Document:

a6693599ex10-2.htm

Exhibit 10.2

 

TRI-VALLEY CORPORATION

REGISTRATION RIGHTS AGREEMENT

 

This Registration Rights Agreement (the “Agreement”) is made and entered into as of April 19, 2011 by and among Tri-Valley Corporation, a Delaware corporation (the “Company”), and the “Purchasers” named in that certain Stock Purchase Agreement by and among the Company and the Purchasers, dated as of an even date herewith (the “Purchase Agreement”). Capitalized terms used in this Agreement without definition have the respective meanings ascribed thereto in the Purchase Agreement.

 

The parties hereby agree as follows:

 

1.            Certain Definitions.

 

As used in this Agreement, the following terms shall have the following meanings:

 

“Purchasers” means the Purchasers identified in the Purchase Agreement and any Affiliate or permitted transferee of any Purchaser who is a subsequent holder of any Registrable Securities.

 

“Prospectus” means the prospectus included in any Registration Statement, as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by such Registration Statement and by all other amendments and supplements to the prospectus, including post-effective amendments and all material incorporated by reference in such prospectus.

 

“Register,” “registered” and “registration” refer to a registration made by preparing and filing a Registration Statement or similar document in compliance with the Securities Act (as defined below), and the declaration or ordering of effectiveness of such Registration Statement or document.

 

“Registrable Securities” means the Common Shares and any capital stock of the Company issued or issuable with respect to the Common Shares as a result of any stock split, stock dividend, recapitalization, exchange or similar event or otherwise; provided, that, a security shall cease to be a Registrable Security upon (A) sale pursuant to a Registration Statement or Rule 144 under the Securities Act, or (B) such security becoming eligible for sale by the Purchasers pursuant to Rule 144 without volume restrictions.

 

“Registration Statement” means any registration statement of the Company filed under the Securities Act that covers the resale of any of the Registrable Securities pursuant to the provisions of this Agreement, amendments and supplements to such Registration Statement, including post-effective amendments, all exhibits and all material incorporated by reference in such Registration Statement.

 

“Required Purchasers” means the Purchasers holding a majority of the Registrable Securities.

 

2.            Registration.

  

  

  

(a) Registration Statements. Promptly following the closing of the purchase and sale of the securities contemplated by the Purchase Agreement (the “Closing Date”) but no later than thirty (30) days after the Closing Date (the “Filing Deadline”), the Company shall prepare and file with the Commission one Registration Statement on Form S-1, covering the resale of the Registrable Securities. Subject to any Commission comments, such Registration Statement shall include the plan of distribution attached hereto as Exhibit A; provided, however, that no Purchaser shall be named as an “underwriter” in the Registration Statement without the Purchaser’s prior written consent. Such Registration Statement also shall cover, to the extent allowable under the Securities Act and the rules promulgated thereunder (including Rule 416), such indeterminate number of additional shares of Common Stock resulting from stock splits, stock dividends or similar transactions with respect to the Registrable Securities. The Registration Statement (and each amendment or supplement thereto, and each request for acceleration of effectiveness thereof) shall be provided in accordance with Section 3(c) to the Purchasers and one counsel of their choice prior to its filing or other submission. If a Registration Statement covering the Registrable Securities is not filed with the Commission on or prior to the Filing Deadline, the Company will make pro rata payments to each Purchaser, as liquidated damages and not as a penalty, in an amount equal to 1.0% of the aggregate amount invested by such Purchaser for each 30-day period or pro rata for any portion thereof following the Filing Deadline for which no Registration Statement is filed with respect to the Registrable Securities. The filing of the Registration Statement shall terminate the existence of any event giving rise to the payment of liquidated damages pursuant to the foregoing sentence. Such payments shall constitute the Purchasers’ exclusive monetary remedy for such events, but shall not affect the right of the Purchasers to seek injunctive relief. Such payments shall be made to each Purchaser in cash no later than ten (10) days after the end of each 30-day period. Notwithstanding anything else to the contrary contained herein, liquidated damages, if any, payable pursuant to this Section 2(a) shall cease to accrue after the date that is six (6) months after the Closing Date.

 

(b)           Expenses. The Company will pay all expenses associated with each registration, including filing and printing fees, the Company’s counsel and accounting fees and expenses, costs associated with clearing the Registrable Securities for sale under applicable state securities laws, and listing fees. In no event shall the Company be responsible for any discounts, commissions, fees of underwriters, selling brokers, dealer managers or similar securities industry professionals with respect to the Registrable Securities being sold, or any legal fees or other costs of the holders.

 

(c)           Effectiveness.

 

(i)            The Company shall use commercially reasonable efforts to have the Registration Statement declared effective as soon as practicable. The Company shall notify the Purchasers by facsimile or e-mail as promptly as practicable, and in any event, within two (2) Trading Days, after any Registration Statement is declared effective and shall simultaneously provide the Purchasers with copies of any related Prospectus to be used in connection with the sale or other disposition of the securities covered thereby. If (A) a Registration Statement covering the Registrable Securities is not declared effective by the Commission prior to the earlier of (i) five (5) Trading Days after the Commission shall have informed the Company that no review of the Registration Statement will be made or that the Commission has no further comments on the Registration Statement or (ii) the 90th day after the filing date, or (B) after a Registration Statement has been declared effective by the Commission, sales cannot be made pursuant to such Registration Statement for any reason (including without limitation by reason of a stop order, or the Company’s failure to update the Registration Statement), but excluding any Allowed Delay (as defined below), then the Company will make pro rata payments to each Purchaser, as liquidated damages and not as a penalty, in an amount equal to 1.0% of the aggregate amount invested by such Purchaser for each 30-day period or pro rata for any portion thereof following the date by which such Registration Statement should have been effective (the “Blackout Period”). Such payments shall constitute the Purchasers’ exclusive monetary remedy for such events, but shall not affect the right of the Purchasers to seek injunctive relief. The amounts payable as liquidated damages pursuant to this paragraph shall be paid monthly within ten (10) days of the last day of each month following the commencement of the Blackout Period until the termination of the Blackout Period. The Blackout Period shall expire upon the declaration of effectiveness by the Commission of the Registration Statement (if the Blackout Period is covered by clause (A) of this Section 2(c)(i)) or the date on which sales pursuant to the Registration Statement may resume (if the Blackout Period is covered by clause (B) of this Section 2(c)(i)). Such payments shall be made to each Purchaser in cash no later than ten (10) days after the end of each 30-day period. Notwithstanding anything else to the contrary contained herein, liquidated damages, if any, payable pursuant to this Section 2(c) shall cease to accrue after the date that is six (6) months after the Closing Date.

  

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(ii)            For not more than twenty (20) consecutive days or for a total of not more than forty-five (45) days in any twelve (12) month period, the Company may suspend the use of any Prospectus included in any Registration Statement contemplated by this Section 2 in the event that the Company determines in good faith that such suspension is necessary to (A) delay the disclosure of material non-public information concerning the Company, the disclosure of which at the time is not, in the good faith opinion of the Company, in the best interests of the Company or (B) amend or supplement the affected Registration Statement or the related Prospectus so that such Registration Statement or Prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the case of the Prospectus in light of the circumstances under which they were made, not misleading, or (C) to file a post-effective amendment to such Registration Statement to comply with the undertakings required by Item 5 12(a) of Regulation S-K (an “Allowed Delay”); provided, that the Company shall promptly (a) notify each Purchaser in writing of the commencement of and the reasons for an Allowed Delay, but shall not (without the prior written consent of a Purchaser) disclose to such Purchaser any material non-public information giving rise to an Allowed Delay, (b) advise the Purchasers in writing to cease all sales under the Registration Statement until the end of the Allowed Delay and (c) use commercially reasonable efforts to terminate an Allowed Delay as promptly as practicable.

 

(d)            Rule 415; Cutback If at any time the Commission takes the position that the offering of some or all of the Registrable Securities in a Registration Statement is not eligible to be made on a delayed or continuous basis under the provisions of Rule 415 under the Securities Act or requires any Purchaser to be named as an “underwriter”, the Company shall (i) remove from the Registration Statement such portion of the Registrable Securities (the “Cut Back Shares”) and/or (ii) agree to such restrictions and limitations on the registration and resale of the Registrable Securities as the Commission may require to assure the Company’s compliance with the requirements of Rule 415 (collectively, the “Commission Restrictions”); provided, however, that the Company shall not agree to name any Purchaser as an “underwriter” in such Registration Statement without the prior written consent of such Purchaser. Any cut-back imposed on the Purchasers pursuant to this Section 2(d) shall be allocated among the Purchasers on a pro rata basis. No liquidated damages shall accrue as to any Cut Back Shares until such date as the Company is able to effect the registration of such Cut Back Shares in accordance with any Commission Restrictions (such date, the “Restriction Termination Date”). From and after the Restriction Termination Date applicable to any Cut Back Shares, all of the provisions of this Section 2 (including the liquidated damages provisions) shall again be applicable to such Cut Back Shares; provided, however, that (i) the Filing Deadline for the Registration Statement including such Cut Back Shares shall be forty-five (45) days after such Restriction Termination Date, and (ii) the date by which the Company is required to obtain effectiveness with respect to such Cut Back Shares under Section 2(c) shall be the 90th day immediately after the filing date of the Registration Statement filed with respect to such Cut Back Shares.

  

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3.            Company Obligations. The Company will use commercially reasonable efforts to effect the registration of the Registrable Securities in accordance with the terms hereof, and pursuant thereto the Company will:

 

(a)           use commercially reasonable efforts to cause such Registration Statement to become effective and to remain continuously effective for a period that will terminate upon the earlier of (i) the date on which all Registrable Securities covered by such Registration Statement as amended from time to time, have been sold, and (ii) the date on which all Registrable Securities covered by such Registration Statement may be sold without volume restrictions pursuant to Rule 144 (the “Effectiveness Period”);

 

(b)           prepare and file with the Commission such amendments and post-effective amendments to the Registration Statement and the Prospectus as may be necessary to keep the Registration Statement effective for the Effectiveness Period and to comply with the provisions of the Securities Act and the Exchange Act with respect to the distribution of all of the Registrable Securities covered thereby;

 

(c)           provide copies to and permit one counsel designated by the Purchasers to review each Registration Statement and all amendments and supplements thereto no fewer than five (5) days prior to their filing with the Commission and not file any document to which such counsel reasonably objects;

 

(d)           furnish to the holders of Registrable Securities (i) promptly after the same is prepared and publicly distributed, filed with the Commission, or received by the Company (but not later than two (2) Trading Days after the filing date, receipt date or sending date, as the case may be) one (1) copy of any Registration Statement and any amendment thereto, each preliminary prospectus and Prospectus and each amendment or supplement thereto, and each letter written by or on behalf of the Company to the Commission or the staff of the Commission, and each item of correspondence from the Commission or the staff of the Commission, in each case relating to such Registration Statement (other than any portion of any thereof which contains information for which the Company has sought confidential treatment), and (ii) such number of copies of a Prospectus, including a preliminary prospectus, and all amendments and supplements thereto and such other documents as each Purchaser may reasonably request in order to facilitate the disposition of the Registrable Securities owned by such Purchaser that are covered by the related Registration Statement;

  

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(e)           use commercially reasonable efforts to (i) prevent the issuance of any stop order or other suspension of effectiveness and, (ii) if such order is issued, obtain the withdrawal of any such order at the earliest possible moment;

 

(f)           prior to any public offering of Registrable Securities, use commercially reasonable efforts to register or qualify or cooperate with the Purchasers and their counsel in connection with the registration or qualification of such Registrable Securities for offer and sale under the securities or blue sky laws of such jurisdictions requested by the Purchasers and do any and all other commercially reasonable acts or things necessary or advisable to enable the distribution in such jurisdictions of the Registrable Securities covered by the Registration Statement; provided, however, that the Company shall not be required in connection therewith or as a condition thereto to (i) qualify to do business in any jurisdiction where it would not otherwise be required to qualify but for this Section 3(f), (ii) subject itself to general taxation in any jurisdiction where it would not otherwise be so subject but for this Section 3(f), or (iii) file a general consent to service of process in any such jurisdiction;

 

(g)           use commercially reasonable efforts to cause all Registrable Securities covered by a Registration Statement to be listed on each securities exchange, interdealer quotation system or other market on which similar securities issued by the Company are then listed;

 

(h)           immediately notify the Purchasers, at any time prior to the end of the Effectiveness Period, upon discovery that, or upon the happening of any event as a result of which, the Prospectus includes an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing, and promptly prepare, file with the Commission and furnish to such holder a supplement to or an amendment of such Prospectus as may be necessary so that such Prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing; and

 

(i)           otherwise use commercially reasonable efforts to comply with all applicable rules and regulations of the Commission under the Securities Act and the Exchange Act, including, without limitation, Rule 172 under the Securities Act, file any final Prospectus, including any supplement or amendment thereof, with the Commission pursuant to Rule 424 under the Securities Act, promptly inform the Purchasers in writing if, at any time during the Effectiveness Period, the Company does not satisfy the conditions specified in Rule 172 and, as a result thereof, the Purchasers are required to deliver a Prospectus in connection with any disposition of Registrable Securities and take such other actions as may be reasonably necessary to facilitate the registration of the Registrable Securities hereunder; and make available to its security holders, as soon as reasonably practicable, but not later than the Availability Date (as defined below), an earnings statement covering a period of at least twelve (12) months, beginning after the effective date of each Registration Statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act, including Rule 158 promulgated thereunder (for the purpose of this subsection 3(i), “Availability Date” means the 45th day following the end of the fourth fiscal quarter that includes the effective date of such Registration Statement, except that, if such fourth fiscal quarter is the last quarter of the Company’s fiscal year, “Availability Date” means the 90th day after the end of such fourth fiscal quarter).

  

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(j)            with a view to making available to the holders of Registrable Securities the benefits of Rule 144 (or its successor rule) and any other rule or regulation of the Commission that may at any time permit the Purchasers to sell shares of Common Stock to the public without registration, the Company covenants and agrees to use commercially reasonable efforts to: (i) make and keep public information available, as those terms are understood and defined in Rule 144, until the earlier of (A) six months after such date as all of the Registrable Securities may be sold without restriction by the holders thereof pursuant to Rule 144 or any other rule of similar effect or (B) such date as all of the Registrable Securities shall have been resold; and (ii) file with the Commission in a timely manner (including any applicable extension periods) all reports and other documents required of the Company under the Exchange Act.

 

4.            Obligations of the Purchasers.

 

(a)           Each Purchaser shall furnish in writing to the Company such information regarding itself, the Registrable Securities held by it and the intended method of disposition of the Registrable Securities held by it, as shall be reasonably required to effect the registration of such Registrable Securities and shall execute such documents in connection with such registration as the Company may reasonably request. At least five (5) Trading Days prior to the first anticipated filing date of any Registration Statement, the Company shall notify each Purchaser of the information the Company requires from such Purchaser if such Purchaser elects to have any of the Registrable Securities included in the Registration Statement. A Purchaser shall provide such information to the Company at least two (2) Trading Days prior to the first anticipated filing date of such Registration Statement if such Purchaser elects to have any of the Registrable Securities included in the Registration Statement. The Company shall not be required to include the Registrable Securities of a holder thereof in a Registration Statement and shall not be required to pay any liquidated or other damages under Sections 2(a) or 2(c) hereof to such holder or other Person who fails to furnish to the Company a fully completed selling stockholder questionnaire at least two Trading Days prior to the Filing Date.

 

(b)           Each Purchaser, by its acceptance of the Registrable Securities agrees to cooperate with the Company as reasonably requested by the Company in connection with the preparation and filing of a Registration Statement hereunder, unless such Purchaser has notified the Company in writing of its election to exclude all of its Registrable Securities from such Registration Statement.

 

(c)           Each Purchaser agrees that, upon receipt of any notice from the Company of either (i) the commencement of an Allowed Delay pursuant to Section 2(c)(ii), or (ii) the happening of an event pursuant to Section 3(h) hereof, such Purchaser will immediately discontinue disposition of Registrable Securities pursuant to the Registration Statement covering such Registrable Securities, until the Purchaser is advised by the Company that such dispositions may again be made.

  

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5.            Indemnification.

 

(a)           Indemnification by the Company. The Company will indemnify and hold harmless each Purchaser and its officers, directors, members, employees and agents, successors and assigns, and each other person, if any, who controls such Purchaser within the meaning of the Securities Act, against any losses, claims, damages or liabilities, joint or several, to which they may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon: (i) any untrue statement or alleged untrue statement or omission or alleged omission of any material fact contained in any Registration Statement, any preliminary Prospectus or final Prospectus, or any amendment or supplement thereof; (ii) any blue sky application or other document executed by the Company specifically for that purpose or based upon written information furnished by the Company filed in any state or other jurisdiction in order to qualify any or all of the Registrable Securities under the securities laws thereof (any such application, document or information herein called a “Blue Sky Application”); (iii) the omission or alleged omission to state in a Blue Sky Application a material fact required to be stated therein or necessary to make the statements therein not misleading; (iv) any violation by the Company or its agents of any rule or regulation promulgated under the Securities Act applicable to the Company or its agents and relating to action or inaction required of the Company in connection with such registration; or (v) any failure to register or qualify the Registrable Securities included in any such Registration Statement in any state where the Company or its agents has affirmatively undertaken or agreed in writing that the Company will undertake such registration or qualification on a Purchaser’s behalf and will reimburse such Purchaser, and each such officer, director or member and each such controlling person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the Company will not be liable in any such case if and to the extent that any such loss, claim, damage or liability arises out of or is based upon (i) a Purchaser’s failure to comply with the prospectus delivery requirements of the Securities Act, (ii) the use by a Purchaser of an outdated or defective Prospectus after the Company has notified such Purchase in writing that the Prospectus is outdated or defective, or (iii) an untrue statement or alleged untrue statement or omission or alleged omission so made in conformity with information furnished by such Purchaser or any such controlling person in writing specifically for use in such Registration Statement or Prospectus or Blue Sky Application.

 

(b)           Indemnification by the Purchasers. Each Purchaser agrees, severally but not jointly, to indemnify and hold harmless, to the fullest extent permitted by law, the Company, its directors, officers, employees, stockholders and each person who controls the Company (within the meaning of the Securities Act) against any losses, claims, damages, liabilities and expense (including reasonable attorney fees) resulting from (i) such Purchaser’s failure to comply with the prospectus delivery requirements of the Securities Act; (ii) the use by such Purchaser of an outdated or defective Prospectus after the Company has notified such Purchase in writing that the Prospectus is outdated or defective; or (iii) any untrue statement of a material fact or any omission of a material fact required to be stated in the Registration Statement or Prospectus or preliminary Prospectus or amendment or supplement thereto or in any Blue Sky Application or necessary to make the statements therein not misleading, (A) to the extent, but only to the extent that (1) such untrue statement or omission is contained in any information furnished in writing by such Purchaser to the Company specifically for inclusion in such Registration Statement or Prospectus or amendment or supplement thereto or Blue Sky Application or (2)such information relates to such Purchaser or such Purchaser’s proposed method of distribution of Registrable Securities and was reviewed and expressly approved in writing by such Purchaser expressly for use in a Registration Statement (it being understood that the Purchaser has approved Annex A hereto for this purpose), such Prospectus or such form of Prospectus or in any amendment or supplement thereto. In no event shall the liability of a Purchaser be greater in amount than the dollar amount of the proceeds (net of all expense paid by such Purchaser in connection with any claim relating to this Section 5 and the amount of any damages such Purchaser has otherwise been required to pay by reason of such untrue statement or omission) received by such Purchaser upon the sale of the Registrable Securities included in the Registration Statement giving rise to such indemnification obligation, except in the case of fraud or willful misconduct by such Purchaser.

  

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(c)            Conduct of Indemnification Proceedings. Any person entitled to indemnification hereunder shall (i) give prompt notice to the indemnifying party of any claim with respect to which it seeks indemnification and (ii) permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party; provided that any person entitled to indemnification hereunder shall have the right to employ separate counsel and to participate in the defense of such claim, but the fees and expenses of such counsel shall be at the expense of such person unless (a) the indemnifying party has agreed to pay such fees or expenses, or (b) the indemnifying party shall have failed to assume the defense of such claim and employ counsel reasonably satisfactory to such person or (c) in the reasonable judgment of any such person, based upon written advice of its counsel, a conflict of interest exists between such person and the indemnifying party with respect to such claims (in which case, if the person notifies the indemnifying party in writing that such person elects to employ separate counsel at the expense of the indemnifying party, the indemnifying party shall not have the right to assume the defense of such claim on behalf of such person); and provided, further, that the failure of any indemnified party to give notice as provided herein shall not relieve the indemnifying party of its obligations hereunder, except to the extent that such failure to give notice shall materially adversely affect the indemnifying party in the defense of any such claim or litigation. It is understood that the indemnifying party shall not, in connection with any proceeding in the same jurisdiction, be liable for fees or expenses of more than one separate firm of attorneys at any time for all such indemnified parties. No indemnifying party will, except with the consent of the indemnified party, consent to entry of any judgment or enter into any settlement that does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect of such claim or litigation.

 

Subject to the terms of this Agreement, all reasonable fees and expenses of an indemnified party (including reasonable fees and expenses to the extent incurred in connection with investigating or preparing to defend such proceeding in a manner not inconsistent with this Section 5) shall be paid to the indemnified party, as incurred; provided, that the indemnified party shall promptly reimburse the indemnifying party for that portion of such fees and expenses applicable to such actions for which it is finally judicially determined (not subject to appeal) such indemnified party is not entitled to indemnification hereunder.

  

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(d)            Contribution. If for any reason the indemnification provided for in the preceding paragraphs (a) and (b) is unavailable to an indemnified party or insufficient to hold it harmless, other than as expressly specified therein, then the indemnifying party shall contribute to the amount paid or payable by the indemnified party as a result of such loss, claim, damage or liability in such proportion as is appropriate to reflect the relative fault of the indemnified party and the indemnifying party, as well as any other relevant equitable considerations. No person guilty of fraudulent misrepresentation within the meaning of Section 11(f) of the Securities Act shall be entitled to contribution from any person not guilty of such fraudulent misrepresentation. In no event shall the contribution obligation of a holder of Registrable Securities be greater in amount than the dollar amount of the proceeds (net of all expenses paid by such holder in connection with any claim relating to this Section 5 and the amount of any damages such holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission) received by it upon the sale of the Registrable Securities giving rise to such contribution obligation except in the case of fraud or willful misconduct by such holder.

 

6.            Miscellaneous.

 

(a)           Amendments and Waivers. This Agreement may be amended only by a writing signed by the Company and the Required Purchasers. The Company may take any action herein prohibited, or omit to perform any act herein required to be performed by it, only if the Company shall have obtained the written consent to such amendment, action or omission to act, of the Required Purchasers.

 

(b)           Notices. All notices and other communications provided for or permitted hereunder shall be made as set forth in Section 5.4 of the Purchase Agreement.

 

(c)           Assignments and Transfers by Purchasers. The provisions of this Agreement shall be binding upon and inure to the benefit of the Purchasers and their respective successors and assigns. A Purchaser may transfer or assign, in whole or from time to time in part, to one or more persons its rights hereunder in connection with the transfer of Registrable Securities by such Purchaser to such person, provided that such Purchaser complies with all laws applicable thereto and provides written notice of assignment to the Company promptly after such assignment is effected.

 

(d)           Assignments and Transfers by the Company. This Agreement may not be assigned by the Company (whether by operation of law or otherwise) without the prior written consent of the Required Purchasers, provided, however, that in the event that the Company is a party to a merger, consolidation, share exchange or similar business combination transaction in which the Common Stock is converted into the equity securities of another Person, from and after the effective time of such transaction, such Person shall, by virtue of such transaction, be deemed to have assumed the obligations of the Company hereunder, the term “Company” shall be deemed to refer to such Person and the term “Registrable Securities” shall be deemed to include the securities received by the Purchasers in connection with such transaction unless such securities are otherwise freely tradable by the Purchasers after giving effect to such transaction.

  

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(e)           Benefits of the Agreement. The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective permitted successors and assigns of the parties. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.

 

(f)           Execution. This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original thereof..

 

(g)           Headings. The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof.

 

(h)           Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.

 

(i)           Further Assurances. The parties shall execute and deliver all such further instruments and documents and take all such other actions as may reasonably be required to carry out the transactions contemplated hereby and to evidence the fulfillment of the agreements herein contained.

 

(j)           Entire Agreement. This Agreement, together with the Purchase Agreement and the exhibits and schedules hereto and thereto, contain the entire understanding of the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules.

  

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(k)           Governing Law; Consent to Jurisdiction. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement (whether brought against a party hereto or its respective Affiliates, directors, officers, shareholders, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City of New York, Borough of Manhattan. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or is an inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law. If either party shall commence an action or proceeding to enforce any provisions of this Agreement, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding.

 

(l)           WAIVER OF JURY TRIAL. IN ANY ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY WAIVES FOREVER TRIAL BY JURY.

 

(m)           Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Trading Day, then such action may be taken or such right may be exercised on the next succeeding Trading Day.

  

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IN WITNESS WHEREOF, the undersigned has caused this Registration Rights Agreement to be duly executed by its authorized signatory as of the date first indicated above.

 

 

	
TRI-VALLEY CORPORATION

	
Address for Notice:

	
By:  /s/ Maston N. Cunningham                                         

	
4550 California Ave., Suite 600

Bakersfield, California 93309

Attn: President

Fax: (661) 378-8201

	       Maston N. Cunningham	 
	       President and Chief Executive Officer	 

 

With a copy to (which shall not constitute notice):

 

K&L Gates LLP

1900 Main Street

Suite 600

Irvine, CA 92614

Attn: Joshua A. Lane, Esq.

Fax: (949) 623-4456

 

 

 

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SIGNATURE PAGE FOR PURCHASER FOLLOWS]

  

-12-

  

IN WITNESS WHEREOF, the undersigned has caused this Registration Rights Agreement to be duly executed by its authorized signatories as of the date first indicated above.

 

Name of Purchaser: Ironman Energy Master Fund                                                                                       

 

Signature of Authorized Signatory of Purchaser: /s/ G. Bryan Dutt                                                        

 

Name of Authorized Signatory: G. Bryan Dutt                                                                                              

 

Title of Authorized Signatory: Managing Director                                                                                       

 

Email Address of Authorized Signatory:                                                                                                        

 

Facsimile Number of Authorized Signatory:                                                                                                 

 

	
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IN WITNESS WHEREOF, the undersigned has caused this Registration Rights Agreement to be duly executed by its authorized signatories as of the date first indicated above.

 

Name of Purchaser: Iroquois Master Fund Ltd.                                                                                            

 

Signature of Authorized Signatory of Purchaser: /s/ Illegible                                                                   

 

Name of Authorized Signatory: Illegible                                                                                                         

 

Title of Authorized Signatory: Authorized Signatory                                                                                  

 

Email Address of Authorized Signatory:                                                                                                        

 

Facsimile Number of Authorized Signatory:                                                                                                 

 

	
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IN WITNESS WHEREOF, the undersigned has caused this Registration Rights Agreement to be duly executed by its authorized signatories as of the date first indicated above.

 

Name of Purchaser: Iroquois Master Fund Ltd.                                                                                            

 

Signature of Authorized Signatory of Purchaser: /s/ Illegible                                                                   

 

Name of Authorized Signatory: Illegible                                                                                                         

 

Title of Authorized Signatory: Authorized Signatory                                                                                  

 

Email Address of Authorized Signatory:                                                                                                        

 

Facsimile Number of Authorized Signatory:                                                                                                 

 

	
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IN WITNESS WHEREOF, the undersigned has caused this Registration Rights Agreement to be duly executed by its authorized signatories as of the date first indicated above.

 

Name of Purchaser: Calm Waters Partnership                                                                                                

 

Signature of Authorized Signatory of Purchaser: /s/ Richard S. Strong                                                  

 

Name of Authorized Signatory: Richard S. Strong                                                                                       

 

Title of Authorized Signatory: Managing Partner                                                                                        

 

Email Address of Authorized Signatory:                                                                                                        

 

Facsimile Number of Authorized Signatory:                                                                                                 

 

	
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IN WITNESS WHEREOF, the undersigned has caused this Registration Rights Agreement to be duly executed by its authorized signatories as of the date first indicated above.

 

Name of Purchaser: Chestnut Ridge Partners, LP                                                                                          

 

Signature of Authorized Signatory of Purchaser: /s/ Illegible                                                                   

 

Name of Authorized Signatory: Illegible                                                                                                         

 

Title of Authorized Signatory: CFO                                                                                                                

 

Email Address of Authorized Signatory:                                                                                                        

 

Facsimile Number of Authorized Signatory:                                                                                                 

 

	
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IN WITNESS WHEREOF, the undersigned has caused this Registration Rights Agreement to be duly executed by its authorized signatories as of the date first indicated above.

 

Name of Purchaser: Glacier Partners                                                                                                                

 

Signature of Authorized Signatory of Purchaser: /s/ Peter Costellanos                                                 

 

Name of Authorized Signatory: Peter Costellanos                                                                                       

 

Title of Authorized Signatory: Partner                                                                                                           

 

Email Address of Authorized Signatory:                                                                                                        

 

Facsimile Number of Authorized Signatory:                                                                                                 

 

	
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IN WITNESS WHEREOF, the undersigned has caused this Registration Rights Agreement to be duly executed by its authorized signatories as of the date first indicated above.

 

Name of Purchaser: Chris F. Cave TOD J’lene Cave                                                                                    

 

Signature of Authorized Signatory of Purchaser: /s/ Chris Cave                                                             

 

Name of Authorized Signatory: Chris Cave                                                                                                   

 

Title of Authorized Signatory:                                                                                                                         

 

Email Address of Authorized Signatory:                                                                                                        

 

Facsimile Number of Authorized Signatory:                                                                                                 

 

	
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IN WITNESS WHEREOF, the undersigned has caused this Registration Rights Agreement to be duly executed by its authorized signatories as of the date first indicated above.

 

Name of Purchaser: Edward Ajootian                                                                                                             

 

Signature of Authorized Signatory of Purchaser: /s/ Edward Ajootian                                                  

 

Name of Authorized Signatory: Edward Ajootian                                                                                        

 

Title of Authorized Signatory:                                                                                                                         

 

Email Address of Authorized Signatory:                                                                                                        

 

Facsimile Number of Authorized Signatory:                                                                                                 

 

	
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IN WITNESS WHEREOF, the undersigned has caused this Registration Rights Agreement to be duly executed by its authorized signatories as of the date first indicated above.

 

Name of Purchaser: Frey Living Trust of 3-20-96                                                                                         

 

Signature of Authorized Signatory of Purchaser: /s/ Philip Frey Jr.                                                        

 

Name of Authorized Signatory: Trustee - Grantor                                                                                        

 

Title of Authorized Signatory:                                                                                                                         

 

Email Address of Authorized Signatory:                                                                                                        

 

Facsimile Number of Authorized Signatory:                                                                                                 

 

	
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IN WITNESS WHEREOF, the undersigned has caused this Registration Rights Agreement to be duly executed by its authorized signatories as of the date first indicated above.

 

Name of Purchaser: George K. Hickox, Jr.                                                                                                      

 

Signature of Authorized Signatory of Purchaser: /s/ George K. Hickox, Jr.                                           

 

Name of Authorized Signatory: George K. Hickox, Jr.                                                                                 

 

Title of Authorized Signatory:                                                                                                                         

 

Email Address of Authorized Signatory:                                                                                                        

 

Facsimile Number of Authorized Signatory:                                                                                                 

 

	
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IN WITNESS WHEREOF, the undersigned has caused this Registration Rights Agreement to be duly executed by its authorized signatories as of the date first indicated above.

 

Name of Purchaser: Jon Mendiola                                                                                                                  

 

Signature of Authorized Signatory of Purchaser: /s/ Jon Mendiola                                                        

 

Name of Authorized Signatory: Jon Mendiola                                                                                               

 

Title of Authorized Signatory:                                                                                                                         

 

Email Address of Authorized Signatory:                                                                                                        

 

Facsimile Number of Authorized Signatory:                                                                                                 

 

	
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Exhibit A

 

Plan of Distribution

 

The selling stockholders, which as used herein includes donees, pledgees, transferees or other successors-in-interest selling shares of common stock or interests in shares of common stock received after the date of this prospectus from a selling stockholder as a gift, pledge, partnership distribution or other transfer, may, from time to time, sell, transfer or otherwise dispose of any or all of their shares of common stock or interests in shares of common stock on any stock exchange, market or trading facility on which the shares are traded or in private transactions. These dispositions may be at fixed prices, at prevailing market prices at the time of sale, at prices related to the prevailing market price, at varying prices determined at the time of sale, or at negotiated prices.

 

The selling stockholders may use any one or more of the following methods when disposing of shares or interests therein:

 

- ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;

 

- block trades in which the broker-dealer will attempt to sell the shares as agent, but may position and resell a portion of the block as principal to facilitate the transaction;

 

- purchases by a broker-dealer as principal and resale by the broker-dealer for its account;

 

- an exchange distribution in accordance with the rules of the applicable exchange;

 

- privately negotiated transactions;

 

- short sales effected after the date the registration statement of which this Prospectus is a part is declared effective by the Commission;

 

- through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise;

 

- broker-dealers may agree with the selling stockholders to sell a specified number of such shares at a stipulated price per share;

 

- a combination of any such methods of sale; and

 

- any other method permitted by applicable law.

 

The selling stockholders may, from time to time, pledge or grant a security interest in some or all of the shares of common stock owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell the shares of common stock, from time to time, under this prospectus, or under an amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act amending the list of selling stockholders to include the pledgee, transferee or other successors in interest as selling stockholders under this prospectus. The selling stockholders also may transfer the shares of common stock in other circumstances, in which case the transferees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus.

  

  

  

In connection with the sale of our common stock or interests therein, the selling stockholders may enter into hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of the common stock in the course of hedging the positions they assume. The selling stockholders may also sell shares of our common stock short and deliver these securities to close out their short positions, or loan or pledge the common stock to broker-dealers that in turn may sell these securities. The selling stockholders may also enter into option or other transactions with broker-dealers or other financial institutions or the creation of one or more derivative securities which require the delivery to such broker-dealer or other financial institution of shares offered by this prospectus, which shares such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction).

 

The aggregate proceeds to the selling stockholders from the sale of the common stock offered by them will be the purchase price of the common stock less discounts or commissions, if any. Each of the selling stockholders reserves the right to accept and, together with their agents from time to time, to reject, in whole or in part, any proposed purchase of common stock to be made directly or through agents. We will not receive any of the proceeds from this offering. Upon any exercise of the warrants by payment of cash, however, we will receive the exercise price of the warrants.

 

The selling stockholders also may resell all or a portion of the shares in open market transactions in reliance upon Rule 144 under the Securities Act of 1933, provided that they meet the criteria and conform to the requirements of that rule.

 

The selling stockholders and any underwriters, broker-dealers or agents that participate in the sale of the common stock or interests therein may be "underwriters" within the meaning of Section 2(11) of the Securities Act. Any discounts, commissions, concessions or profit they earn on any resale of the shares may be underwriting discounts and commissions under the Securities Act. Selling stockholders who are "underwriters" within the meaning of Section 2(11) of the Securities Act will be subject to the prospectus delivery requirements of the Securities Act.

 

Each selling stockholder has advised us that they have not entered into any written or oral agreements, understandings or arrangements with any underwriter or broker-dealer regarding the sale of the resale shares. There is no underwriter or coordinating broker acting in connection with the proposed sale of the resale shares by the selling stockholders.

 

To the extent required, the shares of our common stock to be sold, the names of the selling stockholders, the respective purchase prices and public offering prices, the names of any agents, dealer or underwriter, any applicable commissions or discounts with respect to a particular offer will be set forth in an accompanying prospectus supplement or, if appropriate, a post-effective amendment to the registration statement that includes this prospectus.

 

In order to comply with the securities laws of some states, if applicable, the common stock may be sold in these jurisdictions only through registered or licensed brokers or dealers. In addition, in some states the common stock may not be sold unless it has been registered or qualified for sale or an exemption from registration or qualification requirements is available and is complied with.

  

-25-

  

We have advised the selling stockholders that the anti-manipulation rules of Regulation M under the Exchange Act may apply to sales of shares in the market and to the activities of the selling stockholders and their affiliates. In addition, to the extent applicable we will make copies of this prospectus (as it may be supplemented or amended from time to time) available to the selling stockholders for the purpose of satisfying the prospectus delivery requirements of the Securities Act. The selling stockholders may indemnify any broker-dealer that participates in transactions involving the sale of the shares against certain liabilities, including liabilities arising under the Securities Act.

 

We have agreed to indemnify the selling stockholders against certain liabilities, including liabilities under the Securities Act and state securities laws, relating to the registration of the shares offered by this prospectus.

 

We have agreed with the selling stockholders to keep the registration statement of which this prospectus constitutes a part effective until the earlier of (1) such time as all of the shares covered by this prospectus have been disposed of pursuant to and in accordance with the registration statement or (2) the date on which the shares may be sold without volume restrictions pursuant to Rule 144 of the Securities Act.

 

-26-Ex - 4.6

Execution Version 

Date: as of March 9, 2011

STI SPIRIT SHIPPING COMPANY LIMITED

as Borrower

SCORPIO TANKERS INC.
as Guarantor

THE BANKS AND FINANCIAL INSTITUTIONS

listed in Schedule 1

as Lenders

– and –

DVB BANK SE 

asArranger, Agent

and as Security Trustee

	
  

 	
  

 	
  

 
	
  

 	

 

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
 LOAN AGREEMENT

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	

 

 	
  

 

relating to Senior Secured Term Loan Facility
in the amount of up to US$28,600,000

to partially refinance the acquisition of the product tanker STI SPIRIT

Watson, Farley
& Williams

New York

INDEX

	
  

 	
  

 	
  

 	
  

 
	
 Clause

 	
  

 	
 Page

 
	
  

 
	
 1

 	
 INTERPRETATION

 	
 1

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
 2

 	
 FACILITY

 	
 22

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
 3

 	
 POSITION OF
 THE LENDERS

 	
 22

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
 4

 	
 DRAWDOWN

 	
 24

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
 5

 	
 INTEREST

 	
 25

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
 6

 	
 INTEREST
 PERIODS

 	
 26

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
 7

 	
 DEFAULT
 INTEREST

 	
 27

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
 8

 	
 REPAYMENT
 AND PREPAYMENT

 	
 28

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
 9

 	
 CONDITIONS
 PRECEDENT

 	
 30

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
 10

 	
 REPRESENTATIONS
 AND WARRANTIES

 	
 31

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
 11

 	
 GENERAL
 AFFIRMATIVE AND NEGATIVE COVENANTS

 	
 39

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
 12

 	
 FINANCIAL
 COVENANTS

 	
 47

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
 13

 	
 MARINE
 INSURANCE COVENANTS

 	
 47

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
 14

 	
 SHIP
 COVENANTS

 	
 53

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
 15

 	
 COLLATERAL
 MAINTENANCE RATIO

 	
 57

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
 16

 	
 GUARANTEE

 	
 59

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
 17

 	
 PAYMENTS AND
 CALCULATIONS

 	
 62

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
 18

 	
 APPLICATION
 OF RECEIPTS

 	
 64

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
 19

 	
 APPLICATION
 OF EARNINGS

 	
 65

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
 20

 	
 EVENTS OF
 DEFAULT

 	
 66

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
 21

 	
 FEES AND
 EXPENSES

 	
 70

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
 22

 	
 INDEMNITIES

 	
 71

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
 23

 	
 NO SET-OFF
 OR TAX DEDUCTION; TAX INDEMNITY

 	
 73

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
 24

 	
 ILLEGALITY,
 ETC

 	
 75

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
 25

 	
 INCREASED
 COSTS

 	
 76

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
 26

 	
 SET-OFF

 	
 77

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
 27

 	
 TRANSFERS
 AND CHANGES IN LENDING OFFICES

 	
 78

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
 28

 	
 VARIATIONS
 AND WAIVERS

 	
 82

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
 29

 	
 NOTICES

 	
 83

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
 30

 	
 SUPPLEMENTAL

 	
 86

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
 31

 	
 THE
 SERVICING BANKS

 	
 86

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
 32

 	
 LAW AND
 JURISDICTION

 	
 90

 	
  

 

INDEX

	
  

 	
  

 	
  

 	
  

 
	
 Clause

 	
  

 	
 Page

 
	
  

 	
  

 	
  

 	
  

 
	
 33

 	
 WAIVER OF
 JURY TRIAL

 	
 91

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
 34

 	
 PATRIOT ACT
 NOTICE

 	
 92

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
 EXECUTION
 PAGE

 	
 93

 	
  

 
	
  

 	
  

 	
  

 
	
 SCHEDULE 1
 LENDERS AND COMMITMENTS

 	
  

 	
  

 
	
  

 	
  

 	
  

 
	
 SCHEDULE 2
 INTENTIONALLY OMITTED

 	
  

 	
  

 
	
  

 	
  

 	
  

 
	
 SCHEDULE 3
 DRAWDOWN NOTICE

 	
  

 	
  

 
	
  

 	
  

 	
  

 
	
 SCHEDULE 4
 CONDITION PRECEDENT DOCUMENTS

 	
  

 	
  

 
	
  

 	
  

 	
  

 
	
 SCHEDULE 5
 TRANSFER CERTIFICATE

 	
  

 	
  

 
	
  

 	
  

 	
  

 
	
 SCHEDULE 6
 INTENTIONALLY OMITTED

 	
  

 	
  

 
	
  

 	
  

 	
  

 
	
 SCHEDULE 7
 LIST OF APPROVED BROKERS

 	
  

 	
  

 
	
  

 	
  

 	
  

 
	
 APPENDIX A
 FORM OF CHARTER ASSIGNMENT

 	
  

 	
  

 
	
  

 	
  

 	
  

 
	
 APPENDIX B-1
 FORM OF COMPLIANCE CERTIFICATE (BORROWER)

 	
  

 	
  

 
	
  

 	
  

 	
  

 
	
 APPENDIX B-2
 FORM OF COMPLIANCE CERTIFICATE (GUARANTOR)

 	
  

 	
  

 
	
  

 	
  

 	
  

 
	
 APPENDIX C
 FORM OF EARNINGS ACCOUNT PLEDGE

 	
  

 	
  

 
	
  

 	
  

 	
  

 
	
 APPENDIX D
 FORM OF EARNINGS ASSIGNMENT

 	
  

 	
  

 
	
  

 	
  

 	
  

 
	
 APPENDIX E
 FORM OF INSURANCE ASSIGNMENT

 	
  

 	
  

 
	
  

 	
  

 	
  

 
	
 APPENDIX F
 FORM OF MANAGER’S UNDERTAKING

 	
  

 	
  

 
	
  

 	
  

 	
  

 
	
 APPENDIX G
 FORM OF MORTGAGE

 	
  

 	
  

 
	
  

 	
  

 	
  

 
	
 APPENDIX H
 FORM OF NOTE

 	
  

 	
  

 
	
  

 	
  

 	
  

 
	
 APPENDIX I
 FORM OF SHARES PLEDGE

 	
  

 	
  

 

ii

	
  

 	
  

 
	
 THIS LOAN AGREEMENT (this “Agreement”) is made as of March 9, 2011

 
	
  

 
	
 AMONG

 
	
  

 	
  

 
	
 (1)

 	
 STI SPIRIT SHIPPING COMPANY LIMITED, a
 corporation incorporated and existing under the laws of the Republic of The
 Marshall Islands whose registered address is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro,
 Marshall Islands MH96960, as
 borrower (the “Borrower”, which expression includes its successors,
 transferees and assigns);

 
	
  

 	
  

 
	
 (2)

 	
 SCORPIO TANKERS INC., a corporation
 incorporated and existing under the laws of the Republic of The Marshall
 Islands whose principal office is at 9, Boulevard Charles III, Monaco, 98000,
 as guarantor (the “Guarantor”,
 which expression includes its successors, transferees and assigns);

 
	
  

 	
  

 
	
 (3)

 	
 THE BANKS AND FINANCIAL INSTITUTIONS listed
 in Schedule 1, as lenders (the “Lenders”, which expression includes their
 respective successors, transferees and assigns);

 
	
  

 	
  

 
	
 (4)

 	
 DVB BANK SE, acting in such capacity
 through its London Branch at 80 Cheapside, LondonEC2V 6EE, England, as agent
 for the Lenders (in such capacity, the “Agent”, which expression includes its
 successors, transferees and assigns); 

 
	
  

 	
  

 
	
 (5)

 	
 DVB BANK SE, acting in such capacity
 through its London Branch at 80 Cheapside, London EC2V 6EE, England, as
 security trustee for the Lenders (in such capacity, the “Security Trustee”, which
 expression includes its successors, transferees and assigns); and

 
	
  

 	
  

 
	
 (6)

 	
 DVB BANK SE, acting in such capacity
 through its office at Platz der Republik 6,
 60325 Frankfurt am Main, Germany, as arranger (in such capacity, the “Arranger”, which expression
 includes its successors, transferees and assigns).

 
	
  

 
	
 BACKGROUND

 
	
  

 	
  

 
	
 (A)

 	
 The Lenders have agreed to make available
 to the Borrower a loan facility of up to the lesser of $28,600,000 and 55% of
 the Fair Market Value of the Ship for the purpose of refinancing the
 acquisition of the Ship.

 
	
  

 	
  

 
	
 (B)

 	
 The Lenders 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:

 
	
  

 	
  

 
	
  

 	
 “Acceptable
 Accounting Firm” means Deloitte LLP, or such other recognized
 accounting firm as the Agent may, with the consent of the Majority Lenders
 (such consent not to be unreasonably withheld or delayed), approve from time
 to time in writing; 

 

	
  

 	
  

 	
  

 
	
  

 	
 “Account
 Bank” means ABN AMRO Bank N.V., acting through its office at Coolsingel 93,
 P.O. Box 749, 3000 AS Rotterdam, The Netherlands; 

 
	
  

 	
  

 
	
  

 	
 “Advance” means the principal amount of
 the borrowing by the Borrower under this Agreement;

 
	
  

 	
  

 
	
  

 	
 “Affiliate”
 means, as to any person, any other person that, directly or indirectly,
 controls, is controlled by or is under common control with such person or is
 a director or officer of such person, and for purposes of this definition,
 the term “control” (including
 the terms “controlling”, “controlled by” and “under common control with”) of a person
 means the possession, direct or indirect, of the power to vote 20% or more of
 the Voting Stock of such person or to direct or cause direction of the
 management and policies of such person, whether through the ownership of
 Voting Stock, by contract or otherwise;

 
	
  

 	
  

 
	
  

 	
 “Agreed
 Form” means in relation to any document, that document in the form
 approved by the Agent with the consent of the Majority Lenders (such consent
 not to be unreasonably withheld), or as otherwise approved in accordance with
 any other approval procedure specified in any relevant provision of any
 Finance Document;

 
	
  

 	
  

 
	
  

 	
 “Approved
 Broker” means any of the companies listed on Schedule 7 or such
 other company proposed by the Borrower which the Agent may, with the consent
 of the Majority Lenders (such consent not to be unreasonably withheld),
 approve from time to time for the purpose of valuing the Ship, who shall act
 as an expert and not as arbitrator and whose valuation shall be conclusive
 and binding on all parties to this Agreement;

 
	
  

 	
  

 
	
  

 	
 “Approved Flag” means the Marshall Islands or Liberian flag or such other flag as the
 Agent may, with the consent of the Majority Lenders, approve from time to
 time in writing as the flag on which the Ship shall be registered;

 
	
  

 	
  

 
	
  

 	
 “Approved Management Agreement” means, in
 relation to the Ship in respect of its commercial and technical management, a
 management agreement between the Borrower and each Approved Manager which
 shall be on the BIMCO Shipman 98 form or such other form of management
 agreement, in each case which the Agent may reasonably approve;

 
	
  

 	
  

 
	
  

 	
 “Approved Manager” means each of SSM and
 SCM or any other company proposed by the Borrower which the Agent may
 reasonably approve from time to time as the technical and/or commercial
 manager of a Ship; 

 
	
  

 	
  

 
	
  

 	
 “Availability Period” means the period
 commencing on the Effective Date and ending on the earlier of:

 
	
  

 	
  

 	
  

 
	
  

 	
 (a)

 	
 March 31, 2011 (or such later date as the
 Agent may, with the consent of the Majority Lenders, agree with the
 Borrower); or

 
	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
 the date on which the Total Commitments are
 fully borrowed, cancelled or terminated;

 
	
  

 	
  

 
	
  

 	
 “Bank Secrecy Act” means the United States
 Bank Secrecy Act of 1970, as amended;

 

2

	
  

 	
  

 	
  

 
	
  

 	
 “Business Day” means a day on which banks
 are open in Frankfurt, Germany; London, England; Amsterdam, The Netherlands;
 and New York, New York;

 
	
  

 	
  

 
	
  

 	
 “Capitalized Lease” means, as applied to
 any person, any lease of any property (whether real, personal or mixed) of
 which the discounted present value of the rental obligations of such person,
 as lessee, in conformity with IFRS, is required to be capitalized on the
 balance sheet of such person; and “Capitalized Lease Obligation” is defined
 to mean the rental obligations, as aforesaid, under a Capitalized Lease;

 
	
  

 	
  

 
	
  

 	
 “Cash
 Equivalents” means: 

 
	
  

 	
  

 	
  

 
	
  

 	
 (a)

 	
 securities issued or directly and fully
 guaranteed or insured by the United States of America or any agency or
 instrumentality thereof (provided that the full faith and credit of the
 United States of America is pledged in support thereof);

 
	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
 time deposits, certificates of deposit or
 deposits in the interbank market of any commercial bank of recognized
 standing organized under the laws of the United States of America, any state
 thereof or any foreign jurisdiction having capital and surplus in excess of
 $500,000,000; and 

 
	
  

 	
  

 	
  

 
	
  

 	
 (c)

 	
 such other securities or instruments as the
 Majority Lenders shall agree in writing;

 
	
  

 	
  

 
	
  

 	
 and in respect of both (a) and (b) above,
 with a Rating Category of at least “A+” by S&P and “A” by Moody’s (or the
 equivalent used by another Rating Agency) in each case having maturities of
 not more than ninety (90) days from the date of acquisition;

 
	
  

 	
  

 
	
  

 	
 “Change of Control” means:

 
	
  

 	
  

 	
  

 
	
  

 	
 (a)

 	
 in respect of the Borrower, the occurrence
 of any act, event or circumstance that without prior written consent of the
 Majority Lenders results in the Guarantor owning directly or indirectly less
 than 100% of the issued and outstanding Equity Interests in the Borrower; and

 
	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
 in respect of the Guarantor, means:

 

	
  

 	
  

 	
  

 
	
  

 	
 (i)

 	
 a “person” or “group” (within the meaning
 of Sections 13(d) and 14(d)(2) of the Exchange Act), other than any holders
 of the Guarantor’s Equity Interests as of the date of this Agreement, becomes
 the ultimate “beneficial owner” (as defined in Rule 13d-3 under the Exchange
 Act and including by reason of any change in the ultimate “beneficial
 ownership” of the Equity Interests of the Guarantor) of more than 35% of the
 total voting power of the Voting Stock of the Guarantor (calculated on a
 fully diluted basis); or

 
	
  

 	
  

 	
  

 
	
  

 	
 (ii)

 	
 individuals who at the beginning of any
 period of two consecutive calendar years constituted the Board of Directors
 or equivalent governing body of the Guarantor (together with any new
 directors (or equivalent) whose election by such Board of Directors or
 equivalent governing body or whose nomination for election was approved by a
 vote of at least two-thirds of the members of such Board of Directors or
 equivalent governing body then still in office who either were members of
 such Board of Directors or equivalent governing

 

3

	
  

 	
  

 	
  

 
	
  

 	
  

 	
 body at the beginning of such period or
 whose election or nomination for election was previously so approved) cease
 for any reason to constitute at least 50% of the members of such Board of
 Directors or equivalent governing body then in office;

 

	
  

 	
  

 	
  

 
	
  

 	
 “Charter”
 means, in relation to the Ship, any demise, 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;

 
	
  

 	
  

 
	
  

 	
 “Charter
 Assignment” means, in relation to the Ship, an assignment of the
 relevant Charter in the form set out in Appendix A;

 
	
  

 	
  

 
	
  

 	
 “CISADA” means the United States
 Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010;

 
	
  

 	
  

 
	
  

 	
 “Classification Society”
 means, in relation to the Ship,
 American Bureau of Shipping, Det Norske Veritas or such other first-class vessel
 classification society that is a member of IACS that the Agent mayapprove
 from time to time;

 
	
  

 	
  

 
	
  

 	
 “Code”
 means the United States Internal Revenue Code of 1986, as amended, and the
 regulations promulgated and rulings issued thereunder;

 
	
  

 	
  

 
	
  

 	
 “Collateral”
 means all property (including, without limitation, any proceeds thereof)
 referred to in the Finance Documents that is subject to any Security Interest
 in favor of the Security Trustee, for the benefit of the Lenders, securing
 the Secured Liabilities;

 
	
  

 	
  

 
	
  

 	
 “Collateral Maintenance Ratio” has the
 meaning given in Clause 15.2;

 
	
  

 	
  

 
	
  

 	
 “Commission” or “SEC” means the United
 States Securities and Exchange Commission, as from time to time constituted,
 created under the Exchange Act;

 
	
  

 	
  

 
	
  

 	
 “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 executed by an authorized person
 of the Borrower or Guarantor, as the case may be, in the form set out in
 Appendix B-1 (Borrower) or B-2 (Guarantor);

 
	
  

 	
  

 
	
  

 	
 “Consolidated
 EBITDA” means, for any accounting period, the consolidated net
 income of the Guarantor for that accounting period:

 
	
  

 	
  

 	
  

 
	
  

 	
 (a)

 	
 plus, to the extent deducted in computing the net income of the
 Guarantor for that accounting period, the sum, without duplication, of:

 

	
  

 	
  

 	
  

 
	
  

 	
 (i)

 	
 all federal,
 state, local and foreign income taxes and tax distributions;

 
	
  

 	
  

 	
  

 
	
  

 	
 (ii)

 	
 Consolidated
 Net Interest Expense; 

 

4

	
  

 	
  

 	
  

 
	
  

 	
 (iii)

 	
 depreciation, depletion, amortization of
 intangibles and other non-cash charges or non-cash losses (including non-cash
 transaction expenses and the amortization of debt discounts) and any
 extraordinary losses not incurred in the ordinary course of business;

 
	
  

 	
  

 	
  

 
	
  

 	
 (iv)

 	
 expenses incurred in connection with a
 special or intermediate survey of a Ship during such period; and

 
	
  

 	
  

 	
  

 
	
  

 	
 (v)

 	
 any drydocking expenses; 

 

	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
 minus, to the extent added in computing the consolidated net income of
 the Guarantor for that accounting period, (i) any non-cash income or non-cash
 gains and (ii) any extraordinary gains on asset sales not incurred in the
 ordinary course of business;

 
	
  

 	
  

 
	
  

 	
 “Consolidated
 Funded Debt” means, for any accounting period, the sum of the
 following for the Guarantor determined (without duplication) on a
 consolidated basis for such period and in accordance with IFRS consistently
 applied:

 
	
  

 	
  

 	
  

 
	
  

 	
 (a)

 	
 all Financial Indebtedness; and

 
	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
 all obligations to pay a specific purchase
 price for goods or services whether or not delivered or accepted (including
 take-or-pay and similar obligations which in accordance with IFRS would be
 shown on the liability side of a balance sheet); 

 
	
  

 	
  

 
	
  

 	
 provided that balance sheet accruals for future drydock expenses shall not be
 classified as Consolidated Funded Debt;

 
	
  

 	
  

 
	
  

 	
 “Consolidated Liquidity” means, on a
 consolidated basis at any time, the sum of (a) cash and (b) Cash Equivalents,
 in each case held by the Guarantor on a freely available and unencumbered
 basis;

 
	
  

 	
  

 
	
  

 	
 “Consolidated Net
 Interest Expense” means the aggregate of all interest, commissions,
 discounts and other costs, charges or expenses accruing that are due from the
 Guarantor and all of its subsidiaries during the relevant accounting period
 less (i) interest income received and (ii) amortization of deferred charges
 and arrangement fees, determined on a consolidated basis in accordance with
 IFRS and as shown in the consolidated statements of income for the Guarantor;

 
	
  

 	
  

 
	
  

 	
 “Consolidated Tangible Net Worth” means, on a consolidated basis, the total shareholders’ equity
 (including retained earnings) of the Guarantor, minus goodwill;

 
	
  

 	
  

 
	
  

 	
 “Consolidated Total Capitalization” means Consolidated Tangible Net Worth plus
 Consolidated Funded Debt;

 
	
  

 	
  

 
	
  

 	
 “Contractual Currency” has the meaning
 given in Clause 22.4;

 
	
  

 	
  

 
	
  

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

 

5

	
  

 	
  

 	
  

 
	
  

 	
 “Creditor Party” means the Agent, the
 Security Trustee or any Lender, whether as at the date of this Agreement or
 at any later time;

 
	
  

 	
  

 
	
  

 	
 “Delivery Date” has the meaning given in
 Clause 9.2(b);

 
	
  

 	
  

 
	
  

 	
 “Disbursement Authorization” has the
 meaning given in Clause 9.2(b);

 
	
  

 	
  

 
	
  

 	
 “Dollars” and “$” means the lawful
 currency for the time being of the United States of America;

 
	
  

 	
  

 
	
  

 	
 “Drawdown Date” means, in relation to the
 Advance, the date requested by the Borrower for the Advance to be made, or
 (as the context requires) the date on which the Advance is actually made;

 
	
  

 	
  

 
	
  

 	
 “Drawdown Notice” means a notice in the
 form set out in Schedule 3 (or in any other form which the Agent approves or
 reasonably requires);

 
	
  

 	
  

 
	
  

 	
 “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 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 Account Bank designated
 “STI SPIRIT - Earnings Account”, or any other account (with the Account Bank
 or the Agent or with another bank or financial institution acceptable to the
 Majority Lenders) which is designated as the Earnings Account in relation to
 the Ship for the purposes of this Agreement;

 

6

	
  

 	
  

 	
  

 
	
  

 	
 “Earnings
 Account Pledge” means a pledge of the Earnings Account, in the
 form set out in Appendix C;

 
	
  

 	
  

 
	
  

 	
 “Earnings
 Assignment” means, in relation to the Ship, an assignment of the
 Earnings and any Requisition Compensation of the Ship, in the form set out in
 Appendix D;

 
	
  

 	
  

 
	
  

 	
 “EDGAR” means the Electronic Data
 Gathering, Analysis, and Retrieval system maintained by the SEC;

 
	
  

 	
  

 
	
  

 	
 “Effective
 Date” means the date on which this Agreement is executed and
 delivered by the parties hereto;

 
	
  

 	
  

 
	
  

 	
 “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 a claim for damages,
 compensation, indemnification, contribution, 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 of Environmentally Sensitive
 Material from the Ship; or

 
	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
 any incident in which Environmentally
 Sensitive Material is released and which involves a collision or allision
 between the Ship and another vessel or object, or some other incident of
 navigation or operation, in any 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

 
	
  

 	
  

 	
  

 
	
  

 	
 (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;

 
	
  

 	
  

 
	
  

 	
 “Environmental
 Permit” means any permit, approval, identification number, license
 or other authorization required under any Environmental Law;

 

7

	
  

 	
  

 	
  

 
	
  

 	
 “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;

 
	
  

 	
  

 
	
  

 	
 “Equity Interests” of any person means:

 
	
  

 	
  

 	
  

 
	
  

 	
 (a)

 	
 any and all shares and other equity
 interests (including common stock, preferred stock, limited liability company
 interests and partnership interests) in such person; and

 
	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
 all rights to purchase, warrants or options
 or convertible debt (whether or not currently exercisable), participations or
 other equivalents of or interests in (however designated) such shares or
 other interests in such person;

 
	
  

 	
  

 
	
  

 	
 “ERISA”
 means the United States Employee Retirement Income Security Act of 1974, as
 amended, and the regulations promulgated and rulings issued thereunder;

 
	
  

 	
  

 
	
  

 	
 “ERISA
 Affiliate” means a trade or business (whether or not incorporated)
 that, together with the Guarantor or any subsidiary of it, would be deemed to
 be a single employer under Section 414 of the Code;

 
	
  

 	
  

 
	
  

 	
 “Estate”
 has the meaning assigned such term in Clause 31.1(b)(ii);

 
	
  

 	
  

 
	
  

 	
 “Event of Default” means any of the events
 or circumstances described in Clause 20.1;

 
	
  

 	
  

 
	
  

 	
 “Exchange Act” means the United States
 Securities Exchange Act of 1934, as amended, and any successor act thereto,
 and (unless the context otherwise requires) includes the rules and
 regulations of the Commission promulgated thereunder;

 
	
  

 	
  

 
	
  

 	
 “Executive Order” means an executive order
 issued by the President of the United States of America;

 
	
  

 	
  

 
	
  

 	
 “Fair
 Market Value” means, in relation to the Ship, the market value of
 the Ship at any date that is shown by the average of two (2) valuations each
 prepared and addressed to the Agent:

 
	
  

 	
  

 	
  

 
	
  

 	
 (a)

 	
 as at a date not more than 14 days prior to
 the date such valuation is delivered to the Agent;

 
	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
 by Approved Brokers selected by the Agent,
 one of which shall be Maritime Strategies International Ltd. unless the Agent
 advises otherwise; 

 
	
  

 	
  

 	
  

 
	
  

 	
 (c)

 	
 with or without physical inspection of the
 Ship (as the Agent may require); and

 
	
  

 	
  

 	
  

 
	
  

 	
 (d)

 	
 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 (and with no value to be given to any pooling arrangements); 

 
	
  

 	
  

 
	
  

 	
 provided that (A) if a range of market values is provided in a particular
 appraisal, then the market value in such appraisal shall be deemed to be the
 mid-point within such range and (B) 

 

8

	
  

 	
  

 	
  

 
	
  

 	
 if an additional appraisal is obtained as
 provided in Clause 11.1(h), the market value of the Ship shall be the average
 of the three appraisals obtained;

 
	
  

 	
  

 
	
  

 	
 “Finance Documents” means: 

 
	
  

 	
  

 	
  

 
	
  

 	
 (a)

 	
 this Agreement;

 
	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
 the Charter Assignment;

 
	
  

 	
  

 	
  

 
	
  

 	
 (c)

 	
 the Earnings Account Pledge;

 
	
  

 	
  

 	
  

 
	
  

 	
 (d)

 	
 the Earnings Assignment;

 
	
  

 	
  

 	
  

 
	
  

 	
 (e)

 	
 the Insurance Assignment;

 
	
  

 	
  

 	
  

 
	
  

 	
 (f)

 	
 the Mortgage;

 
	
  

 	
  

 	
  

 
	
  

 	
 (g)

 	
 the Note;

 
	
  

 	
  

 	
  

 
	
  

 	
 (h)

 	
 the Shares Pledge; and

 
	
  

 	
  

 	
  

 
	
  

 	
 (i)

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

 
	
  

 	
  

 
	
  

 	
 “Financial Indebtedness” means, with
 respect to any person (the “debtor”) at any date of determination
 (without duplication): 

 
	
  

 	
  

 	
  

 
	
  

 	
 (a)

 	
 all obligations of the debtor for
 principal, interest or any other sum payable in respect of any moneys
 borrowed or raised by the debtor;

 
	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
 all obligations of the debtor evidenced by
 bonds, debentures, notes or other similar instruments;

 
	
  

 	
  

 	
  

 
	
  

 	
 (c)

 	
 all obligations of the debtor in respect of
 any acceptance credit, guarantee or letter of credit facility or equivalent
 made available to the debtor (including reimbursement obligations with
 respect thereto);

 
	
  

 	
  

 	
  

 
	
  

 	
 (d)

 	
 all obligations of the debtor to pay the
 deferred purchase price of property or services, which purchase price is due
 more than six months after the date of placing such property in service or
 taking delivery thereto or the completion of such services, except trade
 payables; 

 
	
  

 	
  

 	
  

 
	
  

 	
 (e)

 	
 all Capitalized Lease Obligations of the
 debtor as lessee;

 
	
  

 	
  

 	
  

 
	
  

 	
 (f)

 	
 all Financial Indebtedness of persons other
 than the debtor secured by a Security Interest on any asset of the debtor,
 whether or not such Financial Indebtedness is assumed by the debtor, provided
 that the amount of such Financial Indebtedness 

 

9

	
  

 	
  

 	
  

 
	
  

 	
  

 	
 shall be the lesser of (i) the fair market
 value of such asset at such date of determination and (ii) the amount of such
 Financial Indebtedness; and

 
	
  

 	
  

 	
  

 
	
  

 	
 (g)

 	
 all Financial Indebtedness of persons other
 than the debtor under any guarantee, indemnity or similar obligation entered
 into by the debtor to the extent such Financial Indebtedness is guaranteed,
 indemnified, etc. by the debtor.

 

	
  

 	
  

 	
  

 
	
  

 	
 The amount of Financial Indebtedness of any
 debtor at any date shall be the outstanding balance at such date of all
 unconditional obligations as described above and, with respect to contingent
 obligations, the maximum liability upon the occurrence of the contingency
 giving rise to the obligation, as determined in conformity with IFRS, provided
 that (i) the amount outstanding at any time of any Financial
 Indebtedness issued with an original issue discount is the face amount of
 such Financial Indebtedness less the remaining unamortized portion of such
 original issue discount of such Financial Indebtedness at such time as
 determined in conformity with IFRS, and (ii) Financial Indebtedness shall not
 include any liability for taxes;

 
	
  

 	
  

 	
  

 
	
  

 	
 “Fiscal
 Year” means, in relation to any person, each period of one (1) year
 commencing on January 1 of each year and ending on December 31 of such year
 in respect of which its accounts are or ought to be prepared;

 
	
  

 	
  

 	
  

 
	
  

 	
 “Foreign Pension Plan” means any plan,
 fund (including without limitation, any superannuation fund) or other similar
 program established or maintained outside the United States of America by the
 Guarantor or the Borrower or any one or more of their respective subsidiaries
 primarily for the benefit of employees of such Security Party or such
 subsidiaries residing outside the United States of America, which plan, fund
 or other similar program provides, or results in, retirement income, a
 deferral of income in contemplation of retirement or payments to be made upon
 termination of employment, and which plan is not subject to ERISA or the
 Code;

 
	
  

 	
  

 	
  

 
	
  

 	
 “Guaranteed Obligations” has the meaning
 given in Clause 16.1;

 
	
  

 	
  

 	
  

 
	
  

 	
 “IACS” means the International Association
 of Classification Societies;

 
	
  

 	
  

 	
  

 
	
  

 	
 “IFRS”
 means international accounting standards within the meaning of the IAS
 Regulations 1606/2002 to the extent applicable to the relevant financial
 statements;

 
	
  

 	
  

 	
  

 
	
  

 	
 “Insurances” means in relation to the
 Ship: 

 
	
  

 	
  

 	
  

 
	
  

 	
 (a)

 	
 all policies and contracts of insurance,
 including entries of the Ship in any protection and indemnity or war risks
 association, effected in respect of the Ship, the Earnings or otherwise in
 relation to the Ship; and 

 
	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
 all rights and other assets relating to, or
 derived from, any of the foregoing, including any rights to a return of a
 premium;

 
	
  

 	
  

 	
  

 
	
  

 	
 “Insurance
 Assignment” means, in relation to the Ship, an assignment of the
 Insurances, in the form set out in Appendix E;

 
	
  

 	
  

 	
  

 
	
  

 	
 “Interest Period” means a period
 determined in accordance with Clause 6;

 

10

	
  

 	
  

 	
  

 
	
  

 	
 “ISM Code” means the International Safety
 Management Code (including the guidelines on its implementation), adopted by
 the International Maritime Organization, as the same may be amended or
 supplemented from time to time (and the terms “safety management system”,
 “Safety
 Management Certificate” and “Document of Compliance” have the same
 meanings as are given to them in the ISM Code);

 
	
  

 	
  

 
	
  

 	
 “ISM Code Documentation”
 includes, in respect of the Ship:

 
	
  

 	
  

 	
  

 
	
  

 	
 (a)

 	
 the Document of Compliance and Safety
 Management Certificate issued pursuant to the ISM Code in relation to the
 Ship within the periods specified by the ISM Code;

 
	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
 all other documents and data which are
 relevant to the safety management system and its implementation and
 verification which the Agent may require; and

 
	
  

 	
  

 	
  

 
	
  

 	
 (c)

 	
 any other documents which are prepared or
 which are otherwise relevant to establish and maintain the Ship’s compliance
 or the compliance of the Borrower or the relevant Approved Manager with the
 ISM Code which the Agent may require;

 
	
  

 	
  

 
	
  

 	
 “ISPS
 Code” means the International Ship and Port Facility Security Code
 as adopted by the International Maritime Organization, as the same may be
 amended or supplemented from time to time; 

 
	
  

 	
  

 
	
  

 	
 “ISPS Code Documentation” includes:

 
	
  

 	
  

 	
  

 
	
  

 	
 (a)

 	
 the ISSC; and

 
	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
 all other documents and data which are
 relevant to the ISPS Code and its implementation and verification which the
 Agent may require;

 
	
  

 	
  

 
	
  

 	
 “ISSC”
 means a valid and current International Ship Security Certificate issued
 under the ISPS Code;

 
	
  

 	
  

 
	
  

 	
 “Lending
 Office” means, with respect to any Lender, the office of such
 Lender specified as its “Lending Office” under its name on Schedule 1 or in
 the relevant Transfer Certificate pursuant to which it became a Lender, or
 such other office of such Lender as such Lender may from time to time specify
 to the Borrower and the Agent;

 
	
  

 	
  

 
	
  

 	
 “LIBOR” means, in relation to any period
 for which a rate of interest is to be determined under any provisions of a
 Finance Document, the rate which appears on Reuters BBA page LIBOR 01 screen
 at or about 11.00 am (London Time) on the relevant Quotation Date for a
 selected interest period, provided that:

 
	
  

 	
  

 	
  

 
	
  

 	
 (a)

 	
 in the event a Lender determines there is a
 discrepancy (such determination being final, conclusive and binding on the
 Borrower) between this screen rate and the “actual” refinancing rates which
 are quoted to that Lender in its ordinary course of business, including but
 not limited to broker quotes of refinancing rates available in the European
 financial markets, then the “actual” rate shall prevail at that Lender’s
 absolute discretion which shall be final, conclusive and binding on the
 Borrower; and

 

11

	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
 in the event a Lender uses more than one
 (1) broker quote as a basis for calculating its refinancing costs then the
 weighted average of quotes sourced by that Lender in its ordinary course of
 business shall prevail which determination shall be final, conclusive and
 binding. 

 
	
  

 	
  

 
	
  

 	
 For the avoidance of doubt, (i) the
 refinancing rates shall be considered as the benchmark in substitution of the
 screen rate and there shall be no obligation on a Lender to actually
 refinance on a back-to-back basis, (ii) if the agreed screen is replaced or
 service ceases to be available, the Agent may specify another page or service
 displaying the appropriate rate after consultation with the Borrower and the
 Lenders, and (iii) the Agent shall apply a blended rate so that each Lender
 is repaid its portion of its Commitment at the rate which is available to it;

 
	
  

 	
  

 
	
  

 	
 “Loan” means the principal amount from
 time to time outstanding under this Agreement;

 
	
  

 	
  

 
	
  

 	
 “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 $1,000,000 or the equivalent in any other
 currency;

 
	
  

 	
  

 
	
  

 	
 “Majority Lenders” means:

 
	
  

 	
  

 	
  

 
	
  

 	
 (a)

 	
 before the Loan has been made, Lenders
 whose Commitments total 66.66% of the Total Commitments; and

 
	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
 after the Loan has been made, Lenders whose
 Contributions total 66.66% of the Loan;

 
	
  

 	
  

 
	
  

 	
 “Manager’s
 Undertaking” means, in relation to the Ship, the letter executed
 and delivered by an Approved Manager, in the form set out in Appendix F;

 
	
  

 	
  

 
	
  

 	
 “Margin” means 2.75% per annum;

 
	
  

 	
  

 
	
  

 	
 “Margin
 Stock” has the meaning specified in Regulation U of the Board of
 Governors of the United States Federal Reserve System and any successor
 regulations thereto, as in effect from time to time;

 
	
  

 	
  

 
	
  

 	
 “Maturity
 Date” means the earlier of the seventh anniversary of the Drawdown
 Date and the date on which the Loan is accelerated pursuant to Clause 20.4;

 
	
  

 	
  

 
	
  

 	
 “Moody’s” means Moody’s Investors Service,
 Inc., a subsidiary of Moody’s Corporation, and its successors;

 
	
  

 	
  

 
	
  

 	
 “Mortgage” means, in relation to the Ship,
 the first priority or preferred ship mortgage on the Ship, in the form set
 out in Appendix G;

 
	
  

 	
  

 
	
  

 	
 “Multiemployer
 Plan” means, at any time, a “multiemployer plan” as defined in
 Section 4001(a)(3) of ERISA to which the Guarantor or any subsidiary of it or
 any ERISA Affiliate has any liability or obligation to contribute or has
 within any of the six preceding plan years had any liability or obligation to
 contribute;

 

12

	
  

 	
  

 	
  

 
	
  

 	
 “Non-indemnified Tax” means any tax on the
 net income of a Creditor Party (but not a tax on gross income or individual
 items of income), whether collected by deduction or withholding or otherwise,
 which is levied by a taxing jurisdiction which: 

 
	
  

 	
  

 	
  

 
	
  

 	
 (a)

 	
 is located in the country of under whose
 laws such entity is formed (or in the case of a natural person is a country
 of which such person is a citizen); or 

 
	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
 with respect to any Lender, is located in
 the country of its Lending Office; or 

 
	
  

 	
  

 	
  

 
	
  

 	
 (c)

 	
 with respect to any Creditor Party other
 than a Lender, is located in the country from which such party has originated
 its participation in this transaction; 

 
	
  

 	
  

 
	
  

 	
 “Note”
 means a promissory note of the Borrower, payable to the order of the Agent,
 evidencing the aggregate indebtedness of the Borrower under this Agreement,
 in the form set out in Appendix H;

 
	
  

 	
  

 
	
  

 	
 “Notifying Lender” has the meaning given
 in Clause 24.1 or Clause 25.1 as the context requires;

 
	
  

 	
  

 
	
  

 	
 “OFAC”
 means the Office of Foreign Assets Control of the United States Department of
 the Treasury;

 
	
  

 	
  

 
	
  

 	
 “pari passu”, when used with respect to
the ranking of any Financial Indebtedness of any person in relation to other
Financial Indebtedness of such person, means that each such Financial
Indebtedness: 

 
	
  

 	
  

 	
  

 
	
  

 	
 (a)

 	
 either (i) is not subordinated in right of
 payment to any other Financial Indebtedness of such person or (ii) is
 subordinate in right of payment to the same Financial Indebtedness of such
 person as is the other and is so subordinate to the same extent; and

 
	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
 is not subordinate in right of payment to
 the other or to any Financial Indebtedness of such person as to which the
 other is not so subordinate;

 
	
  

 	
  

 
	
  

 	
 “PATRIOT
 Act” means the United States Uniting and Strengthening America by
 Providing Appropriate Tools Required to Intercept and Obstruct Terrorism
 Improvement and Reauthorization Act of 2005 (H.R. 3199);

 
	
  

 	
  

 
	
  

 	
 “Payment Currency” has the meaning given
 in Clause 22.4;

 
	
  

 	
  

 
	
  

 	
 “Permitted Security Interests” means:

 
	
  

 	
  

 	
  

 
	
  

 	
 (a)

 	
 Security Interests created by the Finance
 Documents;

 
	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
 pledges of certificates of deposit or other
 cash collateral securing any Security Party’s reimbursement obligations in
 connection with letters of credit now or hereafter issued for the account of
 such Security Party in connection with the establishment of the financial
 responsibility of such Security Party under 33 C.F.R. Part 130 or
 46 C.F.R. Part 540, as the case may be, as the same may be amended
 or replaced;

 

13

	
  

 	
  

 	
  

 
	
  

 	
 (c)

 	
 Security Interests to secure obligations under workmen’s compensation laws or
 similar legislation, deposits to secure public or statutory obligations,
 warehousemen’s or other like liens, or deposits to obtain the release of such
 liens and deposits to secure surety, appeal or customs bonds on which the
 Borrower or the Guarantor is the principal, as to all of the foregoing, only
 to the extent arising and continuing in the ordinary course of business;

 
	
  

 	
  

 	
  

 
	
  

 	
 (d)

 	
 Security Interests for loss, damage or expense which are fully covered by insurance,
 subject to applicable deductibles satisfactory to the Agent;

 
	
  

 	
  

 	
  

 
	
  

 	
 (e)

 	
 Security Interests for unpaid but not past
 due master’s and crew’s wages in accordance with usual maritime practice;

 
	
  

 	
  

 	
  

 
	
  

 	
 (f)

 	
 Security Interests for salvage;

 
	
  

 	
  

 	
  

 
	
  

 	
 (g)

 	
 Security Interests arising by operation of
 law for not more than two (2) months’ prepaid hire under any charter or other
 contract of employment in relation to the Ship not prohibited by this
 Agreement or any other Finance Document;

 
	
  

 	
  

 	
  

 
	
  

 	
 (h)

 	
 Security Interests for master’s
 disbursements incurred in the ordinary course of trading of the Ship and any
 other Security Interests arising by operation of law or otherwise in the
 ordinary course of the Ship’s business, provided such Security Interests do not
 secure amounts more than 30 days overdue (unless the overdue amount is being
 contested by the Borrower in good faith by appropriate steps) and subject, in
 the case of Security Interests for repair or maintenance, to Clause 14.13(g);

 
	
  

 	
  

 	
  

 
	
  

 	
 (i)

 	
 any Security Interest created in favor of a
 plaintiff or defendant in any proceedings or arbitration as security for
 costs and expenses where the relevant Security Party is actively prosecuting
 or defending such proceedings or arbitration in good faith and such Security
 Interest does not (and is not likely to) result in any sale, forfeiture or
 loss of the Ship; 

 
	
  

 	
  

 	
  

 
	
  

 	
 (j)

 	
 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; 

 
	
  

 	
  

 	
  

 
	
  

 	
 (k)

 	
 Security Interests incidental to the
 conduct of the business of each Security Party or the ownership of such
 Security Party’s property and assets, which Security Interests do not in the
 aggregate materially detract from the value of each such Security Party’s
 property or assets or materially impair the use thereof in the operation of
 its business; and

 
	
  

 	
  

 	
  

 
	
  

 	
 (l)

 	
 Security Interests created by the Guarantor
 in connection with its obligations under the Loan Agreement dated as of June
 2, 2010 among the (i) Guarantor as borrower, (ii) the parties named therein
 as guarantors, (iii) the banks and financial institutions named therein as
 lenders, (iv) the banks and financial institutions named therein as swap
 banks, (v) Nordea Bank Finland PLC, New York Branch, as agent and security
 trustee, and (vi) Nordea Bank Finland PLC, New York Branch, DnB Nor Bank ASA
 and ABN AMRO Bank N.V. as lead arrangers;

 

14

	
  

 	
  

 	
  

 
	
  

 	
 “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 or document falling within
 paragraphs (b) or (c);

 
	
  

 	
  

 
	
  

 	
 “Pertinent Jurisdiction”, in relation to a
 company, means:

 
	
  

 	
  

 	
  

 
	
  

 	
 (a)

 	
 the jurisdiction under the laws of which
 the company is incorporated or formed;

 
	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
 a jurisdiction in which the company has the
 center of its main interests or in which the company’s central management and
 control is or has recently been exercised;

 
	
  

 	
  

 	
  

 
	
  

 	
 (c)

 	
 a jurisdiction in which the overall net
 income of the company is subject to corporation tax, income tax or any
 similar tax;

 
	
  

 	
  

 	
  

 
	
  

 	
 (d)

 	
 a jurisdiction in which assets of the
 company (other than securities issued by, or loans to, related companies)
 having a substantial value are situated, in which the company maintains a
 branch or permanent place of business, or in which a Security Interest
 created by the company must or should be registered in order to ensure its
 validity or priority; or

 
	
  

 	
  

 	
  

 
	
  

 	
 (e)

 	
 a jurisdiction the courts of which have
 jurisdiction to make a winding up, administration or similar order in
 relation to the 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 paragraphs (a) or (b)
 above;

 
	
  

 	
  

 
	
  

 	
 “Pertinent Matter” means:

 
	
  

 	
  

 	
  

 
	
  

 	
 (a)

 	
 any transaction or matter contemplated by,
 arising out of, or in connection with a Pertinent Document; or

 
	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
 any statement relating to a Pertinent
 Document or to a transaction or matter falling within paragraph (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;

 
	
  

 	
  

 
	
  

 	
 “Plan”
 means any employee benefit plan (other than a Multiemployer Plan) subject to
 the provisions of Title IV of ERISA or Section 412 of the Code or Section 302
 of ERISA, and in respect to which a Security Party or any subsidiary of it or
 ERISA Affiliate is (or, if such 

 

15

	
  

 	
  

 	
  

 
	
  

 	
 plan were terminated, would under Section
 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of
 ERISA;

 
	
  

 	
  

 	
  

 
	
  

 	
 “Potential Event of Default” means an
 event or circumstance which, with the giving of any notice and/or the lapse
 of time would constitute an Event of Default;

 
	
  

 	
  

 	
  

 
	
  

 	
 “Quotation Date” means, in relation to any
 period for which an interest rate is to be determined under any provision of
 a Finance Document, the day which is two (2) Business Days before the first
 day of that period, unless market practice differs in the London Interbank
 Market for a currency, in which case the Quotation Date will be determined by
 the Agent in accordance with market practice in the London Interbank Market
 (and if quotations would normally be given by leading banks in the London
 Interbank Market on more than one day, the Quotation Date will be the last of
 those days);

 
	
  

 	
  

 	
  

 
	
  

 	
 “Rating Agencies” means:

 
	
  

 	
  

 	
  

 
	
  

 	
 (a)

 	
 S&P and Moody’s; or

 
	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
 if S&P or Moody’s or both of them are
 not making ratings of securities publicly available, a nationally recognized
 United States rating agency or agencies, as the case may be, selected by the
 Agent with the consent of the Majority Lenders, which will be substituted for
 S&P or Moody’s or both, as the case may be;

 
	
  

 	
  

 	
  

 
	
  

 	
 “Rating Category” means:

 
	
  

 	
  

 	
  

 
	
  

 	
 (a)

 	
 with respect to S&P, any of the
 following categories (any of which may include a “+” or “-”): AAA, AA, A,
 BBB, BB, B, CCC, CC, C and D (or equivalent successor categories);

 
	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
 with respect to Moody’s, any of the following
 categories: Aaa, Aa, A, Baa, Ba, B, Caa, Ca, C and D (or equivalent successor
 categories); and

 
	
  

 	
  

 	
  

 
	
  

 	
 (c)

 	
 the equivalent of any such categories of
 S&P or Moody’s used by another Rating Agency, if applicable;

 
	
  

 	
  

 	
  

 
	
  

 	
 “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”;

 
	
  

 	
  

 	
  

 
	
  

 	
 “S&P” means Standard & Poor’s
 Ratings Services, a division of The McGraw Hill Companies Inc., and its
 successors;

 
	
  

 	
  

 	
  

 
	
  

 	
 “SCM” means Scorpio Commercial Management
 S.A.M., a Monaco company, as commercial manager of the Ship;

 
	
  

 	
  

 	
  

 
	
  

 	
 “Secured Liabilities” means all liabilities
 which 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 Documents; and for this purpose, 

 

16

	
  

 	
  

 	
  

 
	
  

 	
 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;

 
	
  

 	
  

 
	
  

 	
 “Securities Act” means the United States
 Securities Act of 1933, as amended, and any successor act thereto, and
 (unless the context otherwise requires) includes the rules and regulations of
 the Commission promulgated thereunder;

 
	
  

 	
  

 
	
  

 	
 “Security Interest” means:

 
	
  

 	
  

 	
  

 
	
  

 	
 (a)

 	
 a mortgage, encumbrance, charge (whether
 fixed or floating) or pledge, any maritime or other lien or privilege or any
 other security interest of any kind; 

 
	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
 the security 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 B would have been had he
 held a security interest over an asset of A; but this 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 Borrower, the
 Guarantor and any other person (except a Creditor Party) who, as a surety,
 guarantor, mortgagor, assignor or pledgor, as a party to any subordination or
 priorities arrangement, or in any similar capacity, executes a Finance
 Document;

 
	
  

 	
  

 
	
  

 	
 “Security Period” means the period
 commencing on the date of this Agreement and ending on the date on which: 

 
	
  

 	
  

 	
  

 
	
  

 	
 (a)

 	
 all amounts which have become due for
 payment by the Borrower or any other Security Party under the Finance
 Documents and the Master Agreements have been paid;

 
	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
 no amount is owing or has accrued (without yet
 having become due for payment) under any Finance Document or any Master
 Agreement; and

 
	
  

 	
  

 	
  

 
	
  

 	
 (c)

 	
 neither the Borrower nor any other Security
 Party has any future or contingent liability under Clause 21, 22 or 23 or any
 other provision of this Agreement or another Finance Document or a Master
 Agreement; 

 
	
  

 	
  

 
	
  

 	
 “Servicing Bank” means the Agent or the
 Security Trustee;

 
	
  

 	
  

 
	
  

 	
 “Shares Pledge” means a pledge of the
 Equity Interests of the Borrower, in the form set out in Appendix I; 

 
	
  

 	
  

 
	
  

 	
 “Ship” means the LR2 product tanker of
 62,775 gross registered tons and 34,394 net registered tons named “STI
 SPIRIT”, IMO Number 9409259, and registered in the name of the Borrower on an
 Approved Flag, or any Substitute Ship, as applicable;

 

17

	
  

 	
  

 	
  

 	
  

 
	
  

 	
 “SSM” means Scorpio Ship Management
 S.A.M., a Monaco company, as technical manager of the Ship;

 
	
  

 	
  

 
	
  

 	
 “Substitute Ship” has the meaning given in
 Clause 8.9(c);

 
	
  

 	
  

 
	
  

 	
 “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 acquisition of the Ship, whether for full 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 (excluding a requisition for hire for a fixed period not
 exceeding one (1) year without any right to an extension), unless it is
 within one (1) month redelivered to the full control of the Borrower; or

 
	
  

 	
  

 	
  

 
	
  

 	
 (c)

 	
 any arrest, capture, seizure or detention
 of the Ship (including any hijacking or theft) unless it is within one (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
 that the event constituting the total loss occurred;

 
	
  

 	
  

 
	
  

 	
 “Transfer Certificate” has the meaning
 given in Clause 27.2;

 
	
  

 	
  

 
	
  

 	
 “Transferee Lender” has the meaning given
 in Clause 27.2;

 
	
  

 	
  

 
	
  

 	
 “Transferor Lender” has the meaning given
 in Clause 27.2; 

 
	
  

 	
  

 
	
  

 	
 “UCC” means the Uniform Commercial Code of the State of New York; and

 
	
  

 	
  

 
	
  

 	
 “Voting Stock” of any person as of any
 date means the Equity Interests of such person that are at the time entitled
 to vote in the election of the board of directors or similar governing body
 of such person.

 

18

	
  

 	
  

 
	
 1.2

 	
 Construction of certain terms. In this Agreement:

 
	
  

 	
  

 
	
  

 	
 “approved” means, for the purposes of
 Clause 13, approved in writing by the Agent with the consent of the Majority
 Lenders;

 
	
  

 	
  

 
	
  

 	
 “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 corporation,
 limited liability company, partnership, joint venture, unincorporated
 association, joint stock company and trust;

 
	
  

 	
  

 
	
  

 	
 “consent” includes an authorization,
 consent, approval, resolution, license, exemption, filing, registration,
 notarization and legalization;

 
	
  

 	
  

 
	
  

 	
 “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,
 email 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;

 
	
  

 	
  

 
	
  

 	
 “law” includes any order or decree, any
 form of delegated legislation, any treaty or international convention and any
 statute, regulation or resolution of the United States of America, any state
 thereof, the Council of the European Union, the European Commission, the
 United Nations or its Security Council or any other Pertinent Jurisdiction;

 
	
  

 	
  

 
	
  

 	
 “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 natural persons; any
 company; any state, political sub-division of a state and local or municipal
 authority; and any international organization;

 

19

	
  

 	
  

 
	
  

 	
 “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, 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
 6 of the International Time Clauses (Hulls)(1/11/02 or 1/11/03) or clause 8
 of the Institute Time Clauses (Hulls) (1/10/83) or the Institute Amended
 Running Down Clause (1/10/71) or any equivalent provision;

 
	
  

 	
  

 
	
  

 	
 “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
 agency, department or regulatory, self-regulatory or other authority or
 organization;

 
	
  

 	
  

 
	
  

 	
 “subsidiary” has the meaning given in
 Clause 1.4; 

 
	
  

 	
  

 
	
  

 	
 “successor”
 includes any person who is entitled (by assignment, novation, merger or
 otherwise) to any other 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 reorganization 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 or any
 other governmental authority authorized to levy such tax (including any such
 imposed in connection with exchange controls), and any related penalties,
 interest or fines; and 

 
	
  

 	
  

 
	
  

 	
 “war risks” includes the risk of mines and
 all risks excluded by clause 29 of the Institute Hull Clauses (1/11/02 or
 1/11/03) or clause 24 of the Institute Time clauses (Hulls) (1/11/1995) 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:

 

20

	
  

 	
  

 
	
 (a)

 	
 a majority of the issued Equity Interests
 in S (or a majority of the issued Equity Interests 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 Equity Interests of S;
 or

 
	
  

 	
  

 
	
 (c)

 	
 P has the direct or indirect power to
 appoint or remove a majority of the directors (or equivalent) 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. 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 in Clause 1.1 to a document
 being in the form of a particular Appendix include references to that form
 with any modifications to that form which the Agent approves or reasonably
 requires with the consent of the Majority Lenders and which are acceptable to
 the Borrower;

 
	
  

 	
  

 
	
 (c)

 	
 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; 

 
	
  

 	
  

 
	
 (d)

 	
 words denoting the singular number shall
 include the plural and vice versa; and

 
	
  

 	
  

 
	
 (e)

 	
 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 clause, sub-clause and other headings in that and any other
 Finance Document shall be entirely disregarded.

 
	
  

 	
  

 
	
 1.7

 	
 Accounting terms. Unless otherwise specified herein, all
 accounting terms used in this Agreement and in the other Finance Documents
 shall be interpreted, and all financial statements and certificates and
 reports as to financial matters required to be delivered to any Creditor
 Party under this Agreement shall be prepared, in accordance with IFRS as from
 time to time in effect.

 
	
  

 	
  

 
	
 1.8

 	
 Inferences
 regarding materiality. To the extent that any representation, warranty, covenant or other
 undertaking of a Security Party in this Agreement or any other Finance
 Document is qualified by reference to those matters which are not reasonably
 expected to result in a “material adverse effect” or language of similar
 import, no inference shall be drawn therefrom that any Creditor Party has
 knowledge or approves of any noncompliance by such Security Party with any
 law or regulation.

 

21

	
  

 	
  

 	
  

 
	
 2

 	
 FACILITY

 
	
  

 	
  

 
	
 2.1

 	
 Amount of facility. Subject to the other provisions of this Agreement, the Lenders
 severally agree to make available to the Borrower a loan facility in the
 principal amount of up to the lesser of $28,600,000 and 55% of the Fair
 Market Value of the Ship.

 
	
  

 	
  

 
	
 2.2

 	
 Lenders’ participations in Advance. Subject to the other provisions of this
 Agreement, each Lender shall participate in the Advance in the proportion
 which its Commitment bears to the Total Commitments.

 
	
  

 	
  

 
	
 2.3

 	
 Purpose of Advance. The Borrower undertakes with each Creditor Party to use the Advance
 only to partially refinance the acquisition of the Ship.

 
	
  

 	
  

 
	
 2.4

 	
 Cancellation of Total Commitments. Any portion of the Total Commitments not disbursed
 to the Borrower shall be cancelled and terminated automatically on the
 expiration of the Availability Period.

 
	
  

 	
  

 
	
 3

 	
 POSITION OF THE
 LENDERS

 
	
  

 	
  

 
	
 3.1

 	
 Interests several. The rights of the Lenders under this Agreement are several. 

 
	
  

 	
  

 
	
 3.2

 	
 Individual right of action. Each Lender shall be entitled to sue for any
 amount which has become due and payable by a Security Party to it under this
 Agreement without joining the Agent, the Security Trustee or any other Lender
 as additional parties in the proceedings.

 
	
  

 	
  

 
	
 3.3

 	
 Proceedings requiring Majority Lender consent. Except as provided in Clause 3.2, no Lender
 may commence proceedings against any Security Party in connection with a
 Finance Document without the prior consent of the Majority Lenders.

 
	
  

 	
  

 
	
 3.4

 	
 Obligations several. The obligations of the Lenders under this Agreement are several; and
 a failure of a Lender to perform its obligations under this Agreement shall
 not result in:

 
	
  

 	
  

 	
  

 
	
 (a)

 	
 the obligations of the other Lenders being
 increased; nor 

 
	
  

 	
  

 	
  

 
	
 (b)

 	
 any Security Party, any other Lender being
 discharged (in whole or in part) from its obligations under any Finance
 Document,

 
	
  

 	
  

 
	
  

 	
 and in no circumstances shall a Lender have
 any responsibility for a failure of another Lender to perform its obligations
 under this Agreement.

 
	
  

 	
  

 
	
 3.5

 	
 Replacement of a Lender.

 
	
  

 	
  

 
	
 (a)

 	
 If at any time:

 
	
  

 	
  

 	
  

 
	
  

 	
 (i)

 	
 any Lender becomes a Non-Consenting Lender
 (as defined in paragraph (c) below); or

 
	
  

 	
  

 	
  

 
	
  

 	
 (ii)

 	
 the Borrower or any other Security Party
 becomes obliged in the absence of an Event of Default to repay any amount in
 accordance with Clause 24 or to pay additional 

 

22

	
  

 	
  

 	
  

 
	
  

 	
  

 	
 amounts pursuant to Clause 23 or Clause 25
 to any Lender in excess of amounts payable to other Lenders generally,

 
	
  

 	
  

 
	
  

 	
 then the Borrower may, on 30 Business Days’
 prior written notice to the Agent and such Lender, replace such Lender by
 requiring such Lender to (and such Lender shall) transfer pursuant to Clause
 27 all (and not part only) of its rights and obligations under this Agreement
 to a Lender or other bank, financial institution, trust, fund or other entity
 (a “Replacement
 Lender”) selected by the Borrower, which is acceptable to the
 Agent with the consent of the Majority Lenders (other than the Lender the
 Borrower desires to replace), which confirms its willingness to assume and by
 its execution of a Transfer Certificate does assume all the obligations of
 the transferring Lender (including the assumption of the transferring
 Lender’s participations on the same basis as the transferring Lender) for a
 purchase price in cash payable at the time of transfer equal to the
 outstanding principal amount of such Lender’s participation in the
 outstanding Advances and all accrued interest and/or breakages costs and
 other amounts payable in relation thereto under the Finance Documents.

 
	
  

 	
  

 
	
 (b)

 	
 The replacement of a Lender pursuant to
 this Clause 3.5 shall be subject to the following conditions: 

 
	
  

 	
  

 	
  

 
	
  

 	
 (i)

 	
 the Borrower shall have no right to replace
 the Agent or the Security Trustee;

 
	
  

 	
  

 	
  

 
	
  

 	
 (ii)

 	
 neither the Agent nor any Lender shall have
 any obligation to the Borrower to find a Replacement Lender;

 
	
  

 	
  

 	
  

 
	
  

 	
 (iii)

 	
 in the event of a replacement of a
 Non-Consenting Lender such replacement must take place no later than 30 days
 after the date the Borrower notifies the Non-Consenting Lender and the Agent
 of its intent to replace the Non-Consenting Lender pursuant to Clause 3.5(a);
 and

 
	
  

 	
  

 	
  

 
	
  

 	
 (iv)

 	
 in no event shall the Lender replaced under
 this paragraph (b) be required to pay or surrender to such Replacement Lender
 any of the fees received by such Lender pursuant to the Finance Documents.

 
	
  

 	
  

 
	
 (c)

 	
 For
 purposes of this Clause 3.5, in the event that:

 
	
  

 	
  

 	
  

 
	
  

 	
 (i)

 	
 the Borrower or the Agent has requested the
 Lenders to give a consent in relation to or to agree to a waiver or amendment
 of any provisions of the Finance Documents;

 
	
  

 	
  

 	
  

 
	
  

 	
 (ii)

 	
 the consent, waiver or amendment in
 question requires the approval of all Lenders; and 

 
	
  

 	
  

 	
  

 
	
  

 	
 (iii)

 	
 Lenders whose Commitments aggregate more
 than 66.67% percent of the Total Commitments have consented to or agreed to
 such waiver or amendment, 

 
	
  

 	
  

 
	
  

 	
 then any Lender who does not and continues
 not to consent or agree to such waiver or amendment shall be deemed a “Non-Consenting
 Lender”.

 

23

	
  

 	
  

 
	
 4

 	
 DRAWDOWN

 
	
  

 	
  

 
	
 4.1

 	
 Request for Advance. Subject to the following conditions, the Borrower may request the
 Advance to be made by delivering to the Agent a completed Drawdown Notice not
 later than 10:00 a.m. (Piraeus, Greece time) three (3) Business Days prior to
 the intended Drawdown Date.

 
	
  

 	
  

 
	
 4.2

 	
 Availability. The conditions referred to in Clause 4.1 are that:

 
	
  

 	
  

 
	
 (a)

 	
 the Drawdown Date must be a Business Day
 during the Availability Period; 

 
	
  

 	
  

 
	
 (b)

 	
 the amount of the Advance shall not exceed
 the lesser of $28,600,000 and 55% of the Fair Market Value of the Ship and
 shall be used only to partially refinance the acquisition of the Ship; and

 
	
  

 	
  

 
	
 (c)

 	
 the applicable conditions precedent stated
 in Clause 9 hereof shall have been satisfied or waived as provided therein.

 
	
  

 	
  

 
	
 4.3

 	
 Notification to Lenders of receipt of a Drawdown Notice. The Agent shall promptly notify the Lenders
 that it has received a Drawdown Notice and shall inform each Lender of:

 
	
  

 	
  

 
	
 (a)

 	
 the amount of the Advance and the Drawdown
 Date;

 
	
  

 	
  

 
	
 (b)

 	
 the amount of that Lender’s participation
 in the Advance; and

 
	
  

 	
  

 
	
 (c)

 	
 the duration of the first Interest Period.

 
	
  

 	
  

 
	
 4.4

 	
 Drawdown Notice irrevocable. A Drawdown Notice must be signed by an
 officer or a duly authorized attorney-in-fact of the Borrower and once
 served, a Drawdown Notice cannot be revoked without the prior consent of the
 Agent, acting on the authority of the Majority Lenders.

 
	
  

 	
  

 
	
 4.5

 	
 Lenders to make available Contributions. Subject to the provisions of this Agreement,
 each Lender shall, before 10:00 a.m. (New York City time) 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 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 to
 the account of a third party designated by the Borrower in a Drawdown Notice
 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.

 

24

	
  

 	
  

 
	
 4.8

 	
 Promissory note.

 
	
  

 	
  

 
	
 (a)

 	
 The obligation of the Borrower to pay the
 principal of, and interest on, the Loan shall be evidenced by the Note, which
 shall be dated the date of the Drawdown Date. 

 
	
  

 	
  

 
	
 (b)

 	
 The Advance made by the Lenders to the
 Borrower may be evidenced by a notation of the same made by the Agent on the
 grid attached to the Note, which notation, absent manifest error, shall be prima facie evidence of the amount of
 the Advance.

 
	
  

 	
  

 
	
 (c)

 	
 Each Lender shall record on its internal
 records the amount of its participation in the Advance and each payment in
 respect thereof, and the unpaid balance of such participation in the Advance
 shall, absent manifest error and to the extent not inconsistent with the
 notations made by the Agent on the grid attached to the Note, be as so
 recorded.

 
	
  

 	
  

 
	
 (d)

 	
 The failure of the Agent or any Lender to
 make any such notation shall not affect the obligation of the Borrower in
 respect of the Advance or the Loan nor affect the validity of any transfer by
 the Agent of the Note.

 
	
  

 	
  

 
	
 (e)

 	
 On receipt of satisfactory
 evidence that the Note has been lost, mutilated or destroyed and on surrender
 of the remnants thereof, if any, the Borrower will promptly replace the Note,
 without charge to the Creditor Parties, with a similar Note. If such
 replacement Note replaces a lost Note it shall bear an endorsement to that
 effect. Any lost Note subsequently found shall be surrendered to the Borrower
 and cancelled. The Agent shall indemnify the Borrower for any losses, claims
 or damages resulting from the loss of such Note.

 
	
  

 	
  

 
	
 5

 	
 INTEREST

 
	
  

 	
  

 
	
 5.1

 	
 Normal rate of interest. Subject to the provisions of this Agreement,
 the rate of interest on the Loan in respect of an Interest Period shall be
 the aggregate of the Margin and LIBOR for that Interest Period.

 
	
  

 	
  

 
	
 5.2

 	
 Payment of normal interest. Subject to the provisions of this Agreement,
 interest on the Loan in respect of each Interest Period shall be paid by the
 Borrower on the last day of that Interest Period.

 
	
  

 	
  

 
	
 5.3

 	
 Payment of accrued interest. In the case of an Interest Period longer
 than three (3) months, accrued interest shall be paid every three (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
 determined under Clause 6.2),

 
	
  

 	
  

 
	
  

 	
 as soon as reasonably practicable after
 each is determined. 

 
	
  

 	
  

 
	
 5.5

 	
 Notice of prepayment. If the Borrower does not agree with an interest rate notified by the
 Agent under Clause 5.4, the Borrower may give the Agent not less than 15
 Business Days’ 

 

25

	
  

 	
  

 
	
  

 	
 notice of its intention to prepay (without
 premium or penalty but subject to any applicable prepayment fee under Clause
 8.10(c)) at the end of the interest period set by the Agent.

 
	
  

 	
  

 
	
 5.6

 	
 Prepayment; termination of Commitments. A notice under Clause 5.5 shall be
 irrevocable; the Agent shall promptly notify the Lenders of the Borrower’s
 notice of intended prepayment and:

 
	
  

 	
  

 
	
 (a)

 	
 on the date on which the Agent serves that
 notice, the Total Commitments shall be cancelled; and

 
	
  

 	
  

 
	
 (b)

 	
 on the last Business Day of the applicable
 interest period, the Borrower shall prepay (without premium or penalty but
 subject to any applicable prepayment fee under Clause 8.10(c)) the Loan,
 together with accrued interest thereon at the applicable rate plus the
 Margin.

 
	
  

 	
  

 
	
 5.7

 	
 Application of prepayment. The provisions of Clause 8 shall apply in
 relation to the prepayment.

 
	
  

 	
  

 
	
 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 shall be: 

 
	
  

 	
  

 
	
 (a)

 	
 three (3) months; or

 
	
  

 	
  

 
	
 (b)

 	
 such other period as the Agent may, with
 the authorization of the Majority Lenders, agree with the Borrower upon
 written notice from the Borrower to the Agent made not less than five (5)
 Business Days prior to the end of the current Interest Period.

 
	
  

 	
  

 
	
 6.3

 	
 Duration of Interest Periods for repayment installments. In respect of an amount due to be repaid
 under Clause 8 on a particular Repayment Date, an Interest Period 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 three (3) months, any
 Lender notifies the Agent by 11:00 a.m. (New York 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 three (3) months.

 
	
  

 	
  

 
	
 6.5

 	
 Interest periods longer than 12 months. Upon not less than five (5) Business Days
 prior written notice from the Borrower to the Agent, and subject to the
 agreement of all of the Lenders, the interest rate of all or more than 50% of
 the Advance may be fixed for an Interest Period in excess of 12 months. The
 interest rate will be the actual refinancing rate available to the Lenders
 (on a weighted average basis) for that Interest Period plus the Margin.

 

26

	
  

 	
  

 	
  

 
	
 7

 	
 DEFAULT INTEREST

 
	
  

 	
  

 
	
 7.1

 	
 Payment of default interest on overdue amounts. A Security Party shall pay interest in
 accordance with the following provisions of this Clause 7 on any amount
 payable by such Security Party under any Finance Document which the Agent,
 the Security Trustee or any 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 20.4, 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 2.00 percent above:

 
	
  

 	
  

 
	
 (a)

 	
 in the case of an overdue amount of
 principal, the higher of the rates set out at Clauses 7.3(a) and (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:

 
	
  

 	
  

 
	
 (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); and

 
	
  

 	
  

 
	
 (b)

 	
 the Margin plus, in respect of successive
 periods of any duration (including at call) up to three (3) months which the
 Agent may, with the consent of the Majority Lenders, select from time to
 time:

 
	
  

 	
  

 	
  

 
	
  

 	
 (i)

 	
 LIBOR; or

 
	
  

 	
  

 	
  

 
	
  

 	
 (ii)

 	
 if the Agent determines that Dollar
 deposits for any such period are not being made available 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
 Lenders from such other sources as the Agent may from time to time determine.

 
	
  

 	
  

 
	
 7.4

 	
 Notification of interest periods and default rates. The Agent shall promptly notify the Lenders
 and each relevant Security Party 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 (b) of that Clause; but this shall not be taken to
 imply that such Security Party 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 

 

27

	
  

 	
  

 
	
  

 	
 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.

 
	
  

 	
  

 
	
 8

 	
 REPAYMENT AND PREPAYMENT

 
	
  

 	
  

 
	
 8.1

 	
 Amount of repayment installments. The Borrower shall repay the Loan by 28 equal
 consecutive quarterly installments of $397,222 each, together with a balloon
 payment in the amount of $17,477,784 payable concurrently with the last
 repayment installment, provided that if the Advance is for an
 amount less than $28,600,000, the installments and the balloon shall be
 reduced pro-rata in such amount as shall be advised by the Agent to the
 Borrower in writing.

 
	
  

 	
  

 
	
 8.2

 	
 Repayment Dates. The first installment shall be repaid on the date falling three (3)
 months after the Drawdown Date and the last installment on the Maturity Date.

 
	
  

 	
  

 
	
 8.3

 	
 Maturity Date. On the Maturity 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 $1,000,000 or
 a multiple of $1,000,000;

 
	
  

 	
  

 
	
 (b)

 	
 the Agent has received from the Borrower at
 least five (5) Business Days’ prior written notice specifying the amount to
 be prepaid and the date on which the prepayment is to be made; and

 
	
  

 	
  

 
	
 (c)

 	
 the Borrower has provided evidence
 satisfactory to the Agent that any consent required by the Borrower or any
 other 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 other Security Party has been complied with
 (which may be satisfied by the Borrower certifying that no consents are required
 and that no regulations need to be complied with).

 
	
  

 	
  

 
	
 8.6

 	
 Effect of notice of prepayment. A prepayment notice may not be withdrawn or
 amended without the consent of the Agent, given with the authorization of the
 Majority Lenders, and the amount specified in the prepayment notice shall
 become due and payable by the Borrower on the date for prepayment specified
 in the prepayment notice.

 
	
  

 	
  

 
	
 8.7

 	
 Notification of notice of prepayment. The Agent shall notify the Lenders promptly
 upon receiving a prepayment notice, and shall provide any Lender which so
 requests with a copy of any document delivered by the Borrower under Clause
 8.5(c).

 
	
  

 	
  

 
	
 8.8

 	
 Mandatory prepayment. Subject to Clause 8.9, if the Ship is sold or refinanced by banks
 and/or financial institutions that are not parties to this Agreement, or if
 the Ship becomes a Total Loss, the Borrower shall prepay the Advance in full:

 

28

	
  

 	
  

 	
  

 
	
 (a)

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

 
	
  

 	
  

 
	
 (b)

 	
 in the case of a refinancing, on or before
 the date on which the refinancing is completed; or

 
	
  

 	
  

 
	
 (c)

 	
 in the case of a Total Loss, on the earlier
 of the date falling 120 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

 	
 Release and substitution. If at any time during the period prior to the
 second anniversary of the Drawdown Date the Ship is sold or refinanced by
 banks and/or financial institutions that are not parties to this Agreement,
 or if the Ship becomes a Total Loss, the Borrower shall not be required to
 make the mandatory prepayment required under Clause 8.8 if:

 
	
  

 	
  

 
	
 (a)

 	
 no Event of Default or Potential Event of
 Default has occurred and is continuing;

 
	
  

 	
  

 
	
 (b)

 	
 the Security Parties are in compliance with
 all of their respective covenants under the Finance Documents; and 

 
	
  

 	
  

 
	
 (c)

 	
 on or before the date a mandatory
 prepayment would become due under Clause 8.8:

 
	
  

 	
  

 	
  

 
	
  

 	
 (i)

 	
 the Borrower and the Agent, with the consent of the Majority
 Lenders (such consent not to be unreasonably withheld), have agreed upon a vessel (the “Substitute Ship”) that, in the reasonable
 discretion of the Majority Lenders, is of substantially similar type, age,
 quality, condition and value as the Ship;

 
	
  

 	
  

 	
  

 
	
  

 	
 (ii)

 	
 the Substitute Ship is registered on an
 Approved Flag in the name of the Borrower and insured in accordance with the
 requirements of Clause 13 of this Agreement (as if all references therein to
 “Ship” were references to the Substitute Ship) and all requirements therein
 have been complied with; 

 
	
  

 	
  

 	
  

 
	
  

 	
 (iii)

 	
 the Borrower shall have delivered or cause
 to be delivered to the Agent in respect of the Substitute Ship the documents
 required by Schedule 4, Part B, paragraphs 4, 5, 6, 8, 9 and 10; and

 
	
  

 	
  

 	
  

 
	
  

 	
 (iv)

 	
 the Borrower shall have executed and delivered to the Agent
 such Finance Documents in respect of the Substitute Ship, any Charter thereof
 and its Earnings and Insurances, as the Agent shall prescribe in Agreed Form
 (it being understood and agreed that upon the execution and delivery of such
 Finance Documents, all references in this Agreement to the term “Ship” shall
 be deemed to mean and refer to the Substitute Ship).

 
	
  

 	
  

 
	
 8.10

 	
 Amounts payable on prepayment. A voluntary prepayment under Clause 8.4 and
 a mandatory prepayment under Clause 8.8 shall be made together with:

 
	
  

 	
  

 
	
 (a)

 	
 accrued interest (and any other amount
 payable under Clause 22 or otherwise) in respect of the amount prepaid; 

 
	
  

 	
  

 
	
 (b)

 	
 if the prepayment is not made on the last
 day of an Interest Period, any sums payable under Clause 22.1(b); and

 

29

	
  

 	
  

 	
  

 
	
 (c)

 	
 the following prepayment fees as
 applicable:

 
	
  

 	
  

 	
  

 
	
  

 	
 (i)

 	
 1.5% of the prepaid amount in respect of
 any prepayment made prior to the first anniversary of the Drawdown Date; or

 
	
  

 	
  

 	
  

 
	
  

 	
 (ii)

 	
 0.5% of the prepaid amount in respect of
 any prepayment made on or after the first but prior to the second anniversary
 of the Drawdown Date; 

 
	
  

 	
  

 
	
  

 	
 provided that the foregoing prepayment fees in this paragraph (c) shall not be
 payable (1) in respect of a prepayment under Clause 8.8(c), (2) where the
 Borrower has complied with the conditions set forth in Clause 8.9 or (3) in
 respect of any prepayment being made in connection with a refinancing of the
 Loan by DVB Bank SE or its affiliates. It is understood and agreed, however,
 that if the Majority Lenders permit, in their sole discretion, a vessel
 substitution under Clause 8.9 by means of a vessel whose value is less than
 the Ship on the basis of a voluntary, partial prepayment of the Loan, the
 foregoing prepayment fees shall be payable together with such partial
 prepayment.

 
	
  

 	
  

 
	
 8.11

 	
 Application of partial prepayment. Each partial prepayment shall be applied
 against the repayment installments specified in Clause 8.1 in inverse order
 of maturity.

 
	
  

 	
  

 
	
 8.12

 	
 No reborrowing. No amount prepaid may be reborrowed.

 
	
  

 	
  

 
	
 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:

 
	
  

 	
  

 
	
 (a)

 	
 that, on or before the service of the
 Drawdown Notice, the Agent receives:

 
	
  

 	
  

 	
  

 
	
  

 	
 (i)

 	
 the documents described in Part A of
 Schedule 4 in form and substance satisfactory to the Agent; and

 
	
  

 	
  

 	
  

 
	
  

 	
 (ii)

 	
 such documentation and other evidence as is
 reasonably requested by the Agent or a Lender in order for each to carry out
 and be satisfied with the results of all necessary “know your customer” or
 other checks which it is required to carry out in relation to the
 transactions contemplated by this Agreement and the other Finance Documents,
 including without limitation obtaining, verifying and recording certain
 information and documentation that will allow the Agent and each of the
 Lenders to identify each Security Party in accordance with the requirements
 of the PATRIOT Act;

 
	
  

 	
  

 
	
 (b)

 	
 that, on the Drawdown Date but prior to the
 making of the Advance, the Agent receives or is satisfied that it will
 receive on the making of the Advance the documents described in Part B of
 Schedule 4 in form and substance satisfactory to it;

 
	
  

 	
  

 
	
 (c)

 	
 that, on or before the service of the
 Drawdown Notice, the Agent receives the accrued commitment fee and upfront
 fee payable pursuant to Clause 21.1and has received payment of the expenses
 referred to in Clause 21.2; and

 
	
  

 	
  

 
	
 (d)

 	
 that both at the date of the Drawdown
 Notice and at the Drawdown Date:

 

30

	
  

 	
  

 	
  

 
	
  

 	
 (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 and those of the Borrower or any other Security Party which are set
 out in the other Finance Documents (other than those relating to a specific
 date) would be true and not misleading if repeated on each of those dates
 with reference to the circumstances then existing; and

 
	
  

 	
  

 	
  

 
	
  

 	
 (iii)

 	
 there has been no material change in the
 consolidated financial condition, operations or business prospects of the
 Guarantor since the date on which the Guarantor provided information
 concerning those topics to the Agent and/or any Lender;

 
	
  

 	
  

 
	
 (e)

 	
 that, if the Collateral Maintenance Ratio
 were applied immediately following the making of the Advance, the Borrower
 would not be required to provide additional Collateral or prepay part of the
 Loan under Clause 15; and

 
	
  

 	
  

 
	
 (f)

 	
 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
 authorization of the Majority Lenders, request by notice to the Borrower
 prior to the Drawdown Date.

 
	
  

 	
  

 
	
 9.2

 	
 Waiver of conditions precedent. Notwithstanding anything in Clause 9.1 to the
 contrary if the Agent, with the consent of the Majority Lenders, permits the
 Advance to be borrowed before certain of the conditions referred to in Clause
 9.1 are satisfied, the Borrower shall ensure that such conditions are
 satisfied within ten (10) Business Days after such Drawdown Date (or such
 longer period as the Agent may specify).

 
	
  

 	
  

 
	
 10 

 	
 REPRESENTATIONS AND WARRANTIES 

 
	
  

 	
  

 
	
 10.1

 	
 General. Each
 of the Borrower and the Guarantor represents and warrants to each Creditor
 Party as of the Effective Date and the Drawdown Date as follows.

 
	
  

 	
  

 
	
 10.2

 	
 Status. Each Security Party is:

 
	
  

 	
  

 
	
 (a)

 	
 duly incorporated or formed and validly
 existing and in good standing under the law of its jurisdiction of incorporation
 or formation; and

 
	
  

 	
  

 
	
 (b)

 	
 duly qualified and in good standing as a
 foreign company in each other jurisdiction in which it owns or leases
 property or in which the conduct of its business requires it to so qualify or
 be licensed except where, in each case, the failure to so qualify or be
 licensed and be in good standing could not reasonably be expected to have a
 material adverse effect on its business, assets or financial condition or
 which may affect the legality, validity, binding effect or enforce ability of
 the Finance Documents,

 
	
  

 	
  

 
	
  

 	
 and there are no proceedings or actions
 pending or contemplated by any Security Party, or to the knowledge of the
 Borrower or the Guarantor contemplated by any third party, seeking to
 adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up,
 reorganization, arrangement, adjustment, protection, relief, or composition
 of it or its debts under any law relating to bankruptcy, insolvency or
 reorganization or relief of debtors, or seeking the entry of an order for
 relief or the appointment of a receiver, trustee, custodian or other similar 

 

31

	
  

 	
  

 
	
  

 	
 official for it or for any substantial part
 of its property.

 
	
  

 	
  

 
	
 10.3

 	
 Company power;
 consents. Each
 Security Party has the capacity and has taken all action, and no consent of
 any person is required, for:

 
	
  

 	
  

 
	
 (a)

 	
 it to own or lease and operate its
 properties and to carry on its business as now conducted and as proposed to
 be conducted;

 
	
  

 	
  

 
	
 (b)

 	
 it to execute each Finance Document to
 which it is or is to become a party; 

 
	
  

 	
  

 
	
 (c)

 	
 it to own and register the Ship in its name
 under an Approved Flag;

 
	
  

 	
  

 
	
 (d)

 	
 it to comply with its obligations under
 each Finance Document to which it is or is to become a party; 

 
	
  

 	
  

 
	
 (e)

 	
 it to grant the Security Interests granted
 by it pursuant to the Finance Documents to which it is or is to become a
 party;

 
	
  

 	
  

 
	
 (f)

 	
 the perfection or maintenance of the
 Security Interests created by the Finance Documents (including the first
 priority nature thereof); and

 
	
  

 	
  

 
	
 (g)

 	
 the exercise by any Creditor Party of their
 rights under any of the Finance Documents or the remedies in respect of the
 Collateral pursuant to the Finance Documents to which it is a party,

 
	
  

 	
  

 
	
  

 	
 except, in each case, for consents which
 have been duly obtained, taken, given or made and are in full force and
 effect.

 
	
  

 	
  

 
	
 10.4

 	
 Consents in force. All the consents referred to in Clause 10.3 remain in force and
 nothing has occurred which makes any of them liable to revocation.

 
	
  

 	
  

 
	
 10.5

 	
 Title.

 
	
  

 	
  

 
	
 (a)

 	
 The Borrower owns (i) in the case of owned
 real property, good and marketable fee title to and (ii) in the case of owned
 personal property, good and valid title to, or, in the case of leased real or
 personal property, valid and enforceable leasehold interests (as the case may
 be) in, all of its properties and assets, tangible and intangible, of any
 nature whatsoever, free and clear in each case of all Security Interests or
 claims, except for Permitted Security Interests.

 
	
  

 	
  

 
	
 (b)

 	
 The Borrower has not created nor is it
 contractually bound to create any Security Interest on or with respect to any
 of its assets, properties, rights or revenues, except for Permitted Security
 Interests, and except as provided in this Agreement the Borrower is not
 restricted by contract, applicable law or regulation or otherwise from
 creating Security Interests on any of its assets, properties, rights or
 revenues.

 
	
  

 	
  

 
	
 (c)

 	
 The Borrower has received all deeds,
 assignments, waivers, consents, non-disturbance and attornment or similar
 agreements, bills of sale and other documents, and has duly effected all
 recordings, filings and other actions necessary to establish, protect and
 perfect the Borrower’s 

 

32

	
  

 	
  

 	
  

 
	
  

 	
 right, title and interest in and to the
 Ship and other properties and assets (or arrangements for such recordings,
 filings and other actions acceptable to the Agent shall have been made).

 
	
  

 	
  

 
	
 10.6

 	
 Legal validity;
 effective Security Interests. Subject to any relevant insolvency laws affecting creditors’ rights
 generally:

 
	
  

 	
  

 
	
 (a)

 	
 the Finance Documents to which each
 Security Party is a party, constitute or, as the case may be, will constitute
 upon execution and delivery (and, where applicable, registration as provided
 for in the Finance Documents), such Security Party’s legal, valid and binding
 obligations enforceable against it in accordance with their respective terms;
 and

 
	
  

 	
  

 
	
 (b)

 	
 the Finance Documents to which each
 Security Party is a party, creates or, as the case may be, will create upon
 execution and delivery (and, where applicable, registration as provided for
 in the Finance Documents), legal, valid and binding Security Interests
 enforceable in accordance with their respective terms over all the assets to
 which they, by their terms, relate.

 
	
  

 	
  

 
	
 10.7

 	
 No third party Security Interests. Without limiting the generality of Clauses10.5
 and 10.6, at the time of the execution and delivery of each Finance Document:
 

 
	
  

 	
  

 
	
 (a)

 	
 the relevant Security Party 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 of each Finance Document, the borrowing of the Advance,
 and compliance with each Finance Document, will not involve or lead to a
 contravention of:

 
	
  

 	
  

 
	
 (a)

 	
 any law or regulation; or

 
	
  

 	
  

 
	
 (b)

 	
 the constitutional documents of any
 Security Party; or

 
	
  

 	
  

 
	
 (c)

 	
 any contractual or other obligation or
 restriction which is binding on any Security Party or any of its assets.

 
	
  

 	
  

 
	
 10.9

 	
 Taxes.

 
	
  

 	
  

 
	
 (a)

 	
 All payments which a Security Party is
 liable to make under the Finance Documents to which it is a party can
 properly be made without deduction or withholding for or on account of any
 tax payable under any law of any Pertinent Jurisdiction.

 
	
  

 	
  

 
	
 (b)

 	
 Each Security Party has timely filed or has
 caused to be filed all tax returns and other reports that it is required by
 law or regulation to file in any Pertinent Jurisdiction, and has paid or
 caused to be paid all taxes, assessments and other similar charges that are
 due and payable in any Pertinent Jurisdiction, other than taxes and charges:

 
	
  

 	
  

 	
  

 
	
  

 	
 (i)

 	
 which (A) are not yet due and payable or
 (B) are being contested in good faith by appropriate proceedings and for
 which adequate reserves have been established and 

 

33

	
  

 	
  

 	
  

 
	
  

 	
  

 	
 as to which such failure to have paid such
 tax does not create any risk of sale, forfeiture, loss, confiscation or
 seizure of the Ship or of criminal liability; or

 
	
  

 	
  

 	
  

 
	
  

 	
 (ii)

 	
 the non-payment of which could not
 reasonably be expected to have a material adverse effect on the financial
 condition of such Security Party. 

 
	
  

 	
  

 
	
  

 	
 The charges, accruals, and reserves on the
 books of each Security Party respecting taxes are adequate in accordance with
 IFRS.

 
	
  

 	
  

 
	
 (c)

 	
 No material claim for any tax has been
 asserted in writing against a Security Party by any Pertinent Jurisdiction or
 other taxing authority other than claims that are included in the liabilities
 for taxes in the most recent balance sheet of such person or disclosed in the
 notes thereto, if any.

 
	
  

 	
  

 
	
 (d)

 	
 The execution, delivery, filing and
 registration or recording (if applicable) of the Finance Documents and the
 consummation of the transactions contemplated thereby will not cause any of
 the Creditor Parties to be required to make any registration with, give any
 notice to, obtain any license, permit or other authorization from, or file
 any declaration, return, report or other document with any governmental
 authority in any Pertinent Jurisdiction.

 
	
  

 	
  

 
	
 (e)

 	
 No taxes are required by any governmental
 authority in any Pertinent Jurisdiction to be paid with respect to or in
 connection with the execution, delivery, filing, recording, performance or
 enforcement of any Finance Document.

 
	
  

 	
  

 
	
 (f)

 	
 The execution, delivery, filing,
 registration, recording, performance and enforcement of the Finance Documents
 by any of the Creditor Parties will not cause such Creditor Party to be
 deemed to be resident, domiciled or carrying on business in any Pertinent
 Jurisdiction of any Security Party or subject to taxation under any law or
 regulation of any governmental authority in any Pertinent Jurisdiction of any
 Security Party.

 
	
  

 	
  

 
	
 (g)

 	
 Other than the recording of the Mortgage in
 accordance with the laws of the Republic of The Marshall Islands and such
 filings as may be required in a Pertinent Jurisdiction in respect of certain
 of the Finance Documents, and the payment of fees consequent thereto, it is
 not necessary for the legality, validity, enforce ability or admissibility
 into evidence of this Agreement or any other Finance Document that any of
 them or any document relating thereto be registered, filed recorded or
 enrolled with any court or authority in any relevant jurisdiction or that any
 stamp, registration or similar taxes be paid on or in relation to this
 Agreement or any of the other Finance Documents.

 
	
  

 	
  

 
	
 10.10

 	
 No default. No Event of Default or Potential Event of
 Default has occurred or would result from the borrowing of the Advance.

 
	
  

 	
  

 
	
 10.11

 	
 Information. All financial statements, information and other data furnished by or
 on behalf of a Security Party to any of the Creditor Parties:

 
	
  

 	
  

 
	
 (a)

 	
 was true and accurate at the time it was
 given;

 
	
  

 	
  

 
	
 (b)

 	
 such financial statements, if any, have
 been prepared in accordance with IFRS and accurately and fairly represent the
 financial condition of such Security Party as of the date or respective 

 

34

	
  

 	
  

 
	
  

 	
 dates thereof and the results of operations
 of such Security Party for the period or respective periods covered by such
 financial statements;

 
	
  

 	
  

 
	
 (c)

 	
 there are no other facts or matters the
 omission of which would have made or make any such information false or
 misleading;

 
	
  

 	
  

 
	
 (d)

 	
 there has been no material adverse change
 in the financial condition, operations or business prospects of any Security
 Party since the date on which such information was provided other than as
 previously disclosed to the Agent in writing; and

 
	
  

 	
  

 
	
 (e)

 	
 none of the Security Parties has any contingent
 obligations, liabilities for taxes or other outstanding financial obligations
 which are material in the aggregate except as disclosed in such statements,
 information and data.

 
	
  

 	
  

 
	
 10.12

 	
 No litigation. No legal or administrative action involving
 a Security Party (including any action relating to any alleged or actual
 breach of the ISM Code, the ISPS Code or any Environmental Law) has been
 commenced or taken by any person, or, to the Borrower’s or the Guarantor’s
 knowledge, is likely to be commenced or taken which, in either case, would be
 likely to have a material adverse effect on the business, assets or financial
 condition of a Security Party or which may affect the legality, validity,
 binding effect or enforce ability of the Finance Documents.

 
	
  

 	
  

 
	
 10.13

 	
 Intellectual
 property. Except for those with
 respect to which the failure to own or license could not reasonably be
 expected to have a material adverse effect, each Security Party owns or has
 the right to use all patents, trademarks, permits, service marks, trade
 names, copyrights, franchises, formulas, licenses and other rights with
 respect thereto, and have obtained assignment of all licenses and other
 rights of whatsoever nature, that are material to its business as currently
 contemplated without any conflict with the rights of others.

 
	
  

 	
  

 
	
 10.14

 	
 ISM Code and ISPS
 Code compliance. The Borrower has obtained or will obtain or will cause to be obtained all
 necessary ISM Code Documentation and ISPS Code Documentation in connection
 with the Ship and its operation and will be or will cause the Ship and the
 Approved Manager to be in full compliance with the ISM Code and the ISPS
 Code.

 
	
  

 	
  

 
	
 10.15

 	
 Intentionally omitted.

 
	
  

 	
  

 
	
 10.16

 	
 Intentionally omitted.

 
	
  

 	
  

 
	
 10.17

 	
 Compliance with
 law; Environmentally Sensitive Material. Except to the extent the following could not
 reasonably be expected to have a material adverse effect on the business,
 assets or financial condition of any Security Party, or affect the legality,
 validity, binding effect or enforce ability of the Finance Documents:

 
	
  

 	
  

 
	
 (a)

 	
 the operations and properties of each of
 the Security Parties comply with all applicable laws and regulations,
 including without limitation Environmental Laws, all necessary Environmental
 Permits have been obtained and are in effect for the operations and
 properties of each of the Security Parties and each of the Security Parties
 is in compliance in all material respects with all such Environmental
 Permits; and

 

35

	
  

 	
  

 
	
 (b)

 	
 none of the Security Parties has been
 notified in writing by any person that it or any of its subsidiaries or
 Affiliates is potentially liable for the remedial or other costs with respect
 to treatment, storage, disposal, release, arrangement for disposal or
 transportation of any Environmentally Sensitive Material, except for costs
 incurred in the ordinary course of business with respect to treatment,
 storage, disposal or transportation of such Environmentally Sensitive
 Material.

 
	
  

 	
  

 
	
 10.18

 	
 Ownership
 structure.

 
	
  

 	
  

 
	
 (a)

 	
 The Borrower has no subsidiaries.

 
	
  

 	
  

 
	
 (b)

 	
 100% of the Equity Interests of the
 Borrower have been validly issued, are fully paid, non-assessable and free
 and clear of all Security Interests other than Permitted Security Interests
 and are owned beneficially and of record by the Guarantor.

 
	
  

 	
  

 
	
 (c)

 	
 None of the Equity Interests of the
 Borrower are subject to any existing option, warrant, call, right, commitment
 or other agreement of any character to which the Borrower is a party
 requiring, and there are no Equity Interests of the Borrower outstanding
 which upon conversion or exchange would require, the issuance, sale or
 transfer of any additional Equity Interests of the Borrower or other Equity
 Interests convertible into, exchangeable for or evidencing the right to
 subscribe for or purchase Equity Interests of the Borrower.

 
	
  

 	
  

 
	
 10.19

 	
 Pension Plans. No Security Party is a party to any Plan or Multiemployer Plan or
 Foreign Pension Plan.

 
	
  

 	
  

 
	
 10.20

 	
 Margin Stock. The Borrower is not engaged in the business
 of extending credit for the purpose of purchasing or carrying Margin Stock
 and no proceeds of the Advance will be used to buy or carry any Margin Stock
 or to extend credit to others for the purpose of buying or carrying any
 Margin Stock.

 
	
  

 	
  

 
	
 10.21

 	
 Investment company,
 public utility, etc. The Borrower is not:

 
	
  

 	
  

 
	
 (a)

 	
 an “investment company,” or an “affiliated
 person” of, or “promoter” or “principal underwriter” for, an “investment
 company,” as such terms are defined in the Investment Company Act of 1940, as
 amended; or 

 
	
  

 	
  

 
	
 (b)

 	
 a “public utility” within the meaning of
 the United States Federal Power Act of 1920, as amended.

 
	
  

 	
  

 
	
 10.22

 	
 Asset Control.

 
	
  

 	
  

 
	
 (a)

 	
 The Borrower is not a “national” of any
 “designated foreign country”, within the meaning of the Foreign Assets
 Control Regulations or the Cuban Asset Control Regulations of the United
 States Department of the Treasury, 31 C.F.R., Subtitle B, Chapter V, as
 amended, or a “specially designated national” listed by OFAC, or any
 regulations or rulings issued thereunder. 

 
	
  

 	
  

 
	
 (b)

 	
 Neither the making of the Advance nor the
 use of the proceeds thereof nor the performance by the Borrower or the
 Guarantor of its obligations under any of the Finance Documents to 

 

36

	
  

 	
  

 	
  

 
	
  

 	
 which it is a party violates any law,
 regulation or Executive Order restricting loans to, investments in, or the export
 of assets to, foreign countries or entities doing business there.

 
	
  

 	
  

 
	
 (c)

 	
 Neither the making of the Advance nor the
 use of the proceeds thereof nor the performance by the Borrower or the
 Guarantor of its obligations under any of the Finance Documents to which it
 is a party violates CISADA or comparable United Nations or European Union
 legislation.

 
	
  

 	
  

 
	
 10.23

 	
 No money laundering. Without prejudice to the generality of Clause 2.3, in relation to the
 borrowing by the Borrower of the Advance, the performance and discharge of
 its obligations and liabilities under the Finance Documents, and the
 transactions and other arrangements affected or contemplated by the Finance
 Documents to which the Borrower is a party, the Borrower confirms that:

 
	
  

 	
  

 
	
 (a)

 	
 it is acting for its own account; 

 
	
  

 	
  

 
	
 (b)

 	
 it will use the proceeds of the Advance for
 its own benefit, under its full responsibility and exclusively for the
 purposes specified in this Agreement; and 

 
	
  

 	
  

 
	
 (c)

 	
 the foregoing will not involve or lead to a
 contravention of any law, official requirement or other regulatory measure or
 procedure implemented to combat “money laundering” (as defined in Article 1
 of Directive 2005/60/EC of the European Parliament and of the Council) and
 comparable United States federal and state laws, including without limitation
 the PATRIOT Act and the Bank Secrecy Act, or comparable United Nations or
 European Union legislation.

 
	
  

 	
  

 
	
 10.24

 	
 Ship. The Ship:

 
	
  

 	
  

 
	
 (a)

 	
 will be as of the Drawdown Date in the sole
 and absolute ownership of the Borrower and duly registered in the
 Borrower’s name under the law of an Approved Flag, unencumbered save and
 except for the Mortgage thereon in favor of the Security Trustee recorded
 against it and as permitted thereby;

 
	
  

 	
  

 
	
 (b)

 	
 is as of the Drawdown Date seaworthy for
 hull and machinery insurance warranty purposes and in every way fit for its
 intended service; and

 
	
  

 	
  

 
	
 (c)

 	
 will be as of the Drawdown Date insured in
 accordance with the provisions of this Agreement and the requirements hereof
 in respect of such insurances will have been complied with.

 
	
  

 	
  

 
	
 10.25

 	
 Place of Business. For purposes of the UCC, each Security Party
 has only one place of business located at, or, if it has more than one place
 of business, the chief executive office from which it manages the main part
 of its business operations and conducts its affairs is located at:

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 9, Boulevard Charles III

 Monaco 98000

 
	
  

 	
  

 
	
  

 	
 None of the
 Security Parties has a place of business in the United States of America, the
 District of Columbia, the United States Virgin Islands, or any territory or
 insular possession 

 

37

	
  

 	
  

 	
  

 
	
  

 	
 subject to
 the jurisdiction of the United States of America, other than its
 representative office at:

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 150 East 58th
 Street

 New York, New York 10155

 
	
  

 	
  

 
	
 10.26

 	
 Solvency. In the case of each of the Borrower and the
 Guarantor:

 
	
  

 	
  

 	
  

 
	
 (a)

 	
 the sum of its assets, at a fair valuation,
 does and will exceed its liabilities, including, to the extent they are
 reportable as such in accordance with IFRS, contingent liabilities;

 
	
  

 	
  

 
	
 (b)

 	
 the present fair market saleable value of
 its assets is not and shall not be less than the amount that will be required
 to pay its probable liability on its then existing debts, including, to the
 extent they are reportable as such in accordance with IFRS, contingent
 liabilities, as they mature;

 
	
  

 	
  

 
	
 (c)

 	
 it does not and will not have unreasonably
 small working capital with which to continue its business; and

 
	
  

 	
  

 
	
 (d)

 	
 it has not incurred, does not intend to
 incur and does not believe it will incur, debts beyond its ability to pay such
 debts as they mature.

 
	
  

 	
  

 
	
 10.27

 	
 Borrower’s
 business. From the date of its incorporation until the date
 hereof, the Borrower has not conducted any business other than in connection
 with, or for the purpose of, owning and operating the Ship. 

 
	
  

 	
  

 
	
 10.28

 	
 Immunity; Enforcement; Submission to Jurisdiction; Choice of Law.

 
	
  

 	
  

 
	
 (a)

 	
 Each Security Party is subject to civil and
 commercial law with respect to its obligations under the Finance Documents,
 and the execution, delivery and performance by each Security Party of the
 Finance Documents to which it is a party constitute private and commercial
 acts rather than public or governmental acts. 

 
	
  

 	
  

 
	
 (b)

 	
 No Security Party or any of its properties
 has any immunity from suit, court jurisdiction, attachment prior to judgment,
 attachment in aid of execution of a judgment, set-off, execution of a
 judgment or from any other legal process in relation to any Finance Document.

 
	
  

 	
  

 
	
 (c)

 	
 It is not necessary under the laws of any
 Security Party’s jurisdiction of incorporation or formation, in order to
 enable any Creditor Party to enforce its rights under any Finance Document or
 by reason of the execution of any Finance Document or the performance by the
 any Security Party of its obligations under any Finance Document, that such
 Creditor Party should be licensed, qualified or otherwise entitled to carry
 on business in such Security Party’s jurisdiction of incorporation or
 formation. 

 
	
  

 	
  

 
	
 (d)

 	
 None of the Creditor Parties will be deemed
 to be resident, domiciled or carrying on business in any Security Party’s
 jurisdiction of incorporation or formation by reason only of the execution,
 performance and/or enforcement of any Finance Document.

 

38

	
  

 	
  

 	
  

 
	
 (e)

 	
 Under the law of each Security Party’s
 jurisdiction of incorporation or formation, the choice of the law of New York
 to govern this Agreement and the other Finance Documents to which New York
 law is applicable is valid and binding.

 
	
  

 	
  

 
	
 (f)

 	
 The submission by the Security Parties to
 the jurisdiction of the courts of the New York State courts and the U.S.
 Federal court sitting in New York County pursuant to Clause 32.2(a) is valid
 and binding and not subject to revocation, and service of process effected in
 the manner set forth in Clause 32.2(d) will be effective to confer personal
 jurisdiction over the Security Parties in such courts.

 
	
  

 	
  

 
	
 10.29

 	
 Status of Secured Liabilities. The Secured Liabilities constitute direct, unconditional and
 general obligations of each Security Party and rank (a) senior to all
 subordinated Financial Indebtedness and (b) not less than paripassu
 (as to priority of payment and as to security) with all other Financial
 Indebtedness of each Security Party.

 
	
  

 	
  

 
	
 11 

 	
 GENERAL AFFIRMATIVE AND NEGATIVE COVENANTS 

 
	
  

 	
  

 
	
 11.1

 	
 Affirmative
 covenants. From the Drawdown Date until the Total Commitments have terminated and all
 amounts payable hereunder have been paid in full each of the Borrower and the
 Guarantor, as the case may be, undertakes with each Creditor Party to comply
 or cause compliance with the following provisions of this Clause 11.1 except
 as the Agent, with the consent of the Majority Lenders, may approve from time
 to time in writing, such approval not to be unreasonably withheld:

 
	
  

 	
  

 
	
 (a)

 	
 Performance of
 obligations. Each
 Security Party shall duly observe and perform its obligations under each
 Charter and each Finance Document to which it is or is to become a party.

 
	
  

 	
  

 
	
 (b)

 	
 Notification of
 defaults (etc). The Borrower shall promptly notify the
 Agent, upon becoming aware of the same, of:

 
	
  

 	
  

 	
  

 
	
  

 	
 (i)

 	
 the occurrence of an Event of Default or of
 any Potential Event of Default or any other event (including any litigation)
 which is reasonably likely to materially adversely affect any Security
 Party’s ability to perform its obligations under each Charter and each
 Finance Document to which it is or is to become a party;

 
	
  

 	
  

 	
  

 
	
  

 	
 (ii)

 	
 any defaultby any party to a Charter; and 

 
	
  

 	
  

 	
  

 
	
  

 	
 (iii)

 	
 any damage or injury caused by or to the
 Ship in excess of $5,000,000.

 
	
  

 	
  

 
	
 (c)

 	
 Confirmation of no default. The Borrower will, within two (2) Business
 Days after service by the Agent of a written request, serve on the Agent a
 notice which is signed by an officer of the Borrower and which states that:

 
	
  

 	
  

 	
  

 
	
  

 	
 (i)

 	
 no Event of Default or Potential Event of
 Default has occurred; or

 
	
  

 	
  

 	
  

 
	
  

 	
 (ii)

 	
 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 11.1(c) from time to time but only if asked

 

39

	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
 to do so by a Lender or Lenders having
 Contributions exceeding 33% of the Loan or (if no Advances have been made)
 Commitments exceeding 33% of the Total Commitments, and this Clause 11.1(c)
 does not affect the Borrower’s obligations under Clause 11.1(b).

 
	
  

 	
  

 	
  

 
	
 (d)

 	
 Notification of litigation. The Borrower will provide the Agent with
 details of any legal or administrative action involving the Borrower, any
 other Security Party, the Approved Manager or the Ship, the Earnings or the
 Insurances as soon as such action is instituted, unless it is likely that the
 legal or administrative action cannot be considered material in the context
 of any Finance Document.

 
	
  

 	
  

 	
  

 
	
 (e)

 	
 Provision of further information. The Borrower will, as soon as practicable
 after receiving the request, provide the Agent with any additional financial
 or other information relating to:

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (i)

 	
 the Borrower or the Guarantor or any of
 their respective subsidiaries; or

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (ii)

 	
 any other matter relevant to, or to any
 provision of, a Finance Document,

 
	
  

 	
  

 	
  

 
	
  

 	
 which may be requested by the Agent.

 
	
  

 	
  

 	
  

 
	
 (f)

 	
 Books of record and
 account. Each of the Borrower and the Guarantor shall keep proper books of record and
 account, in which full and materially correct entries shall be made of all
 financial transactions and the assets and business of each of the Borrower
 and the Guarantor in accordance with IFRS, and the Agent shall have the right to examine the books and records of
 each of the Borrower and the Guarantor wherever the same may be kept from time to time as it sees fit, in its
 sole reasonable discretion, or to cause an examination to be made by a firm
 of accountants selected by it, provided
 that any examination shall be done without undue interference with
 the day to day business of the Borrower or the Guarantor, as the case may be.

 
	
  

 	
  

 	
  

 
	
 (g)

 	
 Financial reports.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (i)

 	
 The Borrower shall prepare and deliver to
 the Agent:

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (A)

 	
 as soon as practicable, but not later than
 120 days after the end of each Fiscal Year to which they relate, financial
 statements in respect of such Fiscal Year, all in reasonable detail and
 prepared in accordance with IFRS, certified as having been audited by an
 Acceptable Accounting Firm;

 
	
  

 	
  

 	
 (B)

 	
 within 60 days after the end of each of the
 second and fourth quarter of each Fiscal Year, a Compliance Certificate; and

 
	
  

 	
  

 	
 (C)

 	
 such other financial statements (including
 without limitation details of all off-balance sheet and time charter hire
 commitments), annual budgets and projections as may be reasonably requested
 by the Agent, each to be in such form as the Agent may reasonably request.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (ii)

 	
 Whether or not the Guarantor is then
 subject to Sections 13(a) or 15(d) of the Exchange Act, the Guarantor will
 furnish to the Agent: 

 

40

	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (A)

 	
 within 60 days after the end of each of the
 first three fiscal quarters in each Fiscal Year, quarterly reports on Form
 6-K (or any successor form) containing unaudited financial statements
 (including a balance sheet and statement of income, changes in stockholders’
 equity and cash flow) for and as of the end of such fiscal quarter (with
 comparable financial statements for the corresponding fiscal quarter of the
 immediately preceding Fiscal Year);

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (B)

 	
 within 60 days after the end of each of the
 second and fourth quarter of each Fiscal Year, an unaudited balance sheet and
 profit and loss statement, together with a Compliance Certificate;

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (C)

 	
 within 120 days after the end of each
 Fiscal Year, an annual report on Form 20-F (or any successor form) containing
 the audited financial and other information required to be contained therein
 for such Fiscal Year; 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (D)

 	
 at or prior to such times as would be
 required to be filed or furnished to the SEC if the Guarantor were then a
 “foreign private issuer” subject to Sections 13(a) or 15(d) of the Exchange
 Act, all such other reports and information that the Guarantor would have
 been required pursuant thereto; and

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (E)

 	
 such other financial statements (including
 without limitation details of all off-balance sheet and time charter hire
 commitments), annual budgets and projections as may be reasonably requested
 by the Agent, each to be in such form as the Agent may reasonably request,

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 provided that to
the extent that the Guarantor ceases to qualify as a “foreign private issuer”
within the meaning of the Exchange Act, whether or not the Guarantor is then
subject to Sections 13(a) or 15(d) of the Exchange Act, the Guarantor will
furnish to the Agent all reports and other information that it would be
required to file with (or furnish to) the Commission pursuant Sections 13(a)
or 15(d) of the Exchange Act if it were required to file such documents under
the Exchange Act as follows: 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (1)

 	
 if the Guarantor is then subject to
 Sections 13(a) or 15(d) of the Exchange Act, within 30 days of the respective
 dates on which the Guarantor is required to file such documents pursuant to
 the Exchange Act; or 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (2)

 	
 if the Guarantor is not then subject to
 Sections 13(a) or 15(d) under the Exchange Act, the applicable time periods
 described above with respect to quarterly, annual and other reports and
 information.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 Notwithstanding the foregoing, the
 Guarantor will be deemed to have furnished to the Agent such reports and
 information referred to above if the Guarantor has filed such reports and
 information with the Commission via the EDGAR system (or any successor
 system) and such reports and information are publicly available.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 (h)

 	
 Appraisals of Fair Market Value. The Borrower shall
 procure and deliver to the Agent two
 written appraisal reports setting forth
 the Fair Market Value of the Ship as follows:

 

41

	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (i)

 	
 at the Borrower’s expense, for inclusion
 with each Compliance Certificate required to be delivered together with the
 second quarterly and annual financial statements that the Guarantor delivers
 under Clause 11.1(g)(ii)(B); and

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (ii)

 	
 at the Lenders’ expense, at all other times
 upon the request of the Agent or the Majority Lenders, unless an Event of
 Default or Potential Event of Default has occurred and is continuing, in
 which case the Borrower shall procure it at its expense as often as
 requested.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 provided that if there is a difference of or in
 excess of 10% between thetwo valuations obtained by the Borrower, the
 Borrower may, at its sole expense, obtain a third appraisal from an Approved
 Broker.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 (i)

 	
 Taxes. Each Security Party shall prepare and timely
 file all tax returns required to be filed by it and pay and discharge all
 taxes imposed upon it or in respect of any of its property and assets before
 the same shall become in default, as well as all lawful claims (including,
 without limitation, claims for labor, materials and supplies) which, if
 unpaid, might become a Security Interest upon the Collateral or any part
 thereof, except in each case, for any such taxes (i) as are being contested
 in good faith by appropriate proceedings or (ii) the failure of which to pay
 or discharge would not be likely to have a material adverse effect on the
 business, assets or financial condition of the Borrower or any other Security
 Party or to affect the legality, validity, binding effect or enforce ability
 of the Finance Documents.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 (j)

 	
 Consents. Each Security Party shall obtain or cause to
 be obtained, maintain in full force and effect and comply with the conditions
 and restrictions (if any) imposed in connection with, every consent and do
 all other acts and things which may from time to time be necessary or
 required for the continued due performance of all of its obligations under
 any Charter and each Finance Document to which it is or is to become a party,
 and shall deliver a copy of all such consents to the Agent promptly upon its
 request.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 (k)

 	
 Compliance with
 applicable law. Each
 Security Party shall comply in all material respects with all applicable
 federal, state, local and foreign laws, ordinances, rules, orders and
 regulations now in force or hereafter enacted, including, without limitation,
 all Environmental Laws and regulations relating thereto, the failure to
 comply with which would be likely to have a material adverse effect on the
 financial condition of such Security Party or affect the legality, validity,
 binding effect or enforce ability of any Charter and each Finance Document to
 which it is or is to become a party.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 (l)

 	
 Existence. Each Security Party shall do or cause to be
 done all things necessary to preserve and keep in full force and effect its
 existence in good standing under the laws of its jurisdiction of
 incorporation or formation.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 (m)

 	
 Borrower’s
 business. The Borrower shall conduct business only in
 connection with, or for the purpose of, owning and operating the Ship. 

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 (n)

 	
 Properties. Except to the extent the failure to do so
 could not reasonably be expected to have a material adverse effect on the
 business, assets or financial condition of a Security Party or affect the
 legality, validity, binding effect or enforce ability of the Finance
 Documents, each Security Party shall maintain and preserve all of its
 properties that are used 

 

42

	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 or useful in the conduct of its business in
 good working order and condition, ordinary wear and tear excepted.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 (o)

 	
 Loan proceeds. The Borrower shall use the proceeds of the
 Advance solely to partially refinance the acquisition of the Ship.

 
	
  

 	
  

 	
  

 
	
 (p)

 	
 Change of place of
 business. The
 Borrower shall notify promptly the Agent
 of any change in the location of the place of business where it or any other
 Security Party conducts its affairs and keeps its records.

 
	
  

 	
  

 	
  

 
	
 (q)

 	
 Pollution liability. Each Security Party shall take, or
 cause to be taken, such actions as may be reasonably required to mitigate
 potential liability to it arising out of pollution incidents or as may be
 reasonably required to protect the interests of the Creditor Parties with
 respect thereto.

 
	
  

 	
  

 	
  

 
	
 (r)

 	
 Subordination of loans. Each Security Party shall cause all loans made to it by any Affiliate, parent or
 subsidiary and all sums and other obligations (financial or otherwise) owed
 by it to any Affiliate, parent or subsidiary to be fully subordinated to all
 Secured Liabilities.

 
	
  

 	
  

 	
  

 
	
 (s)

 	
 OFAC; Money
 laundering; CISADA. The Borrower shall to the best of its knowledge and ability:

 
	
  

 	
  

 	
  

 
	
  

 	
 (i)

 	
 ensure that no person who owns a
 controlling interest in or otherwise controls the Borrower or any parent or
 subsidiary thereof is or shall be listed on the Specially Designated
 Nationals and Blocked Person List or other similar lists maintained by OFAC
 or included in any Executive Orders;

 
	
  

 	
  

 	
  

 
	
  

 	
 (ii)

 	
 comply, and cause each of its subsidiaries
 to comply, with any applicable law, official requirement or other regulatory
 measure or procedure implemented to combat “money laundering” (as defined in
 Article 1 of Directive 2005/60/EC of the European Parliament and of the
 Council) and comparable United States federal and state laws, including
 without limitation the PATRIOT Act and the Bank Secrecy Act, or comparable
 United Nations or European Union legislation.

 
	
  

 	
  

 	
  

 
	
  

 	
 (iii)

 	
 not use or permit the use of the proceeds
 of the Advance to violate any of the foreign asset control regulations of OFAC
 or any enabling statute or Executive Order relating thereto or CISADA or
 comparable United Nations or European Union legislation.

 
	
  

 	
  

 	
  

 
	
 (t)

 	
 Intentionally omitted.

 
	
  

 	
  

 	
  

 
	
 (u)

 	
 Information provided to be accurate. All financial and other information which is
 provided in writing by or on behalf of any Security Party under or in
 connection with any Finance Document will be true and not misleading and will
 not omit any material fact or consideration.

 
	
  

 	
  

 	
  

 
	
 (v)

 	
 Shareholder and creditor notices. Each of the Borrower and the Guarantor will
 send the Agent, at the same time as they are dispatched, copies of all
 communications which are dispatched to their (i) shareholders or any class of
 them or (ii) their creditors generally.

 
	
  

 	
  

 	
  

 
	
 (w)

 	
 Maintenance of Security Interests. Each of the Borrower and the Guarantor will:

 
							

43

	
  

 	
  

 	
  

 
	
  

 	
 (i)

 	
 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

 
	
  

 	
  

 	
  

 
	
  

 	
 (ii)

 	
 without limiting the generality of paragraph
 (i), at its own cost, promptly register, file, record or enroll 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.

 
	
  

 	
  

 	
  

 
	
 (x)

 	
  “Know your customer” checks. If:

 
	
  

 	
  

 	
  

 
	
  

 	
 (iii)

 	
 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;

 
	
  

 	
  

 	
  

 
	
  

 	
 (iv)

 	
 any change in the status of the Borrower or
 any other Security Party after the date of this Agreement; or

 
	
  

 	
  

 	
  

 
	
  

 	
 (v)

 	
 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 (iii), 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
 (iii), 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 (iii),
 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.

 
	
  

 	
  

 	
  

 
	
 (y)

 	
 Copies of Charters; Charter Assignment; Earnings Assignment. Provided that all
 approvals necessary under Clause 14.13 have been previously obtained, the
 Borrower shall:

 
	
  

 	
  

 	
  

 
	
  

 	
 (i)

 	
 furnish
 promptly to the Agent a true and complete copy of any Charter for the Ship, all
 other documents related thereto and a true and complete copy of each material
 amendment or other modification thereof; 

 
	
  

 	
  

 	
  

 
	
  

 	
 (ii)

 	
 in respect of any such Charter, execute and deliver to the Agent a
 Charter Assignment and use reasonable commercial efforts to cause the
 charterer to execute and deliver to the Security Trustee a consent and
 acknowledgement to such Charter Assignment in the form required thereby; and

 
	
  

 	
  

 	
  

 
	
  

 	
 (iii)

 	
 in respect of any contract for the employment of the Ship for a term which is or which

 

44

	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 by virtue of any optional extensions
 therein contained would be reasonably likely to be of less than 12 months
 duration, execute and deliver to
 the Agent an Earnings Assignment and use reasonable commercial efforts to
 cause the charterer to execute and deliver to the Security Trustee a consent
 and acknowledgement to such Earnings Assignment in the form required thereby
 (if any).

 
	
  

 	
  

 	
  

 	
  

 
	
 (z)

 	
 Further assurances. From time to time, at its expense, each of
 the Borrower and the Guarantor shall duly execute and deliver to the Agent
 such further documents and assurances as the Majority Lenders or the Agent
 may request to effectuate the purposes of this Agreement, the other Finance
 Documents or obtain the full benefit of any of the Collateral.

 
	
  

 	
  

 	
  

 	
  

 
	
 11.2

 	
 Negative covenants. From the Drawdown Date until the Total
 Commitments have terminated and all amounts payable hereunder have been paid
 in full each of the Borrower and the Guarantor, as the case may be,
 undertakes with each Creditor Party to comply or cause compliance with the
 following provisions of this Clause 11.2 except as the Agent, with the
 consent of the Majority Lenders, may approve from time to time in writing,
 such approval not to be unreasonably withheld:

 
	
  

 	
  

 	
  

 	
  

 
	
 (a)

 	
 Security Interests. The Borrower will not create, assume or permit to exist any Security
 Interest whatsoever upon any of its properties or assets, whether now owned
 or hereafter acquired, except for Permitted Security Interests.

 
	
  

 	
  

 	
  

 	
  

 
	
 (b)

 	
 Sale of assets; merger. Each Security Party shall not sell, transfer
 or lease (other than in connection with a Charter) all or substantially all
 of its properties and assets, or enter into any transaction of merger or
 consolidation or liquidate, windup or dissolve itself (or suffer any
 liquidation or dissolution), provided that the Borrower may sell the
 Ship pursuant to the terms of this Agreement.

 
	
  

 	
  

 	
  

 	
  

 
	
 (c)

 	
 Affiliate transactions. No Security Party will enter into any
 transaction or series of related transactions, whether or not in the ordinary
 course of business, with any Affiliate, parent or subsidiary, other than on
 terms and conditions substantially as favorable to such person as would be
 obtainable by such person at the time in a comparable arm’s-length
 transaction with a person other than an Affiliate, parent or subsidiary. 

 
	
  

 	
  

 	
  

 	
  

 
	
 (d)

 	
 Change of business. The Borrower will not change the nature of its business or commence
 any business other than in connection with, or for the purpose of, operating
 the Ship. The Guarantor will not change the nature of its business or
 commence any business other than in connection with, or for the purpose of, owning, managing, chartering and operating
 vessels.

 
	
  

 	
  

 	
  

 	
  

 
	
 (e)

 	
 Change of Control; Negative pledge. Each of the Borrower and the Guarantor will
 not permit any act, event or circumstance that would result in a Change of
 Control, and the Borrower will not permit any pledge or assignment of its
 Equity Interests except in favor of the Security Trustee to secure the
 Secured Liabilities.

 
	
  

 	
  

 	
  

 	
  

 
	
 (f)

 	
 Increases in capital. The Borrower will not increase its capital by way of the issuance of
 any class or series of Equity Interests or create any new class of Equity
 Interests that is not subject to a Security Interest to secure the Secured
 Liabilities. 

 

45

	
  

 	
  

 	
  

 	
  

 
	
 (g)

 	
 Financial Indebtedness. The Borrower will not incur any Financial
 Indebtedness other than the Loan.

 
	
  

 	
  

 	
  

 	
  

 
	
 (h)

 	
 Dividends. So long as an Event of Default has occurred and is continuing, or if
 an Event of Default would result therefrom, or if the Guarantor is not in
 compliance with any of Clauses 12.2 through and including 12.5, each of the
 Borrower and the Guarantor shall not declare or pay any dividends or return
 any capital to its equity holders or authorize or make any other
 distribution, payment or delivery of property or cash to its equity holders,
 or redeem, retire, purchase or otherwise acquire, directly or indirectly, for
 value, any interest of any class or series of its Equity Interests (or
 acquire any rights, options or warrants relating thereto but not including convertible
 debt) now or hereafter outstanding, or repay any subordinated loans to equity
 holders or set aside any funds for any of the foregoing purposes. 

 
	
  

 	
  

 	
  

 	
  

 
	
 (i)

 	
 No amendment to Charter. The Borrower will not agree to any material
 amendment or supplement to, or waive or fail to enforce, a Charter or any of
 its material provisions.

 
	
  

 	
  

 	
  

 	
  

 
	
 (j)

 	
 No employees; VAT group; Ordinary course of business.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (i)

 	
 The Borrower shall not have any employees
 other than the master, the officers and the crew of the Ship.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (ii)

 	
 The Borrower shall not be or become a
 member of any VAT (value added tax) group.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (iii)

 	
 The Borrower shall not enter into any
 transaction or series of related transactions other than in the ordinary
 course of business.

 
	
  

 	
  

 	
  

 	
  

 
	
 (k)

 	
 Loans and investments. The Borrower shall not make any loan or
 advance to, make any investment in, or enter into any working capital
 maintenance or similar agreement with respect to any person, whether by
 acquisition of Equity Interests or indebtedness, by loan, guarantee or
 otherwise.

 
	
  

 	
  

 	
  

 	
  

 
	
 (l)

 	
 Acquisition of capital assets. The Borrower shall not acquire any capital
 assets (including any vessel other than the Ship) by purchase, charter or
 otherwise, provided that for the avoidance of doubt nothing in this Clause
 11.2(l) shall prevent or be deemed to prevent capital improvements being made
 to the Ship.

 
	
  

 	
  

 	
  

 	
  

 
	
 (m)

 	
 Sale and leaseback. The Borrower shall not enter into any arrangements, directly or
 indirectly, with any person whereby it shall sell or transfer any of its
 property, whether real or personal, whether now owned or hereafter acquired,
 if it, at the time of such sale or disposition, intends to lease or otherwise
 acquire the right to use or possess (except by purchase) such property or
 like property for a substantially similar purpose.

 
	
  

 	
  

 	
  

 	
  

 
	
 (n)

 	
 Changes to Fiscal Year and accounting policies. Each of the Borrower and the Guarantor shall
 not change its Fiscal Year or make or permit any change in accounting
 policies affecting (i) the presentation of financial statements or (ii)
 reporting practices, except in either case in accordance with IFRS or
 pursuant to the requirements of applicable laws or regulations.

 

46

	
  

 	
  

 	
  

 	
  

 
	
 (o)

 	
 Jurisdiction of incorporation or formation; Amendment of
 constitutional documents. No Security Party shall change the jurisdiction of its incorporation
 or formation or materially amend its constitutional documents.

 
	
  

 	
  

 	
  

 	
  

 
	
 (p)

 	
 Sale of Ship. The Borrower will not consummate the sale of the Ship without paying or
 causing to be paid all amounts due and owing under this Agreement and the
 other Finance Documents prior to or simultaneously with the consummation of
 such sale.

 
	
  

 	
  

 	
  

 	
  

 
	
 (q)

 	
 Change of location. No Security Party shall change the location of its chief executive
 office or the office where its corporate records are kept or open any new
 office for the conduct of its business on less than thirty (30) days prior
 written notice to the Agent.

 
	
  

 	
  

 	
  

 	
  

 
	
 (r)

 	
 Money laundering. Each of the Borrower and the Guarantor shall not contravene any law,
 official requirement or other regulatory measure or procedure implemented to
 combat “money laundering” (as defined in Article 1 of Directive 2005/60/EC of
 the European Parliament and of the Council and comparable United States
 federal and state laws, including without limitation the Bank Secrecy Act and
 the PATRIOT Act.

 
	
  

 	
  

 	
  

 	
  

 
	
 12

 	
 FINANCIAL COVENANTS

 
	
  

 	
  

 	
  

 	
  

 
	
 12.1

 	
 General.
 From the Drawdown Date until the Total Commitments have terminated and all
 amounts payable hereunder have been paid in full the Guarantor undertakes
 with each Creditor Party to comply or cause compliance with the following
 provisions of this Clause 12 except as the Agent, with the consent of the
 Majority Lenders, may approve from time to time in writing, such approval not
 to be unreasonably withheld.

 
	
  

 	
  

 	
  

 	
  

 
	
 12.2

 	
 Maximum leverage. The Guarantor shall maintain a ratio of Consolidated Funded Debt to
 Consolidated Total Capitalization of not more than 0.60 to 1.00, to be tested
 on the last day of each fiscal quarter.

 
	
  

 	
  

 	
  

 	
  

 
	
 12.3

 	
 Minimum tangible net worth. The Guarantor shall maintain a Consolidated
 Tangible Net Worth of not less than $150,000,000 plus 25% of the Guarantor’s
 cumulative, positive consolidated net income for each fiscal quarter
 commencing on or after the date of this Agreement.

 
	
  

 	
  

 	
  

 	
  

 
	
 12.4

 	
 Minimum interest coverage. Commencing with the third fiscal quarter of
 2011, the Guarantor shall maintain a ratio of Consolidated EBITDA to
 Consolidated Net Interest Expense of not less than 2.50 to 1.00. Such ratio
 shall be calculated quarterly on a trailing quarter basis from and including
 the second fiscal quarter of 2012, provided that for the third fiscal
 quarter of 2012 and all periods thereafter such ratio shall be calculated on
 a trailing four quarter basis.

 
	
  

 	
  

 	
  

 	
  

 
	
 12.5

 	
 Free liquidity. The Guarantor shall maintain Consolidated Liquidity, including all
 amounts on deposit with any bank, of not less than the greater of (a)
 $500,000 per vessel and (b) $10,000,000. 

 
	
  

 	
  

 	
  

 	
  

 
	
 13

 	
 MARINE INSURANCE
 COVENANTS

 
	
  

 	
  

 	
  

 	
  

 
	
 13.1

 	
 General. From
 the Drawdown Date until the Total Commitments have terminated and all amounts
 payable hereunder have been paid in full, the Borrower undertakes with each

 

47

	
  

 	
  

 	
  

 
	
  

 	
 Creditor Party to comply or cause
 compliance with the following provisions of this Clause 13 except as the
 Agent, with the consent of the Majority Lenders, may approve from time to
 time in writing, such approval not to be unreasonably withheld.

 
	
  

 	
  

 	
  

 
	
 13.2

 	
 Maintenance of obligatory insurances. The Borrower shall keep the Ship insured at
 its expense against:

 
	
  

 	
  

 	
  

 
	
 (a)

 	
 fire and usual marine risks (including hull
 and machinery and excess risks);

 
	
  

 	
  

 	
  

 
	
 (b)

 	
 war risks (including without limitation
 London blocking and trapping addendum);

 
	
  

 	
  

 	
  

 
	
 (c)

 	
 protection and indemnity risks (including
 FD&D coverage for all periods that the Ship operates on a time charter); 

 
	
  

 	
  

 	
  

 
	
 (d)

 	
 any other risks against which the Security
 Trustee considers, having regard to practices and other circumstances
 prevailing at the relevant time, it would in the opinion of the Security
 Trustee be reasonable for the Borrower to insure and which are specified by
 the Security Trustee by notice to the Borrower.

 
	
  

 	
  

 	
  

 
	
 13.3

 	
 Terms of obligatory insurances. The Borrower shall effect such insurances in
 respect of the Ship:

 
	
  

 	
  

 	
  

 
	
 (a)

 	
 in Dollars;

 
	
  

 	
  

 	
  

 
	
 (b)

 	
 in the case of fire and usual marine risks
 and war risks, in an amount on an agreed value basis at least the greater of:
 

 
	
  

 	
  

 	
  

 
	
  

 	
 (i)

 	
 120% of the Loan; and 

 
	
  

 	
  

 	
  

 
	
  

 	
 (ii)

 	
 the Fair Market Value of the Ship;

 
	
  

 	
  

 	
  

 
	
  

 	
 provided that not less than 80% of the insured value established pursuant to (i) or
 (ii) above shall be on a hull and machinery basis.

 
	
  

 	
  

 	
  

 
	
 (c)

 	
 in the case of oil pollution liability
 risks, for an aggregate amount equal to the highest level of cover from time
 to time available under basic protection and indemnity club entry and in the
 international marine insurance market;

 
	
  

 	
  

 	
  

 
	
 (d)

 	
 in relation to protection and indemnity
 risks in respect of the full tonnage of the Ship;

 
	
  

 	
  

 	
  

 
	
 (e)

 	
 on approved terms; and

 
	
  

 	
  

 	
  

 
	
 (f)

 	
 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 that are members of the International Group of
 P&I Clubs.

 
	
  

 	
  

 	
  

 
	
 13.4

 	
 Further protections for the Creditor Parties. In addition to the terms set out in Clause
 13.3, the Borrower shall procure that the obligatory insurances effected by
 it shall:

 

48

	
  

 	
  

 	
  

 	
  

 
	
 (a)

 	
 subject always to paragraph (b), name the
 Borrower as the sole named assured unless the interest of every other named
 assured is limited:

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (i)

 	
 in respect of any obligatory insurances for
 hull and machinery and war risks;

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (A)

 	
 to any provable out-of-pocket expenses that
 it has incurred and which form part of any recoverable claim on underwriters;
 and 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (B)

 	
 to any third party liability claims where
 cover for such claims is provided by the policy (and then only in respect of discharge
 of any claims made against it); and 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (ii)

 	
 in respect of any obligatory insurances for
 protection and indemnity risks, to any recoveries it is entitled to make by
 way of reimbursement following discharge of any third party liability claims made
 specifically against it;

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 and every other named assured has
 undertaken in writing to the Security Trustee (in such form as it requires)
 that any deductible shall be apportioned between the Borrower and every other
 named assured in proportion to the aggregate claims made or paid by each of
 them and that it 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;

 
	
  

 	
  

 	
  

 	
  

 
	
 (b)

 	
 whenever the Security Trustee requires,
 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 against the Lenders, 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)

 	
 name the Security Trustee as loss payee
 with such directions for payment as the Security Trustee may specify;

 
	
  

 	
  

 	
  

 	
  

 
	
 (d)

 	
 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;

 
	
  

 	
  

 	
  

 	
  

 
	
 (e)

 	
 provide that such obligatory insurances
 shall be primary without right of contribution from other insurances which
 may be carried by the Security Trustee or any other Creditor Party; and

 
	
  

 	
  

 	
  

 	
  

 
	
 (f)

 	
 provide that the Security Trustee may make
 proof of loss if the Borrower fails to do so.

 
	
  

 	
  

 	
  

 	
  

 
	
 13.5

 	
 Renewal of obligatory insurances. The Borrower shall:

 
	
  

 	
  

 	
  

 	
  

 
	
 (a)

 	
 at least 14 days before the expiry of any
 obligatory insurance:

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (i)

 	
 notify the Security Trustee of the brokers
 (or other insurers) 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 of renewal; and

 

49

	
  

 	
  

 	
  

 
	
  

 	
 (ii)

 	
 obtain 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 ensure that all approved
 brokers provide the Security Trustee with pro forma copies of all policies
 relating to the obligatory insurances which they are to effect or renew and
 of a letter or letters or 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 in
 accordance with the Insurance Assignment; 

 
	
  

 	
  

 	
  

 
	
 (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
 or if they cease to act as brokers;

 
	
  

 	
  

 	
  

 
	
 (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
 relevant Security Party 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. The Borrower shall 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; 

 
	
  

 	
  

 	
  

 
	
 (c)

 	
 where required to be issued under the terms
 of insurance/indemnity provided by the protection and indemnity association,
 but only if and when so requested by the Agent, a certified copy of each
 United States of America voyage quarterly declaration (or other similar
 document or documents) made by the Borrower in relation to the Ship in accordance
 with the requirements of such protection and indemnity association; and 

 

50

	
  

 	
  

 
	
 (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 in relation to the Ship.

 
	
  

 	
  

 
	
 13.8

 	
 Deposit of original
 policies. The
 Borrower shall ensure that all policies relating to obligatory insurances 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 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

 	
 Compliance with
 terms of insurances. The Borrower shall neither do nor 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:

 
	
  

 	
  

 
	
 (a)

 	
 the Borrower shall 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)

 	
 the Borrower shall not make any changes relating to the
 classification or classification society or manager or operator of the Ship
 unless approved by the underwriters of the obligatory insurances;

 
	
  

 	
  

 
	
 (c)

 	
 the Borrower shall 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

 
	
  

 	
  

 
	
 (d)

 	
 the Borrower shall 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 insurers and complying
 with any requirements (as to extra premium or otherwise) which the insurers
 specify.

 
	
  

 	
  

 
	
 13.12

 	
 Alteration to terms
 of insurances.
 The Borrower shall neither make or agree to any alteration to the terms of
 any obligatory insurance nor waive any right relating to any obligatory
 insurance. 

 
	
  

 	
  

 
	
 13.13

 	
 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 

 

51

	
  

 	
  

 	
  

 
	
  

 	
 Trustee to collect or recover any moneys
 which at any time become payable in respect of the obligatory insurances.

 
	
  

 	
  

 	
  

 
	
 13.14

 	
 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 such Security Party 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.

 
	
  

 	
  

 	
  

 
	
 13.15

 	
 Provision of information. In addition, the Borrower shall promptly
 (and in no event less than five (5) days prior to the Drawdown Date) 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 13.16 or dealing with or considering
 any matters relating to any such insurances; 

 
	
  

 	
  

 	
  

 
	
  

 	
 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).

 
	
  

 	
  

 	
  

 
	
 13.16

 	
 Mortgagee’s interest, additional perils and political risk
 insurances.
 The Security Trustee shall be entitled from time to time to effect, maintain
 and renew a mortgagee’s interest additional perils insurance, a mortgagee’s
 political risks insurance and a mortgagee’s interest marine insurance in such
 amounts (not to exceed 120% of the Loan), on such terms, through such
 insurers and generally in such manner as the Security Trustee may from time
 to time consider appropriate 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.

 
	
  

 	
  

 	
  

 
	
 13.17

 	
 Review of insurance requirements. The Security Trustee may and, on instruction
 of the Majority Lenders, shall review, at the expense of the Borrower, 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 or the Majority Lenders 

 

52

	
  

 	
  

 
	
  

 	
 significant and capable of affecting the
 Borrower or the Ship and its insurance (including, without limitation,
 changes in the availability or the cost of insurance coverage or the risks to
 which the Borrower may be subject.)

 
	
  

 	
  

 
	
 13.18

 	
 Modification of insurance requirements. The Security Trustee shall notify the
 Borrower of any proposed modification under Clause 13.17 to the requirements
 of this Clause 13 which the Security Trustee may or, on instruction of the
 Majority Lenders, shall reasonably consider appropriate in the circumstances
 and such modification shall take effect on and from the date it is notified
 in writing to the Borrower as an amendment to this Clause 13 and shall bind
 the Borrower accordingly.

 
	
  

 	
  

 
	
 13.19

 	
 Compliance with 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 13.18.

 
	
  

 	
  

 
	
 14

 	
 SHIP COVENANTS

 
	
  

 	
  

 
	
 14.1

 	
 General. From the Drawdown Date until the Total Commitments have terminated and
 all amounts payable hereunder have been paid in full, the Borrower undertakes
 with each Creditor Party to comply or cause compliance with the following
 provisions of this Clause 14 except as the Agent, with the consent of the
 Majority Lenders, may approve from time to time in writing, such approval not
 to be unreasonably withheld.

 
	
  

 	
  

 
	
 14.2

 	
 Ship’s name and registration. The Borrower shall:

 
	
  

 	
  

 
	
 (a)

 	
 keep the Ship registered in its name under
 the law of an Approved Flag; 

 
	
  

 	
  

 
	
 (b)

 	
 not do, omit to do or allow to be done
 anything as a result of which such registration might be cancelled or
 imperiled; and

 
	
  

 	
  

 
	
 (c)

 	
 not change the name or port of registry on
 which the Ship was registered when it became subject to a Mortgage.

 
	
  

 	
  

 
	
 14.3

 	
 Repair and classification. The Borrower shall keep the Ship in a good
 and safe condition and state of repair:

 
	
  

 	
  

 
	
 (a)

 	
 consistent with first-class ship ownership
 and management practice;

 
	
  

 	
  

 
	
 (b)

 	
 so as to maintain the highest class for the
 Ship with the Classification Society, free of any material or overdue
 recommendations and conditions affecting the Ship’s class; and

 
	
  

 	
  

 
	
 (c)

 	
 so as to comply with all laws and
 regulations applicable to vessels registered under the law of the Approved
 Flag on which the Ship is registered 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,

 

53

	
  

 	
  

 	
  

 
	
  

 	
 and the Borrower shall notify the Creditor
 Parties of the class and the Classification Society not less than five (5)
 days prior to the Drawdown Date.

 
	
  

 	
  

 	
  

 
	
 14.4

 	
 Classification Society instructions. The Borrower shall instruct the
 Classification Society referred to in Clause 14.3(b):

 
	
  

 	
  

 	
  

 
	
 (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 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 Borrower and the Ship either (i) electronically
 (through the Classification Society directly or by way of indirect access via
 the Borrower’s account manager and designating the Security Trustee as a user
 or administrator of the system under its account) or (ii) in person at the
 offices of the Classification Society, and to take copies of them
 electronically or otherwise;

 
	
  

 	
  

 	
  

 
	
 (c)

 	
 to notify the Security Trustee immediately
 in writing if the Classification Society:

 
	
  

 	
  

 	
  

 
	
  

 	
 (i)

 	
 receives notification from the Borrower or
 any other 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 condition of class or a recommendation,
 or 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;

 
	
  

 	
  

 	
  

 
	
 (d)

 	
 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 of such default, 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 the Ship which would or is
 reasonably likely to 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 owned by it from the
 Ship, or any item of equipment owned by it 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 favor of any
 person other than the Security Trustee and becomes on installation on the
 Ship, the property of that Security Party and subject to the security
 constituted by the 

 

54

	
  

 	
  

 
	
  

 	
 Mortgage, provided that the Borrower
 may install and remove 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, at its sole expense, 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, at
 the Borrower’s expense, 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 at the cost of the Borrower) to
 board the Ship up to once per year to inspect its condition or to satisfy
 themselves about proposed or executed repairs and shall afford all proper
 facilities for such inspections. The Security Trustee shall use reasonable
 endeavors to ensure that the operation of the Ship is not adversely affected
 as a result of such inspections.

 
	
  

 	
  

 
	
 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 accounts payable 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 Shipnor 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 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;

 

55

	
  

 	
  

 
	
 (b)

 	
 the Earnings and payments and amounts due
 to the Ship’s master and crew; 

 
	
  

 	
  

 
	
 (c)

 	
 any expenses incurred, or likely to be
 incurred, in connection with the operation, maintenance or repair of the Ship
 and any payments made in respect of the Ship;

 
	
  

 	
  

 
	
 (d)

 	
 any towages and salvages; 

 
	
  

 	
  

 
	
 (e)

 	
 the Borrower’s, the Approved Manager’s or
 the Ship’s compliance with the ISM Code and the ISPS Code; and

 
	
  

 	
  

 
	
 (f)

 	
 the latest technical reports on the Ship
 from the Approved Manager,

 
	
  

 	
  

 
	
  

 	
 and, upon the Security Trustee’s request,
 provide copies of any current charter and charter guarantee relating to the
 Ship, and copies of the Borrower’s or the Approved Manager’s Document of
 Compliance.

 
	
  

 	
  

 
	
 14.12

 	
 Notification of certain events. The Borrower shall immediately notify the
 Security Trustee by fax or email, confirmed forthwith by letter, of:

 
	
  

 	
  

 
	
 (a)

 	
 any casualty which is or is likely to be or
 to become a Major Casualty;

 
	
  

 	
  

 
	
 (b)

 	
 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;

 
	
  

 	
  

 
	
 (c)

 	
 any requirement or condition made by any
 insurer or classification society or by any competent authority which is not
 immediately complied with;

 
	
  

 	
  

 
	
 (d)

 	
 any arrest or detention of the Ship, any
 exercise or purported exercise of any Security Interest on the Ship or the
 Earnings or any requisition of the Ship for hire;

 
	
  

 	
  

 
	
 (e)

 	
 any intended dry docking of the Ship;

 
	
  

 	
  

 
	
 (f)

 	
 any Environmental Claim made against the
 Borrower or in connection with the Ship, or any Environmental Incident;

 
	
  

 	
  

 
	
 (g)

 	
 any claim for breach of the ISM Code or the
 ISPS Code being made against the Borrower, the Approved Manager or otherwise
 in connection with the Ship; or

 
	
  

 	
  

 
	
 (h)

 	
 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 Manager’s 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:

 
	
  

 	
  

 
	
 (a)

 	
 let the Ship on demise charter for any
 period;

 

56

	
  

 	
  

 
	
 (b)

 	
 enter into any charter in relation to the
 Ship under which more than two (2) months’ hire (or the equivalent) is
 payable in advance;

 
	
  

 	
  

 
	
 (c)

 	
 charter the Ship otherwise than on bona
 fide arm’s length terms at the time when the Ship is fixed;

 
	
  

 	
  

 
	
 (d)

 	
 appoint a manager of the Ship other than
 the Approved Manager or agree to any alteration to the terms of the Approved
 Management Agreement;

 
	
  

 	
  

 
	
 (e)

 	
 de-activate or lay up the Ship; 

 
	
  

 	
  

 
	
 (f)

 	
 change the Classification Society; or

 
	
  

 	
  

 
	
 (g)

 	
 put the Ship in to the possession of any
 person for the purpose of work being done upon it in an amount exceeding or
 likely to exceed $1,000,000 (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 Security Interest on the Ship
 or the 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 priority mortgage, carry on board the Ship a certified copy of
 the 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

 	
 Intentionally omitted.

 
	
  

 	
  

 
	
 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

 	
 Scorpio Aframax Tanker Pool. At all times, the Borrower shall keep the
 Ship employed in the Scorpio Aframax Tanker Pool or in such other employment
 reasonably acceptable to the Majority Lenders.

 
	
  

 	
  

 
	
 15

 	
 COLLATERAL
 MAINTENANCE RATIO

 
	
  

 	
  

 
	
 15.1

 	
 General. From the Drawdown Date until the Total Commitments have terminated and
 all amounts payable hereunder have been paid in full, the Borrower undertakes
 with each Creditor Party to comply with the following provisions of this
 Clause 15 except as the Agent, with the consent of the Majority Lenders, may
 approve from time to time in writing, such approval not to be unreasonably
 withheld.

 

57

	
  

 	
  

 
	
 15.2

 	
 Collateral Maintenance Ratio. If, at any time, the Agent notifies the Borrower that:

 
	
  

 	
  

 
	
 (a)

 	
 the aggregate Fair Market Value of the
 Ship; plus

 
	
  

 	
  

 
	
 (b)

 	
 the net realizable value of any additional
 Collateral previously provided under this Clause 15,

 
	
  

 	
  

 
	
  

 	
 is below either (i) 140% of the Loan in the
 case where the Ship is operating in a pool or on the spot market or (ii) 130%
 of the Loan in the case where the Ship is subject to a Charter (such ratio
 being the “Collateral Maintenance Ratio”),
 the Agent (acting upon the instruction of the Majority Lenders) shall have
 the right to require the Borrower to comply with the requirements of Clause
 15.3.

 
	
  

 	
  

 
	
 15.3

 	
 Provision of additional security; prepayment. If the Agent serves a notice on the Borrower
 under Clause 15.2, the Borrower shall, within one (1) month after the date on
 which the Agent’s notice is served, either:

 
	
  

 	
  

 
	
 (a)

 	
 provide, or ensure that a third party
 provides, additional Collateral which, in the opinion of the Majority
 Lenders, is in form and substance acceptable to the Majority Lenders and has
 a net realizable value at least equal to the shortfall and is documented in
 such terms as the Agent may, with the authorization of the Majority Lenders,
 approve or require; or

 
	
  

 	
  

 
	
 (b)

 	
 prepay the Loan in such amount as will
 eliminate the shortfall. 

 
	
  

 	
  

 
	
 15.4

 	
 Value of additional vessel security. The net realizable value of any additional
 Collateral which is provided under Clause 15.3 and which consists of a
 Security Interest over a vessel shall be that shown by a valuation complying
 with the definition of Fair Market Value.

 
	
  

 	
  

 
	
 15.5

 	
 Valuations binding. Any valuation under Clause 15.3 or 15.4 shall be binding and
 conclusive as regards the Borrower, as shall be any valuation which the
 Majority Lenders make of any additional security which does not consist of or
 include a Security Interest.

 
	
  

 	
  

 
	
 15.6

 	
 Provision of information. The Borrower shall promptly provide the
 Agent and any Approved Broker or other expert acting under Clause 15.4 with
 any information which the Agent or the Approved Broker or other 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 the 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 21.2, 21.3 and 22.3, the Borrower shall,
 on demand, pay the Agent the amount of the fees and expenses of any Approved
 Broker or other expert instructed by the Agent under this Clause 15 and all
 legal and other expenses incurred by any Creditor Party in connection with
 any matter arising out of this Clause 15.

 
	
  

 	
  

 
	
 15.8

 	
 Application of prepayment. Clause 8 shall apply in relation to any
 prepayment pursuant to Clause 15.3(b).

 

58

	
  

 	
  

 	
  

 
	
 16

 	
 GUARANTEE

 
	
  

 	
  

 	
  

 
	
 16.1

 	
 Guarantee and indemnity. In
 order to induce the Lenders to make the Loan to the Borrower, the Guarantor irrevocably and unconditionally:

 
	
  

 	
  

 	
  

 
	
 (a)

 	
 guarantees, as a primary obligor and not as
 merely as a surety, to each Creditor Party, the punctual payment and
 performance by the Borrower when due, whether at stated maturity, by acceleration
 or otherwise, of all Secured Liabilities of the Borrower, whether for
 principal, interest, fees, expenses or otherwise (collectively, the “Guaranteed Obligations”);

 
	
  

 	
  

 	
  

 
	
 (b)

 	
 undertakes with each Creditor Party that
 whenever the Borrower does not pay any Guaranteed Obligation when due, the
 Guarantor shall immediately on demand pay that Guaranteed Obligation as if it
 were the primary obligor; and

 
	
  

 	
  

 	
  

 
	
 (c)

 	
 indemnifies each Creditor Party immediately
 on demand against any cost, loss or liability suffered or incurred by that
 Creditor Party (i) if any Guaranteed Obligation is or becomes unenforceable,
 invalid or illegal or (ii) by operation of law as a consequence of the
 transactions contemplated by the Finance Documents. The amount of the cost,
 loss or liability shall be equal to the amount which that Creditor Party
 would otherwise have been entitled to recover.

 
	
  

 	
  

 	
  

 
	
 16.2

 	
 Continuing guarantee. This guarantee:

 
	
  

 	
  

 	
  

 
	
 (a)

 	
 is a continuing guarantee;

 
	
  

 	
  

 	
  

 
	
 (b)

 	
 is joint and several with any other
 guarantee given in respect of the Guaranteed Obligations and shall not in any
 way be prejudiced by any other guarantee or security now or subsequently held
 by any Creditor Party in respect of the Guaranteed Obligations;

 
	
  

 	
  

 	
  

 
	
 (c)

 	
 shall remain in full force and effect until
 the later of the termination of the Total Commitments and the payment and
 performance in full of the Guaranteed Obligations and all other amounts
 payable hereunder regardless of any intermediate payment or discharge in
 whole or in part; and 

 
	
  

 	
  

 	
  

 
	
 (d)

 	
 shall be binding upon the Guarantor, its
 successors and permitted assigns. 

 
	
  

 	
  

 	
  

 
	
 16.3

 	
 Performance of Guaranteed Obligations; obligations pari passu.

 
	
  

 	
  

 	
  

 
	
 (a)

 	
 The Guarantor agrees that the Guaranteed
 Obligations will be performed and paid strictly in accordance with the terms
 of the relevant Finance Document regardless of any law or regulation or order
 of any court:

 
	
  

 	
  

 	
  

 
	
  

 	
 (i)

 	
 affecting (A) any term of such Finance
 Document or the rights of any of the Creditor Parties with respect thereto or
 (B) the Borrower’s ability or obligation to make or render, or right of any
 Creditor Party to receive, any payments or performance due thereunder; or

 
	
  

 	
  

 	
  

 
	
  

 	
 (ii)

 	
 which might otherwise constitute a defense
 to, or a legal or equitable discharge of, the Borrower. 

 

59

	
  

 	
  

 
	
 (b)

 	
 The obligations of the Guarantor under this
 guarantee shall rank pari passu with all other unsecured
 obligations of such Guarantor.

 
	
  

 	
  

 
	
 16.4

 	
 Reinstatement. If any payment of any of the Guaranteed Obligations is rescinded,
 discharged, avoided or reduced or must otherwise be returned by a Creditor
 Party or any other person upon the insolvency, bankruptcy or reorganization
 of the Borrower or any other Security Party or otherwise:

 
	
  

 	
  

 
	
 (a)

 	
 this guarantee shall continue to be
 effective or be reinstated, and the liability of each Guarantor hereunder
 shall continue or be reinstated, as the case may be, as if the payment,
 discharge, avoidance or reduction had not occurred; and

 
	
  

 	
  

 
	
 (b)

 	
 each Creditor Party shall be entitled to
 recover the value or amount of that payment from the Guarantor, as if the
 payment, discharge, avoidance or reduction had not occurred.

 
	
  

 	
  

 
	
 16.5

 	
 Liability absolute and unconditional. The obligations of the Guarantor under this
 Clause 16 shall be irrevocable, absolute and unconditional and shall not be
 affected by an act, omission, matter or thing which, but for this Clause,
 would reduce, release or prejudice any of its obligations under this Clause
 16, and the Guarantor hereby irrevocably waives any defenses it may now have
 or hereafter acquire in any way relating to, any or all of the following:

 
	
  

 	
  

 
	
 (a)

 	
 any time, waiver or consent granted to, or
 composition with, any Security Party or other person;

 
	
  

 	
  

 
	
 (b)

 	
 the release of any other Security Party or
 any other person under the terms of any composition or arrangement with any
 creditor of any Security Party;

 
	
  

 	
  

 
	
 (c)

 	
 the taking, variation, compromise,
 exchange, renewal or release of, or refusal or neglect to perfect, take up or
 enforce, any rights against, or security over assets of, any Security Party
 or other person or any non-presentation or non-observance of any formality or
 other requirement in respect of any instrument or any failure to realize the
 full value of any security;

 
	
  

 	
  

 
	
 (d)

 	
 any incapacity or lack of power, authority
 or legal personality of or dissolution or change in the corporate or company
 structure or status of a Security Party or any other person (including
 without limitation any change in the holding of such Security Party’s or
 other person’s Equity Interests);

 
	
  

 	
  

 
	
 (e)

 	
 any amendment to or replacement of a
 Finance Document or any other document or security;

 
	
  

 	
  

 
	
 (f)

 	
 any unenforceability, illegality or
 invalidity of any obligation of any Security Party or any other person under
 any Finance Document or any other document or security; 

 
	
  

 	
  

 
	
 (g)

 	
 any bankruptcy, insolvency or similar
 proceedings; or

 
	
  

 	
  

 
	
 (h)

 	
 any other circumstance whatsoever that
 might otherwise constitute a defense available to, or a legal or equitable
 discharge of, any Security Party.

 

60

	
  

 	
  

 
	
 16.6

 	
 Waiver of
 promptness, etc.
 The Guarantor hereby unconditionally and irrevocably waives promptness,
 diligence, notice of acceptance, presentment, demand for performance, notice
 of non-performance, default, acceleration, protest or dishonor and any other
 notice with respect to any of the Guaranteed Obligations and this guarantee
 and any requirement that a Creditor Party protect, secure, perfect or insure
 any Security Interest or any property subject thereto or exhaust any right or
 take any action against any Security Party or any other person or entity or
 any Collateral.

 
	
  

 	
  

 
	
 16.7

 	
 Waiver of
 revocation, etc.
 The Guarantor hereby unconditionally and irrevocably waives any right to
 revoke this guarantee.

 
	
  

 	
  

 
	
 16.8

 	
 Waiver of certain
 defenses. The
 Guarantor hereby unconditionally and irrevocably waives:

 
	
  

 	
  

 
	
 (a)

 	
 any defense arising by reason of any claim
 or defense based upon an election of remedies by a Creditor Party that in any
 manner impairs, reduces, releases or otherwise adversely affects the
 subrogation, reimbursement, exoneration, contribution or indemnification
 rights of the Guarantor or other rights of the Guarantor to proceed against
 the Borrower, any of the other Security Parties, any other guarantor or any
 other person or entity or any Collateral; and 

 
	
  

 	
  

 
	
 (b)

 	
 any defense based on any right of set-off
 or counterclaim against or in respect of the obligations of the Guarantor
 hereunder.

 
	
  

 	
  

 
	
 16.9

 	
 Waiver of
 disclosure, etc.
 The Guarantor hereby unconditionally and irrevocably waives any duty on the
 part of any Creditor Party to disclose to the Guarantor any matter, fact or
 thing relating to the business, condition (financial or otherwise),
 operations, performance, properties or prospects of the Borrower, any other
 Security Party or any of their respective subsidiaries now or hereafter known
 by any Creditor Party.

 
	
  

 	
  

 
	
 16.10

 	
 Immediate recourse. The Guarantor waives any right it may have of first requiring any
 Creditor Party (or any trustee or agent on its behalf) to proceed against or
 enforce any other rights or security or claim payment from any person before
 claiming from the Guarantor under this Clause 16. This waiver applies
 irrespective of any law or any provision of a Finance Document to the
 contrary.

 
	
  

 	
  

 
	
 16.11

 	
 Acknowledgment of
 benefits. The
 Guarantor acknowledges that it will receive substantial direct and indirect
 benefits from the financing arrangements contemplated by the Finance
 Documents and that the waivers set forth in this Clause 16 are knowingly made
 in contemplation of such benefits.

 
	
  

 	
  

 
	
 16.12

 	
 Independent obligations. The obligations of the Guarantor under or in
 respect of this guarantee are independent of the Guaranteed Obligations or
 any other obligations of the Borrower or any other Security Party under or in
 respect of the Finance Documents, and a separate action or actions may be
 brought and prosecuted against each Guarantor to enforce this guarantee
 irrespective of whether any action is brought against the Borrower or any
 other Security Party or whether the Borrower or any other Security Party is
 joined in any such action or actions.

 
	
  

 	
  

 
	
 16.13

 	
 Deferral of Guarantor’s rights. Until the Guaranteed Obligations have been
 irrevocably paid and performed in full and unless the Agent otherwise
 directs, the Guarantor will not 

 

61

	
  

 	
  

 
	
  

 	
 exercise any rights which it may have by
 reason of performance by it of its obligations under the Finance Documents:

 
	
  

 	
  

 
	
 (a)

 	
 to be indemnified by another Security
 Party;

 
	
  

 	
  

 
	
 (b)

 	
 to claim any contribution from any other
 guarantor of any Security Party’s obligations under the Finance Documents;
 and/or

 
	
  

 	
  

 
	
 (c)

 	
 to take the benefit (in whole or in part
 and whether by way of subrogation or otherwise) of any rights of the Creditor
 Parties under the Finance Documents or of any other guarantee or security
 taken pursuant to, or in connection with, the Finance Documents by any
 Creditor Party.

 
	
  

 	
  

 
	
 16.14

 	
 Limitation of liability. The Guarantor and each of the Creditor Parties
 hereby confirms that it is its intention that the Guaranteed Obligations not
 constitute a fraudulent transfer or conveyance for purposes of the United
 States Bankruptcy Code, the Uniform Fraudulent Conveyance Act, the Uniform
 Fraudulent Transfer Act or any similar law. To effectuate the foregoing
 intention, the Guarantor and each of the Creditor Parties hereby irrevocably
 agrees that the Guaranteed Obligations guaranteed by the Guarantor shall be
 limited to such amount as will, after giving effect to such maximum amount
 and all other (contingent or otherwise) liabilities of the Guarantor that are
 relevant under such laws, result in the Guaranteed Obligations of the
 Guarantor in respect of such maximum amount not constituting a fraudulent
 transfer or conveyance.

 
	
  

 	
  

 
	
 16.15

 	
 Reliance of Creditor Parties. Each of the Creditor Parties has entered
 into this Agreement in reliance upon, among other things, this guarantee.

 
	
  

 	
  

 
	
 17

 	
 PAYMENTS AND
 CALCULATIONS

 
	
  

 	
  

 
	
 17.1

 	
 Currency and method of payments. All payments to be made by the Lenders or by
 the Security Parties 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 another Security Party to the Agent or any Lender,
 to the account of the Agent at HSBC Bank USA,
 New York, New York, ABA No. 021001088, SWIFT: MRMDUS33, for credit to DVB
 Bank SE (Account No. 000.137.278), Reference: STI SPIRIT, or to such other account with such other bank
 as the Agent may from time to time notify to the Borrower, the other Security
 Parties 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 to the
 Borrower and the other Creditor Parties.

 

62

	
  

 	
  

 
	
 17.2

 	
 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

 
	
  

 	
  

 
	
 (b)

 	
 if the next succeeding Business Day falls
 in the next calendar month, the due date shall be brought forward to the
 immediately preceding Business Day;

 
	
  

 	
  

 
	
  

 	
 and interest shall be payable during any
 extension under paragraph (a) at the rate payable on the original due date.

 
	
  

 	
  

 
	
 17.3

 	
 Basis for calculation of periodic payments. All interest, 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.

 
	
  

 	
  

 
	
 17.4

 	
 Distribution of payments to Creditor Parties. Subject to Clauses 17.5, 17.6 and 17.7:

 
	
  

 	
  

 
	
 (a)

 	
 any amount received by the Agent under a
 Finance Document for distribution or remittance to a Lender or the Security
 Trustee shall be made available by the Agent to that Lender 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 and the Security Trustee
 may have notified to the Agent not less than five (5) Business Days
 previously; and

 
	
  

 	
  

 
	
 (b)

 	
 amounts to be applied in satisfying amounts
 of a particular category which are due to the Lenders generally shall be
 distributed by the Agent to each Lender pro rata to the amount in that
 category which is due to it.

 
	
  

 	
  

 
	
 17.5

 	
 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, deduct and withhold from that amount any sum
 which is then due and payable to the Agent from that Lender under any Finance
 Document or any sum which the Agent is then entitled under any Finance
 Document to require that Lender to pay on demand.

 
	
  

 	
  

 
	
 17.6

 	
 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 any sum which the Agent is
 expecting to receive for remittance or distribution to the Borrower or that
 Lender until the Agent has satisfied itself that it has received that sum.

 
	
  

 	
  

 
	
 17.7

 	
 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, without first having received
 that sum, the Borrower or (as the case may be) the Lender 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. 

 

63

	
  

 	
  

 	
  

 
	
 17.8

 	
 Agent may assume receipt. Clause 17.7 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.

 
	
  

 	
  

 	
  

 
	
 17.9

 	
 Creditor Party accounts. Each Creditor Party shall maintain accounts
 showing the amounts owing to it by the Borrower and each other Security Party
 under the Finance Documents and all payments in respect of those amounts made
 by the Borrower and any other Security Party.

 
	
  

 	
  

 	
  

 
	
 17.10

 	
 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 other
 Security Party under the Finance Documents and all payments in respect of
 those amounts made by the Borrower and any other Security Party.

 
	
  

 	
  

 	
  

 
	
 17.11

 	
 Accounts prima facie evidence. If any accounts maintained under Clauses
 17.9 and 17.10 show an amount to be owing by the Borrower or any other
 Security Party to a Creditor Party, those accounts shall be prima facie
 evidence that that amount is owing to that Creditor Party.

 
	
  

 	
  

 	
  

 
	
 18

 	
 APPLICATION OF
 RECEIPTS

 
	
  

 	
  

 	
  

 
	
 18.1

 	
 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)

 	
 first,
 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 (ii) and (iii) (including, but without limitation,
 all amounts payable by the Borrowers under Clauses 21, 22 and 23 of this
 Agreement or by the Borrowers or any other Security Party under any
 corresponding or similar provision in any other Finance Document);

 
	
  

 	
  

 	
  

 
	
  

 	
 (ii)

 	
 second,
 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

 
	
  

 	
  

 	
  

 
	
  

 	
 (iii)

 	
 third,
 in or towards satisfaction of the Loan;

 
	
  

 	
  

 	
  

 
	
 (b)

 	
 SECOND: in retention of an amount equal to
 any amount not then due and payable under any Finance Document but which the
 Agent, by notice to the Borrower, the other Security Parties and the other
 Creditor Parties, states in its opinion will or may become due and payable in
 the future and, upon those amounts becoming due and payable, in or towards
 satisfaction of them in accordance with the provisions of Clause 18.1(a); and

 
	
  

 	
  

 	
  

 
	
 (c)

 	
 THIRD: any surplus shall be paid to the
 Borrower or to any other person appearing to be entitled to it.

 
	
  

 	
  

 	
  

 
	
 18.2

 	
 Variation of order of application. The Agent may, with the authorization of the
 Majority Lenders, by notice to the Borrower, the other Security Parties and
 the other Creditor Parties

 

64

	
  

 	
  

 
	
  

 	
 provide for a different manner of
 application from that set out in Clause 18.1 either as regards a specified
 sum or sums or as regards sums in a specified category or categories.

 
	
  

 	
  

 
	
 18.3

 	
 Notice of variation of order of application. The Agent may give notices under Clause 18.2
 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.

 
	
  

 	
  

 
	
 18.4

 	
 Appropriation rights overridden. This Clause 18and any notice which the Agent
 gives under Clause 18.2 shall override any right of appropriation possessed,
 and any appropriation made, by the Borrower or any other Security Party.

 
	
  

 	
  

 
	
 18.5

 	
 Payments in excess of Contribution.

 
	
  

 	
  

 
	
 (a)

 	
 If any Lender shall obtain any payment
 (whether voluntary, involuntary, through the exercise of any right of
 set-off, counterclaim or otherwise) in excess of its Contribution, such
 Lender shall forthwith purchase from the other Lenders such participation in
 their respective Contributions as shall be necessary to share the excess payment
 ratably with each of them, provided that if all or any portion of
 such excess payment is thereafter recovered from such purchasing Lender, such
 purchase from each Lender shall be rescinded and such Lender shall repay to
 the purchasing Lender the purchase price to the extent of such recovery
 together with an amount equal to such Lender’s ratable share (according to
 the proportion of (a) the amount of such Lender’s required repayment to (b)
 the total amount so recovered from the purchasing Lender) of any interest or
 other amount paid or payable by the purchasing Lender in respect of the total
 amount so recovered. 

 
	
  

 	
  

 
	
 (b)

 	
 The Borrower agrees that any Lender so
 purchasing a participation from another Lender pursuant to this Clause 18.5
 may, to the fullest extent permitted by law, exercise all of its rights of
 payment (including the right of set-off) with respect to such participation
 as fully as if such Lender were the direct creditor of the Borrower in the
 amount of such participation.

 
	
  

 	
  

 
	
 (c)

 	
 Notwithstanding paragraphs (a) and (b) of
 this Clause 18.5, any Lender which shall have commenced or joined (as a
 plaintiff) in an action or proceeding in any court to recover sums due to it
 under any Finance Document and pursuant to a judgment obtained therein or a settlement
 or compromise of that action or proceeding shall have received any amount,
 such Lender shall not be required to share any proportion of that amount with
 a Lender which has the legal right to, but does not, join such action or
 proceeding or commence and diligently prosecute a separate action or
 proceeding to enforce its rights in the same or another court. 

 
	
  

 	
  

 
	
 (d)

 	
 Each Lender exercising or contemplating
 exercising any rights giving rise to a receipt or receiving any payment of
 the type referred to in this Clause 18.5 or instituting legal proceedings to
 recover sums owing to it under this Agreement shall, as soon as reasonably
 practicable thereafter, give notice thereof to the Agent who shall give
 notice to the other Lenders.

 
	
  

 	
  

 
	
 19

 	
 APPLICATION OF EARNINGS

 
	
  

 	
  

 
	
 19.1

 	
 General. From the Drawdown Date until the Total Commitments have terminated and
 all amounts payable hereunder have been paid in full, the Borrower undertakes
 with each 

 

65

	
  

 	
  

 
	
  

 	
 Creditor Party to comply or cause
 compliance with the following provisions of this Clause 19except as the
 Agent, with the consent of the Majority Lenders, may approve from time to
 time in writing, such approval not to be unreasonably withheld.

 
	
  

 	
  

 
	
 19.2

 	
 Payment of Earnings. The Borrower undertakes with each Creditor Party to ensure
 that subject only to the provisions of any Charter Assignment or Earnings
 Assignment, all the Earnings are paid to the Earnings Account.

 
	
  

 	
  

 
	
 19.3

 	
 Location of Earnings Account. The Borrower shall promptly:

 
	
  

 	
  

 
	
 (a)

 	
 comply with any requirement of the Agent as
 to the location or re-location of the Earnings Account; and

 
	
  

 	
  

 
	
 (b)

 	
 execute any documents which the Agent
 specifies to create or maintain in favor of the Security Trustee a Security
 Interest over (and/or rights of set-off, consolidation or other rights in
 relation to) the Earnings Account.

 
	
  

 	
  

 
	
 19.4

 	
 Borrower’s obligations unaffected. The provisions of this Clause 19 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 other Security Party under any Finance Document. 

 
	
  

 	
  

 
	
 20

 	
 EVENTS OF DEFAULT

 
	
  

 	
  

 
	
 20.1

 	
 Events of Default. An Event of Default occurs if:

 
	
  

 	
  

 
	
 (a)

 	
 the Borrower or any other Security Party
 fails to pay when due any sum payable under a Finance Document or under any
 document relating to a Finance Document or, only in the case of sums payable
 on demand, within five (5) Business Days after the date when first demanded;
 or

 
	
  

 	
  

 
	
 (b)

 	
 any breach occurs of any of Clauses8.8,
 9.2(a), 11.2(b), 11.2(e), 11.2(o) or 11.2(p); or

 
	
  

 	
  

 
	
 (c)

 	
 any breach by the Borrower or any other
 Security Party occurs of any provision of a Finance Document (other than a
 breach covered by paragraphs (a), (b) or (e) of this Clause 20.1) which, in the
 opinion of the Majority Lenders, is capable of remedy, and such default
 continues unremedied 10 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 other
 Security Party occurs of any provision of a Finance Document (other than a
 breach falling within paragraphs (a), (b), (c) or (e) of this Clause 20.1);
 or

 
	
  

 	
  

 
	
 (e)

 	
 any representation, warranty or statement
 made or repeated by, or by an officer or director of, the Borrower or any
 other 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

 

66

	
  

 	
  

 	
  

 
	
 (f)

 	
 an event of default, or an event or
 circumstance which, with the giving of any notice, the lapse of time or both
 would constitute an event of default, has occurred on the part of a Security
 Party under any contract or agreement in excess of $5,000,000 (other than the
 Finance Documents) to which such Security Party, and such event of default
 has not been cured within any applicable grace period;

 
	
  

 	
  

 	
  

 
	
 (g)

 	
 any Financial Indebtedness of a Security
 Party in excess of $5,000,000 is not paid when due (or if there is an
 applicable grace period within such applicable grace period) or, only in the
 case of sums payable on demand, when first demanded, except for any such
 Financial Indebtedness which is being contested by such Security Party in
 good faith and through appropriate proceedings and in a manner that does not
 involve any risk of sale, forfeiture, loss, confiscation or seizure of the
 Ship; or

 
	
  

 	
  

 	
  

 
	
 (h)

 	
 any Security Party shall generally not pay
 its debts as such debts become due, or shall admit in writing its inability
 to pay its debts generally, or shall make a general assignment for the
 benefit of creditors; or 

 
	
  

 	
  

 	
  

 
	
 (i)

 	
 any proceeding shall be instituted by or
 against any Security Party seeking to adjudicate it a bankrupt or insolvent,
 or seeking liquidation, winding up, reorganization, arrangement, adjustment,
 protection, relief, or composition of it or its debts under any law relating
 to bankruptcy, insolvency or reorganization or relief of debtors, or seeking
 the entry of an order for relief or the appointment of a receiver, trustee,
 custodian or other similar official for it or for any substantial part of its
 property, and solely in the case of an involuntary proceeding: 

 
	
  

 	
  

 	
  

 
	
  

 	
 (i)

 	
 such proceeding shall remain undismissed or
 unstayed for a period of 60 days; or 

 
	
  

 	
  

 	
  

 
	
  

 	
 (ii)

 	
 any of the actions sought in such
 involuntary proceeding (including, without limitation, the entry of an order
 for relief against, or the appointment of a receiver, trustee, custodian or
 other similar official for, it or for any substantial part of its property)
 shall occur; or 

 
	
  

 	
  

 	
  

 
	
 (j)

 	
 all or a material part of the undertakings,
 assets, rights or revenues of, or shares or other ownership interest in, any
 Security Party are seized, nationalized, expropriated or compulsorily acquired
 by or under authority of any government; or

 
	
  

 	
  

 	
  

 
	
 (k)

 	
 a creditor attaches or takes possession of,
 or a distress, execution, sequestration or process (each an “action”)
 is levied or enforced upon or sued out against, a material part of the
 undertakings, assets, rights or revenues (the “assets”) of any Security
 Party in relation to a claim by such creditor which, in the reasonable
 opinion of the Majority Lenders, is likely to materially and adversely affect
 the ability of such Security Party to perform all or any of its obligations
 under or otherwise to comply with the terms of any Finance Document to which
 it is a party and such Security Party does not procure that such action is
 lifted, released or expunged within 20 Business Days of such action being (i)
 instituted and (ii) notified to such Security Party; or

 
	
  

 	
  

 	
  

 
	
 (l)

 	
 any judgment or order for the payment of
 money individually or in the aggregate in excess of $1,000,000 (exclusive of
 any amounts fully covered by insurance (less any applicable deductible) and
 as to which the insurer has acknowledged its responsibility to cover such
 judgment or order) shall be rendered against a Security Party and such
 judgment shall not

 

67

	
  

 	
  

 	
  

 
	
  

 	
 have been vacated or discharged or stayed
 or bonded pending appeal within 30 days after the entry thereof or
 enforcement proceedings shall have been commenced by any creditor upon such
 judgment or order; or

 
	
  

 	
  

 	
  

 
	
 (m)

 	
 any Security Party ceases or suspends or
 threatens to cease or suspend the carrying on of its business, or a part of
 its business which, in the opinion of the Majority Lenders, is material in
 the context of this Agreement, except in the case of a sale or a proposed
 sale of the Ship by the Borrower; or

 
	
  

 	
  

 	
  

 
	
 (n)

 	
 the Ship becomes a Total Loss or suffers a
 Major Casualty and (i) in the case of a Total Loss, insurance proceeds are
 not collected or received by the Security Trustee from the underwriters
 within 120 days of the Total Loss Date or (ii) in the case of a Major
 Casualty, the Ship has not been otherwise repaired in a timely and proper
 fashion; or

 
	
  

 	
  

 	
  

 
	
 (o)

 	
 it becomes unlawful or impossible:

 
	
  

 	
  

 	
  

 
	
  

 	
 (i)

 	
 for 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;

 
	
  

 	
  

 	
  

 
	
  

 	
 (ii)

 	
 for the Agent, the Security Trustee or the
 Lenders to exercise or enforce any right under, or to enforce any Security
 Interest created by, a Finance Document; or

 
	
  

 	
  

 	
  

 
	
 (p)

 	
 any consent necessary to enable the
 Borrower to own, operate or charter the Ship or to enable the Borrower or any
 other Security Party to comply with any provision which the Majority Lenders
 consider material of a Finance Document or a Charter is not granted, expires
 without being renewed, is revoked or becomes liable to revocation or any
 condition of such a consent is not fulfilled; or 

 
	
  

 	
  

 	
  

 
	
 (q)

 	
 any material provision of a Finance
 Document proves to have been or becomes invalid or unenforceable, or a
 Security Interest created by a Finance Document proves to have been or
 becomes invalid or unenforceable or such a Security Interest proves to have
 ranked after, or loses its priority to, another Security Interest or any
 other third party claim or interest; or

 
	
  

 	
  

 	
  

 
	
 (r)

 	
 any event occurs or any circumstances arise
 or develop including, without limitation:

 
	
  

 	
  

 	
  

 
	
  

 	
 (i)

 	
 a change in the financial position of any
 Security Party; or

 
	
  

 	
  

 	
  

 
	
  

 	
 (ii)

 	
 any accident or other event involving the
 Ship;

 
	
  

 	
  

 	
  

 
	
  

 	
 and it becomes evident that a Security Party is, or will later become,
 unable to discharge its liabilities under the Finance Documents as they fall
 due; or

 
	
  

 	
  

 	
  

 
	
 (s)

 	
 there occurs
 or develops a change in the financial position, state of affairs or prospects
 of a Security Party which, in the reasonable opinion of the Majority Lenders,
 has a material adverse effect on such Security Party’s ability to discharge
 its liabilities under the Finance Documents as they fall due.

 
	
  

 	
  

 	
  

 
	
 20.2

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

 

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 (a)

 	
 the Agent may, and if so instructed by the
 Majority Lenders, the Agent shall:

 
	
  

 	
  

 	
  

 
	
  

 	
 (i)

 	
 serve on the Borrower a notice stating that
 the Commitments and all other obligations of each Lender to the Borrower
 under this Agreement are cancelled; and/or

 
	
  

 	
  

 	
  

 
	
  

 	
 (ii)

 	
 serve on the Borrower a notice stating that
 the Loan, all accrued interest and all other amounts accrued or owing under
 this Agreement are immediately due and payable or are due and payable on
 demand, provided
 that in the case of an Event of Default under either of Clauses
 20.1(h) or (i), the Loan and all accrued interest and other amounts accrued
 or owing hereunder shall be deemed immediately due and payable without notice
 or demand there for; 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 authorization 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 (ii),
 the Security Trustee, the Agent and/or the Lenders are entitled to take under
 any Finance Document or any applicable law.

 
	
  

 	
  

 	
  

 
	
 20.3

 	
 Termination of Commitments. On the service of a notice under Clause
 20.2(a)(i), the Commitments and all other obligations of each Lender to the
 Borrower under this Agreement shall be cancelled.

 
	
  

 	
  

 	
  

 
	
 20.4

 	
 Acceleration of Loan. On the service of a notice under Clause 20.2(a)(ii), the Loan, all
 accrued interest and all other amounts accrued or owing from the Borrower or
 any other 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, and the Security Trustee shall forthwith be entitled to enforce the
 Security Interests created by this Agreement and any other Finance Document
 in any manner available to it and in such sequence as the Security Trustee
 may, in its absolute discretion, determine.

 
	
  

 	
  

 	
  

 
	
 20.5

 	
 Multiple notices; action without notice. The Agent may serve notices under Clauses
 20.2(a)(i) and (ii) simultaneously or on different dates and it and/or the
 Security Trustee may take any action referred to in Clause 20.2 if no such
 notice is served or simultaneously with or at any time after the service of
 both or either of such notices.

 
	
  

 	
  

 	
  

 
	
 20.6

 	
 Notification of Creditor Parties and Security Parties. The Agent shall send to each Lender, the
 Security Trustee and each Security Party a copy of the text of any notice
 which the Agent serves on the Borrower under Clause 20.2. Such 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 defense.

 
	
  

 	
  

 	
  

 
	
 20.7

 	
 Creditor Party rights unimpaired. Nothing in this Clause shall be taken to
 impair or restrict the exercise of any right given to individual Lenders
 under a Finance Document or the general law; and, in particular, this Clause
 is without prejudice to Clause 3.1. 

 

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 20.8

 	
 Exclusion of Creditor Party liability. No Creditor Party, and no receiver or
 manager appointed by the Security Trustee, shall have any liability to any
 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
 realized from any asset comprised in such a Security Interest or for any
 reduction (however caused) in the value of such an asset,

 
	
  

 	
  

 
	
  

 	
 provided that nothing in this Clause 20.8 shall exempt a Creditor Party or a
 receiver or manager from liability for losses shown to have been caused by the
 gross negligence or the willful 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.

 
	
  

 	
  

 
	
 21

 	
 FEES AND EXPENSES

 
	
  

 	
  

 
	
 21.1

 	
 Commitment and up front fees. The Borrower shall pay to the Agent:

 
	
  

 	
  

 
	
 (a)

 	
 quarterly in arrears during the period from
 (and including) the Effective Date until the undrawn portion of the Total
 Commitments is permanently reduced to zero, for the account of the Lenders, a
 commitment fee at the rate of 1.5% per annum on the amount of the Total
 Commitments less the amount of the Loan, for distribution among the Lenders
 pro rata to their Commitments; and

 
	
  

 	
  

 
	
 (b)

 	
 on the Effective Date, an upfront fee in an
 amount equal to 1.25% of the Total Commitments, for distribution to the
 Arranger. 

 
	
  

 	
  

 
	
 21.2

 	
 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,
 including, without limitation, the reasonable fees and disbursements of a
 Creditor Party’s legal counsel and any local counsel retained by them.

 
	
  

 	
  

 
	
 21.3

 	
 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 expenses incurred by a Creditor Party in connection with: 

 
	
  

 	
  

 
	
 (a)

 	
 any amendment or supplement to a Finance
 Document, or any proposal for such an amendment to be made; 

 
	
  

 	
  

 
	
 (b)

 	
 any consent or waiver by the Lenders, the
 Majority Lenders or the Creditor Party concerned under or in connection with
 a Finance Document, or any request for such a consent or waiver;

 
	
  

 	
  

 
	
 (c)

 	
 the valuation of any Collateral provided or
 offered under Clause 15 or any other matter relating to such Collateral; or

 

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 (d)

 	
 any step taken by the Security Trustee or a
 Lender with a view to the protection, exercise or enforcement of any right or
 Security Interest created by a Finance Document or for any similar purpose.

 
	
  

 	
  

 
	
  

 	
 There shall be recoverable under paragraph
 (d) the full amount of all reasonable 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.

 
	
  

 	
  

 
	
 21.4

 	
 Intentionally omitted.

 
	
  

 	
  

 
	
 21.5

 	
 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.

 
	
  

 	
  

 
	
 21.6

 	
 Certification of amounts. A notice which is signed by an officer 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 (without
 necessarily specifying a detailed breakdown) the matters in respect of which
 the amount, or aggregate amount, is due shall be prima facie evidence that
 the amount, or aggregate amount, is due.

 
	
  

 	
  

 
	
 22

 	
 INDEMNITIES

 
	
  

 	
  

 
	
 22.1

 	
 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; 

 
	
  

 	
  

 
	
 (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, on demand (after giving credit for any default
 interest paid by the Borrower on the amount concerned under Clause 7); or

 
	
  

 	
  

 
	
 (d)

 	
 the occurrence of an Event of Default or a
 Potential Event of Default and/or the acceleration of repayment of the Loan
 under Clause 20.

 
	
  

 	
  

 
	
  

 	
 It is understood that the indemnities
 provided in this Clause 22.1 shall not apply to any claim cost or expense
 which is a tax levied by a taxing authority on the indemnified party (which
 taxes are subject to indemnity solely as provided in 23 below) but shall
 apply to any other costs associated with any tax which is not a
 Non-indemnified Tax.

 
	
  

 	
  

 
	
 22.2

 	
 Breakage costs. Without limiting its generality, Clause 22.1 covers any claim,
 expense, liability or loss, including a loss of a prospective profit,
 incurred by a Lender:

 

71

	
  

 	
  

 
	
 (a)

 	
 in liquidating or employing deposits from
 third parties acquired or arranged to fund 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); and

 
	
  

 	
  

 
	
 (b)

 	
 in terminating, or otherwise in connection
 with, any interest and/or currency swap or any other transaction entered into
 (whether with another legal entity or with another office or department of
 the Lender concerned) to hedge any exposure arising under this Agreement or
 that part which the Lender concerned determines is fairly attributable to
 this Agreement of the amount of the liabilities, expenses or losses
 (including losses of prospective profits) incurred by it in terminating, or
 otherwise in connection with, a number of transactions of which this
 Agreement is one.

 
	
  

 	
  

 
	
 22.3

 	
 Miscellaneous indemnities. The Borrower shall fully indemnify each
 Creditor Party severally on their respective demands in respect of all
 claims, expenses, liabilities and losses which may be made or brought against
 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; or

 
	
  

 	
  

 
	
 (b)

 	
 any other Pertinent Matter,

 
	
  

 	
  

 
	
  

 	
 other than claims, expenses, liabilities
 and losses which are shown to have been caused by the dishonesty or willful
 misconduct or gross negligence of the officers or employees of the Creditor
 Party concerned.

 
	
  

 	
  

 
	
  

 	
 Without prejudice to its generality, this
 Clause 22.3 covers any claims, expenses, liabilities and losses which arise,
 or are asserted, under or in connection with any law relating to safety at
 sea, the ISM Code, the ISPS Code or any Environmental Law.

 
	
  

 	
  

 
	
 22.4

 	
 Currency indemnity. If any sum due from the Borrower or any other Security Party to a
 Creditor Party under a Finance Document or under any order or judgment
 relating to a Finance Document 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 or lodging any claim or proof
 against the Borrower or any other Security Party, whether in its liquidation,
 any arrangement involving it or otherwise; or

 
	
  

 	
  

 
	
 (b)

 	
 obtaining an order or judgment from any
 court or other tribunal; or

 
	
  

 	
  

 
	
 (c)

 	
 enforcing any such order or judgment,

 
	
  

 	
  

 
	
  

 	
 the Borrower shall indemnify the Creditor
 Party concerned against the loss arising when the amount of the payment
 actually received by that Creditor Party is converted at the available rate
 of exchange into the Contractual Currency.

 
	
  

 	
  

 
	
  

 	
 In this Clause 22.4, 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 

 

72

	
  

 	
  

 
	
  

 	
 receives the sum concerned to purchase the
 Contractual Currency with the Payment Currency.

 
	
  

 	
  

 
	
  

 	
 This Clause 22.4 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.

 
	
  

 	
  

 
	
 22.5

 	
 Intentionally omitted.

 
	
  

 	
  

 
	
 22.6

 	
 Certification of amounts. A notice which is signed by an officer of a
 Creditor Party, which states that a specified amount, or aggregate amount, is
 due to that Creditor Party under this Clause 22 and which indicates (without
 necessarily specifying a detailed breakdown) the matters in respect of which
 the amount, or aggregate amount, is due shall be prima facie evidence that
 the amount, or aggregate amount, is due.

 
	
  

 	
  

 
	
 22.7

 	
 Sums deemed due to a Lender. For the purposes of this Clause 22, 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.

 
	
  

 	
  

 
	
 23

 	
 NO SET-OFF OR TAX
 DEDUCTION; TAX INDEMNITY

 
	
  

 	
  

 
	
 23.1

 	
 No deductions. All amounts due from a Security Party under a Finance Document shall
 be paid:

 
	
  

 	
  

 
	
 (a)

 	
 without any form of set-off, cross-claim or
 condition; and

 
	
  

 	
  

 
	
 (b)

 	
 free and clear of any tax deduction except
 a tax deduction which such Security Party is required by law to make.

 
	
  

 	
  

 
	
 23.2

 	
 Grossing-up for taxes. If a Security Party is required by law to
 make a tax deduction from any payment:

 
	
  

 	
  

 
	
 (a)

 	
 such Security Party shall notify the Agent
 as soon as it becomes aware of the requirement;

 
	
  

 	
  

 
	
 (b)

 	
 such Security Party shall pay the tax
 deducted to the appropriate taxation authority promptly, and in any event
 before any fine or penalty arises; and

 
	
  

 	
  

 
	
 (c)

 	
 except if the deduction is for collection
 or payment of a Non-indemnified Tax of a Creditor Party, the amount due in
 respect of the payment shall be increased by the amount necessary to ensure
 that each Creditor Party receives and retains (free from any liability
 relating to the tax deduction) a net amount which, after the tax deduction,
 is equal to the full amount which it would otherwise have received.

 
	
  

 	
  

 
	
 23.3

 	
 Evidence of payment of taxes. Within one (1) month after making any tax
 deduction, the relevant Security Party shall deliver to the Agent documentary
 evidence satisfactory to the Agent that the tax had been paid to the
 appropriate taxation authority.

 
	
  

 	
  

 
	
 23.4

 	
 Intentionally omitted.

 

73

	
  

 	
  

 
	
 23.5

 	
 Indemnity for taxes. The Borrower hereby indemnifies and agrees to hold each Creditor
 Party harmless from and against all taxes other than Non-indemnified Taxes
 levied on such Creditor Party (including, without limitation, taxes imposed on
 any amounts payable under this Clause 23.5) paid or payable by such person,
 whether or not such taxes or other taxes were correctly or legally asserted.
 Such indemnification shall be paid within 10 days from the date on which such
 Creditor Party makes written demand therefore specifying in reasonable detail
 the nature and amount of such taxes or other taxes.

 
	
  

 	
  

 
	
 23.6

 	
 Exclusion from indemnity and gross-up for taxes. The Borrower shall not be required to
 indemnify any Creditor Party for a tax pursuant to Clause 23.5, or to pay any
 additional amounts to any Creditor Party pursuant to Clause 23.2, to the
 extent that the tax is collected by withholding on payments (a “Withholding”)
 and is levied by a Pertinent Jurisdiction of the payer and:

 
	
  

 	
  

 
	
 (a)

 	
 the person claiming such indemnity or
 additional amounts was not an original party to this agreement and under
 applicable law (after taking into account relevant treaties and assuming that
 such person has provided all forms it may legally and truthfully provided) on
 the date such person became a party to this Agreement a Withholding would
 have been required on such payment provided that this exclusion shall not
 apply to the extent such Withholding does not exceed the Withholding that
 would have been applicable if such payment had been made to the person from
 whom such person acquired its rights under the Agreement and this exclusion
 shall not apply to the extent that such Withholding exceeds the amount of
 Withholding that would have been required under the law in effect on the date
 such person became a party to this Agreement; or 

 
	
  

 	
  

 
	
 (b)

 	
 the person claiming such indemnity or
 additional amounts is a Lender who has changed its Lending Office and under
 applicable law (after taking into account relevant treaties and assuming that
 such Lender has provided all forms it may legally and truthfully provide) on
 the date such Lender changed its Lending Office Withholding would have been
 required on such payment provided that this exclusion shall not
 apply to the extent such Withholding does not exceed the Withholding that
 would have been applicable to such payment if such Lender had not changed its
 Lending Office and this exclusion shall not apply to the extent that the
 Withholding exceeds the amount of Withholding that would have been required
 under the law in effect immediately after such Lender changed its Lending
 Office; or

 
	
  

 	
  

 
	
 (c)

 	
 in the case of a Lender, to the extent that
 Withholding would not have been required on such payment if such Lender has
 complied with its obligations to deliver certain tax form pursuant to Section
 23.7 below.

 
	
  

 	
  

 
	
 23.7

 	
 Delivery of tax forms. 

 
	
  

 	
  

 
	
 (a)

 	
 Upon the reasonable request of the
 Borrower, each Lender or transferee that is organized under the laws of a
 jurisdiction outside the United States (a “Non-U.S.
 Lender”) shall deliver to the Agent and the Borrower two properly
 completed and duly executed copies of either U.S. Internal Revenue Service
 Form W-8BEN, W-8ECI or W-8IMY or, upon request of the Borrower or the Agent,
 any subsequent versions thereof or successors thereto, in each case claiming
 such reduced rate (which may be zero) of U.S. Federal withholding tax with
 respect to payments of interest hereunder as such Non-U.S. Lender may
 properly claim. 

 

74

	
  

 	
  

 
	
 (b)

 	
 In addition, in the case of a Non-U.S.
 Lender claiming exemption from U.S. Federal withholding tax under Section
 871(h) or 881(c) of the Code, such Non-U.S. Lender shall, when so requested
 by the Borrower provide to the Agent and the Borrower to in addition to the
 W-8BEN required under Section 23.7(a) a certificate representing that such
 Non-U.S. Lender is not a bank for purposes of Section 881(c) of the Code, is not
 a 10-percent shareholder (within the meaning of Section 871(h)(3)(B) of the
 Code) of the Borrower and is not a controlled foreign corporation related to
 the Borrower (within the meaning of Section 864(d)(4) of the Code), and such
 Non-U.S. Lender agrees that it shall promptly notify the Agent in the event
 any representation in such certificate is no longer accurate. 

 
	
  

 	
  

 
	
 (c)

 	
 Each Non-U.S. Lender shall deliver such
 forms within 20 days after receipt of a written request therefor from the
 Agent or Borrower. 

 
	
  

 	
  

 
	
 (d)

 	
 Notwithstanding any other provision of this
 Clause 23.7, a Non-U.S. Lender
 shall not be required to deliver any form pursuant to this Clause 23.7 that such Non-U.S. Lender is not
 legally entitled to deliver.

 
	
  

 	
  

 
	
 24

 	
 ILLEGALITY, ETC

 
	
  

 	
  

 
	
 24.1

 	
 Illegality. This Clause 24 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 existing law is or will be interpreted or applied; or 

 
	
  

 	
  

 
	
 (b)

 	
 contrary to, or inconsistent with, any
 regulation,

 
	
  

 	
  

 
	
  

 	
 for the Notifying Lender to maintain or
 give effect to any of its obligations under this Agreement in the manner
 contemplated by this Agreement.

 
	
  

 	
  

 
	
 24.2

 	
 Notification of illegality. The Agent shall promptly notify the
 Borrower, the other Security Parties, the Security Trustee and the other
 Lenders of the notice under Clause 24.1 which the Agent receives from the
 Notifying Lender.

 
	
  

 	
  

 
	
 24.3

 	
 Prepayment; termination of Commitment. On the Agent notifying the Borrower under
 Clause 24.2, the Notifying Lender’s Commitment shall terminate; and thereupon
 or, if later, on the date specified in the Notifying Lender’s notice under
 Clause 24.1 as the date on which the notified event would become effective
 the Borrower shall prepay the Notifying Lender’s Contribution in accordance
 with Clause 8.

 
	
  

 	
  

 
	
 24.4

 	
 Mitigation. If circumstances arise which would result in a notification under
 Clause 24.1 then, without in any way limiting the rights of the Notifying
 Lender under Clause 24.3, the Notifying Lender shall use reasonable endeavors
 to transfer its obligations, liabilities and rights under this Agreement and
 the Finance Documents to another office or financial institution not affected
 by the circumstances but the Notifying Lender shall not be under any
 obligation to take any such action if, in its opinion, to do would or might:

 
	
  

 	
  

 
	
 (a)

 	
 have an adverse effect on its business,
 operations or financial condition; or

 

75

	
  

 	
  

 
	
 (b)

 	
 involve it in any activity which is
 unlawful or prohibited or any activity that is contrary to, or inconsistent
 with, any regulation; or

 
	
  

 	
  

 
	
 (c)

 	
 involve it in any expense (unless
 indemnified to its satisfaction) or tax disadvantage.

 
	
  

 	
  

 
	
 25

 	
 INCREASED COSTS

 
	
  

 	
  

 
	
 25.1

 	
 Increased costs. This Clause 25applies 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 Non-Indemnified tax); 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,

 
	
  

 	
  

 
	
  

 	
 the Notifying Lender (or a parent company
 of it) has incurred or will incur an “increased cost”.

 
	
  

 	
  

 
	
 25.2

 	
 Meaning of “increased costs”. In this Clause 25, “increased costs” 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 having taken an assignment of rights
 under this Agreement, of funding or maintaining its Commitment or
 Contribution or performing its 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;

 
	
  

 	
  

 
	
 (e)

 	
 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
 22.1 or by Clause 23 or an item arising directly out of the implementation or
 application of or compliance with the “International Convergence of Capital
 Measurement and Capital Standards, a Revised Framework” published by the
 Basel Committee on Banking Supervision in June 2004, in the form existing on
 the date of this Agreement (“Basel II”)
 or any other law or regulation which implements Basel II (whether such
 implementation, 

 

76

	
  

 	
  

 	
  

 
	
  

 	
 application or compliance is by a
 government, regulator, Creditor Party or any of its affiliates).

 
	
  

 	
  

 	
  

 
	
  

 	
 For the purposes of this Clause 25.2 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.

 
	
  

 	
  

 	
  

 
	
 25.3

 	
 Notification to Borrower of claim for increased costs. The Agent shall promptly notify the Borrower
 and the other Security Parties of the notice which the Agent received from
 the Notifying Lender under Clause 25.1.

 
	
  

 	
  

 	
  

 
	
 25.4

 	
 Payment of increased costs. The Borrower shall pay to the Agent, on 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.

 
	
  

 	
  

 	
  

 
	
 25.5

 	
 Notice of prepayment. If the Borrower is not willing to continue to compensate the
 Notifying Lender for the increased cost under Clause 25.4, the Borrower may
 give the Agent not less than 14 days’ notice of its intention to prepay the
 Notifying Lender’s Contribution at the end of an Interest Period.

 
	
  

 	
  

 	
  

 
	
 25.6

 	
 Prepayment; termination of Commitment. A notice under Clause 25.5 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

 
	
  

 	
  

 	
  

 
	
 (b)

 	
 on the date specified in its notice of
 intended prepayment, the Borrower shall prepay (without premium or penalty
 but subject to any applicable prepayment fee under Clause 8.10(c)) the
 Notifying Lender’s Contribution, together with accrued interest thereon at
 the applicable rate plus the Margin.

 
	
  

 	
  

 	
  

 
	
 25.7

 	
 Application of prepayment. Clause 8 shall apply in relation to the
 prepayment.

 
	
  

 	
  

 	
  

 
	
 26

 	
 SET-OFF

 
	
  

 	
  

 	
  

 
	
 26.1

 	
 Application of credit balances. Upon the occurrence and during the
 continuance of an Event of Default, each Creditor Party may without prior
 notice:

 
	
  

 	
  

 	
  

 
	
 (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;

 

77

	
  

 	
  

 	
  

 
	
  

 	
 (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. 

 
	
  

 	
  

 	
  

 
	
 26.2

 	
 Existing rights
 unaffected. No
 Creditor Party shall be obliged to exercise any of its rights under Clause
 26.1; 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).

 
	
  

 	
  

 
	
 26.3

 	
 Sums deemed due to
 a Lender. For
 the purposes of this Clause 26, 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.

 
	
  

 	
  

 
	
 26.4

 	
 No Security
 Interest. This
 Clause 26 gives the Creditor Parties a contractual right of set-off only, and
 does not create any Security Interest over any credit balance of the
 Borrower. 

 
	
  

 	
  

 
	
 27 

 	
 TRANSFERS AND CHANGES IN LENDING OFFICES 

 
	
  

 	
  

 
	
 27.1

 	
 Transfer by
 Borrower or Guarantor. Neither the Borrower nor the Guarantor may, without the consent of the
 Agent, given on the instructions of the Majority Lenders, transfer any of its
 rights, liabilities or obligations under any Finance Document.

 
	
  

 	
  

 
	
 27.2

 	
 Transfer by a
 Lender. Subject
 to Clause 27.4, a Lender (the “Transferor Lender”) may at any time,
 without needing the consent of the Borrower or any other 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),

 
	
  

 	
  

 
	
  

 	
 to be (in the case of its rights) transferred to, or (in the case of
 its obligations) assumed by, another bank or financial institution or trust,
 fund or other entity reasonably acceptable to the Borrower (save and except
 for transfer of any portion of the Loan to a vehicle for the purpose of
 securitization) (each, a “Transferee Lender”) which (i) is
 regularly engaged in or established for the purpose of making, purchasing or
 investing in loans, securities or other financial assets or the
 securitization or similar transaction of that Transferor Lender’s
 Contribution or Commitment and (ii) is not an Affiliate of the Borrower, by
 delivering to the Agent a completed certificate in the form set out in
 Schedule 5 with any modifications approved or required by the Agent (a “Transfer
 Certificate”) executed by the Transferor Lender and the Transferee
 Lender.

 
	
  

 	
  

 
	
  

 	
 Notwithstanding the foregoing, any rights and obligations of the
 Transferor Lender in its capacity as Agent or Security Trustee shall be
 determined in accordance with Clause 31.

 

78

	
  

 	
  

 
	
 27.3

 	
 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
 other Security Parties, the Security Trustee and each of the other Lenders;

 
	
  

 	
  

 
	
 (b)

 	
 on behalf of the Transferee Lender, send to the Borrower and each
 other Security Party letters or faxes notifying them of the Transfer
 Certificate and attaching a copy of it;

 
	
  

 	
  

 
	
 (c)

 	
 send to the Transferee Lender copies of the letters or faxes sent
 under paragraph (b),

 
	
  

 	
  

 
	
  

 	
 but the Agent shall only be obliged to execute a Transfer Certificate
 delivered to it by the Transferor Lender and the Transferee Lender once it is
 satisfied it has complied with all necessary “know your customer” or other
 similar checks under all applicable laws and regulations to the transfer to
 that Transferee Lender.

 
	
  

 	
  

 
	
 27.4

 	
 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 27.3 on or before that
 date.

 
	
  

 	
  

 
	
 27.5

 	
 No transfer without
 Transfer Certificate. Except as provided in Clause 27.17, no assignment or transfer of any
 right or obligation of a Lender under any Finance Document is binding on, or
 effective in relation to, the Borrower, any other Security Party, the Agent
 or the Security Trustee unless it is effected, evidenced or perfected by a
 Transfer Certificate. 

 
	
  

 	
  

 
	
 27.6

 	
 Lender
 re-organization; waiver of Transfer Certificate. If a Lender enters into any merger,
 de-merger or other reorganization as a result of which all its rights or
 obligations vest in a 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.

 
	
  

 	
  

 
	
 27.7

 	
 Effect of Transfer
 Certificate.
 The effect of a Transfer Certificate is 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 are assigned to the Transferee
 Lender absolutely, free of any defects in the Transferor Lender’s title and
 of any rights or equities which the Borrower or any other 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 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 

 

79

	
  

 	
  

 
	
  

 	
 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 other Security Party against the
 Transferor Lender had not existed;

 
	
  

 	
  

 
	
 (f)

 	
 the Transferee Lender becomes entitled to all the rights under the
 Finance Documents which are applicable to the Lenders generally, including
 but not limited to those relating to the Majority Lenders and Clause 21, 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, 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 other Security Party
 referred to above include, but are not limited to, any right of set off and
 any other kind of cross-claim.

 
	
  

 	
  

 
	
 27.8

 	
 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 27.4) 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 three (3)
 Business Days’ prior notice.

 
	
  

 	
  

 
	
 27.9

 	
 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 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.

 
	
  

 	
  

 
	
 27.10

 	
 Authorization of
 Agent to sign Transfer Certificates. The Borrower, the Security Trustee and each
 Lender irrevocably authorizes the Agent to sign Transfer Certificates on its
 behalf.

 
	
  

 	
  

 
	
 27.11

 	
 Registration fee. In respect of any Transfer Certificate, the
 Agent shall be entitled to recover a registration fee of $5,000 from the
 Transferor Lender or (at the Agent’s option) the Transferee Lender.

 
	
  

 	
  

 
	
 27.12

 	
 Sub-participation;
 subrogation assignment. A Lender may sub-participate all or any part of its rights and/or
 obligations under or in connection with the Finance Documents without the
 consent of, or any notice to, the Borrower, any other Security Party, the
 Agent or the Security Trustee; and the Lenders may assign, in any manner and
 terms agreed by the 

 

80

	
  

 	
  

 
	
  

 	
 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.

 
	
  

 	
  

 
	
 27.13

 	
 Disclosure of
 information.
 Each Security Party irrevocably authorizes each Creditor Party to give,
 divulge and reveal from time to time information and details relating to
 their accounts, the Ship, the Finance Documents, the Loan or the Commitments
 to:

 
	
  

 	
  

 
	
 (a)

 	
 any private, public or internationally recognized authorities that
 are entitled to and have requested to obtain such information;

 
	
  

 	
  

 
	
 (b)

 	
 the Creditor Parties’ respective head offices, branches and
 affiliates and professional advisors;

 
	
  

 	
  

 
	
 (c)

 	
 any other parties to the Finance Documents;

 
	
  

 	
  

 
	
 (d)

 	
 a rating agency or their professional advisors;

 
	
  

 	
  

 
	
 (e)

 	
 any person with whom such Creditor Party proposes to enter (or
 considers entering) into contractual relations in relation to the Loan and/or
 its Commitment or Contribution; and 

 
	
  

 	
  

 
	
 (f)

 	
 any other person regarding the funding, re-financing, transfer,
 assignment, sale, sub-participation or operational arrangement or other
 transaction in relation to the Loan, its Contribution or its Commitment,
 including without limitation, for purposes in connection with a securitization
 or any enforcement, preservation, assignment, transfer, sale or
 sub-participation of any of such Creditor Parties’ rights and obligations;

 
	
  

 	
  

 
	
  

 	
 provided that such Creditor Party has taken commercially
 reasonable efforts to ensure that any person to whom such Creditor Party
 passes any information in accordance with the terms of this Clause 27.13
 undertakes to maintain the confidentiality of such information so as to
 protect any material non-public information of the Security Parties.

 
	
  

 	
  

 
	
 27.14

 	
 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.

 
	
  

 	
  

 
	
 27.15

 	
 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.

 
	
  

 	
  

 
	
 27.16

 	
 Intentionally
 omitted.

 
	
  

 	
  

 
	
 27.17

 	
 Security over Lenders’ rights. In addition to the other rights provided to
 Lenders under this Clause 27, each Lender may without consulting with or
 obtaining consent from the Borrower or any other 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 to secure obligations of that Lender including, without limitation:

 

81

	
  

 	
  

 
	
 (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 other 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.

 

	
  

 	
  

 
	
 28

 	
 VARIATIONS AND WAIVERS

 
	
  

 	
  

 
	
 28.1

 	
 Variations, waivers
 etc. by Majority Lenders. Subject to Clause 28.2, a document shall be effective to vary, waive,
 suspend or limit any provision of a Finance Document, or any Creditor Party’s
 rights or remedies under such a provision or the general law, only if the
 document is signed, or specifically agreed to by fax, by the Borrower, by the
 Agent on behalf of the Majority Lenders, by the Agent and the Security
 Trustee in their own rights, and, if the document relates to a Finance
 Document to which a Security Party is party, by that Security Party.

 
	
  

 	
  

 
	
 28.2

 	
 Variations, waivers
 etc. requiring agreement of all Lenders. As regards the following, Clause 28.1
 applies as if the words “by the Agent on behalf of the Majority Lenders” were
 replaced by the words “by or on behalf of every Lender”:

 
	
  

 	
  

 
	
 (a)

 	
 a reduction in the Margin;

 
	
  

 	
  

 
	
 (b)

 	
 a postponement to the date for, or a reduction in the amount of, any
 payment of principal, interest, fees or other sum payable under this
 Agreement or the Note;

 
	
  

 	
  

 
	
 (c)

 	
 an increase in any Lender’s Commitment;

 
	
  

 	
  

 
	
 (d)

 	
 a change to the definition of “Majority
 Lenders”;

 
	
  

 	
  

 
	
 (e)

 	
 a change to Clause 3 or this Clause 28;

 
	
  

 	
  

 
	
 (f)

 	
 any release of, or material variation to, a Security Interest,
 guarantee, indemnity or subordination arrangement set out in a Finance
 Document; and

 
	
  

 	
  

 
	
 (g)

 	
 any other change or matter as regards which this Agreement or another
 Finance Document expressly provides that each Lender’s consent is required.

 

82

	
  

 	
  

 
	
 28.3

 	
 Variations, waivers
 etc. relating to the Servicing Banks. An amendment or waiver that relates to the
 rights or obligations of the Agent or the Security Trustee under Clause 31
 may not be effected without the consent of the Agent or the Security Trustee.

 
	
  

 	
  

 
	
 28.4

 	
 Exclusion of other
 or implied variations. Except for a document which satisfies the requirements of Clauses
 28.1, 28.2 or 28.3, no document, and 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 another 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.

 

	
  

 	
  

 
	
 29

 	
 NOTICES

 
	
  

 	
  

 
	
 29.1

 	
 General. Unless otherwise specifically provided, any
 notice under or in connection with any Finance Document shall be given by
 letter, electronic mail (“Email”) or fax and references in the
 Finance Documents to written notices, notices in writing and notices signed
 by particular persons shall be construed accordingly.

 
	
  

 	
  

 
	
 29.2

 	
 Addresses for
 communications.
 A notice by letter, Email or fax shall be sent:

 
	
  

 	
  

 
	
 (a)

 	
 to the Borrower

 

	
  

 	
  

 	
  

 
	
  

 	
 or the Guarantor:

 	
 9, Boulevard Charles III

 
	
  

 	
   

 	
 Monaco 98000

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 Attention: Luca Forgione

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 Facsimile:+377 92 05 7045

 
	
  

 	
  

 	
 Email: legal@scorpiogroup.net

 
	
  

 	
  

 	
  

 
	
  

 	
 with a copy to:

 	
 150 E. 58th Street

 
	
  

 	
  

 	
 New York, New York 10155

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 Attention: Chief Financial officer

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 Facsimile: +212-542-1618

 

83

	
  

 	
  

 	
 Email: BLee@scorpiogroup.net

 
	
  

 	
  

 	
  

 
	
 (b)

 	
 to a Lender:

 	
 At the address below its name in Schedule 1 or (as the case may
 require) in the relevant Transfer Certificate.

 
	
  

 	
  

 	
  

 
	
 (c)

 	
 to the Agent:

 	
 DVB Bank SE

 
	
  

 	
  

 	
 London Branch

 
	
  

 	
  

 	
 80 Cheapside

 
	
  

 	
  

 	
 LondonEC2V 6EE, England

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 Attention: Peter J. Attridge

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 Facsimile: +44-207-618-9652

 
	
  

 	
  

 	
 Email: Lam.London@dvbbank.com

 
	
  

 	
  

 	
  

 
	
  

 	
 with a copy to:

 	
 DVB Bank SE, Rep. Office Greece

 
	
  

 	
  

 	
 95 Akti Miaouli

 
	
  

 	
  

 	
 185 38 Piraeus

 
	
  

 	
  

 	
 Greece

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 Attention: Semiramis Stampira

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 Facsimile: +30-210-455-7420

 
	
  

 	
  

 	
 Email: semiramis.stampira@dvbbank.com

 
	
  

 	
  

 	
  

 
	
 (d)

 	
 to the Security Trustee:

 	
 DVB Bank SE

 
	
  

 	
  

 	
 London Branch

 
	
  

 	
  

 	
 80 Cheapside

 
	
  

 	
  

 	
 LondonEC2V 6EE, England

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 Attention: Peter J. Attridge

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 Facsimile: +44-207-618-9652

 
	
  

 	
  

 	
 Email: Lam.London@dvbbank.com

 
	
  

 	
  

 	
  

 
	
  

 	
 with a copy to:

 	
 DVB Bank SE, Rep. Office Greece

 
	
  

 	
  

 	
 95 Akti Miaouli

 
	
  

 	
  

 	
 185 38 Piraeus

 
	
  

 	
  

 	
 Greece

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 Attention: Semiramis Stampira

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 Facsimile: +30-210-455-7420

 
	
  

 	
  

 	
 Email: semiramis.stampira@dvbbank.com

 
	
  

 	
  

 	
  

 
	
  

 	
 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 and the Security Parties.

 
	
  

 	
  

 
	
 29.3

 	
 Effective date of
 notices.
 Subject to Clauses 29.4 and 29.5:

 

84

	
  

 	
  

 
	
 (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; 

 
	
  

 	
  

 
	
 (b)

 	
 a notice which is sent by Email shall be deemed to be served, and
 shall take effect, at the time when it is actually received in readable form;
 and

 
	
  

 	
  

 
	
 (c)

 	
 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. 

 
	
  

 	
  

 
	
 29.4

 	
 Service outside
 business hours.
 However, if under Clause 29.3 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 5:00 p.m. local time,

 
	
  

 	
  

 
	
  

 	
 the notice shall (subject to Clause 29.5) be deemed to be served, and
 shall take effect, at 9:00 a.m. on the next day which is such a business day.

 
	
  

 	
  

 
	
 29.5

 	
 Illegible notices. Clauses 29.3 and 29.4 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.

 
	
  

 	
  

 
	
 29.6

 	
 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

 
	
  

 	
  

 
	
 (b)

 	
 in the case of incorrect and/or incomplete contents, it should have
 been reasonably clear to the party on which the notice was served what the
 correct or missing particulars should have been.

 
	
  

 	
  

 
	
 29.7

 	
 Electronic
 communication between the Agent and a Lender. Any communication to be made between the
 Agent and a Lender under or in connection with the Finance Documents may be
 made by Email or other electronic means, if the Agent and the relevant
 Lender:

 
	
  

 	
  

 
	
 (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 Email 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 Email addresses
 or any other such information supplied to them.

 

85

	
  

 	
  

 
	
  

 	
 Any electronic communication made between the Agent and a Lender will
 be effective only when actually received in readable form and, in the case of
 any electronic communication made by a Lender to the Agent, only if it is
 addressed in such a manner as the Agent shall specify for this purpose.

 

	
  

 	
  

 
	
 29.8

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

 
	
  

 	
  

 
	
 29.9

 	
 Meaning of
 “notice”. In
 this Clause 29, “notice” includes any demand, consent,
 authorization, approval, instruction, waiver or other communication. 

 
	
  

 	
  

 
	
 30 

 	
 SUPPLEMENTAL 

 
	
  

 	
  

 
	
 30.1

 	
 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.

 
	
  

 	
  

 
	
 30.2

 	
 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.

 
	
  

 	
  

 
	
 30.3

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

 
	
  

 	
  

 
	
 30.4

 	
 Binding Effect. This Agreement shall become effective on the
 Effective Date and thereafter shall be binding upon and inure to the benefit
 of each of the parties hereto and their respective successors and assigns.

 
	
  

 	
  

 
	
 31 

 	
 THE SERVICING BANKS 

 
	
  

 	
  

 
	
 31.1

 	
 Appointment and
 Granting.

 
	
  

 	
  

 
	
 (a)

 	
 The Agent. Each of the Lenders and the Arranger
 appoints and authorizes (with a right of revocation) the Agent to act as its
 agent hereunder and under any of the other Finance Documents with such powers
 as are specifically delegated to the Agent by the terms of this Agreement and
 of any of the other Finance Documents, together with such other powers as are
 reasonably incidental thereto. 

 
	
  

 	
  

 
	
 (b)

 	
 The Security
 Trustee.

 

	
  

 	
  

 	
  

 
	
  

 	
 (i)

 	
 Authorization of
 Security Trustee.
 Each of the Lenders, the Arranger and the Agent appoints and authorizes (with
 a right of revocation) the Security Trustee to act as security trustee
 hereunder and under the other Finance Documents (other than the Notes) with
 such powers as are specifically delegated to the Security Trustee by the 

 

86

	
  

 	
  

 	
  

 
	
  

 	
  

 	
 terms of this Agreement and such other Finance Documents, together
 with such other powers as are reasonably incidental thereto.

 
	
  

 	
  

 	
  

 
	
  

 	
 (ii)

 	
 Granting Clause. To
 secure the payment of all sums of money from time to time owing to the
 Lenders under the Finance Documentsand the
 performance of the covenants of the Borrower and any other Security Party
 herein and therein contained, and in consideration of the premises and of the
 covenants herein contained and of the extensions of credit by the Lenders,
 the Security Trustee does hereby declare that it will hold as such trustee in
 trust for the benefit of the Lenders, the Arranger and the Agent, from and
 after the execution and delivery thereof, all of its right, title and
 interest as mortgagee in, to and under the Mortgages and its right, title and
 interest as assignee and secured party under the other Finance Documents (the
 right, title and interest of the Security Trustee in and to the property,
 rights and privileges described above, from and after the execution and
 delivery thereof, and all property hereafter specifically subjected to the
 Security Interest of the indenture created hereby and by the Finance
 Documents by any amendment hereto or thereto are herein collectively called
 the “Estate”);
 TO HAVE AND TO HOLD the Estate unto the Security Trustee and its successors
 and assigns forever, BUT IN TRUST, NEVERTHELESS, for the equal and
 proportionate benefit and security of the Lenders, the Arranger and the Agent
 and their respective successors and assigns without any priority of any one
 over any other, UPON THE CONDITION that, unless and until an Event of Default
 under this Agreement shall have occurred and be continuing, the Borrower
 shall be permitted, to the exclusion of the Security Trustee, to possess and
 use the Ship. IT IS HEREBY COVENANTED, DECLARED AND AGREED that all property
 subject or to become subject hereto is to be held, subject to the further
 covenants, conditions, uses and trusts hereinafter set forth, and each
 Security Party, for itself and its respective successors and assigns, hereby
 covenants and agrees to and with the Security Trustee and its successors in
 said trust, for the equal and proportionate benefit and security of the
 Lenders, the Arranger and the Agent as hereinafter set forth.

 
	
  

 	
  

 	
  

 
	
  

 	
 (iii)

 	
 Acceptance of
 Trusts. The Security Trustee hereby accepts the trusts imposed upon it as
 Security Trustee by this Agreement, and the Security Trustee covenants and
 agrees to perform the same as herein expressed and agrees to receive and
 disburse all monies constituting part of the Estate in accordance with the
 terms hereof.

 

	
  

 	
  

 
	
 31.2

 	
 Scope of Duties. Neither the Agent nor the Security Trustee
 (which terms as used in this sentence and in Clause 31.5 hereof shall include
 reference to their respective affiliates and their own respective and their
 respective affiliates’ officers, directors, employees, agents and
 attorneys-in-fact): 

 
	
  

 	
  

 
	
 (a)

 	
 shall have any duties or responsibilities except those expressly set
 forth in this Agreement and in any of the Finance Documents, and shall not by
 reason of this Agreement or any of the Finance Documents be (except, with
 respect to the Security Trustee, as specifically stated to the contrary in
 this Agreement) a trustee for a Lender; 

 
	
  

 	
  

 
	
 (b)

 	
 shall be responsible to the Lenders for any recitals, statements,
 representations or warranties contained in this Agreement or in any of the
 Finance Documents, or in any certificate or other document referred to or
 provided for in, or received by any of them under, this Agreement or any of
 the other Finance Documents, or for the value, validity, effectiveness, 

 

87

	
  

 	
 genuineness, enforceability or sufficiency of this Agreement or any
 of the other Finance Documents or any other document referred to or provided
 for herein or therein or for any failure by a Security Party or any other
 person to perform any of its obligations hereunder or thereunder or for the
 location, condition or value of any property covered by any Security Interest
 under any of the Finance Documents or for the creation, perfection or
 priority of any such Security Interest;

 
	
  

 	
  

 
	
 (c)

 	
 shall be required to initiate or conduct any litigation or collection
 proceedings hereunder or under any of the Finance Documents unless expressly
 instructed to do so in writing by the Majority Lenders; or 

 
	
  

 	
  

 
	
 (d)

 	
 shall be responsible for any action taken
 or omitted to be taken by it hereunder or under any of the Finance Documents
 or under any other document or instrument referred to or provided for herein
 or therein or in connection herewith or therewith, except for its own gross
 negligence or willful misconduct. Each of the Security Trustee and the Agent
 may employ agents and attorneys-in-fact and neither the Security Trustee nor
 the Agent shall be responsible for the negligence or misconduct of any such
 agents or attorneys-in-fact selected by it in good faith. Each of the
 Security Trustee and the Agent may deem and treat the payee of a Note as the
 holder thereof for all purposes hereof unless and until a written notice of
 the assignment or transfer thereof shall have been filed with the Agent.

 
	
  

 	
  

 
	
 31.3

 	
 Reliance. Each of the Security Trustee and the Agent
 shall be entitled to rely upon any certification, notice or other
 communication (including any thereof by telephone, telex, telefacsimile,
 telegram or cable) believed by it to be genuine and correct and to have been
 signed or sent by or on behalf of the proper person or persons, and upon
 advice and statements of legal counsel, independent accountants and other
 experts selected by the Security Trustee or the Agent, as the case may be. As
 to any matters not expressly provided for by this Agreement or any of the
 other Finance Documents, each of the Security Trustee and the Agent shall in
 all cases be fully protected in acting, or in refraining from acting,
 hereunder or thereunder in accordance with instructions signed by the
 Majority Lenders, and such instructions and any action taken or failure to
 act pursuant thereto shall be binding on all of the Lenders.

 
	
  

 	
  

 
	
 31.4

 	
 Knowledge. Neither the Security Trustee nor the Agent
 shall be deemed to have knowledge or notice of the occurrence of a Potential
 Event of Default or Event of Default (other than, in the case of the Agent,
 the non-payment of principal of or interest on the Loan or actual knowledge
 thereof) unless each of the Security Trustee and the Agent has received
 notice from a Lender or the Borrower specifying such Potential Event of
 Default or Event of Default and stating that such notice is a “Notice of
 Default”. If the Agent receives such a notice of the occurrence of such
 Potential Event of Default or Event of Default, the Agent shall give prompt
 notice thereof to the Security Trustee and the Lenders (and shall give each
 Lender prompt notice of each such non-payment). Subject to Clause 31.8
 hereof, the Security Trustee and the Agent shall take such action with
 respect to such Potential Event of Default or Event of Default or other event
 as shall be directed by the Majority Lenders, except that, unless and until
 the Security Trustee and the Agent shall have received such directions, each
 of the Security Trustee and the Agent may (but shall not be obligated to)
 take such action, or refrain from taking such action, with respect to such
 Potential Event of Default or Event of Default or other event as it shall
 deem advisable in the best interest of the Lenders.

 

88

	
  

 	
  

 
	
 31.5

 	
 Security Trustee
 and Agent as Lenders. Each of the Security Trustee and the Agent (and any successor acting
 as Security Trustee or Agent, as the case may be) in its individual capacity
 as a Lender hereunder shall have the same rights and powers hereunder as any
 other Lender and may exercise the same as though it were not acting as the
 Security Trustee or the Agent, as the case may be, and the term “Lender” or
 “Lenders” shall, unless the context otherwise indicates, include each of the
 Security Trustee and the Agent in their respective individual capacities.
 Each of the Security Trustee and the Agent (and any successor acting as
 Security Trustee and Agent, as the case may be) and their respective
 affiliates may (without having to account therefor to a Lender) accept
 deposits from, lend money to and generally engage in any kind of banking,
 trust or other business with the Borrower and any of its subsidiaries or
 affiliates as if it were not acting as the Security Trustee or the Agent, as
 the case may be, and each of the Security Trustee and the Agent and their
 respective affiliates may accept fees and other consideration from the
 Borrower for services in connection with this Agreement or otherwise without
 having to account for the same to the Lenders.

 
	
  

 	
  

 
	
 31.6

 	
 Indemnification of
 Security Trustee and Agent. The Lenders severally agree, ratably in accordance with the aggregate
 principal amount of each Lender’s Contribution in the Loan, to indemnify each
 of the Agent and the Security Trustee (to the extent not reimbursed under
 other provisions of this Agreement, but without limiting the obligations of
 the Borrower under said other provisions) for any and all liabilities,
 obligations, losses, damages, penalties, actions, judgments, suits, costs,
 expenses or disbursements of any kind and nature whatsoever which may be
 imposed on, incurred by or asserted against the Security Trustee or the Agent
 in any way relating to or arising out of this Agreement or any of the other
 Finance Documents or any other documents contemplated by or referred to
 herein or therein or the transactions contemplated hereby (including, without
 limitation, the costs and expenses which the Borrower is to pay hereunder,
 but excluding, unless an Event of Default has occurred and is continuing,
 normal administrative costs and expenses incident to the performance of their
 respective agency duties hereunder) or the enforcement of any of the terms
 hereof or thereof or of any such other documents, except that no Lender shall
 be liable for any of the foregoing to the extent they arise from the gross
 negligence or willful misconduct of the party to be indemnified.

 
	
  

 	
  

 
	
 31.7

 	
 Reliance on Security
 Trustee or Agent. Each Lender agrees that it has, independently and without reliance on
 the Security Trustee, the Agent or any other Lender, and based on such
 documents and information as it has deemed appropriate, made its own credit
 analysis of the Borrower and decision to enter into this Agreement and that
 it will, independently and without reliance upon the Security Trustee, the
 Agent or any other Lender, and based on such documents and information as it
 shall deem appropriate at the time, continue to make its own analysis and
 decisions in taking or not taking action under this Agreement or any of the
 Finance Documents. None of the Security Trustee or the Agent shall be
 required to keep itself informed as to the performance or observance by the
 Borrower of this Agreement or any of the Finance Documents or any other
 document referred to or provided for herein or therein or to inspect the
 properties or books of the Borrower. Except for notices, reports and other
 documents and information expressly required to be furnished to the Lenders
 by the Security Trustee or the Agent hereunder, neither the Security Trustee
 nor the Agent shall have any duty or responsibility to provide a Lender with
 any credit or other information concerning the affairs, financial condition
 or business of the Borrower or any of its parents, subsidiaries or affiliates
 which may come into the possession of the Security Trustee, the Agent or any
 of their respective affiliates.

 

89

	
  

 	
  

 
	
 31.8

 	
 Actions by Security
 Trustee and Agent. Except for action expressly required of the Security Trustee or the
 Agent hereunder and under the other Finance Documents, each of the Security
 Trustee and the Agent shall in all cases be fully justified in failing or
 refusing to act hereunder and thereunder unless it shall receive further
 assurances to its satisfaction from the Lenders of their indemnification
 obligations under Clause 31.6 against any and all liability and expense which
 may be incurred by it by reason of taking or continuing to take any such action.

 
	
  

 	
  

 
	
 31.9

 	
 Resignation and
 Removal.
 Subject to the appointment and acceptance of a successor Security Trustee or
 Agent (as the case may be) as provided below, each of the Security Trustee
 and the Agent may resign at any time by giving notice thereof to the Lenders
 and the Borrower, and the Security Trustee or the Agent may be removed at any
 time with or without cause by the Majority Lenders by giving notice thereof
 to the Agent, the Security Trustee, the Lenders and the Borrower. Upon any
 such resignation or removal, the Majority Lenders shall have the right to
 appoint a successor Security Trustee or Agent, as the case may be. If no
 successor Security Trustee or Agent, as the case may be, shall have been so
 appointed by the Lenders or, if appointed, shall not have accepted such
 appointment within 30 days after the retiring Security Trustee’s or Agent’s,
 as the case may be, giving of notice of resignation or the Majority Lenders’
 removal of the retiring Security Trustee or Agent, as the case may be, then
 the retiring Security Trustee or Agent, as the case may be, may, on behalf of
 the Lenders, appoint a successor Security Trustee or Agent. Upon the
 acceptance of any appointment as Security Trustee or Agent hereunder by a
 successor Security Trustee or Agent, such successor Security Trustee or
 Agent, as the case may be, shall thereupon succeed to and become vested with
 all the rights, powers, privileges and duties of the retiring Security
 Trustee or Agent, as the case may be, and the retiring Security Trustee or Agent
 shall be discharged from its duties and obligations hereunder. After any
 retiring Security Trustee or Agent’s resignation or removal hereunder as
 Security Trustee or Agent, as the case may be, the provisions of this Clause
 31 shall continue in effect for its benefit in respect of any actions taken
 or omitted to be taken by it while it was acting as the Security Trustee or
 the Agent, as the case may be.

 
	
  

 	
  

 
	
 31.10

 	
 Release of
 Collateral. Without
 the prior written consent of the Majority Lenders, neither the Security
 Trustee nor the Agent will consent to any modification, supplement or waiver
 under any of the Finance Documents nor without the prior written consent of
 all of the Lenders release any Collateral or otherwise terminate any Security
 Interest under the Finance Documents, except that no such consent is
 required, and each of the Security Trustee and the Agent is authorized, to
 release any Security Interest covering property if the Secured Liabilities
 have been paid and performed in full or which is the subject of a disposition
 of property permitted hereunder or to which the Lenders have consented.

 
	
  

 	
  

 
	
 32

 	
 LAW AND JURISDICTION

 
	
  

 	
  

 
	
 32.1

 	
 Governing law. THIS AGREEMENT AND THE OTHER FINANCE
 DOCUMENTS (EXCEPT AS OTHERWISE PROVIDED IN A FINANCE DOCUMENT) SHALL BE
 GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
 YORK WITHOUT REGARD TO ITS CONFLICT OF LAW PRINCIPLES.

 
	
  

 	
  

 
	
 32.2

 	
 Consent to
 Jurisdiction.

 

90

	
  

 	
  

 
	
 (a)

 	
 Each of the Security Parties hereby irrevocably and unconditionally
 submits, for itself and its property, to the nonexclusive jurisdiction of any
 New York State court or Federal court of the United States of America sitting
 in New York County, and any appellate court thereof, in any action or
 proceeding arising out of or relating to this Agreement or any of the other
 Finance Documents to which such Security Party is a party or for recognition
 or enforcement of any judgment, and each of the parties hereto hereby
 irrevocably and unconditionally agrees that all claims in respect of any such
 action or proceeding may be heard and determined in such New York State Court
 or, to the extent permitted by law, in such Federal court. Each of the
 parties hereto agrees that a final judgment in any such action or proceeding
 shall be conclusive and may be enforced in other jurisdictions by suit on the
 judgment or in any other manner provided by law. 

 
	
  

 	
  

 
	
 (b)

 	
 Nothing in this Clause 32.2 shall affect the right of a Creditor
 Party to bring any action or proceeding against a Security Party or its property
 in the courts of any other jurisdictions where such action or proceeding may
 be heard.

 
	
  

 	
  

 
	
 (c)

 	
 Each of the Security Parties hereby irrevocably and unconditionally
 waives, to the fullest extent it may legally and effectively do so, any
 objection which it may now or hereafter have to the laying of venue of any
 suit, action or proceeding arising out of or relating to this Agreement in
 any New York State or Federal court and the defense of an inconvenient forum
 to the maintenance of such action or proceeding in any such court and any
 immunity from jurisdiction of any court or from any legal process with
 respect to itself or its property.

 
	
  

 	
  

 
	
 (d)

 	
 Each of the Security Parties hereby agrees to appoint Seward & Kissel
 LLP, with offices currently located at One Battery Park Plaza, New York, New
 York 10004, Attention: Lawrence Rutkowski, as its designated agent for
 service of process for any action or proceeding arising out of or relating to
 this Agreement or any other Finance Document. Each of the Security Parties also irrevocably consents to the
 service of any and all process in any such action or proceeding by the
 mailing of copies of such process to its address specified in Clause 29.2. Each of the Security Parties also agrees that
 service of process may be made on it by any other method of service provided
 for under the applicable laws in effect in the State of New York.

 
	
  

 	
  

 
	
 32.3

 	
 Creditor Party
 rights unaffected. Nothing in this Clause 32 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.

 
	
  

 	
  

 
	
 32.4

 	
 Meaning of
 “proceedings”.
 In this Clause 32, “proceedings” means proceedings of any
 kind, including an application for a provisional or protective measure.

 
	
  

 	
  

 
	
 33

 	
 WAIVER OF JURY TRIAL

 
	
  

 	
  

 
	
 33.1

 	
 WAIVER. EACH OF THE SECURITY PARTIES AND THE CREDITOR
 PARTIES MUTUALLY AND IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN
 ANY LEGAL ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT
 OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

91

	
  

 	
  

 
	
 34

 	
 PATRIOT ACT NOTICE

 
	
  

 	
  

 
	
 34.1

 	
 PATRIOT Act Notice. Each of the Agent and the Lenders hereby
 notifies the Borrower that pursuant to the requirements of the PATRIOT Act
 and the policies and practices of the Agent and each Lender, the Agent and
 each of the Lenders is required to obtain, verify and record certain
 information and documentation that identifies each Security Party, which
 information includes the name and address of each Security Party and such
 other information that will allow the Agent and each of the Lenders to
 identify each Security Party in accordance with the PATRIOT Act.

 

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92

EXECUTION PAGE

          WHEREFORE,
the parties hereto have caused this Loan Agreement to be executed as of the
date first above written.

	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 STI SPIRIT SHIPPING COMPANY LIMITED,
 as Borrower

 	
 DVB BANK SE, as Lender

 
	
  

 	
  

 	
  

 
	
 By: 

 	
 /s Brian M. Lee

 	
 By: 

 	
 /s Daniel C. Rodgers

 
	

 

 	
  

 	

 

 	
  

 
	
 Name: Brian M. Lee

 	
 Daniel C. Rodgers

 
	
 Title: Attorney-in-Fact

 	
  Attorney-in-Fact

 

	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 SCORPIO TANKERS INC., as Guarantor

 	
  

 	
 DVB BANK SE, as Arranger, Agent and Security Trustee

 
	
  

 	
  

 	
  

 
	
 By: 

 	
 /s Brian M. Lee

 	
 By: 

 	
 /s Daniel C. Rodgers

 
	

 

 	
  

 	

 

 	
  

 
	
 Name: Brian M. Lee

 	
 Daniel C. Rodgers

 
	
 Title: Attorney-in-Fact

 	
 Attorney-in-Fact

 

93

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