exv10w1








Exhibit 10.1




Private & confidential




Dated: 2nd July, 2010




FBB-FIRST BUSINESS BANK S.A.



- and -



GRAND SPARTOUNTA INC.



 

 










LOAN AGREEMENT




relating to a term loan facility of up to US$24,150,000




 

 











Theo V. Sioufas & Co.

Law Offices

Piraeus



(J18-182268/C)




 









 








TABLE OF CONTENTS




	 	 	 	 	 	 	 
	CLAUSE	 	HEADINGS	 	PAGE	 
	 
	1.	 	PURPOSE, DEFINITIONS AND INTERPRETATION
	 	 	1	 
	 
	2.	 	THE FACILITIES
	 	 	14	 
	 
	3.	 	INTEREST
	 	 	16	 
	 
	4.	 	REPAYMENT — PREPAYMENT
	 	 	19	 
	 
	5.	 	PAYMENTS, TAXES, ACCOUNTS AND COMPUTATION
	 	 	23	 
	 
	6.	 	REPRESENTATIONS AND WARRANTIES
	 	 	26	 
	 
	7.	 	CONDITIONS PRECEDENT
	 	 	31	 
	 
	8.	 	COVENANTS
	 	 	36	 
	 
	9.	 	EVENTS OF DEFAULT
	 	 	48	 
	 
	10.	 	INDEMNITIES — EXPENSES — FEES
	 	 	54	 
	 
	11.	 	SECURITY, APPLICATION, SET-OFF AND ACCOUNTS
	 	 	58	 
	 
	12.	 	UNLAWFULNESS, INCREASED COSTS
	 	 	62	 
	 
	13.	 	ASSIGNMENT, PARTICIPATION, LENDING BRANCH
	 	 	65	 
	 
	14.	 	MISCELLANEOUS
	 	 	67	 
	 
	15.	 	NOTICES AND OTHER MATTERS
	 	 	69	 
	 
	16.	 	APPLICABLE LAW AND JURISDICTION
	 	 	71	 
	 
	SCHEDULE	 	 	 	 
	 
	1.	 	FORM OF DRAWDOWN NOTICE
	 	 	 	 






 









 





THIS AGREEMENT is dated 2nd day July, 2010 made BETWEEN:





	1.	 	FBB-FIRST BUSINESS BANK S.A., a bank incorporated in the Republic of Greece with its head
office at 91 Michalakopoulou Street, 11528 Athens, Greece, acting except otherwise herein
provided, through its office at 62, Notara and Sotiros Dios streets, 185 35 Piraeus, Greece,
as lender (hereinafter called the “Bank”, which expression shall include its successors and
assigns); and
	 
	2.	 	GRAND SPARTOUNTA INC., a company organised and existing under the laws of the
Republic of The Marshall Islands and having its registered office at Trust Company Complex,
Ajeltake Island, Majuro, Marshall Islands MH 96960, as borrower (hereinafter called the
“Borrower”, which expression shall include its successors)




AND IT IS HEREBY AGREED as follows:





	1.	 	PURPOSE, DEFINITIONS AND INTERPRETATION






	1.1	 	Purpose: This Agreement sets out the terms and conditions upon and subject to which
the Bank agrees to make available to the Borrower a term loan of up to $24,150,000 (Dollars
twenty four million one hundred fifty thousand) by way of one (1) Advance for the purpose of
re-financing the existing loan Indebtedness of the Borrower to the Bank secured on the Vessel.






	1.2	 	Definitions: In this Agreement, unless the context otherwise requires each term or
expression defined in the recital of the parties, in this Clause and in Clause 11.1 shall have
the meaning given to it in the recital of the parties, in this Clause and:
	 
	 	 	“Accounts Pledge Agreement” means an agreement to be entered into between the Borrower and
the Bank for the creation of a pledge over the Earnings Account and the Retention Account in
favour of the Bank, in form and substance satisfactory to the Bank as the same may from time
to time be amended and/or supplemented;
	 
	 	 	“Advance” means each borrowing of a proportion of the Commitment by the Borrower or (as the
context may require) the principal amount of such borrowing outstanding at any relevant time
hereunder;
	 
	 	 	“Availability Period” means the period starting on the date hereof and ending on the
30th day of July, 2010 or until such later date as the Bank may agree in writing
or on such earlier date (if any), (i) on which the whole of the Commitment has been advanced
by the Bank to the Borrower, or (ii) on which the Commitment is fully




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	 	 	cancelled or reduced to zero pursuant to Clauses 9.8 or 12.1, 12.2 or any other Clause of
this Agreement;
	 
	 	 	“Bank” means the Bank as specified in Recital (1) of this Agreement and includes its
successors in title and transferees;
	 
	 	 	“Banking Day” means a day on which dealings in deposits in Dollars are carried on in the
London Interbank Market and (other than Saturday or Sunday) on which banks are open for
business in London, New York City, Piraeus and Athens (or any other relevant place of
payment under Clause 5);
	 
	 	 	“Borrowed Money” means Indebtedness in respect of (i) money borrowed or raised and debit
balances at banks, (ii) any bond, note, loan stock, debenture or similar debt instrument,
(iii) acceptance or documentary credit facilities, (iv) receivables sold or discounted
(otherwise than on a non-recourse basis), (v) deferred payments for assets or services
acquired, (vi) finance leases and hire purchase contracts, (vii) swaps, forward exchange
contracts, futures and other derivatives, (viii) any other transaction (including without
limitation forward sale or purchase agreements) having the commercial effect of a borrowing
or raising of money or of any of (ii) to (vii) above and (ix) guarantees in respect of
Indebtedness of any person falling within any of (i) to (viii) above;
	 
	 	 	“Borrower” means the Borrower as specified in the preamble of this Agreement;
	 
	 	 	“Charterparty Assignment” means in relation to the Vessel, the assignment of any Long
Charterparty, executed or (as the context may require) to be executed by the Owner in favor
of the Bank, in form and substance as the Bank may approve or require as the same may from
time to time be amended and/or supplemented (together the “Charterparties Assignments”);
	 
	 	 	“Charterparty Assignment Acknowledgement” means the acknowledgement of notice of the
assignment in respect of the relevant Long Charterparty to be given by the relevant
charterer, in the form scheduled to the relevant Charterparty Assignment (together the
“Charterparties Assignments Acknowledgements”);
	 
	 	 	“Classification” means *100 — A — 1.1 Navig II.; BC ESP with the Classification Society or,
in either case, such other classification as the Bank shall, at the request of the Borrower,
have agreed in writing to be treated as the Classification for the purposes of the Security
Documents;
	 
	 	 	“Classification Society” means, in respect of the Vessel, RINA, American Bureau of Shipping,
Lloyds Register of Shipping, Bureau Veritas, Det Norske Veritas, NKK or




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	 	 	such other classification society which is a member of IACS and which the Bank shall, at the
request of the Borrower, have agreed in writing to be treated as the Classification Society
for the purposes of the Security Documents;
	 
	 	 	“Compliance Certificate” means a certificate substantially in a form satisfactory to the
Bank signed by (i) the chief financial officer of the Group or, if the CFO is not available
a director of the Newlead Corporate Guarantor and (ii) a director of the Borrower;
	 
	 	 	“Corporate Guarantor” means the Grandunion Corporate Guarantor or, as the case may be, the
Newlead Corporate Guarantor and any other person nominated by the Borrower and acceptable to
the Bank which may give a Corporate Guarantee;
	 
	 	 	“Corporate Guarantee” means the Grandunion Corporate Guarantee or, as the case may be, the
Newlead Corporate Guarantee;
	 
	 	 	“Default” means any Event of Default or any event which with the giving of notice or lapse
of time (or any combination thereof) would constitute an Event of Default;
	 
	 	 	“Default Rate” means that rate of interest per annum which is determined in accordance with
the provisions of Clause 3.4;
	 
	 	 	“DOC” means a document of compliance issued to an Operator in accordance with rule 13 of the
ISM Code;
	 
	 	 	“Dollar” and “$” mean the lawful currency of the United States of America and in respect of
all payments to be made under any of the Security Documents means funds which are for same
day settlement in the New York Clearing House Interbank Payments System (or such other U.S.
dollar funds as may at the relevant time be customary for the settlement of international
banking transactions denominated in Dollars);
	 
	 	 	“Drawdown Date” means the day, being a Banking Day, on which the Loan is or, as the context
may require, shall be advanced to the Borrower;
	 
	 	 	“Drawdown Notice” means a notice substantially in the terms of Schedule 1;
	 
	 	 	“Drop-down Date” means the date on which of the total number of the issued and outstanding shares of the Borrower shall be transferred from the Grandunion Corporate Guarantor to the
Newlead Corporate Guarantor, such date not being later than fives days from the date of this
Agreement;




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	 	 	“Earnings” means all earnings of the Vessel, both present or future, including all freight,
hire and passage moneys, compensation payable to the Owner in the event of requisition of
the Vessel for hire, remuneration for salvage and towage services, demurrage and detention
moneys, contributions of any nature whatsoever in respect of general average, damages for
breach (or payments for variation or termination) of any charterparty or other contract for
the employment of the Vessel and any other earnings whatsoever due or to become due to the
Owner in respect of the Vessel and all sums recoverable under the Insurances in respect of
loss of Earnings and includes, if and whenever the Vessel is employed on terms whereby any
and all such moneys as aforesaid are pooled or shared with any other person, that proportion
of the net receipts of the relevant pooling or sharing agreement which is attributable to
the Vessel;
	 
	 	 	“Earnings Account” means the interest bearing account opened or, as the context may require
to be opened with the Bank at the Lending Branch in the name of the Borrower or such other
account with any other branch or any other bank, as may be required by and at the discretion
of the Bank, to which (inter alia) all Earnings of the Vessel owned by the Borrower are to
be paid in accordance with Clauses 11.5 and 8.5(b) and includes any sub-accounts thereof and
any other account designated in writing by the Bank to be the Earnings Account for the
purposes of this Agreement;
	 
	 	 	“Encumbrance” means any mortgage, charge (whether fixed or floating), pledge, lien,
hypothecation, assignment, security interest, title retention, arrest, seizure or other
encumbrance of any kind securing or any right conferring a priority of payment in respect of
any obligation of any person;
	 
	 	 	“Environmental Affiliate” means any agent or employee of the Borrower or any other Relevant
Party or any person having a contractual relationship with the Borrower or any other
Relevant Party in connection with any Relevant Ship or her operation or the carriage of
cargo thereon;
	 
	 	 	“Environmental Approval” means any consent, authorisation, licence or approval of any
governmental or public body or authorities or courts applicable to any Relevant Ship or her
operation or the carriage of cargo thereon and/or passengers therein and/or provisions of
goods and/or services on or from the Relevant Ship required under any Environmental Law;
	 
	 	 	“Environmental Laws” means all national, international and state laws, rules, regulations,
treaties and conventions applicable to any Relevant Ship pertaining to the pollution or
protection of human health or the environment including, without limitation, the carriage or
Materials of Environmental Concern and actual or




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	 	 	threatened emissions, spills, releases or discharges of Materials of Environmental Concern
and actual or threatened emissions, spills, releases or discharges of Materials of
Environmental Concern from any Relevant Ship;
	 
	 	 	“Environmental Claim” means (i) any claim by, or directive from, any applicable
governmental, judicial or other regulatory authority alleging breach of, or non- compliance
with, any Environmental Laws or Environmental Approvals or otherwise howsoever relating to
or arising out of an Environmental Incident or (ii) any claim by any other third party
howsoever relating to or arising out of an Environmental Incident (and, in each such case,
“claim” shall mean a claim for damages, clean-up costs, compliance, remedial action or
otherwise);
	 
	 	 	“Environmental Incident” means (i) any release of Material of Environmental Concern from the
Vessel, (ii) any incident in which Material of Environmental Concern is released from a
vessel other than the Vessel and which involves collision between the Vessel and such other
vessel or some other incident of navigation or operation, in either case, where the Vessel,
the Owner and/or the Manager of the Vessel are actually at fault or otherwise liable (in
whole or in part) or (iii) any incident in which Material of Environmental Concern is
released from a vessel other than the Vessel and where the Vessel is actually liable to be
arrested as a result and/or where the Owner and/or the Manager of the Vessel are actually at
fault or otherwise liable;
	 
	 	 	“Event of Default” means any events or circumstances set out in Clause 9.1 to 9.7 (incl.) or
described as such in any other of the Security Documents;
	 
	 	 	“Expenses” means the aggregate at any relevant time (to the extent that the same have not
been received or recovered by the Bank) of:






	 	(a)	 	all losses, liabilities, costs, charges, expenses, damages and outgoings of
whatever nature, (including, without limitation, Taxes, repair costs, registration fees
and insurance premiums, crew wages, repatriation expenses and seamen’s pension fund
dues) suffered, incurred, charged to or paid or committed to be paid by the Bank in
connection with the exercise of the powers referred to in or granted by any of the
Security Documents or otherwise payable by the Borrower in accordance with the terms of
any of the Security Documents;
	 
	 	(b)	 	the expenses referred to in Clause 10.2; and
	 
	 	(c)	 	interest on all such losses, liabilities, costs, charges, expenses, damages and
outgoings from, in the case of Expenses referred to in sub-paragraph (b)




5









 






	 	 	 	above, the date on which such Expenses were demanded by the Bank from the Borrower
and in all other cases, the date on which the same were suffered, incurred or paid
by the Bank until the date of receipt or recovery thereof (whether before or after
judgement) at the Default Rate (as conclusively certified by the Bank save in case
of manifest error);






“Final Maturity Date” means in relation to the Loan the date falling on the fifth
(5th) anniversary of the Drawdown Date;




“Flag State” means the Republic of Liberia or such other state or territory proposed in
writing by the Borrower to the Bank and approved (at its reasonable discretion) by the Bank,
as being the “Flag State” of the Vessel for the purposes of the Security Documents;




“General Assignment” means first priority general assignment of all the Insurances and
Earnings and Requisition Compensation of the Vessel in form and substance satisfactory to
the Bank and respective notices of assignment;




“Governmental Withholdings” means withholdings and any restrictions or conditions resulting
in any charge whatsoever imposed, either now or hereafter, by any sovereign state or by any
political sub-division or taxing authority of any sovereign state;




“Group” means the Newlead Corporate Guarantor and its Subsidiaries (whether direct or
indirect and including, but not limited to, the Borrower) from time to time during the
Security Period and “member of the Group” shall be construed accordingly;




“Grandunion” means Grandunion Inc., a company organised and existing under
the laws of the Republic of Marshall Islands and having its registered office at Trust
Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960;




“Grandunion Corporate Guarantee” means a guarantee given or, as the context may require, to
be given by the Grandunion Corporate Guarantor (which shall be replaced within five (5) days
from the date hereof by the Newlead Corporate Guarantee), in form and substance satisfactory
to the Bank as security for (inter alia) the Outstanding Indebtedness and any and all other
obligations of the Borrower under the Loan Agreement and the Security Documents;




“GAAP” means generally accepted accounting principles in the United States of America;



6









 






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




“Insurances” means in respect of the Vessel all policies and contracts of insurance and
reinsurances for captive company, if applicable, (including, without limitation, all entries
of the Vessel in a protection and indemnity, war risks or other mutual insurance
association) which are from time to time in place or taken out or entered into by or for the
benefit of its Owner (whether in the sole name of its Owner or in the joint names of its
Owner and the Bank) in respect of the Vessel and its earnings or otherwise howsoever in
connection with the Vessel and all benefits of such policies and/or contracts (including all
claims of whatsoever nature and return of premiums);




“Interest Payment Date” means in respect of the Loan or any part thereof in respect of which
a separate Interest Period is fixed the last day of the relevant Interest Period and in case
of any Interest Period longer than three (3) months the date(s) falling at successive three
(3) monthly intervals during such longer Interest Period and the last day of such Interest
Period;




“Interest Period” means in relation to the Loan or any part thereof, each period for the
calculation of interest in respect of the Loan or such part ascertained in accordance with
Clauses 3.2 and 3.3;




“ISM Code” means the International Safety Management Code for the Safe Operation of Ships
and for Pollution Prevention constituted pursuant to Resolution A.741 (18) of the
International Maritime Organisation and incorporated into the Safety of Life at Sea
Convention 1974 and includes any amendments or extensions thereto and any regulation issued
pursuant thereto;




“ISPS Code” means the International Ship and Port Security Code of the International
Maritime Organization and includes any amendments or extensions thereto and any regulation
issued pursuant thereto;




“ISSC” means an International Ship Security Certificate issued in respect of the Vessel
pursuant to the ISPS Code;




“Lending Branch” means the office of the Bank appearing at the beginning of this Agreement
or any other office of the Bank designated by the Bank as the Lending Branch by notice to
the Borrower;



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“LIBOR” means, for an Interest Period:




	 	(a)	 	the offered rate (if any) per annum for deposits in Dollars for such amount and
for such period which is the rate, for such period, appearing on the relevant page of
the Reuter BBA LIBOR01 at or about 11 a.m. London time on the Quotation Day (or, if the
Bank shall have made a determination pursuant to Clause 3.6 such later time (not being
later than 1 p.m. (London time) on the first day of such period) as the Bank may
determine) (and, for the purposes of this Agreement, “Reuter BBA LIBOR01” means the
display designated as “LIBOR01” on the Reuters Service or such other page as may
replace LIBOR01 on that service for the purpose of displaying rates comparable to that
rate or on such other service as may be nominated by the British Bankers’ Association
as the information vendor for the purpose of displaying the British Bankers’
Association Interest Settlement Rates for Dollars); and
	 
	 	(b)	 	if on such date no rate is quoted on Reuter BBA page LIBOR01, or if the rate
quoted on Reuter BBA page LIBOR01 does not reflect the Bank’s cost of funding, LIBOR
for such period shall be the rate per annum determined by the Bank to be the arithmetic
mean (rounded upwards, if necessary, to the nearest one-sixteenth of one per cent.) of
the rates per annum as the rate at which deposits in Dollars are offered to the Bank by
leading banks in the London Interbank Market at the Bank’s request at or about 11:00
a.m. (London time) on the second Banking Day before the first day of such period in an
amount approximately equal to the amount in relation to which LIBOR is to be determined
for a period equivalent to such period and for delivery on the first Banking Day of it;






“Loan” means the aggregate principal amount borrowed by the Borrower in respect of the
Commitment or (as the context may require) the principal amount thereof owing to the Bank
under this Agreement at any relevant time;




“Long Charterparty” means any time charter or contract of affreightment, agreement or
related document in respect of the employment of the Vessel whether now existing or
hereinafter entered into by the Borrower, as owner, and a charterer (of the approval of the
Bank) for a period of at least 12 months and with rates and terms of the Bank’s approval
(and shall include any addenda thereto);




“Management Agreement” means the operating agreement made or to be made between the
Borrower, as Owner of the Vessel and the Manager providing (inter alia) for the Manager to
manage the Vessel;



8









 






“Manager” means for the time being Newlead Bulkers S.A., a company duly
incorporated under the laws of the Republic of Liberia having its registered office at 80
Broad Street, Monrovia, Liberia and an office established in Greece (83 Akti Miaouli and
Flessa Street, GR 185.38 Piraeus) pursuant to the Greek laws 89/67, 378/68, 27/75 and 814/79
or any other person appointed by the Borrower, with the consent of the Bank, as the manager
of the Vessel and includes its successors in title;




“Manager’s Undertaking” means an undertaking executed or (as the context may require) to be
executed by the Manager in favour of the Bank, in form satisfactory to the Bank;




“Margin” means three point five zero per cent (3.50%) per annum; and




“Market Value” means the market value of the Vessel as determined in accordance with Clause
8.2(b);




“Material of Environmental Concern” means and includes pollutants, contaminants, toxic
substances, oil as defined in the United States Oil Pollution Act of 1990 and all hazardous
substances as defined in the United States Comprehensive Environmental Response,
Compensation and Liability Act 1980;




“Month” means a period beginning in one calendar month and ending in the next calendar month
on the day numerically corresponding to the day of the calendar month on which it started
provided that (i) if there is no such numerically corresponding day, it shall end on
the last Banking Day in such next calendar month and (ii) if such numerically corresponding
day is not a Banking Day, the period shall end on the next following Banking Day in the same
calendar month but if there is no such Banking Day it shall end on the preceding Banking Day
and “months” and “monthly” shall be construed accordingly;




“Mortgage” means the first priority ship mortgage and the Deed of Covenant collateral
thereto on the Vessel both to be executed by the Borrower in favour of the Bank in form and
substance satisfactory to the Bank;




“Newlead” means NewLead Holdings Ltd., a company duly incorporated under the laws
of Bermuda, whose registered office is at Canon’s Court, 22 Victoria Street, Hamilton,
Bermuda, and include its successors;




“Newlead Corporate Guarantee” means a guarantee given or, as the context may require, to be
given by the Newlead Corporate Guarantor (which shall replace within five (5) days from the
date hereof the Grandunion Corporate Guarantee), in form and substance satisfactory to the
Bank as security for (inter alia) the Outstanding



9









 







Indebtedness and any and all other obligations of the Borrower under the Loan Agreement and
the Security Documents;




“Operator” means any person who is from time to time during the Security Period concerned in
the operation of the Vessel and falls within the definition of “Company” set out in rule
1.1.2. of the ISM Code;




“Outstanding Indebtedness” means the aggregate of (a) the Loan and interest accrued and
accruing thereon (b) the Expenses and (c) all other sums of money from time to time owing by
the Borrower to the Bank, including, without limitation, default interest, damages,
indemnities, costs, expenses, whether actually or contingently under this Agreement and the
other Security Documents;




“Operating Expenses” means the expenses for crewing, victualling, insuring, maintenance
(including dry-docking and special survey cost and expenses), spares, management, general
and administrative expenses and any other relevant expenses necessary for the commercial
operation of the Vessel which are reasonably incurred for a vessel of the size and type of
the Vessel;




“Owner” means the Borrower;




“Permitted Encumbrance” means any Encumbrance in favour of the Bank created pursuant to the
Security Documents and Permitted Liens;




“Permitted Lien” means any lien on the Vessel for master’s, officers’ or crew’s wages
outstanding in the ordinary course of trading, any lien for salvage and any ship repairer’s
or outfitter’s possessory lien for a sum not (except with the prior written consent of the
Bank) exceeding the Major Casualty (as defined in the Mortgage);




“Quotation Day” means, in respect of any period in respect of which LIBOR falls to be
determined under this Agreement, the second Banking Day before the first day of such period;




“Receiving Bank” means Deutsche Bank Trust Co. Americas (ex. Bankers Trust Company, New
York), SWIFT address BKTRUS33, or such other bank in New York as the Bank may notify to the
Borrower;




“Registry” means the offices of such registrar, commissioner or representative of the Flag
State who is duly authorised to register the Vessel, her Owner’s title to the Vessel and the
Mortgage over the Vessel under the laws and flag of the Flag State;



10









 






“Related Company” means any company member of the Group or other entity of which such
company is a Subsidiary and any Subsidiary of any such company or entity;




“Relevant Party” means the Borrower, the Borrower’s Related Companies, any other Security
Party and any Security Party’s Related Companies;




“Relevant Ship” means the Vessel and any other vessel from time to time (whether before or
after the date of this Agreement) owned, managed or crewed by, or chartered to, any Relevant
Party;




“Repayment Date” in respect of the Loan means each of the dates specified in Clause 4.1(a)
on which the Repayment Instalments shall be payable by the Borrower to the Bank;




“Repayment Instalment” means each instalment of the Loan, which becomes due for repayment by
the Borrower to the Bank on a Repayment Date pursuant to Clause 4.1(a);




“Requisition Compensation” means all sums of money or other compensation from time to time
payable by reason of requisition of the Vessel otherwise than by requisition for hire;




“Retention Account” means an interest bearing account of the Borrower opened (or as the
context may require) to be opened by the Borrower with the Bank or such other branch of the
Bank or any other bank as may be required by and at the discretion of the Bank and
designated “grand spartounta inc. — Retention Account” and includes any
other account designated by the Bank to be a Retention Account for the purposes of this
Agreement;




“Security Documents” means the documents referred to in Clause 11.1 and (where the context
so permits) this Agreement and (b) any and every other document as may have been or shall
from time to time after the date of this Agreement executed to guarantee and/or to secure
the whole or any part of the Outstanding Indebtedness and/or any and all other obligations
of the Borrower to the Bank pursuant to this Agreement (whether or not any such document
also secures moneys from time to time owing pursuant to any other document or agreement);




“Security Party” means the Borrower, the Corporate Guarantors and any other person (other
than the Bank) which is or may become a party to any of the Security Documents;



11









 






“Security Period” means the period commencing on the date hereof and terminating on the date
upon which the Loan together with all interest thereon and all other moneys payable to the
Bank under this Agreement and the Security Documents have been repaid in full to the Bank;




“Security Requirement” means the amount in Dollars (as certified by the Bank whose
certificate shall, in the absence of manifest error, be conclusively binding on the
Borrower) which is:




	 	(a)	 	at any relevant time during the period from 1st January, 2012 to
31st December, 2012 one hundred percent (100%) of the Loan;
	 
	 	(a)	 	at any relevant time thereafter one hundred and twenty percent (120%) of the
Loan;






Provided that during the period from the Drawdown Date to 31st December,
2011 the Security Requirement is hereby waived;




“Security Value” means the amount in Dollars (as certified by the Bank whose certificate
shall, in the absence of manifest error, be conclusive and binding on the Borrower) which,
at any relevant time is the aggregate of (a) the Market Value of the Vessel as most recently
determined in accordance with Clause 8.2(b), (b) the market value of any additional security
provided to the Bank pursuant to Clause 8.2(a) (if any);




“SMC” means a safety management certificate issued in respect of the Vessel in accordance
with rule 13 of the Code;




“Subsidiary” of a person means any company or entity directly or indirectly controlled by
such person, and for this purpose “control” means either ownership of more than fifty
percent (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;




“Taxes” includes all present and future taxes, levies, imposts, duties, fees or charges of
whatever nature together with interest thereon and penalties in respect thereof (except
taxes concerning the Bank and imposed on the overall net income of the Bank) and “Taxation”
shall be construed accordingly;




“Commitment” means the total amount which the Bank agreed to lend to the Borrower under
Clause 2.1 as reduced by any relevant term of this Agreement;



12









 






“Total Loss” means (a) actual, constructive, compromised or arranged total loss of the
Vessel; or (b) requisition for title or other compulsory acquisition of the Vessel otherwise
than by requisition for hire; or (c) hijacking, theft, condemnation, capture, seizure,
detention, arrest or confiscation of the Vessel by any government or by any person acting or
purporting to act on behalf of any government, unless the Vessel is released and restored to
the Borrower within thirty (30) days after the occurrence thereof; and




“Vessel” means the bulk carrier “GRAND SPARTOUNTA”, built Italy by Fincantieri Margnera in
1989, presently lawfully registered under the laws and flag of the Republic of Liberia in
the ownership of the Borrower, and propelled by one oil internal combustion engine of 17,800
HP together with all her boats, engines, machinery tackle outfit spare gear fuel consumable
and other stores belongings and appurtenances whether on board or ashore and whether now
owned or hereafter acquired and all the additions, improvements and replacements in or on
the above described vessel.




	1.3	 	Interpretation: In this Agreement:






	 	(a)	 	clause headings and the table of contents are inserted for convenience of
reference only and shall be ignored in the interpretation of this Agreement;
	 
	 	(b)	 	subject to any specific provision of this Agreement or of any assignment and/or
participation or syndication agreement of any nature whatsoever, reference to each of
the parties hereto and to the other Security Documents shall be deemed to be reference
to and/or to include, as appropriate, their respective successors and permitted
assigns;
	 
	 	(c)	 	reference to a person shall be construed as including reference to an
individual, firm, company, corporation, unincorporated body of persons or any State or
any agency thereof;
	 
	 	(d)	 	where the context so admits, words in the singular include the plural and vice
versa;
	 
	 	(e)	 	the words “including” and “in particular” shall not be construed as limiting
the generality of any foregoing words;
	 
	 	(f)	 	references to (or to any specified provisions of) this Agreement and all
documents referred to in this Agreement shall be construed as references to this
Agreement, that provision or that document as are in force for the time being and as
are amended and/or supplemented from time to time;




13









 






	 	(g)	 	reference to this Agreement includes all the terms of this Agreement and any
Schedules, Annexes or Appendices to this Agreement, which form an integral part of
same;
	 
	 	(h)	 	reference to Clauses, Sub-Clauses and Schedules are to Clauses, Sub-Clauses and
Schedules in this Agreement;
	 
	 	(i)	 	reference to the opinion of the Bank or a determination or acceptance by the
Bank or to documents, acts, or persons acceptable or satisfactory to the Bank or the
like shall be construed as reference to opinion, determination, acceptance or
satisfaction of the Bank at the sole discretion of the Bank and such opinion,
determination, acceptance or satisfaction of the Bank shall be binding on the Borrower
(save for manifest error and as provided otherwise herein);
	 
	 	(j)	 	references to a “regulation” include any present or future regulation, rule,
directive, requirement, request or guideline (whether or not having the force of law)
of any agency, authority, central bank or government department or any self regulatory
or other national or supra-national authority;
	 
	 	(k)	 	references to any person include such person’s assignees and successors in
title;
	 
	 	(l)	 	reference to a “guarantee” include references to an indemnity or other
assurance against financial loss including, without limitation, an obligation to
purchase assets or services as a consequence of a default by any other person to pay
any Indebtedness and “guaranteed” shall be construed accordingly; and
	 
	 	(m)	 	references to any enactment shall be deemed to include references to such
enactment as re-enacted, amended or extended.






	2.	 	THE FACILITIES 
	 
	2.1	 	The Loan






	 	(a)	 	Commitment to Lend: The Bank, relying upon (inter alia) each of the
representations and warranties set forth in Clause 6 and in each of the other Security
Documents, agrees to lend to the Borrower, upon and subject to the terms of this
Agreement, a term loan in the principal sum of up to $24,150,000 (Twenty million
Dollars).




14









 






	 	(b)	 	Number and Purpose of Advances Agreed: The Commitment shall be
advanced to the Borrower in one (1) Advance and shall be used for the purpose set forth
in Clause 1.1.
	 
	 	(c)	 	Termination of the Commitment: Any part of the Commitment undrawn and
uncancelled at the end of the relevant Availability Period shall thereupon be
automatically cancelled.






	2.2	 	Drawdown Notice and commitment to Borrow: Subject to the terms and conditions of
this Agreement, the Commitment shall be made to the Borrower following receipt by the Bank
from the Borrower of a Drawdown Notice not later than 10 a.m. (London time) on the second
Banking Day before the date on which such drawdown is intended to be made. A Drawdown Notice
shall be effective on actual receipt thereof by the Bank and, once given, shall, subject as
provided in Clause 3.6, be irrevocable.
	 
	2.3	 	Disbursement of the Loan: Upon receipt of a Drawdown Notice complying with the terms
of this Agreement the Bank shall, subject to the provisions of Clause 7, on the date specified
in such Drawdown Notice, make the Commitment available to the Borrower.
	 
	2.4	 	Application of Proceeds: The Borrower undertakes with the Bank to use the Loan only
for the purposes stated in Clause 1.1 provided that, without prejudice to the
Borrower’s obligations under Clause 8.1(e), the Bank shall have no responsibility for the
application of the proceeds thereof by the Borrower, and the Bank shall not be under any
obligation to monitor the Borrower’s compliance with this undertaking and no breach of this
undertaking shall affect the Borrower’s other obligations hereunder.
	 
	2.5	 	Evidence: It is hereby expressly agreed and admitted by the Borrower that (save in
case of manifest error) abstracts or photocopies of the books of the Bank as well as
statements of accounts or a certificate signed by an authorised officer of the Bank shall be
conclusive binding and full evidence on the Borrower as to the existence and/or the amount of
the at any time Outstanding Indebtedness, of any amount due under this Agreement, of the
applicable interest rate or Default Rate or any other rate provided for or referred to in this
Agreement, the Interest Period, the value of additional securities under Clause 8.2(a), the
payment or non payment of any amount. Nevertheless, enforcement procedures or any other Court
or out-of-court procedure can be commenced by the Bank on the basis of the above mentioned
means of evidence including written statements or certificates of the Bank.




15









 






	3.	 	INTEREST
	 
	3.1	 	Normal Interest Rate: The Borrower shall pay interest on the Loan (or as the case
may be, each portion thereof to which a different Interest Period relates) in respect of each
Interest Period related thereto on each Interest Payment Date. The interest rate for the
calculation of interest shall be the rate per annum determined by the Bank to be the aggregate
of (i) the Margin and (ii) LIBOR for that Interest Period.
	 
	3.2	 	Selection of Interest Period: The Borrower may by notice received by the Bank not
later than 10 a.m. (London time) on the second Banking Day before the beginning of each
Interest Period specify (subject to Clause 3.3 below) whether such Interest Period shall have
a duration of one (1) or two (2) or three (3) or six (6) or nine (9) or twelve (12) months
(subject to market availability) (or such other period as may be requested by the Borrower and
as the Bank, in its sole discretion, may agree to).
	 
	3.3	 	Duration of Interest Period: Every Interest Period shall, subject to market
availability to be conclusively determined by the Bank, be of the duration specified by the
Borrower pursuant to Clause 3.2 but so that:






	 	(a)	 	the initial Interest Period in respect of the Loan will commence on the date on
which the Loan is advanced and each subsequent Interest Period will commence forthwith
upon the expiry of the previous Interest Period;
	 
	 	(b)	 	if any Interest Period would otherwise overrun one or more Repayment Dates,
then, in the case of the last Repayment Date, such Interest Period shall end on such
Repayment Date, and in the case of any other Repayment Date or Dates the Loan shall be
divided into parts so that there is one part equal to the amount of the Repayment
Instalment due on each Repayment Date, falling during that Interest Period and having
an Interest Period ending on the relevant Repayment Date and another part equal to the
amount of the balance of the Loan having an Interest Period determined in accordance
with Clause 3.2 and the other provisions of this Clause 3.3 and the expression
“Interest Period in respect of the Loan” when used in this Agreement refers to the
Interest Period in respect of the balance of the Loan;
	 
	 	(c)	 	if the Borrower fails to specify the duration of an Interest Period in
accordance with the provisions of Clause 3.2 and this Clause 3.3, such Interest Period
shall have a duration of three (3) months unless another period shall be agreed between
the Bank and the Borrower provided, always, that such period (whether of three
(3) months or of different duration) shall comply with this Clause 3.3; and




16









 






	 	(d)	 	if the Bank determines that funds for the duration of an Interest Period
specified by the Borrower in accordance with Clause 3.2 are not readily available, then
that Interest Period shall have such duration as the Bank, in consultation with the
Borrower, may determine;
	 
	 	 	 	provided always that:






	 	(i)	 	any Interest Period which commences on the last day of a
calendar month, and any Interest Period which commences on the day on which
there is no numerically corresponding day in the calendar month during which
such Interest Period is due to end, shall end on the last Banking Day of the
calendar month during which such Interest Period is due to end; and
	 
	 	(ii)	 	if the last day of an Interest Period is not a Banking Day the
Interest Period shall be extended until the next following Banking Day unless
such next following Banking Day falls in the next calendar month in which case
such Interest Period shall be shortened to expire on the preceding Banking Day.






	3.4	 	Default Interest: If the Borrower fails to pay any sum (including, without
limitation, any sum payable pursuant to this Clause 3.4) on its due date for payment under any
of the Security Documents, the Borrower shall pay interest on such sum from the due date up to
the date of actual payment (as well after as before judgement) at the rate determined by the
Bank pursuant to this Clause 3.4. The period beginning on such due date and ending on such
date of payment shall be divided into successive periods of not more than three (3) months as
selected by the Bank each of which (other than the first, which shall commence on such due
date) shall commence on the last day of the preceding such period. The rate of interest
applicable to each such period shall be the aggregate (as determined by the Bank) of (i) two
per cent (2%) per annum, (ii) the Margin and (iii) costs of funds to the Bank, as conclusively
determined by the Bank save for manifest error. Such interest shall be due and payable on the
last day of each such period as determined by the Bank and each such day shall, for the
purposes of this Agreement, be treated as an Interest Payment Date. In case that a payment is
made in default for any amount, the Interest Periods will be determined by the Bank at its
discretion including the amounts for which there is no default, even if the Bank has not (yet)
exercised its rights pursuant to Clause 9.8(b) of the Agreement. Interest payable by the
Borrower as aforesaid shall be compounded semi-annually (or if the period fixed by the Bank is
longer, at the end of such longer period) and shall be payable on demand.




17









 






	3.5	 	Notification of Interest and Interest Rate: The Bank shall notify the Borrower
promptly of the duration of each Interest Period and of each rate of interest determined by it
under this Clause 3 without prejudice to the right of the Bank to make determinations at its
sole discretion. However, omission of the Bank to make such notification (without the
application of the Borrower) will not constitute and will not be interpreted as if to
constitute a breach of obligation of the Bank except in case of willful misconduct.
	 
	3.6	 	Market disruption — Non Availability






	 	(a)	 	Market Disruption Event: If and whenever, at any time prior to the
commencement of any Interest Period, the Bank (in its reasonable discretion) shall have
determined (which determination shall be conclusive) that a Market Disruption Event has
occurred in relation to the Loan for any such Interest Period, then the Bank shall
forthwith give notice thereof (a “Determination Notice”) to the Borrower and the rate
of interest on the Loan (or the relevant part thereof) for that Interest Period shall
be the percentage rate per annum which is the sum of:






	 	(i)	 	the Margin; and
	 
	 	(ii)	 	the rate which expresses as a percentage rate per annum the
cost to the Bank of funding the Loan (or the relevant part thereof) from
whatever source it may reasonably select.






	 	(b)	 	Meaning of “Market Disruption Event”: In this Agreement “Market
Disruption Event” means:






	 	(i)	 	at or about noon on the Quotation Day for the relevant Interest
Period Interbank Rate is not available; and/or
	 
	 	(ii)	 	before close of business in London on the Quotation Day for the
relevant Interest Period, the Bank determines (in its sole discretion) that the
cost to it of obtaining matching deposits in the London Interbank Market to
fund the Loan (or the relevant part thereof) for such Interest Period would be
in excess of the Interbank Rate; and
	 
	 	(iii)	 	before close of business in London on the Quotation Day for
the relevant Interest Period, deposits in Dollars are not available to the Bank
in the London Interbank Market in the ordinary course of business in sufficient
amounts to fund the Loan (or the relevant part thereof) for such Interest
Period.




18









 












	 	(c)	 	Alternative basis of interest or funding:






	 	(i)	 	If a Market Disruption Event occurs and the Bank or the
Borrower so requires, the Bank and the Borrower shall enter into negotiations
(for a period of not more than five (5) days (the “Negotiation Period”)) after
the giving of the relevant Determination Notice with a view to agreeing a
substitute basis for determining the rate of interest.
	 
	 	(ii)	 	Any alternative basis agreed pursuant to paragraph (i) above
shall be binding on the Bank and all Security Parties.






	 	(d)	 	Alternative basis of interest in absence of agreement: If the Bank and
the Borrower will not enter into negotiations as provided in clause 3.6(c)(i) or if an
alternative interest rate or alternative basis is not agreed within the Negotiation
Period, and the relevant circumstances are continuing at the end of the Negotiation
Period, then the Bank shall set the following Interest Period and an interest rate
representing the cost of funding of the Bank in Dollars of the Loan (or the relevant
part thereof) plus the Margin for such Interest Period; if the relevant circumstances
are continuing at the end of the Interest Period so set by the Bank, the Bank shall
continue to set the following Interest Period and an interest rate representing its
cost of funding in Dollars of the Loan (or the relevant part thereof) plus the Margin
for such Interest Period.
	 
	 	(e)	 	Notice of prepayment: If the Borrower does not agree with an interest
rate set by the Bank under Clause 3.6(d), the Borrower may give the Bank not less than
5 Banking Days’ notice of its intention to prepay the Loan at the end of the interest
period set by the Bank.
	 
	 	(f)	 	Prepayment; termination of Commitment: A notice under Clause 3.6(e)
shall be irrevocable; and on the last Banking Day of the interest period set by the
Bank, the Borrower shall prepay (without premium or penalty) the Loan, together with
accrued interest thereon at the applicable rate plus the Margin and the balance of the
Outstanding Indebtedness.
	 
	 	(g)	 	Application of prepayment: The provisions of Clause 4 shall apply in
relation to the prepayment made hereunder.






	4.	 	REPAYMENT — PREPAYMENT
	 
	4.1	 	(a) Repayment of the Loan: The Borrower shall and it is expressly undertaken by the
Borrower to repay the Loan by (a) twenty (20) equal consecutive




19









 






	 	 	quarterly Repayment Instalments to be repaid on each of the Repayment Dates so that
the first be repaid on the date falling three (3) months after the Drawdown Date of
the Loan and each of the subsequent ones consecutively falling due for payment on
each of the dates falling three (3) months after the immediately preceding Repayment
Date with the last (the 20th) of such Repayment Instalments falling due
for payment on the Final Maturity Date; subject to the provisions of this Agreement
each of the Repayment Instalments shall be in the amount of Eight hundred thousand
Dollars ($800,000) and (b) an additional payment of Dollars $8,150,000 (Eight
million one hundred fifty thousand Dollars) payable together with the last (the
20th) Repayment Instalment on the Final Maturity Date (the “Balloon
Instalment”);
	 
	 	 	provided that (i) in relation to the Loan, if the last Repayment Date would
otherwise fall after the Final Maturity Date, such last Repayment Date shall be the
Final Maturity Date, (ii) in the event that the Commitment is not drawn down in
full, the amount of the Repayment Instalments relative to the Loan and the Balloon
Instalment shall be reduced pro-rata by the amount of the part of the Commitment not
drawn (iii) there shall be no Repayment Dates relative to the Loan after the Final
Maturity Date (iv) on the Final Maturity Date the Borrower shall also pay to the
Bank any and all other monies then and payable under this Agreement and the other
Security Documents and (v) if any of the Repayment Instalments shall become due on a
day which is not a Banking Day, the due date therefore shall be extended to the next
succeeding Banking Day unless such Banking Day falls in the next calendar month, in
which event such due date shall be the immediately preceding Banking Day.
	 
	4.2	 	Voluntary Prepayment. The Borrower shall have the right, upon giving the Bank not less than
five (5) Banking Days’ notice in writing, to prepay, without penalty or prepayment fee, part
or all of the Loan, in each case together with all unpaid interest accrued thereon and all
other sums of money whatsoever due and owing from the Borrower to the Bank hereunder or
pursuant to the other Security Documents and all interest accrued thereon, provided,
that:






	 	(a)	 	the giving of such notice by the Borrower will irrevocably commit the Borrower
to prepay such amount as stated in such notice;
	 
	 	(b)	 	such prepayment may take place only on the last day of an Interest Period in
respect of the Loan provided, however, that if the Borrower shall request
consent to make such prepayment on another day and the Bank shall accede to such
request (it being in the sole discretion of the Bank to decide whether




20









 






	 	 	 	or not to do so) the Borrower will pay in addition to the amount to be prepaid, any
such sum as may be payable to the Bank pursuant to Clause 10.1;
	 
	 	(c)	 	each such prepayment shall be in an amount of a Repayment Instalment or a whole
multiple thereof or the balance of the Loan and will be applied by the Bank in or
towards prepayment first of the Balloon Instalment and then of the remaining Repayment
Instalments in the inverse order of their maturity;
	 
	 	(d)	 	every notice of prepayment shall be effective only on actual receipt (including
by fax) by the Bank, shall be irrevocable and shall oblige the Borrower to make such
prepayment on the date specified;
	 
	 	(e)	 	no amount prepaid may be re-borrowed; and
	 
	 	(f)	 	the Borrower may not prepay the Loan or any part thereof save as expressly
provided in this Agreement.






	4.3	 	Compulsory Prepayment in case of Total Loss or sale of the Vessel.






	 	(a)	 	On the Vessel becoming a Total Loss:






	 	(i)	 	prior to the advancing of the Commitment, the obligation of the
Bank to advance the Commitment shall immediately cease and the Commitment shall
be reduced to zero; or
	 
	 	(ii)	 	in case the Commitment has been already advanced, the Borrower
shall prepay the Outstanding Indebtedness the latest on the date falling one
hundred and eighty (180) days after that on which the Total Loss occurred or,
if earlier, on the date upon which the insurance proceeds in respect of such
Total Loss are or Requisition Compensation is received by the Borrower (or the
Bank pursuant to the Security Documents).
	 
	 	For the purpose of this Agreement:
	 
	 	(aa)	 	an actual total loss of the Vessel shall be deemed to have
occurred at the actual date and time the Vessel was lost but in the event of
the date of the loss being unknown then the actual total loss shall be deemed
to have occurred on the date on which the Vessel was last reported;




21









 






	 	(bb)	 	a constructive total loss shall be deemed to have occurred at
the date and time notice of abandonment of the Vessel is given to the insurers
of the Vessel for the time being (provided a claim for total loss is admitted
by such insurers) or, if such insurers do not admit such a claim, at the date
and time at which a total loss is subsequently adjudged by a competent court of
law or arbitration tribunal to have occurred;
	 
	 	(cc)	 	a compromised or arranged total loss shall be deemed to have
occurred on the date on which a binding agreement as to such compromised or
arranged total loss has been entered into by the insurers of the Vessel;
	 
	 	(dd)	 	Compulsory Acquisition of the Vessel shall be deemed to have
occurred on the date upon which the relevant requisition for title or other
compulsory acquisition occurs; and
	 
	 	(ee)	 	hijacking, theft, condemnation, capture, seizure, detention,
arrest, or confiscation of the Vessel by any government or by any person acting
or purporting to act on behalf of any government, which deprives the Borrower
of the use of the Vessel for more than sixty (60) days shall be deemed to occur
upon the expiry of the period of sixty (60) days after the date upon which the
relevant hijacking, theft, condemnation, capture, seizure, detention, arrest or
confiscation occurred.






	 	(b)	 	In case of sale or other disposal of the Vessel, immediately upon completion of
such sale or other disposal, the Borrower shall prepay the Outstanding Indebtedness.






	4.4	 	Amounts payable on prepayment
	 
	 	 	Any prepayment of all or part of the Loan under this Agreement shall be made together with
(a) accrued interest on the amount to be prepaid to the date of such prepayment (calculated,
in the case of a prepayment pursuant to Clause 3.6 at a rate equal to the aggregate of the
Margin and the cost to the Bank of funding the Loan), (b) any additional amount payable
under Clause 5.3 and (c) all other sums payable by the Borrower to the Bank under this
Agreement or any of the other Security Documents including, without limitation, any amounts
payable under Clause 10.




22









 






	5.	 	PAYMENTS, TAXES, ACCOUNTS AND COMPUTATION
	 
	5.1	 	Payments — No set-off or Counterclaims






	 	(a)	 	The Borrower acknowledge that in performing its obligations under this
Agreement, the Bank will be incurring liabilities to third parties in relation to the
funding of amounts to the Borrower, such liabilities matching the liabilities of the
Borrower to the Bank and that it is reasonable for the Bank to be entitled to receive
payments from the Borrower gross on the due date in order that the Bank is put in a
position to perform its matching obligations to the relevant third parties.
Accordingly, all payments to be made by the Borrower under this Agreement and/or any of
the other Security Documents shall be made in full, without any set-off or counterclaim
whatsoever and, subject as provided in Clause 5.3, free and clear of any deductions or
withholdings or Governmental Withholdings whatsoever, as follows:






	 	(i)	 	in Dollars, not later than 10.00 a.m. (London time) on the
Banking Day (in Athens, London and New York City) on which the relevant payment
is due under the terms of this Agreement; and
	 
	 	(ii)	 	to the Receiving Bank for the account of the Bank, Account No.
04416740, SWIFT Code: FFBGGRAA, reference: Grand Spartounta Inc.—
Loan Agreement”, provided, however, that the Bank shall have
the right to change the place of account for payment, upon fifteen (15) Banking
Days’ prior written notice to the Borrower.






	 	(b)	 	If at any time it shall become unlawful or impracticable for the Borrower to
make payment under this Agreement to the relevant account or bank referred to in Clause
5.1(a), the Borrower may request and the Bank may agree to alternative arrangements for
the payment of the amounts due by the Borrower to the Bank under this Agreement or the
other Security Documents.






	5.2	 	Payments on Banking Days: All payments due shall be made on a Banking Day. If the
due date for payment falls on a day which is not a Banking Day, the due payment or payments
shall be made on the next following Banking Day unless such Banking Day falls in the next
calendar month in which case payment shall be made on the immediately preceding Banking Day.
	 
	5.3	 	Gross Up: If at any time any law, regulation, regulatory requirement or requirement
of any governmental authority, monetary agency, central bank or the like compels the Borrower
to make payment subject to Governmental Withholdings, or any other deduction or withholding,
(excluding tax withholdings on the Bank’s overall net




23









 






	 	 	income) the Borrower shall pay to the Bank such additional amounts as may be necessary to
ensure that there will be received by the Bank a net amount equal to the full amount which
would have been received had payment not been made subject to such Governmental Withholdings
or other deduction or withholding. The Borrower shall indemnify the Bank against any losses
or costs incurred by the Bank by reason of any failure of the Borrower to make any such
deduction or withholding or by reason of any increased payment not being made on the due
date for such payment. The Borrower shall, not later than thirty (30) days after each
deduction, withholding or payment of any Governmental Withholdings, forward to the Bank
official receipts and any other documentary receipts and any other documentary evidence
reasonably required by the Bank in respect of the payment made or to be made of any
deduction or withholding or Governmental Withholding. The obligations of the Borrower under
this provision shall, subject to applicable law, remain in force notwithstanding the
repayment of the Loan and the payment of all interest due thereon pursuant to the provisions
of this Agreement.
	 
	5.4	 	Mitigation: If circumstances arise which would result in an increased amount being
payable by the Borrower under this Clause then, without in any way limiting the rights of the
Bank under this Clause, the Bank shall use reasonable endeavours to transfer its obligations,
liabilities and rights under this Loan and the Security Documents to another office or
financial institution not affected by the circumstances, but the Bank shall not take any such
action if in its opinion, to do so would or might:






	 	(a)	 	have an adverse effect on its business, operations or financial condition; or
	 
	 	(b)	 	involve it in any activity which is unlawful or prohibited or any activity that
is contrary to, or inconsistent, with any regulation; or
	 
	 	(c)	 	involve it in any expense (unless indemnified to its reasonable satisfaction)
or tax disadvantage.






	5.5	 	Tax credits: If the Bank receives for its own account a repayment or credit in
respect of tax on account for which the Borrower has made an increased payment under this
Clause, it shall pay to the Borrower a sum equal to the repayment or credit received,
provided, always, that:






	 	(a)	 	the Bank shall not be obliged to allocate this transaction any part of a tax
repayment or credit which is referable to a number of transactions;
	 
	 	(b)	 	nothing in this Clause shall oblige the Bank to arrange its tax affairs in any
particular manner, to claim any type of relief, credit, allowance or deduction




24









 






	 	 	 	instead of, or in priority to, another or to make any such claim within any
particular time;
	 
	 	(c)	 	nothing in this Clause shall oblige the Bank to make a payment which exceed any
repayment or credit in respect of tax on account of which the Borrower has made an
increased payment under this Clause; and
	 
	 	(d)	 	any allocation or determination made by the Bank under or in connection with
this Clause shall be binding on the Borrower.






	5.6	 	Loan Account: All sums advanced by the Bank to the Borrower under this Agreement and
all interest accrued thereon and all other amounts due under this Agreement from time to time
and all repayments and/or payments thereof shall be debited and credited respectively to a
separate memorandum account maintained by the Bank in accordance with its usual practices in
the name of the Borrower. The Bank may, however, in accordance with its usual practices or
for its accounting needs, maintain more than one account, consolidate or separate them but all
such accounts shall be considered parts of one single memorandum account maintained under this
Agreement. In case that a ship mortgage in the form of Account Current is granted as security
under this Agreement, the account(s) referred to in this Clause shall be the Account Current
referred to in the mortgage.
	 
	5.7	 	Certificates Conclusive: It is hereby expressly agreed and admitted by the Borrower
that abstracts or photocopies or other reproductions of the books of the Bank as well as
statements of accounts or a certificate signed by an authorised officer of the Bank shall
(save for manifest error) be conclusive, binding and full evidence on the Borrower as to the
existence and/or the amount of the at any time Outstanding Indebtedness, of any amount due
under this Agreement, of the applicable Interest Rate or Default Rate or any other rate
provided for or referred to in this Agreement, the Interest Period, the value of additional
securities under Clause 8.2(a) and the payment or non payment of any amount.
	 
	5.8	 	Computation: All interest and other payments payable by reference to a rate per
annum under this Agreement shall accrue from day to day and be calculated on the basis of
actual days elapsed and a 360 day year.




25









 






	6.	 	REPRESENTATIONS AND WARRANTIES
	 
	6.1	 	Continuing representations and warranties. The Borrower hereby represents and warrants to the
Bank that:






	 	(a)	 	Due Incorporation/Valid Existence: the Borrower and each of the other
Security Parties is duly incorporated and validly existing and in good standing under
the laws of their respective countries of incorporation and have power to own their
respective property and assets, to carry on their respective business as the same are
now being lawfully conducted and to purchase, own, finance and operate vessels, as well
as to undertake the obligations which they have undertaken or shall undertake pursuant
to the Security Documents to which it is a party;
	 
	 	(b)	 	Due Corporate Authority: the Borrower has power to execute, deliver
and perform its obligations under the Security Documents to which it is a party and to
borrow the Commitment and each of the other Security Parties has power to execute and
deliver and perform its obligations under the Security Documents to which it is or is
to be a party; all necessary corporate, shareholder and other action has been taken to
authorize the execution, delivery and performance of the same and no limitation on the
powers of the Borrower to borrow will be exceeded as a result of borrowing the Loan;
	 
	 	(c)	 	Litigation: no litigation, arbitration, tax claim or administrative
proceeding involving a potential liability of the Borrower or any other Security Party
in excess of $500,000 is current or pending or (to its or its officers’ knowledge)
threatened against the Borrower or any other Security Party, which, if adversely
determined, would have a materially adverse effect on the business assets or the
financial condition of any of them;
	 
	 	(d)	 	No conflict with other obligations: the execution and delivery of, the
performance of their respective obligations under, and compliance with the provisions
of, the Security Documents by the relevant Security Parties will not (i) contravene any
existing applicable law, statute, rule or regulation or any judgment, decree or permit
to which the Borrower or any other Security Party is subject, (ii) conflict with, or
result in any breach of any of the terms of, or constitute a default under, any
agreement or other instrument to which the Borrower or any other Security Party is a
party or is subject to or by which it or any of its property is bound, (iii) contravene
or conflict with any provision of the memorandum and articles of association/articles
of incorporation/by-laws/statutes or other constitutional documents of the




26









 






	 	 	 	Borrower or any other Security Party or (iv) result in the creation or imposition of
or oblige the Borrower or any other Security Party to create any Encumbrance (other
than a Permitted Encumbrance) on any of the undertakings, assets, rights or revenues
of the Borrower or any other Security Party;
	 
	 	(e)	 	Financial Condition: the financial condition of the Borrower and of
the other Security Parties has not suffered any material deterioration since that
condition was last disclosed to the Bank;
	 
	 	(f)	 	No Immunity: neither the Borrower nor any other Security Party nor any
of their respective assets are entitled to immunity on the grounds of sovereignty or
otherwise from any legal action or proceeding (which shall include, without limitation,
suit, attachment prior to judgement, execution or other enforcement);
	 
	 	(g)	 	Shipping Company: the Borrower is a shipping company involved in the
owning of ships engaged in international voyages and earning profits in free foreign
currency;
	 
	 	(h)	 	Licences/Authorisation: every consent, authorisation, licence or
approval of, or registration with or declaration to, governmental or public bodies or
authorities or courts required by any Security Party to authorize, or required by any
Security Party in connection with, the execution, delivery, validity, enforceability or
admissibility in evidence of each of the Security Documents or the performance by each
Security Party of its obligations under the Security Documents has been obtained or
made and is in full force and effect and there has been no default in the observance of
any of the conditions or restrictions (if any) imposed in, or in connection with, any
of the same;
	 
	 	(i)	 	Perfected Securities: when duly executed, the Security Documents will
create a perfected security interest in favour of the Bank, with the intended priority,
in or over the assets and revenues intended to be covered, valid and enforceable
against the Borrower and the other relevant Security Parties;
	 
	 	(j)	 	No Notarisation/Filing/Recording: save for the registration of the
Mortgage in the Registry, it is not necessary to ensure the legality, validity,
enforceability or admissibility in evidence of this Agreement or any of the other
Security Documents that it or they or any other instrument be notarised, filed,
recorded, registered or enrolled in any court, public office or elsewhere




27









 






	 	 	 	or that any stamp, registration or similar tax or charge be paid on or in relation
to this Agreement or the other Security Documents;
	 
	 	(k)	 	Validity and Binding effect: the Security Documents constitute (or
upon their execution — and in the case of the Mortgage upon its registration at the
Registry — will constitute) valid and legally binding obligations of the relevant
Security Parties enforceable against the Borrower and the other Security Parties in
accordance with their respective terms and that there are no other agreements or
arrangements which may adversely affect or conflict with the Security Documents or the
security thereby created;
	 
	 	(l)	 	Valid Choice of Law: the choice of law agreed to govern this Agreement
and/or any other Security Document and the submission to the jurisdiction of the courts
agreed in each of the Security Documents are or will be, on execution of the respective
Security Documents, valid and binding on the Borrower and any other Security Party
which is or is to be a party thereto; and
	 
	 	(m)	 	Shareholdings: the Borrower is a wholly-owned Subsidiary of the
Grandunion Corporate Guarantor and on the Drop-down Date shall become wholly-owned
Subsidiary of the Newlead Corporate Guarantor and shall remain so throughout the
Security Period.






	6.2	 	Initial representations and warranties. The Borrower hereby further represents and warrants
to the Bank that:






	 	(a)	 	Direct obligations — Pari Passu: the obligations of the Borrower under
this Agreement are direct, general and unconditional obligations of the Borrower and
rank at least pari passu with all other present and future unsecured and unsubordinated
Indebtedness of the Borrower with the exception of any obligations which are
mandatorily preferred by law;
	 
	 	(b)	 	Information: all information, accounts, statements of financial
position, exhibits and reports furnished by or on behalf of the Security Parties to the
Bank in connection with the negotiation and preparation of this Agreement and each of
the other Security Documents are true and accurate in all material respects and not
misleading, do not omit material facts and all reasonable enquiries have been made to
verify the facts and statements contained therein; to the knowledge of the
Directors/Officers of the Borrower, there are no other facts the omission of which
would make any fact or statement therein misleading and, in the case of accounts and
statements of financial




28









 






	 	 	 	position, they have been prepared in accordance with generally accepted accounting
principles which have been consistently applied;
	 
	 	(c)	 	No Default: no Default has occurred and is continuing;
	 
	 	(d)	 	No Taxes: no Taxes are imposed by deduction, withholding or otherwise
on any payment to be made by any Security Party under this Agreement and/or any other
of the Security Documents or are imposed on or by virtue of the execution or delivery
of this Agreement and/or any other of the Security Documents or any document or
instrument to be executed or delivered hereunder or thereunder. In case that any Tax
exists now or will be imposed in the future, it will be borne by the Borrower;
	 
	 	(e)	 	No Default under other Indebtedness: to the knowledge of the
Directors/Officers of the Borrower and the other Security Parties, none of the Borrower
and the other Security Parties is in Default under any agreement relating to
Indebtedness to which it is a party or by which it may be bound;
	 
	 	(f)	 	Ownership/Flag/Seaworthiness/Class/Insurance of the Vessel: the Vessel
is:






	 	(i)	 	in the absolute and free from Encumbrances (other than in
favour of the Bank) ownership of the Owner who will on and after the relevant
Drawdown Date be the sole legal and beneficial owner of the Vessel;
	 
	 	(ii)	 	registered in the name of the Owner through the Registry under
the laws and flag of the Flag State;
	 
	 	(iii)	 	operationally seaworthy and in every way fit for service;
	 
	 	(iv)	 	classed with the Classification with the relevant
Classification Society, free of all recommendations and qualifications of such
Classification Society affecting her class;
	 
	 	(v)	 	insured in accordance with the provisions of this Agreement;
and
	 
	 	(vi)	 	managed by the Manager;






	 	(g)	 	No Charter: unless otherwise permitted in writing by the Bank, the
Vessel will not on or before the relevant Drawdown Date be subject to any charter or
contract nor to any agreement to enter into any charter or contract which, if entered
into after such Drawdown Date would have required the consent of the Bank under any of
the Security Documents and there will not on or before




29









 






	 	 	 	the relevant Drawdown Date be any agreement or arrangement whereby the Earnings of
the Vessel may be shared with any other person;
	 
	 	(h)	 	No Encumbrances: neither the Vessel, nor her Earnings, Requisition
Compensation or Insurances nor any other properties or rights which are, or are to be,
the subject of any of the Security Documents nor any part thereof will be subject to
any Encumbrances other than Permitted Encumbrances;
	 
	 	(i)	 	Compliance with Environmental Laws and Approvals: except as may
already have been disclosed by the Borrower in writing to, and acknowledged in writing
by, the Bank:






	 	(i)	 	the Borrower and its Related Companies have complied with the
provisions of all Environmental Laws;
	 
	 	(ii)	 	the Borrower and its Related Companies have obtained all
Environmental Approvals and are in compliance with all such Environmental
Approvals; and
	 
	 	(iii)	 	neither the Borrower nor any of its Related Companies have
received notice of any Environmental Claim relating to an amount exceeding
$500,000 that the Borrower or any of its Related Companies are not in
compliance with any Environmental Law or any Environmental Approval;






	 	(j)	 	No Environmental Claims






	 	(i)	 	except as may already have been disclosed by the Borrower in
writing to, and acknowledged in writing by, the Bank:






	 	aa)	 	and there is no Environmental Claim exceeding
$500,000 pending or, to the best of the Borrower’s knowledge and
belief, threatened against the Borrower or the Vessel or the Borrower’s
Related Companies or any other Relevant Ship; and
	 
	 	bb)	 	there has been no emission, spill, release or
discharge of a Material of Environmental Concern from the Vessel and or
any other vessel owned by, managed or crewed by or chartered to the
Borrower or, as the case may be, the Manager which could give rise to
an Environmental Claim exceeding $500,000;




30









 












	 	(k)	 	Copies true and complete: the copies of each of the Management
Agreements delivered or to be delivered to the Bank pursuant to clause 7.2 are, or will
when delivered be, true and complete copies of such documents; such documents will when
delivered constitute valid and binding obligations of the parties thereto enforceable
in accordance with their respective terms and there will have been no amendments or
variations thereof or defaults thereunder;
	 
	 	(l)	 	Application made for DOC and SMC: the Operator has applied for a DOC
for itself and an SMC in respect of the Vessel and that neither the Borrower nor any
Operator is aware of any reason why such application may be refused;
	 
	 	(m)	 	ISPS Code: the Owner has obtained a valid and current ISSC in respect
of its Vessel and the Vessel is in compliance with the ISPS Code; and
	 
	 	(n)	 	Money laundering — acting for own account: The Borrower confirms that,
by entering into this Agreement and the other Security Documents, it is acting on its
own behalf and for its own account and it is obtaining the Loan for its own account and
the borrowing of the Commitment and the performance and discharge of the Borrower’s
obligations and liabilities under this Agreement and the other Security Documents to
which it is or is to be a party and other arrangements effected or contemplated by this
Agreement will not involve or lead to contravention of any law, official, requirement
or other regulatory measure or procedure implemented to combat “money laundering” as
defined in Article 1 of the Directive (91/308/EEC) of the Council of the European
Community or any Pertinent Jurisdiction.






	6.3	 	Representations Correct. At the time of entering into this Agreement all above
representations and warranties or any other information given by the Borrower to the Bank are
true and accurate.
	 
	6.4	 	Repetition of Representations and Warranties. The representations and warranties in this
Clause 6 shall be deemed to be repeated by the Borrower on each Drawdown Date and on each
Interest Payment Date throughout the Security Period.
	 
	7.	 	CONDITIONS PRECEDENT
	 
	7.1	 	Conditions precedent to the execution of this Agreement: The Borrower shall provide
the Bank prior to the execution of this Agreement the following documents and evidence in form
and substance satisfactory to the Bank:




31









 












	 	(a)	 	a duly certified true copy of the Articles of Incorporation and By-Laws or the
Memorandum and Articles of Association, or of any other constitutional documents, as
the case may be, of each corporate Security Party;
	 
	 	(b)	 	a recent certificate of incumbency of each corporate Security Party issued by
the appropriate authority or, as appropriate, signed by the secretary or a director
thereof, stating the officers and the directors of each of them;
	 
	 	(c)	 	minutes of separate meetings of the directors and shareholders of each
corporate Security Party at which there was approved (inter alia) the entry into,
execution, delivery and performance of this Agreement, the other Security Documents and
any other documents executed or to be executed pursuant hereto or thereto to which the
relevant corporate Security Party is or is to be a party;
	 
	 	(d)	 	the original of any power(s) of attorney and any further evidence of the due
authority of any person signing this Agreement, the other Security Documents, the
Management Agreements and any other documents executed or to be executed pursuant
hereto or thereto on behalf of any corporate person;
	 
	 	(e)	 	evidence that all necessary licences, consents, permits and authorisations
(including exchange control ones) have been obtained by any Security Party for the
execution, delivery, validity, enforceability, admissibility in evidence and the due
performance of the respective obligations under or pursuant to this Agreement and the
other Security Documents;
	 
	 	(f)	 	any other documents or recent certificates or other evidence which would be
required by the Bank in relation to any corporate Security Party evidencing that the
relevant Security Party has been properly established, continues to exist validly and
to be in good standing; and
	 
	 	(g)	 	a declaration signed by the shareholders of any corporate Security Party
stating respectively the full names of the person or persons beneficially entitled as
shareholders/ stockholders of the entire issued and outstanding shares/ stock of each
of them.






	7.2	 	Conditions precedent to the making of the Commitment. The obligations of the Bank to make
available the Commitment or any part thereof is subject to the further condition that the Bank
on or before the Drawdown Date shall have received the following documents and evidence in
form and substance satisfactory to the Bank:




32









 












	 	(a)	 	each of the Grandunion Corporate Guarantee, Account Pledge Agreement, Mortgage,
General Assignment, any Charterparty Assignment and the Manager’s Undertaking duly
executed;
	 
	 	(b)	 	evidence that the Vessel is duly registered in the ownership of the Owner
through the Registry and under the laws and flag of the Flag State, free from any
Encumbrances save for Permitted Encumbrances;
	 
	 	(c)	 	evidence that the Mortgage has been or, as the case may be, will be, registered
against the Vessel through the Registry under the laws and flag of the Flag State;
	 
	 	(d)	 	evidence in form and substance satisfactory to the Bank that the Vessel has
been or will — on the Drawdown Date — be insured in accordance with the insurance
requirements provided for in this Agreement and the Mortgage including a Mortgagee’s
Interest Insurance for an amount equal to 110% of the amount of the Loan (herein “MII”)
which the Bank may at any time effect on such terms and with such insurers as shall
from time to time be determined by the Bank, to be followed by full copies of cover
notes, policies, certificates of entry or other contracts of insurance and irrevocable
authority is hereby given to the Bank at any time at its discretion to obtain copies of
the policies, certificates of entry or other contracts of insurance from the insurers
and/or obtain any information in relation to the Insurances effected or to be effected
in respect of the Vessel;
	 
	 	(e)	 	if the Bank so requires, a report signed by an independent firm of marine
insurance brokers appointed by the Bank at the expense of the Borrower confirming the
adequacy of the Insurances maintained on each Vessel;
	 
	 	(f)	 	certified true copy of the Management Agreement in respect of the Vessel;
	 
	 	(g)	 	all necessary confirmations by insurers of the Vessel that they will issue
letters of undertaking and endorse notice of assignment and loss payable clauses on the
Insurances, in form and substance satisfactory to the Bank in its sole discretion;
	 
	 	(h)	 	evidence from the Classification Society of the Vessel that the Vessel is
classed with the Classification with the Classification Society, and remains free from
any requirements or recommendations affecting her class;
	 
	 	(i)	 	evidence that the trading certificates of the Vessel are valid and in force;




33









 






	 	(j)	 	the Drawdown Notice duly executed and issued;
	 
	 	(k)	 	if the Bank so requires, a satisfactory to the Bank physical condition survey
report on the Vessel together with a comprehensive record inspection from a surveyor
appointed by the Bank, at the Borrower’s expense;
	 
	 	(l)	 	valuation of the Vessel, at the Borrower’s expense, as at a date determined by
the Bank but in any event before the relevant drawdown, prepared on the basis specified
in Clause 8.2 by major shipbrokers appointed and/or approved by the Bank in form and
substance satisfactory to the Bank in its sole discretion;
	 
	 	(m)	 	evidence satisfactory to the Bank that the Operator complies with the
requirements of the ISM Code, has obtained a DOC for itself, and in relation to the
Vessel, has obtained an SMC in respect of the Vessel issued pursuant to the ISM Code;
	 
	 	(n)	 	a copy of the ISSC issued pursuant to the ISPS Code in respect of the Vessel,
certified as true and in effect by the Borrower and the Manager;
	 
	 	(o)	 	payment of any fees due from the Borrower to the Bank pursuant to the terms of
Clause 10.8 or any other provision of the Security Documents;
	 
	 	(p)	 	evidence that the Earnings Account and the Retention Account have been duly
opened and all mandate forms, signature cards and authorities have been duly delivered;
and
	 
	 	(q)	 	due authorisation in form and substance satisfactory to the Bank authorising
the Bank to have access and/or obtain any copies of class records or other information
at its discretion from the Classification Society of the Vessel.






	7.3	 	No change of circumstances: The obligation of the Bank to make the Commitment or any
part thereof is subject to the further condition that at the time of the giving of the
Drawdown Notice and on the Drawdown Date:






	 	(a)	 	the representations and warranties set out in Clause 6 and in each of the
Security Documents are true and correct on and as of each such time as if each was made
with respect to the facts and circumstances existing at such time;
	 
	 	(b)	 	no Default shall have occurred and be continuing or would result from the
drawdown; and




34









 






	 	(c)	 	the Bank shall be satisfied that there has been no change in the ownership,
management, operations and/or material adverse change in the financial condition of any
Security Party which (change) might, in the sole opinion of the Bank, be detrimental to
the interests of the Bank.






	7.4	 	General Conditions: The obligation of the Bank to make the Commitment first to be
drawn or any part thereof is subject to the further condition that the Bank, prior to or
simultaneously with the relevant drawdown, shall have received:






	 	(a)	 	draft opinions from lawyers appointed by the Bank and draft opinions from the
Security Parties’ legal counsel as to all the matters referred to in Clauses 6.1(a) and
(b) and all such aspects of law as the Bank shall deem relevant to this Agreement and
the other Security Documents and any other documents executed pursuant hereto or
thereto and any further legal or other expert opinion as the Bank at its sole
discretion may require;
	 
	 	(b)	 	confirmation from any agents nominated in this Agreement and elsewhere in the
other Security Documents for the acceptance of any notice or service of process, that
they consent to such nomination; and
	 
	 	(c)	 	an undertaking of the Borrower that it shall execute a receipt in writing in
form and substance satisfactory to the Bank including an acknowledgement and admission
of the Borrower to the effect that the Loan was drawn by the Borrower and a declaration
by the Borrower that all conditions precedent have been fulfilled, that there is no
Event of Default and that all the representations and warranties are true and correct.






	7.5	 	Waiver of conditions precedent: The conditions specified in this Clause 7 are
inserted solely for the benefit of the Bank and may be waived by the Bank in whole or in part
and with or without conditions.
	 
	7.6	 	Conditions subsequent:






	 	(a)	 	the Newlead Corporate Guarantee duly executed by the Newlead Corporate
Guarantor not later than five (5) days from the date of this Agreement; and
	 
	 	(b)	 	Original opinions within 15 days after the relevant Drawdown Date from lawyers
appointed by the Bank as to all matters referred to in Clauses 6.1(a) and (b) and all
such aspects of law as the Bank shall deem relevant to this Agreement and the other
Security Documents and any other documents executed pursuant hereto or thereto and any
further legal or other expert opinion as the Bank at its sole discretion may require.






35











 






	8.	 	COVENANTS
	 
	8.1	 	General: The Borrower hereby undertakes with the Bank that, from the date of this
Agreement and as long as any moneys are due and/or owing and/or outstanding under this
Agreement or any of the other Security Documents, it will:






	 	(a)	 	Financial Statements: prepare or procure to be prepared and furnished
to the Bank, in form and substance satisfactory to the Bank, with (i) annual, audited
(by auditors acceptable to the Bank) financial statements (including balance sheet and
profit and loss accounts) of the Newlead Corporate Guarantor (including the Borrower)
as soon as practicable but not later than 210 days after the end of the financial year
to which they relate, prepared in accordance with GAAP and audited combined or
consolidated financial statements or information in respect of the Group and (ii)
semi-annual combined financial statements of the Borrower within 90 days from the end
of each fiscal semester (herein, a “Semester Date”);
	 
	 	(b)	 	Financial Information: provide the Bank from time to time as the Bank
may request and in form and substance satisfactory to the Bank with information on the
financial conditions, actual and projected for the following 12 month period, cash flow
position, commitments and operations of each Security Party, including cash flow
analysis and voyage accounts of the Vessel with a breakdown of income and running
expenses showing net trading profit, trade payables and trade receivables, such
financial details to be certified by one of the directors of the relevant company or
the chief financial officer of the Borrower as to their correctness and promptly inform
the Bank of all major financial developments and any other Borrowed Money involving or
related to the Borrower and the Newlead Corporate Guarantor or any of them; and
	 
	 	(c)	 	Notice on adverse change or Default: immediately inform the Bank upon
becoming aware of any occurrence which might materially and adversely affect the
ability of the Borrower or any other Security Party to perform its respective
obligations under this Agreement and/or any of the other Security Documents and,
without limiting the generality of the foregoing, will inform the Bank of any Default
forthwith upon becoming aware thereof and will from time to time, if so requested by
the Bank, confirm to the Bank in writing that, save as otherwise stated in such
confirmation, no Default has occurred and is continuing;
	 
	 	(d)	 	Consents and licences: without prejudice to Clauses 6 and 7, obtain or
cause to be obtained, maintain in full force and effect and comply in all material




36









 






	 	 	 	respects with the conditions and restrictions (if any) imposed in, or in connection
with, every consent, authorisation, licence or approval of governmental or public
bodies or authorities or courts and do or cause to be done, all other acts and
things which may from time to time be necessary or desirable under applicable law
for the continued due performance of all the obligations of the Security Parties
under each of the Security Documents;






	 	(e)	 	Use of proceeds: use the Loan exclusively for the purposes specified
in Clause 1.1;
	 
	 	(f)	 	Information on the employment of the Vessel: provide the Bank from time
to time as the Bank may request with information on the employment of the Vessel and of
any Relevant Ship as well as on the terms and conditions of any charterparty, contract
of affreightment, agreement or related document in respect of the employment of the
Vessel and of any Relevant Ship, such information to be certified by one of the
directors of the Borrower as to their correctness;
	 
	 	(g)	 	Pari passu: ensure that its obligations under this Agreement shall,
without prejudice to the provisions of Clause 8.3, at all times rank at least pari
passu with all its other present and future unsecured and unsubordinated Indebtedness
with the exception of any obligations which are mandatorily preferred by law and not by
contract;
	 
	 	(h)	 	Delivery of reports: deliver to the Bank as many copies as the Bank
may reasonably require of every report, circular, notice or like document issued by any
Security Party to its shareholders or creditors generally;
	 
	 	(i)	 	Obligations under Security Documents: duly and punctually perform each
of the obligations expressed to be assumed by it under the Security Documents;
	 
	 	(j)	 	Payment on demand: pay to the Bank on demand any sum of money which is
payable by the Borrower to the Bank under this Agreement but in respect of which it is
not specified in any other Clause when it is due and payable; and
	 
	 	(k)	 	Know your customer and money laundering compliance: provide the Bank
with such documents and evidence as the Bank shall from time to time require, based on
law and regulations applicable from time to time and the Bank’s own internal guidelines
applicable from time to time to identify the Borrower and the other Security Parties,
including the ultimate legal and




37









 






	 	 	 	beneficial owner or owners of such entities, and any other persons involved or
affected by the transaction(s) contemplated by this Agreement.






	8.2	 	Security value maintenance






	 	(a)	 	Security shortfall: If at any time during the Security Period the
Security Value shall be less than the applicable Security Requirement, the Bank may
give notice to the Borrower requiring that such deficiency be remedied and then the
Borrower shall either:






	 	(i)	 	prepay within a period of thirty (30) days of the date of
receipt by the Borrower of the Bank’s said notice such sum in Dollars as will
result in the applicable Security Requirement after such prepayment (taking
into account any other repayment of the Loan made between the date of the
notice and the date of such prepayment) being equal to the Security Value; or
	 
	 	(ii)	 	within thirty (30) days of the date of receipt by the Borrower
of the Bank’s said notice constitute to the satisfaction of the Bank such
further security for the Outstanding Indebtedness as shall be acceptable to the
Bank having a value for security purposes (as determined by the Bank in its
absolute discretion) at the date upon which such further security shall be
constituted which, when added to the Security Value, shall not be less than the
applicable Security Requirement as at such date. Such additional security
shall be constituted by:






	 	a)	 	additional pledged cash deposits in favour of
the Bank in an amount equal to the amount which would be required to be
prepaid under Clause 8.2(a)(i) with the Bank and in an account and
manner to be determined by the Bank; and/or
	 
	 	b)	 	any other security acceptable to the Bank at
its absolute discretion to be provided in a manner determined by the
Bank.






	 	 	 	The provisions of Clause 4.3 and 4.4 shall apply to prepayments under Clause
8.2(a)(i).






	 	(b)	 	Valuation of Vessel: The Vessel shall, for the purposes of this Clause
8.2, be valued in Dollars, ten (10) days prior to the relevant Drawdown Date (as the
Bank may determine) and thereafter as and when the Bank shall require (but at least
once per year) by one (1) first class independent firm of




38









 






	 	 	 	internationally known shipbrokers appointed by the Bank such valuation to be made
without, unless required by the Bank, physical inspection, and on the basis of a
sale for prompt delivery for cash at arms length on normal commercial terms as
between a willing buyer and a willing seller, without taking into account the
benefit or the burden of any charterparty concerning the Vessel. Such valuation
shall constitute the value of the Vessel for the purposes of this Clause 8.2 and
shall be binding upon the parties hereto until such time as any further such
valuation in respect of the Vessel shall be obtained.






	 	(c)	 	Information: The Borrower undertakes to the Bank to supply to the Bank
and to any such shipbrokers such information concerning its Vessel and its condition as
such shipbrokers may reasonably require for the purpose of making any such valuation.
	 
	 	(d)	 	Costs: All costs in connection with the Bank obtaining each valuation
of the Vessel referred to in Clause 8.2(b), and any valuation either of any additional
security for the purposes of ascertaining the Security Value at any time or
necessitated by the Borrower electing to constitute additional security pursuant to
Clause 8.2(a)(ii) shall be borne by the Borrower.
	 
	 	(e)	 	Valuation of additional security: For the purpose of this Clause 8.2,
the market value of any additional security provided or to be provided to the Bank
shall be determined by the Bank in its absolute discretion.
	 
	 	(f)	 	Documents and evidence: In connection with any additional security
provided in accordance with this Clause 8.2, the Bank shall be entitled to receive such
evidence and documents of the kind referred to in Clause 7 as may in the Bank’s opinion
be appropriate and such favorable legal opinions as the Bank shall in its absolute
discretion require.






	8.3	 	Negative undertakings: The Borrower undertakes with the Bank that, from the date of
this Agreement and so long as any moneys are owing under the Security Documents and while all
or any part of the Outstanding Indebtedness remains outstanding, it will not, without the
prior written consent of the Bank):






	 	(a)	 	Negative pledge: permit any Encumbrance (other than a Permitted
Encumbrance) to subsist, arise or be created or extended over all or any part of its
present or future undertakings, assets, rights or revenues to secure or prefer any
present or future Indebtedness or other liability or obligation of such Borrower or any
other person;




39









 












	 	(b)	 	No merger: will procure that none of the Borrower will, without the
prior written consent of the Bank, merge or consolidate with any other person;
	 
	 	(c)	 	Disposals: sell, transfer, abandon, lend or otherwise dispose of or
cease to exercise direct control over any part (being either alone or when aggregated
with all other disposals falling to be taken into account pursuant to this Clause
8.3(c) material in the opinion of the Bank in relation to the undertakings, assets,
rights and revenues of such Borrower) of its present or future undertaking, assets,
rights or revenues (otherwise than by transfers, sales or disposals for full
consideration in the ordinary course of trading) whether by one or a series of
transactions related or not;
	 
	 	(d)	 	Other business: undertake any business other than the ownership and
operation of its Vessel and the chartering of the Vessel to third parties;
	 
	 	(e)	 	Acquisitions: acquire any further assets other than its Vessel and
rights arising under contracts entered into by or on behalf of such Borrower in the
ordinary course of its business of owning, operating and chartering its Vessel;
	 
	 	(f)	 	Other obligations: incur any obligations except for obligations
arising under the Security Documents or contracts entered into in the ordinary course
of its business of owning, operating and chartering its Vessel (and for the purposes of
this Clause 8.3(f) fees to be paid pursuant to the Management Agreements shall be
considered as permitted obligations);
	 
	 	(g)	 	No borrowing: incur any Borrowed Money except for Borrowed Money
pursuant to the Security Documents;
	 
	 	(h)	 	Repayment of borrowings: repay the principal of, or pay interest on or
any other sum in connection with, any of its Borrowed Money except for Borrowed Money
pursuant to the Security Documents;
	 
	 	(i)	 	Guarantees: issue any guarantees or indemnities or otherwise become
directly or contingently liable for the obligations of any person, firm, or corporation
except pursuant to the Security Documents and except for guarantees (up to Two hundred
thousand Dollars ($200,000)) or indemnities from time to time required in the ordinary
course by any protection and indemnity or war risks association with which the Vessel
is entered, guarantees required to procure the release of the Vessel from any arrest,
detention, attachment or levy or guarantees or undertakings required for the salvage of
the Vessel);










40









 












	 	(j)	 	Loans: make any loans or grant any credit (save for normal trade
credit in the ordinary course of business) to any person or agree to do so;
	 
	 	(k)	 	Sureties: permit any Indebtedness of such Borrower to any person
(other than the Bank) to be guaranteed by any person (save, in the case of the
Borrower, for guarantees or indemnities from time to time required in the ordinary
course by any protection and indemnity or war risks association with which the Vessel
is entered, guarantees required to procure the release of the Vessel from any arrest,
detention, attachment or levy or guarantees or undertakings required for the salvage of
the Vessel);
	 
	 	(l)	 	Share capital and distribution: purchase or otherwise acquire for value
any shares of its capital or declare or distribute any of its present or future assets,
undertakings, rights or revenues to any of its shareholders or pay any dividends (save
for dividends paid with the prior written consent of the Bank);
	 
	 	(m)	 	Subsidiaries: without the prior written consent of the Bank form or
acquire any Subsidiaries;
	 
	 	(n)	 	Maintenance of Business Structure: not change the nature, organisation
and conduct of its business as Owner of the Vessel or carry on any business other than
the business carried on the date hereof;
	 
	 	(o)	 	Maintenance of Legal Structure: ensure that none of the documents
defining the constitution of the Borrower shall be altered in any manner whatsoever
without the prior written consent of the Bank (such consent not to be unreasonably
withheld);
	 
	 	(p)	 	Control: ensure that, throughout the Security Period, no change shall
be made directly or indirectly in the ownership, beneficial ownership, control or
management of the Borrower (except for the change of ownership from Grandunion
Corporate Guarantor to the Newlead Corporate Guarantor or any share therein or of the
Vessel from that evidenced to the Bank at the date of this Agreement without the prior
written consent of the Bank (which shall not be unreasonably withheld);
	 
	 	(q)	 	No Freight Derivatives: not (without the prior written consent of the
Bank) enter into any freight derivatives or any other instruments which have the effect
of hedging forward exposures to freight derivatives.










41









 












	8.4	 	Covenants Concerning the Vessel: The Borrower hereby further undertakes and agrees
with the Bank that it will:






	 	(a)	 	Conveyance on default: where the Vessel is (or is to be) sold in
exercise of any power conferred on the Bank, execute, forthwith upon request by the
Bank, such form of conveyance of the Vessel as the Bank may require;
	 
	 	(b)	 	Ownership/Management/Control: ensure that the Vessel is registered
under the laws of the Flag State and thereafter maintain her present ownership,
management, control and beneficial ownership (save for the transfer of the total
number of the issued and outstanding shares of the Borrower from the Grandunion
Corporate Guarantor to the Newlead Corporate Guarantor as provided herein);
	 
	 	(c)	 	Class: ensure that the Vessel will maintain its Classification free of
overdue recommendations, notations or average damage affecting class or permitted by
the relevant Classification Society and provide the Bank on demand with copies of all
class and trading certificates of the Vessel;
	 
	 	(d)	 	Insurances: ensure that all Insurances (as defined in the
Mortgage/General Assignment) of the Vessel are maintained and comply with all insurance
requirements specified in this Agreement and in the Mortgage, including a MII, which
the Bank may at any time effect on such terms and with such insurers as shall from time
to time be determined by the Bank, and in case of failure to maintain any Vessel so
insured, authorise the Bank (and such authorisation is hereby expressly given to the
Bank) to have the right but not the obligation to effect such Insurances on behalf of
the Owner (and in case that any Vessel remains in port for an extended period) to
effect port risks insurances at the cost of the Borrower which, if paid by the Bank,
shall be Expenses;
	 
	 	(e)	 	Transfer/Encumbrances: not without the prior written consent of the
Bank sell or otherwise dispose of the Vessel or any share therein or create or agree to
create or permit to subsist any Encumbrance over the Vessel (or any share or interest
therein) other than Encumbrances created or to be created pursuant to the Security
Documents;
	 
	 	(f)	 	Not imperil Flag, Ownership, Insurances: ensure that the Vessel is
maintained and trades in conformity with the laws of the Flag State or of its owning
company , the requirements of the Insurances and nothing is done or permitted to be
done which could endanger the flag of the Vessel or its




42









 






	 	 	 	unencumbered (other than Encumbrances in favour of the Bank and Encumbrances
permitted by this Agreement) ownership or its Insurances;






	 	(g)	 	Mortgage: execute, and procure the execution and registration of, the
Mortgage over the Vessel under the laws of the Flag State and always comply with all
the covenants provided for in the Mortgage;
	 
	 	(h)	 	Assignment of Earnings: assign or agree to assign otherwise than to
the Bank the Earnings or any part thereof;
	 
	 	(i)	 	Chartering: (a) not without the prior written consent of the Bank
(such consent not to be unreasonably withheld) enter into or agree to enter into in
respect of the employment of its Vessel on demise charter for any period and (b)
promptly advise the Bank on the entering into any Long Charterparty;
	 
	 	(j)	 	Manager: not without the prior written consent of the Bank (and then
only subject to such conditions as the Bank may impose) appoint a manager of its Vessel
(other than the Manager) or terminate or amend the terms of any Management Agreement;
	 
	 	(k)	 	Compliance with Environmental Laws: comply with, and procure that all
Environmental Affiliates of any Relevant Party comply with, all Environmental Laws
including without limitation, requirements relating to manning and establishment of
financial responsibility and to obtain and comply with, and procure that all
Environmental Affiliates of such Relevant Party obtain and comply with, all
Environmental Approvals and to notify the Bank forthwith:






	 	(i)	 	of any Environmental Claim for an amount or amounts in
aggregate exceeding $500,000 made against the Vessel and/or any Relevant Ship
and/or her respective owner; and
	 
	 	(ii)	 	upon becoming aware of any incident which may give rise to an
Environmental Claim and to keep the Bank advised in writing of the Borrower’s
response to such Environmental Claim on such regular basis and in such detail
as the Bank shall require;






	 	(l)	 	Vessel’s Inspection: upon the happening of a Default, permit the Bank,
at the Borrower’s expense: (i) by surveyors or other persons appointed by the Bank to
board the Vessel at all reasonable times for the purpose of inspecting her condition or
for the purpose of satisfying itself in regard to proposed or executed repairs and to
afford all proper facilities for such inspection and (ii)




43









 






	 	 	 	at any time by financial or insurance advisors or other persons appointed by the
Bank to review the operating and insurance records of the Borrower and the Vessel;






	 	(m)	 	Banking operations: ensure that all banking operations in connection
with the Vessel are carried out through the Lending Branch;
	 
	 	(n)	 	Liquidity: ensure that all times during the Security Period there is
standing to the credit of the Earnings Account, a free monthly average balance of not
less than Dollars One hundred fifty thousand ($150,000);
	 
	 	(o)	 	Compliance with ISM Code and ISPS Code: procure that the Manager and
any Operator:






	 	(iii)	 	will comply with and ensure that the Vessel and any Operator
by no later than the relevant Drawdown Date complies with the requirements of
the ISM Code, including (but not limited to) the maintenance and renewal of
valid certificates pursuant thereto throughout the Security Period;
	 
	 	(iv)	 	immediately inform the Bank if there is any threatened or
actual withdrawal of the Owner’s, the Manager’s or an Operator’s DOC or the
SMC in respect of the Vessel owned by the Owner;
	 
	 	(v)	 	promptly inform the Bank upon the issue to the Owner, the
Manager or any Operator of a DOC and to the Vessel of an SMC or the receipt by
the Owner, the Manager or any Operator of notification that its application for
the same has been refused;
	 
	 	(vi)	 	maintain at all times a valid and current ISSC in respect of
the Vessel;
	 
	 	(vii)	 	immediately notify the Bank in writing of any actual or
threatened withdrawal, suspension, cancellation or modification of the ISSC in
respect of the Vessel; and
	 
	 	(viii)	 	procure that the Vessel will comply at all times with the ISPS Code.






	8.5	 	Validity of Securities — Earnings — Taxes etc.: The Borrower hereby further
undertakes and agrees with the Bank that it will:






	 	(a)	 	Validity: ensure and procure that all governmental or other consents
required by law and/or any other steps required for the validity,




44









 






	 	 	 	enforceability and legality of this Agreement and the other Security Documents are
maintained in full force and effect and/or appropriately taken;






	 	(b)	 	Earnings: ensure and procure that, unless and until directed by the
Bank otherwise (i) all the Earnings of the Vessel shall be paid to the relevant
Earnings Account and (ii) the persons from whom the Earnings are from time to time due
are irrevocably instructed to pay them to such Earnings Account or to such other
account in the name of the relevant Borrower or the Borrower as shall be from time to
time determined by the Bank in accordance with the provisions hereof and of the
relevant Security Documents;
	 
	 	(c)	 	Taxes: pay all Taxes, assessments and other governmental charges when
the same fall due, except to the extent that the same are being contested in good faith
by appropriate proceedings and adequate reserves have been set aside for their payment
if such proceedings fail; and
	 
	 	(d)	 	Additional Documents: from time to time and within ten (10) days after
the Bank’s request execute and deliver to the Bank or procure the execution and
delivery to the Bank of all such documents as shall be deemed desirable at the
reasonable discretion of the Bank for giving full effect to this Agreement, and for
perfecting, protecting the value of or enforcing any rights or securities granted to
the Bank under any one or more of this Agreement, the other Security Documents and any
other documents executed pursuant hereto or thereto and in case that any conditions
precedent (with the Bank’s consent) have not been fulfilled prior to the relevant
Drawdown Date, such conditions shall be complied with within fourteen (14) days of such
Drawdown Date (unless the Bank agrees otherwise in writing) and failure to comply with
this covenant shall be an Event of Default, provided, however, that following
the Borrower’s/Guarantors’ request, the Bank, if it considers it appropriate or
necessary, may grant a reasonable extension to the aforementioned periods in case the
Borrower cannot disclose/provide the requested information/document, under the
circumstances arising at the time of the Bank’s request and within the time limit
specified hereinabove.






	8.6	 	Additional Financial Covenants — Compliance Certificate.






	 	(a)	 	Financial Covenants of the Newlead Corporate Guarantor: The Borrower
hereby covenants and undertakes with the Bank, that until the Outstanding Indebtedness
has been paid and discharged in full, it will procure and ensure that:




45









 












	 	(i)	 	at least 10% of the total issued share capital of Newlead is
directly held by Grandunion, into which Messrs. Michael Zolotas and Nikolaos
Fistes hold and shall hold throughout the Security Period at least 51% of its
total issued share capital;
	 
	 	(ii)	 	Messrs. Nikolaos Fistes and Michael Zolotas to remain Chairman
and CEO respectively of the Newlead Corporate Guarantor throughout the Security
Period; and
	 
	 	(iii)	 	the Newlead Corporate Guarantor shall comply with all its
obligations under the Loan Agreement including, without limitation, the
financial covenants set forth in clause 5.3 of the Newlead Corporate Guarantee.






	 	(b)	 	Compliance: The compliance of the Newlead Corporate Guarantor with the
covenants set out in this clause 8.6 shall be determined by the Bank in its sole
discretion on the basis of calculations made by the Bank at any time by reference to
the then latest consolidated financial statements of the Group delivered to the Bank
pursuant to clause 8.1(a). For the avoidance of doubt it is hereby agreed and
acknowledged that the Bank shall be entitled to make any such determinations and/or
calculations at any time, without regard to when any such financial statements are due
to be delivered or have been actually delivered to the Bank pursuant to clause 8.1(a).
	 
	 	(c)	 	Calculations: For the purposes of clause 8.6: (a) no item shall be
deducted or credited more than once in any calculation; and (b) any amount expressed in
a currency other than Dollars shall be converted into Dollars in accordance with the
GAAP consistently applied.
	 
	 	(d)	 	Compliance Certificate: The Borrower shall deliver to the Bank at the
end of each Financial Quarter, and at the same time as the unaudited financial
statements referred to in clause 8.1(a)(ii), a certified true copy of the Compliance
Certificate issued and signed by the Newlead Corporate Guarantor’s Chief Financial
Officer certifying that the covenants contained in Clause 5.3 of the Newlead Corporate
Guarantee are being complied with and providing full calculations supporting such
compliance derived from the then latest financial statements of the Group as lodged
with the Securities and Exchange Commission of the United States by way of Form 6K/20F,
such certificate to be substantially in the form agreed by the Bank set out in Schedule
2.




46









 












	 	(e)	 	Additional financial covenants and guarantees: It is hereby expressly
agreed that in case the Newlead Corporate Guarantor accepts other or more financial
covenants and additional guarantees under loan agreements with other banks or financial
institutions which are more restrictive than those contained in this Agreement, the
Borrower shall procure that this Agreement and the Newlead Corporate Guarantee to be
amended in order such more restrictive or additional financial covenants to be included
herein and in the Newlead Corporate Guarantee.






	8.7	 	Excess Earnings. The Borrower shall procure that no later than 30th September of
each calendar year, and on the basis of the financial statements provided to the Bank pursuant
to Clause 8.1(a), an amount equal to 50% of the Excess Earnings for the Relevant Period shall
be transferred into the Retention Account for onwards application by the Bank in or towards
prepayment of the Balloon Instalment.
	 
	 	 	For the purpose of this Clause 8.7:
	 
	 	 	“Bond Issue” means the issue by the Newlead Corporate Guarantor of the initial amount of
$145,000,000 Bonds, purchased or (as the context may require) to be purchased by Marfin
Egnatia Bank S.A. and/or any of its affiliates;
	 
	 	 	“Excess Earnings” means as at any Relevant Period, an amount calculated in accordance with
the formula: Excess Earnings =Total Income — Operating Expenses for the Relevant Period
plus Debt Service plus $500,000 payable to the Newlead Corporate Guarantor by the Borrower
representing interest pursuant to the Bond Issue by the NewLead Corporate Guarantor;
	 
	 	 	“Total Income” means the total income of the Vessel for the Relevant Period less brokerage
fees and commissions and withholding taxes (if any);
	 
	 	 	“Debt Service” means payments of principal and interest made or due pursuant to this
Agreement in the Relevant Period (including sums standing to the credit of the Retention
Account);
	 
	 	 	“Relevant Period” means each financial year of the Borrower.
	 
	8.8	 	Covenants for the Securities Parties. The Borrower hereby further undertakes and agrees with
the Bank that it will ensure and procure that all other Security Parties and each of them duly
and punctually comply with the covenants in Clauses 8.1 to 8.6, which are applicable to
them/it mutatis mutandis.










47









 












	8.9	 	Newlead Corporate Guarantee. The Borrower hereby further undertakes and agrees with the Bank
that it will ensure and procure that the Newlead Corporate Guarantee shall be duly executed by
the Newlead Corporate Guarantor not later than five (5) days from the date of this Agreement.
	 
	9.	 	EVENTS OF DEFAULT
	 
	 	 	There shall be an Event of Default whenever an event described in Clauses 9.1 to 9.7 occurs:
	 
	9.1	 	Non Performance of Obligations






	 	(a)	 	the Borrower fails to pay on its due date, any sum due from the Borrower under
this Agreement and/or any of the other Security Documents to which it is a party at the
time, in the currency and in the manner stipulated herein and/or any of the other
Security Documents to which it is a party, or, in the case of any sum payable on
demand, within three (3) Banking Days of such demand; or
	 
	 	(b)	 	the Borrower fails to observe and perform any one or more of the covenants,
terms or obligations contained in this Agreement and/or any other Security Document to
which it is a party relating to the Insurances; or
	 
	 	(c)	 	the Borrower commits any breach of or omits to observe any of the covenants,
terms, obligations or undertakings under this Agreement and/or any of the other
Security Documents to which it is a party (other than failure to pay any sum when due
or to comply with any obligation concerning the Insurances) and, in respect of any such
breach or omission which in the opinion of the Bank is capable of remedy, such action
as the Bank may require shall not have been taken within ten (10) Banking Days of the
Bank notifying the Borrower of such required action to remedy the breach or omission;
or






	9.2	 	Events affecting the Security Parties






	 	(a)	 	any Security Party is adjudicated or found bankrupt or insolvent or any
judgement or order is made by any competent court or resolution passed by or petition
(which is not in the reasonable opinion of the Bank frivolous and is not being
contested in good faith by such Security Party) presented for the winding-up or
dissolution of any Security Party or for the appointment of a liquidator, trustee,
receiver, administrator or conservator of the whole or any part of the undertakings,
assets, rights or revenues of any Security Party; or




48









 












	 	(b)	 	any Security Party becomes or is deemed to be insolvent or suspends payment of
its debts or is (or is deemed to be) unable to or admits inability to pay its debts as
they fall due or proposes or enters into any composition, compromise or other
arrangement for the benefit of its creditors generally or good faith proceedings are
commenced in relation to any Security Party under any law, regulation or procedure
relating to reconstruction or readjustment of debts; or
	 
	 	(c)	 	an encumbrancer takes possession or a receiver or similar officer is appointed
of the whole or any part of the undertakings, assets, rights or revenues of any
Security Party or a distress, execution, sequestration or other process is levied or
enforced upon or sued out against any of the undertakings, assets, rights or revenues
of any Security Party and is not discharged within twenty (20) Banking Days; or
	 
	 	(d)	 	all or a material part of the undertakings, assets, rights or revenues of any
Security Party are seized, nationalised, expropriated or compulsorily acquired by or
under the authority of any government; or
	 
	 	(e)	 	any event occurs or (unless contested in good faith) proceeding is taken with
respect to any Security Party in any jurisdiction to which it is subject which has an
effect equivalent or similar to any of the events mentioned in Clauses 9.2(a) to
9.2(d); or
	 
	 	(f)	 	any Security Party suspends or ceases or threatens to suspend or cease to carry
on its business; or
	 
	 	(g)	 	there occurs, in the reasonable opinion of the Bank, a materially adverse
change in the financial condition of any Security Party, which jeopardises or imperils
(or may, in the Bank’s opinion, jeopardise or imperil) the rights conferred to the Bank
under the Security Documents; or
	 
	 	(h)	 	any other event occurs or circumstances arise which, in the reasonable opinion
of the Bank, materially and adversely affects either (i) the ability of any Security
Party to perform all or any of its obligations under or otherwise to comply with the
terms of this Agreement and/or any of the other Security Documents, or (ii) the
security created by this Agreement and/or any of the Security Documents; or
	 
	 	(i)	 	(without the prior written consent of the Bank which shall not be unreasonably
withheld) there is any change in the beneficial ownership of the




49









 






	 	 	 	shares in the Borrower or either Corporate Guarantor, which is not otherwise
permitted under the terms of this Agreement; or






	9.3	 	Representations Incorrect: any representation or warranty made or deemed to be made
or repeated by or in respect of any Security Party in or pursuant to this Agreement or any of
the other Security Documents or in any notice, certificate or statement referred to in or
delivered under this Agreement or any of the other Security Documents is or proves to have
been incorrect in any material respect, which jeopardises or imperils (or may, in the Bank’s
opinion, jeopardise or imperil) the rights conferred to the Bank under any of the Security
Documents; or
	 
	9.4	 	Cross-default: any Indebtedness of the Security Parties (or any of them) related to
an aggregate amount exceeding $1,000,000 (One million Dollars) is not paid when due or becomes
due and payable, or any creditor of the Security Parties (or any of them) becomes entitled to
declare any such Indebtedness due and payable prior to the date when it would otherwise have
become due, or any guarantee or indemnity given or any obligation or covenant undertaken or
agreement made by the Security Parties (or any of them) in respect of Indebtedness is not
honoured when due unless the relevant Security Party shall have satisfied the Bank that such
Indebtedness will not affect or prejudice in any way such Security Party’s ability to pay its
debts as they fall due; or
	 
	9.5	 	Events in relation to the Security Documents






	 	(a)	 	this Agreement or any of the other Security Documents shall at any time and for
any reason become invalid or unenforceable or otherwise cease to remain in full force
and effect, or if the validity or enforceability of any of the Security Documents shall
at any time and for any reason be contested by any party thereto (other than the Bank),
or if any such party shall deny that it has any, or any further, liability thereunder
or it becomes impossible or unlawful for the Borrower to fulfil any of its covenants
and obligations contained in this Agreement or any of the Security Documents or for the
Bank to exercise the rights vested in it thereunder or otherwise; or
	 
	 	(b)	 	any consent, authorisation, licence or approval of, or registration with or
declaration to, governmental or public bodies or authorities or courts required by the
Borrower to authorise or otherwise in connection with, the execution, delivery,
validity, enforceability or admissibility in evidence of this Agreement and/or any of
the other Security Documents or the performance the Borrower of its obligations under
this Agreement and/or any of the other Security Documents is modified in a manner
unacceptable to the Bank or is




50









 






	 	 	 	not granted or is revoked or terminated or expires and is not renewed or otherwise
ceases to be in full force and effect; or






	 	(c)	 	any Encumbrance (other than Permitted Liens) in respect of any of the property
(or part thereof) which is the subject of the Security Documents (or any of them)
becomes enforceable; or






	9.6	 	Events concerning the Vessel






	 	(a)	 	any Vessel becomes a Total Loss or is involved in an incident which in the
reasonable opinion of the Bank may result in the Vessel being subsequently determined
to be a Total Loss and the insurance indemnity is not paid by the insurers to the Bank
under the General Assignment within a period of one hundred eighty (180) days from the
date on which the incident which may result in the Vessel being subsequently determined
to be a Total Loss occurred; or
	 
	 	(b)	 	any Vessel ceases to be managed by the Manager (for any reason other than the
reason of a Total Loss or sale of the Vessel) without the approval of the Bank (such
approval not to be unreasonably withheld) and the relevant Borrower fails to appoint a
substitute Manager within ten (10) Banking Days after the termination of the relevant
Management Agreement with the previous Manager; or
	 
	 	(c)	 	any Vessel is arrested, confiscated, seized, taken in execution, impounded,
forfeited, detained in exercise or purported exercise of any possessory lien or other
claim and the Borrower shall fail to procure the release of the Vessel within a period
of thirty (30) Banking Days thereafter; or
	 
	 	(d)	 	(without prejudice to the generality of sub-Clause 9.1(b) and (c)) for any
reason whatsoever the provisions of Clause 8.4(o) are not complied with and/or any
Vessel ceases to comply with the ISM Code and/or the ISPS Code; or
	 
	 	(e)	 	the registration of any Vessel under the laws and flag of the Flag State is
cancelled or terminated without the prior written consent of the Bank; or






	9.7	 	Environmental Events






	 	(a)	 	any Relevant Party and/or the Manager and/or any of their respective
Environmental Affiliates fails to comply with any Environmental Law or any
Environmental Approval or the Vessel or any Relevant Ship is involved in




51









 






	 	 	 	any incident which gives rise or which may give rise to any Environmental Claim, if
in any such case, such non compliance or incident or the consequences thereof could
(in the reasonable opinion of the Bank) be expected to have a material adverse
effect on the business assets, operations, property or financial condition of the
Borrower or any other Security Party or on the security created by any of the
Security Documents; or






	 	(b)	 	any Security Party or any other person fails or omits to comply with any
requirements of the protection and indemnity association or other insurer with which
the Vessel is entered for insurance or insured against protection and indemnity risks
(including oil pollution risks) to the effect that any cover in relation to the Vessel
(including without limitation, liability for Environmental Claims arising in
jurisdictions where the Vessel operates or trades) is or may be liable to cancellation,
qualification or exclusion at any time; or






	9.8	 	Consequences of Default: The Bank may without prejudice to any other rights of the
Bank (which will continue to be in force concurrently with the following), at any time after
the happening of an Event of Default:






	 	(a)	 	by notice to the Borrower declare that the obligation of the Bank to make the
Commitment (or any part thereof) available shall be terminated; and/or
	 
	 	(b)	 	by notice to the Borrower declare that the Loan and all interest and commitment
commission accrued and all other sums payable under this Agreement and the other
Security Documents have become due and payable, whereupon the same shall, immediately
or in accordance with the terms of such notice, become due and payable without any
further diligence, presentment, demand of payment, protest or notice or any other
procedure from the Bank which are expressly waived by the Borrower; and/or
	 
	 	(c)	 	put into force and exercise all or any of the rights, powers and remedies
possessed by it under this Agreement and/or under any other Security Document and/or as
mortgagee of the Vessel, mortgagee, chargee or assignee or as the beneficiary of any
other property right or any other security (as the case may be) over the assets charged
or assigned to it under the Security Documents or otherwise (whether at law, by virtue
of any of the Security Documents or otherwise);










52









 












	9.9	 	Insolvency Events of Default
	 
	 	 	If an event occurs in respect of the Borrower or the other Security Parties of the type
described in Clause 9.2(a) to (e) (except (i) in the case when a petition was presented or
proceedings were commenced or a suit or writ were issued by a third party and the Borrower
or the relevant Security Party is defending itself in bona fide and (ii) in the case that
such events mentioned in Clause 9.2 relate to only a part of the undertakings, assets,
rights or revenues which in the opinion of the Bank does not affect the ability of the
Borrower or the relevant Security Party to perform its respective obligations under this
Agreement and/or the other Security Documents) the obligation of the Bank to make the Loan
available shall terminate immediately upon receipt by the Bank of the relevant information
(as such receipt shall be conclusively certified by a certificate of the Bank) and all
amounts payable under sub-clause 9.8(b) above shall become immediately due and payable
without any notice or other formality which is hereby expressly waived by the Borrower.
	 
	9.10	 	Proof of Default
	 
	 	 	It is agreed that (i) the non-payment of any sum of money in time will be proved
conclusively by mere passage of time and (ii) the occurrence of this (non payment) shall be
proved conclusively by a mere written statement of the Bank (save for manifest error).
	 
	9.11	 	Exclusion of Bank’s liability
	 
	 	 	Neither the Bank nor any receiver or manager appointed by the Bank, shall have any liability
to the Borrower or another Security Party:






	 	(a)	 	for any loss caused by an exercise of rights under, or enforcement of an
Encumbrance created by, a Security Document or by any failure or delay to exercise such
a right or to enforce such an Encumbrance; or
	 
	 	(b)	 	as mortgagee in possession or otherwise, for any income or principal amount
which might have been produced by or realised from any asset comprised in such an
Encumbrance or for any reduction (however caused) in the value of such an asset,






	 	 	except that this does not exempt the Bank or a receiver or manager from liability for losses
proved to have been caused by the wilful misconduct of the Bank’s own officers and employees
or (as the case may be) such receiver’s or manager’s own partners or employees.




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	10.	 	INDEMNITIES — EXPENSES — FEES
	 
	10.1	 	Indemnity: The Borrower shall on demand (and it is hereby expressly undertaken by
the Borrower to) indemnify the Bank, without prejudice to any of the other rights of the Bank
under any of the Security Documents, against any loss (including loss of Margin, save in the
case under paragraph (c) hereinbelow) or expense which the Bank shall certify as sustained or
incurred as a consequence of:






	 	(a)	 	any default in payment by any of the Security Parties of any sum under any of
the Security Documents when due;
	 
	 	(b)	 	the occurrence of any Event of Default;
	 
	 	(c)	 	any prepayment of the Loan or part thereof being made under Clauses 4.3, 8.2(a)
or 12 or any other repayment of the Loan or part thereof being made otherwise than on
an Interest Payment Date relating to the part of the Loan prepaid or repaid; or
	 
	 	(d)	 	the Commitment not being advanced for any reason (excluding any default by the
Bank) after the Drawdown Notice relative thereto has been given,






	 	 	including, in any such case, but not limited to, any loss or expense sustained or incurred
in maintaining or funding the Loan or any part thereof or in liquidating or re-employing
deposits from third parties acquired to effect or maintain the Loan or any part thereof.
	 
	10.2	 	Expenses: The Borrower shall (and it is hereby expressly undertaken by the Borrower
to) pay to the Bank on demand:






	 	(a)	 	Initial and Amendment expenses: all expenses (including legal,
printing and out-of-pocket expenses) reasonably incurred by the Bank in connection with
the negotiation, preparation and execution of this Agreement and the other Security
Documents and of any amendment or extension of or the granting of any waiver or consent
under this Agreement and/or any of the Security Documents and/or in connection with any
proposal by the Borrower to constitute additional security pursuant to Clause 8.2(a),
whether any such security shall in fact be constituted or not;
	 
	 	(b)	 	Enforcement expenses: all expenses (including legal and out-of-pocket
expenses) incurred by the Bank in contemplation of, or otherwise in connection with,
the enforcement of, or preservation of any rights under, this Agreement and/or any of
the other Security Documents, or otherwise in




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	 	 	 	respect of the moneys owing under this Agreement and/or any of the other Security
Documents or the contemplation or preparation of the above, whether they have been
effected or not; and






	 	(c)	 	MII costs: reimburse the Bank on demand for any and all costs incurred
by the Bank (as supported by vouchers/invoices) in effecting and keeping effected a MII
for an amount of 110% of the aggregate of the Loan, which the Bank may at any time
effect on such terms, in such amounts and with such insurers as shall from time to time
be determined by the Bank, provided, however, that the Bank shall in its
absolute discretion appoint and instruct in respect of the MII the insurance brokers in
respect of such insurance and provided, further, that in the event that the
Bank effects any such insurance on the basis of any mortgagee’s open cover, the
Borrower shall pay on demand to the Bank their proportion of premium due in respect of
the Vessel for which such insurance cover has been effected by the Bank, and any
certificate of the Bank in respect of any such premium due by the Borrower (as
supported by the necessary invoices/vouchers) shall (save for manifest error) be
conclusive and binding upon the Borrower; and
	 
	 	(d)	 	Other expenses: any and all other Expenses.






	 	 	All expenses payable pursuant to this Clause 10.2 shall be paid together with Value Added
Tax (if any) thereon.






	10.3	 	Stamp duty: The Borrower shall pay any and all stamp, registration and similar taxes
or charges (including those payable by the Bank excluding income taxes on the overall net
income of the Bank) imposed by governmental authorities in relation to this Agreement and any
of the other Security Documents, and shall indemnify the Bank against any and all liabilities
with respect to, or resulting from delay or omission on the part of the Borrower to pay such
stamp, taxes or charges.
	 
	10.4	 	Environmental Indemnity: The Borrower shall indemnify the Bank on demand and hold
the Bank harmless from and against all costs, expenses, payments charges, losses, demands,
liabilities, actions, proceedings (whether civil or criminal) penalties, fines, damages,
judgements, orders, sanctions or other outgoings of whatever nature which may be suffered,
incurred or paid by, or made or asserted against the Bank at any time, whether before or after
the repayment in full of principal and interest under this Agreement, relating to, or arising
directly or indirectly in any manner or for any cause or reason out of an Environmental Claim
made or asserted against the Bank.




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	10.5	 	Currencies: If any sum due from the Borrower under any of the Security Documents or
any order or judgement given or made in relation hereto has to be converted from the currency
(the “first currency”) in which the same is payable under the relevant Security Document or
under such order or judgement into another currency (the “second currency”) for the purpose of
(i) making or filing a claim or proof against the Borrower or any other Security Party, as the
case may be, or (ii) obtaining an order or judgement in any court or other tribunal or (iii)
enforcing any order or judgement given or made in relation to any of the Security Documents,
the Borrower shall (and it is hereby expressly undertaken by the Borrower to) indemnify and
hold harmless the Bank from and against any loss suffered as a result of any difference
between (a) the rate of exchange used for such purpose to convert the sum in question from the
first currency into the second currency and (b) the rate or rates of exchange at which the
Bank may in the ordinary course of business purchase the first currency with the second
currency upon receipt of a sum paid to it in satisfaction, in whole or in part, of any such
order, judgement, claim or proof. The term “rate of exchange” includes any premium and costs
of exchange payable in connection with the purchase of the first currency with the second
currency.
	 
	10.6	 	Maintenance of the Indemnities: The indemnities contained in this Clause 10 shall
apply irrespective of any indulgence granted to the Borrower or any other party from time to
time and shall continue to be in full force and effect notwithstanding any payment in favour
of the Bank and any sum due from the Borrower under this Clause 10 will be due as a separate
debt and shall not be affected by judgement being obtained for any other sums due under any
one or more of this Agreement, the other Security Documents and any other documents executed
pursuant hereto or thereto.
	 
	10.7	 	Communications Indemnity: It is hereby agreed in connection with communications
that:






	 	(a)	 	Express authority is hereby given by the Borrower to the Bank to accept (at the
sole discretion of the Bank) all tested or untested communications given by facsimile,
telex, cable or otherwise, regarding any or all of the notices, requests, instructions
or other communications under this Agreement, subject to any restrictions imposed by
the Bank relating to such communications including, without limitation (if so required
by the Bank), the obligation to confirm such communications by letter.
	 
	 	(b)	 	The Borrower shall recognise any and all of the said notices, requests,
instructions or other communications as legal, valid and binding, when these notices,
requests, instructions or communications come from the fax numbers




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	 	 	 	mentioned in Clause 15.1 or any other fax usually used by it or its managing
company.






	 	(c)	 	The Borrower hereby assumes full responsibility for the execution of the said
notices, requests, instructions or communications by the Bank and promises and
recognises that the Bank shall not be held responsible for any loss, liability or
expense that may result from such notices, requests, instructions or other
communications. It is hereby undertaken by the Borrower to indemnify in full the Bank
from and against all actions, proceedings, damages, costs, claims, demands, expenses
and any and all direct and/or indirect losses which the Bank may suffer, incur or
sustain by reason of the Bank following such notices, requests, instructions or
communications.
	 
	 	(d)	 	With regard to notices, requests, instructions or communications issued by
electronic and/or mechanical processes (e.g. by facsimile, telex, but not by email),
the risk of equipment malfunction, including, without limitation, paper shortage,
transmission errors, omissions and distortions is assumed fully and accepted by the
Borrower, save in case of Bank’s wilful misconduct and/or gross negligence.
	 
	 	(e)	 	The risks of misunderstandings and errors of notices, requests, instructions or
communications being given as mentioned above, are for the Borrower and the Bank will
be indemnified in full pursuant to this Clause save in case of Bank’s wilful
misconduct.
	 
	 	(f)	 	The Bank shall have the right to ask the Borrower to furnish any information
the Bank may require to establish the authority of any person purporting to act on
behalf of the Borrower for these notices, requests, instructions or communications but
it is expressly agreed that there is no obligation for the Bank to do so. The Bank
shall be fully protected in, and the Bank shall incur no liability to the Borrower for
acting upon the said notices, requests, instructions or communications which were
believed by the Bank in good faith to have been given by the Borrower or by any of its
authorised representative(s).
	 
	 	(g)	 	It is undertaken by the Borrower to safeguard the function and the security of
the electronic and mechanical appliance(s) such as telex(es), fax(es) (but not email)
etc., as well as the code word list, if any, and to take adequate precautions to
protect such code world list from loss and to prevent its terms becoming known to any
persons not directly concerned with its use. The Borrower shall hold the Bank harmless
and indemnified from all claims,




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	 	 	 	losses, damages and expenses which the Bank may incur by reason of the failure of
the Borrower to comply with the obligations under this Clause and/or this Agreement.






	10.8	 	Arrangement Fee. The Borrower has, or as the case may be, shall pay to the Bank on the date
hereof a non-refundable arrangement fee in the amount of Sixty two thousand Dollars ($62,000).
The fee referred to in this Clause 10.8 is not refundable and shall be payable by the Borrower
to the Bank whether or not any part of the Commitment is ever advanced.
	 
	11.	 	SECURITY, APPLICATION, SET-OFF AND EARNINGS ACCOUNTS
	 
	11.1	 	Securities: As security for the due and punctual repayment of the Loan and payment of
interest thereon as provided in this Agreement and of all other Outstanding Indebtedness, the
Borrower shall ensure and procure that the following Security Documents are duly executed and,
where required, registered in favour of the Bank in form and substance satisfactory to the
Bank at the time specified herein or otherwise as required by the Bank and ensure that such
security consists, on the Drawdown Date, of:






	 	(a)	 	the Mortgage duly registered over the Vessel through the Registry;
	 
	 	(b)	 	the General Assignment;
	 
	 	(c)	 	the Corporate Guarantees;
	 
	 	(d)	 	the Manager’s Undertaking;
	 
	 	(e)	 	the Account Pledge Agreement; and
	 
	 	(f)	 	in case the Vessel is chartered under a Long Charterparty, on the relevant
Drawdown Date or at any time thereafter, the Charterparty Assignment and the
Charterparty Assignment Acknowledgement.






	11.2	 	Maintenance of Securities: It is hereby undertaken by the Borrower that the Security
Documents shall both at the date of execution and delivery thereof and so long as any moneys
are owing and/or due under this Agreement or under the other Security Documents be valid and
binding obligations of the respective Security Parties thereto and rights of the Bank
enforceable in accordance with their respective terms and that they will (unless otherwise
provided in this Agreement), at the expense of the Borrower, execute, sign, perfect and do any
and every such further assurance, document, act, omission or thing as in the opinion of the
Bank (as




58









 






	 	 	supported by any appropriate legal opinions) may be necessary or desirable for perfecting
the security contemplated or constituted by the Security Documents.






	11.3	 	Application of funds: All moneys received by the Bank under or pursuant to any of
the Security Documents and expressed to be applicable in accordance with this Clause 11.3
shall be applied by the Bank in the following manner:






	 	(a)	 	Firstly in or towards payment of Expenses and all sums other than
principal or interest which may be due to the Bank under this Agreement and the other
Security Documents or any of them at the time of application;
	 
	 	(b)	 	Secondly in or towards payment of any default interest;
	 
	 	(c)	 	Thirdly in or towards payment of any arrears of interest (other than
default interest) due in respect of the Loan or any part thereof;
	 
	 	(d)	 	Fourthly in or towards repayment of the Loan whether the same is due
and payable or not;
	 
	 	(e)	 	Fifthly in or towards payment to the Bank for any loss suffered by
reason of any such payment in respect of principal not being effected on an Interest
Payment Date relating to the part of the Loan repaid; and
	 
	 	(f)	 	Sixthly the surplus (if any) shall be paid to the Borrower or to
whomsoever else shall be entitled to receive such surplus.






	11.4	 	Set off: Express authority is hereby given by the Borrower to the Bank without
prejudice to any of the rights of the Bank at law, contractually or otherwise, at any time
after an Event of Default has occurred and is continuing but without notice to the Borrower:






	 	(a)	 	to apply any credit balance standing upon any account of the Borrower with any
branch of the Bank and in whatever currency in or towards satisfaction of any sum due
to the Bank from the Borrower under this Agreement and/or any of the other Security
Documents;
	 
	 	(b)	 	in the name of the Borrower and/or the Bank to do all such acts and execute all
such documents as may be necessary or expedient to effect such application; and
	 
	 	(c)	 	to combine and/or consolidate all or any accounts in the name of the Borrower
with the Bank.










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	 	(d)	 	For all or any of the above purposes authority is hereby given to the Bank to
purchase with the monies standing to the credit of any such account or accounts such
other currencies as may be necessary to effect such application. The Bank shall not be
obliged to exercise any right given by this Clause.






	11.5	 	Earnings Account and Retention Account






	 	(a)	 	The Borrower shall procure that all moneys payable in respect of the Earnings
of the Vessel shall be paid to the Earnings Account free from Encumbrances. Unless and
until an Event of Default shall occur (whereupon the provisions of Clause 11.3 shall be
applicable) no monies shall be withdrawn from the Earnings Account save as hereinafter
provided:






	 	(i)	 	first: in payment of any and all sums whatsoever due
and payable to the Bank hereunder (such sums to be paid in such order as the
Bank may in its sole discretion elect);
	 
	 	(ii)	 	second: during each month of the Security Period (but
by no later than, in the case of the first such month, the date falling thirty
(30) days after the Drawdown Date and, in the case of each subsequent month,
the same date of that month), the Borrower shall cause to be transferred from
the Earnings Account to the Retention Account out of the aggregate amount of
the Earnings of the Vessel received in the Earnings Account during the
preceding month:






	 	a)	 	one third (1/3rd) of the amount of the
Repayment Instalment specified in Clause 4.1 falling due for payment on
the next following Repayment Date; and
	 
	 	b)	 	the relevant fraction of the amount of interest
on the Loan falling due on the next due date for payment of interest
under this Agreement.






	 	 	 	The expression “relevant fraction” in relation to an amount of interest on
the Loan falling due for payment means a fraction (which shall be notified
by the Bank to the Borrower at the beginning of each Interest Period) where
the numerator is always one (1) and where the denominator shall always be
three (3) except in the case of an Interest Period of less than three
months, in which case the denominator shall be the number of months
comprised in such Interest Period; and
	 
	 	(iii)	 	third: any balance shall be released to the Borrower.










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	 	(b)	 	If the aggregate amount of the Earnings of the Vessel received in the Earnings
Account is insufficient in any month for the required transfer to be made from the
Earnings Account to the Retention Account in accordance with Clause 11.5(a), the
Borrower shall make up the amount of such insufficiency on demand from the Bank, but,
without prejudice to its right to make such demand, the Bank may elect to make up the
whole or any part of such insufficiency by increasing the amount of any transfer to be
made in accordance with Clause 11.5(a)(ii) from the aggregate amount of such Earnings
received in the next or subsequent months.
	 
	 	(c)	 	Until the occurrence of an Event of Default (or an event which, with the giving
of notice and/or lapse of time or other applicable condition, might constitute an Event
of Default), the Bank shall on each Repayment Date and on each due date for the payment
of interest under this Agreement apply in accordance with the provisions of Clause 8.1
the relevant part of the balance then standing to the credit of the Retention Account
as shall be required to make payment of the Repayment Instalment specified in Clause
4.1 then due under the terms of this Agreement or payment of interest then due under
the terms of this Agreement and such transfer shall constitute a pro tanto satisfaction
of the Borrower’ obligations to pay such repayment instalment or interest (as the case
may be) then due under this Agreement.
	 
	 	(d)	 	Any amounts for the time being standing to the credit of the Retention Account
shall bear interest at the rate from time to time offered by the Bank to its customers
for Dollar deposits of similar amounts and for periods similar to those for which such
amounts are likely to remain standing to the credit of the Retention Account. Such
interest shall, provided that the foregoing provisions of this Clause 11.5
shall have been complied with and provided that no Event of Default (or event
which, with the giving of notice and/or lapse of time or other applicable condition,
might constitute an Event of Default) shall have occurred, be released to the Borrower.
	 
	 	(e)	 	Nothing herein contained shall be deemed to affect the absolute obligation of
the Borrower to pay interest on and to repay the Loan as provided in Clauses 3 and 6 or
shall constitute a manner or postponement thereof.
	 
	 	(f)	 	The Borrower hereby irrevocably authorises the Bank to make from the Earnings
Account any and all above payments and repayments as and when the same fall due or at
any time thereafter. The Bank shall advise the Borrower in respect of any such payment
or repayment.




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	 	(g)	 	The Borrower will comply with any written requirement of the Bank from time to
time as to the location or re-location of the Earnings Account and the Retention
Account (or either of them) and will from time to time enter into such documentation as
the Bank may reasonably require in order to create or maintain in favour of the Bank an
Encumbrance in the Earnings Account and the Retention Account, all at cost and expense
of the Borrower.
	 
	 	(h)	 	The Borrower hereby covenants with the Bank that the Earnings Account, the
Retention Account and any moneys therein shall not be charged, assigned, transferred or
pledged nor shall there be granted by the Borrower or suffered to arise any third party
rights over or against the whole or any part of the Earnings Account other than in
favour of the Bank.
	 
	 	(i)	 	The Earnings Account shall be operated in accordance with the Bank’s usual
terms and conditions (full knowledge of which the Borrower hereby acknowledges) and
subject to the Bank’s usual charges levied on such accounts and/or transactions
conducted on such accounts (as from time to time notified by the Bank to the Borrower).
	 
	 	(j)	 	The Borrower hereby warrants that sufficient monies to meet the next Repayment
Instalment plus interest thereon will be accumulated each and every month in the
Retention Account.






	 	(k)	 	After the occurrence of an Event of Default the Bank shall be entitled, but not
bound, to apply the balance (if any) including any accrued interest standing to the
credit of the Earnings Account and the Retention Account in accordance with the
provisions of Clause 11.3.
	 
	 	(l)	 	Upon payment in full of all principal, interest and all other amounts due to
the Bank under the terms of this Agreement and the other Security Documents, any
balance then standing to the credit of the Retention Account and/or the Earnings
Account shall be released and paid to the Borrower or to whomsoever else may be
entitled to receive such balance.






	12.	 	UNLAWFULNESS, INCREASED COSTS
	 
	12.1	 	Unlawfulness: If any change in, or introduction of, any law, regulation or
regulatory requirement or any request of any central bank, monetary, regulatory or other
authority or any order of any court renders it unlawful or contrary to any such regulation,
requirement, request or order for the Bank to make available the Commitment (or any part
thereof) or to maintain or fund the Loan, notice shall be given promptly by the Bank to the
Borrower and, if the Commitment or any part




62









 






	 	 	thereof has been made available by the Bank to the Borrower, the Borrower shall be obliged
to prepay the Loan in accordance with the terms of this Agreement, together with accrued
interest thereon to the date of prepayment and all other sums payable by the Borrower under
this Agreement and the obligations of the Bank shall thereupon terminate, whereupon the Bank
shall give prompt notice to the Borrower of such termination.






	12.2	 	Mitigation: If circumstances arise which would result in a notification by the Bank
to the Borrower under this Clause then, without in any way limiting the rights of the Bank
under this Clause, the Bank shall use reasonable endeavours to transfer its obligations,
liabilities and rights under this Agreement and the Security Documents to another office or
financial institution not affected by the circumstances, but the Bank shall be under no
obligation to take any such action if in its opinion, to do so would or might:






	 	(a)	 	have an adverse effect on its business, operations or financial condition; or
	 
	 	(b)	 	involve it in any activity which is unlawful or prohibited or any activity that
is contrary to, or inconsistent, with any regulation; or
	 
	 	(c)	 	involve it in any expense (unless indemnified to its reasonable satisfaction)
or tax disadvantage.






	12.3	 	Increased Cost: If the result of (a) any change in, or in the interpretation or
application of, or the introduction of, any law or any regulation, directive, request or
requirement (whether or not having the force of law, but, if not having the force of law, with
which the Bank or, as the case may be, its holding company habitually complies) by any
governmental authority in any country the laws or regulations of which are applicable on the
Bank or (b) compliance by the Bank with any request from or requirement of any central bank
(including the European Central Bank) or other applicable fiscal or monetary authority
(whether or not having the force of law, but, if not having the force of law, with which the
Bank or, as the case may be, its holding company habitually complies), including (without
limitation) those relating to Taxation, stock or capital adequacy, liquidity, reserve assets,
cash ratio deposits and special deposits or other banking or monetary controls or requirements
which affects the manner in which the Bank allocates capital resources to its obligations
hereunder and the other Security Documents and those (including, but not limited to, “Basle
II”) which shall replace, amend and/or supplement the provisions set out in the statement (as
in effect as of the date of this Agreement) of the Basle I committee on banking supervision
dated July 1988 and entitled “international




63









 






	 	 	convergence of capital measurement and capital structures” or any amendatory or substitute
agreement thereof, is to:






	 	(a)	 	subject the Bank to Taxes or change the basis of Taxation of the Bank with
respect to any payment under any of the Security Documents (other than Taxes or
Taxation on the overall net income, profits or gains of the Bank imposed in the
jurisdiction in which its principal or lending office under this Agreement is located);
and/or
	 
	 	(b)	 	increase the cost to, or impose an additional cost on, the Bank or its holding
company in making or keeping available the Commitment or maintaining or funding the
Loan; and/or
	 
	 	(c)	 	reduce the amount payable or the effective return to the Bank under any of the
Security Documents; and/or
	 
	 	(d)	 	reduce the Bank’s or its holding company’s rate of return on its overall
capital by reason of a change in the manner in which it is required to allocate capital
resources to the Bank’s obligations under any of the Security Documents; and/or
	 
	 	(a)	 	require the Bank or its holding company to make a payment or forgo a return on
or calculated by reference to any amount received or receivable by the Bank under any
of the Security Documents; and/or
	 
	 	(e)	 	require the Bank to incur or sustain a loss (including any loss of
future potential profits) by reason of being obliged to deduct all or part of the
Commitment or the Loan from its capital for regulatory purposes,






	 	 	then and in each case (subject to Clause 12.6) the Borrower shall pay to the Bank, from time
to time, upon demand, such additional moneys as shall indemnify the Bank for any increased
or additional cost, reduction, payment, foregone return or loss whatsoever.
	 
	12.4	 	Claim for increased cost: The Bank will promptly notify the Borrower of any
intention to claim indemnification pursuant to Clause 12.3 and such notification will be a
conclusive and full evidence binding on the Borrower as to the amount of any increased cost or
reduction and the method of calculating the same (save in case of manifest error). A claim
under Clause 12.3 may be made at any time and must be discharged by the Borrower within
fifteen (15) Banking Days of demand. It shall not be a defence to a claim by the Bank under
this Clause 12.3 that any increased cost or reduction could have been avoided by the Bank.
Any amount due from the




64









 






	 	 	Borrower under Clause 12.3 shall be due as a separate debt and shall not be affected by
judgement being obtained for any other sums due under or in respect of this Agreement.






	12.5	 	Option to prepay: If any additional amounts are required to be paid by the Borrower
to the Bank by virtue of Clause 12.3, the Borrower shall be entitled, on giving the Bank not
less than three (3) days prior notice in writing, to prepay the Loan and accrued interest
thereon, together with all other Outstanding Indebtedness on the tenth (10th)
Banking Day from the date of receipt of such notice by the Bank. Any such notice, once given,
shall be irrevocable.
	 
	12.6	 	Exception: Nothing in Clause 12.3 shall entitle the Bank to receive any amount in
respect of compensation for any such liability to Taxes, increased or additional cost,
reduction, payment, foregone return or loss to the extent that the same is subject of an
additional payment under Clause 5.3.
	 
	13.	 	ASSIGNMENT, PARTICIPATION, LENDING BRANCH
	 
	13.1	 	Binding Effect: This Agreement shall be binding upon and inure to the benefit of the
Bank and the Borrower and their respective successors and permitted assigns.
	 
	13.2	 	No Assignment by the Borrower: The Borrower and any other Security Parties may not
assign or transfer any of their respective rights and/or obligations under this Agreement or
any of the other Security Documents or any documents executed pursuant to this Agreement
and/or the other Security Documents.
	 
	13.3	 	Assignment by the Bank:






	 	(a)	 	The Bank may, at any time and without the consent of the Borrower freely
assign, transfers or in any other manner grants participation in respect of all or any
of part of its rights and benefits hereunder and under the Security Documents or freely
grant participations in its interest in the Loan to (in any of the foregoing cases) any
subsidiary or holding company of the Bank or to any subsidiary of such holding company
or to another affiliate of the Bank.
	 
	 	(b)	 	The Bank may, subject to first obtaining the written consent of the Borrower
(such consent not to be unreasonably withheld and the request for which shall be
promptly responded to by the Borrower), at any time assign all or any of its rights and
benefits hereunder and the Security Documents or grant participations in its interest
in the Loan to (in any of the foregoing cases) any prime bank(s) with shipping
experience.










65









 












	13.4	 	Any cost of such assignment or transfer or granting participation shall be for the account of
the Bank.
	 
	13.5	 	Documentation: If the Bank assigns, transfers or in any other manner grants
participation in respect of all or any part of its rights or benefits or transfers all or any
of its obligations as provided in this Clause 13 the Borrower undertakes, immediately on being
requested to do so by the Bank, to enter into and procure that each Security Party enters into
such documents as may be necessary or desirable to transfer to the assignee, transferee or
participant all or the relevant part of the interest of the Bank in the Security Documents and
all relevant references in this Agreement to the Bank shall thereafter be construed as a
reference to the Bank and/or assignee, transferee or participant of the Bank to the extent of
their respective interests and, in the case of a transfer of all or part of the obligations of
the Bank, the Borrower shall thereafter look only to the assignee, transferee or participant
in respect of that proportion of the obligations of the Bank under this Agreement assumed by
such assignee, transferee or participant. The Borrower hereby expressly consents to any
subsequent transfer of the rights and obligations of the Bank and undertakes that it shall
join in and execute such supplemental or substitute agreements as may be necessary to enable
the Bank to assign and/or transfer and/or grant participation in respect of its rights and
obligations to another branch or to one or more banks or financial institutions in a syndicate
or otherwise.
	 
	13.6	 	Disclosure of information: All information furnished to the Bank by the Borrower
pursuant to this Agreement (and which is not at any time in the public domain) shall be
treated as confidential by the Bank. Such information regarding the Security Parties may be
disclosed by the Bank (i) to agents, professional advisers, bank inspectors and employees of
the Bank to the extent required for the proper fulfilment of their obligations under or in
relation to this Agreement, (ii) to any potential assignee or participant of the Bank subject
to the prior written consent of the Borrower (such consent not to be unreasonably withheld) in
respect of the assignments and participations pursuant to this Clause 13 and (iii) as may be
required in order to enforce the provisions of the Security Documents and/or by law or
governmental regulations or authority or by litigation. Any disclosure of information under
this Clause 13 shall always be subject to an obligation of confidentiality by the person to
whom the disclosure is made.
	 
	13.7	 	Change of Lending Branch: The Bank shall be at liberty to transfer the Loan to any
branch or branches, and upon notification of any such transfer, the word “Bank” in this
Agreement and in the other Security Documents shall mean the Bank, acting




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	 	 	through such branch or branches and the terms and provisions of this Agreement and of the
other Security Documents shall be construed accordingly.






	14.	 	MISCELLANEOUS
	 
	14.1	 	Cumulative Remedies: The rights and remedies of the Bank contained in this Agreement
and the other Security Documents are cumulative and not neither exclusive of each other nor of
any other rights or remedies conferred by law.
	 
	14.2	 	Waivers: No failure, delay or omission by the Bank to exercise any right, remedy or
power vested in the Bank under this Agreement and/or the other Security Documents or by law
shall impair such right or power, or be construed as a waiver of, or as an acquiescence in any
default by the Borrower, nor shall any single or partial exercise by the Bank of any power,
right or remedy preclude any other or further exercise thereof or the exercise of any other
power, right or remedy. In the event of the Bank on any occasion agreeing to waive any such
right, remedy or power, or consent to any departure from the strict application of the
provisions of this Agreement or of any other Security Document, such waiver shall not in any
way prejudice or affect the powers conferred upon the Bank under this Agreement and the other
Security Documents or the right of the Bank thereafter to act strictly in accordance with the
terms of this Agreement and the other Security Documents. No modification or waiver by the
Bank of any provision of this Agreement or of any of the other Security Documents nor any
consent by the Bank to any departure therefrom by any Security Party shall be effective unless
the same shall be in writing and then shall only be effective in the specific case and for the
specific purpose for which given. No notice to or demand on any such party in any such case
shall entitle such party to any other or further notice or demand in similar or other
circumstances.
	 
	14.3	 	Integration of Terms: This Agreement contains the entire agreement of the parties
and its provisions supersede the provisions of the commitment letter dated 2nd
June, 2010 (save for the provisions thereof which relate to fees) any and all other prior
correspondence and oral negotiation by the parties in respect of the matters regulated by this
Agreement.
	 
	14.4	 	Amendments: This Agreement and any other Security Documents shall not be amended or
varied in their respective terms by any oral agreement or representation or in any other
manner other than by an instrument in writing of even date herewith or subsequent hereto
executed by or on behalf of the parties hereto or thereto.






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	14.5	 	Invalidity of Terms: In the event of any provision contained in one or more of
this Agreement, the other Security Documents and any other documents executed pursuant hereto
or thereto being invalid, illegal or unenforceable in any respect under any applicable law in
any jurisdiction whatsoever, such provision shall be ineffective as to the jurisdiction only
without affecting the remaining provisions hereof or thereof. If, however, this event becomes
known to the Bank prior to the drawdown of the Commitment or of any part thereof the Bank
shall be entitled to refuse drawdown until this discrepancy is remedied. In case that the
invalidity of a part results in the invalidity of the whole agreement, it is hereby agreed
that there will exist a separate obligation of the Borrower for the prompt payment to the Bank
of all the Outstanding Indebtedness. Where, however, the provisions of any such applicable
law may be waived, they are hereby waived by the parties hereto to the full extent permitted
by the law to the intent that this Agreement, the other Security Documents and any other
documents executed pursuant hereto or thereto shall be deemed to be valid binding and
enforceable in accordance with their respective terms.






	14.6	 	Inconsistency of Terms: In the event of any inconsistency between the provisions of
this Agreement and the provisions of any other Security Document the provisions of this
Agreement shall prevail.






	14.7	 	Language and genuineness of documents






	 	(a)	 	Language: All certificates, instruments and other documents to be
delivered under or supplied in connection with this Agreement or any of the other
Security Documents shall be in the English language.
	 
	 	(b)	 	Certification of documents: Any copies of documents delivered to the
Bank shall be duly certified as true, complete and accurate copies by appropriate
authorities or legal counsel practicing in Greece or otherwise as it will be acceptable
to the Bank at the sole discretion of the Bank.
	 
	 	(c)	 	Certification of signature: Signatures on Board or shareholder
resolutions, Secretary’s certificates and any other documents are, at the discretion of
the Bank, to be verified for their genuineness by appropriate Consul or other competent
authority.






	14.8	 	Further assurances: The Borrower undertakes that the Security Documents shall both
at the date of execution and delivery thereof and so long as any moneys are owing under any of
the Security Documents be valid and binding obligations of the respective parties thereto and
enforceable in accordance with their respective terms




68









 












	 	 	and that it will (unless otherwise
provided herein), at its expense, execute, sign,
perfect and do, and will procure the execution, signing, perfecting and doing by each of the
other Security Parties of, any and every such further assurance, document, act or thing as
in the reasonable opinion of the Bank may be necessary or desirable for perfecting the
security contemplated or constituted by the Security Documents.






	14.9	 	Third Party rights: No term of this Agreement is enforceable under the Contracts
(Rights of Third Parties) Act 1999 by a person who is not a party to this Agreement.






	15.	 	NOTICES AND OTHER MATTERS






	15.1	 	Notices: Every notice, request, demand or other communication under the Agreement
or, unless otherwise provided therein, under any of the other Security Documents shall.






	 	(a)	 	be in writing delivered personally or by first-class prepaid letter (airmail if
available), or shall be served through a process server or subject to Clause 10.7 by
fax;
	 
	 	(b)	 	be deemed to have been received, subject as otherwise provided in this
Agreement or the relevant Security Document, in the case of a telex, at the time of
despatch with confirmed answerback of the addressee appearing at the beginning and end
of the communication, in the case of fax, at the time of dispatch as per transmission
report (provided in either case that if the date of despatch is not a business day in
the country of the addressee it shall be deemed to have been received at the opening of
business on the next such business day), and in the case of a letter when delivered or
served personally or five (5) days after it has been put into the post; and
	 
	 	(c)	 	be sent:






	 	(i)	 	if to be sent to any Security Party, to:
	 
	 	 	 	c/o NewLead Bulkers S.A.,

83 Akti Miaouli and Flessa Street,

185 38 Piraeus, Greece,

Fax No.: +30 213 014 8209

Attention: Chief Financial Officer
	 
	 	(ii)	 	in the case of the Bank at:
	 
	 	 	 	FBB-First Business Bank S.A.

62, Notara and Sotiros Dios streets,




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	 		 	185 35 Piraeus, Greece

Fax No. (+30 210) 4132 058

Attention: The Manager






	 		 	or to such other person, address or fax number as is notified by the relevant
Security Party or the Bank (as the case may be) to the other parties to this
Agreement and, in the case of any such change of address or fax number notified to
the Bank, the same shall not become effective until notice of such change is
actually received by the Bank and a copy of the notice of such change is signed by
the Bank.






	15.2	 	Confidentiality






	 	(a)	 	Each of the parties hereto agrees and undertakes to keep confidential any
documentation and any confidential information concerning the business, affairs,
directors or employees of the other which comes into its possession during this
Agreement and not to use any such documentation, information for any purpose other than
for which it was provided.
	 
	 	(b)	 	The Borrower acknowledges and accepts that the Bank may be required by law,
regulation or regulatory requirement or any request of any central bank or any court
order to disclose information and deliver documentation relating to the Borrower and
the transactions and matters in relation to this Agreement and/or the other Security
Documents to governmental or regulatory agencies and authorities.
	 
	 	(c)	 	The Borrower acknowledges and accepts that in case of occurrence of any of the
Events of Default the Bank may disclose information and deliver documentation relating
to the Borrower and the transactions and matters in relation to this Agreement and/or
the other Security Documents to third parties to the extent that this is necessary for
the enforcement or the contemplation of enforcement of the Bank’s rights or for any
other purpose for which in the opinion of the Bank, such disclosure would be useful or
appropriate for the interests of the Bank or otherwise and the Borrower expressly
authorises any such disclosure and delivery.
	 
	 	(d)	 	The Borrower acknowledges and accepts that the Bank may be prohibited to
disclosing information to the Borrower by reason of law or duties of confidentiality
owed or to be owed to other persons.




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	16.	 	APPLICABLE LAW AND JURISDICTION






	16.1	 	Law:






	 	(a)	 	This Agreement shall be governed by and construed in accordance with English
Law.
	 
	 	(b)	 	For the purposes of enforcement in Greece, it is hereby expressly agreed that
English law as the governing law of the Loan Agreement will be proved by an affidavit
of a solicitor from an English law firm to be appointed by the Bank and the said
affidavit shall constitute full and conclusive evidence binding on the Borrower but the
Borrower shall be allowed to rebut such evidence save for witness.






	16.2	 	Submission to Jurisdiction






	 	(a)	 	For the exclusive benefit of the Bank, the Borrower agrees that any legal
action or proceedings arising out or in connection with this Agreement against the
Borrower or any of its assets may be brought in the English Courts. The Borrower
irrevocably and unconditionally submits to the jurisdiction of such courts and
irrevocably designates, appoints and empowers Messrs. Cheeswrights, Notaries
Public, at their office for the time being at Bankside House, 107 Leadenhall
Street, London EC3A 4HA, England, to receive for it and on its behalf, service of
process issued out of the English courts in any such legal action or proceedings,
provided, however, that the Borrower further agrees that in the event that (i)
Messrs. Cheeswrights, Notaries Public, close or fail to maintain a business
presence in England, or (ii) the Bank, in its sole discretion, shall determine that
service of process on the said agents is not feasible or may be insufficient under the
Laws of England, then any summons, writ or other legal process issued against them in
England may be served upon Messrs. The Law Debenture Corporate Services Limited, Fifth
Floor, 100 Wood Street, London EC2V 7EX, England (hereinafter called the “Process Agent
for English Proceedings”), or their successors, who are hereby authorised to accept
such service, which shall be deemed to be good service on the Borrower. The Borrower
hereby irrevocably agrees to maintain a Process Agent for English Proceedings
throughout the Security Period and hereby agrees that in the event that (aa) Messrs.
The Law Debenture Corporate Services Limited close or fail to maintain a business
presence in England, or (bb) the Bank in its sole discretion, shall determine that
service of process on Messrs. The Law Debenture Corporate Services Limited is not
feasible or may be insufficient under the




71









 












	 	 	 	Laws of England, then the Borrower, within
five (5) days after written notice from the Bank, shall appoint a substitute Process
Agent for English Proceedings acceptable to the Bank and if the Borrower fails to make
such appointment within the said five days period, the Bank may appoint such substitute
Process
Agent for English Proceedings and the Bank is hereby irrevocably authorised to
effect such appointment on Borrower’s behalf. The appointment of the Process Agent
for English Proceedings shall be valid and binding from the date notice of such
appointment is given by the Bank to the Borrower in accordance with Clause 15.1.
The foregoing shall not limit the right of the Bank to start proceedings in any
other country or to serve process in any other manner permitted by law. Finally, the
Borrower hereby waives any objections to the inconvenience of England as a forum.






	 	(a)	 	The submission to the jurisdiction of the English Courts shall not (and shall
not be construed so as to) limit the right of the Bank to take proceedings against the
Borrower in the courts of any other competent jurisdiction nor shall the taking of
proceedings in any one or more jurisdictions preclude the taking of proceedings in any
other jurisdiction, whether concurrently or not.
	 
	 	(b)	 	The parties further agree that subject to Clause 16.2(b) the Courts of England
shall have exclusive jurisdiction to determine any claim which the Borrower may have
against the Bank arising out of or in connection with this Agreement and the Borrower
hereby waives any objections to proceedings with respect to this Agreement in such
courts on the grounds of venue or inconvenient forum.






	16.3	 	Proceedings in any other country:






	 	(a)	 	Clause 16.2 is for the exclusive benefit of the Bank which reserves the rights:






	 	(i)	 	to commence proceedings in relation to any matter which arises
out of or in connection with this Agreement in the courts of any country other
than England and which have or claim jurisdiction to that matter; and
	 
	 	(ii)	 	to commence such proceedings in the courts of any such country
or countries concurrently with or in addition to proceedings in England or
without commencing proceedings in England.






	 	(b)	 	If it is decided by the Bank that any such proceedings should be commenced in
any other country, then any objections as to the jurisdiction or any claim as to the
inconvenience of the forum is hereby waived by the Borrower and it is agreed and
undertaken by the Borrower to instruct lawyers in that country to 




72









 






	 	 	 	accept service of
legal process and not to contest the validity of such proceedings as far as the
jurisdiction of the court or courts involved is concerned and the Borrower agrees that
any judgment or order obtained in
an English court shall be conclusive and binding on the Borrower and shall be
enforceable without review in the courts of any other jurisdiction.






	16.4	 	Process Agent: Mr. George Livanos, an Attorney-at-Law, presently of 83 Akti Miaouli
and Flessa street, GR 18535 Piraeus, Greece, is hereby appointed by the Borrower as agent to
accept service (hereinafter “Process Agent”) upon whom any judicial process in respect of
proceedings in Greece (including but without limitation any documents initiating legal
proceedings) may be served and any notice, request, demand or other communication under this
Agreement or any of the Security Documents. In the event that the Process Agent (or any
substitute process agent notified to the Bank in accordance with the foregoing) cannot be
found at the address specified above (or, as the case may be, notified to the Bank), which
will be conclusively proved by a deed of a process server to the effect that the Process Agent
was not found at such address, the Bank shall have the right to serve the documents either on
the Process Agent at such address or at any address where the Process Agent may be found or in
accordance with the procedure provided by the relevant provisions on service of process
provided by the Hellenic Procedural Code.






	16.5	 	Meaning of “proceedings”: In this Clause 16 “proceedings” means proceedings of any kind,
including an application for a provisional or protective measure.




IN WITNESS whereof the parties hereto have caused this Agreement to be duly executed on the date
first above written.










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SCHEDULE 1




FORM OF DRAWDOWN NOTICE

(referred to in Clause 2.3)




	To: 	 	FBB-First Business Bank S.A.

62, Notara and Sotiros Dios streets,

185 35 Piraeus, Greece

(the “Bank”)





[l], 2010





	Re: 	 	Term loan facility of up to US$24,150,000 — Loan Agreement dated [l]
2010 made between (A) Grand Spartounta Inc. (the “Borrower”) and (B)
the Bank (the “Loan Agreement”).




We refer to the Loan Agreement and hereby give you notice that we wish to borrow as follows:





	(a)	 	the amount of ($[l]) (Dollars [l] million) in respect of the Commitment;
	 
	(b)	 	Drawdown Date: [l], [l];
	 
	(c)	 	duration of the Interest Period in respect of the Loan shall be [l] months/shall
terminate on [l]; and
	 
	(d)	 	Payment instructions: The funds should be credited/remitted to ([l][l] [name and
number of account] [l]) with [l], New York, USA.




We confirm that:





	(a)	 	no event or circumstance has occurred and is continuing which constitutes a Default;
	 
	(b)	 	the representations and warranties contained in Clause 6 of the Loan Agreement and the
representations and warranties contained in each of the other Security Documents are true and
correct at the date hereof as if made with respect to the facts and circumstances existing at
such date;
	 
	(c)	 	the borrowing to be effected by the drawing of the Commitment will be within our corporate
powers, has been validly authorised by appropriate corporate action and will not cause any
limit on our borrowings (whether imposed by statute, regulation, agreement or otherwise) to be
exceeded; and




74









 












	(d)	 	to the best of our knowledge and belief there has been no material adverse change in our
financial position or in the consolidated financial position of ourselves and the other
Security Parties from that described by us to the Bank in the negotiation of the Loan
Agreement.




Words and expressions defined in the Loan Agreement shall have the same meanings when used herein.




	 	 	 	 	 

	SIGNED by

	 	 	)	 
	Mr.

	 	 	)	 
	for and on behalf of

	 	 	)	 
	GRAND SPARTOUNTA INC.,

	 	 	)	 
	of Marshall Islands, in the presence of:

	 	 	)	 






	 	 	 	 	 
	 	 	 
	Witness:  	 	 	 
	 	Name:  	Efstratios Kalantzis 	 	 
	 	Address: 	13 Defteras Merarchias Street

Piraeus, Greece
	 	 
	 	Occupation: 	Attorney-at-law 	 	 



75









 






	 	 	 	 	 



SCHEDULE 2




Form of Compliance Certificate




	To: 	 	FBB-First Business Bank S.A.

(the “Bank”)
	 
	From: 	 	NewLead Holdings Ltd.





Date [            ] 20[    ]





	Re: 	 	Term loan facility of up to US$24,150,000 — Loan Agreement dated
[l] 2010 made between (A) Grand Spartounta Inc. (the
“Borrower”) and (B) the Bank (the “Loan Agreement”).




Dear Sirs



We refer to the Loan Agreement. Words and expressions whose meanings are defined in the Loan
Agreement shall have the same meanings when used herein.



We hereby confirm that [except as stated below] as at the date hereof to the best of our knowledge
and belief after due inquiry:-





	1.	 	all the Borrower’s undertakings in the Loan Agreement set out in clause 8.6 are being fully
complied with and, in particular, by reference to the latest [audited][unaudited] financial
statements, management accounts and all other current relevant information available to us on
a consolidated basis:






	 	i)	 	the amount maintained as at the date hereof in accounts held in the names
of the Borrower and/or the Newlead Corporate Guarantor or any of them with the Bank
(which bank accounts include the Earnings Account but exclude any other accounts of
the Borrower and the Newlead Corporate Guarantor or any of them with the Bank which
are subject to an Encumbrance), as cash balances is $[•], which is at least equal 5%
of the Group’s total Indebtedness as at the relevant time;
	 
	 	ii)	 	the market value adjusted net worth of the Group is [l]; and
	 
	 	iii)	 	the ratio of market value adjusted Total Assets to Total Liabilities of the
Group is [l]:






	2.	 	no Default has occurred;




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	3.	 	appendix 1 hereto contains a comprehensive list of all Group Members as at the date hereof
and the jurisdictions in which they are incorporated and an up-to-date corporate structure
chart for the Group;
	 
	4.	 	the representations set out in clause 6 of the Loan Agreement are true and accurate with
reference to all facts and circumstances now existing and all required authorisations have
been obtained and are in full force and effect; and




[State any exceptions/qualifications to the above statements]



[Attach list of current Group Members and current corporate structure chart]



Yours faithfully,




NEWLEAD HOLDINGS LTD.




	 	 	 	 	 	 	 	 	 	 	 	 	 

	By

	 	 	 	 	 	 	 	By	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 

	 	Name:
	 	 	 	 	 	 	 	Name:	 	 
	 	 	[Chief Financial Officer]	 	 	 	 	 	Director :	 	 
	 	 	[Director :]	 	 	 	 	 	 	 	 






77









 






EXECUTION PAGE




	 	 	 	 	 	 	 

	SIGNED

	 	 	)	 	 	 
	for and on behalf of

	 	 	)	 	 	 
	GRAND SPARTOUNTA INC.,

	 	 	)	 	 	 
	of Marshall Islands,

	 	 	)	 	 	 
	by Mr. Michail Livanos

	 	 	)	 	 	 
	its duly authorised Attorney-in-fact

	 	 	)	 	 	/s/ Michail Livanos
	in the presence of:

	 	 	)	 	 	Attorney-in-Fact






	 	 	 	 	 
	 	 	 
	Witness:  	/s/ Efstratios Kalantzis
 	 	 
	 	Name:  	Efstratios Kalantzis 	 	 
	 	Address:   	13 Defteras Merarchias Street

Piraeus, Greece	 	 
	 	Occupation: 	Attorney-at-law 	 	 
	 



	 	 	 	 	 	 	 

	SIGNED

	 	 	)	 	 	 
	for and on behalf of

	 	 	)	 	 	 
	FBB-FIRST BUSINESS BANK S.A.

	 	 	)	 	 	 
	by Mr. Nikolaos Vougioukas

	 	 	)	 	 	 
	its duly authorised Attorney-in-fact

	 	 	)	 	 	/s/ Nikolaos Vougioukas
	in the presence of:

	 	 	)	 	 	Attorney-in-Fact






	 	 	 	 	 
	 	 	 
	Witness:  	/s/ Efstratios Kalantzis
 	 	 
	 	Name:  	Efstratios Kalantzis 	 	 
	 	Address:   	13 Defteras Merarchias Street

Piraeus, Greece

	 	 
	 	Occupation: 	Attorney-at-law 	 	 
	 




78