NOTE PURCHASE AGREEMENT
Dated as of May 18, 2023
Between
THALASSA SHIPPING & LOGISTICS SOCIÉTÉ ANONYME (as Issuer)
and
DRALVECEN MEZZANINE CAPITAL LLC (as Purchaser)
$60,000,000 10.0% PIK Second-Lien Notes Due June 2028
Drafted by Calderwood & Harkness LLP, 780 Third Avenue, New York, NY 10017 (C&H Matter No. 1044-00003), in coordination with Kellner & Foss LLP, 1185 Avenue of the Americas, 30th Floor, New York, NY 10036
NOTE PURCHASE AGREEMENT
This NOTE PURCHASE AGREEMENT (this "Agreement") is entered into as of May 18, 2023, by and between:
(1) THALASSA SHIPPING & LOGISTICS SOCIÉTÉ ANONYME, a société anonyme organized and existing under the laws of the Hellenic Republic, with registered offices at 42 Akti Miaouli, Piraeus 18538, Greece, and registered with the Athens General Commercial Registry (Greek Tax ID (AFM): 998214763) (the "Issuer" or "TSL"); and
(2) DRALVECEN MEZZANINE CAPITAL LLC, a Delaware limited liability company, with principal offices at 600 Lexington Avenue, 22nd Floor, New York, NY 10022 (the "Purchaser" or "BMC").
The Issuer and the Purchaser are sometimes referred to herein individually as a "Party" and collectively as the "Parties."
RECITALS
WHEREAS, Thalassa Shipping & Logistics Société Anonyme, a société anonyme organized under the laws of the Hellenic Republic (the "Issuer" or "TSL"), with registered offices at 42 Akti Miaouli, Piraeus 18538, Greece (Greek Tax ID (AFM): 998214763), and its wholly-owned subsidiary Thalassa Americas Inc., a Delaware corporation ("TAI"), are parties to that certain Senior Secured Credit Agreement dated as of June 15, 2019 (as amended, restated, supplemented, or otherwise modified from time to time, the "Senior Secured Credit Agreement"), among TSL (as borrower), TAI (as co-borrower for the U.S. Tranche), Nordbank International AG, acting through its Zürich office at Bahnhofstrasse 78, 8001 Zürich, Switzerland (as Administrative Agent and Collateral Agent), and the lenders from time to time party thereto, with total commitments of $685,000,000;
WHEREAS, the Issuer previously issued $100,000,000 in aggregate principal amount of mezzanine notes (the "Existing Mezzanine Notes") to Dralvecen Mezzanine Capital LLC, a Delaware limited liability company (the "Purchaser" or "BMC"), with principal offices at 600 Lexington Avenue, 22nd Floor, New York, NY 10022, on June 15, 2019, bearing interest at a rate of 11.5% PIK toggle per annum, secured by second-priority liens on the same collateral as the Senior Secured Credit Agreement, and as of the date hereof, the outstanding principal balance of the Existing Mezzanine Notes (inclusive of $12,300,000 in capitalized PIK interest accrued through September 30, 2022) is $112,300,000;
WHEREAS, the Issuer experienced a severe liquidity crisis during 2022, including a breach of the Minimum Liquidity Covenant on September 15, 2022 (unrestricted cash of $27,300,000 versus a required minimum of $40,000,000), and breaches of the Maximum Net Leverage Ratio covenant (7.82x actual versus 5.50x permitted) and the Minimum Interest Coverage Ratio covenant (1.74x actual versus 2.50x required) as of September 30, 2022, resulting in events of default under the Senior Secured Credit Agreement and cross-defaults under certain other debt instruments of the Issuer;
WHEREAS, following extensive negotiations among the Issuer, the Purchaser, the Administrative Agent, and certain other creditors and stakeholders, the Issuer, the Purchaser, and certain other creditors entered into that certain Restructuring Support Agreement dated as of March 14, 2023 (the "RSA"), which contemplates, among other things, the exchange of the Existing Mezzanine Notes for (a) $60,000,000 in aggregate principal amount of new 10.0% PIK Second-Lien Notes due June 2028 (the "Notes") and (b) an equity interest representing 15% of the issued and outstanding equity of the Issuer on a fully diluted basis;
WHEREAS, the exchange of $112,300,000 of Existing Mezzanine Notes for $60,000,000 in new Notes represents a haircut of approximately 46.6% on the debt component (calculated as ($112,300,000 − $60,000,000) ÷ $112,300,000), with the Purchaser receiving a 15% equity interest in the Issuer as partial consideration for the reduction in the principal amount of the debt obligations owing to the Purchaser;
WHEREAS, concurrently with the closing of the transactions contemplated hereby, (i) Amendment No. 1 to the Senior Secured Credit Agreement is being entered into to, among other things, extend the maturity of the Senior Secured Credit Facility from June 15, 2024 to June 15, 2027, convert $75,000,000 of the Term Loan A to PIK interest, reduce the revolving credit facility commitment from $200,000,000 to $150,000,000, and reset the financial covenants applicable to the Issuer, (ii) the Amended and Restated Intercreditor Agreement dated as of May 15, 2023 between Nordbank International AG (as first-lien agent) and the Purchaser (as second-lien holder) is being executed, which amends and restates the original Intercreditor Agreement dated as of June 15, 2019, and (iii) KFO Holdings Société Anonyme ("KFO"), the Kostandinos family holding company, is subscribing for new equity in the Issuer in the amount of €35,000,000 (approximately $38,200,000 at the exchange rate of €1 = $1.0914) pursuant to the Equity Subscription Agreement dated as of May 22, 2023;
WHEREAS, the Notes will be issued under that certain Indenture dated as of May 18, 2023 (the "Indenture") between the Issuer and Garrison Trust Company, as indenture trustee (the "Trustee"), with principal offices at 100 Wall Street, 16th Floor, New York, NY 10005, setting forth the terms and conditions of the Notes and the rights and obligations of the Issuer and the holders thereof;
NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:
ARTICLE I — DEFINITIONS AND INTERPRETATION
Section 1.1 — Definitions
As used in this Agreement, the following terms shall have the meanings set forth below:
"Administrative Agent" means Nordbank International AG, a bank organized under the laws of Switzerland, in its capacity as administrative agent and collateral agent under the Senior Secured Credit Agreement, with offices at Bahnhofstrasse 78, 8001 Zürich, Switzerland, and any successor thereto in such capacity.
"Affiliate" means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by, or is under common control with such Person. For purposes of this definition, "control" (including, with correlative meanings, the terms "controlled by" and "under common control with") means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract, or otherwise. A Person shall be deemed to control another Person if such Person possesses, directly or indirectly, the power to vote 25% or more of the voting securities of such other Person or to direct or cause the direction of the management and policies of such other Person.
"Agreement" means this Note Purchase Agreement, dated as of May 18, 2023, by and between the Issuer and the Purchaser, including all exhibits and schedules attached hereto, as the same may be amended, restated, supplemented, or otherwise modified from time to time in accordance with Section 10.6 hereof.
"Amended and Restated Intercreditor Agreement" means that certain Amended and Restated Intercreditor Agreement dated as of May 15, 2023, by and between Nordbank International AG, in its capacity as first-lien agent and collateral agent under the Senior Secured Credit Agreement, and the Purchaser, in its capacity as second-lien holder, amending and restating in its entirety the original Intercreditor Agreement dated as of June 15, 2019, as the same may be further amended, restated, supplemented, or otherwise modified from time to time.
"Amendment No. 1" means Amendment No. 1 to the Senior Secured Credit Agreement dated as of May 15, 2023, among the Issuer, TAI, the Administrative Agent, and the lenders party thereto, providing for, among other things, the extension of the maturity date of the Senior Secured Credit Facility from June 15, 2024 to June 15, 2027, the conversion of $75,000,000 of Term Loan A to PIK interest, the reduction of the revolving credit facility commitment from $200,000,000 to $150,000,000, and the resetting of the financial covenants.
"Business Day" means any day other than a Saturday, a Sunday, or any day on which commercial banks are authorized or required to close in New York, New York, United States; Zürich, Switzerland; Piraeus or Athens, Greece; or London, England.
"Closing" has the meaning set forth in Section 3.1 hereof.
"Closing Date" means June 30, 2023, or such earlier or later date as the Parties may agree in writing, subject in all cases to the proviso that the Closing Date shall not be later than the Outside Date.
"Collateral" means all assets and property subject to second-priority liens securing the Notes, consisting of (a) 38 dry-bulk carriers (10 Capesize, 14 Panamax, and 14 Supramax), (b) 12 container vessels (Sub-Panamax), (c) the Houston terminal lease held by TAI at 1400 McKinney Street, Suite 2200, Houston, TX 77010, (d) all accounts receivable of the Issuer and TAI, (e) 100% of the equity interests in TAI, and (f) 100% of the equity interests in each of the 14 vessel-owning special purpose vehicles listed on Schedule D hereto, in each case being the same collateral pool as that securing the Senior Secured Obligations, but subject to a second-priority lien that is subordinate and junior to the first-priority lien in favor of the Administrative Agent securing the Senior Secured Obligations, as governed by the Amended and Restated Intercreditor Agreement. The Collateral is more fully described in Schedule D hereto.
"Equity Interest" means the equity interest in the Issuer representing 15% of the issued and outstanding equity of the Issuer on a fully diluted basis (after giving effect to the issuance thereof and the equity subscription by KFO pursuant to the Equity Subscription Agreement) to be issued to the Purchaser in connection with the Exchange, as further described in Section 2.3 hereof.
"Equity Subscription Agreement" means that certain Equity Subscription Agreement dated as of May 22, 2023, between TSL and KFO Holdings Société Anonyme, pursuant to which KFO is subscribing for new equity in the Issuer in the amount of €35,000,000 (approximately $38,200,000 at €1 = $1.0914).
"Exchange" means the exchange by the Purchaser of the Existing Mezzanine Notes for the Notes and the Equity Interest, as contemplated by this Agreement and the RSA.
"Existing Mezzanine Notes" means the mezzanine notes in the original principal amount of $100,000,000 issued by the Issuer on June 15, 2019, bearing interest at the rate of 11.5% per annum on a PIK toggle basis, secured by second-priority liens on the same collateral as the Senior Secured Credit Agreement, with an original maturity date of December 15, 2024, and with accrued PIK interest capitalized through the Exchange Date resulting in an aggregate outstanding principal amount of $112,300,000 (comprising $100,000,000 of original principal and $12,300,000 of capitalized PIK interest). The Existing Mezzanine Notes are more fully described in Schedule A hereto.
"GAAP" means United States generally accepted accounting principles, consistently applied.
"Governmental Authority" means any federal, state, local, municipal, provincial, or foreign government or any governmental, quasi-governmental, judicial, regulatory, or administrative department, commission, board, bureau, court, agency, instrumentality, tribunal, or arbitral body, including, without limitation, the Athens General Commercial Registry, the U.S. Securities and Exchange Commission, the Delaware Secretary of State, and any applicable Greek tax authority.
"IFRS" means International Financial Reporting Standards as issued by the International Accounting Standards Board and as adopted and applied by the Issuer for the preparation of its consolidated financial statements.
"Indenture" means that certain Indenture dated as of May 18, 2023, by and between the Issuer and Garrison Trust Company, as Trustee, governing the terms and conditions of the Notes, as the same may be amended, restated, supplemented, or otherwise modified from time to time.
"Issuer" means Thalassa Shipping & Logistics Société Anonyme, a société anonyme organized and existing under the laws of the Hellenic Republic, with registered offices at 42 Akti Miaouli, Piraeus 18538, Greece (Greek Tax ID (AFM): 998214763), and its successors and permitted assigns.
"KFO" means KFO Holdings Société Anonyme, a Greek société anonyme, the holding company of the Kostandinos family, holding (together with Dimitrios Kostandinos, individually, and Elena Kostandinos-Pavlou, individually) 80% of the pre-Exchange equity in the Issuer, with Dimitrios Kostandinos holding 62% and Elena Kostandinos-Pavlou holding 18%.
"Lien" means any mortgage, pledge, hypothecation, assignment, charge, encumbrance, security interest, lien (statutory or other), preference, priority, or other security agreement or preferential arrangement of any kind or nature whatsoever, including any conditional sale or other title retention agreement, any financing lease having substantially the same economic effect as any of the foregoing, and the filing of any financing statement under the Uniform Commercial Code or comparable law of any jurisdiction.
"Lock-Up Agreement" means that certain Lock-Up Agreement dated as of March 14, 2023, by and among the Issuer, the Purchaser, and certain other creditors, entered into in connection with the RSA.
"Material Adverse Effect" means any event, occurrence, fact, condition, change, development, or effect that, individually or in the aggregate, has had or would reasonably be expected to have a material adverse effect on (a) the business, assets, liabilities, financial condition, results of operations, or prospects of the Issuer and its subsidiaries, taken as a whole, (b) the ability of the Issuer to perform its obligations under this Agreement, the Notes, or the Indenture, or (c) the validity or enforceability of the Notes, the Indenture, or the Liens on the Collateral; provided, however, that in no event shall any of the following, alone or in combination, be deemed to constitute, or be taken into account in determining whether there has been, a Material Adverse Effect: (i) changes in general economic, political, financial, banking, credit, capital market, or securities market conditions, (ii) changes in prevailing interest rates, currency exchange rates, or commodity prices (including, without limitation, charter rates, bunker fuel prices, or freight indices), (iii) changes in conditions generally applicable to the international shipping industry (including dry-bulk and container shipping), (iv) changes in applicable law or IFRS or GAAP, (v) the announcement or pendency of the transactions contemplated hereby or by the RSA, (vi) the impact of any pandemic, epidemic, earthquake, hurricane, flood, or other natural disaster, (vii) acts of war, sabotage, or terrorism, or any escalation or worsening thereof, or (viii) the disclosed liquidity crisis and covenant breaches described in the recitals hereto, except, in the case of clauses (i), (ii), (iii), and (iv), to the extent that the Issuer and its subsidiaries are disproportionately affected thereby relative to other participants in the international shipping industry of similar size and character.
"Maturity Date" means June 30, 2028.
"Notes" means the $60,000,000 aggregate principal amount of 10.0% PIK Second-Lien Notes due June 2028 to be issued by the Issuer to the Purchaser pursuant to this Agreement and the Indenture. The Notes are more fully described in Schedule B hereto.
"Outside Date" means June 30, 2023, as established by the RSA, or such later date as the Parties may agree in writing; provided that the Outside Date shall not be extended beyond September 30, 2023 without the written consent of both Parties.
"Person" means an individual, corporation, partnership, limited liability company, joint venture, association, trust, unincorporated organization, Governmental Authority, or any other entity.
"PIK Interest" means interest payable in kind on the Notes by increasing the principal amount of the Notes outstanding, at a rate of 10.0% per annum, compounding semi-annually, as more fully set forth in the Indenture.
"Purchaser" means Dralvecen Mezzanine Capital LLC, a Delaware limited liability company, with principal offices at 600 Lexington Avenue, 22nd Floor, New York, NY 10022, and its successors and permitted assigns.
"RSA" means that certain Restructuring Support Agreement dated as of March 14, 2023, among the Issuer, the Purchaser, the Administrative Agent, and certain other creditors and stakeholders party thereto, as the same may be amended, restated, supplemented, or otherwise modified from time to time.
"Securities Act" means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
"Senior Secured Credit Agreement" means that certain Senior Secured Credit Agreement dated as of June 15, 2019, among the Issuer (as borrower), TAI (as co-borrower for the U.S. Tranche), the Administrative Agent, and the lenders from time to time party thereto, as amended by Amendment No. 1 and as may be further amended, restated, supplemented, or otherwise modified from time to time.
"Senior Secured Obligations" means all obligations arising under or in connection with the Senior Secured Credit Agreement, including all outstanding principal, accrued and unpaid interest, fees, expenses, indemnities, and other amounts owing thereunder, including, without limitation, (a) Term Loan A ($270,000,000 outstanding as of September 30, 2022), (b) the Revolving Credit Facility ($185,000,000 drawn of $200,000,000 commitment as of September 30, 2022), and (c) Term Loan B (U.S. Tranche) ($85,000,000 outstanding as of September 30, 2022), aggregating approximately $540,000,000 outstanding as of September 30, 2022.
"TAI" means Thalassa Americas Inc., a Delaware C-Corporation and wholly-owned subsidiary of the Issuer, with principal office at 1400 McKinney Street, Suite 2200, Houston, TX 77010, with registered agent Capitol Registered Agents LLC, 1209 Orange Street, Wilmington, DE 19801, EIN 84-3291057.
"Trustee" means Garrison Trust Company, a New York trust company, in its capacity as indenture trustee under the Indenture, with principal offices at 100 Wall Street, 16th Floor, New York, NY 10005, and any successor thereto in such capacity.
Section 1.2 — Rules of Interpretation
Unless the context of this Agreement otherwise requires:
(a) References in this Agreement to "Dollars," "dollars," "U.S. Dollars," or "$" are to the lawful currency of the United States of America. References to "Euro," "euro," or "€" are to the single currency of the participating member states of the European Union.
(b) References to any Article, Section, Schedule, or Exhibit are references to the Articles, Sections, Schedules, and Exhibits of this Agreement, unless otherwise specified.
(c) The words "herein," "hereof," "hereunder," and words of similar import refer to this Agreement as a whole and not to any particular provision of this Agreement.
(d) The use of the singular shall include the plural, and vice versa, and the use of any gender shall include all genders, as the context requires.
(e) The headings and captions used in this Agreement are inserted for convenience of reference only and shall not be considered a part of or affect the construction or interpretation of this Agreement.
(f) The words "include," "includes," and "including" shall be deemed to be followed by the phrase "without limitation."
(g) References to any agreement, instrument, or document mean such agreement, instrument, or document as amended, restated, supplemented, or otherwise modified from time to time, unless the context otherwise requires.
(h) References to any Person include such Person's successors and permitted assigns.
(i) References to any statute, rule, or regulation are to such statute, rule, or regulation as amended, modified, supplemented, or replaced from time to time (and, in the case of any statute, include any rule or regulation promulgated under such statute), unless the context otherwise requires.
(j) The words "shall" and "will" have equal force and effect.
(k) The Parties have participated jointly in the negotiation and drafting of this Agreement, and in the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties, and no presumption or burden of proof shall arise favoring or disfavoring either Party by virtue of the authorship of any provision of this Agreement.
Section 1.3 — Accounting Terms
(a) All accounting terms not specifically or completely defined herein shall be construed in conformity with, and all financial data (including financial ratios and other financial calculations) required to be submitted pursuant to this Agreement shall be prepared in conformity with, IFRS as adopted and applied by the Issuer in the preparation of its consolidated financial statements, applied on a consistent basis, except as otherwise specifically prescribed herein.
(b) Notwithstanding the foregoing, with respect to TAI and any financial statements, calculations, or reports prepared solely with respect to TAI on a standalone basis, such statements, calculations, and reports shall be prepared in conformity with GAAP, applied on a consistent basis.
(c) In the event of any conflict between the application of IFRS and GAAP for purposes of consolidated reporting of the Issuer and its subsidiaries, the conflict shall be resolved in favor of IFRS as applied in the Issuer's consolidated financial statements.
(d) If at any time any change in IFRS or GAAP would affect the computation of any financial ratio or requirement set forth in this Agreement or any related transaction document, and either Party so requests, the Parties shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in IFRS or GAAP.
ARTICLE II — PURCHASE AND EXCHANGE
Section 2.1 — Exchange of Existing Mezzanine Notes
(a) On the Closing Date, and subject to the satisfaction or waiver of the conditions precedent set forth in Article VI, the Purchaser shall deliver and surrender to the Issuer (or to the Trustee or such other agent as the Issuer may designate in writing) the Existing Mezzanine Notes, together with all related documentation, in the outstanding aggregate principal amount of $112,300,000 (consisting of $100,000,000 of original principal and $12,300,000 of capitalized PIK interest accrued through September 30, 2022), duly endorsed for transfer or accompanied by duly executed instruments of transfer in form and substance reasonably satisfactory to the Issuer.
(b) In exchange for the Existing Mezzanine Notes, on the Closing Date, the Issuer shall issue and deliver to the Purchaser: (i) $60,000,000 in aggregate principal amount of Notes, and (ii) the Equity Interest described in Section 2.3 hereof.
(c) Upon the delivery of the Notes and the Equity Interest to the Purchaser on the Closing Date, the Existing Mezzanine Notes shall be deemed cancelled and of no further force or effect, and all obligations of the Issuer and its subsidiaries under or in connection with the Existing Mezzanine Notes (including, without limitation, all obligations in respect of principal, accrued and unpaid interest (whether PIK or cash pay), fees, expenses, indemnities, and other amounts owing thereunder) shall be deemed fully satisfied, discharged, and released.
(d) The Parties acknowledge and agree that the Exchange results in a reduction (or "haircut") of approximately 46.6% on the debt component of the Existing Mezzanine Notes, calculated as ($112,300,000 − $60,000,000) ÷ $112,300,000. This reduction reflects the negotiated resolution among the Parties and other stakeholders as contemplated by the RSA and is intended to restore the capital structure of the Issuer to a sustainable level.
Section 2.2 — Issuance of Notes
(a) The Notes shall be issued pursuant to, and shall in all respects be governed by, the Indenture dated as of May 18, 2023, between the Issuer and Garrison Trust Company, as Trustee. In the event of any conflict between the terms of this Agreement and the Indenture with respect to the terms and conditions of the Notes, the Indenture shall control.
(b) The aggregate principal amount of the Notes shall be $60,000,000.
(c) The Notes shall bear interest at the rate of 10.0% per annum, payable entirely in kind ("PIK") by adding accrued interest to the outstanding principal amount of the Notes on each semi-annual interest payment date, with interest compounding semi-annually. For the avoidance of doubt, no cash interest shall be payable on the Notes at any time prior to the Maturity Date or upon the occurrence of an Event of Default, unless otherwise expressly provided in the Indenture.
(d) The Notes shall mature on June 30, 2028 (the "Maturity Date"), at which time the entire outstanding principal amount of the Notes (including all capitalized PIK interest) shall become due and payable.
(e) The Notes shall be secured by second-priority Liens on the Collateral, which Liens shall be subordinate and junior in all respects to the first-priority Liens securing the Senior Secured Obligations in favor of the Administrative Agent, as set forth in and governed by the Amended and Restated Intercreditor Agreement dated as of May 15, 2023. The relative rights and priorities of the first-lien creditors and the second-lien creditors with respect to the Collateral shall be governed exclusively by the Amended and Restated Intercreditor Agreement.
(f) The Notes shall be represented by one or more global notes registered in the name of the Purchaser or its nominee. No CUSIP or ISIN number shall be assigned to the Notes, as the Notes are being issued in a private placement and are not intended to be traded in any public market. The Notes have not been and will not be registered under the Securities Act or the securities laws of any state.
(g) The Notes shall be subject to the events of default, remedies, covenants, and other terms and conditions set forth in the Indenture.
Section 2.3 — Issuance of Equity Interest
(a) On the Closing Date, concurrently with the issuance of the Notes, the Issuer shall issue to the Purchaser shares of the Issuer's capital stock (or such other equity instruments as may be appropriate under Greek law) representing 15% of the issued and outstanding equity of the Issuer on a fully diluted basis, after giving effect to such issuance and the equity subscription by KFO pursuant to the Equity Subscription Agreement.
(b) Following the Closing and after giving effect to the issuance of the Equity Interest and the KFO equity subscription, the equity ownership of the Issuer shall be as follows:
(c) The Equity Interest shall be subject to the terms and conditions of a shareholders' agreement or other governance arrangements to be agreed upon among the Issuer, KFO, and the Purchaser prior to or concurrently with the Closing, which shareholders' agreement shall include, among other things, customary provisions regarding tag-along rights, drag-along rights, pre-emptive rights, information rights, and transfer restrictions.
(d) The issuance of the Equity Interest to the Purchaser shall be exempt from registration under the Securities Act pursuant to Section 4(a)(2) thereof and Rule 506(b) of Regulation D promulgated thereunder.
Section 2.4 — No Cash Consideration
The Exchange is effected entirely on a cashless basis. No cash consideration is payable by either Party to the other Party in connection with the issuance of the Notes or the Equity Interest. All consideration for the Notes and the Equity Interest flows exclusively through the exchange and cancellation of the Existing Mezzanine Notes, representing the full and complete consideration for the issuance of the Notes and the Equity Interest to the Purchaser. For the avoidance of doubt, this Section 2.4 does not affect the obligation of the Issuer to reimburse the Purchaser for certain legal fees as set forth in Section 10.10.
Section 2.5 — Cancellation of Existing Mezzanine Notes
(a) Upon the issuance of the Notes and the Equity Interest on the Closing Date, the Issuer shall mark the Existing Mezzanine Notes "cancelled" and shall retain the cancelled originals in its records for a period of not less than seven (7) years. The Issuer shall promptly deliver to the Purchaser copies of the cancelled Existing Mezzanine Notes for the Purchaser's records.
(b) All security documents, guarantees, pledges, mortgages, and other collateral documents securing the Existing Mezzanine Notes shall terminate and be of no further force or effect upon the Closing, and the Issuer and the Purchaser shall cooperate in good faith to execute and deliver all instruments, filings, and other documents necessary to release the Liens securing the Existing Mezzanine Notes of record.
(c) Concurrently with the release of the Liens securing the Existing Mezzanine Notes, new security documents in favor of the Purchaser (as holder of the Notes) shall become effective, granting to the Purchaser second-priority Liens on the Collateral as provided in the Indenture and the related security documents, subject to the terms and conditions of the Amended and Restated Intercreditor Agreement.
ARTICLE III — CLOSING
Section 3.1 — Closing Date
The closing of the transactions contemplated by this Agreement (the "Closing") shall occur on the Closing Date at the offices of Calderwood & Harkness LLP, 780 Third Avenue, New York, NY 10017, commencing at 10:00 a.m. Eastern Time, or remotely via the electronic exchange of executed signature pages and other deliverables, or at such other time, date, and place as the Parties may agree in writing. The Closing Date shall be June 30, 2023, which is the Outside Date established by the RSA, unless the Parties agree in writing to an earlier or later date (subject to the limitations set forth in the definition of "Outside Date" in Section 1.1).
Section 3.2 — Deliverables of the Issuer at Closing
At or prior to the Closing, the Issuer shall deliver or cause to be delivered to the Purchaser each of the following:
(a) Notes. Executed Notes in the aggregate principal amount of $60,000,000, in the form attached hereto as Exhibit A, duly executed by the Issuer and authenticated by the Trustee.
(b) Equity Interest. Evidence of the issuance of the Equity Interest to the Purchaser, which may consist of share certificates, book-entry confirmation, or other documentation evidencing the Purchaser's ownership of 15% of the issued and outstanding equity of the Issuer on a fully diluted basis.
(c) Indenture. Executed counterpart signature pages of the Issuer to the Indenture.
(d) Amended and Restated Intercreditor Agreement. Executed counterpart signature pages to the Amended and Restated Intercreditor Agreement.
(e) Officer's Certificate (Issuer). An officer's certificate of the Issuer, substantially in the form attached hereto as Exhibit B, signed by Georgios Andreadis, Chief Executive Officer of the Issuer, certifying that (i) the representations and warranties of the Issuer contained in Article IV of this Agreement are true and correct in all material respects as of the Closing Date, (ii) the Issuer has performed and complied with all covenants and obligations required to be performed or complied with by the Issuer at or before the Closing, and (iii) the conditions set forth in Section 6.2 have been satisfied.
(f) Secretary's Certificate (TAI). A secretary's certificate of TAI, certifying (i) true, correct, and complete copies of the resolutions of the board of directors of TAI authorizing the execution, delivery, and performance of this Agreement and the transactions contemplated hereby, (ii) a true, correct, and complete copy of the certificate of incorporation of TAI as currently in effect, (iii) a true, correct, and complete copy of the bylaws of TAI as currently in effect, and (iv) the incumbency and specimen signatures of Marcus Hale and Diana Restrepo, as officers of TAI authorized to execute and deliver documents on behalf of TAI in connection with the transactions contemplated hereby.
(g) Legal Opinion (TAI — Calderwood & Harkness). A legal opinion of Calderwood & Harkness LLP, dated the Closing Date and addressed to the Purchaser, in form and substance reasonably satisfactory to the Purchaser, opining as to the due authorization, execution, delivery, and enforceability of this Agreement and the Notes with respect to TAI, and such other matters as the Purchaser may reasonably request. The responsible partner for such opinion shall be Nathaniel Bower.
(h) Legal Opinion (TSL — Greek Counsel). A legal opinion of Vassiliou & Demetriou Law Offices, dated the Closing Date and addressed to the Purchaser, signed by Alexandros Vassiliou, in form and substance reasonably satisfactory to the Purchaser, opining as to the due organization and valid existence of TSL under Greek law, the due authorization, execution, delivery, and enforceability of this Agreement and the Notes with respect to TSL under Greek law, and such other matters as the Purchaser may reasonably request.
(i) Solvency Certificate (TAI). A Solvency Certificate of TAI, signed by Diana Restrepo, Vice President, Finance, certifying that, after giving effect to the transactions contemplated hereby, TAI (i) is not insolvent, (ii) is not left with unreasonably small capital, and (iii) has not incurred debts beyond its ability to pay as they mature.
(j) Evidence of Amendment No. 1. Evidence, in form and substance reasonably satisfactory to the Purchaser, that Amendment No. 1 to the Senior Secured Credit Agreement has been duly executed by all parties thereto and is effective as of the Closing Date or immediately prior thereto.
(k) Evidence of KFO Equity Contribution. Evidence, in form and substance reasonably satisfactory to the Purchaser, that the Equity Subscription Agreement between TSL and KFO Holdings SA has been duly executed by all parties thereto and that the €35,000,000 equity contribution (approximately $38,200,000 at €1 = $1.0914) has been funded in full.
(l) Good Standing Certificate. A certificate of good standing (or equivalent) for TAI issued by the Delaware Secretary of State, dated not more than ten (10) Business Days prior to the Closing Date.
(m) Auditor Confirmation. A written confirmation from Grainger, Holt & Associates LLP, independent auditor of the Issuer (lead engagement partner Malcolm Holt), confirming that, based on their review, no objections exist regarding the Exchange for financial reporting purposes under IFRS and that the Exchange has been appropriately characterized for purposes of the Issuer's financial statements.
Section 3.3 — Deliverables of the Purchaser at Closing
At or prior to the Closing, the Purchaser shall deliver or cause to be delivered to the Issuer each of the following:
(a) Existing Mezzanine Notes. The Existing Mezzanine Notes in the aggregate outstanding principal amount of $112,300,000, duly endorsed for transfer or accompanied by duly executed instruments of transfer, for cancellation by the Issuer.
(b) Executed Counterpart Signature Pages. Executed counterpart signature pages to this Agreement, the Indenture, the Amended and Restated Intercreditor Agreement, and all other ancillary documents to which the Purchaser is a party.
(c) Officer's Certificate (Purchaser). An officer's certificate of the Purchaser, substantially in the form attached hereto as Exhibit C, signed by Rebecca Quimby, Senior Partner, certifying that (i) the representations and warranties of the Purchaser contained in Article V of this Agreement are true and correct in all material respects as of the Closing Date, (ii) the Purchaser has the requisite power and authority to execute, deliver, and perform its obligations under this Agreement, and (iii) the conditions set forth in Section 6.3 have been satisfied.
Section 3.4 — Concurrent Closings
The Closing under this Agreement is expressly conditioned upon, and shall occur simultaneously with, the closing of each of the following transactions contemplated by the RSA:
(i) Amendment No. 1 to the Senior Secured Credit Agreement. The execution and effectiveness of Amendment No. 1 to the Senior Secured Credit Agreement, dated May 15, 2023, providing for the extension of the maturity date of the Senior Secured Credit Facility from June 15, 2024 to June 15, 2027, the conversion of $75,000,000 of Term Loan A principal to PIK, the reduction of the revolving credit facility commitment from $200,000,000 to $150,000,000, and the resetting of the applicable financial covenants.
(ii) KFO Equity Contribution. The funding of the KFO equity contribution of €35,000,000 (approximately $38,200,000 at the exchange rate of €1 = $1.0914) pursuant to the Equity Subscription Agreement.
(iii) Amended and Restated Intercreditor Agreement. The execution of the Amended and Restated Intercreditor Agreement by Nordbank International AG (as first-lien agent) and the Purchaser (as second-lien holder).
(iv) Payment of Missed Unsecured Note Coupon. The payment of the missed unsecured note coupon of $2,062,500 to Garrison Trust Company (as trustee for the holders of the $50,000,000 8.25% Senior Unsecured Notes due March 1, 2025 (CUSIP 87265BAB5)).
(v) Amended and Restated Intercompany Promissory Note. The execution of the Amended and Restated Intercompany Promissory Note in the principal amount of $76,400,000 from TAI to TSL, providing for the extension of the maturity thereof to December 2028 and the reduction of the applicable interest rate from 5.0% to 2.0% per annum.
The failure of any of the foregoing transactions to close simultaneously with the Closing under this Agreement shall entitle either Party to decline to close the transactions contemplated hereby without liability (except as otherwise provided in Section 9.2).
ARTICLE IV — REPRESENTATIONS AND WARRANTIES OF THE ISSUER
The Issuer hereby represents and warrants to the Purchaser as of the date hereof and as of the Closing Date (except where any such representation or warranty is expressly stated to be made only as of a specified date, in which case such representation or warranty shall be made only as of such specified date), as follows:
Section 4.1 — Organization and Good Standing
(a) TSL is a société anonyme duly organized and validly existing under the laws of the Hellenic Republic, duly registered with the Athens General Commercial Registry, with all requisite corporate power and authority to own, lease, and operate its properties and assets, and to conduct its business as currently conducted and as proposed to be conducted. TSL was founded in 1987 by the Kostandinos family and has been continuously operating since such date.
(b) TAI is a C-Corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware, with its registered agent at Capitol Registered Agents LLC, 1209 Orange Street, Wilmington, DE 19801, and with EIN 84-3291057. TAI has all requisite corporate power and authority to own, lease, and operate its properties and assets and to conduct its business as currently conducted and as proposed to be conducted. TAI is duly qualified to do business and in good standing in each jurisdiction where the nature of its business or the ownership of its properties requires such qualification, including the State of Texas.
(c) Each of the 14 vessel-owning special purpose vehicles through which the Issuer holds title to certain of its vessels is duly organized and validly existing under the laws of the jurisdiction of its organization and has all requisite corporate or entity power and authority to own and operate its respective vessel or vessels.
Section 4.2 — Authorization; Enforceability
(a) The execution, delivery, and performance of this Agreement, the Notes, the Indenture, and each of the other transaction documents to which the Issuer is a party have been duly authorized by all necessary corporate action of the Issuer, including the approval of the board of directors of TSL (which board is chaired by Dimitrios Kostandinos and includes, among others, Georgios Andreadis, Chief Executive Officer, and Irini Dalakoura, Chief Financial Officer). No vote or approval of the shareholders of the Issuer is required in connection with the execution, delivery, or performance of this Agreement or the other transaction documents, other than any shareholder approvals that have already been obtained.
(b) This Agreement has been duly executed and delivered by the Issuer and constitutes, and each of the Notes, the Indenture, and the other transaction documents to which the Issuer is a party, when duly executed and delivered by the Issuer, will constitute, a legal, valid, and binding obligation of the Issuer, enforceable against the Issuer in accordance with its respective terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, receivership, fraudulent transfer, and other similar laws affecting or relating to the enforcement of creditors' rights generally and to general principles of equity (whether considered in a proceeding in equity or at law).
Section 4.3 — No Conflicts
(a) The execution, delivery, and performance by the Issuer of this Agreement, the Notes, the Indenture, and the other transaction documents to which the Issuer is a party, and the consummation of the transactions contemplated hereby and thereby, do not and will not (i) violate or conflict with the articles of association (katastatiko) of TSL or the certificate of incorporation or bylaws of TAI, (ii) violate, conflict with, result in a breach of, or constitute a default (or give rise to any right of termination, cancellation, acceleration, or loss of any right) under, any material agreement, contract, instrument, mortgage, indenture, lien, or license to which the Issuer, TAI, or any of their respective subsidiaries is a party or by which any of them or their respective assets are bound, including the Senior Secured Credit Agreement as amended by Amendment No. 1, or (iii) violate or conflict with any applicable law, statute, rule, regulation, order, judgment, decree, or governmental permit applicable to the Issuer, TAI, or any of their respective subsidiaries, including Greek Law 4738/2020 (the Greek Debt Settlement & Insolvency Code) and any applicable provisions of the Delaware General Corporation Law.
(b) No consent of, or notice to, any lender under the Senior Secured Credit Agreement is required in connection with the Exchange that has not been obtained or given pursuant to Amendment No. 1 and the Amended and Restated Intercreditor Agreement.
Section 4.4 — Governmental Approvals
No consent, approval, license, permit, order, or authorization of, or registration, declaration, notice, or filing with, any Governmental Authority is required in connection with the execution, delivery, and performance by the Issuer of this Agreement or the consummation of the Exchange, other than (i) any filings with the Athens General Commercial Registry in connection with the issuance of the Equity Interest, which filings shall be made promptly following the Closing, and (ii) routine filings, if any, with the U.S. Securities and Exchange Commission, none of which are required, as the Notes and the Equity Interest are being issued in a private placement exempt from registration under the Securities Act.
Section 4.5 — Capitalization
(a) As of the date hereof and immediately prior to giving effect to the transactions contemplated hereby, the authorized, issued, and outstanding capital stock of the Issuer is as set forth in Schedule C hereto. Immediately prior to the Closing, 80% of the equity of the Issuer is held by the Kostandinos family, consisting of 62% held directly or indirectly by Dimitrios Kostandinos and 18% held directly or indirectly by Elena Kostandinos-Pavlou, in each case through KFO Holdings Société Anonyme, with the remaining 20% held by non-family holders.
(b) After giving effect to the issuance of the Equity Interest to the Purchaser and the equity subscription by KFO pursuant to the Equity Subscription Agreement, the Purchaser will hold 15% of the issued and outstanding equity of the Issuer on a fully diluted basis, the Kostandinos family (through KFO) will hold 68%, and non-family holders will hold 17%.
(c) Except as contemplated by this Agreement, the Equity Subscription Agreement, and the RSA, there are no outstanding options, warrants, convertible securities, or other rights or agreements obligating the Issuer to issue, sell, or deliver any additional shares of capital stock or other equity interests of the Issuer.
Section 4.6 — Financial Statements; Material Adverse Effect
(a) The Issuer has provided to the Purchaser true, complete, and correct copies of the following financial statements (collectively, the "Financial Statements"):
(i) The audited consolidated financial statements of the Issuer for the fiscal year ended December 31, 2021, including a consolidated statement of financial position, a consolidated statement of comprehensive income, a consolidated statement of cash flows, and a consolidated statement of changes in equity, together with the notes thereto and the report of Grainger, Holt & Associates LLP (lead engagement partner Malcolm Holt) thereon (such financial statements reflecting consolidated revenue of approximately €1,420,000,000 for FY2021).
(ii) The unaudited consolidated interim financial statements of the Issuer for the nine-month period ended September 30, 2022, prepared on a basis consistent with the audited financial statements (such financial statements reflecting estimated FY2022 consolidated revenue of approximately €987,000,000, representing a decline of approximately 30.5% from FY2021).
(b) The Financial Statements were prepared in accordance with IFRS applied on a consistent basis throughout the periods covered thereby and present fairly, in all material respects, the consolidated financial position, results of operations, and cash flows of the Issuer and its subsidiaries as of the dates and for the periods indicated therein.
(c) TAI revenue for the fiscal year ended December 31, 2021 was approximately $312,000,000. Estimated TAI revenue for the fiscal year ended December 31, 2022 was approximately $198,000,000.
(d) The last-twelve-months ("LTM") EBITDA of the Issuer and its subsidiaries as of September 30, 2022 was approximately $98,600,000. LTM interest expense as of September 30, 2022 was approximately $56,700,000, resulting in an LTM interest coverage ratio of approximately 1.74x.
(e) Since September 30, 2022, there has been no Material Adverse Effect, other than the disclosed liquidity crisis and covenant breaches described in the recitals hereto, including the breach of the Minimum Liquidity Covenant on September 15, 2022, the breach of the Maximum Net Leverage Ratio covenant, and the breach of the Minimum Interest Coverage Ratio covenant.
Section 4.7 — Indebtedness
(a) Schedule E hereto sets forth a complete and accurate list of all outstanding indebtedness of the Issuer and its subsidiaries as of September 30, 2022, aggregating approximately $847,300,000, consisting of the following:
(i) Senior Secured Credit Facility: $540,000,000 outstanding, comprising (A) Term Loan A ($270,000,000), (B) Revolving Credit Facility ($185,000,000 drawn of $200,000,000 commitment), and (C) Term Loan B (U.S. Tranche) ($85,000,000), in each case with Nordbank International AG as Administrative Agent and Collateral Agent, bearing interest at SOFR plus 375 basis points, with an original maturity date of June 15, 2024 (to be extended to June 15, 2027 pursuant to Amendment No. 1).
(ii) Existing Mezzanine Notes: $112,300,000 outstanding (original $100,000,000 principal plus $12,300,000 capitalized PIK interest), held by the Purchaser, bearing interest at 11.5% PIK toggle, with an original maturity date of December 15, 2024 (to be exchanged for the Notes and the Equity Interest pursuant to this Agreement).
(iii) Senior Unsecured Notes: $50,000,000 outstanding, bearing interest at 8.25% cash pay, with a maturity date of March 1, 2025, with Garrison Trust Company as trustee (CUSIP 87265BAB5).
(iv) Intercompany Note: $76,400,000 from TAI to TSL, currently bearing interest at 5.0% per annum, subordinated to the Senior Secured Obligations and the Notes (to be amended and restated to reduce the interest rate to 2.0% and extend the maturity to December 2028).
(v) Trade payables: $38,700,000, of which the largest single creditor is Olympian Fuel & Supply SA, owed approximately $9,200,000.
(vi) Other payables: approximately $29,900,000.
(b) Except as set forth in Schedule E, neither the Issuer nor any of its subsidiaries has any outstanding indebtedness, contingent liabilities, or off-balance-sheet obligations that, individually or in the aggregate, are material.
Section 4.8 — Collateral and Liens
(a) The Collateral securing the Notes (on a second-priority basis) consists of the assets more fully described in Schedule D hereto, including (i) 38 dry-bulk carriers (10 Capesize, 14 Panamax, and 14 Supramax), (ii) 12 container vessels (Sub-Panamax), for a total of 50 vessels, (iii) the Houston terminal lease held by TAI, (iv) all accounts receivable of the Issuer and TAI, and (v) 100% of the equity interests in TAI and 14 vessel-owning special purpose vehicles.
(b) The fleet was appraised at an aggregate value of $623,000,000 as of November 1, 2022, pursuant to an independent appraisal conducted by Drakos Maritime Valuations Ltd. (Captain Nikos Drakos, principal), broken down as follows:
The November 1, 2022 appraised value represents a decline of $268,000,000 (or approximately 30.1%) from the January 2022 appraised value of $891,000,000.
(c) The second-priority Lien on the Collateral securing the Notes is and shall be subordinate and junior in all respects to the first-priority Lien on the Collateral in favor of Nordbank International AG (as Collateral Agent) securing the Senior Secured Obligations, as governed by the Amended and Restated Intercreditor Agreement. No other Liens exist on the Collateral other than the first-priority Lien, the second-priority Lien contemplated hereby, and Permitted Liens (as defined in the Indenture).
Section 4.9 — Litigation
No material litigation, arbitration, governmental investigation, or administrative proceeding is pending or, to the knowledge of the Issuer, threatened against the Issuer, TAI, or any of their respective subsidiaries before any court, arbitral tribunal, Governmental Authority, or regulatory body that (a) would have a Material Adverse Effect, (b) challenges the validity or enforceability of this Agreement, the Notes, the Indenture, or any other transaction document, or (c) seeks to enjoin or prevent the consummation of the transactions contemplated hereby or by the RSA, other than the disclosed covenant breaches under the Senior Secured Credit Agreement and the related forbearance arrangements.
Section 4.10 — Tax Matters
(a) The Issuer and each of its subsidiaries have timely filed all material tax returns required to be filed (taking into account any applicable extensions) with the appropriate tax authorities in all jurisdictions in which such returns are required to be filed, and all such tax returns are true, correct, and complete in all material respects. TSL's Greek Tax ID (AFM) is 998214763. TAI's EIN is 84-3291057.
(b) The Issuer and each of its subsidiaries have paid all material taxes due and payable (whether or not shown on any tax return), except for taxes being contested in good faith by appropriate proceedings and for which adequate reserves have been established in accordance with IFRS or GAAP, as applicable.
(c) The Issuer has been advised by its tax counsel, Sylvia Hartwell of Calderwood & Harkness LLP, regarding the tax treatment of the Exchange, including (i) the potential cancellation-of-debt income implications under Section 108 of the Internal Revenue Code of 1986, as amended, and (ii) the debt modification versus exchange analysis under Treasury Regulation §1.1001-3, and the Issuer has made appropriate determinations and disclosures with respect thereto.
Section 4.11 — Insurance
(a) The Issuer and its subsidiaries maintain adequate insurance coverage with financially sound and reputable insurance carriers, including hull and machinery insurance, protection and indemnity ("P&I") insurance, loss of hire insurance, and general liability insurance, in each case in amounts and with deductibles that are customary for companies engaged in the international shipping industry. Such insurance is brokered through Seaward & Beckett Insurance Brokers Ltd. (Ian Beckett, principal), 71 Fenchurch Street, London EC3M 4BS, United Kingdom.
(b) The Issuer maintains directors' and officers' liability insurance coverage provided by Promontory Indemnity Insurance Co. (Bermuda), Policy No. PII-DO-2022-08847, with an aggregate limit of $25,000,000, which coverage is currently in force and effect. The Issuer shall use commercially reasonable efforts to maintain such D&O coverage (or substantially equivalent coverage) in effect at all times during the term of the Notes.
(c) All premiums on the insurance policies referenced in this Section 4.11 have been paid when due, and no notice of cancellation, non-renewal, or material adverse change has been received by the Issuer with respect to any such policy.
Section 4.12 — Compliance with Laws
The Issuer and TAI are, and since January 1, 2020 have been, in compliance with all applicable laws, statutes, rules, regulations, orders, judgments, and decrees of any Governmental Authority in all material respects, including applicable maritime laws, environmental regulations (including the International Maritime Organization's regulations on greenhouse gas emissions and the International Convention for the Prevention of Pollution from Ships (MARPOL)), sanctions laws, anti-money laundering laws, anti-bribery laws (including the U.S. Foreign Corrupt Practices Act and applicable Greek anti-corruption statutes), and Jones Act considerations applicable to TAI's operations in the United States, except where the failure to be in compliance would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
Section 4.13 — Employee Matters
(a) TSL employs approximately 4,200 employees globally, including shore-based personnel and seafarers. Approximately 680 of such employees are employed by TAI in the United States, principally at TAI's Houston office at 1400 McKinney Street, Suite 2200, Houston, TX 77010.
(b) There are no material labor disputes, strikes, slowdowns, work stoppages, or grievances pending or, to the knowledge of the Issuer, threatened against the Issuer or any of its subsidiaries that would reasonably be expected to have a Material Adverse Effect.
(c) No obligations under the Worker Adjustment and Retraining Notification Act of 1988 (the "WARN Act") or any similar state or local law are currently outstanding with respect to TAI or any of its subsidiaries.
(d) The Issuer and its subsidiaries are in compliance with all material terms and conditions of employment and labor agreements, collective bargaining agreements, and applicable employment laws, including laws relating to wages, hours, overtime, benefits, workplace safety, and immigration.
Section 4.14 — Vessel Disposition Undertaking
Pursuant to the Side Letter Agreement dated March 14, 2023, between TSL and Nordbank International AG, the Issuer has undertaken to sell six (6) older dry-bulk carriers (with an average age of approximately 18 years) within twelve (12) months following the closing of the transactions contemplated by the RSA, for estimated aggregate proceeds of approximately $72,000,000 (based on the November 1, 2022 Drakos appraisal values for such vessels). The net proceeds from such dispositions shall be applied to prepay the Term Loan A under the Senior Secured Credit Agreement in accordance with the mandatory prepayment provisions thereof and the terms of Amendment No. 1. The Issuer shall keep the Purchaser reasonably informed of the progress of such vessel dispositions.
ARTICLE V — REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Issuer as of the date hereof and as of the Closing Date as follows:
Section 5.1 — Organization and Good Standing
BMC is a limited liability company duly organized, validly existing, and in good standing under the laws of the State of Delaware, with all requisite limited liability company power and authority to own, lease, and operate its properties and to conduct its business as currently conducted. BMC's principal offices are located at 600 Lexington Avenue, 22nd Floor, New York, NY 10022.
Section 5.2 — Authorization; Enforceability
The execution, delivery, and performance of this Agreement and each of the other transaction documents to which the Purchaser is a party have been duly authorized by all necessary action on the part of the Purchaser, including all necessary action by its members, managers, or other governing body, as applicable. Rebecca Quimby, Senior Partner of BMC, is duly authorized to execute and deliver this Agreement and the other transaction documents on behalf of the Purchaser and to bind the Purchaser to the obligations set forth herein and therein. This Agreement has been duly executed and delivered by the Purchaser and constitutes, and each of the other transaction documents to which the Purchaser is a party, when duly executed and delivered by the Purchaser, will constitute, a legal, valid, and binding obligation of the Purchaser, enforceable against the Purchaser in accordance with its respective terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, and other similar laws affecting or relating to the enforcement of creditors' rights generally and to general principles of equity.
Section 5.3 — Ownership of Existing Mezzanine Notes
The Purchaser is the sole beneficial and record holder of the Existing Mezzanine Notes in the aggregate outstanding principal amount of $112,300,000 (consisting of $100,000,000 of original principal and $12,300,000 of capitalized PIK interest), free and clear of all Liens, claims, and encumbrances, other than the Liens under the existing Intercreditor Agreement dated as of June 15, 2019 and any restrictions on transfer imposed by applicable securities laws. The Purchaser has the unrestricted right to surrender the Existing Mezzanine Notes for cancellation in connection with the Exchange.