unique risks. Containerized cargoes, which can be high value manufactured goods, dangerous cargoes or smaller quantity commodities, are sealed and locked in containers at the factory or port of origin. Some dangerous cargoes are either mis-declared or not declared at all posing a risk to the ship and other containerized cargo. Certain containerized cargoes are often loaded above the weather deck of a containership and although lashed in place in those above deck stacks, are subject to storms and heavy weather which may cause a container or group of containers to damage the containership if they fall or get thrown overboard. In additional the cargo in each container can be improperly stowed causing the cargo to shift or to self ignite or explode, which may damage the vessel. Certain containers are built with refrigeration units which are powered by electrical generators onboard the containership. Should those refrigeration units fail, they could cause damage to the containership due to fires caused by electrical faults or by raising the temperature of a cargo that needed to be kept below a certain threshold. Other cargo can be carried uncontainerized in so-called “flat racks” generally above the weather deck, which can pose a risk to the vessel or other cargo in a storm or if improperly stowed on the flat rack. Any loss of cargo, which may be covered by insurance, does expose the shipowner to potential monetary and reputational costs. Damage and loss could also arise as a consequence of a collision or grounding or a failure in the services required to support the industry, for example, due to inadequate dredging or icing in the harbors. We have procedures and policies in place to ameliorate these risks, including a robust inspection system during each cargo operation.
Any of these circumstances or events could substantially increase our costs. For example, the costs of replacing a vessel or cleaning up environmental damage could substantially lower our revenues by taking vessels out of operation permanently or for periods of time. Furthermore, the involvement of our vessels in a disaster or delays in delivery, damage or the loss of cargo may harm our reputation as a safe and reliable vessel operator and cause us to lose business. Our vessels could be arrested by maritime claimants, which could result in the interruption of business and decrease revenue and lower profitability.
Some of these inherent risks could result in significant damage, such as marine disaster or environmental incidents, and any resulting legal proceedings may be complex, lengthy, costly and, if decided against us, any of these proceedings or other proceedings involving similar claims or claims for substantial damages may harm our reputation and have a material adverse effect on our business, results of operations, cash flow and financial position. In addition, the legal systems and law enforcement mechanisms in certain countries in which we operate may expose us to risk and uncertainty. Further, we may be required to devote substantial time and cost defending these proceedings, which could divert attention from management of our business. Acts of piracy have historically affected ocean-going vessels trading in certain regions of the world, such as the South China Sea and the Gulf of Aden off the coast of Somalia. Piracy continues to occur in the Gulf of Aden off the coast of Somalia and increasingly in the Gulf of Guinea. Other areas where piracy has affected shipping include the Indian Ocean, the Strait of Malacca, the Arabian Sea, and the Mozambique Channel.
Acts of piracy are a material risk to the shipping industry. Our vessels regularly travel through regions where pirates are active. In January 2014, the Nave Atropos, a vessel currently owned by us, came under attack from a pirate action group in international waters off the coast of Yemen and in February 2016, the Nave Jupiter, a vessel also currently owned by us, came under attack from pirate action groups on her way out from her loading terminal about 50 nautical miles off Bayelsa, Nigeria. In both instances, the crew and the on-board security team successfully implemented the counter piracy action plan and standard operating procedures to deter the attack with no consequences to the vessels or their crew. In December 2019, the Nave Constellation was boarded by armed pirates whilst sailing from Bonny, Nigeria. 19 crewmembers were taken as hostages and were released after 18 days of captivity. Piracy attacks have resulted in certain regions being characterized by insurers as “war risk” zones or Joint War Committee “war and strikes” listed areas.
Premiums payable for insurance coverage could increase significantly and insurance coverage may be more difficult to obtain. Crew costs, including those due to employing onboard security guards, could increase in such circumstances. While the use of security guards is intended to deter and prevent the hijacking of our vessels, it could also increase our risk of liability for death or injury to persons or damage to personal property. 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. Although we insure against these losses to the extent practicable, the risk remains of uninsured losses which could significantly affect our business. Costs are incurred in taking additional security measures in accordance with Best Management Practices to Deter Piracy, notably those contained in the BMP5 industry standard. A number of flag states have signed the 2009 New York Declaration, which expresses commitment to Best Management Practices in relation to piracy and calls for compliance with them as an essential part of compliance with the ISPS Code. 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 us, our results of operations, financial condition and ability to pay dividends. In addition, detention hijacking as a result of an act of piracy against our vessels, an increase in cost, or unavailability of insurance for our vessels, could have a material adverse impact on our business, financial condition, results of operations and cash flows. Acts of piracy on ocean-going vessels could adversely affect our business and operations.
The total loss or damage of any of our vessels or cargoes could harm our reputation as a safe and reliable vessel owner and operator. Any extended vessel off-hire, due to an accident or otherwise, or strikes, could have a materially adverse effect on our business. If we are unable to adequately maintain or safeguard our vessels, we may be unable to prevent any such damage, costs, or loss that could negatively impact our business, financial condition, results of operations, cash flows and ability to pay distributions.
Maritime claimants could arrest or attach one or more of our vessels, which could interrupt our cash flow.
Crew members, tort claimants, claimants for breach of certain maritime contracts, vessel mortgages, suppliers of goods and services to a vessel, shippers or receivers of cargo, and other parties may be entitled to a maritime lien against a vessel for unsatisfied debts, claims or damages, including, in some jurisdictions, for debts incurred by previous owners. In many jurisdictions, a maritime lien holder may enforce its lien by arresting a vessel. The arrest or attachment of one or more of our vessels, if such arrest or attachment is not timely discharged, could cause us to default on a charter or breach covenants in certain of our credit facilities and certain financial liabilities, could interrupt our cash flow and require us to pay large sums of money to have the arrest or attachment lifted. Any of these occurrences could have a material adverse effect on our business, results of operations and financial condition, as well as our cash flows, including cash available for distributions to our unitholders.
In addition, in some jurisdictions, such as South Africa, under the “sister ship” theory of liability, a claimant may arrest both the vessel which is subject to the claimant's maritime lien and any “associated” vessel, which is any vessel owned or controlled by the same owner. Claimants could try to assert “sister ship” liability against one vessel in our fleet for claims relating to another vessel in the fleet.
The smuggling of drugs or other contraband onto our vessels may lead to governmental claims against us.
Our vessels may call in ports where smugglers may attempt to hide drugs and other contraband on vessels, with or without the knowledge of crew members. To the extent our vessels are found with contraband, whether inside or attached to the hull of our vessel and whether with or without the knowledge of any of our crew, we may face reputational damage and governmental or other regulatory claims or penalties, which could have an adverse effect on our business, results of operations, cash flows, financial condition, as well as our cash flows, including cash available for distributions to our unitholders. Under some jurisdictions, vessels used for the conveyance of illegal drugs could result in forfeiture of the vessel to the government of such jurisdiction.
A failure to pass inspection by classification societies could result in one or more vessels being unemployable unless and until they pass inspection, resulting in a loss of revenues from such vessels for that period and a corresponding decrease in operating cash flows.
The hull and machinery of every commercial vessel must be inspected and approved by a classification society authorized by its country of registry. The classification society certifies that a vessel has been built and maintained, is safe and seaworthy in accordance with the applicable rules and regulations of the country of registry of the vessel and with SOLAS (as defined below). Our owned fleet is currently classed by American Bureau of Shipping, Nippon Kaiji Kiokai, Bureau Veritas, DNVGL, and Lloyd's Register.
A vessel must undergo an annual survey, an intermediate survey and a special survey. 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. Our vessels are on special survey cycles for hull inspection and continuous survey cycles for machinery inspection. Every vessel is also required to be drydocked every two to three years for inspection of the underwater parts of such vessel.
If vessel fails any annual survey, intermediate survey or special survey, the vessel may be unable to trade between ports and, therefore, would be unemployable, potentially causing a negative impact on our revenues due to the loss of revenues from such vessel until she is able to trade again. Further, if any vessel fails a classification survey and the condition giving rise to the failure is not cured within a reasonable time, the vessel may lose coverage under various insurance programs, including hull and machinery insurance and/or protection and indemnity insurance, which would result in a breach of relevant covenants under our financing arrangements. Failure to maintain the class of one or more of our vessels could have a material adverse effect on our financial condition and results of operations, as well as our cash flows.
Disruptions in global financial markets, terrorist attacks, regional armed conflicts, general political unrest, economic crisis, the emergence of a pandemic crisis and the resulting governmental action could have a material adverse impact on our results of operations, financial condition and cash flows.
The global economy remains relatively weak, especially when compared to the period prior to the 2008-2009 financial crisis. The current global recovery is proceeding at varying speeds across regions and is still subject to downside economic risks stemming from factors like terrorist attacks in certain parts of the world and the continuing response of the United States and other countries to these attacks, the threat of future terrorist attacks, the continuing refugee crisis in the European Union, the war in and the general political unrest in Ukraine, the continuing war in Syria and the presence of terrorist organizations in the Middle East, conflicts and turmoil in Yemen, Iraq, Afghanistan and Iran, political tension, continuing concerns related to Brexit, concerns regarding epidemics and pandemics, including the effects of COVID-19, and other viral outbreaks or conflicts in the Asia Pacific Region have all led to increased volatility in global credit and equity markets and continue to cause uncertainty and volatility in the world financial markets, which may in turn affect our business, results of operations and financial conditions.
Furthermore, our operations may be adversely affected by changing or adverse political and governmental conditions in the countries where our vessels are flagged or registered and in the regions where we otherwise engage in business. Any disruption caused by these factors may interfere with the operation of our vessels, which could harm our business, financial condition and results of operations. Our operations may also be adversely affected by expropriation of vessels, taxes, regulation, tariffs, trade embargoes, economic sanctions or a disruption of or limit to trading activities, or other adverse events or circumstances in or affecting the countries and regions where we operate or where we may operate in the future. Adverse economic, political, social or other developments can decrease demand and prospects for growth in the shipping industry and thereby could reduce revenue significantly.
In addition, global financial markets and economic conditions have been severely disrupted and volatile in recent years and remain subject to significant vulnerabilities, such as the deterioration of fiscal balances and the rapid accumulation of public debt, continued deleveraging in the banking sector and a limited supply of credit. Credit markets as well as the debt and equity capital markets were exceedingly distressed during 2008 and 2009 and have been volatile since that time. The resulting uncertainty and volatility in the global financial markets may accordingly affect our business, results of operations and financial condition. These uncertainties, as well as future hostilities or other political instability in regions where our vessels trade, could also affect trade volumes and patterns and adversely affect our operations, and otherwise have a material adverse effect on our business, results of operations and financial condition, as well as our cash flows and cash available for distributions to our unitholders and repurchases of common units.
Specifically, 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 and higher capital requirements, many lenders have increased margins on lending rates, enacted tighter lending standards, required more restrictive terms (including higher collateral ratios for advances, shorter maturities and smaller loan amounts), or have refused to refinance existing debt at all. Furthermore, certain banks that have historically been significant lenders to the shipping industry have reduced or ceased lending activities in the shipping industry. Additional tightening of capital requirements and the resulting policies adopted by lenders, could further reduce lending activities. We may experience difficulties obtaining financing commitments or be unable to fully draw on the capacity under our committed term loans in the future, if our lenders are unwilling to extend financing to us or unable to meet their funding obligations due to their own liquidity, capital or solvency issues. We may experience higher interest rates due to governments’ efforts to fight inflation or other reasons which, due to floating rate obligations in some of our financial facilities, may cause our costs to rise which may in turn affect our business, results of operations and financial conditions or may make refinancing or new financing facilities difficult to obtain. We cannot be certain that financing will be available on acceptable terms or at all. If financing 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 distributions to our unitholders. In the absence of available financing, we also may be unable to take advantage of business opportunities or respond to competitive pressures.
Our financial and operating performance may be adversely affected by the COVID-19 pandemic and related governmental responses.
Since 2020, the COVID-19 pandemic and its variants, have resulted in numerous actions taken by governments and governmental agencies including but not limited to travel restrictions, hygiene measures, including quarantines which the coronavirus or other epidemics or pandemics could potentially result in delayed deliveries of our vessels under construction, disrupt our operations and significantly affect global markets, affecting the demand for our services, global demand for goods shipped in containerships, tankers and dry bulk vessels as well as the price of international freights and hires. If the effects of the coronavirus persist, we may be unable to charter our vessels at the rates or for the length of time we currently expect. The effects of the coronavirus remain uncertain, and should customers be under financial pressure this could negatively affect our charterers' willingness to perform their obligations under our time charters. The loss or termination of any of our time charters or a decline in payments under our time charters, could have a material adverse effect on our business, results of operations and financial condition, as well as our cash flows, including cash available for distributions to our unitholders and repurchases of common units.
China, European countries and the United States have previously adopted stringent measures to contain the spread of the virus. Any prolonged measure, or the reimplementation of previously lifted measures, may affect our normal operations and those of our Manager. All these measures have further affected the process of construction and repair of vessels, as well as the presence of workers in shipyards and, of administrative personnel in their offices, which could exceed previously calculated repair periods, causing our vessels to remain off-hire for longer periods than planned. We may face increased costs operating our vessels due to travel restrictions and quarantine requirements, which can among other issues delay crew changes or which may cause us to incur off hire to effect such changes. Possible delays due to quarantine of our vessels caused by COVID-19 infection of our crew or other COVID-19 related disruptions may lead to the termination of charters leaving our vessels without employment. Any prolonged restrictive measures in order to control the novel coronavirus or other adverse global public health developments may have a material and adverse effect on our business operations and demand for our vessels generally. Furthermore, the global recession caused by the pandemic could be prolonged and could also severely affect financing institutions. If any such impact on the financial system is not addressed, we may find it difficult to finance loans that are maturing or to obtain financing for new projects, thus materially affecting our financial position.
The extent of the COVID-19 outbreak’s effect on our operational and financial performance will depend on future developments, including the duration, spread and intensity of the outbreak, any resurgence or mutation of the virus, the availability of vaccines and their global deployment, the development of effective treatments, the imposition of effective public safety and other protective measures and the public’s response to such measures. There continues to be a high level of uncertainty relating to how the pandemic will evolve, how governments and consumers will react and progress on the approval and distribution of vaccines, all of which are uncertain and difficult to predict considering the rapidly evolving landscape. As a result, the ultimate severity of the COVID-19 outbreak is uncertain at this time and therefore we cannot predict the impact it may have on our future operations, which impact could be material and adverse, particularly if the pandemic continues to evolve into a severe worldwide health crisis.
At present, it is not possible to ascertain the overall impact of COVID-19 on our business. However, the occurrence of any of the foregoing events or other epidemics or an increase in the severity or duration of the COVID-19 or other epidemics could have a material adverse effect on our business, results of operations, cash flows, financial condition, value of our vessels, and ability to pay dividends.
Governments could requisition our vessels during a period of war or emergency, resulting in a loss of earnings.
A government of the jurisdiction where one or more of our vessels are registered could requisition one or more of our vessels for title or for hire. 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 may 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. Government requisition of one or more of our vessels may cause us to breach covenants in certain of our credit facilities and certain financial liabilities, and could have a material adverse effect on our business, financial condition, and results of operations, as well as our cash flows, including cash available for distributions to our unitholders.
Risks Relating to Our Indebtedness
The market value of our vessels may fluctuate significantly, which could cause us to breach covenants in our credit facilities and certain financial liabilities and result in foreclosure on our mortgaged vessels.
If the market value of our owned vessels decreases, we may be required to record additional impairment charges in our consolidated financial statements that, among other things, could cause us to breach covenants contained in our credit facilities and certain financial liabilities, which could adversely affect our financial results. If we breach the covenants in our credit facilities and certain financial liabilities and are unable to remedy any relevant breach, our lenders could accelerate our debt and foreclose on the collateral, including our vessels. Any loss of vessels would significantly decrease our ability to generate positive cash flow from operations and therefore service our debt.
We may be unable to obtain additional financing and our debt levels may limit our ability to do so and pursue other business opportunities, and our interest rates under our financing arrangements may fluctuate and may impact our operations.
As of December 31, 2022, the total borrowings amounted to $1,959.0 million. We have the ability to incur additional debt, subject to limitations in our financing arrangements. Our level of debt could have important consequences to us, including the following:
| • | our ability to obtain additional financing, if necessary, for working capital, capital expenditures, acquisitions or other purposes may be impaired or such financing may not be available on favorable terms; |
| • | we may need to use a substantial portion of our cash from operations to make principal and interest payments on our debt, reducing the funds that would otherwise be available for operations, future business opportunities, distributions to unitholders; |
| • | our debt level could make us more vulnerable than our competitors with less debt to competitive pressures or a downturn in our business or the economy generally; and |
| • | our debt level may limit our flexibility in responding to changing business and economic conditions. |
Our ability to borrow against the ships in our existing fleet and any ships we may acquire in the future largely depends on the existence of time charter employment of the ship and on the value of the ships, which in turn depends in part on charter hire rates and the creditworthiness of our charterers. The actual or perceived credit quality of our charterers, any defaults by them, any decline in the market value of our fleet and a lack of long-term employment of our ships 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. Our inability to obtain additional financing or committing to financing on unattractive terms could have a material adverse effect on our business, results of operations and financial condition, as well as our cash flows, including cash available for distributions to our unitholders.
Our ability to service our debt depends upon, among other things, our future financial and operating performance, which will be affected by prevailing economic conditions and financial, business, regulatory and other factors, some of which are beyond our control. Our ability to service debt under our financing arrangements also will depend on market interest rates, since the interest rates applicable to our borrowings will fluctuate with the SOFR or the London Interbank Offered Rate (“LIBOR”). We do not currently hedge against increases in such rates and, accordingly, significant increases in such rate would require increased debt levels and reduce distributable cash. We may not be able to refinance all or part of our maturing debt on favorable terms, or at all.
If our operating income is not sufficient to service our current or future indebtedness, we will be forced to take actions such as reducing or discontinuing distributions, reducing or delaying our business activities, acquisitions, investments or capital expenditures, selling assets, restructuring or refinancing our debt, or seeking additional equity capital or bankruptcy protection. We may not be able to effect any of these remedies on satisfactory terms, or at all.
We are exposed to volatility in interest rates, including SOFR.
The publication of LIBOR is expected to be discontinued in mid-2023. The Federal Reserve Bank of New York now publishes the SOFR based on overnight U.S. Treasury repurchase agreement transactions.
Loans advanced under our financing arrangements are, currently, advanced at a floating rate based on SOFR. Interest rates, which after a long period of relative stability at historically low levels, have been increasing and have been volatile in the past, which can affect the amount of interest payable on our debt, and which, in turn, could have an adverse effect on our earnings and cash flow. SOFR rates were at historically low levels for an extended period of time and may continue to increase from these low levels.
We do not currently have any interest rate swap arrangements as we have fixed interest rate financings. In the past, however, we have entered into interest rate swaps and may do so again in the future. Our financial condition could be materially adversely affected as a result of not entering into interest rate hedging arrangements to hedge our interest rate exposure if the interest rates applicable to our financing arrangements (and any other financing arrangements we may enter into in the future) increases. Even if we enter into interest rate swaps or other derivative instruments for purposes of managing our interest rate, our hedging strategies may not be effective or have the desired impact on our financial conditions or results of operations as we may not effectively manage our interest rate exposure and may incur substantial losses, which could result in higher than market interest rates and charges against our income.
Our credit facilities and certain financial liabilities contain restrictive covenants, which may limit our business and financing activities and may prevent us from paying distributions to unitholders, if our board of directors determines to do so again in the future.
As of December 31, 2022, the outstanding balance under Navios Partners' total borrowings, net of deferred finance costs, was $1,945.4 million.
The operating and financial restrictions and covenants in our credit facilities and certain financial liabilities and any future credit facilities and financial liabilities could adversely affect our ability to finance future operations or capital needs to engage, expand or pursue our business activities and reduce cash available for distribution on our common units. For example, our credit facilities and certain financial liabilities require the consent of our lenders or limit our ability to (among other things):
• incur or guarantee indebtedness;
• charge, pledge or encumber the vessels;
• merge or consolidate;
• change the flag, class or commercial and technical management of our vessels;
• make cash distributions;
• make new investments; and
• sell or change the ownership or control of our vessels.
Our financing arrangements also require us to comply with the International Safety Management Code (the “ISM Code”), and the ISPS Code and to maintain valid safety management certificates and documents of compliance at all times.
The Company’s credit facilities and certain financial liabilities also require compliance with a number of financial covenants, including: (i) maintain a required security ranging over 105% to 140%; (ii) minimum free consolidated liquidity in an amount equal to $500 per owned vessel and a number of vessels as defined in the Company’s credit facilities and financial liabilities; (iii) maintain a ratio of EBITDA to interest expense of at least 2.00:1.00; (iv) maintain a ratio of total liabilities or total debt to total assets (as defined in the Company’s credit facilities and financial liabilities) ranging from less than 0.75 to 0.80; and (v) maintain a minimum net worth ranging from $30.0 million to $135.0 million.
It is an event of default under the credit facilities and certain financial liabilities if such covenants are not complied with in accordance with the terms and subject to the prepayments or cure provisions of the facilities.
In addition, our credit facilities and certain financial liabilities prohibit the payment of distributions if we are not in compliance with certain financial covenants or upon the occurrence of an event of default.
Events of default under our credit facilities and certain financial liabilities include, among other things, the following:
| • | failure to pay any principal, interest, fees, expenses or other amounts when due; |
| • | failure to observe any other agreement, security instrument, obligation or covenant beyond specified cure periods in certain cases; |
| • | default under other indebtedness; |
| • | an event of insolvency or bankruptcy; |
| • | material adverse change in the financial position or prospects of us or our general partner; |
| • | failure of any representation or warranty to be materially correct; and |
| • | failure of Navios Holdings, Angeliki Frangou, or their affiliates (as defined in the financing agreements) to own at least 5% of us. |
Our ability to comply with the covenants and restrictions that are contained in our credit facilities and certain financial liabilities and any other debt instruments we may enter into in the future may be affected by events beyond our control, including prevailing economic, financial and industry conditions. If market or other economic conditions deteriorate, our ability to comply with these covenants may be impaired. If we are in breach of any of the restrictions, covenants, ratios or tests in our credit facilities and certain financial liabilities, especially if we trigger a cross default currently contained in certain of our loan agreements, a significant portion of our obligations may become immediately due and payable, and our lenders' commitment to make further loans to us may terminate. We may not have, or be able to obtain, sufficient funds to make these accelerated payments. In addition, our obligations under our credit facilities are secured by certain of our vessels, and if we are unable to repay borrowings under such credit facilities, lenders could seek to foreclose on those vessels. We anticipate that any subsequent refinancing of our current debt or any new debt will have similar restrictions.
Risks Relating to Our Units
Our board of directors may not declare cash distributions in the foreseeable future.
The declaration and payment of cash distributions, if any, will always be subject to the discretion of our board of directors, restrictions contained in our financing arrangements and the requirements of Marshall Islands law. The timing and amount of any cash distributions declared will depend on, among other things, our earnings, financial condition and cash requirements and availability, our ability to obtain debt and equity financing on acceptable terms as contemplated by our growth strategy, the terms of our outstanding indebtedness and the ability of our subsidiaries to distribute funds to us.
The Dry Cargo and tankers sector of the shipping industry is highly volatile, and we cannot predict with certainty the amount of cash, if any, that will be available for distribution as cash distributions in any period. Also, there may be a high degree of variability from period to period in the amount of cash that is available for the payment of cash distributions.
We may not have sufficient cash available to pay quarterly distributions or to maintain or increase distributions following the establishment of cash reserves and payment of fees and expenses. In February 2016, we announced that our board of directors decided to suspend the quarterly cash distributions to our unitholders, including the distribution for the quarter ended December 31, 2015, in order to conserve cash and improve our liquidity. In March 2018, our board of directors determined to reinstate a distribution and any continued distribution will be at the discretion of our board of directors. The amount of cash we can distribute on our common units depends principally upon the amount of cash we generate from our operations, which may fluctuate based on numerous factors including, those set forth elsewhere in this section.
The actual amount of cash we will have available for distribution also will depend on other factors, some of which are beyond our control, such as the level of capital expenditures we make (including those associated with maintaining vessels, building new vessels, acquiring existing vessels and complying with regulations), our debt service requirements and restrictions on distributions contained in our debt instruments, interest rate fluctuations, the cost of acquisitions, if any, fluctuations in our working capital needs, our ability to make working capital borrowings, and the amount of any cash reserves, including reserves for future maintenance and replacement capital expenditures, working capital and other matters, established by our board of directors in its discretion.
In addition, the amount of cash we generate from our operations may differ materially from our profit or loss for the period, which will be affected by non-cash items. As a result of this and the other factors mentioned above, we may make cash distributions during periods when we record losses and may not make cash distributions during periods when we record net income.
Any dividend payments on our common units would be declared in U.S. dollars, and any unit holder whose principal currency is not the U.S. dollar would be subject to risks of exchange rate fluctuations.
Our common units, and any cash dividends or other distributions to be declared in respect of them, if any, will be denominated in U.S. dollars. Unitholders whose principal currency is not the U.S. dollar will be exposed to foreign currency exchange rate risk. Any depreciation of the U.S. dollar in relation to such foreign currency will reduce the value of such unitholders' units and any appreciation of the U.S. dollar will increase the value in foreign currency terms. In addition, we will not offer our unitholders the option to elect to receive dividends, if any, in any other currency. Consequently, unitholders may be required to arrange their own foreign currency exchange, either through a brokerage house or otherwise, which could incur additional commissions or expenses.
The New York Stock Exchange may delist our securities from trading on its exchange, which could limit your ability to trade our securities and subject us to additional trading restrictions.
Our securities are listed on the New York Stock Exchange (the “NYSE”), a national securities exchange. The NYSE minimum listing standards, require that we meet certain requirements relating to stockholders' equity, number of round-lot holders, market capitalization, aggregate market value of publicly held shares and distribution requirements.
If NYSE delists our securities from trading on its exchange, we could face significant material adverse consequences, including limited availability of market quotations for our securities, limited amount of news and analyst coverage for us, decreased ability for us to issue additional securities or obtain additional financing in the future, limited liquidity for our unitholders and the loss of our tax exemption under Section 883 of the Internal Revenue Code of 1986, as amended (the “Code”), loss of preferential capital gain tax rates for certain dividends received by certain non-corporate U.S. holders, and loss of “mark-to-market” election by U.S. holders in the event we are treated as a passive foreign investment company (“PFIC”).
The price of our common units may be volatile.
The price of our common units may be volatile and may fluctuate due to various factors including:
• actual or anticipated fluctuations in quarterly and annual results;
• fluctuations in the seaborne transportation industry, including fluctuations in the containership market;
• our making of distributions;
• mergers and strategic alliances in the shipping industry;
• changes in governmental regulations or maritime self-regulatory organization standards;
• shortfalls in our operating results from levels forecasted by securities analysts;
• announcements concerning us or our competitors;
• general economic conditions, including the impact of the COVID-19 pandemic and the Russian/Ukrainian conflict;
• terrorist acts;
• future sales of our common units or other securities;
• investors' perceptions of us and the international container shipping industry;
• the general state of the securities markets; and
• other developments affecting us, our industry or our competitors.
The shipping industry has been highly unpredictable and volatile. Securities markets worldwide are experiencing significant price and volume fluctuations. The market price for our securities may also be volatile. This market volatility, as well as general economic, market or political conditions, could reduce the market price of our securities in spite of our operating performance. Consequently, you may not be able to sell our securities at prices equal to or greater than those at which you pay or paid.
Increases in interest rates may cause the market price of our common units to decline.
An increase in interest rates may cause a corresponding decline in demand for equity investments in general and in particular for yield-based equity investments such as our common units. Any such increase in interest rates or reduction in demand for our common units resulting from other relatively more attractive investment opportunities may cause the trading price of our common units to decline. In addition, our interest expense will increase, since initially our debt will bear interest at a floating rate, subject to any interest rate swaps we may enter into the future.
Substantial future issuance and sale of our common units in the public market, including through our continuous offering sales program, could cause the price of our common units to fall, and would dilute your ownership interests.
In order to raise additional capital, we may in the future offer additional common units or other securities convertible into or exchangeable for our common units, including convertible debt. We have in the past entered into Continuous Offering Program Sales Agreement and performed equity raises. Whether we choose to effect future sales under continuous offering programs or through secondary offerings, will depend upon a variety of factors, including, among others, market conditions and the trading price of our common units relative to other sources of capital.
We cannot predict the size of future issuances or sales of our common units, including those made pursuant to the continuous offering program sales agreement or in connection with future acquisitions or capital activities, or the effect, if any, that such issuances or sales may have on the market price of our common units. The issuance and sale of substantial amounts of common units, including issuance and sales pursuant to the continuous offering program sales agreement, or announcement that such issuance and sales may occur, could adversely affect the market price of our common units, and decrease unitholders' proportionate ownership interest in us.
Unitholders may be liable for repayment of distributions.
Under some circumstances, unitholders may have to repay amounts wrongfully returned or distributed to them. Under the Marshall Islands Act, we may not make a distribution to unitholders if the distribution would cause our liabilities to exceed the fair value of our assets. Marshall Islands law provides that for a period of three years from the date of the impermissible distribution, limited partners who received the distribution and who knew at the time of the distribution that it violated Marshall Islands law will be liable to the limited partnership for the distribution amount.
Assignees who become substituted limited partners are liable for the obligations of the assignor to make contributions to the partnership that are known to the assignee at the time it became a limited partner and for unknown obligations if the liabilities could be determined from the partnership agreement. Liabilities to partners on account of their partnership interest and liabilities that are non-recourse to the partnership are not counted for purposes of determining whether a distribution is permitted.
Common unitholders have limited voting rights and our partnership agreement restricts the voting rights of common unitholders owning more than 4.9% of our common units.
Holders of our common units have only limited voting rights on matters affecting our business. We hold a meeting of the limited partners every year to elect one or more members of our board of directors and to vote on any other matters that are properly brought before the meeting. Common unitholders may only elect four of the seven members of our board of directors. The elected directors are elected on a staggered basis and serve for three year terms. Our general partner in its sole discretion has the right to appoint the remaining three directors and to set the terms for which those directors will serve. The partnership agreement also contains provisions limiting the ability of unitholders to call meetings or to acquire information about our operations, as well as other provisions limiting the unitholders' ability to influence the manner or direction of management. Unitholders will have no right to elect our general partner and our general partner may not be removed except by a vote of the holders of at least 66 2/3% of the outstanding units, including any units owned by our general partner and its affiliates, voting together as a single class.
Our partnership agreement further restricts common unitholders' voting rights by providing that if any person or group owns beneficially more than 4.9% of the common units then outstanding, any such common units owned by that person or group in excess of 4.9% may not be voted on any matter and will not be considered to be outstanding when sending notices of a meeting of unitholders, calculating required votes, except for purposes of nominating a person for election to our board, determining the presence of a quorum or for other similar purposes, unless required by law. The voting rights of any such common unitholders in excess of 4.9% will effectively be redistributed pro rata among the other common unitholders holding less than 4.9% of the voting power of all classes of units entitled to vote. Our general partner, its affiliates and persons who acquired common units with the prior approval of our board of directors will not be subject to this 4.9% limitation except with respect to voting their common units in the election of the elected independent directors.
Risks Relating to Our Organizational Structure, Taxes and Other Legal Matters
In addition to the following risk factors, you should read the sections entitled “Material U.S. Federal Income Tax Considerations” and “Non-United States Tax Considerations” of this Annual Report for a more complete discussion of the expected material U.S. federal and non-U.S. income tax considerations relating to us and the ownership and disposition of common units.
Navios Holdings and their affiliates may compete with us.
Navios Partners has entered into an omnibus agreement with Navios Holdings (the “Omnibus Agreement”) in connection with the closing of Navios Partners’ initial public offering “IPO” governing, among other things, Navios Holdings and its controlled affiliates (other than us, our general partner and our subsidiaries) generally agreed not to acquire or own Panamax or Capesize drybulk carriers under time charters of three or more years without the consent of an independent committee of Navios Holdings. The Omnibus Agreement, however, contains significant exceptions that allow Navios Holdings or any of its controlled affiliates to compete with us under specified circumstances which could harm our business.
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 obligations and to make distributions.
We are a holding company and our subsidiaries conduct all of our operations and own all of our operating assets, including our ships. We have no significant assets other than the equity interests in our subsidiaries. As a result, our ability to pay our obligations and to make distributions depends entirely on our subsidiaries and their ability to distribute funds to us. The ability of a subsidiary to make these distributions could be affected by a claim or other action by a third party, including a creditor, or by the law of their respective jurisdiction of incorporation which regulates the payment of distributions. If we are unable to obtain funds from our subsidiaries, our Board of Directors may not exercise its discretion not to declare or make distributions.
We depend on the Managers to assist us in operating and expanding our business.
Pursuant to the Management Agreements between Navios Partners and the Manager, Navios Containers and the Manager, and Navios Acquisition and the Tankers Manager, the Managers provides to us significant commercial and technical management services (including the commercial and technical management of our vessels, vessel maintenance and crewing, purchasing and insurance and shipyard supervision). In addition, pursuant to the Administrative Services Agreement between us and the Manager, the Manager provides us administrative, financial and other support services. Our operational success and ability to execute our growth strategy will depend significantly upon the Managers' satisfactory performance of these services. Our business will be harmed if the Managers fails to perform these services satisfactorily, if the Managers cancel either of these agreements, or if the Managers stop providing these services to us.
Our ability to enter into new charters and expand our customer relationships will depend largely on the Managers and their reputation and relationships in the shipping industry. If the Managers suffers material damage to its reputation or relationships, it may harm our ability to:
• renew existing charters upon their expiration;
• obtain new charters;
• successfully interact with shipyards during periods of shipyard construction constraints;
• obtain financing on commercially acceptable terms; or
• maintain satisfactory relationships with suppliers and other third parties.
If our ability to do any of the things described above is impaired, it could have a material adverse effect on our business, results of operations and financial condition and our ability to make cash distributions and repurchases of common units.
The loss of key members of our senior management team could disrupt the management of our business.
We believe that our success depends on the continued contributions of the members of our senior management team, including our Chairwoman and Chief Executive Officer. The loss of the services of our Chairwoman and Chief Executive Officer or one of our other executive officers or senior management members could impair our ability to identify and secure new charter contracts, to maintain good customer relations and to otherwise manage our business, which could have a material adverse effect on our financial performance and our ability to compete.
The Managers may be unable to attract and retain qualified, skilled employees or crew necessary to operate our vessels and business or may have to pay increased costs for its employees and crew and other vessel operating costs.
Our success will depend in part on the Managers' ability to attract, hire, train and retain highly skilled and qualified personnel. In crewing our vessels, we require technically skilled employees with specialized training who can perform physically demanding work. Competition to attract, hire, train and retain qualified crew members is intense, and crew manning costs continue to increase. If we are not able to increase our hire rates to compensate for any crew cost increases, our business, financial condition, results of operations and ability to make cash distributions to our unitholders may be adversely affected. Any inability we experience in the future to attract, hire, train and retain a sufficient number of qualified employees could impair our ability to manage, maintain and grow our business.
We may be subject to taxes, which may reduce our cash available for distribution to our unitholders.
We and our subsidiaries may be subject to tax in the jurisdictions in which we are organized or operate, reducing the amount of cash available for distribution. In computing our tax obligation 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 could result in additional tax imposed on us or our subsidiaries, further reducing the cash available for distribution. In addition, changes in our operations or ownership could result in additional tax being imposed on us or our subsidiaries in jurisdictions in which operations are conducted.
In accordance with the currently applicable Greek law, foreign flagged vessels that are managed by Greek or foreign ship management companies having established an office in Greece on the basis of the applicable licensing regime are subject to tax liability towards the Greek state which is calculated on the basis of the relevant vessels' tonnage. A tax credit is recognized for tonnage tax (or similar tax) paid abroad, up to the amount of the tax due in Greece. The owner, the manager and the bareboat charterer or the financial lessee (where applicable) are liable to pay the tax due to the Greek state. The payment of said tax exhausts the tax liability of the foreign ship owning company, the bareboat charterer, the financial lessee (as applicable) and the relevant manager against any tax, duty, charge or contribution payable on income from the exploitation of the foreign flagged vessel outside Greece.
U.S. tax authorities could treat us as a “passive foreign investment company,” which could have adverse U.S. federal income tax consequences to U.S. unitholders.
A non-U.S. entity treated as a corporation for U.S. federal income tax purposes will be treated as a “passive foreign investment company” (“PFIC”), for U.S. federal income tax purposes if either (1) at least 75.0% of its gross income for any taxable year consists of “passive income”, or (2) at least 50.0% of the average value of the entity’s assets produce or are held for the production of “passive income”. For purposes of these tests, “passive income” generally includes dividends, interest, gains from the sale or exchange of investment property, and rents and royalties other than rents and royalties that are received from unrelated parties in connection with the active conduct of a trade or business. For purposes of these tests, income derived from the performance of services does not constitute “passive income”. U.S. unitholders of a PFIC are subject to a disadvantageous U.S. federal income tax regime with respect to the income derived by the PFIC, the distributions they receive from the PFIC, and the gain, if any, they derive from the sale or other disposition of their units in the PFIC, as well as additional U.S. federal income tax filing obligations.
Based on our current and projected method of operation, and on opinion of counsel, we believe that we were not a PFIC for any taxable year, including our 2022 taxable year, and we expect that we will not become a PFIC in subsequent taxable years, although no assurance can be given in this regard. Our U.S. counsel, Thompson Hine LLP, is of the opinion that (1) the income we receive from time chartering activities and the assets we own that are engaged in generating such income should not be treated as passive income or assets, respectively, and (2) so long as our income from time charters exceeds 25.0% of our gross income from all sources for each taxable year after our initial taxable year and the fair market value of our vessels contracted under time charters exceeds 50.0% of the average fair market value of all of our assets for each taxable year after our initial taxable year, we should not be a PFIC for any taxable year. This opinion is based on representations and projections provided by us to our counsel regarding our assets, income and charters, and its validity is conditioned on the accuracy of such representations and projections. We expect that all of the vessels in our fleet will be engaged in time chartering activities and thus, for PFIC purposes, our income from those activities will be non-passive income and the vessels engaged in those activities will be non-passive assets. However, we cannot assure you that the method of our operations, or the nature or composition of our income or assets, will not change in the future and that we will not become a PFIC. Moreover, although there is legal authority for our position, there is also contrary authority and no assurance can be given that the Internal Revenue Service, or the IRS, will accept our position.
We may have to pay tax on U.S.-source income, which would reduce our earnings.
Under the Code, 50.0% of the gross transportation income of a vessel-owning or chartering corporation that is attributable to transportation that either begins or ends, but that does not both begin and end, in the United States is characterized as “U.S. Source International Transportation Income”. U.S. Source International Transportation Income generally is subject to a 4.0% U.S. federal income tax without allowance for deduction or, if such U.S. Source International Transportation Income is effectively connected with the conduct of a trade or business in the United States, U.S. federal corporate income tax (presently imposed at a 21.0% rate) as well as a branch profits tax (presently imposed at a 30.0% rate on effectively connected earnings) applies, unless the non-U.S. corporation qualifies for exemption from tax under Section 883 of the Code.
Based on an opinion of counsel, and certain assumptions and representations, we believe that we have qualified for this statutory tax exemption, and we will take this position for U.S. federal income tax return reporting purposes for our 2022 taxable year. However, there are factual circumstances, including some that may be beyond our control that could cause us to lose the benefit of this tax exemption, including the delisting of our securities from quotation on the NYSE and thereby make us subject to U.S. federal income tax on our U.S. Source International Transportation Income. See “Risks Relating to Our Units-The New York Stock Exchange may delist our securities from trading on its exchange, which could limit your ability to trade our securities and subject us to additional trading restrictions”. Furthermore, our board of directors could determine that it is in our best interests to take an action that would result in this tax exemption not applying to us in the future. In addition, our conclusion that we qualify for this exemption, as well as the conclusions in this regard of our counsel, Thompson Hine LLP, is based upon legal authorities that do not expressly contemplate an organizational structure such as ours; specifically, although we have elected to be treated as a corporation for U.S. federal income tax purposes, we are organized as a limited partnership under Marshall Islands law. As such, we are not subject to section 1446 as that section only applies to entities that for U.S. federal income tax purposes are characterized as partnerships. Therefore, we can give no assurances that the IRS will not take a different position regarding our qualification for this tax exemption.
If we were not entitled to the Section 883 exemption for any taxable year, we generally would be subject to a 4.0% U.S. federal gross income tax with respect to our U.S. Source International Transportation Income or, if such U.S. Source International Transportation Income were effectively connected with the conduct of a trade or business in the United States, U.S. federal corporate income tax as well as a branch profits tax for those years would apply. Our failure to qualify for the Section 883 exemption could have a negative effect on our business and would result in decreased earnings available for distribution to our unitholders.
Actions taken by holders of our common units could result in our (and certain of our non-U.S. subsidiaries) being treated as a “controlled foreign corporation,” which could have adverse U.S. federal income tax consequences to certain U.S. holders.
Although we believe that Navios Partners was not a controlled foreign corporation (a “CFC”) as of December 31, 2022, or at any time during 2022, tax rules enacted by the 2017 Tax Cuts and Jobs Act, including the imposition of so-called “downward attribution” for purposes of determining whether a non-U.S. corporation is a CFC, may result in Navios Partners being treated as a CFC for U.S. federal income tax purposes in the future, together with certain of its non-U.S. subsidiaries that are treated as a corporation for U.S. federal tax purposes (a “CFC Sub”). Through downward attribution, U.S. subsidiaries of Navios Holdings are treated as constructive owners of the equity interests of Navios Partners for purposes of determining whether Navios Partners (and a CFC Sub) is a CFC. If, in the future, U.S. holders (including U.S. subsidiaries of Navios Holdings, as discussed above) that each own 10.0% or more (by vote or value) of the equity of Navios Partners own in the aggregate more than 50% of the equity of Navios Partners (by vote or value), in each case, directly, indirectly or constructively, Navios Partners (and a CFC Sub) would become a CFC.
U.S. holders who at all times own less than 10% of our equity should not be affected. However, if we (or a CFC Sub) were to become a CFC, any U.S. holder owning 10% or more (by vote or value), directly or indirectly, of our equity could be subject to U.S. federal income tax in respect of a portion of our earnings and the earnings of a CFC Sub. Any U.S. holder of Navios Partners that owns 10% or more (by vote or value), directly, indirectly or constructively, of the equity of Navios Partners should consult its own tax advisor regarding the U.S. federal tax consequences that may result from Navios Partners (and a CFC Sub) being treated as a CFC (see “Material U.S. Federal Income Tax Considerations – U.S. Federal Income Taxation of U.S. Holders - Controlled Foreign Corporation).
You may be subject to income tax in one or more non-U.S. countries, including Greece, as a result of owning our common units if, under the laws of any such country, we are considered to be carrying on business there. Such laws may require you to file a tax return with and pay taxes to those countries.
We intend that our affairs and the business of each of our controlled affiliates will be conducted and operated in a manner that minimizes income taxes imposed upon us and these controlled affiliates or which may be imposed upon you as a result of owning our common units. However, because we are organized as a partnership, there is a risk in some jurisdictions that our activities and the activities of our subsidiaries may be attributed to our unitholders for tax purposes and, thus, that you will be subject to tax in one or more non-U.S. countries, including Greece, as a result of owning our common units if, under the laws of any such country, we are considered to be carrying on business there. If you are subject to tax in any such country, you may be required to file a tax return with and to pay tax in that country based on your allocable share of our income. We may be required to reduce distributions to you on account of any withholding obligations imposed upon us by that country in respect of such allocation to you. The United States may not allow a tax credit for any foreign income taxes that you directly or indirectly incur.
We believe we can conduct our activities in such a manner that our unitholders should not be considered to be carrying on business in one or more non-U.S. countries including Greece solely as a consequence of the acquisition, holding, disposition or redemption of our common units. However, the question of whether either we or any of our controlled affiliates will be treated as carrying on business in any particular country will be largely a question of fact to be determined based upon an analysis of contractual arrangements, including the Management Agreements we entered into with the Managers and the Administrative Services Agreement we entered into with the Manager, and the way we conduct business or operations, all of which may change over time. Furthermore, the laws of Greece or any other country may change in a manner that causes that country's taxing authorities to determine that we are carrying on business in such country and are subject to its taxation laws. Any foreign taxes imposed on us or any subsidiaries will reduce our cash available for distribution.
We have been organized as a limited partnership under the laws of the Republic of the Marshall Islands, which does not have a well-developed body of partnership law; as a result, unitholders may have more difficulty in protecting their interests than would unitholders of a similarly organized limited partnership in the United States.
Our partnership affairs are governed by our partnership agreement and by the Marshall Islands Act. The provisions of the Marshall Islands Act resemble provisions of the limited partnership laws of a number of states in the United States, most notably Delaware. The Marshall Islands Act also provides that it is to be applied and construed to make it uniform with Delaware law and, so long as it does not conflict with the Marshall Islands Act or decisions of the Marshall Islands courts, interpreted according to the non-statutory law (or case law) of the State of Delaware. There have been, however, few, if any, court cases in the Marshall Islands interpreting the Marshall Islands Act, in contrast to Delaware, which has a fairly well-developed body of case law interpreting its limited partnership statute. Accordingly, we cannot predict whether Marshall Islands courts would reach the same conclusions as the courts in Delaware. For example, the rights of our unitholders and the fiduciary responsibilities of our general partner under Marshall Islands law are not as clearly established as under judicial precedent in existence in Delaware. As a result, unitholders may have more difficulty in protecting their interests in the face of actions by our officers or directors than would unitholders of a similarly organized limited partnership in the United States.
Because we are organized under the laws of the Marshall Islands and our business is operated primarily from our office in Monaco, it may be difficult to serve us with legal process or enforce judgments against us, our directors or our management.
We are organized under the laws of the Marshall Islands, and all of our assets are located outside of the United States. Our business is operated primarily from our office in Monaco. In addition, our general partner is a Marshall Islands limited liability company, and our directors and officers generally are or will be non-residents of the United States, and all or a substantial portion of the assets of these non-residents are located outside the United States. As a result, it may be difficult or impossible for you to bring an action against us or against these individuals in the United States if you believe that your rights have been infringed under securities laws or otherwise. Even if you are successful in bringing an action of this kind, the laws of the Marshall Islands, the Monaco and other jurisdictions may prevent or restrict you from enforcing a judgment against our assets or the assets of our general partner or our directors or officers.
We rely on the master limited partnership structure and its appeal to investors for accessing debt and equity markets to finance our growth and repay or refinance our debt. The depressed trading price of our common units may affect our ability to access capital markets and, as a result, our ability to pay distributions or repay our debt.
We rely on the master limited partnership structure and its appeal to investors for accessing debt and equity markets to finance our growth and repay or refinance our debt.
We rely on our ability to raise capital in the equity and debt markets to grow our fleet and to refinance our debt. A protracted deterioration in the valuation of our common units would increase our cost of capital, make any equity issuance significantly dilutive and may affect our ability to access capital markets and, as a result, our capacity to pay distributions to our unitholders and refinance or repay our debt.
Our partnership agreement limits our general partner's and our directors' fiduciary duties to our unitholders and restricts the remedies available to unitholders for actions taken by our general partner or our directors.
Our partnership agreement contains provisions that reduce the standards to which our general partner and directors would otherwise be held by Marshall Islands law. For example, our partnership agreement:
| • | permits our general partner to make a number of decisions in its individual capacity, as opposed to in its capacity as our general partner. Where our partnership agreement permits, our general partner may consider only the interests and factors that it desires, and in such cases it has no fiduciary duty or obligation to give any consideration to any interest of, or factors affecting us, our affiliates or our unitholders. Decisions made by our general partner in its individual capacity will be made by Olympos Maritime Ltd. Specifically, pursuant to our partnership agreement, our general partner will be considered to be acting in its individual capacity if it exercises its call right, pre-emptive rights or registration rights, consents or withholds consent to any merger or consolidation of the partnership; |
| • | appoints any directors or votes for the election of any director, votes or refrains from voting on amendments to our partnership agreement that require a vote of the outstanding units, voluntarily withdraws from the partnership, transfers (to the extent permitted under our partnership agreement) or refrains from transferring its units or, general partner interest or votes upon the dissolution of the partnership; |
| • | provides that our general partner and our directors are entitled to make other decisions in “good faith” if they reasonably believe that the decision is in our best interests; |
| • | generally provides that affiliated transactions and resolutions of conflicts of interest not approved by the Conflicts Committee of our board of directors and not involving a vote of unitholders must be on terms no less favorable to us than those generally being provided to or available from unrelated third parties or be “fair and reasonable” to us and that, in determining whether a transaction or resolution is “fair and reasonable,” our board of directors may consider the totality of the relationships between the parties involved, including other transactions that may be particularly advantageous or beneficial to us; and |
| • | provides that neither our general partner nor our officers or our directors will be liable for monetary damages to us, our limited partners or assignees for any acts or omissions unless there has been a final and non-appealable judgment entered by a court of competent jurisdiction determining that our general partner or directors or our officers or directors or those other persons engaged in actual fraud or willful misconduct. |
In order to become a limited partner of our partnership, a common unitholder is required to agree to be bound by the provisions in the partnership agreement, including the provisions discussed above.
Our general partner has a limited call right that may require unitholders to sell their common units at an undesirable time or price.
If at any time our general partner and its affiliates, including Navios Holdings, own more than 80% of the common units, our general partner will have the right, which it may assign to any of its affiliates or to us, but not the obligation, to acquire all, but not less than all, of the common units held by unaffiliated persons at a price not less than their then-current market price. As a result, unitholders may be required to sell their common units at an undesirable time or price and may not receive any return on their investment. Unitholders may also incur a tax liability upon a sale of their units.
As of March 17, 2023, Navios Holdings directly owned 3,183,199 common units, which represented a 10.3% ownership interest in Navios Partners. As of March 17, 2023, our general partner owned all 622,296 outstanding general partnership units, which represented a 2.0% ownership interest in us based on all outstanding common units and general partnership units.
Our general partner may transfer its general partner interest to, and the control of our general partner may be transferred to a third party without common unitholder consent.
Our general partner may transfer its general partner interest to a third party without the consent of the unitholders. In addition, our partnership agreement does not restrict the ability of the members of our general partner from transferring their respective membership interests in our general partner to a third party. A different general partner may make decisions or operate our business in a manner that is different, and significantly less skilled and beneficial to us, and that could have a material adverse effect on our business, results of operations and financial condition, as well as our cash flows, including cash available for distributions to our unitholders.
Our partnership agreement contains provisions that may have the effect of discouraging a person or group from attempting to remove our current management or our general partner, and even if our public unitholders are dissatisfied, they will need a qualified majority to remove our general partner.
Our partnership agreement contains provisions that may have the effect of discouraging a person or group from attempting to remove our current management or our general partner.
| • | The vote of the holders of at least 66 2/3 % of all the then outstanding common units, voting together as a single class is required to remove the general partner. Navios Holdings currently owns approximately 10.5% of the total number of outstanding common units. |
| • | Common unitholders elect only four of the seven members of our board of directors. Our general partner in its sole discretion has the right to appoint the remaining three directors. |
| • | Election of the four directors elected by unitholders is staggered, meaning that the members of only one of three classes of our elected directors are selected each year. In addition, the directors appointed by our general partner will serve for terms determined by our general partner. |
| • | A director appointed by our general partner may be removed from our board of directors at any time without cause only by our general partner and with cause by either our general partner, the vote of holders of a majority of all classes of equity interests in us voting as a single class or the majority vote of the other members of our board. A director elected by our common unitholders may be removed from our board of directors at any time with cause by the vote of holders of a majority of our outstanding common units or the majority vote of the other members of our board. “Cause” is narrowly defined to mean that a court of competent jurisdiction has entered a final, non-appealable judgment finding our general partner or director liable for actual fraud or willful or wanton misconduct in its capacity as our general partner or as a member of the board of directors, as the case may be. Cause does not include most cases of charges of poor business decisions such as charges of poor management of our business by the directors appointed by our general partner or as a member of the Board of Directors, as the case may be. |
| • | Our partnership agreement contains provisions limiting the ability of unitholders to call meetings of unitholders, to nominate directors and to acquire information about our operations as well as other provisions limiting the unitholders' ability to influence the manner or direction of management. |
| • | Unitholders' voting rights are further restricted by the partnership agreement provision providing that if any person or group owns beneficially more than 4.9% of the common units then outstanding, any such common units owned by that person or group in excess of 4.9% may not be voted on any matter and will not be considered to be outstanding when sending notices of a meeting of unitholders, calculating required votes, except for purposes of nominating a person for election to our board, determining the presence of a quorum or for other similar purposes, unless required by law. The voting rights of any such common unitholders in excess of 4.9% will be redistributed pro rata among the other common unitholders holding less than 4.9% of the voting power of all classes of units entitled to vote. Our general partner, its affiliates and persons who acquired common units with the prior approval of our board of directors will not be subject to this 4.9% limitation except with respect to voting their common units in the election of the elected directors. |
| • | We have substantial latitude in issuing equity securities without unitholder approval. |
Unitholders may not have limited liability if a court finds that unitholder action constitutes control of our business.
As a limited partner in a partnership organized under the laws of the Marshall Islands, unitholders could be held liable for our obligations to the same extent as a general partner if they participate in the “control” of our business. Our general partner generally has unlimited liability for the obligations of the partnership, such as its debts and environmental liabilities, except for those contractual obligations of the partnership that are expressly made without recourse to our general partner.
We can borrow money to pay distributions, which would reduce the amount of credit available to operate our business.
Our partnership agreement will allow us to make borrowings to make distributions. Accordingly, we can make distributions on all our units even though cash generated by our operations may not be sufficient to pay such distributions. Any borrowings by us to make distributions will reduce the amount of borrowings we can make for operating our business.
Our management will have broad discretion with respect to the use of the proceeds resulting from the issuance of common units whether under a continuous offering program or a secondary offering.
Our management will have broad discretion in the application of the net proceeds from continuous offering programs or secondary offerings, and could spend such proceeds in ways that do not improve our results of operations or enhance the value of our common units. The failure by our management to apply these funds effectively could result in financial losses and cause the price of our common units to decline. Pending their use, we may invest the net proceeds from continuous offering programs or secondary offerings in a manner that does not produce income or that loses value.
Our general partner and its affiliates, including Navios Holdings, own a significant interest in us and may have conflicts of interest and limited fiduciary and contractual duties, which may permit them to favor their own interests to the detriment of unitholders.
Navios Holdings is our main unitholder owning an approximate 10.5% of the total number of outstanding common units. In August 2019, Navios Holdings announced that it sold certain assets, including its ship management division and the general partnership interests in the Company to N Shipmanagement Acquisition Corp. and related entities, affiliated with the Company's Chairwoman and Chief Executive Officer. Our general partner owns all of our general partnership units representing a 2.0% ownership interest in us based on all outstanding common units and general partnership units. This concentration of ownership may delay, deter or prevent acts that would be favored by our other unitholders or deprive unitholders of an opportunity to receive a premium for their common units as part of a sale of our business, and it is possible that the interests of the controlling unitholders may in some cases conflict with our unitholders. The Manager owns 3.7% of the total number of outstanding common units. The interests of Navios Holdings and of our general partner and its affiliates, including the Manager, may be different from your interests. As a result of these conflicts, our general partner and its affiliates may favor their own interests over the interests of our unitholders. These conflicts include, among others, the following situations:
| • | neither our partnership agreement nor any other agreement requires our general partner to pursue, in the operation of their businesses, a business strategy that favors us; |
| • | our general partner and our directors have limited liabilities and reduced their fiduciary duties under the laws of the Marshall Islands, while the remedies available to our unitholders are also restricted, and, as a result of purchasing common units, unitholders are treated as having agreed to the modified standard of fiduciary duties and to certain actions that may be taken by our general partner and our directors, all as set forth in the partnership agreement; |
| • | either or both of our general partner and our board of directors are involved in determining the amount and timing of our asset purchases and sales, capital expenditures, borrowings, issuances of additional partnership securities and reserves, each of which can affect the amount of cash that is available for distribution to our unitholders; |
| • | our general partner is authorized to cause us to borrow funds in order to permit the payment of cash distributions; |
| • | our general partner is entitled to reimbursement of all reasonable costs incurred by it and its affiliates for our benefit; |
| • | our partnership agreement does not restrict us from paying our general partner or its affiliates for any services rendered to us on terms that are fair and reasonable or entering into additional contractual arrangements with any of these entities on our behalf; and |
| • | our general partner may exercise its right to call and purchase our common units if it and its affiliates own more than 80% of our common units. |
Although a majority of our directors will be elected by common unitholders, our general partner will likely have substantial influence on decisions made by our board of directors.
Our officers face conflicts of interest and conflicts in the allocation of their time to our business.
Certain of our executive officers and/or directors also serve as executive officers and/or directors of Navios Holdings. Our Chief Executive Officer is also the Chief Executive Officer of Navios Holdings. Navios Holdings conducts substantial businesses and activities of their own. If these separate activities are significantly greater than our activities, there will be material competition for the time and effort of our officers, who also provide services to Navios Holdings and their respective affiliates. Our officers are not required to work full-time on our affairs and, in the future, we may have additional officers that also provide services to Navios Holdings and their affiliates. As such these individuals have fiduciary duties to Navios Holdings which may cause them to pursue business strategies that disproportionately benefit Navios Holdings or which otherwise are not in our best interests or those of our unitholders. Conflicts of interest may arise between Navios Holdings, on the one hand, and us and our unitholders on the other hand. Certain our officers may spend a substantial portion of their monthly business time dedicated to the business activities of the Navios Holdings and their affiliates. However, the actual allocation of time could vary significantly from time to time depending on various circumstances and needs of the businesses, such as the relative levels of strategic activities of the businesses.
Fees and cost reimbursements, which the Managers determine for services provided to us, represent significant percentage of our revenues, are payable regardless of profitability and reduce our cash available for distributions.
A large portion of the management, staffing and administrative services that we require to operate our business are provided to us by the Managers. We pay the Managers, a commercial and technical management fee under the Management Agreements, as well as an administrative services fee under the Administrative Services Agreement.
Pursuant to the Management Agreements, the Managers provide commercial and technical management services to our vessels until January 1, 2025, when the Management Agreements are currently set to expire.
In addition, the Manager will provide us with administrative services, pursuant to the Administrative Services Agreement also expiring on January 1, 2025, and we will reimburse the Manager for all costs and expenses reasonably incurred by them in connection with the provision of those services. The exact amount of these future costs and expenses are unquantifiable at this time and they are payable regardless of our profitability.
If we desire to terminate either of these agreements before its scheduled expiration, we must pay a termination fee to the Managers as set forth in the Management Agreements. As a result, our ability to make short-term adjustments to manage our costs by terminating one or both these agreements may be limited which could cause our results of operations and ability to pay cash distributions and repurchases of common units to be materially and adversely affected.
For detailed information on the amount of vessel operating expenses owed under the Management Agreements, please read the section entitled, “Item 5.Operating and Financial Review and Prospects - A. Operating results – Vessel operating expenses” and the Note 18 – Transactions with Related Parties and Affiliates to our consolidated financial statements, included elsewhere in this Annual Report.
Item 4. Information on the Partnership
A. History and Development of the Partnership
Navios Partners is an international owner and operator of Dry Cargo and tanker vessels, formed on August 7, 2007 under the laws of the Republic of the Marshall Islands as a limited partnership, under the Marshall Islands Limited Partnership Act.
Olympos Maritime Ltd. is Navios Partners' general partner (the “General Partner”) and currently owns all the general partnership units representing an approximately 2.0% ownership interest in Navios Partners based on all outstanding common units and general partnership units.
Navios Partners is engaged in the seaborne transportation services of a wide range of liquid and dry cargo commodities including iron ore, oil, coal, grain and fertilizer and also containers, chartering its vessels generally under medium to long-term charters. The operations of Navios Partners are managed by the Managers from their offices in Greece, Singapore and Monaco.
The principal executive offices of Navios Partners are located at c/o Navios Maritime Partners L.P., 7 Avenue de Grande Bretagne, Office 11B2, Monte Carlo, MC 98000 Monaco, and its telephone number is (011) + (377) 9798-2140.
The SEC maintains an internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at http://www.sec.gov. The address of the Company’s internet site is https://www.navios-mlp.com. Information contained on this website does not constitute part of this report.
Navios Containers Merger
On March 31, 2021, Navios Partners completed the merger (the “NMCI Merger”) contemplated by the Agreement and Plan of Merger (the “NMCI Merger Agreement”), dated as of December 31, 2020, by and among Navios Partners, its direct wholly-owned subsidiary NMM Merger Sub LLC (“Merger Sub”), Navios Maritime Containers L.P. and Navios Maritime Containers GP LLC, Navios Containers’ general partner at the time. Pursuant to the NMCI Merger Agreement, Merger Sub merged with and into Navios Containers, with Navios Containers continuing as the surviving partnership. As a result of the NMCI Merger, Navios Containers became a wholly-owned subsidiary of Navios Partners. Pursuant to the terms of the NMCI Merger Agreement, each outstanding common unit of Navios Containers that was held by a unitholder other than Navios Partners, Navios Containers and their respective subsidiaries was converted into the right to receive 0.39 of a common unit of Navios Partners. Following the exercise of the optional second merger (“Second Merger”), Navios Containers merged with and into Navios Maritime Containers Sub LP, with Navios Maritime Containers Sub LP continuing as the surviving partnership, and Migen Shipmanagement Ltd, a wholly owned subsidiary of Navios Partners, became Navios Containers’ General Partner. Upon completion of the NMCI Merger on March 31, 2021, beginning from April 1, 2021, the results of operations of Navios Containers are included in Navios Partners’ Consolidated Statements of Operations.
Navios Acquisition Merger
On August 25, 2021 (date of obtaining control), Navios Partners purchased 44,117,647 newly issued shares of Navios Acquisition, thereby acquiring a controlling interest of 62.4% in Navios Acquisition, and the results of operations of Navios Acquisition are included in Navios Partners’ consolidated statements of operations commencing on August 26, 2021.
On October 15, 2021, Navios Partners completed the merger with Navios Acquisition (the “NNA Merger” and together with the NMCI Merger, the “Mergers”) and as a result thereof, Navios Acquisition became a wholly-owned subsidiary of Navios Partners. Each outstanding share of common stock of Navios Acquisition that was held by a stockholder other than Navios Partners was converted into the right to receive 0.1275 of a common unit of Navios Partners. As a result of the NNA Merger, 3,388,226 common units of Navios Partners were issued to former public stockholders of Navios Acquisition.
Financing Arrangements
Please read “Item 5. Operating and Financial Review and Prospects – Recent Developments” for a full description of the Company’s most recent financing arrangements.
Please read Note 11 – Borrowings to our consolidated financial statements, included elsewhere in this Annual Report for a full description of the financing arrangements of the Company as of December 31, 2022.
Distributions
Please read “Item 8. Financial Information – A. Consolidated Statements and Other Financial Information – Cash Distribution Policy” for a full description of the Company’s cash distribution policy.
Please read Note 20 – Cash Distributions and Earning per Unit to our consolidated financial statements, included elsewhere in this Annual Report for a full description of the authorized cash distributions of the Company.
Equity Offerings and Issuances
Please read Note 13 – Repurchases and Issuance of Units to our consolidated financial statements, included elsewhere in this Annual Report for a full description of the Company’s equity offerings and issuances of units.
Acquisitions and Sales of Vessels
On July 26, 2022, the Company entered into a share purchase agreement to acquire a 36-vessel drybulk fleet for a purchase price of $835.0 million including the assumption of bank liabilities, bareboat obligations and finance lease obligations, subject to debt and working capital adjustments, from Navios Holdings. On July 29, 2022, 15 of the 36 vessels were delivered to Navios Partners. On September 8, 2022, the remaining 21 vessels were delivered to Navios Partners.
Please read Note 7 – Vessels, net to our consolidated financial statements, included elsewhere in this Annual Report for a full description of the Company’s acquisitions and sales of vessels as of December 31, 2022.
Please read “Item 5. Operating and Financial Review and Prospects – Recent Developments” for a full description of the Company’s most recent acquisition and sales of vessels.
B. Business Overview
Introduction
Our ESG Practices
We are committed to integrating Environmental, Social and Governance (“ESG”) practices into our operations and business strategy aiming to become a leader in sustainability and exploitation of new technologies. We present our ESG strategy and goals, set measurable sustainability targets and report on our progress across our business operations. Our ESG Report may be found on our website at www.navios-mlp.com. The information on our website is not incorporated by reference into this annual report.
Environment
Our goal ambition is to achieve “net-zero” carbon emissions by 2050. We are progressing our decarbonisation path through:
| (i) | emissions data-driven operational improvements. We continue to expand our vessel performance software tools, allowing us to monitor efficiency performance. This data, in turn, informs operational strategy. We foster and grow long-term relationships with our charterers, with whom we share common environmental sustainability goals. implementing these operationally efficient strategies into our long-term charter agreements. |
| (ii) | technological research and ESD implementation onboard. We have invested in renewing and upgrading our fleet with the latest technologies. Our newbuilding program replaces older vessels with newer, more efficient vessels, all of which are fitted with Energy Saving Devices (“ESD”) straight from the shipyard. We have also been retrofitting propeller boss cap fins and energy saving ducts on multiple vessels and have installed high-efficiency LED lights across our fleet. |
Social responsibility:
We believe we are one of the industry leaders in diversity and inclusion. We are committed to ensuring that we have effective policies, strategies, procedures, and processes that promote equality, encourage diversity, and contribute to an inclusive organisational culture. We continually invest in training both seafarers and shore side staff, especially in topics relating to safety and wellbeing. These trainings are repeated and stressed periodically at regularly hosted crew forums around the world. We address the issue of mental health head on. All our seafarers have access to a 24/7 support line, where they can receive advice and guidance on any health or mental wellbeing issue. We believe that these efforts are the reason for our high crew retention rate. We also contribute to several universities and learning institutions, charities, hospitals, and local religious institutions that assist the local communities.
Governance:
Our company is governed by an experienced and majority independent board of directors. We have committees to ensure oversight of our activities, as well as compliance with all applicable frameworks. We have adopted a Code of Corporate Conduct and Ethics with which all employees comply and we also verify compliance. We encourage our employees and crew to engage in free and open reporting, anonymously or otherwise, using a dedicated email address, or, for crew, an open reporting hotline.
We are an international owner and operator of Dry Cargo and tanker vessels formed by Navios Holdings (NYSE: NM). Our vessels are generally chartered-out under short-term, medium and long-term time charters with an average remaining charter duration of approximately 1.9 years to a strong group of counterparties, including ZIM Integrated Shipping Services Ltd. (“ZIM”), HMM, Chevron Transport Corporation Ltd. (“Chevron”), Feedertech PTE Ltd. (“Feedertech”), COSCO Shipping Group, VS Tankers FZE/AMPTC, Saudi Aramco, Nippon Yusen Kabushiki Kaisha (“NYK Line”) and Kawasaki Kisen Kaisha Ltd. (“K Line”).
Our Fleet
Navios Partners’ fleet consists of 82 drybulk vessels, 47 containerships and 46 tanker vessels, including three newbuilding Capesize chartered-in vessels under bareboat contracts expected to be delivered in the first half of 2023, six newbuilding Aframax/LR2 vessels expected to be delivered in 2024 and the first half of 2025, two newbuilding MR2 Product Tanker chartered-in vessels under bareboat contracts expected to be delivered in the second half of 2025 and the first half of 2026 and 12 newbuilding Containerships expected to be delivered by the second half of 2023 and in 2024. The fleet excludes one Ultra-Handymax, one Panamax and one LR1 Product Tanker vessels agreed to be sold.
We generate revenues by charging our customers for the use of our vessels to transport their dry cargo commodities, containers, crude oil and/or refined petroleum products. In general, the vessels in our fleet are chartered-out under time charters, which range in length from one to twelve years at inception. From time to time, we operate vessels in the spot market until the vessels have been chartered out under short-term, medium and long-term charters.
The following table provides summary information about our fleet as of March 13, 2023:
| Owned Drybulk Vessels | Type | Built | Capacity (DWT) |
Charter-Out Rate(1) |
Index(2) | Expiration Date(3) | |||||||
| Navios Christine B | Ultra-Handymax | 2009 | 58,058 | $11,353 | No | Mar-23 | |||||||
| — | 100.0% average BSI 58 10TC |
Jul-23 | |||||||||||
| Navios Celestial | Ultra-Handymax | 2009 | 58,063 | $11,400 | No | Sep-23 | |||||||
| Navios Vega | Ultra-Handymax | 2009 | 58,792 | — | 100.0% average BSI 58 10TC |
Mar-23 | |||||||
| $14,250 | No | Jul-23 | |||||||||||
| Serenitas N (4) | Ultra-Handymax | 2011 | 56,644 | $11,474 — |
No 99.0% average BSI 58 10TC |
Mar-23 Apr-23 |
|||||||
| Navios La Paix | Ultra-Handymax | 2014 | 61,485 | $12,549 | No | Mar-23 | |||||||
| — | 111% average BSI 58 10TC |
Apr-23 | |||||||||||
| Navios Hyperion | Panamax | 2004 | 75,707 | $19,000 | No | Nov-23 | |||||||
| Navios Anthos | Panamax | 2004 | 75,798 | Scheduled Repairs | — | — | |||||||
| Navios Orbiter | Panamax | 2004 | 76,602 | $11,309 | No | Mar-23 | |||||||
| — | 100.0% average BPI 4TC |
Sep-23 | |||||||||||
| Navios Hope | Panamax | 2005 | 75,397 | $10,780 | No | Mar-23 | |||||||
| — | 100.0% average BPI 4TC |
Jun-24 | |||||||||||
| Navios Taurus | Panamax | 2005 | 76,596 | — | 100.0% average BPI 4TC |
Feb-24 | |||||||
| Navios Sun | Panamax | 2005 | 76,619 | $4,750 | No | Mar-23 | |||||||
| — | 100.0% average BPI 4TC |
Dec-23 | |||||||||||
| Navios Asteriks(27) | Panamax | 2005 | 76,801 | $11,550 — |
No 100.0% average BPI 4TC |
Mar-23 Sep-23 |
|||||||
| Navios Helios | Panamax | 2005 | 77,075 | $11,694 — |
No 100.0% average BPI 4TC |
Mar-23 Jan-24 |
|||||||
| Navios Apollon I | Panamax | 2005 | 87,052 | $11,970 | No | Mar-23 | |||||||
| — | 105.0% average BPI 4TC |
Jul-23 | |||||||||||
| N Amalthia | Panamax | 2006 | 75,318 | — | 92.0% average BPI 82 |
Apr-23 | |||||||
| — | 90.0% average BPI 82 |
Apr-24 | |||||||||||
| Navios Sagittarius(5) | Panamax | 2006 | 75,756 | $11,165 — |
No 100.0% average BPI 4TC |
Mar-23 Sep-23 |
|||||||
| Navios Galileo | Panamax | 2006 | 76,596 | $11,994 | No | Mar-23 | |||||||
| — | 101.0% average BPI 4TC |
Apr-23 | |||||||||||
| N Bonanza | Panamax | 2006 | 76,596 | $11,021 — |
No 100.0% average BPI 4TC |
Mar-23 Apr-24 |
|||||||
| Navios Harmony | Panamax | 2006 | 82,790 | $6,650 | No | Apr-23 | |||||||
| Navios Libertas(4) | Panamax | 2007 | 75,511 | $13,300 | No | Apr-23 | |||||||
| Copernicus N | Panamax | 2010 | 93,062 | $12,198 | No | Mar-23 | |||||||
| — | 107.0% average BPI 4TC |
Sep-23 | |||||||||||
| Unity N | Panamax | 2011 | 79,642 | — | 100.0% average BPI 4TC |
Oct-23 | |||||||
| Odysseus N | Panamax | 2011 | 79,642 | — | 100.0% average BPI 4TC |
Nov-23 | |||||||
| Rainbow N | Panamax | 2011 | 79,642 | $10,735 — |
No 100.0% average BPI 4TC |
Mar-23 Aug-23 |
|||||||
| Navios Avior | Panamax | 2012 | 81,355 | $11,814 — |
No 100.0% average BPI 82 |
Mar-23 May-23 |
|||||||
| Navios Centaurus | Panamax | 2012 | 81,472 | $11,836 — |
No 101.0% average BPI 82 |
Mar-23 Aug-23 |
|||||||
| Navios Victory | Panamax | 2014 | 77,095 | $12,981 | No | Mar-23 | |||||||
| — | 106.75% average BPI 4TC |
Oct-23 | |||||||||||
| Navios Alegria(27) | Panamax | 2016 | 84,852 | $14,197 | No | Jul-24 | |||||||
| Navios Sphera | Panamax | 2016 | 84,872 | — | 108.0% average BPI 82 |
Mar-23 | |||||||
| $19,268 | No | Jun-23 | |||||||||||
| — | 108.0% average BPI 82 |
Apr-24 | |||||||||||
| Navios Sky(5) | Panamax | 2015 | 82,056 | — | 105.0 % average BPI 82 |
Mar-23 | |||||||
| $19,541 | No | Jun-23 | |||||||||||
| — | 105.0 % average BPI 82 |
Sep-24 | |||||||||||
| Navios Uranus(6) | Panamax | 2019 | 81,821 | $15,593 | No | Dec-23 | |||||||
| Navios Herakles I(6) | Panamax | 2019 | 82,036 | $14,897 $18,503 — |
No No 115% average BPI 82 |
Mar-23 Jun-23 Aug-23 |
|||||||
| Navios Galaxy II(6) | Panamax | 2020 | 81,789 | — | 112.5% average BPI 82 |
Mar-23 | |||||||
| $18,635 | No | Jun-23 | |||||||||||
| — | 112.5% average BPI 82 |
Dec-24 | |||||||||||
| Navios Felicity I(6) | Panamax | 2020 | 81,962 | $14,919 | No | Dec-23 | |||||||
| Navios Magellan II(6) | Panamax | 2020 | 82,037 | — | 112.0% average BPI 82 |
Mar-23 | |||||||
| $19,335 | No | Jun-23 | |||||||||||
| — | 112.0% average BPI 82 |
Feb-24 | |||||||||||
| Navios Primavera(5) | Panamax | 2022 | 82,003 | $14,807 | No | Mar-23 | |||||||
| $18,473 | No | Jun-23 | |||||||||||
| — | 112.0% average BPI 82 |
Jul-23 | |||||||||||
| Navios Meridian(5) | Panamax | 2023 | 82,010 | — | 115.5% average BPI 82 |
Mar-23 | |||||||
| $19,132 | No | Jun-23 | |||||||||||
| — | 115.5% average BPI 82 |
Jan-24 | |||||||||||
| Navios Beaufiks(5) | Capesize | 2004 | 180,310 | $22,563 | No | Sep-23 | |||||||
| Navios Fantastiks(5) | Capesize | 2005 | 180,265 | $18,911 | No | Dec-23 | |||||||
| Navios Stellar(5) | Capesize | 2009 | 169,001 | — | 95.75% average BCI 5TC |
Apr-23 | |||||||
| — | 99.0% average BCI 5TC |
Apr-24 | |||||||||||
| Navios Aurora II | Capesize | 2009 | 169,031 | — | 99.0% average BCI 5TC |
Jun-23 | |||||||
| Navios Happiness | Capesize | 2009 | 180,022 | — | 109.0% average BCI 5TC |
Mar-23 | |||||||
| $20,710 | No | Dec-23 | |||||||||||
| Navios Bonavis(5) | Capesize | 2009 | 180,022 | — | 101.5% average BCI 5TC |
May-23 | |||||||
| — | 107.0% average BCI 5TC |
Apr-24 | |||||||||||
| Navios Phoenix(5) | Capesize | 2009 | 180,242 | — | 100.0% average BCI 5TC + $2,000 per day |
Jan-24 | |||||||
| Navios Sol(5) | Capesize | 2009 | 180,274 | — | 110.0% average BCI 5TC |
Mar-23 | |||||||
| $20,378 | No | Dec-23 | |||||||||||
| — | 110.0% average BCI 5TC |
Apr-24 | |||||||||||
| Navios Lumen(5) | Capesize | 2009 | 180,661 | — | 105.0% average BCI 5TC | Mar-23 | |||||||
| Navios Pollux(5) | Capesize | 2009 | 180,727 | — | 100.0% of pool earnings | Jul-23 | |||||||
| Navios Antares(5) | Capesize | 2010 | 169,059 | — | 100.0% average BCI 5TC | Jan-24 | |||||||
| Navios Symphony | Capesize | 2010 | 178,132 | — | 99.0% average BCI 5TC |
Apr-23 | |||||||
| Navios Melodia | Capesize | 2010 | 179,132 | — | 105.0% average BCI 5TC |
Mar-23 | |||||||
| $18,653 | No | Apr-23 | |||||||||||
| $18,702 | No | Jun-23 | |||||||||||
| — | 105.0% average BCI 5TC |
Apr-24 | |||||||||||
| Navios Luz | Capesize | 2010 | 179,144 | — | 102.0% average BCI 5TC |
Jul-23 | |||||||
| Navios Etoile | Capesize | 2010 | 179,234 | — | 100.0% average BCI 5TC |
Apr-23 | |||||||
| — | 105.0% average BCI 5TC |
Feb-24 | |||||||||||
| Navios Buena Ventura | Capesize | 2010 | 179,259 | — | 100.5% average BCI 5TC |
Mar-23 | |||||||
| — | 105.0% average BCI 5TC | Feb-24 | |||||||||||
| Navios Bonheur | Capesize | 2010 | 179,259 | — | 103.0% average BCI 5TC | Sep-23 | |||||||
| Navios Fulvia | Capesize | 2010 | 179,263 | — | 100.0% average BCI 5TC |
Mar-23 | |||||||
| — | 105.0% average BCI 5TC |
Feb-24 | |||||||||||
| Navios Aster | Capesize | 2010 | 179,314 | — | 108.0% average BCI 5TC |
Dec-23 | |||||||
| Navios Ace(5) | Capesize | 2011 | 179,016 | — | 107.25% average BCI 5TC | Apr-23 | |||||||
| Navios Altamira | Capesize | 2011 | 179,165 | — | 100.25% average BCI 5TC | Mar-23 | |||||||
| Navios Azimuth | Capesize | 2011 | 179,169 | — | 105.0% average BCI 5TC |
Mar-23 | |||||||
| $19,701 | No | Jun-23 | |||||||||||
| — | 105.0% average BCI 5TC |
Feb-24 | |||||||||||
| Navios Koyo | Capesize | 2011 | 181,415 | — | 111.0% average BCI 5TC |
May-23 | |||||||
| — | 118.0% average BCI 5TC |
Apr-24 | |||||||||||
| Navios Ray(5) | Capesize | 2012 | 179,515 | — | 102.0% average BCI 5TC |
Mar-23 | |||||||
| $19,950 | No | Dec-23 | |||||||||||
| — | 105.0% average BCI 5TC |
Feb-24 | |||||||||||
| Navios Joy | Capesize | 2013 | 181,389 | Freight Voyage | No | Nov-23 | |||||||
| Navios Gem | Capesize | 2014 | 181,336 | — | 128.0% average BCI 5TC |
Jan-24 | |||||||
| Navios Canary(27) | Capesize | 2015 | 180,528 | — | 125.0% average BCI 5TC |
Dec-23 | |||||||
| Navios Corali(27) | Capesize | 2015 | 181,249 | — | 132.0% average BCI 5TC |
Oct-23 | |||||||
| Navios Felix(27) | Capesize | 2016 | 181,221 | — | 100.0% average BCI 5TC + $4,085 per day |
Jan-24 | |||||||
| Navios Mars | Capesize | 2016 | 181,259 | — | 126.0% average BCI 5TC |
Oct-23 | |||||||
| Navios Armonia(6) | Capesize | 2022 | 182,079 | $20,750 | No | Sep-27 | |||||||
| Navios Azalea(6) | Capesize | 2022 | 182,064 | $19,950 | No | Nov-27 | |||||||
| Navios Astra(28) | Capesize | 2022 | 182,392 | $21,000 | No | Sep-27 |
| Owned Containerships | Type | Built | Capacity (TEU) |
Charter-Out Rate(1) |
Index(2) | Expiration Date(3) | |||||||
| Navios Summer(5) | Containership | 2006 | 3,450 | $45,480 $39,795 $30,320 $20,845 $34,110 |
No No No No No |
May-23 May-24 May-25 May-26 Jul-26 |
|||||||
| Navios Verano (5) | Containership | 2006 | 3,450 | $22,713 | No | Apr-23 | |||||||
| Hyundai Hongkong(7) | Containership | 2006 | 6,800 | $30,119 $21,083 |
No No |
Dec-23 Dec-28 |
|||||||
| Hyundai Singapore(7) | Containership | 2006 | 6,800 | $30,119 $21,083 |
No No |
Dec-23 Dec-28 |
|||||||
| Hyundai Busan(7) | Containership | 2006 | 6,800 | $30,119 $21,083 |
No No |
Aug-24 Aug-29 |
|||||||
| Hyundai Shanghai(7) | Containership | 2006 | 6,800 | $30,119 $21,083 |
No No |
Aug-24 Aug-29 |
|||||||
| Hyundai Tokyo(7) | Containership | 2006 | 6,800 | $30,119 $21,083 |
No No |
Dec-23 Dec-28 |
|||||||
| Protostar N | Containership | 2007 | 2,741 | $46,556 | No | Nov-25 | |||||||
| Navios Spring(5) | Containership | 2007 | 3,450 | $58,500 | No | May-25 | |||||||
| Matson Lanai(5) | Containership | 2007 | 4,250 | $55,794 | No | Jul-25 | |||||||
| Navios Indigo(5) | Containership | 2007 | 4,250 | $63,375 $43,875 $34,125 $24,375 $41,438 |
No No No No No |
Apr-23 Apr-24 Apr-25 Apr-26 Aug-26 |
|||||||
| Navios Vermilion(5) | Containership | 2007 | 4,250 | $45,425 $23,972 $41,722 |
No No No |
Dec-23 Nov-24 Dec-24 |
|||||||
| Navios Verde(5) | Containership | 2007 | 4,250 | $20,845 | No | Jun-23 | |||||||
| Navios Amarillo(5) | Containership | 2007 | 4,250 | $92,381 $63,956 $28,425 $9,475 |
No No No No |
Jan-24 Jan-25 Jan-26 Jan-28 |
|||||||
| Navios Azure(5) | Containership | 2007 | 4,250 | $22,195 | No | Apr-23 | |||||||
| Navios Domino(5) | Containership | 2008 | 4,250 | $24,934 | No | May-23 | |||||||
| Navios Delight(5) | Containership | 2008 | 4,250 | $45,425 | No | Jan-24 | |||||||
| Navios Magnolia | Containership | 2008 | 4,730 | $45,425 $23,972 $41,722 |
No No No |
Nov-23 Oct-24 Nov-24 |
|||||||
| Navios Jasmine | Containership | 2008 | 4,730 | $60,000 | No | Apr-25 | |||||||
| Navios Chrysalis | Containership | 2008 | 4,730 | $30,083 | No | Jul-23 | |||||||
| Navios Nerine | Containership | 2008 | 4,730 | $45,425 $23,972 $41,722 |
No No No |
Oct-23 Sep-24 Oct-24 |
|||||||
| Spectrum N | Containership | 2009 | 2,546 | $36,538 | No | Mar-25 | |||||||
| Navios Devotion(5) | Containership | 2009 | 4,250 | $63,375 $43,875 $34,125 $24,375 $41,438 |
No No No No No |
Mar-23 Mar-24 Mar-25 Mar-26 Jul-26 |
|||||||
| Navios Destiny(5) | Containership | 2009 | 4,250 | $45,425 $23,972 $41,722 |
No No No |
Nov-23 Oct-24 Nov-24 |
|||||||
| Navios Lapis | Containership | 2009 | 4,250 | $31,353 | No | May-23 | |||||||
| Navios Tempo | Containership | 2009 | 4,250 | $44,438 | No | Sep-25 | |||||||
| Navios Miami | Containership | 2009 | 4,563 | $45,425 $23,972 $41,722 |
No No No |
Nov-23 Oct-24 Nov-24 |
|||||||
| Navios Dorado | Containership | 2010 | 4,250 | $21,676 | No | Apr-23 | |||||||
| Zim Baltimore | Containership | 2010 | 4,360 | $43,875 $34,125 $24,375 $41,438 |
No No No No |
Jan-24 Jan-25 Jan-26 May-26 |
|||||||
| Navios Bahamas | Containership | 2010 | 4,360 | $60,000 | No | May-25 | |||||||
| Zim Carmel | Containership | 2010 | 4,360 | $61,114 $42,164 $32,689 $23,214 $39,795 |
No No No No No |
Apr-23 Apr-24 Apr-25 Apr-26 Jun-26 |
|||||||
| Navios Unison(5) | Containership | 2010 | 10,000 | $26,276 | No | Jun-26 | |||||||
| Navios Constellation(5) | Containership | 2011 | 10,000 | $26,276 | No | Jun-26 | |||||||
| Fleur N | Containership | 2012 | 2,782 | $19,750 | No | Mar-24 | |||||||
| Ete N | Containership | 2012 | 2,782 | $19,750 | No | Feb-24 |
| Owned Tanker Vessels | Type | Built | Capacity (DWT) |
Charter-Out Rate(1) |
Profit Sharing Arrangements | Expiration Date(3) | |||||||
| Hector N | MR1 Product Tanker | 2008 | 38,402 | $14,319 $15,306 |
No No |
Jun-23 Aug-23 |
|||||||
| Nave Equinox (5) | MR2 Product Tanker | 2007 | 50,922 | $20,392(8) | No | Sep-24 | |||||||
| Nave Pulsar (27) | MR2 Product Tanker | 2007 | 50,922 | $27,650 | No | Aug-23 | |||||||
| Nave Orbit (5) | MR2 Product Tanker | 2009 | 50,470 | $14,418 | No | Mar-23 | |||||||
| $15,306 | No | Sep-24 | |||||||||||
| Nave Equator (27) | MR2 Product Tanker | 2009 | 50,542 | $23,651 | No | Aug-23 | |||||||
| Nave Aquila (5) | MR2 Product Tanker | 2012 | 49,991 | $27,181 | No | Jun-23 | |||||||
| Nave Atria (5) | MR2 Product Tanker | 2012 | 49,992 | $13,948(9) | No | May-23 | |||||||
| Nave Capella (5) | MR2 Product Tanker | 2013 | 49,995 | $22,138 | No | Jan-25 | |||||||
| Nave Alderamin (5) | MR2 Product Tanker | 2013 | 49,998 | $22,138 | No | Nov-24 | |||||||
| Nave Bellatrix (5) | MR2 Product Tanker | 2013 | 49,999 | $23,083 | No | Aug-23 | |||||||
| Nave Orion (5) | MR2 Product Tanker | 2013 | 49,999 | $22,138 | No | Dec-24 | |||||||
| Nave Titan (5) | MR2 Product Tanker | 2013 | 49,999 | $25,891 | No | Feb-25 | |||||||
| Bougainville (27) | MR2 Product Tanker | 2013 | 50,626 | Floating Rate(10) | No | May-23 | |||||||
| Nave Pyxis (27) | MR2 Product Tanker | 2014 | 49,998 | $25,891 | No | Jan-25 | |||||||
| Nave Luminosity | MR2 Product Tanker | 2014 | 49,999 | $23,004(11) | No | Dec-25 | |||||||
| Nave Jupiter | MR2 Product Tanker | 2014 | 49,999 | $16,491 | No | Aug-23 | |||||||
| Nave Velocity (5) | MR2 Product Tanker | 2015 | 49,999 | $15,553(12) | No | Oct-24 | |||||||
| Nave Sextans | MR2 Product Tanker | 2015 | 49,999 | $16,844 | No | May-23 | |||||||
| $23,196(11) | No | May-26 | |||||||||||
| Nave Ariadne | LR1 Product Tanker | 2007 | 74,671 | Floating Rate(13) | No | Jun-23 | |||||||
| Nave Cielo | LR1 Product Tanker | 2007 | 74,671 | $16,335 $26,564 |
No No |
Sep-23 Nov-23 |
|||||||
| Aurora N(4) | LR1 Product Tanker | 2008 | 63,495 | Freight Voyage | No | Apr-23 | |||||||
| Lumen N | LR1 Product Tanker | 2008 | 63,599 | Floating Rate(13) | No | Apr-23 | |||||||
| Nave Andromeda (5) | LR1 Product Tanker | 2011 | 75,000 | $28,394 | No | Mar-25 | |||||||
| Nave Cetus | LR1 Product Tanker | 2012 | 74,581 | $32,094 | No | Jul-25 | |||||||
| Nave Cassiopeia | LR1 Product Tanker | 2012 | 74,711 | $33,150(14) | No | Jan-25 | |||||||
| Nave Estella(5) | LR1 Product Tanker | 2012 | 75,000 | $28,394 | No | Dec-24 | |||||||
| Nave Rigel | LR1 Product Tanker | 2013 | 74,673 | Floating Rate(15) | No | Oct-23 | |||||||
| Nave Atropos(27) | LR1 Product Tanker | 2013 | 74,695 | $21,971 | No | Oct-24 | |||||||
| Nave Galactic | VLCC | 2009 | 297,168 | $45,425 | No | Sep-23 | |||||||
| Nave Spherical | VLCC | 2009 | 297,188 | Floating Rate | Yes(16) | Jan-24 | |||||||
| Nave Constellation | VLCC | 2010 | 296,988 | Freight Voyage | No | Apr-23 | |||||||
| Nave Quasar | VLCC | 2010 | 297,376 | $16,788 | Yes(17) | Apr-23 | |||||||
| Nave Synergy | VLCC | 2010 | 299,973 | Freight Voyage | No | Apr-23 | |||||||
| Nave Universe | VLCC | 2011 | 297,066 | Freight Voyage | No | Mar-23 | |||||||
| Nave Buena Suerte | VLCC | 2011 | 297,491 | $47,906 | Yes(18) | Jun-25 |
| Bareboat-in vessels | Type | Built | Capacity (DWT) |
Charter-Out Rate(1) |
Index(2) | Expiration Date(3) | |||||||
| Navios Libra | Panamax | 2019 | 82,011 | $13,941 $18,541 — |
No No 109.75% average BPI 82 |
Mar-23 Jun-23 Jun-24 |
|||||||
| Navios Star | Panamax | 2021 | 81,994 | $14,119 $19,413 — |
No No 110.0% average BPI 82 |
Mar-23 Jun-23 Apr-24 |
|||||||
| Navios Amitie | Panamax | 2021 | 82,002 | $13,061 $19,731 — |
No No 110.0% average BPI 82 |
Mar-23 Jun-23 Apr-24 |
|||||||
| Baghdad | VLCC | 2020 | 313,433 | $27,816(19) | No | Sep-30 | |||||||
| Nave Electron | VLCC | 2021 | 313,239 | $47,906 | Yes(18) | Jan-26 | |||||||
| Erbil | VLCC | 2021 | 313,486 | $27,816(19) | No | Feb-31 | |||||||
| Nave Celeste | VLCC | 2022 | 313,418 | Floating rate | Yes(20) | Jul-24 |
| Chartered-in vessels | Type | Built | Capacity (DWT) |
Charter-Out Rate(1) |
Index(2) | Expiration Date(3) | |||||||
| Navios Lyra | Handysize | 2012 | 34,718 | $9,975 | No | Oct-23 | |||||||
| Navios Venus | Ultra-Handymax | 2015 | 61,339 | $5,700 | No | Mar-23 | |||||||
| — | 111.0% average BSI 58 10TC | Feb-24 | |||||||||||
| Navios Amber(21) | Panamax | 2015 | 80,994 | $7,600 | No | Apr-23 | |||||||
| Navios Coral(21) | Panamax | 2016 | 84,904 | $14,383 | No | Mar-23 | |||||||
| $19,736 | No | Jun-23 | |||||||||||
| — | 108.0% average BPI 82 | Feb-24 | |||||||||||
| Navios Citrine(21) | Panamax | 2017 | 81,626 | — | 122.0% average BPI 4TC | Jun-23 | |||||||
| Navios Dolphin(21) | Panamax | 2017 | 81,630 | $14,013(22) | No | Dec-24 | |||||||
| Navios Gemini(23) | Panamax | 2018 | 81,704 | $14,919 | No | Oct-23 | |||||||
| Navios Horizon I(23) | Panamax | 2019 | 81,692 | $13,335 $18,530 — |
No No 108.5% average BPI 82 |
Mar-23 Jun-23 Oct-23 |
|
Bareboat Chartered-in Drybulk Vessels to be Delivered |
Type | Delivery Date | Capacity (DWT) |
Charter-Out Rate(1) |
Index(2) | Expiration Date(3) |
|||||||
| TBN III(6) | Capesize | H1 2023 | 180,000 | $19,600 | No | Nov-27 | |||||||
| TBN I(6) | Capesize | H1 2023 | 180,000 | $19,550 | No | Feb-28 | |||||||
| TBN II(6) | Capesize | H1 2023 | 180,000 | $19,550 | No | Mar-28 |
| Owned Containerships to be Delivered | Type | Delivery Date | Capacity (TEU) |
Charter-Out Rate(1) |
Index(2) | Expiration Date(3) |
|||||||
| TBN IV | Containership | H2 2023 | 5,300 | $42,900 $39,000 $37,050 $35,100 $31,200 $37,050 |
No No No No No No |
Aug-24 Aug-25 Aug-26 Aug-27 Aug-28 Oct-28 |
|||||||
| TBN V
|
Containership | H2 2023 | 5,300 | $42,900 $39,000 $37,050 $35,100 $31,200 $37,050 |
No No No No No No |
Nov-24 Nov-25 Nov-26 Nov-27 Nov-28 Jan-29 |
|||||||
| TBN X | Containership | H2 2023 | 5,300 | $42,900 $39,000 $37,050 $35,100 $31,200 $37,050 |
No No No No No No |
Dec-24 Dec-25 Dec-26 Dec-27 Dec-28 Feb-29 |
|||||||
| TBN VI | Containership | H1 2024 | 5,300 | $42,900 $39,000 $37,050 $35,100 $31,200 $37,050 |
No No No No No No |
Jun-25 Jun-26 Jun-27 Jun-28 Jun-29 Aug-29 |
|||||||
| TBN VII | Containership | H1 2024 | 5,300 | $42,900 $39,000 $37,050 $35,100 $31,200 $37,050 |
No No No No No No |
Jun-25 Jun-26 Jun-27 Jun-28 Jun-29 Aug-29 |
|||||||
| TBN XI | Containership | H1 2024 | 5,300 | $42,900 $39,000 $37,050 $35,100 $31,200 $37,050 |
No No No No No No |
May-25 May-26 May-27 May-28 May-29 Jul-29 |
|||||||
| TBN VIII | Containership | H2 2024 | 5,300 | $42,900 $39,000 $37,050 $35,100 $31,200 $37,050 |
No No No No No No |
Sep-25 Sep-26 Sep-27 Sep-28 Sep-29 Nov-29 |
|||||||
| TBN IX | Containership | H2 2024 | 5,300 | $42,900 $39,000 $37,050 $35,100 $31,200 $37,050 |
No No No No No No |
Nov-25 Nov-26 Nov-27 Nov-28 Nov-29 Jan-30 |
|||||||
| TBN XII | Containership | H2 2024 | 5,300 | $37,500 | No | Apr-30 | |||||||
| TBN XIII | Containership | H2 2024 | 5,300 | $37,500 | No | Apr-30 | |||||||
| TBN XXI | Containership | H2 2024 | 7,700 | $57,213 $52,238 $37,313 $27,363 $24,875(26) |
No No No No No |
Dec-27 Dec -30 Dec -32 Dec -34 Dec -36 |
|||||||
| TBN XX | Containership | H2 2024 | 7,700 | $57,213 $52,238 $37,313 $27,363 $24,875(26) |
No No No No No |
Nov-27 Nov-30 Nov-32 Nov-34 Nov-36 |
| Tanker Vessels to be delivered |
Type | Delivery Date | Capacity (DWT) |
Charter-Out Rate(1) |
Index(2) | Expiration Date(3) |
|||||||
| TBN XIV | Aframax / LR2 | H1 2024 | 115,000 | $26,366(24) | No | Feb-29 | |||||||
| TBN XV | Aframax / LR2 | H1 2024 | 115,000 | $26,366(24) | No | Jun-29 | |||||||
| TBN XVI | Aframax / LR2 | H2 2024 | 115,000 | $25,576(24) | No | Oct-29 | |||||||
| TBN XVII | Aframax / LR2 | H2 2024 | 115,000 | $25,576(24) | No | Nov-29 | |||||||
| TBN XVIII | Aframax / LR2 | H1 2025 | 115,000 | $27,798(25) | No | Feb-30 | |||||||
| TBN XIX | Aframax / LR2 | H1 2025 | 115,000 | $27,798(25) | No | May-30 | |||||||
| TBN XXII(6) | MR2 Product Tanker | H2 2025 | 52,000 | — | — | — | |||||||
| TBN XXIII(6) | MR2 Product Tanker | H1 2026 | 52,000 | — | — | — |
(1) Daily charter-out rate per day, net of commissions.
(2) Index rates exclude commissions.
(3) Estimated dates assuming the midpoint or company’s best estimate of the redelivery period by charterers.
(4) Vessel agreed to be sold.
(5) The vessel is subject to a sale and leaseback transaction with a purchase obligation at the end of the lease term.
(6) The vessel is subject to a bareboat contract with a purchase option at the end of the contract.
(7) Includes optional years (NMM’s option) after 2023.
(8) The premium for when the vessel is trading on ice or follow ice breaker is $1,481 per day.
(9) Charterer’s option to extend the charter for up to 18 months at $14,887 net per day.
(10) Rate based on Scorpio MR pool earnings.
(11) Charterer’s option to extend the charter for one year at $27,913 net per day.
(12) Charterer’s option to extend the charter for one year at $16,540 net per day plus one year at $17,528 net per day.
(13) Rate based on Penfield pool earnings.
(14) Charterer’s option to extend the charter for one year at $40,950 net per day.
(15) Rate based on LR8 pool earnings.
(16) Contract provides for TD3C-TCE index plus $1,463 premium.
(17) Contract provides 100% of BITR TD3C-TCE index up to $37,031 and 50% thereafter with $16,788 floor.
(18) Profit sharing arrangement of 35% above $54,388, 40% above $59,388 and 50% above $69,388.
(19) Charterer’s option to extend the bareboat charter for five years at $29,751 net per day.
(20) Bareboat charter based on adjusted TD3C-WS with floor $22,572 and collar at $29,700.
(21) The vessel is subject to a charter-in agreement with a purchase option at the end of the agreement, classified as a finance lease.
(22) Charterer’s option to extend charter for one year at $15,200.
(23) Purchase option in the form of the right of first refusal and profit share on sale of vessel.
(24) Charterer has the option to extend for five further one-year options at rates increasing by $1,234 net per day each year.
(25) Charterer has the option to charter the vessel on bareboat basis at $20,392 per day. Charterer has the option to extend for a further five one-year options at rates increasing by $1,234 net per day each year.
(26) Charterer’s option to extend charter for two years at $24,875 net per day.
(27) The vessel is subject to a sale and leaseback transaction with a purchase option at the end of the lease term.
(28) The vessel is subject to a bareboat contract with a purchase obligation at the end of the contract.
Our Competitive Strengths
We believe that our future prospects for success are enhanced by the following aspects of our business:
| • | Strength through Diversification. Our diversified platform provides stable entity-level returns for unitholders despite uneven sector performance. |
Our container fleet is enjoying historically high charter rates. Operating in this backdrop, we have opted to fix our container fleet on long-term charters with almost 88.0% of our available containership days fixed for 2023. This reduces market and residual risk for these vessels. We manage the credit risk of the long-term charters independently to ensure we are not simply trading one risk for another. In our dry bulk fleet, we benefit from a market where rates are recovering. We have fixed 41.1% of our available drybulk fleet days for 2023 (excluding index linked days) and have opted to keep 58.9% of our 2023 available days exposed to market rates to capture any available upside. Our chartering strategy also allows us to fix our drybulk fleet on long-term charters when rates do improve. Within tankers, we have 72.9% of our 2023 available tanker days fixed, including favorable legacy charters (excluding index linked days).
Capturing cyclical opportunity that allows for optimal capital allocation. For example, we expected to make an approximately $1.5 billion investment in 23 newbuilding vessels that will deliver to our fleet through 2026. Of these acquisitions, we used the strength of the container market to acquire 12 newbuilding containerships. We hedged our financial investment by entering into long-term, creditworthy charters for these vessels. During 2022, one newbuilding drybulk vessel was acquired as well as six LR2 tankers (which were chartered long term to an oil major) and two MR2 tankers. During 2021, seven newbuilding drybulk vessels were acquired, five of which were delivered to Navios Partners’ fleet during 2022. We also look to opportunistically sell vessels when we can avail of a good return to reallocate capital.
Countering sectors’ specific volatility leads to balance sheet strength. Our diversified asset portfolio provides balance sheet stability from the vagaries of specific sectors. Containership values have declined from their historical highs reached in the first half of 2022, while dry bulk vessel values remain below their all-time highs, but tanker values have recently strengthened on market improvements in the second half of 2022. This variation in asset values balances out through our diversified fleet, leaving us with a significant equity value.
| • | Stable cash flows. Our acquisitions of Navios Containers, Navios Acquisition and the Navios Holdings dry bulk fleet built us scale through a larger, diversified asset base that has an increased earnings capacity. The combinations also enhance our credit profile by increasing cash flow to support our growth and deleveraging initiatives. We opportunistically seek to fix our vessels longer term during market highs and for shorter periods during market lows to avail of any market upturn. We believe that our Management Agreements, which have been extended until January 1, 2025, will continue to provide us with predictable expenses. |
| • | Strong relationship with our Managers. We believe our relationship with our Managers provides us with numerous benefits that are key to our long-term growth and success. Our Managers’ commercial expertise, reputation within the shipping industry and their network of strong relationships with many of the world’s dry cargo raw material producers, agricultural traders and exporters, oil companies, liner operators, industrial end-users, shipyards and shipping companies. We benefit from the Managers’ expertise in technical management, which offers efficient operations and maintenance for our vessels at fixed rates. The Managers’ expertise in fleet management is reflected in their history of low number of off-hire days and in their clean record of no material incidents resulting in pollution or loss of life. |
| • | High-quality, diversified fleet. Our diversified fleet, which includes Capesize, Panamax, Ultra Handymax and Handysize drybulk ships, VLCC and product tankers and Feeder, baby Panamax to Neo Panamax containerships allows us to serve our customers’ transportation needs for dry and liquid commodities and finished goods. Capesize vessels transport mainly iron ore and coal, to industrial users principally in China. Panamax and Ultra Handymax vessels carry coal and grain and other bulk commodities worldwide. VLCC tankers transport crude oil and operate on primarily long–haul trades from the Arabian Gulf or the Atlantic basin to the Far East, North America and Europe. Product tankers transport a large number of different refined oil products, such as naphtha, gasoline, kerosene, jet fuel and gasoil, and principally operate on short– to medium–haul routes. Feeder containerships operate worldwide on short haul trips moving containers from smaller ports to transshipment hubs where the containers are placed on larger containerships for long haul trips from the Far East to Europe or North America. Baby panamaxes engage in intra ocean trade in the Far East and Indian Subcontinent as well as long haul trades to North America, South America and Africa. Neo Panamax containerships serve long haul routes from the Far East to North America and Europe. We believe that our fleet of vessels servicing the drybulk, tanker and container transportation sectors provides us with a more balanced exposure to the commodities and goods we transport and a diversified platform for revenue generation. |
| Our fleet has an average age of 9.5 years as of March 13, 2023, basis fully delivered fleet, (average age of 10.1 years for drybulk fleet, 10.4 years for containerships fleet and 8.1 years for the tanker fleet), compared to a current industry average age of about 11.7 years for the drybulk fleet, 14.3 years for the containerships fleet and 12.4 years for the tanker fleet (all industry averages as of March 2023). Our large asset base provides us a significant buffer of collateral value. |
Business Strategies
Our primary business strategies are the following:
| • | Strategically manage sector exposure. We operate a fleet of dry bulk, tanker and containership vessels, which we believe provides us with diverse opportunities with a range of producers and consumers. As we grow and renew our fleet, we expect to adjust our relative emphasis among the dry bulk, tanker and containership sectors according to our view of the relative opportunities present in each sector. We believe that having a mixed fleet provides the flexibility to adapt to changing market conditions and will allow us to capitalize on sector–specific opportunities through varying economic cycles. |
| • | Pursue stable cash flows through long-term charters for our fleet. We believe that we are a safe, cost-efficient operator of modern and well-maintained drybulk, tanker and containership vessels. We also believe that these attributes, together with our strategy of proactively working towards meeting our customers’ chartering needs, will build us long term customer relationships. Where possible, we will also seek profit sharing arrangements in our time charters, to provide us with potential incremental revenue above the contracted minimum charter rates. Depending on the then applicable market conditions, we intend to deploy our vessels to leading charterers on a mix of long, medium and short-term time contracts, with a greater emphasis on long-term charters paired with profit sharing, when available. We believe a flexible chartering strategy will afford us opportunities to capture increased profits during strong charter markets, while continuing to benefit from the stable cash flows and high utilization rates associated with longer-term time charters. As of March 13, 2023, the vessels in our fleet have an average remaining charter duration of approximately 1.9 years, which we will continuously seek to improve. |
| • | Actively manage our fleet to maximize return on capital over market cycles. We plan to actively manage the size and composition of our fleet through our vessel purchase and sale activities in an effort to achieve sizeable returns on invested capital. Using our Managers’ and Navios Holdings’ global network of relationships and extensive experience in the maritime transportation industry, coupled with our Managers’ shipping and financial expertise, we plan to opportunistically grow and renew our fleet through the timely and selective acquisition of high-quality newbuilding or secondhand vessels when we believe those acquisitions will result in attractive returns on invested capital. We also intend to engage in opportunistic sales to avail ourselves of attractive values available through market cycles. |
| • | Continue to grow and diversify our fleet of owned and chartered-in vessels. We seek to make strategic acquisitions in drybulk, tanker and containerships sectors as well as other shipping-related sectors to expand our fleet in order to capitalize on the demand for container, drybulk and tanker vessels. During 2021 we expanded our fleet by 45 vessels through the NNA Merger and by 29 vessels through the NMCI Merger. We purchased the Navios Holdings dry bulk fleet in July 2022 and maintain the right to purchase certain additional drybulk vessels currently owned or chartered-in by Navios Holdings when those vessels are fixed under long-term charters for a period of three or more years. In addition, we may seek to expand and diversify our fleet through the open market purchase of owned and chartered-in drybulk, tanker or container vessels with or without charters. |
| • | Provide superior customer service by maintaining high standards of performance, reliability and safety. Our customers seek transportation partners that have a reputation for high standards of performance, reliability and safety. We intend to use the Managers’ operational expertise and customer relationships to further expand a sustainable competitive advantage with consistent delivery of superior customer service. |
| • | Benefit from our Managers’ risk management practices and corporate managerial Support. Risk management requires the balancing of a number of factors in a cyclical and potentially volatile environment. In part, this requires a view of the overall health of the markets, as well as an understanding of capital costs and returns. The Managers actively engage in assessing financial and other risks associated with fluctuating market rates, fuel prices, credit risks, interest rates and foreign exchange rates. The Managers closely monitor credit exposure to charterers and other counterparties and have established policies designed to ensure that contracts are entered into with counterparties that have appropriate credit history. We believe that Navios Partners benefits from these established policies |
| • | Sustain a competitive cost structure. Pursuant to our Management Agreements with the Managers, the Managers coordinate and oversee the commercial, technical and administrative management of our fleet. We believe that the Managers are able to do so at rates competitive with those that would be available to us through independent vessel management companies. For example, pursuant to our Management Agreements with the Managers, vessel operating expenses of our vessels are agreed through January 1, 2025. We believe this provides us with cost visibility. |
| • | Capitalize on our relationship with Navios Holdings and the Managers. We believe that we can use our relationship with Navios Holdings and the Managers and their established relationships in the marine transportation industry to obtain favorable long-term time charters and attract new customers as we build a reputation in our own right. We will continue to increase the number of vessels we charter to our existing charterers, as well as enter into charter agreements with new customers, in order to develop a portfolio that is diverse from a customer, geographic, credit risk and maturity perspective. |
Our Customers
We provide or will provide seaborne shipping services under long-term time charters with customers that we believe are creditworthy. For the year ended December 31, 2022, no customer accounted for 10.0% or more of our total revenues. For the year ended December 31, 2021, Singapore Marine represented approximately 14.5% of our total revenues. For the year ended December 31, 2020 HMM, Singapore Marine and Cargill represented approximately 23.4%, 19.5% and 11.4%, respectively, of our total revenues. No other customers accounted for 10% or more of total revenues for any of the years presented.
Although we believe that if any one of our charters were terminated, we could recharter the related vessel at the prevailing market rate relatively quickly, the permanent loss of a significant customer or a substantial decline in the amount of services requested by a significant customer could harm our business, financial condition and results of operations if we were unable to recharter our vessel on a favorable basis due to then-current market conditions, or otherwise.
Competition
The drybulk shipping market is extensive, diversified, competitive and highly fragmented, divided among approximately 2,493 independent drybulk carrier owners. The world's active drybulk fleet consists of approximately 13,199 vessels, aggregating approximately 977 million dwt as of March 1, 2023. As a general principle, the smaller the cargo carrying capacity of a drybulk carrier, the more fragmented is its market, both with regard to charterers and vessel owner/operators. Even among the larger drybulk owners and operators, whose vessels are mainly in the larger sizes, only eleven companies are known to have fleets of 100 dry bulk vessels or more: COSCO Shipping, Nippon Yusen Kaisha, Wisdom Marine, China Development Bank, China Merchants, Starbulk Carriers, Pacific Basin Shipping, Nisshin Shipping, Fredriksen Group, Oldendorff Carriers and K. Lines. There are about 39 owners known to have fleets of between 38 and 93 vessels. However, vessel ownership is not the only determining factor of fleet control. Many owners of bulk carriers charter their vessels out for extended periods, not just to end users (owners of cargo), but also to other owner/operators and to tonnage pools. Such operators may, at any given time, control a fleet many times the size of their owned tonnage. Such operators include Cargill, Pacific Basin Shipping, Bocimar, Zodiac Maritime, Louis Dreyfus/Cetragpa, Cobelfret, Torvald Klaveness and Swiss Marine.
The container shipping market is extensive, diversified, competitive and fragmented, divided among approximately 731 liner operators and independent owners. The world's active containership fleet consists of approximately 5,839 vessels, aggregating approximately 25.866 million TEU as of March 1, 2023. As a general principle, the smaller the cargo carrying capacity of a containership, the more fragmented is its market, both with regard to charterers and vessel owner/operators. Even among the larger liner companies and containership owners and operators, whose vessels are mainly in the larger sizes, only eleven companies are known to control fleets of 91 vessels or more: Mediterranean Shipping Co. (MSC), AP Moller, CMA CGM, COSCO Shipping, Atlas Corp (former Seaspan), Evergreen, Wan Hai Lines, Hapag Lloyd, SITC, PIL and Imabari Shipbuilding. There are about 39 owners known to control fleets of between 29 and 79 vessels. However, vessel ownership is not the only determining factor of fleet control. Liner companies, who control the movement of containers on land and at sea, own vessels directly and charter in vessels on short and long-term charters. Many owners/managers of containerships charter their vessels out for extended periods but do not control the movement of any containers, the so called tonnage providers. Liner companies may, at any given time, control a fleet many times the size of their owned tonnage. MSC and AP Moller are such liner operators; whereas Danaos, Costamare, Peter Dohle, Seaspan and others including Navios Partners are tonnage providers.
The tanker shipping market is extensive, diversified, competitive and fragmented, divided among approximately 3,675 oil companies, operators and independent owners. The world's active tanker fleet over 10,000 DWT consists of approximately 7,456 vessels, aggregating approximately 679 million DWT as of March 1, 2023. As a general principle, the smaller the cargo carrying capacity of a tanker, the more fragmented is its market, both with regard to charterers and vessel owner/operators. Even among the larger oil companies, tanker owners and operators, whose vessels are mainly in the larger sizes, only seven companies are known to control fleets of 98 vessels or more: COSCO Shipping, Mitsui OSK Lines, China Merchants, Scorpio Group, BW Group, SCF Group and Sinokor Merchant. There are about 43 owners known to control fleets of between 33 and 92 vessels. However, vessel ownership is not the only determining factor of fleet control. Oil and trading companies, who control the movement of crude oil and petroleum products on land and at sea, own vessels directly and charter in vessels on short and long-term charters. Many owners/managers of tankers charter their vessels out for extended periods but do not control the movement of any crude or products. Oil companies or trading companies may, at any given time, control a fleet many times the size of their owned tonnage. Saudi Aramco, Exxon, Shell and Chevron are such oil companies; whereas Vitol, Trafigura and Clearlake are traders trading crude oil and product cargoes worldwide. These companies leverage their own cargo base and controlled fleets to optimise their fleet trading strategies.
In addition, a number of large pool operators such as Tankers International, Navig8 and Scorpio Group control substantial fleets in each market segment and have preferential access to cargoes and the ability to optimise vessel chartering through economies of scale and superior market information.
It is likely that we will face substantial competition for long-term charter business from a number of experienced companies. Many of these competitors will have significantly greater financial resources than we do. It is also likely that we will face increased numbers of competitors entering into our transportation sectors, including in the container, tanker and drybulk sectors. Many of these competitors have strong reputations and extensive resources and experience. Increased competition may cause greater price competition, especially for long-term charters.
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 crewing and other services related to the vessel's operation, the cost of which is included in the daily rate and the customer is responsible for substantially all of the vessel voyage costs. The vessels in our fleet are generally hired out under time charters, and we intend to continue to hire out our vessels under time charters. The following discussion describes the material terms common to all of our time charters.
Basic Hire Rate
“Basic hire rate” refers to the basic payment from the customer for the use of the vessel. The hire rate is generally payable semi-monthly, in advance, in U.S. dollars as specified in the charter.
Expenses
The charterer generally pays the voyage expenses, which include all expenses relating to particular voyages, including any bunker fuel expenses, port fees, cargo loading and unloading expenses, canal tolls, agency fees and commissions.
Off-hire
When the vessel is “off-hire,” the charterer generally is not required to pay the basic hire rate, and we are responsible for all costs. A prolonged off-hire may lead to vessel substitution or termination of the time charter. A vessel generally will be deemed off-hire if there is a loss of time due to, among other things:
| • | operational deficiencies; drydocking for repairs, maintenance or inspection; equipment breakdowns; or delays due to accidents or deviations from course, crewing strikes, labor boycotts, certain vessel detentions or similar problems, occurrence of hostilities in the vessel's flag state or in the event of piracy, a natural or man-made event of force majeure; or |
| • | the ship owner's failure to maintain the vessel in compliance with its specifications and contractual standards or to provide the required crew. |
Under some of our charters, the charterer is permitted to terminate the time charter if the vessel is off-hire for an extended period, which is generally defined as a period of 90 or more consecutive off-hire days. Under some circumstances, an event of force majeure may also permit the charterer to terminate the time charter or suspend payment of charter hire.
Termination
We are generally entitled to suspend performance under the time charters covering our vessels if the customer defaults in its payment obligations. Under some of our time charters, either party may terminate the charter in the event of war in specified countries or in locations that would significantly disrupt the free trade of the vessel. Some of our time charters covering our vessels require us to return to the charterer, upon the loss of the vessel, all advances paid by the charterer but not earned by us.
Classification, Inspection and Maintenance
Every sea going vessel must be “classed” by a classification society. The classification society certifies that the vessel is “in class,” signifying that the vessel has been built and maintained in accordance with the rules of the classification society and complies with applicable rules and regulations of the vessel's country of registry and the international conventions of which that country is a member. In addition, where surveys are required by international conventions and corresponding laws and ordinances of a flag state, the classification society will undertake them on application or by official order, acting on behalf of the authorities concerned.
The classification society also undertakes, on request, other surveys and checks that are required by regulations and requirements of the flag state. These surveys are subject to agreements made in each individual case or to the regulations of the country concerned. For maintenance of the class, regular and extraordinary surveys of hull, machinery (including the electrical plant) and any special equipment classed are required to be performed as follows:
| • | Annual Surveys: For seagoing ships, annual surveys are conducted for the hull and the machinery (including the electrical plant) and, where applicable, for special equipment classed, at intervals of 12 months from the date of commencement of the class period indicated in the certificate. |
| • | Intermediate Surveys: Extended annual surveys are referred to as intermediate surveys and typically are conducted two and a half years after commissioning and each class renewal. Intermediate surveys may be carried out on the occasion of the second or third annual survey. |
| • | Class Renewal Surveys: Class renewal surveys, also known as special surveys, are carried out for the ship's hull, machinery (including the electrical plant), and for any special equipment classed, at the intervals indicated by the character of classification for the hull. At the special survey, the vessel is thoroughly examined, including audio-gauging, to determine the thickness of its steel structure. Should the thickness be found to be less than class requirements, the classification society would prescribe steel renewals. The classification society may grant a one-year grace period for completion of the special survey. Substantial amounts of money may have to be spent for steel renewals to pass a special survey if the vessel experiences excessive wear and tear. In lieu of the special survey every four or five years, depending on whether a grace period was granted, a ship owner has the option of arranging with the classification society for the vessel's integrated hull or machinery to be on a continuous survey cycle, in which every part of the vessel would be surveyed within a five-year cycle. |
Management of Ship Operations, Administration and Safety
Pursuant to the Management Agreements with the Managers and the Administrative Services Agreement with the Manager, we have access to human resources, financial and other administrative functions, including:
| • | bookkeeping, audit and accounting services; |
| • | administrative and clerical services; |
| • | banking and financial services; and |
| • | client and investor relations. |
Technical management services are also provided, including:
| • | commercial management of the vessel; |
| • | vessel maintenance and crewing; |
| • | purchasing and insurance; and |
| • | shipyard supervision. |
For more information on the Management Agreements and the Administrative Services Agreement, please read “Item 7. Major Unitholders and Related Party Transactions” and Note 18 – Transactions with Related Parties and Affiliates to our consolidated financial statements, included elsewhere in this Annual Report.
Crewing
The Managers crew our vessels primarily with Filipino, Ukrainian, Polish, Russian, Indian and Georgian officers and Filipino, Georgian, Ethiopian, Indian and Ukrainian seamen. For these nationalities, officers and seamen are referred to the Managers by local crewing agencies. The Managers are also responsible for travel and payroll of the crew. The crewing agencies handle each seaman's training. The Managers require that all of its seamen have the qualifications and licenses required to comply with international regulations and shipping conventions.
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, business interruption due to political circumstances in foreign countries, hostilities, and labor strikes. In addition, there is always an inherent possibility of marine disaster, including oil spills and other environmental mishaps, and the liabilities arising from owning and operating vessels in international trade. The OPA (as defined below), which imposes virtually unlimited liability upon owners, operators and demise charterers of any vessel trading in the United States exclusive economic zone for certain oil pollution accidents in the United States, has made liability insurance more expensive for ship owners and operators trading in the U.S. market. While we believe that our present insurance coverage is adequate, not all risks can be insured, and there can be no guarantee that any specific claim will be paid, or that we will always be able to obtain adequate insurance coverage at reasonable rates.
Hull and Machinery and War Risk Insurances
We have marine hull and machinery and war risk insurance, which include coverage of the risk of actual or constructive total loss, for all of our owned vessels. Each of the owned vessels is covered up to at least fair market value, with a deductible of approximately $0.6 million for dry bulk, containers and tanker vessels for the hull and machinery insurance. We have also extended our war risk insurance to include war loss of hire for any loss of time to the vessel, including for physical repairs, caused by a warlike incident and piracy seizure for up to 270 days of detention / loss of time.
The deductible under the war risk insurance is $0.03 million for all claims relating to loss caused by piracy or by violent theft by persons from outside an entered ship, whereas the war loss of hire covers a 14 day deductible that applies for loss of time in consequence of damage to the vessel, but no days for loss of time related to piracy, terrorism, barratry and violent theft.
We have arranged, as necessary, increased value insurance for our vessels. With the increased value insurance, in case of total loss of the vessel, we will be able to recover the sum insured under the increased value policy in addition to the sum insured under the hull and machinery policy. Increased value insurance also covers excess liabilities that are not recoverable in full by the hull and machinery policies by reason of underinsurance. We do not expect to maintain loss of hire insurance for our vessels. Loss of hire insurance covers business interruptions that result in the loss of use of a vessel.
Protection and Indemnity Insurance
Protection and indemnity insurance is expected to be provided by mutual protection and indemnity associations, or P&I Associations, who indemnify members in respect of discharging their tortious, contractual or statutory third-party legal liabilities arising from the operation of an entered ship. Such liabilities include but are not limited to third-party liability and other related expenses from injury or death of crew, passengers and other third parties, loss or damage to cargo, claims arising from collisions with other vessels, damage to other third-party property, pollution arising from oil or other substances, and salvage, towing and other related costs, including wreck removal. Protection and Indemnity insurance does not automatically cover liabilities that arise from illegal activity by an officer or a crewmember, although coverage may be provided at the discretion of the carrier. Protection and indemnity insurance is a form of mutual indemnity insurance, extended by protection and indemnity mutual associations and always provided in accordance with the applicable associations' rules and members' agreed terms and conditions.
Navios Partners' fleet is currently entered for protection and indemnity insurance with International Group associations where, in line with all International Group Clubs, coverage for oil pollution is limited to $1.0 billion per event. The 13 P&I Associations that comprise the International Group insure approximately 95% of the world's commercial tonnage and have entered into a pooling agreement to collectively reinsure each association's liabilities. Each vessel that Navios Partners acquires will be entered with P&I Associations of the International Group. Under the International Group reinsurance program for the current policy year, each P&I club in the International Group is responsible for the first $10.0 million of every claim. In every claim the amount in excess of $10.0 million and up to $100.0 million is shared by the clubs under the pooling agreement. Any claim in excess of $100.0 million is reinsured by the International Group in the international reinsurance market under the General Excess of Loss Reinsurance Contract. This policy currently provides an additional $2.0 billion of coverage for non-oil pollution claims. Further to this, an additional reinsurance layer has been placed by the International Group for claims up to $1.0 billion in excess of $2.1 billion, i.e. $3.1 billion in total. For passengers and crew claims, the overall limit is $3.0 billion for any one event on any one vessel with a sub-limit of $2.0 billion for passengers. With the exception of pollution, passenger or crew claims, should any other P&I claim exceed Group reinsurance limits, the provisions of all International Group Club's overspill claim rules will operate and members of any International Group Club will be liable for additional contributions in accordance with such rules. To date, there has never been an overspill claim, or one even nearing this level.
As a member of the P&I Associations, which is a member of the International Group, Navios Partners will be subject to calls payable to the associations based on the individual fleet record, the associations' overall claim records as well as the claim records of all other members of the individual associations, and members of the pool of P&I Associations comprising the International Group. The P&I Associations' policy year commences on February 20th. Calls are levied by means of Estimated Total Premiums (“ETP”) and the amount of the final installment of the ETP varies according to the actual total premium ultimately required by the club for a particular policy year. Members have a liability to pay supplementary calls which might be levied by the board of directors of the club if the ETP is insufficient to cover amounts paid out by the club.
Should a member leave or entry cease with any of the associations, at the Club's Managers discretion, they may be liable to pay release calls or provide adequate security for the same amount. Such calls are levied in respect of potential outstanding Club/Member liabilities on open policy years and include but are not limited to liabilities for deferred calls and supplementary calls.
Uninsured Risks
Not all risks are insured and not all risks are insurable. The principal insurable risks which nonetheless remain uninsured across our fleet are “loss of hire” and “strikes,” except in cases of loss of hire due to war or a piracy event or due to presence or suspected presence of contraband on board. Specifically, Navios Partners does not insure these risks because the costs are regarded as disproportionate. These insurances provide, subject to a deductible, a limited indemnity for hire that would not be receivable by the ship owner for reasons set forth in the policy. Should a vessel on time charter, where the vessel is paid a fixed hire day by day, suffer a serious mechanical breakdown, the daily hire will no longer be payable by the charterer. The purpose of the loss of hire insurance is to secure the loss of hire during such periods. In the case of strikes insurance, if a vessel is being paid a fixed sum to perform a voyage and the ship becomes strike bound at a loading or discharging port, the insurance covers the loss of earnings during such periods.
However, in some cases when a vessel is transiting high risk war and/or piracy areas, we arrange war loss of hire insurance to cover up to 270 days of detention/loss of time. When our charterers engage in legally permitted trading in locations which may still be subject to sanctions or boycott, such as Iran or Syria, our insurers may be contractually or by operation of law prohibited from honoring our insurance contract for such trading, which could result in reduced insurance coverage for losses incurred by the related vessels. Furthermore, our insurers and we may be prohibited from posting or otherwise be unable to post security in respect of any incident in such locations, resulting in the loss of use of the relevant vessel and negative publicity for our Company which could negatively impact our business, results of operations, cash flows and unit price.
There are no deductibles for the war loss of hire cover in case of piracy and contraband cover.
Even if our insurance coverage is adequate to cover our losses, if we suffer a loss of a vessel, we may not be able to obtain a timely replacement for any lost vessel. Furthermore, in the future, we may not be able to obtain adequate insurance coverage at reasonable rates for our fleet. For example, more stringent environmental regulations have led to increased costs for, and in the future may result in the lack of availability of, insurance against risks of environmental damage or pollution. We may also be subject to calls, or premiums, in amounts based not only on our own claim records but also on the claim records of all other members of the protection and indemnity associations through which we receive indemnity insurance coverage. A catastrophic oil spill or marine disaster could exceed our insurance coverage, which could have a material adverse effect on our business, results of operations and financial condition. Any uninsured or underinsured loss could harm our business and financial condition. In addition, the insurance may be voidable by the insurers as a result of certain actions, such as vessels failing to maintain required certification.
Regulation
Sources of Applicable Maritime Laws and Standards
Shipping is one of the world's most heavily regulated industries, as it is subject to both governmental regulation and industry standards. The governmental regulation to which we are subject include local and national laws and regulations, as well as international regulations established by the International Maritime Organization (“IMO”), the United Nations agency governing the maritime sector. We are also subject to regulation by ship classification societies and industry associations, which often have independent standards. In the United States and, increasingly, in Europe, the national, state, and local laws and regulations may be more stringent than international conventions, as well as industry standards. Violations of these laws, regulations, conventions, and other requirements could result in sanctions by regulators, including possible fines, penalties, delays, and detention. Compliance with these categories of regulation also impact the vetting process – non-compliances can result in vetting failures.
The primary areas of maritime laws and standards to which we are subject include environment, safety, and security, as provided in detail below.
International Conventions and Standards
The IMO is the United Nations agency with jurisdiction over maritime safety and the prevention of pollution by ships. The IMO has adopted a number of international conventions concerned with preventing, reducing, or managing pollution from ships, and ship safety and security. The most significant of these are described below.
| · | MARPOL |
The International Convention for the Prevention of Pollution from Ships or “MARPOL” is the primary international convention governing vessel pollution prevention and response. MARPOL includes six annexes concerning operational pollution by oil, noxious liquid substances (“NLS”), harmful substances, sewage, garbage and air emissions. More specifically, these annexes contain regulations for the prevention of pollution by oil (Annex I), by noxious liquid substances in bulk (Annex II), by harmful substances in packaged forms within the scope of the International Maritime Dangerous Goods Code (Annex III), by sewage (Annex IV), by garbage (Annex V), and by air emissions, including sulfur oxides (“SOx”), nitrogen oxides (“NOx”), and particulate matter (Annex VI). The annexes also contain recordkeeping and inspection requirements. Port State or the vessel’s flag State may impose fines and penalties for MARPOL violations, particularly for improper discharges into the air or water.
Under MARPOL Annex I, our ships are required to have an International Oil Pollution Prevention (“IOPP”) Certificate and a Shipboard Oil Pollution Emergency Plan; under Annex IV, an International Sewage Pollution Prevention Certificate; under Annex V, a Garbage Management Plan; and under Annex VI, an International Air Pollution Prevention Certificate issued by their flag States, among other requirements, some of which must be approved by their flag States. Additionally, Annex II separates NLS into three categories (X, Y, and Z), depending upon the seriousness of the hazard presented, and Annex III contains requirements for safe handling of packaged substances that represent a serious risk to the environment, as well as guidelines for identification of harmful substances. For example, any relevant documents, such as the ship’s manifest, must identify the substances carried, if any, aboard our vessels.
As of January 1, 2020, the standard was lowered to 0.5% worldwide (down from the previous level of 3.5%). Current regulations also allow for special emissions control areas (“ECAs”) to be established with more stringent controls on emissions of 0.1% sulfur, particulate matter, and nitrogen oxide emissions. Thus, the 0.5% sulfur content requirement applies outside the ECAs. Depending on the type of vessel, transitioning to the use of low sulfur fuel as a means of compliance may have required fuel system modification and tank cleaning. Another means of compliance is the installation of pollution control equipment (exhaust gas cleaning systems or scrubbers), allowing the vessel to use the existing, less expensive, high sulfur content fuel.
Thus far, ECAs have been formally adopted for the Baltic Sea area (limits SOx emissions only subject to the 2017 amendments described below); the North Sea area including the English Channel (limiting SOx emissions only subject to the 2017 amendments described below); the North American ECA, including most of the U.S. and Canada coast (limiting SOx, Nitrogen Oxides (“NOx”), and particulate matter emissions); and the U.S. Caribbean ECA, including Puerto Rico and the U.S. Virgin Islands (limiting SOx, NOx, and particulates). The IMO adopted in 2017 the designation of the North Sea and Baltic Sea as ECAs for NOx under Annex VI as well, which took effect in January 2021 for new vessels constructed on or after January 1, 2021 or existing vessels that replace an engine with non-identical engines, or install an additional engine.
Despite Annex VI’s extensive regulations, some jurisdictions have taken unilateral approaches to air emissions regulation. For example, the U.S. state of California adopted the California Ocean-Going Vessel Fuel Regulation, which contains more stringent low sulfur fuel requirements within California-regulated waters, requiring marine gas oil, extending out to 24 nautical miles, which thus prohibit the use of exhaust gas cleaning systems.
China has also established local emissions control areas: the Pearl River Delta, the Yangtze River Delta, and Bohai Bay. While the Chinese areas are currently consistent with international standards in terms of requiring a 0.5% sulfur content, certain Chinese local emissions control areas, such as inland waterways, coastal emission control areas and Hainan waters, have a 0.1% sulfur limit in force. Similarly, South Korea has established Port Air Quality Control Zones which cap the sulfur content of fuel at 0.1%. South Korea’s Ministry of Oceans and Fisheries designated South Korea’s port areas in in Busan, Ulsan, Yeosu, Gwangyang, Incheon and Pyeongtaek-Dangjin as emission control areas and as of January 1, 2022, the 0.1 % sulfur limit extends to all vessels from the moment of entering until the moment of exiting the Korean emission control area. Since 2010, all vessels in the European Union (“EU”) must changeover to 0.1% sulfur fuel oil when ‘at berth’ in EU and European Economic Area (“EEA”) ports due to EU Directive 2005/33/EC.
At MEPC 79, the MEPC adopted amendments to designate the Mediterranean Sea, as a whole, as an ECA for SOx and particulate matter under MARPOL Annex VI. The limit for sulfur in fuel oil used on board ships is 0.10% mass by mass (m/m), while outside these areas the limit is 0.50% m/m. The amendment is expected to enter into force on May 1, 2024, with the new sulfur limit taking effect on May 1, 2025.
MEPC will likely issue a revised set of climate targets at its 80th meeting (MEPC 80) in July 2023. These new targets will likely included the Zero by 2050 goal. There may also be shorter-term targets for 2030 and 2040.
In addition, certain jurisdictions in which we trade may have not adopted all of the MARPOL annexes, and some may have established various national, regional, or local laws and regulations that apply to these areas.
| · | Ballast Water |
The IMO, as well as jurisdictions worldwide acting outside the scope of the IMO, have implemented requirements relating to the management of ballast water to prevent the harmful effects of foreign invasive species. The IMO's International Convention for the Control and Management of Ships’ Ballast Water and Sediments (the “BWM Convention”) entered into force on September 8, 2017. The BWM Convention requires ships to manage ballast water in a manner that removes, renders harmless, or avoids the uptake or discharge of aquatic organisms and pathogens within ballast water and sediment. As of February 21, 2023, the BWM Convention had 94 contracting states, representing 92.41% of the world’s gross tonnage.
As amended, the BWM Convention requires, among other things, ballast water exchange until ballast water treatment systems are required, the maintenance of certain records, and the implementation of a Ballast Water and Sediments Management Plan. It also requires the installation of ballast water management systems for existing ships by certain compliance deadlines.
Ships constructed prior to September 8, 2017, were required to install ballast water management systems by the first renewal survey after September 8, 2017 and must comply with IMO discharge standards by the due date for their IOPP Certificate renewal survey under MARPOL Annex I. Ships constructed after September 8, 2017 are required to comply with the BWM Convention upon delivery. All ships must meet the IMO ballast water discharge standard by September 8, 2024, regardless of construction date. Updated guidance for Ballast Water and Sediments Management Plan includes more robust testing and performance specifications. The last MEPC session, MEPC 79, was held in December 2022 whereby the Committee approved draft amendments to appendix II of the Annex to the BWM Convention (Form of Ballast Water Record Book) with a view to adoption by MEPC 80 in July 2023. The United States is not party to the BWM Convention, but has similar, though not identical, requirements. Ships operating in U.S. waters must comply with U.S. ballast water regulations.
| · | Pollution Liability Regimes |
Several international conventions impose and limit pollution liability from vessels. An owner of a tank vessel carrying a cargo of “persistent oil,” as defined by the International Convention for Civil Liability for Oil Pollution Damage (the “CLC”), is subject to strict liability for any pollution damage caused in a contracting State by an escape or discharge from cargo or bunker tanks. There is a financial limit on this liability, which is calculated by reference to the tonnage of the ship. The right to limit liability may be lost if the spill is caused by the ship owner’s intentional or reckless conduct. Liability may also be incurred under the CLC for a bunker spill from the vessel even when it is not carrying such cargo if the spill occurs while it is in ballast. However, certain States have only ratified earlier iterations of the CLC, which have a lower liability limit, restrict the area in which the convention is applicable, and only cover spills from tankers if laden at the time of the spill.
The CLC applies in over 100 jurisdictions around the world. Some countries around the world have ratified an earlier version of the CLC, the “1969 Convention”; while others have not ratified any version of the CLC. Further, it is possible that courts in certain States may interpret the CLC to provide fewer protections than intended based on fault, which can increase our liability in certain areas of the globe.
For vessel operations not covered by the CLC, including all non-tank vessels in our fleet, international liability for oil pollution may be governed by the International Convention on Civil Liability for Bunker Oil Pollution Damage (the “Bunker Convention”) in addition to local and national environmental laws.
The Bunker Convention entered into force in 2008 and imposes strict liability on shipowners for pollution damage and response costs incurred in contracting States caused by discharges, or threatened discharges, of bunker oil from all classes of ships not covered by the CLC. The Bunker Convention also requires registered owners of ships over a certain tonnage to maintain insurance to cover their liability for pollution damage in an amount equal to the limits of liability under the applicable national or international limitation regime, including liability limits calculated in accordance with the Convention on Limitation of Liability for Maritime Claims 1976, as amended (the “1976 Convention”). As of February 21, 2023, the Bunker Convention had 105 contracting States, representing 95.20% of the gross tonnage of the world's merchant fleet.
The 1976 Convention is the most widely applicable international regime limiting maritime pollution liability. Rights to limit liability under the 1976 Convention are forfeited where a spill is caused by a shipowner’s intentional or reckless conduct. Certain jurisdictions have ratified the IMO’s Protocol of 1996 to the 1976 Convention, referred to herein as the “Protocol of 1996.” The Protocol of 1996 provides for substantially higher liability limits in those jurisdictions than the limits set forth in the 1976 Convention.
Finally, some jurisdictions are not parties to either the 1976 Convention or the Protocol of 1996, and, therefore, a shipowner’s rights to limit liability for maritime pollution in such jurisdictions may be uncertain or subject to national and local law. The United States is not party to these conventions, but has similar, though not identical, regime under the Oil Pollution Act of 1990 (“OPA”). Ships operating in U.S. waters must comply with U.S. regulations under OPA.
| · | International Safety Regulations |
Our vessels also must operate in compliance with the requirements set forth in the International Convention for the Safety of Life at Sea, as amended, (“SOLAS”), including the International Safety Management Code (the “ISM Code”), which is contained in Chapter IX of SOLAS.
SOLAS was enacted primarily to promote the safety of life and preservation of property. SOLAS, and the regulations and codes of practice thereunder, is regularly amended to introduce heightened shipboard safety requirements into the industry. The ISM Code requires ship operators to develop and maintain an extensive Safety Management System (“SMS”) that includes the adoption of a safety and environmental protection policy setting forth instructions and procedures for safe vessel operation and describing procedures for dealing with emergencies. The ISM Code also requires vessel operators to obtain a Document of Compliance (“DOC”) demonstrating that the company complies with the SMS and a Safety Management Certificate (“SMC”) for each vessel verifying compliance with the approved SMS by each vessel's flag State. No vessel can obtain an SMC unless its manager has been awarded a Document of Compliance, issued by the flag State for the vessel, under the ISM Code.
Non-compliance with the ISM Code and regulations contained in other IMO conventions may subject a shipowner to increased liability, lead to decreases in available insurance coverage for affected vessels, or result in the denial of access to, or detention in, certain ports, which can cause delays. For example, the U.S. Coast Guard and EU authorities have indicated that vessels not in compliance with the ISM Code may be prohibited from trading in ports in the United States and the EU. Each company's DOC and each vessel's SMC must be periodically renewed, and compliance must be periodically verified.
On cyber security, IMO Cyber Risk Management Guidelines came into force on January 1, 2021. Pursuant to the IMO’s resolution MSC.428(98) administrations are encouraged to ensure that cyber risks are appropriately addressed in existing SMSs no later than the first annual verification of the company’s DOC after January 1, 2021.
| · | Vessel Security - the ISPS Code |
In 2002, following the September 11, 2001 terrorist attacks, SOLAS was amended to impose detailed security obligations on vessels and port authorities, most of which are contained in the ISPS Code, which is Chapter XI-2 of SOLAS. Vessels demonstrate compliance with the ISPS Code by having an International Ship Security Certificate issued by their flag State.
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; |
| § | Development of Ship Security Plans; |
| § | Appointment of a Ship Security Officer and a Company Security Officer; and |
| § | Compliance with flag State's security certification requirements. |
Applicable U.S. Laws
The U.S. Federal Trade Commission (“FTC”) is currently accepting public comments on its revisions to its Guides for the Use of Environmental Marketing Claims (“Green Guides”). The current public comment period will close on April 24, 2023. The FTC is expected to issue new guidance on both general and specific environmental benefit claims like sustainability, energy use/effiency, recyclability, climate change and derivative claims like carbon netural and net zero. The FTC is also considering issuing a rulemaking to give the Green Guides the force of law, as they are currently interpretative guidance under Section 5 of the FTC Act. Revised guides are expected in 2024 or 2025.
| · | The Act to Prevention Pollution from Ships |
The Act to Prevent Pollution from Ships (“APPS”) and corresponding U.S. Coast Guard regulations implement several MARPOL annexes in the United States. Violations of MARPOL, APPS, or the implementing regulations can result in liability for civil and/or criminal penalties. Numerous vessel owners and operators, as well as individual ship officers and shoreside technical personnel, have been criminally prosecuted for APPS violations, which may result in significant fines and imprisonment for ship officers.
| · | Clean Water Act, National Invasive Species Act, Vessel General Permit, and Vessel Incidental Discharge Act. |
The Clean Water Act (“CWA”) prohibits the discharge of oil or hazardous substances in U.S. navigable waters and imposes penalties for unauthorized discharges without a permit or exemption. The CWA also imposes substantial liability for the costs of removal, remediation and damages. On December 30, 2022, the EPA and the U.S. Department of the Army released a final rule establishing a revised definition of “waters of the United Stats” (WOTUS). The final rulemaking resets the regulatory landscape to mirror the pre-2015 definition of the term (commonly referred to as “the 1986 regulations”) and includes protection for traditional navigable waters, the territorial seas, interstate waters, and upstream waters that “significantly affect” waters typically viewed as within federal jurisdiction under the Commerce Clause. The final rule goes into effect on March 20, 2023.
The future of the new final WOTUS rule is uncertain because of the U.S. Supreme Court’s anticipated ruling in Sackett v. EPA, which is anticipated to opine on the definition of WOTUS and the types of wetlands Congress to extend federal jurisdiction over. A ruling from the U.S. Supreme Court is anticipated in the first half of 2023. It is unclear how the decision will impact the WOTUS final rule, as it could invalidate portions of it.
The United States is not a party to the BWM Convention discussed above. Instead, ballast water operations are governed by the National Invasive Species Act (“NISA”) and U.S. Coast Guard regulations mandating ballast water management practices for all vessels equipped with ballast water tanks entering U.S. waters, as well as the Vessel General Permit issued by the U.S. Environmental Protection Agency (“EPA”) under the CWA. In addition, through the CWA certification provisions that allow U.S. states to place additional conditions on EPA’s Vessel General Permit, a number of states have implemented a variety of stricter ballast water requirements. The past year has seen a marked increase in enforcement actions by EPA for alleged violations of the Vessel General Permit.
Depending on a vessel’s compliance date for installation of a U.S. Coast Guard type-approved ballast water management system, these requirements may be met by performing mid-ocean ballast exchange, by retaining ballast water onboard the vessel, or by using another ballast water management method authorized by the U.S. Coast Guard. In the near future, ballast water exchange will no longer be permissible. These U.S. Coast Guard regulations and EPA’s Vessel General Permit, however, will ultimately be replaced with the new regulatory regime being developed under the Vessel Incidental Discharge Act (“VIDA”) signed into law on December 4, 2018, which is expected to contain similar, though likely more stringent, requirements. VIDA requires that the new standards be at least as stringent as those currently imposed by the 2013 VGP.
VIDA establishes a new framework for regulation of discharges incidental to the normal operation of commercial vessels into navigable waters of the United States, including management of ballast water. VIDA required the EPA to implement a final rule setting forth standards for incidental discharges, including ballast water, by December 4, 2020 and the U.S. Coast Guard to issue a final rule implementing the EPA’s standards by December 4, 2022. However, EPA missed the statutory deadline of December 4, 2020 and EPA is expected to publish a supplemental notice for comment in the next several months, with the final rule on standards published in late 2024. As such, the overall implementation of VIDA will be delayed, including the U.S. Coast Guard’s implementation of EPA’s final rule on standards, which is scheduled for two years after EPA finalizes its standards. In February 2023, environmental groups sued EPA for the delays in implementing the final standards for incidental discharges. Implementation of VIDA is intended to create more uniformity in state and federal regulation of incidental vessel discharges.
The EPA’s original proposed rule under VIDA, published on October 26, 2020, would have established both general and specific discharge standards. Although VIDA generally pre-empts sate and local laws, states will have the ability to petition for stricter discharge standards and will have inspection and enforcement authority for the federal standards. The general discharge standards are preventative in nature and apply to all incidental discharges. They are organized into three categories: (1) general operation and maintenance; (2) biofouling management; and (3) oil management. These general standards mandate overall minimization of discharges and prescribe best management practices toward achieving this goal. No training or education requirements are included, as these will be set by the U.S. Coast Guard in its rulemaking once EPA’s standards are finalized. EPA’s proposal covers 20 incidental discharges from vessels, down from 27 covered by the 2013 VGP, however, as noted, EPA will be publishing a supplemental proposed rule in 2023, which will include proposed changes to the original proposal. Importantly, EPA did not significantly reduce the number of discharges covered, rather combined several discharges into one, taking a more systematic approach to managing the discharges. Two years after the EPA publishes its final standard, the U.S. Coast Guard is required to finalize corresponding implementation, compliance and enforcement regulations for those standards, including any requirements governing the design, construction, testing, approval, installation and use of devices necessary to achieve the EPA standards.
The 2013 VGP requirements remain in effect until such time that the EPA develops new incidental discharge regulations under VIDA and the U.S. Coast Guard develops regulations to implement EPA’s standards. If this current schedule holds, VIDA will be implemented in late 2026.
| · | Oil Pollution Act of 1990 and State Law Regarding Oil Pollution Liability |
The United States has a comprehensive regulatory and liability regime for the protection and cleanup of the environment from oil spills from all vessels, including cargo or bunker oil spills from tank vessels. This regime is set forth in the “OPA.”
OPA applies to owners and operators whose vessels trade in the United States, its territories and possessions or whose vessels operate in U.S. waters. Under OPA, vessel owners, operators and bareboat charterers are “responsible parties” and are jointly, severally and strictly liable for all containment and clean-up costs, as well as damages, arising from discharges or substantial threats of discharges, of oil from their vessels unless the spill results solely from the act or omission of a third party, an act of God or an act of war, which is determined after-the-fact. As such, responsible parties must respond to a spill immediately irrespective of fault. This strict liability regulatory scheme has made liability insurance in the U.S. more expensive for shipowners and operators trading in the U.S. market.
OPA liability limits are periodically adjusted for inflation, and the U.S. Coast Guard issued a final rule on December 23, 2022 to reflect increases in the Consumer Price Index, which resulted in higher liability limits. These new limits take effect from March 23, 2023. With this adjustment, OPA limits of liability of the responsible party for non-tank vessels will increase to $1,300 per gross ton or $1,076,000, whichever is greater. For double hull tank vessels, other than edible oil tank vessels and oil spill response vessels, the limits of liability depends upon the size of the vessel. The liability amounts are listed as follows: for a tank vessel greater than 3,000 gross tons, other than a single-hull tank vessel, the greater of $2,500 per gross ton or $21,521,000; and for a tank vessel less than or equal to 3,000 gross tons, other than a single-hull tank vessel, the greater of $2,500 per gross ton or $5,380,300. Under OPA, these liability limits do not apply if an incident was directly caused by violation of applicable U.S. federal safety, construction or operating regulations or by a responsible party's gross negligence or willful misconduct, or if the responsible party fails or refuses to report the incident or to cooperate and assist in connection with oil removal activities.
Under OPA, an owner or operator of a fleet of vessels is required only to demonstrate evidence of financial responsibility in an amount sufficient to cover the vessel in the fleet having the greatest maximum liability under OPA. The Certificate of Financial Responsibility (“COFR”) program has been created by the U.S. Coast Guard to ensure that vessels carrying oil as cargo or fuel in the U.S. waters have the financial ability to pay for removal costs and damages resulting from an oil spill or threat of a spill up to their liability limits, which are based on the gross tonnage of our vessels. These limits are subject to annual increases. It is possible for our liability limits to be broken as discussed above, which could expose us to unlimited liability.
A COFR is issued in the name of the company/person financially responsible in the event of a spill or threat of a spill and this is usually the owning company or operator of the vessel. Once they have shown the capability to pay clean-up and damage costs up to the liability limits required by OPA, and a guaranty is issued and then provided to the U.S. Coast Guard, the U.S. Coast Guard will issue a COFR. With a few limited exceptions (not applicable to Navios vessels), vessels greater than 300 gross tons and vessels of any size that are transferring oil or cargoes between vessels or shipping oil in the Exclusive Economic Zone (“EEZ”) are required to comply with the COFR regulations in order to operate in U.S. waters.
The guarantor used throughout the Navios fleet is SIGCO/The Shipowners Insurance and Guaranty Company. SIGCO issues the guaranty noted above and confirms that if the responsible party does not respond to an oil spill or threat of a spill, the guarantor will be called upon to provide the funds to do so. This would be rare because any guaranty issued by SIGCO is contingent on protection and indemnity cover.
The COFR is renewed on a three-year basis whereas the COFR guaranty is renewed annually. The U.S. Coast Guard checks that a vessel has a valid COFR prior to or upon entering the U.S. waters. Some states have COFR requirements in addition to the federal requirement under OPA, which may be more stringent than the requirement under OPA.
Trading in the United States without a valid COFR may result in the vessel being detained and/or fined or prevented from entering U.S. ports until the COFR is in place. We have provided satisfactory evidence of financial responsibility to the U.S. Coast Guard for all of our vessels and all have valid COFRs.
In addition to potential liability under OPA, individual states may impose their own and more stringent liability regimes with regard to oil pollution incidents occurring within their boundaries. Some states' environmental laws impose unlimited liability for oil spills and contain more stringent financial responsibility and contingency planning requirements.
| · | Comprehensive Environmental Response, Compensation and Liability Act |
The Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”) contains a liability regime and provides for cleanup, removal and natural resource damages for the release of hazardous substances (other than oil) whether on land or at sea. Under U.S. law, certain petroleum products which may be carried by our fleet are not considered “oil” and thus are hazardous substances regulated by CERCLA. Thus, in some cases, CERCLA could be applicable to potential cargo spills from our vessels rather than OPA.
Under CERCLA, the owner or operator of a vessel from which there is a release or threatened release of a hazardous substance is liable for certain removal costs, other remedial action, damages due to injury of natural resources, and the costs of any required health assessment for releases that expose individuals to hazardous substances. Liability for any vessel that carries any hazardous substance as cargo or residue is limited to the greater of $300 per gross ton or $5 million. For any other vessel, the limitation is the greater of $300 per gross ton or $500,000. Failure to comply with these requirements may result in daily fines.
These liability limits do not apply if the release resulted from willful misconduct or gross negligence within the privity or knowledge of the responsible person, or from a violation of applicable safety, construction, or operating standards or regulations within the privity or knowledge of the responsible person. In addition, the liability limits also do not apply if the responsible person fails to provide all reasonable cooperation and assistance requested by a responsible public official in connection with response activities conducted under the National Contingency Plan.
Further, any person who is liable for a release or threat of release, and who fails to provide removal or remedial action ordered by the EPA is subject to punitive damages in an amount equal to three times the costs incurred by the federal Superfund trust fund as a result of such failure to act.
| · | Clean Air Act and Emissions Regulations |
The Federal Clean Air Act (“CAA”) requires the EPA to develop standards applicable to emissions of volatile organic compounds and other air contaminants. Our vessels are subject to CAA vapor control and recovery standards (“VCS”) for cleaning fuel tanks and conducting other operations in regulated port areas.
Also, under the CAA, since 1990 the U.S. Coast Guard has regulated the safety of VCSs that are required under EPA and state rules. Our vessels operating in regulated port areas have installed VCSs that are compliant with EPA, state and U.S. Coast Guard requirements. The U.S. Coast Guard has adopted regulations that made its VCS requirements more compatible with new EPA and state regulations, reflected changes in VCS technology, and codified existing U.S. Coast Guard guidelines.
| · | State Laws |
In the United States, there is always a possibility that state law could be more stringent than federal law. Such is the case with certain state laws concerning marine environmental protection. A few examples include:
| § | California adopted more stringent low sulfur fuel requirements within California-regulated waters, requiring marine gas oil and prohibiting exhaust gas cleaning systems. |
| § | California adopted regulatory amendments that implement the federal ballast water discharge standards for vessels arriving at California ports, establish operational monitoring and recordkeeping requirements for vessels that use a ballast water treatment system to meet ballast water discharge performance standards, and authorize California State Lands Commission staff to collect ballast water and sediment samples for research purposes and compliance assessments. These changes became effective on January 1, 2022. |
| § | California also requires the use of shore power or equivalent emissions reductions strategies for vessels at all California ports. |
| § | Vessel owners may in some instances incur liability on an even more stringent basis under state law in the particular state where the spill occurred. For example, many U.S. states have unlimited liability and more stringent requirements for financial responsibility and contingency planning. |
| § | Most states do not have comprehensive laws relating specifically to the discharge of hazardous substances from vessels into state waters as they do for oil discharges, but many states have general water pollution prevention laws that apply to hazardous substances and other materials and others have broadly written hazardous substance cleanup laws based on CERCLA that would provide a cause of action for discharges of hazardous substances from vessels. |
| · | Ship Safety and Security Laws |
With respect to ship safety, the requirements contained in SOLAS and the ISM Code generally have been implemented into U.S. law and are largely captured within U.S. Coast Guard regulations.
Ship security in the United States is governed primarily by the Marine Transportation Security Act of 2002 (“MTSA”), which is implemented by U.S. Coast Guard regulations that impose certain security requirements aboard vessels operating in waters subject to the jurisdiction of the United States.
Because the MTSA regulations were intended to be aligned with international maritime security standards contained in the ISPS Code, the regulations exempt non-U.S.-flag vessels from MTSA vessel security measures, provided such vessels have on board a valid International Ship Security Certificate (“ISSC”) that attests to the vessel's compliance with SOLAS security requirements and the ISPS Code.
Applicable EU Laws
European regulations in the maritime sector are in general based on international law. However, since the Erika incident in 1999 and subsequent court decisions, the European Community has become increasingly active in the field of regulation of maritime safety and protection of the environment. It has been the driving force behind a number of amendments to MARPOL (including, for example, changes to accelerate the timetable for the phase-out of single hull tankers, and to prohibit the carriage in such tankers of heavy grades of oil), and if dissatisfied either with the extent of such amendments or with the timetable for their introduction it has been prepared to legislate on a unilateral basis.
In some instances, EU regulations may impose burdens and costs on shipowners and operators beyond the requirements under international rules and standards.
| · | Liability for Pollution and Interaction between MARPOL and EU Law |
The EU has implemented certain EU-specific pollution laws, most notably a 2005 directive on ship-source pollution. This directive imposes criminal sanctions for pollution caused by intent or recklessness (which would be an offense under MARPOL), as well as by “serious negligence.” The directive could therefore result in criminal liability being incurred in a European port state in circumstances where it may not be incurred in other jurisdictions.
| · | Regulation of Emissions and Emissions Trading System |
The EU has an Emissions Trading System (“ETS”) that has been approved for the maritime transport sector. Formal adoption is expected in the first or second quarter of 2023.
In December 2016, the EU signed into law the National Emissions Ceiling (“NEC”) Directive, which entered into force on December 31, 2016. The NEC required implementation by individual members States through particular laws in each State by June 30, 2018. The NEC aims to set stricter emissions limits on SO2, ammonia, non-methane volatile organic compounds, NOx and fine particulate (PM2.5) by setting new upper limits for emissions of these pollutants. While the NEC is not specifically directed toward the shipping industry, the EU specifically mentions the shipping industry in its announcement of the NEC as a contributor to emissions of PM2.5, SO2 and NOx.
In February 2017, EU member States met to consider independently regulating the shipping industry under the ETS, which requires certain businesses to report on carbon emissions and provides for a credit trading system for carbon allowances. On February 15, 2017, European Parliament voted in favor of a bill to include maritime shipping in the ETS by 2023 if the IMO has not promulgated a comparable system by 2021. In November 2017, the Council of Ministers, EU's main decision-making body, agreed that Europe should act on shipping emissions from 2023 if the IMO fails to deliver effective global measures.
On 14 July 2021, the European Commission adopted a series of legislative proposals depicting how it intends to achieve climate neutrality in the EU by 2050, including the intermediate target of an at least 55% net reduction in greenhouse gas emissions by 2030. These proposals have also been referred to as the “Fit for 55” package. By 2030, large container and passenger ships will be required to use on-shore power supply while at berth in EU ports. The package proposes to revise several pieces of EU climate legislation, including the EU ETS, Effort Sharing Regulation, transport and land use legislation, setting out in real terms the ways in which the Commission intends to reach EU climate targets under the European Green Deal. The EU ETS will require shipping companies to monitor, report, and verify their emissions, as well as purchase and surrender allowances (i.e., carbon credits) beginning in 2024. The EU ETS will include the monitoring and reporting of CO2 emissions in 2024 and will include methane and nitrous oxide in 2026. The ETS will set an annual absolute limit on emissions of certain GHGs and require the purchase of allowances equal to % carbon emitted, thereby putting a price on emissions (2024 – 40%; 2025 – 70%; 2026 – 100%). The deadline to submit (surrender) allowances will be 30 September of the following year. The allowances are gradually reduced over time to reduce the amount of permitted emissions. The ETS will apply to cargo and passenger ships above 5,000 from 2024, and offshore ships above 5,000 GT from 2027. 100% of emissions on voyages within EU/EEA are subject to ETS; 50% of emissions on voyages in and out of EU/EEA are subject to ETS. For container ships, 50% of emissions from a voyage to a transshipment port located within 300 nautical miles of EU are subject to ETS. Vessels entering the EU must report under both EU MRV regulation and IMO Data Collection System.
The penalty for non-compliance with the EU ETS is a an expulsion order. Any shipping company that has failed to surrender allowances for two or more consecutive periods is at risk of receiving an expulsion order. This order means ships can be detained by the Member State the ship is flagged in and denied entry into port.
| · | Ship Recycling and Waste Shipment Regulations |
On December 31, 2018, EU-flagged vessels became subject to Regulation (EU) No. 1257/2013 of the European Parliament and of the Council of 20 November 2013 on ship recycling (the “EU Ship Recycling Regulation” or “ESRR”) and exempt from Regulation (EC) No. 1013/2006 of the European Parliament and of the Council of 14 June 2006 on shipments of waste (the “European Waste Shipment Regulation” or “EWSR”), which had previously governed their disposal and recycling. The EWSR continues to be applicable to Non-European Union Member State-flagged (“non-EU-flagged”) vessels. Commission Implementing Decision (EU) 2021/1211 of July 22, 2021 amending Implementing Decision (EU) 2016/2323 established the European List of ship recycling facilities pursuant to Regulation (EU) No 1257/2013 of the European Parliament which details additional approved EU and non-EU facilities.
As of December 31, 2020, the ESRR applies to vessels of 500 GT and above flying the flag of an EU/EEA member state, or third party-flagged vessels calling at EU ports. Those vessels will be required to carry an Inventory Hazardous Materials certificate onboard.
The Commission has launched an evaluation of the ESRR. Open consultations and targeted consulations will begin in the first quarter of 2023, with completion expected by December 31, 2023.
Under the ESRR, commercial EU-flagged vessels of 500 gross tonnage and above may be recycled only at shipyards included on the European List of Authorised Ship Recycling Facilities (the “European List”). The European List presently includes eight facilities in Turkey, and one facility in the United States, among other European locations, but no facilities in the major ship recycling countries in Asia. The combined capacity of the European List facilities may prove insufficient to absorb the total recycling volume of EU-flagged vessels. This circumstance, taken in tandem with the possible decrease in cash sales, may result in longer wait times for divestment of recyclable vessels as well as downward pressure on the purchase prices offered by European List shipyards. Furthermore, facilities located in the major ship recycling countries generally offer significantly higher vessel purchase prices, and as such, the requirement that we utilize only European List shipyards may negatively impact revenue from the residual values of our vessels.
In addition, the EWSR requires that non-EU-flagged ships departing from European Union ports be recycled only in Organisation for Economic Cooperation and Development (OECD) member countries. In March 2018, the Rotterdam District Court ruled that the sale of four recyclable vessels by third-party Dutch shipowner Seatrade to cash buyers, who then reflagged and resold the vessels to non-OECD country recycling yards, were effectively indirect sales to non-OECD country yards, in violation of the EWSR. If European Union Member State courts widely adopt this analysis, it may negatively impact revenue from the residual values of our vessels and we may be subject to a heightened risk of non-compliance, due diligence obligations and costs in instances in which we sell older ships to cash buyers.
Maritime Decarbonization: Energy Efficiency and Greenhouse Gas Reduction
IMO’s Initial Strategy and Recent Developments
The IMO now has an initial strategy and mandatory measures for an international greenhouse gas (“GHG”) reduction regime for a global industry sector, and recent activity indicates continued interest and regulation in this area in the coming years.
On April 13, 2018, the IMO’s Marine Environment Protection Committee (“MEPC”) 72 adopted resolution MEPC.304(72) on Initial IMO Strategy on reduction of GHG emissions from ships. The initial strategy aims to reduce GHG emissions from shipping by 40% by 2030 when compared to 2008 levels. No international regulations have been implemented to achieve such a reduction.
The IMO’s initial strategy targeted both reducing gross output and efficiency. In order to reduce emissions and increase shipboard efficiency, the IMO is coordinating ways to measure these approaches. This will be done in two ways. First, the technical aspects and design of vessels will be regulated by the new Energy Efficiency Existing Ships Index (“EEXI”) for existing ships. EEXI regulations exist for an “Attained EEXI” to be calculated for each ship, and a “Required EEXI” for specified ship types. A vessel’s emissions will have to meet the targets set out in the EEXI testing to receive a certificate of compliance or International Energy Efficiency Certificate (“IEEC”). Second, the operational aspect will be done by way of the new Carbon Intensity Indicators (“CII”) index, which categorizes every ship’s operational efficiency based upon Data Collection Service information. Aspects of a vessel’s CII will need to be documented under the existing framework of the Ship Energy Efficiency Management Plan (“SEEMP”). On or before January 1, 2023, ships of 5,000 GT and above were required to revise their SEEMP.
Beginning on January 1, 2023, ports will require evidence of a vessel’s IEEC. Vessels without this certification will have increasing difficulty proceeding into a port or a terminal. Failure to obtain an IEEC could be construed as a breach of the MARPOL convention and render the vessel “unseaworthy.”
In June 2021, MEPC 76 developed various short-term (2018–2023), medium-term (2023–2030), and long-term (2030–2050) measures. It approved a three-phase work plan aimed at supporting the Initial IMO Strategy on Reduction of GHG from Ships and its program of follow-up actions: Phase I – Collation and initial consideration of proposals for measures (Time period: Spring 2021 to Spring 2022); Phase II – Assessment and selection of measures to further develop (Time period: Spring 2022 to Spring 2023); and Phase III – Development of measures to be finalized with agreed target dates (Timeline: Target date(s) to be agreed in conjunction with the IMO Strategy on reduction of GHG emissions from ships).
MARPOL Annex VI amendments to entered into force on November 1, 2022, and requirements for EEXI and CII certification went into effect on January 1, 2023. The first annual reporting will be completed in 2023, with the first rating given in 2024. A review clause requires the IMO to review the effectiveness of the implementation of the CII and EEXI requirements, by January 1, 2026, at the latest, and, if necessary, develop and adopt further amendments.
MEPC 79 has made progress towards revising the Initial IMO GHG Strategy, working towards adopting a strengthened revised Strategy in mid-2023 at MEPC 80. A final draft Revised IMO GHG Strategy would be considered by MEPC 80 (scheduled to meet July 3-7, 2023), with a view to adoption.
MEPC 79 considered several proposals on the reduction of the impact of Black Carbon emissions on the Arctic and agreed to refer a submission to PPR 10 (April 2023) for further consideration. A designation was also made of the Mediterranean Sea as an Emissions Control Area (“ECA”) for sulfur oxides and particulate matter from May 1, 2025. This change will bring the Mediterranean Sea in lne with other ECAs like the North Sea and Baltic Sea, where the sulfur content of fuels is already limited to 0.1%.
The MEPC 79 session also took further steps to address GHG emissions. In particular, the session adopted amendments to MARPOL Annex VI to include information on the flashpoint of fuel in the Bunker Delivery Note. The session also discussed on board carbon capture and storage, but the committee deferred the issue to MEPC 80. There was significant support at MEPC 79 for the introduction of a bunker levy and a life cycle assessment (“LCA”) GHG fuel standard (“GFS”). These steps are likely to be addressed more fully when MEPC next meets in July 2023. At that conference, the IMO is scheduled to revise its initial GHG strategy, which calls for a 40% reduction by 2030, and a 50% reduction by 2050 compared to 2008.
Green House Gas (GHG) Regulations
In February 2005, the Kyoto Protocol to the United Nations Framework Convention on Climate Change (the “UNFCCC”) entered into force. Pursuant to the Kyoto Protocol, adopting countries are required to implement national programs to reduce emissions of certain greenhouse gases, generally referred to as GHGs, which are suspected of contributing to global warming. Currently, GHG emissions from international shipping do not come under the Kyoto Protocol. Also, at the 2015 United Nations Climate Change Conference in Paris, the Paris Agremenet was formulated. It became effective on November 4, 2016, but it does not directly limit GHGs from ships. The IMO has developed and intends to continue developing limits on GHG emissions. The IMO is also considering its position on market-based measures through an expert working group.
Among the numerous proposals being considered by the working group are the following: a port State levy based on the amount of fuel consumed by the vessel on its voyage to the port in question; and a global emissions trading scheme which would allocate emissions allowances and set an emissions cap, among others. The IMO’s goal is to reduce total annual GHG emissions by at least 50% by 2050 compared to 2008, while at the same time, pursuing efforts towards phasing them out entirely. Additionally, jurisdictions throughout the world have examined means of regulating GHGs:
Some attention has been paid to GHGs in Europe. On June 28, 2013, the European Commission (“EC”) adopted a communication setting out a strategy for progressively including GHG emissions from maritime transport in the EU’s policy for reducing its overall GHG emissions. The first step proposed by the EC was an EU Regulation to an EU-wide system for the monitoring, reporting and verification of carbon dioxide emissions from large ships starting in 2018. The Regulation was adopted on April 29, 2015 and took effect on July 1, 2015. Monitoring, reporting and verification requirements began on January 1, 2018. The EC also adopted an Implementing Regulation, which entered into force in November 2016, setting templates for monitoring plans, emissions reports, and compliance documents pursuant to Regulation 2015/757.
In the United States, there are varying approaches on whether to add additional regulations on GHG emissions. In January 2020, the Transportation and Infrastructure Committee of the U.S. House of Representatives (the “House”) held a hearing on “Decarbonizing the Maritime Industry,” which highlighted alleged health impacts of GHG, the IMO’s goal of decarbonization, and what next steps can be taken in reducing emissions from vessels. There was a recent bill introduced in the U.S. Congress regarding the reduction of emissions by ships. Specifically, on July 12, 2022, the Clean Shipping Act was introduced, but never received a vote. The bill would have directed the EPA to require vessels on certain commercial voyages to comply with standards for the carbon intensity of the vessel's fuel on a specified schedule, with vessels on such voyages utilizing 100% less than the carbon intensity baseline by 2040 and beyond. Similar to past bills regarding GHGs from vessels, the U.S. Congress did not pass this bill. . We continue to monitor the status of GHG-related legislation and its potential impacts on our business. In the spring of 2022, the U.S. Coast Guard was also expected to adopt GHG regulations that mirror MARPOL Annex VI, but those regulations still remain pending. The Coast Guard has reported that its regulations will be designed to “fill gaps in the existing framework.” The Coast Guard and U.S. Environmental Protection Agency (“EPA”) have entered a memorandum of understanding (“MOU”) by which they have agreed on enforcement responsibilities relating to inspections of marine fueling facilities, shipboard compliance inspections and investigations and enforcement actions.
In January 2023, the U.S. Department of Energy issued an updated decarbonization strategy which included specific policy measures for the maritime sector. The strategy calls for incentivizing research and development activities for zero-emission shipping technology, including alternative fuels and propulsion systems. The strategy seeks to promote electic and hybrid options for small vessels, operational efficiency improvements and onboard carbon capture systems.
Other decarbonization efforts, include the Call to Action for Shipping Decarbonization, an outgrowth of the 2021 United Nations Climate Change Conference, which is aimed at focusing on decarbonizing shipping by 2050.
In March 2022, the U.S. Securities and Exchange Commission (“SEC”) released a proposed rule to require environmental, social and governance (ESG) reporting requirements for U.S. public companies, including the disclosure of climate-related risk information in registration statements and periodic reports.
The new disclosure rules would require public companies to disclose risks that are “reasonably likely to have a material impact on their business, results of operations, or financial condition,” and also “information about its direct greenhouse gas (GHG) emissions (Scope 1) and indirect emissions from purchased electricity or other forms of energy (Scope 2),” plus certain types of GHG emissions “from upstream and downstream activities in its value chain (Scope 3).” Following debates about aspects of the proposal such as the Scope 3 disclosures and the U.S. Supreme Court’s June decision in West Virginia v. EPA that limited federal regulation of power plant emissions, the timeline for final rules have been pushed back. Action is still expected in 2023.
The EU Corporate Sustainability Reporting Directive’s (“CSRD”) ESG requirements will be phased in beginning in 2024, and will require most large maritime shipping companies to report on GHG emissions. CSRD will apply to all large EU companies with more than 250 employees, a turnover of more than $40 million Euros, or total assets of $20 million Euros. Non-EU entities with annual EU- generated revenues in excess of $150 million Euros which also have a large or listed EU subsidiary or a significant EU branch (generating at least $40 million Euros) will have to comply.
The first set of reporting standards should be issued by June 30, 2023. A second set of reporting standards will be issued by June 30, 2024. Sustainability disclosures will be required across several key topics like climate change and biodiversity, human rights, human health and diversity and inclusion. The European Financial Reporting Advisory Group, the entity developing the sustainability reporting standards will develop sector-specific standards. Entities will be required to disclose their sustainability targets and the transition plans to ensure their business model is compatible with the transition to a sustainable economy, objectives of the limiting global warning to 1.5 C in line with the Paris Agreement and achieving climate neutrality by 2050. Entities will be required to disclose their due diligence process with regard to sustainability matters in their own operations and their value chains.
Economic Sanctions and Compliance
We constantly monitor developments in the U.S., the EU and other jurisdictions that maintain economic sanctions against Iran, Russian entities, Venezuela, other countries, and other sanctions targets, including developments in implementation and enforcement of such sanctions programs. Expansion of sanctions programs, embargoes and other restrictions in the future (including additional designations of countries and persons subject to sanctions), or modifications in how existing sanctions are interpreted or enforced, could prevent our vessels from calling in ports in sanctioned countries or could limit their cargoes.
Across all sanctions regimes it is important to ensure that due diligence has been carried out on the parties involved in each transaction. Whilst the US, EU and UK maintain lists of sanctioned persons (as do other jurisdictions), there is variance between those lists on the individuals and entities listed. It cannot be assumed that an individual or entity who does not appear on one list is not caught by alternative sanctions regimes.
Iran Sanctions
There is a divergence in the US and EU/UK position on Iran following the US withdrawal from the Joint Comprehensive Plan of Action.
EU and UK sanctions
EU sanctions on Iran remain in place in relation to the export of arms and military goods listed in the EU Common Military List, military-related goods and items that might be used for internal repression as well as in relation to listed individuals / entities. Full details of these goods can be found in the EU Common Military List and the consolidated EU Council Regulation 267/2012 and EU Council Regulation 359/2011 (each as amended from time to time).Trade with Iran which is caught by the above mentioned sanctions can only be engaged if prior authorization (granted on a case-by-case basis) is obtained from the relevant national authorities within the EU. The remaining restrictions apply to the sale, supply, transfer or export, of specific listed goods directly or indirectly to any Iranian person/for use in Iran, as well as the provision of technical assistance, financing or financial assistance in relation to the restricted activity. Certain individuals and entities remain sanctioned and the prohibition to make available, directly or indirectly, economic resources or assets to or for the benefit of sanctioned parties remains. “Economic resources” is widely defined and it remains prohibited to provide vessels for a fixture from which a sanctioned party (or parties related to a sanctioned party) directly or indirectly benefits. It is therefore still necessary to carry out due diligence on the parties and cargoes involved in fixtures involving Iran.
The UK imposes similar sanctions to the EU in circumstances where there has not been a significant shift in the Iran sanctions regime following the UK’s departure from the EU.
U.S. Sanctions
U.S. economic sanctions on Iran fall into two general categories: “Primary” sanctions, which prohibit U.S. persons or U.S. companies and their foreign branches, U.S. citizens, foreign owned or controlled subsidiaries, U.S. permanent residents, persons within the territory of the United States from engaging in all direct and indirect trade and other transactions with Iran without U.S. government authorization, and U.S. “secondary” sanctions, which apply to non-U.S. persons.
The current secondary sanctions in place with respect to Iran, are relatively expansive and include but are not limited to: (i) sanctions on the Iranian metals industry, (ii) sanctions on Iran’s shipping and shipbuilding sectors, (iii) sanctions on the Iranian energy industry, which includes the petroleum and petrochemicals industries, and (iv) sanctions on the Iranian construction, mining, manufacturing, and textiles industry. These secondary sanctions prohibit significant transactions involving the sale, supply, or transfer of goods or services used in connection with any of the aforementioned industries and sectors of Iran’s economy. While the aforementioned secondary sanctions have the widest application to the international shipping community, there are numerous other secondary sanctions imposed against Iran.
Russia Sanctions
As a result of the crisis in Ukraine and the annexation of Crimea by Russia in 2014, both the United States and the EU implemented sanctions in 2014 against Crimea and certain Russian individuals and entities. These sanctions which are still in force have been greatly expanded and fortified due to Russia’s invasion of Ukraine in February 2022. The United States, the EU, the UK and other nations have imposed expanded economic sanctions against certain Russian individuals, entities and business sectors. Among other things, these sanctions suspend the use of SWIFT for certain Russian banks, curtail Russian access to the sanctioning-countries’ credit markets, forbid Russian aircraft from flying over NATO and other airspace, impose wide ranging trade sanctions in respect of certain Russian exports and prohibit the export of many items to Russia and their provision to persons in Russia.
EU Sanctions
Since 2014, the EU has imposed travel bans and asset freezes on certain Russian persons and entities pursuant to which it is prohibited to make available, directly or indirectly, economic resources or assets to or for the benefit of the sanctioned parties. Other entities are subject to sectoral sanctions, which limit the provision of equity financing and loans to the listed entities. Additionally, various restrictions on trade have been implemented, including a prohibition on the import into the EU of goods originating in Crimea or Sevastopol or the provision of goods to Crimea/Sevastopol. This includes certain Russian seaports where restrictions would prevent a vessel from calling at the port.
Since February 2022, the EU has designated a significant number of individuals and entities as subject to an asset freeze. Notably a number of trading companies have sought to distance themselves from the involvement of sanctioned persons and caution must therefore be exercised when dealing with any Russian individual or entity with appropriate due diligence carried out in accordance with company procedures.
In particular, , the EU has widened existing trade sanctions in relation to Russia including by (i) restricting exports of dual-use and military , and various other advanced technologies, (ii) various restrictions on financial services (including a ban on certain banks from using the SWIFT system), (iii) prohibitions against any transactions with certain state-owned entities, and (iv) various trade and transport restrictions for both export and import of goods, including in relation to oil and petroleum products, coal, steel/iron, fertilisers, potash and luxury goods. The EU has also extended its restrictions to capture (i) various services, including business management services, accounting, architectural and engineering, and legal advice services, and (ii) trade with newly annexed regions of Ukraine (Donetsk, Kherson, Luhansk and Zaporizhzhia).
Lastly, the E.U. has also recently implemented price cap policies with respect to with respect to Russian-origin crude oil and petroleum products.
U.S. Sanctions
U.S. sanctions against Russia were initially imposed following Russia’s annexation of Crimea in 2014 and have been greatly expanded in the last year following Russia’s full invasion of Ukraine. The current sanctions against Russia include full blocking sanctions, an investment ban/trade embargo with respect to certain commodities, sectoral sanctions aimed at certain sectors of the Russian economy, and sanctions with respect to “Covered Regions” in Ukraine. In addition, the majority of the U.S. sanctions against Russia also authorize the imposition of secondary sanctions against any deemed to have materially assisted any persons or entities sanctioned pursuant to the Russian sanctions program. We also note there is a broad carveout to the U.S. sanctions against Russia for transactions involving agricultural commodities.
Additionally, the U.S. has also designated various sectors of the Russian economy for blocking sanctions pursuant to E.O. 14024, including notably the marine sector. Pursuant to this sector designation, the U.S. has the ability to designate to the SDN list any individual or entity determined to be operating or have operated in the marine sector of the Russian economy.
The U.S. has also imposed in E.O. 14066 a prohibition against the importation of Russian-origin petroleum products into the United States. This prohibition encompasses shipments of Russian-origin commodities such as crude oil, petroleum fuels, petroleum, oils and products of their distillation, coal and coal products, and liquified natural gas. E.O. 14066 also prohibits U.S. persons from financing, approving, facilitating, or guaranteeing a transaction of a foreign person where the transaction by that person would be prohibited under the E.O. if that person were a U.S. person. E.O. 14066 also prohibits new investment by U.S. persons in the Russian energy sector. The United States has also issued Executive Order 14071, a complete prohibition on new investment in Russia by a U.S. person.
On November 22, 2022, the United States Department of the Treasury, announced determinations, pursuant to Executive Order 14071, which prohibit the provision of trading/commodities broker, financing, shipping, insurance, flagging, and customs brokering services as they relate to the maritime transport of crude oil and petroleum products of Russian Federation origin (collectively “Covered Services”). The Treasury Department, in coordination with other G7 states, the European, Union, and Australia, authorized the provision of the foregoing services when the price of Russian-origin crude oil does not exceed a certain price, as determined by the Secretary of the Treasury, effectively creating price caps on Russian-origin crude oil and petroleum products. Effective December 5, 2022, the Secretary of the Treasury and other members of the price cap coalition set the price cap on Russian-origin crude oil at $60 per barrel. Effective February 5, 2023, the Secretary of the Treasury set the price cap on Discount to Russian-origin crude petroleum products at $45 per barrel and the price cap on Premium to Russian-origin crude petroleum products at $100 per barrel. The discount to crude price cap applies to naphtha, residual fuel oil, and waste oils, whereas the premium to crude price cap applies to gasoline, motor fuel blending stock, gasoil and diesel fuel, kerosene and kerosene-type jet fuel, and vacuum gas oil. While these price cap policies are not directed specifically at Navios, they could have some impact on our trade, in particular with respect to obtaining “Covered Services” in the U.S. or by U.S. persons.
UK Sanctions
Since the UK’s departure from the EU it has enacted its own sanctions regime, which although in parts mirrors the approach of the EU, is a distinct sanctions regime. Again from February 2022 further restrictions were imposed targeting Russia and those connected to the invasion of Ukraine. Care should be taken to identify where the regimes differ.
UK restrictions similarly include designation of individuals as subject to an asset freeze and travel ban as well as restrictions in relation to the export, supply, delivery and making available of certain goods. There is also a ban on Russian flagged or owned ships from entering UK ports and lastly, the U.K. has also recently implemented price cap policies with respect to Russian-origin crude oil and petroleum products.
Venezuela Sanctions
EU and UK sanctions
EU sanctions against Venezuela are primarily governed by EU Council Regulation 2017/2063 (as amended from time to time) concerning restrictive measures in view of the situation in Venezuela. This includes financial sanctions and restrictions on listed persons and an, arms embargo, and related prohibitions and restrictions including restrictions on items related to internal repression.
The UK imposes similar sanctions to the EU in circumstances where there has not been a significant shift in the Venezuela sanctions regime following the UK’s departure from the EU.
U.S. Sanctions
The U.S. sanctions against Venezuela mainly consist of primary sanctions aimed at U.S. persons and activities within the United States and does not contain broad secondary sanctions aimed at non-U.S. persons such as Navios. However, there are a number of components of the U.S. sanctions against Venezuela that impact the international shipping community as will be discussed below.
First, E.O. 13850 authorizes sanctions against anyone determined to operate in designated sectors of the Venezuela economy. The designated sectors consist of the gold, oil, financial, and security/defense sectors. This E.O. is pertinent because it has been used in the past to sanction vessels and vessel-owning companies engaged in the trade of Venezuelan oil. E.O. 13850 also authorizes sanctions against anyone who is determined to have provided material assistance, goods or services to a SDN who is designated under E.O. 13850.
Second, E.O. 13884 blocked the Government of Venezuela and all entities 50% or more owned by the Government of Venezuela. Under E.O. 13884, unless exempt or authorized by OFAC, the property and interests in property of persons meeting the definition of the “Government of Venezuela” that are in, or come within, the United States or the possession or control of a United States person are blocked. However, while the Government of Venezuela entities are blocked, they are not necessarily also designated to the SDN list. The prohibitions set forth in E.O. 13884 apply to Navios only with respect to voyages involving U.S. persons or activities within the United States.
Other E.U., UK, and U.S. Economic Sanctions Targets
The EU and UK also maintain sanctions against Syria, North Korea, Belarus and certain other countries and against individuals listed by the EU/UK. These restrictions apply to our operations and as such, to the extent that these countries may be involved in any business it is important to carry out checks to ensure compliance with all relevant restrictions and to carry out due diligence checks on counterparties and cargoes.”
The United States maintains comprehensive economic sanctions against various other countries, including Syria, Cuba and North Korea as well as sanctions against entities and individuals (such as entities and individuals in the foregoing targeted countries, designated terrorists, narcotics traffickers) whose names appear on the List of SDNs and Blocked Persons maintained by the U.S. Treasury Department (collectively, the “Sanctions Targets”) and sanctions targeting particular industries (including the potash industry in Belarus). We are subject to the prohibitions of these sanctions to the extent that any transaction or activity we engage in involves Sanctions Targets and a U.S. person or otherwise has a nexus to the United States.
Taxation of the Partnership
United States Taxation
The following is a discussion of the material U.S. federal income tax considerations applicable to us. This discussion is based upon provisions of the Code, final and temporary regulations thereunder (“Treasury Regulations”), and administrative rulings and court decisions, all as in effect currently and during our year ended December 31, 2022 and all of which are subject to change, possibly with retroactive effect. Changes in these authorities may cause the tax consequences to vary substantially from the consequences described below. The following discussion is for general information purposes only and does not purport to be a comprehensive description of all of the U.S. federal income tax considerations applicable to us.
Election to be Treated as a Corporation: We have elected to be treated and we are currently treated as a corporation for U.S. federal income tax purposes. As such, (i) we are subject to U.S. federal income tax on our income to the extent it is from U.S. sources or otherwise is effectively connected with the conduct of a trade or business in the United States as discussed below; and (ii) we are not subject to section 1446 as that section only applies to entities that for U.S. federal income tax purposes are characterized as partnerships.
Taxation of Operating Income: Substantially all of our gross income is attributable to international shipping. For this purpose, gross income attributable to transportation (“Transportation Income”) includes income derived from, or in connection with, the use, the hiring for use, or the leasing for use (if any) of a vessel to transport cargo, or the performance of services directly related to the use of any vessel to transport cargo, and thus includes both time charter income and bareboat charter income (if any).
Transportation Income that is attributable to transportation that either begins or ends, but that does not both begin and end in the United States (“U.S. Source International Transportation Income”) is considered to be 50.0% derived from sources within the United States. Transportation Income attributable to transportation that both begins and ends in the United States (“U.S. Source Domestic Transportation Income”) is considered to be 100.0% derived from sources within the United States. Transportation Income attributable to transportation exclusively between non-U.S. destinations is considered to be 100.0% derived from sources outside the United States. Transportation Income derived from sources outside the United States generally is not subject to U.S. federal income tax.
We believe that we did not earn any U.S. Source Domestic Transportation Income for our fiscal year ended December 31, 2022 and expect that we will not earn any such income for future years. However, certain of our activities gave rise to U.S. Source International Transportation Income, and future expansion of our operations could result in an increase in the amount of U.S. Source International Transportation Income, which generally would be subject to U.S. federal income taxation, unless the exemption from U.S. federal income taxation under Section 883 of the Code (the “Section 883 Exemption”) applied.
The Section 883 Exemption: In general, the Section 883 Exemption provides that if a non-U.S. corporation satisfies the requirements of Section 883 of the Code and the Treasury Regulations thereunder (the “Section 883 Regulations”), it will not be subject to the net basis and branch profit taxes or the 4.0% gross basis tax described below on its U.S. Source International Transportation Income. The Section 883 Exemption applies only to U.S. Source International Transportation Income and does not apply to U.S. Source Domestic Transportation Income. We qualify for the Section 883 Exemption if, among other matters, we meet the following three requirements:
| • | We are organized in a jurisdiction outside the United States that grants an equivalent exemption from tax to corporations organized in the United States with respect to the types of U.S. Source International Transportation Income that we earn (an “Equivalent Exemption”); |
| • | We satisfy the Publicly Traded Test (as described below) or the qualified shareholder stock ownership test (as described in the Section 883 Regulations); and |
| • | We meet certain substantiation, reporting and other requirements. |
We are organized under the laws of the Republic of the Marshall Islands. The U.S. Treasury Department has recognized the Republic of the Marshall Islands as a jurisdiction that grants an Equivalent Exemption with respect to the type of income that we have earned and are expected to earn. Consequently, our U.S. Source International Transportation Income (including for this purpose, any such income earned by our subsidiaries, that have elected to be disregarded as entities separate from us for U.S. federal income tax purposes) will be exempt from U.S. federal income taxation provided we meet the Publicly Traded Test or the qualified shareholder stock ownership test and we satisfy certain substantiation, reporting and other requirements.
In order to meet the “Publicly Traded Test”, the equity interests in the non-U.S. corporation at issue must be “primarily traded” and “regularly traded” on an established securities market either in the United States or in a jurisdiction outside the United States that grants an Equivalent Exemption. The Section 883 Regulations generally provide, in pertinent part, that a class of equity interests in 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 units of such class that are traded during any taxable year on all established securities markets in that country exceeds the number of units in such class that are traded during that year on established securities markets in any other single country. Equity interests in a non-U.S. corporation will be considered to be “regularly traded” on an established securities market under the Section 883 Regulations provided one or more classes of such equity interests representing more than 50.0% of the aggregate vote and value of all of the outstanding equity interests in the non-U.S. corporation satisfy certain listing and trading volume requirements. These listing and trading volume requirements are satisfied with respect to a class of equity interests listed on an established securities market provided trades in such class are effected, other than in de minimis quantities, on such market on at least 60 days during the taxable year and the aggregate number of units in such class that are traded on such market or markets during the taxable year are at least 10% of the average number of units outstanding in that class during the taxable year (with special rules for short taxable years). In addition, a class of equity interests traded on an established securities market in the United States will be considered to satisfy the listing and trading volume requirements if the equity interests in such class are “regularly quoted by dealers making a market” in such class (within the meaning of the Section 883 Regulations). Notwithstanding these rules, a class of equity that would otherwise be treated as “regularly traded” on an established securities market will not be so treated if, for more than half of the number of days during the taxable year, one or more “5.0% unitholders” (i.e., unitholders owning, actually or constructively, at least 5.0% of the vote and value of that class) own in the aggregate 50.0% or more of the vote and value of that class (the “Closely Held Block Exception”), unless the corporation can establish that a sufficient proportion of such 5.0% unitholders are qualified shareholders (as defined in the Section 883 Regulations) so as to preclude other persons who are 5.0% unitholders from owning 50.0% or more of the value of that class for more than half the days during the taxable year.
Because substantially all of our common units are and have been traded on the NYSE, which is considered to be an established securities market, our common units are and have been “primarily traded” on an established securities market for purposes of the Publicly Traded Test.
Further, although the matter is not free from doubt, based upon our expected cash flow and distributions on our outstanding equity interests, we believe that our common units represented more than 50.0% of the total value of all of our outstanding equity interests, and we believe that we satisfied the trading volume requirements described previously for our fiscal year ended December 31, 2022. We believe that we did not lose eligibility for the Section 883 Exemption as a result of the Closely Held Block Exception for such year, and consequently, we believe that we satisfied the Publicly Traded Test for our fiscal year ended December 31, 2022.
While there can be no assurance that we will continue to satisfy the requirements for the Publicly Traded Test in the future, and our board of directors could determine that it is in our best interests to take an action that would result in our not being able to satisfy the Publicly Traded Test, we presently expect, subject to the possibility that our common units may be delisted by a qualifying exchange, to continue to satisfy the requirements for the Publicly Traded Test and the Section 883 Exemption for future years. Please see below for a discussion of the consequences in the event we do not satisfy the Publicly Traded Test or otherwise fail to qualify for the Section 883 Exemption.
Please also see the risk factor entitled “Item 3. Key Information - D. Risk Factors - Risks Relating to Our Units - The New York Stock Exchange may delist our securities from trading on its exchange, which could limit your ability to trade our securities and subject us to additional trading restrictions”.
The Net Basis Tax and Branch Profits Tax: If we earn U.S. Source International Transportation Income and the Section 883 Exemption does not apply, the U.S. source portion of such income may be treated as effectively connected with the conduct of a trade or business in the United States (“Effectively Connected Income”) if we have a fixed place of business in the United States and substantially all of our U.S. Source International Transportation Income is attributable to regularly scheduled transportation or, in the case of bareboat charter income (if any), is attributable to a fixed place of business in the United States.
We believe that, for our fiscal year ended December 31, 2022, none of our U.S. Source International Transportation Income was attributable to regularly scheduled transportation or received pursuant to bareboat charters. As a result, we believe that none of our U.S. Source International Transportation Income for such year would be treated as Effectively Connected Income even in the event that we did not qualify for the Section 883 Exemption. However, there is no assurance that we will not earn income pursuant to regularly scheduled transportation or bareboat charters attributable to a fixed place of business in the United States in the future, which would result in such income being treated as Effectively Connected Income. In addition, any U.S. Source Domestic Transportation Income may be treated as Effectively Connected Income. Any income we earn that is treated as Effectively Connected Income would be subject to U.S. federal corporate income tax (presently imposed at a 21.0% rate) as well as a 30.0% branch profits tax imposed under Section 884 of the Code. In addition, a 30.0% branch interest tax could be imposed on certain interest paid or deemed paid by us.
On the sale of a vessel that has produced Effectively Connected Income, we could be subject to the net basis corporate income tax as well as the branch profits tax with respect to the gain recognized up to the amount of certain prior deductions for depreciation that reduced Effectively Connected Income. Otherwise, we would not be subject to U.S. federal income tax with respect to gain realized on the sale of a vessel, provided the gain is not attributable to an office or other fixed place of business maintained by us in the United States under U.S. federal income tax principles.
The 4.0% Gross Basis Tax: If the Section 883 Exemption does not apply and the net basis tax does not apply, we would be subject to a 4.0% U.S. federal income tax on the U.S. source portion of our gross U.S. Source International Transportation Income, without the benefit of any deductions.
Marshall Islands Taxation
Based on the opinion of Reeder and Simpson, P.C., our counsel as to matters of the law of the Republic of the Marshall Islands, because we, our operating subsidiary and our controlled affiliates do not, and do not expect to, conduct business or operations in the Republic of the Marshall Islands, neither we nor our controlled affiliates will be subject to income, capital gains, profits or other taxation under current Marshall Islands law. As a result, distributions by our operating subsidiary and our controlled affiliates to us will not be subject to Marshall Islands taxation.
Other Tax Jurisdictions
Certain of Navios Partners' subsidiaries are incorporated in countries which impose taxes, such as Malta and Belgium, however such taxes are immaterial to Navios Partners' operations.
In accordance with the currently applicable Greek law, foreign flagged vessels that are managed by Greek or foreign ship management companies having established an office in Greece on the basis of the applicable licensing regime are subject to tax liability towards the Greek state which is calculated on the basis of the relevant vessel's tonnage. A tax credit is recognized for tonnage tax (or similar tax) paid abroad, up to the amount of the tax due in Greece. The owner, the manager and the bareboat charterer or the financial lessee (where applicable) are liable to pay the tax due to the Greek state. The payment of said tax exhausts the tax liability of the foreign ship owning company, the bareboat charterer, the financial lessee (as applicable) and the relevant manager against any tax, duty, charge or contribution payable on income from the exploitation of the foreign flagged vessel outside Greece.
C. Organizational Structure
Please read exhibit 8.1 to this Annual Report for a list of our significant subsidiaries as of December 31, 2022.
Affiliates included in the financial statements accounted for under the equity method:
In the consolidated financial statements of Navios Partners, the following entities are included as affiliates and are accounted for under the equity method for such periods: (i) Navios Containers and its subsidiaries (with an ownership interest of 35.7% as of December 31, 2020). Following the completion of the NMCI Merger, as of March 31, 2021, Navios Containers was acquired by Navios Partners and ownership was 100%; and (ii) Navios Europe II and its subsidiaries with an ownership interest of 5% through the date of its liquidation on June 29, 2020.
D. Property, plants and equipment
Other than our vessels, we do not have any material property, plants or equipment.
Item 4A. Unresolved Staff Comments
None
Item 5. Operating and Financial Review and Prospects
The following is a discussion of Navios Partners’ financial condition and results of operations for each of the fiscal years ended December 31, 2022, 2021 and 2020. Navios Partners’ financial statements have been prepared in accordance with U.S. GAAP. You should read this section together with the consolidated financial statements and the accompanying notes to those financial statements, which are included in this document.
This report contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Reform Act of 1995. These forward-looking statements are based on Navios Partners’ current expectations and observations. Included among the factors that, in our view, could cause actual results to differ materially from the forward-looking statements contained in this report are those discussed under “Risk Factors” and “Forward-Looking Statements”.
Overview
We are an international owner and operator of Dry Cargo and tanker vessels, formed in August 2007 by Navios Holdings. We have been a public company since November 2007.
As of March 17, 2023, there were outstanding 30,184,388 common units and 622,296 general partnership units. Navios Holdings currently owns an approximately 10.3% ownership interest in Navios Partners and Olympos Maritime Ltd, our general partner, through its ownership of all the general partnership units currently owns a 2.0% ownership interest in Navios Partners based on all outstanding common units and general partnership units.
Please see “Item 4. Information on the Partnership”.
Fleet Developments
Please read Note 7 – Vessels, net to our consolidated financial statements, included elsewhere in this Annual Report for a full description of the Company’s fleet developments.
Please read “Item 5. Operating and Financial Review and Prospects – Recent Developments” for a full description of the Company’s most recent fleet developments.
Please read Note 16 – Commitments and Contingencies to our consolidated financial statements, included elsewhere in this Annual Report for a full description of vessels to be delivered to our fleet.
Please read Note 2(b) – Summary of Significant Accounting Policies to our consolidated financial statements, included elsewhere in this Annual Report for a full description of the Company’s subsidiaries.
Recent Developments
Financing arrangements
In February 2023, Navios Partners completed a $32.0 million sale and leaseback transaction with an unrelated third party, in order to finance one drybulk vessel. The sale and leaseback transaction matures ten years from the date of the delivery of the vessel by the owners to the charterer and bears interest at Libor plus 200 bps per annum.
In February 2023, Navios Partners entered into a new credit facility with a commercial bank for a total amount of up to $161.6 million in order to finance part of the contract price of four newbuilding container vessels, currently under construction. The credit facility matures ten years after drawdown and bears interest at SOFR plus 170 bps per annum.
Acquisition of vessels
On March 6, 2023, Navios Partners acquired from an unrelated third party, the Navios Felix, a previously chartered-in 2016-built scrubber-fitted Capesize vessel of 181,221 dwt for a contract price of $40.1 million.
On February 5, 2023, Navios Partners took delivery of the Navios Meridian, a 2023-built Panamax vessel of 82,010 dwt. (See Note 16 – Commitments and Contingencies, included elsewhere in this Annual Report).
Sale of vessels
On March 17, 2023, Navios Partners agreed to sell the Navios Libertas, a 2007-built Panamax vessel of 75,511 dwt, to an unrelated third party, for a sales price of $13.8 million. The sale is expected to be completed during the second quarter of 2023.
On February 6, 2023, Navios Partners agreed to sell the Serenitas N, a 2011-built Ultra-Handymax vessel of 56,644 dwt, to an unrelated third party, for a sales price of $12.3 million. The sale is expected to be completed during the second quarter of 2023.
On February 6, 2023, Navios Partners agreed to sell the Nave Photon, a 2008-built VLCC vessel of 297,395 dwt, to an unrelated third party, for a sales price of $53.0 million. The sale was completed on March 3, 2023.
On January 5, 2023, Navios Partners agreed to sell the Navios Prosperity I, a 2007-built Panamax vessel of 75,527 dwt, to an unrelated third party, for a sales price of $13.8 million. The sale was completed on February 7, 2023.
On January 3, 2023, Navios Partners agreed to sell the Aurora N, a 2008-built LR1 Product Tanker vessel of 63,495 dwt, to an unrelated third party, for a sales price of $22.5 million. The sale is expected to be completed during the second quarter of 2023.
On December 30, 2022, Navios Partners agreed to sell the Navios Amaryllis, a 2008-built Ultra-Handymax vessel of 58,735 dwt, to an unrelated third party, for a sales price of $15.1 million. The sale was completed on January 26, 2023.
On December 19, 2022, Navios Partners agreed to sell the Jupiter N, a 2011-built Post-Panamax vessel of 93,062 dwt, to an unrelated third party, for a sales price of $16.4 million. The sale was completed on February 3, 2023.
On December 5, 2022, Navios Partners agreed to sell the Nave Polaris, a 2011-built Chemical Tanker vessel of 25,145 dwt, to an unrelated third party, for a sales price of $14.7 million. The sale was completed on January 24, 2023.
On December 5, 2022, Navios Partners agreed to sell the Nave Cosmos, a 2010-built Chemical Tanker vessel of 25,130 dwt, to an unrelated third party, for a sales price of $13.6 million. The sale was completed on January 9, 2023.
On December 1, 2022, Navios Partners agreed to sell the Star N, a 2009-built MR1 Product Tanker vessel of 37,836 dwt, to an unrelated third party, for a sales price of $18.1 million. The sale was completed on January 26, 2023.
On November 30, 2022, Navios Partners agreed to sell the Nave Dorado, a 2005-built MR2 Product Tanker vessel of 47,999 dwt, to an unrelated third party, for a sales price of $15.6 million. The sale was completed on January 17, 2023.
Our Charters
We generate revenues by charging our customers for the use of our vessels to transport their liquid, dry and containerized cargos. In general, the vessels in our fleet are chartered-out under time charters, which range in length from one to twelve years at inception. From time to time, we operate vessels in the spot market until the vessels have been chartered under long-term charters.
For the year ended December 31, 2022, no customer accounted for 10.0% or more of our total revenues. For the year ended December 31, 2021, Singapore Marine represented approximately 14.5% of our total revenues. For the year ended December 31, 2020 HMM, Singapore Marine and Cargill represented approximately 23.4%, 19.5% and 11.4%, respectively, of our total revenues. No other customers accounted for 10% or more of total revenues for any of the years presented.
Our revenues are driven by the number of vessels in the fleet, the number of days during which the vessels operate and our charter hire rates, which, in turn, are affected by a number of factors, including:
• the duration of the charters;
• the level of spot and long-term market rates at the time of charter;
• decisions relating to vessel acquisitions and disposals;
• the amount of time spent positioning vessels;
• the amount of time that vessels spend in dry dock undergoing repairs and upgrades;
• the age, condition and specifications of the vessels;
• the aggregate level of supply and demand in the liquid, dry and containerized cargo shipping industry;
• armed conflicts, such as the Russian/Ukrainian conflicts; and
• the global outbreak of novel coronavirus (COVID-19) or other epidemics or pandemics.
Time charters are available for varying periods, ranging from a single trip (spot charter) to long-term which may be many years. In general, a long-term time charter assures the vessel owner of a consistent stream of global revenue. Operating the vessel in the spot market affords the owner greater spot market opportunity, which may result in high rates when vessels are in high demand or low rates when vessel availability exceeds demand. We intend to operate our vessels in the long-term charter market. Vessel charter rates are affected by world economics, international events, weather conditions, strikes, governmental policies, supply and demand and many other factors that might be beyond our control.
We could lose a customer or the benefits of a charter if:
• the customer fails to make charter payments because of its financial inability, disagreements with us or otherwise;
• the customer exercises certain rights to terminate the charter of the vessel;
• the customer terminates the charter because we fail to deliver the vessel within a fixed period of time, the vessel is lost or damaged beyond repair, there are serious deficiencies in the vessel or prolonged periods of off-hire, or we default under the charter; or
• a prolonged force majeure event affecting the customer, including damage to or destruction of relevant production facilities, war or political unrest prevents us from performing services for that customer.
Under some of our time charters, either party may terminate the charter contract in the event of war in specified countries or in locations that would significantly disrupt the free trade of the vessel. Some of the time charters covering our vessels require us to return to the charterer, upon the loss of the vessel, all advances paid by the charterer but not earned by us.
Vessel Operations
Our Managers are generally responsible for the commercial, technical, health and safety and other management services related to the vessels' operation, while charterers are usually responsible for bunkering and substantially all of the vessel voyage costs, including canal tolls and port charges.
Under the Management Agreements we entered into with the Managers, the Managers bear all of our vessel operating expenses in exchange for the payment of fees. Under these agreements, the Managers are responsible for commercial, technical, health and safety and other management services related to the vessels' operation, including chartering, technical support, maintenance and insurance. Under the Management Agreements we had fixed the rates for these ship management services until December 31, 2021 with an annual increase of 3% after January 1, 2022 for the remaining contractual period unless agreed otherwise. Costs associated with special surveys, drydocking expenses and certain extraordinary items under this agreement are reimbursed by Navios Partners at cost at occurrence.
Payment of any extraordinary fees or expenses to the Managers could significantly increase our vessel operating expenses and impact our results of operations.
For detailed information on the Management Agreements, please read “Item 7. Major Unitholders and Related Party Transactions - Management Agreements” and Note 18 – Transactions with Related Parties and Affiliates to our consolidated financial statements, included elsewhere in this Annual Report.
Administrative Services
Under the Administrative Services Agreement we entered into with the Manager, we reimburse the Manager for reasonable costs and expenses incurred in connection with the provision of the services under this agreement within 15 days after the Manager submits to us an invoice for such costs and expenses, together with any supporting detail that may be reasonably required. Under this agreement which expires on January 1, 2025, the Manager provides significant administrative, financial and other support services to us.
For more information on the Administrative Services Agreement, please read “Item 7. Major Unitholders and Related Party Transactions - Administrative Services Agreement” and the Note 18 – Transactions with Related Parties and Affiliates to our consolidated financial statements, included elsewhere in this Annual Report.
Trends and Factors Affecting Our Future Results of Operations
We believe the principal factors that will affect our future results of operations are the economic, regulatory, political and governmental conditions that affect the shipping industry generally and that affect conditions in countries and markets in which our vessels engage in business. Other key factors that will be fundamental to our business, future financial condition and results of operations include:
| • | the demand for seaborne transportation services; |
| • | the ability of the Managers’ commercial and chartering operations to successfully employ our vessels at economically attractive rates, particularly as our fleet expands and our charters expire; |
| • | the effective and efficient technical management of our vessels; |
| • | the Managers’ ability to satisfy technical, health, safety and compliance standards of major commodity traders; and |
| • | the strength of and growth in the number of our customer relationships, especially with major commodity traders. |
In addition to the factors discussed above, we believe certain specific factors will impact our combined and consolidated results of operations. These factors include:
| • | the charter hire earned by our vessels under our charters; |
| • | our access to capital required to acquire additional vessels and/or to implement our business strategy; |
| • | our ability to sell vessels at prices we deem satisfactory; |
| • | our level of debt and the related interest expense and amortization of principal; and |
| • | the level of any distribution on our common units. |
Please read “Risk Factors” for a discussion of certain risks inherent in our business.
A. Operating results
Year Ended December 31, 2022 Compared to the Year Ended December 31, 2021
Upon completion of the NMCI Merger and NNA Merger the results of operations of Navios Containers and Navios Acquisition are included in Navios Partners’ Consolidated Statements of Operations.
The following table presents consolidated revenue and expense information for the years ended December 31, 2022 and 2021. This information was derived from the audited consolidated revenue and expense accounts of Navios Partners for the respective periods.
| Year Ended December 31, 2022 |
Year Ended December 31, 2021 | ||||
| Time charter and voyage revenues | $ | 1,210,528 | $ | 713,175 | |
| Time charter and voyage expenses | (122,630) | (36,142) | |||
| Direct vessel expenses | (56,754) | (29,259) | |||
| Vessel operating expenses (entirely through related parties transactions) | (312,022) | (191,449) | |||
| General and administrative expenses | (67,180) | (41,461) | |||
| Depreciation and amortization of intangible assets | (201,820) | (112,817) | |||
| Amortization of unfavorable lease terms | 74,963 | 108,538 | |||
| Gain on sale of vessels, net | 149,352 | 33,625 | |||
| Interest expense and finance cost, net | (83,091) | (42,762) | |||
| Interest income | 856 | 859 | |||
| Other income | 1,065 | 289 | |||
| Other expense | (14,020) | (9,738) | |||
| Equity in net earnings of affiliated companies | — | 80,839 | |||
| Transaction costs | — | (10,439) | |||
| Bargain gain | — | 48,015 | |||
| Net income | $ | 579,247 | $ | 511,273 | |
| Net loss attributable to the noncontrolling interest | — | 4,913 | |||
| Net income attributable to Navios Partners’ unitholders | $ | 579,247 | $ | 516,186 |
The following table reflects certain key indicators of Navios Partners’ fleet performance for the years ended December 31, 2022 and 2021 (including for 2021, the Navios Containers’ fleet and Navios Acquisition’s fleet from April 1, 2021 and from August 26, 2021, respectively).
| Year Ended December 31, 2022 |
Year Ended December 31, 2021 | ||||
| Available Days (1) | 49,804 | 31,884 | |||
| Operating Days (2) | 49,271 | 31,631 | |||
| Fleet Utilization (3) | 98.9% | 99.2% | |||
| Time Charter Equivalent (per day) (4) | $ | 23,042 | $ | 21,709 | |
| Vessels operating at period end | 162 | 128 |
| (1) | Available days for the fleet represent total calendar days the vessels were in Navios Partners’ possession for the relevant period after subtracting off-hire days associated with scheduled repairs, dry dockings or special surveys and ballast days relating to voyages. The shipping industry uses available days to measure the number of days in a relevant period during which a vessel is capable of generating revenues. |
| (2) | Operating days are the number of available days in the relevant period less the aggregate number of days that the vessels are off-hire due to any reason, including unforeseen circumstances. The shipping industry uses operating days to measure the aggregate number of days in a relevant period during which vessels actually generate revenues. |
| (3) | Fleet utilization is the percentage of time that Navios Partners’ vessels were available for generating revenue, and is determined by dividing the number of operating days during a relevant period by the number of available days during that period. The shipping industry uses fleet utilization to measure efficiency in finding employment for vessels and minimizing the amount of days that its vessels are off-hire for reasons other than scheduled repairs, dry dockings or special surveys. |
| (4) | Time Charter Equivalent rate (“TCE rate”) is defined as voyage, time charter revenues and charter-out revenues under bareboat contracts (grossed up by currently applicable fixed vessel operating expenses) less voyage expenses during a period divided by the number of available days during the period. The TCE rate per day is a standard shipping industry performance measure used primarily to present the actual daily earnings generated by vessels on various types of charter contracts for the number of available days of the fleet. |
Time charter and voyage revenues: Time charter and voyage revenues for the year ended December 31, 2022 increased by $497.3 million, or 69.7%, to $1,210.5 million, as compared to $713.2 million for the same period in 2021. The increase in revenue was mainly attributable to the increase in the size of our fleet and to the increase in the TCE rate. For the year ended December 31, 2022, the time charter and voyage revenues were affected by $48.2 million relating to the straight-line effect of the containerships and tankers charters with de-escalating rates. For the year ended December 31, 2022, the TCE rate increased by 6.1% to $23,042 per day, as compared to $21,709 per day for the same period in 2021. The available days of the fleet increased by 56.2% to 49,804 days for the year ended December 31, 2022, as compared to 31,884 for the same period in 2021 mainly due to the acquisition of the 36-vessel drybulk fleet from Navios Holdings, the NMCI Merger, the NNA Merger and the deliveries of newbuilding and secondhand vessels, partially mitigated by the sale of vessels.
Time charter and voyage expenses: Time charter and voyage expenses for the year ended December 31, 2022 increased by $86.5 million, or 239.6%, to $122.6 million, as compared to $36.1 million for the year ended December 31, 2021. The increase was mainly attributable to : (i) a $38.2 million increase in bareboat and charter-in hire expense of the tanker and drybulk fleet; (ii) a $29.7 million increase in bunkers expenses arising from the increased number of freight voyages in 2022; (iii) an $8.4 million increase in brokers’ commissions; (iv) a $7.2 million increase in other voyage expenses; and (v) a $3.0 million increase in port expenses.
Direct vessel expenses: Direct vessel expenses for the year ended December 31, 2022, increased by $27.5 million, or 93.9%, to $56.8 million, as compared to $29.3 million for the year ended December 31, 2021. The increase of $27.5 million was mainly attributable to the amortization of the deferred drydock and special survey costs and insurance costs due to the increase in the size of our fleet and the increased crew related expenses as a result of covid-19 measures (pursuant to the terms of the Management Agreements).
Vessel operating expenses: Vessel operating expenses for the year ended December 31, 2022, increased by $120.6 million, or 63%, to $312.0 million, as compared to $191.4 million for the year ended December 31, 2021. The increase was mainly due to the expansion of our fleet.
General and administrative expenses: General and administrative expenses increased by $25.7 million, or 61.9%, to $67.2 million for the year ended December 31, 2022, as compared to $41.5 million for the year ended December 31, 2021. The increase was mainly due to a: (i) $21.4 million increase in administrative fees paid to the Managers mainly due to the increased number of vessels in Navios Partners’ fleet; and (ii) $4.6 million increase in legal and professional fees, as well as audit fees and other administrative expenses. The above increase was partially mitigated by an approximately $0.3 million decrease in stock based compensation expenses.
Depreciation and amortization of intangible assets: Depreciation and amortization of intangible assets for the year ended December 31, 2022 increased by $89.0 million or 78.9%, to $201.8 million as compared to $112.8 million for the year ended December 31, 2021. The increase of $89.0 million was mainly attributable to a: (i) $42.4 million increase due to the delivery of the fleet of Navios Acquisition in Navios Partners’ owned fleet; (ii) $34.9 million increase due to the delivery of the 36-vessel drybulk fleet in Navios Partners’ owned fleet; (iii) $7.3 million increase in depreciation expense due to the delivery of the fleet of Navios Containers in Navios Partners’ owned fleet; (iv) $5.7 million increase in depreciation expense due to the delivery of 14 vessels in 2022 and 2021; and (v) $0.8 million increase in depreciation expense due to vessel additions. The above increase was partially mitigated by a: (i) $1.8 million decrease due to the sale of 14 vessels in 2022 and 2021; and (ii) $0.3 million decrease in amortization of favorable lease terms. Depreciation of vessels is calculated using an estimated useful life of 25 years for drybulk and tanker vessels and 30 years for containerships, respectively, from the date the vessel was originally delivered from the shipyard.
Amortization of unfavorable lease terms: Amortization of unfavorable lease terms amounted to $75.0 million for the year ended December 31, 2022, related to the fair value of the time charters with unfavorable lease terms as determined at the acquisition date of Navios Containers, at the date of obtaining control of Navios Acquisition and at the date of the acquisition of the 36-vessel drybulk fleet. Amortization of unfavorable lease terms amounted to $108.5 million for the year ended December 31, 2021, related to the fair value of the time charters with unfavorable lease terms as determined at the acquisition date of Navios Containers and at the date of obtaining control of Navios Acquisition.
Gain on sale of vessels, net: Gain on sale of vessels amounted to $149.4 million for the year ended December 31, 2022, relating to a gain on sale of the Navios Utmost, the Navios Unite, the Navios Camelia, the Navios Alegria and the Perseus N amounted to $157.5 million, partially mitigated by a loss on sale of the Navios Symmetry and impairment loss due to sale of the Nave Cosmos, the Nave Polaris, the Jupiter N and the Navios Prosperity I that amounted to $8.1 million in aggregate (see Note 7 – Vessels, net to our consolidated financial statements, included elsewhere in this Annual Report). Gain on sale of vessels amounted to $33.6 million for the year ended December 31, 2021, relating to a gain on sale of the Navios Altair I, the Harmony N, the Navios Azalea, the Navios Dedication, the Esperanza N, the Castor N and the Solar N amounted to $35.0 million, partially mitigated by a loss on sale of the Joie N that amounted to $1.4 million.
Interest expense and finance cost, net: Interest expense and finance cost, net for the year ended December 31, 2022 increased by $40.3 million, or 94.2%, to $83.1 million, as compared to $42.8 million for the year ended December 31, 2021. The increase was mainly due to the increase in Navios Partner’s average loan balance to $1,550.4 million for the year ended December 31, 2022, as compared to the $930.9 million for the year ended December 31, 2021 due to credit facilities and financial liabilities recognized following the acquisition of 36-vessel drybulk fleet of Navios Holdings, the NNA Merger and the NMCI Merger and due to the increase of the weighted average interest rate for the year ended December 31, 2022 to 5.33% from 4.14% for the year ended December 31, 2021.
Interest income: Interest income amounted to $0.9 million for each of the years ended December 31, 2022 and 2021.
Other income: Other income for the year ended December 31, 2022 amounted to $1.1 million, as compared to $0.3 million for the year ended December 31, 2021.
Other expense: Other expense for the year ended December 31, 2022 amounted to $14.0 million as compared to $9.7 million for the year ended December 31, 2021 mainly due to the increase in expenses related to claims reserve and tonnage tax duties following the increase of our fleet.
Equity in net earnings of affiliated companies: Equity in net earnings of affiliated companies for the year ended December 31, 2021 amounted to $80.8 million. The amount of $80.8 million was the gain from equity in net earnings resulting from the remeasurement of the existing interest held in Navios Containers upon NMCI Merger. As of March 31, 2021, Navios Partners previously held interest of 35.7% in Navios Containers was remeasured to a fair value of $107.0 million, resulting in revaluation gain of $75.4 million which along with the equity gain of approximately $5.4 million from the operations of Navios Containers up to the closing date aggregate to a gain on acquisition of control in the amount of $80.8 million. There was no equity in net earnings of affiliated companies for the year ended December 31, 2022.
Transaction costs: Transaction costs amounted to $10.4 million for the year ended December 31, 2021 and were related to the Mergers. There were no transaction costs for year ended December 31, 2022.
Bargain gain: Bargain gain amounted to $48.0 million for the year ended December 31, 2021, resulting from the excess Navios Containers’ fair value of the identifiable net assets acquired of $342.7 million over the total purchase price consideration of $298.6 million and the excess of Navios Acquisition’s fair value of the identifiable net assets acquired of $211.6 million over the fair value of the consideration transferred of $150.0 million and the fair value of the noncontrolling interest of $57.6 million. There was no bargain gain for year ended December 31, 2022.
Net loss attributable to the noncontrolling interest: Net loss attributable to the noncontrolling interest amounted to $4.9 million for the year ended December 31, 2021. There were no net loss attributable to the noncontrolling interest for year ended December 31, 2022.
Net income attributable to Navios Partners’ unitholders: Net income attributable to Navios Partners’ unitholders for the year ended December 31, 2022 amounted to $579.2 million compared to net income of $516.2 million for the year ended December 31, 2021. The increase in net income of approximately $63.0 million was due to the factors discussed above.
For a detailed discussion of operating results for the year ended December 31, 2021 compared to the year ended December 31, 2020 please see “Item 5. Operating and Financial Review and Prospects - A. Operating results” included in Navios Partners’ 2021 Annual Report filed on Form 20-F with the SEC on April 12, 2022.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements that have or are reasonably likely to have, a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
B. Liquidity and Capital Resources
We anticipate that our primary sources of funds for our short-term liquidity needs will be cash flows from our equity offerings, operations, proceeds from asset sales, long-term bank borrowings and other debt raisings. In addition to distributions on our units, 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 and other maintenance capital expenditures and debt repayment. As of December 31, 2022, Navios Partners’ current assets totaled $310.4 million, while current liabilities totaled $617.7 million, resulting in a negative working capital position of $307.3 million. Navios Partners’ cash forecast indicates that it will generate sufficient cash through its contracted revenue of $3.5 billion as of March 13, 2023 and cash proceeds from sale of vessels (see Note 23 – Subsequent events to our consolidated financial statements, included elsewhere in this Annual Report) to make the required principal and interest payments on its indebtedness, provide for the normal working capital requirements of the business for a period of at least 12 months from the date of issuance of our consolidated financial statements.
Generally, our long-term sources of funds derive from cash from operations, long-term bank borrowings and other debt or equity financings to fund acquisitions and expansion and investment capital expenditures, including opportunities we may pursue under the Omnibus Agreement. 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.
Cash deposits and cash equivalents in excess of amounts covered by government provided insurance are exposed to loss in the event of non-performance by financial institutions. Navios Partners does maintain cash deposits and equivalents in excess of government provided insurance limits. Navios Partners also minimizes exposure to credit risk by dealing with a diversified group of major financial institutions.
Navios Partners may use funds to repurchase its outstanding common units and/or indebtedness from time to time. Repurchases may be made in the open market, or through privately negotiated transactions or otherwise, in compliance with applicable laws, rules and regulations, at prices and on terms Navios Partners deems appropriate and subject to its cash requirements for other purposes, compliance with the covenants under Navios Partners’ credit facilities, and other factors management deems relevant.
As of December 31, 2022, the total borrowings, net of deferred finance costs were $1,945.4 million.
The credit facilities and certain financial liabilities contain a number of restrictive covenants that prohibit or limit Navios Partners from, among other things: incurring or guaranteeing indebtedness; entering into affiliate transactions; charging, pledging or encumbering the vessels; changing the flag, class, management or ownership of Navios Partners’ vessels; changing the commercial and technical management of Navios Partners’ vessels; selling or changing the beneficial ownership or control of Navios Partners’ vessels; not maintaining Navios Holdings’, Angeliki Frangou’s or their affiliates’ ownership in Navios Partners of at least 5.0%; and subordinating the obligations under the credit facilities to any general and administrative costs related to the vessels, including the fixed daily fee payable under the Management Agreements.
The Company’s credit facilities and certain financial liabilities also require compliance with a number of financial covenants, including: (i) maintain a required security ranging over 105% to 140%; (ii) minimum free consolidated liquidity in an amount equal to $0.5 million per owned vessel and a number of vessels as defined in the Company’s credit facilities and financial liabilities; (iii) maintain a ratio of EBITDA to interest expense of at least 2.00:1.00; (iv) maintain a ratio of total liabilities or total debt to total assets (as defined in the Company’s credit facilities and financial liabilities) ranging from less than 0.75 to 0.80; and (v) maintain a minimum net worth ranging from $30.0 million to $135.0 million.
It is an event of default under the credit facilities and certain financial liabilities if such covenants are not complied with in accordance with the terms and subject to the prepayments or cure provisions of the facilities.
As of December 31, 2022, Navios Partners was in compliance with the financial covenants and/or the prepayments and/or the cure provisions, as applicable, in each of its credit facilities and certain financial liabilities.
Please read Note 11 – Borrowings to our consolidated financial statements, included elsewhere in this Annual Report for a full description of the financing arrangements of the Company as of December 31, 2022.
Please read “Item 5. Operating and Financial Review and Prospects – Recent Developments” for a full description of the Company’s most recent financing arrangements.
Please read Note 13 – Repurchases and Issuance of Units to our consolidated financial statements, included elsewhere in this Annual Report for a full description of the Company’s equity offerings and issuances of units.
Please See “Item 4. Information on the Partnership – A. History and Development of the Partnership” for further discussion of Navios Partners' Liquidity and Capital Resources.
Cash flows for the year ended December 31, 2022 compared to the year ended December 31, 2021:
The following table presents cash flow information for the years ended December 31, 2022 and 2021. This information was derived from the audited Consolidated Statements of Cash Flows of Navios Partners for the respective periods.
| Year Ended December 31, 2022 |
Year Ended December 31, 2021 | ||||
| (In thousands of U.S. dollars) | |||||
| Net cash provided by operating activities | $ | 506,340 | $ | 277,173 | |
| Net cash used in investing activities | (316,241) | (106,252) | |||
| Net cash used in financing activities | (184,447) | (32,203) | |||
| Net increase in cash, cash equivalents and restricted cash | $ | 5,652 | $ | 138,718 | |
Cash provided by operating activities for the year ended December 31, 2022 as compared to the cash provided by operating activities for the year ended December 31, 2021:
Net cash provided by operating activities increased by $229.1 million to $506.3 million inflow for the year ended December 31, 2022, as compared to $277.2 million inflow for the same period in 2021.
The net cash outflow resulting from the change in operating assets and liabilities of $139.8 million for the year ended December 31, 2022 resulted from : (i) $65.9 million in payments for dry dock and special survey costs; (ii) a $46.6 million increase in accounts receivable; (iii) a $20.9 million increase in prepaid expenses and other current assets (iv) a $13.4 million decrease in amounts due to related parties; (v) a $6.2 million increase in amounts due from related parties; and (vi) an $1.7 million decrease in accrued expenses. This amount was partially mitigated by: (i) an $11.5 million increase in deferred revenue; and (ii) a $3.4 million increase in accounts payable.
The net cash outflow resulting from the change in operating assets and liabilities of $96.4 million for the year ended December 31, 2021 resulted from a: (i) $53.4 million increase in amounts due from related parties; (ii) $49.8 million payments for dry dock and special survey costs; (iii) $14.5 million decrease in amounts due to related parties; and (iv) $7.7 million decrease in accrued expenses. This amount was partially mitigated by a: (i) $17.7 million increase in deferred revenue; (ii) $9.8 million decrease in prepaid expenses and other current assets; (iii) $1.2 million increase in accounts payable; and (iv) $0.3 million decrease in accounts receivable.
Cash used in investing activities for the year ended December 31, 2022 as compared to the cash used in investing activities for the year ended December 31, 2021:
Net cash used in investing activities increased by $209.9 million to $316.2 million outflow for the year ended December 31, 2022, as compared to $106.3 million outflow for the same period in 2021.
Cash used in investing activities of $316.2 million for the year ended December 31, 2022 was mainly due to: (i) $433.8 million related to vessel acquisitions and additions; and (ii) $176.8 million related to deposits for the acquisition/ option to acquire vessels and capitalized expenses. This amount was partially mitigated by: (i) $284.5 million of net proceeds related to the sale of the Navios Utmost, the Navios Unite, the Navios Alegria, the Navios Camelia, the Perseus N, the Navios Symmetry and the Navios Ulysses in 2022; and (ii) $9.9 million of cash acquired through the delivery of the 36-vessel drybulk fleet.
Cash used in investing activities of $106.3 million for the year ended December 31, 2021 was mainly due to: (i) $217.0 million related to vessel acquisitions and additions; and (ii) $61.8 million related to deposits for the acquisition/ option to acquire vessels and capitalized expenses. This amount was partially mitigated by: (i) $121.0 million of net proceeds related to the sale of the Navios Altair I, the Navios Azalea, the Navios Dedication, the Joie N, the Castor N, the Solar N, the Harmony N and the Esperanza N in 2021; (ii) $42.6 million of cash acquired from business acquisitions through the Mergers; and (iii) $8.9 million of proceeds from the senior unsecured notes of HMM.
Cash used in financing activities for the year ended December 31, 2022 as compared to the cash used in financing activities for the year ended December 31, 2021:
Net cash used in financing activities increased by $152.2 million to $184.4 million outflow for the year ended December 31, 2022, as compared to $32.2 million outflow for the same period in 2021.
Cash used in financing activities of $184.4 million for the year ended December 31, 2022 was mainly due to: (i) $651.8 million repayments of loans and financial liabilities; (ii) $6.2 million payments for cash distributions; and (iii) $6.1 million payments of deferred finance costs related to the new credit facilities and sale and leaseback agreements. This amount was partially mitigated by $479.7 million proceeds from the new credit facilities and sale and leaseback agreements.
Cash used in financing activities of $32.2 million for the year ended December 31, 2021 was mainly due to: (i) loans and financial liabilities repayments of $959.2 million; (ii) payment of $12.2 million of deferred finance fees relating to the new credit facilities and sale and leaseback agreements; and (iii) payment of a total cash distributions of $4.6 million. This amount was partially mitigated by: (i) $735.3 million of proceeds from the new credit facilities and sale and leaseback agreements; and (ii) $208.5 million of proceeds from the issuance of 7,330,222 common units and 384,733 additional general partnership units related to the Continuous Offering Program Sales Agreements and the acquisitions of Navios Containers and Navios Acquisition.
For a detailed discussion of cash flows for the year ended December 31, 2021 compared to the year ended December 31, 2020 please see “Item 5. Operating and Financial Review and Prospects - A. Operating results” included in Navios Partners’ 2021 Annual Report filed on Form 20-F with the SEC on April 12, 2022.
Reconciliation of EBITDA and Adjusted EBITDA to Net Cash from Operating Activities, EBITDA and Operating Surplus
Year Ended 2022 |
Year Ended 2021 |
Year Ended 2020 | ||||||
| (In thousands of U.S. dollars) | ||||||||
| Net cash provided by operating activities | $ | 506,340 | $ | 277,173 | $ | 94,086 | ||
| Net increase in operating assets | 139,537 | 93,092 | 7,261 | |||||
| Net decrease/ (increase) in operating liabilities | 255 | 3,274 | (22,207) | |||||
| Net interest cost | 82,235 | 41,903 | 23,520 | |||||
| Amortization and write-off of deferred finance cost | (5,349) | (3,741) | (2,141) | |||||
| Amortization of operating lease assets/liabilities | (3,912) | 401 | (956) | |||||
| Non-cash amortization of deferred revenue and straight-line | (51,048) | (460) | 1,588 | |||||
| Stock-based compensation | (154) | (523) | (946) | |||||
| Gain on sale of vessels, net | 149,352 | 33,625 | — | |||||
| Vessels impairment loss | — | — | (71,577) | |||||
| Bargain gain | — | 48,015 | — | |||||
| Impairment of receivable in affiliated company | — | — | (6,900) | |||||
| Allowance for credit losses | — | — | (1,495) | |||||
| Equity in earnings of affiliated companies, net of dividends received | — | 80,839 | 1,133 | |||||
| Net loss attributable to noncontrolling interest | — | 4,913 | — | |||||
| EBITDA(1) | $ | 817,256 | $ | 578,511 | $ | 21,366 | ||
| Equity in earnings of affiliated companies | — | (80,839) | — | |||||
| Bargain gain | — | (48,015) | — | |||||
| Transaction costs | — | 10,439 | — | |||||
| Gain on sale of vessels, net | (149,352) | (33,625) | — | |||||
| Impairment of receivable in affiliated company | — | — | 6,900 | |||||
| Vessels impairment loss | — | — | 71,577 | |||||
| Adjusted EBITDA | $ | 667,904 | $ | 426,471 | $ | 99,843 | ||
| Cash interest income | 856 | 745 | 219 | |||||
| Cash interest paid | (80,626) | (50,382) | (23,717) | |||||
| Maintenance and replacement capital expenditures | (244,589) | (83,147) | (36,455) | |||||
| Operating Surplus | $ | 343,545 | $ | 293,687 | $ | 39,890 | ||
| Year Ended December 31, 2022 |
Year Ended December 31, 2021 |
Year Ended December 31, 2020 | ||||||
| (In thousands of U.S. dollars) | ||||||||
| Net cash provided by operating activities | $ | 506,340 | $ | 277,173 | $ | 94,086 | ||
| Net cash used in investing activities | $ | (316,241) | $ | (106,252) | $ | (83,854) | ||
| Net cash used in financing activities | $ | (184,447) | $ | (32,203) | $ | (9,906) | ||
EBITDA and Adjusted EBITDA
EBITDA represents net income/ (loss) attributable to Navios Partners’ unitholders before interest and finance costs, depreciation and amortization (including intangible accelerated amortization) and income taxes. Adjusted EBITDA represents EBITDA excluding certain items, as described in the table above. Navios Partners uses Adjusted EBITDA as a liquidity measure and reconciles EBITDA and Adjusted EBITDA to net cash provided by operating activities, the most comparable U.S. GAAP liquidity measure. EBITDA in this document is calculated as follows: net cash provided by operating activities adding back, when applicable and as the case may be, the effect of: (i) net increase/(decrease) in operating assets; (ii) net (increase)/ decrease in operating liabilities; (iii) net interest cost; (iv) amortization and write-off of deferred finance costs and discount; (v) equity in net earnings of affiliated companies; (vi) impairment charges; (vii) non-cash amortization of deferred revenue and straight-line effect of the containerships and tankers charters with de-escalating rates; (viii) stock-based compensation expense; (ix) amortization of operating lease assets/ liabilities; (xi) gain/ (loss) on sale of assets; (xii) bargain gain; and (xi) net loss attributable to noncontrolling interest. Navios Partners believes that EBITDA and Adjusted EBITDA are each the basis upon which liquidity can be assessed and presents useful information to investors regarding Navios Partners’ ability to service and/or incur indebtedness, pay capital expenditures, meet working capital requirements and make cash distributions. Navios Partners also believes that EBITDA and Adjusted EBITDA are used: (i) by potential lenders to evaluate potential transactions; (ii) to evaluate and price potential acquisition candidates; and (iii) by securities analysts, investors and other interested parties in the evaluation of companies in our industry.
Each of EBITDA and Adjusted EBITDA have limitations as an analytical tool, and should not be considered in isolation or as a substitute for the analysis of Navios Partners’ results as reported under U.S. GAAP. Some of these limitations are: (i) EBITDA and Adjusted EBITDA do not reflect changes in, or cash requirements for, working capital needs; and (ii) although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future. EBITDA and Adjusted EBITDA do not reflect any cash requirements for such capital expenditures. Because of these limitations, EBITDA and Adjusted EBITDA should not be considered as a principal indicator of Navios Partners’ performance. Furthermore, our calculation of EBITDA and Adjusted EBITDA may not be comparable to that reported by other companies due to differences in methods of calculation.
EBITDA for the year ended December 31, 2022 was affected by the accounting effect of a $149.4 million net gain related to the sale of ten of our vessels (including an impairment loss of $7.9 million in connection with the committed sales of four our vessels in January and February 2023). Excluding these items, Adjusted EBITDA increased by $241.4 million to $667.9 million for the year ended December 31, 2022, as compared to $426.5 million for the same period in 2021. The increase in Adjusted EBITDA was primarily due to a: (i) $497.3 million increase in time charter and voyage revenues; and (ii) $0.8 million increase in other income, partially mitigated by: (i) a $120.6 million increase in vessel operating expenses, mainly due to the expansion of our fleet; (ii) an $86.5 million increase in time charter and voyage expenses, mainly due to the increase in a) bareboat and charter-in hire expense of the tanker and drybulk fleet and b) bunker expenses arising from the increased number of freight voyages in 2022; (iii) a $25.7 million increase in general and administrative expenses, mainly due to the expansion of our fleet; (iv) a $14.7 million increase in direct vessel expenses (excluding the amortization of deferred drydock, special survey costs and other capitalized items); (v) a $4.9 million decrease in net loss attributable to noncontrolling interest; and (vi) a $4.3 million increase in other expenses.
EBITDA for the year ended December 31, 2021 was affected by the accounting effect of : (i) an $80.8 million gain from equity in net earnings of affiliated companies; (ii) a $48.0 million bargain gain upon obtaining control over Navios Acquisition and upon completion of NMCI Merger; (iii) a $33.6 million gain related to the sale of eight of our vessels; and (iv) $10.4 million of transaction costs in relation to the NNA Merger and NMCI Merger. Excluding these items, Adjusted EBITDA increased by $326.7 million to $426.5 million for the year ended December 31, 2021, as compared to $99.8 million for the same period in 2020. The increase in Adjusted EBITDA was primarily due to a: (i) $486.4 million increase in time charter and voyage revenues; and (ii) $4.9 million increase in net loss attributable to noncontrolling interest. The above increase was partially mitigated by a: (i) $97.7 million increase in vessel operating expenses, mainly due to the increased fleet; (ii) $25.1 million increase in time charter and voyage expenses; (iii) $17.5 million increase in general and administrative expenses, mainly due to the increased fleet; (iv) $13.0 million increase in direct vessel expenses (excluding the amortization of deferred drydock, special survey costs and other capitalized items); (v) $5.4 million increase in other expense; (vi) $4.8 million decrease in other income; and (vii) $1.1 million decrease in equity in net earnings of affiliated companies.
Operating Surplus
Navios Partners generated an Operating Surplus for the year ended December 31, 2022 of $343.5 million, as compared to $293.7 million for the year ended December 31, 2021. Operating Surplus is a non-GAAP financial measure used by certain investors to assist in evaluating a partnership's ability to make quarterly cash distributions (see “Reconciliation of EBITDA and Adjusted EBITDA to Net Cash from Operating Activities, EBITDA and Operating Surplus” contained herein).
Operating Surplus represents net income adjusted for depreciation and amortization expense, non-cash interest expense, non-cash interest income, estimated maintenance and replacement capital expenditures and one-off items. Maintenance and replacement capital expenditures are those capital expenditures required to maintain over the long term the operating capacity of, or the revenue generated by, Navios Partners’ capital assets.
Operating Surplus is a quantitative measure used in the publicly-traded partnership investment community to assist in evaluating a partnership's ability to make quarterly cash distributions. Operating Surplus is not required by accounting principles generally accepted in the United States and should not be considered a substitute for net income, cash flow from operating activities and other operations or cash flow statement data prepared in accordance with accounting principles generally accepted in the United States or as a measure of profitability or liquidity.
Borrowings
Navios Partners' long-term third party borrowings are presented under the captions “Long-term financial liabilities, net”, “Long-term debt, net”, “Current portion of financial liabilities, net” and “Current portion of long-term debt, net”. As of December 31, 2022 and December 31, 2021, total borrowings, net amounted to $1,945.4 million and $1,361.7 million, respectively. The current portion of long-term borrowings, net amounted to $391.1 million at December 31, 2022 and $255.1 million at December 31, 2021.
Capital Expenditures
Navios Partners finances its capital expenditures with cash flow from operations, equity raisings, long-term bank borrowings and other debt raisings.
Capital expenditures for the years ended December 31, 2022, 2021 and 2020 amounted to $610.6 million, $278.8 million and $83.1 million, respectively.
For the year ended December 31, 2022, expansion capital expenditures of $610.6 million related to: (i) $176.8 million representing deposits for the acquisition/option to acquire three Capesize bareboat charter-in vessels expected to be delivered by the first half of 2023, one Panamax bareboat charter-in vessel delivered in February 2023, 12 newbuilding Containerships expected to be delivered by the second half of 2023 and in 2024; six newbuilding Aframax/LR2 vessels expected to be delivered in 2024 and the first half of 2025; and (ii) $433.8 million relating to vessel acquisitions, additions and capitalized expenses to our fleet.
For the year ended December 31, 2021, expansion capital expenditures of $278.8 million related to: (i) $61.8 million representing deposits for the acquisition/option to acquire five Capesize bareboat charter-in vessels expected to be delivered by the second half of 2022 and first half of 2023, two Panamax bareboat charter-in vessels expected to be delivered by the second half of 2022 and first half of 2023, six Containerships expected to be delivered by the second half of 2023, first half of 2024 and second half of 2024; and (ii) $217.0 million relating to vessel acquisitions, additions and capitalized expenses to our fleet.
For the year ended December 31, 2020, expansion capital expenditures of $83.1 million related to: (i) $10.7 million representing deposits for the option to acquire two Panamax bareboat charter-in vessels expected to be delivered by the first half of 2021; and (ii) $72.4 million relating to vessel acquisitions, additions and capitalized expenses to our fleet.
Maintenance for our vessels and expenses related to drydocking expenses are reimbursed at cost by Navios Partners to our Managers under the Management Agreements. For more information on the Management Agreements, please read “Item 7. Major Unitholders and Related Party Transactions - Management Agreements” and Note 18 – Transactions with Related Parties and Affiliates to our consolidated financial statements, included elsewhere in this Annual Report.
Maintenance and Replacement Capital Expenditures Reserve
Our annual maintenance and replacement capital expenditures reserve for the years ended December 31, 2022 and 2021 was $244.6 million and $83.1 million, respectively, for replacing our vessels at the end of their useful lives.
The amount for estimated replacement capital expenditures attributable to future vessel replacement was based on the following assumptions: (i) current market price to purchase a five year old vessel of similar size and specifications; (ii) a 25-year useful life for drybulk and tanker vessels and a 30-year useful life for containerships; and (iii) a relative net investment rate.
The amount for estimated maintenance capital expenditures attributable to future vessel drydocking and special survey was based on certain assumptions including the remaining useful life of the owned vessels of our fleet, market costs of drydocking and special survey and a relative net investment rate.
Our Board of Directors, with the approval of the Conflicts Committee, may determine that one or more of our assumptions should be revised, which could cause our Board of Directors to increase or decrease the amount of estimated maintenance and replacement capital expenditures. The actual cost of replacing the vessels in our fleet will depend on a number of factors, including prevailing market conditions, charter hire rates and the availability and cost of financing at the time of replacement. We may elect to finance some or all of our maintenance and replacement capital expenditures through the issuance of additional common units which could be dilutive to existing unitholders.
Vessels to be delivered
Please read Note 16 – Commitments and Contingencies to our consolidated financial statements, included elsewhere in this Annual Report for a full description of vessels to be delivered to our fleet.
C. Research and development, patents and licenses, etc.
Not applicable.
D. Trend information
Our results of operations depend primarily on the charter hire rates that we are able to realize for our vessels, which depend on the demand and supply dynamics characterizing the drybulk market at any given time. For other trends affecting our business please see other discussions in “Item 5. Operating and Financial Review and Prospects”.
E. Critical Accounting Estimates
Critical Accounting Policies
Our consolidated financial statements have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates in the application of our accounting policies based on the best assumptions, judgments and opinions of management. Following is a discussion of the accounting policies that involve a higher degree of judgment and the methods of their application that affect the reported amount of assets and liabilities, revenues and expenses and related disclosure of contingent assets and liabilities at the date of our financial statements. Actual results may differ from these estimates under different assumptions or conditions.
Critical accounting policies are those that reflect significant judgments or uncertainties, and potentially result in materially different results under different assumptions and conditions. For a description of all of our significant accounting policies, please refer to Note 2 — Summary of significant accounting policies to the notes to the consolidated financial statements, included elsewhere in this Annual Report.
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 the disclosure of contingent assets and liabilities as of the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. On an on-going basis, management evaluates the estimates and judgments, including those related to uncompleted voyages, future drydock dates, the selection of useful lives for tangible assets and scrap value expected future cash flows from long-lived assets to support impairment tests, provisions necessary for accounts receivable, valuation of intangible assets and liabilities acquired in business combinations and/or asset acquisitions, provisions for legal disputes, and contingencies and the valuation estimates inherent in the deconsolidation gain. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates under different assumptions and/or conditions.
Asset Acquisitions: When the Company enters into an acquisition transaction, it determines whether the acquisition transaction is a purchase of an asset or a business based on the facts and circumstances of the transaction. In accordance with Topic 805, Business Combinations, the Company first evaluates whether substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets (Step one). If that threshold is met, the set of assets and activities is not a business. If the threshold is not met, the Company evaluates whether the set meets the definition of a business (Step two). To be considered a business, a set must include an input and a substantive process that together significantly contributes to the ability to create an output. All assets acquired and liabilities assumed in a business combination are measured at their acquisition date fair values. For asset acquisitions, the net assets acquired should be measured following a cost accumulation and allocation model under which the cost of the acquisition is allocated on a relative fair value basis to the qualifying assets acquired. Transaction costs associated with asset acquisitions are capitalized.
On July 26, 2022, the Company entered into a share purchase agreement to acquire a 36-vessel drybulk fleet for a purchase price of $835.0 million including the assumption of bank liabilities, bareboat obligations and finance leasing obligations, subject to debt and working capital adjustments, from Navios Holdings. The fleet consisted of: (i) 30 vessels (including eight vessels under sale and leaseback and ten vessels under finance leases), (ii) five operating leases and (iii) one vessel that has been classified as held for sale. On July 29, 2022, 15 of the 36 vessels were delivered to Navios Partners. On September 8, 2022, the remaining 21 vessels were delivered to Navios Partners.
The Company performed an assessment, as defined under ASC 805, Business Combinations, and concluded that the acquisition of the 36-vessel drybulk fleet is an asset acquisition. The consideration paid amounted to $370.6 million and is presented under the caption “Acquisition of/ additions to vessels” in the Consolidated Statements of Cash Flows including working capital balances of $(37.0) million in accordance with the share purchase agreement of which an amount of $9.9 million related to cash and cash equivalents and restricted cash and is presented under the caption “Cash acquired from acquisitions” in the Consolidated Statements of Cash Flows. The fair value of net assets acquired compared to the cost of consideration resulted in an excess value of $217.2 million that was allocated to qualifying assets on a relative fair value basis. The qualifying assets were the vessels held and used, leases (finance and operating lease assets) and intangible assets.
Vessels held and used acquired as part of an asset acquisition are recorded at fair value, which is determined based on vessel valuations, obtained from independent third party shipbrokers which are, among other things, based on recent sales and purchase transactions of similar vessels.
When a vessel along with the current charter contract is acquired where the Company acts as a lessor as part of asset acquisition, intangible assets and unfavorable lease terms are recorded at fair value. The fair value of the favorable and unfavorable lease terms (intangible assets and liabilities) was determined by reference to market data and the discounted amount of expected future cash flows. The key assumptions that were used in the discounted cash flow analysis were as follows: (i) the contracted charter rate of the acquired charter over the remaining lease term compared to the current market charter rates for a similar contract; and (ii) discounted using the Company’s relevant discount factor of 11.32%.
For acquired leases as part of an asset acquisition, where the Company is a lessee, the Company has elected to reassess classification. The Company recognizes the right-of-use assets for operating and finance leases acquired at the same amount as the lease liability, adjusted to reflect favorable and unfavorable terms of the lease when compared with market terms.
Intangible Assets and Unfavorable Lease Terms: Navios Partners' intangible assets and liabilities consist of favorable and unfavorable lease terms. When a vessel along with the current charter contract are acquired as part of a business combination and/or asset acquisition, intangible assets and unfavorable lease terms 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 asset is recorded, being the difference between the acquired charter rate and the market charter rate for an equivalent vessel. Where charter rates are less than market charter rates, a liability is recorded, being the difference between the assumed charter rate and the market charter rate for an equivalent vessel. The determination of the fair value of acquired assets and assumed liabilities requires Navios Partners to make significant assumptions and estimates of many variables including market charter rates, contracted charter rates, remaining duration of the charter agreements, the level of utilization of its vessels and its relevant discount rate. 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 Navios Partners' financial position and results of operations.
The amortizable value of favorable and unfavorable leases is amortized over the remaining life of the lease term and the amortization expense/income is included under the captions “Depreciation and amortization of intangible assets” and “Amortization of unfavorable lease terms”, respectively in the Consolidated Statements of Operations.
The amortizable value of favorable leases would be considered impaired if their carrying values could not be recovered from the future undiscounted cash flows associated with the assets. As of December 31, 2022, the management of the Company, after considering various indicators, performed an impairment test which included intangible assets as described “Impairment of Long Lived Assets” below. As of December 31, 2021, the management of the Company has considered various indicators and concluded that events and circumstances did not trigger the existence of potential impairment of its intangible assets and that step one of the impairment analysis was not required as described in “Impairment of Long Lived Assets” below. As of December 31, 2020, the management of the Company, after considering various indicators, performed an impairment test which included intangible assets as described in “Impairment of Long Lived Assets” below. As of December 31, 2022, 2021 and 2020 there was no impairment of intangible assets.
Impairment of Long Lived Assets: Vessels, other fixed assets and other long lived assets held and used by Navios Partners are reviewed periodically for potential impairment whenever events or changes in circumstances indicate that the carrying amount of a particular asset may not be fully recoverable. Navios Partners' management evaluates the carrying amounts and periods over which long-lived assets are depreciated to determine if events or changes in circumstances have occurred that would require modification to their carrying values or useful lives. Measurement of the impairment loss is based on the fair value of the asset. Navios Partners determines the fair value of its assets on the basis of management estimates and assumptions by making use of available market data and taking into consideration third party valuations performed on an individual vessel basis. In evaluating useful lives and carrying values of long-lived assets, certain indicators of potential impairment, are reviewed such as undiscounted projected operating cash flows, vessel sales and purchases, business plans and overall market conditions.
Undiscounted projected net operating cash flows are determined for each asset group and compared to the carrying value of the vessel, the unamortized portion of deferred drydock and special survey costs, ballast water treatment system costs, exhaust gas cleaning system costs and other capitalized items, if any, related to the vessel and the related carrying value of the intangible assets with respect to the time charter agreement attached to that vessel or the carrying value of deposits for newbuildings. Within the shipping industry, vessels are customarily bought and sold with a charter attached. The value of the charter may be favorable or unfavorable when comparing the charter rate to the current market rates. The loss recognized either on impairment or on disposition will reflect the excess of carrying value over fair value (selling price) for the vessel asset group.
The management of the Company has considered various indicators, including but not limited to the market price of its long-lived assets, its contracted revenues and cash flows and the economic outlook.
As of December 31, 2022, the Company concluded that events occurred and circumstances had changed, which indicated that potential impairment of certain of Navios Partners' long-lived assets might exist. These indicators included volatility in the charter market as well as the potential impact the current marketplace may have on the Company’s future operations. As a result, an impairment assessment of certain of long-lived assets (step one) was performed.
As of December 31, 2021, the Company concluded that events and circumstances did not trigger the existence of potential impairment of its vessels and the related intangible assets and that step one of the impairment analysis was not required.
As of December 31, 2020, the Company concluded that events occurred and circumstances had changed, which indicated that potential impairment of Navios Partners' long-lived assets might exist. These indicators included volatility in the charter market as well as the potential impact the current marketplace may have on the Company’s future operations. As a result, an impairment assessment of long-lived assets (step one) was performed.
The Company determined the undiscounted projected net operating cash flows for each vessel and compared it to the vessels' carrying value together with the carrying value of deferred drydock and special survey costs, ballast water treatment system costs, exhaust gas cleaning system costs and other capitalized items, if any, related to the vessel and the carrying value of the related intangible assets, if applicable. The significant factors and assumptions the Company used in the undiscounted projected net operating cash flow analysis included: determining the projected net operating cash flows by considering the charter revenues from existing time charters for the fixed fleet days (Navios Partners' remaining charter agreement rates) and an estimated daily time charter equivalent for the unfixed days (based on a combination of one-year average historical time charter rates for the first year and ten-year average historical one-year time charter rates for the remaining period), over the remaining economic life of each vessel, net of brokerage and address commissions, and excluding days of scheduled off-hires, vessel operating expenses as determined by the Management Agreements (as defined herein) in effect until December 2024 and thereafter assuming an increase of 3.0% every second year and utilization rate of 99.0% based on the fleet's historical performance.
Where the undiscounted projected net operating cash flows do not exceed the carrying value of an asset group, management proceeded to perform step two of the impairment assessment. In step two of the impairment assessment, the Company determined fair value of its vessels through a combination of a discounted cash flow analysis utilizing market participant assumptions from available market data and third-party valuations from independent ship brokers performed on an individual vessel basis. The significant factors and assumptions used by management in determining fair value of vessels included those in developing the projected net operating cash flows over the remaining economic life of each vessel and the discount rate.
During the year ended December 31, 2022, an impairment loss of $7.9 million was recognized in connection with the committed sales of the Nave Cosmos in January 2023, the Nave Polaris in January 2023, the Jupiter N in February 2023 and the Navios Prosperity I in February 2023, as the carrying amount of each asset group was not recoverable and exceeded its fair value less costs to sell (see Note 7 — Vessels, net to our consolidated financial statements, included elsewhere in this Annual Report).
During the fourth quarter of fiscal year 2020, our assessment concluded that step two of the impairment analysis was required for certain of our vessels held and used, as the undiscounted projected net operating cash flows did not exceed the carrying value. As a result, the Company recorded an impairment loss of $51.0 million for four of our vessels, being the difference between the fair value and the vessels’ carrying value together with the carrying value of deferred drydock and special survey costs related to the vessels, presented under the caption “Vessels impairment loss” in the Consolidated Statements of Operations (see Note 7 — Vessels, net to our consolidated financial statements, included elsewhere in this Annual Report).
As of June 30, 2020, our assessment concluded that step two of the impairment analysis was required for three containerships held and used, as the undiscounted projected net operating cash flows did not exceed the carrying value. As a result, the Company recorded an impairment loss of $6.8 million for these vessels, being the difference between the fair value and the vessels’ carrying value together with the carrying value of deferred drydock and special survey costs related to the vessels presented under the caption “Vessels impairment loss” in the Consolidated Statements of Operations.
During the year ended December 31, 2020, an impairment loss of $13.8 million was also recognized in connection with the committed sales of the Navios Soleil in December 2020, the Esperanza N in January 2021 and the Castor N in February 2021, as the carrying amount of each asset group was not recoverable and exceeded its fair value less costs to sell (see Note 7 — Vessels, net to our consolidated financial statements, included elsewhere in this Annual Report).
The total impairment loss recognized amounted to $7.9 million and $0 for the years ended December 31, 2022 and 2021, respectively, and is presented under the caption “Gain on sale of vessels, net” in the Consolidated Statements of Operations.
The total impairment loss recognized amounted to $71.6 million for the year ended December 31, 2020, and is presented under the caption “Vessels impairment loss” in the Consolidated Statements of Operations.
Vessels, Net: Vessels are stated at historical cost, which consists of the contract price and pre-delivery costs incurred during the construction and delivery of newbuildings, including capitalized interest, and any material expenses incurred upon acquisition (improvements and delivery expenses) of second hand vessels. Vessels acquired in an asset acquisition or in a business combination are recorded at fair value. The fair value of the vessels is determined based on vessel valuations, from independent third party shipbrokers. 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. 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 accompanying Consolidated Statements of Operations.
Expenditures for routine maintenance and repairs are expensed as incurred.
Depreciation is computed using the straight line method over the useful life of the vessels, after considering the estimated residual value. Management estimates the residual values of the Company’s drybulk, containerships and tankers based on a scrap value cost of steel times the weight of the ship noted in lightweight ton (“LWT”). Residual values are periodically reviewed and revised to recognize changes in conditions, new regulations or other reasons. Revisions of residual values affect the depreciable amount of the vessels and affect depreciation expense in the period of the revision and future periods. The estimated scrap rate used to calculate the vessel’s scrap value is $340 per LWT as of each of December 31, 2022 and 2021.
Management estimates the useful life of the Company’s vessels to be 25 years for drybulk and tanker vessels and 30 years for the containerships, respectively from the original construction. However, when regulations place limitations over the ability of a vessel to trade on a worldwide basis, its useful life is re-estimated to end at the date such regulations become effective. An increase in the useful life of a vessel or in its residual value would have the effect of decreasing the annual depreciation charge and extending it into later periods. A decrease in the useful life of a vessel or in its residual value would have the effect of increasing the annual depreciation charge.
Deferred Drydock and Special Survey Costs: Navios Partners' vessels are subject to regularly scheduled drydocking and special surveys which are generally carried out every 30 or 60 months, depending on the vessels' ages to coincide with the renewal of the related certificates issued by the classification societies, unless a further extension is obtained in rare cases and under certain conditions. The cost of drydocking and special surveys are deferred and amortized over the above periods or to the next drydocking or special survey date if such date has been determined.
Costs capitalized as part of the drydocking or special survey consist principally of the actual costs incurred at the yard, and expenses relating to spare parts, paints, lubricants and services incurred solely during the drydocking or special survey period.
Revenue and Expense Recognition:
Revenue from time chartering
Revenues from time chartering and bareboat chartering of vessels are accounted for as operating leases and are thus recognized on a straight line basis as the average lease revenue over the rental periods of such charter agreements, as service is performed. A time charter involves placing a vessel at the charterers' disposal for a period of time during which the charterer uses the vessel in return for the payment of a specified daily hire rate. Short period charters for less than three months are referred to as spot-charters. Charters extending three months to a year are generally referred to as medium-term charters. All other charters are considered long-term. The Company has determined to recognize lease revenue as a combined single lease component for all time charters (operating leases) as the related lease component and non-lease components will have the same timing and pattern of the revenue recognition of the combined single lease component. The performance obligations in a time charter contract are satisfied over term of the contract beginning when the vessel is delivered to the charterer until it is redelivered back to the Company. Under time charters, operating costs such as for crews, maintenance and insurance are typically paid by the owner of the vessel.
Revenue from voyage contracts
Under a voyage charter, a vessel is provided for the transportation of specific goods between specific ports in return for payment of an agreed upon freight per ton of cargo. Upon adoption of ASC 606, the Company recognizes revenue ratably from port of loading to when the charterer's cargo is discharged as well as defer costs that meet the definition of “costs to fulfill a contract” and relate directly to the contract.
Pooling arrangements
For vessels operating in pooling arrangements, the Company earns a portion of total revenues generated by the pool, net of expenses incurred by the pool. The amount allocated to each pool participant vessel, including the Company's vessels, is determined in accordance with an agreed-upon formula, which is determined by points awarded to each vessel in the pool based on the vessel's age, design and other performance characteristics. Revenue under pooling arrangements is accounted for as variable rate operating leases on the accrual basis and is recognized when an agreement with the pool exists, price is fixed, service is provided and the collectability is reasonably assured. The allocation of such net revenue may be subject to future adjustments by the pool however, such changes are not expected to be material. The Company recognizes net pool revenue on a monthly and quarterly basis, when the vessel has participated in a pool during the period and the amount of pool revenue can be estimated reliably based on the pool report.
Revenue from profit-sharing
Profit-sharing revenues are calculated at an agreed percentage of the excess of the charterer's average daily income (calculated on a quarterly or semi annual basis) over an agreed amount and accounted for on an accrual basis based on provisional amounts and for those contracts that provisional accruals cannot be made due to the nature of the profit sharing elements, these are accounted for on the actual cash settlement or when such revenue becomes determinable.
Revenues are recorded net of address commissions. Address commissions represent a discount provided directly to the charterers based on a fixed percentage of the agreed upon charter or freight rate. Since address commissions represent a discount (sales incentive) on services rendered by the Company and no identifiable benefit is received in exchange for the consideration provided to the charterer, these commissions are presented as a reduction of revenue.
Recent Accounting Pronouncements:
Please refer to Note 2 — Summary of significant accounting policies to the notes to the consolidated financial statements, included elsewhere in this Annual Report.
Item 6. Directors, Senior Management and Employees
A. Directors and Senior Management
The following table sets forth information regarding our current directors and senior management:
| Name | Age | Position |
| Angeliki Frangou | 58 | Chairwoman of the Board, Chief Executive Officer and Director |
| Ted Petrone | 68 | Vice Chairman of the Board |
| Shunji Sasada | 65 | President and Director |
| Efstratios Desypris | 50 | Chief Operating Officer |
| Erifyli Tsironi | 49 | Chief Financial Officer |
| Joergen Rosleff | 51 | Chief Commercial Officer |
| Vincent Vandewalle | 50 | Chief Trading Officer |
| Georgios Akhniotis | 58 | Executive Vice President-Business Development and Director |
| Anna Kalathaki | 53 | Executive Vice President - Risk Management |
| Vasiliki Papaefthymiou | 54 | Secretary |
| Serafeim Kriempardis | 75 | Director (Class III) |
| Vasilios Mouyis | 60 | Director (Class II) |
| Kunihide Akizawa | 63 | Director (Class I) |
| Alexander Kalafatides | 59 | Director (Class I) |
On March 20, 2023, Mrs. Orthodoxia Zisimatou resigned from her position as a Class II director of the Company to pursue other opportunities. There were no disagreements between Mrs. Zisimatou and the Company. Following Mrs. Zisimatou’s resignation, the Board of the Company appointed Mr. Vasilios Mouyis as a Class II director of the Company to fill the vacancy. Mr. Mouyis does not have any family relationship with any director or other executive officer, or person nominated or chosen by the Company to become a director or executive officer, and he has no direct or indirect material interest in any transactions of the Company. Mr. Mouyis will serve on the Audit, Compensation and Conflicts Committee and is an independent director.
Biographical information with respect to each of our current directors and our executive officers is set forth below. The business address for our directors and executive officers is 7 Avenue de Grande Bretagne, Monte Carlo, MC 98000 Monaco. Each of Ms. Frangou, Mr. Akhniotis and Mr. Sasada were appointed as directors by our general partner, pursuant to our partnership agreement.
Angeliki Frangou has been our Chairwoman of the Board of Directors and Chief Executive Officer since our inception. Ms. Frangou has also been Chairwoman and Chief Executive Officer of Navios Maritime Holdings Inc. (NYSE: NM) since August 2005. Ms. Frangou has been the Chairwoman and a Member of the Board of Directors of Navios South American Logistics Inc. since its inception in December 2007. Ms. Frangou is also a Member of the Foundation for Economic and Industrial Research. Since 2015, Ms. Frangou has been a Member of the Board of Trustees of Fairleigh Dickinson University. Ms. Frangou also acts as Vice Chairwoman of the China Classification Society Mediterranean Committee, and is a member of the International General Committee and of the Hellenic and Black Sea Committee of Bureau Veritas, and is also a member of the Greek Committee of Nippon Kaiji Kyokai. Ms. Frangou received a Bachelor's Degree in Mechanical Engineering, summa cum laude, from Fairleigh Dickinson University and a Master's Degree in Mechanical Engineering from Columbia University.
Ted C. Petrone was appointed our Vice Chairman in November 2022. Mr. Petrone also serves as Vice Chairman of Navios Corporation since January 2015 having previously served as a director of Navios Maritime Holdings Inc. (“Navios Holdings”) from May 2007 to January 2015 and President of Navios Corporation from September 2006 to January 2015. Mr. Petrone has also been Navios South American Logistics Inc. President since July 2020. Mr. Petrone also serves as Vice Chairman of Navios Maritime Partners L.P. since November 2022. Mr. Petrone has served in the maritime industry for 45 years, 42 of which he has spent with Navios Holdings. After joining Navios Holdings as an assistant vessel operator, Mr. Petrone worked in various operational and commercial positions. Mr. Petrone was previously responsible for all aspects of the daily commercial activity, encompassing the trading of tonnage, derivative hedge positions and cargoes. Mr. Petrone graduated from New York Maritime College at Fort Schuyler with a Bachelor of Science degree in maritime transportation. He has served aboard U.S. Navy (Military Sealift Command) tankers.
Shunji Sasada became our President in November 2022 and was appointed to our Board of Directors in August 2007. Mr. Sasada has also served as a director of Navios Maritime Holdings Inc. (“Navios Holdings”) and President of Navios Corporation since January 2015. Mr. Sasada started his shipping career in 1981 in Japan with Mitsui O.S.K. Lines, Ltd. ("MOSK"). In 1991, Mr. Sasada joined Trinity Bulk Carriers as its chartering manager as well as subsidiary board member representing MOSK as one of the shareholders. After an assignment in Norway, Mr. Sasada moved to London and started MOSK's own Ultra Handymax operation as its General Manager. Mr. Sasada joined Navios Holdings in May 1997. Mr. Sasada was Senior Vice President - Fleet Development of Navios Holdings from October 1, 2005 to July 2007 and Chief Operating Officer until December 2014. Mr. Sasada has been a member of the North American Committee of Nippon Kaiji Kyokai since inception. Mr. Sasada is a graduate of Keio University, Tokyo, with a B.A. degree in business and he is a member of Board of Trustees of Keio Academy of New York.
Efstratios Desypris has been the Chief Operating Officer of Navios Partners since November 2021. He has also served as Chief Financial Officer of Navios Partners from 2010 through November 2021. In addition, Mr. Desypris is the Chief Financial Controller of Navios Holdings, Navios Partners' sponsor, since May 2006 and the Chief Financial Officer of N Shipmanagement Acquisition since September 2019. Mr. Desypris has also been a Director of Navios Containers since November 2018. He also serves as SVP-Strategic Planning of Navios South American Logistics Inc. Before joining Navios Holdings, Mr. Desypris worked in the accounting profession, most recently as manager of the audit department at Ernst & Young in Greece. Mr. Desypris started his career as an auditor with Arthur Andersen & Co. in 1997. He holds a Bachelor of Science degree in Economics from the University of Piraeus.
Erifyli Tsironi has been our Chief Financial Officer since November 4th, 2021. Ms. Tsironi is also Senior Vice President – Credit Management of Navios Holdings since October 2014. Ms. Tsironi served as Chief Financial Officer of Navios Maritime Containers L.P. since 2019 until completion of the merger with Navios Maritime Partners L.P. in 2021, and as Chief Financial Officer of Navios Maritime Midstream Partners L.P since its inception in 2014 until completion of the merger with Navios Maritime Acquisition Corporation in 2018. Ms. Tsironi has 26 years experience in shipping. Before joining us, she was Global Dry Bulk Sector Coordinator and Senior Vice President at DVB Bank SE focusing on ship finance. Ms. Tsironi joined DVB Bank in 2000 serving as Assistant Local Manager and Senior Relationship Manager. Previously, she served as account manager/shipping department in ANZ Investment Bank/ANZ Grindlays Bank Ltd from May 1997 until December 1999. Ms. Tsironi holds a BSc. in Economics, awarded with Honours, from the London School of Economics and Political Science and a MSc in Shipping, Trade and Finance, awarded with Distinction, from Bayes (ex Cass) Business School of City University in London.
Joergen Rosleff was appointed our Chief Commercial Officer in November 2022. Previously Mr. Rosleff served as Chief Commercial Officer – Container Division since 2013. Mr. Rosleff has served as a Director and Head of Maersk Broker Exclusive Tonnage Team / Commercial Management Department before joining Navios as well as in various other senior positions in Maersk Broker for about 11 years. Mr. Rosleff has 28 years of experience in the shipping industry as he has served in various commercial positions - tankers, bulkers and containers. Mr. Rosleff has a degree in Business Administration, International Management and Economics, from Copenhagen Business School.
Vincent Vandewalle was appointed as our Chief Trading Officer in November 2022. Since 2010, Mr. Vandewalle also serves as Managing Director in Kleimar NV and has served in the Navios Group as Chief Commercial Officer in Dry bulk since 2012. Mr. Vandewalle has 21 years of experience in the shipping industry with focus in the dry bulk sector. He has served in several commercial positions in Kleimar N.V. in the past 21 years. Mr. Vandewalle has a degree followed by a Master in Applied Economics from University of Leuven and he also holds a Master in Taxation from the University of Leuven.
Georgios Akhniotis was appointed to our Board of Directors in August 2007 and he has been our Executive Vice President-Business Development since February 2008. Mr. Akhniotis has been Navios Holdings' Chief Financial Officer since April 12, 2007. Prior to being appointed Chief Financial Officer of Navios Holdings, Mr. Akhniotis served as Senior Vice President - Business Development of Navios Holdings from August 2006 to April 2007. Mr. Akhniotis has also been Navios South American Logistics Inc. Chief Executive Officer since October 2022 and Director. Prior to joining Navios Holdings, Mr. Akhniotis was a partner at PricewaterhouseCoopers from 1999 to August 2006. Mr. Akhniotis holds a Bachelor of Science degree in engineering from the University of Manchester and he is a member of the institute of chartered accountants in England and Wales. Mr. Akhniotis is also a member of the institute of certified accountants in Cyprus.
Anna Kalathakis was appointed our Executive Vice President – Risk Management in November 2022. Ms. Kalathakis has been Chief Legal Risk Officer of Navios Maritime Holdings Inc. (“Navios Holdings”) since November 2012, and previously Senior Vice President — Legal Risk Management of Navios Holdings from December 2005 until October 2012. Ms. Kalathakis has also been Navios South American Logistics Inc. Secretary since inception and Executive Vice President – Group Risk Management and Director since October 2022. Before joining Navios Holdings, Ms. Kalathakis was the General Manager of the Greek office of A. Bilbrough & Co. Ltd. and an Associate Director of the Company (Managers of the London Steam-Ship Owners’ Mutual Insurance Association Limited). She has previously worked for a U.S. maritime law firm in New Orleans, was admitted to practice law in the state of Louisiana in 1995, and has also worked in a similar capacity at a London maritime law firm. She qualified as a solicitor in England and Wales in 1999 and was admitted to practice law before the Bar in Piraeus, Greece in 2003. She has studied International Relations at Georgetown University, Washington D.C. (1991). She holds an MBA from European University at Brussels (1992) and a J.D. from Tulane Law School (1995).
Vasiliki Papaefthymiou was appointed our Secretary in August 2007. Ms. Papaefthymiou has been Executive Vice President - Legal and a member of Navios Holdings' board of directors since August 25, 2005, and prior to that was a member of the board of directors of ISE. Ms. Papaefthymiou has served as general counsel for Maritime Enterprises Management S.A. since October 2001, where she has advised the company on shipping, corporate and finance legal matters. Ms. Papaefthymiou provided similar services as general counsel to Franser Shipping from October 1991 to September 2001. Ms. Papaefthymiou received her undergraduate degree from the Law School of the University of Athens and a Master degree in Maritime Law from Southampton University in the United Kingdom. Ms. Papaefthymiou is admitted to practice law before the Bar in Piraeus, Greece.
Serafeim Kriempardis was appointed to our Board of Directors in December 2009. Mr. Kriempardis previously served as the Head of Shipping of Piraeus Bank from 2007 to 2009 and as the Head of Shipping of Emporiki Bank of Greece from 1999 to 2007. Prior to serving as Head of Shipping at Emporiki Bank, Mr. Kriempardis served in the Project Finance and Corporate and Feasibility departments of the bank. Mr. Kriempardis is an accountant by training and holds a Bachelor's degree in Economics from the Athens University of Economics and Business and a Diploma in Management from the McGill University of Canada. Mr. Kriempardis also serves as chairman of the Audit Committee, chairman of the Compensation Committee and as a member of our Conflicts Committee, is an independent director.
Vasilios Mouyis was appointed to our Board of Directors in March 2023. Mr. Mouyis has over 34 years of experience in chartering and ship brokerage. He is the co-founder of the Athens-based ship brokering firm, Doric Shipbrokers S.A., where he currently serves as the joint managing director—a position he has held since the firm’s inception in 1994. Previously, Mr. Mouyis served as a chartering broker at Clarkson’s Plc South African office, formerly known as Afromar Pty Ltd. Mr. Mouyis participates as a panelist for the Handysize index of the Baltic Exchange, London, representing Doric Shipbrokers S.A. Mr. Mouyis holds a bachelor’s degree in Economics from the American College of Greece and a post-graduate diploma in Port and Shipping Administration from The University of Wales, Institute of Science and Technology. Mr. Mouyis also serves on our Audit, Compensation and Conflicts Committee and is an independent director.
Kunihide Akizawa has 41 years of experience in shipping and logistics. Mr. Akizawa started his shipping career in 1982 in Japan with Mitsui O.S.K. Lines, Ltd. He worked in the accounting department, the export department focusing on the Red Sea and Mediterranean areas, the bulk department, and a chartering manager of Skaarup Shipping International Corporation, which was a joint-venture company with Mitsui O.S.K. Lines, Ltd. In 1995, Mr. Akizawa joined ITOCHU Corporation in the logistics division. In 2011, he became President of MarineNet, a subsidiary of ITOCHU Corporation as well as five other major Japanese trading houses. In 2016, he was appointed as President of IMECS Co., Ltd, the ship-owning arm of ITOCHU and full subsidiary. From 2021 to December 2022, Mr Akizawa served as Vice President Business Development of Fleet Management Limited. Mr. Akizawa is a graduate of Gakushuin University, Tokyo with a B.A. degree in Economics.
Alexander Kalafatides has been a member of our board of directors since 2019. Mr. Kalafatides has nearly 41 years of experience in general management and marketing. Mr. Kalafatides holds the position of global sales and marketing director of IUC International LLC, a designer and importer of consumer products, and he also serves as an adjunct professor in International Business at Drexel University. He has been involved in considerable turnarounds in various sectors including the marine sector, where he served as Partner and Vice President of CCSI, Inc., a company acting as the sales agent of the Chevron/Texaco joint venture. Following its successful turnaround, the company was acquired by the Chevron/Texaco group. Mr. Kalafatides received his M.B.A. in marketing and international business from the New York University, his B.S.E. in computer engineering & science at the University of Pennsylvania and a Certificate of Director Education from Drexel University's Gupta Governance Institute. Mr. Kalafatides serves as chairman of the Conflicts Committee and as a member of the Audit Committee, is an independent director.
B. Compensation
Reimbursement of Expenses of Our General Partner
Our General Partner does not receive any management fee or other compensation for services from us, although it will be entitled to reimbursement for expenses incurred on our behalf. These expenses include all expenses necessary or appropriate for the conduct of our business and allocable to us, as determined by our General Partner. For the years ended December 31, 2022, 2021 and 2020 no amounts were paid to the General Partner.
Officers' Compensation
We were formed in August 2007. Because our officers, including our Chief Executive Officer and our Chief Financial Officer, are employees of the Managers, their compensation is set and paid by the Managers, and we reimburse the Managers for time they spend on the Company's matters pursuant to the Administrative Services Agreement. Under the terms of the Administrative Services Agreement, we reimburse the Managers for the actual costs and expenses they incur in providing administrative support services to us. The amount of our reimbursements to the Managers for the time of our officers depends on an estimate of the percentage of time our officers spent on our business and is based on a percentage of the salary and benefits that the Managers pay to such officers. For the years ended December 31, 2022, 2021 and 2020, the fees charged by the Managers for administrative services, were $50.2 million, $28.8 million and $13.7 million, respectively.
Compensation of Directors
Our officers and directors who are also employees of the Managers do not receive additional compensation for their service as directors, other than Ms. Frangou who receives, a fee of $0.15 million per year for acting as a director and as Chairwoman of the Board. Each non-management director receives compensation for attending meetings of our board of directors, as well as committee meetings. Each non-management director receives a director fee of $0.08 million per year. The Chairman of our Audit Committee and our Compensation Committee receives an additional fee of $0.03 million per year and the Chairman of our Conflicts Committee receives an additional fee of $0.01 million per year. In addition, each director is reimbursed for out-of-pocket expenses in connection with attending meetings of the board of directors or committees. Each director is fully indemnified by us for actions associated with being a director to the extent permitted under Marshall Islands law.
For the year ended December 31, 2022, the aggregate annual fees paid to our non-management directors were $0.28 million and $0.15 million was paid to Ms. Frangou for acting as a director and as our Chairwoman of the Board.
In December 2022, the Compensation Committee of Navios Partners authorized and approved a cash payment of $4.4 million to our officers and directors for which all service conditions had been met as of December 31, 2022. Also, the Compensation Committee of Navios Partners authorized and approved an additional $4.4 million cash payment to the directors and officers of the Company subject to fulfillment of certain service conditions in 2023.
In February 2019, December 2019, December 2018 and December 2017, Navios Partners granted restricted common units to its directors and officers, which are based solely on service conditions and vest over four years each, respectively. Following the NNA Merger, Navios Partners assumed the restricted common units granted in December 2018 and December 2017 to directors and officers of Navios Acquisition, which are based solely on service conditions and vest over four years each, respectively. Upon the NNA Merger, the unvested restricted common units were 11,843 after exchange on a 1 to 0.1275 basis. The fair value of restricted common units is determined by reference to the quoted stock price on the date of grant or the date that the grants were exchanged upon completion of the NNA Merger. Compensation expense, net of estimated forfeitures, is recognized based on a graded expense model over the vesting period. During the year ended December 31, 2022, the Company forfeited 12,699 unvested restricted common units and cancelled 259 general partnership units. There were no restricted common units exercised, forfeited or expired during the years ended December 31, 2021 and 2020. As of December 31, 2022, in the aggregate, 376,605 restricted common units were vested.
C. Board Practices
Our partnership agreement provides that our General Partner has delegated to our board of directors the authority to oversee and direct our operations, management and policies on an exclusive basis and such delegation will be binding on any successor general partner of the partnership. Our executive officers manage our day-to-day activities consistent with the policies and procedures adopted by our board of directors. All of our executive officers and three of our directors also are executive officers and/or directors of Navios Holdings and our Chief Executive Officer is also the Chairwoman and Chief Executive Officer of Navios Holdings.
Following our first annual meeting of unitholders in 2008, our board of directors consisted of seven members, three persons who were appointed by our General Partner in its sole discretion and four who were elected by the common unitholders. Directors appointed by our general partner serve as directors for terms determined by our general partner. Directors elected by our common unitholders are divided into three classes serving staggered three-year terms. Two of the four directors elected by our common unitholders were designated as our Class I elected directors and will serve until our annual meeting of unitholders in 2024; one director was designated as the Class II elected director and will serve until our annual meeting of unitholders in 2025; and one director was designated as the Class III elected director and will serve until our annual meeting of unitholders in 2023. At each subsequent annual meeting of unitholders, directors will be elected to succeed the class of directors whose terms have expired by a plurality of the votes of the common unitholders, as such holders and voting are determined pursuant to our partnership agreement. Directors elected by our common unitholders will be nominated by the board of directors or by any limited partner or group of limited partners that holds at least 10% of the outstanding common units and complies with the requirements in our partnership agreement.
With respect to our corporate governance, there are several significant differences between us and a domestic issuer in that the New York Stock Exchange does not require a listed limited partnership like us to have a majority of independent directors on our board of directors or to establish a Compensation Committee, although we meet both requirements, or a nominating/corporate governance committee.
We have three committees: an Audit Committee, a Conflicts Committee and a Compensation Committee. Three independent members of our board of directors serve on the Conflicts Committee to review specific matters that the board believes may involve potential conflicts of interest. The Conflicts Committee determines if the resolution of the conflict of interest is fair and reasonable to us.
The members of the Conflicts Committee may not be officers or employees of our general partner or directors, officers or employees of its affiliates, and must meet the independence standards established by the New York Stock Exchange to serve on an Audit Committee of a board of directors and certain other requirements. Any matters approved by the Conflicts Committee are conclusively deemed to be fair and reasonable to us, approved by all of our partners, and not a breach by our directors, our general partner or its affiliates of any duties any of them may owe us or our unitholders. The members of our Conflicts Committee are Messrs. Alexander Kalafatides, Serafeim Kriempardis and Vasilios Mouyis.
In addition, we have an Audit Committee of three independent directors. One of the members of the Audit Committee is an “audit committee financial expert” for purposes of SEC rules and regulations. The Audit Committee, among other things, reviews our external financial reporting, engages our external auditors and oversees our internal audit activities and procedures and the adequacy of our internal accounting controls. Our Audit Committee is comprised of Messrs. Serafeim Kriempardis (financial expert), Alexander Kalafatides and Vasilios Mouyis.
Lastly, we have a Compensation Committee consisting of two independent directors, Mr. Vasilios Mouyis and Mr. Serafeim Kriempardis. The Compensation Committee is governed by a written charter, which was approved by our board of directors. The Compensation Committee is responsible for reviewing and approving the compensation of the Company's executive officers and for establishing, reviewing and evaluating the long-term strategy of our compensation plan.
Employees of the Managers, provide assistance to us and our operating subsidiaries pursuant to the Management Agreements and the Administrative Services Agreement.
Our Chief Executive Officer, Ms. Angeliki Frangou, our Chief Operating Officer, Mr. Efstratios Desypris, and our Chief Financial Officer, Mrs. Erifyli Tsironi, our Secretary, Vasiliki Papaefthymiou, and our Executive Vice President-Business Development, Georgios Akhniotis, allocate their time between managing our business and affairs and the business and affairs of Navios Holdings. As such these individuals have fiduciary duties to Navios Holdings which may cause them to pursue business strategies that disproportionately benefit Navios Holdings or which otherwise are not in our best interests or those of our unitholders. While the amount of time each of them allocate between our business and the business of Navios Holdings varies from time to time depending on various circumstances and the respective needs of the business. We intend, however, to cause our officers to devote as much time to the management of our business and affairs as is necessary for the proper conduct of our business and affairs.
Whenever our General Partner makes a determination or takes or declines to take an action in its individual capacity rather than in its capacity as our General Partner, it is entitled to make such determination or to take or decline to take such other action free of any fiduciary duty or obligation whatsoever to us or any limited partner, and is not required to act in good faith or pursuant to any other standard imposed by our partnership agreement or under the Marshall Islands Act or any other law. Specifically, our General Partner will be considered to be acting in its individual capacity if it exercises its call right, pre-emptive rights or registration rights, consents or withholds consent to any merger or consolidation of the partnership, appoints any directors or votes for the appointment of any director, votes or refrains from voting on amendments to our partnership agreement that require a vote of the outstanding units, voluntarily withdraws from the partnership, transfers (to the extent permitted under our partnership agreement) or refrains from transferring its units, or general partner interest or votes upon the dissolution of the partnership. Actions of our General Partner, which are made in its individual capacity, are made by Olympos Maritime Ltd.
D. Employees
Employees of the Managers provide assistance to us and our operating subsidiaries pursuant to the Management Agreements and the Administrative Services Agreement.
The Managers crew our vessels primarily with Ukrainian, Polish, Filipino, Russian, Indian and Georgian officers and Filipino, Georgian, Ethiopian, Indian and Ukrainian seamen. For these nationalities, officers and seamen are referred to the Managers by local crewing agencies. The crewing agencies handle each seaman's training while the Managers handle their travel and payroll. The Managers require that all of their seamen have the qualifications and licenses required to comply with international regulations and shipping conventions.
The Managers also provide on-shore advisory, operational and administrative support to us pursuant to service agreements. Please see “Item 7. Major Unitholders and Related Party Transactions” and Note 18 – Transactions with Related Parties and Affiliates to our consolidated financial statements, included elsewhere in this Annual Report.
E. Unit Ownership
The following table sets forth certain information regarding beneficial ownership, as of March 17, 2023, of our units by each of our officers and directors and by all of our directors and officers as a group. The information is not necessarily indicative of beneficial ownership for any other purposes. Under SEC rules, a person or entity beneficially owns any units that the person or entity has the right to acquire as of May 16, 2023 (60 days after March 17, 2023) through the exercise of any unit option or other right. The percentage disclosed below is based on all outstanding common units (30,184,388), not including general partnership units (622,296). Unless otherwise indicated, each person or entity has sole voting and investment power (or shares such powers with his or her spouse) with respect to the units set forth in the following table. Information for certain holders is based on information delivered to us.
Identity of Person or Group
| Common Units Owned |
Percentage of Common Units Owned | ||||
| Angeliki Frangou(1) | 1,550,632 | 5.1% | |||
| Ted Petrone | * | * | |||
| Shunji Sasada | * | * | |||
| Efstratios Desypris | * | * | |||
| Joergen Rosleff | * | * | |||
| Georgios Akhniotis | * | * | |||
| Anna Kalathaki | * | * | |||
| Serafeim Kriempardis | * | * | |||
| Kunihide Akizawa | * | * | |||
| Alexander Kalafatides | * | * | |||
| Erifyli Tsironi | — | — | |||
| Vincent Vandewalle | — | — | |||
| Vasiliki Papaefthymiou | — | — | |||
| Vasilios Mouyis | — | — | |||
| All directors and officers as a group (14 persons)(2) | 1,656,756 | 5.5% |
*Less than 1%
| (1) | Excludes units owned by Navios Holdings, on the board of which our Chief Executive Officer, Angeliki Frangou, our Secretary Vasiliki Papaefthymiou, as well as our President, Shunji Sasada, all serve. In addition, Ms. Frangou is Navios Holdings' Chairwoman and Chief Executive Officer, Ms. Papaefthymiou is Navios Holdings' Executive Vice President Legal and Mr. Akhniotis is Navios Holdings' Chief Financial Officer. Includes 12,750 common units underlying vested options. |
| (2) | Each director, executive officer and key employee beneficially owns less than one percent of the outstanding common units, other than Angeliki Frangou. | |
Item 7. Major Unitholders and Related Party Transaction
A. Major Unitholders
The following table sets forth the beneficial ownership as of March 17, 2023, of our common units by each person we know to beneficially own more than 5% of the common units. The number of units beneficially owned by each person is determined under SEC rules and the information is not necessarily indicative of beneficial ownership for any other purpose. Under SEC rules, a person beneficially owns any units as to which the person has or shares voting or investment power. In addition, a person beneficially owns any units that the person or entity has the right to acquire as of May 16, 2023 (60 days after March 17, 2023) through the exercise of any unit option or other right. The percentage disclosed under “Common Units Beneficially Owned” is based on all outstanding units of 30,184,388 common units. There are also 622,296 general partnership units outstanding which are not included in the ownership table below. The general partnership units are held by Olympos Maritime Ltd., which represents a 2.0% ownership interest in Navios Partners based on all outstanding common units and general partnership units. For more information on our general partner, please read “Item 7. Major Unitholders and Related Party Transaction - B. Related Party Transactions”.
| Common Units Beneficially Owned | |||||
| Number | Percentage | ||||
| Name of Beneficial Owner | |||||
| Navios Holdings(1)(2) | 3,183,199 | 10.5% | |||
| Pilgrim Global ICAV(3) | 3,087,401 | 10.2% | |||
| Angeliki Frangou(4) | 1,550,632 | 5.1% | |||
| (1) | The number of common units beneficially owned is based on the information disclosed on the Schedule 13D/A filed with the SEC on October 26, 2021 and includes 216,054 units directly owned by Navios Holdings and over which it has sole voting and dispositive power and 2,967,145 units directly owned by wholly-owned subsidiaries of Navios Holdings, over which Navios Holdings has shared voting and dispositive power. |
| (2) | Navios Holdings is a public company controlled by its board of directors, which consists of the following eight members: Angeliki Frangou, Vasiliki Papaefthymiou, Shunji Sasada, Spyridon Magoulas, John Stratakis, George Malanga, Efstathios Loizos and Michael Pearson. |
| (3) | The number of common units beneficially owned is based on the information disclosed on the Schedule 13G filed with the SEC on February 14, 2023. |
| (4) | The number of common units beneficially owned is based on the information disclosed on the Schedule 13D filed with the SEC on October 26, 2021. |
Our majority unitholders have the same voting rights as our other unitholders except as follows: each outstanding common unit is entitled to one vote on matters subject to a vote of common unitholders. However, to preserve our ability to be exempt from U.S. federal income tax under Section 883 of the Code, if at any time, any person or group owns beneficially more than 4.9% of any class of units then outstanding, any such units owned by that person or group in excess of 4.9% may not be voted. The voting rights of any such unitholders in excess of 4.9% will effectively be redistributed pro rata among the other unitholders holding less than 4.9% of the voting power of such class of units. Our General Partner, its affiliates and persons who acquired common units with the prior approval of our board of directors will not be subject to this 4.9% limitation except with respect to voting their common units in the election of the elected directors.
As of March 17, 2023, we had at least 38 common unit holders of record, 11 of which were located in the United States and held an aggregate of 25,626,021 of our common units, representing approximately 85% of our outstanding common units. However, one of the U.S. common unit holders of record is CEDE & CO., a nominee of The Depository Trust Company, which held 25,464,919 of our common units as of that date. Accordingly, we believe that the units held by CEDE & CO. include common units 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.
B. Related Party Transactions
Please read Note 18 – Transactions with Related Parties and Affiliates to our consolidated financial statements, included elsewhere in this Annual Report for a full description of related party transactions.
Registration Rights Agreements
On February 4, 2015, we completed a private placement to Navios Holdings of 74,703 common units and 1,526 general partnership units, raising gross proceeds of $15.0 million and in connection with such private placement, we entered into a registration rights agreement with Navios Holdings pursuant to which we provide Navios Holdings with certain rights relating to the registration of the common units.
The Omnibus Agreement
At the closing of the IPO, we entered into the Omnibus Agreement with Navios Holdings. The following discussion describes certain provisions of the Omnibus Agreement.
Noncompetition
Under the Omnibus Agreement, Navios Holdings agreed, and caused its controlled affiliates (other than us and our subsidiaries) to agree, not to acquire or own Panamax or Capesize drybulk carriers under charter for three or more years. This restriction does not prevent Navios Holdings or any of its controlled affiliates (other than us and our subsidiaries) from:
| (1) | acquiring or owning Panamax or Capesize drybulk carriers under charters for less than three years; |
| (2) | acquiring a Panamax or Capesize drybulk carrier under charter for three or more years after the closing of the IPO if Navios Holdings offers to sell to us the vessel for fair market value or putting a Panamax or Capesize drybulk carrier that Navios Holdings owns under charter for three or more years if Navios Holdings offers to sell the vessel to us for fair market value at the time it is chartered for three or more years and, in each case, at each renewal or extension of that charter for three or more years; |
| (3) | acquiring a Panamax or Capesize drybulk carrier under charter for three or more years as part of the acquisition of a controlling interest in a business or package of assets and owning those vessels; provided, however, that: |
| (a) | if less than a majority of the value of the total assets or business acquired is attributable to those Panamax or Capesize drybulk carriers and related charters, as determined in good faith by the board of directors of Navios Holdings, Navios Holdings must offer to sell such Panamax or Capesize drybulk carriers and related charters to us for their fair market value plus any additional tax or other similar costs to Navios Holdings that would be required to transfer the Panamax and Capesize drybulk carriers and related charters to us separately from the acquired business; and |
| (b) | if a majority or more of the value of the total assets or business acquired is attributable to the Panamax or Capesize drybulk carriers and related charters, as determined in good faith by the board of directors of Navios Holdings, Navios Holdings shall notify us in writing of the proposed acquisition. We shall, not later than the 15th calendar day following receipt of such notice, notify Navios Holdings if we wish to acquire such Panamax or Capesize drybulk carriers and related charters forming part of the business or package of assets in cooperation and simultaneously with Navios Holdings acquiring the non-Panamax or non-Capesize drybulk carriers and related charters forming part of that business or package of assets. If we do not notify Navios Holdings of our intent to pursue the acquisition within 15 calendar days, Navios Holdings may proceed with the acquisition as provided in (a) above; |
| (4) | acquiring a non-controlling interest in any company, business or pool of assets; |
| (5) | acquiring or owning any Panamax or Capesize drybulk carrier and related charter if we do not fulfill our obligation, under any existing or future written agreement, to purchase such vessel in accordance with the terms of any such agreement; acquiring or owning Panamax or Capesize drybulk carriers under charter for three or more years subject to the offers to us described in paragraphs (2) and (3) above pending our determination whether to accept such offers and pending the closing of any offers we accept; |
| (6) | providing ship management services relating to any vessel whatsoever, including to Panamax or Capesize drybulk carriers owned by the controlled affiliates of Navios Holdings; or |
| (7) | acquiring or owning Panamax or Capesize drybulk carriers under charter for three or more years if we have previously advised Navios Holdings that we consent to such acquisition, operation or charter. |
Under the Omnibus Agreement, Navios Holdings will not be prohibited from operating chartered-in Panamax or Capesize drybulk carriers under charter-out contracts for three or more years, so long as immediately prior to the time such vessel is proposed to be put under such charter-out contract, Navios Holdings offers such charter-out opportunity to us in the event that (i) we have a Panamax or Capesize drybulk carrier that is available and comparable to Navios Holdings' chartered-in vessel and (ii) it is acceptable to the charter customer.
If Navios Holdings or any of its controlled affiliates (other than us or our subsidiaries) acquires or owns Panamax or Capesize drybulk carriers pursuant to any of the exceptions described above, it may not subsequently expand that portion of its business other than pursuant to those exceptions.
In addition, under the Omnibus Agreement we agreed, and caused our subsidiaries to agree, to acquire, own, operate or charter Panamax or Capesize drybulk carriers with charters of three or more years only (any vessels that are not Panamax or Capesize drybulk carriers will in the following be referred to as the “Non-Panamax and Non-Capesize Drybulk Carriers”). This restriction will not:
| (1) | prevent us or any of our subsidiaries from acquiring a Non-Panamax or Non-Capesize Drybulk Carrier and any related charters as part of the acquisition of a controlling interest in a business or package of assets and owning and operating or chartering those vessels, provided, however, that: |
| (a) | if less than a majority of the value of the total assets or business acquired is attributable to a Non-Panamax or Non-Capesize Drybulk Carrier and related charter, as determined in good faith by us; we must offer to sell such Non-Panamax or Non-Capesize Drybulk Carrier and related charter to Navios Holdings for their fair market value plus any additional tax or other similar costs to us that would be required to transfer the Non-Panamax and Non-Capesize Drybulk Carrier and related charter to Navios Holdings separately from the acquired business; and |
| (b) | if a majority or more of the value of the total assets or business acquired is attributable to a Non-Panamax or Non-Capesize Drybulk Carrier and related charter, as determined in good faith by us; we shall notify Navios Holdings in writing of the proposed acquisition. Navios Holdings shall, not later than the 15th calendar day following receipt of such notice, notify us if it wishes to acquire the Non-Panamax or Non-Capesize Drybulk Carrier forming part of the business or package of assets in cooperation and simultaneously with us acquiring the Panamax or Capesize Drybulk Carrier under charter for three or more years forming part of that business or package of assets. If Navios Holdings does not notify us of its intent to pursue the acquisition within 15 calendar days, we may proceed with the acquisition as provided in (a) above; |
| (2) | prevent us or any of our subsidiaries from owning, operating or chartering a Non-Panamax or Non-Capesize Drybulk Carrier subject to the offer to Navios Holdings described in paragraph (1) above, pending its determination whether to accept such offer and pending the closing of any offer it accepts; or |
| (3) | prevent us or any of our subsidiaries from acquiring, operating or chartering a Non-Panamax or Non-Capesize Drybulk Carrier if Navios Holdings has previously advised us that it consents to such acquisition, operation or charter. |
If we or any of our subsidiaries owns, operates and charters Non-Panamax or Non-Capesize Drybulk Carriers pursuant to any of the exceptions described above, neither we nor such subsidiary may subsequently expand that portion of our business other than pursuant to those exceptions.
Upon a change of control of us or our General Partner, the noncompetition provisions of the Omnibus Agreement will terminate immediately. Upon a change of control of Navios Holdings, the noncompetition provisions of the Omnibus Agreement will terminate at the time that is the later of one year following the change of control and the date on which all of our outstanding subordinated units have converted to common units; provided, however, that in no event will the noncompetition provisions of the Omnibus Agreement terminate upon a change of control of Navios Holdings prior to the date that is four years following the date of the Omnibus Agreement.
Rights of First Offer
Under the Omnibus Agreement, we and our subsidiaries will grant to Navios Holdings a right of first offer on any proposed sale, transfer or other disposition of any of our Panamax or Capesize drybulk carriers and related charters or any Non-Panamax or Non-Capesize Drybulk Carriers and related charters owned or acquired by us. Likewise, Navios Holdings agreed (and caused its subsidiaries to agree) to grant a similar right of first offer to us for any Panamax or Capesize drybulk carrier under charter for three or more years it might own. These rights of first offer do not apply to a (a) sale, transfer or other disposition of vessels between any affiliated subsidiaries, or pursuant to the terms of any charter or other agreement with a charter party or (b) merger with or into, or sale of substantially all of the assets to, an unaffiliated third-party.
Prior to engaging in any negotiation regarding any vessel disposition with respect to a Panamax or Capesize drybulk carrier under charter for three or more years with a non-affiliated third-party or any Non-Panamax or Non-Capesize Drybulk Carrier and related charter, we or Navios Holdings, as the case may be, will deliver a written notice to the other party setting forth the material terms and conditions of the proposed transaction. During the 15-day period after the delivery of such notice, we and Navios Holdings will negotiate in good faith to reach an agreement on the transaction. If we do not reach an agreement within such 15-day period, we or Navios Holdings, as the case may be, will be able within the next 180 calendar days to sell, transfer, dispose or re-charter the vessel to a third party (or to agree in writing to undertake such transaction with a third party) on terms generally no less favorable to us or Navios Holdings, as the case may be, than those offered pursuant to the written notice.
Upon a change of control of us or our general partner, the right of first offer provisions of the Omnibus Agreement will terminate immediately. Upon a change of control of Navios Holdings, the right of first offer provisions of the Omnibus Agreement will terminate at the time that is the later of one year following the change of control and the date on which all of our outstanding subordinated units have converted to common units; provided, however, that in no event will the right of first offer provisions of the Omnibus Agreement terminate upon a change of control of Navios Holdings prior to the date that is four years following the date of the Omnibus Agreement.
Indemnification
Navios Holdings will also indemnify us for liabilities related to certain income tax liabilities attributable to the operation of the assets contributed to us prior to the time they were contributed.
Amendments
The Omnibus Agreement may not be amended without the prior approval of the Conflicts Committee of our board of directors if the proposed amendment will, in the reasonable discretion of our board of directors, adversely affect holders of our common units.
Management Agreements
At the closing of the IPO, we entered into a management agreement, as amended, with the Manager, pursuant to which the Manager has agreed to provide certain commercial and technical management services to us. These services are provided in a commercially reasonable manner in accordance with customary ship management practice and under our direction. The Manager provides these services to us directly, but may subcontract for certain of these services with other entities.
The commercial and technical management services include:
| • | the commercial and technical management of the vessel: managing day-to-day vessel operations including negotiating charters and other employment contracts with respect to the vessels and monitoring payments thereunder, ensuring regulatory compliance, arranging for the vetting of vessels, procuring and arranging for port entrance and clearance, appointing counsel and negotiating the settlement of all claims in connection with the operation of each vessel, appointing adjusters and surveyors and technical consultants as necessary, and providing technical support, |
| • | vessel maintenance and crewing: including supervising the maintenance and general efficiency of vessels, and ensuring the vessels are in seaworthy and good operating condition, arranging our hire of qualified officers and crew, arranging for all transportation, board and lodging of the crew, negotiating the settlement and payment of all wages, and |
| • | purchasing and insurance: purchasing stores, supplies and parts for vessels, arranging insurance for vessels (including marine hull and machinery insurance, protection and indemnity insurance and war risk and oil pollution insurance). |
The Management Agreements may be terminated, prior to the end of its term by us upon 120 days' notice if there is a change of control of the Managers, or by the Managers upon 120 days' notice if there is a change of control of us or our general partner. In addition, the Management Agreements may be terminated by us or by the Managers upon 120 days' notice if:
| • | the other party breaches the agreement; |
| • | a receiver is appointed for all or substantially all of the property of the other party; |
| • | an order is made to wind up the other party; |
| • | a final judgment or order that materially and adversely affects the other party's ability to perform the Management Agreements is obtained or entered and not vacated or discharged; or |
| • | the other party makes a general assignment for the benefit of its creditors, files a petition in bankruptcy or liquidation or commences any reorganization proceedings. |
Furthermore, at any time after the first anniversary of the Management Agreements, the Management Agreements may be terminated prior to the end of its term by us or by the Managers upon 365 days' notice for any reason other than those described above. The Management Agreements provide for payment of a termination fee, equal to the fees charged for the full calendar year (for Navios Partners, Navios Containers and Navios Acquisition) preceding the termination date in the event the agreements are terminated on or before December 31, 2024.
In addition to the fixed daily fees payable under the Management Agreements, the Management Agreements provide that the Managers are entitled to reasonable supplementary remuneration for extraordinary fees and costs resulting from:
| • | time spent on insurance and salvage claims; |
| • | time spent vetting and pre-vetting the vessels by any charterers in excess of 10 days per vessel per year; |
| • | the deductible of any insurance claims relating to the vessels or for any claims that are within such deductible range; |
| • | the significant increase in insurance premiums which are due to factors such as “acts of God” outside the control of the Managers; |
| • | repairs, refurbishment or modifications, including those not covered by the guarantee of the shipbuilder or by the insurance covering the vessels, resulting from maritime accidents, collisions, other accidental damage or unforeseen events (except to the extent that such accidents, collisions, damage or events are due to the fraud, gross negligence or willful misconduct of the Managers, their employees or its agents, unless and to the extent otherwise covered by insurance); |
| • | expenses imposed due to any improvement, upgrade or modification to, structural changes with respect to the installation of new equipment aboard any vessel that results from a change in, an introduction of new, or a change in the interpretation of, applicable laws, at the recommendation of the classification society for that vessel or otherwise; |
| • | costs associated with increases in crew employment expenses resulting from an introduction of new, or a change in the interpretation of, applicable laws or resulting from the early termination of the charter of any vessel; |
| • | any taxes, dues or fines imposed on the vessels or the Managers due to the operation of the vessels; |
| • | expenses incurred in connection with the sale or acquisition of a vessel such as inspections and technical assistance; and |
| • | any similar costs, liabilities and expenses that were not reasonably contemplated by us and the Managers as being encompassed by or a component of the fixed daily fees at the time the fixed daily fees were determined. |
Under the Management Agreements, neither we nor the Managers are liable for failure to perform any of our or its obligations, respectively, under the Management Agreements by reason of any cause beyond our or their reasonable control.
In addition, the Managers have no liability for any loss arising in the course of the performance of the commercial and technical management services under the Management Agreements unless and to the extent that such loss is proved to have resulted solely from the fraud, gross negligence or willful misconduct of the Managers or their employees, in which case (except where such loss has resulted from the Managers; intentional personal act or omission and with knowledge that such loss would probably result) the Managers’ liability is limited to $3.0 million for each incident or series of related incidents.
Further, under our Management Agreements, we have agreed to indemnify the Managers and their employees and agents against all actions which may be brought against them under the Management Agreements including, without limitation, all actions brought under the environmental laws of any jurisdiction, or otherwise relating to pollution or the environment, and against and in respect of all costs and expenses they may suffer or incur due to defending or settling such action; provided, however that such indemnity excludes any or all losses which may be caused by or due to the fraud, gross negligence or willful misconduct of the Manager or their employees or agents, or any breach of the Management Agreements by the Managers.
For additional information on the Management Agreements, please read Note 18 – Transactions with Related Parties and Affiliates to our consolidated financial statements, included elsewhere in this Annual Report.
Administrative Services Agreement
At the closing of the IPO, we entered into the Administrative Services Agreement, as amended, with the Manager, pursuant to which the Manager has agreed to provide certain administrative management services to us. The Administrative Service Agreement expires on January 1, 2025 and shall be automatically renewed for a period of an additional five (5) years.
The Administrative Services Agreement may be terminated prior to the end of its term by us upon 120 days' notice if there is a change of control of the Manager or by the Manager upon 120 days' notice if there is a change of control of us or our General Partner. In addition, the Administrative Services Agreement may be terminated by us or by the Manager upon 120 days' notice if:
| • | the other party breaches the agreement; |
| • | a receiver is appointed for all or substantially all of the property of the other party; |
| • | an order is made to wind up the other party; |
| • | a final judgment or order that materially and adversely affects the other party's ability to perform the management agreement is obtained or entered and not vacated or discharged; or |
| • | the other party makes a general assignment for the benefit of its creditors, files a petition in bankruptcy or liquidation or commences any reorganization proceedings. |
Furthermore, the Administrative Services Agreement may be terminated by us or by the Manager upon 365 days' notice for any reason other than those described above. The agreement provides for payment of a termination fee, equal to the fees charged for the full calendar year preceding the termination date in the event the Administrative Services Agreement is terminated on or before December 31, 2024.
The administrative services include:
| • | bookkeeping, audit and accounting services: assistance with the maintenance of our corporate books and records, assistance with the preparation of our tax returns and arranging for the provision of audit and accounting services; |
| • | legal and insurance services: arranging for the provision of legal, insurance and other professional services and maintaining our existence and good standing in necessary jurisdictions; |
| • | administrative and clerical services: assistance with office space, arranging meetings for our common unitholders pursuant to the partnership agreement, arranging the provision of IT services, providing all administrative services required for subsequent debt and equity financings and attending to all other administrative matters necessary to ensure the professional management of our business; |
| • | banking and financial services: providing cash management including assistance with preparation of budgets, overseeing banking services and bank accounts, arranging for the deposit of funds, negotiating loan and credit terms with lenders and monitoring and maintaining compliance therewith; |
| • | advisory services: assistance in complying with United States and other relevant securities laws; |
| • | client and investor relations: arranging for the provision of, advisory, clerical and investor relations services to assist and support us in our communications with our common unitholders; |
| • | integration of any acquired businesses; and |
| • | client and investor relations. |
We reimburse the Manager for reasonable costs and expenses incurred in connection with the provision of these services within 15 days after the Manager submits to us an invoice for such costs and expenses, together with any supporting detail that may be reasonably required.
Under the Administrative Services Agreement, we have agreed to indemnify the Manager and its employees against all actions which may be brought against them under the Administrative Services Agreement including, without limitation, all actions brought under the environmental laws of any jurisdiction, and against and in respect of all costs and expenses they may suffer or incur due to defending or settling such actions; provided, however that such indemnity excludes any or all losses which may be caused by or due to the fraud, gross negligence or willful misconduct of the Manager or its employees or agents.
For additional information on the Administrative Agreement, please read Note 18 – Transactions with Related Parties and Affiliates to our consolidated financial statements, included elsewhere in this Annual Report.
C. Interests of Experts and Counsel.
Not applicable.
Item 8. Financial Information
A. Consolidated Statements and Other Financial Information
Consolidated Financial Statements: See Item 18. Financial Statements.
Legal Proceedings
On August 31, 2016, Hanjin filed for rehabilitation. We had two Capesize vessels chartered to Hanjin at a net rate of $29,356 per day until December 2020. In September 2016, both vessels were redelivered to our commercial management and were rechartered to third parties. We had filed claims to the Seoul Central District Court for the lost revenues in accordance with the rehabilitation process. Rehabilitation proceedings were cancelled on February 2, 2017 and Hanjin entered into liquidation on February 17, 2017. Our claims were registered in the rehabilitation proceedings on October 24, 2016 and would be assessed during the bankruptcy proceedings. We had fully provided for these amounts in our books. (See Note 2(f) — Summary of Significant Accounting Policies to our consolidated financial statements, included elsewhere in this Annual Report).
We are not involved in any other legal proceedings or aware of any proceedings against us, or contemplated to be brought against us that we believe would have a material adverse effect on our business, financial position, results of operations and liquidity.
From time to time, we may be subject to legal proceedings and claims arising out of our operations in the normal course of business. We maintain insurance policies with insurers in amounts and with coverage and deductibles as our board of directors believes are reasonable and prudent. We expect that these claims would be covered by insurance, subject to customary deductibles. Those claims, even if lacking merit, could result in the expenditure of significant financial and managerial resources.
Cash Distribution Policy
Limitations on Cash Distributions and Our Ability to Change Our Cash Distribution Policy
There is no guarantee that unitholders will receive quarterly distributions from us. Beginning with the quarter ending December 31, 2015, our Board of Directors elected to suspend distributions on our common units in order to preserve cash and improve our liquidity. In March 2018, the Company’s Board of Directors announced a new distribution policy under which it paid quarterly cash distributions in the amount of $0.30 per unit, or $1.20 annually. In July 2020, the Company amended its distribution policy under which it intends to pay quarterly cash distributions in the amount of $0.05 per unit, or $0.20 annually.
Our distribution policy is subject to certain restrictions and may be changed at any time, including:
| • | Our unitholders have no contractual or other legal right to receive distributions other than the obligation under our partnership agreement to distribute available cash on a quarterly basis, which is subject to the broad discretion of our board of directors to establish reserves and other limitations. |
| • | While our partnership agreement requires us to distribute all of our available cash, our partnership agreement, including provisions requiring us to make cash distributions contained therein, may be amended. |
| • | Even if our cash distribution policy is not modified or revoked, the amount of distributions we pay under our cash distribution policy and the decision to make any distribution is determined by our board of directors, taking into consideration the terms of our partnership agreement. |
| • | Under Section 51 of the Marshall Islands Limited Partnership Act, we may not make a distribution to our unitholders if the distribution would cause our liabilities to exceed the fair value of our assets. |
| • | We may lack sufficient cash to pay distributions to our unitholders due to decreases in net revenues or increases in operating expenses, principal and interest payments on outstanding debt, tax expenses, working capital requirements, maintenance and replacement capital expenditures or anticipated cash needs. |
| • | Our distribution policy is affected by restrictions on distributions under our credit facilities or other debt instruments. Specifically, our credit facilities contain material financial tests that must be satisfied and we will not pay any distributions that will cause us to violate our credit facilities or other debt instruments. Should we be unable to satisfy these restrictions included in our credit facilities or if we are otherwise in default under our credit facilities, our ability to make cash distributions to unitholders, notwithstanding our cash distribution policy, would be materially adversely affected. |
| • | If we make distributions out of capital surplus, as opposed to operating surplus, such distributions will constitute a return of capital and will result in a reduction in the minimum quarterly distribution and the target distribution levels. We do not anticipate that we will make any distributions from capital surplus. |
Our ability to make distributions to our unitholders depends on the performance of our subsidiaries and their ability to distribute funds to us. The ability of our subsidiaries to make distributions to us may be restricted by, among other things, the provisions of existing and future indebtedness, applicable partnership and limited liability company laws and other laws and regulations.
Quarterly Distribution
Please read Note 20 – Cash Distributions and Earnings per Unit to our consolidated financial statements, included elsewhere in this Annual Report for a full description of the authorized cash distributions of the Company.
B. Significant Changes
No significant changes have occurred since the date of the annual financial statements included herein.
Item 9. The Offer and Listing
A. Offer and Listing Details
Our common units are traded on the New York Stock Exchange (or “NYSE”) under the symbol “NMM”.
B. Plan of Distribution
Not applicable.
C. Markets
See “Item 9.A Offer and Listing Details.”
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
The information required to be disclosed under Item 10.B is incorporated by reference to the following sections of the prospectus included in our Registration Statement on Form F-1 filed with the SEC on November 14, 2007, as such disclosures may be revised pursuant to amendments to our Agreement of Limited Partnership: “The Partnership Agreement,” “Description of the Common Units - The Units”, “Conflicts of Interest and Fiduciary Duties”, “How we make Cash Distributions” and “Our Cash Distribution Policy and Restrictions on Distributions.”
On June 10, 2009, we executed the Second Amended and Restated Agreement of Limited Partnership of Navios Partners. The Second Amended and Restated Agreement of Limited Partnership designated a new series of subordinated units as Subordinated Series A Units (the “Series A Units”).
On March 12, 2015, we executed the Third Amended and Restated Agreement of Limited Partnership of Navios Partners in order to reflect the conversion of the Subordinated Units and the Subordinated Series A Units into Common Units.
On March 19, 2018, we executed the Fourth Amended and Restated Agreement of Limited Partnership of Navios Partners in order to reflect the recent process to clarify the quorum necessary to conduct business at any adjourned meeting.
C. Material Contracts
The following is a summary of each material contract, other than material contracts entered into in the ordinary course of business, to which we or any of our subsidiaries is a party, for the two years immediately preceding the date of this Annual Report, each of which is included in the list of exhibits in Item.
Except as otherwise indicated, please read “Item 5. Operating and Financial Review and Prospects - Trends and Factors Affecting Our Future Results of Operations - Liquidity and Capital Resources - Credit Facilities – Financial Liabilities” for a summary of certain contract terms.
| • | Omnibus Agreement, dated as of November 16, 2007, among Navios Holdings, Navios GP LLC, Navios Maritime Operating LLC., and Navios Partners. Please read “Item 7. Major Unitholders and Related Party Transactions” for a summary of certain contract terms. |
| • | Amendment to Omnibus Agreement, dated as of June 29, 2009, among Navios Holdings, Navios GP LLC, Navios Maritime Operating LLC., and Navios Partners, relating to the Omnibus Agreement dated November 16, 2007. Please read “Item 7. Major Unitholders and Related Party Transactions” for a summary of certain contract terms. |
| • | Management Agreement dated November 16, 2007, between Navios Partners and Navios ShipManagement. Please read “Item 7. Major Unitholders and Related Party Transactions” for a summary of certain contract terms. |
| • | Amendment to Management Agreement dated October 29, 2009, between Navios Partners and Navios ShipManagement relating to the Management Agreement dated November 16, 2007. Please read “Item 7. Major Unitholders and Related Party Transactions” for a summary of certain contract terms. |
| • | Amendment No. 2 to Management Agreement dated October 21, 2011, between Navios Partners and Navios ShipManagement relating to the Management Agreement dated November 16, 2007. Please read “Item 7. Major Unitholders and Related Party Transactions” for a summary of certain contract terms. |
| • | Amendment No. 3 to Management Agreement dated October 30, 2013, between Navios Partners and Navios ShipManagement relating to the Management Agreement dated November 16, 2007. Please read “Item 7. Major Unitholders and Related Party Transactions” for a summary of certain contract terms. |
| • | Amendment No. 4 to Management Agreement dated August 29, 2014, between Navios Partners and Navios ShipManagement relating to the Management Agreement dated November 16, 2007. Please read “Item 7. Major Unitholders and Related Party Transactions” for a summary of certain contract terms. |
| • | Amendment No. 5 to Management Agreement dated February 10, 2015, between Navios Partners and Navios ShipManagement relating to the Management Agreement dated November 16, 2007. Please read “Item 7. Major Unitholders and Related Party Transactions” for a summary of certain contract terms. |
| • | Amendment No. 6 to Management Agreement dated May 4, 2015, between Navios Partners and Navios ShipManagement relating to the Management Agreement dated November 16, 2007. Please read “Item 7. Major Unitholders and Related Party Transactions” for a summary of certain contract terms. |
| • | Amendment No. 7 to Management Agreement dated February 4, 2016, between Navios Partners and Navios ShipManagement relating to the Management Agreement dated November 16, 2007. Please read “Item 7. Major Unitholders and Related Party Transactions” for a summary of certain contract terms. |
| • | Amendment No. 8, to Management Agreement dated November 14, 2017, between Navios Partners and Navios ShipManagement relating to the Management Agreement dated November 16, 2007. Please read “Item 7. Major Unitholders and Related Party Transactions” for a summary of certain contract terms. |
| • | Amendment No. 9 to Management Agreement dated August 28, 2019, between Navios Partners and Navios ShipManagement relating to the Management Agreement dated November 16, 2007. Please read “Item 7. Major Unitholders and Related Party Transactions” for a summary of certain contract terms. |
| • | Amendment No. 10 to Management Agreement dated December 13, 2019, between Navios Partners and Navios ShipManagement relating to the Management Agreement dated November 16, 2007. Please read “Item 7. Major Unitholders and Related Party Transactions” for a summary of certain contract terms. |
| • | Administrative Services Agreement, dated as of November 16, 2007, between Navios Partners and Navios ShipManagement. Please read “Item 7. Major Unitholders and Related Party Transactions” for a summary of certain contract terms. |
| • | Amendment No. 1, dated October 21, 2011, to the Administrative Services Agreement, dated as of November 16, 2007, between Navios Partners and Navios ShipManagement. Please read “Item 7. Major Unitholders and Related Party Transactions” for a summary of certain contract terms. |
| • | Amendment No. 2 to Administrative Services Agreement, dated November 14, 2017, between Navios Maritime Partners and Navios ShipManagement. Please read “Item 7. Major Unitholders and Related Party Transactions” for a summary of certain contract terms. |
| • | Amendment No. 3 to Administrative Services Agreement, dated August 28, 2019, between Navios Maritime Partners and Navios ShipManagement. Please read “Item 7. Major Unitholders and Related Party Transactions” for a summary of certain contract terms. |
| • | Amendment No. 1 to Management Agreement, dated November 23, 2017, between Navios Containers and Navios Shipmanagement Inc. Please read “Item 7. Major Unitholders and Related Party Transactions” for a summary of certain contract terms. |
| • | Amendment No. 2 to Management Agreement, dated April 23, 2018, between Navios Containers and Navios Shipmanagement Inc. Please read “Item 7. Major Unitholders and Related Party Transactions” for a summary of certain contract terms. |
| • | Amendment No. 3 to Management Agreement, dated June 1, 2018, between Navios Containers and Navios Shipmanagement Inc. Please read “Item 7. Major Unitholders and Related Party Transactions” for a summary of certain contract terms. |
| • | Amendment No. 4 to Management Agreement, dated August 28, 2019, between Navios Containers and Navios Shipmanagement Inc. Please read “Item 7. Major Unitholders and Related Party Transactions” for a summary of certain contract terms. |
| • | Management Agreement dated May 28, 2010, between Navios Acquisition and Navios Ship Management Inc. Please read “Item 7. Major Unitholders and Related Party Transactions” for a summary of certain contract terms. |
| • | Amendment to the Management Agreement dated May 4, 2012, between Navios Acquisition and Navios Tankers Manager Inc. Please read “Item 7. Major Unitholders and Related Party Transactions” for a summary of certain contract terms. |
| • | Amendment to the Management Agreement dated May 14, 2014, between Navios Acquisition and Navios Tankers Management Inc. Please read “Item 7. Major Unitholders and Related Party Transactions” for a summary of certain contract terms. |
| • | Fourth Amendment to the Management Agreement, dated May 19, 2016, between Navios Acquisition and Navios Tankers Management Inc. Please read “Item 7. Major Unitholders and Related Party Transactions” for a summary of certain contract terms. |
| • | Fifth Amendment to the Management Agreement, dated May 3, 2018, between Navios Acquisition and Navios Tankers Management Inc. Please read “Item 7. Major Unitholders and Related Party Transactions” for a summary of certain contract terms. |
| • | Sixth Amendment to the Management Agreement, dated as of August 29, 2019, by and between Navios Acquisition and Navios Tankers Management Inc. Please read “Item 7. Major Unitholders and Related Party Transactions” for a summary of certain contract terms. |
| • | Seventh Amendment to the Management Agreement, dated as of December 13, 2019, by and between Navios Acquisition and Navios Tankers Management Inc. Please read “Item 7. Major Unitholders and Related Party Transactions” for a summary of certain contract terms. |
| • | Eighth Amendment to the Management Agreement, dated as of June 26, 2020, by and between Navios Acquisition and Navios Tankers Management Inc. Please read “Item 7. Major Unitholders and Related Party Transactions” for a summary of certain contract terms. |
| • | Continuous Offering Program Sales Agreement, dated November 18, 2016, between Navios Partners and S. Goldman Capital LLC. Please read “Item 5. Operating and Financial Review and Prospects” for a summary of certain contract terms. |
| • | Amendment No. 1 to Continuous Offering Program Sales Agreement, dated June 2, 2017, with S. Goldman Capital LLC. |
| • | Amendment No. 2 to Continuous Offering Program Sales Agreement, dated August 3, 2020, with S. Goldman Capital LLC. |
| • | Loan Agreement, dated March 26, 2018, by and among Goldie Services Company and Seymour Trading Limited; Nordea Bank AB (Publ), Filial I. Norge Skandinaviska Enskilda Banken AB (Publ) and NIBC Bank N.V. |
| • | Loan Agreement for a $44.0 million term loan, dated July 31, 2018, among Navios Partners and DVB Bank S.E. |
| • | Loan Agreement, dated December 28, 2018, relating to a $28.5 million term loan facility, by and among Velvet Shipping Corporation, Golem Navigation Limited and Coasters Ventures Ltd., as joint and several borrowers; the Banks and Financial Institutions listed in Schedule 1 therein, as Lenders; NIBC Bank N.V., as Mandated Lead Arranger; and NIBC Bank N.V., as Agent and Security Trustee. |
| • | Facility Agreement, dated February 12, 2019, by and among Kohylia ShipManagement S.A., Floral Marine Ltd., Ianthe Maritime S.A., and Customized Development S.A., as joint and several Borrowers; guaranteed by Navios Maritime Partners L.P., as Guarantor; arranged by DVB Bank SE, as Arranger; with DVB Bank SE, acting as Facility Agent; DVB Bank SE, acting as Security Agent; and DVB Bank SE, acting as Account Bank. |
| • | Facility Agreement, dated April 5, 2019, by and among Joy Shipping Corporation, Avery Shipping Corporation, DNB Bank ASA and the Bank and Insitutions listed therein. |
| • | Deed of Accession, Amendment, Release and Restatement, dated April 9, 2019, relating to the Loan Agreement, dated June 26, 2017, by and among Casual Shipholding Co., Wave Shipping Corp. and Ammos Shipping Corp., Navios Maritime Partners L.P., Navios Maritime Operating L.L.C., Navios ShipManagement Inc., and BNP Paribas and BNP Paribas (Suisse) SA. |
| • | Facility Agreement, dated July 4, 2019, by and among Chilali Corp., Surf Maritime Co., Pandora Marine Inc., Micaela Shipping Corporation and Credit Agricole Corporate Investment Bank |
| • | Facility Agreement, dated September 26, 2019, by and among Alegria Shipping Corporation, Andromeda Shiptrade Limited, Aurora Shipping Enterprises Ltd., Beryl Shipping Corporation, Cheryl Shipping Corporation, Christal Shipping Corporation, Hyperion Enterprises Inc., Kymata Shipping Co., Orbiter Shipping Corp., Pearl Shipping Corporation, Rubina Shipping Corporation, Seymour Trading Limited, Topaz Shipping Corporation, Hamburg Commercial Bank AG as agent, mandated lead arranger and security trustee, and the banks and financial institutions listed therein. |
| • | Facility Agreement, dated December 12, 2019, by and among Oceanus Shipping Corporation, Cronus Shipping Corporation, Leto Shipping Corporation, Dionysus Shipping Corporation, Prometheus Shipping Corporation, and ABN Amro Bank N.V. as agent and security trustee, and the Banks and Institutions listed therein. |
| • | Supplemental Agreement, dated July 2, 2020, to Loan Agreement, dated December 12, 2019, by and among Navios Maritime Partners L.P., as borrower, ABN Amro Bank N.V., as agent and security trustee, and the banks and financial institutions listed therein. |
| • | Second Supplemental Agreement, dated September 30, 2020, to Loan Agreement, dated December 12, 2019, by and among Navios Maritime Partners L.P., as borrower, ABN Amro Bank N.V., as agent and security trustee, and the banks and financial institutions listed therein. |
| • | Form of Amended and restated Facility Agreement, dated December 16, 2019, by and among Camelia Shipping Inc., Amaryllis Shipping Inc., Azalea Shipping Inc., Anthos Shipping Inc., and Dory Funding DAC as agent and security agent, and the financial institutions listed therein. |
| • | Facility Agreement, dated June 25, 2020, by and among Cronus Shipping Corporation, Dionysus Shipping Corporation, Oceanus Shipping Corporation and Prometheus Shipping Corporation, and Hellenic Bank Public Company Limited as lender, arranger, agent, and security trustee. |
| • | Facility Agreement, dated June 26, 2020, by and among Navios Partners and ABN Amro Bank N.V. as Agent and as Security Trustee and the financial institutions listed therein. |
| • | Facility Agreement, dated September 28, 2020, by and among Emery Shipping Corporation and Rondine Management Corp., and Crédit Agricole Corporate and Investment Bank as lender, arranger, agent, and security trustee. |
| • | Facility Agreement, for a term loan facility, dated March 23,2021, by and among Emery Shipping Corporation, Mandora Shipping Ltd., Rondine Management Corp. and Solagne Shipping Ltd. as borrowers and Credit Agricole Corporate and Investment Bank as lender, arranger, agent and account bank trustee.• Facility Agreement, for a term loan facility, dated April 28, 2021, by and among Buff Shipping Corporation, Brandeis Shipping Corporation, Ammos Shipping Corp. and Wave Shipping Corp. as borrowers and BNP Paribas as lender, agent and security trustee. |
| • | Facility Agreement, dated May 11, 2021, by and among Rubina Shipping Corporation, Topaz Shipping Corporation, Beryl Shipping Corporation, Cheryl Shipping Corporation, Christal Shipping Corporation, Kymata Shipping Co., Pearl Shipping Corporation, Andromeda Shiptrade Limited, Alegria Shipping Corporation, Aurora Shipping Enterprises Ltd., Hyperion Enterprises Inc., Orbiter Shipping Corp., Camelia Shipping Inc. and Balder Maritime Ltd. as borrowers and Hamburg Commercial Bank AG as lender, agent, mandated lead arranger and security trustee, and the banks and financial institutions listed therein. |
| • | Facility Agreement, for a term loan facility, dated June 17, 2021, by and among Anthos Shipping Inc., Azalea Shipping Inc., Fandango Shipping Corporation, Flavescent Shipping Corporation, Sunstone Shipping Corporation and Zaffre Shipping Corporation as borrowers and National Bank of Greece as lender. |
| • | Facility Agreement, for a term loan facility, dated August 19, 2021, by and among Aramis Navigation Inc. as borrowers and DNB (UK) LIMITED as lender and Mandated Lead Arranger, DNB Bank ASA, London Branch as Facility Agent, Security Agent and Sustainability Agent. |
| • | Deed of Accession, Amendment, Release and Restatement relating to a Facility Agreement, for a term loan facility, dated December 07, 2021, by and among Navios Maritime Acquisition Corporation as released borrower, Navios Maritime Partners L.P. as new borrower, the banks and financial institutions listed therein as lenders, and Hamburg Commercial Bank AG as agent, mandated lead arranger and security trustee. |
| • | Facility Agreement, for a term loan facility, dated December 13, 2021, by and among Tinos Shipping Corporation, Psara Shipping Corporation, Oinousses Shipping Corporation, Joy Shipping Corporation and Avery Shipping Company as borrowers and DNB (UK) LIMITED as lender and Mandated Lead Arranger, DNB Bank ASA, London Branch as Facility Agent, Security Agent and Sustainability Agent. |
| • | Deed of Accession, Amendment, Release and Restatement relating to a Facility Agreement, for a term loan facility, dated December 13, 2021, by and among Zakynthos Shipping Corporation, Delos Shipping Corporation, Kerkyra Shipping Corporation, Alkmene Shipping Corporation, Persephone Shipping Corporation and Chernava Marine Corp., Navios Maritime Acquisition Corporation as released guarantor, Navios Maritime Partners L.P. as new guarantor, the banks and financial institutions listed therein as lenders, and BNP Paribas and Crédit Agricole Corporate and Investment Bank as Lenders and Mandated Lead Arrangers and BNP Paribas as agent and security trustee |
| • | Facility Agreement dated March 28, 2022, by and among Esmeralda Shipping Corporation, Proteus Shiptrade SA and Triangle Shipping Corporation as borrowers and ABN AMRO Bank N.V. as lender, agent and security trustee |
| • | Bareboat Charter and Memorandum of Agreement, dated December 12, 2018, among Seven Shipping S.A. and Shichifuki Gumi Co., Ltd., as buyers and bareboat owners, and Perigiali Navigation Limited, as seller and bareboat charterer, providing for the sale and leaseback of the Navios Beaufiks. |
| • | Bareboat Charter and Memorandum of Agreement, dated December 10, 2018, between Sansha Shipping S.A. as buyer and bareboat owner, and Fantastiks Shipping Corporation, as seller and bareboat charterer, providing for the sale and leaseback of the Navios Fantastiks. |
| • | Bareboat Charter and Memorandum of Agreement, dated April 5, 2019, among Hinode Kaiun Co., Ltd., Mansei Kaiun Co., Ltd., and Sunmarine Maritime S.A. as buyers and bareboat owners, and Casual Shipholding Co., as seller and bareboat charterer, providing for the sale and leaseback of the Navios Sol. |
| • | Bareboat Charter and Memorandum of Agreement, dated June 7, 2019, among Tachibana Kaiun Co., Ltd. and Sakae Shipping S.A., as buyers and bareboat owners, and Sagittarius Shipping Corporation, as seller and bareboat charterer, providing for the sale and leaseback of the Navios Sagittarius. |
| • | Bareboat Charter and Memorandum of Agreement, dated July 2, 2019, between Takanawa Line Inc.as buyers and bareboat owners, and Finian Navigation Co., as seller and bareboat charterer, providing for the sale and leaseback of the Navios Ace. |
| • | Bareboat Charters and Memorandum of Agreements, dated June 18, 2021, between Mi-Das Line S.A. as buyer and bareboat owner and Lavender Shipping Corporation and Nostos Shipmanagement Corp. as sellers and bareboat charterers, providing for the sale and leaseback of the Navios Ray and the Navios Bonavis. |
| • | Bareboat Charter and Memorandum of Agreement, dated August 16, 2021, between Batanagar Shipping Corporation, as buyer and bareboat owner, and Finian Navigation Co., as seller and bareboat charterer, providing for the sale and leaseback of the Navios Pollux. |
| • | Bareboat Charters and Memoranda of Agreement by and between Ocean Dazzle Shipping Limited, wholly owned subsidiary of Minsheng Financial Leasing Co. Ltd., and Evian Shiptrade Ltd and Anthimar Marine Inc., dated May 25, 2018, providing for the sale and leaseback of the Navios Amaranth and Navios Amarillo, respectively. |
| • | Bareboat Charters and Memoranda of Agreement by and between Ocean Dawn Shipping Limited, wholly owned subsidiary of Minsheng Financial Leasing Co. Ltd., Pingel Navigation Limited, Ebba Navigation Limited, Clan Navigation Limited, Olympia II Navigation Limited and Enplo Shipping Limited, dated May 25, 2018, providing for the sale and leaseback of the Navios Delight, Navios Destiny, Navios Devotion, Navios Domino and Navios Verde, respectively. |
| • | Bareboat Charters and Memoranda of Agreement by and between Ocean Wood Tang Shipping Limited, wholly owned subsidiary of Minsheng Financial Leasing Co. Ltd., and Bertyl Ventures Co., Isolde Shipping Inc., Rodman Maritime Corp., Silvanus Marine Company, Morven Chartering Inc. and Velour Management Corp., dated May 25, 2018, providing for the sale and leaseback of the Navios Azure, Navios Indigo, Navios Spring, Navios Summer, Matson Oahu (ex-Navios Verano) and Navios Vermillion, respectively. |
| • | Bareboat Charters and Memoranda of Agreement by and between Xiang L44 Hk International Ship Lease Co., Limited, Xiang L45 Hk International Ship Lease Co., Limited, Xiang L46 Hk International Ship Lease Co., Limited and Xiang L47 Hk International Ship Lease Co., Limited wholly owned subsidiaries of Bank of Communications Financial Leasing Company and Vythos Marine Corp., Nefeli Navigation S.A., Fairy Shipping Corporation and Limestone Shipping Corporation dated March 11, 2020, providing for the sale and leaseback of the Navios Constellation, the Navios Unison, the Navios Utmost and the Navios Unite. |
| • | Deed of Accession, Amendment, Release and Restatement relating to a Facility Agreement, for a term loan facility, dated December 03, 2018, by and among Navios Maritime Containers LP as released borrower, Navios Maritime Partners L.P. as new borrower, ABN Amro Bank N.V as lenders, agent and security trustee. |
| • | Loan Agreement, dated June 26, 2019, of up to $54.0 million, among Theros Ventures Limited, Legato Shipholding Inc., Peran Maritime Inc., Zoner Shiptrade S.A., Crayon Shipping Ltd, Inastros Maritime Corp. and Jasmer Shipholding Ltd, as borrowers, BNP Paribas, as lender, as agent and security trustee. |
| • | Loan Agreement, dated June 25, 2020, of up to $20.8 million, among Aphrodite Shipping Corporation and Dione Shipping Corporation, as borrowers, Eurobank S.A., as agent, arranger, and security agent, and the Banks and Financial Institutions listed therein. |
| • | Bareboat charters and Memoranda of Agreement, among Sea 66 Leasing Co. Limited, Sea 67 Leasing Co. Limited, Sea 68 Leasing Co. Limited and Sea 69 Leasing Co. Limited wholly owned subsidiaries of China Merchants Bank Limited, dated March 31, 2018, providing for the sale and leaseback of the Nave Atria, Nave Aquila, Nave Bellatrix and Nave Orion respectively. |
| • | Bareboat Charter and Memorandum of Agreement, dated March 22, 2019, for the sale and leaseback transaction among Great Syros Limited, Great Folegandros Limited, Great Skiathos Limited, Great Serifos Limited, and Great Sifnos Limited, being subsidiaries of AVIC International Leasing Co., Ltd., and Syros Shipping Corporation, Folegandros Shipping Corporation, Skiathos Shipping Corporation, Serifos Shipping Corporation, and Sifnos Shipping Corporation, being wholly owned subsidiaries of Navios Maritime Acquisition Corporation, providing for the sale and leaseback of the Nave Alderamin, Nave Andromeda, Nave Capella, Nave Estella, and Nave Titan, respectively. |
| • | Bareboat Charter and Memorandum of Agreement, dated September 26, 2019, for the sale and leaseback transaction among Great Thasos Limited, Great Kithira Limited, and Great Antipsara Limited, being subsidiaries of AVIC International Leasing Co., Ltd., and Thasos Shipping Corporation, Kithira Shipping Corporation, and Antipsara Shipping Corporation, being wholly owned subsidiaries of Navios Maritime Acquisition Corporation, providing for the sale and leaseback of the Nave Equinox, Nave Orbit, and Nave Velocity, respectively. |
| • | Bareboat Charter and Memoranda of Agreement, dated August 9, 2019, between World Star Shipping S.A. and Samothrace Shipping Corporation, providing for the sale and leaseback of the Nave Pulsar. |
| • | Bareboat Charter and Memorandum of Agreement, dated October 16, 2019, for the sale and leaseback transaction among Xiang T103 HK International Ship Lease Co., Limited, Xiang T104 HK International Ship Lease Co., Limited, Xiang T105 HK International Ship Lease Co., Xiang T106 HK International Ship Lease Co., Limited, Xiang T107 HK International Ship Lease Co., Limited, Limited, and Xiang T108 HK International Ship Lease Co., Limited, being subsidiaries of Bank of Communications Financial Leasing Company, and Skopelos Shipping Corporation, Ios Shipping Corporation, Antikithira Shipping Corporation, Iraklia Shipping Corporation, Limnos Shipping Corporation, and Thera Shipping Corporation, being wholly owned subsidiaries of Navios Maritime Acquisition Corporation, providing for the sale and leaseback of the Nave Ariadne, Nave Cielo, Nave Equator, Bougainville, Nave Pyxis, and Nave Atropos, respectively. |
| • | Bareboat Charter and Memorandum of Agreement, dated June 12, 2020, for the sale and leaseback transaction among Great Rhodes Limited, Great Skyros Limited, Great Crete Limited and Great Rhea Limited, being subsidiaries of AVIC International Leasing Co., Ltd., and Rhodes Shipping Corporation, Skyros Shipping Corporation, Crete Shipping Corporation and Rhea Shipping Corporation, being wholly owned subsidiaries of Navios Maritime Acquisition Corporation, providing for the sale and leaseback of the Nave Cassiopeia, Nave Sextans, Nave Cetus and Perseus N, respectively |
| • | Agreement and Plan of Merger, dated December 31, 2020, by and among Navios Maritime Partners L.P., NMM Merger Sub LLC, Navios Maritime Containers L.P. and Navios Maritime Containers GP LLC. Please read “Item 7. Major Unitholders and Related Party Transactions” for a summary of certain contract terms. |
| • | Agreement and Plan of Merger, dated August 25, 2021, by and among Navios Maritime Partners L.P., Navios Acquisition Merger Sub. Inc. and Navios Maritime Acquisition Corporation. Please read “Item 7. Major Unitholders and Related Party Transactions” for a summary of certain contract terms. |
| • | Bareboat Charter and Memorandum of Agreement, dated February 21, 2022, between Kotobuki Kaiun Co., Ltd., Yutoku Kinkai Kisen Co., Ltd. And Kotobuki Shipping Corporation, S.A., as buyers and bareboat owners, and Kleimar NV and White Narcissus Marine S.A., as seller and bareboat charterer, providing for the sale and leaseback of the Navios Asteriks. |
| • | Facility Agreement dated May 9, 2022, by and among Cronus Shipping Corporation, Bole Shipping Corporation, Skopelos Shipping Corporation, Ios Shipping Corporation and Antipaxos Shipping Corporation, as borrowers, and Hellenic Bank Public Company Limited, as lender, arranger, agent, account bank and security trustee |
| • | Facility Agreement dated June 29, 2022, by and among Customized Development S.A., Kohylia Shipmanagement S.A., Floral Marine LTD. and Ianthe Maritime S.A. as borrowers, and Skandinaviska Enskilda Banken AB. |
| • | Bareboat Charter and Memorandum of Agreement, dated July 4, 2022, between Bright Carrier S.A, as buyers and bareboat owners, and Anafi Shipping Corporation, as seller and bareboat charterer, providing for the sale and leaseback of the Navios Sky. |
| • | Amendment No. 11 dated July 25, 2022, to the Management Agreement dated November 16, 2007, between Navios Maritime Partners L.P. and Navios Shipmanagement Inc. |
| • | Facility Agreement dated September 5, 2022, by and among Navios Maritime Partners L.P. and Hamburg Commercial Bank AG as Agent, Mandated Lead Arranger and Security Trustee. |
| • | Facility Agreement dated September 30, 2022, by and among Melpomene Shipping Corporation and Urania Shipping Corporation, as borrowers, and KFW IPEX-Bank GMBH, as lender, mandated lead arranger, facility agent and security agent. |
| • | Form of Bareboat Charter and Memorandum of Agreement, dated October 27, 2022, for the sale and leaseback transaction between Xiang H131 International Ship Lease Co., Limited Xiang H129 International Ship Lease Co., Limited Xiang H130 International Ship Lease Co., Limited, Xiang H104 International Ship Lease Co., Limited, Xiang H119 International Ship Lease Co., Limited, Xiang H132 International Ship Lease Co., Limited, Jiahai International Ship Lease Co., Limited, Jialong International Ship Lease Co., Limited,, Xiang L33 HK International Ship Lease Co., Limited, Xiang T51 HK International Ship Lease Co., Limited, Longshi International Ship Lease Co., Limited, Longli International Ship Lease Co., Limited, being subsidiaries Bank of Communications Financial Leasing Company Limited, and Velour Management Corp., Morven Chartering Inc., Isolde Shipping Inc., Rodman Maritime Corp., Silvanus Marine Company, Enplo Shipping Limited, Olympia II Navigation Limited, Pingel Navigation Limited, Ebba Navigation Limited, Clan Navigation Limited, Evian Shiptrade Ltd, Anthimar Marine Inc. being wholly owned subsidiaries of Navios Maritime Partners L.P., providing for the sale and leaseback of the Navios Vermilion, Matson Oahu, Navios Indigo, Navios Spring, Navios Summer, Navios Verde, Navios Domino, Navios Delight, Navios Destiny, Navios Devotion, Matson Lanai, Navios Amarillo, respectively. |
| • | Bareboat Charter and Memorandum of Agreement (form of), dated December 5, 2022, between Wealth Line Inc., as buyers and bareboat owners, and Sagittarius Shipping Corporation, as seller and bareboat charterer, providing for the sale and leaseback of the Navios Sagittarius. |
| • | Term Loan Facility Agreement dated December 21, 2022, by and among Rhodes Shipping Corporation, Crete Shipping Corporation, Skyros Shipping Corporation, and First-Citizens Bank & Trust Company. |
| • | Bareboat Charter and Memorandum of Agreement (form of), dated February 14, 2023, between Glory Ocean Shipping S.A. and Temm Maritime Co., Ltd., as buyers and bareboat owners, and Koufonisi Shipping Corporation, as seller and bareboat charterer, providing for the sale and leaseback of the Navios Felix. |
| • | Loan Agreement, dated December 13, 2021, among Ducale Marine Inc., Kleimar NV, Opal Shipping Corporation, Iris Corporation, Highbird Management Inc. and Corsair Shipping Ltd., and Credit Agricole Corporate and Investment Bank and BNP Paribas. |
| • | Bareboat Charter and Memorandum of Agreement, dated December 13, 2021, between Shikar Ventures S.A. and Batanagar Shipping Corporation, providing for the sale and leaseback of Navios Stellar. |
| • | Bareboat Charter and Memorandum of Agreement, dated December 13, 2021, between Pueblo Holdings Ltd. and K.T.M. Corporation S.A., providing for the sale and leaseback of Navios Lumen. |
| • | Bareboat Charter and Memorandum of Agreement, dated December 13, 2021, between Pharos Navigation S.A. and ASL Navigation S.A., providing for the sale and leaseback of the Navios Phoenix. |
| • | Bareboat Charter and Memorandum of Agreement, dated December 13, 2021, between Rumer Holding Ltd. and Juno Maritime Corp., providing for the sale and leaseback of Navios Antares. |
| • | Bareboat Carter and Memorandum of Agreement, dated November 27, 2019, among Anchor Trans Inc., and Vernazza Shiptrade Inc, being a wholly-owned subsidiary of Navios Maritime Holdings Inc., providing for the sale and leaseback of Dream Canary. |
| • | Bareboat Charter and Memorandum of Agreement, dated February 13, 2020, between Lua Line S.A. and Okino Kaiun Co. and Roselite Shipping Corporation, being a wholly-owned subsidiary of Navios Maritime Holdings Inc., providing for the sale and leaseback of Navios Corali. |
D. Exchange controls
We are not aware of any governmental laws, decrees or regulations, including foreign exchange controls, in the Marshall Islands, Liberia, Malta, British Virgin Islands, Luxemburg, Hong Kong, Belgium, Cayman Islands, and the countries of incorporation of Navios Partners and its subsidiaries that restrict the export or import of capital, or that affect the remittance of dividends, interest or other payments to non-resident holders of our securities.
We are not aware of any limitations on the right of non-resident or foreign owners to hold or vote our securities imposed by the laws of the Republic of the Marshall Islands or our Certificate of Formation and Limited Partnership Agreement.
E. Taxation
MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS
The following is a discussion of the material U.S. federal income tax considerations that may be relevant to beneficial owners of our common units and, unless otherwise noted in the following discussion, is the opinion of Thompson Hine LLP, our U.S. counsel, insofar as it relates to matters of U.S. federal income tax law and legal conclusions with respect to those matters. The opinion of our counsel is dependent on the accuracy of representations made by us to them, including descriptions of our operations contained herein.
This discussion is based upon provisions of the Internal Revenue Code of 1986, as amended (the “Code”), U.S. Treasury Regulations, and administrative rulings and court decisions, all as in effect or in existence on the date of this filing and all of which are subject to change or differing interpretations by the Internal Revenue Service (“IRS”) or a court, possibly with retroactive effect. Changes in these authorities may cause the tax consequences of ownership of our common units to vary substantially from the consequences described below. For example, the current U.S. Administration has set forth several tax proposals that would, if enacted, make significant changes to U.S. tax laws. Such proposals include, but are not limited to, an increase in the U.S. federal income tax for long-term capital gain for certain taxpayers with income in excess of a threshold amount. The U.S. Congress may consider, and could include, some or all of these proposals in connection with any tax legislation. It is unclear whether these or similar changes will be enacted and, if enacted, how soon any such changes could take effect. Unless the context otherwise requires, references in this section to “we,” “our” or “us” are references to Navios Maritime Partners L.P.
The following discussion applies only to beneficial owners of common units that own the common units as “capital assets” (generally, property held for investment purposes). The following discussion does not address all aspects of U.S. federal income taxation that may be important to particular beneficial owners of common units in light of their individual circumstances, such as (i) beneficial owners of common units subject to special tax rules (e.g., banks or other financial institutions, real estate investment trusts, regulated investment companies, insurance companies, broker-dealers, traders that elect to mark-to-market for U.S. federal income tax purposes, tax-exempt organizations and retirement plans, individual retirement accounts and tax-deferred accounts, or former citizens or long-term residents of the United States), beneficial owners that will hold the common units as part of a straddle, hedge, conversion, constructive sale, or other integrated transaction for U.S. federal income tax purposes, or beneficial owners that are accrual method taxpayers for U.S. federal income tax purposes and are required to accelerate the recognition of any item of gross income with respect to the common units as a result of such income being recognized on an applicable financial statement (ii) partnerships or other entities classified as partnerships for U.S. federal income tax purposes or their partners, (iii) U.S. Holders (as defined below) that have a functional currency other than the U.S. dollar or (iv) beneficial owners of common units that own 2.0% or more (by vote or value) of our common units (including beneficial owners entitled to a “dividends received deduction” with respect to our common units), all of whom may be subject to tax rules that differ significantly from those summarized below. If a partnership or other entity classified as a partnership for U.S. federal income tax purposes holds our common units, the tax treatment of its partners generally will depend upon the status of the partner, the activities of the partnership and certain determinations made at the partner level. If you are a partner in a partnership holding our common units, you should consult your own tax advisor regarding the tax consequences to you of the partnership’s ownership of our common units.
No ruling has been obtained or will be requested from the IRS, regarding any matter affecting us or holders of our common units. The opinions and statements made herein may be challenged by the IRS and, if so challenged, may not be sustained upon review in a court.
This discussion does not contain information regarding any state or local, estate, gift or alternative minimum tax considerations concerning the ownership or disposition of common units.
Each beneficial owner of our common units should consult its own tax advisor regarding the U.S. federal, state, local, and other tax consequences of the ownership or disposition of common units.
Election to Be Treated as a Corporation
We have elected to be treated as a corporation for U.S. federal income tax purposes. Consequently, among other things, U.S. Holders (as defined below) will not directly be subject to U.S. federal income tax on their shares of our income, but rather will be subject to U.S. federal income tax on distributions received from us and dispositions of common units as described below.
U.S. Federal Income Taxation of U.S. Holders
As used herein, the term “U.S. Holder” means a beneficial owner of our common units that:
| • | is an individual U.S. citizen or resident (as determined for U.S. federal income tax purposes), |
| • | a corporation (or other entity that is classified as a corporation for U.S. federal income tax purposes) organized under the laws of the United States or any of its political subdivisions, |
| • | an estate the income of which is subject to U.S. federal income taxation 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 “United States persons” (as defined in the Code) have the authority to control all substantial decisions of the trust or (ii) the trust has a valid election in effect under current U.S. Treasury Regulations to be treated as a “United States person.” |
Distributions
Subject to the discussion below of the rules applicable to a passive foreign investment company (a “PFIC”), any distributions to a U.S. Holder made by us with respect to our common units generally will constitute dividends, which will be taxable as ordinary income or “qualified dividend income” as described in more detail below, to the extent of our current and accumulated earnings and profits, as determined under U.S. federal income tax principles. Distributions in excess of our current and accumulated earnings and profits will be treated first as a non-taxable return of capital to the extent of the U.S. Holder's tax basis in its common units on a dollar-for-dollar basis, and thereafter as capital gain, which will be either long-term or short-term capital gain depending upon whether the U.S. Holder held the common units for more than one year.
U.S. Holders that are corporations generally will not be entitled to claim a dividends received deduction with respect to distributions they receive from us. Dividends received with respect to the common units will be treated as foreign source income and generally will be treated as “passive category income” for U.S. foreign tax credit purposes.
Dividends received with respect to our common units by a U.S. Holder who is an individual, trust or estate (a “non-corporate U.S. Holder”) generally will be treated as “qualified dividend income” that is taxable to such non-corporate U.S. Holder at preferential capital gain tax rates, provided that: (i) subject to the possibility that our common units may be delisted by a qualifying exchange, our common units are traded on an “established securities market” in the United States (such as the NYSE where our common units are traded) and are “readily tradeable” on such an exchange; (ii) we are not a PFIC for the taxable year during which the dividend is paid or the immediately preceding taxable year (which we do not believe we are, have been or will be, as discussed below); (iii) the non-corporate U.S. Holder has owned the common units for more than 60 days during the 121-day period beginning 60 days before the date on which the common units become ex-dividend (and has not entered into certain risk limiting transactions with respect to such common units); and (iv) the non-corporate U.S. Holder is not under an obligation to make related payments with respect to positions in substantially similar or related property. Any dividends paid on our common units that are not eligible for these preferential rates will be taxed as ordinary income to a non-corporate U.S. Holder. In addition, a 3.8% tax may apply to certain investment income. See “Medicare Tax” below.
Special rules may apply to any amounts received in respect of our common units that are treated as “extraordinary dividends.” In general, an extraordinary dividend is a dividend with respect to a common unit that is equal to or in excess of 10.0% of a U.S. Holder's adjusted tax basis (or fair market value upon the U.S. Holder's election) in such common unit. In addition, extraordinary dividends include dividends received within a one-year period that, in the aggregate, equal or exceed 20.0% of a U.S. Holder's adjusted tax basis (or fair market value) in a common unit. If we pay an “extraordinary dividend” on our common units that is treated as “qualified dividend income,” then any loss recognized by a non-corporate U.S. Holder from the sale or exchange of such common units will be treated as long-term capital loss to the extent of the amount of such dividend.
Sale, Exchange or Other Disposition of Common Units
Subject to the discussion of PFICs below, a U.S. Holder generally will recognize capital gain or loss upon a sale, exchange or other disposition of our common units in an amount equal to the difference between the amount realized by the U.S. Holder from such sale, exchange or other disposition and the U.S. Holder's adjusted tax basis in such units. The U.S. Holder's initial tax basis in the common units generally will be the U.S. Holder's purchase price for the common units and that tax basis will be reduced (but not below zero) by the amount of any distributions on the common units that are treated as non-taxable returns of capital (as discussed under “Distributions” above). Such gain or loss will be treated as long-term capital gain or loss if the U.S. Holder's holding period is greater than one year at the time of the sale, exchange or other disposition.
A corporate U.S. Holder's capital gains, long-term and short-term, are taxed at ordinary income tax rates. If a corporate U.S. Holder recognizes a loss upon the disposition of our common units, such U.S. Holder is limited to using the loss to offset other capital gain. If a corporate U.S. Holder has no other capital gain in the tax year of the loss, it may carry the capital loss back three years and forward five years.
Long-term capital gains of non-corporate U.S. Holders are subject to the favorable tax rate of a maximum of 20%. In addition, a 3.8% tax may apply to certain investment income. See “Medicare Tax” below. A non-corporate U.S. Holder may deduct a capital loss resulting from a disposition of our common units to the extent of capital gains plus up to $3,000 ($1,500 for married individuals filing separate tax returns) annually and may carry forward a capital loss indefinitely.
PFIC Status and Significant Tax Consequences
In general, we will be treated as a PFIC with respect to a U.S. Holder if, for any taxable year in which the holder held our common units, either:
| • | at least 75.0% of our gross income (including the gross income of our vessel-owning subsidiaries) for such taxable year consists of passive income (e.g., dividends, interest, capital gains and rents derived other than in the active conduct of a rental business), or |
| • | at least 50.0% of the average value of the assets held by us (including the assets of our vessel-owning subsidiaries) during such taxable year produce, or are held for the production of, passive income. |
Income earned, or deemed earned, by us in connection with the performance of services would not constitute passive income. By contrast, rental income generally would constitute “passive income” unless we were treated as deriving our rental income in the active conduct of a trade or business under the applicable rules.
Based on our current and projected methods of operations, and an opinion of counsel, we believe that we will not be a PFIC with respect to any taxable year. Our U.S. counsel, Thompson Hine LLP, is of the opinion that (1) the income we receive from the time chartering activities and assets engaged in generating such income should not be treated as passive income or assets, respectively, and (2) so long as our income from time charters exceeds 25.0% of our gross income for each taxable year after our initial taxable year and the value of our vessels contracted under time charters exceeds 50.0% of the average value of our assets for each taxable year after our initial taxable year, we should not be a PFIC. This opinion is based on representations and projections provided to our counsel by us regarding our assets, income and charters, and its validity is conditioned on the accuracy of such representations and projections.
Our counsel's opinion is based principally on their conclusion that, for purposes of determining whether we are a PFIC, the gross income we derive or are deemed to derive from the time chartering activities of our wholly-owned subsidiaries should constitute services income, rather than rental income. Correspondingly, such income should not constitute passive income, and the assets that we or our subsidiaries own and operate in connection with the production of such income, in particular, the vessels we or our subsidiaries own that are subject to time charters, should not constitute passive assets for purposes of determining whether we are or have been a PFIC. We expect that all of the vessels in our fleet will be engaged in time chartering activities and intend to treat our income from those activities as non-passive income, and the vessels engaged in those activities as non-passive assets, for PFIC purposes.
Our counsel has advised us that there is a significant amount of legal authority consisting of the Code, legislative history, IRS pronouncements and rulings supporting our position that the income from our time chartering activities constitutes services income (rather than rental income). There is, however, no direct legal authority under the PFIC rules addressing whether income from time chartering activities is services income or rental income. Moreover, in a case not interpreting the PFIC rules, Tidewater Inc. v. United States, 565 F.3d 299 (5th Cir. 2009), the Fifth Circuit held that the vessel time charters at issue generated predominantly rental income rather than services income. However, the IRS stated in an Action on Decision (AOD 2010-001) that it disagrees with, and will not acquiesce to, the way that the rental versus services framework was applied to the facts 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 AOD, however, is an administrative action that cannot be relied upon or otherwise cited as precedent by taxpayers.
The opinion of our counsel is not binding on the IRS or any court. Thus, while we have received an opinion of our counsel in support of our position, there is a possibility that the IRS or a court could disagree with this position and the opinion of our counsel. In addition, although we intend to conduct our affairs in a manner to avoid being classified as a PFIC with respect to any taxable year, we cannot assure you that the nature of our operations will not change in the future.
As discussed more fully below, if we were to be treated as a PFIC for any taxable year in which a U.S. Holder owned our common units, the U.S. Holder would be subject to different taxation rules depending on whether the U.S. Holder makes an election to treat us as a “Qualified Electing Fund,” which we refer to as a “QEF election.” As an alternative to making a QEF election, the U.S. Holder may be able to make a “mark-to-market” election with respect to our common units, as discussed below. In addition, if we were treated as a PFIC for any taxable year in which a U.S. Holder owned our common units, the U.S. Holder would be required to file IRS Form 8621 with the U.S. Holder's U.S. federal income tax return for each year to report the U.S. Holder's ownership of such common units. In the event a U.S. Holder does not file IRS Form 8621, the statute of limitations on the assessment and collection of U.S. federal income taxes of such U.S. Holder for the related tax year will not close before the date that is three years after the date on which such report is filed.
It should also be noted that, if we were treated as a PFIC for any taxable year in which a U.S. Holder owned our common units and any of our non-U.S. subsidiaries were also a PFIC, the U.S. Holder would be treated as owning a proportionate amount (by value) of the shares of the lower-tier PFIC for purposes of the application of these rules.
Taxation of U.S. Holders Making a Timely QEF Election
If we were to be treated as a PFIC for any taxable year, and a U.S. Holder makes a timely QEF election (any such U.S. Holder, an “Electing Holder”), the Electing Holder must report for U.S. federal income tax purposes its pro rata share of our ordinary earnings and net capital gain, if any, for our taxable year that ends with or within the Electing Holder's taxable year, regardless of whether or not the Electing Holder received any distributions from us in that year. Such income inclusions would not be eligible for the preferential tax rates applicable to “qualified dividend income.” The Electing Holder's adjusted tax basis in our common units will be increased to reflect taxed but undistributed earnings and profits. Distributions to the Electing Holder of our earnings and profits that were previously taxed will result in a corresponding reduction in the Electing Holder's adjusted tax basis in our common units and will not be taxed again once distributed. The Electing Holder would not, however, be entitled to a deduction for its pro rata share of any losses that we incur with respect to any year. An Electing Holder generally will recognize capital gain or loss on the sale, exchange or other disposition of our common units.
Even if a U.S. Holder makes a QEF election for one of our taxable years, if we were a PFIC for a prior taxable year during which the U.S. Holder owned our common units and for which the U.S. Holder did not make a timely QEF election, the U.S. Holder would also be subject to the more adverse rules described below under “Taxation of U.S. Holders Not Making a Timely QEF or Mark-to-Market Election.” However, under certain circumstances, a U.S. Holder may be permitted to make a retroactive QEF election with respect to us for any open taxable years in the U.S. Holder's holding period for our common units in which we are treated as a PFIC. Additionally, to the extent that any of our subsidiaries is a PFIC, a U.S. Holder's QEF election with respect to us would not be effective with respect to the U.S. Holder's deemed ownership of the stock of such subsidiary and a separate QEF election with respect to such subsidiary would be required.
A U.S. Holder makes a QEF election with respect to any year that we are a PFIC by filing IRS Form 8621 with the U.S. Holder's U.S. federal income tax return. If, contrary to our expectations, we were to determine that we are treated as a PFIC for any taxable year, we would notify all U.S. Holders and would provide all necessary information to any U.S. Holder that requests such information in order to make the QEF election described above with respect to us and the relevant subsidiaries. A QEF election would not apply to any taxable year for which we are not a PFIC, but would remain in effect with respect to any subsequent taxable year for which we are a PFIC, unless the IRS consents to the revocation of the election.
Taxation of U.S. Holders Making a “Mark-to-Market” Election
If we were to be treated as a PFIC for any taxable year and, subject to the possibility that our common units may be delisted by a qualifying exchange, our common units were treated as “marketable stock,” then, as an alternative to making a QEF election, a U.S. Holder would be allowed to make a “mark-to-market” election with respect to our common units, provided the U.S. Holder completes and files IRS Form 8621 in accordance with the relevant instructions and related Treasury Regulations. If that election is made, the U.S. Holder generally would include as ordinary income in each taxable year the excess, if any, of the fair market value of the U.S. Holder's common units at the end of the taxable year over the holder's adjusted tax basis in the common units. The U.S. Holder also would be permitted an ordinary loss in respect of the excess, if any, of the U.S. Holder's adjusted tax basis in the common units over the fair market value thereof at the end of the taxable year, but only to the extent of the net amount previously included in income as a result of the mark-to-market election. A U.S. Holder's tax basis in the U.S. Holder's common units would be adjusted to reflect any such income or loss recognized. Gain recognized on the sale, exchange or other disposition of our common units would be treated as ordinary income, and any loss recognized on the sale, exchange or other disposition of the common units would be treated as ordinary loss to the extent that such loss does not exceed the net mark-to-market gains previously included in income by the U.S. Holder. A mark-to-market election would not apply to our common units owned by a U.S. Holder in any taxable year during which we are not a PFIC, but would remain in effect with respect to any subsequent taxable year for which we are a PFIC, unless our common units are no longer treated as “marketable stock” or the IRS consents to the revocation of the election.
Even if a U.S. Holder makes a “mark-to-market” election for one of our taxable years, if we were a PFIC for a prior taxable during which the U.S. Holder owned our common units and for which the U.S. Holder did not make a timely mark-to-market election, the U.S. Holder would also be subject to the more adverse rules described below under “Taxation of U.S. Holders Not Making a Timely QEF or Mark-to-Market Election.”Additionally, to the extent that any of our subsidiaries is a PFIC, a “mark-to-market” election with respect to our common units would not apply to the U.S. Holder's deemed ownership of the stock of such subsidiary.
Taxation of U.S. Holders Not Making a Timely QEF or Mark-to-Market Election
If we were to be treated as a PFIC for any taxable year, a U.S. Holder who does not make either a timely QEF election or a timely “mark-to-market” election for that year (i.e., the taxable year in which the U.S. Holder's holding period commences), whom we refer to as a “Non-Electing Holder,” would be subject to special rules resulting in increased tax liability with respect to (1) any excess distribution (i.e. the portion of any distributions received by the Non-Electing Holder on our common units in a taxable year in excess of 125.0% of the average annual distributions received by the Non-Electing Holder in the three preceding taxable years, or, if shorter, the Non-Electing Holder's holding period for the common units), and (2) any gain realized on the sale, exchange or other disposition of our common units. Under these special rules:
| • | the excess distribution and any gain would be allocated ratably over the Non-Electing Holder's aggregate holding period for the common units; |
| • | the amount allocated to the current taxable year and any year prior to the year we were first treated as a PFIC with respect to the Non-Electing Holder would be taxed as ordinary income; and |
| • | the amount allocated to each of the other taxable years would be subject to tax at the highest rate of tax in effect for the applicable class of taxpayer for that year, and an interest charge for the deemed deferral benefit would be imposed with respect to the resulting tax attributable to each such other taxable year. |
If we were treated as a PFIC for any taxable year and a Non-Electing Holder who is an individual dies while owning our common units, such holder's successor generally would not receive a step-up in tax basis with respect to such common units. Additionally, to the extent that any of our subsidiaries is a PFIC, the foregoing consequences would apply to the U.S. Holder's deemed receipt of any excess distribution on, or gain deemed realized on the disposition of, the stock of such subsidiary deemed owned by the U.S. Holder.
In January 2022, the U.S. Department of Treasury issued proposed regulations concerning PFICs. If the proposed regulations are finalized, they may affect eligibility requirements to make a QEF election or a mark-to-market election.
Controlled Foreign Corporation
Although we believe that Navios Partners was not a controlled foreign corporation (a “CFC”) as of December 31, 2022, or at any time during 2022, tax rules enacted by the 2017 Tax Cuts and Jobs Act, including the imposition of so-called “downward attribution” for purposes of determining whether a non-U.S. corporation is a CFC, may result in Navios Partners being treated as a CFC for U.S. federal income tax purposes in the future, together with certain of its non-U.S. subsidiaries that are treated as a corporation for U.S. federal tax purposes (a “CFC Sub”). As of December 31, 2022, Navios Holdings beneficially owned 10.5% of our common units both directly and indirectly through wholly owned subsidiaries. Through downward attribution, U.S. subsidiaries of Navios Holdings are treated as constructive owners of these equity interests for purposes of determining whether we (and a CFC Sub) are a CFC. If, in the future, U.S. Holders (including U.S. subsidiaries of Navios Holdings, as discussed above) that each own 10% or more of our equity (by vote or value) would own in the aggregate more than 50% of our equity (by vote or value), in each case, directly, indirectly or constructively, we (and a CFC Sub) would become a CFC.
The U.S. federal income tax consequences of U.S. Holders who at all times own less than 10% of our equity, directly, indirectly, and constructively, should not be affected even if we (and a CFC Sub) become a CFC. However, if we (and a CFC Sub) become a CFC, any U.S. Holder who owns 10% or more of our equity (by vote or value), directly or indirectly, should be subject to U.S. federal income tax on a current basis on its pro rata share of our (and a CFC Sub’s) so-called “subpart F” income, “global intangible low-taxed income” (“GILTI”), and any investment in earnings in U.S. property, in addition to being subject to U.S. federal income tax reporting requirements. Income from our time chartering activities could constitute subpart F income if it were derived from passive rental activities. But, Thompson Hine's opinion that the income we earn from our time chartering activities should not be treated as passive income is based principally on their conclusion that such income should constitute services income, rather than rental income (see U.S. Federal Income Taxation of U.S. Holders - PFIC Status and Significant Tax Consequences). Although we believe that the income we earn from our time chartering activities should not be treated as subpart F income, such U.S. Holder may be subject to U.S. federal income tax on such income under the GILTI rules.
If, contrary, to our belief discussed above, the income we earn from our time chartering activities were treated as subpart F income, it is unclear whether such income would nonetheless be exempted from U.S. federal income tax for so long as we qualify for the Section 883 exemption (see Item 4.B. Business Overview - Taxation of the Partnership - The Section 883 Exemption). In this regard, the IRS has taken the position in Revenue Ruling 87-15 that the Section 883 exemption does not cause subpart F income to be exempted from U.S. federal income tax. Any U.S. Holder of Navios Partners that owns 10% or more (by vote or value), directly or indirectly, of the equity of Navios Partners should consult its own tax advisor regarding the U.S. federal tax consequences that may result from Navios Partners (and a CFC Sub) being treated as a CFC.
Medicare Tax
A U.S. Holder that is an individual or estate, or a trust that does not fall into a special class of trusts that is exempt from such tax, will generally be subject to a 3.8% tax on the lesser of (i) the U.S. Holder's “net investment income” for a taxable year and (ii) the excess of the U.S. Holder's modified adjusted gross income for such taxable year over $200,000 ($250,000 in the case of joint filers). For these purposes, “net investment income” will generally include dividends paid with respect to our common units and net gain attributable to the disposition of our common units not held in connection with certain trades or businesses, but will be reduced by any deductions properly allocable to such income or net gain.
U.S. Federal Income Taxation of Non-U.S. Holders
A beneficial owner of our common units (other than a partnership or an entity or arrangement treated as a partnership for U.S. federal income tax purposes) that is not a U.S. Holder is a “Non-U.S. Holder”.
Distributions
Distributions we pay to a Non-U.S. Holder will not be subject to U.S. federal income tax or withholding tax if the Non-U.S. Holder is not engaged in a U.S. trade or business. If the Non-U.S. Holder is engaged in a U.S. trade or business, our distributions will be subject to U.S. federal income tax to the extent they constitute income effectively connected with the Non-U.S. Holder's U.S. trade or business (and a corporate Non-U.S. Holder may also be subject to U.S. federal branch profits tax). However, distributions paid to a Non-U.S. Holder who is engaged in a trade or business may be exempt from taxation under an income tax treaty if the income arising from the distribution is not attributable to a U.S. permanent establishment maintained by the Non-U.S. Holder.
Disposition of Units
In general, a Non-U.S. Holder will not be subject to U.S. federal income tax or withholding tax on any gain resulting from the disposition of our common units provided the Non-U.S. Holder is not engaged in a U.S. trade or business. A Non-U.S. Holder that is engaged in a U.S. trade or business will be subject to U.S. federal income tax in the event the gain from the disposition of units is effectively connected with the conduct of such U.S. trade or business (provided, in the case of a Non-U.S. Holder entitled to the benefits of an income tax treaty with the United States, such gain also is attributable to a U.S. permanent establishment). 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 common units if they are present in the United States for 183 days or more during the taxable year in which those units are disposed and meet certain other requirements.
Backup Withholding and Information Reporting
In general, payments to a non-corporate U.S. Holder of distributions or the legalds of a disposition of common units may be subject to information reporting. These payments to a non-corporate U.S. Holder also may be subject to backup withholding (currently at a rate of 24%), if the non-corporate U.S. Holder:
| • | fails to provide an accurate taxpayer identification number; |
| • | is notified by the IRS that he has failed to report all interest or corporate distributions required to be reported on his U.S. federal income tax returns; or |
| • | in certain circumstances, fails to comply with applicable certification requirements. |
A U.S. Holder generally is required to certify its compliance with the backup withholding rules on IRS Form W-9.
Non-U.S. Holders may be required to establish their exemption from information reporting and backup withholding by certifying their status on IRS Form W-8BEN, W-8BEN-E, W-8ECI or W-8IMY, as applicable.
Backup withholding is not an additional tax. Rather, a unitholder generally may obtain a credit for any amount withheld against his liability for U.S. federal income tax (and obtain a refund of any amounts withheld in excess of such liability) by filing a U.S. federal income tax return with the IRS.
Individual U.S. Holders (and to the extent specified in applicable U.S. Treasury Regulations, certain individual Non-U.S. Holders and certain U.S. Holders that are entities) that hold “specified foreign financial assets,” including our common units, whose aggregate value exceeds $75,000 at any time during the taxable year or $50,000 on the last day of the taxable year (or such higher amounts as prescribed by applicable U.S. Treasury Regulations) are required to file a report on IRS Form 8938 with information relating to the assets for each such taxable year. Specified foreign financial assets would include, among other things, our common units, unless such common units are held in an account maintained by a U.S. “financial institution” (as defined). Substantial penalties apply for 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 U.S. 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 should consult their own tax advisors regarding their reporting obligations.
NON-UNITED STATES TAX CONSIDERATIONS
Marshall Islands Tax Consequences
The following discussion is based upon the opinion of Reeder & Simpson P.C., our counsel as to matters of the laws of the Republic of the Marshall Islands, and the current laws of the Republic of the Marshall Islands applicable to persons who do not reside in, maintain offices in or engage in business in the Republic of the Marshall Islands.
Because we and our subsidiaries do not and do not expect to conduct business or operations in the Republic of the Marshall Islands, under current Marshall Islands law you will not be subject to Marshall Islands taxation or withholding on distributions, including upon distribution treated as a return of capital, we make to you as a unitholder. In addition, you will not be subject to Marshall Islands stamp, capital gains or other taxes on the purchase, ownership or disposition of common units, and you will not be required by the Republic of the Marshall Islands to file a tax return relating to your ownership of common units.
EACH UNITHOLDER IS URGED TO CONSULT HIS OWN TAX, LEGAL AND OTHER ADVISORS REGARDING THE CONSEQUENCES OF OWNERSHIP OF COMMON UNITS UNDER THE UNITHOLDER'S PARTICULAR CIRCUMSTANCES.
F. Dividends and paying agents
Not applicable.
G. Statements by experts
Not applicable.
H. Documents on display
We file reports and other information with the SEC. These materials, including this annual report and the accompanying exhibits, are available from the SEC's website http://www.sec.gov.
I. Subsidiary information
Not applicable.
Item 11. Quantitative and Qualitative Disclosures about Market Risks
Foreign Exchange Risk
Our functional and reporting currency is the U.S. dollar. We engage in worldwide commerce with a variety of entities. Although our operations may expose us to certain levels of foreign currency risk, our transactions are predominantly U.S. dollar denominated. Transactions in currencies other than the U.S. dollar are translated at the exchange rate in effect at the date of each transaction.
Differences in exchange rates during the period between the date a transaction denominated in a foreign currency is consummated and the date on which it is either settled or translated are recognized. Expenses incurred in foreign currencies against which the U.S. Dollar falls in value can increase such expenses, thereby decreasing our income or vice versa if the U.S. dollar increases in value. For example, as of December 31, 2022, the value of the U.S. dollar as compared to the Euro increased by approximately 6.2% compared with the respective value as of December 31, 2021.
Interest Rate Risk
Interest rates have increased significantly as central banks in Europe, United States and other developed countries raise interest rates in an effort to reduce the inflation effect. The eventual implications of tighter monetary policy, and potentially higher long-term interest rates may drive a higher cost of capital for our business.
Bank borrowings under our credit facilities bear interest at a rate based on a premium over U.S. LIBOR/SOFR. Therefore, we are exposed to the risk that our interest expense may increase if interest rates rise. For the years ended December 31, 2022, 2021 and 2020, we paid interest on our outstanding debt at a weighted average interest rate of 5.3%, 4.1% and 4.5%, respectively. A 1% increase in LIBOR/ SOFR would have increased our interest expense for the years ended December 31, 2022, 2021 and 2020 by $12.6 million, $7.9 million and $4.3 million, respectively.
Concentration of Credit Risk
Financial instruments, which potentially subject us to significant concentrations of credit risk, consist principally of trade accounts receivable. We closely monitor our exposure to customers for credit risk. We have policies in place to ensure that we trade with customers with an appropriate credit history.
For the year ended December 31, 2022, no customer accounted for 10.0% or more of our total revenues. For the year ended December 31, 2021, Singapore Marine represented approximately 14.5% of our total revenues. For the year ended December 31, 2020, HMM, Singapore Marine and Cargill represented approximately 23.4%, 19.5% and 11.4%, respectively, of our total revenues. No other customers accounted for 10% or more of total revenues for any of the years presented.
On November 15, 2012 (as amended and supplemented in March 2014, December 2017 and July 2019), Navios Holdings and Navios Partners entered into the Navios Holdings Guarantee by which Navios Holdings would provide supplemental credit default insurance with a maximum cash payment of $20.0 million. In October 2020, Navios Holdings paid an amount of $5.0 million to Navios Partners. In April 2021, Navios Holdings paid an amount of $5.0 million to Navios Partners. As of each of December 31, 2022 and 2021, the outstanding claim receivable amounted to $0 million.
If we lose a charter, we may be unable to re-deploy the related vessel on terms as favorable to us due to the long-term nature of most charters and the cyclical nature of the industry or we may be forced to charter the vessel on the spot market at then market rates which may be less favorable than the charter that has been terminated. If we are unable to re-deploy a vessel for which the charter has been terminated, we will not receive any revenues from that vessel, but we may be required to pay expenses necessary to maintain the vessel in proper operating condition. If we lose a vessel, any replacement or newbuilding would not generate revenues during its construction acquisition period, and we may be unable to charter any replacement vessel on terms as favorable to us as those of the terminated charter.
Even if we successfully charter our vessels in the future, our charterers may go bankrupt or fail to perform their obligations under the charter agreements, they may delay payments or suspend payments altogether, they may terminate the charter agreements prior to the agreed-upon expiration date or they may attempt to renegotiate the terms of the charters. The permanent loss of a customer, time charter or vessel, or a decline in payments under our charters, could have a material adverse effect on our business, results of operations and financial condition and our ability to make cash distributions in the event we are unable to replace such customer, time charter or vessel.
Inflation
Inflation has had a minimal impact on vessel operating expenses, drydocking expenses and general and administrative expenses. Our management does not consider inflation to be a significant risk to direct expenses in the current and foreseeable economic environment.
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 Unitholders and Use of Proceeds
None.
Item 15. Controls and Procedures
A. Disclosure Controls and Procedures
The management of Navios Partners, with the participation of the Chief Executive Officer and Chief Financial Officer, conducted an evaluation, pursuant to Rule 13a-15 promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), of the effectiveness of our disclosure controls and procedures as of December 31, 2022. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective as of December 31, 2022.
Disclosure controls and procedures means controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms and that such information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosures.
B. Management's annual report on internal control over financial reporting
The management of Navios Partners is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) or 15d-15(f) of the Exchange Act. Navios Partners' internal control system was 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 in the United States (“GAAP”).
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.
Navios Partners' management assessed the effectiveness of Navios Partners' internal control over financial reporting as of December 31, 2022. In making this assessment, it used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework (2013). Based on its assessment, management concluded that, as of December 31, 2022, Navios Partners' internal control over financial reporting was effective based on those criteria.
Navios Partners' independent registered public accounting firm has issued an attestation report on Navios Partners' internal control over financial reporting.
C. Attestation report of the registered public accounting firm
Navios Partners' independent registered public accounting firm has issued an audit report on Navios Partners' internal control over financial reporting. This report appears on Page F-4 of the consolidated financial statements.
D. Changes in internal control over financial reporting
There have been no changes in internal controls over financial reporting (identified in connection with management's evaluation of such internal control over financial reporting) that occurred during the year covered by this annual report that have materially affected, or are reasonably likely to materially affect, Navios Partners' internal controls over financial reporting.
Item 16A. Audit Committee Financial Expert
Navios Partners' Audit Committee consists of three independent directors, Vasilios Mouyis, Serafeim Kriempardis and Alexander Kalafatides. The Board of Directors has determined that Serafeim Kriempardis qualifies as “an audit committee financial expert” as defined in the instructions of Item 16A of Form 20-F. Mr. Kriempardis is independent under applicable NYSE and SEC standards.
Item 16B. Code of Ethics
Navios Partners has adopted a code of ethics applicable to officers, directors and employees that complies with applicable guidelines issued by the SEC.
The Navios Partners Code of Corporate Conduct and Ethics is available for review on Navios Partners' website at www.navios-mlp.com.
Item 16C. Principal Accountant Fees and Services
Audit Fees
Our principal Accountants for each of fiscal years 2022 and 2021 were Ernst & Young Hellas S.A. The audit fees for each of the audit of the years ended December 31, 2022 and 2021 were $0.6 million and $0.5 million, respectively.
Audit-Related Fees
There were no audit-related fees billed in 2022 and 2021.
Tax Fees
There were no tax fees billed in 2022 and 2021.
Other Fees
There were no other fees billed in 2022 and 2021.
Audit Committee
The Audit Committee is responsible for the appointment, replacement, compensation, evaluation and oversight of the work of the independent auditors. As part of this responsibility, the Audit Committee pre-approves the audit and non-audit services performed by the independent auditors in order to assure that they do not impair the auditors' independence from Navios Partners. The Audit Committee has adopted a policy which sets forth the procedures and the conditions pursuant to which services proposed to be performed by the independent auditors may be pre-approved.
The Audit Committee separately pre-approved all engagements and fees paid to our principal accountant in 2022.
Item 16D. Exemptions from the Listing Standards for Audit Committees
Not applicable.
Item 16E. Purchases of Units by the Issuer and Affiliated Purchasers
In July 2022, the Board of Directors of Navios Partners authorized a common unit repurchase program for up to $100.0 million of the Company’s common units. Common unit repurchases will be made from time to time for cash in open market transactions at prevailing market prices or in privately negotiated transactions. The timing and amount of repurchases under the program will be determined by Navios Partners’ management based upon market conditions and financial and other considerations, including working capital and planned or anticipated growth opportunities. As of December 31, 2022, no repurchases of common units has been made. The program does not require any minimum repurchase or any specific number of common units and may be suspended or reinstated at any time in the Company’s discretion and without notice. The Board of Directors will review the program periodically.
Item 16F. Change in Registrant's Certifying Accountant
Not applicable.
Item 16G. Corporate Governance
Pursuant to an exception for foreign private issuers, we are not required to comply with the corporate governance practices followed by U.S. companies under the NYSE listing standards. However, we have voluntarily adopted all of the NYSE required practices, except we do not have (i) a nominating/governance committee consisting of independent directors or (ii) a nominating/governance committee charter specifying the purpose and responsibilities of the nominating/governance committee. Instead, all nomination/governance decisions, other than those nominating decisions dictated by our Partnership Agreement, are currently made by a majority of our independent board members.
Item 16H. Mine Safety Disclosures
Not applicable.
Item 16I. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
PART III
Item 17. Financial Statements
Not applicable.
Item 18. Financial Statements
The financial information required by this Item together with the related report of Ernst & Young, Independent Registered Public Accounting Firm, thereon is filed as part of this annual report on Pages F-1 through F-73.
Item 19. Exhibits
| (1) Previously filed as an exhibit to the Company's Registration Statement on Form F-1, as amended (File No. 333-146972) as filed with the SEC and hereby incorporated by reference to the Annual Report. |
| (2) Previously filed as an exhibit to a the Company's Annual Report on Form 20-F for the year ended December 31, 2018 filed on April 9, 2019 and hereby incorporated by reference. |
| (3) Previously filed as an exhibit to a Report on Form 6-K filed on July 14, 2009 and hereby incorporated by reference. |
| (4) Previously filed as an exhibit to the Company's Annual Report on Form 20-F for the year ended December 31, 2012 filed on March 15, 2013 and hereby incorporated by reference. |
| (5) Previously filed as an exhibit to a Report on Form F-1/A for Navios Maritime Midstream Partners L.P. filed on October 27, 2014 and hereby incorporated by reference. |
| (6) Previously filed as an exhibit to a Report on Form 6-K filed on August 1, 2017 and hereby incorporated by reference. |
| (7) Previously filed as an exhibit to a Report on Form 6-K filed on October 30, 2009 and hereby incorporated by reference. |
| (8) Previously filed as an exhibit to a Report on Form 6-K filed on October 24, 2011 and hereby incorporated by reference. |
| (9) Previously filed as an exhibit to a Report on Form 6-K filed on November 7, 2013 and hereby incorporated by reference. |
| (10) Previously filed as an exhibit to a Report on Form 6-K filed on October 30, 2014 and hereby incorporated by reference. |
| (11) Previously filed as an exhibit to a Report on Form 6-K filed on February 17, 2015 and hereby incorporated by reference. |
| (12) Previously filed as an exhibit to a Report on Form 6-K filed on May 5, 2015 and hereby incorporated by reference. |
| (13) Previously filed as an exhibit to the Company's Annual Report on Form 20-F for the year ended December 31, 2015 filed on March 29, 2016 and hereby incorporated by reference. |
| (14) Previously filed as an exhibit to a Report on Form 6-K filed on February 5, 2018 and hereby incorporated by reference. |
| (15) Previously filed as an exhibit to a Report on Form 6-K filed on September 11, 2019 and hereby incorporated by reference. |
| (16) Previously filed as an exhibit to the Company’s Annual Report on Form 20-F for the year ended December 31, 2019 filed on April 1, 2020 and hereby incorporated by reference. |
| (17) Previously filed as an exhibit to the Navios Maritime Containers L.P.’s Registration Statement on Form F-1, as amended (File No. 333-225677), as filed with the SEC and hereby incorporated by reference to the Annual Report. |
| (18) Previously filed as an exhibit to Navios Maritime Containers L.P.’s report on Form 6-K/A filed with the SEC on September 19, 2019 and hereby incorporated by reference to the Annual Report. |
| (19) Previously filed as an exhibit to a Report on Form 6-K filed by Navios Acquisition on June 4, 2010, and hereby incorporated by reference |
| (20) Previously filed as an exhibit to a Report on Form 6-K filed by Navios Acquisition on May 15, 2012, and hereby incorporated by reference |
| (21) Previously filed as an exhibit to a Report on Form 6-K filed by Navios Acquisition on May 22, 2014, and hereby incorporated by reference |
| (22) Previously filed as an exhibit to a Report on Form 6-K filed by Navios Acquisition on June 9, 2016 and hereby incorporated by reference |
| (23) Previously filed as an exhibit to a Report on Form 6-K filed by Navios Acquisition on August 23, 2018 and hereby incorporated by reference |
| (24) Previously filed as an exhibit to a Report on Form 6-K filed by Navios Acquisition on September 11, 2019, and hereby incorporated by reference |
| (25) Previously filed as an exhibit to a Report on Form 6-K filed by Navios Acquisition on August 6, 2020 and hereby incorporated by reference |
| (26) Previously filed as an exhibit to a Report on Form 6-K filed on November 23, 2016 and hereby incorporated by reference. |
| (27) Previously filed as an exhibit to a Report on Form 6-K filed on June 14, 2017 and hereby incorporated by reference. |
| (28) Previously filed as an exhibit to a Report on Form 6-K filed on August 5, 2020 and hereby incorporated by reference. |
| (29) Previously filed as an exhibit to a Report on Form 6-K filed on April 9, 2021 and hereby incorporated by reference. |
| (30) Previously filed as an exhibit to a Report on Form 6-K filed on May 21, 2021 and hereby incorporated by reference. |
| (31) Previously filed as an exhibit to a Report on Form 6-K filed on May 25, 2017 and hereby incorporated by reference. |
| (32) Previously filed as an exhibit to a Report on Form 6-K filed on May 21, 2018 and hereby incorporated by reference. |
| (33) Previously filed as an exhibit to a Report on Form 6-K filed on April 11, 2019 and hereby incorporated by reference. |
| (34) Previously filed as an exhibit to a Report on Form 6-K filed on August 8, 2019 and hereby incorporated by reference. |
| (35) Previously filed as an exhibit to a Report on Form 6-K filed on November 25, 2019 and hereby incorporated by reference. |
| (36) Previously filed as an exhibit to a Report on Form 6-K filed on January 13, 2020 and hereby incorporated by reference. |
| (37) Previously filed as an exhibit to a Report on Form 6-K filed on November 18, 2020 and hereby incorporated by reference. |
| (38) Previously filed as an exhibit to a Report on Form 6-K filed on August 26, 2021 and hereby incorporated by reference. |
| (39) Previously filed as an exhibit to the Company’s Annual Report on Form 20-F for the year ended December 31, 2020 filed on March 31, 2021 and hereby incorporated by reference. |
| (40) Previously filed as an exhibit to a Report on Form 6-K filed on November 29, 2019 and hereby incorporated by reference. |
| (41) Previously filed as an exhibit to Navios Containers’ Annual Report on Form 20-F for the year ended December 31, 20219 filed on March 18, 2020 and hereby incorporated by reference. |
| (42) Previously filed as an exhibit to a Report on Form 20-F filed by Navios Acquisition on April 5, 2018, and hereby incorporated by reference |
| (43) Previously filed as an exhibit to a Report on Form 6-K filed by Navios Acquisition on November 29, 2019, and hereby incorporated by reference) |
(44) Previously filed as an exhibit to a Report on Form 6-K filed on January 4, 2021 and hereby incorporated by reference. (45) Previously filed as an exhibit to the Company's Annual Report on Form 20-F for the year ended December 31, 2020 filed on March 31, 2021 and hereby incorporated by reference. |
| (46) Previously filed as an exhibit to the Company's Annual Report on Form 20-F for the year ended December 31, 2021 filed on April 12, 2022 and hereby incorporated by reference. |
| (47) Previously filed as an exhibit to a Report on Form 6-K filed on May 23, 2022 and hereby incorporated by reference. |
| (48) Previously filed as an exhibit to a Report on Form 6-K filed on September 13, 2022 and hereby incorporated by reference. |
| (49) Previously filed as an exhibit to a Report on Form 6-K filed on December 7, 2022 and hereby incorporated by reference. |
* Filed herewith
INDEX
| Table of Contents | F- 1 |
Report of Independent Registered Public Accounting Firm
To the Partners and the Board of Directors of Navios Maritime Partners L.P.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Navios Maritime Partners L.P. (the “Company”) as of December 31, 2022 and 2021, the related consolidated statements of operations, changes in partners’ capital and cash flows for each of the two years in the period ended December 31, 2022, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2022, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated March 24, 2023 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
| Table of Contents | F- 2 |
Recoverability assessment of vessels, including right-of-use assets under finance leases
| |
| Description of the matter | As of December 31, 2022, the carrying value of the Company’s vessels, including right-of-use assets under finance leases, plus any unamortized portion of deferred drydock and special survey costs, leasehold improvements and intangible assets of favorable lease terms, was $3,956 million. As discussed in Notes 2(k), 2(z) and 7 to the consolidated financial statements, the Company evaluates each vessel and right-of-use asset under finance lease for impairment whenever events or changes in circumstances indicate that the carrying value of a vessel or right-of-use asset under finance lease, including any unamortized portion of deferred drydock and special survey costs, leasehold improvements and intangible assets of favorable lease terms (collectively the “asset group”) may not be fully recoverable in accordance with the guidance in ASC 360 – Property, Plant and Equipment (“ASC 360”). If indicators of impairment exist, management compares the future undiscounted net operating cash flows of the asset group expected to be generated throughout the remaining useful life of each vessel to the carrying value of the asset group. Where an asset group’s carrying value exceeds the undiscounted net operating cash flows, management will recognize an impairment loss equal to the excess of an asset group’s carrying value over the fair value of the vessel or right-of-use asset.
Auditing management’s recoverability assessment was complex given the judgement and estimation uncertainty involved in determining certain assumptions in the undiscounted net operating cash flows, specifically the charter rates for non-contracted revenue days. These charter rates are subjective as they involve the development and use of assumptions about the dry-bulk, container and tanker shipping markets through the end of the useful lives of the vessels. These assumptions are forward looking, and subject to the inherent unpredictability of future global economic and market conditions.
|
| How we addressed the matter in our audit | We obtained an understanding of the Company’s impairment process, evaluated the design, and tested the operating effectiveness of the controls over management’s process to test recoverability of the asset groups, including determination of charter rates for non-contracted revenue days.
We analyzed management’s recoverability assessment by comparing the methodology and model used to evaluate impairment of each asset group against the accounting guidance in ASC 360. To test management’s undiscounted net operating cash flow forecasts, our procedures included, among others, comparing the asset group’s forecasted charter rates for non-contracted revenue days with (i) the current and past performance of the vessels and (ii) external market and industry data. In addition, we performed sensitivity analyses to assess the impact of changes to charter rates for non-contracted revenue days in the determination of the undiscounted net operating cash flows. We assessed the Company’s disclosures in Notes 2(k), 2(z) and 7. |
/s/
We have served as the Company’s auditor since 2021.
March 24, 2023
| Table of Contents | F- 3 |
Report of Independent Registered Public Accounting Firm
To the Unitholders and the Board of Directors of Navios Maritime Partners L.P.
Opinion on Internal Control over Financial Reporting
We have audited Navios Maritime Partners L.P.’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Navios Maritime Partners L.P. (the “Company“) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022 based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the accompanying consolidated balance sheets of the Company as of December 31, 2022 and 2021, the related consolidated statements of operations, changes in partners’ capital and cash flows for each of the two years in the period ended December 31, 2022, and the related notes and our report dated March 24, 2023 expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young (Hellas) Certified Auditors Accountants S.A.
Athens, Greece
March 24, 2023
| Table of Contents | F- 4 |
Report of Independent Registered Public Accounting Firm
To the Partners and Board of Directors of Navios Maritime Partners L.P.
Opinion on the Financial Statements
We have audited the consolidated statements of operations, changes in partners’ capital and cash flows of Navios Maritime Partners L.P. and its subsidiaries (the “Company”) for the year ended December 31, 2020, including the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the results of operations and cash flows of the Company for the year ended December 31, 2020 in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit. 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 audit of these consolidated financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.
Our audit 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 audit 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. We believe that our audit provides a reasonable basis for our opinion.
/s/
March 31, 2021
We served as the Company’s auditor from 2007 to 2020.
| Table of Contents | F- 5 |
NAVIOS MARITIME PARTNERS L.P.
CONSOLIDATED BALANCE SHEETS
(Expressed in thousands of U.S. Dollars except unit data) |
| Notes | December 31, 2022 |
December 31, 2021 | |||||
| ASSETS | |||||||
| Current assets | |||||||
| Cash and cash equivalents | 4 | $ | $ | ||||
| Restricted cash | 4 | ||||||
| Accounts receivable, net | 5 | ||||||
| Prepaid expenses and other current assets | 6 | ||||||
| Total current assets | |||||||
| Vessels, net | 7 | ||||||
| Deposits for vessels acquisitions | 16 | ||||||
| Other long-term assets | 11, 16 | ||||||
| Deferred dry dock and special survey costs, net | |||||||
| Amounts due from related parties | 18 | ||||||
| Intangible assets | 2, 8 | ||||||
| Operating lease assets | 22 | ||||||
| Total non-current assets | |||||||
| Total assets | $ | $ | |||||
| LIABILITIES AND PARTNERS' CAPITAL | |||||||
| Current liabilities | |||||||
| Accounts payable | 9 | $ | $ | ||||
| Accrued expenses | 10 | ||||||
| Deferred revenue | 2 | ||||||
| Operating lease liabilities, current portion | 22 | ||||||
| Amounts due to related parties | 18 | ||||||
| Current portion of financial liabilities, net | 11 | ||||||
| Current portion of long-term debt, net | 11 | ||||||
| Total current liabilities | |||||||
| Operating lease liabilities, net | 22 | ||||||
| Unfavorable lease terms | 8 | ||||||
| Long-term financial liabilities, net | 11 | ||||||
| Long-term debt, net | 11 | ||||||
| Deferred revenue | 2 | ||||||
| Other long-term liabilities | |||||||
| Total non-current liabilities | |||||||
| Total liabilities | $ | $ | |||||
| Commitments and contingencies | 16 | ||||||
| Partners' capital: | |||||||
| Common Unitholders ( and units issued and outstanding at December 31, 2022 and December 31, 2021, respectively) | 1, 13 | ||||||
| General Partner ( |
1, 13 | ||||||
| Total partners' capital | |||||||
| Total liabilities and partners' capital | $ | $ |
See notes to the consolidated financial statements
| Table of Contents | F- 6 |
NAVIOS MARITIME PARTNERS L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Expressed in thousands of U.S. Dollars except unit and per unit data)
|
| Notes | Year Ended December 31, 2022 |
Year Ended December 31, 2021 |
Year Ended December 31, 2020 | |||||||
| Time charter and voyage revenues | 2,14,17,22 | $ | $ | $ | ||||||
| Time charter and voyage expenses | 2,22 | ( |
( |
( | ||||||
| Direct vessel expenses | 18 | ( |
( |
( | ||||||
| Vessel operating expenses (entirely through related parties transactions) | 18 | ( |
( |
( | ||||||
| General and administrative expenses | 10,18 | ( |
( |
( | ||||||
| Depreciation and amortization of intangible assets | 7,8 | ( |
( |
( | ||||||
| Amortization of unfavorable lease terms | 8 | |||||||||
| Gain on sale of vessels, net | 7 | |||||||||
| Vessels impairment loss | 7 | ( | ||||||||
| Interest expense and finance cost, net | 11 | ( |
( |
( | ||||||
| Interest income | 18,19 | |||||||||
| Impairment of receivable in affiliated company | 18 | ( | ||||||||
| Other income | 18,21 | |||||||||
| Other expense | 18,21 | ( |
( |
( | ||||||
| Equity in net earnings of affiliated companies | 3,19 | |||||||||
| Transaction costs | 3 | ( |
||||||||
| Bargain gain | 3 | |||||||||
| Net income/ (loss) | $ | $ | $ | ( | ||||||
| Net loss attributable to the noncontrolling interest | ||||||||||
| Net income/ (loss) attributable to Navios Partners’ unitholders | $ | $ | $ | ( | ||||||
| Net income/ (loss) attributable to Navios Partners’ unitholders | Year Ended December 31, 2022 |
Year Ended December 31, 2021 |
Year Ended December 31, 2020 |
| Common Unitholders | $ | $ | $ | ( | ||||||
| General Partner | ( | |||||||||
| Net income/(loss) attributable to Navios Partners’ unitholders | $ | $ | $ | ( | ||||||
| Earnings/ (losses) attributable to Navios Partners’ unitholders per unit (see Note 20): | Year Ended December 31, 2022 |
Year Ended December 31, 2021 |
Year Ended December 31, 2020 | |||||||
| Earnings/ (losses) attributable to Navios Partners’ unitholders per common unit, basic | $ | $ | $ | ( | ||||||
| Earnings/ (losses) attributable to Navios Partners’ unitholders per common unit, diluted | $ | $ | $ | ( |
See notes to the consolidated financial statements
| Table of Contents | F- 7 |
NAVIOS MARITIME PARTNERS L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in thousands of U.S. Dollars)
|
| Notes | Year Ended December 31, 2022 |
Year Ended December 31, 2021 |
Year Ended December 31, 2020 | |||||||
| OPERATING ACTIVITIES: | ||||||||||
| Net income/ (loss) | $ | $ | $ | ( | ||||||
| Adjustments to reconcile net income/ (loss) to net cash provided by operating activities: | ||||||||||
| Depreciation and amortization of intangible assets | 7,8 | |||||||||
| Amortization of unfavorable lease terms | 8 | ( |
( |
|||||||
| Vessels impairment loss | 7 | |||||||||
| Impairment of receivable in affiliated company | 18 | |||||||||
| Non-cash amortization of deferred revenue and straight-line | ( | |||||||||
| Allowance for credit losses | 5 | |||||||||
| Amortization of operating lease assets/liabilities | 22 | ( |
||||||||
| Amortization and write-off of deferred finance costs and discount | ||||||||||
| Amortization of deferred dry dock and special survey costs | 2 | |||||||||
| Gain on sale of vessels, net | 7 | ( |
( |
|||||||
| Bargain gain | 3 | ( |
||||||||
| Equity in net earnings of affiliated companies | 3,19 | ( |
( | |||||||
| Stock-based compensation | 13 | |||||||||
| Changes in operating assets and liabilities: | ||||||||||
| (Increase)/ decrease in accounts receivable | ( |
( | ||||||||
| (Increase)/ decrease in prepaid expenses and other current assets | 6 | ( |
||||||||
| (Increase)/ decrease in amounts due from related parties | 18 | ( |
( |
|||||||
| Increase/ (decrease) in accounts payable | 9 | ( | ||||||||
| Decrease in accrued expenses | 10 | ( |
( |
( | ||||||
| (Decrease)/ increase in amounts due to related parties | 18 | ( |
( |
|||||||
| Increase/ (decrease) in deferred revenue | ( | |||||||||
| Payments for dry dock and special survey costs | ( |
( |
( | |||||||
| Operating lease liabilities short and long-term | 22 | ( | ||||||||
| Net cash provided by operating activities | ||||||||||
| INVESTING ACTIVITIES: | ||||||||||
| Net cash proceeds from sale of vessels | 2,7 | |||||||||
| Acquisition of/ additions to vessels | 2,7 | ( |
( |
( | ||||||
| Deposits for acquisition/ option to acquire vessel | 16 | ( |
( |
( | ||||||
| Cash acquired from acquisitions | 2,3 | |||||||||
| Repayments of notes receivable | ||||||||||
| Payable to affiliated company | 18 | ( | ||||||||
| Net cash used in investing activities | ( |
( |
( | |||||||
| FINANCING ACTIVITIES: | ||||||||||
| Cash distributions paid | 20 | ( |
( |
( | ||||||
| Net proceeds from issuance of general partnership units | 13 | |||||||||
| Net proceeds from issuance of common units | 13 | |||||||||
| Proceeds from long-term debt and financial liabilities | 11 | |||||||||
| Repayment of long-term debt and financial liabilities | 11 | ( |
( |
( | ||||||
| Payments of deferred finance costs | ( |
( |
( | |||||||
| Net cash used in financing activities | $ | ( |
$ | ( |
$ | ( | ||||
| Increase in cash, cash equivalents and restricted cash | ||||||||||
| Cash, cash equivalents and restricted cash, beginning of period | ||||||||||
| Cash, cash equivalents and restricted cash, end of period | $ | $ | $ |
See notes to the consolidated financial statements
| Table of Contents | F- 8 |
NAVIOS MARITIME PARTNERS L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in thousands of U.S. Dollars)
|
| Notes | Year Ended December 31, 2022 |
Year Ended December 31, 2021 | Year Ended December 31, 2020 | |||||||
| Supplemental disclosures of cash flow information | ||||||||||
| Cash interest paid | $ | $ | ||||||||
| Non cash financing activities | ||||||||||
| Stock-based compensation | $ | $ | ||||||||
| Long-term debt and financial liabilities | 11,3 | $ | $ | * | ||||||
| Non cash investing activities | ||||||||||
| Deposits for acquisition/ option to acquire vessel | 16 | $ | ( |
$ | ||||||
| Loans receivable from affiliates | $ | $ | ( | |||||||
| Acquisition of vessels | 7,3 | $ | ( |
$ | ( |
* |
*For non cash items related to business combinations refer to Note 3 – Acquisition of Navios Containers and Navios Acquisition.
See notes to the consolidated financial statements
| Table of Contents | F- 9 |
NAVIOS MARITIME PARTNERS L.P.
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS’ CAPITAL
(Expressed in thousands of U.S. Dollars except unit data)
| Limited Partners | ||||||||||||||
| General Partner | Common Unitholders | |||||||||||||
| Units | Amount | Units | Amount | Noncontrolling Interest | Total Partners’ Capital | |||||||||
| Balance, December 31, 2019 | $ | $ | |
$ | ||||||||||
| Cash distribution paid ($ |
— | ( |
— | ( |
( | |||||||||
| Proceeds from public offering and issuance of units, net of offering costs (see Note 13) | ||||||||||||||
| Stock-based compensation (see Note 13) | — | — | ||||||||||||
| Net loss | — | ( |
— | ( |
( | |||||||||
| Balance, December 31, 2020 | $ | $ | |
$ | ||||||||||
| Cash distribution paid ($ |
— | ( |
— | ( |
( | |||||||||
| Proceeds from public offering and issuance of units, net of offering costs (see Note 13) |
||||||||||||||
| Units issued for the acquisition of Navios Containers, net of expenses (see Note 3) | ||||||||||||||
| Stock-based compensation (see Note 13) | — | — | ||||||||||||
| Deemed contribution (see Note 3) | — | — | ||||||||||||
| Fair value of noncontrolling interest (see Note 3) | — | — | ||||||||||||
| Net income | — | — | ( |
|||||||||||
| Units issued for the acquisition of Navios Acquisition (see Note 3) | ( |
|||||||||||||
| Balance, December 31, 2021 | $ | $ | |
$ | | |||||||||
| Cash distribution paid ($ |
— | ( |
— | ( |
( | |||||||||
| Units cancelled/ forfeited (see Notes 2, 13) | ( |
( |
||||||||||||
| Stock-based compensation (see Notes 2, 13) | — | — | ||||||||||||
| Net income | — | — | ||||||||||||
| Balance December 31, 2022 | $ | $ | |
$ | | |||||||||
See notes to the consolidated financial statements
| Table of Contents | F- 10 |
NAVIOS MARITIME PARTNERS L.P. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in thousands of U.S. Dollars except unit and per unit data)
|
NOTE 1 – DESCRIPTION OF BUSINESS
Navios Maritime Partners L.P. (“Navios Partners” or the “Company”), is an international owner and operator of dry cargo and tanker vessels, formed on
Navios Partners is engaged in the seaborne transportation services of a wide range of liquid and dry cargo commodities including crude oil, refined petroleum, chemicals, iron ore, coal, grain, fertilizer and also containers, chartering its vessels under short, medium and longer-term charters. The operations of Navios Partners are managed by Navios Shipmanagement Inc., (the “Manager”) and Navios Tankers Management Inc. (“Tankers Manager” and together with the Manager, the “Managers”) which are entities affiliated with the Company’s Chairwoman and Chief Executive Officer (see Note 18 – Transactions with related parties and affiliates).
As of December 31, 2022, there were outstanding common units and general partnership units. As of December 31, 2022, Navios Maritime Holdings Inc. (“Navios Holdings”) owned an approximately % ownership interest in Navios Partners and the General Partner held an approximately
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of presentation: The accompanying consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
Based on internal forecasts and projections that take into account reasonably possible changes in Company’s trading performance, management believes that the Company has adequate financial resources, including cash from sale of vessels (see Note 7 – Vessels, net and Note 23 – Subsequent Events) to continue in operation and meet its financial commitments, including but not limited to capital expenditures and debt service obligations, for a period of at least twelve months from the date of issuance of these consolidated financial statements. Accordingly, the Company continues to adopt the going concern basis in preparing its financial statements.
Following Russia’s invasion of Ukraine in February 2022 the United States, the European Union, the United Kingdom and other countries have announced sanctions against Russia, and may impose wider sanctions and take other actions in the future. To date, no apparent consequences have been identified on the Company’s business. It should be noted that since the Company employs Ukrainian and Russian seafarers, it may face problems in relation to their employment, repatriation, salary payments and be subject to claims in this regard. Notwithstanding the foregoing, it is possible that these tensions might eventually have an adverse impact on the Company’s business, financial condition, results of operations and cash flows. Interest rates have increased significantly as central banks in Europe, United States and other developed countries raise interest rates in an effort to reduce the inflation effect. The eventual implications of tighter monetary policy, and potentially higher long-term interest rates may drive a higher cost of capital for our business.
(b) Principles of consolidation: The accompanying consolidated financial statements include Navios Partners’ wholly owned subsidiaries incorporated under the laws of the Republic of Marshall Islands, Liberia, Malta, Delaware, Cayman Islands, Hong Kong, British Virgin Islands, Luxemburg and Belgium from their dates of incorporation or from the date of acquiring control, for chartered-in vessels, from the dates charter-in agreements were in effect. All significant inter-company balances and transactions have been eliminated in Navios Partners' consolidated financial statements.
Navios Partners also consolidates entities that are determined to be variable interest entities (“VIE”) as defined in the accounting guidance, if it determines that it is the primary beneficiary. A VIE is defined as a legal entity where either (i) equity interest holders as a group lack the characteristics of a controlling financial interest, including decision making ability and an interest in the entity's residual risks and rewards, (ii) the equity holders have not provided sufficient equity investment to permit the entity to finance its activities without additional subordinated financial support, or (iii) the voting rights of some investors are not proportional to their obligations to absorb the expected losses of the entity, their rights to receive the expected residual returns of the entity, or both and substantially all of the entity's activities either involve or are conducted on behalf of an investor that has disproportionately few voting rights.
Subsidiaries: Subsidiaries are those entities in which Navios Partners has an interest of more than one half of the voting rights or otherwise has power to govern the financial and operating policies of the entity.
| Table of Contents | F- 11 |
NAVIOS MARITIME PARTNERS L.P. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in thousands of U.S. Dollars except unit and per unit data)
|
The accompanying consolidated financial statements include the following entities:
| Company name | Vessel name | Country of incorporation | 2022 | 2021 | 2020 | |||||
| Libra Shipping Enterprises Corporation | ||||||||||
| Alegria Shipping Corporation(35) | ||||||||||
| Felicity Shipping Corporation | ||||||||||
| Gemini Shipping Corporation | ||||||||||
| Galaxy Shipping Corporation | ||||||||||
| Aurora Shipping Enterprises Ltd. | ||||||||||
| Palermo Shipping S.A. | ||||||||||
| Fantastiks Shipping Corporation(12) | ||||||||||
| Sagittarius Shipping Corporation(12) | ||||||||||
| Hyperion Enterprises Inc. | ||||||||||
| Chilali Corp. | ||||||||||
| Surf Maritime Co.(12) | ||||||||||
| Pandora Marine Inc. | ||||||||||
| Customized Development S.A. | ||||||||||
| Kohylia Shipmanagement S.A. | ||||||||||
| Orbiter Shipping Corp. | ||||||||||
| Floral Marine Ltd. | ||||||||||
| Golem Navigation Limited(13) | ||||||||||
| Kymata Shipping Co. | ||||||||||
| Joy Shipping Corporation | ||||||||||
| Micaela Shipping Corporation | ||||||||||
| Pearl Shipping Corporation | ||||||||||
| Velvet Shipping Corporation | ||||||||||
| Perigiali Navigation Limited(12) | ||||||||||
| Finian Navigation Co.(12) | ||||||||||
| Ammos Shipping Corp.(40) | ||||||||||
| Wave Shipping Corp. | ||||||||||
| Casual Shipholding Co.(12) | ||||||||||
| Avery Shipping Company | ||||||||||
| Coasters Ventures Ltd. | ||||||||||
| Ianthe Maritime S.A. | ||||||||||
| Rubina Shipping Corporation | ||||||||||
| Topaz Shipping Corporation | ||||||||||
| Beryl Shipping Corporation | ||||||||||
| Cheryl Shipping Corporation | ||||||||||
| Christal Shipping Corporation | ||||||||||
| Fairy Shipping Corporation(5) | ||||||||||
| Limestone Shipping Corporation(28) | ||||||||||
| Dune Shipping Corp. | ||||||||||
| Citrine Shipping Corporation | ||||||||||
| Table of Contents | F- 12 |
NAVIOS MARITIME PARTNERS L.P. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in thousands of U.S. Dollars except unit and per unit data)
|
| Cavalli Navigation Inc. | ||||||||||
| Seymour Trading Limited (2) | ||||||||||
| Goldie Services Company (34) | ||||||||||
| Andromeda Shiptrade Limited | ||||||||||
| Esmeralda Shipping Corporation | ||||||||||
| Triangle Shipping Corporation | ||||||||||
| Oceanus Shipping Corporation(19) | ||||||||||
| Cronus Shipping Corporation | ||||||||||
| Leto Shipping Corporation(17) | ||||||||||
| Dionysus Shipping Corporation(4) | ||||||||||
| Prometheus Shipping Corporation(18) | ||||||||||
| Camelia Shipping Inc.(31) | ||||||||||
| Anthos Shipping Inc. | ||||||||||
| Azalea Shipping Inc.(1) | ||||||||||
| Amaryllis Shipping Inc.(38) | ||||||||||
| Zaffre Shipping Corporation(14) (46) | ||||||||||
| Wenge Shipping Corporation(14), (20) | ||||||||||
| Sunstone Shipping Corporation(14) | ||||||||||
| Fandango Shipping Corporation(14) | ||||||||||
| Flavescent Shipping Corporation(14) | ||||||||||
| Emery Shipping Corporation(15) | ||||||||||
| Rondine Management Corp. (15) | ||||||||||
| Prosperity Shipping Corporation | ||||||||||
| Aldebaran Shipping Corporation | ||||||||||
| JTC Shipping and Trading Ltd.(11) | ||||||||||
| Navios Maritime Partners L.P. | ||||||||||
| Navios Maritime Operating LLC. | ||||||||||
| Navios Partners Finance (US) Inc. | ||||||||||
| Navios Partners Europe Finance Inc. | ||||||||||
| Solange Shipping Ltd.(16) | ||||||||||
| Mandora Shipping Ltd.(16) | ||||||||||
| Olympia II Navigation Limited (12) | ||||||||||
| Pingel Navigation Limited (12) | ||||||||||
| Ebba Navigation Limited (12) | ||||||||||
| Clan Navigation Limited (12) | ||||||||||
| Sui An Navigation Limited (23) | ||||||||||
| Bertyl Ventures Co.(12) | ||||||||||
| Silvanus Marine Company (12) | ||||||||||
| Anthimar Marine Inc. (12) | ||||||||||
| Enplo Shipping Limited (12) | ||||||||||
| Morven Chartering Inc. (12) | ||||||||||
| Rodman Maritime Corp. (12) | ||||||||||
| Isolde Shipping Inc. (12) | ||||||||||
| Velour Management Corp. (12) | ||||||||||
| Evian Shiptrade Ltd. (12) | ||||||||||
| Theros Ventures Limited | ||||||||||
| Legato Shipholding Inc. | ||||||||||
| Inastros Maritime Corp. | ||||||||||
| Zoner Shiptrade S.A. | ||||||||||
| Jasmer Shipholding Ltd. | ||||||||||
| Thetida Marine Co. | ||||||||||
| Jaspero Shiptrade S.A. | ||||||||||
| Peran Maritime Inc. | ||||||||||
| Nefeli Navigation S.A. (12) | ||||||||||
| Crayon Shipping Ltd | ||||||||||
| Chernava Marine Corp. | ||||||||||
| Proteus Shiptrade S.A. | ||||||||||
| Vythos Marine Corp. (12) | ||||||||||
| Navios Maritime Containers Sub L.P. | ||||||||||
| Navios Partners Containers Finance Inc. | ||||||||||
| Boheme Navigation Company | ||||||||||
| Navios Partners Containers Inc. | ||||||||||
| Iliada Shipping S.A. |
| Table of Contents | F- 13 |
NAVIOS MARITIME PARTNERS L.P. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in thousands of U.S. Dollars except unit and per unit data)
|
| Vinetree Marine Company | ||||||||||
| Afros Maritime Inc. | ||||||||||
| Cavos Navigation Co. | ||||||||||
| Perivoia Shipmanagement Co.(10) | ||||||||||
| Pleione Management Limited(10) | ||||||||||
| Bato Marine Corp.(32) | ||||||||||
| Agron Navigation Company (21) | ||||||||||
| Teuta Maritime S.A.(22) | ||||||||||
| Ambracia Navigation Company(12), (29) | ||||||||||
| Artala Shipping Co.(22) | ||||||||||
| Migen Shipmanagement Ltd. | ||||||||||
| Bole Shipping Corporation(24) | ||||||||||
| Brandeis Shipping Corporation(24) | ||||||||||
| Buff Shipping Corporation(24) | ||||||||||
| Morganite Shipping Corporation(27) | ||||||||||
| Balder Maritime Ltd.(26) | ||||||||||
| Melpomene Shipping Corporation(25) | ||||||||||
| Urania Shipping Corporation(25) | ||||||||||
| Terpsichore Shipping Corporation(8) | ||||||||||
| Erato Shipmanagement Corporation(8) | ||||||||||
| Lavender Shipping Corporation(12), (7) | ||||||||||
| Nostos Shipmanagement Corp.(12), (7) | ||||||||||
| Navios Maritime Acquisition Corporation | ||||||||||
| Navios Acquisition Europe Finance Inc. | ||||||||||
| Navios Acquisition Finance (US) Inc. | ||||||||||
| Navios Maritime Midstream Partners GP LLC | ||||||||||
| Letil Navigation Ltd. | ||||||||||
| Navios Maritime Midstream Partners Finance (US) Inc. | ||||||||||
| Aegean Sea Maritime Holdings Inc. | ||||||||||
| Amorgos Shipping Corporation(44) | ||||||||||
| Andros Shipping Corporation(43) | ||||||||||
| Antikithira Shipping Corporation (12) | ||||||||||
| Antiparos Shipping Corporation (12) | ||||||||||
| Antipaxos Shipping Corporation(39) | ||||||||||
| Antipsara Shipping Corporation (12) | ||||||||||
| Crete Shipping Corporation (12) | ||||||||||
| Delos Shipping Corporation(45) | ||||||||||
| Folegandros Shipping Corporation(12) | ||||||||||
| Ikaria Shipping Corporation(12) | ||||||||||
| Ios Shipping Corporation | ||||||||||
| Iraklia Shipping Corporation(12) | ||||||||||
| Kimolos Shipping Corporation | ||||||||||
| Kithira Shipping Corporation(12) | ||||||||||
| Kos Shipping Corporation(12) | ||||||||||
| Lefkada Shipping Corporation | ||||||||||
| Leros Shipping Corporation | ||||||||||
| Mytilene Shipping Corporation(12) | ||||||||||
| Oinousses Shipping Corporation | ||||||||||
| Psara Shipping Corporation | ||||||||||
| Rhodes Shipping Corporation(12) | ||||||||||
| Samos Shipping Corporation | ||||||||||
| Samothrace Shipping Corporation(12) | ||||||||||
| Serifos Shipping Corporation(12) | ||||||||||
| Sifnos Shipping Corporation(12) | ||||||||||
| Skiathos Shipping Corporation(12) | ||||||||||
| Skopelos Shipping Corporation | ||||||||||
| Skyros Shipping Corporation(12) | ||||||||||
| Syros Shipping Corporation(12) | ||||||||||
| Thera Shipping Corporation(12) | ||||||||||
| Tilos Shipping Corporation |
| Table of Contents | F- 14 |
NAVIOS MARITIME PARTNERS L.P. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in thousands of U.S. Dollars except unit and per unit data)
|
| Tinos Shipping Corporation | ||||||||||
| Zakynthos Shipping Corporation | ||||||||||
| Cyrus Investments Corp. | ||||||||||
| Olivia Enterprises Corp. | ||||||||||
| Limnos Shipping Corporation(12) | ||||||||||
| Thasos Shipping Corporation(12) | ||||||||||
| Agistri Shipping Limited | ||||||||||
| Paxos Shipping Corporation | ||||||||||
| Donoussa Shipping Corporation | ||||||||||
| Schinousa Shipping Corporation | ||||||||||
Alonnisos Shipping Corporation |
||||||||||
| Makronisos Shipping Corporation | ||||||||||
| Shinyo Loyalty Limited | ||||||||||
| Shinyo Navigator Limited | ||||||||||
| Amindra Navigation Co. | ||||||||||
| Navios Maritime Midstream Partners L.P. | ||||||||||
| Navios Maritime Midstream Operating LLC | ||||||||||
| Shinyo Dream Limited | ||||||||||
| Shinyo Kannika Limited | ||||||||||
| Shinyo Kieran Limited | ||||||||||
| Shinyo Ocean Limited | ||||||||||
| Shinyo Saowalak Limited | ||||||||||
| Sikinos Shipping Corporation | ||||||||||
| Kerkyra Shipping Corporation | ||||||||||
Doxa International Corp. |
||||||||||
| Alkmene Shipping Corporation(38) | ||||||||||
| Aphrodite Shipping Corporation(47) | ||||||||||
| Dione Shipping Corporation | ||||||||||
| Persephone Shipping Corporation | ||||||||||
| Rhea Shipping Corporation(36) | ||||||||||
| Tzia Shipping Corporation (30) | ||||||||||
| Boysenberry Shipping Corporation | ||||||||||
| Cadmium Shipping Corporation | ||||||||||
| Celadon Shipping Corporation | ||||||||||
| Cerulean Shipping Corporation | ||||||||||
| Kleio Shipping Corporation (6) | ||||||||||
| Polymnia Shipping Corporation (6) | ||||||||||
| Goddess Shiptrade Inc.(41) | ||||||||||
| Aramis Navigation Inc.(3) | ||||||||||
| Thalia Shipping Corporation (6) | ||||||||||
| Muses Shipping Corporation(6) | ||||||||||
| Euterpe Shipping Corporation (8) | ||||||||||
| Calliope Shipping Corporation (25) |
| Table of Contents | F- 15 |
NAVIOS MARITIME PARTNERS L.P. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in thousands of U.S. Dollars except unit and per unit data)
|
| Karpathos Shipping Corporation (6) | ||||||||||
| Patmos Shipping Corporation (6) | ||||||||||
| Tarak Shipping Corporation (8) | ||||||||||
| Astrovalos Shipping Corporation (8) | ||||||||||
| Ithaki Shipping Corporation (6) | ||||||||||
| Gavdos Shipping Corporation (6) | ||||||||||
| Galera Management Company(22) | ||||||||||
| Vatselo Enterprises Corp. (9), (12) | ||||||||||
| Thalassa Marine S.A. | ||||||||||
| Anafi Shipping Corporation(12) | ||||||||||
| Asteroid Shipping S.A. | ||||||||||
| Bulkinvest S.A. | ||||||||||
| Cloud Atlas Marine S.A. | ||||||||||
| Corsair Shipping Ltd. (33) | ||||||||||
| Ducale Marine Inc. | ||||||||||
| Faith Marine Ltd | ||||||||||
| Kleimar N.V.(37) | ||||||||||
| Iris Shipping Corporation | ||||||||||
| Moonstone Shipping Corporation (42) | ||||||||||
| NAV Holdings Limited | ||||||||||
| Navios International Inc. | ||||||||||
| Veja Navigation Company | ||||||||||
| Vernazza Shiptrade Inc. (12) | ||||||||||
| White Narcissus Marine S.A. (12) (37) | ||||||||||
| Talia Shiptrade S.A. | ||||||||||
| Shikhar Ventures S.A. (12) | ||||||||||
| Opal Shipping Corporation | ||||||||||
| Pharos Navigation S.A. (12) | ||||||||||
| Pueblo Holdings Ltd. (12) | ||||||||||
| Red Rose Shipping Corp. | ||||||||||
| Rider Shipmanagement Inc. | ||||||||||
| Roselite Shipping Corporation (12) | ||||||||||
| Rumer Holding Ltd. (12) | ||||||||||
| Jasmine Shipping Corporation | ||||||||||
| Highbird Management Inc. | ||||||||||
| Kastelorizo Shipping Corporation(49) | ||||||||||
| Elafonisos Shipping Corporation(49) | ||||||||||
| Koufonisi Shipping Corporation (48) |
| Table of Contents | F- 16 |
NAVIOS MARITIME PARTNERS L.P. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in thousands of U.S. Dollars except unit and per unit data)
|
(1) The vessel was sold on August 13, 2021 (see Note 7 – Vessels, net).
(2) The vessel was sold on October 29, 2021 (see Note 7 – Vessels, net).
(3) The vessel was acquired on July 9, 2021 (see Note 7 – Vessels, net).
(4) The vessel was sold on August 16, 2021 (see Note 7 – Vessels, net).
(5) The vessel was sold on September 12, 2022 (see Note 7 – Vessels, net).
(6) Expected to be delivered by the second half of 2024.
(7) The vessel was acquired on June 30, 2021 (see Note 7 – Vessels, net).
(8) Expected to be delivered by the first half of 2024.
(9) The vessel was acquired on December 14, 2022 (see Note 7 – Vessels, net).
(10) The vessels were delivered on May 28, 2021 and June 10, 2021 (see Note 22 - Leases).
(11) Not a vessel-owning subsidiary and only holds right to charter-in contracts.
(12) Vessels under the sale and leaseback transaction (see Note 11 – Borrowings).
(13) The vessel was sold on December 10, 2020 (see Note 7 – Vessels, net).
(14) The vessels were acquired on June 29, 2020, following the liquidation of Navios Europe II (see Note 7 – Vessels, net).
(15) The vessels were acquired on September 30, 2020 (see Note 7 – Vessels, net).
(16) The vessels were acquired on March 30, 2021 (see Note 7 – Vessels, net).
(17) The vessel was sold on January 13, 2021 (see Note 7 – Vessels, net).
(18) The vessel was sold on January 28, 2021 (see Note 7 – Vessels, net).
(19) The vessel was sold on February 10, 2021 (see Note 7 – Vessels, net).
(20) The vessel was sold on March 25, 2021 (see Note 7 – Vessels, net).
(21) The vessel was acquired on November 17, 2022 (see Note 7 – Vessels, net).
(22) Expected to be delivered in the first half of 2023.
| Table of Contents | F- 17 |
NAVIOS MARITIME PARTNERS L.P. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in thousands of U.S. Dollars except unit and per unit data)
|
(23) The vessel was sold on July 31, 2021 (see Note 7 – Vessels, net).
(24) The vessels were acquired on May 10, 2021 (see Note 7 – Vessels, net).
(25) Expected to be delivered by the second half of 2023.
(26) The vessel was acquired on June 4, 2021 (see Note 7 – Vessels, net).
(27) The vessel was acquired on February 5, 2023 (see Note 23 – Subsequent Events) .
(28) The vessel was sold on September 21, 2022 (see Note 7 – Vessels, net).
(29) The vessel was acquired on July 27, 2022 (see Note 7 – Vessels, net).
(30) The vessel was delivered on July 5, 2022 (see Note 22 – Leases).
(31) The vessel was sold on November 17, 2022 (see Note 7 – Vessels, net).
(32) The vessel was acquired on September 21, 2022 (see Note 7 – Vessels, net).
(33) The vessel was sold on October 14, 2022 (see Note 2 (i) – Summary of Significant Accounting Policies).
(34) The vessel was sold on October 25, 2022 (see Note 7 – Vessels, net).
(35) The vessel was sold on November 14, 2022 (see Note 7 – Vessels, net).
(36) The vessel was sold on December 23, 2022 (see Note 7 – Vessels, net).
(37) The vessel is owned 50% by White Narcissus Marine S.A.and 50% by Kleimar N.V.
(38) The vessel was sold on January 26, 2023 (see Note 7 – Vessels, net).
(39) The vessel was sold on January 17, 2023 (see Note 7 – Vessels, net).
(40) The vessel was sold on February 7, 2023 (see Note 7 – Vessels, net).
(41) The vessel was acquired on September 13, 2022 (see Note 7 – Vessels, net).
(42) The vessel was sold on February 3, 2023 (see Note 7 – Vessels, net).
(43) The vessel was sold on January 24, 2023 (see Note 7 – Vessels, net).
(44) The vessel was sold on January 9, 2023 (see Note 7 – Vessels, net).
(45) The vessel was sold on March 3, 2023 (see Note 23 – Subsequent Events).
(46) The vessel was agreed to be sold in February 2023. The sale is expected to be completed in the second quarter of 2023 (see Note 23 – Subsequent Events).
(47) The vessel was agreed to be sold in January 2023. The sale is expected to be completed in the second quarter of 2023 (see Note 23 – Subsequent Events).
(48) The vessel was acquired on March 6, 2023 (see Note 23 – Subsequent Events).
(49) Expected to be delivered by the first half of 2025.
| Table of Contents | F- 18 |
NAVIOS MARITIME PARTNERS L.P. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in thousands of U.S. Dollars except unit and per unit data)
|
Investments in Affiliates: Affiliates are entities over which the Company generally has between
Affiliates included in the financial statements accounted for under the equity method: In the consolidated financial statements of Navios Partners, the following entities are included as affiliates and are accounted for under the equity method for such periods: (i) Navios Containers (as defined herein) and its subsidiaries (with an ownership interest % as of December 31, 2020). Following the completion of the NMCI Merger (as defined herein), as of March 31, 2021, Navios Containers (as defined herein) was acquired by Navios Partners and ownership was %; and (ii) Navios Europe II and its subsidiaries with an ownership interest of % through the date of its liquidation on (see Note 18 – Transactions with related parties and affiliates, Note 19 – Investment in affiliates and Note 3 – Acquisition of Navios Containers and Navios Acquisition).
(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 the disclosure of contingent assets and liabilities as of the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. On an on-going basis, management evaluates the estimates and judgments, including those related to uncompleted voyages, future drydock dates, the selection of useful lives for tangible assets and scrap value expected future cash flows from long-lived assets to support impairment tests, provisions necessary for accounts receivable, valuation of intangible assets and liabilities acquired in business combinations and/or asset acquisitions, provisions for legal disputes, and contingencies and the valuation estimates inherent in the deconsolidation gain. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates under different assumptions and/or conditions.
(d) Cash and Cash Equivalents: Cash and cash equivalents consist of cash on hand, deposits held on call with banks, and other short-term liquid investments with original maturities of three months or less.
(e) Restricted Cash: Restricted cash, at each of December 31, 2022 and December 31, 2021, included $
| Table of Contents | F- 19 |
NAVIOS MARITIME PARTNERS L.P. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in thousands of U.S. Dollars except unit and per unit data)
|
(f) Accounts Receivable, Net: Accounts receivable includes receivables from charterers for hire, freight and demurrage billings. On January 1, 2020, the Company adopted Accounting Standards Update 2016-13, “Financial Instruments - Credit Losses” (“ASC 326”). At each balance sheet date, the Company maintains an allowance for credit losses for expected uncollectible accounts receivable ( see Note 5 – Accounts Receivable, net). Navios Partners has filed claims for lost revenues in connection with the 2016 filing by Hanjin Shipping Co. (“Hanjin”) for rehabilitation, which was later followed by entry into liquidation in 2017. The Company had fully provided for these amounts in its books. The allowance for credit losses was $
(g) Inventories: Inventories, which are comprised of: (i) bunkers (when applicable) on board of the vessels, valued at cost as determined on the first-in, first-out basis; and (ii) lubricants and stock provisions on board of the vessels as of the balance sheet date, valued at cost as determined on the first-in, first-out basis.
(h) Vessels, Net: Vessels are stated at historical cost, which consists of the contract price and pre-delivery costs incurred during the construction and delivery of newbuildings, including capitalized interest, and any material expenses incurred upon acquisition (improvements and delivery expenses) of second hand vessels. Vessels acquired in an asset acquisition or in a business combination are recorded at fair value. The fair value of the vessels is determined based on vessel valuations, from independent third party shipbrokers. 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. 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 accompanying Consolidated Statements of Operations. Expenditures for routine maintenance and repairs are expensed as incurred.
Depreciation is computed using the
Management estimates the useful life of the Company’s vessels to be
(i) Assets Held for Sale: It is the Company's policy to dispose of vessels and other fixed assets when suitable opportunities occur and not necessarily to keep them until the end of their useful life. 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 vessel (disposal group); the asset (disposal group) is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of vessels; 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 vessels are not depreciated once they meet the criteria to be held for sale. On October 14, 2022, Navios Partners completed the sale of the Navios Ulysses, a -built vessel of dwt, acquired by Navios Holdings (see Note 2(j) – Summary of Significant Accounting Policies), to an unrelated third party, for a net sales price of $. The vessel was classified as held for sale and was presented under the caption “Vessel held for sale” in the condensed Consolidated Balance Sheets as of September 30, 2022, measured at the lowest of carrying value and fair value less costs to sell. No assets were classified as held for sale as of December 31, 2022 and 2021.
(j) Asset Acquisitions: When the Company enters into an acquisition transaction, it determines whether the acquisition transaction is a purchase of an asset or a business based on the facts and circumstances of the transaction. In accordance with Topic 805, Business Combinations, the Company first evaluates whether substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets (Step one). If that threshold is met, the set of assets and activities is not a business. If the threshold is not met, the Company evaluates whether the set meets the definition of a business (Step two). To be considered a business, a set must include an input and a substantive process that together significantly contributes to the ability to create an output. All assets acquired and liabilities assumed in a business combination are measured at their acquisition date fair values. For asset acquisitions, the net assets acquired should be measured following a cost accumulation and allocation model under which the cost of the acquisition is allocated on a relative fair value basis to the qualifying assets acquired. Transaction costs associated with asset acquisitions are capitalized.
On July 26, 2022, the Company entered into a share purchase agreement to acquire a 36-vessel drybulk fleet for a purchase price of $ including the assumption of bank liabilities, bareboat obligations and finance leasing obligations, subject to debt and working capital adjustments, from Navios Holdings. On , 15 of the 36 vessels were delivered to Navios Partners. On , the remaining 21 vessels were delivered to Navios Partners.
The Company performed an assessment, as defined under ASC 805, Business Combinations, and concluded that the acquisition of the 36-vessel drybulk fleet is an asset acquisition. The consideration paid amounted to $and is presented under the caption “Acquisition of/ additions to vessels” in the Consolidated Statements of Cash Flows including working capital balances of $in accordance with the share purchase agreement of which an amount of $related to cash and cash equivalents and restricted cash and is presented under the caption “Cash acquired from acquisitions” in the Consolidated Statements of Cash Flows. The fair value of net assets acquired compared to the cost of consideration resulted in an excess value of $ that was allocated to qualifying assets on a relative fair value basis. The qualifying assets were the vessels held and used, leases (finance and operating lease assets) and intangible assets.
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NAVIOS MARITIME PARTNERS L.P. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in thousands of U.S. Dollars except unit and per unit data)
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Vessels held and used acquired as part of an asset acquisition are recorded at fair value, which is determined based on vessel valuations, obtained from independent third party shipbrokers which are, among other things, based on recent sales and purchase transactions of similar vessels.
When a vessel along with the current charter contract is acquired where the Company acts as a lessor as part of asset acquisition, intangible assets and unfavorable lease terms are recorded at fair value. The fair value of the favorable and unfavorable lease terms (intangible assets and liabilities) was determined by reference to market data and the discounted amount of expected future cash flows. The key assumptions that were used in the discounted cash flow analysis were as follows: (i) the contracted charter rate of the acquired charter over the remaining lease term compared to the current market charter rates for a similar contract and (ii) discounted using the Company’s relevant discount factor of
For acquired leases as part of an asset acquisition, where the Company is a lessee, the Company has elected to reassess classification. The Company recognizes the right-of-use assets for operating and finance leases acquired at the same amount as the lease liability, adjusted to reflect favorable and unfavorable terms of the lease when compared with market terms.
(k) Impairment of Long Lived Assets: Vessels, other fixed assets and other long lived assets held and used by Navios Partners are reviewed periodically for potential impairment whenever events or changes in circumstances indicate that the carrying amount of a particular asset may not be fully recoverable. Navios Partners' management evaluates the carrying amounts and periods over which long-lived assets are depreciated to determine if events or changes in circumstances have occurred that would require modification to their carrying values or useful lives. Measurement of the impairment loss is based on the fair value of the asset. Navios Partners determines the fair value of its assets on the basis of management estimates and assumptions by making use of available market data and taking into consideration third party valuations performed on an individual vessel basis. In evaluating useful lives and carrying values of long-lived assets, certain indicators of potential impairment, are reviewed such as undiscounted projected operating cash flows, vessel sales and purchases, business plans and overall market conditions.
Undiscounted projected net operating cash flows are determined for each asset group and compared to the carrying value of the vessel, the unamortized portion of deferred drydock and special survey costs, ballast water treatment system costs, exhaust gas cleaning system costs and other capitalized items, if any, related to the vessel and the related carrying value of the intangible assets with respect to the time charter agreement attached to that vessel or the carrying value of deposits for newbuildings. Within the shipping industry, vessels are customarily bought and sold with a charter attached. The value of the charter may be favorable or unfavorable when comparing the charter rate to the current market rates. The loss recognized either on impairment or on disposition will reflect the excess of carrying value over fair value (selling price) for the vessel asset group.
The management of the Company has considered various indicators, including but not limited to the market price of its long-lived assets, its contracted revenues and cash flows and the economic outlook.
As of December 31, 2022, the Company concluded that events occurred and circumstances had changed, which indicated that potential impairment of certain of Navios Partners' long-lived assets might exist. These indicators included volatility in the charter market as well as the potential impact the current marketplace may have on the Company’s future operations. As a result, an impairment assessment of certain of long-lived assets (step one) was performed.
As of December 31, 2021, the Company concluded that events and circumstances did not trigger the existence of potential impairment of its vessels and the related intangible assets and that step one of the impairment analysis was not required.
As of December 31, 2020, the Company concluded that events occurred and circumstances had changed, which indicated that potential impairment of Navios Partners' long-lived assets might exist. These indicators included volatility in the charter market as well as the potential impact the current marketplace may have on the Company’s future operations. As a result, an impairment assessment of long-lived assets (step one) was performed.
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NAVIOS MARITIME PARTNERS L.P. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in thousands of U.S. Dollars except unit and per unit data)
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The Company determined the undiscounted projected net operating cash flows for each vessel and compared it to the vessels' carrying value together with the carrying value of deferred drydock and special survey costs, ballast water treatment system costs, exhaust gas cleaning system costs and other capitalized items, if any, related to the vessel and the carrying value of the related intangible assets, if applicable. The significant factors and assumptions the Company used in the undiscounted projected net operating cash flow analysis included: determining the projected net operating cash flows by considering the charter revenues from existing time charters for the fixed fleet days (Navios Partners' remaining charter agreement rates) and an estimated daily time charter equivalent for the unfixed days (based on a combination of one-year average historical time charter rates for the first year and ten-year average historical one-year time charter rates for the remaining period), over the remaining economic life of each vessel, net of brokerage and address commissions, and excluding days of scheduled off-hires, vessel operating expenses as determined by the Management Agreements (as defined herein) in effect until December 2024 and thereafter assuming an increase of
Where the undiscounted projected net operating cash flows do not exceed the carrying value of an asset group, management proceeded to perform step two of the impairment assessment. In step two of the impairment assessment, the Company determined fair value of its vessels through a combination of a discounted cash flow analysis utilizing market participant assumptions from available market data and third-party valuations from independent ship brokers performed on an individual vessel basis. The significant factors and assumptions used by management in determining fair value of vessels included those in developing the projected net operating cash flows over the remaining economic life of each vessel and the discount rate.
During the year ended December 31, 2022, an impairment loss of $ was recognized in connection with the committed sales of the Nave Cosmos in January 2023, the Nave Polaris in January 2023, the Jupiter N in February 2023 and the Navios Prosperity I in February 2023, as the carrying amount of each asset group was not recoverable and exceeded its fair value less costs to sell (see Note 7 – Vessels, net).
During the fourth quarter of fiscal year 2020, the Company’s assessment concluded that step two of the impairment analysis was required for certain of its vessels held and used, as the undiscounted projected net operating cash flows did not exceed the carrying value. As a result, the Company recorded an impairment loss of $
As of June 30, 2020, the Company’s assessment concluded that step two of the impairment analysis was required for three containerships held and used, as the undiscounted projected net operating cash flows did not exceed the carrying value. As a result, the Company recorded an impairment loss of $
During the year ended December 31, 2020, an impairment loss of $ was also recognized in connection with the committed sales of the Navios Soleil in December 2020, the Esperanza N in January 2021 and the Castor N in February 2021, as the carrying amount of each asset group was not recoverable and exceeded its fair value less costs to sell (see Note 7 — Vessels, net).
The total impairment loss recognized amounted to $ and $ for the years ended December 31, 2022 and 2021, respectively, and is presented under the caption “Gain on sale of vessels, net” in the Consolidated Statements of Operations.
The total impairment loss recognized amounted to $
(l) Deferred Drydock and Special Survey Costs: Navios Partners' vessels are subject to regularly scheduled drydocking and special surveys which are generally carried out every
Costs capitalized as part of the drydocking or special survey consist principally of the actual costs incurred at the yard, and expenses relating to spare parts, paints, lubricants and services incurred solely during the drydocking or special survey period. For the years ended December 31, 2022, 2021 and 2020, the amortization expense was $
(m) Deferred Finance Costs: Deferred finance costs include fees, commissions and legal expenses associated with obtaining or modifying credit facilities and financial liabilities. Deferred finance costs are presented as a deduction from the corresponding liability. These costs are amortized over the life of the related facility using the effective interest rate method, and are presented under the caption “Interest expense and finance cost, net”. Amortization and write-off of deferred finance costs, including amortization of debt discount, for each of the years ended December 31, 2022, 2021 and 2020 were $
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NAVIOS MARITIME PARTNERS L.P. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in thousands of U.S. Dollars except unit and per unit data)
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(n) Intangible Assets and Unfavorable Lease Terms: Navios Partners' intangible assets and liabilities consist of favorable and unfavorable lease terms. When a vessel along with the current charter contract are acquired as part of a business combination and/or asset acquisition, intangible assets and unfavorable lease terms 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 asset is recorded, being the difference between the acquired charter rate and the market charter rate for an equivalent vessel. Where charter rates are less than market charter rates, a liability is recorded, being the difference between the assumed charter rate and the market charter rate for an equivalent vessel. The determination of the fair value of acquired assets and assumed liabilities requires Navios Partners to make significant assumptions and estimates of many variables including market charter rates, contracted charter rates, remaining duration of the charter agreements, the level of utilization of its vessels and its relevant discount rate. 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 Navios Partners' financial position and results of operations.
The amortizable value of favorable and unfavorable leases is amortized over the remaining life of the lease term and the amortization expense/ income is included under the captions “Depreciation and amortization of intangible assets” and “Amortization of unfavorable lease terms”, respectively in the Consolidated Statements of Operations.
The amortizable value of favorable leases would be considered impaired if their carrying values could not be recovered from the future undiscounted cash flows associated with the assets. As of December 31, 2022, the management of the Company, after considering various indicators, performed an impairment test which included intangible assets as described in paragraph (k) above. As of December 31, 2021, the management of the Company has considered various indicators and concluded that events and circumstances did not trigger the existence of potential impairment of its intangible assets and that step one of the impairment analysis was not required as described in paragraph (k) above. As of December 31, 2020, the management of the Company, after considering various indicators, performed an impairment test which included intangible assets as described in paragraph (k) above. As of December 31, 2022, 2021 and 2020 there was
(o) Foreign Currency Translation: Navios Partners' functional and reporting currency is the U.S. Dollar. Navios Partners engages in worldwide commerce with a variety of entities. Although, its operations may expose it to certain levels of foreign currency risk, its transactions are predominantly U.S. dollar denominated. Additionally, Navios Partners' wholly-owned vessel subsidiaries transacted a nominal amount of their operations in Euros; however, all of the subsidiaries' primary cash flows are U.S. dollar denominated. Transactions in currencies other than the functional currency are translated at the exchange rate in effect at the date of each transaction. Differences in exchange rates during the period between the date a transaction denominated in a foreign currency is consummated and the date on which it is either settled or translated, are recognized in the Statements of Operations. The foreign currency gains/ (losses) recognized in the accompanying Consolidated Statements of Operations under the captions “Other income” or “Other expense”, for each of the years ended December 31, 2022, 2021 and 2020 were not material for any of these periods.
(p) Provisions: Navios Partners, in the ordinary course of its business, is subject to various claims, suits and complaints. Management, in consultation with internal and external advisors, will provide for a contingent loss in the financial statements if the contingency had been incurred as of the balance sheet date and the likelihood of loss was probable and the amount of the loss can be reasonably estimated. If Navios Partners has determined that the reasonable estimate of the loss is a range and there is no best estimate within the range, Navios Partners will accrue the lower amount of the range.
Navios Partners, through the Management Agreements (as defined herein), participates in Protection and Indemnity (P&I) insurance coverage plans provided by mutual insurance societies known as P&I clubs. Under the terms of these plans, participants may be required to pay additional premiums (supplementary calls) to fund operating deficits incurred by the clubs (“back calls”). Obligations for back calls are accrued annually based on information provided by the P&I clubs.
(q) Segment Reporting: Navios Partners reports financial information and evaluates its operations by charter revenues and not by the length of ship employment for its customers. Navios Partners does not use discrete financial information to evaluate operating results for each type of charter or vessel type. Management does not identify expenses, profitability or other financial information by charter type. As a result, management reviews operating results solely by revenue per day and operating results of the fleet and thus Navios Partners has determined that it operates under one reportable segment (see Note 14 – Segment information).
(r) Revenue and Expense Recognition:
Revenue from time chartering
Revenues from time chartering and bareboat chartering of vessels are accounted for as operating leases and are thus recognized on a straight line basis as the average lease revenue over the rental periods of such charter agreements, as service is performed. A time charter involves placing a vessel at the charterers' disposal for a period of time during which the charterer uses the vessel in return for the payment of a specified daily hire rate. Short period charters for less than three months are referred to as spot-charters. Charters extending three months to a year are generally referred to as medium-term charters. All other charters are considered long-term. The Company has determined to recognize lease revenue as a combined single lease component for all time charters (operating leases) as the related lease component and non-lease components will have the same timing and pattern of the revenue recognition of the combined single lease component. The performance obligations in a time charter contract are satisfied over term of the contract beginning when the vessel is delivered to the charterer until it is redelivered back to the Company. Under time charters, operating costs such as for crews, maintenance and insurance are typically paid by the owner of the vessel. Revenue from time chartering and bareboat chartering of vessels amounted to $
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NAVIOS MARITIME PARTNERS L.P. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in thousands of U.S. Dollars except unit and per unit data)
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Revenue from voyage contracts
Under a voyage charter, a vessel is provided for the transportation of specific goods between specific ports in return for payment of an agreed upon freight per ton of cargo. Upon adoption of ASC 606, the Company recognizes revenue ratably from port of loading to when the charterer's cargo is discharged as well as defer costs that meet the definition of “costs to fulfill a contract” and relate directly to the contract. Revenue from voyage contracts amounted to $
Pooling arrangements
For vessels operating in pooling arrangements, the Company earns a portion of total revenues generated by the pool, net of expenses incurred by the pool. The amount allocated to each pool participant vessel, including the Company's vessels, is determined in accordance with an agreed-upon formula, which is determined by points awarded to each vessel in the pool based on the vessel's age, design and other performance characteristics. Revenue under pooling arrangements is accounted for as variable rate operating leases on the accrual basis and is recognized when an agreement with the pool exists, price is fixed, service is provided and the collectability is reasonably assured. The allocation of such net revenue may be subject to future adjustments by the pool however, such changes are not expected to be material. The Company recognizes net pool revenue on a monthly and quarterly basis, when the vessel has participated in a pool during the period and the amount of pool revenue can be estimated reliably based on the pool report. Revenue from vessels operating in pooling arrangements amounted to $
Revenue from profit-sharing
Profit-sharing revenues are calculated at an agreed percentage of the excess of the charterer's average daily income (calculated on a quarterly or semi annual basis) over an agreed amount and accounted for on an accrual basis based on provisional amounts and for those contracts that provisional accruals cannot be made due to the nature of the profit sharing elements, these are accounted for on the actual cash settlement or when such revenue becomes determinable. Profit sharing revenue amounted to $
Revenues are recorded net of address commissions. Address commissions represent a discount provided directly to the charterers based on a fixed percentage of the agreed upon charter or freight rate. Since address commissions represent a discount (sales incentive) on services rendered by the Company and no identifiable benefit is received in exchange for the consideration provided to the charterer, these commissions are presented as a reduction of revenue.
Deferred Revenue and Cash Received in Advance: Deferred revenue primarily relates to cash received from charterers prior to it being earned and the straight-line amortization of the containerships and tankers charters with de-escalating rates. These amounts are recognized as revenue over the voyage or charter period.
Time Charter and Voyage Expenses: Time charter and voyage expenses comprise all expenses related to each particular voyage, including time charter hire paid and voyage freight paid, bunkers, port charges, canal tolls, cargo handling, agency fees and brokerage commissions. Also included in time charter and voyage expenses are provisions for losses on time charters and voyages in progress at year-end, direct port terminal expenses and other miscellaneous expenses. Time charter expenses are expensed over the period of the time charter and voyage expenses are recognized as incurred.
Direct Vessel Expenses: Direct vessel expenses comprise the amortization related to drydocking and special survey costs of certain vessels of Navios Partners' fleet and certain extraordinary fees and costs, pursuant to the terms of the Management Agreements (as defined herein).
Prepaid Voyage Costs: Prepaid voyage costs relate to cash paid in advance for expenses associated with voyages. These amounts are recognized as expenses over the voyage or charter period.
Vessel operating expenses: Pursuant to the management agreement (the “Management Agreement”), the Manager, provided commercial and technical management services to Navios Partners’ vessels. For a detailed discussion of vessel operating expenses please see Note 18 – Transactions with related parties and affiliates.
General and administrative expenses: Pursuant to the administrative services agreement (the “Administrative Services Agreement”), the Manager also provides administrative services to Navios Partners, which include bookkeeping, audit and accounting services, legal and insurance services, administrative and clerical services, banking and financial services, advisory services, client and investor relations and other. Under the Administrative Services Agreement, which provide for allocable general and administrative costs, the Manager is reimbursed for reasonable costs and expenses incurred in connection with the provision of these services. For a detailed discussion of general and administrative expenses please see Note 18 – Transactions with related parties and affiliates.
(s) Financial Instruments: Financial instruments carried on the balance sheet include cash and cash equivalents, restricted cash, trade receivables and payables, other receivables and other liabilities, long-term debt, financial liabilities and lease liabilities. 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.
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NAVIOS MARITIME PARTNERS L.P. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in thousands of U.S. Dollars except unit and per unit data)
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Financial Risk Management: Navios Partners' activities expose it to a variety of financial risks including fluctuations in future freight rates, time charter hire rates, fuel prices, 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.
Credit risk: Navios Partners closely monitors its credit exposure to customers and counter-parties for credit risk. Navios Partners has entered into the Management Agreements (as defined herein) with the Managers, pursuant to which the Managers agreed to provide commercial and technical management services to Navios Partners. When negotiating on behalf of Navios Partners' various vessel employment contracts, the Managers have policies in place to ensure that they trade with customers and counterparties with an appropriate credit history.
Financial instruments that potentially subject Navios Partners to concentrations of credit risk are accounts receivable and cash and cash equivalents. Navios Partners 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. See Note 5 – Accounts receivable, net
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 financial liabilities and the ability to close out market positions. Navios Partners 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 Operations.
(t) Cash Distribution:
Available Cash: Generally means, for each fiscal quarter, all cash on hand at the end of the quarter:
| • | less the amount of cash reserves established by the Board of Directors to: |
| • | provide for the proper conduct of the business (including reserve for maintenance and replacement capital expenditures); |
| • | comply with applicable law, any of Navios Partners' debt instruments, or other agreements; or |
• |
provide funds for distributions to the unitholders and to the general partner for any one or more of the next four quarters; |
• plus all cash on hand on the date of determination of Available Cash for the quarter resulting from working capital borrowings made after the end of the quarter. Working capital borrowings are generally borrowings that are made under any revolving credit or similar agreement used solely for working capital purposes or to pay distributions to partners.
Available Cash is a quantitative measure used in the publicly traded partnership investment community to assist in evaluating a partnership's ability to make quarterly cash distributions. Available Cash is not required by U.S. GAAP and should not be considered a substitute for net income, cash flow from operating activities and other operations or cash flow statement data prepared in accordance with accounting principles generally accepted in the United States or as a measure of profitability or liquidity.
Cash distributions are recorded in the Company's financial statements in the period in which they are declared. Navios Partners paid $
Maintenance and Replacement Capital Expenditures: Maintenance and replacement capital expenditures are those capital expenditures required to maintain over the long-term the operating capacity of or the revenue generated by Navios Partners' capital assets, and expansion capital expenditures are those capital expenditures that increase the operating capacity of or the revenue generated by the capital assets. To the extent, however, that capital expenditures associated with acquiring a new vessel increase the revenues or the operating capacity of the Company’s fleet, those capital expenditures would be classified as expansion capital expenditures. As of December 31, 2022, 2021 and 2020, maintenance and replacement capital expenditures reserve approved by the Board of Directors was $
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NAVIOS MARITIME PARTNERS L.P. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in thousands of U.S. Dollars except unit and per unit data)
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(u) Stock-based compensation: In February 2019, December 2019, December 2018 and December 2017, Navios Partners granted restricted common units to its directors and officers, which are based solely on service conditions and vest over four years each, respectively. Following the NNA Merger (as defined herein), Navios Partners assumed the restricted common units granted in December 2018 and December 2017 to directors and officers of Navios Maritime Acquisition Corporation (“Navios Acquisition”), which are based solely on service conditions and vest over four years each, respectively. Upon the NNA Merger (as defined herein), the unvested restricted common units were
As of December 31, 2022, in the aggregate, restricted common units were vested. See Note 13 – Repurchases and Issuance of units.
(v) Income Taxes: The Company is a Marshall Islands Corporation. Pursuant to various treaties and the United States Internal Revenue Code, the Company believes that substantially all its operations are exempt from income taxes in the Marshall Islands and the United States of America. Under the laws of Marshall Islands, Liberia, Cayman Islands, Hong Kong, British Virgin Islands, Panama and Belgium, the countries of the vessel-owning subsidiaries’ incorporation and/or vessels’ registration, the vessel-owning subsidiaries are subject to registration and tonnage taxes which have been presented under the caption “Other expense” in the Consolidated Statements of Operations.
(x) Guarantees: An asset for the fair value of a right undertaken in issuing the guarantee is recognized. The recognition of fair value is not required for certain guarantees such as the parent's guarantee of a subsidiary's debt to a third party or guarantees on product warranties. For those guarantees excluded from the above guidance requiring the fair value recognition of the asset, financial statement disclosures of their terms are made.
On November 15, 2012 (as amended and supplemented in March 2014, December 2017 and July 2019), Navios Holdings and Navios Partners entered into an agreement (the “Navios Holdings Guarantee”) by which Navios Holdings would provide supplemental credit default insurance with a maximum cash payment of $. In October 2020, Navios Holdings paid an amount of $ to Navios Partners. In April 2021, Navios Holdings paid an amount of $ to Navios Partners. As of each of December 31, 2022 and 2021, there were no outstanding claim receivable amount.
(y) Leases for Lessors: Vessel leases where Navios Partners is regarded as the lessor are classified as either operating leases or sales type/ direct financing leases, based on an assessment of the terms of the lease. All Company’s leases, for which the Company acts as lessor, are classified as operating leases.
For charters classified as operating leases where Navios Partners is regarded as the lessor, (see Note 2(r) – Summary of Significant Accounting Policies).
(z) Leases for Lessees: Vessel leases, where Navios Partners is regarded as the lessee, are classified as either operating leases or finance leases, based on an assessment of the terms of the lease. According to the provisions of ASC 842-20-30-1, at the commencement date, a lessee shall measure both of the following: a) The lease liability at the present value of the lease payments not yet paid, discounted using the discount rate for the lease at lease commencement and b) The right-of-use asset, which shall consist of all of the following: i) The amount of the initial measurement of the lease liability, ii) Any lease payments made to the lessor at or before the commencement date, minus any lease incentives received and iii) Any initial direct costs incurred by the lessee.
After lease commencement, the Company measures the lease liability for operating leases at the present value of the remaining lease payments using the discount rate determined at lease commencement. The right-of-use asset is subsequently measured at the amount of the remeasured lease liability, adjusted for the remaining balance of any lease incentives received, any cumulative prepaid or accrued rent if the lease payments are uneven throughout the lease term and any unamortized initial direct costs. Any changes made to leased assets to customize it for a particular use or need of the lessee are capitalized as leasehold improvements. Amounts attributable to leasehold improvements are presented separately from the related right-of-use asset. In cases of Navios Acquisition’s operating lease agreements at the date of obtaining control, the Company measured the lease liability at the present value of the remaining lease payments as if these lease agreements were a new lease of the Company at the date of obtaining control. In cases of operating lease agreements that meet the definition of ASC 842 for a short-term lease (the lease has a lease term of 12 months or less) and does not include an option to purchase the underlying asset that the lessee is reasonably certain to exercise, the Company can make the short-term lease election at the commencement date. A lessee that makes the short-term lease election does not recognize a lease liability or right-of-use asset on its balance sheet. Instead, the lessee recognizes lease payments on a straight-line basis over the lease term. Following the acquisition of the 36-vessel drybulk fleet from Navios Holdings, Navios Partners upon reassessing the classification of the leases in accordance with the criteria in ASC 842, concluded that for a Capesize vessel, with a remaining lease term of less than one year charter-in agreement, the criteria of the definition of short-term lease were met. Consequently, the Company did not recognize operating lease liability and corresponding right-of-use asset. The lease payments of the vessel are included under the caption “Time charter and voyage expenses” in the Consolidated Statements of Operations (see Note 22 – Leases). For charters classified as operating leases, lease expense is recognized on a straight line basis over the rental periods of such charter agreements and is included under the caption “Time charter and voyage expenses” in the Consolidated Statement of Operations.
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After lease commencement, the Company measures the lease liability for finance leases by increasing the carrying amount to reflect interest on the lease liability and reducing the carrying amount to reflect the lease payments made during the period. The right-of-use asset is amortized from the lease commencement date to the remaining useful life of the underlying asset since the Company has either the obligation or is reasonably certain to exercise its option to purchase the underlying asset. For finance leases, interest expense is determined using the effective interest method and is included under the caption “Interest expense and finance cost, net” in the Consolidated Statement of Operations, whereas amortization on the right-of-use asset is recognized on a straight line basis over the useful life of such asset and is included under the caption “Depreciation and amortization of intangible assets” in the Consolidated Statement of Operations.
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 financing transaction. For a sale to have occurred, the control of the asset would need to be transferred to the buyer, and the buyer would need to obtain substantially all the benefits from the use of the asset.
Lease assets used by Navios Partners are reviewed periodically for potential impairment whenever events or changes in circumstances indicate that the carrying amount may not be fully recoverable. Measurement of the impairment loss is based on the fair value of the asset. Navios Partners determines the fair value of its lease assets based on management estimates and assumptions by making use of available market data. In evaluating carrying values of operating and finance lease assets, certain indicators of potential impairment are reviewed, such as undiscounted projected operating cash flows, business plans and overall market conditions.
As of December 31, 2022 and December 31, 2021, the management of the Company has considered various indicators, and concluded that events and circumstances did not trigger the existence of potential impairment of its operating lease assets and that step one of the impairment analysis was not required. As of December 31, 2022, the management concluded that events occurred and circumstances had changed, which indicated that potential impairment of Navios Partners’ finance lease assets might exist. These indicators included volatility in the charter market as well as the potential impact the current marketplace may have on the Company’s future operations As a result, an impairment assessment of finance lease assets (step one) was performed.
As of December 31, 2020, the management concluded that events occurred and circumstances had changed, which indicated that potential impairment of Navios Partners’ operating lease assets might exist. These indicators included volatility in the charter market as well as the potential impact the current marketplace may have on the Company’s future operations As a result, an impairment assessment of operating lease assets (step one) was performed.
The Company determined undiscounted projected net operating cash flows for each bareboat/time chartered-in vessel and compared it to lease asset’s carrying value. The significant factors and assumptions used in the undiscounted projected net operating cash flow analysis included: determining the projected net operating cash flows by considering the charter revenues from existing time charters for the fixed fleet days (the Company’s remaining charter agreement rates) and an estimated daily time charter equivalent for the unfixed days (based on an average historical time charter rates) over the remaining lease term/ economic life of right-of-use assets under operating and finance leases, accordingly, net of brokerage and address commissions excluding days of scheduled off-hires (for the bareboat/time chartered-in vessels), vessel operating expenses in accordance with the terms of Management Agreements (as defined herein) (assuming an annual increase of 3.0% every second year for the bareboat/time chartered-in vessels). If step two of the impairment analysis is required, the analysis includes the use of the discounted cash flow which comprises various assumptions, including the Company’s weighted average cost-of capital (“WACC”).
As of December 31, 2022, the Company’s impairment assessments indicated that the undiscounted projected net operating cash flows determined for finance lease assets exceeded their carrying value. The impairment assessments performed as of December 31, 2022 did not result in impairment charges.
As of December 31, 2020, the Company’s impairment assessments indicated that the undiscounted projected net operating cash flows determined for operating lease assets exceeded their carrying value. The impairment assessments performed as of December 31, 2020 did not result in impairment charges.
(aa) Financial Instruments and Fair Value: Guidance on Fair Value Measurements provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level I measurements) and the lowest priority to unobservable inputs (Level III measurements). A financial instrument's level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. In determining the appropriate levels, the Company performs a detailed analysis of the assets and liabilities that are subject to guidance on Fair Value Measurements.
(bb) Recent Accounting Pronouncements: In March 2020, the Financial Accounting Standards Board issued ASU No. 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”).” ASU 2020-04 provides temporary optional expedients and exceptions to the guidance in U.S. GAAP on contract modifications and hedge accounting to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate (LIBOR) and other interbank offered rates to alternative reference rates. In January 2021, the FASB issued Accounting Standard Update (“ASU”) 2021-01 (Topic 848), which amends and clarifies the existing accounting standard issued in March 2020 (“ASU”) 2020-04 for Reference Rate Reform. Reference rates such as LIBOR, are widely used in a broad range of financial instruments and other agreements. The ASU permits entities to elect certain optional expedients and exceptions when accounting for derivative contracts and certain hedging relationships affected by changes in the interest rates used for discounting cash flows, for computing variation margin settlements, and for calculating price alignment interest in connection with reference rate reform activities under way in global financial markets (the “discounting transition”). The ASU 2020-04 is effective for adoption at any time between March 12, 2020 and December 31, 2022, for all entities and the ASU 2021-01 is effective for all entities as of January 7, 2021 through December 31, 2022. In December 2022, the FASB issued ASU No. 2022-06, Deferral of the Sunset Date of Reference Rate Reform (Topic 848). Topic 848 provides optional expedients and exceptions for applying GAAP to transactions affected by reference rate (e.g., LIBOR) reform if certain criteria are met, for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. The ASU deferred the sunset date of Topic 848 from December 31, 2022 to December 31, 2024. As of December 31, 2022, the Company has not made any contract modifications to replace the reference rate in any of its agreements and will continue to evaluate the effects of this standard on its consolidated financial position, results of operations, and cash flows.
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NAVIOS MARITIME PARTNERS L.P. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in thousands of U.S. Dollars except unit and per unit data)
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NOTE 3 – ACQUISITION OF NAVIOS CONTAINERS AND NAVIOS ACQUISITION
ACQUISITION OF NAVIOS CONTAINERS
On
Navios Partners accounted for the NMCI Merger “as a business combination achieved in stages”, which results in the application of the “acquisition method,” as defined under ASC 805, Business Combinations. Navios Partners’ previously held equity interest in Navios Containers was remeasured to its fair value at March 31, 2021, the date the controlling interest was acquired and the resulting gain was recognized in earnings. Under the acquisition method, the fair value of the consideration paid by Navios Partners in connection with the transaction was allocated to Navios Containers’ net assets based on their estimated fair values at the date of the completion of the NMCI Merger. The excess of the fair value of the identifiable net assets acquired of $ over the total purchase price consideration of $, resulted in a bargain gain of $. The transaction resulted in a bargain gain as a result of the share price of Navios Containers trading at a discount to their net asset value. The fair value of the vessels was determined based on vessel valuations, obtained from independent third party shipbrokers, which are among other things, based on recent sales and purchase transactions of similar vessels. The fair value of the unfavorable lease terms (intangible liabilities) was determined by reference to market data and the discounted amount of expected future cash flows. The key assumptions that were used in the discounted cash flow analysis were as follows: (i) the contracted charter rate of the acquired charter over the remaining lease term compared to the current market charter rates for a similar contract and (ii) discounted using the Company’s relevant discount factor of %.
As of March 31, 2021, Navios Partners’ previously held interest of % in Navios Containers was remeasured to a fair value of $, determined using the closing price per common unit of $ of Navios Containers as of the closing date of the NMCI merger, resulting in revaluation gain of $ which along with the equity gain of $ from the operations of Navios Containers upon the closing date aggregate to a gain on acquisition of control in the amount of $ and is presented in, “Equity in net earnings of affiliated companies”, in the accompanying Consolidated Statement of Operations. The acquisition of the remaining interest of % through the issuance of newly issued common units in Navios Partners was recorded at a fair value of $ on the basis of common units issued at a closing price per common unit of $ as of the closing date of the NMCI Merger.
Since the completion of the NMCI Merger on March 31, 2021, beginning from April 1, 2021, the results of operations of Navios Containers are included in Navios Partners’ Consolidated Statements of Operations. Total time charter and voyage revenues and net income of Navios Containers for the period from April 1, 2021 to December 31, 2021 included in the Consolidated Statement of Operations amounted to $
For the years ended December 31, 2022 and December 31, 2021, transaction costs amounted to $ and $, respectively, and have been expensed in the Consolidated Statement of Operations under the caption “Transaction costs” in the accompanying Consolidated Statements of Operations.
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NAVIOS MARITIME PARTNERS L.P. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in thousands of U.S. Dollars except unit and per unit data)
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The following table summarizes the consideration exchanged and the fair value of assets acquired and liabilities assumed on March 31, 2021:
| Purchase price: | ||
| Fair value of previously held interest (35.7%) | $ | |
| Equity issuance (8,133,452 Navios Partners units * $23.56) | ||
| Total purchase price | ||
| Fair value of assets acquired and liabilities assumed: | ||
| Vessels | ||
| Current assets (including cash of $10,282) | ||
| Unfavorable lease terms | ( | |
| Long term debt and financial liabilities assumed (including current portion) | ( | |
| Current liabilities | ( | |
| Fair value of net assets acquired | ||
| Bargain gain | $ |
The acquired intangible, listed below, as determined at the acquisition date and are amortized under the straight line method over the period indicated below:
| Within One Year | Year Two | Year Three | Year Four | Year Five | Year Six | Total | ||||||||||
| Time charters with unfavorable lease terms | $ | ( |
( |
( |
( |
( |
( |
$ | ( |
Intangible liabilities subject to amortization are amortized using straight line method over their estimated useful lives to their estimated residual value of zero.
The following is a summary of the acquired identifiable intangible liability:
| Amount | ||
| Description | ||
| Unfavorable lease terms | $ | ( |
ACQUISITION OF NAVIOS ACQUISITION
On (date of obtaining control), Navios Partners purchased newly issued shares of Navios Acquisition, thereby acquiring a controlling interest of % in Navios Acquisition, and the results of operations of Navios Acquisition are included in Navios Partners’ consolidated statements of operations commencing on August 26, 2021.
On October 15, 2021, Navios Partners completed the merger with Navios Acquisition (the “NNA Merger” and together with the NMCI Merger, the “Mergers”) and as a result thereof, Navios Acquisition became a wholly-owned subsidiary of Navios Partners. Each outstanding share of common stock of Navios Acquisition that was held by a stockholder other than Navios Partners was converted into the right to receive of a common unit of Navios Partners. As a result of the NNA Merger, common units of Navios Partners were issued to former public stockholders of Navios Acquisition.
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NAVIOS MARITIME PARTNERS L.P. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in thousands of U.S. Dollars except unit and per unit data)
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Navios Partners accounted for the control obtained “as a business combination”, which resulted in the application of the “acquisition method,” as defined under ASC 805, Business Combinations, as well as the recognition of the equity interest in Navios Acquisition not held by Navios Partners to its fair value at the date the controlling interest is acquired by Navios Partners as noncontrolling interest on the consolidated balance sheet. The excess of the fair value of Navios Acquisition’s identifiable net assets acquired of $ over the fair value of the consideration transferred of $ and the fair value of the noncontrolling interest of $, resulted in a bargain gain upon obtaining control of $.
The fair value of the consideration of $ has been treated as deemed contribution with an equal increase in total partner’s capital. The fair value of the noncontrolling interest was determined by using Navios Acquisition’s closing price of $ as of August 25, 2021 (date of obtaining control). The fair value of the vessels was determined based on vessel valuations, obtained from independent third party shipbrokers, which are among other things, based on recent sales and purchase transactions of similar vessels. The fair value of the favorable and unfavorable lease terms (intangible assets and liabilities) were determined by reference to market data and the discounted amount of expected future cash flows. The key assumptions that were used in the discounted cash flow analysis were as follows: (i) the contracted charter rate of the acquired charter over the remaining lease term compared to the current market charter rates for a similar contract; and (ii) discounted using the Company’s relevant discount factor of %.
Total time charter and voyage revenues and net loss of Navios Acquisition for the period from August 26, 2021 to December 31, 2021 included in the Consolidated Statements of Operations amounted to $ and $, respectively.
For the years ended December 31, 2022 and December 31, 2021, transaction costs amounted to $ and $ presented under the caption “Transaction costs” in the accompanying Consolidated Statements of Operations.
The following table summarizes the fair value of the consideration transferred the fair value of assets acquired and liabilities assumed and the fair value of the noncontrolling interest in Navios Acquisition assumed on August 25, 2021:
| Purchase consideration: | ||
| Fair value of the consideration | $ | |
| Fair value of noncontrolling interest (37.6%) | ||
| Total purchase consideration | ||
| Fair value of Navios Acquisition’s assets acquired and liabilities assumed: | ||
| Vessels | ||
| Other long-term assets | ||
| Operating lease assets | ||
| Current assets (including cash and restricted cash of $32,394) | ||
| Favorable lease terms | ||
| Unfavorable lease terms | ( | |
| Long term debt and financial liabilities assumed (including current portion) | ( | |
| Operating lease liabilities (including current portion) | ( | |
| Current liabilities | ( | |
| Fair value of Navios Acquisition’s net assets | ||
| Bargain gain upon obtaining control | $ |
The intangible assets and liabilities, listed below, as determined at the date of obtaining control and are amortized under the straight line method over the period indicated below:
| Within One Year | Year Two | Year Three | Year Four | Year Five | Year Six and thereafter | Total | ||||||||||
| Time charters with favorable lease terms | $ | $ | ||||||||||||||
| Time charters with unfavorable lease terms | $ | ( |
( |
$ | ( |
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NAVIOS MARITIME PARTNERS L.P. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in thousands of U.S. Dollars except unit and per unit data)
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Intangible assets and liabilities subject to amortization are amortized using straight line method over their estimated useful lives to their estimated residual value of zero.
The following is a summary of the identifiable intangible asset and liability at the date of obtaining control:
| Amount | ||
| Description | ||
| Favorable lease terms | $ | |
| Unfavorable lease terms | $ | ( |
If the acquisitions of Navios Containers and Navios Acquisition had been consummated as of January 1, 2020, Navios Partners’ pro-forma revenues and net income for the year ended December 31, 2021 would have been $ and $, respectively, and for the year ended December 31, 2020 would have been $ and $, respectively. These pro-forma results do not include non-recurring items directly related to the business combinations as follows: (a) the gain on remeasurement of the previously held interest on Navios Containers and the equity gain from the operations of Navios Containers upon the closing date in the amount of $; (b) the total bargain gain in the amount of $; and (c) the transaction costs related to the Mergers in the amount of $
NOTE 4 – CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of the following:
| December 31, 2022 |
December 31, 2021 | ||||
| Cash and cash equivalents | $ | $ | |||
| Restricted cash | |||||
| Total cash and cash equivalents and restricted cash | $ | $ |
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NAVIOS MARITIME PARTNERS L.P. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in thousands of U.S. Dollars except unit and per unit data)
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As of December 31, 2022 and December 31, 2021, restricted cash amounted to $
Cash deposits and cash equivalents in excess of amounts covered by government-provided insurance are exposed to loss in the event of non-performance by financial institutions. Navios Partners does maintain cash deposits and equivalents in excess of government-provided insurance limits. Navios Partners also minimizes exposure to credit risk by dealing with a diversified group of major financial institutions.
NOTE 5 – ACCOUNTS RECEIVABLE, NET
Accounts receivable consisted of the following:
| December 31, 2022 |
December 31, 2021 | ||||
| Accounts receivable | $ | $ | |||
| Less: Provision for credit losses | ( |
( | |||
| Accounts receivable, net | $ | $ |
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NAVIOS MARITIME PARTNERS L.P. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in thousands of U.S. Dollars except unit and per unit data)
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Charges to provisions for credit losses are summarized as follows:
| Allowance for credit losses | Balance at beginning of period |
Charges to costs and expenses |
Amount utilized | Balance at end of period | |||||||
| Year ended December 31, 2022 | $ | ( |
$ | $ | $ | ( | |||||
| Year ended December 31, 2021 | $ | ( |
$ | $ | $ | ( | |||||
| Year ended December 31, 2020 | $ | ( |
$ | ( |
$ | $ | ( |
NOTE 6 – PREPAID EXPENSES AND OTHER CURRENT ASSETS
Prepaid expenses and other current assets consist of the following:
| December 31, 2022 |
December 31, 2021 | ||||
| Prepaid voyage costs | $ | $ | |||
| Inventories | |||||
| Claims receivable | |||||
| Other | |||||
| Total prepaid expenses and other current assets | $ | $ |
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NAVIOS MARITIME PARTNERS L.P. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in thousands of U.S. Dollars except unit and per unit data)
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Inventories are comprised of bunkers, lubricants and stores remaining on board as of December 31, 2022 and 2021.
Claims receivable mainly represent claims against vessels' insurance underwriters in respect of damages arising from accidents or other insured risks, as well as claims under charter contracts.
NOTE 7 – VESSELS, NET
| Total Vessels | Cost | Accumulated Depreciation |
Net Book Value | |||||
| Balance December 31, 2019 | $ | $ | ( |
$ | ||||
| Additions/ (Depreciation) | ( |
|||||||
| Disposals | ( |
( | ||||||
| Vessels impairment loss | ( |
( | ||||||
| Balance December 31, 2020 | $ | $ | ( |
$ | ||||
| Additions/ (Depreciation) | ( |
|||||||
| Disposals | ( |
( | ||||||
| Balance December 31, 2021 | $ | $ | ( |
$ | ||||
| Additions/ (Depreciation) | ( |
|||||||
| Disposals/ Impairment | ( |
( | ||||||
| Balance December 31, 2022 | $ | $ | ( |
$ |
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NAVIOS MARITIME PARTNERS L.P. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in thousands of U.S. Dollars except unit and per unit data)
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The above balances as of December 31, 2022 are analyzed in the following tables:
| Owned Vessels | Cost | Accumulated Depreciation |
Net Book Value | |||||
| Balance December 31, 2021 | $ | $ | ( |
$ | ||||
| Additions/ (Depreciation) | ( |
|||||||
| Disposals/ Impairment | ( |
( | ||||||
| Balance December 31, 2022 | $ | $ | ( |
$ |
| Right-of-use assets under finance Lease | Cost | Accumulated Depreciation |
Net Book Value | |||||
| Balance December 31, 2021 | $ | $ | $ | |||||
| Additions/ (Depreciation) | ( |
|||||||
| Disposals | ||||||||
| Balance December 31, 2022 | $ | $ | ( |
$ |
Right-of-use asset under finance leases are calculated at an amount equal to the finance liability, increased with the allocated excess value, the initial direct costs and adjusted for the carrying amount of the straight-line effect of liability as well as the favorable and unfavorable lease terms derived from charter-in agreements.
During the years ended December 31, 2022 and 2021, the Company capitalized certain extraordinary fees and costs related to vessels' regulatory requirements, including ballast water treatment system installation, exhaust gas cleaning system installation and scrubber system installation, that amounted to $
As of December 31, 2022, the Company’s capitalized expenses and deposits for the option to acquire vessels amounted to $ that related to the acquisition of the Navios Armonia, the Navios Astra, the Navios Primavera and the Navios Azalea.
Acquisition of Vessels
2022
On December 14, 2022, Navios Partners took delivery of the Navios Alegria, a -built vessel of dwt, from an unrelated third party, for an acquisition cost of $ (including $ capitalized expenses).
On November 17, 2022, Navios Partners took delivery of the Navios Azalea, a -built vessel of dwt, from an unrelated third party, by entering into a 15-year bareboat charter-in agreement. The bareboat charter-in provides for purchase options with de-escalating purchase prices. Navios Partners accounted for the vessel as finance lease for an acquisition cost of $, including capitalized expenses, and recorded a right-of-use asset at an amount equal to the finance lease liability (see Note 11 – Borrowings), increased by initial direct costs adjusted for the carrying amount of the straight-line effect of the liability.
On September 21, 2022, Navios Partners took delivery of the Navios Armonia, a -built vessel of dwt, from an unrelated third party, by entering into a 15-year bareboat charter-in agreement. The bareboat charter-in provides for purchase options with de-escalating purchase prices. Navios Partners accounted for the vessel as finance lease for an acquisition cost of $, including capitalized expenses, and recorded a right-of-use asset at an amount equal to the finance lease liability (see Note 11 – Borrowings), increased by initial direct costs adjusted for the carrying amount of the straight-line effect of the liability.
On September 13, 2022, Navios Partners took delivery of the Navios Astra, a -built vessel of dwt, from an unrelated third party, by entering into a ten-year bareboat charter-in agreement. The bareboat charter-in provides for purchase options with de-escalating purchase prices. Navios Partners declared its option to purchase the vessel at the end of the tenth year of the bareboat charter-in agreement, preserving the right to exercise the purchase option earlier during the option period. Navios Partners accounted for the vessel as finance lease for an acquisition cost of $, including capitalized expenses, and recorded a right-of-use asset at an amount equal to the finance lease liability (see Note 11 – Borrowings), increased by initial direct costs adjusted for the carrying amount of the straight-line effect of the liability.
On July 27, 2022, Navios Partners took delivery of the Navios Primavera, a -built vessel of dwt, from an unrelated third party, for an acquisition cost of $ (including $ capitalized expenses).
Following the acquisition of 36-vessel drybulk fleet from Navios Holdings, on July 29, 2022, the Company took delivery of ten vessels accounted for as finance leases for an acquisition cost of $and recorded a right-of-use asset at an amount equal to the finance lease liability (see Note 11 – Borrowings), increased with the allocated excess value and adjusted for the carrying amount of the straight-line effect of the liability as well as the favorable and unfavorable lease terms derived from charter-in agreements. On September 8, 2022, the Company took delivery of 20 vessels held and used, accounted for as owned, for an acquisition cost of $
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NAVIOS MARITIME PARTNERS L.P. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in thousands of U.S. Dollars except unit and per unit data)
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2021
Upon acquisition of the majority of outstanding stock of Navios Acquisition and the completion of the NMCI Merger, the fleets of Navios Acquisition and Navios Containers were included in Navios Partners’ owned fleet (see Note 3 – Acquisition of Navios Containers and Navios Acquisition).
On July 9, 2021, Navios Partners acquired the Navios Azimuth, a -built vessel of dwt, from its affiliate, Navios Holdings, for an acquisition cost of $ (including $ capitalized expenses) (see Note 18 – Transactions with related parties and affiliates).
On June 30, 2021, Navios Partners acquired the Navios Ray, a -built vessel of dwt and the Navios Bonavis, a -built vessel of dwt, from its affiliate, Navios Holdings, for an aggregate purchase price of $ (see Note 18 – Transactions with related parties and affiliates).
On June 4, 2021, Navios Partners acquired the Navios Koyo, a -built vessel of dwt, from its affiliate, Navios Holdings, for an acquisition cost of $ (including $ capitalized expenses) (see Note 18 – Transactions with related parties and affiliates).
On May 10, 2021, Navios Partners acquired the Ete N, a -built of TEU, the Fleur N, a -built of TEU and the Spectrum N, a -built of TEU from Navios Acquisition, for an aggregate purchase price of $ (see Note 18 – Transactions with related parties and affiliates).
On March 30, 2021, Navios Partners acquired the Navios Avior, a built vessel of dwt, and the Navios Centaurus, a -built vessel of dwt, from its affiliate, Navios Holdings, for an acquisition cost of $(including $capitalized expenses), including working capital balances of $ (see Note 18 – Transactions with related parties and affiliates).
The acquisition of the individual vessels from Navios Holdings (except for the Navios Koyo) and Navios Acquisition was effected through the acquisition of all of the capital stock of the respective vessel-owning companies, which held the ownership and other contractual rights and obligations related to each of the acquired vessels. Management accounted for each acquisition as an asset acquisition under ASC 805.
2020
On September 30, 2020, Navios Partners acquired the Navios Gem, a -built vessel of dwt and the Navios Victory, a -built vessel of dwt, from its affiliate, Navios Holdings, for a purchase price of $ (see Note 18 – Transactions with related parties and affiliates).
On June 29, 2020, Navios Partners acquired five drybulk vessels, three Panamax and two Ultra-Handymax, for a fair value of $
Sale of Vessels
2022
On December 23, 2022, Navios Partners sold the Perseus N, a -built vessel of dwt, to an unrelated third party, for a net sales price of $. The aggregate net carrying amount of the vessel amounted to $ as of the date of the sale.
On November 17, 2022, Navios Partners sold the Navios Camelia, a -built vessel of dwt, to an unrelated third party, for a net sales price of $. The aggregate net carrying amount of the vessel, including the remaining carrying balance of dry-dock and special survey cost of $, amounted to $ as of the date of the sale.
On November 14, 2022, Navios Partners sold the Navios Alegria, a -built vessel of dwt, to an unrelated third party, for a net sales price of $. The aggregate net carrying amount of the vessel, including the remaining carrying balance of dry-dock and special survey cost of $, amounted to $ as of the date of the sale.
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NAVIOS MARITIME PARTNERS L.P. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in thousands of U.S. Dollars except unit and per unit data)
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On October 25, 2022, Navios Partners sold the Navios Symmetry, a -built vessel of dwt, to an unrelated third party, for a net sales price of $. The aggregate net carrying amount of the vessel, including the remaining carrying balance of dry-dock and special survey cost of $, amounted to $ as of the date of the sale.
On September 21, 2022, Navios Partners sold the Navios Unite, a -built of TEU, to an unrelated third party, for a net sales price of $. The aggregate net carrying amount of the vessel, including the remaining carrying balance of dry-dock and special survey cost of $, amounted to $ as of the date of the sale.
On September 12, 2022, Navios Partners sold the Navios Utmost, a -built of TEU, to an unrelated third party, for a net sales price of $. The aggregate net carrying amount of the vessel, including the remaining carrying balance of dry-dock and special survey cost of $, amounted to $ as of the date of the sale.
Vessels agreed to be sold
On January 5, 2023, Navios Partners agreed to sell the Navios Prosperity I, a -built vessel of dwt, to an unrelated third party, for a sales price of $. The sale was completed on .
On December 30, 2022, Navios Partners agreed to sell the Navios Amaryllis, a -built vessel of dwt, to an unrelated third party, for a sales price of $. The sale was completed on . (See Note 23 – Subsequent Events)
On December 19, 2022, Navios Partners agreed to sell the Jupiter N, a -built vessel of dwt, to an unrelated third party, for a sales price of $. The sale was completed on .
On December 5, 2022, Navios Partners agreed to sell the Nave Polaris, a -built vessel of dwt, to an unrelated third party, for a sales price of $. The sale was completed on .
On December 5, 2022, Navios Partners agreed to sell the Nave Cosmos, a -built vessel of dwt, to an unrelated third party, for a sales price of $. The sale was completed on .
On December 1, 2022, Navios Partners agreed to sell the Star N, a
On November 30, 2022, Navios Partners agreed to sell the Nave Dorado, a -built vessel of dwt, to an unrelated third party, for a sales price of $. The sale was completed on . (See Note 23 – Subsequent Events)
Following the sale of the vessels and the sales agreed to during the year ended December 31, 2022 analyzed above, the aggregate amount of $
2021
On October 29, 2021, Navios Partners sold the Navios Altair I, a -built
On August 16, 2021, Navios Partners sold the Harmony N, a
On August 13, 2021, Navios Partners sold the Navios Azalea, a -built vessel of dwt, to an unrelated third party for a net sales price of $. The aggregate net carrying amount of the vessel, including the remaining carrying balance of dry-dock and special survey cost of $, amounted to $ as at the date of the sale.
On July 31, 2021, Navios Partners sold the Navios Dedication, a -built of TEU to an unrelated third party for a net sales price of $.
On March 25, 2021, the Company sold the Joie N, a
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NAVIOS MARITIME PARTNERS L.P. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in thousands of U.S. Dollars except unit and per unit data)
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On February 10, 2021, the Company sold the Castor N, a
On January 28, 2021, the Company sold the Solar N, a
On January 13, 2021, the Company sold the Esperanza N, a
Following the sale of the vessels during the year ended December 31, 2021, the aggregate net amount of $
2020
On December 10, 2020, Navios Partners sold the Navios Soleil to an unrelated third party for a net sales price of $. The aggregate net carrying amount of the vessel, including the remaining carrying balance of dry dock and special survey cost of $, amounted to $ as at the date of sale. Following the impairment loss of $, recognized as of December 31, 2020, no loss on sale occurred upon the sale of the vessel.
Vessels impairment loss
2022
During the year ended December 31, 2022, an impairment loss of $was recognized in connection with the committed sales of the Nave Cosmos in January 2023, the Nave Polaris in January 2023, the Jupiter N in February 2023 and the Navios Prosperity I in February 2023, as the carrying amount of each asset group was not recoverable and exceeded its fair value less costs to sell, as described above. Each vessel was subject to an existing time charter with an unrelated charterer and was not immediately available for sale and therefore, did not qualify as an asset held for sale as of December 31, 2022.
2021
As of December 31, 2021, events and circumstances did not trigger the existence of potential impairment of the vessels, mainly due to the market improvement. As a result, there was no impairment charge for the year ended December 31, 2021.
2020
In November 2020, Navios Partners entered into a Memorandum of Agreement with an unrelated third party for the sale of the Castor N for a net sales price of $
In October 2020, Navios Partners entered into a Memorandum of Agreement with an unrelated third party for the sale of the Esperanza N for a net sales price of $
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NAVIOS MARITIME PARTNERS L.P. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in thousands of U.S. Dollars except unit and per unit data)
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NOTE 8 – INTANGIBLE ASSETS AND LIABILITIES
Intangible assets as of December 31, 2022 and December 31, 2021 consisted of the following:
| Cost | Accumulated Amortization |
Net Book Value | ||||||
| Favorable lease terms December 31, 2019 | $ | $ | ( |
$ | ||||
| Additions/ (Amortization) | ( |
( | ||||||
| Favorable lease terms December 31, 2020 | $ | $ | ( |
$ | ||||
| Additions/ (Amortization) | ( |
|||||||
| Favorable lease terms December 31, 2021 | $ | $ | ( |
$ | ||||
| Additions/ (Amortization) | ( |
( | ||||||
| Favorable lease terms December 31, 2022 | $ | $ | ( |
$ |
The aggregate amortization of the intangibles for the years ending December 31 is estimated to be as follows:
| Year | Amount | |
| 2023 | $ | |
| 2024 | ||
| 2025 | ||
| 2026 | ||
| 2027 | ||
| 2028 and thereafter | ||
| Total | $ |
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NAVIOS MARITIME PARTNERS L.P. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in thousands of U.S. Dollars except unit and per unit data)
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Intangible assets subject to amortization are amortized using
Intangible liabilities as of December 31, 2022 and December 31, 2021 consisted of the following:
| Cost | Accumulated Amortization |
Net Book Value | ||||||
| Unfavorable lease terms December 31, 2021 | $ | $ | ( |
$ | ||||
| Additions/ (Amortization) | ( |
( | ||||||
| Unfavorable lease terms December 31, 2022 | $ | $ | ( |
$ |
Amortization income of unfavorable lease terms for each of the years ended December 31, 2022, 2021 and 2020 is presented in the following table:
| Year Ended | ||||||||
| December 31, 2022 | December 31, 2021 | December 31, 2020 | ||||||
| Unfavorable lease terms | $ | $ | $ | |||||
| Total | $ | $ | $ | |||||
The aggregate amortization of the intangible liabilities for the years ending December 31 is estimated to be as follows:
| Year | Amount | |
| 2023 | $ | |
| 2024 | ||
| 2025 | ||
| 2026 | ||
| 2027 and thereafter | ||
| Total | $ |
Intangible liabilities subject to amortization are amortized using
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NAVIOS MARITIME PARTNERS L.P. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in thousands of U.S. Dollars except unit and per unit data)
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NOTE 9 – ACCOUNTS PAYABLE
Accounts payable as of December 31, 2022 and 2021 consisted of the following:
| December 31, 2022 |
December 31, 2021 | ||||
| Creditors | $ | $ | |||
| Brokers | |||||
| Professional and legal fees | |||||
| Total accounts payable | $ | $ |
NOTE 10 – ACCRUED EXPENSES
Accrued expenses as of December 31, 2022 and 2021 consisted of the following:
| December 31, 2022 |
December 31, 2021 | ||||
| Accrued voyage expenses | $ | $ | |||
| Accrued loan interest | |||||
| Accrued legal and professional fees | |||||
| Total accrued expenses | $ | $ |
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NAVIOS MARITIME PARTNERS L.P. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in thousands of U.S. Dollars except unit and per unit data)
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As of December 31, 2022 and December 31, 2021, the amount of $
NOTE 11 – BORROWINGS
Borrowings as of December 31, 2022 and December 31, 2021 consisted of the following:
December 31, 2022 |
December 31, 2021 | ||||
| Credit facilities | $ | $ | |||
| Financial liabilities | |||||
| Financial lease liabilities | |||||
| Total borrowings | $ | $ | |||
| Less: Current portion of long-term borrowings, net | ( |
( | |||
| Less: Deferred finance costs, net | ( |
( | |||
| Long-term borrowings, net | $ | $ |
As of December 31, 2022, the total borrowings, net of deferred finance costs were $
BNP PARIBAS Credit Facilities: On
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NAVIOS MARITIME PARTNERS L.P. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in thousands of U.S. Dollars except unit and per unit data)
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On
DVB Bank S.E. Credit Facilities: On
On
Hamburg Commercial Bank AG Credit Facilities: On
On
On
Hellenic Bank Public Company Limited Credit Facility: On
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NAVIOS MARITIME PARTNERS L.P. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in thousands of U.S. Dollars except unit and per unit data)
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On
Nordea Bank AB/Skandinaviska Enskilda BanKen AB/NIBC Bank N.V. Credit Facilities: On
On
On , Navios Partners entered into a credit facility with Skandinaviska Enskilda of up to $ in order . On June 30, 2022, the full amount was drawn. As of December 31, 2022, the total outstanding balance was $ and is repayable in consecutive installments of $ each and a final balloon payment of $ to be paid on the last repayment date. The facility matures in the and bears interest at plus bps per annum.
ABN Amro Bank N.V Credit Facilities: On
On
On
DORY Funding DAC Credit Facility: On
National Bank of Greece Credit Facility: On
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NAVIOS MARITIME PARTNERS L.P. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in thousands of U.S. Dollars except unit and per unit data)
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DNB BANK ASA Credit Facilities: On
On
On
Credit Agricole Corporate and Investment Bank Credit Facilities: On
On
On
KFW IPEX-BANK GMBH: On
FIRST-CITIZENS BANK & TRUST COMPANY: On
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NAVIOS MARITIME PARTNERS L.P. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in thousands of U.S. Dollars except unit and per unit data)
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Upon completion of the NMCI Merger, Navios Partners assumed the following credit facilities:
ABN AMRO BANK N.V Facility: On
BNP Paribas Facility: On
Upon acquisition of the majority of outstanding stock of Navios Acquisition, Navios Partners assumed the following credit facilities:
8 1/8% First Priority Ship Mortgages: Navios Acquisition funded the approximately $ aggregate redemption price with net proceeds from (i) the sale by Navios Acquisition pursuant to the NNA Merger (in reliance on the exemption from registration provided for under Section 4(a)(2) of the Securities Act) of shares of Navios Acquisition common stock to Navios Partners for an aggregate purchase price of $, and borrowings under the Hamburg Commercial Bank AG facility dated in August 2021 and BNP Paribas S.A. Bank facility dated in August 2021. The Ship Mortgage Notes were redeemed in full on .
DVB Bank S.E. and Credit Agricole Corporate and Investment Bank: On , Navios Acquisition entered into a loan agreement with DVB Bank SE and Credit Agricole Corporate and Investment Bank of up to $ (divided into tranches of $ each) . Each tranche of the facility was repayable in installments of $ each with a final balloon payment of $ to be repaid on the last repayment date. The repayment started three months after the delivery of the respective vessel and bore interest at a rate of . On December 15, 2021, the outstanding balance of the loan amounting to $ was prepaid.
BNP Paribas S.A. Bank Facilities: On , Navios Acquisition, through certain of its wholly owned subsidiaries, entered into a term loan facility agreement of up to $ with BNP Paribas, as agent and the lenders named therein, . The credit facility was repayable in equal consecutive installments in the amount of $ each, with a final balloon payment of $ repaid on the last repayment date. The loan matured in . The loan bore interest at plus bps per annum. In December 2021, the outstanding balance of the loan amounting to $ was fully repaid.
In , Navios Acquisition, entered into a loan facility agreement of up to $ with BNP Paribas, in order . Pursuant to an amendment in December 2021, l. Following the amendment, as of December 31, 2022, the remaining outstanding balance of the credit facility was $ and is repayable in equal consecutive installments in the amount of $ each, with a final balloon payment of $ to be repaid on the last repayment date. The facility matures in the and bears interest at plus bps per annum.
Hamburg Commercial Bank AG Facilities: In , Navios Acquisition entered into a loan facility for an amount of $. The facility was repayable in equal consecutive installments of $each, with a final balloon payment of the balance to be repaid on the last repayment date. The facility was scheduled to mature in and bore interest at plus bps per annum. In August 2021, the outstanding balance of the loan amounting to $was prepaid.
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NAVIOS MARITIME PARTNERS L.P. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in thousands of U.S. Dollars except unit and per unit data)
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In , Navios Acquisition entered into a loan agreement with Hamburg Commercial Bank AG of up to $ in order . The facility was repayable in installments of $ each with a final balloon payment of $ repayable on the last repayment date. The facility was expected to mature in and bore interest at plus bps per annum. In October 2020, Navios Acquisition extended the maturity date of the loan to . The remaining balance of the facility was repayable in installments of $ each with a final balloon payment of $ repayable on the last repayment date and bore interest at plus bps per annum. In August 2021, the outstanding balance of the loan amounting to $ was prepaid and refinanced.
In , Navios Acquisition entered into a loan agreement with Hamburg Commercial Bank AG of $in order . Pursuant to an amendment in December 2021, . Following the amendment and as of December 31, 2022, the remaining outstanding balance of the credit facility was $and is repayable in six installments of $each, and four installments of $each, with a final balloon payment of $, to be repaid on the last repayment date. The facility matures in the and bears interest at plus margin bps per annum.
Eurobank S.A: In , Navios Acquisition entered into a loan agreement with Eurobank S.A. of $ in order . As of December 31, 2022, the remaining outstanding balance of the credit facility was $ and is repayable in installments of $ each with a final balloon payment of $ repayable on the last repayment date. The facility matures in the and bears interest at plus bps per annum.
Following the acquisition of 36-vessel drybulk fleet from Navios Holdings, Navios Partners assumed the following credit facilities:
Credit Agricole CIB: In , Navios Holdings entered into a loan agreement with Credit Agricole CIB (“CACIB”) and BNP Paribas(“BNPP”) for an amount of $, . On January 5, 2022, the amount under this facility was fully drawn. In October 2022, the amount of $ was repaid following the sale of one 2007-built handymax vessel. As of December 31, 2022, the remaining outstanding balance of the credit facility was $ and is repayable in one installment of $, eight consecutive installments of $ each with a final balloon payment of $ to be repaid on the last repayment date. The facility matures in the and bears interest at plus bps per annum.
Hamburg Commercial Bank AG: In , Navios Holdings entered into a loan agreement with HCOB for an amount of $, . On January 5, 2022, the amount under this facility was fully drawn. In March 2022, Navios Holdings prepaid an amount of $and one dry bulk vessel was released. Following the prepayment, the remaining outstanding balance of $was repayable in installments of$each with a final balloon payment of $to be repaid on the last repayment date. The facility was scheduled to mature in the and bore interest at plus a margin ranging from bps to bps per annum. In September 2022, the outstanding balance of the loan amounting to $was prepaid.
Financial Liabilities
In , the Company entered into two sale and leaseback agreements of $ in total, with unrelated third parties for the Navios Fantastiks and the Navios Beaufiks. Navios Partners has a purchase obligation to acquire the vessels at the end of the lease term and under ASC 842-40, the transfer of the vessels was determined to be 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 agreements as a financial liability. Navios Partners is obligated to make 69 and 60 consecutive monthly payments, respectively, of approximately $ and $ each, respectively, commencing in December 2018. As of December 31, 2022, the outstanding balance under the sale and leaseback agreements of the Navios Fantastiks and the Navios Beaufiks was $ in total. The agreements mature in the and , respectively, with a purchase obligation of $ per vessel on the last repayment date.
On , the Company entered into a sale and leaseback agreement of $, with unrelated third parties for the Navios Sol, a -built vessel of 180,274 dwt. Navios Partners has a purchase obligation to acquire the vessel at the end of the lease term and under ASC 842-40, the transfer of the vessel was determined to be 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. On April 11, 2019, the amount of $ was drawn. Navios Partners is obligated to make 120 consecutive monthly payments of approximately $ each that commenced in April 2019. As of December 31, 2022, the outstanding balance under the sale and leaseback agreement of the Navios Sol was $. The agreement matures in the , with a purchase obligation of $ on the last repayment date.
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NAVIOS MARITIME PARTNERS L.P. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in thousands of U.S. Dollars except unit and per unit data)
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On , the Company entered into a sale and leaseback agreement of $, with unrelated third parties for the Navios Sagittarius, a -built vessel of dwt. Navios Partners has a purchase obligation to acquire the vessel at the end of the lease term and under ASC 842-40, the transfer of the vessel was determined to be 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. On June 28, 2019, the amount of $ was drawn. Navios Partners is obligated to make 36 consecutive monthly payments of approximately $ each that commenced in June 2019. The agreement matured in the , and a purchase obligation of $ was paid on the last repayment date.
On , the Company entered into a sale and leaseback agreement of $, with unrelated third parties for the Navios Ace, a -built vessel of dwt. Navios Partners has a purchase obligation to acquire the vessel at the end of the lease term and under ASC 842-40, the transfer of the vessel was determined to be 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. On July 24, 2019, the amount of $ was drawn. Navios Partners is obligated to make 132 consecutive monthly payments of approximately $ each that commenced in July 2019. As of December 31, 2022, the outstanding balance under the sale and leaseback agreement of the Navios Ace was $. The agreement matures in the , with a purchase obligation of $ on the last repayment date.
In , the Company entered into a sale and leaseback agreement of $, with unrelated third parties for the Navios Bonavis, a - built vessel of dwt. Navios Partners has a purchase obligation to acquire the vessel at the end of the lease term and under ASC 842-40, the transfer of the vessel was determined to be 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. On June 28, 2021, the amount of $ was drawn. Navios Partners is obligated to make 72 consecutive monthly payments of approximately $ that commenced in June 2021. The agreement matures in the , with a purchase obligation of $ on the last repayment date. As of December 31, 2022, the outstanding balance under the sale and leaseback agreement of the Navios Bonavis was $.
In , the Company entered into a sale and leaseback agreement of $, with unrelated third parties for the Navios Ray, a -built vessel of dwt. Navios Partners has a purchase obligation to acquire the vessel at the end of the lease term and under ASC 842-40, the transfer of the vessel was determined to be 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. On June 28, 2021, the amount of $ was drawn. Navios Partners is obligated to make 108 consecutive monthly payments of approximately $ each that commenced in June 2021. The agreement matures in the , with a purchase obligation of $ on the last repayment date. As of December 31, 2022, the outstanding balance under the sale and leaseback agreement of the Navios Ray was $.
On , the Company entered into a sale and leaseback agreement of $ with an unrelated third party for the Navios Pollux, a -built vessel of dwt. Navios Partners has a purchase obligation to acquire the vessel at the end of the lease term and under ASC 842-40, the transfer of the vessel was determined to be 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. On August 25, 2021, the amount of $ was drawn. Navios Partners is obligated to make 72 consecutive monthly payments of approximately $ each that commenced in August 2021. The agreement matures in the , with a purchase obligation of $ on the last repayment date. As of December 31, 2022, the outstanding balance under the sale and leaseback agreement of the Navios Pollux was $.
Pursuant to a novation agreement dated , the Company agreed to novate the shipbuilding contract and to simultaneously enter into a bareboat charter agreement to bareboat charter-in a newbuilding vessel of dwt, under a ten-year bareboat contract, from an unrelated third party, the Navios Primavera. The Company-lessee has performed an assessment based on provisions of ASC 842 and concluded that it controls the underlying asset that is under construction before the commencement date of the lease and as such, a sale and leaseback of the asset occurs at the commencement date of the lease (upon the completion of construction). In , Navios Partners took delivery of the Navios Primavera, and entered into sale and leaseback agreement with an unrelated third party for $. Navios Partners has a purchase obligation to acquire the vessel at the end of the lease term and under ASC 842-40, the transaction was determined to be 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. Navios Partners is obligated to make 120 consecutive monthly payments of up to $each that commenced in July 2022. The agreement matures in the , with a purchase obligation of $on the last repayment date. As of December 31, 2022, the outstanding balance under the sale and leaseback agreement was $.
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NAVIOS MARITIME PARTNERS L.P. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in thousands of U.S. Dollars except unit and per unit data)
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In
On , the Company entered into a sale and leaseback agreement of $ with an unrelated third party for the Navios Alegria, a -built vessel of dwt. Navios Partners has a purchase option of $ to acquire the vessel at the end of the lease term and given the fact that such exercise price is not equal to the fair value of the asset at the end of the lease term, the transaction was determined to be 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. On December 7, 2022, the amount of $ was drawn. Navios Partners is obligated to make 120 consecutive monthly payments of approximately $ each that commenced in December 2022. The agreement matures in the . As of December 31, 2022, the outstanding balance under the sale and leaseback agreement of the Navios Alegria was $.
On , the Company entered into a sale and leaseback agreement of $ with an unrelated third party for the Navios Sagittarius, a -built vessel of dwt. The bareboat charter-in provides for purchase options with de-escalating purchase prices starting on the end of the third year. In December, 2022, Navios Partners declared its option to purchase the vessel at the end of the fourth year of the bareboat charter-in agreement, preserving the right to exercise the purchase option earlier during the option period. Under ASC 842-40, the transfer of the vessel was determined to be 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. On December 15, 2022, the amount of $ was drawn. Navios Partners is obligated to make 48 consecutive monthly payments of approximately $ each that commenced in December 2022. The agreement matures in the , with a purchase obligation of $ on the last repayment date. As of December 31, 2022, the outstanding balance under the sale and leaseback agreement of the Navios Sagittarius was $.
Upon completion of the NMCI Merger, Navios Partners assumed the following financial liabilities:
On
On
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NAVIOS MARITIME PARTNERS L.P. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in thousands of U.S. Dollars except unit and per unit data)
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Upon acquisition of the majority of outstanding stock of Navios Acquisition, Navios Partners assumed the following financial liabilities:
On , Navios Acquisition entered into a $ sale and leaseback agreement with unrelated third parties to refinance the outstanding balance of the existing facility on . Navios Acquisition has a purchase obligation to acquire the vessels at the end of the lease term and under ASC 842-40, the transaction was accounted for as a failed sale. In accordance with ASC 842-40, Navios Acquisition did not derecognize the respective vessels from its balance sheet and accounted for the amounts received under sale and lease back agreement as a financial liability. In April 2018, Navios Acquisition drew $ under this agreement. The agreement will be repayable in equal consecutive installments of approximately $ each, with a repurchase obligation of $ on the last repayment date. The sale and leaseback agreement matures in and bears interest at plus bps per annum. As of December 31, 2022, the outstanding balance under this agreement was $.
In , Navios Acquisition entered into sale and leaseback agreements with unrelated third parties for $ in order . Navios Acquisition has a purchase obligation to acquire the vessels at the end of the lease term and under ASC 842-40, the transaction was determined to be a failed sale. Following a prepayment made in April 2021, the agreements will be repayable in 17 equal consecutive installments of $ each, followed by one installment of $, with a purchase obligation of $ to be repaid on the last repayment date. The sale and leaseback agreements mature in respectively, and bear interest at plus bps per annum. As of December 31, 2022, the outstanding balance under these agreements was $.
In , Navios Acquisition entered into an additional sale and leaseback agreement of $, with unrelated third parties in order to refinance . Navios Acquisition has a purchase option of $ to acquire the vessel at the end of the lease term and given the fact that such exercise price is not equal to the fair value of the asset at the end of the lease term, under ASC 842-40, the transaction was determined to be a failed sale. Navios Acquisition is obligated to make consecutive payments of approximately $, commencing as of August 2019. The agreement matures in and bears interest at plus an implied margin of bps per annum. As of December 31, 2022, the outstanding balance under this agreement was $.
In , Navios Acquisition entered into additional sale and leaseback agreements with unrelated third parties for $ in order to refinance . Navios Acquisition has a purchase obligation to acquire the vessels at the end of the lease term and under ASC 842-40, the transaction was determined to be a failed sale. Following a prepayment made in April 2021, the agreements will be repaid through periods ranging from four to seven years in consecutive installments of up to $ each, with a purchase obligation of $ to be repaid on the last repayment date. The agreements mature in and bear interest at , depending on the vessel financed. As of December 31, 2022, the outstanding balance under this agreement was $.
In , Navios Acquisition entered into sale and leaseback agreements with unrelated third parties for $ in order to refinance . Navios Acquisition has a purchase option of up to $ in total to acquire the vessels at the end of the lease term and given the fact that such exercise price is not equal to the fair value of each asset at the end of the lease term, under ASC 842-40, the transaction was determined to be a failed sale. In May 2022, the Company exercised its purchase option for two out of six vessels before the end of the lease term, by prepaying an amount of $ . As of December 31, 2022, the outstanding balance under these agreements was $ and is repayable through periods ranging from two to five years in consecutive installments of up to $ each. The sale and leaseback arrangements bear interest at , depending on the vessel financed.
In , Navios Acquisition entered into sale and leaseback agreements with unrelated third parties for $ in order to refinance . Navios Acquisition has a purchase obligation to acquire the vessels at the end of the lease term and under ASC 842-40, the transaction was determined to be a failed sale. In April 2021 Navios Acquisition prepaid the amount of $. In December 2022 following the sale and release of one 2009-built MR1 product tanker the Company prepaid the amount of $. As of December 31, 2022 the outstanding balance of $ is repayable in consecutive installments of $ each, with a purchase obligation of up to $ in total. The sale and leaseback arrangements bear interest at .
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NAVIOS MARITIME PARTNERS L.P. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in thousands of U.S. Dollars except unit and per unit data)
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Following the acquisition of 36-vessel drybulk fleet from Navios Holdings, Navios Partners assumed the following financial liabilities:
In , Navios Holdings entered into sale and leaseback agreement with an unrelated third party for $ in order to finance . Navios Partners has a purchase option of $ to acquire the vessel at the end of the lease term and given the fact that such exercise price is not equal to the fair value of the asset at the end of the lease term, under ASC 842-40, the transaction was determined to be 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 liability assumed under the sale and leaseback agreement as a financial liability. Navios Partners is obligated to make remaining consecutive payments of $ each that commenced in September 2022. The agreement matures in the , with a purchase obligation and bears interest at plus bps per annum. As of December 31, 2022, the outstanding balance under the sale and leaseback agreement was $.
In , Navios Holdings entered into a sale and leaseback agreement with an unrelated third party for $in order to finance . Navios Partners has a purchase option of $to acquire the vessel at the end of the lease term and given the fact that such exercise price is not equal to the fair value of the asset at the end of the lease term, under ASC 842-40, the transaction was determined to be 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 liability assumed under the sale and leaseback agreement as a financial liability. Navios Partners is obligated to make remaining consecutive payments of $each that commenced in September 2022. The agreement matures in the and bears interest at plus bps per annum. As of December 31, 2022, the outstanding balance under the sale and leaseback agreement was $.
In , Navios Holdings entered into sale and leaseback agreement with an unrelated third party for $ in order to finance . Navios Partners has a purchase obligation to acquire the vessel at the end of the lease term and under ASC 842-40, the transaction was determined to be 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 liability assumed under the sale and leaseback agreement as a financial liability. Navios Partners is obligated to make remaining consecutive payments of up to $ each that commenced in September 2022. The agreement matures in the , with a purchase obligation of $ on the last repayment date. As of December 31, 2022, the outstanding balance under the sale and leaseback agreement was $.
In , Navios Holdings entered into sale and leaseback agreement with an unrelated third party for $ in order to finance . Navios Partners has a purchase obligation to acquire the vessel at the end of the lease term and under ASC 842-40, the transaction was determined to be 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 liability assumed under the sale and leaseback agreement as a financial liability. Navios Partners is obligated to make remaining consecutive payments of up to $ each that commenced in September 2022. The agreement matures in the , with a purchase obligation of $ on the last repayment date. As of December 31, 2022, the outstanding balance under the sale and leaseback agreement was $.
In , Navios Holdings entered into sale and leaseback agreement with an unrelated third party for $ in order to finance . Navios Partners has a purchase obligation to acquire the vessel at the end of the lease term and under ASC 842-40, the transaction was determined to be 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 liability assumed under the sale and leaseback agreement as a financial liability. Navios Partners is obligated to make remaining consecutive payments of $ each that commenced in September 2022. The agreement matures in the , with a purchase obligation of $ on the last repayment date and bears interest at plus bps per annum. As of December 31, 2022, the outstanding balance under the sale and leaseback agreement was $.
In, Navios Holdings entered into sale and leaseback agreement with an unrelated third party for $ in order to finance . Navios Partners has a purchase obligation to acquire the vessel at the end of the lease term and under ASC 842-40, the transaction was determined to be 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 liability assumed under the sale and leaseback agreement as a financial liability. Navios Partners is obligated to make remaining consecutive payments of $ each that commenced in September 2022. The agreement matures in the , with a purchase obligation of $ on the last repayment date and bears interest at plus bps per annum. As of December 31, 2022, the outstanding balance under the sale and leaseback agreement was $.
In , Navios Holdings entered into sale and leaseback agreement with an unrelated third party for $in order to finance . Navios Partners has a purchase option of $to acquire the vessel at the end of the lease term and given the fact that such exercise price is not equal to the fair value of the asset at the end of the lease term, under ASC 842-40, the transaction was determined to be 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 liability assumed under the sale and leaseback agreement as a financial liability. Navios Partners is obligated to make remaining consecutive payments of up to $each that commenced in September 2022. The agreement matures in the .
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NAVIOS MARITIME PARTNERS L.P. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in thousands of U.S. Dollars except unit and per unit data)
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In , Navios Holdings entered into sale and leaseback agreement with an unrelated third party for $ in order to finance . Navios Partners has a purchase obligation to acquire the vessel at the end of the lease term and under ASC 842-40, the transaction was determined to be 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 liability assumed under the sale and leaseback agreement as a financial liability. Navios Partners is obligated to make remaining consecutive payments of $ each that commenced in September 2022. The agreement matures in the , with a purchase obligation of $ on the last repayment date and bears interest at plus bps per annum. As of December 31, 2022, the outstanding balance under the sale and leaseback agreement was $.
Finance Lease Liabilities
On Navios Partners took delivery of the Navios Azalea, a -built vessel of dwt, for a bareboat charter-in agreement. The bareboat charter-in provides for purchase options with de-escalating purchase prices starting on the end of the fourth year. The Company has performed an assessment considering the lease classification criteria under ASC 842 and concluded that the arrangement is a finance lease. Consequently, the Company has recognized a finance lease liability based on the net present value of the remaining charter-in payments including the purchase option to acquire the vessel at the end of the lease period, discounted by the Company’s incremental borrowing rate of approximately %. As of December 31, 2022, the outstanding balance was $and is repayable in years in consecutive installments up to $each, with a purchase option of $, assuming that the option will be exercised at the end of the agreement.
On , Navios Partners took delivery of the Navios Armonia, a -built vessel of dwt, for a bareboat charter-in agreement. The bareboat charter-in provides for purchase options with de-escalating purchase prices starting on the end of the fourth year. The Company has performed an assessment considering the lease classification criteria under ASC 842 and concluded that the arrangement is a finance lease. Consequently, the Company has recognized a finance lease liability based on the net present value discounted by the Company’s incremental borrowing rate of approximately % of the remaining charter-in payments including the purchase option to acquire the vessel at the end of the lease period. As of December 31, 2022, the outstanding balance was $and is repayable in years in consecutive installments up to $each, with a purchase option of $, assuming that the option will be exercised at the end of the agreement.
On , Navios Partners took delivery of the Navios Astra, a -built vessel of dwt, for a bareboat charter-in agreement. The bareboat charter-in provides for purchase options with de-escalating purchase prices starting on the end of the fourth year. In December, 2021, Navios Partners declared its option to purchase the vessel at the end of the tenth year of the bareboat charter-in agreement, preserving the right to exercise the purchase option earlier during the option period. The Company has performed an assessment considering the lease classification criteria under ASC 842 and concluded that the arrangement is a finance lease. Consequently, the Company has recognized a finance lease liability amounting to $ based on the net present value of the remaining charter-in payments including the purchase obligation to acquire the vessel at the end of the lease period, discounted by the Company’s incremental borrowing rate of approximately %. As of December 31, 2022, the outstanding balance was $and is repayable in years in consecutive installments up to $each, with a purchase obligation of $, assuming that the obligation will be exercised at the end of the agreement.
Following the acquisition of 36-vessel drybulk fleet from Navios Holdings, Navios Partners upon reassessing the classification of the following leases in accordance with the criteria in ASC 842 Leases, recognized the following finance lease liabilities:
On , Navios Partners took delivery of the Navios Magellan II, a -built vessel of dwt, for a remaining bareboat charter-in agreement. The bareboat charter-in provides for purchase options with de-escalating purchase prices. The Company has performed an assessment considering the lease classification criteria under ASC 842 and concluded that the arrangement is a finance lease. Consequently, the Company has recognized a finance lease liability amounting to $ based on the net present value of the remaining charter-in payments including the purchase option to acquire the vessel at the end of the lease period, discounted by the Company’s incremental borrowing rate of approximately %. As of December 31, 2022, the outstanding balance was $and is repayable in years in consecutive installments up to $each, with a purchase option of $.
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On , Navios Partners took delivery of the Navios Galaxy II, a -built vessel of dwt, for a remaining bareboat charter-in agreement. The bareboat charter-in provides for purchase options with de-escalating purchase prices. The Company has performed an assessment considering the lease classification criteria under ASC 842 and concluded that the arrangement is a finance lease. Consequently, the Company has recognized a finance lease liability amounting to $ based on the net present value of the remaining charter-in payments including the purchase option to acquire the vessel at the end of the lease period, discounted by the Company’s incremental borrowing rate of approximately % As of December 31, 2022, the outstanding balance was $and is repayable in years in consecutive installments up to $each, with a purchase option of $.
On , Navios Partners took delivery of the Navios Uranus, a -built vessel of dwt, for a remaining bareboat charter-in agreement. The bareboat charter-in provides for purchase options with de-escalating purchase prices. The Company has performed an assessment considering the lease classification criteria under ASC 842 and concluded that the arrangement is a finance lease. Consequently, the Company has recognized a finance lease liability amounting to $, based on the net present value of the remaining charter-in payments including the purchase option to acquire the vessel at the end of the lease period, discounted by the Company’s incremental borrowing rate of approximately %. As of December 31, 2022, the outstanding balance was $and is repayable in years in consecutive installments up to $each, with a purchase option of $.
On , Navios Partners took delivery of the Navios Felicity I, a -built vessel of dwt, for a remaining bareboat charter-in agreement. The bareboat charter-in provides for purchase options with de-escalating purchase prices. The Company has performed an assessment considering the lease classification criteria under ASC 842 and concluded that the arrangement is a finance lease. Consequently, the Company has recognized a finance lease liability amounting to $, based on the net present value of the remaining charter-in payments including the purchase option to acquire the vessel at the end of the lease period, discounted by the Company’s incremental borrowing rate of approximately %. As of December 31, 2022, the outstanding balance was $and is repayable in years in consecutive installments up to $each, with a purchase option of $.
On , Navios Partners took delivery of the Navios Herakles I, a -built vessel of dwt, for a remaining bareboat charter-in agreement. The bareboat charter-in provides for purchase options with de-escalating purchase prices. The Company has performed an assessment considering the lease classification criteria under ASC 842 and concluded that the arrangement is a finance lease. Consequently, the Company has recognized a finance lease liability amounting to $ based on the net present value of the remaining charter-in payments including the purchase option to acquire the vessel at the end of the lease period, discounted by the Company’s incremental borrowing rate of approximately %. As of December 31, 2022, the outstanding balance was $and is repayable in years in consecutive installments up to $each, with a purchase option of $.
On , Navios Partners took delivery of the Navios Coral, a -built vessel of dwt, for a remaining charter-in agreement. The charter-in provides for purchase options with de-escalating purchase prices. The Company has performed an assessment considering the lease classification criteria under ASC 842 and concluded that the arrangement is a finance lease. Consequently, the Company has recognized a finance lease liability amounting to $, based on the net present value of the remaining charter-in payments including the purchase option to acquire the vessel at the end of the lease period, discounted by the Company’s incremental borrowing rate of approximately %. As of December 31, 2022, the outstanding balance was $and is repayable in years in consecutive installments up to $each, with a purchase option of $.
On , Navios Partners took delivery of the Navios Amber, a -built vessel of dwt, for a remaining charter-in agreement. The charter-in provides for purchase options with de-escalating purchase prices. The Company has performed an assessment considering the lease classification criteria under ASC 842 and concluded that the arrangement is a finance lease. Consequently, the Company has recognized a finance lease liability amounting to $, based on the net present value of the remaining charter-in payments including the purchase option to acquire the vessel at the end of the lease period, discounted by the Company’s incremental borrowing rate of approximately %. As of December 31, 2022, the outstanding balance was $and is repayable in year in consecutive installments up to $each, with a purchase option of $.
On , Navios Partners took delivery of the Navios Citrine, a -built vessel of dwt, for a remaining charter-in agreement. The charter-in provides for purchase options with de-escalating purchase prices. The Company has performed an assessment considering the lease classification criteria under ASC 842 and concluded that the arrangement is a finance lease. Consequently, the Company has recognized a finance lease liability amounting to $, based on the net present value of the remaining charter-in payments including the purchase option to acquire the vessel at the end of the lease period, discounted by the Company’s incremental borrowing rate of approximately %. As of December 31, 2022, the outstanding balance was $and is repayable in years in consecutive installments up to $each, with a purchase option of $.
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On , Navios Partners took delivery of the Navios Dolphin, a -built vessel of dwt, for a remaining charter-in agreement. The charter-in provides for purchase options with de-escalating purchase prices. The Company has performed an assessment considering the lease classification criteria under ASC 842 and concluded that the arrangement is a finance lease. Consequently, the Company has recognized a finance lease liability amounting to $, based on the net present value of the remaining charter-in payments including the purchase option to acquire the vessel at the end of the lease period, discounted by the Company’s incremental borrowing rate of approximately %. As of December 31, 2022, the outstanding balance was $and is repayable in years in consecutive installments up to $each, with a purchase option of $.
On , Navios Partners took delivery of the Navios Felix, a -built vessel of dwt, for a remaining charter-in agreement. The charter-in provides for purchase options with de-escalating purchase prices. The Company has performed an assessment considering the lease classification criteria under ASC 842 and concluded that the arrangement is a finance lease. Consequently, the Company has recognized a finance lease liability amounting to $, based on the net present value of the remaining charter-in payments including the purchase option to acquire the vessel at the end of the lease period, discounted by the Company’s incremental borrowing rate of approximately %. As of December 31, 2022, the outstanding balance was $and is repayable in year in consecutive installments up to $each, with a purchase option of $.
Based on management estimates and market conditions, the lease term of the leases is being assessed at each balance sheet date. At lease commencement, the Company determines a discount rate to calculate the present value of the lease payments so that it can determine lease classification and measure the lease liability. In determining the discount rate to be used at lease commencement, the Company used its incremental borrowing rate as there was no implicit rate included in charter-in contracts that can be readily determinable. The incremental borrowing rate is the rate that reflects the interest a lessee would have to pay to borrow funds on a collateralized basis over a similar term and in a similar economic environment.
The Company recognizes the total interest expense incurred on finance lease liabilities under the caption “Interest expense and finance cost, net” in the Consolidated Statements of Operations. For the year ended December 31, 2022, the total interest expense incurred amounted to $
Credit Facilities and Financial Liabilities
The credit facilities and certain financial liabilities contain a number of restrictive covenants that prohibit or limit Navios Partners from, among other things: incurring or guaranteeing indebtedness; entering into affiliate transactions; charging, pledging or encumbering the vessels; changing the flag, class, management or ownership of Navios Partners’ vessels; changing the commercial and technical management of Navios Partners’ vessels; selling or changing the beneficial ownership or control of Navios Partners’ vessels; not maintaining Navios Holdings’, Angeliki Frangou’s or their affiliates’ ownership in Navios Partners of at least 5.0%; and subordinating the obligations under the credit facilities to any general and administrative costs related to the vessels, including the fixed daily fee payable under the Management Agreements (defined herein).
As of December 31, 2022 and December 31, 2021, the security deposits under certain sale and leaseback agreements were $
It is an event of default under the credit facilities and certain financial liabilities if such covenants are not complied with in accordance with the terms and subject to the prepayments or cure provisions of the facilities.
The annualized weighted average interest rates of the Company’s total borrowings were
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The maturity table below reflects the principal payments for the next five years and thereafter of all borrowings of Navios Partners outstanding as of December 31, 2022, based on the repayment schedules of the respective credit facilities, financial liabilities and finance lease liabilities (as described above).
| Year | Amount | |
| 2023 | $ | |
| 2024 | ||
| 2025 | ||
| 2026 | ||
| 2027 | ||
| 2028 and thereafter | ||
| Total | $ |
NOTE 12 – FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying value amounts of many of Navios Partners' financial instruments, including accounts receivable and accounts payable approximate their fair value due primarily to the short-term maturity of the related instruments.
Fair value of financial instruments
The following methods and assumptions were used to estimate the fair value of each class of financial instrument:
Cash and cash equivalents: The carrying amounts reported in the Consolidated Balance Sheets for interest bearing deposits approximate their fair value because of the short maturity of these deposits.
Restricted Cash: The carrying amounts reported in the Consolidated Balance Sheets for interest bearing deposits approximate their fair value because of the short maturity of these deposits.
Amounts due from related parties, long-term: The carrying amount of due from related parties long-term reported in the Consolidated Balance Sheets approximates its fair value.
Amounts due to related parties, short-term: The carrying amount of due to related parties, short-term reported in the Consolidated Balance Sheets approximates its fair value due to the short-term nature of these payables.
Long-term borrowings, including current portion, net: The book value has been adjusted to reflect the net presentation of deferred finance costs. The outstanding balance of the floating rate loans, financial liabilities and finance lease liabilities continues to approximate its fair value, excluding the effect of any deferred finance costs.
The estimated fair values of the Navios Partners' financial instruments are as follows:
| December 31, 2022 | December 31, 2021 | ||||||||||
| Book Value | Fair Value | Book Value | Fair Value | ||||||||
| Cash and cash equivalents | $ | $ | $ | $ | |||||||
| Restricted cash | $ | $ | $ | $ | |||||||
| Amounts due from related parties, long-term | $ | $ | $ | $ | |||||||
| Amounts due to related parties, short-term | $ | ( |
$ | ( |
$ | ( |
$ | ( | |||
| Long-term borrowings, including current portion, net | $ | ( |
$ | ( |
$ | ( |
$ | ( | |||
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NAVIOS MARITIME PARTNERS L.P. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in thousands of U.S. Dollars except unit and per unit data)
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Fair Value Measurements
The estimated fair value of the Company’s financial instruments that are not measured at fair value on a recurring basis, categorized based upon the fair value hierarchy, are as follows:
Level I: Inputs are unadjusted, quoted prices for identical assets or liabilities in active markets that the Company has the ability to access. Valuation of these items does not entail a significant amount of judgment.
Level II: Inputs other than quoted prices included in Level I that are observable for the asset or liability through corroboration with market data at the measurement date.
Level III: Inputs that are unobservable. The Company did not use any Level III inputs as of December 31, 2022 and December 31, 2021.
| Fair Value Measurements as at December 31, 2022 | |||||||||||
| Total | Level I | Level II | Level III | ||||||||
| Cash and cash equivalents | $ | $ | $ | $ | |||||||
| Restricted cash | $ | $ | $ | $ | |||||||
| Amounts due from related parties, long-term | $ | $ | $ | $ | |||||||
| Amounts due to related parties, short-term | $ | ( |
$ | $ | ( |
$ | |||||
| Long-term borrowings, net (1) | $ | ( |
$ | $ | ( |
$ | |||||
| Fair Value Measurements as at December 31, 2021 | |||||||||||
| Total | Level I | Level II | Level III | ||||||||
| Cash and cash equivalents | $ | $ | $ | $ | |||||||
| Restricted cash | $ | $ | $ | $ | |||||||
| Amounts due from related parties, long-term | $ | $ | $ | $ | |||||||
| Amounts due to related parties, short-term | $ | ( |
$ | $ | ( |
$ | |||||
| Long-term borrowings, net (1) | $ | ( |
$ | $ | ( |
$ | |||||
(1) The fair value of the Company's debt is estimated based on currently available debt with similar contract terms, interest rate and remaining maturities as well as taking into account its creditworthiness.
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As of December 31, 2022, the Company’s assets measured at fair value on a non-recurring basis were:
| Fair Value Measurements as at December 31, 2022 | |||||||||||
| Total | Level I | Level II | Level III | ||||||||
| Vessels, net | $ | $ | $ | $ | |||||||
As of December 31, 2021, there were no assets measured at fair value on a non-recurring basis.
NOTE 13 – REPURCHASES AND ISSUANCE OF UNITS
In July 2022, the Board of Directors of Navios Partners authorized a common unit repurchase program for up to $
On May 21, 2021, Navios Partners entered into a new Continuous Offering Program Sales Agreement (“$110.0m Sales Agreement”) for the issuance and sale from time to time through its agent common units having an aggregate offering price of up to $
On April 9, 2021, Navios Partners entered into a Continuous Offering Program Sales Agreement (“$75.0m Sales Agreement”) for the issuance and sale from time to time through its agent of common units having an aggregate offering price of up to $
On November 18, 2016, Navios Partners entered into a Continuous Offering Program Sales Agreement for the issuance and sale from time to time through its agent of common units having an aggregate offering price of up to $
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Pursuant to the terms of the NMCI Merger Agreement, each outstanding common unit of Navios Containers that was held by a unitholder other than Navios Partners, Navios Containers and their respective subsidiaries was converted into the right to receive of a common unit of Navios Partners. As a result of the NMCI Merger, common units of Navios Partners were issued to former public unitholders of Navios Containers. Pursuant to the issuance of the common units, Navios Partners issued
Pursuant to the terms of the Navios Acquisition’s merger agreement, each outstanding share of common stock of Navios Acquisition that was held by a stockholder other than Navios Partners, was converted into the right to receive of a common unit of Navios Partners. As a result of the NNA Merger, common units of Navios Partners were issued to former public stockholders of Navios Acquisition. Pursuant to the issuance of the common units, Navios Partners issued
In December 2019, Navios Partners authorized the granting of restricted common units, which were issued on December 18, 2019, to its directors and officers, which are based solely on service conditions and vest over four years. The effect of compensation expense arising from the restricted common units described above amounted to $, $, and $ for the years ended December 31, 2022, 2021 and 2020, and was presented under the caption “General and administrative expenses” in the Consolidated Statements of Operations. There were no restricted common units exercised, forfeited or expired during the years ended December 31, 2022, 2021 and 2020.
In February 2019, Navios Partners authorized the granting of
In December 2018, Navios Partners authorized the granting of restricted common units, which were issued on December 24, 2018, to its directors and officers, which are based solely on service conditions and vest over four years. Navios Partners also issued general partnership units to its general partner for net proceeds of $
In December 2017, Navios Partners authorized the granting of restricted common units, which were issued on January 11, 2018, to its directors and officers, which are based solely on service conditions and vest over four years. The fair value of the restricted common units was determined by reference to the quoted common unit price on the date of grant. Compensation expense, net of estimated forfeitures, is recognized when it is probable that the performance criteria will be met based on a graded expense model over the vesting period. Navios Partners also issued general partnership units to its general partner for net proceeds of $
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Following the NNA Merger, Navios Partners assumed the following granted restricted common units:
In December 2018, Navios Acquisition authorized and issued in the aggregate restricted shares of common stock to its directors and officers. These awards of restricted common stock are based on service conditions only and vest over four years. The fair value of restricted common units was determined by reference to the quoted stock price on the date of grant or the date that the grants were exchanged upon completion of the NNA Merger. Compensation expense, net of estimated forfeitures, is recognized based on a graded expense model over the vesting period. Upon the NNA Merger, the unvested restricted common units were after exchange on a 1 to basis. The effect of compensation expense arising from the restricted common units described above amounted to $ and $ for the years ended December 31, 2022 and 2021, respectively, and was presented under the caption “General and administrative expenses” in the Consolidated Statements of Operations. There were no restricted common units exercised, forfeited or expired during each of the years ended December 31, 2022 and 2021.
In December 2017, Navios Acquisition authorized and issued in the aggregate restricted shares of common stock to its directors and officers. These awards of restricted common stock are based on service conditions only and vest over four years. The fair value of restricted common units was determined by reference to the quoted stock price on the date of grant or the date that the grants were exchanged upon completion of the NNA Merger. Compensation expense, net of estimated forfeitures, is recognized based on a graded expense model over the vesting period. Upon the NNA Merger, the unvested restricted common units were after exchange on a 1 to basis. The effect of compensation expense arising from the restricted common units described above amounted to $ and $ for the years ended December 31, 2022 and 2021, and was presented under the caption “General and administrative expenses” in the Consolidated Statements of Operations. There were no restricted common units exercised, forfeited or expired during each of the years ended December 31, 2022 and 2021.
As of December 31, 2022, the estimated compensation cost related to service conditions of non-vested restricted common units granted in 2019 not yet recognized was $.
As of December 31, 2022 and December 31, 2021, there were and , respectively, restricted common units outstanding that remained unvested.
NOTE 14 – SEGMENT INFORMATION
ASC 280, “Segment Reporting,” establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal organizational structure as well as information about geographical areas, business segments and major customers in financial statements for details on the Company’s business segments. The Company uses the “management approach” in determining reportable operating segments. The management approach considers the internal organization and reporting used by the Company’s chief operating decision maker for making operating decisions and assessing performance as the source for determining the Company’s reportable segments.
Navios Partners reports financial information and evaluates its operations by charter revenues. Navios Partners does not use discrete financial information to evaluate operating results for each type of charter or by sector. As a result, management, including the chief operating decision maker, reviews operating results solely by revenue per day and operating results of the fleet as a whole, determining where to allocate resources and drive business forward by examining consolidated results. Thus Navios Partners has determined that it operates under one reportable segment.
The following table sets out operating revenue by geographic region for Navios Partners' reportable segment. Revenue is allocated on the basis of the geographic region in which the customer is located. Drybulk, Containerships and Tankers operate worldwide. Revenues from specific geographic region, which contribute over 10.0% of total revenue, are disclosed separately.
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Revenue by Geographic Region
Vessels operate on a worldwide basis and are not restricted to specific locations. Accordingly, it is not possible to allocate the assets of these operations to specific countries.
| Year Ended December 31, 2022 |
Year Ended December 31, 2021 |
Year Ended December 31, 2020 | ||||||
| Asia | $ | $ | $ | |||||
| Europe | ||||||||
| America | ||||||||
| Other | ||||||||
| Total | $ | $ | $ |
NOTE 15 – INCOME TAXES
The Republic of the Marshall Islands does not impose a tax on international shipping income. Under the laws of the Marshall Islands, Liberia, Cayman Islands, Hong Kong, British Virgin Islands Panama and Belgium, the countries of the vessel-owning subsidiaries’ incorporation and/or vessels’ registration, the vessel-owning subsidiaries are subject to registration and tonnage taxes, which have been included in vessel expenses in the accompanying Consolidated Statements of Operations.
In accordance with the currently applicable Greek law, foreign flagged vessels that are managed by Greek or foreign ship management companies having established an office in Greece on the basis of the applicable licensing regime are subject to tax liability towards the Greek state, which is calculated on the basis of the relevant vessel’s tonnage. A tax credit is recognized for tonnage tax (or similar tax) paid abroad, up to the amount of the tax due in Greece.
The owner, the manager and the bareboat charterer or the financial lessee (where applicable) are liable to pay the tax due to the Greek state. The payment of said tax exhausts the tax liability of the foreign ship owning company, the bareboat charterer, the financial lessee (as applicable) and the relevant manager against any tax, duty, charge or contribution payable on income from the exploitation of the foreign flagged vessel outside Greece.
We have elected to be treated and we are currently treated as a corporation for U.S. federal income tax purposes. As such, we are not subject to section 1446 as that section only applies to entities that for U.S. federal income tax purposes are characterized as partnerships.
Pursuant to Section 883 of the Internal Revenue Code of the United States, U.S. source income from the international operation of ships is generally exempt from U.S. income tax if the company operating the ships meets certain incorporation and ownership requirements. Among other things, in order to qualify for this exemption, the company operating the ships must be incorporated in a country, which grants an equivalent exemption from income taxes to U.S. corporations. All the vessel-owning subsidiaries satisfy these initial criteria.
In addition, these companies must meet an ownership test. The management of Navios Partners believes that this ownership test was satisfied prior to the IPO by virtue of a special rule applicable to situations where the ship operating companies are beneficially owned by a publicly traded company. Although not free from doubt, management also believes that the ownership test will be satisfied based on the trading volume and ownership of Navios Partners’ units, but no assurance can be given that this will remain so in the future.
NOTE 16 – COMMITMENTS AND CONTINGENCIES
Navios Partners is involved in various disputes and arbitration proceedings arising in the ordinary course of business. Provisions have been recognized in the financial statements for all such proceedings where Navios Partners believes that a liability may be probable, and for which the amounts are reasonably estimable, based upon facts known at the date the financial statements were prepared. Management believes the ultimate disposition of these matters will be immaterial individually and in the aggregate to Navios Partners’ financial position, results of operations or liquidity.
In November 2017, Navios Partners agreed to bareboat charter-in, under a bareboat contract, from an unrelated third party, the Navios Libra, a newbuilding vessel of dwt, delivered on . Navios Partners agreed to pay in total $, representing a deposit for the option to acquire the vessel after the end of the fourth year, of which the first half of $ was paid during the year ended December 31, 2017 and the second half of $ was paid during the year ended December 31, 2018. As of December 31,2022, the total amount of $, including expenses, is presented under the caption “Other long-term assets” in the Consolidated Balance Sheets.
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On October 18, 2019, Navios Partners agreed to bareboat charter-in, under a bareboat contract each, from an unrelated third party, the Navios Amitie and the Navios Star, newbuilding vessels of dwt and dwt, respectively. The vessels were delivered in Navios Partner’s fleet on and , respectively. Navios Partners has the option to acquire the vessels after the end of the fourth year for the remaining period of the bareboat charters. Navios Partners had agreed to pay in total $, representing a deposit for the option to acquire the vessels after the end of the fourth year, of which $ was paid during the year ended December 31, 2019, $ was paid during the year ended December 31, 2020, and the remaining amount of $ was paid upon the delivery of the vessels. As of December 31, 2022, the total amount of $, including expenses, is presented under the caption “Other long-term assets” in the Consolidated Balance Sheets.
On January 25, 2021, Navios Partners agreed to bareboat charter-in, under a
On March 25, 2021, Navios Partners agreed to bareboat charter-in, under a
On July 2, 2021, Navios Partners agreed to purchase
On October 1, 2021, Navios Partners exercised its option to acquire two
In November 2021, Navios Partners agreed to purchase four
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Pursuant to a novation agreement dated January 28, 2022, the Company agreed to novate the shipbuilding contract and to simultaneously enter into a bareboat charter agreement to bareboat charter-in a newbuilding Panamax vessel, under a ten-year bareboat contract, from an unrelated third party. The vessel, Navios Meridian, has dwt and was delivered in Navios Partners’ fleet on . Navios Partners agreed to pay in total $, of which $was paid in July 2021 and the remaining amount of $was paid in April 2022. In January 2022, Navios Partners declared its option to purchase the vessel. The Company-lessee has performed an assessment based on provisions of ASC 842 and concluded that it controls the underlying asset that is under construction before the commencement date of the lease. Consequently, as of December 31, 2022, the Company has capitalized the installments paid by the owner-lessor to the yard, amounted to $ and recognized an equal amounted liability presented under the caption “Other long-term liabilities” in the Consolidated Balance Sheets. As of December 31, 2022, the total amount of $(including installments of $6,860 paid by the owner-lessor to the yard) is presented under the caption “Deposits for vessels acquisitions” in the Consolidated Balance Sheets.
In April 2022, Navios Partners agreed to purchase four
In June 2022, Navios Partners agreed to purchase two newbuilding liquified natural gas (LNG) dual fuel
In September, 2022, Navios Partners agreed to bareboat charter-in, under a
In November 2022, Navios Partners agreed to acquire two
In December 2022, Navios Partners agreed to acquire two newbuilding Japanese MR2 Product Tanker vessels from an unrelated third party, under bareboat contracts. Each vessel has approximately
Upon acquisition of the majority of outstanding stock of Navios Acquisition, Navios Partners assumed the following commitments:
In September 2018, Navios Acquisition agreed to a bareboat charter-in agreement with de-escalating purchase options for the Baghdad and Erbil, newbuilding Japanese VLCCs of dwt and dwt, respectively. On , Navios Acquisition took delivery of the Baghdad. On , Navios Acquisition took delivery of the Erbil. As of December 31, 2022, the total amount of $ is presented under the caption “Other long-term assets” in the Consolidated Balance Sheets.
In the first quarter of 2019, Navios Acquisition exercised its option to a bareboat charter-in agreement with de-escalating purchase options for the Nave Electron, a newbuilding Japanese VLCC of dwt. On , Navios Partners took delivery of the Nave Electron. As of December 31, 2022, the total amount of $ is presented under the caption “Other long-term assets” in the Consolidated Balance Sheets.
In the second quarter of 2020, Navios Acquisition exercised its option for the Nave Celeste, a newbuilding Japanese VLCC of dwt under a bareboat charter agreement with de-escalating purchase options. On , Navios Partners took delivery of the Nave Celeste. As of December 31, 2022, the total amount of $ is presented under the caption “Other long-term assets” in the Consolidated Balance Sheets.
As of December 31, 2022, an amount of $
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As of December 31, 2022, the Company’s future minimum lease commitments under the Company’s charter-in contracts for undelivered vessels, are as follows:
| Year | Amount | |
| 2023 | $ | |
| 2024 | ||
| 2025 | ||
| 2026 | ||
| 2027 | ||
| 2028 and thereafter | ||
| Total | $ |
NOTE 17 – FUTURE MINIMUM CONTRACTUAL REVENUE
The future minimum contractual lease income (charter-out rates are presented net of commissions and assume no off-hires days) as of December 31, 2022, is as follows:
| Year | Amount | |
| 2023 | $ | |
| 2024 | ||
| 2025 | ||
| 2026 | ||
| 2027 | ||
| 2028 and thereafter | ||
| Total | $ |
NOTE 18 – TRANSACTIONS WITH RELATED PARTIES AND AFFILIATES
Vessel operating expenses: In August 2019, Navios Partners extended the duration of its Management Agreement with the Manager until January 1, 2025, with an automatic renewal for an additional five years, unless earlier terminated by either party. Vessel operating expenses were fixed for two years commencing from January 1, 2020 at: (a) $
Following the completion of the NMCI Merger, the fleet of Navios Containers is included in Navios Partners’ owned fleet and continued to be operated by the Manager (see Note 3 – Acquisition of Navios Containers and Navios Acquisition). As per the terms of the Navios Containers’ management agreement with the Manager (the “NMCI Management Agreement”), vessel operating expenses were fixed for two years commencing from January 1, 2020 at: (a) $
Upon acquisition of the majority of outstanding stock of Navios Acquisition, the fleet of Navios Acquisition is included in Navios Partners’ owned fleet and continued to be operated by Tankers Manager (see Note 3 – Acquisition of Navios Containers and Navios Acquisition). As per the terms of Navios Acquisition’s management agreement with Tankers Manager (the “NNA Management Agreement”) and together with the Management Agreement and the NMCI Management Agreement, the “Management Agreements”), vessel operating expenses were fixed for two years commencing from January 1, 2020 at: (a) $ per day per MR2 and MR1 product tanker and chemical tanker vessel; (b) $ per day per LR1 product tanker vessel; and (c) $ per day per VLCC.
The Management Agreements also provide for a technical and commercial management fee of $ per day per vessel and an annual increase of % after January 1, 2022 for the remaining period unless agreed otherwise.
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Following completion of the Mergers, the Managers provided commercial and technical management services to Navios Partners’ vessels until December 31, 2021 for a daily fee of: (a) $
Pursuant to the acquisition of the 36-vessel drybulk fleet, which includes time charter-in vessels, Navios Partners and the Manager, on July 25, 2022, amended the Management Agreement to include a technical and commercial management fee of $ per time charter-in vessel per day.
The Management Agreements also provide for payment of a termination fee, equal to the fees charged for the full calendar year (for Navios Partners, Navios Containers and Navios Acquisition) preceding the termination date in the event the agreements are terminated on or before December 31, 2024.
Drydocking expenses are reimbursed at cost for all vessels.
During the years ended December 31, 2022 and 2021 certain extraordinary fees and costs related to vessels’ regulatory requirements, including ballast water treatment system installation, exhaust gas cleaning system installation and scrubber system installation under the Company's Management Agreements, amounted to $
Total vessel operating expenses for each of the years ended December 31, 2022, 2021 and 2020 amounted to $
General and administrative expenses: Pursuant to the Administrative Services Agreement, the Manager also provides administrative services to Navios Partners, which include bookkeeping, audit and accounting services, legal and insurance services, administrative and clerical services, banking and financial services, advisory services, client and investor relations and other. Under the Administrative Services Agreement, which provide for allocable general and administrative costs, the Manager is reimbursed for reasonable costs and expenses incurred in connection with the provision of these services. In August 2019, Navios Partners extended the duration of its existing Administrative Services Agreement with the Manager until January 1, 2025, to be automatically renewed for another five years. The agreement also provides for payment of a termination fee, equal to the fees charged for the full calendar year preceding the termination date in the event the Administrative Services Agreement is terminated on or before December 31, 2024.
Total general and administrative expenses charged by the Manager for each of the years ended December 31, 2022, 2021 and 2020 amounted to $, $ and $, respectively.
Balance due from/ (to) related parties: Balance due from related parties long term as of December 31, 2022 and December 31, 2021 amounted to $ and $, respectively Balance due to related parties, short-term as of December 31, 2022 and December 31, 2021 amounted to $ and $, respectively, and mainly consisted of payables to the Managers. The balances mainly consisted of administrative fees, drydocking, extraordinary fees and costs related to regulatory requirements including ballast water treatment system, other expenses, as well as fixed vessel operating expenses, in accordance with the Management Agreements.
Impairment of receivable in affiliated company: Navios Holdings, Navios Acquisition and Navios Partners have made available to Navios Europe II revolving loans of up to $ to fund working capital requirements (collectively, the “Navios Revolving Loans II”). In March 2017, the availability under the Navios Revolving Loans II was increased by $ (see Note 19 – Investment in Affiliates).
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On April 21, 2020, Navios Europe II agreed with the lender to fully release the liabilities under the junior participating loan facility for $. Navios Europe II owned seven container vessels and seven dry bulk vessels. Navios Partners had a net receivable of approximately $ from Navios Europe II.
As of March 31, 2020, the decline in the fair value of the investment was considered as other-than-temporary and, therefore, an aggregate loss of $
On May 14, 2020, an agreement was reached to liquidate Navios Europe II before its original expiring date. The transaction was completed on June 29, 2020.
As a result of the Europe II Liquidation, Navios Partners acquired
Following the liquidation of Navios Europe II on June 29, 2020, there was no balance due from Navios Europe II as of December 31, 2022 and December 31, 2021.
Others: Navios Partners has entered into an omnibus agreement with Navios Holdings (the “Partners Omnibus Agreement”) in connection with the closing of Navios Partners’ IPO governing, among other things, when Navios Holdings and Navios Partners may compete against each other as well as rights of first offer on certain drybulk carriers. Pursuant to the Partners Omnibus Agreement, Navios Partners generally agreed not to acquire or own Panamax or Capesize drybulk carriers under time charters of three or more years without the consent of an independent committee of Navios Partners. In addition, Navios Holdings has agreed to offer to Navios Partners the opportunity to purchase vessels from Navios Holdings when such vessels are fixed under time charters of three or more years.
Navios Holdings Guarantee: On November 15, 2012 (as amended and supplemented in March 2014, December 2017 and July 2019), Navios Holdings and Navios Partners entered into the Navios Holdings Guarantee by which Navios Holdings would provide supplemental credit default insurance with a maximum cash payment of $. In October 2020, Navios Holdings paid an amount of $ to Navios Partners. In April 2021, Navios Holdings paid an amount of $ to Navios Partners. As of each of December 31, 2022 and 2021, there were no outstanding claim receivable amount.
General partner: Olympos Maritime Ltd., an entity affiliated to our Chairwoman and Chief Executive Officer, Angeliki Frangou, is the holder of Navios Partners’ general partner interest.
Acquisition of vessels:
2022
On July 26, 2022, the Company entered into a share purchase agreement to acquire a 36-vessel drybulk fleet for a purchase price of $ including the assumption of bank liabilities, bareboat obligations and finance lease obligations, subject to debt and working capital adjustments, from Navios Holdings. On , 15 of the 36 vessels were delivered to Navios Partners. On , the remaining 21 vessels were delivered to Navios Partners.
2021
On July 9, 2021, Navios Partners acquired the Navios Azimuth, a -built vessel of dwt, from its affiliate, Navios Holdings, for an acquisition cost of $ (including $ capitalized expenses).
On June 30, 2021, Navios Partners acquired the Navios Ray, a -built vessel of dwt and the Navios Bonavis, a -built vessel of dwt, from its affiliate, Navios Holdings, for an aggregate purchase price of $.
On June 4, 2021, Navios Partners acquired the Navios Koyo, a -built vessel of dwt, from its affiliate, Navios Holdings, for an acquisition cost of $ (including $ capitalized expenses).
On May 10, 2021, Navios Partners acquired the Ete N, a -built of TEU, the Fleur N, a -built of TEU and the Spectrum N, a -built of TEU from Navios Acquisition, for an aggregate purchase price of $.
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On March 30, 2021, Navios Partners acquired the Navios Avior, a -built vessel of dwt, and the Navios Centaurus, a -built vessel of dwt, from Navios Holdings, for an acquisition cost of $ (including $70 capitalized expenses), including working capital balances of $.
2020
On September 30, 2020, Navios Partners acquired the Navios Gem, a -built vessel of dwt and the Navios Victory, a -built vessel of dwt, from its affiliate, Navios Holdings, for a purchase price of $, including working capital balances of $(4,378). The acquisition was funded through a new credit facility of $ and the balance of $ seller’s credit by Navios Holdings was repaid on October 2, 2020, presented under the caption “Payable to affiliated company” in the Consolidated Statements of Cash Flows.
On June 29, 2020, Navios Partners acquired five drybulk vessels, three Panamax and two Ultra-Handymax, for a fair value of $ in total, following the liquidation of Navios Europe II.
Navios Acquisition Credit Facility: On , Navios Partners and Navios Acquisition entered into a loan agreement under which Navios Partners agreed to make available to Navios Acquisition a working capital facility of up to $. The full amount of the facility was drawn. The facility bore interest at the rate of % per annum. The full amounts borrowed, including accrued interest, were repaid in . As of December 31, 2021, the outstanding balance of $ was eliminated upon consolidation.
Loan payable to affiliated company: On , Navios Acquisition entered into a secured loan agreement with a subsidiary of N Shipmanagement Acquisition Corp. (“NSM”), an entity affiliated with Navios Acquisition’s Chairwoman and Chief Executive Officer, for a loan of up to $ (the “NSM Loan Agreement”). The loan would be repayable in and bears interest at a rate of % per annum, payable .
In August 2021, Navios Acquisition entered into a supplemental agreement (the “Supplemental Loan Agreement”) . The Supplemental Loan Agreement provided for: (i) the issuance of 8,823,529 newly-issued shares of common stock of Navios Acquisition in settlement of $30,000 of the outstanding balance of the NSM Loan Agreement and (ii) the repayment of $ of the outstanding balance of the NSM Loan Agreement in cash as of the date of the Supplemental Loan Agreement and the repayment in cash on January 7, 2022 of the remainder of the outstanding balance of the NSM Loan Agreement, of approximately $.
On , the outstanding amount of $was repaid. As of each of December 31, 2022 and December 31, 2021, there was no outstanding balance of the NSM Loan Agreement. Upon completion of the NNA Merger, the newly-issued shares of common stock of Navios Acquisition were converted into common units of Navios Partners on the same terms applicable to other outstanding shares of common stock of Navios Acquisition.
NOTE 19 – INVESTMENT IN AFFILIATES
Navios Europe II: On February 18, 2015, Navios Holdings, Navios Acquisition and Navios Partners established Navios Europe II and have ownership interests of %, % and %, respectively. From June 8, 2015 through December 31, 2015, Navios Europe II acquired vessels for aggregate consideration consisting of: (i) cash consideration of $ (which was funded with the proceeds of a $ senior loan facilities net of loan discount amounting to $ (the “Senior Loans II”) and loans aggregating $ from Navios Holdings, Navios Acquisition and Navios Partners (collectively, the “Navios Term Loans II”); and (ii) the assumption of a junior participating loan facility (the “Junior Loan II”) with a face amount of $ and fair value of $, at the acquisition date. In addition to the Navios Term Loans II, Navios Holdings, Navios Acquisition and Navios Partners have also made available to Navios Europe II revolving loans up to $ to fund working capital requirements (collectively, the “Navios Revolving Loans II”). In March 2017, the amount of funds available under the Navios Revolving Loans II was increased by $.
Following the liquidation of Navios Europe II on June 29, 2020, Navios Partners acquired five vessel owning companies for a fair value of $in total.
Navios Containers:
As of December 31, 2020, Navios Partners held common units, representing an ownership interest in Navios Containers of %. Investment income of $ was recognized in the Consolidated Statements of Operations under the caption of “Equity in net earnings of affiliated companies” for the year ended December 31, 2020.
The fair value of Navios Partners’ equity investment in Navios Containers was based on unadjusted quoted prices in active markets for Navios Containers’ common units. The fair value of Navios Partners’ equity investment in Navios Containers as at December 31, 2020 was $ compared with its carrying value of $.
On January 4, 2021, Navios Containers and the Company announced that they entered into a definitive merger agreement under which the Company would acquire all of the publicly held common units of Navios Containers in exchange for common units of the Company (the “Transaction”). The Transaction was approved by the necessary common unit holders of Navios Containers at a special meeting held on March 24, 2021. The General Partner of Navios Containers had consented to the NMCI Merger, and the Company voted the Navios Containers’ common units it holds in favor of the Transaction. The Transaction was completed on March 31, 2021. Under the terms of the Transaction, Navios Partners acquired all of the publicly held common units of Navios Containers through the issuance of newly issued common units of Navios Partners in exchange for the publicly held common units of Navios Containers at an exchange ratio of units of Navios Partners for each Navios Containers common unit (see Note 3 – Acquisition of Navios Containers and Navios Acquisition).
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NOTE 20 – CASH DISTRIBUTIONS AND EARNINGS PER UNIT
The amount of distributions paid by Navios Partners and the decision to make any distribution is determined by the Company’s board of directors and will depend on, among other things, Navios Partners’ cash requirements as measured by market opportunities and restrictions under its credit agreements and other debt obligations and such other factors as the Board of Directors may deem advisable. There is no guarantee that the Company will pay the quarterly distribution on the common units in any quarter. The Company is prohibited from making any distributions to unitholders if it would cause an event of default, or an event of default exists, under its existing credit facilities.
There are incentive distribution rights held by Navios GP L.L.C., which are analyzed as follows:
Marginal Percentage Interest in Distributions | |||||||
| Total Quarterly Distribution Target Amount |
Common Unitholders |
Incentive Distribution Right Holder |
General Partner | ||||
| Minimum Quarterly Distribution | up to $ |
|
|
| |||
| First Target Distribution | up to $ |
|
|
| |||
| Second Target Distribution | above $ |
|
|
| |||
| Third Target Distribution | above $ |
|
|
| |||
| Thereafter | above $ |
|
|
| |||
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The authorized quarterly cash distributions for all quarters during the years ended December 2022, 2021 and 2020, are presented below:
| Date | Authorized Quarterly Cash Distribution for the three months ended | Date of record of Common and General Partnership unit Unitholders | Payment of Distribution | $/ Unit | Amount of the declared distribution | |||||||
| January 2020 | $ | $ | ||||||||||
| April 2020 | $ | $ | ||||||||||
| July 2020 | $ | $ | ||||||||||
| October 2020 | $ | $ | ||||||||||
| January 2021 | $ | $ | ||||||||||
| April 2021 | $ | $ | ||||||||||
| July 2021 | $ | $ | ||||||||||
| October 2021 | $ | $ | ||||||||||
| January 2022 | $ | $ | ||||||||||
| April 2022 | $ | $ | | |||||||||
| July 2022 | $ | $ | ||||||||||
| October 2022 | $ | $ | ||||||||||
| January 2023 | $ | $ |
Navios Partners calculates earnings/(losses) attributable to Navios Partners’ unitholders per unit by allocating reported net income/(loss) attributable to Navios Partners’ unitholders for each period to each class of units based on the distribution waterfall for available cash specified in Navios Partners’ partnership agreement, net of the unallocated earnings (or losses). Basic earnings/(losses) attributable to Navios Partners’ unitholders per common unit is determined by dividing net income/(loss) attributable to Navios Partners common unitholders by the weighted average number of common units outstanding during the period. Diluted earnings attributable to Navios Partners’ unitholders per unit is calculated in the same manner as basic earnings per unit, except that the weighted average number of outstanding units increased to include the dilutive effect of outstanding unit options or phantom units. Net earnings/(loss) attributable to Navios Partners’ unitholders per unit undistributed is determined by taking the distributions in excess of net income/(loss) and allocating between common units and general partnership units on a 98%-2% basis. There were no options or phantom units outstanding during each of the years ended December 31, 2022, 2021 and 2020.
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The calculations of the basic and diluted earnings per unit are presented below.
| Year Ended December 31, 2022 | Year Ended December 31, 2021 |
Year Ended December 31, 2020 | ||||||
| Net income / (loss) attributable to Navios Partners’ unitholders | $ | $ | $ | ( | ||||
| Income / (loss) attributable to: | ||||||||
| Common unitholders | $ | $ | $ | ( | ||||
| Weighted average units outstanding basic | ||||||||
| Common unitholders | ||||||||
| Earnings/ (losses) per unit basic: | ||||||||
| Common unitholders | $ | $ | $ | |||||
| Weighted average units outstanding diluted | ||||||||
| Common unitholders | ||||||||
| Earnings/ (losses) per unit diluted: | ||||||||
| Common unitholders | $ | $ | $ | |||||
| Earnings per unit distributed basic: | ||||||||
| Common unitholders | $ | $ | $ | |||||
| Earnings per unit distributed diluted: | ||||||||
| Common unitholders | $ | $ | $ | |||||
| Earnings/ (losses per unit) - undistributed basic: | ||||||||
| Common unitholders | $ | $ | $ | |||||
| Earnings/ (losses) per unit undistributed diluted | ||||||||
| Common unitholders | $ | $ | $ |
Potential common units of and for the years ended December 31, 2022 and 2021, respectively are included in the calculation of earnings attributable to Navios Partners’ unitholders per unit diluted. Potential common units of relating to unvested restricted common units for the year ended December 31, 2020 have an anti-dilutive effect (i.e. those that increase income per unit or decrease loss per unit) and are therefore excluded from the calculation of earnings/ (losses) attributable to Navios Partners’ unitholders per unit diluted.
NOTE 21 – OTHER INCOME - OTHER EXPENSE
As of December 31, 2020, the amount of $
On November 15, 2012 (as amended and supplemented in March 2014, December 2017 and July 2019), Navios Holdings and Navios Partners entered into the Navios Holdings Guarantee by which Navios Holdings would provide supplemental credit default insurance with a maximum cash payment of $. In October 2020, Navios Holdings paid an amount of $to Navios Partners. In April 2021, Navios Holdings paid an amount of $to Navios Partners. As of each of December 31, 2022 and 2021, there were no outstanding claim receivable amount.
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NOTE 22 – LEASES
Time charter out contracts and pooling arrangements
The Company's contract revenues from time chartering, bareboat chartering and pooling arrangements are governed by ASC 842.
Operating Leases
On July 24, 2019, Navios Partners took delivery of the
On May 28, 2021 and June 10, 2021, Navios Partners took delivery of the
Upon acquisition of the majority of outstanding stock of Navios Acquisition, Navios Partners took delivery of two bareboat charter-in vessels, with de-escalating purchase options, the Baghdad, a -built Japanese of dwt and the Erbil, a -built Japanese of dwt. The Company has performed an assessment considering the lease classification criteria under ASC 842 and concluded that the arrangement is an operating lease. Consequently, the Company has recognized an operating lease liability based on the net present value of the remaining charter-in payments and a right-of-use asset at an amount equal to the operating liability adjusted for the carrying amount of the straight-line liability.
On August 30, 2021, Navios Partners took delivery of the
On July 5, 2022, Navios Partners took delivery of the
Following the acquisition of 36-vessel drybulk fleet from Navios Holdings, Navios Partners recognized the following operating leases:
On July 29, 2022, Navios Partners took delivery of the Navios Horizon I, a -built vessel of dwt for a remaining charter-in agreement, the Navios Gemini, a -built vessel of dwt for a remaining charter-in agreement, the Navios Venus, a -built vessel of dwt for a remaining charter-in, and the Navios Lyra, a -built vessel of dwt, for a remaining charter-in agreement, all with de-escalating purchase options. The Company has performed assessments considering the lease classification criteria under ASC 842 and concluded that the arrangements are operating leases. Consequently, the Company has recognized for each vessel an operating lease liability based on the net present value of the remaining charter-in payments and a right-of-use asset at an amount equal to the operating liability, increased with the allocated excess value, adjusted for (i) the carrying amount of the straight-line effect of the liability (if any) and (ii) the favorable and unfavorable lease terms derived from the charter-in agreements.
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Based on management estimates and market conditions, the lease term of the leases is being assessed at each balance sheet date. At lease commencement, the Company determines a discount rate to calculate the present value of the lease payments so that it can determine lease classification and measure the lease liability. In determining the discount rate to be used at lease commencement, the Company used its incremental borrowing rate as there was no implicit rate included in charter-in contracts that can be readily determinable. The incremental borrowing rate is the rate that reflects the interest a lessee would have to pay to borrow funds on a collateralized basis over a similar term and in a similar economic environment. The Company then applies the respective incremental borrowing rate based on the remaining lease term of the specific lease. Navios Partners’ incremental borrowing rates were approximately % for the Navios Libra and the Nave Celeste, % for the Navios Amitie and the Navios Star, % for the Baghdad, the Erbil, the Navios Horizon I, the Navios Gemini, the Navios Venus and the Navios Lyra, and % for the Nave Electron.
As of December 31, 2022 and December 31, 2021 the unamortized balance of the operating lease liability amounted $
The Company recognizes the lease payments for its operating leases as charter hire expenses on a straight-line basis over the lease term. Lease expense incurred and paid for the years ended December 31, 2022, 2021 and 2020 amounted to $
For the years ended December 31, 2022, 2021 and 2020, the sublease income (net of commissions, if any) for vessels where the Company is a lessee amounted to $
As of December 31, 2022 and 2021, the management of the Company has considered various indicators, and concluded that events and circumstances did not trigger the existence of potential impairment of its operating lease assets and that step one of the impairment analysis was not required.
As of December 31, 2020, the Company proceeded with step one of impairment assessment of the unamortized balance of the Right-of-use asset in relation to vessel Navios Libra. The undiscounted projected net operating cash flows exceed the carrying value of the right-of-use asset.
As of December 31, 2022, the weighted average useful life of the remaining operating lease terms was
The table below provides the total amount of lease payments on an undiscounted basis on the Company’s chartered-in contracts as of December 31, 2022:
| Year ending December 31, | Amount | |
| 2023 | $ | |
| 2024 | ||
| 2025 | ||
| 2026 | ||
| 2027 | ||
| 2028 and thereafter | ||
| Total | $ | |
| Operating lease liabilities, including current portion | $ | |
| Discount based on incremental borrowing rate | $ |
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NAVIOS MARITIME PARTNERS L.P. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in thousands of U.S. Dollars except unit and per unit data)
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Finance Leases
For a detailed description of the finance lease liabilities and right-of-use assets for vessels under finance leases, refer to Note 11 – Borrowings, and Note 7 – Vessels, net, respectively.
For the years ended December 31, 2022, 2021 and 2020 the sublease income (net of commissions, if any) for vessels where the Company is a lessee amounted to $
As of December 31, 2022, the management concluded that events occurred and circumstances had changed, which indicated that potential impairment of Navios Partners’ finance lease assets might exist. These indicators included volatility in the charter market as well as the potential impact the current marketplace may have on the Company’s future operations As a result, an impairment assessment of finance lease assets (step one) was performed.
As of December 31 2022, the weighted average useful life of the remaining finance lease terms was
The table below provides the total amount of lease payments and options to acquire vessels on an undiscounted basis under the Company’s finance leases as of December 31, 2022:
| Year ending December 31, | Amount | |
| 2023 | $ | |
| 2024 | ||
| 2025 | ||
| 2026 | ||
| 2027 | ||
| 2028 and thereafter | ||
| Total | $ | |
| Finance lease liabilities, including current portion (see Note 11– Borrowings) | $ | |
| Discount based on incremental borrowing rate | $ |
Bareboat charter-out contract
Subsequently to the charter-in agreement, the Company entered into bareboat charter-out agreements for a firm charter period of
The Company recognizes in relation to the operating leases for the charter-out agreements the charter-out hire income in the Consolidated Statements of Operations on a straight-line basis. As of December 31, 2022, 2021 and 2020 the charter hire income (net of commissions, if any) amounted to $
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NOTE 23 – SUBSEQUENT EVENTS
Acquisition of vessels
On March 6, 2023, Navios Partners acquired from an unrelated third party, the Navios Felix, a previously chartered-in -built vessel of dwt for a contract price of $.
On February 5, 2023, Navios Partners took delivery of the Navios Meridian, a -built vessel of dwt. (See Note 16 – Commitments and Contingencies).
Sale of vessels
On March 17, 2023, Navios Partners agreed to sell the Navios Libertas, a -built vessel of dwt, to an unrelated third party, for a sales price of $. The sale is expected to be completed during the .
On February 6, 2023, Navios Partners agreed to sell the Serenitas N, a
On February 6, 2023, Navios Partners agreed to sell the Nave Photon, a -built vessel of dwt, to an unrelated third party, for a sales price of $. The sale was completed on .
On January 3, 2023, Navios Partners agreed to sell the Aurora N, a
The aggregate gain on sale of the above vessels and the committed sales of the Navios Amaryllis, the Star N and the Nave Dorado (see Note 7 – Vessels, net) is expected to be approximately $.
Financing arrangements
In February 2023, Navios Partners completed a $
In February 2023, Navios Partners entered into a new credit facility with a commercial bank for a total amount of up to $
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SIGNATURES
The registrant herby 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.
| NAVIOS MARITIME PARTNERS L.P. | ||
| By: | /s/ Angeliki Frangou | |
| Angeliki Frangou | ||
| Chief Executive Officer | ||
Date: March 24, 2023
|
Exhibit 4.64
| ‘BARECON 2001” STANDARD BAREBOAT CHARTER | PART1 |
| 1. Shipbroker | BIMCO STANDARD BAREBOAT CHARTER | |||
| CODE NAME : “BARECON 2001” | ||||
| ITOCHU CORPORATION | PART I | |||
| TOKBR Section, 5-1, Kita-Aoyama 2-chome, | 2. Place and date | |||
| Minato-ku, Tokyo, 107-8077, Japan | In New York, U.S. | |||
| 5th December, 2022 | ||||
| 3. Owners / Place of business (Cl. 1) | 4. Bareboat Charterers / Place of business (Cl. 1) | |||
| Wealth Line Inc. guaranteed by Fukujin Kisen Co., Ltd. | Sagittarius Shipping Corporation of Marshall Islands | |||
| 5. Vessel’s name, call sign, flag and IMO number (Cl. 1 and 3) | ||||
| M/V NAVIOS SAGITTARIUS, 3EIC, Panama, 9316866 | ||||
| 6. Type of Vessel | 7. GT / NT | |||
| Bulk Carrier |
38,849/25,164 |
|||
| 8. When / Where built | 9. Total DWT (abt.) in metric tons on | |||
| 2006, Sanoyas Hishino Meisho Corporation |
75,756 MT |
|||
| 10. Classification Society (Cl. 3) | 11. Date of last special survey by the Vessel’s classification society | |||
| NK | 11th March 2022 |
|||
| 12. | ||||
| Cargoes to be carried; All lawful cargoes within the Vessel’s capabilities/Class, IMO, flag, her insurance | ||||
| 13. Port or Place of delivery (Cl.3) | 14. Time for delivery (Cl.4) | 15. Cancelling date (Cl.5) | ||
| .As per Clause 5 of the MOA (as defined in Clause 1 hereof) |
As per Clause 5 of the MOA See Also Clause 32. |
As per Clause 5 of the MOA | ||
| 16. Port or Place of redelivery (Cl. 3) | 17. No. of months’ validity of trading and class certificates upon redelivery (Cl. 15) | |||
| safety afloat at an accessible safe berth of anchorage at a safe port or place within IWL in charterers option |
Minimum 3 months |
|||
| 18. Running days’ notice if other than stated in Cl.4 | 19. Frequency of dry-docking Cl. 10(g) | |||
| N/A |
As per Classification Society and flag state requirements | |||
| 20. Trading Limits (Cl.6) | ||||
| Trading Limits: always safely afloat world-wide within International Navigation Conditions with the Charterer’s option to break same paying extra insurance, but always in accordance with Clause 13, 40, 58. Any other country designated pursuant to any international including U.N. / U.S. / EU or supranational law or regulation imposing trade and economic sanctions, prohibitions or restrictions (which may be amended from time to time during the Charter Period) to be excluded. | ||||
| 21. Charter Period (Cl. 2) | 22. Charter hire (Cl. 11) | |||
| Firm Four (4) years plus/minus One (1) month more or less in Charterers’ option |
See Clause 35 |
|||
| 23. New class and other statutory requirements (state percentage of Vessel’s insurance value acc. to Box 29 (Cl. 10(a)(ii)) | ||||
| N/A |
||||
| 24. Rate of interest payable acc. to Cl.11(f) and, if applicable, acc. to PART IV | 25. Currency and method of payment (Cl.11) | |||
| N/A |
United States Dollars payable calendar monthly in advance | |||
| 26. Place of payment; also state beneficiary and bank account (Cl. 11) | 27. Bank guarantee / bond (sum and place) (Cl. 24 (optional) | |||
| To be advised | N/A | |||
| 28. Mortgage(s), if any (state whether Cl. 12(a) or (b) applies; if 12(b) applies, state date of Financial Instrument and name of Mortgagee(s)/Place of business) (Cl. 12) | 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) | |||
| ‘BARECON 2001” STANDARD BAREBOAT CHARTER | PART1 |
| See Clause 44 | See Clause 40 | |
| 30. Additional insurance cover, if any, for Owners’ account limited to (Cl. 13(b) or, if applicable, Cl. 14(g)) | 31. Additional insurance cover, if any, for Charterers’ account limited to (Cl. 13(b) or, if applicable, Cl. 14(g)) | |
| N/A | See Clause 40 (c) | |
| 32. Latent defects (only to be filled in if period other than stated in Cl.3) | 33. Brokerage commission and to whom payable (Cl.27) | |
| N/A | N/A | |
| 34. Grace period (state number of clear banking days) (Cl. 28) | 35. Dispute Resolution (state 30(a), 30(b) or 30(c); if 30(c) agreed, Place of Arbitration must be stated (Cl. 30) | |
| See Clause 41 | London | |
| 36. War cancellation (indicate countries agreed) (Cl. 26(f)) | ||
| N/A | ||
| 37. Newbuilding Vessel (indicate with ‘yes’ or ‘no’ whether PART III applies) (optional) | 38. Name and place of Builders (only to be filled in if PART III applies) | |
| No | N/A | |
| 39. Vessel’s Yard Building No. (only to be filled in if PART III applies) | 40. Date of | |
| No | N/A | |
| 41. Liquidated damages and costs shall accrue to (state party acc. to Cl. 1) | ||
| a) N/A |
||
| b) N/A |
||
| c) N/A |
||
| 42. Hire/Purchase agreement (indicate with ‘yes’ or ‘no’ whether PART IV applies) (optional) | 43. Bareboat Charter Registry (indicate with ‘yes’ or ‘no’ whether PART IV applies) (optional) | |
| N/A | Yes in Charterers’ option | |
| 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) | |
| See Clause 37 | ||
| 46. Number of additional clauses covering special provisions, if agreed | ||
| Clause 32 to 58 inclusive | ||
PREAMBLE - It is mutually agreed that this Contract shall be performed subject to the conditions contained in this Charter which shall include PART I and PART II. In the event of a conflict of conditions, the provisions of PART I shall prevail over those of PART II to the extent of such conflict but no further. It is further mutually agreed that PART III and/or PART IV and/or PART V shall only apply and shall only form part of this Charter if expressly agreed and stated in Boxes 37, 42 and 43. If PART III and/or PART IV and/or PART V apply, it is further agreed that in the event of a conflict of conditions, the provisions of PART I and PART II shall prevail over those of PART III and/or PART IV and/or PART V to the extent of such conflict but no further.
| Signature (Owners) Wealth Line Inc. |
Signature (Charterers) Sagittarius Shipping Corporation | |||||||
| By: | /s/ Naoto Seno | By: | /s/ GEORGIOS PANAGAKIS | |||||
| Naoto Seno | GEORGIOS PANAGAKIS | |||||||
| Title: | Director | Title: | Attorney-in-fact | |||||
| ‘BARECON 2001” STANDARD BAREBOAT CHARTER | PART1 |
| 28, Mortgage(s), If any (state whether Cl. 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 Clause 44 |
29. Insurance (hull and machinery and war risks) (state value acc. to Cl.13(f) or, if applicable, acc. to Cl. 14(k)) (also state if Cl. 14 applies) See Clause 40 | |
| 30. Additional insurance cover, If any, for Owners’ account limited to (Cl. 13(b) or, If applicable, Cl. 14(g)) N/A |
31. Additional insurance cover, if any, for Charterers’ account limited to (Cl. 13(b) or, if applicable, Cl. 14(g)) See Clause 40 (c) | |
| 32. Latent defects (only to be filled in if period other than stated in Cl.3) N/A |
33. Brokerage commission and to whom payable (Cl.27) N/A | |
| 34. Grace period (state number of clear banking days) (Cl. 28) See Clause 41 |
35. Dispute Resolution (state 30(a), 30(b) or 30(c); if 30(c) agreed, Place of Arbitration must be stated (Cl. 30) London /English Law | |
| 36. War cancellation (indicate countries agreed) (Cl. 26(f)) N/A | ||
| 37. Newbuilding Vessel (indicate with ‘yes’ or ‘no’ whether PART III applies) (optional) No |
38. Name and place of Builders (only to be filled in if PART lll applies) N/A | |
| 39. Vessel’s Yard Building No. (only to be filled in If PART III applies) No |
40. Date of N/A | |
| 41. Liquidated damages and costs shall accrue to (state party acc. to Cl. 1) a) N/A b) N/A c) N/A | ||
| 42. Hire/purchase agreement (indicate with‘ yes’ or ‘no’ whether PART IV applies) (optional) N/A |
43. Bareboat Charter Registry (indicate with ‘yes’ or ‘no’ whether PART IV applies) (optional) N/A See Clause 37(d) | |
| 44. Flag and Country of the Bareboat Charter Registry (only to be filled in if PART V applies) N/A See Clause 37 (d) |
45. Country of the Underlying Registry (only to be filted in if PART V applies) N/A | |
| 46. Number of additional clauses covering special provisions, if agreed Clause 32 to 60 Inclusive | ||
PREAMBLE - If is mutually agreed that this Contract shall be performed subject to the conditions contained in this Charter which shall include PART I and PART II. In the event of a conflict of conditions, the provisions of PART I shall prevail over those of PART II to the extent of such conflict but no further. It Is further mutually agreed that PART III and/or PART IV and/or PART V shall only apply and shall only form part of this Charter if expressly agreed and stated in Boxes 37,42 and 43. If PART III and/or PART IV and/or PART V apply, it is further agreed that in the event of a conflict of conditions, the provisions of PART I and PART II shall prevail over those of PART III and/or PART IV and/or PART V to the extent of such conflict but no further.
| Signature (Owners) GLORY OCEAN SHIPPING S.A. (as to 99.0% shares) |
Signature (Charterers) | |||||||
| By: | /s/ Hiroyuki Funada | By: | /s/ Georgios panagakis | |||||
| Hiroyuki Funada | Georgios panagakis | |||||||
| Title: | Director/President | Title: | ATTORNEY-IN-FACT | |||||
| TEMM MARITIME CO., LTD. (as to 1.0% share) | ||||||||
| By: | /s/ Katsuya Mito | |||||||
| Katsuya Mito | ||||||||
| Title: | President | |||||||
PART II
“BARECON 2001” Standard Bareboat Charter
| 1. Definitions | ||
| 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. | ||
| “MOA” means the Memorandum of Agreement entered into between the Owners as buyers and the Charterers as Sellers dated 5th December 2022 in respect of the Vessel. | ||
| “Banking Days” shall mean the days identified in Cl.36 (b) | ||
| “Total Loss” shall mean the situation identified in Cl.40 (a) | ||
| 2. Charter Period | ||
| 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 Also See Clause 32 | ||
| The Vessel shall be delivered and taken over by the Charterers as per Clause 32. | ||
|
| ||
| The Vessel shall be delivered by the Owners and taken over by the Charterers at the port or place
indicated in Box 13 | ||
| (b) The Vessel shall be properly documented on delivery in accordance with the laws of the flag state
indicated in Box 5 | ||
|
| ||
| 4. Time for Delivery See Clause 32 | ||
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| 5. Cancelling | ||
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|
| ||
| 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 Owners’ prior approval has been obtained to loading thereof. | ||
| 7. Surveys on Delivery and Redelivery | ||
|
| ||
| The Owners and Charterers | ||
| 8. Inspection | ||
| The Owners shall have the right maximum twice per year | ||
| (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. | ||
|
| ||
PART II
“BARECON 2001” Standard Bareboat Charter
|
|
| The Charterers shall also permit the Owners to inspect the Vessel’s log books maximum twice per year whenever reasonably 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 CLAUSE 54 |
|
|
| 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 exercise due diligence to 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 and
|
| (ii) New Class and Other Safety Requirements |
| (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 |
| 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, |
| 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 |
| (d) Flag and Name of Vessel |
| (e) Changes to the Vessel |
| (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 substantially the same |
| (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 division or authority thereof |
PART II
“BARECON 2001” Standard Bareboat Charter
| 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. |
| 11. Hire SEE CLAUSE 35 |
|
|
|
|
| (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. |
|
|
|
|
|
|
|
|
| 12. Mortgage SEE CLAUSE 44 |
| (only to apply if Box 28 has been appropriately filled in) |
|
|
| *) |
| *) (Optional, Clauses 12 (a) and 12 (b) are alternatives; indicate alternative agreed in Box 28). |
| 13. Insurance and Repairs SEE CLAUSE 40 |
| (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 underwriter’s standard form as the Owners have received, reviewed and |
| The Charterers also 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. |
| 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. |
|
|
| (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. |
|
|
| (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. |
|
|
| 14. Insurance, Repairs and Classification N/A |
| (Optional, only to apply if expressly agreed and stated in Box 29, in which event Clause 13 shall be considered deleted). |
|
|
PART II
“BARECON 2001” Standard Bareboat Charter
|
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| ( |
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| 15. Redelivery ALSO SEE CLAUSE 46 |
|
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| Subject to the provisions of Clause 10, the Vessel shall be redelivered to the Owners in substantially 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. |
|
|
| 16. Non-Lien ALSO SEE CLAUSE 47 |
| The Charterers will not suffer, nor permit to be continued, any lien or encumbrance incurred by them or their agents,
which might have priority over the title and interest of the Owners in the Vessel.
|
| 17. Indemnity ALSO SEE CLAUSE 55 |
| (a) The Charterers shall indemnify the Owners against any loss, damage or 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 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. |
PART II
“BARECON 2001” Standard Bareboat Charter
| (b) If the Vessel be arrested or otherwise detained by reason of a claims or claims against the Owners, 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. |
| 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 |
| (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.
|
| 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. |
|
|
| *) Delete as applicable. |
| 24. Bank Guarantee |
| (Optional, only to apply if Box 27 filled in) |
|
|
| 25. Requisition/Acquisition ALSO SEE CLAUSE 40 (a)/(b) |
| (a) In the event of the requisition for Hire of the Vessel by any governmental or other competent authority (hereinafter referred to a “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) Notwithstanding the provisions of clause 25 (a), 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, which for the avoidance of any doubt, shall exclude requisition for use or hire not involving requisition of
title (hereinafter referred to as ‘Compulsory Acquisition’), then, |
| 26. War |
| (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. |
|
|
| (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.
|
PART II
“BARECON 2001” Standard Bareboat Charter
|
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|
(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. |
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| 27. Commission |
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| 28. Termination |
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(a) Charterer’s Default |
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SEE CLAUSE 41 & 42 |
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(b) Owners’ Default |
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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 |
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|
|
(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, |
|
(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 |
|
In the event of the termination of this Charter in accordance with the applicable provisions of 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, the Charterers shall |
PART II
“BARECON 2001” Standard Bareboat Charter
| hold the Vessel as gratuitous bailee only to 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 | |
| *) | (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. | ||
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| *) | Sub-clauses 30(a), 30(b) and 30(c) are alternatives; indicate alternative agreed in Box 35. | |
| 31. | Notices SEE CLAUSE 52 | |
“BARECON 2001” Standard Bareboat Charter
PART III
PROVISIONS TO APPLY FOR NEWBUILDING VESSELS ONLY
(Optional, only to apply if expressly agreed and stated in Box 37)
| 3. | ||
| 4. | ||
| 5. | ||
“BARECON 2001” Standard Bareboat Charter
PART IV
HIRE/PURCHASE AGREEMENT
(Optional, only to apply if expressly agreed and stated in Box 42)
“BARECON 2001” Standard Bareboat Charter
PART V
PROVISIONS TO APPLY FOR VESSELS REGISTERED IN A BAREBOAT CHARTER REGISTRY
(Optional, only to apply if expressly agreed and stated in Box 43)
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Additional Clauses
to
the Bareboat Charter Party dated 5th December, 2022 (this “Charter”) by
Wealth Line Inc. as owner (the “Owners”) and
Sagittarius Shipping Corporation (the “Charterers”)
in respect of MV “Navios Sagittarius” (the “Vessel”)
| 32. | DELIVERY |
(a) The Charterers shall take delivery of the Vessel under this Charter simultaneously with delivery by Charterers as sellers to the Owners as buyers under the MOA, and the Owners shall be obliged to deliver the Vessel to the Charterers hereunder in the same moment as the Owners is taking delivery of the Vessel under the MOA.
(b) The Owners warrant that the Vessel, at time of delivery, is free from all charters, encumbrances, mortgages and maritime liens or any other debts whatsoever, other than (i) those incurred prior to the delivery of the Vessel hereunder, (ii) this Charter and (iii) the mortgage over the Vessel, assignment of insurance in respect of the Vessel and the assignment of the charter hires in respect hereof in favour of the Mortgagee.
(c) The Vessel shall be delivered under this Charter in the same condition and with the same equipment, inventory and spare parts as she is delivered to the Owners under the MOA. The Charterers know the Vessel’s condition at the time of delivery, and expressly agree that the Vessel’s condition as delivered under the MOA is acceptable and in accordance with the provisions of this Charter. The Vessel shall be delivered to the Charterers under this Charter strictly “as is/where is”, and the Charterers shall waive any and all claims against the Owners under this Charter on account of any conditions, seaworthiness, representations, warranties expressed or implied in respect of the Vessel (including but not limited to any bunkers, oils, spare parts and other items whatsoever) on delivery.
| 33. | ISM CODE |
During the currency of this Charter the Charterers shall procure at the costs and expenses and time of the Charterers that the Vessel and the “company” (as defined by the ISM code) shall comply with the requirements of the ISM code. Upon request the Charterers shall provide a copy of relevant documents of compliance (DOC) and safety management certificate (SMC) to the Owners. For the avoidance of any doubt any loss, damage, expense or delay caused by the failure on the part of the “Company” to comply with the ISM code shall be for the Charterers’ account.
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| 34. | CHARTER PERIOD |
| (a) | The Owners shall let to the Charterers and the Charterers shall take the Vessel on charter for the period and upon the terms and conditions contained herein. |
| (b) | Subject always to the provisions hereto, the period of the chartering of the Vessel hereunder (hereinafter referred to as the “Charter Period”) shall comprise (unless terminated at an earlier date in accordance with the terms hereof) a charter period of firm Four (4) years from the date of the delivery of the Vessel by the Owners to the Charterers under this Charter (the “Delivery Date”) with up to one (1) month more or less in the Charterers’ option, provided always that the chartering of the Vessel hereunder may be terminated by the Owners pursuant to Clause 41 or shall terminate in the event of the Total Loss or Compulsory Acquisition of the Vessel subject to, and in accordance with provisions of Clause 40. |
| 35. | CHARTER HIRE |
| (1) | Monthly Hire |
After delivery of the Vessel, the Charterers shall pay the hire monthly in advance as remuneration of letting of the Vessel for the charter period, which consist of (i) Monthly Fixed Hire and (ii) Variable Hire as follows.
I. Monthly Fixed Hire : USD156,250 / month
II. Monthly Variable hire is calculated from the number of the days in any relevant month and daily variable hire in accordance with the following formula:
Monthly Variable Hire = Outstanding Balance (the table of Outstanding Balance shall be attached to this contract as appendix) x (2.30% + one (1) month ICE LIBOR as applicable for the month in respect of which such Monthly Variable Hire is to be calculated) x (the number of the days in the relevant month) / 360
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Applicable One (1) month ICE Libor to be confirmed 3 Banking days prior to the end of every month falling immediately the due date for Charter Hire of the calendar month. The Owners shall notify the Charterers in writing of the Monthly Variable Hire due on any due date for hire by sending to the Charterers a duly issued invoice for that Monthly Variable Hire and Monthly Fixed Hire at least three (3) Banking Days before that due date.
Outstanding Balance means USD 10,500,000 less the aggregate Monthly Fixed Hire as has at any relevant time been paid to the Owners.
Should the ICE LIBOR falls to negative interest rate, zero (0) is to be applied as ICE LIBOR.
ICE LIBOR means the London interbank offered rate administered by ICE Benchmark Administration Limited (or any other person which takes over the administration of that rate) for dollars for the relevant period displayed Applicable Date defined as follows on page LIBOR 01 or LIBOR 02 of the Thomson Reuters screen (or any replacement Thomson Reuters page which displays that rate) or on the appropriate page of such other information service which publishes that rate from time to time in place of Thomson Reuters. If such page or service ceases to be available, the Parties shall, following consultation with their bankers, specify another page or service displaying the relevant rate
No address commission to the Charterers.
| (2) | Absolute Obligations and Meaning of Day |
| (a) | Except in case of the Owners’ default hereunder which actually prevents the Charterers’ quiet use of the Vessel for the purpose of this Charter, the Charterers’ obligations to pay the Hires shall be absolute, and no-off hire shall be claimed by the Charterers for any reason whatsoever and the Charterers shall continuously and always be liable to pay the Hires unless and until:- |
| (i) | the Total Loss Compensation Date in the case of the occurrence of a Total Loss |
| (ii) | the redelivery of the Vessel to the Owners or to the Owners’ nominee |
| (b) | The Date of delivery, the Total Loss Compensation Date and the date of redelivery shall be treated as an entire one day regardless of the time of delivery, the time occurrence of a Total Loss and the time of redelivery. |
| (c) | ”Day” shall be construed as Japan time |
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| 36. | PAYMENTS |
| (a) | Notwithstanding anything to the contrary contained in this Charter, all payments by the Charterers hereunder (whether by way of hire or otherwise) shall be made as follows:- |
| (i) | not later than 11:00 a.m. (New York time) on one Banking Day prior to the date on which the relevant payment is due under the terms of this Charter: and |
| (ii) | in United States Dollars to THE HIROSHIMA BANK, LTD. (or such other bank or banks as may from time to time be notified by the Owners to the Charterers by not less than fourteen (14) days’ prior written notice) for the account of the Owners . |
| (b) | If any day for the making of any payment hereunder shall not be a Banking Day (being, for all purposes of this Charter, a day on which banks are open for transaction of business of the nature required by this Charter in Japan, Piraeus/Greece, London and New York) the due date for payment of the same shall be the next following Banking Day. |
| (c) | Subject to the terms of this Charter, the Charterers’ obligation to pay hire in accordance with the requirements of Clause 35 and this Clause 36 and to pay certain amount of insurance benefit pursuant to Clause 40 (e) and to pay the Termination Compensation pursuant to Clause 42 shall be absolute irrespective of any contingency whatsoever, including (but not limited to) (i) any failure or delay on the part of any party hereto or thereto, whether with or without fault on its part, other than the Owners, in performing or complying with any of the terms or covenants hereunder, (ii) any insolvency, bankruptcy, reorganization, arrangement, readjustment of debt, dissolution, liquidation or similar proceedings by or against the Owners or the Charterers or any change in the constitution of the Owners or the Charterers or any other person, (iii) any invalidity or unenforceability or lack of due authorization of or other defect in this Charter, or (iv) any other cause which would or might but for this provision have the effect of terminating or in any way affecting any obligation of the Charterers under this Charter. |
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| (d) | In the event of failure by the Charterers to pay within ten (10) Banking Days after the due date for payment thereof, or in the case of a sum payable on demand, the date of demand therefor, any hire or other amount payable by them under this Charter, the Charterers will pay to the Owners on demand interest on such hire or other amount from the date of such failure to the date of actual payment (both before and after any relevant judgment or winding up of the Charterers) at the rate determined by the Owners and certified by them to the Charterers (such certification to be conclusive in the absence of manifest error) to be the aggregate of (i) two & one-half per centum (21⁄2 %) and (ii) the London Interbank Offered Rate for US Dollar deposits of not more than one month’s duration (as selected by the Owners or their funders in the light of the likely duration of the default in question) (as such rate is from time to time quoted by leading banks in the London Interbank Market). Interest payable by the Charterers as aforesaid shall be compounded at such intervals as the Owners shall determine and shall be payable on demand. |
| (e) | Any interest payable under this Charter shall accrue from day to day and shall be calculated on the actual number of days elapsed and a three hundred and sixty (360) day year. |
| (f) | In this Charter, unless the context otherwise requires, “month” means a period beginning in one calendar month (and, in the case of the first month, on the date of delivery hereunder) and ending in the succeeding calendar month on the day numerically corresponding to the day of the calendar month in which such period started provided that if there is no such numerically corresponding day, such period shall end on the last day in the relevant calendar month and “monthly” shall be construed accordingly. |
| 37. | FLAG AND CLASS |
| (a) | The Vessel shall upon the Delivery Date be registered in the name of the Owners under the Panamanian flag. |
| (b) | The Owners shall have no right either to transfer the flag of Vessel from Panama to any other registry or to require the Charterers to transfer the Vessel’s classification society. The Charterers shall, at any time after the Delivery Date and at the Charterers’ expense, have the right to transfer the Vessel’s classification society from Nippon Kaiji Kyokai (ClassNK) to any other classification society at least equivalent to ABS. |
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| (c) | Further, in the event that the Charterers need to change the flag of the Vessel, the Charterers can change the flag with the Owner’s consent, which should not be unreasonably withheld, provided however that any expenses and time (including but not limited to legal charges for finance documents for the Mortgagee) shall be for the Charterers‘account. |
| (d) | Subject to the Charterers’ supplying the standard de-registration agreement reasonably satisfactory to the Mortgagee the Charterers are entitled to establish the standard bareboat registration on the Vessel at the costs, expense and time of the Charterers. |
| (e) | If during the Charter Period there are any modifications, improvements, structural changes or new equipment made to the Vessel which are compulsory for the Vessel to comply with change to rules and regulations and/or new requirements (including but not limited to IMO or international port or environmental regulation) to which operation of the Vessel is required to conform, the cost relating to such modifications shall be for the account of the Charterers. |
| (f) | All operational cost including required cost in relation to Vessel’s flag (such as tonnage tax, insurance and crew certs etc) would be for Charterers account. However, all other cost (such as the Owners’ financing cost /cost for registration and discharge of their mortgage etc) would be for Owners account, and Owners and Charterers shall equally bear initial registration cost to Vessel’s flag under Owners’ name. For the bareboat charter and the sale of the vessel, each party should bear its own costs. |
| 38. | IMPROVEMENT AND ADDITIONS |
The Charterers shall have the right to fit additional equipment and to make severable improvements and additions at their expense and risk. Such additional equipment, improvements and additions shall be removed from the Vessel without causing any material damage to the Vessel (any such damage being made good by the Charterers at their time and expense) provided however that the Charterers shall redeliver the Vessel without removing such additional equipment, improvements and additions if the Owners consent to such non-removal before the redelivery.
The Charterers shall also have the right to make structural or non-severable improvements and additions to the Vessel at their own time, costs and expense and risk provided that such improvements and additions do not diminish the market value of the Vessel and are not likely to diminish the market value of the Vessel during or at the end of the Charter Period and do not in any way affect or prejudice the marketability or the useful life of the Vessel and are not likely to affect or prejudice the marketability or the useful life of the Vessel during or at the end of the Charter Period.
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| 39. | UNDERTAKING |
The Charterers undertake and agree that throughout the Charter period they will:-
| • | notify the Owners in writing of any Termination Event (or event of which they are aware which, with the giving of notice and/or lapse of time or other applicable condition, would constitute a Termination Event); |
| 40. | INSURANCE, TOTAL LOSS AND COMPULSORY ACQUISITION |
| (a) | For the purposes of this Charter, the term “Total Loss” shall include actual or constructive or compromised or agreed or arranged total loss of the Vessel including any such total loss as may arise during a requisition for hire. “Compulsory Acquisition” shall have the meaning assigned thereto in Clause 25(b) hereof. |
| (b) | The Charterers undertake with the Owners that throughout the Charter Period:- |
| (i) | they will keep the Vessel insured in underwriter’s standard form as the Owners shall in writing approve, which approval shall not be unreasonably withheld, with such insurers (including P&I and war risks associations) as shall be reasonably acceptable to the Owners with deductibles reasonably acceptable to the Owners (it being agreed and understood by the Charterers that there shall be no element of self- insurance or insurance through captive insurance companies without the prior written consent of the Owners); |
| (ii) | they will be properly entered in and keep entry of the Vessel with P&I Club that is a member of the International Group of Protection and Indemnity Association for the full commercial value and tonnage of the Vessel and against all prudent P&I Risks in accordance with the rules of such association or club including, in case of oil pollution liability risks equal to the highest level of cover from time to time available under the basic entry with such P&I (but always a minimum of USD1,000,000,000.); |
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| (iii) | The policies in respect of the insurances against fire and usual marine risks and policies or entries in respect of the insurances against war risks shall, in each case, include the following loss payable provisions:- |
| (a) | For so long as the Vessel is mortgaged and in accordance with the Deed of Assignment of insurances entered or to be entered into between the Charterers and any mortgagee (the “Assignee”): |
Until such time as the Assignee shall have notified the insurers to the contrary:
| (i) | All recoveries hereunder in respect of an actual, constructive or compromised or arranged total loss shall be paid in full to the Assignee without any deduction or deductions whatsoever and applied in accordance with clause 40 (e); |
| (ii) | All other recoveries not exceeding United States Dollars Five Hundred Thousand (US$500,000.00) shall be paid in full to the Charterers or to their order without any deduction or deductions whatsoever; and |
| (iii) | All other recoveries exceeding United States Dollars Five Hundred Thousand (US$500,000.00) shall, subject to the prior written consent of the Assignee be paid in full to the Charterers or their order without any deduction whatsoever. |
(b) During any periods when the Vessel is not mortgaged:
| (i) | All recoveries hereunder in respect of an actual, constructive or compromised or arranged total loss shall be paid in full to the Owners without any deduction or deductions whatsoever and applied in accordance with clause 40 (e); |
| (ii) | All other recoveries not exceeding United States Dollars One million (US$1,000,000.00) shall be paid in full to the Charterers or to their order without any deduction or deductions whatsoever; and |
| (iii) | All other recoveries exceeding United States |
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| Dollars One million (US$1,000,000.00) shall, subject to the prior written consent of the Owners be paid in full to the Charterers or their order without any deduction whatsoever, subject to the fulfillment of the provisions of Clause 44; |
and the Owners and Charterers agree to be bound by the above provisions.
| (iv) | the Charterers shall procure that duplicates of all cover notes, policies and certificates of entry shall be furnished to the Owners for their custody ; |
| (v) | the Charterers shall procure that the insurers and the war risk and protection and indemnity associations with which the Vessel is entered shall |
| (A) | furnish the Owners with a letter or letters of undertaking in relevant underwriter’s standard form and in accordance with the underwriters’ rules. |
| (B) | supply to the Owners such information in relation to the insurances effected, or to be effected, with them as the Owners may from time to time reasonably require: and |
| (vi) | the Charterers shall use all reasonable efforts to procure that the policies, entries or other instruments evidencing the insurances are endorsed to the effect that the insurers shall give to the Owners prior written notification of any amendment, suspension, cancellation or termination of the insurances in accordance with the underwriters’ guidance and rules. |
| (c) | Notwithstanding anything to the contrary contained in Clauses 13 and any other provisions hereof, the Vessel shall be kept insured during the Charter Period in respect of marine and war risks on hull and machinery basis (The Charterers shall have the option, to take out on a full hull and machinery basis increased value or total loss cover in an amount not exceeding thirty per centum (30%) of the total amount insured from time to time) for not less than the amounts specified in column (b) in the table set out below in respect of the one-yearly period during the Charter Period specified in |
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| column (a) (on the assumption that the first such period commences on the Delivery Date) against such amount (hereinafter referred to as the “Minimum Insured Value”): |
| (a) | (b) | |
| Year | Minimum Insured Value | |
| 1 |
US$11,550,000.- | |
| 2 |
US$9,487,500.- | |
| 3 |
US$7,425,000.- | |
| 4 |
US$5,362,500.- |
| (d) | (i) If the Vessel shall become a Total Loss or be subject to Compulsory Acquisition the Chartering of the Vessel to the Charterers hereunder shall cease and the Charterers shall:- |
| (A) | immediately pay to the Owners all hire, and any other amounts, which have fallen due for payment under this Charter and have not been paid as at and up to the date on which the Total Loss or Compulsory Acquisition occurred (the “Date of Loss”) together with interest thereon at a rate reflecting the Owners’ reasonable cost of funds at such intervals, which amount to be agreed between the Owners and the Charterers and shall cease to be under any liability to pay any hire, but not any other amounts, thereafter becoming due and payable under this Charter, Provided that all hire and any other amounts prepaid by the Charterers subsequent to the Date of Loss shall be forthwith refunded by the Owners: |
| (B) | for the purposes of this sub-clause, the expression “relevant Minimum Insured Value” shall mean the Minimum Insured Value applying to the one-year period in which the Date of Loss occurs. |
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| (ii) | For the purpose of ascertaining the Date of Loss:- |
| (A) | an actual total loss of the Vessel shall be deemed to have occurred at noon (London time) on the actual date the Vessel was lost but in the event of the date of the loss being unknown the actual total loss shall be deemed to have occurred at noon (London time) on the date on which it is acknowledged by the insurers to have occurred: |
| (B) | a constructive, compromised, agreed, or arranged total loss of the Vessel shall be deemed to have occurred at noon (London time) on the date that notice claiming such a total loss of the Vessel is given to the insurers, or, if the insurers do not admit such a claim, at the date and time at which a total loss is subsequently admitted by the insurers or adjudged by a competent court of law or arbitration tribunal to have occurred. Either the Owners or, with the prior written consent of the Owners (such consent not to be unreasonably withheld), the Charterers shall be entitled to give notice claiming a constructive total loss but prior to the giving of such notice there shall be consultation between the Charterers and the Owners and the party proposing to give such notice shall be supplied with all such information as such party may request; and |
| (C) | Compulsory Acquisition shall be deemed to have occurred at the time of occurrence of the relevant circumstances described in Clause25 (b) hereof. |
| (e) | All moneys payable under the insurance effected by the Charterers pursuant to Clauses 13 and 40, or other compensation, in respect of a Total Loss or pursuant to Compulsory Acquisition of the Vessel shall be received in full by the Owners (or the Mortgagees as assignees thereof) and applied by the Owners (or, as the case may be, the Mortgagees):- |
FIRST, in payment of all the Owners’ costs incidental to the collection thereof,
SECONDLY, in or towards payment to the Owners (to the extent that the Owners have not already received the same in full) of a sum equal to the aggregate of (i) unpaid but due hire and other moneys (if any) under this Charter and unpaid interest thereon up to and including the Date of Loss and (ii) the following termination sum or pro-rata de-escalation which shall be payable as at the Date of Loss, and
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| (a) | (b ) | |
| Year | Termination Sum | |
| Delivery Date: |
USD12,000,000.- | |
| At end of 1st year: |
USD9,787,500.- | |
| At end of 2nd year: |
USD7,575,000.- | |
| At end of 3rd year: |
USD5,362,500.- | |
| At end of 4th year: |
USD3,150,000 |
THIRDLY, in payment of any surplus to the Charterers by way of compensation for early termination.
| (f) | The Charterers and the Mortgagee shall execute the “Assignment of Insurances” of which contents and wording shall be mutually agreed between the Owners and the Charterers. |
| 41. | TERMINATION EVENTS |
| (a) | Each of the following events shall be a “Termination Event” for purposes of this Charter:- |
| (i) | if any installment of hire or any other sum payable by the Charterers under this Charter (including any sum expressed to be payable by the Charterers on demand) shall not be paid at its due date under this Charter or within ten (10) Banking Days of the date of demand and such failure to pay is not remedied within ten (10) Banking Days of receipt by the Charterers of written notice from the Owners notifying the Charterers of such failure and requesting that payment is made; or |
| (ii) | Save in circumstances where requisition for hire or compulsory requisition result in termination of insurances for the Vessel, if either (A) the Charterers shall fail at any time to effect or maintain any insurances required to be effected and maintained under this Charter, or any insurer shall avoid or cancel any such insurances (other than where the Charterers proved that the relevant avoidance or cancellation results from an event or circumstance outside the reasonable control of the Charterers and the relevant insurances are reinstated or re-constituted in a manner meeting the requirements of this Charter within seven (7) days of such avoidance or cancellation) or the Charterers shall commit any breach of or make any misrepresentation in respect of any such |
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| insurances the result of which the relevant insurer avoids the policy or otherwise excuses or releases itself from all or any of its liability thereunder, or (B) any of the said insurances shall cease for any reason whatsoever to be in full force and effect (other than where the Charterers proved that the reason in question is outside the reasonable control of the Charterer and the relevant insurances are reinstated or re-constituted in a manner meeting the requirements of this Charter within seven (7) days of such cease); or |
| (iii) | if the Charterers shall at any time fail to observe or perform any of their material obligations under this Charter, other than those obligations referred to in sub-clause (i) or sub-clause (ii) of this Clause 41(a), and such failure to observe or perform any such obligation is either not remediable or is remediable but is not remedied within fifteen (15) days of receipt by the Charterers of a written notice from the Owners requesting remedial action; or |
| (iv) | if any material representation or warranty by the Charterers in connection with this Charter or in any document or certificate furnished to the Owners by the Charterers in connection herewith or therewith shall prove to have been untrue, inaccurate or misleading in any material respect when made (and such occurrence continues unremedied for a period of thirty (30) days after receipt by the Charterers of written notice from the Owners requesting remedial action): or |
| (v) | if a petition shall be presented (and not withdrawn or stayed within sixty (60) days) or an order shall be made or an effective resolution shall be passed for the administration or winding-up of the Charterers (other than for the purpose of a reconstruction or amalgamation during and after which the Charterers remain solvent and the terms of which have been previously approved in writing by the Owners which approval shall not be unreasonably withheld) or if an encumbrancer shall take possession or an administrative or other receiver shall be appointed of the whole or any substantial part of the property, undertaking or assets of the Charterers or if an administrator of the Charterers shall be appointed (and, in any such case, such possession is not given up or such appointment is not withdrawn within sixty (60) days) or if anything analogous to any of the foregoing shall occur under the laws of the place of the Charterers’ incorporation, or |
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| (vi) | if the Charterers shall stop payments to all of its creditors or shall cease to carry on or suspend all or a substantial part of their business or shall be unable to pay their debts, or shall admit in writing their inability to pay their debts, as they become due or shall otherwise become or be adjudicated insolvent; or |
| (vii) | if the Charterers shall apply to any court or other tribunal for, a moratorium or suspension of payments with respect to all or a substantial part of their debts or liabilities, or |
| (viii) | (A) | if the Vessel is arrested or detained (other than for reasons solely attributable to the Owners or to those for whom, for the purposes of this provision, the Owners shall be deemed responsible, including without limitation, any legal person who, at the date hereof or at any time in the future is affiliated with the Owners) and such arrest or detention is not lifted within thirty (30) days (or such longer period as the Owners shall reasonably agree in writing in the light of all the circumstances) ; or | ||
| (B) | if a distress or execution shall be levied or enforced upon or sued out against all or any substantial part of the property or assets of the Charterers and shall not be discharged or stayed within thirty (30) days; or | |||
| (ix) | if any consent, authorization, license or approval necessary for this Charter to be or remain the valid legally binding obligations of the Charterers, or to the Charterers to perform their obligations hereunder or thereunder, shall be materially adversely modified or is not granted or is revoked, suspended, withdrawn or terminated or expires and is not renewed (provided that the occurrence of such circumstances shall not give rise to a Termination Event if the same are remedied within thirty (30) days of the date of their occurrence); or |
| (x) | if (a) any legal proceeding for the purpose of the reconstruction or rehabilitation of the Charterers is commenced and continuing in any jurisdiction and (b) the Owners receive a termination notice from the receiver, trustee or others of the Charterers which informs the termination/rejection of the Charter pursuant to the relevant laws, codes and regulations applicable to such proceeding. |
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| (b) | Any Termination Event shall constitute (as the case may be) either a repudiatory breach of, or breach of condition by the Charterers under, this Charter or an agreed terminating event the occurrence of which will (in any such case) entitle the Owners by notice to the Charterers to terminate the chartering of the Vessel under this Charter and recover the amounts provided for in Clause 42(c) either as liquidated damages or as an agreed sum payable on the occurrence of such event. |
| 42. | OWNERS’ RIGHTS ON TERMINATION |
| (a) | At any time after a Termination Event shall have occurred and be continuing, the Owners may, by notice to the Charterers immediately, or on such date as the Owners shall specify, terminate the chartering by the Charterers of the Vessel under this Charter, 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. For the avoidance of doubt, in case of the termination of the Charter in accordance with 41 (a) (x) hereof, the Charter shall be deemed to be terminated upon receipt by the Owners of the termination notice set forth in Clause 41 (a) (x) hereof. |
| (b) | On or at any time after termination of the chartering by the Charterers of the Vessel pursuant to Clause 42(a) hereof the Owners shall be entitled to retake possession of the Vessel in accordance with Clause 29 hereof, the Charterers hereby agreeing that the Owners, for that 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. |
| (c) | If the Owners pursuant to Clause 42(a) hereof give notice to terminate the chartering by the Charterers of the Vessel, the Charterers shall pay to the Owners on the date of termination (the “Termination Date”), the aggregate of (A) all hire due and payable, but unpaid, under this Charter to (and including) the Termination Date together with interest accrued thereon pursuant to Clause 36(d) hereof from the due date for payment thereof to the Termination Date, (B) any sums, other than hire, due and payable by the Charterers, but unpaid, under this Charter together with interest accrued thereon pursuant to Clause 36(d) to the Termination Date and (C) any actual direct financial loss suffered by the Owners which direct loss shall be determined as the shortfall, if any, between (a) the current market value of the Vessel (average value as estimated, at the Charterers’ expense by two independent valuers such as major London brokers i.e. Arrow Valuations Ltd, Barry Rogliano Salles, Braemar ACM Shipbroking, H Clarkson & Co. Ltd., E.A. Gibsons Shipbrokers, Fearnleys, Galbraith, Simpson Spencer & Young, Howe Robinson & Co Ltd London and Maersk |
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| Broker K.S. (to include, in each case, their successors or assigns and such subsidiary or other company in the same corporate group through which valuations are commonly issued by each of these brokers), or such other first-class independent broker as the Owners and Charterers may agree in writing from time to time) and (b) the Remaining Purchase Option Price (as defined in Clause 49.2 hereof) at any given time always taking into account any charterhire paid during the year to which the specified Remaining Purchase Option Price relates PROVIDED ALWAYS that if the said market value exceeds the aggregate of (A) and (B) and the Remaining Purchase Option Price, then the Owners shall pay the amount of such excess to the Charterers forthwith. The aggregate of (A), (B) and (C) above shall hereinafter be referred to as the “Termination Compensation”). |
| (d) | If the Charter is terminated in accordance with this Clause 42 the Charterers shall immediately redeliver the Vessel at a safe and ice-free port or place as indicated by the Owners. The Vessel shall be redelivered to the Owners in substantially the same condition and class as that in which she was delivered, fair wear and tear not affecting class excepted. |
| (e) | The Owners agree that if following termination of the Charter under this Clause, the Owners sell or otherwise transfer the Vessel to a third party, or enter into any other arrangement with a third party with an option to purchase the Vessel, then the Owners shall pay to the Charterers after that sale (i) the amount of the greater of (a) the sale price and (b) the market value of the Vessel at such sale/transfer/arrangement date less (ii) the aggregate of the unpaid Termination Compensation and the Remaining Purchase Option Price (as defined in Clause 49.2) which would be payable by the Charterers as set out in Clause 49 as at the date of such sale. |
| 43. | NAME |
The Charterers shall, subject only to prior notification to the relevant authorities of the jurisdiction in which for the time being the Vessel is registered, be entitled from time to time to change the name of the 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. Painting and installment shall be at Charterers’ expense and time. The Charterer shall also have the liberty to change the name of the Vessel during the Charter Period at the expense and time of the Charterers (including the legal charge for finance documents for the Mortgagee, if any).
16
The Owners shall have no right to change the name of the Vessel during the Charter Period.
| 44. | MORTGAGE and ASSIGNMENT |
The Owners confirm that they are familiar with the terms of the assignment of insurances made or to be made by the Charterers in favour or the Mortgagee, and they agree to the terms thereof and will do nothing that conflicts therewith, excepting that the Owners shall be entitled to assign its rights, title and interest in and to this Charter to the Mortgagee or its assignee. Neither party shall assign its right or obligations or part of thereof to any third party without the written consent of the other.
In respect of the Vessel the Owners undertake not to borrow more than the respective purchase option prices as set out at the relevant milestone in Clause 49 hereof.
The Owners have the right to register a first preferred mortgage on the Vessel in favour of the Mortgagee (THE HIROSHIMA BANK, LTD.) securing a loan under the Loan Agreement under standard mortgages and security documentation. In which case, the Owners undertake to procure from the Mortgagee a Letter / Agreement of Quiet Enjoyment in a form and substance reasonably acceptable to the Charterers.
The Charterers agree to sign an acknowledgement of the Owners’ charterhire assignment or any other comparable document reasonably required by the Mortgagee, in favour of the Mortgagee. During the course of the Charter the Owners have the right to register a substitute mortgage in favour of another bank provided such registration is effected in a similar amount to the loan amount outstanding with the Mortgagee at that time and only if such substitute mortgagee executes a Letter / Agreement of Quiet Enjoyment in favour of the Charterers in the same form as that provided by the Mortgagee or the form reasonably acceptable for the Charterers. The Charterers will then agree to sign a charterhire assignment in favour of the substitute mortgage in a form as shall be agreed by the Charterers, which agreement not be unreasonably withheld. Any cost incurred by the Charterers shall be for Owners’ account.
Subject to the term and conditions of this Charter, the Charterers also agree that the Owners have the right to assign its rights, title and interest in and to the insurances by way of assignment of insurance in respect of the Vessel to and in favour of the Assignee in a form and substance reasonably acceptable to Charterers and the Assignee.
17
Owners shall procure that exercise and/or enforce of any mortgage and charterhire assignment which might interfere with or prejudice or adversely affect the Charterer’s use of the Vessel or other right of the Charterer under this Charter (including the purchase option of the Vessel) shall be subject to the terms and conditions of the Letter/Agreement of Quiet Enjoyment.
In the event that the Owners execute security of any nature (including but not limited to any mortgage, assignment of insurances) over the Vessel then the Owners hereby undertake and agree as a condition of this Charter to procure that the beneficiary of such security executes in favour of the Charterers a letter / agreement of quiet enjoyment in such form and content as is reasonably acceptable to the Charterers, and exercise and/or enforce of the beneficiary’s rights thereunder is subject to the agreement of a letter / agreement of Quiet Enjoyment before or after delivery of the Vessel.
| 45. | REDELIVERY INSPECTION |
Prior to redelivery under Clause 42 hereof and without interference to the operation of the Vessel, the Owners, at their risk and expense, shall have the right provided that such right is declared at least 20 days prior to the expected redelivery date to carry out an underwater inspection of the Vessel by Class approved diver and in the presence of Class surveyor and Owners’ and Charterers’ representatives. Should any damages in the Vessel’s underwater parts be found that will impose a condition or recommendation of Vessel’s class then:
| a) | In case Class imposes a condition or recommendation of class that does not require drydocking before next scheduled drydocking. Charterers shall pay to Owners the estimated cost to repair such damage in way which is acceptable to Class, which to be direct cost to repair such damage only, as per average quotation for the repair work obtained from two reputable independent shipyards at or in the vicinity of the redelivery port, one to be obtained by Owners and one by Charterers within 2 banking days from the date of imposition of the condition/recommendation unless the parties agree otherwise. |
18
| b) | In case Class require Vessel to be drydocked before the next scheduled drydocking the Charterers shall drydock the Vessel at their expense prior to redelivry of the Vessel to the Owners and repair same to Class satisfaction. |
In such event the Vessel shall be redelivered at the port of the dockyard.
| 46. | REDELIVERY |
The Charterers shall redeliver to the Owners the Vessel with everything belonging to her at the time of redelivery including spare parts on board, used or unused subject to the Clause 38 hereof. The Owners shall take over and pay the Charterers for remaining bunkers and unused lubricating oils including hydraulic oils, and greases, unbroached provisions, paints, ropes and other consumable stores as per Clause 53 at the Charterers’ purchased prices with supporting vouchers. For the purpose of this clause, the Charterers shall withhold the Hire two last hire payments (the “Withheld Hire”) and shall offset the cost of bunkers, unused lubricating oils and unbroached provisions etc., remaining on board at the time of redelivery from the Withheld Hire. If the Withheld Hire is not sufficient to cover the cost of bunkers, unused lubricating oils, and unbroached provisions etc. the Owners shall settle the outstanding amount within 3 Singapore banking days after redelivery of the Vessel.
Personal effects of the Master, officers and crew including slop chest, hired equipment, if any and the following listed items are excluded and shall be removed by the Charterers prior to or at the time of redelivery of the Vessel:
| • | E-mail equipment not part of GMDSS |
| • | Gas bottles |
| • | Electric deck air compressor |
| • | Blasting and painting equipment |
| • | Videotel (or similar) film library |
| 47. | MORTGAGE NOTICE |
The Charterers and place and keep prominently displayed in the chart room, master’s cabin, and engine room of the Vessel a framed printed notice in plain type reading as follows:
19
“NOTICE OF SHIP MORTGAGE”
“This Vessel is covered by a First Preferred Ship Mortgage given to THE HIROSHIMA BANK, LTD., a banking corporation duly organized and existing under the laws of Japan, having its head office at 3-8 Kamiya-cho 1-chome, Naka-ku, Hiroshima City, Hiroshima-Pref., Japan, acting through its Imabari Office at 1-13, Muroya-cho 1-chome, Imabari City, Ehime-Pref., Japan, its successors and assigns under the authority of the laws of the Republic of Panama. Under the terms of said Mortgage, neither the owner of this Vessel, any charterer, the Master of this Vessel, nor any other person has any right, power or authority to create, incur or permit to be imposed upon the Vessel any liens, maritime or otherwise, other than the lien of said Mortgage and liens for crew’s wages or salvage.”;
| 48. | SALE OF VESSEL BY OWNERS |
| 1. | The Owners have the right to sell the Vessel to a reputable third party (“Purchaser”) at any time during the Charter Period with the prior written consent of the Charterers and provided that (i) the Purchaser agrees to take over the benefit and burden of this Charter, (ii) such ownership change does not result in any reflagging of the Vessel, (iii) such ownership change does not result in the Charterers being obliged to increase any payment under this Charter, (iv) such ownership change does not increase the actual or contingent obligations of the Charterers under this Charter, and (v) the Charterers shall not be liable for the costs and expenses (including legal fees) incurred in the sale of the Vessel by the Owners under this Clause 48. |
| 2. | The Owners shall give the Charterers at least one month’s prior written notice of any sale. |
| 3. | Subject to 48.1, the Charterers and Owners undertake with each other to execute one or more novation agreements (or other documents required under applicable law) to novate the rights and obligations of the Owners under this Charter to the Purchaser such novation agreement(s) or other documents to be in such form and substance acceptable to the Charterers and such novation will be effective upon delivery of the Vessel from the Owners to the Purchaser.” |
20
| 49. | CHARTERERS’ OPTION TO PURCHASE VESSEL |
| 1. | Charterers to have purchase option at the end of 4th Year of the Charter Period at a price of USD3,150,000.—(the “Final Purchase Option Price”); however, Charterers to have purchase option to purchase the Vessel at the end of 3rd year anniversary date of the Delivery Date at USD5,362,500 net (the “First Purchase Option Price”) subject to Charterers declaration 3 months before such date. |
| 2. | Charterers further have an option to purchase, such purchase being declared every 3 months interval through the remaining period at the following price or pro-rata de-escalation until the maturity of the Charter Period(the “Subsequent Purchase Option Price” and together with the Final Purchase Option Price and First Purchase Option Price the ‘Purchase Option Price’). |
|
|
At end of 3rd year |
: | USD 5,362,500 | |||
| At end of 4th year |
: | USD 3,150,000 |
(The purchase option price of the Vessel to be calculated in accordance with Clause 49.1 and 49.2 hereof, whether the Final Purchase Option Price or the First Option Price, hereinafter called the “Remaining Purchase Option Price”).
| 3. | Immediately prior to delivery of the Vessel by the Owners to the Charterers under the PO MOA (as defined in Clause 49.4) the Parties shall execute a Protocol of Redelivery and Acceptance under this Charter (the “Redelivery Protocol”) and save in respect of any claims accrued under this Charter prior to the date and time of the Redelivery Protocol, this Charter shall terminate forthwith. |
| 4. | Upon the date of any written notification by the Charterers to the Owners of their intention to purchase the Vessel, the Owners and the Charterers shall be deemed to have unconditionally entered into a contract to sell and purchase the Vessel for the Remaining Purchase Option Price on and in strict conformity with the terms and conditions contained in the Memorandum of Agreement attached to this Charter as Exhibit A (the “PO MOA”). |
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| 50 | DOWN PAYMENT |
The Charterers shall pay US$4,500,000 to the Owners as down payment to the Purchase Option Price upon delivery of the Vessel. The down payment will be netted off against payment of the purchase price under the MEMORANDUM OF AGREEMENT signed by Sagittarius Shipping Corporation and WEALTH LINE INC. dated on 5th December 2022 (herein called “MOA”) at the time of delivery of the Vessel under the MOA and this Charter pursuant to clause 32.
The down payment is not part of the Purchase Option Price of Clause 49 and shall be kept by the Owners on delivery of the Vessel under the PO MOA referred to in Clause 49.
The down payment does not bear interest and is non-refundable. For the avoidance of any doubt, should the Charter be terminated due to Total Loss, the Owners shall make the payment referred to in Clause 40, but shall have no obligation to make any refund to the Charterers in respect of the Down payment.
| 51. | MISCELLANEOUS |
| (a) | The terms and conditions of this Charter and the respective rights of the Owners and the Charterers shall not be waived or varied otherwise than by an instrument in writing of the same date as or subsequent to this Charter executed by both parties or by their duly authorized representatives. |
| (b) | Unless otherwise provided in this Charter whether expressly or by implication, time shall be of the essence in relation to the performance by the Charterers of each and every one of their obligations hereunder. |
22
| (c) | No failure or delay on the part of the Owners or the Charterers in exercising any power, right or remedy hereunder or in relation to the Vessel shall operate as a waiver thereof nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise of any such right or power or the exercise of any other right, power or remedy. |
| (d) | If any terms or condition of this Charter shall to any extent be illegal invalid or unenforceable the remainder of this Charter shall not be affected thereby and all other terms and condition shall be legal valid and enforceable to the fullest extent permitted by law. |
| (e) | The respective rights and remedies conferred on the Owners and the Charterers by this Charter are cumulative, may be exercised as often as the Owners or the Charterers (as the case may be) think fit and are in addition to, and are not exclusive of, any rights and remedies provided by law. |
| 52. | COMMUNICATIONS |
Except as otherwise provided for in this Charter, all notices or other communications under or in respect of this Charter to either party hereto shall be in writing and shall be made or given to such party at the address, facsimile number or e-mail address appearing below (or at such other address, facsimile number or e-mail address as such party may hereafter specify for such purposes to the other by notice in writing):-
|
|
(i) |
in the case of the Owners c/o Fukujin Kisen Co., Ltd. | ||||
| Address |
: 8-55, Kita-hiyoshi-cho 2 chome, Imabari, | |||||
| Ehime Pref., Japan, | ||||||
| Telephone |
: +81-898-34-7711 | |||||
| Telefax |
: +81-898-34-7733 | |||||
| |
: tokyo@fjline.co.jp | |||||
| (ii) |
in the case of the Charterers c/o Navios Shipmanagement Inc. | |||||
| Address |
: 85 Akti Miaouli Street, 18538, Piraeus, Greece | |||||
| Telephone |
: 30-210-4595000 | |||||
| |
: ops@navios.com, legal@navios.com | |||||
| tech@navios.com, legal_corp@navios.com | ||||||
| (iii) |
in the case of the Brokers c/o ITOCHU Corporation | |||||
| Address |
: TOKBR Section, 5-1, Kiya-Aoyama 2-chome, | |||||
| Minato-ku, Tokyo, 107-8077 Japan | ||||||
| Telephone |
: 81-3-3497-2999 | |||||
| Telefax |
: 81-3-3497-7111 | |||||
| |
: tokbr@itochu.co.jp | |||||
23
A written notice includes a notice by facsimile or e-mail. A notice or other communication received on a non-working day or after business hours in the place of receipt shall be deemed to be served on the next following working day in such place.
Subject always to the foregoing sentence, any communication by personal delivery or letter shall be deemed to be received on delivery, any communication by e-mail shall be deemed to be received upon transmission of the automatic answerback of the addresses and any communication by facsimile shall be deemed to be received upon appropriate acknowledgment by the addressee’s receiving equipment.
All communications and documents delivered pursuant to or otherwise relating to this Charter shall either be in English or accompanied by a certified English translation.
| 53. | TRADING IN WAR RISK AREA |
The Charterers shall be permitted to order the Vessel into an area subject to War Risks as defined in Clause 26 without consent of the Owners provided that all Marine, War and P&I Insurance are maintained with full force and effect and the Charterers shall pay any and all additional premiums to maintain such insurance.
| 54. | INVENTORIES, OIL AND STORES |
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 under this Charter and again on redelivery of the Vessel under Clause 42 hereof.
The Owners shall at the time of redelivery under Clause 42 hereof take over and pay for all remaining bunkers, unused lubricating oil (for avoidance of any doubts, the lubricant oil in the machinery is included), unbroached provisions, paints, ropes and other unused consumable stores (excluding spare parts) in the said Vessel at the Charterers’ purchased prices with supporting vouchers, provided that this payment
24
shall be off-set against the Owner’s claim under Clause 42 to the extent the sum equivalent to such payment. However, the Charterers shall not pay to the Owners at time of delivery for any bunkers, lubricating oil, provisions, paints, ropes and consumable stores which the Charterers have supplied to the Vessel at the Charterers’ expense prior to delivery. 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.
| 55. | INDEMNITY FOR POLLUTION RISKS |
The Charterers shall indemnify the Owners against the following Pollution Risks:-
| (a) | liability for damages or compensation payable to any person arising from pollution; |
| (b) | the costs of any measures reasonably taken for the purpose of preventing, minimizing or cleaning up any pollution together with any liability for losses or damages arising from any measures so taken; |
| (c) | liability which the Owners and/or the Charterers may incur, together with costs and expenses incidental thereto, as the result of escape or discharge or threatened escape discharge of oil or any other substance; |
| (d) | the costs or liabilities incurred as a result of compliance with any order or direction given by any government or authority for the purpose of preventing or reducing pollution or the risk of pollution; provided always that such costs or liabilities are not recoverable under the Hull and Machinery Insurance Policies on the Vessel; |
| (e) | liability which the Owners and/or the Charterers may incur to salvors under the exception to the principal of “no cure-no pay” in Article 1 (b) of Lloyds Standard Form of Salvage Agreement (LOF 1990); and |
| (f) | liability which the Charterers may incur for the payment of fines in respect of pollution in so far as such liability may be covered under the rules of the P&I Club. |
25
| 56. | TRADE AND COMPLIANCE CLAUSE |
The Charterers and the Owners hereby agree that no person/s or entity/ies under this Charter will be individual(s) or entity(ies) designated under any applicable national or international law imposing trade and economic sanctions including sanction, prohibition or restriction imposed on any specified persons, entities or bodies including the designation of specified vessels or fleet under United Nations Resolutions or trade or economic sanctions, laws or regulations of the European Union, United Kingdom, Japan or United States of America (collectively, the “Sanctions”).
Further, the Charterers and the Owners agree that the performance of this Charter will not require any action prohibited by sanctions or restrictions under any applicable Sanctions.
Further to the above, Charterers shall take reasonable steps to confirm that at the date of this Charter Party and throughout the duration thereof, any sub-charterer of the Vessel (who is directly contracting with the Charterer in respect of the Vessel at any relevant time), the managers of the Vessel and the Vessel are not a sanctioned party/vessel under the Sanctions.
| 57. | ANTI-BRIBERY AND ANTI-CORRUPTION |
The Charterers and the Owners hereby agree that in connection with this Contract and/or any other business transactions related to it, they as well as their sub-contractors and each of their affiliates, directors, officers, employees, agents, and every other person acting on its and its sub-contactors’ behalf, shall perform all required duties, transactions and dealings in compliance with all applicable laws, rules, regulations relating to anti-bribery and anti-money laundering.
| 58. | NAABSA Clause |
The Vessel may, under the sole responsibility of Charterers, lie safely aground at any safe berth or safe place where it is customary and safe for vessels of similar size and type to lie.
(end)
26
Exhibit 4.65
Dated 21 December 2022
$44,200,000
TERM LOAN FACILITY
RHODES SHIPPING CORPORATION
CRETE SHIPPING CORPORATION
SKYROS SHIPPING CORPORATION
as joint and several Borrowers
FIRST-CITIZENS BANK & TRUST COMPANY
as Facility Agent
and
FIRST-CITIZENS BANK & TRUST COMPANY
as Security Agent
FACILITY AGREEMENT
relating to
the refinancing of existing indebtedness secured on three product tanker vessels
Index
| Clause | Page | |||||
| Section 1 Interpretation | 2 | |||||
| 1 |
Definitions and Interpretation | 2 | ||||
| Section 2 The Facility | 29 | |||||
| 2 |
The Facility | 29 | ||||
| 3 |
Purpose | 29 | ||||
| 4 |
Conditions of Utilisation | 29 | ||||
| Section 3 Utilisation | 31 | |||||
| 5 |
Utilisation | 31 | ||||
| Section 4 Repayment, Prepayment and Cancellation | 34 | |||||
| 6 |
Repayment | 34 | ||||
| 7 |
Prepayment and Cancellation | 35 | ||||
| Section 5 Costs of Utilisation | 40 | |||||
| 8 |
Interest | 40 | ||||
| 9 |
Interest Periods | 41 | ||||
| 10 |
Changes to the Calculation of Interest | 41 | ||||
| 11 |
Fees | 42 | ||||
| Section 6 Additional Payment Obligations | 44 | |||||
| 12 |
Tax Gross Up and Indemnities | 44 | ||||
| 13 |
Increased Costs | 49 | ||||
| 14 |
Other Indemnities | 50 | ||||
| 15 |
Mitigation by the Finance Parties | 53 | ||||
| 16 |
Costs and Expenses | 54 | ||||
| Section 7 Joint and Several Liability of Borrowers | 55 | |||||
| 17 |
Joint and Several Liability of the Borrowers | 55 | ||||
| Section 8 Representations, Undertakings and Events of Default | 57 | |||||
| 18 |
Representations | 57 | ||||
| 19 |
Information Undertakings | 64 | ||||
| 20 |
General Undertakings | 67 | ||||
| 21 |
Insurance Undertakings | 74 | ||||
| 22 |
Ship Undertakings | 80 | ||||
| 23 |
Loan to Value Ratio | 86 | ||||
| 24 |
Accounts and Application of Earnings | 88 | ||||
| 25 |
Events of Default | 89 | ||||
| Section 9 Changes to Parties | 95 | |||||
| 26 |
Changes to the Lenders | 95 | ||||
| 27 |
Changes to the Transaction Obligors | 100 | ||||
| Section 10 The Finance Parties | 101 | |||||
| 28 |
The Facility Agent | 101 | ||||
| 29 |
The Security Agent | 112 | ||||
| 30 |
Conduct of Business by the Finance Parties | 127 | ||||
| 31 |
Sharing among the Finance Parties | 127 | ||||
| Section 11 Administration | 130 | |||||
| 32 |
Payment Mechanics | 130 | ||||
| 33 |
Set-Off | 133 | ||||
| 34 |
Bail-In | 133 | ||||
| 35 |
Notices | 134 | ||||
| 36 |
Calculations and Certificates | 136 | ||||
| 37 |
Partial Invalidity | 136 | ||||
| 38 |
Remedies and Waivers | 136 | ||||
| 39 |
Entire Agreement | 136 | ||||
| 40 |
Settlement or Discharge Conditional | 137 | ||||
| 41 |
Irrevocable Payment | 137 | ||||
| 42 |
Amendments and Waivers | 137 | ||||
| 43 |
Confidential Information | 143 | ||||
| 44 |
Counterparts | 147 | ||||
| Section 12 Governing Law and Enforcement | 148 | |||||
| 45 |
Governing Law | 148 | ||||
| 46 |
Enforcement | 148 | ||||
| 47 |
PATRIOT Act Notice | 148 | ||||
| Schedules | ||||||
| Schedule 1 The Parties |
150 | |||||
| Part A The Borrowers |
150 | |||||
| Part B The Original Lenders |
151 | |||||
| Part C The Servicing Parties |
152 | |||||
| Schedule 2 Conditions Precedent |
153 | |||||
| Part A Conditions Precedent to Utilisation Request |
153 | |||||
| Part B Conditions Precedent to Release of Advance |
156 | |||||
| Schedule 3 Requests |
158 | |||||
| Utilisation Request |
158 | |||||
| Schedule 4 Form of Transfer Certificate |
160 | |||||
| Schedule 5 Form of Assignment Agreement |
162 | |||||
| Schedule 6 Timetables |
165 | |||||
| Schedule 7 Details of the Ships and other Definitions |
166 | |||||
| Execution | ||||||
| Execution Pages |
149 | |||||
THIS AGREEMENT is made on 21 December 2022
PARTIES
| (1) | RHODES SHIPPING CORPORATION, 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 a borrower (“Borrower A”) |
| (2) | CRETE SHIPPING CORPORATION, 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 a borrower (“Borrower B”) |
| (3) | SKYROS SHIPPING CORPORATION, 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 a borrower (“Borrower C”) |
| (4) | THE FINANCIAL INSTITUTIONS listed in Part B of Schedule 1 (The Parties) as lenders (the “Original Lenders”) |
| (5) | FIRST-CITIZENS BANK & TRUST COMPANY as agent of the other Finance Parties (the “Facility Agent”) |
| (6) | FIRST-CITIZENS BANK & TRUST COMPANY as security agent for the Secured Parties (the “Security Agent”) |
BACKGROUND
The Lenders have agreed to make available to the Borrowers a senior secured term loan facility, in three Tranches, in an aggregate amount of up to the lesser of (i) $44,200,000 and (ii) 47.50 per cent. of the aggregate of the Initial Market Value of the Ships for the purpose of refinancing the Existing Indebtedness secured on each Ship.
OPERATIVE PROVISIONS
SECTION 1
INTERPRETATION
| 1 | DEFINITIONS AND INTERPRETATION |
| 1.1 | Definitions |
In this Agreement:
“Account Bank” means:
| (a) | in relation to the Cash Reserve Account, CIT Bank, a division of First-Citizens Bank & Trust Company, acting through its office at 75 N. Fair Oaks Ave., Pasadena, California 91103, United States of America; |
| (b) | in relation to the Earnings Accounts, Hamburg Commercial Bank AG, acting through its office at Gerhart-Hauptmann-Platz 50, 20095 Hamburg, Germany; or |
| (c) | 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 Cash Reserve Account and the Earnings Accounts.
“Account Security” means a document creating Security over any Account in agreed form.
“Adjusted Term SOFR” means the percentage rate per annum which is the aggregate of the applicable:
| (a) | Reference Rate; and |
| (b) | Term SOFR Adjustment, |
and if the aggregate of that Reference Rate and the applicable Term SOFR Adjustment is less than zero, the Adjusted Term SOFR shall be deemed to be zero.
“Advance” means a borrowing of all or part of a Tranche under this Agreement.
“Affiliate” means, in relation to any person, a Subsidiary of that person or a Holding Company of that person or any other Subsidiary of that Holding Company.
“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 (acting on the instructions of the Majority Lenders).
“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 and other Definitions) with the relevant Approved Classification Society or the equivalent classification with another Approved Classification Society.
2
“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 and other Definitions), Lloyd’s Registry, ABS, DNV, BV, the Korean Registry of Shipping, ClassNK, RINA or any other classification society approved in writing by the Facility Agent acting with the authorisation of the Majority Lenders and which authorisation shall not be withheld in the case of any classification society which is a member of the International Association of Classification Societies.
“Approved Flag” means, in relation to a Ship, as at the date of this Agreement, the flag in relation to that Ship specified in Schedule 7 (Details of the Ships and other Definitions), Cyprus, Liberia, Malta, Panama, Marshall Islands or such other flag approved in writing by the Facility Agent acting with the authorisation of the Lenders, such authorisation not to be unreasonably withheld.
“Approved Manager” means, in relation to a Ship:
| (a) | as at the date of this Agreement, the manager specified as the approved manager in relation to that Ship in Schedule 7 (Details of the Ships and other Definitions); or |
| (b) | any Affiliate of Navios Shipmanagement Inc. or any other person approved in writing by the Facility Agent acting with the authorisation of the Majority Lenders, such authorisation not to be unreasonably withheld, as the manager of any Ship. |
“Approved Valuer” means Arrow Sale and Purchase (UK) Limited, Barry Rogliano Salles, Clarkson Securities AS, Maersk Broker K/S, Howe Robinson and Company Limited, Fearnleys AS, Simpson Spence Young Ltd, VesselsValue Limited and Braemar Valuations Limited (or any Affiliate of such person through which valuations are commonly issued) and any other firm or firms of independent sale and purchase shipbrokers approved in writing by the Facility Agent, acting with the authorisation of the Majority Lenders.
“Article 55 BRRD” means Article 55 of Directive 2014/59/EU establishing a framework for the recovery and resolution of credit institutions and investment firms.
“Assignable Charter” means any time charterparty, consecutive voyage charter or contract of affreightment in respect of a Ship of a duration (or capable of exceeding a duration) of 12 months or more or any bareboat charter entered into in accordance with Clauses 22.16 (Restrictions on chartering, appointment of managers etc.) and 22.19 (Charterparty Assignment).
“Assignment Agreement” means an agreement substantially in the form set out in Schedule 5 (Form of Assignment Agreement) or any other form agreed between the relevant assignor and assignee.
“Authorisation” means an authorisation, consent, approval, resolution, licence, exemption, filing, notarisation, legalisation or registration.
“Availability Period” means the period from and including the date of this Agreement to and including 30 January 2023, or such later date as may be agreed by the Facility Agent in writing.
“Available Commitment” means a Lender’s Commitment minus:
| (a) | the amount of its participation in the outstanding Loan; and |
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| (b) | 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 |
| (c) | in relation to the United Kingdom, the UK Bail-In Legislation. |
“Balloon Instalments” has the meaning given to it in Clause 6.1 (Repayment of Loan).
“Base Rate” means for any day a fluctuating rate per annum equal to the highest of:
| (a) | the Federal Funds Rate plus half of one per cent.; or |
| (b) | the rate of interest in effect for such day as publicly announced from time to time by JPMorgan Chase Bank, N.A. as its “prime rate” in effect for such day. |
The Base Rate is not necessarily the lowest rate of interest charged by Lenders in connection with extensions of credit. Any change in the Base Rate due to a change in the “prime rate” announced by JPMorgan Chase Bank, N.A. or the Federal Funds Rate shall be effective from and including the effective date of such change in the “prime rate” announced by JPMorgan Chase Bank, N.A. or the Federal Funds Rate respectively. For the avoidance of doubt, the Base Rate will in no event be less than zero per cent. per annum.
“Bill of Sale” means, in relation to a Ship, the bill of sale executed or, as the case may be, to be executed by the relevant Existing Owner as seller transferring title of ownership in that Ship to the relevant Borrower.
“Borrower” means Borrower A, Borrower B or Borrower C.
“Break Costs” means the amount (if any) by which:
| (a) | the interest which a Lender should have received for the period from the date of receipt of all or any part of its participation in the Loan or an Unpaid Sum to the last day of the current Interest Period in relation to the Loan, the relevant part of the Loan or that Unpaid Sum, had the principal amount or Unpaid Sum received been paid on the last day of that Interest Period |
exceeds
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| (b) | the amount which that Lender would be able to obtain by placing an amount equal to the principal amount or Unpaid Sum received by it on deposit with a leading bank for a period starting on the Business Day following receipt or recovery and ending on the last day of the current Interest Period. |
“Business Day” means a day (other than a Saturday or Sunday) on which banks are open for general business in London, New York, Hamburg, Athens and includes in relation to the fixing of an interest rate, a day which is a US Government Securities Business Day.
“Cash Reserve Account” means:
| (a) | an account in the name of the Guarantor with the relevant Account Bank designated “Cash Reserve Account”; |
| (b) | any other account in the name of the Guarantor or the Borrowers or any of them, as the case may be, with the relevant 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. |
“Change of Control” has the meaning given to it in 25.10 (Change of Control).
“Charter” means, in relation to a Ship, any charter relating to that Ship, or other contract for its employment, whether or not already in existence (including without limitation, an Assignable Charter).
“Charter Guarantee” means any guarantee, bond, letter of credit or other instrument (whether or not already issued) supporting a Charter.
“Charterparty Assignment” means, in relation to an Assignable Charter, a first priority assignment of the rights of the relevant Borrower under that Assignable Charter and any related Charter Guarantee executed or to be executed by that Borrower in favour of the Security Agent in agreed form.
“Code” means the US Internal Revenue Code of 1986.
“Commitment” means:
| (a) | in relation to an Original Lender, the amount set opposite its name under the heading “Commitment” in Part B of Schedule 1 (The Parties) and the amount of any other Commitment transferred to it under this Agreement; and |
| (b) | in relation to any other Lender, the amount of any Commitment transferred to it under this Agreement, |
to the extent not cancelled, reduced or transferred by it under this Agreement.
“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 |
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| (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 information that:
| (i) | is or becomes public information other than as a direct or indirect result of any breach by that Finance Party of Clause 43 (Confidential Information); or |
| (ii) | is identified in writing at the time of delivery as non-confidential by any member of the Group or any of its advisers; or |
| (iii) | 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; or |
| (iv) | in relation to the Guarantor such information as the Guarantor is entitled to disclose by rules and regulations of the US Securities and Exchange Commission and any US Stock Exchange applicable to the Guarantor. |
“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 a Borrower owes to a Secured Party under or in connection with the Finance Documents.
“Deed of Covenant” means, in relation to a Ship, if required by the laws of the Approved Flag of that Ship, a deed of covenant collateral to the Mortgage over that Ship and creating Security over that Ship in agreed form.
“Deed of Release” means any deed releasing the Borrowers and the other Transaction Obligors from their obligations under the Existing Bareboat Charters and any Existing Security in a form acceptable to the Facility Agent.
“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.
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“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.
“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 |
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| (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:
| (a) | an account in the name of that Borrower with the relevant Account Bank designated “Earnings Account”; |
| (b) | any other account in the name of that Borrower with the relevant Account Bank which may, with the prior written consent of the Facility Agent, be opened in the place of the account referred to in paragraph (a) above, irrespective of the number or designation of such replacement account; or |
| (c) | any sub-account of any account referred to in paragraphs (a) or (b) above. |
“EEA Member Country” means any member state of the European Union, Iceland, Liechtenstein and Norway.
“Environmental Approval” means any present or future permit, ruling, variance or other Authorisation required under Environmental Laws.
“Environmental Claim” means any claim by any governmental, judicial or regulatory authority or any other person which arises out of an Environmental Incident or an alleged Environmental Incident or which relates to any Environmental Law and, for this purpose, “claim” includes a claim for damages, compensation, contribution, injury, fines, losses and penalties or any other payment of any kind, including in relation to clean-up and removal, whether or not similar to the foregoing; an order or direction to take, or not to take, certain action or to desist from or suspend certain action; and any form of enforcement or regulatory action, including the arrest or attachment of any asset.
“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. |
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“Environmental Law” means any present or future law relating to pollution or protection of human health or the environment, to conditions in the workplace, to the carriage, generation, handling, storage, use, release or spillage of Environmentally Sensitive Material or to actual or threatened releases of Environmentally Sensitive Material.
“Environmentally Sensitive Material” means and includes all contaminants, oil, oil products, toxic substances and any other substance (including any chemical, gas or other hazardous or noxious substance) which is (or is capable of being or becoming) polluting, toxic or hazardous.
“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 25 (Events of Default).
“Existing Bareboat Charter” means Existing Bareboat Charter A, Existing Bareboat Charter B or Existing Bareboat Charter C.
“Existing Bareboat Charter A” means the bareboat charter dated 12 June 2020 (as amended and supplemented from time to time) made between (i) Borrower A as bareboat charterer and (ii) Existing Owner A as owner, pursuant to which Existing Owner A agreed to bareboat charter Ship A to Borrower A.
“Existing Bareboat Charter B” means the bareboat charter dated 12 June 2020 (as amended and supplemented from time to time) made between (i) Borrower B as bareboat charterer and (ii) Existing Owner B as owner, pursuant to which Existing Owner B agreed to bareboat charter Ship B to Borrower B.
“Existing Bareboat Charter C” means the bareboat charter dated 12 June 2020 (as amended and supplemented from time to time) made between (i) Borrower C as bareboat charterer and (ii) Existing Owner C as owner, pursuant to which Existing Owner C agreed to bareboat charter Ship C to Borrower C.
“Existing Indebtedness” means Existing Indebtedness A, Existing Indebtedness B and Existing Indebtedness C.
“Existing Indebtedness A” means, at any date, the outstanding Financial Indebtedness of Borrower A on that date under Existing Bareboat Charter A.
“Existing Indebtedness B” means, at any date, the outstanding Financial Indebtedness of Borrower B on that date under Existing Bareboat Charter B.
“Existing Indebtedness C” means, at any date, the outstanding Financial Indebtedness of Borrower C on that date under Existing Bareboat Charter C.
“Existing Owner” means Existing Owner A, Existing Owner B or Existing Owner C.
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“Existing Owner A” means, in relation to Ship A, Great Rhodes Limited, 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.
“Existing Owner B” means, in relation to Ship B, Great Crete Limited, 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.
“Existing Owner C” means, in relation to Ship C, Great Skyros Limited, 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.
“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 |
| (c) | any agreement pursuant to the implementation of any treaty, law or regulation referred to in paragraphs (a) or (b) above with the US Internal Revenue Service, the US government or any governmental or taxation authority in any other jurisdiction. |
“FATCA Application Date” means:
| (a) | in relation to a “withholdable payment” described in section 1473(1)(A)(i) of the Code (which relates to payments of interest and certain other payments from sources within the US), 1 July 2014; or |
| (b) | in relation to a “passthru payment” described in section 1471(d)(7) of the Code not falling within paragraph (a) above, the first date from which such payment may become subject to a deduction or withholding required by FATCA. |
“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.
“Federal Funds Rate” means, for any date, the greater of:
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| (a) | the rate calculated by the Federal Reserve Bank of New York based on such day’s Federal funds transactions by depositary institutions (as determined in such manner as the Federal Reserve Bank of New York shall set forth on its public website from time to time) and published on the next succeeding Business Day by the Federal Reserve Bank of New York as the Federal funds effective rate; and |
| (b) | zero per cent. |
“Fee Letter” means any letter or letters dated on or about the date of this Agreement between any of the Facility Agent, the Security Agent and any Obligor setting out any of the fees referred to in Clause 11 (Fees).
“Finance Document” means:
| (a) | this Agreement; |
| (b) | any Fee Letter; |
| (c) | the Utilisation Request; |
| (d) | any Security Document; |
| (e) | any Manager’s Undertaking; |
| (f) | the Guarantee; |
| (g) | any other document which is executed for the purpose of establishing any priority or subordination arrangement in relation to the Secured Liabilities; or |
| (h) | any other document designated as such by the Facility Agent and the Borrowers. |
“Finance Party” means the Facility Agent, the Security Agent 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; |
| (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; |
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| (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. |
“GAAP” means generally accepted accounting principles in the US.
“General Assignment” means, in relation to a Ship, the general assignment creating Security over:
| (a) | that Ship’s Earnings, its Insurances and any Requisition Compensation in relation to that Ship; and |
| (b) | any Charter and any Charter Guarantee in relation to that Ship, |
in agreed form.
“Group” means the Guarantor and its Subsidiaries for the time being (excluding any Subsidiaries whose shares are listed on any public stock exchange and whose financial statements are not consolidated into the financial statements of the Guarantor) and “member of the Group” shall be construed accordingly.
“Guarantee” means a guarantee executed by the Guarantor in agreed form.
“Guarantor” means Navios Maritime Partners L.P., a limited partnership formed in the Republic of the Marshall Islands whose registered address is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960.
“Historic Term SOFR” means, in relation to the Loan or any part of the Loan, the most recent applicable Term SOFR for a period equal in length to the Interest Period of the Loan or that part of the Loan and which is as of a day which is not more than three US Government Securities Business Days before the Quotation Day.
“Holding Company” means, in relation to a person, any other person in relation to which it is a Subsidiary.
“Inventory of Hazardous Materials” means an inventory certificate or statement of compliance (as applicable) issued by the relevant Approved Classification Society or shipyard authority which is supplemented by a list of any and all materials known to be potentially hazardous utilised in the construction of, or otherwise installed on, that Ship, pursuant to the requirements of the EU Ship Recycling Regulation.
“Indemnified Person” has the meaning given to it in Clause 14.2 (Other indemnities).
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“Initial Market Value” means, in relation to a Ship, the Market Value of that Ship calculated in accordance with the valuations relative thereto referred to in paragraph 3.7 of Schedule 2 (Conditions Precedent), Part B.
“Insurances” means, in relation to a Ship:
| (a) | all policies and contracts of insurance, including entries of that Ship in any protection and indemnity or war risks association, effected in relation to that Ship, 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 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 8.2 (Payment of interest).
“Interest Period” means, in relation to the Loan or any part of the Loan, each period determined in accordance with Clause 9 (Interest Periods) and, in relation to an Unpaid Sum, each period determined in accordance with Clause 8.3 (Default interest).
“Interpolated Historic Term SOFR” means, in relation to the Loan or any part of the Loan, the rate which results from interpolating on a linear basis between:
| (a) | either: |
| (i) | the most recent applicable Term SOFR (as of a day which is not more than three US Government Securities Business Days before the Quotation Day) for the longest period (for which Term SOFR is available) which is less than the Interest Period of the Loan or that part of the Loan; or |
| (ii) | if no such Term SOFR is available for a period which is less than the Interest Period of the Loan or that part of the Loan, the most recent Term SOFR for a tenor of one month (as of a day which is not more than three US Government Securities Business Days before the Quotation Day); and |
| (b) | the most recent applicable Term SOFR (as of a day which is not more than three US Government Securities Business Days before the Quotation Day) for the shortest period (for which Term SOFR is available) which exceeds the Interest Period of the Loan or that part of the Loan. |
“Interpolated Term SOFR” means, in relation to the Loan or any part of the Loan, the rate which results from interpolating on a linear basis between:
| (a) | either: |
| (i) | the applicable Term SOFR (as of the Specified Time) for the longest period (for which Term SOFR is available) which is less than the Interest Period of the Loan or that part of the Loan; or |
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| (ii) | if no such Term SOFR is available for a period which is less than the Interest Period of the Loan or that part of the Loan, Term SOFR for a tenor of one month (as of the Specified Time); and |
| (b) | the applicable Term SOFR (as of the Specified Time) for the shortest period (for which Term SOFR is available) which exceeds the Interest Period of the Loan or that part of the Loan. |
“ISM Code” means the International Safety Management Code for the Safe Operation of Ships and for Pollution Prevention (including the guidelines on its implementation), adopted by the International Maritime Organisation, as the same may be amended or supplemented from time to time.
“ISPS Code” means the International Ship and Port Facility Security (ISPS) Code as adopted by the International Maritime Organization’s (IMO) Diplomatic Conference of December 2002, as the same may be amended or supplemented from time to time.
“ISSC” means an International Ship Security Certificate issued under the ISPS Code.
“Lender” means:
| (a) | any Original Lender; and |
| (b) | any bank, financial institution, trust, fund or other entity which has become a Party as a Lender in accordance with Clause 26 (Changes to the Lenders), |
which in each case has not ceased to be a Party in accordance with this 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 for the time being of the borrowings under the Facility and a “part of the Loan” means an Advance, a Tranche, a part of a Tranche or any other part of the Loan as the context may require.
“LTV” means, at any relevant time, the aggregate of the Loan at that time expressed as a percentage of the aggregate Market Value of the Mortgaged Ships (excluding any Ship which has become a Total Loss and remains subject to a Mortgage at that time), the net realisable value of any additional Security provided under Clause 23 (Loan to Value Ratio) plus the balances standing to the credit of the Cash Reserve Account.
“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 $500,000 or the equivalent in any other currency.
“Majority Lenders” means:
| (a) | if no Advance has yet been made, a Lender or Lenders whose Commitments aggregate more than 662⁄3 per cent. of the Total Commitments; or |
| (b) | at any other time, a Lender or Lenders whose participations in the Loan aggregate more than 662⁄3 per cent. of the amount of the Loan then outstanding or, if the Loan has been repaid or prepaid in full, a Lender or Lenders whose participations in the Loan immediately before repayment or prepayment in full aggregate more than 662⁄3 per cent. of the Loan immediately before such repayment. |
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“Management Agreement” means the agreement entered into between a Borrower and/or the Guarantor or its Affiliates and the Approved Manager regarding the management of a Ship acceptable to the Lenders in all respects.
“Manager’s Undertaking” means, in relation to a Ship, the letter of undertaking from an Approved Manager relating to that Ship subordinating the rights of such Approved Manager against that Ship and the relevant Borrower owing that Ship to the rights of the Finance Parties in agreed form.
“Margin” means 1.95 per cent. per annum.
“Market Value” means, in relation to a Ship or any other vessel, at any date, an amount determined by the Facility Agent as being an amount equal to the market value of that Ship or vessel shown by a valuation prepared:
| (a) | as at a date not more than 30 days previously; |
| (b) | by an Approved Valuer selected by the Borrowers and appointed by the Facility Agent (unless the Borrowers have not nominated an Approved Valuer within 14 Business Days of the Facility Agent’s request in which case the Facility Agent will be entitled to select and appoint an Approved Valuer); |
| (c) | with or without physical inspection of that Ship or vessel (as the Facility Agent may require); and |
| (d) | on the basis of a sale for prompt delivery for cash on normal arm’s length commercial terms as between a willing seller and a willing buyer, free of any Charter. |
“Material Adverse Effect” means in the reasonable opinion of the Majority Lenders a material adverse effect on:
| (a) | the business, operations, property, condition (financial or otherwise) or prospects of any Obligor or the Group as a whole; or |
| (b) | the ability of any Transaction Obligor to perform its obligations under any Finance Document; or |
| (c) | the validity or enforceability of, or the effectiveness or ranking of any Security granted or intended to be granted pursuant to any of, the Finance Documents or the rights or remedies of any Finance Party under any of the Finance Documents. |
“Minimum Cash Reserve” has the meaning given to it in Clause 24.7 (Minimum Cash Reserve).
“Month” means a period starting on one day in a calendar month and ending on the numerically corresponding day in the next calendar month, except that:
| (a) | (subject to paragraph (c) below) if the numerically corresponding day is not a Business Day, that period shall end on the next Business Day in that calendar month in which that period is to end if there is one, or if there is not, on the immediately preceding Business Day; |
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| (b) | if there is no numerically corresponding day in the calendar month in which that period is to end, that period shall end on the last Business Day in that calendar month; and |
| (c) | if an Interest Period begins on the last Business Day of a calendar month, that Interest Period shall end on the last Business Day in the calendar month in which that Interest Period is to end. |
The above rules will only apply to the last Month of any period.
“Mortgage” means, in relation to a Ship, a first priority, or, as the case may be, preferred ship mortgage on that Ship in agreed form or any replacement first preferred or first priority ship mortgage on that Ship under the laws of an Approved Flag in agreed form.
“Obligor” means a Borrower or the Guarantor.
“Original Financial Statements” means the annual audited consolidated financial statements of the Group for its financial year ended 31 December 2021.
“Original Jurisdiction” means, in relation to an Obligor, the jurisdiction under whose laws that Obligor is incorporated as at the date of this Agreement.
“Overseas Regulations” means the Overseas Companies Regulations 2009 (SI 2009/1801).
“Parallel Debt” means any amount which a Borrower owes to the Security Agent under Clause 29.2 (Parallel Debt (Covenant to pay the Security Agent)) or under that clause as incorporated by reference or in full in any other Finance Document.
“Participating Member State” means any member state of the European Union that has the euro as its lawful currency in accordance with legislation of the European Union relating to Economic and Monetary Union.
“Party” means a party to this Agreement.
“PATRIOT Act” means the United States Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Improvement and Reauthorization Act of 2005 (H.R. 3199).
“Permitted Charter” means, in relation to a Ship, a Charter:
| (a) | which is a time, voyage or consecutive voyage charter; |
| (b) | the duration of which does not exceed and is not capable of exceeding, by virtue of any optional extensions, 12 months plus a redelivery allowance of not more than 30 days; |
| (c) | which is entered into on bona fide arm’s length terms at the time at which 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 Lenders such authorisation not to be unreasonably withheld.
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“Permitted Financial Indebtedness” means:
| (a) | any Financial Indebtedness incurred under the Finance Documents; |
| (b) | until the Release Date, the Existing Indebtedness; and |
| (c) | any Financial Indebtedness (including without limitation, any shareholder or intra-Group loans made available to the Borrowers (or any of them) in the normal course of its business of trading and operating any of Ship) that is subordinated to all Financial Indebtedness incurred under the Finance Documents in writing in a manner acceptable to the Facility Agent in all respects. |
“Permitted Security” means:
| (a) | until the Release Date, the 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; |
| (e) | liens for master’s disbursements incurred in the ordinary course of trading in accordance with first class ship ownership and management practice and not being enforced through arrest; and |
| (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; |
| (ii) | not being enforced through arrest; and |
| (iii) | subject, in the case of liens for repair or maintenance, to Clause 22.16 (Restrictions on chartering, appointment of managers etc.), |
provided such lien does not secure amounts more than 30 days overdue (unless the overdue amount is being contested in good faith by appropriate steps 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).
“Potential Event of Default” means any event or circumstance specified in Clause 25 (Events of Default) which would (with the expiry of a grace period, the giving of notice, the making of any determination under the Finance Documents or any combination of any of the foregoing) be an Event of Default.
“Prohibited Person” means any person, whether designated by name or by reason of being included in a class of persons, that is, or any vessel that is:
| (a) | listed on a Sanctions List; |
| (b) | resident in, or incorporated or organised under the laws of a Sanctioned Country; |
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| (c) | otherwise a target of Sanctions (“target of Sanctions”, for the purpose of this paragraph (c), signifying a person with whom a person organised or resident in the US or any other national of a Sanctions Authority would be prohibited or restricted by law from engaging in trade, business or other activities, or against whom Sanctions are otherwise directed); or |
| (d) | acting on behalf of any of the persons listed in paragraphs (a) to (c) above. |
“Protected Party” has the meaning given to it in Clause 12.1 (Definitions).
“PSC” means port state control.
“Purchase Price” means, in relation to a Ship, the total purchase price payable for that Ship under the relevant Bill of Sale.
“Quotation Day” means, in relation to any period for which an interest rate is to be determined, two US Government Securities Business Days before the first day of that period unless market practice differs in the relevant syndicated loan market in which case the Quotation Day will be determined by the Facility Agent in accordance with that market practice (and if quotations would normally be given on more than one day, the Quotation Day will be the last of those days).
“Receiver” means a receiver or receiver and manager or administrative receiver of the whole or any part of the Security Assets.
“Reference Rate” means in relation to the Loan or any part of the Loan:
| (a) | the applicable Term SOFR as of the Specified Time and for a period equal in length to the Interest Period of the Loan or that part of the Loan; or |
| (b) | as otherwise determined pursuant to Clause 10.1 (Unavailability of Term SOFR). |
“Release Date” means the date on which the relevant Advance is to be released in accordance with the instructions contained in the Utilisation Request and/or release letter or instruction addressed to the Escrow Agent (as defined in paragraph (b) of Clause 5.6 (Retentions and payment to third parties)).
“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 Date” has the meaning given to it in Clause 7.4 (Mandatory prepayment on sale, seizure or Total Loss).
“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 |
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| (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 Nominating Body” means any applicable central bank, regulator or other supervisory authority or a group of them, or any working group or committee sponsored or chaired by, or constituted at the request of, any of them or the Financial Stability Board.
“Relevant Percentage” has the meaning given t it in Clause 23 (Loan to Value Ratio).
“Repayment Date” means each date on which a Repayment Instalment is required to be paid under Clause 6.1 (Repayment of Loan).
“Repayment Instalments” has the meaning given to it in Clause 6.1 (Repayment of Loan).
“Repeating Representation” means each of the representations set out in Clause 18 (Representations) except Clause 18.10 (Insolvency), Clause 18.11 (No filing or stamp taxes) and Clause 18.12 (Deduction of Tax) and any representation of any Transaction Obligor made in any other Finance Document that is expressed to be a “Repeating Representation” or is otherwise expressed to be repeated.
“Representative” means any delegate, agent, manager, administrator, nominee, attorney, trustee or custodian.
“Requisition” means in relation to a Ship:
| (a) | any expropriation, confiscation, requisition (excluding a requisition for hire or use which does not involve a requisition for title) or acquisition of that Ship, whether for full consideration, a consideration less than its proper value, a nominal consideration or without any consideration, which is effected (whether de jure or de facto) by any government or official authority or by any person or persons claiming to be or to represent a government or official authority; and |
| (b) | any capture or seizure of that Ship (including any hijacking, piracy or theft) by any person whatsoever. |
“Requisition Compensation” includes all compensation or other moneys payable to a Borrower by reason of any Requisition or any arrest or detention of that Ship in the exercise or purported exercise of any lien or claim.
“Resolution Authority” means any body which has authority to exercise any Write-down and Conversion Powers.
“Safety Management Certificate” has the meaning given to it in the ISM Code.
“Safety Management System” has the meaning given to it in the ISM Code.
“Sanctioned Country” means any country or territory whose government is the target of Sanctions or that is subject to comprehensive country-wide or territory-wide Sanctions.
“Sanctioned Ship” means a ship which is the subject of Sanctions.
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“Sanctions” means any trade, economic or financial sanctions laws, regulations, embargoes, freezing provisions, prohibitions or other restrictive measures (including “secondary” or “extraterritorial” sanctions), imposed, administered, enacted or enforced from time to time by any Sanctions Authority.
“Sanctions Authority” means the US, the United Nations Security Council, the European Union, the United Kingdom, the respective governmental institutions and agencies of any of the foregoing, including the Office of Foreign Assets Control of the U.S. Department of the Treasury, the U.S. Department of State, the U.S. Department of Commerce, His Majesty’s Treasury of the United Kingdom, the Office of Financial Sanctions Implementation, or any other relevant sanctions authority enacting, administering or imposing Sanctions applicable by law to a Finance Party or a Transaction Obligor.
“Sanctions List” means the list of Specially Designated Nationals and Blocked Persons, the Foreign Sanctions Evaders List, in each case, published by the Office of Foreign Assets Control of the United States Department of the Treasury, or any similar list maintained by a Sanctions Authority as a measure of imposing, administering, enacting or enforcing Sanctions, in each case 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 Document” means:
| (a) | any Shares Security; |
| (b) | any Mortgage; |
| (c) | any Deed of Covenant; |
| (d) | any General Assignment; |
| (e) | any Charterparty Assignment; |
| (f) | any Account 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. |
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“Security Period” means the period starting on the date of this Agreement and ending on the date on which the Facility Agent is satisfied that there is no outstanding Commitment in force and that the Secured Liabilities have been irrevocably and unconditionally paid and discharged in full.
“Security Property” means:
| (a) | the Transaction Security expressed to be granted in favour of the Security Agent as trustee for the Secured Parties and all proceeds of that Transaction Security; |
| (b) | all obligations expressed to be undertaken by a Transaction Obligor to pay amounts in relation to the Secured Liabilities to the Security Agent as trustee for the Secured Parties and secured by the Transaction Security together with all representations and warranties expressed to be given by a Transaction Obligor or any other person in favour of the Security Agent as trustee for the Secured Parties; |
| (c) | the Security Agent’s interest in any turnover trust created under the Finance Documents; |
| (d) | any other amounts or property, whether rights, entitlements, choses in action or otherwise, actual or contingent, which the Security Agent is required by the terms of the Finance Documents to hold as trustee on trust for the Secured Parties, |
except:
| (i) | rights intended for the sole benefit of the Security Agent; and |
| (ii) | any moneys or other assets which the Security Agent has transferred to the Facility Agent or (being entitled to do so) has retained in accordance with the provisions of this Agreement. |
“Servicing Party” means the Facility Agent or the Security Agent.
“Shareholder” means Navios Maritime Midstream Operating LLC, a limited liability company formed and existing in the Republic of the Marshall Islands whose registered address is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960.
“Shares Security” means, in relation to a Borrower, a document creating Security over the issued shares in that Borrower in agreed form.
“Ship” means Ship A, Ship B or Ship C.
“Ship A” has the meaning given to that term in Schedule 7 (Details of the Ships and other Definitions).
“Ship B” has the meaning given to that term in Schedule 7 (Details of the Ships and other Definitions).
“Ship C” has the meaning given to that term in Schedule 7 (Details of the Ships and other Definitions).
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“SOFR” means the secured overnight financing rate (SOFR) administered by the Federal Reserve Bank of New York (or any other person which takes over the administration of that rate).
“Specified Time” means a day or time determined in accordance with Schedule 6 (Timetables) and in relation to when a Reference Rate is fixed, means the Quotation Day.
“Statement of Compliance” means a Statement of Compliance related to fuel oil consumption pursuant to regulations 6.6 and 6.7 of Annex VI.
“Subsidiary” means that a company (S) is a subsidiary of another company (P) if:
| (a) | a majority of the issued shares in S (or a majority of the issued shares in S which carry unlimited rights to capital and income distributions) are directly owned by P or are indirectly attributable to P; and |
| (b) | P has direct or indirect control over a majority of the voting rights attached to the issued shares of S; |
and any company of which S is a subsidiary is a parent company of S.
“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).
“Term SOFR” means the rate per annum determined by the Facility Agent as the forward-looking term rate based on SOFR as administered by CME Group Benchmark Administration Limited (or any other person which takes over the administration of that rate) for the relevant period published by CME Group Benchmark Administration Limited (or any other person which takes over the publication of that rate) and obtained by the Facility Agent through the Bloomberg Data License Service or a comparable service acceptable to the Facility Agent.
“Term SOFR Adjustment” means 0.10 per cent. per annum.
“Termination Date” means the date falling on the fifth anniversary of the Utilisation Date.
“Third Parties Act” has the meaning given to it in Clause 1.5 (Third party rights).
“Total Commitments” means the aggregate of the Commitments, being in an amount of up to $44,200,000 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 |
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| (b) | in the case of any of the events described in paragraph (a) of the definition “Requisition”, any such Requisition of a Ship unless that Ship is returned to the full control of the relevant Borrower within 60 days of such Requisition; and |
| (c) | in the case of any of the events described in paragraph (b) of the definition “Requisition”, any such Requisition of a Ship unless that Ship is returned to the full control of the relevant Borrower within 90 days of such Requisition, provided that in the event of piracy if the relevant underwriters confirm to the Facility Agent in writing (in customary terms) prior to the end of the 90-day period that the relevant Ship is subject to an approved piracy insurance cover, the earlier of 12 Months after the date on which that Ship is captured by pirates and the date on which the piracy insurance cover expires. |
“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. |
“Tranche” means Tranche A, Tranche B or Tranche C.
“Tranche A” means that part of the Loan to be made available to Borrower A to refinance Existing Indebtedness A in a principal amount not exceeding the lesser of (i) $13,870,000 and (ii) 47.50 per cent. of the Initial Market Value of Ship A.
“Tranche B” means that part of the Loan to be made available to Borrower B to refinance Existing Indebtedness B in a principal amount not exceeding the lesser of (i) $13,870,000 and (ii) 47.50 per cent. of the Initial Market Value of Ship B.
“Tranche C” means that part of the Loan to be made available to Borrower C to refinance Existing Indebtedness C in a principal amount not exceeding the lesser of (i) $16,460,000 and (ii) 47.50 per cent. of the Initial Market Value of Ship C.
“Transaction Document” means:
| (a) | a Finance Document; |
| (b) | any Assignable Charter; |
| (c) | any Charter Guarantee relating to an Assignable Charter; or |
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| (d) | any other document designated as such by the Facility Agent and a Borrower. |
“Transaction Obligor” means an Obligor, the Shareholder, any Approved Manager who is a member of the Group or any other member of the Group who executes a Transaction Document.
“Transaction Security” means the Security created or evidenced or expressed to be created or evidenced under the Security Documents.
“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.
“US Government Securities Business Day” means any day other than:
| (a) | a Saturday or a Sunday; and |
| (b) | a day on which the Securities Industry and Financial Markets Association (or any successor organisation) recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in US Government securities. |
“US Tax Obligor” means:
| (a) | a person which is resident for tax purposes in the US; or |
| (b) | a person some or all of whose payments under the Finance Documents are from sources within the US for US federal income tax purposes. |
“Utilisation” means the utilisation of the Facility.
“Utilisation Date” means the date of the Utilisation, being the date on which all the Advances are to be made.
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“Utilisation Request” means a notice substantially in the form set out in 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 in 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. |
| 1.2 | Construction |
| (a) | Unless a contrary indication appears, a reference in this Agreement to: |
| (i) | the “Account Bank”, 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; |
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| (ii) | “assets” includes present and future properties, revenues and rights of every description; |
| (iii) | a liability which is “contingent” means a liability which is not certain to arise and/or the amount of which remains unascertained; |
| (iv) | “document” includes a deed and also a letter, fax, email or telex; |
| (v) | “expense” means any kind of cost, charge or expense (including all legal costs, charges and expenses) and any applicable Tax including VAT; |
| (vi) | a “Finance Document”, a “Security Document” or “Transaction Document” or any other agreement or instrument is a reference to that Finance Document, Security Document or Transaction Document or other agreement or instrument as amended, replaced, novated, supplemented, extended or restated; |
| (vii) | a “group of Lenders” includes all the Lenders; |
| (viii) | “indebtedness” includes any obligation (whether incurred as principal or as surety) for the payment or repayment of money, whether present or future, actual or contingent; |
| (ix) | “law” includes any order or decree, any form of delegated legislation, any treaty or international convention and any regulation or resolution of the Council of the European Union, the European Commission, the United Nations or its Security Council; |
| (x) | “proceedings” means, in relation to any enforcement provision of a Finance Document, proceedings of any kind, including an application for a provisional or protective measure; |
| (xi) | a “person” includes any individual, firm, company, corporation, government, state or agency of a state or any association, trust, joint venture, consortium, partnership or other entity (whether or not having separate legal personality); |
| (xii) | a “regulation” includes any regulation, rule, official directive, request or guideline (whether or not having the force of law) of any governmental, intergovernmental or supranational body, agency, department or regulatory, self-regulatory or other authority or organisation; |
| (xiii) | a reference to a “Ship”, its names, its flag and, if applicable, its port of registry shall include any replacement name, flag and, if applicable, replacement port of registry, in each case, as may be approved in writing from time to time by the Facility Agent acting with the authorisation of the Majority Lenders; |
| (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; |
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| (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 Potential Event of Default is “continuing” if it has not been remedied or waived and an Event of Default is “continuing” if it has not been waived. |
| 1.3 | Construction of insurance terms |
In this Agreement:
“approved” means, for the purposes of Clause 21 (Insurance Undertakings), approved in writing by the 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 21 (Insurance Undertakings) or any other provision of this Agreement or of another Finance Document.
“policy” includes a slip, cover note, certificate of entry or other document evidencing the contract of insurance or its terms.
“protection and indemnity risks” means the usual risks covered by a protection and indemnity association 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.
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| 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 42.2 (All Lender matters) applies, all the Lenders. |
| 1.5 | Third party rights |
| (a) | Unless expressly provided to the contrary in a Finance Document, a person who is not a Party has no right under the Contracts (Rights of Third Parties) Act 1999 (the “Third Parties Act”) to enforce or to enjoy the benefit of any term of this Agreement. |
| (b) | Subject to Clause 42.3 (Other exceptions) but otherwise notwithstanding any term of any Finance Document, the consent of any person who is not a Party is not required to rescind or vary this Agreement at any time. |
| (c) | Any Receiver, Delegate, Affiliate or any other person described in paragraph (d) of Clause 14.2 (Other indemnities), paragraph (b) of Clause 28.10 (Exclusion of liability), or paragraph (b) of Clause 29.11 (Exclusion of liability) may, subject to this Clause 1.5 (Third party rights) and the Third Parties Act, rely on any Clause of this Agreement which expressly confers rights on it. |
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SECTION 2
THE FACILITY
| 2 | THE FACILITY |
| 2.1 | The Facility |
Subject to the terms of this Agreement, the Lenders make available to the Borrowers a dollar senior secured term loan facility in three Tranches 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. |
| 3 | PURPOSE |
| 3.1 | Purpose |
Each Borrower shall apply all amounts borrowed by it under the Facility only for the purpose stated in the preamble (Background) to this Agreement.
| 3.2 | Monitoring |
No Finance Party is bound to monitor or verify the application of any amount borrowed pursuant to this Agreement.
| 4 | CONDITIONS OF UTILISATION |
| 4.1 | Initial conditions precedent |
The Borrowers may not deliver the 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.
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| 4.2 | Conditions precedent to prepositioning of funds |
The Lenders will only be obliged to comply with Clause 5.4 (Lenders’ participation) and Clause 5.8 (Prepositioning of funds) if on the date of the Utilisation Request and on the proposed Utilisation Date and before the Advance is made available:
| (a) | no Default is continuing or would result from the proposed Advance; |
| (b) | the Repeating Representations to be made by each Transaction Obligor are true; and |
| (c) | no Ship has been sold or become a Total Loss. |
| 4.3 | Conditions precedent to release of the relevant Advance |
The Facility Agent will only be obliged to comply with Clause 5.4 (Lenders’ participation) and Clause 5.9 (Release of prepositioned funds) if on or before the Release Date, the Facility Agent has received, 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.
| 4.4 | 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), Clause 4.2 (Conditions precedent to prepositioning of funds) and Clause 4.3 (Conditions precedent to release of the relevant Advance). |
| (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. |
| 4.5 | 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), Clause 4.2 (Conditions precedent to prepositioning of funds) or Clause 4.3 (Conditions precedent to release of the relevant Advance) has been satisfied, the Borrowers shall ensure that that condition is satisfied within five Business Days after the Utilisation Date or such later date as the Facility Agent, acting with the authorisation of the Majority Lenders, may agree in writing with the Borrowers.
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SECTION 3
UTILISATION
| 5 | UTILISATION |
| 5.1 | Delivery of a 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 under each Tranche and all Tranches shall be drawn simultaneously on the same Utilisation Date unless otherwise agreed by the Facility Agent. |
| 5.2 | Completion of a Utilisation Request |
| (a) | The Utilisation Request is irrevocable and will not be regarded as having been duly completed unless: |
| (b) | the proposed Utilisation Date is a Business Day within the Availability Period; |
| (c) | the currency and amount of the Utilisation comply with Clause 5.3 (Currency and amount); and |
| (d) | 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 amount of the proposed Advance must be an amount which is not more than: |
| (i) | in respect of the Advance under Tranche A, the lower of (i) $13,870,000 and (ii) 47.50 per cent. of the Initial Market Value of Ship A; |
| (ii) | in respect of the Advance under Tranche B, the lower of (i) $13,870,000 and (ii) 47.50 per cent. of the Initial Market Value of Ship B; |
| (iii) | in respect of the Advance under Tranche C, the lower of (i) $16,460,000 and (ii) 47.50 per cent. of the Initial Market Value of Ship C, |
provided that the aggregate amount of all Tranches shall not exceed $44,200,000.
| (c) | The amount of the proposed Advance must be an amount which would not oblige the Borrowers to provide additional security or prepay part of the Loan if the ratio set out in Clause 23 (Loan to Value Ratio) were applied and notice was given by the Facility Agent under Clause 23.1 (Maximum allowed loan to value ratio) immediately after that Advance was utilised. |
| 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 Utilisation Date through its Facility Office. |
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| (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 Tranche which are unutilised at the end of the Availability Period for such Tranche shall then be cancelled.
| 5.6 | Retentions and payment to third parties |
The Borrowers irrevocably authorise the Facility Agent:
| (a) | to deduct from the proceeds of the Advance any fees then payable to the Finance Parties in accordance with Clause 11 (Fees) and any other items listed as deductible items in the Utilisation Request and to apply them in payment of the items to which they relate; |
| (b) | on the Utilisation Date, to pay to, or for the account of, the relevant Borrower which is to utilise the relevant Advance the balance (after any deduction made in accordance with paragraph (a) above) of the amounts which the Facility Agent receives from the Lenders in respect of the relevant Advance. That payment shall be made in like funds as the Facility Agent received from the Lenders in respect of the relevant Advance to the client account of an escrow agent approved in writing by the Facility Agent (the “Escrow Agent”) which the Borrowers specify in the Utilisation Request to be thereafter released to the account of the relevant Existing Owner and with such bank which the Borrowers specify in the Utilisation Request; and |
| (c) | following the deduction of fees in accordance with paragraph (a) above and payment of the balance of the relevant Advance in accordance with paragraph (b) above, any excess amount to be thereafter released to an Earnings Account of a Borrower specified in the Utilisation Request. |
| 5.7 | Disbursement of Advance to third party |
Payment by the Lender under Clause 5.6 (Retentions and 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 director obligors, to each Lender in an amount equal to that Lender’s participation in that Advance.
| 5.8 | Prepositioning of funds |
If, in respect of any proposed Advance, the Lenders, at the request of the Borrowers and on terms acceptable to all the Lenders and in their absolute discretion, preposition funds with the Escrow Agent:
| (a) | agree to pay interest on the amount of the funds so prepositioned at the rate described in Clause 8.1 (Calculation of interest) on the basis of successive interest periods of one day and so that interest shall be paid together with the first payment of interest on such Advance after the Utilisation Date in respect of it or, if the Release Date does not occur, within three Business Day of demand by the Facility Agent; and |
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| (b) | shall without duplication, indemnify each Finance Party against any costs, loss or liability it may incur in connection with such arrangement. |
| 5.9 | Release of prepositioned funds |
On the Release Date, the Facility Agent (acting on the instructions of the Majority Lenders) shall instruct the Escrow Agent to release the amount of the relevant Advance as specified in the Utilisation Request, subject to the provisions of Clause 4.3 (Conditions precedent to release of the relevant Advance) and Clause 4.4 (Notification of satisfaction of conditions precedent).
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SECTION 4
REPAYMENT, PREPAYMENT AND CANCELLATION
| 6 | REPAYMENT |
| 6.1 | Repayment of Loan |
The Borrowers shall repay the Loan as follows:
| (a) | Tranche A shall be repaid by: |
| (i) | 20 equal consecutive quarterly instalments, each in an amount of $470,000 (each a “Tranche A Repayment Instalment” and together the “Tranche A Repayment Instalments”); and |
| (ii) | a balloon instalment in the amount of $4,470,000 (the “Tranche A Balloon Instalment”); |
| (b) | Tranche B shall be repaid by: |
| (i) | 20 equal consecutive quarterly instalments, each in an amount of $470,000 (each a “Tranche B Repayment Instalment” and together the “Tranche B Repayment Instalments”); and |
| (ii) | a balloon instalment in the amount of $4,470,000 (the “Tranche B Balloon Instalment”); and |
| (c) | Tranche C shall be repaid by: |
| (i) | 20 equal consecutive quarterly instalments, each in an amount of $560,000 (each a “Tranche C Repayment Instalment” and together the “Tranche C Repayment Instalments”); and |
| (ii) | a balloon instalment in the amount of $5,260,000 (the “Tranche C Balloon Instalment”). |
| 6.2 | Repayment Dates |
The first Repayment Instalment in respect of each Tranche shall be repaid on the date falling three Months from the Utilisation Date, each subsequent Repayment Instalment in respect of that Tranche shall be repaid at quarterly intervals thereafter and each relevant Balloon Instalment shall be repaid on the Termination Date.
| 6.3 | Effect of cancellation and prepayment on scheduled repayments |
| (a) | If the Available Commitment of any Lender is cancelled under Clause 7.1 (Illegality) then the Repayment Instalments and the Balloon Instalments falling after that cancellation will be reduced pro rata by the amount of the Available Commitments so cancelled. |
| (b) | If the whole or part of any Commitment is cancelled pursuant to Clause 5.5 (Cancellation of Commitments) or Clause 7.2 (Voluntary and automatic cancellation), the Repayment Instalments and the Balloon Instalments for each Repayment Date falling after that cancellation will be reduced pro rata by the amount of the Commitments so cancelled. |
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| (c) | If any part of the Loan is repaid or prepaid in accordance with Clause 7.1 (Illegality) then the Repayment Instalments and the Balloon Instalments for each Repayment Date falling after that repayment or prepayment (as applicable) will be reduced pro rata by the amount of the Loan repaid or prepaid. |
| (d) | If any part of the Loan is prepaid in accordance with Clause 7.3 (Voluntary prepayment of Loan), then such prepayment shall be applied pro rata against each Tranche and the amount of the Repayment Instalments and the Balloon 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, unless such voluntary prepayment is made against the full amount of each Tranche, then such amount prepaid shall be applied against that Tranche. |
| (e) | If any part of the Loan is prepaid in accordance with Clause 7.4 (Mandatory prepayment on sale, seizure or Total Loss) then the amount of the Loan prepaid shall be applied against the Tranche which has been utilised in respect of the relevant Ship and thereafter any balance shall be applied pro rata against each other Tranche and shall reduce the then outstanding Repayment Instalments and the Balloon Instalments of such other Tranches in chronological order. |
| 6.4 | 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.
| 6.5 | Reborrowing |
No Borrower may reborrow any part of the Facility which is repaid.
| 7 | PREPAYMENT AND CANCELLATION |
| 7.1 | Illegality |
If:
| (a) | it becomes unlawful in any applicable jurisdiction for a Lender to perform any of its obligations as contemplated by this Agreement or to fund or maintain its participation in an Advance or the Loan or to determine or charge interest rates based upon Adjusted Term SOFR or Term SOFR or it becomes unlawful for any Affiliate of a Lender for that Lender to do so: |
| (i) | that Lender shall promptly notify the Facility Agent upon becoming aware of that event; |
| (ii) | upon the Facility Agent notifying the Borrowers, the Available Commitment of that Lender will be immediately cancelled; and |
| (iii) | the Borrowers shall prepay that Lender’s participation in the Loan on the last day of the Interest Period for the Loan occurring after the Facility Agent has notified the Borrowers or, if earlier, the date specified by the Lender in the notice delivered to the Facility Agent (being no earlier than the last day of any applicable grace period permitted by law) and that Lender’s corresponding Commitment shall be cancelled in the amount of the participation prepaid. |
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| (b) | If it becomes unlawful for a Lender to perform any of its obligations as contemplated by this Agreement or to fund or maintain its participation in an Advance or the Loan due to: |
| (i) | Sanctions (including in each case, without limitation, (A) the non-existence or cessation of legality, validity, binding effect or enforceability of a provision of a Finance Document and (B) the presence of any circumstances resulting in the imposition of any civil, administrative or criminal measures on a Lender) and/or contrary to, or declared by any Sanctions Authority to be contrary to, Sanctions for any Affiliate of a Lender for that Lender to do so; or |
| (ii) | without prejudice to the generality of the preceding paragraph, any Transaction Obligor or any other member of the Group being or becoming a Prohibited Person which would result in a breach of Sanctions by a Lender: |
| (A) | to the extent permitted by applicable law, that Lender shall promptly notify the Borrowers through the Facility Agent upon becoming aware of that event; |
| (B) | such Lender’s Commitment will be cancelled on the date (the “Sanctions Cancellation Date”) falling 30 days after the date on which the Facility Agent has notified the Borrowers, which it shall do promptly upon receipt of a notification from the Lender; and |
| (C) | the Borrowers shall repay that Lender’s participation in the Loan on the last day of the Interest Period for the Loan occurring after the Sanctions Cancellation Date or, if earlier, the date specified by the Lender in the notice delivered to the Facility Agent (being no later than the earlier of (x) the Sanctions Cancellation Date and (y) the last day of any applicable grace period permitted by law) and that Lender’s corresponding Commitment shall be cancelled in the amount of the participation prepaid. |
| 7.2 | Voluntary and automatic cancellation |
| (a) | The Borrowers may, if they give the Facility Agent not less than ten Business Days’ (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) of the Available Facility. Any cancellation under this Clause 7.2 (Voluntary and automatic cancellation) shall reduce the Commitments of the Lenders rateably and the amount of the relevant Tranche(s). |
| (b) | The unutilised Commitment (if any) of each Lender shall be automatically cancelled at close of business on the date on which the Advances are made available. |
| 7.3 | Voluntary prepayment of Loan |
The Borrowers may, if they give the Facility Agent no less than five Business Days’ (or such shorter period as the Majority Lenders may agree) prior notice, prepay the whole or any part of the Loan (but, if in part, being an amount that reduces the amount of the Loan by a minimum amount of $1,000,000 or an integral multiple of that amount) or such lesser amount as may be acceptable to the Majority Lenders.
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| 7.4 | Mandatory prepayment on sale, seizure or Total Loss |
| (a) | If a Ship is sold (without prejudice to paragraph (a) of Clause 20.12 (Disposals)) or becomes a Total Loss, the Borrowers shall on the Relevant Date prepay an amount equal to (i) the Tranche applicable to that Ship and (ii) such amount, if applicable, to eliminate any shortfall arising in the ratio set out in Clause 23 (Loan to Value Ratio) immediately following the prepayment. |
| (b) | Provided that no Event of Default has occurred and is continuing, any remaining proceeds of the sale or Total Loss of a Ship after the prepayments referred to in paragraph (a) above have 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) | In this Clause 7.4 (Mandatory prepayment on sale, seizure or Total Loss): |
“Relevant Date” means:
| (a) | in the case of a sale of a Ship, on the date on which the sale is completed by delivery of that Ship to the buyer of that Ship; and |
| (b) | in the case of a Total Loss, on the earlier of (i) the date falling 120 days after the Total Loss Date and (ii) the date of receipt by the Security Agent of the proceeds of insurance relating to such Total Loss. |
| 7.5 | Right of repayment and cancellation in relation to a single Lender |
| (a) | If: |
| (i) | any sum payable to any Lender by a Borrower is required to be increased under paragraph (c) of Clause 12.2 (Tax gross-up) or under that clause as incorporated by reference or in full in any other Finance Document; or |
| (ii) | any Lender claims indemnification from a Borrower under Clause 12.3 (Tax indemnity) or Clause 13 (Increased Costs), |
the Borrowers may whilst the circumstance in sub-paragraphs (i) or (ii) above 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. |
| (d) | The Borrowers may, in the circumstances set out in paragraph (a) above, on 15 Business Days’ prior notice to the Facility Agent and that Lender, replace that Lender by requiring that Lender to (and, to the extent permitted by law, that Lender shall) transfer pursuant to Clause 26 (Changes to the Lenders) all (and not part only) of its rights and obligations under this Agreement to a Lender or other bank, financial institution, trust, fund or other entity selected |
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| by the Borrowers which confirms its willingness to assume and does assume all the obligations of the transferring Lender in accordance with Clause 26 (Changes to the Lenders) for a purchase price in cash or other cash payment payable at the time of the transfer equal to the outstanding principal amount of such Lender’s participation in the Loan and all accrued interest (to the extent that the Facility Agent has not given a notification under Clause 26.9 (Pro rata interest settlement)), Break Costs and other amounts payable in relation thereto under the Finance Documents. |
| (e) | The replacement of a Lender pursuant to paragraph (d) above shall be subject to the following conditions: |
| (i) | the Borrowers shall have no right to replace a Lender acting in its capacity as a Servicing Party; |
| (ii) | neither the Facility Agent nor any Lender shall have any obligation to find a replacement Lender; |
| (iii) | in no event shall the Lender replaced under paragraph (d) above be required to pay or surrender any of the fees received by such Lender pursuant to the Finance Documents; and |
| (iv) | the Lender shall only be obliged to transfer its rights and obligations pursuant to paragraph (d) above once it is satisfied that it has complied with all necessary “know your customer” or other similar checks under all applicable laws and regulations in relation to that transfer. |
| (f) | A Lender shall perform the checks described in sub-paragraph (iv) of paragraph (e) above as soon as reasonably practicable following delivery of a notice referred to in paragraph (d) above and shall notify the Facility Agent and the Borrowers when it is satisfied that it has complied with those checks. |
| 7.6 | Restrictions |
| (a) | Any notice of cancellation or prepayment given by any Party under this Clause 7 (Prepayment and Cancellation) shall be irrevocable and, unless a contrary indication appears in this Agreement, shall specify the date or dates upon which the relevant cancellation or prepayment is to be made, 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 the fee provided in Clause 11.3 (Prepayment fee) and 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. |
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| (f) | If the Facility Agent receives a notice under this Clause 7 (Prepayment and Cancellation) it shall promptly forward a copy of that notice to either the Borrowers or the affected Lenders, 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. |
| 7.7 | Application of prepayments |
Any prepayment of any part of the Loan (other than a prepayment pursuant to Clause 7.1 (Illegality)) shall be applied pro rata to each Lender’s participation in that part of the Loan.
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SECTION 5
COSTS OF UTILISATION
| 8 | INTEREST |
| 8.1 | Calculation of interest |
The rate of interest on the Loan or any part of the Loan for each Interest Period is the percentage rate per annum which is the aggregate of the applicable:
| (a) | Margin; and |
| (b) | Adjusted Term SOFR. |
| 8.2 | Payment of interest |
The Borrowers shall pay accrued interest on the Loan or any part of the Loan quarterly in arrears (each an “Interest Payment Date”).
| 8.3 | Default interest |
| (a) | If a Transaction Obligor fails to pay any amount payable by it under a Finance Document on its due date, interest shall accrue on the Unpaid Sum from the due date up to the date of actual payment (both before and after judgment) at a rate which, subject to paragraph (b) below, is two per cent. per annum higher than the rate which would have been payable if the Unpaid Sum had, during the period of non-payment, constituted part of the Loan in the currency of the Unpaid Sum for successive Interest Periods, each of a duration selected by the Facility Agent. Any interest accruing under this Clause 8.3 (Default interest) shall be immediately payable by the Transaction Obligor on demand by the Facility Agent. |
| (b) | If an Unpaid Sum consists of all or part of the Loan which became due on a day which was not the last day of an Interest Period relating to the Loan or that part of the Loan: |
| (i) | the first Interest Period for that Unpaid Sum shall have a duration equal to the unexpired portion of the current Interest Period relating to the Loan or that part of the Loan; and |
| (ii) | the rate of interest applying to that Unpaid Sum during that first Interest Period shall be two 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. |
| 8.4 | Notification of rates of interest |
The Facility Agent shall promptly notify the Lenders and the Borrowers of the determination of a rate of interest under this Agreement.
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| 9 | INTEREST PERIODS |
| 9.1 | Interest Periods |
| (a) | Each Interest Period will be three Months. |
| (b) | An Interest Period in respect of a Tranche or any part of the Loan shall not extend beyond the Termination Date. |
| (c) | The first Interest Period for each Tranche shall start on the Utilisation Date and each subsequent Interest Period shall start on the last day of the preceding Interest Period. |
| (d) | Each Tranche shall have one Interest Period only at any time. |
| (e) | No Interest Period can be selected in respect of a tenor that has ceased to be available in accordance with Clause 42.4 (Benchmark Replacement setting). |
| 9.2 | Non-Business Days |
If an Interest Period would otherwise end on a day which is not a Business Day, that Interest Period will instead end on the next Business Day in that calendar month (if there is one) or the preceding Business Day (if there is not).
| 10 | CHANGES TO THE CALCULATION OF INTEREST |
| 10.1 | Unavailability of Term SOFR |
| (a) | Interpolated Term SOFR: If no Term SOFR is available for the Interest Period of the Loan or any part of the Loan, the applicable Reference Rate shall be the Interpolated Term SOFR for a period equal in length to the Interest Period of the Loan or that part of the Loan. |
| (b) | Historic Term SOFR: If no Term SOFR is available for the Interest Period of the Loan or any part of the Loan and it is not possible to calculate the Interpolated Term SOFR by 17:00 New York time on the relevant Quotation Day, the applicable Reference Rate shall be the Historic Term SOFR for the Loan or that part of the Loan. |
| (c) | Interpolated Historic Term SOFR: If paragraph (b) above applies but no Historic Term SOFR is available for the Interest Period of the Loan or any part of the Loan, the applicable Reference Rate shall be the Interpolated Historic Term SOFR for a period equal in length to the Interest Period of the Loan or that part of the Loan. |
| (d) | Base Rate: If paragraph (c) above applies but it is not possible to calculate the Interpolated Historic Term SOFR, there shall be no Reference Rate for the Loan or that part of the Loan (as applicable) and Clause 10.3 (Base Rate) shall apply to the Loan or that part of the Loan for that Interest Period. |
| 10.2 | Market disruption |
If before close of business in New York 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 that part of the Loan as appropriate) that its cost of funds relating to its participation in the Loan or that part of the Loan would be in excess of Adjusted Term SOFR then Clause 10.3 (Base Rate) shall apply to the Loan or that part of the Loan (as applicable) for the relevant Interest Period.
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| 10.3 | Base Rate |
| (a) | If this Clause 10.3 (Base Rate) applies, the rate of interest on the Loan or the relevant part of the Loan for the relevant Interest Period shall be the percentage rate per annum which is the sum of: |
| (i) | the Margin; and |
| (ii) | the Base Rate from time to time. |
| (b) | If this Clause 10.3 (Base Rate) 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 42.4 (Benchmark Replacement setting), 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. |
| 10.4 | Break Costs |
| (a) | The Borrowers shall, within three Business Days of demand by a Finance Party, pay to that Finance Party its Break Costs attributable to all or any part of the Loan or Unpaid Sum being paid by the Borrowers on a day other than the last day of an Interest Period for the Loan, the relevant part of the Loan or that Unpaid Sum. |
| (b) | Each Lender shall, as soon as reasonably practicable after a demand by the Facility Agent, provide a certificate confirming the amount of its Break Costs for any Interest Period in which they accrue. |
| 11 | FEES |
| 11.1 | Commitment fee |
The Borrowers shall pay to the Facility Agent (for the account of each Lender) a commitment fee in the amount and at the times agreed in a Fee Letter.
| 11.2 | Upfront fee |
The Borrowers shall pay to the Facility Agent an upfront fee in the amount and at the times agreed in a Fee Letter.
| 11.3 | Prepayment fee |
| (a) | Subject to paragraph (c) below, the Borrowers must pay to the Facility Agent for each Lender a prepayment fee on the date of prepayment of all or any part of the Loan pursuant to Clause 7.3 (Voluntary prepayment of Loan). |
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| (b) | The amount of the prepayment fee is, if the prepayment occurs on or before the first anniversary of the Utilisation Date, 1.00 per cent. of the amount prepaid. No prepayment fee will be payable after the first anniversary of the Utilisation date. |
| (c) | No prepayment fee shall be payable under this Clause if the prepayment is made under Clause 7.1 (Illegality), Clause 7.4 (Mandatory prepayment on sale, seizure or Total Loss) or Clause 23.6 (Prepayment mechanism). |
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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 a Borrower 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 Borrower 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 a Borrower 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 Borrower. |
| (c) | If a Tax Deduction is required by law to be made by a Borrower, the amount of the payment due from that Borrower 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 a Borrower is required to make a Tax Deduction, that Borrower 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 Borrower making that Tax Deduction shall deliver to the Facility Agent for the Finance Party entitled to the payment evidence reasonably satisfactory to that Finance Party that the Tax Deduction has been made or (as applicable) any appropriate payment paid to the relevant taxing authority. |
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| 12.3 | Tax indemnity |
| (a) | The Borrowers 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 Borrowers. |
| (d) | A Protected Party shall, on receiving a payment from a Borrower under this Clause 12.3 (Tax indemnity), notify the Facility Agent. |
| 12.4 | Tax Credit |
If a Borrower 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 that Borrower 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 that Borrower.
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| 12.5 | Stamp taxes |
The Borrowers shall pay and, within three Business Days of demand, indemnify each Secured Party against any cost, loss or liability which that Secured Party incurs in relation to all stamp duty, registration and other similar Taxes payable in respect of any Finance Document.
| 12.6 | 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). |
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| (e) | In relation to any supply made by a Finance Party to any Party under a Finance Document, if reasonably requested by such Finance Party, that Party must promptly provide such Finance Party with details of that Party’s VAT registration and such other information as is reasonably requested in connection with such Finance Party’s VAT reporting requirements in relation to such supply. |
| 12.7 | FATCA Information |
| (a) | Subject to paragraph (c) below, each Party shall, within ten Business Days of a reasonable request by another Party: |
| (i) | confirm to that other Party whether it is: |
| (A) | a FATCA Exempt Party; or |
| (B) | not a FATCA Exempt Party; and |
| (ii) | supply to that other Party such forms, documentation and other information relating to its status under FATCA as that other Party reasonably requests for the purposes of that other Party’s compliance with FATCA; and |
| (iii) | supply to that other Party such forms, documentation and other information relating to its status as that other Party reasonably requests for the purposes of that other Party’s compliance with any other law, regulation, or exchange of information regime. |
| (b) | If a Party confirms to another Party pursuant to sub-paragraph (i) of paragraph (a) above that it is a FATCA Exempt Party and it subsequently becomes aware that it is not, or has ceased to be a FATCA Exempt Party, that Party shall notify that other Party reasonably promptly. |
| (c) | Paragraph (a) above shall not oblige any Finance Party to do anything and sub-paragraph (iii) of paragraph (a) above shall not oblige any other Party to do anything which would or might in its reasonable opinion constitute a breach of: |
| (i) | any law or regulation; |
| (ii) | any fiduciary duty; or |
| (iii) | any duty of confidentiality. |
| (d) | If a Party fails to confirm whether or not it is a FATCA Exempt Party or to supply forms, documentation or other information requested in accordance with sub-paragraphs (i) or (ii) of paragraph (a) above (including, for the avoidance of doubt, where paragraph (c) above applies), then such Party shall be treated for the purposes of the Finance Documents (and payments under them) as if it is not a FATCA Exempt Party until such time as the Party in question provides the requested confirmation, forms, documentation or other information. |
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| 12.8 | Withholdings certificate etc |
| (a) | Each Lender shall: |
| (i) | where that Lender is an Original Lender, on the date of this Agreement; |
| (ii) | where that relevant Lender is a New Lender (as defined in Clause 26.1 (Assignments and transfers by the Lenders)), on the relevant Transfer Date; or |
| (iii) | within ten Business Days of the date of a request from the Facility Agent, |
supply to the Facility Agent:
| (A) | a withholding certificate on IRS Form W-8, IRS Form W-9 or any other relevant form (including, for the avoidance of doubt, forms required in connection with tax laws other than in the US); or |
| (B) | any withholding statement or other document, authorisation or waiver as the Facility Agent may require to certify or establish the status of such Lender under FATCA or that other law or regulation. |
| (b) | The Facility Agent shall provide any withholding certificate, withholding statement, document, authorisation or waiver it receives from a Lender pursuant to paragraph (a) above to the Borrowers. |
| (c) | If any withholding certificate, withholding statement, document, authorisation or waiver provided to the Facility Agent by a Lender pursuant to paragraph (a) above is or becomes materially inaccurate or incomplete, that Lender shall promptly update it and provide such updated withholding certificate, withholding statement, document, authorisation or waiver to the Facility Agent unless it is unlawful for the Lender to do so (in which case the Lender shall promptly notify the Facility Agent). The Facility Agent shall provide any such updated withholding certificate, withholding statement, document, authorisation or waiver to the Borrowers. |
| (d) | The Facility Agent may rely on any withholding certificate, withholding statement, document, authorisation or waiver it receives from a Lender pursuant to paragraph (a) or (c) above without further verification. The Facility Agent shall not be liable for any action taken by it under or in connection with paragraphs (a), (b) or (c) above. |
| 12.9 | FATCA Deduction |
| (a) | Each Party may make any FATCA Deduction it is required to make by FATCA, and any payment required in connection with that FATCA Deduction, and no Party shall be required to increase any payment in respect of which it makes such a FATCA Deduction or otherwise compensate the recipient of the payment for that FATCA Deduction. |
| (b) | Each Party shall promptly, upon becoming aware that it must make a FATCA Deduction (or that there is any change in the rate or the basis of such FATCA Deduction), notify the Party to whom it is making the payment and, in addition, shall notify each Borrower and the Facility Agent and the Facility Agent shall notify the other Finance Parties. |
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| 13 | INCREASED COSTS |
| 13.1 | Increased costs |
| (a) | Subject to Clause 13.3 (Exceptions), the Borrowers shall, within three Business Days of a demand by the Facility Agent, pay for the account of a Finance Party the amount of any Increased Costs incurred by that Finance Party or any of its Affiliates as a result of: |
| (i) | the introduction of or any change in (or in the interpretation, administration or application of) any law or regulation; or |
| (ii) | compliance with any law or regulation made, |
in each case after the date of this Agreement; or
| (iii) | the implementation, application of or compliance with Basel III or CRD IV or any law or regulation that implements or applies Basel III or CRD IV. |
| (b) | In this Agreement: |
| (i) | “Basel III” means: |
| (A) | the agreements on capital requirements, a leverage ratio and liquidity standards contained in “Basel III: A global regulatory framework for more resilient banks and banking systems”, “Basel III: International framework for liquidity risk measurement, standards and monitoring” and “Guidance for national authorities operating the countercyclical capital buffer” published by the Basel Committee on Banking Supervision in December 2010, each as amended, supplemented or restated; |
| (B) | the rules for global systemically important banks contained in “Global systemically important banks: assessment methodology and the additional loss absorbency requirement - Rules text” published by the Basel Committee on Banking Supervision in November 2011, as amended, supplemented or restated; and |
| (C) | any further guidance or standards published by the Basel Committee on Banking Supervision relating to “Basel III”. |
| (ii) | “CRD IV” means: |
| (A) | Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending regulation (EU) No. 648/2012, as amended by Regulation (EU) 2019/876; |
| (B) | Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC, as amended by Directive (EU) 2019/878; and |
| (C) | any other law or regulation which implements Basel III. |
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| (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.
| (c) | Notwithstanding anything in this Clause to the contrary, the Dodd-Frank Wall Street Reform and Consumer Protection Act, and all requests, rules, guidelines and directives promulgated thereunder, are deemed to have been introduced or adopted after the date of this Agreement, regardless of the date enacted or adopted. |
| 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 a Borrower; |
| (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); or |
| (d) | 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 a Borrower under the Finance Documents (a “Sum”), or any order, judgment or award given or made in relation to a Sum, has to be converted from the currency (the “First Currency”) in which that Sum is payable into another currency (the “Second Currency”) for the purpose of: |
| (i) | making or filing a claim or proof against that Borrower; or |
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| (ii) | obtaining or enforcing an order, judgment or award in relation to any litigation or arbitration proceedings, |
that Borrower 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 Borrower 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 Borrower shall, on demand, indemnify each Secured Party against any cost, loss or liability incurred by it as a result of: |
| (i) | the occurrence of any Event of Default; |
| (ii) | a failure by a Transaction Obligor to pay any amount due under a Finance Document on its due date, including without limitation, any cost, loss or liability arising as a result of Clause 31 (Sharing among the Finance Parties); |
| (iii) | funding, or making arrangements to fund, its participation in an Advance requested by the Borrowers in the Utilisation Request but not made by reason of the operation of any one or more of the provisions of this Agreement (other than by reason of default or negligence by 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 Borrower 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 (including, without limitation, for negligence or any other category of liability whatsoever) incurred by that Indemnified Person pursuant to or in connection with any litigation, arbitration or administrative proceedings or regulatory enquiry, in connection with or arising out of the entry into and the transactions contemplated by the Finance Documents, having the benefit of any Security constituted by the Finance Documents or which relates to the condition or operation of, or any incident occurring in relation to, 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: |
| (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. |
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| (d) | Once the Loan is fully utilised, the Transaction Obligors agree that no Finance Party shall have any liability to any Transaction Obligor whether in tort, contract or otherwise for losses suffered by any Transaction Obligor in connection with, arising out of or in any way related to the transactions contemplated and the relationship established by any of the Finance Documents, or any act, omission or event occurring in connection therewith, unless such losses resulted from the gross negligence or wilful misconduct of the party from which recovery is sought. |
| (e) | 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 | Indemnity to the Facility Agent |
Each Borrower shall, on demand, indemnify the Facility Agent against:
| (a) | any cost, loss or liability incurred by the Facility Agent (acting reasonably) as a result of: |
| (i) | investigating any event which it reasonably believes is a Default; or |
| (ii) | acting or relying on any notice, request or instruction which it reasonably believes to be genuine, correct and appropriately authorised; or |
| (iii) | instructing lawyers, accountants, tax advisers, surveyors or other professional advisers or experts as permitted under the Finance Documents; and |
| (b) | any cost, loss or liability (including, without limitation, for negligence or any other category of liability whatsoever) 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 32.11 (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. |
| 14.4 | Indemnity to the Security Agent |
| (a) | Each Borrower shall, on demand, indemnify the Security Agent and every Receiver and Delegate against any cost, loss or liability (including, without limitation, for negligence or any other category of liability whatsoever) incurred by any of them: |
| (i) | in relation to or as a result of: |
| (A) | any failure by 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; |
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| (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 14.4 (Indemnity to the Security Agent) and shall have a lien on the Transaction Security and the proceeds of the enforcement of the Transaction Security for all monies payable to it. |
| 15 | MITIGATION BY THE FINANCE PARTIES |
| 15.1 | Mitigation |
| (a) | Each Finance Party shall, in consultation with the Borrowers, take all reasonable steps to mitigate any circumstances which arise and which would result in any amount becoming payable under or pursuant to, or cancelled pursuant to, any of Clause 7.1 (Illegality), Clause 12 (Tax Gross Up and Indemnities) or Clause 13 (Increased Costs) including (but not limited to) transferring its rights and obligations under the Finance Documents to another Affiliate or Facility Office. |
| (b) | Paragraph (a) above does not in any way limit the obligations of any Transaction Obligor under the Finance Documents. |
| 15.2 | Limitation of liability |
| (a) | Each Borrower 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. |
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| 16 | COSTS AND EXPENSES |
| 16.1 | Transaction expenses |
The Borrowers shall, on demand, pay the Facility Agent and the Security Agent the amount of all costs and expenses (including legal fees and VAT) 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 |
If:
| (a) | a Transaction Obligor requests an amendment, waiver or consent; or |
| (b) | an amendment is required either pursuant to Clause 32.9 (Change of currency) or as contemplated in Clause 42.4 (Benchmark Replacement setting); 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 Borrowers shall, on demand, reimburse each of the Facility Agent and the Security Agent for the amount of all costs and expenses (including legal fees and VAT) reasonably incurred by each Secured Party in responding to, evaluating, negotiating or complying with that request or requirement.
| 16.3 | Enforcement and preservation costs |
The Obligors shall, on demand, pay to each Secured Party the amount of all costs and expenses (including legal fees and VAT) incurred by that Secured Party in connection with the enforcement of, or the preservation of any rights under, any Finance Document or the Transaction Security and with any proceedings instituted by or against that Secured Party as a consequence of it entering into a Finance Document, taking or holding the Transaction Security, or enforcing those rights.
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SECTION 7
JOINT AND SEVERAL LIABILITY OF BORROWERS
| 17 | JOINT AND SEVERAL LIABILITY OF THE BORROWERS |
| 17.1 | 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.
| 17.2 | 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. |
| 17.3 | 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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| 17.4 | 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. |
| 17.5 | 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
| 18 | REPRESENTATIONS |
| 18.1 | General |
Each Borrower makes the representations and warranties set out in this Clause 18 (Representations) to each Finance Party on the date of this Agreement.
| 18.2 | Status |
| (a) | It is a corporation, duly incorporated and validly existing in good standing under the law of its jurisdiction of incorporation. |
| (b) | It and each Transaction Obligor has the power to own its assets and carry on its business as it is being conducted. |
| 18.3 | Share capital and ownership |
| (a) | Each of Borrower A and Borrower B is authorised to issue 500 registered shares with a par value of $1.00 per share, all of which shares have been issued in registered form and are fully paid and non-assessable. |
| (b) | Borrower C is authorised to issue 100 registered shares with a par value of $1.00 per share, all of which shares have been issued in registered form and are fully paid and non-assessable. |
| (c) | The legal title to and beneficial interest in the issued shares in each Borrower is held by the Shareholder free of any Security (other than Permitted Security) or any other claim and each Borrower is 100 per cent. owned indirectly by the Guarantor. |
| (d) | None of the issued shares in each Borrower is subject to any option to purchase, pre-emption rights or similar rights. |
| 18.4 | Binding obligations |
The obligations expressed to be assumed by it in each Transaction Document to which it is a party are legal, valid, binding and enforceable obligations.
| 18.5 | Validity, effectiveness and ranking of Security |
| (a) | Each Finance Document to which it is a party does now or, as the case may be, will upon execution and delivery and, where applicable, registration as provided for in that Finance Document create, the Security it purports to create over any assets to which such Security, by its terms, relates, and such Security will, when created or intended to be created, be valid and effective. |
| (b) | No third party has or will have any Security (except for Permitted Security) over any assets that are the subject of any Transaction Security granted by it. |
| (c) | The Transaction Security granted by it to the 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. |
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| (d) | No concurrence, consent or authorisation of any person is required for the creation of or otherwise in connection with any Transaction Security. |
| 18.6 | Non-conflict with other obligations |
The entry into and performance by it of, and the transactions contemplated by, each Transaction Document to which it is a party do not and will not conflict with:
| (a) | any law or regulation applicable to it; |
| (b) | the constitutional documents of any Transaction Obligor or any member of the Group; or |
| (c) | any agreement or instrument binding upon it or any member of the Group or any of its assets or any member of the Group’s assets or constitute a default or termination event (however described) under any such agreement or instrument. |
| 18.7 | Power and authority |
| (a) | It has the power to enter into, perform and deliver, and has taken all necessary action to authorise: |
| (i) | its entry into, performance and delivery of, each Transaction Document to which it is or will be a party and the transactions contemplated by those Transaction Documents; and |
| (ii) | its registration of a Ship owned by it under an Approved Flag. |
| (b) | No limit on its powers will be exceeded as a result of the borrowing, granting of security or giving of guarantees or indemnities contemplated by the Transaction Documents to which it is a party. |
| 18.8 | Validity and admissibility in evidence |
All Authorisations required or desirable:
| (a) | to enable it lawfully to enter into, exercise its rights and comply with its obligations in the Transaction Documents to which it is a party; and |
| (b) | to make the Transaction Documents to which it is a party admissible in evidence in its Relevant Jurisdictions, |
have been obtained or effected and are in full force and effect.
| 18.9 | Governing law and enforcement |
| (a) | The choice of governing law of each Transaction Document to which it is a party will be recognised and enforced in its Relevant Jurisdictions. |
| (b) | Any judgment obtained in relation to a Transaction Document to which it is a party in the jurisdiction of the governing law of that Transaction Document will be recognised and enforced in its Relevant Jurisdictions. |
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| 18.10 | Insolvency |
No:
| (a) | corporate action, legal proceeding or other procedure or step described in paragraph (a) of Clause 25.8 (Insolvency proceedings); or |
| (b) | creditors’ process described in Clause 25.9 (Creditors’ process), |
has been taken or, to its knowledge, threatened in relation to a member of the Group; and none of the circumstances described in Clause 25.7 (Insolvency) applies to a member of the Group.
| 18.11 | No filing or stamp taxes |
Under the laws of its Relevant Jurisdictions it is not necessary that the Finance Documents to which it is a party be registered, filed, recorded, notarised or enrolled with any court or other authority in that jurisdiction or that any stamp, registration, notarial or similar Taxes or fees be paid on or in relation to the Finance Documents to which it is a party or the transactions contemplated by those Finance Documents except any registration, filing, recording, notarisation or enrolling or any Tax or fee payable in relation to any Transaction Obligor which is referred to in any legal opinion delivered pursuant to Clause 4 (Conditions of Utilisation) and which will be made or paid promptly after the date of the relevant Finance Document.
| 18.12 | Deduction of Tax |
It is not required to make any Tax Deduction from any payment it may make under any Finance Document to which it is a party.
| 18.13 | No default |
| (a) | No Event of Default and, on the date of this Agreement, on the Utilisation Date and on the Release Date, no Default is continuing or might reasonably be expected to result from the making of any Utilisation or the entry into, the performance of, or any transaction contemplated by, any Transaction Document. |
| (b) | No other event or circumstance is outstanding which constitutes a default or a termination event (however described) under any other agreement or instrument which is binding on it or any of its Subsidiaries or to which its (or any of its Subsidiaries’) assets are subject which might have a Material Adverse Effect. |
| 18.14 | No misleading information |
| (a) | Any factual information provided by any member of the Group for the purposes of this Agreement was true and accurate in all material respects as at the date it was provided or as at the date (if any) at which it is stated. |
| (b) | The financial projections contained in any such information have been prepared on the basis of recent historical information and on the basis of reasonable assumptions. |
| (c) | Nothing has occurred or been omitted from any such information and no information has been given or withheld that results in any such information being untrue or misleading in any material respect. |
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| 18.15 | Financial Statements |
| (a) | The Original Financial Statements were prepared in accordance with GAAP consistently applied. |
| (b) | The Original Financial Statements give a true and fair view of the Group’s financial condition as at the end of the relevant financial year and its and the Group’s results of operations during the relevant financial year. |
| (c) | There has been no material adverse change in its assets, business or financial condition (or the assets, business or consolidated financial condition of the Group, in the case of the Guarantor) since the date of the Group’s most recent financial statements delivered pursuant to Clause 19.2 (Financial statements) (other than as disclosed to the Facility Agent prior to the date of this Agreement). |
| (d) | The Group’s most recent financial statements delivered pursuant to Clause 19.2 (Financial statements): |
| (i) | have been prepared in accordance with Clause 19.3 (Requirements as to financial statements); and |
| (ii) | give a true and fair view of (if audited) or fairly represent (if unaudited) its financial condition as at the end of the relevant financial year and operations during the relevant financial year (consolidated in the case of the Guarantor). |
| (e) | Since the date of the most recent financial statements delivered pursuant to Clause 19.2 (Financial statements) there has been no material adverse change in its business, assets or financial condition (or the business or consolidated financial condition of the Group, in the case of the Guarantor). |
| 18.16 | Pari passu ranking |
Its payment obligations under the Finance Documents to which it is a party rank at least pari passu with the claims of all its other unsecured and unsubordinated creditors, except for obligations mandatorily preferred by law applying to companies generally.
| 18.17 | No proceedings pending or threatened |
| (a) | No litigation, arbitration or administrative proceedings or investigations (including proceedings or investigations relating to any alleged or actual breach of the ISM Code or of the ISPS Code) of or before any court, arbitral body or agency which, if adversely determined, might reasonably be expected to have a Material Adverse Effect have (to the best of its knowledge and belief (having made due and careful enquiry)) been started or threatened against it or any other Transaction Obligor or any member of the Group. |
| (b) | No judgment or order of a court, arbitral tribunal or other tribunal or any order or sanction of any governmental or other regulatory body which might reasonably be expected to have a Material Adverse Effect has (to the best of its knowledge and belief (having made due and careful enquiry)) been made against it or any other Transaction Obligor or any member of the Group. |
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| 18.18 | Validity and completeness of the Deeds of Release |
| (a) | Each Deed of Release constitutes legal, valid, binding and enforceable obligations of the parties thereto. |
| (b) | No amendments or additions to the Deed of Release have been agreed nor have any rights under the Deed of Release been waived. |
| 18.19 | Valuations |
| (a) | All information supplied by it or on its behalf to an Approved Valuer for the purposes of a valuation delivered to the 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. |
| 18.20 | No breach of laws |
It has not (and no other member of the Group has) breached any law or regulation which breach has or is reasonably likely to have a Material Adverse Effect.
| 18.21 | No Charter |
No Ship is subject to any Charter other than a Permitted Charter.
| 18.22 | Compliance with Environmental Laws |
All Environmental Laws relating to the ownership, operation and management of each Ship and the business of each member of the Group (as now conducted and as reasonably anticipated to be conducted in the future) and the terms of all Environmental Approvals have been complied with.
| 18.23 | No Environmental Claim |
No Environmental Claim has been made or threatened against any member of the Group or any Ship which might reasonably be expected to have a Material Adverse Effect.
| 18.24 | No Environmental Incident |
No Environmental Incident has occurred and no person has claimed that an Environmental Incident has occurred.
| 18.25 | ISM and ISPS Code compliance |
All requirements of the ISM Code and the ISPS Code as they relate to each Borrower, an Approved Manager and each Ship have been complied with.
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| 18.26 | Taxes paid |
| (a) | It is not and no other member of the Group is materially overdue in the filing of any Tax returns and it is not (and no other member of the Group is) overdue in the payment of any amount in respect of Tax. |
| (b) | No claims or investigations are being, or to the best of its knowledge, are reasonably likely to be, made or conducted against it (or any other member of the Group) with respect to Taxes. |
| 18.27 | Financial Indebtedness |
No Borrower has any Financial Indebtedness outstanding other than Permitted Financial Indebtedness.
| 18.28 | Overseas companies |
No Borrower has delivered particulars, whether in its name stated in the Finance Documents or any other name, of any UK Establishment to the Registrar of Companies as required under the Overseas Regulations or, if it has so registered, it has provided to the Facility Agent sufficient details to enable an accurate search against it to be undertaken by the Lenders at the Companies Registry.
| 18.29 | 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.
| 18.30 | Ownership |
| (a) | On and from the Release Date, each Borrower will be the sole legal and beneficial owner of the Ship to be owned by it, its Earnings and its Insurances. |
| (b) | The Shareholder is the sole legal and beneficial owner of all the issued shares in each Borrower. |
| (c) | The Guarantor is the indirect beneficial owner of all the issued shares in the Shareholder. |
| (d) | 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. |
| (e) | The constitutional documents of each Borrower do not and could not restrict or inhibit any transfer of the shares of any Borrower on creation or enforcement of the security conferred by the Security Documents. |
| 18.31 | Centre of main interests and establishments |
For the purposes of The Council of the European Union Regulation No. 2015/848 on Insolvency Proceedings (recast) (the “Regulation”), its centre of main interest (as that term is used in Article 3(1) of the Regulation) is not situated in the US or the United Kingdom and it has no “establishment” (as that term is used in Article 2(10) of the Regulation) in such jurisdiction.
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| 18.32 | Place of business |
No Transaction Obligor has a place of business in the US (save for the Guarantor) or the United Kingdom and its head office functions are carried out at the address stated in Part A of Schedule 1 (The Parties).
| 18.33 | No employee or pension arrangements |
No Borrower has any employees or any liabilities under any pension scheme.
| 18.34 | Sanctions |
| (a) | Neither any Transaction Obligor nor any of their respective Subsidiaries, directors, officers or agents (acting within the scope of their agency): |
| (i) | is a Prohibited Person; |
| (ii) | has violated or is violating any Sanctions; |
| (iii) | has received notice of or is aware of any claim, action, suit, proceeding or investigation against it with respect to Sanctions by any Sanctions Authority; or |
| (iv) | is knowingly engaged in any activity that would reasonably be expected to result in such person being designated as a Prohibited Person. |
| (b) | Each of the Transaction Obligors has implemented and maintains in effect a Sanctions compliance policy which is designed to ensure compliance by each such Transaction Obligor, its Subsidiaries and their respective directors, officers, employees and agents with Sanctions. |
| 18.35 | US Tax Obligor |
No Transaction Obligor is a US Tax Obligor.
| 18.36 | Margin Regulations; Investment Company Act |
| (a) | No Borrower is engaged, nor will it engage in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulation U issued by the Board of Governors of the Federal Reserve System of the United States), and no proceeds of any Advance will be used to buy or carry any margin stock or to extend credit to others for the purpose of buying or carrying any margin stock. |
| (b) | No Transaction Obligor is nor is it required to be registered as an “investment company” under the United States of America Investment Company Act of 1940. |
| 18.37 | Anti-bribery |
No part of the proceeds of the Loan will be used, directly or indirectly, for any payments to any government official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977, as amended.
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| 18.38 | Patriot Act |
To the extent applicable each Obligor is in compliance with (i) the Trading with the Enemy Act, and each of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V) and any other enabling legislation or executive order relating thereto and (ii) the PATRIOT Act.
| 18.39 | Repetition |
The Repeating Representations are deemed to be made by each Borrower by reference to the facts and circumstances then existing on the date of the Utilisation Request, the Release Date and the first day of each Interest Period.
| 19 | INFORMATION UNDERTAKINGS |
| 19.1 | General |
The undertakings in this Clause 19 (Information Undertakings) remain in force throughout the Security Period unless the Facility Agent, acting with the authorisation of the Majority Lenders (or, where specified, all the Lenders), may otherwise permit.
| 19.2 | Financial statements |
The Borrowers procure that the Guarantor shall supply to the Facility Agent in sufficient copies for all the Lenders:
| (a) | as soon as they become available, but in any event within 180 days after the end of each of the Guarantor’s financial years, commencing with the financial year ended on 31 December 2022, the annual audited consolidated financial statement of the Group for that financial year; and |
| (b) | as soon as the same become available, but in any event within 90 days after the end of each quarter of each of the Guarantor’s financial years (ending 31 March, 30 June and 30 September), the unaudited consolidated quarterly financial statement of the Group for that financial quarter starting with the quarter ended 31 March 2023. |
| 19.3 | Requirements as to financial statements |
| (a) | Each set of financial statements delivered by the Guarantor pursuant to Clause 19.2 (Financial statements) shall be certified by an 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 if it has not been filed with the US Securities and Exchange Commission. |
| (b) | The Borrowers shall procure that each set of financial statements of the Guarantor delivered pursuant to Clause 19.2 (Financial statements) is prepared using GAAP, accounting practices and financial reference periods consistent with those applied in the preparation of the Original Financial Statements for the Group unless, in relation to any set of financial statements, it notifies the Facility Agent that there has been a change in GAAP, the accounting practices or reference periods, unless such change is described in the filings made with the US Securities and Exchange Commission, and its auditors (or, if appropriate, the auditors of the Guarantor) deliver to the Facility Agent: |
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| (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 10 (financial covenants) of the Guarantee 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.
| 19.4 | DAC6 |
| (a) | In this Clause 19.4 (DAC6), “DAC6” means the Council Directive of 25 May 2018 (2018/822/EU) amending Directive 2011/16/EU or any replacement legislation applicable in the United Kingdom. |
| (b) | The Borrowers shall supply to the Facility Agent (in sufficient copies for all the Lenders, if the Facility Agent so requests): |
| (i) | promptly upon the making of such analysis or the obtaining of such advice, any analysis made or advice obtained on whether any transaction contemplated by the Transaction Documents or any transaction carried out (or to be carried out) in connection with any transaction contemplated by the Transaction Documents contains a hallmark as set out in Annex IV of DAC6; and |
| (ii) | promptly upon the making of such reporting and to the extent permitted by applicable law and regulation, any reporting made to any governmental or taxation authority by or on behalf of any member of the Group or by any adviser to such member of the Group in relation to DAC6 or any law or regulation which implements DAC6 and any unique identification number issued by any governmental or taxation authority to which any such report has been made (if available). |
| 19.5 | Information: miscellaneous |
Each Borrower 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 material documents dispatched by it to its shareholders (or any class of them) or its creditors generally at the same time as they are dispatched unless the contents of such communication have already been disclosed in the filings made with the US Securities and Exchange Commission; |
| (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; |
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| (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 or which would involve a liability, or a potential or alleged liability, exceeding $1,000,000 (or its equivalent in any other currency or currencies); |
| (d) | promptly, its constitutional documents where these have been amended or varied unless, in respect of the Guarantor, these changes have been disclosed in the filings with the US Securities and Exchange Commission; |
| (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 member of the Group, |
as any Finance Party (through the Facility Agent) may reasonably request; and
| (f) | promptly, such further information and/or documents as any Finance Party (through the Facility Agent) may reasonably request so as to enable such Finance Party to comply with any laws applicable to it or as may be required by any regulatory authority. |
| 19.6 | Notification of Default |
| (a) | Each Borrower 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 Borrower is aware that a notification has already been provided by another Transaction Obligor). |
| (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). |
| 19.7 | “Know your customer” checks |
| (a) | If: |
| (i) | the introduction of or any change in (or in the interpretation, administration or application of) any law or regulation made after the date of this Agreement; |
| (ii) | any change in the status of a Transaction Obligor (or of a Holding Company of a Transaction Obligor) (including, without limitation, a change of ownership of a Transaction Obligor or of a holding company of a Transaction Obligor save for the Guarantor) 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, |
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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 Borrower 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, including without limitation Sanctions, pursuant to the transactions contemplated in the Finance Documents, including, without limitation, obtaining, verifying and recording certain information and documentation that will allow the Facility Agent and each of the Lenders to identify each Transaction Obligor in accordance with the requirements of the PATRIOT Act (as applicable).
| (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, including without limitation Sanctions, pursuant to the transactions contemplated in the Finance Documents including, without limitation, obtaining, verifying and recording certain information and documentation that will allow the Facility Agent and each of the Lenders to identify each Transaction Obligor in accordance with the requirements of the PATRIOT Act (as applicable). |
| 20 | GENERAL UNDERTAKINGS |
| 20.1 | General |
The undertakings in this Clause 20 (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.
| 20.2 | Authorisations |
Each Borrower 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; |
| (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; |
| (iii) | own and operate each Ship (in the case of the Borrowers); and |
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| (c) | without prejudice to the generality of the above, ensure that if, but for the obtaining of an Authorisation, an Obligor would be in breach of any of the provisions of this Agreement which relate to Sanctions or, by reason of Sanctions, would be prohibited from performing any provision of this Agreement, such an Authorisation is obtained so as to avoid such breach or to enable such performance. |
| 20.3 | Compliance with laws |
Each Borrower shall, and shall procure that each other Transaction Obligor will, comply in all respects with all laws and regulations to which it may be subject, if failure so to comply has or is reasonably likely to have a Material Adverse Effect.
| 20.4 | Environmental compliance |
Each Borrower shall, and shall procure that each other Transaction Obligor will:
| (a) | comply with all Environmental Laws; |
| (b) | obtain, maintain and ensure compliance with all requisite Environmental Approvals; |
| (c) | implement procedures to monitor compliance with and to prevent liability under any Environmental Law, |
where failure to do so has or is reasonably likely to have a Material Adverse Effect.
| 20.5 | Environmental Claims |
Each Borrower shall, and shall procure that each other Transaction Obligor will, (through the Guarantor), promptly upon becoming aware of the same, inform the Facility Agent in writing of:
| (a) | any Environmental Claim against any member of the Group which is current, pending or threatened; and |
| (b) | any facts or circumstances which are reasonably likely to result in any Environmental Claim being commenced or threatened against any member of the Group, |
where the claim, if determined against that member of the Group, has or is reasonably likely to have a Material Adverse Effect.
| 20.6 | Taxation |
| (a) | Each Borrower 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 19.2 (Financial statements); and |
| (iii) | such payment can be lawfully withheld and failure to pay those Taxes does not have or is not reasonably likely to have a Material Adverse Effect. |
| (b) | No Borrower shall change its residence for Tax purposes. |
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| 20.7 | Overseas companies |
Each Borrower 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.
| 20.8 | No change to centre of main interests |
Each Borrower shall not change the location of its centre of main interest (as that term is used in Article 3(1) of the Regulation) to either jurisdiction referred to in Clause 18.31 (Centre of main interests and establishments) and it will create no “establishment” (as that term is used in Article 2(10) of the Regulation) in any such jurisdiction.
| 20.9 | Pari passu ranking |
Each Borrower 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.
| 20.10 | Title |
| (a) | Each Borrower shall hold the legal title to, and own the entire beneficial interest in with effect from the Release Date, the relevant Ship, its Earnings and its Insurances. |
| (b) | With effect on and from its creation or intended creation, each Borrower shall, and shall procure that each Transaction Obligor shall, hold the legal title to, and own the entire beneficial interest in any other assets the subject of any Transaction Security created or intended to be created by such Borrower or Transaction Obligor. |
| 20.11 | Negative pledge |
| (a) | No Borrower shall, and shall procure that no other Transaction Obligor will, create or permit to subsist any Security over any of its assets which are, in the case of members of the Group other than the Borrowers, 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 or any other member of the Group; |
| (ii) | sell, transfer or otherwise dispose of any of its receivables on recourse terms; |
| (iii) | enter into any arrangement under which money or the benefit of a bank or other account may be applied, set-off or made subject to a combination of accounts; or |
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| (iv) | enter into any other preferential arrangement having a similar effect, in circumstances where the arrangement or transaction is entered into primarily as a method of raising Financial Indebtedness or of financing the acquisition of an asset. |
| (c) | Paragraphs (a) and (b) above do not apply to any Permitted Security. |
| 20.12 | Disposals |
| (a) | 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 22.16 (Restrictions on chartering, appointment of managers etc.). |
| 20.13 | Merger |
No Borrower shall enter into any amalgamation, demerger, merger, consolidation or corporate reconstruction.
| 20.14 | Change of business |
| (a) | Each Borrower shall procure that no substantial change is made to the general nature of the business of the Guarantor or the Group from that carried on at the date of this Agreement. |
| (b) | No Borrower shall engage in any business other than the ownership and operation of its Ship. |
| 20.15 | Financial Indebtedness |
No Borrower shall incur or permit to be outstanding any Financial Indebtedness except Permitted Financial Indebtedness.
| 20.16 | Expenditure |
No Borrower shall incur any expenditure, except for expenditure reasonably incurred in the ordinary course of owning, operating, maintaining and repairing its Ship.
| 20.17 | Share capital |
No Borrower shall:
| (a) | purchase, cancel, redeem or retire any of its issued shares; |
| (b) | increase or reduce the number of shares that it is authorized to issue or change the par value of such shares or create any new class of shares; |
| (c) | issue any further shares except to the Shareholder and provided such new shares are made subject to the terms of the Shares Security applicable to that Borrower immediately upon the issue of such new shares in a manner satisfactory to the Security Agent and the terms of that Shares Security are complied with; or |
| (d) | appoint any further director, officer or secretary of that Borrower (unless the provisions of the Shares Security applicable to that Borrower are complied with). |
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| 20.18 | Dividends |
No Borrower shall following the occurrence of a Default which is continuing, or where any of the following would result in the occurrence of a Default:
| (a) | declare, make or pay any dividend, charge, fee or other distribution (or interest on any unpaid dividend, charge, fee or other distribution) (whether in cash or in kind) on or in respect of its issued shares (or any class of its shares); |
| (b) | repay or distribute any dividend or share premium reserve; or |
| (c) | redeem, repurchase, defease, retire or repay any of its issued shares or resolve to do so. |
| 20.19 | Other transactions |
No Borrower shall:
| (a) | be the creditor in respect of any loan or any form of credit to any person other than another Obligor and where such loan or form of credit is Permitted Financial Indebtedness; |
| (b) | give or allow to be outstanding any guarantee or indemnity in the ordinary course of its business in aggregate not more than $500,000 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 any guarantee or indemnity given under the Finance Documents; |
| (c) | enter into any material agreement other than: |
| (i) | the Transaction Documents; |
| (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. |
| 20.20 | Unlawfulness, invalidity and ranking; Security imperilled |
No Borrower shall, and shall procure that no other Transaction Obligor will, do (or fail to do) or cause or permit another person to do (or omit to do) anything which is likely to:
| (a) | make it unlawful 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 if that cessation individually or together with any other cessations materially or adversely affects the interests of the Secured Parties under the Finance Documents; |
| (c) | cause any Transaction Document to cease to be in full force and effect; |
| (d) | cause any Transaction Security to rank after, or lose its priority to, any other Security; and |
| (e) | imperil or jeopardise the Transaction Security. |
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| 20.21 | Books and records |
Each Borrower will keep proper books of record and account which will be accurate in all material respects and in which full, true and correct entries in accordance with GAAP will be made of all dealings or transactions in relation to its business and activities.
| 20.22 | Sanctions |
| (a) | No Borrower shall, and shall not suffer, permit or authorize any other Transaction Obligor or any other member of the Group to, directly or indirectly, use, lend, make payments of, contribute or otherwise make available, all or any part of the proceeds of the Loan or other transaction(s) contemplated by this Agreement to fund any trade, business or other activities: |
| (i) | involving or, to the Borrowers’ best knowledge, for the benefit of any Prohibited Person or any subsidiary or joint venture partner of any Prohibited Person; |
| (ii) | in any country or territory, that at the time of such funding is a Sanctioned Country; or |
| (iii) | in any other manner that would result in a violation of Sanctions by any Transaction Obligor, any other member of the Group or any Finance Party. |
| (b) | Each Borrower will, and will ensure that any other Transaction Obligor and any other member of the Group will: |
| (i) | ensure that no person that is a Prohibited Person will have any legal or, to the Borrowers’ best knowledge, beneficial interest in any funds repaid or remitted by any Transaction Obligor to a Lender in connection with the Loan or any part of the Loan; |
| (ii) | not fund all or any part of any payment or repayment under the Loan out of proceeds derived from any activity with a Prohibited Person or in or with a Sanctioned Country; |
| (iii) | not fund all or any part of any payment or repayment under the Loan out of proceeds derived from transactions which would be prohibited by Sanctions or would otherwise cause any Finance Party, any Transaction Obligor or any other member of the Group to be in breach of Sanctions; and |
| (iv) | procure that no proceeds from activities or business with a Prohibited Person or in or with a Sanctioned Country are credited to any Earnings Account or any other Account. |
| (c) | Each Borrower shall (and shall procure that each other Transaction Obligor and each other member of the Group shall) maintain in effect a Sanctions compliance policy which is designed to ensure compliance by each such person and their respective directors, officers, employees and agents with Sanctions. |
| (d) | Each Borrower shall procure that each other Transaction Obligor and each other member of the Group will comply in all respects with Sanctions. |
| (e) | No Borrower nor any other Transaction Obligor nor any other member of the Group shall be a Prohibited Person. |
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| (f) | The representations and covenants in Clause 20.22 (Sanctions), paragraphs (a) through (e) of this Clause 20.22 (Sanctions), Clause 22.10 (Compliance with laws etc.) (solely as relates to Sanctions) and Clause 22.12 (Sanctions and Ship trading) (collectively, the “Sanctions Clauses”) shall not apply to any Lender that informs the Facility Agent that it is subject to Council Regulation (EC) No. 2271/96 of 22 November 1996 (“EU Blocking Regulation”) or Section 7 of the German Foreign Trade Ordinance (§ 7 Außenwirtschaftsverordnung) or a similar applicable anti-boycott statute (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 the Sanctions Clauses would violate some or all of the Anti Boycott Regulations. |
| (g) | Restricted Lender: |
| (i) | In connection with any amendment, waiver, determination or direction relating to the Sanctions Clauses 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 (each a “Restricted Lender”), the Commitment or participation in the Loan, as applicable, of that Restricted Lender will, subject to paragraph (ii) below, be excluded for the purpose of determining whether the consent of the Majority Lenders has been obtained or whether the determination or direction by the Majority Lenders has been made or given. |
| (ii) | The Facility Agent is only permitted to exclude the Commitment or participation in the Loan of a Lender pursuant to paragraph (i) above for the purpose of determining whether the consent of the Majority Lenders has been obtained or whether the determination or direction by the Majority Lenders has been made, if following the Facility Agent’s request for such consent, determination or direction by the Majority Lenders the respective Lender notifies the Facility Agent that it is a Restricted Lender for such purpose. |
| 20.23 | Further assurance |
| (a) | Each Borrower 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; |
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| (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 Borrower 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 a Borrower delivers to the Security Agent any document executed by itself or another Transaction Obligor pursuant to this Clause 20.21 (Further assurance), that Borrower shall deliver, or shall procure that such other Transaction Obligor will deliver, to the Security Agent a certificate signed by one of that Borrower’s or Transaction Obligor’s officers which shall: |
| (i) | set out the text of a resolution of that Borrower’s or Transaction Obligor’s directors specifically authorising the execution of the document specified by the Security Agent; and |
| (ii) | state that either the resolution was duly passed at a meeting of the directors validly convened and held, throughout which a quorum of directors entitled to vote on the resolution was present, or that the resolution has been signed by all the directors or officers and is valid under that Borrower’s or Transaction Obligor’s articles of incorporation or limited partnership agreement, as applicable. |
| 21 | INSURANCE UNDERTAKINGS |
| 21.1 | General |
The undertakings in this Clause 21 (Insurance Undertakings) remain in force on and from the Release Date and throughout the rest of the Security Period except as the Facility Agent, acting with the authorisation of the Majority Lenders (or, where specified, all the Lenders) may otherwise permit.
| 21.2 | Maintenance of obligatory insurances |
Each Borrower shall keep the Ship owned by it insured at its expense against:
| (a) | hull and machinery plus freight interest and hull interest and any other usual marine risks (including excess risks); |
| (b) | war risks, including blocking and trapping and to cover piracy and terrorism if those risks are excluded from fire and usual marine risks cover; |
| (c) | protection and indemnity risks (including freight, demurrage and defence cover without exclusion of any Environmental Incident) with a protection and indemnity association being a member of the International Group of Protection and Indemnity Clubs; and |
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| (d) | any other risks against which the Facility Agent acting on the instructions of the Majority Lenders considers, having regard to practices and other circumstances prevailing at the relevant time, it would be reasonable for that Borrower to insure and which are specified by the Facility Agent by notice to that Borrower. |
| 21.3 | 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: |
| (i) | 120 per cent. of the Tranche relating to the Ship owned by it; 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 and in the international marine insurance market but not less than $1,000,000,000; |
| (d) | in the case of protection and indemnity risks, in respect of the full tonnage of its Ship; |
| (e) | on approved terms; and |
| (f) | through Approved Brokers and with approved insurance companies and/or underwriters or, in the case of war risks and protection and indemnity risks, in approved war risks and protection and indemnity risks associations. |
| 21.4 | Further protections for the Finance Parties |
In addition to the terms set out in Clause 21.3 (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, the Guarantor or any Approved Manager as the named assured or co-assureds unless the interest of every other named assured is limited: |
| (i) | in respect of any obligatory insurances for hull and machinery and war risks; |
| (A) | to any provable out-of-pocket expenses that 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; |
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and every other named insured has undertaken in writing to the Security Agent (in such form as it requires) that any deductible shall be apportioned between that Borrower and every other named insured in proportion to the gross claims made or paid by each of them and that it shall do all things necessary and provide all documents, evidence and information to enable the Security Agent to collect or recover any moneys which at any time become payable in respect of the obligatory insurances;
| (b) | whenever the Facility Agent requires, name (or be amended to name) the Security Agent as additional named insured for its rights and interests, warranted no operational interest and with full waiver of rights of subrogation against the Security Agent, but without the Security Agent being liable to pay (but having the right to pay) premiums, calls or other assessments in respect of such insurance; |
| (c) | name the Security Agent as loss payee with such directions for payment as the Facility Agent may specify; |
| (d) | provide that all payments by or on behalf of the insurers under the obligatory insurances to the Security Agent shall be made without set off, counterclaim or deductions or condition whatsoever; |
| (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. |
| 21.5 | Renewal of obligatory insurances |
Each Borrower shall:
| (a) | at least 21 days before the expiry of any obligatory insurance effected by it: |
| (i) | notify the Facility Agent of the Approved Brokers (or other insurers) and any protection and indemnity or war risks association through or with which it proposes to renew that obligatory insurance and of the proposed terms of renewal; and |
| (ii) | obtain the Facility Agents’ approval to the matters referred to in sub-paragraph (i) above; |
| (b) | at least 14 days before the expiry of any obligatory insurance, renew that obligatory insurance in accordance with the Facility Agent’s approval pursuant to paragraph (a) above; and |
| (c) | procure that the Approved Brokers and/or the approved war risks and protection and indemnity associations with which such a renewal is effected shall promptly after the renewal notify the Facility Agent in writing of the terms and conditions of the renewal. |
| 21.6 | 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 of undertaking in a form required by the Facility Agent and including undertakings by the Approved Brokers that: |
| (i) | they will have endorsed on each policy, immediately upon issue, a loss payable clause and a notice of assignment complying with the provisions of Clause 21.4 (Further protections for the Finance Parties); |
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| (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 and at least fourteen (14) days’ prior to any policy cancellation for non-payment of premium; |
| (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; and |
| (vii) | they will arrange for a separate policy to be issued in respect of the Ship owned by that Borrower forthwith upon being so requested by the Facility Agent. |
| 21.7 | 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 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. |
| 21.8 | 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.
| 21.9 | Payment of premiums |
Each Borrower shall punctually pay all premiums or other sums payable in respect of the obligatory insurances effected by it and produce all relevant receipts when so required by the Facility Agent or the Security Agent.
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| 21.10 | Guarantees |
Each Borrower shall ensure that any guarantees required by a protection and indemnity or war risks association are promptly issued and remain in full force and effect.
| 21.11 | 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 21.6 (Copies of policies; letters of undertaking)) ensure that the obligatory insurances are not made subject to any exclusions or qualifications to which the 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. |
| 21.12 | 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.
| 21.13 | Settlement of claims |
Each Borrower shall:
| (a) | not settle, compromise or abandon any claim under any obligatory insurance for Total Loss or for a Major Casualty; and |
| (b) | do all things necessary and provide all documents, evidence and information to enable the Security Agent to collect or recover any moneys which at any time become payable in respect of the obligatory insurances. |
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| 21.14 | Provision of copies of communications |
Each Borrower shall provide the Security Agent, at the time of each such communication, 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. |
| 21.15 | Provision of information |
Each Borrower shall promptly provide the Facility Agent (or any persons which it may designate) with any information which the Facility Agent (or any such designated person) requests for the purpose of:
| (a) | obtaining or preparing any report from an independent marine insurance broker as to the adequacy of the obligatory insurances effected or proposed to be effected; and/or |
| (b) | effecting, maintaining or renewing any such insurances as are referred to in Clause 21.16 (Mortgagee’s interest and additional perils insurances) or dealing with or considering any matters relating to any such insurances, |
and the 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.
| 21.16 | Mortgagee’s interest and additional perils insurances |
| (a) | The Security Agent shall be entitled from time to time to effect, maintain and renew a mortgagee’s interest marine insurance and a mortgagee’s interest additional perils insurance in such amounts, on such terms, through such insurers and generally in such manner as the Security Agent acting on the instructions of the Majority Lenders may reasonably from time to time consider appropriate. |
| (b) | The Borrowers shall upon demand fully indemnify the Security Agent in respect of all premiums and other expenses which are incurred in connection with or with a view to effecting, maintaining or renewing any insurance referred to in paragraph (a) above or dealing with, or considering, any matter arising out of any such insurance. |
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| 22 | SHIP UNDERTAKINGS |
| 22.1 | General |
The undertakings in this Clause 22 (Ship Undertakings) remain in force on and from the Release Date and throughout the rest of the Security Period except as the Facility Agent, acting with the authorisation of the Majority Lenders (or, where specified, all the Lenders) may otherwise permit.
| 22.2 | Ships’ names 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 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 agreed change of name or 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, if applicable, related Deed of Covenant 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. |
| 22.3 | 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. |
| 22.4 | Classification society undertaking |
Each Borrower shall, in respect of the Ship owned by it, instruct the relevant Approved Classification Society:
| (a) | to send to the Security Agent, following receipt of a written request from the Security Agent, certified true copies of all original class records held by the Approved Classification Society in relation to that Ship; |
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| (b) | to allow the Security Agent (or its agents), at any time and from time to time, to inspect the original class and related records of that Borrower and that Ship at the offices of the Approved Classification Society and to take copies of them; |
| (c) | to notify the Security Agent immediately in writing if the Approved Classification Society: |
| (i) | receives notification from that Borrower or any person that that Ship’s Approved Classification Society is to be changed; or |
| (ii) | becomes aware of any facts or matters which may result in or have resulted in a change, suspension, discontinuance, withdrawal or expiry of that Ship’s class under the rules or terms and conditions of that Borrower or that Ship’s membership of the Approved Classification Society; |
| (d) | following receipt of a written request from the Security Agent: |
| (i) | to confirm that that Borrower is not in default of any of its contractual obligations or liabilities to the Approved Classification Society, including confirmation that it has paid in full all fees or other charges due and payable to the Approved Classification Society; or |
| (ii) | to confirm that that Borrower is in default of any of its contractual obligations or liabilities to the Approved Classification Society, to specify to the Security Agent in reasonable detail the facts and circumstances of such default, the consequences of such default, and any remedy period agreed or allowed by the Approved Classification Society. |
| 22.5 | 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 alter the structure, type or performance characteristics of that Ship or materially reduce its value.
| 22.6 | Removal and installation of parts |
| (a) | Subject to paragraph (b) below, no Borrower shall remove any material part of any Ship, or any item of equipment installed on any Ship unless: |
| (i) | the part or item so removed is forthwith replaced by a suitable part or item which is in the same condition as or better condition than the part or item removed; |
| (ii) | the replacement part or item is free from any Security in favour of any person other than the Security Agent; and |
| (iii) | the replacement part or item becomes, on installation on that Ship, the property of that Borrower and subject to the security constituted by the Mortgage on that Ship and, if applicable, the related Deed of Covenant. |
| (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. |
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| 22.7 | Surveys |
Each Borrower shall submit the Ship owned by it regularly to all periodic or other surveys which may be required for classification purposes and, if so required by the Facility Agent acting on the instructions of the Majority Lenders, provide the Facility Agent, with copies of all survey reports.
| 22.8 | Inspection |
Each Borrower shall permit the Security Agent (acting through surveyors or other persons appointed by it for that purpose) to board the Ship owned by it at all reasonable times and provided there is no interference with that Ship’s operation to inspect its condition or to satisfy themselves about proposed or executed repairs and shall afford all proper facilities for such inspections. The cost of the inspection shall be borne by the Borrowers once per annum, unless an Event of Default or a Major Casualty has occurred, in which case the cost of all inspections while the Event of Default or Major Casualty is continuing or shall be borne by the Borrowers.
| 22.9 | 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 immediately upon receiving notice of the arrest of the Ship owned by it or of its detention in exercise or purported exercise of any lien or claim, take all steps necessary to procure its release by providing bail or otherwise as the circumstances may require. |
| 22.10 | Compliance with laws etc. |
Each Borrower shall:
| (a) | comply, or procure compliance with all laws or regulations: |
| (i) | relating to its business generally; and |
| (ii) | relating to the Ship owned by it, its ownership, employment, operation, management and registration, |
including, but not limited to:
| (A) | the ISM Code; |
| (B) | the ISPS Code; |
| (C) | all applicable Environmental Laws; |
| (D) | all Sanctions; and |
| (E) | the laws of the Approved Flag; and |
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| (b) | obtain, comply with and do all that is necessary to maintain in full force and effect any Environmental Approvals; and |
| (c) | without limiting paragraph (a) above, not employ the Ship owned by it nor allow its employment, operation or management in any manner contrary to any law or regulation including but not limited to the ISM Code, the ISPS Code, all Environmental Laws and Sanctions (or which would be contrary to Sanctions if Sanctions were binding on each Transaction Obligor). |
| 22.11 | ISPS Code |
Without limiting paragraph (a) of Clause 22.10 (Compliance with laws etc.), each Borrower shall:
| (a) | procure that the Ship owned by it and the company responsible for that Ship’s compliance with the ISPS Code comply with the ISPS Code; and |
| (b) | maintain an ISSC for that Ship; and |
| (c) | notify the Facility Agent immediately in writing of any actual or threatened withdrawal, suspension, cancellation or modification of the ISSC. |
| 22.12 | Sanctions and Ship trading |
Without limiting Clause 22.10 (Compliance with laws etc.), each Borrower shall procure:
| (a) | that the Ship owned by it shall not be used in trading to or from a Sanctioned Country, or by or, to the Borrowers’ best knowledge, for the benefit of, a Prohibited Person; |
| (b) | that the Ship owned by it shall not otherwise be used to or from a Sanctioned Country or otherwise in any manner contrary to Sanctions, or in any manner which would cause any Finance Party to be in breach of Sanctions; |
| (c) | that the Ship owned by it shall not be used in trading in any manner that may result in such Ship becoming a Sanctioned Ship; |
| (d) | that the Ship owned by it shall not be traded in any manner which would trigger the operation of any sanctions limitation or exclusion clause (or similar) in the Insurances; and |
| (e) | without prejudice to the above provisions of this Clause 22.12 (Sanctions and Ship trading), that each time 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 (a) of Clause 22.10 (Compliance with laws etc.) as regards Sanctions and this Clause 22.12 (Sanctions and Ship trading) and which charterparty permits refusal of employment or voyage orders if such employment or compliance with such orders either results in non-compliance with such provisions or breaches (in the opinion of that Borrower) Sanctions. |
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| 22.13 | Trading in war zones |
No Borrower shall cause or permit any Ship to enter or trade to any zone which is declared a war zone by any government or by that Ship’s war risks insurers or which is otherwise excluded from the scope of coverage of the obligatory insurances unless that Borrower has (at its expense) effected any special, additional or modified insurance cover which the insurers require to ensure that that Ship remains properly insured in accordance with the Finance Documents (including, without limitation, any requirement for the payment of additional or extra insurance premia).
| 22.14 | Provision of information |
Without prejudice to Clause 19.5 (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.
| 22.15 | Notification of certain events |
Each Borrower shall, in respect of the Ship owned by it, immediately notify the Facility Agent by fax, confirmed forthwith by letter, of:
| (a) | any casualty to that Ship which is or is likely to be or to become a Major Casualty; |
| (b) | any occurrence as a result of which that Ship has become or is, by the passing of time or otherwise, likely to become a Total Loss; |
| (c) | any requisition of that Ship for hire; |
| (d) | any requirement, condition or recommendation made in relation to that Ship by any insurer, classification society, Approved Flag or PSC or by any competent authority which is not immediately complied with; |
| (e) | any arrest or detention of that Ship or any exercise or purported exercise of any lien on that Ship or the Earnings; |
| (f) | any intended dry docking of that Ship; |
| (g) | any Environmental Claim made against that Borrower or in connection with that Ship, or any Environmental Incident; |
| (h) | any claim for breach of the ISM Code or the ISPS Code being made against that Borrower, an Approved Manager or otherwise in connection with that Ship; or |
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| (i) | any other matter, event or incident, actual or threatened, the effect of which will or could lead to the ISM Code or the ISPS Code not being complied with; |
| (j) | any notice, or such Borrower becoming aware, of any claim, action, suit, proceeding or investigation against any Transaction Obligor, any of its Subsidiaries or any of their respective directors, officers, employees or agents with respect to Sanctions; or |
| (k) | any circumstances which could give rise to a breach of any representation or undertaking in this Agreement, or any Event of Default, relating to Sanctions, |
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.
| 22.16 | Restrictions on chartering, appointment of managers etc. |
No Borrower shall, in relation to the Ship owned by it:
| (a) | let that Ship on demise charter for any period; |
| (b) | enter into any time, voyage or consecutive voyage charter in respect of that Ship other than a Permitted Charter; |
| (c) | amend and/or supplement a Management Agreement in any material way that would lead to an Event of Default provided however that any amendment and/or supplement whatsoever shall be notified to the Facility Agent, unless publicly available; |
| (d) | terminate a Management Agreement or appoint a manager of that Ship other than an Approved Manager; |
| (e) | de activate or lay up that Ship; or |
| (f) | put that Ship into the possession of any person for the purpose of work being done upon it in an amount exceeding or likely to exceed $500,000 (or the equivalent in any other currency) unless the relevant Borrower ensures that 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. |
| 22.17 | Notice of Mortgage |
Each Borrower shall keep the relevant Mortgage registered against the Ship owned by it as a valid first preferred mortgage, 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.
| 22.18 | Sharing of Earnings |
No Borrower shall:
| (a) | enter into any agreement or arrangement for the sharing of any Earnings other than any profit sharing arrangement on arm’s length basis; or |
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| (b) | enter into any agreement or arrangement for the release of, or adverse alteration to, any guarantee or Security relating to any Earnings other than customary profit-sharing arrangements. |
| 22.19 | Charterparty Assignment |
If any Borrower enters into an Assignable Charter that Borrower shall promptly after the date of such Assignable Charter enter into a Charterparty Assignment and the assignment contemplated thereunder shall be notified to the relevant charterer and any charter guarantor in accordance with the terms of such Charterparty Assignment and that Borrower shall use its commercially reasonable endeavours to obtain an acknowledgment of that Charterparty Assignment from the relevant Charterer and/or charter guarantor, and shall additionally deliver to the Facility Agent such other documents relevant to that Borrower and that Ship equivalent to those referred to at paragraphs 1.2, 1.3, 1.5, 1.8, 2, 6.2 and 6.7 of Schedule 2 (Conditions Precedent), Part A as the Facility Agent may require.
| 22.20 | Inventory of Hazardous Materials |
Each Borrower shall maintain an Inventory of Hazardous Materials in respect of the Ship owned by it which shall be maintained until the Loan has been fully repaid.
| 22.21 | Sustainable and socially responsible dismantling of Ships |
Each Borrower confirms that it will procure that the Ship owned by it shall be dismantled in a safe, sustainable and socially and environmentally responsible way and shall include, without limitation, the requirement that such Ship is recycled at a recycling yard which conducts its recycling business in a safely, socially and environmentally responsible manner and, to the extent applicable, in accordance with the provisions of The Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships, 2009 and/or, with regard to any EU flagged vessels, the EU Ship Recycling Regulation.
| 22.22 | 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 22 (Ship Undertakings).
| 23 | LOAN TO VALUE RATIO |
| 23.1 | Maximum allowed loan to value ratio |
| (a) | Clause 23.2 (Provision of additional security; prepayment) applies if the Facility Agent notifies the Borrowers that the LTV is above the Relevant Percentage. |
| (b) | In this Clause 23.1 (Maximum allowed loan to value ratio), “Relevant Percentage” means: |
| (i) | on and from the Utilisation Date until the date falling 24 months after the Utilisation Date, 75 per cent.; and |
| (ii) | at all times thereafter during the Security Period, 70 per cent., |
in each case, expressed as a percentage of the aggregate of the Loan.
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| 23.2 | Provision of additional security; prepayment |
| (a) | If the Facility Agent serves a notice on the Borrowers under Clause 23.1 (Maximum allowed loan to value ratio), the Borrowers shall, on or before the date falling 30 Business Days after the date on which the Facility Agent’s notice is served (the “Prepayment Date”), prepay such part of the Loan as shall eliminate the shortfall. |
| (b) | The Borrowers may, instead of making a prepayment as described in paragraph (a) above, provide, or ensure that a third party has provided, additional security which, in the opinion of the Facility Agent acting on the instructions of the Majority Lenders: |
| (i) | has a net realisable value at least equal to the shortfall; and |
| (ii) | is documented in such terms as the Facility Agent may approve or require, |
before the Prepayment Date; and conditional upon such security being provided in such manner, it shall satisfy such prepayment obligation.
| 23.3 | Value of additional vessel security |
The net realisable value of any additional security which is provided under Clause 23.2 (Provision of additional security; prepayment) and which consists of Security over a vessel shall be the Market Value of the vessel concerned.
| 23.4 | Valuations binding |
Any valuation under this Clause 23 (Loan to Value Ratio) shall be binding and conclusive as regards each Borrower.
| 23.5 | Provision of information |
| (a) | Each Borrower shall promptly provide the Facility Agent and any shipbroker acting under this Clause 23 (Loan to Value Ratio) with any information which the Facility Agent or the shipbroker may request for the purposes of the valuation. |
| (b) | If any Borrower fails to provide the information referred to in paragraph (a) above by the date specified in the request, the valuation may be made on any basis and assumptions which the shipbroker or the Facility Agent considers prudent. |
| 23.6 | Prepayment mechanism |
Any prepayment pursuant to Clause 23.2 (Provision of additional security; prepayment) shall be made in accordance with the relevant provisions of Clause 7 (Prepayment and Cancellation) and shall be treated as a voluntary prepayment pursuant to Clause 7.3 (Voluntary prepayment of Loan).
| 23.7 | Provision of valuations |
The Borrowers will, at their own cost and expense and at the request of the Facility Agent, obtain a valuation of each Ship owned by a Borrower or that will be owned on and from the Release Date and any other vessel over which additional Security has been created in accordance with Clause 23.3 (Value of additional vessel security), from an Approved Valuer, addressed to the Finance parties, to enable the Facility Agent to determine the Market Value
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of that Ship or that vessel not more than 30 days before the Utilisation Date and on two occasions in each year on 30 June and 31 December. The Facility Agent may also obtain such a valuation evidencing the Market Value of any Ship or any other vessel over which additional Security has been created in accordance with Clause 23.3 (Value of additional vessel security) at any other time at the expense of the Borrowers after an Event of Default has occurred or at the Finance Parties’ expense or otherwise.
| 24 | ACCOUNTS AND APPLICATION OF EARNINGS |
| 24.1 | Accounts |
No Borrower may, without the prior consent of the Facility Agent, maintain any bank account other than its Earnings Account.
| 24.2 | 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.
| 24.3 | Interest accrued on Cash Reserve Account |
Any credit balance on the Cash Reserve Account shall bear interest at the rate from time to time offered by the relevant Account Bank to its customers or dollar deposits of similar amounts and for periods similar to those for which such balance appear to the relevant Account Bank likely to remain on the Cash Reserve Account.
| 24.4 | Release of accrued interest |
Interest accruing under Clause 24.3 (Interest accrued on Cash Reserve Account) shall be credited to the Cash Reserve Account and shall be released to the Guarantor provided that no Event of Default is continuing.
| 24.5 | 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 (or any of them) and the Cash Reserve Account; 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) its Earnings Account (or any of them) and the Cash Reserve Account. |
| 24.6 | Restriction on withdrawal |
During the Security Period a Borrower may withdraw any sum from its Earnings Account provided that (i) no Event of Default has occurred from such withdrawal and (ii) no notice has been given to that Borrower by the Facility Agent or the Security Agent that such withdrawal is not permitted.
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| 24.7 | Minimum Cash Reserve |
The Borrowers procure that the Guarantor shall maintain in the Cash Reserve Account, on and from the relevant Utilisation Date and at all times thereafter during the Security Period, a credit balance of not less than $500,000 for each Mortgaged Ship (the “Minimum Cash Reserve”).
| 25 | EVENTS OF DEFAULT |
| 25.1 | General |
Each of the events or circumstances set out in this Clause 25 (Events of Default) is an Event of Default except for Clause 25.20 (Acceleration) and Clause 25.21 (Enforcement of security).
| 25.2 | 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. |
| 25.3 | Specific obligations |
A breach occurs of Clause 4.5 (Waiver of conditions precedent), clause 10 (financial covenants) of the Guarantee, Clause 20.10 (Title), Clause 20.10(b) (Negative pledge), Clause 20.20 (Unlawfulness, invalidity and ranking; Security imperilled), Clause 20.22 (Sanctions), Clause 22.12 (Sanctions and Ship trading), Clause 21.2 (Maintenance of obligatory insurances), Clause 21.3 (Terms of obligatory insurances), Clause 21.5 (Renewal of obligatory insurances), Clause 22.13 (Trading in war zones) or save to the extent such breach is a failure to pay and therefore subject to Clause 25.2 (Non-payment), Clause 23 (Loan to Value Ratio).
| 25.4 | Other obligations |
| (a) | A Transaction Obligor does not comply with any provision of the Finance Documents (other than those referred to in Clause 25.2 (Non-payment) and Clause 25.3 (Specific obligations)). |
| (b) | No Event of Default under paragraph (a) above will occur if the failure to comply is capable of remedy and is remedied within 15 Business Days of the Facility Agent giving notice to the Borrowers or (if earlier) any Transaction Obligor becoming aware of the failure to comply. |
| 25.5 | 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 the relevant representation or statement can be repeated within five Business Days of the date on which the Facility Agent notifies the relevant Borrower of it not being true and accurate and on the date of such repetition it is not incorrect or misleading in any respect.
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| 25.6 | Cross default |
| (a) | Any Financial Indebtedness of any Transaction Obligor (other than an Approved Manager) is not paid when due nor within any originally applicable grace period. |
| (b) | Any Financial Indebtedness of any Transaction Obligor (other than an Approved Manager) 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) unless the Transaction Obligor (other than an Approved Manager) is contesting the declaration of an event of default or of the Financial Indebtedness becoming due and payable in good faith and on substantial grounds by appropriate proceedings and adequate reserves (in the reasonable opinion of the Facility Agent) have been set aside for its payment if such proceedings fail. |
| (c) | Any commitment for any Financial Indebtedness of any Transaction Obligor (other than an Approved Manager) is cancelled or suspended by a creditor of any Transaction Obligor as a result of an event of default (however described). |
| (d) | Any creditor of any Transaction Obligor (other than an Approved Manager) becomes entitled to declare any Financial Indebtedness of that Transaction Obligor (other than the Approved Manager) due and payable prior to its specified maturity as a result of an event of default (however described) unless the Transaction Obligor is contesting the declaration of an Event of Default or of the Financial Indebtedness becoming due and payable in good faith and on substantial grounds by appropriate proceedings and adequate reserves (in the reasonable opinion of the Facility Agent) have been set aside for its payment if such proceedings fail. |
| (e) | No Event of Default will occur under this Clause 25.6 (Cross default) in respect of a person other than a Borrower if the aggregate amount of Financial Indebtedness or commitment for Financial Indebtedness falling within paragraphs (a) to (d) above is less than $10,000,000 (or its equivalent in any other currency). |
| 25.7 | Insolvency |
| (a) | A Transaction Obligor (other than an Approved Manager): |
| (i) | is unable or admits inability to pay its debts as they fall due; or |
| (ii) | is deemed to, or is declared to, be unable to pay its debts under applicable law; or |
| (iii) | suspends making payments on any of its debts. |
| (b) | A moratorium is declared in respect of any indebtedness of any Transaction Obligor (other than an Approved Manager). If a moratorium occurs, the ending of the moratorium will not remedy any Event of Default caused by that moratorium. |
| 25.8 | 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 (other than an Approved Manager); |
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| (ii) | a composition, compromise, assignment or arrangement with any creditor of any Transaction Obligor (other than an Approved Manager); |
| (iii) | the appointment of a liquidator, receiver, administrator, administrative receiver, compulsory manager or other similar officer in respect of any Transaction Obligor (other than an Approved Manager) or any of its assets; or |
| (iv) | enforcement of any Security over any assets of any Transaction Obligor (other than an Approved Manager), |
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 15 days of commencement. |
| 25.9 | 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 any Approved Manager or an arrest or detention of a Ship which, in accordance with Clause 25.14 (Arrest), is discharged within 90 days).
| 25.10 | Change of Control |
| (a) | A Change of Control has occurred. |
| (b) | In this Clause 25.10 (Change of Control): |
“Change of Control” means a change which results in:
| (a) | Navios Maritime Holdings Inc. and/or Mrs. Angeliki Frangou and her direct descendants (either directly or indirectly) (through entities owned and controlled by her or trusts or foundations of which she is a beneficiary) ceasing to be the owner of, or having ultimate control of the voting rights attaching to more than five per cent. of all the units (including for the avoidance of doubt both general partner units and common units) in the Guarantor; or |
| (b) | Mrs. Angeliki Frangou and her direct descendants (either directly or indirectly) (through entities owned and controlled by her or trusts or foundations of which she is a beneficiary), ceasing to be the owner of, or having ultimate control of the voting rights attaching to all the issued shares in the general partner of the Guarantor, which is currently Olympos Maritime Ltd; or |
| (c) | Mrs. Angeliki Frangou ceasing to act as chairman or chief executive officer of the Guarantor and Olympos Maritime Ltd ceasing to be the general partner of the Guarantor; or |
| (d) | any person or group of persons acting in concert, other than Navios Maritime Holdings Inc., Mrs Angeliki Frangou and her direct descendants (either directly or indirectly), gaining control of the Guarantor; or |
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| (e) | the Guarantor ceasing to be the owner of, directly or indirectly, the issued shares in each Borrower; |
For the purpose of paragraph (d) above “control” means the holding beneficially issued units of the Guarantor representing 50 per cent. or more of the voting rights.
For the purpose of paragraph (d) above “acting in concert” means a group of persons who, pursuant to an agreement or understanding (whether formal or informal), actively co-operate, through the acquisition directly or indirectly of shares in the Guarantor by any of them, either directly or indirectly, to obtain or consolidate control of the Guarantor.
| 25.11 | Unlawfulness, invalidity and ranking |
| (a) | It is or becomes unlawful for a Transaction Obligor to perform any of its obligations under the Finance Documents. |
| (b) | Any obligation of a Transaction Obligor under the Finance Documents is not or ceases to be legal, valid, binding or enforceable. |
| (c) | Any Finance Document ceases to be in full force and effect or to be continuing or is or purports to be determined or any Transaction Security is alleged by a party to it (other than a Finance Party) to be ineffective. |
| (d) | Any Transaction Security proves to have ranked after, or loses its priority to, any other Security. |
| 25.12 | Security imperilled |
Any Security created or intended to be created by a Finance Document is in any way imperilled or in jeopardy.
| 25.13 | Cessation of business |
Any Transaction Obligor suspends or ceases to carry on all or a material part of its business.
| 25.14 | Arrest |
Any arrest of a Ship or its detention in the exercise or the purported exercise of any lien or claim unless it is redelivered to the full control of the relevant Borrower within 90 days of such arrest or detention.
| 25.15 | Expropriation |
The authority or ability of any member of the Group to conduct its business is limited or wholly or substantially curtailed by any seizure, expropriation, nationalisation, intervention, restriction or other action by or on behalf of any governmental, regulatory or other authority or other person in relation to any member of the Group or any of its assets other than:
| (a) | an arrest or detention of a Ship referred to in Clause 25.14 (Arrest); or |
| (b) | any Requisition. |
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| 25.16 | Repudiation and rescission of agreements |
A Transaction Obligor (or any other relevant party) rescinds or purports to rescind or repudiates or purports to repudiate a Transaction Document or any of the Transaction Security or evidences an intention to rescind or repudiate a Transaction Document or any Transaction Security.
| 25.17 | Litigation |
Any litigation, arbitration or administrative proceedings or investigations of, or before, any court, arbitral body or agency are started or threatened, or any judgment or order of a court, arbitral body or agency is made, in relation to any of the Transaction Documents or the transactions contemplated in any of the Transaction Documents or against any member of the Group or its assets which has or is reasonably likely to have a Material Adverse Effect.
| 25.18 | Sanctions |
| (a) | Any Transaction Obligor or any of their respective Subsidiaries is designated a Prohibited Person or a Ship is designated a Sanctioned Ship. |
| (b) | This Clause 25.18 (Sanctions) is without prejudice to any Event of Default which may occur by reason of breach of, or non-compliance with, any of the other provisions of this Agreement. |
| 25.19 | Material adverse change |
Any event or circumstance occurs which has or is reasonably likely to have a Material Adverse Effect.
| 25.20 | Acceleration |
On and at any time after the occurrence of an Event of Default which is continuing the Facility Agent may, and shall if so directed by the Majority Lenders:
| (a) | by notice to the Borrowers: |
| (i) | cancel the Available Commitment of each Lender, whereupon they shall immediately be cancelled; |
| (ii) | declare that all or part of the Loan, together with accrued interest, and all other amounts accrued or outstanding under the Finance Documents be immediately due and payable, whereupon it shall become immediately due and payable; and/or |
| (iii) | declare that all or part of the Loan be payable on demand, whereupon it shall immediately become payable on demand by the Facility Agent acting on the instructions of the Majority Lenders; and/or |
| (b) | exercise or direct the Security Agent to exercise any or all of its rights, remedies, powers or discretions under the Finance Documents, |
and the Facility Agent may serve notices under sub-paragraphs (i), (ii) and (iii) of paragraph (a) above simultaneously or on different dates and any Servicing Party may take any action referred to in paragraph (b) above or Clause 25.21 (Enforcement of security) if no such notice is served or simultaneously with or at any time after the service of any of such notice.
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| 25.21 | 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 25.20 (Acceleration), the Security Agent is entitled to take under any Finance Document or any applicable law or regulation.
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SECTION 9
CHANGES TO PARTIES
| 26 | CHANGES TO THE LENDERS |
| 26.1 | Assignments and transfers by the Lenders |
Subject to this Clause 26 (Changes to the Lenders), a Lender (the “Existing Lender”) may:
| (a) | assign any of its rights; or |
| (b) | transfer by novation any of its rights and obligations, |
under the Finance Documents to another bank or financial institution or to a trust, fund or other entity which is regularly engaged in or established for the purpose of making, purchasing or investing in shipping loans, securities or other financial assets (the “New Lender”).
| 26.2 | Conditions of assignment or transfer |
| (a) | The consent of the Borrowers is required for an assignment or transfer by an Existing Lender, unless the assignment or transfer is: |
| (i) | to another Lender or an Affiliate of a Lender; |
| (ii) | if Existing Lender is a fund, to a fund which is a Related Fund; or |
| (iii) | made at a time when an Event of Default is continuing. |
| (b) | The consent of the Borrowers to an assignment or transfer must not be unreasonably withheld or delayed. Each Borrower will be deemed to have given its consent 10 Business Days after the Existing Lender has requested it unless consent is expressly refused by that Borrower within that time. |
| (c) | 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. |
| (d) | Each Borrower 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 a Borrower or any other Transaction Obligor had against the Existing Lender. |
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| (e) | A transfer will only be effective if the procedure set out in Clause 26.5 (Procedure for transfer) is complied with. |
| (f) | 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 (f) shall not apply in respect of an assignment or transfer made in the ordinary course of the primary syndication of the Facility.
| (g) | 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. |
| 26.3 | 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.
| 26.4 | 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: |
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| (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 26 (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. |
| 26.5 | Procedure for transfer |
| (a) | Subject to the conditions set out in Clause 26.2 (Conditions of assignment or transfer), a transfer is effected in accordance with paragraph (c) below when the Facility Agent executes an otherwise duly completed Transfer Certificate delivered to it by the Existing Lender and the New Lender. The Facility Agent shall, subject to paragraph (b) below as soon as reasonably practicable after receipt by it of a duly completed Transfer Certificate appearing on its face to comply with this Agreement and delivered in accordance with this Agreement, execute that Transfer Certificate. |
| (b) | The Facility Agent shall only be obliged to execute a Transfer Certificate delivered to it by the Existing Lender and the New Lender once it is satisfied it has complied with all necessary “know your customer” or other similar checks under all applicable laws and regulations in relation to the transfer to such New Lender. |
| (c) | Subject to Clause 26.9 (Pro rata interest settlement), on the Transfer Date: |
| (i) | to the extent that in the Transfer Certificate the Existing Lender seeks to transfer by novation its rights and obligations under the Finance Documents and in respect of the Transaction Security, each of the Transaction Obligors and the Existing Lender shall be released from further obligations towards one another under the Finance Documents and in respect of the Transaction Security and their respective rights against one another under the Finance Documents and in respect of the Transaction Security shall be cancelled (being the “Discharged Rights and Obligations”); |
| (ii) | each of the Transaction Obligors and the New Lender shall assume obligations towards one another and/or acquire rights against one another which differ from the Discharged Rights and Obligations only insofar as that Transaction Obligor and the New Lender have assumed and/or acquired the same in place of that Transaction Obligor and the Existing Lender; |
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| (iii) | the Facility Agent, the Security Agent, 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 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”. |
| 26.6 | Procedure for assignment |
| (a) | Subject to the conditions set out in Clause 26.2 (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 26.9 (Pro rata interest settlement), on the Transfer Date: |
| (i) | the Existing Lender will assign absolutely to the New Lender its rights under the Finance Documents and in respect of the Transaction Security expressed to be the subject of the assignment in the Assignment Agreement; |
| (ii) | the Existing Lender will be released from the obligations (the “Relevant Obligations”) expressed to be the subject of the release in the Assignment Agreement (and any corresponding obligations by which it is bound in respect of the Transaction Security); and |
| (iii) | the New Lender shall become a Party as a “Lender” and will be bound by obligations equivalent to the Relevant Obligations. |
| (d) | Lenders may utilise procedures other than those set out in this Clause 26.6 (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 26.5 (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 26.2 (Conditions of assignment or transfer). |
| 26.7 | 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.
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| 26.8 | Security over Lenders’ rights |
In addition to the other rights provided to Lenders under this Clause 26 (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. |
| 26.9 | Pro rata interest settlement |
| (a) | If the Facility Agent has notified the Lenders that it is able to distribute interest payments on a “pro rata basis” to Existing Lenders and New Lenders then (in respect of any transfer pursuant to Clause 26.5 (Procedure for transfer) or any assignment pursuant to Clause 26.6 (Procedure for assignment) the Transfer Date of which, in each case, is after the date of such notification and is not on the last day of an Interest Period): |
| (i) | any interest or fees in respect of the relevant participation which are expressed to accrue by reference to the lapse of time shall continue to accrue in favour of the Existing Lender up to but excluding the Transfer Date (“Accrued Amounts”) and shall become due and payable to the Existing Lender (without further interest accruing on them) on the last day of the current Interest Period (or, if the Interest Period is longer than six Months, on the next of the dates which falls at six Monthly intervals after the first day of that Interest Period); and |
| (ii) | The rights assigned or transferred by the Existing Lender will not include the right to the Accrued Amounts, so that, for the avoidance of doubt: |
| (A) | when the Accrued Amounts become payable, those Accrued Amounts will be payable to the Existing Lender; and |
| (B) | the amount payable to the New Lender on that date will be the amount which would, but for the application of this Clause 26.9 (Pro rata interest settlement), have been payable to it on that date, but after deduction of the Accrued Amounts. |
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| (b) | In this Clause 26.9 (Pro rata interest settlement) references to “Interest Period” shall be construed to include a reference to any other period for accrual of fees. |
| (c) | An Existing Lender which retains the right to the Accrued Amounts pursuant to this Clause 26.9 (Pro rata interest settlement) but which does not have a Commitment shall be deemed not to be a Lender for the purposes of ascertaining whether the agreement of any specified group of Lenders has been obtained to approve any request for a consent, waiver, amendment or other vote of Lenders under the Finance Documents. |
| 27 | CHANGES TO THE TRANSACTION OBLIGORS |
| 27.1 | 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.
| 27.2 | 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 27.2 (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. |
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SECTION 10
THE FINANCE PARTIES
| 28 | THE FACILITY AGENT |
| 28.1 | Appointment of the Facility Agent |
| (a) | Each of the Lenders appoints the Facility Agent to act as its agent under and in connection with the Finance Documents. |
| (b) | Each of 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. |
| 28.2 | 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; |
| (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. |
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| (e) | If giving effect to instructions given by the Majority Lenders would in the Facility Agent’s opinion have an effect equivalent to an amendment or waiver referred to in Clause 42 (Amendments and Waivers), the Facility Agent shall not act in accordance with those instructions unless consent to it so acting is obtained from each Party (other than the Facility Agent) whose consent would have been required in respect of that amendment or waiver. |
| (f) | In exercising any discretion to exercise a right, power or authority under the Finance Documents where it has not received any instructions as to the exercise of that discretion the Facility Agent shall do so having regard to the interests of all the Finance Parties. |
| (g) | The Facility Agent may refrain from acting in accordance with any instructions of any Finance Party or group of Finance Parties until it has received any indemnification and/or security that it may in its discretion require (which may be greater in extent than that contained in the Finance Documents and which may include payment in advance) for any cost, loss or liability (together with any applicable VAT) which it may incur in complying with those instructions. |
| (h) | Without prejudice to the remainder of this Clause 28.2 (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. |
| 28.3 | 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 26.7 (Copy of Transfer Certificate or Assignment Agreement to Borrowers), paragraph (b) above shall not apply to any Transfer Certificate or any Assignment Agreement. |
| (d) | Except where a Finance Document specifically provides otherwise, the Facility Agent is not obliged to review or check the adequacy, accuracy or completeness of any document it forwards to another Party. |
| (e) | If the Facility Agent receives notice from a Party referring to any Finance Document, describing a Default and stating that the circumstance described is a Default, it shall promptly notify the other Finance Parties. |
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| (f) | If the Facility Agent is aware of the non-payment of any principal, interest, commitment fee or other fee payable to a Finance Party (other than the Facility Agent 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). |
| 28.4 | No fiduciary duties |
| (a) | Nothing in any Finance Document constitutes the Facility Agent as a trustee or fiduciary of any other person. |
| (b) | The Facility Agent shall not 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. |
| 28.5 | 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 32.5 (Application of receipts; partial payments).
| 28.6 | Business with the Group |
The Facility 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.
| 28.7 | 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 |
| (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.
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| (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 25.2 (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 the Utilisation Request) is made on behalf of and with the consent and knowledge of all the Transaction Obligors. |
| (c) | The Facility Agent may engage and pay for the advice or services of any lawyers, accountants, tax advisers, surveyors or other professional advisers or experts. |
| (d) | Without prejudice to the generality of paragraph (c) above or paragraph (e) below, the Facility Agent may at any time engage and pay for the services of any lawyers to act as independent counsel to the Facility Agent (and so separate from any lawyers instructed by the Lenders) if the Facility Agent in its reasonable opinion deems this to be desirable. |
| (e) | The Facility Agent may rely on the advice or services of any lawyers, accountants, tax advisers, surveyors or other professional advisers or experts (whether obtained by the Facility Agent or by any other Party) and shall not be liable for any damages, costs or losses to any person, any diminution in value or any liability whatsoever arising as a result of its so relying. |
| (f) | The Facility Agent may act in relation to the Finance Documents and the Security Property through its officers, employees and agents and shall not: |
| (i) | be liable for any error of judgment made by any such person; or |
| (ii) | be bound to supervise, or be in any way responsible for any loss incurred by reason of misconduct, omission or default on the part of any such person, |
unless such error or such loss was directly caused by the Facility Agent’s gross negligence or wilful misconduct.
| (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, the Facility 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. |
| (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. |
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| 28.8 | Responsibility for documentation |
The Facility Agent is not 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, 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. |
| 28.9 | 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. |
| 28.10 | Exclusion of liability |
| (a) | Without limiting paragraph (b) below (and without prejudice to paragraph (e) of Clause 32.11 (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 (including, without limitation, for negligence or any other category of liability whatsoever) 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 |
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| (iv) | any damages, costs or losses to any person, any diminution in value, or any other liability whatsoever arising as a result of: |
| (A) | any Benchmark Replacement implemented pursuant to Clause 42.4 (Benchmark Replacement setting); or |
| (B) | the selection and implementation of any Confirming Changes, |
including, without limitation, whether the composition or characteristics of any Benchmark Replacement will be similar to, or produce the same value or economic equivalence of the relevant Benchmark or have the same volume or liquidity as did the relevant Benchmark before it discontinuance or unavailability; or
| (v) | without prejudice to the generality of sub-paragraphs (i) to (iv) above, any damages, costs or losses to any person, any diminution in value or any liability whatsoever arising as a result of: |
| (A) | any act, event or circumstance not reasonably within its control; or |
| (B) | the general risks of investment in, or the holding of assets in, any jurisdiction, |
including (in each case and without limitation) such damages, costs, losses, diminution in value or liability arising as a result of nationalisation, expropriation or other governmental actions; any regulation, currency restriction, devaluation or fluctuation; market conditions affecting the execution or settlement of transactions or the value of assets (including any Disruption Event); breakdown, failure or malfunction of any third party transport, telecommunications, computer services or systems; natural disasters or acts of God; war, terrorism, insurrection or revolution; or strikes or industrial action.
| (b) | No Party other than the Facility Agent may take any proceedings against any officer, employee or agent of the Facility Agent in respect of any claim it might have against the Facility Agent or in respect of any act or omission of any kind by that officer, employee or agent in relation to any Transaction Document or any Security Property and any officer, employee or agent of the Facility Agent may rely on this paragraph (b) subject to Clause 1.5 (Third party rights) and the provisions of the Third Parties Act. |
| (c) | The Facility Agent will not be liable for any delay (or any related consequences) in crediting an account with an amount required under the Finance Documents to be paid by the Facility Agent if the Facility Agent has taken all necessary steps as soon as reasonably practicable to comply with the regulations or operating procedures of any recognised clearing or settlement system used by the Facility Agent for that purpose. |
| (d) | Nothing in this Agreement shall oblige the Facility Agent 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 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.
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| (e) | Without prejudice to any provision of any Finance Document excluding or limiting the Facility Agent’s liability, any liability (including, without limitation, for negligence or any other category of liability whatsoever) 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. |
| (f) | The Facility Agent may select information sources or services in its reasonable discretion to ascertain the Base Rate, Adjusted Term SOFR, Term SOFR, or any other Benchmark, in each case pursuant to the terms of this Agreement, and shall have no liability to the Borrowers, any Lender or any other person or entity for damages of any kind, including direct or indirect, special, punitive, incidental or consequential damages, costs, losses or expenses (whether in tort, contract or otherwise and whether at law or in equity), for any error or calculation of any such rate (or component thereof) provided by any such information source or service. |
| 28.11 | 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 (including, without limitation, for negligence or any other category of liability whatsoever) 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 32.11 (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. |
| 28.12 | 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. |
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| (d) | If the Facility Agent wishes to resign because (acting reasonably) it has concluded that it is no longer appropriate for it to remain as agent and the Facility Agent is entitled to appoint a successor Facility Agent under paragraph (c) above, the Facility Agent may (if it concludes (acting reasonably) that it is necessary to do so in order to persuade the proposed successor Facility Agent to become a party to this Agreement as Facility Agent) agree with the proposed successor Facility Agent amendments to this Clause 28 (The Facility Agent) 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. |
| (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. |
| (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 14.3 (Indemnity to the Facility Agent) and this Clause 28 (The Facility 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 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. |
| 28.13 | 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, the Facility 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. |
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| 28.14 | Relationship with the other Finance Parties |
| (a) | Subject to Clause 26.9 (Pro rata interest settlement), the Facility Agent may treat the person shown in its records as Lender at the opening of business (in the place of the Facility Agent’s principal office as notified to the Finance Parties from time to time) as the Lender acting through its Facility Office: |
| (i) | entitled to or liable for any payment due under any Finance Document on that day; and |
| (ii) | entitled to receive and act upon any notice, request, document or communication or make any decision or determination under any Finance Document made or delivered on that day, |
unless it has received not less than five Business Days’ prior notice from that Lender to the contrary in accordance with the terms of this Agreement.
| (b) | Each Finance Party shall supply the Facility Agent with any information that the Security Agent may reasonably specify (through the Facility Agent) as being necessary or desirable to enable the Security Agent to perform its functions as Security Agent. Each Finance Party shall deal with the Security Agent exclusively through the Facility Agent and shall not deal directly with the Security Agent and any reference to any instructions being given by or sought from any Finance Party or group of Finance Parties by or to the Security Agent in this Agreement must be given or sought through the Facility Agent. |
| (c) | Any Lender may by notice to the Facility Agent appoint a person to receive on its behalf all notices, communications, information and documents to be made or despatched to that Lender under the Finance Documents. Such notice shall contain the address, fax number and (where communication by electronic mail or other electronic means is permitted under Clause 35.5 (Electronic communication)) electronic mail address and/or any other information required to enable the transmission of information by that means (and, in each case, the department or officer, if any, for whose attention communication is to be made) and be treated as a notification of a substitute address, fax number, electronic mail address (or such other information), department and officer by that Lender for the purposes of Clause 35.2 (Addresses) and sub-paragraph (ii) of paragraph (a) of Clause 35.5 (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. |
| 28.15 | 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 Facility 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; |
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| (c) | whether that Finance Party has recourse, and the nature and extent of that recourse, against any Party or any of its respective assets under, or in connection with, any Transaction Document, the Security Property, the transactions contemplated by the Transaction Documents or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Transaction Document or the Security Property; |
| (d) | the adequacy, accuracy or completeness of any information provided by the Facility Agent, any Party or by any other person under, or in connection with, any Transaction Document, the transactions contemplated by any Transaction Document or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Transaction Document; and |
| (e) | the right or title of any person in or to or the value or sufficiency of any part of the Security Assets, the priority of any of the Transaction Security or the existence of any Security affecting the Security Assets. |
| 28.16 | Facility Agent’s management time |
Any amount payable to the Facility Agent under Clause 14.3 (Indemnity to the Facility Agent), Clause 16 (Costs and Expenses) and Clause 28.11 (Lenders’ indemnity to the Facility Agent) shall include the cost of utilising the Facility Agent’s management time or other resources and will be calculated on the basis of such reasonable daily or hourly rates as the Facility Agent may notify to the Borrowers and the other Finance Parties, and is in addition to any fee paid or payable to the Facility Agent under Clause 11 (Fees).
| 28.17 | 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.
| 28.18 | Reliance and engagement letters |
Each Secured Party confirms that the Facility Agent has authority to accept on its behalf (and ratifies the acceptance on its behalf of any letters or reports already accepted by the Facility Agent) the terms of any reliance letter or engagement letters or any reports or letters provided by accountants, auditors or providers of due diligence reports in connection with the Finance Documents or the transactions contemplated in the Finance Documents and to bind it in respect of those, reports or letters and to sign such letters on its behalf and further confirms that it accepts the terms and qualifications set out in such letters.
| 28.19 | Full freedom to enter into transactions |
Without prejudice to Clause 28.6 (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:
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| (a) | to enter into and arrange banking, derivative, investment and/or other transactions of every kind with or affecting any Transaction Obligor or any person who is party to, or referred to in, a Finance Document (including, but not limited to, any interest or currency swap or other transaction, whether related to this Agreement or not, and acting as syndicate agent and/or security agent for, and/or participating in, other facilities to such Transaction Obligor or any person who is party to, or referred to in, a Finance Document); |
| (b) | to deal in and enter into and arrange transactions relating to: |
| (i) | any securities issued or to be issued by any Transaction Obligor or any other person; or |
| (ii) | any options or other derivatives in connection with such securities; and |
| (c) | to provide advice or other services to 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.
| 28.20 | Amounts paid in error |
| (a) | If the Facility Agent pays an amount to another Party and the Facility Agent notifies that Party that such payment was an Erroneous Payment then the Party to whom that amount was paid by the Facility Agent shall on demand refund the same to the Facility Agent together with interest on that amount from the date of payment to the date of receipt by the Facility Agent, calculated by the Facility Agent to reflect its cost of funds. |
| (b) | Neither: |
| (i) | the obligations of any Party to the Facility Agent; nor |
| (ii) | the remedies of the Facility Agent, |
(whether arising under this Clause 28.20 (Amounts paid in error) or otherwise) which relate to an Erroneous Payment will be affected by any act, omission, matter or thing which, but for this paragraph (b), would reduce, release or prejudice any such obligation or remedy (whether or not known by the Facility Agent or any other Party).
| (c) | All payments to be made by a Party to the Facility Agent (whether made pursuant to this Clause 28.20 (Amounts paid in error) or otherwise) which relate to an Erroneous Payment shall be calculated and be made without (and free and clear of any deduction for) set-off or counterclaim. |
| (d) | In this Agreement, “Erroneous Payment” means a payment of an amount by the Facility Agent to another Party which the Facility Agent determines (in its sole discretion) was made in error. |
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| 29 | THE SECURITY AGENT |
| 29.1 | 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 29 (The Security Agent) and the other provisions of the Finance Documents. |
| (b) | Each other Finance Party authorises the Security Agent to perform the duties, obligations and responsibilities and to exercise the rights, powers, authorities and discretions specifically given to the Security Agent under, or in connection with, the Finance Documents together with any other incidental rights, powers, authorities and discretions. |
| 29.2 | Parallel Debt (Covenant to pay the Security Agent) |
| (a) | Each Borrower 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 a Borrower: |
| (i) | shall become due and payable at the same time as its Corresponding Debt; |
| (ii) | is independent and separate from, and without prejudice to, its Corresponding Debt. |
| (c) | For the purposes of this Clause 29.2 (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 a Borrower 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 a Borrower 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 a Borrower shall never exceed its Corresponding Debt.
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| (e) | All amounts received or recovered by the Security Agent in connection with this Clause 29.2 (Parallel Debt (Covenant to pay the Security Agent)) to the extent permitted by applicable law, shall be applied in accordance with Clause 32.5 (Application of receipts; partial payments). |
| (f) | This Clause 29.2 (Parallel Debt (Covenant to pay the Security Agent)) shall apply, with any necessary modifications, to each Finance Document. |
| 29.3 | 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.
| 29.4 | Instructions |
| (a) | The Security Agent shall: |
| (i) | unless a contrary indication appears in a Finance Document, exercise or refrain from exercising any right, power, authority or discretion vested in it as Security Agent in accordance with any instructions given to it by: |
| (A) | all Lenders (or the Facility Agent on their behalf) if the relevant Finance Document stipulates the matter is an all Lender decision; and |
| (B) | in all other cases, the Majority Lenders (or the Facility Agent on their behalf); and |
| (ii) | not be liable for any act (or omission) if it acts (or refrains from acting) in accordance with sub-paragraph (i) above (or if this Agreement stipulates the matter is a decision for any other Finance Party or group of Finance Parties, in accordance with instructions given to it by that Finance Party or group of Finance Parties). |
| (b) | The Security Agent shall be entitled to request instructions, or clarification of any instruction, from the Majority Lenders (or the Facility Agent on their behalf) (or, if the relevant Finance Document stipulates the matter is a decision for any other Finance Party or group of Finance Parties, from that Finance Party or group of Finance Parties) as to whether, and in what manner, it should exercise or refrain from exercising any right, power, authority or discretion and the Security Agent may refrain from acting unless and until it receives any such instructions or clarification that it has requested. |
| (c) | Save in the case of decisions stipulated to be a matter for any other Finance Party or group of Finance Parties under the relevant Finance Document and unless a contrary indication appears in a Finance Document, any instructions given to the Security Agent by the Majority Lenders shall override any conflicting instructions given by any other Parties and will be binding on all Finance Parties. |
| (d) | Paragraph (a) above shall not apply: |
| (i) | where a contrary indication appears in a Finance Document; |
| (ii) | where a Finance Document requires the Security Agent to act in a specified manner or to take a specified action; |
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| (iii) | in respect of any provision which protects the Security Agent’s own position in its personal capacity as opposed to its role of Security Agent for the relevant Secured Parties. |
| (iv) | in respect of the exercise of the Security Agent’s discretion to exercise a right, power or authority under any of: |
| (A) | Clause 29.28 (Application of receipts); |
| (B) | Clause 29.29 (Permitted Deductions); and |
| (C) | Clause 29.30 (Prospective liabilities). |
| (e) | If giving effect to instructions given by the Majority Lenders would in the Security Agent’s opinion have an effect equivalent to an amendment or waiver referred to in Clause 42 (Amendments and Waivers), the Security Agent shall not act in accordance with those instructions unless consent to it so acting is obtained from each Party (other than the Security Agent) whose consent would have been required in respect of that amendment or waiver. |
| (f) | In exercising any discretion to exercise a right, power or authority under the Finance Documents where either: |
| (i) | it has not received any instructions as to the exercise of that discretion; or |
| (ii) | the exercise of that discretion is subject to sub-paragraph (iv) of paragraph (d) above, |
the Security Agent shall do so having regard to the interests of all the Secured Parties.
| (g) | The Security Agent may refrain from acting in accordance with any instructions of any Finance Party or group of Finance Parties until it has received any indemnification and/or security that it may in its discretion require (which may be greater in extent than that contained in the Finance Documents and which may include payment in advance) for any cost, loss or liability (together with any applicable VAT) which it may incur in complying with those instructions. |
| (h) | Without prejudice to the remainder of this Clause 29.4 (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. |
| 29.5 | Duties of the Security Agent |
| (a) | The Security Agent’s duties under the Finance Documents are solely mechanical and administrative in nature. |
| (b) | The Security Agent shall promptly forward to a Party the original or a copy of any document which is delivered to the Security Agent for that Party by any other Party. |
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| (c) | Except where a Finance Document specifically provides otherwise, the Security Agent is not obliged to review or check the adequacy, accuracy or completeness of any document it forwards to another Party. |
| (d) | If the Security Agent receives notice from a Party referring to any Finance Document, describing a Default and stating that the circumstance described is a Default, it shall promptly notify the other Finance Parties. |
| (e) | The Security Agent shall have only those duties, obligations and responsibilities expressly specified in the Finance Documents to which it is expressed to be a party (and no others shall be implied). |
| 29.6 | 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. |
| 29.7 | 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.
| 29.8 | 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. |
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| (b) | The Security Agent shall be entitled to carry out all dealings with the other Finance Parties through the Facility Agent and may give to the Facility Agent any notice or other communication required to be given by the Security Agent to any Finance Party. |
| (c) | The Security Agent may assume (unless it has received notice to the contrary in its capacity as security agent for the Secured Parties) that: |
| (i) | no Default has occurred; |
| (ii) | any right, power, authority or discretion vested in any Party or any group of Finance Parties has not been exercised; and |
| (iii) | any notice or request made by any Borrower (other than the Utilisation Request) is made on behalf of and with the consent and knowledge of all the Transaction Obligors. |
| (d) | The Security Agent may engage and pay for the advice or services of any lawyers, accountants, tax advisers, surveyors or other professional advisers or experts. |
| (e) | Without prejudice to the generality of paragraph (c) above or paragraph (f) below, the Security Agent may at any time engage and pay for the services of any lawyers to act as independent counsel to the Security Agent (and so separate from any lawyers instructed by the Facility Agent or the Lenders) if the Security Agent in its reasonable opinion deems this to be desirable. |
| (f) | The Security Agent may rely on the advice or services of any lawyers, accountants, tax advisers, surveyors or other professional advisers or experts (whether obtained by the Security Agent or by any other Party) and shall not be liable for any damages, costs or losses to any person, any diminution in value or any liability whatsoever arising as a result of its so relying. |
| (g) | The Security Agent may act in relation to the Finance Documents and the Security Property through its officers, employees and agents and shall not: |
| (i) | be liable for any error of judgment made by any such person; or |
| (ii) | be bound to supervise, or be in any way responsible for any loss incurred by reason of misconduct, omission or default on the part of any such person, |
unless such error or such loss was directly caused by the Security Agent’s gross negligence or wilful misconduct.
| (h) | Unless a Finance Document expressly provides otherwise the Security Agent may disclose to any other Party any information it reasonably believes it has received as security agent under the Finance Documents. |
| (i) | Notwithstanding any other provision of any Finance Document to the contrary, the Security Agent is not obliged to do or omit to do anything if it would or might, in its reasonable opinion, constitute a breach of any law or regulation or a breach of a fiduciary duty or duty of confidentiality. |
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| (j) | Notwithstanding any provision of any Finance Document to the contrary, the Security Agent is not obliged to expend or risk its own funds or otherwise incur any financial liability in the performance of its duties, obligations or responsibilities or the exercise of any right, power, authority or discretion if it has grounds for believing the repayment of such funds or adequate indemnity against, or security for, such risk or liability is not reasonably assured to it. |
| 29.9 | Responsibility for documentation |
None of the Security Agent, any Receiver or Delegate is responsible or liable for:
| (a) | the adequacy, accuracy or completeness of any information (whether oral or written) supplied by the Facility Agent, the Security Agent, a Transaction Obligor or any other person in, or in connection with, any Transaction Document or the transactions contemplated in the Transaction Documents or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Transaction Document; |
| (b) | the legality, validity, effectiveness, adequacy or enforceability of any Transaction Document or the Security Property or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with, any Transaction Document or the Security Property; or |
| (c) | any determination as to whether any information provided or to be provided to any Secured Party is non-public information the use of which may be regulated or prohibited by applicable law or regulation relating to insider dealing or otherwise. |
| 29.10 | 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. |
| 29.11 | 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 (including, without limitation, for negligence or any other category of liability whatsoever) for: |
| (i) | any damages, costs or losses to any person, any diminution in value, or any liability whatsoever arising as a result of taking or not taking any action under or in connection with any Transaction Document or the Security Property, unless directly caused by its gross negligence or wilful misconduct; |
| (ii) | exercising, or not exercising, any right, power, authority or discretion given to it by, or in connection with, any Transaction Document, the Security Property or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with, any Transaction Document or the Security Property; or |
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| (iii) | any shortfall which arises on the enforcement or realisation of the Security Property; or |
| (iv) | without prejudice to the generality of sub-paragraphs (i) to (iii) above, any damages, costs or losses to any person, any diminution in value or any liability whatsoever arising as a result of: |
| (A) | any act, event or circumstance not reasonably within its control; or |
| (B) | the general risks of investment in, or the holding of assets in, any jurisdiction, |
including (in each case and without limitation) such damages, costs, losses, diminution in value or liability arising as a result of nationalisation, expropriation or other governmental actions; any regulation, currency restriction, devaluation or fluctuation; market conditions affecting the execution or settlement of transactions or the value of assets (including any Disruption Event); breakdown, failure or malfunction of any third party transport, telecommunications, computer services or systems; natural disasters or acts of God; war, terrorism, insurrection or revolution; or strikes or industrial action.
| (b) | No Party other than the Security Agent, that Receiver or that Delegate (as applicable) may take any proceedings against any officer, employee or agent of the Security Agent, a Receiver or a Delegate in respect of any claim it might have against the Security Agent, a Receiver or a Delegate or in respect of any act or omission of any kind by that officer, employee or agent in relation to any Transaction Document or any Security Property and any officer, employee or agent of the Security Agent, a Receiver or a Delegate may rely on this 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 (including, without limitation, for negligence or any other category of liability whatsoever) 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 |
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| 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. |
| 29.12 | Lenders’ indemnity to the Security Agent |
| (a) | Each Lender shall (in proportion to its share of the Total Commitments or, if the Total Commitments are then zero, to its share of the Total Commitments immediately prior to their reduction to zero) indemnify the Security Agent and every Receiver and every Delegate, within three Business Days of demand, against any cost, loss or liability (including, without limitation, for negligence or any other category of liability whatsoever) incurred by any of them (otherwise than by reason of the Security Agent’s, Receiver’s or Delegate’s gross negligence or wilful misconduct) in acting as Security Agent, Receiver or Delegate under the Finance Documents (unless the Security Agent, Receiver or Delegate has been reimbursed by a Transaction Obligor pursuant to a Finance Document). |
| (b) | Subject to paragraph (c) below, the Borrowers shall immediately on demand reimburse any Lender for any payment that Lender makes to the Security Agent pursuant to paragraph (a) above. |
| (c) | Paragraph (b) above shall not apply to the extent that the indemnity payment in respect of which the Lender claims reimbursement relates to a liability of the Security Agent to an Obligor. |
| 29.13 | 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. |
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| (f) | Upon the appointment of a successor, the retiring Security Agent shall be discharged, by way of a document executed as a deed, from any further obligation in respect of the Finance Documents (other than its obligations under paragraph (b) of Clause 29.25 (Winding up of trust) and paragraph (d) above) but shall remain entitled to the benefit of Clause 14.4 (Indemnity to the Security Agent) and this Clause 29 (The Security Agent) and any other provisions of a Finance Document which are expressed to limit or exclude its liability (or to indemnify it) in acting as Security Agent. Any fees for the account of the retiring Security Agent shall cease to accrue from (and shall be payable on) that date. Any successor and each of the other Parties shall have the same rights and obligations amongst themselves as they would have had if such successor had been an original Party. |
| (g) | The Majority Lenders may, by notice to the Security Agent, require it to resign in accordance with paragraph (b) above. In this event, the Security Agent shall resign in accordance with paragraph (b) above but the cost referred to in paragraph (d) above shall be for the account of the 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. |
| 29.14 | 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. |
| 29.15 | 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; |
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| (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 |
| (e) | the right or title of any person in or to or the value or sufficiency of any part of the Security Assets, the priority of any of the Transaction Security or the existence of any Security affecting the Security Assets. |
| 29.16 | Security Agent’s management time |
| (a) | Any amount payable to the Security Agent under Clause 14.4 (Indemnity to the Security Agent), Clause 16 (Costs and Expenses) and Clause 29.12 (Lenders’ indemnity to the Security Agent) shall include the cost of utilising the Security Agent’s management time or other resources and will be calculated on the basis of such reasonable daily or hourly rates as the Security Agent may notify to the Borrowers and the other Finance Parties, and is in addition to any fee paid or payable to the Security Agent under Clause 11 (Fees). |
| (b) | Without prejudice to paragraph (a) above, in the event of: |
| (i) | a Default; |
| (ii) | the Security Agent being requested by a Transaction Obligor or the Majority Lenders to undertake duties which the Security Agent and the Borrowers agree to be of an exceptional nature or outside the scope of the normal duties of the Security Agent under the Finance Documents; or |
| (iii) | the Security Agent and the Borrowers agreeing that it is otherwise appropriate in the circumstances, |
the Borrowers shall pay to the Security Agent any additional remuneration (together with any applicable VAT) that may be agreed between them or determined pursuant to paragraph (c) below.
| (c) | If the Security Agent and the Borrowers fail to agree upon the nature of the duties, or upon the additional remuneration referred to in paragraph (b) above or whether additional remuneration is appropriate in the circumstances, any dispute shall be determined by an investment bank (acting as an expert and not as an arbitrator) selected by the Security Agent and approved by the Borrowers or, failing approval, nominated (on the application of the Security Agent) by the President for the time being of the Law Society of England and Wales (the costs of the nomination and of the investment bank being payable by the Borrowers) and the determination of any investment bank shall be final and binding upon the Parties. |
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| 29.17 | Reliance and engagement letters |
Each Secured Party confirms that the Security Agent has authority to accept on its behalf (and ratifies the acceptance on its behalf of any letters or reports already accepted by the Security Agent) the terms of any reliance letter or engagement letters or any reports or letters provided by accountants, auditors or providers of due diligence reports in connection with the Finance Documents or the transactions contemplated in the Finance Documents and to bind it in respect of those, reports or letters and to sign such letters on its behalf and further confirms that it accepts the terms and qualifications set out in such letters.
| 29.18 | No responsibility to perfect Transaction Security |
The Security Agent shall not be liable for any failure to:
| (a) | require the deposit with it of any deed or document certifying, representing or constituting the title of any Transaction Obligor to any of the Security Assets; |
| (b) | obtain any licence, consent or other authority for the execution, delivery, legality, validity, enforceability or admissibility in evidence of any Finance Document or the Transaction Security; |
| (c) | register, file or record or otherwise protect any of the Transaction Security (or the priority of any of the Transaction Security) under any law or regulation or to give notice to any person of the execution of any Finance Document or of the Transaction Security; |
| (d) | take, or to require any Transaction Obligor to take, any step to perfect its title to any of the Security Assets or to render the Transaction Security effective or to secure the creation of any ancillary Security under any law or regulation; or |
| (e) | require any further assurance in relation to any Finance Document. |
| 29.19 | Insurance by Security Agent |
| (a) | The Security Agent shall not be obliged: |
| (i) | to insure any of the Security Assets; |
| (ii) | to require any other person to maintain any insurance; or |
| (iii) | to verify any obligation to arrange or maintain insurance contained in any Finance Document, |
and the Security Agent shall not be liable for any damages, costs or losses to any person as a result of the lack of, or inadequacy of, any such insurance.
| (b) | Where the Security Agent is named on any insurance policy as an insured party, it shall not be liable for any damages, costs or losses to any person as a result of its failure to notify the insurers of any material fact relating to the risk assumed by such insurers or any other information of any kind, unless the Majority Lenders request it to do so in writing and the Security Agent fails to do so within 14 days after receipt of that request. |
| 29.20 | Custodians and nominees |
The Security Agent may appoint and pay any person to act as a custodian or nominee on any terms in relation to any asset of the trust as the Security Agent may determine, including for the purpose of depositing with a custodian this Agreement or any document relating to the trust created under this Agreement and the Security Agent shall not be responsible for any loss, liability, expense, demand, cost, claim or proceedings incurred by reason of the misconduct, omission or default on the part of any person appointed by it under this Agreement or be bound to supervise the proceedings or acts of any person.
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| 29.21 | Delegation by the Security Agent |
| (a) | Each of the Security Agent, any Receiver and any Delegate may, at any time, delegate by power of attorney or otherwise to any person for any period, all or any right, power, authority or discretion vested in it in its capacity as such. |
| (b) | That delegation may be made upon any terms and conditions (including the power to sub delegate) and subject to any restrictions that the Security Agent, that Receiver or that Delegate (as the case may be) may, in its discretion, think fit in the interests of the Secured Parties. |
| (c) | No Security Agent, Receiver or Delegate shall be bound to supervise, or be in any way responsible for any damages, costs or losses incurred by reason of any misconduct, omission or default on the part of any such delegate or sub delegate. |
| 29.22 | Additional Security Agents |
| (a) | The Security Agent may at any time appoint (and subsequently remove) any person to act as a separate trustee or as a co-trustee jointly with it: |
| (i) | if it considers that appointment to be in the interests of the Secured Parties; or |
| (ii) | for the purposes of conforming to any legal requirement, restriction or condition which the Security Agent deems to be relevant; or |
| (iii) | for obtaining or enforcing any judgment in any jurisdiction, |
and the Security Agent shall give prior notice to the Borrowers and the Finance Parties of that appointment.
| (b) | Any person so appointed shall have the rights, powers, authorities and discretions (not exceeding those given to the Security Agent under or in connection with the Finance Documents) and the duties, obligations and responsibilities that are given or imposed by the instrument of appointment. |
| (c) | The remuneration that the Security Agent may pay to that person, and any costs and expenses (together with any applicable VAT) incurred by that person in performing its functions pursuant to that appointment shall, for the purposes of this Agreement, be treated as costs and expenses incurred by the Security Agent. |
| 29.23 | Acceptance of title |
The Security Agent shall be entitled to accept without enquiry, and shall not be obliged to investigate, any right and title that any Transaction Obligor may have to any of the Security Assets and shall not be liable for or bound to require any Transaction Obligor to remedy any defect in its right or title.
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| 29.24 | Releases |
Upon a disposal of any of the Security Assets pursuant to the enforcement of the Transaction Security by a Receiver, a Delegate or the Security Agent, the Security Agent is irrevocably authorised (at the cost of the Borrowers 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.
| 29.25 | Winding up of trust |
If the Security Agent, with the approval of the Facility Agent determines that:
| (a) | all of the Secured Liabilities and all other obligations secured by the Security Documents have been fully and finally discharged; and |
| (b) | no Secured Party is under any commitment, obligation or liability (actual or contingent) to make advances or provide other financial accommodation to any Transaction Obligor pursuant to the Finance Documents, |
then
| (i) | the trusts set out in this Agreement shall be wound up and the Security Agent shall release, without recourse or warranty, all of the Transaction Security and the rights of the Security Agent under each of the Security Documents; and |
| (ii) | any Security Agent which has resigned pursuant to Clause 29.13 (Resignation of the Security Agent) shall release, without recourse or warranty, all of its rights under each Security Document. |
| 29.26 | Powers supplemental to Trustee Acts |
The rights, powers, authorities and discretions given to the Security Agent under or in connection with the Finance Documents shall be supplemental to the Trustee Act 1925 and the Trustee Act 2000 and in addition to any which may be vested in the Security Agent by law or regulation or otherwise.
| 29.27 | Disapplication of Trustee Acts |
Section 1 of the Trustee Act 2000 shall not apply to the duties of the Security Agent in relation to the trusts constituted by this Agreement and the other Finance Documents. Where there are any inconsistencies between (i) the Trustee Acts 1925 and 2000 and (ii) the provisions of this Agreement and any other Finance Document, the provisions of this Agreement and any other Finance Document shall, to the extent permitted by law and regulation, prevail and, in the case of any inconsistency with the Trustee Act 2000, the provisions of this Agreement and any other Finance Document shall constitute a restriction or exclusion for the purposes of the Trustee Act 2000.
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| 29.28 | Application of receipts |
All amounts from time to time received or recovered by the Security Agent pursuant to the terms of any Finance Document, under Clause 29.2 (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 29 (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 29 (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 29.2 (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 32.5 (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. |
| 29.29 | Permitted Deductions |
The Security Agent may, in its discretion:
| (a) | set aside by way of reserve amounts required to meet, and to make and pay, any deductions and withholdings (on account of Taxes or otherwise) which it is or may be required by any applicable law to make from any distribution or payment made by it under this Agreement; and |
| (b) | pay all Taxes which may be assessed against it in respect of any of the Security Property, or as a consequence of performing its duties, or by virtue of its capacity as Security Agent under any of the Finance Documents or otherwise (other than in connection with its remuneration for performing its duties under this Agreement). |
| 29.30 | Prospective liabilities |
Following enforcement of any of the Transaction Security, the Security Agent may, in its discretion, or at the request of the Facility Agent, hold any Recoveries in an interest bearing suspense or impersonal account(s) in the name of the Security Agent with such financial institution (including itself) and for so long as the Security Agent shall think fit (the interest being credited to the relevant account) for later payment to the Facility Agent for application in accordance with Clause 29.28 (Application of receipts) in respect of:
| (a) | any sum to the Security Agent, any Receiver or any Delegate; and |
| (b) | any part of the Secured Liabilities, |
that the Security Agent or, in the case of paragraph (b) only, the Facility Agent, reasonably considers, in each case, might become due or owing at any time in the future.
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| 29.31 | Investment of proceeds |
Prior to the payment of the proceeds of the Recoveries to the Facility Agent for application in accordance with Clause 29.28 (Application of receipts) the Security Agent may, in its discretion, hold all or part of those proceeds in an interest bearing suspense or impersonal account(s) in the name of the Security Agent with such financial institution (including itself) and for so long as the Security Agent shall think fit (the interest being credited to the relevant account) pending the payment from time to time of those moneys in the Security Agent’s discretion in accordance with the provisions of Clause 29.28 (Application of receipts).
| 29.32 | Currency conversion |
| (a) | For the purpose of, or pending the discharge of, any of the Secured Liabilities the Security Agent may convert any moneys received or recovered by the Security Agent from one currency to another, at a market rate of exchange. |
| (b) | The obligations of any Transaction Obligor to pay in the due currency shall only be satisfied to the extent of the amount of the due currency purchased after deducting the costs of conversion. |
| 29.33 | Good discharge |
| (a) | Any payment to be made in respect of the Secured Liabilities by the Security Agent may be made to the Facility Agent on behalf of the Secured Parties and any payment made in that way shall be a good discharge, to the extent of that payment, by the Security Agent. |
| (b) | The Security Agent is under no obligation to make the payments to the Facility Agent under paragraph (a) above in the same currency as that in which the obligations and liabilities owing to the relevant Finance Party are denominated. |
| 29.34 | Amounts received by Obligors |
If any of the Obligors receives or recovers any amount which, under the terms of any of the Finance Documents, should have been paid to the Security Agent, the Borrowers will ensure that such amount received or recovered is held 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.
| 29.35 | Application and consideration |
In consideration for the covenants given to the Security Agent by each Borrower in relation to Clause 29.2 (Parallel Debt (Covenant to pay the Security Agent)), the Security Agent agrees with each Borrower to apply all moneys from time to time paid by such Borrower to the Security Agent in accordance with the foregoing provisions of this Clause 29 (The Security Agent).
| 29.36 | Full freedom to enter into transactions |
Without prejudice to Clause 29.7 (Business with the Group) or any other provision of a Finance Document and notwithstanding any rule of law or equity to the contrary, the Security Agent shall be absolutely entitled:
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| (a) | to enter into and arrange banking, derivative, investment and/or other transactions of every kind with or affecting any Transaction Obligor or any person who is party to, or referred to in, a Finance Document (including, but not limited to, any interest or currency swap or other transaction, whether related to this Agreement or not, and acting as syndicate agent and/or security agent for, and/or participating in, other facilities to such Transaction Obligor or any person who is party to, or referred to in, a Finance Document); |
| (b) | to deal in and enter into and arrange transactions relating to: |
| (i) | any securities issued or to be issued by any Transaction Obligor or any other person; or |
| (ii) | any options or other derivatives in connection with such securities; |
| (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 |
| (d) | to engage in transactions that may affect the calculation of any Benchmark Replacement and/or relevant adjustments to it without any consideration of the interests of, or liability to, any Transaction Obligor or any other Party, |
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), (c) and (d) above, to use (subject only to insider dealing legislation) any information or opportunity, howsoever acquired by it, to pursue its own interests exclusively, to refrain from disclosing such dealings, transactions or other matters or any information acquired in connection with them and to retain for its sole benefit all profits and benefits derived from the dealings transactions or other matters.
| 30 | 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. |
| 31 | SHARING AMONG THE FINANCE PARTIES |
| 31.1 | 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 32 (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; |
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| (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 32 (Payment Mechanics), without taking account of any Tax which would be imposed on the Facility Agent in relation to the receipt, recovery or distribution; and |
| (c) | the Recovering Finance Party shall, within three Business Days of demand by the Facility Agent, pay to the Facility Agent an amount (the “Sharing Payment”) equal to such receipt or recovery less any amount which the Facility Agent determines may be retained by the Recovering Finance Party as its share of any payment to be made, in accordance with Clause 32.5 (Application of receipts; partial payments). |
| 31.2 | 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 32.5 (Application of receipts; partial payments) towards the obligations of that Transaction Obligor to the Sharing Finance Parties.
| 31.3 | Recovering Finance Party’s rights |
On a distribution by the Facility Agent under Clause 31.2 (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.
| 31.4 | 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. |
| 31.5 | Exceptions |
| (a) | This Clause 31 (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. |
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| (b) | A Recovering Finance Party is not obliged to share with any other Finance Party any amount which the Recovering Finance Party has received or recovered as a result of taking legal or arbitration proceedings, if: |
| (i) | it notified that other Finance Party of the legal or arbitration proceedings; and |
| (ii) | that other Finance Party had an opportunity to participate in those legal or arbitration proceedings but did not do so as soon as reasonably practicable having received notice and did not take separate legal or arbitration proceedings. |
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SECTION 11
ADMINISTRATION
| 32 | PAYMENT MECHANICS |
| 32.1 | 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. |
| 32.2 | Distributions by the Facility Agent |
Each payment received by the Facility Agent under the Finance Documents for another Party shall, subject to Clause 32.3 (Distributions to a Transaction Obligor) and Clause 32.4 (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 an Advance, to such account of such person as may be specified by the Borrowers in the Utilisation Request.
| 32.3 | Distributions to a Transaction Obligor |
The Facility Agent may (with the consent of the Transaction Obligor or in accordance with Clause 33 (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.
| 32.4 | Clawback and pre-funding |
| (a) | Where a sum is to be paid to the Facility Agent under the Finance Documents for another Party, the Facility Agent is not obliged to pay that sum to that other Party (or to enter into or perform any related exchange contract) until it has been able to establish to its satisfaction that it has actually received that sum. |
| (b) | Unless paragraph (c) below applies, if the Facility Agent pays an amount to another Party and it proves to be the case that the Facility Agent had not actually received that amount, then the Party to whom that amount (or the proceeds of any related exchange contract) was paid by the Facility Agent shall on demand refund the same to the Facility Agent together with interest on that amount from the date of payment to the date of receipt by the Facility Agent, calculated by the Facility Agent to reflect its cost of funds. |
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| (c) | If the Facility Agent 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 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. |
| 32.5 | Application of receipts; partial payments |
| (a) | If the Facility Agent receives a payment that is insufficient to discharge all the amounts then due and payable by a Transaction Obligor under the Finance Documents, the Facility Agent shall apply that payment towards the obligations of that Transaction Obligor under the Finance Documents in the following order: |
| (i) | first, in or towards payment pro rata of any unpaid fees, costs and expenses of, and any other amounts owing to, the Facility Agent, the Security Agent, any Receiver or any Delegate under the Finance Documents; |
| (ii) | secondly, in or towards payment pro rata of any accrued interest and fees due but unpaid to the Lenders under this Agreement; |
| (iii) | thirdly, in or towards payment pro rata of any principal due but unpaid to the Lenders under this Agreement; and |
| (iv) | fourthly, in or towards payment pro rata of any other sum due but unpaid under the Finance Documents. |
| (b) | The Facility Agent shall, if so directed by the Majority Lenders, vary, or instruct the Security Agent to vary (as applicable), the order set out in sub-paragraphs (ii) to (iv) of paragraph (a) above. |
| (c) | Paragraphs (a) and (b) above will override any appropriation made by a Transaction Obligor. |
| 32.6 | 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.
| 32.7 | 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). |
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| (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. |
| 32.8 | 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. |
| 32.9 | 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. |
| 32.10 | 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. |
| 32.11 | 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; |
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| (b) | the Facility Agent shall not be obliged to consult with the Borrowers in relation to any changes mentioned in paragraph (a) above if, in its opinion, it is not practicable to do so in the circumstances and, in any event, shall have no obligation to agree to such changes; |
| (c) | the Facility Agent may consult with the Finance Parties in relation to any changes mentioned in paragraph (a) above but shall not be obliged to do so if, in its opinion, it is not practicable to do so in the circumstances; |
| (d) | any such changes agreed upon by the Facility Agent and the Borrowers shall (whether or not it is finally determined that a Disruption Event has occurred) be binding upon the Parties and any Transaction Obligors as an amendment to (or, as the case may be, waiver of) the terms of the Finance Documents notwithstanding the provisions of Clause 42 (Amendments and Waivers); |
| (e) | the Facility Agent shall not be liable for any damages, costs or losses to any person, any diminution in value or any liability whatsoever (including, without limitation for negligence, gross negligence or any other category of liability whatsoever but not including any claim based on the fraud of the Facility Agent) arising as a result of its taking, or failing to take, any actions pursuant to or in connection with this Clause 32.11 (Disruption to Payment Systems etc.); and |
| (f) | the Facility Agent shall notify the Finance Parties of all changes agreed pursuant to paragraph (d) above. |
| 33 | 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.
| 34 | BAIL-IN |
Notwithstanding any other term of any Finance Document or any other agreement, arrangement or understanding between the parties to a Finance Document, each Party acknowledges and accepts that any liability of any party to a Finance Document under or in connection with the Finance Documents may be subject to Bail-In Action by the relevant Resolution Authority and acknowledges and accepts to be bound by the effect of:
| (a) | any Bail-In Action in relation to any such liability, including (without limitation): |
| (i) | a reduction, in full or in part, in the principal amount, or outstanding amount due (including any accrued but unpaid interest) in respect of any such liability; |
| (ii) | a conversion of all, or part of, any such liability into shares or other instruments of ownership that may be issued to, or conferred on, it; and |
| (iii) | a cancellation of any such liability; and |
| (b) | a variation of any term of any Finance Document to the extent necessary to give effect to any Bail-In Action in relation to any such liability. |
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| 35 | NOTICES |
| 35.1 | Communications in writing |
Any communication to be made under or in connection with the Finance Documents shall be made in writing and, unless otherwise stated, may be made by fax or letter.
| 35.2 | Addresses |
The address and fax number (and the department or officer, if any, for whose attention the communication is to be made) of each Party for any communication or document to be made or delivered under or in connection with the Finance Documents are:
| (a) | in the case of the Borrowers, that specified in Part A of Schedule 1 (The Parties); |
| (b) | in the case of each Lender, that specified in Schedule 1 (The Parties) or, if it becomes a Party after the date of this Agreement, that notified in writing to the Facility Agent on or before the date on which it becomes a Party; |
| (c) | in the case of the Facility Agent and the Security Agent, that specified in Part C of Schedule 1 (The Parties), |
or any substitute address, fax number or department or officer as the Party may notify to the Facility Agent (or the Facility Agent may notify to the other Parties, if a change is made by the Facility Agent) by not less than five Business Days’ notice.
| 35.3 | Delivery |
| (a) | Any communication or document made or delivered by one person to another under or in connection with the Finance Documents will only be effective: |
| (i) | if by way of fax, when received in legible form; or |
| (ii) | if by way of letter, when it has been left at the relevant address or five Business Days after being deposited in the post postage prepaid in an envelope addressed to it at that address, |
and, if a particular department or officer is specified as part of its address details provided under Clause 35.2 (Addresses), if addressed to that department or officer.
| (b) | Any communication or document to be made or delivered to a Servicing Party will be effective only when actually received by that Servicing Party and then only if it is expressly marked for the attention of the department or officer of that Servicing Party specified in Schedule 1 (The Parties) (or any substitute department or officer as that Servicing Party shall specify for this purpose). |
| (c) | All notices from or to a Transaction Obligor shall be sent through the Facility Agent unless otherwise specified in any Finance Document. |
| (d) | Any communication or document made or delivered to the Borrowers in accordance with this Clause will be deemed to have been made or delivered to each of the Transaction Obligors. |
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| (e) | Any communication or document which becomes effective, in accordance with paragraphs (a) to (d) above, after 5.00 p.m. in the place of receipt shall be deemed only to become effective on the following day. |
| 35.4 | Notification of address and fax number |
Promptly upon receipt of notification of an address and fax number or change of address or fax number pursuant to Clause 35.2 (Addresses) or changing its own address or fax number, the Facility Agent shall notify the other Parties.
| 35.5 | Electronic communication |
| (a) | Any communication to be made or document to be delivered by one Party to another under or in connection with the Finance Documents may be made or delivered by electronic mail or other electronic means (including, without limitation, by way of posting to a secure website) if those two Parties: |
| (i) | notify each other in writing of their electronic mail address and/or any other information required to enable the transmission of information by that means; and |
| (ii) | notify each other of any change to their address or any other such information supplied by them by not less than five Business Days’ notice. |
| (b) | Any such electronic communication or delivery as specified in paragraph (a) above to be made between a Borrower and a Finance Party may only be made in that way to the extent that those two Parties agree that, unless and until notified to the contrary, this is to be an accepted form of communication or delivery. |
| (c) | Any such electronic communication or document as specified in paragraph (a) above or delivered by one Party to another will be effective only when actually received (or made available) in readable form and in the case of any electronic communication or document made or delivered by a Party to the Facility Agent or the Security Agent only if it is addressed in such a manner as the Facility Agent or the Security Agent shall specify for this purpose. |
| (d) | Any electronic communication or document which becomes effective, in accordance with paragraph (c) above, after 5.00 p.m. in the place in which the Party to whom the relevant communication or document is sent or made available has its address for the purpose of this Agreement shall be deemed only to become effective on the following day. |
| (e) | Any reference in a Finance Document to a communication being sent or received or a document being delivered shall be construed to include that communication or document being made available in accordance with this Clause 35.5 (Electronic communication). |
| 35.6 | English language |
| (a) | Any notice given under or in connection with any Finance Document must be in English. |
| (b) | All other documents provided under or in connection with any Finance Document must be: |
| (i) | in English; or |
| (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. |
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| 36 | CALCULATIONS AND CERTIFICATES |
| 36.1 | 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.
| 36.2 | 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.
| 36.3 | Day count convention |
Any interest, commission or fee accruing under a Finance Document will accrue from day to day and is calculated on the basis of the actual number of days elapsed and a year of 360 days or, in any case where the practice in the Relevant Market differs, in accordance with that market practice.
| 37 | 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.
| 38 | REMEDIES AND WAIVERS |
| (a) | 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. |
| (b) | No variation or amendment of a Finance Document shall be valid unless in writing and signed by or on behalf of all the relevant Finance Parties in accordance with the provisions of Clause 42 (Amendments and Waivers). |
| 39 | ENTIRE AGREEMENT |
| (a) | This Agreement, in conjunction with the other Finance Documents, constitutes the entire agreement between the Parties and supersedes all previous agreements, understandings and arrangements between them, whether in writing or oral, in respect of its subject matter. |
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| (b) | Each Borrower acknowledges that it has not entered into this Agreement or any other Finance Document in reliance on, and shall have no remedies in respect of, any representation or warranty that is not expressly set out in this Agreement or in any other Finance Document. |
| 40 | SETTLEMENT OR DISCHARGE CONDITIONAL |
Any settlement or discharge under any Finance Document between any Finance Party and any Transaction Obligor shall be conditional upon no security or payment to any Finance Party by any Transaction Obligor or any other person being set aside, adjusted or ordered to be repaid, whether under any insolvency law or otherwise.
| 41 | IRREVOCABLE PAYMENT |
If the Facility Agent considers that an amount paid or discharged by, or on behalf of, a Transaction Obligor or by any other person in purported payment or discharge of an obligation of that Transaction Obligor to a Secured Party under the Finance Documents is capable of being avoided or otherwise set aside on the liquidation or administration of that Transaction Obligor or otherwise, then that amount shall not be considered to have been unconditionally and irrevocably paid or discharged for the purposes of the Finance Documents.
| 42 | AMENDMENTS AND WAIVERS |
| 42.1 | Required consents |
| (a) | Subject to Clause 42.2 (All Lender matters) and Clause 42.3 (Other exceptions) any term of the Finance Documents may be amended or waived only with the consent of the Majority Lenders and, in the case of an amendment, the Borrowers and any such amendment or waiver will be binding on all Parties. |
| (b) | The Facility Agent may effect, on behalf of any Finance Party, any amendment or waiver permitted by this Clause 42 (Amendments and Waivers). |
| (c) | Without prejudice to the generality of Clause 28.7 (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 26.9 (Pro rata interest settlement) shall apply to this Clause 42 (Amendments and Waivers). |
| 42.2 | All Lender matters |
| (a) | Subject to Clause 42.4 (Benchmark Replacement setting), 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: |
| (b) | the definition of “Majority Lenders” in Clause 1.1 (Definitions); |
| (c) | a postponement to or extension of the date of payment of any amount under the Finance Documents; |
| (d) | a reduction in the Margin or the amount of any payment of principal, interest, fees or commission payable; |
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| (e) | a change in currency of payment of any amount under the Finance Documents; |
| (f) | 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; |
| (g) | a change to any Transaction Obligor other than in accordance with Clause 27 (Changes to the Transaction Obligors); |
| (h) | any provision which expressly requires the consent of all the Lenders; |
| (i) | this Clause 42 (Amendments and Waivers); |
| (j) | any change to the preamble (Background), Clause 2 (The Facility), Clause 3 (Purpose), Clause 5 (Utilisation), Clause 6.3 (Effect of cancellation and prepayment on scheduled repayments), Clause 7.4 (Mandatory prepayment on sale, seizure or Total Loss), Clause 8 (Interest), Clause 22.10 (Compliance with laws etc.), Clause 22.12 (Sanctions and Ship trading), Clause 24 (Accounts and Application of Earnings), Clause 26 (Changes to the Lenders), Clause 31 (Sharing among the Finance Parties), Clause 45 (Governing Law) or Clause 46 (Enforcement); |
| (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 2 (guarantee) of the Guarantee; |
| (ii) | the joint and several liability of the Borrowers under Clause 17 (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 or any material variation of the guarantees and indemnities granted under clause 2 (guarantee) of the Guarantee, the joint and several liability of the Borrowers under Clause 17 (Joint and Several Liability of the Borrowers) or of any Transaction Security or any guarantee, indemnity or subordination arrangement set out in a Finance Document unless permitted under this Agreement or any other Finance Document or relating to a sale or disposal of an asset which is the subject of the Transaction Security where such sale or disposal is expressly permitted under this Agreement or any other Finance Document, |
shall not be made, or given, without the prior consent of all the Lenders.
| 42.3 | Other exceptions |
| (a) | An amendment or waiver which relates to the rights or obligations of a Servicing Party may not be effected without the consent of that Servicing Party. |
| (b) | The Borrowers and the Facility Agent or the Security Agent, as applicable, may amend or waive a term of a Fee Letter to which they are party. |
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| 42.4 | Benchmark Replacement setting |
| (a) | Benchmark Replacement: Notwithstanding anything to the contrary herein or in any other Finance Document, upon the occurrence of a Benchmark Transition Event, the Facility Agent and the Borrowers may amend this Agreement to replace the then-current Benchmark with a Benchmark Replacement. Any such amendment with respect to a Benchmark Transition Event will become effective at 5:00 p.m. (New York City time) on the fifth (5th) Business Day after the date notice of such Benchmark Replacement is provided to the Lenders and the Borrowers so long as the Facility Agent has not received, by such time, written notice of objection to such amendment from Lenders comprising the Majority Lenders. No replacement of a Benchmark with a Benchmark Replacement pursuant to this paragraph will occur prior to the applicable Benchmark Transition Start Date. |
| (b) | Conforming Changes: In connection with the use or administration of Term SOFR, or the use, administration, adoption or implementation of a Benchmark Replacement, the Facility Agent will have the right to make Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Finance Document, any amendments implementing such Conforming Changes will become effective without any further action or consent of any other party to this Agreement or any other Finance Document. |
| (c) | Notices: Standards for Decisions and Determinations: The Facility Agent will promptly notify the Borrowers and the Lenders of (i) the implementation of any Benchmark Replacement and (ii) the effectiveness of any Conforming Changes. The Facility Agent will promptly notify the Borrowers of the removal or reinstatement of any tenor of a Benchmark pursuant to paragraph (d) below. Any determination, decision or election that may be made by the Facility Agent or, if applicable, any Lender (or group of Lenders) pursuant to this Clause 42.4 (Benchmark Replacement setting), including any determination with respect to a tenor, rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any decision to take or refrain from taking any action or any selection, will be conclusive and binding absent manifest error and may be made in its or their sole discretion and without consent from any other party to this Agreement or any other Finance Document, except, in each case, as expressly required pursuant to this Clause 42.4 (Benchmark Replacement setting). |
| (d) | Unavailability of Tenor of Benchmark: Notwithstanding anything to the contrary herein or in any other Finance Document, at any time (including in connection with the implementation of a Benchmark Replacement), (i) if the then-current Benchmark is a term rate (including Term SOFR) and either (A) any tenor for such Benchmark is not displayed on a screen or other information service that publishes such rate from time to time as selected by the Facility Agent in its reasonable discretion or (B) the administrator of such Benchmark or the regulatory supervisor for the administrator of such Benchmark has provided a public statement or publication of information announcing that any tenor for such Benchmark is not or will not be representative or in compliance with or aligned with the International Organization of Securities Commissions (IOSCO) Principles for Financial Benchmarks, then the Facility Agent may modify the definition of “Interest Period” (or any similar or analogous definition or related provisions) for any Benchmark settings at or after such time to remove such unavailable, non-representative, non-compliant or non-aligned tenor and (ii) if a tenor that was removed pursuant to clause (i) above either (A) is subsequently displayed on a screen or information service for a Benchmark (including a Benchmark Replacement) or (B) is not, or is no longer, subject to an announcement that it is not or will not be representative or in compliance with or aligned with the International Organization of Securities Commissions (IOSCO) Principles for |
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| Financial Benchmarks for a Benchmark (including a Benchmark Replacement), then the Facility Agent may modify the definition of “Interest Period” (or any similar or analogous definition or related provisions) for all Benchmark settings at or after such time to reinstate such previously removed tenor. |
| (e) | Benchmark Unavailability Period: Upon the Borrowers’ receipt of notice of the commencement of a Benchmark Unavailability Period, the Borrowers may revoke any pending request for a borrowing of any Advance to be made during any Benchmark Unavailability Period. |
| (f) | The following terms shall have the following meanings: |
“Available Tenor” means, as of any date of determination and with respect to the then-current Benchmark, as applicable, (i) if such Benchmark is a term rate, any tenor for such Benchmark (or component thereof) that is or may be used for determining the length of an interest period pursuant to this Agreement or (ii) otherwise, any payment period for interest calculated with reference to such Benchmark (or component thereof) that is or may be used for determining any frequency of making payments of interest calculated with reference to such Benchmark, in each case, as of such date and not including, for the avoidance of doubt, any tenor for such Benchmark that is then-removed from the definition of “Interest Period” or related provisions pursuant to paragraph (d) of this Clause 42.4 (Benchmark Replacement setting).
“Benchmark” means, initially, Term SOFR; provided that if a Benchmark Transition Event has occurred with respect to Term SOFR or the then-current Benchmark, then “Benchmark” means the applicable Benchmark Replacement to the extent that such Benchmark Replacement has replaced such prior benchmark rate pursuant to paragraph (a) of this Clause 42.4 (Benchmark Replacement setting).
“Benchmark Replacement” means with respect to any Benchmark Transition Event, the sum of:
| (a) | the alternate benchmark rate that has been selected by the Facility Agent and the Borrowers giving due consideration to (i) any selection or recommendation of a replacement benchmark rate or the mechanism for determining such a rate by the Relevant Governmental Body or (ii) any evolving or then-prevailing market convention for determining a benchmark rate as a replacement to the then-current Benchmark for Dollar-denominated syndicated credit facilities; and |
| (b) | the related Benchmark Replacement Adjustment; |
provided that, if such Benchmark Replacement as so determined would be less than zero, such Benchmark Replacement will be deemed to be zero for the purposes of this Agreement and the other Finance Documents
“Benchmark Replacement Adjustment” means, with respect to any replacement of the then-current Benchmark with an Unadjusted Benchmark Replacement, the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) that has been selected by the Facility Agent and the Borrowers giving due consideration to:
| (a) | any selection or recommendation of a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement by the Relevant Governmental Body; or |
| (b) | any evolving or then-prevailing market convention for determining a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement for Dollar-denominated syndicated credit facilities. |
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“Benchmark Replacement Date” means the earliest to occur of the following events with respect to the then-current Benchmark:
| (a) | in the case of paragraph (a) or paragraph (b) of the definition of “Benchmark Transition Event”, the later of (i) the date of the public statement or publication of information referenced therein and (ii) the date on which the administrator of such Benchmark (or the published component used in the calculation thereof) permanently or indefinitely ceases to provide all Available Tenors of such Benchmark (or such component thereof); or |
| (b) | in the case of paragraph (c) of the definition of “Benchmark Transition Event”, the first date on which such Benchmark (or the published component used in the calculation thereof) has been determined and announced by or on behalf of the administrator of such Benchmark (or such component thereof) or the regulatory supervisor for the administrator of such Benchmark (or such component thereof) to be non-representative or non-compliant with or non-aligned with the International Organization of Securities Commissions (IOSCO) Principles for Financial Benchmarks; provided that such non-representativeness, non-compliance or non-alignment will be determined by reference to the most recent statement or publication referenced in such clause (c) and even if any Available Tenor of such Benchmark (or such component thereof) continues to be provided on such date. |
For the avoidance of doubt, the “Benchmark Replacement Date” will be deemed to have occurred in the case of paragraph (a) or paragraph (b) above with respect to any Benchmark upon the occurrence of the applicable event or events set forth therein with respect to all then-current Available Tenors of such Benchmark (or the published component used in the calculation thereof).
“Benchmark Transition Event” means the occurrence of one or more of the following events with respect to the then-current Benchmark:
| (a) | a public statement or publication of information by or on behalf of the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that such administrator has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof), permanently or indefinitely; provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof); |
| (b) | a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof), the FRB, the Federal Reserve Bank of New York, an insolvency official with jurisdiction over the administrator for such Benchmark (or such component), a resolution authority with jurisdiction over the administrator for such Benchmark (or such component) or a court or an entity with similar insolvency or resolution authority over the administrator for such Benchmark (or such component), which states that the administrator of such Benchmark (or such component) has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof) permanently or indefinitely; provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof); or |
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| (c) | a public statement or publication of information by or on behalf of the administrator of such Benchmark (or the published component used in the calculation thereof) or the regulatory supervisor for the administrator of such Benchmark (or such component thereof) announcing that all Available Tenors of such Benchmark (or such component thereof) are not, or as of a specified future date will not be, representative or in compliance with or aligned with the International Organization of Securities Commissions (IOSCO) Principles for Financial Benchmarks. |
For the avoidance of doubt, a “Benchmark Transition Event” will be deemed to have occurred with respect to any Benchmark if a public statement or publication of information set forth above has occurred with respect to each then-current Available Tenor of such Benchmark (or the published component used in the calculation thereof).
“Benchmark Transition Start Date” means, in the case of a Benchmark Transition Event, the earlier of:
| (a) | the applicable Benchmark Replacement Date; and |
| (b) | if such Benchmark Transition Event is a public statement or publication of information of a prospective event, the 90th day prior to the expected date of such event as of such public statement or publication of information (or if the expected date of such prospective event is fewer than 90 days after such statement or publication, the date of such statement or publication). |
“Benchmark Unavailability Period” means, the period (if any):
| (a) | beginning at the time that a Benchmark Replacement Date has occurred if, at such time, no Benchmark Replacement has replaced the then-current Benchmark for all purposes hereunder and under any Finance Document in accordance with this Clause 42.4 (Benchmark Replacement setting); and |
| (b) | ending at the time that a Benchmark Replacement has replaced the then-current Benchmark for all purposes hereunder and under any Finance Document in accordance with this Clause 42.4 (Benchmark Replacement setting). |
“Conforming Changes” means, with respect to either the use or administration of Term SOFR or the use, administration, adoption or implementation of any Benchmark Replacement, any technical, administrative or operational changes (including changes to the definition of “Base Rate”, “Business Day”, “U.S. Government Securities Business Day,” or “Interest Period” or any similar or analogous definition (or the addition of a concept of “interest period”), timing and frequency of determining rates and making payments of interest, timing of borrowing requests or prepayment, conversion or continuation notices, the applicability and length of lookback periods and other technical, administrative or operational matters) that the Facility Agent decides may be appropriate to reflect the adoption and implementation of any such rate or to permit the use and administration thereof by the Facility Agent in a manner substantially consistent with market practice (or, if the Facility Agent decides that adoption of any portion of such market practice is not administratively feasible or determines that no market practice for the administration of any such rate exists, in such other manner of administration as the Facility Agent decides is reasonably necessary in connection with the administration of this Agreement and the other Finance Documents).
“Unadjusted Benchmark Replacement” means the applicable Benchmark Replacement excluding the related Benchmark Replacement Adjustment.
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| 42.5 | Borrower Intent |
Without prejudice to the generality of Clauses 1.2 (Construction) and 17.2 (Waiver of defences), each Borrower expressly confirms that it intends that any guarantee contained in this Agreement or any other Finance Document and any Security created by any Finance Document shall extend from time to time to any (however fundamental) variation, increase, extension or addition of or to any of the Finance Documents and/or any facility or amount made available under any of the Finance Documents for the purposes of or in connection with any of the following: business acquisitions of any nature; increasing working capital; enabling investor distributions to be made; carrying out restructurings; refinancing existing facilities; refinancing any other indebtedness; making facilities available to new borrowers; any other variation or extension of the purposes for which any such facility or amount might be made available from time to time; and any fees, costs and/or expenses associated with any of the foregoing.
| 43 | CONFIDENTIAL INFORMATION |
| 43.1 | Confidentiality |
Each Finance Party agrees to keep all Confidential Information confidential and not to disclose it to anyone, save to the extent permitted by Clause 43.2 (Disclosure of Confidential Information) and Clause 43.4 (Disclosure to numbering service providers) and to ensure that all Confidential Information is protected with security measures and a degree of care that would apply to its own confidential information.
| 43.2 | Disclosure of Confidential Information |
Any Finance Party may disclose:
| (a) | to any of its Affiliates and Related Funds and any of its or their officers, directors, employees, professional advisers, auditors, partners, credit insurers and insurers, reinsurers, insurance brokers 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 (and in relation to any Confidential Information relating to the Guarantor, if 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) except that there shall be no such requirement to so inform if the recipient is subject to professional obligations to maintain the confidentiality of the information or is otherwise bound by requirements of confidentiality in relation to the Confidential Information; |
| (b) | to any person: |
| (i) | to (or through) whom it assigns or transfers (or may potentially assign or transfer) all or any of its rights and/or obligations under one or more Finance Documents or which succeeds (or which may potentially succeed) it as Facility Agent or Security Agent and, in each case, to any of that person’s Affiliates, Related Funds, Representatives and professional advisers; |
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| (ii) | with (or through) whom it enters into (or may potentially enter into), whether directly or indirectly, any sub-participation in relation to, or any other transaction under which payments are to be made or may be made by reference to, one or more Finance Documents and/or one or more Transaction Obligors and to any of that person’s Affiliates, Related Funds, Representatives and professional advisers; |
| (iii) | appointed by any Finance Party or by a person to whom sub-paragraph (i) or (ii) of paragraph (b) above applies to receive communications, notices, information or documents delivered pursuant to the Finance Documents on its behalf (including, without limitation, any person appointed under paragraph (c) of Clause 28.14 (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 26.8 (Security over Lenders’ rights); |
| (viii) | who is a Party, a member of the Group or any related entity of a Transaction Obligor; |
| (ix) | as a result of the registration of any Finance Document as contemplated by any Finance Document or any legal opinion obtained in connection with any Finance Document; or |
| (x) | with the consent of the 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-paragraph (iv) of paragraph (b) above, the person to whom the Confidential Information is to be given has entered into a Confidentiality Undertaking or is otherwise bound by requirements of confidentiality in relation to the Confidential Information they receive and is informed that some or all of such Confidential Information may be price-sensitive information; |
| (C) | in relation to sub-paragraphs (v), (vi) and (vii) of paragraph (b) above, the person to whom the Confidential Information is to be given is informed of its confidential nature and that some or all of such Confidential Information may be price-sensitive information except that there shall be no requirement to so inform if, in the opinion of that Finance Party, it is not practicable so to do in the circumstances; |
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| (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 Obligors if the rating agency to whom the Confidential Information is to be given is informed of its confidential nature and that some or all of such Confidential Information may be price-sensitive information. |
| 43.3 | DAC6 |
Nothing in any Finance Document shall prevent disclosure of any Confidential Information or other matter to the extent that preventing that disclosure would otherwise cause any transaction contemplated by the Finance Documents or any transaction carried out in connection with any transaction contemplated by the Finance Documents to become an arrangement described in Part II A 1 of Annex IV of Directive 2011/16/EU.
| 43.4 | Disclosure to numbering service providers |
| (a) | Any Finance Party may disclose to any national or international numbering service provider appointed by that Finance Party to provide identification numbering services in respect of this Agreement, the Facility and/or one or more Transaction Obligors the following information: |
| (i) | names of Transaction Obligors; |
| (ii) | country of domicile of Transaction Obligors; |
| (iii) | place of incorporation of Transaction Obligors; |
| (iv) | date of this Agreement; |
| (v) | Clause 45 (Governing Law); |
| (vi) | the name of the Facility Agent; |
| (vii) | date of each amendment and restatement of this Agreement; |
| (viii) | amount of Total Commitments; |
| (ix) | currency of the Facility; |
| (x) | type of Facility; |
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| (xi) | ranking of Facility; |
| (xii) | Termination Date for Facility; |
| (xiii) | changes to any of the information previously supplied pursuant to sub-paragraphs (i) to (xii) above; and |
| (xiv) | such other information agreed between such Finance Party and the Borrowers, |
to enable such numbering service provider to provide its usual syndicated loan numbering identification services.
| (b) | The Parties acknowledge and agree that each identification number assigned to this Agreement, the Facility and/or one or more Transaction Obligors by a numbering service provider and the information associated with each such number may be disclosed to users of its services in accordance with the standard terms and conditions of that numbering service provider. |
| (c) | Each Obligor represents, on behalf of itself and the other Transaction Obligors, that none of the information set out in sub-paragraphs (i) to (xiv) of paragraph (a) above is, nor will at any time be, unpublished price-sensitive information. |
| (d) | The Facility Agent shall notify the Guarantor and the other Finance Parties of: |
| (i) | the name of any numbering service provider appointed by the Facility Agent in respect of this Agreement, the Facility and/or one or more Transaction Obligors; and |
| (ii) | the number or, as the case may be, numbers assigned to this Agreement, the Facility and/or one or more Transaction Obligors by such numbering service provider. |
| 43.5 | Entire agreement |
This Clause 43 (Confidential Information) constitutes the entire agreement between the Parties in relation to the obligations of the Finance Parties under the Finance Documents regarding Confidential Information and supersedes any previous agreement, whether express or implied, regarding Confidential Information.
| 43.6 | Inside information |
Each of the Finance Parties acknowledges that some or all of the Confidential Information is or may be price-sensitive information and that the use of such information may be regulated or prohibited by applicable legislation including securities law relating to insider dealing and market abuse and each of the Finance Parties undertakes not to use any Confidential Information for any unlawful purpose.
| 43.7 | 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 43.2 (Disclosure of Confidential Information) except where such disclosure is made to any of the persons referred to in that paragraph during the ordinary course of its supervisory or regulatory function; |
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| (b) | upon becoming aware that Confidential Information has been disclosed in breach of this Clause 43 (Confidential Information); and |
| (c) | in respect of any publicity regarding the Facility or any of the terms thereof which shall be agreed in advance by the Guarantor and the Facility Agent unless otherwise required in connection with the Guarantor’s reporting obligations under or in connection with the rules and regulations of the US Securities Exchange Commission and any US Stock Exchange applicable to the Guarantor. |
| 43.8 | Continuing obligations |
The obligations in this Clause 43 (Confidential Information) are continuing and, in particular, shall survive and remain binding on each Finance Party for a period of 12 months from the earlier of:
| (a) | the date on which all amounts payable by the Borrowers under or in connection with this Agreement have been paid in full and all Commitments have been cancelled or otherwise cease to be available; and |
| (b) | the date on which such Finance Party otherwise ceases to be a Finance Party. |
| 44 | COUNTERPARTS |
Each Finance Document may be executed in any number of counterparts, and this has the same effect as if the signatures on the counterparts were on a single copy of the Finance Document.
147
SECTION 12
GOVERNING LAW AND ENFORCEMENT
| 45 | GOVERNING LAW |
This Agreement and any non-contractual obligations arising out of or in connection with it are governed by English law.
| 46 | ENFORCEMENT |
| 46.1 | 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 Borrowers accept that the courts of England are the most appropriate and convenient courts to settle Disputes and accordingly no Borrower will argue to the contrary. |
| (c) | This Clause 46.1 (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. |
| 46.2 | Service of process |
| (a) | Without prejudice to any other mode of service allowed under any relevant law, each Borrower (other than a Borrower incorporated in England and Wales): |
| (i) | irrevocably appoints Hill Dickinson Services (London) Limited at its current address at The Broadgate Tower, 20 Primrose Street, London EC2A 2EW, England, 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 Borrower of the process will not invalidate the proceedings concerned. |
| (b) | If any person appointed as an agent for service of process is unable for any reason to act as agent for service of process, the Borrowers (on behalf of all the Obligors) must immediately (and in any event within five 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. |
| 47 | PATRIOT ACT NOTICE |
Each of the Secured Parties notifies the Borrowers that pursuant to the requirements of the PATRIOT Act and the policies and practices of the Secured Parties, each of the Secured Parties is required to obtain, verify and record certain information and documentation that identifies each Borrower, which information includes the name and address of each Borrower and such other information that will allow the Facility Agent and each of the Lenders to identify each Borrower in accordance with the PATRIOT Act.
This Agreement has been entered into on the date stated at the beginning of this Agreement.
148
EXECUTION PAGES
BORROWERS
| SIGNED by | GEORGIOS PANAGAKIS | ) | ||
| as attorney-in-fact | ) ) | |||
| for and on behalf of | ) | |||
| RHODES SHIPPING CORPORATION | ) | |||
| in the presence of: | ) | |||
| Witness’ signature: | /s/ Moria Horaha |
) | ||
| Witness’ name: | Moria Horaha | ) | ||
| Witness’ address: | WATSON FARLEY & WILLIAMS | ) | ||
| 348 SYNGROU AVENUE | ||||
| KALLITHEA 176 74 | ||||
| ATHENS - GREECE | ||||
| SIGNED by | GEORGIOS PANAGAKIS | ) | ||
| as attorney-in-fact | ) ) | |||
| for and on behalf of | ) | |||
| CRETE SHIPPING CORPORATION | ) | |||
| in the presence of: | ) | |||
| Witness’ signature: | /s/ Moria Horaha |
) | ||
| Witness’ name: | Moria Horaha | ) | ||
| Witness’ address: | WATSON FARLEY & WILLIAMS | ) | ||
| 348 SYNGROU AVENUE | ||||
| KALLITHEA 176 74 | ||||
| ATHENS - GREECE | ||||
| SIGNED by | GEORGIOS PANAGAKIS | ) | ||
| as attorney-in-fact | ) ) | |||
| for and on behalf of | ) | |||
| SKYROS SHIPPING CORPORATION | ) | |||
| in the presence of: | ) | |||
| Witness’ signature: | /s/ Moria Horaha |
) | ||
| Witness’ name: | Moria Horaha | ) | ||
| Witness’ address: | WATSON FARLEY & WILLIAMS | ) | ||
| 348 SYNGROU AVENUE | ||||
| KALLITHEA 176 74 | ||||
| ATHENS - GREECE | ||||
149
| ORIGINAL LENDERS | ||||
| SIGNED by |
CHARALAMPOS KAZANTZIS |
) | ||
| duly authorised |
) ) | |||
| for and on behalf of |
) | |||
| FIRST-CITIZENS BANK & |
) | |||
| TRUST COMPANY |
) | |||
| in the presence of: |
) | |||
| Witness’ signature: |
/s/ Moria Haraka |
) | ||
| Witness’ name: |
Moria Haraka |
) | ||
| Witness’ address: |
WATSON FARLEY & WILLIAMS |
) | ||
| 348 SYNGROU AVENUE |
||||
| KALLITHEA 176 74 |
||||
| ATENS - GREECE |
||||
| FACILITY AGENT |
||||
| SIGNED by |
CHARALAMPOS KAZANTZIS |
) | ||
| duly authorised |
) ) | |||
| for and on behalf of |
) | |||
| FIRST-CITIZENS BANK & |
) | |||
| TRUST COMPANY |
) | |||
| in the presence of: |
) | |||
| Witness’ signature: |
/s/ Moria Haraka |
) | ||
| Witness’ name: |
Moria Haraka |
) | ||
| Witness’ address: |
WATSON FARLEY & WILLIAMS |
) | ||
| 348 SYNGROU AVENUE |
||||
| KALLITHEA 176 74 |
||||
| ATENS - GREECE |
||||
| SECURITY AGENT |
||||
| SIGNED by |
CHARALAMPOS KAZANTZIS |
) | ||
| duly authorised |
) ) | |||
| for and on behalf of |
) | |||
| FIRST-CITIZENS BANK & |
) | |||
| TRUST COMPANY |
) | |||
| in the presence of: |
) | |||
| Witness’ signature: |
/s/ Moria Haraka |
) | ||
| Witness’ name: |
Moria Haraka |
) | ||
| Witness’ address: |
WATSON FARLEY & WILLIAMS |
) | ||
| 348 SYNGROU AVENUE |
||||
| KALLITHEA 176 74 |
||||
| ATENS - GREECE |
||||
150
Exhibit 4.66
Additional Clauses
to
the Bareboat Charter Party dated 14 February 2023 (this “Charter”) by
GLORY OCEAN SHIPPING S.A. (as to 99% share) and TEMM
MARITIME CO., LTD. (as to 1% share) as owner (the “Owners”) and
Koufonisi Shipping Corporation as charterer (the “Charterers”)
in respect of MV “NAVIOS FELIX” (the “Vessel”)
| 32. | DELIVERY |
(a) The Charterers shall take delivery of the Vessel under this Charter simultaneously with delivery by the Sellers (as defined in Clause 1 of this Charter) as sellers to the Owners as buyers under the MOA, and the Owners shall be obliged to deliver the Vessel to the Charterers hereunder in the same moment as the Owners are taking delivery of the Vessel under the MOA.
(b) In the event that the Vessel is not delivered to Owners under the MOA for any reason, this Charter shall automatically terminate.
(c) The Owners warrant that the Vessel, at time of delivery, is free from all charters, encumbrances, mortgages and maritime liens or any other debts whatsoever, other than (i) those incurred prior to the delivery of the Vessel hereunder, (ii) this Charter and (iii) the mortgage over the Vessel, assignment of insurance in respect of the Vessel and the assignment of the charter hires in respect hereof in favour of THE CHUGOKU BANK, LTD. (the “Mortgagee”).
(d) The Vessel shall be delivered under this Charter in the same condition and with the same equipment, inventory and spare parts as she is delivered to the Owners under the MOA. The Charterers know the Vessel’s condition at the time of delivery, and expressly agree that the Vessel’s condition as delivered under the MOA is acceptable and in accordance with the provisions of this Charter. The Vessel shall be delivered to the Charterers under this Charter strictly “as is/where is”, and the Charterers shall waive any and all claims against the Owners under this Charter on account of any conditions, seaworthiness, representations, warranties expressed or implied in respect of the Vessel (including but not limited to any bunkers, oils, spare parts and other items whatsoever) on delivery.
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| 33. | ISM CODE |
During the currency of this Charter the Charterers shall procure at the costs and expenses and time of the Charterers that the Vessel and the “company” (as defined by the ISM code) shall comply with the requirements of the ISM code. Upon request the Charterers shall provide a copy of relevant documents of compliance (DOC) and safety management certificate (SMC) to the Owners. For the avoidance of any doubt any loss, damage, expense or delay caused by the failure on the part of the “Company” to comply with the ISM code shall be for the Charterers’ account.
| 34. | CHARTER PERIOD |
| (a) | The Owners shall let to the Charterers and the Charterers shall take the Vessel on charter for the period and upon the terms and conditions contained herein. |
| (b) | Subject always to the provisions hereto, the period of the chartering of the Vessel hereunder (hereinafter referred to as the “Charter Period”) shall comprise (unless terminated at an earlier date in accordance with the terms hereof) a firm charter period of 10 years from the date of the delivery of the Vessel by the Owners to the Charterers under this Charter (the “Delivery Date”) with up to 60 days more or less, provided always that the chartering of the Vessel hereunder may be terminated by the Owners pursuant to Clause 41 or shall terminate in the event of the Total Loss or Compulsory Acquisition of the Vessel subject to, and in accordance with provisions of Clause 40. |
| 35. | CHARTER HIRE |
Monthly Hire Rate
After the delivery of Vessel, the Charterers shall pay the hire monthly in advance for the Charter Period, which consist of (i) Monthly Fixed Hire, (ii) Monthly Variable Hire and (iii) Monthly Owners’ profit:
(i) Monthly Fixed Hire (same as Owners’ loan principal repayment based on 10 years equal monthly repayment schedule with US$750,000 balloon) is the sum of US$ 260,416.667- for Vessel, which is equal to one one hundred twentieth (1/120) of the initial Charter Principal Balance minus US$750,000 balloon; and
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(ii) Monthly Variable Hire is calculated from the number of the days in any relevant month, and daily variable hire in accordance with the following formula:
Monthly Variable Hire = Daily Variable Hire x the number of the days in the relevant month
Daily Variable Hire = Charter Principal Balance x (2.0% + one (1) month ICE LIBOR as applicable for the month in respect of which such Daily Variable Hire is to be calculated) / 360
Applicable one (1) month ICE LIBOR to be confirmed ten (10) Banking Days prior to hire due date (The both parties to discuss again about the exact date when the date for delivery of the vessel gets closer.). The Owners shall notify the Charterers in writing of the Monthly Variable Hire due on any due date for hire by sending to the Charterers a duly issued invoice for that Monthly Variable Hire and Monthly Fixed Hire at least four (4) Banking Days before such due date.
Charter Principal Balance means US$32,000,000.- less the aggregate Monthly Fixed Hire as has at any relevant time been paid to the Owners for Vessel.
Should the ICE LIBOR fail to negative interest rate, zero (0) is to be applied as ICE LIBOR.
Should the ICE LIBOR is abolished, alternate indicator shall be discussed, agreed between both party and applied to this calculation.
(iii) Monthly Owners profit: US$20,000/month for Vessel.
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“Banking Day” shall mean a day on which banks are open in Japan, Piraeus/Greece, Germany, London and New York.
Hire to be payable monthly in advance into the Owners designated account as the fund available on the due date.
No address commission to Charterers.
| 36. | PAYMENTS |
| (a) | Notwithstanding anything to the contrary contained in this Charter, all payments by the Charterers hereunder (whether by way of hire or otherwise) shall be made as follows:- |
| (i) | not later than 11:00 a.m. (New York time) on one Banking Day prior to the date on which the relevant payment is due under the terms of this Charter: and |
| (ii) | in United States Dollars to the bank account in the name of the Owners established and maintained in THE CHUGOKU BANK, LTD. Kure Branch, as more specifically notified later by the Owners in writing (or such other bank or banks as may from time to time be notified by the Owners to the Charterers by not less than fourteen (14) days’ prior written notice) for the account of the Owners. |
| (b) | If any day for the making of any payment hereunder shall not be a Banking Day (as defined in Clause 35 hereof) the due date for payment of the same shall be the next following Banking Day. |
| (c) | Subject to the terms of this Charter, the Charterers’ obligation to pay hire in accordance with the requirements of Clause 35 and this Clause 36 and to pay certain amount of insurance benefit pursuant to Clause 40 (e) and to pay the Termination Compensation pursuant to Clause 42 shall be absolute irrespective of any contingency whatsoever, including (but not limited to) (i) any failure or delay on the part of any party hereto or thereto, whether with or without fault on its part, other than the Owners, in performing or complying with any of the terms or covenants hereunder, (ii) any insolvency, bankruptcy, reorganization, arrangement, readjustment of debt, dissolution, liquidation or similar proceedings by or against the Owners or the Charterers or any change in the constitution of the Owners or the Charterers or any other person, (iii) any invalidity or unenforceability or lack of due authorization of or other defect in this Charter, or (iv) any other cause which would or might but for this provision have the effect of terminating or in any way affecting any obligation of the Charterers under this Charter. |
4
| (d) | In the event of failure by the Charterers to pay within three (3) Banking Days after the due date for payment thereof, or in the case of a sum payable on demand, the date of demand therefor, any hire or other amount payable by them under this Charter, the Charterers will pay to the Owners on demand interest on such hire or other amount from the date of such failure to the date of actual payment (both before and after any relevant judgment or winding up of the Charterers) at the rate determined by the Owners and certified by them to the Charterers (such certification to be conclusive in the absence of manifest error) to be the aggregate of (i) two & one-half per centum (21⁄2 %) and (ii) the London Interbank Offered Rate for US Dollar deposits of not more than one month’s duration (as selected by the Owners or their funders in the light of the likely duration of the default in question) (as such rate is from time to time quoted by leading banks in the London Interbank Market). Interest payable by the Charterers as aforesaid shall be compounded at such intervals as the Owners shall determine and shall be payable on demand. |
| (e) | Any interest payable under this Charter shall accrue from day to day and shall be calculated on the actual number of days elapsed and a three hundred and sixty (360) day year. |
| (f) | In this Charter, unless the context otherwise requires, “month” means a period beginning in one calendar month (and, in the case of the first month, on the date of delivery hereunder) and ending in the succeeding calendar month on the day numerically corresponding to the day of the calendar month in which such period started provided that if there is no such numerically corresponding day, such period shall end on the last day in the relevant calendar month and “monthly” shall be construed accordingly. |
| 37. | FLAG AND CLASS |
| (a) | The Vessel shall upon the Delivery Date be registered in the name of the Owners under the Panamanian flag. The Owners and Charterers agree to keep the Panamanian flag during the Charter Period, subject to Clause 37(c). |
| (b) | The Owners shall have no right to transfer the Vessel’s classification society. |
5
The Charterers shall, at any time after the Delivery Date and at the Charterers’ expense, have the right to transfer the Vessel’s classification society from Nippon Kaiji Kyokai to any other classification society at least equivalent to Nippon Kaiji Kyokai.
| (c) | Further, in the event that the Charterers need to change the flag of the Vessel for its commercial or operational reason, the Charterers can change the flag with the prior written Owner’s consent, which should not be unreasonably withheld, provided however that: |
| (i) | the Owners may reject such change of flag if the proposed flag will cause any problem for the Mortgagee (in the reasonable opinion of the Mortgagee); |
| (ii) | the Owners shall have the right to take redelivery the Vessel under the Panamanian flag, and accordingly If the Vessel is redelivered to the Owners without the purchase by the Charterers under Clause 49 hereof and she is then under the flag of any state other than Panama, on demand, the Owners may change such flag to the Panamanian flag so that the Owners may take redelivery of the Vessel under the Panamanian flag (in which case the Charterer shall cooperate with the Owners for change to the Panamanian flag); and |
| (iii) | any expenses and time (including, but not limited to, documented legal charges for finance documents for the Mortgagee) in relation to change of flag (including charge to the Panamanian flag) shall be for the Charterers’ account. |
| (d) | With the prior written consents of the Owner and the Mortgagee (which shall not be unreasonably withheld) and subject to the Charterers’ supplying the standard de-registration agreement reasonably satisfactory to the Mortgagee, the Charterers are entitled to establish the standard bareboat charter registration on the Vessel at the costs, expense (including but not limited to, documented legal charges for finance documents for the Mortgagee, if any) and time of the Charterers. |
| (e) | If during the Charter Period there are modifications made to the Vessel which are compulsory for the Vessel to comply with change to rules and regulations to which operation of the Vessel is required to conform, the cost relating to such modifications shall be for the account of the Charterers. |
| (f) | The Owners will arrange the Vessel’s registration under Panama flag and recordation of their mortgage and for the issuance of all Vessel’s initial certificates of the flag at the Owners’ cost. Thereafter the Charterers are responsible to arrange for the renewal of such certs at the Charterers’ cost throughout the Charter Period |
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| 38. | IMPROVEMENT AND ADDITIONS |
The Charterers shall have the right to fit additional equipment and to make severable improvements and additions at their expense and risk. Such additional equipment, improvements and additions shall be removed from the Vessel without causing any material damage to the Vessel (any such damage being made good by the Charterers at their time and expense) provided however that the Charterers shall redeliver the Vessel without removing such additional equipment, improvements and additions if the Owners consent to such non-removal before the redelivery.
The Charterers shall also have the right to make structural or non-severable improvements and additions to the Vessel at their own time, costs and expense and risk provided that such improvements and additions do not diminish the market value of the Vessel and are not likely to diminish the market value of the Vessel during or at the end of the Charter Period and do not in any way affect or prejudice the marketability or the useful life of the Vessel and are not likely to affect or prejudice the marketability or the useful life of the Vessel during or at the end of the Charter Period.
In the event of any structural modifications to Vessel or installation of new equipment becoming necessary for the continued operation of Vessel by reason of new class regulations or by compulsory legislation to which operation of Vessel is required to conform, the cost of such compulsory modifications shall be for the Charterers’ account.
| 39. | UNDERTAKING |
The Charterers undertake and agree that throughout the Charter period they will:-
| • | notify the Owners in writing of any Termination Event (or event of which they are aware which, with the giving of notice and/or lapse of time or other applicable condition, would constitute a Termination Event); |
| 40. | INSURANCE, TOTAL LOSS AND COMPULSORY ACQUISITION |
| (a) | For the purposes of this Charter, the term “Total Loss” shall include actual or constructive or compromised or agreed or arranged total |
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| loss of the Vessel including any such total loss as may arise during a requisition for hire. “Compulsory Acquisition” shall have the meaning assigned thereto in Clause 25(b) hereof. |
| (b) | The Charterers undertake with the Owners that throughout the Charter Period:- |
| (i) | they will keep the Vessel insured in the first class underwriter’s standard form as the Owners shall in writing approve, which approval shall not be unreasonably withheld, with such insurers (including P&I and war risks associations) as shall be reasonably acceptable to the Owners with deductibles reasonably acceptable to the Owners (it being agreed and understood by the Charterers that there shall be no element of self- insurance or insurance through captive insurance companies without the prior written consent of the Owners); |
| (ii) | they will be properly entered in and keep entry of the Vessel with P&I Club that is a member of the International Group of Protection and Indemnity Association for the full commercial value and tonnage of the Vessel and against all prudent P&I Risks in accordance with the rules of such association or club including, in case of oil pollution liability risks equal to the highest level of cover from time to time available under the basic entry with such P&I (but always a minimum of USD1,000,000,000); |
| (iii) | The policies in respect of the insurances against fire and usual marine risks and policies or entries in respect of the insurances against war risks shall, in each case, include the following loss payable provisions:- |
| (a) | For so long as the Vessel is mortgaged and in accordance with the Deed of Assignment of insurances entered or to be entered into between the Charterers and any mortgagee (the “Assignee”): |
Until such time as the Assignee shall have notified the insurers to the contrary:
| (i) | All recoveries hereunder in respect of an actual, constructive or compromised or arranged total loss |
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| shall be paid in full to the Assignee without any deduction or deductions whatsoever and applied in accordance with clause 40 (e); |
| (ii) | All other recoveries not exceeding United States Dollars Five Hundred Thousand (US$500,000.00) shall be paid in full to the Charterers or to their order without any deduction or deductions whatsoever; and |
| (iii) | All other recoveries exceeding United States Dollars Five Hundred Thousand (US$500,000.00) shall, subject to the prior written consent of the Assignee be paid in full to the Charterers or their order without any deduction whatsoever. |
| (b) | During any periods when the Vessel is not mortgaged: |
| (i) | All recoveries hereunder in respect of an actual, constructive or compromised or arranged total loss shall be paid in full to the Owners without any deduction or deductions whatsoever and applied in accordance with clause 40 (e); |
| (ii) | All other recoveries not exceeding United States Dollars Two Million (US$2,000,000.00) shall be paid in full to the Charterers or to their order without any deduction or deductions whatsoever; and |
| (iii) | All other recoveries exceeding United States Dollars Two million (US$2,000,000.00) shall, subject to the prior written consent of the Owners be paid in full to the Charterers or their order without any deduction whatsoever, subject to the fulfillment of the provisions of Clause 44; |
and the Owners and Charterers agree to be bound by the above provisions.
| (iv) | the Charterers shall procure that duplicates of all cover notes, policies and certificates of entry shall be furnished to the Owners for their custody; |
| (v) | the Charterers shall procure that the insurers and the war risk and protection and indemnity associations with which the Vessel is entered shall |
9
| (A) | furnish the Owners with a letter or letters of undertaking in relevant underwriter’s standard form and in accordance with the underwriters’ rules. |
| (B) | supply to the Owners such information in relation to the insurances effected, or to be effected, with them as the Owners may from time to time reasonably require: and |
| (vi) | the Charterers shall use all reasonable efforts to procure that the policies, entries or other instruments evidencing the insurances are endorsed to the effect that the insurers shall give to the Owners prior written notification of any amendment, suspension, cancellation or termination of the insurances in accordance with the underwriters’ guidance and rules. |
| (c) | Notwithstanding anything to the contrary contained in Clauses 13 and any other provisions hereof, the Vessel shall be kept insured during the Charter Period in respect of marine and war risks on hull and machinery basis (The Charterers shall have the option, to take out on a full hull and machinery basis increased value or total loss cover in an amount not exceeding Thirty per centum (30%) of the total amount insured from time to time) for not less than the amounts specified in column (b) in the table set out below in respect of the one-yearly period during the Charter Period specified in column (a) (on the assumption that the first such period commences on the Delivery Date) against such amount (hereinafter referred to as the “Minimum Insured Value”): |
| (a) | (b) | |||
| Year | Minimum Insured Value | |||
| 1 |
US$ | 35,200,000 | ||
| 2 |
US$ | 31,762,500 | ||
| 3 |
US$ | 28,325,000 | ||
| 4 |
US$ | 24,887,500 | ||
| 5 |
US$ | 21,450,000 | ||
| 6 |
US$ | 18,012,500 | ||
| 7 |
US$ | 14,575,000 | ||
| 8 |
US$ | 11,137,500 | ||
| 9 |
US$ | 7,700,000 | ||
| 10 |
US$ | 4,262,500 | ||
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| (d) | (i) If the Vessel shall become a Total Loss or be subject to Compulsory Acquisition the Chartering of the Vessel to the Charterers hereunder shall cease and the Charterers shall:- |
| (A) | immediately pay to the Owners all hire, and any other amounts, which have fallen due for payment under this
Charter and have not been paid as at and up to the date on which the Total Loss or Compulsory Acquisition occurred (the “Date of Loss”) together with interest thereon at a rate reflecting the Owners’ reasonable cost of funds at
such intervals, which amount to be agreed between the Owners and the Charterers and shall cease to be under any liability to pay any hire, but not any other amounts, thereafter becoming due and payable under this Charter, |
| (B) | for the purposes of this sub-clause, the expression “relevant Minimum Insured Value” shall mean the Minimum Insured Value applying to the one-year period in which the Date of Loss occurs. |
| (ii) | For the purpose of ascertaining the Date of Loss:- |
| (A) | an actual total loss of the Vessel shall be deemed to have occurred at noon (London time) on the actual date the Vessel was lost but in the event of the date of the loss being unknown the actual total loss shall be deemed to have occurred at noon (London time) on the date on which it is acknowledged by the insurers to have occurred: |
| (B) | a constructive, compromised, agreed, or arranged total loss of the Vessel shall be deemed to have occurred at noon (London time) on the date that notice claiming such a total loss of the Vessel is given to the insurers, or, if the insurers do not admit such a claim, at the date and time at which a total loss is subsequently admitted by the insurers or adjudged by a competent court of law or arbitration tribunal to have |
11
| occurred. Either the Owners or, with the prior written consent of the Owners (such consent not to be unreasonably withheld), the Charterers shall be entitled to give notice claiming a constructive total loss but prior to the giving of such notice there shall be consultation between the Charterers and the Owners and the party proposing to give such notice shall be supplied with all such information as such party may request; and |
| (C) | Compulsory Acquisition shall be deemed to have occurred at the time of occurrence of the relevant circumstances described in Clause25 (b) hereof. |
| (e) | All moneys payable under the insurance effected by the Charterers pursuant to Clauses 13 and 40, or other compensation, in respect of a Total Loss or pursuant to Compulsory Acquisition of the Vessel shall be received in full by the Owners (or the Mortgagees as assignees thereof) and applied by the Owners (or, as the case may be, the Mortgagees):- |
FIRST, in payment of all the Owners’ costs incidental to the collection thereof,
SECONDLY, in or towards payment to the Owners (to the extent that the Owners have not already received the same in full) of a sum equal to the aggregate of (i) unpaid but due hire under this Charter and unpaid interest thereon up to and including the Date of Loss and (ii) the “Termination Amount” (defined below) as at the Date of Loss, and
THIRDLY, in payment of any surplus to the Charterers by way of compensation for early termination.
“Termination Amount” shall mean:
| (A) | in case that Date of Loss is at or after the end of 4th year of the Charter Period, the Termination Amount shall be equal to the Purchase Option Price payable under Clause 49 which shall be calculated based on the Date of Loss; and |
| (B) | in case that the Date of Loss is before the 4th year of the Charter Period, the Termination Amount shall be as follows: |
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| (date) | (amount) | |||
| as at the Delivery Date: |
US$ | 34,087,500 | ||
| at the end of 1st year of the Charter Period: |
US$ | 30,855,500 | ||
| at the end of 2nd year of the Charter Period: |
US$ | 27,623,500 | ||
| at the end of 3rd year of the Charter Period: |
US$ | 24,391,500., | ||
provided that, in relation to (B), if Date of Loss is between the two dates as specified above, then the Termination Amount shall be adjusted proportionally on the basis of 360 days a year.
| (f) | The Charterers and the Mortgagee shall execute the ”Assignment of Insurances” of which contents and wording shall be mutually agreed between the Owners and the Charterers. |
| 41. | TERMINATION EVENTS |
| (a) | Each of the following events shall be a “Termination Event” for purposes of this Charter:- |
| (i) | if any installment of hire or any other sum payable by the Charterers under this Charter (including any sum expressed to be payable by the Charterers on demand) shall not be paid at its due date or within ten (10) Banking Days following the due date of payment and such failure to pay is not remedied within three (3) Banking Days of receipt by the Charterers of written notice from the Owners notifying the Charterers of such failure and requesting that payment is made; or |
| (ii) | Save in circumstances where requisition for hire or compulsory requisition result in termination of insurances for the Vessel, if either (A) the Charterers shall fail at any time to effect or maintain any insurances required to be effected and maintained under this Charter, or any insurer shall avoid or cancel any such insurances (other than where the relevant avoidance or cancellation results from an event or circumstance outside the reasonable control of the Charterers and the relevant insurances are reinstated or re-constituted in a manner meeting the requirements of this Charter within seven (7) days of such avoidance or cancellation) or the Charterers shall commit any breach of or make any misrepresentation in respect of any such insurances the result of which the relevant insurer avoids the policy or otherwise excuses or releases itself from all or any of its liability thereunder, or (B) any |
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| of the said insurances shall cease for any reason whatsoever to be in full force and effect (other than where the reason in question is outside the reasonable control of the Charterer and the relevant insurances are reinstated or re-constituted in a manner meeting the requirements of this Charter within seven (7) days of such cease); or |
| (iii) | if the Charterers shall at any time fail to observe or perform any of their material obligations under this Charter, other than those obligations referred to in sub-clause (i) or sub-clause (ii) of this Clause 41(a), and such failure to observe or perform any such obligation is either not remediable or is remediable but is not remedied within thirty (30) days of receipt by the Charterers of a written notice from the Owners requesting remedial action; or |
| (iv) | if any material representation or warranty by the Charterers in connection with this Charter or in any document or certificate furnished to the Owners by the Charterers in connection herewith or therewith shall prove to have been untrue, inaccurate or misleading in any material respect when made (and such occurrence continues unremedied for a period of thirty (30) days after receipt by the Charterers of written notice from the Owners requesting remedial action): or |
| (v) | if a petition shall be presented (and not withdrawn or stayed within sixty (60) days) or an order shall be made or an effective resolution shall be passed for the administration or winding-up of the Charterers (other than for the purpose of a reconstruction or amalgamation during and after which the Charterers remain solvent and the terms of which have been previously approved in writing by the Owners which approval shall not be unreasonably withheld) or if an encumbrancer shall take possession or an administrative or other receiver shall be appointed of the whole or any substantial part of the property, undertaking or assets of the Charterers or if an administrator of the Charterers shall be appointed (and, in any such case, such possession is not given up or such appointment is not withdrawn within sixty (60) days) or if anything analogous to any of the foregoing shall occur under the laws of the place of the Charterers’ incorporation, or |
| (vi) | if the Charterers shall stop payments to all of its creditors or shall cease to carry on or suspend all or a substantial part of their business or shall be unable to pay their debts, or shall admit in writing their inability to pay their debts, as they become due or shall otherwise become or be adjudicated insolvent; or |
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| (vii) | if the Charterers shall apply to any court or other tribunal for, a moratorium or suspension of payments with respect to all or a substantial part of their debts or liabilities, or |
| (viii) | (A) | (a) if the Vessel is arrested or detained (other than for reasons solely attributable to the Owners or to those for whom, for the purposes of this provision, the Owners shall be deemed responsible, including without limitation, any legal person who, at the date hereof or at any time in the future is affiliated with the Owners) and such arrest or detention is not lifted within ninety (90) days (or such longer period as the Owners shall reasonably agree in the light of all the circumstances) of the date on which the Vessel has been arrested or detained, or (b) if any petition of any public auction or other sale proceeding (following such arrest or detention) is filed or such proceeding is commenced or ordered by the competent court or other authority (except that the Charterer promptly contested in good faith and which is continuing), | ||
| (B) | if a distress or execution shall be levied or enforced upon or sued out against all or any substantial part of the property or assets of the Charterers and shall not be discharged or stayed within ninety (90) days; or | |||
| (ix) | if any consent, authorization, license or approval necessary for this Charter to be or remain the valid legally binding obligations of the Charterers, or to the Charterers to perform their obligations hereunder or thereunder, shall be materially adversely modified or is not granted or is revoked, suspended, withdrawn or terminated or expires and is not renewed (provided that the occurrence of such circumstances shall not give rise to a Termination Event if the same are remedied within thirty (30) days of the date of their occurrence); or |
| (x) | if (a) any legal proceeding for the purpose of the reconstruction or rehabilitation of the Charterers is commenced and continuing in any jurisdiction and (b) the Owners receive a termination notice from the receiver, trustee or others of the Charterers which informs the termination/rejection of the Charter pursuant to the relevant laws, codes and regulations applicable to such proceeding. |
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| (b) | A Termination Event shall constitute (as the case may be) either a repudiatory breach of, or breach of condition by the Charterers under, this Charter or an agreed terminating event the occurrence of which will (in any such case) entitle the Owners by notice to the Charterers to terminate the chartering of the Vessel under this Charter and recover the amounts provided for in Clause 42(c) either as liquidated damages or as an agreed sum payable on the occurrence of such event. |
| 42. | OWNERS’ RIGHTS ON TERMINATION |
| (a) | At any time after a Termination Event shall have occurred and be continuing, the Owners may, by notice to the Charterers immediately, or on such date as the Owners shall specify, terminate the chartering by the Charterers of the Vessel under this Charter, 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. For the avoidance of doubt, in case of the termination of the Charter in accordance with 41 (a) (x) hereof, the Charter shall be deemed to be terminated upon receipt by the Owners of the termination notice set forth in Clause 41 (a) (x) hereof. |
| (b) | On or at any time after termination of the chartering by the Charterers of the Vessel pursuant to Clause 42(a) hereof the Owners shall be entitled to retake possession of the Vessel, the Charterers hereby agreeing that the Owners, for that 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. |
| (c) | If the Owners pursuant to Clause 42(a) hereof give notice to terminate the chartering by the Charterers of the Vessel, the Charterers shall pay to the Owners on the date of termination (the “Termination Date”), the aggregate of (A) all hire due and payable, but unpaid, under this Charter to (and including) the Termination Date together with interest accrued thereon pursuant to Clause 36(d) hereof from the due date for payment thereof to the Termination Date, (B) any sums, other than hire, due and payable by the Charterers, but unpaid, under this Charter together with interest accrued thereon pursuant to Clause 36(d) to the Termination Date and (C) any actual direct financial loss suffered by the Owners which direct loss shall be determined as the shortfall, if any, between (a) the current market value of the Vessel (average value as estimated by two |
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|
independent valuers such as major London brokers i.e. Arrow Valuations Ltd, Barry Rogliano Salles, Braemar ACM Shipbroking, H Clarkson & Co. Ltd., E.A. Gibsons Shipbrokers, Fearnleys,
Galbraith, Simpson Spencer & Young, Howe Robinson & Co Ltd London and Maersk Broker K.S. (to include, in each case, their successors or assigns and such subsidiary or other company in the same corporate group through which
valuations are commonly issued by each of these brokers), or such other first-class independent broker as the Owners and Charterers may agree in writing from time to time) and (b) the Termination Amount (as defined in Clause 40(e)) to be
calculated based on the Termination Date |
| (d) | If the Charter is terminated in accordance with this Clause 42 the Charterers shall immediately redeliver the Vessel at a safe and ice-free port or place as indicated by the Owners. The Vessel shall be redelivered to the Owners in substantially the same condition and class as that in which she was delivered, fair wear and tear not affecting class excepted. |
| (e) | The Owners agree that if following termination of the Charter under this Clause, the Owners sell or otherwise transfer the Vessel to a third party, or enter into any other arrangement with a third party with an option to purchase the Vessel, then the Owners shall pay to the Charterers after that sale (i) the amount of the sale price less (ii) the aggregate of the unpaid Termination Compensation and the Termination Amount (as defined in Clause 40(e)) which would be payable by the Charterers as set out in Clause 49 as at the date of such sale (which shall include, for the avoidance of doubt, any costs and expenses incurred by the Owners arising from or in relation to the termination and the re-possession of the Vessel and operation, repair (as the case may be) and such sale of the Vessel). |
| 43. | NAME |
The Charterers shall, subject only to prior notification to the relevant authorities of the jurisdiction in which for the time being the Vessel is registered, be entitled from time to time to change the name of the 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
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fly their own house flag. Painting and installment shall be at Charterers’ expense and time. The Charterer shall also have the liberty to change the name of the Vessel during the Charter Period at the expense and time of the Charterers (including the legal charge for finance documents for the Mortgagee, if any).
The Owners shall have no right to change the name of the Vessel during the Charter Period.
| 44. | MORTGAGE and ASSIGNMENT |
The Owners confirm that they are familiar with the terms of the assignment of insurances made or to be made by the Charterers in favour or the Mortgagee, and they agree to the terms thereof and will do nothing that conflicts therewith, excepting that the Owners shall be entitled to assign its rights, title and interest in and to this Charter to the Mortgagee or its assignee. Neither party shall assign its right or obligations or part of thereof to any third party without the written consent of the other, unless otherwise expressly permitted herein.
In respect of the Vessel the Owners undertake not to borrow more than the respective purchase option prices as set out at the relevant milestone in Clause 49 hereof.
The Owners have the right to register a first preferred mortgage on the Vessel in favour of the Mortgagee securing a loan under the Loan Agreement under standard mortgages and security documentation. In which case, the Owners undertake to procure from the Mortgagee a Letter of Quiet Enjoyment in a form and substance acceptable to the Charterers.
The Charterers agree to sign an acknowledgement of the Owners’ charterhire assignment or any other comparable document reasonably required by the Mortgagee, in favour of the Mortgagee. During the course of the Charter the Owners have the right to register a substitute mortgage in favour of another bank provided such registration is effected in a similar amount to the loan amount outstanding with the Mortgagee at that time and only if such substitute mortgagee executes a Letter of Quiet Enjoyment in favour of the Charterers in the same form as that provided by the Mortgagee or the form acceptable for the Charterers. The Charterers will then agree to sign a charterhire assignment in favour of the substitute mortgage in a form as shall be agreed by the Charterers, which agreement not be unreasonably withheld. Any cost incurred by the Charterers shall be for Owners’ account.
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Subject to the term and conditions of this Charter, the Charterers also agree that the Owners have the right to assign its rights, title and interest in and to the insurances by way of assignment of insurance in respect of the Vessel to and in favour of the Assignee in a form and substance acceptable to Charterers and the Assignee.
Owners shall procure that any mortgage and charterhire assignment shall be subject to this Charter and to the rights of the Charterers hereunder, in accordance with, and subject to, a Letter of Quiet Enjoyment.
In the event that the Owners execute security of any nature (including but not limited to any mortgage, assignment of insurances) over the Vessel then the Owners hereby undertake and agree as a condition of this Charter to procure that the beneficiary of such security executes in favour of the Charterers a letter of quiet enjoyment in such form and content as is reasonably acceptable to the Charterers, and the effectiveness of this assignment clause is subject to the agreement of a letter of Quiet Enjoyment on or before delivery of the Vessel.
The Charterers shall not assign charter nor sub-charter Vessel on a bareboat basis except with the prior consent in writing of the Owners, which shall not be unreasonably withheld. Such Owners’ prior written consent will not be required provided that Vessel remain at all times under the management of Navios Shipmanagement Inc. or an affiliate of Navios Shipmanagement Inc. or of Angeliki Frangou Furthermore, the Charterers may assign or transfer the charter by way of novation to a subsidiary or affiliate of Navios Maritime Partners L.P. without Owners’ prior written consent, in which case, (i) the Charterers, the Owners and such new charterers as permitted under this Clause shall enter into a novation agreement on or before such novation at the Charterers’ cost and (ii) new assignment of insurances and assignment of charterhires as mentioned above and an amendment of the Mortgage (as the case may be) shall be made in favour of the Mortgagee at the Charterers’ cost.
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| 45. | REDELIVERY INSPECTION |
Prior to redelivery and without interference to the operation of the Vessel, the Owners, at their risk and expense, shall have the right provided that such right is declared at least 20 days prior to the expected redelivery date to carry out an underwater inspection of the Vessel by Class approved diver and in the presence of Class surveyor and Owners’ and Charterers’ representatives. Should any damages in the Vessel’s underwater parts be found that will impose a condition or recommendation of Vessel’s class then:
| a) | In case Class imposes a condition or recommendation of class that does not require drydocking before next scheduled drydocking. Charterers shall pay to Owners the estimated cost to repair such damage in way which is acceptable to Class, which to be direct cost to repair such damage only, as per average quotation for the repair work obtained from two reputable independent shipyards at or in the vicinity of the redelivery port, one to be obtained by Owners and one by Charterers within 2 Banking Days from the date of imposition of the condition/recommendation unless the parties agree otherwise. |
| b) | In case Class require Vessel to be drydocked before the next scheduled drydocking the Charterers shall drydock the Vessel at their expense prior to redelivery of the Vessel to the Owners and repair same to Class satisfaction. |
In such event the Vessel shall be redelivered at the port of the dockyard.
| 46. | REDELIVERY |
The Charterers shall redeliver to the Owners the Vessel with everything belonging to her at the time of redelivery including spare parts on board, used or unused subject to the Clause 38 hereof. The Owners shall take over and pay the Charterers for remaining bunkers and unused lubricating oils including hydraulic oils, and greases, unbroached provisions, paints, ropes and other consumable stores as per Clause 53 at the Charterers’ purchased prices with supporting vouchers. For the purpose of this clause, the Charterers shall withhold the Hire two last hire payments (the “Withheld Hire”) and shall offset the cost of bunkers, unused lubricating oils and unbroached provisions etc., remaining on board at the time of redelivery from the Withheld Hire. If the Withheld Hire is not sufficient to cover the cost of bunkers, unused lubricating oils, and unbroached provisions etc. the Owners shall settle the outstanding amount within 3 Banking Days after redelivery of the Vessel.
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Personal effects of the Master, officers and crew including slop chest, hired equipment, if any and the following listed items are excluded and shall be removed by the Charterers prior to or at the time of redelivery of the Vessel:
| • | E-mail equipment not part of GMDSS |
| • | Gas bottles |
| • | Electric deck air compressor |
| • | Blasting and painting equipment |
| • | Videotel (or similar) film library |
| 47. | MORTGAGE NOTICE |
The Charterers keep prominently displayed in the chart room, engine room and the master’s cabin of the Vessel a framed printed notice in plain type (the print on which shall measure at least six inches by nine inches) reading as follows:-
NOTICE OF MORTGAGE
“This Vessel is covered by a First Preferred Ship Mortgage given to THE CHUGOKU BANK, LTD., a banking corporation duly organized and existing under the laws of Japan, having its head office at 3-6-1, Hon-dori, Kure, Hiroshima-Pref., Japan, its successors and assigns, under the authority of the laws of the Republic of Panama. Under the terms of said Mortgage, neither the owner of this Vessel, any charterer, the Master of this Vessel, nor any other person has any right, power or authority to create, incur or permit to be imposed upon the Vessel any liens, maritime or otherwise, other than the lien of said Mortgage and liens for crew’s wages or salvage.”
| 48. | SALE OF VESSEL BY OWNERS |
| 1. | The Owners have the right to sell the Vessel to a reputable third party (“Purchaser”) at any time during the Charter Period with the prior written consent of the Charterers and provided that (i) the Purchaser agrees to take over the benefit and burden of this Charter, (ii) such ownership change does not result in any reflagging of the Vessel, (iii) such ownership change does not result in the Charterers being obliged to increase any payment under this Charter, (iv) such ownership change does not increase the actual or contingent obligations of the Charterers under this Charter, and (v) the Charterers shall not be liable for the costs and expenses (including legal fees) incurred in the sale of the Vessel by the Owners under this Clause 48. |
| 2. | The Owners shall give the Charterers at least one month’s prior written notice of any sale. |
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| 3. | Subject to 48.1, the Charterers and Owners undertake with each other to execute one or more novation agreements (or other documents required under applicable law) to novate the rights and obligations of the Owners under this Charter to the Purchaser such novation agreement(s) or other documents to be in such form and substance acceptable to the Charterers and such novation will be effective upon delivery of the Vessel from the Owners to the Purchaser.” |
| 49. | CHARTERERS’ OPTION TO PURCHASE VESSEL |
| 1. | From (and including) the end of 4th year of the Charter Period, the Charterers have the option to purchase the Vessel at the following purchase price. The Charterers’ purchase option is subject to Charterers’ written declaration to the Owners latest three (3) months prior to the expected date of delivery, such date to be indicated by the Charterers in their declaration notice (such purchase option price at such expected date of delivery indicated in the declaration notice as calculated by the following formula, being called the “Purchase Option Price”). |
The Purchase Option Price shall be calculated in accordance with the following formula (Pls also see purchase option price appendix ):
“Purchase Option Price = (A) + (B) + (C)”
(A) = Charter Principal Balance
(B) = Owners’ profit starting from US$1,450,000. at the end of 4th year and de-escalate US$75,000/year to the end of 10th year
(C) = Owners’ broker commission: 1.00% over the above (A) + (B) for Vessel
| 2. | The Purchase Option Price shall be paid in full free of bank charges to the Owners (as seller) upon the delivery date of the Vessel under this Clause. |
| 3. | Immediately prior to delivery of the Vessel by the Owners to the Charterers under the PO MOA (as defined in Clause 49.4) the Parties shall execute a Protocol of Redelivery and Acceptance under this Charter (the “Redelivery Protocol”) and save in respect of any claims accrued under this Charter prior to the date and time of the Redelivery Protocol, this Charter shall terminate forthwith. |
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| 4. | Upon the date of any written notification by the Charterers to the Owners of their intention to purchase the Vessel, the Owners and the Charterers shall be deemed to have unconditionally entered into a contract to sell and purchase the Vessel for the Purchase Option Price on and in strict conformity with the terms and conditions contained in the Memorandum of Agreement attached to this Charter as Exhibit A (the “PO MOA”). |
| 50. | MISCELLANEOUS |
| (a) | The terms and conditions of this Charter and the respective rights of the Owners and the Charterers shall not be waived or varied otherwise than by an instrument in writing of the same date as or subsequent to this Charter executed by both parties or by their duly authorized representatives. |
| (b) | Unless otherwise provided in this Charter whether expressly or by implication, time shall be of the essence in relation to the performance by the Charterers of each and every one of their obligations hereunder. |
| (c) | No failure or delay on the part of the Owners or the Charterers in exercising any power, right or remedy hereunder or in relation to the Vessel shall operate as a waiver thereof nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise of any such right or power or the exercise of any other right, power or remedy. |
| (d) | If any terms or condition of this Charter shall to any extent be illegal invalid or unenforceable the remainder of this Charter shall not be affected thereby and all other terms and condition shall be legal valid and enforceable to the fullest extent permitted by law. |
| (e) | The respective rights and remedies conferred on the Owners and the Charterers by this Charter are cumulative, may be exercised as often as the Owners or the Charterers (as the case may be) think fit and are in addition to, and are not exclusive of, any rights and remedies provided by law. |
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| 51. | COMMUNICATIONS |
Except as otherwise provided for in this Charter, all notices or other communications under or in respect of this Charter to either party hereto shall be in writing and shall be made or given to such party at the address, facsimile number or e-mail address appearing below (or at such other address, facsimile number or e-mail address as such party may hereafter specify for such purposes to the other by notice in writing):-
| (i) | in the case of the Owners c/o FUNADA KAIUN CO., LTD. |
| Address | : 13-7 Nigata Sanbashi-dori Kure Hiroshima, 737-0154 | |||
| Telephone | : +81-823-79-0005 | |||
| Telefax | : +81-823-79-0031 | |||
| : hiroyuki.funada@funadakaiun.com |
| (ii) | in the case of the Charterers c/o Navios Shipmanagement Inc. |
| Address | : 85 Akti Miaouli Street, 18538, Piraeus, Greece | |||
| Telephone | : 30-210-4595000 | |||
| : ops@navios.com | ||||
| legal@navios.com, tech@navios.com legal_corp@navios.com |
| (iii) | in the case of the Brokers c/o Mitsui & Co., Ltd. |
| Address | : 2-1, Otemachi 1-Chome, Chiyodaku, Tokyo 100-8631, Japan | |||
| Telephone | : +81-3-3285-4327 | |||
| Telefax | : | |||
| : tkmyh@dg.mitsui.com |
A written notice includes a notice by facsimile or e-mail. A notice or other communication received on a non-working day or after business hours in the place of receipt shall be deemed to be served on the next following working day in such place.
Subject always to the foregoing sentence, any communication by personal delivery or letter shall be deemed to be received on delivery, any communication by e-mail shall be deemed to be received upon transmission of the automatic answerback of the addresses and any communication by facsimile shall be deemed to be received upon appropriate acknowledgment by the addressee’s receiving equipment.
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All communications and documents delivered pursuant to or otherwise relating to this Charter shall either be in English or accompanied by a certified English translation.
| 52. | TRADING IN WAR RISK AREA |
The Charterers shall be permitted to order the Vessel into an area subject to War Risks as defined in Clause 26 without consent of the Owners provided that all Marine, War and P&I Insurance are maintained with full force and effect and the Charterers shall pay any and all additional premiums to maintain such insurance.
| 53. | INVENTORIES, OIL AND STORES |
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.
The Owners shall at the time of 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 Charterers’ purchased prices with supporting vouchers. However, the Charterers shall not pay to the Owners at time of delivery for any bunkers, lubricating oil, provisions, paints, ropes and consumable stores which the Charterers have supplied to the Vessel at the Charterers’ expense prior to delivery. 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.
| 54. | INDEMNITY FOR POLLUTION RISKS |
The Charterers shall indemnify the Owners against the following Pollution Risks:-
| (a) | liability for damages or compensation payable to any person arising from pollution; |
| (b) | the costs of any measures reasonably taken for the purpose of preventing, minimizing or cleaning up any pollution together with any liability for losses or damages arising from any measures so taken; |
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| (c) | liability which the Owners and/or the Charterers may incur, together with costs and expenses incidental thereto, as the result of escape or discharge or threatened escape discharge of oil or any other substance; |
| (d) | the costs or liabilities incurred as a result of compliance with any order or direction given by any government or authority for the purpose of preventing or reducing pollution or the risk of pollution; provided always that such costs or liabilities are not recoverable under the Hull and Machinery Insurance Policies on the Vessel; |
| (e) | liability which the Owners and/or the Charterers may incur to salvors under the exception to the principal of “no cure-no pay” in Article 1 (b) of Lloyds Standard Form of Salvage Agreement (LOF 1990); and |
| (f) | liability which the Charterers may incur for the payment of fines in respect of pollution in so far as such liability may be covered under the rules of the P&I Club. |
| 55. | TRADE AND COMPLIANCE CLAUSE |
The Charterers and the Owners hereby agree that no person/s or entity/ies under this Charter will be individual(s) or entity(ies) designated under any applicable national or international law imposing trade and economic sanctions.
Further, the Charterers and the Owners agree that the performance of this Charter will not require any action prohibited by sanctions or restrictions under any applicable national or international law or regulation imposing trade or economic sanctions.
| 56. | ANTI-BRIBERY AND ANTI-CORRUPTION |
The Charterers and the Owners hereby agree that in connection with this Contract and/or any other business transactions related to it, they as well as their sub-contractors and each of their affiliates, directors, officers, employees, agents, and every other person acting on its and its sub-contactors’ behalf, shall perform all required duties, transactions and dealings in compliance with all applicable laws, rules, regulations relating to anti-bribery and anti-money laundering.
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| 57 | COSTS AND EXPENSES |
| (a) | The parties hereto agree that all operational cost including required cost in relation to Vessel’s flag (such as tonnage tax, insurance and crew certs etc) would be for the Charterers’ account. However, all other cost (such as financing cost /cost for registration and discharge of their mortgage etc) would be for the Owners’ account. |
| (b) | For this Charter and the MOA, each party should bear its own costs unless otherwise agreed herein. |
| 58 | MANAGEMENT COMPANY |
The management company shall be Navios Shipmanagement Inc., or any other management company affiliated to Angeliki Frangou. The Charterers may change the management company with the Owners’ prior consent not to be unreasonably withheld, unless such change is to an affiliate of Navios Shipmanagement Inc. or of Angeliki Frangou in which case Owners’ consent will not be required.
| 59 | BBC SURVEY (Further to Clause 8) |
In case the Vessel has any incidents/casualties, Owners have the right to carry out physical inspection more than once per year at Owners’ expense. Charterers will do their best to organize the timing and place based on Owners’ preferred timing. Charterers’ technical and operation team will organize accordingly. Owners shall have the right to visit the Vessel at dry-dock after the completion of DD works.
| 60 | SANCTION |
| (1) | In this Clause, the following provisions shall apply where any sanction, prohibition or restriction is imposed on any specified persons, entities or bodies including the designation of any specified vessels or fleets under United Nations Resolutions or trade or economic sanctions, laws or regulations of the European Union, United States of America, United Kingdom, Panama, Japan, the Flag State of the Vessel and/or the Marshall Islands. |
| (2) | The Owners and the Charterers hereby represent and warrant to each other that as of the even date hereof, they have never received any notice of legal proceedings or investigation in relation to the sanctions, restrictions or designation referred to in sub-clause (1) and have never acknowledged existence of such legal proceedings or investigation. |
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| (3) | The Owners hereby warrants that at the date of entering into this Agreement and during the currency of this Charter: |
| (i) | none of the Owners, their directors and officers is subject to any of the sanctions, prohibitions, restrictions or designation referred to in sub-clause (1) which prohibit or render unlawful any performance by the Charterers and/or the Owners under this Charter; |
| (ii) | the Owners are letting and performing other obligations hereunder as principals and not as agent, trustee or nominee of any person with whom transactions are prohibited or restricted under sub-clause (1); and |
| (iii) | the Owners will promptly inform the Charterers of receipt of any notice of proceeding or investigation referred to in sub-clause (2) and send the copy of such notice and any relevant documents they have received in relation thereto. |
| (4) | The Charterers hereby warrants that at the date of entering into this Agreement and during the currency of this Charter: |
| (i) | none of the Charterers, the management company under Clause 58 hereof, their respective directors and officers is subject to any of the sanctions, prohibitions, restrictions or designation referred to in sub-clause (1) which prohibit or render unlawful any performance by the Charterers and/or the Owners under this Charter; the Charterers are hiring and performing other obligations hereunder as principals and not as agent, trustee or nominee of any person with whom transactions are prohibited or restricted under sub-clause (1); |
| (ii) | the Vessel is not a designated vessel under any of the sanctions, prohibitions, restrictions or designation referred to in sub-clause (1); |
| (iii) | the Charterer will promptly inform the Owners of receipt of any notice of proceeding or investigation referred to in sub-clause (2) and send the copy of such notice and any relevant documents they have received in relation thereto; and |
| (iv) | on demand the Charterers will provide the Owners of all Relevant Documents in relation to the Vessel and/or the cargo on board the Vessel. In this paragraph (v), “Relevant Documents” shall mean (A) such documents as required to prove that the Charterers are not in breach of the sanctions, prohibitions, restrictions or designation referred to in sub-clause (1) and/or (B) such documents as required for the Owners and/or the Mortgagee to disclose to any competent authority in relation to the sanctions, prohibitions, restrictions or designation referred to in sub-clause (1), provided that the Relevant Documents shall be reasonably and practicably obtainable to the Charterers. |
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| 61 | DOWN PAYMENT |
The Charterers shall pay US$8,000,000 to the Owners as down payment to the Purchase Option Price upon delivery of the Vessel. The down payment will be netted off against payment of the purchase price under the MEMORANDUM OF AGREEMENT signed by Koufonisi Shipping Corporation and GRORY OCEAN SHIPPING S.A.dated on 20th February 2023 (herein called “MOA”) at the time of delivery of the Vessel under the MOA and this Charter pursuant to clause 32.
The down payment is not part of the Purchase Option Price of Clause 49 and shall be kept by the Owners on delivery of the Vessel under the PO MOA referred to in Clause 49.
The down payment does not bear interest and is non-refundable.For the avoidance of any doubt, should the Charter be terminated due to Total Loss, the Owners shall make the payment referred to in Clause 40, but shall have no obligation to make any refund to the Charterers in respect of the Down payment.
| 62. | NAABSA Clause |
The Vessel may lie safely aground at any safe berth or safe place where it is customary and safe for vessels of similar size and type to lie.
(end)
29
Exhibit 4.67
Dated September 2022
DUCALE MARINE INC.
KLEIMAR NV
OPAL SHIPPING CORPORATION
IRIS SHIPPING CORPORATION
HIGHBIRD MANAGEMENT INC.
CORSAIR SHIPPING LTD.
as joint and several Borrowers
and
THE BANKS AND FINANCIAL INSTITUTIONS
listed in Schedule 1
as Lenders
and
CRÉDIT AGRICOLE CORPORATE AND INVESTMENT BANK
BNP PARIBAS
as Bookrunners and Arrangers
and
CRÉDIT AGRICOLE CORPORATE AND INVESTMENT BANK
BNP PARIBAS
as Mandated Lead Arrangers
and
CRÉDIT AGRICOLE CORPORATE AND INVESTMENT BANK
as Agent and Security Trustee
SUPPLEMENTAL AGREEMENT
relating to
a loan facility of (originally) up to US$105,000,000
Index
| Clause | Page | |||||
| 1 | Interpretation |
3 | ||||
| 2 | Agreement of the Creditor Parties |
4 | ||||
| 3 | Conditions Precedent |
4 | ||||
| 4 | Representations and Warranties |
5 | ||||
| 5 | Amendments to Loan Agreement and other Finance Documents |
5 | ||||
| 6 | Further Assurances |
7 | ||||
| 7 | Fees and Expenses |
8 | ||||
| 8 | Communications |
8 | ||||
| 9 | Supplemental |
8 | ||||
| 10 | Law and Jurisdiction |
8 | ||||
| Execution |
||||||
| Execution Page | 9 | |||||
| Schedules | ||||||
| Schedule 1 Lenders | 14 | |||||
| Schedule 2 Effective Date Certificate | 15 | |||||
THIS AGREEMENT is made on September 2022
BETWEEN
| (1) | DUCALE MARINE INC., a corporation incorporated and existing under the laws of the Marshall Islands whose registered address is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 (“Borrower A”), KLEIMAR NV, a public limited liability company incorporated in Belgium and having its registered office at 5 Suikerrui, 2000 Antwerp, Belgium, registered with the Crossroads Bank for Enterprises under number 0426.557.894, RLE Antwerp, Antwerp division (“Borrower B”), OPAL SHIPPING CORPORATION, a corporation incorporated and existing under the laws of the Marshall Islands whose registered address is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 (“Borrower C”), IRIS SHIPPING CORPORATION, a corporation incorporated and existing under the laws of the Marshall Islands whose registered address is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 (“Borrower D”), HIGHBIRD MANAGEMENT INC., a corporation incorporated and existing under the laws of the Marshall Islands whose registered address is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 (“Borrower E”) and CORSAIR SHIPPING LTD., a corporation incorporated and existing under the laws of the Marshall Islands whose registered address is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 (“Borrower F”), as joint and several Borrowers; |
| (2) | THE BANKS AND FINANCIAL INSTITUTIONS listed in Schedule 1, as Lenders; |
| (3) | CRÉDIT AGRICOLE CORPORATE AND INVESTMENT BANK a sociéte anonyme incorporated under the laws of France acting 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 Nanterre and BNP PARIBAS whose registered office (siege social) is at 16 Boulevard des Italiens, 75009 Paris, France, acting through its office at Grands Moulins de Pantin, 9 rue du Débarcadère, 93500 Pantin, France as Bookrunners and Arrangers; |
| (4) | CRÉDIT AGRICOLE CORPORATE AND INVESTMENT BANK a sociéte anonyme incorporated under the laws of France acting 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 Nanterre and BNP PARIBAS whose registered office (siege social) is at 16 Boulevard des Italiens, 75009 Paris, France, acting through its office at Grands Moulins de Pantin, 9 rue du Débarcadère, 93500 Pantin, France as Mandated Lead Arrangers; and |
| (5) | CRÉDIT AGRICOLE CORPORATE AND INVESTMENT BANK a sociéte anonyme incorporated under the laws of France acting 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 Nanterre as Agent and Security Trustee. |
BACKGROUND
| (A) | By a loan agreement dated 13 December 2021 (as amended and supplemented from time to time, the “Loan Agreement”) and made between (i) the Borrowers, (ii) the Lenders, (iii) the Agent, (iv) the Mandated Lead Arrangers and (v) the Security Trustee, the Lenders agreed to make available to the Borrowers a loan facility in an amount of (originally) up to US$105,000,000, of which an amount of US$92,000,000 is outstanding by way of principal on the date hereof. |
| (B) | By an Agency and Trust Agreement dated 13 December 2021 entered into pursuant to the Loan Agreement, it was agreed that the Security Trustee would hold the Trust Property on trust for the Lenders. |
| (C) | By a guarantee dated 5 January 2022 (the “Original Guarantee”) executed by the Navios Maritime Holdings Inc. (the “Original Guarantor”) in favour of the Security Trustee, the Original Guarantor has guaranteed the Borrowers’ liabilities under the Loan Agreement. |
| (D) | By a subordination agreement dated 3 January 2022 (the “Subordination Agreement”) executed by (i) the Original Guarantor, (ii) Navios Shipmanagement Holdings Corporation as subordinated creditor (the “Subordinated Creditor”) and (iii) the Security Trustee, the Subordinated Creditor agreed to the terms of the subordination of its liabilities owed by the Original Guarantor. |
| (E) | The Borrowers have requested that the Lenders give their consent: |
| (i) | to a change in the corporate structure which results in each Borrower being the indirect subsidiary of the New Guarantor; |
| (ii) | for each of the Existing Shareholders to enter into a share purchase agreement in order to sell their shares which they hold in the relevant Borrower to the New Shareholder; |
| (iii) | to the release of the Original Guarantor from its obligations and liabilities under the Original Guarantee; and |
| (iv) | to the release of the Subordinated Creditor from its obligations and liabilities under the Subordination Agreement, |
(together, the “Request”).
| (F) | The Lenders’ consent to the Borrowers’ request referred to in Recital (E) is subject to inter alia: |
| (i) | the execution of a new guarantee by the New Guarantor guaranteeing the obligations of the Borrowers under the Loan Agreement (as amended and supplemented by this Agreement); and |
| (ii) | the execution of the New Share Pledges by the New Shareholder pledging the shares of the Borrowers under the Loan Agreement (as amended and supplemented by this Agreement). |
| (G) | This Agreement sets out the terms and conditions on which the Creditor Parties agree, with effect on and from the Effective Date, to amend the Loan Agreement. |
2
IT IS AGREED as follows:
| 1 | INTERPRETATION |
| 1.1 | Defined expressions |
Words and expressions defined in the Loan Agreement and the other Finance Documents shall have the same meanings when used in this Agreement unless the context otherwise requires.
| 1.2 | Definitions |
In this Agreement, unless the contrary intention appears:
“Effective Date” means the date on which the conditions precedent in Clause 3 (Conditions Precedent) are satisfied as confirmed by the Effective Date Certificate;
“Effective Date Certificate” means a certificate to be executed by the Agent and issued to the Borrowers in the form set out in Schedule 2;
“Existing Shareholder” means:
| (a) | in relation to Borrower A, Borrower E and Borrower F, Anemos Maritime Holdings Inc., a corporation incorporated under the laws of the Marshall Islands whose registered address is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, MH96960; |
| (b) | in relation to Borrower B, Camco Holdings Limited and NAV Holdings Limited, each a company incorporated under the laws of Malta whose registered office is at 25/16 Vincenti Buildings, Strait Street, Valletta VLT 1432, Malta; |
| (c) | in relation to Borrower C, Aquis Marine Corp., a corporation incorporated under the laws of the Marshall Islands whose registered address is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, MH96960; and |
| (d) | in relation to Borrower D, Navios Asia LLC, a limited liability company formed under the laws of the Marshall Islands whose registered address is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, MH96960; |
“Finance Documents” shall have the meaning ascribed thereto in the Loan Agreement and shall also include for avoidance of doubt the supplemental letters dated 22 March 2022 and 6 April 2022;
“Loan Agreement” means the loan agreement referred to in Recital (A);
“New Guarantee” means a guarantee, to be executed by the New Guarantor in favour of the Security Trustee, in respect of the obligations of the Borrowers under the Loan Agreement (as amended and supplemented by this Agreement) and other Finance Documents in such form as the Lenders may approve or require;
“New Guarantor” means Navios Maritime Partners L.P., a limited partnership formed in the Marshall Islands whose registered address is at Trust Company Complex, Ajeltake Road, Ajeltake Island, MH 96960, Majuro, Marshall Islands;
3
“New Share Pledges” means each of the new share pledges to be executed by the New Shareholder in relation to the shares in Ducale Marine Inc., Opal Shipping Corporation, Iris Shipping Corporation, Highbird Management Inc. and Corsair Shipping Ltd.; and
“New Shareholder” means Veja Navigation Company, a corporation incorporated and existing in the Marshall Islands whose registered address is at Trust Company Complex, Ajeltake Road, Ajeltake Island, MH 96960, Majuro, Marshall Islands.
| 1.3 | Application of construction and interpretation provisions of Loan Agreement |
Clauses 1.2 to 1.5 of the Loan Agreement apply, with any necessary modifications, to this Agreement.
| 2 | AGREEMENT OF THE CREDITOR PARTIES |
| 2.1 | Agreement of the Lenders |
The Lenders agree subject to and upon the terms and conditions of this Agreement to the Request.
| 2.2 | Agreement of the Creditor Parties |
The Creditor Parties agree, subject to and upon the terms and conditions of this Agreement, to the consequential amendment of the Loan Agreement and the other Finance Documents in connection with the matters referred to in Clause 2.1.
| 2.3 | Effective Date |
The agreement of the Lenders and the other Creditor Parties contained in Clauses 2.1 and 2.2 shall have effect on and from the satisfaction of the conditions referred to in Clause 3 (conditions precedent) and the issuance of the Effective Date Certificate.
| 3 | CONDITIONS PRECEDENT |
The conditions referred to in Clause 2.3 are that the Agent shall have received the following documents and evidence in all respects in form and substance satisfactory to the Agent and its lawyers on or before the CPs Satisfaction Date:
| (a) | documents of the kind specified in paragraphs 1 of Schedule 3, Part A to the Loan Agreement in relation to the New Shareholder and the New Guarantor; |
| (b) | documents of the kind specified in paragraphs 2, 3 and 4 of Schedule 3, Part A to the Loan Agreement in relation to the Borrowers in connection with their execution of this Agreement, in the case of the New Guarantor, the New Guarantee and in the case of the New Shareholder, the New Share Pledges updated with appropriate modifications to refer to this Agreement; |
| (c) | an original of this Agreement duly executed by the parties to it and counter-signed by the Approved Managers; |
| (d) | an original of the New Guarantee duly executed by the parties to it; |
| (e) | an original of each New Share Pledge duly executed by the parties to it; |
4
| (f) | original of each new share certificate together with original ancillary documents under the New Share Pledges; |
| (g) | documentary evidence that the agent for service of process named in the New Guarantee and the New Share Pledges has accepted its appointment; |
| (h) | favourable opinions from lawyers appointed by the Agent on such matters concerning the laws of Marshall Islands and Belgium and such other relevant jurisdictions as the Agent may require; |
| (i) | evidence that the fees specified in Clause 7 have been received in full by the Agent; and |
| (j) | any other document or evidence as the Agent may request in writing from the Borrowers. |
| 4 | REPRESENTATIONS AND WARRANTIES |
| 4.1 | Repetition of Loan Agreement representations and warranties |
The Borrowers represent and warrant to the Creditor Parties that the representations and warranties in clause 10 of the Loan Agreement remain true and not misleading if repeated on the date of this Agreement.
| 4.2 | Repetition of Finance Document representations and warranties |
Each Borrower and each of the other Security Parties represents and warrants to the Creditor Parties that the representations and warranties in the Finance Documents (other than the Loan Agreement) to which it is a party remain true and not misleading if repeated on the date of this Agreement.
| 5 | AMENDMENTS TO LOAN AGREEMENT AND OTHER FINANCE DOCUMENTS |
| 5.1 | Specific amendments to Loan Agreement |
With effect on and from the Effective Date, the Loan Agreement shall be amended as follows:
| (a) | by amending the definition of “Corporate Guarantor” to read as follows: |
““Navios Maritime Partners L.P., a limited partnership formed and existing under the laws of the Marshall Islands whose registered address is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960”;”
| (b) | By amending the definition of “Designated Shareholder” to read as follows: |
““Designated Unitholder” means Mrs Angeliki Frangou either directly or indirectly (through entities owned and controlled by her or trusts or foundations of which she is the beneficiary) and/or Navios Maritime Holdings Inc. or any of their affiliates being, either individually or together, the ultimate beneficial owner(s) of, or having ultimate control of the voting rights attaching to, at least 5 per cent. of all the Common Units in the Guarantor and in the plural means all of them; ”
| (c) | by amending paragraph (a) in the definition of “Finance Documents” to read: |
“(a) this Agreement, the supplemental letters dated 22 March 2022 and 6 April 2022 and the supplemental agreement dated September 2022;”
5
| (d) | by deleting paragraph (k) in the definition of “Finance Documents” renumbering paragraph (l) as paragraph (k); |
| (e) | by amending the definition of “Margin” to read as follows: |
““Margin” means 2.85 per cent. per annum;”
| (f) | by deleting the definitions of “Senior Secured Notes”, “Senior Secured Notes Indebtedness”, “Subordinated Creditor”, “Subordinated Liabilities”, “Subordinated Loan Agreement” and “Subordination Agreement”; |
| (g) | by deleting the definition of “Shareholder” and replacing it with the following definition: |
““Shareholder” means:
| (a) | in relation to Borrower A, Borrower C, Borrower D, Borrower E and Borrower F, Veja Navigation Company, a corporation incorporated under the laws of the Marshall Islands whose registered address is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, MH96960; and |
| (b) | in relation to Borrower B, Camco Holdings limited and NAV Holdings Limited, each a company incorporated under the laws of Malta whose registered office is at 25/16 Vincenti Buildings, Strait Street, Valletta VLT 1432, Malta;” |
| (h) | by amending paragraph (b) of clause 10.3 (share capital and ownership) to read as follows: |
“Borrower B is authorised to issue 4,835,003 of no par value, and the ownership of all those shares is held in registered form by the relevant Shareholder, free of any Security Interest or other claim, save for any Security Interests created by the Finance Documents.”
| (i) | by deleting the words “and under the relevant unsecured guarantee executed by each Borrower under the Senior Secured Notes and the Subordinated Loan Agreements” from paragraph (a) of clause 11.4 (no other liabilities or obligations to be incurred); and |
| (j) | by amending paragraph (k) of clause 19.1 (events of default) to read as follows: |
“the Designated Shareholders own, in aggregate, less than 5 per cent. of the issued and outstanding common units in the Corporate Guarantor;”;
| (k) | by deleting paragraph (p) of clause 19.1 (events of default) in its entirety; and |
| (l) | by deleting the words “, the Subordination Agreement” in para 1 of Schedule 3, Part A; |
| (m) | by deleting the words “the Subordinated Creditor,” in para 2 of Schedule 3, Part A; |
| (n) | by deleting the words “the Subordinated Creditor,” in para 3 of Schedule 3, Part A; |
| (o) | by deleting the words “the Subordinated Creditor,” in para 3 of Schedule 3, Part A; and |
| (p) | by replacing the wording in paragraph 3 of Schedule 3, Part B in its entirety with the following: |
“This paragraph is intentionally omitted.”
6
| 5.2 | Amendments to Finance Documents |
With effect on and from the Effective Date each of the Finance Documents other than the Loan Agreement shall be, and shall be deemed by this Agreement to have been, amended as follows:
| (a) | the definition of, and references throughout each of the Finance Documents to, the Loan Agreement and any of the Finance Documents shall be construed as if the same referred to the Loan Agreement and those Finance Documents as amended and supplemented by this Agreement; and |
| (b) | by construing references throughout each of the Finance Documents to “this Agreement”, “this Deed”, hereunder and other like expressions as if the same referred to such Finance Documents as amended and supplemented by this Agreement. |
| 5.3 | Finance Documents to remain in full force and effect |
The Finance Documents shall remain in full force and effect as amended and supplemented by:
| (a) | the amendments to the Finance Documents contained or referred to in Clauses 5.1 and 5.2; and |
| (b) | such further or consequential modifications as may be necessary to give full effect to the terms of this Agreement. |
| 6 | FURTHER ASSURANCES |
| 6.1 | Each Borrower’s and each Security Party’s obligation to execute further documents etc. |
Each Borrower and each Security Party shall:
| (a) | execute and deliver to the Security Trustee (or as it may direct) any assignment, mortgage, power of attorney, proxy or other document, governed by the law of England or such other country as the Security Trustee may, in any particular case, specify; |
| (b) | effect any registration or notarisation, give any notice or take any other step, |
which the Agent may, by notice to the Borrowers, specify for any of the purposes described in Clause 6.2 or for any similar or related purpose.
| 6.2 | Purposes of further assurances |
Those purposes are:
| (a) | validly and effectively to create any Security Interest or right of any kind which the Security Trustee intended should be created by or pursuant to the Loan Agreement or any other Finance Document, each as amended and supplemented by this Agreement, and |
| (b) | implementing the terms and provisions of this Agreement. |
7
| 6.3 | Terms of further assurances |
The Security Trustee may specify the terms of any document to be executed by the Borrowers or any Security Party under Clause 6.1, and those terms may include any covenants, powers and provisions which the Security Trustee considers appropriate to protect its interests.
| 6.4 | Obligation to comply with notice |
The Borrowers or any Security Party shall comply with a notice under Clause 6.1 by the date specified in the notice.
| 7 | FEES AND EXPENSES |
| (a) | The Borrowers shall pay to the Agent, for equal distribution to the Lenders, a non-refundable amendment fee of $20,000 on the date of this Agreement. |
| (b) | The provisions of clause 20 (fees and expenses) of the Loan Agreement shall apply to this Deed as if they were expressly incorporated in this Deed with any necessary modifications. |
| 8 | COMMUNICATIONS |
| 8.1 | General |
The provisions of clause 28 (notices) of the Loan Agreement, as amended and supplemented by this Agreement, shall apply to this Agreement as if they were expressly incorporated in this Agreement with any necessary modifications.
| 9 | SUPPLEMENTAL |
| 9.1 | Counterparts |
This Agreement may be executed in any number of counterparts.
| 9.2 | Third Party rights |
A person who is not a party to this Agreement has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce or to enjoy the benefit of any term of this Agreement.
| 10 | LAW AND JURISDICTION |
| 10.1 | Governing law |
This Agreement and any non-contractual obligations arising out of or in connection with it shall be governed by and construed in accordance with English law.
| 10.2 | Incorporation of the Loan Agreement provisions |
The provisions of clause 31 (law and jurisdiction) of the Loan Agreement, as amended and supplemented by this Agreement, shall apply to this Agreement as if they were expressly incorporated in this Agreement with any necessary modifications.
THIS AGREEMENT has been duly executed as a Deed on the date stated at the beginning of this Agreement.
8
EXECUTION PAGE
| THE BORROWERS | ||||||
| SIGNED by | ) | /s/ GEORGIOS PANAGAKIS |
||||
| for and on behalf of | ) | |||||
| DUCALE MARINE INC. | ) | |||||
| SIGNED by | ) | /s/ GEORGIOS PANAGAKIS |
||||
| for and on behalf of | ) | |||||
| KLEIMAR NV | ) | |||||
| SIGNED by | ) | /s/ GEORGIOS PANAGAKIS |
||||
| for and on behalf of | ) | |||||
| OPAL SHIPPING CORPORATION | ) | |||||
| SIGNED by | ) | /s/ GEORGIOS PANAGAKIS |
||||
| for and on behalf of | ) | |||||
| IRIS SHIPPING CORPORATION | ) | |||||
| SIGNED by | ) | /s/ GEORGIOS PANAGAKIS |
||||
| for and on behalf of | ) | |||||
| HIGHBIRD MANAGEMENT INC. | ) | |||||
| SIGNED by | ) | /s/ GEORGIOS PANAGAKIS |
||||
| for and on behalf of | ) | |||||
| CORSAIR SHIPPING LTD. | ) | |||||
9
| LENDERS | ||||||
| SIGNED by | ) | /s/ CHARALAMPOS KAZANTZIS |
||||
| for and on behalf of | ) | |||||
| CRÉDIT AGRICOLE CORPORATE | ) | |||||
| AND INVESTMENT BANK | ) | |||||
| SIGNED by | ) | /s/ CHARALAMPOS KAZANTZIS |
||||
| for and on behalf of | ) | |||||
| BNP PARIBAS | ) | |||||
| BOOKRUNNERS AND ARRANGERS | ||||||
| SIGNED by | ) | /s/ CHARALAMPOS KAZANTZIS |
||||
| for and on behalf of | ) | |||||
| CRÉDIT AGRICOLE CORPORATE | ) | |||||
| AND INVESTMENT BANK | ) | |||||
| SIGNED by | ) | /s/ CHARALAMPOS KAZANTZIS |
||||
| for and on behalf of | ) | |||||
| BNP PARIBAS | ) | |||||
| MANDATED LEAD ARRANGERS | ||||||
| SIGNED by | ) | /s/ CHARALAMPOS KAZANTZIS |
||||
| for and on behalf of | ) | |||||
| CRÉDIT AGRICOLE CORPORATE | ) | |||||
| AND INVESTMENT BANK | ) | |||||
| SIGNED by | ) | /s/ CHARALAMPOS KAZANTZIS |
||||
| for and on behalf of | ) | |||||
| BNP PARIBAS | ) | |||||
10
| AGENT | ||||||
| SIGNED by | ) | /s/ CHARALAMPOS KAZANTZIS |
||||
| for and on behalf of | ) | |||||
| CRÉDIT AGRICOLE CORPORATE | ) | |||||
| AND INVESTMENT BANK | ) | |||||
| SECURITY TRUSTEE | ||||||
| SIGNED by | ) | /s/ CHARALAMPOS KAZANTZIS |
||||
| for and on behalf of | ) | |||||
| CRÉDIT AGRICOLE CORPORATE | ) | |||||
| AND INVESTMENT BANK | ) | |||||
| Witness to all the above | ) | |||||
| Signature | ) | /s/ AIKATERINA DIMITRIOU |
||||
| Name: | ) | AIKATERINA DIMITRIOU | ||||
| Address: | ) | WATSON FARLEY & WILLIAMS 348 SYNGROU AVENUE 176 74 KALLITHEA ATHENS - GREECE |
||||
11
COUNTERSIGNED this 6th day of September 2022 for and on behalf of the following Approved Manager and Subordinated Creditor which, by its execution hereof, confirms and acknowledges that it has read and understood the terms and conditions of this supplemental agreement, that it agrees in all respects to the same and that the Finance Documents to which it is a party shall remain in full force and effect and shall continue to stand as security for the obligations of the Borrowers under the Loan Agreement.
| /s/ Georgios Akhniotis |
| Georgios Akhniotis |
| President for and on behalf of |
| NAVIOS SHIPMANAGEMENT INC. |
| /s/ Georgios Akhniotis |
| Georgios Akhniotis |
| Secretary for and on behalf of |
| KLEIMAR LTD. |
| /s/ Georgios Akhniotis |
| Georgios Akhniotis |
| President for and on behalf of |
| NAVIOS TECHNICAL MANAGEMENT S.A. |
| /s/ Anna Kalathaki |
| Anna Kalathaki |
| Secretary for and on behalf of |
| NAVIOS CORPORATION MANAGEMENT INC. |
12
COUNTERSIGNED this 6th day of September 2022 for and on behalf of Navios Maritime Partners L.P. which, by its execution hereof, confirms and acknowledges that it has read and understood the terms and conditions of this supplemental agreement.
| /s/ GEORGIOS PANAGAKIS |
| GEORGIOS PANAGAKIS Attorney-in-fact for and on behalf of |
| NAVIOS MARITIME PARTNERS L.P. |
13
SCHEDULE 1
LENDERS
| Lender | Lending Office | |
| CRÉDIT AGRICOLE CORPORATE AND INVESTMENT BANK | 12, place des Etats-Unis CS 70052 92547 Montrouge Cedex France
E-mail:
clementine.costil@ca-cib.com;
Copy: | |
| BNP PARIBAS | 9 rue Débarcadère 93 500 Pantin France
Fax: +33 (0) 1 42984355 e-mail: nurhan.gulec@bnpparibas.com; michael.neel@bnpparibas.com | |
14
SCHEDULE 2
EFFECTIVE DATE CERTIFICATE
| To: | DUCALE MARINE INC. | |
| KLEIMAR NV | ||
| OPAL SHIPPING CORPORATION | ||
| IRIS SHIPPING CORPORATION | ||
| HIGHBIRD MANAGEMENT INC. | ||
| CORSAIR SHIPPING LTD. | ||
| c/o Navios Shipmanagement Inc. 85 Akti Miaouli | ||
| Piraeus 185 38 | ||
| Greece |
[•] 2022
Supplemental Agreement dated [•] 2022 (the “Supplemental Agreement”) amending and supplementing the loan agreement dated 13 December 2021 (as supplemented and amended from time to time) and made between (i) Ducale Marine Inc., Kleimar NV, Opal Shipping Corporation, Iris Shipping Corporation, Highbird Management Inc. and Corsair Shipping Ltd. as joint and several borrowers (the “Borrowers”), (ii) the banks and financial institutions listed in schedule 1 therein as lenders (the “Lenders”), (iii) Crédit Agricole Corporate and Investment Bank and BNP Paribas as bookrunners and arrangers, (iv) Crédit Agricole Corporate and Investment Bank and BNP Paribas as mandated lead arrangers (the “Mandated Lead Arrangers”), (v) Crédit Agricole Corporate and Investment Bank as agent (the “Agent”) and (vi) Crédit Agricole Corporate and Investment Bank as security trustee (the “Security Trustee”), pursuant to which the Lenders made available to the Borrowers a senior secured term loan facility of (originally) up to US$105,000,000
Dear Sirs,
We refer to the supplemental Agreement.
Words and expressions defined in the Supplemental Agreement shall have the same meanings when used herein.
This is the Effective Date Certificate referred to in the Supplemental Agreement and it is confirmed that the Effective Date is [•] 2022.
Yours faithfully
for and on behalf of
CRÉDIT AGRICOLE CORPORATE AND INVESTMENT BANK
as Agent
15
Exhibit 4.68
Dated 13 December 2021
DUCALE MARINE INC.
KLEIMAR NV
OPAL SHIPPING CORPORATION
IRIS SHIPPING CORPORATION
HIGHBIRD MANAGEMENT INC.
CORSAIR SHIPPING LTD.
as joint and several Borrowers
and
THE BANKS AND FINANCIAL INSTITUTIONS
listed in Schedule 1
as Lenders
and
CRÉDIT AGRICOLE CORPORATE AND INVESTMENT BANK
BNP PARIBAS
as Bookrunners and Arrangers
and
CRÉDIT AGRICOLE CORPORATE AND INVESTMENT BANK
BNP PARIBAS
as Mandated Lead Arrangers
and
CRÉDIT AGRICOLE CORPORATE AND INVESTMENT BANK
as Agent and Security Trustee
LOAN AGREEMENT
relating to a loan facility of up to $105,000,000
secured on seven bulk carriers
Index
| Clause | Page | |||||
| 1 |
Interpretation | 2 | ||||
| 2 |
Loan Facility | 27 | ||||
| 3 |
Position of the Lenders | 27 | ||||
| 4 |
Drawdown | 28 | ||||
| 5 |
Interest | 29 | ||||
| 6 |
Interest Periods | 32 | ||||
| 7 |
Default Interest | 32 | ||||
| 8 |
Repayment and Prepayment | 34 | ||||
| 9 |
Conditions Precedent | 36 | ||||
| 10 |
Representations and Warranties | 37 | ||||
| 11 |
General Undertakings | 41 | ||||
| 12 |
Corporate Undertakings | 47 | ||||
| 13 |
Insurance | 49 | ||||
| 14 |
Ship covenants | 55 | ||||
| 15 |
Security Cover | 60 | ||||
| 16 |
Payments and Calculations | 62 | ||||
| 17 |
Application of Receipts | 64 | ||||
| 18 |
Application of Earnings | 65 | ||||
| 19 |
Events of Default | 68 | ||||
| 20 |
Fees and Expenses | 74 | ||||
| 21 |
Indemnities | 75 | ||||
| 22 |
No Set-off or Tax Deduction | 78 | ||||
| 23 |
Illegality, etc | 80 | ||||
| 24 |
Increased Costs | 81 | ||||
| 25 |
Set-off | 82 | ||||
| 26 |
Transfers and Changes in Lending Offices | 83 | ||||
| 27 |
Variations and Waivers by majority lenders | 88 | ||||
| 28 |
Notices | 90 | ||||
| 29 |
Supplemental | 92 | ||||
| 30 |
Confidentiality | 94 | ||||
| 31 |
Law and Jurisdiction | 98 | ||||
| 32 |
Bail-In | 99 | ||||
| Schedules | ||||
| Schedule 1 Lenders and Commitments |
[•] | |||
| Schedule 2 Drawdown Notice |
[•] | |||
| Schedule 3 Condition Precedent Documents |
[•] | |||
| Part A |
[•] | |||
| Part B |
[•] | |||
| Schedule 4 Transfer Certificate |
[•] | |||
| Schedule 5 Vessel Details |
[•] | |||
| Schedule 6 Account Details |
[•] | |||
| Execution | ||||
| Execution Pages |
[•] | |||
THIS LOAN AGREEMENT is made on 13 December 2021
PARTIES
| (1) | DUCALE MARINE INC., a corporation incorporated and existing under the laws of the Marshall Islands whose registered address is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 as Borrower A. |
| (2) | KLEIMAR NV, a public limited liability company incorporated in Belgium and having its registered office at 5 Suikerrui, 2000 Antwerp, Belgium, registered with the Crossroads Bank for Enterprises under number 0426.557.894, RLE Antwerp, Antwerp division as Borrower B. |
| (3) | OPAL SHIPPING CORPORATION, a corporation incorporated and existing under the laws of the Marshall Islands whose registered address is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 as Borrower C. |
| (4) | IRIS SHIPPING CORPORATION, a corporation incorporated and existing under the laws of the Marshall Islands whose registered address is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 as Borrower D. |
| (5) | HIGHBIRD MANAGEMENT INC., a corporation incorporated and existing under the laws of the Marshall Islands whose registered address is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 as Borrower E. |
| (6) | CORSAIR SHIPPING LTD., a corporation incorporated and existing under the laws of the Marshall Islands whose registered address is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 as Borrower F. |
| (7) | THE BANKS AND FINANCIAL INSTITUTIONS listed in Schedule 1, as Lenders. |
| (8) | CRÉDIT AGRICOLE CORPORATE AND INVESTMENT BANK a sociéte anonyme incorporated under the laws of France acting 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 Nanterre and BNP PARIBAS whose registered office (siege social) is at 16 Boulevard des Italiens, 75009 Paris, France, acting through its office at Grands Moulins de Pantin, 9 rue du Débarcadère, 93500 Pantin, France as Bookrunners and Arrangers. |
| (9) | CRÉDIT AGRICOLE CORPORATE AND INVESTMENT BANK a sociéte anonyme incorporated under the laws of France acting 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 Nanterre and BNP PARIBAS whose registered office (siege social) is at 16 Boulevard des Italiens, 75009 Paris, France, acting through its office at Grands Moulins de Pantin, 9 rue du Débarcadère, 93500 Pantin, France as Mandated Lead Arrangers. |
| (10) | CRÉDIT AGRICOLE CORPORATE AND INVESTMENT BANK a sociéte anonyme incorporated under the laws of France acting 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 Nanterre as Agent and Security Trustee. |
BACKGROUND
The Lenders have agreed to make available to the Borrowers a senior secured term loan facility, in an aggregate amount equal to the lesser of (i) $105,000,000 and (ii) 65 per cent. of the aggregate Initial Market Value of the Ships, in one advance, for the purpose of partially refinancing the Mortgage Notes Indebtedness of the Corporate Guarantor under the Mortgage Notes.
IT IS AGREED as follows:
| 1 | INTERPRETATION |
| 1.1 | Definitions |
Subject to Clause 1.5 (General Interpretation), in this Agreement:
“Account” means each of the Earnings Accounts and the Retention Account and, in the plural, means all of them;
“Account Bank” means Crédit Agricole Corporate and Investment Bank, a sociéte anonyme incorporated under the laws of France acting 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 Nanterre or any other bank or other financial institution acceptable to the Agent and the Borrowers;
“Account Pledge” means, in relation to each Account, a deed of pledge of that Account in such form as the Lenders may approve or require, and in the plural means all of them;
“Advance” means the borrowing of all or part of the Loan under this Agreement;
“Affected Lender” has the meaning given in Clause 5.7 (Market disruption);
“Agency and Trust Deed” means the agency and trust deed executed or to be executed between the Borrowers, the Lenders, the Agent and the Security Trustee in such form as the Lenders may approve or require;
“Agent” means Crédit Agricole Corporate and Investment Bank, a sociéte anonyme incorporated under the laws of France acting 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 Nanterre or any successor of it appointed under clause 5 (appointment of a new servicing bank) of the Agency and Trust Deed;
“Applicable Person” has the meaning given in Clause 29.4 (Waiver of Banking Secrecy);
“Approved Broker” means any of Arrow Sale & Purchase (UK) Limited, Barry Rogliano Salles, Braemar ACM Valuations Limited, Clarkson Valuations Limited, E.A. Gibson Shipbrokers Ltd., Fearnleys AS, Galbraith’s Limited, Simpson Spence & Young Ltd., Howe Robinson Partners Marine Evaluations Ltd, Maersk Broker A/S and Affinity (Shipping) LLP (to include, in each case, their successors or assigns and such subsidiary or other company in the same corporate group through which valuations are commonly issued by each of these brokers), or such other first-class independent broker as the Borrowers and the Agent (acting on the instructions of the Majority Lenders) may agree in writing from time to time;
“Approved Flag” means, in relation to a Ship, the flag of Marshall Islands, the flag of Liberia, the flag of Panama, the flag of Cyprus, the flag of Malta or such other flag as the Agent (acting on the instructions of the Majority Lenders) may approve as the flag on which that Ship is or, as the case may be, shall be registered;
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“Approved Flag State” means, in relation to a Ship, the Republic of the Marshall Islands, the Republic of Liberia, the Republic of Panama, the Republic of Cyprus, Republic of Malta or any other country in which the Agent (acting on the instructions of the Majority Lenders) may approve that that Ship is or, as the case may be, shall be registered;
“Approved Manager” means, in respect of the commercial and technical management of each Ship, Navios Shipmanagement or any other company (for the avoidance of doubt, other than an affiliate or subsidiary of Navios Shipmanagement or an entity affiliated to Mrs Angeliki Frangou), which the Agent (acting on the instructions of the Majority Lenders) may approve from time to time as the commercial and technical manager of any Ship (such approval not required in respect of an affiliate or subsidiary of Navios Shipmanagement or an entity affiliated to Mrs Angeliki Frangou);
“Approved Manager’s Undertaking” means, in relation to a Ship, a letter of undertaking including, without limitation, an assignment of the Approved Manager’s rights, title and interest in the Insurances of the relevant Ship executed or to be executed by the Approved Manager in favour of the Security Trustee agreeing certain matters in relation to the Approved Manager serving as the manager of that Ship and subordinating the rights of the Approved Manager against that Ship and that Borrower to the rights of the Creditor Parties under the Finance Documents, in such form as the Security Trustee, with the authorisation of the Lenders, may approve or require and, in the plural, means all of them;
“Arrangers” means Crédit Agricole Corporate and Investment Bank, a sociéte anonyme incorporated under the laws of France acting 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 Nanterre and BNP Paribas whose registered office (siege social) is at 16 Boulevard des Italiens, 75009 Paris, France, acting through its office at Grands Moulins de Pantin, 9 rue du Débarcadère, 93500 Pantin, France;
“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;
“Availability Period” means the period commencing on the date of this Agreement and ending on:
| (a) | 30 January 2022 (or such later date as the Agent acting on the instructions of the Lenders may, in its sole discretion, agree with the Borrowers); or |
| (b) | if earlier, the date on which the Total Commitments are fully borrowed, cancelled or terminated; |
“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 |
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| (c) | in relation to the United Kingdom, the UK Bail-In Legislation; |
“Balloon Instalment” has the meaning given to it in Clause 8.1 (Amount of repayment instalments);
“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”; |
“Bookrunners” means Crédit Agricole Corporate and Investment Bank, a sociéte anonyme incorporated under the laws of France acting 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 Nanterre and BNP Paribas whose registered office (siege social) is at 16 Boulevard des Italiens, 75009 Paris, France, acting through its office at Grands Moulins de Pantin, 9 rue du Débarcadère, 93500 Pantin, France;
“Borrower” means each of Borrower A, Borrower B, Borrower C, Borrower D, Borrower E and Borrower F and, in the plural, means all of them;
“Borrower A” means Ducale Marine Inc., a corporation incorporated and existing under the laws of the Marshall Islands whose registered address is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960;
“Borrower B” means Kleimar NV, a public limited liability company incorporated in Belgium and having its registered office at 5 Suikerrui, 2000 Antwerp, Belgium, registered with the Crossroads Bank for Enterprises under number 0426.557.894, RLE Antwerp, Antwerp division;
“Borrower C” means Opal Shipping Corporation, a corporation incorporated and existing under the laws of the Marshall Islands whose registered address is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960;
“Borrower D” means Iris Shipping Corporation, corporation incorporated and existing under the laws of the Marshall Islands whose registered address is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960;
“Borrower E” means Highbird Management Inc., a corporation incorporated and existing under the laws of the Marshall Islands whose registered address is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960;
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“Borrower F” means Corsair Shipping Ltd., a corporation incorporated and existing under the laws of the Marshall Islands whose registered address is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960;
“Business Day” means a day on which banks are open in London, Athens, Paris and Geneva and in respect of a day on which a payment is required to be made under a Finance Document, also in New York City;
“Charterparty” means:
| (a) | in relation to a Ship, any charterparty in respect of that Ship (including, without limitation, an Existing Charter) of a duration exceeding or capable of exceeding 12 months, made on terms and with a charterer acceptable in all respects to the Lenders; and |
| (b) | in relation to a Collateral Ship, a Collateral Charter; |
“Charterparty Assignment” means:
| (a) | in relation to a Ship, the deed of assignment of any Charterparty in favour of the Security Trustee, in such form as the Lenders may approve or require; and |
| (b) | in relation to a Collateral Ship, the deed of assignment of a Collateral Charter in favour of the Security Trustee, in such form as the Lenders may approve or require; |
“Classification Society” means a member of the IACS or any other classification society approved in writing by the Agent acting with the authorisation of the Majority Lenders;
“Code” means the United States Internal Revenue Code of 1986;
“Collateral Charter” means each of Collateral Charter A, Collateral Charter B, Collateral Charter C and Collateral Charter D as defined in term in Schedule 5 (Vessel Details) and, in the plural, means all of them;
“Collateral Charterer” means each of Collateral Charterer A, Collateral Charterer B, Collateral Charterer C and Collateral Charterer D as defined in term in Schedule 5 (Vessel Details) and, in the plural, means all of them;
“Collateral Provider” means each of Collateral Provider A, Collateral Provider B, Collateral Provider C and Collateral Provider D as defined in term in Schedule 5 (Vessel Details) and, in the plural, means all of them;
“Collateral Ship” means each of Collateral Ship A, Collateral Ship B, Collateral Ship C and Collateral Ship D as defined in term in Schedule 5 (Vessel Details) and, in the plural, means all of them;
“Commitment” means, in relation to a Lender, the amount set opposite its name in Schedule 1 or, as the case may require, the amount specified in the relevant Transfer Certificate, as that amount may be reduced, cancelled or terminated in accordance with this Agreement (and “Total Commitments” means the aggregate of the Commitments of all the Lenders);
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“Confidentiality Undertaking” means a confidentiality undertaking substantially in a recommended form of the Loan Market Association (LMA) or in any other form agreed between the Borrowers and the Agent;
“Confidential Information” means all information relating to the Borrowers, any Security Party, the Group, the Finance Documents or the Loan of which a Creditor Party becomes aware in its capacity as, or for the purpose of becoming, a Creditor Party or which is received by a Creditor Party in relation to, or for the purpose of becoming a Creditor Party under, the Finance Documents or the Loan from either:
| (a) | any member of the Group or any of its advisers; or |
| (b) | another Creditor Party, if the information was obtained by that Creditor 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 Creditor Party of Clause 30; 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 Creditor Party before the date the information is disclosed to it in accordance with paragraphs (a) or (b) above or is lawfully obtained by that Creditor Party after that date, from a source which is, as far as that Creditor Party is aware, unconnected with the Group and which, in either case, as far as that Creditor Party is aware, has not been obtained in breach of, and is not otherwise subject to, any obligation of confidentiality; and |
| (ii) | any Funding Rate or any quotation supplied to the Agent by a Reference Bank; |
“Contractual Currency” has the meaning given in Clause 21.5 (Currency indemnity);
“Contribution” means, in relation to a Lender, the part of the Loan which is owing to that Lender;
“Corporate Guarantee” means the guarantee given or to be given by the Corporate Guarantor in favour of the Security Trustee, guaranteeing the obligations of the Borrowers under this Agreement and the other Finance Documents, in such form as the Lenders may approve or require;
“Corporate Guarantor” means Navios Maritime Holdings Inc., a corporation incorporated and existing under the laws of the Marshall Islands whose registered address is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 and listed on the New York Stock Exchange;
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“CRD IV” means Directive 2013/36/EU of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2003/87/EC and repealing Directive 2006/48/EC and 2006/29/EC;
“Creditor Party” means the Agent, the Security Trustee or any Lender, whether as at the date of this Agreement or at any later time;
“CRR” means Regulation (EU) No. 575/2013 of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending regulation (EU) No. 648/2012;
“Designated Shareholder” means Mrs Angeliki Frangou either directly or indirectly (through entities owned and controlled by her or trusts or foundations of which she is the beneficiary) and her respective affiliates being, either individually or together, the ultimate beneficial owner(s) of, or having ultimate control of the voting rights attaching to, at least 10 per cent. of all the issued and outstanding voting shares in the Corporate Guarantor and in the plural means all of them;
“Dollars” and “$” means the lawful currency for the time being of the United States of America;
“Drawdown Date” means, in relation to the Advance, the date requested by the Borrowers for the Advance to be made, or (as the context requires) the date on which the Advance is actually made;
“Drawdown Notice” means a notice in the form set out in Schedule 2 (or in any other form which the Agent approves or reasonably requires);
“Earnings” means, in relation to a Ship and the Collateral Ship, all moneys whatsoever which are now, or later become, payable (actually or contingently) to the Borrower owning that Ship, the Collateral Provider or the Security Trustee and which arise out of the use or operation of that Ship, including (but not limited to):
| (a) | all freight, hire and passage moneys, compensation payable to that Borrower, the Collateral Provider or the Security Trustee in the event of requisition of the Ship or the Collateral Ship owned by it for hire, remuneration for salvage and towage services, demurrage and detention moneys and damages for breach (or payments for variation or termination) of any charterparty or other contract for the employment of that Ship or the Collateral Ship; |
| (b) | all moneys which are at any time payable under Insurances, if any, in respect of loss of earnings; and |
| (c) | if and whenever that Ship or the Collateral Ship is employed on terms whereby any moneys falling within paragraphs (a) or (b) 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 or the Collateral Ship; |
“Earnings Account” means:
| (a) | in relation to a Ship, an account in the name of the Borrower owning that Ship with the Account Bank as per Schedule 6 (Account Details), or any other account (with that or another office of the Account Bank) which replaces this Earnings Account and is designated by the Agent as the Earnings Account in respect of that Ship for the purposes of this Agreement, and, in the plural, means all of them; and |
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| (b) | in relation to a Collateral Ship, an account in the name of that Collateral Provider with the Account Bank as per Schedule 6 (Account Details), or any other account (with that or another office of the Account Bank Bank) which replaces this Earnings Account and is designated by the Agent as the Earnings Account in respect of that Collateral Ship for the purposes of this Agreement, and, in the plural, means all of them; |
“EEA Member Country” means any member state of the European Union, Iceland, Liechtenstein and Norway;
“Environmental Claim” means:
| (a) | any claim by any governmental, judicial or regulatory authority which arises out of an Environmental Incident or an alleged Environmental Incident or which relates to any Environmental Law; or |
| (b) | any claim by any other person which relates to an Environmental Incident or to an alleged Environmental Incident, |
and “claim” means a claim for damages, compensation, fines, penalties or any other payment of any kind 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 in relation to a Ship:
| (a) | any release of Environmentally Sensitive Material from that Ship; or |
| (b) | any incident in which Environmentally Sensitive Material is released from a vessel other than that Ship and which involves a collision between that Ship and such other vessel or some other incident of navigation or operation, in either case, in connection with which that Ship is actually or potentially liable to be arrested, attached, detained and/or injuncted and/or that Ship and/or the Borrower which is the owner thereof and/or any operator or manager of that 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 otherwise than from that Ship and in connection with which that Ship is actually or potentially liable to be arrested and/or where the Borrower which is the owner thereof and/or any operator or manager of that Ship is at fault or allegedly at fault or otherwise liable to any legal or administrative action; |
“Environmental Law” means any law relating to pollution or protection of the environment, to the carriage of Environmentally Sensitive Material or to actual or threatened releases of Environmentally Sensitive Material;
“Environmentally Sensitive Material” means oil, oil products 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;
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“EU Bail-In Legislation Schedule” means the document described as such and published by the Loan Market Association (or any successor person) from time to time;
“Event of Default” means any of the events or circumstances described in Clause 19.1 (Events of Default);
“Existing Charter” shall have the meaning given to that term in Schedule 5 (Vessel Details);
“Existing Charterer” shall have the meaning given to that term in Schedule 5 (Vessel Details);
“Existing Security Interest” means any Existing Security Interests created under the Mortgage Notes;
“FATCA” means:
| (a) | sections 1471 to 1474 of the Code or any associated regulations; |
| (b) | any treaty, law or regulation of any other jurisdiction, or relating to an intergovernmental agreement between the US and any other jurisdiction, which (in either case) facilitates the implementation of any law or regulation referred to in paragraph (a) above; or |
| (c) | any agreement pursuant to the implementation of any treaty, law or regulation referred to in paragraphs (a) or (b) above with the US Internal Revenue Service, the US government or any governmental or taxation authority in any other jurisdiction; |
“FATCA Deduction” means a deduction or withholding from a payment under any Finance Document required by or under FATCA;
“FATCA Exempt Party” means a party to a Finance Document that is entitled to receive payments free from any FATCA Deduction;
“FATCA FFI” means a foreign financial institution as defined in section 1471 (d)(4) of the Code which, if any Creditor Party is not a FATCA Exempt Party, could be required to make a FATCA Deduction;
“Fee Letter” means any letter or letters dated on or about the date of this Agreement between any of the Lenders, the Agent and the Security Trustee and any Security Party setting out any of the fees referred to in Clause 20 (Fees and Expenses);
“Final Maturity Date” means the earlier of:
| (a) | the date falling on the third anniversary of the Drawdown Date; and |
| (b) | 30 December 2024; |
“Finance Documents” means:
| (a) | this Agreement; |
| (b) | the Agency and Trust Deed; |
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| (c) | the Corporate Guarantee; |
| (d) | any Fee Letters; |
| (e) | the General Assignments; |
| (f) | the Mortgages; |
| (g) | the Account Pledge; |
| (h) | the Charterparty Assignments; |
| (i) | the Approved Manager’s Undertakings; |
| (j) | the Shares Security Deeds; |
| (k) | the Subordination Agreement; and |
| (l) | any other document (whether creating a Security Interest or not) which is executed at any time by a Borrower, the Corporate Guarantor, the Shareholder, the Approved Manager, the Collateral Provider or any other person as security for, or to establish any form of subordination or priorities arrangement in relation to, any amount payable to the Lenders under this Agreement or any of the other documents referred to in this definition; |
“Financial Indebtedness” means, in relation to a person (the “debtor”), a liability of the debtor:
| (a) | for principal, interest or any other sum payable in respect of any moneys borrowed or raised by the debtor; |
| (b) | under any loan stock, bond, debenture, note or other security issued by the debtor; |
| (c) | under any acceptance credit, guarantee or letter of credit facility or dematerialised equivalent made available to the debtor; |
| (d) | under a financial lease, a deferred purchase consideration arrangement or any other agreement having the commercial effect of a borrowing or raising of money by the debtor; |
| (e) | under any foreign exchange transaction, any interest or currency swap or any other kind of derivative transaction entered into by the debtor or, if the agreement under which any such transaction is entered into requires netting of mutual liabilities, the liability of the debtor for the net amount; or |
| (f) | under a guarantee, indemnity or similar obligation entered into by the debtor in respect of a liability of another person which would fall within (a) to (e) if the references to the debtor referred to the other person; |
“Funding Rate” means any rate notified to the Agent by a Lender pursuant to Clause 5.12 (Alternative rate of interest in absence of agreement);
“General Assignment” means, in relation to a Ship, a general assignment of the Earnings, the Insurances and any Requisition Compensation, in such form as the Lenders may approve or require and in the plural means all of them;
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“Group” means together, the Corporate Guarantor and its wholly-owned subsidiaries (direct or indirect) including, but not limited to, the Borrowers and the Collateral Providers from time to time during the Security Period and “member of the Group” shall be construed accordingly;
“IACS” means the International Association of Classification Societies;
“Initial Market Value” means, in relation to a Ship, the Market Value thereof determined by taking the valuation of that Ship referred to in paragraph 6 of Schedule 3 (Condition Precedent Documents), Part B;
“Insurances” means, in relation to a Ship:
| (a) | all policies and contracts of insurance, including entries of that Ship in any protection and indemnity or war risks association, which are effected in respect of that Ship, the Earnings or otherwise in relation to it whether before, on or after the date of this Agreement; and |
| (b) | all rights and other assets relating to, or derived from, any of the foregoing, including any rights to a return of a premium and any rights in respect of any claim whether or not the relevant policy, contract of insurance or entry has expired on or before the date of this Agreement; |
“Interest Period” means a period determined in accordance with Clause 6 (Interest Periods);
“Interpolated Screen Rate” means, in relation to LIBOR for an Interest Period, the rate (rounded to the same number of decimal places as the two relevant Screen Rates) which results from interpolating on a linear basis between:
| (a) | the applicable Screen Rate for the longest period (for which that Screen Rate is available) which is less than that Interest Period; and |
| (b) | the applicable Screen Rate for the shortest period (for which that Screen Rate is available) which exceeds that Interest Period, |
each as of 11.00 a.m. (London time) on the Quotation Day for the currency of the Loan;
“ISM Code” means, in relation to its application to the Borrowers, the Ships and their operation:
| (a) | ‘The International Management Code for the Safe Operation of Ships and for Pollution Prevention’, currently known or referred to as the ‘ISM Code’, adopted by the Assembly of the International Maritime Organisation by Resolution A.741(18) on 4 November 1993 and incorporated on 19 May 1994 into chapter IX of the International Convention for the Safety of Life at Sea 1974 (SOLAS 1974); and |
| (b) | all further resolutions, circulars, codes, guidelines, regulations and recommendations which are now or in the future issued by or on behalf of the International Maritime Organisation or any other entity with responsibility for implementing the ISM Code, including without limitation, the ‘Guidelines on implementation or administering of the International Safety Management (ISM) Code by Administrations’ produced by the International Maritime Organisations pursuant to Resolution A.788(19) adopted on 25 November 1995, |
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as the same may be amended, supplemented or replaced from time to time;
“ISM Code Documentation” includes, in relation to a Ship:
| (a) | the document of compliance (DOC) and safety management certificate (SMC) issued pursuant to the ISM Code within the periods specified by the ISM Code; and |
| (b) | all other documents and data which are relevant to the ISM SMS and its implementation and verification which the Agent may require; and |
| (c) | any other documents which are prepared or which are otherwise relevant to establish and maintain that Ship’s or that Borrower’s compliance with the ISM Code which the Agent may require; |
“ISM SMS” means the safety management system which is required to be developed, implemented and maintained under the ISM Code;
“ISPS Code” means the International Ship and Port Facility Security Code constituted pursuant to resolution A.924 (22) of the International Maritime Organisation (“IMO”) adopted by a Diplomatic conference of the IMO on Maritime Security on 13 December 2002 and now set out in Chapter XI-2 of the Safety of Life at Sea Convention (SOLAS) 1974 (as amended) to take effect on 1 July 2004;
“ISSC” means a valid and current International Ship Security Certificate issued under the ISPS Code;
“Lender” means, subject to Clause 26.6 (Lender re-organisation; waiver of Transfer Certificate):
| (a) | a bank or financial institution listed in Schedule 1 and acting through its branch or office indicated in Schedule 1 (Lenders and Commitments) (or through another branch notified to the Borrowers under Clause 26.14 (Change of lending office)) unless it has delivered a Transfer Certificate or Certificates covering the entire amounts of its Commitment and its Contribution; and |
| (b) | the holder for the time being of a Transfer Certificate; |
“LIBOR” means, for an Interest Period:
| (a) | the applicable Screen Rate; |
| (b) | (if no Screen Rate is available for that Interest Period) the Interpolated Screen Rate; or |
| (c) | if: |
| (i) | no Screen Rate is available for the currency of the Loan; or |
| (ii) | no Screen Rate is available for that Interest Period and it is not possible to calculate an Interpolated Screen Rate, |
the Reference Bank Rate,
as of, in the case of paragraphs (a) to (c) above, 11.00 a.m. (London time) on the Quotation Day for the currency of the Loan and for a period equal in length to that Interest Period and, if any such rate is below zero, LIBOR will be deemed to be zero;
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“Loan” means the principal amount for the time being outstanding under this Agreement;
“Major Casualty” means, in relation to a Ship, any casualty to that Ship in respect of which the claim or the aggregate of the claims against all insurers, before adjustment for any relevant franchise or deductible, exceeds $500,000 or the equivalent in any other currency;
“Majority Lenders” means:
| (a) | before the Advance has been made, Lenders whose Commitments total 66.67 per cent. of the Total Commitments; and |
| (b) | after the Advance has been made, Lenders whose Contributions total 66.67 per cent. of the Loan, |
and in any event in respect of (a) and (b) above shall not consist of less than two Lenders;
“Mandated Lead Arrangers” means Crédit Agricole Corporate and Investment Bank, a sociéte anonyme incorporated under the laws of France acting 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 Nanterre and BNP Paribas whose registered office (siege social) is at 16 Boulevard des Italiens, 75009 Paris, France, acting through its office at Grands Moulins de Pantin, 9 rue du Débarcadère, 93500 Pantin, France;
“Margin” means:
| (a) | for the period commencing on the Date of this Agreement and ending on 30 April 2022, 3.25 per cent. per annum; or |
| (b) | if by 30 April 2022, the Senior Secured Notes Indebtedness is not refinanced in full (or repaid, or amended and extended) with a new maturity date falling after the Final Maturity Date or repaid in full, 3.75 per cent. per annum; or |
| (c) | if by 30 April 2022, the Senior Secured Notes Indebtedness is refinanced in full (or repaid, or amended and extended) with a new maturity date falling after the Final Maturity Date or repaid in full, 2.85 per cent. per annum; |
“Market Value” means the market value of the Ship determined from time to time in accordance with Clause 15.4 (Valuation of Ship);
“Minimum Liquidity” has the meaning given in Clause 11.20 (Minimum Liquidity);
“Mortgage” means, in relation to a Ship, the first preferred or, as the case may be, priority ship mortgage and, if applicable, deed of covenant collateral thereto on that Ship, executed by the Borrower which is the owner thereof in favour of the Security Trustee or (as the case may be) the Lenders, in such form as the Lenders may approve or require and in the plural means all of them;
“Mortgage Notes” means the first priority ship mortgage notes of $650,000,000 issued on 29 November 2013 by the Corporate Guarantor and Navios Maritime Finance II (US) Inc. with a scheduled maturity of 15 January 2022 at a fixed rate of 7,375 per cent.;
“Mortgage Notes Indebtedness” means, at any date, any outstanding Financial Indebtedness (or part thereof) on that date under the Mortgage Notes;
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“Navios Shipmanagement” means Navios Shipmanagement Inc., a corporation incorporated in the Marshall Islands having its registered address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro MH96960, Marshall Islands;
“Negotiation Period” has the meaning given in Clause 5.10 (Negotiation of alternative rate of interest);
“Notifying Lender” has the meaning given in Clause 23.1 (Illegality) or Clause 24.2 (Increased cost claims) as the context requires;
“Payment Currency” has the meaning given in Clause 21.5 (Currency indemnity);
“Permitted Financial Indebtedness” means the financial indebtedness incurred by Borrower B in the ordinary course of its business of owning and acquiring vessels and in relation to the vessels owned by it other than Ship B and Ship E;
“Permitted Security Interests” means:
| (a) | Security Interests created by the Finance Documents; |
| (b) | at any time prior to the Drawdown Date, any Existing Security Interest; |
| (c) | liens for unpaid crew’s wages in accordance with usual maritime practice; |
| (d) | liens for salvage; |
| (e) | liens arising by operation of law for not more than 2 months’ prepaid hire under any charter in relation to a Ship not prohibited by this Agreement; |
| (f) | liens for master’s disbursements incurred in the ordinary course of trading and any other lien arising by operation of law or otherwise in the ordinary course of the operation, repair or maintenance of a Ship, provided such liens do not secure amounts more than 45 days overdue (unless the overdue amount is being contested by the relevant Borrower in good faith by appropriate steps) and subject, in the case of liens for repair or maintenance, to paragraph (g) of Clause 14.13 (Restrictions on chartering, appointment of managers etc.); |
| (g) | 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 relevant Borrower is prosecuting or defending such action in good faith by appropriate steps; |
| (h) | Security Interests arising by operation of law in respect of taxes which are not overdue for payment other than taxes being contested in good faith by appropriate steps and in respect of which appropriate reserves have been made; and |
| (i) | in relation to Borrower B any Security Interests created under the Permitted Financial Indebtedness; |
“Person” has the meaning given to it in Clause 10.18 (Sanctions);
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“Pertinent Jurisdiction”, in relation to a company, means:
| (a) | England and Wales; |
| (b) | the country under the laws of which the company is incorporated or formed; |
| (c) | a country in which the company’s central management and control is or has recently been exercised; |
| (d) | a country in which the overall net income of the company is subject to corporation tax, income tax or any similar tax; |
| (e) | a country in which assets of the company (other than securities issued by, or loans to, related companies) having a substantial value are situated, in which the company maintains a permanent place of business, or in which a Security Interest created by the company must or should be registered in order to ensure its validity or priority; and |
| (f) | a country the courts of which have jurisdiction to make a winding up, administration or similar order in relation to the company or which would have such jurisdiction if their assistance were requested by the courts of a country referred to in paragraphs (a) or (c) above; |
“Poseidon Principles” means the financial industry framework for assessing and disclosing the climate alignment of ship finance portfolios published in June 2019 as the same may be amended or replaced to reflect changes in applicable law or regulation or the introduction of or changes to mandatory requirements of the International Maritime Organisation from time to time;
“Potential Event of Default” means an event or circumstance which, with the giving of any notice, the lapse of time, a determination of the Majority Lenders and/or the satisfaction of any other condition, would constitute an Event of Default;
“Quotation Date” means, in relation to any period for which an interest rate is to be determined under any provision of a Finance Document, the day which is 2 Business Days in London before the first day of that period, unless market practice differs in the London Interbank Market for a currency, in which case the Quotation Date will be determined by the Agent in accordance with market practice in the London Interbank Market (and if quotations would normally be given by leading banks in the London Interbank Market on more than one day, the Quotation Date will be the last of those days);
“Reference Bank” means, in relation to the determination of LIBOR and any mandatory costs, the London office of such bank as may be appointed by the Agent after consultation with (but without the approval of) the Borrowers;
“Reference Bank Rate” means the arithmetic mean of the rates (rounded upwards to four decimal places) as supplied to the Agent at its request by the Reference Banks:
| (a) | if: |
| (i) | the Reference Bank is a contributor to the Screen Rate; and |
| (ii) | it consists of a single figure, |
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as the rate (applied to the relevant Reference Bank and the relevant currency and period) which contributes to the Screen Rate and asked to submit to the relevant administrator; or
| (b) | in any other case, as the rate at which the Reference Bank could fund itself in dollars for the relevant period with reference to the unsecured whole sale funding market; |
“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 Person” has the meaning given in Clause 19.9 (Relevant Persons);
“Relevant Nominating Body” means any applicable central bank, regulator or other supervisory authority or a group of them, or any working group or committee sponsored or chaired by, or constituted at the request of, any of them or the Financial Stability Board;
“Repayment Date” means a date on which a repayment is required to be made under Clause 8 (Repayment and Prepayment);
“Repayment Instalment” has the meaning given to it in Clause 8.1 (Amount of repayment instalments);
“Replacement Benchmark” means a benchmark rate which is:
| (a) | formally designated, nominated or recommended as the replacement for a Screen Rate by: |
| (i) | the administrator of that Screen Rate; or |
| (ii) | any Relevant Nominating Body, |
and if replacements have, at the relevant time, been formally designated, nominated or recommended under both paragraphs, the “Replacement Benchmark” will be the replacement under paragraph (ii) above;
| (b) | in the opinion of the Lenders and the Borrowers, generally accepted in the international or any relevant domestic syndicated loan markets as the appropriate successor to a Screen Rate; or |
| (c) | in the opinion of the Lenders and the Borrowers, an appropriate successor to a Screen Rate; |
“Representative” means any delegate, agent, manager, administrator, nominee, attorney, trustee or custodian;
“Requisition Compensation” includes all compensation or other moneys payable by reason of any act or event such as is referred to in paragraph (b) of the definition of “Total Loss”;
“Retention Account” means an account in the joint names of the Borrowers with the Account Bank as per Schedule 6 (Account Details), or any other account (with that or another office of the Account Bank) which replaces this account and is designated by the Agent as the Retention Account for the purposes of this Agreement;
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“Sanctioned Person” has the meaning given to it in Clause 10.18 (Sanctions);
“Sanctioned Country” has the meaning given to it in Clause 10.18 (Sanctions);
“Sanctions” means any economic or trade sanctions or restrictive measures enacted, administered, imposed or enforced by the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC), the U.S. Department of State, the United Nations Security Council and/or the European Union and/or any of its member states and/or Her Majesty’s Treasury and/or the State Secretariat for Economic Affairs of Switzerland (SECO) and/or the French Republic or other relevant sanctions authority;
“Screen Rate” means the London interbank offered rate administered by ICE Benchmark Administration Limited (or any other person which takes over the administration of that rate) for dollars for the relevant period displayed (before any correction, recalculation or republication by the administrator) on page LIBOR01 of the Thomson Reuters screen (or any replacement Thomson Reuters page which displays that rate) or on the appropriate page of such other information service which publishes that rate from time to time in place of Thomson Reuters. If such page or service ceases to be available, the Agent may specify another page or service displaying the relevant rate after consultation with the Borrowers.
“Screen Rate Replacement Event” means, in relation to a Screen Rate:
| (a) | the methodology, formula or other means of determining that Screen Rate has, in the opinion of the Lenders, and the Borrowers materially changed; |
| (b) |
| (i) |
| (A) | the administrator of that Screen Rate or its supervisor publicly announces that such administrator is insolvent; or |
| (B) | information is published in any order, decree, notice, petition or filing, however described, or filed with a court, tribunal, exchange, regulatory authority or similar administrative, regulatory or judicial body which reasonably confirms that the administrator of that Screen Rate is insolvent, |
provided that, in each case, at that time, there is no successor administrator to continue to provide that Screen Rate;
| (ii) | the administrator of that Screen Rate publicly announces that it has ceased or will cease, to provide that Screen Rate permanently or indefinitely and, at that time, there is no successor administrator to continue to provide that Screen Rate; |
| (iii) | the supervisor of the administrator of that Screen Rate publicly announces that such Screen Rate has been or will be permanently or indefinitely discontinued; or |
| (iv) | the administrator of that Screen Rate or its supervisor announces that that Screen Rate may no longer be used; or |
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| (v) | the supervisor of the administrator of that Screen Rate makes a public announcement or publishes information: |
| (A) | stating that that Screen Rate is no longer or, as of a specified future date will no longer be, representative of the underlying market or economic reality that it is intended to measure and that representativeness will not be restored (as determined by such supervisor); and |
| (B) | with awareness that any such announcement or publication will engage certain triggers for fallback provisions in contracts which may be activated by any such pre-cessation announcement or publication; or |
| (c) | the administrator of that Screen Rate determines that that Screen Rate should be calculated in accordance with its reduced submissions or other contingency or fallback policies or arrangements and either: |
| (i) | the circumstance(s) or event(s) leading to such determination are not (in the opinion of the Lenders and the Borrowers) temporary; or |
| (ii) | that Screen Rate is calculated in accordance with any such policy or arrangement for a period no less than the Screen Rate Contingency Period; or |
| (d) | in the opinion of the Lenders and the Borrowers, that Screen Rate is otherwise no longer appropriate for the purposes of calculating interest under this Agreement; |
“Secured Liabilities” means all liabilities which the Borrowers, the Security Parties or any of them have, at the date of this Agreement or at any later time or times, under or by virtue of the Finance Documents or any judgment relating to the Finance Documents; and for this purpose, there shall be disregarded any total or partial discharge of these liabilities, or variation of their terms, which is effected by, or in connection with, any bankruptcy, liquidation, arrangement or other procedure under the insolvency laws of any country;
“Security Cover Ratio” means, at any relevant time, the aggregate of:
| (a) | the aggregate of the Market Value of the Ships and the credit balance standing at such time to the credit of the Retention Account; plus |
| (b) | the net realisable value of any additional security provided at that time under Clause 15 (Security Cover), |
expressed as a percentage of the Loan;
“Security Interest” means:
| (a) | a mortgage, charge (whether fixed or floating) or pledge, any maritime or other lien or any other security interest of any kind; and |
| (b) | the rights of the plaintiff under an action in rem in which the vessel concerned has been arrested or a writ has been issued or similar step taken; |
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“Security Party” means the Corporate Guarantor, the Approved Manager, the Shareholder and any other person (except a Creditor Party, an Existing Charterer and a Collateral Charterer) who, as a surety or mortgagor, as a party to any subordination or priorities arrangement, or in any similar capacity, executes a document falling within the final paragraph of the definition of “Finance Documents”;
“Security Period” means the period commencing on the date of this Agreement and ending on the date on which the Agent notifies the Borrowers, the Security Parties and the other Creditor Parties that:
| (a) | all amounts which have become due for payment by a Borrower or any Security Party under the Finance Documents have been paid; |
| (b) | no amount is owing or has accrued (without yet having become due for payment) under any Finance Document; |
| (c) | no Borrower nor any Security Party has any future or contingent liability under Clause 20 (Fees and Expenses), 21 (Indemnities) or 22 (No Set-off or Tax Deduction) below or any other provision of this Agreement or another Finance Document; and |
| (d) | the Agent, the Security Trustee and the Lenders do not consider that there is a significant risk that any payment or transaction under a Finance Document would be set aside, or would have to be reversed or adjusted, in any present or possible future bankruptcy of a Borrower or a Security Party or in any present or possible future proceeding relating to a Finance Document or any asset covered (or previously covered) by a Security Interest created by a Finance Document; |
“Security Trustee” means Crédit Agricole Corporate and Investment Bank, a sociéte anonyme incorporated under the laws of France acting 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 Nanterre or any successor of it appointed under clause 5 (appointment of a new servicing bank) of the Agency and Trust Deed;
“Senior Secured Notes” means the senior secured notes of $305,000,000 issued on 21 November 2017 by the Corporate Guarantor and Navios Maritime Finance II (US) Inc. with a scheduled maturity of 15 August 2022 at a fixed rate of 11,25 per cent.;
“Senior Secured Notes Indebtedness” means, at any date, any outstanding Financial Indebtedness (or part thereof) on that date under the Senior Secured Notes;
“Shareholder” means:
| (a) | in relation to Borrower A, Borrower E and Borrower F, Anemos Maritime Holdings Inc., a corporation incorporated under the laws of the Marshall Islands whose registered address is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, MH96960; |
| (b) | in relation to Borrower B, NAV Holdings Limited, a company incorporated under the laws of Malta whose registered office is at 25/16 Vincenti Buildings, Strait Street, Valletta VLT 1432, Malta; |
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| (c) | in relation to Borrower C, Aquis Marine Corp., a corporation incorporated under the laws of the Marshall Islands whose registered address is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, MH96960; and |
| (d) | in relation to Borrower D, Navios Asia LLC, a limited liability company formed under the laws of the Marshall Islands whose registered address is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, MH96960; |
“Shares Security Deed” means, in respect of all the issued shares in each Borrower, a pledge of such shares executed or to be executed by the Shareholder in favour of the Security Trustee, in such form as the Lenders may approve or require;
“Ship” means each of Ship A, Ship B, Ship C, Ship D, Ship E, Ship F and Ship G and, in the plural, means all of them;
“Ship A” has the meaning given to that term in Schedule 5 (Vessel Details);
“Ship B” has the meaning given to that term in Schedule 5 (Vessel Details);
“Ship C” has the meaning given to that term in Schedule 5 (Vessel Details);
“Ship D” has the meaning given to that term in Schedule 5 (Vessel Details);
“Ship E” has the meaning given to that term in Schedule 5 (Vessel Details);
“Ship F” has the meaning given to that term in Schedule 5 (Vessel Details);
“Ship G” has the meaning given to that term in Schedule 5 (Vessel Details);
“Subordinated Creditor” means Navios Shipmanagement Holdings Corporation, a corporation incorporated under the laws of the Marshall Islands whose registered address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, MH96960;
“Subordinated Liabilities” means all indebtedness owed or expressed to be owed by the Corporate Guarantor to a Subordinated Creditor under the Subordinated Loan Agreements;
“Subordinated Loan Agreement” means:
| (a) | loan agreement dated 29 August 2019 and made between (i) the Corporate Guarantor as borrower and (ii) the Subordinated Creditor as lender as amended and restated on or around the date of this Agreement; |
| (b) | loan agreement dated 29 June 2021 and made between (i) the Corporate Guarantor as borrower and (ii) the Subordinated Creditor as lender as amended and restated on or around the date of this Agreement; |
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| (c) | any supplemental agreement entered or to be entered into between (i) the Corporate Guarantor as borrower and (ii) the Subordinated Creditor as lender amending, supplementing and/or restating the Subordinated Loan Agreements referred to in paragraphs (a) and/or (b) above; and |
| (d) | any other amendment and/or supplement related to the Subordinated Liabilities; |
“Subordination Agreement” means a subordination agreement entered into or to be entered into by the Subordinated Creditor and the Agent in such form as the Lenders may approve or require;
“Total Loss” means in relation to a Ship:
| (a) | actual, constructive, compromised, agreed or arranged total loss of that Ship; |
| (b) | any expropriation, confiscation, requisition or acquisition of a Ship whether for full consideration, a consideration less than its proper value, a nominal consideration or without any consideration, which is effected by any government or official authority or by any person or persons claiming to be or to represent a government or official authority, excluding a requisition for hire for a fixed period not exceeding one year without any right to an extension unless a Ship is within 30 days redelivered to the full control of the Borrower owning that Ship; |
| (c) | any condemnation of that Ship by any tribunal or by any person or person claiming to be a tribunal; and |
| (d) | any arrest, capture, seizure, confiscation or detention of that Ship (including any hijacking or theft) unless it is within the Relevant Period redelivered to the full control of the Borrower owning that Ship. |
In this definition “Relevant Period” means:
| (a) | in the case of any arrest of a Ship, within 1 month; and |
| (b) | in the case of piracy or capture, seizure, confiscation or detention of a Ship (including any hijacking or theft) 90 days Provided that if the relevant underwriters confirm to the Agent in writing prior to the end of the 90-day period referred to in (i) above that the relevant Ship is subject to an approved piracy insurance cover, the earlier of 12 months after the date on which that Ship is captured by pirates and the date on which the piracy insurance cover expires; |
“Total Loss Date” means in relation to a Ship:
| (a) | in the case of an actual loss, 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 to the insurers; and |
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| (ii) | the date of any compromise, arrangement or agreement made by or on behalf of the Borrower owning that Ship, 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, on the earlier of: |
| (i) | the date at which a total loss is subsequently admitted by such insurers; |
| (ii) | the date at which a total loss is subsequently adjudged by a competent court of law or arbitration tribunal to have occurred, if such insurers do not immediately admit such claim; or |
| (iii) | the date (or the most likely date) on which it appears to the Agent that the event constituting the total loss occurred; |
“Transfer Certificate” has the meaning given in Clause 26.2 (Transfer by a Lender);
“Trust Property” has the meaning given in clause 3.1 (definition of “trust property”) of the Agency and Trust Deed;
“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);
“US” means the United States of America;
“US GAAP” means generally accepted international accounting principles as from time to time in effect in the United States of America;
“US Tax Obligor” means:
| (a) | a person which is resident for tax purposes in the United States of America; or |
| (b) | a person some or all of whose payments under the Finance Documents are from sources within the United States for US federal income tax purposes; and |
“Write-down and Conversion Powers” means:
| (a) | in relation to any Bail-In Legislation described in the EU Bail-In Legislation Schedule from time to time, the powers described as such in relation to that Bail-In Legislation in the EU Bail-In Legislation Schedule; |
| (b) | in relation to any other applicable Bail-In Legislation other than the UK Bail-In Legislation: |
| (i) | any powers under that Bail-In Legislation to cancel, transfer or dilute shares issued by a person that is a bank or investment firm or other financial institution or affiliate of a bank, investment firm or other financial institution, to cancel, reduce, modify or change the form of a liability of such a person or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation that are related to or ancillary to any of those powers; and |
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| (ii) | any similar or analogous powers under that Bail-In Legislation; and |
| (c) | in relation to the UK Bail-In Legislation, any powers under that UK Bail-In Legislation to cancel, transfer or dilute shares issued by a person that is a bank or investment firm or other financial institution or affiliate of a bank, investment firm or other financial institution, to cancel, reduce, modify or change the form of a liability of such a person or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that UK Bail-In Legislation that are related to or ancillary to any of those powers. |
| 1.2 | Construction of certain terms |
| (a) | In this Agreement: |
“approved” means, for the purposes of Clause 13 (Insurance), approved in writing by the Agent;
“asset” includes every kind of property, asset, interest or right, including any present, future or contingent right to any revenues or other payment;
“company” includes any partnership, joint venture and unincorporated association;
“consent” includes an authorisation, consent, approval, resolution, licence, exemption, filing, registration, notarisation and legalisation;
“contingent liability” means a liability which is not certain to arise and/or the amount of which remains unascertained;
“document” includes a deed; also a letter or fax;
“excess risks” means, in relation to a Ship, the proportion of claims for general average, salvage and salvage charges not recoverable under the hull and machinery policies in respect of the Ship in consequence of its insured value being less than the value at which the Ship is assessed for the purpose of such claims;
“expense” means any kind of cost, charge or expense (including all legal costs, charges and expenses) and any applicable value added or other tax;
“law” includes any form of delegated legislation, any order or decree, any treaty or international convention and any regulation or resolution of the Council of the European Union, the European Commission, the United Nations or its Security Council;
“legal or administrative action” means any legal proceeding or arbitration and any administrative or regulatory action or investigation;
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“liability” includes every kind of debt or liability (present or future, certain or contingent), whether incurred as principal or surety or otherwise;
“months” shall be construed in accordance with Clause 1.3 (Meaning of “month”);
“obligatory insurances” means, in relation to a Ship, all insurances effected, or which the Borrower owning that Ship, is obliged to effect, under Clause 13 or any other provision of this Agreement or another Finance Document;
“parent company” has the meaning given in Clause 1.4 (Meaning of “subsidiary”);
“person” includes any individual, any entity, any company; any state, political sub-division of a state and local or municipal authority; and any international organisation;
“policy”, in relation to any insurance, includes a slip, cover note, certificate of entry or other document evidencing the contract of insurance or its terms;
“protection and indemnity risks” means the usual risks covered by a protection and indemnity association 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;
“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;
“subsidiary” has the meaning given in Clause 1.4 (Meaning of “subsidiary”);
“successor” includes any person who is entitled (by assignment, novation, merger or otherwise) to any other person’s rights under this Agreement or any other Finance Document (or any interest in those rights) or who, as administrator, liquidator or otherwise, is entitled to exercise those rights; and in particular references to a successor include a person to whom those rights (or any interest in those rights) are transferred or pass as a result of a merger, division, reconstruction or other reorganisation of it or any other person;
“tax” includes any present or future tax, duty, impost, levy or charge of any kind which is imposed by any state, any political sub-division of a state or any local or municipal authority (including any such imposed in connection with exchange controls), and any connected penalty, interest or fine;
“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; and
“which is continuing” or “is continuing”, 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.
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| (b) | In this Agreement, where it relates to Borrower B, a reference to: |
“gross negligence” is a reference to zware fout/faute lourde and “wilful misconduct” is a reference to opzet/dol;
a “liquidator”, “receiver”, “administrative receiver”, “administrator” or similar officer includes any insolventiefunctionaris/praticien de l’insolvabilité, curator/curateur, vereffenaar/liquidateur, gedelegeerd rechter/juge délégué, ondernemingsbemiddelaar/médiateur d’entreprise, gerechtsmandataris/mandataire de justice, voorlopig bewindvoerder/administrateur provisoire, gerechtelijk bewindvoerder/administrateur judiciaire, mandataris ad hoc/mandataire ad hoc and any sekwester/séquestre;
a “suspension of payments”, “moratorium”, or “reorganisation” includes any gerechtelijke reorganisatie/réorganisation judiciaire;
an “insolvency” includes any insolventieprocedure/procedure d’insolvabilité, gerechtelijke reorganisatie/réorganisation judiciaire, faillissement/faillite and any other concurrence between creditors (samenloop van schuldeisers/concours des créanciers);
a “security interest” includes a mortgage (hypotheek/hypothèque), a pledge (pand/gage), a transfer by way of security (overdracht ten titel van zekerheid/transfert à titre de garantie), any other proprietary security interest (zakelijke zekerheid/sûreté réelle), a mandate to grant a mortgage, a pledge or any other real surety, a privilege (voorrecht/privilège) and a retention of title (eigendomsvoorbehoud/réserve de propriété);
an obligor being “incorporated” in Belgium or of which its “jurisdiction of incorporation” is Belgium, means that that Security Party has its registered office (zetel/siège) in Belgium;
a person being “unable to pay its debts” is that person being in a state of cessation of payments (staking van betaling/cessation de paiements);
a “composition” includes any minnelijk akkoord met schuldeisers/accord amiable avec des créanciers or any gerechtelijke reorganisatie/réorganisation judiciaire;
“winding-up”, “administration” or “dissolution” includes any vereffening/liquidation, ontbinding/dissolution, sluiting van een onderneming/fermeture d’entreprise and faillissement/faillite;
“attachment”, “sequestration”, “distress”, “execution” or analogous procedures includes any uitvoerend beslag/saisie exécution and bewarend beslag/saisie conservatoire;
an “amalgamation”, “demerger”, “merger” or “corporate reconstruction” includes an overdracht van algemeenheid/transfert d’universalité, an overdracht van bedrijfstak/transfert de branche d’activité, a splitsing/scission and a fusie/fusion as well as assimilated transactions (gelijkgestelde verrichtingen/operations assimilées) in accordance with article 12:7 and 12:8 of the Belgian Code of Companies and Associations;
the “Belgian Civil Code” means the Belgian oud Burgerlijk Wetboek/ancien Code Civil, as amended from time to time, or after its replacement, the Belgian Burgerlijk Wetboek/Code Civil, as amended from time to time; and
the “Belgian Code of Companies and Associations” means the Belgian Wetboek van vennootschappen en verenigingen/Code des sociétés et des associations dated 23 March 2019, as amended from time to time.
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| 1.3 | Meaning of “month” |
A period of one or more “months” ends on the day in the relevant calendar month numerically corresponding to the day of the calendar month on which the period started (“the numerically corresponding day”), but:
| (a) | on the Business Day following the numerically corresponding day if the numerically corresponding day is not a Business Day or, if there is no later Business Day in the same calendar month, on the Business Day preceding the numerically corresponding day; or |
| (b) | on the last Business Day in the relevant calendar month, if the period started on the last Business Day in a calendar month or if the last calendar month of the period has no numerically corresponding day, |
and “month” and “monthly” shall be construed accordingly.
| 1.4 | Meaning of “subsidiary” |
A company (S) is a subsidiary of another company (P) if:
| (a) | a majority of the issued shares in S (or a majority of the issued shares in S which carry unlimited rights to capital and income distributions) are directly owned by P or are indirectly attributable to P; or |
| (b) | P has direct or indirect control over a majority of the voting rights attached to the issued shares of S; |
and any company of which S is a subsidiary is a parent company of S Provided that there shall be excluded from this definition any subsidiaries which are listed on a public stock exchange.
| 1.5 | General Interpretation |
| (a) | In this Agreement: |
| (i) | references to, or to a provision of, a Finance Document or any other document are references to it as amended or supplemented, whether before the date of this Agreement or otherwise; |
| (ii) | references to, or to a provision of, any law include any amendment, extension, re-enactment or replacement, whether made before the date of this Agreement or otherwise; and |
| (iii) | words denoting the singular number shall include the plural and vice versa. |
| (b) | Clauses 1.1 (Definitions) to 1.4 (Meaning of “subsidiary”) and paragraph (a) of this Clause 1.5 (General Interpretation) apply unless the contrary intention appears. |
| (c) | References in Clauses 1.1 (Definitions) to a document being in the form of a particular Appendix include references to that form with any modifications to that form which the Agent (with the authorisation of the Lenders in the case of substantial modifications) approves or requires. |
| (d) | The clause headings shall not affect the interpretation of this Agreement. |
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| 2 | LOAN FACILITY |
| 2.1 | Amount of loan facility |
Subject to the other provisions of this Agreement, the Lenders shall make available to the Borrowers a senior secured term loan facility, in one Advance, in an aggregate amount not exceeding the Total Commitments.
| 2.2 | Lenders’ participations in the Advance |
Subject to the other provisions of this Agreement, each Lender shall participate in the Advance in the proportion which, as at the Drawdown Date, its Commitment bears to the Total Commitments.
| 2.3 | Purpose of Advance |
The Borrowers undertake with each Creditor Party to use the Advance only for the purpose stated in the preamble to this Agreement.
| 3 | POSITION OF THE LENDERS |
| 3.1 | Interests of Lenders several |
The rights of the Creditor Parties under this Agreement are several; accordingly each Lender shall be entitled to sue for any amount which has become due and payable by the Borrowers to it under this Agreement without joining the Security Trustee or any other Creditor Party as additional parties in the proceedings, save that the Security Interests created by any of the Finance Documents may only be enforced in accordance with Clause 19.2 (Actions following an Event of Default).
| 3.2 | Proceedings by individual Creditor Party |
However, without the prior consent of the Lenders, no Creditor Party may bring proceedings in respect of:
| (a) | any other liability or obligation of any Borrower or a Security Party under or connected with a Finance Document; or |
| (b) | any misrepresentation or breach of warranty by any Borrower or a Security Party in or connected with a Finance Document. |
| 3.3 | Obligations of Creditor Parties several |
The obligations of the Lenders under this Agreement are several; and a failure of a Lender to perform its obligations under this Agreement shall not result in:
| (a) | the obligations of the other Lenders being increased; nor |
| (b) | a Borrower, any Security Party or any other Lender being discharged (in whole or in part) from its obligations under any Finance Documents, |
and in no circumstances shall a Lender have any responsibility for a failure of another Lender to perform its obligations under this Agreement.
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| 3.4 | Parties bound by certain actions of Lenders |
Every Lender, each Borrower and each Security Party shall be bound by:
| (a) | any determination made, or action taken, by the Lenders under any provision of a Finance Document; |
| (b) | any instruction or authorisation given by the Lenders to the Agent or the Security Trustee under or in connection with any Finance Document; and |
| (c) | any action taken (or in good faith purportedly taken) by the Agent or the Security Trustee in accordance with such an instruction or authorisation. |
| 3.5 | Reliance on action of Agent |
However, each Borrower and each Security Party:
| (a) | shall be entitled to assume that the Lenders have duly given any instruction or authorisation which, under any provision of a Finance Document, is required in relation to any action which the Agent has taken or is about to take; and |
| (b) | shall not be entitled to require any evidence that such an instruction or authorisation has been given. |
| 3.6 | Construction |
In Clauses 3.4 (Parties bound by certain actions of Lenders) and 3.5 (Reliance on action of Agent) references to action taken include (without limitation) the granting of any waiver or consent, an approval of any document and an agreement to any matter.
| 4 | DRAWDOWN |
| 4.1 | Request for Advance |
| (a) | Subject to the following conditions, the Borrowers may request the Advance to be advanced by ensuring that the Agent receives a completed Drawdown Notice not later than 11.00 a.m. (Paris time) 2 Business Days prior to the intended Drawdown Date (or such other shorter period as the Lenders may agree). |
| (b) | The Borrowers may not deliver more than one Drawdown Notice. |
| 4.2 | Availability |
The conditions referred to in Clause 4.1 (Request for Advance) are that:
| (a) | the Drawdown Date has to be a Business Day during the Availability Period; |
| (b) | the amount of the Advance shall not exceed the lesser of (i) $105,000,000 and (ii) 65 per cent. of the aggregate Initial Market Value of the Ships; |
| (c) | the Advance shall be made available in a single amount; and |
| (d) | the amount of the Advance shall not exceed the Total Commitments. |
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| 4.3 | Notification to Lenders of receipt of a Drawdown Notice |
The Agent shall promptly notify the Lenders that it has received a Drawdown Notice and shall inform each Lender of:
| (a) | the amount of the Advance and the Drawdown Date; |
| (b) | the amount of that Lender’s participation in the Advance; and |
| (c) | the duration of the first Interest Period. |
| 4.4 | Drawdown Notice irrevocable |
A Drawdown Notice must be signed by an officer or other authorised person of each Borrower; and once served a Drawdown Notice cannot be revoked without the prior consent of the Agent, acting on the authority of the Majority Lenders.
| 4.5 | Lenders to make available Contributions |
Subject to the provisions of this Agreement, each Lender shall, on and with value on the Drawdown Date, make available to the Agent for the account of the Borrowers the amount due from that Lender under Clause 2.2 (Lenders’ participations in the Advance).
| 4.6 | Disbursement of Advance |
Subject to the provisions of this Agreement, the Agent shall on the Drawdown Date pay to the Borrowers the amounts which the Agent receives from the Lenders under Clause 4.5 (Lenders to make available Contributions); and that payment to the Borrowers shall be made:
| (a) | to the account which the Borrowers specify in the Drawdown Notice; and |
| (b) | in the like funds as the Agent received the payments from the Lenders. |
| 4.7 | Disbursement of Loan to third party |
The payment by the Agent under Clause 4.6 (Disbursement of Advance) to any third party specified by the Borrowers in the Drawdown Notice shall constitute the making of the 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 Contribution.
| 5 | INTEREST |
| 5.1 | Payment of normal interest |
Subject to the provisions of this Agreement, interest on the Loan in respect of each Interest Period shall be paid by the Borrowers on the last day of that Interest Period.
| 5.2 | Normal rate of interest |
Subject to the provisions of this Agreement, the rate of interest on each Advance in respect of an Interest Period shall be the aggregate of (i) the Margin and (ii) LIBOR for that Interest Period subject to Clauses 5.6 (Absence of quotations by Reference Bank) and 5.7 (Market disruption).
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| 5.3 | Payment of accrued interest |
In the case of an Interest Period longer than 3 months, accrued interest shall be paid every 3 months during that Interest Period and on the last day of that Interest Period.
| 5.4 | Notification of Interest Periods and rates of normal interest |
The Agent shall notify the Borrowers and each Lender of:
| (a) | each rate of interest; and |
| (b) | the duration of each Interest Period, |
as soon as reasonably practicable after each is determined.
| 5.5 | Obligation of Reference Bank to quote |
Each of the Reference Banks which is a Lender shall use all reasonable efforts to supply the quotation required of it for the purposes of fixing a rate of interest under this Agreement unless that Reference Bank ceases to be a Lender pursuant to Clause 26.16 (Security over Lenders’ rights).
| 5.6 | Absence of quotations by Reference Bank |
If any Reference Bank fails to supply a quotation, the relevant rate of interest shall be set in accordance with the following provisions of this Clause 5 (Interest).
| 5.7 | Market disruption |
The following provisions of this Clause 5 (Interest) apply if:
| (a) | LIBOR is to be determined by reference to the Reference Banks and no Reference Bank does, before 1.00 p.m. (London time) on the Quotation Date for an Interest Period, provide quotations to the Agent in order to fix LIBOR; or |
| (b) | at least 1 Business Day before the start of an Interest Period, a Lender may notify the Agent that LIBOR fixed by the Agent would not accurately reflect the cost to that Lender of funding its respective Contribution (or any part of it) during the Interest Period in the London interbank market at or about 11.00 a.m. (London time) on the Quotation Date for the Interest Period; or |
| (c) | at least 1 Business Day before the start of an Interest Period, the Agent is notified by a Lender (the “Affected Lender”) that for any reason it is unable to obtain Dollars in the London Interbank Market in order to fund its Contribution (or any part of it) during the Interest Period. |
| 5.8 | Notification of market disruption |
The Agent shall promptly notify the Borrowers and each of the Lenders stating the circumstances falling within Clause 5.7 (Market disruption) which have caused its notice to be given.
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| 5.9 | Suspension of drawdown |
If the Agent’s notice under Clause 5.8 (Notification of market disruption) is served before the Advance is made:
| (a) | in a case falling within paragraphs (a) or (b) of Clause 5.7 (Market disruption), the Lenders’ obligations to make such Advance; |
| (b) | in a case falling within paragraph (c) of Clause 5.7 (Market disruption), the Affected Lender’s obligation to participate in such Advance, |
shall be suspended while the circumstances referred to in the Agent’s notice continue.
| 5.10 | Negotiation of alternative rate of interest |
Subject to Clause 27.4 (Replacement of Screen Rate), if the Agent’s notice under Clause 5.8 is served after the Advance is made, the Borrowers, the Agent and the Lenders or (as the case may be) the Affected Lender shall use reasonable endeavours to agree, within the 30 days after the date on which the Agent serves its notice under Clause 5.8 (the “Negotiation Period”), an alternative interest rate or (as the case may be) an alternative basis for the Lenders or (as the case may be) the Affected Lender to fund or continue to fund their or its Contribution during the Interest Period concerned.
| 5.11 | Application of agreed alternative rate of interest |
Subject to Clause 27.4 (Replacement of Screen Rate), any alternative interest rate or an alternative basis which is agreed during the Negotiation Period shall take effect in accordance with the terms agreed.
| 5.12 | Alternative rate of interest in absence of agreement |
Subject to Clause 27.4 (Replacement of Screen Rate), if an alternative interest rate or alternative basis is not agreed within the Negotiation Period, and the relevant circumstances are continuing at the end of the Negotiation Period, then the Agent shall, with the agreement of each Lender or (as the case may be) the Affected Lender, set an interest period and interest rate representing the cost of funding of the Lenders concerned or (as the case may be) the Affected Lender in Dollars or in any available currency of their or its Contribution plus the Margin; and the procedure provided for by this Clause 5.12 (Alternative rate of interest in absence of agreement) shall be repeated if the relevant circumstances are continuing at the end of the interest period so set by the Agent.
| 5.13 | Notice of prepayment |
If the Borrowers do not agree with an interest rate set by the Agent under Clause 5.12 (Alternative rate of interest in absence of agreement), the Borrowers may give the Agent not less than 15 Business Days’ notice of their intention to prepay at the end of the interest period set by the Agent.
| 5.14 | Prepayment; termination of Commitments |
A notice under Clause 5.13 (Notice of prepayment) shall be irrevocable; the Agent shall promptly notify the Lenders or (as the case may require) the Affected Lender of the Borrowers’ notice of intended prepayment; and:
| (a) | on the date on which the Agent serves that notice, the Total Commitments or (as the case may require) the Commitment of the Affected Lender shall be cancelled; and |
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| (b) | on the last Business Day of the interest period set by the Agent, the Borrowers shall prepay (without premium or penalty) the Loan or, as the case may be, the Affected Lender’s Contribution, together with accrued interest thereon at the applicable rate plus the Margin. |
| 5.15 | Application of prepayment |
The provisions of Clause 8 (Repayment and Prepayment) shall apply in relation to the prepayment.
| 6 | INTEREST PERIODS |
| 6.1 | Commencement of Interest Periods |
The first Interest Period shall commence on the Drawdown Date and each subsequent Interest Period shall commence on the expiry of the preceding Interest Period.
| 6.2 | Duration of normal Interest Periods |
Subject to Clauses 6.3 (Duration of Interest Periods for Repayment Instalments) and 6.4 (Non-availability of matching deposits for Interest Period selected), each Interest Period shall be:
| (a) | 3 or 6 months as notified by the Borrowers to the Agent not later than 11.00 a.m. (Paris time) 3 Business Days before the commencement of the Interest Period; or |
| (b) | 3 months, if the Borrowers fail to notify the Agent by the time specified in paragraph (a) above; or |
| (c) | such other period as the Agent may agree with the Borrowers, subject to additional funding costs (if any) for periods shorter than 3 months. |
| 6.3 | Duration of Interest Periods for Repayment Instalments |
| (a) | In respect of an amount due to be repaid under Clause 8 (Repayment and Prepayment) on a particular Repayment Date, an Interest Period shall end on that Repayment Date. |
| (b) | An Interest Period in respect of the Loan shall not extend beyond the Final Maturity Date. |
| 6.4 | Non-availability of matching deposits for Interest Period selected |
If, after the Borrowers have selected an Interest Period longer than 3 months, any Lender notifies the Agent by 11.00 a.m. (London time) on the third Business Day before the commencement of the Interest Period that it is not satisfied that deposits in Dollars for a period equal to the Interest Period will be available to it in the London Interbank Market when the Interest Period commences, the Interest Period shall be 3 months.
| 7 | DEFAULT INTEREST |
| 7.1 | Payment of default interest on overdue amounts |
The Borrowers shall pay interest in accordance with the following provisions of this Clause 7 (Default Interest) on any amount payable by any Borrower under any Finance Document which the Agent, the Security Trustee or the other designated payee does not receive on or before the relevant date, that is:
| (a) | the date on which the Finance Documents provide that such amount is due for payment; or |
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| (b) | if a Finance Document provides that such amount is payable on demand, the date on which the demand is served; or |
| (c) | if such amount has become immediately due and payable under Clause 19.4 (Acceleration of Loan), the date on which it became immediately due and payable. |
| 7.2 | Default rate of interest |
Interest shall accrue on an overdue amount from (and including) the relevant date until the date of actual payment (as well after as before judgment) at the rate per annum determined by the Agent to be 2 per cent. above:
| (a) | in the case of an overdue amount of principal, the higher of the rates set out at paragraphs (a) and (b) of Clause 7.3 (Calculation of default rate of interest); or |
| (b) | in the case of any other overdue amount, the rate set out at paragraph (b) of Clause 7.3 (Calculation of default rate of interest). |
| 7.3 | Calculation of default rate of interest |
The rates referred to in Clause 7.2 (Default rate of interest) are:
| (a) | the rate applicable to the overdue principal amount immediately prior to the relevant date (but only for any unexpired part of any then current Interest Period); |
| (b) | the aggregate of the Margin plus, in respect of successive periods of any duration (including at call) up to 3 months which the Agent may select from time to time: |
| (i) | LIBOR; or |
| (ii) | if the Agent (after consultation with the Reference Bank) determines that Dollar deposits for any such period are not being made available to the Reference Bank by leading banks in the London Interbank Market in the ordinary course of business, a rate from time to time determined by the Agent by reference to the cost of funds to the Reference Bank from such other sources as the Agent (after consultation with the Reference Bank) may from time to time determine. |
| 7.4 | Notification of interest periods and default rates |
The Agent shall promptly notify the Lenders and the Borrowers of each interest rate determined by the Agent under Clause 7.3 (Calculation of default rate of interest) and of each period selected by the Agent for the purposes of paragraph (b) of that Clause; but this shall not be taken to imply that the Borrowers are liable to pay such interest only with effect from the date of the Agent’s notification.
| 7.5 | Payment of accrued default interest |
Subject to the other provisions of this Agreement, any interest due under this Clause shall be paid on the last day of the period by reference to which it was determined; and the payment shall be made to the Agent for the account of the Creditor Party to which the overdue amount is due.
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| 7.6 | Compounding of default interest |
Any such interest which is not paid at the end of the period by reference to which it was determined shall thereupon be compounded.
| 8 | REPAYMENT AND PREPAYMENT |
| 8.1 | Amount of repayment instalments |
The Borrowers shall repay the Loan by:
| (a) | 4 equal consecutive quarterly instalments each in the amount of $6,500,000 followed by 8 equal consecutive quarterly instalments of $4,750,000 (each a “Repayment Instalment” and together, the “Repayment Instalments”); and |
| (b) | a balloon instalment in the amount of up to $41,000,000 (the “Balloon Instalment”). |
Provided that if the amount of the Loan actually drawn down is less than $105,000,000 each Repayment Instalment and the Balloon Instalment shall be reduced pro rata by an amount in aggregate equal to the undrawn amount.
| 8.2 | Repayment Dates |
The first Repayment Instalment shall be repaid on the date falling 3 months after the Drawdown Date with the remaining Repayment Instalments to be repaid at 3-months intervals thereafter and the last Repayment Instalment together with the Balloon Instalment shall be repaid on the Final Maturity Date.
| 8.3 | Final Repayment Date |
On the final Repayment Date, the Borrowers shall additionally pay to the Agent for the account of the Creditor Parties all other sums then accrued or owing under any Finance Document.
| 8.4 | Voluntary prepayment |
Subject to the following conditions, the Borrowers may prepay the whole or any part of the Loan on the last day of an Interest Period in respect thereof.
| 8.5 | Conditions for voluntary prepayment |
The conditions referred to in Clause 8.4 (Voluntary prepayment) are that:
| (a) | a partial prepayment shall be $1,000,000 or an integral multiple of $1,000,000; |
| (b) | the Agent has received from the Borrowers at least 3 Business Days’ prior written notice specifying the amount to be prepaid and the date on which the prepayment is to be made (such date shall be the last day of an Interest Period); and |
| (c) | the Borrowers have provided evidence satisfactory to the Agent that any consent required by the Borrowers or any Security Party in connection with the prepayment has been obtained and remains in force, and that any requirement relevant to this Agreement which affects the Borrowers or any Security Party has been complied with. |
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| 8.6 | Effect of notice of prepayment |
A prepayment notice may not be withdrawn or amended without the consent of the Agent, given with the authority of the Majority Lenders, and the amount specified in the prepayment notice shall become due and payable by the Borrowers on the date for prepayment specified in the prepayment notice.
| 8.7 | Notification of notice of prepayment |
The Agent shall notify the Lenders promptly upon receiving a prepayment notice, and shall provide any Lender which so requests with a copy of any document delivered by the Borrowers under paragraph (c) of Clause 8.5 (Conditions for voluntary prepayment).
| 8.8 | Mandatory prepayment |
The Borrowers shall be obliged to prepay the Relevant Amount:
| (a) | if a Ship is sold, on or before the date on which the sale is completed by delivery of that Ship to the buyer; or |
| (b) | if a Ship becomes a Total Loss, on the earlier of the date falling 180 days after the Total Loss Date and the date of receipt by the Security Trustee of the proceeds of insurance relating to such Total Loss. |
In this Clause 8.8 (Mandatory prepayment):
“Relevant Amount” means:
| (i) | an amount equal to the higher of: |
| (A) | the Relevant Fraction of the Loan on the date on which the relevant Ship is sold or becomes a Total Loss; and |
| (B) | an amount which after the application of the prepayment to be made pursuant to paragraph (b) of Clause 8.10 (Application of partial prepayment) results in the Security Cover Ratio being at last equal to the greater of (A) the Security Cover Ratio required to be maintained under Clause 15.1 (Minimum required security cover) and (B) the percentage which applied immediately prior to the applicable event described in paragraph (a) or (b) of this Clause 8.8 (Mandatory prepayment); or |
| (ii) | if the relevant Ship is the last Ship subject to a Mortgage, the whole of the Loan. |
“Relevant Fraction” means a fraction of which the numerator is the Market Value of the Ship which is sold or becomes a Total Loss and the denominator is the aggregate of (A) the Market Value of the other Ships then subject to a Mortgage and (B) the Market Value of that Ship.
| 8.9 | Amounts payable on prepayment |
A prepayment shall be made together with accrued interest (and any other amount payable under Clause 21 (Indemnities) below or otherwise) in respect of the amount prepaid and, if the prepayment is not made on the last day of an Interest Period together with any sums payable under paragraph (b) of Clause 21.1 (Indemnities regarding borrowing and repayment of Loan) but (subject to Clause 8.11 (No reborrowing)) without premium or penalty.
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| 8.10 | Application of partial prepayment |
Any partial prepayment shall be applied:
| (a) | if made pursuant to Clause 8.4 (Voluntary prepayment), pro rata against the then outstanding Repayment Instalments and the Balloon Instalment; |
| (b) | if made pursuant to Clause 8.8 (Mandatory prepayment): |
| (i) | FIRSTLY: pro rata against the Repayment Instalments and the Balloon Instalment; and |
| (ii) | SECONDLY: pro rata towards repayment of any overdue interest, any breakage costs, any accrued interest relating to the Loan, any other costs, fees, expenses, commissions due under this Agreement; and |
| (iii) | THIRDLY: any surplus shall be released to the Borrowers Provided that no Event of Default or Potential Event of Default has occurred or is continuing. |
| 8.11 | No reborrowing |
No amount repaid or prepaid may be reborrowed.
| 9 | CONDITIONS PRECEDENT |
| 9.1 | Documents, fees and no default |
Each Lender’s obligation to contribute to the Advance is subject to the following conditions precedent:
| (a) | that on or before the date of this Agreement, the Agent receives: |
| (i) | the documents described in Part A of Schedule 3 (Condition Precedent Documents) in a form and substance satisfactory to the Agent and its lawyers; |
| (ii) | the up-front fee referred to in Clause 20.1 (Up-front fee); |
| (iii) | the commitment fee referred to in Clause 20.2 (Commitment fee); |
| (iv) | the agency fee referred to in Clause 20.3 (Agency fee); and |
| (v) | payment in full of any expenses payable pursuant to Clause 20.2 (Commitment fee) which are due and payable on the date of this Agreement; |
| (b) | that, before or on the Drawdown Date, the Agent receives: |
| (i) | the documents described in Part B of Schedule 3 (Condition Precedent Documents) in form and substance satisfactory to the Agent and its lawyers; and |
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| (ii) | payment in full of any expenses payable pursuant to Clause 20.2 (Commitment fee) which are due and payable on the date of this Agreement; |
| (c) | that at the date of the Drawdown Notice and at the Drawdown Date: |
| (i) | no Event of Default or Potential Event of Default has occurred or is continuing or would result from the borrowing of the relevant Advance; and |
| (ii) | the representations and warranties in Clause 10 (Representations and Warranties) and those of the Borrowers or any Security Party which are set out in the other Finance Documents would be true and not misleading if repeated on each of those dates with reference to the circumstances then existing; |
| (iii) | none of the circumstances contemplated by Clause 5.7 (Market disruption) has occurred and is continuing; and |
| (iv) | there has been no material adverse change in the business, management, condition (financial or otherwise), results of operations, operation, performance, prospects or properties of the Borrowers or any of them and/or the Corporate Guarantor applying as at 30 September 2021; |
| (d) | that, if the ratio set out in Clause 15.1 (Minimum required security cover) were applied immediately following the making of the Advance, the Borrowers would not be obliged to provide additional security or prepay part of the Loan under that Clause; and |
| (e) | that the Agent has received, and found to be acceptable to it, any further opinions, consents, agreements and documents in connection with the Finance Documents which the Agent may, with the authorisation of the Majority Lenders, request by notice to the Borrowers prior to the Drawdown Date. |
| 9.2 | Waiver of conditions precedent |
If the Majority Lenders, at their discretion, permit the Advance to be borrowed before certain of the conditions referred to in Clause 9.1 (Documents, fees and no default) are satisfied, the Borrowers shall ensure that those conditions are satisfied within 5 Business Days after the Drawdown Date (or such longer period as the Agent may, with the authority of the Majority Lenders, specify).
| 9.1 | Condition subsequent |
Borrower B undertakes to deliver or cause to be delivered to the Agent by 30 January 2022, a duly executed original of a Shares Security Deed in respect of all the issued shares in Borrower B executed by the Shareholder of Borrower B in favour of the Security Trustee.
| 10 | REPRESENTATIONS AND WARRANTIES |
| 10.1 | General |
Each Borrower represents and warrants (which representations and warranties (other than the ones in Clauses 10.11 (Information) and 10.12 (No litigation)) shall survive the execution of this Agreement and shall be deemed to be repeated throughout the Security Period on the first day of each Interest Period with respect to the facts and circumstances then existing) to each Creditor Party as follows.
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| 10.2 | Status |
| (a) | Each of Borrower A, Borrower C, Borrower D, Borrower E and Borrower F is duly incorporated and validly existing and in good standing under the laws of the Republic of the Marshall Islands. |
| (b) | Borrower B is duly incorporated and validly existing and in good standing under the laws of the Kingdom of Belgium. |
| 10.3 | Share capital and ownership |
| (a) | Each of Borrower A, Borrower E and Borrower F are authorised to issue 500 registered and/or bearer shares without par value and has issued 500 shares, all of which are fully paid and non-assessable, and the ownership of all those shares is held in registered form by the relevant Shareholder, free of any Security Interest or other claim, save for any Security Interests created by the Finance Documents. |
| (b) | Borrower B is authorised to issue fifty-six thousand nine hundred and ninety (56,990) of no par value, and the ownership of all those shares is held in registered form by the relevant Shareholder, free of any Security Interest or other claim, save for any Security Interests created by the Finance Documents. |
| (c) | Each of Borrower C and Borrower D are authorised to issue five hundred (500) registered shares with a par value of one US Dollar (US$1.00 ) per share and has issued 500 shares, all of which are fully paid and non-assessable, and the ownership of all those shares is held in registered form by the relevant Shareholder, free of any Security Interest or other claim, save for any Security Interests created by the Finance Documents. |
| (d) | All the shares of each Shareholder are held directly or indirectly, free of any Security Interest or other claim, by the Corporate Guarantor. |
| 10.4 | Corporate power |
Each Borrower has the corporate capacity, and has taken all corporate action and obtained all consents necessary for it to:
| (a) | continue to own the Ship owned by it under the relevant Approved Flag; |
| (b) | execute the Finance Documents to which that Borrower is a party; and |
| (c) | borrow under this Agreement and to make all the payments contemplated by, and to comply with, those Finance Documents to which that Borrower is a party. |
| 10.5 | Consents in force |
All the consents referred to in Clause 10.4 (Corporate power) remain in force and nothing has occurred which makes any of them liable to revocation.
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| 10.6 | Legal validity; effective Security Interests |
The Finance Documents to which that Borrower is a party, do now or, as the case may be, will, upon execution and delivery (and, where applicable, registration as provided for in the Finance Documents):
| (a) | constitute that Borrower’s legal, valid and binding obligations enforceable against that Borrower in accordance with their respective terms; and |
| (b) | create legal, valid and binding Security Interests enforceable in accordance with their respective terms over all the assets to which they, by their terms, relate, |
subject to any relevant insolvency laws affecting creditors’ rights generally.
| 10.7 | No third party Security Interests |
Without limiting the generality of Clause 10.6 (Legal validity; effective Security Interests), at the time of the execution and delivery of each Finance Document to which a Borrower is a party:
| (a) | each Borrower will have the right to create all the Security Interests which that Finance Document purports to create; and |
| (b) | no third party will have any Security Interest (except for Permitted Security Interests) or any other interest, right or claim over, in or in relation to any asset to which any such Security Interest, by its terms, relates. |
| 10.8 | No conflicts |
The execution by a Borrower of each Finance Document to which it is a party, and the borrowing by that Borrower of the Loan, and its compliance with each Finance Document to which it is a party will not involve or lead to a contravention of:
| (a) | any law or regulation; or |
| (b) | the constitutional documents of that Borrower; or |
| (c) | any contractual or other obligation or restriction which is binding on that Borrower or any of its assets. |
| 10.9 | No withholding taxes |
All payments which each Borrower is liable to make under the Finance Documents to which it is a party may be made without deduction or withholding for or on account of any tax payable under any law of any Pertinent Jurisdiction.
| 10.10 | No default |
No Event of Default or Potential Event of Default has occurred and is continuing or would result from the entry into, the performance of, or any transaction contemplated by, any Finance Document.
| 10.11 | Information |
All information which has been provided in writing by or on behalf of the Borrowers or any member of the Group to any Creditor Party in connection with any Finance Document satisfied the requirements of Clause 11.5 (Information provided to be accurate); all audited and unaudited accounts which have been so provided satisfied the requirements of Clause 11.7 (Form of financial statements); and there has been no material adverse change in the financial position or state of affairs, operation, performance or prospects of the Borrowers or any of them or any Security Party (excluding the Approved Manager) as at 30 June 2021 from that disclosed to the Agent.
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| 10.12 | No litigation |
No material, legal or administrative action involving any Borrower or any Security Party (excluding the Approved Manager) has been commenced or taken or, to a Borrower’s knowledge, is likely to be commenced or taken.
| 10.13 | Compliance with certain undertakings |
At the date of this Agreement, each Borrower is in compliance with Clauses 11.2 (Title and negative pledge), 11.4 (No other liabilities or obligations to be incurred), 11.9 (Consents) and 11.13 (Confirmation of no default).
| 10.14 | Taxes paid |
Each Borrower has paid all taxes applicable to, or imposed on or in relation to that Borrower, its business or the Ship owned by it.
| 10.15 | No money laundering; anti-bribery |
None of the Borrowers, the Security Parties and the Designated Shareholder nor any of their subsidiaries, directors or officers, or, to their best knowledge, any affiliate, agent or employee of them, have engaged in any activity or conduct which would violate any applicable sanctions, anti-bribery, anti-corruption or anti-money laundering laws, regulations or rules and each of the Borrowers, the Security Parties and the Designated Shareholder has instituted and maintains policies and procedures designed to prevent violation of such laws, regulations and rules.
| 10.16 | ISM Code, ISPS Code Compliance and Environmental Laws |
All requirements of the ISM Code, ISPS Code and Environmental Laws as they relate to the Borrowers, the Approved Manager and the Ships have been complied with.
| 10.17 | No immunity |
No Borrower, nor any of its assets is entitled to immunity on the grounds of sovereignty or otherwise from any legal action or proceeding (which shall include, without limitation, suit attachment prior to judgement, execution or other enforcement).
| 10.18 | Sanctions |
None of the Borrowers, the Security Parties, the Designated Shareholder or any charterer in respect of a Ship nor any of their subsidiaries, directors or officers, or, to their best knowledge, any affiliate, agent or employee of them, is an individual or entity (a “Person”), that is, or is owned or controlled by Persons that are: (i) the target of any Sanctions (a “Sanctioned Person”) or (ii) located, organized or resident in a country or territory that is, or whose government is, the target of Sanctions broadly prohibiting dealings with such government, country or territory (a “Sanctioned Country”) or (iii) in violation of any Sanctions, anti-bribery, anti-corruption or anti-money laundering laws, regulations or rules.
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| 10.19 | Validity and completeness of the Existing Charters and the Collateral Charters |
| (a) | Each Existing Charter and Collateral Charter constitute legal, valid, binding and enforceable obligations of each Borrower and each Collateral Provider which is a party thereto. |
| (b) | The copies of the Existing Charters and the Collateral Charters delivered to the Agent before the date of this Agreement are true and complete copies. |
| (c) | No amendments or additions to any Existing Charter and any Collateral Charter have been agreed nor has any Borrower or any Collateral Provider waived any of its respective rights under the relevant Existing Charter and the relevant Collateral Provider. |
| 10.20 | Insolvency |
In relation to each Borrower, no corporate action, legal proceeding or other procedure or step described in paragraph (g) of Clause 19.1 (Events of Default) or creditors’ process described in that clause has been taken or, to its knowledge, threatened in relation to it, and none of the circumstances described in paragraph (g) of Clause 19.1 (Events of Default) applies to it.
| 11 | GENERAL UNDERTAKINGS |
| 11.1 | General |
Each Borrower undertakes with each Creditor Party to comply with the following provisions of this Clause 11 (General Undertakings) at all times during the Security Period except as the Agent may, with the authority of the Majority Lenders, otherwise permit in writing.
| 11.2 | Title and negative pledge |
Each Borrower will:
| (a) | hold the legal title to, and own the entire beneficial interest in the Ship owned by it, the Insurances and Earnings, free from all Security Interests and other interests and rights of every kind, except for those created by the Finance Documents and the effect of assignments contained in the Finance Documents; |
| (b) | not create or permit to arise any Security Interest (except for Permitted Security Interests) over any other asset, present or future; and |
| (c) | procure that its liabilities under the Finance Documents to which it is party do and will rank at least pari passu with all other present and future unsecured liabilities, except for liabilities which are mandatorily preferred by law. |
| 11.3 | No disposal of assets |
No Borrower will transfer, lease or otherwise dispose of:
| (a) | all or a substantial part of its assets, whether by one transaction or a number of transactions, whether related or not; or |
| (b) | any debt payable to it or any other right (present, future or contingent right) to receive a payment, including any right to damages or compensation, |
but paragraph (a) does not apply to any charter of a Ship as to which Clause 14.13 (Restrictions on chartering, appointment of managers etc.) applies.
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| 11.4 | No other liabilities or obligations to be incurred |
No Borrower will incur any liability or obligation except:
| (a) | liabilities and obligations under the Finance Documents to which it is a party and under the relevant unsecured guarantee executed by each Borrower under the Senior Secured Notes and the Subordinated Loan Agreements; |
| (b) | in relation to Borrower B, any Permitted Financial Indebtedness; |
| (c) | subject to other provisions of this Agreement, liabilities or obligations reasonably incurred in the ordinary course of trading, maintaining, repairing, operating and chartering the Ship owned by it; and |
| (d) | Financial Indebtedness to any other corporation which is a member of the Group or individual who is a shareholder or majority shareholder in a member of the Group Provided that such Financial Indebtedness shall be fully subordinated to the Loan and the relevant Borrower shall, promptly following the Agent’s demand, execute or procure the execution of any documents which the Agent specifies to create or maintain the subordination of the rights of the relevant member of the Group against the relevant Borrower to those of the Creditor Parties under the Finance Documents. |
| 11.5 | Information provided to be accurate |
All financial and other information which is provided in writing by or on behalf of a Borrower under or in connection with any Finance Document will be true, correct, accurate and not misleading and will not omit any material fact or consideration.
| 11.6 | Provision of financial statements |
Each Borrower will send or procure that they are sent to the Agent:
| (a) | as soon as possible, but in no event later than 180 days after the end of each financial year of the Corporate Guarantor (commencing with the financial year ending on 31 December 2021), the audited annual consolidated accounts of the Group; and |
| (b) | as soon as possible, but in no event later than 90 days after the end of the 6-month period ending on 30 June in each financial year of the Corporate Guarantor (commencing with the 6-month period ending on 30 June 2022), the unaudited semi-annual consolidated management accounts in respect of the Group, duly certified as to their correctness by an officer of the Corporate Guarantor; and |
| (c) | promptly after each request by the Agent, such further financial information about that Borrower, the Ship owned by it and the Corporate Guarantor or any other member of the Group (including, but not limited to, information regarding the charter arrangements, Financial Indebtedness and operating expenses) as the Agent may require. |
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| 11.7 | Form of financial statements |
All accounts (audited and unaudited) delivered under Clause 11.6 (Provision of financial statements) will:
| (a) | be prepared in accordance with all applicable laws and US GAAP; |
| (b) | give a true and fair view of the state of affairs of the relevant person at the date of those accounts and of its profit for the period to which those accounts relate; and |
| (c) | fully disclose or provide for all significant liabilities of the Group. |
| 11.8 | Shareholder notices |
Each Borrower will send to the Agent following a request by the Agent, and at the same time as they are despatched, copies of all communications which are despatched to that Borrower’s shareholders or any class of them.
| 11.9 | Consents |
Each Borrower will, and will procure that each Security Party will, maintain in force and promptly obtain or renew, and will promptly send certified copies to the Agent of, all consents required:
| (a) | for that Borrower and that Security Party to perform its obligations under any Finance Document or any Charterparty to which it is party; |
| (b) | for the validity or enforceability of any Finance Document and any Charterparty to which it is party; and |
| (c) | for that Borrower to continue to own and operate the Ship owned by it, |
and that Borrower will, and will procure that each Security Party will, comply with the terms of all such consents.
| 11.10 | Maintenance of Security Interests |
Each Borrower will:
| (a) | at its own cost, do all that it reasonably can to ensure that any Finance Document validly creates the obligations and the Security Interests which it purports to create; and |
| (b) | without limiting the generality of paragraph (a) above, at its own cost, promptly register, file, record or enrol any Finance Document with any court or authority in all Pertinent Jurisdictions, pay any stamp, registration or similar tax in all Pertinent Jurisdictions in respect of any Finance Document, give any notice or take any other step which, in the opinion of the Majority Lenders, is or has become necessary or desirable for any Finance Document to be valid, enforceable or admissible in evidence or to ensure or protect the priority of any Security Interest which it creates. |
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| 11.11 | Notification of litigation |
Each Borrower will provide the Agent with details of any legal or administrative action involving that Borrower, any Security Party, the Approved Manager, the Ship owned by it, the Earnings or the Insurances in respect of that Ship as soon as such action is instituted or it becomes apparent to that Borrower that it is likely to be instituted, unless it is clear that the legal or administrative action cannot be considered material in the context of any Finance Document.
| 11.12 | Principal place of business |
Each Borrower will maintain its place of business, and keep its corporate documents and records, at the address stated in paragraph (a) of Clause 28.2 (Addresses for communications); and no Borrower will establish, or do anything as a result of which it would be deemed to have, a place of business in the United States or the United Kingdom or any country other than Greece.
| 11.13 | Confirmation of no default |
Each Borrower will, within 2 Business Days after service by the Agent of a written request, serve on the Agent a notice which is signed by an officer of each Borrower and which:
| (a) | states that no Event of Default or Potential Event of Default has occurred; or |
| (b) | states that no Event of Default or Potential Event of Default has occurred, except for a specified event or matter, of which all material details are given. |
The Agent may serve requests under this Clause 11.13 (Confirmation of no default) from time to time; this Clause 11.13 (Confirmation of no default) does not affect the Borrowers’ obligations under Clause 11.14 (Notification of default).
| 11.14 | Notification of default |
Each Borrower will notify the Agent as soon as that Borrower becomes aware of the occurrence of an Event of Default or a Potential Event of Default and will thereafter keep the Agent fully up-to-date with all developments.
| 11.15 | Provision of further information |
Each Borrower will, as soon as practicable after receiving a request, provide the Agent with any additional financial or other information relating:
| (a) | to that Borrower, the Ship owned by it, the Insurances, the Earnings or the Corporate Guarantor; |
| (b) | to any other matter relevant to, or to any provision of, a Finance Document; or |
| (c) | any information requested in respect of that Borrower, the Corporate Guarantor, the Shareholder and the Designated Shareholder in connection with the Creditor Parties’ and/or the Account Bank’s “Know your customer” regulations, including, but not limited to information required pursuant to all applicable laws and regulations, including, without limitation, the laws of the European Union, France and the United States of America in connection with that Borrower, the Corporate Guarantor and any other Security Party and their respective beneficial owners, |
which may be requested by the Agent, the Security Trustee or any Lender at any time.
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| 11.16 | Provision of copies and translation of documents |
Each Borrower will supply the Agent with a sufficient number of copies of the documents referred to above to provide 1 copy for each Creditor Party; if the Agent so requires in respect of any of those documents, that Borrower will provide a certified English translation prepared by a translator approved by the Agent.
| 11.17 | “Know your customer” checks. If: |
| (a) | the introduction of or any change in (or in the interpretation, administration or application of) any law or regulation made after the date of this Agreement; |
| (b) | any change in the status of any Borrower or any Security Party after the date of this Agreement; or |
| (c) | 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 the Agent or any Lender (or, in the case of paragraph (c), 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, the Borrowers shall promptly upon the request of the Agent or any Lender supply, or procure the supply of, such documentation and other evidence as is reasonably requested by the Agent (for itself or on behalf of any Lender) or the Lender concerned (for itself or, in the case of the event described in paragraph (c), on behalf of any prospective new Lender) in order for the Agent, the Lender concerned or, in the case of the event described in paragraph (c), 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.
| 11.18 | Sanctions |
| (a) | None of the Borrowers and the Security Parties will, directly or indirectly, use the proceeds of the loan hereunder, or lend, contribute or otherwise make available such proceeds to any subsidiary, affiliate, joint venture partner or any other Person, (i) to fund any activities or business of or with any Person, or in any country or territory, that, at the time of such funding, is, a Sanctioned Person or Sanctioned Country or (ii) use in repayment of any moneys due to the Finance Parties any earnings of the Ship paid directly or indirectly from any activities or business of or with any Person, or in any country, territory or port, that, at the time of such payment, is, a Sanctioned Person or Sanctioned Country, or (iii) in any other manner that would result in a violation of Sanctions by any Person (including the Borrowers, the Corporate Guarantor, the Approved Manager, the Collateral Providers, an Existing Charterer, a Collateral Charterer, a future charterer of a Ship or a Collateral Ship and any Person participating in the loan hereunder, whether as underwriter, advisor, investor, lender, hedge provider, facility or security agent or otherwise); |
| (b) | Without limiting paragraphs (a) and (b) of Clause 14.10 (Compliance with laws etc.), the Borrowers shall, and shall procure that the Collateral Providers, the Existing Charterers and the Collateral Charterers shall: |
| (i) | comply with, and shall use reasonably endeavors to ensure compliance with, all Sanctions (including obtaining any applicable consents, authorizations or licenses) in respect of a Ship or a Collateral Ship; |
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| (ii) | not cause or permit a Ship or a Collateral Ship to be registered in a Sanctioned Country or used by or for the benefit of a Sanctioned Person; |
| (iii) | not cause or permit the Ship to be used in or otherwise to go to, stop in or call at, a Sanctioned Country; |
| (iv) | not cause or permit a Ship or a Collateral Ship to be operated by a charterer or sub-charterer whose state of incorporation and/or principal place of business is a Sanctioned Country and/or is Sanctioned Person; |
| (v) | ensure that each Existing Charter, each Collateral Charter or any other charterparty or sub-charterparty in respect of each Ship or each Collateral Ship shall contain, contractual language which has the effect of prohibiting the use of that Ship or that Collateral Ship in violation of any Sanctions; and |
| (vi) | not cause or permit a Ship or a Collateral Charter to be used in any manner or business which is prohibited by applicable anti-corruption, anti-money laundering, countering the financing of terrorism, and export and import laws and regulations. |
| (c) | Each Borrower shall not, and shall procure that each Collateral Provider shall not, use, cause or permit a Ship or a Collateral Ship to be used in a way that would result in a violation of Sanctions by each Borrower, each Collateral Provider, each Existing Charterer, each Collateral Charterer, any future charterer of a Ship or a Collateral Ship or a Creditor Party. |
| 11.19 | Hedging of interest rate risks – Right of first refusal |
The Borrowers hereby grant to the Lenders a right of first refusal for the purpose of hedging any part of the interest rate risk under this Agreement throughout the Security Period. In the event that the Borrowers decide to hedge their exposure under this Agreement, they shall enter into such documentation as may be required by the relevant Lender (in such capacity the “Swap Bank”) and the provisions of this Agreement will be amended to incorporate the amendments required, including, but not limited to, Clause 17 (Application of Receipts) reflecting pari passu sharing in the security and receipts between the Lenders and the Swap Bank.
| 11.20 | Minimum Liquidity |
| (a) | Each Borrower shall maintain in its Earnings Account credit balances in an aggregate amount of not less than the Minimum Liquidity, commencing from the Drawdown Date and at all times thereafter throughout the Security Period. |
| (b) | In this Clause 11.20 (Minimum Liquidity): |
“Minimum Liquidity” means:
| (a) | from the Drawdown Date until 31 March 2022, $500,000 per Ship subject to a Mortgage; and |
| (b) | at all times thereafter during the Security Period: |
| (i) | if the Security Cover Ratio is less than 170 per cent., $750,000 per Ship subject to a Mortgage; or |
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| (ii) | if the Security Cover Ratio is equal to or above 170 per cent., $500,000 per Ship subject to a Mortgage. |
| 11.21 | No amendment to the Existing Charters and the Collateral Charters |
| (a) | No Borrower will agree to any material amendment (and for, the avoidance of doubt, “material” to mean any amendment which may detrimentally affect the interests of any Creditor Party) or supplement to, or waive or fail to enforce, any Existing Charter or any of its provisions. |
| (b) | The Borrowers shall procure that no Collateral Provider will agree to any material amendment (and for, the avoidance of doubt, “material” to mean any amendment which may detrimentally affect the interests of any Creditor Party) or supplement to, or waive or fail to enforce, that Collateral Charter or any of its provisions. |
| 11.22 | Use of websites |
| (a) | Each Borrower acknowledges an agrees that ay information under this Agreement may be delivered to a Lender (through the Agent) on to an electronic website (a “Website Lender”) if: |
| (i) | the Agent and the Lender agree; |
| (ii) | the Agent appoints a website provider and designates an electronic website for this purpose (the “Designated Website”); |
| (iii) | the Designated Website is used for communication between the Agent and the Lenders; |
| (iv) | the Agent notifies the Lenders of the address for the website; |
| (v) | the information can only be posted on the website by the Agent; and |
| (vi) | the information posted is in a format agreed between each Borrower and the Agent. |
| (b) | The cost of the website shall be borne by each Borrower, subject to such cost being agreed by each Borrower beforehand. |
| (c) | Any Website Lender may request from any Borrower, through the Agent, one paper copy of any information required to be provided under this Agreement which is posted onto the Designated Website and each Borrower shall at its own cost comply with any such request within ten Business Days. |
| 12 | CORPORATE UNDERTAKINGS |
| 12.1 | General |
Each Borrower also undertakes with each Creditor Party to comply with the following provisions of this Clause 12 (Corporate Undertakings) at all times during the Security Period except as the Agent may, with the authorisation of the Majority Lenders, otherwise permit.
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| 12.2 | Maintenance of status |
| (a) | Each of Borrower A, Borrower C, Borrower D, Borrower E and Borrower F will maintain its separate corporate existence and remain in good standing under the laws of the Republic of the Marshall Islands. |
| (b) | Borrower B will maintain its separate corporate existence and remain in good standing under the laws of the Belgium. |
| 12.3 | Negative undertakings |
No Borrower will:
| (a) | carry on any business other than the ownership, chartering and operation of the Ship owned by it; or |
| (b) | pay any dividend or make any other form of distribution or effect any form of redemption, purchase or return of share capital if: |
| (i) | an Event of Default has occurred at such time; or |
| (ii) | an Event of Default would occur as a direct result of such distribution, redemption, purchase or return; or |
| (c) | provide any form of credit or financial assistance or issue guarantees in favour of any other corporation or individual other than in the normal course of its business Provided that that corporation or individual to whom any form of credit or financial assistance has been granted or in favour of whom the guarantee has been issued fully subordinates its rights to the rights of the Creditor Parties under the Finance Documents on terms acceptable to the Agent; |
| (d) | provide any form of credit or financial assistance to: |
| (i) | a person who is directly or indirectly interested in that Borrower’s share or loan capital; or |
| (ii) | any company in or with which such a person is directly or indirectly interested or connected, |
or enter into any transaction with or involving such a person or company 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) | open or maintain any account with any bank or financial institution except accounts with the Account Bank for the purposes of the Finance Documents and any accounts disclosed to the Agent on or prior to the date of this Agreement; or |
| (f) | issue, allot or grant any person a right to any shares in its capital or repurchase or reduce its issued share capital; or |
| (g) | 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, or enter into any transaction in a derivative other than for hedging of the Loan, save in relation to Borrower B in the ordinary course of business of chartering, operating and trading vessels; or |
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| (h) | enter into any form of amalgamation, merger or de-merger or any form of reconstruction or reorganisation. |
| 13 | INSURANCE |
| 13.1 | General |
Each Borrower undertakes with each Creditor Party to comply with the following provisions of this Clause 13 (Insurance), from the Drawdown Date and throughout the term of the Security Period, except as the Agent may, with the authority of the Majority Lenders, otherwise permit in writing.
| 13.2 | Maintenance of obligatory insurances |
Each Borrower shall keep the Ship owned by it, at all times during the Security Period, insured at the expense of that Borrower against:
| (a) | fire and usual marine risks (including hull and machinery and excess risks); and |
| (b) | war risks; and |
| (c) | protection and indemnity, meaning the usual risks including liability for oil pollution and excess war risk P&I cover; and |
| (d) | any other risks against which the Lenders consider, having regard to practices and other circumstances prevailing at the relevant time, it would in the opinion of the Lenders be reasonable for that Borrower to insure and which are specified by the Security Trustee by notice to that Borrower. |
| 13.3 | 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 such amounts as shall from time to time be approved by the Agent but in any event in an amount not less than the greater of (i) the Market Value of the Ship owned by it and (ii) an amount which, when aggregated with the amount for which the other Ships then subject to a Mortgage is insured, is equal to 120 per cent. of the Loan; and |
| (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 (with the international group of protection and indemnity clubs) and the international marine insurance market (currently $1,000,000,000); |
| (d) | in relation to protection and indemnity risks in respect of the relevant Ship’s full value and tonnage; |
| (e) | on such terms as shall from time to time be approved in writing by the Agent (including, without limitation, a blocking and trapping clause); and |
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| (f) | through approved brokers and with approved insurance companies and/or underwriters or, in the case of war risks and protection and indemnity risks, in approved war risks and protection and indemnity risks associations which are members of the International Group of Protection and Indemnity Associations. |
| 13.4 | Further protections for the Creditor Parties |
In addition to the terms set out in Clause 13.3 (Terms of obligatory insurances), each Borrower shall procure that the obligatory insurances shall:
| (a) | subject always to paragraph (b), name that Borrower as the sole named assured unless the interest of every other named assured is limited: |
| (i) | in respect of any obligatory insurances for hull and machinery and war risks; |
| (A) | to any provable out-of-pocket expenses that 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; |
| (b) | name (or be amended to name) the Security Trustee as mortgagee for its rights and interests, warranted no operational interest and with full waiver of rights of subrogation against the Security Trustee, but without the Security Trustee thereby being liable to pay (but having the right to pay) premiums, calls or other assessments in respect of such insurance; |
| (c) | name the Security Trustee as sole loss payee with such directions for payment as the Security Trustee may specify; |
| (d) | provide that all payments by or on behalf of the insurers under the obligatory insurances to the Security Trustee shall be made without set-off, counterclaim or deductions or condition whatsoever; |
| (e) | provide that the insurers shall waive, to the fullest extent permitted by English law, their entitlement (if any) (whether by statute, common law, equity, or otherwise) to be subrogated to the rights and remedies of the Security Trustee in respect of any rights or interests (secured or not) held by or available to the Security Trustee in respect of the Secured Liabilities, until the Secured Liabilities shall have been fully repaid and discharged, except that the insurers shall not be restricted by the terms of this paragraph (d) from making personal claims against persons (other than any Borrower or any Creditor Party) in circumstances where the insurers have fully discharged their liabilities and obligations under the relevant obligatory insurances; |
| (f) | provide that such obligatory insurances shall be primary without right of contribution from other insurances which may be carried by the Security Trustee; |
| (g) | provide that the Security Trustee may make proof of loss if that Borrower fails to do so; and |
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| (h) | provide that if any obligatory insurance is cancelled, or if any substantial change is made in the coverage which adversely affects the interest of the Security Trustee, or if any obligatory insurance is allowed to lapse for non-payment of premium, such cancellation, charge or lapse shall not be effective with respect to the Security Trustee for 30 days (or 7 days in the case of war risks) after receipt by the Security Trustee of prior written notice from the insurers of such cancellation, change or lapse. |
| 13.5 | Renewal of obligatory insurances |
Each Borrower shall:
| (a) | at least 14 days before the expiry of any obligatory insurance: |
| (i) | notify the Security Trustee of the brokers (or other insurers) and any protection and indemnity or war risks association through or with whom that Borrower proposes to renew that insurance and of the proposed terms of renewal; and |
| (ii) | in case of any substantial change in insurance cover, obtain the Lenders’ approval to the matters referred to in paragraph (i) above; |
| (b) | at least 7 days before the expiry of any obligatory insurance, renew the insurance; and |
| (c) | procure that the approved brokers and/or the war risks and protection and indemnity associations with which such a renewal is effected shall promptly after the renewal notify the Security Trustee in writing of the terms and conditions of the renewal. |
| 13.6 | Copies of policies; letters of undertaking |
Each Borrower shall ensure that all approved brokers provide the Security Trustee with copies of all policies relating to the obligatory insurances which they effect or renew and of a letter or letters or undertaking in a form required by the Lenders and including undertakings by the approved brokers that:
| (a) | 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 13.4 (Further protections for the Creditor Parties); |
| (b) | they will hold such policies, and the benefit of such insurances, to the order of the Security Trustee in accordance with the said loss payable clause; |
| (c) | they will advise the Security Trustee immediately of any material change to the terms of the obligatory insurances; |
| (d) | they will notify the Security Trustee, not less than 14 days before the expiry of the obligatory insurances, in the event of their not having received notice of renewal instructions from that Borrower or its agents and, in the event of their receiving instructions to renew, they will promptly notify the Security Trustee of the terms of the instructions; and |
| (e) | they will not set off against any sum recoverable in respect of a claim relating to the Ship owned by it under such obligatory insurances any premiums or other amounts due to them or any other person whether in respect of that Ship or otherwise, they waive any lien on the policies or, any sums received under them, which they might have in respect of such premiums or other amounts, and they will not cancel such obligatory insurances by reason of non-payment of such premiums or other amounts, and will arrange for a separate policy to be issued in respect of that Ship forthwith upon being so requested by the Security Trustee. |
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| 13.7 | 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 provides the Security Trustee with:
| (a) | a certified copy of the certificate of entry for that Ship; and |
| (b) | a letter or letters of undertaking in such form as may be required by the Lenders; and |
| (c) | where required to be issued under the terms of insurance/indemnity provided by that Borrower’s protection and indemnity association, a certified copy of each United States of America voyage quarterly declaration (or other similar document or documents) made by that Borrower in relation to that Ship in accordance with the requirements of such protection and indemnity association; and |
| (d) | 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. |
| 13.8 | Deposit of original policies |
Each Borrower shall ensure that all policies relating to obligatory insurances are deposited with the approved brokers through which the insurances are effected or renewed.
| 13.9 | Payment of premiums |
Each Borrower shall punctually pay all premiums or other sums payable in respect of the obligatory insurances and produce all relevant receipts when so required by the Security Trustee.
| 13.10 | Guarantees |
Each Borrower shall ensure that any guarantees required by a protection and indemnity or war risks association are promptly issued and remain in full force and effect.
| 13.11 | Restrictions on employment |
No Borrower shall employ the Ship owned by it, nor permit her to be employed, outside the cover provided by any obligatory insurances.
| 13.12 | Compliance with terms of insurances |
No Borrower shall either do or omit to do (or 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 thereunder repayable in whole or in part; and in particular:
| (a) | each Borrower shall 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 paragraph (c) of Clause 13.6 (Copies of policies; letters of undertaking) above) ensure that the obligatory insurances are not made subject to any exclusions or qualifications to which the Security Trustee has not given its prior approval; |
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| (b) | no Borrower shall make any changes relating to the classification or the Classification Society or manager or operator of the Ship owned by it approved by the underwriters of the obligatory insurances; |
| (c) | each Borrower shall make 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 |
| (d) | no Borrower shall 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 (including but not limited to any applicable laws and Sanctions), without first obtaining the consent of the insurers and complying with any requirements (as to extra premium or otherwise) which the insurers specify. |
| 13.13 | 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 without the prior written consent of the Security Trustee.
| 13.14 | Settlement of claims |
No Borrower shall settle, compromise or abandon any claim under any obligatory insurance for Total Loss or for a Major Casualty, and shall do all things necessary and provide all documents, evidence and information to enable the Security Trustee to collect or recover any moneys which at any time become payable in respect of the obligatory insurances.
| 13.15 | Provision of copies of communications |
Each Borrower shall provide the Security Trustee, at the time of each such communication, copies of all written communications in case of, but not limited to, an Event of Default, Total Loss or Major Casualty between that Borrower and:
| (a) | the approved brokers; and |
| (b) | the approved protection and indemnity and/or war risks associations; and |
| (c) | the approved insurance companies and/or underwriters, which relate directly or indirectly to: |
| (i) | that Borrower’s obligations relating to the obligatory insurances including, without limitation, all requisite declarations and payments of additional premiums or calls; and |
| (ii) | any credit arrangements made between that Borrower and any of the persons referred to in paragraphs (a) or (b) above relating wholly or partly to the effecting or maintenance of the obligatory insurances. |
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| 13.16 | Provision of information |
In addition, each Borrower shall promptly provide the Security Trustee (or any persons which it may designate) with any information which the Security Trustee (or any such designated person) requests for the purpose of:
| (a) | obtaining or preparing any report from an independent marine insurance broker appointed by the Agent 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 13.17 (Mortgagee’s interest and additional perils insurances) below or dealing with or considering any matters relating to any such insurances, |
and that Borrower shall, forthwith upon demand, indemnify the Security Trustee in respect of all fees and other expenses incurred by or for the account of the Security Trustee in connection with any such report as is referred to in paragraph (a) above.
| 13.17 | Mortgagee’s interest and additional perils insurances |
The Security Trustee shall 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 Lenders may from time to time consider appropriate:
| (a) | a mortgagee’s interest marine insurance in relation to the Ships in an amount equal to 110 per cent. of the Loan, providing for the indemnification of the Creditor 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 that Ship or of the Borrower owning that Ship, being a loss or damage which is 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: |
| (i) | 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; |
| (ii) | any act or omission, whether deliberate, negligent or accidental, or any knowledge or privity of that Borrower, any other person referred to in paragraph (i) 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 |
| (iii) | any other matter capable of being insured against under a mortgagee’s interest marine insurance policy whether or not similar to the foregoing; |
| (b) | a mortgagee’s interest additional perils policy in relation to the Ships in an amount equal to 110 per cent. of the Loan, providing for the indemnification of the Security Trustee against, among other things, any possible losses or other consequences of any Environmental Claim, including the risk of expropriation, arrest or any form of detention of a Ship, the imposition of any Security Interest 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, |
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and the Borrowers shall upon demand fully indemnify the Security Trustee in respect of all premiums and other expenses which are incurred in connection with or with a view to effecting, maintaining or renewing any such insurance or dealing with, or considering, any matter arising out of any such insurance.
| 13.18 | Review of insurance requirements |
The Lenders shall be entitled to review the requirements of this Clause 13 (Insurance) from time to time in order to take account of any changes in circumstances after the date of this Agreement which are, in the opinion of the Lenders, significant and capable of affecting any Borrower or any Ship and its or their Insurances (including, without limitation, changes in the availability or the cost of Insurances or the risks to which the Borrower owning that Ship may be subject), and may appoint insurance consultants in relation to this review at the cost of the Borrowers, such review to be carried out at the Agent’s request, at any time during the Security Period if the Agent (acting on the instructions of the Lenders) considers necessary (the reasonable fees of the insurance consultants to conduct such review shall be deducted from the Earnings Accounts (or any of them) and each Borrower hereby agrees to arrange the transfer of monies from its Earnings Account in order to pay such fees) Provided that the Borrowers shall not be required to pay the fees of the insurance consultants to conduct such review more often than once a year unless an Event of Default has occurred and is continuing, or unless a change in the terms of the cover of any Ship has occurred.
| 13.19 | Modification of insurance requirements |
The Security Trustee shall notify the Borrowers of any proposed modification under Clause 13.18 (Review of insurance requirements) to the requirements of this Clause 13 (Insurance) which the Lenders consider appropriate in the circumstances, and such modification shall take effect on and from the date it is notified in writing to the Borrowers as an amendment to this Clause 13 (Insurance) and shall bind the Borrowers accordingly.
| 13.20 | Compliance with mortgagee’s instructions |
The Security Trustee shall be entitled (without prejudice to or limitation of any other rights which it may have or acquire under any Finance Document) to require a Ship to remain at any safe port or to proceed to and remain at any safe port designated by the Security Trustee until the Borrower owning that Ship implements any amendments to the terms of the obligatory insurances and any operational changes required as a result of a notice served under Clause 13.19 (Modification of insurance requirements).
| 14 | SHIP COVENANTS |
| 14.1 | General |
Each Borrower also undertakes with each Creditor Party to comply with the following provisions of this Clause 14 (Ship covenants), at all times during the Security Period, except as the Agent may, with the authorisation of the Majority Lenders, otherwise permit in writing.
| 14.2 | Ship’s name and registration |
Each Borrower shall keep the Ship owned by it registered in its name under an Approved Flag; shall not do or allow to be done anything as a result of which such registration might be cancelled or imperilled; and shall not change the name or port of registry of that Ship, without the prior written consent of the Agent (acting with the authorisation of the Lenders), which shall not be unreasonably withheld, and shall remain acceptable to the Agent (acting with the authorisation of the Lenders) at all times.
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| 14.3 | Repair and classification |
Each Borrower shall keep the Ship owned by it in a good, safe and seaworthy condition and state of repair:
| (a) | consistent with first-class ship ownership and management practice; |
| (b) | so as to maintain the highest class with a Classification Society which is a member of IACS acceptable to the Agent (acting with the authorisation of the Lenders) free of overdue recommendations and conditions of such Classification Society; |
| (c) | so as to comply with all laws and regulations applicable to vessels registered at ports of the Approved Flag State or to vessels trading to any jurisdiction to which such Ship may trade from time to time, including but not limited to the ISM Code and the ISM Code Documentation and the ISPS Code; and |
| (d) | each Borrower shall use its commercially reasonable efforts to allow the Agent (or its agents), at any time, to inspect the original class and related records of that Borrower and the Ship owned by it electronically (through the Classification Society directly) and to take copies of such records. |
| 14.4 | Modification |
No Borrower shall make any modification or repairs to, or replacement of, the Ship or equipment installed on the Ship owned by it which would or might materially alter the structure, type or performance characteristics of that Ship or materially reduce its value.
| 14.5 | Removal of parts |
No Borrower shall remove any material part of the Ship owned by it, or any item of equipment installed on, that Ship unless 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, is free from any Security Interest or any right in favour of any person other than the Security Trustee and becomes on installation on the relevant Ship the property of that Borrower and subject to the security constituted by the relevant Mortgage Provided that each Borrower may install equipment owned by a third party if the equipment can be removed without any risk of damage to its Ship.
| 14.6 | Surveys |
Each Borrower shall submit the Ship owned by it regularly to all periodical or other surveys which may be required for classification purposes and, if so required by the Lenders provide the Security Trustee, with copies of all survey reports.
| 14.7 | Technical Survey |
Without prejudice to each Borrower’s obligations pursuant to Clause 14.6 (Surveys), each Borrower promptly following the request of the Agent will, submit the Ship for a technical survey by an independent surveyor or surveyors appointed by the Agent (provided such technical survey does not interfere with the ordinary trading of the Ship owned by it). All fees and expenses incurred in relation to the appointment of the surveyor or surveyors and the preparation and issue of all technical reports pursuant to this Clause 14.7 (Technical Survey) shall be for the account of the Borrowers.
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| 14.8 | Inspection |
Each Borrower shall permit the Security Trustee (by surveyors or other persons appointed by it for that purpose) to board the Ship owned by it at all times (but in any event without interfering with the ordinary trading of the Ship owned by it) to inspect its condition or to satisfy themselves about proposed or executed repairs, shall afford all proper facilities for such inspections and pay to the Agent the amount of all fees, costs and expenses incurred in respect of such inspections Provided that so long as no Event of Default shall have occurred that Borrower shall not be obliged to pay any fees and expenses in respect of more than one inspection of its Ship in any calendar year.
| 14.9 | Prevention of and release from arrest |
Each Borrower shall promptly discharge:
| (a) | all liabilities which give or may give rise to maritime or possessory liens on or claims enforceable against the Ship owned by it, the Earnings or the Insurances; |
| (b) | all taxes, dues and other amounts charged in respect of the Ship owned by it, the Earnings or the Insurances; and |
| (c) | all other outgoings whatsoever in respect of the Ship owned by it, the Earnings or the Insurances, |
and, forthwith upon receiving notice of the arrest of that Ship, or of her detention in exercise or purported exercise of any lien or claim, that Borrower shall procure her release by providing bail or otherwise as the circumstances may require.
| 14.10 | Compliance with laws etc. |
Each Borrower shall:
| (a) | comply, or procure compliance with the ISM Code (including, for the avoidance of doubt, by the Approved Manager), all Environmental Laws, the ISPS Code, Sanctions and all other laws or regulations relating to the Ship owned by it, its ownership, operation and management or to the business of that Borrower; |
| (b) | not employ the Ship owned by it, nor allow its employment in any manner contrary to any law or regulation in any relevant jurisdiction including but not limited to the ISM Code and the ISPS Code and Sanctions; and |
| (c) | in the event of hostilities in any part of the world (whether war is declared or not), not cause or permit 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 the prior written consent of the Lenders has been given and that Borrower has (at its expense) effected any special, additional or modified insurance cover which the Lenders may require. |
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| 14.11 | Provision of information |
Each Borrower shall promptly provide the Security Trustee with any information which the Lenders request regarding:
| (a) | the Ship owned by it, its employment, position and engagements; |
| (b) | the Earnings and payments and amounts due to that Ship’s master and crew of that Ship; |
| (c) | any expenses incurred, or likely to be incurred, in connection with the operation, maintenance or repair of that Ship and any payments made in respect of that Ship; |
| (d) | any towages and salvages; |
| (e) | any intended dry-docking of that Ship; |
| (f) | that Borrower’s, the Approved Manager’s compliance or the compliance of that Ship with the ISM Code and the ISPS Code; and |
| (g) | any other information which the Creditor Parties (or any of them) may reasonably request, |
and, upon the Security Trustee’s request, provide copies of any current charter relating to that Ship, and copies of that Borrower’s or the Approved Manager’s Document of Compliance or any other document issued under ISM Code Documentation.
| 14.12 | Notification of certain events |
Each Borrower shall immediately notify the Security Trustee by letter of:
| (a) | any casualty which is or is likely to be or to become a Major Casualty; |
| (b) | any occurrence as a result of which the Ship owned by it has become or is, by the passing of time or otherwise, likely to become a Total Loss; |
| (c) | any requirement or recommendation made by any insurer or Classification Society or by any competent authority which is not complied with in accordance with its terms; |
| (d) | any arrest or detention of the Ship owned by it, any exercise or purported exercise of any lien on the Ship or its Earnings or any requisition of such Ship for hire; |
| (e) | any dry docking of the Ship owned by it; |
| (f) | any Environmental Claim made against that Borrower or in connection with the Ship owned by it, or any Environmental Incident; |
| (g) | any claim for breach of the ISM Code or the ISPS Code being made against that Borrower, the Approved Manager or otherwise in connection with the Ship owned by it; or |
| (h) | 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 that Borrower shall keep the Security Trustee advised in writing on a regular basis and in such detail as the Security Trustee shall require of that Borrower’s, the Approved Manager’s or any other person’s response to any of those events or matters.
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| 14.13 | Restrictions on chartering, appointment of managers etc. |
No Borrower shall, in relation to the Ship owned by it:
| (a) | let that Ship on demise charter for any period; |
| (b) | enter into any time or consecutive voyage charter in respect of that Ship for a term which exceeds, or which by virtue of any optional extensions may exceed, 12 months except as the Agent may consent, such consent not to be unreasonably withheld; |
| (c) | enter into any charter in relation to that Ship under which more than 2 months’ hire (or the equivalent) is payable in advance; |
| (d) | charter that Ship otherwise than on bona fide arm’s length terms at the time when that Ship is fixed; |
| (e) | appoint a manager of that Ship other than the Approved Manager or agree to any material alteration to the terms of the Approved Manager’s appointment which could lead to an Event of Default (“material alterations” to include, without limitation, alterations concerning fees, duration and parties); |
| (f) | de-activate or lay up that Ship; or |
| (g) | put that Ship into the possession of any person for the purpose of work being done upon her in an amount exceeding or likely to exceed $500,000 (or the equivalent in any other currency) unless that person has first given to the Security Trustee and in terms satisfactory to it a written undertaking not to exercise any lien on that Ship or her Earnings for the cost of such work or otherwise. |
| 14.14 | Notice of Mortgage |
Each Borrower shall keep the Mortgage relative to its Ship registered against its Ship as a valid first priority or as the case may be preferred mortgage, carry on board that Ship a certified copy of that Mortgage and place and maintain in a conspicuous place in the navigation room and the Master’s cabin of that Ship a framed printed notice stating that that Ship is mortgaged by that Borrower to the Security Trustee.
| 14.15 | Sharing of Earnings |
No Borrower shall:
| (a) | enter into any agreement or arrangement for the sharing of any Earnings; |
| (b) | enter into any agreement or arrangement for the postponement of any date on which any Earnings are due; or for the reduction of the amount of any Earnings or otherwise for the release or adverse alteration of any right of that Borrower to any Earnings; or |
| (c) | enter into any agreement or arrangement for the release of, or adverse alteration to, any guarantee or Security Interest relating to any Earnings other than customary profit sharing arrangements in time charter contracts. |
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| 14.16 | Time Charter Assignment |
If a Borrower enters into any Charterparty of a duration exceeding or capable of exceeding 12 months, that Borrower shall, at the request of the Agent, execute in favour of the Security Trustee a Charterparty Assignment, and shall deliver to the Agent such other documents equivalent to those referred to at paragraphs 3, 4 and 5 of Part A and 7 of Part B of Schedule 3 (Condition Precedent Documents) hereof as the Agent may require.
| 14.17 | ISM Code, ISPS Code compliance and Environmental Laws |
All requirements of the ISM Code, ISPS Code and Environmental Laws as they relate to each Borrower, the Approved Manager, the Ship owned by the relevant Borrower shall be complied with at all times.
| 14.18 | Poseidon Principles |
Each Borrower shall, upon the request of any Lender and at the cost of the Borrowers, on or before 31st July in each calendar year, supply or procure the supply by the relevant Approved Classification Society (as specified by the relevant Lender) to the Agent of all information necessary in order for any Lender to comply with its obligations under the Poseidon Principles in respect of the preceding year, including, without limitation, all ship fuel oil consumption data required to be collected and reported in accordance with Regulation 22A of Annex VI and any Statement of Compliance, in each case relating to the Ship owned by it for the preceding calendar year provided always that, for the avoidance of doubt, such information shall be “Confidential Information” for the purposes of Clause 30.1 (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.
| 15 | SECURITY COVER |
| 15.1 | Minimum required security cover |
Clause 15.2 (Provision of additional security; prepayment) applies if the Agent notifies the Borrowers that the Security Cover Ratio is below 125 per cent, and Security Cover Ratio shall be tested as at 30 June and 31 December each year.
| 15.2 | Provision of additional security; prepayment |
If the Agent serves a notice on the Borrowers under Clause 15.1 (Minimum required security cover), the Borrowers shall prepay such part (at least) of the Loan as will eliminate the shortfall on or before the date falling 1 month after the date on which the Agent’s notice is served under Clause 15.1 (Minimum required security cover) (the “Prepayment Date”) unless at least 1 Business Day before the Prepayment Date it has provided, or ensured that a third party has provided, additional security which, in the reasonable opinion of the Majority Lenders, has a net realisable value at least equal to the shortfall.
In this Clause 15.2 (Provision of additional security; prepayment) “security” means a Security Interest over an asset or assets (whether securing a Borrower’s liabilities under the Finance Documents or a guarantee in respect of those liabilities), or a guarantee, letter of credit or other security (including any cash pledged to the Security Trustee) in respect of that Borrower’s liabilities under the Finance Documents.
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| 15.3 | Requirement for additional documents |
The Borrowers shall not be deemed to have complied with Clause 15.2 (Provision of additional security; prepayment) above until the Agent has received in connection with the additional security certified copies of documents of the kinds referred to in paragraphs 3, 4 and 5 of Schedule 3 (Condition Precedent Documents), Part A and such legal opinions in terms acceptable to the Majority Lenders from such lawyers as they may select.
| 15.4 | Valuation of Ship |
For the purpose of the Security Cover Ratio determination under Clause 15.1 (Minimum required security cover), the market value of a Ship shall be provided:
| (a) | as at a date not more than 30 days previously; |
| (b) | by an Approved Broker selected by the Borrowers and appointed by the Agent (unless the Borrowers have not nominated an Approved Broker within 5 Business Days of the Agent’s request in which case the Agent will be entitled to select and appoint an Approved Broker); |
| (c) | with or without physical inspection of that Ship (as the Agent may require); and |
| (d) | on the basis of a sale for prompt delivery for cash on normal arm’s length commercial terms as between a willing seller and a willing buyer, free of any existing charter or other contract of employment (as the Agent may require). |
| 15.5 | Value of additional security |
The net realisable value of any additional security which is provided under Clause 15.1 (Minimum required security cover) and which consists of a Security Interest over a vessel shall be that shown by a valuation complying with the requirements of Clause 15.4 (Valuation of Ship).
| 15.6 | Valuations binding |
Any valuation under Clause 15.2 (Provision of additional security; prepayment), 15.4 (Valuation of Ship) or 15.5 (Value of additional security) shall be binding and conclusive as regards the Borrowers, as shall be any valuation which the Majority Lenders make of a security which does not consist of or include a Security Interest.
| 15.7 | Provision of information |
The Borrowers shall promptly provide the Agent and any Approved Broker or expert acting under Clause 15.4 (Valuation of Ship) or 15.5 (Value of additional security) with any information which the Agent or the Approved Broker or expert may request for the purposes of the valuation; and, if the Borrowers fail to provide the information by the date specified in the request, the valuation may be made on any basis and assumptions which the Approved Broker or the Majority Lenders (or the expert appointed by them) consider prudent.
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| 15.8 | Payment of valuation expenses |
Without prejudice to the generality of the Borrowers’ obligations under Clauses 20.5 (Costs of variations, amendments, enforcement etc.) and 20.6 (Documentary taxes), the Borrowers shall, on demand, pay the Agent the amount of the fees and expenses of any Approved Broker or expert instructed by the Agent under this Clause and all legal and other expenses incurred by any Creditor Party in connection with any matter arising out of this Clause Provided that so long as no Event of Default shall have occurred and is continuing and so long as all valuations of each Ship commissioned by the Agent for the purposes of this Clause 15 (Security Cover) confirm that the Borrowers have satisfied the test in Clause 15.1 (Minimum required security cover), no Borrower shall be obliged to pay the fees and expenses in respect of more than two valuations (excluding valuations provided to determine the Initial Market Value).
| 15.9 | Frequency of valuations |
The Borrowers acknowledge and agree that the Agent may commission valuation(s) of any Ship at such times as the Agent may reasonably request (including, without limitation, on the occurrence of any breach of obligation under this Agreement, any Finance Document or any other relevant documentation in connection therewith) and, in any event not less than twice in any calendar year.
| 16 | PAYMENTS AND CALCULATIONS |
| 16.1 | Currency and method of payments |
All payments to be made:
| (a) | by the Lenders to the Agent; or |
| (b) | by any Borrower to the Arranger, the Bookrunner, the Mandated Lead Arrangers, the Agent, the Security Trustee or any Lender, |
under a Finance Document shall be made to the Agent or to the Security Trustee, in the case of an amount payable to it:
| (i) | by not later than 11.00 a.m. (New York City time) on the due date; |
| (ii) | in same day Dollar funds settled through the New York Clearing House Interbank Payments System (or in such other Dollar funds and/or settled in such other manner as the Agent shall specify as being customary at the time for the settlement of international transactions of the type contemplated by this Agreement); |
| (iii) | to the account of the Agent, as the Agent may from time to time notify to the Borrowers and the other Creditor Parties; and |
| (iv) | in the case of an amount payable to the Security Trustee, to such account as it may from time to time notify to the Borrowers and the other Creditor Parties. |
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| 16.2 | Payment on non-Business Day |
If any payment by any Borrower under a Finance Document would otherwise fall due on a day which is not a Business Day:
| (a) | the due date shall be extended to the next succeeding Business Day; or |
| (b) | if the next succeeding Business Day falls in the next calendar month, the due date shall be brought forward to the immediately preceding Business Day, |
and interest shall be payable during any extension under paragraph (a) at the rate payable on the original due date.
| 16.3 | Basis for calculation of periodic payments |
All interest and any other payments under any Finance Document which are of an annual or periodic nature shall accrue from day to day and shall be calculated on the basis of the actual number of days elapsed and a 360 day year.
| 16.4 | Distribution of payments to Creditor Parties |
Subject to Clauses 16.5 (Permitted deductions by Agent), 16.6 (Agent only obliged to pay when monies received) and 16.7 (Refund to Agent of monies not received):
| (a) | any amount received by the Agent under a Finance Document for distribution or remittance to a Lender or the Security Trustee shall be made available by the Agent to that Lender or, as the case may be, the Security Trustee by payment, with funds having the same value as the funds received, to such account as the Lender or the Security Trustee may have notified to the Agent not less than 5 Business Days previously; and |
| (b) | amounts to be applied in satisfying amounts of a particular category which are due to the Lenders generally shall be distributed by the Agent to each Lender pro rata to the amount in that category which is due to it. |
| 16.5 | Permitted deductions by Agent |
Notwithstanding any other provision of this Agreement or any other Finance Document, the Agent may, before making an amount available to a Lender, deduct and withhold from that amount any sum which is then due and payable to the Agent from that Lender under any Finance Document or any sum which the Agent is then entitled under any Finance Document to require that Lender to pay on demand.
| 16.6 | Agent only obliged to pay when monies received |
Notwithstanding any other provision of this Agreement or any other Finance Document, the Agent shall not be obliged to make available to the Borrowers or any Lender any sum which the Agent is expecting to receive for remittance or distribution to the Borrowers or that Lender until the Agent has satisfied itself that it has received that sum.
| 16.7 | Refund to Agent of monies not received |
If and to the extent that the Agent makes available a sum to the Borrowers or a Lender, without first having received that sum, the Borrowers or (as the case may be) the Lender concerned shall, on demand:
| (a) | refund the sum in full to the Agent; and |
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| (b) | pay to the Agent the amount (as certified by the Agent) which will indemnify the Agent against any funding or other loss, liability or expense incurred by the Agent as a result of making the sum available before receiving it. |
| 16.8 | Agent may assume receipt |
Clause 16.7 (Refund to Agent of monies not received) shall not affect any claim which the Agent has under the law of restitution, and applies irrespective of whether the Agent had any form of notice that it had not received the sum which it made available.
| 16.9 | Creditor Party accounts |
Each Creditor Party shall maintain accounts showing the amounts owing to it by the Borrowers and each Security Party under the Finance Documents and all payments in respect of those amounts made by the Borrowers and any Security Party.
| 16.10 | Agent’s memorandum account |
The Agent shall maintain a memorandum account showing the amounts advanced by the Lenders and all other sums owing to the Agent, the Security Trustee and each Lender from the Borrowers and each Security Party under the Finance Documents and all payments in respect of those amounts made by the Borrowers and any Security Party.
| 16.11 | Accounts prima facie evidence |
If any accounts maintained under Clauses 16.9 (Creditor Party accounts) and 16.10 (Agent’s memorandum account) show an amount to be owing by a Borrower or a Security Party to a Creditor Party, those accounts shall be prima facie evidence that that amount is owing to that Creditor Party.
| 17 | APPLICATION OF RECEIPTS |
| 17.1 | Normal order of application |
Except as any Finance Document may otherwise provide, any sums which are received or recovered by any Creditor Party under or by virtue of any Finance Document shall be applied:
| (a) | FIRST: in or towards satisfaction of any amounts then due and payable under the Finance Documents in the following proportions: |
| (i) | first, in or towards satisfaction pro rata of all amounts then due and payable to the Creditor Parties under the Finance Documents other than those amounts referred to at (ii) and (iii) below (including, but without limitation, all amounts payable by any Borrower under Clauses 20 (Fees and Expenses), 21 (Indemnities) and 22 (No Set-off or Tax Deduction) of this Agreement or by any Borrower or any Security Party under any corresponding or similar provision in any other Finance Document); |
| (ii) | secondly, in or towards satisfaction pro rata of any and all amounts of interest or default interest payable to the Creditor Parties under the Finance Documents; and |
| (iii) | thirdly, in or towards satisfaction of the Loan; |
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| (b) | SECONDLY: in retention of an amount equal to any amount not then due and payable under any Finance Document but which the Agent, by notice to the Borrowers (or any of them), the Security Parties and the other Creditor Parties, states in its opinion will or may become due and payable in the future and, upon those amounts becoming due and payable, in or towards satisfaction of them in accordance with the foregoing provisions of paragraph (a) of Clause 17.1 (Normal order of application); |
| (c) | THIRDLY: in or towards satisfaction of any amounts representing insurance costs or premiums then due and payable by the Borrowers (or any of them) in connection with the Ships and/or the Lenders; |
| (d) | FOURTHLY: in or towards satisfaction of any amounts representing management fees then due and payable by the Borrowers (or any of them) to the Approved Manager in connection with the Ships; and |
| (e) | FIFTHLY: any surplus shall be paid to the Borrowers (or any of them) or to any other person appearing to be entitled to it. |
| 17.2 | Variation of order of application |
The Agent may, with the authorisation of the Majority Lenders by notice to the Borrowers, the Security Parties and the other Creditor Parties provide for a different manner of application from that set out in Clause 17.1 (Normal order of application) either as regards a specified sum or sums or as regards sums in a specified category or categories.
| 17.3 | Notice of variation of order of application |
The Agent may give notices under Clause 17.2 (Variation of order of application) from time to time; and such a notice may be stated to apply not only to sums which may be received or recovered in the future, but also to any sum which has been received or recovered on or after the third Business Day before the date on which the notice is served.
| 17.4 | Appropriation rights overridden |
This Clause 17 and any notice which the Agent gives under Clause 17.2 (Variation of order of application) shall override any right of appropriation possessed, and any appropriation made, by any Borrower or any Security Party.
| 18 | APPLICATION OF EARNINGS |
| 18.1 | Payment of Earnings |
The Borrowers shall, and shall procure that each Collateral shall, undertake with each Creditor Party that, throughout the Security Period (subject only to the provisions of the General Assignment to which it is party):
| (a) | it shall maintain the Accounts opened in its name (whether individually or jointly) with the Account Bank; |
| (b) | it shall ensure that all Earnings of the Ship owned by it and each Collateral Ship it are paid to the Earnings Account for that Ship or that Collateral Ship, as the case may be; and |
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| (c) | the Minimum Liquidity amounts required to be maintained pursuant to Clause 11.20 (Minimum Liquidity) shall be maintained in the relevant Earnings Account of the Ships. |
| 18.2 | Monthly retentions |
The Borrowers undertake with each Creditor Party to ensure that, on and from the date falling one month after the Drawdown Date and at monthly intervals thereafter during the Security Period, there are transferred to the Retention Account out of the Earnings received in the Earnings Accounts during the preceding month:
| (a) | one-third of the amount of the relevant Repayment Instalment falling due under Clause 8.1 (Amount of repayment instalments) on the next Repayment Date; and |
| (b) | the relevant fraction of the aggregate amount of interest on the Loan which is payable on the next due date for payment of interest under this Agreement, |
and the Borrowers irrevocably authorise the Agent to make those transfers if the Borrowers fail to do so.
The “relevant fraction”, in relation to paragraph (b), is a fraction of which the numerator is 1 and the denominator the number of months comprised in the then current Interest Period (or if the current Interest Period in respect of the Loan ends after the next due date for payment of interest under this Agreement, the number of months from the later of the commencement of the current Interest Period in respect of the Loan or the last due date for payment of interest to the next due date for payment of interest in respect of the Loan under this Agreement).
| 18.3 | Shortfall in Earnings |
If the aggregate Earnings received in the Earnings Account are insufficient at any time for the required amount to be transferred to the Retention Account under Clause 18.2 (Monthly retentions), the Borrowers shall immediately pay the amount of the insufficiency into the Retention Account.
| 18.4 | Application of retentions |
Until an Event of Default or a Potential Event of Default occurs, the Agent shall, to the extent there are sufficient funds standing to the credit of the Retention Account, on each Repayment Date and on each due date for the payment of interest under this Agreement distribute to the Lenders in accordance with Clause 16.4 (Distribution of payments to Creditor Parties) so much of the then balance on the Retention Account as equals:
| (a) | the Repayment Instalment due on that Repayment Date pursuant to Clause 8.1 (Amount of repayment instalments); or |
| (b) | the amount of interest in respect of the Loan payable on that interest payment date, |
in discharge of the Borrowers’ liability for that Repayment Instalment or that interest.
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| 18.5 | Application of Earnings |
Each Borrower and the Collateral Provider undertakes with the Lenders that money from time to time credited to, or for the time being standing to the credit of, the Earnings Accounts shall (i) unless and until an Event of Default shall have occurred (whereupon the provisions of Clause 17.1 (Normal order of application) shall be and become applicable) or (ii) unless otherwise agreed in writing between the Borrowers and the Agent, be available for application in the following manner:
| (a) | in or towards making payments of all amounts due and payable by the Borrowers under this Agreement (other than payments of principal and interest); |
| (b) | in or towards satisfaction of all amounts of interest or default interest payable to the Creditor Parties under the Finance Documents; |
| (c) | in or towards satisfaction of the Loan; |
| (d) | in or towards making payments of all fees due to the Approved Manager and thereafter meeting the costs and expenses from time to time incurred by or on behalf of a Borrower in connection with the operation of the Ship owned by it; and |
| (e) | as to any surplus from time to time arising on an Earnings Account following application as aforesaid, to be paid to the Borrower owning that Ship or to whomsoever it may direct. |
| 18.6 | Location of account |
Each Borrower shall promptly:
| (a) | comply with any requirement of the Agent as to the location or re-location of its Earnings Account; and |
| (b) | execute any documents which the Agent specifies to create or maintain in favour of the Security Trustee a Security Interest over (and/or rights of set-off, consolidation or other rights in relation to) the Accounts. |
| 18.7 | Debits for expenses etc. |
The Agent shall be entitled (but not obliged) from time to time to debit the Earnings Accounts without prior notice in order to discharge any amount due and payable under Clause 20 (Fees and Expenses) or 21 (Indemnities) to a Creditor Party or payment of which any Creditor Party has become entitled to demand under Clause 20 (Fees and Expenses) or 21 (Indemnities).
| 18.8 | Borrowers’ obligations unaffected |
The provisions of this Clause 18 (Application of Earnings) (as distinct from a distribution effected under Clause 18.4 (Application of retentions)) do not affect:
| (a) | the liability of the Borrowers to make payments of principal and interest on the due dates; or |
| (b) | any other liability or obligation of the Borrowers or any Security Party under any Finance Document. |
| 18.9 | Restriction on withdrawal |
During the Security Period no sum may be withdrawn by a Borrower from the Retention Account.
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| 19 | EVENTS OF DEFAULT |
| 19.1 | Events of Default |
An Event of Default occurs if:
| (a) | the Borrowers or any of them or any Security Party fails to pay when due or (if so payable) on demand any sum payable under a Finance Document or under any document relating to a Finance Document; or |
| (b) | any breach occurs of Clause 9.2 (Waiver of conditions precedent), 10.15 (No money laundering; anti-bribery), 10.18 (Sanctions), 11.2 (Title and negative pledge), 11.3 (No disposal of assets), 11.18 (Sanctions), 11.20 (Minimum Liquidity), 12.2 (Maintenance of status), 12.3 (Negative undertakings), 13.2 (Maintenance of obligatory insurances), 13.3 (Terms of obligatory insurances), 14.2 (Ship’s name and registration) or 15.2 (Provision of additional security; prepayment) or clause 12.3 (negative undertakings) of the Corporate Guarantee; or |
| (c) | any breach by the Borrowers or any of them or any Security Party occurs of any provision of a Finance Document (other than a breach covered by paragraphs (a) or (b) above) if, in the opinion of the Majority Lenders, such default is capable of remedy, and such default continues unremedied 14 days after the earlier of (i) written notice from the Agent requesting action to remedy the same and (ii) any Borrower becoming aware of such breach; or |
| (d) | (subject to any applicable grace period specified in the Finance Document) any breach by the Borrowers or any of them or any Security Party occurs of any provision of a Finance Document (other than a breach covered by paragraphs (a), (b) or (c) above); or |
| (e) | any representation, warranty or statement made or repeated by, or by an officer of, any Borrower or a Security Party in a Finance Document or in a Drawdown Notice or any other notice or document relating to a Finance Document is untrue or misleading when it is made or repeated; or |
| (f) | any of the following occurs in relation to any Financial Indebtedness of a Relevant Person (for an amount exceeding, in the case of any Relevant Person other than a Borrower $10,000,000 (or the equivalent in any other currency) in aggregate): |
| (i) | any Financial Indebtedness of a Relevant Person is not paid when due or, if so payable, on demand; or |
| (ii) | any Financial Indebtedness of a Relevant Person becomes due and payable or capable of being declared due and payable prior to its stated maturity date as a consequence of any event of default unless the Relevant Person is contesting the declaration of an event of default or of the Financial Indebtedness becoming due and payable in good faith and on substantial grounds by appropriate proceedings and adequate reserves have been set aside for its payment if such proceedings fail; or |
| (iii) | a lease, hire purchase agreement or charter creating any Financial Indebtedness of a Relevant Person is terminated by the lessor or owner or becomes capable of being terminated as a consequence of any termination event; or |
| (iv) | any overdraft, loan, note issuance, acceptance credit, letter of credit, guarantee, foreign exchange or other facility, or any swap or other derivative contract or transaction, relating to any Financial Indebtedness of a Relevant Person ceases to be available or becomes capable of being terminated as a result of any event of default, or cash cover is required, or becomes capable of being required, in respect of such a facility as a result of any event of default; or |
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| (v) | any Security Interest securing any Financial Indebtedness of a Relevant Person becomes enforceable; or |
| (g) | any of the following occurs in relation to a Relevant Person: |
| (i) | a Relevant Person becomes, in the reasonable opinion of the Lenders, unable to pay its debts as they fall due; or |
| (ii) | any assets of a Relevant Person are subject to any form of execution, attachment, arrest, sequestration or distress in respect of a sum of, or sums aggregating, $10,000,000 or more or the equivalent in another currency and such execution, attachment, arrest, sequestration or distress is not withdrawn or discharged within thirty (30) days; or |
| (iii) | any administrative or other receiver is appointed over any asset of a Relevant Person; or |
| (iv) | an administrator is appointed (whether by the court or otherwise) in respect of a Relevant Person; or |
| (v) | any formal declaration of bankruptcy or any formal statement to the effect that a Relevant Person is insolvent or likely to become insolvent is made by a Relevant Person or by the directors or officers of a Relevant Person or, in any proceedings, by a lawyer acting for a Relevant Person; or |
| (vi) | a provisional liquidator is appointed in respect of a Relevant Person, a winding up order is made in relation to a Relevant Person or a winding up resolution is passed by a Relevant Person; or |
| (vii) | a resolution is passed, an administration notice is given or filed, an application or petition to a court is made or presented or any other step is taken by (aa) a Relevant Person, (bb) the members, shareholders, officers or directors of a Relevant Person, (cc) a holder of Security Interests which together relate to all or substantially all of the assets of a Relevant Person, or (dd) a government minister or public or regulatory authority of a Pertinent Jurisdiction for or with a view to the winding up of that or another Relevant Person or the appointment of a provisional liquidator or administrator in respect of that or another Relevant Person, or that or another Relevant Person ceasing or suspending business operations or payments to creditors, save that this paragraph does not apply to a fully solvent winding up of a Relevant Person other than a Borrower or the Corporate Guarantor which is, or is to be, effected for the purposes of an amalgamation or reconstruction previously approved by the Majority Lenders and effected not later than 3 months after the commencement of the winding up; or |
| (viii) | an administration notice is given or filed, an application or petition to a court is made or presented or any other step is taken by a creditor of a Relevant Person (other than a holder of Security Interests which together relate to all or substantially all of the assets of a Relevant Person) for the winding up of a Relevant Person or the appointment of a provisional liquidator or administrator in respect of a Relevant |
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| Person in any Pertinent Jurisdiction, unless the proposed winding up, appointment of a provisional liquidator or administration is being contested in good faith, on substantial grounds and not with a view to some other insolvency law procedure being implemented instead and either (aa) the application or petition is dismissed or withdrawn within 60 days of being made or presented, or (bb) within 60 days of the administration notice being given or filed, or the other relevant steps being taken, other action is taken which will ensure that there will be no administration and (in both cases (aa) or (bb)) the Relevant Person will continue to carry on business in the ordinary way and without being the subject of any actual, interim or pending insolvency law procedure; or |
| (ix) | a Relevant Person or its directors or officers take any steps (whether by making or presenting an application or petition to a court, or submitting or presenting a document setting out a proposal or proposed terms, or otherwise) with a view to obtaining, in relation to that or another Relevant Person, any form of moratorium, suspension or deferral of payments, reorganisation of debt (or certain debt) or arrangement with all or a substantial proportion (by number or value) of creditors or of any class of them or any such moratorium, suspension or deferral of payments, reorganisation or arrangement is effected by court order, by the filing of documents with a court, by means of a contract or in any other way at all; or |
| (x) | any meeting of the members, shareholders or directors, or of any committee of the board or senior management, of a Relevant Person is held or summoned for the purpose of considering a resolution or proposal to authorise or take any action of a type described in paragraphs (iv) to (ix) or a step preparatory to such action, or (with or without such a meeting) the members, shareholders, directors or such a committee resolve or agree that such an action or step should be taken or should be taken if certain conditions materialise or fail to materialise; or |
| (xi) | in a country other than England, any event occurs, any proceedings are opened or commenced or any step is taken which, in the reasonable opinion of the Majority Lenders is similar to any of the foregoing; or |
| (h) | any Borrower or any Security Party ceases or suspends carrying on its business or a part of its business which, in the reasonable opinion of the Majority Lenders, is material in the context of this Agreement Provided that no Event of Default will occur under this paragraph (h) if the Security Party is an Approved Manager and the Borrowers replace such Approved Manager by another Approved Manager within 30 days from the date of such event; or |
| (i) | it becomes unlawful in any Pertinent Jurisdiction or impossible: |
| (i) | for any Borrower or any Security Party to discharge any liability under a Finance Document or to comply with any other obligation which the Majority Lenders consider material under a Finance Document; or |
| (ii) | for the Agent, the Security Trustee or the Lenders to exercise or enforce any right under, or to enforce any Security Interest created by, a Finance Document; or |
| (j) | any official consent necessary to enable any Borrower to own, operate or charter the Ship owned by it or to enable any Borrower or any Security Party to comply with any provision which the Majority Lenders reasonably consider material of a Finance Document is not granted, expires without being renewed, is revoked or becomes liable to revocation or any |
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| condition of such a consent is not fulfilled, unless the relevant Borrower contests any denial, expiration or revocation (other than with respect to a Finance Documents) and on the condition that, in the reasonable opinion of the Majority Lenders (i) there are real prospects of such contest being successfully granted/upheld by the relevant Borrower (ii) such contest being made in good faith; or |
| (k) | it appears to the Majority Lenders that, without their prior written consent: |
| (i) | a change has occurred or probably has occurred after the date of this Agreement in the legal or direct beneficial ownership of any of the shares in any Borrower or the Shareholder in the voting rights attaching to any of those shares; or |
| (ii) | any Borrower ceases to be a wholly owned indirect subsidiary of the Corporate Guarantor; or |
| (iii) | the Designated Shareholders own, in aggregate, less than 10 per cent. of the issued and outstanding voting shares in the Corporate Guarantor; or |
| (iv) | the shares of the Corporate Guarantor cease to be listed on the New York Stock Exchange (NYSE) or any other US or European stock exchange acceptable to the Agent; or |
| (v) | Mrs Angeliki Frangou ceases to be the Chairman or the Chief Executive Officer of the Corporate Guarantor; or |
| (l) | any provision which the Majority Lenders consider material of a Finance Document proves to have been or becomes invalid or unenforceable, or a Security Interest created by a Finance Document proves to have been or becomes invalid or unenforceable or such a Security Interest proves to have ranked after, or loses its priority to, another Security Interest or any other third party claim or interest; or |
| (m) | the security constituted by a Finance Document is in any way imperilled or in jeopardy; or |
| (n) | any other event occurs or any other circumstances arise or develop including, without limitation: |
| (i) | a material adverse change in the business, condition (financial or otherwise), operation, state of affairs or prospects of any Borrower, the Corporate Guarantor or the Group; or |
| (ii) | any accident or other event involving any Ship or another vessel owned, chartered or operated by a Relevant Person, |
in the light of which the Majority Lenders reasonably consider that there is a significant risk that any Security Party is, or will later become, unable to discharge its liabilities under the Finance Documents as they fall due or the enforceability of any Finance Document may be adversely affected.
| (o) | Existing Charters and Collateral Charters |
| (i) | Any Existing Charter or any Collateral Charter is frustrated (except as a result of a Total Loss of the relevant Ship or the relevant Collateral Ship), terminated (except by mere effluxion of time), cancelled or rescinded or purported to be cancelled or rescinded or the relevant Ship or the relevant Collateral Ship is withdrawn from service under that Existing Charter or that Collateral Charter, respectively prior to its termination by effluxion of time. |
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| (ii) | No Event of Default will occur under sub-paragraph (i) of this paragraph (o) of Clause 19.1 (Events of Default) if, as soon as possible, but in any event not later than 60 days after such frustration, termination, cancellation or rescission the Borrower owning the relevant Ship, the Collateral Provider being the disponent owner of the relevant Collateral Ship: |
| (A) | has entered into a new charter (a “Replacement Charter”) in respect of that ship with a duration which is approximately the same as the remaining duration of such Existing Charter or such Collateral Charter on terms otherwise acceptable to the Agent (acting on the instructions of the Majority Lenders at their sole discretion), which shall not be unreasonably withheld or delayed; |
| (B) | has delivered to the Agent copies of such Replacement Charter or sufficient evidence that such Replacement Charter has been agreed and, if applicable, any related charter guarantee duly executed by the parties thereto and of each document to be delivered pursuant to each of them; and |
| (C) | has complied with its obligations pursuant to Clause 14.16 (Time Charter Assignment) in relation to such Replacement Charter (as if same was by definition a Charterparty) and, if applicable, any related charter guarantee. |
| (p) | Repayment of Subordinated Loan Agreement |
Any payment of principal or interest under the Subordinated Loan Agreement prior to the Final Maturity Date (other than in accordance with the Subordination Agreement).
| 19.2 | Actions following an Event of Default |
On, or at any time after, the occurrence of an Event of Default, which is continuing:
| (a) | the Agent may, and if so instructed by the Majority Lenders, the Agent shall: |
| (i) | serve on the Borrowers a notice stating that all or part of the Commitments and all other obligations of each Lender to the Borrowers under this Agreement are terminated; and/or |
| (ii) | serve on the Borrowers a notice stating that all or part of the Loan, all accrued interest and all other amounts accrued or owing under this Agreement are immediately due and payable or are due and payable on demand; and/or |
| (iii) | take any other action which, as a result of the Event of Default or any notice served under sub-paragraph (i) or (ii) above, the Agent and/or the Lenders are entitled to take under any Finance Document or any applicable law; and/or |
| (b) | the Security Trustee may, and if so instructed by the Agent, acting with the authorisation of the Lenders, the Security Trustee shall take any action which, as a result of the Event of Default or any notice served under sub-paragraph (i) or (ii) of paragraph (a) above, the Security Trustee, the Agent and/or the Majority Lenders are entitled to take under any Finance Document or any applicable law. |
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| 19.3 | Termination of Commitments |
On the service of a notice under sub-paragraph (i) of paragraph (a) Clause 19.2 (Actions following an Event of Default), the Commitments and all other obligations of each Lender to the Borrowers under this Agreement shall terminate.
| 19.4 | Acceleration of Loan |
On the service of a notice under sub-paragraph (ii) of paragraph (a) Clause 19.2 (Actions following an Event of Default), the Loan, all accrued interest and all other amounts accrued or owing from the Borrowers or any Security Party under this Agreement and every other Finance Document shall become immediately due and payable or, as the case may be, payable on demand.
| 19.5 | Multiple notices; action without notice |
The Agent may serve notices under sub-paragraph (i) or (ii) of paragraph (a) Clause 19.2 (Actions following an Event of Default) simultaneously or on different dates and it and/or the Security Trustee may take any action referred to in that Clause if no such notice is served or simultaneously with or at any time after the service of both or either of such notices.
| 19.6 | Notification of Creditor Parties and Security Parties |
The Agent shall send to each Lender, the Security Trustee and each Security Party a copy or the text of any notice which the Agent serves on the Borrowers under Clause 19.2 (Actions following an Event of Default); but the notice shall become effective when it is served on the Borrowers, and no failure or delay by the Agent to send a copy or the text of the notice to any other person shall invalidate the notice or provide the Borrowers or any Security Party with any form of claim or defence.
| 19.7 | Creditor Party’s rights unimpaired |
Nothing in this Clause shall be taken to impair or restrict the exercise of any right given to individual Lenders under a Finance Document or the general law; and, in particular, this Clause is without prejudice to Clause 3.1 (Interests of Lenders several).
| 19.8 | Exclusion of Creditor Party Liability |
No Creditor Party, and no receiver or manager appointed by the Security Trustee, shall have any liability to the Borrowers or a Security Party:
| (a) | for any loss caused by an exercise of rights under, or enforcement of a Security Interest created by, a Finance Document or by any failure or delay to exercise such a right or to enforce such a Security Interest; or |
| (b) | as mortgagee in possession or otherwise, for any income or principal amount which might have been produced by or realised from any asset comprised in such a Security Interest or for any reduction (however caused) in the value of such an asset, |
except that this does not exempt a Creditor Party or a receiver or manager from liability for losses shown to have been caused by the gross negligence or the wilful misconduct of such Creditor Party’s own officers and employees or (as the case may be) such receiver’s or manager’s own partners or employees.
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| 19.9 | Relevant Persons |
In this Clause 19 (Events of Default), a “Relevant Person” means a Borrower, a Security Party (excluding the Approved Manager), and any company which is a subsidiary of any Borrower or of a Security Party (excluding the Approved Manager) or of which any Borrower is a subsidiary.
| 19.10 | Interpretation |
In paragraph (f) of Clause 19 (Events of Default) references to an event of default or a termination event include any event, howsoever described, which is similar to an event of default in a facility agreement or a termination event in a finance lease; and in paragraph (f) of Clause 19 (Events of Default) “petition” includes an application.
| 20 | FEES AND EXPENSES |
| 20.1 | Up-front fee |
The Borrowers shall pay the up-front fee in accordance with the relevant Fee Letter.
| 20.2 | Commitment fee |
The Borrowers shall pay the commitment fee in accordance with the relevant Fee Letter.
| 20.3 | Agency fee |
The Borrowers shall pay the agency fee in accordance with the relevant Fee Letter.
| 20.4 | Costs of negotiation, preparation etc. |
The Borrowers shall pay to the Agent, within ten Business Days’ from its demand, the amount of all expenses incurred by the Agent or the Security Trustee in connection with the negotiation, preparation, execution or registration of any Finance Document or any related document or with any transaction contemplated by a Finance Document or a related document (including, without limitation, out of pocket expenses, legal fees and any related VAT).
| 20.5 | Costs of variations, amendments, enforcement etc. |
The Borrowers shall pay to the Agent, within ten Business Days’ from its demand, the amount of all documented expenses incurred by a Creditor Party in connection with:
| (a) | any amendment or supplement to a Finance Document, or any proposal for such an amendment to be made, including, but not limited to, any amendment or supplement (or any proposal for such an amendment or supplement) contemplated in Clause 27.4 (Replacement of Screen Rate); |
| (b) | any consent or waiver by the Lenders, the Majority Lenders or the Creditor Party concerned under or in connection with a Finance Document, or any request for such a consent or waiver; |
| (c) | the valuation of any security provided or offered under Clause 15 or any other matter relating to such security; |
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| (d) | where the Agent, in its absolute opinion, considers that there has been a material change to the insurances in respect of a Ship, the review of the insurances of a Ship pursuant to Clause 13.18 (Review of insurance requirements); |
| (e) | the opinions of the independent insurance consultant referred to in paragraph 7 of Part B, Schedule 3 (Condition Precedent Documents); and |
| (f) | any step taken by any Lender concerned with a view to the protection, exercise or enforcement of any right or Security Interest created by a Finance Document or for any similar purpose. |
There shall be recoverable under paragraph (d) the full amount of all legal expenses, whether or not such as would be allowed under rules of court or any taxation or other procedure carried out under such rules.
| 20.6 | Documentary taxes |
The Borrowers shall promptly pay any tax payable on or by reference to any Finance Document, and shall, on the Agent’s demand, fully indemnify each Creditor Party against any liabilities, claims losses and expenses resulting from any failure or delay by the Borrowers to pay such a tax.
| 20.7 | Certification of amounts |
A notice which is signed by two officers of a Creditor Party, which states that a specified amount, or aggregate amount, is due to that Creditor Party under this Clause 20 (Fees and Expenses) and which indicates (without necessarily specifying a detailed breakdown) the matters in respect of which the amount, or aggregate amount, is due shall be prima facie evidence that the amount, or aggregate amount, is due.
| 21 | INDEMNITIES |
| 21.1 | Indemnities regarding borrowing and repayment of Loan |
The Borrowers shall fully indemnify the Agent and each Lender on the Agent’s demand and the Security Trustee on its demand in respect of all claims, expenses, liabilities and losses which are made or brought against or incurred by that Creditor Party, or which that Creditor Party reasonably and with due diligence estimates that it will incur, as a result of or in connection with:
| (a) | the Advance not being borrowed on the date specified in the Drawdown Notice for any reason other than a default by the Lender claiming the indemnity; |
| (b) | the receipt or recovery of all or any part of the Loan or an overdue sum otherwise than on the last day of an Interest Period or other relevant period including, without limitation, where such receipt or recovery is made as a result of the voluntary or mandatory repayment or prepayment of the Loan, or any part thereof; |
| (c) | any failure (for whatever reason) by the Borrowers to make payment of any amount due under a Finance Document on the due date or, if so payable, on demand (after giving credit for any default interest paid by the Borrowers on the amount concerned under Clause 7 (Default Interest)); and |
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| (d) | the occurrence and/or continuance of an Event of Default and/or the acceleration of repayment of the Loan under Clause 19 (Events of Default), |
and in respect of any tax (other than tax on its overall net income or a FATCA Deduction) for which a Creditor Party is liable in connection with any amount paid or payable to that Creditor Party (whether for its own account or otherwise) under any Finance Document.
| 21.2 | Breakage costs |
Without limiting its generality, Clause 21.1 (Indemnities regarding borrowing and repayment of Loan) covers any liability, expense or loss, including a loss of a prospective profit, incurred by a Lender:
| (a) | in liquidating or employing deposits from third parties acquired or arranged to fund or maintain all or any part of its Contribution and/or any overdue amount (or an aggregate amount which includes its Contribution or any overdue amount); and |
| (b) | in terminating, or otherwise in connection with, any interest and/or currency swap or any other transaction entered into (whether with another legal entity or with another office or department of the Lender concerned) to hedge any exposure arising under this Agreement or that part which the Lender concerned determines is fairly attributable to this Agreement of the amount of the liabilities, expenses or losses (including losses of prospective profits) incurred by it in terminating, or otherwise in connection with, a number of transactions of which this Agreement is one. |
| 21.3 | Miscellaneous indemnities |
The Borrowers shall fully indemnify each Creditor Party severally on their respective demands in respect of all claims, demands, proceedings, liabilities, taxes, losses and expenses of every kind (“liability items”) which may be made or brought against, or incurred by, a Creditor Party, in any country, in relation to:
| (a) | any action taken, or omitted or neglected to be taken, under or in connection with any Finance Document by the Agent, the Security Trustee or any other Creditor Party or by any receiver appointed under a Finance Document; and |
| (b) | any other event, matter or question which occurs or arises at any time during the Security Period and which has any connection with, or any bearing on, any Finance Document, any payment or other transaction relating to a Finance Document or any asset covered (or previously covered) by a Security Interest created (or intended to be created) by a Finance Document, |
other than claims, expenses, liabilities and losses which are shown to have been directly and mainly caused by the dishonesty or wilful misconduct of the officers or employees of the Creditor Party concerned.
| 21.4 | Extension of indemnities; environmental indemnity |
Without prejudice to its generality, Clause 21.3 (Miscellaneous indemnities) covers:
| (a) | any matter which would be covered by Clause 21.3 (Miscellaneous indemnities) if any of the references in that Clause to a Lender were a reference to the Agent or (as the case may be) to the Security Trustee; and |
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| (b) | any liability items which arise, or are asserted, under or in connection with any law relating to safety at sea, pollution or the protection of the environment, the ISM Code, the ISPS Code or any Environmental Law. |
| 21.5 | Currency indemnity |
If any sum due from a Borrower or any Security Party to a Creditor Party under a Finance Document or under any order or judgment relating to a Finance Document has to be converted from the currency in which the Finance Document provided for the sum to be paid (the “Contractual Currency”) into another currency (the “Payment Currency”) for the purpose of:
| (a) | making or lodging any claim or proof against a Borrower or any Security Party, whether in its liquidation, any arrangement involving it or otherwise; or |
| (b) | obtaining an order or judgment from any court or other tribunal; or |
| (c) | enforcing any such order or judgment, |
the Borrowers shall indemnify the Creditor Party concerned against the loss arising when the amount of the payment actually received by that Creditor Party is converted at the available rate of exchange into the Contractual Currency.
In this Clause 21.5 (Currency indemnity), the “available rate of exchange” means the rate at which the Creditor Party concerned is able at the opening of business (London time) on the Business Day after it receives the sum concerned to purchase the Contractual Currency with the Payment Currency.
This Clause 21.5 (Currency indemnity) creates a separate liability of each Borrower which is distinct from its other liabilities under the Finance Documents and which shall not be merged in any judgment or order relating to those other liabilities.
| 21.6 | Certification of amounts |
A notice which is signed by 2 officers of a Creditor Party, which states that a specified amount, or aggregate amount, is due to that Creditor Party under this Clause 21 (Indemnities) and which indicates (without necessarily specifying a detailed breakdown of the amounts due) the matters in respect of which the amount, or aggregate amount, is due shall be prima facie evidence that the amount, or aggregate amount, is due.
| 21.7 | Sums deemed due to a Lender |
For the purposes of this Clause 21 (Indemnities), a sum payable by the Borrowers to the Agent or the Security Trustee for distribution to a Lender shall be treated as a sum due to that Lender.
| 21.8 | Sanctions |
| (a) | The Borrowers shall, within three (3) Business Days of demand by a Creditor Party, indemnify each Creditor Party against any cost, loss or liability incurred by it as a result of any civil penalty or fine against, and all reasonable costs and expenses (including reasonable counsel fees and disbursements) incurred in connection with the defence thereof by, the Agent or any Lender as a result of conduct of the Borrowers or any Security Party or any of their partners, directors, officers, employees, agents or advisors, that violates any Sanctions. |
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| (b) | The indemnity in paragraph (a) of Clause 21.8 (Sanctions) above shall cover any losses incurred by each Creditor Party in any jurisdiction arising or asserted under or in connection with any law relating to any Sanctions. |
| 22 | NO SET-OFF OR TAX DEDUCTION |
| 22.1 | No deductions |
All amounts due from the Borrowers under a Finance Document shall be paid:
| (a) | without any form of set-off, cross-claim or condition; and |
| (b) | free and clear of any tax deduction except a tax deduction which a Borrower is required by law to make. |
| 22.2 | Grossing-up for taxes |
If a Borrower is required by law to make a tax deduction from any payment:
| (a) | that Borrower shall notify the Agent as soon as it becomes aware of the requirement; |
| (b) | that Borrower shall pay the tax deducted to the appropriate taxation authority promptly, and in any event before any fine or penalty arises; and |
| (c) | the amount due in respect of the payment shall be increased by the amount necessary to ensure that each Creditor Party receives and retains (free from any liability relating to the tax deduction) a net amount which, after the tax deduction, is equal to the full amount which it would otherwise have received. |
| 22.3 | Evidence of payment of taxes |
Within 1 month after making any tax deduction, the Borrower concerned shall deliver to the Agent documentary evidence satisfactory to the Agent that the tax had been paid to the appropriate taxation authority.
| 22.4 | Exclusion of tax on overall net income |
In this Clause 22 (No Set-off or Tax Deduction) “tax deduction” means any deduction or withholding for or on account of any present or future tax except tax on a Creditor Party’s overall net income or a FATCA Deduction.
| 22.5 | FATCA information |
| (a) | Subject to paragraph (c) below, each party to the Finance Documents shall, within 5 Business Days of a reasonable request by another party to the Finance Documents: |
| (i) | confirm to that other party whether it is: |
| (A) | a FATCA Exempt Party; or |
| (B) | not a FATCA Exempt Party; and |
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| (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 to any Finance Document 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 Creditor Party, and sub-paragraph (iii) of paragraph (a) above shall not oblige any other party to a Finance Document, 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 to any Finance Document 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-paragraph (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 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) | If a Borrower is or becomes a US Tax Obligor or a FATCA FFI, it shall as soon as reasonably practicable inform the Agent of the same; |
| (f) | Where the Agent reasonably believes that its obligations under FATCA require it, the relevant Borrower or the relevant Security Party shall provide the Agent, upon request, with a W-8 BEN-E form (or any successor form) or any other forms or documentation the Agent may reasonably require, as soon as reasonably practicable. The Agent shall not be liable for any action which it takes or refrains from taking under or in connection with this paragraph (f); |
| (g) | If a Borrower is or becomes a US Tax Obligor or a FATCA FFI, or where the Agent reasonably believes that its obligations under FATCA require it, each Creditor Party shall, within 10 Business Days of the date of a request from the Agent supply to the Agent: |
| (i) | a withholding certificate on Form W-8 or Form W-9 (or any successor form) (as applicable); and/or |
| (ii) | any withholding statement and other documentation, authorisations and waivers as the Agent may require to certify or establish the status of such Creditor Party under FATCA, |
the Agent shall provide any withholding certificate, withholding statement, documentation, authorisations and waivers it receives from a Creditor Party pursuant to this paragraph (g) to that Borrower or the relevant Security Party and shall be entitled to rely on any such withholding certificate, withholding statement, documentation, authorisations and waivers provided without further verification. The Agent shall not be liable for any action which it takes or refrains from taking under or in connection with this paragraph (g); and
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| (h) | The Borrowers, each Security Party and each Creditor Party agrees that if any withholding certificate, withholding statement, documentation, authorisations and waivers provided to the Agent pursuant to paragraphs (f) to (g) above is or becomes materially inaccurate or incomplete, it shall promptly update such withholding certificate, withholding statement, documentation, authorisations and waivers or promptly notify the Agent in writing of its legal inability to do so. The Agent shall, if applicable, provide any such updated withholding certificate, withholding statement, documentation, authorisations and waivers to the Borrowers or the relevant Security Party. The Agent shall not be liable for any action which it takes or refrains from taking under or in connection with this paragraph (h). |
| 22.6 | FATCA Deduction |
| (a) | Each party to a Finance Document may make any FATCA Deduction it is required to make by FATCA, and any payment required in connection with that FATCA Deduction, and shall not be required to increase any payment in respect of which it makes such a FATCA Deduction or otherwise compensate the recipient of the payment for that FATCA Deduction. |
| (b) | Each party to a Finance Document 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 a Finance Document to whom it is making the payment and, in addition, shall notify the Borrowers and the Agent and the Agent shall notify the other Creditor Parties. |
| 23 | ILLEGALITY, ETC |
| 23.1 | Illegality |
This Clause 23 (Illegality, etc) applies if a Lender (the “Notifying Lender”) notifies the Agent that it has become, or will with effect from a specified date, become for that Lender or any affiliate of that Lender:
| (a) | unlawful or prohibited as a result of the introduction of a new law, an amendment to an existing law or a change in the manner in which an existing law is or will be interpreted or applied; or |
| (b) | contrary to, or inconsistent with, any regulation, |
for the Notifying Lender to maintain or give effect to any of its obligations under this Agreement in the manner contemplated by this Agreement.
| 23.2 | Notification of illegality |
The Agent shall promptly notify the Borrowers, the Security Parties, the Security Trustee and the other Lenders of the notice under Clause 23.1 (Illegality) which the Agent receives from the Notifying Lender.
| 23.3 | Prepayment; termination of Commitment |
On the Agent notifying the Borrowers under Clause 23.2 (Notification of illegality), the Notifying Lender’s Commitment shall terminate; and thereupon or, if later, on the date specified in the Notifying Lender’s notice under Clause 23.1 (Illegality) as the date on which the notified event would become effective the Borrowers shall prepay the Notifying Lender’s Contribution in accordance with Clause 8 (Repayment and Prepayment).
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| 24 | INCREASED COSTS |
| 24.1 | Increased costs |
| (a) | Each Borrower shall, within 3 Business Days of a demand by the Agent, pay for the account of a Creditor Party the amount of any Increased Costs incurred by that Creditor 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, |
after the date of this Agreement.
| (b) | In this Agreement, “Increased Costs” means: |
| (i) | a reduction in the rate of return from the Loan or on a Creditor Party’s (or its affiliate’s) overall capital; |
| (ii) | an additional or increased cost; or |
| (iii) | a reduction of any amount due and payable under any Finance Document, |
which is incurred or suffered by a Creditor Party or any of its affiliates to the extent that it is attributable to that Creditor Party having entered into its Commitment or funding or performing its obligations under any Finance Document and, for the avoidance of doubt, includes any Increased Costs incurred or suffered by a Creditor Party or any of its affiliates as a result of or with connection to Basel III, CRD IV or CRR,
but not an item attributable to a change in the rate of tax on the overall net income of the Notifying Lender (aa) (or a parent company of it) or (bb) an item covered by the indemnity for tax in Clause 21.1 (Indemnities regarding borrowing and repayment of Loan) or by Clause 22 (No Set-off or Tax Deduction) or (cc) a FATCA Deduction.
| 24.2 | Increased cost claims |
| (a) | A Creditor Party (the “Notifying Lender”) intending to make a claim pursuant to Clause 24.1 (Increased costs) shall notify the Agent of the event giving rise to the claim, following which the Agent shall promptly notify the Borrower. |
| (b) | Each Creditor Party shall, as soon as practicable after a demand by the Agent, provide a certificate setting out, in reasonably detail, the amount and the event giving rise to such Increased Costs, except that no Creditor Party shall be required to disclose any information that is confidential or proprietary (as determined by such Finance Party in its sole discretion). |
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| 24.3 | Notification to Borrowers of claim for increased costs |
The Agent shall promptly notify the Borrowers and the Security Parties of the notice which the Agent received from the Notifying Lender under Clause 24.2 (Increased cost claims).
| 24.4 | Payment of increased costs |
The Borrowers shall pay to the Agent, on the Agent’s demand, for the account of the Notifying Lender the amounts which the Agent from time to time notifies the Borrowers that the Notifying Lender has specified to be necessary to compensate the Notifying Lender for the increased cost.
| 24.5 | Notice of prepayment |
If the Borrowers are not willing to continue to compensate the Notifying Lender for the increased cost under Clause 24.4 (Payment of increased costs), the Borrowers may give the Agent not less than 15 days’ notice of their intention to prepay the Notifying Lender’s Contribution at the end of an Interest Period and/or to cancel the Notifying Lender’s Available Commitment.
| 24.6 | Prepayment; termination of Commitment |
A notice under Clause 24.5 (Notice of prepayment) shall be irrevocable; the Agent shall promptly notify the Notifying Lender of the Borrowers’ notice of intended prepayment; and:
| (a) | on the date on which the Agent serves that notice, the Commitment of the Notifying Lender shall be cancelled; and |
| (b) | on the date specified in its notice of intended prepayment, the Borrowers shall prepay (without premium or penalty) the Notifying Lender’s Contribution, together with accrued interest thereon at the applicable rate plus the Margin. |
| 24.7 | Application of prepayment |
Clause 8 (Repayment and Prepayment) shall apply in relation to the prepayment.
| 25 | SET-OFF |
| 25.1 | Application of credit balances |
Each Creditor Party may without prior notice:
| (a) | apply any balance (whether or not then due) which at any time stands to the credit of any account in the name of a Borrower at any office in any country of that Creditor Party in or towards satisfaction of any sum then due from that Borrower to that Creditor Party under any of the Finance Documents; and |
| (b) | for that purpose: |
| (i) | break, or alter the maturity of, all or any part of a deposit of that Borrower; |
| (ii) | convert or translate all or any part of a deposit or other credit balance into Dollars; and |
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| (iii) | enter into any other transaction or make any entry with regard to the credit balance which the Creditor Party concerned considers appropriate. |
| 25.2 | Existing rights unaffected |
No Creditor Party shall be obliged to exercise any of its rights under Clause 25.1 (Application of credit balances); and those rights shall be without prejudice and in addition to any right of set-off, combination of accounts, charge, lien or other right or remedy to which a Creditor Party is entitled (whether under the general law or any document).
| 25.3 | Sums deemed due to a Lender |
For the purposes of this Clause 25 (Set-off), a sum payable by the Borrowers to the Agent or the Security Trustee for distribution to, or for the account of, a Lender shall be treated as a sum due to that Lender; and each Lender’s proportion of a sum so payable for distribution to, or for the account of, the Lenders shall be treated as a sum due to such Lender.
| 25.4 | No Security Interest |
This Clause 25 (Set-off) gives the Creditor Parties a contractual right of set off only and does not create any equitable charge or other Security Interest over any credit balance of any Borrower.
| 26 | TRANSFERS AND CHANGES IN LENDING OFFICES |
| 26.1 | Transfer by Borrowers |
No Borrower may, without the consent of the Agent, given on the instructions of all the Lenders:
| (a) | transfer any of its rights or obligations under any Finance Document; or |
| (b) | enter into any merger, de-merger or other reorganisation, or carry out any other act, as a result of which any of its rights or liabilities would vest in, or pass to, another person. |
| 26.2 | Transfer by a Lender |
| (a) | Subject to Clause 26.4 (Effective Date of Transfer Certificate), a Lender (the “Transferor Lender”) may at any time, without the prior written consent of the Borrowers (but with a 15 days’ prior notice), transfer and/or assign: |
| (i) | its rights in respect of all or part of its Contribution; or |
| (ii) | its obligations in respect of all or part of its Commitment; or |
| (iii) | a combination of (i) and (ii), |
to another Lender, another branch, subsidiary or affiliate of a Lender, another first class international bank or financial institution, any member of the European System of Central Banks, or to any (re)insurers and insurance brokers or other entity which is regularly engaged in or established for the purpose of making, purchasing or investing in shipping loans, securities or other financial assets (a “Transferee Lender”) by delivering to the Agent a completed certificate in the form set out in Schedule 4 (Transfer Certificate) with any modifications approved or required by the Agent (a “Transfer Certificate”) executed by the Transferor Lender and the Transferee Lender.
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However, any rights and obligations of the Transferor Lender in its capacity as Agent or Security Trustee will have to be dealt with separately in accordance with the Agency and Trust Deed.
| 26.3 | Transfer Certificate, delivery and notification |
As soon as reasonably practicable after a Transfer Certificate is delivered to the Agent, it shall (unless it has reason to believe that the Transfer Certificate may be defective):
| (a) | sign the Transfer Certificate on behalf of itself, each Borrower, the Security Parties, the Security Trustee and each of the other Lenders; |
| (b) | on behalf of the Transferee Lender, send to each Borrower and each Security Party letters or faxes notifying them of the Transfer Certificate and attaching a copy of it; and |
| (c) | send to the Transferee Lender copies of the letters or faxes sent under paragraph (b) above, |
Provided that the Agent is satisfied that the Transferee Lender 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 Transferee Lender.
| 26.4 | Effective Date of Transfer Certificate |
A Transfer Certificate becomes effective on the date, if any, specified in the Transfer Certificate as its effective date Provided that it is signed by the Agent under Clause 26.3 (Transfer Certificate, delivery and notification) on or before that date.
| 26.5 | No transfer without Transfer Certificate |
No assignment or transfer of any right or obligation of a Lender under any Finance Document is binding on, or effective in relation to, any Borrower, any Security Party, the Agent or the Security Trustee unless it is effected, evidenced or perfected by a Transfer Certificate.
| 26.6 | Lender re-organisation; waiver of Transfer Certificate |
However, if a Lender enters into any merger, de-merger or other reorganisation as a result of which all its rights or obligations vest in another person (the “successor”), the Agent may, if it sees fit, by notice to the successor and the Borrowers and the Security Trustee waive the need for the execution and delivery of a Transfer Certificate; and, upon service of the Agent’s notice, the successor shall become a Lender with the same Commitment and Contribution as were held by the predecessor Lender.
| 26.7 | Effect of Transfer Certificate |
A Transfer Certificate takes effect in accordance with English law as follows:
| (a) | to the extent specified in the Transfer Certificate, all rights and interests (present, future or contingent) which the Transferor Lender has under or by virtue of the Finance Documents are assigned to the Transferee Lender absolutely, free of any defects in the Transferor Lender’s title and of any rights or equities which the Borrowers or any Security Party had against the Transferor Lender; |
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| (b) | the Transferor Lender’s Commitment is discharged to the extent specified in the Transfer Certificate; |
| (c) | the Transferee Lender becomes a Lender with the Contribution previously held by the Transferor Lender and a Commitment of an amount specified in the Transfer Certificate; |
| (d) | the Transferee Lender becomes bound by all the provisions of the Finance Documents which are applicable to the Lenders generally, including those about pro-rata sharing and the exclusion of liability on the part of, and the indemnification of, the Agent and the Security Trustee and, to the extent that the Transferee Lender becomes bound by those provisions (other than those relating to exclusion of liability), the Transferor Lender ceases to be bound by them; |
| (e) | any part of the Loan which the Transferee Lender advances after the Transfer Certificate’s effective date ranks in point of priority and security in the same way as it would have ranked had it been advanced by the transferor, assuming that any defects in the transferor’s title and any rights or equities of any Borrower or any Security Party against the Transferor Lender had not existed; |
| (f) | the Transferee Lender becomes entitled to all the rights under the Finance Documents which are applicable to the Lenders generally, including but not limited to those relating to the Majority Lenders and those under Clause 5.7 (Market disruption) and Clause 20 (Fees and Expenses), and to the extent that the Transferee Lender becomes entitled to such rights, the Transferor Lender ceases to be entitled to them; and |
| (g) | in respect of any breach of a warranty, undertaking, condition or other provision of a Finance Document or any misrepresentation made in or in connection with a Finance Document, the Transferee Lender shall be entitled to recover damages by reference to the loss incurred by it as a result of the breach or misrepresentation, irrespective of whether the original Lender would have incurred a loss of that kind or amount. |
The rights and equities of any Borrower or any Security Party referred to above include, but are not limited to, any right of set off and any other kind of cross-claim.
| 26.8 | Maintenance of register of Lenders |
During the Security Period the Agent shall maintain a register in which it shall record the name, Commitment, Contribution and administrative details (including the lending office) from time to time of each Lender holding a Transfer Certificate and the effective date (in accordance with Clause 26.4 (Effective Date of Transfer Certificate)) of the Transfer Certificate; and the Agent shall make the register available for inspection by any Lender, the Security Trustee and the Borrowers during normal banking hours, subject to receiving at least 3 Business Days prior notice.
| 26.9 | Reliance on register of Lenders |
The entries on that register shall, in the absence of manifest error, be conclusive in determining the identities of the Lenders and the amounts of their Commitments and Contributions and the effective dates of Transfer Certificates and may be relied upon by the Agent and the other parties to the Finance Documents for all purposes relating to the Finance Documents.
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| 26.10 | Authorisation of Agent to sign Transfer Certificates |
The Borrowers, the Security Trustee and each Lender irrevocably authorise the Agent to sign Transfer Certificates on its behalf.
| 26.11 | Registration fee |
In respect of any Transfer Certificate, the Agent shall be entitled to recover a registration fee of $1,500 (and all costs, fees and expenses incidental to the transfer (including, but not limited to legal fees and expenses)) from the Transferor Lender or (at the Agent’s option) the Transferee Lender.
| 26.12 | Sub-participation; subrogation assignment |
A Lender may sub-participate all or any part of its rights and/or obligations under or in connection with the Finance Documents without the consent of, or any notice to, the Borrowers, any Security Party, the Agent or the Security Trustee; and the Lenders may assign, in any manner and terms agreed by the Majority Lenders, the Agent and the Security Trustee, all or any part of those rights to an insurer or surety who has become subrogated to them.
| 26.13 | Disclosure of information |
Subject to Clause 26.4 (Effective Date of Transfer Certificate), a Lender may, disclose to a potential Transferee Lender or, to any sub-participant any information which the Lender has received in relation to the Borrowers, any Security Party or their affairs under or in connection with any Finance Document, unless the information is clearly of a confidential nature only after a potential Transferee Lender or any sub-participant to whom disclosure is made agrees to be bound by the terms of the confidentiality undertaking in this Clause 26.13 (Disclosure of information) by way of a confidentiality agreement in a form recommended by the LMA from time to time or acceptable to the Borrowers.
The Borrowers agree that the terms and conditions of this Agreement shall remain confidential and shall not, or shall procure that the Corporate Guarantor shall not, disclose (whether, without limitation, in writing or orally) to third parties (other than any disclosure to the Corporate Guarantor’s shareholders, officers, employees or professional advisers Provided that the person to whom disclosure is made agrees to be bound by the terms of the confidentiality undertaking in this Clause 26.13 (Disclosure of information) any information required to be disclosed by law, regulation or any governmental or competent regulatory authority (including without limitation, any securities exchange), provided that, to the extent reasonably practicable, the Corporate Guarantor shall inform the Agent on the proposed form, timing, nature and purpose of the disclosure) the existence of this Agreement or the terms and conditions contained herein without the prior written consent of the Lenders.
| 26.14 | Change of lending office |
A Lender may change its lending office by giving notice to the Agent and the change shall become effective on the later of:
| (a) | the date on which the Agent receives the notice; and |
| (b) | the date, if any, specified in the notice as the date on which the change will come into effect, |
provided that a Lender shall not nominate more than two lending offices.
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| 26.15 | Notification |
On receiving such a notice, the Agent shall notify the Borrowers and the Security Trustee; and, until the Agent receives such a notice, it shall be entitled to assume that a Lender is acting through the lending office of which the Agent last had notice.
| 26.16 | Security over Lenders’ rights |
In addition to the other rights provided to Lenders under this Clause 26 (Transfers and Changes in Lending Offices), each Lender may without consulting with or obtaining consent from any Borrower or any Security Party, at any time charge, assign or otherwise create a Security Interest 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 Interest to secure obligations to a federal reserve or central bank; and |
| (b) | in the case of any Lender which is a fund, any charge, assignment or other Security Interest 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 Interest 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 Interest for the Lender as a party to any of the Finance Documents; or |
| (ii) | require any payments to be made by the Borrowers or any Security Party 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. |
| 26.17 | Preservation of security |
The benefit of the Security Interests created under the Finance Documents shall automatically transfer to any assignee or transferee (by way of novation or otherwise) of part or all of the obligations expressed to be secured by the Security Interests created under the Finance Documents. For the purpose of Article 1278 and Article 1281 of the Belgian Civil Code (and, to the extent applicable, any similar provisions of foreign law), the Security Trustee, the other Credit Parties and each of the obligors hereby expressly reserve the preservation of the Security Interests created under the Finance Documents in case of assignment, novation, amendment or any other transfer or change of the obligations expressed to be secured by the Security Interests created under the Finance Documents (including, without limitation, an extension of the term or an increase of the amount of such obligations or the granting of additional credit) or of any change of any of the parties to this Agreement or any other Finance Document.
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| 27 | VARIATIONS AND WAIVERS BY MAJORITY LENDERS |
| 27.1 | Variations, waivers etc. by Lenders |
Subject to Clause 27.2 (Variations, waivers etc. requiring agreement of all Lenders), a document shall be effective to vary, waive, suspend or limit any provision of a Finance Document, or any Creditor Party’s rights or remedies under such a provision or the general law, only if the document is signed, or specifically agreed to by fax, by the Borrowers, by the Agent on behalf of the Majority Lenders, by the Agent and the Security Trustee in their own rights, and, if the document relates to a Finance Document to which a Security Party is party, by that Security Party.
| 27.2 | Variations, waivers etc. requiring agreement of all Lenders |
Subject to Clause 27.4 (Replacement of Screen Rate), as regards the following, Clause 27.1 (Variations, waivers etc. by Lenders) applies as if the words “by the Agent on behalf of the Majority Lenders” were replaced by the words “by or on behalf of every Lender”:
| (a) | a reduction in the Margin; |
| (b) | a postponement to the date for, or a reduction in the amount of, any payment of principal, interest, fees or other sum payable under this Agreement; |
| (c) | an increase in any Lender’s Commitment; |
| (d) | a change to the definition of “Majority Lenders”; |
| (e) | a change to Clause 3 (Position of the Lenders) or this Clause 27 (Variations and Waivers by majority lenders); |
| (f) | any release of, or material variation to, a Security Interest, guarantee, indemnity or subordination arrangement set out in a Finance Document; and |
| (g) | any other change or matter as regards which this Agreement or another Finance Document expressly provides that each Lender’s consent is required. |
| 27.3 | Exclusion of other or implied variations |
Except for a document which satisfies the requirements of Clauses 27.1 (Variations, waivers etc. by Lenders) and 27.2 (Variations, waivers etc. requiring agreement of all Lenders), no document, and no act, course of conduct, failure or neglect to act, delay or acquiescence on the part of the Creditor Parties or any of them (or any person acting on behalf of any of them) shall result in the Creditor Parties or any of them (or any person acting on behalf of any of them) being taken to have varied, waived, suspended or limited, or being precluded (permanently or temporarily) from enforcing, relying on or exercising:
| (a) | a provision of this Agreement or another Finance Document; or |
| (b) | an Event of Default; or |
| (c) | a breach by a Borrower or a Security Party of an obligation under a Finance Document or the general law; or |
| (d) | any right or remedy conferred by any Finance Document or by the general law, |
and there shall not be implied into any Finance Document any term or condition requiring any such provision to be enforced, or such right or remedy to be exercised, within a certain or reasonable time.
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| 27.4 | Replacement of Screen Rate |
| (a) | If a Screen Rate Replacement Event has occurred in relation to the Screen Rate for dollars, any amendment or waiver which relates to: |
| (i) | providing for the use of a Replacement Benchmark; and |
| (ii) |
| (A) | aligning any provision of any Finance Document to the use of that Replacement Benchmark; |
| (B) | enabling that Replacement Benchmark to be used for the calculation of interest under this Agreement (including, without limitation, any consequential changes required to enable that Replacement Benchmark to be used for the purposes of this Agreement); |
| (C) | implementing market conventions applicable to that Replacement Benchmark; |
| (D) | providing for appropriate fallback (and market disruption) provisions for that Replacement Benchmark; or |
| (E) | adjusting the pricing to reduce or eliminate, to the extent reasonably practicable, any transfer of economic value from one Party to another as a result of the application of that Replacement Benchmark (and if any adjustment or method for calculating any adjustment has been formally designated, nominated or recommended by the Relevant Nominating Body, the adjustment shall be determined on the basis of that designation, nomination or recommendation), |
may be made with the consent of the Agent (acting on the instructions of the Majority Lenders) and the Borrowers.
| (b) | If, as at 1 January 2023 this Agreement provides that the rate of interest for the Loan in dollars is to be determined by reference to the Screen Rate for LIBOR: |
| (i) | a Screen Rate Replacement Event shall be deemed to have occurred on that date in relation to the Screen Rate for dollars; and |
| (ii) | the Agent, (acting on the instructions of the Majority Lenders) and the Borrowers shall enter into negotiations in good faith with a view to agreeing the use of a Replacement Benchmark in relation to dollars in place of that Screen Rate from and including a date no later than 31 May 2023. |
| (c) | If any Lender fails to respond to a request for an amendment or waiver described in, or for any other vote of Lenders in relation to, 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 |
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| (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. |
| 28 | NOTICES |
| 28.1 | General |
Unless otherwise specifically provided, any notice under or in connection with any Finance Document shall be given by letter or fax; and references in the Finance Documents to written notices, notices in writing and notices signed by particular persons shall be construed accordingly.
| 28.2 | Addresses for communications |
A notice shall be sent:
| (a) | to a Borrower: | |||
| c/o Tankers Management (Cayman) SEZC | ||||
| Strathvale House, 90 N Church Street | ||||
| P.O. Box 309, Grand Cayman | ||||
| KY1-1104 Cayman Islands | ||||
| for the attention of: Vassiliki Papaefthymiou | ||||
| E-mail: legal_corp@navios.com; | ||||
| vpapaefthymiou@Navios.com | ||||
| (b) | to a Lender: | At the address below its name in Schedule 1 or (as the case may require) in the relevant Transfer Certificate. | ||
| (c) | to the Agent and the | Crédit Agricole Corporate and Investment Bank | ||
| Security Trustee: | 12, place des Etats-Unis | |||
| CS 70052 | ||||
| 92547 Montrouge Cedex | ||||
| France | ||||
| E-mail: clementine.costil@ca-cib.com; romy.roussel@ca-cib.com; charlene.marguetheintz@ca-cib.com; | ||||
| Copy: nicoletta.panayiotopoulos@ca-cib.com; yannick.legourieres@ca-cib.com; | ||||
| (d) | to the Account Bank: | Crédit Agricole Corporate and Investment Bank | ||
| 12, place des Etats-Unis | ||||
| CS 70052 | ||||
| 92547 Montrouge Cedex | ||||
| France | ||||
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| E-mail: | ||||
| clementine.costil@ca-cib.com; romy.roussel@ca-cib.com; charlene.marguetheintz@ca-cib.com; | ||||
| Copy: | ||||
| nicoletta.panayiotopoulos@ca-cib.com; yannick.legourieres@ca-cib.com; | ||||
or to such other address as the relevant party may notify the Agent or, if the relevant party is the Agent or the Security Trustee, the Borrowers, the Lenders and the Security Parties.
| 28.3 | Effective date of notices |
Subject to Clauses 28.4 (Service outside business hours) and 28.5 (Illegible notices):
| (a) | a notice which is delivered personally or posted shall be deemed to be served, and shall take effect, at the time when it is delivered; and |
| (b) | a notice which is sent by fax shall be deemed to be served, and shall take effect, 2 hours after its transmission is completed. |
| 28.4 | Service outside business hours |
However, if under Clause 28.3 (Effective date of notices) a notice would be deemed to be served:
| (a) | on a day which is not a business day in the place of receipt; or |
| (b) | on such a business day, but after 5 p.m. local time, |
the notice shall (subject to Clause 28.5 (Illegible notices)) be deemed to be served, and shall take effect, at 9 a.m. on the next day which is such a business day.
| 28.5 | Illegible notices |
Clauses 28.3 (Effective date of notices) and 28.4 (Service outside business hours) do not apply if the recipient of a notice notifies the sender within 1 hour after the time at which the notice would otherwise be deemed to be served that the notice has been received in a form which is illegible in a material respect.
| 28.6 | Valid notices |
A notice under or in connection with a Finance Document shall not be invalid by reason that its contents or the manner of serving it do not comply with the requirements of this Agreement or, where appropriate, any other Finance Document under which it is served if:
| (a) | the failure to serve it in accordance with the requirements of this Agreement or other Finance Document, as the case may be, has not caused any party to suffer any significant loss or prejudice; or |
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| (b) | in the case of incorrect and/or incomplete contents, it should have been reasonably clear to the party on which the notice was served what the correct or missing particulars should have been. |
| 28.7 | English language |
Any notice under or in connection with a Finance Document shall be in English.
| 28.8 | Meaning of “notice” |
In this Clause “notice” includes any demand, consent, authorisation, approval, instruction, waiver or other communication.
| 29 | SUPPLEMENTAL |
| 29.1 | Rights cumulative, non-exclusive |
The rights and remedies which the Finance Documents give to each Creditor Party are:
| (a) | cumulative; |
| (b) | may be exercised as often as appears expedient; and |
| (c) | shall not, unless a Finance Document explicitly and specifically states so, be taken to exclude or limit any right or remedy conferred by any law. |
| 29.2 | Severability of provisions |
If any provision of a Finance Document is or subsequently becomes void, unenforceable or illegal, that shall not affect the validity, enforceability or legality of the other provisions of that Finance Document or of the provisions of any other Finance Document.
| 29.3 | Third party rights |
A person who is not a party to this Agreement has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce or to enjoy the benefit of any term of this Agreement.
| 29.4 | Waiver of Banking Secrecy |
The Borrowers hereby irrevocably authorise and give consent to the Agent and, each of its affiliates, and their respective subsidiaries, branches and representative offices and their respective directors, officers, employees and agents (the “Authorised Persons” and each an “Authorised Person”), to disclose and transmit to the Applicable Persons, whether orally, in writing or by any other means, information and documents which relates to, or are connected with, the Borrowers, their beneficial owner, any other member of the Group, their business, dealings or assets (the “Information”), from time to time and to the extent that the Authorised Person deems such disclosure or transmission to be necessary or desirable for or incidental to the carrying out of its duties, obligations, commitments and activities whether arising under contract or by operation of law and/or consolidated supervision and risk management policy, to the extent that the Information is covered by banking secrecy under any applicable law in general and Swiss banking secrecy rules in particular and/or:
| (a) | necessary or desirable for the purposes of its internal cross-selling enabling the Borrowers and/or any other member of the Group to benefit from the Agent’s or any other Authorised Person’s business activities; and/or |
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| (b) | necessary or desirable to insure a risk related to the Borrowers and/or any other member of the Group; and/or |
| (c) | necessary or desirable to syndicate a risk related to the Borrowers and/or any other member of the Group; and/or |
| (d) | necessary or desirable to securitise a risk related to the Borrowers and/or any other member of the Group; and/or |
| (e) | necessary or desirable to open an account or to start a business relation with the Agent’s or any other Authorised Person’s parent company or any of its subsidiaries or branches. |
In this Clause 29.4 (Waiver of Banking Secrecy), “Applicable Person” means any or all of the following persons:
| (i) | any authority or person against which, pursuant to any applicable law, administrative order or court ruling, banking secrecy may not be validly asserted by an Authorised Person; |
| (ii) | the Agent’s or any other Authorised Person’s parent company, any of its subsidiaries, branches or representative offices; |
| (iii) | any rating agency, auditor, insurance and reinsurance company, broker or professional adviser, to the extent such entity or person is bound by a statutory or contractual duty of confidentiality; |
| (iv) | any financial institution and institutional or other investor who is or might be involved in securitisation schemes, hedging agreements, participations, credit derivatives or any other risk transfer or sharing arrangements, including, inter alia, a bank and/or other financial institution’s participation in, or syndication in respect of, the Loan; |
| (v) | any potential assignee or transferee or person who has entered into or is proposing to enter into contractual arrangements with the Authorised Person in relation to a Borrower; and |
| (vi) | any external computer services provider, for the purpose of maintenance or repair of the Agent’s or any other Authorised Person’s computer systems and date provided that such external computer services provider is bound by the confidentiality policy of BNP Paribas. |
| 29.5 | Reference Banks |
If a Reference Bank (or, if a Reference Bank is not a Lender, the Lender of which it is an affiliate) ceases to be a Lender, the Agent shall (in consultation with the Borrowers) appoint another Lender or an affiliate of a Lender to replace that Reference Bank.
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| 29.6 | Role of Reference Banks |
| (a) | No Reference Bank is under any obligation to provide a quotation or any other information to the Agent but may do so at the Agent’s request. |
| (b) | No Reference Bank will be liable for any action taken by it under or in connection with any Finance Document, or for any quotation provided to the Agent. |
| (c) | No Party (other than the relevant Reference Bank) may take any proceedings against any officer, employee or agent of any Reference Bank in respect of any claim it might have against that Reference Bank or in respect of any act or omission of any kind by that officer, employee or agent in relation to any Finance Document, or to any quotation provided to the Agent, and any officer, employee or agent of each Reference Bank may rely on this clause subject to clause 29.3 and the provisions of the Third Parties Act. |
| 29.7 | Third party Reference Banks |
Any Reference Bank which is not a party to this Agreement may rely on Clause 29.6 (Role of Reference Banks) subject to Clause 29.3 (Third party rights) and the provisions of the Third Parties Act.
| 29.8 | Counterparts |
A Finance Document may be executed in any number of counterparts.
| 30 | CONFIDENTIALITY |
| 30.1 | Confidential Information |
Each Creditor Party agrees to keep all Confidential Information confidential and not to disclose it to anyone, save to the extent permitted by Clauses 30.2 (Disclosure of Confidential Information) and 30.3 (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 taking also into account the public nature of the Corporate Guarantor.
| 30.2 | Disclosure of Confidential Information |
Any Creditor Party may disclose:
| (a) | to any of its affiliates and Related Funds and any of its or their officers, directors, employees, professional advisers, auditors, insurers, reinsurers, partners and Representatives such Confidential Information as that Creditor 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; |
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| (b) | to any person: |
| (i) | to (or through) whom it assigns or transfers (or may potentially assign or transfer) all or any of its rights and/or obligations under one or more Finance Documents or which succeeds (or which may potentially succeed) it as Agent and, in each case, to any of that person’s affiliates, Related Funds, Representatives and professional advisers; |
| (ii) | with (or through) whom it enters into (or may potentially enter into), whether directly or indirectly, any sub-participation in relation to, or any other transaction under which payments are to be made or may be made by reference to, one or more Finance Documents and/or the Borrowers and/or any Security Party and to any of that person’s affiliates, Related Funds, Representatives and professional advisers; |
| (iii) | appointed by any Creditor 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; |
| (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, arbitration, administrative or other investigations, proceedings or disputes; |
| (vii) | to whom or for whose benefit that Creditor Party charges, assigns or otherwise creates a Security Interest (or may do so) pursuant to Clause 26.16 (Security over Lenders’ rights), including to a federal reserve or central bank (including, for the avoidance of doubt, the European Central Bank) to (or through) whom it creates Security Interest pursuant to Clause 26.16 (Security over Lenders’ rights) and any federal reserve or central bank (including, for the avoidance of doubt, the European Central Bank) may disclose such Confidential Information to a third party to whom it transfers (or may potentially transfer) rights under the Finance Documents or the securities issued by the special purpose vehicle in connection with the enforcement of such Security Interest; |
| (viii) | who is a party to a Finance Document, a member of the Group or any related entity of the Borrowers or any Security Party; or |
| (ix) | with the consent of the Borrowers; |
in each case, such Confidential Information as that Creditor 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; |
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| (B) | in relation to sub-paragraph (iv) of paragraph (b) above, the person to whom the Confidential Information is to be given has entered into a Confidentiality Undertaking or is otherwise bound by requirements of confidentiality in relation to the Confidential Information they receive and is informed that some or all of such Confidential Information may be price-sensitive information; |
| (C) | in relation to 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 Creditor Party, it is not practicable so to do in the circumstances; |
| (c) | to any person appointed by that Creditor Party or by a person to whom paragraph (b)(i) or (b)(ii) 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 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 Borrowers and the relevant Creditor Party; and |
| (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 Borrowers and/or the Security Parties. |
| 30.3 | Disclosure to numbering service providers |
| (a) | Any Creditor Party may disclose to any national or international numbering service provider appointed by that Creditor Party to provide identification numbering services in respect of this Agreement, the Loan and/or the Borrowers and/or the Security Parties the following information: |
| (i) | names of the Borrowers and the Security Parties; |
| (ii) | country of domicile of the Borrowers and the Security Parties; |
| (iii) | place of incorporation of the Borrowers and the Security Parties; |
| (iv) | date of this Agreement; |
| (v) | governing law; |
| (vi) | the name of the Agent; |
| (vii) | date of each amendment and restatement of this Agreement; |
| (viii) | amount of the Loan; |
| (ix) | amount of Total Commitments; |
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| (x) | currency of the Loan; |
| (xi) | type of facility; |
| (xii) | ranking of facility; |
| (xiii) | final Repayment Date; |
| (xiv) | changes to any of the information previously supplied pursuant to paragraphs (i) to (xiii) above; and |
| (xv) | such other information agreed between such Creditor Party and the Borrowers, |
to enable such numbering service provider to provide its usual syndicated loan numbering identification services.
| (b) | The parties to this Agreement acknowledge and agree that each identification number assigned to this Agreement, the Loan and/or the Borrowers and/or any Security Party 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) | The Borrowers represent that none of the information set out in sub-paragraphs (i) to (xv) of paragraph (a) above is, nor will at any time be, unpublished price-sensitive information. |
| (d) | The Agent shall notify the Borrowers and the other Creditor Parties of: |
| (i) | the name of any numbering service provider appointed by the Agent in respect of this Agreement, the Loan and/or the Borrowers and/or the Security Parties; and |
| (ii) | the number or, as the case may be, numbers assigned to this Agreement, the Loan and/or the Borrowers and/or the Security Parties by such numbering service provider. |
| 30.4 | Entire agreement |
This Clause 30 (Confidentiality) constitutes the entire agreement between the parties to this Agreement in relation to the obligations of the Creditor Parties under the Finance Documents regarding Confidential Information and supersedes any previous agreement, whether express or implied, regarding Confidential Information.
| 30.5 | Inside information |
Each of the Creditor 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 Creditor Parties undertakes not to use any Confidential Information for any unlawful purpose.
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| 30.6 | Notification of disclosure |
Each of the Creditor 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 30.2 (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 30. |
| 30.7 | Continuing obligations |
The obligations in this Clause 30 (Confidentiality) are continuing and, in particular, shall survive and remain binding on each Creditor Party for a period of 12 months from the earlier of:
| (a) | the date on which all amounts payable by the Borrowers and the Security Parties 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 Creditor Party otherwise ceases to be a Creditor Party. |
| 31 | LAW AND JURISDICTION |
| 31.1 | English law |
This Agreement and any non-contractual obligations arising out of or in connection with it shall be governed by, and construed in accordance with, English law.
| 31.2 | Exclusive English jurisdiction |
Subject to Clause 31.3 (Choice of forum for the exclusive benefit of the Creditor Parties), the courts of England shall have exclusive jurisdiction to settle any Dispute.
| 31.3 | Choice of forum for the exclusive benefit of the Creditor Parties |
Clause 31.2 (Exclusive English jurisdiction) is for the exclusive benefit of the Creditor Parties, each of which reserves the right:
| (a) | to commence proceedings in relation to any Dispute in the courts of any country other than England and which have or claim jurisdiction to that Dispute; and |
| (b) | to commence such proceedings in the courts of any such country or countries concurrently with or in addition to proceedings in England or without commencing proceedings in England. |
No Borrower shall commence any proceedings in any country other than England in relation to a Dispute.
| 31.4 | Process agent |
Each Borrower irrevocably appoints Hill Dickinson LLP at their office for the time being, presently at The Broadgate Tower, 20 Primrose Street, London EC2A 2EW, England to act as its agent to receive and accept on its behalf any process or other document relating to any proceedings in the English courts which are connected with a Dispute.
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| 31.5 | Creditor Party rights unaffected |
Nothing in this Clause 31 (Law and Jurisdiction) shall exclude or limit any right which any Creditor Party may have (whether under the law of any country, an international convention or otherwise) with regard to the bringing of proceedings, the service of process, the recognition or enforcement of a judgment or any similar or related matter in any jurisdiction.
| 31.6 | Meaning of “proceedings” and “Dispute” |
In this Clause 31 (Law and Jurisdiction), “proceedings” means proceedings of any kind, including an application for a provisional or protective measure and a “Dispute” means any dispute arising out of or in connection with this Agreement (including a dispute relating to the existence, validity or termination of this Agreement or any non-contractual obligation arising out of or in connection with this Agreement.
| 32 | BAIL-IN |
| 32.1 | Contractual recognition of 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 hereto acknowledges and accepts that any liability of any party to a Finance Document under or in connection with the Finance Documents may be subject to Bail-In Action by the relevant Resolution Authority and acknowledges and accepts to be bound by the effect of:
| (a) | any Bail-In Action in relation to any such liability, including (without limitation): |
| (i) | a reduction, in full or in part, in the principal amount, or outstanding amount due (including any accrued but unpaid interest) in respect of any such liability; |
| (ii) | a conversion of all, or part of, any such liability into shares or other instruments of ownership that may be issued to, or conferred on, it; and |
| (iii) | a cancellation of any such liability; and |
| (b) | a variation of any term of any Finance Document to the extent necessary to give effect to any Bail-In Action in relation to any such liability. |
THIS AGREEMENT has been entered into on the date stated at the beginning of this Agreement.
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EXECUTION PAGES
| BORROWERS | ||
| SIGNED by /s/ Fransisco G. Tazelaar | ||
| Abogado / Attorney-at-law | ) | |
| for and on behalf of | ) | |
| DUCALE MARINE INC. | ) | |
| SIGNED by /s/ Fransisco G. Tazelaar | ||
| Abogado / Attorney-at-law | ) | |
| for and on behalf of | ) | |
| KLEIMAR NV | ) | |
| SIGNED by /s/ Fransisco G. Tazelaar | ||
| Abogado / Attorney-at-law | ) | |
| for and on behalf of | ) | |
| OPAL SHIPPING CORPORATION | ) | |
| SIGNED by /s/ Fransisco G. Tazelaar Abogado / Attorney-at-law |
) | |
| for and on behalf of | ) | |
| IRIS SHIPPING CORPORATION | ) | |
| SIGNED by /s/ Fransisco G. Tazelaar Abogado / Attorney-at-law |
) | |
| for and on behalf of | ) | |
| HIGHBIRD MANAGEMENT INC. | ) | |
| SIGNED by /s/ Fransisco G. Tazelaar | ||
| Abogado / Attorney-at-law | ) | |
| for and on behalf of | ) | |
| CORSAIR SHIPPING LTD. | ) | |
| LENDERS | ||
| SIGNED by /s/ Charalampos Kazantzis | ) | |
| for and on behalf of | ) | |
| CRÉDIT AGRICOLE CORPORATE AND INVESTMENT BANK |
) ) | |
100
| SIGNED by /s/ Charalampos Kazantzis for and on behalf of |
) ) | |
| BNP PARIBAS | ) | |
| BOOKRUNNERS AND ARRANGERS | ||
| SIGNED by /s/ Charalampos Kazantzis for and on behalf of |
) ) | |
| CRÉDIT AGRICOLE CORPORATE | ) | |
| AND INVESTMENT BANK | ) | |
| SIGNED by /s/ Charalampos Kazantzis for and on behalf of |
) ) | |
| BNP PARIBAS | ) | |
| MANDATED LEAD ARRANGERS | ||
| SIGNED by /s/ Charalampos Kazantzis for and on behalf of |
) ) | |
| CRÉDIT AGRICOLE CORPORATE | ) | |
| AND INVESTMENT BANK | ) | |
| SIGNED by /s/ Charalampos Kazantzis for and on behalf of |
) ) | |
| BNP PARIBAS | ) | |
| AGENT | ||
| SIGNED by /s/ Charalampos Kazantzis for and on behalf of |
) ) | |
| CRÉDIT AGRICOLE CORPORATE | ) | |
| AND INVESTMENT BANK | ) | |
101
| SECURITY TRUSTEE | ||
| SIGNED by /s/ Charalampos Kazantzis for and on behalf of |
) ) | |
| CRÉDIT AGRICOLE CORPORATE | ) | |
| AND INVESTMENT BANK | ) | |
| Witness to all the above /s/ Aikaterina Dimitriou | ) | |
| Signature | ) | |
| Name: AIKATERINA DIMITRIOU | ) | |
| Address: WATSON FARLEY & WILLIAMS |
) | |
| 348 SYNGROU AVENUE |
||
| 176 74 KALLITHEA |
||
| ATHENS - GREECE |
||
102
Exhibit 4.69
| ‘BARECON 2001” STANDARD BAREBOAT CHARTER | PART1 |
| 1. Shipbroker
ITOCHU CORPORATION TOKBR Section, 5-1, Kita-Aoyama 2-chome, Minato-ku, Tokyo, 107-8077, Japan |
BIMCO STANDARD BAREBOAT CHARTER CODE NAME : “BARECON 2001” PART I | |||
| 2. Place and date | ||||
| In New York, U.S. | ||||
| XXth December, 2021 | ||||
| 3. Owners / Place of business (Cl. 1) |
4. Bareboat Charterers / Place of business (Cl. 1) | |||
| Batanagar Shipping Corporation guaranteed by Okouchi Kaiun Co., Ltd. |
Shikhar Ventures S.A. 80 Broad Street, Monrovia, Liberia | |||
| 5. Vessel’s name, call sign, flag and IMO number (Cl. 1 and 3) |
||||
| M/V NAVIOS STELLAR, 3FCJ, Panama, 9498781 | ||||
| 6. Type of Vessel |
7. GT / NT | |||
| Bulk Carrier |
88,421/56,329 | |||
| 8. When / Where built |
9. Total DWT (abt.) in metric tons on | |||
| 2009, Sungdong S.B. & Marine Engineering Co., Ltd. |
169,001 MT | |||
| 10. Classification Society (Cl. 3) |
11. Date of last special survey by the Vessel’s classification society | |||
| American Bureau of Shipping (ABS) |
17 October, 2019 | |||
| 12. | ||||
| Cargoes to be carried; All lawful cargoes within the Vessel’s capabilities/Class, IMO, flag, her insurance | ||||
| 13. Port or Place of delivery (Cl.3)
As per Clause 5 of the MOA (as defined in Clause 1 hereof) |
14. Time for delivery (Cl.4)
As per Clause 5 of the MOA See Also Clause 32. |
15. Cancelling date (Cl.5)
As per Clause 5 of the MOA | ||
| 16. Port or Place of redelivery (Cl. 3) |
17. No. of months’ validity of trading and class certificates upon redelivery (Cl. 15) | |||
| At one safe berth or one safe port worldwide in the Charterers’ option |
Minimum 3 months | |||
| 18. Running days’ notice if other than stated in Cl.4 |
19. Frequency of dry-docking Cl. 10(g) | |||
| N/A |
As per Classification Society and flag state requirements | |||
| 20. Trading Limits (Cl.6) |
||||
| Trading Limits: always safely afloat world-wide within International Navigation Conditions with the Charterer’s option to break same paying extra insurance, but always in accordance with Clause 13 and 40. Any other country designated pursuant to any international including U.N. / U.S. / EU or supranational law or regulation imposing trade and economic sanctions, prohibitions or restrictions (which may be amended from time to time during the Charter Period) to be excluded. | ||||
| 21. Charter Period (Cl. 2) |
22. Charter hire (Cl. 11) | |||
| Firm Six (6) years plus Optional Two (2) years with up to 3 months more or less in Charterers’ option (See Clause 34) |
See Clause 35 | |||
| 23. New class and other statutory requirements (state percentage of Vessel’s insurance value acc. to Box 29 (Cl. 10(a)(ii)) |
||||
| N/A |
||||
| 24. Rate of interest payable acc. to Cl.11(f) and, if applicable, acc. to PART IV |
25. Currency and method of payment (Cl.11) | |||
| N/A |
United States Dollars payable calendar monthly in advance | |||
| 26. Place of payment; also state beneficiary and bank account (Cl. 11) |
27. Bank guarantee / bond (sum and place) (Cl. 24 (optional) | |||
| To be advised |
N/A | |||
| ‘BARECON 2001” STANDARD BAREBOAT CHARTER | PART1 |
| 28. Mortgage(s), if any (state whether Cl. 12(a) or (b) applies; if 12(b) applies, state date of Financial Instrument and name of Mortgagee(s)/Place of business) (Cl. 12) |
29. Insurance (hull and machinery and war risks) (state value acc. to Cl.13(f) or, if applicable, acc. to Cl. 14(k)) (also state if Cl.14 applies) | |
| See Clause 44 |
See Clause 40 | |
| 30. Additional insurance cover, if any, for Owners’ account limited to (Cl. 13(b) or, if applicable, Cl. 14(g)) |
31. Additional insurance cover, if any, for Charterers’ account limited to (Cl. 13(b) or, if applicable, Cl. 14(g)) | |
| N/A |
See Clause 40 (c) | |
| 32. Latent defects (only to be filled in if period other than stated in Cl.3) |
33. Brokerage commission and to whom payable (Cl.27) | |
| N/A |
N/A | |
| 34. Grace period (state number of clear banking days) (Cl. 28) |
35. Dispute Resolution (state 30(a), 30(b) or 30(c); if 30(c) agreed, Place of Arbitration must be stated (Cl. 30) | |
| See Clause 41 |
London | |
| 36. War cancellation (indicate countries agreed) (Cl. 26(f)) |
||
| N/A | ||
| 37. Newbuilding Vessel (indicate with ‘yes’ or ‘no’ whether PART III applies) (optional) |
38. Name and place of Builders (only to be filled in if PART III applies) | |
| No |
N/A | |
| 39. Vessel’s Yard Building No. (only to be filled in if PART III applies) |
40. Date of | |
| No |
N/A | |
| 41. Liquidated damages and costs shall accrue to (state party acc. to Cl. 1) |
||
| a) N/A |
||
| b) N/A |
||
| c) N/A |
||
| 42. Hire/Purchase agreement (indicate with ‘yes’ or ‘no’ whether PART IV applies) (optional) |
43. Bareboat Charter Registry (indicate with ‘yes’ or ‘no’ whether PART IV applies) (optional) | |
| N/A |
Yes in Charterers’ option | |
| 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) | |
| See Clause 37 |
||
| 46. Number of additional clauses covering special provisions, if agreed |
||
| Clause 32 to 56 inclusive | ||
| PREAMBLE—It is mutually agreed that this Contract shall be performed subject to the conditions contained in this Charter which shall include PART I and PART II. In the event of a conflict of conditions, the provisions of PART I shall prevail over those of PART II to the extent of such conflict but no further. It is further mutually agreed that PART III and/or PART IV and/or PART V shall only apply and shall only form part of this Charter if expressly agreed and stated in Boxes 37, 42 and 43. If PART III and/or PART IV and/or PART V apply, it is further agreed that in the event of a conflict of conditions, the provisions of PART I and PART II shall prevail over those of PART III and/or PART IV and/or PART V to the extent of such conflict but no further. | ||
| Signature (Owners) | Signature (Charterers) | |
| Batanagar Shipping Corporation |
Shikhar Ventures S.A. | |
| /s/ Keisuke Okouchi |
/s/ Shunti Sasada | |
| By: Keisuke Okouchi Title: Attorney-in-fact |
By: Shunti Sasada Title: Attorney-in-fact | |
PART II
“BARECON 2001” Standard Bareboat Charter
| 1. | Definitions |
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.
“MOA” means the Memorandum of Agreement entered into between the Owners as buyers and the Charterers as Sellers dated XXth December 2021 in respect of the Vessel.
“Banking Days” shall mean the days identified in Cl.36 (b)
“Total Loss” shall mean the situation identified in Cl.40 (a)
| 2. | Charter Period |
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 Also See Clause 32 |
The Vessel shall be delivered and taken over by the Charterers as per Clause 32.
(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 Clause 32 |
(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 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 date, the
Owners may, as soon as they are in 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 Owners’ prior approval has been obtained to loading thereof.
| 7. | Surveys on Delivery and Redelivery |
(not applicable when PART III applies, as indicated in Box 37)
The Owners and Charterers have the right of shall each appointing surveyors for the purpose of determining and
agreeing in writing the condition of the Vessel at the time of delivery. 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.
| 8. | Inspection |
The Owners shall have the right maximum twice per yearat 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:- provided it does not interfere with the operation of the Vessel and/or crew
(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
PART II
“BARECON 2001” Standard Bareboat Charter
(c) for any other commercial reason they consider necessary (provided it does not
unduly interferer 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 log books maximum twice per year
whenever reasonably 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 CLAUSE 53 |
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. 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. SEE ALSO CLAUSE 32, AND CLAUSE 46
| 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 exercise due diligence to 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 and |
| (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 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. SEE
CLAUSE 38
| (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.
(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
de-registration, if required by the Owners, shall be at the Charterers’ expense and time. SEE CLAUSE 37 & 43
(e) Changes to the Vessel - 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.
SEE CLAUSE 38
(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 substantially 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. 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 the Charterers shall remove such equipment at the end of the period unless agreed otherwise by the Owners and the Charterers. 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 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
PART II
“BARECON 2001” Standard Bareboat Charter
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.
| 11. | Hire SEE CLAUSE 35 |
(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 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 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) of 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 CLAUSE 44 |
|
|
(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..
| *) |
|
(Optional, Clauses 12 (a) and 12 (b) are alternatives; indicate alternative agreed in Box 28).
| 13. | Insurance and Repairs SEE CLAUSE 40 |
(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
underwriter’s standard form as the Owners have received, reviewed and shall in writingapproved, which approval shall not be unreasonably
withheld.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 mortgagees (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 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.
(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 Instrument, 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 the 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. SEE CLAUSE 40
(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. SEE CLAUSE 40
| 14. | Insurance, Repairs and Classification N/A |
(Optional, only to apply if expressly agreed and stated in Box 29, in which event Clause 13 shall be considered deleted).
PART II
“BARECON 2001” Standard Bareboat Charter
(a) During the Charter Period the Vessel shall be kept insured by the Owners at their
expenses 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-clause 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.
(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. |
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At the expiration of the Charter Period the Vessel shall be redelivered by the Charterers to the Owners at a safe
berth or anchorage 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 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 5 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 the Charter shall continue to apply.
Subject to the provisions of Clause 10, the Vessel shall be redelivered to the Owners in
substantially 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 ALSO SEE CLAUSE 47 |
The Charterers will not suffer, nor permit to be continued, any lien or encumbrance incurred by them or their agents, which might have
priority over the title and interest of the Owners in the Vessel. 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 ALSO SEE CLAUSE 54 |
(a) The Charterers shall indemnify the Owners against any loss, damage or 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 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.
PART II
“BARECON 2001” Standard Bareboat Charter
(b) If the Vessel be arrested or otherwise detained by reason of a claims or claims against the Owners, 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.
| 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 |
(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 he 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. SEE CLAUSE48
| 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 the Carriage of Passengers and their Luggage by Sea, 1974, and any protocol thereto.
Delete as applicable.
| 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 ALSO SEE CLAUSE 40 (a)/(b) |
(a) In the event of the requisition for Hire of the Vessel by any governmental or other competent authority (hereinafter referred to a “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) Notwithstanding the provisions of clause 25 (a), 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, which for the avoidance of any doubt, shall exclude requisition for use or hire not involving requisition of title (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”, but not thenafter.
| 26. | War |
(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.
(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 risk 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
PART II
“BARECON 2001” Standard Bareboat Charter
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 and 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 therefore 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.
| 28. | Termination |
(a) Charterer’s 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:
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(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.
SEE CLAUSE 41 & 42
(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 compromised 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. SEE CLAUSE 40
(d)/(e)
(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 arrangements 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 |
In the event of the termination of this Charter in accordance with the applicable provisions of 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, the Charterers shall
PART II
“BARECON 2001” Standard Bareboat Charter
hold the Vessel as gratuitous bailee only to the Owners. The Owners shall arrange for an authorised represent-ative 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 |
| *) | (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.
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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 conduced in accordance with the Shortened Arbitration Procedure of the Society of Maritime Arbitrators,
Inc. current at the time when the arbitration proceedings are commenced.
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(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:-
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(Note: the parries should be aware that the mediation process may not necessarily interrupt time
limits.)
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Sub-clauses 30(a), 30(b) and 30(c) are alternatives; indicate alternative agreed in Box 35.
| 31. | Notices SEE CLAUSE 51 |
(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.
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“BARECON 2001” Standard Bareboat Charter
PART III
PROVISIONS TO APPLY FOR NEWBUILDING VESSELS ONLY
(Optional, only to apply if expressly agreed and stated in Box 37)
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(a) The Vessel shall be constructed in accordance with the Building Shipbuilding Contract (hereafter called
“the ‘Shipbuilding Building Contract’) as annexed to this Charter, made between the Builders and the Sellers Owners and in accordance with the specifications and plans annexed thereto, such
Building Contract, specifications and plans having been countersigned as approved by the Charterers.
(b) No change
shall be made in the Shipbuilding 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 Charterers 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 account 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.
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(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 but the
delivery date for the purpose of the 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 Sellers Owners under the Shipbuilding
Contract, the Builders become entitled under that Contract not to deliver the Vessel to the Sellers, the Owners 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 of 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; SEE CLAUSE 33
(iv) if this Charter terminates under sub-clause (b) 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. |
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If not otherwise agreed, the Owners authorise the Charterers to arrange for the guarantee works to be performed in accordance with
the Shipbuilding 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.
| 4. |
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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. |
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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 redelivery.
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 rate of hire per day or pro rata.
“BARECON 2001” Standard Bareboat Charter
PART IV
HIRE/PURCHASE AGREEMENT
(Optional, only to apply if expressly agreed and stated in Box 42)
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 expense 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 legalised, 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 Maser, 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 of their journey to any other place.
“BARECON 2001” Standard Bareboat Charter
PART V
PROVISIONS TO APPLY FOR VESSELS REGISTERED IN A BAREBOAT CHARTER REGISTRY
(Optional, only to apply if expressly agreed and stated in Box 43)
| 1. |
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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. |
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The Vessel chartered under this Charter is financed by a mortgage and the provisions of Clause
12(b) (PART II) shall apply.
| 3. |
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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.
Additional Clauses
to
the Bareboat Charter Party dated XXth December, 2021 (this “Charter”) by
Batanagar Shipping Corporation as owner (the “Owners”) and
Shikhar Ventures S.A.as charterer (the “Charterers”)
in respect of MV “Navios Stellar” (the “Vessel”)
| 32. | DELIVERY |
(a) The Charterers shall take delivery of the Vessel under this Charter simultaneously with delivery by Charterers as sellers to the Owners as buyers under the MOA, and the Owners shall be obliged to deliver the Vessel to the Charterers hereunder in the same moment as the Owners is taking delivery of the Vessel under the MOA.
(b) The Owners warrant that the Vessel, at time of delivery, is free from all charters, encumbrances, mortgages and maritime liens or any other debts whatsoever, other than (i) those incurred prior to the delivery of the Vessel hereunder, (ii) this Charter and (iii) the mortgage over the Vessel, assignment of insurance in respect of the Vessel and the assignment of the charter hires in respect hereof in favour of the Mortgagee.
(c) The Vessel shall be delivered under this Charter in the same condition and with the same equipment, inventory and spare parts as she is delivered to the Owners under the MOA. The Charterers know the Vessel’s condition at the time of delivery, and expressly agree that the Vessel’s condition as delivered under the MOA is acceptable and in accordance with the provisions of this Charter. The Vessel shall be delivered to the Charterers under this Charter strictly “as is/where is”, and the Charterers shall waive any and all claims against the Owners under this Charter on account of any conditions, seaworthiness, representations, warranties expressed or implied in respect of the Vessel (including but not limited to any bunkers, oils, spare parts and other items whatsoever) on delivery.
| 33. | ISM CODE |
During the currency of this Charter the Charterers shall procure at the costs and expenses and time of the Charterers that the Vessel and the “company” (as defined by the ISM code) shall comply with the requirements of the ISM code. Upon request the Charterers shall provide a copy of relevant documents of compliance (DOC) and safety management certificate (SMC) to the Owners. For the avoidance of any doubt any loss, damage, expense or delay caused by the failure on the part of the “Company” to comply with the ISM code shall be for the Charterers’ account.
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| 34. | CHARTER PERIOD |
| (a) | The Owners shall let to the Charterers and the Charterers shall take the Vessel on charter for the period and upon the terms and conditions contained herein. |
| (b) | Subject always to the provisions hereto, the period of the chartering of the Vessel hereunder (hereinafter referred to as the “Charter Period”) shall comprise (unless terminated at an earlier date in accordance with the terms hereof) a charter period of firm Six (6) years and optional Two (2) years from the date of the delivery of the Vessel by the Owners to the Charterers under this Charter (the “Delivery Date”) with up to three (3) months more or less in the Charterers’ option, provided always that the chartering of the Vessel hereunder may be terminated by the Owners pursuant to Clause 41 or shall terminate in the event of the Total Loss or Compulsory Acquisition of the Vessel subject to, and in accordance with provisions of Clause 40. Charterers can declare optional 2 years extension for Charter period upon a written declaration from Charterers, but this declaration shall be issued not later than end of 5th years of Charter Period. |
| 35. | CHARTER HIRE |
The Charterers shall, throughout the Charter Period, pay charter hire (“Charter Hire”) to the Owners monthly in advance at the agreed following rate by telegraphic transfer for each successive period of a month commencing with the Delivery Date and with subsequent installments at monthly intervals after the date of payment of such first installment by and until the redelivery of the Vessel. Time is of the essence for payment of the Charter Hire under this Charter.
| 1st – 4th Year |
USD 7,500 / day | |||
| 5th – 6th Year |
USD 7,350 / day | |||
| Optional 2 Years |
USD 7,350 / day | |||
| No address commission. |
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| 36. | PAYMENTS |
| (a) | Notwithstanding anything to the contrary contained in this Charter, all payments by the Charterers hereunder (whether by way of hire or otherwise) shall be made as follows:- |
| (i) | not later than 11:00 a.m. (New York time) on one Banking Day prior to the date on which the relevant payment is due under the terms of this Charter: and |
| (ii) | in United States Dollars to THE HIROSHIMA BANK, LTD. (or such other bank or banks as may from time to time be notified by the Owners to the Charterers by not less than fourteen (14) days’ prior written notice) for the account of the Owners . |
(b) If any day for the making of any payment hereunder shall not be a Banking Day (being, for all purposes of this Charter, a day on which banks are open for transaction of business of the nature required by this Charter in Japan, Piraeus/Greece, London and New York) the due date for payment of the same shall be the next following Banking Day.
(c) Subject to the terms of this Charter, the Charterers’ obligation to pay hire in accordance with the requirements of Clause 35 and this Clause 36 and to pay certain amount of insurance benefit pursuant to Clause 40 (e) and to pay the Termination Compensation pursuant to Clause 42 shall be absolute irrespective of any contingency whatsoever, including (but not limited to) (i) any failure or delay on the part of any party hereto or thereto, whether with or without fault on its part, other than the Owners, in performing or complying with any of the terms or covenants hereunder, (ii) any insolvency, bankruptcy, reorganization, arrangement, readjustment of debt, dissolution, liquidation or similar proceedings by or against the Owners or the Charterers or any change in the constitution of the Owners or the Charterers or any other person, (iii) any invalidity or unenforceability or lack of due authorization of or other defect in this Charter, or (iv) any other cause which would or might but for this provision have the effect of terminating or in any way affecting any obligation of the Charterers under this Charter.
(d) In the event of failure by the Charterers to pay within ten (10) Banking Days after the due date for payment thereof, or in the case of a sum payable on demand, the date of demand therefor, any hire or other amount payable by them under this Charter, the Charterers will pay to the Owners
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on demand interest on such hire or other amount from the date of such failure to the date of actual payment (both before and after any relevant judgment or winding up of the Charterers) at the rate determined by the Owners and certified by them to the Charterers (such certification to be conclusive in the absence of manifest error) to be the aggregate of (i) two & one-half per centum (21⁄2 %) and (ii) the London Interbank Offered Rate for US Dollar deposits of not more than one month’s duration (as selected by the Owners or their funders in the light of the likely duration of the default in question) (as such rate is from time to time quoted by leading banks in the London Interbank Market). Interest payable by the Charterers as aforesaid shall be compounded at such intervals as the Owners shall determine and shall be payable on demand.
| (e) | Any interest payable under this Charter shall accrue from day to day and shall be calculated on the actual number of days elapsed and a three hundred and sixty (360) day year. |
| (f) | In this Charter, unless the context otherwise requires, “month” means a period beginning in one calendar month (and, in the case of the first month, on the date of delivery hereunder) and ending in the succeeding calendar month on the day numerically corresponding to the day of the calendar month in which such period started provided that if there is no such numerically corresponding day, such period shall end on the last day in the relevant calendar month and “monthly” shall be construed accordingly. |
| 37. | FLAG AND CLASS |
| (a) | The Vessel shall upon the Delivery Date be registered in the name of the Owners under the Panamanian flag. |
| (b) | The Owners shall have no right either to transfer the flag of Vessel from Panama to any other registry or to require the Charterers to transfer the Vessel’s classification society. The Charterers shall, at any time after the Delivery Date and at the Charterers’ expense, have the right to transfer the Vessel’s classification society from American Bureau of Shipping (ABS) to any other classification society at least equivalent to ABS. |
| (c) | Further, in the event that the Charterers need to change the flag of the Vessel, the Charterers can change the flag with the Owner’s consent, which should not be unreasonably withheld, provided however that any expenses and time (including but not limited to legal charges for finance documents for the Mortgagee) shall be for the Charterers‘account. |
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| (d) | Subject to the Charterers’ supplying the standard de-registration agreement reasonably satisfactory to the Mortgagee the Charterers are entitled to establish the standard bareboat registration on the Vessel at the costs, expense and time of the Charterers. |
| (e) | If during the Charter Period there are any modifications, improvements, structural changes or new equipment made to the Vessel which are compulsory for the Vessel to comply with change to rules and regulations and/or new requirements (including but not limited to IMO or international port or environmental regulation) to which operation of the Vessel is required to conform, the cost relating to such modifications shall be for the account of the Charterers. |
| (f) | All operational cost including required cost in relation to Vessel’s flag (such as tonnage tax, insurance and crew certs etc) would be for Charterers account. However, all other cost (such as the Owners’ financing cost /cost for registration and discharge of their mortgage etc) would be for Owners account, and Owners and Charterers shall equally bear initial registration cost to Vessel’s flag under Owners’ name. For the bareboat charter and the sale of the vessel, each party should bear its own costs. |
| 38. | IMPROVEMENT AND ADDITIONS |
The Charterers shall have the right to fit additional equipment and to make severable improvements and additions at their expense and risk. Such additional equipment, improvements and additions shall be removed from the Vessel without causing any material damage to the Vessel (any such damage being made good by the Charterers at their time and expense) provided however that the Charterers shall redeliver the Vessel without removing such additional equipment, improvements and additions if the Owners consent to such non-removal before the redelivery.
The Charterers shall also have the right to make structural or non-severable improvements and additions to the Vessel at their own time, costs and expense and risk provided that such improvements and additions do not diminish the market value of the Vessel and are not likely to diminish the market value of the Vessel during or at the end of the Charter Period and do not in any way affect or prejudice the marketability or the useful life of the Vessel and are not likely to affect or prejudice the marketability or the useful life of the Vessel during or at the end of the Charter Period.
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| 39. | UNDERTAKING |
The Charterers undertake and agree that throughout the Charter period they will:-
| • | notify the Owners in writing of any Termination Event (or event of which they are aware which, with the giving of notice and/or lapse of time or other applicable condition, would constitute a Termination Event); |
| 40. | INSURANCE, TOTAL LOSS AND COMPULSORY ACQUISITION |
| (a) | For the purposes of this Charter, the term “Total Loss” shall include actual or constructive or compromised or agreed or arranged total loss of the Vessel including any such total loss as may arise during a requisition for hire. “Compulsory Acquisition” shall have the meaning assigned thereto in Clause 25(b) hereof. |
| (b) | The Charterers undertake with the Owners that throughout the Charter Period:- |
| (i) | they will keep the Vessel insured in underwriter’s standard form as the Owners shall in writing approve, which approval shall not be unreasonably withheld, with such insurers (including P&I and war risks associations) as shall be reasonably acceptable to the Owners with deductibles reasonably acceptable to the Owners (it being agreed and understood by the Charterers that there shall be no element of self- insurance or insurance through captive insurance companies without the prior written consent of the Owners); |
| (ii) | they will be properly entered in and keep entry of the Vessel with P&I Club that is a member of the International Group of Protection and Indemnity Association for the full commercial value and tonnage of the Vessel and against all prudent P&I Risks in accordance with the rules of such association or club including, in case of oil pollution liability risks equal to the highest level of cover from time to time available under the basic entry with such P&I (but always a minimum of USD1,000,000,000.); |
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| (iii) | The policies in respect of the insurances against fire and usual marine risks and policies or entries in respect of the insurances against war risks shall, in each case, include the following loss payable provisions:- |
| (a) | For so long as the Vessel is mortgaged and in accordance with the Deed of Assignment of insurances entered or to be entered into between the Charterers and any mortgagee (the “Assignee”): |
Until such time as the Assignee shall have notified the insurers to the contrary:
| (i) | All recoveries hereunder in respect of an actual, constructive or compromised or arranged total loss shall be paid in full to the Assignee without any deduction or deductions whatsoever and applied in accordance with clause 40 (e); |
| (ii) | All other recoveries not exceeding United States Dollars Five Hundred Thousand (US$500,000.00) shall be paid in full to the Charterers or to their order without any deduction or deductions whatsoever; and |
| (iii) | All other recoveries exceeding United States Dollars Five Hundred Thousand (US$500,000.00) shall, subject to the prior written consent of the Assignee be paid in full to the Charterers or their order without any deduction whatsoever. |
| (b) | During any periods when the Vessel is not mortgaged: |
| (i) | All recoveries hereunder in respect of an actual, constructive or compromised or arranged total loss shall be paid in full to the Owners without any deduction or deductions whatsoever and applied in accordance with clause 40 (e); |
| (ii) | All other recoveries not exceeding United States Dollars One million (US$1,000,000.00) shall be paid in full to the Charterers or to their order without any deduction or deductions whatsoever; and |
| (iii) | All other recoveries exceeding United States Dollars One million (US$1,000,000.00) shall, subject to the prior written consent of the Owners be paid in full to the Charterers or their order without any deduction whatsoever, subject to the fulfillment of the provisions of Clause 44; |
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and the Owners and Charterers agree to be bound by the above provisions.
| (iv) | the Charterers shall procure that duplicates of all cover notes, policies and certificates of entry shall be furnished to the Owners for their custody ; |
| (v) | the Charterers shall procure that the insurers and the war risk and protection and indemnity associations with which the Vessel is entered shall |
| (A) | furnish the Owners with a letter or letters of undertaking in relevant underwriter’s standard form and in accordance with the underwriters’ rules. |
| (B) | supply to the Owners such information in relation to the insurances effected, or to be effected, with them as the Owners may from time to time reasonably require: and |
| (vi) | the Charterers shall use all reasonable efforts to procure that the policies, entries or other instruments evidencing the insurances are endorsed to the effect that the insurers shall give to the Owners prior written notification of any amendment, suspension, cancellation or termination of the insurances in accordance with the underwriters’ guidance and rules. |
| (c) | Notwithstanding anything to the contrary contained in Clauses 13 and any other provisions hereof, the Vessel shall be kept insured during the Charter Period in respect of marine and war risks on hull and machinery basis (The Charterers shall have the option, to take out on a full hull and machinery basis increased value or total loss cover in an amount not exceeding thirty per centum (30%) of the total amount insured from time to time) for not less than the amounts specified in column (b) in the table set out below in respect of the one-yearly period during the Charter Period specified in column (a) (on the assumption that the first such period commences on the Delivery Date) against such amount (hereinafter referred to as the “Minimum Insured Value”): |
| (a) | (b) |
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| Year | Minimum Insured Value | |||
| 1 |
US$ | 20,900,000.- | ||
| 2 |
US$ | 18,493,750.- | ||
| 3 |
US$ | 16,087,500.- | ||
| 4 |
US$ | 13,681,250.- | ||
| 5 |
US$ | 11,275,000.- | ||
| 6 |
US$ | 8,868,750.- | ||
| 7 |
US$ | 6,462,500.- | ||
| 8 |
US$ | 4,056,250.- | ||
| (d) (i) | If the Vessel shall become a Total Loss or be subject to Compulsory Acquisition the Chartering of the Vessel to the Charterers hereunder shall cease and the Charterers shall:- |
| (A) | immediately pay to the Owners all hire, and any other amounts, which have fallen due for payment under this Charter and have not been paid as at and up to the date on which the Total Loss or Compulsory Acquisition occurred (the “Date of Loss”) together with interest thereon at a rate reflecting the Owners’ reasonable cost of funds at such intervals, which amount to be agreed between the Owners and the Charterers and shall cease to be under any liability to pay any hire, but not any other amounts, thereafter becoming due and payable under this Charter, Provided that all hire and any other amounts prepaid by the Charterers subsequent to the Date of Loss shall be forthwith refunded by the Owners: |
| (B) | for the purposes of this sub-clause, the expression “relevant Minimum Insured Value” shall mean the Minimum Insured Value applying to the one-year period in which the Date of Loss occurs. |
| (ii) | For the purpose of ascertaining the Date of Loss:- |
| (A) | an actual total loss of the Vessel shall be deemed to have occurred at noon (London time) on the actual date the Vessel was lost but in the event of the date of the loss being unknown the actual total loss shall be deemed to have occurred at noon (London time) on the date on which it is acknowledged by the insurers to have occurred: |
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| (B) | a constructive, compromised, agreed, or arranged total loss of the Vessel shall be deemed to have occurred at noon (London time) on the date that notice claiming such a total loss of the Vessel is given to the insurers, or, if the insurers do not admit such a claim, at the date and time at which a total loss is subsequently admitted by the insurers or adjudged by a competent court of law or arbitration tribunal to have occurred. Either the Owners or, with the prior written consent of the Owners (such consent not to be unreasonably withheld), the Charterers shall be entitled to give notice claiming a constructive total loss but prior to the giving of such notice there shall be consultation between the Charterers and the Owners and the party proposing to give such notice shall be supplied with all such information as such party may request; and |
| (C) | Compulsory Acquisition shall be deemed to have occurred at the time of occurrence of the relevant circumstances described in Clause25 (b) hereof. |
| (e) | All moneys payable under the insurance effected by the Charterers pursuant to Clauses 13 and 40, or other compensation, in respect of a Total Loss or pursuant to Compulsory Acquisition of the Vessel shall be received in full by the Owners (or the Mortgagees as assignees thereof) and applied by the Owners (or, as the case may be, the Mortgagees):- |
FIRST, in payment of all the Owners’ costs incidental to the collection thereof,
SECONDLY, in or towards payment to the Owners (to the extent that the Owners have not already received the same in full) of a sum equal to the aggregate of (i) unpaid but due hire under this Charter and unpaid interest thereon up to and including the Date of Loss and (ii) the amount of purchase option price payable under clause 49 as at the Date of Loss, and
THIRDLY, in payment of any surplus to the Charterers by way of compensation for early termination.
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| (f) | The Charterers and the Mortgagee shall execute the “Assignment of Insurances” of which contents and wording shall be mutually agreed between the Owners and the Charterers. |
| 41. TERMINATION | EVENTS |
| (a) | Each of the following events shall be a “Termination Event” for purposes of this Charter:- |
| (i) | if any installment of hire or any other sum payable by the Charterers under this Charter (including any sum expressed to be payable by the Charterers on demand) shall not be paid at its due date under this Charter or within ten (10) Banking Days of the date of demand and such failure to pay is not remedied within ten (10) Banking Days of receipt by the Charterers of written notice from the Owners notifying the Charterers of such failure and requesting that payment is made; or |
| (ii) | Save in circumstances where requisition for hire or compulsory requisition result in termination of insurances for the Vessel, if either (A) the Charterers shall fail at any time to effect or maintain any insurances required to be effected and maintained under this Charter, or any insurer shall avoid or cancel any such insurances (other than where the Charterers proved that the relevant avoidance or cancellation results from an event or circumstance outside the reasonable control of the Charterers and the relevant insurances are reinstated or re-constituted in a manner meeting the requirements of this Charter within seven (7) days of such avoidance or cancellation) or the Charterers shall commit any breach of or make any misrepresentation in respect of any such insurances the result of which the relevant insurer avoids the policy or otherwise excuses or releases itself from all or any of its liability thereunder, or (B) any of the said insurances shall cease for any reason whatsoever to be in full force and effect (other than where the Charterers proved that the reason in question is outside the reasonable control of the Charterer and the relevant insurances are reinstated or re-constituted in a manner meeting the requirements of this Charter within seven (7) days of such cease); or |
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| (iii) | if the Charterers shall at any time fail to observe or perform any of their material obligations under this Charter, other than those obligations referred to in sub-clause (i) or sub-clause (ii) of this Clause 41(a), and such failure to observe or perform any such obligation is either not remediable or is remediable but is not remedied within thirty (30) days of receipt by the Charterers of a written notice from the Owners requesting remedial action; or |
| (iv) | if any material representation or warranty by the Charterers in connection with this Charter or in any document or certificate furnished to the Owners by the Charterers in connection herewith or therewith shall prove to have been untrue, inaccurate or misleading in any material respect when made (and such occurrence continues unremedied for a period of thirty (30) days after receipt by the Charterers of written notice from the Owners requesting remedial action): or |
| (v) | if a petition shall be presented (and not withdrawn or stayed within sixty (60) days) or an order shall be made or an effective resolution shall be passed for the administration or winding-up of the Charterers (other than for the purpose of a reconstruction or amalgamation during and after which the Charterers remain solvent and the terms of which have been previously approved in writing by the Owners which approval shall not be unreasonably withheld) or if an encumbrancer shall take possession or an administrative or other receiver shall be appointed of the whole or any substantial part of the property, undertaking or assets of the Charterers or if an administrator of the Charterers shall be appointed (and, in any such case, such possession is not given up or such appointment is not withdrawn within sixty (60) days) or if anything analogous to any of the foregoing shall occur under the laws of the place of the Charterers’ incorporation, or |
| (vi) | if the Charterers shall stop payments to all of its creditors or shall cease to carry on or suspend all or a substantial part of their business or shall be unable to pay their debts, or shall admit in writing their inability to pay their debts, as they become due or shall otherwise become or be adjudicated insolvent; or |
| (vii) | if the Charterers shall apply to any court or other tribunal for, a moratorium or suspension of payments with respect to all or a substantial part of their debts or liabilities, or |
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| (viii) | (A) if the Vessel is arrested or detained (other than for reasons solely attributable to the Owners or to those for whom, for the purposes of this provision, the Owners shall be deemed responsible, including without limitation, any legal person who, at the date hereof or at any time in the future is affiliated with the Owners) and such arrest or detention is not lifted within thirty (30) days (or such longer period as the Owners shall reasonably agree in writing in the light of all the circumstances) ; or |
| (B) | if a distress or execution shall be levied or enforced upon or sued out against all or any substantial part of the property or assets of the Charterers and shall not be discharged or stayed within thirty (30) days; or |
| (ix) | if any consent, authorization, license or approval necessary for this Charter to be or remain the valid legally binding obligations of the Charterers, or to the Charterers to perform their obligations hereunder or thereunder, shall be materially adversely modified or is not granted or is revoked, suspended, withdrawn or terminated or expires and is not renewed (provided that the occurrence of such circumstances shall not give rise to a Termination Event if the same are remedied within thirty (30) days of the date of their occurrence); or |
| (x) | if (a) any legal proceeding for the purpose of the reconstruction or rehabilitation of the Charterers is commenced and continuing in any jurisdiction and (b) the Owners receive a termination notice from the receiver, trustee or others of the Charterers which informs the termination/rejection of the Charter pursuant to the relevant laws, codes and regulations applicable to such proceeding. |
| (b) | Any Termination Event shall constitute (as the case may be) either a repudiatory breach of, or breach of condition by the Charterers under, this Charter or an agreed terminating event the occurrence of which will (in any such case) entitle the Owners by notice to the Charterers to terminate the chartering of the Vessel under this Charter and recover the amounts provided for in Clause 42(c) either as liquidated damages or as an agreed sum payable on the occurrence of such event. |
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| 42. | OWNERS’ RIGHTS ON TERMINATION |
| (a) | At any time after a Termination Event shall have occurred and be continuing, the Owners may, by notice to the Charterers immediately, or on such date as the Owners shall specify, terminate the chartering by the Charterers of the Vessel under this Charter, 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. For the avoidance of doubt, in case of the termination of the Charter in accordance with 41 (a) (x) hereof, the Charter shall be deemed to be terminated upon receipt by the Owners of the termination notice set forth in Clause 41 (a) (x) hereof. |
| (b) | On or at any time after termination of the chartering by the Charterers of the Vessel pursuant to Clause 42(a) hereof the Owners shall be entitled to retake possession of the Vessel in accordance with Clause 29 hereof, the Charterers hereby agreeing that the Owners, for that 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. |
| (c) | If the Owners pursuant to Clause 42(a) hereof give notice to terminate the chartering by the Charterers of the Vessel, the Charterers shall pay to the Owners on the date of termination (the “Termination Date”), the aggregate of (A) all hire due and payable, but unpaid, under this Charter to (and including) the Termination Date together with interest accrued thereon pursuant to Clause 36(d) hereof from the due date for payment thereof to the Termination Date, (B) any sums, other than hire, due and payable by the Charterers, but unpaid, under this Charter together with interest accrued thereon pursuant to Clause 36(d) to the Termination Date and (C) any actual direct financial loss suffered by the Owners which direct loss shall be determined as the shortfall, if any, between (a) the current market value of the Vessel (average value as estimated, at the Charterers’ expense by two independent valuers such as major London brokers i.e. Arrow Valuations Ltd, Barry Rogliano Salles, Braemar ACM Shipbroking, H Clarkson & Co. Ltd., E.A. Gibsons Shipbrokers, Fearnleys, Galbraith, Simpson Spencer & Young, Howe Robinson & Co Ltd London and Maersk Broker K.S. (to include, in each case, their successors or assigns and such subsidiary or other company in the same corporate group through which valuations are commonly issued by each of these brokers), or such other first-class independent broker as the Owners and Charterers may agree in writing from time to time) and (b) the Remaining Purchase Option Price (as defined in Clause 49.2 hereof) at any given time always taking into account any charterhire paid during the year to which the specified Remaining Purchase Option Price relates PROVIDED ALWAYS that if the said market value exceeds the aggregate of (A) and (B) and the Remaining Purchase Option Price, then the Owners shall pay the amount of such excess to the Charterers forthwith. The aggregate of (A), (B) and (C) above shall hereinafter be referred to as the “Termination Compensation”). |
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| (d) | If the Charter is terminated in accordance with this Clause 42 the Charterers shall immediately redeliver the Vessel at a safe and ice-free port or place as indicated by the Owners. The Vessel shall be redelivered to the Owners in substantially the same condition and class as that in which she was delivered, fair wear and tear not affecting class excepted. |
| (e) | The Owners agree that if following termination of the Charter under this Clause, the Owners sell or otherwise transfer the Vessel to a third party, or enter into any other arrangement with a third party with an option to purchase the Vessel, then the Owners shall pay to the Charterers after that sale (i) the amount of the greater of (a) the sale price and (b) the market value of the Vessel at such sale/transfer/arrangement date less (ii) the aggregate of the unpaid Termination Compensation and the Remaining Purchase Option Price (as defined in Clause 49.2) which would be payable by the Charterers as set out in Clause 49 as at the date of such sale. |
| 43. | NAME |
The Charterers shall, subject only to prior notification to the relevant authorities of the jurisdiction in which for the time being the Vessel is registered, be entitled from time to time to change the name of the 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. Painting and installment shall be at Charterers’ expense and time. The Charterer shall also have the liberty to change the name of the Vessel during the Charter Period at the expense and time of the Charterers (including the legal charge for finance documents for the Mortgagee, if any).
The Owners shall have no right to change the name of the Vessel during the Charter Period.
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| 44. | MORTGAGE and ASSIGNMENT |
The Owners confirm that they are familiar with the terms of the assignment of insurances made or to be made by the Charterers in favour or the Mortgagee, and they agree to the terms thereof and will do nothing that conflicts therewith, excepting that the Owners shall be entitled to assign its rights, title and interest in and to this Charter to the Mortgagee or its assignee. Neither party shall assign its right or obligations or part of thereof to any third party without the written consent of the other.
In respect of the Vessel the Owners undertake not to borrow more than the respective purchase option prices as set out at the relevant milestone in Clause 49 hereof.
The Owners have the right to register a first preferred mortgage on the Vessel in favour of the Mortgagee (THE HIROSHIMA BANK, LTD.) securing a loan under the Loan Agreement under standard mortgages and security documentation. In which case, the Owners undertake to procure from the Mortgagee a Letter / Agreement of Quiet Enjoyment in a form and substance reasonably acceptable to the Charterers.
The Charterers agree to sign an acknowledgement of the Owners’ charterhire assignment or any other comparable document reasonably required by the Mortgagee, in favour of the Mortgagee. During the course of the Charter the Owners have the right to register a substitute mortgage in favour of another bank provided such registration is effected in a similar amount to the loan amount outstanding with the Mortgagee at that time and only if such substitute mortgagee executes a Letter / Agreement of Quiet Enjoyment in favour of the Charterers in the same form as that provided by the Mortgagee or the form reasonably acceptable for the Charterers. The Charterers will then agree to sign a charterhire assignment in favour of the substitute mortgage in a form as shall be agreed by the Charterers, which agreement not be unreasonably withheld. Any cost incurred by the Charterers shall be for Owners’ account.
Subject to the term and conditions of this Charter, the Charterers also agree that the Owners have the right to assign its rights, title and interest in and to the insurances by way of assignment of insurance in respect of the Vessel to and in favour of the Assignee in a form and substance reasonably acceptable to Charterers and the Assignee.
Owners shall procure that exercise and/or enforce of any mortgage and charterhire assignment which might interfere with or prejudice or adversely affect the Charterer’s use of the Vessel or other right of the Charterer under this Charter (including the purchase option of the Vessel) shall be subject to the terms and conditions of the Letter/Agreement of Quiet Enjoyment.
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In the event that the Owners execute security of any nature (including but not limited to any mortgage, assignment of insurances) over the Vessel then the Owners hereby undertake and agree as a condition of this Charter to procure that the beneficiary of such security executes in favour of the Charterers a letter / agreement of quiet enjoyment in such form and content as is reasonably acceptable to the Charterers, and exercise and/or enforce of the beneficiary’s rights thereunder is subject to the agreement of a letter / agreement of Quiet Enjoyment before or after delivery of the Vessel.
| 45. | REDELIVERY INSPECTION |
Prior to redelivery under Clause 42 hereof and without interference to the operation of the Vessel, the Owners, at their risk and expense, shall have the right provided that such right is declared at least 20 days prior to the expected redelivery date to carry out an underwater inspection of the Vessel by Class approved diver and in the presence of Class surveyor and Owners’ and Charterers’ representatives. Should any damages in the Vessel’s underwater parts be found that will impose a condition or recommendation of Vessel’s class then:
| a) | In case Class imposes a condition or recommendation of class that does not require drydocking before next scheduled drydocking. Charterers shall pay to Owners the estimated cost to repair such damage in way which is acceptable to Class, which to be direct cost to repair such damage only, as per average quotation for the repair work obtained from two reputable independent shipyards at or in the vicinity of the redelivery port, one to be obtained by Owners and one by Charterers within 2 banking days from the date of imposition of the condition/recommendation unless the parties agree otherwise. |
| b) | In case Class require Vessel to be drydocked before the next scheduled drydocking the Charterers shall drydock the Vessel at their expense prior to redelivry of the Vessel to the Owners and repair same to Class satisfaction. |
In such event the Vessel shall be redelivered at the port of the dockyard.
17
| 46. | REDELIVERY |
The Charterers shall redeliver to the Owners the Vessel with everything belonging to her at the time of redelivery including spare parts on board, used or unused subject to the Clause 38 hereof. The Owners shall take over and pay the Charterers for remaining bunkers and unused lubricating oils including hydraulic oils, and greases, unbroached provisions, paints, ropes and other consumable stores as per Clause 53 at the Charterers’ purchased prices with supporting vouchers. For the purpose of this clause, the Charterers shall withhold the Hire two last hire payments (the “Withheld Hire”) and shall offset the cost of bunkers, unused lubricating oils and unbroached provisions etc., remaining on board at the time of redelivery from the Withheld Hire. If the Withheld Hire is not sufficient to cover the cost of bunkers, unused lubricating oils, and unbroached provisions etc. the Owners shall settle the outstanding amount within 3 Singapore banking days after redelivery of the Vessel.
Personal effects of the Master, officers and crew including slop chest, hired equipment, if any and the following listed items are excluded and shall be removed by the Charterers prior to or at the time of redelivery of the Vessel:
| • | E-mail equipment not part of GMDSS |
| • | Gas bottles |
| • | Electric deck air compressor |
| • | Blasting and painting equipment |
| • | Videotel (or similar) film library |
| 47. | MORTGAGE NOTICE |
The Charterers and place and keep prominently displayed in the chart room, master’s cabin, and engine room of the Vessel a framed printed notice in plain type reading as follows:
“NOTICE OF SHIP MORTGAGE”
“This Vessel is covered by a First Preferred Ship Mortgage given to THE HIROSHIMA BANK, LTD., a banking corporation duly organized and existing under the laws of Japan, having its head office at 3-8 Kamiya-cho 1-chome, Naka-ku, Hiroshima City, Hiroshima-Pref., Japan, acting through its Imabari Office at 1-13, Muroya-cho 1-chome, Imabari City, Ehime-Pref., Japan, its successors and assigns under the authority of the laws of the Republic of Panama. Under the terms of said Mortgage, neither the owner of this Vessel, any charterer, the Master of this Vessel, nor any other person has any right, power or authority to create, incur or permit to be imposed upon the Vessel any liens, maritime or otherwise, other than the lien of said Mortgage and liens for crew’s wages or salvage.”;
18
| 48. | SALE OF VESSEL BY OWNERS |
| 1. | The Owners have the right to sell the Vessel to a reputable third party (“Purchaser”) at any time during the Charter Period with the prior written consent of the Charterers and provided that (i) the Purchaser agrees to take over the benefit and burden of this Charter, (ii) such ownership change does not result in any reflagging of the Vessel, (iii) such ownership change does not result in the Charterers being obliged to increase any payment under this Charter, (iv) such ownership change does not increase the actual or contingent obligations of the Charterers under this Charter, and (v) the Charterers shall not be liable for the costs and expenses (including legal fees) incurred in the sale of the Vessel by the Owners under this Clause 48. |
| 2. | The Owners shall give the Charterers at least one month’s prior written notice of any sale. |
| 3. | Subject to 48.1, the Charterers and Owners undertake with each other to execute one or more novation agreements (or other documents required under applicable law) to novate the rights and obligations of the Owners under this Charter to the Purchaser such novation agreement(s) or other documents to be in such form and substance acceptable to the Charterers and such novation will be effective upon delivery of the Vessel from the Owners to the Purchaser.” |
| 49. | CHARTERERS’ OPTION TO PURCHASE VESSEL |
| 1. | Charterers to have purchase option at the end of 8th Year of the Charter Period at a price of USD3,600,000.—(the “Final Purchase Option Price”); however, Charterers to have purchase option to purchase the Vessel at the end of 4th year anniversary date of the Delivery Date at USD12,000,000 net (the “First Purchase Option Price”) subject to Charterers declaration 3 months before such date. |
19
| 2. | Charterers further have an option to purchase, such purchase being declared at any time through the remaining period at the following price or pro-rata de-escalation until the maturity of the Charter Period (the “Subsequent Purchase Option Price”). |
| At end of 4th year : |
USD 12,000,000 | |||
| At end of 5th year : |
USD 9,900,000 | |||
| At end of 6th year : |
USD 7,800,000 | |||
| At end of 7th year : |
USD 5,700,000 | |||
| At end of 8th year : |
USD 3,600,000 |
(The purchase option price of the Vessel to be calculated in accordance with Clause 49.1 and 49.2 hereof, whether the Final Purchase Option Price or the First Option Price or the Subsequent Purchase Option Price, hereinafter called the “Remaining Purchase Option Price”).
| 3. | Immediately prior to delivery of the Vessel by the Owners to the Charterers under the PO MOA (as defined in Clause 49.4) the Parties shall execute a Protocol of Redelivery and Acceptance under this Charter (the “Redelivery Protocol”) and save in respect of any claims accrued under this Charter prior to the date and time of the Redelivery Protocol, this Charter shall terminate forthwith. |
| 4. | Upon the date of any written notification by the Charterers to the Owners of their intention to purchase the Vessel, the Owners and the Charterers shall be deemed to have unconditionally entered into a contract to sell and purchase the Vessel for the Remaining Purchase Option Price on and in strict conformity with the terms and conditions contained in the Memorandum of Agreement attached to this Charter as Exhibit A (the “PO MOA”). |
20
| 50. | MISCELLANEOUS |
| (a) | The terms and conditions of this Charter and the respective rights of the Owners and the Charterers shall not be waived or varied otherwise than by an instrument in writing of the same date as or subsequent to this Charter executed by both parties or by their duly authorized representatives. |
| (b) | Unless otherwise provided in this Charter whether expressly or by implication, time shall be of the essence in relation to the performance by the Charterers of each and every one of their obligations hereunder. |
| (c) | No failure or delay on the part of the Owners or the Charterers in exercising any power, right or remedy hereunder or in relation to the Vessel shall operate as a waiver thereof nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise of any such right or power or the exercise of any other right, power or remedy. |
| (d) | If any terms or condition of this Charter shall to any extent be illegal invalid or unenforceable the remainder of this Charter shall not be affected thereby and all other terms and condition shall be legal valid and enforceable to the fullest extent permitted by law. |
| (e) | The respective rights and remedies conferred on the Owners and the Charterers by this Charter are cumulative, may be exercised as often as the Owners or the Charterers (as the case may be) think fit and are in addition to, and are not exclusive of, any rights and remedies provided by law. |
51. COMMUNICATIONS
Except as otherwise provided for in this Charter, all notices or other communications under or in respect of this Charter to either party hereto shall be in writing and shall be made or given to such party at the address, facsimile number or e-mail address appearing below (or at such other address, facsimile number or e-mail address as such party may hereafter specify for such purposes to the other by notice in writing):-
(i) in the case of the Owners c/o Okouchi Kaiun Co., Ltd.
Address : 2264-35, Namikata, Namikata-cho, Imabari City,
Ehime Prefecture 799-2101, Japan
Telephone : +81-898-41-9318
Telefax : +81-898-43-0674
E-mail : okouchi@lime.ocn.ne.jp
21
| (ii) | in the case of the Charterers c/o Navios Shipmanagement Inc. |
Address : 85 Akti Miaouli Street, 18538, Piraeus, Greece
Telephone : 30-210-4595000
E-mail : ops@navios.com, legal@navios.com
tech@navios.com, legal_corp@navios.com
| (iii) | in the case of the Brokers c/o ITOCHU Corporation |
Address : TOKBR Section, 5-1, Kiya-Aoyama 2-chome,
Minato-ku, Tokyo, 107-8077 Japan
Telephone : 81-3-3497-2999
Telefax : 81-3-3497-7111
E-mail : tokbr@itochu.co.jp
A written notice includes a notice by facsimile or e-mail. A notice or other communication received on a non-working day or after business hours in the place of receipt shall be deemed to be served on the next following working day in such place.
Subject always to the foregoing sentence, any communication by personal delivery or letter shall be deemed to be received on delivery, any communication by e-mail shall be deemed to be received upon transmission of the automatic answerback of the addresses and any communication by facsimile shall be deemed to be received upon appropriate acknowledgment by the addressee’s receiving equipment.
All communications and documents delivered pursuant to or otherwise relating to this Charter shall either be in English or accompanied by a certified English translation.
52. TRADING IN WAR RISK AREA
The Charterers shall be permitted to order the Vessel into an area subject to War Risks as defined in Clause 26 without consent of the Owners provided that all Marine, War and P&I Insurance are maintained with full force and effect and the Charterers shall pay any and all additional premiums to maintain such insurance.
53. INVENTORIES, OIL AND STORES
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 under this Charter and again on redelivery of the Vessel under Clause 42 hereof.
22
The Owners shall at the time of redelivery under Clause 42 hereof take over and pay for all remaining bunkers, unused lubricating oil (for avoidance of any doubts, the lubricant oil in the machinery is included), unbroached provisions, paints, ropes and other unused consumable stores (excluding spare parts) in the said Vessel at the Charterers’ purchased prices with supporting vouchers, provided that this payment shall be off-set against the Owner’s claim under Clause 42 to the extent the sum equivalent to such payment. However, the Charterers shall not pay to the Owners at time of delivery for any bunkers, lubricating oil, provisions, paints, ropes and consumable stores which the Charterers have supplied to the Vessel at the Charterers’ expense prior to delivery. 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.
| 54. | INDEMNITY FOR POLLUTION RISKS |
The Charterers shall indemnify the Owners against the following Pollution Risks:-
| (a) | liability for damages or compensation payable to any person arising from pollution; |
| (b) | the costs of any measures reasonably taken for the purpose of preventing, minimizing or cleaning up any pollution together with any liability for losses or damages arising from any measures so taken; |
| (c) | liability which the Owners and/or the Charterers may incur, together with costs and expenses incidental thereto, as the result of escape or discharge or threatened escape discharge of oil or any other substance; |
| (d) | the costs or liabilities incurred as a result of compliance with any order or direction given by any government or authority for the purpose of preventing or reducing pollution or the risk of pollution; provided always that such costs or liabilities are not recoverable under the Hull and Machinery Insurance Policies on the Vessel; |
23
| (e) | liability which the Owners and/or the Charterers may incur to salvors under the exception to the principal of “no cure-no pay” in Article 1 (b) of Lloyds Standard Form of Salvage Agreement (LOF 1990); and |
| (f) | liability which the Charterers may incur for the payment of fines in respect of pollution in so far as such liability may be covered under the rules of the P&I Club. |
| 55. | TRADE AND COMPLIANCE CLAUSE |
The Charterers and the Owners hereby agree that no person/s or entity/ies under this Charter will be individual(s) or entity(ies) designated under any applicable national or international law imposing trade and economic sanctions including sanction, prohibition or restriction imposed on any specified persons, entities or bodies including the designation of specified vessels or fleet under United Nations Resolutions or trade or economic sanctions, laws or regulations of the European Union, United Kingdom, Japan or United States of America (collectively, the “Sanctions”).
Further, the Charterers and the Owners agree that the performance of this Charter will not require any action prohibited by sanctions or restrictions under any applicable Sanctions.
Further to the above, Charterers shall take reasonable steps to confirm that at the date of this Charter Party and throughout the duration thereof, any sub-charterer of the Vessel (who is directly contracting with the Charterer in respect of the Vessel at any relevant time), the managers of the Vessel and the Vessel are not a sanctioned party/vessel under the Sanctions.
| 56. | ANTI-BRIBERY AND ANTI-CORRUPTION |
The Charterers and the Owners hereby agree that in connection with this Contract and/or any other business transactions related to it, they as well as their sub-contractors and each of their affiliates, directors, officers, employees, agents, and every other person acting on its and its sub-contactors’ behalf, shall perform all required duties, transactions and dealings in compliance with all applicable laws, rules, regulations relating to anti-bribery and anti-money laundering.
(end)
24
Exhibit 4.70
| ‘BARECON 2001” STANDARD BAREBOAT CHARTER | PART1 | |||
| 1. Shipbroker |
BIMCO STANDARD BAREBOAT CHARTER CODE NAME : “BARECON 2001” | |||
| ITOCHU CORPORATION TOKBR Section, 5-1, Kita-Aoyama 2-chome, Minato-ku, Tokyo, 107-8077, Japan |
PART I | |||
| 2. Place and date
In New York, U.S.
30th November, 2021 | ||||
| 3. Owners / Place of business (Cl. 1) |
4. Bareboat Charterers / Place of business (Cl. 1) | |||
| K.T.M. Corporation S.A. guaranteed by Kawana Kaiun Co., Ltd. of Japan
K.T.M. Corporation S.A. address as follows:
15th Floor, Banco General Tower, Aquilino de la Guardia Street, Marbella, Panama City, Republic of Panama |
Pueblo Holdings Ltd.
Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, MH96960, Marshall Islands | |||
| 5. Vessel’s name, call sign, flag and IMO number (Cl. 1 and 3) |
||||
| M/V NAVIOS LUMEN, 3EZS3, Panama, 9500637 | ||||
| 6. Type of Vessel |
7. GT / NT | |||
| Bulk Carrier |
94,817/58,778 | |||
| 8. When / Where built |
9. Total DWT (abt.) in metric tons on | |||
| 2009, STX Offshore & Shipbuilding Co., Ltd. |
180,660 MT | |||
| 10. Classification Society (Cl. 3) |
11. Date of last special survey by the Vessel’s classification society | |||
| Bureau Veritas (BV) |
March 8th, 2020 | |||
| 12. | ||||
| Cargoes to be carried; All lawful cargoes within the Vessel’s capabilities/Class, IMO, flag, her insurance | ||||
| 13. Port or Place of delivery (Cl.3)
As per Clause 5 of the MOA (as defined in Clause 1 hereof) |
14. Time for delivery (Cl.4)
As per Clause 5 of the MOA |
15. Cancelling date (Cl.5)
N/A | ||
| See Also Clause 32. | ||||
| 16. Port or Place of redelivery (Cl. 3) |
17. No. of months’ validity of trading and class certificates upon redelivery (Cl. 15) | |||
| N/A |
Minimum 3 months | |||
| 18. Running days’ notice if other than stated in Cl.4 |
19. Frequency of dry-docking Cl. 10(g) | |||
| N/A |
As per Classification Society and flag state requirements | |||
| 20. Trading Limits (Cl.6) |
||||
| Trading Limits: always safely afloat world-wide within International Navigation Conditions with the Charterer’s option to break same paying extra insurance, but always in accordance with Clause 13 and 40. Any other country designated pursuant to any international (including U.N. / U.S. / EU / UK) or supranational law or regulation imposing trade and economic sanctions, prohibitions or restrictions (which may be amended from time to time during the Charter Period) to be excluded. | ||||
| 21. Charter Period (Cl. 2) |
22. Charter hire (Cl. 11) | |||
| Eight (8) years with up to 3 months more or less in Charterers’ option (See Clause 34) |
See Clause 35 | |||
| 23. New class and other statutory requirements (state percentage of Vessel’s insurance value acc. to Box 29 (Cl. 10(a)(ii)) |
||||
| N/A |
||||
| 24. Rate of interest payable acc. to Cl.11(f) and, if applicable, acc. to PART IV |
25. Currency and method of payment (Cl.11) | |||
| N/A |
United States Dollars payable calendar monthly in advance | |||
| 26. Place of payment; also state beneficiary and bank account (Cl. 11) |
27. Bank guarantee / bond (sum and place) (Cl. 24 (optional) | |||
| ‘BARECON 2001” STANDARD BAREBOAT CHARTER | PART1 | |||
| To be advised |
N/A | |
| 28. Mortgage(s), if any (state whether Cl. 12(a) or (b) applies; if 12(b) applies, state date of Financial Instrument and name of Mortgagee(s)/Place of business) (Cl. 12) |
29. Insurance (hull and machinery and war risks) (state value acc. to Cl.13(f) or, if applicable, acc. to Cl. 14(k)) (also state if Cl.14 applies) | |
| See Clause 44 |
See Clause 40 | |
| 30. Additional insurance cover, if any, for Owners’ account limited to (Cl. 13(b) or, if applicable, Cl. 14(g)) |
31. Additional insurance cover, if any, for Charterers’ account limited to (Cl. 13(b) or, if applicable, Cl. 14(g)) | |
| N/A |
See Clause 40 (c) | |
| 32. Latent defects (only to be filled in if period other than stated in Cl.3) |
33. Brokerage commission and to whom payable (Cl.27) | |
| N/A |
N/A | |
| 34. Grace period (state number of clear banking days) (Cl. 28) |
35. Dispute Resolution (state 30(a), 30(b) or 30(c); if 30(c) agreed, Place of Arbitration must be stated (Cl. 30) | |
| See Clause 41 |
London | |
| 36. War cancellation (indicate countries agreed) (Cl. 26(f)) |
||
| N/A |
||
| 37. Newbuilding Vessel (indicate with ‘yes’ or ‘no’ whether PART III applies) (optional) |
38. Name and place of Builders (only to be filled in if PART III applies) | |
| No |
N/A | |
| 39. Vessel’s Yard Building No. (only to be filled in if PART III applies) |
40. Date of | |
| No |
N/A | |
| 41. Liquidated damages and costs shall accrue to (state party acc. to Cl. 1) |
||
| a) N/A |
||
| b) N/A |
||
| c) N/A |
||
| 42. Hire/Purchase agreement (indicate with ‘yes’ or ‘no’ whether PART IV applies) (optional) |
43. Bareboat Charter Registry (indicate with ‘yes’ or ‘no’ whether PART IV applies) (optional) | |
| N/A |
Yes in Charterers’ option | |
| 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) | |
| See Clause 37 |
||
| 46. Number of additional clauses covering special provisions, if agreed |
||
| Clause 32 to 55 inclusive |
||
PREAMBLE—It is mutually agreed that this Contract shall be performed subject to the conditions contained in this Charter which shall include PART I and PART II. In the event of a conflict of conditions, the provisions of PART I shall prevail over those of PART II to the extent of such conflict but no further. It is further mutually agreed that PART III and/or PART IV and/or PART V shall only apply and shall only form part of this Charter if expressly agreed and stated in Boxes 37, 42 and 43. If PART III and/or PART IV and/or PART V apply, it is further agreed that in the event of a conflict of conditions, the provisions of PART I and PART II shall prevail over those of PART III and/or PART IV and/or PART V to the extent of such conflict but no further.
| Signature (Owners) | Signature (Charterers) | |
| K.T.M. Corporation S.A. |
Pueblo Holdings Ltd. | |
| /s/ Tomoyuki Kawana |
/s/ Georgia Panagaios | |
| By: Tomoyuki Kawana Title: Attorney-in-fact |
By: Georgia Panagaios Title: Attorney-in-fact | |
PART II
“BARECON 2001” Standard Bareboat Charter
| 1. | Definitions |
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.
“MOA” means the Memorandum of Agreement entered into between the Owners as buyers and the Charterers as Sellers dated 30th November 2021 in respect of the Vessel.
“Banking Days” shall mean the days identified in Cl.36 (b)
“Total Loss” shall mean the situation identified in Cl.40 (a)
| 2. | Charter Period |
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 Also See Clause 32 |
The Vessel shall be delivered and taken over by the Charterers as per Clause 32.
(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 Clause 32 |
(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 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 date, the
Owners may, as soon as they are in 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 Owners’ prior approval has been obtained to loading thereof.
| 7. | Surveys on Delivery and Redelivery |
(not applicable when PART III applies, as indicated in Box 37)
The Owners and Charterers have the right of shall each appointing surveyors for the purpose of
determining and agreeing in writing the condition of the Vessel at the time of delivery.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.
| 8. | Inspection |
The Owners shall have the right maximum twice per year (and more time in the case of necessity) maximum twice
per year 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:-
provided it does not interfere with the operation of the Vessel and/or crew
(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
PART II
“BARECON 2001” Standard Bareboat Charter
(c) for any other commercial reason they consider necessary (provided it does not
unduly interferer 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 log books maximum twice per year (and more
time in the case of Necessity) maximum twice per year whenever reasonably 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 CLAUSE 52 |
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. 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. SEE ALSO CLAUSE 32
| 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 exercise due diligence to 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 and, except as provided for in Clause 14(l), if applicable, at their own expense,
they shall at all times keep the Vessel’s Class unexpired fully up to date with the Classification Society indicated in Box 10 maintain all other necessary certificates in force at all times.
| (ii) | New Class and Other Safety Requirements |
| (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.
(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 de-registration, if required by the Owners, shall be at the Charterers’ expense and time. SEE CLAUSE 37 & 43
(e) Changes to the Vessel - 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. SEE CLAUSE 38
(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 substantially 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. 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 the Charterers shall remove such equipment at the end of the period unless agreed otherwise by the Owners and the
Charterers. 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 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
PART II
“BARECON 2001” Standard Bareboat Charter
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.
| 11. | Hire SEE CLAUSE 35 |
(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 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 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) of 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 CLAUSE 44 |
(only to apply if Box 28 has been appropriately filled in)
|
|
| *) |
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| 13. | Insurance and Repairs SEE CLAUSE 40 |
(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 underwriter’s standard form as the Owners have received, reviewed and shall in writing
approved, which approval shall not be unreasonably withheld.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 mortgagees (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 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.
(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 Instrument, 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 the 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. SEE CLAUSE 40
(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. SEE CLAUSE 40
| 14. | Insurance, Repairs and Classification N/A |
(Optional, only to apply if expressly agreed and stated in Box 29, in which event Clause 13 shall be considered deleted).
During the Charter Period the Vessel shall be kept insured by the Owners at their expenses against hull and machinery and
war risks under the form of policy or
PART II
“BARECON 2001” Standard Bareboat Charter
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-clause 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.
(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. |
|
At the expiration of the Charter Period the Vessel shall be redelivered by the Charterers to the Owners at a safe
berth or anchorage 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 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
5 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 the
Charter shall continue to apply.
Subject to the provisions of Clause
10, the Vessel shall be redelivered to the Owners in substantially 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 ALSO SEE CLAUSE 47 |
The Charterers will not suffer, nor permit to be continued, any lien or encumbrance incurred by them or their agents, which might have
priority over the title and interest of the Owners in the Vessel. 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 ALSO SEE CLAUSE 54 |
(a) The Charterers shall indemnify the Owners against any loss, damage or 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 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.
PART II
“BARECON 2001” Standard Bareboat Charter
(b) If the Vessel be arrested or otherwise detained by reason of a claims or claims against the Owners, 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.
| 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 |
(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. Such Owners’ prior consent shall not be required provided that the
Vessel remains at all times under the management of Navios Shipmanagement Inc. or an affiliate of Navios Shipmanagement Inc.
(b) The Owners shall not sell the Vessel during he 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. SEE CLAUSE48
| 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. |
|
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| *) | Delete as applicable. |
| 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 ALSO SEE CLAUSE 40 (a)/(b) |
(a) In the event of the requisition for Hire of the Vessel by any governmental or other competent authority (hereinafter referred to a “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) Notwithstanding the provisions of clause 25 (a), 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, which for the avoidance of any doubt, shall exclude requisition for use
or hire not involving requisition of title (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”, but not thenafter.
| 26. | War |
(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,
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 the entry into it, the Owners shall have the right to require the Vessel to leave such area.
(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 risk 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.
PART II
“BARECON 2001” Standard Bareboat Charter
| (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 and 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 therefore 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.
| 28. | Termination |
| (a) | Charterer’s 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:
|
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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;
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(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;
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SEE CLAUSE 41 & 42
| (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 compromised 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. SEE CLAUSE 40
(d)/(e)
(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 arrangements 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 |
In the event of the termination of this Charter in accordance with the applicable provisions of 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, the Charterers shall
PART II
“BARECON 2001” Standard Bareboat Charter
hold the Vessel as gratuitous bailee only to the Owners. The Owners shall arrange for an authorised represent-ative 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 |
| *) | (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.
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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 conduced in accordance with the
Shortened Arbitration Procedure of the Society of Maritime Arbitrators, Inc. current at the time when the arbitration proceedings are commenced.
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(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.
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(Note: the parries should be aware that the mediation process may not necessarily interrupt time limits.)
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| *) | Sub-clauses 30(a), 30(b) and 30(c) are alternatives; indicate alternative agreed in Box 35. |
| 31. | Notices SEE CLAUSE 50 |
(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.
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“BARECON 2001” Standard Bareboat Charter
PART III
PROVISIONS TO APPLY FOR NEWBUILDING VESSELS ONLY
(Optional, only to apply if expressly agreed and stated in Box 37)
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(a) The Vessel shall be constructed in accordance with the Building Shipbuilding Contract (hereafter called
“the ‘Shipbuilding Building Contract’) as annexed to this Charter, made between the Builders and the Sellers Owners and in accordance with the specifications and plans annexed thereto, such
Building Contract, specifications and plans having been countersigned as approved by the Charterers.
(b) No change
shall be made in the Shipbuilding 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 Charterers 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 account 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.
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(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 but the
delivery date for the purpose of the 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 Sellers Owners under the Shipbuilding
Contract, the Builders become entitled under that Contract not to deliver the Vessel to the Sellers, the Owners 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 of 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; SEE CLAUSE 33
(iv) if this Charter terminates under sub-clause (b) 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. |
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If not otherwise agreed, the Owners authorise the Charterers to arrange for the guarantee works to be performed in accordance with
the Shipbuilding 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.
| 4. |
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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. |
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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 redelivery.
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 rate of hire per day or pro rata.
“BARECON 2001” Standard Bareboat Charter
PART IV
HIRE/PURCHASE AGREEMENT
(Optional, only to apply if expressly agreed and stated in Box 42)
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 expense 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 legalised, 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 Maser, 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 of their journey to any other place.
“BARECON 2001” Standard Bareboat Charter
PART V
PROVISIONS TO APPLY FOR VESSELS REGISTERED IN A BAREBOAT CHARTER REGISTRY
(Optional, only to apply if expressly agreed and stated in Box 43)
| 1. |
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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. |
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The Vessel chartered under this Charter is financed by a mortgage and the provisions of Clause
12(b) (PART II) shall apply.
| 3. |
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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.
Additional Clauses
to
the Bareboat Charter Party dated 30th November, 2021 (this “Charter”) by
K.T.M. Corporation S.A. guaranteed by Kawana Kaiun Co., Ltd. as owner (the “Owners”) and
Pueblo Holdings Ltd. as charterer (the “Charterers”)
in respect of MV “Navios Lumen” (the “Vessel”)
| 32. | DELIVERY |
(a) The Charterers shall take delivery of the Vessel under this Charter simultaneously with delivery by Charterers as sellers to the Owners as buyers under the MOA, and the Owners shall be obliged to deliver the Vessel to the Charterers hereunder in the same moment as the Owners is taking delivery of the Vessel under the MOA.
(b) The Owners warrant that the Vessel, at time of delivery, is free from all charters, encumbrances, mortgages and maritime liens or any other debts whatsoever, other than (i) those incurred prior to the delivery of the Vessel hereunder, (ii) this Charter and (iii) the mortgage over the Vessel, assignment of insurance in respect of the Vessel and the assignment of the charter hires in respect hereof in favour of the Mortgagee.
(c) The Vessel shall be delivered under this Charter in the same condition and with the same equipment, inventory and spare parts as she is delivered to the Owners under the MOA. The Charterers know the Vessel’s condition at the time of delivery, and expressly agree that the Vessel’s condition as delivered under the MOA is acceptable and in accordance with the provisions of this Charter. The Vessel shall be delivered to the Charterers under this Charter strictly “as is/where is”, and the Charterers shall waive any and all claims against the Owners under this Charter on account of any conditions, seaworthiness, representations, warranties expressed or implied in respect of the Vessel (including but not limited to any bunkers, oils, spare parts and other items whatsoever) on delivery.
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| 33. | ISM CODE |
During the currency of this Charter the Charterers shall procure at the costs and expenses and time of the Charterers that the Vessel and the “company” (as defined by the ISM code) shall comply with the requirements of the ISM code. Upon request the Charterers shall provide a copy of relevant documents of compliance (DOC) and safety management certificate (SMC) to the Owners. For the avoidance of any doubt any loss, damage, expense or delay caused by the failure on the part of the “Company” to comply with the ISM code shall be for the Charterers’ account.
| 34. | CHARTER PERIOD |
| (a) | The Owners shall let to the Charterers and the Charterers shall take the Vessel on charter for the period and upon the terms and conditions contained herein. |
| (b) | Subject always to the provisions hereto, the period of the chartering of the Vessel hereunder (hereinafter referred to as the “Charter Period”) shall comprise (unless terminated at an earlier date in accordance with the terms hereof) a charter period of Eight (8) years from the date of the delivery of the Vessel by the Owners to the Charterers under this Charter (the “Delivery Date”) with up to three (3) months more or less in the Charterers’ option, provided always that the chartering of the Vessel hereunder may be terminated by the Owners pursuant to Clause 41 or shall terminate in the event of the Total Loss or Compulsory Acquisition of the Vessel subject to, and in accordance with provisions of Clause 40. |
| 35. | CHARTER HIRE |
The Charterers shall, throughout the Charter Period, pay charter hire (“Charter Hire”) to the Owners monthly in advance at the agreed following rate by telegraphic transfer for each successive period of a month commencing with the Delivery Date and with subsequent installments at monthly intervals after the date of payment of such first installment by and until the redelivery of the Vessel. Time is of the essence for payment of the Charter Hire under this Charter.
| 1st – 4th Year |
USD 7,500 / day | |
| 5th – 8th Year |
USD 7,350 / day |
No address commission.
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36. PAYMENTS
| (a) | Notwithstanding anything to the contrary contained in this Charter, all payments by the Charterers hereunder (whether by way of hire or otherwise) shall be made as follows:- |
| (i) | not later than 11:00 a.m. (New York time) on one Banking Day prior to the date on which the relevant payment is due under the terms of this Charter: and |
| (ii) | in United States Dollars to THE HIROSHIMA BANK, LTD. (or such other bank or banks as may from time to time be notified by the Owners to the Charterers by not less than fourteen (14) days’ prior written notice) for the account of the Owners . |
| (b) | If any day for the making of any payment hereunder shall not be a Banking Day (being, for all purposes of this Charter, a day on which banks are open for transaction of business of the nature required by this Charter in Japan, Piraeus/Greece, London and New York) the due date for payment of the same shall be the immediately preceding Banking Day. |
| (c) | Subject to the terms of this Charter, the Charterers’ obligation to pay hire in accordance with the requirements of Clause 35 and this Clause 36 and to pay certain amount of insurance benefit pursuant to Clause 40 (e) and to pay the Termination Compensation pursuant to Clause 42 shall be absolute irrespective of any contingency whatsoever, including (but not limited to) (i) any failure or delay on the part of any party hereto or thereto, whether with or without fault on its part, other than the Owners, in performing or complying with any of the terms or covenants hereunder, (ii) any insolvency, bankruptcy, reorganization, arrangement, readjustment of debt, dissolution, liquidation or similar proceedings by or against the Owners or the Charterers or any change in the constitution of the Owners or the Charterers or any other person, (iii) any invalidity or unenforceability or lack of due authorization of or other defect in this Charter, or (iv) any other cause which would or might but for this provision have the effect of terminating or in any way affecting any obligation of the Charterers under this Charter. |
| (d) | In the event of failure by the Charterers to pay on the due date for payment thereof under this Charter, or in the case of a sum payable on demand, within ten (10) Banking Days of the date of demand, any hire or other amount payable by them under this Charter, the Charterers shall pay to the Owners on demand interest on such hire or other amount from (and including) the date of such failure to (and including) the date of actual payment (both before and after any relevant judgment or winding up of the Charterers) at the rate to be the aggregate of (i) two & one-half per centum |
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| (21⁄2 %) and (ii) the London Interbank Offered Rate for US Dollar deposits of not more than one month’s duration (as selected by the Owners or their funders in the light of the likely duration of the default in question) (as such rate is from time to time quoted by leading banks in the London Interbank Market). |
| • | Interest payable by the Charterers as aforesaid shall be compounded at such intervals as the Owners shall determine and shall be payable on demand. |
| (e) | Any interest payable under this Charter shall accrue from day to day and shall be calculated on the actual number of days elapsed and a three hundred and sixty (360) day year. |
| (f) | In this Charter, unless the context otherwise requires, “month” means a period beginning in one calendar month (and, in the case of the first month, on the date of delivery hereunder) and ending in the succeeding calendar month on the day numerically corresponding to the day of the calendar month in which such period started provided that if there is no such numerically corresponding day, such period shall end on the last day in the relevant calendar month and “monthly” shall be construed accordingly. |
| 37. | FLAG AND CLASS |
| (a) | The Vessel shall upon the Delivery Date be registered in the name of the Owners under the Panamanian flag. |
| (b) | The Owners shall have no right either to transfer the flag of Vessel from Panama to any other registry or to require the Charterers to transfer the Vessel’s classification society. The Charterers shall, at any time after the Delivery Date and at the Charterers’ expense, have the right to transfer the Vessel’s classification society from American Bureau of Shipping (ABS) to any other classification society at least equivalent to ABS. |
| (c) | Further, in the event that the Charterers need to change the flag of the Vessel, the Charterers can change the flag with the Owner’s consent, which should not be unreasonably withheld, provided however that any expenses and time (including but not limited to legal charges for finance documents for the Mortgagee) shall be for the Charterers‘account. |
| (d) | Subject to the Charterers’ supplying the standard de-registration agreement reasonably satisfactory to the Mortgagee and with the prior written consent of the Owner which shall not be unreasonably withheld, the Charterers are entitled to establish the standard bareboat registration on the Vessel at the costs, expense and time of the Charterers. |
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| (e) | If during the Charter Period there are any modifications, improvements, structural changes or new equipment made to the Vessel which are compulsory for the Vessel to comply with change to rules and regulations and/or new requirements (including but not limited to IMO) to which operation of the Vessel is required to conform, the cost, time and risk relating to such modifications shall be for the account of the Charterers. |
| (f) | All operational cost including required cost in relation to Vessel’s flag (such as tonnage tax, insurance and crew certs etc) would be for Charterers account. However, the Owners’ financing cost and cost for registration and discharge of their mortgage and other security documents in respect of the Vessel would be for Owners account, and Owners and Charterers shall equally bear initial registration cost to Vessel’s flag under Owners’ name. For the bareboat charter and the sale of the vessel, each party should bear its own costs. |
| 38. | IMPROVEMENT AND ADDITIONS |
The Charterers shall have the right to fit additional equipment and to make severable improvements and additions at their expense and risk. Such additional equipment, improvements and additions shall be removed from the Vessel without causing any material damage to the Vessel (any such damage being made good by the Charterers at their time and expense) provided however that the Charterers shall redeliver the Vessel without removing such additional equipment, improvements and additions if the Owners consent to such non-removal before the redelivery.
The Charterers shall also have the right to make structural or non-severable improvements and additions to the Vessel at their own time, costs and expense and risk provided that such improvements and additions do not diminish the market value of the Vessel and are not likely to diminish the market value of the Vessel during or at the end of the Charter Period and do not in any way affect or prejudice the marketability or the useful life of the Vessel and are not likely to affect or prejudice the marketability or the useful life of the Vessel during or at the end of the Charter Period.
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| 39. | UNDERTAKING |
The Charterers undertake and agree that throughout the Charter period they will:-
| (a) | use reasonable endeavors to and as soon as practicably possible notify the Owners in writing of any Termination Event (or event of which they are aware which, with the giving of notice and/or lapse of time or other applicable condition, would constitute a Termination Event); |
| (b) | use reasonable endeavors to and as soon as practicably possible notify the Owners in writing of any accident to the Vessel involving repairs the cost of which will or is likely to exceed US Dollars Five Hundred Thousand (US$500,000.00-) or the equivalent in any other currency; |
| (c) | use reasonable endeavors to and as soon as practicably possible notify the Owners in writing of any occurrence in consequence whereof the Vessel has become or is likely to become a Total Loss (as defined in Clause 40 (e) hereof) or the Compulsory Acquisition (as defined in Clause 25 (b) hereof); or |
| (d) | use reasonable endeavors to and as soon as practicably possible notify the Owners in writing of any capture, seizure, arrest or detention of the Vessel or requisition for use or hire of the Vessel; or |
| (e) | supply to the Owners copies of the survey reports issued in respect of such periodical or other surveys as may be required for classification purposes upon requests; or |
| (f) | provide reasonable documents relating to cargo carried on board the Vessel upon requests in connection with sanction diligence only |
| 40. | INSURANCE, TOTAL LOSS AND COMPULSORY ACQUISITION |
| (a) | For the purposes of this Charter, the term “Total Loss” shall include actual or constructive or compromised or agreed or arranged total loss of the Vessel including any such total loss as may arise during a requisition for hire. “Compulsory Acquisition” shall have the meaning assigned thereto in Clause 25(b) hereof. |
| (b) | The Charterers undertake with the Owners that throughout the Charter Period:- |
| (i) | they will keep the Vessel insured in underwriter’s standard form as the Owners shall in writing approve, which approval shall not be unreasonably withheld, with such insurers (including P&I and war risks associations) as shall be reasonably acceptable to the Owners with deductibles reasonably acceptable to the Owners (it being agreed and understood by the Charterers that there shall be no element of self- insurance or insurance through captive insurance companies without the prior written consent of the Owners); |
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| (ii) | they will be properly entered in and keep entry of the Vessel with P&I Club that is a member of the International Group of Protection and Indemnity Association for the full commercial value and tonnage of the Vessel and against all prudent P&I Risks in accordance with the rules of such association or club including, in case of oil pollution liability risks equal to the highest level of cover from time to time available under the basic entry with such P&I (but always a minimum of USD1,000,000,000.); |
| (iii) | The policies in respect of the insurances against fire and usual marine risks and policies or entries in respect of the insurances against war risks shall, in each case, include the following loss payable provisions:- |
| (a) | For so long as the Vessel is mortgaged and in accordance with the Deed of Assignment of insurances entered or to be entered into between the Charterers and any mortgagee (the “Assignee”): |
Until such time as the Assignee shall have notified the insurers to the contrary:
| (i) | All recoveries hereunder in respect of an actual, constructive or compromised or arranged total loss shall be paid in full to the Assignee without any deduction or deductions whatsoever and applied in accordance with clause 40 (e); |
| (ii) | All other recoveries not exceeding United States Dollars Five Hundred Thousand (US$500,000.00) shall be paid in full to the Charterers or to their order without any deduction or deductions whatsoever; and |
| (iii) | All other recoveries exceeding United States Dollars Five Hundred Thousand (US$500,000.00) shall, subject to the prior written consent of the Assignee be paid in full to the Charterers or their order without any deduction whatsoever. |
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| (b) | During any periods when the Vessel is not mortgaged and the after the reassignment of the insurances from the Assignee to the Owners: |
| (i) | All recoveries hereunder in respect of an actual, constructive or compromised or arranged total loss shall be paid in full to the Owners without any deduction or deductions whatsoever and applied in accordance with clause 40 (e); |
| (ii) | All other recoveries not exceeding United States Dollars one million (US$1,000,000.00) shall be paid in full to the Charterers or to their order without any deduction or deductions whatsoever; and |
| (iii) | All other recoveries exceeding United States Dollars one million (US$1,000,000.00) shall, subject to the prior written consent of the Owners be paid in full to the Charterers or their order without any deduction whatsoever; |
and the Owners and Charterers agree to be bound by the above provisions.
| (iv) | the Charterers shall procure that duplicates of all cover notes, policies, insurance slips and certificates of entry shall be furnished to the Owners for their custody upon each of the Delivery Date and renewal or change of the relevant insurances of the Vessel or upon reasonable demand by the Owners; |
| (v) | the Charterers shall procure that the insurers and the war risk and protection and indemnity associations with which the Vessel is entered shall |
| (A) | furnish the Owners with a letter or letters of undertaking in relevant underwriter’s standard form and in accordance with the underwriters’ rules. |
| (B) | supply to the Owners such information in relation to the insurances effected, or to be effected, with them as the Owners may from time to time reasonably require: and |
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| (vi) | the Charterers shall procure that the policies, entries or other instruments evidencing the insurances are endorsed to the effect that the insurers shall give to the Owners as soon as practicably possible prior written notification of any material amendment and seven (7) days with respect to suspension, cancellation or termination of the insurances in accordance with the underwriters’ guidance and rules. |
| (c) | Notwithstanding anything to the contrary contained in Clauses 13 and any other provisions hereof, the Vessel shall be kept insured during the Charter Period in respect of marine and war risks on hull and machinery basis (The Charterers shall have the option, to take out on a full hull and machinery basis increased value or total loss cover in an amount not exceeding thirty per centum (30%) of the total amount insured from time to time) for not less than the amounts specified in column (b) in the table set out below in respect of the one-yearly period during the Charter Period specified in column (a) (on the assumption that the first such period commences on the Delivery Date) against such amount (hereinafter referred to as the “Minimum Insured Value”): |
| (a) Year |
(b) Minimum Insured Value |
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| 1 |
US$ | 20,900,000.- | ||
| 2 |
US$ | 18,493,750.- | ||
| 3 |
US$ | 16,087,500.- | ||
| 4 |
US$ | 13,681,250.- | ||
| 5 |
US$ | 11,275,000.- | ||
| 6 |
US$ | 8,868,750.- | ||
| 7 |
US$ | 6,462,500.- | ||
| 8 |
US$ | 4,056,250.- | ||
| (d) | (i) If the Vessel shall become a Total Loss or be subject to Compulsory Acquisition the Chartering of the Vessel to the Charterers hereunder shall cease and the Charterers shall:- |
| (A) | immediately pay to the Owners all hire, and any other amounts, which have fallen due for payment under this Charter and have not been paid as at and up to the date on which the Total Loss or Compulsory Acquisition occurred (the “Date of Loss”) together with interest thereon at a rate reflecting the Owners’ |
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| reasonable cost of funds at such intervals, which amount to be agreed between the Owners and the Charterers and shall cease to be under any liability to pay any hire, but not any other amounts, thereafter becoming due and payable under this Charter, Provided that all hire and any other amounts prepaid by the Charterers subsequent to the Date of Loss shall be forthwith refunded by the Owners: |
| (B) | for the purposes of this sub-clause, the expression “relevant Minimum Insured Value” shall mean the Minimum Insured Value applying to the one-year period in which the Date of Loss occurs. |
| (ii) | For the purpose of ascertaining the Date of Loss:- |
| (A) | an actual total loss of the Vessel shall be deemed to have occurred at noon (London time) on the actual date the Vessel was lost but in the event of the date of the loss being unknown the actual total loss shall be deemed to have occurred at noon (London time) on the date on which it is acknowledged by the insurers to have occurred: |
| (B) | a constructive, compromised, agreed, or arranged total loss of the Vessel shall be deemed to have occurred at noon (London time) on the date that notice claiming such a total loss of the Vessel is given to the insurers, or, if the insurers do not admit such a claim, at the date and time at which a total loss is subsequently admitted by the insurers or adjudged by a competent court of law or arbitration tribunal to have occurred. Either the Owners or, with the prior written consent of the Owners (such consent not to be unreasonably withheld), the Charterers shall be entitled to give notice claiming a constructive total loss but prior to the giving of such notice there shall be consultation between the Charterers and the Owners and the party proposing to give such notice shall be supplied with all such information as such party may request; and |
| (C) | Compulsory Acquisition shall be deemed to have occurred at the time of occurrence of the relevant circumstances described in Clause25 (b) hereof. |
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| (e) | All moneys payable under the insurance effected by the Charterers pursuant to Clauses 13 and 40, or other compensation, in respect of a Total Loss or pursuant to Compulsory Acquisition of the Vessel shall be received in full by the Owners (or the Mortgagees as assignees thereof) and applied by the Owners (or, as the case may be, the Mortgagees):- |
FIRST, in payment of all the Owners’ costs incidental to the collection thereof,
SECONDLY, in or towards payment to the Owners (to the extent that the Owners have not already received the same in full) of a sum equal to the aggregate of (i) unpaid but due hire and other moneys (if any) under this Charter and unpaid interest thereon up to and including the Date of Loss and (ii) the following termination sum or pro-rata de-escalation which shall be payable as at the Date of Loss, and
| (a) | (b) | |||
| Year | Termination Sum | |||
| Delivery Date: |
USD 20,400,000.- | |||
| At end of 1st year: |
USD 18,300,000.- | |||
| At end of 2nd year: |
USD 16,200,000.- | |||
| At end of 3rd year: |
USD 14,100,000.- | |||
| At end of 4th year: |
USD 12,000,000.- | |||
| At end of 5th year: |
USD 9,900,000.- | |||
| At end of 6th year: |
USD 7,800,000.- | |||
| At end of 7th year: |
USD 5,700,000.- | |||
| At end of 8th year: |
USD 3,600,000.- | |||
THIRDLY, in payment of any surplus to the Charterers by way of compensation for early termination.
| (f) | The Charterers and the Mortgagee shall execute the “Assignment of Insurances” of which contents and wording shall be mutually agreed between the Owners and the Charterers. |
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| 41. | TERMINATION EVENTS |
| (a) | Each of the following events shall be a “Termination Event” for purposes of this Charter:- |
| (i) | if any installment of hire or any other sum payable by the Charterers under this Charter (including any sum expressed to be payable by the Charterers on demand) shall not be paid at its due date under this Charter or within ten (10) Banking Days of the date of demand and such failure to pay is not remedied within ten (10) Banking Days of receipt by the Charterers of written notice from the Owners notifying the Charterers of such failure and requesting that payment is made; or |
| (ii) | Save in circumstances where requisition for hire or compulsory requisition result in termination of insurances for the Vessel, if either (A) the Charterers shall fail at any time to effect or maintain any insurances required to be effected and maintained under this Charter, or any insurer shall avoid or cancel any such insurances (other than where the Charterer proved that the relevant avoidance or cancellation results from an event or circumstance outside the reasonable control of the Charterers and the relevant insurances are reinstated or re-constituted in a manner meeting the requirements of this Charter within five (5) Banking Days of such avoidance or cancellation) or the Charterers shall commit any breach of or make any misrepresentation in respect of any such insurances the result of which the relevant insurer avoids the policy or otherwise excuses or releases itself from all or any of its liability thereunder, or (B) any of the said insurances shall cease for any reason whatsoever to be in full force and effect (other than where the Charterer proved that the reason in question is outside the reasonable control of the Charterer and the relevant insurances are reinstated or re-constituted in a manner meeting the requirements of this Charter within five (5) Banking Days of such cease); or |
| (iii) | if the Charterers shall at any time fail to observe or perform any of their material obligations under this Charter, other than those obligations referred to in sub-clause (i) or sub-clause (ii) of this Clause 41(a), and such failure to observe or perform any such obligation is either not remediable or is remediable but is not remedied within thirty (30) days of receipt by the Charterers of a written notice from the Owners requesting remedial action; or |
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| (iv) | if any material representation or warranty by the Charterers in connection with this Charter or in any document or certificate furnished to the Owners by the Charterers in connection herewith or therewith shall prove to have been untrue, inaccurate or misleading in any material respect when made (and such occurrence continues unremedied for a period of thirty (30) days after receipt by the Charterers of written notice from the Owners requesting remedial action): or |
| (v) | if a petition shall be presented (and not withdrawn or stayed within sixty (60) days) or an order shall be made or an effective resolution shall be passed for the administration or winding-up of the Charterers (other than for the purpose of a reconstruction or amalgamation during and after which the Charterers remain solvent and the terms of which have been previously approved in writing by the Owners which approval shall not be unreasonably withheld) or if an encumbrancer shall take possession or an administrative or other receiver shall be appointed of the whole or any substantial part of the property, undertaking or assets of the Charterers or if an administrator of the Charterers shall be appointed (and, in any such case, such possession is not given up or such appointment is not withdrawn within sixty (60) days) or if anything analogous to any of the foregoing shall occur under the laws of the place of the Charterers’ incorporation, or |
| (vi) | if the Charterers shall stop payments to all of its creditors or shall cease to carry on or suspend all or a substantial part of their business or shall be unable to pay their debts, or shall admit in writing their inability to pay their debts, as they become due or shall otherwise become or be adjudicated insolvent; or |
| (vii) | if the Charterers shall apply to any court or other tribunal for, a moratorium or suspension of payments with respect to all or a substantial part of their debts or liabilities, or |
| (viii) (A) | if the Vessel is arrested or detained (other than for reasons solely attributable to the Owners or to those for whom, for the purposes of this provision, the Owners shall be deemed responsible, including without limitation, any legal person who, at the date hereof or at any time in the future is affiliated with the Owners) and such arrest or detention is not lifted within thirty (30) days (or such longer period as the Owners may reasonably agree in writing in the light of all the circumstances) ; or |
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| (B) | if a distress or execution shall be levied or enforced upon or sued out against all or any substantial part of the property or assets of the Charterers and shall not be discharged or stayed within thirty (30) days; or |
| (ix) | if any consent, authorization, license or approval necessary for this Charter to be or remain the valid legally binding obligations of the Charterers, or to the Charterers to perform their obligations hereunder or thereunder, shall be materially adversely modified or is not granted or is revoked, suspended, withdrawn or terminated or expires and is not renewed (provided that the occurrence of such circumstances shall not give rise to a Termination Event if the same are remedied within thirty (30) days of the date of their occurrence); or |
| (x) | if (a) any legal proceeding for the purpose of the reconstruction or rehabilitation of the Charterers is commenced and continuing in any jurisdiction and (b) the Owners receive a termination notice from the receiver, trustee or others of the Charterers which informs the termination/rejection of the Charter pursuant to the relevant laws, codes and regulations applicable to such proceeding. |
| (b) | Any Termination Event shall constitute a repudiatory breach of, or breach of condition by the Charterers under, this Charter or an agreed terminating event the occurrence of which will (in any such case) entitle the Owners by notice to the Charterers to terminate the chartering of the Vessel under this Charter and recover the amounts provided for in Clause 42(c) either as liquidated damages or as an agreed sum payable on the occurrence of such event. |
| 42. | OWNERS’ RIGHTS ON TERMINATION |
| (a) | At any time after a Termination Event shall have occurred and be continuing, the Owners may, by notice to the Charterers immediately, or on such date as the Owners shall specify, terminate the chartering by the Charterers of the Vessel under this Charter, 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. For the avoidance of doubt, in case of the termination of the Charter in accordance with 41 (a) (x) hereof, the Charter shall be deemed to be terminated upon receipt by the Owners of the termination notice set forth in Clause 41 (a) (x) hereof. |
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| (b) | On or at any time after termination of the chartering by the Charterers of the Vessel pursuant to Clause 42(a) hereof the Owners shall be entitled to retake possession of the Vessel in accordance with Clause 29 hereof, the Charterers hereby agreeing that the Owners, for that 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. |
| (c) | If the Owners pursuant to Clause 42(a) hereof give notice to terminate the chartering by the Charterers of the Vessel, the Charterers shall pay to the Owners on the date of termination (the “Termination Date”), the aggregate of (A) all hire due and payable, but unpaid, under this Charter to (and including) the Termination Date together with interest accrued thereon pursuant to Clause 36(d) hereof from the due date for payment thereof to the Termination Date, (B) any sums, other than hire, due and payable by the Charterers, but unpaid, under this Charter together with interest accrued thereon pursuant to Clause 36(d) to the Termination Date and (C) any actual direct financial loss suffered by the Owners which direct loss shall be determined as the shortfall, if any, between (a) the current market value of the Vessel, in the event that the Vessel is not sold within 3 months from the Termination Date, (average value as estimated by two independent valuers such as major London brokers i.e. Arrow Valuations Ltd, Barry Rogliano Salles, Braemar ACM Shipbroking, H Clarkson & Co. Ltd., E.A. Gibsons Shipbrokers, Fearnleys, Galbraith, Simpson Spencer & Young, Howe Robinson & Co Ltd London and Maersk Broker K.S. (to include, in each case, their successors or assigns and such subsidiary or other company in the same corporate group through which valuations are commonly issued by each of these brokers), or such other first-class independent broker as the Owners and Charterers may agree in writing from time to time) and (b) the Remaining Purchase Option Price (as defined in Clause 49.2 hereof) at any given time always taking into account any charterhire paid during the year to which the specified Remaining Purchase Option Price relates PROVIDED ALWAYS that if the said market value exceeds the aggregate of (A) and (B) and the Remaining Purchase Option Price, then the Owners shall pay the amount of such excess to the Charterers forthwith. The aggregate of (A), (B) and (C) above shall hereinafter be referred to as the “Termination Compensation”). Nevertheless, if the Vessel is sold or transferred within 3 months after the Termination Date, Clause 42 (e) shall apply. |
15
| (d) | If the Charter is terminated in accordance with this Clause 42 the Charterers shall immediately redeliver the Vessel at a safe and ice-free port or place as indicated by the Owners. The Vessel shall be redelivered to the Owners in substantially the same condition and class as that in which she was delivered, fair wear and tear not affecting class excepted. |
| (e) | Following the re-delivery of the Vessel by the Charterers after a termination of this Charter on the Termination Date, if the Owners subsequently intend to sell the Vessel, they shall notify the Charterers in writing of the potential sale and the potential sale price of the Vessel (the “Proposed Owners’ Sale Price”) whereupon the Charterers (or their nominee) may, within 5 days of such notification, elect to purchase the Vessel by paying an amount which is the higher of (I) the Proposed Owners’ Sale Price and (II) the aggregate of clause 42 (c) (A) and (B) and the Remaining Purchase Option Price (as defined in Clause 48.2). If the Charterers notify the Owners that they do not intend to purchase the Vessel or the Charterers do not respond to the Owners within such days’ period (or such longer period as the Owners may in their absolute discretion determine), the Owners may sell the Vessel on such terms as the Owners may deem fit but for avoidance of any doubt, in the event that the selling price of the Vessel exceeds the aggregate of Clause 42 (c) (A), (B), the remaining Purchase Option Price and all costs and expenses (including but not limited to brokerage fees and attorney’s fees) reasonably incurred by the Owners for negotiation, preparation, execution and performance of such sale, then any amount in excess of this should be paid to the Charterers. |
| 43. | NAME |
The Charterers shall, subject only to prior notification to the relevant authorities of the jurisdiction in which for the time being the Vessel is registered, be entitled from time to time to change the name of the 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. Painting and installment shall be at Charterers’ expense and time. The Charterer shall also have the liberty to change the name of the Vessel during the Charter Period at the expense and time of the Charterers (including the legal charge for finance documents for the Mortgagee, if any).
The Owners shall have no right to change the name of the Vessel during the Charter Period.
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| 44. | MORTGAGE and ASSIGNMENT |
The Owners confirm that they are familiar with the terms of the assignment of insurances made or to be made by the Charterers in favour or the Mortgagee, and they agree to the terms thereof and will do nothing that conflicts therewith, excepting that the Owners shall be entitled to assign its rights, title and interest in and to this Charter to the Mortgagee or its assignee. Neither party shall assign its right or obligations or part of thereof to any third party without the written consent of the other.
In respect of the Vessel the Owners undertake not to borrow more than the respective purchase option prices as set out at the relevant milestone in Clause 49 hereof.
The Owners have the right to register a first preferred mortgage on the Vessel in favour of the Mortgagee (THE HIROSHIMA BANK, LTD.) securing a loan under the Loan Agreement under standard mortgages and security documentation. In which case, the Owners undertake to procure from the Mortgagee a Letter/Agreement of Quiet Enjoyment in a form and substance reasonably acceptable to the Charterers.
The Charterers agree to sign an acknowledgement of the Owners’ charterhire assignment or any other comparable document reasonably required by the Mortgagee, in favour of the Mortgagee. During the course of the Charter the Owners have the right to register a substitute mortgage in favour of another bank provided such registration is effected in a similar amount to the loan amount outstanding with the Mortgagee at that time and only if such substitute mortgagee executes a Letter/Agreement of Quiet Enjoyment in favour of the Charterers in the same form as that provided by the Mortgagee or the form reasonably acceptable for the Charterers. The Charterers will then agree to sign a charterhire assignment in favour of the substitute mortgage in a form as shall be agreed by the Charterers, which agreement not be unreasonably withheld. Any cost incurred by the Charterers shall be for Owners’ account.
Subject to the term and conditions of this Charter, the Charterers also agree that the Owners have the right to assign its rights, title and interest in and to the insurances by way of assignment of insurance in respect of the Vessel to and in favour of the Assignee in a form and substance reasonably acceptable to Charterers and the Assignee.
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Owners shall procure that exercise and/or enforce of any mortgage and charterhire assignment which might interfere with or prejudice or adversely affect the Charterer’s use of the Vessel or other right of the Charterer under this Charter (including the purchase option of the Vessel) shall be subject to the terms and conditions of the Letter/Agreement of Quiet Enjoyment.
In the event that the Owners execute security of any nature (including but not limited to any mortgage, assignment of insurances) over the Vessel then the Owners hereby undertake and agree as a condition of this Charter to procure that the beneficiary of such security executes in favour of the Charterers a letter/agreement of quiet enjoyment in such form and content as is reasonably acceptable to the Charterers, and exercise and/or enforce of the beneficiary’s rights thereunder is subject to the agreement of a letter/agreement of Quiet Enjoyment before or after delivery of the Vessel.
| 45. | REDELIVERY INSPECTION |
Prior to redelivery under Clause 42 hereof and without interference to the operation of the Vessel, the Owners, at their risk and expense, shall have the right provided that such right is declared at least 20 days prior to the expected redelivery date to carry out an underwater inspection of the Vessel by Class approved diver and in the presence of Class surveyor and Owners’ and Charterers’ representatives. Should any damages in the Vessel’s underwater parts be found that will impose a condition or recommendation of Vessel’s class then:
| a) | In case Class imposes a condition or recommendation of class that does not require drydocking before next scheduled drydocking. Charterers shall pay to Owners the estimated cost to repair such damage in way which is acceptable to Class, which to be direct cost to repair such damage only, as per average quotation for the repair work obtained from two reputable independent shipyards at or in the vicinity of the redelivery port, one to be obtained by Owners and one by Charterers within 2 banking days from the date of imposition of the condition/recommendation unless the parties agree otherwise. |
| b) | In case Class require Vessel to be drydocked before the next scheduled drydocking the Charterers shall drydock the Vessel at their expense prior to redelivry of the Vessel to the Owners and repair same to Class satisfaction. |
In such event the Vessel shall be redelivered at the port of the dockyard.
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| 46. | MORTGAGE NOTICE |
The Charterers and place and keep prominently displayed in the chart room, master’s cabin, and engine room of the Vessel a framed printed notice in plain type reading as follows:
“NOTICE OF SHIP MORTGAGE”
“This Vessel is covered by a First Preferred Ship Mortgage given to THE HIROSHIMA BANK, LTD., a banking corporation duly organized and existing under the laws of Japan, having its head office at 3-8 Kamiya-cho 1-chome, Naka-ku, Hiroshima City, Hiroshima-Pref., Japan, acting through its Kure Office at 5-4, Hondori 3-chome, Kure City, Hiroshima-Pref., Japan, its successors and assigns under the authority of the laws of the Republic of Panama. Under the terms of said Mortgage, neither the owner of this Vessel, any charterer, the Master of this Vessel, nor any other person has any right, power or authority to create, incur or permit to be imposed upon the Vessel any liens, maritime or otherwise, other than the lien of said Mortgage and liens for crew’s wages or salvage.”;
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| 47. | SALE OF VESSEL BY OWNERS |
| 1. | The Owners have the right to sell the Vessel to a reputable third party (“Purchaser”) at any time during the Charter Period with the prior written consent of the Charterers and provided that (i) the Purchaser agrees to take over the benefit and burden of this Charter, (ii) such ownership change does not result in any reflagging of the Vessel, (iii) such ownership change does not result in the Charterers being obliged to increase any payment under this Charter, (iv) such ownership change does not increase the actual or contingent obligations of the Charterers under this Charter, and (v) the Charterers shall not be liable for the costs and expenses (including legal fees) incurred in the sale of the Vessel by the Owners under this Clause 47. |
| 2. | The Owners shall give the Charterers at least one month’s prior written notice of any sale. |
| 3. | Subject to 47.1, the Charterers and Owners undertake with each other to execute one or more novation agreements (or other documents required under applicable law) to novate the rights and obligations of the Owners under this Charter to the Purchaser such novation agreement(s) or other documents to be in such form and substance acceptable to the Charterers and such novation will be effective upon delivery of the Vessel from the Owners to the Purchaser.” |
| 48. | CHARTERERS’ OBLIGATION OR OPTION TO PURCHASE VESSEL |
| 1. | Charterers to have purchase obligation at the end of 96th months of the Charter Period at a price of USD3,600,000 net—(the “Final Purchase Obligation Price” which price shall not be reduced irrespective of the actual purchase date of the Vessel); however, Charterers to have purchase option to purchase the Vessel at the end of 4th year anniversary date of the Delivery Date at USD12,000,000 net (the “First Purchase Option Price”) subject to Charterers declaration 3 months before such date. |
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| 2. | Charterers further have an option to purchase, such purchase being declared at any time through the remaining period at the following price or pro-rata de-escalation until the maturity of the Charter Period (the “Subsequent Purchase Option Price”), provided that in any event Subsequent Purchase Option Price shall not be less than USD 3,600,000.- irrespective of the actual purchase date of the Vessel. |
| At end of 4th year | : | USD 12,000,000.- | ||
| At end of 5th year | : | USD 9,900,000.- | ||
| At end of 6th year | : | USD 7,800,000.- | ||
| At end of 7th year | : | USD 5,700,000.- | ||
| At end of 8th year | : | USD 3,600,000.- |
(The purchase option price of the Vessel to be calculated in accordance with Clause 48.1 and 48.2 hereof, whether the Final Purchase Option Price or the First Option Price or the Subsequent Purchase Option Price, hereinafter called the “Remaining Purchase Option Price”).
| 3. | Immediately prior to delivery of the Vessel by the Owners to the Charterers under the PO MOA (as defined in Clause 48.4) the Parties shall execute a Protocol of Redelivery and Acceptance under this Charter (the “Redelivery Protocol”) and save in respect of any claims accrued under this Charter prior to the date and time of the Redelivery Protocol, this Charter shall terminate forthwith. |
| 4. | Upon the date of any written notification by the Charterers to the Owners of their intention to purchase the Vessel, the Owners and the Charterers shall be deemed to have unconditionally entered into a contract to sell and purchase the Vessel for the Remaining Purchase Option Price on and in strict conformity with the terms and conditions contained in the Memorandum of Agreement attached to this Charter as Exhibit A (the “PO MOA”). |
| 49. | MISCELLANEOUS |
| (a) | The terms and conditions of this Charter and the respective rights of the Owners and the Charterers shall not be waived or varied otherwise than by an instrument in writing of the same date as or subsequent to this Charter executed by both parties or by their duly authorized representatives. |
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| (b) | Unless otherwise provided in this Charter whether expressly or by implication, time shall be of the essence in relation to the performance by the Charterers of each and every one of their obligations hereunder. |
| (c) | No failure or delay on the part of the Owners or the Charterers in exercising any power, right or remedy hereunder or in relation to the Vessel shall operate as a waiver thereof nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise of any such right or power or the exercise of any other right, power or remedy. |
| (d) | If any terms or condition of this Charter shall to any extent be illegal invalid or unenforceable the remainder of this Charter shall not be affected thereby and all other terms and condition shall be legal valid and enforceable to the fullest extent permitted by law. |
| (e) | The respective rights and remedies conferred on the Owners and the Charterers by this Charter are cumulative, may be exercised as often as the Owners or the Charterers (as the case may be) think fit and are in addition to, and are not exclusive of, any rights and remedies provided by law. |
| 50. | COMMUNICATIONS |
Except as otherwise provided for in this Charter, all notices or other communications under or in respect of this Charter to either party hereto shall be in writing and shall be made or given to such party at the address, facsimile number or e-mail address appearing below (or at such other address, facsimile number or e-mail address as such party may hereafter specify for such purposes to the other by notice in writing):-
| (i) | in the case of the Owners c/o Kawana Kaiun Co., Ltd. |
| Address | : | KAWANA BLDG, 12-20, Hiro-Oshingai-1 Chome, | ||
| Kure-City, Hiroshima 737-0141, Japan | ||||
| Telephone | : | +81-823-36-2010 | ||
| Telefax | : | +81-823-75-2012 | ||
| : | info@kawana-kaiun.co.jp |
| (ii) | in the case of the Charterers c/o Navios Shipmanagement Inc. |
| Address | : | 85 Akti Miaouli Street, 18538, Piraeus, Greece | ||
| Telephone | : | 30-210-4595000 | ||
| : | ops@navios.com, legal@navios.com | |||
| tech@navios.com, legal_corp@navios.com |
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| (iii) | in the case of the Brokers c/o ITOCHU Corporation |
| Address | : | TOKBR Section, 5-1, Kiya-Aoyama 2-chome, | ||
| Minato-ku, Tokyo, 107-8077 Japan | ||||
| Telephone | : | 81-3-3497-2939 | ||
| Telefax | : | 81-3-3497-7111 | ||
| : | tokbr@itochu.co.jp |
A written notice includes a notice by facsimile or e-mail. A notice or other communication received on a non-working day or after business hours in the place of receipt shall be deemed to be served on the next following working day in such place.
Subject always to the foregoing sentence, any communication by personal delivery or letter shall be deemed to be received on delivery, any communication by e-mail shall be deemed to be received upon transmission of the automatic answerback of the addresses and any communication by facsimile shall be deemed to be received upon appropriate acknowledgment by the addressee’s receiving equipment.
All communications and documents delivered pursuant to or otherwise relating to this Charter shall either be in English or accompanied by a certified English translation.
| 51. | TRADING IN WAR RISK AREA |
The Charterers shall be permitted to order the Vessel into an area subject to War Risks as defined in Clause 26 without consent of the Owners provided that all Marine, War and P&I Insurance are maintained with full force and effect and the Charterers shall pay any and all additional premiums to maintain such insurance.
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| 52. | INVENTORIES, OIL AND STORES |
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 under this Charter and again on redelivery of the Vessel under Clause 42 hereof.
The Owners shall at the time of redelivery under Clause 42 hereof take over and pay for all remaining bunkers, unused lubricating oil (for avoidance of any doubts, the lubricant oil in the machinery is included), unbroached provisions, paints, ropes and other unused consumable stores (excluding spare parts) in the said Vessel at the Charterers’ purchased prices with supporting vouchers, provided that this payment shall be off-set against the Owner’s claim under Clause 42 to the extent the sum equivalent to such payment. However, the Charterers shall not pay to the Owners at time of delivery for any bunkers, lubricating oil, provisions, paints, ropes and consumable stores which the Charterers have supplied to the Vessel at the Charterers’ expense prior to delivery. 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.
| 53. | INDEMNITY FOR POLLUTION RISKS |
Charterers shall indemnify the Owners against the following Pollution Risks:-
| (a) | liability for damages or compensation payable to any person arising from pollution; |
| (b) | the costs of any measures reasonably taken for the purpose of preventing, minimizing or cleaning up any pollution together with any liability for losses or damages arising from any measures so taken; |
| (c) | liability which the Owners and/or the Charterers may incur, together with costs and expenses incidental thereto, as the result of escape or discharge or threatened escape discharge of oil or any other substance; |
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| (d) | the costs or liabilities incurred as a result of compliance with any order or direction given by any government or authority for the purpose of preventing or reducing pollution or the risk of pollution; provided always that such costs or liabilities are not recoverable under the Hull and Machinery Insurance Policies on the Vessel; |
| (e) | liability which the Owners and/or the Charterers may incur to salvors under the exception to the principal of “no cure-no pay” in Article 1 (b) of Lloyds Standard Form of Salvage Agreement (LOF 1990); and |
| (f) | liability which the Charterers may incur for the payment of fines in respect of pollution in so far as such liability may be covered under the rules of the P&I Club. |
| 54. | TRADE AND COMPLIANCE CLAUSE |
| (a) | The Charterers and the Owners hereby agree that no person/s or entity/ies under this Charter will be individual(s) or entity(ies) designated under any applicable national or international law imposing trade and economic sanctions, including sanction, prohibition or restriction imposed on any specified persons, entities or bodies including the designation of specified vessels or fleet under United Nations Resolutions or trade or economic sanctions, laws or regulations of the European Union, United Kingdom, Japan or United States of America (collectively, the “Sanctions”). |
| (b) | Further, the Charterers and the Owners agree that the performance of this Charter will not require any action prohibited by sanctions or restrictions under any applicable Sanctions. |
| (c) | Further to the above, Charterers shall take reasonable steps to confirm that at the date of this Charter Party and throughout the duration thereof, any sub-charterer of the Vessel (who is directly contracting with the Charterer in respect of the Vessel at any relevant time), the managers of the Vessel and the Vessel are not a sanctioned party/vessel under the Sanctions. |
| 55. | ANTI-BRIBERY AND ANTI-CORRUPTION |
The Charterers and the Owners hereby agree that in connection with this Contract and/or any other business transactions related to it, they as well as their sub-contractors and each of their affiliates, directors, officers, employees, agents, and every other person acting on its and its sub-contactors’ behalf, shall perform all required duties, transactions and dealings in compliance with all applicable laws, rules, regulations relating to anti-bribery and anti-money laundering.
(end)
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Exhibit 4.71
| 1. Shipbroker
Not Applicable |
THE BALTIC AND INTERNATIONAL MARITIME COUNCIL(BIMCO) STANDARD BAREBOAT CHARTER CODE NAME: “BARECON 2001” PART I | |||||
| 2. Place and date at [Place] on [date] | ||||||
|
|
3. Owners/Place of business (Cl.1)
ASL NAVIGATION S.A.
53rd E Street, Urbanizacion Marbella,
MMG Tower, 16th Floor, Panama,
Republic of Panama |
4. Bareboat charterers(Charterers)/Place of business (Cl.1)
PHAROS NAVIGATION S.A.
Republic of the Marshall Islands | ||||
| 5. Vessel’s name, Call Sign and Flag (Cl. 1 and 3)
M/V “NAVIOS PHOENIX”, 3FFF3, and Panama, Republic of Panama. | ||||||
| 6. Type of Vessel
Bulk Carrier |
7. GRT/NRT
90423 / 59281 | |||||
| 8. When/Where built
IMABARI SHIPBUILDING CO., LTD.
Hiroshima Shipyard on December 21st, 2009 |
9. Total DWT (abt.) in metric tons on summer freeboard
180,242M.T. | |||||
| 10. Classification Society (Cl. 3) BV (Bureau Veritas) |
11. Date of last special survey by the Vessel’s classification society 3rd April, 2020 | |||||
|
|
12. Further particulars of Vessel (also indicate minimum number of months’ validity of class certificates agreed acc. to Cl. 3)
As is upon delivery | |||||
| 13. Port or Place of delivery (Cl.3)
any part of the world (including sea area), excluding North Korea, Cuba, Israel, “war or warlike zone”, and countries banned/boycotted by the U.N., subject to the limits of current British Institute Warranties |
14. Time for delivery (Cl.4)
On or after 15th December 2021 |
15. Cancelling date (Cl.5)
14th January 2022 | ||||
| 16. Port of Place of redelivery (Cl.15)
One Safe port worldwide range |
17. No. of months’ validity of trading and class certificates upon redelivery (Cl.15)
Three months | |||||
| 18. Running days’ notice in other than stated in Cl.4
N/A |
19. Frequency of dry-docking (Cl.10(g))
In accordance with Class rules and regulation and flag state requirements | |||||
| 20. Trading limits (Cl.6)
Trading Worldwide within IWL via safe ports / safe anchorage that the Vessel is suitable call, excluding any war risk zones. Charterers have option to break the limits, provided that Charterers extra insurance to be placed at Charterers’ risk and expense to Owners’ satisfaction, | ||||||
| 21. Charter Period (Cl.2)
Six (6) years or up to 6 months less at the Charterers’ option |
22. Charter Hire (Cl.11)
Please see Clause 36 | |||||
| 23. New class and other safety requirements (state percentage of Vessel’s insurance value acc. To Box 29) (Cl.10(a)(ii))
Not Applicable | ||||||
| 24. Rate of interest payable acc. To Cl.11 (f) and, if applicable, acc. to PART IV
1M ICE LIBOR plus 3% |
25. Currency and method of payment (Cl.11)
Monthly in cash in United States currency by telegraphic transfer | |||||
(Continued)
(continued) “BARECON 2001” Standard Bareboat Charter PART I
| 26. Place of payment; also state beneficiary and bank account (Cl. 11)
To be advised |
27. Bank guarantee/bond (sum and place) (Cl. 22) (optional)
Not Applicable | |||
| 28. Mortgage(s), if any. (state whether Cl. 12(a) or (b) applies; if 11(b) applies state date of Financial Instrument and name of Mortgagee(s)/Place of business) (Cl. 12)
Cl. 12(b) to apply. Mortgage to be arranged in favour of Sumitomo Mitsui Trust Bank, Limited, Japan |
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)
Not less than 110% of the Charter Principal Balance as defined in Clause 36(1)(ii) | |||
| 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))
To be determined by the Charterers | |||
| 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)
Seven (7) Clear Banking Days in US, Japan and Greece |
35. Dispute Resolution (state 30(a), 30(b) or 30(c); if 30(c) agreed Place of Arbitration must be stated)
Clause 30(a) to be applied. | |||
| 36. War cancellation (indicate countries agreed) (Cl.26(f))
UK, U.S.A., Russia, PRC China, Greece, Japan | ||||
| 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)
Not Applicable | |||
| 39. Vessel’s Yard Building No. (only to be filled in if Part III applies)
Not Applicable |
40. Date of Building Contract (only to be filled in if Part III applies)
Not Applicable | |||
| 41. Liquidated damages and costs shall accrue to (state party acc. To Cl.1) a) Please see Clause 34(3)(4)(5)(6) b) c) | ||||
| 42. Hire/Purchase agreement (indicate with “yes” or “no” whether Part IV applies) (optional)
No |
43. Bareboat Charter Registry (indicate with “yes” or “no” whether Part V applies) (optional)
No | |||
| 44. Flag and Country of the Bareboart Charter Registry (only to be filled in if Part V applies)
Not Applicable |
45. Country of the Underlying Registry (only to be filled in if Part V applies)
Not Applicable | |||
| 46. Number of additional clauses covering special provisions, if agreed
Clause No 32-50 attached hereto are deemed to be fully incorporated in this Charter Party. | ||||
| PREAMBLE—It is mutually agreed that this Contract shall be performed subject to the conditions contained in this Charter which shall include PART I and PART II. In the event of a conflict of conditions, the provisions of PART I shall prevail over those of PART II to the extent of such conflict but no further. It is further mutually agreed that PART III and/or PART IV and/or PART V shall only apply and shall 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 mutually agreed that in the event of a conflict of conditions, the provisions of PART I and PART II shall prevail over those of PART III and/or PART IV and/or PART V to the extent of such conflict but no further. | ||||
| Signature (Owners) ASL NAVIGATION S.A.
Masafumi Abo / President |
Signature (Charterers) PHAROS NAVIGATION S.A.
Shunji Sasada | |||
“BARECON 2001” Standard Bareboat Charter
PART II
| 1. | Definitions |
In this Charter, the following terms shall have the meanings hereby assigned to them:
“Banking Day” means a day on which banks are open for business in Tokyo, Piraeus and New York;
“The Owners” shall mean the party identified in Box3;
“The Charterers” shall mean the party identified in Box4;
“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.
| 2. | Charter Period |
In consideration of the hire detailed in Box 22, the Owners have agreed to let and the Charterers have agreed to the Vessel for the period stated in Box 21 (“The Charter Period”).
| 3. | Delivery (not applicable when Part III applies, as indicated in Box 37) the Vessel shall be delivered in accordance with Clause 35 and Clause 2 of Part III |
(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 berth as the Charterers may direct.
(b) The Vessel shall be provisionally registered properly documented on delivery and shall be
properly registered and documented within the grace period 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 the Charter, provided such defects have manifested themselves within twelve
(12) months after delivery unless otherwise provided in Box 32.
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“BARECON 2001” Standard Bareboat Charter
| 4. | Time for Delivery (not applicable to when Part III applies, as indicated in Box 37) |
The Vessel to be delivered not 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 to keep the Charterers closely advised of
possible changes in the Vessel’s position.
| 5. | Cancelling (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
solely due to Owners’ fault, 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 date, 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) 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 and the rules of the P&I club (including any warranties expressed or implied therein) without first obtaining the consent of the insurers including the P&I club 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 and International Regulations to which the Vessel shall be subject 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.
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“BARECON 2001” Standard Bareboat Charter
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 Owners’ prior approval has been obtained to loading thereof.
|
|
The Owners and Charterers shall each appoint surveyors for
the purpose of determining and agreeing in writing the conditions of the Vessel at the time of delivery and redelivery hereunder. The Owners shall bear all expenses of the On-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.
| 8. | Inspection |
The Owners shall have the right once a year at any time after giving reasonable notice to the Charterers to inspect or survey the Vessel or instruct a duly authorized surveyor to carry out such survey on their behalf – provided that it does not interfere with the operation of the Vessel and/or crew:-
(a) to ascertain the condition of the Vessel and satisfy themselves that the Vessel is being properly repaired and maintained and/or for any
other commercial reason they consider necessary. 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 log books 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 and Consumable Oil and Stores |
A complete inventory of the Vessel’s entire equipment, outfit including spare parts, appliances and of all consumable stores provided and
paid for by Owners on board the Vessel shall be made by the Charterers in conjunction with the Owners on delivery and again on redelivery of the Vessel. The Charterers and the Owners, respectively, shall at the time
of delivery and redelivery take over and pay (except, on delivery, to the extent that Charterers have paid suppliers directly for the same) for all bunkers, lubricating oil, unbroached provisions, paints, ropes and
other consumable stores (excluding spare parts) in the said Vessel at the actual purchased price as evidenced by supporting vouchers then current market prices at the ports of delivery and redelivery, respectively.
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“BARECON 2001” Standard Bareboat Charter
| 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 exercise due diligence to 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 and, except as provided for in Clause 14 (l), 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 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 costing (excluding the Charterers’ loss of time) more than the percentage stated in Box 23, or if Box 23 is left black, 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 the 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.
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“BARECON 2001” Standard Bareboat Charter
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.
(d) 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 name and/or the Classification Society 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.
(e) Changes to the Vessel – Subject to Clause 10(a)(ii) 43
of Rider Clauses, 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, which should not be
unreasonably withheld. 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 conditions 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. 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 the Charterers shall remove such equipment at the end of the period unless agreed otherwise by the Owners and the Charterers. . 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 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 least 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.
7 / 36
“BARECON 2001” Standard Bareboat Charter
| 11. | Hire |
(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. Please See Clause 36 of Rider Clauses.
(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 monthly 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
maintained in Box 26.
(d) Final payment of hire, if for a period less than thirty
(30) running days one (1) month, shall be calculated proportionally according to the number of days and hours remaining before delivery 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’ Associate (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 (only to apply if Box 28 has been appropriately filled in) |
|
|
| *) | (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, operations, 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 provided that a Quiet Enjoyment Agreement will be in place at the
time of mortgage registration the wording of which to be mutually agreed between the Owners and the Charterers. |
| *) | (Optional, Clause 12 (a) and 12 (b) are alternative; indicate alternative agreed in Box 28). |
8 / 36
“BARECON 2001” Standard Bareboat Charter
| 13. | Insurance and Repairs |
(a) During the Charter Period the Vessel shall be kept insured by the Charterers at their expense against hull and machinery, war by first
class insurers and Protection and Indemnity risks by a member of International Group of P&I club (and any risks against which it is compulsory to insure for the operation of the Vessel, including maintaining for the operation of the
Vessel, including maintaining financial security in accordance with sub-clause 10(a)(iii)) in the Charterers’ standard form as the Owners have received, reviewed and approved,. 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 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 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 or any warranty or guarantee under the Shipbuilding Contract 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) including any deviation, shall be for the Charterers’ account.
(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 part 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 polices 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 required to enable the Owners to comply with the insurance provisions of the Financial Instrument.
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“BARECON 2001” Standard Bareboat Charter
(d) Subject to the provisions of the Financial Instrument, 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 or
the Mortgagees who shall distribute the moneys between the Owners, the Mortgagees and the Charterers according to their respective interests, but so that the Mortgagee
shall never receive more than the Owners would otherwise have been entitled to under this Charter. 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. Please see clause 40 of Rider Clauses
(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 purposes 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 please refer to Box 29.
|
|
(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.
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“BARECON 2001” Standard Bareboat Charter
(f) All time used for repairs under the provisions of
sub-clause 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 insurance 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 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.
(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 |
At the expiration of the Charter Period the Vessel shall be redelivered by the Charterers at a safe and ice-free port or place as indicated in Box 16, in such ready safe berth as the Owner 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 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.
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“BARECON 2001” Standard Bareboat Charter
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 |
The Charterers will not suffer, nor permit to be continued, any lien or encumbrance incurred by them or their agents, which might have priority
over the title and interest of the Owners in the Vessel. 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 |
(a) The Charters shall indemnify the Owners against any loss, damage or 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 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, 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.
| 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.
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| 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 and Sub-Charter and Sale |
(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 Owner 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, and agreeing to be bound by, 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.
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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.
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| 25. | Requisition/Acquisition |
(a) In the event of 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 reminder 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 equal to the hire it receives from the relevant government and on the date its receives the same, 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 and the Purchase Option Price shall be increased by the aggregate daily amount of such shortfall prior to the payment of the Purchase
Option Price.
(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, which for the avoidance of any doubt, shall exclude requisition for use or hire not involving requisition of title (hereinafter referred to as “Compulsory Acquisition”), then, 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” but not thereafter.
| 26. | War |
(a) For the purpose of this Clause, the word “War Risk” 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), act of piracy, acts of terrorists, acts of hostility or malicious damage, blockages (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,
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 Risk. 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
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into it, the Owners shall have the right to require the Vessel to leave such area.(c) The Vessel shall not load contraband cargo, or to pass through any blockade, whether such
blockage be imposed on all vessels, or is imposed selectively in any war 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 risk 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, destination, 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 afny 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 as 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 she 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.
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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.
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If the full hire is not paid owing to breach of 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.
| 28. | Termination |
(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:
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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;
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(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.
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(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
compromised
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 either 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.
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In the event of the termination of this Clause in accordance with the applicable provisions of 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, the Charterers shall hold the Vessel as gratuitous bailee only to 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 |
| *) | (a) This Contract shall be governed by and construed in accordance with English law and any dispute arising out of this Contract shall be referred to arbitration in London in accordance with the Arbitration Acts 1996 or any statutory modification or re-enactment thereof save to the effect 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 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 give notice that it has done so within the 14 days
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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 not 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.
*) (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 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.
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(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:-
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(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 alternative; indicate alternative agreed in Box 35. |
| 31. | Notices. |
(a) Any notice to be given by either party to the other party shall be in writing and may be sent by fax, email, 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.
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“BARECON 2001” Standard Bareboat Charter
PART III
PROVISIONS TO APPLY FOR NEWBUILDING VESSLES ONLY
(Optional, only to apply if expressly agreed and stated in Box 37)
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(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.The Owners shall, at the Owners’ cost and expense, send to and maintain at the shipyard their representative to act in
connection with approval of the plans and drawings, attendance to the tests and inspections relating to the Vessel, its machinery, equipment and outfitting, and any other matters for which he is specifically authorized by the Owners.
(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. Clause 35(3) shall apply in
respect of any repairs, replacements or defects which appear within the first 12 months from delivery by the Builders. The Owners shall use their best endeavours to compel the Builders to repair, replace or remedy any defects and 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 Charterers shall be bound to accept such sums as the Owners are able to recover, having used their best endeavours, 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, replacements or remedying defects or for any loss of time incurred.
Any liquidated damages for physical defects or deficiencies shall accrue to the account 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. See Clause 34 and 35 of Rider Clauses
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(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 but 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 Owners 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. See Clause 39(3).
(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
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(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. See Clause 35 of Rider Clauses
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If not otherwise agreed, the Owners authorize 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 performances to the extent the Owners may request. See Clause 35 of Rider Clauses
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The name of the Vessel shall be decided by 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.
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The Owners and the Charterers shall appoint surveyors for the purpose of determining and agreeing in writing the conditions of the
Vessel at the time of redelivery.
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 rate of hire per day or pro rata.
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PART IV
HIRE/PURCHASE AGREEMENT
(Optional, only to apply if expressly agreed and stated in Box 42)
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 form 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.
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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.
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PART V
PROVISIONS TO APPLY FOR VESSELS REGISTERED IN A BAREBOAT CHARTER REGISTRY
(Optional, only to apply if expressly agreed and stated in Box 43)
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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.
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The Vessel chartered under this Clause is financed by a mortgage and the provision of Clause 12(b) (Part II) shall apply.
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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 have against the Owners under this
Charter.
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32. CONDITIONS PRECEDENT
| (1) | Conditions Precedent to Owners’ Obligations: As a condition precedent to performance by the Owners of their obligations hereunder, the following conditions shall be satisfied by the following date:- |
| (a) | Condition Precedent Documents from Charterers upon Execution: Receipt by the Owners of the following documents upon signing of this Charter:- |
| (i) | a certified copy of the resolutions of the board of directors of the Charterers authorizing them to execute this Charter; |
| (ii) | a certified true copy of the Memorandum and Articles of Association of the Charterers; |
| (b) | Condition Precedent Documents from Charterers upon Delivery: Receipt by the Owners of the following documents upon Delivery of the Vessel. |
| (i) | the Insurance Assignment duly executed by the Owners and the Charterers in favour of the Mortgagee, copies of the notices of assignment to the Insurers signed by the Owners and the Charterers, two originals of the letters of undertaking from the Insurers; |
| (c) | Continuation of Memorandum of Agreement: the Memorandum of Agreement being effective throughout the Pre-Delivery Period. |
| (d) | No Termination Event: no Termination Event arising and continuing during the Pre-Delivery Period, unless it is remedied or waived. |
| (2) | Conditions Precedent to Charterers’ Obligations: As a condition precedent to the Charterers being bound by their obligations hereunder, the following conditions shall be satisfied by the following dates:- |
| (a) | Condition Precedent Documents from Owners upon Execution: Receipt by the Charterers of the following documents upon signing of this Charter:- |
| (i) | a certified copy of the resolutions of the board of directors of the Owners authorizing them to execute this Charter; |
| (ii) | a certified true copy of the Articles of Incorporation of the Owners |
| (b) | Condition Precedent Documents from Owners by the delivery of the Vessel: Receipt by the Charterers of the following documents by the delivery of the Vessel: copy of the Quiet Enjoyment Agreement signed by the Mortgagee with the original to follow as soon as possible thereafter; |
| (c) | Continuation of Memorandum of Agreement: the Memorandum of Agreement being effective throughout the Pre-Delivery Period. |
33. ADDITIONAL PROVISION CONCERNING
SHIPBUILDING(DELETE)
34. ACQUSITION COST(DELETE)
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35. DELIVERY OF VESSEL AND OWNERS’ WARRANTY OF QUALITY, ETC.
| (1) | Protocol of Delivery and Acceptance |
The Owners and the Charterers shall sign, execute and deliver a Protocol of Delivery and Acceptance under the Memorandum of Agreement and under the Charter in a form and substance which shall constitute an absolute and conclusive evidence of delivery of the Vessel from the Owners to the Charterers.
36. HIRES AND EXTRA PAYMENTS
| (1) | Monthly Hire |
After delivery of the Vessel, the Charterers shall pay the hire monthly in advance as remuneration of letting of the Vessel for the charter period, which consist of (i) Monthly Fixed Hire and (ii) Variable Hire as follows.
| (i) | Monthly Fixed Hire is the sum of USD 229,166.67, which is equal to one seventy second (1/72) of USD 16,500,000.-, which is the initial Charter Principal Balance less USD 3,500,000-; and |
| (ii) | Monthly Variable hire is calculated from the number of the days in any relevant month and daily variable hire in accordance with the following formula: |
Monthly Variable Hire = Daily Variable Hire x the number of the days in the relevant month.
Daily Variable Hire = Charter Principal Balance x (3.00% + one (1) month ICE LIBOR as applicable for the month in respect of which such Daily Variable Hire is to be calculated) / 360
An applicable one (1) month ICE LIBOR shall be one month LIBOR administered by ICE Benchmark Administration Limited on five (5) Business Days prior to the first day of the relevant month.
If no Screen Rate is available for one month ICE LIBOR for any particular month, the applicable one month ICE LIBOR shall be the alternative rate as evidenced by and applicable under the loan or facility agreement (such evidence to be provided to the Charterers) between the Owners and the mortgagee(s) in box 28 and the spread over the alternative rate shall be adjusted.
The Owners shall notify the Charterers in writing of the Monthly Variable Hire due on any due date for hire by sending to the Charterers a duly issued invoice for that Monthly Variable Hire and Monthly Fixed Hire at least four (4) Banking Days before that due date.
Charter Principal Balance means USD20, 000,000 less the aggregate Monthly Fixed Hire as has at any relevant time been paid to the Owners.
| (2) | Absolute Obligations and Meaning of Day |
| (a) | Except in case of the Owners’ default hereunder which actually prevents the Charterers’ quiet use of the Vessel for the purpose of this Charter, the Charterers’ |
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| obligations to pay the Hires shall be absolute, and no-off hire shall be claimed by the Charterers for any reason whatsoever and the Charterers shall continuously and always be liable to pay the Hires unless and until:- |
| (i) | the Total Loss Compensation Date in the case of the occurrence of a Total Loss; or |
| (ii) | the redelivery of the Vessel to the Owners or to the Owners’ nominee |
| (b) | The Date of delivery, the Total Loss Compensation Date and the date of redelivery shall be treated as an entire one day regardless of the time of delivery, the time occurrence of a Total Loss and the time of redelivery. |
| (c) | “Day” shall be construed as Japan time |
| (3) | Extra Payments |
In addition to the above Hire, the Charterers shall pay to the Owners or arrange directly for the payment of the following items.
| (i) | Flag State’s Annual tonnage tax throughout the Charter Period. |
| (ii) | 50% of the registration cost of the Vessel to the Flag State |
| (iii) | Any other flag related costs excluding the costs related to the registration (except for its 50%, which to be borne by Charterers) and deletion of the Vessel to and from the Flag State and the recordation or discharge of any mortgage in favour of Owners’ financiers and/or any other costs related to Owners’ financing arrangements, which shall be for the Owners’ account. |
37. OPTION TO PURCHASE VESSEL
The Charterers shall have the option to purchase the Vessel at any time after the end of the third year after the Delivery Date on terms that they must exercise that option at least 3 months before the intended transfer of the Vessel to the Charterers.
The purchase price shall be in the following amount depending on the date of the exercise of the option:
At end of 3rd year : USD 12,117,500
At end of 4th year : USD 9,345,000
At end of 5th year : USD 6,572,500
At end of 6th year : USD 3,800,000
and if the option is exercised between such dates, the purchase price shall be reduced pro rata (the amount payable being herein called the “Purchase Option Price”).
Upon exercise by the Charterers of the purchase option under this Clause, the Owners and the Charterers shall enter into an MOA (the “MOA”) substantially in the form attached to this Charter at Exhibit B.
In case the Charterers purchase the Vessel in accordance with this Clause, the Vessel shall be redelivered under this Charter on the date of delivery of the Vessel to the Charterers under the MOA.
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38. TERMINATION EVENTS
Each of the following events shall be a “Termination Event” for purposes of this Charter: -
| (i) | if any hire installment or any other sum payable by the Charterers under this Charter is not paid within ten (10) Banking Days of its due date or (in the case only of sums expressed to be payable by the Charterers on demand) within fifteen (15) Banking Days following the date of demand therefor and such failure to pay is not remedied within seven (7) Banking Days(in Greece, New York and Japan ) of receipt by the Charterers of written notice from the Owners notifying the Charterers of such failure and requesting remedial actions ; or |
| (ii) | if : |
| (A) | Save in circumstances where requisition for hire or compulsory requisition result in termination of insurances for the Vessel, the Charterers shall at any time fail to effect or maintain any insurances required under this Charter; or that any insurer avoid or cancel any such insurances (other than where the relevant avoidance or cancellation results from an event or circumstance outside the reasonable control of the Charterers and the relevant insurances are reinstated or re-constituted in a manner meeting the requirements of this Charter within seven (7) days of such avoidance or cancellation); or |
| (B) | the Charterers commit any breach of or make any misrepresentation in respect of any such insurances the result of which is to entitle the relevant insurer to avoid the policy or otherwise to be excused or released from all or any of its liability thereunder to the Owners (unless, prior to the relevant insurer exercising any such right, he expressly and irrevocably waives the breach or misrepresentation in question); or |
| (C) | any of the said insurances ceases for any reason whatsoever to be in full force and effect (other than where the reason in question is outside the reasonable control of the Charterers and that the relevant insurances are reinstated or re-constituted in a manner meeting the requirements of this Charter within seven (7) days of such termination); or |
| (iii) | if the Charterers shall at any time fail to observe or perform any of their material obligations being any obligation relating to the condition of the Vessel and/or the validity of any security provided to the Owners under this Charter other than those obligations referred to in sub-clause (i) or sub-clause (ii), and such failure to observe or perform the said obligation is either not remediable or is not remedied within thirty (30) days of receipt by the Charterers of a written notice from the Owners requesting remedial action; or |
| (iv) | if any material representation or warranty by the Charterers in connection with the Charter shall prove to be untrue, inaccurate or misleading in any material respect when made (and such occurrence continues unremedied for a period of thirty (30) days after receipt by the Charterers of written notice from the Owners requesting remedial action): or |
| (v) if | a petition is presented (and not withdrawn or stayed within sixty (60) days) or an order shall be made or an effective resolution shall be passed for the administration or winding-up of the Charterers (other than for the purpose of a reconstruction or amalgamation during and after which the Charterers remain solvent the terms of |
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| which have been previously approved in writing by the Owners which approval shall not be unreasonably withheld); or |
| (vi) if | an encumbrancer shall take possession or an administrative or other receiver shall be appointed of the whole or any substantial part of the property, undertaking or assets of the Charterers or if an administrator of the Charterers shall be appointed (and, in any such case, such possession is not given up or such appointment is not withdrawn within sixty (60) days) or if anything analogous to any of the foregoing shall occur under the laws of the place of the Charterers’ incorporation, or |
| (vii) | if the Charterers apply to any court or other tribunal for, a moratorium or suspension of payments with respect to all or a substantial part of their debts or liabilities, or |
| (viii) | if the Vessel is arrested or detained (other than for reasons solely attributable to the Owners or to those for whom, for the purposes of this provision, the Owners shall be deemed responsible, including without limitation, any legal person who, at the date hereof or at any time in the future is affiliated with the Owners) and such arrest or detention is not lifted within sixty (60) days (or such longer period as the Owners shall reasonably agree in the light of all the circumstances) ; or |
| (ix) | if a distress or execution proceedings is levied against all or a substantial part of property or assets belonging to the Charterers and shall not be discharged or stayed within sixty (60) days; or |
| (x) | if any consent, authorization, license or approval necessary for the Charter to be or remain legally binding shall be materially adversely modified or is not granted or is revoked, suspended, withdrawn or terminated (provided that the occurrence of such circumstances shall not give rise to a Termination Event if the same are remedied within forty (40) days of the date of their occurrence). |
39. PRE-DELIVERY TERMINATION
| (1) Pre-Delivery | Termination |
If any of the following events arises before delivery of the Vessel to the Charterers, the Owners shall be entitled to terminate this Charter by giving a written notice to the Charterers:-
| (a) | when any Termination Event pursuant to Clause 38 has arisen and is continuing; or |
| (b) | if any of the conditions precedent under Clause 32 (1) is not satisfied or waived by such date and time as therein stipulated unless otherwise agreed by the parties to this Charter; or |
| (c) | Termination or Rescission of Memorandum of Agreement. |
| (2) | Cancellation of Commitment |
If this Charter is terminated pursuant to the paragraph (1) above, the Owners shall thereupon be released from any and all of their obligations, liabilities, undertakings and agreements whatsoever under this Charter.
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| (3) Termination | or Rescission of Memorandum of Agreement due to reasons beyond Owners’ control |
If this Charter is terminated because of termination or rescission of Memorandum of Agreement and such termination or rescission is due to reasons beyond the Owners’ control, the parties hereto shall be released from any obligations and liabilities whatsoever under this Charter.
(4) Failure to provide conditions precedent.
The Charterers shall be entitled to terminate this Charter by giving a written notice to the Owners if any of the conditions precedent under Rider Clause 32(2) is not satisfied or waived by such date and time as therein stipulated unless otherwise agreed by the parties to this Charter, and upon such termination the Charterers shall be released from any and all of their obligations, liabilities, undertakings and agreements whatsoever under this Charter.
40. TERMINATION DUE TO TOTAL LOSS
In the event that the Vessel becomes a Total Loss:-
| (a) | if any due date for Hire payment arises between the date of occurrence of a Total Loss and the date of receipt of any proceeds and/or the recoveries payable under insurance, the Charterers shall pay the hire then due and payable on each such due date of hire payment. |
| (b) | the Charterers shall procure that the Charter Principal Balance as at the Total Loss Compensation Date shall be paid to the Owners or the Mortgagees out of the proceeds and/or the recoveries payable under the Hull and Machinery Insurance and the War Risks Insurance or the compensation payable by the relevant government or authority in the case of Total Loss due to the Requisition of title (the “Requisition Compensation”), as the case may be, on or immediately after the date of receipt of proceeds and/or the recoveries payable under the insurances. If Total Loss proceeds are paid to the Owners or the Mortgagees, the Owners shall, or shall procure that the Mortgagees, pay to the Charterers any Total Loss Balance forthwith on receipt of such proceeds. |
Total Loss Balance = (B)—(A)
where
(A) = the Charter Principal Balance as of the Total Loss Compensation Date
(B) = the aggregate Total Loss proceeds
Total Loss Compensation Date is the date of receipt by the Owners and/or the Mortgagee and/or the Charterers of the proceeds/the recoveries
| (d) | If the amount of the insurance proceeds or the Requisition Compensations paid on the Total Loss Compensation Date is insufficient to cover the Charter Principal Balance, the Charterers shall pay the Total Loss Compensation or the amount of such deficiency to the Owners on the Total Loss Compensation Date; |
| (e) | on the Total Loss Compensation Date, the Charterers shall also pay (i) the Variable Hire calculated from the immediately preceding date on which Hire was due until the Total |
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| Loss Compensation Date; |
| (f) | if any proceeds and/or the recoveries of the insurance or the Requisition Compensation in respect of such Total Loss shall become payable after the full payment of the Total Loss Compensation to the Owners, the Owners shall give full co-operation so that those insurance proceeds or the Requisition Compensations shall be payable to the Charterers or to their order; |
| (g) | upon completion of the procedures in (a)(b)(c)(d) and (e) above, this Charter terminates. |
| (h) | Any proceeds and/or the recoveries payable under the Hull and Machinery Insurance and the War Risks Insurance or Requisition Compensation shall be paid (i) firstly in payment of Owners’ costs of collection, (ii) Secondly in payment of the Total Loss Compensation and (iii) thirdly in payment to the Charterers as compensation for early termination of this Charter. |
41. INSURANCE PROCEEDS
The policies in respect of the insurances against fire and usual marine risks and policies or entries in respect of the insurances against war risks shall, in each case, include the following loss payable provisions:-
| (a) | For so long as the Vessel is mortgaged and in accordance with the Deed of Assignment of insurances entered or to be entered into between the Charterers and any Mortgagee (the “Assignee”): |
“Until such time as the Assignee shall have notified the insurers to the contrary:
(i) All recoveries hereunder in respect of an actual, constructive or compromised or arranged total loss shall be paid in full to the Assignee without any deduction or deductions whatsoever;
(ii) All other recoveries not exceeding United States Dollars One million(US$1,000,000.00) shall be paid in full to the Charterers or to their order without any deduction or deductions whatsoever; and
(iii) All other recoveries exceeding United States Dollars One million (US$1,000,000.00) shall, subject to the prior written consent of the Assignee be paid in full to the Charterers or their order without any deduction whatsoever.
| (b) | During any periods when the Vessel is not mortgaged: |
“(i) All recoveries hereunder in respect of an actual, constructive or compromised or arranged total loss shall be paid in full to the Owners without any deduction or deductions whatsoever;
(ii) All other recoveries not exceeding United States Dollars five million (US$5,000,000.00) shall be paid in full to the Charterers or to their order without any deduction or deductions whatsoever; and
(iii) All other recoveries exceeding United States Dollars five million (US$5,000,000.00) shall, subject to the prior written consent of the Owners be paid in full to the Charterers or their order without any deduction whatsoever;
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and the Owners and Charterers agree to be bound by the above provisions
42. TERMINATION DUE TO TERMINATION EVENT
| (a) | Early Termination and Redelivery |
If any of the Termination Events as per Clause 38 has occurred and is continuing during the Charter Period, the Owners shall be entitled to terminate this Charter by giving a notice of termination to the Charterers and this Charter shall terminate upon receipt by the Charterers of such notice; and if this Charter is so terminated, the Owners shall be released from any and all of their obligations, liabilities and responsibilities under this Charter and the Charterers shall be obligated to redeliver the Vessel immediately or within a reasonable period of time at such place as provided for in Box 16 of Part I of this Charter. In the case that the Charterers refuse to redeliver the Vessel voluntarily, the Owners shall have the right to instruct the master of the Vessel to take the Vessel to such place at Charterers’ cost as the Owners shall nominate and to redeliver the Vessel to the Owners there.
| (b) | Redelivery Condition |
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. If the Vessel fails to satisfy such requirement, the Charterers shall be liable to pay the cost for repair or estimated loss. “”If there is a conflict between the opinion of the Owners and the opinion of the Charterers in relation to the condition of the Vessel, the Owners and Charterers may jointly appoint one independent surveyor of international reputation to assess the condition of the Vessel.
| (c) | Charterers’ Liability for Remaining Encumbrance |
The Vessel shall be redelivered to the Owners free from any Encumbrance whatsoever (save for the Mortgages or other Encumbrances attributable to the Owners), and the Charterers shall be liable to discharge or pay the necessary amount to discharge those Encumbrances (save for the Mortgages and other Encumbrances attributable to the Owners) accrued during the Charter Period. This liability of the Charterers shall continue to exist after redelivery of the Vessel.
| (d) | Termination Compensation |
If the Owners give notice pursuant to Clause 42(a) to terminate this Charter, the Charterers shall pay to the Owners on the date of termination (the “Termination Date”), the aggregate of (A) all hire due and payable, but unpaid, under this Charter to (and including) the Termination Date, (B) any sums, other than hire, due and payable by the Charterers, but unpaid, under this Charter and (C) the shortfall, if any, between (a) the current market value of the Vessel (hereinafter the “Market Value”, being the average value as estimated by two independent valuers such as major London brokers i.e. Arrow Valuations Ltd, Barry Rogliano Salles, Braemar ACM Shipbroking, H Clarkson & Co. Ltd., E.A. Gibsons Shipbrokers, Fearnleys, Galbraith, Simpson Spencer & Young, Howe Robinson & Co Ltd London and Maersk Broker K.S. (to include, in each case, their successors or assigns and such subsidiary or other company in the same corporate group through which valuations are commonly issued by each of these brokers), or such other first-class independent broker
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as the Owners and Charterers may agree in writing from time to time) and (b) the Charter Principal Balance as at the Termination Date PROVIDED ALWAYS that if the Market Value exceeds the aggregate of (A) and (B) above and the Charter Principal Balance, then the Owners shall pay the amount of such excess to the Charterers forthwith
43. NEW CLASS AND OTHER SECURITY REQUIREMENT
All expenses incurred for
(i) any improvements or structural changes to the Vessel; or
(ii) installation of new equipment on board the Vessel;
for the purposes of maintaining new class requirements of it being necessary for the continued operation by reason of new class requirements, or compulsory legislation during the term of the Charter, shall be for Charterers’ account.
If the new rules and regulations become effective during the Charter Period they shall be applied and maintained at the Charterers’ risk and expenses.
44. ASSIGNMENT OF CHARTER AND EARNINGS
The Owners may assign to the Mortgagee all or any part of their rights, title and interest in and to this Charter and transfer to the Mortgagee their contractual position as owners under this Charter and the Charterers shall execute an acknowledgement and consent of the Assignment of the Charter in form satisfactory to the Mortgages and the Charterers, subject to the Owners and Mortgagee executing a quiet enjoyment agreement in the form and content acceptable to the Charterers and the effectiveness of such assignment and/or any other security over the Vessel or this Charter is subject to agreement of the above mentioned quiet enjoyment agreement by the Owners, the Charterers and the Mortgagee before delivery of the Vessel.
45. QUIET ENJOYMENT
The Charterers shall enter into the Quiet Enjoyment Agreement with the Mortgagee whereby the Mortgagee shall agree that except in the case of occurrence of any Termination Event which is continuing and has not been remedied or waived, the Mortgagee shall not enforce the Mortgage in such a way as shall prevent the Charterers from having quiet use and enjoyment of the Vessel and that in the case of occurrence of any event of default under the Mortgage, the Mortgagee may nominate a third party who must be acceptable to the Charterers and who shall take over the contractual position of the Owners hereunder and shall enter into and execute all documentation necessary to do so.
46. ASSIGNMENT OF INSURANCE
The Charterers hereby agree to assign with the Owners whereby the insurance in respect to the Vessel shall be assigned in favor of the Mortgagee of the Vessel.
The Charterers hereby agrees to provide upon delivery date of the Vessel, to the Owners with a copy of all policies of the insurances and entry certificate of the P & I Club with respect of the Vessel, on which a Notice of Assignment, Loss Payable and Cancellation Clause in the form to be agreed have been duly contained or endorsed as an integral part of these policies, certificates and contracts, and Letters of Undertaking in the form to be agreed, shall be arranged and issued in accordance with usual insurance market practice for these types of insurance.
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47. TRADING IN WAR RISK AREA
The Charterers shall be permitted to order the Vessel into an area subject to War Risk as defined in Clause 26 without consent of the Owners provided that all Marine, War and P&I Insurance are maintained with full force and effect and the Charterers shall pay any and all additional premiums to maintain such insurance.
48. MISCELLANEOUS
| (a) | Unless otherwise agreed in writing, no failure by either party to exercise any right or remedy available to it hereunder nor any delay so to exercise any such right to remedy shall operate as a waiver of it nor shall any single or partial exercise of any right or remedy preclude any other or further exercise thereof or the exercise of any other right or remedy. |
| (b) | This agreement is severable if any term or condition of this Charter is determined to be illegal unenforceable by any court of competent jurisdiction, such provision shall be deemed to have been deleted without affecting the remaining provisions of this agreement. |
| (c) | The Charterers and the Owners hereby agree that in connection with this Charter and/or any other business transactions related to it, they as well as their sub-contractors and each of their affiliates, directors, officers, employees, agents, and every other person acting on its and its sub-contactors’ behalf, shall perform all required duties, transactions and dealings in compliance with all applicable laws, rules, regulations relating to anti-bribery and anti-money laundering. |
| (d) | The Charterers and the Owners hereby agree that (i) no person(s) or entity/ies under this Charter will be individual(s) or entity/ies designated under any applicable national or international law imposing trade and economic sanctions and (ii) the performance of this Charter will not require any action prohibited by sanctions or restrictions under any applicable national or international law imposing trade and economic sanctions. |
49. NOTICE
Any communication, demand or notice to be given hereunder shall be given in writing by hand or sent by postage prepaid registered mail (registered airmail if sent overseas) or facsimile transmission or email as follows (or to each party, at such other address or number as such party may designate by notice in writing to the other party):
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| To: Owners: | ASL NAVIGATION S.A., | |||
| c/o Abo Shoten Co, Ltd. | ||||
| 18-10, 2-chome, Tsuchido, Onomichi, | ||||
| Hiroshima-prefecture, Japan | ||||
| Facsimile: +81-848-20-1022 | ||||
| Email: info@abo.co.jp | ||||
| To: Charterers: | PHAROS NAVIGATION S.A., | |||
| c/o Navios Shipmanagement Inc, | ||||
| 83 Akti Miaouli Str. | ||||
| 18538 Piraeus, | ||||
| Greece, | ||||
| Facsimile: | ||||
| Email: legal@navios.com | ||||
| tech@navios.com | ||||
| legal_corp@navios.com | ||||
50. DEFINITIONS
In this Charter, unless the context otherwise requires, the following expressions shall have the following meanings
“Delivery Date” means the date of delivery of the Vessel by the Owners to the Charterers under this Charter;
“Market Value” of the Vessel means at any relevant time the current market value of the Vessel being the average value as estimated by two independent valuers such as major London brokers i.e. Arrow Valuations Ltd, Barry Rogliano Salles, Braemar ACM Shipbroking, H Clarkson & Co. Ltd., E.A. Gibsons Shipbrokers, Fearnleys, Galbraith, Simpson Spencer & Young, Howe Robinson & Co Ltd London and Maersk Broker K.S.;
“Mortgagee” means Sumitomo Mitsui Trust Bank, Limited of Japan;
“Pre-Delivery Period” means the period beginning on the date of this Charter and ending on the Delivery Date;
“Quiet Enjoyment Agreement” means an agreement made by the Charterers with Mortgagee in a form acceptable to the Charterers in which the Mortgagee undertakes not to enforce its mortgage over the Vessel as long as no Termination Event has occurred which is contining;
“Total Loss” means any of the following events:- (a) the Vessel shall become an actual, constructive, compromised or agreed total loss or (b) a Compulsory Acquisition or (c) the Vessel shall be seized by or forfeited to, any governmental authority.
“Memorandum of Agreement” means a Contract dated MMMM DDth, YYYY between the Charterers as seller and the Owners as buyer whereby the Charterers have agreed to sell the Vessel to the Owners, and the Owners have agreed to purchase the Vessel.
= End of Rider Clauses =
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Exhibit 4.72
| ‘BARECON 2001” STANDARD BAREBOAT CHARTER | PART 1 | |||||
| 1. Shipbroker
ITOCHU CORPORATION TOKBR Section, 5-1, Kita-Aoyama 2-chome, Minato-ku, Tokyo, 107-8077, Japan |
BIMCO STANDARD BAREBOAT CHARTER CODE NAME : “BARECON 2001” PART I 2. Place and date
In New York, U.S.
XX XXXXX, 2021 | |||
| 3. Owners / Place of business (Cl. 1)
Juno Marine Corp., Paseo Del Mar and Pacific Avenues Coasta del Este, MMG Tower, 23rd Floor, Panama City, Republic of Panama |
4. Bareboat Charterers / Place of business (Cl. 1)
Rumer Holding Ltd. Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, MH96960, Marshall Islands | |||
| 5. Vessel’s name, call sign, flag and IMO number (Cl. 1 and 3)
M/V NAVIOS ANTARES, 3EXD4, Panama, 9481257 |
||||
| 6. Type of Vessel
Bulk Carrier |
7. GT / NT
88,421 /56,329 |
|||
| 8. When / Where built
2010, Sungdong S.B. & Marine Eng’g Co., Ltd. |
9. Total DWT (abt.) in metric tons on summer freeboard
169,059 MT | |||
| 10. Classification Society (Cl. 3)
American Bureau of Shipping (ABS) |
11. Date of last special survey by the Vessel’s classification society
4th June, 2020 | |||
| 12.
Cargoes to be carried; All lawful cargoes within the Vessel’s capabilities/Class, IMO, flag, her insurance | ||||
| 13. Port or Place of delivery (Cl.3)
As per Clause 5 of the MOA (as defined in Clause 1 hereof) |
14. Time for delivery (Cl.4)
As per Clause 5 of the MOA See Also Clause 32. |
15. Cancelling date (Cl.5)
N/A | ||
| 16. Port or Place of redelivery (Cl. 3)
N/A |
17. No. of months’ validity of trading and class certificates upon redelivery (Cl. 15)
Minimum 3 months | |||
| 18. Running days’ notice if other than stated in Cl.4
N/A |
19. Frequency of dry-docking Cl. 10(g)
As per Classification Society and flag state requirements | |||
| 20. Trading Limits (Cl.6)
Trading Limits: always safely afloat world-wide within International Navigation Conditions with the Charterer’s option to break same paying extra insurance, but always in accordance with Clause 13 and 40.
Any other country designated pursuant to any international (including U.N. / U.S. / EU / UK) or supranational law or regulation imposing trade and economic sanctions, prohibitions or restrictions (which may be amended from time to time during the Charter Period) to be excluded. | ||||
| 21. Charter Period (Cl. 2)
Firm Seven (7) years with up to 3 months more or less in Charterers’ option (See Clause 34) |
22. Charter hire (Cl. 11)
See Clause 35 |
|||
| 23. New class and other statutory requirements (state percentage of Vessel’s insurance value acc. to Box 29 (Cl. 10(a)(ii))
N/A |
||||
| 24. Rate of interest payable acc. to Cl.11(f) and, if applicable, acc. to PART IV
N/A |
25. Currency and method of payment (Cl.11)
United States Dollars payable calendar monthly in advance | |||
| 26. Place of payment; also state beneficiary and bank account (Cl. 11)
To be advised |
27. Bank guarantee / bond (sum and place) (Cl. 24 (optional)
N/A | |||
| 28. Mortgage(s), if any (state whether Cl. 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 Clause 44 |
29. Insurance (hull and machinery and war risks) (state value acc. to Cl.13(f) or, if applicable, acc. to Cl. 14(k)) (also state if Cl.14 applies)
See Clause 40 | |||
| ‘BARECON 2001” STANDARD BAREBOAT CHARTER | PART 1 | |||||
| 30. Additional insurance cover, if any, for Owners’ account limited to (Cl. 13(b) or, if applicable, Cl. 14(g))
N/A |
31. Additional insurance cover, if any, for Charterers’ account limited to (Cl. 13(b) or, if applicable, Cl. 14(g))
See Clause 40 (c) | |
| 32. Latent defects (only to be filled in if period other than stated in Cl.3)
N/A |
33. Brokerage commission and to whom payable (Cl.27)
N/A | |
| 34. Grace period (state number of clear banking days) (Cl. 28)
See Clause 41 |
35. Dispute Resolution (state 30(a), 30(b) or 30(c); if 30(c) agreed, Place of Arbitration must be stated (Cl. 30)
London | |
| 36. War cancellation (indicate countries agreed) (Cl. 26(f))
N/A |
||
| 37. Newbuilding Vessel (indicate with ‘yes’ or ‘no’ whether PART III applies) (optional)
No |
38. Name and place of Builders (only to be filled in if PART III applies)
N/A | |
| 39. Vessel’s Yard Building No. (only to be filled in if PART III applies)
No |
40. Date of
N/A | |
| 41. Liquidated damages and costs shall accrue to (state party acc. to Cl. 1)
a) N/A
b) N/A
c) N/A |
||
| 42. Hire/Purchase agreement (indicate with ‘yes’ or ‘no’ whether PART IV applies) (optional)
N/A |
43. Bareboat Charter Registry (indicate with ‘yes’ or ‘no’ whether PART IV applies) (optional)
Yes in Charterers’ option | |
| 44. Flag and Country of the Bareboat Charter Registry (only to be filled in if PART V applies)
See Clause 37 |
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
Clause 32 to 56 inclusive |
||
| PREAMBLE - It is mutually agreed that this Contract shall be performed subject to the conditions contained in this Charter which shall include PART I and PART II. In the event of a conflict of conditions, the provisions of PART I shall prevail over those of PART II to the extent of such conflict but no further. It is further mutually agreed that PART III and/or PART IV and/or PART V shall only apply and shall only form part of this Charter if expressly agreed and stated in Boxes 37, 42 and 43. If PART III and/or PART IV and/or PART V apply, it is further agreed that in the event of a conflict of conditions, the provisions of PART I and PART II shall prevail over those of PART III and/or PART IV and/or PART V to the extent of such conflict but no further. | ||
| Signature (Owners) | Signature (Charterers) | |
| Juno Marine Corp. | Rumer Holding Ltd. | |
| By: | By: | |
| Title: Attorney-in-fact | Title: Attorney-in-fact | |
PART II
“BARECON 2001” Standard Bareboat Charter
| 1. | Definitions |
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.
“MOA” means the Memorandum of Agreement entered into between the Owners as buyers and the Charterers as Sellers dated XX XXXXX 2021 in respect of the Vessel.
“Banking Days” shall mean the days identified in Cl.36 (b)
“Total Loss” shall mean the situation identified in Cl.40 (a)
| 2. | Charter Period |
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 Also See Clause 32 |
The Vessel shall be delivered and taken over by the Charterers as per Clause 32.
(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 Clause 32 |
(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 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 date, the
Owners may, as soon as they are in 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 Owners’ prior approval has been obtained to loading thereof.
| 7. | Surveys on Delivery and Redelivery |
(not applicable when PART III applies, as indicated in Box 37)
The Owners and Charterers have the right of shall each appointing surveyors for the purpose of determining and
agreeing in writing the condition of the Vessel at the time of delivery.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.
| 8. | Inspection |
The Owners shall have the right maximum twice per year (and more time in the case of necessity) maximum twice
per year 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:-
provided it does not interfere with the operation of the Vessel and/or crew
(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
PART II
“BARECON 2001” Standard Bareboat Charter
(c)for any other commercial reason they consider necessary (provided it does not
unduly interferer 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 log books maximum twice per year (and more
time in the case of Necessity) maximum twice per year whenever reasonably 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 CLAUSE 52 |
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. 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. SEE ALSO CLAUSE 32
| 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 exercise due diligence to 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 and |
| (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 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. SEE CLAUSE 38
| (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.
(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 de-registration, if required by the Owners, shall be at the Charterers’ expense and time. SEE CLAUSE 37 & 43
(e) Changes to the Vessel - 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.
SEE CLAUSE 38
(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 substantially 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. 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 the Charterers shall remove such equipment at the end of the period unless agreed otherwise by the Owners and the Charterers. 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 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
PART II
“BARECON 2001” Standard Bareboat Charter
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.
| 11. | Hire SEE CLAUSE 35 |
(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 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 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) of 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 CLAUSE 44 |
(only to apply if Box 28 has been appropriately filled in)
| *) |
|
| *) |
|
| *) | (Optional, Clauses 12 (a) and 12 (b) are alternatives; indicate alternative agreed in Box 28). |
| 13. | Insurance and Repairs SEE CLAUSE 40 |
(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 underwriter’s standard form as the Owners have
received, reviewed and shall in writing approved, which approval shall not be unreasonably withheld.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 mortgagees (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 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.
(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 Instrument, 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 the 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. SEE CLAUSE 40
(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. SEE CLAUSE 40
| 14. | Insurance, Repairs and Classification N/A |
(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 expenses against hull and machinery
and war risks under the form of policy or
PART II
“BARECON 2001” Standard Bareboat Charter
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-clause 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.
(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. |
|
At the expiration of the Charter Period the Vessel shall be redelivered by the Charterers to the Owners at a safe
berth or anchorage 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 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
5 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 the
Charter shall continue to apply.
Subject to the provisions of Clause
10, the Vessel shall be redelivered to the Owners in substantially 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 ALSO SEE CLAUSE 47 |
The Charterers will not suffer, nor permit to be continued, any lien or encumbrance incurred by them or their agents, which might have
priority over the title and interest of the Owners in the Vessel.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 ALSO SEE CLAUSE 54 |
(a) The Charterers shall indemnify the Owners against any loss, damage or 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 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.
PART II
“BARECON 2001” Standard Bareboat Charter
(b) If the Vessel be arrested or otherwise detained by reason of a claims or claims against the Owners, 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.
| 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 |
(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. Such Owners’ prior consent shall not be required provided that the
Vessel remains at all times under the management of Navios Shipmanagement Inc. or an affiliate of Navios Shipmanagement Inc.
(b) The Owners shall not sell the Vessel during he 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. SEE CLAUSE48
| 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. |
| *) |
|
| *) | Delete as applicable. |
| 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 ALSO SEE CLAUSE 40 (a)/(b) |
(a) In the event of the requisition for Hire of the Vessel by any governmental or other competent authority (hereinafter referred to a “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) Notwithstanding the provisions of clause 25 (a), 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, which for the avoidance of any doubt, shall exclude requisition for use or hire not involving requisition of title (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”, but not thenafter.
| 26. | War |
(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,
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 the entry into it, the Owners shall have the right to require the Vessel to leave such area.
(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 risk 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
PART II
“BARECON 2001” Standard Bareboat Charter
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 and 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 therefore 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.
| 28. | Termination |
(a) Charterer’s 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:
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(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;
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(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 compromised 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. SEE CLAUSE 40
(d)/(e)
(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 arrangements 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 |
In the event of the termination of this Charter in accordance with the applicable provisions of 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, the Charterers shall
PART II
“BARECON 2001” Standard Bareboat Charter
hold the Vessel as gratuitous bailee only to 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 |
| *) | (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.
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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 conduced in accordance with the Shortened Arbitration Procedure of the Society of Maritime Arbitrators, Inc. current at
the time when the arbitration proceedings are commenced.
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(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.
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(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.
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(Note: the parries 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 CLAUSE 50 |
(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.
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| “BARECON 2001” Standard Bareboat Charter |
OPTIONAL PART | |||
| PART III | ||||
| PROVISIONS TO APPLY FOR NEWBUILDING VESSELS ONLY (Optional, only to apply if expressly agreed and stated in Box 37) | ||||
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(a) The Vessel shall be constructed in accordance with the Building Shipbuilding Contract (hereafter called
“the ‘Shipbuilding Building Contract’) as annexed to this Charter, made between the Builders and the Sellers Owners and in accordance with the specifications and plans annexed thereto, such
Building Contract, specifications and plans having been countersigned as approved by the Charterers.
(b) No change
shall be made in the Shipbuilding 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 Charterers 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 account 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.
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(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 but the
delivery date for the purpose of the 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 Sellers Owners under the Shipbuilding
Contract, the Builders become entitled under that Contract not to deliver the Vessel to the Sellers, the Owners 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 of 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; SEE CLAUSE 33
(iv) if this Charter terminates under sub-clause (b) 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. |
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If not otherwise agreed, the Owners authorise the Charterers to arrange for the guarantee works to be performed in accordance with
the Shipbuilding 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.
| 4. |
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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. |
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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 redelivery.
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 rate of hire per day or pro rata.
| “BARECON 2001” Standard Bareboat Charter |
OPTIONAL PART | |||
| PART IV | ||||
| HIRE/PURCHASE AGREEMENT (Optional, only to apply if expressly agreed and stated in Box 42) | ||||
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 expense 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 legalised, 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 Maser, 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 of their journey to any other place.
| “BARECON 2001” Standard Bareboat Charter |
OPTIONAL PART | |||
| PART V | ||||
| PROVISIONS TO APPLY FOR VESSELS REGISTERED IN A BAREBOAT CHARTER REGISTRY (Optional, only to apply if expressly agreed and stated in Box 43) | ||||
| 1. |
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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. |
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The Vessel chartered under this Charter is financed by a mortgage and the provisions of Clause
12(b) (PART II) shall apply.
| 3. |
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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.
Additional Clauses
to
the Bareboat Charter Party dated XX XXXXXX, 2021 (this “Charter”) by
Juno Marine Corp., as owner (the “Owners”) and
Rumer Holding Ltd. as charterer (the “Charterers”)
in respect of MV “Navios Antares” (the “Vessel”)
| 32. | DELIVERY |
(a) The Charterers shall take delivery of the Vessel under this Charter simultaneously with delivery by Charterers as sellers to the Owners as buyers under the MOA, and the Owners shall be obliged to deliver the Vessel to the Charterers hereunder in the same moment as the Owners is taking delivery of the Vessel under the MOA.
(b) The Owners warrant that the Vessel, at time of delivery, is free from all charters, encumbrances, mortgages and maritime liens or any other debts whatsoever, other than (i) those incurred prior to the delivery of the Vessel hereunder, (ii) this Charter and (iii) the mortgage over the Vessel, assignment of insurance in respect of the Vessel and the assignment of the charter hires in respect hereof in favour of the Mortgagee.
(c) The Vessel shall be delivered under this Charter in the same condition and with the same equipment, inventory and spare parts as she is delivered to the Owners under the MOA. The Charterers know the Vessel’s condition at the time of delivery, and expressly agree that the Vessel’s condition as delivered under the MOA is acceptable and in accordance with the provisions of this Charter. The Vessel shall be delivered to the Charterers under this Charter strictly “as is/where is”, and the Charterers shall waive any and all claims against the Owners under this Charter on account of any conditions, seaworthiness, representations, warranties expressed or implied in respect of the Vessel (including but not limited to any bunkers, oils, spare parts and other items whatsoever) on delivery.
| 33. | ISM CODE |
During the currency of this Charter the Charterers shall procure at the costs and expenses and time of the Charterers that the Vessel and the “company” (as defined by the ISM code) shall comply with the requirements of the ISM code. Upon request the Charterers shall provide a copy of relevant documents of compliance (DOC) and safety management certificate (SMC) to the Owners. For the avoidance of any doubt any loss, damage, expense or delay caused by the failure on the part of the “Company” to comply with the ISM code shall be for the Charterers’ account.
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| 34. | CHARTER PERIOD |
| (a) | The Owners shall let to the Charterers and the Charterers shall take the Vessel on charter for the period and upon the terms and conditions contained herein. |
| (b) | Subject always to the provisions hereto, the period of the chartering of the Vessel hereunder (hereinafter referred to as the “Charter Period”) shall comprise (unless terminated at an earlier date in accordance with the terms hereof) a charter period of Seven (7) years from the date of the delivery of the Vessel by the Owners to the Charterers under this Charter (the “Delivery Date”) with up to three (3) months more or less in the Charterers’ option, provided always that the chartering of the Vessel hereunder may be terminated by the Owners pursuant to Clause 41 or shall terminate in the event of the Total Loss or Compulsory Acquisition of the Vessel subject to, and in accordance with provisions of Clause 40. |
| 35. | CHARTER HIRE |
| (1) | Monthly Hire |
After delivery of the Vessel, the Charterers shall pay the hire monthly in advance as remuneration of letting of the Vessel for the charter period, which consist of (i) Monthly Fixed Hire and (ii) Variable Hire as follows.
I. Monthly Fixed Hire : USD7,565 / day
II. Monthly Variable hire is calculated from the number of the days in any relevant month and daily variable hire in accordance with the following formula:
Monthly Variable Hire = Outstanding Balance (the table of Outstanding Balance shall be attached to this contract as appendix) x (2.0% + one (1) month ICE LIBOR as applicable for the month in respect of which such Monthly Variable Hire is to be calculated) x (the number of the days in the relevant month) / 360
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Applicable One (1) month ICE Libor to be confirmed 3 Banking days prior to the end of every month falling immediately the due date for Charter Hire of the calendar month. The Owners shall notify the Charterers in writing of the Monthly Variable Hire due on any due date for hire by sending to the Charterers a duly issued invoice for that Monthly Variable Hire and Monthly Fixed Hire at least three (3) Banking Days before that due date.
Outstanding Balance means USD 19,000,000 less the aggregate Monthly Fixed Hire as has at any relevant time been paid to the Owners.
Should the ICE LIBOR falls to negative interest rate, zero (0) is to be applied as ICE LIBOR.
ICE LIBOR means the London interbank offered rate administered by ICE Benchmark Administration Limited (or any other person which takes over the administration of that rate) for dollars for the relevant period displayed Applicable Date defined as follows on page LIBOR 01 or LIBOR 02 of the Thomson Reuters screen (or any replacement Thomson Reuters page which displays that rate) or on the appropriate page of such other information service which publishes that rate from time to time in place of Thomson Reuters. If such page or service ceases to be available, the Parties shall, following consultation with their bankers, specify another page or service displaying the relevant rate
No address commission to the Charterers.
| (2) | Absolute Obligations and Meaning of Day |
| (a) | Except in case of the Owners’ default hereunder which actually prevents the Charterers’ quiet use of the Vessel for the purpose of this Charter, the Charterers’ obligations to pay the Hires shall be absolute, and no-off hire shall be claimed by the Charterers for any reason whatsoever and the Charterers shall continuously and always be liable to pay the Hires unless and until:- |
| (i) | the Total Loss Compensation Date in the case of the occurrence of a Total Loss |
| (ii) | the redelivery of the Vessel to the Owners or to the Owners’ nominee |
| (b) | The Date of delivery, the Total Loss Compensation Date and the date of redelivery shall be treated as an entire one day regardless of the time of delivery, the time occurrence of a Total Loss and the time of redelivery. |
| (c) | ”Day” shall be construed as Japan time |
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| 36. | PAYMENTS |
| (a) | Notwithstanding anything to the contrary contained in this Charter, all payments by the Charterers hereunder (whether by way of hire or otherwise) shall be made as follows:- |
| (i) | not later than 11:00 a.m. (New York time) on one Banking Day prior to the date on which the relevant payment is due under the terms of this Charter: and |
| (ii) | in United States Dollars to THE CHUGOKU BANK, LTD. (or such other bank or banks as may from time to time be notified by the Owners to the Charterers by not less than fourteen (14) days’ prior written notice) for the account of the Owners . |
| (b) | If any day for the making of any payment hereunder shall not be a Banking Day (being, for all purposes of this Charter, a day on which banks are open for transaction of business of the nature required by this Charter in Japan, Piraeus/Greece, London and New York) the due date for payment of the same shall be the immediately preceding Banking Day. |
| (c) | Subject to the terms of this Charter, the Charterers’ obligation to pay hire in accordance with the requirements of Clause 35 and this Clause 36 and to pay certain amount of insurance benefit pursuant to Clause 40 (e) and to pay the Termination Compensation pursuant to Clause 42 shall be absolute irrespective of any contingency whatsoever, including (but not limited to) (i) any failure or delay on the part of any party hereto or thereto, whether with or without fault on its part, other than the Owners, in performing or complying with any of the terms or covenants hereunder, (ii) any insolvency, bankruptcy, reorganization, arrangement, readjustment of debt, dissolution, liquidation or similar proceedings by or against the Owners or the Charterers or any change in the constitution of the Owners or the Charterers or any other person, (iii) any invalidity or unenforceability or lack of due authorization of or other defect in this Charter, or (iv) any other cause which would or might but for this provision have the effect of terminating or in any way affecting any obligation of the Charterers under this Charter. |
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| (d) | In the event of failure by the Charterers to pay on the due date for payment thereof under this Charter, or in the case of a sum payable on demand, within ten (10) Banking Days of the date of demand, any hire or other amount payable by them under this Charter, the Charterers shall pay to the Owners on demand interest on such hire or other amount from (and including) the date of such failure to (and including) the date of actual payment (both before and after any relevant judgment or winding up of the Charterers) at the rate to be the aggregate of (i) two & one-half per centum (21⁄2 %) and (ii) the London Interbank Offered Rate for US Dollar deposits of not more than one month’s duration (as selected by the Owners or their funders in the light of the likely duration of the default in question) (as such rate is from time to time quoted by leading banks in the London Interbank Market). |
Interest payable by the Charterers as aforesaid shall be compounded at such intervals as the Owners shall determine and shall be payable on demand.
| (e) | Any interest payable under this Charter shall accrue from day to day and shall be calculated on the actual number of days elapsed and a three hundred and sixty (360) day year. |
| (f) | In this Charter, unless the context otherwise requires, “month” means a period beginning in one calendar month (and, in the case of the first month, on the date of delivery hereunder) and ending in the succeeding calendar month on the day numerically corresponding to the day of the calendar month in which such period started provided that if there is no such numerically corresponding day, such period shall end on the last day in the relevant calendar month and “monthly” shall be construed accordingly. |
| 37. | FLAG AND CLASS |
| (a) | The Vessel shall upon the Delivery Date be registered in the name of the Owners under the Panamanian flag. |
| (b) | The Owners shall have no right either to transfer the flag of Vessel from Panama to any other registry or to require the Charterers to transfer the Vessel’s classification society. The Charterers shall, at any time after the Delivery Date and at the Charterers’ expense, have the right to transfer the Vessel’s classification society from American Bureau of Shipping (ABS) to any other classification society at least equivalent to ABS. |
| (c) | Further, in the event that the Charterers need to change the flag of the Vessel, the Charterers can change the flag with the Owner’s consent, which should not be unreasonably withheld, provided however that any expenses and time (including but not limited to legal charges for finance documents for the Mortgagee) shall be for the Charterers‘account. |
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| (d) | Subject to the Charterers’ supplying the standard de-registration agreement reasonably satisfactory to the Mortgagee and with the prior written consent of the Owner which shall not be unreasonably withheld, the Charterers are entitled to establish the standard bareboat registration on the Vessel at the costs, expense and time of the Charterers. |
| (e) | If during the Charter Period there are any modifications, improvements, structural changes or new equipment made to the Vessel which are compulsory for the Vessel to comply with change to rules and regulations and/or new requirements (including but not limited to IMO) to which operation of the Vessel is required to conform, the cost, time and risk relating to such modifications shall be for the account of the Charterers. |
| (f) | All operational cost including required cost in relation to Vessel’s flag (such as tonnage tax, insurance and crew certs etc) would be for Charterers account. However, the Owners’ financing cost and cost for registration and discharge of their mortgage and other security documents in respect of the Vessel would be for Owners account, and Owners and Charterers shall equally bear initial registration cost to Vessel’s flag under Owners’ name. For the bareboat charter and the sale of the vessel, each party should bear its own costs. |
| 38. | IMPROVEMENT AND ADDITIONS |
The Charterers shall have the right to fit additional equipment and to make severable improvements and additions at their expense and risk. Such additional equipment, improvements and additions shall be removed from the Vessel without causing any material damage to the Vessel (any such damage being made good by the Charterers at their time and expense) provided however that the Charterers shall redeliver the Vessel without removing such additional equipment, improvements and additions if the Owners consent to such non-removal before the redelivery.
The Charterers shall also have the right to make structural or non-severable improvements and additions to the Vessel at their own time, costs and expense and risk provided that such improvements and additions do not diminish the market value of the Vessel and are not likely to diminish the market value of the Vessel during or at the end of the Charter Period and do not in any way affect or prejudice the marketability or the useful life of the Vessel and are not likely to affect or prejudice the marketability or the useful life of the Vessel during or at the end of the Charter Period.
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| 39. | UNDERTAKING |
The Charterers undertake and agree that throughout the Charter period they will:-
| (a) | use reasonable endeavors to and as soon as practicably possible notify the Owners in writing of any Termination Event (or event of which they are aware which, with the giving of notice and/or lapse of time or other applicable condition, would constitute a Termination Event); |
| (b) | use reasonable endeavors to and as soon as practicably possible notify the Owners in writing of any accident to the Vessel involving repairs the cost of which will or is likely to exceed US Dollars Five Hundred Thousand (US$500,000.00-) or the equivalent in any other currency; |
| (c) | use reasonable endeavors to and as soon as practicably possible notify the Owners in writing of any occurrence in consequence whereof the Vessel has become or is likely to become a Total Loss (as defined in Clause 40 (e) hereof) or the Compulsory Acquisition (as defined in Clause 25 (b) hereof); or |
| (d) | use reasonable endeavors to and as soon as practicably possible notify the Owners in writing of any capture, seizure, arrest or detention of the Vessel or requisition for use or hire of the Vessel; or |
| (e) | supply to the Owners copies of the survey reports issued in respect of such periodical or other surveys as may be required for classification purposes upon requests; or |
| (f) | provide reasonable documents relating to cargo carried on board the Vessel upon requests in connection with sanction diligence only |
| 40. | INSURANCE, TOTAL LOSS AND COMPULSORY ACQUISITION |
| (a) | For the purposes of this Charter, the term “Total Loss” shall include actual or constructive or compromised or agreed or arranged total loss of the Vessel including any such total loss as may arise during a requisition for hire. “Compulsory Acquisition” shall have the meaning assigned thereto in Clause 25(b) hereof. |
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| (b) | The Charterers undertake with the Owners that throughout the Charter Period:- |
| (i) | they will keep the Vessel insured in underwriter’s standard form as the Owners shall in writing approve, which approval shall not be unreasonably withheld, with such insurers (including P&I and war risks associations) as shall be reasonably acceptable to the Owners with deductibles reasonably acceptable to the Owners (it being agreed and understood by the Charterers that there shall be no element of self- insurance or insurance through captive insurance companies without the prior written consent of the Owners); |
| (ii) | they will be properly entered in and keep entry of the Vessel with P&I Club that is a member of the International Group of Protection and Indemnity Association for the full commercial value and tonnage of the Vessel and against all prudent P&I Risks in accordance with the rules of such association or club including, in case of oil pollution liability risks equal to the highest level of cover from time to time available under the basic entry with such P&I (but always a minimum of USD1,000,000,000.); |
| (iii) | The policies in respect of the insurances against fire and usual marine risks and policies or entries in respect of the insurances against war risks shall, in each case, include the following loss payable provisions:- |
| (a) | For so long as the Vessel is mortgaged and in accordance with the Deed of Assignment of insurances entered or to be entered into between the Charterers and any mortgagee (the “Assignee”): |
Until such time as the Assignee shall have notified the insurers to the contrary:
| (i) | All recoveries hereunder in respect of an actual, constructive or compromised or arranged total loss shall be paid in full to the Assignee without any deduction or deductions whatsoever and applied in accordance with clause 40 (e); |
| (ii) | All other recoveries not exceeding United States Dollars Five Hundred Thousand (US$500,000.00) shall be paid in full to the Charterers or to their order without any deduction or deductions whatsoever; and |
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| (iii) | All other recoveries exceeding United States Dollars Five Hundred Thousand (US$500,000.00) shall, subject to the prior written consent of the Assignee be paid in full to the Charterers or their order without any deduction whatsoever. |
| (b) | During any periods when the Vessel is not mortgaged and the after the reassignment of the insurances from the Assignee to the Owners: |
| (i) | All recoveries hereunder in respect of an actual, constructive or compromised or arranged total loss shall be paid in full to the Owners without any deduction or deductions whatsoever and applied in accordance with clause 40 (e); |
| (ii) | All other recoveries not exceeding United States Dollars one million (US$1,000,000.00) shall be paid in full to the Charterers or to their order without any deduction or deductions whatsoever; and |
| (iii) | All other recoveries exceeding United States Dollars one million (US$1,000,000.00) shall, subject to the prior written consent of the Owners be paid in full to the Charterers or their order without any deduction whatsoever; |
and the Owners and Charterers agree to be bound by the above provisions.
| (iv) | the Charterers shall procure that duplicates of all cover notes, policies, insurance slips and certificates of entry shall be furnished to the Owners for their custody upon each of the Delivery Date and renewal or change of the relevant insurances of the Vessel or upon reasonable demand by the Owners; |
| (v) | the Charterers shall procure that the insurers and the war risk and protection and indemnity associations with which the Vessel is entered shall |
| (A) | furnish the Owners with a letter or letters of undertaking in relevant underwriter’s standard form and in accordance with the underwriters’ rules. |
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| (B) | supply to the Owners such information in relation to the insurances effected, or to be effected, with them as the Owners may from time to time reasonably require: and |
| (vi) | the Charterers shall procure that the policies, entries or other instruments evidencing the insurances are endorsed to the effect that the insurers shall give to the Owners as soon as practicably possible prior written notification of any material amendment and seven (7) days with respect to suspension, cancellation or termination of the insurances in accordance with the underwriters’ guidance and rules. |
| (c) | Notwithstanding anything to the contrary contained in Clauses 13 and any other provisions hereof, the Vessel shall be kept insured during the Charter Period in respect of marine and war risks on hull and machinery basis (The Charterers shall have the option, to take out on a full hull and machinery basis increased value or total loss cover in an amount not exceeding thirty per centum (30%) of the total amount insured from time to time) for not less than the amounts specified in column (b) in the table set out below in respect of the one-yearly period during the Charter Period specified in column (a) (on the assumption that the first such period commences on the Delivery Date) against such amount (hereinafter referred to as the “Minimum Insured Value”): |
| (a) | (b) | |||
| Year | Minimum Insured Value | |||
| 1 |
US$ | 20,900,000.- | ||
| 2 |
US$ | 18,072,000.- | ||
| 3 |
US$ | 15,243,000.- | ||
| 4 |
US$ | 12,415,000.- | ||
| 5 |
US$ | 9,586,000.- | ||
| 6 |
US$ | 6,760,000.- | ||
| 7 |
US$ | 3,929,000.- | ||
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| (d) | (i) If the Vessel shall become a Total Loss or be subject to Compulsory Acquisition the Chartering of the Vessel to the Charterers hereunder shall cease and the Charterers shall:- |
| (A) | immediately pay to the Owners all hire, and any other amounts, which have fallen due for payment under this Charter and have not been paid as at and up to the date on which the Total Loss or Compulsory Acquisition occurred (the “Date of Loss”) together with interest thereon at a rate reflecting the Owners’ reasonable cost of funds at such intervals, which amount to be agreed between the Owners and the Charterers and shall cease to be under any liability to pay any hire, but not any other amounts, thereafter becoming due and payable under this Charter, Provided that all hire and any other amounts prepaid by the Charterers subsequent to the Date of Loss shall be forthwith refunded by the Owners: |
| (B) | for the purposes of this sub-clause, the expression “relevant Minimum Insured Value” shall mean the Minimum Insured Value applying to the one-year period in which the Date of Loss occurs. |
| (ii) | For the purpose of ascertaining the Date of Loss:- |
| (A) | an actual total loss of the Vessel shall be deemed to have occurred at noon (London time) on the actual date the Vessel was lost but in the event of the date of the loss being unknown the actual total loss shall be deemed to have occurred at noon (London time) on the date on which it is acknowledged by the insurers to have occurred: |
| (B) | a constructive, compromised, agreed, or arranged total loss of the Vessel shall be deemed to have occurred at noon (London time) on the date that notice claiming such a total loss of the Vessel is given to the insurers, or, if the insurers do not admit such a claim, at the date and time at which a total loss is subsequently admitted by the insurers or adjudged by a competent court of law or arbitration tribunal to have occurred. Either the Owners or, with the prior written consent of the Owners (such consent not to be unreasonably withheld), the Charterers shall be entitled to give notice claiming a constructive total loss but prior to the giving of such notice there shall be consultation between the Charterers and the Owners and the party proposing to give such notice shall be supplied with all such information as such party may request; and |
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| (C) | Compulsory Acquisition shall be deemed to have occurred at the time of occurrence of the relevant circumstances described in Clause25 (b) hereof. |
| (e) | All moneys payable under the insurance effected by the Charterers pursuant to Clauses 13 and 40, or other compensation, in respect of a Total Loss or pursuant to Compulsory Acquisition of the Vessel shall be received in full by the Owners (or the Mortgagees as assignees thereof) and applied by the Owners (or, as the case may be, the Mortgagees):- |
FIRST, in payment of all the Owners’ costs incidental to the collection thereof,
SECONDLY, in or towards payment to the Owners (to the extent that the Owners have not already received the same in full) of a sum equal to the aggregate of (i) unpaid but due hire and other moneys (if any) under this Charter and unpaid interest thereon up to and including the Date of Loss and (ii) the following termination sum or pro-rata de-escalation which shall be payable as at the Date of Loss, and
| (a) | (b) | |||||||||
| Year | Termination Sum | |||||||||
| Delivery Date |
: | USD 20,900,000.- | ||||||||
| At end of 1st year |
: | USD 18,072,000.- | ||||||||
| At end of 2nd year |
: | USD 15,243,000.- | ||||||||
| At end of 3rd year |
: | USD 13,200,000.- | ||||||||
| At end of 4th year |
: | USD 10,150,000.- | ||||||||
| At end of 5th year |
: | USD 7,400,000.- | ||||||||
| At end of 6th year |
: | USD 4,650,000.- | ||||||||
| At end of 7th year |
: | USD 1,900,000.- | ||||||||
THIRDLY, in payment of any surplus to the Charterers by way of compensation for early termination.
| (f) | The Charterers and the Mortgagee shall execute the “Assignment of Insurances” of which contents and wording shall be mutually agreed between the Owners and the Charterers. |
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| 41. | TERMINATION EVENTS |
| (a) | Each of the following events shall be a “Termination Event” for purposes of this Charter:- |
| (i) | if any installment of hire or any other sum payable by the Charterers under this Charter (including any sum expressed to be payable by the Charterers on demand) shall not be paid at its due date under this Charter or within ten (10) Banking Days of the date of demand and such failure to pay is not remedied within ten (10) Banking Days of receipt by the Charterers of written notice from the Owners notifying the Charterers of such failure and requesting that payment is made; or |
| (ii) | Save in circumstances where requisition for hire or compulsory requisition result in termination of insurances for the Vessel, if either (A) the Charterers shall fail at any time to effect or maintain any insurances required to be effected and maintained under this Charter, or any insurer shall avoid or cancel any such insurances (other than where the Charterer proved that the relevant avoidance or cancellation results from an event or circumstance outside the reasonable control of the Charterers and the relevant insurances are reinstated or re-constituted in a manner meeting the requirements of this Charter within five (5) Banking Days of such avoidance or cancellation) or the Charterers shall commit any breach of or make any misrepresentation in respect of any such insurances the result of which the relevant insurer avoids the policy or otherwise excuses or releases itself from all or any of its liability thereunder, or (B) any of the said insurances shall cease for any reason whatsoever to be in full force and effect (other than where the Charterer proved that the reason in question is outside the reasonable control of the Charterer and the relevant insurances are reinstated or re-constituted in a manner meeting the requirements of this Charter within five (5) Banking Days of such cease); or |
| (iii) | if the Charterers shall at any time fail to observe or perform any of their material obligations under this Charter, other than those obligations referred to in sub-clause (i) or sub-clause (ii) of this Clause 41(a), and such failure to observe or perform any such obligation is either not remediable or is remediable but is not remedied within thirty (30) days of receipt by the Charterers of a written notice from the Owners requesting remedial action; or |
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| (iv) | if any material representation or warranty by the Charterers in connection with this Charter or in any document or certificate furnished to the Owners by the Charterers in connection herewith or therewith shall prove to have been untrue, inaccurate or misleading in any material respect when made (and such occurrence continues unremedied for a period of thirty (30) days after receipt by the Charterers of written notice from the Owners requesting remedial action): or |
| (v) | if a petition shall be presented (and not withdrawn or stayed within sixty (60) days) or an order shall be made or an effective resolution shall be passed for the administration or winding-up of the Charterers (other than for the purpose of a reconstruction or amalgamation during and after which the Charterers remain solvent and the terms of which have been previously approved in writing by the Owners which approval shall not be unreasonably withheld) or if an encumbrancer shall take possession or an administrative or other receiver shall be appointed of the whole or any substantial part of the property, undertaking or assets of the Charterers or if an administrator of the Charterers shall be appointed (and, in any such case, such possession is not given up or such appointment is not withdrawn within sixty (60) days) or if anything analogous to any of the foregoing shall occur under the laws of the place of the Charterers’ incorporation, or |
| (vi) | if the Charterers shall stop payments to all of its creditors or shall cease to carry on or suspend all or a substantial part of their business or shall be unable to pay their debts, or shall admit in writing their inability to pay their debts, as they become due or shall otherwise become or be adjudicated insolvent; or |
| (vii) | if the Charterers shall apply to any court or other tribunal for, a moratorium or suspension of payments with respect to all or a substantial part of their debts or liabilities, or |
| (viii) (A) | if the Vessel is arrested or detained (other than for reasons solely attributable to the Owners or to those for whom, for the purposes of this provision, the Owners shall be deemed responsible, including without limitation, any legal person who, at the date hereof or at any time in the future is affiliated with the Owners) and such arrest or detention is not lifted within thirty (30) days (or such longer period as the Owners may reasonably agree in writing in the light of all the circumstances) ; or |
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| (B) | if a distress or execution shall be levied or enforced upon or sued out against all or any substantial part of the property or assets of the Charterers and shall not be discharged or stayed within thirty (30) days; or |
| (ix) | if any consent, authorization, license or approval necessary for this Charter to be or remain the valid legally binding obligations of the Charterers, or to the Charterers to perform their obligations hereunder or thereunder, shall be materially adversely modified or is not granted or is revoked, suspended, withdrawn or terminated or expires and is not renewed (provided that the occurrence of such circumstances shall not give rise to a Termination Event if the same are remedied within thirty (30) days of the date of their occurrence); or |
| (x) | if (a) any legal proceeding for the purpose of the reconstruction or rehabilitation of the Charterers is commenced and continuing in any jurisdiction and (b) the Owners receive a termination notice from the receiver, trustee or others of the Charterers which informs the termination/rejection of the Charter pursuant to the relevant laws, codes and regulations applicable to such proceeding. |
| (b) | Any Termination Event shall constitute a repudiatory breach of, or breach of condition by the Charterers under, this Charter or an agreed terminating event the occurrence of which will (in any such case) entitle the Owners by notice to the Charterers to terminate the chartering of the Vessel under this Charter and recover the amounts provided for in Clause 42(c) either as liquidated damages or as an agreed sum payable on the occurrence of such event. |
| 42. | OWNERS’ RIGHTS ON TERMINATION |
| (a) | At any time after a Termination Event shall have occurred and be continuing, the Owners may, by notice to the Charterers immediately, or on such date as the Owners shall specify, terminate the chartering by the Charterers of the Vessel under this Charter, 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. For the avoidance of doubt, in case of the termination of the Charter in accordance with 41 (a) (x) hereof, the Charter shall be deemed to be terminated upon receipt by the Owners of the termination notice set forth in Clause 41 (a) (x) hereof. |
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| (b) | On or at any time after termination of the chartering by the Charterers of the Vessel pursuant to Clause 42(a) hereof the Owners shall be entitled to retake possession of the Vessel in accordance with Clause 29 hereof, the Charterers hereby agreeing that the Owners, for that 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. |
| (c) | If the Owners pursuant to Clause 42(a) hereof give notice to terminate the chartering by the Charterers of the Vessel, the Charterers shall pay to the Owners on the date of termination (the “Termination Date”), the aggregate of (A) all hire due and payable, but unpaid, under this Charter to (and including) the Termination Date together with interest accrued thereon pursuant to Clause 36(d) hereof from the due date for payment thereof to the Termination Date, (B) any sums, other than hire, due and payable by the Charterers, but unpaid, under this Charter together with interest accrued thereon pursuant to Clause 36(d) to the Termination Date and (C) any actual direct financial loss suffered by the Owners which direct loss shall be determined as the shortfall, if any, between (a) the current market value of the Vessel, in the event that the Vessel is not sold within 3 months from the Termination Date, (average value as estimated by two independent valuers such as major London brokers i.e. Arrow Valuations Ltd, Barry Rogliano Salles, Braemar ACM Shipbroking, H Clarkson & Co. Ltd., E.A. Gibsons Shipbrokers, Fearnleys, Galbraith, Simpson Spencer & Young, Howe Robinson & Co Ltd London and Maersk Broker K.S. (to include, in each case, their successors or assigns and such subsidiary or other company in the same corporate group through which valuations are commonly issued by each of these brokers), or such other first-class independent broker as the Owners and Charterers may agree in writing from time to time) and (b) the Remaining Purchase Option Price (as defined in Clause 49.2 hereof) at any given time always taking into account any charterhire paid during the year to which the specified Remaining Purchase Option Price relates PROVIDED ALWAYS that if the said market value exceeds the aggregate of (A) and (B) and the Remaining Purchase Option Price, then the Owners shall pay the amount of such excess to the Charterers forthwith. The aggregate of (A), (B) and (C) above shall hereinafter be referred to as the “Termination Compensation”). Nevertheless, if the Vessel is sold or transferred within 3 months after the Termination Date, Clause 42 (e) shall apply. |
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| (d) | If the Charter is terminated in accordance with this Clause 42 the Charterers shall immediately redeliver the Vessel at a safe and ice-free port or place as indicated by the Owners. The Vessel shall be redelivered to the Owners in substantially the same condition and class as that in which she was delivered, fair wear and tear not affecting class excepted. |
| (e) | Following the re-delivery of the Vessel by the Charterers after a termination of this Charter on the Termination Date, if the Owners subsequently intend to sell the Vessel, they shall notify the Charterers in writing of the potential sale and the potential sale price of the Vessel (the “Proposed Owners’ Sale Price”) whereupon the Charterers (or their nominee) may, within 5 days of such notification, elect to purchase the Vessel by paying an amount which is the higher of (I) the Proposed Owners’ Sale Price and (II) the aggregate of clause 42 (c) (A) and (B) and the Remaining Purchase Option Price (as defined in Clause 48.2). If the Charterers notify the Owners that they do not intend to purchase the Vessel or the Charterers do not respond to the Owners within such days’ period (or such longer period as the Owners may in their absolute discretion determine), the Owners may sell the Vessel on such terms as the Owners may deem fit but for avoidance of any doubt, in the event that the selling price of the Vessel exceeds the aggregate of Clause 42 (c) (A), (B), the remaining Purchase Option Price and all costs and expenses (including but not limited to brokerage fees and attorney’s fees) reasonably incurred by the Owners for negotiation, preparation, execution and performance of such sale, then any amount in excess of this should be paid to the Charterers. |
| 43. | NAME |
The Charterers shall, subject only to prior notification to the relevant authorities of the jurisdiction in which for the time being the Vessel is registered, be entitled from time to time to change the name of the 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. Painting and installment shall be at Charterers’ expense and time. The Charterer shall also have the liberty to change the name of the Vessel during the Charter Period at the expense and time of the Charterers (including the legal charge for finance documents for the Mortgagee, if any).
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The Owners shall have no right to change the name of the Vessel during the Charter Period.
| 44. | MORTGAGE and ASSIGNMENT |
The Owners confirm that they are familiar with the terms of the assignment of insurances made or to be made by the Charterers in favour or the Mortgagee, and they agree to the terms thereof and will do nothing that conflicts therewith, excepting that the Owners shall be entitled to assign its rights, title and interest in and to this Charter to the Mortgagee or its assignee. Neither party shall assign its right or obligations or part of thereof to any third party without the written consent of the other.
In respect of the Vessel the Owners undertake not to borrow more than the respective purchase option prices as set out at the relevant milestone in Clause 49 hereof.
The Owners have the right to register a first preferred mortgage on the Vessel in favour of the Mortgagee (THE CHUGOKU BANK, LTD.) securing a loan under the Loan Agreement under standard mortgages and security documentation. In which case, the Owners undertake to procure from the Mortgagee a Letter/Agreement of Quiet Enjoyment in a form and substance reasonably acceptable to the Charterers.
The Charterers agree to sign an acknowledgement of the Owners’ charterhire assignment or any other comparable document reasonably required by the Mortgagee, in favour of the Mortgagee. During the course of the Charter the Owners have the right to register a substitute mortgage in favour of another bank provided such registration is effected in a similar amount to the loan amount outstanding with the Mortgagee at that time and only if such substitute mortgagee executes a Letter/Agreement of Quiet Enjoyment in favour of the Charterers in the same form as that provided by the Mortgagee or the form reasonably acceptable for the Charterers. The Charterers will then agree to sign a charterhire assignment in favour of the substitute mortgage in a form as shall be agreed by the Charterers, which agreement not be unreasonably withheld. Any cost incurred by the Charterers shall be for Owners’ account.
Subject to the term and conditions of this Charter, the Charterers also agree that the Owners have the right to assign its rights, title and interest in and to the insurances by way of assignment of insurance in respect of the Vessel to and in favour of the Assignee in a form and substance reasonably acceptable to Charterers and the Assignee.
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Owners shall procure that exercise and/or enforce of any mortgage and charterhire assignment which might interfere with or prejudice or adversely affect the Charterer’s use of the Vessel or other right of the Charterer under this Charter (including the purchase option of the Vessel) shall be subject to the terms and conditions of the Letter/Agreement of Quiet Enjoyment.
In the event that the Owners execute security of any nature (including but not limited to any mortgage, assignment of insurances) over the Vessel then the Owners hereby undertake and agree as a condition of this Charter to procure that the beneficiary of such security executes in favour of the Charterers a letter/agreement of quiet enjoyment in such form and content as is reasonably acceptable to the Charterers, and exercise and/or enforce of the beneficiary’s rights thereunder is subject to the agreement of a letter/agreement of Quiet Enjoyment before or after delivery of the Vessel.
| 45. | REDELIVERY INSPECTION |
Prior to redelivery under Clause 42 hereof and without interference to the operation of the Vessel, the Owners, at their risk and expense, shall have the right provided that such right is declared at least 20 days prior to the expected redelivery date to carry out an underwater inspection of the Vessel by Class approved diver and in the presence of Class surveyor and Owners’ and Charterers’ representatives. Should any damages in the Vessel’s underwater parts be found that will impose a condition or recommendation of Vessel’s class then:
| a) | In case Class imposes a condition or recommendation of class that does not require drydocking before next scheduled drydocking. Charterers shall pay to Owners the estimated cost to repair such damage in way which is acceptable to Class, which to be direct cost to repair such damage only, as per average quotation for the repair work obtained from two reputable independent shipyards at or in the vicinity of the redelivery port, one to be obtained by Owners and one by Charterers within 2 banking days from the date of imposition of the condition/recommendation unless the parties agree otherwise. |
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| b) | In case Class require Vessel to be drydocked before the next scheduled drydocking the Charterers shall drydock the Vessel at their expense prior to redelivry of the Vessel to the Owners and repair same to Class satisfaction. |
In such event the Vessel shall be redelivered at the port of the dockyard.
| 46. | MORTGAGE NOTICE |
The Charterers and place and keep prominently displayed in the chart room, master’s cabin, and engine room of the Vessel a framed printed notice in plain type reading as follows:
“NOTICE OF SHIP MORTGAGE”
“This Vessel is covered by a First Preferred Ship Mortgage given to THE CHUGOKU BANK, LTD., a banking corporation duly organized and existing under the laws of Japan, having its head office at 15-20 Marunouchi 1-chome, Kita-ku, Okayama City, Okayama-Pref., Japan, acting through its Onomichi Office at 2-9, Higashigosho-cho, Onomichi, Hiroshima-Pref., Japan, its successors and assigns under the authority of the laws of the Republic of Panama. Under the terms of said Mortgage, neither the owner of this Vessel, any charterer, the Master of this Vessel, nor any other person has any right, power or authority to create, incur or permit to be imposed upon the Vessel any liens, maritime or otherwise, other than the lien of said Mortgage and liens for crew’s wages or salvage.”;
| 47. | SALE OF VESSEL BY OWNERS |
| 1. | The Owners have the right to sell the Vessel to a reputable third party (“Purchaser”) at any time during the Charter Period with the prior written consent of the Charterers and provided that (i) the Purchaser agrees to take over the benefit and burden of this Charter, (ii) such ownership change does not result in any reflagging of the Vessel, (iii) such ownership change does not result in the Charterers being obliged to increase any payment under this Charter, (iv) such ownership change does not increase the actual or contingent obligations of the Charterers under this Charter, and (v) the Charterers shall not be liable for the costs and expenses (including legal fees) incurred in the sale of the Vessel by the Owners under this Clause 47. |
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| 2. | The Owners shall give the Charterers at least one month’s prior written notice of any sale. |
| 3. | Subject to 47.1, the Charterers and Owners undertake with each other to execute one or more novation agreements (or other documents required under applicable law) to novate the rights and obligations of the Owners under this Charter to the Purchaser such novation agreement(s) or other documents to be in such form and substance acceptable to the Charterers and such novation will be effective upon delivery of the Vessel from the Owners to the Purchaser.” |
| 48. | CHARTERERS’ OPTION TO PURCHASE VESSEL |
| 1. | Charterers to have purchase option to purchase the Vessel at the end of 3rd year anniversary date of the Delivery Date at USD13,200,000 net (the “First Purchase Option Price”) subject to Charterers declaration 3 months before such date. |
| 2. | Charterers further have an option to purchase, such purchase being declared at any time through the remaining period at the following price or pro-rata de-escalation until the maturity of the Charter Period (the “Subsequent Purchase Option Price”), provided that in any event Subsequent Purchase Option Price shall not be less than USD 1,900,000.- irrespective of the actual purchase date of the Vessel. |
| At end of 3rd year |
: | USD 13,200,000.- | ||||||||
| At end of 4th year |
: | USD 10,150,000.- | ||||||||
| At end of 5th year |
: | USD 7,400,000.- | ||||||||
| At end of 6th year |
: | USD 4,650,000.- | ||||||||
| At end of 7th year |
: | USD 1,900,000.- |
(The purchase option price of the Vessel to be calculated in accordance with Clause 48.1 and 48.2 hereof, whether the Final Purchase Option Price or the First Option Price or the Subsequent Purchase Option Price, hereinafter called the “Remaining Purchase Option Price”).
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| 3. | Immediately prior to delivery of the Vessel by the Owners to the Charterers under the PO MOA (as defined in Clause 48.4) the Parties shall execute a Protocol of Redelivery and Acceptance under this Charter (the “Redelivery Protocol”) and save in respect of any claims accrued under this Charter prior to the date and time of the Redelivery Protocol, this Charter shall terminate forthwith. |
| 4. | Upon the date of any written notification by the Charterers to the Owners of their intention to purchase the Vessel, the Owners and the Charterers shall be deemed to have unconditionally entered into a contract to sell and purchase the Vessel for the Remaining Purchase Option Price on and in strict conformity with the terms and conditions contained in the Memorandum of Agreement attached to this Charter as Exhibit A (the “PO MOA”). |
| 49. | MISCELLANEOUS |
| (a) | The terms and conditions of this Charter and the respective rights of the Owners and the Charterers shall not be waived or varied otherwise than by an instrument in writing of the same date as or subsequent to this Charter executed by both parties or by their duly authorized representatives. |
| (b) | Unless otherwise provided in this Charter whether expressly or by implication, time shall be of the essence in relation to the performance by the Charterers of each and every one of their obligations hereunder. |
| (c) | No failure or delay on the part of the Owners or the Charterers in exercising any power, right or remedy hereunder or in relation to the Vessel shall operate as a waiver thereof nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise of any such right or power or the exercise of any other right, power or remedy. |
| (d) | If any terms or condition of this Charter shall to any extent be illegal invalid or unenforceable the remainder of this Charter shall not be affected thereby and all other terms and condition shall be legal valid and enforceable to the fullest extent permitted by law. |
22
| (e) | The respective rights and remedies conferred on the Owners and the Charterers by this Charter are cumulative, may be exercised as often as the Owners or the Charterers (as the case may be) think fit and are in addition to, and are not exclusive of, any rights and remedies provided by law. |
| 50. | COMMUNICATIONS |
Except as otherwise provided for in this Charter, all notices or other communications under or in respect of this Charter to either party hereto shall be in writing and shall be made or given to such party at the address, facsimile number or e-mail address appearing below (or at such other address, facsimile number or e-mail address as such party may hereafter specify for such purposes to the other by notice in writing):-
| (i) in the case of the Owners c/o Shoei Marine Co., Ltd. | ||
| Address |
: 24-11, Nigatasanbashidori, | |
| Kure-City, Hiroshima 737-0154, Japan | ||
| Telephone |
: +81-90-4149-1591 | |
| |
: masaki_watanabe@shoeimarine.com | |
| (ii) in the case of the Charterers c/o Navios Shipmanagement Inc. | ||
| Address |
: 85 Akti Miaouli Street, 18538, Piraeus, Greece | |
| Telephone |
: 30-210-4595000 | |
| |
: ops@navios.com, legal@navios.com | |
| tech@navios.com, legal_corp@navios.com | ||
| (iii) in the case of the Brokers c/o ITOCHU Corporation | ||
| Address |
: TOKBR Section, 5-1, Kiya-Aoyama 2-chome, | |
| Minato-ku, Tokyo, 107-8077 Japan | ||
| Telephone |
: 81-3-3497-2939 | |
| Telefax |
: 81-3-3497-7111 | |
| |
: tokbr@itochu.co.jp | |
A written notice includes a notice by facsimile or e-mail. A notice or other communication received on a non-working day or after business hours in the place of receipt shall be deemed to be served on the next following working day in such place.
23
Subject always to the foregoing sentence, any communication by personal delivery or letter shall be deemed to be received on delivery, any communication by e-mail shall be deemed to be received upon transmission of the automatic answerback of the addresses and any communication by facsimile shall be deemed to be received upon appropriate acknowledgment by the addressee’s receiving equipment.
All communications and documents delivered pursuant to or otherwise relating to this Charter shall either be in English or accompanied by a certified English translation.
| 51. | TRADING IN WAR RISK AREA |
The Charterers shall be permitted to order the Vessel into an area subject to War Risks as defined in Clause 26 without consent of the Owners provided that all Marine, War and P&I Insurance are maintained with full force and effect and the Charterers shall pay any and all additional premiums to maintain such insurance.
| 52. | INVENTORIES, OIL AND STORES |
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 under this Charter and again on redelivery of the Vessel under Clause 42 hereof.
The Owners shall at the time of redelivery under Clause 42 hereof take over and pay for all remaining bunkers, unused lubricating oil (for avoidance of any doubts, the lubricant oil in the machinery is included), unbroached provisions, paints, ropes and other unused consumable stores (excluding spare parts) in the said Vessel at the Charterers’ purchased prices with supporting vouchers, provided that this payment shall be off-set against the Owner’s claim under Clause 42 to the extent the sum equivalent to such payment. However, the Charterers shall not pay to the Owners at time of delivery for any bunkers, lubricating oil, provisions, paints, ropes and consumable stores which the Charterers have supplied to the Vessel at the Charterers’ expense prior to delivery. 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.
24
| 53. | INDEMNITY FOR POLLUTION RISKS |
Charterers shall indemnify the Owners against the following Pollution Risks:-
| (a) | liability for damages or compensation payable to any person arising from pollution; |
| (b) | the costs of any measures reasonably taken for the purpose of preventing, minimizing or cleaning up any pollution together with any liability for losses or damages arising from any measures so taken; |
| (c) | liability which the Owners and/or the Charterers may incur, together with costs and expenses incidental thereto, as the result of escape or discharge or threatened escape discharge of oil or any other substance; |
| (d) | the costs or liabilities incurred as a result of compliance with any order or direction given by any government or authority for the purpose of preventing or reducing pollution or the risk of pollution; provided always that such costs or liabilities are not recoverable under the Hull and Machinery Insurance Policies on the Vessel; |
| (e) | liability which the Owners and/or the Charterers may incur to salvors under the exception to the principal of “no cure-no pay” in Article 1 (b) of Lloyds Standard Form of Salvage Agreement (LOF 1990); and |
| (f) | liability which the Charterers may incur for the payment of fines in respect of pollution in so far as such liability may be covered under the rules of the P&I Club. |
| 54. | TRADE AND COMPLIANCE CLAUSE |
| (a) | The Charterers and the Owners hereby agree that no person/s or entity/ies under this Charter will be individual(s) or entity(ies) designated under any applicable national or international law imposing trade and economic sanctions, including sanction, prohibition or restriction imposed on any specified persons, entities or bodies including the designation of specified vessels or fleet under United Nations Resolutions or trade or economic sanctions, laws or regulations of the European Union, United Kingdom, Japan or United States of America (collectively, the “Sanctions”). |
25
| (b) | Further, the Charterers and the Owners agree that the performance of this Charter will not require any action prohibited by sanctions or restrictions under any applicable Sanctions. |
| (c) | Further to the above, Charterers shall take reasonable steps to confirm that at the date of this Charter Party and throughout the duration thereof, any sub-charterer of the Vessel (who is directly contracting with the Charterer in respect of the Vessel at any relevant time), the managers of the Vessel and the Vessel are not a sanctioned party/vessel under the Sanctions. |
| 55. | ANTI-BRIBERY AND ANTI-CORRUPTION |
The Charterers and the Owners hereby agree that in connection with this Contract and/or any other business transactions related to it, they as well as their sub-contractors and each of their affiliates, directors, officers, employees, agents, and every other person acting on its and its sub-contactors’ behalf, shall perform all required duties, transactions and dealings in compliance with all applicable laws, rules, regulations relating to anti-bribery and anti-money laundering.
| 56. | MANAGEMENT COMPANY |
The management company shall be Navios Shipmanagement Inc. or any other management company affiliated to Angeliki Frangou . The Charterers may change the management company with the Owners’ prior consent not to be unreasonably withheld, unless such change is to an affiliate of Navios Shipmanagement Inc. or of Angeliki Frangou in which case Owners’ consent will not be required.
(end)
26
Exhibit 4.73
‘BARECON 2001” STANDARD BAREBOAT CHARTER
PART1
1, Shipbroker BIMCO STANDARD BAREBOAT CHARTER
CODE NAME : “BARECON 2001”
Mitsui & CO.L TD PART I 2. Place and date lilillil!l
November 2019 :zr
3. Owners I Place of business (CI. 1) 4. Bareboat Charterers I Place of business {CJ. 1}
Anchor Trans lnc. Vernazza Shlptrada lnc.
Panama City, Republic of Panama guaranteed by Elfuku
Trust Company Complex, Ajeltake Road, Ajeltake Island, Kaiun Co., Ltd. Majuro. MH96960, Marshall Islands guaranteed by Navios
Maritime Partners L.P.
5. Vessel’s name, call sign, flag and IMO number (CI. 1 and 3)
Dream Canary, 3EBN6,
Panamanian flag, 1tl0,528 M.T. DIW Type Bulk Carrier, IMO Number 95830(}5
6. Type of Vessel 7. GT /NT 180,628 M.T. DfW Type Bulk Carrier GT: 92,379 tons
NT: 60,236 tons
8. When I Where built 9. Total DWT (abt.} in metric tons on
s1:1mmer fFeeBeafi:l
March, 2015 at TSUNEISHI HEAVY INDUSTRIES (CEBU), 180,528 M.T. INC.
10. Classification Society (CI. 3) 11. Date of last special survey by the Vessel’s classification society
Nippon Kaiji Kyokal {NK) NIA
12 ... f mtl:lef-{:1aftlsulars-of-Vesse~e--iAGIGate--miAimHFR
AHFf’ll:ler-ef months!-vaJIGity--ef-slass seFtifieate&agreed aoo.ta-Gb--J} Cargoes to be carried; All lawful cargoes within the Vessel’s capabilities/Class, IMO, flag, her insurance
13. Port or Place of delivery (CI.3) 14. Time for delivery (CI.4) 15. Cancelling date (CI.5)
As per Clause 6 of the MOA (as defined in Clause 1 hereof) As per Clause 5 of the MOA As par Clause 5 of the MOA See Also Clause 32.
16. Port or Place of redelivery (CI. 3) 17. No. of months’ validity of trading and class certificates upon redelivery {CI. 15)
At one safe berth ·or one safe port WOI’Idwide In the 3 months Charterers’ option but always within the Trading Limits
16. Running days’ notice if other thaA stated in Cl.4 19. Frequency of dry-docking Cl. 10(g)
NIA As per Classification Society and flag state requirements
20. Trading Limits (CI.6)
Trading Umits: always safely afloat worldRwide within International Navigation Conditions with the Charterer’s option to break same paying extra insurance~
but always In accordance with Clause 13 and 40.
In any event any country/place designated pursuant to any International or supranational law or regulation imposing
trade 1
and economic sanctions including countries/places sanctioned by UN/USA, prohibitions or restrictions (which may be amended from time to time during the
Charter Period) shall always be excluded.
21. Charter Period (CI. 2) 22. Charter hire (CI. 11)
Twelves (12) years plus/minus 30 days in Charterers’ option See Clause 35
(See Clause 34)
23. New class and other statutory requirements (slate percentage of Vessel’s insurance value ace. to Box 29 (CI. 10(a)(ii))
NIA
24. Rate of Interest payable ace. to Cl.11 (f) and, if applicable, 25. Currency and method
of payment (CI.11) ace. to PART fV
NIA United States Dollars payable calendar monthly in advance
26. Place of payment: also state beneficiary and bank account 27. Bank guarantee I bond (sum and place) (CI. 24 (optional) {CI. 11)
To be advised NIA
‘BARE:CON 2001” STANDARD BAREBOAT CHARTER
PART1
30. Additional insurance cover, if any, for Owners’ account
limited 31, Additional insurance cover, if any, for Charterers’ account to (CI. 13(b) or, If applicable, Cl. 14(g)) limited to (CI. 13(b) or, if applicable, Cl. 14(g)) N/A See Clause 40 (c)
32. Latent defecls (only to be filled in [f period other than stated in 33. Brokerage commission and to whom payable (CI.27) Cl.3) N/A NIA 34. Grace period (state number of clear
banking days) (CI. 28) 35. Dispute Resolution (state 30(a), 30(b) or 30(c); if 3D( c) agreed, Place of Arbitration musl be stated (CI. 30) See Clause 41 London I English Law
36. War cancellation (indicate countries agreed) (CI. 26(f)) NIA
37. Newbuilding Vessel
(Indicate with ‘yes’ or ‘no’ whether PART 38. Name and place of Builders (only to be filled In if PART Ill lit applies) (optional\ applies) NIA No
39. Vessel’s Yard Building No. (only to be filled in if PART Ill 40. Date of lauildiR§-Shipbuilding Contract (only to be filled in if applies) PART Ill applies) N/A No
41. Liquidated damages and costs shall accrue to (s1ate party ace. to Cl. 1) a) NIA b) NIA c) NIA
42. !-lire/Purchase agreement (indicate with ‘yes’ or
‘no’ whether 43. Bareboat Charter Registry (Indicate with ‘yes’ or ‘no’ whether PART IV applies) (optional) PART IV applies) (optional) NIA N/A See Clause 37(d)
44. Flag and Country of the Bareboat Charter Registry (only to be 45. Country of the Unde~ying RegistfY (only to be filled in If PART filled In If PART V applies) V applies) NIA
NIA
See Clause 37 (d) 46. Number of additional clauses covering special provisions, if agreed Clause 32 to 60 Inclusive .. PREAMBLE u It Is mutually agreed that
th1s Contract shall be performed subject to the conditions contamed m lh1s Charter which shall include PART I and PART II. In the event of a conflict of conditions, the provisions of PART I shall prevail over those of PART II to the extent of such
conflict but no further. It fs further mutually agreed that PART Ill and/or PART IV and/or PART V shall only apply and shall only form part of this Charter If expressly agreed and stated in Boxes 37, 42 and 43. If PART Ill and/or PART IV and/or PART
V apply, it Is further agreed that In the event of a conflict of conditions, !he provisions of PART I and PART II shall prevail over those of PART lll and/or PART IV and/or PART V to the extent of such conflict but no further.
PART II
“BARECON 2001 u Standard Bareboat
Charter
I. Definitions 1 In this Charter, the following terms shall have the 2 meanings hereby assigned to them: 3 “The Owners” shall mean the party
identified in Box 3; 4 “The Charlerers” shall mean the party Identified in Box 4; 5 “The Vessel” shall mean Lha vessel named in Box 5 and 6 with particulars as staled in Boxes 6 to .1.2.’ 7 “Financial Instrument”
means the mortgage, deed of 8 covenant or other such financial security instrument as 9 annexed to t11ls Charter and stated In Box 28. 10 “MOA” means the Memorandum of Agreement entered into between the Owners as buyers and SMALTITE
SHIPPING CORPORATION of the Marshall Islands as Sellers (the “Sellers”) dated th November 20191n respect of the Vessel. “Banking Days” shall mean the days identified In Cl.36 (b) “Total Loss” shall mean the situation
identified In Cl.40 (a) 11 2, 12 Charter Period 13 In conslderalion of the hire detailed in !2Qxl6, the Owners 14 have agreed to let and the Charterers have agreed to hire 15 the Vessel for the period stated in Box 21 (the “Charter
Period”). 16 3. Delivery Also See Clause 32 The Vessel shall be delivered and taken over by the 17 Charterers as per Clause 32. 1B
(n<JI.ap~W/e.wheJ>PAR.FJJI.a~~l/ell,$!R!IiGalefi-ill-&lx-3l! 19 w---+i’1e-0wReFS sf:tal!-befGre aA€1 at the-tlme-Gf--Gek•lefy: 20
9l<Of4;e-00e-dili-sa-te-make-!11e-\lessel-seawof1Ay-a00 21 ifl-<wef)’-<””fl-dY·-In Aull, maol*!ery-anG-eq;lii>fAeAI 22 klr-seFVise-wHler-thls GI:JaFteF. 23 The Vessel shall be dellvered by the Owners and taken 24
over by the Charterers at the port or place indicated in Box 25 13 iR-SOOI\-reaE1)LS<lfe-lleflh -as-tl’le-Gliaflerers-ffiay-<liFeBI. 26 (b) The Vessel shall be properly documented on 27 def\very In accordance with the laws of the flag
state 28 Indicated in Box 5 ~e-reqHiFemeRts of-~the 29
Gl-assiflsatiGfl-GE)Giety-st-ated-iA-B~he-vassel r,J~GA 30 Qelivei)’---&Rati-J:lave her
SllFVey-Gycl~ate---anEI 31 tra€11f1!3 aJ-1G-class ceFI:ifisates--vali€1 fer at leaat-thB--flHmbet= 32 Gf-moot-As-agreed-i-A--Bex-4a. 33
(s) The
dellv.,._-&-Vessel-l>y-lll<Hlwner<HlA<!-til<> 34 takiA!J-OVBf-Gf-ttle-Vessel--by tAe -GhaFterers shall 35 GGRStltute-a f1:1ll J:78FfeF!flance by tl~e Qwner-s---e.f--aH-tRe 36
Gwnerf?--eelfgatkms-unee-F---tl:lis----Giause--J,-aRG---thereafter. 37 the--Ghaftefers-sRalt-Rat---be-----entitletl--te make or--a.&seft 30 afl)L-Giaim------aga-lnst-tRe-----OwAers-on-aGGOO-R-t--tlf--any 39 conEfi:tfGRs,--feprese Rlatie As
or---wa Ffa-Rties----expressed----ef 40 implie<l-wiliHespool-l<>-the-\lessel-bYI-llle-Qwn.,._.Aaii-Oe 41 lia~le----fGf-the--Gest----ef----bldt---not tile time fef--repaiFs------eF 42 ffiAewal-s-ossasfoo-e4--by---latent defects In-the
l.£essel, Aar. 43 machioofY-er-appuFleH-a-AGes,---existing-a-t-tHe------time-af 44 delivaf)’-Ynser this Cl1arter,l>feVi<le<HiuGh-defesls-Aave 45 manifeste<l-111emselves-witllia-lwelve (12) menll1s attar 46
deHve~ess-otheFWise-provided--iR---Be-x-32.-- 47
4. Time for Delivery Soe Clause 32 48 (lleHI~pi-hen PNlTN appiles,.af’rindiGated ,;, BOK 37J 49
The-Ves~tlall-nel-be-<lellvered--llefere-111e-dale 50 ffidieate€1--IA-IilOX----1-4--wf.thool--the CAafleFers’ GGAS6Rl---aAft 51
IAe--<lwMrs-s~fGise-<ki<HIIIigeAse-to-<lelivef-lhe 52 \/essei-Aol-later-!11aR-1Ae-date-lndlsale<HR-BOJ<-U, 53 Ytliess-0t-he11Nise aQreed~in-€hm 18, the owners--stta-11-glve 54 llle-Gharlerers--nol-less IAaR ll>irtY409)
FURRiAg--da)IS’ 55 praliRllmuy-aA<I-eol-less IAaR louJteen .. (44)-flffilliRg.-<fays’ 56 <leflnite-Retioo-<ll’-the date en wl11oh-tl1e-\lesse!-is-expeG!e<l 57 to-be-rea<ly-for.<telivef)c-- 58
+lie-Qwn”””’””’ll-keej>-llle-CI\arteref&-<llesal)’-a<Wise<J-.sf 59 possil>le·changes-i&#i...V.ssel’s-pe8ilien, 5. Cancelling 60
(ilel-appiiGab/ewhei>I’Nm/RI~pH!N!;.arHRdiGatOO<R Box :m 61 (a) Sl1oHid--!ile-V&&sel--nol-l>e-<lellvered-latest-by-1Ae 62 ea-HGellin~ndiaateEI in Be>( Hi, tAe Ghaftor-ets---shaU 63 have 111e
optieFI-<Il-<:ansellinf)-IAis--Charle~l>y-!JMRg.the 64 Qwner8-fletlse-Gf-GansellatieA-WUhiA---lffiFly-si*{a())-ruRRffiiJ 65
heuFs after
tl=le-GaReelnng--Gate--st-ated .. -in Be>< 15, falliRg 66 wRIGA tAis Charter. sAall reFAaiA-In-full-fGFGS-aHd-eff-esh 67 (b)--JI-il-af’peafS-lhat-the Vassel •vill-be-<lelayad-bayeR<t 68 the--saRselling.~da~wner-s may, as
soon-as-tRey 69 are-in-posiUeA--te-state-with reaseRa91e-cefl:aiA.t.y-tRe-.day 70 en-wl1ioll-lhe-\/....-eel<l·bS-rBa<ly,give-notis-of 71 ta--the-GA-aFterers ask-Ing wAetRer tRey-wlll-exefGise--thalr. 72 optieR ef
sanGelling,aM--tA6----Gptian m~::~st then----be 73 deslare<l witAin ene--hHA<Iree aRe--sil<ty-Gi!fl11--(to!l) 74 f-Hfi-Ring Ael.IFS of-.. tt!e reaeipt 9Y-the-GAafteFem--Gf--s.waR- 75
fl0li06-.<>r··WiiAffi-IAirl)’-slx-{8!l)-FIIAAins-11ours after the 76 -lillg-Qate,-wAisAO\IeF-is-ll1e.ea~IOfrli-IAs-Chart&Ms 77 Ge-net---then S3Eeralse their---eptieR--Gf--GanaelliR§, tAe 78 -seveRtJ:l day
afteF-the---feadffiass--date stated lr...-.. -tAe 79
QwnafS!--.noUse-shaa----be-substltl::lteEI fur-the----saFloolling 80 date-II’IElieateEI iA
QQX-1-6--fef-the-purpsse--Gf-.tRis--.G.tause--lh 81 (s) Cancellution-IIRder this ClaHs~ll-be-wltlw<ll 82 prejudiee te aA~’ Glaim---tile--GRaFterers may et-he!Wise 83 ~ave eR tt:Je-Gwners l.IREier thls.Ghaftet; 84 Tradlng Restrictions 85 The
Vessel shall be employed in lawful trades for the 86 carriage of suitable lawful merchandise within the trading 87 limits indicated in Box 20. 88 The Charterers undertake not to employ the Vessel or 89 suffer the Vessel to be employed otherwise than
in 90 conformity with the terms of the contracts of Insurance 91 (including any warranties expressed or impl!ed therein) 92 without first obtaining the consent of the insurers to such 93 employment and complying with such requirements as to 94 extra
premium or othe!Wise as the insurers may 95 prescribe. 96 The Charterers also undertake not to employ the Vessel 97 or suffer her employment in any trade or business which 98 is forbidden by the law of any country to which the Vessel 99 may sail or
Is otherwise illicit or in carl)’lng illicit or 100 prohibited goods or in any manner whatsoever which 101 may render her liable to condemnation, destruction, 102 seizure or confiscation, 103 Notwithstanding any other provisions contained in
this 104 Charter it is agreed that nuclear fuels or radioactive 105 products or waste are specifically excluded from the 106 cargo permitted to be loaded or carried under this 107 Charter. +»is--ex.slusien Gees RGl--apply-te--mdk:Hsotopes 108
H-584--of---iRteAEied ta~be wseEI ff>f-~any----im:kfstf!lal, 109 Gomm~fjfiGUitural, FAeEiieal-or-ssientffiG--Purpeses 11 0 f’l’OVi4aO-IIle-GwileF6’-i>rle<-app1<Wal 11as beeo-%1aiRe<i 111 1<>-laadiRg 111ereof, 112
113 Surveys on Delivery and Redellvery 114 (Rel-app//cable-whlllri’AR+ill.appll~--l•fJ!lliHJ 115 The Owners and Charterers have the right of shall--eaGA 116 appointing surveyors for the purpose of determining and 117 agreeing in wriling
the condition of the Vessel at the time 118 of delivery.redel-iveFy-Rereum:ier--: +Ae-Gwfler6-sRall--aaaF 119 all-expeAses ef tt:Ja-Qn-Rire---Swvey--IHGiuEiing-tGSS-Gf-tliYle, 120 if aRy, aA€1 tAe-Gharlerers st!all-bea~peru;es-of-.the 121
Gff..flire-!>urvey..iRcludlnQ loss-ef-liroo,-il-any1--al-llle.-<faily 122 e€juivaleRt-te--t-he-mte--ef-hir:e-gt--pro-Fata-#lefOOf.. 123 Inspection See Clause 59 124 The Owners shall have the right maximum once per 125 year-at-aAY--time
after giving r-easi)Rable 1 month prior 126 notice to the Charterers to Inspect or survey the Vessel 127 or instruct a duly authorised surveyor to carry out such 128 survey on their behalf:b provided it does not intolfere with the
operation/Itinerary of the Vessel and/or crew (a) to ascertain the condition of the Vessel and satisfy 129 themselves that the Vessel is being properly repaired 130 and maintained. The costs and fees for such inspection 131 or survey shall be paid
by the Owners.-HAiess-tAe--Vessel 132 ls--feuru;l te JBEfl:llre--reyairs--er--FAalnteRa-ROO--iA--efdaf----ta 133 asllleve-1110-”on<lilien-se-j>revioed; 134 (b) lA <11y dosl<--if-tAe-CI1aflerers--have Rei Ofl’ desked 135
11eF-if>-aGOor<iaASB-Witlf--GiallSe41l(!ff,---+lle-oost&-an<l 136 fees-feF--Sush-lnspeetieA er sar:vey-sA-a-U--be--pakf--b.y-11-le 137 Ci1afleFOr<;;-an<l 13
PART II
11BARECON 2001’’ Standard
Bareboat Charter
neses&afY--WtoviEieEI it Elees-nokiAGuiy--IRterl’erer-wRA-U1e 140
Gemm6f6ial-epemli9R--9f-the Vessel). +he eests aA€1 fees 141 for- s1:1eA IAspeelisn ami--suwey-s.f:lall-be--paiG----by---the 142
~ 143 All-time---\lSeG--in-respe4-ef-iASpeGtl9A, SUR’8Y or-repaiFS 144 sha-lf--be-fer tAe CRaFlererHsoooot-.an€1--:ferFH 13aFt ef-.the 145 Ghartef-l’efiG~, 146 The
Charterers shall also permit the Owners to inspect the 147 Vessel’s log books maximum once per year wAMe-Ver. 148 reasanaBI-y--feqwested and shall whenever required by the 149 Owners furnish them with full Information regarding any 150
casualties or other accidents or damage to the Vessel. 151 9. Inventories, Oil and Stores SEE CLAUSE 53 152 A-oomplet:a--1-JweHtory-ef.--t.l:le--.Veel’s eAtiFe eEJuipment, 153 <>Ut{il---lnsiOOing s~are ~arts,--a-j>~S-afl<l--9f-a.il
154 ~lestares eR-boafd-tR0---Vessel sAall be made 155 9y-the Gt\arte-rers iR saAfunot.leR--wl-tll--tl:le-G-~Il 156 delivery anEI a~:JaiR eA-re€1~-tAe Vessel. +he 157 G-Rarte-FSfS--aRG---the 0’A’Rers, respeetivel)’, sRall-a-t-tha-
158 t-ime--ef--tlelivery aREl rede!ivoFY tal<e ove-r aAEI 13ay fer-all 159 booker~saUng--eU1-(ffiS.FGaoheEI !3FaVisioos,.patAts; 160 ropes aAEI Qther GeRsYmable steres (exsludtflft-SP8f8 161 paFts)-ifl-tl:le....sa.Q-Vesse-J-..at...tAe-then e~nent
market-pFises 162 at-t-he-parts-of-Eiellver; amf.re€1elivery, respestiv~e 163 GMrtere<S-Silal~eosYFe-Utal-all-spare pa~a llsted-irHM 164 hwentery and 1:1seEI dtHin€J the CAarter PorJeEI are 165 ~d-attheir expa!’lse fJFier
to--rode-I-I¥GFY---Gf.-lh-a 166 Vessel- SEE ALSO CLAUSE 32, AND CLAUSE 46 167 Maintenance and Operation 10. (a)(i)Maintenance and Repairs- During the Charter period 168 the Vessel shall be in the full possession and at the 169 absolute disposal
for all purposes of the Charterers 170 and under their complete control In every respect. 171 Tho Charterers shall exercise due diligence to 172 maintain the Vessel, her machinery, boilers, 173 appurtenances and spare parts In a good state of 174
repair, in efficient operating condition and in 175 accordance with good commercial maintenance 176 practice and, except as provided for in Clause 14(1), if 177 applicable, at thelr own expense, they shall at all 178 times keep the Vessel’s
Class unexpired fully-t.~~ 179 Elate with the Classlflcatlon Society indicated in Box 180 1Q maintain all other necessary certificates In force at 181 all times. 182 (ii) New Class and Other Safety Requjmments 183
J.R..#ie-evenl-ef--a»y--{mprovemeAt, s!FI.!Gtur-al eRaR§es 184 (;)f--f-’lew---eMment-----beoomiRg-nesess~f---tl-1e 185 G<>Ali””ed-<lj>eralioo-<lf-lt\e-Vessel-i:>Y-<easell-Bf-flew 186
class---fe€fHiFemeAts er by e€1mpulsery leglslatieA 187 sosYRIJ--jexsl”~ifl§-lhe-Gharterers’--loss-ol-\ime) 188 more--tAa-R---tt~e .. perGeAtaQ€1--Stated--iA Be:c 23, ·OF--if 189 Bm: 2J Is le#-l>laAk,--a-per
eeet. of the-\lasssl’s 190 ffiwfaRGe--val-IJe--a&-Stated In Bax 29,---thaR----tl:le 19’1 extem,il-any;4e-whisiHIH><ale sf hire shall-bs-vafie<l 192 aM-#Ie--rat.Je.....iA---whsR-the sest of oomplianse---s-0011 193
be-shaFad--between--tJ:l~e-s--sensemeG-ffi--.f:lrde-r 194 te-aGRieve------a-------Ra!:.lle---€1istrihutkm-----tJ:Iereef----ag 195 be-tween tlote OwneFS-afld-the---GflaFieFeFS having 196 regaFG,--------iAter-aUa,........tQ--tf:te--leA€JtR
ef the-peFieG 197 fefRaini~eHhis-Gh.artef,--Shal~·iR tRe absam::&-ef 198 agr-eement,ba-mfer-rad-to-·-tAe ais~l.lte resGIYtloo 199 melllo<klgreeo-in-Gia”se JQ, SEE ClAUSE 38 200 (iii} Financial Security w The Charterers
shall maintain 201 financial security or responsibility In respect of third 202 party liabilities as required by any government, 203 Including federal, state or municipal or other division 204 or authority thereof, to enable the Vessel, without 205
penalty or charge, lawfUlly to enter, remain at, or 206 leave any port, place, territorial or contiguous waters 207 of any country, state or munlcipality In performance 208 of this Charter without any delay. This obligation 209 shall apply whether
or not such requirements have 210 been lawfully imposed by such government or 211 division or authority thereof. 212 The Charterers shall make and maintain all 213 auangemenls by bond or othe!Wise as may be 214 necessary to satisfy such requirements
at the Charterers’ 215 sole expense and the Charterers shall Indemnify the 216 Owners against all consequences whatsoever (including 217 loss of time) for any failure or Inability to do so. 218 {b) Operation of the Vessel -The Charterers shall
at 219 their own expense and by their own procurement man 220 1 victual, navigate, operate, supply, fuel and, whenever 221 required, repair the Vessel during the Charter Period and 222 they shall pay all charges and expenses of every kind 223 and
nature whatsoever incidental to their use and 224 operation of the Vessel under this Charter, Including 225 annual flag state fees and any foreign general 226 municipality and/or state taxes. The Master, officers and 227 crew of tho Vessel shall be
the servants of the Charterers 228 for all purposes whatsoever, eveA if fuF any----reason 229 ap~eiflteG-l>y-the-GwRsr&, 230 Charterers shall comply with the regulations regarding 231 officers and crew ln force In the country of the
Vessel’s 232 flag or any other applicable law. 233 (c) The Charterers shall keep the Owners aJ~G-the 234 I’Fl-GJtgagee(s) advised of the Intended employment, 235 planned dry-docking and major repairs of the Vessel, as 236 reasonably
required. 237 (d) Flag and Name of Vessel 238 Gufing .. Jhe-GAaftef-~erlaEI,-the-Gflartefel’lHlhal-have-the 239 libe-Fly-te-paif.tt....the--Vessei iR their-EIWfl-GeleurS;-fAStall--atHI 240
<lisj>lay..their..fllflfleHRsignia-aAEJ-.IIy-IAeir-eWIH!9118<>-11ag, 241 +he G”arterers sl1all-alae-have-the-liilerty,with-the 242 QwnefS!-GonseAt,--wl:liGh---sffil.II.--.Aet---b~f\fea89flably 24 3 wi\Rhald, le
ehaege-the-flag-and/of-llle...-Aame--<>l-ille 244 \lesseHlurln§-lh~rter-P-efie<I,--F>affillAg-an<i--re- 245 J*lintin~moot-an<l ra lnstalmSFII,-reqlstmtieA-aAG 246 €1e ragistratien,.
if--reqWe€1-by-ll’la-Gw»eFS,·ShaJt--9e--at-..tle 24 7 Charterers’ expeASO-afi<J..tim~SEE CLAUSE 37 & 43 248 (e) Changes to the Yessei--SYilj~lause-W(a)(il), 249
tlle-Q\arterers-shall--make-fH>-ffif!!Gturakhaflges-.. ;n-#!e 250 Vessel Gf--GJ.laR~n tAe maGhin~ailers,. 251 appYrtenaRGaS--GF-Spare 13alts tttereet:---witheut-·in-easR 252
inskmGe--fifst--seGur~nQ----th-e--Owners!-ar:;j;lroval-thareef.-------#’ 253 the-QwAers-se-agree,the-GI!artereFS-&Rall,lf-the-GwRers 254 ss reEflliFe, restere-tAe----Vessel-te--its-fGr-mer-sooGiticHl 255 before tAe teFmiAatien ef tRis
Chaftef.- SEE CLAUSE 38 256 (f) Use of the Vessel’s Outfit. Equipment and 257 Appliances a The Charterers shall have the use of all 258 outfit, equipment, and appliances on board the Vessel at 259 the time of delivery, provided the same or
their 260 substantial equivalent shall be returned to·the Owners on 261 redelivery In substantially the same geeQ......grf.leF-aAd 262 condition as when received, ordinary wear and tear excepted. The 263 Charterers shan from time to time
during the Charter 264 period replace such items of equipment as shall be so 265 damaged or wom as to be unfit for use. The Charterers 266 are to procure that all repairs to or replacement of any 267 damaged, worn or lost parts or equipment be
affected 268 in such manner {both as regards workmanship and 269 quality of materials) as not to diminish the value of the 270 Vessel. The Charterers hava the right to fit additional 27·1 equipment at their expense and risk but the Charterers
272 shall remove such equipment at the end of the period 273 unless agreed otherwise by the Owners and the Charterers, -If rf*Juast€4-b-y-the--GwRe-Fs. Any equipment including radio 274 equipment on hire on the Vessel at time of delivery shall
275 be kept and maintained by the Charterers and the 276 Charterers shalt assume the obligations and liabilities of 277 the Owners undor any lease contracts In connecllon 278 therewith and shall reimburse the Owners for all 279 expenses incurred In
connection therewith, also for any 280 new equipment required in order to comply with radio 281 regulations. 282 (g) Periodical Dry-Docking - The Charterers shall dry- 283 dock the Vessel and clean and paint her undeJWater 204 parts whenever the
same may be necessary, but not
PART II
11BARECON 2001 1’ Standard Bareboat
Charter less than once during the period stated In Box 19 or, If Box 286 19 has been lett blank, every sixty (60) calendar months 287 after delivery or such other period as may be required by 288 the Classification Society or flag state. 289 11.
Hire SEE CLAUSE 35 290 (a)-~~aflerers shall pay--hlre--<kie-lO--IAe--Gwlleffi 291 I*JAGI\Jalll’-l.,_.ooof<lanaa--WIIMile-lefm&-of..lhis--Gllarlef-iA 292 respoot-4-wAist-1-time-&RaU-ba-Gf-the--BSS&AOO: 293
(1>)-+he-Gllaflerers shal~pay to the Owners-fGf..tlle-hire-ol 294 tfte-lJessel a lldm!3 sum-iiHiw--amount:-tREl~Gated-lll--8ex--2a 295 wh!Gh-shalf..ll~la-Aot later tha~ve~uoniR!I 296 Elays-i~ha-firs~um-l>eill!JilllYeble-efl-lAe 297
dat<H~Rd-ilo<!f-of-t11o--Vesoel’s-<Jeiively--la-the-Gllaflel0rs, 298 leire--~l>alt-l>e-r>aid-<lontilloously-threu§hout-tll~rlef 299 PeFieG. 300 (c) Payment of hire shall be made in cash without 301 discount In the
currency and in the manner indicated in 302 Box 25 and at the place mentioned in Box 26. 303 {Gf--- FiAalj3ayment.of--Aire, if far a-pefleG--ef-less-llia-R--tf::t.ft.y 304 (:lllj-runniR~ eays, shatt-toa-aalsulate<l--proporlloR!I!I¥ 305
aooorffin§l te tAe--mlm98f-ef--days FemaiAiflg.--befere 306 re<lelivery---<:lnd---a<lvaMe--paymeRt--lo-I>E>-elfestee 307 aoooF<IiA!W- 308 (ef---SI!euld-lhe-Ve&sei-l>e-losH>f-FJli&siAg,.nire-ffialkease 309
fFGm-the4ate-aR€1-tlme-wh9-R---SRe--was-le~st-heaftl-e.f. 310 :r-Ae-Gate-\lpon-whlsh-tAe--Vess~e-treate9 as lost-&F 311 missing shall be t””·(-10)--<lay&-<l~er--the-\lessel-wa&-l..t 312 repoF1:e9 ar
when--lha--Vassel-is------f)estad-as.--mfssiA§-bY 313 bley9!.s1-wtliGhevef....asGUrs first /1-,ny.. .flife--{:}airJ-ln-advafloo 314 te-be-a<ljuste<i-aGGor<IIRgiy, 315 (lj Any delay-In paymente--ahntitle--!Ae-Qwnef& 316 to~i~e-..
rate-p-ef--aRAUm-a&-a{¥6ed--in BeJi 24. If 317 8~as-net-been---fi.lled.-ill;-#’t~ree-mootA-s-interbank 318 effered-rata-ln--bondon (bi~OR or-11&-wooessort-aJ--the 319 OOJ’Fe-Asy-.state~ iA Se-x 29, as
q\KlteG---by--li:Je-·BFitisR 320 Bankem’ Asseffiatlen--{88At--en-t·he date vAleA-th&-hife-fell 321 d”e,ir!Greased-l>y 2 per sent,-$aif.aW!y, 322 AA- Payment Gf Interest a~e wndei’--SHh-Gfayse-1-~11 323
l:.la-maQa-wlthin seven (7) r-uAAing-.Qay-s-ef the Elate of---lRe 324 Gwne~eGifyiRg-t.Re--ameuHl-payable-ol’-;--if’l---tR 325 ah-e.eAGe-Qf-an-iRVGioo,at-the-time-Gf-.tM-n~ayment 326 dale, 327 12. Mortgage SEE CLAUSE 44 328 (only to epply
If Box 28 lias been appropriately filled In) 329 ‘l {a)--The-Owflers-waFFaR!-tl>al-tlley-llave-no~effeated 330 any mafl~age{a)-e~e-Vassel and that--thoy-sllall-n<>t 331
elfeat-any-mortgase(&)-witllool-tl1e-prior-GO!l8enl-<>l-the 332 GllaJterei’S,whisiH;I>alkwt-I>EHifll’<l<l.OAably-witlll>altl~ 333 :1 (tl)--+lla-Vessekilarter-this Charter ls,fiAanse<l 334
b.y-a-meFl:gage-aGGeffiiAo-----00-th e Fi na AGiai-Hlstnnrtent”’” 335 +Ae-GhartOl’efS--<lRdertake-lo-eompl~rovide--sooh 336 i-nformatiGA-and--4eGUmeAts---to enat:lle the--GWRefS--.to 337 somply,wlth-all Sl.IGR
1Actrustiens-ef4irestions-in-re&affi..te 338 the ernJ31eyFAenl,.---tns-ufaROOS,------epe-FaliaR-;-fe~aiFS and 339 maiR-terumse-of.-tAe-Vessel--as-laiG-4ewn-iA--tAe---F-JnanGial 340 I-Rstrument-er-as-may¥be GiFesteG
from-time-te-time----duriAg 341 the-G\Iff6!1BY· af the Charter-l>y-lhe-marlgagee(<>}-lll 342 OOAfGFffiity~inan~menb-----+Re--CilaFtSfBfS 343 OORfirm ti:lat, ffl~ tl:lis f)tnp~se;--lhey-----Jlave-----asquai-Rted 344 themselves wltA
all--relevalll---terms,---eeA~iUon&-aflG 345 pmvisieRS----et--1:-he--Finanelal-·lnstrr.Jment and af]Fee to 346 askAGWIOOge tRis in writlng-11’1-----aAy--form tAat r+~ay-be 347 fllquiFB<i-1>y--111e-rnortgagae(&-), The
Ownei’S-WaffaR\..th aI 348 teeyfiave-not-elfeste<i-any mart~age(&-)-otheHilaR-statad 349 i!Hle><-28-aRtl-ti>a~they shall no~agree-te-any-amoodment 350 ef.-the--meftga!iJe{st--r-e-ferreG--te--ifl-Box 28 er effest--any 351
eth~m~s)------witheut-th8----f1Fi9f---OORSen~e 352 Ghartel’ef&,-WhJsh-sAaU-net-tle-uRreasenal:.lly-witAAekl.- 353 *) (Optional, Clauses 12 fal and J.2...JlU are ~tllematlves; indioate 354 altemallve agreed In Box 28l. 355 356 13. Insurance
and Repairs SEE CLAUSE 40 357 (a} During the Charter Period the Vessel shall be kept 358 insured by the Charterers at their expense against hull 359 and machinery, war and Protection and Indemnity risks 359 (and any risks against which It is
compulsory to insure for 360 the operation of the Vessel, Including maintaining 361 financial security In accordance with sub~clause 362 10(a)(lll))ln undeowrlter’s standard from as the 363 Owners have recelvedJ reviewed and shall-in 364
Wl#ingapproved,-wRIGA--a[;)pr-ova-1----sAall-flet;.........be 365 mr<laSGilably-wllhllet<l.IA-s”sh-ferm-ae-lhe--Gwn””’ 366 sl>ali--IR-wriUn~ve, whish apprevai---Wall-r>et-l>e 367 ul’lfeasoR-ably-withh.eiEh
Such insurances shall be 368 arranged by the Charterers to protect the interests of 369 both the Owners and the Charterers and the mortgagees 370 (If any), and the Charterers shall be at liberty to protect 371 under such Insurances the Interests of
any managers 372 they may appoint. Insurance policies shall cover the 373 Owners and the Charterers according to their respective 374 interests. Subjest-kHAe--previsiellS--Gf-th~cial 375 -enl;-l~nd-the-ewr<>val sf tee Owners-and 376
Uls-insl:lfBF&,---the-Ghar=tereFs shall-effeGt-all-lnsw:ed-fepair-s 377 an€! sAall r.JndeFtake--settlemeffi-aR4..-felrnOOFsement-fl:em 378 lJ;}s-insuFeFS-Gf-.all eesls in Gonneetioo--with eldeR repairs 379
as-we-U----as---msur~es,.-B*fletwes-an€1----UaSii-Uies--to-tAe 380 exteAt-9f-GeV&FaQe-UndeF tAe insuraRGeS--Rerei~d 381 foh 382 383 The Charterers also to remain responsible for and to 384 effect repairs and settlement of costs and expenses
385 incurred thereby in respect of all other repairs not 386 covered by the insurances and/or not exceeding any 387 possible franchise(s) or deductibles provided for In the 388 Insurances. 389 All time used for repairs under the provisions of sub-
390 clause 13(al and for repairs of latent defects according to 391 Clause 3(cl above, including any deviation, shall be for 392 the Charterers’ account. 393 {G}--If-«::e----wflditieFt&-ef....tt:le--abeve-if’lsuraAG9S---f3ermit
394 ad<IUiOflal-lnsH~be plaoed by-lh8-J*!rtlee,suse 395 OOV&f-8-hall-be-l-imited-to---the---amGunt fer easA paRy-set-eut 396 iA-80J<-3Q..antl-ll<»<+””,r$pe<llive~y,--=t=fle..GwAers-<>F-tfle 397
GRaJ:ter-eFS---aS-I:he Gase may-be----si:lal[--immeffiately 398 fumisll--th<HJther-party..wlthi>artl’*’lam-ol-aRy-aeeitional 399 ffiwronse-e#eGted,--IRSIOOtf’lg-.eeple&--Gf.--any saver nates 400
or--J:)eliGies-and--tf!G-WFitten-OOR-Sent-of..the--ffislJfefS-Oh.my 401 susll-require-4-i-FNWfanee in any Gase-whe~e--the---BaRSeflt 402 of sueR instueFS-is--fle.eessafY;- 403 (c) The Charterers shall upon the request of the 404 Owners provide
information and promptly execute such 405 documents as may be reasonably required to enable the 406 Owners to comply with the Insurance provisions of tile 407 Financial Instrument. 408 (d)--S<ll,jest----la--the--pr0111siGAs-ef tee Flnanaial 409
ffistnfment, if any, shouJEI---tAe--¥essel-bewme-all-BOOfa~ 410 eonstrusYve,~sompromised-GF-agreed-total-less--under-t:Ae 411 i-MliFanees reEjulred ~:mEier sua-siause---1-3{ah--all 412 irn;ura
nG9--f}SYAlents--fGF-.stleh-iess-sHall-be-paid---te--the 41 3 Gwoofs-w!’IG--Shall--distrioote--U:le .. --meAeys betweoo-tAe 414 0Wn8fo-aml-the-Chaflerero-aGGer<lirl!l-i<>-thaiHeSJlas!IVe 415 interest&.---+he C
AaFI.ere~ndeftake-to-notify---tAa-GwnefS 416 ami-the meFt~agee~ny, ef any-{)GGu~n 417 sonse€{UBRGB··Of-wAish--tlcie.JJttssel is likely-te--be-GGme-a 418 t<>ta~les&-a&4efined-11’1-1111s-<;tauea~SEE CLAUSE 40
419 (e) The Owners shall, upon the request of the 420 Charterers, promptly execute such documents as may be 421 required to enable the Charterers to abandon the Vessel 422 to insurers and claim a constructive total loss. 423
(f)-~FeF-th6---f)l.JFf39Se-Gf--iASUf-aRGe-GGVefa!)e---a{J8ifmt-.Rull 424 aru:HnaGhln~r-r-isks----u-OOer-the-pmvisief’IS-Of...sHb.. olaus~{a),lhe-value-ef..lhe-Ve&sst-ie-lhe-sum-IR<li&ated i!Hl<>J<-29~SEE CLAUSE 40 14.
Insurance, Repairs and Classification N/A 425 (Optional, only lo apply if expressly agreed and slated ill 426 Box 29. in whlcl1 event Clause 13 s!Jafl be consklered 427 deleted). 428 (a) llHrin~
tAe-Ci>artef..l>eriod-ll>a-Vesse~~all-l>e-l<ept 429 insured-hy-111e--Owners-al-tlleiH>Xpenses-ega lnst-lwll-aRd 430 maGhiRe-fY-URd war Flsks ~AdeHRe--fGfm..of-p9UGy-eF 431
PART II
“13ARECON 2001” Standard
Bareboat Charter ~:~eiiGle&-att-asheG-heret~e-Qwnar-s-a-AGioHAsldfefS-shall 432 Rat-have--any-FigAt--ef.--reseve~brooatJoo-against-the 433Ghaftemr.s-oo-a.GGount-ef.--IGss ef ar any Elama€Je to--tfls 434 Vassei--af--hef.-maeffioory. ..
-Gf----BPPI:Irtenaooes-GovereE!--By 435 su~raAGe, er en--a-GGG-Unt--ef.-.--paymems--mage--te 436 GiSGilaf!je-Giaim&-agaif!St.oF-iiabiiiUes-<>1-!Ra-\/essei-GF-IRe 437 OWRers seve reEl by SUGA--IRs\lranGe.---------ffisuFaRGe-f*)liGies 438
sllai~ooV&F-IIle-GWAef&-<IRG-111e-GhartE!fafHIOOGrGIAg-le 439 lM-if--fespeative--iR-I.erasts-.------ 440 l\Jl-l:lUFiAg-!lle-Ghaflef.-PefieEI--IAe-Vessel-sllail-bE>-kef>~ 441 lnsHfeEi-by·----lhe--GRaff.ereFS at
tA~ense-agffinst 442 f’f<JteoMoo-afld.-inelemHii)’-·Fisks-4and-a~-··a!}l!iH$1 443 whisii-Jt-.ls.-oem;>ulwl)’-lo-iA&Yie·foHil<Hl~eratioA-et-the 444
‘lessel,---iRGI<I<ilflg--maiffiainlniJ-IiAanoial-seGI!Fity-ffi 445 assOf<iaA<;e-wiliHll!H:Iause-iG(a)(iii))-IA-wsh-ferm-as-the 446 GwflefS-sA-atl-tA-Wr~tin~prove ‘lffilslg ap.(}~all-flet 447 be-unFeaSeRably-wilhi>eiQ, 448
(G)-IR--th6-9Vefll-illal--aflt-aol-eF-Ae~ii§9Are--of-tAe 449 Gharterers--<;hall vitiate aR)’-91-the--iAWfaoce-llerein 450 pr-eviGed;-{he CAaFterer.s~y-te-tRe-GwnefS-al.l--lasses 451
afld.-iAdemnify-.the-GwRem-agaffiat-ai~Giaims-afld-GemaOOs 452 wlllGR-wouiG------GtheMise !:lave beeR-------OOvereG----by---sucll 453 ffis.ufanca- 454 (<lt--+he-C:IlhalaflFi<elfreOlr<>s-sshali,-twbjesl-t<Hile-a~~revai-Gf-the 455
GwAer~F-G-wRers!....IJM6fWr.iteFS,-------affeG~I-Insure4 456 repai-d-the-GhaflO!ers-shall-unaeFlake-Gettl”””’”’-<>f 457 alt-mlscetlafl-oous elCJ3SRS es-iA------oo-nneGtlen---wlth-------sool:t 458
repaif8--aS--Welt--as-all---insttFa4----Ghaf§es,-e.XpeASas----aAd 459 liat>iUties,to---tRe-extent---ef-Gaver-a!’)e-UA€1er-·the-fA&YfanGes 460 provlae<l-feeunaer-tH~ravi&laAs-of.s>JIH;Iause-44{aj, 461
+ile--GRQrtef8fS-tG----.be-seeured---fafr:Abursemem-tJ:lrough 462 the-OwnSfS!--Undei:Vt’ritars fer SHGI:I ex-F~eMiku’es---Bi*JH 463 pFGSGRtatioR-Gf-aooount&,.---...... 464 (e)-The-GhMerers-to-ramaiR-feapoRSiGle-lor.-f!fl<l-le 465
effeGl-----fer;lairs ana setUemeffi.---Qf-oosts----aml--exp&RSes 466 inwn-eG-tl’lsFaby fA---I’eSPeGt-of...a.U.--.etfer~fS-f’IOt-~ 467 b~uFaRSe&----andlef-fl{}t 93EeaaEliR9--a~lble 468
--fmnG!tis~-oHeOOctibles-J.:mwi€1eG----fuf---in---4Ae 469 iR&YfaRGefh 470 {ft--AII-tlme-used-t’eF-fe!’lafrs-ttn€lef---the--p-mvisleRS of-sub- 471 sla!JS&-’14(o)-aFI<I-+4{e)-aRG-fef-FO~~ateR!-<Iefeots 472
aGOOrding-t-o-Cia~beva,--iAGiudiH~deviatiea, 473 shaU-be-fer-tl:le----Gharterer&--asoount--aRG-sJ:Iall-fGfffi-Ji1alt-Of 474 Yle-Gherter-l”eeie<h- 475 :r.ne-Gwoors-sR-a-JI...Aot-be---re.spanslble-feF-any-9*(:JeASes.-as 476 are-insld-
t<Hh<Hise--aRd-ap-·oHAe-Vess-r 477 suGh-time-as-may-bB-f9quire€1-t&-make-suM-repaiffi.:. 478 (!l)-lf-~he-senditieAS-ef-the-above-inSl!FaflWs··POfffiit 479 addi~oflal--insu~o-Joe-j>lased-l>y-tl1e-parti~sl\
480 oover-shall-bo>-llmile<l-le-tlle-affi9\1At...for-sash-j>alty.sei-sllt 481 ifi···BEI*-3Q-an~~~-re&pe6tfvely~wners er the 482 Gf!.a.i:tefe-rs-as-tRe--Gase-may-b&-6Aalt--lmmetliately-furnlsR 483
the-eillef.j>arty-wilh-J)artlslllars-<>f-any-addiljonal-iHS<Iranse 484 effeGteG,.jnGAAHAg. .. sepies--Gf-any-oover-nate&-Gf-.j:loileles 485 a00-th9-WA-tten--sensoot--G~·--t:l=le--iRSureFG ef any--.s.usA 486
ffifltliFOO-inSUfB-Ae&·iFI any sase.wRere--#te·ooASeffi af-.suOO 487 ffi&urer.s-is--Resessru:y.------- 488 ih)·-Shoold-tho-llessei-b”””IFI<Hln--<lGIIIai,GGRslruBtlv<>, 489
Gompmmise€J--or_....,agree4-tota!---IGss--l&ndeF----tha-itH.mr-ar.ees 490 require4---ttRGer----6lollrG!ause 11 (a), ai~AGe-13’aymeAts 491 fuH!\Ish-loss--shaii-Jo<>-j>a{<l-1~-lhe--Qwners, whe shall 492
GistriDute-ttfe-------mooeys-·--betweeA---themse!ves---aflQ --.ti:Je 493 GHaftera-FS-aGGefding-te tAeir respeelive-interests. 494 {it---lf-·-the------Vesse+---beoome6---aR----aGblal,....--ooAstrustive, 495
OOR1f;lf9ffiiseG-er--agree4-----te-lal-le8S---\I-RGer-lJ:I.e.---ffisl:l-r.anoos 496 aFFange4--by-the--GwAers-in---aGGe!’Gans~u~e 497 44(B),-lhi&-GilarleF-shal~lermffiate as of the-Gate-ef-suoh 498 I 499
(j)---+llo-Ghar!erero-shali-ll;:>OR-th...,._t-af4ile-Gwner&; 500 PFOOII>IIY.Ill<OW!e-Gush-<leeumenl&-$-may-be-Fe~uired-!e 501 eAabte-the-Owner-8-l.Q.-abaftde.A-the-Vessel-to--tfte iRSUreFS 502
aA€1-slaim··a--e.GRstfUGlive-teta-l-leS&- 503 (i<)--l’or-lile-pur~ese-Gf-lnsuF8flGG-GG\Iefa!le-8Qaill6l-11ull 504 an4-mashinefY--8Ad-waHisks-undeF-the”pmvisioos-of-.sub- 505
oiause-14(aM!le-value-eUhe-lles<lei~s-tha-surA 506 iFidioatefl-i.R--gg.x-29.,... 507 (1)---NetwlthstaA<lffig--any!Rie!j-GOiltailled--i!H*!b-olaHSe 508 4{l(a~eEI-thal-l!eder-tile-pmvislens-of.Gia<~Se-14, 509
lklpp~Oilbia,lile-GwneF<H>hall-kee;Hhe-\lessel’s-Giass 51 0 fully-up4e-elale-With-!ha-GiasstliGalleR-Sosiely-lmtioate<l-ln 511 Bex--W-an<l-mailltaln-ilil-etl1er-lleoessary-eertiliostes-ffi 512 :feFGe-at-ai-1-times., 513 15.
Redelivery ALSO SEE CLAUSE 46 514 At the expiration of the Charter Period lhe Vessel shall 515 be rede!ivered by the Charterers to the Owners at a safe 516 berth or anchorage at a safe aRS-loo-free-port or place 617 as indicated in Box 16, 1-A
S\!Gh-ready-sale-eerth-as-the-Gwnefs.ffla\4lifeot~The 518 Charterers shall give the Owners not less than thirty 519 (30) running days’ preliminary notice of expected date, 520 range of ports of redelivery or port or place of redelivery 521 and
not less than fourteen (14) running days’ definite 522 notice of expected date and port or place of redelivery. 523 Any changes thereafter in Vassel’s position shall be 524 notified Immediately to the Owners. 525 The Charterers warrant
that they will not permit the 526 Vessel to commence a voyage {Including any preceding 527 ballast voyage) which cannot reasonably be expected to 528 be completed in time to allow redelivery of the Vessel 529 within the Charter Period.
Notwithstanding the above, 530 should the Charterers fail to redeliver the Vessel wlthtn 531 the Charter Period, the Charterers shall pay the daily 532 equivalent to the rate of hire stated in Box 22 plus 5 533 per cent or to the market rate,
whichever is the higher, 534 for the number of days by which the Charter Period is 535 exceeded. All other terms, conditions and provisions of 536 the Charter shall continue to apply, 537 Subject to the provisions of Clause 10, the Vessel shall 538
be redelivered to the Owners In substantially the same 539 Gf-as-§-€H~d stfb~Gtw:e,state, condition aRd·Gia&& as that in 540 which she was delivered, fair wear and tear not affecting 541 class excepted. 542 The Vessel upon
redelivery shall have her survey cycles 543 up to date and trading and class certificates valid for at 544 least the number of months agreed In Box 17. 545 16. Non-Lien ALSO SEE CLAUSE 47 546 The Charterers will not suffer, nor permit to be
continued, 547 any lien or encumbrance incurred by them or their 548 agents, which might have priority over the title and 649 interest of the Owners In the Vessel. +Re-------G-llarterefG 550
fufthef--agree---tG--fasteR----te---tha--Vesse-1--in--a--oonspiGUous 551 ;>lase-aml-1o-l<eep-s<>-fastene<klwill9-the-Ghafler-P~ed 552 a-AGtiee-FeadiA§-as-fQIJews;. 553
‘+hi;;-Vessel-is-the-J>FOI’efty-of...tRame-<>1”-Gwners)rlWs 554 HRdeF--GilaFter--t-9-1Rame--ef-Ghafterer-s)--aRG-by--the-tGfFils 555 el-tl1e-Ghafler-P-arly-Aei!Aer-the-GhafterefS-Ref---the 556
MasteF-Aave.-any-Rghl,paweF---9f--auU~Gfity--la-Gfeate,iRGUF 567 e~SffHit.to-be-imposed-eA--the--Vessel aAy ·lien 556 whatseevef.!. .. - 559 17. Indemnity ALSO SEE CLAUSE 64 560 (a) The Charterers shall indemnify the Owners against 561 any
loss, damago or expense Incurred by the Owners 562 arising out of or in relation to the operation of the Vessel 563 by the Charterers, and against any lien of whatsoever 564 nature arising out of an event occurring during the 565 Charter Period. If
the Vessel be arrested or otherwise 566 detained by reason of claims or liens arising out of her 567 operation hereunder by the Charterers, the Charterers 566 shall at their own expense take all reasonable steps to fi69 secure that within a
reasonable time the Vessel is 570 released, including the provision of ball. 571 Without prejudice to the generality of the foregoing, the 572 Charterers agree to indemnify the Owners against all 573 consequences or liabilities arising from the
Master, 674 officers or agents signing Bills of Lading or other 575 documents. 576
PART II
“BARt=CON 2001” Standard
Bareboat Charter (b) If the Vessel be arrested or otheiWise detained by 577 reason of a claims or claims against the Owners, the 578 Owners shall at their own expense take all reasonable 579 steps lo secure that within a reasonable time the Vessel
is 560 released, including the provision of bail. 561 ln such circumstances the Owners shall indemnify the 562 Charterers against any loss, damage or expense 583 incurred by the Charterers (Jncluding hire paid under this 584 Charter) as a direct
Gonsequence of such arrest or 585 detention. 566 18. Lien 667 The Owners to have a lien upon all cargoes, sub~hires and 568 sub-freights belonging or due to the Charterers or any 569 sub-charterers and any Bill of lading freight for all 590 claims
under this Charter, and the Charterers to have a 591 lien on the Vessel for all moneys paid in advance and not 592 earned. 593 19. Salvage 594 AU salvage and towage performed by the Vessel shall be 595 for the Charterers’ benefit and the cost
of repairing 596 damage occasioned thereby shall be borne by the 597 Charterers. 598 20. Wreck Removal 599 In the event of the Vassel becoming a wreck or 600 obstruction to navigation the Charterers shall Indemnify 601 the Owners against any sums
whatsoever which the 602 Owners shall become liable to pay and shall pay in 603 consequence of the Vessel becoming a wreck or 604 obstruction to navigation. 605 21. General Average 606 The Owners shall not contribute to General Average. 607 22.
Assignment, Sub~Charter and Sale 608 {a) The Charterers shall not assign this Charter nor sub- 609 charter the Vessel on a bareboat basis except with the 610 prior consent in writing of the OWners, which shall not be 611 unreasonably withheld, and
subject to such terms and 612 conditions as the Owners shall approve. 613 (b)-The----QwnefS--&Rall---not-sall tl:le ‘less~-dijfiA§-----he 614 G\!ffi>AG)’-of--tllis--Ghafl-~lcwlth-<118--I’Fi<>F--wrllteA 615
GGASeRt-------ef-.----ttJe---GhaFtereFS, V.’l’liGA shall A9t Sa 616 tmr--saoonably--wi#theld, and s~;~t.Jjest-to--tRe--b~;~yeF-aweptiAg 617 a A assi!iAR-lertt-af-tJais--CharteF:- SEE ClAUSE48 616 23. Contracts of Carriage 619 “) (a)
The Charterers are to procure that all documents 620 Issued during the Charter Period evidencing the terms and 621 conditions agreed in respect of carriage of goods shall 622 contain a paramount clause incorporating any legislation 623 rel~ting to
carrier’s llabllily for cargo compulsorily 624 applicable ·In the trade; if no such legislation exists, the 625 documents shall incorporate the Hague..Visby Rules, The 626 documents shall also contain the New Jason Clause 627 and the
BothRto~Biame Collision Clause. 623 ~ fbt---+he .. -GI:1-a-He-rer-s----are--t9----(}roGYre-t11aalhla~JI-i~”’assengeF 629 tleket&-i&swad---duFiAg---tRe-Gt:larter-P-eFlGG-fGF----tAe-Gaffiage-ef 630
passengel£--aml------tAalr-lugeage------blmief--thfs----GRa-ftef---P.all 631 oontaiF1----a-----J3-meunt-sla-Hs-e----lnoofP9-fati-Ag--aAy..-legiffiatien 632 rela-t-iRg-------te----6a-FfieFs-Uabm~er----passengers aAGl tlleir- 633
l”g9<JQ<>-G<llfl~Ciisorily-awtisable--ln-t-cle;-lf-n<H>”Gh 634 le~exlst&;-tAe-passe»f!9-f----tiGkets-s»all-iAGe-fPflJale 635 tHe-------Atherts---Conventien Relatln§-the-GaHiaee-e:J 636
Passe-RgeFS---aml tAeir lugga§e------by-Sea,--1-9-74,-----anti--a-Ry 637 ~rotocol-theret<>, 636 ‘) llelete as eppllcabla. 639 24. Bank Guarantee 640 (Oplional, only to apply if !1!!JJZ fflled In) 641 -+J:le-G-flafteFer.S-YAEieR:al~e
to ..fur -flisA--;-bsfore-de-llve~e 642 Vessel,-a-fir-skl-ass----bank-gYa-FaR-tea-el”-beAG-----lR-----e-sum 643 a-Ad-al-the ~!aGe as-inS~GateG----in-Be-J( 27 as §U.arantee--fef 644
f”ll-p-aRGe-Gf..thnir-Geli§ali<>n841nclef-lllis 645 Gllarter-.--~ 646 25. Requisition/Acquisition ALSO SEE CLAUSE 40 (a)l(b) 647 (a) In the event of the requisition for Hire of the Vassel 646 by any governmental or ot11er competent
authority 649 (hereinafter referred to a “Requisition for Hire”} 650 Irrespective of the date during the Charter Period when 651 “Requisition for Hire” may occur and Irrespective of the 652 length thereof and whether or not il be
for an indefinite 653 or a limited period of time, and irrespective of whether 11 654 may or wlll remain in force for the remainder of the 655 Charter Period, this Charter shall not be deemed 656 thereby or thereupon to be frustrated or otherwise
657 terminated and the Charterers shall continue to pay the 658 stipulated hire in the manner provided by this Charter 659 unur the time when the Charter would have terminated 660 pursuant to any of the provisions hereof always provided 661 however
that Jn the event of “Requisition for Hire” any 662 Requisition Hire or compensation received or receivable 663 by the Owners shall be payable lo the Charterers during 664 the remainder of the Charter Period or the period of the 665
‘Requisition for Hire’ whichever be the shorter. 666 (b) Notwithstanding the provisions of clause 25 (a), in 667 the event of the Owners being deprived of their ownership In the Vessel by any Compulsory Acquisition 668 of the Vessel or
requisition for title by any governmental 669 or other competent authority, which for the avoidance 670 of any doubt, shall exch~de requisition for use or hire not Involving requisition of title (hereinafter referred to 671 as ‘Compulsory
Acquisition’), then, -ifrespeative--ef 672 the Glate EflJFIA9·Ahe Char:ter PerieG---wlwn-~!Gaffii*HsaFY 673 Mquls!U~GGur,.this Charter shall be deemed 674 terminated as of the date of such “Compulsory 675 Acquisition”. Jn such
event charter hire to be considered 676 as earned and to be paid up to the date and time of such 677 “Compulsory Acquisition”, but not thenafter. 678 26. War 679 (a) For the purpose of this Clause, the words ‘War 680 Risks’ shall
include any war (whether actual or 661 threatened), act of war, civil war, hostilities, revolution, 682 rebellion, civil commotion, warlike operations, the laying 683 of mines (whether actual or reported), acts of piracy, 684 acts of terrorists,
acts of hostility or malicious damage, 685 blockades (whether imposed against all vessels or 686 imposed selectively against vessels of certain flags or 687 ownership, or against certain cargoes or crews or 688 otherwise howsoever), by any person,
body, terrorist or 689 political group, or the Government of any state 690 whatsoever, which may be dangerous or are likely to be 691 or to become dangerous lo the Vessel, her cargo, crew 692 or other persons on board the Vessel. 693 {b) The Vessel,
unless the written consent of the 694 Owners be first obtained, shall not continue to or go 695 through any port, place, area or zone (whether of 696 land or sea), or any wate1way or .canal, where II 697 reasonably appears that the Vessel, her
cargo, crew or 698 other persons on board the Vessel, in the reasonable 699 judgement of the Owners, may be, or are likely to be, 700 exposed to War Risks. Should the Vessel be within any 701 such place as aforesaid, whlch only becomes dan{.Jerous
702 or is. likely to be or to become dangerous, after the entry 703 into it, the Owners shall have tile right to require the 704 Vessel to leave such area. 705 (c) The Vessel shall not load contraband cargo, or to 706 pass through any blockade,
whether such blockade be 707 imposed on all vessels, or 1s imposed selectively in any 708 way whatsoever against vessels of certain flags or 709 ownership, or against certain cargoes or crews or 710 otherwise howsoever, or to proceed to an area
where 711 she shall be subject, or is likely to be subject to a 712 belligerent’s right of search and/or oonfiscntion. 713 (d) If tAe insurers ef tRe war--fisk-------i-nstlfanGa,----wAe-tt 714
Glauoo--14--is-a~e,--shookl-requir&-!’a}’ffie!ll-of “115 preml~:~ms--anlil’-er salls-beGaHSB;-p-I:IFSI:IaRt-----tG--~the 716 G-flafterers! efdef&,---#te-VesseHs---witi:HRr-m-!s-ffire----lG.-ooter 717
and-r~ny-afea---Gf-areas---wffiGI’l-a-re---apeclfied 716 b-y----swA-insurer-s---,as--ba-IA§--Wbjest--te-ad4iUooal .. .prem-il:lms 719 beGai;;I-Se ef ~’\’ar R.lsks-,---tR8-fi-SUGh-premium&--afldler-Galls
PART II
11BARECON 2001” Standard Bareboat Charter
sl!all-oe-ffiimi>llffie<l-by-lha-Gllartar&fS-la-#le-GweeFS-al 720 the-same-time-as-t~B-Aext-paymeffi--Qf-Air:e-is·dl:l&:- 721
(e) The Charterers shall have the liberty: 722
(1) to comply with all orders, directions, 723
recommendations or advice as to departure, arrival, 724 routes, sailing in convoy, ports of call, stoppages, 725 destinations, discharge of cargo, delivery, or in any 726 other way whatsoever which are given by the 727 government of the nation under
whose flag the 728 vessel sails, or any other government, body or group 729 whatsoever acting with the power to compel 739 compliance with their orders or directions’ 731 (ii) to comply with the orders, directions or 732 recommendations of any
war risks underwriters who 733 have the authority to give the same under the terms 734 of the war risks insuran«::e; 735 (iii) to comply with the terms of any resolution of tha 736
Security Council of the Unlted Nations, any 737 directives of the European Community, the effective 738 orders of any other supranational body which has 739 the right to issue and
give the same, and with 740 national laws aimed at enforcing the same to which 741 the Owners are subject, and to obey the orders and 742 directions of those who are charged with their 743 enforcement. 744 {f.)-------ffi-te-evant ef ebltbmak-ef wa.f
{w-Rether--the-fe ae-a 745 deslar-atlGR-Gf-w-ar-·or-net--t--fit--betweeR any ~NO-GF--m9fe 746 of-the-4eUewln€J-OO\HWi~·the-I.J.Rite4--States ef Ameriear 747 Rlfssiar·the UniteS Kin~Eiaffij----FfanGB;--and---tfle-P~ 748
Re!*ll>liG-af-Ghi~etwa&A-afl)’-1wo-aHll<)f6-of--the 749 eeHRY/es--stateEI in Bex----3e., -9etfl-tl-le--Gwf:tefS- aRG----tRe 750 GharteFeFS stlall--have ltle right---tG---GB:HGel-this--GR-after7 751 wf:le.FmlpoA--tRe-G-1:1-afterers
sl1all retleliv&f-tl:te--Vessel--ffi 752
!!1e-GWOOfS-i!HIGGGr<!aiwa-With-Giao<;e-4li;jl-!he-\lessel 753
has-eaF§e-en-beaf4--afteF-disGJ:\af§e-#lereor-at 754 l;lestiAatiGA-;--9r-if-da9affeG-u1’!deF ti:Jis G1ause .. rr-eFR 755 reasAiAg-an<k>fl-g-U-a! a Rear opell-aFI<kafe-perl--as 756 <!ireGted by !!1e
Gwners,-er4!11e-Vessei-llawe-Gaf!I’J 757 el+-bGaHJ,--at-#le-peft-at-wA~e-Vessel tReA !s--eF--if-at 758 sea-ai---a---Reaf;-epeR---aAG----safe-paR-as----dlroote€1----by--tf:la- 759 QWAefS,----f-n.-aU Gases
hffe-shaH--sootfnue---te-9e----pai4-J.R 760 aGGOFEiaooa---w/th~-Gl-at:it!ie-----1--1----aFld e>:GefJt a.s-afe.Fe.satd-a!l 761 elller-jmWisiellS4lllio-GhaF!6FWII-appi)41HYI 762 rodellve~ 763
27. Commission 764
+he--GwRar.s-to pay a eernmissien--a-t--tRe-.rate--ffiE!Wated-in 766 ~ate
tAe 6rokers Ramea ln-Br:m g~ en-any--hire---paid 766 un<J<lf-th<>-Gha~<>-<a!a--l&-iR<IiGa!ed-in Bo” 331-lllo 767 oommiss-ioo----tG-be pai€1 by the.-QwneF&-SRall---GeV8F----#te 768 astual-exj:Jenses ef tl:le
BrokefS-aR€1-a-raaseRable--fee--feF 769 their-work ,. 770
lf-tho-IHIW!Ir&-is-ooli>ai<k>wi~reaGh-of !H&-GharteH>y 771
aitflef--Of--lho-partles, the ‘”’W-IIa-erafore----,;1\aU 772
-iAGemAify--#le--Bmkef&-afJaiR-st--lllelf---Wss.-- Qf.-oommtsslon~ 773
Should the parties agree to cancel the Charter, the 774 Owners shall Indemnify the Brokers against any loss of 776 commission but in such case the commission shall not 776 exceed
the brokerage on one year’s hire. 777
28. Termlnatron 778
(a)
Charterer’s Default 779
+he--GwRers--shali-IJe-entttte<l--lG--withGraw-too--\lessel-from 780 tAe-sefViGe-Gf-.the----Gh aFteFers
anS----tefmlAata-Ule---GRa-Jter. 781 willl--immediate-elfesl-by-wfil!el1 not1Ge-io-111&-Gharterer&-1t 782 {it-the CJ:laFterers fail te pay ~’liFe in aGGefGaooe-with 783
Glause---1-’h----Mewever.,--wftefe----.there------1&------fai!ure--te 784 make-----puflGtuaJ.----payment--eJ---flir-e-due---te-eve-FS!ghtT 785 Aei}Hgel’!ce, erreFS or--omlssial’ls-oR--#Ie-paH--of--t-Re 786
Ghafter~sir-baFl-ke-fs,-lhe Qv ·ners enan give the 787
GRaftefefs----wfitten-----AgtiGe--~e.~numbef------{)f -GJea-F 788
i>allking-<tays.--stated-i11-13ox-34---jas-feG<Jjjnise<l-a!-IAe 789 agraOf! t>lase--of;>aymoot)--in--wlliGh-to-<estify-tlla-latlura, 790
aR4-wheA----Se-reGtitied-witRlA----$l;lGI=l-FWJ’Rber~e.f---4ays 791 fol!owiAg--t-he-OwneFS’ noUG&,---the-paymeffi.-&MI!--stand 792 a-s---regular. anEI j8{clAGtual.--~-aHur-e-by--the-Gflarte!’8fS-to 793 pay-l;iro--wl!hin--11\o
794
“”’”bSf--<lf-day&-sta!e<l-ln--Behl4-af-li1e!HeGelvieg 795 the-QwnefS!-RatlGB<-a&--l*fNiGed .. hatei-A,-sha!~e 796
the-Gwnefs-t~w-fRe---Vessel··fmm-t-Re-servise 797 ef-the--GRaftafefS--an€1-temtinate·-tfle----GNFteF-WI!Ae-ut 798 furth9f-tletise.; 799
(IIJ--!I1e-Ghafiefer;;..Jail--!o--GGmply-wl-e-requ-s BOO oF. 801
~lause--8-ftra<lin!}-RestfiG!lons) 802 (2) Clause-1;l{a)--(ffisuranoo--a00--Repaifs) 803
(‘r<Widad-tHel-ll!e--GweerH\I!all--have--!R<H>ptieA;--J.y 804 wr.iUen netiGa -te-the--ChaFterefs,-.. to gl•:e the 805
Gl!artaref&-a--Sf”’Glfie-mi>ef--Of-<iay&-jjraoo--wilhffi 806 whiel:l te r-eGtlfy-tfla---failiJfe-witHoot-prejudire---00-the 807 Gwoors’--flght-te--wlth<lraiV--afl<l..laFrnl!lai<Hm<iar--!his 808
Glause If lhe Chaf!efers-fal~ply- with sush 809
Mtioor
~ll)--the-CharteFers fall le res!lfy any-failuro--to-e””’’’il’ 810 will>-the-·-r-””men!s of sub-Gl..,.e---40(a){i) 811
(MalnteMAGS--itAd -Re;a aiFS) as-seGR-a&-pFaGtlsally 812 pessible--after--tfle---GwRers..--fl~uested--tl:lem-in 813 wRUng se te Elo·-at=u:l--i-R---any-eve-Rt--so-ihat--tAe 814
~ASUmRGe-Gever.is-net-prejudiG-e€1-:. 815
SEE CLAUSE 41 & 42
(b) Owners’ Default 816 If the Owners shall by any act or omission be in breach of 817 their obligations under this Charter to the extent that the 818 Charterers are deprived
of the use of the Vassel and 819 such breach continues for a period of fourteen (14} 820 running days after written notice thereof has been given 821 by the Charterers to the Owners, the Charterers shall be 822 entitled to terminate this Charter
with immediate effect by 823 written notice to the OWners. 824 (c) Loss of Vessel This CAarter-shall-l>e-deeme<l-!<>--ba-leFmiFiatad-if-tho :Vessel----heGGmes a tetal-less er !s deslared-a~
soostrustive-eF-Gempromise4-oF--arraHge4--tetal-less.------Fef
!110--flurpose-4-this-wl>-Giausa,-!he-\lesssl--shall-eo!-ba 825
deemed-·tG---Be-l9$t--uR!ese--s-Ae-ha&-eilRer--beoome--aA 826
-aGtuai-tGta!--tess-or-ag-reement-lla-s-aee-A--feaffieG-wllh-hBF 827
-uA€1SFWf.!ters-iR-FespeGt--Gf--h6f-GGAStr.ustiva,oompremiseG 828 fH-affilAi}e4---tGtal less er if---m!Gh-agreemt-wlth~h6f 829 Wl<!e/W<Iter&-is-Rol--faaGha<I--J!..i&.a<ijudg~soffil’elefli 830
tfibunal---tRat---a-oonstrustWe---!oss--ef----ths----Vessel-has 831 oGGUrrorh SEE CLAUSE 40 (d)/( e) 832
(d) Either party shall be entitled to terminate this 833
Charter with immediate effect by written notice to the 834 other party in the event of an order being made or 835 resolution passed for the winding up,
dissoilltion, 836 liquidation or bankruptcy of the other party {otherwise 837 than for the purpose of reconstruction or amalgamation) 838 or if a receiver Is appointed, or-iHt-wspen~ymeAt; 839 ceases to carry on business or makes any special 840
arrangaments or composition with its creditors. 841 (e) The termination of this Charter shall be without 842 prejudice to all rights accrued due between ttla parties 843 prior to the date of termination and to any claim that 844 either party might
have. 845
Repossession
In the event of the termination ofthis Charter in
accordance with the applicable provisions of Clause 28, the Owners shall have the right to repossess the Vessel 846 from the Charterers at her current or next port of call, or 847 at a port or place convenient to them without hindrance 848 or
interference by the Charterers, courts or local 849 authorities. Pending physical repossession cf the Vessel in accordance with this Clause 29, the Charterers shall 850 85”1 29. 852 853 854 865 856 85”1 858
PART II
“BARE CON 2001” Standard Bareboat
Charter hold the Vessel as gratuitous bailee only to the Owners. 859 The Owners shall arrange for an authorised represent- 860 ative to board the Vessel as soon as reasonably 861 practicable following the termination of the Charter. The 862 Vessel
shall be deemed to be repossessed by the Owners 863 from the Charterers upon the boarding of the Vessel by 864 the Owners’ representative. All arrangements and 865 expenses relating to the settling of wages, 866 disembarkation and repatriation
of the Charterers’ 867 Master, officers and crew shall be the sole responsibility 868 of the Charterers. 869 30. Dispute Resolution 870 ‘) (a) This Contract shall be governed by and construed in 871 accordance with English law and any
dispute arising out of 872 or In connection with this Contract shall be referred to 873 arbitration In London in accordance with the Arbitration Act 874 1996 or any statutory modification or re-enactment thereof 875 save to the extent necessary to
give effect to the 876 provisions of this Clause. 877 The arbitration shall be conducted in accordance with the 878 London Maritime Arbitrators Association (LMM) Terms 879 current at the time when the arbitration proceedings are 880 commenced. 881
The reference shall be to three arbitrators. A party 882 wishing to refer a dispute to arbitration sllall appoint its 883 arbitrator and send notice of such appointment in writing 884 to the other party requiring the other party to appoint its 885
own arbitrator within 14 calendar days of that notice and 886 stating that iL will appoint its arbitrator as sole arbitrator 887 unless the other party appoints its own arbitrator and 888 gives not!ce tllat It has done so within the 14 days 889
specified. If the other party does not appoint its own 890 arbitrator and give nollca that it has done so within the 891 14 days specified, the party referring a dispute to 892 arbitration may, without the requirement of any further 893 prior notice
to the other party, appoint its arbltrator as 894 sole arbitrator and shall advise the other party 895 accordingly. The award of a sole arbitrator shall be 896 binding on both parties as if he had been appointed by 897 agreement. 898 Nothing herein
shall prevent the parties agreeing in writing 899 to vary these provisions to provide for the appointment of 900 a sole arbitrator. 901 In cases where neither the claim nor any counterclaim 902 exceeds the sum of US$50,000 (or such other sum as the
903 parties may agree) tho arbitration shall be conducted in 904 accordance with the LMAA Small Claims Procedure 905 current at the time when the arbitration proceedings are 906 commenced. 907 (b)-.+his-GoolfaG!-shall-b’”iJOV6r+lOd by and
senstrue<HA 908 e<GOfdAAGa-Wilh +ille-9-<>f-llle-lJnlle<I-States-Gede-an<l-#1e 909 Mafltima-baw-Gf-#Je--YRited-atates-anfl.-aR.y4isp-ute-aFisiA§ 910 eut-ef-aF-iA-oormeGtleR--Wit-A-this--GeRf:Fa.Gt-shaJI-98-Fefe.Ffed 911
le-1RF<>e-j>ef&ell&-al-J>Iew-Y-eFk,-<me-to--I>IH!j>~oiR!ed··l>y 912 eaoR-el-1iJ<>-j)artie&-llerele,-<lnd-li1G-tllif<i-by Ji>a-tw<H><J 913 OOese-JF,-tAeif---tleslskm-Gr-that-ef
any two-ef.-tlwm....sllall-be 914 linal,-and....fef-ll\e...pufJ>956&--<JI-enferolAg-any....aW81”<1, 915 judgmSRt-may--be-eAle-Fed-ol’l--3fHIWar-d by aAy GGI:lft-of 916 eempetent----j:UFiOOiGtien. Ti:la
proeeeffiA.gs--shall---be 917 oonGuGled--iA-aGGerGanss witA the---rules---ef-.the--Sesiety.-9f 918 Mafi\lme-Afbitfa!ers, ins, 919 ffi-.Gasas--wl1&re---neltRer---#te-Giaim--nGf-afi.Y-GOUAterolaim 920
‘”””’eGs-!il<HtUffi-ei-\JS$aOfJO()..(ef-suGh-eli>eH;Wll-astile 921 parties--may -agree)--tilEHifllitr.tle!Hlllali--be--oon<laee<l-ln 922 aG<leFGafl
,...wlll1-lluHlhoflene<I-Afi>itraUen--Prose<lur<H>f 923 tl>e-Sesialy-ei-Marltime-Afi>ilfa!ers;-IA<>-<>””””t-at.fue-time 924 wReB-Ule-arbit-ratioo-pRJseeEfiAf:”IS aFe somFAeAGed. 925
(<;)--rhis-Ge-.t-shali-ll9-!JGVernefi loy-aM-GOns!rue<i ifl 926 ast3Gf<iaooe-wl!h-·tile-laws-Gf-tht>-j>laoe-ffi1l!Ually-agreed-by 927 ~Fties-anG-any dis~We-aflsiAg~out-Bf-eHR-GoAAeGtloo 928
wlth--tRis---GG-RtmGt--sAall---be-refefr-ad--tQ-arbitfatloo-at-a 929 rnulHa-Uy-agre~klre.--siJbjeGt---tv- tAe p~esedh!FSS 930 appUsai>ie-tllere, 931 (<IJ--Nolwltll-g-ja),-(~)-a!>ove,lh<;-r>aftles-may 932
agree--at-aAy.-time-ttH”e!Of--19-medialiefl...a!1y-<ii-sa 933 aRfi/Qf--Gispute---afisjRQ-9Ut--ef-er-iA-Gel’m6Sti-Gn-wit-!Hhis 934 GontfaGb 935 IR-tile-oase -oHrdisp<Jie..i11-re8pt>Gktf-WhisiH!fbltratioo 936
has--l>t>eA-WmmensaEH!nder-(a)rii>)-<>1”-{o)-aeeve,the 937 foiiewiRf!””haii-ai’f’ly;- 938 (IJ-!iii!her-party may at any-liffit>-afi<Wrom-lime-!G 939 time- elesl-te-refet-the dispute
or--paft.-.Gf...tl1e-displ:lla 940 lfHl’ledia!ioR-by..-aefVIee-.on-tRe--elhef...paf!y-Gf...a 941 WfilleR-1\0ti~MeE!i<ttien-Notise”J-(<;a!URg-on 942 tile other party-lt>-a!Jree-to-media!it>fh 943 ~1)-+he--e!her ~afly
•han-the-oo-wilhlit-44--<;aiendaf 944 days ef resei~t--of-the-MeGiatlen-Netise-GGnfifi’Fl---#la.t 945 Ul-ey-agree te medlatie~GI+-Gase-tfle-parties 946 shaiHh<>fealtar-agree-a-medlatof-Withffi..a.-furlileH4 947
ealan<lal”-<iays,lailiR!!-Whi-<>--applioatie!Htf 948 eitileF-~eclla!eF-Will-be--a~poiAteG-.premptiy 949 ey-tRe-Afi>itratieo-+rii>unaHIIl<>-”+fibunal’)-eF-SliGh 950 persen- as tRe T-tlbunal may
desi§Aate-fer---that 951 Pllfll956.---l’h9-R1e<liaUeR-sAali-lle-eeA<Ius!ed-ffi.&!loh 952 ptaoo .. -aRG-iA--a(;GordanGe----With--suoh---pfeGSEIHFe-afld 953 on---s-uGA-t6fA-1s-~s tRe ~artles may agroe--eF,iR-tRe 954 eveAt--ef
9isag~ement, as may.---be--set---by--tAe 955 me<iiatef, 956 ~ii)-11-jhe--e!her-pafl>’--<!ees--not--a§fae-lo 957 me<ilate,lilat-faGt-may-l:Je-brou~<>-atteAiieR-91 958
tlle-+rii>unal-aA<i-may-b<Hai<er!..ifl!<>·asoollfll.by..the 959 +Abunal-wilO!HIIIooatin!Hile-oosts--el-!ile-afbltmtiOil 960 as-between.fue-pl!ftles, 961
(W)--+ile·.,edia!ioR--shaii-oot-alfeGHhEI-fi{lhl-<>f···lll1er 962 pafty-t-a--seek-s-~:~sR-Fellsf-er tal~e SYsh---steps--a&-ft 963 wnsiQ6fS--ROGessa~t-eGt-its--il=l-teFsst- 964 (v)--Eitiler party
may-a<ivioa-the TA~unal that-#ley.llave 965 afjfee{J--to-ma4i-atleR.---+-h~itratie~ures 966 sl!a!l-ooA!inufH!uFIR!}-lhe-<endookJI-the-me<iiatien 967 i>y-ti1e--T-fii><ma!-may-take-the--mediattaR-tlmetable 968
inla-<>sGOOAt-whaA--Seltlln!l-lhe-timetabl<>-le•·•leps..ifl 969 the-arbitraliOfh 970 (vlt-lJnie&&-etAe!WIS.......,IIfOe<l-<>~est~ed·-iA-!ile 971 meGtatlon-tefmS;-eaGl-1-party sAall bear-its ovm
sests 972 inooFFe<!-in-the-mediatioo-an<i lila ~a~ies.sl>aii-Ware 973 “’’IOiiy.the-me<ilat<>r’s-sesls-afl<l.&xpenses, 974 (viif-’l”-lle-mealati<>n-pm..........mall--be-willlellt-praj!Jdioo
975 aOO--oonfideffiiaf.-and--lle--fAfet:matlon-91’-dvGHments 976 disGieseQ..<Iurlng it sl1ali 9EHeveaied-to-111e.:rfii><ffiai 977 exeept-1:9-tRe ~Gent that-#tey are C:i!sGiosa-13-!e-ooQe~ 978
the-law-aA<i-pmeeti<!f’eijevemin!l-llle-afi>llr<~tla~>c 979 (Nille;..ilJe.pa!rios-<i>efrlti-!Je-aware..lhel lho medlalle~ay 980 uaf-neGell<afily-iRlerropiJfme.limil&} 9 81 (e) If Box
35~iH’aft..i-is-nek!wfef/fia!eiy-lllled--IR,sub~ 982 ala\ISe-30(a)4lhis-Giause-sAa!t-appl~l>-oia\Jse-3Q(G) 983 silaU-opply-ln-aU-o’”””” 984 ‘) Sub-clauses 30laJ, {!Q@ and J)f2l are allernatives; Indicate 985
alternative ~greed In Box 35. 986 31. Notiaes SE;E CLAUSE 51 987 {<I)-Any-ootia<He-b6-!Jiv61l-by...either paFty to the--elileF 988 pa~all-b<>-ln-wfiliR!J-<”lfld·may-lla-seAt-.by..ffil<.-teiOJ<; 989
reglslereG-er--FeGGfQed+naiJ-e.r..by-persoRal-sewlG& 990 (b}----+he--adGfess--ef-tl:te--Ruties fer seFViGe--af.--s.I;IGA 991 eommuniGatioo-s~all-be--as-stated-ln-Bexe-s-;}...and--4 992 rOSjleGtively, 993
“BARE CON 2001” Standard Bareboat Charter
PART Ill OPTIONAL PART
PROVISIONS TO APPLY FOR NEWBUILOING VESSELS ONLY
(OpfionaJ, only to apply if expressly agreed and stated In Box 37)
Spesllioatioos-all<I-S~Ipbulldln!J-GeRtraG! {a)----+he-Vessel--sRal-f.--be--eeAStRK;teG--iA--aGGOrGaooe-with
the--B\Iildln§-$1li~oulldiA!}-GoRlfa<Jl-fllerealleH;alle<l-”ll!e 2 ‘<Jei~ouil<liR§-!Midlng--G<lntfa6l’)-as-aAASJ<ed--te---tl!is ~ Gi1artef;-lllaGe-l>elweefi--IAe-.f!JJildef<>-anG--lRe-Sell6f8 4
QWAeF&-aAG--ffl--aSGGF€iaRSe With the-spooif~GaUeRS--afld & pialt&--aAAexeEI----Iilaf<lt<l;-----WGh-B<IildiR!J-GeRifaGt, a speGif!Gatioos---aAd·-PiaR&--havi-R!}-Seen-GG-tffi-te~sigAe€!-as +
-·<1-by~he-Gilarl<lfer& 8 (l>l--.J>I<H;Ilange-sllall-bo-ma<le-in-llle-SIIlpbuiiEiiR!J-QulldiAg Goo!faol-GHn--the-s~eslllaalt<>lllH>r-piafls-QI-lh&-\lessel-as 9
a~pr~e-Gha-·-aiHlforesal<l-willlout-tAe .\{) Gl:taFtererf?-wAsenb 4+ (G)---+Ile--C~aflerere -sllall-lmv&-!Ae-<1ght-lo-00n-olr -12 FGf’F””8R!alive-\G-th<>-ll<lildefS’-¥af<l-le~ASflOOI-tllo-\lessel
~ Gwmg~urse--ef-.t4ef-6GRSWGtieR--le--s-atlsfy--#lemselves 44 t-Aat--GensiJ:uGtkl.n.--is-iA--assGFda-Ree--~wilA----suGh .. -awroved 41i &[3eslflsatiens-aAf!.-.!*a»s-as---fefer.re4---tG--tmdef----Wb-Giause .jS
(a)-eHili&-Gia”””’ -1+ .jjl (d)·--+R<>-\Ie&sel--shall-be--built--iA-ascord ,......witll-tRe llllildiAg-Gooifast--aAEi-4\all--l>e--el-th<>-deoort~tioiHG!-sUt 49
lheFei!tr-<JuojaG!-to-!1\~rovi&iaR<H>I-·••ktallse ;!(s)(<~ ;J() llareundef,-lAe-GilaFterefS--sllall-be-b9CIH<!--lo-aooept-;he ;u
Vessel----from.-tRe-GWner-s,--<39A’lpleta4-aAd--oonstNGted--iA 22 a006f8an......wilh-llle-Bulldln!}-GentmGI,--sn-tha-Eiata-of ;J;l
<lelivef)’-l>y-the--B\Iilders,....+A<>-GhaFterefS-uR<Iefleke-tllal 24 havi-seple<!-111e-\le&sel-llley-wiU-Rat-llleraafieH’alsa 2§ aR)Lslaims-agaiAst-llle-Gwl!are-ln-f85PSGI-ar-tlle-Vessel’s 2S pelfefmanse er
Sj366UiGatleA------Gt----defaGts,------if----aR.y. ‘J+ Nsverthetess,-il1-f8-Sfl’6Bt···Gf-.a.Ay--fepaif&,-feplaGeFAGRtS-”Gf 28 aefeell>--wllisll--appeaF-WitiliA-lil<>-tirst-42-mentils--IFGm :19
ijeiivefY-bY--tAe--BHHGefs,tRe--QwnefS--Sh.atl-enEieaveYr--te <!0
GQmpet-tRe----EkliiGers--te----fe.J;lair, Fef!laGe-eF--FeFHedy----aAY ;u
de-feote--e.F--tG-r-eoovef-fmffi--tl::!e-BuilEieFs--any--exf;leAditldfe :>2 if’IGUFreG-in--GaffYiFig--oot--s-uGh reJ3aiFS,~meAts--er ~ remedies-.-----HeweveF,--#Je-GwAefs!--lla9illly--t.9--tAe-Gilatte~ers u <14
shall-be-llmite<l-t<>-lhe-el<leR!Iile-Qwflers llave a vaH<I-efeim agaifi&t-lile-l’lulldefs...WldeHile-jjUa~ause-el--the •• SUIIding-G<>nlraG!-{a--ooi’)’-Wl1er<>ol-ffils-be-~lie<!--l<>
‘aa ¥1- lile-Gharterefi>),-+lle-GhaflereFa-shali-be-IJeuR<!-Ie-aGGGpl wch-sumS-as-the--Gwfl9fS--8f6-reas<>naaly-ai>ie-to-re._, 39
UHEief-t-his---etause-an~-eAall-make-AQ~f-l:lfthef Giaiffi-GA-lhe 4Q
QwAef&--for---tila---dlffefeRGe-betweaA-the-amel:lnt(&}-sG 44 r-eGG’IOO!d-aAG----Ule-aGklal-expeAtlituFe-On-fGPaifS,replasement
er-reme<lylng-Oelasi<H>r-i<>f-any~me-l ‘”’ 4:! Afly-li~ui<late<Hiarnages-lor-pilysl<;al-<lefesls-e~de~si””Gies 44 shall-aGGfUe-lo-lile-assmml-<>l-the-pal!y-slatad-iR-llo>4’$) 45
of-if-flsl··fiii~Rall-be-share<l-ef;ually-be\woon·the-paflle!h 4Q The-Ge&ls--ef --f*lfSUing--a--Giaim---eF--Gia-lms af)aiAst--tAe 47 lluildEli<Hinder-lills-Giause-(instuEiiAjj-any-1iai>mty-l<>-lile 48
Bllilders)-silall-lle-l:>ame-lly-lll...parly-s!alad-iA-B<l>-#(b)-er- 49 ii-Rei-IIU~n-sllall-be-sllared-sqHally.-lletweeMil...paflle& a9 M :r-lme-aRd.J’Iaw-oWellvery SE!; CI.A\JS€-33 (~bjesl-----tG tAe
‘fessel----having---wmplet.e4---fleF !;2 asseptaooe--lflals-ffiGiudiA!I-Ifials.-el-wrrw·•flllilmleRHl1 53 aooar<lenGe-Wilil-!ll<>-ll<lildln~at-aR<I--sj>eGIHsallons M
le-lhe-satisfaeUGlHlf-lile-Gilaflerer&,-llle-GwnBfS-silall.gjve 55 and---tl:te---Ghart.erers...shall-take-f.lelivefY-Gf the Vessel--af.leat lie when-feady-foHialivery-aR<i-properly-<Jeeum8llle<i--at-the 5+
!luilaef&’-’>’af<H>f-so-or-saf<>-and-readily-at.-.ll>le liS aook,whar~-<>H>Iaee-as-may-b<>-agreed-llolween-llle-parties §9
herel<>-aRa-llla-l’luilaElf&.-1Jnd9F-Ihe-l>uil9iAg-G<lntFaGI,-!IIe 00 !luilaers-llave-eslimaleo lh-e-Vessel-wll~.be-rea<ly-fef ()j. <lellvel)’-la-llle-llwllefS-as-lllareiJ>-~rovide<l-el!l-lhe-delivery @;!
date-lo~ths-pufPese--al-lile-GilarleHlllall-ba-lll<>-dal<>-wheR @;! lile-\iessel-is-ln-fast-rea<ly-for-<leiivBl’)’-lly-lh<>-E!alloers-aftar 64
oompletfen”-Gf--.tFials--wJ:Je:tl’Jer~tRat---bs--befere-or-after-as a& lndioateG-ffi-lhe-ll!iikllng-G<mifa~art8FeFS-Shaii-RG! 66 be-entilled-ta-relll8e-ooseplanse--<>l-<leliv~he-Vessel fJ7 68
an<l-llpan-aR<I--sfiar--susll-aG<Je~laRoo,-·suOieolte-Gimlse 00 .j.(<l);-ll!a-Ghar!Sf9f&-shait-Rot-b.......U~ad--le--make-afl)’ ‘Ill
G!aiFA-aQain&t-tfte-GwRSF&-in---f6SJ)BGf.··9f.--.a.Hy-GSRGJtlf.HIS;- .f.:l. FepfaseAtati9AS---Gf--Warrafllie.s.,---wAe#leF-...-e*f)r.e~s-----Gf +2
ill’l~~a<J,as-l<>-lil........werthiROSS-Of-lile--\lessol--sr-·-IR +:! .respeG~ay-in-deJiver-y. 74 (b)---il-f<lf-any-reasan-Giilef-lilan-a-defaull--lly-llle-8ellars ;ze
Gwners-4mdef--lll<>-1lllipi>alldin!}-GellifaG!;-Iile-!luildere -7S beoolfi8---6Atltled--uRQer--fuat-Ce~ol:--ttl-deliiJef--t.l:!e ++ \lessel-lo~lle-Sellers,-lile-Gwners-shalklj;oR-givil1jj-l<>-lhe +8
Ghaflerers-...WFil!ell--netiao--of--llulldors---l>”””miA§--69 79 efflille<:l,be-elffi!lsed-lroll’I-Qivi”l)-<<ellvory-<>l-lho-Vessel-lo SO
lile-GilaFterefS-an<l--u~oR-fBGeipt--ef...Gilsh-<loliae-by-.llla 81. GJ:i.after.oFS tl:lis Ch~a.II-Gease-t&llave-effee.t. g2 (G)-I~y-reasoR-Ihe-GwAer&.booarne-eRlllled-uA<IGf lhe-EMdlng-Geffifast-le-rejeG!--Iile-\lessel--lhe-Qwner~
8J Gl1311;-i>efer<>-exerslslllg-s-.Jght.ffi.fejeetiaR;-OOnsulf-lile 84 C~s-and--therebl\}00 35 (iJ--il’the-GI!arterer&-00-nol-wisll-t<Hako-<lelivery-ef-lile 86 \1essel -liley-sllall-infafffi-111e.Gwners-wit
hill-8fAAln-(7-j-Mming 8+ Elajl&-by-no~n-wfiliA!T-aA<HI;Jo/l-feseipl-by.tho-Gwnem-el 88 sYGh-ooYss<hls-GilafteHlhalklease-lo-llave-e flesli-<>r 89 \ii)-lf-lhe-GilartereFS-Wish-W-leke-aelivefy.-ol-llle-\/essel gQ
liley-may-by-oolis<>-in-wfiliRg-willliR--seven-fl)--rumliRg lJ1. day&--f6{lUir-e--t-Ae-0WReF&-te-r~8fj9tiats-witJ:I....lha--BHf\G6f$--3S tl6 la-the-lerfm-eR--Willsh-<lalivery--slle\11~--be-leken-aA<iler W
reffa.iR-from--exe-f(;;isiR§--!Aelr-fighl-ef-r-ej&Gtlan ~aAG--UfH’ln 94 reeeipt~h~-ROOse-tJ:le-QwAer.s-sllatkGmmeHGe-.SYGR 95 n6!JGljaHoAHI!ld/or-leke--<lelivory-el--the-Vessei-lfGm-the gg
BllildefS-sA<i-deliveH1er-ta-lll<>-GhaflerefSi 97 (ll~.....ffi.-AG-Gi_R_II-IIle-Gharterers-i>e-enlilied W le-rejasl-llle-lle&&Okloless lhe 0Wfl&f&-are-ai>le-1o-re)esl 99
lile-\/esse>lfe”’-th<>-llllil<lei’Si-S€E-GbWS!;-~ 400 (iv)---lf...li;is...Cilarter-lefmlnale&-1Jnd8f-S\Ib-slause-(b)-el W.1-tllis-Giause,llle-Gwo6f8--Bhall-lilereaft8f-f191-be--liable-te 4{);! llle-Gharleref&
-for-aA)’-<;Ialm-oodef-BF-afisiRg--suk>l-tllis 41l3 Gha-...Jis-t&llf\iRatl<>lh - (<1)-An}Yi~uldate<klamage&-fur-de!ay-in .. daJivery.-unaef 4.Qii
lile-!luH<llnB-Gooifaet-aA<I-a!ly-<JeSl&-inG1lfFe<i~n-purwiAg 49@ a-slairn-!llorefe~sllall-assrue-le-lile-aOOOUAt-·Of.-lh...parly +W- statad-in 8 “” 41 (c)-<>F-iHlot...Jilled--ln-sllall-b<>-GI13red 498
E><j\lally-llelweeR-IIle-paflieSo 400 -149 3. GuaraHteeW..-ks-SEI>-GI.AIJSIH2 -lf.--net-----etllePNise---ag reed,--the--Gwners---au-t-Rorise-----tAe -144 GkarteFeFS----tQ...ar-Ean§e--fof--tlw.--guaFaRtee-wefks-..to-be
-’1-’1-2 per{efffiO<i--i!Hloosrdan......with-l~e-£hlpl>uildiAg-build~ -!’hl Goolmet-t””’”””nd-11 ire--1e--seflliAlle-dHfifl!l-lh...peFiod-·of +14
guaraRtae.--wer~TAe--G-RarteFef<’..,....Have--te--advlsa--tlla :1--4§ GWAem-abe-ul----#le-peffefmaAre-te--th~t--the-GWAer-s 44-€i may-re<jUeol, 4-1-7 4. Name-ei-Vessoi-SIOE-GI.AIJS!i44 H8
+h<>-Ralll<>-<>l--!lle--\/essol-shall-l>e--mulHally--agreed 149 betweeFI---#l-e-GwneRrand-tlle--Ghalle-mJS--anG---ti:te-”V-essal 4-20 sllall-be-painle~!Hile-sola\11&,-display.the-lwmel-insignla -1U
aA<I-lly-th<>-hause-fla€J-<1S-16qlllre<l-i>y-tll<>-Gi1aFte”’”” “lb! 5. S-oy OA ~edellvefy---<l!iE-GbA\JSE-46 423 +ile-GwRers--and-111<>-GI>aflerefS-Mlali-appelnt-suM>yors 124
feF-Iil...pHfj>986-GI-de\emllnin~<J-agreoillg-ln-wfiliAg-lhe -l-ila oondioeR-el1he-\/esoel-at-th<>-ilm<>-ei-Fadelivepr, ;.:;e Willlaut-i>rejuaioe-to-Ciause-1~T II), lhe ChaflefSre = s-1\all-bear:-all·-s\J rvay-expeA-Ses-a
llG---al-l-Gthe r eests, if-any. 4-28 inGiuain@-lhe-sast-el-dosldlls-afl<!-<lndasldAS,if-requifed., 4;!9 as-well-as-all-re~aiF-oosts.-iRSUFf9d~e-ChartGrefS-silall 4<10 alse---tlear-all-less--Gf.--.tim.e--spe~ormeGUGn-wltl:l--aRy ~-34
<lesldng-aA<i-unde~s-well-a&repair&,-WhiGil-&llall-l>e j;J2 pald-af-lil<>-Fate-s>-lllr”·POHlay-<>rfr<>-rala~ -13a
11 BARE!CON 2001 11 Standard 13areboat Charter
PART IV HIRE/PURCHASE AGREEMENT (Optional, only to apply if expressly agreed and stated in Box 42) OPTIONAL PART GR---e*pifatiof’l-ef-this Gf:laFter
and-pFaVieletl Ute CRartm 1 ~ave-fYifilleG-theii’-Gbligatioos-a’*”roing-lo PART I and-11 2 as-woll-as-P-ART--111,-il-a;>plisabla, ~ is agrea<l-llla’-- 3 1*1YfRenl ef the fiRal ~aymeAt ef J:Jire-ag....per Glat~se 11·
4 tRe-----Gflafl:efEHS Rave ~urshaseGI tAe--Vessel----witA 5 “””’l’lllin!l-l><>l<mg!H!j-lo-llBH>A<I-llle-Vassal-is--fully-pal~ 6 fer, 7 11>-fhe-f<J//ew/nfi-Para--<HJwn-d-to-as 8 tRe-Se#er.s-aRfllRe
CheFiemr.s--&8-tRe iiJIJ}’GFS. 9 +Re-¥essal-sRal~e-<lmarea by Ills Sellefs-an<l-!al<eA 10 evef--t,y-the Bu)·ers t;~fl-expiFatffi.R--gf lt:la-Gharter. 11 +lw-$enGf6---.ijOOFaAtee-tAat tRe Veasel;-at--tRe-tiFRe-of 12
delivefYr-!s-free-fr-om-a!f....e.rurumbranses aAEI maFitime-lieAS 13 er-aAy-4e9ts--what-sGever etAer tf:lan-these-aRsiflQ--from 14 anyth-iA{J--Gene-eHtet Elene l;ly the-BHyere er any.-exisliA§ 15 meft!jilge-agreea nat Ia
l>e-paid-e~-Sy-tlle-tima-<>f-<1~ 16 $helHG-any-slaim&;-wAiell-have-besn iAe~F:e€1 f,lflor-te--th& 17 Mfll<H>I-Gelivery,-l>e-me<la-agaiAal-tlle-llessel,tha-Seller<> 18
hereby--oo<lertaka--to--inaemfllly-li1e--Buyers-agaiASI-all 19 OOHSe”J«eAses 9f sldst:l Glaims te tAe extent-U--eaHe 20 proved that the Sellers are resfJenslbl&-fer-wGR-GJ.alms., 21 Any ta,;es,
not-affa.i.;--GGRSIJiaf-·3A€1---9tf1Gf-Gi:targes--aR€1 22 expense-ooAHested-wltR-Ifle-fmFGhase-aAd Fe§istrotloA 23 una9F-S<lyers!--llag shall l>a-for-BI!Y<>FS’--aGOOunt,--Any. 24 ~oAsl.llar aAEI--ether
eAaF§es and~oo-ses 25 GGAASG004-with-sl~f.-.tAe-£elleFS’ re~isrer shall-f3e-fe.F 26 Seiier<;CaG- 27 lfl exeHange--fGf---J*lYFASAI--of---tAe-lasl--mGAtWs---1:\il’e 28 instalment-the-Sellers sAall
fllmish···lhe-8uyeFS-WitH--a-Bill 29 o~e--<luly-attealf!<i-alla-.legaliae<l,--logetller-witll-;~ 30 serUfioate settlA§ eY-t--the Fef!istemd--·enwmbfance&;--if 31
“”l’-GR-dellvery4-llle-Vaoael-ill<M>ellers-sl1all-[;fevlde 32 fGr-deletieA ef the Vessel-ffem-tRe-ShiJts--Rag.fster-anG 33 GeliveF-a-Geftlficate-Gklelefum-t~.-the 13t:Jyers. 34
+he-Sel19fS-ffiall,-<!l-lhe-time-al-<leliveF)’;-Ilaf1d··te-111e 35 BliyGRH~IH:Iassifisao9A--GSFiifjsates-(fer-Aill~-9llf!ffies, 36 ar!OOws,chaiRB, ale) as well·as-ali-plaAS-whlffi-may-lle-ln 37 .Se-ll~essh:~A: 38
+he-wireless iR&tallation-anEI--llaHt!Ga~·iA&tfl.lFASAts,.unle&& 39 GFI-hir<>,-·SRatl-i>e--iRGiooe<l-in-llle-sal....wlthalil-ariy-axtra 40 paymenl, 41
+lle-Vaoael-witl>-BverythiA!}-l>elaAging-le-11eF-SI1a 11-b&-at 42 Seller-s’ rlsk-am.I--B*fJE:mSe--YAtiJ.--she--i&--EielivereEI te the 43 S~.Jy”ers.;-SUbjeGt--lo-tA(o)-GOildi(ioAs ef tAis CoffifaGt,--aA4-Ihe 44
Vesset-wilh·--aVSF)’IhiAg oelon9iA!J-la-heF shall be 45 dellvered-allG-tak-en-eVat-as-slla--fs....at-the-time-Gf Qeliveryr 46 after wAisR tlw-Sellers sRall Aave-·n9--f6SpGRBibility.-.feF 47 pessible fa~;Jlts er ElefiGienGies ef
aRy rJess.r~pUoo,. 48 +lle-B!IyeFs-uncleflake-la-pay.-feF-IAe-re~atFiaoan-eWI!e 49 Mafl<lf,-<lfiloeF8;-aAd-otller-pef6<lnnel-lHippolnted-by-lfle 50 Sellef&--tG---the--pGH----wl:iere---tAe Vessel·-·ent&FSG---tRe 51
Sar.eboat CRaFter as fJBfnGial:lse J (P’\RT II} er ta pay the 52 equlvalen~oost,el-tllelf.j<AAney-te-a!1)’-9tller-pla- 53
“BARECON 2001 11 Standard Bat·eboat Charter OPTIONAL PART PARTY PROVISIONS TO APPLY FOR VESSELS REGISTERED IN A BAREBOAT CHARTER
REGISTRY {Optional, only to epply If expressly agreed and stated in Box 43) 1. Gef.I.Riti.ans 1 l”of--he-j>Hfj>OS<H>l-tllls-AAR+-V,.JAe-fellewing-lef!”fl&-Shall 2 tlave-tl:!e-meanings-AeF&Sy-assiOfle4-te·them;. 3
~ar-ebeat CRaFter Rea~l:laU--meatHI:te-re~ 4 the-slat<>-wllese--fla§-lhe-\/essel-wlll-lly-anG-ifHII\ich-111e 5 GAaflareAS-<~F<>-i”ejjistereEI--as-lhe--lJarel>oat--sf\aF!erem 6
<l\lfing4h9-J’Ofia<l-<>f.1ha-Ba<eooa!-Gilaf!er, 7 “’ff!!>-’’adefivif!G=-Re!!i<;t<¢.shall-meaR-tfl<>-reQistfy-of-ll!e 8 stat&-in wllisll llle OwnefS-1)f.tha-¥essel-arerB!jistered-as
9 Own6f8-afld-lawhisl1-j\lfisdislloo-and-Gen!fel-ei.JI1e.vesssl 10 wilf-reve Ft l:lfJ’9A tefmfR-ati-Gfl.-Gf.----.tR.e--@ateDeat---Gharter 11 Registfatien~ 12 2. M~e See Clause-44 13 +Aa-Vessekflaflered-UndeF-tlli&-GilaReHs-Jinan~ 14
mof!gago.-and--tl\a-previsi011S·-ef Clause 12fl>} (I’AR-T-11) 15 &hall-a;>ply, 16 ‘l’ermlnatten-of-GhaFier by-Qelault 17 lf..tl.la-Vessel sl:laFI:eFed-uRdaf.-tl:tis-GAaFtef-is-fegfstered-iR 18
a-llareboa\-Gila~er-Regislfy-as-s\aled-ia-llel<-44;-anG-if 19 the-Ownefs-shall-<latault-·in-tOO-j:Jaym-.ol-any-<>meants 20 <ki&--UA<ieF-.JI1&-merlga!Je(8)--sj>aoilled-iA--Bex--2ll,-the 21
Ghafierefa-shall,-il-se-<equlreG-by--tlla-me~ag&e;-<lireGt 22 #1-e--Gwners te re r:egls-lef....lhe·-Ve&sel--ln-the---YAderlyiRg- 23 Regislfy-a&-shewn-ifl-gex~ 24
ffi--lhe--ell<!f!I--GI--lhe--\lesseb-oelng--delete<I--IFGm-·--1~e 25 Ba-Febeat-GHafter. Ref]iBtF}’ as stated In-Sex 44, due-te-a 26 defauil-by-lhe--OwRef&-IA-tlle-paymant-ef-a!lj’-aR10UAis 27 ooe-uA~ar-tlle-morlga!Je(s)
,lhe-Gfla.Fterai$-Shalchav&.JI1e 28 rlgRt--te--lelmil1-ls--Ghafter-fefthwllh--aml--wilheot 29 l’f’!)Udiee-le-aRY-<>IheF-Sialm-they-may-flave-agaifllll-tAe 30 QWA&f&-IJnder-tA-i&-G-J::IartAA 31
Exhibit 4.74
‘BARECON 2001” STANDARD BAREBOAT CHARTER PART1
1. Shlpbrol<er BIMCO STANDARD BAREBOAT CHARTER CODE NAME : “BARECON 2001”
Mitsui
& CO.LTD PART! 2. Place and dale
\$ EebruclY~.I 2020
3. Owners/ Place of
business (CI. 1) 4. Bareboat Charterers I Place of business (CI. 1) LUA LINE S.A., Republic of Pan·ama and OK! NO KAIUN CO., ROSELITE SHIPPING CORPORATION LTD.
The owning ratio of Vessel between LUA LINE S.A. and OK! NO KAIUN CO. LTO . Is 50 :50.
5.
Vessel’s name, call sign, flag and lMO number (CI. 1 and 3)
DREAM CORAL(to be named NAVIOS CORAL!), Panamanian flag, 180,249 M.T. D/WTypo Bulk Carrier, IMO
Number 9747948
6. Type of Vessel 7. GTINT
180,249 M.T. 0/WType Bulk Carrier
GT/NT: 92,722/60,504
8. When I Where built 9. Total DWT (abt.) in metric tons on summer flae~aar~ 2016, IMABARI SHIPBUILDING CO., LTO . 180,249 M.T. DIW
10. Classification Society (CI. 3) 11. Dale of last special survey by the Vessel’s classification society Nippon Katji Kyokal (NK) N/A
12 .-I’YriRet-paftioulars ef Ve sset {a lse In die ate minffimRHlUmbSH>Hll<>nlhs’-valldl~as&-oolllnGates-a!JfSe<i-aoo,.le-Gh-3)
Cargoes to be carrledj All Jawfuf cargoes within tile Vessel’s capabllltlos/Ciass, IMO, flag her Insurance
1
13. Port or Place of delivery (CI.3) 14. Time for delivery (CI.4) 15. Cancelling date (CI.5)
As per Clause 6 of the MOA (as defined In Clause1 hereof) As per Clause 5 of the MOA As per Clause 5 of U1e MOA See Also Clause 32.
1S. Port or Place of redelivery (CI. 3) 17. No. of months’ var!d!ty of trading and class certificates upon redelivery (CI. 15)
At one safe berth or one safe port worldwide In the 3 months
Charterers’ option but
always within the Trading Limits
18. Running days’ notice if other than stated in C!.4 19. Frequency of dry-docking Cl. 1D(g)
N/A As per Classification Society and flag state requirements
20. Trading Limits (CI.6)
Trading Limits: always safely afloat world~wldo wlthln International Navigation Conditions with the Charterer’s option to break same paying extra insurance,
but always In accordance with Clauso 13 and 40.
In any event, any country/place designated pursuant to any International or supranational raw or regulation
Imposing trade and economic sanctions Including countries/places sanctioned by UN/USA, prohibitions or restricllons (which may be amended from time to time during tho Charter Period) shall always be excluded.
21. Charter Period (CI. 2) 22. Charter hire (CI. 11)
Twelve (12) years phis/minus 30 days In
Charterers’ option See Clause 35
(See Clause 34)
23. New class and other
statutory requirements (state percentage of Vessel’s insurance value ace. to Box 29 (CI. 1O(a)(ii)) N/A
24. Rate of Interest payable ace. to Cl.11 (Q anc, If
applicable, 25. Currency and method of payment (CI.11) ace. to PART IV
N/A Untted States DoUars l>ayable calendar monthly Ln advance
26. Place of payment; also state beneficiary and bank account 27. Bank guarantee I bond (sum and place) (CI. 24 (optional) (CI.11)
To be advised NIA
28. Mortgage(s), if any (state whether Cl. 12(e) or (b) applies; if 29.
Insurance {llUrl and machinery and war risks) (state value
‘BARECON 2001” STANDARD BAREBOAT CHARTER PART!
12(b) applies, state date of Financial Instrument and name of ace. Ia CI.I3(Q or, If applicable, ace. to Cl. 14(k)) (also state if Mort.gagee(s)/Piace of business) (CI. 12) Cl.14
applies)
See Clause 44 See Clause 40
30. Additional insurance cover, if any,
for Owners’ accounL limited 31. Additional insurance cover, if any, for Charterers’ account to (CI.13(b) or, If applicable, Cl. 14(g)) limited to (CI. 13(b) or, if applicable, Cl. 14(g)) NIA See Clause 40 (c)
32. Latent defects (only to be filled In If period olher then stated in 33. Brokerage commission and to whom payable (CI.27) Cl.3) NIA NIA
34. Grace period (stale number of clear banking days) (CI. 28) 35. Dispute Resolution (state 30(a), 30(b) or 30(c); if 30(c) agreed, Place of Arbitration must be stated (CI. 30)
Sao Clause 41 London I English Law
36. War cancellation (indicate countries agreed) (CI. 26(Q) NIA
37. Newbulidlng Vessel (Indicate with ‘yes’ or ‘no’ whether PART 38. Name and place of Builders (only to be filled In if PART Ill Ill applies) ll!.t!!JQM!l
applies) NIA
No
39. Vesoel’s Yard Building No. (only to be filled In if
PART Ill 40. Date of ll\lil<IIRg-Shlpbulldlng Contract (only to be filled tn If applies) PART Ill applies) NIA
No
41. Liquidated damages and costs shall accrue to (state party ace. to Cl. 1) a} N/A
NIA
~~ NIA
42. Hire/Purchase agreement (indicate with ‘yes’ or
‘no’ whether 43. Bareboat Charter Registry (indicate with ‘yes’ or ‘no’ whether
PART IV applies) (optional) PART IV applies)
(optional) NIA NIA
See Clause 37(d)
44. Flag and Country of the Bareboat
Charter Registry (only to be 45. Country of the Underlying Rogistry (only to be filled In If PART filled in if PARTV applies) V applies) NIA N/A
See Clause 37 (d)
46. Number of additional clauses covering special provi!>ions, If agreed
Clause 32 to 60 lnclusivo
PREAMBlE- It 1s mutually agroad thai this Contract
shall be performed subject to the conditions contained 1n th1s Charter wh1ch shall Include PART I and PART II. In the event of a conflict of conditions, the provisions of PART I shall prevail over those of PART II to the extent of such con filet but
no further. It Is further mutually agreed that PART til and/or PART IV and/or PART V shall only apply and shall only form part of this Charter If expressly agreed and stated In Boxes 37,42 and 43. If PART Ill and/or PART IV and/or PARTV apply, It Is
fur1her agreed that in the event or a conflict of condl!lons, the provisions of PART I and PART II shall prevail over those of
PART Ill and/or PART IV and/or
PARTVto tho exlent of such conflict but no further Signature (OWners) Signature (Charterers)
.’1 .- ;- -,., -
;_...-’
..... ~~~.... ~....... . .. .................. ~.~ ..: ..........................
...
By: Masanobu Oklno By: Ceor~o; Pa.««IJ<t.kt~
Title:
President of LUA LINE S.A. Title: A l+ovuev- i~-<- F’ttd-Signature (Owners)
By: Masanobu Oklno
Title: Prosldant of OKJNO KAIUIII CO., LTD.
PART II
11 BARECON 2001” Standard Bareboat
Charter
11 BARECON 2001”
1. Dennltlons 1 In this Charter, the following
terms shall have the 2 meanings hereby assigned to them: 3
“The Ownem”shall mean the party Identified in Box 3; 4 “The Charterers”shall mean
the party Identified In Box 4; 5
•rhe Vessel” shall mean the vessel named in Box 5 and 6 with particulars as stated in Boxes 6 to j_g; 7 aFinancial
Instrument” means the mortgage, deed of 8 covenant or oiher such financial security instrument as 9 annexed to this Charter and stated In~. 10
11MOA11 means
the Memorandum of Agreement entered Into between the Owners as buyers and
ROSE LITE SHIPPING CORPORATION as Sellers (the
J•sellers1’) dated 2020 In respect of the Vessel.
“Banktng Days” shall
mean the days identified In
Cl.36 (b)
“Tota1 Loss” shall mean the
sltuatlon Identified In
Cl.40 (a) 11
2. 12 Charter Period 13
In consideration of the hire detailed !n ~.theOwners 14 have agreed to let and the Charterers have agreed to hire 15 the Vessel for the period stated In~(the “Charter
Period”). 16
3. Delivery Also See Clause 32
Tho Vessel shall be
delivered and taken over by the 17
Charterers as por Clause 32. 18
(llfll.<lppt/<8-R+-IIHiwJ~•. as indi<aledi~ 19 (a) The Ovmers allall befOf<HIA<I-at-lhe-limEH>~dellvery 20 eXefGise
due-dlligenG&-te-mak-e--the Vesset seaweFtRy ani:! 21 in.evefY-respeol-reaoy In hull, mashinery and equlpmeRt 22 far SBPiiOO tJRti&F-fh.fs..Gftafter-: 23
The Vessel shall be delivered by the Owners and taken 24 over by the Charterers at the port or place indicated in Box 25 13 i!Hluoh-t’eady-saf<Hl<lllh
as the ChaFierers may-direst. 26 (b) The Vessel shall be properly documented on 27 delivery in accordance with the laws of Lhe flag state 28
Indicated in Box 5
arul--ll\e--requlrements-of-the 29 slasstnsation sooiety-<tate<I-IFl-Box--111-The-\lessel-upen 30 dellvef)’ shall-have--hef--6\!fVey sysles up-IG-<Iate-all<l 31 trading and
slass-<:elliliGates41all<l-ior-at-least-tll9-lluml>e< 32 oH!lorlllls-agreed-1!1-l.loJ<-R.. 33 (G)-:r-he-<lellvery-4-the-\lessel by the Ovmers-an<l-tlle 34 taking ever of th&-Vesse~by-the Cllalterers sllall 35
sooslltute-a-tull-peffermanse by tile Ov:ne:s ef-all--llle 36
Gwnar-s!-ebligatiafls \:lAder ttlis ClaYse a, and--thereafte-J: 37
-Fierers-shali-net-i>e--el’ltitie<l-t<>-make-eH>SSef! 38 any-Glalm-eijaiRst the OWJ’teFS eA--aOOOUAt-----Gf-any. 39 oomJi~ons, reflreseAtatieRs
er:-warmnties-e-xpr-essed-(}F 40 lmplled-wltll-respest to the Vessel-bu~tho-OWAers-shail-l>e 41 ilaelo-for the sost ef bu!-Rot-the--timo-foHepaif&-<lf 42
!’ellewai&-<>ooaslened-by-laten~oefest<HA-!Ao-Vessel,-her 43 mael’llnery e· app~;~RenaAses, axls1lng-at-th~lma-ef 44
deliver:y blAder thls-Gharter,..preVkfeG-sush defeets have 45 manlfested--lhemseives-witl!ln ~·:el•te (12) months alief 46 dellveF)’ ~:~nless
ethsFW!se--pr(wJdeG-iA--8~ 47
4. Time for Delivery See Clouse 32 48
(Rot
Bflli!Jesoh>-wh61H’Aimliapptles,as.Jildi<atedi~ 49 +ile-\lessel-sllaiH!et oe oelivere<l--before the data 60 lndiGated-iFl-BOl( 14 wilheiii-!A~ha~erers!-oonsenklnd 51 -ner&-sllall-<>xerGise-<iue diligense-to-deliver the 52
Vessel-not-late: than IRe date indiGated-ln·Bex-Mh 53 Vnia”” othew.4se agreed-ln-Box-13;-tho-OWAOfS-Shali-give 54 the-Gilal’lerers-lloi--/<!Ml--than thirty (31))-runnlng-<lays! 65 pFeliminary
anG-not--less-lhan-fourtee~nnln!jJ-days! 56 detlflite-n9Uce-ef..the4ate en whleh tlie Vessells-expeGted 57 te-lle-ready-ler<tetivery,- 58 The-GwnerHI>all keep the Chaflerers-Giosely-advlse<klf 59
pessiOIEHlllanges-in-llle-Vessel’siJosltion,
6. cancelling 60
(no!-appi/<8/Jh>-whel>PIIIlRII<lpp/ie<;-a>lndi<aled !R i!MEj 61 {a)--Sheuld-lhe-Vessei-noi-R!Hiel!vered latesl--b’f-tlle 62 sanselling
date-lndiGato<l-ln-BOJ< 1§, the ChaFie:ers-sllall 63 llave-llle-<>ptlon-okanselllng this Chafler by givlng-llle 64 Ownem-nolloe-okansellatlon-wlllllr>-!hirty-sil<-(;!ll)-rwrming 65
hours after th!Hlai\OOIIing-<latiHltaleo In Be” 15, failing 66 whlsh-1hlo-GhaFleH11lall-remaln4n-iYII-Ior.. -an<i-effeob 67
(l>)-lf-it-appears-tl!at-\he-\le$el-will be delayed-beyond 66 lh!Hlanoeilinfj-<late,-!Ae-GWAers-may, as seen-<lS-tAey 69 afe iA fJBSitien te stale with reasaRable
seFtainty the Gay 70 en wl:lls~ tfla Vessel she~:~IS’ be ma9y, give Rslise tt’Jereer 71 t<Hhe-GhartereRHlsl<ln(I-Whether-lheY-wlii-exerGise-thel• 72 opli<>A-Gklanseillng,an<l-tlle--opilen must then-be 73
<leGiared-wlthiR--Gne-hundre<l--and--slxty·elght--fW8) 74 FURRing hoc”’ of the reoolpt by t-rterers of sush 75 notlse-or-wlthln-thllty-slx-(36)-runnlng-lleUrs-after-the 76
Gallselllng4ate,whlohev9f-I!Hhe-ea~i9H~the-Gila<lerers 77 <lo--net then exerolse-thetr option of oanseliing, the 78 seventh aay
aftef--!AEH&adiness-<fate-etated--ln-lhe 79
GwMrs’ MUse sha:U--be substituted fer tAe Ganaellffig 80
<iate-lndlsated In B~erthe purpose ef this Clause ti. 81
(<>)
Gansellatio01-UA<ief-lh~ooe § shall oe willlQIJI 82 prejudlse to SAY slalm lhe Chaflerers may eU!OfWise 83 hav<>eMha-Qwners-undeHhi&G)larter. 84
6. Trading Restrictions 85
The Vessel shall be employed in lawful trades for
the 86 carriage of suitable lawful merchandise within the trading 87 limits Indicated in Box 20. 86 The Charterers undertake not to employ the Vassel or 89 suffer the Vessel to be employed otherwise than In 90 conformily with the terms of the
contracts of insurance 91
(Including any warranties expressed or Implied therein) 92 without first obtaining the consent of the Insurers to such 93 employment and
complying with such requirements as to 94 exira premium or otherwise as the Insurers may 95 prescribe. 96 The Charterers also undertake not to employ the Vessel 97 or suffer her employment In any trade or business which 98
Is forbidden by the law of any country to which the Vessel 99 may sail or Is otherwise Illicit or In carrying illicit or 100 prohibited goods or in any manner whatsoever which 101
may render her liable to condemnation, destruction, 102 seizure or confiscation. 103 Notwithstanding any other provisions contained in this 104 Charter it is agreed that nuclear fuels or radioactive 105 products or waste are specifically excluded
from the 106 cargo permitted to be loaded or carried under this 107
Charter. +his exolusiell-<laes-Rot-apply-ta-radio-isotoj:>ea 108
l!Se<l--<lr-lntende<l--to-lle-useci---l<>r’---aJly-lnd!!Siriat-, 109 oommerGial;-agrioultural;-;nedloal-or-osieRiiflo-pufJloses 110 provided the Owners’ prior appreval-llas--b&arH>btaine<l 111 tG-teadlng.theroot
112 113 7. Surveys on Delivery and Redelivery 114
(llol-8pp!lo91i!ewhenPARTIII~ 115
The Owners and Charterers have the right ofsi>al~eaoh 116 appoln11ng surveyors for the purpose of determining and 117 agreeing in writing the condition of the Vessel at the llme
118 of delivery.re<fellvery-hareunder. +he-{)wnOfS-Shai~bear 119 ell aXfleRses a’-tfle-QR-ffire--Swv~nsh.JEifAg-lasHf-tim&; 120
11-any,-and-lhe
Chaflerers shali-b&ar-olt-e.penses-el-lhe 121 OU hire SUNey-lns!OOiflij-Joss-af-tlme,ikmy;-at-the-dally 122 e<tllivaleRt-to the rate or hire-<>r-plo rata themot 123
8. inspection See Clause 59 124
The Owners shall have the right maximum once per 125
yearaklny-1ime after giving reasonable 1 month prior 126 notice to the Charterers to Inspect or survey the Vessel 127 or instruct a duly authorised surveyor to carry out such 128 survey on their behalf:- provlded It do~.ts not Interfere with the-
ope-ration/Itinerary of the Vessel andfor crew (a} to ascertain the condition of the Vessel and satJsl”y 129 themselves that the Vessel Is being properly repaired 130 and mafntalned. The costs and fees for such Inspection 131 or survey shall be
paid by the OWners.--\ffile-ss tRe Vessel 132 -i-s--faund---le ret:~t~ire ref)aifs-.ef--ma/Fiteoonoo-ln-order-to 133 aehieve-lhe-GGA<iillen-<9-J>reviaed; 134 (b) In df)’ deck if-l~e-Qlarterers-i>aviH!Oklry-<iooked 135 her ifl
aseer£fanGa-wUA-...- GJause-10(g~e-sosls--aOO 136 fees--fOf-SUGh-illSf’OGiien er SUIV9)’-8MI~e-pal<i--by-lha 137 Charterers;-and 138
PART II
11BARECON 2001” Standard Bareboat
Charter
11BARECON 2001”
(<>) for any et~er--G<Jmmerslal--reason
they seRSi<ler 139 oosessary (provhie<l-it does not unduly IAiolferer-wllh-lhe 140 oemmeFGiai-GpefBtlen-of-lhe Vessel). The-e<>sltHIOO-Iees 141 fof-SUG!Hnspeotlon and su,ey shall--l>e--pal<l-by-the 142 OWners, 143
All time used-ht-fes[:JeGt ef iRspeGtieA,--SUW&y-oHepalr& 144 shall-be-fer the Challerers’ aGOOunt-anG-Ierm ~art ef tha 145 G-eriG<!, 146 The Charterers shall also
permit the Owners to Inspect the 147
Vessel’s log books maximum once per year wheneve; 148 reasonably-requested and shall whenever required by the 149
Owners furnish them with full !nrormation regarding any 150 casualties or other accidents or damage to the Vessel. 151
9. Inventories, 011 and Stores SEE CLAUSE 53 152
A-<romplete
lnventery-<>1-th&--Vessel’s-<>nllre-e~ulpmOR~ 153
<>lll!il--i<>oluolng spaFe-parts, appllaRGes aml-&1-all 154
oonsumable stores sn-boar<l-t~e-VesseH!hall-l>e-maoe 155
l>y--lhe
Charterel’S-ln-oon)unotlen with the Ownera en 156
Oeilvery--an<l-a~A-reoetlvery el the-Vesseh-+lle 157
~arterers anG-tJ\e-.Qwner~estively, sRall at the 158
Uma--{)f.-4ellvety-anEHedetivety take
ever and pay feF-aU: 169 bunkef&,-lubrl<!aling oil, unbroaehe<l-pr<>vlslens;-palnts, 160
FQ):lBS aRd otf.ler-oon&umable--sleres (eJtsl~:~~iAg
spaFe 161 peRsf-IA-Iho-sald-Vessel at tha then ourrent markel-plioes 162 al-tlle-perts-Gklollvery-<~nlke<lellvory,-reepeslively. The 163 Charterera shall-ensuro that all spare parts liste~e 164 hwentery and wsad rl~:~riAg the Charter
Pefiod-are 165 refllased at thelr--&~ense flFier te ret::lslilJe:y of the 166
Vessel~ SEE ALSO CLAUSE 32, AND CLAUSE 46 167
Malntenanca and Operation
10. (a)(J)Maintenance and Repairs· During the Charter period
168 the Vessel shall be In the full possession and at the 169 absolute disposal for all purposes of the Charterers 170 and under their complete control in every respect. 171 The Charterers shall exercise due diligence to 172 maintain the Vessel, her
machinery, boilers, 173 appurtenances and spare parts in a good state of 174 repair, in efficient operating condition and In 175 accordance with good commercial maintenance 176 practice and, except as provided for In Clause 14(1), If 177 applicable,
at their own expense, they shall at all 178 times keep the Vessel’s Class unexpired fully-up-to 179 Oete with the Classification Society Indicated In Box 180
.1Q maintain all other necessary certificates in force at 181 all times. 182
{ii) New Class and Other Safetv Requirements 183 fA-the-event.-Gkmy-lmpr.ovemeAtj slmstt:~ral shanges 184 or-----flew-----equlpment---beoomlnjJ------A.esessa!y
fef--th.e 185 ooRtirmed-eperatian-of-tha Vessel by reassfl sf-new 186
Glass re~uireMcnt&--<Jr-by--GeMpulsory-!eglslatlen 187
oestlng-(ex~luding-the Chartcrera’ loss of-time) 188 more-than-the-peraentage stale<i-1R--Box-:l3,-er-lf 189
Qex 2a is--left-b!ank;--5--per-GeA~f--the Vessel’s 190 lnsuronce value as stated h’1 QO)( 29, then-the 191
OJ<tenl;-ik!!ly,-le-whloh-lll<Hal8-0f.lllre-shalt-lle-vafie<l 192 an<l-th8-J’atl<>-ln-whlsh-lhe-oosl-ef--oemplianGe shsll 193 bO··ShafB<I
between the-partles-oonoeme<l-iA-Order 194 ta-ae!’deve a reasanable--dlstf.fuutieA thereef as 195 b&lWeen-the--GW!lera--an<l--thrH:harterers haVIR!! 196 regard, lnter--alla,-te-the--length of the perlo<l 197
remalnlng-<~n<ier-this-f:hartcr, shall In the absenoe-ef 198 agreemeJI\,-be-referre<l--t<>--lh<Hilspute--resolutlen 199 methed-agreeo’-ln Clause 3Q. SEE CLAUSE 38 200 (Ill) Financial Security - The Charterers shall maintain
201 financial security or responsibility in respect of third 202 party liabilities as required by any government, 203 including federal, state or municipal or other division 204 or authority thereof, to onable the Vessel, without 205 penally or
charge, lawfully to enter, remain at, or 206 leave any port, place, territorial or contiguous waters 207 or any country, state or municipality In performance 208 of this Charter without any delay. This obligation 209 shall apply whether or not such
requirements have 210 been lawfully imposed by such government or 211 division or authority t~ereof. 212
arrangements by bond or otheiW!se as may be 214 necessary
to satisfy such requirements at the Charterers’ 215 sole expense and the Charterers shall indemnify the 216 Owners against aU consequences whatsoever (including 217 loss of time) for any failure or Inability to do so. 218
(b) Operatjon of the Vessel -The Charterers shall at 219 their own expense and by their own procurement man, 220 vtctual, navigate, operate, supply, fuel and, whenever 221
required, repair the Vessel during the Charter Period and 222 they shall pay all charges and expenses of every kind 223 and nature whatsoever incidental to their use and 224 operation of the Vessel under this Charter, Including 225 annual flag state
fees and any foreign general 228 municipality and/or state taxes. The Master officers and 227
1 crew of the Vessel shall be the servants of the Charterers 228 for
all purposes whatsoever, even-if..--foi’---Bny---masofl 229 appeillted-l>y-lhe-GwnOF& 230 Charterers s~all comply with t~e regulations regarding 231 officers and crew In force In the country of the Vessel’s 232 flag or any olher
applicable law. 233 (c) The Charterers shall keep the owners an<l--the 234 me~gagee(s) advised of the Intended employment, 235 planned dry-docking and major repairs of the Vessel, as 236 reasonably required. 237 (d) Flag and Name of Vessel 238
r:lwrln!l-\lle-GharteH’erle<l,-t~e-Gharterero-shall-lleve-lhe 239 liberty-lo-paint~~e-Vessei-IA-Ihelr-ewA-OOieufS;-inslall-anEI 240
Ols~lay
tholr-fWAAeiiASigAia-aAO fly their SIVA hs•se flag, 241 ThrH:harterens--shall-alse-have--lhe--llberty,wltil--the 242
OwneFS’ GQ!’lsent, wAial:l
sAall net be ~mreas&Rably 243 wlthheld;-t<Hlllange--lhe-flag-and/or-the-name-<>t-the 244
VesaeHI•fill§c-ltle-Gha~er Period.
Palntlni!-and--re- 245 peffiting,IABial-d--re-hlslali!!Cllt,-Jeglslratien--M<I 246
Ele-reglstraHen,iH’e~”ir~<i-l>y-l~e-Owners,sllall-ile-<lt-lhe 24 7 CMI!erers’ e>pense an<l-time,.-SEE CLAUSE 37 & 43 248
(e) Changes to the Vessei...S•I>JeGt-I<H:iaYse4ll{aJ~I); 249 lhe--GMFlerers shall make--fle stRJslt.~ml shaAges in-#le 250
Vessei---Gr-41anges--IA--the-maslllnefY;---I>ollers, 251 appuFtananGes-&r-spare-paFts-thareaf....wilheut-Jn-eaGh 252 instaAoo-lifst-sOSllriH!j-11\e Owners’
aptlroval-lhereelc--tf 253 the-Owners-so-agree;-the-Gharterers-shall,l~the-Owners 254
S9-fequire,----restere--the-Vessel te its farffief--Gf)ndiY.an 255
before-lhe-lermlnatlon-of.thls-Gharter, SEE CLAUSE 38 256
(n Use of the Vessel’s Oulfil Equ’1oment and 257 Appliances - The Charterers shall have the
u!?.a of all 258 outfit, equipment, and appliances on board the Vessel at 259 the time of delivery, provided the same or their 260 substantial equivalent shall be returned to the Owners on 281 redelivery in substantially the same geo4-e~er----aRG
262 condition as when received, ordinary wear and tear excepled. The 263
Charterers shall from time to time during the Charter 264 period replace such Jtems of
equipment as shall be so 265 damaged or worn as to be unfit for use. The Charterers 266 are to procure that all repairs to or replacement of any 267 damaged, worn or lost parts or equipment be effected 268 In such manner (both as regards workmanship
and 269 quality of materials) as not to diminish the value of the 270 Vessel. The Charterers have t~e right to fit additional 271 equipment at their expense and risk but the Charterers 272 shall remove such equipment at the end of the period 273
unless agreed otherwise by the Owners and the Charterers . ..Jf r~uested-l>y-lhe-Gwners, Any equipment including radio 274 equipment on hire on the Vessel at time of dellvel)’ shall 275 be kept and maintained by the Charterers and the 278
Charterers shall assume the obligations and liabilities of 277 tho Owners under any lease contracts in connection 278 therewith and shall reimburse the Owners for
all 279 expenses incurred in connection therewith, also for any 280 new equipment required In order to comply with radio 281 regurauons, 282
(g) Periodical
Drv-Docklnq - The Charterers shall dry- 283 dock the Vessel and <:lean and paint her underwater 284 parts whenever the same may be necessary, but not 285
PART II
11BARECON 2001” Standard Bareboat
Charter
11BARECON 2001”
(<>) for any et~er--G<Jmmerslal--reason
they seRSi<ler 139 oosessary (provhie<l-it does not unduly IAiolferer-wllh-lhe 140 oemmeFGiai-GpefBtlen-of-lhe Vessel). The-e<>sltHIOO-Iees 141 fof-SUG!Hnspeotlon and su,ey shall--l>e--pal<l-by-the 142 OWners, 143
All time used-ht-fes[:JeGt ef iRspeGtieA,--SUW&y-oHepalr& 144 shall-be-fer the Challerers’ aGOOunt-anG-Ierm ~art ef tha 145 G-eriG<!, 146 The Charterers shall also
permit the Owners to Inspect the 147
Vessel’s log books maximum once per year wheneve; 148 reasonably-requested and shall whenever required by the 149
Owners furnish them with full !nrormation regarding any 150 casualties or other accidents or damage to the Vessel. 151
9. Inventories, 011 and Stores SEE CLAUSE 53 152
A-<romplete
lnventery-<>1-th&--Vessel’s-<>nllre-e~ulpmOR~ 153
<>lll!il--i<>oluolng spaFe-parts, appllaRGes aml-&1-all 154
oonsumable stores sn-boar<l-t~e-VesseH!hall-l>e-maoe 155
l>y--lhe
Charterel’S-ln-oon)unotlen with the Ownera en 156
Oeilvery--an<l-a~A-reoetlvery el the-Vesseh-+lle 157
~arterers anG-tJ\e-.Qwner~estively, sRall at the 158
Uma--{)f.-4ellvety-anEHedetivety take
ever and pay feF-aU: 169 bunkef&,-lubrl<!aling oil, unbroaehe<l-pr<>vlslens;-palnts, 160
FQ):lBS aRd otf.ler-oon&umable--sleres (eJtsl~:~~iAg
spaFe 161 peRsf-IA-Iho-sald-Vessel at tha then ourrent markel-plioes 162 al-tlle-perts-Gklollvery-<~nlke<lellvory,-reepeslively. The 163 Charterera shall-ensuro that all spare parts liste~e 164 hwentery and wsad rl~:~riAg the Charter
Pefiod-are 165 refllased at thelr--&~ense flFier te ret::lslilJe:y of the 166
Vessel~ SEE ALSO CLAUSE 32, AND CLAUSE 46 167
Malntenanca and Operation
10. (a)(J)Maintenance and Repairs· During the Charter period
168 the Vessel shall be In the full possession and at the 169 absolute disposal for all purposes of the Charterers 170 and under their complete control in every respect. 171 The Charterers shall exercise due diligence to 172 maintain the Vessel, her
machinery, boilers, 173 appurtenances and spare parts in a good state of 174 repair, in efficient operating condition and In 175 accordance with good commercial maintenance 176 practice and, except as provided for In Clause 14(1), If 177 applicable,
at their own expense, they shall at all 178 times keep the Vessel’s Class unexpired fully-up-to 179 Oete with the Classification Society Indicated In Box 180
.1Q maintain all other necessary certificates in force at 181 all times. 182
{ii) New Class and Other Safetv Requirements 183 fA-the-event.-Gkmy-lmpr.ovemeAtj slmstt:~ral shanges 184 or-----flew-----equlpment---beoomlnjJ------A.esessa!y
fef--th.e 185 ooRtirmed-eperatian-of-tha Vessel by reassfl sf-new 186
Glass re~uireMcnt&--<Jr-by--GeMpulsory-!eglslatlen 187
oestlng-(ex~luding-the Chartcrera’ loss of-time) 188 more-than-the-peraentage stale<i-1R--Box-:l3,-er-lf 189
Qex 2a is--left-b!ank;--5--per-GeA~f--the Vessel’s 190 lnsuronce value as stated h’1 QO)( 29, then-the 191
OJ<tenl;-ik!!ly,-le-whloh-lll<Hal8-0f.lllre-shalt-lle-vafie<l 192 an<l-th8-J’atl<>-ln-whlsh-lhe-oosl-ef--oemplianGe shsll 193 bO··ShafB<I
between the-partles-oonoeme<l-iA-Order 194 ta-ae!’deve a reasanable--dlstf.fuutieA thereef as 195 b&lWeen-the--GW!lera--an<l--thrH:harterers haVIR!! 196 regard, lnter--alla,-te-the--length of the perlo<l 197
remalnlng-<~n<ier-this-f:hartcr, shall In the absenoe-ef 198 agreemeJI\,-be-referre<l--t<>--lh<Hilspute--resolutlen 199 methed-agreeo’-ln Clause 3Q. SEE CLAUSE 38 200 (Ill) Financial Security - The Charterers shall maintain
201 financial security or responsibility in respect of third 202 party liabilities as required by any government, 203 including federal, state or municipal or other division 204 or authority thereof, to onable the Vessel, without 205 penally or
charge, lawfully to enter, remain at, or 206 leave any port, place, territorial or contiguous waters 207 or any country, state or municipality In performance 208 of this Charter without any delay. This obligation 209 shall apply whether or not such
requirements have 210 been lawfully imposed by such government or 211 division or authority t~ereof. 212
arrangements by bond or otheiW!se as may be 214 necessary
to satisfy such requirements at the Charterers’ 215 sole expense and the Charterers shall indemnify the 216 Owners against aU consequences whatsoever (including 217 loss of time) for any failure or Inability to do so. 218
(b) Operatjon of the Vessel -The Charterers shall at 219 their own expense and by their own procurement man, 220 vtctual, navigate, operate, supply, fuel and, whenever 221
required, repair the Vessel during the Charter Period and 222 they shall pay all charges and expenses of every kind 223 and nature whatsoever incidental to their use and 224 operation of the Vessel under this Charter, Including 225 annual flag state
fees and any foreign general 228 municipality and/or state taxes. The Master officers and 227
1 crew of the Vessel shall be the servants of the Charterers 228 for
all purposes whatsoever, even-if..--foi’---Bny---masofl 229 appeillted-l>y-lhe-GwnOF& 230 Charterers s~all comply with t~e regulations regarding 231 officers and crew In force In the country of the Vessel’s 232 flag or any olher
applicable law. 233 (c) The Charterers shall keep the owners an<l--the 234 me~gagee(s) advised of the Intended employment, 235 planned dry-docking and major repairs of the Vessel, as 236 reasonably required. 237 (d) Flag and Name of Vessel 238
r:lwrln!l-\lle-GharteH’erle<l,-t~e-Gharterero-shall-lleve-lhe 239 liberty-lo-paint~~e-Vessei-IA-Ihelr-ewA-OOieufS;-inslall-anEI 240
Ols~lay
tholr-fWAAeiiASigAia-aAO fly their SIVA hs•se flag, 241 ThrH:harterens--shall-alse-have--lhe--llberty,wltil--the 242
OwneFS’ GQ!’lsent, wAial:l
sAall net be ~mreas&Rably 243 wlthheld;-t<Hlllange--lhe-flag-and/or-the-name-<>t-the 244
VesaeHI•fill§c-ltle-Gha~er Period.
Palntlni!-and--re- 245 peffiting,IABial-d--re-hlslali!!Cllt,-Jeglslratien--M<I 246
Ele-reglstraHen,iH’e~”ir~<i-l>y-l~e-Owners,sllall-ile-<lt-lhe 24 7 CMI!erers’ e>pense an<l-time,.-SEE CLAUSE 37 & 43 248
(e) Changes to the Vessei...S•I>JeGt-I<H:iaYse4ll{aJ~I); 249 lhe--GMFlerers shall make--fle stRJslt.~ml shaAges in-#le 250
Vessei---Gr-41anges--IA--the-maslllnefY;---I>ollers, 251 appuFtananGes-&r-spare-paFts-thareaf....wilheut-Jn-eaGh 252 instaAoo-lifst-sOSllriH!j-11\e Owners’
aptlroval-lhereelc--tf 253 the-Owners-so-agree;-the-Gharterers-shall,l~the-Owners 254
S9-fequire,----restere--the-Vessel te its farffief--Gf)ndiY.an 255
before-lhe-lermlnatlon-of.thls-Gharter, SEE CLAUSE 38 256
(n Use of the Vessel’s Oulfil Equ’1oment and 257 Appliances - The Charterers shall have the
u!?.a of all 258 outfit, equipment, and appliances on board the Vessel at 259 the time of delivery, provided the same or their 260 substantial equivalent shall be returned to the Owners on 281 redelivery in substantially the same geo4-e~er----aRG
262 condition as when received, ordinary wear and tear excepled. The 263
Charterers shall from time to time during the Charter 264 period replace such Jtems of
equipment as shall be so 265 damaged or worn as to be unfit for use. The Charterers 266 are to procure that all repairs to or replacement of any 267 damaged, worn or lost parts or equipment be effected 268 In such manner (both as regards workmanship
and 269 quality of materials) as not to diminish the value of the 270 Vessel. The Charterers have t~e right to fit additional 271 equipment at their expense and risk but the Charterers 272 shall remove such equipment at the end of the period 273
unless agreed otherwise by the Owners and the Charterers . ..Jf r~uested-l>y-lhe-Gwners, Any equipment including radio 274 equipment on hire on the Vessel at time of dellvel)’ shall 275 be kept and maintained by the Charterers and the 278
Charterers shall assume the obligations and liabilities of 277 tho Owners under any lease contracts in connection 278 therewith and shall reimburse the Owners for
all 279 expenses incurred in connection therewith, also for any 280 new equipment required In order to comply with radio 281 regurauons, 282
(g) Periodical
Drv-Docklnq - The Charterers shall dry- 283 dock the Vessel and <:lean and paint her underwater 284 parts whenever the same may be necessary, but not 285
PART II
11BARECON 2001” Standard Bareboat
Charter
11BARECON 2001”
(<>) for any et~er--G<Jmmerslal--reason
they seRSi<ler 139 oosessary (provhie<l-it does not unduly IAiolferer-wllh-lhe 140 oemmeFGiai-GpefBtlen-of-lhe Vessel). The-e<>sltHIOO-Iees 141 fof-SUG!Hnspeotlon and su,ey shall--l>e--pal<l-by-the 142 OWners, 143
All time used-ht-fes[:JeGt ef iRspeGtieA,--SUW&y-oHepalr& 144 shall-be-fer the Challerers’ aGOOunt-anG-Ierm ~art ef tha 145 G-eriG<!, 146 The Charterers shall also
permit the Owners to Inspect the 147
Vessel’s log books maximum once per year wheneve; 148 reasonably-requested and shall whenever required by the 149
Owners furnish them with full !nrormation regarding any 150 casualties or other accidents or damage to the Vessel. 151
9. Inventories, 011 and Stores SEE CLAUSE 53 152
A-<romplete
lnventery-<>1-th&--Vessel’s-<>nllre-e~ulpmOR~ 153
<>lll!il--i<>oluolng spaFe-parts, appllaRGes aml-&1-all 154
oonsumable stores sn-boar<l-t~e-VesseH!hall-l>e-maoe 155
l>y--lhe
Charterel’S-ln-oon)unotlen with the Ownera en 156
Oeilvery--an<l-a~A-reoetlvery el the-Vesseh-+lle 157
~arterers anG-tJ\e-.Qwner~estively, sRall at the 158
Uma--{)f.-4ellvety-anEHedetivety take
ever and pay feF-aU: 169 bunkef&,-lubrl<!aling oil, unbroaehe<l-pr<>vlslens;-palnts, 160
FQ):lBS aRd otf.ler-oon&umable--sleres (eJtsl~:~~iAg
spaFe 161 peRsf-IA-Iho-sald-Vessel at tha then ourrent markel-plioes 162 al-tlle-perts-Gklollvery-<~nlke<lellvory,-reepeslively. The 163 Charterera shall-ensuro that all spare parts liste~e 164 hwentery and wsad rl~:~riAg the Charter
Pefiod-are 165 refllased at thelr--&~ense flFier te ret::lslilJe:y of the 166
Vessel~ SEE ALSO CLAUSE 32, AND CLAUSE 46 167
Malntenanca and Operation
10. (a)(J)Maintenance and Repairs· During the Charter period
168 the Vessel shall be In the full possession and at the 169 absolute disposal for all purposes of the Charterers 170 and under their complete control in every respect. 171 The Charterers shall exercise due diligence to 172 maintain the Vessel, her
machinery, boilers, 173 appurtenances and spare parts in a good state of 174 repair, in efficient operating condition and In 175 accordance with good commercial maintenance 176 practice and, except as provided for In Clause 14(1), If 177 applicable,
at their own expense, they shall at all 178 times keep the Vessel’s Class unexpired fully-up-to 179 Oete with the Classification Society Indicated In Box 180
.1Q maintain all other necessary certificates in force at 181 all times. 182
{ii) New Class and Other Safetv Requirements 183 fA-the-event.-Gkmy-lmpr.ovemeAtj slmstt:~ral shanges 184 or-----flew-----equlpment---beoomlnjJ------A.esessa!y
fef--th.e 185 ooRtirmed-eperatian-of-tha Vessel by reassfl sf-new 186
Glass re~uireMcnt&--<Jr-by--GeMpulsory-!eglslatlen 187
oestlng-(ex~luding-the Chartcrera’ loss of-time) 188 more-than-the-peraentage stale<i-1R--Box-:l3,-er-lf 189
Qex 2a is--left-b!ank;--5--per-GeA~f--the Vessel’s 190 lnsuronce value as stated h’1 QO)( 29, then-the 191
OJ<tenl;-ik!!ly,-le-whloh-lll<Hal8-0f.lllre-shalt-lle-vafie<l 192 an<l-th8-J’atl<>-ln-whlsh-lhe-oosl-ef--oemplianGe shsll 193 bO··ShafB<I
between the-partles-oonoeme<l-iA-Order 194 ta-ae!’deve a reasanable--dlstf.fuutieA thereef as 195 b&lWeen-the--GW!lera--an<l--thrH:harterers haVIR!! 196 regard, lnter--alla,-te-the--length of the perlo<l 197
remalnlng-<~n<ier-this-f:hartcr, shall In the absenoe-ef 198 agreemeJI\,-be-referre<l--t<>--lh<Hilspute--resolutlen 199 methed-agreeo’-ln Clause 3Q. SEE CLAUSE 38 200 (Ill) Financial Security - The Charterers shall maintain
201 financial security or responsibility in respect of third 202 party liabilities as required by any government, 203 including federal, state or municipal or other division 204 or authority thereof, to onable the Vessel, without 205 penally or
charge, lawfully to enter, remain at, or 206 leave any port, place, territorial or contiguous waters 207 or any country, state or municipality In performance 208 of this Charter without any delay. This obligation 209 shall apply whether or not such
requirements have 210 been lawfully imposed by such government or 211 division or authority t~ereof. 212
arrangements by bond or otheiW!se as may be 214 necessary
to satisfy such requirements at the Charterers’ 215 sole expense and the Charterers shall indemnify the 216 Owners against aU consequences whatsoever (including 217 loss of time) for any failure or Inability to do so. 218
(b) Operatjon of the Vessel -The Charterers shall at 219 their own expense and by their own procurement man, 220 vtctual, navigate, operate, supply, fuel and, whenever 221
required, repair the Vessel during the Charter Period and 222 they shall pay all charges and expenses of every kind 223 and nature whatsoever incidental to their use and 224 operation of the Vessel under this Charter, Including 225 annual flag state
fees and any foreign general 228 municipality and/or state taxes. The Master officers and 227
1 crew of the Vessel shall be the servants of the Charterers 228 for
all purposes whatsoever, even-if..--foi’---Bny---masofl 229 appeillted-l>y-lhe-GwnOF& 230 Charterers s~all comply with t~e regulations regarding 231 officers and crew In force In the country of the Vessel’s 232 flag or any olher
applicable law. 233 (c) The Charterers shall keep the owners an<l--the 234 me~gagee(s) advised of the Intended employment, 235 planned dry-docking and major repairs of the Vessel, as 236 reasonably required. 237 (d) Flag and Name of Vessel 238
r:lwrln!l-\lle-GharteH’erle<l,-t~e-Gharterero-shall-lleve-lhe 239 liberty-lo-paint~~e-Vessei-IA-Ihelr-ewA-OOieufS;-inslall-anEI 240
Ols~lay
tholr-fWAAeiiASigAia-aAO fly their SIVA hs•se flag, 241 ThrH:harterens--shall-alse-have--lhe--llberty,wltil--the 242
OwneFS’ GQ!’lsent, wAial:l
sAall net be ~mreas&Rably 243 wlthheld;-t<Hlllange--lhe-flag-and/or-the-name-<>t-the 244
VesaeHI•fill§c-ltle-Gha~er Period.
Palntlni!-and--re- 245 peffiting,IABial-d--re-hlslali!!Cllt,-Jeglslratien--M<I 246
Ele-reglstraHen,iH’e~”ir~<i-l>y-l~e-Owners,sllall-ile-<lt-lhe 24 7 CMI!erers’ e>pense an<l-time,.-SEE CLAUSE 37 & 43 248
(e) Changes to the Vessei...S•I>JeGt-I<H:iaYse4ll{aJ~I); 249 lhe--GMFlerers shall make--fle stRJslt.~ml shaAges in-#le 250
Vessei---Gr-41anges--IA--the-maslllnefY;---I>ollers, 251 appuFtananGes-&r-spare-paFts-thareaf....wilheut-Jn-eaGh 252 instaAoo-lifst-sOSllriH!j-11\e Owners’
aptlroval-lhereelc--tf 253 the-Owners-so-agree;-the-Gharterers-shall,l~the-Owners 254
S9-fequire,----restere--the-Vessel te its farffief--Gf)ndiY.an 255
before-lhe-lermlnatlon-of.thls-Gharter, SEE CLAUSE 38 256
(n Use of the Vessel’s Oulfil Equ’1oment and 257 Appliances - The Charterers shall have the
u!?.a of all 258 outfit, equipment, and appliances on board the Vessel at 259 the time of delivery, provided the same or their 260 substantial equivalent shall be returned to the Owners on 281 redelivery in substantially the same geo4-e~er----aRG
262 condition as when received, ordinary wear and tear excepled. The 263
Charterers shall from time to time during the Charter 264 period replace such Jtems of
equipment as shall be so 265 damaged or worn as to be unfit for use. The Charterers 266 are to procure that all repairs to or replacement of any 267 damaged, worn or lost parts or equipment be effected 268 In such manner (both as regards workmanship
and 269 quality of materials) as not to diminish the value of the 270 Vessel. The Charterers have t~e right to fit additional 271 equipment at their expense and risk but the Charterers 272 shall remove such equipment at the end of the period 273
unless agreed otherwise by the Owners and the Charterers . ..Jf r~uested-l>y-lhe-Gwners, Any equipment including radio 274 equipment on hire on the Vessel at time of dellvel)’ shall 275 be kept and maintained by the Charterers and the 278
Charterers shall assume the obligations and liabilities of 277 tho Owners under any lease contracts in connection 278 therewith and shall reimburse the Owners for
all 279 expenses incurred in connection therewith, also for any 280 new equipment required In order to comply with radio 281 regurauons, 282
(g) Periodical
Drv-Docklnq - The Charterers shall dry- 283 dock the Vessel and <:lean and paint her underwater 284 parts whenever the same may be necessary, but not 285
PART II
11BARECON 2001” Standard Bareboat
Charter
11BARECON 2001”
(<>) for any et~er--G<Jmmerslal--reason
they seRSi<ler 139 oosessary (provhie<l-it does not unduly IAiolferer-wllh-lhe 140 oemmeFGiai-GpefBtlen-of-lhe Vessel). The-e<>sltHIOO-Iees 141 fof-SUG!Hnspeotlon and su,ey shall--l>e--pal<l-by-the 142 OWners, 143
All time used-ht-fes[:JeGt ef iRspeGtieA,--SUW&y-oHepalr& 144 shall-be-fer the Challerers’ aGOOunt-anG-Ierm ~art ef tha 145 G-eriG<!, 146 The Charterers shall also
permit the Owners to Inspect the 147
Vessel’s log books maximum once per year wheneve; 148 reasonably-requested and shall whenever required by the 149
Owners furnish them with full !nrormation regarding any 150 casualties or other accidents or damage to the Vessel. 151
9. Inventories, 011 and Stores SEE CLAUSE 53 152
A-<romplete
lnventery-<>1-th&--Vessel’s-<>nllre-e~ulpmOR~ 153
<>lll!il--i<>oluolng spaFe-parts, appllaRGes aml-&1-all 154
oonsumable stores sn-boar<l-t~e-VesseH!hall-l>e-maoe 155
l>y--lhe
Charterel’S-ln-oon)unotlen with the Ownera en 156
Oeilvery--an<l-a~A-reoetlvery el the-Vesseh-+lle 157
~arterers anG-tJ\e-.Qwner~estively, sRall at the 158
Uma--{)f.-4ellvety-anEHedetivety take
ever and pay feF-aU: 169 bunkef&,-lubrl<!aling oil, unbroaehe<l-pr<>vlslens;-palnts, 160
FQ):lBS aRd otf.ler-oon&umable--sleres (eJtsl~:~~iAg
spaFe 161 peRsf-IA-Iho-sald-Vessel at tha then ourrent markel-plioes 162 al-tlle-perts-Gklollvery-<~nlke<lellvory,-reepeslively. The 163 Charterera shall-ensuro that all spare parts liste~e 164 hwentery and wsad rl~:~riAg the Charter
Pefiod-are 165 refllased at thelr--&~ense flFier te ret::lslilJe:y of the 166
Vessel~ SEE ALSO CLAUSE 32, AND CLAUSE 46 167
Malntenanca and Operation
10. (a)(J)Maintenance and Repairs· During the Charter period
168 the Vessel shall be In the full possession and at the 169 absolute disposal for all purposes of the Charterers 170 and under their complete control in every respect. 171 The Charterers shall exercise due diligence to 172 maintain the Vessel, her
machinery, boilers, 173 appurtenances and spare parts in a good state of 174 repair, in efficient operating condition and In 175 accordance with good commercial maintenance 176 practice and, except as provided for In Clause 14(1), If 177 applicable,
at their own expense, they shall at all 178 times keep the Vessel’s Class unexpired fully-up-to 179 Oete with the Classification Society Indicated In Box 180
.1Q maintain all other necessary certificates in force at 181 all times. 182
{ii) New Class and Other Safetv Requirements 183 fA-the-event.-Gkmy-lmpr.ovemeAtj slmstt:~ral shanges 184 or-----flew-----equlpment---beoomlnjJ------A.esessa!y
fef--th.e 185 ooRtirmed-eperatian-of-tha Vessel by reassfl sf-new 186
Glass re~uireMcnt&--<Jr-by--GeMpulsory-!eglslatlen 187
oestlng-(ex~luding-the Chartcrera’ loss of-time) 188 more-than-the-peraentage stale<i-1R--Box-:l3,-er-lf 189
Qex 2a is--left-b!ank;--5--per-GeA~f--the Vessel’s 190 lnsuronce value as stated h’1 QO)( 29, then-the 191
OJ<tenl;-ik!!ly,-le-whloh-lll<Hal8-0f.lllre-shalt-lle-vafie<l 192 an<l-th8-J’atl<>-ln-whlsh-lhe-oosl-ef--oemplianGe shsll 193 bO··ShafB<I
between the-partles-oonoeme<l-iA-Order 194 ta-ae!’deve a reasanable--dlstf.fuutieA thereef as 195 b&lWeen-the--GW!lera--an<l--thrH:harterers haVIR!! 196 regard, lnter--alla,-te-the--length of the perlo<l 197
remalnlng-<~n<ier-this-f:hartcr, shall In the absenoe-ef 198 agreemeJI\,-be-referre<l--t<>--lh<Hilspute--resolutlen 199 methed-agreeo’-ln Clause 3Q. SEE CLAUSE 38 200 (Ill) Financial Security - The Charterers shall maintain
201 financial security or responsibility in respect of third 202 party liabilities as required by any government, 203 including federal, state or municipal or other division 204 or authority thereof, to onable the Vessel, without 205 penally or
charge, lawfully to enter, remain at, or 206 leave any port, place, territorial or contiguous waters 207 or any country, state or municipality In performance 208 of this Charter without any delay. This obligation 209 shall apply whether or not such
requirements have 210 been lawfully imposed by such government or 211 division or authority t~ereof. 212
arrangements by bond or otheiW!se as may be 214 necessary
to satisfy such requirements at the Charterers’ 215 sole expense and the Charterers shall indemnify the 216 Owners against aU consequences whatsoever (including 217 loss of time) for any failure or Inability to do so. 218
(b) Operatjon of the Vessel -The Charterers shall at 219 their own expense and by their own procurement man, 220 vtctual, navigate, operate, supply, fuel and, whenever 221
required, repair the Vessel during the Charter Period and 222 they shall pay all charges and expenses of every kind 223 and nature whatsoever incidental to their use and 224 operation of the Vessel under this Charter, Including 225 annual flag state
fees and any foreign general 228 municipality and/or state taxes. The Master officers and 227
1 crew of the Vessel shall be the servants of the Charterers 228 for
all purposes whatsoever, even-if..--foi’---Bny---masofl 229 appeillted-l>y-lhe-GwnOF& 230 Charterers s~all comply with t~e regulations regarding 231 officers and crew In force In the country of the Vessel’s 232 flag or any olher
applicable law. 233 (c) The Charterers shall keep the owners an<l--the 234 me~gagee(s) advised of the Intended employment, 235 planned dry-docking and major repairs of the Vessel, as 236 reasonably required. 237 (d) Flag and Name of Vessel 238
r:lwrln!l-\lle-GharteH’erle<l,-t~e-Gharterero-shall-lleve-lhe 239 liberty-lo-paint~~e-Vessei-IA-Ihelr-ewA-OOieufS;-inslall-anEI 240
Ols~lay
tholr-fWAAeiiASigAia-aAO fly their SIVA hs•se flag, 241 ThrH:harterens--shall-alse-have--lhe--llberty,wltil--the 242
OwneFS’ GQ!’lsent, wAial:l
sAall net be ~mreas&Rably 243 wlthheld;-t<Hlllange--lhe-flag-and/or-the-name-<>t-the 244
VesaeHI•fill§c-ltle-Gha~er Period.
Palntlni!-and--re- 245 peffiting,IABial-d--re-hlslali!!Cllt,-Jeglslratien--M<I 246
Ele-reglstraHen,iH’e~”ir~<i-l>y-l~e-Owners,sllall-ile-<lt-lhe 24 7 CMI!erers’ e>pense an<l-time,.-SEE CLAUSE 37 & 43 248
(e) Changes to the Vessei...S•I>JeGt-I<H:iaYse4ll{aJ~I); 249 lhe--GMFlerers shall make--fle stRJslt.~ml shaAges in-#le 250
Vessei---Gr-41anges--IA--the-maslllnefY;---I>ollers, 251 appuFtananGes-&r-spare-paFts-thareaf....wilheut-Jn-eaGh 252 instaAoo-lifst-sOSllriH!j-11\e Owners’
aptlroval-lhereelc--tf 253 the-Owners-so-agree;-the-Gharterers-shall,l~the-Owners 254
S9-fequire,----restere--the-Vessel te its farffief--Gf)ndiY.an 255
before-lhe-lermlnatlon-of.thls-Gharter, SEE CLAUSE 38 256
(n Use of the Vessel’s Oulfil Equ’1oment and 257 Appliances - The Charterers shall have the
u!?.a of all 258 outfit, equipment, and appliances on board the Vessel at 259 the time of delivery, provided the same or their 260 substantial equivalent shall be returned to the Owners on 281 redelivery in substantially the same geo4-e~er----aRG
262 condition as when received, ordinary wear and tear excepled. The 263
Charterers shall from time to time during the Charter 264 period replace such Jtems of
equipment as shall be so 265 damaged or worn as to be unfit for use. The Charterers 266 are to procure that all repairs to or replacement of any 267 damaged, worn or lost parts or equipment be effected 268 In such manner (both as regards workmanship
and 269 quality of materials) as not to diminish the value of the 270 Vessel. The Charterers have t~e right to fit additional 271 equipment at their expense and risk but the Charterers 272 shall remove such equipment at the end of the period 273
unless agreed otherwise by the Owners and the Charterers . ..Jf r~uested-l>y-lhe-Gwners, Any equipment including radio 274 equipment on hire on the Vessel at time of dellvel)’ shall 275 be kept and maintained by the Charterers and the 278
Charterers shall assume the obligations and liabilities of 277 tho Owners under any lease contracts in connection 278 therewith and shall reimburse the Owners for
all 279 expenses incurred in connection therewith, also for any 280 new equipment required In order to comply with radio 281 regurauons, 282
(g) Periodical
Drv-Docklnq - The Charterers shall dry- 283 dock the Vessel and <:lean and paint her underwater 284 parts whenever the same may be necessary, but not 285
PART II
11BARECON 2001” Standard Bareboat
Charter
11BARECON 2001”
(<>) for any et~er--G<Jmmerslal--reason
they seRSi<ler 139 oosessary (provhie<l-it does not unduly IAiolferer-wllh-lhe 140 oemmeFGiai-GpefBtlen-of-lhe Vessel). The-e<>sltHIOO-Iees 141 fof-SUG!Hnspeotlon and su,ey shall--l>e--pal<l-by-the 142 OWners, 143
All time used-ht-fes[:JeGt ef iRspeGtieA,--SUW&y-oHepalr& 144 shall-be-fer the Challerers’ aGOOunt-anG-Ierm ~art ef tha 145 G-eriG<!, 146 The Charterers shall also
permit the Owners to Inspect the 147
Vessel’s log books maximum once per year wheneve; 148 reasonably-requested and shall whenever required by the 149
Owners furnish them with full !nrormation regarding any 150 casualties or other accidents or damage to the Vessel. 151
9. Inventories, 011 and Stores SEE CLAUSE 53 152
A-<romplete
lnventery-<>1-th&--Vessel’s-<>nllre-e~ulpmOR~ 153
<>lll!il--i<>oluolng spaFe-parts, appllaRGes aml-&1-all 154
oonsumable stores sn-boar<l-t~e-VesseH!hall-l>e-maoe 155
l>y--lhe
Charterel’S-ln-oon)unotlen with the Ownera en 156
Oeilvery--an<l-a~A-reoetlvery el the-Vesseh-+lle 157
~arterers anG-tJ\e-.Qwner~estively, sRall at the 158
Uma--{)f.-4ellvety-anEHedetivety take
ever and pay feF-aU: 169 bunkef&,-lubrl<!aling oil, unbroaehe<l-pr<>vlslens;-palnts, 160
FQ):lBS aRd otf.ler-oon&umable--sleres (eJtsl~:~~iAg
spaFe 161 peRsf-IA-Iho-sald-Vessel at tha then ourrent markel-plioes 162 al-tlle-perts-Gklollvery-<~nlke<lellvory,-reepeslively. The 163 Charterera shall-ensuro that all spare parts liste~e 164 hwentery and wsad rl~:~riAg the Charter
Pefiod-are 165 refllased at thelr--&~ense flFier te ret::lslilJe:y of the 166
Vessel~ SEE ALSO CLAUSE 32, AND CLAUSE 46 167
Malntenanca and Operation
10. (a)(J)Maintenance and Repairs· During the Charter period
168 the Vessel shall be In the full possession and at the 169 absolute disposal for all purposes of the Charterers 170 and under their complete control in every respect. 171 The Charterers shall exercise due diligence to 172 maintain the Vessel, her
machinery, boilers, 173 appurtenances and spare parts in a good state of 174 repair, in efficient operating condition and In 175 accordance with good commercial maintenance 176 practice and, except as provided for In Clause 14(1), If 177 applicable,
at their own expense, they shall at all 178 times keep the Vessel’s Class unexpired fully-up-to 179 Oete with the Classification Society Indicated In Box 180
.1Q maintain all other necessary certificates in force at 181 all times. 182
{ii) New Class and Other Safetv Requirements 183 fA-the-event.-Gkmy-lmpr.ovemeAtj slmstt:~ral shanges 184 or-----flew-----equlpment---beoomlnjJ------A.esessa!y
fef--th.e 185 ooRtirmed-eperatian-of-tha Vessel by reassfl sf-new 186
Glass re~uireMcnt&--<Jr-by--GeMpulsory-!eglslatlen 187
oestlng-(ex~luding-the Chartcrera’ loss of-time) 188 more-than-the-peraentage stale<i-1R--Box-:l3,-er-lf 189
Qex 2a is--left-b!ank;--5--per-GeA~f--the Vessel’s 190 lnsuronce value as stated h’1 QO)( 29, then-the 191
OJ<tenl;-ik!!ly,-le-whloh-lll<Hal8-0f.lllre-shalt-lle-vafie<l 192 an<l-th8-J’atl<>-ln-whlsh-lhe-oosl-ef--oemplianGe shsll 193 bO··ShafB<I
between the-partles-oonoeme<l-iA-Order 194 ta-ae!’deve a reasanable--dlstf.fuutieA thereef as 195 b&lWeen-the--GW!lera--an<l--thrH:harterers haVIR!! 196 regard, lnter--alla,-te-the--length of the perlo<l 197
remalnlng-<~n<ier-this-f:hartcr, shall In the absenoe-ef 198 agreemeJI\,-be-referre<l--t<>--lh<Hilspute--resolutlen 199 methed-agreeo’-ln Clause 3Q. SEE CLAUSE 38 200 (Ill) Financial Security - The Charterers shall maintain
201 financial security or responsibility in respect of third 202 party liabilities as required by any government, 203 including federal, state or municipal or other division 204 or authority thereof, to onable the Vessel, without 205 penally or
charge, lawfully to enter, remain at, or 206 leave any port, place, territorial or contiguous waters 207 or any country, state or municipality In performance 208 of this Charter without any delay. This obligation 209 shall apply whether or not such
requirements have 210 been lawfully imposed by such government or 211 division or authority t~ereof. 212
arrangements by bond or otheiW!se as may be 214 necessary
to satisfy such requirements at the Charterers’ 215 sole expense and the Charterers shall indemnify the 216 Owners against aU consequences whatsoever (including 217 loss of time) for any failure or Inability to do so. 218
(b) Operatjon of the Vessel -The Charterers shall at 219 their own expense and by their own procurement man, 220 vtctual, navigate, operate, supply, fuel and, whenever 221
required, repair the Vessel during the Charter Period and 222 they shall pay all charges and expenses of every kind 223 and nature whatsoever incidental to their use and 224 operation of the Vessel under this Charter, Including 225 annual flag state
fees and any foreign general 228 municipality and/or state taxes. The Master officers and 227
1 crew of the Vessel shall be the servants of the Charterers 228 for
all purposes whatsoever, even-if..--foi’---Bny---masofl 229 appeillted-l>y-lhe-GwnOF& 230 Charterers s~all comply with t~e regulations regarding 231 officers and crew In force In the country of the Vessel’s 232 flag or any olher
applicable law. 233 (c) The Charterers shall keep the owners an<l--the 234 me~gagee(s) advised of the Intended employment, 235 planned dry-docking and major repairs of the Vessel, as 236 reasonably required. 237 (d) Flag and Name of Vessel 238
r:lwrln!l-\lle-GharteH’erle<l,-t~e-Gharterero-shall-lleve-lhe 239 liberty-lo-paint~~e-Vessei-IA-Ihelr-ewA-OOieufS;-inslall-anEI 240
Ols~lay
tholr-fWAAeiiASigAia-aAO fly their SIVA hs•se flag, 241 ThrH:harterens--shall-alse-have--lhe--llberty,wltil--the 242
OwneFS’ GQ!’lsent, wAial:l
sAall net be ~mreas&Rably 243 wlthheld;-t<Hlllange--lhe-flag-and/or-the-name-<>t-the 244
VesaeHI•fill§c-ltle-Gha~er Period.
Palntlni!-and--re- 245 peffiting,IABial-d--re-hlslali!!Cllt,-Jeglslratien--M<I 246
Ele-reglstraHen,iH’e~”ir~<i-l>y-l~e-Owners,sllall-ile-<lt-lhe 24 7 CMI!erers’ e>pense an<l-time,.-SEE CLAUSE 37 & 43 248
(e) Changes to the Vessei...S•I>JeGt-I<H:iaYse4ll{aJ~I); 249 lhe--GMFlerers shall make--fle stRJslt.~ml shaAges in-#le 250
Vessei---Gr-41anges--IA--the-maslllnefY;---I>ollers, 251 appuFtananGes-&r-spare-paFts-thareaf....wilheut-Jn-eaGh 252 instaAoo-lifst-sOSllriH!j-11\e Owners’
aptlroval-lhereelc--tf 253 the-Owners-so-agree;-the-Gharterers-shall,l~the-Owners 254
S9-fequire,----restere--the-Vessel te its farffief--Gf)ndiY.an 255
before-lhe-lermlnatlon-of.thls-Gharter, SEE CLAUSE 38 256
(n Use of the Vessel’s Oulfil Equ’1oment and 257 Appliances - The Charterers shall have the
u!?.a of all 258 outfit, equipment, and appliances on board the Vessel at 259 the time of delivery, provided the same or their 260 substantial equivalent shall be returned to the Owners on 281 redelivery in substantially the same geo4-e~er----aRG
262 condition as when received, ordinary wear and tear excepled. The 263
Charterers shall from time to time during the Charter 264 period replace such Jtems of
equipment as shall be so 265 damaged or worn as to be unfit for use. The Charterers 266 are to procure that all repairs to or replacement of any 267 damaged, worn or lost parts or equipment be effected 268 In such manner (both as regards workmanship
and 269 quality of materials) as not to diminish the value of the 270 Vessel. The Charterers have t~e right to fit additional 271 equipment at their expense and risk but the Charterers 272 shall remove such equipment at the end of the period 273
unless agreed otherwise by the Owners and the Charterers . ..Jf r~uested-l>y-lhe-Gwners, Any equipment including radio 274 equipment on hire on the Vessel at time of dellvel)’ shall 275 be kept and maintained by the Charterers and the 278
Charterers shall assume the obligations and liabilities of 277 tho Owners under any lease contracts in connection 278 therewith and shall reimburse the Owners for
all 279 expenses incurred in connection therewith, also for any 280 new equipment required In order to comply with radio 281 regurauons, 282
(g) Periodical
Drv-Docklnq - The Charterers shall dry- 283 dock the Vessel and <:lean and paint her underwater 284 parts whenever the same may be necessary, but not 285
PART II
11BARECON 2001” Standard Bareboat
Charter
11BARECON 2001”
(<>) for any et~er--G<Jmmerslal--reason
they seRSi<ler 139 oosessary (provhie<l-it does not unduly IAiolferer-wllh-lhe 140 oemmeFGiai-GpefBtlen-of-lhe Vessel). The-e<>sltHIOO-Iees 141 fof-SUG!Hnspeotlon and su,ey shall--l>e--pal<l-by-the 142 OWners, 143
All time used-ht-fes[:JeGt ef iRspeGtieA,--SUW&y-oHepalr& 144 shall-be-fer the Challerers’ aGOOunt-anG-Ierm ~art ef tha 145 G-eriG<!, 146 The Charterers shall also
permit the Owners to Inspect the 147
Vessel’s log books maximum once per year wheneve; 148 reasonably-requested and shall whenever required by the 149
Owners furnish them with full !nrormation regarding any 150 casualties or other accidents or damage to the Vessel. 151
9. Inventories, 011 and Stores SEE CLAUSE 53 152
A-<romplete
lnventery-<>1-th&--Vessel’s-<>nllre-e~ulpmOR~ 153
<>lll!il--i<>oluolng spaFe-parts, appllaRGes aml-&1-all 154
oonsumable stores sn-boar<l-t~e-VesseH!hall-l>e-maoe 155
l>y--lhe
Charterel’S-ln-oon)unotlen with the Ownera en 156
Oeilvery--an<l-a~A-reoetlvery el the-Vesseh-+lle 157
~arterers anG-tJ\e-.Qwner~estively, sRall at the 158
Uma--{)f.-4ellvety-anEHedetivety take
ever and pay feF-aU: 169 bunkef&,-lubrl<!aling oil, unbroaehe<l-pr<>vlslens;-palnts, 160
FQ):lBS aRd otf.ler-oon&umable--sleres (eJtsl~:~~iAg
spaFe 161 peRsf-IA-Iho-sald-Vessel at tha then ourrent markel-plioes 162 al-tlle-perts-Gklollvery-<~nlke<lellvory,-reepeslively. The 163 Charterera shall-ensuro that all spare parts liste~e 164 hwentery and wsad rl~:~riAg the Charter
Pefiod-are 165 refllased at thelr--&~ense flFier te ret::lslilJe:y of the 166
Vessel~ SEE ALSO CLAUSE 32, AND CLAUSE 46 167
Malntenanca and Operation
10. (a)(J)Maintenance and Repairs· During the Charter period
168 the Vessel shall be In the full possession and at the 169 absolute disposal for all purposes of the Charterers 170 and under their complete control in every respect. 171 The Charterers shall exercise due diligence to 172 maintain the Vessel, her
machinery, boilers, 173 appurtenances and spare parts in a good state of 174 repair, in efficient operating condition and In 175 accordance with good commercial maintenance 176 practice and, except as provided for In Clause 14(1), If 177 applicable,
at their own expense, they shall at all 178 times keep the Vessel’s Class unexpired fully-up-to 179 Oete with the Classification Society Indicated In Box 180
.1Q maintain all other necessary certificates in force at 181 all times. 182
{ii) New Class and Other Safetv Requirements 183 fA-the-event.-Gkmy-lmpr.ovemeAtj slmstt:~ral shanges 184 or-----flew-----equlpment---beoomlnjJ------A.esessa!y
fef--th.e 185 ooRtirmed-eperatian-of-tha Vessel by reassfl sf-new 186
Glass re~uireMcnt&--<Jr-by--GeMpulsory-!eglslatlen 187
oestlng-(ex~luding-the Chartcrera’ loss of-time) 188 more-than-the-peraentage stale<i-1R--Box-:l3,-er-lf 189
Qex 2a is--left-b!ank;--5--per-GeA~f--the Vessel’s 190 lnsuronce value as stated h’1 QO)( 29, then-the 191
OJ<tenl;-ik!!ly,-le-whloh-lll<Hal8-0f.lllre-shalt-lle-vafie<l 192 an<l-th8-J’atl<>-ln-whlsh-lhe-oosl-ef--oemplianGe shsll 193 bO··ShafB<I
between the-partles-oonoeme<l-iA-Order 194 ta-ae!’deve a reasanable--dlstf.fuutieA thereef as 195 b&lWeen-the--GW!lera--an<l--thrH:harterers haVIR!! 196 regard, lnter--alla,-te-the--length of the perlo<l 197
remalnlng-<~n<ier-this-f:hartcr, shall In the absenoe-ef 198 agreemeJI\,-be-referre<l--t<>--lh<Hilspute--resolutlen 199 methed-agreeo’-ln Clause 3Q. SEE CLAUSE 38 200 (Ill) Financial Security - The Charterers shall maintain
201 financial security or responsibility in respect of third 202 party liabilities as required by any government, 203 including federal, state or municipal or other division 204 or authority thereof, to onable the Vessel, without 205 penally or
charge, lawfully to enter, remain at, or 206 leave any port, place, territorial or contiguous waters 207 or any country, state or municipality In performance 208 of this Charter without any delay. This obligation 209 shall apply whether or not such
requirements have 210 been lawfully imposed by such government or 211 division or authority t~ereof. 212
arrangements by bond or otheiW!se as may be 214 necessary
to satisfy such requirements at the Charterers’ 215 sole expense and the Charterers shall indemnify the 216 Owners against aU consequences whatsoever (including 217 loss of time) for any failure or Inability to do so. 218
(b) Operatjon of the Vessel -The Charterers shall at 219 their own expense and by their own procurement man, 220 vtctual, navigate, operate, supply, fuel and, whenever 221
required, repair the Vessel during the Charter Period and 222 they shall pay all charges and expenses of every kind 223 and nature whatsoever incidental to their use and 224 operation of the Vessel under this Charter, Including 225 annual flag state
fees and any foreign general 228 municipality and/or state taxes. The Master officers and 227
1 crew of the Vessel shall be the servants of the Charterers 228 for
all purposes whatsoever, even-if..--foi’---Bny---masofl 229 appeillted-l>y-lhe-GwnOF& 230 Charterers s~all comply with t~e regulations regarding 231 officers and crew In force In the country of the Vessel’s 232 flag or any olher
applicable law. 233 (c) The Charterers shall keep the owners an<l--the 234 me~gagee(s) advised of the Intended employment, 235 planned dry-docking and major repairs of the Vessel, as 236 reasonably required. 237 (d) Flag and Name of Vessel 238
r:lwrln!l-\lle-GharteH’erle<l,-t~e-Gharterero-shall-lleve-lhe 239 liberty-lo-paint~~e-Vessei-IA-Ihelr-ewA-OOieufS;-inslall-anEI 240
Ols~lay
tholr-fWAAeiiASigAia-aAO fly their SIVA hs•se flag, 241 ThrH:harterens--shall-alse-have--lhe--llberty,wltil--the 242
OwneFS’ GQ!’lsent, wAial:l
sAall net be ~mreas&Rably 243 wlthheld;-t<Hlllange--lhe-flag-and/or-the-name-<>t-the 244
VesaeHI•fill§c-ltle-Gha~er Period.
Palntlni!-and--re- 245 peffiting,IABial-d--re-hlslali!!Cllt,-Jeglslratien--M<I 246
Ele-reglstraHen,iH’e~”ir~<i-l>y-l~e-Owners,sllall-ile-<lt-lhe 24 7 CMI!erers’ e>pense an<l-time,.-SEE CLAUSE 37 & 43 248
(e) Changes to the Vessei...S•I>JeGt-I<H:iaYse4ll{aJ~I); 249 lhe--GMFlerers shall make--fle stRJslt.~ml shaAges in-#le 250
Vessei---Gr-41anges--IA--the-maslllnefY;---I>ollers, 251 appuFtananGes-&r-spare-paFts-thareaf....wilheut-Jn-eaGh 252 instaAoo-lifst-sOSllriH!j-11\e Owners’
aptlroval-lhereelc--tf 253 the-Owners-so-agree;-the-Gharterers-shall,l~the-Owners 254
S9-fequire,----restere--the-Vessel te its farffief--Gf)ndiY.an 255
before-lhe-lermlnatlon-of.thls-Gharter, SEE CLAUSE 38 256
(n Use of the Vessel’s Oulfil Equ’1oment and 257 Appliances - The Charterers shall have the
u!?.a of all 258 outfit, equipment, and appliances on board the Vessel at 259 the time of delivery, provided the same or their 260 substantial equivalent shall be returned to the Owners on 281 redelivery in substantially the same geo4-e~er----aRG
262 condition as when received, ordinary wear and tear excepled. The 263
Charterers shall from time to time during the Charter 264 period replace such Jtems of
equipment as shall be so 265 damaged or worn as to be unfit for use. The Charterers 266 are to procure that all repairs to or replacement of any 267 damaged, worn or lost parts or equipment be effected 268 In such manner (both as regards workmanship
and 269 quality of materials) as not to diminish the value of the 270 Vessel. The Charterers have t~e right to fit additional 271 equipment at their expense and risk but the Charterers 272 shall remove such equipment at the end of the period 273
unless agreed otherwise by the Owners and the Charterers . ..Jf r~uested-l>y-lhe-Gwners, Any equipment including radio 274 equipment on hire on the Vessel at time of dellvel)’ shall 275 be kept and maintained by the Charterers and the 278
Charterers shall assume the obligations and liabilities of 277 tho Owners under any lease contracts in connection 278 therewith and shall reimburse the Owners for
all 279 expenses incurred in connection therewith, also for any 280 new equipment required In order to comply with radio 281 regurauons, 282
(g) Periodical
Drv-Docklnq - The Charterers shall dry- 283 dock the Vessel and <:lean and paint her underwater 284 parts whenever the same may be necessary, but not 285
PART II
11BARECON 2001” Standard Bareboat
Charter
11BARECON 2001”
(<>) for any et~er--G<Jmmerslal--reason
they seRSi<ler 139 oosessary (provhie<l-it does not unduly IAiolferer-wllh-lhe 140 oemmeFGiai-GpefBtlen-of-lhe Vessel). The-e<>sltHIOO-Iees 141 fof-SUG!Hnspeotlon and su,ey shall--l>e--pal<l-by-the 142 OWners, 143
All time used-ht-fes[:JeGt ef iRspeGtieA,--SUW&y-oHepalr& 144 shall-be-fer the Challerers’ aGOOunt-anG-Ierm ~art ef tha 145 G-eriG<!, 146 The Charterers shall also
permit the Owners to Inspect the 147
Vessel’s log books maximum once per year wheneve; 148 reasonably-requested and shall whenever required by the 149
Owners furnish them with full !nrormation regarding any 150 casualties or other accidents or damage to the Vessel. 151
9. Inventories, 011 and Stores SEE CLAUSE 53 152
A-<romplete
lnventery-<>1-th&--Vessel’s-<>nllre-e~ulpmOR~ 153
<>lll!il--i<>oluolng spaFe-parts, appllaRGes aml-&1-all 154
oonsumable stores sn-boar<l-t~e-VesseH!hall-l>e-maoe 155
l>y--lhe
Charterel’S-ln-oon)unotlen with the Ownera en 156
Oeilvery--an<l-a~A-reoetlvery el the-Vesseh-+lle 157
~arterers anG-tJ\e-.Qwner~estively, sRall at the 158
Uma--{)f.-4ellvety-anEHedetivety take
ever and pay feF-aU: 169 bunkef&,-lubrl<!aling oil, unbroaehe<l-pr<>vlslens;-palnts, 160
FQ):lBS aRd otf.ler-oon&umable--sleres (eJtsl~:~~iAg
spaFe 161 peRsf-IA-Iho-sald-Vessel at tha then ourrent markel-plioes 162 al-tlle-perts-Gklollvery-<~nlke<lellvory,-reepeslively. The 163 Charterera shall-ensuro that all spare parts liste~e 164 hwentery and wsad rl~:~riAg the Charter
Pefiod-are 165 refllased at thelr--&~ense flFier te ret::lslilJe:y of the 166
Vessel~ SEE ALSO CLAUSE 32, AND CLAUSE 46 167
Malntenanca and Operation
10. (a)(J)Maintenance and Repairs· During the Charter period
168 the Vessel shall be In the full possession and at the 169 absolute disposal for all purposes of the Charterers 170 and under their complete control in every respect. 171 The Charterers shall exercise due diligence to 172 maintain the Vessel, her
machinery, boilers, 173 appurtenances and spare parts in a good state of 174 repair, in efficient operating condition and In 175 accordance with good commercial maintenance 176 practice and, except as provided for In Clause 14(1), If 177 applicable,
at their own expense, they shall at all 178 times keep the Vessel’s Class unexpired fully-up-to 179 Oete with the Classification Society Indicated In Box 180
.1Q maintain all other necessary certificates in force at 181 all times. 182
{ii) New Class and Other Safetv Requirements 183 fA-the-event.-Gkmy-lmpr.ovemeAtj slmstt:~ral shanges 184 or-----flew-----equlpment---beoomlnjJ------A.esessa!y
fef--th.e 185 ooRtirmed-eperatian-of-tha Vessel by reassfl sf-new 186
Glass re~uireMcnt&--<Jr-by--GeMpulsory-!eglslatlen 187
oestlng-(ex~luding-the Chartcrera’ loss of-time) 188 more-than-the-peraentage stale<i-1R--Box-:l3,-er-lf 189
Qex 2a is--left-b!ank;--5--per-GeA~f--the Vessel’s 190 lnsuronce value as stated h’1 QO)( 29, then-the 191
OJ<tenl;-ik!!ly,-le-whloh-lll<Hal8-0f.lllre-shalt-lle-vafie<l 192 an<l-th8-J’atl<>-ln-whlsh-lhe-oosl-ef--oemplianGe shsll 193 bO··ShafB<I
between the-partles-oonoeme<l-iA-Order 194 ta-ae!’deve a reasanable--dlstf.fuutieA thereef as 195 b&lWeen-the--GW!lera--an<l--thrH:harterers haVIR!! 196 regard, lnter--alla,-te-the--length of the perlo<l 197
remalnlng-<~n<ier-this-f:hartcr, shall In the absenoe-ef 198 agreemeJI\,-be-referre<l--t<>--lh<Hilspute--resolutlen 199 methed-agreeo’-ln Clause 3Q. SEE CLAUSE 38 200 (Ill) Financial Security - The Charterers shall maintain
201 financial security or responsibility in respect of third 202 party liabilities as required by any government, 203 including federal, state or municipal or other division 204 or authority thereof, to onable the Vessel, without 205 penally or
charge, lawfully to enter, remain at, or 206 leave any port, place, territorial or contiguous waters 207 or any country, state or municipality In performance 208 of this Charter without any delay. This obligation 209 shall apply whether or not such
requirements have 210 been lawfully imposed by such government or 211 division or authority t~ereof. 212
arrangements by bond or otheiW!se as may be 214 necessary
to satisfy such requirements at the Charterers’ 215 sole expense and the Charterers shall indemnify the 216 Owners against aU consequences whatsoever (including 217 loss of time) for any failure or Inability to do so. 218
(b) Operatjon of the Vessel -The Charterers shall at 219 their own expense and by their own procurement man, 220 vtctual, navigate, operate, supply, fuel and, whenever 221
required, repair the Vessel during the Charter Period and 222 they shall pay all charges and expenses of every kind 223 and nature whatsoever incidental to their use and 224 operation of the Vessel under this Charter, Including 225 annual flag state
fees and any foreign general 228 municipality and/or state taxes. The Master officers and 227
1 crew of the Vessel shall be the servants of the Charterers 228 for
all purposes whatsoever, even-if..--foi’---Bny---masofl 229 appeillted-l>y-lhe-GwnOF& 230 Charterers s~all comply with t~e regulations regarding 231 officers and crew In force In the country of the Vessel’s 232 flag or any olher
applicable law. 233 (c) The Charterers shall keep the owners an<l--the 234 me~gagee(s) advised of the Intended employment, 235 planned dry-docking and major repairs of the Vessel, as 236 reasonably required. 237 (d) Flag and Name of Vessel 238
r:lwrln!l-\lle-GharteH’erle<l,-t~e-Gharterero-shall-lleve-lhe 239 liberty-lo-paint~~e-Vessei-IA-Ihelr-ewA-OOieufS;-inslall-anEI 240
Ols~lay
tholr-fWAAeiiASigAia-aAO fly their SIVA hs•se flag, 241 ThrH:harterens--shall-alse-have--lhe--llberty,wltil--the 242
OwneFS’ GQ!’lsent, wAial:l
sAall net be ~mreas&Rably 243 wlthheld;-t<Hlllange--lhe-flag-and/or-the-name-<>t-the 244
VesaeHI•fill§c-ltle-Gha~er Period.
Palntlni!-and--re- 245 peffiting,IABial-d--re-hlslali!!Cllt,-Jeglslratien--M<I 246
Ele-reglstraHen,iH’e~”ir~<i-l>y-l~e-Owners,sllall-ile-<lt-lhe 24 7 CMI!erers’ e>pense an<l-time,.-SEE CLAUSE 37 & 43 248
(e) Changes to the Vessei...S•I>JeGt-I<H:iaYse4ll{aJ~I); 249 lhe--GMFlerers shall make--fle stRJslt.~ml shaAges in-#le 250
Vessei---Gr-41anges--IA--the-maslllnefY;---I>ollers, 251 appuFtananGes-&r-spare-paFts-thareaf....wilheut-Jn-eaGh 252 instaAoo-lifst-sOSllriH!j-11\e Owners’
aptlroval-lhereelc--tf 253 the-Owners-so-agree;-the-Gharterers-shall,l~the-Owners 254
S9-fequire,----restere--the-Vessel te its farffief--Gf)ndiY.an 255
before-lhe-lermlnatlon-of.thls-Gharter, SEE CLAUSE 38 256
(n Use of the Vessel’s Oulfil Equ’1oment and 257 Appliances - The Charterers shall have the
u!?.a of all 258 outfit, equipment, and appliances on board the Vessel at 259 the time of delivery, provided the same or their 260 substantial equivalent shall be returned to the Owners on 281 redelivery in substantially the same geo4-e~er----aRG
262 condition as when received, ordinary wear and tear excepled. The 263
Charterers shall from time to time during the Charter 264 period replace such Jtems of
equipment as shall be so 265 damaged or worn as to be unfit for use. The Charterers 266 are to procure that all repairs to or replacement of any 267 damaged, worn or lost parts or equipment be effected 268 In such manner (both as regards workmanship
and 269 quality of materials) as not to diminish the value of the 270 Vessel. The Charterers have t~e right to fit additional 271 equipment at their expense and risk but the Charterers 272 shall remove such equipment at the end of the period 273
unless agreed otherwise by the Owners and the Charterers . ..Jf r~uested-l>y-lhe-Gwners, Any equipment including radio 274 equipment on hire on the Vessel at time of dellvel)’ shall 275 be kept and maintained by the Charterers and the 278
Charterers shall assume the obligations and liabilities of 277 tho Owners under any lease contracts in connection 278 therewith and shall reimburse the Owners for
all 279 expenses incurred in connection therewith, also for any 280 new equipment required In order to comply with radio 281 regurauons, 282
(g) Periodical
Drv-Docklnq - The Charterers shall dry- 283 dock the Vessel and <:lean and paint her underwater 284 parts whenever the same may be necessary, but not 285
PART II
11BARECON 2001” Standard Bareboat
Charter
11BARECON 2001”
(<>) for any et~er--G<Jmmerslal--reason
they seRSi<ler 139 oosessary (provhie<l-it does not unduly IAiolferer-wllh-lhe 140 oemmeFGiai-GpefBtlen-of-lhe Vessel). The-e<>sltHIOO-Iees 141 fof-SUG!Hnspeotlon and su,ey shall--l>e--pal<l-by-the 142 OWners, 143
All time used-ht-fes[:JeGt ef iRspeGtieA,--SUW&y-oHepalr& 144 shall-be-fer the Challerers’ aGOOunt-anG-Ierm ~art ef tha 145 G-eriG<!, 146 The Charterers shall also
permit the Owners to Inspect the 147
Vessel’s log books maximum once per year wheneve; 148 reasonably-requested and shall whenever required by the 149
Owners furnish them with full !nrormation regarding any 150 casualties or other accidents or damage to the Vessel. 151
9. Inventories, 011 and Stores SEE CLAUSE 53 152
A-<romplete
lnventery-<>1-th&--Vessel’s-<>nllre-e~ulpmOR~ 153
<>lll!il--i<>oluolng spaFe-parts, appllaRGes aml-&1-all 154
oonsumable stores sn-boar<l-t~e-VesseH!hall-l>e-maoe 155
l>y--lhe
Charterel’S-ln-oon)unotlen with the Ownera en 156
Oeilvery--an<l-a~A-reoetlvery el the-Vesseh-+lle 157
~arterers anG-tJ\e-.Qwner~estively, sRall at the 158
Uma--{)f.-4ellvety-anEHedetivety take
ever and pay feF-aU: 169 bunkef&,-lubrl<!aling oil, unbroaehe<l-pr<>vlslens;-palnts, 160
FQ):lBS aRd otf.ler-oon&umable--sleres (eJtsl~:~~iAg
spaFe 161 peRsf-IA-Iho-sald-Vessel at tha then ourrent markel-plioes 162 al-tlle-perts-Gklollvery-<~nlke<lellvory,-reepeslively. The 163 Charterera shall-ensuro that all spare parts liste~e 164 hwentery and wsad rl~:~riAg the Charter
Pefiod-are 165 refllased at thelr--&~ense flFier te ret::lslilJe:y of the 166
Vessel~ SEE ALSO CLAUSE 32, AND CLAUSE 46 167
Malntenanca and Operation
10. (a)(J)Maintenance and Repairs· During the Charter period
168 the Vessel shall be In the full possession and at the 169 absolute disposal for all purposes of the Charterers 170 and under their complete control in every respect. 171 The Charterers shall exercise due diligence to 172 maintain the Vessel, her
machinery, boilers, 173 appurtenances and spare parts in a good state of 174 repair, in efficient operating condition and In 175 accordance with good commercial maintenance 176 practice and, except as provided for In Clause 14(1), If 177 applicable,
at their own expense, they shall at all 178 times keep the Vessel’s Class unexpired fully-up-to 179 Oete with the Classification Society Indicated In Box 180
.1Q maintain all other necessary certificates in force at 181 all times. 182
{ii) New Class and Other Safetv Requirements 183 fA-the-event.-Gkmy-lmpr.ovemeAtj slmstt:~ral shanges 184 or-----flew-----equlpment---beoomlnjJ------A.esessa!y
fef--th.e 185 ooRtirmed-eperatian-of-tha Vessel by reassfl sf-new 186
Glass re~uireMcnt&--<Jr-by--GeMpulsory-!eglslatlen 187
oestlng-(ex~luding-the Chartcrera’ loss of-time) 188 more-than-the-peraentage stale<i-1R--Box-:l3,-er-lf 189
Qex 2a is--left-b!ank;--5--per-GeA~f--the Vessel’s 190 lnsuronce value as stated h’1 QO)( 29, then-the 191
OJ<tenl;-ik!!ly,-le-whloh-lll<Hal8-0f.lllre-shalt-lle-vafie<l 192 an<l-th8-J’atl<>-ln-whlsh-lhe-oosl-ef--oemplianGe shsll 193 bO··ShafB<I
between the-partles-oonoeme<l-iA-Order 194 ta-ae!’deve a reasanable--dlstf.fuutieA thereef as 195 b&lWeen-the--GW!lera--an<l--thrH:harterers haVIR!! 196 regard, lnter--alla,-te-the--length of the perlo<l 197
remalnlng-<~n<ier-this-f:hartcr, shall In the absenoe-ef 198 agreemeJI\,-be-referre<l--t<>--lh<Hilspute--resolutlen 199 methed-agreeo’-ln Clause 3Q. SEE CLAUSE 38 200 (Ill) Financial Security - The Charterers shall maintain
201 financial security or responsibility in respect of third 202 party liabilities as required by any government, 203 including federal, state or municipal or other division 204 or authority thereof, to onable the Vessel, without 205 penally or
charge, lawfully to enter, remain at, or 206 leave any port, place, territorial or contiguous waters 207 or any country, state or municipality In performance 208 of this Charter without any delay. This obligation 209 shall apply whether or not such
requirements have 210 been lawfully imposed by such government or 211 division or authority t~ereof. 212
arrangements by bond or otheiW!se as may be 214 necessary
to satisfy such requirements at the Charterers’ 215 sole expense and the Charterers shall indemnify the 216 Owners against aU consequences whatsoever (including 217 loss of time) for any failure or Inability to do so. 218
(b) Operatjon of the Vessel -The Charterers shall at 219 their own expense and by their own procurement man, 220 vtctual, navigate, operate, supply, fuel and, whenever 221
required, repair the Vessel during the Charter Period and 222 they shall pay all charges and expenses of every kind 223 and nature whatsoever incidental to their use and 224 operation of the Vessel under this Charter, Including 225 annual flag state
fees and any foreign general 228 municipality and/or state taxes. The Master officers and 227
1 crew of the Vessel shall be the servants of the Charterers 228 for
all purposes whatsoever, even-if..--foi’---Bny---masofl 229 appeillted-l>y-lhe-GwnOF& 230 Charterers s~all comply with t~e regulations regarding 231 officers and crew In force In the country of the Vessel’s 232 flag or any olher
applicable law. 233 (c) The Charterers shall keep the owners an<l--the 234 me~gagee(s) advised of the Intended employment, 235 planned dry-docking and major repairs of the Vessel, as 236 reasonably required. 237 (d) Flag and Name of Vessel 238
r:lwrln!l-\lle-GharteH’erle<l,-t~e-Gharterero-shall-lleve-lhe 239 liberty-lo-paint~~e-Vessei-IA-Ihelr-ewA-OOieufS;-inslall-anEI 240
Ols~lay
tholr-fWAAeiiASigAia-aAO fly their SIVA hs•se flag, 241 ThrH:harterens--shall-alse-have--lhe--llberty,wltil--the 242
OwneFS’ GQ!’lsent, wAial:l
sAall net be ~mreas&Rably 243 wlthheld;-t<Hlllange--lhe-flag-and/or-the-name-<>t-the 244
VesaeHI•fill§c-ltle-Gha~er Period.
Palntlni!-and--re- 245 peffiting,IABial-d--re-hlslali!!Cllt,-Jeglslratien--M<I 246
Ele-reglstraHen,iH’e~”ir~<i-l>y-l~e-Owners,sllall-ile-<lt-lhe 24 7 CMI!erers’ e>pense an<l-time,.-SEE CLAUSE 37 & 43 248
(e) Changes to the Vessei...S•I>JeGt-I<H:iaYse4ll{aJ~I); 249 lhe--GMFlerers shall make--fle stRJslt.~ml shaAges in-#le 250
Vessei---Gr-41anges--IA--the-maslllnefY;---I>ollers, 251 appuFtananGes-&r-spare-paFts-thareaf....wilheut-Jn-eaGh 252 instaAoo-lifst-sOSllriH!j-11\e Owners’
aptlroval-lhereelc--tf 253 the-Owners-so-agree;-the-Gharterers-shall,l~the-Owners 254
S9-fequire,----restere--the-Vessel te its farffief--Gf)ndiY.an 255
before-lhe-lermlnatlon-of.thls-Gharter, SEE CLAUSE 38 256
(n Use of the Vessel’s Oulfil Equ’1oment and 257 Appliances - The Charterers shall have the
u!?.a of all 258 outfit, equipment, and appliances on board the Vessel at 259 the time of delivery, provided the same or their 260 substantial equivalent shall be returned to the Owners on 281 redelivery in substantially the same geo4-e~er----aRG
262 condition as when received, ordinary wear and tear excepled. The 263
Charterers shall from time to time during the Charter 264 period replace such Jtems of
equipment as shall be so 265 damaged or worn as to be unfit for use. The Charterers 266 are to procure that all repairs to or replacement of any 267 damaged, worn or lost parts or equipment be effected 268 In such manner (both as regards workmanship
and 269 quality of materials) as not to diminish the value of the 270 Vessel. The Charterers have t~e right to fit additional 271 equipment at their expense and risk but the Charterers 272 shall remove such equipment at the end of the period 273
unless agreed otherwise by the Owners and the Charterers . ..Jf r~uested-l>y-lhe-Gwners, Any equipment including radio 274 equipment on hire on the Vessel at time of dellvel)’ shall 275 be kept and maintained by the Charterers and the 278
Charterers shall assume the obligations and liabilities of 277 tho Owners under any lease contracts in connection 278 therewith and shall reimburse the Owners for
all 279 expenses incurred in connection therewith, also for any 280 new equipment required In order to comply with radio 281 regurauons, 282
(g) Periodical
Drv-Docklnq - The Charterers shall dry- 283 dock the Vessel and <:lean and paint her underwater 284 parts whenever the same may be necessary, but not 285
11BARECON 20011’ Standard Bareboat Charter OPTIONAL
PART
PARTV
PROVISIONS TO APPLY FOR VESSELS REGISTERED IN A BAREBOAT CHARTER REGISTRY
(Op/lonal, only to apply if expressly agreed and stoted In Box 43)
1.
l:leflnl!loRS 1 i’<>f-!he-pYFj>OS<Nl~NliS P,~RT ‘l, the following leFA1S shall 2
have-tha.meanings her~§Ae<l-te-them; 3
~areboat-Gbarter-Re:Eiis1FV~ sl:lall meaA-the-feg~f 4 the-slate-whose nag tho Vesoel ‘lAII Hy.-an<l-ln-whiGh-lho 5
Gllali<lr<>rs are reglsl~s-the-bareboa~orer.; 6 dyfln§-lhG-~>efio<l-el-tlle-8arebeal Chafieh 7
“fluHJn<lerlyiA!!-Beois!N’-shell-mean-tlle-reglstry-fl~he 8 slate iR whlsll-lhe-(Jwnors-of-lh~l-are regislere<kl& 9
Qwneffl-&fld to whish jYrisdlolioll-and-Genlrol-oHhe-Vessol 10 will-revoiH!por>-termlnatlo!Hl~a Bareboat Charlef 11
Registration, 12
2. Mortgag~e<H:Iause-44 13
+lle-Vessol shartere<l-<uldeF-Ihls-Gllartef-ls-flnanood-l>y.-a 14 mortgaga-.mHhe previsions of ClaYse 12(b) (PART I~ 15 shalkli’J’Iy. 16
3. -””«o»-<>~a~efawll 17
IHhe-Vassekllartere<l-<m<leHills
Chalter Is regislere<l-iR 18 a-Bareboa~ller-Reglslf’{-<>s-slaled-ln-Box-44;-an<l-lf 19 th&-GwnBRH!halklelauiWn-the payA1enl of any aA1ount& 20
“”’’--liA<IeF--the-morlgage(6)-opeG!Jied-ln--llox--28,--the 21
Charterers seal!, If so require<l-l>~gee,-<lireG! 22
the-Gwner&-I<H1l-register-lh...Vassel-ln-the-Un<lerlying 23
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ffi-I.J:Ie event ef tlte Vessel being BefeteEI frem tAa 25
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Ownef&-\!n<ieHilis-Gllafler, 31
Additional Clauses
to the Bareboat Charter Party
dated 15 fe!z)”Mvv 2020 (this “Charter”) by
r,
LUA LINE S.A.
and OK! NO KA!UN CO., LTD. as owner (the “Owners”) and
ROSELITE SHIPPING CORPORATION. as charterer (the “Charterers”)
in respect of MV “Dream Coral” (to be named “Navios Corali”) (the “Vessel”)
32. DELIVERY
(a) The Charterers shall take delivery of the Vessel under this Charter
simultaneously with delivery by the Sellers (as defined in Clause 1 of this Charter) as sellers to the Owners as buyers under the MOA, and the Owners shall be obliged to deliver the Vessel to the Charterers hereunder in the same moment as the Owners
is taking delivery of the Vessel under the MOA.
(b) In the event that the Vessel is not delivered to Owners under the MOA for any reason, this Charter shall
automatically terminate.
(c) The Owners warrant that the Vessel, at time of delivery, is free from all charters, encumbrances, mortgages and maritime liens or any
other debts whatsoever, other than (I) those incurred prior to the delivery of the Vessel hereunder, (ii) this Charter and (iii) the mortgage over the Vessel, assignment of insurance in respect of the Vessel and the assignment of the charter hires
in respect hereof in favour of AWA BANK. (the
“Mortgagee”).
(d) The
Vessel shall be delivered under this Charter in the same condition and with the same equipment, inventory and spare parts as she is delivered to the Owners under the MOA. The Charterers know the Vessel’s condition at the time of delivery, and
expressly agree that the Vessel’s condition as delivered under the MOA is acceptable and in accordance with the provisions of this Charter. The Vessel shall be delivered to the Charterers under this Charter strictly “as is/where is”,
and the Charterers shall waive any and all claims against the Owners under this Charter on account of any conditions, seaworthiness, representations, warranties expressed or implied in respect of the Vessel (including but not limited to any bunkers,
oils, spare parts and other items whatsoever) on delivery.
33. ISM CODE
During the currency of this Charter
the Charterers shall procure at the costs and expenses and time of the Charterers that the Vessel and the “company” (as defined by the ISM code) shall comply with the requirements of the ISM code. Upon request the Charterers shall provide
a copy of relevant documents of compliance (DOC) and safety management certificate (SMC) to the Owners. For the avoidance of any doubt any loss, damage, expense or delay caused by the failure on the part of the “Company” to comply with the
ISM code shall be for the Charterers’ account.
34. CHARTER PERIOD
(a)
The Owners shall let to the Charterers and the Charterers shall take the Vessel on charter for the period and upon the terms and conditions contained herein.
(b)
Subject always to the provisions hereto, the period of the chartering of the Vessel hereunder (hereinafter referred to as the “Charter Period”) shall comprise (unless terminated at an earlier date in accordance with the terms hereof) a
charter period of 12 years from the date of the delivery of the Vessel by the Owners to the Charterers under this Charter (the “Delivery Date”) with up to 30 days more or less in the Charterers’ option, provided always that the
chartering of the Vessel hereunder may be terminated by the Owners pursuant to Clause 41 or shall terminate in the event of the Total Loss or Compulsory Acquisition of the Vessel subject to, and in accordance with provisions of Clause 40.
35. CHARTER HIRE
Monthly Hire Rate
After the delivery of Vessel, the Charterers shall pay the hire monthly in advance for the Charter Period, which consist of (i) Monthly Fixed Hire, (ii) Monthly Variable Hire and
(iii) Monthly Owners’ profit:
(i) Monthly Fixed Hire (same as Owners’ loan principal repayment based on 12 years equal monthly repayment schedule with
US$750,000 balloon) is the sum of US$237,847.-(in the case of Purchase Price is US$35,000,000) for
Vessel, which is equal to one hundred forty forth (1/144) of the initial Charter Principal Balance minus US$750,000 balloon. Otherwise,
the Monthly Fixed Hire should be proportionally adjusted to 1/144 of the applicable Amortized Purchase Price if delivery of the Vessel occurs after April 01, 2020; and
(ii) Monthly Variable Hire is calculated from the number of the days in any relevant month, and daily variable hire in accordance with the following formula:
Monthly Variable Hire = Daily Variable Hire x the number of the days in the relevant month
Daily Variable Hire= Charter Principal Balance x (2.0% +one (1) month ICE Ll BOR as applicable for the month in respect of which such Daily Variable Hire is to be
calculated) I 360
Applicable one (1) month ICE LIBOR to be confirmed fourteen (14) Banking Days prior to hire due date (The both parties to discuss again about the
exact date when the date for delivery of the vessel gets closer.). The Owners shall notify the Charterers in writing of the Monthly Variable Hire due on any due date for hire by sending to the Charterers a duly issued invoice for that Monthly
Variable Hire and Monthly Fixed Hire at least four (4) Banking Days before such due date.
Charter Principal Balance means US$35,000,000.-(or the Amortized Purchase
Price if delivery of the Vessel occurs after April 01, 2020) less the aggregate Monthly Fixed Hire as has at any relevant time been paid to the Owners for Vessel.
Should the ICE LIBOR fail to negative interest rate, zero (0) is to be applied as ICE LIBOR.
(iii) Monthly Owners profit: US$20,000 /month for Vessel.
“Banking Day” shall mean a
day on which banks are open in Japan, Piraeus/Greece, London and New York.
36. PAYMENTS
(a) Notwithstanding anything lo the
contrary contained in this Charter, all payments by the Charterers hereunder (whether by way of hire or othe1wise) shall be made as follows:-
(i) not rater than 11
:OD a.m. (New York time) on one Banking Day prior to the date on which the relevant payment is due under the terms of this Charter: and
(ii) in United States
Dollars to the bank account in the name of the Owners established and maintained in THE AWA BANK, LTD.
Komatsushima Office, as more specifically notified later by
the Owners in writing (or such other bank or banks as may from time to time be notified by the Owners to the Charterers by not less than fourteen (14) days’ prior written notice) for the account of the Owners.
(b) If any day for the making of any payment hereunder shall not be a Banking Day (as defined in Clause 35 hereof) the due date for payment of the same shall be the next following
Banking Day.
(c) Subject to the terms of this Charter, the Charterers’ obligation to pay hire in accordance with the requirements of Clause 35 and this Clause
36 and to pay certain amount of insurance benefit pursuant to Clause 40 (e) and to pay the Termination Compensation pursuant to Clause 42 shall be absolute irrespective of any contingency whatsoever, including (but not limited to) (i) any failure or
delay on the part of any party hereto or thereto, whether with or without fault on its part, other than the Owners, in performing or complying with any of the terms or covenants hereunder, (ii) any insolvency, bankruptcy, reorganization,
arrangement, readjustment of debt, dissolution, liquidation or similar proceedings by or against the Owners or the Charterers or any change in the constitution of the Owners or the Charterers or any other person, (iii) any invalidity or
unenforceability or lack of due authorization of or other defect in this Charter, or (iv) any other cause which would or might but for this provision have the effect of terminating or in any way affecting any obligation of the Charterers under this
Charter.
(d) In the event of failure by the Charterers to pay within three (3) Banking Days after the due date for payment thereof, or in the case of a sum
payable on demand, the date of demand therefor, any hire or other amount payable by them under this Charter, the Charterers will pay to
the Owners on demand interest on such hire or other amount from the date of such failure to the date of actual payment (both before and after any relevant judgment or winding up of the Charterers) at the rate determined by the Owners and certified
by them to the Charterers (such ce1iification to be conclusive in the absence of manifest error) to be the aggregate of (i) two & one-half per centum (2% %) and (ii) the London Interbank Offered Rate for US Dollar deposits of not more than one
month’s duration (as selected by the Owners or their funders in the light of the likely duration of the default in question) (as such rate is from time to time quoted by leading banks in the London Interbank Market). Interest payable by the
Charterers as aforesaid shall be compounded at such intervals as the Owners shall determine and shall be payable on demand.
(e) Any interest payable under this
Charter shall accrue from day to day and shall be calculated on the actual number of days elapsed and a three hundred and sixty (360) day year.
(f) In this
Charter, unless the context otherwise requires, “month” means a period beginning in one calendar month (and, In the case of the first month, on the date of delivery hereunder} and ending in the succeeding calendar month on the day
numerically corresponding to the day of the calendar month in which such period started provided that if there is no such numerically corresponding day, such period shall end on the last day in the relevant calendar month and “monthly”
shall be construed accordingly.
37. FLAG AND CLASS
(a) The Vessel shall upon
the Delivery Date be registered in the name of the Owners under the Panamanian flag. The Owners and Charterers agree to keep the Panamanian flag during the Charter Period, subject to Clause 37(c}.
(b) The Owners shall have no right to transfer the Vessel’s classification society. The Charterers shall, at any time after the Delivery Date and at the Charterers’
expense, have the right to transfer the Vessel’s classification society from Nippon Kaiji Kyokai to any other classification society at least equivalent to Nippon Kaiji Kyokai.
(c) Further, in the event that the Charterers need to change the flag of the Vessel for its commercial or operational reason, the Charterers can
change the flag with the prior written Owner’s consent, which should not be unreasonably withheld, provided however that:
(i) the Owners may reject such change of flag if the propsed flag will cause any problem for the Mortgagee (in the reasonable opinion of the Mortgagee);
(ii) the Owners shall have the right to take redelivery the Vessel under the Pananian flag, and accordingly If the Vessel is redelivered to the Owners without the
purchase by the Charterers under Clause 49 hereof and she is then under the flag of any state other than Panama, on demand, the Owners may change such flag to the Panamanian flag so that the Owners may take redelivery of the Vessel under the
Panamanian flag (in which case the Charterer shall cooperate with the Owners for change to the Panamanian flag); and (iii) any expenses and time (including, but not limited to, legal charges for finance documents for the Mortgagee) in relation to
change of flag (including chage to the Panamanian flag) shall be for the Charterers’account.
(d) With the prior written consents of the Owner and the
Mortgagee (which shall not be unreasonably withheld) and subject to the Charterers’ supplying the standard de-registration agreement reasonably satisfactory to the Mortgagee, the Charterers are entitled to establish the standard bareboat
charter registration on the Vessel at the costs, expense (including but not limited to legal charges for finance .documents for the Mortgagee, if any) and time of the Charterers.
(e) If during the Charter Period there are modifications made to the Vessel which are compulsory for the Vessel to comply with change to rules and regulations to which operation of
the Vessel is required to conform, the cost relating to such modifications shall be for the account of the Charterers.
(f) The Owners will arrange the
Vessel’s registration under Panama flag and recordation of their mortgage and for the issuance of all Vessel’s initial certificates of the flag at the Owners’ cost. Thereafter the Charterers are responsible to arrange for the renewal
of such certs at the Charterers’ cost throughout the Charter Period
38. IMPROVEMENT AND ADDITIONS
The Charterers shall have the right to fit additional equipment and to make severable improvements and additions at their expense and risk. Such
additional equipment, improvements and additions shall be removed from the Vessel without causing any material damage to the Vessel (any
such damage being made good by the Charterers at their time and expense) provided however that the Charterers shall redeliver the Vessel without removing such additional equipment, improvements and additions if the Owners consent to such non-removal
before the redelivery.
The Charterers shall also have the right to make structural or non-severable improvements and additions to the Vessel at their own time,
costs and expense and risk provided that such improvements and additions do not diminish the market value of the Vessel and are not likely to diminish the market value of the Vessel during or at the end of the Charter Period and do not in any way
affect or prejudice the marketability or the useful life of the Vessel and are not likely to affect or prejudice the marketability or the useful life of the Vessel during or at the end of the Charter Period.
In the event of any structural modifications to Vessel or installation of new equipment becoming necessary for the continued operation of Vessel by reason of new class regulations
or by compulsory legislation to which operation of Vessel is required to conform, the cost of such compulsory modifications shall be for the Charterers’ account.
39. UNDERTAKING
The Charterers undertake and agree that throughout the Charter period they
will:-
-notify the Owners in writing of any Termination Event (or event of which they are aware which, with the giving of notice and/or lapse of time or other
applicable condition, would constitute a Termination Event); - provide survey status of the Vessel to the Owners when they request it.
40. INSURANCE, TOTAL LOSS
AND COMPULSORY ACQUISITION
(a) For the purposes of this Charter, the term “Total Loss” shall include actual or constructive or compromised or agreed or
arranged total loss of the Vessel including any such total loss as may arise during a requisition for hire. “Compulsory Acquisition” shall have the meaning assigned thereto in Clause 25(b) hereof.
(b) The Charterers undertake with the Owners that throughout the Charter Period:-
(i) they will keep the Vessel insured in the first class underwriter’s standard form as the Owners shall in writing approve, which
approval shall not be unreasonably withheld, with such insurers (including P&I and war risks associations) as shall be reasonably acceptable to the Owners with deductibles reasonably acceptable to the Owners (ii being agreed and understood by
the Charterers that there shall be no element of self- insurance or insurance through captive insurance companies without the prior written consent of the Owners);
(ii) they will be properly entered in and keep entry of the Vessel with P&I Club that is a member of the International Group of Protection and Indemnity
Association for the full commercial value and tonnage of the Vessel and against all prudent P&I
Risks in accordance with the rules of such association or club
including, in case of oil pollution liability risks equal to the highest level of cover from time to time available under the basic entry with such P&I (but always a minimum of USD1 ,000,000,000);
(iii) The policies in respect of the insurances against fire and usual marine risks and policies or entries in respect of the insurances against war risks shall, in each case,
include the following loss payable provisions:-
(a) For so long as the Vessel is mortgaged in favour of the Mortgagee (as defined in this Additional Clause 32) as
assignee:
Until such time as the Assignee shall have notified the insurers to the contrary:
(i) All recoveries hereunder in respect of an actual, constructive or compromised or arranged total loss shall be paid in full to the Assignee without any deduction or deductions
whatsoever and applied in accordance with clause 40 (e); (ii) All other recoveries not exceeding United Slates Dollars One Million (US$1,000,000.00) shall be paid in full to the Charterers or to their order without any deduction or deductions
whatsoever; and
(iii) All other recoveries exceeding United States Dollars One Million (US$1,000,000.00) shall, subject to the prior written consent of
the Assignee which shall not be unreasonably withheld be paid in full to the Charterers or their order without any deduction whatsoever.
(iv)
(b} During any periods when the Vessel is not mortgaged:
(i) All recoveries hereunder in
respect of an actual, constructive or compromised or arranged total loss shall be paid in full to the Owners without any deduction or deductions whatsoever and applied in accordance with clause 40 (e); (ii) All other recoveries not exceeding United
States Dollars Two Million (US$2,000,000.00) shall be paid in full to the Charterers or to their order without any deduction or deductions whatsoever; and (iii) All other recoveries exceeding United States Dollars Two million (US$2,000,000.00)
shall, subject to the prior written consent of the Owners be paid in full to the Charterers or their order without any deduction whatsoever, subject to the fulfillment of the provisions of Clause 44;
and the Owners and Charterers agree to be bound by the above provisions.
(iv) the Charterers
shall procure that duplicates of all cover notes, policies and certificates of entry shall be furnished to the Owners for their custody;
(v) the Charterers shall
procure that the insurers and the war risk and protection and indemnity associations with which the Vessel is entered shall
(A) furnish the Owners with a letter or
letters of undertaking addressed to the Mortgagee in relevant underwriter’s standard form and in accordance with the underwriters’ rules.
(B) supply to
the Owners such information in relation to the insurances effected, or to be effected, with them
as the Owners may from time to time reasonably require: and
(vi) the Charterers shall use all reasonable efforts to procure that the policies, entries or other instruments evidencing the insurances are endorsed to the effect that the
insurers shall give to the Owners prior written notification of any amendment, suspension, cancellation or termination of the insurances in accordance with the underwriters’ guidance and rules.
(c) Notwithstanding anything to the contrary contained in Clauses 13 and any other provisions hereof, the Vessel shall be kept insured during the Charter Period in respect of
marine and war risks on hull and machinery basis (The Charterers shall have the option, to take out on a full hull and machinery basis increased value or total loss cover in an amount not exceeding Thirty per centum (30%) of the total amount insured
from time to time) for not less than the amounts specified in column (b) in the table set out below in respect of the one-yearly period during the Charter Period specified in column (a) (on the assumption that the first such period commences on the
Delivery Date) against such amount (hereinafter referred to as the “Minimum Insured Value”):
(a) (b)
Year Minimum Insured Value
1 USD 38,500,000
2 USD 35,360,417
3 USD 32,220,833
4 USD 29,081,250
5 USD 25,941,667
6 USD 22,802,083
7 USD 19,662,500
8 USD 16,522,917
9 USD 13,383,333
10 USD 10,243,750
11 USD 7,104,167
12 USD 3,964,583
(d) (i) Jf the Vessel shall become a Total Loss or be subject to Compulsory
Acquisition the Chartering of the Vessel to the
Charterers hereunder shall cease and the Charterers shall:-
(A) immediately pay to the Owners all hire, and any other amounts, which have fallen due for payment under this Charter and have not been paid as at and up to the date on which the
Total Loss or Compulsory Acquisition occurred (the “Date of Loss”) together with interest thereon at a rate reflecting the Owners’ reasonable cost of funds at such intervals, which amount to be agreed between the Owners and the
Charterers and shall cease to be under any liability to pay any hire, but not any other amounts, thereafter becoming due and payable under this Charter, Provided that all hire and any other amounts prepaid by the Charterers subsequent to the Dale of
boss shall be forthwith refunded by the OWRefSi
(B) for the purposes of this sub-clause, the expression “relevant Minimum Insured Value” shall mean the
Minimum Insured Value applying to the one-year period in which the Date of Loss occurs.
(ii) For the purpose of ascertaining the Date of Loss:-
(A) an actual total loss of the Vessel shall be deemed to have occurred at noon (London time) on the actual date the Vessel was lost but in the event of the date of the loss being
unknown the actual total loss shall be deemed to have occurred at noon (London time) on the date on which it is acknowledged by the insurers to have occurred;
(B)
a constructive, compromised, agreed, or arranged total loss of the Vessel shall be deemed to have occurred at noon (London time) on the date that notice claiming such a total loss of the Vessel is given to the insurers, or, if the insurers do not
admit such a claim, at the date and time at which a total loss is subsequently admitted by the insurers or adjudged by a competent court of law or arbitration tribunal to have occurred. Either the Owners or, with the prior written consent of the
Owners (such consent not to be unreasonably withheld), the Charterers shall be
entitled to give notice claiming a constructive total loss but prior to the giving of such notice there shall be consultation between
the Charterers and the Owners and the party proposing to give such notice shall be supplied with all such information as such party may request; and
(C) Compulsory
Acquisition shall be deemed to have occurred at the time of occurrence of the relevant circumstances described in Clause25 (b) hereof.
(e) All moneys payable under
the insurance effected by the Charterers pursuant to Clauses 13 and 40, or other compensation, in respect of a Total Loss or pursuant to Compulsory Acquisition of the Vessel shall be received in full by the Owners (or the Mortgagees as assignees
thereof) and applied by the Owners (or, as the case may be, the Mortgagees):-
FIRST, in payment of all the Owners’ costs incidental to the collection thereof,
SECONDLY, in or towards payment to the Owners (to the extent that the Owners have not already received the same in full) of a sum equal to the aggregate of (i)
unpaid but due hire under this Charter and unpaid interest thereon up to and including the Date of Loss and (ii) the “Termination Amounf’ (defined below) as at the Date of Loss, and
THIRDLY, in payment of any surplus to the Charterers by way of compensation for early termination.
“Termination Amount” shall mean:
(A) in case that Date of Loss is at or after the
end of 4th year of the Charter Period, the Termination Amount shall be equal to the Purchase Option Price payable under Clause 49 which shall be calculated based on the Date of Loss; and
(B) in case that the Date of Loss is before the 4th year of the Charter Period, the Termination Amount shall be as follows: (date) (amount) as at the Delivery Date: USD 37,054,375
at the end of 1•1 year of the Charter Period: USO 34, 171,667
at the end of 2nd year of the Charter Period: USD 31,225,833 at the end of 3rd year of the Charter Period: USD 28,280,000
provided that, in relation to (B), if Date of Loss is between the two dates as specified above, then the Termination Amount shall be adjusted proportionally on the basis of 360
days a year.
(f) The Charterers and the Mortgagee shall execute the “Assignment of Insurances” of which contents and wording shall be mutually agreed
between the Owners and the Chaiterers.
41. TERMINATION EVENTS
(a) Each of the
following events shall be a “Termination Event” for purposes of this Charter:-
(i) if any installment of hire or any other sum payable by the Charterers
under this Charter (including any sum expressed to be payable by the Charterers on demand) shall not be paid at its due date or within ten (10) Banking Days following the due date of payment and such failure to pay is not remedied within three (3)
Banking Days of receipt by the Charterers of written notice from the Owners notifying the Charterers of such failure and requesting that payment is made; or
(ii)
Save in circumstances where requisition for hire or compulsory requisition result in termination of insurances for the Vessel, if either (A) the Charterers shall fail at any time to effect or maintain any insurances required to be effected and
maintained under this Charter, or any insurer shall avoid or cancel any such insurances (other than where the relevant avoidance or cancellation results from an event or circumstance outside the reasonable control of the Charterers and the relevant
insurances are reinstated or re-constituted in a manner meeting the requirements of this Charter within seven (7) days of such avoidance or cancellation) or the Charterers shall commit any breach of or make any misrepresentation in respect of any
such insurances the result of which the relevant insurer avoids the policy or otherwise excuses or releases itself from all or any of its liability thereunder, or (B) any of the said insurances shall cease for any reason whatsoever to be in full
force and effect (other than where the reason in question is
outside the reasonable control of the Charterer and the relevant insurances are reinstated or re-constituted in a manner meeting the
requirements of this Charter within seven (7) days of such cease); or
(iii) if the Charterers shall al any time fail to observe or perform any of their material
obligations under this Charter, other than those obligations referred to in sub-clause (i) or sub-clause (ii) of this Clause 41 (a), and such failure to observe or perform any such obligation is either not remediable or is remediable but is not
remedied within thirty (30) days of receipt by the Charterers of a written notice from the Owners requesting remedial action; or
(iv) if any material
representation or warranty by the Charterers in connection with this Charter or in any document or certificate furnished to the Owners by the Charterers in connection herewith or therewith shall prove to have been untrue, inaccurate or misleading in
any material respect when made (and such occurrence continues unremedied for a period of thirty (30) days after receipt by the Charterers of written notice from the Owners requesting remedial action): or
(v) if a petition shall be presented (and not withdrawn or stayed within sixty (60) days) or an order shall be made or an effective resolution shall be passed for the
administration or winding-up of the Charterers (other than for the purpose of a reconstruction or amalgamation during and after which the Charterers remain solvent and the terms of which have been previously approved in writing by the Owners which
approval shall not be unreasonably withheld) or if an encumbrancer shall take possession or an administrative or other receiver shall be appointed of the whole or any substantial part of the property, undertaking or assets of the Charterers or if an
administrator of the Charterers shall be appointed (and, in any such case, such possession is not given up or such appointment is not withdrawn within sixty (60) days) or if anything analogous to any of the foregoing shall occur under the laws of
the place of the Charterers’ incorporation, or
(vi) if the Charterers shall stop payments to all of its creditors or shall cease to carry on or suspend all or
a substantial part of their business or shall be unable to pay their debts, or shall admit in writing their inability to pay their debts, as they become due or shall otherwise become or be adjudicated insolvent; or
{vii) if the Charterers shall apply to any court or other tribunal for, a moratorium or suspension of payments with respect to all or a
substantial part of their debts or liabilities, or
{viii) (A) {a) if the Vessel is arrested or detained (other than for reasons solely attributable to the Owners
or to those for whom, for the purposes of this provision, the Owners shall be deemed responsible, including without limitation, any legal person who, at the date hereof or at any time in the future is affiliated with the Owners) and such arrest or
detention is not lifted within ninety (90) days {or such longer period as the Owners shall reasonably agree in the light of all the circumstances) of the date on which the Vessel has been arrested or detained, or {b) if any petition of any public
auction or other sale proceeding {following such arrest or detention) is filed or such proceeding is commenced or ordered by the competent court or other authority (except that the Charterer promptly contested in good faith and which is continuing),
{B) if a distress or execution shall be levied or enforced upon or sued out against all or any substantial part of the property or assets of the Charterers and
shall not be discharged or stayed within ninety (90) days; or
{ix} if any consent, authorization, license or approval necessary for this Charter to be or remain
the valid legally binding obligations of the Charterers, or to the Charterers to perform their obligations hereunder or thereunder, shall be materially adversely modified or is not granted or is revoked, suspended, withdrawn or terminated or expires
and is not renewed (provided that the occurrence of such circumstances shall not give rise to a Termination Event if the same are remedied within thirty (30) days of the date of their occurrence); or
(x) if {a) any legal proceeding for the purpose of the reconstruction or rehabilitation of the Charterers is commenced and continuing in any jurisdiction and {b) the Owners receive
a termination notice from the receiver, trustee or others of the Charterers which informs the termination/rejection of the Charter pursuant to the relevant laws, codes and regulations applicable to such proceeding.
(b) A Termination Event shall constitute (as the case may be) either a repudiatory breach of, or breach of condition by the Charterers
under, this Charter or an agreed terminating event the occurrence of which will (in any such case) entitle the Owners by notice to the Charterers to terminate the chartering of the Vessel under this Charter and recover the amounts provided for in
Clause 42(c) either as liquidated damages or as an agreed sum payable on the occurrence of such event.
42. OWNERS’ RIGHTS ON TERMINATION
(a) At any time after a Termination Event shall have occurred and be continuing, the Owners may, by notice to the Charterers immediately, or on such date as the Owners shall
specify, terminate the chartering by the Charterers of the Vessel under this Charter, 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. For the avoidance of doubt, in case of the termination of the Charter Jn accordance with 41 (a) (x) hereof, the Charter shall be deemed to be terminated upon receipt by the Owners of the termination notice set forth in Clause 41 (a} (x)
hereof.
(b) On or at any time after termination of the chartering by the Charterers of the Vessel pursuant to Clause 42(a) hereof the Owners shall be entitled to
retake possession of the Vessel, the Charterers hereby agreeing that the Owners, for that 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.
(c) If the Owners pursuant to Clause 42(a) hereof give notice to terminate the chartering by the
Charterers of the Vessel, the Charterers shall pay to the Owners on the date of termination (the “Termination Date”), the aggregate of (A} all hire due and payable, but unpaid, under this Charter to (and including) the Termination Date
together with interest accrued thereon pursuant to Clause 36(d) hereof from the due date for payment thereof to the Termination Date, (B} any sums, other than hire, due and payable by the Charterers, but unpaid, under this Charter together with
interest accrued thereon pursuant to Clause 36(d} to the Termination Date and (C) any actual direct financial loss suffered by the Owners which direct Joss shall be determined as the shortfall, if any, between (a) the current market value of the
Vessel (average value as estimated by two independent valuers such as major London brokers i.e. Arrow Valuations Ltd, Barry Rogliano Salles, Braemar ACM Shipbroking, H Clarkson & Co.
Ltd., E.A. Gibsons Shipbrokers, Fearnleys, Galbraith, Simpson Spencer & Young, Howe Robinson & Co Ltd London and Maersk Broker
K.S. (to include, in each case, their successors or assigns and sL1ch subsidiary or other company in the same corporate group through which valuations are commonly Issued by each of these brokers), or such other first-class independent broker as the
Owners and Charterers may agree in writing from time to time) and (b) the Termination Amount (as defined In Clause 40(e)) to be calculated based on the Termination Date PROVIDED ALWAYS that if the said market value exceeds the aggregate of (A) and
(B) and the Termination Amount, then the Owners shall pay the amount of such excess to the Charterers forthwith. The aggregate of (A), (8) and (C) above shall hereinafter be referred to as the “Termination Compensation”).
(d) If the Charter is terminated in accordance with this Clause 42 the
Charterers shall
Immediately redeliver the Vessel at a safe and ice-free port or place as indicated by the Owners. The Vessel shall be redelivered to the Owners in substantially the same condition and class as that in which she was delivered, fair wear and tear not
affecting class excepted.
(e) The Owners agree that if following termination of th!l Charter under this Clause, the Owners sell or otherwise transfer the Vessel to
a third party, or enter into any other arrangement with a third party with an option to purchase the Vessel, then the Owners shall pay to the Charterers after that sale (i) the amount of the sale price less (ii) the aggregate of the unpaid
Termination Compensation and the Termination Amount (as defined in Clause 40(e)) which would be payable by the Charterers as set out in Clause 49 as at the date of such sale (which shall include, for the avoidance of doubt, any costs and expenses
Incurred by the Owners arising from or in relation to the termination and the re-possession of the Vessel and operation, repair (as the case may be) and such sale of the Vessel).
43. NAME
The Charterers shall, subject only to prior notification to the relevant authorities
of the jurisdiction in which for the time being the Vessel is registered, be entitled from time to time to change the name of the 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. Painting and Installment shall be at Charterers’ expense and time. The Charterer shall also have the liberty to change the name of the Vessel during the Charter Period at
the expense and time of
the Charterers (including the legal charge for finance documents for the Mortgagee, if any).
The Owners shall have no right to change the name of the Vessel during the Charter Period.
44.
MORTGAGE and ASSIGNMENT
The Owners confirm that they are famillar with the terms of the assignment of insurances made or to be made by the Charterers in favour or
the Mortgagee, and they agree to the terms thereof and will do nothing that conflicts therewith, excepting that the Owners shall be entitled to assign its rights, title and interest in and to this Charter to the Mortgagee or its assignee. Neither
party shall assign its right or obligations or part of thereof to any third party without the written consent of the other, unless otherwise expressly permitted herein.
In respect of the Vessel the Owners undertake not to borrow more than the respective purchase option prices as set out at the relevant milestone in Clause 49 hereof.
The Owners have the right to register a first preferred mortgage on the Vessel in favour of the Mortgagee securing a loan under the Loan Agreement under standard mortgages and
security documentation. In which case, the Owners undertake to procure from the Mortgagee a Letter of Quiet Enjoyment In a form and substance acceptable to the Charterers.
The Charterers agree to sign an acknowledgement of the Owners’ charterhire assignment or any other comparable document reasonably required by the Mortgagee, in favour of the
Mortgagee. During the course of the Charter the Owners have the right to register a substitute mortgage in favour of another bank provided such registration is effected in a similar amount to the loan amount outstanding with the Mortgagee at that
time and only if such substitute mortgagee executes a Letter of Quiet Enjoyment in favour of the Charterers in the same form as that provided by the Mortgagee or the form acceptable for the Charterers. The Charterers will then agree to sign a
charterhire assignment in favour of the substitute mortgage in a form as shall be agreed by the Charterers, which agreement not be unreasonably withheld. Any cost incurred by the Charterers shall be for Owners’ account.
Subject to the term and conditions of this Charter, the Charterers also agree that the Owners have the right to assign its rights, title
and interest in and to the insurances by way of assignment of insurance in respect of the Vessel to and in favour of the Assignee in a form and substance acceptable to Charterers and the Assignee.
Owners shall procure that any mortgage and charterhire assignment shall be subject to this Charter and to the rights of the Charterers hereunder, In accordance with, and subject
to, a Letter of Quiet Enjoyment.
In the event that the Owners execute security of any nature (including but not limited to any mortgage, assignment of insurances)
over the Vessel then the Owners hereby undertake and agree as a condition of this Charter to procure that the beneficiary of such security executes in favour of the Charterers a letter of quiet enjoyment in such form and content as is reasonably
acceptable to the Charterers, and the effectiveness of this assignment clause is subject to the agreement of a letter of Quiet Enjoyment on or before delivery of the Vessel.
The Charterers shall not assign charter nor sub-charter Vessel on a bareboat basis except with the prior consent in writing of the Owners, which shall not be unreasonably withheld.
Such Owners’ prior written consent will not be required provided that Vessel remain at all times under the management of Navios Shipmanagement Inc. or an affiliate of Navies Shipmanagement Inc. or of Angeliki Frangou Furthermore, the Charterers
may assign or transfer the charter by way of novation to a subsidiary or affiliate of Navios Maritime Holdings Inc without Owners’ prior written consent, in which case, (i) the Charterers, the Owners and such new charterers as permitted under
this Clause shall enter into a novafion agreement on or before such novation at the Charterers’ cost and (ii) new assignment of insurances and assignment of charterhires as mentioned above and an amendment of the Mortgage (as the case may be)
shall be made in favour of the Mortgagee at the Charterers’ cost.
45. REDELIVERY INSPECTION
Prior to redelivery and without interference to the operation of the Vessel, the Owners, at their risk and expense, shall have the right provided that such right is declared at
least 20 days prior to the expected redelivery date to carry out an underwater inspection of the Vessel by Class approved diver and in the presence of Class surveyor and Owners’ and Charterers’ representatives. Should any damages in the
Vessel’s underwater parts be found that will impose a condition or recommendation of Vessel’s class
then:
a) In case Class imposes a condition or
recommendation of class that does not require drydocking before next scheduled drydocking. Charterers shall pay to Owners the estimated cost to repair such damage .in way which is acceptable to Class, which to be direct cost to repair such damage
only, as per average quotation for the repair work obtained from two reputable independent shipyards at or in the vicinity of the redelivery port, one to be obtained by Owners and one by Charterers within 2 Banking Days from the date of imposition
of the conditionfrecommendation unless the parties agree otherwise.
b) In case Class require Vessel to be drydocked before the next scheduled drydocking the
Charterers shall drydock the Vessel at their expense prior to redelivry of the Vessel to the Owners and repair same to Class satisfaction.
In such event the Vessel
shall be redelivered at the port of the dockyard.
46. REDELIVERY
The
Charterers shall redeliver to the Owners the Vessel with everything belonging to her at the time of redelivery including spare parts on board, used or unused subject to the Clause 38 hereof. The Owners shall take over and pay the Charterers for
remaining bunkers and unused lubricating oils including hydraulic oils, and greases, unbroached provisions, paints, ropes and other consumable stores as per Clause 53 al the Charterers’ purchased prices with supporting vouchers. For the purpose
of this clause, the Charterers shall withhold the Hire two last hire payments (the “Withheld Hire”) and shall offset the cost of bunkers, unused lubricating oils and unbroached provisions etc., remaining on board at the time of redelivery
from the Withheld Hire. If the Withheld Hire is not sufficient to cover the cost of bunkers, unused lubricating oils, and unbroached provisions etc. the Owners shall settle the outstanding amount within 3 Banking Days after redelivery of the Vessel.
Personal effects of the Master, officers and crew including slop chest, hired equipment, if any and the following listed items are excluded and shall be removed by
the Charterers prior to or at the time of redelivery of the Vessel:
E-mail equipment not part of GMDSS Gas bottles Electric deck air compressor Blasting and painting equipment Videotel (or similar) film
library
47. MORTGAGE NOTICE
The Charterers keep prominently displayed in the
chart room, engine room and the master’s cabin of the Vessel a framed printed notice in plain type (the print on which shall measure at least six inches by nine inches) reading as follows:-
NOTICE OF MORTGAGE
“This Vessel is covered by a First Preferred Ship Mortgage given to
THE AWA BANK, LTD. a banking corporation duly organized and existing under the laws of Japan, having its head office at 24-1,NISHI SEMBACHO 2CHOME,TOKUSHIMA CITY,TOKUSHIMA,JAPAN, Japan, acting through its KOMATSUSHIMA Office at 7-14, MATSUSHIMACHO,
KOMATSUSHIMA CITY, TOKUSHIMA, JALAN, Japan, its successors and assigns, under the authority of the laws of the Republic of Panama. Under the terms of said Mortgage, neither the owner of this Vessel, any charterer, the Master of this Vessel, nor any
other person has any right, power or authority to create, incur or permit to be imposed upon the Vessel any liens, maritime or otherwise, other than the lien of said Mortgage and liens for crew’s wages or salvage.”
48. SALE OF VESSEL BY OWNERS
| 1. | The Owners have the right to sell the Vessel to a reputable third party (“Purchaser”) at any time during the Charter Period with the prior written consent of the Charterers and provided that (i) the Purchaser agrees to take over the benefit and burden of this Charter, (ii) such ownership change does not result in any reflagging of the Vessel, (iii) such ownership change does not resu It in the Charterers being obliged to increase any payment under this Charter, (iv) such ownership change does not increase the actual or contingent obligations of the Charterers under this Charter, and (v) the Charterers shall not be liable for the costs and expenses (including legal fees) incurred in the sale of the Vessel by the Owners under this Clause 48. |
| 2. | The Owners shall give the Charterers at least one month’s prior written |
notice of any sale.
| 3. | Subject to 48.1, the Charterers and Owners undertake with each other to execute one or more novation agreements (or other documents required under applicable law) to novate the rights and obligations of the Owners under this Charter to the Purchaser such novation agreement(s) or other documents to be in such form and substance acceptable to the Charterers and such novation will be effective upon delivery of the Vessel from the Owners to the Purchaser.” |
49. CHARTERERS’ OPTION TO PURCHASE VESSEL
| 1. | From (and including) the end of 4th year of the Charter Period, the Charterers have the option to purchase the Vessel at the following purchase price. The Charterers’ purchase option is subject to Charterers’ written declaration to the Owners latest three (3) months prior to the expected date of delivery, such date to be indicated by the Charterers in their declaration notice (such purchase option price at such expected date of delivery indicated in the declaration notice as calculated by the following formula, being called the “Purchase Option Price”). |
| The | Purchase Option Price shall be calculated in accordance with the following formula: |
| “Purchase | Option Price = (A} + (B) + (C)” (A} = Charter Principal Balance |
| (B) | =Owners’ profit starting from US$1,500,000. at the end of 4th year and de-escalate US$62,500/year to the end of 12th year (C} == Owners’ broker commission: 1.00% over the above (A) + (B) for Vessel |
2. The
Purchase Option Price shall be paid in full free of bank charges to the Owners (as seller) upon the delivery date of the Vessel under this Clause.
3. Immediately
prior to delivery of the Vessel by the Owners to the Charterers under the PO MOA (as defined in Clause 49.4) the Parties shall execute a Protocol of Redelivery and Acceptance under this Charter (the “Redelivery
Protocol”) and save in respect of any claims accrued under this Charter prior to the date and time of the Redelivery Protocol, this
Charter shall terminate forthwith.
4. Upon the date of any written notification by the Charterers to the Owners of their intention to purchase the Vessel, the
Owners and the Charterers shall be deemed to have unconditionally entered into a contract to sell and purchase the Vessel for the Purchase Option Price on and in strict conformity with the terms and conditions contained In the Memorandum of
Agreement attached to this Charter as Exhibit A (the “PO MOA”).
50. MISCELLANEOUS
(a) The terms and conditions of this Charter and the respective rights of the Owners and the Charterers shall not be waived or varied otherwise than by an instrument in writing of
the same date as or subsequent to this Charter executed by both parties or by their duly authorized representatives.
(b) Unless otherwise provided in this Charter
whether expressly or by implication, time shall be of the essence in relation to the performance by the Charterers of each and every one of their obligations hereunder.
(c) No failure or delay on the part of the Owners or the Charterers in exercising any power, right or remedy hereunder or in relation to the Vessel shall operate as a waiver
thereof nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise of any such right or power or the exercise of any other right, power or remedy.
(d) If any terms or condition of this Charter shall to any extent be illegal invalid or unenforceable the remainder of this Charter shall not be affected thereby and all other
terms and condition shall be legal valid and enforceable to the fullest extent permitted by law.
(e) The respective rights and remedies conferred on the Owners and
the Charterers by this Charter are cumulative, may be exercised as often as the Owners or the Charterers (as the case may be) think fit and are in addition to, and are not exclusive of, any rights and remedies provided by law.
51. COMMUNICATIONS
Except as otherwise provided
for in this Charter, all notices or other communications under or in respect of this Charter to either party hereto shall be in writing and shall be made or given to such party at the address, facsimile number or e-mail address appearing below (or
at such other address, facsimile number or e-mail address as such party may hereafter specify for such purposes to the other by notice in writing):-
(i) in the
case of the Owners c/o OKINO KAIUN CO., LTD.
Address : 7-22, Minamikomatsushima-Cho, Komatsushima, Tokushima, 773-0005 Japan Telephone : +81-0885-32-1534 Telefax :
+81-0885-32-1529 E-mail : okino@f6.dion.ne.jp
(ii) in the case of the Charterers c/o Navios Shipmanagement Inc. Address : 85 Akti Mlaouli Street, 18538, Piraeus,
Greece Telephone : 30-210-4595000 E-mail : ops@navios.com legal@navios.com, tech@navios.com legal_corp@navios.com
(iii) in the case of the Brokers c/o Mitsui &
Co., Ltd.
Address : 1-3, Marunouchi 1-Chome, Chiyodaku, Tokyo 100-8631, Japan Telephone : +81-3-3285-4452 Telefax E-mail : tkmsh@dg.mitsui.com
A written notice includes a notice by facsimile or e-mail. A notice or other communication received on a non-working day or after business hours in the place of receipt shall be
deemed to be served on the next following working day in such place.
Subject always to the foregoing sentence, any communication by personal delivery or letter
shall be deemed to be received on delivery, any communication by e-mail shall be deemed to be received upon transmission of the automatic answerback of the addresses and any communication by facsimile shall be deemed to be received upon
appropriate acknowledgment by the addressee’s receiving equipment.
All communications and documents delivered pursuant to or otherwise relating to this Charter shall either be in English or accompanied by a certified English translation.
52. TRADING IN WAR RISK AREA
The Charterers shall be permitted to order the
Vessel into an area subject to War Risks as defined in Clause 26 without consent of the Owners provided that all Marine, War and P&I Insurance are maintained with full force and effect and the Charterers shall pay any and all additional premiums
to maintain such insurance.
53. INVENTORIES, OIL AND STORES
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.
The Owners shall at the time of 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 Charterers’ purchased prices with supporting vouchers. However, the Charterers shall not pay to the Owners at time of delivery for any bunkers, lubricating oil, provisions, paints, ropes
and consumable stores which the Charterers have supplied to the Vessel at the Charterers’ expense prior to delivery. 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.
54. INDEMNITY FOR POLLUTION RISKS
The Charterers shall indemnify the Owners against the following Pollution Risks:-
(a)
liability for damages or compensation payable to any person arising from pollution;
25
(b) the costs of any measures reasonably taken for the purpose of preventing, minimizing or cleaning up any pollution together with any
liability for losses or damages arising from any measures so taken;
(c) liability which the Owners and/or the Charterers may incur, together with costs and
expenses incidental thereto, as the result of escape or discharge or threatened escape discharge of oil or any other substance;
(d) the costs or liabilities
incurred as a result of compliance with any order or direction given by any government or authority for the purpose of preventing or reducing pollution or the risk of pollution; provided always that such costs or liabi/lties are not recoverable
under the Hull and Machinery Insurance Policies on the Vessel;
(e) liability which the Owners and/or the Charterers may incur to salvors under the exception to the
principal of “no cure-no pay” in Article 1 (b) of Lloyds Standard Form of Salvage Agreement (LOF 1990); and
(f) liability which the Charterers may incur
for the payment of fines in respect of pollution in so far as such liability may be covered under the rules of the P&I Club.
55. TRADE AND COMPLIANCE CLAUSE
The Charterers and the Owners hereby agree that no person/s or entity/ies under this Charter will be individual(s) or entily(ies) designated under any applicable
national or international law imposing trade and economic sanctions.
Further, the Charterers and the Owners agree that the performance of this Charter will not
require any action prohibited by sanctions or restrictions under any applicable national or international law or regulation imposing trade or economic sanctions.
56. ANTI-BRIBERY AND ANTI-CORRUPTION
The Charterers and the Owners hereby
agree that in connection with this Contract and/or any other business transactions related to it, they as well as their sub-contractors and each of their affiliates, directors, officers, employees, agents, and every other person acting on its and
its sub-contactors’ behalf, shall perform all required duties, transactions and dealings in compliance with all applicable
26
laws, rules, regulations relating to anti-bribery and anti-money laundering.
57 COSTS AND EXPENSES
(a) The parties hereto agree that all operational cost Including
required cost in relation to Vessel’s flag (such as tonnage tax, insurance and crew certs etc) would be for the Charterers’ account. However, all other cost (such as financing cost /cost for registration and discharge of their mortgage
etc) would be for the Owners’ account.
(b) For this Charter and the MOA, each party should bear its own costs unless otherwise agreed herein.
58 MANAGEMENT COMPANY
The management company shall be Synergy Marine Pte Ltd. and/or Navios
Shipmanagement Inc., and/or any other management company affiliated to Angeliki Frangou. The Charterers may change the management company with the Owners’ prior consent not to be unreasonably withheld, unless such change is to an affiliate of
Navios Shipmanagement Inc. or of Angeliki Frangou in which case Owners’ consent will not be required.
59 BBC SURVEY (Further to Clause 8)
1. In case the Vessel has any incidents/casualties, Owners have the right to carry out physical inspection more than once per year at Owners’ expense. Charterers will do their
best to organize the timing and place based on Owners’ preferred timing. Charterers tech and OPS will organize accordingly. Owners shall have the right to visit the Vessel at dry-dock after the completion of DD works.
2. The Owners shall have the right to perform a physical inspectionfsurvey (including dry-dock) of Vessel each once per year. Prior one month notice of intention to perform such
survey shall be given in writing to the Charterers and the Charterers shall keep the Owners informed of Vessel’s each itinerary for possible inspection. Inspections shall be at Owners Cost and not to unreasonably disturb and/or delay
Vessel’s itinerary. In case the Vessel has any incidents/casualties, Owners have the right to carry out physical inspection more than once per year at Owners’ expense.
3. Charterers will do their best to organize the timing and place based on Owners’ preferred timing. Charterers tech and OPS will organize accordingly.
4. Owners shall have the right to visit the Vessel at dry-dock after the completion of DD works.
27
60 SANCTION
(1) In this Clause, the following
provisions shall apply where any sanction, prohibition or restriction Is imposed on any specified persons, entities or bodies including the designation of any specified vessels or fleets under United Nations Resolutions or trade or economic
sanctions, laws or regulations of the European Union, United States of America, United Kingdom, Panama, Japan, the Flag State of the Vessel and/or the Marshall Islands.
(2) The Owners and the Charterers hereby represent and warrant to each other that as of the even date hereof, they have never received any notice of legal proceedings or
investigation in relation to the sanctions, restrictions or designation referred to in sub-clause (1) and have never acknowledged existence of such legal proceedings or investigation.
(3) The Owners hereby warrants that at the date of entering into this Agreement and during the currency of this Charter: (i) none of the Owners, their directors and officers is
subject to any of the sanctions, prohibitions, restrictions or designation referred to in sub-clause (1) which prohibit or render unlawful any performance by the Charterers and/or the Owners under this Charter; (ii) the Owners are letting and
performing other obligations hereunder as principals and not as agent, trustee or nominee of any person with whom transactions are prohibited or restricted under sub-clause (1); and (iii) the Owners will promptly inform the Charterers of receipt of
any notice of proceeding or investigation referred to in sub-clause (2) and send the copy of such notice and any relevant documents they have received in relation thereto.
(4) The Charterers hereby warrants that at the date of entering into this Agreement and during the currency of this Charter: (i) none of the Charterers, the management company
under Clause 58 hereof, their respective directors and officers is subject to any of the sanctions, prohibitions, restrictions or designation referred to in sub-clause (1) which prohibit or render unlawful any performance by the Charterers and/or
the Owners under this Charter; the Charterers are hiring and performing other obligations hereunder as principals and not as agent, trustee or nominee of any person with whom transactions are prohibited or restricted under sub-clause (1); (ii) the
Vessel is not a designated vessel under any of the sanctions,
28
prohibitions, restrictions or designation referred to in sub-clause (1); (iii) the Charterer will promptly inform the Owners of receipt
of any notice of proceeding or investigation referred to in sub-clause (2) and send the copy of such notice and any relevant documents they have received in relation thereto; and (iv) on demand the Charterers will provide the Owners of all Relevant
Documents in relation to the Vessel and/or the cargo on board the Vessel.
In this paragraph (v), “Relevant Documents” shall mean (A) such documents as
required to prove that the Charterers are not in breach of the sanctions, prohibitions, restrictions or designation referred to in sub-clause (1) and/or (B) such documents as required for the Owners and/or the Mortgagee to disclose to any competent
authority in relation to the sanctions, prohibitions, restrictions or designation referred to in sub-clause (1), provided that the Relevant Documents shall be reasonably and practicably obtainable to the Charterers.
(end)
Attachment: Exhibit A (PO MOA),
Purchase Option Price (for reference)
[ PURCHSE OPTION PRICE (for reference) l
1
2
3
4 $23,583,333 $25,334, 167
5 $20, 729, 167 $22,388,333
6 $17,875,000 $19, 442,500
7 $15,020,833 $16, 496,667
8 $12, 166, 667 $13, 550,833
9 $9,312,500 $10,605,000
10 $6,458,333 $7, 659, 167
11 $3, 604, 167 $4, 713,333
12 $750,000 $1. 767,500
Exhibit 4.75
| ‘BARECON 2001” STANDARD BAREBOAT CHARTER | PART 1 |
| 1. Shipbroker
ITOCHU CORPORATION TOKBR Section, 5-1, Kita-Aoyama 2-chome, Minato-ku, Tokyo, 107-8077, Japan |
BIMCO STANDARD BAREBOAT CHARTER CODE NAME : “BARECON 2001” | |||
| PART I | ||||
|
2. Place and date In New York, U.S. 21st February, 2022 | ||||
|
3. Owners / Place of business (Cl. 1) Kotobuki Kaiun Co., Ltd. / Yutoku Kinkai Kisen Co., Ltd. / Kotobuki Shipping Corporation, S.A. |
4. Bareboat Charterers / Place of business (Cl. 1) Kleimar NV, 5 Suikerrui, 2000 Antwerp, Belgium and, White Narcissus Marine S.A 53rd Street Urbanizacion Obartio, Swiss Tower, 16th Floor, Panama, Republic of Panama | |||
|
5. Vessel’s name, call sign, flag and IMO number (Cl. 1 and 3) M/V NAVIOS ASTERIKS, 3E3421, Panama, 9304253 | ||||
|
6. Type of Vessel Bulk Carrier |
7. GT / NT 40,014/25,301 | |||
|
8. When / Where built 2005, Sasebo Heavy Industries Co., Ltd. |
9. Total DWT
(abt.) in metric tons on 76,801 MT | |||
|
10. Classification Society (Cl. 3) Lloyds Register (LR) |
11. Date of last special survey by the Vessel’s classification society April 24th, 2020 | |||
|
12. Cargoes to be carried; All lawful cargoes within the Vessel’s capabilities/Class, IMO, flag, her insurance | ||||
|
13. Port or Place of delivery (Cl.3) As per Clause 5 of the MOA (as defined in Clause 1 hereof) |
14. Time for delivery (Cl.4) As per Clause 5 of the MOA See Also Clause 32. |
15. Cancelling date (Cl.5) N/A | ||
|
16. Port or Place of redelivery (Cl. 3) At one safe berth or one safe port in Japan/Singapore range in the Charterers option in case the PO is not exercised otherwise, worldwide in Charterers option |
17. No. of
months’ validity of trading and class certificates upon redelivery Minimum 3 months | |||
|
18. Running days’ notice if other than stated in Cl.4 N/A |
19. Frequency of dry-docking Cl. 10(g) As per Classification Society and flag state requirements | |||
|
20. Trading Limits (Cl.6)
Trading Limits: always safely afloat world-wide within International Navigation Conditions with the Charterer’s option to break same paying extra insurance, but always in accordance with Clause 13, 40 and 56. in case of calling/passing war risks area, Charterers will make reasonable commercial efforts to submit prior notification to the Owners. Any other country designated pursuant to any international (including U.N. / U.S. / EU / UK) or supranational law or regulation imposing trade and economic sanctions, prohibitions or restrictions (which may be amended from time to time during the Charter Period) to be excluded. | ||||
|
21. Charter Period (Cl. 2) Five (5) years with up to 3 months more or 1 month less in Charterers’ option (See Clause 34) |
22. Charter hire (Cl. 11) See Clause 35 | |||
|
23. New class and other statutory requirements (state percentage of Vessel’s insurance value acc. to Box 29 (Cl. 10(a)(ii)) N/A | ||||
|
24. Rate of interest payable acc. to Cl.11(f) and, if applicable, acc. to PART IV N/A |
25. Currency and method of payment (Cl.11) United States Dollars payable calendar monthly in advance | |||
|
26. Place of payment; also state beneficiary and bank account To be advised |
27. Bank guarantee / bond (sum and place) (Cl. 24 (optional) N/A | |||
| ‘BARECON 2001” STANDARD BAREBOAT CHARTER | PART 1 |
|
28. Mortgage(s), if any (state whether Cl. 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 Clause 44 |
29. Insurance (hull and machinery and war risks) (state value acc. to Cl.13(f) or, if applicable, acc. to Cl. 14(k)) (also state if Cl.14 applies) See Clause 40 | |
|
30. Additional insurance cover, if any, for Owners’ account limited to (Cl. 13(b) or, if applicable, Cl. 14(g)) N/A |
31. Additional insurance cover, if any, for Charterers’ account limited to (Cl. 13(b) or, if applicable, Cl. 14(g)) See Clause 40 (c) | |
|
32. Latent defects (only to be filled in if period other than stated in Cl.3) N/A |
33. Brokerage commission and to whom payable (Cl.27) N/A | |
|
34. Grace period (state number of clear banking days) (Cl. 28) See Clause 41 |
35. Dispute Resolution (state 30(a), 30(b) or 30(c); if 30(c) agreed, Place of Arbitration must be stated (Cl. 30) London | |
|
36. War cancellation (indicate countries agreed) (Cl. 26(f)) N/A | ||
|
37. Newbuilding Vessel (indicate with ‘yes’ or ‘no’ whether PART III applies) (optional) No |
38. Name and place of Builders (only to be filled in if PART III applies) N/A | |
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39. Vessel’s Yard Building No. (only to be filled in if PART III applies) No |
40. Date of N/A | |
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41. Liquidated damages and costs shall accrue to (state party acc. to Cl. 1) a) N/A b) N/A c) N/A | ||
|
42. Hire/Purchase agreement (indicate with ‘yes’ or ‘no’ whether PART IV applies) (optional) N/A |
43. Bareboat Charter Registry (indicate with ‘yes’ or ‘no’ whether PART IV applies) (optional) Yes in Charterers’ option | |
|
44. Flag and Country of the Bareboat Charter Registry (only to be filled in if PART V applies) See Clause 37 |
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 Clause 32 to 56 inclusive |
||
| PREAMBLE - It is mutually agreed that this Contract shall be performed subject to the conditions contained in this Charter which shall include PART I and PART II. In the event of a conflict of conditions, the provisions of PART I shall prevail over those of PART II to the extent of such conflict but no further. It is further mutually agreed that PART III and/or PART IV and/or PART V shall only apply and shall only form part of this Charter if expressly agreed and stated in Boxes 37, 42 and 43. If PART III and/or PART IV and/or PART V apply, it is further agreed that in the event of a conflict of conditions, the provisions of PART I and PART II shall prevail over those of PART III and/or PART IV and/or PART V to the extent of such conflict but no further. | ||
|
Signature (for and on behalf the Owners)
/s/ Shintaro Itadoko By: Shintaro Itadoko Title: Attorney-in-fact |
Signature (for and on behalf of the Charterers)
/s/ Georgios Panagakis By: Georgios Panagakis Title: Attorney-in-fact | |
PART II
“BARECON 2001” Standard Bareboat Charter
| 1. | Definitions |
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.
“MOA” means the Memorandum of Agreement entered into between the Owners as buyers and the Charterers as Sellers dated 21st February 2022 in respect of the Vessel.
“Banking Days” shall mean the days identified in Cl.36 (b)
“Total Loss” shall mean the situation identified in Cl.40 (a)
| 2. | Charter Period |
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 Also See Clause 32 |
The Vessel shall be delivered and taken over by the Charterers as per Clause 32.
(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 Clause 32 |
(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 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 date, the
Owners may, as soon as they are in 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 Owners’ prior approval has been obtained to loading thereof.
| 7. | Surveys on Delivery and Redelivery |
(not applicable when PART III applies, as indicated in Box 37)
The Owners and Charterers have the right of shall each appointing 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.
| 8. | Inspection |
The Owners shall have the right maximum twice per year (and more time in the case of necessity) maximum twice per
year 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:- provided it does not interfere with the operation of
the Vessel and/or crew
(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
PART II
“BARECON 2001” Standard Bareboat Charter
(c) for any other commercial reason they consider necessary (provided it does not
unduly interferer 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 log books maximum twice per year (and more
time in the case of Necessity) maximum twice per year whenever reasonably 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 CLAUSE 52 |
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. 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. SEE ALSO CLAUSE 32
| 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
exercise due diligence to 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 and |
| (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 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. SEE CLAUSE 38
| (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.
(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 de-registration, if required by the Owners, shall be at the Charterers’ expense and time. SEE CLAUSE 37 & 43
(e) Changes to the Vessel - 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. SEE CLAUSE 38
(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 substantially 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. 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 the Charterers shall remove such equipment at the end of the period unless agreed otherwise by the Owners and the Charterers. 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 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
PART II
“BARECON 2001” Standard Bareboat Charter
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.
| 11. | Hire SEE CLAUSE 35 |
(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 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 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) of 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 five (5)
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 CLAUSE 44 |
(only to apply if Box 28 has been appropriately filled in)
|
|
| *) |
|
| *) | (Optional, Clauses 12 (a) and 12 (b) are alternatives; indicate alternative agreed in Box 28). |
| 13. | Insurance and Repairs SEE CLAUSE 40 |
(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 underwriter’s standard form as the Owners have received, reviewedwhich
approval shall not be unreasonably withheld.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 mortgagees (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 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.
(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 Instrument, 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 the 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. SEE CLAUSE 40
(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. SEE CLAUSE 40
| 14. | Insurance, Repairs and Classification N/A |
(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 expenses against hull and machinery
and war risks under the form of policy or
PART II
“BARECON 2001” Standard Bareboat Charter
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-clause 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.
(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 ALSO SEE CLAUSE 45 |
At the expiration of the Charter Period the Vessel shall be redelivered by the Charterers to the Owners at a safe berth or anchorage at a safe port 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 fifteen (15) running days’ definite notice of expected date and port or place of redelivery. Any changes thereafter in 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 5 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 the Charter shall continue to apply.
Subject to the provisions of Clause 10, the Vessel shall be redelivered to the Owners in substantially 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 ALSO SEE CLAUSE 47 |
The Charterers will not suffer, nor permit to be continued, any lien or encumbrance incurred by them or their agents, which might have
priority over the title and interest of the Owners in the Vessel. 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 ALSO SEE CLAUSE 54 |
(a) The Charterers shall indemnify the Owners against any loss, damage or 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 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.
PART II
“BARECON 2001” Standard Bareboat Charter
(b) If the Vessel be arrested or otherwise detained by reason of a claims or claims against the Owners, 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.
| 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 |
(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. Such Owners’ prior consent shall not be required provided that the
Vessel remains at all times under the management of Navios Shipmanagement Inc. or an affiliate of Navios Shipmanagement Inc.
(b) The Owners shall not sell the Vessel during he currency of this Charter except with the prior written
| 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
|
|
(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 the Carriage of Passengers and their Luggage by Sea, 1974, and any protocol thereto.
*)
24.
Delete as applicable.
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 ALSO SEE CLAUSE 40 (a)/(b) |
(a) In the event of the requisition for Hire of the Vessel by any governmental or other competent authority (hereinafter referred to a “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) Notwithstanding the provisions of clause 25 (a), 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, which for the avoidance of
any doubt, shall exclude requisition for use or hire not involving requisition of title (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”, but not thenafter.
| 26. | War |
(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,
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 the entry into it, the Owners shall have the right to require the Vessel to leave such area.
(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 risk 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
PART II
“BARECON 2001” Standard Bareboat Charter
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 and 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.
Commission
| 27. |
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If the full hire is not paid owing to breach of the Charter by either of the parties, the party liable
therefore 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.
Termination
| 28. | (a) Charterer’s 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:
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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;
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SEE CLAUSE 41 & 42
| (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 compromised 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. SEE CLAUSE 40 (d)/(e)
(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 arrangements 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.
Repossession
In the event of the termination of this Charter in accordance with the applicable provisions of 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, the Charterers shall
| 29. |
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PART II
“BARECON 2001” Standard Bareboat Charter
hold the Vessel as gratuitous bailee only to 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 |
| *) | (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.
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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 conduced in accordance with the Shortened Arbitration Procedure of the Society of Maritime Arbitrators, Inc. current at the time when the arbitration proceedings are commenced.
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(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.
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(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.
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(Note: the parries 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 CLAUSE 50 |
(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.
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| “BARECON 2001” Standard Bareboat Charter | ||||
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PART III PROVISIONS TO APPLY FOR NEWBUILDING VESSELS ONLY |
OPTIONAL PART | |||
| (Optional, only to apply if expressly agreed and stated in Box 37) |
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(a) The Vessel shall be constructed in accordance with the Building Shipbuilding Contract (hereafter called “the
‘Shipbuilding Building Contract’) as annexed to this Charter, made between the Builders and the Sellers Owners and in accordance with the specifications and plans annexed thereto, such Building Contract, specifications and plans having
been countersigned as approved by the Charterers.
(b) No change shall be made in the Shipbuilding 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 Charterers 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 account 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.
Time and Place of Delivery – SEE CLAUSE 32
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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 Sellers Owners under the Shipbuilding Contract, the Builders become entitled under
that Contract not to deliver the Vessel to the Sellers, the Owners 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
of 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; SEE CLAUSE 33
(iv) if this Charter terminates under sub-clause (b) 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. |
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If not otherwise agreed, the Owners authorise the Charterers to arrange for the guarantee works to be performed in accordance with
the Shipbuilding 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.
| 4. |
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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.
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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 redelivery.
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 rate of hire per day or pro rata.
| “BARECON 2001” Standard Bareboat Charter | ||||
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PART IV HIRE/PURCHASE AGREEMENT |
OPTIONAL PART | |||
| (Optional, only to apply if expressly agreed and stated in Box 42) |
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 expense 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 legalised, 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 Maser, 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 of their journey to any other place.
| “BARECON 2001” Standard Bareboat Charter | ||||
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PART V PROVISIONS TO APPLY FOR VESSELS REGISTERED IN A BAREBOAT CHARTER REGISTRY |
OPTIONAL PART | |||
| (Optional, only to apply if expressly agreed and stated in Box 43) |
| 1. |
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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. |
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The Vessel chartered under this Charter is financed by a mortgage and the provisions of Clause 12(b) (PART
II) shall apply.
| 3. |
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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.
Additional Clauses
to
the Bareboat Charter Party dated 21st February, 2022 (this “Charter”) by
Kotobuki Kaiun Co., Ltd. / Kotobuki Shipping Corporation, S.A. / Yutoku
Kinkai Kisen Co., Ltd. as owner (the “Owners”) and
Kleimar NV / White Narcissus Marine S.A. as charterer (the “Charterers”)
in respect of MV “Navios Asteriks” (the “Vessel”)
| 32. | DELIVERY |
(a) The Charterers shall take delivery of the Vessel under this Charter simultaneously with delivery by Charterers as sellers to the Owners as buyers under the MOA, and the Owners shall be obliged to deliver the Vessel to the Charterers hereunder in the same moment as the Owners is taking delivery of the Vessel under the MOA.
(b) The Owners warrant that the Vessel, at time of delivery, is free from all charters except for the time charter in place at the time of delivery, encumbrances, mortgages and maritime liens or any other debts whatsoever, other than (i) those incurred prior to the delivery of the Vessel hereunder, (ii) this Charter and (iii) the mortgage over the Vessel, assignment of insurance in respect of the Vessel and the assignment of the charter hires in respect hereof in favour of the Mortgagee.
(c) The Vessel shall be delivered under this Charter in the same condition and with the same equipment, inventory and spare parts as she is delivered to the Owners under the MOA. The Charterers know the Vessel’s condition at the time of delivery, and expressly agree that the Vessel’s condition as delivered under the MOA is acceptable and in accordance with the provisions of this Charter. The Vessel shall be delivered to the Charterers under this Charter strictly “as is/where is”, and the Charterers shall waive any and all claims against the Owners under this Charter on account of any conditions, seaworthiness, representations, warranties expressed or implied in respect of the Vessel (including but not limited to any bunkers, oils, spare parts and other items whatsoever) on delivery.
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| 33. | ISM CODE |
During the currency of this Charter the Charterers shall procure at the costs and expenses and time of the Charterers that the Vessel and the “company” (as defined by the ISM code) shall comply with the requirements of the ISM code. Upon request the Charterers shall provide a copy of relevant documents of compliance (DOC) and safety management certificate (SMC) to the Owners. For the avoidance of any doubt any loss, damage, expense or delay caused by the failure on the part of the “Company” to comply with the ISM code shall be for the Charterers’ account.
| 34. | CHARTER PERIOD |
| (a) | The Owners shall let to the Charterers and the Charterers shall take the Vessel on charter for the period and upon the terms and conditions contained herein. |
| (b) | Subject always to the provisions hereto, the period of the chartering of the Vessel hereunder (hereinafter referred to as the “Charter Period”) shall comprise (unless terminated at an earlier date in accordance with the terms hereof) a charter period of Five (5) years from the date of the delivery of the Vessel by the Owners to the Charterers under this Charter (the “Delivery Date”) with up to three (3) months more or one (1) month less in the Charterers’ option, provided always that the chartering of the Vessel hereunder may be terminated by the Owners pursuant to Clause 41 or shall terminate in the event of the Total Loss or Compulsory Acquisition of the Vessel subject to, and in accordance with provisions of Clause 40. |
| 35. | CHARTER HIRE |
The Charterers shall, throughout the Charter Period, pay charter hire (“Charter Hire”) to the Owners monthly in advance at the agreed following rate by telegraphic transfer for each successive period of a month commencing with the Delivery Date and with subsequent installments at monthly intervals after the date of payment of such first installment by and until the redelivery of the Vessel. Time is of the essence for payment of the Charter Hire under this Charter.
1st – 5th Year USD 7,150 / day
No address commission.
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| 36. | PAYMENTS |
| (a) | Notwithstanding anything to the contrary contained in this Charter, all payments by the Charterers hereunder (whether by way of hire or otherwise) shall be made as follows:- |
| (i) | not later than 11:00 a.m. (New York time) on one Banking Day prior to the date on which the relevant payment is due under the terms of this Charter: and |
| (ii) | in United States Dollars to THE JUHACHI-SHINWA BANK, LTD. (or such other bank or banks as may from time to time be notified by the Owners to the Charterers by not less than fourteen (14) days’ prior written notice) for the account of the Owners . |
| (b) | If any day for the making of any payment hereunder shall not be a Banking Day (being, for all purposes of this Charter, a day on which banks are open for transaction of business of the nature required by this Charter in Japan, Piraeus/Greece, London and New York) the due date for payment of the same shall be the immediately preceding Banking Day. |
| (c) | Subject to the terms of this Charter, the Charterers’ obligation to pay hire in accordance with the requirements of Clause 35 and this Clause 36 and to pay certain amount of insurance benefit pursuant to Clause 40 (e) and to pay the Termination Compensation pursuant to Clause 42 shall be absolute irrespective of any contingency whatsoever, including (but not limited to) (i) any failure or delay on the part of any party hereto or thereto, whether with or without fault on its part, other than the Owners, in performing or complying with any of the terms or covenants hereunder, (ii) any insolvency, bankruptcy, reorganization, arrangement, readjustment of debt, dissolution, liquidation or similar proceedings by or against the Owners or the Charterers or any change in the constitution of the Owners or the Charterers or any other person, (iii) any invalidity or unenforceability or lack of due authorization of or other defect in this Charter, or (iv) any other cause which would or might but for this provision have the effect of terminating or in any way affecting any obligation of the Charterers under this Charter. |
| (d) | In the event of failure by the Charterers to pay on the due date for payment thereof under this Charter, or in the case of a sum payable on demand, within Five (5) Banking Days of the date of demand, any hire or other amount payable by them under this Charter, the Charterers shall pay to the Owners on demand interest on such hire or other amount from (and including) the date of such failure to (and including) the date of actual payment (both before and after any relevant judgment or winding up of the |
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| Charterers) at the rate to be the aggregate of (i) two & one-half per centum (21⁄2 %) and (ii) the London Interbank Offered Rate for US Dollar deposits of not more than one month’s duration (as selected by the Owners or their funders in the light of the likely duration of the default in question) (as such rate is from time to time quoted by leading banks in the London Interbank Market). |
Interest payable by the Charterers as aforesaid shall be compounded at such intervals as the Owners shall determine and shall be payable on demand.
| (e) | Any interest payable under this Charter shall accrue from day to day and shall be calculated on the actual number of days elapsed and a three hundred and sixty (360) day year. |
| (f) | In this Charter, unless the context otherwise requires, “month” means a period beginning in one calendar month (and, in the case of the first month, on the date of delivery hereunder) and ending in the succeeding calendar month on the day numerically corresponding to the day of the calendar month in which such period started provided that if there is no such numerically corresponding day, such period shall end on the last day in the relevant calendar month and “monthly” shall be construed accordingly. |
| 37. | FLAG AND CLASS |
| (a) | The Vessel shall upon the Delivery Date be registered in the name of the Owners under the Panamanian flag. |
| (b) | The Owners shall have a right either to transfer the flag of Vessel from Panama to any other registry or to require the Charterers to transfer the Vessel’s classification society both changes with the prior written consent of the Charterer. The Charterers shall, at any time after the Delivery Date and at the Charterers’ expense, have the right to transfer the Vessel’s classification society from Llyod Register (LR) to any other classification society at least equivalent to LR. |
| (c) |
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| (d) | Subject to the Charterers’ supplying the standard de-registration agreement reasonably satisfactory to the Mortgagee and with the prior written consent of the Owner which shall not be unreasonably withheld, the Charterers are entitled to establish the standard bareboat registration on the Vessel at the costs, expense and time of the Charterers. |
| (e) | If during the Charter Period there are any modifications, improvements, structural changes or new equipment made to the Vessel which are compulsory for the Vessel to comply with change to rules and regulations and/or new requirements (including but not limited to IMO) to which operation of the Vessel is required to conform, the cost, time and risk relating to such modifications shall be for the account of the Charterers. |
| (f) | All operational cost including required cost in relation to Vessel’s flag (such as tonnage tax, insurance and crew certs etc) would be for Charterers account. However, the Owners’ financing cost and cost for registration and discharge of their mortgage and other security documents in respect of the Vessel would be for Owners account, and Owners and Charterers shall equally bear initial registration cost to Vessel’s flag under Owners’ name. For the bareboat charter and the sale of the vessel, each party should bear its own costs. |
| 38. | IMPROVEMENT AND ADDITIONS |
The Charterers shall have the right to fit additional equipment and to make severable improvements and additions at their expense and risk. Such additional equipment, improvements and additions shall be removed from the Vessel without causing any material damage to the Vessel (any such damage being made good by the Charterers at their time and expense) provided however that the Charterers shall redeliver the Vessel without removing such additional equipment, improvements and additions if the Owners consent to such non-removal prior 90 days of the expected redelivery date.
The Charterers shall also have the right to make structural or non-severable improvements and additions with Owners’ prior consents (which shall not be unreasonably withheld) to the Vessel at their own time, costs and expense and risk provided that such improvements and additions do not diminish the market value of the Vessel and are not likely to diminish the market value of the Vessel during or at the end of the Charter Period and do not in any way affect or prejudice the marketability or the useful life of the Vessel and are not likely to affect or prejudice the marketability or the useful life of the Vessel during or at the end of the Charter Period.
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| 39. | UNDERTAKING |
The Charterers undertake and agree that throughout the Charter period they shall:-
| (a) | use reasonable endeavors to and as soon as practicably possiblenotify the Owners in writing of any Termination Event (or event of which they are aware which, with the giving of notice and/or lapse of time or other applicable condition, would constitute a Termination Event); |
| (b) | use reasonable endeavors to and as soon as practicably possible notify the Owners in writing of any accident to the Vessel involving repairs the cost of which will or is likely to exceed US Dollars Five Hundred Thousand (US$500,000.00-) or the equivalent in any other currency; |
| (c) | use reasonable endeavors to and as soon as practicably possible notify the Owners in writing of any occurrence in consequence whereof the Vessel has become or is likely to become a Total Loss (as defined in Clause 40 (e) hereof) or the Compulsory Acquisition (as defined in Clause 25 (b) hereof); or |
| (d) | use reasonable endeavors to and as soon as practicably possible notify the Owners in writing of any capture, seizure, arrest or detention of the Vessel or requisition for use or hire of the Vessel; or |
| (e) | supply to the Owners copies of the survey reports issued in respect of such periodical or other surveys as may be required for classification purposes upon requests; or |
| (f) | provide reasonable documents relating to cargo carried on board the Vessel upon requests in connection with sanction diligence only |
| 40. | INSURANCE, TOTAL LOSS AND COMPULSORY ACQUISITION |
| (a) | For the purposes of this Charter, the term “Total Loss” shall include actual or constructive or compromised or agreed or arranged total loss of the Vessel including any such total loss as may arise during a requisition for hire. “Compulsory Acquisition” shall have the meaning assigned thereto in Clause 25(b) hereof. |
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| (b) | The Charterers undertake with the Owners that throughout the Charter Period:- |
| (i) | they will keep the Vessel insured in underwriter’s standard form as the Owners shall in writing approve, which approval shall not be unreasonably withheld, with such insurers (including P&I and war risks associations) as shall be reasonably acceptable to the Owners with deductibles reasonably acceptable to the Owners (it being agreed and understood by the Charterers that there shall be no element of self- insurance or insurance through captive insurance companies without the prior written consent of the Owners); |
| (ii) | they will be properly entered in and keep entry of the Vessel with P&I Club that is a member of the International Group of Protection and Indemnity Association for the full commercial value and tonnage of the Vessel and against all prudent P&I Risks in accordance with the rules of such association or club including, in case of oil pollution liability risks equal to the highest level of cover from time to time available under the basic entry with such P&I (but always a minimum of USD1,000,000,000.); |
| (iii) | The policies in respect of the insurances against fire and usual marine risks and policies or entries in respect of the insurances against war risks shall, in each case, include the following loss payable provisions:- |
| (a) | For so long as the Vessel is mortgaged and in accordance with the Deed of Assignment of insurances entered or to be entered into between the Charterers and any mortgagee (the “Assignee”): |
Until such time as the Assignee shall have notified the insurers to the contrary:
| (i) | All recoveries hereunder in respect of an actual, constructive or compromised or arranged total loss shall be paid in full to the Assignee without any deduction or deductions whatsoever and applied in accordance with clause 40 (e); |
| (ii) | All other recoveries not exceeding United States Dollars Five Hundred Thousand (US$500,000.00) shall be paid in full to the Charterers or to their order without any deduction or deductions whatsoever; and |
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| (iii) | All other recoveries exceeding United States Dollars Five Hundred Thousand (US$500,000.00) shall, subject to the prior written consent of the Assignee be paid in full to the Charterers or their order without any deduction whatsoever. |
| (b) | During any periods when the Vessel is not mortgaged and the after the reassignment of the insurances from the Assignee to the Owners: |
| (i) | All recoveries hereunder in respect of an actual, constructive or compromised or arranged total loss shall be paid in full to the Owners without any deduction or deductions whatsoever and applied in accordance with clause 40 (e); |
| (ii) | All other recoveries not exceeding United States Dollars Five Hundred Thousand (US$500,000.00) shall be paid in full to the Charterers or to their order without any deduction or deductions whatsoever; and |
| (iii) | All other recoveries exceeding United States Dollars Five Hundred Thousand (US$500,000.00) shall, subject to the prior written consent of the Owners be paid in full to the Charterers or their order without any deduction whatsoever; |
and the Owners and Charterers agree to be bound by the above provisions.
| (iv) | the Charterers shall procure that duplicates of all cover notes, policies, insurance slips and certificates of entry shall be furnished to the Owners for their custody upon each of the Delivery Date and renewal or change of the relevant insurances of the Vessel or upon reasonable demand by the Owners; |
| (v) | the Charterers shall procure that the insurers and the war risk and protection and indemnity associations with which the Vessel is entered shall |
| (A) | furnish the Owners with a letter or letters of undertaking in relevant underwriter’s standard form and in accordance with the underwriters’ rules. |
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| (B) | supply to the Owners such information in relation to the insurances effected, or to be effected, with them as the Owners may from time to time reasonably require: and |
| (vi) | the Charterers shall procure that the policies, entries or other instruments evidencing the insurances are endorsed to the effect that the insurers shall give to the Owners as soon as practicably possible prior written notification of any material amendment and seven (7) days with respect to suspension, cancellation or termination of the insurances in accordance with the underwriters’ guidance and rules. |
| (c) | Notwithstanding anything to the contrary contained in Clauses 13 and any other provisions hereof, the Vessel shall be kept insured during the Charter Period in respect of marine and war risks on hull and machinery basis (The Charterers shall have the option, to take out on a full hull and machinery basis increased value or total loss cover in an amount not exceeding thirty per centum (30%) of the total amount insured from time to time) for not less than the amounts specified in column (b) in the table set out below in respect of the one-yearly period during the Charter Period specified in column (a) (on the assumption that the first such period commences on the Delivery Date) against such amount (hereinafter referred to as the “Minimum Insured Value”): |
| (a) | (b) | |||
| Year | Minimum Insured Value | |||
| 1 | US$13.20 million.- | |||
| 2 | US$11.20 million.- | |||
| 3 | US$ 9.20 million.- | |||
| 4 | US$ 7.20 million .- | |||
| 5 | US$ 5.20 million.- |
| (d) | (i) If the Vessel shall become a Total Loss or be subject to Compulsory Acquisition the Chartering of the Vessel to the Charterers hereunder shall cease and the Charterers shall:- |
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| (A) | immediately pay to the Owners all hire, and any other amounts, which have fallen due for payment under this Charter and have not been paid as at and up to the date on which the Total Loss or Compulsory Acquisition occurred (the “Date of Loss”) together with interest thereon at a rate reflecting the Owners’ reasonable cost of funds at such intervals, which amount to be agreed between the Owners and the Charterers and shall cease to be under any liability to pay any hire, but not any other amounts, thereafter becoming due and payable under this Charter, Provided that all hire and any other amounts prepaid by the Charterers subsequent to the Date of Loss shall be forthwith refunded by the Owners: |
| (B) | for the purposes of this sub-clause, the expression “relevant Minimum Insured Value” shall mean the Minimum Insured Value applying to the one-year period in which the Date of Loss occurs. |
| (ii) | For the purpose of ascertaining the Date of Loss:- |
| (A) | an actual total loss of the Vessel shall be deemed to have occurred at noon (London time) on the actual date the Vessel was lost but in the event of the date of the loss being unknown the actual total loss shall be deemed to have occurred at noon (London time) on the date on which it is acknowledged by the insurers to have occurred: |
| (B) | a constructive, compromised, agreed, or arranged total loss of the Vessel shall be deemed to have occurred at noon (London time) on the date that notice claiming such a total loss of the Vessel is given to the insurers, or, if the insurers do not admit such a claim, at the date and time at which a total loss is subsequently admitted by the insurers or adjudged by a competent court of law or arbitration tribunal to have occurred. Either the Owners or, with the prior written consent of the Owners (such consent not to be unreasonably withheld), the Charterers shall be entitled to give notice claiming a constructive total loss but prior to the giving of such notice there shall be consultation between the Charterers and the Owners and the party proposing to give such notice shall be supplied with all such information as such party may request; and |
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| (C) | Compulsory Acquisition shall be deemed to have occurred at the time of occurrence of the relevant circumstances described in Clause25 (b) hereof. |
| (e) | All moneys payable under the insurance effected by the Charterers pursuant to Clauses 13 and 40, or other compensation, in respect of a Total Loss or pursuant to Compulsory Acquisition of the Vessel shall be received in full by the Owners (or the Mortgagees as assignees thereof) and applied by the Owners (or, as the case may be, the Mortgagees):- |
FIRST, in payment of all the Owners’ costs incidental to the collection thereof,
SECONDLY, in or towards payment to the Owners (to the extent that the Owners have not already received the same in full) of a sum equal to the aggregate of (i) unpaid but due hire and other moneys (if any) under this Charter and unpaid interest thereon up to and including the Date of Loss and (ii) the following termination sum or pro-rata de-escalation which shall be payable as at the Date of Loss, and
| (a) | (b) | |||
| Year | Termination Sum | |||
| Delivery Date: | USD 13.20 million - | |||
| At end of 1st year: | USD 11.60 million - | |||
| At end of 2nd year: | USD 9.10 million .- | |||
| At end of 3rd year: | USD 6.60 million.- | |||
| At end of 4th year: | USD 4.10 million.- | |||
| At end of 5th year: | USD 1.60 million.- |
THIRDLY, in payment of any surplus to the Charterers by way of compensation for early termination.
| (f) | The Charterers and the Mortgagee shall execute the “Assignment of Insurances” of which contents and wording shall be mutually agreed between the Owners and the Charterers. |
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| 41. | TERMINATION EVENTS |
| (a) | Each of the following events shall be a “Termination Event” for purposes of this Charter:- |
| (i) | if any installment of hire or any other sum payable by the Charterers under this Charter (including any sum expressed to be payable by the Charterers on demand) shall not be paid at its due date under this Charter or within ten (10) Banking Days of the date of demand and such failure to pay is not remedied within ten (10) Banking Days of receipt by the Charterers of written notice from the Owners notifying the Charterers of such failure and requesting that payment is made; or |
| (ii) | Save in circumstances where requisition for hire or compulsory requisition result in termination of insurances for the Vessel, if either (A) the Charterers shall fail at any time to effect or maintain any insurances required to be effected and maintained under this Charter, or any insurer shall avoid or cancel any such insurances (other than where the Charterer proved that the relevant avoidance or cancellation results from an event or circumstance outside the reasonable control of the Charterers and the relevant insurances are reinstated or re-constituted in a manner meeting the requirements of this Charter within five (5) Banking Days of such avoidance or cancellation) or the Charterers shall commit any breach of or make any misrepresentation in respect of any such insurances the result of which the relevant insurer avoids the policy or otherwise excuses or releases itself from all or any of its liability thereunder, or (B) any of the said insurances shall cease for any reason whatsoever to be in full force and effect (other than where the Charterer proved that the reason in question is outside the reasonable control of the Charterer and the relevant insurances are reinstated or re-constituted in a manner meeting the requirements of this Charter within five (5) Banking Days of such cease); or |
| (iii) | if the Charterers shall at any time fail to observe or perform any of their material obligations under this Charter, other than those obligations referred to in sub-clause (i) or sub-clause (ii) of this Clause 41(a), and such failure to observe or perform any such obligation is either not remediable or is remediable but is not remedied within thirty (30) days of receipt by the Charterers of a written notice from the Owners requesting remedial action; or |
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| (iv) | if any material representation or warranty by the Charterers in connection with this Charter or in any document or certificate furnished to the Owners by the Charterers in connection herewith or therewith shall prove to have been untrue, inaccurate or misleading in any material respect when made (and such occurrence continues unremedied for a period of thirty (30) days after receipt by the Charterers of written notice from the Owners requesting remedial action): or |
| (v) | if a petition shall be presented (and not withdrawn or stayed within sixty (60) days) or an order shall be made or an effective resolution shall be passed for the administration or winding-up of the Charterers (other than for the purpose of a reconstruction or amalgamation during and after which the Charterers remain solvent and the terms of which have been previously approved in writing by the Owners which approval shall not be unreasonably withheld) or if an encumbrancer shall take possession or an administrative or other receiver shall be appointed of the whole or any substantial part of the property, undertaking or assets of the Charterers or if an administrator of the Charterers shall be appointed (and, in any such case, such possession is not given up or such appointment is not withdrawn within sixty (60) days) or if anything analogous to any of the foregoing shall occur under the laws of the place of the Charterers’ incorporation, or |
| (vi) | if the Charterers shall stop payments to all of its creditors or shall cease to carry on or suspend all or a substantial part of their business or shall be unable to pay their debts, or shall admit in writing their inability to pay their debts, as they become due or shall otherwise become or be adjudicated insolvent; or |
| (vii) | if the Charterers shall apply to any court or other tribunal for, a moratorium or suspension of payments with respect to all or a substantial part of their debts or liabilities, or |
| (viii) (A) | if the Vessel is arrested or detained (other than for reasons solely attributable to the Owners or to those for whom, for the purposes of this provision, the Owners shall be deemed responsible, including without limitation, any legal person who, at the date hereof or at any time in the future is affiliated with the Owners) and such arrest or detention is not lifted within thirty (30) days (or such longer period as the Owners may reasonably agree in writing in the light of all the circumstances) ; or |
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| (B) | if a distress or execution shall be levied or enforced upon or sued out against all or any substantial part of the property or assets of the Charterers and shall not be discharged or stayed within thirty (30) days; or |
| (ix) | if any consent, authorization, license or approval necessary for this Charter to be or remain the valid legally binding obligations of the Charterers, or to the Charterers to perform their obligations hereunder or thereunder, shall be materially adversely modified or is not granted or is revoked, suspended, withdrawn or terminated or expires and is not renewed (provided that the occurrence of such circumstances shall not give rise to a Termination Event if the same are remedied within thirty (30) days of the date of their occurrence); or |
| (x) | if (a) any legal proceeding for the purpose of the reconstruction or rehabilitation of the Charterers is commenced and continuing in any jurisdiction and (b) the Owners receive a termination notice from the receiver, trustee or others of the Charterers which informs the termination/rejection of the Charter pursuant to the relevant laws, codes and regulations applicable to such proceeding. |
| (b) | Any Termination Event shall constitute a repudiatory breach of, or breach of condition by the Charterers under, this Charter or an agreed terminating event the occurrence of which will (in any such case) entitle the Owners by notice to the Charterers to terminate the chartering of the Vessel under this Charter and recover the amounts provided for in Clause 42(c) either as liquidated damages or as an agreed sum payable on the occurrence of such event. |
| 42. | OWNERS’ RIGHTS ON TERMINATION |
| (a) | At any time after a Termination Event shall have occurred and be continuing, the Owners may, by notice to the Charterers immediately, or on such date as the Owners shall specify, terminate the chartering by the Charterers of the Vessel under this Charter, 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. For the avoidance of doubt, in case of the termination of the Charter in accordance with 41 (a) (x) hereof, the Charter shall be deemed to be terminated upon receipt by the Owners of the termination notice set forth in Clause 41 (a) (x) hereof. |
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| (b) | On or at any time after termination of the chartering by the Charterers of the Vessel pursuant to Clause 42(a) hereof the Owners shall be entitled to retake possession of the Vessel in accordance with Clause 29 hereof, the Charterers hereby agreeing that the Owners, for that 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. |
| (c) | If the Owners pursuant to Clause 42(a) hereof give notice to terminate the chartering by the Charterers of the Vessel, the Charterers shall pay to the Owners on the date of termination (the “Termination Date”), the aggregate of (A) all hire due and payable, but unpaid, under this Charter to (and including) the Termination Date together with interest accrued thereon pursuant to Clause 36(d) hereof from the due date for payment thereof to the Termination Date, (B) any sums, other than hire, due and payable by the Charterers, but unpaid, under this Charter together with interest accrued thereon pursuant to Clause 36(d) to the Termination Date and (C) any actual direct financial loss suffered by the Owners which direct loss shall be determined as the shortfall, if any, between (a) the current market value of the Vessel, in the event that the Vessel is not sold within 3 months from the Termination Date, (average value as estimated by two independent valuers such as major London brokers i.e. Arrow Valuations Ltd, Barry Rogliano Salles, Braemar ACM Shipbroking, H Clarkson & Co. Ltd., E.A. Gibsons Shipbrokers, Fearnleys, Galbraith, Simpson Spencer & Young, Howe Robinson & Co Ltd London and Maersk Broker K.S. (to include, in each case, their successors or assigns and such subsidiary or other company in the same corporate group through which valuations are commonly issued by each of these brokers), or such other first-class independent broker as the Owners and Charterers may agree in writing from time to time) and (b) the Remaining Purchase Option Price (as defined in Clause 49.2 hereof) at any given time always taking into account any charterhire paid during the year to which the specified Remaining Purchase Option Price relates PROVIDED ALWAYS that if the said market value exceeds the aggregate of (A) and (B) and the Remaining Purchase Option Price, then the Owners shall pay the amount of such excess to the Charterers forthwith. The aggregate of (A), (B) and (C) above shall hereinafter be referred to as the “Termination Compensation”). Nevertheless, if the Vessel is sold or transferred within 3 months after the Termination Date, Clause 42 (e) shall apply. |
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| (d) | If the Charter is terminated in accordance with this Clause 42 the Charterers shall immediately redeliver the Vessel at a safe and ice-free port or place as indicated by the Owners. The Vessel shall be redelivered to the Owners in substantially the same condition and class as that in which she was delivered, fair wear and tear not affecting class excepted. |
| (e) | Following the re-delivery of the Vessel by the Charterers after a termination of this Charter on the Termination Date, if the Owners subsequently intend to sell the Vessel, they shall notify the Charterers in writing of the potential sale and the potential sale price of the Vessel (the “Proposed Owners’ Sale Price”) whereupon the Charterers (or their nominee) may, within 3 days of such notification, elect to purchase the Vessel by paying an amount which is the higher of (I) the Proposed Owners’ Sale Price and (II) the aggregate of clause 42 (c) (A) and (B) and the Remaining Purchase Option Price (as defined in Clause 48.2). If the Charterers notify the Owners that they do not intend to purchase the Vessel or the Charterers do not respond to the Owners within such days’ period (or such longer period as the Owners may in their absolute discretion determine), the Owners may sell the Vessel on such terms as the Owners may deem fit but for avoidance of any doubt, in the event that the selling price of the Vessel exceeds the aggregate of Clause 42 (c) (A), (B), the remaining Purchase Option Price and all costs and expenses (including but not limited to brokerage fees and attorney’s fees) reasonably incurred by the Owners for negotiation, preparation, execution and performance of such sale, then any amount in excess of this should be paid to the Charterers. |
| 43. | NAME |
The Charterers shall, subject only to prior notification to the relevant authorities of the jurisdiction in which for the time being the Vessel is registered, be entitled from time to time to change the name of the 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. Painting and installment shall be at Charterers’ expense and time. The Charterer shall also have the liberty to change the name of the Vessel during the Charter Period at the expense and time of the Charterers (including the legal charge for finance documents for the Mortgagee, if any).
The Owners shall have no right to change the name of the Vessel during the Charter Period.
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| 44. | MORTGAGE and ASSIGNMENT |
The Owners confirm that they are familiar with the terms of the assignment of insurances made or to be made by the Charterers in favour or the Mortgagee, and they agree to the terms thereof and will do nothing that conflicts therewith, excepting that the Owners shall be entitled to assign its rights, title and interest in and to this Charter to the Mortgagee or its assignee. Neither party shall assign its right or obligations or part of thereof to any third party without the written consent of the other.
In respect of the Vessel the Owners undertake not to borrow more than the respective purchase option prices as set out at the relevant milestone in Clause 49 hereof.
The Owners have the right to register a first preferred mortgage on the Vessel in favour of the Mortgagee (THE JUHACHI-SHINWA BANK, LTD.) securing a loan under the Loan Agreement under standard mortgages and security documentation. In which case, the Owners undertake to procure from the Mortgagee a Letter/Agreement of Quiet Enjoyment in a form and substance reasonably acceptable to the Charterers.
The Charterers agree to sign an acknowledgement of the Owners’ charterhire assignment or any other comparable document reasonably required by the Mortgagee, in favour of the Mortgagee. During the course of the Charter the Owners have the right to register a substitute mortgage in favour of another bank provided such registration is effected in a similar amount to the loan amount outstanding with the Mortgagee at that time and only if such substitute mortgagee executes a Letter/Agreement of Quiet Enjoyment in favour of the Charterers in the same form as that provided by the Mortgagee or the form reasonably acceptable for the Charterers. The Charterers will then agree to sign a charterhire assignment in favour of the substitute mortgage in a form as shall be agreed by the Charterers, which agreement not be unreasonably withheld. Any cost incurred by the Charterers shall be for Owners’ account.
Subject to the term and conditions of this Charter, the Charterers also agree that the Owners have the right to assign its rights, title and interest in and to the insurances by way of assignment of insurance in respect of the Vessel to and in favour of the Assignee in a form and substance reasonably acceptable to Charterers and the Assignee.
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Owners shall procure that the exercise and/or enforcement of any mortgage and charterhire assignment which might interfere with or prejudice or adversely affect the Charterer’s use of the Vessel or other right of the Charterer under this Charter (including the purchase option of the Vessel) shall be subject to the terms and conditions of the Letter/Agreement of Quiet Enjoyment.
In the event that the Owners execute security of any nature (including but not limited to any mortgage, assignment of insurances) over the Vessel then the Owners hereby undertake and agree as a condition of this Charter to procure that the beneficiary of such security executes in favour of the Charterers a letter/agreement of quiet enjoyment in such form and content as is reasonably acceptable to the Charterers, and exercise and/or enforce of the beneficiary’s rights thereunder is subject to the agreement of a letter/agreement of Quiet Enjoyment before or after delivery of the Vessel.
| 45. | REDELIVERY INSPECTION |
Prior to redelivery under Clause 42 hereof and without interference to the operation of the Vessel, the Owners, at their risk and expense, shall have the right provided that such right is declared at least 10 days prior to the expected redelivery date to carry out an underwater inspection of the Vessel by Class approved diver and in the presence of Class surveyor and Owners’ and Charterers’ representatives. Should any damages in the Vessel’s underwater parts be found that will impose a condition or recommendation of Vessel’s class then:
| a) | In case Class imposes a condition or recommendation of class that does not require drydocking before next scheduled drydocking. Charterers shall pay to Owners the estimated cost to repair such damage in way which is acceptable to Class, which to be direct cost to repair such damage only, as per average quotation for the repair work obtained from two reputable independent shipyards at or in the vicinity of the redelivery port, one to be obtained by Owners and one by Charterers within 3 banking days from the date of imposition of the condition/recommendation unless the parties agree otherwise. |
| b) | In case Class require Vessel to be drydocked before the next scheduled drydocking the Charterers shall drydock the Vessel at their expense prior to redelivery of the Vessel to the Owners and repair same to Class satisfaction. |
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In such event the Vessel shall be redelivered at the port of the dockyard.
| 46. | MORTGAGE NOTICE |
The Charterers and place and keep prominently displayed in the chart room, master’s cabin, and engine room of the Vessel a framed printed notice in plain type reading as follows:
“NOTICE OF SHIP MORTGAGE”
“This Vessel is covered by a First Preferred Ship Mortgage given to THE JUHACHI-SHINWA BANK, a banking corporation duly organized and existing under the laws of Japan, having its head office at 1-11, Doza-machi, Nagasaki, 8500841, Japan, acting through its Kurume Branch at 2-1, Mutsumon Machi, Kurume City, Fukuoka, 8300031, Japan, its successors and assigns under the authority of the laws of the Republic of Panama. Under the terms of said Mortgage, neither the owner of this Vessel, any charterer, the Master of this Vessel, nor any other person has any right, power or authority to create, incur or permit to be imposed upon the Vessel any liens, maritime or otherwise, other than the lien of said Mortgage and liens for crew’s wages or salvage.”;
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| 47. | SALE OF VESSEL BY OWNERS |
| 1. | The Owners have the right to sell the Vessel to a reputable third party (“Purchaser”) at any time during the Charter Period with the prior written consent of the Charterers and provided that (i) the Purchaser agrees to take over the benefit and burden of this Charter, (ii) such ownership change does not result in any reflagging of the Vessel, (iii) such ownership change does not result in the Charterers being obliged to increase any payment under this Charter, (iv) such ownership change does not increase the actual or contingent obligations of the Charterers under this Charter, and (v) the Charterers shall not be liable for the costs and expenses (including legal fees) incurred in the sale of the Vessel by the Owners under this Clause 47. |
| 2. | The Owners shall give the Charterers at least one month’s prior written notice of any sale. |
| 3. | Subject to 47.1, the Charterers and Owners undertake with each other to execute one or more novation agreements (or other documents required under applicable law) to novate the rights and obligations of the Owners under this Charter to the Purchaser such novation agreement(s) or other documents to be in such form and substance acceptable to the Charterers and such novation will be effective upon delivery of the Vessel from the Owners to the Purchaser.” |
| 48. | CHARTERERS’ OBLIGATION OR OPTION TO PURCHASE VESSEL |
| 1. | Charterers to have purchase option to purchase the Vessel starting at the end of 3rd year anniversary date of the Delivery Date at USD 6,600,000 net (the “First Purchase Option Price”) subject to Charterers declaration 3 months before such date. |
| 2. | Charterers further have an option to purchase, such purchase being declared at any time during the 3rd year and the 4th year and 5th year of the Delivery Date at the following price or pro-rata de-escalation until the maturity of the Charter Period (the “Subsequent Purchase Option Price”), provided that in any event Subsequent Purchase Option Price shall not be less than USD 1,600,000.- irrespective of the actual purchase date of the Vessel. |
| At end of 3rd year : USD 6,600,000 |
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| At end of 4th year : USD 4,100,000.- |
| At end of 5th year : USD 1,600,000.- |
(The purchase option price of the Vessel to be calculated in accordance with Clause 48.1 and 48.2 hereof, whether the Final Purchase Option Price or the First Option Price or the Subsequent Purchase Option Price, hereinafter called the “Remaining Purchase Option Price”).
| 3. | Immediately prior to delivery of the Vessel by the Owners to the Charterers under the PO MOA (as defined in Clause 48.4) the Parties shall execute a Protocol of Redelivery and Acceptance under this Charter (the “Redelivery Protocol”) and save in respect of any claims accrued under this Charter prior to the date and time of the Redelivery Protocol, this Charter shall terminate forthwith. |
| 4. | Upon the date of any written notification by the Charterers to the Owners of their intention to purchase the Vessel, the Owners and the Charterers shall be deemed to have unconditionally entered into a contract to sell and purchase the Vessel for the Remaining Purchase Option Price on and in strict conformity with the terms and conditions contained in the Memorandum of Agreement attached to this Charter as Exhibit A (the “PO MOA”). |
| 49. | MISCELLANEOUS |
| (a) | The terms and conditions of this Charter and the respective rights of the Owners and the Charterers shall not be waived or varied otherwise than by an instrument in writing of the same date as or subsequent to this Charter executed by both parties or by their duly authorized representatives. |
| (b) | Unless otherwise provided in this Charter whether expressly or by implication, time shall be of the essence in relation to the performance by the Charterers of each and every one of their obligations hereunder. |
| (c) | No failure or delay on the part of the Owners or the Charterers in exercising any power, right or remedy hereunder or in relation to the Vessel shall operate as a waiver thereof nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise of any such right or power or the exercise of any other right, power or remedy. |
21
| (d) | If any terms or condition of this Charter shall to any extent be illegal invalid or unenforceable the remainder of this Charter shall not be affected thereby and all other terms and condition shall be legal valid and enforceable to the fullest extent permitted by law. |
| (e) | The respective rights and remedies conferred on the Owners and the Charterers by this Charter are cumulative, may be exercised as often as the Owners or the Charterers (as the case may be) think fit and are in addition to, and are not exclusive of, any rights and remedies provided by law. |
| 50. | COMMUNICATIONS |
Except as otherwise provided for in this Charter, all notices or other communications under or in respect of this Charter to either party hereto shall be in writing and shall be made or given to such party at the address, facsimile number or e-mail address appearing below (or at such other address, facsimile number or e-mail address as such party may hereafter specify for such purposes to the other by notice in writing):-
| (i) | in the case of the Owners c/o Kotobuki Kaiun Co., Ltd. |
| Address | : 3-2-4, Shiranuhi-Machi, Omuta-City, Fukuoka, 8360843, Japan |
| Telephone | : +81-###-##-#### |
| Telefax | : +81-###-##-#### |
| : vsl@kotobuki-kaiun.co.jp |
| (ii) | in the case of the Charterers c/o Navios Shipmanagement Inc. |
| Address | : 85 Akti Miaouli Street, 18538, Piraeus, Greece |
| Telephone | : 30-210-4595000 |
| : ops@navios.com, legal@navios.com |
| tech@navios.com, legal_corp@navios.com |
| (iii) | in the case of the Brokers c/o ITOCHU Corporation |
| Address | : TOKBR Section, 5-1, Kiya-Aoyama 2-chome, |
| Minato-ku, Tokyo, 107-8077 Japan |
| Telephone | : 81-3-3497-2939 |
| Telefax | : 81-3-3497-7111 |
| : tokbr@itochu.co.jp |
22
A written notice includes a notice by facsimile or e-mail. A notice or other communication received on a non-working day or after business hours in the place of receipt shall be deemed to be served on the next following working day in such place.
Subject always to the foregoing sentence, any communication by personal delivery or letter shall be deemed to be received on delivery, any communication by e-mail shall be deemed to be received upon transmission of the automatic answerback of the addresses and any communication by facsimile shall be deemed to be received upon appropriate acknowledgment by the addressee’s receiving equipment.
All communications and documents delivered pursuant to or otherwise relating to this Charter shall either be in English or accompanied by a certified English translation.
| 51. | TRADING IN WAR RISK AREA |
The Charterers shall be permitted to order the Vessel into an area subject to War Risks as defined in Clause 26 without consent of the Owners provided that all Marine, War and P&I Insurance are maintained with full force and effect and the Charterers shall pay any and all additional premiums to maintain such insurance.
| 52. | INVENTORIES, OIL AND STORES |
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 under this Charter and again on redelivery of the Vessel under Clause 42 hereof.
The Owners shall at the time of redelivery under Clause 42 hereof take over and pay for all remaining bunkers, unused lubricating oil (for avoidance of any doubts, the lubricant oil in the machinery is included), unbroached provisions, paints, ropes and other unused consumable stores (excluding spare parts) in the said Vessel at the Charterers’ purchased prices with supporting vouchers, provided that this payment shall be off-set against the Owner’s claim under Clause 42 to the extent
23
the sum equivalent to such payment. However, the Charterers shall not pay to the Owners at time of delivery for any bunkers, lubricating oil, provisions, paints, ropes and consumable stores which the Charterers have supplied to the Vessel at the Charterers’ expense prior to delivery. 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.
| 53. | INDEMNITY FOR POLLUTION RISKS |
Charterers shall indemnify the Owners against the following Pollution Risks:-
| (a) | liability for damages or compensation payable to any person arising from pollution; |
| (b) | the costs of any measures reasonably taken for the purpose of preventing, minimizing or cleaning up any pollution together with any liability for losses or damages arising from any measures so taken; |
| (c) | liability which the Owners and/or the Charterers may incur, together with costs and expenses incidental thereto, as the result of escape or discharge or threatened escape discharge of oil or any other substance; |
| (d) | the costs or liabilities incurred as a result of compliance with any order or direction given by any government or authority for the purpose of preventing or reducing pollution or the risk of pollution; provided always that such costs or liabilities are not recoverable under the Hull and Machinery Insurance Policies on the Vessel; |
| (e) | liability which the Owners and/or the Charterers may incur to salvors under the exception to the principal of “no cure-no pay” in Article 1 (b) of Lloyds Standard Form of Salvage Agreement (LOF 1990); and |
| (f) | liability which the Charterers may incur for the payment of fines in respect of pollution in so far as such liability may be covered under the rules of the P&I Club. |
| 54. | TRADE AND COMPLIANCE CLAUSE |
| (a) | The Charterers and the Owners hereby agree that no person/s or entity/ies |
24
| under this Charter will be individual(s) or entity(ies) designated under any applicable national or international law imposing trade and economic sanctions, including sanction, prohibition or restriction imposed on any specified persons, entities or bodies including the designation of specified vessels or fleet under United Nations Resolutions or trade or economic sanctions, laws or regulations of the European Union, United Kingdom, Japan or United States of America (collectively, the “Sanctions”). |
| (b) | Further, the Charterers and the Owners agree that the performance of this Charter will not require any action prohibited by sanctions or restrictions under any applicable Sanctions. |
| (c) | Further to the above, Charterers shall take reasonable steps to confirm that at the date of this Charter Party and throughout the duration thereof, any sub-charterer of the Vessel (who is directly contracting with the Charterer in respect of the Vessel at any relevant time), the managers of the Vessel and the Vessel are not a sanctioned party/vessel under the Sanctions. |
| 55. | ANTI-BRIBERY AND ANTI-CORRUPTION |
The Charterers and the Owners hereby agree that in connection with this Contract and/or any other business transactions related to it, they as well as their sub-contractors and each of their affiliates, directors, officers, employees, agents, and every other person acting on its and its sub-contactors’ behalf, shall perform all required duties, transactions and dealings in compliance with all applicable laws, rules, regulations relating to anti-bribery and anti-money laundering.
| 56. | NAABSA Clause |
The Owners agree to allow the vessels’ calls at any safe port/berth in Brazil, Argentina and Uruguay where it is customary for similar size vessels to lie safely aground.
(end)
25
Exhibit 4.76
| ‘BARECON 2001” STANDARD BAREBOAT CHARTER | PART 1 |
| 1. Shipbroker
ITOCHU CORPORATION TOKBR Section, 5-1, Kita-Aoyama 2-chome, Minato-ku, Tokyo, 107-8077, Japan |
BIMCO STANDARD BAREBOAT CHARTER CODE NAME : “BARECON 2001” | |||
| PART I | ||||
|
2. Place and date In New York, U.S. 4 July 2022 | ||||
| 3. Owners / Place of business (Cl. 1) | 4. Bareboat Charterers / Place of business (Cl. 1) | |||
|
Bright Carrier S.A. Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, MH96960, Marshall Islands MH96960 |
Anafi Shipping Corporation Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 | |||
|
5. Vessel’s name, call sign, flag and IMO number (Cl. 1 and 3) M/V NAVIOS SKY, 3EDP3, Panama, 9724180 | ||||
|
6. Type of Vessel Bulk Carrier |
7. GT / NT 43,439/27,558 | |||
|
8. When / Where built 2015 / SANOYAS SHIPBUILDING CORPORATION MIZUSHIMA SHIPYARD |
9. Total DWT
(abt.) in metric tons on 82,056 MT | |||
|
10. Classification Society (Cl. 3) ClassNK |
11. Date of last special survey by the Vessel’s classification society April 21th, 2020 | |||
|
12. Cargoes to be carried; All lawful cargoes within the Vessel’s capabilities/Class, IMO, flag, her insurance | ||||
|
13. Port or Place of delivery (Cl.3) As per Clause 5 of the MOA (as defined in Clause 1 hereof) |
14. Time for delivery (Cl.4) As per Clause 5 of the MOA See Also Clause 32. |
15. Cancelling date (Cl.5) As per Clause 5 of the MOA | ||
|
16. Port or Place of redelivery (Cl. 3) At one safe berth or one safe port worldwide in the Charterers’ option |
17. No. of
months’ validity of trading and class certificates upon redelivery Minimum 3 months | |||
|
18. Running days’ notice if other than stated in Cl.4 N/A |
19. Frequency of dry-docking Cl. 10(g) As per Classification Society and flag state requirements | |||
|
20. Trading Limits (Cl.6)
Trading Limits: always safely afloat world-wide within International Navigation Conditions with the Charterer’s option to break same paying extra insurance, but always in accordance with Clause 13 and 40. Any other country designated pursuant to any international including U.N. / U.S. / EU or supranational law or regulation imposing trade and economic sanctions, prohibitions or restrictions (which may be amended from time to time during the Charter Period) to be excluded. | ||||
|
21. Charter Period (Cl. 2) Ten (10) years with up to [3 months] more or less in Charterers’ option (See Clause 34) |
22. Charter hire (Cl. 11) See Clause 35 | |||
| 23. New class and other statutory requirements (state percentage of Vessel’s insurance value acc. to Box 29 (Cl. 10(a)(ii)) N/A |
||||
|
24. Rate of interest payable acc. to Cl.11(f) and, if applicable, acc. to PART IV N/A |
25. Currency and method of payment (Cl.11) United States Dollars payable calendar monthly in advance | |||
|
26. Place of payment; also state beneficiary and bank account To be advised |
27. Bank guarantee / bond (sum and place) (Cl. 24 (optional) N/A | |||
| ‘BARECON 2001” STANDARD BAREBOAT CHARTER | PART 1 |
|
28. Mortgage(s), if any (state whether Cl. 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 Clause 44 |
29. Insurance (hull and machinery and war risks) (state value acc. to Cl.13(f) or, if applicable, acc. to Cl. 14(k)) (also state if Cl.14 applies) See Clause 40 | |
|
30. Additional insurance cover, if any, for Owners’ account limited to (Cl. 13(b) or, if applicable, Cl. 14(g)) N/A |
31. Additional insurance cover, if any, for Charterers’ account limited to (Cl. 13(b) or, if applicable, Cl. 14(g)) See Clause 40 (c) | |
|
32. Latent defects (only to be filled in if period other than stated in Cl.3) N/A |
33. Brokerage commission and to whom payable (Cl.27) N/A | |
|
34. Grace period (state number of clear banking days) (Cl. 28) See Clause 41 |
35. Dispute Resolution (state 30(a), 30(b) or 30(c); if 30(c) agreed, Place of Arbitration must be stated (Cl. 30) London | |
|
36. War cancellation (indicate countries agreed) (Cl. 26(f)) N/A | ||
|
37. Newbuilding Vessel (indicate with ‘yes’ or ‘no’ whether PART III applies) (optional) No |
38. Name and place of Builders (only to be filled in if PART III applies) N/A | |
|
39. Vessel’s Yard Building No. (only to be filled in if PART III applies) No |
40. Date of N/A | |
|
41. Liquidated damages and costs shall accrue to (state party acc. to Cl. 1) a) N/A b) N/A c) N/A | ||
|
42. Hire/Purchase agreement (indicate with ‘yes’ or ‘no’ whether PART IV applies) (optional) N/A |
43. Bareboat Charter Registry (indicate with ‘yes’ or ‘no’ whether PART IV applies) (optional) Yes in Charterers’ option | |
|
44. Flag and Country of the Bareboat Charter Registry (only to be filled in if PART V applies) See Clause 37 |
45. Country of the Underlying Registry (only to be filled in if PART V applies) Republic of Panama | |
| 46. Number of additional clauses covering special provisions, if agreed Clause 32 to 56 inclusive |
||
| PREAMBLE - It is mutually agreed that this Contract shall be performed subject to the conditions contained in this Charter which shall include PART I and PART II. In the event of a conflict of conditions, the provisions of PART I shall prevail over those of PART II to the extent of such conflict but no further. It is further mutually agreed that PART III and/or PART IV and/or PART V shall only apply and shall only form part of this Charter if expressly agreed and stated in Boxes 37, 42 and 43. If PART III and/or PART IV and/or PART V apply, it is further agreed that in the event of a conflict of conditions, the provisions of PART I and PART II shall prevail over those of PART III and/or PART IV and/or PART V to the extent of such conflict but no further. | ||
|
Signature (Owners) Bright Carrier S.A.
/s/ Katsutoshi Sugahara By: Katsutoshi Sugahara Title: President |
Signature (Charterers) Anafi Shipping Corporation
/s/ Georgios Panagakis By: Georgios Panagakis Title: Attorney-In-Fact | |
PART II
“BARECON 2001” Standard Bareboat Charter
| 1. | Definitions |
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.
“MOA” means the Memorandum of Agreement entered into between the Owners as buyers and the Charterers as Sellers dated 4 July 2022 in respect of the Vessel.
“Banking Days” shall mean the days identified in Cl.36 (b)
“Total Loss” shall mean the situation identified in Cl.40 (a)
| 2. | Charter Period |
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 Also See Clause 32 |
The Vessel shall be delivered and taken over by the Charterers as per Clause 32.
(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 Clause 32 |
(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 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 date, the
Owners may, as soon as they are in 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 suitablelawful 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 and the rules of the P&I club (including any warranties expressed or implied therein) without first obtaining the consent of the insurers including the P&I club 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 and International Regulations to which the Vessel shall be subject 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 Owners’ prior approval has been obtained to loading thereof.
| 7. | Surveys on Delivery and Redelivery |
(not applicable when PART III applies, as indicated in Box 37)
The Owners and Charterers have the right of shall each appointing surveyors for the purpose of determining and
agreeing in writing the condition of the Vessel at the time of delivery.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.
| 8. | Inspection |
The Owners shall have the right maximum twice per yearat 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:- provided it does not interfere with the operation of the Vessel and/or crew
(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
PART II
“BARECON 2001” Standard Bareboat Charter
(c) for any other commercial reason they consider necessary (provided it does not
unduly interferer 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 log books maximum twice per
year whenever reasonably 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 CLAUSE 53 |
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. 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. SEE ALSO CLAUSE
32, AND CLAUSE 46
| 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 exercise due diligence to 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 and |
| (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 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. SEE CLAUSE 38
| (iii) | Financial Security - The Charterers shall maintain financial security or responsibility in respect of third party liabilities and/or oil or other pollution damage, including the wreck removal 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.
(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
de-registration, if required by the Owners, shall be at the Charterers’ expense and time. SEE CLAUSE 37 & 43
(e) Changes to the Vessel - 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.
SEE CLAUSE 38
(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 substantially 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. 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 the Charterers shall remove such equipment at the end of the period unless agreed otherwise by the Owners and the Charterers. 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 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
PART II
“BARECON 2001” Standard Bareboat Charter
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.
| 11. | Hire SEE CLAUSE 35 |
(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 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 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) of 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 CLAUSE 44 |
(only to apply if Box 28 has been appropriately filled in)
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| *) | (Optional, Clauses 12 (a) and 12 (b) are alternatives; indicate alternative agreed in Box 28). |
| 13. | Insurance and Repairs SEE CLAUSE 40 |
(a) During the Charter Period the Vessel shall be kept insured by the Charterers at their expense against hull and machinery, war by first
class insurers and Protection and Indemnity risks by a member of International Group of P&I club (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 underwriter’s standard form which the Owners shall in writing approve which shall not be unreasonably withheld as the Owners
have received, reviewed and shall in writingapproved, which approval shall not be unreasonably withheld. 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 mortgagees (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 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.
(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 Instrument, 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 the 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.
SEE CLAUSE 40
(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. SEE CLAUSE 40
| 14. | Insurance, Repairs and Classification N/A |
(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 expenses against hull and machinery and war risks under the form
of policy or
PART II
“BARECON 2001” Standard Bareboat Charter
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-clause 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.
(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 ALSO SEE CLAUSE 46 |
At the expiration of the Charter Period unless the Charterers have exercised their option to purchase the Vessel in accordance with
provisions of Clause 49 the Vessel shall be redelivered by the Charterers to the Owners at a safe berth or anchorage 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 forty-five (45) and 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 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 5 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 the Charter shall continue to apply.
Subject to the provisions of Clause 10, the Vessel shall be redelivered to the Owners in substantially
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 ALSO SEE CLAUSE 47 |
The Charterers will not suffer, nor permit to be continued, any lien or encumbrance incurred by them or their agents, which might have
priority over the title and interest of the Owners in the Vessel.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 ALSO SEE CLAUSE 54 |
(a) The Charterers shall indemnify the Owners against any loss, damage or 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 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.
PART II
“BARECON 2001” Standard Bareboat Charter
(b) If the Vessel be arrested or otherwise detained by reason of a claims or claims against the Owners, 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.
| 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 |
(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 he 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. SEE CLAUSE 48
| 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. |
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| *) | Delete as applicable. |
| 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 ALSO SEE CLAUSE 40 (a)/(b) |
(a) In the event of the requisition for Hire of the Vessel by any governmental or other competent authority (hereinafter referred to a “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) Notwithstanding the provisions of clause 25 (a), 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, which for the avoidance of any doubt, shall exclude requisition for use or hire not involving requisition of
title (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”, but not thenafter.
| 26. | War |
(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,
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 the entry into it, the Owners shall have the right to require the Vessel to leave such area.
(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 risk 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.
PART II
“BARECON 2001” Standard Bareboat Charter
(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 and 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 therefore 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.
| 28. | Termination |
(a) Charterer’s 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:
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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;
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(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;
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SEE CLAUSE 41 & 42
(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 compromised 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. SEE CLAUSE 40
(d)/(e)
(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 arrangements 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.
Repossession
In the event of the termination of this Charter in accordance with the applicable provisions of 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, the Charterers shall
29.
PART II
“BARECON 2001” Standard Bareboat Charter
hold the Vessel as gratuitous bailee only to 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 |
| *) | (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.
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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 conduced in accordance with the Shortened Arbitration Procedure of the Society of Maritime Arbitrators, Inc. current at
the time when the arbitration proceedings are commenced.
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(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:-
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(Note: the parries should be aware that the mediation process may not necessarily interrupt time limits.)
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| *) | Sub-clauses 30(a), 30(b) and 30(c) are alternatives; indicate alternative agreed in Box 35. |
| 31. | Notices SEE CLAUSE 51 |
(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.
| “BARECON 2001” Standard Bareboat Charter |
||||
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PART III PROVISIONS TO APPLY FOR NEWBUILDING VESSELS ONLY |
OPTIONAL PART | |||
| (Optional, only to apply if expressly agreed and stated in Box 37) |
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(a) The Vessel shall be constructed in accordance with the Building Shipbuilding Contract (hereafter called
“the ‘Shipbuilding Building Contract’) as annexed to this Charter, made between the Builders and the Sellers Owners and in accordance with the specifications and plans annexed thereto, such
Building Contract, specifications and plans having been countersigned as approved by the Charterers.
(b) No change
shall be made in the Shipbuilding 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 Charterers 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 account 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.
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(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 but the
delivery date for the purpose of the 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 Sellers Owners under the Shipbuilding
Contract, the Builders become entitled under that Contract not to deliver the Vessel to the Sellers, the Owners 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 of 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; SEE CLAUSE 33
(iv) if this Charter terminates under sub-clause (b) 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. |
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If not otherwise agreed, the Owners authorise the Charterers to arrange for the guarantee works to be performed in accordance with
the Shipbuilding 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.
| 4. |
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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. |
|
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 redelivery.
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 rate of hire per day or pro rata.
| “BARECON 2001” Standard Bareboat Charter |
||||
|
PART IV HIRE/PURCHASE AGREEMENT |
OPTIONAL PART | |||
| (Optional, only to apply if expressly agreed and stated in Box 42) |
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 expense 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 legalised, 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 Maser, 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 of their journey to any other place.
| “BARECON 2001” Standard Bareboat Charter |
||||
|
PART V PROVISIONS TO APPLY FOR VESSELS REGISTERED IN A BAREBOAT CHARTER REGISTRY |
OPTIONAL PART | |||
| (Optional, only to apply if expressly agreed and stated in Box 43) |
| 1. |
|
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. |
|
The Vessel chartered under this Charter is financed by a mortgage and the provisions of Clause
12(b) (PART II) shall apply.
| 3. |
|
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.
Additional Clauses
to
the Bareboat Charter Party dated 4 July, 2022 (this “Charter”) by
Bright Carrier S.A. as owner (the “Owners”) and
Anafi Shipping Corporation as charterer (the “Charterers”)
in respect of MV “Navios Sky” (the “Vessel”)
| 32. | DELIVERY |
(a) The Charterers shall take delivery of the Vessel under this Charter simultaneously with delivery by Charterers as sellers to the Owners as buyers under the MOA, and the Owners shall be obliged to deliver the Vessel to the Charterers hereunder in the same moment as the Owners is taking delivery of the Vessel under the MOA.
(b) The Owners warrant that the Vessel, at time of delivery, is free from all charters, encumbrances, mortgages and maritime liens or any other debts whatsoever, other than (i) those incurred prior to the delivery of the Vessel hereunder, (ii) this Charter and (iii) the mortgage over the Vessel, assignment of insurance in respect of the Vessel and the assignment of the charter hires in respect hereof in favour of the Mortgagee.
(c) The Vessel shall be delivered under this Charter in the same condition and with the same equipment, inventory and spare parts as she is delivered to the Owners under the MOA. The Charterers know the Vessel’s condition at the time of delivery, and expressly agree that the Vessel’s condition as delivered under the MOA is acceptable and in accordance with the provisions of this Charter. The Vessel shall be delivered to the Charterers under this Charter strictly “as is/where is”, and the Charterers shall waive any and all claims against the Owners under this Charter on account of any conditions, seaworthiness, representations, warranties expressed or implied in respect of the Vessel (including but not limited to any bunkers, oils, spare parts and other items whatsoever) on delivery.
| 33. | ISM CODE |
During the currency of this Charter the Charterers shall procure at the costs and expenses and time of the Charterers that the Vessel and the “company” (as defined by the ISM code) shall comply with the requirements of the ISM code. Upon request the Charterers shall provide a copy of relevant documents of compliance (DOC) and safety management certificate (SMC) to the Owners. For the avoidance of any doubt any loss, damage, expense or delay caused by the failure on the part of the “Company” to comply with the ISM code shall be for the Charterers’ account.
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| 34. | CHARTER PERIOD |
| (a) | The Owners shall let to the Charterers and the Charterers shall take the Vessel on charter for the period and upon the terms and conditions contained herein. |
| (b) | Subject always to the provisions hereto, the period of the chartering of the Vessel hereunder (hereinafter referred to as the “Charter Period”) shall comprise (unless terminated at an earlier date in accordance with the terms hereof) a charter period of Ten (10) years from the date of the delivery of the Vessel by the Owners to the Charterers under this Charter (the “Delivery Date”) with up to three (3) months more or less in the Charterers’ option, provided always that the chartering of the Vessel hereunder may be terminated by the Owners pursuant to Clause 41 or shall terminate in the event of the Total Loss or Compulsory Acquisition of the Vessel subject to, and in accordance with provisions of Clause 40. |
| 35. | CHARTER HIRE |
| (1) | Rate of Hire to be calculated based on following formula: |
| (A) | Hire Base + (B) Owners’ Profit |
| (A) | Hire Base = Principal repayment + Interest payment |
The rate for the Principal payment: US$ 5,205 per day
The rate for the Interest payment:
(1M ICE LIBOR + 1.55% Margin) x Loan Outstanding (basis USD22Mil down to USD3Mil for 10 years) x No of days/360
*Even though the ICE LIBOR 1 month falls to negative interest rate, the rate shall not be below 0%.
(B) Owners’ Profit to be US$17,500/month (fixed) with ( (A) + (B) ) x 1.25% as Owner’s broker commission
Hire to be payable monthly in advance into the Owners designated account as the fund available on the due date.
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No address commission to the Charterers.
| 36. | PAYMENTS |
| (a) | Notwithstanding anything to the contrary contained in this Charter, all payments by the Charterers hereunder (whether by way of hire or otherwise) shall be made as follows:- |
| (i) | not later than 11:00 a.m. (New York time) on one Banking Day prior to the date on which the relevant payment is due under the terms of this Charter: and |
| (ii) | in United States Dollars to THE SAN-IN GODO BANK, LTD. (or such other bank or banks as may from time to time be notified by the Owners to the Charterers by not less than fourteen (14) days’ prior written notice) for the account of the Owners . |
| (b) | If any day for the making of any payment hereunder shall not be a Banking Day (being, for all purposes of this Charter, a day on which banks are open for transaction of business of the nature required by this Charter in Japan, Piraeus/Greece, London and New York) the due date for payment of the same shall be the previousBanking Day. |
| (c) | Subject to the terms of this Charter, the Charterers’ obligation to pay hire in accordance with the requirements of Clause 35 and this Clause 36 and to pay certain amount of insurance benefit pursuant to Clause 40 (e) and to pay the Termination Compensation pursuant to Clause 42 shall be absolute irrespective of any contingency whatsoever, including (but not limited to) (i) any failure or delay on the part of any party hereto or thereto, whether with or without fault on its part, other than the Owners, in performing or complying with any of the terms or covenants hereunder, (ii) any insolvency, bankruptcy, reorganization, arrangement, readjustment of debt, dissolution, liquidation or similar proceedings by or against the Owners or the Charterers or any change in the constitution of the Owners or the Charterers or any other person, (iii) any invalidity or unenforceability or lack of due authorization of or other defect in this Charter, or (iv) any other cause which would or might but for this provision have the effect of terminating or in any way affecting any obligation of the Charterers under this Charter. |
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| (d) | In the event of failure by the Charterers to pay within three (3) Banking Days after the due date for payment thereof, or in the case of a sum payable on demand, the date of demand therefor, any hire or other amount payable by them under this Charter, the Charterers will pay to the Owners on demand interest on such hire or other amount from the date of such failure to the date of actual payment (both before and after any relevant judgment or winding up of the Charterers) at the rate determined by the Owners and certified by them to the Charterers (such certification to be conclusive in the absence of manifest error) to be the aggregate of (i) two & one-half per centum (21⁄2 %) and (ii) the London Interbank Offered Rate for US Dollar deposits of not more than one month’s duration (as selected by the Owners or their funders in the light of the likely duration of the default in question) (as such rate is from time to time quoted by leading banks in the London Interbank Market). Interest payable by the Charterers as aforesaid shall be compounded at such intervals as the Owners shall determine and shall be payable on demand. |
| (e) | Any interest payable under this Charter shall accrue from day to day and shall be calculated on the actual number of days elapsed and a three hundred and sixty (360) day year. |
| (f) | In this Charter, unless the context otherwise requires, “month” means a period beginning in one calendar month (and, in the case of the first month, on the date of delivery hereunder) and ending in the succeeding calendar month on the day numerically corresponding to the day of the calendar month in which such period started provided that if there is no such numerically corresponding day, such period shall end on the last day in the relevant calendar month and “monthly” shall be construed accordingly. |
| 37. | FLAG AND CLASS |
| (a) | The Vessel shall upon the Delivery Date be registered in the name of the Owners under the Panamanian flag. |
| (b) | The Owners shall have no right either to transfer the flag of Vessel from Panama to any other registry or to require the Charterers to transfer the Vessel’s classification society. The Charterers shall, at any time after the Delivery Date and at the Charterers’ expense, have the right to transfer the Vessel’s classification society from ClassNK (NK) to any other classification society at least equivalent to NK. |
| (c) | Further, in the event that the Charterers need to change the flag of the Vessel, the Charterers can change the flag with the Owner’s consent, which should not be unreasonably withheld, provided however that any expenses and time (including but not limited to legal charges for finance documents for the Mortgagee) shall be for the Charterers‘ account. |
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| (d) | Subject to the Charterers’ supplying the standard de-registration agreement reasonably satisfactory to the Mortgagee the Charterers are entitled to establish the standard bareboat registration on the Vessel at the costs, expense and time of the Charterers. |
| (e) | If during the Charter Period there are modifications made to the Vessel which are compulsory for the Vessel to comply with change to rules and regulations to which operation of the Vessel is required to conform, the cost relating to such modifications shall be for the account of the Charterers. |
| (f) | All operational cost including required cost in relation to Vessel’s flag (such as tonnage tax, insurance and crew certs etc) would be for Charterers account. However, all other cost (such as financing cost /cost for registration and discharge of their mortgage etc) would be for Owners account, and Owners shall bear initial registration cost to Vessel’s flag under Buyers’ name. For the bareboat charter and the sale of the vessel, each party should bear its own costs. |
| 38. | IMPROVEMENT AND ADDITIONS |
The Charterers shall have the right to fit additional equipment and to make severable improvements and additions at their expense and risk. Such additional equipment, improvements and additions shall be removed from the Vessel without causing any material damage to the Vessel (any such damage being made good by the Charterers at their time and expense) provided however that the Charterers shall redeliver the Vessel without removing such additional equipment, improvements and additions if the Owners consent to such non-removal before the redelivery.
The Charterers shall also have the right to make structural or non-severable improvements and additions to the Vessel at their own time, costs and expense and risk provided that such improvements and additions do not diminish the market value of the Vessel and are not likely to diminish the market value of the Vessel during or at the end of the Charter Period and do not in any way affect or prejudice the marketability or the useful life of the Vessel and are not likely to affect or prejudice the marketability or the useful life of the Vessel during or at the end of the Charter Period.
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| 39. | UNDERTAKING |
The Charterers undertake and agree that throughout the Charter period they will:-
| • | notify the Owners in writing of any Termination Event (or event of which they are aware which, with the giving of notice and/or lapse of time or other applicable condition, would constitute a Termination Event); |
| 40. | INSURANCE, TOTAL LOSS AND COMPULSORY ACQUISITION |
| (a) | For the purposes of this Charter, the term “Total Loss” shall include actual or constructive or compromised or agreed or arranged total loss of the Vessel including any such total loss as may arise during a requisition for hire. “Compulsory Acquisition” shall have the meaning assigned thereto in Clause 25(b) hereof. |
| (b) | The Charterers undertake with the Owners that throughout the Charter Period:- |
| (i) | they will keep the Vessel insured in underwriter’s standard form as the Owners shall in writing approve, which approval shall not be unreasonably withheld, with such insurers (including P&I and war risks associations) as shall be reasonably acceptable to the Owners with deductibles reasonably acceptable to the Owners (it being agreed and understood by the Charterers that there shall be no element of self- insurance or insurance through captive insurance companies without the prior written consent of the Owners); |
| (ii) | they will be properly entered in and keep entry of the Vessel with P&I Club that is a member of the International Group of Protection and Indemnity Association for the full commercial value and tonnage of the Vessel and against all prudent P&I Risks in accordance with the rules of such association or club including, in case of oil pollution liability risks equal to the highest level of cover from time to time available under the basic entry with such P&I (but always a minimum of USD1,000,000,000.); |
| (iii) | The policies in respect of the insurances against fire and usual marine risks and policies or entries in respect of the insurances against war risks shall, in each case, include the following loss payable provisions:- |
| (a) | For so long as the Vessel is mortgaged and in accordance with the Deed of Assignment of insurances entered or to be entered into between the Charterers and any mortgagee (the “Assignee”): |
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Until such time as the Assignee shall have notified the insurers to the contrary:
| (i) | All recoveries hereunder in respect of an actual, constructive or compromised or arranged total loss shall be paid in full to the Assignee without any deduction or deductions whatsoever and applied in accordance with clause 40 (e); |
| (ii) | All other recoveries not exceeding United States Dollars Five hundred thousand (US$500,000.00) shall be paid in full to the Charterers or to their order without any deduction or deductions whatsoever; and |
| (iii) | All other recoveries exceeding United States Dollars Five hundred thousand (US$500,000.00) shall, subject to the prior written consent of the Assignee be paid in full to the Charterers or their order without any deduction whatsoever. |
| (b) | During any periods when the Vessel is not mortgaged: |
| (i) | All recoveries hereunder in respect of an actual, constructive or compromised or arranged total loss shall be paid in full to the Owners without any deduction or deductions whatsoever and applied in accordance with clause 40 (e); |
| (ii) | All other recoveries not exceeding United States Dollars Two million (US$2,000,000.00) shall be paid in full to the Charterers or to their order without any deduction or deductions whatsoever; and |
| (iii) | All other recoveries exceeding United States Dollars Two million (US$2,000,000.00) shall, subject to the prior written consent of the Owners be paid in full to the Charterers or their order without any deduction whatsoever, subject to the fulfillment of the provisions of Clause 44; |
and the Owners and Charterers agree to be bound by the above provisions.
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| (iv) | the Charterers shall procure that duplicates of all cover notes, policies and certificates of entry shall be furnished to the Owners for their custody ; |
| (v) | the Charterers shall procure that the insurers and the war risk and protection and indemnity associations with which the Vessel is entered shall |
| (A) | furnish the Owners with a letter or letters of undertaking in relevant underwriter’s standard form and in accordance with the underwriters’ rules. |
| (B) | supply to the Owners such information in relation to the insurances effected, or to be effected, with them as the Owners may from time to time reasonably require: and |
| (vi) | the Charterers shall use all reasonable efforts to procure that the policies, entries or other instruments evidencing the insurances are endorsed to the effect that the insurers shall give to the Owners prior written notification of any amendment, suspension, cancellation or termination of the insurances in accordance with the underwriters’ guidance and rules. |
| (c) | Notwithstanding anything to the contrary contained in Clauses 13 and any other provisions hereof, the Vessel shall be kept insured during the Charter Period in respect of marine and war risks on hull and machinery basis (The Charterers shall have the option, to take out on a full hull and machinery basis increased value or total loss cover in an amount not exceeding thirty per centum (30%) of the total amount insured from time to time) for not less than the amounts specified in column (b) in the table set out below in respect of the one-yearly period during the Charter Period specified in column (a) (on the assumption that the first such period commences on the Delivery Date) against such amount (hereinafter referred to as the “Minimum Insured Value”): |
| (a) Year |
(b) Minimum Insured Value | |
| 1 | US$ 24,200,000.- | |
| 2 | US$ 22,110,000.- |
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| 3 | US$ 20,020,000.- |
| 4 | US$ 17,930,000.- |
| 5 | US$ 15,840,000.- |
| 6 | US$ 13,750,000.- |
| 7 | US$ 11,660,000.- |
| 8 | US$ 9,570,000.- |
| 9 | US$ 7,480,000.- |
| 10 | US$ 5,390,000.- |
| (d) (i) | If the Vessel shall become a Total Loss or be subject to Compulsory Acquisition the Chartering of the Vessel to the Charterers hereunder shall cease and the Charterers shall:- |
| (A) | immediately pay to the Owners all hire, and any other amounts, which have fallen due for payment under this Charter and have not been paid as at and up to the date on which the Total Loss or Compulsory Acquisition occurred (the “Date of Loss”) together with interest thereon at a rate reflecting the Owners’ reasonable cost of funds at such intervals, which amount to be agreed between the Owners and the Charterers and shall cease to be under any liability to pay any hire, but not any other amounts, thereafter becoming due and payable under this Charter, Provided that all hire and any other amounts prepaid by the Charterers subsequent to the Date of Loss shall be forthwith refunded by the Owners: |
| (B) | for the purposes of this sub-clause, the expression “relevant Minimum Insured Value” shall mean the Minimum Insured Value applying to the one-year period in which the Date of Loss occurs. |
| (ii) | For the purpose of ascertaining the Date of Loss:- |
| (A) | an actual total loss of the Vessel shall be deemed to have occurred at noon (London time) on the actual date the Vessel was lost but in the event of the date of the loss being unknown the actual total loss shall be deemed to have occurred at noon (London time) on the date on which it is acknowledged by the insurers to have occurred: |
9
| (B) | a constructive, compromised, agreed, or arranged total loss of the Vessel shall be deemed to have occurred at noon (London time) on the date that notice claiming such a total loss of the Vessel is given to the insurers, or, if the insurers do not admit such a claim, at the date and time at which a total loss is subsequently admitted by the insurers or adjudged by a competent court of law or arbitration tribunal to have occurred. Either the Owners or, with the prior written consent of the Owners (such consent not to be unreasonably withheld), the Charterers shall be entitled to give notice claiming a constructive total loss but prior to the giving of such notice there shall be consultation between the Charterers and the Owners and the party proposing to give such notice shall be supplied with all such information as such party may request; and |
| (C) | Compulsory Acquisition shall be deemed to have occurred at the time of occurrence of the relevant circumstances described in Clause25 (b) hereof. |
| (e) | All moneys payable under the insurance effected by the Charterers pursuant to Clauses 13 and 40, or other compensation, in respect of a Total Loss or pursuant to Compulsory Acquisition of the Vessel shall be received in full by the Owners (or the Mortgagees as assignees thereof) and applied by the Owners (or, as the case may be, the Mortgagees):- |
FIRST, in payment of all the Owners’ costs incidental to the collection thereof,
SECONDLY, in or towards payment to the Owners (to the extent that the Owners have not already received the same in full) of a sum equal to the aggregate of (i) unpaid but due hire under this Charter and unpaid interest thereon up to and including the Date of Loss and (ii) the amount of purchase option price payable under clause 49 as at the Date of Loss, In case the purchase option price is not defined (i.e. from the delivery date to the end of 4th year), below table to be applied. The amount on any date in between each anniversary date to be calculated pro rata basis.
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At the Delivery date US$23,639,000
End of 1st year US$21,618,000
End of 2nd year US$19,598,000
End of 3rd year US$17,577,000
THIRDLY, in payment of any surplus to the Charterers by way of compensation for early termination.
| (f) | The Charterers and the Mortgagee shall execute the “Assignment of Insurances” of which contents and wording shall be mutually agreed between the Owners and the Charterers. |
| 41. | TERMINATION EVENTS |
| (a) | Each of the following events shall be a “Termination Event” for purposes of this Charter:- |
| (i) | if any installment of hire or any other sum payable by the Charterers under this Charter (including any sum expressed to be payable by the Charterers on demand) shall not be paid at its due date or within ten (10) Banking Days following the due date of payment and such failure to pay is not remedied within ten (10) Banking Days of receipt by the Charterers of written notice from the Owners notifying the Charterers of such failure and requesting that payment is made; or |
| (ii) | Save in circumstances where requisition for hire or compulsory requisition result in termination of insurances for the Vessel, if either (A) the Charterers shall fail at any time to effect or maintain any insurances required to be effected and maintained under this Charter, or any insurer shall avoid or cancel any such insurances (other than where the relevant avoidance or cancellation results from an event or circumstance outside the reasonable control of the Charterers and the relevant insurances are reinstated or re-constituted in a manner meeting the requirements of this Charter within seven (7) days of such avoidance or cancellation) or the Charterers shall commit any breach of or make any misrepresentation in respect of any such insurances the result of which the relevant insurer avoids the policy or otherwise excuses or releases itself from all or any of its liability thereunder, or (B) any of the said insurances shall cease for any reason whatsoever to be in full force and effect (other than where the reason in question is outside the reasonable control of the Charterer and the relevant insurances are reinstated or re-constituted in a manner meeting the requirements of this Charter within seven (7) days of such cease); or |
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| (iii) | if the Charterers shall at any time fail to observe or perform any of their material obligations under this Charter, other than those obligations referred to in sub-clause (i) or sub-clause (ii) of this Clause 41(a), and such failure to observe or perform any such obligation is either not remediable or is remediable but is not remedied within thirty (30) days of receipt by the Charterers of a written notice from the Owners requesting remedial action; or |
| (iv) | if any material representation or warranty by the Charterers in connection with this Charter or in any document or certificate furnished to the Owners by the Charterers in connection herewith or therewith shall prove to have been untrue, inaccurate or misleading in any material respect when made (and such occurrence continues unremedied for a period of thirty (30) days after receipt by the Charterers of written notice from the Owners requesting remedial action): or |
| (v) | if a petition shall be presented (and not withdrawn or stayed within sixty (60) days) or an order shall be made or an effective resolution shall be passed for the administration or winding-up of the Charterers (other than for the purpose of a reconstruction or amalgamation during and after which the Charterers remain solvent and the terms of which have been previously approved in writing by the Owners which approval shall not be unreasonably withheld) or if an encumbrancer shall take possession or an administrative or other receiver shall be appointed of the whole or any substantial part of the property, undertaking or assets of the Charterers or if an administrator of the Charterers shall be appointed (and, in any such case, such possession is not given up or such appointment is not withdrawn within sixty (60) days) or if anything analogous to any of the foregoing shall occur under the laws of the place of the Charterers’ incorporation, or |
| (vi) | if the Charterers shall stop payments to all of its creditors or shall cease to carry on or suspend all or a substantial part of their business or shall be unable to pay their debts, or shall admit in writing their inability to pay their debts, as they become due or shall otherwise become or be adjudicated insolvent; or |
| (vii) | if the Charterers shall apply to any court or other tribunal for, a moratorium or suspension of payments with respect to all or a substantial part of their debts or liabilities, or |
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| (viii) (A) | if the Vessel is arrested or detained (other than for reasons solely attributable to the Owners or to those for whom, for the purposes of this provision, the Owners shall be deemed responsible, including without limitation, any legal person who, at the date hereof or at any time in the future is affiliated with the Owners) and such arrest or detention is not lifted within forty-five (45) days (or such longer period as the Owners shall reasonably agree in the light of all the circumstances) ; or |
| (B) | if a distress or execution shall be levied or enforced upon or sued out against all or any substantial part of the property or assets of the Charterers and shall not be discharged or stayed within thirty (30) days; or |
| (ix) | if any consent, authorization, license or approval necessary for this Charter to be or remain the valid legally binding obligations of the Charterers, or to the Charterers to perform their obligations hereunder or thereunder, shall be materially adversely modified or is not granted or is revoked, suspended, withdrawn or terminated or expires and is not renewed (provided that the occurrence of such circumstances shall not give rise to a Termination Event if the same are remedied within thirty (30) days of the date of their occurrence); or |
| (x) | if (a) any l egal proceeding for the purpose of the reconstruction or rehabilitation of the Charterers is commenced and continuing in any jurisdiction and (b) the Owners receive a termination notice from the receiver, trustee or others of the Charterers which informs the termination/rejection of the Charter pursuant to the relevant laws, codes and regulations applicable to such proceeding. |
| (b) | A Termination Event shall constitute (as the case may be) either a repudiatory breach of, or breach of condition by the Charterers under, this Charter or an agreed terminating event the occurrence of which will (in any such case) entitle the Owners by notice to the Charterers to terminate the chartering of the Vessel under this Charter and recover the amounts provided for in Clause 42(c) either as liquidated damages or as an agreed sum payable on the occurrence of such event. |
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| 42. | OWNERS’ RIGHTS ON TERMINATION |
| (a) | At any time after a Termination Event shall have occurred and be continuing, the Owners may, by notice to the Charterers immediately, or on such date as the Owners shall specify, terminate the chartering by the Charterers of the Vessel under this Charter, 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. For the avoidance of doubt, in case of the termination of the Charter in accordance with 41 (a) (x) hereof, the Charter shall be deemed to be terminated upon receipt by the Owners of the termination notice set forth in Clause 41 (a) (x) hereof. |
| (b) | On or at any time after termination of the chartering by the Charterers of the Vessel pursuant to Clause 42(a) hereof the Owners shall be entitled to retake possession of the Vessel, the Charterers hereby agreeing that the Owners, for that 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. |
| (c) | If the Owners pursuant to Clause 42(a) hereof give notice to terminate the chartering by the Charterers of the Vessel, the Charterers shall pay to the Owners on the date of termination (the “Termination Date”), the aggregate of (A) all hire due and payable, but unpaid, under this Charter to (and including) the Termination Date together with interest accrued thereon pursuant to Clause 36(d) hereof from the due date for payment thereof to the Termination Date, (B) any sums, other than hire, due and payable by the Charterers, but unpaid, under this Charter together with interest accrued thereon pursuant to Clause 36(d) to the Termination Date and (C) any reasonable legal expenses incurred due to a Termination Event caused by the Charterers which are properly documented and invoiced, and (D) any actual direct financial loss suffered by the Owners which direct loss shall be determined as the shortfall, if any, between (a) the current market value of the Vessel (average value as estimated by two independent valuers such as major London brokers i.e. Arrow Valuations Ltd, Barry Rogliano Salles, Braemar ACM Shipbroking, H Clarkson & Co. Ltd., E.A. Gibsons Shipbrokers, Fearnleys, Galbraith, Simpson Spencer & Young, Howe Robinson & Co Ltd London and Maersk Broker K.S. (to include, in each case, their successors or assigns and such subsidiary or other company in the same corporate group through which valuations are commonly issued by each of these brokers), or such other first-class independent broker as the Owners and Charterers may agree in writing |
14
| from time to time) and (b) the Remaining Purchase Option Price (as defined in Clause 49.2 hereof). In case the purchase option price is not defined (i.e. from the delivery date to the end of 3rd year), below table to be applied. Price on any date in between each anniversary date to be calculated prorata basis. |
At the Delivery date US$23,639,000
End of 1st year US$21,618,000
End of 2nd year US$19,598,000
End of 3rd year US$17,577,000
At any given time always taking into account any charterhire paid during the year to which the specified Remaining Purchase Option Price relates PROVIDED ALWAYS that if the said market value exceeds the aggregate of (A), (B), (C), and the Remaining Purchase Option Price, then the Owners shall pay the amount of such excess to the Charterers forthwith. The aggregate of (A), (B), (C), and (D) above shall hereinafter be referred to as the “Termination Compensation”).
| (d) | If the Charter is terminated in accordance with this Clause 42 the Charterers shall immediately redeliver the Vessel at a safe and ice-free port or place as indicated by the Owners. The Vessel shall be redelivered to the Owners in substantially the same condition and class as that in which she was delivered, fair wear and tear not affecting class excepted. |
| (e) | The Owners agree that if following termination of the Charter under this Clause, the Owners sell or otherwise transfer the Vessel to a third party, or enter into any other arrangement with a third party with an option to purchase the Vessel, then the Owners shall pay to the Charterers after that sale (i) the amount of the greater of (a) the sale price and (b) the market value of the Vessel at such sale/transfer/arrangement date less (ii) the aggregate of the unpaid Termination Compensation and the Remaining Purchase Option Price (as defined in Clause 49.2) which would be payable by the Charterers as set out in Clause 49 as at the date of such sale. |
For the avoidance of any doubt, in accordance with the provision of rider clause 49 herein, no additional amount shall be paid by the Owners to the Charterers under this Clause 42(e) in respect the Deposit if the Charter is terminated by reason of a Termination Event.
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| 43. | NAME |
The Charterers shall, subject only to prior notification to the relevant authorities of the jurisdiction in which for the time being the Vessel is registered, be entitled from time to time to change the name of the 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. Painting and installment shall be at Charterers’ expense and time. The Charterer shall also have the liberty to change the name of the Vessel during the Charter Period at the expense and time of the Charterers (including the legal charge for finance documents for the Mortgagee, if any).
The Owners shall have no right to change the name of the Vessel during the Charter Period.
| 44. | MORTGAGE and ASSIGNMENT |
The Owners confirm that they are familiar with the terms of the assignment of insurances made or to be made by the Charterers in favour or the Mortgagee, and they agree to the terms thereof and will do nothing that conflicts therewith, excepting that the Owners shall be entitled to assign its rights, title and interest in and to this Charter to the Mortgagee or its assignee. Neither party shall assign its right or obligations or part of thereof to any third party without the written consent of the other.
In respect of the Vessel the Owners undertake not to borrow more than the respective purchase option prices as set out at the relevant milestone in Clause 49 hereof.
The Owners have the right to register a first preferred mortgage on the Vessel in favour of the Mortgagee (THE SAN-IN GODO BANK, LTD.) securing a loan under the Loan Agreement under standard mortgages and security documentation. In which case, the Owners undertake to procure from the Mortgagee a Letter of Quiet Enjoyment in a form and substance acceptable to the Charterers.
The Charterers agree to sign an acknowledgement of the Owners’ charterhire assignment or any other comparable document reasonably required by the Mortgagee, in favour of the Mortgagee. During the course of the Charter the Owners have the right to register a substitute mortgage in favour of another bank provided such registration is effected in a similar amount to the loan amount outstanding with the Mortgagee at that time and only if such substitute mortgagee executes a Letter of Quiet Enjoyment in favour of the Charterers in the same form as that provided by the Mortgagee or the form acceptable for the Charterers. The Charterers will then agree to sign a charterhire assignment in favour of the substitute mortgage in a form as shall be agreed by the Charterers, which agreement not be unreasonably withheld. Any cost incurred by the Charterers shall be for Owners’ account.
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Subject to the term and conditions of this Charter, the Charterers also agree that the Owners have the right to assign its rights, title and interest in and to the insurances by way of assignment of insurance in respect of the Vessel to and in favour of the Assignee in a form and substance acceptable to Charterers and the Assignee.
Owners shall procure that any mortgage and charterhire assignment shall be subject to this Charter and to the rights of the Charterers hereunder, in accordance with, and subject to, a Letter of Quiet Enjoyment.
In the event that the Owners execute security of any nature (including but not limited to any mortgage, assignment of insurances) over the Vessel then the Owners hereby undertake and agree as a condition of this Charter to procure that the beneficiary of such security executes in favour of the Charterers a letter of quiet enjoyment in such form and content as is reasonably acceptable to the Charterers, and the effectiveness of this assignment clause is subject to the agreement of a letter of Quiet Enjoyment before delivery of the Vessel.
| 45. | REDELIVERY INSPECTION |
Prior to redelivery and without interference to the operation of the Vessel, the Owners, at their risk and expense, shall have the right provided that such right is declared at least 20 days prior to the expected redelivery date to carry out an underwater inspection of the Vessel by Class approved diver and in the presence of Class surveyor and Owners’ and Charterers’ representatives. Should any damages in the Vessel’s underwater parts be found that will impose a condition or recommendation of Vessel’s class then:
| a) | In case Class imposes a condition or recommendation of class that does not require drydocking before next scheduled drydocking. Charterers shall pay to Owners the estimated cost to repair such damage in way which is acceptable to Class, which to be direct cost to repair such damage only, as per average quotation for the repair work obtained from two reputable independent shipyards at or in the vicinity of the redelivery port, one to be obtained by Owners and one by Charterers within 2 banking days from the date of imposition of the condition/recommendation unless the parties agree otherwise. |
17
| b) | In case Class require Vessel to be drydocked before the next scheduled drydocking the Charterers shall drydock the Vessel at their expense prior to redelivery of the Vessel to the Owners and repair same to Class satisfaction. |
In such event the Vessel shall be redelivered at the port of the dockyard.
| 46. | REDELIVERY |
The Charterers shall redeliver to the Owners the Vessel with everything belonging to her at the time of redelivery including spare parts on board, used or unused subject to the Clause 38 hereof. The Owners shall take over and pay the Charterers for remaining bunkers and unused lubricating oils including hydraulic oils, and greases, unbroached provisions, paints, ropes and other consumable stores as per Clause 53 at the Charterers’ purchased prices with supporting vouchers. For the purpose of this clause, the Charterers shall withhold the Hire two last hire payments (the “Withheld Hire”) and shall offset the cost of bunkers, unused lubricating oils and unbroached provisions etc., remaining on board at the time of redelivery from the Withheld Hire. If the Withheld Hire is not sufficient to cover the cost of bunkers, unused lubricating oils, and unbroached provisions etc. the Owners shall settle the outstanding amount within 3 Singapore banking days after redelivery of the Vessel.
Personal effects of the Master, officers and crew including slop chest, hired equipment, if any and the following listed items are excluded and shall be removed by the Charterers prior to or at the time of redelivery of the Vessel:
| • | E-mail equipment not part of GMDSS |
| • | Gas bottles |
| • | Electric deck air compressor |
| • | Blasting and painting equipment |
| • | Videotel (or similar) film library |
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| 47. | MORTGAGE NOTICE |
The Charterers keep prominently displayed in the chart room and in the master’s cabin of the Vessel a framed printed notice (the print on which shall measure at least six inches by nine inches) reading as follows:-
NOTICE OF MORTGAGE
This Vessel is owned by Bright Carrier S.A. and is subject to a first preferred mortgage in favour of THE SAN-IN GODO BANK, LTD. Under the terms of the said Mortgage neither the Owner, nor the master, nor any charterer of the Vessel nor any other person has the right or authority to create, incur or permit any lien, charge or encumbrance to be placed on the Vessel other than sums for crews’ wages and salvage.
| 48. | SALE OF VESSEL BY OWNERS |
| 1. | The Owners have the right to sell the Vessel to a reputable third party (“Purchaser”) at any time during the Charter Period with the prior written consent of the Charterers and provided that (i) the Purchaser agrees to take over the benefit and burden of this Charter, (ii) such ownership change does not result in any reflagging of the Vessel, (iii) such ownership change does not result in the Charterers being obliged to increase any payment under this Charter, (iv) such ownership change does not increase the actual or contingent obligations of the Charterers under this Charter, and (v) the Charterers shall not be liable for the costs and expenses (including legal fees) incurred in the sale of the Vessel by the Owners under this Clause 48. |
| 2. | The Owners shall give the Charterers at least one month’s prior written notice of any sale. |
| 3. | Subject to 48.1, the Charterers and Owners undertake with each other to execute one or more novation agreements (or other documents required under applicable law) to novate the rights and obligations of the Owners under this Charter to the Purchaser such novation agreement(s) or other documents to be in such form and substance acceptable to the Charterers and such novation will be effective upon delivery of the Vessel from the Owners to the Purchaser.” |
| 49. | CHARTERERS’ OPTION TO PURCHASE VESSEL |
| 1. | Charterers to have purchase option at the end of 120th months of the Charter Period at a price of US$3,333,000. - (the “Final Purchase Option Price”); however, Charterers to have purchase option to purchase the Vessel at the end of 4th year anniversary date of the Delivery Date at US$15,557,000 net (the “First Purchase Option Price”) subject to Charterers declaration 3 months before such date. |
19
| 2. | Charterers further have an option to purchase, such purchase being declared at any time through the remaining period at the following price or pro-rata de-escalation until the maturity of the Charter Period (the “Subsequent Purchase Option Price”). |
At end of 4th year : US$15,557,000.-
At end of 5th year : US$13,537,000.-
At end of 6th year : US$11,516,000.-
At end of 7th year : US$9,496,000.-
At end of 8th year : US$7,475,000.-
At end of 9th year : US$5,455,000.-
At end of 10th year : US$3,333,000.-
(The purchase option price of the Vessel to be calculated in accordance with Clause 49.1 and 49.2 hereof, whether the Final Purchase Option Price or the First Option Price or the Subsequent Purchase Option Price, hereinafter called the “Remaining Purchase Option Price”).
| 3. | Immediately prior to delivery of the Vessel by the Owners to the Charterers under the PO MOA (as defined in Clause 49.4) the Parties shall execute a Protocol of Redelivery and Acceptance under this Charter (the “Redelivery Protocol”) and save in respect of any claims accrued under this Charter prior to the date and time of the Redelivery Protocol, this Charter shall terminate forthwith. |
| 4. | Upon the date of any written notification by the Charterers to the Owners of their intention to purchase the Vessel, the Owners and the Charterers shall be deemed to have unconditionally entered into a contract to sell and purchase the Vessel for the Remaining Purchase Option Price on and in strict conformity with the terms and conditions contained in the Memorandum of Agreement attached to this Charter as Exhibit A (the “PO MOA”). |
20
| 50. | MISCELLANEOUS |
| (a) | The terms and conditions of this Charter and the respective rights of the Owners and the Charterers shall not be waived or varied otherwise than by an instrument in writing of the same date as or subsequent to this Charter executed by both parties or by their duly authorized representatives. |
| (b) | Unless otherwise provided in this Charter whether expressly or by implication, time shall be of the essence in relation to the performance by the Charterers of each and every one of their obligations hereunder. |
| (c) | No failure or delay on the part of the Owners or the Charterers in exercising any power, right or remedy hereunder or in relation to the Vessel shall operate as a waiver thereof nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise of any such right or power or the exercise of any other right, power or remedy. |
| (d) | If any terms or condition of this Charter shall to any extent be illegal invalid or unenforceable the remainder of this Charter shall not be affected thereby and all other terms and condition shall be legal valid and enforceable to the fullest extent permitted by law. |
| (e) | The respective rights and remedies conferred on the Owners and the Charterers by this Charter are cumulative, may be exercised as often as the Owners or the Charterers (as the case may be) think fit and are in addition to, and are not exclusive of, any rights and remedies provided by law. |
| 51. | COMMUNICATIONS |
Except as otherwise provided for in this Charter, all notices or other communications under or in respect of this Charter to either party hereto shall be in writing and shall be made or given to such party at the address, facsimile number or e-mail address appearing below (or at such other address, facsimile number or e-mail address as such party may hereafter specify for such purposes to the other by notice in writing):-
| (i) | in the case of the Owners c/o Sugahara Kisen Co., Ltd. |
Address : 7F Daido Seimei Bld., 2-1-23 Hondori, Kure,
21
| Hiroshima, 737-0045, Japan |
| Telephone | : +81-823-27-3588 |
| Telefax | : +81-823-27-3589 |
| : spc@sugaharakisen.co.jp |
| (ii) | in the case of the Charterers c/o Navios Shipmanagement Inc. |
| Address | : 85 Akti Miaouli Street, 18538, Piraeus, Greece |
| Telephone | : 30-210-4595000 |
| : ops@navios.com, legal@navios.com |
| tech@navios.com, legal_corp@navios.com |
| (iii) | in the case of the Brokers c/o ITOCHU Corporation |
| Address | : TOKBR Section, 5-1, Kiya-Aoyama 2-chome, |
| Minato-ku, Tokyo, 107-8077 Japan |
| Telephone | : 81-3-3497-2953 |
| Telefax | : 81-3-3497-7111 |
| : tokbr@itochu.co.jp |
A written notice includes a notice by facsimile or e-mail. A notice or other communication received on a non-working day or after business hours in the place of receipt shall be deemed to be served on the next following working day in such place.
Subject always to the foregoing sentence, any communication by personal delivery or letter shall be deemed to be received on delivery, any communication by e-mail shall be deemed to be received upon transmission of the automatic answerback of the addresses and any communication by facsimile shall be deemed to be received upon appropriate acknowledgment by the addressee’s receiving equipment.
All communications and documents delivered pursuant to or otherwise relating to this Charter shall either be in English or accompanied by a certified English translation.
| 52. | TRADING IN WAR RISK AREA |
The Charterers shall be permitted to order the Vessel into an area subject to War Risks as defined in Clause 26 without consent of the Owners provided that all Marine, War and P&I Insurance are maintained with full force and effect and the Charterers shall pay any and all additional premiums to maintain such insurance.
22
| 53. | INVENTORIES, OIL AND STORES |
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.
The Owners shall at the time of redelivery take over and pay for all bunkers, unused lubricating oil, unbroached provisions, paints, ropes and other consumable stores (excluding spare parts) in the said Vessel at the Charterers’ purchased prices with supporting vouchers. However, the Charterers shall not pay to the Owners at time of delivery for any bunkers, lubricating oil, provisions, paints, ropes and consumable stores which the Charterers have supplied to the Vessel at the Charterers’ expense prior to delivery. 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.
| 54. | INDEMNITY FOR POLLUTION RISKS |
The Charterers shall indemnify the Owners against the following Pollution Risks:-
| (a) | liability for damages or compensation payable to any person arising from pollution; |
| (b) | the costs of any measures reasonably taken for the purpose of preventing, minimizing or cleaning up any pollution together with any liability for losses or damages arising from any measures so taken; |
| (c) | liability which the Owners and/or the Charterers may incur, together with costs and expenses incidental thereto, as the result of escape or discharge or threatened escape discharge of oil or any other substance; |
| (d) | the costs or liabilities incurred as a result of compliance with any order or direction given by any government or authority for the purpose of preventing or reducing pollution or the risk of pollution; provided always that such costs or liabilities are not recoverable under the Hull and Machinery Insurance Policies on the Vessel; |
| (e) | liability which the Owners and/or the Charterers may incur to salvors under the exception to the principal of
“no cure-no pay” in |
23
| (b) of Lloyds Standard Form of Salvage Agreement (LOF 1990); and |
| (f) | liability which the Charterers may incur for the payment of fines in respect of pollution in so far as such liability may be covered under the rules of the P&I Club. |
| 55. | TRADE AND COMPLIANCE CLAUSE |
The Charterers and the Owners hereby agree that no person/s or entity/ies under this Charter will be individual(s) or entity(ies) designated under any applicable national or international law imposing trade and economic sanctions.
Further, the Charterers and the Owners agree that the performance of this Charter will not require any action prohibited by sanctions or restrictions under any applicable national or international law or regulation imposing trade or economic sanctions.
| 56. | ANTI-BRIBERY AND ANTI-CORRUPTION |
The Charterers and the Owners hereby agree that in connection with this Contract and/or any other business transactions related to it, they as well as their sub-contractors and each of their affiliates, directors, officers, employees, agents, and every other person acting on its and its sub-contactors’ behalf, shall perform all required duties, transactions and dealings in compliance with all applicable laws, rules, regulations relating to anti-bribery and anti-money laundering.
(end)
24
Exhibit 8.1
List of Subsidiaries of Navios Maritime Partners L.P.
Libra Shipping Enterprises Corporation
Alegria Shipping Corporation
Felicity Shipping Corporation
Gemini Shipping Corporation
Galaxy Shipping Corporation
Aurora Shipping Enterprises Ltd.
Palermo Shipping S.A
Fantastiks Shipping Corporation
Sagittarius Shipping Corporation
Hyperion Enterprises Inc.
Chilali Corp.
Surf Maritime Co.
Pandora Marine Inc.
Customized Development S.A.
Kohylia Shipmanagement S.A.
Orbiter Shipping Corp.
Floral Marine Ltd.
Golem Navigation Limited
Kymata Shipping Co.
Joy Shipping Corporation
Micaela Shipping Corporation
Pearl Shipping Corporation
Velvet Shipping Corporation
Perigiali Navigation Limited
Finian Navigation Co.
Ammos Shipping Corp.
Wave Shipping Corp.
Casual Shipholding Co.
Avery Shipping Company
Coasters Ventures Ltd.
Ianthe Maritime S.A.
Rubina Shipping Corporation
Topaz Shipping Corporation
Beryl Shipping Corporation
Cheryl Shipping Corporation
Christal Shipping Corporation
Fairy Shipping Corporation
Limestone Shipping Corporation
Dune Shipping Corp.
Citrine Shipping Corporation
Cavalli Navigation Inc.
Seymour Trading Limited
Goldie Services Company
Andromeda Shiptrade Limited
Esmeralda Shipping Corporation
Triangle Shipping Corporation
Oceanus Shipping Corporation
Cronus Shipping Corporation
Leto Shipping Corporation
Dionysus Shipping Corporation
Prometheus Shipping Corporation
Camelia Shipping Inc.
Anthos Shipping Inc.
Azalea Shipping Inc.
Amaryllis Shipping Inc.
Zaffre Shipping Corporation
Wenge Shipping Corporation
Sunstone Shipping Corporation
Fandango Shipping Corporation
Flavescent Shipping Corporation
Emery Shipping Corporation
Rondine Management Corp.
Prosperity Shipping Corporation
Aldebaran Shipping Corporation
JTC Shipping and Trading Ltd.
Navios Maritime Partners L.P.
Navios Maritime Operating LLC.
Navios Partners Finance (US) Inc.
Navios Partners Europe Finance Inc.
Solange Shipping Ltd.
Mandora Shipping Ltd.
Olympia II Navigation Limited
Pingel Navigation Limited
Ebba Navigation Limited
Clan Navigation Limited
Sui An Navigation Limited
Bertyl Ventures Co.
Silvanus Marine Company
Anthimar Marine Inc.
Enplo Shipping Limited
Morven Chartering Inc.
Rodman Maritime Corp.
Isolde Shipping Inc.
Velour Management Corp.
Evian Shiptrade Ltd.
Theros Ventures Limited
Legato Shipholding Inc.
Inastros Maritime Corp.
Zoner Shiptrade S.A.
Jasmer Shipholding Ltd.
Thetida Marine Co.
Jaspero Shiptrade S.A.
Peran Maritime Inc.
Nefeli Navigation S.A.
Crayon Shipping Ltd
Chernava Marine Corp.
Proteus Shiptrade S.A.
Vythos Marine Corp.
Navios Maritime Containers Sub L.P.
Navios Partners Containers Finance Inc.
Boheme Navigation Company
Navios Partners Containers Inc.
Iliada Shipping S.A.
Vinetree Marine Company
Afros Maritime Inc.
Cavos Navigation Co.
Perivoia Shipmanagement Co.
Pleione Management Limited
Bato Marine Corp.
Agron Navigation Company
Teuta Maritime S.A.
Ambracia Navigation Company
Artala Shipping Co.
Migen Shipmanagement Ltd.
Bole Shipping Corporation
Brandeis Shipping Corporation
Buff Shipping Corporation
Morganite Shipping Corporation
Balder Maritime Ltd.
Melpomene Shipping Corporation
Urania Shipping Corporation
Terpsichore Shipping Corporation
Erato Shipmanagement Corporation
Lavender Shipping Corporation
Nostos Shipmanagement Corp.
Navios Maritime Acquisition Corporation
Navios Acquisition Europe Finance Inc.
Navios Acquisition Finance (US) Inc.
Navios Maritime Midstream Partners GP LLC
Letil Navigation Ltd.
Navios Maritime Midstream Partners Finance (US) Inc.
Aegean Sea Maritime Holdings Inc.
Amorgos Shipping Corporation
Andros Shipping Corporation
Antikithira Shipping Corporation
Antiparos Shipping Corporation
Antipaxos Shipping Corporation
Antipsara Shipping Corporation
Crete Shipping Corporation
Delos Shipping Corporation
Folegandros Shipping Corporation
Ikaria Shipping Corporation
Ios Shipping Corporation
Iraklia Shipping Corporation
Kimolos Shipping Corporation
Kithira Shipping Corporation
Kos Shipping Corporation
Lefkada Shipping Corporation
Leros Shipping Corporation
Mytilene Shipping Corporation
Oinousses Shipping Corporation
Psara Shipping Corporation
Rhodes Shipping Corporation
Samos Shipping Corporation
Samothrace Shipping Corporation
Serifos Shipping Corporation
Sifnos Shipping Corporation
Skiathos Shipping Corporation
Skopelos Shipping Corporation
Skyros Shipping Corporation
Syros Shipping Corporation
Thera Shipping Corporation
Tilos Shipping Corporation
Tinos Shipping Corporation
Zakynthos Shipping Corporation
Cyrus Investments Corp.
Olivia Enterprises Corp.
Limnos Shipping Corporation
Thasos Shipping Corporation
Agistri Shipping Limited
Paxos Shipping Corporation
Donoussa Shipping Corporation
Schinousa Shipping Corporation
Alonnisos Shipping Corporation
Makronisos Shipping Corporation
Shinyo Loyalty Limited
Shinyo Navigator Limited
Amindra Navigation Co.
Navios Maritime Midstream Partners L.P.
Navios Maritime Midstream Operating LLC
Shinyo Dream Limited
Shinyo Kannika Limited
Shinyo Kieran Limited
Shinyo Ocean Limited
Shinyo Saowalak Limited
Sikinos Shipping Corporation
Kerkyra Shipping Corporation
Doxa International Corp.
Alkmene Shipping Corporation
Aphrodite Shipping Corporation
Dione Shipping Corporation
Persephone Shipping Corporation
Rhea Shipping Corporation
Tzia Shipping Corporation
Boysenberry Shipping Corporation
Cadmium Shipping Corporation
Celadon Shipping Corporation
Cerulean Shipping Corporation
Kleio Shipping Corporation
Polymnia Shipping Corporation
Goddess Shiptrade Inc.
Aramis Navigation Inc.
Thalia Shipping Corporation
Muses Shipping Corporation
Euterpe Shipping Corporation
Calliope Shipping Corporation
Karpathos Shipping Corporation
Patmos Shipping Corporation
Tarak Shipping Corporation
Astrovalos Shipping Corporation
Ithaki Shipping Corporation
Gavdos Shipping Corporation
Galera Management Company
Vatselo Enterprises Corp.
Thalassa Marine S.A.
Anafi Shipping Corporation
Asteroid Shipping S.A.
Bulkinvest S.A.
Cloud Atlas Marine S.A.
Corsair Shipping Ltd.
Ducale Marine Inc.
Faith Marine Ltd
Kleimar N.V.
Iris Shipping Corporation
Moonstone Shipping Corporation
NAV Holdings Limited
Navios International Inc.
Veja Navigation Company
Vernazza Shiptrade Inc.
White Narcissus Marine S.A.
Talia Shiptrade S.A.
Shikhar Ventures S.A.
Opal Shipping Corporation
Pharos Navigation S.A.
Pueblo Holdings Ltd.
Red Rose Shipping Corp.
Rider Shipmanagement Inc.
Roselite Shipping Corporation
Rumer Holding Ltd.
Jasmine Shipping Corporation
Highbird Management Inc.
Kastelorizo Shipping Corporation
Elafonisos Shipping Corporation
Koufonisi Shipping Corporation
Exhibit 12.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Angeliki Frangou, certify that:
1. I have reviewed this annual report on Form 20-F for the year ended December 31, 2022 of Navios Maritime Partners L.P.;
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 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 subsidiary, 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 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 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 controls over financial reporting.
Date: March 24, 2023
| /s/ Angeliki Frangou |
| Angeliki Frangou |
| Chief Executive Officer (Principal Executive Officer) |
Exhibit 12.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Erifyli Tsironi, certify that:
1. I have reviewed this annual report on Form 20-F for the year ended December 31, 2022 of Navios Maritime Partners L.P.;
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 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 subsidiary, 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 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 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 controls over financial reporting.
Date: March 24, 2023
| /s/ Erifyli Tsironi |
| Erifyli Tsironi |
| Chief Financial Officer (Principal Financial Officer) |
Exhibit 13.1
Certification
Pursuant To Section 906 of the Sarbanes-Oxley Act Of
2002
(Subsections (A) And (B) Of Section 1350,
Chapter 63 of Title 18, United States Code)
Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code), each of the undersigned officers of Navios Maritime Partners L.P., (the “Company”), does hereby certify, to such officer’s knowledge, that:
(i) the Annual Report on Form 20-F for the fiscal year ended December 31, 2022 (the “Form 20-F”) of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934;
(ii) and 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 24, 2023 | /s/ Angeliki Frangou | |||||
| Angeliki Frangou Chief Executive Officer | ||||||
| Dated: March 24, 2023 | /s/ Erifyli Tsironi | |||||
| Erifyli Tsironi | ||||||
| Chief Financial Officer | ||||||
Exhibit 15.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the incorporation by reference in the Registration Statement on Form F-3 (No. 333-237934) of Navios Maritime Partners L.P. of our report dated March 31, 2021 relating to the financial statements, which appears in this Form 20-F.
/s/ PricewaterhouseCoopers S.A.
Athens, Greece
March 24, 2023
Exhibit 15.2
Consent of Independent Registered Public Accounting Firm
We consent to the incorporation by reference in the Registration Statement (Form F-3 No. 333-237934) of Navios Maritime Partners L.P. and in the related Prospectus of our reports dated March 24, 2023, with respect to the consolidated financial statements of Navios Maritime Partners L.P., and the effectiveness of internal control over financial reporting of Navios Maritime Partners L.P., included in this Annual Report (Form 20-F) for the year ended December 31, 2022.
/s/ Ernst & Young (Hellas) Certified Auditors Accountants S.A.
Athens, Greece
March 24, 2023