EX-4.22






Private & confidential




Dated: 28th August, 2008




EMPORIKI BANK OF GREECE S.A.




- and -




STEALTHGAS INC.




 






LOAN AGREEMENT NO. 201/2008




for a secured floating interest rate

loan facility of up to US$29,437,000




 







Theo V. Sioufas & Co.

Law Offices

Piraeus




 









 





TABLE OF CONTENTS




	 	 	 	 	 	 	 
	CLAUSE	 	HEADINGS	 	PAGE	 
	 
	 	 	 	 	 	 
	1.
	 	PURPOSE, DEFINITIONS AND INTERPRETATION 	 	 	1	 
	2.
	 	THE LOAN 	 	 	13	 
	3.
	 	INTEREST 	 	 	14	 
	4.
	 	REPAYMENT — PREPAYMENT 	 	 	17	 
	5.
	 	PAYMENTS, TAXES AND COMPUTATION 	 	 	23	 
	6.
	 	REPRESENTATIONS AND WARRANTIES 	 	 	25	 
	7.
	 	CONDITIONS PRECEDENT 	 	 	31	 
	8.
	 	COVENANTS 	 	 	35	 
	9.
	 	EVENTS OF DEFAULT 	 	 	43	 
	10.
	 	INDEMNITIES — EXPENSES — FEES 	 	 	50	 
	11.
	 	SECURITY, APPLICATION AND SET-OFF 	 	 	54	 
	12.
	 	UNLAWFULNESS, INCREASED COSTS 	 	 	58	 
	13.
	 	ASSIGNMENT, PARTICIPATION, CHANGE OF LENDING BRANCH 	 	 	60	 
	14.
	 	COMMUNICATIONS 	 	 	62	 
	15.
	 	GOVERNING LAW AND JURISDICTION 	 	 	64	 






SCHEDULE





	 	 	 	 	 	 	 
	1.
	 	FORM OF DRAWDOWN NOTICE 	 	 	 	 







 









 







THIS AGREEMENT No. 201 is dated 28th August, 2008 made BETWEEN:





	(1)	 	EMPORIKI BANK OF GREECE S.A., a banking societe anonyme duly incorporated under the laws of
Greece, having its registered office at 11, Sofokleous Street, Athens, Greece, acting for the
purposes of this Agreement through its office at 114 Kolokotroni Street, Piraeus, Greece, as
lender (the “Bank”); and
	 
	(2)	 	STEALTHGAS INC., a company duly incorporated in the Republic of The Marshall Islands having
its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, P.O. Box
1405, Majuro, Marshall Islands MH 96960 (the
“Borrower”, which expression includes its
successors);




AND IT IS HEREBY AGREED as follows:





	1.	 	PURPOSE, DEFINITIONS AND INTERPRETATION
	 
	1.1	 	Purpose
	 
	 	 	This Agreement sets out the terms and conditions upon and subject to which it is agreed
that the Bank will make available to the Borrower a term loan of up to the lesser of (a)
Twenty nine million four hundred thirty seven thousand Dollars ($29,437,000) and (b) 75%
of the Market Values of the Vessels determined in accordance with Clause 8.10(b) to be
used for the purpose of financing part of the Market Values of the Vessels determined as
aforesaid.
	 
	1.2	 	Definitions
	 
	 	 	In this Agreement, unless the context otherwise requires each term or expression defined
in the recital of the parties and in this Clause shall have the meaning given to it in the
recital of the parties and in this Clause and:
	 
	 	 	“Accounts Pledge Agreement” means an agreement to be made between the Owners and the Bank
for the creation of a pledge in favour of the Bank over the Earnings Accounts and the
Retention Account, in form satisfactory to the Bank;
	 
	 	 	“Advance” means each borrowing of a portion of the Commitment by the Borrower or (as the
context may require) the principal amount of such borrowing;
	 
	 	 	“Agreed Rate” means a rate agreed between the Bank and the Borrower on the basis of which
(instead of LIBOR) the interest rate is determined pursuant to Clause 3.6;
	 
	 	 	“Availability Period” means the period starting on the date hereof and ending on the
15th September, 2008 or until such later date as the Bank may agree in writing
or on such earlier date (if any), (i) on which the whole Commitment has (or — in case that
the Commitment has been agreed in Clause 2.3 to be advanced in more than one Advance — all
Advances have) been advanced by the Bank to the Borrower, or (ii) on which the Borrower
cancels the whole of the undrawn Commitment under Clause 2.7 or (iii) on which the
Commitment is reduced to zero pursuant to Clauses 9.10 or 12.2 or 12.5 or any other Clause
of this Agreement;





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	 	 	“Balloon Instalment” means the principal part of the Loan amounting to $8,831,008 (Eight million
eight hundred thirty one thousand and eight Dollars);
	 
	 	 	“Bank” means the Bank as specified in the beginning of this Agreement and the successors and
assigns of the Bank;
	 
	 	 	“Banking Day” means any day on which banks and foreign exchange markets in New York, London,
Athens and Piraeus and in each country or place in or at which an act is required to be done
under this Agreement in accordance with the usual practice of the Bank, are open for the
transaction of business of the nature contemplated in this Agreement;
	 
	 	 	“Borrowed Money” means Indebtedness incurred in respect of (i) money borrowed or raised, (ii) any
bond, note, loan stock, debenture or similar instrument, (iii) acceptance or documentary credit
facilities, (iv) deferred payments for assets or services acquired, (v) rental payments under
leases (whether in respect of land, machinery, equipment or otherwise) entered into primarily as a
method of raising finance or of financing the acquisition of the asset leased, (vi) guarantees,
bonds, stand-by letters of credit or other instruments issued in connection with the performance
of contracts and (vii) guarantees or other assurances against financial loss in respect of
Indebtedness of any person falling within any of paragraphs (i) to (vi) above;
	 
	 	 	“Borrower” means the Borrower as specified at the beginning of this Agreement;
	 
	 	 	“Charterparty” means in respect of each Vessel any time charterparty entered or to be entered by
the Owner thereof or any person, firm or company on its behalf, as owner, and a charterer
acceptable to the Bank (herein a “Charterer”), which Charterparty exceeds or is capable of
exceeding twelve (12) months in duration and on terms and conditions in all respects acceptable to
the Bank (and shall include any addenda thereto) and includes the Shell Charterparties;
	 
	 	 	“Charterparty Assignment” in relation to a Vessel means the assignment of the relevant Shell
Charterparty executed or (as the context may require) to be executed by the Owner thereof in
favour of the Bank and an acknowledgement of notice of the assignment in respect of such Shell
Charterparty to be given by the relevant Charterer, in form satisfactory to the Bank (together,
the “Charterparties Assignments”);
	 
	 	 	“Commitment” means the amount which the Bank has agreed to lend to the Borrower under Clause 2.1
as reduced pursuant to any relevant term of this Agreement;
	 
	 	 	“Commitment Letter” means the Commitment Letter dated 20th February, 2008 of the Bank
and shall include any amendments or addenda thereto;
	 
	 	 	“Confirmation” means a Confirmation exchanged, or deemed exchanged, between the Bank and the
Borrower as contemplated by the Master Agreement;
	 
	 	 	“Corporate Guarantors” means the Owners;




2









 












	 	 	“Corporate Guarantee” means any guarantee given or, as the context may require, to be given by a
Corporate Guarantor in form and substance satisfactory to the Bank as a security for the
Outstanding Indebtedness and any and all other obligations of the Borrower under this Agreement
and the Master Agreement (together, the “Corporate Guarantees”);
	 
	 	 	“Credit Support Document” means any document described as such in the Master Agreement and, where
the context permits, any other document referred to in any Credit Support Document which has the
effect of creating an Encumbrance in favour of the Bank;
	 
	 	 	“Default” means any Event of Default or any event which with the giving of notice or lapse of time
or the satisfaction of any other condition (or any combination thereof) would constitute an Event
of Default;
	 
	 	 	“Default Rate” means that rate of interest per annum which is determined in accordance with the
provisions of Clause 3.4;
	 
	 	 	“DOC” means a document of compliance issued to an Operator in accordance with rule 13 of the ISM
Code;
	 
	 	 	“Dollars” and “$” mean the lawful currency of the United States of America and in respect of all
payments to be made under any of the Security Documents means funds which are for same day
settlement in the New York Clearing House Interbank Payments System (or such other U.S. dollar
funds as may at the relevant time be customary for the settlement of international banking
transactions denominated in Dollars);
	 
	 	 	“Drawdown Date” means the day, being a Banking Day, on which the Commitment or an Advance is or,
as the context may require, shall be advanced to the Borrower;
	 
	 	 	“Drawdown Notice” means a notice substantially in the terms of Schedule 1;
	 
	 	 	“Early Termination Date” has the meaning given to that expression in section 14 of the Master
Agreement;
	 
	 	 	“Earnings” in relation to a Vessel, means all earnings of such Vessel, both present or future,
including all freight, hire and passage moneys, compensation payable to the Owner in the event of
requisition of such Vessel for hire, remuneration for salvage and towage services, demurrage and
detention moneys, contributions of any nature whatsoever in respect of general average, damages for
breach (or payments for variation or termination) of any Charterparty or other contract for the
employment of such Vessel and any other earnings whatsoever due or to become due to the Owner in
respect of such Vessel and all sums recoverable under the Insurances in respect of loss of Earnings
and includes, if and whenever such Vessel is employed on terms whereby any and all such moneys as
aforesaid are pooled or shared with any other person, that proportion of the net receipts of the
relevant pooling or sharing agreement which is attributable to such Vessel;
	 
	 	 	“Earnings Account” means an account opened or to be opened and maintained in the name of each
Owner with the Bank pursuant to Clause 11.7 and shall include any sub-






3









 









	 	 	accounts or call accounts (whether in Dollars or any other currency) opened under the same
designation or any revised designation or number from time to time notified by the Bank to the
Borrower or the relevant Owner and to which (inter alia) all Earnings of the Vessel owned by such
Owner are to be paid in accordance with Clauses 11.7 and 8.9(b) (together, the “Earnings
Accounts”);
	 
	 	 	“Encumbrance” means any mortgage, charge (whether fixed or floating), pledge, lien, hypothecation,
assignment, security interest, title retention, arrest, seizure, garnishee order (whether nisi or
absolute) or any other order or judgement having similar effect or other encumbrance of any kind
securing or any right conferring a priority of payment in respect of any obligation of any person;
	 
	 	 	“Environmental Affiliate” in relation to a Vessel means any agent or employee of the Owner thereof
or any other Relevant Party or any person having a contractual relationship with such Owner or any
other Relevant Party in connection with any Relevant Ship or her operation or the carriage of
cargo thereon;
	 
	 	 	“Environmental Approval” means any consent, authorisation, licence or approval of any governmental
or public body or authorities or courts applicable to any Relevant Ship or her operation or the
carriage of cargo thereon and/or passengers therein and/or provisions of goods and/or services on
or from the Relevant Ship required under any Environmental Law;
	 
	 	 	“Environmental Claim” means (i) any claim by, or directive from, any applicable governmental,
judicial or other regulatory authority alleging breach of, or non-compliance with, any
Environmental Laws or Environmental Approvals or otherwise howsoever relating to or arising out of
an Environmental Incident or (ii) any claim by any other third party howsoever relating to or
arising out of an Environmental Incident (and, in each such case, “claim” shall mean a claim for
damages, clean-up costs, compliance, remedial action or otherwise);
	 
	 	 	“Environmental Incident” in relation to a Vessel means (i) any release of Material of Environmental
Concern from such Vessel, (ii) any incident in which Material of Environmental Concern is released
from a vessel other than such Vessel and which involves collision between such Vessel and such
other vessel or some other incident of navigation or operation, in either case, where such Vessel,
the Owner thereof or the Manager are actually at fault or otherwise liable (in whole or in part) or
(iii) any incident in which Material of Environmental Concern is released from a vessel other than
such Vessel and where such Vessel is actually liable to be arrested as a result and/or where the
Owner thereof or the Manager are actually at fault or otherwise liable;
	 
	 	 	“Environmental Laws” means all national, international and state laws, rules, regulations, treaties
and conventions applicable to any Relevant Ship pertaining to the pollution or protection of human
health or the environment including, without limitation, the carriage or Materials of Environmental
Concern and actual or threatened emissions, spills, releases or discharges of Materials of
Environmental Concern and actual or threatened emissions, spills, releases or discharges of
Materials of Environmental Concern from any Relevant Ship (including, without limitation, the





4









 






	 	 	United States Oil Pollution Act of 1990 and any comparable laws of the individual States of the
United States of America);
	 
	 	 	“Event of Default” means any event or circumstance set out in Clause 9 or described as such in any
other of the Security Documents;
	 
	 	 	“Expenses” means the aggregate at any relevant time (to the extent that the same have not been
received or recovered by the Bank) of:






	 	(a)	 	all losses, liabilities, costs, charges, expenses, damages and outgoings of whatever nature,
(including, without limitation, Taxes, repair costs, registration fees and insurance
premiums, crew wages, repatriation expenses and seamen’s pension fund dues) suffered,
incurred, charged to or paid or committed to be paid by the Bank in connection with the
exercise of the powers referred to in or granted by any of the Security Documents or
otherwise payable by the Borrower in accordance with the terms of any of the Security
Documents;
	 
	 	(b)	 	the expenses referred to in Clause 10.2; and
	 
	 	(c)	 	interest on all such losses, liabilities, costs, charges, expenses, damages and outgoings
from, in the case of Expenses referred to in sub-paragraph (b) above, the date on which such
Expenses were demanded by the Bank from the Borrower and in all other cases, the date on
which the same were suffered, incurred or paid by the Bank until the date of receipt or
recovery thereof (whether before or after judgement) at the Default Rate (as conclusively
certified by the Bank);






	 	 	“Final Maturity Date” means the date falling twelve (12) years from the Drawdown Date;
	 
	 	 	“Flag State” means the Republics of Marshall Islands (in the case of the Gastech Vessel) and the
Republic of Malta (in the case of Studio City Vessel) or, in the case of either Vessel, such other
state or territory proposed in writing by the Owner thereof to the Bank and approved (at its sole
discretion) by the Bank, as being the Flag State of such Vessel for the purposes of the Security
Documents;
	 
	 	 	“Gastech Owner” means
Gastech Inc., a company duly incorporated in the Republic of The
Marshall Islands having its registered office at Trust Company Complex, Ajeltake Road, Ajeltake
Island, Majuro, Marshall Islands MH 96960 (and includes its successors);
	 
	 	 	“General Assignment” in relation to each Vessel means the assignment collateral to the relevant
Mortgage executed or (as the context may require) to be executed by the Owner thereof in favour of
the Security Agent in form satisfactory to the Security Agent (together, the “General
Assignments”);
	 
	 	 	“Governmental Withholdings” means withholdings and any restrictions or conditions resulting in any
charge whatsoever imposed, either now or hereafter, by any sovereign state or by any political
sub-division or taxing authority of any
sovereign state;






5









 










	 	 	Group” means the Borrower, its Subsidiaries (including the Owners) and “Group Member” means any
member of the Group;
	 
	 	 	“IAS” means International Accounting Standards consistently applied;
	 
	 	 	“Indebtedness” means any obligation for the payment or repayment of money, whether as principal or
as surety, whether present or future, actual or contingent;
	 
	 	 	“Insurances” in relation to each Vessel means in respect of such Vessel all policies and contracts
of insurance and reinsurances for captive company, if applicable, (including, without limitation,
all entries of such Vessel in a protection and indemnity, war risks or other mutual insurance
association) which are from time to time in place or taken out or entered into by or for the
benefit of its Owner (whether in the sole name of its owner or in the joint names of its Owner and
the Security Agent) in respect of such Vessel and its earnings or otherwise howsoever in
connection with such Vessel and all benefits of such policies and/or contracts (including all
claims of whatsoever nature and return of premiums);
	 
	 	 	“Interest Payment Date” means in respect of the Loan or any part thereof in respect of which a
separate Interest Period is fixed the last day of the relevant Interest Period and in case of any
Interest Period longer than six (6) months the date(s) falling at successive six (6) monthly
intervals during such longer Interest Period and the last day of such Interest Period;
	 
	 	 	“Interest Period” means in relation to the Loan or any part thereof, each period for the
calculation of interest in respect of the Loan or such part ascertained in accordance with Clauses
3.2 and 3.3;
	 
	 	 	“ISM Code” means in relation to its application to an Owner, its Vessel and her operation:






	 	(a)	 	“The International Management Code for the Safe Operation of Ships and for Pollution
Prevention”, currently known or referred to as the “ISM Code”, adopted by the Assembly of the
International Maritime Organisation by Resolution A. 741(18) on 4th November, 1993
and incorporated on 19th May, 1994 into chapter IX of the International Convention
for the Safety of Life at Sea 1974 (SOLAS 1974); and
	 
	 	(b)	 	all further resolutions, circulars, codes, guidelines, regulations and recommendations which
are now or in the future issued by or on behalf of the International Maritime Organisation or
any other entity with responsibility for implementing the ISM Code, including without
limitation, the “Guidelines on implementation or administering of the International Safety
Management (ISM) Code by Administrations” produced by the International Maritime Organisation
pursuant to Resolution A. 788(19) adopted on 25th November, 1995;






	 	 	as the same may be amended, supplemented or replaced from time to time;






6









 










	 	 	“ISM Code Documentation” includes:






	 	(a)	 	the DOC and SMC issued by a classification society in all respects acceptable to the Bank in
its absolute discretion pursuant to the ISM Code in relation to a Vessel within the period
specified by the ISM Code;
	 
	 	(b)	 	all other documents and data which are relevant to the ISM SMS and its implementation and
verification which the Bank may require by request; and
	 
	 	(c)	 	any other documents which are prepared or which are otherwise relevant to establish and
maintain each Vessel’s or its Owner’s compliance with the ISM Code which the Bank may require
by request;






	 	 	“ISM SMS” means the safety management system which is required to be developed, implemented and
maintained under the ISM Code;
	 
	 	 	“ISPS Code” means the International Ship and Port Security Code of the International Maritime
Organization and includes any amendments or extensions thereto and any regulation issued pursuant
thereto;
	 
	 	 	“ISSC” means an International Ship Security Certificate issued in respect of each Vessel pursuant
to the ISPS Code;
	 
	 	 	“Lending Branch” means the office of the Bank appearing at the beginning of this Agreement or any
other office of the Bank designated by the Bank as the Lending Branch by notice to the Borrower;
	 
	 	 	“LIBOR” means, in relation to a particular period:






	 	(a)	 	the offered rate (if any) per annum for deposits in Dollars 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. (London time) on the second Banking Day prior to the commencement of
that Interest Period (or, if the Bank shall have made a determination pursuant to clause 3.6
such later time (not being later than 1 p.m. (London time) on the first day of such period) as
the Bank may determine) (and, for the purposes of this Agreement, “REUTERS BBA Page LIBOR 01”
means the display designated as “REUTERS BBA Page LIBOR 01” on the Telerate Service or such
other page as may replace REUTERS BBA Page LIBOR 01 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 for the purpose of displaying British Bankers’ Association
Interest Settlement Rates for Dollars)
	 
	 	(b)	 	if on such date no such rate is so displayed, LIBOR for such period shall be the rate
determined by the Bank to be the rate at which the Bank in accordance with its usual
practices is able to obtain similar deposit(s) in Dollars in an amount approximately equal to
the amount in relation to which LIBOR is to be determined for a period equivalent to such
period in the London Interbank Market at or about 11:00 a.m. (London time) on the second
Banking Day before the first day of such period;






7












 






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




“Major Casualty Amount” means any casualty to a Vessel in respect whereof the claim or the
aggregate of the claims against all insurers, before adjustment for any relevant franchise or
deductible, exceeds One Million Dollars ($1,000,000) or the equivalent in any other currency;




“Management Agreement” in relation to a Vessel means the agreement made or to be made between the
Owner thereof and the Manager providing for the appointment of the Manager to manage such Vessel
subject to and upon the terms and conditions therein contained and approved by the Bank (together,
“Management Agreements”);




“Manager”
means Stealth Maritime
Corp. S.A., a company duly incorporated under the laws
of the Republic of Liberia, whose registered office is at 80 Broad Street, Monrovia, Liberia and
having an established office in Greece under Greek laws 89/67, 378/68, 25/75 and 814/79 (as
amended) at 331 Kifissias Avenue, 145 61 Kifissia, Athens, Greece and/or any other person
nominated by the Borrower and acceptable to the Bank which shall manage the Vessels (or either of
them);




“Manager’s Undertaking” in relation to a Vessel means letter of undertaking and subordination
executed or (as the context may require) to be executed by the Manager in favour of the Bank, such
undertaking to be in form and substance satisfactory to the Bank (together, the “Manager’s
Undertakings”);




“Margin” means zero point nine zero per centum (0.90%) per annum;




“Master Agreement” means the Master Agreement (on the 1992 ISDA (Multicurrency — Crossborder) form
as modified (or any other form of master agreement relating to interest or currency exchange
transactions)) made or to be made between the Bank and the Borrower, and includes the Schedule
thereto and all transactions from time to time entered into and Confirmations from time to time
exchanged under the Master Agreement and any amending, supplementing or replacement agreements
made from time to time;




“Master Agreement Liabilities” means, at any relevant time, all liabilities actual or contingent,
present or future, of the Borrower to the Bank under the Master Agreement;




“Master Agreement Security Deed” means, in relation to the Master Agreement, the security deed
executed or (as the context may require) to be executed by the Borrower in favour of the Bank in
relation to certain of the rights of the Borrower under the Master Agreement in form and substance
satisfactory to the Bank;




“Market Value” in relation to a Vessel means the market value of such Vessel as determined in
accordance with Clause 8.10(b);




“Material of Environmental Concern” means and includes pollutants, contaminants toxic substances,
oil as defined in the United States Oil Pollution Act of 1990 and all



8









 









hazardous substances as defined in the United States Comprehensive Environmental Response,
Compensation and Liability Act 1988;




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




“Mortgage” means in relation to a Vessel the first preferred ship mortgage or, as the case may,
first priority ship mortgage and the Deed of Covenants supplemental thereto, to be executed by the
Owner thereof in favour of the Bank in form satisfactory to the Bank and be registered on such
Vessel on the relevant Drawdown Date (together, the
“Mortgages”);




“Mortgaged Vessel” means, at any relevant time, any Vessel which is at such time subject to a
Mortgage and/or the Earnings, the Insurances and Requisition Compensation (each as defined in the
relevant Mortgage or, as the case may be, General Assignment) of which are subject to an
Encumbrance pursuant to the relevant Security Documents and a Vessel shall for the purposes of
this Agreement be deemed to be a Mortgaged Vessel as from whichever shall be the earlier of (a)
the Drawdown Date of the relevant Advance for that Vessel and (b) the date that the Mortgage of
that Vessel shall have been executed and registered in accordance with this Agreement until
whichever shall be the earlier of (i) the payment in full of the amount required to be paid by the
Borrower pursuant to Clause 4.3 following the sale or Total Loss of such Vessel and (ii) the date
on which all monies owing under the Security Documents have been repaid in full;




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




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




“Owners” means, together, the Gastech Owner and the Studio City Owner and in the singular either
of them as the context may require;




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




“Permitted Liens” in relation to a Vessel means any lien on such Vessel for master’s, officer’s or
crew’s wages outstanding in the ordinary course of trading, any lien for salvage and any ship
repairer’s or outfitter’s possessory lien for a sum not (except



9









 






with the prior written consent of the Bank) exceeding the Major Casualty (as defined in the
Mortgages);




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




“Related Company” of any company is a company which is controlled by that company from time to
time;




“Relevant Jurisdiction” means any jurisdiction in which or where any Security Party is
incorporated, resident, domiciled, has a permanent establishment, carries on, or has a place of
business or is otherwise effectively connected;




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




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




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




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




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




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




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




“Security Documents” means the Master Agreement, the Master Agreement Security Deed, the Accounts
Pledge Agreement, the General Assignments, the Mortgages, the Corporate Guarantees, the
Charterparties Assignments, the Manager’s Undertaking and any document or documents (including if
the context requires this Agreement) that may now or hereafter be executed to secure the whole or
any part of the Outstanding Indebtedness as well as for the performance by the Borrower of all its
obligations covenants and agreements pursuant to this Agreement, the Master Agreement and/or the
other Security Documents, each such Security Document to be in form and substance as the Bank may
require as the same may from time to time be amended and/or supplemented;




10









 









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




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




“Security Requirement” means the amount in Dollars (as certified by the Bank whose certificate
shall, in the absence of manifest error, be conclusively binding on the Borrower) which is at any
relevant time one hundred and twenty five percent (125%) of the aggregate of the Loan and the Swap
Exposure;




“Security Value” means the amount in Dollars (as certified by the Bank whose certificate shall, in
the absence of manifest error, be conclusive and binding on the Borrower) which, at any relevant
time is the aggregate of (a) the Market Value of the Mortgaged Vessel (s) as most recently
determined in accordance with Clause 8.10(b) and (b) the market value of any additional security
provided under Clause 8.10(c) (if any);




“Shell Charterparty” means in relation to:




	 	(a)	 	the Gastech Vessel means the time charter (code name “Shelltime 4”) dated February 8, 2006,
made between Shell Tankers Private Limited or Shell Nominee, of Singapore, later changed to
Shell International Eastern Trading Company owned by Shell Eastern Trading (Pte) Ltd., as
charterer (the “Charterer”), and Dreamship Inc., as owner (the “Original Owner”), for the
time-charter employment of such Vessel for a remaining period expiring in May 2009, at a
monthly ceiling hire of $245,000 and with all other terms and conditions acceptable to the
Bank (the “Gastech Shell Charterparty”); and
	 
	 	(b)	 	the Studio City Vessel means the a time charter (code name “Shelltime 4”) dated March 27,
2007, made between Shell Gas Trading (Asia Pacific) Inc., of Philippines, later changed to
Shell International Eastern Trading Company owned by Shell Eastern Trading (Pte) Ltd., as
charterer (the “Charterer”), and Stellar Management Ltd., as owner (the “Original Owner”),
for the time-charter employment of such Vessel for a remaining period expiring in July, 2010,
at a monthly hire of $247,000 and with all other terms and conditions acceptable to the Bank
(the “Studio City Shell Charterparty”),
	 
	 	 	 	(together, the “Shell Charterparties”);






	 	 	“SMC” in relation to a Vessel means a safety management certificate issued in respect of such
Vessel in accordance with rule 13 of the ISM Code;
	 
	 	 	“Studio City Owner” means Studio City Inc., a company duly incorporated in the Republic of
The Marshall Islands having its registered office at Trust Company Complex, Ajeltake Road, Ajeltake
Island, Majuro, Marshall Islands MH 96960 (and includes its successors);





11









 






“Subsidiary” means a body corporate from time to time of which another body corporate (a)
has direct or indirect control, or (b) owns directly or indirectly more than fifty percent
(50%) of the share capital or similar right of ownership (and in this definition “control”
means the power to direct the management and the policies of a body corporate, whether
through the ownership of voting capital, by contract or otherwise);




“Swap Exposure” means, as at any relevant time, the amount certified by the Bank to the
Borrower to be the aggregate net amount in Dollars which would be payable by the Borrower
to the Bank under (and calculated in accordance with) section 6(e) (Payments on Early
Termination) of the Master Agreement if an Early Termination Date had occurred at the
relevant time in relation to all continuing Transactions;




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




“Total Loss” in relation to a Vessel, means (a) actual, constructive, compromised or
arranged total loss of such Vessel; or (b) requisition for title or other compulsory
acquisition of such Vessel otherwise than by requisition for hire; or (c) hijacking, theft,
condemnation, capture, seizure, detention, arrest or confiscation of such Vessel by any
government or by any person acting or purporting to act on behalf of any government, unless
such Vessel is released and restored to the Owner thereof within sixty (60) days after the
occurrence thereof;




“Transaction” means a transaction entered into between the Bank and the Borrower governed
by the Master Agreement;




“Vessels” means, together:




	 	(a)	 	the gas carrier motor vessel “GAS KALOGEROS” of approximately 4,484 gt and
1,346 nt, registered in the ownership of the Studio City Owner at the Ships’ Registry
of the port of Valletta under the laws and flag of the Republic of Malta under IMO
Number 9392858 (the “Studio City Vessel”); and
	 
	 	(b)	 	the gas carrier motor vessel “GAS SIKOUSIS”
of approximately 3,434 gt and 1,031 nt, built in 2006 and registered in the ownership of the Gastech Owner at the Ships’
Registry of the port of Majuro under the laws and flag of the Republic of Marshall
Islands under Official Number 2843 (the “Gastech Vessel”),






and “Vessel” means either of them as the context may require.




	1.3	 	Interpretation. In this Agreement:






	 	(a)	 	Clause headings and the table of contents are inserted for convenience of
reference only and shall be ignored in the interpretation of this Agreement;
	 
	 	(b)	 	each of the terms defined in Clause 1.2 when used in plural and terms defined
in plural or words used in plural (and unless in the specific clause or sentence




12









 






	 	 	 	is otherwise expressly specified) mean all of them collectively and/or each of them
and/or anyone of them (even if this is not expressly so spelled out) as the context
may require or permit;






	 	(c)	 	subject to any specific provision of this Agreement or of any assignment
and/or participation or syndication agreement of any nature whatsoever, reference to
each of the parties hereto and to the other Security Documents shall be deemed to be
reference to and/or to include, as appropriate, their respective successors and
permitted assigns;
	 
	 	(d)	 	reference to a person shall be construed as including reference to a firm,
company, corporation or any State or any agency thereof;
	 
	 	(e)	 	where the context so admits, words in the singular include the plural and vice
versa;
	 
	 	(f)	 	the words “including” and “in particular” shall not be construed as limiting
the generality of any foregoing words;
	 
	 	(g)	 	this Agreement and all documents referred to in this Agreement include the
same as varied or supplemented from time to time;
	 
	 	(h)	 	reference to this Agreement includes all the terms of this Agreement and any
Schedules, Annexes or Appendices to this Agreement, which form an integral part of
same;
	 
	 	(i)	 	reference to Clauses, Sub-Clauses and Schedules are to Clauses, Sub-Clauses
and Schedules in this Agreement;
	 
	 	(j)	 	reference to a “guarantee” include references to an indemnity or other
assurance against financial loss including, without limitation, an obligation to
purchase assets or services as a consequence of a default by any other person to pay
any Indebtedness and “guaranteed” shall be construed accordingly;
	 
	 	(k)	 	reference to the opinion of the Bank or a determination or acceptance by the
Bank or to documents, acts, or persons acceptable or satisfactory to the Bank or the
like shall be construed as reference to opinion, determination, acceptance or
satisfaction of the Bank at the reasonable discretion of the Bank and such opinion,
determination, acceptance or satisfaction of the Bank shall be conclusive and binding
on the Borrower (save as herein provided); and
	 
	 	(l)	 	words and expressions defined in the Master Agreement, unless the context
otherwise requires, when used herein, have the same meaning.






	2.	 	THE LOAN
	 
	2.1	 	Commitment to Lend. Relying upon each of the representations and warranties in Clause 6 and
in each of the other Security Documents, it is hereby agreed and undertaken by the Bank to
lend to the Borrower upon and subject to the terms of this Agreement, the sum referred to in
Clause 1.1 hereof.










13









 












	2.2	 	Drawdown Notice and Commitment to Borrow. Subject to the terms and conditions of this
Agreement, the Commitment (or -in case that the Commitment has been agreed in Clause 2.3 to
be advanced in more than one Advance — each Advance) shall be advanced to the Borrower
following receipt by the Bank from the Borrower of a Drawdown Notice not later than 10 a.m.
(London time) on the second Banking Day before the date on which the drawdown is intended
to be made. A Drawdown Notice shall be effective on actual receipt by the Bank and, once
given, shall subject as provided in Clause 3.6 be irrevocable.
	 
	2.3	 	Number of Advances Agreed. The Commitment shall be advanced to the Borrower in up to two (2)
Advances.
	 
	2.4	 	Disbursement. Upon receipt of a Drawdown Notice complying with the terms of this Agreement
the Bank shall, subject to the provisions of Clause 7, on the date specified in such Drawdown
Notice, make the Commitment (or — in case that the Commitment has been agreed in Clause 2.3
to be advanced in more than one Advance — the relevant Advance) available to the Borrower.
	 
	2.5	 	Application of proceeds. Without prejudice to the Borrower’s obligations under Clause
8.10(a), the Bank shall have no responsibility for the application of the proceeds of the
Loan (or any part thereof) by the Borrower.
	 
	2.6	 	Termination Date. Any part of the Commitment undrawn and uncancelled at the end of the
Availability Period shall thereupon be automatically cancelled.
	 
	2.7	 	Cancellation. The Borrower shall be entitled to cancel any undrawn part of the Commitment
under this Agreement upon giving the Bank not less than five (5) Banking Days’ notice in
writing to that effect, provided that no Drawdown Notice has been given to the Bank under
Clause 2.2 for the full amount of the Commitment or in respect of the portion thereof in
respect of which cancellation is required by the Borrower. Any such notice of cancellation,
once given, shall be irrevocable. Any amount cancelled may not be drawn. Notwithstanding any
such cancellation pursuant to this Clause 2.7 the Borrower shall continue to be liable for
any and all amounts due to the Bank under this Agreement including without limitation any
amounts due to the Bank under Clause 10.
	 
	3.	 	INTEREST
	 
	3.1	 	Interest Rate. The Borrower shall pay interest on the Loan (or as the case may be, each
portion thereof to which a different Interest Period relates) in respect of each Interest
Period (or part thereof) on each Interest Payment Date in arrears, provided that in the case
of an Interest Period of more than six (6) months interest accruing during such Interest
Period shall be payable quarterly in arrears and on the last day of such Interest Period. The
interest rate for the calculation of interest shall be the rate per annum determined by the
Bank to be the aggregate of (i) the Margin and (ii) LIBOR, unless there is an Agreed Rate in
which case the interest rate for the calculation of interest shall be the rate per annum
determined by the Bank to be the aggregate of (i) the Margin and (ii) the Agreed Rate.
	 
	3.2	 	Selection of Interest Period. The Borrower may by notice received by the Bank not later than
10 a.m. (London time) on the second Banking Day before the beginning of




14









 






	 	 	each Interest Period specify (subject to Clause 3.3 below) whether such Interest Period
shall have a duration of six (6) or twelve (12) months (or such other period as may be
requested by the Borrower subject to Bank’s approval and market availability).






	3.3	 	Duration of Interest Period. Every Interest Period shall, subject to market availability to
be conclusively determined by the Bank, be of the duration specified by the Borrower pursuant
to Clause 3.2 but so that:






	 	(a)	 	the initial Interest Period in respect of the Loan (or — in case that the
Commitment is agreed to be advanced in more than one Advance — of each Advance) will
commence on the date on which the Commitment (or — as the case may be — the relevant
Advance) is advanced and each subsequent Interest Period will commence forthwith upon
the expiry of the previous Interest Period;
	 
	 	(b)	 	in case that the Commitment is advanced by more than one Advance, the initial
Interest Period in respect of each Advance after the first Advance shall end on the
same day as the then current Interest Period for the Loan;
	 
	 	(c)	 	if any Interest Period would otherwise overrun one or more Repayment Dates,
then, in the case of the last Repayment Date, such Interest Period shall end on such
Repayment Date, and in the case of any other Repayment Date or Dates the Loan shall be
divided into parts so that there is one part equal to the amount(s) of the Repayment
Instalment(s) due on each Repayment Date falling during that Interest Period and
having an Interest Period ending on the relevant Repayment Date and another part equal
to the amount of the balance of the Loan having an Interest Period determined in
accordance with Clause 3.2 and the other provisions of this Clause 3.3;
	 
	 	(d)	 	if the Borrower fails to specify the duration of an Interest Period in
accordance with the provisions of Clause 3.2 and this Clause 3.3, such Interest Period
shall have a duration of three (3) months unless another period shall be agreed
between the Bank and the Borrower provided always that such period (whether of three
(3) months or of different duration) shall comply with this Clause 3.3; and
	 
	 	(e)	 	if the Bank determines that the duration of an Interest Period specified by
the Borrower in accordance with Clause 3.2 is not readily available, then that
Interest Period shall have such duration as the Bank, in consultation with the
Borrower, may determine,
	 
	 	 	 	provided, always, that:






	 	(i)	 	any Interest Period which commences on the last day of a
calendar month, and any Interest Period which commences on the day on which
there is no numerically corresponding day in the calendar month during which
such Interest Period is due to end, shall end on the last Banking Day of the
calendar month during which such Interest Period is due to end; and










15









 












	 	(ii)	 	if the last day of an Interest Period is not a Banking Day the
Interest Period shall be extended until the next following Banking Day
unless such next following Banking Day falls in the next calendar month in
which case such Interest Period shall be shortened to expire on the
preceding Banking Day.






	3.4	 	Default Interest. If the Borrower fails to pay any sum (including, without limitation, any
sum payable pursuant to this Clause 3.4) on its due date for payment under any of the
Security Documents, the Borrower shall pay interest on such sum from the due date up to the
date of actual payment (as well after as before judgement) at the rate determined by the Bank
pursuant to this Clause 3.4. The period beginning on such due date and ending on such date of
payment shall be divided into successive periods of such duration as selected by the Bank
each of which (other than the first, which shall commence on such due date) shall commence on
the last day of the preceding such period. The rate of interest applicable to each such
period shall be the aggregate (as determined by the Bank) of (i) two per cent (2%), per
annum, (ii) the Margin and (iii) LIBOR. Such interest shall be due and payable on the last
day of each such period as determined by the Bank and each such day shall, for the purposes
of this Agreement, be treated as an Interest Payment Date. In case that a payment is made in
default for any amount, the Interest Periods will be determined by the Bank at its discretion
including the amounts for which there is no default, even if the Bank has not (yet) exercised
its rights pursuant to Clause 9.10 of this Agreement. If for the reasons specified in Clause
3.6, the Bank is unable to determine a rate in accordance with the foregoing provisions of
this Clause 3.4, interest on any sum not paid on its due date for payment shall be calculated
at a rate determined by the Bank to be two per cent (2%) per annum above the aggregate of the
Margin and costs of funds to the Bank as conclusively determined by the Bank save for
manifest error. Interest payable by the Borrower as aforesaid shall be compounded
semi-annually (or if the period fixed by the Bank is longer, at the end of such longer
period) and shall be payable on demand.
	 
	3.5	 	Notification of Interest. The Bank shall notify the Borrower promptly of the duration of
each Interest Period and of each rate of interest determined by it under this Clause 3
without prejudice to the right of the Bank to make determinations at its sole discretion. In
case that the Bank fails to notify the Borrower as above, such failure will not affect the
validity of the determination of the Interest Period and Interest Rate made pursuant to
Clause 3 and neither constitute nor will be interpreted as if to constitute a breach of
obligation of the Bank except in case of wilful misconduct.
	 
	3.6	 	Market disruption — Non availability. If and whenever, at any time prior to the commencement
of any Interest Period, the Bank shall have determined (which determination shall, in the
absence of manifest error, be conclusive) (i) that adequate and fair means do not exist for
ascertaining LIBOR in respect of Dollars during said Interest Period or (ii) that deposits in
Dollars are not available to the Bank in the London Interbank Market in the ordinary course of
business in sufficient amounts for any Interest Period or (iii) that by reason of
circumstances affecting the London Interbank Market generally it is impracticable for the Bank
to advance the Commitment or fund or continue to fund an Advance or the Loan during any
Interest Period or (iv) that LIBOR for that Interest Period will not adequately reflect the
cost of funding of the Loan for that Interest Period, the Bank shall the Bank shall forthwith




16









 






	 	 	give notice (a “Determination Notice”) thereof to the Borrower. A Determination Notice
shall contain particulars of the relevant circumstances giving rise to its issue. After the
giving of any Determination Notice the undrawn amount of the Commitment shall not be
borrowed until notice to the contrary is given to the Borrower by the Bank.






	 	(a)	 	During the Period of ten (10) days after any Determination Notice has been
given by the Bank under Clause 3.6(a) the Bank and the Borrower shall negotiate in
good faith (but without incurring any legal obligations) with a view to arriving to an
acceptable alternative basis (the “Substitute Basis”), for maintaining the Loan,
failing which the Borrower shall promptly, on first demand or within the time limit
which may be determined by the Bank, prepay the Loan together with accrued interest
thereon to the date of prepayment (calculated at the rate or rates most lately
applicable to the Loan) and all other sums payable by the Borrower under the Security
Documents and the Commitment shall be reduced to zero. In case the Bank agrees to a
Substitute Basis for funding the Loan the Bank shall certify such Substitute Basis to
the Borrower. The Substitute Basis may (without limitation) include alternative
interest period, alternative currencies or alternative rates of interest but shall
include a margin above the cost of funds to the Bank equivalent to the relevant
Margin. Each Substitute Basis so certified shall be binding upon the Borrower and
shall take effect in accordance with its terms from the date specified in the
Determination Notice until such time as the Bank notifies the Borrower that none of
the circumstances specified in clause 3.6(a) continues to exist whereupon the normal
interest rate fixing provisions of this Agreement shall apply.






	3.7	 	Swap Transactions






	 	(a)	 	If, at any time during the Security Period, the Borrower wishes to enter into
swap Transactions so as to (inter alia) hedge all or any part of their exposure under
this Agreement to interest rate fluctuations, it shall advise the Bank in writing.
	 
	 	(b)	 	Any such swap transaction shall be concluded with the Bank under the Master
Agreement provided however that no such swap transaction shall be concluded unless the
Bank first agrees to it in writing. If and when any such swap transaction has been
concluded, it shall constitute a Transaction, and the Borrower shall sign a
Confirmation with the Bank.






	4.	 	REPAYMENT — PREPAYMENT
	 
	4.1	 	Repayment.






	 	(a)	 	Repayment: The Borrower shall and it is expressly undertaken by the
Borrower to repay the Loan by (i) twenty four (24) consecutive semi-annual repayment
instalments (the “Repayment Instalments”), each of which shall be in the amount of
eight hundred fifty eight thousand five hundred eighty three Dollars ($858,583), each
to be repaid on each of the Repayment Dates so that the first be repaid on the date
falling six (6) months from the Drawdown Date of the first Advance and each of the
subsequent ones consecutively






17












 






	 	 	 	falling due for payment on each of the dates falling six (6) months after the
immediately preceding Repayment Date with the last (the 24th) of such
Repayment Instalments falling due for payment on the Final Maturity Date and (ii)
the Balloon Instalment payable together with the last Repayment Instalment on the
Final Maturity Date;
	 
	 	 	 	provided that (aa) if the Commitment is not drawn down in full, the amount
of each Repayment Instalment and the Balloon Instalment shall be reduced
proportionally (bb) if the last Repayment Date would otherwise fall after the Final
Maturity Date, such last Repayment Date shall be the Final Maturity Date, (cc)
there shall be no Repayment Dates after the Final Maturity Date, (dd) on the Final
Maturity Date the Borrower shall also pay to the Bank any and all other monies then
payable under this Agreement and the other Security Documents, and (ee) if any of
the Repayment Instalments shall become due on a day which is not a Banking Day, the
due date therefor shall be extended to the next succeeding Banking Day unless such
Banking Day falls in the next calendar month, in which event such due date shall be
the immediately preceding Banking Day.
	 
	 	(b)	 	Deferment Option: The Borrower may by giving not less than 15 days’
prior written notice thereof to the Bank, elect to defer the payment of up to one
third of three (3) Repayment Instalments specified in Clause 4.1(a), not necessarily
consecutive, expressly subject to the following terms and conditions:






	 	(i)	 	no deferment of a Repayment Instalment shall be made prior to
the repayment of the first six (6) Repayment Instalments;
	 
	 	(ii)	 	no Default or Event of Default has occurred and is continuing
both at the date of the Borrower’s said request and on the Repayment Date on
which the first deferred Repayment Instalment was due and payable;
	 
	 	(iii)	 	the Security Value is at least equal to the Security
Requirement both at the date of the Borrower’s said request and on the
Repayment Date on which the relevant deferred Repayment Instalment was due and
payable; and
	 
	 	(iv)	 	each deferred Repayment Instalment shall be added pro-rata to
the Balloon Instalments and shall be repaid on the relevant Final Maturity
Dates, provided that in no circumstances shall the period for the
repayment of the Loan be extended beyond the Final Maturity Date.






	4.2	 	Voluntary Prepayment. The Borrower shall have the right, upon giving the Bank not less than
Ten (10) Banking Days’ notice in writing, to prepay, without any penalty or fee, part or all
of the Loan in each case together with all unpaid interest accrued thereon and all other sums
of money whatsoever due and owing from the Borrower to the Bank hereunder or pursuant to the
other Security Documents and all interest accrued thereon, provided that:






	 	(a)	 	the giving of such notice by the Borrower will irrevocably commit the
Borrower to prepay such amount as stated in such notice;




18









 












	 	(b)	 	such prepayment may take place only on the last day of an Interest Period
relating to the whole of the Loan provided, however, that if the Borrower shall
request consent to make such prepayment on another day and the Bank shall accede to
such request (it being in the sole discretion of the Bank to decide whether or not
to do so) the Borrower will pay in addition to the amount to be prepaid, any such
sum as may be payable to the Bank pursuant to Clause 10.1;
	 
	 	(c)	 	each partial prepayment shall be equal to the amount of $800,000 or a whole
multiple thereof or the balance of the Loan and will be applied by the Bank in or
towards first the Balloon Instalment and then the Repayment Instalments, in the
inverse order of their due dates of payment;
	 
	 	(d)	 	every notice of prepayment shall be effective only on actual receipt by the
Bank, shall be irrevocable and shall oblige the Borrower to make such prepayment on
the date specified;
	 
	 	(e)	 	no amount prepaid may be re-borrowed; and
	 
	 	(f)	 	the Borrower may not prepay the Loan or any part thereof save as expressly
provided in this Agreement.






	4.3	 	Compulsory Prepayment in case of Total Loss or sale of a Vessel






	 	(a)	 	On any Mortgaged Vessel becoming a Total Loss or suffering damage or being
involved in an incident which in the reasonable opinion of the Bank may result in
such Vessel being subsequently determined to be a Total Loss:






	 	(i)	 	prior to the drawdown of the Advance relative to such Vessel
the obligation of the Bank to advance such Advance shall cease; or
	 
	 	(ii)	 	in case the Commitment (or any part thereof) has been
already advanced, the amount of the Loan shall, on expiry of a period of one
hundred and eighty (180) days following the occurrence of such Total Loss or
the date on which the relevant Mortgaged Vessel suffered damage or the
incident which, in the reasonable opinion of the Bank, may result in such
Vessel being subsequently determined to be a Total Loss occurred or, if
earlier, on the date upon which the insurance proceeds in respect of such
Total Loss are or Requisition Compensation in respect of such Vessel is
received by the Owner thereof, be reduced by an amount equal to the Required
Amount (as hereinafter defined) and the amount so prepaid shall be applied by
the Bank in pro-rata prepayment of the outstanding Repayment Instalments
(including the Balloon Instalment);
	 
	 	 	 	and for the purpose of this Agreement:






	 	aa)	 	an actual total loss of a Vessel shall be
deemed to have occurred at the actual date and time a Vessel was lost
but in the event of the date of the loss being unknown then the actual
total loss shall be deemed to have occurred on the date on which a
Vessel was last reported;










19









 












	 	bb)	 	in the case of a constructive total loss of a Vessel, upon the date
and at the time notice of abandonment of such Vessel is given to the
insurers of such Vessel for the time being (provided a claim for total
loss is admitted by such insurers) or, if such insurers do not forthwith
admit such a claim, or, in the event that such notice of abandonment is
not given by the Owner thereof to the insurers of such Vessel, at the
date and time on which occurred the incident which may result, in the
reasonable opinion of the Bank, in such Vessel being subsequently
determined to be a Total Loss;
	 
	 	cc)	 	a compromised or arranged total loss shall be deemed to
have occurred on the date on which a binding agreement as to such
compromised or arranged total loss has been entered into by the insurers of
a Vessel;
	 
	 	dd)	 	requisition for title or other compulsory acquisition of a
Vessel shall be deemed to have occurred on the date upon which the relevant
requisition for title or other compulsory acquisition occurs; and
	 
	 	ee)	 	hijacking, theft, condemnation, capture, seizure, detention,
arrest, or confiscation of a Vessel by any government or by any person acting
or purporting to act on behalf of any government, which deprives the relevant
Owner of the use of its Vessel for more than sixty (60) days shall be deemed
to occur upon the expiry of the period of sixty (60) days after the date upon
which the relevant hijacking, theft, condemnation, capture, seizure,
detention, arrest or confiscation occurred.






	 	(b)	 	If any Mortgaged Vessel is sold the amount of the Loan shall, forthwith upon receipt of the
proceeds of such sale be reduced by an amount equal to the Required Amount of the Loan and
the Borrower shall thereupon be obliged to make such repayment of the Loan, provided,
that such sale is made at the market value of the relevant Mortgaged Vessel prevailing at
the time. The amount so prepaid shall be applied by the Bank in pro-rata prepayment of the
outstanding Repayment Instalments (including the Balloon Instalment);






	 	 	and for the purpose of this Clause 4.3, “Required Amount” means in relation to either Mortgaged
Vessel an amount equal to 50% of the Loan outstanding at the relevant time, provided, however,
that if the relevant Mortgaged Vessel so lost or sold is the last Mortgaged Vessel, then the
full amount of the insurance or, as the case may be, the sale proceeds shall apply against full
repayment of the Outstanding Indebtedness and additionally the Borrower shall pay to the Bank the
balance (if any) of the Outstanding Indebtedness. In addition the Borrower shall be obliged
together with the Required Amount to pay to the Bank the amount of the interest accrued on the Loan
to the date of prepayment and all other sums (other than the balance of principal of the Loan
remaining outstanding after such prepayment having been made) due and payable by the Borrower to
the Bank pursuant to the Security Documents (or





20









 






	 	 	any of them) including without limitation, any amounts payable under Clause 10 as the Bank
in its absolute discretion may determine;
	 
	 	 	provided, however, that if after the payment of the Required Amount and any
additional amounts payable to the Bank under this Clause 4.3 the provisions of Clause
8.10(a) are not complied with, the Borrower shall additionally prepay to the Bank the
amount of the shortfall or provide additional security as provided in such Clause 8.10(a).
	 
	4.4	 	Amounts payable on prepayment. Any prepayment of all or part of the Loan under this
Agreement shall be made together with (a) accrued interest on the amount to be prepaid to the
date of such prepayment, (b) any additional amount payable under Clause 5.3 and 12.3 and (c)
all other sums payable by the Borrower to the Bank under this Agreement or any of the other
Security Documents including, without limitation, any amounts payable under Clause 10.
	 
	4.5	 	Amounts payable on prepayment






	 	(a)	 	Any prepayment of all or part of the Loan under this Agreement shall be made
together with (a) accrued interest on the amount to be prepaid to the date of such
prepayment, (b) any additional amount payable under Clause 5.3 and 12.3, and (c) all
other sums payable by the Borrower to the Bank under this Agreement or any of the
other Security Documents including, without limitation, any amounts payable under
Clause 10.
	 
	 	(b)	 	In case the Borrower requests the prepayment of the full amount of the Loan
and at the relevant time there are any Transaction(s) in relation to the Loan or, as
the case may be, such Tranche outstanding under the Master Agreement, the Borrower
shall pay in addition to the above any and all amounts then outstanding under the
relevant Transactions.






	4.6	 	Master Agreement, Repayments and Prepayments






	 	(a)	 	Subject to the execution and delivery to the Bank of the Master Agreement,
the Bank and the Borrower may during the Security Period enter, into one or more
Transactions pursuant to the Master Agreement, subject to the Bank’s approval, the
terms and conditions of each of which are or will be specified in a Confirmation sent
by the Bank to the Borrower.
	 
	 	(b)	 	Notwithstanding any provision of the Master Agreement to the contrary, in the
case of a prepayment of all or part of the Loan (including, without limitation, upon a
Total Loss or sale in accordance with clause 4.3 or under clause 8.10(c)), then
subject to clause 4.6(b) the Bank shall be entitled but not obliged (and, where
relevant, may do so without the consent of the Borrower, where it would otherwise be
required whether under the Master Agreement or otherwise) to amend, supplement,
cancel, net out, terminate, liquidate, transfer or assign all or any part of the
rights, benefits and obligations created by any Transaction and/or the Master
Agreement and/or to obtain or re establish any hedge or related trading position in
any manner and with any person the Bank in its absolute discretion may determine and
both the Bank’s and the Borrower’s continuing obligations under any Transaction and/or
the Master




21









 






	 	 	 	Agreement shall, unless agreed otherwise by the Bank, be calculated so far as the Bank
considers it practicable by reference to the amended repayment schedule for the Loan
taking into account the fact that less than the full amount of the Loan remains
outstanding.






	 	(c)	 	If any amount of the Loan remains outstanding following a prepayment under this Agreement
and the Bank in its absolute discretion agrees, following a written request of the Borrower,
that the Borrower may be permitted to maintain all or part of a Transaction in an amount not
wholly matched with or linked to all or part of the Loan, the Borrower shall within ten (10)
days of being notified by the Bank of such requirement, provide the Bank with, or procure the
provision to the Bank of, such additional security as shall in the opinion of the Bank be
adequate to secure the performance of such Transaction, which additional security shall take
such form, be constituted by such documentation and be entered into between such parties, as
the Bank in its absolute discretion may approve or require, and each document comprising such
additional security shall constitute a Credit Support Document.
	 
	 	(d)	 	The Borrower shall on the first written demand of the Bank indemnify the Bank in respect of
all losses, costs and expenses (including, but not limited to, legal costs and expenses)
incurred or sustained by the Bank as a consequence of or in relation to the effecting of any
matter or transactions referred to in this clause 4.6.
	 
	 	(e)	 	Notwithstanding any provision of the Master Agreement to the contrary, if for any reason, a
Transaction has been entered into but no Advance is drawn down under this Agreement then,
subject to clause 4.6(e) the Bank shall be entitled but not obliged (and, where relevant, may
do so without the consent of the Borrower where it would otherwise be required whether under
the Master Agreement or otherwise) to amend, supplement, cancel, net out, terminate,
liquidate, transfer or assign all or any part of the rights, benefits and obligations created
by such Transaction and/or the Master Agreement and/or to obtain or re-establish any hedge or
related trading position in any manner and with any person the Bank in its absolute
discretion may determine.
	 
	 	(f)	 	If a Transaction has been entered into but no Advance is drawn down under this Agreement and
the Bank in its absolute discretion agrees, following a written request of the Borrower, that
the Borrower may be permitted to maintain all or part of a Transaction, the Borrower shall
within ten (10) days of being notified by the Bank of such requirement, provide the Bank with,
or procure the provision to the Bank of, such additional security as shall in the opinion of
the Bank be adequate to secure the performance of such Transaction, which additional security
shall take such form, be constituted by such documentation and be entered into between such
parties, as the Bank in its absolute discretion may approve or require, and each document
comprising such additional security shall constitute a Credit Support Document for the
purposes of the Master Agreement and/or otherwise.
	 
	 	(g)	 	Without prejudice to or limitation of the obligations of the Borrower under
clause 4.6(c), in the event that the Bank exercises any of its rights under




22









 












	 	 	 	clauses 4.6 (a), 4.6(b), 4.6(d) or 4.6(e) and such exercise results in all or part
of a Transaction being terminated such termination shall be treated under the
Master Agreement in the same manner as if it were a Terminated Transaction (as
defined in section 14 of the Master Agreement) effected by the Bank after an Event
of Default (as so defined in that section 14) by the Borrower and, accordingly, the
Bank shall be permitted to recover from the Borrower a payment for early
termination calculated in accordance with the provisions of section 6(e)(i) of the
Master Agreement.
	 
	 	(h)	 	No Transaction or Confirmation will be entered into without the specific
consent of the Bank.






	5.	 	PAYMENTS, TAXES AND COMPUTATION






	5.1	 	Payment — No set-off or Counterclaims






	 	(a)	 	The Borrower acknowledges that in performing its obligations under this
Agreement, the Bank will be incurring liabilities to third parties in relation to
the funding of amounts to the Borrower, such liabilities matching the liabilities
of the Borrower to the Bank and that it is reasonable for the Bank to be entitled
to receive payments from the Borrower gross on the due date in order that the
Bank is put in a position to perform its matching obligations to the relevant
third parties. Accordingly, subject to paragraph (f) of Part 5 of the Schedule to
the Master Agreement, all payments to be made by the Borrower under this
Agreement and/or any of the other Security Documents shall be made in full,
without any set-off or counterclaim whatsoever and, subject as provided in
Clause 5.3, free and clear of any deductions or withholdings or Governmental
Withholdings whatsoever, in Dollars on the due date to the account of the
Bank at such bank and in such place as the Bank may from time to time
specify for that purpose, reference: “Stealthgas Inc. — Loan
Agreement
dated 28th August, 2008”;
	 
	 	 	 	provided, however, that the Bank shall have the right to change the place
of account for payment, upon five (5) Banking Days’ prior written notice to the
Borrower.
	 
	 	(b)	 	If at any time it shall become unlawful or impracticable for the Borrower to
make payment under this Agreement to the relevant account or bank referred
to in Clause 5.1(a), the Borrower may request and the Bank may agree to
alternative arrangements for the payment of the amounts due by the Borrower
to the Bank under this Agreement or the other Security Documents.






	5.2	 	Payments on Banking Days. All payments due shall be made on a Banking Day. If
the due date for payment falls on a day which is not a Banking Day, that payment due
shall be made on the first Banking Day thereafter, provided that this falls in the same
calendar month. If it does not, payments shall fall due and be made on the last
Banking Day before the said due date.




23









 












	5.3	 	Gross Up.






	 	(a)	 	If at any time any law, regulation, regulatory requirement or requirement of
any governmental authority, monetary agency, central bank or the like compels the
Borrower to make payment subject to Governmental Withholdings, or any other deduction
or withholding, the Borrower shall pay to the Bank such additional amounts as may be
necessary to ensure that there will be received by the Bank a net amount equal to the
full amount which would have been received had payment not been made subject to such
Governmental Withholdings or other deduction or withholding. The Borrower shall
indemnify the Bank against any losses or costs incurred by the Bank by reason of any
failure of the Borrower to make any such deduction or withholding or by reason of any
increased payment not being made on the due date for such payment. The Borrower shall,
not later than thirty (30) days after each deduction, withholding or payment of any
Governmental Withholdings, forward to the Bank official receipts and any other
documentary receipts and any other documentary evidence reasonably required by the
Bank in respect of the payment made or to be made of any deduction or withholding or
Governmental Withholding. The obligations of the Borrower under this provision shall,
subject to applicable law, remain in force notwithstanding the repayment of the Loan
and the payment of all interest due thereon pursuant to the provisions of this
Agreement.
	 
	 	(b)	 	For the avoidance of doubt, Clause 5.3(a) does not apply in respect of sums
due from the Borrower to the Bank under or in connection with the Master Agreement as
to which sums the provisions of section 2(d) (Deduction or Withholding for Tax) of the
Master Agreement shall apply.






	5.4	 	Tax Credit. If following any such deduction or withholding as is referred to in Clause
7.6 from any payment paid by the Borrower, the Bank shall receive or be granted a
credit against a remission for any Taxes payable by it, the Bank shall, subject to the
Bank having made any increased payment in accordance with Clause 7.6 and to the
extent that the Bank do so without prejudicing the retention of the amount of such
credit or remission and without prejudice to the right of the Bank to obtain any other
relief or allowance available to it, reimburse to the Borrower the proportion of such
credit or remission as shall leave the Bank (after such reimbursement) in no worse
position as it would have been in had there been no such deduction or withholding
from the payment by the Borrower as aforesaid. Such reimbursement shall be made as
soon as reasonably practicable after the amount of such credit, relief, remission or
repayment has been received by the Bank and upon the Bank certifying that the
amount of such credit or remission has been received by it. Nothing contained in this
Agreement shall oblige the Bank to rearrange its tax affairs or to disclose any
information regarding its tax affairs and computations. Without prejudice to the
generality of the foregoing, the Borrower shall not, by virtue of this Clause 5.4 be
entitled to enquire about the Bank’s tax affairs.
	 
	5.5	 	Loan Account. All sums advanced by the Bank to the Borrower under this
Agreement and all interest accrued thereon and all other amounts due under this
Agreement and/or the Master Agreement from time to time and all repayments and/or
payments thereof shall be debited and credited respectively to a separate loan account




24









 












	 	 	maintained by the Bank in accordance with its usual practices in the name of the Borrower.
The Bank may, however, in accordance with its usual practices or for its accounting needs,
maintain more than one account, consolidate or separate them but all such accounts shall be
considered parts of one single loan account maintained under this Agreement. In case that a
ship mortgage in the form of Account Current is granted as security under this Agreement
and the Master Agreement, the account(s) referred to in this Clause shall be the Account
Current referred to in such mortgage.
	 
	5.6	 	Evidence-Certificates conclusive. The Borrower hereby expressly agrees and admits that
abstracts or photocopies or other reproductions of the books of the Bank as well as
statements of accounts or a certificate signed by an authorised officer of the Bank shall
(save for manifest error) be conclusive binding and full evidence on the Borrower as to the
existence and/or the amount of the at any time Outstanding Indebtedness, of any amount due
under this Agreement and/or the Master Agreement, of the applicable interest rate or Default
Rate or any other rate provided for or referred to in this Agreement, the Interest Period,
the value of additional securities under Clause 8.10, the payment or non payment of any
amount. Any certificate or determination of the Bank as to any rate of interest or any other
amount pursuant to and for the purposes of any of the Security Documents shall, in the
absence of manifest error, be conclusive and binding on the Borrower and the other Security
Parties. Nevertheless, enforcement procedures or any other Court or out of Court procedure
can be commenced by the Bank on the basis of the abovementioned means of evidence including
written statements or certificates of the Bank.
	 
	5.7	 	Computation. All interest and other payments payable by reference to a rate per annum under
this Agreement shall accrue from day to day and be calculated on the basis of actual days
elapsed and a 360 day year.
	 
	6.	 	REPRESENTATIONS AND WARRANTIES
	 
	 	 	This Agreement is entered into by the Bank in reliance upon the following representations
and warranties made by the Borrower and it is hereby represented and warranted by the
Borrower that the following matters are true at the date of this Agreement, and covenant
that they shall remain true so long as there is any Outstanding Indebtedness:
	 
	6.1	 	Continuing representations and warranties
	 
	 	 	The Borrower represents and warrants to the Bank that:






	 	(a)	 	Due Incorporation/Valid Existence
	 
	 	 	 	each of the Security Parties is duly incorporated and validly existing and in good
standing under the laws of their respective countries of incorporation and have
power to own their respective property and assets, to carry on their respective
business as the same are now being lawfully conducted and to purchase, own, finance
and operate vessels, or, as the case may be, manage vessels, as well as to
undertake the obligations which such Security Party has undertaken or shall
undertake pursuant to the Security Documents;






25









 









	 	(b)	 	Due Corporate Authority
	 
	 	 	 	each of the Security Parties has power to execute, deliver and perform its obligations
under the Security Documents to which it is or is to be a party and to borrow the
Commitment and each of the other Security Parties has power to execute and deliver and
perform its obligations under the Security Documents to which it is or is to be a party;
all necessary corporate, shareholder and other action has been taken to authorise the
execution, delivery and performance of the same and no limitation on the powers of the
Borrower to borrow will be exceeded as a result of borrowing the Loan and none of the
corporate Security Parties has an established or de-facto place of business in any part of
the United Kingdom or the United States of America;
	 
	 	(c)	 	Litigation
	 
	 	 	 	no litigation, arbitration, tax claim or administrative proceeding is current or pending
or (to its or its officers’ knowledge) threatened against the Borrower or any other
Security Party, which, if adversely determined, would have a materially adverse effect on
the business assets or the financial condition of any of them;
	 
	 	(d)	 	No conflict with other obligations
	 
	 	 	 	the execution and delivery of, the performance of its obligations under, and compliance
with the provisions of, the Security Documents by the relevant Security Parties will not
(i) contravene any existing applicable law, statute, rule or regulation or any judgment,
decree or permit to which the Borrower or any other Security Party is subject, (ii)
conflict with, or result in any breach of any of the terms of, or constitute a default
under, any agreement or other instrument to which the Borrower or any other Security
Party is a party or is subject to or by which it or any of its property is bound, (iii)
contravene or conflict with any provision of the memorandum and articles of
association/articles of incorporation/by-laws/statutes or other constitutional documents
of the Borrower or any other Security Party or (iv) result in the creation or imposition
of or oblige the Borrower or any other Security Party to create any Encumbrance (other
than a Permitted Encumbrance) on any of the undertakings, assets, rights or revenues of
the Borrower or any other Security Party;
	 
	 	(e)	 	Financial Condition
	 
	 	 	 	the financial condition of the Borrower and of the other Security Parties has not
suffered any material deterioration since that condition was last disclosed to the Bank;
	 
	 	(f)	 	No Immunity
	 
	 	 	 	neither the Borrower nor any other Security Party nor any of their respective assets are
entitled to immunity on the grounds of sovereignty or otherwise from any legal action or
proceeding (which shall include, without limitation,
suit, attachment prior to judgement, execution or other enforcement);






26











 






	 	(g)	 	Shipping Company
	 
	 	 	 	each of the Borrower and the Manager is a shipping company involved in the owning or, as
the case may be, managing of ships engaged in international voyages and earning profits in
free foreign currency;
	 
	 	(h)	 	Licences/Authorisation
	 
	 	 	 	every consent, authorisation, license or approval of, or registration with or declaration
to, governmental or public bodies or authorities or courts required by any Security Party
to authorise, or required by any Security Party in connection with, the execution,
delivery, validity, enforceability or admissibility in evidence of each of the Security
Documents or the performance by each Security Party of its obligations under the Security
Documents has been obtained or made and is in full force and effect and there has been no
default in the observance of any of the conditions or restrictions (if any) imposed in, or
in connection with, any of the same so far as the Borrower are aware;
	 
	 	(i)	 	Perfected Securities
	 
	 	 	 	when duly executed, the Security Documents will create a perfected Encumbrance in favour
of the Bank, with the intended priority, over the assets and revenues intended to be
covered, valid and enforceable against each of the Borrower and the other Security
Parties;
	 
	 	(j)	 	No Notarisation/Filing/Recording
	 
	 	 	 	save for the registration of any mortgage in the appropriate shipping registry, it is not
necessary to ensure the legality, validity, enforceability or admissibility in evidence
of this Agreement or any of the other Security Documents that it or they or any other
instrument be notarised, filed, recorded, registered or enrolled in any court, public
office or elsewhere or that any stamp, registration or similar tax or charge be paid on
or in relation to this Agreement or the other Security Documents;
	 
	 	(k)	 	Validity and Binding effect
	 
	 	 	 	the Security Documents constitute (or upon their execution — and in the case of any
mortgage upon its registration at the appropriate registry — will constitute) valid and
legally binding obligations of the relevant Security Parties enforceable against each of
the Borrower and the other Security Parties in accordance with their respective terms and
that there are no other agreements or arrangements which may adversely affect or conflict
with the Security Documents or the security thereby created; and
	 
	 	(1)	 	Valid Choice of Law
	 
	 	 	 	the choice of law agreed to govern this Agreement and/or any other Security Document and
the submission to the jurisdiction of the courts agreed in each of the Security Documents
are or will be, on execution of the respective





27









 






	 	 	 	Security Documents, valid and binding on each of the Borrower and any other
Security Party which is or is to be a party thereto.






	6.2	 	Initial representations and warranties
	 
	 	 	The Borrower further represents and warrants to the Bank that;






	 	(a)	 	Direct obligations — Pari Passu
	 
	 	 	 	the obligations of the Borrower under this Agreement are direct, general and
unconditional obligations of the Borrower and rank at least pari passu with all
other present and future unsecured and unsubordinated Indebtedness of the Borrower
with the exception of any obligations which are mandatorily preferred by law;
	 
	 	(b)	 	Information
	 
	 	 	 	all information, accounts, statements of financial position, exhibits and reports
furnished by or on behalf of any Security Party to the Bank in connection with the
negotiation and preparation of this Agreement and each of the other Security
Documents are true and accurate in all material respects and not misleading, do
not omit material facts and all reasonable enquiries have been made to verify the
facts and statements contained therein; there are no other facts the omission of
which would make any fact or statement therein misleading and, in the case of
accounts and statements of financial position, they have been prepared in
accordance with generally accepted accounting principles which have been
consistently applied;
	 
	 	(c)	 	No Event of Default
	 
	 	 	 	no Event of Default has occurred and is continuing;
	 
	 	(d)	 	No Taxes
	 
	 	 	 	no Taxes are imposed by deduction, withholding or otherwise on any payment to be
made by any Security Party under this Agreement and/or any other of the Security
Documents or are imposed on or by virtue of the execution or delivery of this
Agreement and/or any other of the Security Documents or any document or instrument
to be executed or delivered hereunder or thereunder. In case that any Tax exists
now or will be imposed in the future, it will be borne by the Borrower;
	 
	 	(e)	 	No default under other Indebtedness
	 
	 	 	 	neither the Borrower nor any other Security Party is in default under any agreement
relating to Indebtedness to which it is a party or by which it may be bound;
	 
	 	(f)	 	Ownership/Flag/Seaworthiness/Class/Insurance of the
Vessels
	 
	 	 	 	each Vessel on the relevant Drawdown Date will be:










28









 












	 	(i)	 	in the absolute and free from Encumbrances (other than in favour of the Bank)
ownership of the Owner thereof;
	 
	 	(ii)	 	registered in the name of the Owner thereof through the Registry of the
under the laws of the respective Flag State;
	 
	 	(iii)	 	operationally seaworthy and in every way fit for service;
	 
	 	(iv)	 	classed with a Classification Society member of IACS, which has been
approved by the Bank in writing and such classification is and will be free of all
overdue requirements and recommendations of such Classification Society;
	 
	 	(v)	 	insured in accordance with the provisions of this Agreement and the relevant
Mortgage; and
	 
	 	(vi)	 	managed by the Manager;






	 	(g)	 	No Charter
	 
	 	 	 	save for the relevant Shell Charterparty and unless otherwise permitted in writing by the
Bank, neither of the Vessels will on or before the relevant Drawdown Date be subject to
any charter or contract nor to any agreement to enter into any charter or contract which,
if entered into after the such Drawdown Date would have required the consent of the Bank
under any of the Security Documents and there will not on or before such Drawdown Date be
any agreement or arrangement whereby the Earnings of the relevant Vessel may be shared
with any other person;
	 
	 	(h)	 	No Encumbrances
	 
	 	 	 	neither the Vessels (or either of them) nor their/her Earnings, Requisition Compensation
or Insurances nor any other properties or rights which are, or are to be, the subject of
any of the Security Documents nor any part thereof will, on the relevant Drawdown Date, be
subject to any Encumbrances other than Permitted Encumbrances.
	 
	 	(i)	 	Compliance with Environmental Laws and Approvals: except as may already have been
disclosed by the Borrower in writing to, and acknowledged in writing by, the Bank:






	 	(i)	 	each of the Borrower, the Owners and their Related Companies have complied
with the provisions of all Environmental Laws;
	 
	 	(ii)	 	each of the Borrower, the Owners and their Related Companies have obtained
all Environmental Approvals and are in compliance with all such Environmental
Approvals; and
	 
	 	(iii)	 	neither any of the Borrower and the Owners nor any of their Related
Companies have received notice of any Environmental Claim that any of the Borrower
and the Owners or any of its respective Related





29









 






	 	 	 	Companies are not in compliance with any Environmental Law or any Environmental
Approval;






	 	(j)	 	No Environmental Claims






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






	 	aa)	 	there is no Environmental Claim pending or, to the best of
the Borrower’ knowledge and belief, threatened against the Borrower or the
Owners (or either of them) or the Vessels (or either of them) or any other
Relevant Ship reasonably expected to have a material adverse effect on the
business assets, operations, property or financial condition of any of the
Borrower or the Owners or any other Security Party or on the security
created by any of the Security Documents; and
	 
	 	bb)	 	there has been no emission, spill, release or discharge of
a Material of Environmental Concern from the Vessels (or either of them) or
any other Relevant Ship owned by the Borrower or the Owners nor to the best
of the Borrower’ knowledge and belief from any Relevant Ship which could
give rise to an Environmental Claim;






	 	(k)	 	Copies true and complete
	 
	 	 	 	the copies of the Shell Charterparties and the Management Agreements delivered or to be
delivered to the Bank pursuant to Clause 7.3 are, or will when delivered be, true and
complete copies of such documents; such documents will when delivered constitute valid
and binding obligations of the parties thereto enforceable in accordance with their
respective terms and there will have been no amendments or variations thereof or defaults
thereunder;
	 
	 	(l)	 	Compliance with the ISM Code
	 
	 	 	 	each Vessel and any Operator complies or will on the drawdown of the Commitment or (as
the case may be) of the relevant Advance comply with the requirements of the ISM Code;
	 
	 	(m)	 	Compliance with ISPS Code
	 
	 	 	 	each Owner has a valid and current ISSC in respect of its Vessel and each Vessel will be
in full compliance with the ISPS Code;
	 
	 	(n)	 	Money laundering — acting for own account
	 
	 	 	 	the Borrower confirms that it is the beneficiary for each part of the Loan made or to be
made available to it and it will promptly inform the Bank by written notice if it is not,
or ceases to be, the beneficiary and notify the Bank in writing of the name and the
address of the new beneficiaiy/beneficiaries; the Borrower is aware that under applicable
money laundering provisions, it has an




30









 






	 	 	 	obligation to state for whose account the Loan is obtained; the Borrower confirms
that, by entering into this Agreement and the other Security Documents, it is
acting on its own behalf and for its own account and it is obtaining the Loan for
its own account. In relation to the borrowing by the Borrower of the Loan, the
performance and discharge of its obligations and liabilities under this Agreement
or any of the Security Documents and the transactions and other arrangements
effected or contemplated by this Agreement or any of the Documents to which the
Borrower is a party, it is acting for its own account and that the foregoing will
not involve or lead to a contravention of any law, official requirement or other
regulatory measure or procedure which has been implemented to combat “money
laundering” (as defined in Article 1 of the Directive (91/308/EEC) of the Council
of the European Community).






	6.3	 	Representations Correct
	 
	 	 	At the time of entering into this Agreement all above representations and warranties or any
other information given by the Borrower to the Bank are true and accurate.
	 
	6.4	 	Repetition of Representations and Warranties
	 
	 	 	The representations and warranties in this Clause 6 shall be deemed to be repeated by the
Borrower on and as of each day from the date of this Agreement until all moneys due or
owing by the Security Parties or any of them under this Agreement and the Security
Documents have been repaid in full as if made with reference to the facts and
circumstances existing on each such day.
	 
	7.	 	CONDITIONS PRECEDENT
	 
	7.1	 	Conditions concerning corporate authorisations. The obligation of the Bank to make the
Commitment or any part thereof available to the Borrower and/or to allow any Transaction to
be effected under the Master Agreement shall be subject to the condition that the Bank, shall
have received, not later than two (2) Banking Days before the day on which the Drawdown
Notice in respect of the Commitment (or, in case that more than one advance have been agreed
in Clause 2.3, in respect of the first Advance) is given, the following documents and
evidence in form and substance satisfactory to the Bank:






	 	(a)	 	a duly certified true copy of the Articles of Incorporation and By-Laws or
the Memorandum and Articles of Association, or of any other constitutional documents,
as the case may be, of each corporate Security Party together, where appropriate,
with certified translations of the same in English;
	 
	 	(b)	 	a recent certificate of incumbency of each corporate Security Party issued by
the appropriate authority and/or at the discretion of the Bank signed by the secretary
or a director of each of them respectively, stating the corporate body which binds
every one of them, the officers and/or the directors of each of them and containing
specimens of their signatures;
	 
	 	(c)	 	minutes of separate meetings of the directors and shareholders (or of any
other body which binds them, if any) of any corporate Security Party at which there




31









 






	 	 	 	was approved the entry into, execution, delivery and performance of this Agreement,
the other Security Documents and any other documents executed or to be executed
pursuant hereto or thereto to which the relevant corporate Security Party is a
party;






	 	(d)	 	the original of any power(s) and any further evidence of the due authority of
any person signing this Agreement, the Security Documents and any other documents
executed or to be executed pursuant hereto or thereto on behalf of any corporate
person;
	 
	 	(e)	 	evidence that all necessary licences, consents, permits and authorisations
(including exchange control ones) have been obtained by any Security Party for the
execution, delivery, validity, enforceability, admissibility in evidence and the due
performance of the respective obligations under or pursuant to this Agreement and the
other Security Documents;
	 
	 	(f)	 	in the event that the Bank agrees (at its sole discretion) that a Security
Party may have a corporate shareholder, the conditions set out in sub-clauses (a),
(b), (c) and (d) of this Clause 7.1 shall apply (mutatis mutandis) to such corporate
shareholder; and
	 
	 	(g)	 	any other documents or recent certificates or other evidence which would be
required by the Bank in relation to any corporate Security Party evidencing that the
relevant Security Party has been properly established, continues to exist validly and
to be in good standing, which is its present board of directors and shareholders, that
the execution and performance of the Security Documents has been duly authorised and
generally that the representations in Clause 6 are correct in all respects.






	7.2	 	Conditions concerning the Securities. The obligations of the Bank to advance the
Commitment or (if so provided in Clause 2.3) any part thereof to the Borrower and/or
to allow any Transaction to be effected under the Master Agreement is subject to the
further condition that the Bank at the time of receiving a Drawdown Notice shall have
received the following documents (save for the securities which, due to the
requirement of their registration in public registries or due to their nature, cannot be
delivered to the Bank before the relevant Drawdown Notice and which will be
delivered to the Bank simultaneously with the relevant drawdown):






	 	(a)	 	each of the Security Documents duly executed and where appropriate duly
registered with the appropriate registry; and
	 
	 	(b)	 	evidence that the Earnings Accounts and the Retention Account have been duly
opened and all mandate forms, signature cards and authorities have been duly
delivered; and






	7.3	 	Conditions concerning the Vessels. The obligations of the Bank to advance the
Commitment or (if so provided in Clause 2.3) any part thereof to the Borrower and/or
to allow any Transaction to be effected under the Master Agreement is subject to the
further condition that the Bank at the time of receiving a Drawdown Notice shall have
received the following documents (save for the securities which, due to the
requirement of their registration in public registries or due to their nature, cannot be




32









 






	 	 	delivered to the Bank before the relevant Drawdown Notice and which will be delivered to the Bank
simultaneously with the relevant drawdown):






	 	(a)	 	evidence that each Vessel on the relevant Drawdown Date will be:






	 	(i)	 	in the absolute and free from Encumbrances (other than in favour of the
Bank) ownership of the Owner thereof who is and on will and after the relevant
Drawdown Date be the sole legal and beneficial owner of such Vessel;
	 
	 	(ii)	 	registered in the name of the Borrower through the Registry under the laws
and flag of the relevant Flag State;
	 
	 	(iii)	 	operationally seaworthy and in every way fit for service;
	 
	 	(iv)	 	classed with a classification society which is a member of the IACS and
which has been approved by the Bank in writing and such class will be free of all
requirements and recommendations of such classification society;
	 
	 	(v)	 	insured in accordance with the provisions of this Agreement;
	 
	 	(vi)	 	managed by the Manager; and
	 
	 	(vii)	 	in full compliance with the ISM Code and the ISPS Code;






	 	(b)	 	evidence that, on or prior to the relevant Drawdown Date a Mortgagee’s Interest Insurance
(herein, “MII”) and a Mortgagee’s Interest Additional Perils (Pollution) Insurance (herein,
“MAPI”), each under the Bank’s wording or upon such terms as shall from time to time be
determined by the Bank but for an amount not exceeding, in each case, 110% of the amount of
the Loan) to be followed by full copies of cover notes, policies, certificates of entry or
other contracts of insurance together with an opinion from insurance consultants appointed by
the Bank, on the Insurances effected or to be effected in respect of each of the Vessels upon
and following the relevant Drawdown Date;
	 
	 	(c)	 	copies of the DOC and SMC referred to in paragraph (a) in the definition of the ISM Code
Documentation certified as true and in effect by the Borrower and the Manager; and
	 
	 	(d)	 	copies of such ISM Code Documentation as the Bank may by written notice to the Borrower have
requested not later than two (2) days before the relevant Drawdown Date certified as true and
complete in all material respects by the Borrower and the Manager;
	 
	 	(e)	 	copy of the ISSC in relation to each Vessel;
	 
	 	(f)	 	true and complete copy of each Charterparty;
	 
	 	(g)	 	if the Bank so requires a report signed by an independent firm of marine insurance brokers
appointed by the Bank at the expense of the Borrower confirming the adequacy of the Insurances
maintained on each Vessel;




33









 












	 	(h)	 	if the Bank so requires, a satisfactory to the Bank physical condition survey
report on each Vessel together with a comprehensive record inspection from a
surveyor appointed by the Bank, at the Borrower’s expense; and
	 
	 	(i)	 	valuation of each Vessel, at the Borrower’s expense, as at a date determined
by the Bank but in any event before the relevant drawdown, prepared on the basis
specified in Clause 8.10(b) by major shipbrokers appointed and/or approved by the Bank
in form and substance satisfactory to the Bank in its sole discretion.






	7.4	 	No change of circumstances. The obligation of the Bank to advance the
Commitment or (if so provided in Clause 2.3) any part thereof to the Borrower and/or
to allow any Transaction to be effected under the Master Agreement is subject to the
further condition that at the time of the giving of a Drawdown Notice and on
advancing the Commitment or (if it has been so agreed in Clause 2.3) on the making
of the Advance to which such Drawdown Notice relates:






	 	(a)	 	the representations and warranties set out in Clause 6 and in each of the
Security Documents are true and correct on and as of each such time as if each was
made with respect to the facts and circumstances existing at such time;
	 
	 	(b)	 	no Event of Default shall have occurred and be continuing or would result
from the relevant drawdown;
	 
	 	(c)	 	the Bank shall be satisfied that there has been no change in the ultimate
ownership, management and/or adverse change financial condition of any Security Party
which (change) might, in the sole opinion of the Bank, be detrimental to the
interests of the Bank; and






	7.5	 	General Conditions. The obligation of the Bank to advance the Commitment or (if so
provided in Clause 2.3) any part thereof to the Borrower and/or to allow any
Transaction to be effected under the Master Agreement is subject to the further
condition that the Bank, prior to or simultaneously with the drawdown, shall have
received:






	 	(a)	 	opinions from the Security Parties’ legal counsel and from lawyers appointed
by the Bank as to all the matters referred to in Clauses 6.1(a) and (b) and all such
aspects of law as the Bank shall deem relevant to this Agreement and the other
Security Documents and any other documents executed pursuant hereto or thereto and
confirms that all the Security Parties are aware of the entire contents of this
Agreement and the other Security Documents as well as opinion from the lawyers
appointed by the Bank and any further legal or other expert opinion as the Bank at
its sole discretion may reasonably require;
	 
	 	(b)	 	confirmation from any agents nominated in this Agreement and elsewhere in the
other Security Documents for the acceptance of any notice or service of process, that
they consent to such nomination;
	 
	 	(c)	 	a receipt in writing in form and substance satisfactory to the Bank
including an acknowledgement and admission of the Borrower and/or any other Security
Party to the effect that the Commitment or relevant part thereof (as the case




34









 






	 	 	 	may be) was drawn by the Borrower and a declaration by the Borrower that all
conditions precedent have been fulfilled, that there is no Event of Default and
that all the representations and warranties are true and correct; and






	 	(d)	 	evidence that the arrangement fee and the commitment fee referred to in Clause
10.8 have been paid in full to the Bank;






	7.6	 	Further documents. The Bank may from time to time request and the Borrower shall, within the
period specified by the Bank, deliver to the Bank such further documents certificates and/or
opinions as reasonably requested at the sole discretion of the Bank.
	 
	8.	 	COVENANTS
	 
	 	 	It is hereby undertaken by the Borrower that, from the date of this Agreement and as long
as any money is due and/or owing and/or outstanding under this Agreement or any of the
other Security Documents, each of the Borrower and the Owners will:
	 
	8.1	 	Information Covenants






	 	(a)	 	Annual financial Statements: furnish the Bank, in form and substance
satisfactory to the Bank, with annual audited consolidated financial statements of
the Borrower and the Group (including the Owners) at latest within 180 days after the
end of the financial year concerned, commencing as at the 31st December,
2007 prepared in accordance with IAS;
	 
	 	(b)	 	Financial Information: provide the Bank annually and from time to
time as the Bank may reasonably request and in form and substance satisfactory to the
Bank with information on all major financial developments of the Borrower and the
Group, such as sales or purchases of vessels, new loans, refinancing/restructuring of
existing loans, as well as the financial conditions, cash flow position, commitments
and operations of the Borrower and its Related Companies including cash flow analysis
and voyage accounts of any vessels owned by any such party with a breakdown of income
and running expenses showing net trading profit, trade payables and trade
receivables, such financial details to be certified by one of the financial officer
of the relevant company as to their correctness;
	 
	 	(c)	 	Information on adverse change or Default: promptly inform the Bank
of any occurrence which came to the knowledge of the Borrower which might adversely
affect the ability of any of the Borrower or any other Security Party to perform its
respective obligations under this Agreement and/or any of the other Security
Documents and of any Default forthwith upon becoming aware thereof;
	 
	 	(d)	 	Information on the employment of the Vessels: provide the Bank from
time to time as the Bank may request with information on the employment of each Vessel
and of any Relevant Ship as well as on the terms and conditions of any charterparty,
contract of affreightment, agreement or related document in respect of the employment
of each Vessel and of any Relevant Ship, such information to be certified by one of
the directors of the Borrower as to their correctness;





35









 






	8.2	 	Banking operations — Minimum Liquidity






	 	(a)	 	ensure that, all banking operations in connection with each Vessel are carried
out through the Lending Office; and
	 
	 	(b)	 	ensure that throughout the Security Period the Borrower and the Owners or any
of them, will maintain in unencumbered (except in favour of the Bank) deposit
account(s) maintained with the Bank (including the Retention Account) an average
monthly balance of Dollars eight hundred thousand ($800,000);






	8.3	 	No Further Financial Exposure
	 
	 	 	without the prior written consent of the Bank:






	 	(a)	 	No further Indebtedness: ensure that neither of the Owners will
incur any further Indebtedness nor authorise or accept any capital commitments (other
than that normally associated with the day to day operations of its Vessel) nor enter
into any agreement for payment on deferred terms or hire agreement without the prior
written consent of the Bank;
	 
	 	(b)	 	No Loans: not make any loans or advances to, or any investments in
any person, firm, corporation, joint venture or other entity including (without
limitation) any loan or advance to any officer, director, stockholder or employee
directly or through the Manager;
	 
	 	(c)	 	No Dividends — No disposal of Assets: not declare or pay any
dividends or other distribution upon any of the issued shares or otherwise dispose of
any assets to any of the shareholders of the Borrower, without the prior written
consent of the Bank, provided, however, that unless an Event of Default has
occurred the Borrower shall be entitled to declare or pay any dividends upon any of
the issued shares for an amount of up to 50% of its Excess Cash Flow;
	 
	 	(d)	 	and for the purpose of this Clause 8.3(c):






	 	(i)	 	“Debt Service” means an amount (as conclusively certified by the
Bank) which is equal to the aggregate payments of principal and interest
which the Borrower will be obliged to pay to the Bank pursuant to this
Agreement and the other Security Documents during the relevant Excess Cash
Flow Calculation Period (including sums standing to the credit of the
Retention Account);
	 
	 	(ii)	 	“Excess Cash Flow Calculation Period” means each successive
annual period during the Security Period, the first commencing with the
financial year terminating on 31st December, 2007 up to the date
when the Outstanding Indebtedness has been repaid in full to the Bank;
	 
	 	(iii)	 	“Excess Cash Flow” means, in relation to any Excess Cash
Flow Calculation Period, the amount (as conclusively calculated by the Bank)
which is equal to the Total Income minus (a) the amount of Debt




36









 






	 	 	 	Service payable pursuant to Clause 4.1 and 3, and (b) the Operating
Expenses paid during such Excess Cash Flow Calculation Period;






	 	(iv)	 	“Total Income” in relation to a Excess Cash Flow Calculation
Period means the total income of the Vessels for such Excess Cash Flow
Calculation Period less brokerage fees and commissions and withholding taxes
(if any);






	 	(e)	 	No Payments: except pursuant to this Agreement and the Security
Documents (or as expressly permitted by the same) not pay out any funds to any company
or person except in connection with the administration of the Borrower, the Owners,
the operation and/or repair of the Vessels; and
	 
	 	(f)	 	Master Agreement Derivatives: not enter into any transaction in a
derivative other than under the Master Agreement;






	8.4	 	Maintenance of Business Structure






	 	(a)	 	Maintenance of Business Structure: not change the nature, organisation
and conduct of the business of the Borrower or either Owner, as owner of its Vessel or
the Manager as manager of vessels, as the case may be, or carry on any business other
than the business carried on at the date of this Agreement;
	 
	 	(b)	 	Maintenance of Legal Structure: ensure that none of the documents
defining the constitution of the Borrower and/or any corporate shareholder shall be
altered in any manner whatsoever without the prior written consent of the Bank;
	 
	 	(c)	 	Control: ensure that no change shall be made directly or indirectly in
the ownership, legal and beneficial ownership control or management of the Borrower or
the Owners or any share therein or of the Vessels without the prior written consent of
the Bank (such consent not to be unreasonably withheld); and
	 
	 	(d)	 	No merger: not merge or consolidate with any other company or person;
	 
	 	(e)	 	Pari passu: ensure that its obligations under this Agreement shall,
without prejudice to the provisions of this Clause 8.4 at all times rank at least pari
passu with all its other present and future unsecured and unsubordinated Indebtedness
with the exception of any obligations which are mandatorily preferred by law and not
by contract;






	8.5	 	Maintenance of Assets






	 	(a)	 	No Transfer of Assets: not convey, assign, transfer, sell or
otherwise dispose of or deal with any of their real or personal property, assets or
rights, whether present or future, without the prior written consent of the Bank, such
consent not to be unreasonably withheld; and
	 
	 	(b)	 	No Encumbrance of Assets: not allow any part of its undertaking,
property, assets or rights, whether present or future, to be mortgaged, charged,
pledged,




37









 






	 	 	 	used as a lien or otherwise encumbered without the prior written consent of the
Bank, such consent not to be unreasonably withheld.






	8.6	 	Covenants Concerning the Vessels






	 	(a)	 	Ownership/Management/Control: ensure that each Vessel will be
registered on the relevant Drawdown Date under the laws of the relevant Flag State and
thereafter maintain her present ownership, management, control and beneficial
ownership;
	 
	 	(c)	 	Class: ensure that each Vessel will remain in class free of any and
all recommendations, overdue notations or average damage affecting class and provide
the Bank on demand with copies of all class and trading certificates of each Vessel;
	 
	 	(d)	 	Insurances: ensure that all Insurances of each Vessel are maintained
and comply with all insurance requirements specified in this Agreement and in the
relevant Mortgage and in case of failure to maintain each Vessel so insured authorise
the Bank (and such authorisation is hereby expressly given to the Bank) to have the
right but not the obligation to effect such Insurances on behalf of its Owner (and in
case that either Vessel remains in port for an extended period to effect port risks
insurances at the cost of the Borrower which, if paid by the Bank, shall be
Expenses);
	 
	 	(e)	 	Transfer/Encumbrances: not without the prior written consent of the
Bank sell or otherwise dispose of either Vessel or any share therein or create or
agree to create or permit to subsist any Encumbrance over either Vessel (or any share
or interest therein) other than Permitted Encumbrances;
	 
	 	(f)	 	Not imperil Flag. Ownership, Insurances: ensure that each Vessel is
maintained and trades in conformity with the laws of the relevant Flag State, of its
owning company or of the nationality of the officers of such Vessel, the requirements
of the Insurances and nothing is done or permitted to be done which could endanger
the flag of either Vessel or its unencumbered (other than Permitted Encumbrances)
ownership or its Insurances;
	 
	 	(g)	 	Mortgage Covenants: always comply with all the covenants provided
for in the relevant Mortgage;
	 
	 	(h)	 	Charter: save for the relevant Shell Charterparty, neither Owner
enters into a charterparty, contract of affreightment, agreement or related document
in respect of the employment of its Vessel (i) on demise charterparty or (ii) without
the prior written consent of the Bank, for a period for more than twelve (12) months
or below the market rate prevailing at the time when the relevant Vessel is fixed in
or on terms which are not in accordance with the commercial practice prevailing at
the relevant time;
	 
	 	(i)	 	Assignment of Earnings: not assign or agree to assign otherwise than
to the Bank the Earnings or any part thereof; and






38











 






	 	(j)	 	Compliance with Environmental Laws: comply with, and procure
that all Environmental Affiliates of any Relevant Party comply with, all
Environmental Laws including without limitation, requirements relating to manning
and establishment of financial responsibility and to obtain and comply with, and
procure that all Environmental Affiliates of such Relevant Party obtain and comply
with, all Environmental Approvals and to notify the Bank forthwith:






	 	(i)	 	of any Environmental Claim for an amount or amounts in
aggregate exceeding $1,000,000 made against either Vessel and or any Relevant
Ship and/or her respective owner; and
	 
	 	(ii)	 	upon becoming aware of any incident which may give rise to an
Environmental Claim and to keep the Bank advised in writing of the Borrower’s
response to such Environmental Claim on such regular basis and in such detail
as the Bank shall require; and






	 	(k)	 	Ownership: ensure that each Vessel will maintain her present
ownership, management, control and beneficial ownership;






	8.7	 	Compliance with the ISM Code and ISPS Code






	 	 	 	procure that the Manager and any Operator:
	 
	 	(a)	 	will comply with and ensure that each Vessel and any Operator complies with
the requirements of the ISM Code, including (but not limited to) the maintenance and
renewal of valid certificates pursuant thereto throughout the Security Period;
	 
	 	(b)	 	immediately inform the Bank if there is any threatened or actual withdrawal of
the either Owner’s, the Manager’s or an Operator’s DOC or the SMC in respect of the
Vessels (or any of them); and
	 
	 	(c)	 	promptly inform the Bank upon the issue to either Owner, the Manager or any
Operator of a DOC and to any of the Vessels of an SMC or the receipt by the Owners (or
either of them), the Manager or any Operator of notification that its application for
the same has been realised; and
	 
	 	(d)	 	(aa) will maintain at all times a valid and current ISSC in respect of each
Vessel, (bb) immediately notify the Bank in writing of any actual or threatened
withdrawal, suspension, cancellation or modification of the ISSC in respect of either
Vessel and (cc) procure that each Vessel will comply at all times with the ISPS Code.






	8.8	 	Observance of Covenants






	 	(a)	 	Use of the Loan: use the Loan exclusively for the purpose specified
in this Agreement;
	 
	 	(b)	 	Compliance with Covenants: duly and punctually perform all
obligations under this Agreement and the other Security Documents;




39









 






	 	(c)	 	Payment on Demand: pay to the Bank on demand any sum of money which is
payable by the Borrower to the Bank under this Agreement but in respect of which it
is not specified in any other Clause when it is due and payable; and
	 
	 	(d)	 	Evidence of Compliance: upon request by the Bank from time to time
provide such information and evidence to the Bank as the Bank would reasonably require
to demonstrate compliance with the covenants and undertakings set forth in this
Agreement and any other Security Document.






	8.9	 	Validity of Securities






	 	(a)	 	Validity: ensure and procure that all governmental or other consents
required by law and/or any other steps required for the validity, enforceability and
legality of this Agreement and the other Security Documents are maintained in full
force and effect and/or appropriately taken;
	 
	 	(b)	 	Earnings: ensure and procure that, unless and until directed by the
Bank otherwise (i) all the Earnings of each Vessel shall be paid to the relevant
Earnings Account and (ii) the persons from whom the Earnings of such Vessel are from
time to time due are irrevocably instructed to pay them to such Earnings Account in
accordance with the provisions hereof and of the relevant Security Documents;
	 
	 	(c)	 	Taxes: pay all Taxes, assessments and other governmental charges when
the same fall due, except to the extent that the same are being contested in good
faith by appropriate proceedings and adequate reserves have been set aside for their
payment if such proceedings fail; and
	 
	 	(d)	 	Additional Documents: from time to time at the request of the Bank
execute and deliver to the Bank or procure the execution and delivery to the Bank of
all such documents as the Bank would reasonably require for giving full effect to this
Agreement, and for perfecting, protecting the value of or enforcing any rights or
securities granted to the Bank under any one or more of this Agreement, the other
Security Documents and any other documents executed pursuant hereto or thereto and in
case that any Conditions Precedent have not been fulfilled prior to the Drawdown, such
Conditions shall be complied with within five (5) days of Drawdown (unless the Bank
agrees otherwise in writing) and failure to comply with this Covenant shall be an
Event of Default.






	8.10	 	Vessels’ Value to Debt Ratio-Additional Security






	 	(a)	 	Vessels’ Value to Debt Ratio: The Borrower hereby undertakes that,
from the date of this Agreement and as long as any money is due and/or owing and/or
outstanding under this Agreement or any of the other Security Documents, the Borrower
will ensure that the aggregate of (i) the Security Value shall be at least equal to of
the Security Requirement at the relevant time and if at any relevant time the Security
Value is less than the Security Requirement, they will within fifteen (15) Banking
Days of being advised by the Bank of such event either:




40









 












	 	(i)	 	provide the Bank with such additional security as shall in the opinion of the
Bank be adequate to make up such deficiency and which shall take such form and
shall be constituted by such documentation and be entered into between such
parties as the Bank may reasonable approve or require (and, if the Borrower does
not make proposals satisfactory to the Bank in relation to such additional
security within the aforesaid period of fifteen (15) Banking Days of the date of
the Bank’s notification to the Borrower aforesaid, the Borrower shall be deemed to
have elected to prepay in accordance with sub-clause (ii) below), or
	 
	 	(ii)	 	prepay (in accordance with Clause 4.2 (but without regard to the requirement
for ten (10) days notice) such amount of the Loan as will ensure that the aggregate
Market Value (determined as aforesaid) of the Mortgaged Vessels and any such
additional security is after such prepayment at least equal to 125% of the aggregate
of (i) the Loan and (ii) the Swap Exposure.
	 
	 	 	 	Such additional security shall be constituted by:






	 	aa)	 	additional pledged cash deposits in favour of the Bank in
an amount equal to such shortfall with a bank and in an account and manner
to be determined by the Bank; and/or
	 
	 	bb)	 	a priority mortgage in form and substance satisfactory to
the Bank; and/or
	 
	 	cc)	 	any other security acceptable to the Bank to be provided
in a manner determined by the Bank.






	 	Any such additional security provided to the Bank shall be released by the Bank once the
Security Requirement ratio has been restored. The provisions of Clause 4.3 and 4.4 shall
apply to prepayments under Clause 8.10(a).and/or






	 	(b)	 	Valuation of the Vessels: At any time (and at least once per year) that the Bank
might consider to be (at the reasonable discretion of the Bank) necessary or useful and at the
expense of the Borrower, have each Vessel valued in Dollars, without, unless required by the
Bank, physical inspection and on the basis of sale for prompt delivery and free of
Encumbrances for cash at arm’s length on normal commercial terms as between a willing seller
and a willing buyer without taking into account the benefit of any charterparty or other
engagement concerning such Vessel (“the basis of valuation”), by one (1) of the following
shipbrokers namely: (i) H. Clarkson & Company Limited, (ii) Galbraith’s Ltd., (iii) A.E.
Gibson Shipbrokers Ltd. (iv) Barry Rogliano, and (v) Braemar Seascope Limited, or any other
shipbrokers, as may from time to time be appointed by the Bank for this purpose at the Bank’s
sole discretion. The Market Value of each Vessel determined as aforesaid shall be notified by
the Bank to the Borrower and such valuation shall constitute the value of such Vessel for the
purposes of this Agreement and shall be binding upon the parties hereto. The Bank and the
Borrower each agrees to accept such valuation made by the shipbroker appointed as aforesaid as
conclusive evidence of the Market Value of the relevant Vessel at the date of such




41









 






	 	 	 	valuation. The Borrower further agrees to supply the Bank and any shipbroker
appointed as aforesaid with such information concerning each of the Vessels and her
condition as such shipbroker may reasonably require for the purpose of making such
valuation.
	 	(c)	 	Valuation of additional security: For the purpose of this Clause 8.10,
the market value of any additional security provided or to be provided to the Bank
shall be determined by the Bank in its absolute discretion without any necessity for
the Bank assigning any reason thereto provided, always, that if the additional
security is in the form of a collateral vessel such collateral vessel shall be valued
in accordance with the provisions of Clause 8.10(b) or, as the case may be, 8.10(c) or
if the additional security is in form of a cash deposit full credit shall be given for
such cash deposit on a Dollar for Dollar basis.
	 
	 	(d)	 	Documents and evidence: In connection with any additional security
provided in accordance with this Clause 8.10, the Bank shall be entitled to receive
such evidence and documents as may in the Bank’s reasonable opinion be appropriate and
such favourable legal opinions as the Bank shall in its absolute discretion require.
	 
	 	(e)	 	Costs: All costs in connection with any valuation made pursuant to
Clauses 8.10(b) and (c) shall be borne by the Borrower. Any valuation referred to in
Clause 8.10 to be addressed to the Bank.






	8.11	 	No security or lien from other person. The Borrower has not taken or received, and the
Borrower undertakes that until all moneys, obligations and liabilities due, owing or incurred
by the Borrower under this Agreement and the Security Documents have been paid in full, it
will not take or receive, any security or lien from any other person liable or for any
liability whatsoever.
	 
	8.12	 	Additional Financial covenants






	 	(a)	 	The Borrower shall ensure that, throughout the Security Period, its
financial condition on a consolidated basis and as evidenced by the most recent
annual audited Accounting Information, shall be such that:






	 	(i)	 	Total Debt not to exceed 0.8:1 of the total Adjusted Net Worth;
	 
	 	(ii)	 	it is always maintained the consolidated interest cover
ratio (EBITDA to Net Interest Expense) greater than or equal to 2.5:1;






	 	(b)	 	The expressions used in this Clause 8.12 shall be construed in accordance
with law and accounting principles internationally accepted as used in the Accounting
Information produced in accordance with sub-clause 8.1(a), and for the purposes of
this Agreement:






	 	(i)	 	“Accounting Information” means the annual audited
consolidated financial statements of the Group, to be provided by the Borrower
to the Bank in accordance with Clause 8.1(a); and




42









 






	 	 	 	“Accounting Period” means each consecutive period of twelve months falling
during the Security Period for which annually Accounting Information is
required to be delivered pursuant to Clause 8.1(a);
	 
	 	(ii)	 	“Adjusted Net Worth” means, in respect of an Accounting
Period, book equity adjusted for the difference between the book and market
value of assets;
	 
	 	(iii)	 	“EBITDA” on a consolidated basis of the Group means the
Earnings before interest and other taxes, depreciation and amortization;
	 
	 	(iv)	 	“Net Interest Expense” means on a consolidated basis the total
interest expense minus the total interest income; and
	 
	 	(v)	 	“Total Debt” means, in respect of an Accounting Period, the
aggregate on a consolidated basis of the Group of all short term interest
bearing bank debt included in the financial statements of the Group under
current liabilities plus the long term interest bearing bank debt, plus any
cash and/or any short term financial investments encumbered as security for
funded loan.






	8.13	 	Stock-holding. The Borrower shall ensure that throughout the Security Period at least 15% of
the shares of the Borrower shall be directly or indirectly held by members of the Vafias
family.
	 
	8.14	 	Covenants for the Security Parties. The Borrower undertakes that until all moneys,
obligations and liabilities due, owing or incurred by the Borrower under this Agreement and
the Security Documents have been paid in full, that will ensure and procure that all other
Security Parties and each of them duly and punctually comply with the covenants in Clauses
8.1 to 8.12 which are applicable to them mutatis mutandis.
	 
	9.	 	EVENTS OF DEFAULT
	 
	 	 	There shall be an Event of Default whenever an event described in Clauses 9.1 to 9.9
occurs:
	 
	9.1	 	Non Performance of Obligations






	 	(a)	 	the Borrower or any other Security Party fails to pay any sum due from the
Borrower or, as the case may be such Security Party, under this Agreement and/or any
of the other Security Documents at the time, in the currency and in the manner
stipulated herein and/or any of the other Security Documents, or, in the case of any
sum payable on demand, within three (3) Banking Days of such demand; or
	 
	 	(b)	 	the Borrower or any other Security Party fails to observe and perform any one
or more of the covenants, terms or obligations contained in this Agreement and/or any
other Security Document relating to the Insurances; or




43









 






	 	(c)	 	the Borrower or any other Security Party commits any breach of or omits to
observe any of the covenants, terms, obligations or undertakings under this
Agreement and/or any of the other Security Documents (other than failure to pay any
sum when due or to comply with any obligation concerning the Insurances) and, in
respect of any such breach or omission which in the opinion of the Bank is capable
of remedy, such action as the Bank may require shall not have been taken within ten
(10) days of the Bank notifying the Borrower and/or the relevant Security Party of
such required action to remedy the breach or omission; or






	9.2	 	Events affecting the Borrower






	 	(a)	 	the Borrower is adjudicated or found bankrupt or insolvent or any order is
made by any competent court or resolution passed by the Borrower or petition presented
for the winding-up or dissolution of the Borrower or for the appointment of a
liquidator, trustee, administrator or conservator of the whole or any part of the
undertakings, assets, rights or revenues of the Borrower; or
	 
	 	(b)	 	any Security Party becomes or is deemed to be insolvent or suspends payment of
its debts or is (or is deemed to be) unable to or admits inability to pay its debts as
they fall due or proposes or enters into any composition, compromise or other
arrangement for the benefit of its creditors generally or good faith proceedings are
commenced in relation to any Security Party under any law, regulation or procedure
relating to reconstruction or readjustment of debts; or
	 
	 	(c)	 	an encumbrancer takes possession or a receiver or similar officer is appointed
of the whole or any part of the undertakings, assets, rights or revenues of the
Borrower or a distress, execution, sequestration or other process is levied or
enforced upon or sued out against any of the undertakings, assets, rights or revenues
of the Borrower and is not discharged within thirty (30) days; or
	 
	 	(d)	 	all or a material part of the undertakings, assets, rights or revenues of the
Borrower are seized, nationalised, expropriated or compulsorily acquired by or under
the authority of any government; or
	 
	 	(e)	 	any event occurs or proceeding is taken with respect to the Borrower in any
jurisdiction to which it is subject which has an effect equivalent or similar to any
of the events mentioned in Clauses 9.2(a) to 9.2(d); or
	 
	 	(f)	 	the Borrower suspends or ceases or threatens to suspend or cease to carry on
its business; or
	 
	 	(g)	 	there occurs, in the reasonable opinion of the Bank, a materially adverse
change in the financial condition of the Borrower; or
	 
	 	(h)	 	any other event occurs or circumstances arise which, in the reasonable
opinion of the Bank, is likely materially and adversely to affect either (i) the
ability of the Borrower to perform all or any of its obligations under or otherwise to
comply with the terms of this Agreement and/or any of the other Security Documents, or
(ii) the security created by this Agreement and/or any of the Security Documents; or




44









 






	 	(i)	 	there is any change in the beneficial ownership of the shares in any of the
Borrower, the Corporate Guarantors and/or in the Manager; or






	9.3	 	Representations Incorrect
	 
	 	 	any representation or warranty made or deemed to be made or repeated by or in respect of
the Borrower in or pursuant to this Agreement or any of the other Security Documents or in
any notice, certificate or statement referred to in or delivered under this Agreement or
any of the other Security Documents is or proves to have been incorrect in any material
respect; or
	 
	9.4	 	Cross-default of the Borrower
	 
	 	 	any Indebtedness of the Borrower is not paid when due or becomes due and payable, or any
creditor of the Borrower becomes entitled to declare any such Indebtedness due and payable
prior to the date when it would otherwise have become due, or any guarantee or indemnity
given or any obligation or covenant undertaken or agreement made by the Borrower in
respect of Indebtedness is not honoured when due; or
	 
	9.5	 	Events affecting the Security Documents






	 	(a)	 	this Agreement or any of the other Security Documents shall at any time and
for any reason become invalid or unenforceable or otherwise cease to remain in full
force and effect, or if the validity or enforceability of any of the Security
Documents shall at any time and for any reason be contested by any party thereto
(other than the Bank), or if any such party shall deny that it has any, or any
further, liability thereunder or it becomes impossible or unlawful for the Borrower
to fulfil any of its covenants and obligations contained in this Agreement or any of
the Security Documents or for the Bank to exercise the rights vested in it thereunder
or otherwise; or
	 
	 	(b)	 	any consent, authorisation, licence or approval of, or registration with or
declaration to, governmental or public bodies or authorities or courts required by
the Borrower to authorise or otherwise in connection with, the execution, delivery,
validity, enforceability or admissibility in evidence of this Agreement and/or any of
the other Security Documents or the performance by the Borrower of its obligations
under this Agreement and/or any of the other Security Documents is modified in a
manner unacceptable to the Bank or is not granted or is revoked or terminated or
expires and is not renewed or otherwise ceases to be in full force and effect; or
	 
	 	(c)	 	any Encumbrance in respect of any of the property (or part thereof) which is
the subject of the Security Documents (or any of them) is enforced; or
	 
	 	(d)	 	any other event or events (whether related or not) occurs which constitutes a
material (in the reasonable opinion of the Bank) adverse change, from the position
applicable as at the date of this Agreement, in the business, affairs or condition
(financial or otherwise) of any Security Party or a Credit Support Provider)
(including any such material adverse change resulting from an Environmental Incident)
the effect of which is, in the reasonable opinion of the Bank, to impair, delay or
prevent the due fulfillment by any Security Party or a




45









 






	 	 	 	Credit Support Provider of any of their respective obligations or undertakings
contained in this Loan Agreement, the Master Agreement or any of the Security
Documents; or






	9.6	 	Events concerning the Security Parties






	 	(a)	 	any Security Party (other than the Borrower) fails to pay any sum due from it
under this Agreement and/or any of the Security Documents when due, or, in the case of
any sum payable on demand, within three (3) Banking Days of demand; or
	 
	 	(b)	 	any Security Party (other than the Borrower) fails to observe and perform any
one or more of the covenants, terms or obligations contained in this Agreement
(including Schedule 1) and/or the other Security Documents relating to the Insurances;
or
	 
	 	(c)	 	any Security Party (other than the Borrower) commits any breach of or omits to
observe any of the covenants, terms, obligations or undertakings expressed to be
assumed by it under this Agreement and/or any of the Security Documents (other than
failure to pay any sum when due or to observe or perform obligations relating to the
Insurances) and, in respect of any such breach or omission which in the opinion of the
Bank is capable of remedy, such action as the Bank may require shall not have been
taken within seven (7) days of the Bank notifying the relevant Security Party, of such
required action to remedy the breach or omission; or
	 
	 	(d)	 	any representation or warranty made or deemed to be made or repeated by or in
respect of any Security Party (other than the Borrower) in or pursuant to this
Agreement or any of the other Security Documents or in any notice, certificate or
statement referred to in or delivered under this Agreement or any of the other
Security Documents is or proves to have been incorrect in any material respect; or
	 
	 	(e)	 	any of the events referred to in Clauses 9.2 to 9.5 occurs (amended as
appropriate) in relation to any Security Party (other than the Borrower); or
	 
	 	(f)	 	the provisions of Clause 8.12 are not complied with within the period therein
prescribed; or






	9.7	 	Environmental Events






	 	(a)	 	any Relevant Party and/or the Manager and/or any of their respective
Environmental Affiliates fails to comply with any Environmental Law or any
Environmental Approval or any of the Vessels or any other vessel managed by the
Manager is involved in any incident which gives rise or which may give rise to any
Environmental Claim, if in any such case, such non compliance or incident or the
consequences thereof could (in the opinion of the Bank) reasonably be expected to have
a material adverse effect on the business assets, operations, property or financial
condition of any of the Borrower or any other Security Party or on the security
created by any of the Security Documents; or




46









 






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






	9.8	 	Events Concerning the Vessels






	 	(a)	 	either Vessel becomes a Total Loss unless:






	 	(i)	 	the Bank shall have received within sixty (60) days after the
occurrence of the event giving rise to such total Loss confirmation from the
relevant underwriter that such Total Loss is an insured event and constitutes
a valid claim against such underwriters; and
	 
	 	(ii)	 	after receipt of such confirmation the Bank shall have
received within one hundred and eighty days (180) after the occurrence of
such event, the insurance proceeds in an amount equal to the amount for which
such Vessel was required to be insured in accordance with the provisions of
this Agreement immediately prior to the event giving rise to such Total Loss;
or






	 	(b)	 	either Vessel ceases to be managed by the Manager (for any reason other than
the reason of a Total Loss or sale of such Vessel) with the approval of the Bank, and
the Owner thereof fails to appoint a Manager within
two fifteen (215) days after the
termination of the relevant Management Agreement with the previous Manager; or
	 
	 	(c)	 	either Vessel is arrested, confiscated, seized, taken in execution,
impounded, forfeited, detained in exercise or purported exercise of any possessory
lien or other claim and the Owner thereof fails to procure the release of such Vessel
within a period of thirty (30) days thereafter; or
	 
	 	(d)	 	(without prejudice to the generality of sub-Clauses 9.1(b) and (c)) for any
reason whatsoever the provisions of Clause 8.7 are not complied with and/or either
Vessel ceases to comply with the ISM Code or the ISPS Code; or
	 
	 	(e)	 	the Flag State of either Vessel becomes involved in hostilities or civil war
or there is a seizure of power in such Flag State by unconstitutional means if, in
any such case, such event could in the reasonable opinion of the Bank reasonably be
expected to have a material adverse effect on the security constituted by any of the
Security Documents and alternative arrangements satisfactory to the Bank have not
been made promptly upon the Bank’s request; or
	 
	 	(f)	 	the registration of either Vessel under the laws and flag of the relevant
Flag State is cancelled or terminated without the prior written consent of the Bank
or, if either Vessel is only provisionally registered on the relevant Drawdown Date
and is not permanently registered under the laws and flag of the relevant




47









 






	 	 	 	Flag State at least ninety (90) days prior to the deadline for completing such
permanent registration; or
	 
	 	(g)	 	either Shell Charterparty or any other Charterparty is terminated or rescinded
for any reason whatsoever or either Shell Charterparty or any other Charterparty is
frustrated and the Borrower does not produce to the Bank within one (1) month from
such event a substitute Charterparty for the employment of the relevant Vessel,
entered into between the Owner thereof and the relevant charterer; or
	 
	 	(h)	 	moneys are withdrawn from either of the Earnings Accounts otherwise than in
accordance with clause 11.7; or






	9.9	 	Events concerning the Master Agreement






	 	(a)	 	an Event of Default or Potential Event of Default (in each case as defined
in the Master Agreement) has occurred and is continuing under the Master Agreement;
or
	 
	 	(b)	 	notice of an Early Termination Date is given by the Bank under section 6(a)
of the Master Agreement; or
	 
	 	(c)	 	an Early Termination Date (as defined in the Master Agreement) has occurred
or been effectively designated under the Master Agreement; or
	 
	 	(d)	 	a person entitled to do so gives notice of an Early Termination Date (as
defined in the Master Agreement) under section 6(b)(iv) of the Master Agreement; or
	 
	 	(e)	 	the Master Agreement is terminated, cancelled, suspended, rescinded or
revoked or otherwise ceases to remain in full force and effect for any reason.






	9.10	 	Actions following an Event of Default
	 
	 	 	On, or at any time after, the occurrence of an Event of Default:






	 	(a)	 	the Bank may, without prejudice to any of its other rights, by notice to the
Borrower declare that:






	 	(i)	 	all the obligations of the Bank to the Borrower under this
Agreement are terminated, whereupon the Total Commitment shall be reduced to
zero forthwith; and/or
	 
	 	(ii)	 	the Loan and all interest and commitment commission accrued
and all other sums payable under the Security Documents have become due and
payable, whereupon the same shall, immediately or in accordance with the
terms of such notice, become due and payable and/or
	 
	 	(iii)	 	take any other action which, as a result of the Event of
Default or any notice served under paragraph (a) or (b) the Bank is entitled
to take under any Security Document or any applicable law; and/or




48









 












	 	(b)	 	the Bank may take any action (other than termination of a Transaction under a
Master Agreement) which, as a result of the Event of Default or any notice served
under clause 9.10(a), the Bank is entitled to take under any Security Document or
any applicable law.






	9.11	 	Acceleration. On the service of a notice under Clause 9.10(a), the Loan, all accrued
interest and all other amounts accrued or owing from the Borrower or any Security Party under
this Agreement and every other Security Document shall become immediately due and payable or,
as the case may be, payable on demand together with the Swap Exposure of the Bank which has
terminated any existing Transactions under the Master Agreement.
	 
	9.12	 	Insolvency Events of Default. If an event occurs in respect of any of the Borrower or the
other Security Parties of the type described in Clause 9.2(a) to (e) (except (i) in the case
when a petition was presented or proceedings were commenced or a suit or writ were issued by
a third party and the Borrower or the relevant Security Party is defending itself in bona
fide and (ii) in the case that such events mentioned in Clause 9.2 relate to only a part of
the undertakings, assets, rights or revenues which in the reasonable opinion of the Bank does
not affect the ability of the Borrower to perform its obligations under this Agreement and/or
the Security Documents) the obligation of the Bank to make the Commitment available shall
terminate immediately upon receipt by the Bank of the relevant information (as such receipt
shall be conclusively certified by a certificate of the Bank) and all amounts payable under
sub-clause 9.10 above shall become immediately due and payable without any notice or other
formality which is hereby expressly waived by the Borrower.
	 
	9.13	 	Demand basis. If, pursuant to clause 9.10(a), the Bank declares the Loan to be due and
payable on demand, the Bank may by written notice to the Borrower (a) call for repayment of
the Loan on such date as may be specified whereupon the Loan shall become due and payable on
the date so specified together with all interest accrued and all other sums payable under
this Agreement or (b) withdraw such declaration with effect from the date specified in such
notice.
	 
	9.14	 	Proof of Default. It is agreed that (i) the non-payment of any sum of money in time will be
proved conclusively by mere passage of time and (ii) the occurrence of this (non payment) and
any other Event of Default shall be proved conclusively by a mere written statement of the
Bank which statement shall (save for manifest error) be conclusive, binding and full evidence
for the Borrower.
	 
	9.15	 	Exclusion of Bank’s liability. Neither the Bank nor any receiver or manager appointed by the
Bank, shall have any liability to the Borrower or a Security Party:






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




49









 












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






	10.	 	INDEMNITIES — EXPENSES — FEES
	 
	10.1	 	Miscellaneous Indemnities.






	 	(a)	 	The Borrower shall on demand (and it is hereby expressly jointly and severally
undertaken by the Borrower to) indemnify the Bank, without prejudice to any of the
other rights of the Bank under any of the Security Documents, against any loss or
expense which the Bank shall certify as sustained or incurred as a consequence of:






	 	(i)	 	any default in payment by any of the Security Parties of any
sum under any of the Security Documents when due;
	 
	 	(ii)	 	the occurrence and/or continuance of any Event of Default (or
event which, with the giving of notice and/or lapse of time or other
applicable condition, might constitute an Event of Default) and/or the
acceleration of repayment of the Loan (or any part thereof) pursuant to Clause
9.10; and/or
	 
	 	(iii)	 	any prepayment of the Loan or part thereof being made under
Clauses 4.2, 4.3, 8.10(a) or 12 or any other repayment of the Loan or part
thereof being made otherwise than on an Interest Payment Date relating to the
part of the Loan prepaid or repaid; or
	 
	 	(iv)	 	the Commitment or an Advance not being advanced for any
reason (excluding any default by the Bank) after the relevant Drawdown Notice
has been given,






	 	(b)	 	Without limiting its generality, Clause 10.1(a) covers any claim, expense,
liability or loss, including a loss of a prospective profit, incurred by the Bank:






	 	(i)	 	in liquidating or employing deposits from third parties
acquired or arranged to fund or maintain all or any part of the Loan and/or
any overdue amount (or an aggregate amount which includes the Loan or any
overdue amount); and
	 
	 	(ii)	 	in terminating or reversing, or otherwise in connection with,
any Transaction or any other interest rate and/or currency swap or any other
transaction or arrangement entered into by the Bank (whether with another
legal entity or with another office or department of the Bank) to hedge any
exposure arising under this Agreement or that part which the Bank determines
is fairly attributable to this Agreement of the amount of the liabilities,
expenses or losses (including losses of prospective profits) incurred by it in
terminating or reversing, or otherwise in connection with, any open position
arising under this Agreement or the Master Agreement.






50











 






	10.2	 	Expenses. The Borrower shall (and it is hereby expressly undertaken by the Borrower) pay
to the Bank on demand:






	 	(a)	 	Initial and Amendment expenses: all expenses (including legal,
printing and out-of-pocket expenses) incurred by the Bank in connection with the
negotiation, preparation and execution of this Agreement and the other Security
Documents and of any amendment or extension of or the granting of any waiver or
consent under this Agreement and/or any of the Security Documents and/or in connection
with any proposal by the Borrower to constitute additional security pursuant to Clause
8.10(c), whether any such security shall in fact be constituted or not;
	 
	 	(b)	 	Enforcement expenses: all expenses (including legal and out-of- pocket
expenses) incurred by the Bank in contemplation of, or otherwise in connection with,
the enforcement of, or preservation of any rights under, this Agreement and/or any of
the other Security Documents, or otherwise in respect of the moneys owing under this
Agreement and/or any of the other Security Documents or the contemplation or
preparation of the above, whether they have been effected or not; and
	 
	 	(c)	 	MII and MAPI costs: reimburse the Bank on demand for any and all costs
incurred by the Bank (as conclusively certified by the Bank) in effecting and keeping
effected (i) a MII and (ii) a MAPI, provided, however, that the Bank shall in
its absolute discretion appoint and instruct in respect of any such MII and MAPI the
insurance brokers in respect of each such Insurance and provided, further,
that in the event that the Bank effects any such Insurance on the basis of any
mortgagee’s open cover, the Borrower shall pay on demand to the Bank its proportion of
premium due in respect of the relevant Vessel for which such insurance cover has been
effected by the Bank, and any certificate of the Bank in respect of any such premium
due by the Borrower shall (save for manifest error) be conclusive and binding upon the
Borrower;
	 
	 	(d)	 	Other expenses: any and all other Expenses; and
	 
	 	(e)	 	Legal costs: the legal costs of the Bank’s appointed lawyer, in respect
of the preparation of this Agreement and the other Security Documents as well as the
legal costs of the foreign lawyers (if these are available) in respect of the
registration of the Security Documents or any search or opinion given to the Bank in
respect of the Security Parties or the Vessels or the Security Documents. The said
legal costs shall be due and payable on the date of drawdown.






	 	 	All expenses payable pursuant to this Clause 10.2 shall be paid together with Value Added
Tax (if any) thereon.
	 
	10.3	 	Stamp duty. The Borrower shall (and it is hereby expressly undertaken by the Borrower to pay
any and all stamp, registration and similar taxes or charges (including those payable by the
Bank) imposed by governmental authorities in relation to this Agreement and any of the other
Security Documents, and shall indemnify the Bank against any and all liabilities with respect
to, or resulting from delay or omission on the part of the Borrower to pay such stamp taxes
or charges.




51









 






	10.4	 	Environmental Indemnity. The Borrower shall indemnify the Bank on demand and hold the
Bank harmless from and against all costs, expenses, payments charges, losses, demands,
liabilities, actions, proceedings (whether civil or criminal) penalties, fines, damages,
judgements, orders, sanctions or other outgoings of whatever nature which may be suffered,
incurred or paid by, or made or asserted against the Bank at any time, whether before or
after the repayment in full of principal and interest under this Agreement, relating to, or
arising directly or indirectly in any manner or for any cause or reason out of an
Environmental Claim made or asserted against the Bank.
	 
	10.5	 	Currency indemnity. If any sum due from the Borrower under any of the Security Documents or
any order or judgement given or made in relation hereto has to be converted from the currency
(the “first currency”) in which the same is payable under the relevant Security Document or
under such order or judgement into another currency (the
“second currency”) for the purpose
of (i) making or filing a claim or proof against the Borrower or any other Security Party, as
the case may be, (ii) obtaining an order or judgement in any court or other tribunal or (iii)
enforcing any order or judgement given or made in relation to any of the Security Documents,
the Borrower shall (and it is hereby expressly undertaken by the Borrower to) indemnify and
hold harmless the Bank from and against any loss suffered as a result of any difference
between (a) the rate of exchange used for such purpose to convert the sum in question from
the first currency into the second currency and (b) the rate or rates of exchange at which
the Bank may in the ordinary course of business purchase the first currency into the second
currency and (b) the rate or rates of exchange at which the Bank may in the ordinary course
of business purchase the first currency with the second currency upon receipt of a sum paid
to it in satisfaction, in whole or in part, of any such order, judgement, claim or proof. Any
amount due from the Borrower under this Clause 10.5 shall be due as a separate debt and shall
not be affected by judgement being obtained for any other sums due under or in respect of any
of the Security Documents, and the term “rate of exchange” includes any premium and costs of
exchange payable in connection with the purchase of the first currency with the second
currency.
	 
	10.6	 	Maintenance of the Indemnities. The indemnities contained in this Clause 10 shall apply
irrespective of any indulgence granted to the Borrower or any other party from time to time
and shall continue to be in full force and effect notwithstanding any payment in favour of
the Bank and any sum due from the Borrower under this Clause 10 will be due as a separate
debt and shall not be affected by judgement being obtained for any other sums due under any
one or more of this Agreement, the other Security Documents and any other documents executed
pursuant hereto or thereto.
	 
	10.7	 	Communications Indemnity. It is hereby agreed in connection with communications
that:






	 	(a)	 	express authority is hereby given by the Borrower to the Bank to accept (at
the sole discretion of the Bank) all tested or untested communications given by
facsimile cable or otherwise, regarding any or all of the notices, requests,
instructions or other communications under this Agreement, subject to any restrictions
imposed by the Bank relating to such communications including, without limitation (if
so required by the Bank), the obligation to confirm such communications by letter;




52









 






	 	(b)	 	the Borrower shall recognise any and all of the said notices, requests,
instructions or other communications as legal, valid and binding, when these
notices, requests, instructions or communications come from the fax numbers
mentioned in Clause 14.1 or any other fax usually used by it or its managing
company;
	 
	 	(c)	 	the Borrower hereby assumes full responsibility for the execution of the said
notices, requests, instructions or communications by the Bank and promises and
recognises that the Bank shall not be held responsible for any loss, liability or
expense that may result from such notices, requests, instructions or other
communications. It is hereby undertaken by the Borrower to indemnify in full the Bank
from and against all actions, proceedings, damages, costs, claims, demands, expenses
and any and all direct and/or indirect losses which the Bank or any third party may
suffer, incur or sustain by reason of the Bank following such notices, requests,
instructions or communications;
	 
	 	(d)	 	with regard to notices, requests, instructions or communications issued by
electronic and/or mechanical processes (e.g. by facsimile), the risk of equipment
malfunction, including, without limitation, paper shortage, transmission errors,
omissions and distortions is assumed fully and accepted by the Borrower;
	 
	 	(e)	 	the risks of misunderstandings and errors of notices, requests, instructions or
communications being given as mentioned above, are for the Borrower and the Bank will
be indemnified in full pursuant to this Clause;
	 
	 	(f)	 	the Bank shall have the right to ask the Borrower to furnish any information the
Bank may require to establish the authority of any person purporting to act on behalf
of the Borrower for these notices, requests, instructions or communications but it is
expressly agreed that there is no obligation for the Bank to do so. The Bank shall be
fully protected in, and the Bank shall incur no liability to the Borrower for acting
upon the said notices, requests, instructions or communications which were believed by
the Bank in good faith to have been given by the Borrower or by any of their authorised
representative(s); and
	 
	 	(g)	 	it is undertaken by the Borrower to safeguard the function and the security of
the electronic and mechanical appliance(s) such as fax(es) etc., as well as the
code word list, if any, and to take adequate precautions to protect it from loss
and to prevent its terms becoming known to any persons not directly
concerned with its use. The Borrower shall hold the Bank harmless and
indemnified from all claims, losses, damages and expenses which the Bank
may incur by reason of the failure of the Borrower to comply with the
obligations under this Clause and/or this Agreement.






	10.8	 	Arrangement Fee — Commitment Fee. As an inducement for the Bank to enter into this
Agreement the Borrower shall pay to the Bank:






	 	(a)	 	on or before the date hereof an arrangement fee in an amount equal to 0.20% of
the amount of the Commitment; and




53









 






	 	(b)	 	in arrears on each of the dates falling at three monthly intervals after the
date hereof until the earlier of (a) the last day of the Availability Period (b)
the Drawdown Date of the Advance second to occur and (c) the date of cancellation
of the Commitment in full by the Borrower (the “Commitment Commission Period”)
commitment commission at the rate of zero point two zero (0.20%) percent per annum
on the daily undrawn and uncancelled amount of the Commitment, computed from the
date hereof (in the case of the first payment of commission) and from the date of
the preceding payment of commission (in the case of each subsequent payment) until
the last day of the Commitment Commission Period.






	 	 	The arrangement fee and commitment commission referred to in this Clause 10.8 are not
refundable and shall be payable by the Borrower to the Bank whether or not any part of the
Commitment is ever advanced.
	 
	11.	 	SECURITY, APPLICATION AND SET-OFF
	 
	11.1	 	Securities. As security for the due and punctual repayment of the Loan and payment
of interest thereon as provided in this Agreement and of all other Outstanding
Indebtedness, the Borrower shall ensure and procure that the following Security
Documents are duly executed and, where required, registered in favour of the Bank in
form and substance satisfactory to the Bank at the time specified herein or otherwise
as required by the Bank and ensure that such security consists of:






	 	(a)	 	the Mortgages;
	 
	 	(b)	 	the General Assignments;
	 
	 	(c)	 	the Corporate Guarantees;
	 
	 	(d)	 	the Charterparties Assignments;
	 
	 	(e)	 	the Accounts Pledge Agreements;
	 
	 	(f)	 	the Master Agreement Security Deeds; and
	 
	 	(g)	 	the Manager’s Undertaking.






	11.2	 	Maintenance of Securities. It is hereby undertaken by the Borrower that the Security
Documents shall both at the date of execution and delivery thereof and so long as any moneys
are owing and/or due under this Agreement or under the other Security Documents be valid and
binding obligations of the respective Security Parties thereto and rights of the Bank
enforceable in accordance with their respective terms and that they will, at the expense of
the Borrower, execute, sign, perfect and do any and every such further assurance, document,
act, omission or thing as in the opinion of the Bank may be necessary or desirable for
perfecting the security contemplated or constituted by the Security Documents.
	 
	11.3	 	Application of funds. All moneys received or recovered by the Bank under or pursuant to any
of the Security Documents and expressed to be applicable in




54









 






	 	 	accordance with the provisions of this clause 11.3 shall be applied by the Bank in the
following manner:






	 	(a)	 	firstly in or towards payment of Expenses and all sums other than
principal or interest which may be due to the Bank under this Agreement and the
Security Documents or any of them, at the time of application;
	 
	 	(b)	 	secondly in or towards payment of any default interest;
	 
	 	(c)	 	thirdly in or towards payment of any arrears of interest due in
respect of the Loan or any part thereof;
	 
	 	(d)	 	fourthly in or towards repayment of the Loan or any part thereof which
is due and payable; and
	 
	 	(e)	 	fifthly in or towards payment to the Bank for any loss suffered by
reason of any such payment in respect of principal not being effected on an Interest
Payment Date relating to the part of the Loan repaid; and
	 
	 	(f)	 	sixthly, in or towards payment to the Bank of any other sums owing to
it under any of the Security Documents (other than the Master Agreement);
	 
	 	(g)	 	seventhly, in or towards payment to the Bank of any sum owing under
the Master Agreement; and
	 
	 	(h)	 	eighthly the surplus (if any) shall be paid to the Borrower, or to
whomsoever else shall be entitled thereto.






	11.4	 	Waiver of right of appropriation. The Borrower hereby irrevocably waives any rights of
appropriation to which it may be entitled.
	 
	11.5	 	Right of Set-off. Express authority is hereby given by the Borrower to the Bank without
prejudice to any of the rights of the Bank at law contractually or otherwise, at any time and
without notice to the Borrower:






	 	(a)	 	to apply any credit balance standing upon any account of the Borrower with any
branch of the Bank and in whatever currency in or towards satisfaction of any sum due
to the Bank from the Borrower under this Agreement and/or any of the other Security
Documents;
	 
	 	(b)	 	in the name of the Borrower and/or the Bank to do all such acts and execute
all such documents as may be necessary or expedient to effect such application; and
	 
	 	(c)	 	to combine and/or consolidate all or any accounts in the name of the Borrower
with the Bank.
	 
	 	(d)	 	For all or any of the above purposes authority is hereby given to the Bank to
purchase with the monies standing to the credit of any such account or accounts such
other currencies as may be necessary to effect such application. The Bank shall not be
obliged to exercise any right given by this Clause.





55









 






	11.6	 	Rights under Master Agreement.






	 	(a)	 	Without prejudice to its rights hereunder and/or under the Master Agreement,
the Bank may at the same time as, or at any time after, any Event of Default under
this Agreement or the Borrower’s default under the Master Agreement, set off any
amount due now or in the future from the Borrower to the Bank under this Agreement
against any amount due from the Bank to the Borrower under the Master Agreement and
apply the first amount in discharging the second amount. The effect of any set off
under this clause 11.6(a) shall be effective to extinguish or, as the case may
require, reduce the liabilities of the Bank under the Master Agreement.
	 
	 	(b)	 	The rights conferred on the Bank by this Clause 11.6 shall be in addition to,
and without prejudice to or limitation of, the rights of netting and set off conferred
on the Bank by the Master Agreement. The Borrower acknowledges that the Bank shall be
under no obligation to make any payment to the Borrower under or pursuant to the
Master Agreement if, at the time that payment becomes due, there shall have occurred
an Event of Default, which is continuing or Potential Event of Default, or an Event of
Default or Termination Event (as those terms are respectively defined in the Master
Agreement).






	11.7	 	Earnings Account-Retention Account.






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






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






	 	aa)	 	one sixth (l/6th) of the amount
of the Repayment Instalment specified in Clause 4.1 falling due for
payment on the next following Repayment Date; and
	 
	 	bb)	 	the relevant fraction of the amount of
interest on the Loan falling due on the next due date for payment of
interest under this Agreement.




56









 






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






	 	(iii)	 	thirdly: any balance shall be released to the relevant Owner.






	 	(b)	 	If the aggregate amount of the Earnings of the Vessels received in the Earnings Accounts is
insufficient in any month for the required transfer to be made from the Earnings Accounts to
the Retention Account in accordance with Clause 11.7(a), the Borrower shall make up the
amount of such insufficiency on demand from the Bank, but, without prejudice to its right to
make such demand, the Bank may elect (at its absolute discretion) to make up the whole or any
part of such insufficiency by increasing the amount of any transfer to be made in accordance
with Clause 11.7(a)(ii) from the aggregate amount of such Earnings received in the next or
subsequent months.
	 
	 	(c)	 	Until the occurrence of a Default, the Bank shall on each Repayment Date and on each due
date for the payment of interest under this Agreement apply in accordance with the provisions
of Clause 11.7 (ii) the relevant part of the balance then standing to the credit of the
Retention Account as shall be required to make payment of the Repayment Instalment specified
in Clause 4.1 then due under the terms of this Agreement or payment of interest then due
under the terms of this Agreement and such transfer shall constitute a pro tanto satisfaction
of the Borrower’s obligations to pay such repayment instalment or interest (as the case may
be) then due under this Agreement.
	 
	 	(d)	 	Any amounts for the time being standing to the credit of the Retention Account shall bear
interest at the rate from time to time offered by the Bank to its customers for Dollar
deposits of similar amounts and for periods similar to those for which such amounts are
likely to remain standing to the credit of the Retention Account. Such interest shall,
provided that the foregoing provisions of this Clause 11.7 shall have been complied with and
provided that no Default shall have occurred, be released to the relevant Owner.
	 
	 	(e)	 	Nothing herein contained shall be deemed to affect the absolute obligation of the Borrower to
pay interest on and to repay the Loan as provided in Clauses 3 and 4 or shall constitute a
manner or postponement thereof.
	 
	 	(f)	 	Each Owner hereby irrevocably authorises the Bank to make from its Earnings Account any and
all above payments and repayments as and when the same fall due or at any time thereafter.
	 
	 	(g)	 	The Borrower and the Owners will comply with any written requirement of the
Bank from time to time as to the location or re-location of the Earning
Accounts and the Retention Account (or any of them) and will from time to
time enter into such documentation as the Bank may require in order to create




57









 






	 		 	or maintain in favour of the Bank an Encumbrance in the Earnings Accounts and the
Retention Account, all at cost and expense of the Borrower.
	 
	 	(h)	 	The Borrower and the Owners covenant with the Bank that the Earnings Accounts,
the Retention Account and any moneys therein shall not be charged, assigned,
transferred or pledged nor shall there be granted by the Borrower or either Owner or
suffered to arise any third party rights over or against the whole or any part of the
Earnings Accounts (or either of them) other than in favour of the Bank.
	 
	 	(i)	 	The Earnings Accounts shall be operated in accordance with the Bank’s usual
terms and conditions (full knowledge of which the Borrower and each Owner hereby
acknowledges) and subject to the Bank’s usual charges levied on such accounts and/or
transactions conducted on such accounts (as from time to time notified by the Bank to
the Borrower).
	 
	 	(j)	 	The Borrower hereby warrants that sufficient monies to meet the next Repayment
Instalment plus interest thereon will be accumulated each and every month in the
Retention Account.
	 
	 	(k)	 	After the occurrence of a Default the balance (if any) including any accrued
interest standing to the credit of the Earnings Accounts (or either of them) and the
Retention Account shall be applied in accordance with the provisions of Clause 11.3.
	 
	 	(l)	 	Upon payment in full of all principal, interest and all other amounts due to
the Bank under the terms of this Agreement and the other Security Documents, any
balance then standing to the credit of the Retention Account and/or the Earnings
Accounts shall be released and paid to the relevant Owner or to whomsoever else may be
entitled to receive such balance.






	12.	 	UNLAWFULNESS, INCREASED COSTS
	 
	12.1	 	Unlawfulness. If any change in, or introduction of, any law, regulation or regulatory
requirement or any request of any central bank, monetary, regulatory or other authority
or any order of any court renders it unlawful or contrary to any such regulation,
requirement, request or order for the Bank to advance the Commitment or to maintain
or fund the Loan, notice shall be given promptly by the Bank to the Borrower
whereupon the Commitment shall be reduced to zero and the Borrower shall be
obliged to prepay the Loan in accordance with such notice, together with accrued
interest thereon to the date of prepayment and all other sums payable by the Borrower
under this Agreement and/or the Master Agreement.
	 
	 	 	In any such event the Borrower and the Bank shall (as per the provisions of sub-Clause
3.6) negotiate in good faith (but without incurring any legal obligations) with a view to
agreeing the terms for making the Loan available from another jurisdiction or providing
the Loan from alternative sources.
	 
	12.2	 	Change of circumstances. If any change in or in the interpretation of any applicable
law or regulation, by any government or governmental authority or
agency, makes it unlawful for the Bank to maintain or give effect to its obligations or to claim or




58









 






	 	 	receive any amount payable to the Bank under this Agreement, then the Bank may serve
written notice on the Borrower declaring its obligations under this Agreement terminated in
whole or in part, whereupon the same shall terminate forthwith and the Borrower will
immediately repay the Loan and accrued interest to the date of prepayment together with all
other Outstanding Indebtedness to the Bank pursuant to the terms of the notice.
	 
	12.3	 	Increased Cost. If, as a result of (a) any change in or in the interpretation of any law,
regulation or official directive (whether or not having the force of law but, if not having
the force of law, with which the Bank habitually complies), by any governmental authority in
any country the laws or regulations of which are applicable on the Bank, or (b) compliance by
the Bank with any request from any applicable fiscal or monetary authority (whether or not
having the force of law but, if not having the force of law, with which the Bank habitually
complies) or (c) any other set of circumstances affecting the Bank including (without
limitation) those relating to Taxation, stock or capital adequacy, any type of liquidity,
reserve assets, cash ratio deposits and special deposits or other banking or monetary
controls or requirements (except to the extent included in the Mandatory Cost) which affects
the manner in which the Bank allocates capital resources to its obligations hereunder
(including (without limitation) those resulting from the implementation of or compliance with
any amendment of the “International Convergence of Capital Measurement and Capital Standards,
a Revised Framework” published by the Basle Committee on Banking Supervision (July 1988, as
amended) or any amendatory or substitute agreement thereof including, without limitation, the
proposed new Basle Capital Accord (Basle II) or any law or regulation which implements Basle
II):






	 	(a)	 	the cost to the Bank of making the Commitment or any part thereof or
maintaining or funding the Loan is increased or an additional cost on the Bank is
imposed; and/or
	 
	 	(b)	 	subject the Bank to Taxes or the basis of Taxation (other than Taxes or
Taxation on the overall net income of the Bank) in respect of any payments to the
Bank under this Agreement or any of the other Security Documents is changed; and/or
	 
	 	(c)	 	the amount payable or the effective return to the Bank under any of the
Security Documents is reduced; and/or
	 
	 	(d)	 	the Bank’s rate of return on its overall capital by reason of a change in
the manner in which it is required to allocate capital resources to the Bank’s
obligations under any of the Security Document is reduced; and/or
	 
	 	(e)	 	require the Bank to make a payment or forgo a return on or calculated by
references to any amount received or receivable by it under any of the Security
Documents is required; and/or
	 
	 	(f)	 	require the Bank to incur or sustain a loss (including a loss of future
potential profits) by reason of being obliged to deduct all or part of the Commitment
or the Loan from its capital for regulatory purposes,






59











 






	 	 	then and in each case (subject to Clause 12.6) the Borrower shall pay to the Bank, from
time to time, upon demand, such additional moneys as shall indemnify the Bank for any
increased or additional cost, reduction, payment, foregone return or loss whatsoever
	 
	12.4	 	Claim for increased cost. The Bank will promptly notify the Borrower of any intention to
claim indemnification pursuant to Clause 12.3 and such notification will be a conclusive and
full evidence binding on the Borrower as to the amount of any increased cost or reduction and
the method of calculating the same and the Borrower shall be allowed to rebut such evidence
by any means of evidence save for witness. A claim under Clause 12.3 may be made at any time
and must be discharged by the Borrower within seven (7) days of demand. It shall not be a
defence to a claim by the Bank under this Clause 12.3 that any increased cost or reduction
could have been avoided by the Bank. Any amount due from the Borrower under Clause 12.3 shall
be due as a separate debt and shall not be affected by judgement being obtained for any other
sums due under or in respect of this Agreement.
	 
	12.5	 	Option to prepay. If any additional amounts are required to be paid by the Borrower to the
Bank by virtue of Clause 12.3, the Borrower shall be entitled, on giving the Bank not less
than fourteen (14) days prior notice in writing, to prepay the Loan and accrued interest
thereon, together with all other Outstanding Indebtedness, on the next Repayment Date. Any
such notice, once given, shall be irrevocable.
	 
	12.6	 	Exception. Nothing in Clause 12.3 shall entitle the Bank to receive any amount in respect of
compensation for any such liability to Taxes, increased or additional cost, reduction,
payment, foregone return or loss to the extent that the same is subject of an additional
payment under Clause 5.3.
	 
	13.	 	ASSIGNMENT, PARTICIPATION, CHANGE OF LENDING BRANCH
	 
	13.1	 	Binding Effect. This Agreement shall be binding upon and inure to the benefit of the Bank
and the Borrower and their respective successors and assigns.
	 
	13.2	 	No Assignment by the Borrower. The Borrower and any other parties to the Security Documents
may not assign any rights and/or obligations under this Agreement or any of the other
Security Documents or any documents executed pursuant to this Agreement and/or the other
Security Documents.
	 
	13.3	 	Assignment by the Bank. The Bank may at any time (following adequate notice being given to
the Borrower and the other Security Parties but without the consent of the Borrower), assign,
transfer, or offer participation to any other bank or financial institution, in whole or in
part, or in any manner dispose of all or any of its rights and/or obligations arising or
accruing under this Agreement or any of the other Security Documents or any documents
executed pursuant to this Agreement and/or the other Security Documents.
	 
	13.4	 	Documentation. If the Bank assigns, transfers or in any other manner grants participation in
respect of all or any part of its rights or benefits or transfers all or any of its
obligations as provided in this Clause 13 the Borrower undertakes, immediately on being
requested to do so by the Bank, to enter into and procure that each Security Party enters into
(at the Bank’s expense) such documents as may be necessary or desirable to transfer to the
assignee, transferee or participant all or the relevant part of




60









 






	 	 	the interest of the Bank in the Security Documents and all relevant references in this
Agreement to the Bank shall thereafter be construed as a reference to the Bank and/or
assignee, transferee or participant of the Bank to the extent of their respective interests
and, in the case of a transfer of all or part of the obligations of the Bank, the Borrower
shall thereafter look only to the assignee, transferee or participant in respect of that
proportion of the obligations of the Bank under this Agreement assumed by such assignee,
transferee or participant. The Borrower hereby expressly consents to any subsequent
transfer of the rights and obligations of the Bank and undertake that they shall join in
and execute such supplemental or substitute agreements as may be necessary to enable the
Bank to assign and/or transfer and/or grant participation in respect of its rights and
obligations to another branch or to one or more banks or financial institutions in a
syndicate or otherwise.
	 
	13.5	 	Disclosure of information. The Bank may without the consent of the Borrower, disclose (on a
confidential basis) to a prospective assignee, substitute or transferee or to any other
person who may propose entering into contractual relations with the Bank in relation to this
Agreement such information about the Borrower and the other Security Parties as the Bank
shall consider appropriate.
	 
	13.6	 	Change of Lending Branch. The Bank shall be at liberty to transfer the Loan to any branch or
branches, and upon notification of any such transfer, the word “Bank” in this Agreement and
in the other Security Documents shall mean the Bank, acting through such branch or branches
and the terms and provisions of this Agreement and of the other Security Documents shall be
construed accordingly.
	 
	13.7	 	Cumulative Remedies. The rights and remedies of the Bank contained in this Agreement and the
other Security Documents are cumulative and not neither exclusive of each other nor of any
other rights or remedies conferred by law.
	 
	13.8	 	Waivers. No delay or omission by the Bank to exercise any right, remedy or power vested in
the Bank under this Agreement and/or the other Security Documents or by law shall impair such
right or power, or be construed as a waiver of, or as an acquiescence in any default by the
Borrower and/or any other Security Party, nor shall any single or partial exercise by the
Bank of any power, right or remedy preclude any other or further exercise thereof or the
exercise of any other power, right or remedy. In the event of the Bank on any occasion
agreeing to waive any such right, remedy or power, or consent to any departure from the
strict application of the provisions of this Agreement or of any Security Document, such
waiver shall not in any way prejudice or affect the powers conferred upon the Bank under this
Agreement and the other Security Documents or the right of the Bank thereafter to act
strictly in accordance with the terms of this Agreement and the other Security Documents. No
modification or waiver by the Bank of any provision of this Agreement or of any of the other
Security Documents nor any consent by the Bank to any departure therefrom by any Security
Party shall be effective unless the same shall be in writing and then shall only be effective
in the specific case and for the specific purpose for which given. No notice to or demand on
any such party in any such case shall entitle such party to any other or further notice or
demand in similar or other circumstances.
	 
	13.9	 	Integration of Terms. This Agreement contains the entire agreement of the parties and its
provisions supersede the provisions of the Commitment Letter (save for the




61









 






	 	 	provisions thereof which relate to fees) and any and all other prior correspondence and
oral negotiation by the parties in respect of the matters regulated by this Agreement.
	 
	13.10	 	Amendments. This Agreement and any other Security Documents shall not be amended or varied
in their respective terms by any oral agreement or representation or in any other manner
other than by an instrument in writing of even date herewith or subsequent hereto executed by
or on behalf of the parties hereto or thereto.
	 
	13.11	 	Invalidity of Terms. In the event of any provision contained in one or more of this
Agreement, the other Security Documents and any other documents executed pursuant hereto or
thereto being invalid, illegal or unenforceable in any respect under any applicable law in
any jurisdiction whatsoever, such provision shall be ineffective as to the jurisdiction only
without affecting the remaining provisions hereof or thereof. If, however, this event becomes
known to the Bank prior to the Drawdown of the Commitment or of any part thereof the Bank
shall be entitled to refuse drawdown until this discrepancy is remedied. Where, however, the
provisions of any such applicable law may be waived, they are hereby waived by the parties
hereto to the full extent permitted by the law to the intent that this Agreement, the other
Security Documents and any other documents executed pursuant hereto or thereto shall be
deemed to be valid binding and enforceable in accordance with their respective terms.
	 
	13.12	 	Inconsistency of Terms. In the event of any inconsistency between the provisions of this
Agreement and the provisions of a Security Document the provisions of this Agreement shall
prevail.
	 
	13.13	 	Language and genuineness of documents






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






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






	 	(a)	 	be in writing delivered personally or be first-class prepaid letter (airmail
if available), or cable or shall be served through a process server or subject to
Clause 10.7 by fax;






62












 






	 	(b)	 	be deemed to have been received, subject as otherwise provided in this
Agreement or the relevant Security Document, in the case of a fax, at the time of
dispatch as per transmission report (provided that if the date of despatch is not a
business day in the country of the addressee it shall be deemed to have been
received at the opening of business on the next such business day), in the case of
a cable 24 hours after despatch and in the case of a letter when delivered or
served personally or five (5) days after it has been put into the post; and
	 
	 	(c)	 	be sent:






	 	(i)	 	if to be sent to any
Security Party, to:
 c/o Stealth Maritime
Corp. S.A.,
 331 Kifissias Avenue,
 145 61
Kifissia, Athens, Greece, 
Facsimile No: +30
210 6252817 
Attention: Chief Financial
Officer
	 
	 	(ii)	 	if to be sent to the Bank, to

Emporiki Bank of Greece S.A.

Shipping Division, 
114
Kolokotroni Street, 
GR 185 35
Piraeus, Greece, 
Fax No.: +30 210 4226779 
Attention: The Manager






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






	14.2	 	Confidentiality






	 	(a)	 	Each of the parties hereto agree and undertake to keep confidential any
documentation and any confidential information concerning the business, affairs,
directors or employees of the other which comes into its possession during this
Agreement and not to use any such documentation, information for any purpose other
than for which it was provided.
	 
	 	(b)	 	The Borrower acknowledges and accepts that the Bank may be required by law or
that it may be appropriate for the Bank to disclose information and deliver
documentation relating to the Borrower and the transactions and matters in relation to
this Agreement and/or the other Security Documents to governmental or regulatory
agencies and authorities.
	 
	 	(c)	 	The Borrower acknowledges and accepts that in case of occurrence of any of the
Events of Default the Bank may disclose information and deliver documentation relating
to the Borrower and the transactions and matters in relation to this Agreement and/or
the other Security Documents to third parties




63









 






	 	 	 	to the extend that this is necessary for the enforcement or the contemplation of
enforcement of the Bank’s rights or for any other purpose for which in the opinion
of the Bank, such disclosure should be useful or appropriate for the interests of
the Bank or otherwise and the Borrower expressly authorise any such disclosure and
delivery.
	 
	 	(d)	 	The Borrower acknowledges and accepts that the Bank may be prohibited or it
may be inappropriate for the Bank to disclose information to the Borrower by reason of
law or duties of confidentiality owed or to be owed to other persons.
	 
	 	(e)	 	The Borrower hereby grants its consent to the communication by the Bank for
process in the meaning of law 2472/97 of its personal data contained in this
Agreement, the Security Documents, in the Earnings Accounts and the Retention Account
for onwards communication thereof to the inter-banking database record called
“Teiresias” kept and solely used by banks and financial institutions. The Borrower is
entitled at any relevant time throughout the Security Period to revoke its consent
given hereunder by written notice addressed to the Bank and the Registrar of
“Teiresias A.E.” at 2, Alamanas street, 15125 Maroussi, Athens, Greece.






	15.	 	GOVERNING LAW AND JURISDICTION
	 
	15.1	 	Law. This Agreement is governed by, and shall be construed in accordance with, English law.
	 
	15.2	 	Submission to jurisdiction. The Borrower agrees, for the benefit of each Creditor, that any
legal action or proceedings arising out of or in connection with this Agreement against the
Borrower or any of its assets may be brought in the English courts. The Borrower irrevocably
and unconditionally submits to the jurisdiction of such courts and irrevocably designates,
appoints and empowers Messrs. Saville & Co. (attention: Mr. Richard Saville) at their
office for the time being at One Carey Lane, London, EC2V 8AE, England, to receive for it and
on its behalf, service of process issued out of the English courts in any such legal action or
proceedings, who is hereby authorised to accept such service, which shall be deemed to be good
service on the Borrower, provided, however, that the Borrower further agrees that in
the event that (i) Messrs. Saville & Co. (or any other agent appointed by the
Borrower in substitution of Messrs. Saville & Co. and acceptable to the Lenders)
close or fail to maintain a business presence in England, or (ii) the Lenders, in their sole
discretion, shall determine that service of process on the said agents is not feasible or may
be insufficient under the Laws of England, then any summons, writ or other legal process
issued against the Borrower in England may be served upon Messrs. The Law Debenture Corporate
Services Limited, currently located at 5th Floor, 100 Wood Street, London EC2V 7EX,
England, (hereinafter called the “Process Agent for English Proceedings”) or their successors,
who are hereby authorised to accept such service, which shall be deemed to be good service on
the Borrower. The appointment of the Process Agent for English Proceedings shall be valid and
binding from the date notice of such appointment is given by the Agent to the Borrower in
accordance with Clauses 17.1 and 17.2. The submission to such jurisdiction shall not (and
shall not be construed so as to) limit the right of a Creditor to take proceedings against the
Borrower in the courts of any other competent jurisdiction nor shall the taking of




64









 






	 	 	proceedings in any one or more jurisdictions preclude the taking of proceedings in any
other jurisdiction, whether concurrently or not.
	 
	 	 	The parties further agree that only the courts of England and not those of any other State
shall have jurisdiction to determine any claim which the Borrower may have against any
Creditor arising out of or in connection with this Agreement.
	 
	15.3	 	Contracts (Rights of Third Parties) Act 1999. No term of this Agreement is enforceable under
the Contracts (Rights of Third Parties) Act 1999 by a person who is not a party to this
Agreement.
	 
	15.4	 	Process Agent in Greece. Mrs. Sophia Damigou, an attorney-at-law, c/o Stealth
Maritime Corp. S.A., 331 Kifissias Avenue, 145 61 Kifissia, Athens, Greece, is hereby
appointed by the Borrower as agent to accept service (hereinafter “Process Agent”) upon whom
any judicial process in respect of proceedings in Greece may be served and any process
notice, judicial or extra-judicial request, demand for payment, payment order, foreclosure
proceedings, notarial announcement of claim, notice, request, demand or other communication
under this Agreement or any of the Security Documents. In the event that the Process Agent
(or any substitute process agent notified to the Bank in accordance with the foregoing)
cannot be found at the address specified above (or, as the case may be, notified to the
Bank), which will be conclusively proved by a deed of a process server to the effect that the
Process Agent was not found at such address, any process notice, judicial or extra-judicial
request, demand for payment, payment order, foreclosure proceedings, notarial announcement of
claim or other communication to be sent to any Security Party may be validly notified in
accordance with the relevant provisions of the Hellenic Code on Civil Procedure.
	 
	15.5	 	Meaning of “proceedings”. In this Clause 15 “proceedings” means proceedings of any kind,
including an application for a provisional or protective measure.




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





65











 





EXECUTION PAGE




THE BORROWER




	 	 	 	 	 	 	 	 	 
	SIGNED by	 	 	)	 	 	 
	Mr. Andrew Simmons	 	 	)	 	 	 
	for and on behalf of the Borrower	 	 	)	 	 	 
	STEALTHGAS INC.	 	 	)	 	 	/s/ Andrew Simmons
	 

	 	 	 	 	 	 	 	 
	of Marshall Islands, in the presence of:	 	 	)	 	 	Attorney-in-Fact
	 
	 	 	 	 	 	 	 	 
	 
	Witness:

	 	/s/ Konstantinos Samaritis	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	Name:

	 	Konstantinos Samaritis	 	 	 	 	 	 
	Address:

	 	c/o Stealth Maritime Corp. S.A.,

331 Kifissias Avenue,

145 61 Athens, Greece	 	 	 	 	 	 
	Occupation:

	 	Attorney-at-law	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	THE BANK	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	SIGNED by	 	 	)	 	 	 
	Mrs. Christina Margelou and	 	 	)	 	 	/s/ Christina Margelou
	 

	 	 	 	 	 	 	 	 
	Mr. Cryssoula Voulgari	 	 	)	 	 	Attorney-in-Fact
	for and on behalf of	 	 	)	 	 	 
	EMPORIKI BANK OF GREECE S.A.	 	 	)	 	 	 
	in the presence of:	 	 	)	 	 	/s/ Cryssoula Voulgari
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	Attorney-in-Fact
	 
	 	 	 	 	 	 	 	 
	Witness:

	 	/s/ Aristeidis D. Vourdas	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	Name:

	 	Aristeidis D. Vourdas	 	 	 	 	 	 
	Address:

	 	13 Defteras Merarchias Street	 	 	 	 	 	 
	 

	 	Piraeus, Greece	 	 	 	 	 	 
	Occupation:

	 	Attorney-at-law	 	 	 	 	 	 






66









 





SCHEDULE 1



FORM OF DRAWDOWN NOTICE

(referred to in Clause 2.2)





	To:	 	EMPORIKI BANK OF GREECE S.A.

144 Kolokotroni Street,
 GR
185.35 Piraeus, 
Greece (the
“Bank”)





[•], 2008



Re: US$29,437,000 Loan Agreement (the “Loan Agreement”) dated [•] August, 2008 made between (1) the
Bank, as lender, (2)
Stealthgas Inc., of Marshall Islands, as borrower, (the “Borrower”).



We refer to the Loan Agreement and hereby give you notice that we wish to draw the Commitment in
the amount of $[•] (Dollars [•]) on [•], 2008. We select a first Interest Period in respect of
the Loan of [•] months/ terminating on [•], 2008. The funds should be credited to [•] [name and
number of account] [•]) with [•], New York, USA.



We confirm that:





	(i)	 	no event or circumstance has occurred and is continuing which constitutes a Default;
	 
	(ii)	 	the representations and warranties contained in Clause 6 of the Loan Agreement and the
representations and warranties contained in each of the Security Documents are true and
correct at the date hereof as if made with respect to the facts and circumstances existing
at such date;
	 
	(iii)	 	the borrowing to be effected by the drawing of the said Advance will be within our
corporate powers, has been validly authorised by appropriate corporate action and will not
cause any limit on our borrowings (whether imposed by statute, regulation, agreement or
otherwise) to be exceeded;
	 
	(iv)	 	there has been no change in the ownership, management or financial condition of any of the
Security Parties from that previously disclosed to the Bank in writing other than [•]; and
	 
	(v)	 	we will use the proceeds of the above Advance[s] for our benefit and under our full
responsibility and exclusively for the purposes specified in the Loan Agreement.





					
	 	 	 	 	 
	Schedule 1
	 	67
	 	 






 









 





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




	 	 	 	 	 	 	 	 	 
	SIGNED by	 	 	)	 	 	 
	Mr.	 	 	)	 	 	 
	for and on behalf of the Borrower	 	 	)	 	 	 
	STEALTHGAS INC.	 	 	)	 	 	 
	of Marshall Islands, in the presence of:	 	 	)	 	 	 
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Witness:
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	Name:

	 	      [•]	 	 	 	 	 	 
	Address:

	 	      [•]

      Piraeus, Greece,	 	 	 	 	 	 






Occupation: Attorney-at-law




					
	 	 	 	 	 
	Schedule 1
	 	68