Document:

Exhibit 10.8

 

Dated 12 January 2015

________________________

HSBC BANK PLC

as Lender

-and-

ULTRA TWO SHIPPING LTD

as Borrower

_______________________________________________

FINANCIAL AGREEMENT

_______________________________________________

Relating to a term loan facility not exceeding

 US$19,950,000

 

  

INDEX

	
1

	
PURPOSE

	
2

	
2

	
DEFINITIONS

	
2

	
3

	
THE FACILITY- AVAILABILITY

	
22

	
4

	
HEDGING STRATEGY

	
23

	
5

	
NOTICE OF DRAWDOWN

	
25

	
6

	
INTEREST PERIODS

	
26

	
7

	
INTEREST

	
27

	
8

	
DEFAULT INTEREST

	
27

	
9

	
SUBSTITUTE BASIS

	
28

	
10

	
PREPAYMENT

	
29

	
11

	
REPAYMENT

	
32

	
12

	
APPLICATION

	
33

	
13

	
EVIDENCE OF DEBT

	
34

	
14

	
PAYMENTS

	
34

	
15

	
TAX GROSS UP AND INDEMNITIES

	
35

	
16

	
CHANGE OF CIRCUMSTANCES

	
40

	
17

	
REPRESENTATIONS AND WARRANTIES

	
41

	
18

	
SECURITIES

	
47

	
19

	
CONDITIONS PRECEDENT AND SUBSEQUENT

	
47

	
20

	
GENERAL UNDERTAKINGS

	
50

	
21

	
INSURANCE UNDERTAKINGS

	
56

	
22

	
OPERATIONAL UNDERTAKINGS

	
58

	
23

	
SECURITY MARGIN

	
63

	
24

	
EVENTS OF DEFAULT

	
63

	
25

	
SET-OFF

	
67

	
26

	
FEES

	
68

	
27

	
EARNINGS AND RETENTION ACCOUNTS

	
68

	
28

	
EXPENSES

	
70

	
29

	
INDEMNITY

	
70

	
30

	
ENVIRONMENTAL INDEMNITY

	
70

	
31

	
CONFIDENTIALITY

	
70

	
32

	
LENDER'S BUSINESS

	
72

	
33

	
STAMP DUTIES- TAXES ETC

	
72

	
34

	
DETERMINATIONS

	
72

	
35

	
NO WAIVER

	
73

	
36

	
PARTIAL INVALIDITY

	
73

	
37

	
TRANSFER AND ASSIGNMENT

	
73

	
38

	
NON-IMMUNITY

	
74

	
39

	
NOTICES

	
74

	
40

	
SUPPLEMENTAL

	
75

	
41

	
LAW AND JURISDICTION

	
76

	
42

	
THIS AGREEMENT AND THE OTHER FINANCE DOCUMENTS

	
77

	
EXECUTION PAGE

	
78

	
SCHEDULE1

	
79

	
SCHEDULE 2

	
81

THIS AGREEMENT is made the 12 January 2015.

BETWEEN

1)            HSBC BANK PLC, as lender; and

2)            ULTRA TWO SHIPPING LTD as borrower;

IT IS AGREED AS FOLLOWS:

	1	PURPOSE

	1.01	This Agreement sets out the terms and conditions on which the Lender has agreed to make available to the Borrower, as borrower, a term loan facility, up to the maximum amount of Nineteen million Nine hundred Fifty thousand Dollars ($19,950,000) in one (1) advance, for the purpose of assisting the Borrower in partly financing the Construction Cost of the Ship.

	1.02	The Borrower has the option to hedge its exposure under this Agreement to interest rate fluctuations by entering into interest rate swap transactions with the Lender at the times and in the manner hereinafter set forth.

	2	DEFINITIONS

	2.01	In this Agreement the following terms shall have the following meanings:

"Accounts" means collectively the Earnings Account and the Retention Account and, in the singular, means either of them;

"Accounts' Charges" means collectively the Earnings Account Charge and the Retention Account Charge, and in the singular means either of them;

"Accounting Information" means the combined audited by the Auditors annual and the unaudited semi annual financial statements of the Group, each as provided or (as the context may require) to be provided to the Lender in accordance with Clause 20.01 of this Agreement;

"Accounting Period" means (a) each financial year of the Guarantor and (b) each half of each financial year of the Guarantor for which Accounting Information is required to be delivered pursuant to this Agreement;

"Additional Instalment Amount" means an amount equal to the fraction having as numerator the Approved Charter Additional Facility Amount and denominator the number of the Repayment Instalments that fall due within the period of the Approved Charter.

2

"Applicable Accounting Principles" means those accounting principles, standards and practices on which preparation of the Accounting Information is based, which are US GAAP and principles and practices adopted by the Guarantor and its Subsidiaries (including without limitation the Borrower) at the date hereof or at any time thereafter and notified to and accepted by the Lender;

"Applicable Margin" means two point eighty per cent (2.80%) per annum, PROVIDED HOWEVER that, without prejudice to Clause 23, in the event that, at any time during the Security Period, the Market Value of the Ship (determined pursuant to Clause 22.26) is less than one hundred forty three per cent (143%) of the aggregate of (i) the outstanding amount of the Facility and (ii) (in case the Master Agreement is utilized) the Maximum Permitted Swap Exposure, and the Borrower has not, within ten (10) Banking Days of receipt of a notice from the Lender advising the Borrower of the amount of such deficiency (which notice, in the absence of manifest error, shall be conclusive), provided to the Lender additional security (valued in accordance with normal banking practice) which shall in all respects be satisfactory to the Lender so that the Market Value of the Ship (determined in accordance with Clause 22.26) together with the value of any additional security (valued as aforesaid) provided to the Lender is at least one hundred forty three per cent (143%) of the aggregate of (i) the outstanding amount of the Facility and (ii) (in case the Master Agreement is utilized) the Maximum Permitted Swap Exposure or prepaid part of the Facility in accordance with Clause 10 so that, following such prepayment, the Market Value of the Ship (determined in accordance with Clause 22.26) is at least one hundred forty three per cent (143%) of the aggregate of (i) the outstanding amount of the Facility and (ii) (in case the Master Agreement is utilized) the Maximum Permitted Swap Exposure, the Applicable Margin shall be increased to three point forty five per cent (3.45%) per annum for. such Interest Periods during which the Market Value of the Ship (determined pursuant to Clause 22.26) remains less than one hundred forty three per cent (143%) of the aggregate of (i) the outstanding amount of the Facility and (ii) (in case the Master Agreement is utilized) the Maximum Permitted Swap Exposure;

"Approved Brokers" means the insurance brokers appointed by the Borrower with the Lender's prior approval;

"Approved Charter" means in respect of the Ship, a time charter to be made between the Borrower and a charterer acceptable to the Lender in its reasonable discretion, for a period of not less than twenty four (24) months, at such hire rate and on such other terms and conditions as may be acceptable to the Lender in its reasonable discretion;

"Approved Charter Assignment" means the first priority deed of assignment of the rights of the Borrower under the Approved Charter, made or, as the context may require, to be made by and between the Borrower and the Lender relative to the Approved Charter of the Ship, and acknowledged by the relevant charterer(s), in form and substance reasonably satisfactory to the Lender as the same may from time to time be amended, varied or supplemented;

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"Approved Charter Additional Facility Amount" means the amount equal to the difference between (a) the amount of the Facility Available for Drawdown if the Ship is under an Approved Charter, pursuant to Clause 3.01.01, and (b) the amount of the Facility Available for Drawdown if the Ship is not under an Approved Charter, pursuant to Clause 3.01.02, at the Drawdown Date.

"Approved Shareholders" means collectively the individuals declared to and acceptable by the Lender in its sole discretion, and in the singular means any of them;

"Auditors" means any first class firm of international accountants to be approved by the Lender;

"Availability Period" means the period commencing from the date of this Agreement and ending on the Termination Date;

"Balloon Payment" means a payment in the amount of Eleven million Four hundred Eighty Five thousand Dollars ($11,485,000) to be made by the Borrower to the Lender on the twentieth (201 ) and final Repayment Date together with the twentieth (201 ) and final Repayment Instalment;

"Banking Day" means a day on which banks and financial markets are open for business in all of Piraeus, New York and London and any other financial centre which the Lender (acting reasonably) may deem appropriate for the operation of the provisions of this Agreement;

"Borrower" means ULTRA TWO SHIPPING LTD, a corporation incorporated in the Republic of Liberia, having its registered office at 80 Broad Street, Monrovia, Liberia and Registration Number C-116832;

"Broken Funding Costs" means any amount that the Lender may certify as necessary to compensate the Lender for any loss (other than Taxes) incurred or to be incurred by the Lender as a consequence of repayment in respect of funds borrowed (or committed to be borrowed) or deposits taken (or committed to be taken) from third parties in connection with the Facility, or in liquidating or re-employing such funds or deposits for the remaining part of the then current Interest Period;

"Classification Society" means Bureau Veritas, or such other classification society member of the lACS as may be approved in writing by the Lender;

"Code" means the US Internal Revenue Code of 1986.

"CTA" means the Corporation Tax Act 2009.

4

"Commitment Letter" means the letter dated 23 October 2014, issued by the Lender addressed to the Guarantor and duly accepted by it on behalf of the Borrower and the other Security Parties on 10 November 2014;

"Compulsory Acquisition" means requisition for title or other compulsory acquisition, requisition, appropriation, expropriation, deprivation, forfeiture or confiscation for any reason of the 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;

"Confidential Information" means all information relating to any Security Party, the Finance Documents or the Facility of which the Lender becomes aware in its capacity as, or for the purpose of becoming, the Lender which is received by the Lender in relation to, or for the purpose of becoming the Lender under, the Finance Documents or the Facility from any Security Party or any of its advisers in whatever form, and includes information given orally and any document, electronic file or any other way of representing or recording information which contains or is derived or copied from such information but excludes information that:

(i)            is or becomes public information other than as a direct or indirect result of

any breach by the Lender of Clause 31(Confidentiality); or

(ii)            is identified in writing at the time of delivery as non-confidential by any Security Party or any of its advisers; or

(iii)            is known by the Lender before the date the information is disclosed to it by any Security Party or any of its advisers or is lawfully obtained by the Lender after that date, from a source which is, as far as the Lender is aware, unconnected with any Security Party and which, in either case, as far as the Lender is aware, has not been obtained in breach of, and is not otherwise subject to, any obligation of confidentiality;

"Confirmation" in relation to any continuing Designated Transaction, has the meaning ascribed to it in the Master Agreement;

"Construction Cost" means the amount of Twenty Eight million, Five hundred thousand Dollars (28,500,000$);

"Control" means in relation to a body corporate:

		(a)	the power (whether by way of ownership of shares, proxy, contract, agency or otherwise) to:

		(i)	cast, or control the casting of, more than fifty per cent (50%) of the maximum number of votes that might be cast at a general meeting of such body corporate; or

		(ii)	appoint or remove all, or the majority, of the directors or other equivalent officers of such body corporate; or

5

		(ii)	give directions with respect to the operating and financial polices of such body corporate with which the directors or other equivalent officers of such body corporate are obliged to comply; and/or

		(b)	the holding beneficially of more than fifty per cent (50%) of the issued share capital of such body corporate (excluding any part of that issued capital that carries no right to participate beyond a specified amount in a distribution of either profits or capital),

and "Controlled" shall be construed accordingly;

"Controlling person(s)" has the meaning defined under local or foreign tax laws, regulatory guidance or intergovernmental cooperation agreements.

"Consolidated Debt" means, in respect of an Accounting Period, the aggregate amount of Debt owed by the members of the Group (other than any Debt owing by any member of the Group to another member of the Group), as stated in the then most recent Accounting Information relevant to such Accounting Period;

"Corporate Security Parties" means those of the Security Parties, which are companies or corporations and not natural persons and, in the singular, means any of them;

"Debt" means, in relation to any member of the Group (the "debtor"):

		(a)	Financial Indebtedness of the debtor;

		(b)	liability for any credit to the debtor from a supplier of goods or services or under any instalment purchase or payment plan or other similar arrangement;

		(c)	contingent liabilities of the debtor (including without limitation any taxes or other payments under dispute) which have been or, under the Applicable Accounting Principles consistently applied, should be recorded in the notes to the Accounting Information;

		(d)	deferred tax of the debtor; and

		(e)	liability under a guarantee, indemnity or similar obligation entered into by the debtor in respect of a liability of another person who is not a member of the Group which would fall within (a) to (d) above if the references to the debtor referred to the other person;

"Default Rate" means the interest rate referred to in Clause 8.01;

6

"Delivery Date" means the date on which the Ship is delivered to the Borrower pursuant to the Purchase Documents;

"Designated Transaction" means a Transaction which, without prejudice to the provisions of Clause 4.03, fulfils the following requirements:

		a)	it is entered into by the Borrower pursuant to the Master Agreement with the Lender;

		b)	its purpose is the hedging of the Borrower's exposure under this Agreement to fluctuations in LIBOR arising from the funding of the Facility; and

		c)	it is designated by the Borrower, by delivery by the Borrower to the Lender of a notice of designation as a Designated Transaction for the purposes of the Finance Documents;

"Dollars" or "$" means the lawful currency for the time being of the United States of America;

"Drawdown" means the making of the Facility by the Lender to the Borrower;

"Drawdown Date" means the date requested by the Borrower for the Facility to be made available or (as the context requires) the date on which the Facility is actually made available;

"Early Termination Date" in relation to any continuing Designated Transaction, shall have the meaning ascribed to it in the Master Agreement;

"Earnings" means in relation to the Ship all freight, hire, passage monies and any other amounts whatsoever which may at any time be earned by or become payable to or for the account of the Borrower or its agents arising out of or as a result of the ownership, possession, management and/or operation of the Ship by the Borrower or its agents or under any charter (including, but without limitation the Approved Charter), contract of carriage or other contract (including a salvage or towage contract) for the use, operation or management of the Ship, all payments for any variation of any such contract and all damages for any breach of any such contract, all general average and salvage remuneration and all compensation for requisition for hire; !

"Earnings Account" means the interest-bearing deposit account opened or to be opened in the name of the Borrower to be maintained throughout the Security Period with the Lender in Piraeus, Greece or any other branch of the Lender in Greece or elsewhere as the Lender may reasonably designate, into which all the Earnings of the Ship are to be paid in accordance with clause 22.02, such account to include any substitute account or revised account or revised designation or number whatsoever and any deposit account to which monies from the Earnings Account may from time to time be paid on a time deposit basis;

7

"Earnings Account Charge" means the first priority assignment, pledge and charge to be granted by the Borrower to the Lender on the Earnings Account in form and substance satisfactory to the Lender, as the same may from time to time hereafter be amended or supplemented;

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

"Environmental Approvals" means any permit, licence, approval, ruling, certification, exemption or other authorisation relating to the Ship required under any applicable Environmental Laws;

"Environmental Claim" means:

		(a)	
any claim by or directive from any applicable governmental, judicial or regulatory authority alleging breach of, or non-compliance with any Environmental Laws or Environmental Approvals or otherwise howsoever relating to or arising out of an Environmental Incident; or

 

		(b)	any claim by any other person which relates to an Environmental Incident or to an alleged Environmental Incident;

and "claim" means a claim for damages, compensation, fines, penalties or any other payment of any kind whether or not similar to the foregoing; an order or direction to take, or not to take, certain action or to desist from or suspend certain action; and any form of enforcement or regulatory action, including the arrest or attachment of any asset;

"Environmental Incident" means:

		(a)	any release, discharge, disposal or emission of Environmentally Sensitive Material by or from a Relevant Ship; or

		(b)	any incident in which Environmentally Sensitive Material is released from a vessel other than a Relevant Ship and which involves a collision between a Relevant Ship and such other vessel or some other incident of navigation or operation, in either case, in connection with which a Relevant Ship is actually or potentially liable to be arrested, attached, detained or injuncted and/or a Relevant Ship and/or any owner and/or any other operator or manager thereof is at fault or otherwise liable to any legal or administrative action; or

		(c)	any other incident in which Environmentally Sensitive Material is released otherwise than from a Relevant Ship and in connection with which any Relevant Ship is actually or potentially liable to be arrested and/or where any

8

owner and/or any operator or manager of any Relevant Ship is at fault or otherwise liable to any legal or administrative action;

"Environmental Laws" means all national and international laws, ordinances, rules, regulations, rules of common law, conventions and agreements whatsoever pertaining to pollution or protection of human health or the environment, to the carriage of Environmentally Sensitive Material or to actual or threatened releases of Environmentally Sensitive Material (including without limitation, the United States Oil Pollution Act of 1990 and any comparable laws of the individual States of the United States of America);

"Environmentally Sensitive Material" means oil, oil products and any other substance (including any chemical, gas or other hazardous or noxious substance), which is (or is capable of being or becoming) polluting, toxic or hazardous;

"Event of Default" means any event referred to in Clause 24;

"Excess Risks" means in relation to the Ship the proportion of claims for general average and salvage charges and under the ordinary running-down clause, which is not recoverable in consequence of the value at which the Ship is assessed for the purpose of such claims exceeding her insured value;

"Facility" means the term loan facility in an amount of up to Nineteen million Nine hundred Fifty thousand Dollars ($19,950,000) to be made available to the Borrower by the Lender in one (1) advance pursuant to the terms of Clause 3 or, if the context may so require, so much thereof as shall for the time being be outstanding to the Lender hereunder;

"Facility Available for Drawdown if the Ship is under an Approved Charter" has the meaning attributed to it in Clause 3.01.01;

"Facility Available for Drawdown if the Ship is not under an Approved Charter" has the meaning attributed to it in Clause 3.01.02;

"FATCA" means:

(a)            sections 1471 to 1474 of the Code or any associated regulations or other official guidance;

(b)            any treaty, law, regulation or other official guidance enacted in any other jurisdiction, or relating to an intergovernmental agreement between the US and any other jurisdiction, which (in either case) facilitates the implementation of (a); or

(c)            any agreement pursuant to the implementation of (a) or (b) with the US Internal Revenue Service, the US government or any governmental or taxation authority in any other jurisdiction;

"FATCA Application Date" means:

9

(a)            in relation to a "withholdable payment" described in section 1473(1)(A)(i) of the Code (which relates to payments of interest and certain other payments from sources within the US), 1 July 2014;

(b)            in relation to a "withholdable payment" described in section 1473(1)(A)(ii) of the Code (which relates to "gross proceeds" from the disposition of property of a type that can produce interest from sources within the US), 1 January 2017; or

(c)            in relation to a "passthru payment" described in section 1471(d)(7) of the Code not falling within (a) or (b), 1 January 2017, 

or, in each case, such other date from which such payment may become subject to a deduction or withholding required by FATCA as a result of any change in FATCA after the date of this Agreement.

 

"FATCA Deduction" means a deduction or withholding from a payment under a Finance Document required by FATCA

"FATCA Exempt Party" means a Party that is entitled to receive payments free from any FATCA Deduction.

"FATCA FFI" means a foreign financial institution as defined in section 1471(d)(4) of the Code which, if the Lender is not a FATCA Exempt Party, could be required to make a FATCA Deduction.

"Finance Documents" means:

(a)            this Agreement; and

(b)            the Master Agreement; and

(b)            the Security Documents; and

(c)            any other document (whether creating an Encumbrance or not) which is executed at any time by any Security Party or any other person as security for, or to establish any form of subordination or priorities' arrangement in relation to any amount payable to the Lender under this Agreement or any of the documents referred to in this definition;

"Financial Indebtedness" means any indebtedness for or in respect of:

(a)            moneys borrowed and debit balances at banks or other financial institutions;

(b)            any acceptance under any acceptance credit or bill discounting facility (or dematerialised equivalent);

(c)            any note purchase facility or the issue of bonds, notes, debentures, loan stock or any similar instrument;

(d)            the amount of any liability in respect of any finance or capital lease;

(e)            receivables sold or discounted (other than any receivables to the extent they are sold on a non-recourse basis);

(f)            any Treasury Transaction (and, when calculating the value of that Treasury

Transaction, only the marked to market value (or, if any actual amount is due as a result of the termination or close-out of that Treasury Transaction, that amount) shall be taken into account);

10

(g)            any counter-indemnity obligation in respect of a guarantee, bond, standby or documentary letter of credit or any other instrument issued by a bank or financial institution in respect of (i) an underlying liability of an entity which is not a Security Party which liability would fall within one of the other sections of this definition or (ii) any liabilities of any Security Party relating to any post-retirement benefit scheme;

(h)           any amount raised by the issue of shares which are redeemable (other than at the option of the issuer) before the Termination Date or are otherwise classified as borrowings under standard accounting principles;

(i)            any amount of any liability under an purchase agreement if (i) one of the primary reasons advance or deferred behind entering into the agreement is to raise finance or to finance the acquisition or construction of the asset or service in question or (ii) the agreement is in respect of the supply of assets or services and payment is due more than 30 days after the date of supply;

(j)            any amount raised under any other transaction (including any forward sale or purchase, sale and sale back or sale and leaseback agreement) having the commercial effect of a borrowing or otherwise classified as borrowings under standard accounting principles; and

(k)           the amount of any liability in respect of any guarantee or indemnity for any of the items referred to in (a) to (j).

"Fleet Book Value" means at the end of a relevant period the aggregate book value of the Fleet Vessels less depreciation as stated in the most recent Accounting Information of the Group delivered pursuant to Clause 20.01;

"Fleet Market Value" means at the date of calculation the aggregate of the Market Values of the Fleet Vessels;

"Fleet Vessels" means all of the vessels (including but not limited to the Ship) from time to time wholly owned by members of the Group (including, without limitation, the Borrower) and, in the singular means any of them;

"General Assignment" means the first priority deed of assignment made or, as the context may require, to be made by and between the Borrower and the Lender relative to the Insurances, the Earnings and the Requisition Compensation of the Ship in form and substance satisfactory to the Lender as the same may from time to time be amended, varied or supplemented;

"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 or tribunal 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;

"Group" means the Guarantor and its Subsidiaries (whether direct or indirect and including without limitation the Borrower and each other Corporate Security Party)

11

from time to time during the Security Period and "members of the Group" shall be construed accordingly;

"Guarantee" means the guarantee in respect of the Borrower' obligations under this Agreement and the other Finance Documents, to be executed by the Guarantor in favour of the Lender, in form and substance satisfactory to the Lender, as the same may from time to time be amended, varied or supplemented;

"Guarantor" means EUROSEAS LTD.,a corporation organised and existing under the Laws of the Marshall Islands having its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands and each other company or person, who may from time to time guarantee the obligations of the Borrower hereunder and, in the plural, means all of them;

"Holding" means, in relation to the Guarantor, the beneficial holding by the Approved Shareholder of the issued share capital of the Guarantor [excluding any part of that issued capital that carries (i) no right to participate beyond a specified amount in a distribution of either profits or capital and/or (ii) no power (whether by way of ownership of shares, proxy, contract, agency or otherwise) to cast, or control the casting of votes at a general meeting of the Guarantor];

"Indebtedness" means the aggregate of the Facility and interest thereon and any and all moneys, liabilities and obligations (whether actual or contingent, whether existing or hereafter arising, whether or not for the payment of money, and including, without limitation, the Master Agreement Liabilities, Broken Funding Costs (if any), and any obligation or liability to pay damages) which are now or which may at any time and from time to time hereafter be due, owing, payable or incurred or expressed to be due, owing, payable or incurred from any Security Party (whether as principal, surety or otherwise) to the Lender under this Agreement and the other Finance Documents and/or in connection herewith and/or therewith (as conclusively - in the absence of manifest error- certified by the Lender);

"Insurance Documents" means all slips, cover notes, contracts, policies, certificates of entry or other insurance documents evidencing or constituting the Insurances from time to time in effect;

"Insurances" means all policies and contracts of insurance (which expression includes all entries of the Ship in a protection and indemnity or mutual hull or war risks association) or such other arrangements by way of insurance which are from time to time taken out or entered into in respect of or in connection with the Ship pursuant to this Agreement and including all benefits thereof including all claims of whatsoever nature and return of premiums;

"Insurers" means the underwriters, insurance companies, mutual insurance associations with or by which the Insurances are effected;

12

"Interest Determination Date" means the Banking Day, which is two (2) Banking Days prior to the commencement of an Interest Period;

"Interest Payment Date" means each day on which interest is payable in accordance with Clause 7, provided that if any such day is not a Banking Day, the relevant Interest Payment Date shall be the next succeeding day which is a Banking Day, unless such next succeeding Banking Day falls into another calendar month, in which event, the relevant Interest Payment Date shall be the immediately preceding Banking Day;

"Interest Period" means each of the successive periods determined in accordance with Clause 6 of this Agreement during which the Facility or any part thereof is outstanding and for which an Interest Rate in respect thereof is to be established hereunder;

"Interest Rate" means (save as provided in Clause 9) the rate(s) of interest applicable to the Facility (or any part thereof) during each Interest Period in respect thereof which is/are conclusively (in the absence of manifest error) certified by the Lender to the Borrower to be the aggregate of (a) the Applicable Margin and (b) LIBOR and (c) the Mandatory Cost (if any);

"ISM Code" means, in relation to its application to the Manager, the Borrower, the Ship and her operation:

		(a)	'The International Management Code for the Safe Operation of Ships and for Pollution Prevention', currently known or referred to as the 'ISM Code', adopted by the Assembly of the International Maritime Organisation by Resolution A.741(18) on 4 November 1993 and incorporated on 19 May 1994 into chapter IX of the International Convention for the Safety of Life at Sea 1974(SOLAS 1974); and

		(b)	all further resolutions, circulars, codes, guidelines, regulations and recommendations which are now or in the future issued by or on behalf of the International Maritime Organisation or any other entity with responsibility for implementing the ISM Code, including without limitation, the 'Guidelines on implementation or administering of the International Safety Management (ISM) Code by Administrations produced by the International Maritime Organisation pursuant to Resolution A. 788(19) adopted on 25 November 1995,

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

"ISM Code Documentation" includes, in relation to the Ship:

		(a)	the document of compliance (DOC) and safety management certificate (SMC) issued pursuant to the ISM Code within the periods specified by the ISM Code; and

13

		(b)	all other documents and data which are relevant to the ISM SMS and its implementation and verification which the Lender may require; and

		(c)	any other documents which are prepared or which are otherwise relevant to establish and maintain compliance of the Ship or the compliance of the Borrower and the Manager with the ISM Code which the Lender may require;

"ISM SMS" means, in relation to the Ship, the safety management system for the Ship which is required to be developed, implemented and maintained by the Borrower under the ISM Code;

"ISPS Code" means the International Ship and Port Facility Security Code adopted by the International Maritime Organization Assembly as the same may have been or may be amended or supplemented from time to time;

"ISPS Code Documentation" includes in relation to the Ship:

		(a)	the International Ship Security Certificate issued pursuant to the ISPS Code within the periods specified by the ISPS Code; and

		(b)	all other documents and data which are relevant to the ISPS Code and its implementation and verification which the Lender may require;

"ITA" means the Income Tax Act 2007;

"Lender" means HSBC BANK PLC, a banking company duly incorporated under the laws of England whose registered office is at 8 Canada Square, London E14 5HQ, United Kingdom, and shall include its successors and assigns;

"Leverage Ratio" means, in respect of an Accounting Period, the ratio of the Consolidated Debt (as stated in the then most recent Accounting Information) to the Market Value Adjusted Total Assets of the Group, relevant to such Accounting Period;

"LIBOR" means, for an Interest Period:

		(a)	the applicable Screen Rate; or

		(b)	(if no Screen Rate is available for any Interest Period) the arithmetic mean of the rates (rounded upwards to four decimal places) quoted to the Lender in the London interbank market, at 11.00 a.m. on the Interest Determination Date for that Interest Period for the offering of deposits in Dollars in an amount comparable to the Facility (or any relevant part of the Facility) and for a period comparable to the relevant Interest Period and, if any such rate is below zero, LIBOR will be deemed to be zero.

"Loan Account" means collectively the account or accounts maintained by the Lender referred to in Clause 13;

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"Major Casualty" means any casualty to the Ship in respect of which the claim or the aggregate of the claims against all insurers, before adjustment for any relevant franchise or deductible, exceeds Seven hundred thousand Dollars ($700,000) or the equivalent in any other currency;

"Management Agreement" means in relation to the Ship, the management agreement in respect of the Ship made or to be made by and between (i) the Borrower and (ii) the Manager on terms acceptable to the Lender, as the same may from time to time be amended, varied or supplemented;

"Manager" means EUROBULK LTD., a company organised and existing under the laws of Liberia, with its registered office at 80 Broad Street, Monrovia, Liberia, having established an office in Greece under Law 89/67 (as in force) at 4 Messogiou & Evropis Street, Marousi 15124, Athens, Greece or any other company that may approved by the Lender as the manager of the Ship, in the Lender's sole discretion;

"Manager's Undertakings" means, in relation to the Ship, a letter of undertaking including, where appropriate, an assignment of any obligatory insurances, executed or, as the context may require, to be executed by the Manager in favour of the Lender, on such terms as the Lender may approve or require;

"Mandatory Cost" means the cost imputed to the Lender of compliance with the mandatory liquid asset requirements and/or the banking supervision or any other costs whatsoever imposed by national or international regulations.

"Market Value" means in respect of each of the Fleet Vessels (including without limitation the Ship), the value thereof at each relevant time determined in accordance with the provisions of Clause 22.26;

"Market Value Adjusted Net Worth" means at any relevant time the amount obtained by deducting from the Market Value Adjusted Total Assets the amount of the Total Liabilities;

"Market Value Adjusted Total Assets" means at any relevant time the Total Assets as adjusted by replacing the Fleet Book Value with the Fleet Market Value;

"Material Adverse Effect" means in the reasonable opinion of the Lender a material adverse effect on:

(a)            the business, operations, property, condition (financial or otherwise) or prospects of any Security Party; or

(b)            the ability of any Security Party to perform its payment obligations under any Finance Document; or

(c)            the validity or enforceability of, or the effectiveness or ranking of any Encumbrance granted or purporting to be granted pursuant to any of, the Finance Documents or the rights or remedies of the Lender under any of the Finance Documents.

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"Master Agreement" means the master agreement (on the 2002 ISDA (Multicurrency — Crossborder) form) and the Schedule thereto, both made or to be made between the Borrower and the Lender and includes all Designated Transactions from time to time entered into and Confirmations from time to time exchanged thereunder, as the same may from time to time be amended, varied or supplemented;

"Master Agreement Assignment" means in relation to the Master Agreement, the assignment of that Master Agreement in favour of the Lender, executed or, as the context requires, to be executed by the Borrower in form and substance satisfactory to the Lender as security for the Indebtedness, as the same may from time to time be amended, varied or supplemented;

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

"Maximum Permitted Swap Exposure" means an amount not exceeding One million Dollars ($1,000,000);

"Mortgage" means, in relation to the Ship, the first preferred Mortgage or the first priority statutory mortgage and a deed of covenants collateral thereto (as the case may be) on the Ship, granted or, as the context may require, to be granted by the Borrower in favour of the Lender to secure the due payment of the Indebtedness in form and substance satisfactory to the Lender, as the same may from time to time be amended, varied or supplemented;

"NASDAQ" means the National Association of Securities Dealers Automated Quotation;

"Nomination Date" means the Banking Day which is two (2) Banking Days prior to the commencement of an Interest Period;

"Notice of Drawdown" means the written notice given by the Borrower to the Lender pursuant to Clause 5.01.04 substantially in the form set out in Schedule 1 hereto (or in any other form which the Lender may require);

"Original Jurisdiction" means, in relation to a Security Party, the jurisdiction under whose laws that Security Party is incorporated as at the date of this Agreement;

"Party" means a party to this Agreement;

"Permitted Liens" means any supplier's, carrier's, seamen's, workman's or similar lien arising in the ordinary course of business automatically by statute or by operation of law and not by way of contract in respect of amounts not yet due and payable but

16

excluding any lien arising from any default or omission of the Security Parties or any of them;

"Potential Event of Default" means any event, which with the giving of notice or passage of time or the combination of both or the fulfilment of any other condition may become an Event of Default;

"Proceeds" means the proceeds paid under the terms of this Agreement and the other Finance Documents, or any of them (including but not limited to the proceeds of any sale of the Ship, the Earnings and the Insurances), the proceeds from the enforcement of any of the Finance Documents, and following an Event of Default which is continuing any moneys to the credit of the Earnings Account and the Retention Account or either of them;

"Prohibited Person" means any person (whether designated by name or by reason of being included in a class of persons) against whom Sanctions are directed;

"Protection and Indemnity Risks" means the usual risks covered by a protection and indemnity association that is a member of the International Group of Protection and Indemnity Associations, including the proportion not otherwise recoverable in case of collision under the ordinary running-down clause;

"Purchase Documents" means collectively the shipbuilding contract dated 30 November 2013, entered by and among Yangzhou Dayang Shipbuilding Co., Ltd and Sumec Marine Co., Ltd. both of the People's Republic of China as joint and several sellers and the Borrower as buyer and all other contracts, bills of sale and other documents whatsoever made or to be made, whereby the Borrower contracted to buy and pursuant to which the Borrower will acquire title of the Ship, as they may be amended, supplemented or varied from time to time with the prior consent of the Lender, such consent not to be unreasonably withheld;

"Related Fund" means, in relation to a fund (the "first fund"), a fund which is managed or advised by the same investment manager or investment adviser as the first fund, or, .if it is managed by a different investment manager or investment adviser, a fund whose investment manager or investment adviser is an Affiliate (as such term is defined in Clause 31) of the investment manager or investment adviser of the first fund.

"Relevant Jurisdiction" means, in relation to a Security Party:

		(a)	its Original Jurisdiction;

		(b)	any jurisdiction where any asset subject to or intended to be subject to a Finance Document to be executed by it is situated;

		(c)	any jurisdiction where it conducts its business; and

		(d)	the jurisdiction whose laws govern the perfection of any of the Finance Documents entered by it;

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"Relevant Ship" means all Fleet Vessels, (including without limitation the Ship), and any other ship from time to time owned, managed or crewed by, or demise or bareboat chartered to the Borrower, the Manager or any other member of the Group;

"Repayment Dates" means, collectively (i) the date falling three (3) months from the Drawdown Date and (ii) each of the eighteen (18) dates falling at consecutive three monthly intervals thereafter and (iii) the twentieth (20th) date falling two (2) months after the immediately preceeding (nineteenth) Repayment Date; provided that if any such day is not a Banking Day the relevant Repayment Date shall be the next succeeding day which is a Banking Day unless such next succeeding Banking Day falls in another calendar month in which event the relevant Repayment Date shall be the immediately preceding Banking Day;

"Repayment Instalments" means, in respect of the Facility, collectively the Repayment Instalments referred to in Clause 11.01 and in the singular means any one of them;

"Requisition Compensation" means all compensation payable by reason of any Compulsory Acquisition of the Ship;

"Retention Account" means an account to be opened in the name of the Borrower pursuant to Clause 27 where monies shall be deposited in accordance with Clause 27, such account to include any substitute account or revised account or revised designation or number whatsoever and any deposit account to which monies from such account may from time to time be paid on a time deposit basis;

"Retention Account Charge" means the assignment, pledge and charge to be granted by the Borrower to the Lender on the Retention Account in form and substance satisfactory to the Lender, as the same may from time to time be amended, varied or supplemented;

"Sanctions" means any sanctions, embargoes, freezing provisions, prohibitions or other restrictions relating to trading, doing business, investment, exporting, financing or making assets available (or other activities similar to or connected with any of the forgoing):

		(a)	imposed by any law or regulation of the United Kingdom, the Council of the European Union, the United Nations or its Security Council or the United States of America, whether or not any Security Party or any other member of the Group is legally bound to comply with the forgoing; or

		(b)	otherwise imposed by any law or regulation by which any Security Party, or any other member of the Group, is bound or, as regards a regulation, compliance with which is reasonable in the ordinary course of business of any Security Party or any other member of the Group;

"Screen Rate" means in relation to LlBOR, the London interbank offered rate administered by the ICE Benchmark Administration Limited (or any other person which takes over the administration of that rate) for the relevant currency and period

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displayed on pages LIBOR01 or LIBOR02 of the Reuters screen (or any replacement Reuters page which displays that rate) or on the appropriate page of such other information service which publishes that rate from time to time in place of Reuters. If such page or the service ceases to be available, the Lender may specify another page or service displaying the appropriate rate after consultation with the Borrower.

"Security Documents" means collectively the Mortgage, the General Assignment, the Approved Charter Assignment, the Account Charges, the Manager's Undertaking, the Master Agreement Assignment, the Guarantee and any other agreement or document that may be executed at any time by any Security Party or any other person as security for all or any part of the Indebtedness, as each of them may from time to time be amended, varied or supplemented and in the singular means any of them;

"Security Parties" means each party to the Finance Documents (other than the Lender) and in the singular means any of them;

"Security Period" means the period during which the Finance Documents or any of them remain in effect and ending when the Indebtedness is paid in full to the satisfaction of the Lender;

"Security Requirement" means the amount in Dollars (as certified by the Lender whose certificate shall, in the absence of manifest error, be conclusive and binding on the Borrower and the Lender) which is at least equal to:

		(i)	if the Master Agreement is utilized and for as long as it is utilized, One hundred Twenty Five per cent (125%) of the aggregate amount of the Facility and the Maximum Permitted Swap Exposure at any relevant time; or

		(ii)	if the Master Agreement is not utilized, One hundred Thirty per cent (130%) of the Facility at any relevant time;

PROVIDED HOWEVER that for as long as the Holding by the Approved Shareholders in the Guarantor falls below twenty per cent (20%) but remains above ten per cent (10%), the Security Requirement will, at all times, (unless the Lender provides its prior written consent permitting otherwise) be an amount in Dollars (as certified by the Lender whose certificate shall, in the absence of manifest error, be conclusive and binding on the Borrower and the Lender) equal to One hundred Sixty Six point Five per cent (166.5%) of the aggregate amount of (i) the Facility and (ii) (in case the Master Agreement is utilized) the Maximum Permitted Swap Exposure;

"Security Value" means the amount in Dollars (as certified by the Lender whose certificate shall, in the absence of manifest error, be conclusive and binding on the Borrower and the Lender) which is, at any relevant time, the aggregate of (a) the Market Value of the Ship as most recently determined in accordance with Clause 22.26 and (b) the market value of any additional security for the time being provided to the Lender;

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"Ship" means the bulk carrier of 63,500 DWT with Hull Nr DY161, currently constructed pursuant to the shipbuilding contract dated 30 November 2013, entered by and among Yangzhou Dayang Shipbuilding Co., Ltd and Sumec Marine Co., Ltd. both of the People's Republic of China as joint and several sellers and the Borrower as buyer, which, upon her deliver to the Borrower will be registered in the ownership of the Borrower at the Port of Monrovia, Liberia, under the Liberian flag, or under such other flag as may be acceptable to the Lender in its reasonable discretion;

"Subject Documents" means all of the Finance Documents, the Approved Charter, the Purchase Documents and the Management Agreement (none to be amended, varied, supplemented or modified without the prior consent of the Lender, such consent not to be unreasonably withheld in relation to the Approved Charter) and together with (a) any other instrument, document or memorandum, scheduled to any of the documents referred to above, and (b) any notice, consent or acknowledgement referred to in or required pursuant to any of the documents referred to above and (c) any document, instrument or memorandum which secures any of the obligations of the Borrower under any of the Finance Documents or under any other Subject Document;

"Substantial Owners" has the meaning defined under local or foreign tax laws, regulatory guidance or intergovernmental cooperation agreements.

"Subsidiary" of a person means: (a) any other person directly or indirectly Controlled by that person; or (b) any other person whose dividends or distributions on ordinary voting share capital that person is entitled to receive is more than fifty per cent (50%); or (c) any entity (whether or not so Controlled) treated as a Subsidiary in the financial statements of that person from time to time;

"Swap Exposure" means, at any relevant date, the amount certified by the Lender (whose certificate shall in the absence of manifest error be conclusive and binding on the Borrower and the Lender) to be the aggregate net amount in Dollars which would be payable by the Borrower to the Lender, under (and calculated in accordance with) section 6(e) (Payments on Early Termination) of the Master Agreement if an Early Termination Date had occurred on the relevant date in relation to all continuing Designated Transactions entered into between the Borrower and the Lender;

"Tax Authority" means any local or foreign regulatory or tax authority.

"Taxes" means all present and future taxes, levies, imposts, duties, charges, fees, deductions and withholdings, and any restrictions or conditions resulting in a charge (other than taxes on the overall net income of the Lender) and "Tax" and "Taxation" shall be construed accordingly;

"Termination Date" means the 30th April 2016 or such later date as the Lender may approve in writing;

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"Total Assets" means at any relevant time the total assets (including cash and cash equivalents) of the Group as stated in the most recent combined Accounting Information of the Group;

"Total Liabilities" means at any relevant time the total liabilities of the Group as stated in the most recent combined Accounting Information of the Group;

"Total Loss" means in relation to the Ship:

		(a)	the actual or constructive or compromised or arranged or agreed total loss of the Ship; or

		(b)	the Compulsory Acquisition of the Ship; or

		(c)	the hijacking, theft, condemnation, capture, seizure, arrest, detention or confiscation of the Ship (other than where the same amounts to the Compulsory Acquisition of the 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 Borrower from such hijacking, theft, condemnation, capture, seizure, arrest, detention or confiscation within thirty (30) days after the occurrence thereof or such lesser period provided in the War Risks Insurances;

"Transaction" has the meaning ascribed to it in the Master Agreement.

"Treasury Transactions" means any derivative transaction entered into in connection with protection against or benefit from fluctuation in any rate or price;

"US GAAP" means generally accepted accounting principles adopted in the United States;

"US Tax Obligor" means (i) a Security Party which is resident for tax purposes in the United States of America; or (ii) a Security Party some or all of whose payments under the Finance Documents are from sources within the United States for US federal income tax purposes;

"VAT" means (i) any tax imposed in compliance with the Council Directive of 28 November 2006 on the common system of value added tax (EC Directive 2006/112); and (ii) any other tax of a similar nature, whether imposed in a member state of the European Union in substitution for, or levied in addition to, such tax referred to in (a), or imposed elsewhere.

"War Risks" includes all risks referred to in the Institute Time Clauses (Hulls) (1/10/83) and (1/11/95) including, but not limited to, the risk of mines, blocking and trapping, missing vessel, confiscation and all risks excluded by Clause 22 of the Institute Time Clauses (Hulls) (1/10/83) or Clause 23 of the Institute Time Clauses (Hulls) (1/10/83) or Clause 24 of the Institute Time Clauses (Hulls) (1/11/1995)

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	2.02	In this Agreement clause headings are for ease of reference only and shall be disregarded in the construction of this Agreement.

	2.03	In this Agreement unless the context otherwise requires:

	2.03.01	words importing the singular number shall include the plural and vice versa;

	2.03.02	any reference to a document or instrument is a reference to that document or instrument as the same may have been, or may from time to time be amended or supplemented;

	2.03.03	the liquidation, winding-up or dissolution of a company or body corporate or the appointment of a receiver, administrative receiver, manager or administrator of or in relation to a company or corporation or any of its assets shall be construed so as to include any equivalent or analogous proceedings under the laws of the jurisdiction in which it is incorporated or any jurisdiction in which it carries on business or has assets or liabilities;

	2.03.04	references to persons include any individual, partnership, firm, trust, body corporate, government, governmental body, authority, agency, unincorporated body of persons or association;

	2.03.05	a reference to any enactment or 'statutory provision include any enactment or statutory provision which amends, extends, consolidates or replaces the same or which has been amended, extended, consolidated or replaced by the same and shall include any orders, regulations, codes of practice, instruments or other subordinated legislation made under the relevant enactment or statutory provision; and

	2.03.06	"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 (a) 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 (b) 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; and

	2.03.07	the words "herein", "hereto" and "hereunder" refer to this Agreement as a whole and not to the particular Clause or Schedule in which the words may be used.

	3	THE FACILITY — AVAILABILITY

	3.01	The Lender hereby agrees to make available to the Borrower, subject to the terms and the conditions hereof, the Facility in an amount equal to the lesser of:

	3.01.01	In case the Ship is, on the Drawdown Date, under an Approved Charter:

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	3.01.01.1	Nineteen million Nine hundred Fifty thousand Dollars ($19,950,000) and

	3.01.01.2	seventy per cent (70%) of the Construction Cost and

	3.01.01.3	seventy per cent (70%) of the Market Value of the Ship on the Drawdown Date (determined pursuant to Clause 22.26)

(called the "Facility Available for Drawdown if the Ship is under an Approved Charter")

or

	3.01.02	In case the Ship is not, on the Drawdown Date, under an Approved Charter:

	3.01.02.1	Eighteen million Five hundred Twenty Five thousand Dollars ($18,525,000) and

	3.01.02.2	sixty five per cent (65%) of the Construction Cost and

	3.01.02.3	sixty five per cent (65%) of the Market Value of the Ship on the Drawdown Date (determined pursuant to Clause 22.26)

(called the "Facility Available for Drawdown if the Ship is not under an Approved Charter")

in one (1) advance, for the purpose of assisting the Borrower in partly financing the Construction Cost of the Ship.

	3.02	The Borrower undertakes to apply the proceeds of the Facility for the purpose stated herein; the Lender shall be entitled (but not obliged) to monitor the application of such proceeds.

	3.03	Subject as herein provided, the Facility is available to be drawn by the Borrower only during the Availability Period. The Facility or any part thereof which remains undrawn at the close of business in Athens on the expiration of the Availability Period shall be automatically cancelled.

	4	HEDGING STRATEGY

	4.01	The Borrower acknowledges the significance of addressing the interest rate risk inherent in this Agreement in cooperation with the Lender. Along these lines:

	4.01.01	the Borrower undertakes to establish, together with the Lender, mechanisms to monitor the interest rate exposure and evaluate available hedge strategies;

	4.01.02	the Borrower invites the Lender to provide on a regular basis hedging ideas and products; and

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	4.01.03	the Borrower undertakes that it may enter into a Designated Transaction so as to limit its exposure under this Agreement to interest rate fluctuations on terms and conditions mutually agreed between the Borrower and the Lender.

	4.02	Any Designated Transaction shall be entered into on the basis of the Master Agreement and pursuant to the strategy set out herein and shall be concluded with the Lender.

	4.03	No Designated Transaction may be entered into by the Borrower:

	4.03.01	if there is a Material Adverse Effect in relation to any one or more of the Security Parties or any other member of the Group and/or if any other Event of Default or a Potential Event of Default occurs;

	4.03.02	for a period longer than five (5) years, commencing from the Drawdown Date;

	4.03.03	for an amount which, when aggregated with the amount of any other Designated Transaction entered by the Borrower will not, at any relevant time, exceed the amount of the Facility, as reducing from time to time thereafter pursuant to Clause 11.01 so that the notional principal amount of the continuing Designated Transactions does not (taking into account the scheduled amortisation) exceed at any relevant time the amount of the Facility as reducing from time to .time thereafter pursuant to Clause 11.01;

	4.03.04	if the Lender determines that at the relevant time the Swap Exposure exceeds, or might exceed as a result thereof, the Maximum Permitted Swap Exposure;

	4.04	Notwithstanding any provision of this Agreement and/or the Master Agreement to the contrary, if for any reason a Designated Transaction has been entered into but the Facility is not drawn under this Agreement then, subject to clause 4.05, the Lender shall be entitled but not obliged (and, where relevant, may do so without the consent of the Borrower where it would otherwise be required whether under the Master Agreement or otherwise) to amend, supplement, cancel, net out, terminate, liquidate, transfer or assign all or any part of the rights, benefits and obligations created by such Designated Transaction and/or the Master Agreement and/or to obtain or re-establish any hedge or related trading position in any manner and with any person the Lender in its absolute discretion may determine.

	4.05	If a Designated Transaction has been entered into but the Facility is not drawn down under this Agreement and the Lender in its absolute discretion agrees, following a written request of the Borrower, that the Borrower may be permitted to maintain all or part of a Designated Transaction, the Borrower shall, within fifteen (15) days of being notified by the Lender of such requirement in writing, provide the Lender with, or procure the provision to the Lender of, such additional security as shall in the opinion of the Lender be adequate to secure the performance of such Designated Transaction, whichadditional security shall take such form and be constituted by such documentation, as the Lender in its absolute discretion may approve or require.

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	4.06	The Borrower shall on the first written demand of the Lender indemnify the Lender in respect of all losses, costs and expenses (including, but not limited to, legal costs and expenses) incurred or sustained by the Lender as a consequence of or in relation to the effecting of any matter or transactions referred to in Clauses 4.04 and 4.05.

	4.07	Without prejudice to or limitation of the obligations of the Borrower under Clause 4.06, in the event that the Lender exercises any of its rights under Clauses 4.04 or 4.05 and such exercise results in all or part of a Designated Transaction being terminated such termination shall be treated under the Master Agreement in the same manner as if it were a Terminated Transaction (as defined in section 14 of the Master Agreement) effected by the Lender after an Event of Default (as so defined in that section 14) by the Borrower and, accordingly, the Lender shall be permitted to recover from the Borrower a payment for early termination calculated in accordance with the provisions of section 6(e)(i) of the Master Agreement.

	4.08	In the event that the Lender fails to enter into a Designated Transaction with the Borrower, the Lender shall not be liable to the Borrower to enter into such Designated Transaction nor to compensate the Borrower for such failure.

	4.09	The Borrower hereby undertakes to ensure that, throughout the Security Period any and all payments by the Lender to the Borrower under each Designated Transaction are paid to the Earnings Account.

	5	NOTICE OF DRAWDOWN

	5.01	Subject to:

	5.01.01	the receipt by the Lender of the documents and satisfaction of the other conditions specified in Clauses 19.01 and 19.03 in form and substance satisfactory to the Lender and its legal advisers on or before the Drawdown Date; and

	5.01.02	no Event of Default or a Potential Event of Default having occurred; and

	5.01.03	the representations and warranties set out in Clause 17 (updated mutatis mutandis to the Drawdown Date) being true and/or correct; and

	5.01.04	the receipt by the Lender of the Notice of Drawdown in the form set out in Schedule 1 hereto not later than 11.00 a.m. (London time) two (2) Banking Days prior to the Drawdown Date setting out, inter alia, the date of the proposed Drawdown,

the Facility will be made available to the Borrower in accordance with and on the terms and conditions. of this Agreement.

	5.02	The Notice of Drawdown shall be irrevocable and the Borrower shall be bound to borrow in accordance with such notice.

	5.03	On the payment of the Facility the Borrower shall sign an Acknowledgement in the form set out in Schedule 2 hereto.

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	5.04	If the Borrower gives the Notice of Drawdown pursuant to Clause 5.01.04 and the Lender makes arrangements on the basis of such notice to acquire Dollars in the London Interbank Market to fund the Facility or any part thereof and the Borrower is not permitted or otherwise fails to borrow in accordance with such Notice of Drawdown (either on account of any condition precedent not being fulfilled or otherwise) the Borrower shall indemnify the Lender against any damages, losses or expenses which the Lender may incur (either directly or indirectly) as a consequence of the failure by the Borrower to borrow in accordance with such Notice of Drawdown.

	6	INTEREST PERIODS

	6.01	Subject as provided in Clause 6.02, the Interest Periods applicable to the Facility shall (subject to market availability) be periods of a duration of three (3) or six (6) or twelve (12) months (or such other periods as the Lender and the Borrower may agree) as selected by the Borrower by written notice to be received by the Lender not later than 11.00 a.m. (London time) on the relevant Nomination Date;

	6.02	Notwithstanding the provisions of Clause 6.01:

	6.02.01	the initial Interest Period in respect of the Facility shall commence on the Drawdown Date and shall end on the expiry date thereof and each subsequent Interest Period shall commence on the expiry of the preceding Interest Period in respect thereof;

	6.02.02	if any Interest Period would otherwise end on a day which is not a Banking Day, that Interest Period shall be extended to the next succeeding day which is a Banking Day unless such next succeeding Banking Day falls in another calendar month in which event that Interest Period shall end upon the immediately preceding Banking Day;

	6.02.03	if any Interest Period commences on the last Banking Day in a calendar month or if there is no numerically corresponding day in the month in which that Interest Period ends, that Interest Period shall end on the last Banking Day in that later month;

	6.02.04	where any Repayment Date occurs other than at the end of an Interest Period there shall in respect of that part of the Facility equivalent to the amount of the Repayment Instalment falling due on such Repayment Date be a separate Interest Period expiring on such Repayment Date and the Interest Rate relating to such part shall be fixed separately;

	6.02.05	no Interest Period shall extend beyond the final Repayment Date;

	6.02.06	if the Borrower fails to select an Interest Period in accordance with the above, such Interest Period shall be of three (3) months duration or of such other duration as the Lender in its sole discretion may select; and

	6.02.07	save as provided in Clause 6.02.04, the Borrower shall not select more than one Interest Periods at any one time.

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	7	INTEREST

	7.01	Subject to the terms of this Agreement the Borrower shall pay to the Lender interest in respect of the Facility (or the relevant part thereof) accruing at the Interest Rate for each Interest Period relating thereto in arrears on the last day of each Interest Period; provided that if any Interest Period is of a duration longer than three (3) months, accrued interest in respect of the Facility (or the relevant part thereof) shall be paid every three (3) months during such Interest Period and on the last day of such Interest Period.

	7.02	Interest shall be calculated on the basis of the actual number of days elapsed and a three hundred and sixty (360) day year.

	7.03	The Lender will calculate and determine the Interest Rate applicable for the Facility, each determination being promptly notified by the Lender to the Borrower at the beginning of each Interest Period in respect thereof. The Lender's certificate as to the Interest Rate applicable shall be final and (except in the case of manifest error) binding on the Borrower and the other Security Parties.

	8	DEFAULT INTEREST

	8.01	In the event of a failure by the Borrower to pay any amount on the date on which such amount is due and payable pursuant to this Agreement and/or any one or more of the other Finance Documents (unless otherwise specifically provided in any Finance Document) and irrespective of any notice by the Lender or any other person to the Borrower in respect of such failure, the Borrower shall pay interest on such amount on demand from the date of such default up to the date of actual payment (as well after as before judgment) at the rate per annum which is the aggregate of (a) Two per cent (2%) and (b) the Applicable Margin and (c) the rate at which the Lender in accordance with its normal practice is offered deposits in Dollars in the London Interbank Market for such period as the Lender may select at or about 11.00 a.m. (London time) on the Banking Day immediately following that on which the Lender becomes aware of such failure and (d) any Mandatory Cost and, so long as such failure continues, such rate shall be recalculated on the same basis thereafter.

	8.02	Any interest which shall have accrued under Clause 8.01 in respect of an unpaid amount shall be compounded with the overdue amount at the end of each Interest Period applicable to that overdue amount and shall be due and payable at the end of the period by reference to which it is calculated or such other date or dates as the Lender may specify by written notice to the Borrower.

	8.03	Clauses 7.02 and 7.03 shall apply to the calculation and determination of interest on amounts in default.

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	9	SUBSTITUTE BASIS

	9.01	If the Lender determines (which determination - in the absence of manifest error - shall be conclusive) that:

	9.01.01	at 11.00 a.m. (London time) on any Interest Determination Date the Lender was not being offered by banks in the London Interbank Market deposits in Dollars in the required amount and for the required period; or

	9.01.02	LIBOR would not adequately reflect the cost to the Lender of making, funding or maintaining the Facility or any part thereof for the duration of the next succeeding Interest Period; or

	9.01.03	by reason of circumstances affecting the London Interbank Market such deposits are not available to the Lender in such market; or

	9.01.04	adequate and reasonable means do not or will not exist for the Lender to ascertain the Interest Rate applicable to the next succeeding Interest Period; or

	9.01.05	Dollars will or may not continue to be freely transferable;

then, and in any such case the Lender shall give a written notice of any such event to the Borrower and in case any of the above occurs on the Interest Determination Date prior to the Drawdown Date the Borrower's right to borrow the Facility or any part thereof shall be suspended during the continuation of such circumstances.

	9.02	If, however, any of the events described in Clause 9.01 occurs on any other Interest Determination Date relative to the Facility or any part thereof, then the duration of the relevant Interest Period(s) shall be up to one (1) month and during such Interest Period the Interest Rate applicable to the Facility or the relevant part thereof shall be the rate per annum determined by the Lender rounded upwards to the nearest whole multiple of one sixteenth per cent (1/16th%) to be the aggregate of the Applicable Margin, and any Mandatory Cost and the cost (expressed as a percentage rate per annum) to the Lender of funding the amount of the Facility during such Interest Period(s).

	9.03	During such Interest Period(s) the Borrower and the Lender shall negotiate in good faith in order to agree an Interest Rate or Interest Rates and Interest Period or Interest Periods satisfactory to the Borrower and the Lender to be substituted for those which but for the occurrence of any such event as specified in this Clause would have applied. If the Borrower and the Lender are unable to agree on such an Interest Rate(s) and Interest Period(s) by the day which is two (2) Banking Days before the end of the Interest Period referred to above, the Borrower shall repay the Facility together with accrued interest thereon at the Interest Rate set out above, together with all other amounts due under this Agreement relative to the Facility, on the last day of such Interest Period.

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	10	PREPAYMENT

	10.01	Unless an Event of Default has occurred (whereupon the provisions of Clause 12.01 shall apply), the Borrower shall be obliged to prepay the Indebtedness in full, if the Ship is sold (with the Lender's prior written consent) or becomes a Total Loss or is refinanced or in the case that the Mortgage on the Ship is discharged pursuant to sub­ Clause 10.02.03.

	10.02	Any prepayment referred to in Clause 10.01 shall be effected on the following dates (as appropriate):

	10.02.01	in the case of a sale, of the Ship, on or before the date on which such sale is completed by delivery of the Ship to her buyer; or

	10.02.02	in the case of a Total Loss, on the earlier of (i) the date falling one hundred eighty (180) days after the date of occurrence of such Total Loss and (ii) the date of receipt by the Lender of the proceeds of insurance relating to such Total Loss; or

	10.02.03	in the case the Mortgage on the Ship is discharged (other than in the circumstances referred to in paragraph 10.02.01 above and where the Borrower and the other Security Parties have discharged all their obligations, whether actual or contingent, under this Agreement and the other Finance Documents), on or before the date on which the Mortgage on the Ship is discharged.

	10.03	For the purposes of Clause 10.02.02 a Total Loss shall be deemed to have occurred

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

	10.03.02	in the case of a constructive total loss of the Ship upon the date and at the time notice of abandonment of the Ship is given to the Insurers of the Ship for the time being (provided a claim for such total loss is admitted by such Insurers) or, if such Insurers do not admit such a claim, or, in the event that such notice of abandonment is not given by the Borrower to the Insurers of the Ship, on the date and at a time on which the incident, which may result in the Ship, being subsequently determined to be a constructive total loss, has occurred;

	10.03.03	in the case of a compromised or arranged total loss of the 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 the Ship;

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

	10.03.05	in the case of hijacking, theft, condemnation, capture, seizure, arrest, detention or confiscation of the Ship (other than where the same amounts to Compulsory Acquisition of the Ship by any Government Entity, or by persons purporting to act on

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behalf of any Government Entity), which deprives the Borrower of the use of the 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.

	10.04	In case the Holding by the Approved Shareholders in the Guarantor falls below ten per cent (10%) without the prior written consent of the Lender, the Borrower shall be obliged to prepay the Indebtedness in full to the full satisfaction of the Lender, within thirty (30) Banking Days from the Lender's written notice to the Borrower to that effect.

	10.05	On giving not less than fifteen (15) days' prior written notice to the Lender the Borrower may prepay all or any part of the Facility (but if in part the amount to be prepaid shall be equal to one Repayment Instalment or a multiple thereof) at the end of the then current Interest Period without any premium of penalty. The Borrower shall obtain any consent or approval from the relevant authorities that may be necessary to make any such prepayment of the Facility and if it fails to obtain and/or comply with the terms of such consent or approval and in consequence thereof the Lender has to repay the amount prepaid or the Lender incurs any penalty or loss then the Borrower shall indemnify the Lender forthwith against all amounts so repaid and/or against all such penalties and losses incurred.

	10.06	Prepayments under Clause 10.05 shall be applied on a pro rata basis on the then outstanding relevant Repayment Instalments and the relevant Balloon Payment.

	10.07	Save as otherwise herein expressly provided, any prepayment of the Facility made or deemed to be made under this Agreement shall, if made otherwise than at the end of an Interest Period relative to the amounts prepaid, be made together with accrued interest thereon and such additional amount (if any) as the Lender may certify as necessary to compensate the Lender for any Broken Funding Costs incurred or to be incurred by it as a result of such prepayment including any loss of the Applicable Margin up to the end of the then current Interest Period in respect of the whole amount of the Facility which is outstanding at the beginning of such Interest Period.

	10.08	Any notice of prepayment given by the Borrower under this Agreement shall be irrevocable and the Borrower shall be bound to prepay in accordance with each such notice.

	10.09	The Borrower may not prepay all or any part of the Facility except in accordance with the express terms of this Agreement.

	10.10	On or prior to any prepayment of the Facility or any part thereof under this Clause 10 or any other provision of this Agreement, the Borrower shall wholly or partially reverse, offset, unwind or otherwise terminate one or more of the continuing Designated Transactions as applicable so that the notional principal amount of the continuing Designated Transactions thereafter remaining does not and will not in the future (taking into account the scheduled amortization) exceed the amount of the Facility as reducing from time to time thereafter pursuant to Clause 11.01.

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	10.11	Without prejudice to the foregoing, if less than the full amount of the Facility remains outstanding following a prepayment under this Agreement and the Lender in its absolute discretion agrees, following a written request of the Borrower, that the Borrower may be permitted to maintain all or part of a Designated Transaction in an amount not wholly matched with or linked to all or part of the Facility, the Borrower shall, within fifteen (15) days of being notified by the Lender of such requirement, provide the Lender with, or procure the provision to the Lender of, such additional security as shall in the opinion of the Lender be adequate to secure the performance of such Designated Transaction, which additional security shall take such form and be constituted by such documentation, as the Lender in its absolute discretion may approve or require.

	10.12	Notwithstanding any provision of the Master Agreement to the contrary, in the case of a prepayment of all or part of the Facility (including, without limitation, following the occurrence of a Total Loss or upon a sale of the Ship or the discharge of a Mortgage in accordance. with Clause 10.01 Mandatory Prepayment), or under Clauses 10.04 (Mandatory Prepayment), 9 (Substitute Basis), 16 (Change of Circumstances) or 23 (Security Margin)) then, subject to Clause 10.11, the Lender shall be entitled but not obliged (and, where relevant, may do so without the consent of the Borrower, where it would otherwise be required whether under the Master Agreement or otherwise) to amend, supplement, cancel, net out, terminate, liquidate, transfer or assign all or any part of the rights, benefits and obligations created by any Designated Transaction and/or the Master Agreement and/or to obtain or re-establish any hedge or related trading position in any manner and with any person the Lender in its absolute discretion may determine and both the Lender's and the Borrower's continuing obligations under any Designated Transaction and/or the Master Agreement shall, unless agreed otherwise by the Lender, be calculated so far as the Lender considers it practicable by reference to the amended repayment schedule for the Facility taking into account the fact that less than the full amount of the Facility remains outstanding.

	10.13	The Borrower shall on the first written demand of the Lender indemnify the Lender in respect of all losses, costs and expenses (including, but not limited to, legal costs and expenses) incurred or sustained by the Lender as a consequence of or in relation to the effecting of any matter or transactions referred to in Clauses 10.11 and 10.12.

	10.14	Without prejudice to or limitation of the obligations of the Borrower under Clause 10.13, in the event that the Lender exercises any of its rights under Clauses 10.11 and 10.12 and such exercise results in all or part of a Designated Transaction being terminated such termination shall be treated under the Master Agreement in the same manner as if it were a Terminated Transaction (as defined in section 14 of the Master Agreement) effected by the Lender after an Event of Default (as so defined in that section 14) by the Borrower and, accordingly, the Lender shall be permitted to recover from the Borrower a payment for early termination calculated in accordance with the provisions of section 6(e)(i) of the Master Agreement.

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	11	REPAYMENT

	11.01	The Borrower shall repay the Facility by:

A)            If the Ship is under an Approved Charter

I)  twenty (20) equal consecutive Repayment Instalments, each such Repayment Instalment being in the amount of Three hundred Fifty Two thousand Dollars ($352,000) the first such Repayment Instalment being due and payable on the date falling three (3) months from the Drawdown Date and each of the succeeding eighteen (18) such Repayment Instalments, on the eighteen (18) Repayment Dates falling at consecutive three monthly intervals thereafter and the twentieth (20th) Repayment Instalment falling due two (2) months after the immediately preceding (nineteenth) Repayment Date on the twentieth and final Repayment Date; and

II)  the Balloon Payment payable together with the twentieth (2oth) Repayment Instalment referred to in sub-paragraph (a) above on the twentieth (2oth) and final Repayment Date; and

Ill)  each Additional Instalment Amount together with each corresponding Repayment Instalment (referred to under subparagraph (I) above) falling due within the period of the Approved Charter.

PROVIDED however, that if the amount of the Facility actually drawn is less than Dollars Nineteen million Nine hundred Fifty thousand Dollars ($19,950,000) then the Balloon Payment and the Repayment Instalments shall be reduced pro rata by the undrawn amount.

OR

B)            If the Ship is not under an Approved Charter

I)  twenty (20) equal consecutive Repayment Instalments, each such Repayment Instalment being in the amount of Three hundred Fifty Two thousand Dollars ($352,000) the first such Repayment Instalment being due and payable on the date falling three (3) months from the Drawdown Date and each of the succeeding eighteen (18) such Repayment Instalments, on the eighteen (18) Repayment Dates falling at consecutive three monthly intervals thereafter and the twentieth (20th) Repayment Instalment falling due two (2) months after the immediately preceding (nineteenth) Repayment Date on the twentieth and final Repayment Date; and

II)  the Balloon Payment payable together with the twentieth (20th) Repayment Instalment referred to in sub-paragraph (a) above on the twentieth (20th) and final Repayment Date;

PROVIDED however, that if the amount of the Facility actually drawn is less than Dollars Eighteen million Five hundred Twenty Five thousand ($18,525,000) then the

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relevant Balloon Payment and the relevant Repayment Instalments shall be reduced pro rata by the undrawn amount.

	11.02	Each Repayment Instalment and the Balloon Payment shall be paid in Dollars.

	11.03	Any amounts repaid or prepaid under this Agreement may not be re-borrowed.

	11.04	On or prior to any repayment of the Facility or any part thereof under this Clause 11, the Borrower shall wholly or partially reverse, offset, unwind or otherwise terminate one or more of the continuing Designated Transactions as applicable so that the notional principal amount of the continuing Designated Transactions thereafter remaining does not and will not in the future (taking into account the scheduled amortisation) exceed the amount of the Facility as reducing from time to time thereafter pursuant to Clause 11.01.

	11.05	Without prejudice to the provisions of the foregoing Clause 11.04, Clauses 10.11, 10.12, 10.13 and 10.14 will also apply on the repayment of the Facility or any part thereof under this Clause 11.

	12	APPLICATION

	12.01	All Proceeds received by the Lender under or pursuant to any one or more of the Finance Documents and expressed to be applicable in accordance with the provisions of this Clause 12 shall be held by the Lender, to be applied in the following manner:

	12.01.01	first, in or towards payment of all sums other than principal of or interest on the Facility which may be owing to the Lender under this Agreement and the other Finance Documents or any of them;

	12.01.02	second, in or towards payment of any default interest and/or overdue principal payments payable to the Lender under the Finance Documents;

	12.01.03	third, in or towards payment to the Lender of any interest owing in respect of the Facility or any part thereof;

	12.01.04	fourth, in or towards payment to the Lender of principal owing in respect of the Facility;

	12.01.05	fifth, in or towards payment to the Lender of any amount due to it in accordance with the provisions of Clause 15 (Tax Gross up and Indemnities) and Clause 29 (Indemnity) by reason of any such payment in respect of the Facility not being effected on the last day of an Interest Period in respect of the total amount of the Facility;

	12.01.06	sixth, in or towards payment of any amounts then payable to the Lender under the Master Agreement and the other Finance Documents including without limitation any net amount which the Borrower shall have become liable to pay or deliver under section 2 (Obligations) of the Master Agreement but shall have failed to pay or deliver

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to the Lender at the time of application or distribution under this Clause 12, or any part thereof;

	12.01.07	seventh at any time on or after the occurrence of an Event of Default in retention of a sum equal to the total of any and all other amounts (as calculated by the Lender) which although not then due to the Lender under any one or more of this Agreement and the other Finance Documents will become so due to the Lender, such sums thereafter to be applied by the Lender from time to time in accordance with this Clause 12; and

	12.01.08	eighth, the surplus (if any) shall be paid to the Borrower or to whomsoever else may be entitled to receive such surplus.

	12.02	If any Proceeds recovered by the Lender have to be repaid by the Lender on the ground of unfair or fraudulent preference or on any other ground, the Lender shall have the same rights hereunder and/or under the other Finance Documents against the Borrower as if such amounts had never been applied in payment of the Indebtedness.

	13	EVIDENCE OF DEBT

	13.01	The Lender shall maintain in accordance with its usual practice one or more Loan Accounts in the name of the Borrower evidencing the Indebtedness.

	13.02	In any legal action or proceedings arising out of or in connection with this Agreement and/or the other Finance Documents the entries made in the Loan Account(s) maintained pursuant to Clause 13.01 or a certificate signed by one authorized officer of the Lender shall be conclusive evidence (save in the case of manifest error) of the existence and amounts of the liabilities of the Borrower therein recorded.

	14	PAYMENTS

	14.01	All amounts payable under this Agreement and/or the other Finance Documents by the Borrower, including amounts payable under this Clause 14, shall be paid in full to the Lender without set-off or counterclaim or retention and free and clear of and without any deduction or withholding for or on account of any Taxes.

	14.02	In the event the Borrower is required by law to make any such deduction or withholding from any payment hereunder then the Borrower shall, within a period of not more than seven (7) Banking Days therefrom, pay to the Lender such additional amount as will result in the receipt by the Lender of the full amount which would have been received hereunder had no such deduction or withholding been made, but if the Lender shall be or becomes entitled to any Tax credit or relief in respect of any Tax which is deducted from any payment by the Borrower and if the Lender in its reasonable determination actually receives a benefit from such Tax credit or relief in its country of domicile, incorporation or residence, the Lender shall, subject to any laws or regulations applicable thereto, pay to the Borrower after such benefit is effectively received by the Lender such amounts (which shall be conclusively certified- in the absence of manifest

34

error – by the Lender) as shall ensure that the net amount actually retained by the Lender is equal to the amount which would have been retained if there had been no such deduction; the Borrower shall promptly forward to the Lender any official receipt of the relevant taxation or other authority or other evidence acceptable to the Lender of the amount deducted or withheld as aforesaid, provided that in the event that it shall be illegal for the Borrower to pay such additional amount as is referred to in this Clause

	14.03	then the Indebtedness shall be repayable by the Borrower to the Lender on demand.

	14.04	All payments to be made by the Borrower under this Agreement and/or the other Finance Documents shall be made in Dollars in immediately available and freely transferable and convertible funds not later than 11.00 a.m. London time on the date upon which the relevant payment is due to the Lender at such account as the Lender may from time to time nominate by written notice to the Borrower

	14.05	The Borrower undertakes to indemnify the Lender against any loss incurred by the Lender as a result of any judgment or order being given or made for the payment of any amount due under this Agreement and/or the other Finance Documents and such judgment or order being expressed in a currency other than the currency in which the payment was due under this Agreement and/or the other Finance Documents and as a result of any variation having occurred in rates of exchange between the date on which the currency is converted for the purpose of such judgment or order and the date of actual payment thereof. This indemnity shall constitute a separate and independent liability of the Borrower and shall continue in force and effect notwithstanding any such judgment or order as aforesaid.

	15	TAX GROSS UP AND INDEMNITIES

Without prejudice to the generality of Clauses 14.02 and Clause 33:

	15.01	For the purposes of this Clause the following terms will have the meaning ascribed to them herein:

"Protected Party" means the Lender if it is or will be subject to any liability or required to make any payment for or on account of Tax in relation to a sum received or receivable (or any sum deemed for the purposes of Tax to be received or receivable) under a Finance Document.

"Tax Credit" means a credit against, relief or remission for, or repayment of any Tax.

"Tax Deduction" means a deduction or withholding for or on account of Tax from a payment under a Finance Document, other than a FATCA Deduction.

"Tax Payment" means either the increase in a payment made by a Security Party to the Lender under Clause 15.02 (Tax gross-up) or a payment by the Borrower under Clause 15.03 (Tax indemnity).

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	15.02	The Borrower shall (and shall procure that each other Security Party shall) make all payments to be made by them without any Tax Deduction, unless a Tax Deduction is required by law, subject as follows:

	15.02.01	the Borrower shall, promptly upon becoming aware, that the Borrower or any other Security Party must make a Tax Deduction (or that there is any change in the rate or the basis of a Tax Deduction) notify the Lender accordingly.

 Similarly, the Lender shall notify the Borrower on becoming so aware in respect of a payment payable to the Lender;

	15.02.02	if a Tax Deduction is required by law to be made by the Borrower or any other Security Party, the amount of the payment due from the Borrower or that other Security Party shall be increased to an amount which (after making any Tax Deduction) leaves an amount equal to the payment which would have been due if no Tax Deduction had been required;

	15.02.03	if the Borrower or any other Security Party is required to make a Tax Deduction, the Borrower shall (and shall procure that such other Security Party shall) make that Tax Deduction and any payment required in connection with that Tax Deduction within the time allowed and in the minimum amount required by law;

	15.02.04	within 30 days of making either a Tax Deduction or any payment required in connection with that Tax Deduction, the Borrower shall (and shall procure that such other Security Party shall) deliver to the Lender a statement under section 975 of the ITA or other evidence reasonably satisfactory to the Lender that the Tax Deduction has been made or (as applicable) any appropriate payment paid to the relevant taxing authority;

	15.03	Tax indemnity

	15.03.01	The Borrower shall (within three (3) Banking Days of the written demand by the Lender) pay to the Lender, if the Lender is a Protected Party, an amount equal to the loss, liability or cost which the Lender determines will be or has been (directly or indirectly) suffered for or on account of Tax by the Lender in respect of a Finance Document.

	15.03.02	Clause 15.03.01 shall not apply:

(a)            with respect to any Tax assessed on the Lender:

(i)            under the law of the jurisdiction in which the Lender is incorporated or, if different, the jurisdiction (or jurisdictions) in which the Lender is treated as resident for tax purposes; or

(ii)       under the law of the jurisdiction in which the Facility office of the Lender is located in respect of amounts received or receivable in that jurisdiction,

36

if that Tax is imposed on or calculated by reference to the net income received or receivable (but not any sum deemed to be received or receivable) by the Lender; or

(b)            to the extent a loss, liability or cost (i) is compensated for by an increased payment under Clause 15.02 (Tax gross-up), or Clause 15.07 (FATCA Deduction and gross-up by a Security Party) or Clause 15.08 (FATCA Deduction by the Lender);

The Lender making, or intending to make, a claim under paragraph (a) above shall promptly notify the Borrower in writing of the event which will give, or has given, rise to the claim.

In the event that it shall be illegal for the Borrower to pay such additional amount as is referred to in this Clause 15.03.01 then the Indebtedness shall be repayable by the Borrower to the Lender on demand.

	15.04	Tax Credit

	15.04.01	If a Security Party makes a Tax Payment and the Lender determines that:

	15.04.01.1	a Tax Credit is attributable to an increased payment of which that Tax Payment forms part, to that Tax Payment or to a Tax Deduction in consequence of which that Tax Payment was received; and

	15.04.01.2	the Lender has obtained, utilised and retained that Tax Credit,

   the Lender shall pay an amount to that Security Party which the Lender determines will leave it (after that payment) in the same after-Tax position as it would have been in had the Tax Payment not been required to be made by that Security Party.

	15.05	VAT

	15.05.01	All amounts expressed to be payable under a Finance Document by any Security Party to the Lender which (in whole or in part) constitute the consideration for any supply for VAT purposes are deemed to be exclusive of any VAT which is chargeable on that supply, and accordingly, if VAT is or becomes chargeable on any supply made by the Lender to any Security Party under a Finance Document and the Lender is required to account to the relevant tax authority for the VAT, that Security Party must pay to the Lender (in addition to and at the same time as paying any other consideration for such supply) an amount equal to the amount of the VAT (and the Lender must promptly provide an appropriate VAT invoice to the Borrower).

	15.05.02	Where a Finance Document requires any Security Party to reimburse or indemnify the Lender for any cost or expense, that Security Party shall reimburse or indemnify (as the case may be) the Lender for the full amount of such cost or expense, including such part thereof as represents VAT, save to the extent that the Lender reasonably determines that it is entitled to credit or repayment in respect of such VAT from the relevant tax authority.

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	15.05.03	Any reference in this Clause 15.05 to any Security Party shall, at any time when such Security Party is treated as a member of a group for VAT purposes, include (where appropriate and unless the context otherwise requires) a reference to the representative member of such group at such time (the term "representative member" to have the same meaning as in the Value Added Tax Act 1994).

	15.05.04	In relation to any supply made by the Lender to any Security Party under a Finance Document, if reasonably requested by the Lender, that Security Party must promptly provide the Lender with details of that Security Party's VAT registration and such other information as is reasonably requested in connection with the Lender's VAT reporting requirements in relation to such supply.

	15.06	FATCA information

	15.06.01	Subject to Clause 15.06.03, each Party shall, within ten Banking Days of a reasonable request by another Party:

(a)                confirm to that other Party whether it is: (i) a FATCA Exempt Party; or (ii) not a FATCA Exempt Party; and

(b)          supply to that other Party such forms, documentation and other information relating to its status under FATCA (including its applicable "passthru payment percentage" or other information required under the US Treasury Regulations or other official guidance including intergovernmental agreements) as that other Party reasonably requests for the purposes of that other Party's compliance with FATCA.

	15.06.02	If a Party confirms to another Party pursuant to Clause 15.06.01 (a)(i) that it is a FATCA Exempt Party and it subsequently becomes aware that it is not, or has ceased to be a FATCA Exempt Party, that Party shall notify that other Party reasonably promptly.

	15.06.03	Clause 15.06.01 shall not oblige the Lender to do anything which would or might in its reasonable opinion constitute a breach of:

a.  any law or regulation;

b.  any fiduciary duty;

c.  any duty of confidentiality; or

d.  any policy of the Lender.

	15.06.04	If a Party fails to confirm its status or to supply forms, documentation or other information requested in accordance with Clause 15.06.01 (including, for the avoidance of doubt, where Clause 15.06.03 applies), then:

	15.06.04.1	if that Party failed to confirm whether it is (and/or remains) a FATCA Exempt Party then such Party shall be treated for the purposes of the Finance Documents as if it is not a FATCA Exempt Party; and

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	15.06.04.2	if that Party failed to confirm its applicable "passthru payment percentage" then such Party shall be treated for the purposes of the Finance Documents (and payments made thereunder) as if its applicable "passthru payment percentage" is 100%,

until (in each case) such time as the Party in question provides the requested confirmation, forms, documentation or other information.

	15.07	FATCA Deduction and gross-up by a Security Party

	15.07.01	If a Security Party is required to make a FATCA Deduction, that Security Party shall make that FATCA Deduction and any payment required in connection with that FATCA Deduction within the time allowed and in the minimum amount required by FATCA.

	15.07.02	If a FATCA Deduction is required to be made by a Security Party, the amount of the payment due from that Security Party shall be increased to an amount which (after making any FATCA Deduction) leaves an amount equal to the payment which would have been due if no FATCA Deduction had been required.

	15.07.03	The Borrower shall promptly upon becoming aware that a Security Party must make a FATCA Deduction (or that there is any change in the rate or the basis of a FATCA Deduction) notify the Lender accordingly. Similarly, the Lender shall notify the Borrower and that Security Party in writing.

	15.07.04	Within 30 days of making either a FATCA Deduction or any payment required in connection with that FATCA Deduction, the Security Party making that FATCA Deduction or payment shall deliver to the Lender evidence reasonably satisfactory to the Lender that the FATCA Deduction has been made or (as applicable) any appropriate payment paid to the relevant governmental or taxation authority.

	15.08	FATCA Deduction by the Lender

	15.08.01	The Lender may make any FATCA Deduction it is required by FATCA to make, and any payment required in connection with that FATCA Deduction, and the Lender shall not be required to increase any payment in respect of which it makes such a FATCA Deduction or otherwise compensate the recipient of the payment for that FATCA Deduction. The Lender shall notify the Borrower accordingly.

	15.08.02	The Borrower shall (within three Banking Days of demand by the Lender) pay to the Lender an amount equal to the loss, liability or cost which the Lender determines will be or has been (directly or indirectly) suffered by the Lender as a result of making a FATCA Deduction in respect of a payment due to it under a Finance Document.

	15.08.03	The Lender making, or intending to make, a claim under paragraph 15.08.02 above shall promptly notify in writing the Borrower of the FATCA Deduction.

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	16	CHANGE OF CIRCUMSTANCES

	16.01	If:

	16.01.01	any law, regulation, treaty or official directive (whether or not having the force of law) or the interpretation thereof by any authority charged with the administration thereof:

	16.01.01.1	subjects the Lender to any Tax with respect to payments of principal of or interest on the Facility or any other amount payable hereunder; or

	16.01.01.2	changes the basis of Taxation of payments to the Lender of principal of or interest on the Facility or of any other amount payable hereunder (other than a change in the rate of Tax on the overall net income of the Lender); or

	16.01.01.3	imposes, modifies or deems applicable any reserve and/or special deposit requirements against or in respect of assets or liabilities of, or deposits with or for the account of, or loans or credit extended by the Lender; or

	16.01.01.4	imposes on the Lender any other condition affecting this Agreement, the Facility or its funding; or

	16.01.02	the Lender complies with any request, law, regulation (including any which relates to capital adequacy or liquidity control or which affects the manner in which the Lender allocates capital resources to its obligations under this Agreement [including without limitation, those resulting from (a) the implementation or application of or compliance with the "Basel III: International framework for liquidity risk measurement, standards and monitoring" and "Guidance for national authorities operating the countercyclical capital buffer" published by the Basel Committee on Banking Supervision in December 2010, as amended, supplemented or restated, and (b) the rules for global systemically important banks contained in "Global systemically important banks: assessment methodology and the additional loss absorbency requirement -Rules text" published by the Basel Committee on Banking Supervision in November 2011 and (c) any further guidance or standards published by the Basel Committee on Banking Supervision relating to "Basel III"] or directive from any applicable fiscal or monetary authority (whether or not having the force of law) and as a result of any of the foregoing either directly or indirectly;

	16.01.03	the cost to the Lender of making, funding or maintaining the Facility is increased; or

	16.01.04	the amount of principal, interest or other amount payable to the Lender or the effective return to the Lender hereunder is reduced; or

	16.01.05	the Lender makes any payment or foregoes any interest or other return on or calculated by reference to the gross amount receivable by it from the Borrower hereunder,

40

then and in each such case upon demand from time to time the Borrower shall pay to the Lender such amount as shall compensate the Lender for such increased cost, reduction, payment or foregone interest or other return. If the Lender is entitled to make a claim pursuant to this Clause it shall notify the Borrower of the event by reason of which it is so entitled and shall submit to the Borrower a certificate setting out details of the event giving rise to such compensation, the amount thereof and the manner in which it has been calculated and in the absence of manifest error such certificate shall be conclusive:

On receipt of such certificate the Borrower shall have the option to prepay within ninety (90) days the Facility together with all interest accrued thereon and all costs and other amounts (including amounts payable as referred to above and any Broken Funding Costs) payable to the Lender hereunder. If the Borrower decides to exercise such option it shall give written notice to the Lender and prepay the amount due to the Lender within ninety (90) days of the receipt of the certificate referred to above together with any other amounts payable to the Lender under this Agreement. The Lender's duties and liabilities hereunder shall be cancelled on the giving of such notice.

	16.02	Notwithstanding anything to the contrary herein contained, if any change in law, regulation or treaty or in the interpretation or application thereof by any authority charged with the administration thereof shall make it unlawful for the Lender to make, fund or maintain the Facility or any part thereof, the Lender may by written notice thereof to the Borrower declare that the Lender's duty to provide the Borrower with the Facility shall be terminated forthwith whereupon the Borrower shall prepay forthwith (or if permitted by law on the next following Interest Payment Date) the Facility together with all interest accrued thereon and all other amounts payable to the Lender hereunder including any Broken Funding Costs. The Lender's duties and liabilities hereunder shall be cancelled on the giving of such notice.

	16.03	If any of the events referred to in Clause 16.01 or Clause 16.02 shall occur, but without prejudice to the liability of the Borrower to prepay the Facility, the Borrower and the Lender shall negotiate in good faith with a view to agreeing terms for making the Facility available from another jurisdiction, or funding the Facility from alternative sources or otherwise restructuring the Facility on a basis which is not unlawful.

	17	REPRESENTATIONS AND WARRANTIES

	17.01	The Borrower hereby represents and warrants to the Lender that the following matters are true at the time of this Agreement and warrant that they shall remain true until full payment of all amounts payable hereunder:

	17.01.01	each Corporate Security Party is a company or corporation duly formed and validly existing under the laws of the country of its Original Jurisdiction and has the power and authority to own its respective assets and carry on business in each Relevant Jurisdiction and complies with all relevant legislation and laws and regulations (including but not limited to the laws and regulations relating to the listing of the

41

shares of the Guarantor in NASDAQ) to the extend applicable to such Corporate Security Party;

	17.01.02	the Borrower has the power to borrow hereunder and to enter into Designated Transactions and each Security Party has power to enter into this Agreement and the other Subject Documents to which it is a party and to perform and discharge its respective duties and liabilities hereunder and thereunder and each Security Party has taken all necessary action (whether corporate or otherwise) required to authorise the execution, delivery and performance of this Agreement and the other Subject Documents to which is a party and the borrowing to be made hereunder;

	17.01.03	the execution, delivery and performance of this Agreement and the other Subject Documents will not contravene or exceed the powers granted to each Security Party or by, or any provision of, any law or regulation (including but not limited to the laws and regulations relating to the listing of the shares of the Guarantor in NASDAQ, as the case may be), in any Relevant Jurisdiction of the Security Parties or any of them, any order or decree of any competent governmental agency or court of or in any Relevant Jurisdiction of the Security Parties or any of them, the certificates of incorporation, memoranda and articles of association of the Corporate Security Parties or any of them or any mortgage, deed, contract or agreement to which the Security Parties or any of them is/are a party and which is binding upon the Security Parties' assets and will not cause any Encumbrance (other than Permitted Liens) to arise over or attach to all or any part of any Security Party's revenues or assets nor require any Security Party to create any such Encumbrance otherwise than in favour of the Lender;

	17.01.04	all consents, licences, approvals, registrations, authorisations or declarations (including, without limitation, all foreign exchange control approvals) in any Relevant Jurisdiction of the Security Parties or any of them required to enable the Borrower to borrow hereunder and the Borrower and each of the other Security Parties lawfully to enter into and perform and discharge their respective duties and liabilities under this Agreement and the other Subject Documents, to which each is a party and to ensure that the duties and liabilities of each of the Security Parties hereunder and thereunder are legal, valid and enforceable in accordance with the terms of this Agreement and the other Subject Documents to which each is a party and to make this Agreement and the other Subject Documents admissible in evidence in such aforesaid jurisdictions have been obtained or made and are in full force and effect;

	17.01.05	this Agreement and the other Subject Documents constitute the legal, valid, binding and unconditional duties and liabilities of each Security Party as is a party thereto, enforceable against such Security Party in accordance with the terms thereof;

	17.01.06	no Security Party has failed to pay when due any amount or to perform any duty under the provisions of any agreement to which it is a party or by which it may be bound relating to Financial Indebtedness in excess in aggregate of One million Dollars ($1,000,000) and no event has occurred and is continuing which constitutes,

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or which with the giving of notice or lapse of time or both would constitute, a material breach or default by such Security Party under any such agreement;

	17.01.07	no litigation, arbitration, tax claim or administrative proceedings in any court, arbitration tribunal or governmental authority are pending or, to the knowledge of the Borrower, threatened against any Security Party or any of its respective assets which might materially adversely affect such Security Party's ability to perform and discharge its respective duties and liabilities hereunder and under the other Subject Documents to which it is a party thereto;

	17.01.08	the financial condition of the Security Parties has not suffered any material deterioration since that condition was last disclosed to the Lender;

	17.01.09	the information provided to the Lender in relation to this transaction is true and correct in all material respects and does not omit any material detail;

	17.01.10	except for the registration of the Mortgage at the appropriate Registry of ships, it is not necessary or advisable to ensure the legality, validity, enforceability or admissibility in evidence of this Agreement or of any one or more of the other Subject Documents, that any of them be filed, recorded or enrolled with any governmental authority or agency or that they be stamped with any stamp, registration or similar transaction tax in the United States or in the United Kingdom or in the Republic of the Marshall Islands or in the Republic of Liberia or in the Republic of Greece or in' any other Relevant Jurisdiction;

	17.01.11	the Accounting Information provided by the Borrower and/or the Guarantor to the Lender is complete and correct and presents fairly the position of the members of the Group therein stated and the results of the operations of the members of the Group therein stated ended on the relevant date, and have been prepared in accordance with the Applicable Accounting Principles and practices consistently applied and give a true and fair view of the financial condition, assets and liabilities of the members of the Group therein stated at the date to which such Accounting Information have been prepared and since that date there has been no adverse change in the financial condition of the business, assets or operation of the members of the Group therein stated or the Group taken as a whole (as the case may be);

	17.01.12	all the obligations and liabilities of the Borrower hereunder and of the other Security Parties under the other Subject Documents rank and will rank at least pari passu in right of payments with all other unsubordinated indebtedness of the Borrower or of the other Security Parties;

	17.01.13	no Security Party is entitled to claim any immunity in relation to itself or its assets under any law or in any jurisdiction in connection with any legal proceedings, set off or counterclaim relating to this Agreement and the other Subject Documents to which it is a party or in connection with the enforcement of any judgment or order arising from such proceedings;

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	17.01.14	the Borrower has not incurred any Financial Indebtedness, or authorised or accepted any capital commitments (other than that normally associated with the construction of or the day-to-day operation of the Ship, where appropriate);

	17.01.15	no Taxes are imposed by deduction withholding or otherwise on any payment made or to be made by any Security Party under this Agreement and/or any other of the Subject Documents or are imposed on or by virtue of the execution or delivery of this Agreement and/or any other of the Subject Documents or any document or instrument to be executed or delivered hereunder or thereunder and all relevant tax returns have been filed and/or will be filed when due;

	17.01.16	None of the Security Parties is a FATCA FFI or a US Tax Obligor;

	17.01.17	None of the Security Parties is materially overdue in the filing of any Tax returns or is overdue in the payment of any amount in respect of Tax.

	17.01.18	No claims or investigations are being, or are reasonably likely to be, made or conducted against any of the Security Parties with respect to Taxes.

	17.01.19	Each of the Security Parties (other than the Manager) is resident for Tax purposes only in its Original Jurisdiction and the Manager is resident for Tax purposes only in the Republic of Greece.

	17.01.20	Each of the Security Parties and each member of the Group has conducted its businesses in compliance with applicable anti-corruption laws and has instituted and maintained policies and procedures designed to promote and achieve compliance with such laws.

	17.01.21	It is not necessary under the laws of any Relevant Jurisdiction of any of the Security Parties (i) in order to enable the Lender to enforce its rights under any Finance Document; or (ii) by reason of the execution of any Finance Document or the performance by it of its obligations under any Finance Document, that the Lender should be licensed, qualified or otherwise entitled to carry on business in any of the Relevant Jurisdictions of any of the Security Parties and the Lender is not and will not be deemed to be resident, domiciled or carrying on business in any of the Relevant Jurisdictions of any of the Security Parties by reason only of the execution, performance and/or enforcement of any Finance Document.

	17.01.22	Any borrowing by the Borrower under this Agreement, and the performance of its obligations under this Agreement and under the other Finance Documents, will be for the Borrower's own account and will not involve any breach by it of any law or regulatory measure relating to "money laundering" as defined in Article 1 of the Directive (2005/EC/60) of the European Parliament and of the Council of the European Communities.

	17.01.23	
the choice of law agreed to govern this Agreement and each other Subject Document and the submission to the jurisdiction of the courts agreed in each of the Subject Documents are or will be on execution of the respective Subject Documents

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valid and binding on the Borrower and any other Security Party which is a party thereto;

	17.01.24	the giving of the Guarantee pursuant to this Agreement by the Guarantor is to the commercial benefit of the Guarantor;

	17.01.25	each Security Party and each member of the Group is in compliance, in all respects, with all Sanctions;

	17.01.26	none of the Security Parties and/or the other members of the Group is a Prohibited Person or is owned or controlled by, or acting directly or indirectly on behalf of or for the benefit of, a Prohibited Person and it does not own or control a Prohibited Person; and

	17.01.27	no proceeds of the Facility shall be made available, directly or indirectly, to or for the benefit of a Prohibited Person or otherwise shall be, directly or indirectly, applied in a manner or for a purpose prohibited by Sanctions.

	17.02	The Borrower hereby further represents and warrants to the Lender that on the Delivery Date the following matters will be true and shall remain true in all material respects throughout the Security Period:

	17.02.01	the Ship has unconditionally been delivered to and accepted by the Borrower pursuant to the Purchase Documents and the full amount of the Construction Cost payable in respect thereof has been duly paid;

	17.02.02	the Ship is duly registered in the name of the Borrower under a flag acceptable to the Lender;

	17.02.03	the Ship is and will remain in the absolute and unencumbered ownership of the Borrower, save as contemplated by this Agreement and the other Finance Documents;

	17.02.04	the Ship has and will maintain the highest class with the Classification Society free of all recommendations and qualifications of her Classification Society affecting class;

	17.02.05	the Ship is and will remain operationally seaworthy;

	17.02.06	the Mortgage in respect of the Ship has been duly recorded against the Ship as a valid first priority ship mortgage in favour of the Lender in accordance with the laws of her flag;

	17.02.07	the Ship, the Borrower and the Manager will comply with all relevant laws, regulations and requirements (statutory or otherwise) including without limitation all Sanctions, and the ISM Code, the ISPS Code, the ISM Code Documentation and the ISPS Code Documentation as are applicable to (i) ships registered under the laws of the flag the Ship is flying and (ii) engaged in the same or a similar service as the Ship is engaged;

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	17.02.08	the Ship is and will remain under the management of the Manager under the terms of the Management Agreement;

	17.02.09	the Ship is and will remain insured in accordance with the provisions of this Agreement in respect of the Insurances;

	17.02.10	the Borrower and the Manager comply with the provisions of all Environmental Laws in respect of the Ship;

	17.02.11	the Borrower and the Manager have obtained all Environmental Approvals and are and shall be in compliance with all such Environmental Approvals in respect of the Ship;

	17.02.12	neither the Borrower nor the Manager have received notice of any Environmental Claim that alleges that the Borrower or the Manager is not in compliance with any Environmental Law or any Environmental Approval in respect of the Ship;

	17.02.13	there is no Environmental Claim pending against the Borrower and/or the Manager and/or the Ship;

	17.02.14	no Environmental Incident has occurred which could or might give rise to any Environmental Claim against the Borrower and/or the Manager and/or the Ship;

	17.02.15	there are and will be no commissions, rebates, premiums or other payments by or to or on account of the Borrower, the other Security Parties and the shareholders of the Corporate Security Parties in connection with the Purchase Documents relating to the Ship other than as disclosed to the Lender by the Borrower in writing;

	17.02.16	none of the parties to the Purchase Documents is in default thereunder;

	17.02.17	the balance of the Construction Cost of the Ship (in addition to the part thereof to be financed with the proceeds of the Facility) has not been or, will not be provided by way of any loan from any party;

	17.03	The Borrower further represents, warrants and confirms to the Lender that:

	17.03.01	it enters into this Agreement for its own account and receives the Facility or any part thereof for its sole benefit; and

	17.03.02	it will promptly inform the Lender (by written notice to the Lender) if it is not, or ceases to be, such beneficiary(ies) and will then set down in writing the name(s) and the address(es) of the relevant beneficiary(ies).

	17.04	The representations and warranties of the Borrower set out in Clauses 17.01 and 17.02 and 17.03 above shall survive the execution of this Agreement and shall be deemed to be repeated on the Drawdown Date and on each Repayment Date, and on each Interest Payment Date and on the date of entering into each Designated Transaction with respect to the facts and circumstances existing at each such time as if made at such time.

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	18	SECURITIES

	18.01	The Borrower hereby agrees that the Security Documents shall secure with first priority the due payment of the Indebtedness.

	18.02	It is declared and agreed in relation to the security created by the Security Documents that:

	18.02.01	it shall be held by the Lender as a continuing security for the payment of the Indebtedness; and

	18.02.02	the security so created shall not be satisfied or discharged by intermediate payment or satisfaction of any part of the amount secured thereunder; and

	18.02.03	the security so created shall be in addition to and shall not in any way be prejudiced or affected by any collateral or other security now or hereafter held by the Lender for all or any part of the amounts thereby secured; and

	18.02.04	every power and right given to the Lender hereunder and under the Master Agreement shall be in addition to and not in limitation of any and every other power or right of the Lender under the Security Documents and may be exercised from time to time in such order and as often as the Lender may consider appropriate.

	19	CONDITIONS PRECEDENT AND SUBSEQUENT

	19.01	Notwithstanding the provisions of Clause 5, the agreement of the Lender to permit the drawdown of the Facility and/or the entering into any Designated Transaction is subject to the condition that the Lender shall have received not later than the Drawdown Date the following documents or evidence in form and substance satisfactory to the Lender and its legal advisers:

	19.01.01	a copy, certified as a true copy by the secretary of each Corporate Security Party of the resolutions of the shareholders of the Borrower and resolutions of the directors of each of the Borrower, the Guarantor and the Manager, authorising the transaction contemplated hereby, resolving the issuance of each respective power of attorney to be provided under Clause 19.01.02 and authorising a person or persons to sign or executeon their behalf this Agreement, the Notice of Drawdown, the Acknowledgement (as in the form of Schedule 2 hereof) and the other Finance Documents as each is a party thereto;

	19.01.02	the originals of any power or powers of attorney granted pursuant to Clause 19.01.01;

	19.01.03	certificates or other evidence satisfactory to the Lender, in its sole discretion of the existence and good standing of each Security Party;

	19.01.04	certificate issued by the respective director or secretary of each Corporate Security Party specifying the Directors and Officers of each such Corporate Security

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Party (and of any corporate director, officer thereof), its authorized and issued share capital (and of any corporate shareholder thereof) and in respect of the Borrower, a certificate issued by a director or the secretary of the Borrower, specifying the shareholders thereof;

	19.01.05	copies of the relevant constitutional documents of each Corporate Security Party, certified as true copies by the Borrower's legal counsel;

	19.01.06	certified copies of all documents (with a certified translation if an original is not in English) evidencing any other necessary action (including but without limitation governmental approval, consents, licences, authorisations, validations or exemptions which the Lender or its legal advisers may require) by the Security Parties or any of them with respect to this Agreement and the other Finance Documents;

	19.01.07	such documents or evidence relating to the ultimate beneficial ownership of the Borrower and any corporate shareholder(s) thereof in form and substance satisfactory to the Lender;

	19.01.08	such documents or evidence relating to the verification of identity and knowledge of the Lender's customers and compliance to the full satisfaction of the Lender with all necessary "know your customer" and money laundering requirements (including but without limitation compliance to the full satisfaction of the Lender with any requirements in relation to the shares of the Borrower and the Manager and any corporate shareholder(s) thereof), as the Lender may in its absolute discretion require;

	19.01.09	evidence that the Earnings Account has been duly opened by the Borrower, as appropriate and all mandate forms, signature cards and authorities have been duly delivered and that the Earnings Account is free of all liens or charges;

	19.01.10	payment of the fees in accordance with Clause 26;

	19.01.11	evidence that the Borrower have complied with its obligations under Clauses 20.37 and 20.38;

	19.01.12	evidence that the Ship has been duly delivered to and accepted by the Borrower and that she is duly registered in the ownership of the Borrower at the relevant ships' Registry acceptable by the Lender, free of any Encumbrances otherwise than as contemplated herein;

	19.01.13	(if required by the Lender) a charter free market valuation of the Ship on the basis specified in Clause 22.26;

	19.01.14	evidence that the Ship is insured in accordance with the provisions of this Agreement;

	19.01.15	evidence that the Ship is classed at the highest classification status with the Classification Society free of recommendations or other conditions or notations affecting her class;

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	19.01.16	certified copies of the classification and international safety and trading certificates issued by the Classification Society of the Ship and each other competent authority (as the case may be) free of recommendations or other conditions affecting her class;

	19.01.17	copies of the ISM Code Documentation and the ISPS Code Documentation in relation to the Ship, the Borrower and the Manager;

	19.01.18	the Mortgage on the Ship duly executed by the Borrower, legalised as appropriate and registered at the appropriate Shipping Registry;

	19.01.19	the Master Agreement and the Master Agreement Assignment duly executed by the Borrower;

	19.01.20	the General Assignment and Earnings Account Charge duly executed by the Borrower;

	19.01.21	notices of assignment of the Insurances in respect of the Ship duly signed by the Borrower;

	19.01.22	notices of assignment of the Earnings in respect of the Ship duly signed by the Borrower;

	19.01.23	the Manager's Undertaking in respect of the Ship together with notices of assignment of the right, title and benefit of the Manager to the Insurances of the Ship, duly executed, as appropriate;

	19.01.24	the Guarantee duly executed by the Guarantor;

	19.01.25	(in case the Ship is under an Approved Charter) the Approved Charter Assignment duly executed by the Borrower together with the relevant notices thereof acknowledged by the relevant charterer(s);

	19.01.26	copy of the Management Agreement, the Purchase Documents and the Approved Charter (if any), all certified as true and complete copies thereof by the Borrower's legal counsel;

	19.01.27	the Manager's Undertaking in respect of the Ship duly executed by the Manager, and respective notices thereof;

	19.01.28	evidence that an amount of Seven thousand Five hundred Euros (€7,500), plus disbursements and VAT thereon has been paid to the Messrs V&P Law Firm in connection with the preparation of this Agreement and the other Finance Documents, or irrevocable written mandates to the Lender to make those payments forthwith by debiting any account of the Borrower held with the Lender;

	19.01.29	such further documents and evidence as the Lender may hereafter request.

	19.02	The agreement of the Lender to maintain the Facility or any part thereof and/or to enter into any Designated Transaction is subject to the condition that the Lender shall have

49

received as soon as practicable after the Drawdown Date, but in any event not later than twenty (20) days after the Drawdown Date, the following documents or evidence in form and substance satisfactory to the Lender and its legal advisers

	19.02.01	a letter from the agents referred to in Clauses 41.04 and 41.05 addressed to the Lender confirming acceptance of their appointment as agents for service of process;

	19.02.02	the opinion letters from counsels appointed and/or acceptable to the Lender as well as opinion letters from the Security Parties' legal counsel in relation to this Agreement and the other Finance Documents in form and substance satisfactory to the Lender; and

	19.02.03	
such further documents and evidence as the Lender may hereafter request.

	19.03	The obligation of the Lender to advance the Facility or any part thereof is further subject to the following conditions:

	
19.03.01

	That both at the date of the Notice of Drawdown and on the Drawdown Date:

(i)  no Event of Default or Potential Event of Default has occurred or might result from making the Facility available; and

(ii)  the representations and warranties of the Borrower set out in Clause 17 as well as the representations and warranties of the Borrower and of the other Security Parties set out in the other Finance Documents are true and accurate in all material respects as of each such date, as if made on each such date with reference to the facts then subsisting; and

(iii)  there is not a Material Adverse Effect in relation to any one or more of the Security Parties or any other member of the Group; and

(ii) that none of the circumstances specified in Clause 16 has occurred and is continuing; and

	19.03.02	
That if the test set out in Clause 23 was applied immediately following the advance of the Facility, the Borrower would not be obliged to provide additional security or prepay part of the Facility as therein provided.

	19.04	If the Lender, at its discretion, permits the Facility or any part thereof to be borrowed before certain of the conditions referred to in Clause 19.01 as the case may be are satisfied, the Borrower shall ensure that those conditions are satisfied within five (5) Banking Days after the Drawdown Date (or such longer period as the Lender specifies).

	20	GENERAL UNDERTAKINGS

The Borrower undertakes with the Lender to comply with the following provisions of this Clause 20 at all relevant times during the Security Period, except as the Lender may otherwise previously permit in writing:

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	20.01	to (and ensure and procure that each other Security Party shall) supply the Lender with such number of copies as the Lender may require of (a) the annual Accounting Information as soon as available but in any event not later than one hundred and fifty (150) days after the end of the relevant period to which they relate starting with the 2013 financial statements and (b) such other information with regard to the business, properties or condition, financial or otherwise, of the Guarantor, the Manager and the other members of the Group as the Lender may from time to time reasonably request;

	20.02	to procure that the Accounting Information to be delivered from time to time in accordance with Clause 20.01 shall be prepared in accordance with the Applicable Accounting Principles and practices consistently applied, which shall present fairly the financial positions, as at the end of each such financial year to which they relate, of the Group and the results of its operations for the year to which the Accounting Information relates.

	20.03	to (and ensure and procure that each other Security Party shall) obtain promptly at any time and from time to time such registrations, licenses, consents and approvals as may be required in respect of this Agreement and the other Subject Documents under any applicable law or regulation to enable them to perform and discharge their respective duties and liabilities hereunder and thereunder and promptly supply the Lender with copies thereof;

	20.04	to (and ensure and procure that each other Security Party shall) ensure that at all times the claims of the Lender against the Borrower and the other Security Parties under this Agreement and the other Finance Documents rank at least pari passu with the claims of all other unsecured creditors of the relevant Security Party save those whose claims are preferred by any bankruptcy, insolvency or other similar laws of general application;

	20.05	to (and ensure and procure that each other Security Party shall) deliver to the Lender translations into English (certified by an authorised translator) of any documents which have to be delivered to the Lender under the terms of this Agreement or the other Subject Documents, the originals of which are not in the English language;

	20.06	not to make any loans or advances to, or any investments in, any person, firm, corporation or joint venture (or to any officer, director, stockholder, employee or customer of any such person) other than loans or advances made in the ordinary course of business;

	20.07	not to (and ensure and procure that the Guarantor shall not) declare or pay any dividends or make any distributions to its respective shareholders in any form whatsoever if:

	20.07.01	an Event of Default or a Potential Event of Default has occurred; or

	20.07.02	immediately following such payment of dividends and/or distributions the test set out in Clause 23 was applied and the Borrower would be obliged to provide additional security or prepay part of the Facility as therein provided; or

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	20.07.03	immediately following such payment of dividends and/or distributions the Borrower would be in breach of Clause 20.38;

	20.08	not to borrow any money or permit any such borrowing to continue or incur any Financial Indebtedness whatsoever other than the Facility and the Swap Exposure or other than by way of subordinated shareholders' loans or enter into any agreement for payment on deferred terms (otherwise than on customary suppliers' credit terms) or any equipment lease or contract hire agreement other than in the ordinary course of business;

	20.09	not to assume, guarantee or otherwise undertake the liability of any person, firm or company (otherwise than pursuant to the terms hereof and in the ordinary course of construction, operation or trading of the Ship);

	20.10	not to authorise or accept any capital commitments (save and except in connection with the ordinary course of construction, operation or trading of the Ship);

	20.11	not to (and ensure and procure that each other Security Party shall not) change the nature of its respective business or commence any business other than the ownership and operation of ships and activities ancillary thereto;

	20.12	not to (and ensure and procure that each other Security Party shall not) (save and except as provided in this Agreement or otherwise in favour of the Lender), create or permit to exist any Encumbrance whatsoever on the Ship or on any of its other property or assets, real or personal, whether now owned or hereafter acquired, other than a Permitted Lien;

	20.13	without prejudice to the obligations of the Borrower under Clause 20.14, promptly after the happening of an event which is (or may, with the giving of notice or passage of time or satisfaction of any other condition or any combination of the foregoing, become) an Event of Default, to notify the Lender in writing of such event and of the steps (if any) which are being taken to nullify or mitigate its effect;

	20.14	from time to time on request by the Lender to (and ensure and procure that each other Security Party shall) deliver to it a certificate signed by a director or officer of such Corporate Security Party confirming that, save as may be notified in detail in such certificate, no Event of Default or Potential Event of Default has occurred and is then subsisting, to be accompanied by such evidence as to the information and matters contained in such certificate as the Lender may from time to time reasonably require;

	20.15	to (and procure that each other relevant Security Party shall) ensure and procure that each Corporate Security Party shall maintain its corporate existence under the laws of its Original Jurisdiction and shall comply in all material respects with all relevant legislation and laws and regulations (including but not limited to the laws and regulations relating to the listing of the shares of the Guarantor in NASDAQ), applicable to such Corporate Security Party;

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	20.16	to (and procure that each other relevant Security Party shall) ensure and procure that no change in

(a)  the registered ownership of the shares of the Borrower and

(b)  the registered or beneficial ownership of the shares of the Manager and the Ship shall occur;

	20.17	to execute and procure the execution by each other Security Party of any further document or documents reasonably required by the Lender in order to perfect or complete the security created by the Security Documents;

	20.18	to (and ensure and procure that each other Security Party shall) pay all Taxes, assessments and other governmental charges when the same fall due, except to the extent that the same are being contested in good faith by appropriate proceedings and adequate reserves have been set aside for their payment if such proceedings fail and ensure and procure that all its relevant tax returns shall be properly and timely filed;

	20.19	other than in accordance with this agreement, not to convey, assign, transfer, sell or otherwise dispose of or deal with the Ship or any of its real or personal property, assets or rights whether present or future, neither to assign or otherwise transfer its rights title and interest unto the Master Agreement;

	20.20	to send (or procure that it is sent) to the Lender as soon as the same is instituted (or, to the knowledge of any Security Party threatened), details of any litigation, arbitration or administrative proceedings against or involving a Security Party, or the Ship which is likely to have a Material Adverse Effect on a Security Party or the operation of the Ship;

	20.21	to comply (and ensure that each other Security Party will comply) with all laws regulations (including but not limited to the laws and regulations relating to the listing of the shares of the Guarantor in NASDAQ, as the case may be), treaties and conventions applicable to the Borrower, the other Security Parties and the Ship and to carry on the Ship all certificates and other documents which may from time to time be required to evidence such compliance;

	20.22	not to (and ensure and procure that no Security Party will) become a FATCA FFI or a US Tax Obligor;

	20.23	to (and ensure and procure that the Security Parties and the other members of the Group will) comply, in all respects, with all Sanctions;

	20.24	not to (and ensure and procure that none of the Security Parties and the other members of the Group will) become a Prohibited Person or become owned or controlled by, or act directly or indirectly on behalf of, a Prohibited Person, or become the owner or controller of a Prohibited Person;

	20.25	not to make, directly or indirectly, available any proceeds of the Facility to or for the benefit of a Prohibited Person and to ensure and procure that any proceeds of the

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Facility is not, directly or indirectly, applied in a manner or for a purpose prohibited by Sanctions;

	20.26	not to and ensure and procure that the Borrower and the Manager and any corporate shareholder(s) thereof shall not dissolve, merge into or consolidate with any other company or person and ensure and procure that no change in the management or the legal ownership of the Borrower and the Ship shall be effected;

	20.27	to (and procure that the Guarantor will) ensure that no change in the Chief Executive Officer and/or the Chairman of the Guarantor shall occur;

	20.28	to use the proceeds of the Facility for its benefit and under its full responsibility and exclusively for the purpose specified in this Agreement;

	20.29	not to (and ensure and procure that no other Security Party will) directly or indirectly use the proceeds of the Facility for any purpose which would breach the Bribery Act 2010, the United States Foreign Corrupt Practices Act of 1977 or other similar legislation in other jurisdictions;

	20.30	to (and ensure and procure that each of the Security Parties and each member of the Group will) conduct its businesses in compliance with applicable anti-corruption laws and has instituted and maintained policies and procedures designed to promote and achieve compliance with such laws;

	20.31	to ensure and procure that, throughout the Security Period, all payments in relation to the operation of the Ship will be effected through the Lender (either via the Piraeus branch or any other branch reasonably nominated by the Lender);

	20.32	to ensure and procure that the Swap Exposure shall not exceed the Maximum Permitted Swap Exposure;

	20.33	to (and ensure and procure that each other Security Party will) deliver promptly to the Lender such documents and evidence as the Lender shall from time to time require relating to the ultimate beneficial ownership of the Borrower, the Manager and their respective corporate shareholder(s) (save from the Guarantor);

	20.34	to (and ensure and procure that each other Security Party will) deliver to the Lender such documents and evidence as the Lender shall from time to time require relating to the verification of identity and knowledge of the Lender's customers and the compliance by the Lender with all necessary "know your customer" or similar checks, and to comply within thirty (30) days from the Lender's written notice to the Borrower to that effect, to the full satisfaction of the Lender, with any requirements of the Lender in relation to the shares of the Borrower and the other members of the Group and their respective corporate shareholder(s) [including but without limitation any requirements of the Lender as to the approved form of the shares (registered or otherwise) of the Borrower and the other members of the Group and their corporate shareholder(s)], always on the basis of applicable laws and regulations or the Lender's own internal (generally applied)

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guidelines, in each case as such laws, regulations or internal guidelines apply from time to time;

	20.35	to (i) provide the Lender with any documentation or information, as the Lender may request, which relates to individual or entity tax status and (ii) inform the Lender, or respond to any request from the Lender, if there are any changes to tax information previously provided;

	20.36	upon request by the Lender, to obtain, and to ensure and procure that each other Security Party will obtain a written waiver or consent from its respective Substantial Owners or Controlling Persons, which will be provided to the Lender to permit the Lender and other members of the HSBC Group to disclose and report tax and account specific financial information to any local or foreign Tax Authority. Where any one of the Borrower and/or the other Security Parties fails to comply with requests for tax information, or fails to respond to requests for waivers or consents for tax information disclosure, or fails to respond to requests to obtain waivers or consents from Substantial Owners or Controlling Persons, the Lender may take, and may instruct members of the HSBC Group to take whatever actions are necessary to comply with the Lender's local or foreign tax reporting obligations, including without limitation any of the following action:

(a)  the Lender may withhold taxes that may be due from certain payments made to or on behalf of any one of the Borrower and/or the other Security Parties; and/or

(b)  The Lender shall have the right to pay relevant taxes to the appropriate Tax Authority; and/or

(c)  The Lender shall have the right to refuse to provide certain services to any one of the Borrower and/or the other Security Parties; and/or

(d)  the Lender shall have the right to close any account to which the provision of any facility may relate; and

	20.37	to ensure and procure that at all times during the Security Period, the Borrower and/or the Guarantor shall maintain with the Piraeus branch of the Lender, or, subject to the prior written consent of the Lender, at any other branch of the Lender to the credit of any account held with the Lender in the name of the Borrower and/or the Guarantor, minimum deposits amounting in aggregate to at least Dollars Five hundred thousand ($500,000) (which amount for the avoidance of doubt shall include the amount required by Clause 20.38.03 hereof), free of any Encumbrances in relation to this Ship;

	20.38	to (and procure that the Guarantor will) ensure that throughout the Security Period:

	20.38.01	the Market Value Adjusted Net Worth of the Guarantor shall not be less than Fifteen million Dollars ($15,000,000);

	20.38.02	the Leverage Ratio of the Guarantor will not be higher than 0.75:1; and

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	20.38.03	on a consolidated basis, at all times, the aggregate amount of cash deposits held in accounts of members of the Group (including the Guarantor) free from any Encumbrances shall not be less than Three hundred thousand Dollars ($300,000) per Fleet Vessel;

	21	INSURANCE UNDERTAKINGS

The Borrower hereby undertakes with the Lender that during the Security Period (at the expense of the Borrower and upon such terms, in such amounts and with such Insurers as shall from time to time be approved in writing by the Lender), the Borrower shall comply with the following provisions of this Clause 21 at all times during the Security Period, except as the Lender may otherwise permit in writing:

	21.01	to insure and keep insured the Ship in Dollars or such other currency as may be approved in writing by the Lender, in the full insurable value of the Ship but in no event for an amount less than the higher of (i) the Market Value of the Ship and (ii) one hundred and twenty five per cent (125%) of the aggregate of (a) the Facility and (b) (in case the Master Agreement is utilized) the Maximum Permitted Swap Exposure against fire and usual marine (including Excess Risks) and War Risks covered by hull and machinery policies;

	21.02	to enter the Ship in the name of the Borrower, for her full value and tonnage in a protection and indemnity association approved by the Lender with unlimited liability if available otherwise for the highest possible standard cover for the time being $1,000,000,000 for oil pollution and for excess oil spillage and pollution liability insurance for the highest possible standard cover against all Protection and Indemnity Risks;

	21.03	to pay to the Lender on demand all premiums or other amounts payable by the Lender in effecting a Mortgagees' Interest Insurance policy ("MII") and a mortgagee's interest (additional perils) insurance policy in the name of the Lender for a minimum insured amount of not less than one hundred and ten per cent (110%) of (a) the Facility and (b) (in case the Master Agreement is utilized) the Maximum Permitted Swap Exposure and under such wording and conditions acceptable to the Lender;

	21.04	if the Ship enters the territorial waters of the United States of America (or other jurisdiction having legislation similar to the US Oil Pollution Act 1990) for any reason whatsoever, to take out such additional insurance to cover such risks as may be necessary in order to obtain a Certificate of Financial Responsibility from the United States Coastguard;

	21.05	upon the Lender's request, to effect loss of hire and/or Earnings Insurance on the Ship (as may be required by the Lender) in respect of charterparties which exceed twelve (12) months duration and otherwise on such terms and in such amounts as the Lender may instruct the Borrower as being necessary or appropriate;

	21.06	to effect such additional Insurances as may reasonably be requested by the Lender to maintain the scope of the existing cover of the Insurances;

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	21.07	to renew the Insurances at least fourteen (14) days before the relevant Insurances expire and to procure that the Approved Brokers shall promptly confirm in writing to the Lender as and when each such renewal is effected;

	21.08	to punctually pay all premiums, calls, contributions or other sums payable in respect of the Insurances and to produce all relevant receipts when so required in writing by the Lender;

	21.09	to arrange for the execution of such guarantees as may from time to time be required by any Protection and Indemnity or War Risks association;

	21.10	to give notice of assignment of the Insurances to the Insurers in the form set out in Schedule 2 to the General Assignment and to procure that a copy of the notice of assignment shall be endorsed upon or attached to the relevant Insurance Documents;

	21.11	to procure that the Insurance Documents shall be deposited with the Approved Brokers and that such brokers shall provide the Lender with certified copies thereof and shall issue to the Lender a letter or letters of undertaking in such form as the Lender shall reasonably require;

	21.12	to procure that the Protection and Indemnity and/or War Risks associations in which the Ship is entered shall provide the Lender with a letter or letters of undertaking in their standard form and shall provide the Lender with a copy of the certificates of entry;

	21.13	to procure that the Insurance Documents (including all certificates of entry in any Protection and Indemnity and/or War Risks association) shall contain loss payable clauses in the form set out in Schedule 3 or Schedule 4 (as may be appropriate) to the General Assignment;

	21.14	to procure that the Insurance Documents shall provide that the lien or set off for unpaid premiums or calls shall be limited to only the premiums or calls due in relation to the Insurances on the Ship and for fourteen (14) days prior written notice to be given to the Lender by the Insurers (such notice to be given even if the Insurers have not received an appropriate enquiry from the Lender) in the event of cancellation or termination of Insurances and in the event of the non-payment of the premium or calls, the right to pay the said premium or calls within a reasonable time;

	21.15	to promptly provide the Lender with full information regarding any Major Casualty or any casualties or damage to the Ship in consequence whereof such Ship has become or may become a Total Loss;

	21.16	to promptly provide the Lender, at the Borrower's cost, with a detailed report issued by a firm of marine insurance brokers or consultants appointed by the Lender in relation to the Insurances, as and when the Lender may reasonably request;

	21.17	not to do any act nor voluntarily suffer nor permit any act to be done whereby any Insurance shall or may be suspended or avoided and not to suffer nor permit the Ship to engage in any voyage nor to carry any cargo not permitted under the Insurances in

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effect without first covering such Ship to the amount herein provided for with additional insurance reasonably satisfactory to the Lender for such voyage or the carriage of such cargo;

	21.18	(without limitation to the generality of the foregoing) in particular not permit the Ship to enter or trade to any zone which is declared a war zone by any Government or by the Ship's War Risks Insurers unless there shall have been effected by the Borrower and at its expense such special insurance as the War Risk Insurers may require; and

	21.19	to procure that all amounts payable under the Insurances are paid in accordance with the loss payable clause in the form set out in Schedule 3 or Schedule 4 (as may be appropriate) to the General Assignment and to apply and procure that all amounts as are paid to the Borrower are applied to the repair of the damage and the reparation of the loss in respect of which the said amounts shall have been received; and

	21.20	should the Ship be laid up for any period, to arrange 'lay-up' Insurances for the Ship during such period, at its own cost and upon such terms and conditions, in such amounts and with such Insurers as shall from time to time be approved in writing by the Lender.

	22	OPERATIONAL UNDERTAKINGS

The Borrower hereby further undertakes with the Lender to comply with the following provisions of this Clause 22 at all relevant times during the Security Period except as the Lender may otherwise previously permit in writing:

	22.01	to ensure that the Ship shall be kept registered as a Liberian flag ship at the port of Monrovia, Liberia, (or under such other flag as may be acceptable to the Lender in its reasonable discretion) and not to do or suffer to be done anything whereby such registration may be forfeited or imperilled;

	22.02	to ensure that all the Earnings of the Ship are paid into the Earnings Account;

	22.03	to pay as and when due and payable, all taxes, assessments, levies, governmental charges, fines and penalties lawfully imposed on and enforceable against the Ship;

	22.04	to ensure that the Ship (or any share thereof or interest therein) shall not be sold transferred, mortgaged, charged, hypothecated or abandoned (save in the case of maritime necessity) and that neither the Insurances nor the Earnings of the Ship or any Requisition Compensation will be assigned otherwise than in favour of the Lender;

	22.05	to ensure that the Ship shall neither be employed and/or operated in a manner contrary to any law or regulation in any relevant jurisdiction including without limitation to the ISM Code and the ISPS Code and all Sanctions and neither Borrower nor the Manager will engage in any unlawful trade or carry any cargo that may expose the Ship to penalty, forfeiture or capture and in the event of hostilities in any part of the world (whether a war be declared or not) nor employ the Ship or voluntarily suffer her employment in carrying any contraband goods;

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	22.06	not to create or permit to be created or continued any lien or Encumbrance(s) on the Ship and/or the Insurances and/or the Earnings and/or any Requisition Compensation (other than Permitted Liens) and to satisfy all claims and demands which if unpaid might in law or by statute or otherwise create a lien or Encumbrance(s) and (without prejudice to the generality of the foregoing) to procure that no lien or Encumbrance(s) is created or permitted to be created or continued on the Ship for any reason whatsoever;

	22.07	on the request of the Lender, to provide to and procure that the Lender shall be provided with satisfactory evidence that the wages, allotments, insurance and pension contributions of the Master and crew of the Ship are being paid in accordance with the relevant agreements relating to the Ship and the relevant regulations, and that all deductions from the remuneration of the Master and crew in respect of any tax liability (including all social insurance contributions) are being made and accounted for to the relevant authority and that the Master of the Ship has no claim for disbursements other than those properly incurred by him in the ordinary trading of the Ship on the voyage then in progress;

	22.08	if any writ or proceedings are issued against the Ship or if the Ship shall be otherwise attached, arrested or detained by any proceeding in any court or tribunal or by any government or other authority, the Borrower shall immediately notify and procure that the Lender shall be notified thereof by telefax confirmed by letter and to cause the Ship to be released and all liens or Encumbrance(s) (except for the Mortgage and any Permitted Liens on the Ship) thereon to be discharged forthwith;

	22.09	(save for the Approved Charter) not to voyage or time charter the Ship or place her under any contract for employment for any period which when aggregated with any optional periods of extension contained in the said charter or contract, would exceed twelve (12) months duration, provided however that in the event of the Ship being employed (with the Lender's prior written consent) under any charter which when aggregated with any optional periods contained in such charter would exceed twelve (12) months duration, the Lender shall be furnished forthwith with (a) details and documentary evidence satisfactory to the Lender in its sole discretion in respect of the new employment, (b) upon Lender's request, a specific assignment in favour of the Lender of the benefit of such charter together with a notice of any such assignment addressed to the relevant charterer and endorsed with an acknowledgement of receipt by the relevant charterer all in form and substance satisfactory to the Lender and (c) upon Lender's request, a specific agreement of subordination of the rights of such charterer to the rights of the Lender;

	22.10	not to demise charter the Ship for any period whatsoever;

	22.11	not to deliver the Ship into the possession of any person or persons for effecting repairs or renewals to the Ship the cost of which will exceed the amount of Seven hundred thousand Dollars ($700,000) unless such person or persons shall have given a written undertaking to the Lender not to exercise any lien or right of detention on the Ship in respect of the cost of such repairs or renewals;

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	22.12	at all times and at the Borrower's own expense, to maintain the Ship in a seaworthy condition and in good running order and repair in accordance with first class ship ownership and ship management practice and to keep and procure that the Ship is kept in such condition as will entitle her to the highest classification status with the Classification Society free from recommendations and notations which have not been complied with in accordance with their terms and to procure that, upon the Lender's request, the Lender is provided with a certificate issued by the Classification Society that such classification status is maintained and with copies of all other classification certificates as the Lender may request in writing;

	22.13	to submit the Ship regularly to such periodical or other surveys as may be required for classification purposes and, if so required by the Lender in writing, supply and procure that the Lender is supplied with copies of all survey reports issued in respect thereof;

	22.14	to notify and procure that the Lender is notified immediately by facsimile of any recommendation or requirement imposed on the Ship by the Classification Society, the Insurers or by any other competent authority that is not complied with in accordance with its terms;

	22.15	to give to the Lender reasonable prior notice of any proposed dry docking or any underwater survey of the Ship so that the Lender (if it so desires) can arrange for a representative to be present;

	22.16	to authorise and procure that the Classification Society and all other regulatory authorities of the Ship are authorised to disclose to the Lender any information or documents requested by the Lender relating to the classification, repair, maintenance or seaworthiness of the Ship;

	22.17	to comply with all legal requirements whether imposed by enactment, regulation, common law or otherwise and to have on board the Ship as and when legally required valid certificates showing compliance therewith;

	22.18	without prejudice to Clause 22.17, to take all necessary and proper precautions to prevent any infringements of the Anti-Drug Abuse Act of 1986 of the United States of America or any similar legislation applicable to the Ship in any jurisdiction in or to which the Ship shall be employed or trade or which may otherwise be applicable to the Ship or the Borrower and, if the Lender shall so require, the Borrower shall enter into a "Carrier Initiative Agreement" with the United States Customs Service and to procure that such agreement (or any similar agreement hereafter introduced by any agency of the United States of America) is maintained by the Borrower in full force and effect;

	22.19	to comply with and to ensure and procure that the Manager and all servants and agents of the Borrower and the Manager or any charterer of the Ship shall comply with, the ISM Code, the ISM Code Documentation, the ISPS Code, the ISPS Code Documentation, all Sanctions, all Environmental Laws and all legislation of any state or government in relation to the Ship, her ownership, operation and management or to the business of the Borrower and the Manager, including, without limitation, requirements

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relating to manning, submission of oil spill response plans, designation of qualified individuals and establishing financial responsibility;

	22.20	to hold and procure that the Manager shall hold all appropriate ISM Documentation and to provide the Lender with copies of the relevant ISM Code Documentation and ISPS Code Documentation duly issued to the Borrower, the Manager and the Ship pursuant to the ISM Code and the ISPS Code;

	22.21	to keep, or procure that it is kept, on board the Ship a copy of all relevant ISM Code Documentation and ISPS Code Documentation respectively;

	22.22	to perform and discharge all duties and liabilities imposed on the Borrower under any charter, bill of lading or other contract relating to the Ship;

	22.23	not to remove or permit the removal of any part of the Ship or any equipment belonging thereto, nor make or permit to be made any alteration in the structure type or speed of the Ship which materially reduces the value of the Ship (unless such removal or alteration is required by statute or by her Classification Society);

	22.24	at all reasonable times and on reasonable notice, to permit and procure that the Lender or its authorised representative is permitted full and complete access to the Ship for the purpose of inspecting the state and condition of the Ship and her cargo and papers and at the written request of the Lender deliver and procure the delivery for inspection copies of any and all contracts and documents relating to the Ship whether on board or not;

	22.25	to keep and procure that the Lender is kept fully informed as to the use, the employment and the position of the Ship and promptly provide and procure that the Lender is provided with information concerning the classification, status and insurance of the Ship from time to time as and when so required in writing by the Lender;

	22.26	when so requested by the Lender, to appoint and procure that two firms of independent sale and purchase shipbrokers shall be appointed, as nominated or approved by the Lender, to give valuations of the Ship in Dollars, such valuations to be made without physical inspection (unless otherwise required by the Lender) and on the basis of an arm's-length transaction by a willing buyer from a willing seller and where the Ship is subject to a charter, with or without taking into account such charter (whichever results to a lower value of the Ship); The average of the aforesaid two valuations shall constitute the Market Value of the Ship. In case the difference between the said two valuations is more than ten per cent (10%), a third firm of independent sale and purchase shipbrokers, nominated or approved by the Lender, will be appointed and the average of all three such valuations shall constitute the Market Value of the Ship. The fees of the shipbrokers appointed to give such valuations shall be paid by the Borrower;

	22.27	in the event of Compulsory Acquisition of the Ship by any Government Entity, to execute and procure the execution of any assignment that the Lender may request in relation to any and all amounts which such Government Entity shall be liable to pay as

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compensation for the Ship or for her use and if received by the Borrower to pay and procure the payment of such amounts immediately to the Lender,

	22.28	to maintain the appointment of the Manager as manager of the Ship and not to vary in any material respect or terminate this appointment;

	22.29	to execute and procure the execution by each other Security Party of any further document or documents required by the Lender in order to perfect or complete the security created by the Finance Documents;

	22.30	to execute and deliver to the Lender such documents of transfer as the Lender may require in the event of sale of the Ship pursuant to any power of sale contained in the Mortgage or which the Lender may have in law;

	22.31	to immediately notify the Lender by fax, confirmed forthwith by letter, of:

(i)            any casualty in respect of the Ship which is or is likely to be or to become a Major Casualty;

(ii)            any occurrence as a result of which the Ship has become or is, by the passing of time or otherwise, likely to become a Total Loss;

(iii)            any requirement or recommendation made by any insurer or classification society or by any competent authority in respect of the Ship which is not complied with in accordance with its terms;

(iv)            any arrest or detention of the Ship, any exercise or purported exercise of any lien on the Ship or her Earnings or her Insurances or any requisition of the Ship for hire;

(v)            any Environmental Claim made against the Borrower or the Manager or in connection with the Ship or any Environmental Incident in respect thereof;

(vi)            any claim for breach of the ISM Code or the ISPS Code being made against a Borrower and/or the Manager or otherwise in connection with the Ship; or

(vii)            any other matter, event or incident, actual or threatened the effect of which will or could lead to the ISM Code or the ISPS Code or the Sanctions not being complied with;

and advise and procure that the Lender shall be advised in writing on a regular basis and in such detail as the Lender shall require of the Borrower's or any other person's response to any of those events or matters;

	22.32	to keep prominently in the Chart Room and in the Master's cabin of the Ship a framed duly completed notice printed in plain type of such size that the area of print shall cover a space not less than six inches wide and nine inches high reading as follows:

"NOTICE OF MORTGAGE

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This Ship is owned by [..] of Liberia and is subject to a first priority/preferred Mortgage [and a deed of covenant collateral thereto - as the case may be] in favour of HSBC BANK PLC; under the terms of the said Mortgage, a certified copy of which is preserved with the Ship's papers, neither the owners nor the Captain nor any officer or agent nor any charterer of this Ship nor any other person whatsoever has any power, right or authority whatever to create, incur or permit the imposition on this Ship any commitments or encumbrances except for crews' wages accrued for not more than three (3) months or salvage."; and

	22.33	to comply with its respective obligations under each Subject Document and not to (and ensure and procure that no other party thereto will) vary, amend or terminate any of the aforesaid documents.

	23	SECURITY MARGIN

	23.01	In the event that at any time during the Security Period the Security Value is less than the Security Requirement, then the Borrower shall within thirty (30) Banking Days of receipt of a written notice from the Lender advising the Borrower of the amount of such deficiency (which notice in the absence of manifest error shall be conclusive) either provide to the Lender additional security (valued in accordance with normal banking practice) which shall in all respects be acceptable and satisfactory to the Lender in its sole discretion and which in the opinion of the Lender shall be equal to the shortfall or prepay in accordance with Clause 10 such part (at least) of the Facility that in the opinion of the Lender is required in order to eliminate the shortfall.

	24	EVENTS OF DEFAULT

	24.01	If:

	24.01.01	the Borrower fails to pay on the due date for payment any amount which shall have become due hereunder and/or under the other Finance Documents;

	24.01.02	any representation, warranty or statement made by the Borrower in this Agreement and/or in any of the other Finance Documents or any certificate, statement or opinion delivered or made hereunder or under the other Finance Documents or in connection herewith or with the other Finance Documents shall be incorrect or inaccurate when made;

	24.01.03	the Borrower fails to duly and punctually perform or observe any other term of this Agreement or of the other Finance Documents and in any such case such failure, if capable of remedy, shall continue for fourteen (14) Banking Days after the Lender shall have given to the Borrower written notice of such failure;

	24.01.04	any other Financial Indebtedness of the Borrower exceeding in aggregate One million Dollars ($1,000,000) becomes due and payable or, with the giving of notice or lapse of time or any other condition or a combination thereof, capable of being declared due and payable prior to its stated maturity by reason of any circumstance

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entitling the creditor(s) thereof to declare such indebtedness due and payable and such indebtedness is not paid within fourteen (14) Banking Days therefrom;

	24.01.05	the Borrower enters into voluntary or involuntary bankruptcy, liquidation or dissolution, or becomes insolvent, or an administrator, administrative receiver, receiver or liquidator is appointed on all or a material part of its undertaking or assets or proceedings are commenced by or against it under any reorganisation, arrangement, readjustment of debts, dissolution or liquidation law or regulation, or if any event shall occur which, under the relevant system of law, shall have an equivalent effect;

	24.01.06	the Borrower ceases or threatens to cease to carry on the whole or a substantial part of its business;

	24.01.07	there shall be a transfer or disposal of all or a substantial part of the assets of the Borrower, whether by one or a series of transactions, related or not, without the prior written consent of the Lender;

	24.01.08	any event occurs having a Material Adverse Effect on the Borrower;

	24.01.09	the value of the assets of the Borrower is less than its respective liabilities (taking into account contingent and prospective liabilities);

	24.01.10	the Borrower reduces its authorised or issued or subscribed capital;

	24.01.11	any governmental or other consent, licence or authority required to make any one of this Agreement and/or the other Finance Documents legal, valid, binding, enforceable and admissible in evidence or required to enable the Borrower to perform its duties and discharge its liabilities hereunder or under any one or more of the other Finance Documents is withdrawn or ceases to be in full force and effect unless the Borrower procures that such consent, licence or authority is reinstated or re-issued to the satisfaction of the Lender within fourteen (14) Banking Days of the said withdrawal or cessation;

	24.01.12	any distress or execution is levied or enforced against a material (in the opinion of the Lender) part of the property and assets of the Borrower and such distress or execution is not withdrawn or discharged within fourteen (14) Banking Days;

	24.01.13	the Borrower stops payment of, or is unable to, or admits inability to pay its debts as they fall due, or enters into any composition or other arrangement with its creditors generally or declares a general moratorium on the payment of indebtedness;

	24.01.14	the Borrower becomes a Prohibited Person or becomes owned or controlled by, or acts directly or indirectly on behalf of, a Prohibited Person or the Borrower becomes the owner or controller of a Prohibited Person;

	24.01.15	any proceeds of the Facility are made available, directly or indirectly, to or for the benefit of a Prohibited Person or otherwise is, directly or indirect! applied in a manner or for a purpose prohibited by Sanctions;

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	24.01.16	the Borrower becomes a FATCA FFI or a US Tax Obligor;

	24.01.17	the Borrower is not in compliance, in all respects, with all Sanctions;

	24.01.18	any of the events referred to in Clauses 24.01.01 up to and inclusive 24.01.17 occurs, mutatis mutandis, in respect of any other Security Party or any other member of the Group;

	24.01.19	without limiting the generality of Clause 24.01.03, the Borrower is in breach of the provisions of Clause 20.37 and/or Clause 20.38 and/or Clause 23;

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

	24.01.21	the Borrower and/or any other Security Party fails to comply within thirty (30) days from the Lender's written notice to the Borrower to that effect, to the full satisfaction of the Lender, with any requirements of the Lender in relation to the shares of the Borrower and the Manager and/or of their corporate shareholder(s) [including but without limitation any requirements of the Lender as to the approved form of the shares (registered or otherwise) of the Borrower and the Manager and/or of their corporate shareholder(s);

	24.01.22	there is a change in the management or the legal ownership of a Borrower and/or the Manager or of any of their corporate shareholder(s) without the prior written consent of the Lender;

	24.01.23	the Borrower sells, transfers, disposes of or (other than by Permitted Liens) encumbers the Ship or any interest or share therein, or agrees to do so without the prior written consent of the Lender;

	24.01.24	the Ship is arrested or detained and such arrest or detention is not released within twenty five (25) days, or an order for the sale of the Ship is made by a court of competent jurisdiction or the Borrower ceases to retain possession and/or control of the Ship for a period in excess of twenty five (25) days;

	24.01.25	the Ship becomes a Total Loss and the Borrower fails to make the payment required to be made under Clause 10.01 in respect of such Total Loss within the time set forth in Clause 10.02.02;

	24.01.26	the Ship is laid up for a period exceeding thirty (30) days without the prior written consent of the Lender;

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	24.01.27	the country of registration of the Ship becomes involved in war (whether or not declared) or civil war or is occupied by any other power and the Lender in its discretion considers that, as a result, the security conferred by any of the Finance Documents is materially prejudiced;

	24.01.28	an Event of Default under any one of the Subject Documents (as defined therein) occurs;

	24.01.29	the Subject Documents or any of them is terminated, revoked, cancelled, or otherwise ceases, in whole or in part, to be valid, binding and enforceable;

	24.01.30	any Security Party repudiates or evidences an intention to repudiate any one or more of the Subject Documents;

	24.01.31	the Guarantor ceases to be actively involved in the business of the Borrower and/or the Manager;

	24.01.32	the fulfilment of any one or more of the obligations covenants and undertakings contained in any one or more of this Agreement, the other Finance Documents and any other documents executed pursuant hereto or thereto or the exercise of any of the rights vested in the Lender hereunder or thereunder becoming either unlawful under any applicable law or unauthorised by any authority having jurisdiction or otherwise impossible;

	24.02	Upon the occurrence of an Event of Default which is continuing and at any time thereafter the Lender:

	24.02.01	may by written notice to the Borrower declare that any undrawn part of the Facility shall be cancelled, whereupon the same shall be cancelled;

	24.02.02	may by written notice to the Borrower declare the Indebtedness immediately due and payable whereupon the same shall become so payable to the Lender;

	24.02.03	take any other action, exercise any other right or pursue any other remedy conferred upon the Lender by this Agreement and/or the other Finance Documents or by any applicable law or regulation or otherwise as a consequence of such Event of Default;

	24.02.04	shall be entitled but not obliged to, exercise all its rights under the Master Agreement and to, inter alia, cancel, net out, unwind, terminate or liquidate all or any part of the rights, benefits and obligations created by any Designated Transaction and/or the Master Agreement. Without prejudice to or limitation of the obligations of the Borrower hereunder and under the Master Agreement, in the event that the Lender exercises any of its rights hereunder and such exercise results in all or part of a Designated Transaction being terminated, such termination shall constitute a Terminated Transaction (as defined in section 14 of the Master Agreement) effected by the Lender after an Event of Default (as so defined in that section 14) by the Borrower and, accordingly, the Lender shall be entitled to recover from the Borrower

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a payment for early termination calculated in accordance with the provisions of section 6(e)(i) of the Master Agreement.

	24.03	All Proceeds received by the Lender under or pursuant to any of the Finance Documents after the happening of any Event of Default shall be applied by the Lender in payment of the Indebtedness in accordance with the terms of Clause 12.

	24.04	On the occurrence of an Event of Default which is continuing the Lender shall have the right and power to order the Ship to proceed forthwith at the Borrower's risk and expense to a port or place nominated by the Lender. The Borrower undertakes to give the necessary instructions to the Master of the Ship to comply with any such order of the Lender and if the Borrower fails to give such instructions for any reason whatsoever the Lender shall have the right and power to give such instructions direct to the Master.

	25	SET-OFF

	25.01	The Borrower hereby authorises the Lender, without prejudice and in addition to all rights of set off, combination, lien or otherwise which the Lender has at law or under any agreement between the Lender and the Borrower, at any time following the occurrence of an Event of Default which is continuing without demand and without notice:

	25.01.01	to set off any amount to the credit of any existing accounts of the Borrower with the Lender, (whether deposit, loan or otherwise, in the name of the Borrower or otherwise) including, without limitation, the Accounts, in or towards satisfaction of all amounts due from the Borrower under this Agreement and/or any one or more of the other Finance Documents; and

	25.01.02	to transfer and apply any amount standing to the credit of any such existing accounts of the Borrower with any associate or subsidiary of the Lender in or towards satisfaction of all amounts due from the Borrower under this Agreement and/or any one or more of the other Finance Documents.

	25.02	For that purpose the Lender has the power, without limitation, to:

	25.02.01	break, or alter the maturity of, all or any part of a deposit of the Borrower; and/or

	25.02.02	enter into any other transaction or make any entry with regard to the credit balance which the Lender considers appropriate.

	25.03	Without prejudice to its rights hereunder and/or under the Master Agreement, the Lender may at the same time as, or at any time after, an Event of Default or a Potential Event of Default occurs under this Agreement or the Borrower's default under the Master Agreement, set-off any amount due now or in the future from the Borrower to the Lender under this Agreement against any amount due from the Lender to the Borrower under the Master Agreement and apply the first amount in discharging the second amount. The effect of any set-off under this Clause 25.03 shall be effective to

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extinguish or, as the case may require, reduce the liabilities of the Lender under the Master Agreement.

	25.04	Where such set-off or transfer requires the conversion of one currency into another, such conversion shall be calculated at the spot rate as conclusively determined by the Lender for purchasing such currency with the currency in which the relevant amounts are denominated on the date of actual payment.

	26	FEES

	26.01	The Borrower shall pay to the Lender an availability fee of one per cent per annum (1%) on the from time to time available and undrawn amount of the Facility (the "Availability Fee"); such Availability Fee for the Facility shall accrue from day to day for a period starting on the date of signing of this Agreement and ending on the earlier of (i) the Drawdown Date of the Facility and (ii) on the Termination Date and shall be calculated upon the exact number of days which have elapsed on the basis of a year consisting of three hundred and sixty (360) days and shall be payable quarterly in arrears.

	26.02	The Borrower shall pay to the Lender an arrangement fee of zero point eighty per cent (0.80%) of the final amount to be drawn down, of which, approximately twenty five per cent (25%) thereof i.e. US Dollars Thirty Nine thousand Nine hundred (US$39,900) has been paid by the Borrower on the 19 December 2014 and the remaining seventy five per cent (75%) thereof will be paid to the Lender simultaneously with the Drawdown of the Facility on the Drawdown Date.

	27	EARNINGS AND RETENTION ACCOUNTS

	27.01	The Borrower hereby agrees to ensure and procure that all the Earnings of the Ship, shall be paid into the Earnings Account, which shall be charged in favour of the Lender by the Earnings Account Charge. Unless and until an Event of Default or a Potential Event of Default occurs, whereupon the Lender may give notice to the Borrower that it requires that all Earnings of the Ship are paid directly to the Lender, all amounts in the Earnings Account shall be applied as follows:

	27.01.01	first, towards the payment of fees and costs that are due and payable by the Borrower to the Lender under the Finance Documents;

	27.01.02	second, (in case the Retention Account provided for in Clause 27.02 has been opened) towards payment to the Retention Account of the amounts that may be required to be transferred to the credit thereof in accordance with Clause 27.02; and

	27.01.03	third, any balance thereafter remaining in the Earnings Accounts shall be available to the Borrower for the payment of the Operating Expenses of the Ship as well as for the payment of dividends and the repayment of any shareholders' loans.

	27.02	Within fifteen (15) days from the written notice of the Lender to the Borrower to that effect, the Borrower shall open the Retention Account with the Lender, which shall be charged in favour of the Lender by the Retention Account Charge. date falling

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thirty (30) days from the immediately preceding (as from the written notice of the Lender referred to in this Clause 27.02) Repayment Instalment and on the same date in each consecutive following calendar month (provided that if such day is not a Banking Day, the next following Banking Day) the Lender will transfer from the Earnings Accounts to the Retention Account an amount equal to one third (1/3rd) of each Repayment Instalment payable on the next Repayment Date thereof and the relevant monthly fraction of the interest in respect thereof due on the relevant next Interest Payment Date; PROVIDED HOWEVER THAT, without prejudice to the provisions of Clause 35, the Lender will be entitled not to exercise the right conferred on the Lender under this Clause 27.02, :or as long as the Lender thinks fit, at the Lender's sole and absolute discretion.

	27.03	The Lender shall pay interest to the Borrower on the credit balances from time to time in the Retention Account at the rate, which it usually pays on equivalent amounts and in accordance with its usual practice.

	27.04	On each Repayment Date the Lender shall transfer from the Retention Account to the Loan Account(s) an amount equal to each relevant Repayment Instalment payable on that date and on each relevant Interest Payment Date the Lender shall transfer from the Retention Account to the Loan Account(s) an amount equal to the interest payable in respect thereof under Clause 7 on that date.

	27.05	In the event that there are insufficient funds in the Earnings Account to pay the amounts referred to in Clause 27.02 above the Borrower agrees to pay to the Lender an amount equal to the difference between the actual amount in the Earnings Account and the amount due under Clause 27.02 on the first Banking Day in such month.

	27.06	The Lender acknowledges that the Borrower shall, unless and until an Event of Default or a Potential Event of Default shall occur and the Lender shall direct to the contrary, be entitled from time to time, to require that moneys for the time being standing to the credit of the Accounts be transferred in such amounts and for such periods as the Borrower selects to fixed-term deposit accounts ("deposit accounts") opened in the name of the Borrower with the Lender.

	27.07	The Borrower shall not be entitled to withdraw moneys standing to the credit of the relevant Account which are the subject of a fixed term deposit until the expiry of the period of such deposit unless the Borrower shall, on withdrawing such moneys pay to the Lender on demand any loss or expense which the Lender shall certify that it has sustained or incurred as a result of such withdrawal being made prior to the expiry of the period of the relevant deposit and the Lender shall be entitled to debit the relevant Account for the amount so certified prior to such withdrawal being made. In the event that any moneys so deposited are to be applied pursuant to this Clause 27, the Borrower shall, on such application being made, pay to the Lender on demand any loss or expense which the Lender shall certify that it has sustained or incurred as a result of such application being made prior to the expiry of the period of the relevant deposit and the Lender shall be entitled to debit the relevant Account for the amount so certified prior to such application being made. Any deposit accounts shall, for all the purposes

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of the Finance Documents, be deemed to be sub-accounts of the relevant Account from which the moneys deposited in the deposit accounts were transferred and all references in the Finance Documents to such Account shall be deemed to include the deposit accounts deemed as aforesaid to be sub-accounts thereof.

	28	EXPENSES

	28.01	Whether or not the Facility or any part thereof, is actually drawn down the Borrower shall reimburse the Lender on demand for all costs, charges and expenses incurred by the Lender in connection with the preparation, negotiation and conclusion of this Agreement and the other Finance Documents including the fees and expenses of the Lender's legal advisers.

	28.02	The Borrower shall reimburse the Lender on demand for all charges and expenses (including legal fees) incurred by the Lender in or in connection with the exercise of the Lender's rights and powers under this Agreement and the other Finance Documents (including but not limited to the fees and charges of auditors, brokers, surveyors and lawyers instructed by the Lender) and with the actual, attempted or purported enforcement of, or preservation of rights under this Agreement and the other Finance Documents.

	29	INDEMNITY

	29.01	The Borrower hereunder undertakes and agrees to indemnify the Lender, upon the Lender's first demand, from and against any losses, costs or expenses (including legal expenses) which it incurs in consequence of any Event of Default including (but without limitation) all losses (including loss of profit for the then current Interest Period), premiums and penalties incurred or to be incurred in liquidating or redeploying deposits made by third parties or funds acquired or arranged to advance or maintain the Facility or any part thereof and any liability items which arise, or are asserted, under or in connection with any law relating to safety at sea.

	30	ENVIRONMENTAL INDEMNITY

	30.01	The Borrower undertakes to indemnify the Lender against all damages, losses, liabilities, costs, expenses, penalties, fines or proceedings which may be incurred or paid by or imposed on the Lender directly or indirectly at any time (whether before or alter the Indebtedness has been repaid in full) pursuant to any Environmental Law or any other environmental legislation of any state or government which would not have been incurred or paid by or imposed on the Lender had it not entered into this Agreement and/or the other Finance Documents.

	31	CONFIDENTIALITY

In this Clause

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"Affiliate" means, in relation to any person, a subsidiary of that person, or a holding company of that person or any other subsidiary of that holding company; and

"Representative" means any delegate, agent, manager, administrator, nominee, attorney, trustee or custodian

	31.01	The Lender agrees to keep all Confidential Information confidential and not to disclose it to anyone, save to the extent permitted by Clause 31.02 (Disclosure of Confidential Information) and Clause 31.03 (Disclosure to numbering service providers), and to ensure that all Confidential Information is protected with security measures and a degree of care that would apply to its own confidential information.

	31.02	The Lender may disclose:

	31.02.01	to any of its Affiliates and Related Funds and any of its or their officers, directors, employees, professional advisers, auditors, partners and Representatives such Confidential Information as the Lender shall consider appropriate;

	31.02.02	to any person:

		(a)	to (or through) whom it assigns or transfers (or may potentially assign or transfer) all or any of its rights and/or obligations under one or more Finance Documents and to any of that person's Affiliates, Related Funds, Representatives and professional advisers;

		(b)	with (or through) whom it enters into (or may potentially enter into), whether directly or indirectly, any sub-participation in relation to, or any other transaction under which payments are to be made or may be made by reference to, one or more Finance Documents and/or one or more Security Parties and to any of that person's Affiliates, Related Funds, Representatives and professional advisers;

		(c)	appointed by the Lender or by a person to whom Clause 31.02.02(a) or 31.02.02(b) applies to receive communications, notices, information or documents delivered pursuant to the Finance Documents on its behalf;

		(d)	who invests in or otherwise finances (or may potentially invest in or otherwise finance), directly or indirectly, any transaction referred to in Clause 31.02.02(a) or 31.02.02(b);

		(e)	to whom information is required or requested to be disclosed by any court of competent jurisdiction or any governmental, banking, taxation or other regulatory authority or similar body, the rules of any relevant stock exchange or pursuant to any applicable law or regulation;

		(f)	to whom information is required to be disclosed in connection with, and for the purposes of, any litigation, arbitration, administrative or other investigations, proceedings or disputes;

		(g)	who is a Party; or

		(h)	with the consent of the Borrower; and

	31.02.03	to any person appointed by the Lender or by a person to whom Clause 31.02.02(a) or 31.02.02(b) applies to provide administration or settlement services in respect of one or more of the Finance Documents including without limitation, in relation to the trading of participations in respect of the Finance Documents, such

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Confidential Information as may be required to be disclosed to enable such service provider to provide any of the services referred to in this Clause 31.02.03.

	31.03	Disclosure to numbering service providers

	31.03.01	The Lender may disclose to any national or international numbering service provider appointed by the Lender to provide identification numbering services in respect of this Agreement, the Facility and/or one or more Security Parties the information to enable such numbering service provider to provide its usual syndicated loan numbering identification services.

	31.03.02	The Parties acknowledge and agree that each identification number assigned to this Agreement, the Facility and/or one or more Security Parties by a numbering service provider and the information associated with each such number may be disclosed to users of its services in accordance with the standard terms and conditions of that numbering service provider.

	32	LENDER'S BUSINESS

	32.01	No provision of this Agreement will:

	32.01.01	interfere with the right of the Lender to arrange its affairs (tax or otherwise) in whatever manner it thinks fit;

	32.01.02	oblige the Lender to investigate or claim any credit, relief, remission or repayment available to it or the extent, order and manner of any claim; or

	32.01.03	oblige the Lender to disclose any information relating to its affairs (tax or otherwise) or any computations in respect of Tax.

	33	STAMP DUTIES - TAXES ETC

	33.01	The Borrower shall pay any and all stamp, registration and similar taxes and charges of whatsoever nature which may be payable or determined to be payable on, or in connection with, the execution, registration, notarisation, performance or enforcement of this Agreement or the other Finance Documents. The Borrower shall indemnify the Lender against any and all liabilities with respect to or resulting from any delay or omission on the part of the Borrower to pay any such taxes.

	34	DETERMINATIONS

	34.01	Each determination of an Interest Rate or a Default Rate or of any amount in respect of principal or interest or fees or expenses by the Lender in accordance with this Agreement and every other determination or certification by the Lender under this Agreement shall be conclusive and binding on the Borrower in the absence of manifest error.

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	35	NO WAIVER

	35.01	No failure to exercise and no delay on the part of the Lender in exercising any right or power hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right or power preclude any other or future exercise thereof or the exercise of any other right or power. The rights, powers and remedies herein provided are cumulative and not exclusive of any rights, powers or remedies provided by law.

	36	PARTIAL INVALIDITY

	36.01	In the event that any term or condition of this Agreement is rendered or declared illegal, invalid or inoperative in whole or in part by any statute rule or regulation or any decision of any court or tribunal of competent jurisdiction then such determination or declaration shall neither affect the validity of any other term or condition of this Agreement which (save as aforesaid) will remain in full force and effect nor the legality, validity or enforceability of such term or condition under the laws of any other jurisdiction.

	37	TRANSFER AND ASSIGNMENT

	37.01	This Agreement shall bind and be to the benefit of the Borrower and the Lender and their respective successors and permitted assigns.

	37.02	The Borrower may not assign any of its rights, powers, duties or liabilities hereunder.

	37.03	The Lender may at any time and without the prior consent of the Borrower assign or transfer all or part of the Facility and its rights and powers under any one or more of this Agreement and the other Finance Documents to any other bank or other financial institution (the "Transferee Lender").

	37.04	The Lender may at any time and from time to time change its lending office in respect of the whole or any part of its participation in the Facility. The Lender shall notify the Borrower of any such change in the lending office as soon as is practicable.

	37.05	If the Lender assigns or transfers all or any part of its rights, powers duties and liabilities hereunder pursuant to Clause 37.03 the Borrower undertakes immediately on being requested to do so by the Lender to enter into and procure that the other parties to the Finance Documents shall enter into, such documents as may be necessary or desirable to transfer to the Transferee Lender all or part of the Lender's interest in the Finance Documents and all relevant references in this Agreement and the other Finance Documents to the Lender shall thereafter be construed as a reference to the Lender and/or its assignee or transferee (as the case may be) to the extent of their respective interests.

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	38	NON-IMMUNITY

	38.01	The Borrower does not have any right of immunity from set-off, suit or execution, attachment or other legal process under the laws of the United Kingdom or the Republic of Greece or the Republic of the Marshall Islands or the Republic of Liberia.

	38.02	The exercise by the Borrower of its rights and performance and discharge of its duties and liabilities hereunder will constitute commercial acts done and performed for private and commercial purposes.

	38.03	To the extent that the Borrower may in any jurisdiction in which proceedings may at any time be taken for the enforcement of this Agreement and/or any of the other Finance Documents claim for itself or its assets immunity from suit, judgment, execution, attachment (whether, before judgment or otherwise) or other legal process, and to the extent that in any such jurisdiction there may be attributed to itself or its assets any such immunity (whether or not claimed), the Borrower hereby irrevocably agrees not to claim and hereby irrevocably waives any such immunity to the full extent permitted by the laws of such jurisdiction.

	39	NOTICES

	39.01	Unless otherwise specifically provided, any notice under or in connection with any Finance Document shall be given by letter or fax; and references in the Finance Documents to written notices, notices in writing and notices signed by particular persons shall be construed accordingly.

	39.02	A notice shall be sent:

	 	
(a)

	
to the Borrower:

	
c/o EUROBULK LTD

	 	 	 	
4, Messogiou & Evropis Street

	 	 	 	
151 24 Maroussi

	 	 	 	
Greece

	 	 	 	
Fax No.: +30 211 1804097

	 			
	 	
(b)

	
to the Lender:

	 
	 	 	 	
111 Messoghion Ave, 

Athens,

	 	 	 	
Greece, Tel: +30 210 6961457

	 	 	 	
Attn. Ms Katerina Eleftheriou.

or to such other address as the relevant party may notify the other in writing.

	39.03	Subject to Clauses 39.04 and 39.05:

(a)            a notice which is delivered personally or posted shall be deemed to be served, and shall take effect, at the time when it is delivered;

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(b)            a notice which is sent by fax shall be deemed to be served, and shall take effect, two (2) hours after its transmission is completed.

	39.04	However, if under Clause 39.03 a notice would be deemed to be served:

(a)            on a day which is not a Banking Day in the place of receipt; or

(b)            on such a Banking Day, but after 5 p.m. local time;

the notice shall (subject to Clause 39.05) be deemed to be served, and shall take effect, at 9 a.m. on the next day which is such a Banking Day.

	39.05	Clauses 39.03 and 39.04 do not apply if the recipient of a notice notifies the sender within one (1) hour after the time at which the notice would otherwise be deemed to be served that the notice has been received in a form, which is illegible in a material respect.

	39.06	A notice under or in connection with a Finance Document shall not be invalid by reason that the manner of serving it does not comply with the requirements of this Agreement or, where appropriate, any other Finance Document under which it is served if the failure to serve it in accordance with the requirements of this Agreement or other Finance Document, as the case may be, has not caused any party to suffer any significant loss or prejudice.

	39.07	Any notice under or in connection with a Finance Document shall be in English or in Greek.

	39.08	In this Clause "notice" includes any demand, consent, authorisation, approval, instruction, waiver or other communication.

	40	SUPPLEMENTAL

	40.01	The rights and remedies which the Finance Documents give to the Lender are:

(a)            cumulative;

(b)            may be exercised as often as appears expedient; and

(c)            shall not, unless a Finance Document explicitly and specifically states so, be taken to exclude or limit any right or remedy conferred by any law.

	40.02	If any provision of a Finance Document is or subsequently becomes void, unenforceable or illegal, that shall not affect the validity, enforceability or legality of the other provisions of that Finance Document or of the provisions of any other Finance Document.

	40.03	A Finance Document may be executed in any number of counterparts.

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	40.04	A person who is not a party to this Agreement has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce or to enjoy the benefit of any term of this Agreement.

	40.05	This Agreement supersedes the terms and conditions contained in any correspondence relating to the subject matter of this Agreement exchanged between the Lender and the Borrower or their representatives prior to the date of this Agreement, including without limitation, the Commitment Letter.

	41	LAW AND JURISDICTION

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

	41.02	Subject to Clause 41.03, the courts of England shall have exclusive jurisdiction to settle any disputes, which may arise out of or in connection with this Agreement.

	41.03	Clause 41.02 is for the exclusive benefit of the Lender, which reserves the right:

(a)            to commence proceedings in relation to any matter which arises out of or in connection with this Agreement in the courts of the Republic of Greece and/or any country other than England or Greece and which have or claim jurisdiction to that matter; and

(b)            to commence such proceedings in the courts of any such country or countries concurrently with or in addition to proceedings in England or Greece or without commencing proceedings in England or Greece.

The Borrower shall not commence any proceedings in any country other than England in relation to a matter, which arises out of or in connection with this Agreement.

	41.04	The Borrower irrevocably appoint Messrs. Hill Dickinson Service (London) Limited presently at lrongate House, Duke's Place, London EC3A 7LP England, Att. Mr. Patrick Hawkins, tel: +44 207 2839033 email: patrick.hawkins@hilldickinson.com to act as their agent to receive and accept on their behalf any process or other document relating to any proceedings in the English courts which are connected with this Agreement.

	41.05	The Borrower irrevocably designate and appoint Mr. Alexandros Kapellaris, Advocate, with offices at 42, Panepistimiou Street, 106 79 Athens, Greece, as agent for the service of process in Greece ("antiklitos") and agree to consider any legal process or any demand or notice made served by or on behalf of the Lender on the said agent as being made to the Borrower. The designation of such an authorized agent (antiklitos) shall remain irrevocable until all indebtedness shall have been paid in full in accordance with the terms of this Agreement and the other Finance Documents.

	41.06	Nothing in this Clause 41 shall exclude or limit any right which the Lender may have (whether under the law of any country, an international convention or otherwise) with regard to the bringing of proceedings, the service of process, the recognition or enforcement of a judgment or any similar or related matter in any jurisdiction.

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	41.07	In this Clause 41, "proceedings" means proceedings of any kind, including an application for a provisional or protective measure or enforcement court order (diatagi pliromis).

	42	THIS AGREEMENT AND THE OTHER FINANCE DOCUMENTS

	42.01	In case of any conflict between the provisions of this Agreement and any of the other Finance Documents the provisions of this Agreement shall prevail.

AS WITNESS the hands of the duly authorised representatives of the parties hereto the day and year first above written.

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EXECUTION PAGE

	
SIGNED by

	
)

	
Mr. Gerassimos Mentoros

	
) /s/ Mr. Gerassimos Mentoros

	
for and on behalf of

	
)

	
HSBC BANK PLC

	
)

	
In the presence of: /s/ Christos Gourikis

	
)

	
SIGNED by

	
)

	
Ms Stephania Karmiri

	
) /s/ Ms Stephania Karmiri

	
for and on behalf of

	
)

	
ULTRA TWO SHIPPING LTD

	
)

	
in the presence of: /s/ Christos Gourikis

	
)

78

SCHEDULE 1

Notice of Drawdown

TO:            HSBC BANK PLC

.........

Date ......

Dear Sirs,

Financial Agreement dated ....... made between ......... and HSBC BANK PLC

	1.	We refer to the financial agreement dated .......... (the "Financial Agreement") and made between ourselves, as borrower and yourselves as lender, in connection with a loan facility of up to ..........

Terms defined in the Financial Agreement have their defined meanings when used in this Notice of Drawdown.

	2.	We request to borrow the Facility as follows:

		(a)	Amount: $ ............;

		(b)	Drawdown Date: .............;

		(c)	Duration of the first Interest Period shall be ............. months; and

		(d)	Payment instructions: ..............

	3.	We represent and warrant that:

		(a)	the representations and warranties in Clause 17 of the Financial Agreement and in the other Finance Documents would remain true and not misleading if repeated on the date of this notice with reference to the circumstances now existing;

		(b)	no Event of Default has occurred or will result from the borrowing of the Facility.

	4.	This notice cannot be revoked without your prior written consent of the Lender.

	5.	We authorise you to deduct from the proceeds of the Facility the amount of the fees referred to in Clause 26 and all the legal fees and disbursements payable pursuant to Clause 19.01.28.

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Yours faithfully,

For and on behalf of

.........

_________________________

..........................................

Attorney-in-Fact

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SCHEDULE 2

Acknowledgement

Date: ........

Financial Agreement dated ............. made between ........... and HSBC Bank Pic (the "Financial Agreement")

We the undersigned Borrower declare that in connection with the above Financial Agreement we received the Facility in the amount of ............ Dollars ($.........) value ...........

Capitalized terms used herein shall have the respective meanings specified in the Financial Agreement.

Yours faithfully,

For and on behalf of

...............

_____________________________

.................................................

Attorney-in-Fact

SK 02558 0005 6500330

81Exhibit 10.9

Dated 20 March 2015

ULTRA ONE SHIPPING LTD

 as Borrower

and

THE BANKS AND FINANCIAL INSTITUTIONS

listed in Schedule 1

as Lenders

and

HSH NORDBANK AG

as Agent, Mandated Lead Arranger, Swap Bank

and Security Trustee

LOAN AGREEMENT

relating to a senior secured post-delivery term

loan facility of up to US$19,000,000

to provide finance secured on

 Sellers' Hull No. DY160

 

 

 

 

WATSON FARLEY

 &

WILLIAMS

Index

	
Clause

	 	
Page

	 	 	 
	
1

	
Interpretation

	
 1

	
2

	
Facility

	
 16

	
3

	
Position of the Lenders and Swap Bank

	
16

	
4

	
Drawdown

	
17

	
5

	
Interest

	
 18

	
6

	
Interest Periods

	
 20

	
7

	
Default Interest

	
 21

	
8

	
Repayment and Prepayment

	
22

	
9

	
Conditions Precedent

	
24

	
10

	
Representations and Warranties

	
25

	
11

	
General Undertakings

	
 29

	
12

	
Corporate Undertakings

	
34

	
13

	
Insurance

	
35

	
14

	
Ship Covenants

	
41

	
15

	
Security Cover

	
46

	
16

	
Payments and Calculations

	
47

	
17

	
Application of Receipts

	
49

	
18

	
Application of Earnings; Swap Payments

	
50

	
19

	
Events of Default

	
52

	
20

	
Fees and Expenses

	
57

	
21

	
Indemnities

	
 58

	
22

	
No Set-Off or Tax Deduction

	
 61

	
23

	
Illegality, etc.

	
 62

	
24

	
Increased Costs

	
63

	
25

	
Set-Off

	
65

	
26

	
Transfers and Changes in Lending Offices

	
 65

	
27

	
Variations and Waivers

	
70

	
28

	
Notices

	
71

	
29

	
Supplemental

	
73

	
30

	
Law and Jurisdiction

	
74

	
Schedule 1 Lenders and Commitments

	
76

	
Schedule 2 Drawdown Notice

	
77

	
Schedule 3 Condition Precedent Documents

	
78

	
Schedule 4 Mandatory Cost Formula

	
81

	
Schedule 5 Designation Notice

	
83

	
Schedule 6 Transfer Certificate

	
84

	
Schedule 7 Power of Attorney

	
88

	
Schedule 8 Form of Compliance Certificate

	
89

	
Execution Pages

	
90

THIS AGREEMENT is made on 20 March 2015

BETWEEN

	(1)	ULTRA ONE SHIPPING LTD, a corporation incorporated in the Republic of Liberia whose registered office is at 80 Broad Street, Monrovia, Liberia as Borrower;

	(2)	THE BANKS AND FINANCIAL INSTITUTIONS listed in Schedule 1, as Lenders;

	(3)	HSH NORDBANK AG acting through its office at Gerhart-Hauptmann-Platz 50, D-20095 Hamburg, Germany, as Agent;

	(4)	HSH NORDBANK AG acting through its office at Gerhart-Hauptmann-Platz 50, D-20095 Hamburg, Germany, as Mandated Lead Arranger;

	(5)	HSH NORDBANK AG acting through its office at Gerhart-Hauptmann-Platz 50, D-20095 Hamburg, Germany, as Security Trustee; and

	(6)	HSH NORDBANK AG acting through its office at Martensdamm 6, D-24103 Kiel, Germany, as Swap Bank.

BACKGROUND

	(A)	The Lenders have agreed to make available to the Borrower a senior secured post-delivery term loan facility in one advance in an amount up to the lesser of (i) $19,000,000 and (H) 62.5 per cent. of the Initial Market Value of the Ship for the purpose of part financing the Contract Price of the Ship.

	(B)	The Swap Bank has agreed to enter into interest rate swap transactions with the Borrower from time to time to hedge the Borrower's exposure under this Agreement to interest rate fluctuations.

	(C)	The Lenders and the Swap Bank have agreed to share pari passu in the security to be granted to the Security Trustee pursuant to this Agreement.

IT IS AGREED as follows:

	1.	INTERPRETATION

	1.1	Definitions

Subject to Clause 1.5, in this Agreement:

"Account" means each of the Earnings Account, the Liquidity Account, the Swap Account and the Retention Account and, in the plural, means all of them;

"Account Pledge" means, in relation to each Account, a pledge agreement creating security in respect of that Account in the Agreed Form and, in the plural, means all of them;

"Additional Minimum Liquidity" has the meaning given in Clause 11.19;

"Advance" means the principal amount of the borrowing by the Borrower under this Agreement in respect of the Ship or, as the context may require, the principal amount outstanding under such Advance under this Agreement;

"Affected Lender" has the meaning given in Clause 5.7;

"Agency and Trust Agreement" means the agency and trust agreement executed or to be executed between the Borrower and the Creditor Parties in the Agreed Form;

"Agent" means HSH Nordbank AG, acting in such capacity through its office at Gerhart-Hauptmann-Platz 50, D-20095 Hamburg, Germany, or any successor of it appointed under clause 5 of the Agency and Trust Agreement;

"Agreed Form" means in relation to any document, that document in the form approved in writing by the Agent (acting on the instructions of the Majority Lenders) or as otherwise approved in accordance with any other approval procedure specified in any relevant provisions of any Finance Document;

"Applicable Lender" has the meaning given in Clause 5.2;

"Approved Auditor" means any auditors acceptable to the Lenders;

"Approved Broker" means Arrow, Barry Rogliano Sales, Clarksons, Howe Robinson, SSY Valuation Services, Maersk Brokers, RS Platou Shipbrokers and Fearnleys (or such subsidiary or other company in the same corporate group through which valuations are commonly issued) and, in the plural, means all of them;

"Approved Flag" means, in relation to the Ship, the Liberian flag or such other flag as the Agent may approve as the flag on which the Ship is or, as the case may be, shall be registered;

"Approved Flag State" means, in relation to the Ship, the Republic of Liberia or any other country in which the Agent may approve that the Ship is or, as the case may be, shall be registered;

"Approved Manager" means, in respect of the Ship, Eurobulk Ltd or any other company which the Agent (acting on the instructions of the Majority Lenders) may approve from time to time as the commercial and/or technical manager of the Ship;

"Approved Manager's Undertaking" means, in relation to the Ship, a letter of undertaking including (inter alia) an assignment of the Approved Manager's rights, title and interest in the Insurances executed or to be executed by the Approved Manager in favour of the Security Trustee in the Agreed Form agreeing certain matters in relation to that Approved Manager, serving as manager and subordinating its rights against the Ship and the Borrower to the rights of the Creditor Parties under the Finance Documents and, in the plural, means all of them;

"Assignable Charter" means, in relation to the Ship, any time charterparty, consecutive voyage charter or contract of affreightment in respect of the Ship having a duration (or capable of exceeding a duration) of 12 months or more and any guarantee of the obligations of the charterer under such charter or any bareboat charter in respect of the Ship and any guarantee of the obligations of the charterer under such bareboat charter, entered or to be entered into by the Borrower and a charterer or, as the context may require, bareboat charterer and, in the plural, means all of them;

"Availability Period" means the period commencing on the date of this Agreement and ending on:

		(a)	30 April 2016 (or such later date as the Agent may, with the authorisation of the Lenders, agree with the Borrower); or

		(b)	if earlier, the date on which the Total Commitments are fully borrowed, cancelled or terminated;

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"Balloon Instalment" has the meaning given in Clause 8.1;

"Basel III" means, together:

		(a)	the agreements on capital requirements, a leverage ratio and liquidity standards contained in "Basel III: A global regulatory framework for more resilient banks and banking systems", "Basel III: International framework for liquidity risk measurement, standards and monitoring" and "Guidance for national authorities operating the countercyclical capital buffer" published by the Basel Committee on Banking Supervision in December 2010, each as amended, supplemented or restated;

		(b)	the rules for global systemically important banks contained in "Global systemically important banks: assessment methodology and the additional loss absorbency requirement - Rules text" published by the Basel Committee on Banking Supervision in November 2011, as amended, supplemented or restated; and

		(c)	any further guidance or standards published by the Basel Committee on Banking Supervision relating to "Basel III";

"Borrower" means Ultra One Shipping Ltd, a corporation incorporated in the Republic of Liberia having its registered office at 80 Broad Street, Monrovia, Liberia;

"Break Costs" has the meaning given in Clause 21.2;

"Builder" means Yangzhou Dayang Shipbuilding Co. Ltd., a corporation organised and existing under the laws of the People's Republic of China;

"Building Contract" means the building contract entered into between the Builder and Sumec Marine Co Ltd a corporation organised and existing under the laws of the People's Republic of China ("Sumec") (Sumec and the Builder collectively the "Sellers") and the Borrower for the construction by the Sellers and delivery to the Borrower of the Ship;

"Business Day" means a day (other than a Saturday or Sunday) on which banks are open for general business in London, Piraeus and Hamburg and, in respect of a day on which a payment is required to be made under a Finance Document, also in New York City and, in respect of a day on which payment is required to be made to the Sellers or any of them, also in the People's Republic of China;

"Cancellation Notice" has the meaning given in Clause 8.6;

"Charterparty Assignment" means, in relation to the Ship, an assignment of the rights of the Borrower under any Assignable Charter relative thereto executed or to be executed by the Borrower in favour of the Security Trustee in the Agreed Form and, in the plural, means all of them;

"Commitment" means, in relation to a Lender, the amount set opposite its name in Schedule 1, or, as the case may require, the amount specified in the relevant Transfer Certificate, as that amount may be reduced, cancelled or terminated in accordance with this Agreement (and "Total Commitments" means the aggregate of the Commitments of all the Lenders);

"Compliance Certificate" means a certificate in the form set out in Schedule 8 (or in any other form which the Agent approves or reasonably requires) to be provided at the times and in the manner set out in Clause 11.20;

"Confirmation" and "Early Termination Date", in relation to any continuing Designated Transaction, have the meanings given in the Master Agreement;

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"Contract Price" means the aggregate amount payable by the Borrower to the Sellers pursuant to the Building Contract;

"Construction Cost" means the Contract Price, any extras payable to the Sellers, the supervision cost and the buyers' supplies payable by the Borrowers for the construction of the Ship.

"Contractual Currency" has the meaning given in Clause 21.6;

"Contribution" means, in relation to a Lender, the part of the Loan which is owing to that Lender;

"Corporate Guarantee" means a corporate guarantee of the obligations of the Borrower under this Agreement, the Master Agreement and the other Finance Documents to which the Borrower is a party, in the Agreed Form;

"Corporate Guarantor" means Euroseas Ltd, a corporation incorporated in the Republic of the Marshall Islands whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, MH96960, the Marshall Islands;

"Cost of Funding" means, in relation to a Lender, the rate per annum determined by that Lender to be the rate at which deposits in Dollars are offered to that Lender by leading banks in the London Interbank Market at that Lender's request at or about 11.00 a.m. (London time) on the Quotation Date for an Interest Period and for a period equal to that Interest Period and for delivery on the first Business Day of it, or, if that Lender uses other ways than the London Interbank Market to fund deposits in Dollars, such rate as determined by that Lender to be the Lender's cost of funding deposits in Dollars for that Interest Period;

"Creditor Party" means the Agent, the Security Trustee, the Mandated Lead Arranger, any Lender or the Swap Bank, whether as at the date of this Agreement or at any later time and, in the plural, means all of them;

"Delivery Date" means the date of delivery of the Ship from the Sellers to the Borrower in accordance with the Building Contract.

"Designated Transaction" means a Transaction which fulfils the following requirements:

		(a)	it is entered into by the Borrower pursuant to the Master Agreement with the Swap Bank which, at the time the Transaction is entered into, is also a Lender;

		(b)	its purpose is the hedging of the Borrower's exposure under this Agreement to fluctuations in LIBOR arising from the funding of the Loan (or any part thereof) for a period expiring no later than the Final Repayment Date; and

		(c)	it is designated by the Swap Bank, by delivery by the Swap Bank to the Borrower and the Agent of a notice of designation in the form set out in Schedule 5, as a Designated Transaction for the purposes of the Finance Documents;

"Dollars" and "$" means the lawful currency for the time being of the United States of America;

"Drawdown Date" means, in respect of the Advance, the date requested by the Borrower for the Advance to be borrowed, or (as the context requires) the date on which the Advance is actually borrowed;

"Drawdown Notice" means a notice in the form set out in Schedule 2 (or in any other form which the Agent approves or reasonably requires);

4

"Earnings" means, in relation to the Ship, all moneys whatsoever which are now, or later become, payable (actually or contingently) to the Borrower or the Security Trustee and which arise out of the use or operation of the Ship, including (but not limited to):

		(a)	except to the extent that they fall within paragraph (b);

		(i);	all freight, hire and passage moneys;

		(ii)	compensation payable to the Borrower or the Security Trustee in the event of requisition of the Ship for hire;

		(iii)	remuneration for salvage and towage services;

		(iv)	demurrage and detention moneys;

		(v)	damages for breach (or payments for variation or termination) of any charterparty or other contract for the employment of the Ship; and

		(vi)	all moneys which are at any time payable under any Insurances in respect of loss of hire; and

		(b)	if and whenever the Ship is employed on terms whereby any moneys falling within paragraphs (a)(i) to (vi) are pooled or shared with any other person, that proportion of the net receipts of the relevant pooling or sharing arrangement which is attributable to the Ship;

"Earnings Account" means, in relation to the Ship, an account in the name of the Borrower with the Agent in Hamburg designated "Ultra One Shipping Ltd - Earnings Account", or any other account (with that or another office of the Agent or with a bank or financial institution other than the Agent) which replaces such account and is designated by the Agent as the Earnings Account for the purposes of this Agreement in accordance with the Agent's instructions in writing;

"Environmental Claim" means:

		(a)	any claim by any governmental, judicial or regulatory authority which arises out of an Environmental Incident or an alleged Environmental Incident or which relates to any Environmental Law; or

		(b)	any claim by any other person which relates to an Environmental Incident or to an alleged Environmental Incident,

and "claim" means in this context a claim for damages, compensation, fines, penalties or any other payment of any kind whether or not similar to the foregoing; an order or direction to take, or not to take, certain action or to desist from or suspend certain action; and any form of enforcement or regulatory action, including the arrest or attachment of any asset;

"Environmental Incident" means, in relation to the Ship:

		(a)	any release of Environmentally Sensitive Material from the Ship; or

		(b)	any incident in which Environmentally Sensitive Material is released from a vessel other than the Ship and which involves a collision between the Ship and such other vessel or some other incident of navigation or operation, in either case, in connection with which the Ship is actually or potentially liable to be arrested, attached, detained or injuncted and/or the Ship and/or the Borrower and/or any operator or manager of the Ship is at fault or allegedly at fault or otherwise liable to any legal or administrative action; or

5

		(c)	any other incident in which Environmentally Sensitive Material is released otherwise than from the Ship and in connection with which the Ship is actually or potentially liable to be arrested and/or where the Borrower and/or any operator or manager of the Ship is at fault or allegedly at fault or otherwise liable to any legal or administrative action;

"Environmental Law" means any law relating to pollution or protection of the environment, to the carriage of Environmentally Sensitive Material or to actual or threatened releases of Environmentally Sensitive Material;

"Environmentally Sensitive Material" means oil, oil products and any other substance (including any chemical, gas or other hazardous or noxious substance) which is (or is capable of being or becoming) polluting, toxic or hazardous;

"Event of Default" means any of the events or circumstances described in Clause 19.1;

"Final Repayment Date" means the date falling on the earlier of (i) the fourth annual anniversary of the Drawdown Date and (ii) 30 April 2020;

"Finance Documents" means together:

		(a)	this Agreement;

		(b)	the Master Agreement;

		(c)	the Master Agreement Assignment;

		(d)	the Corporate Guarantee;

		(e)	the Agency and Trust Agreement;

		(f)	the General Assignment;

		(g)	the Mortgage;

		(h)	the Account Pledges;

		(i)	any Charterparty Assignments;

		(j)	the Approved Manager's Undertaking; and

		(k)	any other document (whether creating a Security Interest or not) which is executed at any time by the Borrower, the Corporate Guarantor, the Approved Manager or any other person as security for, or to establish any form of subordination or priorities arrangement in relation to, any amount payable to the Lenders and/or the Swap Bank under this Agreement or any of the other documents referred to in this definition and, in the singular, means any of them;

"Financial Indebtedness" means, in relation to a person (the "debtor"), any actual or contingent liability of the debtor:

		(a)	for principal, interest or any other sum payable in respect of any moneys borrowed or raised by the debtor;

		(b)	under any loan stock, bond, note or other security issued by the debtor;

		(c)	under any acceptance credit, guarantee or letter of credit facility made available to the debtor;

6

		(d)	under a financial lease, a deferred purchase consideration arrangement or any other agreement having the commercial effect of a borrowing or raising of money by the debtor;

		(e)	under any interest or currency swap, exchange or any other kind of derivative transaction entered into by the debtor or, if the agreement under which any such transaction is entered into requires netting of mutual liabilities, the liability of the debtor for the net amount; or

		(f)	under receivables sold or discounted (other than any receivables to the extent that they are sold on a non-recourse basis); or

		(g)	under a guarantee, indemnity or similar obligation entered into by the debtor in respect of a liability of another person which would fall within (a) to (e) if the references to the debtor referred to the other person;

"Financial Year" means, in relation to each of the Borrower, the Corporate Guarantor and the Group, each period of 1 year commencing on 1 January in respect of which their individual or, as the case may be, consolidated accounts are or ought to be prepared;

"GAAP" means generally accepted accounting principles in the USA;

"General Assignment" means, in relation to the Ship, a general assignment of (inter alia) the Earnings, the Insurances and any Requisition Compensation in the Agreed Form;

"Group" means together, the Borrower, the Corporate Guarantor and all subsidiaries direct or indirect) of the Corporate Guarantor from time to time during the Security Period and "member of the Group" shall be construed accordingly;

"IACS" means the International Association of Classification Societies;

"Initial Market Value" means, in relation to the Ship, the Market Value thereof calculated in accordance with the valuations relative thereto referred to in paragraph 4 of Schedule 3, Part B;

"Instalment" has the meaning given in Clause 8.1;

"Insurances" means, in relation to the Ship:

		(a)	all policies and contracts of insurance and any reinsurance, policies or contracts, including entries of the Ship in any protection and indemnity or war risks association, effected in respect of the Ship, its Earnings or otherwise in relation to it whether before, on or after the date of this Agreement; and

		(b)	all rights (including, without limitation, any and all rights or claims which the Borrower may have under or in connection with any cut-through clause relative to any reinsurance contract relating to the aforesaid policies or contracts of insurance) and other assets relating to, or derived from, any of the foregoing, including any rights to a return of a premium and any rights in respect of any claim whether or not the relevant policy, contract of insurance or entry has expired on or before the date of this Agreement;

"Interest Period" means a period determined in accordance with Clause 6;

"ISM Code" means the International Safety Management Code (including the guidelines on its implementation), adopted by the International Maritime Organisation as the same may be amended or supplemented from time to time (and the terms "safety management

7

system", "Safety Management Certificate" and "Document of Compliance" have the same meanings as are given to them in the ISM Code);

"ISPS Code" means the International Ship and Port Facility Security Code as adopted by the International Maritime Organisation, as the same may be amended or supplemented from time to time;

"ISSC" means a valid and current International Ship Security Certificate issued under the ISPS Code;

"Lender" means, subject to Clause 26.6, a bank or financial institution listed in Schedule 1 and acting through its branch indicated in Schedule 1 (or through another branch notified to the Agent under Clause 26.15) or its transferee, successor or assign;

"LIBOR" means, for an Interest Period:

		(a)	the rate per annum equal to the offered quotation for deposits in Dollars for a period equal to, or as near as possible equal to, the relevant Interest Period which appears on the Screen Rate; or

		(b)	if no the Screen Rate is available, the rate per annum determined by the Agent to be the arithmetic mean (rounded upwards, if necessary, to the nearest one-sixteenth of one per cent.) of the rates per annum notified to the Agent by each Reference Bank as the rate at which deposits in Dollars are offered to that Reference Bank by leading banks in the London Interbank Market at that Reference Bank's request at or about 11.00 a.m. (London time) on the Quotation Date for that Interest Period for a period equal to that Interest Period and for delivery on the first Business Day of it;

"Liquidity Account" means an account in the name of the Borrower with the Agent in Hamburg designated "Ultra One Shipping Ltd — Liquidity Account", or any other account (with that or another office of the Agent or with a bank or financial institution other than the Agent) which replaces such account and is designated by the Agent as the Liquidity Account for the purposes of this Agreement in accordance with the Agent's instructions in writing;

"Loan" means the principal amount for the time being outstanding under this Agreement;

"LSW 1189" means the London Standard Wording for marine insurances which incorporates the German Direct Mortgage Clause;

"Major Casualty" means, in relation to the Ship, any casualty to the Ship in respect of which the claim or the aggregate of the claims against all insurers, before adjustment for any relevant franchise or deductible, exceeds $750,000 or the equivalent in any other currency;

"Majority Lenders" means:

		(a)	before the Advance is made, Lenders whose Commitments total 66.7 per cent. of the Total Commitments; and

		(b)	after the Advance is made, Lenders whose Contributions total 66.7 per cent. of the Loan;

"Mandated Lead Arranger" means HSH Nordbank AG, acting in such capacity through its office at Gerhart-Hauptmann-Platz 50, D-20095 Hamburg, Germany, or any successor;

"Mandatory Cost" means the percentage rate per annum calculated by the Agent in accordance with Schedule 4;

"Margin" means 3.00 per cent. per annum;

8

"Market Value" means, in relation to the Ship, the market value thereof determined in accordance with Clause 15.3;

"Master Agreement" means the master agreement (on the 2002 ISDA (Multicurrency-Crossborder) form) and the schedule collateral thereto in the Agreed Form made between the Borrower and the Swap Bank and includes all Designated Transactions from time to time entered into and Confirmations from time to time exchanged under the master agreement;

"Master Agreement Assignment" means the assignment of the Master Agreement in the Agreed Form;

"Material Adverse Change" means any event or series of events which, in the opinion of the Majority Lenders, has or will have a Material Adverse Effect;

"Material Adverse Effect" means a material adverse effect on:

		(a)	the business, property, assets, liabilities, operations or condition (financial or otherwise) of the Borrower and/or the Guarantor taken as a whole;

		(b)	the ability of the Borrower and/or the Guarantor to comply with or perform any of its obligations or discharge any of its liabilities, under any Finance Document as they fall due; or

		(c)	the validity, legality or enforceability of any Finance Document;

"Maximum Advance Amount" means an amount up to the lesser of (i) $19,000,000 and (ii) 62.5 per cent. of the Initial Market Value of the Ship;

"Minimum Liquidity" has the meaning given in Clause 11.19;

"Mortgage" means, in relation to the Ship, the first preferred or, as the case may be, priority ship mortgage on the Ship and, if required pursuant to the laws of the applicable Approved Flag State, a deed of covenants collateral thereto, each in the Agreed Form;

"Negotiation Period" has the meaning given in Clause 5.10;

"Notifying Lender" has the meaning given in Clause 21.2, 23.1 or Clause 24.1 as the context requires;

"Payment Currency" has the meaning given in Clause 21.6;

"Permitted Security Interests" means:

		(a)	Security Interests created by the Finance Documents;

		(b)	liens for unpaid master's and crew's wages in accordance with usual maritime practice;

		(c)	liens for salvage;

		(d)	liens arising by operation of law for not more than 2 months' prepaid hire under any charter in relation to the Ship not prohibited by this Agreement;

		(e)	liens for master's disbursements incurred in the ordinary course of trading and any other lien arising by operation of law or otherwise in the ordinary course of the construction, operation, repair or maintenance of the Ship, provided such liens do not secure amounts more than 30 days overdue (unless the overdue amount is

9

being contested by the Borrower in good faith by appropriate steps) and subject, in the case of liens for repair or maintenance, to Clause 14.13(e);

		(f)	any Security Interest created in favour of a plaintiff or defendant in any proceedings or arbitration as security for costs and expenses while the Borrower is actively prosecuting or defending such proceedings or arbitration in good faith; and

		(g)	Security Interests arising by operation of law in respect of taxes which are not overdue for payment or in respect of taxes being contested in good faith by appropriate steps and in respect of which appropriate reserves have been made;

"Pertinent Document" means:

		(a)	any Finance Document;

		(b)	any policy or contract of insurance contemplated by or referred to in Clause 13 or any other provision of this Agreement or another Finance Document;

		(c)	any other document contemplated by or referred to in any Finance Document; and

		(d)	any document which has been or is at any time sent by or to a Servicing Bank in contemplation of or in connection with any Finance Document or any policy, contract of insurance or other document falling within above paragraphs;

"Pertinent Jurisdiction", in relation to a company, means:

		(a)	England and Wales;

		(b)	the country under the laws of which that company is incorporated or formed;

		(c)	a country in which that company has the centre of its main interests or which that

 company's central management and control is or has recently been exercised;

		(d)	a country in which the overall net income of that company is subject to corporation tax, income tax or any similar tax;

		(e)	a country in which assets of that company (other than securities issued by, or loans to, related companies) having a substantial value are situated, in which that company maintains a branch or permanent place of business, or in which a Security Interest created by that company must or should be registered in order to ensure its validity or priority; and

		(f)	a country the courts of which have jurisdiction to make a winding up, administration or similar order in relation to that company, whether as a main or territorial or ancillary proceedings, or which would have such jurisdiction if their assistance were requested by the courts of a country referred to in above paragraphs (b) or (c);

"Pertinent Matter" means:

		(a)	any transaction or matter contemplated by, arising out of, or n connection with a Pertinent Document; or

		(b)	any statement relating to a Pertinent Document or to a transaction or matter falling within paragraph above (a),

and covers any such transaction, matter or statement, whether entered into, arising or made at any time before the signing of this Agreement or on or at any time after that signing;

10

"Potential Event of Default" means an event or circumstance of the type described in Clause 19.1 which, with the giving of any notice or the lapse of time, a determination of the Majority Lenders and/or the satisfaction of any other condition, would constitute an Event of Default;

"Prepayment Date" has the meaning given in Clause 15.2;

"Prepayment Notice" has the meaning given in Clause 8.5(b);

"Quotation Date" means, in relation to any Interest Period (or any other period for which an interest rate is to be determined under any provision of a Finance Document), the day on which quotations would ordinarily be given by leading banks in the London Interbank Market for deposits in the currency in relation to which such rate is to be determined for delivery on the first day of that Interest Period or other period;

"Reference Banks" means, subject to Clause 26.18, together, the Hamburg branch of HSH Nordbank AG, any other bank acceptable to the Agent (acting on the instructions of the Majority Lenders) and any of their respective successors;

"Relevant Person" has the meaning given in Clause 19.9;

"Repayment Date" means a date on which a repayment is required to be made under Clause 8;

"Requisition Compensation" includes all compensation or other moneys payable by reason of any act or event such as is referred to in paragraph (b) of the definition of "Total Loss";

"Retention Account" means an account in the name of the Borrower with the Agent in Hamburg designated "Ultra One Shipping Ltd — Retention Account", or any other account (with that or another office of the Agent or with a bank or financial institution other than the Agent) which replaces this account and is designated by the Agent as the Retention Account for the purposes of this Agreement in accordance with the Agent's instructions;

"Screen Rate" means the London interbank offered rate administered by the ICE Benchmark Administration Limited (or any other person which takes over the administration of that rate) for Dollars for the relevant period displayed on pages LIBOR01 or LIBOR02 of the Reuters screen (or any replacement Reuters page which displays that rate) or on the appropriate page of such other information service which publishes that rate from time to time in place of Reuters. If such page or service ceases to be available, the Agent may specify another page or service displaying the relevant rate after consultation with the Borrower;

"Secured Liabilities" means all liabilities which the Borrower, the Corporate Guarantor, the Security Parties or any of them have, at the date of this Agreement or at any later time or times, under or in connection with any Finance Document or any judgment relating to any Finance Document; and for this purpose, there shall be disregarded any total or partial discharge of these liabilities, or variation of their terms, which is effected by, or in connection with, any bankruptcy, liquidation, arrangement or other procedure under the insolvency laws of any country;

"Security Interest" means:

		(a)	a mortgage, charge (whether fixed or floating) or pledge, any maritime or other lien or any other security interest of any kind;

		(b)	the rights of a plaintiff under an action in rem; and

		(c)	any arrangement entered into by a person (A) the effect of which is to place another person (B) in a position which is similar, in economic terms, to the position in which

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B would have been had he held a security interest over an asset of A; but paragraph (c) does not apply to a right of set off or combination of accounts conferred by the standard terms of business of a bank or financial institution;

"Security Party" means the Corporate Guarantor, each Approved Manager and any other person (except a Creditor Party) who, as a surety or mortgagor, as a party to any subordination or priorities arrangement, or in any similar capacity, executes a document falling within the final paragraph of the definition of "Finance Documents";

"Security Period" means the period commencing on the date of this Agreement and ending on the date on which the Agent notifies the Borrower, the Security Parties and the other Creditor Parties that:

		(a)	all amounts which have become due for payment by the Borrower or any Security Party under the Finance Documents have been paid;

		(b)	no amount is owing or has accrued (without yet having become due for payment) under any Finance Document;

		(c)	neither the Borrower nor any Security Party has any future or contingent liability under Clauses 20, 21 or 22 or any other provision of this Agreement or another Finance Document; and

		(d)	the Agent, the Mandated Lead Arranger, the Security Trustee and the Majority Lenders do not consider that there is a significant risk that any payment or transaction under a Finance Document would be set aside, or would have to be reversed or adjusted, in any present or possible future bankruptcy of the Borrower or a Security Party or in any present or possible future proceeding relating to a Finance Document or any asset covered (or previously covered) by a Security Interest created by a Finance Document;

"Security Trustee" means HSH Nordbank AG, acting in such capacity through its office at Gerhart-Hauptmann-Platz 50, D-20095, Hamburg, Germany, or any successor of it appointed under clause 5 of the Agency and Trust Agreement;

"Servicing Bank" means the Agent or the Security Trustee;

"Ship" means the ultramax bulk carrier of approximately 63,500 metric tons deadweight which is currently being constructed by the Sellers for the Borrower pursuant to the Building Contract, having Sellers' Hull No. DY160 and which is currently scheduled to be delivered to and purchased by the Borrower in the fourth quarter of 2015 or the first quarter of 2016 and registered in its name under an Approved Flag in accordance with the laws of the applicable Approved Flag State;

"Swap Account" means an account in the name of the Borrower with the Agent in Hamburg designated "Ultra One Shipping Ltd — Swap Account", or any other account (with that or another office of the Agent or with a bank or financial institution other than the Agent) which replaces this account and is designated by the Agent as the Swap Account for the purposes of this Agreement in accordance with the Agent's instructions in writing;

"Swap Bank" means HSH Nordbank AG, acting in such capacity through its office at Martensdamm 6, D-24103 Kiel, Germany;

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

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"Total Loss" means, in relation to the Ship:

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

		(b)	any expropriation, confiscation, requisition or compulsory acquisition of the Ship (excluding a requisition for hire for a fixed period not exceeding one year without any right to an extension), whether for full or part consideration, a consideration less than its proper value, a nominal consideration or without any consideration, which is effected by any government or official authority or by any person or persons claiming to be or to represent a government or official authority unless it is within 1 month from the date of such occurrence redelivered to the full control of the Borrower;

		(c)	any condemnation of the Ship by any tribunal or by any person or person claiming to be a tribunal; and

		(d)	any arrest, capture, seizure, confiscation or detention of the Ship (including any hijacking or theft) unless it is within 1 month redelivered to the full control of the Borrower;

"Total Loss Date" means, in relation to the Ship:

		(a)	in the case of an actual loss of the Ship, the date on which it occurred or, if that is unknown, the date when the Ship was last heard of;

		(b)	in the case of a constructive, compromised, agreed or arranged total loss of the Ship, the earliest of:

		(i)	the date on which a notice of abandonment is given to the insurers; and

		(ii)	the date of any compromise, arrangement or agreement made by or on behalf of the Borrower with the Ship's insurers in which the insurers agree to treat the Ship as a total loss; and

		(c)	in the case of any other type of total loss, on the date (or the most likely date) on which it appears to the Agent (acting reasonably) that the event constituting the total loss occurred;

"Transaction" has the meaning given in the Master Agreement;

"Transfer Certificate" has the meaning given in Clause 26.2; and

"Trust Property" has the meaning given in clause 3.1 of the Agency and Trust Agreement.

"Underlying Documents" means any Assignable Charters, the Building Contract and, in the singular, means any of them.

	1.2	Construction of certain terms

In this Agreement:

"administration notice" means a notice appointing an administrator, a notice of intended appointment and any other notice which is required by law (generally or in the case concerned) to be filed with the court or given to a person prior to, or in connection with, the appointment of an administrator;

"approved" means, for the purposesof Clause 13, approved in writing by the Agent at its discretion;

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"asset" includes every kind of property, asset, interest or right, including any present, future or contingent right to any revenues or other payment;

"company" includes any partnership, joint venture and unincorporated association;

"consent" includes an authorisation, consent, approval, resolution, licence, exemption, filing, registration, notarisation and legalisation;

"contingent liability" means a liability which is not certain to arise and/or the amount of which remains unascertained;

"document" includes a deed; also a letter or fax;

"excess risks" means, in relation to the Ship, the proportion of claims for general average, salvage and salvage charges not recoverable under the hull and machinery policies in respect of the Ship in consequence of its insured value being less than the value at which the Ship is assessed for the purpose of such claims;

"expense" means any kind of cost, charge or expense (including all legal costs, charges and expenses) and any applicable value added or other tax;

"gross negligence" means a form of negligence which is distinct from ordinary negligence, in which the due diligence and care which are generally to be exercised have been disregarded to a particularly high degree, in which the plainest deliberations have not been made and that which should be most obvious to everybody has not been followed;

"law" includes any order or decree, any form of delegated legislation, any treaty or international convention and any regulation or resolution of the Council of the European Union, the European Commission, the United Nations or its Security Council;

"legal or administrative action" means any legal proceeding or arbitration and any administrative or regulatory action or investigation;

"liability" includes every kind of debt or liability (present or future, certain or contingent), whether incurred as principal or surety or otherwise;

"months" shall be construed in accordance with Clause 1.3;

"obligatory insurances" means, in relation to the Ship, all insurances effected, or which the Borrower is obliged to effect, under Clause 13 or any other provision of this Agreement or another Finance Document;

"parent company" has the meaning given in Clause 1.4;

"person" includes any individual, any partnership, any company; any state, political sub­division of a state and local or municipal authority; and any international organisation;

"policy" in relation to any insurance, includes a slip, cover note, certificate of entry or other document evidencing the contract of insurance or its terms;

"protection and indemnity risks" means the usual risks covered by a protection and indemnity association managed in London or by members of the International Group, including pollution risks and the proportion (if any) of any sums payable to any other person or persons in case of collision which are not recoverable under the hull and machinery policies by reason of the incorporation in them of clause 1 of the Institute Time Clauses (Hulls) (1/10/82) or clause 8 of the Institute Time Clauses (Hulls) (1/11/1995) or the Institute Amended Running Down Clause (1/10/71) or any equivalent provision;

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"regulation" includes any regulation, rule, official directive, request or guideline (whether or not having the force of law) of any governmental body, intergovernmental or supranational body, agency (monetary or otherwise), department, central bank, regulatory, self-regulatory or other authority or organisation;

"subsidiary" has the meaning given in Clause 1.4;

"successor" includes any person who is entitled (by assignment, novation, merger or otherwise) to any person's rights under this Agreement or any other Finance Document (or any interest in those rights) or who, as administrator, liquidator or otherwise, is entitled to exercise those rights; and in particular references to a successor include a person to whom those rights (or any interest in those rights) are transferred or pass as a result of a merger, division, reconstruction or other reorganisation of it or any other person;

"tax" includes any present or future tax, duty, impost, levy or charge of any kind which is imposed by any state, any political sub-division of a state or any local or municipal authority (including any such imposed in connection with exchange controls), and any connected penalty, interest or fine; and

"war risks" includes the risk of mines and all risks excluded by clause 29 of the International Hull Clauses (1/11/02 or 1/11/03), clause 24 of the Institute Time Clauses (Hulls)(1/11/95) or clause 23 of the Institute Time Clauses (Hulls) (1/10/83).

	1.3	Meaning of "month"

A period of one or more "months" ends on the day in the relevant calendar month numerically corresponding to the day of the calendar month on which the period started ("the numerically corresponding day"), but:

	(a)	On the Business Day following the numerically corresponding day if the numerically corresponding day is not a Business Day or, if there is no later Business Day in the same calendar month, on the Business Day preceding the numerically corresponding day; or

	(b)	on the last Business Day in the relevant calendar month, if the period started on the last Business Day in a calendar month or if the last calendar month of the period has no numerically corresponding day,

and "month" and "monthly" shall be construed accordingly.

	1.4	Meaning of "subsidiary"

A company (S) is a subsidiary of another company (P) if:

	(a)	a majority of the issued shares in S (or a majority of the issued shares in S which carry unlimited rights to capital and income distributions) are directly owned by P or are indirectly attributable to P; or

	(b)	P has direct or indirect control over a majority of the voting rights attaching to the issued shares of S; or

	(c)	P has the direct or indirect power to appoint or remove a majority of the directors of S; or

	(d)	P otherwise has the direct or indirect power to ensure that the affairs of S are conducted in accordance with the wishes of P,

and any company of which S is a subsidiary is a parent company of S.

	1.5	General Interpretation

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In this Agreement:

	(a)	references to, or to a provision of, a Finance Document or any other document are references to it as amended or supplemented, whether before the date of this Agreement or otherwise;

	(b)	references to, or to a provision of, any law include any amendment, extension, re-enactment or replacement, whether made before the date of this Agreement or otherwise;

	(c)	words denoting the singular number shall include the plural and vice versa; and

	(d)	Clauses 1.1 to 1.5 apply unless the contrary intention appears.

	1.6	Headings

In interpreting a Finance Document or any provision of a Finance Document, all clauses, sub-clauses and other headings in that and any other Finance Document shall be entirely disregarded.

	2.	FACILITY

	2.1	Amount of facility

Subject to the other provisions of this Agreement, the Lenders shall make available to the Borrower a senior secured post-delivery term loan facility of up to the lesser of (a) $19,000,000 and (b) 62.5 per cent. of the Initial Market Value, in one Advance.

	2.2	Lenders' participations in Advances

Subject to the other provisions of this Agreement, each Lender shall participate in the Advance in the proportion which, as at the Drawdown Date, its Commitment bears to the Total Commitments.

	2.3	Purpose of Advance

The Borrower undertakes with each Creditor Party to use the Advance only for the purpose stated in the preamble to this Agreement.

	3.	POSITION OF THE LENDERS AND SWAP BANK

	3.1	Interests several

The rights of the Lenders and of the Swap Bank under this Agreement and under the Master Agreement are several.

	3.2	Individual right of action

Each Lender and the Swap Bank shall be entitled to sue for any amount which has become due and payable by the Borrower to it under this Agreement or under the Master Agreement without joining the Agent, the Security Trustee, any other Lender or the Swap Bank as additional parties in the proceedings.

	3.3	Proceedings requiring Majority Lender consent

Except as provided in Clause 3.2, neither a Lender nor the Swap Bank may commence proceedings against the Borrower or any Security Party in connection with a Finance Document or the Master Agreement without the prior consent of the Majority Lenders.

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	3.4	Obligations several

The obligations of the Lenders under this Agreement and of the Swap Bank under the Master Agreement are several; and a failure of a Lender to perform its obligations under this Agreement or a failure of the Swap Bank to perform its obligations under the Master Agreement shall not result in:

	(a)	the obligations of the other Lenders or the Swap Bank being increased; nor

	(b)	the Borrower, any Security Party, any other Lender or the Swap Bank being discharged (in whole or in part) from its obligations under any Finance Document or under the Master Agreement;

and in no circumstances shall a Lender or the Swap Bank have any responsibility for a failure of another Lender or the Swap Bank to perform its obligations under this Agreement or the Master Agreement.

	4.	DRAWDOWN

	4.1	Request for the Advance

Subject to the following conditions, the Borrower may request the Advance to be borrowed by ensuring that the Agent receives a completed Drawdown Notice not later than 11.00 a.m. (Hamburg time) 3 Business Days prior to the Drawdown Date.

	4.2	Availability

The conditions referred to in Clause 4.1 are that:

	(a)	the Drawdown Date has to be a Business Day during the Availability Period;

	(b)	the amount of the Advance shall be applied in paying the Construction Cost;

	(c)	the Advance shall not exceed the relevant Maximum Advance Amount;

	(d)	any undrawn portion of the Total Commitments in respect of the Advance to occur, upon the determination of the Initial Market Value, shall be automatically cancelled as at the Drawdown Date; and

	(e)	the amount of the Advance shall not exceed the Total Commitments.

	4.3	Notification to Lenders of receipt of the Drawdown Notice

The Agent shall promptly notify the Lenders that it has received the Drawdown Notice and shall inform each Lender of:

	(a)	the amount of the Advance to which the Drawdown Notice relates and the Drawdown Date;

	(b)	the amount of that Lender's participation in the Advance; and

	(c)	the duration of the first Interest Period in respect of the Advance.

	4.4	Drawdown Notice irrevocable

The Drawdown Notice must be signed by a duly authorised signatory of the Borrower; and once served, the Drawdown Notice cannot be revoked without the prior consent of the Agent, acting on the authority of the Majority Lenders.

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	4.5	Lenders to make available Contributions

Subject to the provisions of this Agreement, each Lender shall, on and with value on the Drawdown Date, make available to the Agent for the account of the Borrower the amount due from that Lender on the Drawdown Date under Clause 2.2.

	4.6	Disbursement of Advance

Subject to the provisions of this Agreement, the Agent shall on the Drawdown Date pay to the Borrower the amounts which the Agent receives from the Lenders under Clause 4.5; and that payment to the Borrower shall be made:

	(a)	to the account which the Borrower specifies in the Drawdown Notice; and

	(b)	in the like funds as the Agent received the payments from the Lenders.

	4.7	Disbursement of Advance to third party

The payment by the Agent under Clause 4.6 shall constitute the making of the Advance and the Borrower shall at that time become indebted, as principal and direct obligor, to each Lender in an amount equal to that Lender's Contribution.

	5.	INTEREST

	5.1	Payment of normal interest

Subject to the provisions of this Agreement, interest on the Advance in respect of each Interest Period relative to the Advance shall be paid by the Borrower on the last day of that Interest Period.

	5.2	Normal rate of interest

Subject to the provisions of this Agreement, the rate of interest on the Advance in respect of an Interest Period relative to the Advance shall be the aggregate of (i) the Margin, (ii) the Mandatory Cost (if any) and (iii) LIBOR for that Interest Period.

	5.3	Payment of accrued interest

In the case of an Interest Period of longer than 3 months (subject to the prior agreement of the Agent in accordance with Clause 6.2(b)), accrued interest shall be paid every 3 months during that Interest Period and on the last day of that Interest Period.

	5.4	Notification of Interest Periods and rates of normal interest

The Agent shall notify the Borrower and each Lender of:

	(a)	each rate of interest; and

	(b)	the duration of each Interest Period,

as soon as reasonably practicable after each is determined.

	5.5	Obligation of Reference Banks to quote

A Reference Bank which is a Lender shall use all reasonable efforts to supply the quotation required of it for the purposes of fixing a rate of interest under this Agreement unless that Reference Bank ceases to be a Lender pursuant to Clause 26.18.

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	5.6	Absence of quotations by Reference Banks

If any Reference Bank fails to supply a quotation, the Agent shall determine the relevant LIBOR on the basis of the quotations supplied by the other Reference Bank or Banks; but if 2 or more of the Reference Banks fail to provide a quotation, the relevant rate of interest shall be set in accordance with the following provisions of this Clause 5.

	5.7	Market disruption

The following provisions of this Clause 5 apply if:

	(a)	no rate is quoted on the Screen Rate and 2 or more of the Reference Banks do not, before 1:00 p.m. (London time) on the Quotation Date for an Interest Period, provide quotation to the Agent in order to fix LIBOR; or

	(b)	at least 1 Business Day before the start of an Interest Period, Lenders having Contributions together amounting to more than 50 per cent. of the Loan (or, if the Loan has not been made, Commitments amounting to more than 50 per cent. of the Total Commitments) notify the Agent that LIBOR fixed by the Agent would not accurately reflect the cost to those Lenders of funding their respective Contributions (or any part of them) during the Interest Period in the London Interbank Market at or about 11.00 a.m. (London time) on the Quotation Date for the Interest Period; or

	(c)	at least 3 Business Days before the start of an Interest Period, the Agent is notified by a Lender (the "Affected Lender") that for any reason it is unable to obtain Dollars in the London Interbank Market or otherwise in order to fund its Contribution (or any part of it) during the Interest Period.

	5.8	Notification of market disruption

The Agent shall promptly notify in writing the Borrower and each of the Lenders and the Swap Bank stating the circumstances falling within Clause 5.7 which have caused its notice to be given.

	5.9	Suspension of drawdown

If the Agent's notice under Clause 5.8 is served before the Advance is made:

	(a)	In a case falling within Clause 5.7(a) or 5.7(b), the Lender's obligation to advance the Advance; and

	(b)	In a case falling within Clause 5.7(c), the Affected Lender's obligation to participate in the Advance,

shall be suspended while the circumstances referred to in the Agent's notice continue.

	5.10	Negotiation of alternative rate of interest

If the Agent's notice under Clause 5.8 is served after the Advance is borrowed, the Borrower, the Agent, the Lenders or (as the case may be) the Affected Lender and the Swap Bank shall use reasonable endeavours to agree, within 30 days after the date on which the Agent serves its notice under Clause 5.8 (the "Negotiation Period"), an alternative interest rate or (as the case may be) an alternative basis for the Lenders or (as the case may be) the Affected Lender to fund or continue to fund their or its Contribution during the Interest Period concerned.

	5.11	Application of agreed alternative rate of interest

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Any alternative interest rate or an alternative basis which is agreed during the Negotiation Period shall take effect in accordance with the terms agreed.

	5.12	Alternative rate of interest in absence of agreement

If an alternative interest rate or alternative basis is not agreed within the Negotiation Period, and the relevant circumstances are continuing at the end of the Negotiation Period, then the Agent shall, with the agreement of each Lender or (as the case may be) the Affected Lender, set an interest period and interest rate representing the Cost of Funding of the Lenders or (as the case may be) the Affected Lender in Dollars or in any available currency of their or its Contribution plus the Margin and the Mandatory Cost (if any); and the procedure provided for by this Clause 5.12 shall be repeated if the relevant circumstances are continuing at the end of the interest period so set by the Agent.

	5.13	Notice of prepayment

If the Borrower does not agree with an interest rate set by the Agent under Clause 5.12, the Borrower may give the Agent not less than five (5) Business Days' notice of its intention to prepay the Loan at the end of the interest period set by the Agent.

	5.14	Prepayment; termination of Commitments

A notice under Clause 5.13 shall be irrevocable; the Agent shall promptly notify the Lenders or (as the case may require) the Affected Lender of the Borrower's notice of intended prepayment; and:

	(a)	on the date on which the Agent serves that notice, the Total Commitments or (as the case may requite) the Commitment of the Affected Lender shall be canceled; and

	(b)	on the last Business Day of the interest period set by the Agent, the Borrower shall prepay (without premium or penalty) the Loan or, as the case may be, the Affected Lender's Contribution, together with accrued interest thereon at the applicable rate plus the Margin and the Mandatory Cost (if any).

	5.15	Application of prepayment

The provisions of Clause 8 shall apply in relation to the prepayment.

	5.16	Interest rate hedging

Signature of the Master Agreement does not commit the Borrower or the Swap Bank to conclude Designated Transactions, or even the Swap Bank to offer terms for doing so, but does provide a contractual framework within which Designated Transactions may be concluded and secured, assuming that the Borrower and the Swap Bank are both willing to conclude any Designated Transaction at the relevant time and that, if that is the case, mutually acceptable terms can then be agreed at the relevant time.

	6.	INTEREST PERIODS

	6.1	Commencement of Interest Periods

The first Interest Period applicable to the Advance shall commence on the Drawdown Date and each subsequent Interest Period shall commence on the expiry of the preceding Interest Period.

	6.2	Duration of normal Interest Periods

Subject to Clauses 6.3 and 6.4, each Interest Period in respect of the Advance shall be:

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	(a)	3 months; or

	(b)	such other period (as notified by the Borrower to the Agent not later than 11:00 a.m. (Hamburg time) 3 Business Days before the commencement of the Interest Period in respect of the Advance) as the Agent may, with the authorisation of the Majority Lenders, agree with the Borrower; or

	(c)	3 months, if the Borrower fails to notify the Agent of another period by the time specified in paragraph (a) or no such other period is agreed between the Borrower and the Agent in accordance with paragraph (a).

	6.3	Duration of Interest Periods for Instalments

In respect of an amount due to be repaid under Clause 8 on a particular Repayment Date, an Interest Period in respect of the Advance to which that Repayment Date relates shall end on that Repayment Date.

	6.4	Non-availability of matching deposits for Interest Period selected

If, after the Borrower has selected and the Lenders have agreed an Interest Period longer than 3 months, any Lender notifies the Agent by 11.00 a.m. (Hamburg time) on the third Business Day before the commencement of the Interest Period that it is not satisfied that deposits in Dollars for a period equal to the Interest Period will be available to it in the London Interbank Market when the Interest Period commences, the Interest Period shall be of 3 months.

	7.	DEFAULT INTEREST

	7.1	Payment of default interest on overdue amounts

The Borrower shall pay interest in accordance with the following provisions of this Clause 7 on any amount payable by the Borrower under any Finance Document which the Agent, the Security Trustee or the other designated payee does not receive on or before the relevant date, that is:

	(a)	the date on which the Finance Documents provide that such amount is due for payment; or

	(b)	if a Finance Document provides that such amount is payable on demand, the date on which the demand is served; or

	(c)	if such amount has become immediately due and payable under Clause 19.4, the date on which it became immediately due and payable.

	7.2	Default rate of interest

Interest shall accrue on an overdue amount from (and including) the relevant date until the date of actual payment (as well after as before judgment) at the rate per annum determined by the Agent to be 2.50 per cent. above:

	(a)	in the case of an overdue amount of principal, the higher of the rates set out at Clauses 7.3(a) and 7.3(b); or

	(b)	in the case of any other overdue amount, the rate set out at Clause 7.3(b).

	7.3	Calculation of default rate of interest

The rates referred to in Clause 7.2 are:

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	(a)	the rate applicable to the overdue principal amount immediately prior to the relevant date (but only for any unexpired part of any then current Interest Period applicable to it);

	(b)	the aggregate of the Margin and the Mandatory Cost (if any) plus, in respect of successive periods of any duration (including at call) up to 3 months which the Agent may select from time to time:

		(i)	LIBOR; or

		(ii)	if the Agent (after consultation with the Reference Banks) determines that Dollar deposits for any such period are not being made available to any Reference Bank by leading banks in the London Interbank Market in the ordinary course of business, a rate from time to time determined by the Agent by reference to the cost of funds to the Reference Banks from such other sources as the Agent (after consultation with the Reference Banks) may from time to time determine.

	7.4	Notification of interest periods and default rates

The Agent shall promptly notify the Lenders and the Borrower of each interest rate determined by the Agent under Clause 7.3 and of each period selected by the Agent for the purposes of paragraph 7.3 of that Clause; but this shall not be taken to imply that the Borrower is liable to pay such interest only with effect from the date of the Agent's notification.

	7.5	Payment of accrued default interest

Subject to the other provisions of this Agreement, any interest due under this Clause shall be paid on the last day of the period by reference to which it was determined; and the payment shall be made to the Agent for the account of the Creditor Party to which the overdue amount is due.

	7.6	Compounding of default interest

Any such interest which is not paid at the end of the period by reference to which it was determined shall thereupon be compounded.

	7.7	Application to Master Agreement

For the avoidance of doubt, this Clause 7 does not apply to any amount payable under the Master Agreement in respect of any continuing Transaction as to which section 2(e) (Default Interest and Compensation) of the Master Agreement shall apply.

	8.	REPAYMENT AND PREPAYMENT

	8.1	Amount of Instalments

The Borrower shall repay the Loan by 16 equal consecutive quarterly instalments, each in the amount of $280,000 (each an "Instalment" and, together, the "Instalments") and a balloon instalment in the amount of $14,520,000 (the "Balloon Instalment") Provided that if the amount advanced is less than $19,000,000, the aggregate amount of the Instalments and the Balloon Instalment shall be reduced by an amount equal to the undrawn amount on a pro rata basis.

	8.2	Repayment Dates

The first Instalment in respect of the Advance shall be repaid on the date falling 3 months after the Drawdown Date, each subsequent Instalment shall be repaid at three-monthly

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intervals thereafter and the last Instalment in respect of the Advance, shall be repaid together with the Balloon Instalment, on the Final Repayment Date.

	8.3	Final Repayment Date

On the Final Repayment Date, the Borrower shall additionally pay to the Agent for the account of the Creditor Parties all other sums then accrued or owing under any Finance Document.

	8.4	Voluntary prepayment

Subject to the following conditions, the Borrower may prepay the whole or any part of the Loan on the last day of an Interest Period.

	8.5	Conditions for voluntary prepayment

The conditions referred to in Clause 8.4 are that:

	(a)	a partial prepayment shall be $500,000 or a higher integral multiple thereof (or such other amount acceptable to the Agent acting on the instructions of the Majority Lenders);

	(b)	the Agent has received from the Borrower at least 5 Business Days' prior irrevocable written notice (each, a "Prepayment Notice") specifying the amount to be prepaid and the date on which the prepayment is to be made;

	(c)	the Borrower has provided evidence satisfactory to the Agent that any consent required by the Borrower or any Security Party in connection with the prepayment has been obtained and remains in force, and that any regulation relevant to this Agreement which affects the Borrower or any Security Party has been complied with;

	(d)	the Borrower is in compliance with Clauses 8.10, 8.13 and 8.14 on or prior to the date of prepayment.

	8.6	Optional facility cancellation

The Borrower shall be entitled, upon giving to the Agent not less than 5 Business Days' prior written notice (the "Cancellation Notice"), which notice shall be irrevocable, to cancel, in whole or in part, and, if in part, by an amount not less than $500,000 or a higher multiple thereof (or such other amount acceptable to the Agent acting on the instructions of the Majority Lenders), the undrawn balance of the Total Commitments. Upon such cancellation taking effect on expiry of a Cancellation Notice the several obligations of the Lenders to make their respective Commitments available in relation to the portion of the Total Commitments to which such Cancellation Notice relates shall terminate.

8.7                  Cancellation Notice or Prepayment Notice

The Agent shall notify the Lenders promptly upon receiving a Cancellation Notice or Prepayment Notice, and shall provide, in the case of a Prepayment Notice, any Lender which so requests with a copy of any document delivered by the Borrower under Clause 8.5(c).

	8.8	Mandatory prepayment

The Borrower shall be obliged to prepay the Loan in full if the Ship:

	(a)	is sold on or before the date on which the sale is completed by delivery of the Ship to the buyer; and

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	(b)	becomes a Total Loss, on the earlier of the date falling 90 days after the Total Loss Date and the date of receipt by the Security Trustee of the proceeds of insurance relating to such Total Loss.

	8.9	Effect of Prepayment Notice and Cancellation Notice

Neither a Prepayment Notice nor a Cancellation Notice may be withdrawn or amended without the written consent of the Agent, given with the authorisation of the Majority Lenders, and:

	(a)	in the case of a Prepayment Notice, the amount specified in that Prepayment Notice shall become due and payable by the Borrower on the date for prepayment specified in that Prepayment Notice; and

	(b)	in the case of a Cancellation Notice, the amount cancelled shall be permanently cancelled and may not be borrowed.

	8.10	Amounts payable on prepayment

A prepayment shall be made together with accrued interest (and any other amount payable under Clause 21 or otherwise) in respect of the amount prepaid and, if the prepayment is not made on the last day of an Interest Period together with any sums payable under Clause 21.2) but without premium or penalty.

	8.11	Application of partial prepayment or cancellation

Each partial prepayment if made pursuant to Clauses 5.13, 8.4, 8.6, 8.14, 15.2, 19.2, 23.3 or 24.5, shall be applied pro rata against the Instalments which are at the time being outstanding and the Balloon Instalment.

	8.12	No reborrowing

No amount prepaid or cancelled may be reborrowed.

	8.13	Unwinding of Designated Transactions

If required by the Swap Bank, on or prior to any repayment or prepayment under this Clause 8 or any other provision of this Agreement, the Borrower shall wholly or partially reverse, offset, unwind or otherwise terminate one or more of the continuing Designated Transactions so that the notional principal amount of the continuing Designated Transactions thereafter remaining does not and will not in the future (taking into account the scheduled amortisation) exceed the amount of the Loan as reducing from time to time thereafter pursuant to Clause 8.1 and any repayment or prepayment under this Clause 8.

	8.14	Prepayment of Swap Benefit

If a Designated Transaction is terminated in circumstances where the Swap Bank would be obliged to pay an amount to the Borrower under the Master Agreement, the Borrower hereby agrees that such payment may, in the sole discretion of the Swap Bank, instead be applied in prepayment of the Loan in accordance with the provisions of Clause 8.11(a) and irrevocably authorises the Swap Bank to pay such amount to the Agent for such purpose.

	9.	CONDITIONS PRECEDENT

	9.1	Documents, fees and no default

Each Lender's obligation to contribute to the Advance is subject to the following conditions precedent:

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	(a)	that, on or before the service of the Drawdown Notice, the Agent receives:

		(i)	the documents described in Part A of Schedule 3 in form and substance satisfactory to the Agent and its lawyers; and

		(ii)	payment in full of the structuring fee payable pursuant to Clause 20.1(a);

	(b)	that, on the Drawdown Date but prior to the advance of the Loan, the Agent receives;

		(i)	the documents or evidence described in Part B of Schedule 3 in form and substance satisfactory to the Agent and its lawyers;

		(ii)	payment of any commitment fee payable pursuant to Clause 20.1(b); and

		(iii)	payment of any expenses payable pursuant to Clause 20.2 which are due and payable on the Drawdown Date;

	(c)	that both at the date of the Drawdown Notice and at the Drawdown Date:

		(i)	no Event of Default or Potential Event of Default has occurred or would result from the borrowing of the Advance;

		(ii)	the representations and warranties in Clause 10.1 and those of the Borrower or any Security Party which are set out in the other Finance Documents would be true and not misleading if repeated on each of those dates with reference to the circumstances then existing;

		(iii)	none of the circumstances contemplated by Clause 5.7 has occurred and is continuing; and

		(iv)	there has been no Material Adverse Change; and

	(d)	that, if the ratio set out in Clause 15.1 were applied immediately following the making of the Advance, the Borrower would not be obliged to provide additional security or prepay part of the Loan under that Clause; and

	(e)	that the Agent has received, and found to be acceptable to it, any further opinions, consents, agreements and documents in connection with the Finance Documents which the Agent may, with the authorisation of the Majority Lenders, request by written notice to the Borrower prior to the Drawdown Date.

	9.2	Waiver of conditions precedent

If the Majority Lenders, at their discretion, permit the Advance to be borrowed before certain of the conditions referred to in Clause 9.1 are satisfied, the Borrower shall ensure that those conditions are satisfied within 7 Business Days after the Drawdown Date (or such longer period as the Agent may, with the authorisation of the Majority Lenders, specify).

	10.	REPRESENTATIONS AND WARRANTIES

	10.1	General

The Borrower represents and warrants to each Creditor Party as follows.

	10.2	Status

The Borrower is duly incorporated, validly existing and in good standing under the laws of the Republic of Liberia.

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	10.3	Share capital and ownership

The Borrower has an authorised share capital of $5 divided into 500 registered and/or bearer shares of $0.01 each, all of which shares have been issued in registered form fully paid, and the legal title and ownership of all those shares is held, free of any Security Interest or other claim, by the Guarantor.

	10.4	Corporate power

The Borrower has the corporate capacity, and has taken all corporate action and obtained all consents necessary for it:

	(a)	to execute the Underlying Documents to which it is a party and to register the Ship in its name under an Approved Flag;

	(b)	to execute the Finance Documents to which the Borrower is a party; and

	(c)	to borrow under this Agreement, to enter into Designated Transactions under the Master Agreement and to make all the payments contemplated by, and to comply with, those Finance Documents to which the Borrower is a party.

	10.5	Consents in force

All the consents referred to in Clause 10.4 remain in force and nothing has occurred which makes any of them liable to revocation.

	10.6	Legal validity; effective Security Interests

The Finance Documents to which the Borrower is a party, do now or, as the case may be, will, upon execution and delivery (and, where applicable, registration as provided for in the Finance Documents):

	(a)	constitute the Borrower's legal, valid and binding obligations enforceable against the Borrower in accordance with their respective terms; and

	(b)	create legal, valid and binding Security Interests enforceable in accordance with their respective terms over all the assets to which they, by their terms, relate,

subject to any relevant insolvency laws affecting creditors' rights generally.

	10.7	No third party Security Interests

Without limiting the generality of Clause 10.6, at the time of the execution and delivery of each Finance Document to which the Borrower is a party:

	(a)	the Borrower will have the right to create all the Security Interests which that Finance Document purports to create; and

	(b)	no third party will have any Security Interest (except for Permitted Security Interests) or any other interest, right or claim over, in or in relation to any asset to which any such Security Interest, by its terms, relates.

	10.8	No conflicts

The execution by the Borrower and each Security Party of each Finance Document and each Underlying Document to which it is a party, and the borrowing by the Borrower of the Loan (or any part thereof), and its compliance with each Finance Document and each Underlying Document to which it is a party will not involve or lead to a contravention of:

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	(a)	any law or regulation of any Pertinent Jurisdiction; or

	(b)	the constitutional documents of the Borrower; or

	(c)	any contractual or other obligation or restriction which is binding on the Borrower or any of its assets,

and will not have a Material Adverse Effect.

	10.9	No withholding taxes

All payments which the Borrower is liable to make under the Finance Documents to which it is a party may be made without deduction or withholding for or on account of any tax payable under any law of any Pertinent Jurisdiction.

	10.10	No default

No Event of Default or Potential Event of Default has occurred.

	10.11	Information

All information which has been provided in writing by or on behalf of the Borrower or any Security Party to any Creditor Party in connection with any Finance Document satisfied the requirements of Clause 11.5; all audited and unaudited and financial statements which have been so provided satisfied the requirements of Clause 11.7 and are true, correct and not misleading and present fairly and accurately the financial position of the Borrower, the Corporate Guarantor or the Group (as the case may be); and there has been no change in the financial position or state of affairs of the Borrower, the Corporate Guarantor or the Group (or any member thereof) from that disclosed in the latest of those accounts which is likely to have a Material Adverse Effect.

	10.12	No litigation

No legal or administrative action involving the Borrower or any Security Party (including action relating to any alleged or actual breach of the ISM Code or the ISPS Code) has been commenced or taken or, to the Borrower's knowledge, is likely to be commenced or taken which would, in either case, have a Material Adverse Effect.

	10.13	Validity and completeness of Underlying Documents

Each Underlying Document constitutes valid, binding and enforceable obligations of the parties thereto in accordance with its terms and:

	(a)	each of the copies of that Underlying Document delivered to the Agent before the date of this Agreement is a true and complete copy; and

	(b)	no amendments or additions to that Underlying Document have been agreed nor has any party which is the party to that Underlying Document, waived any of their respective rights thereunder.

	10.14	Compliance with certain undertakings

At the date of this Agreement, the Borrower is in compliance with Clauses 10.18, 11.2, 11.4, 11.9, 11.13, 13, 14.3 and 14.10.

	10.15	No rebates etc.

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There is no agreement or understanding to allow or pay any rebate, premium, commission, discount or other benefit or payment (howsoever described) to the Borrower, the Sellers or a third party in connection with the purchase by the Borrower of its Ship, other than as disclosed to the Lenders in writing on or prior to the date of this Agreement.

	10.16	Taxes paid

The Borrower has paid all taxes applicable to, or imposed on or in relation to the Borrower, its business or the Ship.

	10.17	ISM Code and ISPS Code compliance

On or before the Delivery Date, all requirements of the ISM Code and the ISPS Code as they relate to the Borrower, the Corporate Guarantor, the Approved Manager and the Ship have been complied with.

	10.18	No Money laundering

The Borrower:

	(a)	
will not, and will procure that no Security Party, to the extent applicable, will, in connection with this Agreement or any of the other Finance Documents, contravene or permit any subsidiary to contravene, any law, official requirement or other regulatory measure or or procedure implemented to combat "money laundering" (as defined in Article 1 of the Directive 2005/60/EC of the European Parliament and of the Council of the European Union of 26 October 2005) and comparable United States Federal and state laws.  The Borrower shall further submit any documents and declarations on request, if such documents or declarations are required by any Creditor Party to comply with its domestic money laundering and/or legal identification requirements; and

	(b)	
confirms that it is the beneficiary within the meaning of the German Anti Money Laundering Act (Gesetz über das Aufspüren von Gewinnen aus schweren Straftaten (Geldwäschegesetz)), acting for its own account and not for or on behalf of any other person for each part of the Loan made or to be made available to it under this Agreement. That is to say, it acts for its own account and not for or on behalf of anyone else.

The Borrower will promptly inform the Agent by written notice, if it is not or ceases to be the beneficiary and will provide in writing the name and address of the beneficiary.

The Agent shall promptly notify the Lenders of any written notice it receives under this Clause 10.18.

	10.19	No immunity

Neither the Borrower nor any of its assets is entitled to immunity on grounds of sovereignty or otherwise from any legal action or proceeding (including, without limitation, suit, attachment prior to judgement, execution or other enforcement).

	10.20	Choice of law

The choice of the laws of England to govern the Loan Agreement and those other Finance Documents which are expressed to be governed by the laws of England, the laws of Germany to govern the Account Pledges and the laws of the applicable Approved Flag State to govern the Mortgages (other than any applicable deed of covenant which shall be governed by English law), constitutes a valid choice of law and the submission by the Borrower or, as the case may be, the relevant Security Parties thereunder to the non­exclusive jurisdiction of the Courts of England and, in the case of the Account Pledges, Germany or, in the case of the Mortgages, the applicable Approved Flag State is a valid

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submission and does not contravene the laws of the Approved Flag State or the laws of England or, in the case of the Account Pledges, Germany or, in the case of the Mortgages, the applicable Approved Flag State and will be applied by the Courts of The Marshall Islands if the Loan Agreement or those other Finance Documents or any claim thereunder comes under their jurisdiction upon proof of the relevant provisions of the laws of England or, in the case of the Account Pledges, Germany or, in the case of the Mortgages, the applicable Approved Flag State.

	10.21	Pari passu ranking

The obligations of each Security Party under the Finance Documents to which it is a party are direct, general and unconditional obligations and rank at least pari passu with the claims of all its other unsecured and unsubordinated creditors except for obligations mandatorily preferred by law applying to companies generally.

	10.22	Best Commercial Interests

It is in the best commercial interests of the Security Parties to enter into the Finance Documents to which they are a party.

	10.23	Repetition

The representations and warranties in this Clause 10 shall be deemed to be repeated by the Borrower:

	(a)	on the date of service of the Drawdown Notice;

	(b)	on the Drawdown Date; and

	(c)	with the exception of Clauses 10.9, 10.10, 10.11 and 10.12, on the first day of each Interest Period and on the date of any Compliance Certificate issued pursuant to Clause 11.20,

as if made with reference to the facts and circumstances existing on each such day.

	11.	GENERAL UNDERTAKINGS

	11.1	General

The Borrower undertakes with each Creditor Party to comply with the following provisions of this Clause 11 at all times during the Security Period except as the Agent may, with the authorisation of the Majority Lenders, otherwise permit.

	11.2	Title; negative pledge and pari passu ranking

The Borrower will:

	(a)	hold the legal title to, and own the entire legal interest in the Ship, her Insurances and Earnings, free from all Security Interests and other interests and rights of every kind, except for those created by the Finance Documents and the effect of assignments contained in the Finance Documents and except for Permitted Security Interests; and

	(b)	not create or permit to arise any Security Interest (except for Permitted Security Interests) over any other asset, present or future (including, but not limited to, the Borrower's rights against the Swap Bank under the Master Agreement or all or any part of the Borrower's interest in any amount payable to the Borrower by the Swap Bank under the Master Agreement).

	11.3	No disposal of assets

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The Borrower will not transfer, lease or otherwise dispose of:

	(a)	all or a substantial part of its assets, whether by one transaction or a number of transactions, whether related or not; or

	(b)	any debt payable to it or any other right (present, future or contingent right) to receive a payment, including any right to damages or compensation,

but paragraph (a) and (b) do not apply to any charter of the Ship.

	11.4	No other liabilities or obligations to be incurred

The Borrower will not incur any liability or obligation (including, without limitation, any Financial Indebtedness or any obligations under a guarantee) except:

	(a)	liabilities and obligations under the Finance Documents and the Underlying Documents to which it is or, as the case may be, will be a party; and

	(b)	liabilities or obligations reasonably incurred in the normal course of its business of constructing, trading, operating and chartering, maintaining and repairing the Ship (including, without limitation, any shareholder loan subject to the Borrower ensuring on or prior to the date of the first advance of that loan, that the rights of the shareholder which is the provider of the loan are fully subordinated in writing upon such terms and conditions as shall be required by the Agent (acting on the instructions of the Majority Lenders) to the rights of the Creditor Parties under the Finance Documents but excluding any investments, any sale or lease back agreements and any off-balance-sheet obligations).

	11.5	Information provided to be accurate

All financial and other information, including but not limited to factual information, exhibits and reports, which is provided in writing by or on behalf of the Borrower under or in connection with any Finance Document will be true, correct and not misleading and will not omit any material fact or consideration.

	11.6	Provision of financial statements

The Borrower will send or procure that there are sent to the Agent:

	(a)	as soon as possible, but in no event later than 180 days after the end of each Financial Year of the Borrower and the Corporate Guarantor, the unaudited individual management accounts of the Borrower and the consolidated audited annual financial statements of the Group for that Financial Year (commencing with the unaudited management accounts or the audited financial statements (as the case may be) for the Financial Year which ended on 31 December 2015 in respect of the Borrower and on 31 December 2014 in respect of the Corporate Guarantor); and

	(b)	as soon as possible, but in no event later than 90 days after the end of each 6-month period ending on 30 June and 31 December in each Financial Year of the Borrower or, as the case may be, the Corporate Guarantor, the semi-annual individual unaudited management accounts in respect of the Borrower or, in the case of the Corporate Guarantor, the semi­annual consolidated unaudited financial statements of the Group, in each case, for that 6-month period (commencing with the management accounts for the 6-month period ending on 30 June 2016 in respect of the Borrower and the financial statements for the period ending on 30 June 2015 in respect of the Corporate Guarantor), duly certified as to their correctness by the chief financial officer of the Corporate Guarantor; and

	(c)	promptly after each written request by the Agent, such further financial, business or other operational information in respect of the Borrower, the Ship, the Corporate Guarantor, the

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other Security Parties and the Group (including, without limitation, any information regarding any sale and purchase agreements, investment brochures, shipbuilding contracts and charter agreements) as may be requested by the Agent.

	11.7	Form of financial statements

All accounts delivered under Clause 11.6 will:

	(a)	be prepared in accordance with all applicable laws and GAAP and, in the case of any audited financial statements, be certified by an Approved Auditor;

	(b)	fairly represent the financial condition of the Borrower or the Group (as the case may be) at the date of those accounts and of their profit for the period to which those accounts relate; and

	(c)	fully disclose or provide for all significant liabilities of the Borrower or the Group (as the case may be).

	11.8	Shareholder and creditor notices

The Borrower will send the Agent, at the same time as they are despatched, copies of all communications related to any Finance Documents or to any events set out in Clause 19.1(f)(g) or (h), which are despatched to the Borrower's shareholders or creditors or any class of them.

	11.9	Consents

The Borrower will maintain in force and promptly obtain or renew, and will promptly send certified copies to the Agent of, any consents required:

	(a)	for the Borrower to perform its obligations under any Finance Document or any Underlying Document to which it is a party;

	(b)	for the validity or enforceability of any Finance Document or any Underlying Document to which it is a party;

	(c)	for the Borrower to continue to own and operate the Ship,

and the Borrower will comply with the terms of all such consents.

11.10                  Maintenance of Security Interests

The Borrower will:

	(a)	at its own cost, do all that it reasonably can to ensure that any Finance Document validly creates the obligations and the Security Interests which it purports to create; and

	(b)	without limiting the generality of paragraph (a), at its own cost, promptly register, file, record or enrol any Finance Document with any court or authority in all Pertinent Jurisdictions, pay any stamp, registration or similar tax in all Pertinent Jurisdictions in respect of any Finance Document, give any notice or take any other step which, in the opinion of the Majority Lenders, is or has become necessary or desirable for any Finance Document to be valid, enforceable or admissible in evidence or to ensure or protect the priority of any Security Interest which it creates.

	11.11	Notification of litigation

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The Borrower will provide the Agent with details of any legal or administrative action involving the Borrower, the Ship, the Earnings or the Insurances in respect of the Ship, any Security Party or the Approved Manager, as soon as such action is instituted or it becomes apparent to the Borrower that it is likely to be instituted, unless it is clear that such legal or administrative action cannot be considered material in the context of any Finance Document, and the Borrower shall procure that reasonable measures are taken for the defence in any such legal or administrative action.

	11.12	No amendment to Underlying Documents

The Borrower will not agree to any amendment or supplement to, or waive or fail to enforce, the Underlying Documents (other than in respect of any Assignable Charter) to which it is a party or any of its provisions without the prior written consent of the Agent (acting on the instructions of the Majority Lenders) which consent and instructions will not be unreasonably withheld.

	11.13	Principal place of business

The Borrower will maintain its place of business, and keep its corporate documents and records, at the address stated at the commencement of this Agreement; and the Borrower will not establish, or do anything as a result of which it would be deemed to have, a place of business in the United States of America or the United Kingdom.

	11.14	Confirmation of no default

The Borrower will, within 2 Business Days after service by the Agent of a written request, serve on the Agent a notice which is signed by 2 directors of the Borrower and which:

	(a)	states that no Event of Default or Potential Event of Default has occurred; or

	(b)	states that no Event of Default or Potential Event of Default has occurred, except for a specified event or matter, of which all material details are given.

The Agent may serve requests under this Clause 11.14 from time to time but only if asked to do so by a Lender or Lenders having Contributions exceeding 10 per cent. of the Loan or (if the Advance has not been made) Commitments exceeding 10 per cent. of the Total Commitments; and this Clause 11.14 does not affect the Borrower's obligations under Clause 11.15.

	11.15	Notification of default

The Borrower will notify the Agent as soon as the Borrower becomes aware of:

	(a)	the occurrence of an Event of Default or a Potential Event of Default; or

	(b)	any matter which indicates that an Event of Default or a Potential Event of Default may have occurred,

and will keep the Agent fully up-to-date with all developments.

	11.16	Provision of further information

The Borrower will, as soon as practicable after receiving the request, provide the Agent with any additional financial business or other operational information relating:

	(a)	to the Borrower, the Ship, the Earnings or the Insurances; or

	(b)	to any other matter relevant to, or to any provision of, a Finance Document,

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which may be reasonably requested by the Agent, the Security Trustee or any Lender or any Swap Bank at any time.

	11.17	Provision of copies and translation of documents

The Borrower will supply the Agent with a sufficient number of copies of the documents referred to above to provide 1 copy for each Creditor Party; and if the Agent so requires in respect of any of those documents, the Borrower will provide a certified English translation prepared by a translator approved by the Agent.

	11.18	"Know your customer" checks

If:

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

	(b)	any change in the status of the Borrower or any Security Party after the date of this Agreement; or

	(c)	a proposed assignment or transfer by a Lender of any of its rights and obligations under this Agreement to a party that is not a Lender prior to such assignment or transfer,

obliges the Agent or any Lender (or, in the case of paragraph (c), any prospective new Lender) to comply with "know your customer" or similar identification procedures in circumstances where the necessary information is not already available to it, the Borrower shall promptly upon the request of the Agent or the Lender concerned supply, or procure the supply of, such documentation and other evidence as is reasonably requested by the Agent (for itself or on behalf of any Lender) or the Lender concerned (for itself or, in the case of the event described in paragraph (c), on behalf of any prospective new Lender) in order for the Agent, the Lender concerned or, in the case of the event described in paragraph (c), any prospective new Lender to carry out and be satisfied it has complied with all necessary "know your customer" or other similar checks under all applicable laws and regulations pursuant to the transactions contemplated in the Finance Documents.

	11.19	Minimum Liquidity and Additional Minimum Liquidity

The Borrower shall maintain in the Liquidity Account credit balances in an aggregate amount of not less than:

	(a)	$600,000 ("Minimum Liquidity") commencing from the Drawdown Date and at all times thereafter until the irrevocable and unconditional payment of any and all Secured Liabilities; and

	(b)	in addition to the amount required under paragraph (a) of this Clause, an additional amount of $280,000 ("Additional Minimum Liquidity") commencing from the Drawdown Date and at all times thereafter up to and including the Repayment Date of the 8th Instalment, at which time, the Additional Minimum Liquidity shall be released to or to the order of the Borrower upon its written request Provided that the 8th Instalment is paid by the Borrower and no Event of Default or Potential Event of Default has occurred or is continuing or will occur as a result of the release of the relevant Additional Minimum Liquidity amount.

	11.20	Compliance Certificate

	(a)	The Borrower shall supply to the Agent, together with each set of financial statements delivered pursuant to paragraphs (a) and (b) of Clause 11.6, a Compliance Certificate.

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	(b)	Each Compliance Certificate shall be duly signed by the chief financial officer of the Corporate Guarantor and two directors of the Borrower, evidencing (inter alia) the Borrower's compliance (or not, as the case may be) with the provisions of Clause 11.19 and Clause 15.1 and the Corporate Guarantor's compliance with the financial covenants set out in the Corporate Guarantee.

	12.	CORPORATE UNDERTAKINGS

	12.1	General

The Borrower also undertakes with each Creditor Party to comply with the following provisions of this Clause 12 at all times during the Security Period except as the Agent may, with the authorisation of the Majority Lenders, otherwise permit in writing.

	12.2	Maintenance of status

The Borrower will maintain its separate corporate existence and remain in good standing under the laws of the Republic of Liberia.

	12.3	Negative undertakings

The Borrower will not:

	(a)	change the nature of its business or carry on any type of business other than the ownership, chartering and operation of the Ship; or

	(b)	pay any dividend or make any other form of distribution or effect any form of redemption, purchase or return of share capital if an Event of Default has occurred and is continuing at the relevant time or an Event of Default will result from the payment of a dividend or the making of any other form of distribution; or

	(c)	provide any form of credit or financial assistance to:

		(i)	a person who is directly or indirectly interested in the Borrower's share or loan capital; or

		(ii)	any company in or with which such a person is directly or indirectly interested or connected,

or enter into any transaction with or involving such a person or company on terms which are, in any respect, less favourable to the Borrower than those which it could obtain in a bargain made at arms' length;

	(d)	open or maintain any account with any bank or financial institution except the Accounts with the Agent and the Security Trustee for the purposes of the Finance Documents;

	(e)	issue, allot or grant any person a right to any shares in its capital or repurchase or reduce its issued share capital;

	(f)	acquire any shares or other securities other than US or UK Treasury bills and certificates of deposit issued by major North American or European banks, or enter into any transaction in a derivative other than any Designated Transactions; or

	(g)	enter into any form of amalgamation, merger or de-merger, acquisition, divesture, split-up or any form of reconstruction or reorganisation.

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	13.	INSURANCE

	13.1	General

The Borrower also undertakes with each Creditor Party to comply with the following provisions of this Clause 13 at all times during the Security Period except as the Agent may, with the authorisation of the Majority Lenders, otherwise permit.

	13.2	Maintenance of obligatory insurances

On and following the Delivery Date, the Borrower shall keep the Ship insured at the expense of the Borrower against:

	(a)	fire and usual marine risks (including hull and machinery and excess risks);

	(b)	war risks (including, without limitation, protection and indemnity war risks with a separate limit not less than hull value);

	(c)	protection and indemnity risks (including, without limitation, protection and indemnity war risks in excess of the amount for war risks (hull) and oil pollution liability risks) in each case in the highest amount available in the international insurance market); and

	(d)	any other risks in respect of which insurance would be obtained by a prudent owner or operator of the Ship and which the Security Trustee (acting on the instructions of the Majority Lenders), having regard to practices, recommendations and other circumstances prevailing at the relevant time, may from time to time reasonably require by notice to the Borrower.

	13.3	Terms of obligatory insurances

The Borrower shall effect such insurances in such amounts in such currency and upon such terms and conditions as shall from time to time be approved in writing by the Security Trustee in its reasonable discretion, but in any event as follows:

	(a)	in Dollars;

	(b)	in the case of fire and usual marine risks and war risks, on an agreed value basis in an amount equal to at least the higher of (i) an amount which is equal to 120 per cent. of the aggregate of (A) the Loan and (B) the principal amount secured by any equal or prior ranking Security Interest on the Ship and (ii) the Market Value of the Ship;

	(c)	in the case of oil pollution liability risks, for an amount equal to the highest level of cover from time to time available under basic protection and indemnity club entry (with the International Group of Protection and Indemnity Clubs) and the international marine insurance market (currently $1,000,000,000 for any one accident or occurrence);

	(d)	in relation to protection and indemnity risks in respect of the full value and tonnage of the Ship;

	(e)	in relation to war risks insurance, extended to cover piracy and terrorism where excluded under the fire and usual marine risks insurance;

	(f)	on approved terms and conditions;

	(g)	such other risks of whatever nature and howsoever arising in respect of which insurance would be maintained by a prudent owner of a vessel similar to the Ship; and

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	(h)	through approved brokers and with approved insurance companies and/or underwriters or, in the case of war risks and protection and indemnity risks, in approved war risks and protection and indemnity risks associations which are members of the International Group of Protection and Indemnity Associations and have a Standard & Poor's rating of at least BBB- or a comparable rating by any other rating agency acceptable to the Security Trustee (acting on the instructions of the Majority Lenders).

	13.4	Further protections for the Creditor Parties

In addition to the terms set out in Clause 13.3, the Borrower shall and shall use its best endeavours to procure that:

	(a)	it and any and all third parties who are named assured or co-assured under any obligatory insurance shall assign their interest in any and all obligatory insurances and other Insurances if so required by the Agent;

	(b)	whenever the Security Trustee requires, the obligatory insurances name (or be amended to name) the Security Trustee as additional named assured for its rights and interests, warranted no operational interest and with full waiver of rights of subrogation they may have under any applicable law against the Security Trustee but without the Security Trustee thereby being liable to pay (but having the right to pay) premiums, calls or other assessments in respect of such insurance;

	(c)	the interest of the Security Trustee as assignee and as loss payee shall be duly endorsed on all slips, cover notes, policies, certificates of entry or other instruments of insurance in respect of the obligatory insurances;

	(d)	the obligatory insurances shall name the Security Trustee as sole loss payee with such directions for payment as the Security Trustee may specify;

	(e)	the obligatory insurances shall provide that all payments by or on behalf of the insurers under the obligatory insurances to the Security Trustee shall be made without set-off, counterclaim or deductions or condition whatsoever;

	(f)	the obligatory insurances shall provide that the insurers shall waive, to the fullest extent permitted by English law, their entitlement (if any) (whether by statute, common law, equity, or otherwise) to be subrogated to the rights and remedies of the Security Trustee in respect of any rights or interests (secured or not) held by or available to the Security Trustee in respect of the Secured Liabilities, until the Secured Liabilities shall have been fully repaid and discharged, except that the insurers shall not be restricted by the terms of this paragraph (f) from making personal claims against persons (other than the Borrower or any Creditor Party) in circumstances where the insurers have fully discharged their liabilities and obligations under the relevant obligatory insurances;

	(g)	the obligatory insurances shall provide that the obligatory insurances shall be primary without right of contribution from other insurances effected by the Security Trustee or any other Creditor Party;

	(h)	the obligatory insurances shall provide that the Security Trustee may make proof of loss if the Borrower fails to do so; and

	(i)	the obligatory insurances shall provide that if any obligatory insurance is cancelled, or if any substantial change is made in the coverage which adversely affects the interest of the Security Trustee, or if any obligatory insurance is allowed to lapse for non-payment of premium, such cancellation, charge or lapse shall only be effective against the Security Trustee 14 days (or 7 days in the case of war risks) after receipt by the Security Trustee of prior written notice from the insurers of such cancellation, change or lapse.

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	13.5	Renewal of obligatory insurances

The Borrower shall:

	(a)	at least 14 days before the expiry of any obligatory insurance effected by it:

		(i)	notify the Security Trustee of the brokers, underwriters, insurance companies and any protection and indemnity or war risks association through or with whom the Borrower proposes to renew that obligatory insurance and of the proposed terms and conditions of renewal; and

		(ii)	seek the Security Trustee's approval to the matters referred to in paragraph (i);

	(b)	at least 7 days before the expiry of any obligatory insurance, renew that obligatory insurance in accordance with the Security Trustee's approval pursuant to paragraph (a); and

	(c)	procure that the approved brokers and/or the war risks and protection and indemnity associations with which such a renewal is effected shall promptly after the renewal notify the Security Trustee in writing of the terms and conditions of the renewal.

	13.6	Copies of policies; letters of undertaking

The Borrower shall use its best endeavours to ensure that all approved brokers provide the Security Trustee with pro forma copies of all cover notes and policies relating to the obligatory insurances which they are to effect or renew and of a letter or letters of undertaking in a form required by the Security Trustee and including undertakings by the approved brokers that:

	(a)	they will have endorsed on each policy, immediately upon issue, a loss payable clause and a notice of assignment complying with the provisions of Clause 13.4;

	(b)	they will hold such policies, and the benefit of such insurances, to the order of the Security Trustee in accordance with the said loss payable clause;

	(c)	they will advise the Security Trustee immediately of any material change to the terms of the obligatory insurances;

	(d)	they will notify the Security Trustee, not less than 14 days before the expiry of the obligatory insurances, in the event of their not having received notice of renewal instructions from the Borrower or its agents and, in the event of their receiving instructions to renew, they will promptly notify the Security Trustee of the terms of the instructions; and

	(e)	they will not set off against any sum recoverable in respect of a claim relating to the Ship under such obligatory insurances any premiums or other amounts due to them or any other person whether in respect of the Ship or otherwise, they waive any lien on the policies, or any sums received under them, which they might have in respect of such premiums or other amounts, and they will not cancel such obligatory insurances by reason of non-payment of such premiums or other amounts, and will arrange for a separate policy to be issued in respect of the Ship forthwith upon being so requested by the Security Trustee.

	13.7	Copies of certificates of entry; letters of undertaking

The Borrower shall use its best endeavours to ensure that any protection and indemnity and/or war risks associations in which the Ship is entered provides the Security Trustee with:

	(a)	a certified copy of the certificate of entry for the Ship;

	(b)	a letter or letters of undertaking in such form as may be required by the Security Trustee;

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	(c)	where required to be issued under the terms of insurance/indemnity provided by the Borrower's protection and indemnity association, a certified copy of each United States of America voyage quarterly declaration (or other similar document or documents) made by the Borrower in accordance with the requirements of such protections and idemnity association; and

	(d)	a certified copy of each certificate of financial responsibility for pollution by oil or other Environmentally Sensitive Material issued by the relevant certifying authority or, as the case may be, protection and indemnity associations in relation to the Ship (if applicable).

	13.8	Deposit of original policies

The Borrower shall ensure that all policies relating to obligatory insurances effected by it are deposited with the approved brokers through which the insurances are effected or renewed.

	13.9	Payment of premiums

The Borrower shall punctually pay all premiums or other sums payable in respect of the obligatory insurances effected by it and produce all relevant receipts when so required by the Security Trustee.

	13.10	Guarantees

The Borrower shall ensure that any guarantees required by a protection and indemnity or war risks association are promptly issued and remain in full force and effect.

	13.11	Restrictions on employment

The Borrower shall not employ the Ship, nor shall permit it to be employed, outside the cover provided by any obligatory insurances without first obtaining the consent of the insurers and complying with any requirements (as to extra premium or otherwise) which the insurers specify.

	13.12	Compliance with terms of insurances

The Borrower shall not do or omit to do (nor permit to be done or not to be done) any act or thing which would or might render any obligatory insurance invalid, void, voidable or unenforceable or render any sum payable under an obligatory insurance repayable in whole or in part; and, in particular it shall:

	(a)	take all necessary action and comply with all requirements which may from time to time be applicable to the obligatory insurances, and (without limiting the obligation contained in Clause 13.6(c)) ensure that the obligatory insurances are not made subject to any exclusions or qualifications to which the Security Trustee has not given its prior approval;

	(b)	not make any changes relating to the classification or classification society or manager or operator of the Ship approved by the underwriters of the obligatory insurances;

	(c)	make (and promptly supply copies to the Agent) of all quarterly or other voyage declarations which may be required by the protection and indemnity risks association in which the Ship is entered to maintain cover for trading to the United States of America and Exclusive Economic Zone (as defined in the United States Oil Pollution Act 1990 or any other applicable legislation) and, if applicable, shall procure that the Approved Manager complies with this requirement; and

	(d)	not employ the Ship, nor allow it to be employed, otherwise than in conformity with the terms and conditions of the obligatory insurances, without first obtaining the consent of the

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insurers and complying with any requirements (as to extra premium or otherwise) which the insurers specify.

	13.13	Alteration to terms of insurances

The Borrower shall neither make nor agree to any material alteration to the terms of any obligatory insurance or waive any right relating to any obligatory insurance.

	13.14	Settlement of claims

The Borrower shall not settle, compromise or abandon any claim under any obligatory insurance for Total Loss or for a Major Casualty, and shall do all things necessary and provide all documents, evidence and information to enable the Security Trustee to collect or recover any moneys which at any time become payable in respect of the obligatory insurances and shall do all things necessary to ensure such collection or recovery is made.

	13.15	Provision of copies of communications

The Borrower shall provide the Security Trustee, at the time of each such communication, copies of all written communications between the Borrower and:

	(a)	the approved brokers;

	(b)	the approved protection and indemnity and/or war risks associations; and

	(c)	the approved insurance companies and/or underwriters, which relate directly or indirectly to:

		(i)	the Borrower's obligations relating to the obligatory insurances including, without limitation, all requisite declarations and payments of additional premiums or calls; and

		(ii)	any credit arrangements made between the Borrower and any of the persons referred to in paragraphs (a) or (b) relating wholly or partly to the effecting or maintenance of the obligatory insurances.

	13.16	Provision of information and further undertakings

In addition, the Borrower shall promptly provide the Security Trustee (or any persons which it may designate) with any information which the Security Trustee (or any such designated person) requests for the purpose of:

	(a)	obtaining or preparing any report from an independent marine insurance broker as to the adequacy of the obligatory insurances effected or proposed to be effected; and/or

	(b)	effecting, maintaining or renewing any such insurances as are referred to in Clause 13.17 or dealing with or considering any matters relating to any such insurances,

and the Borrower shall:

		(i)	do all things necessary and provide the Agent and the Security Trustee with all documents and information to enable the Security Trustee to collect or recover any moneys in respect of the Insurances which are payable to the Security Trustee pursuant to the Finance Documents; and

		(ii)	promptly provide the Agent with full information regarding any Major Casualty in consequence whereof the Ship has become or may become a Total Loss and agree

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to any settlement of such casualty or other accident or damage to the Ship only with the Agent's prior written consent.

and the Borrower shall, forthwith upon demand, indemnify the Security Trustee in respect of all fees and other expenses incurred by or for the account of the Security Trustee in connection with any such report as is referred to in paragraph (a).

	13.17	Mortgagee's interest and additional perils insurances

The Security Trustee shall be entitled from time to time to effect, maintain and renew all or any of the following insurances on such terms, through such insurers and generally in such manner as the Majority Lenders may from time to time consider appropriate:

	(a)	a mortgagee's interest insurance providing for the indemnification of the Creditor Parties for any losses under or in connection with any Finance Document (in an amount of up to 120 percent of the Loan) which directly or indirectly result from loss of or damage to the Ship or a liability of the Ship or of the Borrower, being a loss or damage which is prima facie covered by an obligatory insurance but in respect of which there is a non-payment (or reduced payment) by the underwriters by reason of, or on the basis of an allegation concerning:

		(i)	any act or omission on the part of the Borrower, of any operator, charterer, manager or sub-manager of the Ship or of any officer, employee or agent of the Borrower or of any such person, including any breach of warranty or condition or any non-disclosure relating to such obligatory insurance;

		(ii)	any act or omission, whether deliberate, negligent or accidental, or any knowledge or privity of the Borrower, any other person referred to in paragraph (i) above, or of any officer, employee or agent of the Borrower or of such a person, including the casting away or damaging of the Ship and/or the Ship being unseaworthy; and/or

		(iii)	any other matter capable of being insured against under a mortgagee's interest marine insurance policy whether or not similar to the foregoing; and

	(b)	a mortgagee's interest additional perils insurance providing for the indemnification of the Creditor Parties against, among other things, any possible losses or other consequences of any Environmental Claim, including the risk of expropriation, arrest or any form of detention of the Ship, the imposition of any Security Interest over the Ship and/or any other matter capable of being insured against under a mortgagee's interest additional perils policy whether or not similar to the foregoing, and in an amount of up to 110 per cent. of the Loan,

and the Borrower shall upon demand fully indemnify the Security Trustee in respect of all premiums and other expenses which are incurred in connection with or with a view to effecting, maintaining or renewing any such insurance or dealing with, or considering, any matter arising out of any such insurance.

	13.18	Review of insurance requirements

The Security Trustee shall be entitled to review the requirements of this Clause 13 from time to time in order to take account of any changes in circumstances after the date of this Agreement which are, in the opinion of the Agent (acting on the instructions of the Majority Lenders), significant and capable of affecting the Borrower, the Ship and its Insurances (including, without limitation, changes in the availability of the cost of insurance coverage or the risks to which the Borrower may be subject) and the Borrower shall upon demand fully indemnify the Agent in respect of all fees and other expenses incurred by or for the account of the Agent in appointing an independent marine insurance broker or adviser to conduct such review.

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	13.19	Modification of insurance requirements

The Security Trustee shall notify the Borrower of any proposed modification under Clause 13.18 to the requirements of this Clause 13 which the Security Trustee reasonably considers appropriate in the circumstances, and such modification shall take effect 3 Business Days from the date it is notified in writing to the Borrower as an amendment to this Clause 13 and shall bind the Borrower accordingly.

	13.20	Compliance with mortgagee's instructions

The Security Trustee shall be entitled (without prejudice to or limitation of any other rights which it may have or acquire under any Finance Document) to require the Ship to remain at any safe port or to proceed to and remain at any safe port designated by the Security Trustee until the Borrower implements any amendments to the terms of the obligatory insurances and any operational changes required as a result of a notice served under Clause 13.19.

	14.	SHIP COVENANTS

	14.1	General

The Borrower also undertakes with each Creditor Party to comply with the following provisions of this Clause 14 at all times during the Security Period except as the Agent, with the authorisation of the Majority Lenders, may otherwise permit in writing.

	14.2	Ship's name and registration

From the Delivery Date, the Borrower shall keep the Ship registered in its name under an Approved Flag; shall not do, omit to do or allow to be done anything as a result of which such registration might be cancelled or imperilled; and shall not change the name or port of registry of the Ship.

	14.3	Repair and classification

From the Delivery Date, the Borrower shall, and shall procure that the Approved Manager shall, keep the Ship in a good and safe condition and state of repair, sea and cargo worthy in all respects:

	(a)	consistent with first-class ship ownership and management practice;

	(b)	so as to maintain the highest class free of any overdue recommendations and conditions, with a classification society which is a member of IACS (other than the China Classification Society and the Russian Maritime Registry of Shipping) and acceptable to the Agent; and

	(c)	so as to comply with all laws and regulations applicable to vessels registered at ports in Approved Flag State or to vessels trading to any jurisdiction to which the Ship may trade from time to time, including but not limited to the ISM Code and the ISPS Code,

and the Agent shall be given power of attorney in the form attached as Schedule 7 to act on behalf of the Borrower in order to, inspect the class records and any files held by the classification society and to require the classification society to provide the Agent or any of its nominees with any information, document or file, it might request and the classification society shall be fully entitled to rely hereon without any further inquiry.

	14.4	Classification society undertaking

The Borrower shall instruct the classification society referred to in Clause 14.3 (and procure that the classification society undertakes with the Security Trustee) in relation to the Ship:

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	(a)	to send to the Security Trustee, following receipt of a written request from the Security Trustee, certified true copies of all original class records and any other related records held by the classification society in relation to the Ship;

	(b)	to allow the Security Trustee (or its agents), at any time and from time to time, to inspect the original class and related records of the Ship at the offices of the classification society and to take copies of them;

	(c)	to notify the Security Trustee immediately in writing if the classification society:

		(i)	receives notification from the Borrower or any person that the Ship's classification society is to be changed; or

		(ii)	becomes aware of any facts or matters which may result in or have resulted in a change, suspension, discontinuance, withdrawal or expiry of the Ship's class under the rules or terms and conditions of the Borrower's or the Ship's membership of the classification society;

	(c)	following receipt of a written request from the Security Trustee:

		(i)	to confirm that the Borrower is not in default of any of its contractual obligations or liabilities to the classification society and, without limiting the foregoing, that it has paid in full all fees or other charges due and payable to the classification society; or

		(ii)	if the Borrower is in default of any of its contractual obligations or liabilities to the classification society, to specify to the Security Trustee in reasonable detail the facts and circumstances of such default, the consequences thereof, and any remedy period agreed or allowed by the classification society.

	14.5	Modification

The Borrower shall not make any modification or repairs to, or replacement of, the Ship or equipment installed on it which would or might materially alter the structure, type or performance characteristics of the Ship or materially reduce its value.

	14.6	Removal of parts

The Borrower shall not remove any material part of the Ship, or any item of equipment installed on, the Ship unless the part or item so removed is forthwith replaced by a suitable part or item which is in the same condition as or better condition than the part or item removed, is free from any Security Interest or any right in favour of any person other than the Security Trustee and becomes on installation on the Ship the property of the Borrower and subject to the security constituted by the relevant Mortgage and, if applicable, the Deed of Covenant Provided that the Borrower may install equipment owned by a third party if the equipment can be removed without any risk of damage to the Ship.

	14.7	Surveys

The Borrower shall submit the Ship regularly to all periodical or other surveys which may be required for classification purposes and, if so required by the Security Trustee provide the Security Trustee, with copies of all survey reports.

	14.8	Inspection

The Borrower shall permit the Security Trustee (by surveyors or other persons appointed by it for that purpose) to board the Ship at all reasonable times (including, without limitation, in respect of the survey report required pursuant to Schedule 3, Part B, paragraph 12 in respect of which the Borrower shall assist in making all necessary arrangements with the Sellers), on

42

reasonable notice and taking into account the Ship's schedule, to inspect its condition or to satisfy themselves about proposed or executed repairs and shall afford all proper facilities for such inspections at the Borrower's expense (other than in respect of the survey report required pursuant to Schedule 3, paragraph 12 and for purposes of Clause 26, which shall be at the Agent's expense) and, in respect of the survey report, and if the inspector or surveyor appointed by the Security Trustee under this Clause is of the opinion that there are any technical, commercial or operational actions being undertaken or omitted to be undertaken by the Borrower or the Approved Managers which adversely affect the operation or value of the Ship, the Borrower shall forthwith (at their expense) on the Security Trustee's demand remedy such action or inaction and provide the Security Trustee with evidence that it has taken such remedial action.

	14.9	Prevention of and release from arrest

The Borrower shall promptly discharge:

	(a)	all liabilities which give or may give rise to maritime or possessory liens on or claims enforceable against the Ship, the Earnings or the Insurances;

	(b)	all taxes, dues and other amounts charged in respect of the Ship, the Earnings or the Insurances; and

	(c)	all other outgoings whatsoever in respect of the Ship, the Earnings or the Insurances,

and, forthwith upon receiving notice of the arrest of the Ship, or of its detention in exercise or purported exercise of any lien or claim, the Borrower shall procure its release by providing bail or otherwise as the circumstances may require.

	14.10	Compliance with laws etc.

The Borrower shall:

	(a)	comply, or procure compliance with the ISM Code, the ISPS Code, all Environmental Laws and all other laws or regulations relating to the Ship, its ownership, operation and management or to the business of the Borrower;

	(b)	not employ the Ship nor allow its employment in any manner contrary to any law or regulation in any relevant jurisdiction including but not limited to the ISM Code and the ISPS Code; and

	(c)	in the event of hostilities in any part of the world (whether war is declared or not), not cause or permit the Ship to enter or trade to any zone which is declared a war zone by any government or by the Ship's war risks insurers unless the prior written consent of the Security Trustee has been given and the Borrower has (at its expense) effected any special, additional or modified insurance cover which the Security Trustee may reasonably require.

	14.11	Provision of information

The Borrower shall promptly provide the Security Trustee with any information which it requests regarding:

	(a)	the Ship, its employment, position and engagements;

	(b)	the Earnings and payments and amounts due to the master and crew of the Ship;

	(c)	any expenses incurred, or likely to be incurred, in connection with the construction, operation, maintenance or repair of the Ship and any payments made in respect of the Ship;

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	(d)	any towages and salvages; and

	(e)	its compliance, either Approved Managers' compliance and the compliance of the Ship with the ISM Code and the ISPS Code,

and, upon the Security Trustee's request, provide copies of any current charter relating to the Ship, of any current charter guarantee and copies of the Borrower's or that Approved Managers' Document of Compliance, Safety Management Certificate and the ISSC.

	14.12	Notification of certain events

The Borrower shall immediately notify the Security Trustee by letter, of:

	(a)	its entry into any agreement or arrangement for the postponement of any date on which any Earnings are due, the reduction of the amount of any Earnings or otherwise for the release or adverse alteration of any right of the Borrower to any Earnings;

	(b)	its entry into a demise charter in respect of the Ship for any period;

	(c)	its entry into any time or consecutive voyage charter in respect of the Ship for a term which exceeds, or which by virtue of any optional extensions may exceed, 12 months;

	(d)	any casualty which is or is likely to become a Major Casualty;

	(e)	any occurrence as a result of which the Ship has become or is, by the passing of time or otherwise, likely to become a Total Loss;

	(f)	any requirement, condition or recommendation made by any insurer or classification society or by any competent authority which is not immediately complied with in accordance with its terms;

	(g)	any arrest or detention of the Ship, any exercise or purported exercise of any lien on the Ship or its Earnings or any requisition of the Ship for hire;

	(h)	any intended dry docking of the Ship;

	(i)	any Environmental Claim made against the Borrower or in connection with the Ship, or any Environmental Incident;

	(j)	any claim for breach of the ISM Code or the ISPS Code being made against the Borrower, the Approved Managers or otherwise in connection with the Ship; or

	(k)	any other matter, event or incident, actual or threatened, the effect of which will or could lead to the ISM Code or the ISPS Code not being complied with,

and the Borrower shall keep the Security Trustee advised in writing on a regular basis and in such detail as the Security Trustee shall require of the Borrower's, the Approved Managers' or any other person's response to any of those events or matters.

	14.13	Restrictions on chartering, appointment of managers etc.

The Borrower shall not, in relation to the Ship:

	(a)	enter into any charter in relation to the Ship under which more than 2 months' hire (or the equivalent) is payable in advance;

	(b)	charter the Ship otherwise than on bona fide arm's length terms at the time when the Ship is fixed;

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	(c)	appoint a manager of the Ship other than the Approved Managers or agree to any material alteration to the terms of the Approved Manager's appointment;

	(d)	de-activate or lay up the Ship; or

	(e)	put the Ship into the possession of any person for the purpose of work being done upon it in an amount exceeding or likely to exceed $750,000 (or the equivalent in any other currency) unless that person has first given to the Security Trustee and in terms satisfactory to it a written undertaking not to exercise any lien on the Ship or its Earnings for the cost of such work or for any other reason.

	14.14	Notice of Mortgage

The Borrower shall keep the Mortgage registered against the Ship as a valid first preferred or, as the case may be, priority mortgage, carry on board the Ship a certified copy of that Mortgage and place and maintain in a conspicuous place in the navigation room and the Master's cabin of the Ship a framed printed notice stating that the Ship is mortgaged by the Borrower to the Security Trustee.

	14.15	Sharing of Earnings

Without Agent's prior written consent, the Borrower shall not enter into any agreement or arrangement for the sharing of any Earnings other than a profit sharing agreed at arm's length under a charter party provided that it is not a part of any pool arrangement, in which case the Agent's prior written consent will be required (such consent not to be unreasonably withheld or delayed).

	14.16	ISPS Code

The Borrower shall comply with the ISPS Code and in particular, without limitation, shall:

	(a)	procure that the Ship and the company responsible for the Ship's compliance with the ISPS Code comply with the ISPS Code; and

	(b)	maintain for the Ship an ISSC; and

	(c)	notify the Agent immediately in writing of any actual or threatened withdrawal, suspension, cancellation or modification of the ISSC.

	14.17	Charterparty Assignment

If the Borrower enters into an Assignable Charter, it shall, at the request of the Agent:

	(a)	execute in favour of the Security Trustee a Charterparty Assignment (such Charterparty Assignment to be notified to the relevant charterer and any charter guarantor, and the Borrower shall use its best endeavours to obtain an acknowledgement from that relevant charterer and charter guarantor); and

	(b)	without limiting the generality of the above, if that Assignable Charter is a bareboat charter, procure that the bareboat charterer shall execute in favour of the Security Trustee an assignment of (inter alia) all its rights, title and interest in and to the Insurances in respect of the Ship effected either by the Borrower or by the bareboat charterer and a customary letter of undertaking in favour of the Security Trustee whereby (inter alia) the interests of the bareboat charterer under the bareboat charter are subordinated to the interests of the Security Trustee under the Finance Documents, each in the Agreed Form,

and shall deliver to the Agent such other documents equivalent to those referred to at paragraphs 3, 4, 5,7 and 9 of Schedule 3, Part A as the Agent may require.

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	15.	SECURITY COVER

	15.1	Minimum required security cover

Clause 15.2 applies if the Agent notifies in writing the Borrower that:

	(a)	the Market Value of the Ship; plus

	(b)	the net realisable value of any additional security previously provided under this Clause 15; plus,

is below an amount equal to 125 per cent. of the Loan.

	15.2	Provision of additional security; prepayment

If the Agent serves a written notice on the Borrower under Clause 15.1, the Borrower shall prepay such part at least of the Loan as will eliminate the shortfall on or before the date falling 14 Business Days after the date on which the Agent's notice is served under Clause 15.1 (the "Prepayment Date") unless at least 3 Business Day before the Prepayment Date the Borrower has provided, or ensured that a third party has provided, additional security which, in the opinion of the Majority Lenders, has a net realisable value at least equal to the shortfall and is documented in such terms as the Agent may, with the authorisation of the Majority Lenders, approve or require.

	15.3	Valuation of Ship

The Market Value of the Ship at any date is that shown by taking the arithmetic means of two valuations issued by 2 Approved Brokers, one of which is to be selected and appointed by the Agent and the other to be selected by the Borrower and appointed by the Agent (unless the Borrower do not elect to appoint an Approved Broker within 14 days after the Agent's request to receive a valuation of the Ship, in which case the Agent shall select and appoint a second Approved Broker), each valuation to be addressed to the Agent and prepared:

	(a)	as at a date not more than 14 days previously;

	(b)	with or without physical inspection of the Ship (as the Agent may require); and

	(c)	on the basis of a sale for prompt delivery for cash on normal arm's length commercial terms as between a willing seller and a willing buyer, free of any existing charter or other contract of employment,

Provided that if the difference between the 2 valuations obtained at any one time pursuant to this Clause 15.3 is greater than 15 per cent., a valuation shall be commissioned from a third Approved Broker appointed and selected by the Agent. Such valuation shall be prepared in accordance with this Clause 15.3 and the Market Value of the Ship in such circumstances shall be the average of all three valuations.

	15.4	Value of additional vessel security

The net realisable value of any additional security which is provided under Clause 15.2 and which consists of a Security Interest over a vessel shall be that shown by a valuation complying with the requirements of Clause 15.3.

	15.5	Valuations binding

Any valuation under Clause 15.2, 15.3 or 15.4 shall be binding and conclusive as regards the Borrower and the Lenders, as shall be any valuation which the Majority Lenders make of any

46

additional security which does not consist of or include a Security Interest, it being agreed however that in case of additional security in the form of cash in Dollars, the same will be valued on a Dollar for Dollar basis.

	15.6	Provision of information

The Borrower shall promptly provide the Agent and any Approved Broker or expert acting under Clause 15.3 or 15.4 with any information which the Agent or that Approved Broker or expert may request for the purposes of the valuation; and, if the Borrower fails to provide the information by the date specified in the request, the valuation may be made on any basis and assumptions which that Approved Broker or the Majority Lenders (or the expert appointed by them) consider prudent.

	15.7	Payment of valuation expenses

Without prejudice to the generality of the Borrower's obligations under Clauses 20.2, 20.3 and 21.3, the Borrower shall, on demand, pay the Agent the amount of the fees and expenses of any Approved Broker or expert instructed by the Agent under this Clause and all legal and other expenses incurred by any Creditor Party in connection with any matter arising out of this Clause.

	15.8	Frequency of valuations

The Borrower acknowledges and agrees that the Agent may commission valuation(s) of the Ship at such times as the Lender shall deem necessary and, in any event, not less than twice during each year of the Security Period.

	16.	PAYMENTS AND CALCULATIONS

	16.1	Currency and method of payments

All payments to be made by the Lenders or by the Borrower under a Finance Document shall be made to the Agent or to the Security Trustee, in the case of an amount payable to it:

	(a)	by not later than 11.00 a.m. (New York City time) on the due date;

	(b)	in same day Dollar funds settled through the New York Clearing House Interbank Payments System (or in such other Dollar funds and/or settled in such other manner as the Agent shall specify as being customary at the time for the settlement of international transactions of the type contemplated by this Agreement);

	(c)	in the case of an amount payable by a Lender to the Agent or by the Borrower to the Agent or any Lender, to the account of the Agent at JP Morgan Chase Bank, New York (SWIFT Code CHASUS33) (Account No. 001-1-331 808 in favour of HSH Nordbank AG, Hamburg, SWIFT Code HSHNDEHH; Reference "Ultra One Shipping LTD") or to such other account with such other bank as the Agent may from time to time notify in writing to the Borrower and the other Creditor Parties; and

	(d)	in the case of an amount payable to the Security Trustee, to such account as it may from time to time notify in writing to the Borrower and the other Creditor Parties.

	16.2	Payment on non-Business Day

If any payment by the Borrower under a Finance Document would otherwise fall due on a day which is not a Business Day:

	(a)	the due date shall be extended to the next succeeding Business Day; or

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	(b)	if the next succeeding Business Day falls in the next calendar month, the due date shall be brought forward and to the immediately preceeding Business Day,

and interest shall be payable during any extension under paragraph (a) at the rate payable on the original due date.

	16.3	Basis for calculation of periodic payments

All interest and commitment fee and any other payments under any Finance Document which are of an annual or periodic nature shall accrue from day to day and shall be calculated on the basis of the actual number of days elapsed and a 360 day year.

	16.4	
Distribution of payments to Creditor Parties 

 

Subject to Clauses 16.5, 16.6 and 16.7:

	(a)	any amount received by the Agent under a Finance Document for distribution or remittance to a Lender, the Swap Bank or the Security Trustee shall be made available by the Agent to that Lender, the Swap Bank or, as the case may be, the Security Trustee by payment, with funds having the same value as the funds received, to such account as the Lender, the Swap Bank or the Security Trustee may have notified to the Agent not less than 5 Business Days previously; and

	(b)	amounts to be applied in satisfying amounts of a particular category which are due to the Lenders and/or the Swap Bank generally shall be distributed by the Agent to each Lender and the Swap Bank pro rata to the amount in that category which is due to it.

	16.5	Permitted deductions by Agent

Notwithstanding any other provision of this Agreement or any other Finance Document, the Agent may, before making an amount available to a Lender or the Swap Bank, deduct and withhold from that amount any sum which is then due and payable to the Agent from that Lender or the Swap Bank under any Finance Document or any sum which the Agent is then entitled under any Finance Document to require that Lender or the Swap Bank to pay on demand.

	16.6	Agent only obliged to pay when monies received

Notwithstanding any other provision of this Agreement or any other Finance Document, the Agent shall not be obliged to make available to the Borrower or any Lender or the Swap Bank any sum which the Agent is expecting to receive for remittance or distribution to the Borrower or that Lender or the Swap Bank until the Agent has satisfied itself that it has received that sum.

	16.7	Refund to Agent of monies not received

If and to the extent that the Agent makes available a sum to the Borrower or a Lender or the Swap Bank, without first having received that sum, the Borrower or (as the case may be) the Lender or the Swap Bank concerned shall, on demand:

	(a)	refund the sum in full to the Agent; and

	(b)	pay to the Agent the amount (as certified by the Agent) which will indemnify the Agent against any funding or other loss, liability or expense incurred by the Agent as a result of making the sum available before receiving it.

	16.8	Agent may assume receipt

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Clause 16.7 shall not affect any claim which the Agent has under the law of restitution, and applies irrespective of whether the Agent had any form of notice that it had not received the sum which it made available.

	16.9	Creditor Party accounts

Each Creditor Party shall maintain accounts showing the amounts owing to it by the Borrower and each Security Party under the Finance Documents and all payments in respect of those amounts made by the Borrower and any Security Party.

	16.10	Agent's memorandum account

The Agent shall maintain a memorandum account showing the amounts advanced by the Lenders and all other sums owing to the Agent, the Security Trustee and each Lender from the Borrower and each Security Party under the Finance Documents and all payments in respect of those amounts made by the Borrower and any Security Party.

	16.11	Accounts prima facie evidence

If any accounts maintained under Clauses 16.9 and 16.10 show an amount to be owing by the Borrower or a Security Party to a Creditor Party, those accounts (absent manifest error) shall be prima facie evidence that that amount is owing to that Creditor Party.

	17.	APPLICATION OF RECEIPTS

	17.1	Normal order of application

Except as any Finance Document may otherwise provide, any sums which are received or recovered by any Creditor Party under or by virtue of any Finance Document shall be applied:

	(a)	FIRST: in or towards satisfaction of any amounts then due and payable under the Finance Documents in the following order and proportions:

		(i)	firstly, in or towards satisfaction pro rata of all amounts then due and payable to the Creditor Parties under the Finance Documents other than those amounts referred to at paragraphs (H) and (Hi) (including, but without limitation, all amounts payable by the Borrower under Clauses 20, 21 and 22 of this Agreement or by the Borrower or any Security Party under any corresponding or similar provision in any other Finance Document);

		(ii)	secondly, in or towards satisfaction pro rata of any and all amounts of interest or default interest payable to the Creditor Parties under the Finance Documents (and, for this purpose, the expression "interest" shall include any net amount which the Borrower shall have become liable to pay or deliver under section 2(e) (Obligations) of the Master Agreement but shall have failed to pay or deliver to the Swap Bank at the time of application or distribution under this Clause 17); and

		(iii)	thirdly, in or towards satisfaction pro rata of the Loan and the Swap Exposure (in the case of the latter, calculated as at the actual Early Termination Date applying to each particular Designated Transaction, or if no such Early Termination Date shall have occurred, calculated as if an Early Termination Date occurred on the date of application or distribution hereunder);

	(b)	SECONDLY: if an Event of Default or Potential Event of Default has occurred, in retention of an amount equal to any amount not then due and payable under any Finance Document but which the Agent, by written notice to the Borrower, the Security Parties and the other Creditor Parties, states in its opinion will either or may become due and payable in the

49

future and, upon those amounts becoming due and payable, in or towards satisfaction of them in accordance with the provisions of Clause 17.1(a); and

	(c)	THIRDLY: any surplus shall be paid to the Borrower or to any other person appearing to be entitled to it.

	17.2	Variation of order of application

The Agent may, with the authorisation of the Majority Lenders and the Swap Bank, by written notice to the Borrower, the Security Parties and the other Creditor Parties provide for a different manner of application from that set out in Clause 17.1 either as regards a specified sum or sums or as regards sums in a specified category or categories.

	17.3	Notice of variation of order of application

The Agent may give notices under Clause 17.2 from time to time; and such a notice may be stated to apply not only to sums which may be received or recovered in the future, but also to any sum which has been received or recovered on or after the third Business Day before the date on which the notice is served.

	17.4	Appropriation rights overridden

This Clause 17 and any notice which the Agent gives under Clause 17.2 shall override any right of appropriation possessed, and any appropriation made, by the Borrower or any Security Party.

	18.	APPLICATION OF EARNINGS; SWAP PAYMENTS

	18.1	Payment of Earnings and swap payments

The Borrower undertakes with each Creditor Party to ensure that, throughout the Security Period (and subject only to the provisions of the General Assignment to which it is a party):

	(a)	it shall maintain the Accounts with the Agent;

	(b)	all Earnings of the Ship are paid to the Earnings Account;

	(c)	all Minimum Liquidity and Additional Minimum Liquidity amounts required pursuant to Clause 11.19 shall be maintained in the Liquidity Account; and

	(d)	all payments by the Swap Bank to the Borrower under each Designated Transaction are paid to the Swap Account and at least 1 day prior to any payment required to be made under a Designated Transaction, ensure that there are sufficient funds in the Swap Account in order to be able to effect such payment.

	18.2	Monthly retentions

The Borrower undertakes with each Creditor Party to ensure that, in each calendar month of the Security Period after the Drawdown Notice is served, on such dates as the Agent may from time to time specify, there is transferred in respect of the Advance to the Retention Account (in respect of sub- clauses (a) and (b)) out of the Earnings received in the Earnings Account during the preceding calendar month:

	(a)	one-third of the amount of the relevant Instalment falling due in respect of the Advance under Clause 8.1 on the next Repayment Date; and

	(b)	the relevant fraction of the aggregate amount of interest on the Advance which is payable on the next due date for payment of interest under this Agreement,

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and the Borrower irrevocably authorises the Agent to make those transfers.

The "relevant fraction", in relation to paragraph (b), is a fraction of which the numerator is 1 and the denominator the number of months comprised in the then current Interest Period (or if the current Interest Period in respect of the Advance ends after the next due date for payment of interest under this Agreement, the number of months from the later of the commencement of the current Interest Period in respect of the Advance or the last due date for payment of interest to the next due date for payment of interest in respect of the Advance under this Agreement).

	18.3	Shortfall in Earnings

If the aggregate Earnings received in the Earnings Account is insufficient at any time for the required amount to be transferred to the Retention Account under Clause 18.2, the Borrower shall immediately pay the amount of the insufficiency into the Retention Account.

	18.4	Application of retentions

Until an Event of Default or a Potential Event of Default occurs and is continuing, the Agent shall on each Repayment Date and on each due date for the payment of interest under this Agreement distribute to the Lenders in accordance with Clause 16.4 so much of the then balance on the Retention Account as equals:

		(i)	the Instalment due on that Repayment Date pursuant to Clause 8.1; or

		(ii)	the amount of interest in respect of the Loan payable on that interest payment date, in discharge of the Borrower's liability for that Instalment or that interest.

	18.5	Interest accrued on the Accounts

Any credit balance on each Account shall bear interest at the rate from time to time offered by the Agent to its customers for Dollar deposits of similar amounts and for periods similar to those for which such balances appear to the Agent likely to remain on that Account.

	18.6	Release of accrued interest

Interest accruing under Clause 18.5 shall be credited to the relevant Account but shall not be released to the Borrower until the irrevocable and unconditional payment of any and all Secured Liabilities (other than in respect of the Earnings Account which shall be available to the Borrower subject to the terms and conditions of Clause 18.10).

	18.7	Location of Accounts

The Borrower shall promptly:

	(a)	comply with any requirement of the Agent as to the location or re-location of the Accounts (or any of them); and

	(b)	execute any documents which the Agent specifies to create or maintain in favour of the Security Trustee a Security Interest over (and/or rights of set-off, consolidation or other rights in relation to) the Accounts.

	18.8	Debits for fees, expenses etc.

The Agent shall be entitled (but not obliged) from time to time to debit the Earnings Account without prior notice in order to discharge any amount due and payable under Clauses 20 or

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21 to a Creditor Party or payment of which any Creditor Party has become entitled to demand under Clauses 20 or 21.

	18.9	Borrower's obligations unaffected

The provisions of this Clause 18 (as distinct from a distribution effected under Clause 18.4) do not affect:

	(a)	the liability of the Borrower to make payments of principal and interest on the due dates; or

	(b)	any other liability or obligation of the Borrower or any Security Party under any Finance Document.

	18.10	Restriction on withdrawal

During the Security Period no sum may be withdrawn from the Liquidity Account, the Retention Account or the Swap Account (other than by the Agent for application in accordance with Clause 18.4), without the prior written consent of the Agent.

The Borrower may, in any calendar month, after having transferred all amounts due or which will become due to the Retention Account in such calendar month in accordance with Clause 18.2 above, withdraw any surplus (a "Surplus") from the Earnings Account as it may think fit Provided that no Event of Default or Potential Event of Default has occurred which is continuing, and following the occurrence of an Event Default or Potential Event of Default which is continuing, any Surplus shall remain on the Earnings Account and the Borrower may only withdraw the Surplus (or any part thereof) with the prior written consent of the Agent (acting upon the instructions of the Majority Lenders in order to satisfy the documented and properly incurred operating expenses of the Ship.

	19.	EVENTS OF DEFAULT

	19.1	Events of Default

An Event of Default occurs if:

	(a)	the Borrower or any Security Party fails to pay when due or (if so payable) on demand (or within 3 Business Days of such due date or date of dem and if the failure to pay is due to to technical or administrative error) any sum payable under a Finance Document or under any document relating to a Finance Document; or

	(b)	any breach occurs of Clause 9.2, 11.2, 11.3, 11.19, 12.2, 12.3 or 15.2 or clause 11.14 of financial covenants the Corporate Guarantee; or

	(c)	any breach by the Borrower or any Security Party occurs of any provision of a Finance Document (other than a breach covered by paragraphs (a) or (b)) which is capable of remedy, and such default continues unremedied 15 Business Days after written notice from the Agent requesting action to remedy the same; or

	(d)	(subject to any applicable grace period specified in the Finance Document) any breach by the Borrower or any Security Party occurs of any provision of a Finance Document (other than a breach falling within paragraphs (a), (b) or (c)); or

	(e)	any representation, warranty or statement made or repeated by, or by an officer of, the Borrower or a Security Party in a Finance Document or in the Drawdown Notice or any other notice or document relating to a Finance Document is untrue or misleading when it is made or repeated ; or

	(f)	any of the following occurs in relation to any Financial Indebtedness of a Relevant Person:

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		(i)	any Financial Indebtedness of a Relevant Person is not paid when due; or

		(ii)	any Financial Indebtedness of a Relevant Person exceeding in aggregate one million Dollars ($1,000,000) becomes due and payable or capable of being declared due and payable prior to its stated maturity date as a consequence of any event of default; or

		(iii)	a lease, hire purchase agreement or charter creating any Financial Indebtedness of a Relevant Person is terminated by the lessor or owner or becomes capable of being terminated as a consequence of any termination event; or

		(iv)	any overdraft, loan, note issuance, acceptance credit, letter of credit, guarantee, foreign exchange or other facility, or any swap or other derivative contract or transaction, relating to any Financial Indebtedness of a Relevant Person ceases to be available or becomes capable of being terminated as a result of any event of default, or cash cover is required, or becomes capable of being required, in respect of such a facility as a result of any event of default; or

		(v)	any Security Interest securing any Financial Indebtedness of a Relevant Person becomes enforceable; or

	(g)	any of the following occurs in relation to a Relevant Person:

		(i)	a Relevant Person becomes unable to pay its debts as they fall due; or

		(ii)	any assets of a Relevant Person are subject to any form of execution, attachment, arrest, sequestration or distress or any form of freezing order; or

		(iii)	any administrative or other receiver is appointed over any asset of a Relevant Person; or

		(iv)	an administrator is appointed (whether by the court or otherwise) in respect of a Relevant Person; or

		(v)	any formal declaration of bankruptcy or any formal statement to the effect that a Relevant Person is insolvent or likely to become insolvent is made by a Relevant Person or by the directors of a Relevant Person or, in any proceedings, by a lawyer acting for a Relevant Person; or

		(vi)	a provisional liquidator is appointed in respect of a Relevant Person, a winding up order is made in relation to a Relevant Person or a winding up resolution is passed by a Relevant Person; or

		(vii)	a resolution is passed, an administration notice is given or filed, an application or petition to a court is made or presented or any other step is taken by (aa) a Relevant Person, (bb) the members or directors of a Relevant Person, (cc) a holder of Security Interests which together relate to all or substantially all of the assets of a Relevant Person, or (dd) a government minister or public or regulatory authority of a Pertinent Jurisdiction for or with a view to the winding up of that or another Relevant Person or the appointment of a provisional liquidator or administrator in respect of that or another Relevant Person, or that or another Relevant Person ceasing or suspending business operations or payments to creditors, save that this paragraph does not apply to a fully solvent winding up of a Relevant Person other than the Borrower or the Corporate Guarantor which is, or is to be, effected for the purposes of an amalgamation or reconstruction previously approved by the Majority Lenders and effected not later than 3 months after the commencement of the winding up; or

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		(viii)	an administration notice is given or filed, an application or petition to a court is made or presented or any other step is taken by a creditor of a Relevant Person (other than a holder of Security Interests which together relate to all or substantially all of the assets of a Relevant Person) for the winding up of a Relevant Person or the appointment of a provisional liquidator or administrator in respect of a Relevant Person in any Pertinent Jurisdiction, unless the proposed winding up, appointment of a provisional liquidator or administration is being contested in good faith, on substantial grounds and not with a view to some other insolvency law procedure being implemented instead and either (aa) the application or petition is dismissed or withdrawn within 30 days of being made or presented, or (bb) within 30 days of the administration notice being given or filed, or the other relevant steps being taken, other action is taken which will ensure that there will be no administration and (in both cases (aa) or (bb)) the Relevant Person will continue to carry on business in the ordinary way and without being the subject of any actual, interim or pending insolvency law procedure; or

		(ix)	a Relevant Person or its directors take any steps (whether by making or presenting an application or petition to a court, or submitting or presenting a document setting out a proposal or proposed terms, or otherwise) with a view to obtaining, in relation to that or another Relevant Person, any form of moratorium, suspension or deferral of payments, reorganisation of debt (or certain debt) or arrangement with all or a substantial proportion (by number or value) of creditors or of any class of them or any such moratorium, suspension or deferral of payments, reorganisation or arrangement is effected by court order, by the filing of documents with a court, by means of a contract or in any other way at all; or

		(x)	any meeting of the members or directors, or of any committee of the board or senior management, of a Relevant Person is held or summoned for the purpose of considering a resolution or proposal to authorise or take any action of a type described in paragraphs (iv) to (ix) or a step preparatory to such action, or (with or without such a meeting) the members, directors or such a committee resolve or agree that such an action or step should be taken or should be taken if certain conditions materialise or fail to materialise; or

		(xi)	in any country other than England, any event occurs, any proceedings are opened or commenced or any step is taken which, in the opinion of the Majority Lenders is similar to any of the foregoing; or

	(h)	the Borrower ceases or suspends carrying on its business or a part of its business which, in the option of the Majority Lenders, is material in the context of this Agreement;or

	(i)	it becomes unlawful in any Pertinent Jurisdiction or impossible:

		(i)	for the Borrower or any Security Party to discharge any liability under a Finance Document or to comply with any other obligation which the Majority Lenders consider material under a Finance Document; or

		(ii)	for the Agent, the Security Trustee or the Lenders or the Swap Bank to exercise or enforce any right under, or to enforce any Security Interest created by, a Finance Document; or

	(j)	any official consent necessary to enable the Borrower to own, operate or charter the Ship or to enable the Borrower or any Security Party to comply with any provision which the Majority Lenders consider material of a Finance Document or any Underlying Document is not granted, expires without being renewed, is revoked or becomes liable to revocation or any condition of such a consent is not fulfilled in accordance with its terms; or

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	(k)	it appears to the Majority Lenders that, without their prior consent, a change has occurred or probably has occurred after the date of this Agreement in the direct ownership or control of any of the shares in the Borrower or in the voting rights attaching to any of those shares; or

	(l)	any provision which the Majority Lenders consider material of a Finance Document proves to have been or becomes invaild or unenforceable, or a Security Interest created by a Finance Document proves to have been or becomes invaild or unenforceable or such a Security Interest proves to have ranked after, or loses its priorty to, another Security Interest or any other third party claim or interest which is not a Permitted Security Interest; or

	(m)	the security constituted by a Finance Document is in any way imperilled or in jeopardy; or

	(n)	an Event of Default (as defined in section 14 of a Master Agreement) occurs; or

	(o)	any other adverse event or series of adverse events occur or any other circumstances arise or develop including, without limitation:

		(i)	an adverse change in the financial position, state of affairs or prospects of the Borrower or the Corporate Guarantor or any other Security Party; or

		(ii)	any accident or other event involving the Ship or another vessel owned, chartered or operated by a Relevant Person; or

		(iii)	the threat or commencement of legal or administrative action involving the Borrower, the Ship, either of the Approved Manager or any Security Party; or

		(iv)	the withdrawal of any material license or governmental or regulatory approval in respect of the Ship, the Borrower, an Approved Manager or the Borrower's or Approved Manager's business (unless such withdrawal can be contested with the effect of suspension and is in fact so contested in good faith by the Borrower or the Approved Manager),

which constitutes a Material Adverse Change.

	19.2	Actions following an Event of Default

On, or at any time after, the occurrence of an Event of Default which is continuing:

	(a)	the Agent may, and if so instructed by the Majority Lenders, the Agent shall:

		(i)	serve on the Borrower a written notice stating that all or part of the Commitments and of the other obligations of each Lender to the Borrower under this Agreement are cancelled; and/or

		(ii)	serve on the Borrower a written notice stating that all or part of the Loan together with accrued interest and all other amounts accrued or owing under this Agreement are immediately due and payable or are due and payable on demand; and/or

		(iii)	take any other action which, as a result of the Event of Default or any notice served under paragraph (i) or (ii), the Agent and/or the Lenders are entitled to take under any Finance Document or any applicable law; and/or

	(b)	the Security Trustee may, and if so instructed by the Agent, acting with the authorisation of the Majority Lenders, the Security Trustee shall take any action which, as a result of the Event of Default or any notice served under paragraph (a)(i) or (a)(ii), the Security Trustee,

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the Agent, the Mandated Lead Arranger and/or the Lenders and/or the Swap Bank are entitled to take under any Finance Document or any applicable law.

	19.3	Termination of Commitments

On the service of a notice under Clause 19.2(a)(i), the Commitments and all other obligations of each Lender to the Borrower under this Agreement shall be cancelled.

	19.4	Acceleration of Loan

On the service of a notice under Clause 19.2(a)(ii), all or, as the case may be, the part of the Loan specified in the notice together with accrued interest and all other amounts accrued or owing from the Borrower or any Security Party under this Agreement and every other Finance Document shall become immediately due and payable or, as the case may be, payable on demand.

	19.5	Multiple notices; action without notice

The Agent may serve notices under Clauses 19.2(a)(i) or 19.2(a)(ii) simultaneously or on different dates and it and/or the Security Trustee may take any action referred to in Clause 19.2 if no such notice is served or simultaneously with or at any time after the service of both or either of such notices.

	19.6	Notification of Creditor Parties and Security Parties

The Agent shall send to each Lender, the Swap Bank, the Security Trustee and each Security Party a copy or the text of any notice which the Agent serves on the Borrower under Clause 19.2; but the notice shall become effective when it is served on the Borrower, and no failure or delay by the Agent to send a copy or the text of the notice to any other person shall invalidate the notice or provide the Borrower or any Security Party with any form of claim or defence.

	19.7	Credit Party rights unimpaired

Nothing in this Clause shall be taken to impair or restrict the exercise of any right given to individual Lenders or Swap Bank under a Finance Document or the general law; and, in particular, this Clause is without prejudice to Clause 3.1.

	19.8	Exclusion of Creditor Party liability

No Creditor Party, and no receiver or manager appointed by the Security Trustee, shall have any liability to the Borrower or a Security Party:

	(a)	for any loss caused by an exercise of rights under, or enforcement of a Security Interest created by, a Finance Document or by any failure  or delay to exercise such a right or to enforce such a Security Interest; or

	(b)	as mortgagee in possession or otherwise, for any income or principal amount which might have been produced by or realised from any asset comprised in such a Security Interest or for any reduction (however caused) in the value of such an asset,

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

	19.9	Relevant Persons

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In this Clause 19, a "Relevant Person" means the Borrower, a Security Party, and any member of the Group.

	19.10	Interpretation

In Clause 19.1(f) references to an event of default or a termination event include any event, howsoever described, which is similar to an event of default in a facility agreement or a termination event in a finance lease; and in Clause 19.1(g) "petition" includes an application.

	19.11	Position of Swap Bank

Neither the Agent nor the Security Trustee shall be obliged, in connection with any action taken or proposed to be taken under or pursuant to the foregoing provisions of this Clause 19 to have any regard to the requirements of the Swap Bank except to the extent that the Swap Bank is also a Lender.

	20.	FEES AND EXPENSES

	20.1	Arrangement, structuring and commitment fees

The Borrower shall pay to the Agent:

	(a)	(for the Agent's own account) on the signing date of this Agreement, a non-refundable structurng fee in the amount of $95,000 (representing 0.50 per cent. of the Total Commitments); and

	(b)	a non-refundable commitment fee, at the rate of 0.90 per cent. per annum on the undrawn or uncancelled amount of the Loan, payable quarterly in arrears for distribution among the Lenders pro rata to their Commitments, during the period from (and including) three months from 14 January 2015 (being the date falling 3 months after the Borrower's acceptance of the firm offer letter regarding the Loan) to the period ending on the earlier of (i) the Drawdown Date and (ii) the last day of the Availability Period (and on the last day of such period).

	20.2	Costs of negotiation, preparation etc.

The Borrower shall pay to the Agent on its demand the amount of all expenses incurred by the Agent or the Security Trustee in connection with the negotiation, preparation, execution or registration of any Finance Document or any related document or with any transaction contemplated by a Finance Document or a related document.

	20.3	Costs of variations, amendments, enforcement etc.

The Borrower shall pay to the Agent, on the Agent's demand, for the account of the Creditor Party concerned, the amount of all reasonable (other than in relation to any expenses under sub-clause (d)) expenses incurred by a Creditor Party in connection with:

	(a)	any amendment or supplement (or any proposal for such an amendment or supplement) requested (or, in the case of a proposal, made) by or on behalf of the Borrower and relating to a Finance Document or any other Pertinent Document;

	(b)	any consent, waiver or suspension of rights by the Lenders, the Swap Bank, the Majority Lenders or the Creditor Party concerned or any proposal for any of the foregoing requested (or, in the case of a proposal, made) by or on behalf of the Borrower under or in connection with a Finance Document or any other Pertinent Document;

	(c)	the valuation of any security provided or offered under and pursuant to Clause 15 or any other matter relating to such security; or

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	(d)	any step taken by the Lender concerned or the Swap Bank with a view to the preservation, protection, exercise or enforcement of any rights or Securty Interest created by a Finance Document or for any similar purpose including, without limitation, any proceedings to recover or retain proceeds of enforcement or any other proceedings following enforcement proceedings until the date all outstandling indebtedness to the Creditor Parties under the Finance Documents and any other Pertinent Document is repaid in full.

There shall be recoverable under paragraph (d) the full amount of all legal expenses, whether or not such as would be allowed under rules of court or any taxation or other procedure carried out under such rules.

Provided that no Event of Default has occurred and is continuing, any external advisers other than legal advisers will be mandated by the Agent only after consultation with the Borrower, and the Borrower and the Agent will use their best endeavours to agree to external advisers as well as the arrangements mutually agreeable to both parties.

	20.4	Documentary taxes

The Borrower shall promptly pay any tax payable on or by reference to any Finance Document, and shall, on the Agent's demand, fully indemnify each Creditor Party against any claims, expenses, liabilities and losses resulting from any failure or delay by the Borrower to pay such a tax.

	20.5	Certification of amounts

A notice which is signed by 2 officers of a Creditor Party, which states that a specified amount, or aggregate amount, is due to that Creditor Party under this Clause 20 and which indicates (upon request from the Borrower, a reasonable breakdown) the matters in respect of which the amount, or aggregate amount, is due shall be (absent manifest error) prima facie evidence that the amount, or aggregate amount, is due.

	21.	INDEMNITIES

	21.1	Indemnities regarding borrowing and repayment of Loan

The Borrower shall fully indemnify the Agent and each Lender on the Agent's demand and the Security Trustee on its demand in respect of all claims, expenses, liabilities and losses which are made or brought against or incurred by that Creditor Party, or which that Creditor Party reasonably and with due diligence estimates that it will incur, as a result of or in connection with:

	(a)	the Advance not being borrowed on the date specified in the Drawdown Notice for any reason other than a default by the Lender claiming the indemnity after the Drawdown Notice has been served in accordance with the provisions of this Agreement;

	(b)	the receipt or recovery of all or any part of the Loan or an overdue sum otherwise than on the last day of an Interest Period or other relevant period;

	(c)	any failure (for whatever reason) by the Borrower to make payment of any amount due under a Finance Document on the due date or, if so payable, following demand (after giving credit for any default interest paid by the Borrower on the amount concerned under Clause 7) including but not limited to any costs and expenses of enforcing any Security Interests created by the Finance Documents and any claims, liabilities and losses which may be brought against, or incurred by, a Creditor Party when enforcing any Security Interests created by the Finance Documents; and

	(d)	the occurrence and/or continuance of an Event of Default or a Potential Event of Default and/or the acceleration of repayment of the Loan under Clause 19 (including without

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limitation any costs, expenses or liabilities incurred by a Creditor Party in relation to any insurances taken or arranged by that Creditor Party following the occurrence of an event of Default in relation to port risks, new liability insurance or any other type of insurance),

and in respect of any tax (other than tax on its overall net income) for which a Creditor Party is liable in connection with any amount paid or payable to that Creditor Party (whether for its own account or otherwise) under any Finance Document.

	21.2	Break Costs

If a Lender (the "Notifying Lender") notifies the Agent that as a consequence of receipt or recovery of all or any part of the Loan (a "Payment") on a day other than the last day of an Interest Period applicable to the sum received or recovered the Notifying Lender has or will, with effect from a specified date, incur Break Costs:

	(a)	the Agent shall promptly notify the Borrower of a notice it receives from a Notifying Lender under this Clause 21.2;

	(b)	the Borrower shall, within 5 Business Days of the Agent's demand, pay to the Agent for the account of the Notifying Lender the amount of such Break Costs; and

	(c)	the Notifying Lender shall, as soon as reasonably practicable, following a request by the Borrower, provide a certificate confirming the amount of the Notifying Lender's Break Costs for the Interest Period in which they accrue, such certificate to be, in the absence of manifest error, conclusive and binding on the Borrower.

In this Clause 21.2, "Break Costs" means, in relation to a Payment the amount (if any) by which:

		(i)	the interest which the Notifying Lender, should have received in respect of the sum received or recovered from the date of receipt or recovery of such Payment to the last day of the then current Interest Period applicable to the sum received or recovered had such Payment been made on the last day of such Interest Period;

exceeds

		(ii)	the amount which the Notifying Lender, would be able to obtain by placing an amount equal to such Payment on deposit with a leading bank in the London Interbank Market for a period commencing on the Business Day following receipt or recovery of such Payment (as the case may be) and ending on the last day of the then current Interest Period applicable to the sum received or recovered.

	21.3	Other breakage costs

Without limiting its generality, Clause 21.1 covers any claim, expense, liability or loss, including (without limitation) (i) a loss of a prospective profit, incurred by a Lender in borrowing, liquidating or re-employing deposits from third parties acquired, contracted for or arranged to fund, effect or maintain all or any part of its Contribution and/or any overdue amount (or an aggregate amount which includes its Contribution or any overdue amount) other than claims, expenses, liabilities and losses which are shown to have been directly and mainly caused by the gross negligence or wilful misconduct of the officers or employees of the Creditor Party concerned and (ii) any applicable legal fees.

	21.4	Miscellaneous indemnities

The Borrower shall fully indemnify each Creditor Party severally on their respective demands, without prejudice to any of their other rights under any of the Finance Documents, in respect of all claims, expenses, liabilities and losses which may be made or

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brought against or sustained or incurred by a Creditor Party, in any country, as a result of or in connection with:

	(a)	any action taken, or omitted or neglected to be taken, under or in connection with any Finance Document by the Agent, the Security Trustee or any other Creditor Party or by any receiver appointed under a Finance Document;

	(b)	investigating any event which the Creditor Party concerned reasonably believes constitutes an Event of Default or Potential Event of Default;

	(c)	acting or relying on any notice, request or instruction which the Creditor Party concerned reasonably believes to be genuine, correct and appropriately authorised; or

	(d)	any other Pertinent Matter,

other than claims, expenses, liabilities and losses which are shown to have been directly and mainly caused by the dishonesty, gross negligence or wilful misconduct of the officers or employees of the Creditor Party concerned.

	21.5	Environmental Indemnity

Without prejudice to the generality of Clause 21.3, this Clause 21.4 covers any claims, demands, proceedings, liabilities, taxes, losses, liabilities or expenses of every kind which arise, or are asserted, under or in connection with any law relating to safety at sea, the ISM Code or the ISPS Code, any Environmental Law.

	21.6	Currency indemnity

If any sum due from the Borrower or any Security Party to a Creditor Party under a Finance Document or under any order, award or judgment relating to a Finance Document (a "Sum") has to be converted from the currency in which the Finance Document provided for the Sum to be paid (the "Contractual Currency") into another currency (the "Payment Currency") for the purpose of:

	(a)	making, filing or lodging any claim or proof against the Borrower or any Security Party, whether in its liquidation, any arrangement involving it or otherwise; or

	(b)	obtaining an order, judgment or award from any court or other tribunal in relation to any litigation or arbitration proceedings; or

	(c)	enforcing any such order, judgment or award,

the Borrower shall as an independent obligation, within 3 Business Days of demand, indemnify the Creditor Party to whom that Sum is due against any cost, loss or liability arising when the payment actually received by that Creditor Party is converted at the available rate of exchange back into the Contractual Currency including any discrepancy between (A) the rate of exchange actually used to convert the Sum from the Payment Currency into the Contractual Currency and (B) the available rate of exchange.

In this Clause 21.6, the "available rate of exchange" means the rate at which the Creditor Party concerned is able at the opening of business (London time) on the Business Day after it receives the Sum to purchase the Contractual Currency with the Payment Currency.

The Borrower waives any right it may have in any jurisdiction to pay any amount under the Finance Documents in a currency other than that in which it is expressed to be payable.

If any Creditor Party receives any Sum in a currency other than the Contractual Currency, the Borrower shall indemnify in full the Creditor Party concerned against any cost, loss or

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liability arising directly or indirectly from any conversion of such Sum to the Contractual Currency.

This Clause 21.6 creates a separate liability of the Borrower which is distinct from its other liabilities under the Finance Documents and which shall not be merged in any judgment or order relating to those other liabilities.

	21.7	Application to Master Agreement

For the avoidance of doubt, Clause 21.6 does not apply in respect of sums due from the Borrower to the Swap Bank under or in connection with the Master Agreement as to which sums the provisions of section 8 (Contractual Currency) of the Master Agreement shall apply.

	21.8	Certification of amounts

A notice which is signed by 2 officers of a Creditor Party, which states that a specified amount, or aggregate amount, is due to that Creditor Party under this Clause 21 and which indicates (with, upon request by the Borrower, a reasonable breakdown) the matters in respect of which the amount, or aggregate amount, is due shall (absent manifest error) be prima facie evidence that the amount, or aggregate amount, is due.

	21.9	Sums deemed due to a Lender

For the purposes of this Clause 21, a sum payable by the Borrower to the Agent or the Security Trustee for distribution to a Lender shall be treated as a sum due to that Lender.

	22.	NO SET-OFF OR TAX DEDUCTION

	22.1	No deductions

All amounts due from the Borrower under a Finance Document shall be paid:

	(a)	without any form of set-off, counter-claim, cross-claim or condition; and

	(b)	free and clear of any tax deduction except a tax deduction which the Borrower is required by law to make.

	22.2	Grossing-up for taxes

If, at any time, the Borrower is required by law, regulation or regulatory requirement to make a tax deduction from any payment due under a Finance Document:

	(a)	the Borrower shall notify the Agent as soon as it becomes aware of the requirement;

	(b)	the amount due in respect of the payment shall be increased by the amount necessary to ensure that, after the making of such tax deduction, each Creditor Party receives on the due date for such payment (and retains free from any liability relating to the tax deduction) a net amount which is equal to the full amount which it would have received had no such tax deduction been required to be made; and

	(c)	the Borrower shall pay the full amount of the tax required to be deducted to the appropriate taxation authority promptly in accordance with the relevant law, regulation or regulatory requirement, and in any event before any fine or penalty arises.

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	22.3	Indemnity and evidence of payment of taxes

The Borrower shall fully indemnify each Creditor Party on the Agent's demand in respect of all claims, expenses, liabilities and losses incurred by any Creditor Party by reason of any failure of the Borrower to make any tax deduction or by reason of any increased payment not being made on the due date for such payment in accordance with Clause 22.2. Within 30 days after making any tax deduction, the Borrower shall deliver to the Agent any receipts, certificates or other documentary evidence satisfactory to the Agent that the tax had been paid to the appropriate taxation authority.

If the Borrower makes a Tax Payment and the relevant Creditor Party determines that:

	(a)	a Tax Credit is attributable to an increased payment of which that Tax Payment forms part, to that Tax Payment or to a Tax Deduction in consequence of which that Tax Payment was received; and

	(b)	that Creditor Party has obtained, utilised and retained that Tax Credit,

the Creditor Party shall pay an amount to the Borrower which that Creditor Party determines will leave it (after that payment) in the same after-tax position as it would have been in had the Tax Payment not been required to be made by the Borrower.

For purposes of this Clause:

"Tax Credit" means a credit against, relief or remission for, or repayment of any tax.

"Tax Deduction" means a deduction or withholding for or on account of tax from a payment under a Finance Document.

"Tax Payment" means either the increase in a payment made by the Borrower to a Creditor Party under Clause 22.2 or a payment under this Clause 22.3.

	22.4	Exclusion of tax on overall net income

In this Clause 22 "tax deduction" means any deduction or withholding from any payment due under a Finance Document for or on account of any present or future tax except tax on a Creditor Party's overall net income.

	22.5	Application to Master Agreement

For the avoidance of doubt, Clause 22 does not apply in respect of sums due from the Borrower to the Swap Bank under or in connection with the Master Agreement as to which sums the provisions of section 2(d) (Deduction or Withholding for Tax) of the Master Agreement shall apply.

	23.	ILLEGALITY, ETC.

	23.1	Illegality

This Clause 23 applies if a Lender (the "Notifying Lender") notifies the Agent that it has become, or will with effect from a specified date, become:

	(a)	unlawful or prohibited as a result of the introduction of a new law, an amendment to an existing law or a change in the manner in which an exisiting law is or will be interpreted or applied; or

	(b)	contrary to, or inconsistent with, any regulation,

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for the Notifying Lender to perform, maintain or give effect to any of its obligations under this Agreement in the manner contemplated by this Agreement or to fund or maintain the Loan.

	23.2	Notification of illegality

The Agent shall promptly notify the Borrower, the Security Parties, the Security Trustee and the other Lenders of the notice under Clause 23.1 which the Agent receives from the Notifying Lender.

	23.3	Prepayment; termination of Commitment

On the Agent notifying the Borrower under Clause 23.2, subject to the consent and participation of the Notifying Lender, the Creditor Parties shall use reasonable efforts to transfer the Notifying Lender's Commitment to a lending office in a jurisdiction not affected by the events described in Clause 23.1 and, if they are unable to successfully transfer the Notifying Lender's Commitment within a time frame selected in their discretion, the Notifying Lender's Commitment shall be immediately cancelled; and thereupon or, if later, on the date specified in the Notifying Lender's notice under Clause 23.1 as the date on which the notified event would become effective the Borrower shall prepay the Notifying Lender's Contribution on the last day of the then current Interest Period in accordance with clauses 8.10 and 8.11(a).

	24.	INCREASED COSTS

	24.1	Increased costs

This Clause 24 applies if a Lender (the "Notifying Lender") notifies the Agent that the Notifying Lender considers that as a result of:

	(a)	the introduction or alteration after the date of this Agreement of a law or an alteration after the date of this Agreement in the manner in which a law is interpreted or applied (disregarding any effect which relates to the application to payments under this Agreement of a tax on the Lender's overall net income); or

	(b)	complying with any regulation (including any which relates to capital adequacy or liquidity controls or which affects the manner in which the Notifying Lender allocates capital resources to its obligations under this Agreement) which is introduced, or altered, or the interpretation or application of which is altered, after the date of this Agreement; or

	(c)	the implementation or application of or compliance with the "International Convergence of Capital Measurement and Capital Standards, a Revised Framework" published by the Basel Committee on Banking Supervision in June 2004 in the form existing on the date of this Agreement (the "Basel II Accord") or any other law or regulation implementing the Basel II Accord or any of the approaches provided for and allowed to be used by banks under or in connection with the Basel II Accord, in each case when compared to the cost of complying with such regulations as determined by the Agent (or parent company of it) on the date of this Agreement (whether such implementation, application or compliance is by a government, regulator, supervisory authority, the Notifying Lender or its holding company); or

	(d)	the implementation or application of or compliance with Basel III or any law or regulation which implements or applies Basel III (regardless of the date on which it is enacted, adopted or issued and regardless of whether any such implementation, application or compliance is by a government, regulator, the Notifying Lender or any of its affiliates) is that the Notifying Lender (or a parent company of it),

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the Notifying Lender (or a parent company of it) has incurred or will incur an "increased cost".

	24.2	Meaning of "increased cost"

In this Clause 24, "increased cost" means, in relation to a Notifying Lender:

	(a)	an additional or increased cost incurred as a result of, or in connection with, the Notifying Lender having entered into, or being a party to, this Agreement or a Transfer Certificate, of funding or maintaining its Commitment or Contribution or performing obligations under this Agreement, or of having outstanding all or any part of its Contribution or other unpaid sums;

	(b)	a reduction in the amount of any payment to the Notifying Lender under this Agreement or in the effective return which such a payment represents to the Notifying Lender or on its capital;

	(c)	an additional or increased cost of funding all or maintaining all or any of the advances comprised in a class of advances formed by or including the Notifying Lender's Contribution or (as the case may require) the proportion of that cost attributable to the Contribution; or

	(d)	a liability to make a payment, or a return foregone, which is calculated by reference to any amounts received or receivable by the Notifying Lender under this Agreement,

but not an item attributable to a change in the rate of tax on the overall net income of the Notifying Lender (or a parent company of it) or an item covered by the indemnity for tax in Clause 21.1 or by Clause 22.

For the purposes of this Clause 24.2 the Notifying Lender may in good faith allocate or spread costs and/or losses among its assets and liabilities (or any class of its assets and liabilities) on such basis as it considers appropriate.

	24.3	Notification to Borrower of claim for increased costs

The Agent shall promptly notify the Borrower and the Security Parties of the notice which the Agent received from the Notifying Lender under Clause 24.1.

	24.4	Payment of increased costs

The Borrower shall pay to the Agent, not later than 5 days after the Agent's demand, for the account of the Notifying Lender the amounts which the Agent from time to time notifies the Borrower that the Notifying Lender has specified to be necessary to compensate the Notifying Lender for the increased cost.

	24.5	Notice of prepayment

If the Borrower is not willing to continue to compensate the Notifying Lender for the increased cost under Clause 24.4, the Borrower may give the Agent not less than 14 days' notice of their intention to prepay the Notifying Lender's Contribution at the end of an Interest Period.

	24.6	Prepayment; termination of Commitment

A notice under Clause 24.5 shall be irrevocable; the Agent shall promptly notify the Notifying Lender of the Borrower's notice of intended prepayment; and:

	(a)	on the date on which the Agent serves that notice, the Commitment of the Notifying Lender shall be cancelled; and

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	(b)	on the date specified in its notice of intended prepayment, the Borrower shall prepay (without premium or penalty) the Notifying Lender's Contribution, together with accrued interest thereon at the applicable rate plus the Margin and the Mandatory Cost (if any).

	24.7	Application of prepayment

Clause 8 shall apply in relation to the prepayment.

	25.	SET-OFF

	25.1	Application of credit balances

Each Creditor Party may without prior notice following the occurrence of an Event of Default:

	(a)	apply any balance (whether or not then due) which at any time stands to the credit of any account in the name of the Borrower at any office in any country of that Creditor Party in or towards satisfaction of any sum then due from the Borrower to that Creditor Party under any of the Finance Documents; and

	(b)	for that purpose:

		(i)	break, or alter the maturity of, all or any part of a deposit of the Borrower;

		(ii)	convert or translate all or any part of a deposit or other credit balance into Dollars; and

		(iii)	enter into any other transaction or make any entry with regard to the credit balance which the Creditor Party concerned considers appropriate.

	25.2	Existing rights unaffected

No Creditor Party shall be obliged to exercise any of its rights under Clause 25.1; and those rights shall be without prejudice and in addition to any right of set-off, combination of accounts, charge, lien or other right or remedy to which a Creditor Party is entitled (whether under the general law or any document).

	25.3	Sums deemed due to a Lender

For the purposes of this Clause 25, a sum payable by the Borrower to the Agent or the Security Trustee for distribution to, or for the account of, a Lender shall be treated as a sum due to that Lender; and each Lender's proportion of a sum so payable for distribution to, or for the account of, the Lenders shall be treated as a sum due to such Lender.

	25.4	No Security Interest

This Clause 25 gives the Creditor Parties a contractual right of set-off only, and does not create any equitable charge or other Security Interest over any credit balance of the Borrower.

	26.	TRANSFERS AND CHANGES IN LENDING OFFICES

	26.1	Transfer by Borrower

The Borrower may not assign or transfer any of its rights, liabilities or obligations under any Finance Document.

	26.2	Transfer by a Lender

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Subject to Clause 26.4, a Lender (the "Transferor Lender") may at any time, without needing the consent of the Borrower or any Security Party, cause:

	(a)	its rights in respect of all or part of its Contribution; or

	(b)	its obligations in respect of all or part of its Commitment; or

	(c)	a combination of (a) and (b); or

	(d)	all or part of its credit risk under this Agreement and the other Finance Documents,

to be syndicated to or, (in the case of its rights) assigned, pledged or transferred to, or (in the case of its obligations) pledged or assumed by, any other bank, or financial institution or to a trust, fund or other entity which is regularly engaged in or established for the purpose of making, purchasing or investing in loans, securities or other financial assets (a "Transferee Lender") by delivering to the Agent a completed certificate in the form set out in Schedule 6 with any modifications approved or required by the Agent (a "Transfer Certificate") executed by the Transferor Lender and the Transferee Lender.

However any rights and obligations of the Transferor Lender in its capacity as Agent or Security Trustee will have to be dealt with separately in accordance with the Agency and Trust Agreement.

	26.3	Transfer Certificate, delivery and notification

As soon as reasonably practicable after a Transfer Certificate is delivered to the Agent, it shall (unless it has reason to believe that the Transfer Certificate may be defective):

	(a)	sign the Transfer Certificate on behalf of itself, the Borrower, the Security Parties, the Security Trustee and each of the other Lenders and the Swap Bank;

	(b)	on behalf of the Transferee Lender, send to the Borrower and each Security Party letters or faxes notifying them of the Transfer Certificate and attaching a copy of it; and

	(c)	send to the Transferee Lender copies of the letters or faxes sent under paragraph (b) above.

	26.4	Effective Date of Transfer Certificate

A Transfer Certificate becomes effective on the date, if any, specified in the Transfer Certificate as its effective date Provided that it is signed by the Agent under Clause 26.3 on or before that date.

	26.5	No transfer without Transfer Certificate

Except as provided in Clause 26.17, no assignment or transfer of any right or obligation of a Lender under any Finance Document (other than the Master Agreement) is binding on, or effective in relation to, the Borrower, any Security Party, the Agent or the Security Trustee unless it is effected, evidenced or perfected by a Transfer Certificate.

	26.6	Lender re-organisation; waiver of Transfer Certificate

However, if a Lender enters into any merger, de-merger or other reorganisation as a result of which all its rights or obligations vest in another person (the "successor"), the Agent may, if it sees fit, by notice to the successor and the Borrower and the Security Trustee waive the need for the execution and delivery of a Transfer Certificate; and, upon service of the Agent's notice, the successor shall become a Lender with the same Commitment and Contribution as were held by the predecessor Lender.

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	26.7	Effect of Transfer Certificate

A Transfer Certificate takes effect in accordance with English law as follows:

	(a)	to the extent specified in the Transfer Certificate, all rights and interests (present, future or contingent) which the Transferor Lender has under or by virtue of the Finance Documents (other than the Master Agreement) are assigned to the Transferee Lender absolutely, free of any defects in the Transferor Lender title and of any rights or equities which the Borrower or any Security Party had against the Transferor Lender;

	(b)	the Transferor Lender's Commitment is discharged to the extent specified in the Transfer Certificate;

	(c)	the Transferee Lender becomes a Lender with the Contribution previously held by the Transferor Lender and a Commitment of an amount specified in the Transfer Certificate;

	(d)	the Transferee Lender becomes bound by all the provisions of the Finance Documents (other than the Master Agreement) which are applicable to the Lenders generally, including those about pro-rata sharing and the exclusion of liability on the part of, and the indemnification of, the Agent and the Security Trustee and, to the extent that the Transferee Lender becomes bound by those provisions (other than those relating to exclusion of liability), the Transferor Lender ceases to be bound by them;

	(e)	any part of the Loan which the Transferee Lender advances after the Transfer Certificate's effective date ranks in point of priority and security in the same way as it would have ranked had it been advanced by the transferor, assuming that any defects in the transferor's title and any rights or equities of the Borrower or any Security Party against the Transferor Lender had not existed;

	(f)	the Transferee Lender becomes entitled to all the rights under the Finance Documents (other than the Master Agreement) which are applicable to the Lenders generally, including but not limited to those relating to the Majority Lenders and those under Clause 5.7 and Clause 20, and to the extent that the Transferee Lender becomes entitled to such rights, the Transferor Lender ceases to be entitled to them; and

	(g)	in respect of any breach of a warranty, undertaking, condition or other provision of a Finance Document or any misrepresentation made in or in connection with a Finance Document (other than the Master Agreement), the Transferee Lender shall be entitled to recover damages by reference to the loss incurred by it as a result of the breach or misrepresentation, irrespective of whether the original Lender would have incurred a loss of that kind or amount.

The rights and equities of the Borrower or any Security Party referred to above include, but are not limited to, any right of set off and any other kind of cross-claim.

	26.8	Maintenance of register of Lenders

During the Security Period the Agent shall maintain a register in which it shall record the name, Commitment, Contribution and administrative details (including the lending office) from time to time of each Lender holding a Transfer Certificate and the effective date (in accordance with Clause 26.4) of the Transfer Certificate; and the Agent shall make the register available for inspection by any Lender, the Security Trustee and the Borrower during normal banking hours, subject to receiving at least 3 Business Days' prior notice.

	26.9	Reliance on register of Lenders

The entries on that register shall, in the absence of manifest error, be conclusive in determining the identities of the Lenders and the amounts of their Commitments and

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Contributions and the effective dates of Transfer Certificates and may be relied upon by the Agent and the other parties to the Finance Documents for all purposes relating to the Finance Documents.

	26.10	Authorisation of Agent to sign Transfer Certificates

The Borrower, the Security Trustee, each Lender and the Swap Bank irrevocably authorises the Agent to sign Transfer Certificates on its behalf. The Borrower and each Security Party irrevocably agree to the transfer procedures set out in this Clause 26 and to the extent the cooperation of the Borrower and/or any Security Party shall be required to effect any such transfer, the Borrower and such Security Party shall take all necessary steps to afford such cooperation Provided that this shall not result in any additional costs or fees whatsoever (including for the avoidance of doubt and registration fee) to be borne by the Borrower or such Security Party.

	26.11	Registration fee

In respect of any Transfer Certificate, the Agent shall be entitled to recover a registration fee of $2,500 from the Transferor Lender or (at the Agent's option) the Transferee Lender.

	26.12	Sub-participation; subrogation assignment

A Lender may sub-participate or include in a securitisation or similar transaction all or any part of its rights and/or obligations under or in connection with the Finance Documents (other than the Master Agreement) without the Borrower's prior consent and without serving a notice thereon and the Lenders may assign without the Borrower's prior consent and without serving a notice thereon, in any manner and terms agreed by the Majority Lenders, the Agent and the Security Trustee, all or any part of those rights to an insurer or surety who has become subrogated to them. The Borrower shall, and shall procure that each Security Party shall, do everything requested by the Agent or any Lender to assist and co-operate with that Lender to achieve a successful securitisation or similar transaction.

	26.13	Sub-division, split, modification or re-tranching

Any Lender may, in its sole discretion, sub-divide, split, sever, modify or re-tranche its Contribution into one or more parts subject to the overall cost of its Contribution to the Borrower remaining unchanged, if such changes are necessary in order to achieve a successful execution of a securitisation, syndication or any other capital market exit in respect of its Contribution (or any applicable part thereof).

	26.14	Disclosure of information

A Lender may, without the prior consent of the Borrower, the Corporate Guarantor or any other Security Party, disclose to a potential Transferee Lender or sub participant as well as, where relevant, to rating agencies, trustees and accountants, any financial or other information which that Lender has received in relation to the Loan, the Borrower, the Corporate Guarantor and any other Security Party or their affairs and collateral or security provided under or in connection with any Finance Document, their financial circumstances and any other information whatsoever, as that Lender may deem reasonably necessary or appropriate in connection with the potential syndication, the assessment of the credit risk and the ongoing monitoring of the Loan by any potential Transferee Lender and that Lender shall be released from its obligation of secrecy and from banking confidentiality.

In the event any such potential Transferee Lender, sub-participant, rating agency, trustee or accountant is not already bound by any legal obligation of secrecy or banking confidentiality, the Lender concerned shall require such other party to sign a confidentiality agreement. The Borrower shall, and shall procure that the Corporate Guarantor and any other Security Party shall:

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	(a)	provide the Creditor Parties (or any of them) with all information deemed, reasonably, necessary by the Creditor Parties (or any of them) for the purposes of any transfer, syndication or sub-participation to be effected pursuant to this Clause 26; and

	(b)	procure that the representatives of the Borrower, the Corporate Guarantor or any other Security Party, are available to participate in any meeting with any Transferee Lender or any rating agency at such times and places as the Creditor Parties may reasonably request following prior notice (to be served reasonably in advance) to the Borrower, the Corporate Guarantor or that Security Party.

The Borrower shall not, and shall ensure that no Security Party will, publish any details regarding the Loan or any of the Finance Documents without the Agent's prior written consent (which consent shall not be unreasonably withheld) it being agreed that the Guarantor (being a publicly listed company) may in any event disclose the basic details regarding the Loan to the US Securities and Exchange Commission (the "SEC") and otherwise in compliance with its SEC reporting obligations.

	26.15	Change of lending office

A Lender may change its lending office by giving notice to the Agent and the change shall become effective on the later of:

	(a)	the date on which the Agent receives the notice; and

	(b)	the date, if any, specified in the notice as the date on which the change will come into effect.

	26.16	Notification

On receiving such a notice, the Agent shall notify the Borrower and the Security Trustee; and, until the Agent receives such a notice, it shall be entitled to assume that a Lender is acting through the lending office of which the Agent last had notice.

	26.17	Security over Lenders' rights

In addition to the other rights provided to Lenders under this Clause 26, each Lender may without consulting with or obtaining consent from, the Borrower or any Security Party, at any time charge, assign or otherwise create a Security Interest in or over (whether by way of collateral or otherwise) all or any of its rights under any Finance Document (other than the Master Agreement) to secure obligations of that Lender including, without limitation:

	(a)	any charge, assignment or other Security Interest to secure obligations to a federal reserve or central bank; and

	(b)	in the case of any Lender which is a fund, any charge, assignment or other Security Interest granted to any holders (or trustee or representatives of holders) of obligations owed, or securities issued, by that Lender as security for those obligations or securities;

except that no such charge, assignment or Security Interest shall:

		(i)	release a Lender from any of its obligations under the Finance Documents or substitute the beneficiary of the relevant charge, assignment or Security Interest for the Lender as a party to any of the Finance Documents; or

		(ii)	require any payments to be made by the Borrower or any Security Party or grant to any person any more extensive rights than those required to be made or granted to the relevant Lender under the Finance Documents.

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	26.18	Replacement of a Reference Bank

If any Reference Bank ceases to be a Lender or is unable on a continuing basis to supply quotations for the purposes of Clause 5 then, unless the Borrower, the Agent and the Majority Lenders otherwise agree, the Agent, acting on the instructions of the Majority Lenders, and after consulting the Borrower, shall appoint another bank (whether or not a Lender) to be a replacement Reference Bank; and, when that appointment comes into effect, the first-mentioned Reference Bank's appointment shall cease to be effective.

	27.	VARIATIONS AND WAIVERS

	27.1	Required consents

	(a)	Subject to Clause 27.2 (Exceptions) any term of the Finance Documents may be amended or waived only with the consent of the Majority Lenders and the Borrower and any such amendment or waiver will be binding on all Creditor Parties and the Borrower.

	(b)	Any instructions given by the Majority Lenders will be binding on all the Creditor Parties.

	(c)	The Agent may effect, on behalf of any Creditor Party, any amendment or waiver permitted by this Clause.

	27.2	Exceptions

	(a)	An amendment or waiver that has the effect of changing or which relates to:

		(i)	the definition of "Majority Lenders" or "Finance Documents" in Clause 1.1 (Definitions);

		(ii)	an extension to the date of payment of any amount under the Finance Documents;

		(iii)	a reduction in the Margin or a reduction in the amount of any payment of principal, interest fees, commission or other amount payable under any of the Finance Documents;

		(iv)	an increase in or an extension of any Lender's Commitment;

		(v)	any provision which expressly requires the consent of all the Lenders; or

		(vi)	Clause 3 (Position of the Lenders and Swap Banks), Clause 11.5 (Information provided to be accurate), 11.6 (Provision of financial statements), 11.7 (Form of financial statements), Clause 11.16 (Provision of Further Information), Clause 26 (Transfers and Changes in Lending Offices) or this Clause 27.2;

		(vii)	any release of any Security Interest, guarantee, indemnities or subordination arrangement created by any Finance Document;

		(viii)	any change of the currency in which the Loan is provided or any amount is payable under any of the Finance Documents;

		(ix)	an extension of the Availability Period;

		(x)	change clauses 16.4 (Distribution of payment to Creditor Parties) and 22 (Grossing-up),

may not be effected without the prior written consent of all Lenders.

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	(b)	An amendment or waiver which relates to the rights or obligations of the Agent, the Arranger or the Security Trustee may not be effected without the consent of the Agent, the Arranger or the Security Trustee, as the case may be.

	27.3	Exclusion of other or implied variations

Except for a document which satisfies the requirements of Clauses 27.1 and 27.2, no document, and, subject to Clause 27.4, no act, course of conduct, failure or neglect to act, delay or acquiescence on the part of the Creditor Parties or any of them (or any person acting on behalf of any of them) shall result in the Creditor Parties or any of them (or any person acting on behalf of any of them) being taken to have varied, waived, suspended or limited, or being precluded (permanently or temporarily) from enforcing, relying on or exercising:

	(a)	a provision of this Agreement or another Finance Document; or

	(b)	an Event of Default; or

	(c)	a breach by the Borrower or a Security Party of an obligation under a Finance Document or the general law; or

	(d)	any right or remedy conferred by any Finance Document or by the general law,

and there shall not be implied into any Finance Document any term or condition requiring any such provision to be enforced, or such right or remedy to be exercised, within a certain or reasonable time.

	27.4	Deemed consent

With respect to any amendment, variation, waiver, suspension or limit requested by any party to this Agreement and which requires the approval of all the Lenders or the Majority Lenders (as the case may be), the Agent shall provide each Lender with written notice of such request accompanied by such detailed background information as may be reasonably necessary (in the opinion of the Agent) to determine whether to approve such action. A Lender shall be deemed to have approved such action if such Lender fails to object to such action by written notice to the Agent within 10 days of that Lender's receipt of the Agent's notice or such other time as the Agent may state in the relevant notice as being the time available for approval of such action.

	28.	NOTICES

	28.1	General

Unless otherwise specifically provided, any notice under or in connection with any Finance Document shall be given by letter or fax; and references in the Finance Documents to written notices, notices in writing and notices signed by particular persons shall be construed accordingly.

	28.2	Addresses for communications. A notice by letter or fax shall be sent:

	
(a)

	
to the Borrower:

	
4 Messogiou & Evropis Street

151 24, Maroussi

Greece

Fax No: +30 211 1804097

	 	 	 
	
(b)

	
to a Lender:

	
At the address below its name in Schedule 1 or (as the case may require) in the relevant Transfer

71

	 	 	
Certificate.

	
(c)

	
to the Agent and Security Trustee:

	
HSH Nordbank AG

CRM Shipping Europe & Offshore

Gerhart-Hauptm ann-Platz 50

20095 Ha,birg

Germany

Fax No : +49 40 3333 34118

	 	 	 
	
(d)

	
to the Swap Bank:

	
Martensdamm 6

D-24103 Kiel

Germany

Fax No : +49 40 3333 34086

	 	 	 

or to such other address as the relevant party may notify the Agent or, if the relevant party is the Agent or the Security Trustee, the Borrower, the Lenders, the Swap Bank and the Security Parties.

	28.3	Effective date of notices

Subject to Clauses 28.4 and 28.5:

	(a)	a notice which is delivered personally or posted shall be deemed to be served, and shall take effect, at the time when it is delivered; and

	(b)	a notice which is sent by fax shall be deemed to be served, and shall take effect, 2 hours after its transmission is completed.

	28.4	Service outside business hours

However, if under Clause 28.3 a notice would be deemed to be served:

	(a)	on a day which is not a business day in the place of receipt; or

	(b)	on such a business day, but after 5 p.m. local time,

the notice shall (subject to Clause 28.5) be deemed to be served, and shall take effect, at 9 a.m. on the next day which is such a business day.

	28.5	Illegible notices

Clauses 28.3 and 28.4 do not apply if the recipient of a notice notifies the sender within 1 hour after the time at which the notice would otherwise be deemed to be served that the notice has been received in a form which is illegible in a material respect.

	28.6	Valid notices

A notice under or in connection with a Finance Document shall not be invalid by reason that its contents or the manner of serving it do not comply with the requirements of this Agreement or, where appropriate, any other Finance Document under which it is served if:

	(a)	the failure to serve it in accordance with the requirements of this Agreement or other Finance Document, as the case may be, has not caused any party to suffer any significant loss or prejudice; or

72

	(b)	in the case of incorrect and/or incomplete contents, it should have been reasonably clear to the party on which the notice wsa served what the correct or missing particulars should have been.

	28.7	Electronic communication

Any communication to be made between the Agent and a Creditor Party or the Borrower or any other Security Party under or in connection with the Finance Documents may be made by electronic mail or other electronic means, if the Agent and, in the case of a communication to a Creditor Party, the relevant Creditor Party (or in the case of a communication to a Security Party, the relevant Security Party):

	(a)	agree that, unless and until notified to the contrary, this is to be an accepted form of communication;

	(b)	notify each other in writing of their electronic mail address and/or any other information required to enable the sending and receipt of information by that means; and

	(c)	notify each other of any change to their respective addresses or any other such information supplied to them.

Any electronic communication made between the Agent and a Lender or the Swap Bank or the Borrower or any other Security Party will be effective only when actually received in readable form and, in the case of any electronic communication made by a Creditor Party or the Borrower or any other Security Party to the Agent, only if it is addressed in such a manner as the Agent shall specify for this purpose.

	28.8	English language

Any notice under or in connection with a Finance Document shall be in English.

	28.9	Meaning of "notice"

In this Clause 28, "notice" includes any demand, consent, authorisation, approval, instruction, waiver or other communication.

	29.	SUPPLEMENTAL

	29.1	Rights cumulative, non-exclusive

The rights and remedies which the Finance Documents give to each Creditor Party are:

	(a)	cumulative;

	(b)	may be exercised as often as appears expedient; and

	(c)	shall not, unless a Finance Document explicitly and specifically states so, be taken to exclude or limit any right or remedy conferred by any law.

	29.2	Severability of provisions

If any provision of a Finance Document is or subsequently becomes void, unenforceable or illegal, that shall not affect the validity, enforceability or legality of the other provisions of that Finance Document or of the provisions of any other Finance Document.

	29.3	Counterparts

A Finance Document may be executed in any number of counterparts.

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	29.4	Third party rights

A person who is not a party to this Agreement has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce or to enjoy the benefit of any term of this Agreement.

	29.5	Benefit and binding effect

The terms of this Agreement shall be binding upon, and shall enure to the benefit of, the parties hereto and their respective (including subsequent) successors and permitted assigns and transferees.

	30.	LAW AND JURISDICTION

	30.1	English law

This Agreement and any non-contractual obligations arising out of or in connection with it shall be governed by, and construed in accordance with, English law.

	30.2	Exclusive English jurisdiction

Subject to Clause 30.3, the courts of England shall have exclusive jurisdiction to settle any Dispute.

	30.3	Choice of forum for the exclusive benefit of the Creditor Parties

Clause 30.2 is for the exclusive benefit of the Creditor Parties, each of which reserves the right:

	(a)	to commence proceedings in relation to any Dispute in the courts of any country other than England and which have or claim jurisdiction to that Disputes; and

	(b)	to commence such proceedings in the courts of any such country or countries concurrently with or in addition to proceedings in England or without commencing proceedings in England.

The Borrower shall not commence any proceedings in any country other than England in relation to a Dispute.

	30.4	Process agent

The Borrower irrevocably appoints Hill Dickinson Service (London) Limited at its registered office for the time being, presently at Irongate House, Duke's Place, London EC3A 7LP England, to act as its agent to receive and accept on its behalf any process or other document relating to any proceedings in the English courts which are connected with a Dispute.

	30.5	Creditor Party rights unaffected

Nothing in this Clause 30 shall exclude or limit any right which any Creditor Party may have (whether under the law of any country, an international convention or otherwise) with regard to the bringing of proceedings, the service of process, the recognition or enforcement of a judgment or any similar or related matter in any jurisdiction.

	30.6	Meaning of "proceedings" and "Dispute"

In this Clause 31, "proceedings" means proceedings of any kind, including an application for a provisional or protective measure and a "Dispute" means any dispute arising out of or in connection with this Agreement (including a dispute relating to the existence, validity or

74

termination of this Agreement) or any non-contractual obligation arising out of or in connection with this Agreement.

THIS AGREEMENT has been entered into on the date stated at the beginning of this Agreement.

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SCHEDULE 1

 LENDERS AND COMMITMENTS

	
Lender

	
Lending Office

	
Commitment

(Dollars)

	 	 	 
	
HSH Nordbank AG

	
Gerhart-Hauptmann-Platz 50

20095 Hamburg

 Germany

	
19,000,000

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SCHEDULE 2

 DRAWDOWN NOTICE

	
To:

	
HSH Nordbank AG

Gerhart-Hauptmann-Platz 50

20095 Hamburg

Germany

Attention: [Loans Administration]

	
[·] 2015

DRAWDOWN NOTICE

		2	We refer to the loan agreement (the "Loan Agreement") dated [·] 2015 and made between ourselves, as Borrower, the Lenders referred to therein, and yourselves as Agent, Mandated Lead Arranger, as Security Trustee and as Swap Bank in connection with a facility of up to US$19,000,000. Terms defined in the Loan Agreement have their defined meanings when used in this Drawdown Notice.

3            We request to borrow as follows:

		(a)	Amount of Advance: US$[·];

		(b)	Drawdown Date: [·];

		(c)	Duration of the first Interest Period shall be [·] months; and

		(d)	Payment instructions: account in our name and numbered [·] with [·] of [·].

4            We represent and warrant that:

		(a)	the representations and warranties in Clause 10 of the Loan Agreement would remain true and not misleading if repeated on the date of this notice with reference to the circumstances now existing; and

		(b)	no Event of Default or Potential Event of Default has occurred or will result from the borrowing of the Advance.

5            This notice cannot be revoked without the prior consent of the Majority Lenders.

6            [We authorise you to deduct the [0] fee(s) payable pursuant to in Clause(s) 20.1[·] and [·]].

[Name of Signatory]

[Director]

for and on behalf of

ULTRA ONE SHIPPING LTD

77

SCHEDULE 3

CONDITION PRECEDENT DOCUMENTS

 PART A

The following are the documents referred to in Clause 9.1(a) required before service of the first Drawdown Notice.

	1	A duly executed original of:

	(a)	this Agreement;

	(b)	the Master Agreement;

	(c)	the Master Agreement Assignment;

	(d)	the Corporate Guarantee;

	(e)	the Agency and Trust Agreement; and

	(f)	the Account Pledges.

	2	Copies of the certificate of incorporation and constitutional documents of the Borrower, the Corporate Guarantor and any other Security Party and any company registration documents in respect of the Borrower, the Corporate Guarantor or, any other Security Party (including, without limitation, any corporate register excerpts, if applicable) required by the Agent and a list of all members of the Group.

	3	Copies of resolutions of the shareholders of the Borrower and of the directors of the Borrower and each Security Party authorising the execution of each of the Finance Documents to which the Borrower or that Security Party is a party and, in the case of the Borrower, authorising named officers to give the Drawdown Notice and other notices under this Agreement.

	4	The original of any power of attorney under which any Finance Document is executed on behalf of the Borrower, the Corporate Guarantor or any other Security Party.

	5	Copies of any consents which the Borrower, the Corporate Guarantor or any other Security Party requires to enter into, or make any payment under, any Finance Document.

	6	The originals of any mandates or other documents required in connection with the opening or operation of the Accounts.

	7	Documentary evidence that the agent for service of process named in Clause 31 has accepted its appointment.

	8	Any documents required by the Agent in respect of the Borrower, the Corporate Guarantor and any other Security Party to satisfy the Lenders' "know your customer" requirements.

	9	Favourable legal opinions from lawyers appointed by the Agent on such matters concerning the laws of the Republic of Liberia, the Republic of the Marshall Islands and such other relevant jurisdictions as the Agent may require.

	10	If the Agent so requires, in respect of any of the documents referred to above, a certified English translation prepared by a translator approved by the Agent.

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PART B

The following are the documents referred to in Clause 9.1(b) required before the Drawdown Date. In Part B of this Schedule 3, the following definitions have the following meanings:

	1	A duly executed original of the Mortgage, the General Assignment and any Charterparty Assignment relating to any Assignable Charter (and of each document to be delivered by each of them) each in respect of the Ship.

	2	Documentary evidence that on the Delivery Date:

	(a)	the Ship has been unconditionally delivered by the Sellers accepted by, the Borrower under the Building Contract, and the Contract Price payable thereunder (in addition to the part to be financed by the Advance) has been duly paid in full (together with a copy of each of the documents delivered by the Sellers to the Borrower under the Building Contract (including, but not limited to the bill of sale, the commercial invoice and the protocol of delivery and acceptance));

	(b)	the Ship is definitively and permanently registered in the name of the Borrower under an Approved Flag in accordance with the laws of the applicable Approved Flag State;

	(c)	the Ship is in the absolute and unencumbered ownership of the Borrower save as contemplated by the Finance Documents;

	(d)	the Ship maintains the class specified in Clause 14.3(b) with a first class classification society which is a member of IACS as the Agent may approve free of all overdue recommendations and conditions of such classification society;

	(e)	the Mortgage relating to the Ship has been duly registered or recorded against the Ship as a valid first preferred or, as the case may be, priority mortgage in accordance with the laws of the applicable Approved Flag State;

	(f)	the Ship is insured in accordance with the provisions of this Agreement and all requirements therein in respect of insurances have been complied with; and

	(g)	if the Ship is subject to an Assignable Charter, the Ship is delivered to the relevant charterer in accordance with the terms of that Assignable Charter.

	3	Documents establishing that the Ship will, as from the Drawdown Date, be managed by the Approved Managers on terms acceptable to the Lenders, together with:

	(a)	the Approved Managers' Undertaking relative thereto; and

	(b)	copies of the Approved Managers' Document of Compliance and evidence of issuance on the Delivery Date and of the Ship's Safety Management Certificate (together with any other details of the applicable safety management system which the Agent requires).

	4	The Initial Market Value of the Ship prepared pursuant to Clause 15.3, stated to be for the purposes of this Agreement, which shows a value of the Ship in an amount which will be sufficient to satisfy the Borrower's obligations under Clause 15.1.

	5	A certified true copy of any Assignable Charter applicable to the Ship duly executed by the parties thereto and a certified true copy of the Building Contract.

	6	Favourable legal opinions from lawyers appointed by the Agent on such matters concerning the laws of the Approved Flag State and such other relevant jurisdictions as the Agent may require.

79

	7	A favourable opinion from an independent insurance consultant acceptable to the Agent on such matters relating to the insurances for the Ship as the Agent may reasonably require.

	8	Evidence satisfactory to the Agent that the Minimum Liquidity and Additional Minimum Liquidity amounts are each standing to the credit of the Liquidity Account pursuant to Clause 11.19.

	9	If the Agent so requires, in respect of any of the documents referred to above, a certified English translation prepared by a translator approved by the Agent.

	10	Evidence satisfactory to the Agent of payment of all fees due and payable in accordance with Clause 9 of this Agreement.

Each of the documents specified in paragraphs 3 and 4 of Part A shall be notarised or legalised by the relevant competent authority and every other copy document delivered under this Schedule shall be certified as a true and up to date copy by a director or the secretary (or equivalent officer) of the Borrower by an attorney-at-law.

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SCHEDULE 4

 MANDATORY COST FORMULA

	1	The Mandatory Cost is an addition to the interest rate to compensate Lenders for the cost of compliance with (a) the requirements of the Financial Services Authority (or any other authority which replaces all or any of its functions) or (b) the requirements of the European Central Bank.

	2	On the first day of each Interest Period (or as soon as possible thereafter) the Agent shall calculate, as a percentage rate, a rate (the "Additional Cost Rate") for each Lender, in accordance with the paragraphs set out below. The Mandatory Cost will be calculated by the Agent as a weighted average of the Lenders' Additional Cost Rates (weighted in proportion to the percentage participation of each Lender in the Advance) and will be expressed as a percentage rate per annum.

	3	The Additional Cost Rate for any Lender lending from a lending office in a Participating Member State will be the percentage notified by that Lender to the Agent. This percentage will be certified by that Lender in its notice to the Agent to be its reasonable determination of the cost (expressed as a percentage of that Lender's participation in all Advances made from that lending office) of complying with the minimum reserve requirements of the European Central Bank in respect of loans made from that lending office.

	
4

	The Additional Cost Rate for any Lender lending from a lending office in the United Kingdom will be calculated by the Agent as follows:

	 	
E x 0.01

	 	
per cent. per annum

	 	
300

Where:

		E	is designed to compensate Lenders for amounts payable under the Fees Rules and is calculated by the Agent as being the average of the most recent rates of charge supplied by the Reference Banks to the Agent pursuant to paragraph 6 below and expressed in pounds per £1,000,000.

	5	For the purposes of this Schedule:

	(a)	"Eligible Liabilities" and "Special Deposits" have the meanings given to them from time to time under or pursuant to the Bank of England Act 1998 or (as may be appropriate) by the Bank of England;

	(b)	"Fees Rules" means the rules on periodic fees contained in the FSA Supervision Manual or such other law or regulation as may be in force from time to time in respect of the payment of fees for the acceptance of deposits;

	(c)	"Fee Tariffs" means the fee tariffs specified in the Fees Rules under the activity group A.1 Deposit acceptors (ignoring any minimum fee or zero rated fee required pursuant to the Fees Rules but taking into account any applicable discount rate);

81

	(d)	"Participating Member State" means any member state of the European Union that adopts or has adopted the euro as its lawful currency in accordance with legislation of the European Union relating to European Monetary Union; and

	(e)	"Tariff Base" has the meaning given to it in, and will be calculated in accordance with, the Fees Rules.

	6	If requested by the Agent, the Reference Banks shall, as soon as practicable after publication by the Financial Services Authority, supply to the Agent, the rate of charge payable by the Reference Banks to the Financial Services Authority pursuant to the Fees Rules in respect of the relevant financial year of the Financial Services Authority (calculated for this purpose by the Reference Banks as being the average of the Fee Tariffs applicable to the Reference Banks for that financial year) and expressed in pounds per £1,000,000 of the Tariff Base of the Reference Banks.

	7	Each Lender shall supply any information required by the Agent for the purpose of calculating its Additional Cost Rate. In particular, but without limitation, each Lender shall supply the following information in writing on or prior to the date on which it becomes a Lender:

	(a)	the jurisdiction of its lending office; and

	(b)	any other information that the Agent may reasonably require for such purpose.

Each Lender shall promptly notify the Agent in writing of any change to the information provided by it pursuant to this paragraph.

	8	The rates of charge of the Reference Banks for the purpose of E above shall be determined by the Agent based upon the information supplied to it pursuant to paragraph 6 above and on the assumption that, unless a Lender notifies the Agent to the contrary, each Lender's obligations in relation to cash ratio deposits and special Deposits are the same as those of a typical bank from its jurisdiction of incorporation with a lending office in the same jurisdiction as its lending office.

	9	The Agent shall have no liability to any person if such determination results in an Additional Cost Rate which over or under compensates any Lender and shall be entitled to assume that the information provided by any Lender or the Reference Banks pursuant to paragraphs 3, 6 and 7 above is true and correct in all respects.

	10	The Agent shall distribute the additional amounts received as a result of the Mandatory Cost to the Lenders on the basis of the Additional Cost Rate for each Lender based on the information provided by each Lender and the Reference Banks pursuant to paragraphs 3, 6 and 7 above.

	11	Any determination by the Agent pursuant to this Schedule in relation to a formula, the Mandatory Cost, an Additional Cost Rate or any amount payable to a Lender shall, in the absence of manifest error, be conclusive and binding on all parties.

	12	The Agent may from time to time, after consultation with the Borrower and the Lenders, determine and notify to all parties any amendments which are required to be made to this Schedule in order to comply with any change in law, regulation or any requirements from time to time imposed by the Financial Services Authority or the European Central Bank (or, in any case, any other authority which replaces all or any of its functions) and any such determination shall, in the absence of manifest error, be conclusive and binding on all parties.

82

SCHEDULE 5

 DESIGNATION NOTICE

	
To:

	
Ultra One Shipping Ltd

[·]

	 	 
	 	
-and-

	 	 
	 	
HSH Nordbank AG

Gerhart-Hauptmann-Platz 50

20095 Hamburg

Germany

 Attention: [Loans Administration]

[date]

Dear Sirs

Loan Agreement dated [·] 2015 (the "Loan Agreement") and made between (i) Ultra One Shipping Ltd as Borrower, (ii) the Lenders, (iii) the Swap Bank, (iv) and yourselves as Agent, Mandated Lead Arranger, Swap Bank and Security Trustee

Words and expressions defined in the Loan Agreement shall be used in this Designation Notice. We refer to:

	1	the Loan Agreement;

	2	the Master Agreement dated as of [·] made between yourselves and the Swap Bank; and

	3	a Confirmation delivered pursuant to the said Master Agreement dated [·] and addressed by the Swap Bank to yourselves.

In accordance with the terms of the Loan Agreement, we hereby give you notice of the said Confirmation and hereby confirm that the Transaction evidenced by it will be designated as a "Designated Transaction" for the purposes of the Loan Agreement and the Finance Documents.

Yours faithfully

_____________________________

for and on behalf of

HSH NORDBANK AG

(as Swap Bank)

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SCHEDULE 6

 TRANSFER CERTIFICATE

The Transferor and the Transferee accept exclusive responsibility for ensuring that this Certificate and the transaction to which it relates comply with all legal and regulatory requirements applicable to them respectively.

	To:	HSH Nordbank AG for itself and for and on behalf of the Borrower, each Security Party, the Security Trustee, each Lender and the Swap Bank, as defined in the Loan Agreement referred to below.

[·]

	1	This Certificate relates to a Loan Agreement (the "Loan Agreement") dated [·] 2015 and made between (1) Ultra One Shipping Ltd (the "Borrower") as Borrower, (2) the banks and financial institutions named therein as Lenders, (3) HSH Nordbank AG as Swap Bank, (4) HSH Nordbank AG as Agent (5) HSH Nordbank AG as Mandated lead Arranger and (6) HSH Nordbank AG as Security Trustee for a loan facility of up to US$19,000,000.

	2	In this Certificate, terms defined in the Loan Agreement shall, unless the contrary intention appears, have the same meanings and:

"Relevant Parties" means the Agent, the Borrower, each Security Party, the Security Trustee, each Lender and the Swap Bank;

"Transferor" means [full name] of [lending office]; and

"Transferee" means [full name] of [lending office].

	3	The effective date of this Certificate is [·] Provided that this Certificate shall not come into effect unless it is signed by the Agent on or before that date.

	4	The Transferor assigns to the Transferee absolutely all rights and interests (present, future or contingent) which the Transferor has as Lender under or by virtue of the Loan Agreement and every other Finance Document (other than the Master Agreement) in relation to [·] per cent. of its Contribution, which percentage represents $[·].

	5	By virtue of this Certificate and Clause 26 of the Loan Agreement, the Transferor is discharged [entirely from its Commitment which amounts to $[·]] [from [·] per cent. of its Commitment, which percentage represents $[·]] and the Transferee acquires a Commitment of $[·].]

	6	The Transferee undertakes with the Transferor and each of the Relevant Parties that the Transferee will observe and perform all the obligations under the Finance Documents (other than the Master Agreement) which Clause 26 of the Loan Agreement provides will become binding on it upon this Certificate taking effect.

	7	The Agent, at the request of the Transferee (which request is hereby made) accepts, for the Agent itself and for and on behalf of every other Relevant Party, this Certificate as a Transfer Certificate taking effect in accordance with Clause 26 of the Loan Agreement.

	8	The Transferor:

	(a)	warrants to the Transferee and each Relevant Party that:

84

		(i)	the Transferor has full capacity to enter into this transaction and has taken all corporate action and obtained all consents which are in connection with this transaction; and

		(ii)	this Certificate is valid and binding as regards the Transferor;

	(b)	warrants to the Transferee that the Transferor is absolutely entitled, free of encumbrances, to all the rights and interests covered by the assignment in paragraph 4 above; and

	(c)	undertakes with the Transferee that the Transferor will, at its own expense, execute any documents which the Transferee reasonably requests for perfecting in any relevant jurisdiction the Transferee's title under this Certificate or for a similar purpose.

	9	The Transferee:

	(a)	confirms that it has received a copy of the Loan Agreement and each of the other Finance Documents;

	(b)	agrees that it will have no rights of recourse on any ground against either the Transferor, the Agent, the Mandated Lead Arranger, the Security Trustee, any Lender or the Swap Bank in the event that:

		(i)	any of the Finance Documents prove to be invalid or ineffective;

		(ii)	the Borrower or any Security Party fails to observe or perform its obligations, or to discharge its liabilities, under any of the Finance Documents;

		(iii)	it proves impossible to realise any asset covered by a Security Interest created by a Finance Document, or the proceeds of such assets are insufficient to discharge the liabilities of the Borrower or any Security Party under the Finance Documents;

	(c)	agrees that it will have no rights of recourse on any ground against the Agent, the Mandated Lead Arranger, the Security Trustee, any Lender or the Swap Bank in the event that this Certificate proves to be invalid or ineffective;

	(d)	warrants to the Transferor and each Relevant Party that:

		(i)	it has full capacity to enter into this transaction and has taken all corporate action and obtained all consents which it needs to take or obtain in connection with this transaction; and

		(ii)	this Certificate is valid and binding as regards the Transferee; and

	(e)	confirms the accuracy of the administrative details set out below regarding the Transferee.

	10	The Transferor and the Transferee each undertake with the Agent, the Mandated Lead Arranger and the Security Trustee severally, on demand, fully to indemnify the Agent and/or the Security Trustee and/or the Mandated Lead Arranger in respect of any claim, proceeding, liability or expense (including all legal expenses) which they or either of them may incur in connection with this Certificate or any matter arising out of it, except such as are shown to have been mainly and directly caused by the gross and culpable negligence or dishonesty of the Agent's, the Mandated Lead Arranger's or the Security Trustee's own officers or employees.

	11	The Transferee shall repay to the Transferor on demand so much of any sum paid by the Transferor under paragraph 10 as exceeds one-half of the amount demanded by the Agent, the Mandated Lead Arranger or the Security Trustee in respect of a claim, proceeding, liability or expense which was not reasonably foreseeable at the date of this Certificate; but

85

nothing in this paragraph shall affect the liability of each of the Transferor and the Transferee to the Agent, the Mandated Lead Arranger or the Security Trustee for the full amount demanded by it.

[Name of Transferor] [Name of Transferee]

	
By:

	
By:

	
Date:

	
Date:

Agent

Signed for itself and for and on behalf of itself

as Agent and for every other Relevant Party

 HSH Nordbank AG

By:

Date:

86

Administrative Details of Transferee

	
Name of Transferee:

	 
	 	 
	
Lending Office:

	 
	 	 
	
Contact

	 
	
(Loan Administration Department):

	
Person

	 	 
	
Telephone:

	 
	 	 
	
Fax:

	 
	 	 
	
Contact

	 
	
(Credit Administration Department):

	
Person

	 	 
	
Telephone:

	 
	 	 
	
Fax:

	 
	 	 
	
Account for payments:

	 
	 	 
	 	 

Note: This Transfer Certificate alone may not be sufficient to transfer a proportionate share of the Transferor's interest in the security constituted by the Finance Documents in the Transferor's or Transferee's jurisdiction. It is the responsibility of each Lender to ascertain whether any other documents are required for this purpose.

87

SCHEDULE 7

 POWER OF ATTORNEY

Know all men by these presents that ULTRA ONE SHIPPING LTD (the "Company"), a company incorporated in the Republic of Liberia and having its registered address at 90 Broad Street, Monrovia, Liberia irrevocably and by way of security appoints HSH Nordbank AG (the "Attorney") of Gerhart-Hauptmann-Platz 50, D-20095 Hamburg, Germany its attorney, to act in the name of the Company and to exercise any right, entitlement or power of the Company in relation to [name of classification society] (the "Classification Society") and/or to the classification records of any vessel owned, controlled or operated by the Company including, without limitation, such powers or entitlement as the Company may have to inspect the class records and any files held by the Classification Society in relation to any such vessel and to require the Classification Society to provide to the Attorney or to any of its nominees any information, document or file which the Attorney may request

Ratification of actions of attorney. For the avoidance of doubt and without limiting the generality of the above, it is confirmed that the Company hereby ratifies any action which the Attorney takes or purports to take under this Power of Attorney and the Classification Society shall be entitled to rely hereon without further enquiry.

Delegation. The Attorney may exercise its powers hereunder through any officer or through any nominee and/or may sub-delegate to any person or persons (including a Receiver and persons designated by him) all or any of the powers (including the discretions) conferred on the Attorney hereunder, and may do so on terms authorising successive sub-delegations.

this Power of Attorney was executed by the Company as a Deed on [date].]

	
EXECUTED as a DEED by

	
)

	
ULTRA ONE SHIPPING LTD

	
)

	
acting by two directors or one director

	
)

	
and the company secretary

	
)

	
Director:..................................................

	 
	
Director/Secretary::..................................................

	 
	 	 

88

SCHEDULE 8

 FORM OF COMPLIANCE CERTIFICATE

	 	 
	
To:

	
HSH Nordbank AG

Gerhart-Hauptmann-Platz 50

20095 Hamburg

 Germany

[·]201[·]

Dear Sirs,

We refer to a loan agreement dated [·] 2015 (the "Loan Agreement") made between (amongst others) yourselves and ourselves in relation to a term loan facility of up to $19,000,000.

Words and expressions defined in the Loan Agreement shall have the same meaning when used in this compliance certificate.

The Borrower and the Corporate Guarantor represent that no Event of Default or Potential Event of Default has occurred as at the date of this certificate [except for the following matter or event [set out all material details of matter or event]]. In addition as of [·], the Borrower and the Corporate Guarantor each confirm compliance with the minimum liquidity requirements set out in Clause 11.19 [,] [and] the minimum security cover requirement set out in Clause 15.1 [and][list here any other financial covenants which are applicable to the relevant transaction], of the Loan Agreement for the [6-month] period ending on the date of this certificate

We now certify that, as at [·]:

	(a)	the aggregate of the Minimum Liquidity amount standing to the credit of the Liquidity Account is $[·];

	(b)	the aggregate of the Additional Minimum Liquidity amount standing to the credit of the Liquidity Account is $[·];

	(c)	the ratio set out in Clause 15.1 is at [·] per cent.; and

	(d)	[list here any other applicable financial covenants from the Corporate Guarantee].

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

	 	 	 
	
Chief Financial Officer

for and on behalf of

Euroseas Ltd.

	 	
Director

for and on behalf of

Ultra One Shipping Ltd

	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	
Director

for and on behalf of

Ultra One Shipping Ltd

	 	 

89

EXECUTION PAGES

	
BORROWER

	 	 
	 	 	 
	
SIGNED by

	
)

	 
	
Stefania Karmiri

	
)

	
/s/ Stefania Karmiri

	
for and on behalf of

	
)

	 
	
ULTRA ONE SHIPPING LTD

	
)

	 
	
in the presence of:

	 	
 

	
/s/ Panagiota Gemona

	 	
 

	 		
	
PANAGIOTA GEMONA

ATTORNEY-AT-LAW

WATSON FARLEY & WILLIAMS

348 SYNGROU AVENUE

176 74 KALLITHEA

ATHENS-GREECE

	 	
 

	 	 	
	 	 	
 

	 	 	
 

	 	 	 
	 	 	 
	
LENDERS

	 	 
	 	 	 
	
SIGNED by

	
)

	 
	
Georgia Asimakopoulos

	
)

	
/s/ Georgia Asimakopoulos

	
for and on behalf of

	
)

	 
	
HSH NORDBANK AG

	
)

	 
	
in the presence of:

	
)

	 
	
/s/ Panagiota Gemona

	 	 
	 	 	 
	 	 	 
	 	 	 
	
SWAP BANK

	 	 
	 	 	 
	
SIGNED by

	
)

	 
	
Georgia Asimakopoulos

	
)

	
/s/ Georgia Asimakopoulos

	
for an onbehalf of

	
)

	 
	
HSH NORDBANK AG

	
)

	 
	
in the presence of:

	
)

	 
	
/s/ Panagiota Gemona

	 	 
	 	 	 
	 	 	 
	 	 	 
	
AGENT

	 	 
	 	 	 
	
SIGNED by

	
)

	 
	
Georgia Asimakopoulos

	
)

	
/s/ Georgia Asimakopoulos

	
for an onbehalf of

	
)

	 
	
HSH NORDBANK AG

	
)

	 
	
in the presence of

	
)

	 
	
/s/ Panagiota Gemona

	 	 
	 	 	 
	 	 	 
	 	 	 
	
MANDATED LEADLEAD ARRANGER

	 	 	 
	
SIGNED by

	
)

	 
	
Georgia Asimakopoulos

	
)

	
/s/ Georgia Asimakopoulos

	
for an onbehalf of

	
)

	 
	
HSH NORDBANK AG

	
)

	 
	
in the presence of

	
)

	 
	
/s/ Panagiota Gemona

	 	 
	 	 	 
	
PANAGIOTA GEMONA

ATTORNEY-AT-LAW

WATSON FARLEY & WILLIAMS

348 SYNGROU AVENUE

176 74 KALLITHEA

ATHENS-GREECE

	 	

90

	
SECURITY TRUSTEE

	 	 
	 	 	 
	
SIGNED by

	
)

	 
	
Georgia Asimakopoulos

	
)

	
/s/ Georgia Asimakopoulos

	
for an onbehalf of

	
)

	 
	
HSH NORDBANK AG

	
)

	 
	
in the presence of

	
)

	 
	
/s/ Panagiota Gemona

	 	 
	 	 	 
	
PANAGIOTA GEMONA

ATTORNEY-AT-LAW

WATSON FARLEY & WILLIAMS

348 SYNGROU AVENUE

176 74 KALLITHEA

ATHENS-GREECE

	 	 

)

91

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