Exhibit 10.32


 


Private &
Confidential


 


 


LOAN AGREEMENT

for a

Loan of up to US$17,600,000

to

TASMAN SEAWAYS INC.

and

SANTON LIMITED



provided by

NATIONAL BANK OF GREECE S.A.


 


 





 

















 


Contents


 


	
  Clause

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  1

  	
  Purpose and definitions

  	
  1

  
	
   

  	
   

  	
   

  
	
  2

  	
  The Commitment
  and the Loan

  	
  17

  
	
   

  	
   

  	
   

  
	
  3

  	
  Interest and Interest Periods

  	
  20

  
	
   

  	
   

  	
   

  
	
  4

  	
  Repayment and
  prepayment

  	
  22

  
	
   

  	
   

  	
   

  
	
  5

  	
  Fees,
  commitment commission and expenses

  	
  24

  
	
   

  	
   

  	
   

  
	
  6

  	
  Payments and
  taxes; accounts and calculations

  	
  25

  
	
   

  	
   

  	
   

  
	
  7

  	
  Representations and warranties

  	
  26

  
	
   

  	
   

  	
   

  
	
  8

  	
  Undertakings

  	
  30

  
	
   

  	
   

  	
   

  
	
  9

  	
  Conditions

  	
  36

  
	
   

  	
   

  	
   

  
	
  10

  	
  Events of Default

  	
  38

  
	
   

  	
   

  	
   

  
	
  11

  	
  Indemnities

  	
  41

  
	
   

  	
   

  	
   

  
	
  12

  	
  Unlawfulness
  and increased costs

  	
  42

  
	
   

  	
   

  	
   

  
	
  13

  	
  Security and
  set-off

  	
  43

  
	
   

  	
   

  	
   

  
	
  14

  	
  Operating
  Accounts

  	
  44

  
	
   

  	
   

  	
   

  
	
  15

  	
  Assignment,
  transfer and lending office

  	
  46

  
	
   

  	
   

  	
   

  
	
  16

  	
  Notices and other matters

  	
  47

  
	
   

  	
   

  	
   

  
	
  17

  	
  Governing law and jurisdiction

  	
  49

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Schedule 1
  Form of Drawdown Notice

  	
   

  
	
   

  	
   

  	
   

  
	
  Schedule 2
  Documents and evidence required as conditions precedent

  	
   

  
	
   

  	
   

  	
   

  
	
  Schedule 3
  Pre-delivery Advances per Ship

  	
   

  
	
   

  	
   

  	
   

  
	
  Schedule 4
  Form of Pre-delivery Security Assignment

  	
   

  
	
   

  	
   

  	
   

  
	
  Schedule 5
  Form of Corporate Guarantee

  	
   

  



 

















 


THIS
AGREEMENT is dated           October 2006
and made BETWEEN:


 


(1)           TASMAN
SEAWAYS INC. and SANTON
LIMITED as joint and several Borrowers; and


 


(2)           NATIONAL
BANK OF GREECE S.A. as Bank.


 


IT IS AGREED as follows:


 


1              Purpose and definitions


 


1.1          Purpose


 


This
Agreement sets out the terms and conditions upon and subject to which the Bank
agrees to make available to the Borrowers, jointly and severally, a loan of up
to Seventeen million six hundred thousand Dollars ($17,600,000) in up to twelve
(12) Advances to be used for the purpose of financing and/or refinancing part
of the construction and acquisition cost of the Ships.


 


1.2          Definitions


 


In this
Agreement, unless the context otherwise requires:


 


“Account Pledges” means, together, the Operating Account
Pledges and the Retention Account Pledge and “Account
Pledge” means any of them;


 


“Accounts” means, together, the Santon Operating Account, the
Tasman Operating Account and the Retention Account and “Account”
means any of them;


 


“Additional Cost Advance”:


 


(a)           in
relation to the Santon Ship and the Santon Tranche, means the Santon Additional
Cost Advance; or


 


(b)           in
relation to the Tasman Ship and the Tasman Tranche, means the Tasman Additional
Cost Advance;


 


“Advances” means each borrowing of a proportion of the
Commitment by the Borrowers or (as the context may require) the principal
amount of such borrowing, it includes (i) each Santon Pre-delivery
Advance, (ii) the Santon Delivery Advance, (iii) the Santon
Additional Cost Advance, (iv) each Tasman Pre-delivery Advance, (v) the
Tasman Delivery Advance and (vi) the Tasman Additional Cost Advance, and:


 


(a)           in
relation to the Santon Ship and the Santon Tranche, it means the Santon Advances;
or


 


(b)           in
relation to the Tasman Ship and the Tasman Tranche, it means the Tasman Advances,


 


and “Advance” means any of them;


 


“Assignee” has the meaning ascribed thereto in clause 15.3;


 


“Balloon Instalment” has, in respect of each Tranche, the meaning
ascribed thereto in clause 4.1;


 


“Bank” means National Bank of Greece S.A. whose registered
office is at 86 Aeolou Street, 102 32 Athens, Greece acting for the purposes of
this Agreement through its branch at 2 Bouboulinas & Akti Miaouli, 185
35 Piraeus, Greece (or of such other address as may last have been notified to
the Borrowers pursuant to clause 15.6) and includes its successors in
title, Assignees and/or Transferees;


 


1

















 


“Banking Day” means a day on which dealings in deposits in
Dollars are carried on in the London Interbank Eurocurrency Market and (other
than Saturday or Sunday) on which banks are open for business in London, Piraeus
and New York City (or any other relevant place of payment under clause 6);


 


“Borrowed Money” means Indebtedness incurred in respect of (i) money
borrowed or raised and debit balances at banks, (ii) any bond, note, loan
stock, debenture or similar debt instrument, (iii) acceptance or
documentary credit facilities, (iv) receivables sold or discounted
(otherwise than on a non-recourse basis), (v) deferred payments for assets
or services acquired, (vi) finance leases and hire purchase contracts, (vii) swaps,
forward exchange contracts, futures and other derivatives, (viii) any
other transaction (including without limitation forward sale or purchase
agreements) having the commercial effect of a borrowing or raising of money or
of any of (ii) to (vii) above and (ix) guarantees in respect of
Indebtedness of any person falling within any of (i) to (viii) above;


 


“Borrower” means:


 


(a)           in
relation to the Santon Ship, the Santon Borrower; or


 


(b)           in
relation to the Tasman Ship, the Tasman Borrower,


 


and “Borrowers” means either or both of them;


 


“Borrowers’ Security Documents” means, at any relevant time,
such of the Security Documents as shall have been executed by either of the
Borrowers at such time;


 


“Builder” means Qingdao Hyundai Shipbuilding Co. Ltd, a
corporation duly organised and existing under the laws of the People’s Republic
of China, having its registered office at Lingshanwei Jiaonan, PC 266427,
Qingdao Shandong Province, the People’s Republic of China and includes it
successors in title;


 


“Casualty Amount” means, in relation to each Ship, Two
hundred and fifty thousand Dollars ($250,000) or the equivalent in any other
currency;


 


“Classification” means in relation to each Ship, the
classification “+100A1 Double Hull Oil Tanker, ESP, LI, +LMC, CCS, descriptive
motor “Shipright BWMP (S or F) & Shipright (SCM)”“ with the relevant
Classification Society, or such other classification as the Bank shall, at the
request of a Borrower, have agreed in writing shall be treated as the
Classification in relation to such Borrower’s Ship for the purposes of the
relevant Ship Security Documents;


 


“Classification Society” means, in relation to each Ship, Lloyd’s
Register of Shipping, or such other classification society which the Bank
shall, at the request of a Borrower, have agreed in writing shall be treated as
the Classification Society in relation to such Borrower’s Ship for the purposes
of the relevant Ship Security Documents;


 


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


 


“Commitment” means the amount which the Bank has agreed to
lend to the Borrowers under clause 2.1 as reduced by any relevant term of
this Agreement;


 


“Compulsory Acquisition” means, in relation to a Ship,
requisition for title or other compulsory acquisition, requisition, appropriation,
expropriation, deprivation, forfeiture or confiscation for any reason of that Ship
by any Government Entity or other competent authority, whether de jure or de
facto, but shall exclude requisition for use or hire not involving requisition
of title;


 


2

















 


“Construction Cost” means:


 


(a)           in relation to Santon Ship,
the Santon Construction Cost; or


 


(b)           in relation to the Tasman Ship,
the Tasman Construction Cost,


 


and “Construction Costs” means either or both of them;


 


“Contract” means:


 


(a)           in relation to the Santon Ship,
the Santon Contract; or


 


(b)           in relation to the Tasman Ship,
the Tasman Contract,


 


and “Contracts” means either or both of them;


 


“Contract Assignment Consent and Acknowledgement” means:


 


(a)           in relation to the Santon Ship,
the Santon Contract Assignment Consent and Acknowledgement; or


 


(b)           in relation to the Tasman Ship,
the Tasman Contract Assignment Consent and Acknowledgement,


 


and “Contract Assignment Consents and Acknowledgements” means either
or both of them;


 


“Contract Price” means:


 


(a)           in relation to the Santon Ship, the Santon Contract Price; or


 


(b)           in relation to the Tasman Ship,
the Tasman Contract Price,


 


and “Contract Prices” means either or both of them;


 


“Corporate Guarantee” means:


 


(a)           the Manager
Corporate Guarantee; or


 


(b)           the Holding
Corporate Guarantee,


 


and “Corporate Guarantees” means either or both of them;


 


“Corporate Guarantor” means Aegean Marine Petroleum Network
Inc. of Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall
Islands MH96960 and includes its successors in title;


 


“Default” means any Event of Default or any event or
circumstance 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;


 


“Delivery” means, in relation to each Ship, the delivery of
such Ship by the Builder to, and the acceptance of such Ship by, the relevant
Borrower pursuant to the relevant Contract;


 


“Delivery Advance”:


 


(a)           in relation to the Santon Ship
and the Santon Tranche, means the Santon Delivery Advance; or


 


3

















 


(b)           in relation to the Tasman Ship
and the Tasman Tranche, means the Tasman Delivery Advance,


 


and “Delivery Advances” means either or both of them;


 


“Delivery Date” means, in relation to each Ship, the date
upon which its Delivery occurs;


 


“DOC” means a document of compliance issued to an Operator in
accordance with rule 13 of the 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, mean 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 U.S. dollars);


 


“Drawdown Date” means, in relation to an Advance, any date,
being a Banking Day falling during the relevant Drawdown Period, on which the
Borrowers request that Advance to be made as specified in the relevant Drawdown
Notice (whether or not such Advance is actually made or not);


 


“Drawdown Notice” means a notice substantially in the terms
of Error!
Reference source not found.;


 


“Drawdown Period” means, in relation to an Advance, the
period commencing on the date of this Agreement and ending on the relevant Termination
Date or the period ending on such earlier date (if any) on which (a) the
aggregate amount of all Advances is equal to the Commitment or (b) the
Commitment is reduced to zero pursuant to clauses 4.3, 10.2 or 12 or (c) Delivery
of the Ship relevant to such Advance occurs;


 


“Earnings” means, in relation to a Ship, all moneys
whatsoever from time to time due or payable to a Borrower during the Security
Period arising out of the use or operation of such Borrower’s Ship including
(but without limiting the generality of the foregoing) all freight, hire and
passage moneys, income arising out of pooling arrangements, compensation
payable to such Borrower in the event of requisition of such Borrower’s Ship
for hire, remuneration for salvage or towage services, demurrage and detention
moneys and damages for breach (or payment for variation or termination) of any
charterparty or other contract for the employment of such Borrower’s Ship;


 


“Encumbrance” means any mortgage, charge (whether fixed or
floating), pledge, lien, hypothecation, assignment, trust arrangement or
security interest or other encumbrance of any kind securing any obligation of
any person or any type of preferential arrangement (including without
limitation title transfer and/or retention arrangements) having a similar
effect;


 


“Environmental Affiliate” means any agent or employee of either
Borrower or any other Relevant Party or any person having a contractual
relationship with either Borrower or any other Relevant Party in connection
with any Relevant Ship or its operation or the carriage of cargo and/or
passengers thereon and/or the provision of goods and/or services on or from any
Relevant Ship;


 


“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 its operation or the carriage of cargo
and/or passengers thereon and/or the provision of goods and/or services on or
from such Relevant Ship required under any Environmental Law;


 


“Environmental Claim” means any and all material enforcement,
clean-up, removal or other governmental or regulatory actions or orders
instituted or completed pursuant to any Environmental Law or any Environmental
Approval together with claims made by any third party relating to damage,
contribution, loss or injury, resulting from any actual or threatened emission,
spill, release or discharge of a Pollutant from any Relevant Ship;


 


4

















 


“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 of Pollutants and
actual or threatened emissions, spills, releases or discharges of Pollutants;


 


“Event of Default” means any of the events or circumstances
described in clause 10.1;


 


“First Advance”:


 


(a)           in relation to the Santon Ship
and the Santon Tranche, means the Santon First Advance; or


 


(b)           in relation to the Tasman Ship
and the Tasman Tranche, means the Tasman First Advance,


 


and “First Advances” means either or both of them;


 


“First Repayment Date” means, in relation to each Tranche
(and subject to clause 6.3), the date falling three (3) months after the
earlier of (a) the Drawdown Date of the Delivery Advance relevant to such
Tranche and (b) the last day of the Drawdown Period for the Delivery
Advance relevant to such Tranche;


 


“Flag State” means, in relation to each Ship, such state or
territory designated in writing by the Bank in its absolute discretion, at the
request of the relevant Borrower, as being the “Flag State”
of such Ship for the purposes of the relevant Ship Security Documents or such
other state or territory designated in writing by the Bank in its absolute
discretion, at the request of a Borrower as being the “Flag State” of such Borrower’s
Ship for the purpose of the Security Documents;


 


“Fourth Advance”:


 


(a)           in relation to the Santon
Ship and the Santon Tranche, means the Santon Fourth Advance; or


 


(b)           in relation to the Tasman
Ship and the Tasman Tranche, means the Tasman Fourth Advance,


 


and “Fourth Advances” means either or both of them;


 


“General Assignment” means:


 


(a)           in relation to the Santon
Ship, the Santon General Assignment; or


 


(b)           in relation to the Tasman Ship, the Tasman General Assignment,


 


and “General Assignments” means either or both of them;


 


“Government Entity” means and includes (whether having a
distinct legal personality or not) any national or local government authority,
board, commission, department, division, organ, instrumentality, court or
agency and any association, organisation or institution of which any of the
foregoing is a member or to whose jurisdiction any of the foregoing is subject
or in whose activities any of the foregoing is a participant;


 


“Holding Corporate Guarantee” means the corporate guarantee
executed or (as the context may require) to be executed by the Corporate
Guarantor in favour of the Bank in the form set out in schedule 5;


 


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


 


5

















 


“Insurances” means, in relation to a Ship, all policies and
contracts of insurance (which expression includes all entries of that Ship in a
protection and indemnity or war risks association) which are from time to time
during the Security Period in place or taken out or entered into by or for the
benefit of the relevant Borrower (whether in the sole name of such Borrower, or
in the joint names of such Borrower and the Bank or otherwise) in respect of such
Borrower’s Ship and her Earnings or otherwise howsoever in connection with such
Ship and all benefits thereof (including claims of whatsoever nature and return
of premiums);


 


“Interest Payment Date” means the last day of an Interest
Period;


 


“Interest Period” means, in relation to any Advance or
Tranche, each period for the calculation of interest in respect of such Advance
or, as the case may be, Tranche, ascertained in accordance with clauses 3.2
and 3.3;


 


“Iota” means Iota Corporation, a corporation duly organised
and existing under the laws of the Republic of Liberia having its registered
office at 80 Broad Street, Monrovia, Republic of Liberia and includes its
successors in title;


 


“ISPS Code” means the International Ship and Port facility Security
Code constituted pursuant to resolution A.924(22) of the International Maritime
Organization now set out in Chapter XI-2 of the International Convention for
the Safety of Life at Sea 1974 (as amended) as adopted by a Diplomatic
conference of the International Maritime Organisation on Maritime Security in December 2002
and includes any amendments or extensions thereto and any regulation issued
pursuant thereto;


 


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


 


“LIBOR” means,
in relation to any amount and for any period, the offered rate (if any) for
deposits of Dollars for such amount and for such period which is:


 


(a)           the rate for such period, appearing on Reuters page LIBOR 01
(British Bankers’ Association Interest Settlement Rates) (or such other page as
may replace such page LIBOR 01 on such system or on any other system of
the information vendor for the time being designated by the British Bankers’
Association to calculate the BBA Interest Settlement Rate (as defined in the
British Bankers’ Association’s Recommended Terms and Conditions (“BBAIRS” terms) at or about 11:00 a.m.
(London time) on the Quotation Date; or


 


(b)           if on such date no such rate is displayed, the rate quoted to the Bank
by the Reference Bank at the request of the Bank as the Reference Bank’s
offered rate for deposits of 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 to prime banks in the London Interbank Market at or about 11:00 a.m.
(London time) on the Quotation Date for such period;


 


“Listing Date” means the date when all the shares in the
Corporate Guarantor are successfully listed on the New York Stock Exchange;


 


“Loan” means the aggregate principal amount owing to the Bank
under this Agreement at any relevant time;


 


“Management Agreement” means:


 


(a)           in relation to the Santon Ship,
the Santon Management Agreement; or


 


(b)           in relation to the Tasman Ship, the Tasman Management Agreement,


 


and “Management Agreements” means either or both of them;


 


“Manager” means, in relation to each Ship, Aegean Bunkering
Services Inc. of Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro,
Marshall Islands MH96960 or any other


 


6

















 


person
appointed by the relevant Borrower, with the prior written consent of the Bank,
as the manager of such Ship and, in each such case, includes its successors in
title;


 


“Manager Corporate Guarantee” means the corporate guarantee
executed or (as the context may require) to be executed by the Manager in
favour of the Bank in the form set out in schedule 5;


 


“Manager’s Undertaking” means:


 


(a)           in
relation to the Santon Ship, the Santon Manager’s Undertaking; or


 


(b)           in
relation to the Tasman Ship, the Tasman Manager’s Undertaking,


 


and “Manager’s Undertakings” means either or both of them;


 


“Margin” means:


 


(c)           in
relation to each Tranche minus the part thereof which is repayable by the
Balloon Instalment for such Tranche, one point one five per cent (1.15%) per
annum; and


 


(d)           in
relation to the part of each Tranche which is repayable by the Balloon
Instalment for such Tranche, one point two five per cent (1.25%) per annum;


 


“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 the
period started on the last Banking Day in a calendar month or if there is no
such numerically corresponding day, it shall end on the last Banking Day in
such next calendar month and (ii) if such numerically corresponding day is
not a Banking Day, the period shall end on the next following Banking Day in
the same calendar month but if there is no such Banking Day it shall end on the
preceding Banking Day and “months” and “monthly” shall be construed accordingly;


 


“Mortgage” means:


 


(a)           in relation to the Santon Ship,
the Santon Mortgage; or


 


(b)           in relation to the Tasman Ship, the Tasman Mortgage,


 


and “Mortgages” means either or both of them;


 


“Mortgaged Ship” means, at any relevant time, either Ship
which is at such time subject to a Mortgage and/or the Earnings, Insurances and
Requisition Compensation of which are subject to an Encumbrance pursuant to the
relevant Ship Security Documents and a Ship shall, for the purposes of this
Agreement, be deemed to be a Mortgaged Ship as from whichever shall be the
earlier of (a) the Drawdown Date of the Delivery Advance for that Ship and
(b) the date that the Mortgage of that Ship 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 Bank pursuant to clause 4.3 following the Total Loss of such Ship and (ii) the
date on which all moneys owing under the Security Documents have been repaid in
full;


 


“Operating Account” means:


 


(a)           in relation to the Santon Ship,
the Santon Operating Account; or


 


(b)           in relation to the Tasman Ship,
the Tasman Operating Account,


 


and “Operating Accounts” means either or both of them;


 


“Operating Account Pledge” means:


 


7

















 


(e)           in
relation to the Santon Ship, the Santon Operating Account Pledge; or


 


(f)            in
relation to the Tasman Ship, the Tasman Operating Account Pledge,


 


and “Operating Account Pledges” means either or both of them;


 


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


 


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


 


“Permitted Liens” means, in relation to each Ship, any lien
on that Ship 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 with the prior written
consent of the Bank) exceeding the relevant Casualty Amount;


 


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


 


“Pre-delivery Advances”:


 


(a)           in relation to the Santon Ship
and the Santon Tranche, means the Santon Pre-delivery Advances; or


 


(b)           in relation to the Tasman Ship
and the Tasman Tranche, means the Tasman Pre-delivery Advances,


 


and “Pre-delivery Advance” means any of them;


 


“Pre-delivery Security Assignment” means:


 


(a)           in relation to the Santon Ship,
the Santon Pre-delivery Security Assignment; or


 


(b)           in relation to the Tasman Ship,
the Tasman Pre-delivery Security Assignment,


 


and “Pre-delivery Security Assignments” means either or both of
them;


 


“Quotation Date” means, in respect of any period in respect
of which LIBOR falls to be determined under this Agreement, the day falling two
(2) Banking Days before the first day of such period;


 


“Reference Bank” means the London Branch of National Bank of
Greece S.A. situated at present at 50 St Mary Axe, London EC3A 8EL, England;


 


“Refund Guarantee” means:


 


(a)           in relation to the Santon Ship,
any Santon Refund Guarantee; or


 


(b)           in relation to the Tasman Ship,
any Tasman Refund Guarantee,


 


and “Refund Guarantees” means any or all of them;


 


“Refund Guarantee Assignment Consent and Acknowledgement”
means:


 


(a)           in relation to the Santon Ship, any Santon Refund Guarantee Assignment
Consent and Acknowledgement; or


 


8

















 


(b)           in relation to the Tasman Ship,
any Tasman Refund Guarantee Assignment Consent and Acknowledgement,


 


and “Refund Guarantee Assignment Consents and Acknowledgements”
means any or all of them;


 


“Refund Guarantor” means Bank of Communications, Qingdao
Branch of Qingdao, The People’s Republic of China and/or any other bank or financial
institution acceptable to the Bank in its sole discretion and appointed by the
Builder to issue a Refund Guarantee and includes their respective successors in
title and “Refund Guarantors” means any or
all of them;


 


“Registry” means, in relation to a Ship, any registrar,
consul, commissioner or representative of the relevant Flag State who is duly
authorised and empowered to register such Ship, the relevant Borrower’s title
to such Ship and the relevant Mortgage under the laws and flag of the relevant Flag
State;


 


“Regulatory Agency” means the Government Entity or other
organisation in a Flag State which has been designated by the Government of that
Flag State to implement and/or administer and/or enforce the provisions of the
Code;


 


“Related Company” means:


 


(a)           of the Bank, means any Subsidiary of the Bank, any
company or other entity of which the Bank is a Subsidiary and any Subsidiary of
any such company or entity; or


 


(b)           of a Security Party, means any company or other
entity which is engaged in the
bunkering business or
in the provision of bunkering services and which is:


 


(i)            a Subsidiary of the relevant Security Party; or


 


(ii)           any company or other entity (“holding company”) of which such Security
Party is a Subsidiary; or


 


(iii)          any Subsidiary (other than such Security Party) of
any such holding company;


 


“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;


 


“Relevant Party” means the Borrowers, the Borrowers’ Related
Companies, the other Security Parties and their respective Related Companies;


 


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


 


“Repayment Dates” means, in relation to each Tranche (and subject
to clause 6.3), the First Repayment Date in respect such Tranche and each
of the dates falling at three (3) monthly intervals after such First
Repayment Date up to and including the earlier of (a) the date falling one
hundred and seventeen (117) months after such First Repayment Date and (b) in
the case of the Tasman Tranche, 30 November 2018 or, in the case of the
Santon Tranche, 30 April 2020;


 


“Requisition Compensation” means, in relation to a Ship, all
sums of money or other compensation from time to time payable during the
Security Period by reason of the Compulsory Acquisition of such Ship;


 


“Retention Account” means an interest bearing Dollar account
of the Borrowers opened jointly by the Borrowers with the Bank and includes any
sub-accounts thereof and any other account designated in writing by the Bank to
be a Retention Account for the purposes of this Agreement;


 


9

















 


“Retention Account Pledge” means a first priority pledge
executed or (as the context may require) to be executed by the Borrowers in
favour of the Bank in respect of the Retention Account in such form as the Bank
may in its sole discretion require;


 


“Retention Amount” means, in relation to any Retention Date
in respect of a Tranche, such sum as shall be the aggregate of:


 


(a)           one-third
(1/3rd) of the repayment instalment in
respect of such Tranche falling due for payment pursuant to clause 4.1 (as
the same may have been reduced by any prepayment) on the next Repayment Date
for such Tranche after the relevant Retention Date; and


 


(b)           the
applicable fraction (as hereinafter defined) of the aggregate amount of
interest falling due for payment in respect of each part of such Tranche during
and at the end of each Interest Period current at the relevant Retention Date
in respect of such Tranche and, for this purpose, the expression “applicable fraction” in relation to each Interest Period
shall mean a fraction having a numerator of one and a denominator equal to the
number of Retention Dates in respect of such Tranche falling within the
relevant Interest Period;


 


“Retention Dates” means, in relation to each Tranche, the
date falling thirty (30) days after the earlier of (a) the Drawdown Date of
the relevant Delivery Advance and (b) the last day of the Drawdown Period
for such Tranche, and each of the dates falling at monthly intervals after such
date and prior to the final Repayment Date for the relevant Tranche;


 


“Santon Additional Cost” means One million six hundred
thousand Dollars ($1,600,000) or such other lesser sum in Dollars as may be
payable by the Santon Borrower to Iota pursuant to the Santon Supervision
Contract, as the cost for services provided by Iota thereunder;


 


“Santon Additional Cost Advance” means an Advance of up to
$1,280,000 made or (as the context may require) to be made available to the
Borrowers for the purpose of financing and/or refinancing part of the Santon
Additional Cost;


 


“Santon  Advances”
means, together, the Santon Pre-delivery Advances, the Santon Additional Cost
Advance and the Santon Delivery Advance and “Santon
Advance” means any of them;


 


“Santon  Borrower” means
Santon Limited of 80 Broad Street, Monrovia, Republic of Liberia and includes
its successors in title;


 


“Santon Construction Cost” means the aggregate of (a) the
Santon Contract Price and (b) the Santon Additional Cost;


 


“Santon Contract” means the shipbuilding contract dated 13 January 2006,
made between the Builder and the Santon Borrower, as may be amended,
supplemented, varied, replaced or novated from time to time with the prior
written consent of the Bank, relating to the construction and sale by the
Builder, and the purchase by the Santon Borrower, of the Santon Ship;


 


“Santon  Contract Assignment
Consent and Acknowledgement” means the acknowledgement of notice of,
and consent to, the assignment in respect of the Santon Contract to be given by
the Builder in the form scheduled to the Santon Pre-delivery Security
Assignment;


 


“Santon  Contract Price”
means Nine million four hundred thousand Dollars ($9,400,000) or such other
lesser sum in Dollars as may be payable by the Santon Borrower to the Builder
pursuant to the Santon Contract, as the purchase price for the Santon Ship
thereunder;


 


“Santon Delivery Advance” means an Advance of up to One million
eight hundred and eighty thousand Dollars ($1,880,000) made or (as the context
may require) to be made available to the Borrowers for the purpose of financing
or refinancing in part the final instalment of the Santon Contract Price
falling due on the Delivery Date for the Santon Ship;


 


10

















 


“Santon First Advance” means an Advance of up to Seven
hundred and fifty two thousand Dollars ($752,000) made or (as the context may
require) to be made available to the Borrowers for the purpose of refinancing
in part the payment of the first instalment of the Santon Contract Price
falling due before the Delivery Date of the Santon Ship as set out in schedule 3;


 


“Santon Fourth Advance” means an Advance of up to One million
eight hundred and eighty thousand Dollars ($1,880,000) made or (as the context
may require) to be made available to the Borrowers for the purpose of financing
or refinancing in part the payment of the fourth instalment of the Santon
Contract Price falling due before the Delivery Date of the Santon Ship as set
out in schedule 3;


 


“Santon  General Assignment”
means the first priority deed of covenant and/or general assignment collateral
to the Santon Mortgage executed or (as the context may require) to be executed
by the Santon Borrower in favour of the Bank in such form as the Bank may require
in its sole discretion;


 


“Santon  Management Agreement”
means the management agreement made or (as the context may require) to be made
between the Santon Borrower and the Manager in a form previously approved in
writing by the Bank providing (inter alia) for
the Manager to manage the Santon Ship;


 


“Santon  Manager’s Undertaking”
means the first priority undertaking and assignment in relation to the Santon
Ship executed or (as the context may require) to be executed by the Manager in
favour of the Bank in such form as the Bank may require in its sole discretion;


 


“Santon  Mortgage” means
the first priority or (as the case may be) preferred mortgage of the Santon
Ship executed or (as the context may require) to be executed by the Santon
Borrower in favour of the Bank in such form as the Bank may require in its sole
discretion;


 


“Santon  Operating Account”
means an interest bearing Dollar account of the Santon Borrower opened or (as
the context may require) to be opened by the Santon Borrower with the Bank and includes
any sub-accounts thereof and any other account designated in writing by the
Bank to be a Santon Operating Account for the purposes of this Agreement;


 


“Santon  Operating Account Pledge”
means a first priority pledge executed or (as the context may require) to be
executed by the Santon Borrower in favour of the Bank in respect of the Santon
Operating Account in such form as the Bank may in its sole discretion require;


 


“Santon  Pre-delivery Advances”
means, together, the Santon First Advance, the Santon Second Advance, the
Santon Third Advance and the Santon Fourth Advance and “Santon
Pre-delivery Advance” means any of them;


 


“Santon  Pre-delivery Security
Assignment” means the assignment of the Santon Contract and the
Santon Refund Guarantees executed or (as the context may require) to be
executed by the Santon Borrower in favour of the Bank in the form set out in schedule 4;


 


“Santon  Refund Guarantee
Assignment Consent and Acknowledgement” means, in relation to each
Santon Refund Guarantee, an acknowledgement of notice of, and consent to, the
assignment in respect of that Santon Refund Guarantee to be given by the
relevant Refund Guarantor in the form scheduled to the Santon Pre-delivery
Security Assignment and “Santon  Refund Guarantee Assignment Consents and Acknowledgements”
means any or all of them;


 


“Santon  Refund Guarantees”
means, together, the letter of guarantee no. LGG03102000600010 dated 17 March 2006
issued by Bank of Communications, Qingdao Branch as Refund Guarantor in respect
of certain of the Builder’s obligations under the Santon Contract and any other
letters of guarantee to be issued by a Refund Guarantor in respect of the
Builder’s obligations under the Santon Contract, pursuant to the Santon
Contract or any agreement supplemental to the Santon Contract, and any
extensions, renewals or replacements


 


11

















 


to or
of any such guarantee(s), in each case in form and substance acceptable to the
Bank in its sole discretion and “Santon  Refund Guarantee” means any of them;


 


“Santon Second Advance” means an Advance of up to One million
five hundred and four thousand Dollars ($1,504,000) made or (as the context may
require) to be made available to the Borrowers for the purpose of financing or
refinancing in part the payment of the second instalment of the Santon Contract
Price falling due before the Delivery Date of the Santon Ship as set out in schedule 3;


 


“Santon  Ship” means the
5,500 dwt (approximately) double-hull oil tanker known on the date of this
Agreement as Hull No. QHS-224 at the Builder’s yard, to be constructed and
sold by the Builder to the Santon Borrower pursuant to the Santon Contract and
to be registered on its Delivery Date in the ownership of the Santon Borrower
through the relevant Registry under the laws and flag of the relevant Flag
State;


 


“Santon  Supervision Contract”
means the contract dated 24 February 2006 made between the Santon Borrower
and Iota as may be amended, supplemented, varied, replaced or novated from time
to time with the prior written consent of the Bank, relating to the design,
building supervision, representation, procurement of machinery and supplies and
turn-key delivery of the Santon Ship;


 


“Santon Third Advance” means an Advance of up to One million
five hundred and four thousand Dollars ($1,504,000) made or (as the context may
require) to be made available to the Borrowers for the purpose of financing or
refinancing in part the payment of the third instalment of the Santon Contract
Price falling due before the Delivery Date of the Santon Ship as set out in schedule 3;


 


“Santon Tranche” means a tranche of the Loan of up to Eight
million eight hundred thousand Dollars ($8,800,000) drawn down or to be drawn
down in not more than six (6) Advances (being the Santon Advances);


 


“Second Advance”:


 


(a)           in relation to the Santon Ship
and the Santon Tranche, means the Santon Second Advance; or


 


(b)           in relation to the Tasman Ship
and the Tasman Tranche, means the Tasman Second Advance,


 


and “Second Advances” means either or both of them;


 


“Security Documents” means this Agreement, the Corporate
Guarantees, the Mortgages, the General Assignments, the Pre-delivery Security
Assignments, the Contract Assignment Consents and Acknowledgements, the Refund
Guarantee Assignment Consents and Acknowledgements, the Account Pledges, the
Manager’s Undertakings and any other agreement or document as may have been or
shall from time to time after the date of this Agreement be executed to
guarantee and/or secure all or any part of the Loan, interest thereon and other
moneys from time to time owing by the Borrowers or either of them or any other
Security Party pursuant to this Agreement or any other Security Document
(whether or not any such document also secures moneys from time to time owing pursuant
to any other document or agreement);


 


“Security Party” means each Borrower, the Corporate
Guarantor, the Manager, each Refund Guarantor and the Builder or any other
person who may at any time be a party to any of the Security Documents (other
than the Bank);


 


“Security Period” means the period commencing on the date
hereof and terminating upon discharge of the security created by the Security
Documents by payment of all monies payable thereunder;


 


12

















 


“Security Requirement” 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 Borrowers) which is, at any relevant
time:


 


(a)           during the period
commencing on the earlier of (i) the Drawdown Date of the second Delivery
Advance to be drawn down and (ii) the last day of the last Drawdown Period
to elapse, and ending on the day falling twelve (12) months thereafter (the “Adjustment Date”), One hundred and eleven point eleven per
cent (111.11%) of the Loan; or


 


(b)           during the period
commencing on the day falling immediately after the First Adjustment Date and
ending on the day when all amounts owing under this Agreement and the other
Security Documents have been paid in full, One hundred and twenty five per cent
(125%) of the Loan;


 


“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 Borrowers and the Bank) which is, at any relevant
time, the aggregate of (a) the market value of the Mortgaged Ships as most
recently determined in accordance with clause 8.2.2 and (b) the
market value of any additional security for the time being actually provided to
the Bank pursuant to clause 8.2;


 


“Ships” means, together, the Santon Ship and the Tasman Ship
and “Ship” means either of them;


 


“Ship Security Documents”:


 


(a)           in relation to the Santon Ship,
means the Santon Mortgage, the Santon General Assignment and the Santon Manager’s
Undertaking; or


 


(b)           in relation to the Tasman Ship,
means the Tasman Mortgage, the Tasman General Assignment and the Tasman Manager’s
Undertaking;


 


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


 


“Supervision Contract” means:


 


(a)           in
relation to the Santon Ship, the Santon Supervision Contract; or


 


(b)           in
relation to the Tasman Ship, the Tasman Supervision Contract,


 


and “Supervision Contracts” means either or both of them;


 


“Subsidiary” of a person means any company or entity directly
or indirectly controlled by such person, and for this purpose “control” means either the ownership of more than fifty per
cent (50%) of the voting share capital (or equivalent rights of ownership) of
such company or entity or the power to direct its policies and management,
whether by contract or otherwise;


 


“Tasman Additional Cost” means One million six hundred
thousand Dollars ($1,600,000) or such other lesser sum in Dollars as may be
payable by the Tasman Borrower to Iota pursuant to the Tasman Supervision
Contract, as the cost for services provided by Iota thereunder;


 


“Tasman Additional Cost Advance” means an Advance of up to
$1,280,000 made or (as the context may require) to be made available to the
Borrowers for the purpose of financing and/or refinancing part of the Tasman
Additional Cost;


 


“Tasman Advances” means, together, the Tasman Pre-delivery
Advances, the Tasman Additional Cost Advance and the Tasman Delivery Advance
and “Tasman Advance” means any of them;


 


13

















 


“Tasman Borrower” means Tasman Seaways Inc. of 80 Broad
Street, Monrovia, Republic of Liberia and includes its successors in title;


 


“Tasman Construction Cost” means the aggregate of (a) the
Tasman Contract Price and (b) the Tasman Additional Cost;


 


“Tasman Contract” means the shipbuilding contract dated 13 January 2006,
made between the Builder and the Tasman Borrower, as may be amended,
supplemented, varied, replaced or novated from time to time with the prior
written consent of the Bank, relating to the construction and sale by the
Builder, and the purchase by the Tasman Borrower, of the Tasman Ship;


 


“Tasman Contract Assignment Consent and Acknowledgement”
means the acknowledgement of notice of, and consent to, the assignment in
respect of the Tasman Contract to be given by the Builder in the form scheduled
to the Tasman Pre-delivery Security Assignment;


 


“Tasman Contract Price” means Nine million four hundred
thousand Dollars ($9,400,000) or such other lesser sum in Dollars as may be
payable by the Tasman Borrower to the Builder pursuant to the Tasman Contract
as the purchase price for the Tasman Ship thereunder;


 


“Tasman Delivery Advance” means an Advance of up to One
million eight hundred and eighty thousand Dollars ($1,880,000) made or (as the
context may require) to be made available to the Borrowers for the purpose of
financing or refinancing in part the final instalment of the Tasman Contract
Price falling due on the Delivery Date of the Tasman Ship;


 


“Tasman First Advance” means an Advance of up to Seven
hundred and fifty two thousand Dollars ($752,000) made or (as the context may
require) to be made available to the Borrowers for the purpose of refinancing
in part the payment of the first instalment of the Tasman Contract Price
falling due before the Delivery Date of the Tasman Ship as set out in schedule 3;


 


“Tasman Fourth Advance” means an Advance of up to One million
eight hundred and eighty thousand Dollars ($1,880,000) made or (as the context
may require) to be made available to the Borrowers for the purpose of financing
or refinancing in part the payment of the fourth instalment of the Tasman
Contract Price falling due before the Delivery Date of the Tasman Ship as set
out in schedule 3;


 


“Tasman General Assignment” means the first priority deed of
covenant and/or general assignment collateral to the Tasman Mortgage executed
or (as the context may require) to be executed by the Tasman Borrower in favour
of the Bank in such form as the Bank may require in its sole discretion;


 


“Tasman Management Agreement” means the management agreement
made or (as the context may require) to be made between the Tasman Borrower and
the Manager in a form previously approved in writing by the Bank providing (inter alia) for the Manager to manage the Tasman Ship;


 


“Tasman Manager’s Undertaking” means the first priority
undertaking and assignment in relation to the Tasman Ship executed or (as the
context may require) to be executed by the Manager in favour of the Bank in
such form as the Bank may require in its sole discretion;


 


“Tasman Mortgage” means the first priority or (as the case
may be) preferred mortgage of the Tasman Ship executed or (as the context may
require) to be executed by the Tasman Borrower in favour of the Bank in such
form as the Bank may require in its sole discretion;


 


“Tasman Operating Account” means an interest bearing Dollar
account of the Tasman Borrower opened or (as the context may require) to be
opened by the Tasman Borrower with the Bank and includes any sub-accounts
thereof and any other account designated in writing by the Bank to be a Tasman
Operating Account for the purposes of this Agreement;


 


14

















 


“Tasman  Operating Account Pledge”
means a first priority pledge executed or (as the context may require) to be
executed by the Tasman Borrower in favour of the Bank in respect of the Tasman
Operating Account in such form as the Bank may in its sole discretion require;


 


“Tasman Pre-delivery Advances” means, together, the Tasman
First Advance, the Tasman Second Advance, the Tasman Third Advance and the
Tasman Fourth Advance and “Tasman Pre-delivery
Advance” means any of them;


 


“Tasman Pre-delivery Security Assignment” means the
assignment of the Tasman Contract and the Tasman Refund Guarantees executed or
(as the context may require) to be executed by the Tasman Borrower in favour of
the Bank in the form set out in schedule 4;


 


“Tasman Refund Guarantee Assignment Consent and Acknowledgement”
means, in relation to each Tasman Refund Guarantee, an acknowledgement of
notice of, and consent to, the assignment in respect of that Tasman Refund
Guarantee to be given by the relevant Refund Guarantor in the form scheduled to
the Tasman Pre-delivery Security Assignment and “Tasman
Refund Guarantee Assignment Consents and Acknowledgements” means any
or all of them;


 


“Tasman Refund Guarantees” means, together, the letter of
guarantee no. LGG0310200600007 dated 17 March 2006 issued by Bank of
Communications, Qingdao Branch as Refund Guarantor in respect of certain of the
Builder’s obligations under the Tasman Contract and any other letters of
guarantee to be issued by a Refund Guarantor in respect of the Builder’s
obligations under the Tasman Contract, pursuant to the Tasman Contract or any
agreement supplemental to the Tasman Contract, and any extensions, renewals or
replacements to or of any such guarantee(s), in each case in form and substance
acceptable to the Bank in its sole discretion and “Tasman Refund
Guarantee” means any of them;


 


“Tasman Second Advance” means an Advance of up to One million
five hundred and four thousand Dollars ($1,504,000) made or (as the context may
require) to be made available to the Borrowers for the purpose of financing or
refinancing in part the payment of the second instalment of the Tasman Contract
Price falling due before the Delivery Date of the Tasman Ship as set out in schedule 3;


 


“Tasman Ship” means the 5,500 dwt (approximately) double-hull
oil tanker known on the date of this Agreement as Hull No. QHS-221 at the
Builder’s yard, to be constructed and sold by the Builder to the Tasman
Borrower pursuant to the Tasman Contract and to be registered on its Delivery
Date in the ownership of the Tasman Borrower through the relevant Registry
under the laws and flag of the relevant Flag State;


 


“Tasman Supervision Contract” means the contract dated 24 February 2006
made between the Tasman Borrower and Iota as may be amended, supplemented,
varied, replaced or novated from time to time with the prior written consent of
the Bank, relating to the design, building supervision, representation,
procurement of machinery and supplies and turn-key delivery of the Tasman Ship;


 


“Tasman Third Advance” means an Advance of up to One million
five hundred and four thousand Dollars ($1,504,000) made or (as the context may
require) to be made available to the Borrowers for the purpose of financing or
refinancing in part the payment of the third instalment of the Tasman Contract
Price falling due before the Delivery Date of the Tasman Ship as set out in schedule 3;


 


“Tasman Tranche” means a tranche of the Loan of up to Eight
million eight hundred thousand Dollars ($8,800,000) drawn down or to be drawn
down in not more than six (6) Advances (being the Tasman Advances);


 


“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 and “Taxation”
shall be construed accordingly;


 


15

















 


“Termination Date” means:


 


(a)           in
relation to the Santon Tranche and each Advance thereof, 30 April 2010;


 


(b)           in
relation to the Tasman Tranche and each Advance thereof, 30 November 2008,


 


or, in each
such case, such later date as the Borrowers may request and the Bank may in its
absolute discretion consent to;


 


“Third Advance”:


 


(a)           in relation to the Santon Ship
and the Santon Tranche, means the Santon Third Advance; or


 


(b)           in relation to the Tasman Ship
and the Tasman Tranche, means the Tasman Third Advance,


 


and “Third Advances” means either or both of them;


 


“Total Loss” means, in relation to a Ship:


 


(a)           actual, constructive, compromised or arranged total loss of such
Ship; or


 


(b)           the Compulsory Acquisition of such Ship; or


 


(c)           the hijacking, theft,
condemnation, capture, seizure, arrest, detention or confiscation of such Ship
(other than where the same amounts to the Compulsory Acquisition of such Ship)
by any Government Entity, or by persons acting or purporting to act on behalf
of any Government Entity, unless such Ship be released and restored to the
relevant Borrower (or, if prior to its Delivery Date, the Builder) from such
hijacking, theft, condemnation, capture, seizure, arrest, detention or
confiscation within thirty (30) days after the occurrence thereof;


 


“Tranche” means:


 


(a)           in
relation to the Santon Ship, the Santon Tranche; or


 


(b)           in
relation to the Tasman Ship, the Tasman Tranche,


 


and “Tranches” means either or both of them;


 


“Transferee” has the meaning ascribed thereto in clause 15.4;
and


 


“Underlying Documents” means, together, the Contracts, the Refund
Guarantees, the Supervision Contracts and the Management Agreements and “Underlying Document” means any of them.


 


1.3          Headings


 


Clause headings
and the table of contents are inserted for convenience of reference only and
shall be ignored in the interpretation of this Agreement.


 


1.4          Construction
of certain terms


 


In this
Agreement, unless the context otherwise requires:


 


1.4.1        references
to clauses and schedules are to be construed as references to clauses of,
and schedules to, this Agreement and references to this Agreement include
its schedules;


 


16

















 


1.4.2        references
to (or to any specified provision of) this Agreement or any other document
shall be construed as references to this Agreement, that provision or that
document as in force for the time being and as amended in accordance with terms
thereof, or, as the case may be, with the agreement of the relevant parties;


 


1.4.3        references
to a “regulation” include any present or
future regulation, rule, directive, requirement, request or guideline (whether
or not having the force of law) of any agency, authority, central bank or
government department or any self-regulatory or other national or
supra-national authority;


 


1.4.4        words
importing the plural shall include the singular and vice versa;


 


1.4.5        references
to a time of day are to London time;


 


1.4.6        references
to a person shall be construed as references to an individual, firm, company,
corporation, unincorporated body of persons or any Government Entity;


 


1.4.7        references
to a “guarantee” include references to an
indemnity or other assurance against financial loss including, without
limitation, an obligation to purchase assets or services as a consequence of a
default by any other person to pay any Indebtedness and “guaranteed”
shall be construed accordingly; and


 


1.4.8        references
to any enactment shall be deemed to include references to such enactment as
re-enacted, amended or extended.


 


2              The Commitment and the Loan


 


2.1          Agreement
to lend


 


The
Bank, relying upon each of the representations and warranties in clause 7,
agrees to lend to the Borrowers, jointly and severally, upon and subject to the
terms of this Agreement, the principal sum of up to Seventeen million six
hundred thousand Dollars ($17,600,000) in up to twelve (12) Advances comprising
two (2) Tranches, namely, the Santon Tranche and the Tasman Tranche.


 


2.2          Drawdown


 


Subject
to the terms and conditions of this Agreement, each Advance shall be made
following receipt by the Bank from the Borrowers of a Drawdown Notice not later
than 10:00 a.m. on the second Banking Day before the date, which shall be
a Banking Day falling within the relevant Drawdown Period, on which such
Advance 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 3.6.1, be irrevocable.


 


2.3          Timing
and limitations of Loan, Tranches and Advances


 


2.3.1        The
aggregate amount of the Loan shall not exceed the lower of (a) Seventeen million
six hundred thousand Dollars ($17,600,000), (b) eighty per cent (80%) of
the aggregate Construction Costs of both of the Ships and (c) eighty per
cent (80%) of the aggregate of the market values of the Ships determined in
accordance with the valuations of the Ships obtained pursuant to schedule 2,
Part 6, paragraph 18.


 


2.3.2        The
aggregate amount of all the Advances for a Ship shall not exceed the lower of (a) Eight
million eight hundred thousand Dollars ($8,800,000), (b) eighty per cent (80%)
of the Construction Cost of the relevant Ship and (c) eighty per cent
(80%) of the market value of the relevant Ship determined in accordance with
the valuation of that Ship obtained pursuant to schedule 2, Part 6,
paragraph 18.


 


2.3.3        The
amount of each Pre-delivery Advance shall be:


 


(a)   in the case of each First Advance, not more than $752,000;


 


17

















 


(b)   in the case of each Second Advance, not more than $1,504,000;


 


(c)   in the case of each Third Advance, not more than $1,504,000; and


 


(d)   in the case of each Fourth Advance, not more than $1,880,000.


 


2.3.4        Each
First Advance:


 


(a)   shall be applied in or towards payment to the Builder of part of the
first instalment of the Contract Price for the Ship relevant to such Advance;


 


(b)   shall be made when the instalment referred to in paragraph 2.3.4(a) above
has become due and payable, as specified in the second column of schedule 3
opposite the relevant First Advance; and


 


(c)   shall be paid by the Bank to the Builder, unless the relevant
Borrower has already paid the relevant first instalment to the Builder when it
was due, in which case the relevant First Advance (or part thereof) shall be
advanced to the Borrowers in refinancing of such payment.


 


2.3.5        Each
Second Advance:


 


(a)   shall be applied in or towards payment to the Builder of part of the
second instalment of the Contract Price for the Ship relevant to such Advance;


 


(b)   shall be made when the instalment referred to in paragraph 2.3.5(a) above
has become due and payable, as specified in the second column of schedule 3
opposite the relevant Second Advance; and


 


(c)   shall be paid by the Bank to the Builder, unless the relevant
Borrower has already paid the relevant second instalment to the Builder when it
was due, in which case the relevant Second Advance (or part thereof) shall be
advanced to the Borrowers in refinancing of such payment.


 


2.3.6        Each
Third Advance:


 


(a)   shall be applied in or towards payment to the Builder of part of the
third instalment of the Contract Price for the Ship relevant to such Advance;


 


(b)   shall be made when the instalment referred to in paragraph 2.3.6(a) above
has become due and payable, as specified in the second column of schedule 3
opposite the relevant Third Advance; and


 


(c)   shall be paid by the Bank to the Builder unless the relevant
Borrower has already paid the relevant third instalment to the Builder when it
was due, in which case the relevant Third Advance (or part thereof) shall be
advanced to the Borrowers in refinancing of such payment.


 


2.3.7        Each
Fourth Advance


 


(a)   shall be applied in or towards payment to the Builder of part of the
fourth instalment of the Contract Price for the Ship relevant to such Advance;


 


(b)   shall be made when the instalment referred to in paragraph 2.3.7(a) above
has become due and payable, as specified in the second column of schedule 3
opposite the relevant Fourth Advance; and


 


(c)   shall be paid by the Bank to the Builder, unless the relevant
Borrower has already paid the relevant fourth instalment to the Builder when it
was due, in which case the relevant


 


18

















 


Fourth Advance (or part thereof) shall be
advanced to the Borrowers in refinancing of such payment.


 


2.3.8        Each
Delivery Advance:


 


(a)   shall not exceed the lower of:


 


(i)    One million eight hundred and eighty thousand Dollars ($1,880,000);


 


(ii)   the amount in Dollars which, when added to the aggregate amount of
the Pre-delivery Advances for the relevant Ship actually drawn down, will
produce a figure equal to eighty per cent (80%) of the Contract Price of that Ship;


 


(iii)  the amount in Dollars which, when added to the aggregate amount of
the Pre-delivery Advances for the relevant Ship actually drawn down, will
produce a figure equal to eighty per cent (80%) of the market value of that Ship
determined in accordance with the valuation of such Ship obtained pursuant to schedule 2,
Part 6, paragraph 18; and


 


(iv)  the amount in Dollars which, when added to the aggregate amount of
the Pre-delivery Advances for the relevant Ship actually drawn down, will
produce a total figure of $7,520,000;


 


(b)   shall be applied in or towards payment to the Builder of part of the
final instalment of the Contract Price for the Ship relevant to such Advance;


 


(c)   shall be made when the instalment referred to in paragraph 2.3.8(b)(i) above
has become due and payable; and


 


(d)   shall be paid by the Bank to the Builder unless the relevant
Borrower has already paid the relevant final instalment to the Builder when it
was due, in which case the relevant Delivery Advance (or part thereof) shall be
advanced to the Borrowers in refinancing of such payment.


 


2.3.9        Each
Additional Cost Advance:


 


(a)   shall not exceed the lower of (i) One million two hundred and
eighty thousand Dollars ($1,280,000) and (ii) eighty per cent (80%) of the
Additional Cost of the Ship relevant to such Additional Cost Advance;


 


(b)   may not be drawn down unless the Pre-delivery Advances and the
Delivery Advance for that Ship have also been drawn down;


 


(c)   may only be drawn down simultaneously with the Delivery Advance for
that Ship; and


 


(d)   shall be applied in or towards payment to Iota of part of the
Additional Cost for the relevant Ship and shall be paid by the Bank to Iota,
unless the relevant Borrower has already paid the Additional Cost (or part
thereof) for that Ship to Iota when it was due, in which case the relevant
Additional Cost Advance (or part thereof) shall be advanced to the Borrowers in
refinancing of such payment.


 


2.4          Availability


 


Upon
receipt of a Drawdown Notice complying with the terms of this Agreement the
Bank shall, subject to the provisions of clause 9, on the date specified
in the Drawdown Notice, make the relevant Advance available to the Borrowers in
accordance with clause 6.2.  The
Borrowers acknowledge that payment of any Advance to Iota or, as the case may
be, the Builder, in accordance with clause 6.2 shall satisfy the
obligation of the Bank to lend that Advance to the Borrowers under this
Agreement.


 


19

















 


2.5          Termination
of Commitment


 


Any
part of the Commitment undrawn and uncancelled by the relevant Termination
Date, shall thereupon be automatically cancelled.


 


2.6          Application
of proceeds


 


Without
prejudice to the Borrowers’ obligations under clause 8.1.3, the Bank shall
have no responsibility for the application of proceeds of the Loan or any part
thereof by the Borrowers.


 


3              Interest and Interest Periods


 


3.1          Normal
interest rate


 


The
Borrowers shall pay interest on each Tranche in respect of each Interest Period
relating thereto on each Interest Payment Date (or, in the case of Interest
Periods of more than three (3) months, by instalments, the first three (3) months
from the commencement of the Interest Period and the subsequent instalments at
intervals of three (3) months or, if shorter, the period from the date of
the preceding instalment until the Interest Payment Date relative to such Interest
Period) at the rate per annum determined by the Bank to be the aggregate of (a) the
Margin and (b) LIBOR for such Interest Period.


 


3.2          Selection
of Interest Periods


 


The Borrowers
may by notice received by the Bank not later than 10:00 a.m. on the second
Banking Day before the beginning of each Interest Period, specify whether such
Interest Period shall have a duration of one (1) month, three (3) months,
six (6) months, nine (9) months or twelve (12) months or such other shorter
period as the Borrowers may select and the Bank may, in its absolute
discretion, agree.


 


3.3          Determination
of Interest Periods


 


Every
Interest Period shall be of the duration required by, or specified by the
Borrowers pursuant to, clause 3.2 but so that:


 


3.3.1        the
initial Interest Period in respect of each Advance shall commence on the
Drawdown Date of such Advance and each subsequent Interest Period in respect
thereof shall commence on the last day of the previous Interest Period for such
Advance;


 


3.3.2        the
initial Interest Period in respect of each Advance in respect of a Ship (after
the first Advance to be drawn down in respect of such Ship) shall end on the
same day as the then current Interest Period for the Tranche for such Ship and,
on the last day of such Interest Period, such Advances shall be consolidated
into, and shall thereafter constitute, the Tranche in respect of such Ship;


 


3.3.3        if
any Interest Period in respect of a Tranche would otherwise overrun a Repayment
Date for such Tranche, then, in the case of the last Repayment Date for such Tranche,
such Interest Period shall end on such Repayment Date, and in the case of any
other Repayment Date or Repayment Dates for such Tranche, the relevant Tranche shall
be divided into parts so that there is one part in the amount of the repayment
instalment or instalments due on each Repayment Date for such Tranche falling
during that Interest Period and having an Interest Period ending on the
relevant Repayment Date and another part in the amount of the balance of the relevant
Tranche having an Interest Period ascertained in accordance with clause 3.2
and the other provisions of this clause 3.3; and


 


3.3.4        if
the Borrowers fail 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 or such other period as
shall comply with this clause 3.3.


 


20

















 


3.4          Default
interest


 


If the
Borrowers fail 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 Borrowers shall pay interest on such sum on demand from
the due date up to the date of actual payment (as well after as before
judgment) at a rate determined by the Bank pursuant to this clause 3.4.  The period beginning on such due date and
ending on such date of payment shall be divided into successive periods of not
more than six (6) months as selected by the Bank each of which (other than
the first, which shall commence on such due date) shall commence on the last
day of the preceding such period.  The
rate of interest applicable to each such period shall be the aggregate (as determined
by the Bank) of (a) two per cent (2%) per annum, (b) the Margin and (c) LIBOR
for such period.  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, provided that, if such unpaid sum is an amount of
principal which became due and payable by reason of a declaration by the Bank
under clause 10.2.2 or a prepayment pursuant to clauses 4.3, 8.2 or
12.1, on a date other than an Interest Payment Date relating thereto, the first
such period selected by the Bank shall be of a duration equal to the period
between the due date of such principal sum and such Interest Payment Date and
interest shall be payable on such principal sum during such period at a rate two
per cent (2%) above the rate applicable thereto immediately before it shall
have become so due and payable.  If, for
the reasons specified in clause 3.6.1, 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 the cost of funds to the Bank.


 


3.5          Notification
of Interest Periods and interest rate


 


The
Bank shall notify the Borrowers promptly of the duration of each Interest
Period and of each rate of interest determined by it under this clause 3.


 


3.6          Market
disruption; non-availability


 


3.6.1        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):


 


(a)   that adequate and fair means do not exist for ascertaining LIBOR
during such Interest Period; or


 


(b)   that deposits in Dollars are not available to the Bank in the London
Interbank Market in the ordinary course of business in sufficient amounts to
fund the Loan for such Interest Period,


 


the
Bank shall forthwith give notice (a “Determination Notice”)
thereof to the Borrowers.  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 Borrowers by the
Bank.


 


3.6.2        During
the period of ten (10) days after any Determination Notice has been given
by the Bank under clause 3.6.1, the Bank shall certify an alternative
basis (the “Substitute Basis”) for maintaining
the Loan.  The Substitute Basis may
(without limitation) include alternative interest periods, alternative
currencies or alternative rates of interest but shall include a margin above
the cost of funds to the Bank equivalent to the Margin.  Each Substitute Basis so certified shall be
binding upon the Borrowers 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 Borrowers that none of the circumstances specified in clause 3.6.1
continues to exist whereupon the normal interest rate fixing provisions of this
Agreement shall apply.


 


21

















 


4              Repayment and prepayment


 


4.1          Repayment


 


The
Borrowers shall repay each Tranche by forty (40) instalments, one such
instalment to be repaid on each of the Repayment Dates for such Tranche.  Subject to the provisions of this Agreement,
the amount of each of the repayment instalments (other than the last repayment
instalment) for each Tranche shall be One hundred and fifty four thousand
Dollars ($154,000) and the amount of the last repayment instalment for each
Tranche shall be Two million seven hundred and ninety four thousand Dollars
($2,794,000) (comprising a repayment instalment of One hundred and fifty four
thousand Dollars ($154,000) and a balloon payment of Two million six hundred
and forty thousand Dollars ($2,640,000) (each such balloon payment in relation
to a Tranche, the “Balloon Instalment”
for that Tranche)).  If the Commitment in
respect of either Tranche or part thereof is not drawn in full, the amount of the
repayment instalments in respect of the relevant Tranche (including the
relevant Balloon Instalment) shall be reduced proportionately.


 


4.2          Voluntary
prepayment


 


The Borrowers
may prepay either Tranche in whole or part (being One hundred thousand Dollars ($100,000)
or any larger sum which is an integral multiple of One hundred thousand Dollars
($100,000)) on any Interest Payment Date relating to the part of the Tranche to
be prepaid, without premium or penalty.


 


4.3          Prepayment
on Total Loss or demand under Refund Guarantees


 


4.3.1        Before
first drawdown - Ships


 


On a Ship
becoming a Total Loss or suffering damage or being involved in an incident
which, in the opinion of the Bank, may result in such Ship being subsequently
determined to be a Total Loss, before any Advance for such Ship is drawn down,
the obligation of the Bank to advance the Tranche (or part thereof) for such Ship
shall immediately cease and the Commitment shall be reduced accordingly.


 


4.3.2        After
first drawdown but prior to Delivery - Ships


 


(a)   On a Ship becoming a Total Loss or suffering damage or being
involved in an incident which, in the opinion of the Bank, may result in such Ship
being subsequently determined to be a Total Loss, after any Advance for such Ship
has been drawn down but prior to the drawing of the Delivery Advance for such Ship,
the obligation of the Bank to advance any other Advance (or part thereof) for
such Ship shall immediately cease, the Commitment shall be reduced accordingly
and the Borrowers shall prepay the outstanding Pre-delivery Advances for such Ship
in full.


 


(b)   If a claim is made under any Refund Guarantee and such claim is not
paid within twenty (20) Banking Days of it being made (whether or not such
claim has been referred to the appropriate courts pursuant to the relevant
Refund Guarantee), then (a) the obligation of the Bank to advance any
other Advance (or any part thereof) for the Ship relevant to such Refund
Guarantee shall immediately cease and (b) forthwith on the expiry of such
twenty (20) day period the Borrowers shall prepay in full the then outstanding Advances
in respect of that Ship Provided however that
if the relevant claim made under the Contract to which such Refund Guarantee
relates has been referred to arbitration under the terms of such Contract, the
time-limit (and the corresponding prepayment obligation of the Borrowers)
referred to in paragraph (b) of this clause shall be extended to ninety (90)
days of the claim under the relevant Refund Guarantee being made.


 


4.3.3        Thereafter -
Mortgaged Ships


 


(a)   On the date falling one hundred and twenty (120) days after that on
which a Mortgaged Ship became a Total Loss or, if earlier, on the date upon
which the insurance proceeds


 


22

















 


in respect of
such Total Loss are, or Requisition Compensation for such Mortgaged Ship is,
received by the relevant Borrower (or the Bank pursuant to the Security
Documents), the Borrowers shall prepay an amount equal to the higher of (i) the
Tranche for such Mortgaged Ship in full (subject to clause 4.3.3(b)) and (ii) the
amount of insurance proceeds or Requisition Compensation actually received by
the relevant Borrower (or the Bank pursuant to the Security Documents) in
respect of such Total Loss.


 


(b)   Notwithstanding sub-paragraph (a) of this clause 4.3.3, if an
Event of Default shall have occurred and be continuing at the time the relevant
Mortgaged Ship becomes a Total Loss, the Borrowers shall, on the date specified
in such paragraph (a), prepay such part of the Loan as the Bank may require in
its sole discretion.


 


4.3.4        Interpretation


 


For the
purpose of this Agreement, a Total Loss in respect of a Ship shall be deemed to
have occurred:


 


(a)   in the case of an actual total loss of a Ship, on the actual date
and at the time such Ship was lost or, if such date is not known, on the date
on which such Ship was last reported;


 


(b)   in the case of a constructive total loss of a Ship, upon the date
and at the time notice of abandonment of such Ship is given to the insurers of
such Ship for the time being;


 


(c)   in the case of a compromised or arranged total loss of a Ship, on
the date upon which a binding agreement as to such compromised or arranged
total loss has been entered into by the insurers of such Ship;


 


(d)   in the case of Compulsory Acquisition of such Ship, on the date upon
which the relevant requisition of title or other compulsory acquisition occurs;
and


 


(e)   in the case of hijacking, theft, condemnation, capture, seizure,
arrest, detention or confiscation of a Ship (other than where the same amounts
to Compulsory Acquisition of such Ship) by any Government Entity, or by persons
purporting to act on behalf of any Government Entity, which deprives the
relevant Borrower (or, if prior to its Delivery Date, the Builder) of the use
of such Ship for more than thirty (30) days, upon the expiry of the period of
thirty (30) days after the date upon which the relevant hijacking, theft,
condemnation, capture, seizure, arrest, detention or confiscation occurred.


 


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 clauses 6.6
or 12.2 and (c) all other sums payable by the Borrowers to the Bank under
this Agreement or any of the other Security Documents including, without
limitation, any accrued commitment commission payable under clause 5.1.2
and any amounts payable under clause 11.


 


4.5          Notice
of prepayment; reduction of repayment instalments


 


4.5.1        No
prepayment may be effected under clause 4.2 unless the Borrowers shall
have given the Bank at least ten (10) days’ notice of their intention to
make such prepayment.  Every notice of
prepayment shall be effective only on actual receipt by the Bank, shall be
irrevocable, shall specify the Tranche and the amount thereof to be prepaid and
shall oblige the Borrowers to make such prepayment on the date specified.


 


4.5.2        Any
amount prepaid pursuant to clause 4.2 in respect of a Tranche shall be
applied in reducing the repayment instalments of the relevant Tranche
(including the relevant Balloon Instalment) under clause 4.1 in inverse
order of their due dates for payment or in any other manner requested in
writing by the Borrowers and agreed in writing by the Bank.


 


23














 


4.5.3        Any
amount prepaid pursuant to clause 4.3.3(a)(ii) or clause 4.3.3(b) shall
be applied in reducing such Advances and/or the repayment instalments of such
Tranches, and in such manner, as the Bank may require in its absolute
discretion.


 


4.5.4        Any
amount prepaid pursuant to clause 8.2.1(a) shall be applied in prepayment
of both Tranches proportionately as between them and in reduction of the
repayment instalments of each Tranche in inverse order of their due dates for
payment.


 


4.5.5        The
Borrowers may not prepay the Loan or any part thereof save as expressly
provided in this Agreement.  No amount
prepaid under this Agreement may be re-borrowed.


 


5              Fees, commitment commission and expenses


 


5.1          Fees


 


The
Borrowers shall pay to the Bank:


 


5.1.1        on
or prior to the date of this Agreement, an arrangement fee of Fifty two thousand
eight hundred Dollars ($52,800) (receipt of which is hereby acknowledged by the
Bank on 25 April 2006); and


 


5.1.2        on
each of the dates falling at three (3) monthly intervals after the date of
this Agreement until the earlier of (i) the last day of the last Drawdown
Period to elapse and (ii) the Drawdown Date of the last Delivery Advance
to be drawn down, and on the earlier of such two dates, commitment commission
computed from the date of this Agreement (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) at the rate of zero point three five per cent
(0.35%) per annum on the daily undrawn amount of the Commitment.


 


The fee
referred to in clause 5.1.1 and the commitment commission referred to in clause 5.1.2
shall be non-refundable and shall be payable by the Borrowers to the Bank
whether or not any part of the Commitment is ever advanced.


 


5.2          Expenses


 


The
Borrowers shall pay to the Bank on a full indemnity basis on demand all
expenses (including legal, printing and out-of-pocket expenses) incurred by the
Bank:


 


5.2.1        in
connection with the negotiation, preparation, execution and, where relevant,
registration of the Security Documents and of any amendment or extension of or
the granting of any waiver or consent under, any of the Security Documents; and


 


5.2.2        in
contemplation of, or otherwise in connection with, the enforcement of, or
preservation of any rights under, any of the Security Documents, or otherwise
in respect of the moneys owing under any of the Security Documents,


 


together
with interest at the rate referred to in clause 3.4 from the date on which
such expenses were incurred to the date of payment (as well after as before
judgment).


 


5.3          Value
Added Tax


 


All
fees, commitment commission and expenses payable pursuant to this clause 5
shall be paid together with value added tax or any similar tax (if any)
properly chargeable thereon.  Any value
added tax chargeable in respect of any services supplied by the Bank under this
Agreement shall, on delivery of the value added tax invoice, be paid in
addition to any sum agreed to be paid hereunder.


 


24

















 


5.4          Stamp
and other duties


 


The
Borrowers shall pay all stamp, documentary, registration or other like duties
or taxes imposed on or in connection with any of the Underlying Documents, the
Security Documents or the Loan and shall indemnify the Bank against any
liability arising by reason of any delay or omission by the Borrowers to pay
such duties or taxes.


 


6              Payments and taxes; accounts and
calculations


 


6.1          No
set-off or counterclaim


 


The
Borrowers acknowledge that in performing its obligations under this Agreement,
the Bank will be incurring liabilities to third parties in relation to the
funding of amounts to the Borrowers, such liabilities matching the liabilities
of the Borrowers to the Bank and that it is reasonable for the Bank to be entitled
to receive payments from the Borrowers gross on the due date in order that the
Bank is put in a position to perform its matching obligations to the relevant
third parties.  Accordingly, all payments
to be made by the Borrowers under any of the Security Documents shall be made
in full, without any set-off or counterclaim whatsoever and, subject as
provided in clause 6.6, free and clear of any deductions or withholdings,
in Dollars (except for charges or expenses which shall be paid in the currency
in which they are incurred) on the due date (for value on the day on which
payment is due) to such account at such bank and in such place as the Bank may
from time to time specify for this purpose.


 


6.2          Payment
by the Bank


 


All
sums to be advanced by the Bank to the Borrowers under this Agreement in
respect of an Advance shall be remitted in Dollars on the Drawdown Date for the
relevant Advance to the account specified in the Drawdown Notice for such
Advance.


 


6.3          Non-Banking
Days


 


When
any payment under any of the Security Documents would otherwise be due on a day
which is not a Banking Day, the due date for payment shall be extended to the
next following Banking Day unless such Banking Day falls in the next calendar
month in which case payment shall be made on the immediately preceding Banking
Day.


 


6.4          Calculations


 


All
interest and other payments of an annual nature under any of the Security
Documents shall accrue from day to day and be calculated on the basis of actual
days elapsed and a three hundred and sixty (360) day year.


 


6.5          Certificates
conclusive


 


Any
certificate or determination of the Bank as to any rate of interest, rate of
exchange 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 Borrowers.


 


6.6          Grossing-up
for Taxes


 


If at
any time the Borrowers are required to make any deduction or withholding in
respect of Taxes from any payment due under any of the Security Documents, the
sum due from the Borrowers in respect of such payment shall be increased to the
extent necessary to ensure that, after the making of such deduction or
withholding, the Bank receives on the due date for such payment (and retains,
free from any liability in respect of such deduction or withholding), a net sum
equal to the sum which it would have received had no such deduction or
withholding been required to be made and the Borrowers shall indemnify the Bank
against any losses or costs incurred by it by reason of any failure of the
Borrowers 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 Borrowers shall promptly deliver to the
Bank any receipts, certificates or other


 


25

















 


proof
evidencing the amounts (if any) paid or payable in respect of any deduction or
withholding as aforesaid.


 


6.7          Loan
account


 


The
Bank shall maintain, in accordance with its usual practice, an account or
accounts evidencing the amounts from time to time lent by, owing and paid to,
it under the Security Documents.  Such
account or accounts shall, in the absence of manifest error, be conclusive as
to the amount from time to time owing by the Borrowers under the Security Documents.


 


7              Representations and warranties


 


7.1          Continuing
representations and warranties


 


The
Borrowers jointly and severally represent and warrant to the Bank that:


 


7.1.1        Due
incorporation


 


each of
the Borrowers and each of the other Security Parties are duly incorporated and
validly existing in good standing under the laws of their respective countries
of incorporation as Liberian corporations (in the case of the Borrowers), as
Marshall Islands corporations (in the case of the Manager and the Corporate Guarantor)
or as companies with limited liability (in the case of the other Security
Parties), and have power to carry on their respective businesses as they are
now being conducted and to own their respective property and other assets;


 


7.1.2        Corporate
power


 


each of
the Borrowers has power to execute, deliver and perform its obligations under
the Borrowers’ Security Documents and the Underlying 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 and the Underlying 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 either Borrower to borrow will be exceeded as a result of
borrowing the Loan;


 


7.1.3        Binding
obligations


 


the
Underlying Documents and the Security Documents constitute or will, when executed,
constitute valid and legally binding obligations of the relevant Security
Parties enforceable in accordance with their respective terms;


 


7.1.4        No
conflict with other obligations


 


the
execution and delivery of, the performance of their obligations under, and
compliance with the provisions of, the Underlying Documents and 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 either of the Borrowers 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 either of the Borrowers or any other Security Party is a party or is
subject or by which it or any of its property is bound, (iii) contravene
or conflict with any provision of the constitutional documents of either of the
Borrowers or any other Security Party or (iv) result in the creation or
imposition of or oblige either of the Borrowers 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 Borrowers or any other Security
Party;


 


7.1.5        No
litigation


 


no
litigation, arbitration or administrative proceeding is taking place, pending
or, to the knowledge of any of the officers of the Borrowers, threatened
against either of the Borrowers or any other Security Party which could have a
material adverse effect on the business, assets or


 


26

















 


financial
condition of either of the Borrowers or any of their Related Companies or any
other Security Party;


 


7.1.6        No
filings required


 


save
for (a) the registration of the Mortgages through the relevant Registry
and (b) the registration of each Refund Guarantee with the State
Administration for Foreign Exchange in the People’s Republic of China, it is
not necessary to ensure the legality, validity, enforceability or admissibility
in evidence of any of the Security Documents or any of the Underlying Documents
that they or any other instrument be notarised, filed, recorded, registered or
enrolled in any court, public office or elsewhere in any Relevant Jurisdiction
or that any stamp, registration or similar tax or charge be paid in any
Relevant Jurisdiction on or in relation to the Security Documents and the
Underlying Documents and each of the Security Documents and the Underlying
Documents is in proper form for its enforcement in the courts of each Relevant
Jurisdiction;


 


7.1.7        Choice
of law


 


the
choice of English law to govern the Underlying
Documents and the Security Documents (other than the Mortgages and the Account
Pledges), the choice of the law of (i) the relevant Flag State to govern each
Mortgage and (ii) Greek law to govern the Account Pledges, and the
submissions by the Security Parties to the non-exclusive jurisdiction of the
English courts, or, as the case may be, the Greek courts, are valid and
binding;


 


7.1.8        No
immunity


 


neither
of the Borrowers nor any other Security Party nor any of their respective
assets is 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);


 


7.1.9        Consents
obtained


 


every
consent, authorisation, licence or approval of, or registration with or
declaration to, governmental or public bodies or authorities or courts required
by any Security Party to authorise, or required by any Security Party in
connection with, the execution, delivery, validity, enforceability or
admissibility in evidence of each of the Underlying Documents and the Security
Documents or the performance by each Security Party of its obligations under
the Underlying Documents and 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; and


 


7.1.10      Shareholdings


 


each of
the Borrowers and the Manager is a wholly-owned indirect Subsidiary of the
Corporate Guarantor and all of the shares in the Corporate Guarantor are
legally and ultimately beneficially owned by such persons as disclosed by or on
behalf of the Borrowers or any other Security Party to the Bank in the
negotiation of this Agreement.


 


7.2          Initial
representations and warranties


 


The
Borrowers jointly and severally further represent and warrant to the Bank that:


 


7.2.1        Pari
passu


 


the
obligations of each Borrower under this Agreement are direct, general and
unconditional obligations of such Borrower and rank at least pari passu with
all other present and future unsecured and unsubordinated Indebtedness of such
Borrower (with the exception of any obligations which are mandatorily preferred
by law and not by contract);


 


27

















 


7.2.2        No
default under other Indebtedness


 


neither
of the Borrowers nor any of their respective Related Companies nor any other
Security Party is (nor would with the giving of notice or lapse of time or the
satisfaction of any other condition or combination thereof be) in breach of or
in default under any other agreement relating to Indebtedness to which it is a
party or by which it may be bound;


 


7.2.3        Information


 


the
information, exhibits and reports furnished by any Security Party to the Bank
in connection with the negotiation and preparation of the 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;


 


7.2.4        No
withholding Taxes


 


no
Taxes are imposed by withholding or otherwise on any payment to be made by any
Security Party under the Underlying Documents or the Security Documents or are
imposed on or by virtue of the execution or delivery by the Security Parties of
the Underlying Documents or the Security Documents or any other document or
instrument to be executed or delivered under any of the Security Documents;


 


7.2.5        No
Default


 


no
Default has occurred and is continuing;


 


7.2.6        No
Default under Contracts, Supervision Contracts or Refund Guarantees


 


neither
Borrower is in default of any of its obligations under the relevant Contract or
the relevant Supervision Contract or any of its obligations upon the
performance or observance of which depend the continued liability of any Refund
Guarantor in accordance with the terms of any Refund Guarantee relating to such
Borrower’s Ship;


 


7.2.7        No
Encumbrance in respect of pre-delivery security


 


neither
Borrower has previously charged, encumbered or assigned the benefit of any of
its rights, title and interest in or to the Contract or the Supervision
Contract or any Refund Guarantee relating to such Borrower’s Ship and such
benefit and all such rights, title and interest are freely assignable and
chargeable in the manner contemplated by the Security Documents;


 


7.2.8        The
Ships


 


each Ship
will be on the Drawdown Date of the Delivery Advance relevant to such Ship:


 


(a)   in the absolute ownership of the relevant Borrower who will, on and
after such date, be the sole, legal and beneficial owner of such Ship;


 


(b)   registered in the name of the relevant Borrower through the relevant
Registry as a ship under the laws and flag of the relevant Flag State;


 


(c)   operationally seaworthy and in every way fit for service; and


 


(d)   classed with the relevant Classification free of all requirements
and recommendations of the relevant Classification Society;


 


7.2.9        Ships’
employment


 


neither
of the Ships is, nor will be, on the Drawdown Date of the relevant Delivery
Advance, subject to any charter or contract or to any agreement to enter into
any charter or contract which,


 


28

















 


if
entered into after the date of the relevant Ship Security Documents would have
required the consent of the Bank and, on or before the Drawdown Date of the
Delivery Advance relevant to a Ship, there will not be any agreement or
arrangement whereby the Earnings of that Ship may be shared with any other
person;


 


7.2.10      Freedom from Encumbrances


 


no Ship,
nor its Earnings, Insurances or Requisition Compensation nor its Operating
Account nor any other properties or rights which are, or are to be, the subject
of any of the Security Documents relating to that Ship nor any part thereof
will be, on the Drawdown Date of the Delivery Advance relevant to such Ship,
subject to any Encumbrance (other than Permitted Encumbrances);


 


7.2.11      Compliance with Environmental
Laws and Approvals


 


except
as may already have been disclosed by the Borrowers in writing to, and acknowledged
in writing by, the Bank:


 


(a)   the Borrowers and the other Relevant Parties and, to the best of the
Borrowers’ knowledge and belief (having made due enquiry), their respective
Environmental Affiliates have complied with the provisions of all Environmental
Laws;


 


(b)   the Borrowers and the other Relevant Parties and, to the best of the
Borrowers’ knowledge and belief (having made due enquiry), their respective
Environmental Affiliates have obtained all Environmental Approvals and are in
compliance with all such Environmental Approvals; and


 


(c)   neither the Borrowers nor any other Relevant Party nor, to the best
of the Borrowers’ knowledge and belief (having made due enquiry), any of their
respective Environmental Affiliates has received notice of any Environmental
Claim that the Borrowers or either of them or any other Relevant Party or any
such Environmental Affiliate is not in compliance with any Environmental Law or
any Environmental Approval;


 


7.2.12      No Environmental Claims


 


except
as may already have been disclosed by the Borrowers in writing to, and
acknowledged in writing by, the Bank, there is no Environmental Claim pending
or, to the best of the Borrowers’ knowledge and belief, threatened against
either of the Borrowers or either of the Ships or any other Relevant Party or
any other Relevant Ship or, to the best of the Borrowers’ knowledge and belief
(having made due enquiry), any of their respective Environmental Affiliates;


 


7.2.13      No potential Environmental
Claims


 


except
as may already have been disclosed by the Borrowers in writing to, and
acknowledged in writing by, the Bank, there has been no emission, spill,
release or discharge of a Pollutant from either of the Ships or any other
Relevant Ship owned by, managed or crewed by or chartered to either of the Borrowers
nor, to the best of the Borrowers’ knowledge and belief (having made due
enquiry), from any Relevant Ship owned by, managed or crewed by or chartered to
any other Relevant Party which could give rise to an Environmental Claim;


 


7.2.14      No material adverse change


 


there
has been no material adverse change in the financial position of the Borrowers
or the Manager or the Corporate Guarantor or any other Relevant Party from that
described by the Borrowers to the Bank in the negotiation of this Agreement;


 


29

















 


7.2.15      ISPS Code


 


on the
Drawdown Date of the Delivery Advance for a Ship, the relevant Borrower shall
have a valid and current ISSC in respect of that Ship and such Ship shall be in
compliance with the ISPS Code;


 


7.2.16      Copies true and complete -
commissions


 


(a)   the copies of each of the Underlying Documents (other than the
Refund Guarantees) delivered or to be delivered to the Bank pursuant to clause 9.1
are, or will when delivered be, true and complete copies of such documents;
each of such document constitutes valid and binding obligations of the parties
thereto enforceable in accordance with its terms and there will have been no
amendments or variations thereof or defaults thereunder; and


 


(b)   there are no address or other commissions payable to either of the
Borrowers or any other Relevant Party on account of any of the Contracts and
the Supervision Contracts, except as disclosed in writing by or on behalf of
the Borrowers or any other Security Party to the Bank prior to the date of this
Agreement;


 


7.2.17      Refund Guarantees


 


the
original executed copy of each Refund Guarantee delivered or to be delivered to
the Bank pursuant to clause 9 is, or will when delivered be, a true and complete
original of such document; each such document will, when delivered, constitute
valid and binding obligations of the relevant Refund Guarantor enforceable in
accordance with its terms and there will have been no amendments or variations
thereof or defaults thereunder; and


 


7.2.18      Application for DOC and SMC


 


the
Operator maintains a DOC for itself and, on the Drawdown Date of the Delivery Advance
for a Ship, it will have applied, for an SMC in respect of such Ship, and
neither of the Borrowers nor the Operator is aware of any reason why any such
application may be refused.


 


7.3          Repetition
of representations and warranties


 


On and
as of each Drawdown Date and (except in relation to the representations and
warranties in clause 7.2) on each Interest Payment Date, the Borrowers
shall (a) be deemed to repeat the representations and warranties in clauses 7.1
and 7.2 as if made with reference to the facts and circumstances existing on
such day and (b) be deemed to further represent and warrant to the Bank
that the then latest audited financial statements delivered to the Bank (if
any) have been prepared in accordance with generally accepted international
accounting principles and practices which have been consistently applied and
present fairly and accurately the financial position of the Borrowers and the combined
financial position of the Borrowers, the Manager and their Related Companies as
at the end of the financial period to which the same relate and the results of
the operations of the Borrowers and the combined results of the operations of the
Borrowers, the Manager and their Related Companies for the financial period to
which the same relate, respectively, and, as at the end of such financial
period, neither the Borrowers nor the Manager nor any of their Related
Companies had any significant liabilities (contingent or otherwise) or any
unrealised or anticipated losses which are not disclosed by, or reserved
against or provided for in, such financial statements.


 


8              Undertakings


 


8.1          General


 


The
Borrowers jointly and severally undertake with the Bank that, from the date of
this Agreement and so long as any moneys are owing under any of the Security
Documents and while all or any part of the Commitment remains outstanding, each
Borrower will:


 


30

















 


8.1.1        Notice
of Default


 


(a)   promptly inform the Bank of any occurrence of which it becomes aware
which might adversely affect the ability of any Security Party to perform its
obligations under any of the Security Documents or the Underlying Documents
and, without limiting the generality of the foregoing, will inform the Bank of
any Default forthwith upon becoming aware thereof and will from time to time,
if so requested by the Bank, confirm to the Bank in writing that, save as
otherwise stated in such confirmation, no Default has occurred and is
continuing; and


 


(b)   promptly inform the Bank of any occurrence of which it becomes aware
which might adversely affect the ability or rights of either Borrower to make
any claims under the Contract or the Supervision Contract or any Refund
Guarantee relating to such Borrower’s Ship, which might reduce or release any
of the obligations of the Builder or either of them under such Contract or lota
under such Supervision Contract or of the relevant Refund Guarantor under such
Refund Guarantee (as the case may be);


 


8.1.2        Consents
and licences


 


without
prejudice to clauses 7.1 and 9, obtain or cause to be obtained, maintain
in full force and effect and comply in all material respects with the
conditions and restrictions (if any) imposed in, or in connection with, every
consent, authorisation, licence or approval of governmental or public bodies or
authorities or courts and do, or cause to be done, all other acts and things
which may from time to time be necessary or desirable under applicable law for
the continued due performance of all the obligations of the Security Parties
under each of the Security Documents and the Underlying Documents;


 


8.1.3        Use
of proceeds


 


use the
Loan or, as the case may be, the Advances exclusively for the purpose specified
in clauses 1.1 and 2.3;


 


8.1.4        Pari
passu


 


ensure
that its obligations under this Agreement shall, without prejudice to the
provisions of clause 8.3 and the security intended to be created by the
Security Documents, 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;


 


8.1.5        Financial
statements


 


prepare
or cause to be prepared financial statements of each of the Borrowers and combined
financial statements of the Borrowers, the Corporate Guarantor, the Manager and
their Related Companies in accordance with generally accepted international
accounting principles and practices consistently applied in respect of each
financial year and cause the same to be reported on by their respective
auditors and prepare or cause to be prepared unaudited financial statements of
each of the Borrowers and combined financial statements of the Borrowers, the
Corporate Guarantor, the Manager and their Related Companies in respect of each
financial half year on the same basis as the annual statements and deliver to
the Bank as many copies of the same as the Bank may reasonably require as soon
as practicable but not later than one hundred and eighty (180) days (in the
case of audited financial statements) and thirty (30) days (in the case of
unaudited financial statements) after the end of the financial period to which
they relate;


 


8.1.6        Delivery
of reports


 


deliver
to the Bank as many copies as the Bank may reasonably require of every report,
circular, notice or like document issued by the Borrowers, the Corporate
Guarantor, the Manager or any of their respective Related Companies to their
shareholders or creditors generally, in each case at the time of issue thereof;


 


31

















 


8.1.7        Provision
of further information


 


provide
the Bank with such financial and other information (including, without
limitation, information relating to the Builder and the construction of the Ships)
concerning the Borrowers, the other Security Parties, the other Relevant Parties
and their respective affairs as the Bank may from time to time reasonably require
and shall promptly advise the Bank of all major financial developments in
relation to the Borrowers, the other Security Parties and their Related
Companies including, without prejudice to the generality of the foregoing, any
vessel sales or purchases or any new borrowings;


 


8.1.8        Obligations
under Security Documents


 


and
will procure that each of the other Security Parties will, duly and punctually
perform each of the obligations expressed to be assumed by it under the
Security Documents and the Underlying Documents;


 


8.1.9        Compliance
with Code


 


and
will procure that any Operator will, comply with, and ensure that each Ship and
any Operator at all times complies with, the requirements of the Code,
including (but not limited to) the maintenance and renewal of valid
certificates pursuant thereto throughout the Security Period;


 


8.1.10      Withdrawal of DOC and SMC


 


and
will procure that any Operator will, immediately inform the Bank if there is
any threatened or actual withdrawal of such Operator’s DOC or the SMC in
respect of either Ship;


 


8.1.11      Issuance of DOC and SMC


 


and
will procure that any Operator will, promptly inform the Bank upon the issuance
to any Operator of a DOC and to each Ship of an SMC or the receipt by either of
the Borrowers or any Operator of notification that its application for the same
has been refused;


 


8.1.12      ISPS Code compliance


 


and
will procure that the Manager or any Operator will:


 


(a)   from the Drawdown Date of the Delivery Advance for a Ship and at all
times thereafter, maintain a valid and current ISSC in respect of that Ship;


 


(b)   immediately notify the Bank in writing of any actual or threatened
withdrawal, suspension, cancellation or modification of the ISSC in respect of either
Ship;


 


(c)   procure that, from the Drawdown Date of the Delivery Advance for a Ship
and at all times thereafter, that Ship will comply at all times with the ISPS
Code;


 


8.1.13      “KYC” requirements


 


deliver to the Bank such
documents and evidence as the Bank shall from time to time require, based on
applicable law and regulations and the Bank’s own internal guidelines from time
to time, in each case, relating to the verification of identity and knowledge
of the Bank’s customers;


 


8.2          Security
value maintenance


 


8.2.1        Security
shortfall


 


If, at
any time after the earlier of (i) Drawdown Date of the second Delivery
Advance to be drawn down and (ii) the last day of the last Drawdown Period
to elapse, the Security Value shall be less than the Security Requirement, the
Bank may give notice to the Borrowers requiring that such deficiency be
remedied and then the Borrowers shall at its discretion either:


 


32

















 


(a)   prepay within a period of fourteen (14) days of the date of receipt
by the Borrowers of the Bank’s said notice such sum in Dollars as will result
in the Security Requirement after such prepayment (taking into account any
other repayment made in accordance with clause 4.1 between the date of the
notice and the date of such prepayment) being at least equal to the Security
Value; or


 


(b)   within fourteen (14) days of the date of receipt by the Borrowers of
the Bank’s said notice constitute to the satisfaction of the Bank such further
security for the Loan as shall be acceptable to the Bank having a value for
security purposes (as determined by the Bank in its discretion) at the date
upon which such further security shall be constituted which, when added to the
Security Value, shall not be less than the Security Requirement as at such
date.


 


The
provisions of clauses 4.4, 4.5.4 and 4.5.5 shall apply to prepayments made
under clause 8.2.1(a).


 


8.2.2        Valuation
of Mortgaged Ships


 


Each
Mortgaged Ship shall, for the purposes of this clause 8.2, be valued in
Dollars as and when the Bank shall require by two (2) independent firms of
shipbrokers appointed by the Bank in its sole discretion.  Each such valuation of a Mortgaged Ship shall
be addressed to the Bank and made without, unless required by the Bank,
physical inspection and on the basis of a sale for prompt delivery for cash at
arm’s length on normal commercial terms, as between a willing buyer and a
willing seller and without taking into account the benefit of any charterparty
or other engagement concerning the relevant Mortgaged Ship.  The arithmetic mean of such valuations shall
constitute the value of such Mortgaged Ship for the purposes of this clause 8.2
provided however that if the two (2) valuations in respect of a Mortgaged
Ship vary by more than fifteen per cent (15%), the Bank acting in its sole discretion
shall appoint a third independent firm of shipbrokers to value such Mortgaged
Ship on the same basis as the other two (2) valuations and, in that case,
the arithmetic mean of the three (3) valuations shall constitute the value
of such Mortgaged Ship for the purpose of this clause 8.2.


 


The
value of each Mortgaged Ship determined in accordance with the provisions of
this clause 8.2 shall be binding upon the parties hereto until such time
as any such further valuations shall be obtained.


 


8.2.3        Information


 


The
Borrowers jointly and severally undertake to the Bank to supply to the Bank and
to any such shipbrokers such information concerning each Mortgaged Ship and its
condition as such shipbrokers may reasonably require for the purpose of making
any such valuation.


 


8.2.4        Costs


 


All
costs in connection with the Bank obtaining any valuation of each of the
Mortgaged Ships referred to in clause 8.2.2 and in schedule 2, Part 6,
paragraph 18, and any valuation either of any additional security for the
purposes of ascertaining the Security Value at any time or necessitated by the
Borrowers electing to constitute additional security pursuant to clause 8.2.1(b),
shall be borne by the Borrowers.


 


8.2.5        Valuation
of additional security


 


For the
purposes of this clause 8.2, the market value of any additional security
provided or to be provided to the Bank shall be determined by the Bank in its
absolute discretion without any necessity for the Bank assigning any reason
thereto.


 


8.2.6        Documents
and evidence


 


In
connection with any additional security provided in accordance with this clause 8.2,
the Bank shall be entitled to receive such evidence and documents of the kind
referred to in Error!


 


33

















 


Reference source not found. as may in the Bank’s opinion be appropriate and such favourable
legal opinions as the Bank shall in its absolute discretion require.


 


8.3          Negative
undertakings


 


The
Borrowers jointly and severally undertake with the Bank that, from the date of
this Agreement and so long as any moneys are owing under the Security Documents
and while all or any part of the Commitment remains outstanding, they will not,
without the prior written consent of the Bank;


 


8.3.1        Negative
pledge


 


permit
any Encumbrance (other than a Permitted Encumbrance) to subsist, arise or be
created or extended over all or any part of their respective present or future
undertaking, assets, rights or revenues in order to secure or prefer any
present or future Indebtedness or other liability or obligation of the Borrowers
or either of them or any Security Party or any other person;


 


8.3.2        No
merger


 


merge
or consolidate with any other person;


 


8.3.3        Disposals


 


sell,
transfer, abandon, lend or otherwise dispose of or cease to exercise direct
control over any part (being either alone or when aggregated with all other
disposals falling to be taken into account pursuant to this clause 8.3.3
material in the opinion of the Bank in relation to the undertaking, assets,
rights and revenues of the relevant Borrower taken as a whole) of their
respective present or future undertaking, assets, rights or revenues (otherwise
than by transfers, sales or disposals for full consideration in the ordinary
course of trading) whether by one or a series of transactions related or not;


 


8.3.4        Other
business


 


undertake
any business other than the ownership and operation of the Ships and the
chartering of the Ships to third parties;


 


8.3.5        Acquisitions


 


acquire
any further assets other than the Ships and rights arising under contracts
entered into by or on behalf of the relevant Borrower in the ordinary course of
its business of owning, operating and chartering the Ships;


 


8.3.6        Other
obligations


 


incur
any obligations except for obligations arising under the Underlying Documents
or the Security Documents or contracts entered into in the ordinary course of their
business of owning, operating and chartering the Ships;


 


8.3.7        No
Borrowed Money


 


incur
any Borrowed Money except for Borrowed Money pursuant to the Security Documents;


 


8.3.8        Repayment
of Borrowed Money


 


repay
the principal of, or pay interest on or any other sum in connection with any of
their Borrowed Money except for Borrowed Money pursuant to the Security
Documents;


 


34

















 


8.3.9        Guarantees


 


issue
any guarantees or indemnities or otherwise become directly or contingently
liable for the obligations of any person, firm or corporation except pursuant
to the Security Documents and except for guarantees or indemnities from time to
time required in the ordinary course by any protection and indemnity or war risks
association with which a Ship is entered, guarantees required to procure the
release of a Ship from any arrest, detention, attachment or levy or guarantees
or undertakings required for the salvage of a Ship;


 


8.3.10      Loans


 


make
any loans or grant any credit (save for normal trade credit in the ordinary
course of business) to any person or agree to do so;


 


8.3.11      Sureties


 


permit
any Indebtedness of the Borrowers to any person (other than the Bank) to be
guaranteed by any person (save for guarantees or indemnities from time to time
required in the ordinary course by any protection and indemnity or war risks
association with which a Ship is entered, guarantees required to procure the
release of a Ship from any arrest, detention, attachment or levy or guarantees
or undertakings required for the salvage of a Ship);


 


8.3.12      Share capital and distribution


 


purchase
or otherwise acquire for value any shares of their capital or distribute any of
their other present or future assets, undertakings, rights or revenues to any
of their shareholders or, following a Default, declare or pay any dividends;


 


8.3.13      Subsidiaries


 


form or
acquire any Subsidiaries;


 


8.3.14      Manager


 


appoint
any manager of either of the Ships other than the Manager or terminate or amend
the terms of either of the Management Agreements; or


 


8.3.15      Shareholdings


 


change,
cause or permit any change in, the legal and/or ultimate beneficial ownership
of either of the Borrowers or the Corporate Guarantor or the Manager from that existing
on the date of this Agreement as specified in clause 7.1.10 Provided however that following the Listing Date such
restriction, insofar as it relates to the shares in the Corporate Guarantor,
shall only apply in respect of the ultimate beneficial ownership of thirty five
per cent (35%) of the issued shares in the Corporate Guarantor which shall at
all times after the Listing Date remain ultimately beneficially owned by the
persons ultimately beneficially owning all of the shares in the Corporate
Guarantor on the date of this Agreement as specified in clause 7.1.10;


 


8.4          Pre-delivery
positive undertakings


 


The
Borrowers hereby jointly and severally undertake and agree with the Bank that they
will:


 


8.4.1        Conveyance
on default


 


where either
Ship is (or is to be) sold in exercise of any power contained in the relevant Pre-delivery
Security Assignment or otherwise conferred on the Bank, execute, forthwith upon
request by the Bank, such form of conveyance of such Ship as the Bank may
require;


 


35

















 


8.4.2        Flag
State


 


not
later than thirty (30) days prior to the Delivery Date of each Ship, obtain the
Bank’s written approval of the Flag State for such Ship; and


 


8.4.3        Mortgage


 


immediately
upon Delivery of each Ship procure that the relevant Borrower shall execute,
and procure the registration of, the Mortgage over such Ship under the laws and
flag of the relevant Flag State and provide all other documents and evidence as
specified in Part 6 of schedule 2 in respect of such Ship.


 


8.5          Pre-delivery
negative undertaking


 


The
Borrowers hereby jointly and severally further undertake and agree with the
Bank that they will not, without the prior written consent of the Bank (and
then only subject to such conditions as the Bank may impose), let or agree to
let either Ship:


 


8.5.1        on
demise charter for any period; or


 


8.5.2        by
any time or consecutive voyage charter for a term which exceeds or which by
virtue of any optional extensions therein contained may exceed twelve (12)
months’ duration; or


 


8.5.3        on
terms whereby more than two (2) months’ hire (or the equivalent) is
payable in advance; or


 


8.5.4        below
the market rate prevailing at the time when the relevant Ship is fixed.


 


9              Conditions


 


9.1          Documents
and evidence


 


9.1.1        Commitment


 


The
obligation of the Bank to make the Commitment available shall be subject to the
condition that the Bank or its duly authorised representative shall have
received, not later than two (2) Banking Days before the date of this
Agreement, the documents and evidence specified in Part 1 of Error! Reference source not
found., in form and substance satisfactory to the
Bank.


 


9.1.2        First
Advances


 


The
obligation of the Bank to make available the First Advance in respect of a Ship
shall be subject to the condition that the Bank or its duly authorised
representative shall have received, on or prior to the drawdown of the relevant
First Advance, the relevant documents and evidence specified in Part 2 of schedule 2
in respect of such Ship, in form and substance satisfactory to the Bank.


 


9.1.3        Second
Advances


 


The
obligation of the Bank to make available the Second Advance in respect of a Ship
shall be subject to the condition that the Bank or its duly authorised
representative shall have received, on or prior to the drawdown of the relevant
Second Advance, the relevant documents and evidence specified in Part 3 of
schedule 2 in respect of such Ship, in form and substance satisfactory to
the Bank.


 


9.1.4        Third
Advances


 


The obligation of the Bank to make available the Third
Advance in respect of a Ship shall be subject to the condition that the Bank or
its duly authorised representative shall have received, on or prior to the
drawdown of the relevant Third Advance, the relevant documents and evidence


 


36

















 


specified in Part 4 of schedule 2
in respect of such Ship, in form and substance satisfactory to the Bank.


 


9.1.5        Fourth
Advances


 


The obligation of the Bank to make available the Fourth
Advance in respect of a Ship shall be subject to the condition that the Bank or
its duly authorised representative shall have received, on or prior to the
drawdown of the relevant Fourth Advance, the relevant documents and evidence
specified in Part 5 of schedule 2 in respect of such Ship, in form
and substance satisfactory to the Bank.


 


9.1.6        Delivery
Advances


 


The obligation of the Bank to make available the
Delivery Advance in respect of a Ship shall be subject to the condition that
the Bank or its duly authorised representative shall have received, on or prior
to the drawdown of the relevant Delivery Advance, the documents and evidence
specified in Part 6 of Error! Reference source not found.  in respect of such Ship, in form and substance satisfactory to the
Bank.


 


9.1.7        Additional
Cost Advances


 


The obligation of the Bank to make available the
Additional Cost Advance in respect of a Ship shall be subject to the condition
that the Bank or its duly authorised representative shall have received, on or
prior to the drawdown of the Additional Cost Advance for such Ship, the
documents and evidence specified in Part 7 of schedule 2 in respect
of such Ship, in form and substance satisfactory to the Bank.


 


9.2          General
conditions precedent


 


The obligation of the Bank to make any Advance
available shall be subject to the further conditions that, at the time of the
giving of the Drawdown Notice in respect of the relevant Advance and at the
time of the making of the relevant Advance:


 


9.2.1        the
representations and warranties contained in (i) clauses 7.1, 7.2 and
7.3(b) and (ii) clause 4 of each Corporate Guarantee, 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; and


 


9.2.2        no
Default shall have occurred and be continuing or would result from the making
of such Advance.


 


9.3          Waiver
of conditions precedent


 


The
conditions specified in this clause 9 are inserted solely for the benefit
of the Bank and may be waived by the Bank in whole or in part and with or
without conditions.


 


9.4          Further
conditions precedent


 


Not
later than five (5) Banking Days prior to each Drawdown Date and not later
than five (5) Banking Days prior to each Interest Payment Date, the Bank
may request and the Borrowers shall, not later than two (2) Banking Days
prior to such date, deliver to the Bank on such request further favourable
certificates and/or opinions as to any or all of the matters which are the
subject of clauses 7, 8, 9 and 10 of this Agreement.


 


37

















 


10             Events of Default


 


10.1          Events


 


There
shall be an Event of Default if:


 


10.1.1                     Non-payment: any Security Party fails to
pay any sum payable by it under any of the Security Documents or the Underlying
Documents at the time, in the currency and in the manner stipulated in the
Security Documents or the Underlying Documents (and so that, for this purpose,
sums payable on demand shall be treated as having been paid at the stipulated
time if paid within three (3) Banking Days of demand); or


 


10.1.2                     Breach of Insurance and certain other obligations:
either of the Borrowers or the Manager fails to obtain and/or maintain the
Insurances (in accordance with the requirements of the Security Documents) for
either of the Ships or if any insurer in respect of such Insurances cancels any
of such Insurances or disclaims liability by reason, in either case, of
mis-statement in any proposal for any of such Insurances or for any other
failure or default on the part of the Borrowers or either of them or any other
person or the Borrowers commit any breach of or omit to observe any of the
obligations or undertakings expressed to be assumed by them under clauses 8.2,
8.3, 8.4 or 8.5 of this Agreement or either Corporate Guarantor commits any
breach of or omits to observe any of the obligations or undertakings expressed
to be assumed by it under clause 5.2 of the Corporate Guarantee to which it is
a party; or


 


10.1.3                     Breach of other obligations:
any Security Party commits any breach of or omits to observe any of its
obligations or undertakings expressed to be assumed by it under any of the
Security Documents or any of the Underlying Documents (other than those
referred to in clauses 10.1.1, 10.1.2 and 10.1.3 above) 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
fourteen (14) days of the Bank notifying the relevant Security Party of such
default and of such required action; or


 


10.1.4                     Misrepresentation: any representation or
warranty made or deemed to be made or repeated by or in respect of any Security
Party in or pursuant to any of the Security Documents or in any notice,
certificate or statement referred to in or delivered under any of the Security
Documents or any of the Underlying Documents is or proves to have been
incorrect or misleading in any material respect; or


 


10.1.5                     Cross-default: any Indebtedness of any Relevant
Party is not paid when due or any Indebtedness of any Relevant Party becomes
(whether by declaration or automatically in accordance with the relevant
agreement or instrument constituting the same) due and payable prior to the
date when it would otherwise have become due (unless as a result of the
exercise by the relevant Relevant Party of a voluntary right of prepayment) or
any creditor of any Relevant Party becomes entitled to declare any such
Indebtedness due and payable or any facility or commitment available to any Relevant
Party relating to Indebtedness is withdrawn, suspended or cancelled by reason
of any default (howsoever described) of the person concerned unless the
relevant Relevant Party shall have satisfied the Bank that such withdrawal,
suspension or cancellation will not affect or prejudice in any way the relevant
Relevant Party’s ability to pay its debts as they fall due and fund its
commitments, or any guarantee given by any Relevant Party in respect of
Indebtedness is not honoured when due and called upon; or


 


10.1.6                     Legal process: any judgment or order made
against any Relevant Party is not stayed or complied with within seven (7) days
or a creditor attaches or takes possession of, or a distress, execution,
sequestration or other process is levied or enforced upon or sued out against,
any of the undertakings, assets, rights or revenues of any Relevant Party and
is not discharged within seven (7) days; or


 


10.1.7                     Insolvency: any Relevant Party is unable
or admits inability to pay its debts as they fall due; suspends making payments
on any of its debts or announces an intention to do so; becomes insolvent; has
assets the value of which is less than the value of its liabilities (taking
into account


 


38

















 


contingent and prospective liabilities); or suffers the
declaration of a moratorium in respect of any of its Indebtedness; or


 


10.1.8                     Reduction or loss of capital:
a meeting is convened by any Relevant Party for the purpose of passing any resolution
to purchase or reduce its share capital or to redeem any of its shares; or


 


10.1.9                     Winding up: any corporate action, legal
proceedings or other procedure or step is taken for the purpose of winding up
any Relevant Party or an order is made or resolution passed for the winding up
of any Relevant Party or a notice is issued convening a meeting for the purpose
of passing any such resolution; or


 


10.1.10               Administration: any petition is presented,
notice given or step is taken for the purpose of the appointment of an administrator
of any Relevant Party or the Bank believes that any such petition or other step
is imminent or an administration order is made in relation to any Relevant Party;
or


 


10.1.11               Appointment of receivers and managers:
any administrative or other receiver is appointed of any Relevant Party or any
part of its assets and/or undertaking or any other steps are taken to enforce
any Encumbrance over all or any part of the assets of any Relevant Party; or


 


10.1.12               Compositions: any corporate action, legal
proceedings or other procedures or steps are taken, or negotiations commenced,
by any Relevant Party or by any of its creditors with a view to the general
readjustment or rescheduling of all or part of its indebtedness or to proposing
any kind of composition, compromise or arrangement involving such company and
any of its creditors; or


 


10.1.13               Analogous proceedings: there occurs, in relation to
any Relevant Party, in any country or territory in which any of them carries on
business or to the jurisdiction of whose courts any part of their assets is
subject, any event which, in the reasonable opinion of the Bank, appears in
that country or territory to correspond with, or have an effect equivalent or
similar to, any of those mentioned in clauses 10.1.6 to 10.1.12 (inclusive)
or any Relevant Party otherwise becomes subject, in any such country or
territory, to the operation of any law relating to insolvency, bankruptcy or
liquidation; or


 


10.1.14               Cessation of business: any Relevant Party suspends
or ceases or threatens to suspend or cease to carry on its business; or


 


10.1.15               Seizure: all or a material part of the
undertaking, assets, rights or revenues of, or shares or other ownership
interests in, any Relevant Party are seized, nationalised, expropriated or
compulsorily acquired by or under the authority of any government; or


 


10.1.16               Invalidity: any of the 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 Security Party which is a party thereto, or if any
such Security Party shall deny that it has any, or any further, liability
thereunder; or


 


10.1.17               Unlawfulness: it becomes impossible or
unlawful at any time for any Security Party, to fulfil any of the covenants and
obligations expressed to be assumed by it in any of the Security Documents or
for the Bank to exercise the rights or any of them vested in it under any of
the Security Documents or otherwise; or


 


10.1.18               Repudiation: any Security Party
repudiates any of the Security Documents or does or causes or permits to be
done any act or thing evidencing an intention to repudiate any of the Security Documents;
or


 


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


 


39

















 


10.1.20               Material adverse change: there occurs, in the reasonable
opinion of the Bank, a material adverse change in the financial condition of
any Relevant Party by reference to the financial position of that Relevant Party
as described by or on behalf of the Borrowers or any Security Party to the Bank
in the negotiation of this Agreement; or


 


10.1.21               Arrest: either Ship is arrested, confiscated,
seized, taken in execution, impounded, forfeited, detained in exercise or
purported exercise of any possessory lien or other claim or otherwise taken
from the possession of the relevant Borrower and such Borrower shall fail to
procure the release of such Ship within a period of fifteen (15) days
thereafter; or


 


10.1.22               Registration: the registration of either Ship
under the laws and flag of the relevant Flag State is cancelled or terminated
without the prior written consent of the Bank or if such registration of either
Ship is not renewed at least forty five (45) days prior to the expiry of such registration;
or


 


10.1.23               Unrest: any Flag
State becomes involved in hostilities or civil war or there is a seizure of
power in any Flag State by unconstitutional means if, in any such case, such
event could in the opinion of the Bank reasonably be expected to have a
material adverse effect on the security constituted by any of the Security
Documents; or


 


10.1.24               Environment: either of the Borrowers
and/or any other Relevant Party and/or any of their respective Environmental
Affiliates fails to comply with any Environmental Law or any Environmental
Approval or either of the Borrowers and/or any other Relevant Party and/or any
of their respective Environmental Affiliates or either Ship or any other
Relevant Ship is involved in any incident which gives rise or may give rise to
an 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 either of the Borrowers or any other
Security Party or on the security constituted by any of the Security Documents;
or


 


10.1.25               P&I: either Borrower or the Manager or any
other person fails or omits to comply with any requirements of the protection
and indemnity association or other insurer with which a Ship is entered for
insurance or insured against protection and indemnity risks (including oil
pollution risks) to the effect that any cover (including, without limitation,
any cover in respect of liability for Environmental Claims arising in
jurisdictions where such Ship operates or trades) is or may be liable to
cancellation, qualification or exclusion at any time; or


 


10.1.26               Shareholdings: there is any change in the
legal and/or ultimate beneficial ownership of any of the shares of any of the
Borrowers, the Manager or the Corporate Guarantor from that existing on the
date of this Agreement as specified in clause 7.1.10 save for any change in
respect of the shares in the Corporate Guarantor following the Listing Date
which does not result in less than thirty five per cent (35%) of the issued
shares in the Corporate Guarantor being ultimately beneficially owned by the
persons who are the ultimate beneficial owners of all the shares in the Corporate
Guarantor on the date of this Agreement as specified in clause 7.1.10; or


 


10.1.27               Termination or variation of, or dispute under, Contracts and
Supervision Contracts:  any Contract or Supervision Contract is
terminated or rescinded for any reason whatsoever; or any Contract or
Supervision Contract is frustrated; or any Contract or Supervision Contract is
varied in any manner not permitted by or pursuant to the relevant Pre-delivery
Security Assignment or this Agreement; or there is any dispute or litigation or
any other proceedings between the relevant parties under or in respect of any
Contract or any Supervision Contract; or


 


10.1.28               Termination of Refund Guarantees:  any Refund Guarantee expires or is
repudiated, cancelled, rescinded or otherwise terminated (other than by the
return of such Refund Guarantee by the relevant Borrower to the Builder and/or
the relevant Refund Guarantor following the Delivery of the Ship to which such
Refund Guarantee relates); or


 


10.1.29               Non-delivery of Ships: either Ship is not delivered
to, and accepted by, the relevant Borrower under the relevant Contract or the
Delivery Advance for either Ship is not drawn down, in either case, on or
before the end of the Drawdown Period for the Delivery Advance relevant to such
Ship; or


 


40

















 


10.1.30               Accounts: moneys are withdrawn from
any of the Accounts other than in accordance with clause 14; or


 


10.1.31               Licenses, etc:  any license, authorisation, consent or
approval at any time necessary to enable any Security Party to comply with its
obligations under the Security Documents or the Underlying Documents is revoked
or withheld or modified or is otherwise not granted or fails to remain in full
force and effect or if any exchange control or other law or regulation shall
exist which would make any transaction under the Security Documents or the
Underlying Documents or the continuation thereof, unlawful or would prevent the
performance by any Security Party of any term of any of the Security Documents
or the Underlying Documents; or


 


10.1.32               Material events: any other event occurs or
circumstance arises which, in the reasonable opinion of the Bank, is likely
materially and adversely to affect either (i) the ability of any Security
Party to perform all or any of its obligations under or otherwise to comply
with the terms of any of the Security Documents or (ii) the security
created by any of the Security Documents.


 


10.2          Acceleration


 


The
Bank may, without prejudice to any other rights of the Bank, at any time after
the happening of an Event of Default by notice to the Borrowers declare that:


 


10.2.1        the
obligation of the Bank to make the Commitment available shall be terminated,
whereupon the Commitment shall be reduced to zero forthwith; and/or


 


10.2.2        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.


 


10.3          Demand
basis


 


If,
pursuant to clause 10.2.2, the Bank declares the Loan to be due and
payable on demand, the Bank may by written notice to the Borrowers (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 and commitment commission accrued and all other sums payable under
this Agreement or (b) withdraw such declaration with effect from the date
specified in such notice.


 


11             Indemnities


 


11.1          Miscellaneous
indemnities


 


The
Borrowers shall on demand indemnify the Bank, without prejudice to any of the
Bank’s other rights under any of the Security Documents, against any loss
(including loss of Margin) or expense which the Bank shall certify as sustained
or incurred by it as a consequence of:


 


11.1.1        any
default in payment by the Borrowers of any sum under any of the Security
Documents when due;


 


11.1.2        the
occurrence of any other Event of Default;


 


11.1.3        any
prepayment or reduction of a Tranche or part thereof being made under clauses 4.3,
8.2.1 or 12.1 or any other repayment or prepayment of a Tranche or part thereof
being made otherwise than on an Interest Payment Date relating to the part of
the Tranche prepaid or repaid; or


 


11.1.4        any
Advance not being made for any reason (excluding any default by the Bank) after
the Drawdown Notice in relation thereto has been given,


 


41

















 


including,
in any such case, but not limited to, any loss or expense sustained or incurred
in maintaining or funding a Tranche or any part thereof or in liquidating or re-employing
deposits from third parties acquired to effect or maintain a Tranche or any
part thereof.


 


11.2        Currency
indemnity


 


If any
sum due from the Borrowers under any of the Security Documents or any order or
judgment given or made in relation thereto 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 judgment
into another currency (the “second currency”)
for the purpose of (a) making or filing a claim or proof against the
Borrowers or either of them, (b) obtaining an order or judgment in any
court or other tribunal or (c) enforcing any order or judgment given or
made in relation to any of the Security Documents, the Borrowers shall
indemnify and hold harmless the Bank from and against any loss suffered as a
result of any difference between (i) the rate of exchange used for such
purpose to convert the sum in question from the first currency into the second
currency and (ii) 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, judgment, claim or proof. 
Any amount due from the Borrowers under this clause 11.2 shall be
due as a separate debt and shall not be affected by judgment 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.


 


11.3        Environmental
indemnity


 


The
Borrowers 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 whatsoever out of an
Environmental Claim made or asserted against the Bank if such Environmental
Claim would not have been, or been capable of being, made or asserted against
the Bank if it had not entered into any of the Security Documents and/or
exercised any of its rights, powers and discretions thereby conferred and/or
performed any of its obligations thereunder and/or been involved in any of the
transactions contemplated by the Security Documents.


 


11.4        Central
Bank or European Central Bank reserve requirements indemnity


 


The
Borrowers shall on demand promptly indemnify the Bank against any cost incurred
or loss suffered by it as a result of its complying with the minimum reserve
requirements of the European Central Bank and/or with respect to maintaining
required reserves with the relevant national Central Bank to the extent that
such compliance relates to the Commitment or the Loan or deposits obtained by
it to fund or maintain the whole or part of the Loan and such cost or loss is
not recoverable by the Bank under clause 12.2.


 


12           Unlawfulness and increased costs


 


12.1        Unlawfulness


 


If it
is or becomes contrary to any law or regulation for the Bank to make any
Advance or to maintain the Commitment or fund the Loan, the Bank shall promptly
give notice to the Borrowers whereupon (a) the Commitment shall be reduced
to zero and (b) the Borrowers shall be obliged to prepay the Loan either (i) forthwith
or (ii) on a future specified date not being earlier than the latest date
permitted by the relevant law or regulation together with interest and
commitment commission accrued to the date of prepayment and all other sums
payable by the Borrowers under this Agreement.


 


42

















 


12.2        Increased
costs


 


If the
result of any change in, or in the interpretation or application of, or the
introduction of, any law or any regulation, request or requirement (whether or
not having the force of law, but, if not having the force of law, with which
the Bank or, as the case may be, its holding company habitually complies),
including (without limitation) those relating to Taxation, capital adequacy,
liquidity, reserve assets, cash ratio deposits and special deposits, is to:


 


12.2.1      subject
the Bank to Taxes or change the basis of Taxation of the Bank with respect to
any payment under any of the Security Documents (other than Taxes or Taxation
on the overall net income, profits or gains of the Bank imposed in the
jurisdiction in which its principal or lending office under this Agreement is
located); and/or


 


12.2.2      increase
the cost to, or impose an additional cost on, the Bank or its holding company
in making or keeping the Commitment available or maintaining or funding all or
part of the Loan; and/or


 


12.2.3      reduce
the amount payable or the effective return to the Bank under any of the
Security Documents; and/or


 


12.2.4      reduce
the Bank’s or its holding company’s rate of return on its overall capital by
reason of a change in the manner in which it is required to allocate capital
resources to the Bank’s obligations under any of the Security Documents; and/or


 


12.2.5      require
the Bank or its holding company to make a payment or forego a return on or
calculated by reference to any amount received or receivable by the Bank under
any of the Security Documents; and/or


 


12.2.6      require
the Bank or its holding company 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,


 


then
and in each such case (subject to clause 12.3):


 


(a)   the Bank shall notify the Borrowers in writing of such event
promptly upon its becoming aware of the same; and


 


(b)   the Borrowers shall on demand pay to the Bank the amount which the
Bank specifies (in a certificate and supporting documents setting forth and
evidencing the basis of the computation of such amount but not including any
matters which the Bank or its holding company regards as confidential) is
required to compensate the Bank and/or (as the case may be) its holding company
for such liability to Taxes, cost, reduction, payment, foregone return or loss.


 


For the
purposes of this clause 12.2, “holding company”
means the company or entity (if any) within the consolidated supervision of
which the Bank is included.


 


12.3        Exception


 


Nothing
in clause 12.2 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 the
subject of an additional payment under clause 6.6.


 


13           Security and set-off


 


13.1        Application
of moneys


 


All
moneys received by the Bank under or pursuant to any of the Security Documents
and expressed to be applicable in accordance with the provisions of this clause 13.1
shall be applied by the Bank in the following manner:


 


43

















 


13.1.1      first,
in or towards payment of all unpaid costs, expenses, fees and commitment
commission which may be owing to the Bank under any of the Security Documents;


 


13.1.2      secondly,
in or towards payment of any arrears of interest owing in respect of the Loan
or any part thereof;


 


13.1.3      thirdly,
in or towards repayment of the Loan (whether the same is due and payable or
not);


 


13.1.4      fourthly,
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;


 


13.1.5      fifthly,
in or towards payment to the Bank of any other sums owing to it under any of
the Security Documents; and


 


13.1.6      sixthly,
the surplus (if any) shall be paid to the Borrowers or to whomsoever else may
be entitled to receive such surplus.


 


13.2        Set-off


 


13.2.1      The
Borrowers authorise the Bank (without prejudice to any of the Bank’s rights at
law, in equity or otherwise), at any time and without prior notice to the
Borrowers, to apply any credit balance to which the Borrowers or either of them
is then entitled standing upon any account of the Borrowers or either of them with
any branch of the Bank in or towards satisfaction of any sum due and payable
from the Borrowers or either of them to the Bank under any of the Security
Documents.  For this purpose, the Bank is
authorised to purchase with the moneys standing to the credit of such account
such other currencies as may be necessary to effect such application.


 


13.2.2      The
Bank shall not be obliged to exercise any right given to it by this
clause 13.2.  The Bank shall notify
the Borrowers forthwith upon the exercise or purported exercise of any right of
set-off giving full details in relation thereto.


 


13.3        Further
assurance


 


The
Borrowers jointly and severally undertake with the Bank that the Security
Documents shall both at the date of execution and delivery thereof and so long
as any moneys are owing under any of the Security Documents be valid and
binding obligations of the respective parties thereto and rights of the Bank
enforceable in accordance with their respective terms and that it will, at its
expense, execute, sign, perfect and do, and will procure the execution,
signing, perfecting and doing by each of the other Security Parties of, any and
every such further assurance, document, act or thing as in the reasonable
opinion of the Bank may be necessary or desirable for perfecting the security
contemplated or constituted by the Security Documents.


 


13.4        Conflicts


 


In the
event of any conflict between this Agreement and any of the other Borrowers’
Security Documents, the provisions of this Agreement shall prevail.


 


14           Operating Accounts


 


14.1        General


 


The
Borrowers jointly and severally undertake with the Bank that they will:


 


14.1.1      on or before the date of this
Agreement, open each of the Accounts; and


 


14.1.2      procure
that all moneys payable to each Borrower in respect of the Earnings of such
Borrower’s Ship shall, unless and until the Bank directs to the contrary
pursuant to the provisions of the relevant General Assignment, be paid to the Operating
Account for such Ship, Provided however


 


44

















 


that if any of the moneys paid to the relevant Operating Account
are payable in a currency other than Dollars, the Bank shall (and each Borrower
in respect of its Operating Account hereby irrevocably instructs the Bank to)
convert such moneys into Dollars at the Bank’s spot rate of exchange at the
relevant time for the purchase of Dollars with such currency and the term “spot rate of exchange” shall include any premium and costs
of exchange payable in connection with the purchase of Dollars with such
currency.


 


14.2        Operating
Accounts: withdrawals


 


Unless
the Bank otherwise agrees in writing, neither Borrower shall be entitled to
withdraw any moneys from its Operating Account at any time from the date of
this Agreement and so long as any moneys are owing under the Security Documents
save that, unless and until a Default shall occur and the Bank shall direct to
the contrary, each Borrower may withdraw moneys from its Operating Account for
the following purposes:


 


14.2.1      to
transfer to the Retention Account on each Retention Date all or part of the
Retention Amount for such Retention Date;


 


14.2.2      to
pay any unpaid costs, expenses, fees and commitment commission which may be
owing to the Bank under any of the Security Documents;


 


14.2.3      to
pay any amount to the Bank in or towards payments of any instalments of
interest or principal or any other amounts then payable pursuant to the
Security Documents;


 


14.2.4      to
pay the proper and reasonable expenses of its Ship;


 


14.2.5      to
pay the proper and reasonable expenses of administering its affairs; and


 


14.2.6      to
pay any other amounts to the extent permitted by clause 8.3.12,


 


Provided
however that if, in the opinion of the Bank, there are insufficient sums
standing to the credit of the Operating Accounts to meet principal and interest
falling due on the next Repayment Date and the next Interest Payment Date or
any other moneys which are or will become due and payable to the Bank, the
Borrowers shall not be entitled to make any withdrawal under clauses 14.2.4 and
14.2.5 without the prior written consent of the Bank.


 


14.3        Retention
Account: credits and withdrawals


 


14.3.1      The
Borrowers hereby jointly and severally undertake with the Bank that they will,
from the date of this Agreement and so long as any moneys are owing under the
Security Documents, on each Retention Date pay to the Bank for credit to the
Retention Account, the Retention Amount for such Retention Date provided
however that, to the extent that there are moneys standing to the credit of the
Operating Accounts (or either of them) as at the relevant Retention Date, such
moneys shall, up to an amount equal to the Retention Amount, be transferred to
the Retention Account on that Retention Date (and each of the Borrowers in
respect of its own Operating Account hereby irrevocably authorises the Bank to
effect each such transfer) and to that extent the Borrowers’ obligations to make
the payments referred to in this clause 14.3.1 shall have been fulfilled
upon such transfer being effected.


 


14.3.2      Unless
and until there shall occur an Event of Default (whereupon the provisions of
clause 14.4 shall apply), all Retention Amounts credited to the Retention
Account together with interest from time to time accruing or at any time
accrued thereon shall be applied by the Bank (and the Borrowers hereby
irrevocably authorise the Bank so to apply the same) upon each Repayment Date
and/or on each day that interest is payable pursuant to clause 3.1, in or
towards payment to the Bank of the instalment then falling due for repayment
or, as the case may be, the amount of interest then due.  Each such application by the Bank shall
constitute a payment in or towards satisfaction of the Borrowers’ corresponding
payment obligations under this Agreement but shall be strictly without
prejudice to the obligations of each of the Borrowers to make any such payment
to the extent that the aforesaid application by the Bank is insufficient to
meet the same.


 


45

















 


14.3.3      Unless
the Bank otherwise agrees in writing and subject to clause 14.3.2, neither
of the Borrowers shall be entitled to withdraw any moneys from the Retention
Account at any time from the date of this Agreement and so long as any moneys
are owing under the Security Documents.


 


14.4        Deductions


 


The
Bank shall be entitled (but not obliged) at any time to deduct from the balance
for the time being standing to the credit of any Account all other moneys which
may fall due to be paid to the Bank under the terms of this Agreement and the
other Security Documents or otherwise howsoever in connection with the Loan.


 


14.5        Pledging
of Operating Accounts


 


The
Accounts and all amounts from time to time standing to the credit thereof shall
be subject to the security constituted and the rights conferred by the Account
Pledges.


 


15           Assignment,
transfer and lending office


 


15.1        Benefit
and burden


 


This
Agreement shall be binding upon, and enure for the benefit of, the Bank and the
Borrowers and their respective successors in title.


 


15.2        No
assignment by Borrowers


 


Neither
of the Borrowers may assign or transfer any of its rights or obligations under
this Agreement.


 


15.3        Assignment
by Bank


 


The
Bank may assign all or any part of its rights under this Agreement or under any
of the other Security Documents to any other bank or financial institution (an “Assignee”) without the consent of the Borrowers (the
Borrowers consenting to any such assignment by their execution of this
Agreement).


 


15.4        Transfer


 


The
Bank may transfer all or any part of its rights, benefits and/or obligations
under this Agreement and/or any of the other Security Documents to any one or
more banks or other financial institutions (a “Transferee”)
without the consent of the Borrowers (the Borrowers consenting to any such
transfer by their execution of this Agreement) if the Transferee, by delivery
of such undertaking as the Bank may approve, becomes bound by the terms of this
Agreement and agrees to perform all or, as the case may be, part of the Bank’s
obligations under this Agreement.


 


15.5        Documenting
assignments and transfers


 


If the
Bank assigns all or any part of its rights or transfers all or any part of its
rights, benefits and/or obligations as provided in clauses 15.3 or 15.4,
the Borrowers jointly and severally undertake, immediately on being requested
to do so by the Bank and at the cost of the Bank, to enter into, and procure
that the other Security Parties shall enter into, such documents as may be
necessary or desirable to transfer to the Assignee or Transferee all or the
relevant part of the Bank’s interest 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 its Assignee or Transferee (as the case may be) to
the extent of their respective interests.


 


46

















 


15.6        Lending
office


 


The
Bank shall lend through its office at the address specified in the definition
of “Bank” in clause 1.2 or through any other office of the Bank selected from
time to time by it through which the Bank wishes to lend for the purposes of
this Agreement.  If the office through
which the Bank is lending is changed pursuant to this clause 15.6, the
Bank shall notify the Borrowers promptly of such change.


 


15.7        Disclosure
of information


 


The
Bank may disclose to a prospective assignee, 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 Borrowers as the Bank shall
consider appropriate.


 


16           Notices and other matters


 


16.1        Notices


 


Every
notice, request, demand or other communication under this Agreement or (unless
otherwise provided therein) under any of the other Security Documents shall:


 


16.1.1      be
in writing delivered personally or by first-class prepaid letter (airmail if
available) or facsimile transmission or other means of telecommunication in
permanent written form;


 


16.1.2      be
deemed to have been received, subject as otherwise provided in the relevant
Security Document, in the case of a letter, when delivered personally or three (3) days
after it has been put in the post and, in the case of a facsimile transmission
or other means of telecommunication in permanent written form, upon receipt of
confirmation that the facsimile transmission has been received (provided that
if the date receipt is not a business day in the country of the addressee or if
the time of receipt is after the close of business in the country of the
addressee it shall be deemed to have been received at the opening of business
on the next such business day); and


 


16.1.3      be
sent:


 


(a)   if to the Borrowers or either of them at:


 


	
  c/o Aegean Bunkering Services Inc.

  
	
  42 Hatzikiriakou Street

  
	
  185 38 Piraeus

  
	
  Greece

  
	
   

  
	
  Fax no:

  	
  +30 210 458 6242

  
	
  Attention:

  	
  The Directors

  



 


(b)   if to the Bank at:


 


	
  National Bank of Greece S.A.

  
	
  Administration Shipping Division

  
	
  2 Bouboulinas & Akti Miaouli

  
	
  185 35 Piraeus

  
	
  Greece

  
	
   

  
	
  Fax No:

  	
  +30 210 414 4119

  
	
  Attention:

  	
  Corporate Manager

  



 


or to
such other address and/or numbers as is notified by one party to the other
party under this Agreement.


 


47

















 


16.2        No
implied waivers, remedies cumulative


 


No
failure or delay on the part of the Bank to exercise any power, right or remedy
under any of the Security Documents shall operate as a waiver thereof, 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.  The remedies
provided in the Security Documents are cumulative and are not exclusive of any
remedies provided by law.


 


16.3        English
language


 


All
certificates, instruments and other documents to be delivered under or supplied
in connection with any of the Security Documents shall be in the English
language or shall be accompanied by a certified English translation upon which
the Bank shall be entitled to rely.


 


16.4        Borrowers’
obligations


 


16.4.1      Joint and several


 


Notwithstanding
anything to the contrary contained in any of the Security Documents, the
agreements, obligations and liabilities of the Borrowers herein contained are joint
and several and shall be construed accordingly. 
Each of the Borrowers agrees and consents to be bound by the Security
Documents to which it is, or is to be, a party notwithstanding that each of the
other Borrower which is intended to sign or to be bound may not do so or be
effectually bound and notwithstanding that any of the Security Documents may be
invalid or unenforceable against the other Borrower, whether or not the
deficiency is known to the Bank.


 


16.4.2      Borrowers as principal debtors


 


Each Borrower
acknowledges and confirms that it is a principal and original debtor in respect
of all amounts which may become payable by the Borrowers in accordance with the
terms of this Agreement or any of the other Security Documents and agrees that
the Bank may also continue to treat it as such, whether or not the Bank is or
becomes aware that such Borrower is or has become a surety for the other
Borrower.


 


16.4.3      Indemnity


 


The
Borrowers hereby agree jointly and severally to keep the Bank fully indemnified
on demand against all damages, losses, costs and expenses (provided that, in
the case of such costs and expenses, they are reasonable and documented) arising
from any failure of either Borrower to perform or discharge any purported
obligation or liability of the other Borrower which would have been the subject
of this Agreement or any other Security Document had it been valid and
enforceable and which is not or ceases to be valid and enforceable against a
Borrower on any ground whatsoever, whether or not known to the Bank (including,
without limitation, any irregular exercise or absence of any corporate power or
lack of authority of, or breach of duty by, any person purporting to act on
behalf of a Borrower (or any legal or other limitation, whether under the Limitation
Acts or otherwise or any disability or death, bankruptcy, unsoundness of mind,
insolvency, liquidation, dissolution, winding up, administration, receivership,
amalgamation, reconstruction or any other incapacity of any person whatsoever
(including, in the case of a partnership, a termination or change in the
composition of the partnership) or any change of name or style or constitution
of any Security Party)).


 


16.4.4      Liability unconditional


 


None of
the obligations or liabilities of either Borrower under this Agreement or any
other Security Document shall be discharged or reduced by reason of:


 


(a)   the death, bankruptcy, unsoundness of mind, insolvency, liquidation,
dissolution, winding-up, administration, receivership, amalgamation,
reconstruction or other incapacity of any person whatsoever (including, in the
case of a partnership, a


 


48

















 


termination or
change in the composition of the partnership) or any change of name or style or
constitution of the other Borrower or any other person liable;


 


(b)   the Bank granting any time, indulgence or concession to, or
compounding with, discharging, releasing or varying the liability of, the other
Borrower or any other person liable or renewing, determining, varying or
increasing any accommodation, facility or transaction or otherwise dealing with
the same in any manner whatsoever or concurring in, accepting, varying any
compromise, arrangement or settlement or omitting to claim or enforce payment
from the other Borrower or any other person liable; or


 


(c)   anything done or omitted which but for this provision might operate
to exonerate the Borrower.


 


16.4.5      Recourse to other security


 


The
Bank shall not be obliged to make any claim or demand or to resort to any Security
Document or other means of payment now or hereafter held by or available to it
for enforcing this Agreement or any of the Security Documents against a
Borrower or any other person liable and no action taken or omitted by the Bank
in connection with any such Security Document or other means of payment will
discharge, reduce, prejudice or affect the liability of the Borrowers under
this Agreement and the Security Documents to which any of them is, or is to be,
a party.


 


16.4.6      Waiver of Borrowers’ rights


 


Each
Borrower agrees with the Bank that, from the date of this Agreement and so long
as any moneys are owing under any of the Security Documents and while all or
any part of the Commitment remains outstanding, it will not, without the prior
written consent of the Bank:


 


(a)   exercise any right of subrogation, reimbursement and indemnity
against the other Borrower or any other person liable under the Security
Documents;


 


(b)   demand or accept repayment in whole or in part of any Indebtedness
now or hereafter due to such Borrower from the other Borrower or from any other
person liable or demand or accept any guarantee, indemnity or other assurance
against financial loss or any document or instrument created or evidencing an
Encumbrance in respect of the same or dispose of the same;


 


(c)   take any steps to enforce any right against the other Borrower or
any other person liable in respect of any such moneys; or


 


(d)   claim any set-off or counterclaim against the other Borrower or any
other person liable or claiming or proving in competition with the Bank in the
liquidation of the other Borrower or any other person liable or have the
benefit of, or share in, any payment from or composition with, the other Borrower
or any other person liable or any other Security Document now or hereafter held
by the Bank for any moneys owing under this Agreement or for the obligations or
liabilities of any other person liable but so that, if so directed by the Bank,
it will prove for the whole or any part of its claim in the liquidation of the
other Borrower or other person liable on terms that the benefit of such proof
and all money received by it in respect thereof shall be held on trust for the
Bank and applied in or towards discharge of any moneys owing under this
Agreement in such manner as the Bank shall deem appropriate.


 


17           Governing law and jurisdiction


 


17.1        Law


 


This
Agreement is governed by, and shall be construed in accordance with, English
law.


 


17.2        Submission
to jurisdiction


 


Each Borrower
agrees, for the benefit of the Bank, that any legal action or proceedings
arising out of or in connection with this Agreement against the Borrowers or
either of them or any of


 


49

















 


their
assets may be brought in the English courts. 
Each Borrower irrevocably and unconditionally submits to the
jurisdiction of such courts and irrevocably designates, appoints and empowers Riches
Consulting at present of Old Jarretts Farmhouse, Brantridge Lane, Balcombe,
West Sussex, RH17 6JR, 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.  The submission to such
jurisdiction shall not (and shall not be construed so as to) limit the right of
the Bank to take proceedings against the Borrowers or either of them in the
courts of any other competent jurisdiction nor shall the taking of proceedings
in any one or more jurisdictions preclude the taking of proceedings in any
other jurisdiction, whether concurrently or not.


 


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 Borrowers or either of
them may have against the Bank arising out of or in connection with this
Agreement.


 


17.3        Contracts
(Rights of Third Parties) Act 1999


 


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


 


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


 


Schedule 1


 


50

















 


	
  SIGNED

  	
  )

  	
   

  
	
  by

  	
  )

  	
   

  	
   

  
	
  for
  and on behalf of

  	
  )

  	
  Attorney-in-fact

  
	
  SANTON LIMITED

  	
  )

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SIGNED

  	
  )

  	
   

  
	
  by

  	
  )

  	
   

  	
   

  
	
  for
  and on behalf of

  	
  )

  	
  Attorney-in-fact

  
	
  TASMAN SEAWAYS INC.

  	
  )

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SIGNED

  	
  )

  	
   

  	
   

  
	
  by

  	
  )

  	
  Authorized
  signatory

  
	
  and
  by

  	
  )

  	
   

  
	
  for
  and on behalf of

  	
  )

  	
   

  	
   

  
	
  NATIONAL BANK OF GREECE S.A.

  	
  )

  	
  Authorized
  signatory

  



 


51