exv10w8






Exhibit 10.8




F21.085




DATED 9 July 2010




GRAND AFFECTION S.A.

GRAND AFFINITY S.A.

(as Borrowers)




- and -



DVB BANK SE

and others

(as Lenders)



- and -



DVB BANK SE

(as Agent)



- and -



DVB BANK SE

(as Security Agent)



 





US$48,000,000 SECURED

LOAN AGREEMENT



 





STEPHENSON HARWOOD

Ariston Building

2 Filellinon Street & Akti Miaouli

Piraeus 185 36

Greece

Tel: +30 210 4295 160

Fax: +30 210 4295 166

Ref: F21.085



 









 





CONTENTS




	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	 	 	 
	 	 	 	 
	1	 	Definitions and Interpretation
	 	 	2	 
	 	 	 
	 	 	 	 
	2	 	The Loan and its Purpose
	 	 	16	 
	 	 	 
	 	 	 	 
	3	 	Conditions of Utilisation
	 	 	16	 
	 	 	 
	 	 	 	 
	4	 	Advance
	 	 	20	 
	 	 	 
	 	 	 	 
	5	 	Repayment
	 	 	20	 
	 	 	 
	 	 	 	 
	6	 	Prepayment
	 	 	22	 
	 	 	 
	 	 	 	 
	7	 	Interest
	 	 	23	 
	 	 	 
	 	 	 	 
	8	 	Indemnities
	 	 	27	 
	 	 	 
	 	 	 	 
	9	 	Fees
	 	 	31	 
	 	 	 
	 	 	 	 
	10	 	Security and Application of Moneys
	 	 	31	 
	 	 	 
	 	 	 	 
	11	 	Representations
	 	 	35	 
	 	 	 
	 	 	 	 
	12	 	Undertakings and Covenants
	 	 	38	 
	 	 	 
	 	 	 	 
	13	 	Events of Default
	 	 	49	 
	 	 	 
	 	 	 	 
	14	 	Assignment and Sub-Participation
	 	 	54	 
	 	 	 
	 	 	 	 
	15	 	The Agent, the Security Agent and the Lenders
	 	 	56	 
	 	 	 
	 	 	 	 
	16	 	Set-Off
	 	 	65	 
	 	 	 
	 	 	 	 
	17	 	Payments
	 	 	65	 
	 	 	 
	 	 	 	 
	18	 	Notices
	 	 	66	 
	 	 	 
	 	 	 	 
	19	 	Partial Invalidity
	 	 	68	 
	 	 	 
	 	 	 	 
	20	 	Remedies and Waivers
	 	 	68	 






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	 	 	 	 	Page	 
	 	 	 
	 	 	 	 
	21	 	Joint and several liability
	 	 	69	 
	 	 	 
	 	 	 	 
	22	 	Miscellaneous
	 	 	70	 
	 	 	 
	 	 	 	 
	23	 	Law and Jurisdiction
	 	 	71	 
	 	 	 
	 	 	 	 
	SCHEDULE 1: The Lenders and the Commitments	 	 	73	 
	 	 	 
	 	 	 	 
	SCHEDULE 2: Conditions Precedent and Subsequent	 	 	74	 
	Part I: Conditions precedent
	 	 	74	 
	Part II: Conditions subsequent
	 	 	78	 
	Part III: Delivery conditions precedent
	 	 	79	 
	Part IV: Delivery conditions subsequent
	 	 	83	 
	 	 	 
	 	 	 	 
	SCHEDULE 3: Calculation of Mandatory Cost	 	 	84	 
	 	 	 
	 	 	 	 
	SCHEDULE 4: Form of Drawdown Notice	 	 	87	 
	 	 	 
	 	 	 	 
	SCHEDULE 5: Form of Transfer Certificate	 	 	88	 
	 	 	 
	 	 	 	 
	SCHEDULE 6: Form of Compliance Certificate	 	 	91	 
	 	 	 
	 	 	 	 
	SCHEDULE 7: Loans Administration Form	 	 	92	 











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LOAN AGREEMENT




Dated: 9 July 2010




BETWEEN:





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





WHEREAS:





	(A)	 	Each Borrower has agreed to purchase the relevant Vessel from the Builder on the terms of the
relevant Building Contract and intends to register that Vessel on delivery under the relevant
flag specified below in the definition of “Vessels”.
	 
	(B)	 	Each of the Lenders has agreed to advance to the Borrowers on a joint and several basis its
Commitment (aggregating, with all the other Commitments, up to $48,000,000) to assist the
Borrowers in pre-delivery and post-delivery finance of part of the aggregate Contract Price of
the Vessels and to refinance certain Existing Indebtedness.




 









 











IT IS AGREED as follows:





	1	 	Definitions and Interpretation






	 	1.1	 	In this Agreement:
	 
	 	 	 	“Accounts” means the Earnings Accounts and the Retention Account.
	 
	 	 	 	“Account Holder” means Emporiki Bank of Greece S.A., a company duly incorporated
under the laws of Greece, having its registered office at 11, Sofokleous Street,
Athens, Greece, and acting through its office at 1 Korai Street, Athens 10564,
Greece or any other bank or financial institution acceptable to the Agent (in its
sole discretion) which at any time, with the Agent’s prior written consent, holds
the Accounts.
	 
	 	 	 	“Accounts Charges” means the deeds of charge referred to in Clause 10.1.6 (Security
Documents) and “Accounts Charge” means any one of them.
	 
	 	 	 	“Actual Rate” has the meaning set out in Clause 7.11.
	 
	 	 	 	“Administration” has the meaning given to it in paragraph 1.1.3 of the ISM Code.
	 
	 	 	 	“Annex VI” means Annex VI (Regulations for the Prevention of Air Pollution from
Ships) to the International Convention for the Prevention of Pollution from Ships
1973 (as modified in 1978 and 1997).
	 
	 	 	 	“Approved Flag” means a flag acceptable to the Agent in its discretion.
	 
	 	 	 	“Assignments” means the deeds of assignment of the Insurances, Earnings and
Requisition Compensation, and Charters referred to in Clause 10.1.5 (Security
Documents) and “Assignment” means any one of them.
	 
	 	 	 	“Availability Termination Date” means the earlier of (a) the Delivery Date of the
last Vessel to be delivered and (b) 15 July 2012 or such later date as the Lenders
may in their discretion agree.
	 
	 	 	 	“Break Costs” means all sums payable by the Borrowers from time to time under Clause
8.3 (Break Costs).




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	 	 	 	“Builder” means SPP Shipbuilding Co., Ltd., a company incorporated under the laws of
the Republic of South Korea with its principal office at 1609-4, Hwang-ri,
Gwangdo-myun, Tongyoung-si, Gyeongsangnam-do, South Korea.
	 
	 	 	 	“Building Contracts” means the contracts dated 30 August 2007, as amended by Addenda
No. 1 dated 13 April 2009, Addenda No. 2 dated 11
June 2010, Addenda No. 3 dated 11
June 2010, Addenda No. 4 dated 12 June 2010 and Addenda No. 5 dated 2 July 2010 on the
terms and subject to the conditions of which the Builder has agreed to construct the
Vessels for, and deliver the Vessels to, the Borrowers respectively and “Building
Contract” means either one of them (as the same may be further amended and/or
supplemented and/or novated and/or replaced from time to time with the prior written
consent of the Lenders).
	 
	 	 	 	“Building Contract Assignments” means the deeds of assignment of the Building
Contracts and the Refund Guarantees referred to in Clause 10.1.1 (Security
Documents) and “Building Contract Assignment” means either one of them.
	 
	 	 	 	“Business Day” means a day (other than a Saturday or Sunday) on which banks are open
for general business in New York, London, Frankfurt and Piraeus.
	 
	 	 	 	“Cash Sweep” means, in respect of the Earnings of a Vessel, one hundred per
cent (100%) of the Excess Cash Flow for the period commencing on the Delivery Date
of each Vessel until the relevant Balloon is reduced to an aggregate amount of three
million Dollars ($3,000,000) and fifty per cent (50%) of the Excess Cash Flow of
each Vessel thereafter.
	 
	 	 	 	“Charterer” means the charterer as disclosed to the Lenders at the date of this
Agreement.
	 
	 	 	 	“Charter” means the charterparty made between a Borrower (as owner) and a
Charterer (as charterer) in respect of a Vessel on the terms and subject to the
conditions of which a Borrower may charter its Vessel to a Charterer and “Charters”
means more than one of them.
	 
	 	 	 	“Commitment” means, in relation to a Lender, the amount of the Loan which that
Lender agrees to advance to the Borrowers as its several liability as indicated
against the name of that Lender in Schedule 1 (The Lenders and the Commitments)
and/or,




3









 












	 	 	 	where the context permits, the amount of the Loan advanced by that Lender and
remaining outstanding and “Commitments” means more than one of them.
	 
	 	 	 	“Compliance Certificate” means a certificate substantially in the form set out in
Schedule 6 (Form of Compliance Certificate).
	 
	 	 	 	“Contract Price”, in respect of each Vessel, means an aggregate amount of thirty
seven million Dollars ($37,000,000), as evidenced by the relevant Building Contract.
	 
	 	 	 	“Corporate Guarantee” means the guarantee and indemnity referred to in Clause 10.1.2
(Security Documents).
	 
	 	 	 	“Corporate Guarantor” means GrandUnion Inc., a company incorporated according to the
law of the Marshall Islands, with its registered office at The Trust Company
Complex, Ajeltake Island, Ajeltake Road, Majuro Marshall Islands, M.H. 96960, c/o
The Trust Company of the Marshall Islands Inc. and/or (where the context permits)
any other person who shall at any time during the Facility Period give to the
Lenders or to the Security Agent on their behalf a guarantee and/or indemnity for
the repayment of all or part of the Indebtedness.
	 
	 	 	 	“Currency of Account” means, in relation to any payment to be made to a Finance
Party under a Finance Document, the currency in which that payment is required to be
made by the terms of that Finance Document.
	 
	 	 	 	“Debt Service” means repayment of scheduled Repayment Installments, any fees and
expenses payable to the Finance Parties under this Agreement and interest on the
Loan.
	 
	 	 	 	“Deeds of Covenants” means the deeds of covenants referred to in Clause 10.1.4
(Security Documents).
	 
	 	 	 	“Default” means an Event of Default or any event or circumstance specified in Clause
13.1 (Events of Default) which would (with the expiry of a grace period, the giving
of notice, the making of any determination under the Finance Documents or any
combination of any of the foregoing) be an Event of Default.
	 
	 	 	 	“Delivery Date” means:-




4









 












	 	(a)	 	in respect of the Vessel with Builder’s hull number H-4023, the
date of the actual delivery of that Vessel from the Builder to Affection, but
not later than 28 February 2011; and
	 
	 	(b)	 	in respect of the Vessel with Builder’s hull no. H-4029, the
date of the actual delivery of that Vessel from the Builder to Affinity, but
not later than 15 July 2012;






	 	 	 	“Determination Date” means, with respect to an Interest Period, the date which is
(2) Business Days before the first day of that Interest Period.
	 
	 	 	 	“DOC” means, in relation to the ISM Company, a valid Document of Compliance issued
for the ISM Company by the Administration under paragraph 13.2 of the ISM Code.
	 
	 	 	 	“Dollars” and “$” each means available and freely transferable and convertible funds
in lawful currency of the United States of America.
	 
	 	 	 	“Drawdown Date” means the date on which the relevant Drawing is advanced under
Clause 4 (Advance).
	 
	 	 	 	“Drawdown Notice” means a notice substantially in the form set out in Schedule 4
(Form of Drawdown Notice).
	 
	 	 	 	“Drawings” means the First Drawing, the Second Drawing, the Third Drawing and the
Fourth Drawing (as each such term is defined in Clause 3.3.5) or any other part of a
Vessel Loan advanced or to be advanced pursuant to a Drawdown Notice and “Drawing”
means any one of them.
	 
	 	 	 	“Earnings” means all hires, freights, pool income and other sums payable to or for
the account of a Borrower in respect of a Vessel including (without limitation) all
remuneration for salvage and towage services, demurrage and detention moneys,
contributions in general average, compensation in respect of any requisition for
hire, and damages and other payments (whether awarded by any court or arbitral
tribunal or by agreement or otherwise) for breach, termination or variation of any
contract for the operation, employment or use of a Vessel.




5









 












	 	 	 	“Earnings Accounts” means a bank account to be opened in the name of each Borrower
with the Account Holder and designated “[name of Borrower] — Earnings Account” and
“Earnings Account” means either one of them.
	 
	 	 	 	“Encumbrance” means a mortgage, charge, assignment, pledge, lien, or other security
interest securing any obligation of any person or any other agreement or arrangement
having a similar effect.
	 
	 	 	 	“Equity Portion” means that amount of an installment under a Building Contract
payable or paid by the relevant Borrower to the Builder pursuant to the relevant
Building Contract and not forming part of the Loan.
	 
	 	 	 	“Event of Default” means any of the events or circumstances set out in Clause 13.1
(Events of Default).
	 
	 	 	 	“Excess Cash Flow” means, in respect of each Vessel, the Earnings of that Vessel
remaining following deduction of the Operating Expenses and the Debt Service in
respect of that Vessel and deduction of the applicable Minimum Liquidity Reserve.
	 
	 	 	 	“Existing Indebtedness” means the amount of seven million thirty one thousand
two hundred and fifty Dollars ($7,031,250) in respect of each Vessel or fourteen
million sixty two thousand five hundred Dollars ($14,062,500) for both Vessels under
the Existing Loan Facility.
	 
	 	 	 	“Existing Loan Facility” means the loan facility agreement dated 18 October 2007 as
amended and supplemented by a first supplemental agreement dated 13 June 2008 and as
further amended and supplemented by a second supplemental agreement dated 24
December 2009 each made between the Borrowers and 3 other companies.
	 
	 	 	 	“Facility Period” means the period beginning on the date of this Agreement and
ending on the date when the whole of the Indebtedness has been paid in full and the
Security Parties have ceased to be under any further actual or contingent liability
to the Finance Parties under or in connection with the Finance Documents.
	 
	 	 	 	“Fee Letter” means any letter or letters dated on or about the date of this
Agreement between the Agent and the Borrowers setting out any of the fees referred
to in Clause 9 (Fees).




6









 












	 	 	 	“Final Maturity Date” means, the earlier of (i) the date falling nine years and nine
months after the Delivery Date in respect of the first Vessel to be delivered and
(ii) 31 December 2020, or in each case in the Agent’s absolute discretion (following
the Borrowers’ request) such later date as the Agent may agree.
	 
	 	 	 	“Finance Documents” means this Agreement, the Security Documents, any Fee Letter and
any other document designated as such by the Agent and the Borrowers and “Finance
Document” means any one of them.
	 
	 	 	 	“Finance Parties” means the Agent, the Security Agent and the Lenders and “Finance
Party” means any one of them.
	 
	 	 	 	“Financial Indebtedness” means any obligation for the payment or repayment of money,
whether present or future, actual or contingent, in respect of:






	 	(a)	 	moneys borrowed;
	 
	 	(b)	 	any acceptance credit;
	 
	 	(c)	 	any bond, note, debenture, loan stock or similar instrument;
	 
	 	(d)	 	any finance or capital lease;
	 
	 	(e)	 	receivables sold or discounted (other than on a non-recourse basis);
	 
	 	(f)	 	deferred payments for assets or services;
	 
	 	(g)	 	any derivative transaction protecting against or benefiting
from fluctuations in any rate or price (and, when calculating the value of any
derivative transaction, only the marked to market value shall be taken into
account);
	 
	 	(h)	 	any amount raised under any other transaction (including any
forward sale or purchase agreement) having the commercial effect of a
borrowing;
	 
	 	(i)	 	any counter-indemnity obligation in respect of a guarantee,
indemnity, bond, standby or documentary letter of credit or any other
instrument issued by a bank or financial institution; and
	 
	 	(j)	 	the amount of any liability in respect of any guarantee or
indemnity for any of the items referred to in paragraphs (a) to (i) above.




7









 












	 	 	 	“Financial Statements” means the financial statements of the Borrowers and the
Corporate Guarantor provided to the Agent in accordance with Clause 12.1.1 and
12.1.3.
	 
	 	 	 	“GAAP” means generally accepted accounting principles in IFRS.
	 
	 	 	 	“IAPPC” means a valid international air pollution prevention certificate for a
Vessel issued under Annex VI.
	 
	 	 	 	“IFRS” means International Financial Reporting Standards issued and/or adopted by
the International Accounting Standards Board.
	 
	 	 	 	“Indebtedness” means the aggregate from time to time of: the amount of the Loan
outstanding; all accrued and unpaid interest on the Loan; and all other sums of any
nature (together with all accrued and unpaid interest on any of those sums) payable
to any of the Finance Parties under all or any of the Finance Documents.
	 
	 	 	 	“Installments” means the First Installment, the Second Installment, the Third
Installment, the Fourth Installment and the Fifth Installment (as each such term is
defined in Clause 3.3.5) and “Installment” means any one of them.
	 
	 	 	 	“Insurances” means all policies and contracts of insurance (including all entries in
protection and indemnity or war risks associations) which are from time to time
taken out or entered into in respect of or in connection with a Vessel or her
increased value or her Earnings and (where the context permits) all benefits under
such contracts and policies, including all claims of any nature and returns of
premium.
	 
	 	 	 	“Interest Payment Date” means each date for the payment of interest in accordance
with Clause 7.8 (Accrual and payment of interest).
	 
	 	 	 	“Interest Period” means each period for the determination and payment of interest
selected by the Borrowers or agreed or selected by the Agent pursuant to Clause 7
(Interest).
	 
	 	 	 	“ISM Code” means the International Management Code for the Safe Operation of Ships
and for Pollution Prevention.
	 
	 	 	 	“ISM Company” means, at any given time, the company responsible for a Vessel’s
compliance with the ISM Code under paragraph 1.1.2 of the ISM Code.




8









 












	 	 	 	“ISPS” Code” means the International Ship and Port Facility Security Code.
	 
	 	 	 	“ISPS Company” means, at any given time, the company responsible for a Vessel’s
compliance with the ISPS Code.
	 
	 	 	 	“ISSC” means a valid international ship security certificate for a Vessel issued
under the ISPS Code.
	 
	 	 	 	“LIBOR” means:






	 	(a)	 	the rate per annum equal to the offered quotation for deposits
in Dollars in an amount comparable to the Loan (or any relevant part of the
Loan) for a period equal to, or as near as possible equal to, the relevant
Interest Period which appears on Reuters BBA Page LIBOR 01 at or about 11.00
a.m. on the Determination Date of the relevant Interest Period (and, for the
purposes of this Agreement, “BBA Page LIBOR 01” means the Reuters’ page or such
other page as may replace that page 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 British Bankers’ Association Interest Settlement Rates
for Dollars); or
	 
	 	(b)	 	if no rate is quoted on BBA Page LIBOR 01 on the Determination
Date of the relevant Interest Period or if the Lender has provided a rate in
compliance with Clause 7.11 for the relevant Interest Period, the Actual Rate
for that Interest Period shall be the per annum rate used.






	 	 	 	“Loan” means the aggregate amount of the Vessel Loans advanced or to be advanced by
the Lenders to the Borrowers under Clause 4 (Advance) or, where the context permits,
the amount of the Vessel Loans advanced and for the time being outstanding.
	 
	 	 	 	“Loans Administration Form” means a form substantially in the form of Schedule 7.
	 
	 	 	 	“Majority Lenders” means a Lender or Lenders whose Commitments aggregate more than
sixty six per cent (66%) of the aggregate of all the Commitments.




9









 












	 	 	 	“Management Agreements” means the agreements for the commercial and/or technical
management of the Vessels between the Borrowers respectively and the Managers and
“Management Agreement” means any one of them.
	 
	 	 	 	“Managers” means Newlead Shipping S.A. of the Republic of Panama and/or Newlead
Bulkers S.A. of the Republic of Liberia or such other commercial and/or technical
managers of the Vessels nominated by the Borrowers as the Agent may approve.
	 
	 	 	 	“Mandatory Cost” means the percentage rate per annum calculated by the Agent in
accordance with Schedule 3 (Calculation of Mandatory Cost).
	 
	 	 	 	“Margin” means three per cent (3%) per annum.
	 
	 	 	 	“Market Value”, in respect of a Vessel, means the market value of the Vessel to be
conclusively determined on the basis of the average of valuations (which are not
more than two months old at the time of the calculation of the Market Value in
question) provided by two reputable, independent and first class firm of shipbrokers
appointed by the Agent. If the two valuations differ by a margin of over 15% then a
third shipbroker shall be appointed by the Agent and the market value shall be the
average of the three valuations. All valuations shall be on the basis of a
charter-free sale for prompt delivery for cash at arm’s length on normal commercial
terms as between a willing seller and a willing buyer and at the expense of the
Borrowers.
	 
	 	 	 	“Maximum Loan Amount” means an amount up to the lesser of $48,000,000 (representing
68.6% of the aggregate Contract Price of the Vessels less the Seller’s Credit) and
80% of the aggregate Market Value of the Vessels (to be determined not less than two
weeks prior to each Drawdown Date in respect of each Drawing, other than the first
drawdown to occur in July 2010, and on each Delivery Date).
	 
	 	 	 	“Maximum Vessel Loan” means, for each Vessel an amount up to the lesser of
$24,000,000 (representing 68.6% of each Vessel’s Contract Price less the Seller’s
Credit) and 80% of its Market Value (to be determined not less than two weeks prior
to each Drawdown Date in respect of each Drawing, other than the first drawdown to
occur in July 2010, and to each Delivery Date).
	 
	 	 	 	“Minimum Charter Requirements” means, in respect of a Charter for a Vessel, a
minimum daily net rate of hire of $12,000 plus 60%/40% profit sharing basis (60%




10









 












	 	 	 	for the Charterer and 40% for the relevant Borrower) commencing with a minimum daily
net rate of hire of $14,000 with a minimum period of duration of twelve (12) years
in accordance with the relevant terms of the Charter and otherwise on terms
acceptable to the Agent in its discretion.
	 
	 	 	 	“Minimum Liquidity Reserve” means, in respect of each Borrower, unrestricted cash
free of Encumbrances other than in favour of the Agent of not less than five hundred
thousand Dollars ($500,000).
	 
	 	 	 	“Mortgages” means the preferred or statutory mortgages referred to in Clause 10.1.4
(Security Documents) together with the Deeds of Covenants (if applicable)
and “Mortgage” means either one of them.
	 
	 	 	 	“Operating Expenses” means expenses properly and reasonably incurred by a Borrower
in connection with the operation, employment, maintenance, repair and insurance of
its Vessel.
	 
	 	 	 	“Original Financial Statements” means the Financial Statements of the relevant
Borrower for the financial year ended 31 December 2011 for the Vessel delivered in
2011 or 31 December 2012 for the Vessel delivered in 2012.
	 
	 	 	 	“Personal Guarantees” means the guarantees and indemnities referred to in Clause
10.1.7 (Security Documents) and “Personal Guarantee” means either one of them.
	 
	 	 	 	“Personal Guarantors” means any person acceptable to the Agent in its discretion
and/or (where the context permits) any other person who shall at any time during the
Facility Period give to the Agent a guarantee and/or indemnity for the repayment of
all or part of the Indebtedness and “Personal Guarantor” means either one of them.
	 
	 	 	 	“Pledgor” means Alpha Bulkers Inc., a company incorporated according to the law of
the Marshall Islands, with its registered office at The Trust Company Complex,
Ajeltake Island, Ajeltake Road, Majuro Marshall Islands, M.H. 96960, c/o The Trust
Company of the Marshall Islands Inc., which is a wholly owned subsidiary of the
Corporate Guarantor.
	 
	 	 	 	“Proportionate Share” means, at any time, the proportion which a Lender’s Commitment
(whether or not advanced) then bears to the aggregate Commitments of all the Lenders
(whether or not advanced).




11









 












	 	 	 	“Refund Guarantees” means refund guarantees numbered M42W20710XD00018 and
M42W20710XD00025 respectively issued by the Refund Guarantor in favour of the
Borrowers respectively pursuant to the Building Contracts on 8 October 2007 and
“Refund Guarantee” means either one of them.
	 
	 	 	 	“Refund Guarantor” means Shinhan Bank Masan Middle Market Banking Center, acting
through its branch at South Korea.
	 
	 	 	 	“Relevant Documents” means the Finance Documents, the Building Contracts, the Refund
Guarantees, the Charters, the Management Agreements, the Managers’ confirmation
specified in Part I of Schedule 2 (Conditions precedent) and the Account Holder’s
confirmation specified in Part I of Schedule 2 (Conditions precedent).
	 
	 	 	 	“Repayment Date” means the date for payment of any Repayment Installment in
accordance with Clause 5.1 (Repayment of each Vessel Loan).
	 
	 	 	 	“Repayment Installment” means any installment of a Vessel Loan to be repaid by the
Borrowers under Clause 5.1 (Repayment of each Vessel Loan).
	 
	 	 	 	“Requisition Compensation” means all compensation or other money which may from time
to time be payable to a Borrower as a result of a Vessel being requisitioned for
title or in any other way compulsorily acquired (other than by way of requisition
for hire).
	 
	 	 	 	“Retention Account” means a bank account opened or to be opened in the name of the
Borrowers with the Account Holder and designated “Grand Affection S.A. and Grand
Affinity S.A.- Retention Account”.
	 
	 	 	 	“Security Documents” means the Building Contract Assignments, the Guarantee, the
Personal Guarantees, the Share Pledges, the Mortgages, the Deeds of Covenants, the
Assignments and the Accounts Charges, or (where the context permits) any one or more
of them and any other agreement or document which may at any time be executed by any
person as security for the payment of all or any part of the Indebtedness and
“Security Document” means any one of them.
	 
	 	 	 	“Security Parties” means the Borrowers, the Corporate Guarantor, the Personal
Guarantors, the Pledgor and any other person who may at any time during the




12









 












	 	 	 	Facility Period be liable for, or provide security for, all or any part of the
Indebtedness, and “Security Party” means any one of them.
	 
	 	 	 	“Seller’s Credit” means a credit of the Contract Price in respect of each Vessel in
the amount of $2,000,000 each, in favour of each Borrower.
	 
	 	 	 	“Share Pledges” means the pledges of shares referred to in Clause 10.1.3 (Security
Documents).
	 
	 	 	 	“SMC” means a valid safety management certificate issued for a Vessel by or on
behalf of the Administration under paragraph 13.7 of the ISM Code.
	 
	 	 	 	“SMS” means a safety management system for a Vessel developed and implemented in
accordance with the ISM Code.
	 
	 	 	 	“Tax” means any tax, levy, impost, duty or other charge or withholding of a similar
nature (including any penalty or interest payable in connection with any failure to
pay or any delay in paying any of the same).
	 
	 	 	 	“Threshold Amount” means the amount of one million Dollars ($1,000,000).
	 
	 	 	 	“Total Loss” means:






	 	(a)	 	an actual, constructive, arranged, agreed or compromised total
loss of a Vessel; or
	 
	 	(b)	 	the requisition for title or compulsory acquisition of a Vessel
by any government or other competent authority (other than by way of
requisition for hire); or
	 
	 	(c)	 	the capture, seizure, arrest, detention or confiscation of a
Vessel by any government or by persons acting or purporting to act on behalf of
any government, unless that Vessel is released and returned to the possession
of the relevant Borrower within one month after the capture, seizure, arrest,
detention or confiscation in question.






	 	 	 	“Transfer Certificate” means a certificate substantially in the form set out in
Schedule 5 (Form of Transfer Certificate) or any other form agreed between the Agent
and the Borrowers.




13









 












	 	 	 	“Transfer Date”, in relation to any Transfer Certificate, the later of:






	 	(a)	 	the proposed Transfer Date specified in the Transfer Certificate; and
	 
	 	(b)	 	the date on which the Agent executes the Transfer Certificate.






	 	 	 	“Trust Property” means:






	 	(a)	 	all benefits derived by the Security Agent from Clause 10
(Security and Application of Moneys); and
	 
	 	(b)	 	all benefits arising under (including, without limitation, all
proceeds of the enforcement of) each of the Security Documents,






	 	 	 	with the exception of any benefits arising solely for the benefit of the Security
Agent.
	 
	 	 	 	“Vessel Loan A” means, in respect of the Vessel with Builder’s hull number H-4023,
the part of the Loan advanced or to be advanced by the Lenders to the Borrowers in
respect of that Vessel under Clause 4 (Advance) or, where the context permits, the
aggregate principal amount so advanced and for the time being outstanding.
	 
	 	 	 	“Vessel Loan B” means, in respect of the Vessel with Builder’s hull number H-4029,
the part of the Loan advanced or to be advanced by the Lenders to the Borrowers in
respect of that Vessel under Clause 4 (Advance) or, where the context permits, the
aggregate principal amount so advanced and for the time being outstanding.
	 
	 	 	 	“Vessel Loans” means Vessel Loan A and Vessel Loan B and each a “Vessel Loan”.
	 
	 	 	 	“Vessels” means approximately the 35,000 dwt bulk carriers and everything now or in
the future belonging to them on board and ashore, currently under construction by
the Builder with the Builder’s hull numbers set out below for the respective
Borrowers set out below on the terms of the Building Contracts and, on delivery to
the Borrowers, intended to be registered under an Approved Flag in the ownership of
the respective Borrowers and “Vessel” means either one of them:





	 	 	 
	Hull Number	 	Borrower
	H-4023

	 	Affection
	H-4029

	 	Affinity






14









 







	 	1.2	 	In this Agreement:






	 	1.2.1	 	words denoting the plural number include the singular and vice versa;
	 
	 	1.2.2	 	words denoting persons include corporations, partnerships,
associations of persons (whether incorporated or not) or governmental or
quasi-governmental bodies or authorities and vice versa;
	 
	 	1.2.3	 	references to Recitals, Clauses and Schedules are references
to recitals, clauses and schedules to or of this Agreement;
	 
	 	1.2.4	 	references to this Agreement include the Recitals and the
Schedules;
	 
	 	1.2.5	 	the headings and contents page(s) are for the purpose of
reference only, have no legal or other significance, and shall be ignored in
the interpretation of this Agreement;
	 
	 	1.2.6	 	references to any document (including, without limitation, to
all or any of the Relevant Documents) are, unless the context otherwise
requires, references to that document as amended, supplemented, novated or
replaced from time to time;
	 
	 	1.2.7	 	references to statutes or provisions of statutes are
references to those statutes, or those provisions, as from time to time
amended, replaced or re-enacted;
	 
	 	1.2.8	 	references to any Finance Party include its successors,
transferees and assignees; and
	 
	 	1.2.9	 	a time of day (unless otherwise specified) is a reference to
London time.






	 	1.3	 	Offer letter
	 
	 	 	 	This Agreement supersedes the terms and conditions contained in any correspondence
relating to the subject matter of this Agreement exchanged between any Finance Party
and the Borrowers or their representatives prior to the date of this Agreement.




15









 












	2	 	The Loan and its Purpose






	 	2.1	 	Amount Subject to the terms of this Agreement, the Lenders agree to make
available to the Borrowers a term loan comprising both Vessel Loans and not exceeding
in aggregate the Maximum Loan Amount.
	 
	 	2.2	 	Finance Parties’ obligations The obligations of each Finance Party under the
Finance Documents are several. Failure by a Finance Party to perform its obligations
under the Finance Documents does not affect the obligations of any other party to the
Finance Documents. No Finance Party is responsible for the obligations of any other
Finance Party under the Finance Documents.
	 
	 	2.3	 	Purpose The Borrowers shall apply the Loan for the purposes referred to in
Recital (B).
	 
	 	2.4	 	Monitoring No Finance Party is bound to monitor or verify the application of
any amount borrowed under this Agreement.






	3	 	Conditions of Utilisation






	 	3.1	 	Conditions precedent The Borrowers are not entitled to have any Drawing
advanced unless the Agent has received all of the documents and other evidence listed
in Part I of Schedule 2 (Conditions precedent), save that references in Section 2 of
that Part I to “the Vessel” or to any person or document relating to a Vessel shall be
deemed to relate solely to either Vessel specified in the relevant Drawdown Notice or
to any person or document relating to that Vessel respectively.
	 
	 	3.2	 	Further conditions precedent The Lenders will only be obliged to advance a
Drawing if on the date of the Drawdown Notice and on the proposed Drawdown Date:






	 	3.2.1	 	no Default is continuing or would result from the advance of
that Drawing; and
	 
	 	3.2.2	 	the representations made by the Borrowers under Clause 11
(Representations) are true in all material respects.






	 	3.3	 	Drawing limit The Lenders will only be obliged to advance a Drawing if:




16









 












	 	3.3.1	 	that Drawing will not increase the Loan to a sum in excess of
the Maximum Loan Amount;
	 
	 	3.3.2	 	that Drawing will not result in more than fifty per cent (50%)
of the Maximum Loan Amount being advanced for a Vessel;
	 
	 	3.3.3	 	that Drawing will not cause the amount of the relevant Maximum
Vessel Loan to be exceeded;
	 
	 	3.3.4	 	the proposed Drawdown Date of that Drawing (other than that
which refinances the Existing Indebtedness) coincides with the due date for
payment by the relevant Borrower of the relevant Installment of the relevant
Vessel under its Building Contract and that Drawing will be applied in payment
of that Installment; and
	 
	 	3.3.5	 	that Drawing (other than that which refinances the Existing
Indebtedness) will be applied in or towards payment of one of the following
Installments of the Contract Price of the relevant Vessel under the relevant
Building Contract and shall amount to a maximum of the sum set out below
opposite the relevant Installment and always subject to Clause 3.3.3:





	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Per cent	 	 	 	 	 	 	 	 
	 	 	(%) of	 	 	 	 	 	 	 	Total
	 	 	Contract	 	 	 	Equity	 	amount of
	Installment	 	Price	 	Drawing	 	Portion	 	Installment
	first
installment

(on signing of
Building Contract)

	 	 	10	%	 	$2,812,500

(re-financed under
the Existing
Indebtedness)

(“First Drawing A”)
	 	$	887,500	 	 	$3,700,000

(“First Installment”)






17









 






	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Per cent	 	 	 	 	 	 	 	 
	 	 	(%) of	 	 	 	 	 	 	 	Total
	 	 	Contract	 	 	 	Equity	 	amount of
	Installment	 	Price	 	Drawing	 	Portion	 	Installment
	second installment

(9 months from
signing of Building
Contract)

	 	 	15	%	 	$4,218,750

(and $2,812,500
(re-financed under
the Existing
Indebtedness)

(the “First Drawing
B” and together
with the First
Drawing A, the
“First Drawing”)
	 	$	1,331,250	 	 	$5,550,000

(“Second
Installment”)
	(on or about 

January 2010)

	 	 	2.7	%	 	—
	 	$	1,000,000	 	 	$1,000,000
	third installment

(upon steel cutting)

	 	 	20	%	 	$5,071,607

(“Second Drawing”)
	 	$	2,328,393	 	 	$7,400,000

(“Third Installment”)
	fourth installment

(upon keel laying)

	 	 	17.3	%	 	$4,388,571

(“Third Drawing”)
	 	$	2,011,429	 	 	$6,400,000

(“Fourth
Installment”)
	fifth installment

(on Delivery Date)

	 	 	35	%	 	$7,508,571

(“Fourth Drawing”)
	 	$	3,441,429	 	 	$10,950,000

(“Fifth Installment”)
	Seller’s Credit

	 	 	—	 	 	—
	 	 	—	 	 	$2,000,000
	 

	 	 	 	 	 	 
	 	 	 	 	 	 
	Total

	 	 	100	%	 	$24,000,000
	 	$	11,000,000	 	 	$37,000,000
	 

	 	 	 	 	 	 
	 	 	 	 	 	 






18









 








	 	3.4	 	Conditions subsequent The Borrowers undertake to deliver or to cause to be
delivered to the Agent on, or as soon as practicable after, the relevant Drawdown Date
the additional documents and other evidence listed in Part II of Schedule 2 (Conditions
subsequent), save that references in that Part II to “the Vessel” or to any person or
document relating to a Vessel shall be deemed to relate solely to a Vessel specified in
the relevant Drawdown Notice or to any person or document relating to that Vessel
respectively.
	 
	 	3.5	 	Delivery conditions precedent Whether or not a Drawing is advanced on a
Delivery Date, the Borrowers undertake to deliver or to cause to be delivered to the
Agent on each Delivery Date the additional documents and other evidence listed in Part
III of Schedule 2 (Delivery conditions precedent), save that references in that Part
III to “the Vessel” or to any person or document relating to a Vessel shall be deemed
to relate solely to the Vessel being delivered on that Delivery Date.
	 
	 	3.6	 	Delivery conditions subsequent Whether or not a Drawing is advanced on a
Delivery Date, the Borrowers undertake to deliver or to cause to be delivered to the
Agent on, or as soon as practicable after, each Delivery Date the additional documents
and other evidence listed in Part IV of Schedule 2 (Delivery conditions subsequent),
save that references in that Part IV to “the Vessel” or to any person or document
relating to a Vessel shall be deemed to relate solely to the Vessel delivered on that
Delivery Date.
	 
	 	3.7	 	No Waiver If the Lenders in their sole discretion agree to advance a Drawing
to the Borrowers before all of the documents and evidence required by Clause 3.1
(Conditions precedent) and/or Clause 3.5 (Delivery conditions precedent) have been
delivered to or to the order of the Agent, the Borrowers undertake to deliver all
outstanding documents and evidence to or to the order of the Agent no later than thirty
(30) days after the relevant Drawdown Date or such other date specified by the Agent.




19









 












	 	 	 	The advance of a Drawing under this Clause 3.7 shall not be taken as a waiver of the
Lenders’ right to require production of all the documents and evidence required by
Clauses 3.1 (Conditions precedent) and 3.5 (Delivery conditions precedent).
	 
	 	3.8	 	Form and content All documents and evidence delivered to the Agent under this
Clause 3 shall:






	 	3.8.1	 	be in form and substance acceptable to the Agent; and
	 
	 	3.8.2	 	if required by the Agent, be certified, notarised, legalised
or attested in a manner acceptable to the Agent.






	4	 	Advance






	 	4.1	 	Drawdown Request The Borrowers may request a Drawing to be advanced in one
amount on any Business Day prior to the Availability Termination Date by delivering to
the Agent a duly completed Drawdown Notice not more than ten (10) and not fewer than
three (3) Business Days before the proposed Drawdown Date.
	 
	 	4.2	 	Lenders’ participation Subject to Clauses 2 (The Loan and its Purpose) and 3
(Conditions of Utilisation), the Agent shall promptly notify each Lender of the receipt
of a Drawdown Notice, following which each Lender shall advance its Proportionate Share
of the relevant Drawing to the Borrowers through the Agent on the relevant Drawdown
Date.






	5	 	Repayment






	 	5.1	 	Repayment of each Vessel Loan The Borrowers agree to repay:






	 	5.1.1	 	Vessel Loan A to the Agent for the account of the Lenders by
thirty nine (39) consecutive quarterly installments, the first twelve (12) such
installments each in the sum of three hundred and sixty two thousand five
hundred Dollars ($362,500), the following twelve (12) such installments each in
the sum of three hundred and eighty seven thousand five hundred Dollars
($387,500), the following fourteen (14) such installments each in the sum of
four hundred thousand Dollars ($400,000) and the thirty-ninth and final such
installment in the sum of nine million four hundred thousand Dollars
($9,400,000) (comprising an installment of four hundred thousand Dollars
($400,000) and a balloon payment of nine million Dollars




20









 












	 	 	 	($9,000,000) (the “Balloon A”)), the first such installment falling due on
the date which is three calendar months after the Delivery Date in respect
of the Vessel with Builder’s hull number H-4023 and subsequent installments
falling due at consecutive intervals of three calendar months thereafter and
the final Repayment Date in respect thereof falling not later than the Final
Maturity Date; and
	 
	 	5.1.2	 	Vessel Loan B to the Agent for the account of the Lenders by
thirty four (34) consecutive quarterly installments, the first twelve (12) such
installments each in the sum of three hundred and sixty two thousand five
hundred Dollars ($362,500), the following twelve (12) such installments each in
the sum of three hundred and eighty seven thousand five hundred Dollars
($387,500), the following nine (9) such installments each in the sum of four
hundred thousand Dollars ($400,000) and the thirty-fourth and final such
installment in the sum of eleven million four hundred thousand Dollars
($11,400,000) (comprising an installment of four hundred thousand Dollars
($400,000) and a balloon payment of eleven million Dollars ($11,000,000) (the
“Balloon B” and together with the Balloon A, the “Balloons” and each a
“Balloon”), the first such installment falling due on the date which is three
calendar months after the Delivery Date in respect of the Vessel with Builder’s
hull number H-4029 and subsequent installments falling due at consecutive
intervals of three calendar months thereafter and the final Repayment Date in
respect thereof falling not later than the Final Maturity Date.






	 	5.2	 	Reduction of Repayment Installments If the aggregate amount advanced to the
Borrowers in respect of a Vessel Loan is less than twenty four million Dollars
($24,000,000), the amount of the relevant Balloon shall be reduced by the difference
between the amount of twenty four million Dollars ($24,000,000) and the amount actually
advanced in respect of that Vessel Loan.
	 
	 	5.3	 	Reborrowing The Borrowers may not reborrow any part of a Vessel Loan which is
repaid or prepaid.
	 
	 	5.4	 	Cash Sweep Commencing from the Delivery Date of each Vessel, each Vessel’s
Excess Cash Flow shall be retained in the relevant Earnings Account for application in
reduction of the relevant Balloon and such amount shall be applied towards




21









 












	 	 	 	reduction of the relevant Balloon quarterly in arrears, falling after the relevant
Delivery Date and shall be paid to the Lender on each applicable Repayment Date
together with the applicable Repayment Installment. The Borrowers shall provide the
Lender, on a quarterly basis, five days prior to each Repayment Date, with a
certificate showing the Earnings of the Vessel in question for the preceding three
months period, less the Debt Service, the Operating Expenses and the Minimum
Liquidity Reserve, in order for the Excess Cash Flow to be established.






	6	 	Prepayment






	 	6.1	 	Illegality If it becomes unlawful in any jurisdiction for a Lender to perform
any of its obligations as contemplated by this Agreement or to fund or maintain the
Loan:






	 	6.1.1	 	that Lender shall promptly notify the Agent of that event;
	 
	 	6.1.2	 	upon the Agent notifying the Borrowers, the Commitment of that
Lender (to the extent not already advanced) will be immediately cancelled; and
	 
	 	6.1.3	 	the Borrowers shall repay that Lender’s Commitment in respect
of each Vessel Loan (to the extent already advanced) on the last day of its
current Interest Period or, if earlier, the date specified by that Lender in
the notice delivered to the Agent and notified by the Agent to the Borrowers
(being no earlier than the last day of any applicable grace period permitted by
law) and the remaining Repayment Installments in respect of that Vessel Loan
shall be reduced pro rata.






	 	6.2	 	Voluntary prepayment of a Vessel Loan The Borrowers may prepay the whole or
any part of either Vessel Loan (but, if in part, being an amount that reduces that
Vessel Loan by a minimum amount of $500,000 or integral multiples thereof) subject as
follows:






	 	6.2.1	 	they give the Agent not less than five (5) Business Days’ (or
such shorter period as the Majority Lenders may agree) prior notice;
	 
	 	6.2.2	 	no prepayment may be made until after the Availability
Termination Date; and
	 
	 	6.2.3	 	any prepayment under this Clause 6.2 shall be applied in
prepayment of the remaining Repayment Installments in respect of that Vessel
Loan pro rata.




22









 












	 	6.3	 	Mandatory prepayment on sale or Total Loss or change in the ownership or
control of a Borrower If a Vessel is sold by a Borrower or becomes a Total Loss or a
Borrower changes its ultimate beneficial ownership or control from that advised to the
Agent at the date of this Agreement, without the prior written consent of the Lenders,
the Borrowers shall, simultaneously with any such sale or change in ultimate ownership
control or within one hundred and eighty (180) days after any such Total Loss, prepay
the whole of the Vessel Loan then outstanding in relation to that Vessel or in the case
of a change in ultimate beneficial ownership or control of a Borrower shall prepay the
whole of the Loan forthwith. Any such prepayment shall be applied in prepayment of the
remaining Repayment Installments in respect of that Vessel Loan in inverse order of
maturity.
	 
	 	6.4	 	Restrictions Any notice of prepayment given under this Clause 6 shall be
irrevocable and, unless a contrary indication appears in this Agreement, shall specify
the date or dates upon which the relevant prepayment is to be made and the amount of
that prepayment.
	 
	 	 	 	Any prepayment under this Agreement shall be made together with accrued interest on
the amount prepaid and, subject to any Break Costs, without premium or penalty.
	 
	 	 	 	If the Agent receives a notice under this Clause 6 it shall promptly forward a copy
of that notice to the Borrowers or the Lenders, as appropriate.






	7	 	Interest






	 	7.1	 	Interest Periods The period during which each Vessel Loan shall be
outstanding under this Agreement shall be divided into consecutive Interest Periods of
three or six months’ duration, as selected by the Borrowers by written notice to the
Agent not later than 11.00 a.m. on the third Business Day before the beginning of the
Interest Period in question, or such other duration as may be agreed by the Agent
(acting on the instructions of all the Lenders).
	 
	 	7.2	 	Beginning and end of Interest Periods Each Interest Period shall start on the
first Drawdown Date of the relevant Vessel Loan or (if a Drawing of that Vessel Loan is
already advanced) on the last day of the preceding Interest Period and end on the date
which numerically corresponds to the first Drawdown Date of that Vessel Loan or the




23









 












	 	 	 	last day of the preceding Interest Period in the relevant calendar month except
that, if there is no numerically corresponding date in that calendar month, the
Interest Period shall end on the last Business Day in that month.
	 
	 	7.3	 	Second and subsequent Drawings If the second or any subsequent Drawing of a
Vessel Loan is made otherwise than on the first day of an Interest Period for the
balance of that Vessel Loan, there shall be a separate initial Interest Period for that
Drawing commencing on its Drawdown Date and expiring on the final date of the then
current Interest Period for the balance of that Vessel Loan.
	 
	 	7.4	 	Interest Periods to meet Repayment Dates If an Interest Period would
otherwise expire after the next Repayment Date in respect of the relevant Vessel Loan,
there shall be a separate Interest Period for a part of that Vessel Loan equal to the
relevant Repayment Installment which shall expire on the next Repayment Date and the
Interest Period determined shall apply only to the balance of that Vessel Loan.
	 
	 	7.5	 	Non-Business Days If an Interest Period would otherwise end on a day which is
not a Business Day, that Interest Period will instead end on the next Business Day in
that calendar month (if there is one) or the preceding Business Day (if there is not).
	 
	 	7.6	 	Interest rate During each Interest Period interest shall accrue on each
Vessel Loan at the rate determined by the Agent to be the aggregate of (a) the Margin,
and (b) LIBOR and (c) the Mandatory Cost, if any.
	 
	 	7.7	 	Failure to select Interest Period If the Borrowers at any time fail to select
or agree an Interest Period in accordance with Clause 7.1 (Interest Periods) the
interest rate applicable shall be the rate determined by the Agent in accordance with
Clause 7.6 (Interest rate) for an Interest Period of such duration (not exceeding three
months) as the Agent may select.
	 
	 	7.8	 	Accrual and payment of interest Interest shall accrue from day to day, shall
be calculated on the basis of a 360 day year and the actual number of days elapsed (or,
in any circumstance where market practice differs, in accordance with the prevailing
market practice) and shall be paid by the Borrowers to the Agent for the account of the
Lenders on the last day of each Interest Period and, if the Interest Period is longer
than three months, on the dates falling at three monthly intervals after the first day
of that Interest Period.




24









 












	 	7.9	 	Default interest If a Borrower fails to pay any amount payable by it under a
Finance Document on its due date, interest shall accrue on the overdue amount from the
due date up to the date of actual payment (both before and after judgment) at a rate
which is the aggregate of (a) two point five per cent (2.5%), (b) the Margin and (c)
LIBOR for such period, in the currency of the overdue amount for successive Interest
Periods, each selected by the Agent (acting reasonably). Any interest accruing under
this Clause 7.9 shall be immediately payable by that Borrower on demand by the Agent.
If unpaid, any such interest will be compounded with the overdue amount at the end of
each Interest Period applicable to that overdue amount but will remain immediately due
and payable.
	 
	 	7.10	 	Actual rate






	 	7.10.1	 	(a) If at any time the Agent determines at its absolute discretion (which
determination shall be final and conclusive and binding on the Borrowers) that
the actual rate quoted to the Agent by the Lenders in the ordinary course of
its business (including, without limitation, broker quotes to the Agent of
funding rates available in the European financial markets) to fund the Loan (or
any part of it) for the relevant Interest Period is higher than the rate
appearing on BBA Page LIBOR 01 determined under paragraph (a) of the definition
of LIBOR in Clause 1 for that Interest Period or (b) if no rate is quoted on
BBA Page LIBOR 01 at 11:00 a.m. on the Determination Date for the relevant
Interest Period, the Agent shall as soon as practicable, and in any event no
later than the first day of that Interest Period, give notice to the Borrowers
of the rate quoted to that Lender in the ordinary course of its business
(including, without limitation, broker quotes to the Agent of funding rates
available in the European financial markets) to fund the Loan (or any part of
it) for that Interest Period.
	 
	 	7.10.2	 	Where the Agent provides the Borrowers with a rate under Clause 7.10.1, that
rate (the “Actual Rate”) shall apply for the relevant Interest Period.
	 
	 	7.10.3	 	For the purposes of this Clause 7.10, the Agent may determine its funding
rate for the relevant Interest Period by obtaining one or more broker quotes in
the ordinary course of its business and where more than one such quote is




25









 












	 	 	 	obtained then the weighted average of quotes obtained by the Agent shall
prevail and the Borrowers will pay all the costs and expenses of the average
of each of the Lender’s funding cost on the Agent’s first demand. For the
avoidance of doubt, the funding rate determined by the Agent shall be deemed
to be the benchmark in substitution of BBA Page LIBOR 01 for the relevant
Interest Period, however, there shall be no obligation on the Agent to
actually refinance on a back-to-back basis its funding for the relevant
Interest Period as a condition to such substitution.
	 
	 	7.10.4	 	The Actual Rate that shall apply for the relevant Interest Period in
accordance with this Clause 7.10 shall not be higher than the actual rate that
has been quoted to the Agent under Clause 7.10.1.
	 
	 	7.10.5	 	if, within thirty (30) days of the giving of the notice referred to in Clause
7.10.1, the Borrowers and the Agent fail to agree in writing on a substitute
basis for determining the rate of interest, the Borrowers will immediately
prepay the relevant Commitment in that Vessel Loan, together with any Break
Costs and the remaining Repayment Installments in respect of that Vessel Loan
shall be reduced pro rata.






	 	7.11	 	Material adverse change If at any time the Agent determines (which
determination shall be final and conclusive and binding on the Borrowers) that, by
reason of changes affecting global economic and political developments or the
international money and capital markets, the Agent shall give notice to the Lenders and
the Borrowers of the occurrence of such event and the Agent on behalf of the Lenders
will negotiate with the Borrowers in good faith with a view to modifying this Agreement
to provide a substitute basis for determining the terms of this Agreement which is
financially a substantial equivalent to the basis provided for in this Agreement, any
substitute basis agreed pursuant this Clause shall be binding on all the parties to
this Agreement and shall apply to all Commitments in that Vessel Loan and if, within
thirty (30) days of the giving of the notice referred to in this Clause, the Borrowers
and the Agent fail to agree in writing on a substitute basis for determining the terms
of this Agreement, the Borrowers will immediately prepay the Loan, together with any
Break Costs.




26









 












	 	7.12	 	Determinations conclusive The Agent shall promptly notify the Borrowers of
the determination of a rate of interest under this Clause 7.12 and each such
determination shall (save in the case of manifest error) be final and conclusive.






	8	 	Indemnities






	 	8.1	 	Transaction expenses The Borrowers will, within fourteen (14) days of the
Agent’s written demand, pay the Agent (for the account of the Finance Parties) the
amount of all costs and expenses (including legal fees and Value Added Tax or any
similar or replacement tax if applicable) incurred by the Finance Parties or any of
them in connection with:






	 	8.1.1	 	the negotiation, preparation, printing, execution and
registration of the Finance Documents (whether or not any Finance Document is
actually executed or registered and whether or not all or any part of the Loan
is advanced);
	 
	 	8.1.2	 	any amendment, addendum or supplement to any Finance Document
(whether or not completed); and
	 
	 	8.1.3	 	any other document which may at any time be required by a
Finance Party to give effect to any Finance Document or which a Finance Party
is entitled to call for or obtain under any Finance Document.






	 	8.2	 	Funding costs The Borrowers shall indemnify each Finance Party, by payment to
the Agent (for the account of that Finance Party) on the Agent’s written demand,
against all losses and costs incurred or sustained by that Finance Party if, for any
reason, a Drawing is not advanced to the Borrowers after the relevant Drawdown Notice
has been given to the Agent, or is advanced on a date other than that requested in the
Drawdown Notice (unless, in either case, as a result of any default by a Finance
Party).
	 
	 	8.3	 	Break Costs The Borrowers shall indemnify each Finance Party, by payment to
the Agent (for the account of that Finance Party) on the Agent’s written demand,
against all costs, losses, premiums or penalties incurred by that Finance Party as a
result of its receiving any prepayment of all or any part of the Loan (whether pursuant
to Clause 6 (Prepayment) or otherwise) on a day other than the last day of an Interest
Period in respect of the same, or any other payment under or in relation to the




27









 












	 	 	 	Finance Documents on a day other than the due date for payment of the sum in
question, including (without limitation) any losses or costs incurred in liquidating
or re-employing deposits from third parties acquired to effect or maintain all or
any part of the Loan, and any liabilities, expenses or losses incurred by that
Finance Party in terminating or reversing, or otherwise in connection with, any
interest rate and/or currency swap, transaction or arrangement entered into by that
Finance Party to hedge any exposure arising under this Agreement, or in terminating
or reversing, or otherwise in connection with, any open position arising under this
Agreement.
	 
	 	8.4	 	Currency indemnity In the event of a Finance Party receiving or recovering
any amount payable under a Finance Document in a currency other than the Currency of
Account, and if the amount received or recovered is insufficient when converted into
the Currency of Account at the date of receipt to satisfy in full the amount due, the
Borrowers shall, on the Agent’s written demand, pay to the Agent for the account of the
relevant Finance Party such further amount in the Currency of Account as is sufficient
to satisfy in full the amount due and that further amount shall be due to the Agent on
behalf of the relevant Finance Party as a separate debt under this Agreement.
	 
	 	8.5	 	Increased costs (subject to Clause 8.6 (Exceptions to increased costs)) If,
by reason of the introduction of any law, or any change in any law, or any change in
the interpretation or administration of any law, or compliance with any request or
requirement from any central bank or any fiscal, monetary or other authority occurring
after the date of this Agreement:






	 	8.5.1	 	a Finance Party (or the holding company of a Finance Party)
shall be subject to any Tax with respect to payment of all or any part of the
Indebtedness (other than Tax on overall net income); or
	 
	 	8.5.2	 	the basis of Taxation of payments to a Finance Party in
respect of all or any part of the Indebtedness shall be changed; or
	 
	 	8.5.3	 	any reserve requirements shall be imposed, modified or deemed
applicable against assets held by or deposits in or for the account of or loans
by any branch of a Finance Party; or




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	 	8.5.4	 	the manner in which a Finance Party allocates capital
resources to its obligations under this Agreement or any ratio (whether cash,
capital adequacy, liquidity or otherwise) which a Finance Party is required or
requested to maintain shall be affected; or
	 
	 	8.5.5	 	there is imposed on a Finance Party (or on the holding company
of a Finance Party) any other condition in relation to the Indebtedness or the
Finance Documents;






	 	 	 	and the result of any of the above shall be to increase the cost to a Finance Party
(or to the holding company of a Finance Party) of that Finance Party making or
maintaining its Commitment, or to cause a Finance Party to suffer (in its opinion) a
material reduction in the rate of return on its overall capital below the level
which it reasonably anticipated at the date of this Agreement and which it would
have been able to achieve but for its entering into this Agreement and/or performing
its obligations under this Agreement, then, subject to Clause 8.6 (Exceptions to
increased costs), the Finance Party affected shall notify the Agent and the
Borrowers shall from time to time pay to the Agent on demand for the account of that
Finance Party the amount which shall compensate that Finance Party (or the relevant
holding company) for such additional cost or reduced return. A certificate signed
by an authorised signatory of that Finance Party setting out the amount of that
payment and the basis of its calculation shall be submitted to the Borrowers and
shall be conclusive evidence of such amount save for manifest error or on any
question of law.
	 
	 	8.6	 	Exceptions to increased costs Clause 8.5 (Increased costs) does not apply to
the extent any additional cost or reduced return referred to in that Clause is:






	 	8.6.1	 	compensated for by a payment made under Clause 8.10 (Taxes); or
	 
	 	8.6.2	 	compensated for by a payment made under Clause 17.3 (Grossing-up); or
	 
	 	8.6.3	 	compensated for by the payment of the Mandatory Cost; or
	 
	 	8.6.4	 	attributable to the wilful breach by the relevant Finance
Party (or the holding company of that Finance Party) of any law or regulation.






	 	8.7	 	Events of Default The Borrowers shall indemnify each Finance Party from time
to time, by payment to the Agent (for the account of that Finance Party) on the Agent’s




29









 












	 	 	 	written demand, against all losses, costs and liabilities incurred or sustained by
that Finance Party as a consequence of any Event of Default.
	 
	 	8.8	 	Enforcement costs The Borrowers shall pay to the Agent (for the account of
each Finance Party) on the Agent’s written demand the amount of all costs and expenses
(including legal fees) incurred by that Finance Party in connection with the
enforcement of, or the preservation of any rights under, any Finance Document including
(without limitation) any losses, costs and expenses which that Finance Party may from
time to time sustain, incur or become liable for by reason of that Finance Party being
mortgagee of a Vessel and/or a lender to the Borrowers, or by reason of that Finance
Party being deemed by any court or authority to be an operator or controller, or in any
way concerned in the operation or control, of a Vessel.
	 
	 	8.9	 	Other costs The Borrowers shall pay to the Agent (for the account of each
Finance Party) on the Agent’s written demand of the amount of all sums which that
Finance Party may pay or become actually or contingently liable for on account of a
Borrower in connection with a Vessel (whether alone or jointly or jointly and severally
with any other person) including (without limitation) all sums which that Finance Party
may pay or guarantees which it may give in respect of the Insurances, any expenses
incurred by that Finance Party in connection with the maintenance or repair of a Vessel
or in discharging any lien, bond or other claim relating in any way to a Vessel, and
any sums which that Finance Party may pay or guarantees which it may give to procure
the release of a Vessel from arrest or detention.
	 
	 	8.10	 	Taxes The Borrowers shall pay all Taxes to which all or any part of the
Indebtedness or any Finance Document may be at any time subject (other than Tax on a
Finance Party’s overall net income) and shall indemnify the Finance Parties, by payment
to the Agent (for the account of the Finance Parties) on the Agent’s written demand,
against all liabilities, costs, claims and expenses resulting from any omission to pay
or delay in paying any such Taxes.
	 
	 	8.11	 	Basel II In relation to the implementation or application of, or compliance
with, the “International Convergence of Capital Measurement and Capital Standards, a
Revised Framework” published by the Basel Committee on Banking Supervision in June 2004
in the form existing on the date of this Agreement (“Basel II”) or any other law or
regulation which implements Basel II (whether such implementation, application or
compliance is by a government, regulator, a Finance Party or any




30









 












	 	 	 	holding company of a Finance Party), if this gives rise to a change in the Risk
Asset Weighting of a Finance Party’s actual or notional rate of return from the Loan
then the amount of any reduction of the Finance Party’s rate of return from the Loan
will be payable by the Borrowers. The Agent shall consult with the Borrowers in
relation to the effect of the implementation of Basel II.






	9	 	Fees






	 	9.1	 	Commitment fee The Borrowers shall pay to the Agent (for the account of the
Lenders in proportion to their Commitments) a fee computed at the rate of one per cent
(1%) per annum on the undrawn amount of the Loan from time to time from the date of
this Agreement until the earlier of the Drawdown Date in respect of the final Drawing
and the Availability Termination Date. The accrued commitment fee is payable on the
last day of each successive period of three months from the date of this Agreement and
on the Availability Termination Date.
	 
	 	9.2	 	Agency fee The Borrowers shall pay to the Agent (for its own account) an
agency fee in the amount and at the times agreed in a Fee Letter.
	 
	 	9.3	 	Amendment Fee The Borrowers shall pay to the Agent a non refundable amendment
fee in the amount and at the times agreed in the Fee Letter.






	10	 	Security and Application of Moneys






	 	10.1	 	Security Documents As security for the payment of the Indebtedness, the
Borrowers shall execute and deliver to the Security Agent or cause to be executed and
delivered to the Security Agent (in the case of Clause 10.1.3, at any time during the
Facility Period, to be determined by the Security Agent) the following documents in
such forms and containing such terms and conditions as the Security Agent shall
require:






	 	10.1.1	 	first priority deeds of assignment of the Building Contracts and the Refund
Guarantees;
	 
	 	10.1.2	 	a guarantee and indemnity from the Corporate Guarantor;
	 
	 	10.1.3	 	first priority pledges of all the issued shares of the Borrowers;




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	 	10.1.4	 	first preferred or statutory mortgages over the Vessels together with
collateral deeds of covenants, if applicable;
	 
	 	10.1.5	 	first priority deeds of assignment of the Insurances, Earnings, Charters, and
Requisition Compensation of the Vessels;
	 
	 	10.1.6	 	first priority deeds of charge over the Accounts and all amounts from time to
time standing to the credit of the Accounts; and
	 
	 	10.1.7	 	a guarantee and indemnity from each of the Personal Guarantors;






	 	10.2	 	Accounts The Borrowers shall maintain the Accounts with the Account Holder
for the duration of the Facility Period free of Encumbrances and rights of set off
other than those created by or under the Finance Documents.
	 
	 	10.3	 	Minimum Liquidity Reserve Each Borrower shall, at all times during the
Facility Period, maintain at its Earnings Account the Minimum Liquidity Reserve.
	 
	 	10.4	 	Earnings The Borrowers shall procure that all Earnings and any Requisition
Compensation are credited to the relevant Earnings Account.
	 
	 	10.5	 	Transfers to Retention Account In respect of each Vessel Loan, on the day in
each calendar month during the Facility Period which numerically corresponds to the
relevant first Drawdown Date (or, if there is no such day, on the last Business Day of
that month), the Borrowers shall procure that there is transferred from the Earnings
Accounts or either of them to the Retention Account:






	 	10.5.1	 	one-third of the amount of the Repayment Installment in respect of the
relevant Vessel Loan due on the next Repayment Date for the relevant Vessel
Loan (which shall be deemed to be the day for that transfer if that day is a
Repayment Date); and
	 
	 	10.5.2	 	the amount of interest due on the next Interest Payment Date in respect of
the relevant Vessel Loan (which shall be deemed to be the day for that transfer
if that day is an Interest Payment Date) divided by the number of months
between the last Interest Payment Date for that Vessel Loan (or, if none, the
first Drawdown Date for that Vessel Loan) and that next Interest Payment Date,




32









 












	 	 	 	and the Borrowers irrevocably authorise the Agent to instruct the Account Holder to
make those transfers.
	 
	 	10.6	 	Additional payments to Retention Account If for any reason the amount
standing to the credit of the relevant Earnings Accounts is insufficient to make any
transfer to the Retention Account required by Clause 10.5 (Transfers to Retention
Account), the Borrowers shall, without demand, procure that there is credited to the
Retention Account, on the date on which the relevant amount would have been transferred
from the Earnings Accounts or the relevant one of them, an amount equal to the amount
of the shortfall.
	 
	 	10.7	 	Application of Retention Account The Borrowers shall procure that there is
transferred from the Retention Account to the Agent:






	 	10.7.1	 	on each Repayment Date, the amount of the Repayment Installment then due; and
	 
	 	10.7.2	 	on each Interest Payment Date, the amount of interest then due,






	 	 	 	and the Borrowers irrevocably authorises the Agent to instruct the Account Holder to
make those transfers.
	 
	 	10.8	 	Borrowers’ obligations not affected If for any reason the amount standing to
the credit of the Retention Account is insufficient to pay any Repayment Installment or
to make any payment of interest when due, the Borrowers’ obligation to pay that
Repayment Installment or to make that payment of interest shall not be affected.
	 
	 	10.9	 	Restriction on withdrawal During the Facility Period no sum may be withdrawn
from any of the Accounts (except in accordance with this Clause 10) without the prior
written consent of the Agent.
	 
	 	10.10	 	Access to information The Borrowers agree that the Agent (and its nominees)
may from time to time during the Facility Period review the records held by the Account
Holder (whether in written or electronic form) in relation to the Accounts, and
irrevocably waive any right of confidentiality which may exist in relation to those
records.
	 
	 	10.11	 	Statements Without prejudice to the rights of the Agent under Clause 10.10
(Access to information), the Borrowers will procure that the Account Holder provides to
the




33









 












	 	 	 	Agent, no less frequently than each calendar month during the Facility Period,
written statements of account showing all entries made to the credit and debit of
the Accounts during the immediately preceding calendar month.
	 
	 	10.12	 	Application after acceleration From and after the giving of notice to the
Borrowers by the Agent under Clause 13.2 (Acceleration), the Borrowers shall procure
that all sums from time to time standing to the credit of any of the Accounts are
immediately transferred to the Agent for application in accordance with Clause 10.13
(General application of moneys) and the Borrowers irrevocably authorise the Agent to
make those transfers and to instruct the Account Holder to make those transfers.
	 
	 	10.13	 	General application of moneys Each Borrower, subject to Clause 10.14
(Application of moneys on sale or Total Loss), irrevocably authorises the Agent and the
Security Agent to apply all sums which either of them may receive:






	 	10.13.1	 	pursuant to a sale or other disposition of its Vessel or any right, title or
interest in its Vessel; or
	 
	 	10.13.2	 	by way of payment of any sum in respect of the Insurances, Earnings, Charter
or Requisition Compensation of its Vessel; or
	 
	 	10.13.3	 	by way of transfer of any sum from any of the Accounts; or
	 
	 	10.13.4	 	otherwise arising under or in connection with any Security Document,






	 	 	 	in or towards satisfaction, or by way of retention on account, of the Indebtedness,
in such manner as the Agent may determine.





	 	10.14	 	Application of moneys on sale or Total Loss Each Borrower irrevocably
authorises the Agent and the Security Agent to apply all sums which any of them may
receive pursuant to a sale by that Borrower of its Vessel or a Total Loss of its Vessel
in or towards satisfaction of the prepayment due and payable by virtue of that sale or
Total Loss under Clause 6.3 (Mandatory prepayment on sale or Total Loss), but the
Borrowers’ obligation to make that prepayment shall not be affected if those sums are
insufficient to satisfy that obligation.
	 
	 	10.15	 	Additional security If at any time after the relevant Delivery Date the
aggregate of the Market Value of a Vessel and the value of any additional security
(such value to




34









 












	 	 	 	be the face amount of the deposit (in the case of cash), determined conclusively by
appropriate advisers appointed by the Agent (in the case of other charged assets),
and determined by the Agent in its discretion (in all other cases)) for the time
being provided to the Security Agent under this Clause 10.15 is less than (a) one
hundred and ten per cent (110%) of the applicable Vessel Loan from the relevant
Delivery Date until the fifth anniversary of that Delivery Date and (b) one hundred
and twenty per cent (120%) of the applicable Vessel Loan from the fifth anniversary
of the relevant Delivery Date until the end of the Facility Period, the Borrowers
shall, within thirty (30) days of the Agent’s request, at the Borrowers’ option:






	 	10.15.1	 	pay to the Security Agent or to its nominee a cash deposit in the amount of
the shortfall to be secured in favour of the Security Agent as additional
security for the payment of the Indebtedness; or
	 
	 	10.15.2	 	give to the Security Agent other additional security in amount and form
acceptable to the Security Agent in its discretion; or
	 
	 	10.15.3	 	prepay the amount of the Indebtedness in respect of that Vessel Loan which
will ensure that the aggregate of the Market Value of the Vessel and the value
of any such additional security in respect of that Vessel is not less than (a)
one hundred and ten per cent (110%) of the applicable Vessel Loan from the
relevant Delivery Date until the fifth anniversary of that Delivery Date and
(b) one hundred and twenty per cent (120%) of the applicable Vessel Loan from
the fifth anniversary of the relevant Delivery Date until the end of the
Facility Period.






	 	 	 	Clauses 5.3 (Reborrowing), 6.2.3 (Voluntary prepayment of a Vessel Loan) and 6.4
(Restrictions) shall apply, mutatis mutandis, to any prepayment made under this
Clause 10.15 and the value of any additional security provided shall be determined
as stated above.






	11	 	Representations






	 	11.1	 	Representations The Borrowers make the representations and warranties set out
in this Clause 11.1 to each Finance Party on the date of this Agreement.






	 	11.1.1	 	Status Each Security Party (which is not an individual) is a corporation,
duly incorporated and validly existing under the law of its jurisdiction of




35









 












	 	 	 	incorporation and has the power to own its assets and carry on its business
as it is being conducted.
	 
	 	11.1.2	 	Binding obligations The obligations expressed to be assumed by each
Security Party in each Finance Document to which it is a party are legal,
valid, binding and enforceable obligations.
	 
	 	11.1.3	 	Non-conflict with other obligations The entry into and performance by each
Security Party of, and the transactions contemplated by, the Finance Documents
do not conflict with:






	 	(a)	 	any law or regulation applicable to that
Security Party;
	 
	 	(b)	 	the constitutional documents of that Security
Party; or
	 
	 	(c)	 	any document binding on that Security Party or
any of its assets,






	 	 	 	and in borrowing the Loan, the Borrowers are acting
for their own account.
	 
	 	11.1.4	 	Power and authority Each Security Party has the power to enter into,
perform and deliver, and has taken all necessary action to authorise its entry
into, performance and delivery of, the Finance Documents to which it is a party
and the transactions contemplated by those Finance Documents.
	 
	 	11.1.5	 	Validity and admissibility in evidence All consents, licences, approvals,
authorisations, filings and registrations required or desirable:






	 	(a)	 	to enable each Security Party lawfully to enter
into, exercise its rights and comply with its obligations in the
Finance Documents to which it is a party or to enable each Finance
Party to enforce and exercise all its rights under the Finance
Documents; and
	 
	 	(b)	 	to make the Finance Documents to which any
Security Party is a party admissible in evidence in its jurisdiction of
incorporation,






	 	 	 	have been obtained or effected and are in full force and effect, with the
exception only of the registrations referred to in Parts II and IV of
Schedule 2 (Conditions subsequent and Delivery conditions subsequent).




36









 












	 	11.1.6	 	Governing law and enforcement The choice of English law as the governing
law of any Finance Document expressed to be governed by English law will be
recognised and enforced in the jurisdiction of incorporation of each relevant
Security Party, and any judgment obtained in England in relation to any such
Finance Document will be recognised and enforced in the jurisdiction of
incorporation of each relevant Security Party.
	 
	 	11.1.7	 	Deduction of Tax No Security Party is required under the law of its
jurisdiction of incorporation to make any deduction for or on account of Tax
from any payment it may make under any Finance Document.
	 
	 	11.1.8	 	No filing or stamp taxes Under the law of jurisdiction of incorporation of
each relevant Security Party it is not necessary that the Finance Documents be
filed, recorded or enrolled with any court or other authority in that
jurisdiction or that any stamp, registration or similar tax be paid on or in
relation to the Finance Documents or the transactions contemplated by the
Finance Documents.
	 
	 	11.1.9	 	No default No Event of Default is continuing or might reasonably be
expected to result from the advance of any Drawing.
	 
	 	11.1.10	 	No misleading information Any factual information provided by any Security
Party to any Finance Party was true and accurate in all material respects as at
the date it was provided.
	 
	 	11.1.11	 	Pari passu ranking The payment obligations of each Security Party under
the Finance Documents to which it is a party rank at least pari passu with the
claims of all its other unsecured and unsubordinated creditors, except for
obligations mandatorily preferred by law applying to companies generally.
	 
	 	11.1.12	 	No proceedings pending or threatened No litigation, arbitration or
administrative proceedings of or before any court, arbitral body or agency have
been started or (to the best of the Borrowers’ knowledge threatened) which, if
adversely determined, might reasonably be expected to have a materially adverse
effect on the business, assets, financial condition or credit worthiness of any
Security Party.






37











 






	 	11.1.13	 	Disclosure of material facts The Borrowers are not aware of any
material facts or circumstances which have not been disclosed to the Agent and
which might, if disclosed, have adversely affected the decision of a person
considering whether or not to make loan facilities of the nature contemplated
by this Agreement available to the Borrowers.
	 
	 	11.1.14	 	No established place of business in the UK or US No Security Party has an
established place of business in the United Kingdom or the United States of
America.
	 
	 	11.1.15	 	Completeness of Relevant Documents The copies of any Relevant Documents
provided or to be provided by the Borrowers to the Agent in accordance with
Clause 3 (Conditions of Utilisation) are, or will be, true and accurate copies
of the originals and represent, or will represent, the full agreement between
the parties to those Relevant Documents in relation to the subject matter of
those Relevant Documents and there are no commissions, rebates, premiums or
other payments due or to become due in connection with the subject matter of
those Relevant Documents other than in the ordinary course of business or as
disclosed to, and approved in writing by, the Agent.






	 	11.2	 	Repetition Each representation and warranty in Clause 11.1 (Representations)
is deemed to be repeated by the Borrowers by reference to the facts and circumstances
then existing on the date of each Drawdown Notice and the first day of each Interest
Period.






	12	 	Undertakings and Covenants
	 
	 	 	The undertakings and covenants in this Clause 12 remain in force for the duration of the
Facility Period.






	 	12.1	 	Information Undertakings






	 	12.1.1	 	Financial Statements The Borrowers shall supply to the Agent and shall
procure that the Corporate Guarantor supplies to the Agent as soon as the same
become available, but in any event within 180 days after the end of each of its
financial years, each Borrower’s and the Corporate Guarantor’s audited
consolidated financial and cash flow statements for that financial




38









 












	 	 	 	year, together with a Compliance Certificate, signed by two directors of the
relevant Borrower and the Corporate Guarantor, setting out (in reasonable
detail) computations as to compliance with Clause 12.2 (Financial covenants)
as at the date as at which those financial and cash flow statements were
drawn up.
	 
	 	12.1.2	 	Requirements as to Financial Statements Each set of Financial Statements
delivered by the Borrowers under Clause 12.1.1 (Financial Statements):






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






	 	(i)	 	a description of any change
necessary for those Financial Statements to reflect the GAAP,
accounting practices and reference periods upon which the
Original Financial Statements were prepared; and
	 
	 	(ii)	 	sufficient information, in form
and substance as may be reasonably required by the Agent, to
enable the Agent to make an accurate comparison between the
financial position indicated in those Financial Statements and
that indicated in the Original Financial Statements.






	 	12.1.3	 	Interim Financial Statements The Borrowers shall supply to the Agent and
shall procure that the Corporate Guarantor supplies to the Agent as soon as the
same become available, but in any event within 90 days after the end of each
half-year during each of its financial half-years, each





39









 











	 	 	 	Borrower’s and the Corporate Guarantor’s management prepared half-years
management accounts for that half-year.
	 
	 	12.1.4	 	Information: miscellaneous The Borrowers shall supply and shall procure
that the Corporate Guarantor shall also supply to the Agent:






	 	(a)	 	all documents dispatched by a Borrower to its
shareholders (or any class of them) or its creditors generally at the
same time as they are dispatched;
	 
	 	(b)	 	promptly upon becoming aware of them, details
of any litigation, arbitration or administrative proceedings which are
current, threatened or pending against any Security Party, and which
might, if adversely determined, have a materially adverse effect on the
business, assets, financial condition or credit worthiness of that
Security Party; and
	 
	 	(c)	 	promptly, such further information regarding
the financial condition, business and operations of any Security Party
as the Agent may reasonably request including, without limitation, cash
flow analyses and details of the operating costs of a Vessel.






	 	12.1.5	 	Notification of default






	 	(a)	 	The Borrowers shall notify the Agent of any
Default (and the steps, if any, being taken to remedy it) promptly upon
becoming aware of its occurrence.
	 
	 	(b)	 	Promptly upon a request by the Agent, each
Borrower shall supply to the Agent a certificate signed by two of its
directors or senior officers on its behalf certifying that no Default
is continuing (or if a Default is continuing, specifying the Default
and the steps, if any, being taken to remedy it).






	 	12.1.6	 	“Know your customer” checks If:






	 	(a)	 	the introduction of or any change in (or in the
interpretation, administration or application of) any law or regulation
made after the date of this Agreement;




40









 












	 	(b)	 	any change in the status of a Borrower after
the date of this Agreement; or
	 
	 	(c)	 	a proposed assignment or transfer by a Lender
of any of its rights and obligations under this Agreement to a party
that is not a Lender prior to such assignment or transfer,






	 	 	 	obliges the Agent or any Lender (or, in the case of (c) above, any
prospective new Lender) to comply with “know your customer” or similar
identification procedures in circumstances where the necessary information
is not already available to it, the Borrowers shall promptly upon the
request of the Agent or any Lender supply, or procure the supply of, such
documentation and other evidence as is reasonably requested by the Agent
(for itself or on behalf of any Lender) or any Lender for itself (or, in the
case of (c) above, on behalf of any prospective new Lender) in order for the
Agent or that Lender (or, in the case of (c) above, any prospective new
Lender) to carry out and be satisfied it has complied with all necessary
“know your customer” or other similar checks under all applicable laws and
regulations pursuant to the transactions contemplated in the Finance
Documents.
	 
	 	12.1.7	 	Pledge over the Borrowers’ Shares The Borrowers shall procure the execution
and delivery to the Agent forthwith upon the Agent’s first request in writing
the Shares Pledges and any and all information and documentation collateral
thereto and shall procure that, save for the Shares Pledges, there shall be no
Encumbrances over the security contemplated by the Shares Pledges during the
Facility Period.






	 	12.2	 	Financial covenants






	 	12.2.1	 	The Borrower shall procure that, the Corporate Guarantor shall at all times
during the Facility Period:






	 	(a)	 	maintain Leverage which does not exceed 75%; and
	 
	 	(b)	 	maintain a minimum Market Net Worth of not less
than sixty million Dollars ($60,000,000); and




41









 












	 	(c)	 	maintain Minimum Liquidity at least equal to
five per cent (5%) of the Total Debt.






	 	 	 	The financial covenants contained in this Clause 12.2.1 shall be tested
semi-annually on the basis of the annual or semi-annual Financial Statements
provided under Clause 12.1.1 and Clause 12.1.3 and shall be confirmed in the
relevant Compliance Certificate.
	 
	 	12.2.2	 	The expressions used in Clause 12.2.1 shall be construed in accordance with
GAAP, and for the purposes of this Agreement:
	 
	 	 	 	“Current Assets” means, in respect of the Corporate Guarantor, the
aggregate (as of the date of calculation) of the Corporate Guarantor’s
cash, marketable securities, trade and other receivables realisable within
one year, inventories and prepaid expenses which are to be charged to
income within one year as well as any other assets listed under the
definition of Current Assets on the basis of the annual or semi-annual
Financial Statements provided under Clause 12.1.1 and Clause 12.1.3
	 
	 	 	 	“Debt” means the aggregate (as of the date of calculation) of all
obligations of the Corporate Guarantor then outstanding for the payment or
repayment of money as stated in the Financial Statements then most recently
required to be delivered pursuant to Clause 12.1.1 or Clause 12.1.3
including, without limitation:






	 	(a)	 	any amounts payable by the Corporate Guarantor
under leases or similar arrangements over their respective periods;
	 
	 	(b)	 	any credit to the Corporate Guarantor from a
supplier of goods or under any installment purchase or other similar
arrangement;
	 
	 	(c)	 	the aggregate amount then outstanding of
liabilities and obligations of third parties to the extent that they
are guaranteed by the Corporate Guarantor;
	 
	 	(d)	 	any contingent liabilities (including any taxes
or other payments under dispute or arbitration) which have been or,
under GAAP, should be recorded in the notes to the Corporate
Guarantor’s Financial Statements;




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	 	(e)	 	any deferred tax liabilities; and
	 
	 	(f)	 	any and all overdraft facilities.






	 	 	 	“Fleet Vessels” means the Vessels and any other vessel from time to time
directly or indirectly owned by the Corporate Guarantor and/or a Subsidiary
of the Corporate Guarantor (each a “Fleet Vessel”).
	 
	 	 	 	“Leverage” means the ratio of Total Debt divided by the Total Assets.
	 
	 	 	 	“Market Net Worth” means the Total Assets less Total Debt.
	 
	 	 	 	“Minimum Liquidity” means the sum of cash and cash equivalents excluding
restricted cash, as such term is defined in the applicable Financial
Statements.
	 
	 	 	 	“Subsidiaries” means any company or entity directly or indirectly
controlled by such person, and for this purpose “control” means either the
ownership of more than fifty per cent (50%) of the voting share capital (or
equivalent rights of ownership) of such company or entity or the power to
direct its policies and management, whether by contract or otherwise and
“Subsidiary” means any one of them.
	 
	 	 	 	“Total Assets” means the aggregate of: (a) the Current Assets, (b) the
aggregate of the relevant yard installments advanced to the relevant
builder(s) for the Fleet Vessels under construction and (c) the remaining
Fleet Vessels adjusted for their Market Value.
	 
	 	 	 	“Total Debt” means the aggregate (as of the date of calculation) of all
those component parts of the Debt which fall due after the respective dates
of the agreements providing for such component parts of the Debt (including
for the avoidance of doubt the current portion of such Debt) as stated in
the Financial Statements then most recently required to be delivered
pursuant to Clause 12.1.1 or Clause 12.1.3.




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	 	12.3	 	General undertakings






	 	12.3.1	 	Authorisations The Borrowers shall promptly:






	 	(a)	 	obtain, comply with and do all that is
necessary to maintain in full force and effect; and
	 
	 	(b)	 	supply certified copies to the Agent of,






	 	 	 	any consent, licence, approval or authorisation required under any law or
regulation to enable each Security Party to perform its obligations under
the Finance Documents to which it is a party and to ensure the legality,
validity, enforceability or admissibility in evidence in the jurisdiction of
incorporation of each relevant Security Party of any Finance Document.
	 
	 	12.3.2	 	Compliance with laws Each Borrower shall comply in all respects with all
laws to which it may be subject, if failure so to comply would materially
impair its ability to perform its obligations under the Finance Documents.
	 
	 	12.3.3	 	Conduct of business Each Borrower shall carry on and conduct its business
in a proper and efficient manner, file all requisite tax returns and pay all
tax which becomes due and payable (except where contested in good faith).
	 
	 	12.3.4	 	Evidence of good standing The Borrowers will from time to time if requested
by the Agent provide the Agent with evidence in form and substance satisfactory
to the Agent that the Security Parties and all corporate shareholders of any
Security Party remain in good standing.
	 
	 	12.3.5	 	Borrowers’ ownership Subject only to the transfer contemplated by Clause
13.1.24, the Borrowers will procure that each of the Borrowers remain one
hundred per cent (100%), directly or indirectly, owned by the Corporate
Guarantor.
	 
	 	12.3.6	 	Subordination Each Borrower undertakes that all shareholder’s loans made to
the Borrowers and all claims of the Corporate Guarantor against the Borrowers
and any sums owed to the Managers are fully subordinated to the Indebtedness.




44









 












	 	12.3.7	 	Negative pledge and no disposals Neither Borrower shall without the prior
written consent of the Agent create nor permit to subsist any Encumbrance or
other third party rights over any of its present or future assets or
undertaking nor dispose of any those assets or of all or part of that
undertaking.
	 
	 	12.3.8	 	Merger Neither Borrower shall without the prior written consent of the
Agent enter into any amalgamation, demerger, merger or corporate
reconstruction.
	 
	 	12.3.9	 	Change of business Neither Borrower shall without the prior written consent
of the Agent make any substantial change to the general nature of its business
from that carried on at the date of this Agreement.
	 
	 	12.3.10	 	No other business Neither Borrower shall without the prior written consent
of the Agent engage in any business other than the ownership, operation,
chartering and management of its Vessel.
	 
	 	12.3.11	 	No place of business in UK or US Neither Borrower shall have an
established place of business in the United Kingdom or the United States of
America at any time during the Facility Period.
	 
	 	12.3.12	 	No borrowings Neither Borrower shall without the prior written consent of
the Agent borrow any money (except for the Loan and unsecured Financial
Indebtedness subordinated to the Loan) nor incur any obligations under leases.
	 
	 	12.3.13	 	No substantial liabilities Except in the ordinary course of business,
neither Borrower shall without the prior written consent of the Agent incur any
liability to any third party which is in the Agent’s opinion of a substantial
nature.
	 
	 	12.3.14	 	No loans or other financial commitments Neither Borrower shall without the
prior written consent of the Agent make any loan nor enter into any guarantee
or indemnity or otherwise voluntarily assume any actual or contingent liability
in respect of any obligation of any other person except for loans made in the
ordinary course of business in connection with the chartering, operation or
repair of its Vessel, not exceeding the Threshold





45









 











	 	 	 	Amount. Loans made by a Borrower in the ordinary course of business in
connection with the chartering, operation or repair of its Vessel exceeding
the Threshold Amount, require the prior written consent of the Agent.
	 
	 	12.3.15	 	No dividends Neither Borrower shall without the prior written consent of
the Agent (such consent not to be unreasonably withheld) pay any dividends or
make any other distributions of a revenue or capital nature to shareholders or
issue any new shares.
	 
	 	12.3.16	 	Inspection of records Each Borrower will permit the inspection of its
financial records and accounts from time to time by the Agent or its nominee.
	 
	 	12.3.17	 	No change in Relevant Documents The Borrowers shall procure that, without
the prior written consent of the Agent, there shall be no termination of,
alteration to, or waiver of any term of, any of the Relevant Documents which
are not Finance Documents.
	 
	 	12.3.18	 	No change in ownership or control of a Borrower or Corporate Guarantor Save
for the transfer contemplated by Clause 13.1.24, neither Borrower shall, and
shall procure that the Corporate Guarantor shall not, permit any change in its
beneficial ownership and control from that advised to the Agent at the date of
this Agreement.
	 
	 	12.3.19	 	No transactions The Borrowers shall not, and shall procure that the
Corporate Guarantor shall not, enter into any transactions with any other
affiliated or associated company without the prior written consent of the
Agent, unless it is reasonably incurred in the normal course of its business.
	 
	 	12.3.20	 	No security interest Each Borrower shall not, and shall procure that the
Corporate Guarantor shall not, create any form of security interest or quasi
security interest over any of its assets or revenue without the prior written
consent of the Agent unless it is reasonably incurred in the normal course of
its business.
	 
	 	12.3.21	 	Evidence of payment of Equity Portion The Borrowers shall provide to the
Agent evidence, in a form and substance acceptable to the Agent in its
discretion, that, any Equity Portion has been paid to the Agent one day prior
to the Drawdown Date for remittance to the Builder with the relevant portion of
the Loan and that it is fully subordinated to the Loan.




46









 












	 	12.3.22	 	Loans Administration Form The Borrowers shall provide a completed loans
administration form (as provided by the Agent and substantially in the form set
out in Schedule 7) which, inter alia, shall provide the Agent with the list of
authorised persons (“Authorised Persons”) who, on behalf of the Security
Parties, may make any information request or communicate generally with the
Agent in relation to the ongoing administration of the Loan by the Agent
throughout the Facility Period. The Authorised Persons shall also be the point
of first contact with the Security Parties for the Agent in relation to the
administration of the Loan. The list of Authorised Persons may only be amended
and/or varied by an Authorised Person or Director of the relevant Security
Party.






	 	12.4	 	Vessel undertakings






	 	12.4.1	 	No sale of Vessel Neither Borrower shall sell or otherwise dispose of its
Vessel or any shares in its Vessel nor agree to do so without the prior written
consent of the Agent, save as provided in the Charter, pursuant to Clauses 3.1
and 3.4 evidencing the Minimum Charter Requirements.
	 
	 	12.4.2	 	No chartering after Event of Default Following the occurrence and during
the continuation of an Event of Default neither Borrower shall without the
prior written consent of the Agent let its Vessel on charter or renew or extend
any charter or other contract of employment of its Vessel (nor agree to do so).
	 
	 	12.4.3	 	No change in management Each Borrower shall procure that, without the prior
written consent of the Agent, there shall be no termination of, alteration to,
or waiver of any term of, the Management Agreement in respect of its Vessel and
neither Borrower shall without the prior written consent of the Agent permit
the Managers to sub-contract or delegate the commercial or technical management
of its Vessel to any third party.
	 
	 	12.4.4	 	Registration of Vessel Each Borrower undertakes to register and maintain
the registration of its Vessel under an Approved Flag for the duration of the
Facility Period unless the Agent agrees otherwise in writing.
	 
	 	12.4.5	 	Evidence of current COFR Each Borrower will, if and for so long as its
Vessel trades in the United States of America and Exclusive Economic Zone





47









 











	 	 	 	(as defined in the United States Oil Pollution Act 1990), obtain, retain and
provide the Agent with a copy of, a valid Certificate of Financial
Responsibility for its Vessel under that Act and will comply strictly with
the requirements of that Act.






	 	12.4.6	 	ISM Code compliance Each Borrower will:






	 	(a)	 	procure that its Vessel remains for the
duration of the Facility Period subject to a SMS;
	 
	 	(b)	 	maintain a valid and current SMC for its Vessel
throughout the Facility Period and provide a copy to the Agent;
	 
	 	(c)	 	procure that the ISM Company maintains a valid
and current DOC throughout the Facility Period and provide a copy to
the Agent; and
	 
	 	(d)	 	immediately notify the Agent in writing of any
actual or threatened withdrawal, suspension, cancellation or
modification of the SMC of its Vessel or of the DOC of the ISM Company.






	 	12.4.7	 	ISPS Code compliance Each Borrower will:






	 	(a)	 	for the duration of the Facility Period comply
with the ISPS Code in relation to its Vessel and procure that its
Vessel and the ISPS Company comply with the ISPS Code;
	 
	 	(b)	 	maintain a valid and current ISSC for its
Vessel throughout the Facility Period and provide a copy to the Agent;
and
	 
	 	(c)	 	immediately notify the Agent in writing of any
actual or threatened withdrawal, suspension, cancellation or
modification of the ISSC of its Vessel.






	 	12.4.8	 	Annex VI compliance Each Borrower will:






	 	(a)	 	for the duration of the Facility Period comply
with Annex VI in relation to its Vessel and procure that its Vessel’s
master and crew are familiar with, and that its Vessel complies with,
Annex VI;




48









 












	 	(b)	 	maintain a valid and current IAPPC for its
Vessel throughout the Facility Period and provide a copy to the Agent;
and
	 
	 	(c)	 	immediately notify the Agent in writing of any
actual or threatened withdrawal, suspension, cancellation or
modification of the IAPPC of its Vessel.






	 	12.4.9	 	Physical inspection The Agent shall be entitled to physically inspect each
Vessel, and the relevant Borrower shall bear the cost of such inspection not
more than once every calendar year, provided that the Vessel in question is
found to be in satisfactory condition according to the reasonable opinion of
the Agent. If the Vessel in question is not found to be in satisfactory
condition according to the reasonable opinion of the Agent, or there is an
Event of Default which is continuing, then the relevant Borrower shall bear the
cost of any further inspection of that Vessel at any time.
	 
	 	12.4.10	 	Minimum Charter Requirements Each Borrower shall comply with the Minimum
Charter Requirements for the duration of the Facility Period and the Charter
evidencing such Minimum Charter Requirements shall be in force prior to the
first Drawdown Date.






	13	 	Events of Default






	 	13.1	 	Events of Default Each of the events or circumstances set out in this Clause
13.1 is an Event of Default.






	 	13.1.1	 	Non-payment The Borrowers do not pay on the due date any amount payable by
them under a Finance Document at the place at and in the currency in which it
is expressed to be payable.
	 
	 	13.1.2	 	Other obligations A Security Party or any other person (except a Finance
Party) does not comply with any provision of any of the Relevant Documents to
which that Security Party or person is a party (other than as referred to in
Clause 13.1.1 (Non-payment)).
	 
	 	 	 	No Event of Default under this Clause 13.1.2 will occur if the failure to
comply is capable of remedy and is remedied within ten (10) Business Days




49









 












	 	 	 	of the Agent giving notice to the Borrowers or the Borrowers becoming aware
of the failure to comply.
	 
	 	13.1.3	 	Misrepresentation Any representation, warranty or statement made or deemed
to be repeated by a Security Party in any Finance Document or any other
document delivered by or on behalf of a Security Party under or in connection
with any Finance Document is or proves to have been incorrect or misleading in
any material respect when made or deemed to be repeated.
	 
	 	13.1.4	 	Cross default Any Financial Indebtedness of a Security Party:






	 	(a)	 	is not paid when due or within any originally
applicable grace period; or
	 
	 	(b)	 	is declared to be, or otherwise becomes, due
and payable before its specified maturity as a result of an event of
default (however described); or
	 
	 	(c)	 	is capable of being declared by a creditor to
be due and payable before its specified maturity as a result of such an
event.






	 	13.1.5	 	Insolvency






	 	(a)	 	A Security Party is unable or admits inability
to pay its debts as they fall due, suspends making payments on any of
its debts or, by reason of actual or anticipated financial
difficulties, commences negotiations with one or more of its creditors
with a view to rescheduling any of its Financial Indebtedness.
	 
	 	(b)	 	The value of the assets of a Security Party is
less than its liabilities (taking into account contingent and
prospective liabilities).
	 
	 	(c)	 	A moratorium is declared in respect of any
Financial Indebtedness of a Security Party.






	 	13.1.6	 	Insolvency proceedings Any corporate action, legal proceedings or other
procedure or step is taken for:




50









 












	 	(a)	 	the suspension of payments, a moratorium of any
Financial Indebtedness, winding-up, dissolution, administration,
bankruptcy or reorganisation (by way of voluntary arrangement, scheme
of arrangement or otherwise) of a Security Party;
	 
	 	(b)	 	a composition, compromise, assignment or
arrangement with any creditor of a Security Party;
	 
	 	(c)	 	the appointment of a liquidator, receiver,
administrative receiver, administrator, compulsory manager, or trustee
or other similar officer in respect of any Security Party or any of its
assets; or
	 
	 	(d)	 	enforcement of any Encumbrance over any assets
of a Security Party,






	 	 	 	or any analogous procedure or step is taken in any
jurisdiction.






	 	13.1.7	 	Creditors’ process Any expropriation, attachment, sequestration, distress
or execution affects any asset or assets of a Security Party.
	 
	 	13.1.8	 	Change in ownership or control of a Borrower There is any change in the
beneficial ownership or control of a Borrower from that advised to the Agent by
the Borrowers at the date of this Agreement.
	 
	 	13.1.9	 	Repudiation A Security Party or any other person (except a Finance Party)
repudiates any of the Relevant Documents to which that Security Party or person
is a party or evidences an intention to do so.
	 
	 	13.1.10	 	Impossibility or illegality Any event occurs which would, or would with
the passage of time, render performance of any of the Relevant Documents by a
Security Party or any other party to any such document impossible, unlawful or
unenforceable by a Finance Party or a Security Party.
	 
	 	13.1.11	 	Conditions subsequent Any of the conditions referred to in Clause 3.4
(Conditions subsequent) and/or Clause 3.6 (Delivery Conditions Subsequent) is
not satisfied within the time reasonably required by the Agent.
	 
	 	13.1.12	 	Revocation or modification of authorisation Any consent, licence,
approval, authorisation, filing, registration or other requirement of any





51









 











	 	 	 	governmental, judicial or other public body or authority which is now, or
which at any time during the Facility Period becomes, necessary to enable a
Security Party or any other person (except a Finance Party) to comply with
any of its obligations under any of the Relevant Documents is not obtained,
is revoked, suspended, withdrawn or withheld, or is modified in a manner
which the Agent considers is, or may be, prejudicial to the interests of a
Finance Party, or ceases to remain in full force and effect.
	 
	 	13.1.13	 	Curtailment of business A Security Party ceases, or threatens to cease, to
carry on all or a substantial part of its business or, as a result of
intervention by or under the authority of any government, the business of a
Security Party is wholly or partially curtailed or suspended, or all or a
substantial part of the assets or undertaking of a Security Party is seized,
nationalised, expropriated or compulsorily acquired.
	 
	 	13.1.14	 	Reduction of capital A Security Party reduces its authorised or issued or
subscribed capital.
	 
	 	13.1.15	 	Loss of Vessel A Vessel suffers a Total Loss or is otherwise destroyed,
abandoned, confiscated, forfeited or condemned as prize, or a similar event
occurs in relation to any other vessel which may from time to time be mortgaged
to the Security Agent as security for the payment of all or any part of the
Indebtedness, except that a Total Loss, or event similar to a Total Loss in
relation to any other vessel, shall not be an Event of Default if:






	 	(a)	 	that Vessel or other vessel is insured in
accordance with the Security Documents; and
	 
	 	(b)	 	no insurer has refused to meet or has disputed
the claim for Total Loss and it is not apparent to the Agent in its
discretion that any such refusal or dispute is likely to occur; and
	 
	 	(c)	 	payment of all insurance proceeds in respect of
the Total Loss is made in full to the Security Agent within one hundred
and eighty (180) days of the occurrence of the casualty giving rise to
the Total Loss in question or such longer period as the Agent may in
its discretion agree.




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	 	13.1.16	 	Challenge to registration The registration of a Vessel or a Mortgage is
contested or becomes void or voidable or liable to cancellation or termination,
or the validity or priority of a Mortgage is contested.
	 
	 	13.1.17	 	War The country of registration of a Vessel becomes involved in war
(whether or not declared) or civil war or is occupied by any other power and
the Agent in its discretion considers that, as a result, the security conferred
by any of the Security Documents is materially prejudiced.
	 
	 	13.1.18	 	Notice of termination The Corporate Guarantor and/or each of the Personal
Guarantors gives notice to the Security Agent to terminate its respective
obligations under the Corporate Guarantee and/or a Personal Guarantee.
	 
	 	13.1.19	 	Death of Personal Guarantor A Personal Guarantor dies or becomes of
unsound mind and the Borrowers do not procure that, within twenty-one (21) days
of being required to do so by the Agent, the Agent is provided with a
replacement guarantee and indemnity and/or other additional security for the
payment of the Indebtedness in form and substance acceptable to the Agent.
	 
	 	13.1.20	 	Builder and Refund Guarantor Before the Delivery Date, any of the
circumstances set out in Clause 13.1.5 or 13.1.6 occurs in relation to the
Builder or the Refund Guarantor.
	 
	 	13.1.21	 	No issue of a Refund Guarantee The Borrowers do not deliver or cause to be
delivered to the Agent a Refund Guarantee which is to the Agent’s satisfaction.
	 
	 	13.1.22	 	Building Contract and Refund Guarantees At any time during the Facility
Period the Building Contract or any of the Refund Guarantees is terminated,
revoked, cancelled or repudiated or otherwise ceases to remain in full force
and effect.
	 
	 	13.1.23	 	Material adverse change Any event or series of events occurs which, in the
opinion of the Agent, is likely to have a materially adverse effect on the
business, assets, financial condition or credit worthiness of a Security Party.




53









 












	 	13.1.24	 	Non transfer of beneficial ownership The 100% beneficial ownership of a
Borrower is not transferred from the Corporate Guarantor to Newlead Holdings
Ltd. of Bermuda the latest by 31 October 2010.






	 	13.2	 	Acceleration If an Event of Default is continuing the Agent may by notice to
the Borrowers cancel any part of the Maximum Loan Amount not then advanced and:






	 	13.2.1	 	declare that the Loan, together with accrued interest, and all other amounts
accrued or outstanding under the Finance Documents are immediately due and
payable, whereupon they shall become immediately due and payable; and/or
	 
	 	13.2.2	 	declare that the Loan is payable on demand, whereupon it shall immediately
become payable on demand by the Agent.






	14	 	Assignment and Sub-Participation






	 	14.1	 	Lenders’ rights A Lender may, at its own expense, assign any of its rights
under this Agreement or transfer by novation any of its rights and obligations under
this Agreement to any other branch or affiliate of that Lender or to any other bank or
financial institution, and may grant sub-participations in all or any part of its
Commitment.
	 
	 	14.2	 	Borrowers’ co-operation The Borrowers will co-operate fully with a Lender in
connection with any assignment, transfer or sub-participation by that Lender; will
execute and procure the execution of such documents as that Lender may require in that
connection; and irrevocably authorise any Finance Party to disclose to any proposed
assignee, transferee or sub-participant (whether before or after any assignment,
transfer or sub-participation and whether or not any assignment, transfer or
sub-participation shall take place) all information relating to the Security Parties,
the Loan, the Relevant Documents and the Vessels which any Finance Party may in its
discretion consider necessary or desirable.
	 
	 	14.3	 	Rights of assignee Any assignee of a Lender shall (unless limited by the
express terms of the assignment) take the full benefit of every provision of the
Finance Documents benefitting that Lender PROVIDED THAT an assignment will only be
effective on notification by the Agent to that Lender and the assignee that the Agent
is satisfied it has complied with all necessary “Know your customer” or other similar





54









 











	 	 	 	checks under all applicable laws and regulations in relation to the assignment to
the assignee.






	 	14.4	 	Transfer Certificates If a Lender wishes to transfer any of its rights and
obligations under or pursuant to this Agreement, it may do so by delivering to the
Agent a duly completed Transfer Certificate, in which event on the Transfer Date:






	 	14.4.1	 	to the extent that that Lender seeks to transfer its rights and obligations,
the Borrowers (on the one hand) and that Lender (on the other) shall be
released from all further obligations towards the other;
	 
	 	14.4.2	 	the Borrowers (on the one hand) and the transferee (on the other) shall
assume obligations towards the other identical to those released pursuant to
Clause 14.4.1; and
	 
	 	14.4.3	 	the Agent, each of the Lenders and the transferee shall have the same rights
and obligations between themselves as they would have had if the transferee had
been an original party to this Agreement as a Lender






	 	 	 	PROVIDED THAT the Agent shall only be obliged to execute a Transfer Certificate
once:






	 	(a)	 	it is satisfied it has complied with all necessary “know your
customer” or other similar checks under all applicable laws and regulations in
relation to the transfer to the transferee; and
	 
	 	(b)	 	the transferee has paid to the Agent for its own account a
transfer fee of $1,000 Dollars; and
	 
	 	(c)	 	the number of Lenders does not exceed five at any time.






	 	 	 	The Agent shall, as soon as reasonably practicable after it has executed a Transfer
Certificate, send to the Borrowers a copy of that Transfer Certificate.
	 
	 	14.5	 	Finance Documents Unless otherwise expressly provided in any Finance Document
or otherwise expressly agreed between a Lender and any proposed transferee and notified
by that Lender to the Agent on or before the relevant Transfer Date, there shall
automatically be assigned to the transferee with any transfer of a Lender’s rights and
obligations under or pursuant to this Agreement the rights of that





55









 











	 	 	 	Lender under or pursuant to the Finance Documents (other than this Agreement) which
relate to the portion of that Lender’s rights and obligations transferred by the
relevant Transfer Certificate.
	 
	 	14.6	 	No assignment or transfer by the Borrowers No Borrower may assign any of its
rights or transfer any of its rights or obligations under the Finance Documents.






	15	 	The Agent, the Security Agent and the Lenders






	 	15.1	 	Appointment






	 	15.1.1	 	Each Lender appoints the Agent to act as its agent under and in connection
with the Finance Documents and each Lender and the Agent appoints the Security
Agent to act as its security agent for the purpose of the Security Documents.
	 
	 	15.1.2	 	Each Lender authorises the Agent and each Lender and the Agent authorises the
Security Agent to exercise the rights, powers, authorities and discretions
specifically given to the Agent or the Security Agent (as the case may be)
under or in connection with the Finance Documents together with any other
incidental rights, powers, authorities and discretions.
	 
	 	15.1.3	 	Except where the context otherwise requires, references in this Clause 15 to
the “Agent” shall mean the Agent and the Security Agent individually and
collectively.






	 	15.2	 	Authority Each Lender irrevocably authorises the Agent (subject to Clauses
15.4 (Limitations on authority) and 15.18 (Instructions)):






	 	15.2.1	 	to execute any Finance Document (other than this Agreement) on its behalf;
	 
	 	15.2.2	 	to collect, receive, release or pay any money on its behalf;
	 
	 	15.2.3	 	acting on the unanimous instructions from time to time of the Lenders to give
or withhold any waivers, consents or approvals under or pursuant to any Finance
Document; and




56









 












	 	15.2.4	 	acting on the unanimous instructions from time to time of the Lenders to
exercise, or refrain from exercising, any rights, powers, authorities or
discretions under or pursuant to any Finance Document.






	 	 	 	The Agent shall have no duties or responsibilities as agent or as security agent
other than those expressly conferred on it by the Finance Documents and shall not be
obliged to act on any instructions from the Lenders or the Majority Lenders if to do
so would, in the opinion of the Agent, be contrary to any provision of the Finance
Documents or to any law, or would expose the Agent to any actual or potential
liability to any third party.
	 
	 	15.3	 	Trust The Security Agent agrees and declares, and each of the other Finance
Parties acknowledges, that, subject to the terms and conditions of this Clause 15.3,
the Security Agent holds the Trust Property on trust for the Finance Parties
absolutely. Each of the other Finance Parties agrees that the obligations, rights and
benefits vested in the Security Agent shall be performed and exercised in accordance
with this Clause 15.3. The Security Agent shall have the benefit of all of the
provisions of this Agreement benefiting it in its capacity as security agent for the
Finance Parties, and all the powers and discretions conferred on trustees by the
Trustee Act 1925 (to the extent not inconsistent with this Agreement). In addition:






	 	15.3.1	 	the Security Agent and any attorney, agent or delegate of the Security Agent
may indemnify itself or himself out of the Trust Property against all
liabilities, costs, fees, damages, charges, losses and expenses sustained or
incurred by it or him in relation to the taking or holding of any of the Trust
Property or in connection with the exercise or purported exercise of the
rights, trusts, powers and discretions vested in the Security Agent or any
other such person by or pursuant to the Security Documents or in respect of
anything else done or omitted to be done in any way relating to the Security
Documents;
	 
	 	15.3.2	 	the other Finance Parties acknowledge that the Security Agent shall be under
no obligation to insure any property nor to require any other person to insure
any property and shall not be responsible for any loss which may be suffered by
any person as a result of the lack or insufficiency of any insurance; and




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	 	15.3.3	 	the Finance Parties agree that the perpetuity period applicable to the trusts
declared by this Agreement shall be the period of eighty years from the date of
this Agreement.






	 	 	 	The provisions of Part I of the Trustee Act 2000 shall not apply to
the Security Agent or the Trust Property.
	 
	 	15.4	 	Limitations on authority Except with the prior written consent of all the
Lenders, the Agent shall not be entitled to:






	 	15.4.1	 	release or vary any security given for the Borrowers’ obligations under this
Agreement; nor
	 
	 	15.4.2	 	waive the payment of any sum of money payable by any Security Party under the
Finance Documents; nor
	 
	 	15.4.3	 	change the meaning of the expressions “Majority Lenders” or “Margin”; nor
	 
	 	15.4.4	 	exercise, or refrain from exercising, any right, power, authority or
discretion, or give or withhold any consent, the exercise or giving of which
is, by the terms of this Agreement, expressly reserved to the Lenders; nor
	 
	 	15.4.5	 	extend the due date for the payment of any sum of money payable by any
Security Party under any Finance Document; nor
	 
	 	15.4.6	 	take or refrain from taking any step if the effect of such action or inaction
may lead to the increase of the obligations of a Lender under any Finance
Document; nor
	 
	 	15.4.7	 	agree to change the currency in which any sum is payable under any Finance
Document (other than in accordance with the terms of the relevant Finance
Document); nor
	 
	 	15.4.8	 	agree to amend this Clause 15.4.






	 	15.5	 	Liability Neither the Agent nor any of its directors, officers, employees or
agents shall be liable to the Lenders for anything done or omitted to be done by the
Agent





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	 	 	 	under or in connection with any of the Relevant Documents unless as a result of the
Agent’s gross negligence or wilful misconduct.
	 
	 	15.6	 	Acknowledgement Each Lender acknowledges that:






	 	15.6.1	 	it has not relied on any representation made by the Agent or any of the
Agent’s directors, officers, employees or agents or by any other person acting
or purporting to act on behalf of the Agent to induce it to enter into any
Finance Document;
	 
	 	15.6.2	 	it has made and will continue to make without reliance on the Agent, and
based on such documents and other evidence as it considers appropriate, its own
independent investigation of the financial condition and affairs of the
Security Parties in connection with the making and continuation of the Loan;
	 
	 	15.6.3	 	it has made its own appraisal of the creditworthiness of the Security
Parties; and
	 
	 	15.6.4	 	the Agent shall not have any duty or responsibility at any time to provide it
with any credit or other information relating to any Security Party unless that
information is received by the Agent pursuant to the express terms of a Finance
Document.






	 	 	 	Each Lender agrees that it will not assert nor seek to assert against any director,
officer, employee or agent of the Agent or against any other person acting or
purporting to act on behalf of the Agent any claim which it might have against them
in respect of any of the matters referred to in this Clause 15.6.
	 
	 	15.7	 	Limitations on responsibility The Agent shall have no responsibility to any
Security Party or to any Lender on account of:






	 	15.7.1	 	the failure of a Lender or of any Security Party to perform any of its
obligations under a Finance Document; nor
	 
	 	15.7.2	 	the financial condition of any Security Party; nor
	 
	 	15.7.3	 	the completeness or accuracy of any statements, representations or warranties
made in or pursuant to any Finance Document, or in or pursuant to any




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	 	 	 	document delivered pursuant to or in connection with any Finance Document;
nor
	 
	 	15.7.4	 	the negotiation, execution, effectiveness, genuineness, validity,
enforceability, admissibility in evidence or sufficiency of any Finance
Document or of any document executed or delivered pursuant to or in connection
with any Finance Document.






	 	15.8	 	The Agent’s rights The Agent may:






	 	15.8.1	 	assume that all representations or warranties made or deemed repeated by any
Security Party in or pursuant to any Finance Document are true and complete,
unless, in its capacity as the Agent, it has acquired actual knowledge to the
contrary;
	 
	 	15.8.2	 	assume that no Default has occurred unless, in its capacity as the Agent, it
has acquired actual knowledge to the contrary;
	 
	 	15.8.3	 	rely on any document or notice believed by it to be genuine;
	 
	 	15.8.4	 	rely as to legal or other professional matters on opinions and statements of
any legal or other professional advisers selected or approved by it;
	 
	 	15.8.5	 	rely as to any factual matters which might reasonably be expected to be
within the knowledge of any Security Party on a certificate signed by or on
behalf of that Security Party; and
	 
	 	15.8.6	 	refrain from exercising any right, power, discretion or remedy unless and
until instructed to exercise that right, power, discretion or remedy and as to
the manner of its exercise by the Lenders (or, where applicable, by the
Majority Lenders) and unless and until the Agent has received from the Lenders
any payment which the Agent may require on account of, or any security which
the Agent may require for, any costs, claims, expenses (including legal and
other professional fees) and liabilities which it considers it may incur or
sustain in complying with those instructions.




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	 	15.9	 	The Agent’s duties The Agent shall:






	 	15.9.1	 	if requested in writing to do so by a Lender, make enquiry and advise the
Lenders as to the performance or observance of any of the provisions of any
Finance Document by any Security Party or as to the existence of an Event of
Default; and
	 
	 	15.9.2	 	inform the Lenders promptly of any Event of Default of which the Agent has
actual knowledge.






	 	15.10	 	No deemed knowledge The Agent shall not be deemed to have actual knowledge
of the falsehood or incompleteness of any representation or warranty made or deemed
repeated by any Security Party or actual knowledge of the occurrence of any Default
unless a Lender or a Security Party shall have given written notice thereof to the
Agent in its capacity as the Agent. Any information acquired by the Agent other than
specifically in its capacity as the Agent shall not be deemed to be information
acquired by the Agent in its capacity as the Agent.
	 
	 	15.11	 	Other business The Agent may, without any liability to account to the
Lenders, generally engage in any kind of banking or trust business with a Security
Party or with a Security Party’s subsidiaries or associated companies or with a Lender
as if it were not the Agent.
	 
	 	15.12	 	Indemnity The Lenders shall, promptly on the Agent’s request, reimburse the
Agent in their respective Proportionate Shares, for, and keep the Agent fully
indemnified in respect of all liabilities, damages, costs and claims sustained or
incurred by the Agent in connection with the Finance Documents, or the performance of
its duties and obligations, or the exercise of its rights, powers, discretions or
remedies under or pursuant to any Finance Document, to the extent not paid by the
Security Parties and not arising solely from the Agent’s gross negligence or wilful
misconduct.
	 
	 	15.13	 	Employment of agents In performing its duties and exercising its rights,
powers, discretions and remedies under or pursuant to the Finance Documents, the Agent
shall be entitled to employ and pay agents to do anything which the Agent is empowered
to do under or pursuant to the Finance Documents (including the receipt of money and
documents and the payment of money) and to act or refrain from taking action in
reliance on the opinion of, or advice or information obtained from,





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	 	 	 	any lawyer, banker, broker, accountant, valuer or any other person believed by the
Agent in good faith to be competent to give such opinion, advice or information.
	 
	 	15.14	 	Distribution of payments The Agent shall pay promptly to the order of each
Lender that Lender’s Proportionate Share of every sum of money received by the Agent
pursuant to the Finance Documents (with the exception of any amounts payable pursuant
to Clause 9 (Fees) and/or any Fee Letter and any amounts which, by the terms of the
Finance Documents, are paid to the Agent for the account of the Agent alone or
specifically for the account of one or more Lenders) and until so paid such amount
shall be held by the Agent on trust absolutely for that Lender.
	 
	 	15.15	 	Reimbursement The Agent shall have no liability to pay any sum to a Lender
until it has itself received payment of that sum. If, however, the Agent does pay any
sum to a Lender on account of any amount prospectively due to that Lender pursuant to
Clause 15.14 (Distribution of payments) before it has itself received payment of that
amount, and the Agent does not in fact receive payment within five (5) Business Days
after the date on which that payment was required to be made by the terms of the
Finance Documents, that Lender will, on demand by the Agent, refund to the Agent an
amount equal to the amount received by it, together with an amount sufficient to
reimburse the Agent for any amount which the Agent may certify that it has been
required to pay by way of interest on money borrowed to fund the amount in question
during the period beginning on the date on which that amount was required to be paid by
the terms of the Finance Documents and ending on the date on which the Agent receives
reimbursement.
	 
	 	15.16	 	Redistribution of payments Unless otherwise agreed between the Lenders and
the Agent, if at any time a Lender receives or recovers by way of set-off, the exercise
of any lien or otherwise from any Security Party, an amount greater than that Lender’s
Proportionate Share of any sum due from that Security Party to the Lenders under the
Finance Documents (the amount of the excess being referred to in this Clause 15.16 and
in Clause 15.17 (Rescission of Excess Amount) as the “Excess Amount”) then:






	 	15.16.1	 	that Lender shall promptly notify the Agent (which shall promptly notify each
other Lender);
	 
	 	15.16.2	 	that Lender shall pay to the Agent an amount equal to the Excess Amount
within ten (10) days of its receipt or recovery of the Excess Amount; and




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	 	15.16.3	 	the Agent shall treat that payment as if it were a payment by the Security
Party in question on account of the sum due from that Security Party to the
Lenders and shall account to the Lenders in respect of the Excess Amount in
accordance with the provisions of this Clause 15.16.






	 	 	 	However, if a Lender has commenced any legal proceedings to recover sums owing to it
under the Finance Documents and, as a result of, or in connection with, those
proceedings has received an Excess Amount, the Agent shall not distribute any of
that Excess Amount to any other Lender which had been notified of the proceedings
and had the legal right to, but did not, join those proceedings or commence and
diligently prosecute separate proceedings to enforce its rights in the same or
another court.
	 
	 	15.17	 	Rescission of Excess Amount If all or any part of any Excess Amount is
rescinded or must otherwise be restored to any Security Party or to any other third
party, the Lenders which have received any part of that Excess Amount by way of
distribution from the Agent pursuant to Clause 15.16 (Redistribution of payments) shall
repay to the Agent for the account of the Lender which originally received or recovered
the Excess Amount, the amount which shall be necessary to ensure that the Lenders share
rateably in accordance with their Proportionate Shares in the amount of the receipt or
payment retained, together with interest on that amount at a rate equivalent to that
(if any) paid by the Lender receiving or recovering the Excess Amount to the person to
whom that Lender is liable to make payment in respect of such amount, and Clause
15.16.3 (Redistribution of payments) shall apply only to the retained amount.
	 
	 	15.18	 	Instructions Where the Agent is authorised or directed to act or refrain
from acting in accordance with the instructions of the Lenders or of the Majority
Lenders each of the Lenders shall provide the Agent with instructions within three (3)
Business Days of the Agent’s request (which request may be made orally or in writing).
If a Lender does not provide the Agent with instructions within that period, that
Lender shall be bound by the decision of the Agent. Nothing in this Clause 15.18 shall
limit the right of the Agent to take, or refrain from taking, any action without
obtaining the instructions of the Lenders or the Majority Lenders if the Agent in its
discretion considers it necessary or appropriate to take, or refrain from taking, such
action in order to preserve the rights of the Lenders under or in connection with the
Finance Documents. In that event, the Agent will notify the Lenders of the action
taken by it




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	 	 	 	as soon as reasonably practicable, and the Lenders agree to ratify any action taken
by the Agent pursuant to this Clause 15.18.
	 
	 	15.19	 	Payments All amounts payable to a Lender under this Clause 15 shall be paid
to such account at such bank as that Lender may from time to time direct in writing to
the Agent.
	 
	 	15.20	 	“Know your customer” checks Each Lender shall promptly upon the request of
the Agent supply, or procure the supply of, such documentation and other evidence as is
reasonably requested by the Agent (for itself) in order for the Agent to carry out and
be satisfied it has complied with all necessary “know your customer” or other similar
checks under all applicable laws and regulations pursuant to the transactions
contemplated in the Finance Documents.
	 
	 	15.21	 	Resignation Subject to a successor being appointed in accordance with this
Clause 15.21, the Agent may resign as agent and/or security agent at any time without
assigning any reason by giving to the Borrowers and the Lenders notice of its intention
to do so, in which event the following shall apply:






	 	15.21.1	 	the Lenders may within thirty (30) days after the date of the Agent’s notice
appoint a successor to act as agent and/or security agent or, if they fail to
do so, the Agent may appoint any other bank or financial institution as its
successor;
	 
	 	15.21.2	 	the resignation of the Agent shall take effect simultaneously with the
appointment of its successor on written notice of that appointment being given
to the Borrowers and the Lenders;
	 
	 	15.21.3	 	the Agent shall thereupon be discharged from all further obligations as
agent and/or security agent but shall remain entitled to the benefit of the
provisions of this Clause 15; and
	 
	 	15.21.4	 	the Agent’s successor and each of the other parties to this Agreement shall
have the same rights and obligations amongst themselves as they would have had
if that successor had been a party to this Agreement.






	 	15.22	 	No fiduciary relationship Except as provided in Clauses 15.3 (Trust) and
15.14 (Distribution of payments), the Agent shall not have any fiduciary relationship
with




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	 	 	 	or be deemed to be a trustee of or for any other person and nothing contained in any
Finance Document shall constitute a partnership between any two or more Lenders or
between the Agent and any other person.






	16	 	Set-Off






	 	16.1	 	Set-off A Finance Party may set off any matured obligation due from the
Borrowers under any Finance Document (to the extent beneficially owned by that Finance
Party) against any matured obligation owed by that Finance Party to either Borrower,
regardless of the place of payment, booking branch or currency of either obligation.
If the obligations are in different currencies, that Finance Party may convert either
obligation at a market rate of exchange in its usual course of business for the purpose
of the set-off.






	17	 	Payments






	 	17.1	 	Payments Each amount payable by a Borrower under a Finance Document shall be
paid to such account at such bank as the Agent may from time to time direct to the
Borrowers in the Currency of Account and in such funds as are customary at the time for
settlement of transactions in the relevant currency in the place of payment. Payment
shall be deemed to have been received by the Agent on the date on which the Agent
receives authenticated advice of receipt, unless that advice is received by the Agent
on a day other than a Business Day or at a time of day (whether on a Business Day or
not) when the Agent in its discretion considers that it is impossible or impracticable
for the Agent to utilise the amount received for value that same day, in which event
the payment in question shall be deemed to have been received by the Agent on the
Business Day next following the date of receipt of advice by the Agent.
	 
	 	17.2	 	No deductions or withholdings Each payment (whether of principal or interest
or otherwise) to be made by a Borrower under a Finance Document shall, subject only to
Clause 17.3 (Grossing-up), be made free and clear of and without deduction for or on
account of any Taxes or other deductions, withholdings, restrictions, conditions or
counterclaims of any nature.
	 
	 	17.3	 	Grossing-up If at any time any law requires (or is interpreted to require) a
Borrower to make any deduction or withholding from any payment, or to change the rate
or manner in which any required deduction or withholding is made, the Borrowers will





65









 











	 	 	 	promptly notify the Agent and, simultaneously with that payment, will pay to the
Agent whatever additional amount (after taking into account any additional Taxes on,
or deductions or withholdings from, or restrictions or conditions on, that
additional amount) is necessary to ensure that, after the deduction or withholding,
the relevant Finance Parties receive a net sum equal to the sum which they would
have received had no deduction or withholding been made.
	 
	 	17.4	 	Evidence of deductions If at any time a Borrower is required by law to make
any deduction or withholding from any payment to be made by it under a Finance
Document, that Borrower will pay the amount required to be deducted or withheld to the
relevant authority within the time allowed under the applicable law and will, no later
than thirty (30) days after making that payment, deliver to the Agent an original
receipt issued by the relevant authority, or other evidence acceptable to the Agent,
evidencing the payment to that authority of all amounts required to be deducted or
withheld.
	 
	 	17.5	 	Adjustment of due dates If any payment or transfer of funds to be made under
a Finance Document, other than a payment of interest on the Loan, shall be due on a day
which is not a Business Day, that payment shall be made on the next succeeding Business
Day (unless the next succeeding Business Day falls in the next calendar month in which
event the payment shall be made on the next preceding Business Day). Any such
variation of time shall be taken into account in computing any interest in respect of
that payment.
	 
	 	17.6	 	Control Account The Agent shall open and maintain on its books a control
account in the names of the Borrowers showing the advance of the Loan and the
computation and payment of interest and all other sums due under this Agreement. The
Borrowers’ obligations to repay the Loan and to pay interest and all other sums due
under this Agreement shall be evidenced by the entries from time to time made in the
control account opened and maintained under this Clause 17.6 and those entries will, in
the absence of manifest error, be conclusive and binding.






	18	 	Notices






	 	18.1	 	Communications in writing Any communication to be made under or in connection
with this Agreement shall be made in writing and, unless otherwise stated, may be made
by fax or letter.




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	 	18.2	 	Addresses The address and fax number (and the department or officer, if any,
for whose attention the communication is to be made) of each party to this Agreement
for any communication or document to be made or delivered under or in connection with
this Agreement are:






	 	18.2.1	 	in the case of the Borrowers, c/o Newfront Shipping S.A., 83 Akti Miaouli &
Flessa, Piraeus GR 185 38, Greece (fax no: +30 210 42 88 503) marked for the
attention of Mr. Michalis Livanos;
	 
	 	18.2.2	 	in the case of each Lender, those appearing opposite its name in Schedule 1
(The Lenders and the Commitments);
	 
	 	18.2.3	 	in the case of the Agent, to the Agent at its address at the head of this
Agreement (fax no: +49 69 97 7688) marked for the attention of Loan
Administration Department, together with a copy to DVB Bank SE, Representative
Office Greece (fax no: +30 210 455 74 20); and
	 
	 	18.2.4	 	in the case of the Security Agent, to the Security Agent at its address at
the head of this Agreement (fax no: +44 207 618 9652) marked for the attention
of Loan Administration Department, together with a copy to DVB Bank SE,
Representative Office Greece (fax no: +30 210 455 74 20);






	 	 	 	or any substitute address, fax number, department or officer as any party may notify
to the Agent (or the Agent may notify to the other parties, if a change is made by
the Agent) by not less than five (5) Business Days’ notice.
	 
	 	18.3	 	Delivery Any communication or document made or delivered by one party to this
Agreement to another under or in connection this Agreement will only be effective:






	 	18.3.1	 	if by way of fax, when received in legible form; or
	 
	 	18.3.2	 	if by way of letter, when it has been left at the relevant address or five
(5) Business Days after being deposited in the post postage prepaid in an
envelope addressed to it at that address;






	 	 	 	and, if a particular department or officer is specified as part of its address
details provided under Clause 18.2 (Addresses), if addressed to that department or
officer.




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	 	 	 	Any communication or document to be made or delivered to the Agent will be effective
only when actually received by the Agent.
	 
	 	 	 	All notices from or to the Borrowers shall be sent through the Agent.
	 
	 	18.4	 	Notification of address and fax number Promptly upon receipt of notification
of an address, fax number or change of address, pursuant to Clause 18.2 (Addresses) or
changing its own address or fax number, the Agent shall notify the other parties to
this Agreement.
	 
	 	18.5	 	English language Any notice given under or in connection with this Agreement
must be in English. All other documents provided under or in connection with this
Agreement must be:






	 	18.5.1	 	in English; or
	 
	 	18.5.2	 	if not in English, and if so required by the Agent, accompanied by a
certified English translation and, in this case, the English translation will
prevail unless the document is a constitutional, statutory or other official
document.






	19	 	Partial Invalidity
	 
	 	 	If, at any time, any provision of a Finance Document is or becomes illegal, invalid or
unenforceable in any respect under any law of any jurisdiction, neither the legality,
validity or enforceability of the remaining provisions nor the legality, validity or
enforceability of such provision under the law of any other jurisdiction will in any way be
affected or impaired.
	 
	20	 	Remedies and Waivers
	 
	 	 	No failure to exercise, nor any delay in exercising, on the part of any Finance Party, any
right or remedy under a Finance Document shall operate as a waiver, nor shall any single or
partial exercise of any right or remedy prevent any further or other exercise or the
exercise of any other right or remedy. The rights and remedies provided in this Agreement
are cumulative and not exclusive of any rights or remedies provided by law.




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	21	 	Joint and several liability






	 	21.1	 	Nature of liability The representations, warranties, covenants, obligations
and undertakings of the Borrowers contained in this Agreement shall be joint and
several so that each Borrower shall be jointly and severally liable with the other
Borrower for all of the same and such liability shall not in any way be discharged,
impaired or otherwise affected by:






	 	21.1.1	 	any forbearance (whether as to payment or otherwise) or any time or other
indulgence granted to the other Borrower or any other Security Party under or
in connection with any Finance Document;
	 
	 	21.1.2	 	any amendment, variation, novation or replacement of any other Finance
Document;
	 
	 	21.1.3	 	any failure of any Finance Document to be legal valid binding and enforceable
in relation to the other Borrower or any other Security Party for any reason;
	 
	 	21.1.4	 	the winding-up or dissolution of the other Borrower or any other Security
Party;
	 
	 	21.1.5	 	the release (whether in whole or in part) of, or the entering into of any
compromise or composition with, the other Borrower or any other Security Party;
or
	 
	 	21.1.6	 	any other act, omission, thing or circumstance which would or might, but for
this provision, operate to discharge, impair or otherwise affect such
liability.






	 	21.2	 	No rights as surety Until the Indebtedness has been unconditionally and
irrevocably paid and discharged in full, each Borrower agrees that it shall not, by
virtue of any payment made under this Agreement on account of the Indebtedness or by
virtue of any enforcement by a Finance Party of its rights under this Agreement or by
virtue of any relationship between, or transaction involving, the relevant Borrower and
any other Borrower or any other Security Party:




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	 	21.2.1	 	exercise any rights of subrogation in relation to any rights, security or
moneys held or received or receivable by a Finance Party or any other person;
or
	 
	 	21.2.2	 	exercise any right of contribution from any other Borrower or any other
Security Party under any Finance Document; or
	 
	 	21.2.3	 	exercise any right of set-off or counterclaim against any other Borrower or
any other Security Party; or
	 
	 	21.2.4	 	receive, claim or have the benefit of any payment, distribution, security or
indemnity from any other Borrower or any other Security Party; or
	 
	 	21.2.5	 	unless so directed by the Agent (when the relevant Borrower will prove in
accordance with such directions), claim as a creditor of any other Borrower or
any other Security Party in competition with any Finance Party






	 	 	 	and each Borrower shall hold in trust for the Finance Parties and forthwith pay or
transfer (as appropriate) to the Agent any such payment (including an amount equal
to any such set-off), distribution or benefit of such security, indemnity or claim
in fact received by it.






	22	 	Miscellaneous






	 	22.1	 	No oral variations No variation or amendment of a Finance Document shall be
valid unless in writing and signed on behalf of all the Finance Parties.
	 
	 	22.2	 	Further Assurance If any provision of a Finance Document shall be invalid or
unenforceable in whole or in part by reason of any present or future law or any
decision of any court, or if the documents at any time held by or on behalf of the
Finance Parties or any of them are considered by the Lenders for any reason
insufficient to carry out the terms of this Agreement, then from time to time the
Borrowers will promptly, on demand by the Agent, execute or procure the execution of
such further documents as in the opinion of the Lenders are necessary to provide
adequate security for the repayment of the Indebtedness.
	 
	 	22.3	 	Rescission of payments etc. Any discharge, release or reassignment by a
Finance Party of any of the security constituted by, or any of the obligations of a
Security Party contained in, a Finance Document shall be (and be deemed always to have




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	 	 	 	been) void if any act (including, without limitation, any payment) as a result of
which such discharge, release or reassignment was given or made is subsequently
wholly or partially rescinded or avoided by operation of any law.
	 
	 	22.4	 	Certificates Any certificate or statement signed by an authorised signatory
of the Agent purporting to show the amount of the Indebtedness (or any part of the
Indebtedness) or any other amount referred to in any Finance Document shall, save for
manifest error or on any question of law, be conclusive evidence as against the
Borrowers of that amount.
	 
	 	22.5	 	Counterparts This Agreement may be executed in any number of counterparts
each of which shall be original but which shall together constitute the same
instrument.
	 
	 	22.6	 	Contracts (Rights of Third Parties) Act 1999 A person who is not a party to
this Agreement has no right under the Contracts (Rights of Third Parties) Act 1999 to
enforce or to enjoy the benefit of any term of this Agreement.






	23	 	Law and Jurisdiction






	 	23.1	 	Governing law This Agreement shall in all respects be governed by and
interpreted in accordance with English law.
	 
	 	23.2	 	Jurisdiction For the exclusive benefit of the Finance Parties, the parties to
this Agreement irrevocably agree that the courts of England are to have jurisdiction to
settle any disputes which may arise out of or in connection with this Agreement and
that any proceedings may be brought in those courts.
	 
	 	23.3	 	Alternative jurisdictions Nothing contained in this Clause 23 shall limit the
right of the Finance Parties to commence any proceedings against the Borrowers in any
other court of competent jurisdiction nor shall the commencement of any proceedings
against the Borrowers in one or more jurisdictions preclude the commencement of any
proceedings in any other jurisdiction, whether concurrently or not.
	 
	 	23.4	 	Waiver of objections Each Borrower irrevocably waives any objection which it
may now or in the future have to the laying of the venue of any proceedings in any
court referred to in this Clause 23, and any claim that those proceedings have been
brought in an inconvenient or inappropriate forum, and irrevocably agrees that a




71









 












	 	 	 	judgment in any proceedings commenced in any such court shall be conclusive and
binding on it and may be enforced in the courts of any other jurisdiction.
	 
	 	23.5	 	Service of process Without prejudice to any other mode of service allowed
under any relevant law, each Borrower:






	 	23.5.1	 	irrevocably appoints Holman Nominees Limited, Marlow House, Lloyds
Avenue, London EC3N 3AL, England (tel.: + 44 (0) 20 7488 2300 / Fax: +
44 (0) 20 7481 0316) as its agent for service of process in relation to any
proceedings before the English courts in connection with this Agreement; and
	 
	 	23.5.2	 	agrees that failure by a process agent to notify a Borrower of the process
will not invalidate the proceedings concerned.






72











 





SCHEDULE 1: The Lenders and the Commitments




Names




	 	 	 	 	 

	DVB BANK SE

	 	$	18,990,000	 
	Platz der Republik 6

D-60325 Frankfurt am Main 

Federal Republic of Germany
	 	 	 	 
	 
	 	 	 	 
	Fax No.: +49 69 97 504 526

Attention: Loans Administration Department
	 	 	 	 
	 
	 	 	 	 
	With copy to:
	 	 	 	 
	DVB BANK SE 

Representative office 

95 Akti Miaouli 

Piraeus 185 38

Greece
	 	 	 	 
	 
	 	 	 	 
	Fax No.: +30 210 429 1284

Attention: Representative Office Greece
	 	 	 	 
	 
	 	 	 	 
	NORD/LB

	 	$	17,065,000	 
	Norddeutsche Landesbank Girozentrale 

International Shipping Group 

Ship and Aircraft Finance Department 

Internal Post Code 2214/4629

Friedrichswall 10

30159 Hannover, Germany
	 	 	 	 
	 
	 	 	 	 
	EMPORIKI BANK OF GREECE S.A.

	 	$	11,945,000	 
	11, Sofokleous Street, Athens, Greece, 

and acting through its office at 

1 Korai Street, Athens 10564, Greece
	 	 	 	 






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SCHEDULE 2: Conditions Precedent and Subsequent




Part I: Conditions precedent




	1	 	Security Parties






	 	(a)	 	Constitutional Documents Copies of the constitutional documents of each
Security Party together with such other evidence as the Agent may reasonably require
that each Security Party is duly incorporated in its country of incorporation and
remains in existence with power to enter into, and perform its obligations under, the
Relevant Documents to which it is or is to become a party.
	 
	 	(b)	 	Certificates of good standing A certificate of good standing in respect of
each Security Party (if such a certificate can be obtained).
	 
	 	(c)	 	Board resolutions A copy of a resolution of the board of directors of each
Security Party:






	 	(i)	 	approving the terms of, and the transactions contemplated by,
the Relevant Documents to which it is a party and resolving that it execute
those Relevant Documents; and
	 
	 	(ii)	 	authorising a specified person or persons to execute those
Relevant Documents (and all documents and notices to be signed and/or
despatched under those documents) on its behalf.






	 	(d)	 	Shareholder resolutions A copy of a resolution signed by all the holders of
the issued shares in each Security Party, approving the terms of, and the transactions
contemplated by, the Relevant Documents to which that Security Party is a party.
	 
	 	(e)	 	Officer’s certificates A certificate of a duly authorised officer of each
Security Party certifying that each copy document relating to it specified in this Part
I of Schedule 2 is correct, complete and in full force and effect as at a date no
earlier than the date of this Agreement and setting out the names of the directors,
officers and shareholders of that Security Party and the proportion of shares held by
each shareholder.




74









 












	 	(f)	 	Powers of attorney The notarially attested and legalised power of attorney of
each Security Party under which any documents are to be executed or transactions
undertaken by that Security Party.
	 
	 	(g)	 	Capital structure, equity and debt finance Evidence, in form and substance
satisfactory to the Agent, of the capital structure of the Borrowers and the Corporate
Guarantor evidencing that the Borrowers and the Corporate Guarantor have, in the
opinion of the Agent, sufficient equity and debt finance commitments from other sources
in order to fulfil the Borrowers’ obligations under the Building Contracts.
	 
	 	(h)	 	Beneficial ownership Evidence in form and substance satisfactory to the Agent
of the beneficial ownership of each Borrower and the Agent will not make any Drawings
available (other than the First Drawing), unless Newlead Holdings Ltd. is the ultimate
beneficial owner of all the shares in the each Borrower.






	2	 	Security and related documents






	 	(a)	 	Vessel documents Photocopies, certified as true, accurate and complete by a
director or the secretary or the legal advisers of the Borrower, of:






	 	(i)	 	the Building Contract, evidencing the Contract Price;
	 
	 	(ii)	 	the notice or invoice issued by the Builder and countersigned
by the Vessel’s classification society evidencing the obligation of the
Borrower to pay the relevant installment to the Builder under the Building
Contract on a date no later than the proposed Drawdown Date of the Drawing in
question; and
	 
	 	(iii)	 	the duly executed original Charter, evidencing the Minimum
Charter Requirements.






	 	(b)	 	Security Documents The Building Contract Assignments, the Corporate
Guarantee, the Personal Guarantees, the Accounts Charges (if required by the Agent at
this stage), the Share Pledges and the Assignment in respect of any Charter, together
with all other documents required by any of them, including, without limitation, all
notices of assignment and/or charge and evidence that those notices will be duly
acknowledged by the recipients.




75









 












	 	(c)	 	Refund Guarantee The original Refund Guarantee, duly executed in form and
substance satisfactory to the Agent.
	 
	 	(d)	 	No disputes The written confirmation of the Borrower that there is no dispute
under any of the Relevant Documents as between the parties to any such document.
	 
	 	(e)	 	Mandates Such duly signed forms of mandate, and/or other evidence of the
opening of the Accounts, as the Agent may require.
	 
	 	(f)	 	Valuation A valuation not older than two weeks prior to the relevant Drawdown
Date, based on a charter-free sale for prompt delivery for cash at arm’s length on
normal commercial terms as between a willing seller and a willing buyer of the Vessel,
addressed to and acceptable to the Agent and conclusively determined on the basis of
the average of valuations provided by two reputable, independent and first class firm
of shipbrokers appointed by the Agent. If the two valuations differ by a margin of over
15% then a third shipbroker shall be appointed by the Agent and the market value shall
be the average of the three valuations.
	 
	 	(g)	 	Equity Portion Evidence satisfactory to the Agent that any Equity Portion has
been paid to the Agent fifteen (15) Business Days prior to the relevant Drawdown Date
for remittance to the Builder with the relevant portion of the Loan and that it is
fully subordinated to the Loan.






	3	 	Legal opinions






	 	(a)	 	An English law legal opinion and if a Security Party is incorporated in a
jurisdiction other than England and Wales or if any Finance Document is governed by the
laws of a jurisdiction other than England and Wales, a legal opinion of the legal
advisers to the Lenders in each relevant jurisdiction, substantially in the form or
forms provided to the Agent prior to signing this Agreement or confirmation
satisfactory to the Agent that such an opinion will be given.






	4	 	Other documents and evidence






	 	(a)	 	Drawdown Notice A duly completed Drawdown Notice.
	 
	 	(b)	 	Process agent Evidence that any process agent referred to in Clause 23.5
(Service of process) and any process agent appointed under any other Finance Document
has accepted its appointment.




76









 












	 	(c)	 	Other authorisations A copy of any other consent, licence, approval,
authorisation or other document, opinion or assurance which the Agent considers to be
necessary or desirable (if it has notified the Borrowers accordingly) in connection
with the entry into and performance of the transactions contemplated by any of the
Relevant Documents or for the validity and enforceability of any of the Relevant
Documents.
	 
	 	(d)	 	Fees Evidence that the fees, costs and expenses then due from the Borrowers
under Clause 8 (Indemnities) and Clause 9 (Fees) have been paid or will be paid by the
relevant Drawdown Date.
	 
	 	(e)	 	“Know your customer” documents Such documentation and other evidence as is
reasonably requested by the Agent in order for the Lenders to comply with all necessary
“know your customer” or similar identification procedures in relation to the
transactions contemplated in the Finance Documents.




77









 











Part II: Conditions subsequent





	1	 	Acknowledgements of notices Acknowledgements of all notices of assignment and/or charge
given pursuant to any Security Documents received by the Agent pursuant to Part I of this
Schedule 2.
	 
	2	 	Legal opinions Such of the legal opinions specified in Part I of this Schedule 2 as have
not already been provided to the Agent.




78









 











Part III: Delivery conditions precedent





	1	 	Officer’s certificate A certificate signed by a duly authorised officer of each Security
Party dated no later than five (5) Business Days before the Delivery Date confirming that none
of the documents and evidence delivered to the Agent pursuant to Clauses 3.1 (Conditions
precedent) and 3.4 (Conditions subsequent) has been amended, modified or revoked in any way
since its delivery to the Agent.
	 
	2	 	Security and related documents






	 	(a)	 	Vessel documents Photocopies, certified as true, accurate and complete by a
director or the secretary of the Borrower, of:






	 	(i)	 	the builder’s certificate and/or bill of sale transferring
title in the Vessel to the Borrower free of all encumbrances, maritime liens or
other debts;
	 
	 	(ii)	 	the protocol of delivery and acceptance evidencing the
unconditional physical delivery of the Vessel by the Builder to the Borrower
pursuant to the Building Contract;
	 
	 	(iii)	 	the commercial invoice issued by the Builder in respect of the
final contract price of the Vessel;
	 
	 	(iv)	 	the declaration of warranty issued by the Builder to the
Borrower pursuant to the Building Contract;
	 
	 	(v)	 	any charterparty or other contract of employment of the Vessel
which will be in force on the Delivery Date including, without limitation, the
Charter;
	 
	 	(vi)	 	the Management Agreement;
	 
	 	(vii)	 	the Vessel’s current Safety Construction, Safety Equipment,
Safety Radio, Oil Pollution Prevention and Load Line Certificates;
	 
	 	(viii)	 	the Vessel’s current Certificate of Financial Responsibility issued pursuant
to the United States Oil Pollution Act 1990;
	 
	 	(ix)	 	the Vessel’s current SMC;
	 
	 	(x)	 	the ISM Company’s current DOC;




79









 












	 	(xi)	 	the Vessel’s current ISSC;
	 
	 	(xii)	 	the Vessel’s current IAPPC;
	 
	 	(xiii)	 	the Vessel’s current Tonnage Certificate;






in each case together with all addenda, amendments or supplements.




	 	(b)	 	Evidence of Borrower’s title Evidence that any prior registration of the
Vessel in the ownership of the Builder and any Encumbrance registered against that
ownership have been cancelled (or confirmation from the Builder that there was no such
prior registration) and evidence that on the Delivery Date (i) the Vessel will be at
least provisionally registered under the flag stated in Recital (A) in the ownership of
the Borrower and (ii) the Mortgage will be capable of being registered against the
Vessel with first priority.
	 
	 	(c)	 	Evidence of insurance Evidence that the Vessel is insured in the manner
required by the Security Documents at least 15 days prior to the Delivery Date and that
letters of undertaking will be issued in the manner required by the Security Documents,
together with (if required by the Agent) the written approval of the Insurances by an
insurance adviser appointed by the Agent.
	 
	 	(d)	 	Confirmation of class An interim Certificate of Confirmation of Class for
hull and machinery confirming that the Vessel is classed with the highest class
applicable to vessels of her type with Lloyd’s Register or such other classification
society as may be acceptable to the Agent.
	 
	 	(e)	 	Equity Portion Evidence satisfactory to the Agent that any Equity Portion
has been paid to the Agent fifteen (15) Business Days prior to the relevant Drawdown
Date for remittance to the Builder with the relevant portion of the Loan and that it is
fully subordinated to the Loan.
	 
	 	(f)	 	Survey report A report by a surveyor instructed by the Agent to inspect the
Vessel confirming that the condition of the Vessel is in all respects acceptable to the
Agent.
	 
	 	(g)	 	Valuation A valuation not older than two weeks prior to the Delivery Date,
based on a charter-free sale for prompt delivery for cash at arm’s length on normal
commercial terms as between a willing seller and a willing buyer of the Vessel,
addressed to and acceptable to the Agent and conclusively determined on the basis of




80









 






	 	 	 	the average of valuations provided by two reputable, independent and first class
firm of shipbrokers appointed by the Agent. If the two valuations differ by a margin
of over 15% then a third shipbroker shall be appointed by the Agent and the market
value shall be the average of the three valuations.






	 	(h)	 	Security Documents The Mortgage and the Assignments in respect of the Vessel,
the Account Charges and the (if required by the Agent at this stage) Share Pledges,
together with all other documents required by any of them, including, without
limitation, all notices of assignment and/or charge and evidence that those notices
will be duly acknowledged by the recipients.
	 
	 	(i)	 	Mandates Such duly signed forms of mandate, and/or other evidence of the
opening of the Accounts, as the Agent may require.
	 
	 	(j)	 	Managers’ confirmation The written confirmation of the Managers that,
throughout the Facility Period unless otherwise agreed by the Agent, they will remain
the commercial and technical managers of the Vessel and that they will not, without the
prior written consent of the Agent, sub-contract or delegate the commercial or
technical management of the Vessel to any third party and confirming in terms
acceptable to the Agent that, following the occurrence of an Event of Default, all
claims of the Managers against the Borrower shall be subordinated to the claims of the
Finance Parties under the Finance Documents.
	 
	 	(k)	 	The Account Holder’s confirmation The written confirmation of the Account
Holder that the Accounts have been opened with the Account Holder and are, and will
remain throughout the Facility Period, free from Encumbrances and rights of set off
other than as created by or pursuant to the Security Documents.
	 
	 	(l)	 	Mortgagees’ Insurances Evidence of the Agent being covered under the
Mortgagees’ Insurances for an amount of not less than one hundred and twenty per cent
(120%) of the Loan and at the expense of the Borrower.






	3	 	Legal opinions






	 	(a)	 	An English law legal opinion and if a Security Party is incorporated in a
jurisdiction other than England and Wales or if any Finance Document is governed by the
laws of a jurisdiction other than England and Wales, a legal opinion of the legal
advisers to the Lenders in each relevant jurisdiction, substantially in the form or
forms




81









 






	 	 	 	provided to the Agent prior to signing this Agreement or confirmation satisfactory
to the Agent that such an opinion will be given.






	4	 	Other documents and evidence






	 	(a)	 	Process agent Evidence that any process agent appointed under any Finance
Document has accepted its appointment.
	 
	 	(b)	 	Other authorisations A copy of any other consent, licence, approval,
authorisation or other document, opinion or assurance which the Agent considers to be
necessary or desirable (if it has notified the Borrowers accordingly) in connection
with the entry into and performance of the transactions contemplated by any of the
Relevant Documents or for the validity and enforceability of any of the Relevant
Documents.




82









 











Part IV: Delivery conditions subsequent





	1	 	Evidence of Borrower’s title Certificate of ownership and encumbrance (or equivalent)
issued by the Registrar of Ships (or equivalent official) of the Approved Flag confirming that
(a) the Vessel is permanently registered under that flag in the ownership of the Borrower, (b)
the Mortgage has been registered with first priority against the Vessel and (c) there are no
further Encumbrances registered against the Vessel.
	 
	2	 	Letters of undertaking Letters of undertaking in respect of the Insurances as required by
the Security Documents together with copies of the relevant policies or cover notes or entry
certificates duly endorsed with the interest of the Finance Parties.
	 
	3	 	Acknowledgements of notices Acknowledgements of all notices of assignment and/or charge
given pursuant to any Security Documents received by the Agent pursuant to Part III of this
Schedule 2.
	 
	4	 	Legal opinions Such of the legal opinions specified in Part III of this Schedule 2 as have
not already been provided to the Agent.
	 
	5	 	Master’s receipt The master’s receipt for the Mortgage, if applicable.




83









 











SCHEDULE 3: Calculation of Mandatory Cost





	1	 	The Mandatory Cost is an addition to the interest rate to compensate the Lenders for the cost
of compliance with (a) the requirements of the Bank of England and/or the Financial Services
Authority (or, in either case, any other authority which replaces all or any of its functions)
or (b) the requirements of the European Central Bank.
	 
	2	 	On the first day of each Interest Period (or as soon as possible thereafter) the Agent shall
calculate, as a percentage rate, a rate (the “Additional Cost
Rate”) for each Lender in
accordance with the paragraphs set out below. The Mandatory Cost will be calculated by the
Agent as a weighted average of the Lenders’ Additional Cost Rates (weighted in proportion to
the percentage participation of each Lender in the Loan) and will be expressed as a percentage
rate per annum.
	 
	3	 	The Additional Cost Rate for any Lender lending from an office in the euro-zone will be the
percentage notified by that Lender to the Agent to be its reasonable determination of the cost
(expressed as a percentage of that Lender’s participation in the relevant Vessel Loan) of
complying with the minimum reserve requirements of the European Central Bank as a result of
participating in the relevant Vessel Loan from that office.
	 
	4	 	The Additional Cost Rate for any Lender lending from an office in the United Kingdom will be
calculated by the Agent as follows:






	 	(a)	 	where the relevant Vessel Loan is denominated in sterling:






BY
+ S(Y - Z) + F x 0.01 per cent per annum




100
- (B + S)




	 	(b)	 	where the relevant Vessel Loan is denominated in any currency other than
sterling:






F x 0.01 per cent per annum




300




where:




	 	B 	 	is the percentage of eligible liabilities (assuming these to be in excess of
any stated minimum) which that Lender is from time to time required to maintain as an
interest free cash ratio deposit with the Bank of England to comply with cash ratio
requirements;





84









 











	 	Y 	 	is the percentage rate of interest (excluding the Margin and the Mandatory Cost
and, if the relevant Vessel Loan is an overdue amount, the additional rate of interest
specified in Clause 7.9 (Default interest)) payable for the relevant Interest Period on
the relevant Vessel Loan;
	 
	 	S 	 	is the percentage (if any) of eligible liabilities which that Lender is
required from time to time to maintain as interest bearing special deposits with the
Bank of England;
	 
	 	Z 	 	is the interest rate per annum payable by the Bank of England to that Lender on
special deposits; and
	 
	 	F 	 	is the charge payable by that Lender to the Financial Services Authority under
paragraph 2.02 or 2.03 (as appropriate) of the Fees Regulations or the equivalent
provisions in any replacement regulations (with, for this purpose, the figure for the
minimum amount in paragraph 2.02b or such equivalent provision deemed to be zero),
expressed in pounds per £1 million of the fee base of that Lender.






	5	 	For the purpose of this Schedule:






	 	(a)	 	“eligible liabilities” and “special deposits” have the meanings given to them
at the time of application of the formula by the Bank of England;
	 
	 	(b)	 	“fee base” has the meaning given to it in the Fees Regulations;
	 
	 	(c)	 	“Fees Regulations” means the regulations governing periodic fees contained in
the FSA Supervision Manual or such other law or regulation as may be in force from time
to time in respect of the payment of fees for the acceptance of deposits.






	6	 	In the application of the formula B, Y, S and Z are included in the formula as figures and
not as percentages, e.g. if B = 0.5% and Y = 15%, BY is calculated as 0.5. x 15. Each rate
calculated in accordance with the formula is, if necessary, rounded upward to four decimal
places.
	 
	7	 	If a Lender does not supply the information required by the Agent to determine its Additional
Cost Rate when requested to do so, the applicable Mandatory Cost shall be determined on the
basis of the information supplied by the remaining Lenders.




85









 












	8	 	If a change in circumstances has rendered, or will render, the formula inappropriate, the
Agent shall notify the Borrowers of the manner in which the Mandatory Cost will subsequently
be calculated. The manner of calculation so notified by the Agent shall, in the absence of
manifest error, be binding on the Borrowers.




86









 











SCHEDULE 4: Form of Drawdown Notice




	 	 	 

	To:

	 	DVB BANK SE
	 
	 	 
	From:

	 	GRAND AFFECTION S.A.

GRAND AFFINITY S.A.






2010




Dear Sirs




Drawdown Notice



We refer to the Loan Agreement dated                      2010 made between, amongst
others,
ourselves and yourselves (the “Agreement”).



Words and phrases defined in the Agreement have the same meaning when used in this Drawdown Notice.



Pursuant to Clause 4.1 of the Agreement, we irrevocably request that you advance to us a Drawing in
the sum of
[                             
                               ] of the Vessel
Loan in respect of Hull no. [          ] on
                              200 , which is a
Business Day, by paying the amount of the Drawing in accordance with the provisions of the relevant
Building Contract towards payment of the [          ] Installment of the Contract Price.



We warrant that the representations and warranties contained in Clause 11.1 of the Agreement are
true and correct at the date of this Drawdown Notice and will be true and correct on           
200 , that no Default has occurred and is continuing, and that no Default will result from the
advance of the Drawing requested in this Drawdown Notice.



[We select the period of [          ] months as the first Interest Period.]




Yours faithfully



  







For and on behalf of




GRAND AFFECTION S.A.

GRAND AFFINITY S.A.




87









 





SCHEDULE 5: Form of Transfer Certificate




To: DVB BANK SE




TRANSFER CERTIFICATE



This transfer certificate relates to a secured loan facility agreement (as from time to time
amended, varied, supplemented or novated the “Loan Agreement”) dated                     2010, on
the terms and subject to the conditions of which a secured loan facility of up to $48,000,000 was
made available to GRAND AFFECTION S.A. and GRAND AFFINITY S.A. on a joint and several basis, by a
syndicate of banks on whose behalf you act as agent and security agent.





	1	 	Terms defined in the Loan Agreement shall, unless otherwise expressly indicated, have the
same meaning when used in this certificate. The terms “Transferor” and “Transferee” are
defined in the schedule to this certificate.
	 
	2	 	The Transferor:






	 	2.1	 	confirms that the details in the Schedule under the heading “Transferor’s
Commitment” accurately summarise its Commitment; and
	 
	 	2.2	 	requests the Transferee to accept by way of novation the transfer to the
Transferee of the amount of the Transferor’s Commitment specified in the Schedule by
counter-signing and delivering this certificate to the Agent at its address for
communications specified in the Loan Agreement.






	3	 	The Transferee requests the Agent to accept this certificate as being delivered to the Agent
pursuant to and for the purposes of clause 14.4 of the Loan Agreement so as to take effect in
accordance with the terms of that clause on the Transfer Date specified in the Schedule.
	 
	4	 	The Agent confirms its acceptance of this certificate for the purposes of clause 14.4 of the
Loan Agreement.
	 
	5	 	The Transferee confirms that:






	 	5.1	 	it has received a copy of the Loan Agreement together with all other
information which it has required in connection with this transaction;




88









 












	 	5.2	 	it has not relied and will not in the future rely on the Transferor or any
other party to the Loan Agreement to check or enquire on its behalf into the legality,
validity, effectiveness, adequacy, accuracy or completeness of any such information;
and
	 
	 	5.3	 	it has not relied and will not in the future rely on the Transferor or any
other party to the Loan Agreement to keep under review on its behalf the financial
condition, creditworthiness, condition, affairs, status or nature of any Security
Party.






	6	 	Execution of this certificate by the Transferee constitutes its representation and warranty
to the Transferor and to all other parties to the Loan Agreement that it has the power to
become a party to the Loan Agreement as a Lender on the terms of the Loan Agreement and has
taken all steps to authorise execution and delivery of this certificate.
	 
	7	 	The Transferee undertakes with the Transferor and each of the other parties to the Loan
Agreement that it will perform in accordance with their terms all those obligations which by
the terms of the Loan Agreement will be assumed by it after delivery of this certificate to
the Agent and the satisfaction of any conditions subject to which this certificate is
expressed to take effect.
	 
	8	 	The Transferor makes no representation or warranty and assumes no responsibility with respect
to the legality, validity, effectiveness, adequacy or enforceability of any Finance Document
or any document relating to any Finance Document, and assumes no responsibility for the
financial condition of any Finance Party or for the performance and observance by any Security
Party of any of its obligations under any Finance Document or any document relating to any
Finance Document and any conditions and warranties implied by law are expressly excluded.
	 
	9	 	The Transferee acknowledges that nothing in this certificate or in the Loan Agreement shall
oblige the Transferor to:






	 	9.1	 	accept a re-transfer from the Transferee of the whole or any part of the
rights, benefits and/or obligations transferred pursuant to this certificate; or
	 
	 	9.2	 	support any losses directly or indirectly sustained or incurred by the
Transferee for any reason including, without limitation, the non-performance by any
party to any Finance Document of any obligations under any Finance Document.




89









 












	10	 	The address and fax number of the Transferee for the purposes of clause 18 of the Loan
Agreement are set out in the Schedule.
	 
	11	 	This certificate may be executed in any number of counterparts each of which shall be
original but which shall together constitute the same instrument.
	 
	12	 	This certificate shall be governed by and interpreted in accordance with English law.





THE SCHEDULE





	1	 	Transferor:
	 
	2	 	Transferee:
	 
	3	 	Transfer Date (not earlier than the fifth Business Day after the date of delivery of the
Transfer Certificate to the Agent):
	 
	4	 	Transferor’s Commitment:
	 
	5	 	Amount transferred:
	 
	6	 	Transferee’s address and fax number for the purposes of clause 18 of the Loan Agreement:





	 	 	 

	[name of Transferor]

	 	[name of Transferee]
	 
	 	 
	By:

	 	By:
	 
	 	 
	Date:

	 	Date:






DVB BANK SE as Agent




By:




Date:




90









 





SCHEDULE 6: Form of Compliance Certificate




	 	 	 

	To:

	 	DVB BANK SE
	 
	 	 
	From:

	 	GRAND AFFECTION S.A. 

GRAND AFFINITY S.A. 

GRANDUNION INC.
	 
	 	 
	Dated:
	 	 






Dear Sirs




Grand Affection S.A and Grand Affinity S.A. — US$48,000,000 Loan Agreement dated [     ] 2010 (the “Agreement”)



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



We confirm that:





	 	1.	 	the Leverage does not exceed 75%, as required by Clause 12.2.1 (a);
	 
	 	2.	 	the Minimum Net Worth is not lower than sixty million Dollars ($60,000,000) as
required by Clause 12.2.1. (b); and
	 
	 	3.	 	the Minimum Liquidity is in excess of 5% of the Total Debt, as required by Clause
12.2.1 (c).




We confirm that no Default is continuing.*




	 	 	 	 	 

	Signed:
	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 
	 	Director	 	Director
	 
	 	 	 	 
	 
	 	of	 	of
	 
	 	 	 	 
	 
	 	GRAND AFFECTION S.A.	 	GRANDUNION INC.
	 
	 	GRAND AFFINITY S.A.	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 
	 	Director	 	Director
	 
	 	 	 	 
	 
	 	of	 	of
	 
	 	 	 	 
	 
	 	GRAND AFFECTION S.A.	 	GRANDUNION INC.
	 
	 	GRAND AFFINITY S.A.	 	 








 




			
	*	 	If this statement cannot be made, the
certificate should identify any Default that is continuing and the steps, if
any, being taken to remedy it.




91









 










SCHEDULE 7: Loans Administration Form





			
	To:	 	DVB Bank SE




We hereby appoint the following persons to act as our point of contact with regards to any issue
arising in connection with the administration to the agreement dated [                    ]
made between (inter alia) yourselves and ourselves (the “Loan Agreement”) or any other documents
related to the Loan:





	1.	 	[                   
           ],
of [                        
                ],
Tel: [          ],
Mobile [                      ],
e-mail: [                    ].
	 
	2.	 	[                   
           ],
of [                        
                ],
Tel: [          ],
Mobile [                      ],
e-mail: [                    ].

	 
	3.	 	[                   
           ],
of [                        
                ],
Tel: [          ],
Mobile [                      ],
e-mail: [                    ].




No other persons other than the Directors of the Borrower or the persons listed above (the
“Authorised Persons”) are hereby authorised to request any information from you regarding the Loan
Agreement or any other matter related to the Loan or the Borrower or communicate with you in any
way regarding the foregoing in and under any circumstances.



For the avoidance of doubt, the following are the Directors of the Company:





	1.	 	[                   
           ],
of [                        
                ],
Tel: [          ],
Mobile [                      ],
e-mail: [                    ].
	 
	2.	 	[                   
           ],
of [                        
                ],
Tel: [          ],
Mobile [                      ],
e-mail: [                    ].
	 
	3.	 	[                   
           ],
of [                        
                ],
Tel: [          ],
Mobile [                      ],
e-mail: [                    ].




This list of authorised persons may only be amended, modified or varied in writing by an Authorised
Person with copy to the other Authorised Persons.



We agree to indemnify you and hold you harmless in relation to any information you provide to any
Authorised Person.



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



This letter shall be governed and construed in accordance with English law.




Yours sincerely




 






For and on behalf of




GRAND AFFECTION S.A.

GRAND AFFINITY S.A.




92









 




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




	 	 	 

	SIGNED
by Michael Livanos

duly authorised for and on behalf 

of GRAND AFFECTION S.A.

	 	)

)     /s/ Michael Livanos

)
	 
	 	 
	SIGNED by Michael Livanos

duly authorised for and on behalf 

of GRAND AFFINITY S.A.

	 	)

)     /s/ Michael Livanos

)
	 
	 	 
	SIGNED
by Dimitrios Beis

duly authorised for and on behalf 

of DVB BANK SE (as a Lender)

	 	)

)     /s/ Dimitrios Beis

)
	 
	 	 
	SIGNED by Dimitrios Beis

duly authorised for and on behalf 

of DVB BANK SE (as the Agent)

	 	)

)     /s/ Dimitrios Beis

)
	 
	 	 
	SIGNED by Dimitrios Beis

duly authorised for and on behalf 

of DVB BANK SE (as the Security Agent)

	 	)

)     /s/ Dimitrios Beis

)
	 
	 	 
	SIGNED by Dimitrios Beis

duly authorised for and on behalf 

of Norddeutsche Landesbank Girozentrale

	 	)

)     /s/ Dimitrios Beis

)
	 
	 	 
	SIGNED
by Georgios Koutsoudakis

and by Chryssa Voulgari

duly authorised for and on behalf 

of EMPORIKI BANK OF GREECE S.A.

	 	)

)


)     /s/ Georgios Koutsoudakis

)     /s/ Chryssa Voulgari







93