Document:

Exhibit 10.7

 

	
  1.

  	
  Date
  of Agreement

  17th
  March 2005

  	
   

  	
  THE BALTIC AND INTERNATIONAL MARITIME COUNCIL
  (BIMCO)

  

  STANDARD SHIP MANAGEMENT AGREEMENT

  

  CODE NAME: “SHIPMAN 98”

  	
  

  
	
  Part I

  
	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  Owners (name, place of registered office and law of
  registry) (Cl. 1)

  	
   

  	
  3.

  	
  Managers (name, place of registered office and law of registry) (Cl. 1)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name

  Hamilton Navigation Inc

  	
   

  	
   

  	
  Name

  Target Marine S.A.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Place of registered office

  Ajeltake Road, Ajeltake Island, Majuro

  	
   

  	
   

  	
  Place of registered office

  24, Kanigos st, Kastella

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Law of registry

  Marshall Islands MH 96960

  	
   

  	
   

  	
  Law of registry

  Piraeus 185-34, Greece

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  Day and year of commencement of Agreement (Cl.
  2)

  	
   

  	
   

  	
   

  
	
   

  	
  Upon delivery of the vessel

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
  Crew Management (state “yes” or “no” as agreed) (Cl.
  3.1)

  	
   

  	
  6.

  	
  Technical Management (state “yes” or “no” as agreed)
  (Cl. 3.2)

  
	
   

  	
  YES

  	
   

  	
   

  	
  YES

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
  Commercial Management (state “yes” or “no” as
  agreed) (Cl. 3.3)

  	
   

  	
  8.

  	
  Insurance Arrangements (state “yes” or “no” as
  agreed) (Cl. 3.4)

  
	
   

  	
  Limited as per clase 3.3

  	
   

  	
   

  	
  YES

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
  Accounting Services (state “yes” or “no” as agreed)
  (Cl. 3.5)

  	
   

  	
  10.

  	
  Sale or purchase of the Vessel (state “yes” or “no” as agreed) (Cl. 3.6)

  
	
   

  	
  YES

  	
   

  	
   

  	
  YES

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11.

  	
  Provisions (state “yes” or “no” as agreed) (Cl.
  3.7)

  	
   

  	
  12.

  	
  Bunkering (state “yes” or “no” as agreed) (Cl. 3.8)

  
	
   

  	
  YES

  	
   

  	
   

  	
  YES

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  13.

  	
  Chartering Services Period (only to be filled in if
  “yes” stated in Box 7) (Cl. 3.3(i))

  	
   

  	
  14.

  	
  Owners’ Insurance (state alternative (i), (ii) or
  (iii) of (Cl. 6.3)

  
	
   

  	
  N/A

  	
   

  	
   

  	
  YES (ii)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  15.

  	
  Annual Management Fee (state annual amount) (Cl.
  8.1)

  	
   

  	
  16.

  	
  Severance Costs (state maximum amount) (Cl. 8.4 (ii))

  
	
   

  	
  US$ 182,500 or US$ 500 per day 

  	
   

  	
   

  	
  US$ 10,000

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  17.

  	
  Day and year of termination of Agreement (Cl. 17)

  14 months from delivery of the vessel 

  	
   

  	
  18.

  	
  Law and Arbitration (state
  alternative 19.1, 19.2 or 19.3; if 19.3 place of
  arbitration must be stated) (Cl. 19)

  
	
   

  	
   

  	
   

  	
   

  	
  19.1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  19.

  	
  Notices (state postal and cable address, telex and
  telefax number for serving notice and communication to the Owners) (Cl.
  20)

  	
   

  	
  20.

  	
  Notices (state postal and cable address, telex and
  telefax number for serving notice and communication to the Managers) (Cl.
  20)

  
	
   

  	
  Hamilton Navigation Inc, Ajeltake
  Road, Ajeltake Island, Majuro, Marshall Islands MH 96960

  	
   

  	
   

  	
  Target Marine S.A., 24 Kanigos st,
  Kastella, Piraeus 185-34, Greece

  
						

 

It is mutually agreed between the party stated in Box 2 and the
party stated in Box 3 that this Agreement consisting of PART I
and PART II as well as Annexes “A” (Details of Vessel), “B”
(Details of Crew), “C” (Budget) and “D” (Associated vessels)
attached hereto, shall be performed subject to the conditions contained herein.
In the event of a conflict of conditions, the provisions of PART I
and Annexes “A”, “B”, “C” and “D” shall prevail
over those of PART II to the extent of such conflict but no
further.

 

	
  Signature(s)
  (Owners)

  	
  Signature(s)
  (Managers)

  
	
   

  	
   

  
	
  /s/ Illegible

  	
   

  	
  /s/
  Illegible

  	
   

  
				

 

This document is a computer generated SHIPMAN 98 form printed by
authority of BIMCO. Any insertion or deletion to the form must be clearly
visible. In the event of any modification made to the pre-printed text of this
document which is not clearly visible, the text of the original BIMCO approved
document shall apply. BIMCO assumes no responsibility for any loss, damage or
expense as a result of discrepancies between the original BIMCO approved
document and this computer generated document.

 

 

PART II

“SHIPMAN 98” Standard Ship Management Agreement

 

1.                         Definitions

 

In this Agreement save where the context otherwise
requires, the following words and expressions shall have the meanings hereby
assigned to them.

 

“Owners” means the
party identified in Box 2.

 

“Managers” means
the party identified in Box 3.

 

“Vessel” means the
vessel or vessels details of which are set out in Annex “A” attached
hereto.

 

“Crew” means the
Master, officers and ratings of the numbers, rank and nationality specified in Annex
“B” attached hereto.

 

“Crew Support Costs” means
all expenses of a general nature which are not particularly referable to any individual
vessel for the time being managed by the Managers and which are incurred by the
Managers for the purpose of providing an efficient and economic management
service and, without prejudice to the generality of the foregoing, shall
include the cost of crew standby pay, training schemes for officers and
ratings, cadet training schemes, sick pay, study pay, recruitment and
interviews. 

 

“Severance Costs” means
the costs which the employers are legally obliged to pay to or in respect of
the Crew as a result of the early termination of any employment contract for
service on the Vessel.

 

“Crew Insurances” means
insurances against crew risks which shall include but not be limited to death,
sickness, repatriation, injury, shipwreck unemployment indemnity and loss of
personal effects.

 

“Management Services” means
the services specified in sub-clauses 3.1 to 3.8 as indicated affirmatively in
Boxes 5 to 12.

 

“ISM Code” means
the International Management Code for the Safe Operation of Ships and for
Pollution Prevention as adopted by the International Maritime Organization
(IMO) by resolution A.741(18) or any subsequent amendment thereto.

 

“STCW 95” means
the International Convention on Standards of Training, Certification and
Watchkeeping for Seafarers, 1978, as amended in 1995 or any subsequent
amendment thereto.

 

2.                         Appointment
of Managers

 

With effect from the day and year stated in Box 4
and continuing unless and until terminated as provided herein, the Owners
hereby appoint the Managers and the Managers hereby agree to act as the
Managers of the Vessel.

 

3.                         Basis of
Agreement

 

Subject to the terms and conditions herein provided,
during the period of this Agreement, the Managers shall carry out Management
Services in respect of the Vessel as agents for and on behalf of the Owners.
The Managers shall have authority to take such actions as they may from
time to time in their absolute discretion consider to be necessary to enable
them to perform this Agreement in accordance with sound ship management
practice.

 

3.1 Crew Management

(only applicable if agreed according
to Box 5)

 

The Managers shall provide suitably qualified Crew for
the Vessel as required by the Owners in accordance with the STCW 95
requirements, provision of which includes but is not limited to the following
functions:

 

(i)                       selecting
and engaging the Vessel’s Crew, including payroll arrangements, pension
administration, and insurances for the Crew other than those mentioned in Clause
6;

 

(ii)                    ensuring
that the applicable requirements of the law of the flag of the Vessel are
satisfied in respect of manning levels, rank, qualification and certification
of the Crew and employment regulations including Crew’s tax, social insurance,
discipline and other requirements;

 

(iii)                 ensuring that all members of the Crew
have passed a medical examination with a qualified doctor certifying that they
are fit for the duties for which they are engaged and are in possession of
valid medical certificates issued in accordance with appropriate flag State
requirements. In the absence of applicable flag State requirements the medical
certificate shall be dated not more than three months prior to the respective
Crew members leaving their country of domicile and maintained for the duration
of their service on board the Vessel;

 

(iv)                ensuring
that the Crew shall have a command of the English language of a sufficient
standard to enable them to perform their duties safely;

 

(v)                   arranging
transportation of the Crew, including repatriation;

 

(vi)                training
of the Crew and supervising their efficiency;

 

(vii)             conducting union negotiations;

 

(viii)          operating the Managers’ drug and alcohol
policy unless otherwise agreed.

 

3.2 Technical Management

(only applicable if agreed according
to Box 6)

 

The Managers shall provide technical management which
includes, but is not limited to, the following functions:

 

(i)                       provision
of competent personnel to supervise the maintenance and general efficiency of
the Vessel;

 

(ii)                    arrangement
and supervision of dry dockings, repairs, alterations and the upkeep of the
Vessel to the standards required by the Owners provided that the Managers shall
be entitled to incur the necessary expenditure to ensure that the Vessel will
comply with the law of the flag of the Vessel and of the places where she
trades, and all requirements and recommendations of the classification society;

 

(iii)                 arrangement of the supply of necessary
stores, spares and lubricating oil;

 

(iv)                appointment
of surveyors and technical consultants as the Managers may consider from
time to time to be necessary;

 

(v)                   development,
implementation and maintenance of a Safety Management System (SMS) in
accordance with the ISM Code (see sub-clauses 4.2 and 5.3).

 

3.3 Commercial Management

(only applicable if agreed according
to Box 7)

 

The Managers shall provide the commercial operation of
the Vessel, as required by the Owners, which includes, but is not limited to,
the following functions:

 

(iii)                 providing voyage estimates and
accounts and calculating of hire, freights, demurrage and/or despatch moneys
due from or due to the charterers of the Vessel;

 

(iv)                issuing
of voyage instructions;

 

(v)                   appointing
agents;

 

(vi)                appointing
stevedores;

 

(vii)             arranging surveys associated with the
commercial operation of the Vessel.

 

3.4 Insurance Arrangements(1)

(only applicable if agreed according
to Box 8)

 

The Managers shall arrange insurances in accordance
with Clause 6, on such terms and conditions as the Owners shall have instructed
or agreed, in particular regarding conditions,

 

 

Insured values, deductibles and franchises.

 

3.5                  Accounting
Services

(only applicable if agreed according
to Box 9)

 

The Managers shall:

 

(I)                      establish
an accounting system which meets the requirements of the Owners and provide
regular accounting services, supply regular reports and records,

 

(II)                  maintain
the records of all costs and expenditure incurred as well as data necessary or
proper for the settlement of accounts between the parties.

 

3.6                  Sale or Purchase
of the Vessel

(only applicable if agreed according
to Box 10)

 

The Managers shall, in accordance with the Owners’
instructions, supervise the sale or purchase of the Vessel, including the
performance of any sale or purchase agreement, but not negotiation of the same.

 

3.7                  Provisions (only applicable if agreed according to Box 11)

 

The Managers shall arrange for the supply of
provisions.

 

3.8                  Bunkering (only applicable if agreed according to Box 12)

 

The Managers shall arrange for the provision of bunker
fuel of the quality specified by the Owners as required for the Vessel’s trade.

 

4.                         Managers’
Obligations

 

4.1                  The Managers
undertake to use their best endeavours to provide the agreed Management
Services as agents for and on behalf of the Owners in accordance with sound
ship management practice and to protect and promote the interests of the Owners
in all matters relating to the provision of services hereunder. Provided,
however, that the Managers in the performance of their management
responsibilities under this Agreement shall be entitled to have regard to their
overall responsibility in relation to all vessels as may from time to time
be entrusted to their management and in particular, but without prejudice to
the generality of the foregoing, the Managers shall be entitled to allocate
available supplies, manpower and services in such manner as in the prevailing
circumstances the Managers in their absolute discretion consider to be fair and
reasonable.

 

4.2                  Where the Managers are providing
Technical Management in accordance with sub-clause 3.2, they shall procure that the requirements
of the law of the flag of the Vessel are satisfied and they shall in particular
be deemed to be the “Company” as defined by the ISM Code, assuming the
responsibility for the operation of the Vessel and taking over the duties and
responsibilities imposed by the ISM Code when applicable.

 

5.                         Owners’
Obligations

 

5.1                  The Owners shall pay all sums due to
the Managers punctually in accordance with the terms of this Agreement.

 

5.2                  Where the Managers are providing
Technical Management in accordance with sub-clause 3.2, the Owners shall:

 

(i)                       procure
that all officers and ratings supplied by them or on their behalf comply with
the requirements of STCW 95;

 

(ii)                    instruct
such officers and ratings to obey all reasonable orders of the Managers in
connection with the operation of the Managers’ safety management system.

 

5.3                  Where the Managers are not providing
Technical Management in accordance with sub-clause 3.2, the Owners shall procure that the
requirements of the law of the flag of the Vessel are satisfied and that they,
or such other entity as may be appointed by them and identified to the
Managers, shall be deemed to be the “Company” as defined by the ISM Code
assuming the responsibility for the operation of the Vessel and taking over the
duties and responsibilities imposed by the ISM Code when applicable.

 

6.                         Insurance
Policies

 

The Owners shall procure, whether by instructing the
Managers under sub-clause 3.4 or otherwise, that throughout the period
of this Agreement:

 

6.1                  at the Owners’ expense, the Vessel is
insured for not less than her sound market value or entered for her full gross
tonnage, as the case may be for:

 

(i)                       usual
hull and machinery marine risks (including crew negligence) and excess
liabilities;

 

(ii)                    protection
and indemnity risks (including pollution risks and Crew Insurances); and

 

(iii)                 war risks (Including protection and
indemnity and crew risks)

 

In accordance with the best practice of prudent owners
of vessels of a similar type to the Vessel, with first class insurance
companies, underwriters or associations (“the Owners’ Insurances”);

 

6.2                  all premiums and calls on the Owners’
Insurances are paid promptly by their due date,

 

6.3                  the Owners’ Insurances name jointly the
Owners and the Managers and, subject

 

to underwriters’ agreement, any third party designated
by the Managers as a joint assured or
as a loss payee, with full
cover, with the Owners

 

obtaining cover in respect of each of the insurances
specified in sub-clause 6.1:

 

(i)                       on
terms whereby the Managers and any such third party are liable in respect of
premiums or calls arising in connection with the Owners’ Insurances; or

 

(ii)                    if
reasonably obtainable, on terms such that neither the Managers nor any such
third party shall be under any liability in respect of premiums or calls
arising in connection with the Owners’ Insurances; or

 

(iii)                 on such other terms as may be
agreed in writing.

 

Indicate alternative (i), (ii) or
(iii) in Box 14. If Box 14 is left blank then (i) applies.

 

6.4                  written evidence is provided, to the
reasonable satisfaction of the Managers, of their compliance with their
obligations under Clause 6 within a reasonable time of the commencement
of the Agreement, and of each renewal
date and, if specifically requested, of each payment date of the Owners’
Insurances.

 

7.                         Income Collected and Expenses
Paid on Behalf of Owners

 

7.1                  All moneys collected by the Managers
under the terms of this Agreement (other than moneys payable by the Owners to
the Managers) and any interest thereon shall be held to the credit of the
Owners in a separate bank account.

 

7.2                  All expenses incurred by the Managers
under the terms of this Agreement on behalf of the Owners (including expenses
as provided in Clause 8) may be debited against the Owners in the
account referred to under sub-clause 7.1 but shall in any event remain
payable by the Owners to the Managers on demand.

 

8.                         Management
Fee

 

8.1                  The Owners shall pay to the Managers
for their services as Managers under this Agreement an annual management fee as
stated in Box 15 which shall be payable by equal monthly instalments in
advance, the first instalment being payable on the commencement of this
Agreement (see Clause 2 and Box 4) and subsequent instalments
being payable every month.

 

8.3                  The Managers
shall, at no extra cost to the Owners, provide their own office accommodation,
office staff, facilities and stationery. Without limiting the generality of Clause
7 the Owners shall reimburse the Managers for postage and communication
expenses, travelling expenses, and other out of pocket

 

 

expenses properly incurred by the Managers in
pursuance of the Management Services.

 

8.4 In the event of
the appointment of the Managers being terminated by the Owners or the Managers
in accordance with the provisions of Clauses 17 and 18.1 other
than by reason of default by the Managers, or if the Vessel is lost, sold or
otherwise disposed of, the “management fee” payable to the Managers according
to the provisions of sub-clause 8.1, shall continue to be payable for a
further period of one calendar
month as from the termination date. In addition, provided that the Managers
provide Crew for the Vessel in accordance with sub-clause 3.1:

 

(i)        the
Owners shall continue to pay Crew Support Costs during the said further period
of three calendar months and

 

(ii)       the
Owners shall pay an equitable proportion of any Severance Costs which may materialize,
not exceeding the amount stated in Box 16.

 

8.5 If the Owners
decide to lay-up the Vessel whilst this Agreement remains in force and such
lay-up lasts for more than three months, an appropriate reduction of the
management fee for the period exceeding three months until one month before the
Vessel is again put into service shall be mutually agreed between the parties.

 

8.6 Unless
otherwise agreed in writing all discounts and commissions obtained by the
Managers in the course of the management of the Vessel shall be credited to the
Owners.

 

9.                         Budgets
and Management of Funds

 

9.1 The Managers should this Agreement be extended as per Clause 17 shall
present to the Owners annually a budget for the following twelve months in such
form as the Owners require. The budget for the first 14 months hereof is fixed to be US$ 3,550 per day. Subsequent
annual budgets shall be prepared by the Managers and submitted to the Owners
not less than two months before
the anniversary date of the Owners’ financial
year (see Clause 2 and Box 4).

 

9.2 The Owners
shall indicate to the Managers their acceptance and approval of the annual
budget within one month of presentation and in the absence of any such indication
the Managers shall be entitled to assume that the Owners have accepted the
proposed budget. Should the Owners disagree
with the budget and same is not amended within three (3) days to meet with
Owners reasonable requirements, Owners will have a right to terminate this
Agreement as per clause 18.2.

 

9.3 Following the
agreement of the budget, the Managers shall prepare and present to the Owners
their estimate of the working capital requirement of the Vessel and the
Managers shall each month up-date this estimate. Based thereon, the Managers
shall each month request the Owners in writing for the funds required to run
the Vessel for the ensuing month, including the payment of any occasional or
extraordinary item of expenditure, such as emergency repair costs, additional
insurance premiums, bunkers or provisions. Such funds shall be received by the
Managers within ten running days after the receipt by the Owners of the
Managers’ written request and shall be held to the credit of the Owners in a
separate bank account.

 

9.4 The Managers
shall produce a comparison between budgeted and actual income and expenditure
of the Vessel in such form as required by the Owners monthly or at such
other intervals as mutually agreed.

 

9.5 Notwithstanding
anything contained herein to the contrary, the Managers shall in no
circumstances be required to use or commit their own funds to finance the
provision of the Management Services.

 

10.                  Managers’ Right
to Sub-Contract

 

The Managers shall not have the right to sub-contract any
of their obligations hereunder, including those mentioned in sub-clause 3.1,
without the prior written consent of the Owners which shall not be unreasonably
withheld. In the event of such a sub-contract the Managers shall remain fully
liable for the due performance of their obligations under this Agreement.

 

11.                  Responsibilities

 

11.1 Force
Majeure - Neither
the Owners nor the Managers shall be under any liability for any failure to perform any
of their obligations hereunder by reason of any cause whatsoever of any nature
or kind beyond their reasonable control.

 

11.2 Liability
to Owners - (i) Without
prejudice to sub-clause 11.1, the Managers shall be under no liability
whatsoever to the Owners for any loss, damage, delay or expense of whatsoever
nature, whether direct or indirect, (including but not limited to loss of
profit arising out of or in connection with detention of or delay to the
Vessel) and howsoever arising in the course of performance of the Management
Services UNLESS same is proved to
have resulted solely from the negligence, gross negligence or wilful default of
the Managers or their employees, or agents or sub-contractors employed by them
in connection with the Vessel, in which case (save where loss, damage, delay or
expense has resulted from the Managers’ personal act or omission committed with
the intent to cause same or recklessly and with knowledge that such loss,
damage, delay or expense would probably result) the Managers’ liability for
each incident or series of incidents giving rise to a claim or claims
shall never exceed a total of ten times the annual management fee payable
hereunder.

 

(ii) Notwithstanding anything that may appear to
the contrary in this Agreement, the Managers shall not be liable for any of the
actions of the Crew, even if such actions are negligent, grossly negligent or
wilful, except only to the extent that they are shown to have resulted from a
failure by the Managers to discharge their obligations under sub-clause 3.1,
in which case their liability shall be limited in accordance with the terms of
this Clause 11.

 

11.3 Indemnity
- Except to the extent and solely for the amount
therein set out that the Managers would be liable under sub-clause 11.2,
the Owners hereby undertake to keep the Managers and their employees, agents
and sub-contractors Indemnified and to hold them harmless against all actions,
proceedings, claims, demands or liabilities whatsoever or howsoever arising
which may be brought against them or incurred or suffered by them arising
out of or in connection with the performance of the Agreement, and against and
in respect of all costs, losses, damages and expenses (including legal costs
and expenses on a full indemnity basis) which the Managers may suffer or
incur (either directly or indirectly) in the course of the performance of this
Agreement.

 

11.4 “Himalaya”
- It
is hereby expressly agreed that no employee or agent of the Managers (including
every sub-contractor from time to time employed by the Managers) shall in any
circumstances whatsoever be under any liability whatsoever to the Owners for
any loss, damage or delay of whatsoever kind arising or resulting directly or
indirectly from any act, neglect or default on his part while acting in
the course of or in connection with his employment and, without prejudice to
the generality of the foregoing provisions in this Clause 11, every
exemption, limitation, condition and liberty herein contained and every right,
exemption from liability, defence and immunity of whatsoever nature applicable
to the Managers or to which the Managers are entitled hereunder shall also be
available and shall extend to protect every such employee or agent of the
Managers acting as aforesaid and for the purpose of all the foregoing
provisions of this Clause 11 the Managers are or shall be deemed to be
acting as agent or trustee on behalf of and for the benefit of all persons who
are or might be their servants or agents from time to time (including
sub-contractors as aforesaid) and all such persons shall to this extent be or be
deemed to be parties to this

 

 

Agreement.

 

12.                  Documentation

 

Where the Managers are providing Technical Management
in accordance with sub-clause 3.2, and/or
Crew Management in accordance with sub-clause 3.1, they shall make
available, upon Owners’ request, all documentation and records related to the
Safety Management System (SMS) and/or the Crew which the Owners need in order
to demonstrate compliance with the ISM Code and STCW 95 or to defend a claim
against a third party.

 

13.                  General
Administration

 

13.1 The Managers shall handle and settle with Owners’ prior approval, all claims
arising out of the Management Services hereunder and keep the Owners informed
regarding any incident of which the Managers become aware which gives or may give
rise to claims or disputes involving third parties.

 

13.2 The Managers shall, as Instructed by the
Owners, bring or defend actions, suits or proceedings in connection with
matters entrusted to the Managers according to this Agreement.

 

13.3 The Managers shall also have power to obtain
legal or technical or other outside expert advice in relation to the handling
and settlement of claims and disputes or all other matters affecting the
interests of the Owners in respect of the Vessel.

 

13.4 The Owners shall arrange for the provision of
any necessary guarantee bond or other security.

 

13.5 Any costs reasonably incurred by the Managers
in carrying out their obligations according to Clause 13 shall be
reimbursed by the Owners.

 

14.                  Auditing

 

The Managers shall provide
bookkeeping services and shall at all times maintain and keep true
and correct accounts and shall make the same available for inspection and
auditing by the Owners or by independent
auditors at such times
as may be mutually agreed. On the termination, for whatever reasons, of
this Agreement, the Managers shall release to the Owners, if so requested, the
originals where possible, or otherwise certified copies, of all such accounts
and all documents specifically relating to the Vessel and her operation.

 

15.                  lnspection of
Vessel

 

The Owners shall have the
right at any time after giving reasonable notice to the Managers to inspect the
Vessel for any reason they consider necessary.

 

16.                  Compliance with
Laws and Regulations

 

The Managers will not do or
permit to be done anything which might cause any breach or infringement of the
laws and regulations of the Vessel’s flag, or of the places where she trades.

 

17.                  Duration of the
Agreement

 

This Agreement shall come
into effect on the day and year stated in Box 4 and shall continue until
the date stated in Box 17. Thereafter it shall continue until terminated
by either party giving to the other notice in writing, in which event the
Agreement shall terminate upon the expiration of a period of two months from
the date upon which such notice was given.

 

18.                  Termination

 

18.1 Owners’ default

 

(I)           The Managers shall be entitled to terminate
the Agreement with immediate effect by notice in writing if any moneys payable
by the Owners under this Agreement shall not have been received in the Managers’
nominated account within ten running days of receipt by the Owners of the
Managers written request or if the Vessel is repossessed by the Mortgagees.

 

(II)                   If the Owners:

 

(a)                     fail to meet
their obligations under sub-clauses 5.2 and 5.3 of this Agreement for any reason within their
control, or

 

(b)                     proceed with
the employment of or continue to employ the Vessel in the carriage of
contraband, blockade running, or in an unlawful trade, or on a voyage which in
the reasonable opinion of the Managers is unduly hazardous or improper,

 

the Managers may give
notice of the default to the Owners, requiring them to remedy it as soon as
practically possible. In the event that the Owners fail to remedy it within a
reasonable time to the satisfaction of the Managers, the Managers shall be
entitled to terminate the Agreement with immediate effect by notice in writing.

 

18.2 Managers’ Default

 

If the Managers fail to meet
their obligations under Clauses 3 and 4 of this Agreement for any
reason within the control of the Managers, the Owners may give notice to
the Managers of the default, requiring them to remedy it as soon as practically
possible. In the event that the Managers fail to remedy it within a reasonable
time to the satisfaction of the Owners, the Owners shall be entitled to
terminate the Agreement with immediate effect by notice in writing.

 

18.3 Extraordinary Termination

 

This Agreement shall be
deemed to be terminated in the case of the sale of the Vessel or if the Vessel
becomes a total loss or is declared as a constructive or compromised or
arranged total loss or is requisitioned.

 

18.4 For the purpose of sub-clause 18.3
hereof

 

(I)          the date upon which the Vessel is to be
treated as having been sold or otherwise disposed of shall be the date on which
the Owners cease to be registered as Owners of the Vessel;

 

(II)       the Vessel shall not be deemed to be lost unless
either she has become an actual total loss or agreement has been reached with
her underwriters in respect of her constructive, compromised or arranged total
loss or if such agreement with her underwriters is not reached it is adjudged
by a competent tribunal that a constructive loss of the Vessel has occurred.

 

18.5 This Agreement shall terminate forthwith in
the event of an order being made or resolution passed for the winding up,
dissolution, liquidation or bankruptcy of either party (otherwise than for the
purpose of reconstruction or amalgamation) or if a receiver is appointed, or if
it suspends payment, ceases to carry on business or makes any special
arrangement or composition with its creditors.

 

18.6 The termination of this Agreement shall be
without prejudice to all rights accrued due between the parties prior to the
date of termination.

 

19.                  Law and
Arbitration

 

19.1 This Agreement shall be governed by and
construed in accordance with English law and any dispute arising out of or in
connection with this Agreement shall be referred to arbitration in London in
accordance with the Arbitration Act 1996 or any statutory modification or re-enactment
thereof save to the extent necessary to give effect to the provisions of this
Clause.

 

The arbitration shall be conducted in accordance with
the London Maritime Arbitrators Association (LMAA) Terms current at the time
when the arbitration proceedings are commenced.

 

The reference shall be to three arbitrators. A party
wishing to refer a dispute to arbitration shall appoint its arbitrator and send
notice of such appointment in writing to the other

 

 

party requiring the other party to appoint its own
arbitrator within 14 calendar days of that notice and stating that it will
appoint its arbitrator as sole arbitrator unless the other party appoints its
own arbitrator and gives notice that it has done so within the 14 days
specified. If the other party does not appoint its own arbitrator and give
notice that it has done so within the 14 days specified, the party referring a
dispute to arbitration may, without the requirement of any further prior notice
to the other party, appoint its arbitrator as sole arbitrator and shall advise
the other party accordingly. The award of a sole arbitrator shall be binding on
both parties as if he had been appointed by agreement.

 

Nothing herein shall prevent the parties agreeing in
writing to vary these provisions to provide for the appointment of a sole
arbitrator.

 

In cases where neither the claim nor any counterclaim
exceeds the sum of USD50,000 (or such other sum as the parties may agree)
the arbitration shall be conducted in accordance with the LMAA Small Claims Procedure
current at the time when the arbitration proceedings are commenced.

 

19.2           This Agreement shall be governed by and
construed in accordance with Title 9 of the United States Code and the Maritime
Law of the United States and any dispute arising out of or in connection with
this Agreement shall be referred to three persons at New York, one to be
appointed by each of the parties hereto, and the third by the two so chosen;
their decision or that of any two of them shall be final, and for the purposes of
enforcing any award, judgement may be entered on an award by any court of competent
jurisdiction. The proceedings shall be conducted in accordance with the rules of
the Society of Maritime Arbitrators, Inc.

 

In cases where neither the claim nor any counterclaim
exceeds the sum of USD50,000 (or such other sum as the parties may agree)
the arbitration shall be conducted in accordance with the Shortened Arbitration
Procedure of the Society of Maritime Arbitrators, Inc. current at the time
when the arbitration proceedings are commenced.

 

19.3           This Agreement shall be governed by and
construed in accordance with the laws of the place mutually agreed by the
parties and any dispute arising out of or in connection with this Agreement
shall be referred to arbitration at a mutually agreed place, subject to the
procedures applicable there.

 

19.4           If Box 18 in Part I is not
appropriately filled in, sub-clause 19.1 of this Clause shall apply.

 

 

Note: 19.1, 19.2 and 19.3
are alternatives; indicate alternative agreed in Box 18.

 

20.                  Notices

 

20.1           Any notice to be
given by either party to the other party shall be in writing and may be
sent by fax, telex, registered or recorded mail or by personal service.

 

20.2           The address of the Parties for service of
such communication shall be as stated in Boxes 19 and 20,
respectively.

 

 

ANNEX “A” (DETAILS OF VESSEL OR
VESSELS) TO

THE BALTIC AND INTERNATIONAL MARITIME COUNCIL (BIMCO)

STANDARD SHIP MANAGEMENT AGREEMENT - CODE NAME: “SHIPMAN 98”

 

Date of Agreement:

17th March 2005

Name of Vessel(s):

MV Electra

 

Particulars of Vessel(s):

Built: 09/2004, By: Onomichi (Japan) Hull
No.504

Flag: Marshall Islands, Place of
Registration: Majuro

Call Sign: V 7 G L 5, Grt/Nrt: 29,990/18,081 tns

Register Number: 2123, IMO No.:9277656

 

21. The fixed amount of US$ 3,550 per
day under Clause 9.1 will be paid to the Managers monthly in advance and will
cover all operating expenses of the Vessel, less any extraordinary amounts
necessary for emergency repairs, scheduled drydocking, Special Survey, modifications,
additional insurance premiums, bunkers or provisions. The operating expenses
include by way of indication crew wages and related costs, expenses for the
support and victualing of the crew, the cost of insurance (including loss of
hire insurance), expenses relating to scheduled repairs and maintenance,
including paints, the costs of spares and consumable stores, lubricating oils,
flag expenses (including tonnage tax and surveys) and other miscellaneous
expenses.

 

22. It is also agreed that the
Managers will arrange also for loss of hire insurance on terms and conditions
acceptable to the Owners.

 

23. The Management fee as per box 15
is on the basis of a parity of US$ / Euro at 1.30 up to 1.35. At the beginning
of each calendar quarter date the daily Management fee for the next 3 months
will be adjusted only upwards according to the US$ / Euro exchange rate as
quoted by EFG Eurobank Ergasias Bank SA two business days before the end of
each calendar quarter.Exhibit 10.12

 

	
  1.

  	
  Date
  of Agreement

  17th
  March 2005

  	
   

  	
  THE BALTIC AND INTERNATIONAL MARITIME COUNCIL
  (BIMCO)

  

  STANDARD SHIP MANAGEMENT AGREEMENT

  

  CODE NAME: “SHIPMAN 98”

  	
  

  
	
  Part I

  
	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  Owners (name, place of registered office and law of registry) (Cl.
  1)

  	
   

  	
  3.

  	
  Managers
  (name, place of registered office and law of registry) (Cl. 1)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name

  Abilene Navigation Inc

  	
   

  	
   

  	
  Name

  Target
  Marine S.A.

  
	
   

  	
  Place of registered office

  Ajeltake Road, Ajeltake Island, Majuro

  	
   

  	
   

  	
  Place
  of registered office

  24, Kanigos st, Kastella

  
	
   

  	
  Law of registry

  Marshall
  Islands MH 96960

  	
   

  	
   

  	
  Law
  of registry

  Piraeus 185-34, Greece

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  Day and year of
  commencement of Agreement (Cl. 2)

  Upon delivery of the vessel

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
  Crew Management
  (state “yes” or “no” as agreed) (Cl. 3.1)

  YES

  	
   

  	
  6.

  	
  Technical
  Management (state “yes” or “no” as agreed) (Cl. 3.2)

  YES

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
  Commercial
  Management (state “yes” or “no” as agreed) (Cl. 3.3)

  Limited
  as per class 3.3

  	
   

  	
  8.

  	
  Insurance
  Arrangements (state “yes” or “no” as agreed) (Cl. 3.4)

  YES

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
  Accounting
  Services (state “yes” or “no” as agreed) (Cl. 3.5)

  YES

  	
   

  	
  10.

  	
  Sale
  or purchase of the Vessel (state “yes” or “no” as agreed) (Cl. 3.6)

  YES

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11.

  	
  Provisions
  (state “yes” or “no” as agreed) (Cl. 3.7)

  YES

  	
   

  	
  12.

  	
  Bunkering
  (state “yes” or “no” as agreed) (Cl. 3.8)

  YES

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  13.

  	
  Chartering
  Services Period (only to be filled in if “yes” stated in Box 7) (Cl.
  3.3(i))

  N/A

  	
   

  	
  14.

  	
  Owners’
  Insurance (state alternative (i), (ii) or (iii) of Cl.
  6.3)

  

  YES (ii)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  15.

  	
  Annual
  Management Fee (state annual amount) (Cl. 8.1)

  US$ 182,500 or US$ 500 per day

  	
   

  	
  16.

  	
  Severance
  Costs (state maximum amount) (Cl. 8.4(ii))

  US$ 10,000

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  17.

  	
  Day and year of
  termination of Agreement (Cl. 17)

  

  14 months from delivery of the vessel

  	
   

  	
  18.

  	
  Law
  and Arbitration (state alternative 19.1, 19.2 or 19.3;
  if 19.3 place of arbitration must be stated) (Cl. 19)

  19.1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  19.

  	
  Notices (state
  postal and cable address, telex and telefax number for serving notice and
  communication to the Owners) (Cl. 20)

  	
   

  	
  20.

  	
  Notices (state postal
  and cable address, telex and telefax number for serving notice and
  communication to the Managers) (Cl. 20)

   

  
	
   

  	
  Abilene
  Navigation Inc. Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH
  96960

  	
   

  	
   

  	
  Target
  Marine S.A., 24 Kanigos st, Kastella, Piraeus 185-34, Greece

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  /s/ Illegible

  	
   

  	
   

  	
   

  
						

 

It is mutually
agreed between the party stated in Box 2 and the party stated in Box
3 that this Agreement consisting of PART I and PART II as
well as Annexes “A” (Details of Vessel), “B” (Details of Crew), “C”
(Budget) and “D” (Associated vessels) attached hereto, shall be
performed subject to the conditions contained herein. In the event of a
conflict of conditions, the provisions of PART I and Annexes “A”,
“B”, “C” and “D” shall
prevail over those of PART II to the extent of such conflict but no
further.

 

	
  Signature(s)
  (Owners) 

  	
   

  	
  Signature(s)
  (Managers) 

  
	
   

  	
   

  	
   

  
	
  /s/ Illegible

  	
   

  	
  /s/ Illegible

  

 

This document is a
computer generated SHIPMAN 98 form printed by authority of BIMCO. Any insertion
or deletion to the form must be clearly visible. In the event of any
modification made to the pre-printed text of this document which is not clearly
visible, the text of the original BIMCO approved document shall apply. BIMCO
assumes no responsibility for any loss, damage or expense as a result of
discrepancies between the original BIMCO approved document and this computer
generated document.

 

 

PART II

“SHIPMAN 98” Standard Ship Management Agreement

 

1.                         Definitions

 

In this Agreement save where the context otherwise requires, the
following words and expressions shall have the meanings hereby assigned to
them.

 

“Owners” means the party identified in Box 2.

 

“Managers” means the party identified in Box 3.

 

“Vessel” means the vessel or vessels details of which are set out in Annex “A”
attached hereto.

 

“Crew” means the Master, officers and ratings of the numbers, rank and
nationality specified in Annex “B” attached hereto. 

 

“Crew Support Costs” means all expenses of a general nature which
are not particularly referable to any individual vessel for the time being
managed by the Managers and which are incurred by the Managers for the purpose
of providing an efficient and economic management service and, without
prejudice to the generality of the foregoing, shall include the cost of crew
standby pay, training schemes for officers and ratings, cadet training schemes,
sick pay, study pay, recruitment and interviews. 

 

“Severance Costs” means the costs which the employers are
legally obliged to pay to or in respect of the Crew as a result of the early
termination of any employment contract for service on the Vessel.

 

“Crew Insurances” means insurances against crew risks which
shall include but not be limited to death, sickness, repatriation, injury,
shipwreck unemployment indemnity and loss of personal effects.

 

“Management Services” means the services specified in sub-clauses
3.1 to 3.8 as indicated affirmatively in Boxes 5 to 12. 

 

“ISM Code” means the International Management Code for the Safe Operation of Ships
and for Pollution Prevention as adopted by the International Maritime Organization
(IMO) by resolution A.741(18) or any subsequent amendment thereto.

 

“STCW 95” means the International Convention on Standards of Training,
Certification and Watchkeeping for Seafarers, 1978, as amended in 1995 or any
subsequent amendment thereto.

 

2.                         Appointment
of Managers

 

With effect from the day and year stated in Box 4 and continuing
unless and until terminated as provided herein, the Owners hereby appoint the
Managers and the Managers hereby agree to act as the Managers of the Vessel.

 

3.                         Basis of
Agreement

 

Subject to the terms and conditions herein provided, during the period
of this Agreement, the Managers shall carry out Management Services in respect
of the Vessel as agents for and on behalf of the Owners. The Managers shall
have authority to take such actions as they may from time to time in their
absolute discretion consider to be necessary to enable them to perform this
Agreement in accordance with sound ship management practice.

 

3.1
Crew Management

(only applicable if agreed according to Box 5)

 

The Managers shall provide suitably qualified Crew for the Vessel as
required by the Owners in accordance with the STCW 95 requirements, provision
of which includes but is not limited to the following functions:

 

(i)                       selecting
and engaging the Vessel’s Crew, including payroll arrangements, pension
administration, and insurances for the Crew other than those mentioned in Clause
6;

 

(ii)                    ensuring that
the applicable requirements of the law of the flag of the Vessel are satisfied
in respect of manning levels, rank, qualification and certification of the Crew
and employment regulations including Crew’s tax, social insurance, discipline
and other requirements;

 

(iii)                 ensuring that
all members of the Crew have passed a medical examination with a qualified
doctor certifying that they are fit for
the duties for which they are engaged and are in possession of valid medical
certificates issued in accordance with appropriate flag State requirements. In
the absence of applicable flag State requirements the medical certificate shall
be dated not more than three months prior to the respective Crew members
leaving their country of domicile and maintained for the duration of their
service on board the Vessel;

 

(iv)                ensuring that the
Crew shall have a command of the English language of a sufficient standard to
enable them to perform their duties safely;

 

(v)                   arranging transportation of the Crew,
including repatriation;

 

(vi)      training of the Crew and
supervising their efficiency;

 

(vii)     conducting union
negotiations;

 

(viii)          operating the Managers’ drug and alcohol
policy unless otherwise agreed.

 

3.2
Technical Management

(only applicable if agreed according to Box 6)

 

The Managers shall provide technical management which includes, but is
not limited to, the following functions:

 

(i)                       provision of competent personnel to supervise
the maintenance and general efficiency of the Vessel;

 

(ii)                    arrangement
and supervision of dry dockings, repairs, alterations and the upkeep of the
Vessel to the standards required by the Owners provided that the Managers shall
be entitled to incur the necessary expenditure to ensure that the Vessel will
comply with the law of the flag of the Vessel and of the places where she
trades, and all requirements and recommendations of the classification society;

 

(iii)                 arrangement of
the supply of necessary stores, spares and lubricating oil;

 

(iv)                appointment of
surveyors and technical consultants as the Managers may consider from time to
time to be necessary;

 

(v)                   development,
implementation and maintenance of a Safety Management System (SMS) in accordance with the ISM Code (see sub-clauses
4.2 and 5.3).

 

3.3
Commercial Management

(only applicable if agreed according to Box 7)

 

The Managers shall provide the commercial operation of the Vessel, as
required by the Owners, which includes, but is not limited to, the following
functions:

 

(iii)                 providing
voyage estimates and accounts and calculating of hire, freights, demurrage
and/or despatch moneys due from or due to the charterers of the Vessel;

 

(iv)                issuing of voyage
instructions;

 

(v)                   appointing
agents;

 

(vi)                appointing
stevedores;

 

(vii)             arranging surveys
associated with the commercial operation of the Vessel.

 

3.4
Insurance Arrangements’

(only applicable if agreed according to Box 8)

 

The Managers shall arrange insurances in accordance with Clause 6, on
such terms and conditions as the Owners shall have instructed or agreed, in
particular regarding conditions,

 

 

insured values,
deductibles and franchises.

 

3.5
Accounting Services

(only
applicable if agreed according to Box 9)  

 

The Managers
shall:

 

(i)                       establish
an accounting system which meets the requirements of the Owners and provide
regular accounting services, supply regular reports and records,

 

(ii)                    maintain the records
of all costs and expenditure incurred as well as data necessary or proper for
the settlement of accounts between the parties.

 

3.6
Sale or Purchase of the Vessel

(only
applicable if agreed according to Box 10)

 

The Managers
shall, in accordance with the Owners’ instructions, supervise the sale or
purchase of the Vessel, including the performance of any sale or purchase
agreement, but not negotiation of the same.

 

3.7
Provisions (only
applicable if agreed according to Box 11) 

The Managers shall
arrange for the supply of provisions.

 

3.8
Bunkering  (only applicable
if agreed according to Box 12)

The Managers shall
arrange for the provision of bunker fuel of the quality specified by the Owners
as required for the Vessel’s trade.

 

4.                         Managers’
Obligations  

 

4.1 The Managers
undertake to use their best endeavours to provide the agreed Management
Services as agents for and on behalf of the Owners in accordance with sound
ship management practice and to protect and promote the interests of the Owners
in all matters relating to the provision of services hereunder.

 

Provided, however, that the Managers in the performance of their
management responsibilities under this Agreement shall be entitled to have
regard to their overall responsibility in relation to all vessels as may from
time to time be entrusted to their management and in particular, but without
prejudice to the generality of the foregoing, the Managers shall be entitled to
allocate available supplies, manpower and services in such manner as in the prevailing
circumstances the Managers in their absolute discretion consider to be fair and
reasonable.

 

4.2 Where the
Managers are providing Technical Management in accordance with sub-clause 3.2,
they shall procure that the requirements of the law of the flag of the Vessel
are satisfied and they shall in particular be deemed to be the “Company” as
defined by the ISM Code, assuming the responsibility for the operation of the
Vessel and taking over the duties and responsibilities imposed by the ISM Code
when applicable.

 

5.                          Owners’
Obligations

 

5.1 The Owners
shall pay all sums due to the Managers punctually in accordance with the terms
of this Agreement. 

 

5.2 Where the Managers are providing
Technical Management in accordance with sub-clause 3.2, the Owners shall:

 

(i)        procure
that all officers and ratings supplied by them or on their behalf comply with
the requirements of STCW 95; 

 

(ii)       instruct
such officers and ratings to obey all reasonable orders of the Managers in
connection with the operation of the Managers’ safety management system.

 

5.3 Where the
Managers are not providing Technical Management in accordance with sub-clause 3.2,
the Owners shall procure that the requirements of the law of the flag of the
Vessel are satisfied and that they, or such other entity as may be appointed by
them and identified to the Managers, shall be deemed to be the “Company” as
defined by the ISM Code assuming the responsibility for the operation of the
Vessel and taking over the duties and responsibilities imposed by the ISM Code
when applicable.

 

6.                         Insurance Policies  

 

The Owners shall procure, whether by instructing the Managers under
sub-clause 3.4 or
otherwise, that throughout the period of this Agreement: 

 

6.1 at the Owners’
expense, the Vessel is insured for not less than her sound market value or
entered for her full gross tonnage, as the case may be for:

 

(i)        usual
hull and machinery marine risks (including crew negligence) and excess
liabilities;

 

(ii)       protection
and indemnity risks (including pollution risks and Crew Insurances); and

 

(iii)      war
risks (including protection and indemnity and crew risks) in accordance with
the best practice of prudent owners of vessels of a similar type to the Vessel,
with first class insurance companies, underwriters or associations (“the Owners’
Insurances”);

 

6.2 all premiums
and calls on the Owners’ Insurances are paid promptly by their due date,

 

6.3 the Owners’
Insurances name jointly the Owners and the Managers and, subject to
underwriters’ agreement, any third party designated by the Managers as a joint
assured or as a loss payee, with full cover, with the Owners obtaining cover in
respect of each of the insurances specified in sub-clause 6.1:

 

(i)        on
terms whereby the Managers and any such third party are liable in respect of
premiums or calls arising in connection with the Owners’ Insurances; or 

 

(ii)       if
reasonably obtainable, on terms such that neither the Managers nor any such
third party shall be under any liability in respect of premiums or calls
arising in connection with the Owners’ Insurances; or

 

(iii)      on
such other terms as may be agreed in writing. 
Indicate alternative (i), (ii) or
(iii) in Box 14. If Box 14 is left blank then (i) applies.

 

6.4 written
evidence is provided, to the reasonable satisfaction of the Managers, of their
compliance with their obligations under Clause 6 within a reasonable
time of the commencement of the Agreement, and of each renewal date and, if
specifically requested, of each payment date of the Owners’ Insurances.

 

7.                         Income
Collected and Expenses Paid on Behalf of Owners  

7.1 All moneys
collected by the Managers under the terms of this Agreement (other than moneys
payable by the Owners to the Managers) and any interest thereon shall be held
to the credit of the Owners in a separate bank account.

 

7.2 All expenses
incurred by the Managers under the terms of this Agreement on behalf of the
Owners (including expenses as provided in Clause 8) may be debited
against the Owners in the account referred to under sub-clause 7.1 but
shall in any event remain payable by the Owners to the Managers on demand.

 

8.                         Management
Fee 

 

8.1 The Owners
shall pay to the Managers for their services as Managers under this Agreement
an annual management fee as stated in Box 15 which shall be payable by
equal monthly instalments in advance, the first instalment being payable on the
commencement of this Agreement (see Clause 2 and Box 4) and
subsequent instalments being payable every month. 

8.3 The Managers
shall, at no extra cost to the Owners, provide their own office accommodation,
office staff, facilities and stationery. Without limiting the generality of Clause
7 the Owners shall reimburse the Managers for postage and communication
expenses, travelling expenses, and other out of pocket

 

 

expenses properly
incurred by the Managers in pursuance of the Management Services.

 

8.4
In the event of the appointment of the Managers being terminated by the Owners
or the Managers in accordance with the provisions of Clauses 17 and 18.1
other than by reason of default by the Managers, or if the Vessel is lost, sold
or otherwise disposed of, the “management fee” payable to the Managers
according to the provisions of sub-clause 8.1, shall continue to be
payable for a further period of one calendar months as from the termination
date. In addition, provided that the Managers provide Crew for the Vessel in
accordance with sub-clause 3.1:

 

(i)                       the Owners
shall continue to pay Crew Support Costs during the said further period of
three calendar months and

 

(ii)                    the Owners
shall pay an equitable proportion of any Severance Costs which may materialize,
not exceeding the amount stated in Box 16.

 

8.5
If the Owners decide to lay-up the Vessel whilst this Agreement remains in
force and such lay-up lasts for more than three months, an appropriate
reduction of the management fee for the period exceeding three months until one
month before the Vessel is again put into service shall be mutually agreed
between the parties.

 

8.6
Unless otherwise agreed in writing all discounts and commissions obtained by
the Managers in the course of the management of the Vessel shall be credited to
the Owners.

 

9.        Budgets
and Management of Funds

 

9.1
The Managers should this Agreement be extended as per Clause 17 shall present
to the Owners annually a budget for the following twelve months in such form as
the Owners require. The budget for the first 14 months here is fixed to be US$
3,550 per day. Subsequent annual budgets shall be prepared by the Managers and
submitted to the Owners not less than two months before the anniversary date of
the Owners’ financial year (see Clause 2 and Box 4).

 

9.2 The Owners shall indicate to the Managers their acceptance and approval
of the annual budget within one month of presentation and in the absence of any
such indication the Managers shall be entitled to assume that the Owners have
accepted the proposed budget. Should the Owners disagree with the budget and
same is not amended within three (3) days to meet with Owners reasonable
requirements, Owners will have a right to terminate this Agreement as per
clause 18.2.

 

9.3 Following the agreement of the budget, the Managers shall prepare and
present to the Owners their estimate of the working capital requirement of the
Vessel and the Managers shall each month up-date this estimate. Based thereon,
the Managers shall each month request the Owners in writing for the funds
required to run the Vessel for the ensuing month, including the payment of any
occasional or extraordinary item of expenditure, such as emergency repair
costs, additional insurance premiums, bunkers or provisions. Such funds shall
be received by the Managers within ten running days after the receipt by the
Owners of the Managers’ written request and shall be held to the credit of the
Owners in a separate bank account.

 

9.4 The Managers shall produce a comparison between budgeted and actual
income and expenditure of the Vessel in such form as required by the Owners
monthly or at such other intervals as mutually agreed.

 

9.5 Notwithstanding anything contained herein to the contrary, the Managers
shall in no circumstances be required to use or commit their own funds to
finance the provision of the Management Services.

 

10.      Managers’
Right to Sub-Contract

 

The Managers shall
not have the right to sub-contract any of their obligations hereunder,
including those mentioned in sub-clause 3.1, without the prior written
consent of the Owners which shall not be unreasonably withheld. In the event of
such a sub-contract the Managers shall remain fully liable for the due
performance of their obligations under this Agreement.

 

11.      Responsibilities

 

11.1
Force Majeure - Neither the Owners nor the Managers
shall be under any liability for any failure to perform any of their
obligations hereunder by reason of any cause whatsoever of any nature or kind
beyond their reasonable control.

 

11.2
Liability to Owners - (i) Without prejudice to sub-clause
11.1, the Managers shall be under no liability whatsoever to the Owners for any
loss, damage, delay or expense of whatsoever nature, whether direct or
indirect, (including but not limited to loss of profit arising out of or in
connection with detention of or delay to the Vessel) and howsoever arising in
the course of performance of the Management Services UNLESS same is proved to
have resulted solely from the negligence, gross negligence or wilful default of
the Managers or their employees, or agents or sub-contractors employed by them
in connection with the Vessel, in which case (save where loss, damage, delay or
expense has resulted from the Managers’ personal act or omission committed with
the intent to cause same or recklessly and with knowledge that such loss,
damage, delay or expense would probably result) the Managers’ liability for
each incident or series of incidents giving rise to a claim or claims shall
never exceed a total of ten times the annual management fee payable hereunder.

 

(ii)
Notwithstanding anything that may appear to the contrary in this Agreement, the
Managers shall not be liable for any of the actions of the Crew, even if such
actions are negligent, grossly negligent or wilful, except only to the extent
that they are shown to have resulted from a failure by the Managers to
discharge their obligations under sub-clause 3.1, in which case their
liability shall be limited in accordance with the terms of this Clause 11.

 

11.3
Indemnity - Except to the extent and solely for the
amount therein set out that the Managers would be liable under sub-clause 11.2.
the Owners hereby undertake to keep the Managers and their employees, agents and
sub-contractors indemnified and to hold them harmless against all actions,
proceedings, claims, demands or liabilities whatsoever or howsoever arising
which may be brought against them or incurred or suffered by them arising out
of or in connection with the performance of the Agreement, and against and in
respect of all costs, losses, damages and expenses (including legal costs and
expenses on a full indemnity basis) which the Managers may suffer or incur
(either directly or indirectly) in the course of the performance of this
Agreement.

 

11.4
“Himalaya”-
It is hereby expressly agreed that no employee or agent of the
Managers (including every sub-contractor from time to time employed by the
Managers) shall in any circumstances whatsoever be under any liability
whatsoever to the Owners for any loss, damage or delay of whatsoever kind
arising or resulting directly or indirectly from any act, neglect or default on
his part while acting in the course of or in connection with his employment
and, without prejudice to the generality of the foregoing provisions in this Clause
11, every exemption, limitation, condition and liberty herein contained and
every right, exemption from liability, defence and immunity of whatsoever
nature applicable to the Managers or to which the Managers are entitled
hereunder shall also be available and shall extend to protect every such
employee or agent of the Managers acting as aforesaid and for the purpose of
all the foregoing provisions of this Clause 11 the Managers are or shall
be deemed to be acting as agent or trustee on behalf of and for the benefit of
all persons who are or might be their servants or agents from time to time
(including sub-contractors as aforesaid) and all such persons shall to this
extent be or be deemed to be parties to this

 

 

Agreement.

 

12.                  Documentation

 

Where the Managers
are providing Technical Management in accordance with sub-clause 3.2 and/or Crew Management in accordance with
sub-clause 3.1, they shall make available, upon Owners’ request, all
documentation and records related to the Safety Management System (SMS) and/or
the Crew which the Owners need in order to demonstrate compliance with the ISM
Code and STCW 95 or to defend a claim against a third party.

 

13.                  General
Administration

 

13.1
The Managers shall handle and settle with Owners’ prior
approval, all claims arising out of the Management Services hereunder and keep
the Owners informed regarding any incident of which the Managers become aware
which gives or may give rise to claims or disputes involving third parties.

 

13.2
The Managers shall, as instructed by the Owners, bring or
defend actions, suits or proceedings in connection with matters entrusted to
the Managers according to this Agreement.

 

13.3
The Managers shall also have power to obtain legal or
technical or other outside expert advice in relation to the handling and
settlement of claims and disputes or all other matters affecting the interests
of the Owners in respect of the Vessel.

 

13.4
The Owners shall arrange for the provision of any necessary
guarantee bond or other security.

 

13.5
Any costs reasonably incurred by the Managers in carrying out
their obligations according to Clause 13 shall be reimbursed by the
Owners.

 

14.                  Auditing

 

The Managers shall
provide bookkeeping services and shall at
all times maintain and keep true and correct accounts and shall make the same
available for inspection and auditing by the Owners or by independent auditors at such times as may be mutually agreed. On the termination, for
whatever reasons, of this Agreement, the Managers shall release to the Owners,
if so requested, the originals where possible, or otherwise certified copies,
of all such accounts and all documents specifically relating to the Vessel and
her operation.

 

15.                  Inspection of
Vessel

 

The Owners shall
have the right at any time after giving reasonable notice to the Managers to
inspect the Vessel for any reason they consider necessary.

 

16.                  Compliance with
Laws and Regulations

 

The Managers will
not do or permit to be done anything which might cause any breach or
infringement of the laws and regulations of the Vessel’s flag, or of the places
where she trades.

 

17.                  Duration of the
Agreement

 

This Agreement
shall come into effect on the day and year stated in Box 4 and shall
continue until the date stated in Box 17. Thereafter it shall continue
until terminated by either party giving to the other notice in writing, in
which event the Agreement shall terminate upon the expiration of a period of
two months from the date upon which such notice was given.

 

18.                  Termination

 

18.1
Owners’ default

 

(i)                       The
Managers shall be entitled to terminate the Agreement with immediate effect by
notice in writing if any moneys payable by the Owners under this Agreement
shall not have been received in the Managers’ nominated account within ten
running days of receipt by the Owners of the Managers written request or if the
Vessel is repossessed by the Mortgagees.

 

(ii)                    If the Owners:

 

(a)  fail to meet their obligations under
sub-clauses 5.2 and 5.3 of this Agreement for any reason within
their control, or

 

(b)  proceed with the employment of or continue
to employ the Vessel in the carriage of contraband, blockade running, or in an
unlawful trade, or on a voyage which in the reasonable opinion of the Managers
is unduly hazardous or improper,

 

the Managers may
give notice of the default to the Owners, requiring them to remedy it as soon
as practically possible. In the event that the Owners fail to remedy it within
a reasonable time to the satisfaction of the Managers, the Managers shall be
entitled to terminate the Agreement with immediate effect by notice in writing.

 

18.2
Managers’ Default

 

If the Managers
fail to meet their obligations under Clauses 3 and 4 of this
Agreement for any reason within the control of the Managers, the Owners may
give notice to the Managers of the default, requiring them to remedy it as soon
as practically possible. In the event that the Managers fail to remedy it
within a reasonable time to the satisfaction of the Owners, the Owners shall be
entitled to terminate the Agreement with immediate effect by notice in writing.

 

18.3 Extraordinary Termination

 

This Agreement
shall be deemed to be terminated in the case of the sale of the Vessel or if
the Vessel becomes a total loss or is declared as a constructive or compromised
or arranged total loss or is requisitioned.

 

18.4
For the purpose of sub-clause 18.3 hereof

 

(i)                       the date
upon which the Vessel is to be treated as having been sold or otherwise
disposed of shall be the date on which the Owners cease to be registered as
Owners of the Vessel;

 

(ii)                    the Vessel
shall not be deemed to be lost unless either she has become an actual total
loss or agreement has been reached with her underwriters in respect of her
constructive, compromised or arranged total loss or if such agreement with her
underwriters is not reached it is adjudged by a competent tribunal that a
constructive loss of the Vessel has occurred.

 

18.5
This Agreement shall terminate forthwith in the event of an
order being made or resolution passed for the winding up, dissolution,
liquidation or bankruptcy of either party (otherwise than for the purpose of
reconstruction or amalgamation) or if a receiver is appointed, or if it
suspends payment, ceases to carry on business or makes any special arrangement
or composition with its creditors.

 

18.6
The termination of this Agreement shall be without prejudice
to all rights accrued due between the parties prior to the date of termination.

 

19.                  Law and
Arbitration

 

19.1
This Agreement shall be governed by and construed in
accordance with English law and any dispute arising out of or in connection
with this Agreement shall be referred to arbitration in London in accordance
with the Arbitration Act 1996 or any statutory modification or re-enactment thereof
save to the extent necessary to give effect to the provisions of this Clause.

 

The arbitration
shall be conducted in accordance with the London Maritime Arbitrators
Association (LMAA) Terms current at the time when the arbitration proceedings
are commenced.

 

The reference shall be to three arbitrators. A party wishing  to refer a dispute to arbitration shall
appoint its arbitrator and send
notice of such appointment in writing to the other

 

 

party requiring the other party to appoint its own arbitrator within 14
calendar days of that notice and stating that it will appoint its arbitrator as
sole arbitrator unless the other party appoints its own arbitrator and gives
notice that it has done so within the 14 days specified. If the other party
does not appoint its own arbitrator and give notice that it has done so within
the 14 days specified, the party referring a dispute to arbitration may,
without the requirement of any further prior notice to the other party, appoint
its arbitrator as sole arbitrator and shall advise the other party accordingly.
The award of a sole arbitrator shall be binding on both parties as if he had
been appointed by agreement.

 

Nothing herein shall prevent the parties agreeing in writing to vary
these provisions to provide for the appointment of a sole arbitrator.

 

In cases where neither the claim nor any counterclaim exceeds the sum of
USD50,000 (or such other sum as the parties may agree) the arbitration shall be
conducted in accordance with the LMAA Small Claims Procedure current at the
time when the arbitration proceedings are commenced.

 

19.2 This Agreement shall be governed by and construed in accordance with
Title 9 of the United States Code and the Maritime Law of the United States and
any dispute arising out of or in connection with this Agreement shall be
referred to three persons at New York, one to be appointed by each of the
parties hereto, and the third by the two so chosen; their decision or that of
any two of them shall be final, and for the purposes of enforcing any award,
judgement may be entered on an award by any court of competent jurisdiction.
The proceedings shall be conducted in accordance with the rules of the Society
of Maritime Arbitrators, Inc.

 

In cases where neither the claim nor any counterclaim exceeds the sum of
USD50,000 (or such other sum as the parties may agree) the arbitration shall be
conducted in accordance with the Shortened Arbitration Procedure of the Society
of Maritime Arbitrators, Inc. current at the time when the arbitration
proceedings are commenced.

 

19.3 This Agreement shall be governed by and construed in accordance with the
laws of the place mutually agreed by the parties and any dispute arising out of
or in connection with this Agreement shall be referred to arbitration at a
mutually agreed place, subject to the procedures applicable there.

 

19.4 If Box 18 in Part I is not appropriately filled in, sub-clause 19.1
of this Clause shall apply.

 

Note: 19.1, 19.2 and 19.3 are
alternatives; indicate alternative agreed in Box 18.

 

20.      Notices

 

20.1 Any notice to be given by either party to the other party shall be in
writing and may be sent by fax, telex, registered or recorded mail or by
personal service.

 

20.2 The address of the Parties for service of such communication shall be as
stated in Boxes 19 and 20, respectively.

 

 

ANNEX
“A” (DETAILS OF VESSEL OR VESSELS) TO

THE BALTIC AND INTERNATIONAL MARITIME COUNCIL (BIMCO)

STANDARD SHIP MANAGEMENT AGREEMENT - CODE NAME: “SHIPMAN 98”

 

Date of Agreement:

17th March 2005

Name of Vessel(s): 

MV Ekavi

 

Particulars of
Vessel(s):

Built: 09/2004, By: Onomichi (Japan) Hull
No.505

Flag: Marshall Islands, Place of Registration: Majuro

Call Sign: V 7 G L 6, Grt/Nrt: 29,990/18,081 tns

Register Number: 2124, IMO No.:9277668

 

21. The fixed
amount of US$ 3,550 per day under Clause 9.1 will be paid to the Managers monthly in advance and will
cover all operating expenses of the Vessel, less any extraordinary amounts
necessary for emergency repairs, scheduled drydocking, Special Survey,
modifications, additional insurance premiums, bunkers or provisions. The
operating expenses include by way of indication crew wages and related costs,
expenses for the support and victualing of the crew, the cost of insurance
(including loss of hire insurance), expenses relating to scheduled repairs and
maintenance, including paints, the costs of spares and consumable stores,
lubricating oils, flag expenses (including tonnage tax and surveys) and other miscellaneous expenses.

 

22. It is also
agreed that the Managers will arrange also for loss of hire insurance on terms
and conditions acceptable to the Owners.

 

23. The Management
fee as per box 15 is on the basis of a parity of US$ / Euro at 1.30 up to 1.35.
At the beginning of each calendar quarter date the daily Management fee for the
next 3 months will be adjusted only upwards according to the US$ / Euro
exchange rate as quoted by EFG
Eurobank Ergasias Bank SA two business days before the end of each calendar
quarter.

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