Document:

Exhibit 10.29

 

Private & Confidential

 

LOAN
AGREEMENT

for a

Loan of up
to US$33,400,000

to

AMORGOS MARITIME INC.

KIMOLOS MARITIME INC.

MILOS MARITIME INC.

MYKONOS
MARITIME INC.

and

SYROS
MARITIME INC.

 

provided by

THE ROYAL
BANK OF SCOTLAND PLC

 

 

 

Contents

 

	
  Clause

  	
   

  	
   

  	
  Page

  
	
  1

  	
  Purpose and definitions

  	
  1

  
	
  2

  	
  The Commitment and the Loan

  	
  28

  
	
  3

  	
  Interest and Interest Periods

  	
  30

  
	
  4

  	
  Repayment and prepayment

  	
  32

  
	
  5

  	
  Fees, commitment commission and expenses

  	
  36

  
	
  6

  	
  Payments and taxes; accounts and calculations

  	
  37

  
	
  7

  	
  Representations and warranties

  	
  38

  
	
  8

  	
  Undertakings

  	
  43

  
	
  9

  	
  Conditions

  	
  49

  
	
  10

  	
  Events of Default

  	
  50

  
	
  11

  	
  Indemnities

  	
  54

  
	
  12

  	
  Unlawfulness and increased costs

  	
  55

  
	
  13

  	
  Security and set-off

  	
  56

  
	
  14

  	
  Operating Accounts

  	
  57

  
	
  15

  	
  Assignment, transfer and lending office

  	
  58

  
	
  16

  	
  Notices and other matters

  	
  59

  
	
  17

  	
  Governing law and jurisdiction

  	
  63

  

 

	
  Schedule 1 Form of Drawdown Notice

  	
  65

  
	
  Schedule 2 Documents and evidence required as
  conditions precedent

  	
  67

  
	
  Schedule 3 Pre-delivery Advances per Ship

  	
  80

  
	
  Schedule 4 Form of Pre-delivery Security
  Assignment

  	
  81

  
	
  Schedule 5 Form of Corporate Guarantee

  	
  82

  
	
  Schedule 6 Form of Personal Guarantee

  	
  83

  
	
  Schedule 7 Form of Master Swap Agreement

  	
  84

  
	
  Schedule 8 Form of Master Agreement
  Security Deed

  	
  85

  
	
  Schedule 9 Form of Insurance Letter

  	
  86

  

 

 

 

	
  Schedule 10 Form of Interest Period
  Letter

  	
  87

  
	
  Schedule 11 Calculation of Additional Cost

  	
  89

  
	
  Schedule 12 Conditions subsequent

  	
  90

  

 

 

 

THIS AGREEMENT is dated 10 February 2006 and made BETWEEN:

 

 

	
  (1)

  	
  AMORGOS MARITIME INC., KIMOLOS
  MARITIME INC., MILOS MARITIME INC., MYKONOS MARITIME INC. and SYROS
  MARITIME INC. as joint and several Borrowers; and

  
	
   

  	
   

  	
   

  
	
  (2)

  	
  THE ROYAL BANK OF SCOTLAND PLC as Bank.

  

 

IT IS AGREED as follows:

 

	
  1

  	
  Purpose and definitions

  
	
   

  	
   

  
	
  1.1

  	
  Purpose

  
	
   

  	
   

  
	
   

  	
  This Agreement sets out the terms and conditions
  upon and subject to which the Bank agrees to make available to the Borrowers,
  jointly and severally, a loan of up to Thirty three million four hundred
  thousand Dollars ($33,400,000) in up to twenty (20) Advances to be used for
  the purpose of financing and/or refinancing part of the construction and
  acquisition cost of the Newbuildings.

  
	
   

  	
   

  
	
  1.2

  	
  Definitions

  
	
   

  	
   

  
	
   

  	
  In this Agreement, unless the context otherwise
  requires:

  
	
   

  	
   

  
	
   

  	
  “Additional Cost” means, in relation to any period, a
  percentage calculated for such period at an annual rate determined in the
  manner set out in schedule 11;

   

  “Advances” means each borrowing of a proportion of the
  Commitment by the Borrowers or (as the context may require) the
  principal amount of such borrowing, it includes (i) each Amorgos
  Pre-delivery Advance, (ii) the Amorgos Delivery Advance, (iii) each
  Kimolos Pre-delivery Advance, (iv) the Kimolos Delivery Advance, (v) each
  Milos Pre-delivery Advance, (vi) the Milos Delivery Advance, (vii) each
  Mykonos Pre-delivery Advance, (viii) the Mykonos Delivery Advance, (ix) each
  Syros Pre-delivery Advance and (x) the Syros Delivery Advance, and:

  
	
   

  	
   

  
	
   

  	
  (a)

  	
  in relation to the Amorgos Ship and the Amorgos
  Tranche, it means the Amorgos Advances;

  
	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  in relation to the Kimolos Ship and the Kimolos
  Tranche, it means the Kimolos Advances;

  
	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  in relation to the Milos Ship and the Milos
  Tranche, it means the Milos Advances;

  
	
   

  	
   

  	
   

  
	
   

  	
  (d)

  	
  in relation to the Mykonos Ship and the Mykonos
  Tranche, it means the Mykonos Advances; or

  
	
   

  	
   

  	
   

  
	
   

  	
  (e)

  	
  in relation to the Syros Ship and the Syros
  Tranche, it means the Syros Advances, 

  
	
   

  	
   

  	
   

  
	
   

  	
  and “Advance” means
  any of them;

   

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

   

  “Amorgos Borrower” means Amorgos Maritime Inc. of Trust
  Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands
  MH96960 and includes its successors in title;

   

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

   

  “Amorgos Contract” means the shipbuilding contract dated 6 February 2005,
  as amended by addendum No. 1 dated 31 March 2005, addendum No. 2
  dated 27 April 2005 and addendum No. 3 dated 27 May 2005, all made
  between the Builders and the Amorgos Borrower, as may be

  

 

1

 

	
   

  	
  further amended, supplemented, varied, replaced or
  novated from time to time with the prior written consent of the Bank,
  relating to the construction and sale by the Builders, and the purchase by
  the Amorgos Borrower, of the Amorgos Ship;

   

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

   

  “Amorgos Contract Price” means Six million eight hundred thousand
  Dollars ($6,800,000) or such other lesser sum in Dollars as may be
  payable by the Amorgos Borrower to the Builders pursuant to the Amorgos
  Contract as the contract price for the Amorgos Ship;

   

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

   

  “Amorgos Delivery Advance” means an Advance of up to Three million
  seven hundred and fifty seven thousand five hundred Dollars ($3,757,500) made
  or (as the context may require) to be made available to the Borrowers
  for the purpose of (a) financing or refinancing in part the final
  instalment of the Amorgos Contract Price and the final instalment of the
  Amorgos Supervision Cost, each falling due on the Delivery Date for the
  Amorgos Ship and (b) (as to the balance) refinancing the payment of any
  other part of the Amorgos Construction Cost previously made by the
  Amorgos Borrower and not already financed or refinanced under the terms of
  this Agreement;

   

  “Amorgos First Advance” means an Advance of up to Four hundred and
  seventeen thousand five hundred Dollars ($417,500) made or (as the context may require)
  to be made available to the Borrowers for the purpose of financing or
  refinancing in part the payment of the second instalment of the Amorgos
  Contract Price and the second instalment of the Amorgos Supervision Cost,
  each falling due before the Delivery Date for the Amorgos Ship as set out in schedule 3;

   

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

   

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

   

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

   

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

   

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

   

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

  

 

2

 

	
   

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

   

  “Amorgos Refund Guarantees” means, together, the letter of guarantee no. LGD6600200500007
  dated 9 June 2005 issued by Bank of Communications, Fuzhou Branch as
  Refund Guarantor in respect of certain of the Builders’ obligations under the
  Amorgos Contract and any other letters of guarantee to be issued by a Refund
  Guarantor in respect of the Builders’ obligations under the Amorgos Contract,
  pursuant to the Amorgos Contract or any agreement supplemental to the Amorgos
  Contract, and any extensions, renewals or replacements to or of any such
  guarantee(s), in each case in form and substance acceptable to the Bank
  in its sole discretion and “Amorgos Refund
  Guarantee” means any of them;

   

  “Amorgos Second Advance” means an Advance of up to One million two
  hundred and fifty two thousand five hundred Dollars ($1,252,500) made or (as
  the context may require) to be made available to the Borrowers for the
  purpose of (a) financing or refinancing in full the payment of the third
  instalment of the Amorgos Contract Price falling due before the Delivery Date
  for the Amorgos Ship as set out in schedule 3 and (b) (as to the
  balance) refinancing the payment of any other part of the Amorgos
  Construction Cost previously made by the Amorgos Borrower and not already
  financed or refinanced under the terms of this Agreement;

   

  “Amorgos Ship” means the 3,800 dwt (approximately)
  double-hull oil product tanker currently known as Hull No. DN-3500-4, to
  be constructed and sold by the Builders to the Amorgos Borrower pursuant to
  the Amorgos Contract and to be registered on the Delivery Date for such
  Newbuilding in the ownership of the Amorgos Borrower through the relevant
  Registry under the laws and flag of the relevant Flag State;

   

  “Amorgos Supervision Contract” means the contract dated 10 February 2005
  made between the Amorgos Borrower and Iota as may be amended,
  supplemented, varied, replaced or novated from time to time with the prior
  written consent of the Bank, relating to the design, building, supervision,
  representation, procurement of machinery and supplies and turn-key delivery
  of the Amorgos Ship;

   

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

   

  “Amorgos Supervision Cost” means One million five hundred and fifty
  thousand Dollars ($1,550,000) or such other lesser sum in Dollars as may be
  payable by the Amorgos Borrower to Iota pursuant to the Amorgos Supervision
  Contract, as the cost for the services provided by Iota thereunder;

   

  “Amorgos Third Advance” means an Advance of up to One million two
  hundred and fifty two thousand five hundred Dollars ($1,252,500) made or (as
  the context may require) to be made available to the Borrowers for the
  purpose of financing or refinancing in part the payment of the fourth
  instalment of the Amorgos Contract Price and the third instalment of the
  Amorgos Supervision Cost, each falling due before the Delivery Date for the
  Amorgos Ship as set out in schedule 3;

   

  “Amorgos Tranche” means a tranche of the Loan of up to Six
  million six hundred and eighty thousand Dollars ($6,680,000) to be drawn down
  in not more than four (4) Advances (being the Amorgos Advances);

   

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

  

 

3

 

	
   

  	
  “Bank” means The Royal Bank of Scotland plc whose
  registered office is at 36 St. Andrew Square, Edinburgh EH2 2YB, Scotland
  acting for the purposes of this Agreement through its branch at 45 Akti
  Miaouli, 185 10 Piraeus, Greece (or of such other address as may last
  have been notified to the Borrowers pursuant to clause 15.6) and includes its
  successors in title, Assignees and/or Transferees;

   

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

   

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

   

  “Borrower” means:

  

 

	
   

  	
  (a)

  	
  in relation to the Amorgos Ship, the Amorgos
  Borrower;

  
	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  in relation to the Kimolos Ship, the Kimolos
  Borrower;

  
	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  in relation to the Milos Ship, the Milos Borrower;

  
	
   

  	
   

  	
   

  
	
   

  	
  (d)

  	
  in relation to the Mykonos Ship, the Mykonos
  Borrower; or

  
	
   

  	
   

  	
   

  
	
   

  	
  (e)

  	
  in relation to the Syros Ship, the Syros Borrower,

  

 

	
   

  	
  and “Borrowers”
  means any or all of them;

   

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

   

  “Builders” means, together, FSIGC and FSS and “Builder” means either of them;

   

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

   

  “Certificate of Ownership” means a certificate issued by the ultimate
  beneficial owner or owners of all the shares in the Borrowers, the Corporate
  Guarantor and the Manager in such form as the Bank may require in
  its absolute discretion;

   

  “Classification” means:

  

 

	
   

  	
  (a)

  	
  in relation to each Newbuilding, the
  classification “+A1 OIL CARRIER (E) ESP, FP.<60°C, + ACC + AMS” with
  the relevant Classification Society; or

  
	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  in relation to the Collateral Ship, 100 A1 Double
  Hull oil tanker (FP above 60 degrees C), ESP, LMC with the relevant
  Classification Society,

  
	
   

  	
   

  	
   

  
	
   

  	
  or, in each case, such other classification as the
  Bank shall, at the request of an Owner, have agreed in writing shall be
  treated as the Classification in relation to such Owner’s Ship for the
  purposes of the relevant Ship Security Documents;

  

 

4

 

	
   

  	
  “Classification Society” means:

  
	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  in relation to each Newbuilding, American Bureau
  of Shipping; or

  
	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  in relation to the Collateral Ship, Lloyds
  Register of Shipping,

  
	
   

  	
   

  	
   

  
	
   

  	
  or, in each such case, such other classification
  society which the Bank shall, at the request of an Owner, have agreed in
  writing shall be treated as the Classification Society in relation to such
  Owner’s Ship for the purposes of the relevant Ship Security Documents;

   

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

   

  “Collateral Deed of Covenant” means the deed of covenant collateral to
  the Collateral Mortgage executed or (as the context may require) to be
  executed by the Corporate Guarantor in favour of the Bank in such form as
  the Bank may require in its sole discretion;

   

  “Collateral Management Agreement”
  means the agreement
  dated 27 January 2004 executed between the Corporate Guarantor and the
  Manager or any other agreement executed between the Corporate Guarantor and
  the Manager in a form previously approved in writing by the Bank
  providing (inter alia) for the Manager to manage the Collateral Ship;

   

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

   

  “Collateral Mortgage” means the second priority Maltese mortgage
  of the Collateral Ship executed or (as the context may require) to be
  executed by the Corporate Guarantor in favour of the Bank in such form as
  the Bank may require in its sole discretion;

   

  “Collateral Mortgage Date” means the date falling not later than seven
  (7) days after the date when the Bank shall have sent to the Corporate
  Guarantor a request under clause 5.1.5 of the Corporate Guarantee;

   

  “Collateral Ship” means the 2002-built 6,500 dwt
  (approximately) double-hull oil tanker Aegean
  Flower registered in the ownership of the Corporate Guarantor
  under the laws of the relevant Flag State with IMO number 8978394;

   

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

   

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

   

  “Construction Cost” means:

  
	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  in relation to Amorgos Ship, the Amorgos
  Construction Cost;

  
	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  in relation to Kimolos Ship, the Kimolos Construction
  Cost;

  
	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  in relation to Milos Ship, the Milos Construction
  Cost;

  
	
   

  	
   

  	
   

  
	
   

  	
  (d) 

  	
  in relation to Mykonos Ship, the Mykonos
  Construction Cost; or

  
	
   

  	
   

  	
   

  

 

5

 

	
   

  	
  (e)

  	
  in relation to the Syros. Ship, the Syros
  Construction Cost, 

  
	
   

  	
   

  	
   

  
	
   

  	
  and “Construction
  Costs” means any or all of them; 

  
	
   

  	
   

  
	
   

  	
  “Contract” means:

  
	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  in relation to the Amorgos Ship, the Amorgos
  Contract;

  
	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  in relation to the Kimolos Ship, the Kimolos
  Contract;

  
	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  in relation to the Milos Ship, the Milos Contract;

  
	
   

  	
   

  	
   

  
	
   

  	
  (d)

  	
  in relation to the Mykonos Ship, the Mykonos
  Contract; or

  
	
   

  	
   

  	
   

  
	
   

  	
  (e)

  	
  in relation to the Syros Ship, the Syros Contract,

  
	
   

  	
   

  	
   

  
	
   

  	
  and “Contracts” means
  any or all of them;

  
	
   

  	
   

  
	
   

  	
  “Contract Assignment Consent and
  Acknowledgement” means:

  
	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  in relation to the Amorgos Ship, the Amorgos
  Contract Assignment Consent and Acknowledgement;

  
	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  in relation to the Kimolos Ship, the Kimolos
  Contract Assignment Consent and Acknowledgement;

  
	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  in relation to the Milos Ship, the Milos Contract
  Assignment Consent and Acknowledgement;

  
	
   

  	
   

  	
   

  
	
   

  	
  (d)

  	
  in relation to the Mykonos Ship, the Mykonos
  Contract Assignment Consent and Acknowledgement; or

  
	
   

  	
   

  	
   

  
	
   

  	
  (e)

  	
  in relation to the Syros Ship, the Syros Contract
  Assignment Consent and Acknowledgement,

  
	
   

  	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

  	
  “Contract Price” means:

  
	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  in relation to the Amorgos Ship, the Amorgos
  Contract Price;

  
	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  in relation to the Kimolos Ship, the Kimolos
  Contract Price;

  
	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  in relation to the Milos Ship, the Milos Contract
  Price;

  
	
   

  	
   

  	
   

  
	
   

  	
  (d)

  	
  in relation to the Mykonos Ship, the Mykonos
  Contract Price; or

  
	
   

  	
   

  	
   

  
	
   

  	
  (e)

  	
  in relation to the Syros Ship, the Syros Contract
  Price, 

  
	
   

  	
   

  	
   

  
	
   

  	
  and “Contract
  Prices” means any or all of them;

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

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

  

 

6

 

	
   

  	
  “Credit Support Document” has the meaning given to that expression in
  section 14 of the Master Swap Agreement and as set out in paragraph (f) or
  Part 4 of the Schedule to the Master Swap Agreement;

   

  “Credit Support Provider” means any person defined as such in the
  Master Swap Agreement pursuant to section 14 of the Master Swap
  Agreement;

   

  “Deed of Covenant” means:

  
	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  in relation to the Amorgos Ship, the Amorgos Deed
  of Covenant;

  
	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  in relation to the Kimolos Ship, the Kimolos Deed
  of Covenant;

  
	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  in relation to the Milos Ship, the Milos Deed of
  Covenant;

  
	
   

  	
   

  	
   

  
	
   

  	
  (d)

  	
  in relation to the Mykonos Ship, the Mykonos Deed
  of Covenant;

  
	
   

  	
   

  	
   

  
	
   

  	
  (e)

  	
  in relation to the Syros Ship, the Syros Deed of
  Covenant; or

  
	
   

  	
   

  	
   

  
	
   

  	
  (f)

  	
  in relation to the Collateral Ship, the Collateral
  Deed of Covenant, 

  
	
   

  	
   

  	
   

  
	
   

  	
  and “Deeds of
  Covenant” means any or all of them;

   

  “Default” means any Event of Default or any event or
  circumstance which with the giving of notice or lapse of time or the
  satisfaction of any other condition (or any combination thereof) would constitute
  an Event of Default;

   

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

   

  “Delivery Advance”:

  
	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  in relation to the Amorgos Ship and the Amorgos
  Tranche, means the Amorgos Delivery Advance;

  
	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  in relation to the Kimolos Ship and the Kimolos
  Tranche, means the Kimolos Delivery Advance;

  
	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  in relation to the Milos Ship and the Milos
  Tranche, means the Milos Delivery Advance;

  
	
   

  	
   

  	
   

  
	
   

  	
  (d)

  	
  in relation to the Mykonos Ship and the Mykonos
  Tranche, means the Mykonos Delivery Advance; or

  
	
   

  	
   

  	
   

  
	
   

  	
  (e)

  	
  in relation to the Syros Ship and the Syros
  Tranche, means the Syros Delivery Advance, 

  
	
   

  	
   

  	
   

  
	
   

  	
  and “Delivery
  Advances” means any or all of them;

  
	
   

  	
   

  
	
   

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

   

  “DOC” means a document of compliance issued to
  an Operator in accordance with rule 13 of the Code;

   

  “Dollars” and “$”
  mean the lawful currency of the United States of America and, in respect of
  all payments to be made under any of the Security Documents, mean funds which
  are for same day settlement in the New York Clearing House Interbank Payments
  System (or such other U.S. dollar funds as may at the relevant time be
  customary for the settlement of international banking transactions
  denominated in U.S. dollars);

  

 

7

 

	
   

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

   

  “Drawdown Notice” means a notice substantially in the terms
  of schedule 1;

   

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

   

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

   

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

   

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

   

  “Environmental Approval” means any consent, authorisation, licence
  or approval of any governmental or public body or authorities or courts
  applicable to any Relevant Ship or its operation or the carriage of cargo
  and/or passengers thereon and/or the provision of goods and/or services on or
  from such Relevant Ship required under any Environmental Law;

   

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

   

  “Environmental Laws” means all national, international and
  state laws, rules, regulations, treaties and conventions applicable to any
  Relevant Ship pertaining to the pollution or protection of human health or
  the environment including, without limitation, the carriage of Pollutants and
  actual or threatened emissions, spills, releases or discharges of Pollutants;

   

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

   

  “First Advance”:

  
	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  in relation to the Amorgos Ship and the Amorgos
  Tranche, means the Amorgos First Advance;

  
	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  in relation to the Kimolos Ship and the Kimolos
  Tranche, means the Kimolos First Advance;

  
	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  in relation to the Milos Ship and the Milos
  Tranche, means the Milos First Advance;

  

 

8

 

	
   

  	
  (d)

  	
  in relation to the Mykonos Ship and the Mykonos
  Tranche, means the Mykonos First Advance; or

  
	
   

  	
   

  	
   

  
	
   

  	
  (e)

  	
  in relation to the Syros Ship and the Syros
  Tranche, means the Syros First Advance,

  
	
   

  	
   

  	
   

  
	
   

  	
  and “First
  Advances” means any or all of them;

   

  “First Deed of Covenant” means the first priority deed of covenant
  collateral to the First Mortgage dated 30 January 2004 executed by the
  Corporate Guarantor in favour of the Bank as security for the Corporate
  Guarantor’s obligations under the First Loan Agreement;

   

  “First Loan Agreement” means the loan agreement dated 28 January 2004
  made between (a) the Corporate Guarantor and (b) the Bank, as
  amended and supplemented from time to time;

   

  “First Manager’s Undertaking” means the first priority undertaking and
  assignment in relation to the Collateral Ship dated 30 January 2004 and
  executed by the Manager (as defined in the First Loan Agreement) in favour of
  the Bank;

   

  “First Mortgage” means the first priority Maltese statutory
  mortgage of the Collateral Ship dated 30 January 2004 executed by the
  Corporate Guarantor in favour of the Bank as security for the Corporate
  Guarantor’s obligations under the First Loan Agreement;

   

  “First Mortgage Documents” means, together, the First Loan Agreement,
  the First Mortgage, the First Deed of Covenant and the First Manager’s
  Undertaking;

   

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

   

  “Flag State” means:

  
	
   

  	
   

  	
   

  
	
   

  	
  (a)

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

  
	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  in relation to the Collateral Ship, the Republic
  of Malta,

  
	
   

  	
   

  	
   

  
	
   

  	
  or, in each case, such other state or territory
  designated in writing by the Bank in its absolute discretion, at the request
  of an Owner as being the “Flag State” of such Owner’s Ship for the purpose of
  the Security Documents;

   

  “FSIGC” means Fujian Shipbuilding Industry Group
  Corporation, a corporation duly organized and existing under the laws of the
  People’s Republic of China, having its registered office at 27 Qunzhong Road,
  Fuzhou, Fujian, The People’s Republic of China and includes its successors in
  title;

   

  “FSS” means Fujian Southeast Shipyard, a
  corporation duly organized and existing under the laws of the People’s
  Republic of China, having its registered office at 7# Jianshe Road, Economic
  Technical Development Zone of Fuzhou, Fujian Province, The People’s Republic
  of China and includes its successors in title;

   

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

   

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

  

 

9

 

	
   

  	
  “Insurance Letter” means, in respect of a Ship, a letter from
  the Owner of such Ship in the form set out in schedule 9;

   

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

   

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

   

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

   

  “Interest Period Letter” means the letter addressed by the Borrowers
  to the Bank, such letter to be substantially in the form set out in schedule 10;

   

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

   

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

   

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

   

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

   

  “Kimolos Borrower” means Kimolos Maritime Inc. of Trust
  Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands
  MH96960 and includes its successors in title;

   

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

   

  “Kimolos Contract” means the shipbuilding contract dated 6 February 2005,
  as amended by addendum No. 1 dated 31 March 2005, addendum No. 2
  dated 27 April 2005 and addendum No. 3 dated 27 May 2005, all
  made between the Builders and the Kimolos Borrower, as may be further
  amended, supplemented, varied, replaced or novated from time to time with the
  prior written consent of the Bank, relating to the construction and sale by
  the Builders, and the purchase by the Kimolos Borrower, of the Kimolos Ship;

   

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

   

  “Kimolos Contract Price” means Six million eight hundred thousand
  Dollars ($6,800,000) or such other lesser sum in Dollars as may be
  payable by the Kimolos Borrower to the Builders pursuant to the Kimolos
  Contract as the contract price for the Kimolos Ship;

  

 

10

 

	
   

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

   

  “Kimolos Delivery Advance” means an Advance of up to Three million
  seven hundred and fifty seven thousand five hundred Dollars ($3,757,500) made
  or (as the context may require) to be made available to the Borrowers for
  the purpose of (a) financing or refinancing in part the final
  instalment of the Kimolos Contract Price and the final instalment of the
  Kimolos Construction Cost, each falling due on the Delivery Date for the
  Kimolos Ship and (b) (as to the balance) refinancing the payment of any
  other part of the Kimolos Construction Cost previously made by the
  Kimolos Borrower and not already financed or refinanced under the terms of
  this Agreement;

   

  “Kimolos First Advance” means an Advance of up to Four hundred and
  seventeen thousand five hundred Dollars ($417,500) made or (as the context may require)
  to be made available to the Borrowers for the purpose of financing or
  refinancing in part the payment of the second instalment for the Kimolos
  Contract Price and the second instalment of the Kimolos Supervision Cost,
  each falling due before the Delivery Date for the Kimolos Ship as set out in schedule 3;

   

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

   

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

   

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

   

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

   

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

   

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

   

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

   

  “Kimolos Refund Guarantees” means, together, the letter of guarantee no. LGD6600200500008
  dated 9 June 2005 issued by Bank of Communications, Fuzhou Branch as
  Refund Guarantor in respect of certain of the Builders’ obligations under the
  Kimolos Contract and any other letters of guarantee to be issued by a Refund
  Guarantor in respect of the Builders’ obligations under the Kimolos Contract
  pursuant to the Kimolos Contract or any agreement supplemental to the Kimolos
  Contract, and any extensions, renewals or replacements to or of any such
  guarantee(s), in each case in form and substance acceptable to the Bank
  in its sole discretion and “Kimolos
  Refund Guarantee” means any of
  them;

  

 

11

 

 

	
   

  	
  “Kimolos Second Advance” means an Advance of up to One million two
  hundred and fifty two thousand five hundred Dollars ($1,252,500) made or (as
  the context may require) to be made available to the Borrowers for the
  purpose of (a) financing or refinancing in full the payment of the third
  instalment of the Kimolos Contract Price falling due before the Delivery Date
  for the Kimolos Ship as set out in schedule 3 and (b) (as to the
  balance) refinancing the payment of any other part of the Kimolos
  Construction Cost previously made by the Kimolos Borrower and not already
  financed or refinanced under the terms of this Agreement;

   

  “Kimolos Ship” means the 3,800 dwt (approximately)
  double-hull oil product tanker currently known as Hull No. DN-3500-5, to
  be constructed and sold by the Builders to the Kimolos Borrower pursuant to
  the Kimolos Contract and to be registered on the Delivery Date for such
  Newbuilding in the ownership of the Kimolos Borrower through the relevant
  Registry under the laws and flag of the relevant Flag State;

   

  “Kimolos Supervision Contract” means the contract dated 10 February 2005
  made between the Kimolos Borrower and Iota as may be amended,
  supplemented, varied, replaced or novated from time to time with the prior
  written consent of the Bank, relating to the design, building, supervision,
  representation, procurement of machinery and supplies and turn-key delivery
  of the Kimolos Ship;

   

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

   

  “Kimolos Supervision Cost” means One million five hundred and fifty
  thousand Dollars ($1,550,000) or such other lesser sum in Dollars as may be
  payable by the Kimolos Borrower to Iota pursuant to the Kimolos Supervision
  Contract, as the cost for the services provided by Iota thereunder;

   

  “Kimolos Third Advance” means an Advance of up to One million two
  hundred and fifty two thousand five hundred Dollars ($1,252,500) made or (as
  the context may require) to be made available to the Borrowers for the
  purpose of financing or refinancing in part the payment of the fourth
  instalment of the Kimolos Contract Price and the third instalment of the
  Kimolos Supervision Cost falling due before the Delivery Date for the Kimolos
  Ship as set out in schedule 3;

   

  “Kimolos Tranche” means a tranche of the Loan of up to Six
  million six hundred and eighty thousand Dollars ($6,680,000) to be drawn down
  by not more than four (4) Advances (being the Kimolos Advances);

   

  “LIBOR” means, in relation to a particular period,
  the rate determined by the Bank to be that at which deposits in Dollars and
  in an amount comparable with the amount in relation to which LIBOR is to be
  determined and for a period equal to the relevant period were being offered
  by the Bank to prime banks in the London Interbank Market at or about 11:00 a.m.
  on the second Banking Day before the first day of such period, provided that
  if the Borrowers shall at any time enter into any Transaction(s) under the
  Master Swap Agreement, LIBOR shall (during the period when any such
  Transaction(s) are effective and for an amount equal to the notional amount
  of such Transaction(s)) be the rate for deposits in Dollars for a period
  equivalent to such period at or about 11:00 a.m. on the second Banking
  Day before the first day of such period as displayed on Telerate page 3750
  (British Bankers’ Association Interest Settlement Rates) (or such other page as
  may replace such page 3750 on such system or on any other system of
  the information vendor for the time being designated by the British Bankers’
  Association to calculate the BBA Interest Settlement Rate (as defined in the
  British Bankers’ Association’s Recommended Terms and Conditions (“BBAIRS” terms) dated August, 1996) for
  Dollars);

   

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

  

 

12

 

	
   

  	
  “Management Agreement” means:

  
	
   

  	
   

  
	
   

  	
  (a)

  	
  in relation to the Amorgos Ship, the Amorgos
  Management Agreement;

  
	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  in relation to the Kimolos Ship, the Kimolos
  Management Agreement;

  
	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  in relation to the Milos Ship, the Milos
  Management Agreement;

  
	
   

  	
   

  	
   

  
	
   

  	
  (d)

  	
  in relation to the Mykonos Ship, the Mykonos
  Management Agreement;

  
	
   

  	
   

  	
   

  
	
   

  	
  (e)

  	
  in relation to the Syros Ship, the Syros
  Management Agreement; or

  
	
   

  	
   

  	
   

  
	
   

  	
  (f)

  	
  in relation to the Collateral Ship, the Collateral
  Management Agreement, 

  
	
   

  	
   

  	
   

  
	
   

  	
  and “Management
  Agreements” means any or all of them;

   

  “Manager” means, in relation to each Ship, Aegean
  Bunkering Services Inc. of Trust Company Complex, Ajeltake Road, Ajeltake
  Island, Majuro, Marshall Islands MH96960 or any other person appointed by the
  relevant Owner, with the prior written consent of the Bank, as the manager of
  such Ship and, in each such case, includes its successors in title;

   

  “Manager’s Undertaking” means:

  
	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  in relation to the Amorgos Ship, the Amorgos
  Manager’s Undertaking;

  
	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  in relation to the Kimolos Ship, the Kimolos
  Manager’s Undertaking;

  
	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  in relation to the Milos Ship, the Milos Manager’s
  Undertaking;

  
	
   

  	
   

  	
   

  
	
   

  	
  (d)

  	
  in relation to the Mykonos Ship, the Mykonos
  Manager’s Undertaking;

  
	
   

  	
   

  	
   

  
	
   

  	
  (e)

  	
  in relation to the Syros Ship, the Syros Manager’s
  Undertaking; or

  
	
   

  	
   

  	
   

  
	
   

  	
  (f)

  	
  in relation to the Collateral Ship, the Collateral
  Manager’s Undertaking, 

  
	
   

  	
   

  	
   

  
	
   

  	
  and “Manager’s
  Undertakings” means any or all of them;

   

  “Margin” means one point one five per cent (1.15%)
  per annum;

   

  “Master Agreement Security Deed” means the security deed executed or (as the
  context may require) to be executed by the Borrowers in favour of the
  Bank in the form set out in schedule 8;

   

  “Master Swap Agreement” means the agreement made between the Bank
  and the Borrowers dated as of February 2006 comprising an ISDA Master
  Agreement, a schedule thereto (each in the form set out in schedule 7
  and any Confirmations (as defined therein) supplemental thereto;

   

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

   

  “Milos Borrower” means Milos Maritime Inc. of Trust Company
  Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 and
  includes its successors in title;

   

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

   

  “Milos Contract” means the shipbuilding contract dated 6 February 2005,
  as amended by addendum No. 1 dated 31 March 2005, addendum No. 2
  dated 27 April 2005 and addendum No. 3 dated 27 May 2005, all
  made between the Builders and the Milos Borrower, as may be

  

 

13

 

	
   

  	
  written consent of the Bank, relating to the
  construction and sale by the Builders, and the purchase by the Milos
  Borrower, of the Milos Ship;

   

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

   

  “Milos Contract Price” means Six million eight hundred thousand
  Dollars ($6,800,000) or such other lesser sum in Dollars as may be
  payable by the Milos Borrower to the Builders pursuant to the Milos Contract,
  as the contract price for the Milos Ship;

   

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

   

  “Milos Delivery Advance” means an Advance of up to Three million
  seven hundred and fifty seven thousand five hundred Dollars ($3,757,500) made
  or (as the context may require) to be made available to the Borrowers
  for the purpose of (a) financing or refinancing in part the final
  instalment of the Milos Contract Price with and final instalment of the Milos
  Construction Cost, each falling due on the Delivery Date for the Milos Ship
  and (b) (as to the balance) refinancing the payment of any other part of
  the Milos Construction Cost previously made by the Milos Borrower and not
  already financed or refinanced under the terms of this Agreement;

   

  “Milos First Advance” means an Advance of up to Four hundred and
  seventeen thousand five hundred Dollars ($417,500) made or (as the context may require)
  to be made available to the Borrowers for the purpose of financing or
  refinancing in part the payment of the second instalment of the Milos
  Contract Price and the second instalment of the Milos Supervision Cost, each
  falling due before the Delivery Date for the Milos Ship as set out in schedule 3;

   

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

   

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

   

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

   

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

   

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

   

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

   

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

  

 

14

 

	
   

  	
  “Milos Refund Guarantees” means, together, the letter of guarantee no. LGD6600200500014
  dated 9 June 2005 issued by Bank of Communications, Fuzhou Branch as
  Refund Guarantor in respect of certain of the Builders’ obligations under the
  Milos Contract and any other letters of guarantee to be issued by a Refund
  Guarantor in respect of the Builders’ obligations under the Milos Contract,
  pursuant to the Milos Contract or any agreement supplemental to the Milos
  Contract, and any extensions, renewals or replacements to or of any such
  guarantee(s), in each case in form and substance acceptable to the Bank
  in its sole discretion and “Milos Refund
  Guarantee” means any of them;

   

  “Milos Second Advance” means an Advance of up to One million two
  hundred and fifty two thousand five hundred Dollars ($1,252,500) made or (as
  the context may require) to be made available to the Borrowers for the
  purpose of (a) financing or refinancing in full the payment of the third
  instalment of the Milos Contract Price falling due before the Delivery Date
  for the Milos Ship as set out in schedule 3 and (b) (as to the
  balance) refinancing the payment of any other part of the Milos Construction
  Cost previously made by the Milos Borrower and not already financed or
  refinanced under the terms of this Agreement;

   

  “Milos Ship” means the 3,800 dwt (approximately)
  double-hull oil product tanker currently known as Hull No. DN-3500-1, to
  be constructed and sold by the Builders to the Milos Borrower pursuant to the
  Milos Contract and to be registered on the Delivery Date for such Newbuilding
  in the ownership of the Milos Borrower through the relevant Registry under
  the laws and flag of the relevant Flag State;

   

  “Milos Supervision Contract” means the contract dated 10 February 2005
  made between the Milos Borrower and Iota as may be amended,
  supplemented, varied, replaced or novated from time to time with the prior
  written consent of the Bank, relating to the design, building, supervision,
  representation, procurement of machinery and supplies and turn-key delivery
  of the Milos Ship;

   

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

   

  “Milos Supervision Cost” means One million five hundred and fifty
  thousand Dollars ($1,550,000) or such other lesser sum in Dollars as may be
  payable by the Milos Borrower to Iota pursuant to the Milos Supervision
  Contract, as the cost for the services provided by Iota thereunder;

   

  ‘Milos Third Advance” means an Advance of up to One million two hundred
  and fifty two thousand five hundred Dollars ($1,252,500) made or (as the
  context may require) to be made available to the Borrowers for the
  purpose of financing or refinancing in part the payment of the fourth
  instalment of the Milos Contract Price and the third instalment of the Milos
  Supervision Cost, each falling due before the Delivery Date for the Milos
  Ship as set out in schedule 3;

   

  “Milos Tranche” means a tranche of the Loan of up to Six
  million six hundred and eighty thousand Dollars ($6,680,000) to be drawn down
  in not more than four (4) Advances (being the Milos Advances);

   

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

  

 

15

 

	
   

  	
  “Mortgage” means:

  
	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  in relation to the Amorgos Ship, the Amorgos
  Mortgage;

  
	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  in relation to the Kimolos Ship, the Kimolos
  Mortgage;

  
	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  in relation to the Milos Ship, the Milos Mortgage;

  
	
   

  	
   

  	
   

  
	
   

  	
  (d)

  	
  in relation to the Mykonos Ship, the Mykonos
  Mortgage;

  
	
   

  	
   

  	
   

  
	
   

  	
  (e)

  	
  in relation to the Syros Ship, the Syros Mortgage;
  or

  
	
   

  	
   

  	
   

  
	
   

  	
  (f)

  	
  in relation to the Collateral Ship, the Collateral
  Mortgage, 

  
	
   

  	
   

  	
   

  
	
   

  	
  and “Mortgages”
  means any or all of them;

   

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

   

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

   

  “Mykonos Borrower” means Mykonos Maritime Inc. of Trust
  Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands
  MH96960 and includes its successors in title;

   

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

   

  “Mykonos Contract” means the shipbuilding contract dated 6 February 2005,
  as amended by addendum No. 1 dated 31 March 2005, addendum No. 2
  dated 27 April 2005 and addendum No. 3 dated 27 May 2005, all
  made between the Builders and the Mykonos Borrower, as may be further
  amended, supplemented, varied, replaced or novated from time to time with the
  prior written consent of the Bank, relating to the construction and sale by
  the Builders, and the purchase by the Mykonos Borrower, of the Mykonos Ship;

   

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

   

  “Mykonos Contract Price” means Six million eight hundred thousand
  Dollars ($6,800,000) or such other lesser sum in Dollars as may be
  payable by the Mykonos Borrower to the Builders pursuant to the Mykonos
  Contract, as the contract price for the Mykonos Ship;

   

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

   

  “Mykonos Delivery Advance” means an Advance of up to Three million
  seven hundred and fifty seven thousand five hundred Dollars ($3,757,500) made
  or (as the context may require) to be made available to the Borrowers
  for the purpose of (a) financing or refinancing in part the

  

 

16

 

	
   

  	
  final instalment of the Mykonos Contract Price and
  the final instalment of the Mykonos Supervision Cost, each falling due on the
  Delivery Date for the Mykonos Ship and (b) (as to the balance)
  refinancing the payment of any other part of the Mykonos Construction
  Cost previously made by the Mykonos Borrower and not already financed or
  refinanced under the terms of this Agreement;

   

  “Mykonos First Advance” means an Advance of up to Four hundred and
  seventeen thousand five hundred Dollars ($417,500) made or (as the context may require)
  to be made available to the Borrowers for the purpose of financing or
  refinancing in part the payment of the second instalment of the Mykonos
  Contract Price and the second instalment of the Mykonos Supervision Cost,
  each falling due before the Delivery Date for the Mykonos Ship as set out in schedule 3;

   

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

   

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

   

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

   

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

   

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

   

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

   

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

   

  “Mykonos Refund Guarantees” mean, together, the letter of guarantee no. LGD6600200500010
  dated 9 June 2005 issued by Bank of Communications, Fuzhou Branch as
  Refund Guarantor in respect of certain of the Builders’ obligations under the
  Mykonos Contract and any other letters of guarantee to be issued by a Refund
  Guarantor in respect of the Builders’ obligations under the Mykonos Contract,
  pursuant to the Mykonos Contract or any agreement supplemental to the Mykonos
  Contract, and any extensions, renewals or replacements to or of any such
  guarantee(s), in each case in form and substance acceptable to the Bank
  in its sole discretion and “Mykonos Refund
  Guarantee” means any of them;

   

  “Mykonos Second Advance” means an Advance of up to One million two
  hundred and fifty two thousand five hundred Dollars ($1,252,500) made or (as
  the context may require) to be made available to the Borrowers for the
  purpose of (a) financing or refinancing in full the payment of the third
  instalment of the Mykonos Contract Price falling due before the Delivery Date
  for the

  

 

17

 

	
   

  	
  Mykonos Ship as set out in schedule 3 and (b) (as
  to the balance) refinancing the payment of any other part of the Mykonos
  Construction Cost previously made by the Mykonos Borrower and not already
  financed or refinanced under the terms of this Agreement;

   

  “Mykonos Ship” means the 3,800 dwt (approximately)
  double-hull oil product tanker currently known as Hull No. DN-3500-7, to
  be constructed and sold by the Builders to the Mykonos Borrower pursuant to
  the Mykonos Contract and to be registered on the Delivery Date for such
  Newbuilding in the ownership of the Mykonos Borrower through the relevant
  Registry under the laws and flag of the relevant Flag State;

   

  “Mykonos Supervision Contract” means the contract dated 10 February 2005
  made between the Mykonos Borrower and Iota as may be amended,
  supplemented, varied, replaced or novated from time to time with the prior
  written consent of the Bank, relating to the design, building, supervision,
  representation, procurement of machinery and supplies and turn-key delivery
  of the Mykonos Ship;

   

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

   

  “Mykonos Supervision Cost” means One million five hundred and fifty
  thousand Dollars ($1,550,000) or such lesser other sum in Dollars as may be
  payable by the Mykonos Borrower to Iota pursuant to the Mykonos Supervision
  Contract, as the cost for the services provided by Iota thereunder;

   

  “Mykonos Third Advance” means an Advance of up to One million two
  hundred and fifty two thousand five hundred Dollars ($1,252,500) made or (as
  the context may require) to be made available to the Borrowers for the
  purpose of financing or refinancing in part the payment of the fourth
  instalment of the Mykonos Contract Price and the third instalment of the
  Mykonos Supervision Cost, each falling due before the Delivery Date for the
  Mykonos Ship as set out in schedule 3;

   

  “Mykonos Tranche” means a tranche of the Loan of up to Six
  million six hundred and eighty thousand Dollars ($6,680,000) to be drawn down
  in not more than four (4) Advances (being the Mykonos Advances);

   

  “Newbuildings” means, together, the Amorgos Ship, the
  Kimolos Ship, the Milos Ship, the Mykonos Ship and the Syros Ship and “Newbuilding” means any of them;

   

  “Operating Account” means:

  
	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  in relation to the Amorgos Ship, the Amorgos
  Operating Account;

  
	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  In relation to the Kimolos Ship, the Kimolos
  Operating Account;

  
	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  in relation to the Milos Ship, the Milos Operating
  Account;

  
	
   

  	
   

  	
   

  
	
   

  	
  (d)

  	
  in relation to the Mykonos Ship, the Mykonos
  Operating Account; or

  
	
   

  	
   

  	
   

  
	
   

  	
  (e)

  	
  in relation to the Syros Ship, the Syros Operating
  Account, 

  
	
   

  	
   

  	
   

  
	
   

  	
  and “Operating
  Accounts” means any or all of them;

  
	
   

  	
   

  
	
   

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

  

 

18

 

	
   

  	
  “Owner” means:

  
	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  in relation to the Amorgos Ship, the Amorgos
  Borrower;

  
	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  in relation to the Kimolos Ship, the Kimolos
  Borrower;

  
	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  in relation to the Milos Ship, the Milos Borrower;

  
	
   

  	
   

  	
   

  
	
   

  	
  (d)

  	
  in relation to the Mykonos Ship, the Mykonos
  Borrower;

  
	
   

  	
   

  	
   

  
	
   

  	
  (e)

  	
  in relation to the Syros Ship, the Syros Borrower;
  or

  
	
   

  	
   

  	
   

  
	
   

  	
  (f)

  	
  in relation to the Collateral Ship, the Corporate
  Guarantor

  
	
   

  	
   

  	
   

  
	
   

  	
  and “Owners”
  means any or all of them;

   

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

   

  “Permitted Liens” means, in relation to each Ship, any lien
  on that Ship for master’s, officer’s or crew’s wages outstanding in the
  ordinary course of trading, any lien for salvage and any ship repairer’s or
  outfitter’s possessory lien for a sum not (except with the prior written
  consent of the Bank) exceeding the relevant Casualty Amount;

   

  “Personal Guarantee” means the guarantee executed or (as the
  context may require) to be executed by the Personal Guarantor in favour
  of the Bank in the form set out in schedule 6 or (as the context may require)
  any substitute personal guarantee accepted by the Bank pursuant to
  clause10.1.27;

   

  “Personal Guarantor” means such individual as may be
  agreed by the Bank in writing or (as the context may require) any
  substitute individual or individuals who issue a personal guarantee accepted
  by the Bank pursuant to clause 10.1.27;

   

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

   

  “Pre-delivery Advances”:

  
	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  in relation to the Amorgos Ship and the Amorgos
  Tranche, means the Amorgos Pre-delivery Advances;

  
	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  in relation to the Kimolos Ship and the Kimolos
  Tranche, means the Kimolos Pre-delivery Advances;

  
	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  in relation to the Milos Ship and the Milos
  Tranche, means the Milos Pre-delivery Advances;

  
	
   

  	
   

  	
   

  
	
   

  	
  (d)

  	
  in relation to the Mykonos Ship and the Mykonos
  Tranche, means the Mykonos Pre-delivery Advances; or

  
	
   

  	
   

  	
   

  
	
   

  	
  (e)

  	
  in relation to the Syros Ship and the Syros
  Tranche, means the Syros Pre-delivery Advances,

  
	
   

  	
   

  	
   

  
	
   

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

  

 

19

 

	
   

  	
  “Pre-delivery Security Assignment” means:

  
	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  in relation to the Amorgos Ship, the Amorgos
  Pre-delivery Security Assignment;

  
	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  in relation to the Kimolos Ship, the Kimolos
  Pre-delivery Security Assignment;

  
	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  in relation to the Milos Ship, the Milos
  Pre-delivery Security Assignment;

  
	
   

  	
   

  	
   

  
	
   

  	
  (d)

  	
  in relation to the Mykonos Ship, the Mykonos
  Pre-delivery Security Assignment; or

  
	
   

  	
   

  	
   

  
	
   

  	
  (e)

  	
  in relation to the Syros Ship, the Syros
  Pre-delivery Security Assignment,

  
	
   

  	
   

  	
   

  
	
   

  	
  and “Pre-delivery
  Security Assignments” means any or all of them;

  
	
   

  	
   

  
	
   

  	
  “Refund Guarantee” means:

  
	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  in relation to the Amorgos Ship, any Amorgos
  Refund Guarantee;

  
	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  in relation to the Kimolos Ship, any Kimolos
  Refund Guarantee;

  
	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  in relation to the Milos Ship, any Milos Refund
  Guarantee;

  
	
   

  	
   

  	
   

  
	
   

  	
  (d)

  	
  in relation to the Mykonos Ship, any Mykonos
  Refund Guarantee; or

  
	
   

  	
   

  	
   

  
	
   

  	
  (e)

  	
  in relation to the Syros Ship, any Syros Refund
  Guarantee, 

  
	
   

  	
   

  	
   

  
	
   

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

   

  “Refund Guarantee Assignment
  Consent and Acknowledgement” means:

  
	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  in relation to the Amorgos Ship, any Amorgos
  Refund Guarantee Assignment Consent and Acknowledgement;

  
	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  in relation to the Kimolos Ship, any Kimolos
  Refund Guarantee Assignment Consent and Acknowledgement;

  
	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  in relation to the Milos Ship, any Milos Refund
  Guarantee Assignment Consent and Acknowledgement;

  
	
   

  	
   

  	
   

  
	
   

  	
  (d)

  	
  in relation to the Mykonos Ship, any Mykonos
  Refund Guarantee Assignment Consent and Acknowledgement; or

  
	
   

  	
   

  	
   

  
	
   

  	
  (e)

  	
  in relation to the Syros Ship, any Syros Refund
  Guarantee Assignment Consent and Acknowledgement,

  
	
   

  	
   

  	
   

  
	
   

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

   

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

   

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

  

 

20

 

	
   

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

   

  “Related Company” means:

  
	
   

  	
   

  	
   

  
	
   

  	
  (a)

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

  
	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  of a Security Party, means any company or other
  entity which is active in the bunkering business or services and which is:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (i)

  	
  a Subsidiary of the relevant Security Party; or

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (ii)

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

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (iii)

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

  
	
   

  	
   

  	
   

  	
   

  
	
   

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

   

  “Relevant Party” means the Borrowers, the Borrowers’
  Related Companies, the other Security Parties (other than the Builders and
  the Refund Guarantors) and their respective Related Companies;

   

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

   

  “Repayment Dates” means, in relation to each Tranche (and
  subject to clause 6.3), the First Repayment Date in respect such Tranche and
  each of the dates falling at three (3) monthly intervals after such
  First Repayment Date up to and including the date falling one hundred and
  forty one (141) months after such First Repayment Date,

   

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

   

  “Second Advance”:

  
	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  in relation to the Amorgos Ship and the Amorgos
  Tranche, means the Amorgos Second Advance;

  
	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  in relation to the Kimolos Ship and the Kimolos
  Tranche, means the Kimolos Second Advance;

  
	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  in relation to the Milos Ship and the Milos
  Tranche, means the Milos Second Advance;

  
	
   

  	
   

  	
   

  
	
   

  	
  (d)

  	
  in relation to the Mykonos Ship and the Mykonos
  Tranche, means the Mykonos Second Advance; or

  
	
   

  	
   

  	
   

  
	
   

  	
  (e)

  	
  in relation to the Syros Ship and the Syros
  Tranche, means the Syros Second Advance, 

  
	
   

  	
   

  	
   

  
	
   

  	
  and “Second
  Advances” means any or all of them;

  
	
   

  	
   

  
	
   

  	
  “Security Documents” means this Agreement, the Master Swap
  Agreement, the Master Agreement Security Deed, the Corporate Guarantee, the
  Personal Guarantee, the Mortgages,

  

 

21

 

	
   

  	
  the Deeds of Covenant, the Pre-delivery Security
  Assignments, the Contract Assignment Consents and Acknowledgements, the
  Refund Guarantee Assignment Consents and Acknowledgements, the Supervision
  Contract Assignment Consents and Acknowledgements, the Manager’s
  Undertakings, the Certificate of Ownership and any other agreement or
  document as may have been or shall from time to time after the date of
  this Agreement be executed to guarantee and/or secure all or any part of
  the Loan, interest thereon and other moneys from time to time owing by the
  Borrowers or any of them or any other Security Party pursuant to this
  Agreement and/or the Master Swap Agreement or any other Security Document
  (whether or not any such document also secures moneys from time to time owing
  pursuant to any other document or agreement);

   

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

   

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

   

  “Security Requirement” means the amount in Dollars (as certified
  by the Bank whose certificate shall, in the absence of manifest error, be
  conclusive and binding on the Borrowers and the Bank) which is, at any
  relevant time, One hundred and twenty five per cent (125%) of the aggregate
  of (a) the Loan and (b) the cost (if any) (as certified by the Bank
  whose certificate shall in the absence of manifest error be conclusive and
  binding on the Borrowers and the Bank) of terminating any Transactions
  entered into pursuant to the Master Swap Agreement;

   

  “Security Value” means the amount in Dollars (as certified
  by the Bank whose certificate shall, in the absence of manifest error, be
  conclusive and binding on the Borrowers and the Bank) which is, at any
  relevant time, the aggregate of (i) the market value of the Mortgaged
  Ships as most recently determined in accordance with clause 8.2.2 and (ii) the
  market value of any additional security for the time being actually provided
  to the Bank pursuant to clause 8.2;

   

  “Ships” means, together, the Newbuildings and the
  Collateral Ship and “Ship” means
  any of them;

   

  “Ship Security Documents”:

  
	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  in relation to the Amorgos Ship, means the Amorgos
  Mortgage, the Amorgos Deed of Covenant and the Amorgos Manager’s Undertaking;

  
	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  in relation to the Kimolos Ship, means the Kimolos
  Mortgage, the Kimolos Deed of Covenant and the Kimolos Manager’s Undertaking;

  
	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  in relation to the Milos Ship, means the Milos
  Mortgage, the Milos Deed of Covenant and the Milos Manager’s Undertaking;

  
	
   

  	
   

  	
   

  
	
   

  	
  (d)

  	
  in relation to the Mykonos Ship, means the Mykonos
  Mortgage, the Mykonos Deed of Covenant and the Mykonos Manager’s Undertaking;

  
	
   

  	
   

  	
   

  
	
   

  	
  (e)

  	
  in relation to the Syros Ship, means the Syros
  Mortgage, the Syros Deed of Covenant and the Syros Manager’s Undertaking; or

  
	
   

  	
   

  	
   

  
	
   

  	
  (f)

  	
  in relation to the Collateral Ship, means the
  Collateral Mortgage, the Collateral Deed of Covenant and the Collateral
  Manager’s Undertaking;

  
	
   

  	
   

  	
   

  
	
   

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

  

 

22

 

	
   

  	
  “Supervision Contract” means:

  
	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  in relation to the Amorgos Ship, the Amorgos
  Supervision Contract;

  
	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  in relation to the Kimolos Ship, the Kimolos
  Supervision Contract;

  
	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  in relation to the Milos Ship, the Milos
  Supervision Contract;

  
	
   

  	
   

  	
   

  
	
   

  	
  (d)

  	
  in relation to the Mykonos Ship, the Mykonos
  Supervision Contract; or

  
	
   

  	
   

  	
   

  
	
   

  	
  (e)

  	
  in relation to the Syros Ship, the Syros
  Supervision Contract; 

  
	
   

  	
   

  	
   

  
	
   

  	
  and “Supervision
  Contracts” means any or all of them; 

  
	
   

  	
   

  
	
   

  	
  “Supervision Contract Assignment
  Consent and Acknowledgement” means:

  
	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  in relation to the Amorgos Ship, the Amorgos Supervision
  Contract Assignment Consent and Acknowledgement;

  
	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  in relation to the Kimolos Ship, the Kimolos
  Supervision Contract Assignment Consent and Acknowledgement;

  
	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  in relation to the Milos Ship, the Milos
  Supervision Contract Assignment Consent and Acknowledgement;

  
	
   

  	
   

  	
   

  
	
   

  	
  (d)

  	
  in relation to the Mykonos Ship, the Mykonos
  Supervision Contract Assignment Consent and Acknowledgement; or

  
	
   

  	
   

  	
   

  
	
   

  	
  (e)

  	
  in relation to the Syros Ship, the Syros
  Supervision Contract Assignment Consent and Acknowledgement,

  
	
   

  	
   

  	
   

  
	
   

  	
  and “Supervision
  Contract Assignment Consents and Acknowledgements” means any or
  all of them;

  
	
   

  	
   

  
	
   

  	
  “Supervision Cost” means:

  
	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  in relation to Amorgos Ship, the Amorgos
  Supervision Cost;

  
	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  in relation to Kimolos Ship, the Kimolos Supervision
  Cost;

  
	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  in relation to Milos Ship, the Milos Supervision
  Cost;

  
	
   

  	
   

  	
   

  
	
   

  	
  (d)

  	
  in relation to Mykonos Ship, the Mykonos
  Supervision Cost; or

  
	
   

  	
   

  	
   

  
	
   

  	
  (e)

  	
  in relation to the Syros Ship, the Syros
  Supervision Cost, 

  
	
   

  	
   

  	
   

  
	
   

  	
  and “Supervision
  Costs” means any or all of them;

   

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

   

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

   

  “Syros Borrower” means Syros Maritime Inc. of Trust Company
  Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 and
  includes its successors in title;

  

 

23

 

	
   

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

   

  “Syros Contract” means the shipbuilding contract dated 6 February 2005,
  as amended by addendum No. 1 dated 31 March 2005, addendum No. 2
  dated 27 April 2005 and addendum No. 3 dated 27 May 2005, all
  made between the Builders and the Syros Borrower, as may be further
  amended, supplemented, varied, replaced or novated from time to time with the
  prior written consent of the Bank, relating to the construction and sale by
  the Builders, and the purchase by the Syros Borrower, of the Syros Ship;

   

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

   

  “Syros Contract Price” means Six million eight hundred thousand
  Dollars ($6,800,000) or such other lesser sum in Dollars as may be
  payable by the Syros Borrower to the Builders pursuant to the Syros Contract,
  as the contract price for the Syros Ship;

   

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

   

  “Syros Delivery Advance” means an Advance of up to Three million
  seven hundred and fifty seven thousand five hundred Dollars ($3,757,500) made
  or (as the context may require) to be made available to the Borrowers
  for the purpose of (a) financing or refinancing in part the final
  instalment of the Syros Contract Price and the final instalment of the Syros
  Supervision Cost, each falling due on the Delivery Date for the Syros Ship
  and (b) (as to the balance) refinancing the payment of any other part of
  the Syros Construction Cost previously made by the Syros Borrower and not
  already financed or refinanced under the terms of this Agreement;

   

  “Syros First Advance” means an Advance of up to Four hundred and
  seventeen thousand five hundred Dollars ($417,500) made or (as the context may require)
  to be made available to the Borrowers for the purpose of financing or
  refinancing in part the payment of the second instalment of the Syros
  Contract Price and the second instalment of the Syros Supervision Cost, each
  falling due before the Delivery Date for the Syros Ship as set out in schedule 3;

   

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

   

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

   

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

   

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

   

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

   

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

  

 

24

 

	
   

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

   

  “Syros Refund Guarantees” means, together, the letter of guarantee no. LGD6600200500009
  dated 9 June 2005 issued by Bank of Communications, Fuzhou Branch as
  Refund Guarantor in respect of certain of the Builders’ obligations under the
  Syros Contract and any other letters of guarantee to be issued by a Refund
  Guarantor in respect of the Builders’ obligations under the Syros Contract,
  pursuant to the Syros Contract or any agreement supplemental to the Syros
  Contract, and any extensions, renewals or replacements to or of any such
  guarantee(s), in each case in form and substance acceptable to the Bank
  in its sole discretion and “Syros Refund
  Guarantee” means any of them;

   

  “Syros Second Advance” means an Advance of up to One million two
  hundred and fifty two thousand five hundred Dollars ($1,252,500) made or (as
  the context may require) to be made available to the Borrowers for the
  purpose of (a) financing or refinancing in full the payment of the third
  instalment of the Syros Contract Price falling due before the Delivery Date
  for the Syros Ship as set out in schedule 3 and (b) (as to the
  balance) refinancing the payment of any other part of the Syros
  Construction Cost previously made by the Syros Borrower and not already
  financed or refinanced under the terms of this Agreement;

   

  “Syros Ship” means the 3,800 dwt (approximately)
  double-hull oil product tanker currently known as Hull No. DN-3500-6, to
  be constructed and sold by the Builders to the Syros Borrower pursuant to the
  Syros Contract and to be registered on the Delivery Date for such Newbuilding
  in the ownership of the Syros Borrower through the relevant Registry under
  the laws and flag of the relevant Flag State;

   

  “Syros Supervision Contract” means the contract dated 10 February 2005
  made between the Syros Borrower and Iota as may be amended,
  supplemented, varied, replaced or novated from time to time with the prior
  written consent of the Bank, relating to the design, building, supervision,
  representation, procurement of machinery and supplies and turn-key delivery
  of the Syros Ship;

   

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

   

  “Syros Supervision Cost” means One million five hundred and fifty
  thousand Dollars ($1,550,000) or such other lesser sum in Dollars as may be
  payable by the Syros Borrower to Iota pursuant to the Syros Supervision Contract,
  as the cost for the services provided by Iota thereunder;

   

  “Syros Third Advance” means an Advance of up to One million two
  hundred and fifty two thousand five hundred Dollars ($1,252,500) made or (as
  the context may require) to be made available to the Borrowers for the
  purpose of financing or refinancing in part the payment of the fourth
  instalment of the Syros Contract Price and the third instalment of the Syros
  Supervision Cost, each falling due before the Delivery Date for the Syros
  Ship as set out in schedule 3;

   

  “Syros Tranche” means a tranche of the Loan of up to Six
  million six hundred and eighty thousand Dollars ($6,680,000) to be drawn down
  in not more than four (4) Advances (being the Syros Advances);

   

  “Taxes” includes all present and future taxes,
  levies, imposts, duties, fees or charges of whatever nature together with
  interest thereon and penalties in respect thereof and “Taxation” shall be construed
  accordingly;

  

 

25

 

	
   

  	
  “Termination Date” means:

  
	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  in relation to the Amorgos First Advance, 30 June 2006;

  
	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  in relation to the Amorgos Second Advance, 31 October 2006;

  
	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  in relation to the Amorgos Third Advance, 30 April 2007;

  
	
   

  	
   

  	
   

  
	
   

  	
  (d)

  	
  in relation to the Amorgos Delivery Advance, 30 September 2007;

  
	
   

  	
   

  	
   

  
	
   

  	
  (e)

  	
  in relation to the Kimolos First Advance, 15 October 2006;

  
	
   

  	
   

  	
   

  
	
   

  	
  (f)

  	
  in relation to the Kimolos Second Advance, 15 February 2007;

  
	
   

  	
   

  	
   

  
	
   

  	
  (g)

  	
  in relation to the Kimolos Third Advance, 30 June 2007;

  
	
   

  	
   

  	
   

  
	
   

  	
  (h)

  	
  in relation to the Kimolos Delivery Advance, 30 October 2007;

  
	
   

  	
   

  	
   

  
	
   

  	
  (i)

  	
  in relation to the Milos First Advance, 28 April 2006;

  
	
   

  	
   

  	
   

  
	
   

  	
  (j)

  	
  in relation to the Milos Second Advance, 28 April 2006;

  
	
   

  	
   

  	
   

  
	
   

  	
  (k)

  	
  in relation to the Milos Third Advance, 30 September 2006;

  
	
   

  	
   

  	
   

  
	
   

  	
  (l)

  	
  in relation to the Milos Delivery Advance, 28 February 2007;

  
	
   

  	
   

  	
   

  
	
   

  	
  (m)

  	
  in relation to the Mykonos First Advance, 28 February 2007;

  
	
   

  	
   

  	
   

  
	
   

  	
  (n)

  	
  in relation to the Mykonos Second Advance, 30 June 2007;

  
	
   

  	
   

  	
   

  
	
   

  	
  (o)

  	
  in relation to the Mykonos Third Advance, 10 November 2007;

  
	
   

  	
   

  	
   

  
	
   

  	
  (p)

  	
  in relation to the Mykonos Delivery Advance, 10 March 2008;

  
	
   

  	
   

  	
   

  
	
   

  	
  (q)

  	
  in relation to the Syros First Advance, 16 November 2006;

  
	
   

  	
   

  	
   

  
	
   

  	
  (r)

  	
  in relation to the Syros Second Advance, 31 March 2007;

  
	
   

  	
   

  	
   

  
	
   

  	
  (s)

  	
  in relation to the Syros Third Advance, 14 September 2007;
  or

  
	
   

  	
   

  	
   

  
	
   

  	
  (t)

  	
  in relation to the Syros Delivery Advance, 31 January 2008,

  
	
   

  	
   

  	
   

  
	
   

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

   

  “Third Advance”:

  
	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  in relation to the Amorgos Ship and the Amorgos
  Tranche, means the Amorgos Third Advance;

  
	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  in relation to the Kimolos Ship and the Kimolos
  Tranche, means the Kimolos Third Advance;

  
	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  in relation to the Milos Ship and the Milos
  Tranche, means the Milos Third Advance;

  
	
   

  	
   

  	
   

  
	
   

  	
  (d)

  	
  in relation to the Mykonos Ship and the Mykonos
  Tranche, means the Mykonos Third Advance; or

  
	
   

  	
   

  	
   

  
	
   

  	
  (e)

  	
  in relation to the Syros Ship and the Syros
  Tranche, means the Syros Third Advance,

  

 

26

 

	
   

  	
  and “Third
  Advances” means any or all of them;

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  	
   

  
	
   

  	
  (a)

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

  
	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  the Compulsory Acquisition of such Ship; or

  
	
   

  	
   

  	
   

  
	
   

  	
  (c)

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

  
	
   

  	
   

  	
   

  
	
   

  	
  “Tranche” means:

  
	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  in relation to the Amorgos Ship, the Amorgos
  Tranche;

  
	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  in relation to the Kimolos Ship, the Kimolos
  Tranche;

  
	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  in relation to the Milos Ship, the Milos Tranche;

  
	
   

  	
   

  	
   

  
	
   

  	
  (d)

  	
  in relation to the Mykonos Ship, the Mykonos
  Tranche; or

  
	
   

  	
   

  	
   

  
	
   

  	
  (e)

  	
  in relation to the Syros Ship, the Syros Tranche,

  
	
   

  	
   

  	
   

  
	
   

  	
  and “Tranches”
  means any or all of them;

  
	
   

  	
   

  
	
   

  	
  “Transaction” means a Transaction as defined in the
  introductory paragraph of the Master Swap Agreement;

   

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

   

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

  
	
   

  	
   

  
	
  1.3

  	
  Headings

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
  1.4

  	
  Construction of certain terms

  
	
   

  	
   

  
	
   

  	
  In this Agreement, unless the context otherwise
  requires:

  
	
   

  	
   

  
	
  1.4.1

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

  
	
   

  	
   

  
	
  1.4.2

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

  
	
   

  	
   

  
	
  1.4.3

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

  

 

27

 

	
  1.4.4

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

  
	
   

  	
   

  
	
  1.4.5

  	
  references to a time of day are to London time;

  
	
   

  	
   

  
	
  1.4.6

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

  
	
   

  	
   

  
	
  1.4.7

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

  
	
   

  	
   

  
	
  1.4.8

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

  
	
   

  	
   

  
	
  2

  	
  The Commitment and the Loan

  
	
   

  	
   

  
	
  2.1

  	
  Agreement to lend 

  
	
   

  	
   

  
	
   

  	
  The Bank, relying upon each of the representations
  and warranties in clause 7, agrees to lend to the Borrowers, jointly and
  severally, upon and subject to the terms of this Agreement, the principal sum
  of up to Thirty three million four hundred thousand Dollars ($33,400,000) in
  up to twenty (20) Advances comprising five (5) Tranches, namely, the
  Amorgos Tranche, the Kimolos Tranche, the Milos Tranche, the Mykonos Tranche
  and the Syros Tranche.

  
	
   

  	
   

  
	
  2.2

  	
  Drawdown

  
	
   

  	
   

  
	
   

  	
  Subject to the terms and conditions of this
  Agreement, each Advance shall be made following receipt by the Bank from the
  Borrowers of a Drawdown Notice not later than 10:00 a.m. on the second
  Banking Day before the date, which shall be a Banking Day falling within the
  relevant Drawdown Period, on which such Advance is intended to be made. A
  Drawdown Notice shall be effective on actual receipt by the Bank and, once
  given, shall, subject as provided in clause 3.6.1, be irrevocable.

  
	
   

  	
   

  
	
  2.3

  	
  Timing and limitations of Loan,
  Tranches and Advances

  
	
   

  	
   

  
	
  2.3.1

  	
  The aggregate amount of the Loan shall not exceed
  the lower of (a) Thirty three million four hundred thousand Dollars
  ($33,400,000) and (b) eighty per cent (80%) of the aggregate
  Construction Costs of all the Newbuildings.

  
	
   

  	
   

  
	
  2.3.2

  	
  The aggregate amount of all the Advances for a
  Newbuilding shall not exceed the lower of (a) Six million six hundred
  and eighty thousand Dollars ($6,680,000) and (b) eighty per cent (80%)
  of the Construction Cost of the relevant Newbuilding.

  
	
   

  	
   

  
	
  2.3.3

  	
  The amount of each Pre-delivery Advance shall be:

  
	
   

  	
   

  
	
   

  	
  (a)

  	
  in the case of each First Advance, not more than
  $417,500;

  
	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  in the case of each Second Advance, not more than
  $1,252,500; and

  
	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  in the case of each Third Advance, not more than
  $1,252,500.

  
	
   

  	
   

  	
   

  
	
  2.3.4

  	
  Each First Advance:

  
	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  shall be applied in or towards payment to the
  Builders and, as the case may be, Iota of part of the second instalment
  of the Contract Price and part of the second instalment of the
  Supervision Cost (respectively) for the Newbuilding relevant to such Advance;

  

 

 

28

 

	
   

  	
  (b)

  	
  shall be made when both such instalments have
  become due and payable, as specified in the second and third column,
  respectively, of schedule 3 opposite the relevant First Advance; and

  
	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  shall be paid by the Bank to the Builders and Iota,
  respectively, unless the relevant Borrower has already paid either such
  instalment to the Builders or (as the case may be) Iota when it was due,
  in which case the relevant First Advance (or part thereof) shall be
  advanced to the Borrowers in refinancing of such payment.

  
	
   

  	
   

  	
   

  
	
  2.3.5

  	
  Each Second Advance:

  
	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  shall be applied (i) first, in or towards
  payment to the Builders of the full amount of the third instalment of the
  Contract Price for the Newbuilding relevant to such Advance and (ii) secondly,
  as to its balance in refinancing of any other part of the Construction
  Cost of the relevant Newbuilding previously paid by the relevant Borrower
  when it was due and not financed or refinanced by this Agreement;

  
	
   

  	
   

  	
   

  
	
   

  	
  (b)

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

  
	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  (except for the part of the relevant Second
  Advance referred to in paragraph 2.3.5(a)(ii) above, which shall be paid
  directly to the Borrowers) shall be paid by the Bank to the Builders, unless
  the relevant Borrower has already paid the relevant third instalment to the
  Builders when it was due, in which case the relevant Second Advance (or part thereof)
  shall be advanced to the Borrowers in refinancing of such payment.

  
	
   

  	
   

  	
   

  
	
  2.3.6

  	
  Each Third Advance:

  
	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  shall be applied in or towards payment to the
  Builders and, as the case may be, Iota of part of the fourth
  instalment of the Contract Price and part of the third instalment of the
  Supervision Cost (respectively) for the Newbuilding relevant to such Advance;

  
	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  shall be made when both such instalments have
  become due and payable, as specified in the second and third column,
  respectively, of schedule 3 opposite the relevant Third Advance; and

  
	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  shall be paid by the Bank to the Builders and Iota,
  respectively, unless the relevant Borrower has already paid either such
  instalment to the Builders or (as the case may be) Iota when it was due,
  in which case the relevant Third Advance (or part thereof) shall be
  advanced to the Borrowers in refinancing of such payment.

  
	
   

  	
   

  	
   

  
	
  2.3.7

  	
  Each Delivery Advance:

  
	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  shall not exceed the lower of:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (i)

  	
  Three million seven hundred and fifty seven thousand
  five hundred Dollars ($3,750,500);

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (ii)

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

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (iii)

  	
  the amount in Dollars which, when added to the
  aggregate amount of the Pre-delivery Advances for the relevant Newbuilding
  actually drawn down, will produce a figure equal to eighty per cent (80%) of
  the market value of that Newbuilding determined in accordance with the
  valuation of such Newbuilding obtained pursuant to schedule 2, Part 5,
  paragraph 19; and

  

 

29

 

	
   

  	
   

  	
  (iv)

  	
  the amount in Dollars which, when added to the
  aggregate amount of the Pre-delivery Advances for the relevant Newbuilding
  actually drawn down, will produce a total figure of $6,680,000;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  shall be applied (i) first, in or towards
  payment to the Builders and, as the case may be, Iota of part of
  the final instalment of the Contract Price and the final instalment of the
  Supervision Cost (respectively) for the Newbuilding relevant to such Advance
  and (ii) secondly, as to its balance in refinancing of any other part of
  the Construction Cost of the relevant Newbuilding previously paid by the
  relevant Borrower when it was due and not financed or refinanced by this
  Agreement;

  
	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  shall be made when both of the instalments
  referred to in paragraph 2.3.7(b)(i) above have become due and payable;
  and

  
	
   

  	
   

  	
   

  
	
   

  	
  (d)

  	
  (except for the part of the relevant Delivery
  Advance referred to in paragraph 2.3.7(b)(ii) above, which shall be paid
  directly to the Borrowers) shall be paid by the Bank to the Builders and Iota,
  respectively, unless the relevant Borrower has already paid either such
  instalment to the Builders or (as the case may be) Iota when it was due,
  in which case the relevant Delivery Advance (or part thereof) shall be
  advanced to the Borrowers in refinancing of such payment.

  
	
   

  	
   

  	
   

  	
   

  
	
  2.4

  	
  Availability

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
  2.5

  	
  Termination of Commitment

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
  2.6

  	
  Application of proceeds

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
  3

  	
  Interest and Interest Periods

  
	
   

  	
   

  
	
  3.1

  	
  Normal interest rate

  
	
   

  	
   

  
	
   

  	
  Subject to paragraph (i) of Part 5 of
  the Schedule to the Master Swap Agreement, the Borrowers shall pay
  interest on each Tranche in respect of each Interest Period relating thereto
  on each Interest Payment Date (or, in the case of Interest Periods of more
  than three (3) months, by instalments, the first three (3) months
  from the commencement of the Interest Period and the subsequent instalments
  at intervals of three (3) months or, if shorter, the period from the
  date of the preceding instalment until the Interest Payment Date relative to
  such Interest Period) at the rate per annum determined by the Bank to be the
  aggregate of (a) the Margin, (b) the Additional Cost and (c) LIBOR
  for such Interest Period.

  
	
   

  	
   

  
	
  3.2

  	
  Selection of Interest Periods

  
	
   

  	
   

  
	
   

  	
  Subject to paragraph (i) of Part 5 of
  the Schedule to the Master Swap Agreement, the Borrowers may by
  notice received by the Bank not later than 10:00 a.m. on the second
  Banking Day before the beginning of each Interest Period, specify whether
  such Interest Period shall have a duration of one (1) month, two (2) months,
  (3) months, six (6) months or twelve (12) months or such other
  period as the Borrowers may select and the Bank may, in its absolute
  discretion, agree

  

 

30

 

	
   

  	
  Provided always that if, on any date upon which an
  Interest Period falls to be selected by the Borrowers pursuant to this clause
  3.2, a Transaction or Transactions (which is/are effective or which shall
  become effective during the relevant Interest Period) shall have been entered
  into between the Bank and the Borrowers pursuant to the Master Swap
  Agreement, LIBOR shall, during the period of any such Transaction(s) and for
  an amount equal to the notional amount of such Transaction(s), be determined
  by reference to the rate for deposits in Dollars displayed on Telerate page 3750
  (British Bankers’ Association Settlement Rates) in accordance with the
  proviso to the definition of LIBOR in clause 1.2 and, for the avoidance of
  doubt, LIBOR for that part of the Loan which exceeds the notional amount
  of the Transaction(s) shall be determined by reference to the rate for
  deposits in Dollars referred to in the definition of LIBOR in clause 1.2 but
  excluding the proviso to such definition.

  
	
   

  	
   

  
	
  3.3

  	
  Determination of Interest Periods

  
	
   

  	
   

  
	
   

  	
  Subject to paragraph (i) of Part 5 of
  the Schedule to the Master Swap Agreement, every Interest Period shall
  be of the duration required by, or specified by the Borrowers pursuant to,
  clause 3.2 but so that:

  
	
   

  	
   

  
	
  3.3.1

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

  
	
   

  	
   

  
	
  3.3.2

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

  
	
   

  	
   

  
	
  3.3.3

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

  
	
   

  	
   

  
	
  3.3.4

  	
  if the Borrowers fail to specify the duration of
  an Interest Period in accordance with the provisions of clause 3.2 and this
  clause 3.3, such Interest Period shall have a duration of three (3) months
  or such other period as shall comply with this clause 3.3.

  
	
   

  	
   

  
	
  3.4

  	
  Default interest

  
	
   

  	
   

  
	
   

  	
  If the Borrowers fail to pay any sum (including,
  without limitation, any sum payable pursuant to this clause 3.4) on its due
  date for payment under any of the Security Documents (other than the Master
  Swap Agreement), the Borrowers shall pay interest on such sum on demand from
  the due date up to the date of actual payment (as well after as before judgment)
  at a rate determined by the Bank pursuant to this clause 3.4. The period
  beginning on such due date and ending on such date of payment shall be
  divided into successive periods of not more than six (6) months as
  selected by the Bank each of which (other than the first, which shall
  commence on such due date) shall commence on the last day of the preceding
  such period. The rate of interest applicable to each such period shall be the
  aggregate (as determined by the Bank) of (a) one per cent (1%) per
  annum, (b) the Margin, (c) the Additional Cost and (d) LIBOR
  for such period. Such interest shall be due and payable on the last day of
  each such period as determined by the Bank and each such day shall, for the
  purposes of this Agreement, be treated as an Interest Payment Date, provided
  that, if such unpaid sum is an amount of principal which became due and
  payable by reason of a declaration by the Bank under clause 10.2.2 or a
  prepayment pursuant to clauses 4.3, 8.2 or 12.1, on a date other than an
  Interest Payment Date relating thereto, the first such period selected by the
  Bank shall be of a duration equal to the

  

 

31

 

	
   

  	
  period between the due date of such principal sum
  and such Interest Payment Date and interest shall be payable on such
  principal sum during such period at a rate one per cent (1%) above the rate
  applicable thereto immediately before it shall have become so due and
  payable. If, for the reasons specified in clause 3.6.1, the Bank is unable to
  determine a rate in accordance with the foregoing provisions of this clause
  3.4, interest on any sum not paid on its due date for payment shall be
  calculated at a rate determined by the Bank to be one per cent (1%) per annum
  above the aggregate of the Margin and the cost of funds (including Additional
  Cost) to the Bank.

  
	
   

  	
   

  
	
  3.5

  	
  Notification of Interest Periods
  and interest rate

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
  3.6

  	
  Market disruption;
  non-availability

  
	
   

  	
   

  
	
  3.6.1

  	
  If and whenever, at any time prior to the
  commencement of any Interest Period, the Bank shall have determined (which
  determination shall, in the absence of manifest error, be conclusive):

  
	
   

  	
   

  
	
   

  	
  (a)

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

  
	
   

  	
   

  	
   

  
	
   

  	
  (b)

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

  
	
   

  	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
  3.6.2

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

  
	
   

  	
   

  
	
  4

  	
  Repayment and prepayment

  
	
   

  	
   

  
	
  4.1

  	
  Repayment

  
	
   

  	
   

  
	
   

  	
  The Borrowers shall repay each Tranche by forty
  eight (48) instalments, one such instalment to be repaid on each of the
  Repayment Dates for such Tranche. Subject to the provisions of this Agreement,
  the amount of each of the repayment instalments (other than the last
  repayment instalment) for each Tranche shall be One hundred and forty
  thousand Dollars ($140,000) and the amount of the last repayment instalment
  for each Tranche shall be One hundred thousand Dollars ($100,000). If the
  Commitment in respect of any Tranche or part thereof is not drawn in
  full, the amount of the repayment instalments in respect of the relevant
  Tranche shall be reduced proportionately.

  
	
   

  	
   

  
	
  4.2

  	
  Voluntary prepayment

  
	
   

  	
   

  
	
   

  	
  The Borrowers may prepay any Tranche in whole
  or part (being Two hundred thousand Dollars ($200,000) or any larger sum
  which is an integral multiple of Two hundred thousand Dollars ($200,000)) on
  any Interest Payment Date relating to the part of the Tranche to be
  prepaid, without premium or penalty.

  

 

32

 

	
  4.3

  	
  Prepayment on Total Loss or
  demand under Refund Guarantees

  
	
   

  	
   

  
	
  4.3.1

  	
  Before first
  drawdown - Newbuildings

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
  4.3.2

  	
  Before first drawdown - Collateral Ship

  
	
   

  	
   

  
	
   

  	
  On the Collateral Ship becoming a Total Loss or
  suffering damage or being involved in an incident which, in the opinion of
  the Bank, may result in the Collateral Ship being subsequently
  determined to be a Total Loss, before any Advance is drawn down, the
  Commitment will be reduced by such amount (and in respect of such Advances)
  as the Bank may in its absolute discretion require and the Bank’s
  obligation to make available any Advances (or any part thereof) which
  comprise the part of the Commitment that was so cancelled shall
  immediately cease.

  
	
   

  	
   

  
	
  4.3.3

  	
  After first drawdown but prior to Delivery -
  Newbuildings

  
	
   

  	
   

  
	
   

  	
  (a)

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

  
	
   

  	
   

  	
   

  
	
   

  	
  (b)

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

  
	
   

  	
   

  
	
  4.3.4

  	
  After first drawdown but prior to Delivery -
  Collateral Ship

  
	
   

  	
   

  
	
   

  	
  On the Collateral Ship becoming a Total Loss or
  suffering damage or being involved in an incident which, in the opinion of
  the Bank, may result in the Collateral Ship being subsequently
  determined to be a Total Loss, during the Drawdown Period of all the Delivery
  Advances but following the drawing of the first Advance to be drawn down, the
  Commitment shall be reduced by such amount (and in respect of such Advances)
  as the Bank may require in its absolute discretion and the Bank’s
  obligation to make available any Advances (or any part thereof) which
  comprise the part of the Commitment that was so cancelled shall immediately
  cease and the Borrowers shall prepay such amount of the Loan (and in respect
  of such Advances and/or Tranches) as the Bank may require in its
  absolute discretion.

  
	
   

  	
   

  
	
  4.3.5

  	
  Thereafter - Mortgaged Ships

  
	
   

  	
   

  
	
   

  	
  On the date falling one hundred and twenty (120)
  days after that on which a Mortgaged Ship became a Total Loss or, if earlier,
  on the date upon which the insurance proceeds in respect of such Total Loss
  are, or Requisition Compensation for such Ship is, received by the relevant
  Borrower (or the

  

 

33

 

	
   

  	
  Bank pursuant to the Security Documents), the
  Borrowers shall prepay the Tranche for such Mortgaged Ship in full.

  

 

	
  4.3.6

  	
  Interpretation

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  	
   

  
	
   

  	
  (a)

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

  
	
   

  	
   

  	
   

  
	
   

  	
  (b)

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

  
	
   

  	
   

  	
   

  
	
   

  	
  (c)

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

  
	
   

  	
   

  	
   

  
	
   

  	
  (d)

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

  
	
   

  	
   

  	
   

  
	
   

  	
  (e)

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

  
				

 

	
  4.4

  	
  Amounts payable on prepayment

  
	
   

  	
   

  
	
   

  	
  Any prepayment of all or part of the Loan
  under this Agreement shall be made together with (a) accrued interest on
  the amount to be prepaid to the date of such prepayment, (b) any
  additional amount payable under clauses 6.6 or 12.2 and (c) all other
  sums payable by the Borrowers to the Bank under this Agreement or any of the
  other Security Documents including, without limitation, any accrued
  commitment commission payable under clause 5.1.2 and any amounts payable
  under clause 11.

  

 

	
  4.5

  	
  Notice of prepayment; reduction
  of repayment Instalments

  
	
   

  	
   

  
	
  4.5.1

  	
  No prepayment may be effected under clause
  4.2 unless the Borrowers shall have given the Bank at least fourteen (14)
  days’ notice of their intention to make such prepayment. Every notice of
  prepayment shall be effective only on actual receipt by the Bank, shall be
  irrevocable, shall specify the Tranche and the amount thereof to be prepaid
  and shall oblige the Borrowers to make such prepayment on the date specified.

  
	
   

  	
   

  
	
  4.5.2

  	
  Any amount prepaid pursuant to clause 4.2 in
  respect of a Tranche shall be applied in reducing the repayment instalments
  of the relevant Tranche under clause 4.1 in inverse order of their due dates
  for payment.

  
	
   

  	
   

  
	
  4.5.3

  	
  Any amount prepaid pursuant to clause 4.3.4 shall
  be applied in reducing such Advances and/or the repayment instalments of such
  Tranches, and in such manner, as the Bank may require in its absolute
  discretion.

  
	
   

  	
   

  
	
  4.5.4

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

  
	
   

  	
   

  
	
  4.5.5

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

  

 

34

 

	
  4.6

  	
  Master Swap Agreement, repayments
  and prepayments

  
	
   

  	
   

  
	
  4.6.1

  	
  Notwithstanding any provision of the Master Swap
  Agreement to the contrary, in the case of a prepayment of all or part of
  the Loan (including, without limitation, following the occurrence of a Total
  Loss in accordance with clause 4.3 or under clauses 8.2.1(a) or 12.1)
  then, subject to clause 4.6.2, the Bank shall be entitled but not obliged
  (and, where relevant, may do so without the consent of the Borrowers,
  where it would otherwise be required whether under the Master Swap Agreement
  or otherwise) to amend, supplement, cancel, net out, terminate, liquidate,
  transfer or assign all or any part of the rights, benefits and
  obligations created by any Transaction and/or the Master Swap Agreement
  and/or to obtain or re-establish any hedge or related trading position in any
  manner and with any person the Bank in its absolute discretion may determine
  and both the Bank’s and the Borrowers’ continuing obligations under any
  Transaction and/or the Master Swap Agreement shall, unless agreed otherwise
  by the Bank, be calculated so far as the Bank considers it practicable by
  reference to the amended repayment schedule for the Loan taking into
  account the fact that less than the full amount of the Loan remains
  outstanding.

  
	
   

  	
   

  
	
  4.6.2

  	
  If less than the full amount of the Loan remains
  outstanding following a prepayment under this Agreement and the Bank in its
  absolute discretion agrees, following a written request of the Borrowers,
  that the Borrowers may be permitted to maintain all or part of a
  Transaction in an amount not wholly matched with or linked to all or part of
  the Loan, the Borrowers shall, within ten (10) days of being notified by
  the Bank of such requirement, provide the Bank with, or procure the provision
  to the Bank of, such additional security as shall in the opinion of the Bank
  be adequate to secure the performance of such Transaction, which additional
  security shall take such form, be constituted by such documentation and be
  entered into between such parties, as the Bank in its absolute discretion may approve
  or require, and each document comprising such additional security shall
  constitute a Credit Support Document.

  
	
   

  	
   

  
	
  4.6.3

  	
  The Borrowers shall on the first written demand of
  the Bank indemnify the Bank in respect of all losses, costs and expenses
  (including, but not limited to, legal costs and expenses) incurred or
  sustained by the Bank as a consequence of or in relation to the effecting of
  any matter or transactions referred to in this clause 4.6.

  
	
   

  	
   

  
	
  4.6.4

  	
  Notwithstanding any provision of the Master Swap
  Agreement to the contrary, if for any reason a Transaction has been entered
  into but no Advance is drawn down under this Agreement then, subject to
  clause 4.6.5, the Bank shall be entitled but not obliged (and, where
  relevant, may do so without the consent of the Borrowers where it would
  otherwise be required whether under the Master Swap Agreement or otherwise)
  to amend, supplement, cancel, net out, terminate, liquidate, transfer or
  assign all or any part of the rights, benefits and obligations created
  by such Transaction and/or the Master Swap Agreement and/or to obtain or
  re-establish any hedge or related trading position in any manner and with any
  person the Bank in its absolute discretion may determine.

  
	
   

  	
   

  
	
  4.6.5

  	
  If a Transaction has been entered into but no
  Advance is drawn down under this Agreement and the Bank in its absolute
  discretion agrees, following a written request of the Borrowers, that the
  Borrowers may be permitted to maintain all or part of a
  Transaction, the Borrowers shall, within ten (10) days of being notified
  by the Bank of such requirement, provide the Bank with, or procure the
  provision to the Bank of, such additional security as shall in the opinion of
  the Bank be adequate to secure the performance of such Transaction, which
  additional security shall take such form, be constituted by such
  documentation and be entered into between such parties, as the Bank in its
  absolute discretion may approve or require, and each document comprising
  such additional security shall constitute a Credit Support Document for the
  purposes of the Master Swap Agreement and/or otherwise.

  
	
   

  	
   

  
	
  4.6.6

  	
  Without prejudice to or limitation of the
  obligations of the Borrowers under clause 4.6.3, in the event that the Bank
  exercises any of its rights under clauses 4.6.1, 4.6.2, 4.6.4 or 4.6.5 and
  such exercise results in all or part of a Transaction being terminated,
  such termination shall be treated under the Master Swap Agreement in the same
  manner as if it were a Terminated Transaction (as defined in section 14
  of the Master Swap Agreement) effected by the Bank after an Event of Default
  (as so defined in that section 14) by the Borrowers and, accordingly,
  the Bank shall be

  

 

35

 

	
   

  	
  permitted to recover from the Borrowers a payment
  for early termination calculated in accordance with the provisions of section 6(e)(i) of
  the Master Swap Agreement.

  
	
   

  	
   

  
	
  5

  	
  Fees, commitment commission and
  expenses

  
	
   

  	
   

  
	
  5.1

  	
  Fees

  
	
   

  	
   

  
	
   

  	
  The Borrowers shall pay to the Bank:

  
	
   

  	
   

  
	
  5.1.1

  	
  on the date of this Agreement, an arrangement fee
  of Ninety five thousand Dollars ($95,000); and

  
	
   

  	
   

  
	
  5.1.2

  	
  on 5 August 2005 and on each of the dates
  falling at three (3) monthly intervals thereafter until the earlier of (i) the
  last day of the last Drawdown Period to elapse and (ii) the Drawdown
  Date of the last Delivery Advance to be drawn down, and on the earlier of
  such two dates, commitment commission computed from 5 May 2005 (in the
  case of the first payment of commission) and from the date of the preceding
  payment of commission (in the case of each subsequent payment) at the rate of
  zero point two zero per cent (0.20%) per annum on the daily undrawn amount of
  the Commitment.

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
  5.2

  	
  Expenses

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
  5.2.1

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

  
	
   

  	
   

  
	
  5.2.2

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

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
  5.3

  	
  Value Added Tax

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
  5.4

  	
  Stamp and other duties

  
	
   

  	
   

  
	
   

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

  

 

36

 

	
  6

  	
  Payments and taxes; accounts and
  calculations

  
	
   

  	
   

  
	
  6.1

  	
  No set-off or counterclaim

  
	
   

  	
   

  
	
   

  	
  The Borrowers acknowledge that in performing its
  obligations under this Agreement, the Bank will be incurring liabilities to
  third parties in relation to the funding of amounts to the Borrowers, such
  liabilities matching the liabilities of the Borrowers to the Bank and that it
  is reasonable for the Bank to be entitled to receive payments from the
  Borrowers gross on the due date in order that the Bank is put in a position
  to perform its matching obligations to the relevant third parties. Accordingly,
  subject to paragraph (i) of Part 5 of the Schedule to the
  Master Swap Agreement, all payments to be made by the Borrowers under any of
  the Security Documents shall be made in full, without any set-off or
  counterclaim whatsoever and, subject as provided in clause 6.6, free and
  clear of any deductions or withholdings, in Dollars (except for charges or
  expenses which shall be paid in the currency in which they are incurred) on the
  due date (for value on the day on which payment is due) to the account of the
  Bank at American Express Bank Limited, 23rd Floor, American
  Express Tower, 200 Vesey Street, New York, NY 10285-2300, USA, Account Number
  000261123 (with a direct tested telex advice to the Bank) or to such other
  account of the Bank at such bank and in such place as the Bank may from
  time to time specify for this purpose.

  
	
   

  	
   

  
	
  6.2

  	
  Payment by the Bank

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
  6.3

  	
  Non-Banking Days

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
  6.4

  	
  Calculations

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
  6.5

  	
  Certificates conclusive

  
	
   

  	
   

  
	
   

  	
  Any certificate or determination of the Bank as to
  any rate of interest, rate of exchange or any other amount pursuant to and
  for the purposes of any of the Security Documents shall, in the absence of
  manifest error, be conclusive and binding on the Borrowers.

  
	
   

  	
   

  
	
  6.6

  	
  Grossing-up for Taxes

  
	
   

  	
   

  
	
   

  	
  If at any time the Borrowers are required to make
  any deduction or withholding in respect of Taxes from any payment due under
  any of the Security Documents, the sum due from the Borrowers in respect of
  such payment shall be increased to the extent necessary to ensure that, after
  the making of such deduction or withholding, the Bank receives on the due
  date for such payment (and retains, free from any liability in respect of
  such deduction or withholding), a net sum equal to the sum which it would
  have received had no such deduction or withholding been required to be made
  and the Borrowers shall indemnify the Bank against any losses or costs
  incurred by it by reason of any failure of the Borrowers to make any such
  deduction or withholding or by reason of any increased payment not being made
  on the due date for such payment. The Borrowers shall promptly deliver to the
  Bank any receipts, certificates or other proof evidencing the amounts (if any)
  paid or payable in respect of any deduction or withholding as aforesaid.

  

 

37

 

	
  6.7

  	
  Loan account

  
	
   

  	
   

  
	
   

  	
  The Bank shall maintain, in accordance with its
  usual practice, an account or accounts evidencing the amounts from time to
  time lent by, owing and paid to, it under the Security Documents. Such
  account shall be the “account current” referred to in the Collateral Mortgage
  and, if any other Mortgage shall be in a statutory form, also in such other
  Mortgage. Such account shall, in the absence of manifest error, be conclusive
  as to the amount from time to time owing by the Borrowers under the Security
  Documents.

  
	
   

  	
   

  
	
  7

  	
  Representations and warranties

  
	
   

  	
   

  
	
  7.1

  	
  Continuing representations and
  warranties

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
  7.1.1

  	
  Due incorporation

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
  7.1.2

  	
  Corporate power

  
	
   

  	
   

  
	
   

  	
  each of the Borrowers has power to execute,
  deliver and perform its obligations under the Borrowers’ Security Documents
  and the Underlying Documents to which it is or is to be a party and to borrow
  the Commitment and each of the other Security Parties has power to execute
  and deliver and perform its obligations under the Security Documents and
  the Underlying Documents to which it is or is to be a party; all necessary
  corporate, shareholder and other action has been taken to authorise the
  execution, delivery and performance of the same and no limitation on the
  powers of any Borrower to borrow will be exceeded as a result of borrowing
  the Loan;

  
	
   

  	
   

  
	
  7.1.3

  	
  Binding obligations

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
  7.1.4

  	
  No conflict with other obligations

  
	
   

  	
   

  
	
   

  	
  the execution and delivery of, the performance of
  their obligations under, and compliance with the provisions of, the
  Underlying Documents and the Security Documents by the relevant Security
  Parties will not (i) contravene any existing applicable law, statute, rule or
  regulation or any judgment, decree or permit to which any of the Borrowers or
  any other Security Party is subject, (ii) conflict with, or result in
  any breach of any of the terms of, or constitute a default under, any
  agreement or other instrument to which any of the Borrowers or any other
  Security Party is a party or is subject or by which it or any of its property
  is bound, (iii) contravene or conflict with any provision of the
  constitutional documents of any of the Borrowers or any other Security Party
  (other than the Personal Guarantor) or (iv) result in the creation or
  imposition of or oblige any of the Borrowers or any other Security Party to
  create any Encumbrance (other than a Permitted Encumbrance) on any of the
  undertakings, assets, rights or revenues of the Borrowers or any other
  Security Party;

  
	
   

  	
   

  
	
  7.1.5

  	
  No litigation

  
	
   

  	
   

  
	
   

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

  

 

38

 

	
   

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

  
	
   

  	
   

  
	
  7.1.6

  	
  No filings required

  
	
   

  	
   

  
	
   

  	
  save for the registration of the Mortgages through
  the Registry, it is not necessary to ensure the legality, validity,
  enforceability or admissibility in evidence of any of the Security Documents
  or any of the Underlying Documents that they or any other instrument be
  notarised, filed, recorded, registered or enrolled in any court, public
  office or elsewhere in any Relevant Jurisdiction or that any stamp,
  registration or similar tax or charge be paid in any Relevant Jurisdiction on
  or in relation to the Security Documents and the Underlying Documents and
  each of the Security Documents and the Underlying Documents is in proper form for
  its enforcement in the courts of each Relevant Jurisdiction;

  
	
   

  	
   

  
	
  7.1.7

  	
  Choice of law

  
	
   

  	
   

  
	
   

  	
  the choice of English law to govern the Underlying
  Documents and the Security Documents (other than the Mortgages), the choice
  of the law of the relevant Flag State to govern each Mortgage, and the
  submissions by the Security Parties to the non-exclusive jurisdiction of the
  English courts, are valid and binding;

  
	
   

  	
   

  
	
  7.1.8

  	
  No immunity

  
	
   

  	
   

  
	
   

  	
  none of the Borrowers nor any other Security Party
  nor any of their respective assets is entitled to immunity on the grounds of
  sovereignty or otherwise from any legal action or proceeding (which shall
  include, without limitation, suit, attachment prior to judgement, execution
  or other enforcement);

  
	
   

  	
   

  
	
  7.1.9

  	
  Consents obtained

  
	
   

  	
   

  
	
   

  	
  every consent, authorisation, licence or approval
  of, or registration with or declaration to, governmental or public bodies or
  authorities or courts required by any Security Party to authorise, or
  required by any Security Party in connection with, the execution, delivery,
  validity, enforceability or admissibility in evidence of each of the
  Underlying Documents and the Security Documents or the performance by each
  Security Party of its obligations under the Underlying Documents and the
  Security Documents has been obtained or made and is in full force and effect
  and there has been no default in the observance of any of the conditions or
  restrictions (if any) imposed in, or in connection with, any of the same; and

  
	
   

  	
   

  
	
  7.1.10

  	
  Shareholdings 

  
	
   

  	
   

  
	
   

  	
  each of the Borrowers, the Corporate Guarantor and
  the Manager is legally and ultimately beneficially owned by such person or
  persons as specified in the Certificate of Ownership.

  
	
   

  	
   

  
	
  7.2

  	
  Initial representations and
  warranties

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
  7.2.1

  	
  Pari passu

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
  7.2.2

  	
  No default under other Indebtedness

  
	
   

  	
   

  
	
   

  	
  none of the Borrowers nor any of their respective
  Related Companies nor any other Security Party is (nor would with the giving
  of notice or lapse of time or the satisfaction of any other condition or
  combination thereof be) in breach of or in default under the Master Swap

  

 

39

 

	
   

  	
  Agreement or any other agreement relating to
  Indebtedness to which it is a party or by which it may be bound;

  
	
   

  	
   

  
	
  7.2.3

  	
  Information

  
	
   

  	
   

  
	
   

  	
  the information, exhibits and reports furnished by
  any Security Party to the Bank in connection with the negotiation and
  preparation of the Security Documents are true and accurate in all material
  respects and not misleading, do not omit material facts and all reasonable
  enquiries have been made to verify the facts and statements contained
  therein; there are no other facts the omission of which would make any fact
  or statement therein misleading;

  
	
   

  	
   

  
	
  7.2.4

  	
  No withholding Taxes

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
  7.2.5

  	
  No Default

  
	
   

  	
   

  
	
   

  	
  no Default has occurred and is continuing;

  
	
   

  	
   

  
	
  7.2.6

  	
  No Default under Contracts, Supervision Contracts
  or Refund Guarantees

  
	
   

  	
   

  
	
   

  	
  no Borrower is in default of any of its obligations
  under the relevant Contract or the relevant Supervision Contract or any of
  its obligations upon the performance or observance of which depend the
  continued liability of any Refund Guarantor in accordance with the terms of
  any Refund Guarantee relating to such Borrower’s Newbuilding;

  
	
   

  	
   

  
	
  7.2.7

  	
  No Encumbrance in respect of pre-delivery security

  
	
   

  	
   

  
	
   

  	
  no Borrower has previously charged, encumbered or
  assigned the benefit of any of its rights, title and interest in or to the
  Contract or the Supervision Contract or any Refund Guarantee relating to such
  Borrower’s Newbuilding and such benefit and all such rights, title and
  interest are freely assignable and chargeable in the manner contemplated by
  the Security Documents;

  
	
   

  	
   

  
	
  7.2.8

  	
  The Ships

  
	
   

  	
   

  
	
   

  	
  each Newbuilding will be on the Drawdown Date of
  the Delivery Advance relevant to such Newbuilding, and the Collateral Ship
  will be on the Collateral Mortgage Date:

  
	
   

  	
   

  
	
   

  	
  (a)

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

  
	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  registered in the name of the relevant Owner
  through the relevant Registry as a ship under the laws and flag of the
  relevant Flag State;

  
	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  operationally seaworthy and in every way fit for
  service; and

  
	
   

  	
   

  	
   

  
	
   

  	
  (d)

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

  
	
   

  	
   

  	
   

  
	
  7.2.9

  	
  Ships’ employment

  
	
   

  	
   

  
	
   

  	
  none of the Ships is, nor will be, (in the case of
  each Newbuilding) on the Drawdown Date of the relevant Delivery Advance or
  (in the case of the Collateral Ship) on the Collateral Mortgage Date, subject
  to any charter or contract or to any agreement to enter into any charter or
  contract which, if entered into after the date of the relevant Ship Security
  Documents would have required the consent of the Bank and, on or before the
  Drawdown Date of the Delivery Advance relevant

  

 

40

 

	
   

  	
  to a Newbuilding, there will not be any agreement
  or arrangement whereby the Earnings of that Newbuilding may be shared
  with any other person;

  
	
   

  	
   

  
	
  7.2.10

  	
  Freedom from Encumbrances

  
	
   

  	
   

  
	
   

  	
  (a)

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

  
	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  neither the Collateral Ship nor its Earnings,
  Insurances or Requisition Compensation nor any other properties or rights
  which are, or are to be, the subject of any of the Security Documents
  relating to the Collateral Ship nor any part thereof will be, on the
  Collateral Mortgage Date, subject to any Encumbrance (other than Permitted
  Encumbrances);

  
	
   

  	
   

  	
   

  
	
  7.2.11

  	
  Compliance with Environmental Laws and Approvals

  
	
   

  	
   

  	
   

  
	
   

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

  
	
   

  	
   

  	
   

  
	
   

  	
  (a)

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

  
	
   

  	
   

  	
   

  
	
   

  	
  (b)

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

  
	
   

  	
   

  	
   

  
	
   

  	
  (c)

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

  
	
   

  	
   

  	
   

  
	
  7.2.12

  	
  No Environmental Claims

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
  7.2.13

  	
  No potential Environmental Claims

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
  7.2.14

  	
  No material adverse change

  
	
   

  	
   

  
	
   

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

  

 

41

 

	
  7.2.15

  	
  ISPS Code

  
	
   

  	
   

  
	
   

  	
  (a)

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

  
	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  on the Collateral Mortgage Date the Corporate
  Guarantor shall have a valid and current ISSC in respect of the Collateral
  Ship and the Collateral Ship shall be in compliance with the ISPS Code;

  
	
   

  	
   

  	
   

  
	
  7.2.16

  	
  Copies true and complete - commissions

  
	
   

  	
   

  	
   

  
	
   

  	
  (a)

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

  
	
   

  	
   

  	
   

  
	
   

  	
  (b)

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

  
	
   

  	
   

  	
   

  
	
  7.2.17

  	
  Refund Guarantees

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
  7.2.18

  	
  Application for DOC and SMC

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
  7.3

  	
  Repetition of representations and
  warranties

  
	
   

  	
   

  
	
   

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

  
				

 

42

 

	
  8

  	
  Undertakings

  
	
   

  	
   

  
	
  8.1

  	
  General

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
  8.1.1

  	
  Notice of Default

  
	
   

  	
   

  	
   

  
	
   

  	
  (a)

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

  
	
   

  	
   

  	
   

  
	
   

  	
  (b)

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

  
	
   

  	
   

  
	
  8.1.2

  	
  Consents and licences

  
	
   

  	
   

  
	
   

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

   

  
	
  8.1.3

  	
  Use of proceeds

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
  8.1.4

  	
  Pari passu

  
	
   

  	
   

  
	
   

  	
  ensure that its obligations under this Agreement
  and the Master Swap Agreement shall, without prejudice to the provisions of
  clause 8.3, at all times rank at least pari passu with all its other present
  and future unsecured and unsubordinated Indebtedness with the exception of
  any obligations which are mandatorily preferred by law and not by contract;

  
	
   

  	
   

  
	
  8.1.5

  	
  Financial statements

  
	
   

  	
   

  
	
   

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

  

 

43

 

	
   

  	
  statements) and thirty (30) days (in the case of
  unaudited financial statements) after the end of the financial period to
  which they relate;

  
	
   

  	
   

  
	
  8.1.6

  	
  Delivery of reports

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
  8.1.7

  	
  Provision of further information

  
	
   

  	
   

  
	
   

  	
  provide the Bank with such financial and other
  information (including, without limitation, information relating to the
  Builders and the construction of the Newbuildings, information relating to
  the position, trading and/or employment of the Ships and any actual or
  proposed purchase of vessels by any Related Companies of the Borrowers or of
  the Manager) concerning the Borrowers, the other Security Parties, the other
  Relevant Parties and their respective affairs, at the earliest possible
  opportunity and in any event at regular intervals of not more than three (3) months
  and at all other times as the Bank may from time to time require;

  
	
   

  	
   

  
	
  8.1.8

  	
  Obligations under Security Documents

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
  8.1.9

  	
  Compliance with Code

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
  8.1.10

  	
  Withdrawal of DOC and SMC

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
  8.1.11

  	
  Issuance of DOC and SMC

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
  8.1.12

  	
  ISPS Code compliance

  
	
   

  	
   

  
	
   

  	
  and will procure that the Manager or any Operator
  will:

  
	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  maintain at all times a valid and current ISSC
  respect of the Collateral Ship;

  
	
   

  	
   

  	
   

  
	
   

  	
  (b)

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

  
	
   

  	
   

  	
   

  
	
   

  	
  (c)

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

  
	
   

  	
   

  	
   

  
	
   

  	
  (d)

  	
  procure that the Collateral Ship will comply at
  all times with the ISPS Code; and

  
	
   

  	
   

  	
   

  
	
   

  	
  (e)

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

  
	
   

  	
   

  	
   

  

 

44

 

	
  8.1.13

  	
  “KYC” requirements

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
  8.1.14

  	
  Minimum liquidity

  
	
   

  	
   

  
	
   

  	
  maintain or ensure that there are maintained at
  all times cash balances of at least $2,500,000 in bank accounts held with the
  Bank in the name of the Owners and/or the Manager and/or the Personal
  Guarantor and/or any other person within the same beneficial ownership as the
  Owners and agreed by the Bank in writing from time to time and, for the
  purposes of this clause “bank accounts” shall include the Operating Accounts
  but shall exclude any other bank accounts held with the Bank which are
  subject to an Encumbrance; and

  
	
   

  	
   

  
	
  8.1.15

  	
  Conditions subsequent

  
	
   

  	
   

  
	
   

  	
  deliver to the Bank, and/or procure that the
  Corporate Guarantor executes and delivers to the Bank, on or prior to the
  Collateral Mortgage Date, the documents and evidence set out in schedule 12
  in form and substance satisfactory to the Bank.

  
	
   

  	
   

  
	
  8.2

  	
  Security value maintenance

  
	
   

  	
   

  
	
  8.2.1

  	
  Security shortfall

  
	
   

  	
   

  
	
   

  	
  If, at any time after the Drawdown Date of the
  first Delivery Advance to be drawn down the Security Value shall be less than
  the Security Requirement, the Bank may give notice to the Borrowers
  requiring that such deficiency be remedied and then the Borrowers shall at
  its discretion either:

  
	
   

  	
   

  	
   

  
	
   

  	
  (a)

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

  
	
   

  	
   

  	
   

  
	
   

  	
  (b)

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

  
	
   

  	
   

  
	
   

  	
  The provisions of clauses 4.4 and 4.5 shall apply
  to prepayments made under clause 8.2.1(a).

  
	
   

  	
   

  
	
  8.2.2

  	
  Valuation of Mortgaged Ships

  
	
   

  	
   

  
	
   

  	
  Each Mortgaged Ship shall, for the purposes of
  this clause 8.2, be valued in Dollars as and when the Bank shall require by
  an independent firm of shipbrokers nominated by the Borrowers and approved by
  the Bank in its sole discretion or, failing such nomination or approval,
  appointed by the Bank in its sole discretion. Each such valuation of a
  Mortgaged Ship shall be addressed to the Bank and made without, unless
  required by the Bank, physical inspection and on the basis of a sale for
  prompt delivery for cash at arm’s length on normal commercial terms, as
  between a willing buyer and a willing seller and without taking into account
  the benefit of any charterparty or other engagement concerning the relevant
  Mortgaged Ship. Such valuation shall constitute the value of such Mortgaged
  Ship for the purposes of this clause 8.2 unless the Bank objects to the
  valuation of the relevant Mortgaged Ship provided by the shipbroker nominated
  by the Borrowers within seven (7) days of receipt of such valuation, in
  which event the value of such Mortgaged Ship shall be the mean of the value
  specified in such valuation and the value

  

 

45

 

	
   

  	
  specified in a further valuation issued by an
  independent firm of shipbrokers appointed by the Bank and made on the same
  basis as specified above.

   

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

  
	
   

  	
   

  
	
  8.2.3

  	
  Information

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
  8.2.4

  	
  Costs

  
	
   

  	
   

  
	
   

  	
  All costs in connection with the Bank obtaining
  any valuation of each of the Mortgaged Ships referred to in clause 8.2.2 and
  in schedule 2, Part 5, paragraph 19, and any valuation either of
  any additional security for the purposes of ascertaining the Security Value
  at any time or necessitated by the Borrowers electing to constitute
  additional security pursuant to clause 8.2.1(b), shall be borne by the Borrowers.

  
	
   

  	
   

  
	
  8.2.5

  	
  Valuation of additional security

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
  8.2.6

  	
  Documents and evidence

  
	
   

  	
   

  
	
   

  	
  In connection with any additional security
  provided in accordance with this clause 8.2, the Bank shall be entitled to
  receive such evidence and documents of the kind referred to in schedule 2
  as may in the Bank’s opinion be appropriate and such favourable legal
  opinions as the Bank shall in its absolute discretion require.

  
	
   

  	
   

  
	
  8.3

  	
  Negative undertakings

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
  8.3.1

  	
  Negative pledge

  
	
   

  	
   

  
	
   

  	
  permit any Encumbrance (other than a Permitted
  Encumbrance) to subsist, arise or be created or extended over all or any part of
  their respective present or future undertakings, assets, rights or revenues
  (including, but not limited to, the Borrowers’ rights against the Bank under
  any Transactions and/or the Master Swap Agreement or all or any part of
  the Borrowers’ interest in any amount payable to the Borrowers by the Bank
  under any Transactions and/or the Master Swap Agreement) in order to secure
  or prefer any present or future Indebtedness or other liability or obligation
  of the Borrowers or any of them or any Security Party or any other person;

  
	
   

  	
   

  
	
  8.3.2

  	
  No merger

  
	
   

  	
   

  
	
   

  	
  merge or consolidate with any other person;

  
	
   

  	
   

  
	
  8.3.3

  	
  Disposals

  
	
   

  	
   

  
	
   

  	
  sell, transfer, abandon, lend or otherwise dispose
  of or cease to exercise direct control over any part (being either alone
  or when aggregated with all other disposals falling to be taken into account
  pursuant to this clause 8.3.3 material in the opinion of the Bank in relation
  to the

  

 

46

 

	
   

  	
  undertakings, assets, rights and revenues of the
  relevant Borrower taken as a whole) of their respective present or future
  undertaking, assets, rights or revenues (otherwise than by transfers, sales
  or disposals for full consideration in the ordinary course of trading)
  whether by one or a series of transactions related or not;

  
	
   

  	
   

  
	
  8.3.4

  	
  Other business

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
  8.3.5

  	
  Acquisitions

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
  8.3.6

  	
  Other obligations

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
  8.3.7

  	
  No borrowing

  
	
   

  	
   

  
	
   

  	
  incur any Indebtedness except for Indebtedness
  pursuant to the Security Documents;

  
	
   

  	
   

  
	
  8.3.8

  	
  Repayment of borrowings

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
  8.3.9

  	
  Guarantees

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
  8.3.10

  	
  Loans

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
  8.3.11

  	
  Sureties

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
  8.3.12

  	
  Share capital and distribution

  
	
   

  	
   

  
	
   

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

  

 

47

 

	
  8.3.13

  	
  Subsidiaries

  
	
   

  	
   

  
	
   

  	
  form or acquire any Subsidiaries;

  
	
   

  	
   

  
	
  8.3.14

  	
  Manager

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
  8.3.15

  	
  Shareholdings

  
	
   

  	
   

  
	
   

  	
  change, cause or permit any change in the legal
  and/or ultimate beneficial ownership of any of the Borrowers or the Corporate
  Guarantor or the Manager from that existing on the date of this Agreement as
  specified in clause 7.1.10.

  
	
   

  	
   

  
	
  8.4

  	
  Pre-delivery positive
  undertakings

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
  8.4.1

  	
  Conveyance on default

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
  8.4.2

  	
  Flag State

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
  8.4.3

  	
  Mortgage

  
	
   

  	
   

  
	
   

  	
  immediately upon Delivery of each Newbuilding
  procure that the relevant Borrower shall execute, and procure the
  registration of, the Mortgage over such Newbuilding under the laws and flag
  of the relevant Flag State and provide all other documents and evidence as
  specified in Part 5 of schedule 2 in respect of such Newbuilding.

  
	
   

  	
   

  
	
  8.5

  	
  Pre-delivery negative undertaking

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
  8.5.1

  	
  on demise charter for any period; or

  
	
   

  	
   

  
	
  8.5.2

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

  
	
   

  	
   

  
	
  8.5.3

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

  
	
   

  	
   

  
	
  8.5.4

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

  

 

48

 

	
  9

  	
  Conditions

  
	
   

  	
   

  
	
  9.1

  	
  Documents and evidence

  
	
   

  	
   

  
	
  9.1.1

  	
  Commitment

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
  9.1.2

  	
  First Advances

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
  9.1.3

  	
  Second Advances

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
  9.1.4

  	
  Third Advances

  
	
   

  	
   

  
	
   

  	
  The obligation of the Bank to make available the
  Third Advance in respect of any Newbuilding shall be subject to the condition
  that the Bank or its duly authorised representative shall have received, on
  or prior to the drawdown of the relevant Third Advance, the relevant
  documents and evidence specified in Part 4 of schedule 2 in respect
  of such Newbuilding, in form and substance satisfactory to the Bank.

  
	
   

  	
   

  
	
  9.1.5

  	
  Delivery Advances

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
  9.2

  	
  General conditions precedent

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
  9.2.1

  	
  the representations and warranties contained in (i) clauses
  7.1, 7.2 and 7.3(b), (ii) clause 4 of the Corporate Guarantee and (iii) clause
  4 of the Personal Guarantee, are true and correct on and as of each such time
  as if each was made with respect to the facts and circumstances existing at
  such time; and

  
	
   

  	
   

  
	
  9.2.2

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

  

 

49

 

 

	
  9.3

  	
  Waiver of conditions precedent

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
  9.4

  	
  Further conditions precedent

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
  10

  	
  Events of Default 

  
	
   

  	
   

  
	
  10.1

  	
  Events

  
	
   

  	
   

  
	
   

  	
  There shall be an Event of Default if:

  
	
   

  	
   

  
	
  10.1.1

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

  
	
   

  	
   

  
	
  10.1.2

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

  
	
   

  	
   

  
	
  10.1.3

  	
  Breach of Insurance and certain
  other obligations: any
  of the Owners or the Manager fails to obtain and/or maintain the Insurances
  (in accordance with the requirements of the Security Documents) for any of
  the Ships or if any insurer in respect of such Insurances cancels any of such
  Insurances or disclaims liability by reason, in either case, of mis-statement
  in any proposal for any of such Insurances or for any other failure or
  default on the part of the Owners or any of them or any other person or
  the Borrowers or the Corporate Guarantor commit any breach of or omit to
  observe any of the obligations or undertakings expressed to be assumed by
  them under clauses 8.1.14, 8.1.15, 8.2, 8.3, 8.4 or 8.5 of this Agreement or
  clauses 5.1.5 or 5.2 of the Corporate Guarantee, respectively; or

  
	
   

  	
   

  
	
  10.1.4

  	
  Breach of other obligations: any Security Party commits any breach of
  or omits to observe any of its obligations or undertakings expressed to be
  assumed by it under any of the Security Documents or any of the Underlying
  Documents (other than those referred to in clauses 10.1.1, 10.1.2 and 10.1.3
  above) and, in respect of any such breach or omission which in the opinion of
  the Bank is capable of remedy, such action as the Bank may require shall
  not have been taken within fourteen (14) days of the Bank notifying the
  relevant Security Party of such default and of such required action; or

  
	
   

  	
   

  
	
  10.1.5

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

  
	
   

  	
   

  
	
  10.1.6

  	
  Cross-default: any Indebtedness of any Relevant Party is
  not paid when due or any Indebtedness of any Relevant Party becomes (whether
  by declaration or automatically in

  

 

50

 

	
   

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

  
	
   

  	
   

  
	
  10.1.7

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

  
	
   

  	
   

  
	
  10.1.8

  	
  Insolvency: any Relevant Party is unable or admits
  inability to pay its debts as they fall due; suspends making payments on any
  of its debts or announces an intention to do so; becomes insolvent; has
  assets the value of which is less than the value of its liabilities (taking
  into account contingent and prospective liabilities); or suffers the declaration
  of a moratorium in respect of any of its Indebtedness; or

  
	
   

  	
   

  
	
  10.1.9

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

  
	
   

  	
   

  
	
  10.1.10

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

  
	
   

  	
   

  
	
  10.1.11

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

  
	
   

  	
   

  
	
  10.1.12

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

  
	
   

  	
   

  
	
  10.1.13

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

  
	
   

  	
   

  
	
  10.1.14

  	
  Analogous proceedings: there occurs, in relation to any Relevant
  Party, in any country or territory in which any of them carries on business
  or to the jurisdiction of whose courts any part of their assets is subject,
  any event which, in the reasonable opinion of the Bank, appears in that
  country or territory to correspond with, or have an effect equivalent or
  similar to, any of those mentioned in clauses 10.1.7 to 10.1.13 (inclusive)
  or any Relevant Party otherwise becomes subject, in any such country or
  territory, to the operation of any law relating to insolvency, bankruptcy or
  liquidation; or

  
	
   

  	
   

  
	
  10.1.15

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

  
	
   

  	
   

  
	
  10.1.16

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

  

 

51

 

	
  10.1.17

  	
  Invalidity: any of the Security Documents shall at any
  time and for any reason become invalid or unenforceable or otherwise cease to
  remain in full force and effect, or if the validity or enforceability of any
  of the Security Documents shall at any time and for any reason be contested
  by any Security Party which is a party thereto, or if any such Security Party
  shall deny that it has any, or any further, liability thereunder; or

  
	
   

  	
   

  
	
  10.1.18

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

  
	
   

  	
   

  
	
  10.1.19

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

  
	
   

  	
   

  
	
  10.1.20

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

  
	
   

  	
   

  
	
  10 1.21

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

  
	
   

  	
   

  
	
  10.1.22

  	
  Arrest: any Ship is arrested, confiscated, seized,
  taken in execution, impounded, forfeited, detained in exercise or purported
  exercise of any possessory lien or other claim or otherwise taken from the
  possession of the relevant Owner and such Owner shall fail to procure the
  release of such Ship within a period of two (2) days thereafter; or

  
	
   

  	
   

  
	
  10.1.23

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

  
	
   

  	
   

  
	
  10.1.24

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

  
	
   

  	
   

  
	
  10.1.25

  	
  Environment: any of the Borrowers and/or any other
  Relevant Party and/or any of their respective Environmental Affiliates fails
  to comply with any Environmental Law or any Environmental Approval or any of
  the Borrowers and/or any other Relevant Party and/or any of their respective
  Environmental Affiliates or any Ship or any other Relevant Ship is involved
  in any incident which gives rise or may give rise to an Environmental Claim
  if, in any such case, such non-compliance or incident or the consequences
  thereof could, in the opinion of the Bank reasonably be expected to have a
  material adverse effect on the business, assets, operations, property or
  financial condition of any of the Borrowers or the Corporate Guarantor or any
  other Security Party or on the security constituted by any of the Security
  Documents; or

  
	
   

  	
   

  
	
  10.1.26

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

  
	
   

  	
   

  
	
  10.1.27

  	
  Personal Guarantor: the Personal Guarantor passes away or is
  found to be of unsound mind by a court of a Relevant Jurisdiction, unless
  there shall have been delivered to the Bank a substitute guarantee or other
  security acceptable to the Bank within seven (7) days of either of such
  events occurring; or

  

 

52

 

	
  10.1.28

  	
  Shareholdings: there is any change in the legal and/or
  ultimate beneficial ownership of any of the shares in any of the Borrowers or
  the Manager or the Corporate Guarantor from that existing on the date of this
  Agreement as specified in clause 7.1.10; or

  
	
   

  	
   

  
	
  10.1.29

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

  
	
   

  	
   

  
	
  10.1.30

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

  
	
   

  	
   

  
	
  10.1.31

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

  
	
   

  	
   

  
	
  10.1.32

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

  
	
   

  	
   

  
	
  10.1.33

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

  
	
   

  	
   

  
	
  10.1.34

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

  
	
   

  	
   

  
	
  10.2

  	
  Acceleration

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
  10.2.1

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

  
	
   

  	
   

  
	
  10.2.2

  	
  the Loan and all interest and commitment
  commission accrued and all other sums payable under the Security Documents
  have become due and payable, whereupon the same shall, immediately or in
  accordance with the terms of such notice, become due and payable.

  
	
   

  	
   

  
	
  10.3

  	
  Demand basis

  
	
   

  	
   

  
	
   

  	
  If, pursuant to clause 10.2.2, the Bank declares
  the Loan to be due and payable on demand, the Bank may by written notice
  to the Borrowers (a) call for repayment of the Loan on such date as may be
  specified whereupon the Loan shall become due and payable on the date so
  specified together with all interest and commitment commission accrued and
  all other sums payable under this Agreement or (b) withdraw such
  declaration with effect from the date specified in such notice.

  

 

53

 

	
  11

  	
  Indemnities

  
	
   

  	
   

  
	
  11.1

  	
  Miscellaneous Indemnities

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
  11.1.1

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

  
	
   

  	
   

  
	
  11.1.2

  	
  the occurrence of any other Event of Default;

  
	
   

  	
   

  
	
  11.1.3

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

  
	
   

  	
   

  
	
  11.1.4

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

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
  11.2

  	
  Currency indemnity

  
	
   

  	
   

  
	
   

  	
  If any sum due from the Borrowers under any of the
  Security Documents or any order or judgment given or made in relation thereto
  has to be converted from currency (the “first
  currency”) in which the same is payable under the relevant Security
  Document or under such order or judgment into another currency (the “second currency”) for the purpose of (a) making
  or filing a claim or proof against the Borrowers or any of them, (b) obtaining
  an order or judgment in any court or other tribunal or (c) enforcing any
  order or judgment given or made in relation to any of the Security Documents,
  the Borrowers shall indemnify and hold harmless the Bank from and against any
  loss suffered as a result of any difference between (i) the rate of
  exchange used for such purpose to convert the sum in question from the first
  currency into the second currency and (ii) the rate or rates of exchange
  at which the Bank may in the ordinary course of business purchase the
  first currency with the second currency upon receipt of a sum paid to it in
  satisfaction, in whole or in part, of any such order, judgment, claim or
  proof. Any amount due from the Borrowers under this clause 11.2 shall be due
  as a separate debt and shall not be affected by judgment being obtained for any
  other sums due under or in respect of any of the Security Documents and the
  term “rate of exchange” includes
  any premium and costs of exchange payable in connection with the purchase of
  the first currency with the second currency.

  
	
   

  	
   

  
	
  11.3

  	
  Environmental Indemnity

  
	
   

  	
   

  
	
   

  	
  The Borrowers shall indemnify the Bank on demand
  and hold the Bank harmless from and against all costs, expenses, payments,
  charges, losses, demands, liabilities, actions, proceedings (whether civil or
  criminal), penalties, fines, damages, judgements, orders, sanctions or other
  outgoings of whatever nature which may be suffered, incurred or paid by,
  or made or asserted against the Bank at any time, whether before or after the
  repayment in full of principal and interest under this Agreement, relating
  to, or arising directly or indirectly in any manner or for any cause or
  reason whatsoever out of an Environmental Claim made or asserted against the
  Bank if such Environmental Claim would not have been, or been capable of
  being, made or asserted against the Bank if it had not entered into any of
  the Security Documents and/or exercised any of its rights, powers and
  discretions thereby conferred and/or performed any of its obligations
  thereunder and/or been involved in any of the transactions contemplated by
  the Security Documents.

  

 

54

 

	
  12

  	
  Unlawfulness and increased costs

  
	
   

  	
   

  
	
  12.1

  	
  Unlawfulness

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
  12.2

  	
  Increased costs

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
  12.2.1

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

  
	
   

  	
   

  
	
  12.2.2

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

  
	
   

  	
   

  
	
  12.2.3

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

  
	
   

  	
   

  
	
  12.2.4

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

  
	
   

  	
   

  
	
  12.2.5

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

  
	
   

  	
   

  
	
  12.2.6

  	
  require the Bank or its holding company to incur
  or sustain a loss (including a loss of future potential profits) by reason of
  being obliged to deduct all or part of the Commitment or the Loan from
  its capital for regulatory purposes,

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

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

  

 

55

 

	
  12.3

  	
  Exception

  
	
   

  	
   

  
	
   

  	
  Nothing in clause 12.2 shall entitle the Bank to
  receive any amount in respect of compensation for any such liability to
  Taxes, increased or additional cost, reduction, payment, foregone return or
  loss (a) to the extent that the same is taken into account in
  calculating the Additional Cost or (b) to the extent that the same is
  the subject of an additional payment under clause 6.6.

  
	
   

  	
   

  
	
  13

  	
  Security and set-off 

  
	
   

  	
   

  
	
  13.1

  	
  Application of moneys

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
  13.1.1

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

  
	
   

  	
   

  
	
  13.1.2

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

  
	
   

  	
   

  
	
  13.1.3

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

  
	
   

  	
   

  
	
  13.1.4

  	
  fourthly, in or towards payment to the Bank for
  any loss suffered by reason of any such payment in respect of principal not
  being effected on an Interest Payment Date relating to the part of the
  Loan repaid;

  
	
   

  	
   

  
	
  13.1.5

  	
  fifthly in or towards payment to the Bank of any
  sum owing under the Master Swap Agreement;

  
	
   

  	
   

  
	
  13.1.6

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

  
	
   

  	
   

  
	
  13.1.7

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

  
	
   

  	
   

  
	
  13.2

  	
  Set-off

  
	
   

  	
   

  
	
  13.2.1

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

  
	
   

  	
   

  
	
  13.2.2

  	
  Without prejudice to its rights hereunder and/or
  under the Master Swap Agreement, the Bank may at the same time as, or at
  any time after, any Default under this Agreement or the Borrowers’ default
  under the Master Swap Agreement, set-off any amount due now or in the future
  from the Borrowers or any of them to the Bank under this Agreement against
  any amount due from the Bank to the Borrowers or any of them under the Master
  Swap Agreement and apply the first amount in discharging the second amount.
  The effect of any set-off under this sub-clause 13.2.2 shall be effective to
  extinguish or, as the case may require, reduce the liabilities of the
  Bank under the Master Swap Agreement.

  
	
   

  	
   

  
	
  13.2.3

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

  

 

56

 

	
  13.3

  	
  Further assurance

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
  13.4

  	
  Conflicts

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
  14

  	
  Operating Accounts

  
	
   

  	
   

  
	
  14.1

  	
  General

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
  14.1.1

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

  
	
   

  	
   

  
	
  14.1.2

  	
  procure that all moneys payable to each Borrower
  in respect of the Earnings of such Borrower’s Ship shall, unless and until
  the Bank directs to the contrary pursuant to the provisions of the relevant
  Deed of Covenant, be paid to the Operating Account for such Ship, Provided
  however that if any of the moneys paid to the relevant Operating Account are
  payable in a currency other than Dollars, the Bank shall (and each Borrower
  in respect of its Operating Account hereby irrevocably instructs the Bank to)
  convert such moneys into Dollars at the Bank’s spot rate of exchange at the
  relevant time for the purchase of Dollars with such currency and the term “spot rate of exchange”
  shall include any premium and costs of exchange payable in connection with
  the purchase of Dollars with such currency.

  
	
   

  	
   

  
	
  14.2

  	
  Operating Accounts: withdrawals

  
	
   

  	
   

  
	
   

  	
  Unless the Bank otherwise agrees in writing, no
  Borrower shall be entitled to withdraw any moneys from its Operating Account
  at any time from the date of this Agreement and so long as any moneys are
  owing under the Security Documents save that, unless and until a Default
  shall occur and the Bank shall direct to the contrary, each Borrower may withdraw
  moneys from its Operating Account for the following purposes:

  
	
   

  	
   

  
	
  14.2.1

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

  
	
   

  	
   

  
	
  14.2.2

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

  
	
   

  	
   

  
	
  14.2.3

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

  
	
   

  	
   

  
	
  14.2.4

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

  
	
   

  	
   

  
	
  14.2.5

  	
  to make as other payment not expressly prohibited
  by the terms of this Agreement or any other Security Document, 

  
	
   

  	
   

  
	
   

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

  

 

57

 

	
  14.3

  	
  Interest

  
	
   

  	
   

  
	
   

  	
  Amounts standing to the credit of each Operating
  Account shall bear interest at the rate (unless otherwise agreed between the
  Bank and the relevant Borrower) which is certified by the Bank to that
  Borrower to be the rate quoted by the Bank to its customers for deposits in
  Dollars for such period as the Bank may determine and in an amount comparable
  with the amount for the time being standing to the credit of that Operating
  Account, such interest to be credited to such Operating Account at the expiry
  of each such period of deposit and to accrue from day to day and to be
  calculated on the basis of a three hundred and sixty (360) day year and the
  actual number of days elapsed.

  
	
   

  	
   

  
	
  14.4

  	
  Set-off

  
	
   

  	
   

  
	
   

  	
  Without in any way affecting the rights of the
  Bank under clause 13.2, upon the occurrence of a Default or at any time
  thereafter the Bank shall be entitled to set-off and apply all sums standing
  to the credit of any Operating Account and accrued interest (if any) thereon
  without notice to the Borrowers in the manner specified in clause 13.1.

  
	
   

  	
   

  
	
  14.5

  	
  Deductions

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
  14.6

  	
  Charging of Operating Accounts

  
	
   

  	
   

  
	
   

  	
  Each Borrower with full title guarantee hereby
  charges and agrees to charge, by way of first fixed charge and releases and
  agrees to the release to the Bank, as a continuing security for the payment
  of the Loan, interest thereon and all other moneys from time to time owing
  under this Agreement, the Master Swap Agreement and the other Security
  Documents (for the purposes of this clause 14.6, the “Outstanding Indebtedness”), such
  Borrower’s Operating Account and all moneys from time to time standing to the
  credit of such Operating Account, including any interest from time to time
  accrued and accruing thereon (whether or not credited thereto) and no
  Borrower shall be entitled to withdraw any such monies from its Operating
  Account otherwise than in accordance with this clause 14 until such time as
  the Outstanding Indebtedness has been conclusively certified by the Bank to
  have been repaid in full.

  
	
   

  	
   

  
	
  14.7

  	
  Representations and warranties

  
	
   

  	
   

  
	
   

  	
  Each Borrower hereby represents and warrants to
  the Bank that:

  
	
   

  	
   

  
	
  14.7.1

  	
  it is the sole, absolute, legal and beneficial
  owner of, and has good right and title to its Operating Account; and

  
	
   

  	
   

  
	
  14.7.2

  	
  neither its Operating Account nor any part thereof
  is subject to any Encumbrance save as constituted by this Agreement or
  otherwise permitted by the terms of this Agreement.

  
	
   

  	
   

  
	
  15

  	
  Assignment, transfer and lending
  office

  
	
   

  	
   

  
	
  15.1

  	
  Benefit and burden

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
  15.2

  	
  No assignment by Borrowers

  
	
   

  	
   

  
	
   

  	
  None of the Borrowers may assign or transfer
  any of its rights or obligations under this Agreement.

  

 

58

 

	
  15.3

  	
  Assignment by Bank

  
	
   

  	
   

  
	
   

  	
  The Bank may assign all or any part of
  its rights under this Agreement, the Master Swap Agreement (notwithstanding
  the terms of Section 7 of the Master Swap Agreement) or under any of the
  other Security Documents to any other bank or financial institution (an “Assignee”) without the consent of the
  Borrowers (the Borrowers consenting to any such assignment by their execution
  of this Agreement).

  
	
   

  	
   

  
	
  15.4

  	
  Transfer

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
  15.5

  	
  Documenting assignments and
  transfers

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
  15.6

  	
  Lending office

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
  15.7

  	
  Disclosure of information

  
	
   

  	
   

  
	
   

  	
  The Bank may disclose to a prospective
  assignee, transferee or to any other person who may propose entering
  into contractual relations with the Bank in relation to this Agreement such
  information about the Borrowers as the Bank shall consider appropriate.

  
	
   

  	
   

  
	
  16

  	
  Notices and other matters

  
	
   

  	
   

  
	
  16.1

  	
  Notices

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
  16.1.1

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

  
	
   

  	
   

  
	
  16.1.2

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

  

 

59

 

	
  16.1.3

  	
  be sent:

  
	
   

  	
   

  
	
   

  	
   

  	
  (a)

  	
  if to the Borrowers or any of them at:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  c/o Aegean Bunkering Services Inc.

  42 Hatzikiriakou Street

  185 38 Piraeus

  Greece

   

  Fax No:     +30 210 458
  6242

  Attention:   Mr Dimitris Koutsoukos

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (b)

  	
  if to the Bank at:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  The Royal Bank of Scotland plc

  Piraeus Branch

  45 Akti Miaouli

  185 10 Piraeus

  Greece

   

  Fax No:     +30 210 459
  6600

  Attention:   Shipping Department

  
	
   

  	
   

  	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
  16.2

  	
  No implied waivers, remedies
  cumulative

  
	
   

  	
   

  
	
   

  	
  No failure or delay on the part of the Bank
  to exercise any power, right and remedy under any of the Security Documents
  shall operate as a waiver thereof, nor shall any single or partial exercise
  by the Bank of any power, right or remedy preclude any other or further
  exercise thereof or the exercise of any other power, right or remedy. The
  remedies provided in the Security Documents are cumulative and are not
  exclusive of any remedies provided by law.

  
	
   

  	
   

  
	
  16.3

  	
  English language

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
  16.4

  	
  Borrowers’ obligations 

  
	
   

  	
   

  
	
  16.4.1

  	
  Joint and several

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
  16.4.2

  	
  Borrowers as principal debtors

  
	
   

  	
   

  
	
   

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

  

 

60

 

	
  16.4.3

  	
  Indemnity

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
  16.4.4

  	
  Liability unconditional

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

  	
   

  	
  (a)

  	
  the death, bankruptcy, unsoundness of mind,
  insolvency, liquidation, dissolution, winding-up, administration,
  receivership, amalgamation, reconstruction or other incapacity of any person
  whatsoever (including, in the case of a partnership, a termination or change
  in the composition of the partnership) or any change of name or style or
  constitution of the other Borrowers or any of them or any other person
  liable;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (b)

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

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (c)

  	
  anything done or omitted which but for this
  provision might operate to exonerate the Borrowers or any of them.

  
	
   

  	
   

  	
   

  	
   

  
	
  16.4.5

  	
  Recourse to other security

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
  16.4.6

  	
  Waiver of Borrowers’ rights

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

  	
   

  	
  (a)

  	
  exercise any right of subrogation, reimbursement
  and indemnity against the other Borrowers or any of them or any other person
  liable under the Security Documents;

  

 

61

 

	
   

  	
   

  	
  (b)

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

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (c)

  	
  take any steps to enforce any right against the
  other Borrowers or any of them or any other person liable in respect of any such
  moneys; or

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (d)

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

  
	
   

  	
   

  
	
  16.5

  	
  Maximum liability

  
	
   

  	
   

  
	
  16.5.1

  	
  Each Borrower shall be entitled to rights of
  contribution as against the other Borrowers or any of them, however, such
  rights of contribution shall (a) not in any way (except as otherwise
  expressly set forth in clause 16.5.2 below) condition or lessen the liability
  of each Borrower as a joint and several borrower for the whole of the
  obligations owed to the Bank hereunder, and under the Security Documents. and
  (b) shall be fully subject and subordinate to the rights of the Bank
  against the Borrowers hereunder, and under the Security Documents.

  
	
   

  	
   

  
	
  16.5.2

  	
  Notwithstanding anything to the contrary contained
  in this Agreement, or any of the Security Documents, in the event that any
  court or other judicial body of competent jurisdiction determines that legal
  principles of fraudulent conveyances, fraudulent transfers or similar
  concepts are applicable in evaluating the enforceability against any
  particular Borrower or its assets of this Agreement or any Security Document
  granted by such Borrower as security for its obligations hereunder and that
  under such principles, this Agreement or such other Security Documents would
  not be enforceable against such Borrower or its asset unless the following
  provisions of this clause 16.5.2 had effect, then, the maximum liability of
  such Borrower hereunder (the “Maximum
  Liability Amount”) shall be limited such that in no event shall
  such amount exceed the lesser of (i) the obligations of such Borrower
  hereunder (in the principal amount of up to Thirty three million four hundred
  thousand Dollars ($33,400,000), plus interest, expenses, fees and any amounts
  owing under the Master Swap Agreement), and (ii) an amount equal to the
  aggregate, without double counting, of (a) ninety-five percent (95%) of
  such Borrower’s Adjusted Net Worth (as hereinafter defined) on the date
  hereof, on the date of commencement of a case under the Bankruptcy Code of
  the United States of America, as amended (11 U.S.C ss 101-1330) (the “Bankruptcy Code”) or any similar
  legislation in any other jurisdiction, in which such Borrower is a debtor, or
  on the date enforcement of this Agreement is sought (the “Determination Date”), whichever is
  greater, (b) the aggregate fair value of such Borrower’s Subrogation and
  Contribution Rights (as hereinafter defined) and (c) the amount of any
  Valuable Transfer (as hereinafter defined) to such Borrower; provided that
  each Borrower’s liability under this Agreement shall further be limited to
  the extent, if any, required so that the obligations of each Borrower under
  this Agreement shall not be subject to avoidance under Section 548 of
  the Bankruptcy Code or any similar provision under the legislation of any
  other relevant jurisdiction, or to being set aside or annulled under any
  applicable law relating to fraudulent transfers or fraudulent conveyances. In
  determining the limitations, if any, on the amount of any Borrower’s
  obligations hereunder pursuant to the preceding sentence, any rights of
  subrogation or contribution (collectively the “Subrogation and Contribution Rights”) which such Borrower may have
  on the Determination Date with respect

  

 

62

 

	
   

  	
  to the Funding Borrower (as hereinafter defined)
  under applicable law shall be taken into account.

  
	
   

  	
   

  
	
  16.5.3

  	
  As used herein “Adjusted
  Net Worth” of each Borrower shall mean, as of any date of
  determination thereof, an amount equal to the lesser of (a) an amount
  equal to the excess of (i) the amount of the present fair saleable value
  of the assets of such Borrower over (ii) the amount that will be
  required to pay such Borrower’s probable liability on its then existing
  debts, including contingent liabilities, as they become absolute and matured,
  and (b) an amount equal to the excess of (i) the sum of such
  Borrower’s property at a fair valuation over (ii) the amount of all
  liabilities of such Borrower, contingent or otherwise, as such terms are
  construed in accordance with applicable federal and state laws in the United
  States of America, or the laws of other applicable jurisdictions, governing
  determinations of the insolvency of debtors.

  
	
   

  	
   

  
	
  16.5.4

  	
  In determining the Adjusted Net Worth of each
  Borrower for purposes of calculating the Maximum Liability Amount for such
  Borrower, the liabilities of such Borrower to be used in such determination
  pursuant to each section (ii) of clause 17.6.3 shall in any event
  exclude (a) the liabilities of such Borrower under this Agreement, (b) any
  liabilities of such Borrower subordinated in right of payment to this
  Agreement and (c) any liabilities of such Borrower for Subrogation and
  Contribution Rights to the other Borrowers.

  
	
   

  	
   

  
	
  16.5.5

  	
  As used herein “Valuable
  Transfer” shall mean, in respect of each Borrower, (a) all
  loans, advances or capital contributions made to such Borrower with proceeds
  of the Loan made under this Agreement, (b) all debt securities or other
  obligations of such Borrower acquired from such Borrower or retired by such
  Borrower with proceeds of the Loan made under this Agreement and transferred,
  absolutely and not as collateral, to such Borrower (c) the fair market
  value of all property acquired with proceeds of the Loan made under this
  Agreement and transferred, absolutely and not as collateral, to such Borrower,
  (d) all equity securities of such Borrower acquired from such Borrower
  with proceeds of the Loan made under this Agreement and (e) the value of
  any other economic benefits in accordance with applicable federal and state
  laws, or the laws of other applicable jurisdictions, governing determinations
  of the insolvency of debtors, in each case accruing to such Borrower as a
  result of the Loan made available under this Agreement.

  
	
   

  	
   

  
	
  16.5.6

  	
  Without in any way modifying or affecting the
  obligations of any of the Borrowers hereunder, in the event any of the
  Borrowers shall make any payment or payments to the Bank under this Agreement
  in an aggregate amount in excess of such Borrower’s Percentage (such Borrower
  hereinafter called the “Funding Borrower”
  and each of the other Borrowers hereinafter called the “Other Borrower” and together the “Other Borrowers”), each Other Borrower
  shall contribute to the Funding Borrower an amount equal to such Other
  Borrower’s Percentage of such payment or payments made by the Funding
  Borrower. For the purposes hereof, a Funding Borrower’s or each Other
  Borrowers’ Percentage shall be determined as of the date on which such
  payment was made by reference to the ratio of (a) such Funding Borrower’s
  or such Other Borrowers’ Adjusted Net Worth as of such date to (b) the
  aggregate Adjusted Net Worth of the Borrowers (including the Funding
  Borrower) as of such date. Nothing in this paragraph shall affect each
  Borrowers’ several liability to the Bank for the entire amount of the
  obligations of the Borrowers under this Agreement (up to the limitations set
  forth in the preceding paragraph) or in any other manner impair any right or
  remedy of the Bank hereunder. The limitations provided above are intended
  solely to preserve the rights of the Bank under this Agreement to the maximum
  extent permitted by applicable law and none of the Borrowers nor any other
  person shall have any right hereunder that it would not otherwise have under
  applicable law.

  
	
   

  	
   

  
	
  17

  	
  Governing law and jurisdiction 

  
	
   

  	
   

  
	
  17.1

  	
  Law

  
	
   

  	
   

  
	
   

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

  

 

63

 

	
  17.2

  	
  Submission to jurisdiction

  
	
   

  	
   

  
	
   

  	
  Each Borrower agrees, for the benefit of the Bank,
  that any legal action or proceedings arising out of or in connection with
  this Agreement against the Borrowers or any of them or any of their assets may be
  brought in the English courts. Each Borrower irrevocably and unconditionally
  submits to the jurisdiction of such courts and irrevocably designates,
  appoints and empowers Riches Consulting at present of Old Jarretts Farmhouse,
  Brantridge Lane, Balcombe, West Sussex RH17 6JR, England to receive for it
  and on its behalf, service of process issued out of the English courts in any
  such legal action or proceedings. The submission to such jurisdiction shall
  not (and shall not be construed so as to) limit the right of the Bank to take
  proceedings against the Borrowers or any of them in the courts of any other
  competent jurisdiction nor shall the taking of proceedings in any one or more
  jurisdictions preclude the taking of proceedings in any other jurisdiction,
  whether concurrently or not.

   

  The parties further agree that only the Courts of
  England and not those of any other State shall have jurisdiction to determine
  any claim which the Borrowers or any of them may have against the Bank
  arising out of or in connection with this Agreement.

  
	
   

  	
   

  
	
  17.3

  	
  Contracts (Rights of Third
  Parties) Act 1999

  
	
   

  	
   

  
	
   

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

  

 

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

 

64

 

	
  SIGNED 

  	
  )

  	
   

  	
   

  
	
  by SPYRIDON FOKAS

  	
  )

  	
  /s/ SPYRIDON FOKAS

  	
   

  
	
  for and on behalf of

  	
  )

  	
  Attorney-in-fact

  	
   

  
	
  AMORGOS MARITIME INC.

  	
  )

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SIGNED 

  	
  )

  	
   

  	
   

  
	
  by SPYRIDON FOKAS

  	
  )

  	
  /s/ SPYRIDON FOKAS

  	
   

  
	
  for and on behalf of

  	
  )

  	
  Attorney-in-fact

  	
   

  
	
  KIMOLOS MARITIME INC.

  	
  )

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SIGNED 

  	
  )

  	
   

  	
   

  
	
  by SPYRIDON FOKAS

  	
  )

  	
  /s/ SPYRIDON FOKAS

  	
   

  
	
  for and on behalf of

  	
  )

  	
  Attorney-in-fact

  	
   

  
	
  MILOS MARITIME INC.

  	
  )

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SIGNED 

  	
  )

  	
   

  	
   

  
	
  by SPYRIDON FOKAS

  	
  )

  	
  /s/ SPYRIDON FOKAS

  	
   

  
	
  for and on behalf of

  	
  )

  	
  Attorney-in-fact

  	
   

  
	
  MYKONOS MARITIME INC.

  	
  )

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SIGNED 

  	
  )

  	
   

  	
   

  
	
  by SPYRIDON FOKAS

  	
  )

  	
  /s/ SPYRIDON FOKAS

  	
   

  
	
  for and on behalf of

  	
  )

  	
  Attorney-in-fact

  	
   

  
	
  SYROS MARITIME INC.

  	
  )

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SIGNED 

  	
  )

  	
   

  	
   

  
	
  by FOTIS BRATIMOS

  	
  )

  	
  /s/ FOTIS BRATIMOS

  	
   

  
	
  for and on behalf of

  	
  )

  	
  Attorney-in-fact

  	
   

  
	
  THE ROYAL BANK OF SCOTLAND PLC

  	
  )

  	
   

  	
   

  

 

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EXHIBIT 4.4  

        THE REGISTERED HOLDER OF THIS PURCHASE OPTION BY ITS ACCEPTANCE HEREOF, AGREES THAT IT WILL NOT SELL, TRANSFER OR ASSIGN THIS PURCHASE OPTION EXCEPT AS HEREIN
PROVIDED AND THE REGISTERED HOLDER OF THIS PURCHASE OPTION AGREES THAT IT WILL NOT SELL, TRANSFER, ASSIGN, PLEDGE OR HYPOTHECATE THIS PURCHASE OPTION FOR A PERIOD OF ONE YEAR FOLLOWING THE EFFECTIVE
DATE (DEFINED BELOW) TO ANYONE OTHER THAN (I) MORGAN JOSEPH & CO. INC. ("MORGAN JOSEPH") OR A SELECTED DEALER IN CONNECTION WITH
THE OFFERING, OR (II) A BONA FIDE OFFICER OR PARTNER OF MORGAN JOSEPH OR OF ANY SUCH SELECTED DEALER. 

        THIS
PURCHASE OPTION IS NOT EXERCISABLE PRIOR TO THE LATER OF THE CONSUMMATION BY TALIERA CORPORATION ("COMPANY") OF A MERGER, CAPITAL
STOCK EXCHANGE, ASSET OR STOCK ACQUISITION OR OTHER SIMILAR BUSINESS COMBINATION ("BUSINESS COMBINATION") (AS DESCRIBED MORE FULLY IN THE COMPANY'S
REGISTRATION STATEMENT (DEFINED HEREIN)) OR                        , 2007. VOID AFTER 5:00 P.M. NEW YORK CITY LOCAL TIME,
                        , 2010.
 

 
 

UNIT PURCHASE OPTION    
    
    FOR THE PURCHASE OF    
    
    550,000 UNITS    
    
    OF    
    
    TALIERA CORPORATION    
    

1.    Purchase Option.    

        THIS
CERTIFIES THAT, in consideration of $100.00 duly paid to Taliera Corporation (the "Company") by or on behalf of Morgan
Joseph & Co. Inc. or registered assigns ("Holder"), is entitled to at any time or from time to time upon the later of the consummation of
a Business Combination or                            , 2007 ("Commencement
Date"), and at or before 5:00 p.m., New York City local time,
                , 2010 ("Expiration Date"), but not thereafter, to subscribe for, purchase and receive, in whole or in part,
 up to Five
Hundred Fifty Thousand (550,000) units ("Units") of the Company, each Unit consisting of one share of common stock of the Company, par value $0.0001 per
share ("Common Stock"), and one warrant ("Warrant") expiring four years from the effective date
("Effective Date") of the registration statement ("Registration Statement") pursuant to which Units are
offered for sale to the public ("Offering"). Each Warrant is the same as the warrants included in the Units being registered for sale to the public by
way of the Registration Statement ("Public Warrants"). If the Expiration Date is a day on which banking institutions are authorized by law to close,
then this Purchase Option may be exercised on the next succeeding day which is not such a day in accordance with the terms herein. During the period ending on the Expiration Date, the Company agrees
not to take any action that would terminate the Purchase Option. This Purchase Option is initially 

 

exercisable
at $10.00 per Unit so purchased; provided, however, that upon the occurrence of any of the events specified in Section 6 hereof, the
rights granted by this Purchase Option, including the exercise price per Unit and the number of Units (and shares of Common Stock and Warrants) to be received upon such exercise, shall be adjusted as
therein specified. The term "Exercise Price" shall mean the initial exercise price or the adjusted exercise price, depending on the context. 

2.    Exercise.    

        2.1    Exercise Form.    In order to exercise this Purchase Option, the exercise form attached hereto must be duly
executed and completed and delivered to the Company, together with this Purchase Option and payment of the Exercise Price for the Units being purchased payable in cash or by certified check or
official bank check. If the subscription rights represented hereby shall not be exercised at or before 5:00 p.m., New York City local time, on the Expiration Date this Purchase Option shall
become and be void without further force or effect, and all rights represented hereby shall cease and expire. 

        2.2    Legend.    Each certificate for the securities purchased under this Purchase Option shall bear a legend as
follows unless such securities have been registered under the Securities Act of 1933, as amended ("Act"): 

"THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED ("ACT") OR APPLICABLE STATE LAW. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD
OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE ACT AND APPLICABLE STATE LAW." 

        2.3    Cashless Exercise.    

        2.3.1    Determination of Amount.    In lieu of the payment of the Exercise Price multiplied by the number of Units
for which this Purchase Option is exercisable (and in lieu of being entitled to receive Common Stock and Warrants) in the manner required by Section 2.1, the Holder shall have the right (but
not the obligation) to convert any exercisable but unexercised portion of this Purchase Option into Units ("Cashless Exercise Right") as follows: upon
exercise of the Cashless Exercise Right, the Company shall deliver to the Holder (without payment by the Holder of any of the Exercise Price in cash) that number of Units (or that number of shares of
Common Stock and Warrants comprising that number of Units) equal to the quotient obtained by dividing (x) the "Value" (as defined below) of the portion of the Purchase Option being converted by
(y) the "Current Market Value" (as defined below). The "Value" of the portion of the Purchase Option being converted shall equal the remainder
derived from subtracting (a) (i) the Exercise Price multiplied by (ii) the number of Units underlying the portion of this Purchase Option being converted from (b) the Current
Market Value of a Unit multiplied by the number of Units underlying the portion of the Purchase Option being converted. As used herein, the term "Current Market
Value" per Unit at any date means: (A) in the event that neither the Units nor 

2

 

Public
Warrants are still trading, the remainder derived from subtracting (x) the exercise price of the Warrants multiplied by the number of shares of Common Stock issuable upon exercise of the
Warrants underlying one Unit from (y) (i) the Current Market Price of the Common Stock multiplied by (ii) the number of shares of Common Stock underlying one Unit, which shall include
the shares of Common Stock underlying the Warrants included in such Unit; (B) in the event that the Units, Common Stock and Public Warrants are still trading, (i) if the Units are listed
on a national securities exchange or quoted on the Nasdaq National Market, Nasdaq SmallCap Market or NASD OTC Bulletin Board (or successor exchange), the last sale price of the Units in the principal
trading market for the Units as reported by the exchange, Nasdaq or the NASD, as the case may be, on the last trading day preceding the date in question; or (ii) if the Units are not listed on
a national securities exchange or quoted on the Nasdaq National Market, Nasdaq SmallCap Market or the NASD OTC Bulletin Board (or successor exchange), but is traded in the residual
over-the-counter market, the closing bid price for Units on the last trading day preceding the date in question for which such quotations are reported by the Pink Sheets, LLC
or similar publisher of such quotations; and (C) in the event that the Units are not still trading but the Common Stock and Public Warrants underlying the Units are still trading, the Current
Market Price of the Common Stock plus the product of (x) the Current Market Price of the Public Warrants and (y) the number of shares of Common Stock underlying the Warrants included in
one Unit. The "Current Market Price" shall mean (i) if the Common Stock (or Public Warrants, as the case may be) is listed on a national securities exchange or quoted on the Nasdaq National
Market, Nasdaq SmallCap Market or NASD OTC Bulletin Board (or successor exchange), the last sale price of the Common Stock (or Public Warrants) in the principal trading market for the Common Stock as
reported by the exchange, Nasdaq or the NASD, as the case may be, on the last trading day preceding the date in question; (ii) if the Common Stock (or Public Warrants, as the case may be) is
not listed on a national securities exchange or quoted on the Nasdaq National Market, Nasdaq SmallCap Market or the NASD OTC Bulletin Board (or successor exchange), but is traded in the residual
over-the-counter market, the closing bid price for the Common Stock (or Public Warrants) on the last trading day preceding the date in question for which such quotations are
reported by the Pink Sheets, LLC or similar publisher of such quotations; and (iii) if the fair market value of the Common Stock cannot be determined pursuant to clause (i) or
(ii) above, such price as the Board of Directors of the Company shall determine, in good faith. In the event the Public Warrants have expired and are no longer exercisable, no "Value" shall be
attributed to the Warrants underlying this Purchase Option. Additionally, in the event that this Purchase Option is exercised pursuant to this Section 2.3 and the Public Warrants are still
trading, the "Value" shall be reduced by the difference between the Warrant Exercise Price and the exercise price of the Public Warrants multiplied by the number of Warrants underlying the Units
included in the portion of this Purchase Option being converted. 

        2.3.1    Mechanics of Cashless Exercise.    The Cashless Exercise Right may be exercised by the Holder on any business
day on or after the Commencement Date and not later than the Expiration Date by delivering the Purchase Option with the duly executed exercise form attached hereto with the cashless exercise section
completed to the Company, exercising the Cashless Exercise Right and specifying the total number of Units the Holder will purchase pursuant to such Cashless Exercise Right. 

        2.4    No Obligation to Net Cash Settle.    Notwithstanding anything to the contrary contained in this Purchase
Option, in no event will the Company be required to net cash settle the 

3

 

exercise
of the Purchase Option or the Warrants underlying the Purchase Option. The holder of the Purchase Option and the Warrants underlying the Purchase Option will not be entitled to exercise the
Purchase Option or the Warrants underlying such Purchase Option unless a registration statement is effective, or an exemption from the registration requirements is available at such time and, if the
holder is not able to exercise the Purchase Option or underlying Warrants, the Purchase Option and/or the underlying Warrants, as applicable, will expire worthless. 

3.    Transfer.    

        3.1    General Restrictions.    The registered Holder of this Purchase Option, by its acceptance hereof, agrees that
it will not sell, transfer, assign, pledge or hypothecate this Purchase Option for a period of one year following the Effective Date to anyone other than (i) Morgan Joseph or a selected dealer
in connection with the Offering, or (ii) a bona fide officer or partner of Morgan Joseph or of any such selected dealer in accordance with the National Association of Securities
Dealers, Inc. ("NASD") Conduct Rule 2710(g)(1). On and after the first anniversary of the Effective Date, transfers to others may be made
subject to compliance with or exemptions from applicable securities laws. In order to make any permitted assignment, the Holder must deliver to the Company the assignment form attached hereto duly
executed and completed, together with the Purchase Option and payment of all transfer taxes, if any, payable in connection therewith. The Company shall within five (5) business days transfer
this Purchase Option on the books of the Company and shall execute and deliver a new Purchase Option or Purchase Options of like tenor to the appropriate assignee(s) expressly evidencing the right to
purchase the aggregate number of Units purchasable hereunder or such portion of such number as shall be contemplated by any such assignment. 

        3.2    Restrictions Imposed by the Act.    The securities evidenced by this Purchase Option shall not be transferred
unless and until (i) the Company has received the opinion of counsel for the Holder that the securities may be transferred pursuant to an exemption from registration under the Act and
applicable state securities laws, the availability of which is established to the reasonable satisfaction of the Company (the Company hereby agreeing that the opinion of Ice Miller, LLP shall be
deemed satisfactory evidence of the availability of an exemption), or (ii) a registration statement or a post-effective amendment to the Registration Statement relating to such
securities has been filed by the Company and declared effective by the Securities and Exchange Commission (the "Commission") and compliance with
applicable state securities law has been established. 

4.    New Purchase Options to be Issued.    

        4.1    Partial Exercise or Transfer.    Subject to the restrictions in  Section 3 hereof, this Purchase Option may be exercised
or assigned in whole or in part. In the event of the exercise or assignment hereof in
part only, upon surrender of this Purchase Option for cancellation, together with the duly executed exercise or assignment form and funds sufficient to pay any Exercise Price and/or transfer tax, the
Company shall cause to be delivered to the Holder without charge a new Purchase Option of like tenor to this Purchase Option in the name of the Holder evidencing the right of the Holder to purchase
the number of Units purchasable hereunder as to which this Purchase Option has not been exercised or assigned. 

4

 

        4.2    Lost Certificate.    Upon receipt by the Company of evidence satisfactory to it of the loss, theft, destruction
or mutilation of this Purchase Option and of reasonably satisfactory indemnification and, if required by the Company, the posting of a bond, the Company shall execute and deliver a new Purchase Option
of like tenor and date. Any such new Purchase Option executed and delivered as a result of such loss, theft, mutilation or destruction shall constitute a substitute contractual obligation on the part
of the Company. 

5.    Registration Rights.    

        5.1    Definitions.    For purposes of this Purchase Option, the following terms shall have the meanings set forth
below 

        5.1.1    "Demand Registration" shall have the meaning set forth in Section 5.2. 

        5.1.2    "Demanding Holders" shall mean, in connection with any Demand Registration or Piggyback Registration, the Eligible
Holders whose Registrable Securities are included in such Registration. 

        5.1.3    "Eligible Holder" shall mean a Holder of one of more of the Purchase Options, Units, Common Stock or Warrants included
in the Units issued upon exercise of the Purchase Option, or Common Stock issued upon exercise of such Warrants, and "Eligible Holders" means the
Holders of all of the Purchase Options, Units, Common Stock or Warrants issued upon exercise of the Purchase Options, or Common Stock issued upon exercise of such Warrants;  provided, however, that "Eligible Holder" shall not
include any person or entity that holds Common Stock acquired upon exercise of the Purchase Option or upon exercise of Warrants acquired upon exercise of such Purchase Option that has been acquired
pursuant to a transfer pursuant to Rule 144 and that may be traded without restriction pursuant to Rule 144 or registered under the Securities Act (other than the registration statement
pursuant to which the Purchase Option was registered). 

        5.1.4    "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended. 

        5.1.5    "Investor Securities" shall mean the securities eligible for registration pursuant to the Registration Rights
Agreement. 

        5.1.6    "Piggyback Registration" shall have the meaning set forth in  Section 5.3. 

        5.1.7    "Purchase Options" shall mean this Purchase Option and any other identical Purchase Options (other than the number of
Units that may be acquired and the identity of the Holder) derived from this Purchase Option as a result of transfer of a portion of this Purchase Option. 

        5.1.8    "Registrable Securities" shall mean the Common Stock included in the Units issuable upon exercise of the Purchase
Options and the Common Stock issued or issuable upon exercise of the Warrants included in the Purchase Options, and all shares of Common Stock issued with respect to such securities as a result of any
stock split or stock dividend; provided, however, that such shares of Common Stock shall cease to be Registrable Securities: (a) upon 

5

 

sale
or transfer pursuant to an effective registration statement under the Securities Act; or (b) when all Registrable Shares held by an Eligible Holder can be sold or by the Eligible Holder
under Rule 144 under the Securities Act within any three-month period. 

        5.1.9    "Registration" shall mean a Demand Registration or a Piggyback Registration. 

        5.1.10    "Registration Rights Agreement" shall mean that certain Registration Rights Agreement dated as
of                        ,
2006 between the Company and the initial investors in the Company. 

        5.1.11    "Underwriting Agreement" shall mean that certain Underwriting Agreement
dated                        , 2006 by and among the
Company, on one hand, and Morgan Joseph and several other underwriters on the other hand. 

        5.2    Demand Registration.    

        5.2.1    Grant of Right.    The Company, upon written demand ("Initial Demand
Notice") of the Holder(s) of at least 51% of the Purchase Options and/or the underlying Units and/or the underlying securities/Registrable Securities (as defined below)
("Majority Holders") at any time within the four year period commencing one year after the Effective Date, agrees to use its best efforts to register
(the "Demand Registration") under the Act on one occasion, all or any portion of the Registrable Securities requested by the Majority Holders in the
Initial Demand Notice and all of the securities underlying such Purchase Options, including the Units, Common Stock, the Warrants and the Common Stock underlying the Warrants (collectively, the
"Registrable Securities"). On such
occasion, the Company will use its best efforts to file a registration statement or a post-effective amendment to the Registration Statement covering the Registrable Securities
within sixty (60) days after receipt of the Initial Demand Notice and use its best efforts to have such registration statement or post-effective amendment declared effective as soon
as possible thereafter. The demand for registration may be made at any time during a period of four (4) years beginning on the Effective Date. The Initial Demand Notice shall specify the number
of shares of Registrable Securities proposed to be sold and the intended method(s) of distribution thereof. The Company will notify all holders of the Purchase Options and/or Registrable Securities of
the demand within ten (10) days from the date of the receipt of any such Initial Demand Notice. Each holder of Registrable Securities who wishes to include all or a portion of such holder's
Registrable Securities in the Demand Registration (each such holder including shares of Registrable Securities in such registration, a "Demanding
Holder") shall so notify the Company within fifteen (15) days after the receipt by the holder of the notice from the Company. Upon any such request, the Demanding
Holders shall be entitled to have their Registrable Securities included in the Demand Registration, subject to Section 5.2.4. 

        5.2.2    Effective Registration.    A registration will not count as a Demand Registration until the Registration
Statement filed with the Commission with respect to such Demand Registration has been declared effective and the Company has complied with all of its obligations under this Agreement with respect
thereto; provided, however, that if, after such registration statement has been declared effective, the offering of Registrable Securities pursuant to a Demand Registration is interfered with by any
stop order or injunction of the Commission or 

6

 

any
other governmental agency or court, the registration statement with respect to such Demand Registration will be deemed not to have been declared effective, unless and until, (i) such stop
order or injunction is removed, rescinded or otherwise terminated, and (ii) a majority-in-interest of the Demanding Holders thereafter elect to continue the offering. 

        5.2.3    Underwritten Offering.    If the Majority Holders so elect and such holders so advise the Company as part of
the Initial Demand Notice, the offering of such Registrable Securities pursuant to such Demand Registration shall be in the form of an underwritten offering. In such event, the right of any holder to
include its Registrable Securities in such registration shall be conditioned upon such holder's participation in such underwriting and the inclusion of such holder's Registrable Securities in the
underwriting to the extent provided herein. All Demanding Holders proposing to distribute their securities through such underwriting shall enter into an underwriting agreement in customary form with
the underwriter or underwriters selected for such underwriting by the Majority Holders. 

        5.2.4    Reduction of Offering.    If the managing underwriter or underwriters for a Demand Registration that is to be
an underwritten offering advises the Company and the Demanding Holders in writing that the dollar amount or number of shares of Registrable Securities which the Demanding Holders desire to sell, taken
together with all other shares of Common Stock or other securities which the Company desires to sell and the shares of Common Stock, if any, as to which registration has been requested pursuant to
written contractual piggy-back registration rights held by other stockholders of the Company who desire to sell, exceeds the maximum dollar amount or maximum number of shares that can be
sold in such offering without adversely affecting the proposed offering price, the timing, the distribution method, or the probability of success of such offering (such maximum dollar amount or
maximum number of shares, as applicable, the "Maximum Number of Shares"), then the Company shall include in such registration: (i) first, the
Registrable Securities as to which Demand Registration has been requested by the Demanding Holders (pro rata in accordance with the number of shares that each such Person has requested be included in
such registration, regardless of the number of shares held by each such Person (such proportion is referred to herein as "Pro Rata")) that can be sold
without exceeding the Maximum
Number of Shares; (ii) second, to the extent that the Maximum Number of Shares has not been reached under the foregoing clause (i), the shares of Common Stock or other securities that
the Company desires to sell that can be sold without exceeding the Maximum Number of Shares; (iii) third, to the extent that the Maximum Number of Shares has not been reached under the
foregoing clauses (i) and (ii), the shares of Common Stock or other securities registrable pursuant to the terms of the Registration Rights Agreement between the Company and the initial
investors in the Company, dated as of                            , 2006 (the "Registration Rights Agreement" and such registrable securities, the
"Investor Securities") as to which "piggy-back" registration has been requested by the holders thereof, Pro Rata, that can be sold without
exceeding the Maximum Number of Shares; and (iv) fourth, to the extent that the Maximum Number of Shares have not been reached under the foregoing clauses (i), (ii), and (iii), the shares of
Common Stock or other securities for the account of other persons that the Company is obligated to register pursuant to written contractual arrangements with such persons and that can be sold without
exceeding the Maximum Number of Shares. 

        5.2.5    Withdrawal.    If a majority-in-interest of the Demanding Holders disapprove of the
terms of any underwriting or are not entitled to include all of their Registrable 

7

 

Securities
in any offering, such majority-in-interest of the Demanding Holders may elect to withdraw from such offering by giving written notice to the Company and the
underwriter or underwriters of their request to withdraw prior to the effectiveness of the registration statement filed with the Commission with respect to such Demand Registration. If the
majority-in-interest of the Demanding Holders withdraws from a proposed offering relating to a Demand Registration, then the Company does not have to continue its obligations
under Section 5.2 with respect to such proposed offering. 

        5.2.6    Terms.    The Company shall bear all fees and expenses attendant to registering the Registrable Securities,
including the expenses of any legal counsel selected by the Holders to represent them in connection with the sale of the Registrable Securities, but the Holders shall pay any and all underwriting
commissions. The Company agrees to use its reasonable best efforts to qualify or register the Registrable Securities in such states as are reasonably requested by the Majority Holder(s); provided,
however, that in no event shall the Company be required to register the Registrable Securities in a state in which such registration would cause (i) the Company to be obligated to qualify to do
business in such state, or would subject the Company to taxation as a foreign corporation doing business in such jurisdiction or (ii) the principal stockholders of the Company to be obligated
to escrow their shares of capital stock of the Company. The Company shall use its best efforts to cause any registration statement or post-effective amendment filed pursuant to the demand
rights granted under Section 5.2.1 to remain effective for a period of nine consecutive months from the effective date of such registration
statement or post-effective amendment. 

        5.3    Piggy-Back Registration.    

        5.3.1    Piggy-Back Rights.    If at any time during the seven year period commencing on the Effective
Date the Company proposes to file a registration statement under the Act with respect to an offering of equity securities, or securities or other obligations exercisable or exchangeable for, or
convertible into, equity securities, by the Company for its own account or for stockholders of the Company for their account (or by the Company and by stockholders of the Company including, without
limitation, pursuant to Section 5.1), other than a registration statement (i) filed in connection with any employee stock option or other benefit plan, (ii) for an exchange offer
or offering of securities solely to the Company's existing stockholders, (iii) for an offering of debt
that is convertible into equity securities of the Company or (iv) for a dividend reinvestment plan, then the Company shall (x) give written notice of such proposed filing to the holders
of Registrable Securities as soon as practicable but in no event less than ten (10) days before the anticipated filing date, which notice shall describe the amount and type of securities to be
included in such offering, the intended method(s) of distribution, and the name of the proposed managing underwriter or underwriters, if any, of the offering, and (y) offer to the holders of
Registrable Securities in such notice the opportunity to register the sale of such number of shares of Registrable Securities as such holders may request in writing within five (5) days
following receipt of such notice (a "Piggy-Back Registration"). The Company shall cause such Registrable Securities to be included in such
registration and shall use its best efforts to cause the managing underwriter or underwriters of a proposed underwritten offering to permit the Registrable Securities requested to be included in a
Piggy-Back Registration on the same terms and conditions as any similar securities of the Company and to permit the sale or other disposition of such Registrable Securities in accordance
with the intended method(s) of 

8

 

distribution
thereof. All holders of Registrable Securities proposing to distribute their securities through a Piggy-Back Registration that involves an underwriter or underwriters shall
enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such Piggy-Back Registration. 

        5.3.2    Reduction of Offering.    If the managing underwriter or underwriters for a Piggy-Back
Registration that is to be an underwritten offering advises the Company and the holders of Registrable Securities in writing that the dollar amount or number of shares of Common Stock which the
Company desires to sell, taken together with shares of Common Stock, if any, as to which registration has been demanded pursuant to written contractual arrangements with persons other than the holders
of Registrable Securities hereunder, the Registrable Securities as to which registration has been requested under this Section 5.3, and the
shares of Common Stock, if any, as to which registration has been requested pursuant to the written contractual piggy-back registration rights of other stockholders of the Company, exceeds
the Maximum Number of Shares, then the Company shall include in any such registration: 

        (a)   If
the registration is undertaken for the Company's account: (A) first, the shares of Common Stock or other securities that the Company desires to sell that can
be sold without exceeding the Maximum Number of Shares; (B) second, to the extent that the Maximum Number of Shares has not been reached under the foregoing clause (A), the shares of
Common Stock or other securities, if any, comprised of Registrable Securities and Investor Securities, as to which registration has been requested pursuant to the applicable written contractual
piggy-back registration rights of such security holders, Pro Rata, that can be sold without exceeding the Maximum Number of Shares; and (C) third, to the extent that the Maximum
Number of shares has not been reached under the foregoing clauses (A) and (B), the shares of Common Stock or other securities for the account of other persons that the Company is obligated to
register pursuant to written contractual piggy-back registration rights with such persons and that can be sold without exceeding the Maximum Number of Shares; 

        (b)   If
the registration is a "demand" registration undertaken at the demand of holders of Investor Securities,
(A) first, the shares of Common Stock or other securities for the account of the demanding persons, Pro Rata, that can be sold without exceeding the Maximum Number of Shares; (B) second,
to the extent that the Maximum Number of Shares has not been reached under the foregoing clause (A), the shares of Common Stock or other securities that the Company desires to sell that can be
sold without exceeding the Maximum Number of Shares; (C) third, to the extent that the Maximum Number of Shares has not been reached under the foregoing clauses
(A) and (B), the shares of Registrable Securities, Pro Rata, as to which registration has been requested pursuant to the terms hereof, that can be sold without exceeding the Maximum Number of
Shares; and (D) fourth, to the extent that the Maximum Number of Shares has not been reached under the foregoing clauses (A), (B) and (C), the shares of Common Stock or other securities
for the account of other persons that the Company is obligated to register pursuant to written contractual arrangements with such persons, that can be sold without exceeding the Maximum Number of
Shares; and 

        (c)   If
the registration is a "demand" registration undertaken at the demand of persons other than either the holders of Registrable Securities or of Investor Securities,
(A) first, the shares of Common Stock or other securities for the account of the 

9

QuickLinks

UNIT PURCHASE OPTION FOR THE PURCHASE OF 550,000 UNITS OF TALIERA CORPORATION

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