exv10w2






Exhibit 10.2




F21.103




DATED 9 November 2010




GRAND AFFECTION S.A.

GRAND AFFINITY S.A.

(as Borrowers)



- and -



NEWLEAD HOLDINGS LTD.

(as New Corporate Guarantor)



- and -



DVB BANK SE

and others

(as Lenders)



- and -



DVB BANK SE

(as Agent)



- and -



DVB BANK SE

(as Security Agent)



 





SECOND SUPPLEMENTAL AGREEMENT

TO A SECURED LOAN FACILITY AGREEMENT

DATED 9 JULY 2010 AS AMENDED AND SUPPLEMENTED

BY A FIRST SUPPLEMENTAL AGREEMENT

DATED 14 JULY 2010

 





STEPHENSON HARWOOD

Ariston Building

2 Filellinon Street & Akti Miaouli

Piraeus 185 36

Greece

Tel: +30 210 4295 160

Fax: +30 210 4295 166

Ref: F21.103



 









 





CONTENTS




	 	 	 	 	 
	 	 	Page
	1 Interpretation
	 	 	2	 
	 
	 	 	 	 
	2 Conditions
	 	 	3	 
	 
	 	 	 	 
	3 Representations and Warranties
	 	 	4	 
	 
	 	 	 	 
	4 Amendments to Loan Agreement and the Security Documents
	 	 	4	 
	 
	 	 	 	 
	5 Confirmation and Undertaking
	 	 	21	 
	 
	 	 	 	 
	6 Communications, Law and Jurisdiction
	 	 	21	 
	 
	 	 	 	 
	Schedule 1
	 	 	22	 
	Effective Date Confirmation
	 	 	22	 
	 
	 	 	 	 
	Schedule 2
	 	 	23	 
	Form of Compliance Certificate
	 	 	23
	 







 












 





SECOND SUPPLEMENTAL AGREEMENT




Dated: 9 November 2010




BETWEEN:-





	(1)	 	GRAND AFFECTION S.A. (“Affection”) and GRAND AFFINITY S.A. (“Affinity”), each a company
incorporated under the laws of the Marshall Islands with its registered office at c/o The
Trust Company of the Marshall Islands Inc., The Trust Company Complex, Ajeltake Island,
Ajeltake Road, Majuro, Marshall Islands M.H. 96960; and (together the “Borrowers” and each a
“Borrower”) jointly and severally; and
	 
	(2)	 	NEWLEAD HOLDINGS LTD., a company incorporated according to the laws of Bermuda, with its
registered office at Canons Court, 22 Victoria Street, Hamilton HM12, Bermuda (the
“New Corporate Guarantor”); and
	 
	(3)	 	the banks listed in schedule 1 of the loan agreement, each acting through its office at the
address indicated against its name in schedule 1 (together the “Lenders” and each a “Lender”);
and
	 
	(4)	 	DVB BANK SE, acting as agent, as underwriter and as arranger through its office at Platz der
Republik 6, D-60325 Frankfurt am Main, Federal Republic of Germany (in that capacity the
“Agent”); and
	 
	(5)	 	DVB BANK SE, acting as security agent through its office at Platz der Republik 6, D-60325
Frankfurt am Main, Federal Republic of Germany (in that capacity the “Security Agent”).




SUPPLEMENTAL TO a Secured Loan Facility Agreement dated 9 July 2010 as amended and supplemented by
a first supplemental agreement dated 14 July 2010 (together, the “Loan Agreement”) each made
between (1) the Lenders, as lenders, (2) the Agent, acting as agent for the Lenders, (3) the
Security Agent, acting as security agent for the Lenders and (4) the Borrowers, each of the
Republic of the Marshall Islands, as joint and several borrowers, on the terms and subject to the
conditions of which the Lenders have agreed to advance to the Borrowers, on a joint and several
basis, an aggregate amount not exceeding forty eight million United States Dollars (US$48,000,000)
(the “Loan”) in order to assist the Borrowers in pre-delivery and post-delivery finance of part of
the aggregate Contract Price of the Vessels and to refinance certain Existing Indebtedness.




 









 





WHEREAS:-





	(A)	 	The Borrowers and the New Corporate Guarantor have, inter alia, requested that, the financial
covenants contained in clause 12.2 of the Loan Agreement and clause 6.12 of the New Corporate
Guarantee be amended as more particularly described in this Second Supplemental Agreement.
	 
	(B)	 	The Lenders, the Agent, the Security Agent, the Borrowers and the New Corporate Guarantor
have agreed to amend the Loan Agreement and the New Corporate Guarantee on the terms and
subject to the conditions contained in this Second Supplemental Agreement.





IT IS AGREED THAT:-





	1	 	Interpretation






	 	1.1	 	In this Second Supplemental Agreement the following words and expressions shall
have the following meanings:-






	 	1.1.1	 	“Effective Date” means the date on which the Agent confirms to
the Borrowers in writing substantially in the form set out in Schedule 1 that
all of the conditions referred to in Clause 2.1 have been satisfied, which
confirmation the Agent shall be under no obligation to give if an Event of
Default shall have occurred.
	 
	 	1.1.2	 	“Second Supplemental Agreement” means the agreement herein
contained.






	 	1.2	 	All words and expressions defined in the Loan Agreement shall have the same
meaning when used in this Second Supplemental Agreement unless the context otherwise
requires, and clause 1.2 of the Loan Agreement shall apply to the interpretation of
this Second Supplemental Agreement as if it were set out in full.
	 
	 	1.3	 	All obligations, representations, warranties, covenants and undertakings of the
Borrowers under or pursuant to this Second Supplemental Agreement shall, unless
otherwise expressly provided, be entered into, made or given by them jointly and
severally.





2









 






	2	 	Conditions






	 	2.1	 	Before Clause 4 of this Second Supplemental Agreement shall take effect, the
Security Parties shall deliver or cause to be delivered to or to the order of the Agent
the following documents and evidence:-






	 	2.1.1	 	A certificate of incumbency from a duly authorised officer of
each of the Borrowers and the New Corporate Guarantor confirming that none of
the documents delivered to the Lender pursuant to Clause 3.1 of the Loan
Agreement have been amended or modified in any way since the date of their
delivery to the Agent, or copies, certified by a duly authorised officer of the
Security Party in question as true, complete, accurate and neither amended nor
revoked, of any which have been amended or modified.
	 
	 	2.1.2	 	A certificate of good standing in respect of each of the
Borrowers and the New Corporate Guarantor.
	 
	 	2.1.3	 	The Second Supplemental Agreement, together with all
notices and other documents required by any of them, duly executed.
	 
	 	2.1.4	 	A letter from Holman Nominees Limited, Marlow House, Lloyds
Avenue, London EC3N 3AL, England (tel.: + 44 (0) 20 7488 2300 / Fax: +
44 (0) 20 7481 0316) accepting their appointment by each of the Borrowers and
the New Corporate Guarantor as agent for service of proceedings pursuant to
this Second Supplemental Agreement.
	 
	 	2.1.5	 	If required by the Agent, confirmation satisfactory to the
Lenders that all legal opinions required by the Lender will be given
substantially in the form required by the Agent.
	 
	 	2.1.6	 	Evidence of payment by the Borrowers for the account of the
Lenders of an amendment fee in the amount of $10,000, in proportion to their
Commitments, on the date of this Second Supplemental Agreement.






	 	2.2	 	If the Agent agrees that Clause 4 of this Second Supplemental Agreement shall
take effect prior to the Effective Date, the Borrowers and the New Corporate Guarantor




3









 






	 	 	 	undertake to deliver all outstanding documents and evidence to or to the order of
the Agent no later than the date specified by the Agent, which however, shall not be
taken as a waiver of the Agent’s right to require production of all the documents
and evidence required by Clause 2.1.






	 	2.3	 	All documents and evidence delivered to the Agent pursuant to this Clause shall:-






	 	2.3.1	 	be in form and substance acceptable to the Agent;
	 
	 	2.3.2	 	be accompanied, if required by the Agent, by translations into
the English language, certified in a manner acceptable to the Agent; and
	 
	 	2.3.3	 	if required by the Agent, be certified, notarised, legalised
or attested in a manner acceptable to the Agent.






	3	 	Representations and Warranties
	 
	 	 	Each of the representations and warranties contained in clause 11 of the Loan Agreement and
clause 2 of the New Corporate Guarantee shall be deemed repeated by the Borrowers and the
New Corporate Guarantor at the date of this Second Supplemental Agreement and at the
Effective Date, by reference to the facts and circumstances then pertaining, as if
references to the Finance Documents included this Second Supplemental Agreement.
	 
	4	 	Amendments to the Loan Agreement and the New Corporate Guarantee
	 
	 	 	With effect from 9 July 2010:-






	 	4.1	 	clause 12.1.1 of the Loan Agreement shall be deleted and replaced with the
following:-
	 
	 	 	 	“12.1.1 Financial Statements The Borrowers shall supply to the Agent and shall
procure that the New Corporate Guarantor supplies to the Agent as soon as the same
become available, but in any event within 180 days after the end of each of its
financial years, each Borrower’s and the New Corporate Guarantor’s audited
consolidated financial and cash flow statements for that financial year, together
with a Compliance Certificate to be provided by the New Corporate Guarantor and
signed by one director of the New Corporate Guarantor, setting out (in reasonable




4









 






	 	 	 	detail) computations as to compliance with Clause 12.2 (Financial covenants) as at
the date as at which those financial and cash flow statements were drawn up.”;






	 	4.2	 	schedule 6 of the Loan Agreement shall be deleted and replaced with Schedule 2;
	 
	 	4.3	 	clause 12.2.1 of the Loan Agreement shall be deleted and replaced with the
following:-
	 
	 	 	 	“12.2.1 The Borrower shall:






	 	12.2.1.1	 	procure that the New Corporate Guarantor shall at all times during
the Facility Period:






	 	(a)	 	maintain an Equity Ratio of not less than:






	 	(i)	 	from the
Financial Quarter Day ending on 30 September 2012
until the Financial Quarter Day ending on 30 June 2013,
25%; and
	 
	 	(ii)	 	from the
Financial Quarter Day ending on 30 September 2013
onwards, 30%;






	 	(b)	 	maintain on a consolidated
basis the Minimum Liquidity;
	 
	 	(c)	 	maintain on a consolidated
basis on each Financial Quarter Day, Working Capital of not
less than zero Dollars ($0);
	 
	 	(d)	 	maintain a ratio of EBITDA to
Interest Payable on a trailing four (4) Financial Quarter basis
of not less than:






	 	(i)	 	from the
Financial Quarter Day ending on 30 September 2012 until
the Financial Quarter Day ending on 30 June 2013, 2.00
to 1.00; and
	 
	 	(ii)	 	from the
Financial Quarter Day ending on 30 September 2013
onwards, 2.50 to 1.00; and






	 	(e)	 	maintain free Cash in an amount
which is no less than five




5









 






	 	 	 	million Dollars ($5,000,000).






	 	 	 	The financial covenants contained in this Clause 12.2.1.1 (a) — (d)
shall be tested quarterly on the basis of the quarterly Financial
Statements provided under Clause 12.1.1 and Clause 12.1.3 and shall
be confirmed in the relevant Compliance Certificate and the
financial covenants contained in this Clause 12.2.1.1 (e) shall be
tested monthly by the provisions of bank statements in form and
substance acceptable to the Agent.”;
	 
	 	12.2.1.2	 	procure that the New Corporate Guarantor as soon as possible, but in no
event no later than twenty eight (28) days after the end of each month in each
financial year provide to the Agent a cash balance report showing (a) Minimum
Liquidity, (b) detailed break down of unrestricted cash, restricted cash,
unrestricted cash equivalents and restricted cash equivalents of the New
Corporate Guarantor, (c) the unutilised funds under the IBG Bond Issue and (d)
the unutilised overdraft limits and the identity of the banks that these relate
to; and
	 
	 	12.2.1.3	 	maintain at any time following each Vessel’s delivery, the Minimum
Liquidity Reserve (which is included in the total sum of the Minimum Liquidity
and which is identifiable on a per Vessel basis in the relevant monthly bank
statements) in respect of each Vessel and as soon as possible, but in no event
later than twenty eight (28) days after the end of each month in each financial
year provide to the Agent a cash balance report showing each Borrower’s
unrestricted Cash balances.”;






	 	4.4	 	clause 12.2.2 of the Loan Agreement shall be deleted and replaced with the
following:-






	 	 	 	“12.2.2 The expressions used in Clause 12.2.1 shall be construed in accordance with
GAAP, and for the purposes of Clause 12.2.1:
	 
	 	 	 	“Borrowed Money” means Indebtedness in respect of (i) money borrowed or
raised and debit balances at banks, (ii) any bond, note, loan stock,
debenture or similar debt instrument, (iii) acceptance or documentary credit




6









 






	 	 	 	facilities, (iv) receivables sold or discounted (otherwise than on a
non-recourse basis), (v) deferred payments for assets or services acquired,
(vi) finance leases and hire purchase contracts, (vii) swaps, forward
exchange contracts, futures and other derivatives, (viii) any other
transaction (including without limitation forward sale or purchase
agreements) having the commercial effect of a borrowing or raising of money
or of any of (ii) to (vii) above and (ix) guarantees in respect of
Indebtedness of any person falling within any of (i) to (viii) above;
	 	 	 	“Cash” means free and available negotiable money, orders, cheques and bank
balances and deposits but to exclude (a) any cash that is specifically
blocked and charged and (b) cash standing to the credit of any blocked
account and charged to the Agent pursuant to this Agreement;
	 
	 	 	 	“Cash Equivalent Investments” means at any time:






	 	a)	 	certificates of deposit maturing within one
year after the relevant date of calculation and issued by a bank or
financial institution acceptable to the Agent;
	 
	 	b)	 	any investment in marketable debt obligations
issued or guaranteed by the government of the United States of America,
the United Kingdom, any member state of the European Economic Area or
any Participating Member State or by an instrumentality or agency of
any of them having an equivalent credit rating, maturing within one
year after the relevant date of calculation and not convertible or
exchangeable to any other security; or
	 
	 	c)	 	any other debt security approved by the Agent;
or
	 
	 	d)	 	amounts standing to the credit of the Retention
Account,






in each case, to which any member of the Group is beneficially entitled at
that time and which is not issued or guaranteed by any member of the Group or
subject to any Encumbrance (other than one arising under the Security
Documents);



7









 







“Charter” means, in relation to a Fleet Vessel, any time charter or
consecutive voyage charter entered into by the relevant owner with a
charterer for a duration of no less than twelve (12) months and in a form and
substance acceptable to the Majority Lenders in their sole discretion and
“Charters” means all of them;




“Current Assets” means, at any time in respect of the Group, the amount of
current assets of the Group on a consolidated basis which would be included
as current assets in a consolidated balance sheet of the Group in accordance
with GAAP drawn up at such time together with such amount of Cash and Cash
Equivalent Investments forming part of the Minimum Liquidity and/or the
Retention Amount (but always excluding any current assets arising from
Derivative Financial Instruments) which may be disregarded from the current
assets in a consolidated balance sheet of the Group;




“Current Liabilities” means, at any time in respect of the Group, the amount
of current liabilities of the Group on a consolidated basis which would be
included as current liabilities in the consolidated balance sheet of the
Group in accordance with GAAP drawn up at such time excluding Deferred Revenue
and all current liabilities arising from Derivative Financial Instruments;




“Deferred Revenue” means at any time in respect of the Group, that liability
calculated at the time an existing Charter(s) or other employment arrangement
is assumed, by discounting at the Group’s weighted average cost of capital,
the difference between the market charter rate for an equivalent vessel and
the assumed charter rate, which liability is recorded as deferred revenue and
amortised to revenue over the remaining period of such Charter(s) or other
employment arrangement;




“Derivative Financial Instruments” means at any time in respect of the Group
the fair value of any derivative transaction and the fair value of any other
derivative financial instruments appearing under this heading (and previously
approved by the Agent) in the consolidated financial statements of the Group
provided by the Borrowers to the Finance Parties in accordance with the
provisions of clause 12.1.3 of the Loan Agreement or otherwise and



8









 







in the event of the Borrowers changing the form or substance of the financial
statements (always in accordance with GAAP) provided by the Borrowers to the
Finance Parties so that Derivative Financial Instruments no longer appears as
a heading and/or such Derivative Financial Instruments are otherwise accounted
for, the determination of what constitutes Derivative Financial Instruments
shall be made by the Agent acting reasonably;




“EBITDA” means, in respect of any period, the consolidated profit on ordinary
activities of the Group before Tax for such period:




	 	a.	 	adjusted to exclude Interest Receivable and Interest Payable and other
similar income or costs to the extent not already excluded;
	 
	 	b.	 	adjusted to exclude any gain or loss realised on the disposal of fixed
assets (whether tangible or intangible);
	 
	 	c.	 	after adding back depreciation and amortisation;
	 
	 	d.	 	adjusted to exclude any exceptional or extraordinary costs or income;
	 
	 	e.	 	after deducting any profit arising out of the release of any provisions
against a liability or charge (excluding in this context the release of any
provisions against liabilities or charges relating to exceptional or
extraordinary items);






“Equity Ratio” means Shareholders Equity as a percentage of Total Assets
adjusted, in each case, for the difference between Fleet Market Value and
Fleet Book Value;




“Finance Lease” means any lease under which a member of the Group is the
lessee which is or should be treated as a finance lease under GAAP (and
includes any hire purchase contract or other arrangement which is similarly
treated);




“Financial Quarter” means each period of approximately three (3) months
commencing on the day after a Financial Quarter Day and ending on the next
following Financial Quarter Day;



9









 







“Financial Quarter Day” means 31 March, 30 June, 30 September and 31 December
in any year;




“Financial Year” means the annual accounting period of the Group ending on 31
December in each year;




“Fleet Book Value” means, at the end of a Financial Year, the aggregate book
value of the Fleet Vessels less depreciation as stated in the most recent
financial statements delivered pursuant to Clause 12.1.1;




“Fleet Market Value” means, at the date of calculation, the aggregate of the
Market Value of all of the Fleet Vessels as last determined in accordance with
the Market Value;




“Fleet Vessels” means the vessels (including, but not limited to, the Vessels)
from time to time owned by a member of the Group (each a “Fleet Vessel”);




“Group” means the New Corporate Guarantor and its Related Companies
(including, but not limited to, the Borrowers) and “member of the Group” shall
be construed accordingly;




“Indebtedness” means any obligation for the payment or repayment of money,
whether as principal or as surety and whether present or future, actual or
contingent;




“Interest” means, in respect of any specified Borrowed Money, all continuing
regular or periodic costs, charges and expenses incurred in effecting,
servicing or maintaining such Borrowed Money including:




(a) gross interest, commitment fees, discount and acceptance fees and
guarantee, fronting and ancillary facility fees payable or incurred on any
form of such Borrowed Money;




(b) repayment and prepayment premiums payable or incurred in repaying or
prepaying such Borrowed Money; and



10









 






(c) the interest element of Finance Leases,




but excluding, in respect of such Borrowed Money, agency and arrangement
fees or other up-front fees;




“Interest Payable” means, in respect of any period, the aggregate
(calculated on a consolidated basis) of:




	 	(a)	 	the amounts charged and posted (or estimated to
be charged and posted) as a current accrual accrued during such period
in respect of members of the Group by way of Interest on all Borrowed
Money, but excluding any amount accruing as interest in-kind (and not
as cash pay) to the extent capitalised as principal during such period;
and
	 
	 	(b)	 	net payments in relation to interest rate or
currency hedging arrangements in respect of Borrowed Money (after
deducting net income in relation to such interest rate or currency
hedging arrangements);






“Interest Receivable” means, in respect of any period, the amount of
Interest accrued on cash balances of the Group (including the amount of
interest accrued on the Earnings Accounts, to the extent that the account
holder is entitled to receive such interest) during such period;




“Market Value”, in respect of a Fleet Vessel, means the market value of the
relevant Vessel to be conclusively determined on the basis of the average of
valuations (which are not more than two months old at the time of the
calculation of the Market Value in question) provided by two reputable,
independent and first class firm of shipbrokers appointed by the Agent. If
the two valuations differ by a margin of over 15% then a third shipbroker
shall be appointed by the Agent and the market value shall be the average of
the three valuations. All valuations shall be on the basis of a charter-free
sale for prompt delivery for cash at arm’s length on normal commercial terms
as between a willing seller and a willing buyer and at the expense of the
Borrowers.




“Minimum Liquidity” means, at any time in respect of the Group, the minimum
amount of Cash and Cash Equivalent Investments being no less




11












 






	 	 	 	than 5% of the Group’s overall Indebtedness (drawn and comprising of short
term debt, long term debt and long term leases);
	 
	 	 	 	“Related Company” of a person means Subsidiary of such person, any company
or other entity of which such person is a Subsidiary and any Subsidiary of
any such company or entity;
	 
	 	 	 	“Shareholders Equity” means, at any time in respect of the Group, the amount
of shareholders equity of the Group on a consolidated basis which would be
included as shareholders equity in the consolidated balance sheet of the
Group in accordance with GAAP drawn up at such time as stated in the most
recent Financial Statements;
	 
	 	 	 	“Subsidiary” of a person means any company or entity directly or indirectly
controlled by such person, and for this purpose “control” means either the
ownership of more than fifty per cent (50%) of the voting share capital (or
equivalent rights of ownership) of such company or entity or the power to
direct its policies and management, whether by contract or otherwise;
	 
	 	 	 	“Total Assets” means, at any time in respect of the Group, the amount of
total assets of the Group on a consolidated basis which would be included as
total assets in a consolidated balance sheet of the Group in accordance with
GAAP drawn up at such time as stated in the most recent Financial
Statements; and
	 
	 	 	 	“Working Capital” means Current Assets less Current Liabilities as defined
herewith but excluding the current portion of long term debt maturing within
twelve (12) months and such exclusion in relation to the current portion of
the long term debt to be applicable only for the period from 01/07/2010 to
01/01/2012.






	 	4.5	 	clause 6.5 of the New Corporate Guarantee shall be deleted and replaced with
the following:-






	 	“6.5	 	The Guarantor shall supply to the Security Agent as soon as the
same become available, but in any event within 180 days after the end of each
of its financial





12









 






	 	 	 	years, its audited consolidated financial and cash flow statements for that
financial year together with a Compliance Certificate, signed by one director
of the Guarantor, setting out (in reasonable detail) computations as to
compliance with clause 6.12 as at the date as at which those financial and cash
flow statements were drawn up. Each set of Financial Statements:






	 	6.5.1	 	shall be certified by one director of the Guarantor
as fairly representing its financial condition as at the date at which
those Financial Statements were drawn up; and
	 
	 	6.5.2	 	shall be prepared using GAAP, accounting practices
and financial reference periods consistent with those applied in the
preparation of the Original Financial Statements unless, in relation to
any set of Financial Statements, the Guarantor notifies the Security Agent
that there has been a change in GAAP, the accounting practices or
reference periods and the Guarantor’s auditors deliver to the Security
Agent:






	 	(a)	 	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
	 
	 	(b)	 	sufficient information, in form
and substance as may be reasonably required by the Security
Agent, to enable the Security Agent to make an accurate
comparison between the financial position indicated in those
Financial Statements and that indicated in the Original
Financial Statements.”;






	 	4.6	 	clause 6.12 of the New Corporate Guarantee shall be deleted and replaced with
the following:-






	 	6.12	 	The Guarantor shall:






	 	6.12.1	 	at all times during the Facility Period:
	 
	 	(a)	 	maintain an Equity Ratio of not less than:




13









 












	 	(i)	 	from the Financial Quarter Day
ending on 30 September 2012 until the Financial Quarter Day
ending on 30 June 2013, 25%; and
	 
	 	(ii)	 	from the Financial Quarter Day
ending on 30 September 2013 onwards, 30%;






	 	(b)	 	maintain on a consolidated basis the Minimum Liquidity;
	 
	 	(c)	 	maintain on a consolidated basis on each
Financial Quarter Day, Working Capital of not less than zero Dollars
($0);
	 
	 	(d)	 	maintain a ratio of EBITDA to Interest Payable
on a trailing four (4) Financial Quarter basis of not less than:






	 	(i)	 	from the Financial Quarter Day
ending on 30 September 2012 until the Financial Quarter Day
ending on 30 June 2013, 2.00 to 1.00; and
	 
	 	(ii)	 	from the Financial Quarter Day
ending on 30 September 2013 onwards, 2.50 to 1.00; and






	 	(e)	 	maintain free Cash in an amount which is no
less than five million Dollars ($5,000,000).






	 	 	 	The financial covenants contained in this Clause
6.12.1 (a) — (d) shall be tested quarterly on the basis of the
quarterly Financial Statements provided under Clause 6.12.1 and Clause
6.11 and shall be confirmed in the relevant Compliance Certificate and
the financial covenants contained in this Clause 6.12.1 (e) shall be
tested monthly by the provisions of bank statements in form and
substance acceptable to the Agent; and
	 
	 	6.12.2	 	as soon as possible, but in no event no later than twenty eight (28) days
after the end of each month in each financial year provide to the Agent a cash
balance report showing (a) Minimum Liquidity, (b) detailed break down of
unrestricted cash, restricted cash, unrestricted cash equivalents and




14









 












	 	 	 	restricted cash equivalents of the Guarantor, (c) the unutilised funds under
the IBG Bond Issue and (d) the unutilised overdraft limits and the identity
of the banks that these relate to.”;






	 	4.7	 	clause 6.13 of the New Corporate Guarantee shall be deleted and replaced with
the following:-






	 	 	 	“Borrowed Money” means Indebtedness in respect of (i) money borrowed or
raised and debit balances at banks, (ii) any bond, note, loan stock,
debenture or similar debt instrument, (iii) acceptance or documentary credit
facilities, (iv) receivables sold or discounted (otherwise than on a
non-recourse basis), (v) deferred payments for assets or services acquired,
(vi) finance leases and hire purchase contracts, (vii) swaps, forward
exchange contracts, futures and other derivatives, (viii) any other
transaction (including without limitation forward sale or purchase
agreements) having the commercial effect of a borrowing or raising of money
or of any of (ii) to (vii) above and (ix) guarantees in respect of
Indebtedness of any person falling within any of (i) to (viii) above;
	 
	 	 	 	“Cash” means free and available negotiable money, orders, cheques and bank
balances and deposits but to exclude (a) any cash that is specifically
blocked and charged and (b) cash standing to the credit of any blocked
account and charged to the Agent pursuant to this Agreement;
	 
	 	 	 	“Cash Equivalent Investments” means at any time:






	 	a)	 	certificates of deposit maturing within one
year after the relevant date of calculation and issued by a bank or
financial institution acceptable to the Agent;
	 
	 	b)	 	any investment in marketable debt obligations
issued or guaranteed by the government of the United States of America,
the United Kingdom, any member state of the European Economic Area or
any Participating Member State or by an instrumentality or agency of
any of them having an equivalent credit rating, maturing within one
year after the relevant date of calculation and not convertible or
exchangeable to any other security; or





15









 






	 	c)	 	any other debt security approved by the Agent;
or
	 
	 	d)	 	amounts standing to the credit of the Retention
Account,






	 	 	 	in each case, to which any member of the Group is beneficially entitled at
that time and which is not issued or guaranteed by any member of the Group or
subject to any Encumbrance (other than one arising under the Security
Documents);
	 
	 	 	 	“Charter” means, in relation to a Fleet Vessel, any time charter or
consecutive voyage charter entered into by the relevant owner with a
charterer for a duration of no less than twelve (12) months and in a form and
substance acceptable to the Majority Lenders in their sole discretion and
“Charters” means all of them;
	 
	 	 	 	“Current Assets” means, at any time in respect of the Group, the amount of
current assets of the Group on a consolidated basis which would be included
as current assets in a consolidated balance sheet of the Group in accordance
with GAAP drawn up at such time together with such amount of Cash and Cash
Equivalent Investments forming part of the Minimum Liquidity and/or the
Retention Amount (but always excluding any current assets arising from
Derivative Financial Instruments) which may be disregarded from the current
assets in a consolidated balance sheet of the Group;
	 
	 	 	 	“Current Liabilities” means, at any time in respect of the Group, the amount
of current liabilities of the Group on a consolidated basis which would be
included as current liabilities in the consolidated balance sheet of the
Group in accordance with GAAP drawn up at such time excluding Deferred Revenue
and all current liabilities arising from Derivative Financial Instruments;
	 
	 	 	 	“Deferred Revenue” means at any time in respect of the Group, that liability
calculated at the time an existing Charter(s) or other employment arrangement
is assumed, by discounting at the Group’s weighted average cost of capital,
the difference between the market charter rate for an equivalent vessel and
the assumed charter rate, which liability is recorded as deferred revenue and




16









 












	 	 	 	amortised to revenue over the remaining period of such Charter(s) or other
employment arrangement;
	 
	 	 	 	“Derivative Financial Instruments” means at any time in respect of the Group
the fair value of any derivative transaction and the fair value of any other
derivative financial instruments appearing under this heading (and previously
approved by the Agent) in the consolidated financial statements of the Group
provided by the Borrowers to the Finance Parties in accordance with the
provisions of clause 12.1.3 of the Loan Agreement or otherwise and in the
event of the Borrowers changing the form or substance of the financial
statements (always in accordance with GAAP) provided by the Borrowers to the
Finance Parties so that Derivative Financial Instruments no longer appears as
a heading and/or such Derivative Financial Instruments are otherwise accounted
for, the determination of what constitutes Derivative Financial Instruments
shall be made by the Agent acting reasonably;
	 
	 	 	 	“EBITDA” means, in respect of any period, the consolidated profit on ordinary
activities of the Group before Tax for such period:






	 	a.	 	adjusted to exclude Interest Receivable and Interest Payable and other
similar income or costs to the extent not already excluded;
	 
	 	b.	 	adjusted to exclude any gain or loss realised on the disposal of fixed
assets (whether tangible or intangible);
	 
	 	c.	 	after adding back depreciation and amortisation;
	 
	 	d.	 	adjusted to exclude any exceptional or extraordinary costs or income;
	 
	 	e.	 	after deducting any profit arising out of the release of any provisions
against a liability or charge (excluding in this context the release of any
provisions against liabilities or charges relating to exceptional or
extraordinary items);






	 	 	 	“Equity Ratio” means Shareholders Equity as a percentage of Total Assets
adjusted, in each case, for the difference between Fleet Market Value and
Fleet Book Value;




17









 












	 	 	 	“Finance Lease” means any lease under which a member of the Group is the
lessee which is or should be treated as a finance lease under GAAP (and
includes any hire purchase contract or other arrangement which is similarly
treated);
	 
	 	 	 	“Financial Quarter” means each period of approximately three (3) months
commencing on the day after a Financial Quarter Day and ending on the next
following Financial Quarter Day;
	 
	 	 	 	“Financial Quarter Day” means 31 March, 30 June, 30 September and 31 December
in any year;
	 
	 	 	 	“Financial Year” means the annual accounting period of the Group ending on 31
December in each year;
	 
	 	 	 	“Fleet Book Value” means, at the end of a Financial Year, the aggregate book
value of the Fleet Vessels less depreciation as stated in the most recent
financial statements delivered pursuant to Clause 12.1.1;
	 
	 	 	 	“Fleet Market Value” means, at the date of calculation, the aggregate of the
Market Value of all of the Fleet Vessels as last determined in accordance with
the Market Value;
	 
	 	 	 	“Fleet Vessels” means the vessels (including, but not limited to, the Vessels)
from time to time owned by a member of the Group (each a “Fleet Vessel”);
	 
	 	 	 	“Group” means the Guarantor and its Related Companies (including, but not
limited to, the Borrowers) and “member of the Group” shall be construed
accordingly;
	 
	 	 	 	“Indebtedness” means any obligation for the payment or repayment of money,
whether as principal or as surety and whether present or future, actual or
contingent;





18









 






	 	 	 	“Interest” means, in respect of any specified Borrowed Money, all continuing
regular or periodic costs, charges and expenses incurred in effecting,
servicing or maintaining such Borrowed Money including:






	 	 	 	 (a) gross interest, commitment fees, discount and acceptance fees and
guarantee, fronting and ancillary facility fees payable or incurred on any
form of such Borrowed Money;
	 
	 	 	 	 (b) repayment and prepayment premiums payable or incurred in repaying or
prepaying such Borrowed Money; and
	 
	 	 	 	 (c) the interest element of Finance Leases,
	 
	 	 	 	but excluding, in respect of such Borrowed Money, agency and arrangement
fees or other up-front fees;
	 
	 	 	 	“Interest Payable” means, in respect of any period, the aggregate
(calculated on a consolidated basis) of:






	 	(a)	 	the amounts charged and posted (or estimated to
be charged and posted) as a current accrual accrued during such period
in respect of members of the Group by way of Interest on all Borrowed
Money, but excluding any amount accruing as interest in-kind (and not
as cash pay) to the extent capitalised as principal during such period;
and
	 
	 	(b)	 	net payments in relation to interest rate or
currency hedging arrangements in respect of Borrowed Money (after
deducting net income in relation to such interest rate or currency
hedging arrangements);






	 	 	 	“Interest Receivable” means, in respect of any period, the amount of
Interest accrued on cash balances of the Group (including the amount of
interest accrued on the Earnings Accounts, to the extent that the account
holder is entitled to receive such interest) during such period;
	 
	 	 	 	“Market Value”, in respect of a Fleet Vessel, means the market value of the
relevant Vessel to be conclusively determined on the basis of the average of
valuations (which are not more than two months old at the time of the
calculation of the Market Value in question) provided by two




19









 












	 	 	 	reputable, independent and first class firm of shipbrokers appointed by the
Agent. If the two valuations differ by a margin of over 15% then a third
shipbroker shall be appointed by the Agent and the market value shall be the
average of the three valuations. All valuations shall be on the basis of a
charter-free sale for prompt delivery for cash at arm’s length on normal
commercial terms as between a willing seller and a willing buyer and at the
expense of the Borrowers.
	 
	 	 	 	“Minimum Liquidity” means, at any time in respect of the Group, the minimum
amount of Cash and Cash Equivalent Investments being no less than 5% of the
Group’s overall Indebtedness (drawn and comprising of short term debt, long
term debt and long term leases);
	 
	 	 	 	“Related Company” of a person means Subsidiary of such person, any company
or other entity of which such person is a Subsidiary and any Subsidiary of
any such company or entity;
	 
	 	 	 	“Shareholders Equity” means, at any time in respect of the Group, the amount
of shareholders equity of the Group on a consolidated basis which would be
included as shareholders equity in the consolidated balance sheet of the
Group in accordance with GAAP drawn up at such time as stated in the most
recent Financial Statements;
	 
	 	 	 	“Subsidiary” of a person means any company or entity directly or indirectly
controlled by such person, and for this purpose “control” means either the
ownership of more than fifty per cent (50%) of the voting share capital (or
equivalent rights of ownership) of such company or entity or the power to
direct its policies and management, whether by contract or otherwise;
	 
	 	 	 	“Total Assets” means, at any time in respect of the Group, the amount of
total assets of the Group on a consolidated basis which would be included as
total assets in a consolidated balance sheet of the Group in accordance with
GAAP drawn up at such time as stated in the most recent Financial
Statements; and






20











 






	 	 	 	“Working Capital” means Current Assets less Current Liabilities as defined
herewith but excluding the current portion of long term debt maturing within
twelve (12) months and such exclusion in relation to the current portion of
the long term debt to be applicable only for the period from 01/07/2010 to
01/01/2012.






	 	 	All other terms and conditions of the Loan Agreement and the New Corporate Guarantee shall
remain unaltered and in full force and effect.
	 
	5	 	Confirmation and Undertaking






	 	5.1	 	Each of the Borrowers and the New Corporate Guarantor confirms that all of its
respective obligations under or pursuant to each of the Security Documents to which it
is a party remain in full force and effect, despite the amendments to the Loan
Agreement and the New Corporate Guarantee made in this Second Supplemental Agreement,
as if all references in any of the Security Documents to the Loan Agreement and the New
Corporate Guarantee were references to the Loan Agreement and the New Corporate
Guarantee as amended and supplemented by this Second Supplemental Agreement.
	 
	 	5.2	 	The definition of any term defined in any of the Security Documents shall, to
the extent necessary, be modified to reflect the amendments to the Loan Agreement and
the New Corporate Guarantee made in or pursuant to this Second Supplemental Agreement.






	6	 	Communications, Law and Jurisdiction
	 
	 	 	The provisions of clauses 18 and 23 of the Loan Agreement shall apply to this Second
Supplemental Agreement as if they were set out in full and as if references to the Loan
Agreement were references to this Second Supplemental Agreement.




21









 











Schedule 1




Effective Date Confirmation




	To:	 	GRAND AFFECTION S.A.
	 
	 	 	GRAND AFFINITY S.A.
	 
	 	 	each of The Trust Company Complex, Ajeltake Island, Ajeltake Road Majuro,
	 
	 	 	Marshall Islands M.H. 96960
	 
	 	 	NEWLEAD HOLDINGS LTD.,
	 
	 	 	Canons Court, 22 Victoria Street, Hamilton HM12, Bermuda




We, DVB BANK SE, refer to the Second Supplemental Agreement dated 9 November 2010 (the “Second
Supplemental Agreement”) relating to a secured loan facility agreement dated 9 July 2010 as amended
and supplemented by a first supplemental agreement dated 14 July 2010 (together, the “Loan
Agreement”) made between, inter alia, you as Borrowers, the banks listed in it as the Lenders,
ourselves as the Agent and ourselves as the Security Agent, in respect of a loan to you from the
Lenders of up to forty eight million Dollars ($48,000,000).



We hereby confirm that all conditions precedent referred to in Clause 2.1 of the Second
Supplemental Agreement have been satisfied. In accordance with Clauses 1.1 and 4 of the Second
Supplemental Agreement the Effective Date is the date of this confirmation and the amendments to
the Loan Agreement are now effective.



Dated: 9 November 2010




	 	 	 	 	 	 	 

	Signed:
	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	 	 	Alexandros Damianidis 
for and on behalf of 
DVB BANK SE	 	 








22









 








SCHEDULE 2: Form of Compliance Certificate




	 	 	 

	To:

	 	DVB BANK SE
	 
	 	 
	From:

	 	NEWLEAD HOLDINGS LTD.





Dated:



Dear Sirs




Grand Affection S.A and Grand Affinity S.A. - US$48,000,000 Loan Agreement dated 9
July 2010 (the “Agreement”)



We refer to the Agreement. This is a Compliance Certificate. Terms defined in the
Agreement have the same meaning when used in this Compliance Certificate unless
given a different meaning in this Compliance Certificate.



We confirm that:





	(a)	 	we maintain an Equity Ratio of not less than:






	 	(i)	 	from the Financial Quarter Day ending on 30
September 2012 until the Financial Quarter Day ending on 30 June 2013,
25%; and
	 
	 	(ii)	 	from the Financial Quarter Day ending on 30
September 2013 onwards, 30%;






	(b)	 	we maintain on a consolidated basis the Minimum Liquidity;
	 
	(c)	 	we maintain on a consolidated basis on each Financial Quarter
Day, Working Capital of not less than zero Dollars ($0);
	 
	(d)	 	we maintain a ratio of EBITDA to Interest Payable on a trailing
four (4) Financial Quarter basis of not less than:






	 	(i)	 	from the Financial Quarter Day ending on 30
September 2012 until the Financial Quarter Day ending on 30 June 2013,
2.00 to 1.00; and
	 
	 	(ii)	 	from the Financial Quarter Day ending on 30
September 2013 onwards, 2.50 to 1.00; and




23









 












	(e)	 	we maintain free Cash in an amount which is no less than five
million Dollars ($5,000,000).




We confirm that no Default is continuing.




	 	 	 	 	 
	Signed:
	 	 	 	 
	 

	 	 

	 	 
	 

	 	Director	 	 
	 

	 	of	 	 
	 

	 	NEWLEAD HOLDINGS LTD.	 	 






24









 





IN WITNESS of which the parties to this Second Supplemental Agreement have executed this Second
Supplemental Agreement the day and year first before written.




	 	 	 

	SIGNED and DELIVERED as a DEED by
	 	)
	GRAND AFFECTION S.A.
	 	)
	acting by Michael Livanos
	 	) /s/ Michael Livanos
	its duly authorised attorney-in-fact
	 	)
	in the presence of: Dimitrios Beis
	 	) /s/  Dimitrios Beis
	 
	 	 
	SIGNED and DELIVERED as a DEED by
	 	)
	GRAND AFFINITY S.A.
	 	)
	acting by Michael Livanos
	 	) /s/ Michael Livanos
	its duly authorised attorney-in-fact
	 	)
	in the presence of: Dimitrios Beis
	 	) /s/ Dimitrios Beis
	 
	 	 
	SIGNED and DELIVERED as a DEED by
	 	)
	NEWLEAD HOLDINGS LTD.
	 	)
	acting by Panagiotis Peter Kallifidas
	 	) /s/ Panagiotis Peter Kallifidas
	its duly authorised attorney-in-fact
	 	)
	in the presence of: Dimitrios Beis
	 	) /s/ Dimitrios Beis
	 
	 	 
	SIGNED and DELIVERED as a DEED by
	 	)
	DVB BANK SE (as a Lender)
	 	)
	acting by Alexandros Damianidis
	 	) /s/ Alexandros Damianidis
	its duly authorised attorney-in-fact
	 	)
	in the presence of: Dimitrios Beis
	 	) /s/ Dimitrios Beis






25









 






	 	 	 

	SIGNED and DELIVERED as a DEED by
	 	)
	DVB BANK SE (as the Agent)
	 	)
	acting by Alexandros Damianidis
	 	) /s/ Alexandros Damianidis
	its duly authorised attorney-in-fact
	 	)
	in the presence of: Dimitrios Beis
	 	) /s/ Dimitrios Beis
	 
	 	 
	SIGNED and DELIVERED as a DEED by
	 	)
	DVB BANK SE (as the Security Agent)
	 	)
	acting by Alexandros Damianidis
	 	) /s/ Alexandros Damianidis
	its duly authorised attorney-in-fact
	 	)
	in the presence of: Dimitrios Beis
	 	) /s/ Dimitrios Beis
	 
	 	 
	SIGNED and DELIVERED as a DEED by
	 	)
	Norddeutsche Landesbank Girozentrale
	 	)
	(as a Lender)
	 	)
	acting by Alexandros Damianidis
	 	) /s/ Alexandros Damianidis
	its duly authorised attorney-in-fact
	 	)
	in the presence of: Dimitrios Beis
	 	) /s/ Dimitrios Beis
	 
	 	 
	SIGNED and DELIVERED as a DEED by
	 	)
	EMPORIKI BANK OF GREECE S.A.
	 	)
	(as a Lender)
	 	)
	acting by
	 	)
	and Chryssa Voulgari/Christina Margelou
	 	) /s/ Chryssa Voulgari
	its duly authorised attorney-in-fact
	 	) /s/ Christina Margelou
	in the presence of: Dimitrios Beis
	 	) /s/ Dimitrios Beis







26