Document:

exv10w5

Exhibit 10.5

Private & confidential

Dated: 22nd
October, 2007

EFG EUROBANK ERGASIAS S.A.

- and -

GRAND ESMERALDA INC. and

GRAND FORTUNESHIP INC. 

 

 

LOAN AGREEMENT

for a secured floating interest rate

loan facility of up to US$32,000,000

 

 

THEO V. SIOUFAS LAW OFFICES

13, Defteras Merarchias

185 35 Piraeus

Greece

(J18-181891/C)

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	CLAUSE	 	HEADINGS	 	PAGE	 
	 	 	 
	 	 	 	 
	1.	 	PURPOSE, DEFINITIONS AND INTERPRETATION
	 	 	1	 
	 	 	 
	 	 	 	 
	2.	 	THE LOAN
	 	 	13	 
	 	 	 
	 	 	 	 
	3.	 	INTEREST
	 	 	15	 
	 	 	 
	 	 	 	 
	4.	 	REPAYMENT — PREPAYMENT
	 	 	18	 
	 	 	 
	 	 	 	 
	5.	 	PAYMENTS, TAXES, LOAN ACCOUNT AND COMPUTATION
	 	 	22	 
	 	 	 
	 	 	 	 
	6.	 	REPRESENTATIONS AND WARRANTIES
	 	 	24	 
	 	 	 
	 	 	 	 
	7.	 	CONDITIONS PRECEDENT
	 	 	28	 
	 	 	 
	 	 	 	 
	8.	 	COVENANTS
	 	 	32	 
	 	 	 
	 	 	 	 
	9.	 	EVENTS OF DEFAULT
	 	 	40	 
	 	 	 
	 	 	 	 
	10.	 	INDEMNITIES — EXPENSES — FEES
	 	 	45	 
	 	 	 
	 	 	 	 
	11.	 	SECURITY, APPLICATION, SET-OFF AND ACCOUNTS
	 	 	48	 
	 	 	 
	 	 	 	 
	12.	 	UNLAWFULNESS, INCREASED COSTS
	 	 	52	 
	 	 	 
	 	 	 	 
	13.	 	ASSIGNMENT, PARTICIPATION, LENDING OFFICE
	 	 	54	 
	 	 	 
	 	 	 	 
	14.	 	MISCELLANEOUS
	 	 	55	 
	 	 	 
	 	 	 	 
	15.	 	NOTICES AND OTHER MATTERS
	 	 	57	 
	 	 	 
	 	 	 	 
	16.	 	APPLICABLE LAW AND JURISDICTION
	 	 	59	 

SCHEDULE

	 	 	 

	1.	 	FORM OF DRAWDOWN NOTICE

 

 

THIS AGREEMENT is dated 22nd day of October, 2007 made BETWEEN:

	(1)	 	EFG EUROBANK ERGASIAS S.A., a banking societe anonyme duly incorporated under the laws of
Greece, having its registered office at 8 Othonos Street, Athens, Greece, acting for the
purposes of this Agreement through its office at 83 Akti Miaouli and Flessa Street, GR 185 38
Piraeus, Greece, as lender (hereinafter called the “Bank”, which expression shall include its
successors and assignees); and

	(2)	(a)	 	GRAND ESMERALDA INC., a company incorporated in the Republic of Liberia, having
its registered office at 80 Broad Street, Monrovia, Liberia, as borrower (hereinafter called
the “Esmeralda Borrower”, which expression shall include its successors); and

	 	(b)	 	GRAND FORTUNESHIP INC., a company incorporated in the Republic of
Liberia, having its registered office at 80 Broad Street, Monrovia, Liberia, as
borrower (hereinafter called the “Fortuneship Borrower”, which expression shall include
its successors, and together with the Esmeralda Borrower hereinafter called the
“Borrowers” and singly a “Borrower”)

AND IT IS HEREBY AGREED as follows:

	1.	 	PURPOSE, DEFINITIONS AND INTERPRETATION
	 
	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 on a joint and several basis a loan of up
to Thirty two million Dollars ($32,000,000) by way of one (1) advance, to be used for the
purpose of:

	 	(a)	 	financing part of the acquisition cost of the Fortune Vessel; and
	 
	 	(b)	 	re-financing the existing loan indebtedness of the Esmeralda Borrower to the
Bank and covering working capital requirements of the Esmeralda Vessel.

	1.2	 	Definitions: In this Agreement, unless the context otherwise requires each term or
expression defined in the recital of the parties and in this Clause shall have the meaning
given to it in the recital of the parties or, as the case may be, in this Clause and:
	 
	 	 	“Accounts Pledge Agreement” means an agreement to be made between the Borrowers and the Bank
for the creation of a pledge in favour of the Bank over the Earnings Accounts, the Retention
Account and the Reserve Account, in form satisfactory to the Bank;
	 
	 	 	“Advance” means each borrowing of a proportion of the Commitment by the Borrowers or (as the
context may require) the principal amount of such borrowing;
	 
	 	 	“Approved Manager” means for the time being Newfront Shipping S.A., a corporation
organised and existing under the laws of the Republic of Panama and having its registered
office in Panama City, Panama and a branch office established in Greece (at 83 Akti Miaouli
and Flessa Street, 185 38 Piraeus, Greece) pursuant to the Greek laws 89/67, 378/68, 27/75
and 814/79 (as amended) or any other person appointed by the Borrowers, with the written
consent of the Bank (such consent not to
be unreasonably withheld), as the Approved Manager of the Vessels, and includes its
successors in title;
	 
	 	 	“Approved Manager’s Undertaking” means a letter of undertaking and subordination to be
executed by the Approved Manager whereby the Approved

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	 	 	Manager shall (inter alia) subordinate
any and all claims and/or rights it may have against the Borrowers and/or the Vessels to the
claims and rights of the Bank hereunder and the Security Documents;
	 
	 	 	“Availability Period” means the period starting on the date hereof and ending on the
30th day of October, 2007 or such later date as the Bank may, in its absolute
discretion, agree in writing or on such earlier date (if any), (i) on which the whole
Commitment has been advanced by the Bank to the Borrowers, or (ii) on which the Commitment
is reduced to zero pursuant to Clauses 9.2 or 12.1, 12.2 or any other Clause of this
Agreement;
	 
	 	 	“Bank” means the Bank as specified in the beginning of this Agreement and includes its
successors in title and transferees;
	 
	 	 	“Banking Day” means any day on which banks and foreign exchange markets in New York, London,
Monaco, Piraeus and Athens and in each country or place in or at which an act is required to
be done under this Agreement in accordance with the usual practice of the Bank, are open for
the transaction of business of the nature contemplated in this Agreement;
	 
	 	 	“Borrowed Money” means Indebtedness incurred in respect of (i) money borrowed or raised,
(ii) any bond, note, loan stock, debenture or similar instrument, (iii) acceptance or
documentary credit facilities, (iv) deferred payments for assets or services acquired, (v)
rental payments under leases (whether in respect of land, machinery, equipment or otherwise)
entered into primarily as a method of raising finance or of financing the acquisition of the
asset leased, (vi) guarantees, bonds, stand-by letters of credit or other instruments issued
in connection with the performance of contracts (vii) obligations under any derivative
instrument and (vii) guarantees or other assurances against financial loss in respect of
Indebtedness of any person falling within any of paragraphs (i) to (vi) above;
	 
	 	 	“Borrower” means the Esmeralda Borrower and the Fortuneship Borrower as specified in the
beginning of this Agreement;
	 
	 	 	“Break Costs” means all costs, losses, premiums or penalties incurred by the Bank in the
circumstances contemplated by Clause 10.1, or as a result of it receiving any prepayment of
all or any part of the Loan (whether pursuant to Clause 4 or otherwise), or any other
payment under or in relation to the Security Documents on a day other than the due date for
payment of the sum in question, and includes (without limitation) any losses or costs
incurred in liquidating or re-employing deposits from third parties acquired to effect or
maintain the Loan, and any liabilities, expenses or losses incurred by the Bank in
terminating or reversing, or otherwise in connection with, any interest rate and/or currency
swap, transaction or arrangement entered into by the Bank to hedge any exposure arising
under this Agreement, or in terminating or reversing, or otherwise in connection with, any
open position arising under this Agreement or the Master Agreement;
	 
	 	 	“Charterparty” in relation to a Vessel means any time or bareboat charterparty or contract
of affreightment, agreement or related document in respect of the employment of such Vessel
whether now existing or hereinafter entered into by the Owner thereof or any person, firm or
company on its behalf for a period for more than nine (9) months with a charterer, at a
daily rate and on terms and conditions acceptable to the Bank (and shall include any addenda
thereto), and includes the Esmeralda Charterparty and the Fortune Charterparty;
	 
	 	 	“Charterparty Assignment” the assignment of each of the Esmeralda Charterparty and the
Fortune Charterparty and, after the termination of either of them, of any new

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	 	 	Charterparty,
in favour of the Bank, in form and substance as the Bank may approve or require as the same
may from time to time be amended and/or supplemented (together, the “Charterparties’
Assignments”);
	 
	 	 	“Commitment” means the amount which the Bank has agreed to lend to the Borrowers under
Clause 2.1 as reduced pursuant to any relevant term of this Agreement;
	 
	 	 	“Compliance Certificate” means a certificate substantially in the form set out in schedule 2
signed by (i) the chief financial officer of the Group or, if the CFO is not available a
director of the Corporate Guarantor and (ii) a director of each of the Borrowers;
	 
	 	 	“Compulsory Acquisition” in relation to either Vessel means requisition for title or other
compulsory acquisition, requisition, appropriation, expropriation, deprivation, forfeiture
or confiscation for any reason of such Vessel 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;
	 
	 	 	“Confirmation” means a Confirmation exchanged, or deemed exchanged, between the Bank and the
Borrowers as contemplated by the Master Agreement;
	 
	 	 	“Corporate Guarantor” means Grandunion Inc., a company organised and existing under
the laws of the Republic of Marshall Islands and having its registered office a company
incorporated in Marshall Islands having its registered office at Trust Company Complex,
Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960;
	 
	 	 	“Corporate Guarantee” means the guarantee given or, as the context may require, to be given
by the Corporate Guarantor in form and substance satisfactory to the Bank as a security for
the Outstanding Indebtedness and any and all other obligations of the Borrowers under this
Agreement;
	 
	 	 	“Credit Support Document” means any document described as such in the Master Agreement and,
where the context permits, any other document referred to in any Credit Support Document
which has the effect of creating an Encumbrance in favour of the Bank;
	 
	 	 	“Credit Support Provider” means any person (other than the Borrowers) described as such in
the Master Agreement;
	 
	 	 	“Debt Service” in relation to any relevant period means an amount (as conclusively certified
by the Bank) which is equal to the aggregate payments of principal and
interest which the Borrowers will be obliged to pay to the Bank pursuant to this Agreement
and the other Security Documents during such Period;
	 
	 	 	“Default” means any Event of Default or any event 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;
	 
	 	 	“Default Rate” means that rate of interest per annum which is determined in accordance with
the provisions of Clause 3.4;
	 
	 	 	“Delivery” means the delivery of the Fortune Vessel by the Seller to, and the acceptance of
the Vessel by, the Owner thereof pursuant to the MOA;
	 
	 	 	“Delivery Date” means the date upon which Delivery occurs;

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	 	 	“DOC” means a document of compliance issued to an Operator in accordance with rule 13 of the
ISM Code;
	 
	 	 	“Dollar” 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 means 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 Dollars);
	 
	 	 	“Drawdown Date” means the day, being a Banking Day, on which the Commitment is or, as the
context may require, shall be advanced to the Borrowers;
	 
	 	 	“Drawdown Notice” means a notice substantially in the terms of Schedule 1;
	 
	 	 	“Early Termination Date” has the meaning given to that expression in section 14 of the
Master Agreement;
	 
	 	 	“Earnings” in relation to each Vessel means all moneys whatsoever due or to become due to
the Owner thereof at any time during the Security Period arising out of the use or operation
of such Vessel including (but without prejudice to the generality of the foregoing) all
freight, hire and passage moneys, compensation payable to the Owner thereof in event of
requisition of such Vessel for hire, remuneration for salvage and towage services, demurrage
and detention moneys and damages for breach (or payments for variation or termination) of
any charterparty or other contract for the employment of such Vessel and any other earnings
whatsoever due or to become due to the Owner thereofin respect of such Vessel and all sums
recoverable under the Insurances in respect of loss of Earnings,
provided that if
and so long as such Vessel may be used for the purpose of any pooling arrangement or joint
venture between the Owner thereof and any other person or persons (the terms of which
pooling arrangement or joint venture shall be subject to the prior written approval of the
Bank), the term “Earnings” shall be construed for the period during which the relevant
Vessel is used for such purpose as meaning that proportion of the net revenue from the
relevant pooling or joint venture agreement or agreements as it attributed to such Vessel;
	 
	 	 	“Earnings Account” in relation to each Vessel means the interest bearing Dollar account of
the Owner thereof opened or (as the context may require) to be opened by
such Owner with the Bank or with any other branch of the Bank, as may be required by and at
the discretion of the Bank, which (inter alia) all Earnings of such Vessel are to be paid in
accordance with Clauses 8.7(f) and 11.5 and includes any other account designated in writing
by the Bank to be the Earnings Account in relation to such Vessel for the purposes of this
Agreement (together, the “Earnings Accounts”);
	 
	 	 	“Encumbrance” means any mortgage, charge (whether fixed or floating), pledge, lien,
hypothecation, assignment, security interest, title retention, arrest, seizure or other
encumbrance of any kind securing or any right conferring a priority of payment in respect of
any obligation of any person;
	 
	 	 	“Environmental Affiliate” means any agent or employee of either of the Borrowers or any
other Relevant Party or any person having a contractual relationship with either of the
Borrowers or any other Relevant Party in connection with any Relevant Ship or its operation
or the carriage of cargo thereon and/or the provision of goods and/ or services on or from
the 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

4

 

	 	 	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 the 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 Material of Environmental Concern from any Relevant
Ship;
	 
	 	 	“Environmental Incident” means (i) any release of Material of Environmental Concern from
either Vessel, (ii) any incident in which Material of Environmental Concern is released from
a vessel other than the Vessels and which involves collision between either Vessel and such
other vessel or some other incident of navigation or operation, in either case, either
Vessel, the Owner thereof or the Approved Manager are actually at fault or otherwise liable
(in whole or in part) or (iii) any incident in which Material of Environmental Concern is
released from a vessel other than the Vessels and where either Vessel is actually or
potentially liable to be arrested as a result and/or where the Owner or the Approved Manager
are actually or allegedly at fault or otherwise liable;
	 
	 	 	“Environmental Laws” means all national, international and state laws, rules, regulations,
treaties and conventions (including, without limitation, the United States Oil Pollution Act
of 1990 and any comparable laws of the individual States of the United States of America)
applicable to the Vessels pertaining to the pollution or protection of human health or the
environment including, without limitation, the carriage of Materials of Environmental
Concern and actual or threatened emissions, spills, releases or discharges of Materials of
Environmental Concern;
	 
	 	 	“Esmeralda Charterparty” means the time-charter in the NYPE Form, dated 15th
December, 2005 entered into between the Esmeralda Borrower, as owner and Messrs. Amato di
Navigazione S.p.A., of Naples, Italy, as charterer, as amended by an addendum No.1 dated
8th February, 2007, providing for the employment of Esmeralda
Vessel for a further period of 12 to 14 months at a daily hire of $24,500 including overtime
(and shall include any addenda thereto);
	 
	 	 	“Event of Default” means any events or circumstances set out in Clause 9 or described as
such in any other of the Security Documents;
	 
	 	 	“Excess Earnings Calculation Period” means each successive annual period during the Security
Period, the first commencing with the financial year terminating on 31st
December, 2007 up to the date when the Outstanding Indebtedness has been repaid in full to
the Bank;
	 
	 	 	“Excess Earnings” means, in relation to any Excess Earnings Calculation Period, the amount
(as conclusively calculated by the Bank) which is equal to the Total Income minus
(a) the Repayment Instalments due pursuant to clause 4.1 and interest on the Loan payable
pursuant to Clause 3 during such Excess Earnings Calculation Period, and (b) the Operating
Expenses paid during such Excess Earnings Calculation Period;
	 
	 	 	“Expenses” means the aggregate at any relevant time (to the extent that the same have not
been received or recovered by the Bank) of:

	 	(a)	 	all losses, liabilities, costs, charges, expenses, damages and outgoings of
whatever nature, (including, without limitation, Taxes, repair costs, registration fees
and insurance premiums, crew wages, repatriation expenses

5

 

	 	 	 	and seamen’s pension fund
dues, towage, pilot costs and harbour dues) suffered, incurred, charged to or paid or
committed to be paid by the Bank in connection with the exercise of the powers referred
to in or granted by any of the Security Documents or otherwise payable by the Borrowers
in accordance with the terms of any of the Security Documents;
	 
	 	(b)	 	the expenses referred to in Clause 10.2; and
	 
	 	(c)	 	interest on all such losses, liabilities, costs, charges, expenses, damages and
outgoings from, in the case of Expenses referred to in sub-paragraph (b) above, the
date on which such Expenses were demanded by the Bank from the Borrowers and in all
other cases, the date on which the same were suffered, incurred or paid by the Bank
until the date of receipt or recovery thereof (whether before or after judgement) at
the Default Rate (as conclusively certified by the Bank);

	 	 	“Final Maturity Date” means the date falling seventy eight (78) months from the Drawdown
Date;
	 
	 	 	“Flag State” in relation to each Vessel means Republic of Liberia or such other state or
territory proposed in writing by the Borrowers to the Bank and approved (at its sole
discretion) by the Bank, as being the “Flag State” of such Vessel for the purposes of the
Security Documents;
	 
	 	 	“Fortune Charterparty” means the time-charter in the NYPE Form, dated 13th March,
2007 entered into between Meldrew Marine Ltd., of Liberia (the “Original Owner”), as owner
and Messrs. Cosco Bulk Carrier, of Tianjin, P.R.C., as charterer, as amended by an addendum
thereto, whereby the Original Owner was substituted by the Fortuneship Borrower, as owner
under such Charterparty, providing for the employment of the Fortune Vessel for a period of
minimum 24 months to about 28
months at a daily hire of $16,350 including overtime (and shall include any addenda
thereto);
	 
	 	 	“General Assignment” in relation to each Vessel means the first priority deed of general
assignment of the Earnings, Insurances and any Requisition Compensation of such Vessel
collateral to the relevant Mortgage executed or (as the context may require) to be executed
by the Owner thereof in favour of the Bank, in form satisfactory to the Bank (together, the
“General Assignments”);
	 
	 	 	“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;
	 
	 	 	“Governmental Withholdings” means withholdings and any restrictions or conditions resulting
in any charge whatsoever imposed, either now or hereafter, by any sovereign state or by any
political sub-division or taxing authority of any sovereign state;
	 
	 	 	“Group” means the Borrowers, the Corporate Guarantor and their Subsidiares and any other
company whose ships are managed by the Approved Manager;
	 
	 	 	“Hedging Transaction” means a Transaction entered into between the Bank and the Borrowers
pursuant to the Master Agreement for the express purpose of hedging all or part of the
Borrowers’ interest rate risk pursuant to this Agreement;

6

 

	 	 	“IAS” means International Accounting Principles consistently applied;
	 
	 	 	“Indebtedness” means any obligation for the payment or repayment of money, whether as
principal or as surety, whether present or future, actual or contingent;
	 
	 	 	“Insurances” in relation to each Vessel means all policies and contracts of insurance (which
expression includes all entries of such Vessel 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 Owner thereof (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
Vessel and her Earnings or otherwise howsoever in connection with such Vessel and all
benefits thereof (including claims of whatsoever nature and return of premiums);
	 
	 	 	“Interest Payment Date” means in respect of the Loan or any part thereof in respect of which
a separate Interest Period is fixed, the last day of the relevant Interest Period and in
case of any Interest Period which is longer than six (6) months each day falling at six (6)
months intervals during such longer Interest Period and the last day of such longer Interest
Period;
	 
	 	 	“Interest Period” means in relation to the Loan or any part thereof, each period for the
calculation of interest in respect of the Loan or such part ascertained in accordance with
Clauses 3.2 and 3.3;
“International Accounting Principles” means generally accepted international accounting
principles, standards and practices;
	 
	 	 	“ISM Code” means the International Safety Management Code for the Safe Operation of Ships
and for Pollution Prevention constituted pursuant to Resolution A.741 (18) and A. 913 (22)
of the International Maritime Organisation and incorporated into the Safety of Life at Sea
Convention 1974 and includes any amendments or extensions thereto and any regulation issued
pursuant thereto;
	 
	 	 	“ISPS Code” means the International Ship and Port Security Code of the International
Maritime Organization and includes any amendments or extensions thereto and any regulation
issued pursuant thereto;
	 
	 	 	“ISSC” in relation to each Vessel means an International Ship Security Certificate issued in
respect of such Vessel pursuant to the ISPS Code;
	 
	 	 	“LIBOR” means in relation to any amount and for any period:

	 	(a)	 	the offered rate (if any) per annum for deposits in Dollars for such amount and
for such period which is the rate, for such period, appearing on the relevant page of
the Reuters Screen LIBOR01 at or about 11 a.m. London time on the Quotation Date (or,
if the Bank shall have made a determination pursuant to Clause 3.6 such later time (not
being later than 1 p.m. (London time) on the first day of such period) as the Bank may
determine) (and, for the purposes of this Agreement, “Reuters Screen LIBOR01” means the
display designated as “LIBOR01” on the Reuters Service or such other page as may
replace LIBOR01 on that service for the purpose of displaying rates comparable to that
rate or on such other service as may be nominated by the British Bankers’ Association
as the information vendor for the purpose of displaying the British Bankers’
Association Interest Settlement Rates for Dollars); and
	 
	 	(b)	 	if on such date no such rate is so displayed, LIBOR for such period shall be
the rate determined by the Bank in accordance with its usual practices to obtain
similar deposit(s) in Dollars on the basis of the rates quoted by the

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	 	 	 	Bank as the
Bank’s offered rate for deposits in Dollars in an amount approximately equal to the
amount in relation to which LIBOR is to be determined for a period equivalent to such
period in the London Interbank Market at or about 11:00 a.m. (London time) on the
second Banking Day before the first day of such period;

	 	 	“Loan” means the aggregate principal amount borrowed by the Borrowers in respect of the
Commitment or (as the context may require) the principal amount thereof owing to the Bank
under this Agreement at any relevant time;
	 
	 	 	“Major Casualty Amount” means three hundred thousand Dollars ($300,000) (or the equivalent
in any other currency);
	 
	 	 	“Management Agreement” in relation to each Vessel means each agreement made or to be made
between the Owner thereof and any Approved Manager providing (inter alia) for the Approved
Manager to manage such Vessel owned by such Owner (together, the “Management Agreements”);
	 
	 	 	“Margin” means one point ten per centum (1.10%) per annum;
“Market Value” in relation to each Vessel means the market value of such Vessel as
determined in accordance with Clause 8.4(b) and (d);
	 
	 	 	“Master Agreement” means the Master
Agreement (on the 1992 ISDA (Multicurrency —
Crossborder) form as modified (or any other form of master agreement relating to interest or
currency exchange transactions)) made or to be made between the Bank and the Borrowers, and
includes the Schedule thereto and all transactions from time to time entered into and
Confirmations from time to time exchanged under the Master Agreement and any amending,
supplementing or replacement agreements made from time to time;
	 
	 	 	“Master Agreement Liabilities” means, at any relevant time, all liabilities actual or
contingent, present or future, of the Borrowers to the Bank under the Master Agreement;
	 
	 	 	“Master Agreement Security Deed” means, in relation to the Master Agreement, the security
deed executed or (as the context may require) to be executed by the Borrowers in favour of
the Bank in relation to certain of the rights of the Borrowers under the Master Agreement in
form and substance satisfactory to the Bank;
	 
	 	 	“Material of Environmental Concern” 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;
	 
	 	 	“MOA” means in relation to the Fortune Vessel, the Memorandum of Agreement dated
26th April, 2007, entered into between the Seller, as seller, and the Fortuneship
Borrower, as buyer, in respect of the sale by such seller and the purchase by the
Fortuneship Borrower of the Fortune Vessel and any and all addenda thereto;
	 
	 	 	“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 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

8

 

	 	 	such Banking Day it shall end on the preceding Banking Day
and “months” and “monthly” shall be construed accordingly;
	 
	 	 	“Mortgage” in relation to each Vessel means the first preferred Liberian ship mortgage on
such Vessel to be executed by the Owner thereof in favour of the Bank in form satisfactory
to the Bank (together, the “Mortgages”);
	 
	 	 	“Mortgagees’ Insurances” means all polices and contracts of mortgagees’ interest insurance
(“MII”), mortgagees’ additional perils (oil pollution) insurance (“MAPI”) and any other
insurance from time to time taken out by the Bank, as mortgagee, in relation to the Vessels;
	 
	 	 	“Mortgaged Vessel” means, at any relevant time, either Vessel which is at such time subject
to a Mortgage and/or the Earnings, the Insurances and Requisition Compensation (each as
defined in the relevant Mortgage or, as the case may be, General Assignment) of which are
subject to an Encumbrance pursuant to the relevant
Security Documents and a Vessel shall for the purposes of this Agreement be deemed to be a
Mortgaged Vessel as from whichever shall be the earlier of (a) the Drawdown Date of the
relevant Advance for that Vessel and (b) the date that the Mortgage of that Vessel 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 Borrowers
pursuant to Clause 4.3 following the sale or Total Loss of such Vessel and (ii) the date on
which all monies owing under the Security Documents have been repaid in full;
	 
	 	 	“Operator” in relation to each Vessel means any person who is from time to time during the
Security Period concerned in the operation of such Vessel and falls within the definition of
“Company” set out in rule 1.1.2. of the ISM Code;
	 
	 	 	“Operating Expenses” in relation to each Vessel means the expenses for crewing, victualling,
insuring, maintenance (including drydocking and special survey cost and expenses), spares,
management and operation of such Vessel which are reasonably incurred for a vessel of the
size and type of such Vessel;
	 
	 	 	“Outstanding Indebtedness” means the aggregate of (a) the Loan and interest accrued and
accruing thereon, (b) the Expenses, (c) the Master Agreement Liabilities and all other sums
of any nature (together with all interest on any of those sums) which from time to time may
be payable by the Borrowers to the Bank pursuant to the Security Documents, whether actually
or contingently (d) any damages payable as a result of any breach by the Borrowers of any of
the Security Documents and (e) any damages or other sums payable as a result of any of the
obligations of the Borrowers under or pursuant to any of the Security Documents being
disclaimed by a liquidator or any other person, or, where the context permits, the amount
thereof for the time being outstanding;
	 
	 	 	“Owners” means the Borrowers;
	 
	 	 	“Permitted Encumbrance” means any Encumbrance in favour of the Bank created pursuant to the
Security Documents and Permitted Liens;
	 
	 	 	“Permitted Lien” means any lien on the Vessels (or either of them) for master’s, officers’
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 Major Casualty Amount;

9

 

	 	 	“Receiving Bank” means Deutsche Bank Trust Co. Americas (ex. Bankers Trust Company, New
York), SWIFT address BKTRUS33, or such other bank in New York as the Bank may notify to the
Borrowers;
	 
	 	 	“Registry” in relation to each Vessel means any registrar, commissioner or representative of
the Flag State of such Vessel who is duly authorised and empowered to register such Vessel,
the Owner’s title to such Vessel and the Mortgage under the laws of such Flag State through
such Registry;
	 
	 	 	“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 Approved Manager and the Corporate Guarantor and
their Subsidiaries;
	 
	 	 	“Relevant Ship” means each Vessel 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 Date” means each of the up to thirteen (13) consecutive repayment dates specified
in Clause 4.1 on which the Repayment Instalments shall be payable by the Borrowers to the
Bank;
	 
	 	 	“Repayment Instalment” means each instalment of the Loan which becomes due for repayment by
the Borrowers to the Bank on a Repayment Date pursuant to Clause 4.1;
	 
	 	 	“Requisition Compensation” in relation to each Vessel means all sums of money or other
compensation from time to time payable by reason of requisition of such Vessel otherwise
than by requisition for hire;
	 
	 	 	“Reserve Account” means an account opened or, as the case may be, to be opened in the name
of the Borrowers with the Bank into which the Excess Earnings shall be deposited in
accordance with Clause 8.9);
	 
	 	 	“Retention Account” means the interest bearing Dollar account of the Borrowers with the Bank
or any other branch of the Bank as the Bank may at its discretion require and designated
“Grand Esmeralda Inc. — Grand Fortuneship Inc. — Retention Account” and includes any other
account designated by the Bank to be a Retention Account for the purposes of this Agreement;
	 
	 	 	“Security Documents” means this Agreement, the Master Agreement and any Credit Support
Document, the Accounts Pledge Agreement, the Mortgages, the Corporate Guarantee, the General
Assignments, the Charterparty Assignments, the Approved Manager’s Undertaking, the Master
Agreement Security Deed and any and every other document as may have been or shall from time
to time after the date of this Agreement be executed to guarantee and/or to secure the whole
or any part of the Outstanding Indebtedness and/or any and all other obligations of the
Borrowers to the Bank pursuant to this Agreement (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 of the Borrowers, the Corporate Guarantor, the Approved Manager
and any other person (other than the Bank) who may at any time be a party to any of the
Security Documents;

10

 

	 	 	“Security Period” the period commencing on the date hereof and terminating on the date upon
which the Outstanding Indebtedness has been repaid in full to the Bank;
	 
	 	 	“Security Requirement” means the amount in Dollars (as certified by the Bank whose
certificate shall, in the absence of manifest error, be conclusive binding on the Borrowers)
which is at any relevant time one hundred twenty five percent (125%) of the aggregate amount
of the Loan and the Swap Exposure;
	 
	 	 	“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) which,
at any relevant time is the aggregate of:

	 	(a)	 	the aggregate Market Value of the Mortgaged Vessels as most recently determined
in accordance with Clause 8.4(b) and (d); and
	 
	 	(b)	 	the market value of any additional security for the time being actually
provided to the Bank pursuant to Clause 8.4(b) and (d);

	 	 	“Seller” means Meldrew Marine Limited, of Liberia;
	 
	 	 	“SMC” in relation to each Vessel means a safety management certificate issued in respect of
such Vessel in accordance with rule 13 of the Code;
	 
	 	 	“Subsidiary” of a person means any company or entity directly or indirectly controlled by
such person, and for this purpose “control” means either ownership of more than fifty
percent (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;
	 
	 	 	“Swap Exposure” means, as at any relevant date, the amount certified by the Bank to the
Borrowers to be the aggregate net amount in Dollars which would be payable by the Borrowers
to the Bank under (and calculated in accordance with) Section 6(e) (Payments on Early
Termination) of the Master Agreement if an Early Termination Date had occurred on the
relevant date in relation to all continuing Transactions entered into between the Borrowers
and the Bank;
	 
	 	 	“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 (except
taxes concerning the Bank and imposed on the net income of the Bank) and “Taxation” shall be
construed accordingly;
	 
	 	 	“Total Income” in relation to a Excess Earnings Calculation Period means the total income of
the Vessels for such Excess Earnings Calculation Period less brokerage fees and commissions
and withholding taxes (if any);
	 
	 	 	“Total Loss” in relation to a Vessel means:

	 	(a)	 	actual, constructive, compromised or arranged total loss of such Vessel; or
	 
	 	(b)	 	the Compulsory Acquisition of such Vessel; or
	 
	 	(c)	 	the hijacking, theft, condemnation, capture, seizure, arrest, detention or
confiscation of such Vessel (other than where the same amounts to the Compulsory
Acquisition of such Vessel) by any Government Entity, or by persons acting or
purporting to act on behalf of any Government Entity, unless such Vessel be released
and restored to the Owner thereof from such hijacking, theft, condemnation, capture,
seizure, arrest, detention or confiscation within thirty days after the occurrence
thereof;

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	 	 	“Transaction” means a transaction entered into between the Bank and the Borrowers governed
by the Master Agreement; and
	 
	 	 	“Vessels” means:

	 	(a)	 	the m/v “GRAND ESMERALDA” of approximately 36,725 gt and 23,310 nt, built in
1990 in Japan by TSU Works NKK in 1990, lawfully registered under the laws and flag of
the Republic of Liberia in the Ships’ Register of the Port of Monrovia in the ownership
of the Esmeralda Borrower and having Official No. 12671, IMO No. 8920062, Call Sign
A8GX9 and propelled by one oil internal combustion engine of 17,800 HP together with
all her boats, engines, machinery tackle outfit spare gear fuel consumable and other
stores belongings and appurtenances whether on board or ashore and whether now owned or
hereafter acquired and all the additions, improvements and replacements in or on the
above described vessel (the “Esmeralda Vessel”); and
	 
	 	(b)	 	the m/v “FORTUNE QUEEN” of approximately 22,361 gt and 12,680 nt, built in 1984
in Japan by Kawasaki H. I. Ltd, lawfully registered under the laws and flag of the
Republic of Liberia in the Ships’ Register of the Port of Monrovia and having Official
No. 10146, Call Sign ELRH3 and propelled by one oil internal combustion engine of 5,285
KW together with all her boats, engines, machinery tackle outfit spare gear fuel
consumable and other stores belongings and appurtenances whether on board or ashore and
whether now owned or hereafter acquired and all the additions, improvements and
replacements in or on the above described vessel, purchased by the Fortuneship Borrower
pursuant to the MOA and which, upon Delivery to the Fortuneship Borrower, shall be
re-registered under the laws and flag of the Republic of Liberia in the ownership of
the Fortuneship Borrower with the new name “GRAND FORTUNE” (the “Fortune Vessel”),
	 
	 	 	 	(together, the “Vessels” and “Vessel” means either of them as the context may
require).

	1.3	 	Interpretation In this Agreement:

	 	(a)	 	Clause headings and the table of contents are inserted for convenience of
reference only and shall be ignored in the interpretation of this Agreement;
	 
	 	(b)	 	subject to any specific provision of this Agreement or of any assignment and/or
participation or syndication agreement of any nature whatsoever, reference to each of
the parties hereto and to the other Security Documents shall be deemed to be reference
to and/or to include, as appropriate, their respective successors and permitted
assigns;
	 
	 	(c)	 	reference to a person shall be construed as including reference to an
individual, firm, company, corporation, unincorporated body of persons or any State or
any agency thereof;
	 
	 	(d)	 	where the context so admits, words in the singular include the plural and vice
versa;
	 
	 	(e)	 	the words “including” and “in particular” shall not be construed as limiting
the generality of any foregoing words;
	 
	 	(f)	 	references to (or to any specified provisions of) this Agreement and all
documents referred to in this Agreement shall be construed as references to

12

 

	 	 	 	this Agreement, that provision or that document as are in force for the time being
and as are amended and/or supplemented from time to time;
	 
	 	(g)	 	reference to this Agreement includes all the terms of this Agreement and any
Schedules, Annexes or Appendices to this Agreement, which form an integral part of
same;
	 
	 	(h)	 	reference to Clauses, Sub-Clauses and Schedules are to Clauses, Sub-Clauses and
Schedules in this Agreement;
	 
	 	(i)	 	reference to the opinion of the Bank or a determination or acceptance by the
Bank or to documents, acts, or persons acceptable or satisfactory to the Bank or the
like shall be construed as reference to opinion, determination, acceptance or
satisfaction of the Bank at the sole discretion of the Bank and such opinion,
determination, acceptance or satisfaction of the Bank shall be conclusive and binding
on the Borrowers;
	 
	 	(j)	 	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;
	 
	 	(k)	 	references to any person include such person’s assignees and successors in
title;
	 
	 	(l)	 	reference 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;
	 
	 	(m)	 	all obligations imposed on, or assumed by each of the Borrowers and the
Corporate Guarantor are joint and several even if not so expressed; and
	 
	 	(n)	 	references to any enactment shall be deemed to include references to such
enactment as re-enacted, amended or extended.

	2.	 	THE LOAN 
	 
	2.1	 	Commitment to Lend The Bank, relying upon (inter alia) each of the representations
and warranties set forth in Clause 6 and in each of the other Security Documents, agrees to
lend to the Borrowers, as joint and several Borrowers, by one (1) Advance and upon and subject
to the terms of this Agreement, the principal sum of Thirty two million Dollars ($32,000,000).
	 
	2.2	 	Drawdown Notice and Commitment to Borrow Subject to the terms and conditions of this
Agreement, the Commitment shall be advanced to the Borrowers following receipt by the Bank
from the Borrowers of a Drawdown Notice not later than 10 a.m. (London time) on the second
Banking Day before the date on which the drawdown is intended to be made. A Drawdown Notice
shall be effective on actual receipt thereof by the Bank and, once given, shall, subject as
provided in Clause 3.6, be irrevocable.
	 
	2.3	 	Number and Purpose of Advances Agreed The Commitment shall be advanced to the
Borrowers in one (1) Advance and shall be used for the purpose of set forth in Clause 1.1.

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	2.4	 	Disbursement Upon receipt of a Drawdown Notice complying with the terms of this
Agreement the Bank shall, subject to the provisions of Clause 7, on the date specified in such
Drawdown Notice, make the Commitment available to the Borrowers.
	 
	2.5	 	Application of Proceeds Without prejudice to the Borrowers’ obligations under Clause
8.7(a), the Bank shall have no responsibility for the application of the proceeds of the Loan
(or any part thereof) by the Borrowers.
	 
	2.6	 	Termination Date of the Commitment Any part of the Commitment undrawn and
uncancelled at the end of the Availability Period relative thereto shall thereupon be
automatically cancelled.
	 
	2.7	 	Evidence It is hereby expressly agreed and admitted by the Borrowers that abstracts
or photocopies of the books of the Bank as well as statements of accounts or a certificate
signed by an authorised officer of the Bank shall be conclusive binding and full evidence on
the Borrowers as to the existence and/or the amount of the at any time Outstanding
Indebtedness, of any amount due under this Agreement and/or the Master Agreement, of the
applicable interest rate or Default Rate or any other rate provided for or referred to in this
Agreement and/or the Master Agreement, the Interest Period, the value of additional securities
under Clause 8.4(c), the payment or non payment of any amount and/or the occurrence of any
other Event of Default. Nevertheless, enforcement procedures or any other Court or
out-of-court procedure can be commenced by the Bank on the basis of the above mentioned means
of evidence including written statements or certificates of the Bank.
	 
	2.8	 	No security or lien from other person None of the Borrowers has
taken or received, and each of the Borrowers undertake that until all moneys, obligations and
liabilities due, owing or incurred by the Borrowers under this Agreement and the Security
Documents have been paid in full, it will not take or receive, any security or lien from any
other person liable or for any liability whatsoever.
	 
	2.9	 	Joint and Several Liability of the Borrowers

	 	(a)	 	The liability of each of the Borrowers hereunder shall in all cases, whether so
expressed to be or not, be joint and several and each representation and warranty and
each covenant and agreement made or given by the Borrowers is made or given by them all
jointly and severally.
	 
	 	(b)	 	The Bank may at its discretion accept orders, instructions, notices or advices
from any of the Borrowers hereunder (which Borrower will be deemed to act on behalf of
all the Borrowers and express authority is given to it by this Clause to act on this
way) and shall ignore any subsequent conflicting instructions, notices or advices from
any of the other Borrowers (unless they may be deemed at the discretion of the Bank as
proper revocation or amendments of earlier instructions) and may reach any agreement in
connection with this Agreement or any of the other Security Documents with any of the
Borrowers which shall be binding on all the Borrowers.
	 
	 	(c)	 	None of the Borrowers shall be exonerated and its liability hereunder shall not
be lessened or impaired by any time, indulgence or relief being given by the Bank to
any other Borrower or any other person or by any person to the Borrowers, by any
amendment of or supplement to this Agreement or any of the other Security Documents
or any other document, by the taking, variation, compromise, renewal or release of
or refusal or neglect to perfect or enforce any right, remedies or securities
against any of the Borrowers or any other person or by anything done or omitted
which but for this provision might operate to exonerate such Borrower (or might be
interpreted as such).

14

 

	 	(d)	 	The obligations of any of the Borrowers hereunder shall not be affected by any
legal limitation, disability, incapacity or other circumstances relating to any other
Borrower or any other person, whether or not known to the Bank, by any invalidity in or
irregularity or unenforceability of the obligations of any other Borrower or any other
person under this Agreement or any of the other Security Documents or otherwise or by
any change in the constitution of, or any amalgamation or reconstruction of any other
Borrower, the Bank or any other person.
	 
	 	(e)	 	Each of the Borrowers hereby waive all rights such Borrower may have of first
requiring the Bank to proceed against or enforce any right or security of, or claim
payment from any other Borrower or any other person.

	2.10	 	Non competition of the Borrowers with the Bank

	 	(a)	 	Until all moneys, obligations and liabilities due, owing or incurred by the
Borrowers to the Bank under this Agreement and the other Security Documents have been
paid or discharged in full, each Borrower agrees not to exercise or enforce any rights
of subrogation or indemnity or any other right which otherwise it has against any other
Borrower and agrees not to claim any set-off or counterclaim against any other Borrower
or to claim or prove in competition with the Bank in the event of bankruptcy,
insolvency or liquidation of any other Borrower or have any benefit of or any share in
any guarantee or security now or hereafter held by the Bank.
	 
	 	(f)	 	None of the Borrowers has taken or received, and each Borrower undertakes that
until all moneys, obligations and liabilities due, owing or incurred by the Borrowers
under this Agreement and the Security Documents have been paid in full, it will not
take or receive, any security or lien from any other Borrower in respect of borrowing
as co-borrower jointly and severally liable or for any liability whatsoever.

	2.11	 	Interest to co-borrow The Borrowers have an interest in borrowing jointly and
severally in that they are companies which belong to the same group of companies and have
close financial co-operation and mutual assistance and in that the Commitment would not have
been available to each one of the Borrowers separately.
	 
	3.	 	INTEREST — SWAP TRANSACTIONS
	 
	3.1	 	Normal Interest Rate The Borrowers shall pay interest on the Loan (or as the case
may be, each portion thereof to which a different Interest Period relates) in respect of each
Interest Period related thereto on each Interest Payment Date and in case of any Interest
Period longer than six (6) months, interest shall be payable semi-annually in arrears and on
the last day of such Interest Period. The interest rate for the calculation of interest shall
be the rate per annum determined by the Bank to be the aggregate of (i) the Margin and (ii)
LIBOR for such Interest Period.
	 
	3.2	 	Selection of Interest Period The Borrowers may by notice received by the Bank not
later than 10 a.m. (London time) on the second Banking Day before the beginning of each
Interest Period specify (subject to Clause 3.3 below) whether such Interest Period shall have
a duration of one (1), three (3) or six (6) months (or such other period as may be requested
by the Borrowers and as the Bank, in its sole discretion, may agree to).
	 
	3.3	 	Duration of Interest Period Every Interest Period shall, subject to market
availability to be conclusively determined by the Bank, be of the duration specified by the
Borrowers pursuant to Clause 3.2 but so that:

15

 

	 	(a)	 	the initial Interest Period in respect of the Loan will commence on the
Drawdown Date and each subsequent Interest Period will commence forthwith upon the
expiry of the previous Interest Period;
	 
	 	(b)	 	if any Interest Period would otherwise overrun one or more Repayment Dates,
then, in the case of the last Repayment Date, such Interest Period shall end on such
Repayment Date, and in the case of any other Repayment Date or Dates the Loan shall be
divided into parts so that there is one part equal to the amount of the Repayment
Instalment due on each Repayment Date falling during that Interest Period and having an
Interest Period ending on the relevant Repayment Date and another part equal to the
amount of the balance of the Loan having an Interest Period determined in accordance
with Clause 3.2 and the other provisions of this Clause 3.3 and the expression
“Interest Period in respect of the Loan” when used in this Agreement refers to the
Interest Period in respect of the balance of the Loan;
	 
	 	(c)	 	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 unless another period shall be agreed between
the Bank and the Borrowers provided, always, that such period (whether of three
(3) months or of different duration) shall comply with this Clause 3.3; and
	 
	 	(d)	 	if the Bank determines that funds for the duration of an Interest Period
specified by the Borrowers in accordance with Clause 3.2 are not readily available,
then that Interest Period shall have such duration as the Bank, in consultation with
the Borrowers, may determine.

	3.4	 	Default Interest If the Borrowers fail to pay any sum (including, without
limitation, any sum payable pursuant to this Clause 3.4) on its due date for payment under any
of the Security Documents, the Borrowers shall pay interest on such sum from the due date up
to the date of actual payment (as well after as before judgement) at the 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 three (3)
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
(i) two per cent (2%), per annum, (ii) the Margin and (iii) costs of funds to the Bank as
conclusively determined by the Bank save for manifest error. 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. In case that a
payment is
made in default for any amount, the Interest Periods will be determined by the Bank at its
discretion including the amounts for which there is no default, even if the Bank has not
(yet) exercised its rights pursuant to Clause 9.2(b) of the Agreement. Interest payable by
the Borrowers as aforesaid shall be compounded semi-annually (or if the period fixed by the
Bank is longer, at the end of such longer period) and shall be payable on demand.
	 
	3.5	 	Notification of Interest 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 without prejudice to the right of the Bank to make determinations at its
sole discretion. However, omission of the Bank to make such notification (without the
application of the Borrowers) will not constitute and will not be interpreted as if to
constitute a breach of obligation of the Bank except in case of willful misconduct.

16

 

	3.6	 	Market disruption — Non Availability

	 	(a)	 	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) (i) that adequate and fair means do not exist for ascertaining
LIBOR in respect of Dollars during said Interest Period or (ii) that deposits in
Dollars are not available to the Bank in the London Interbank Market in the ordinary
course of business in sufficient amounts for any Interest Period or (iii) that by
reason of circumstances affecting the London Interbank Market generally it is
impracticable for the Bank to advance the Commitment (or any part thereof) or fund or
continue to fund the Loan during any Interest Period or (iv) that LIBOR for that
Interest Period will not adequately reflect the cost of funding of the Loan for that
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.
	 
	 	(b)	 	During the period of ten (10) days after any Determination Notice has been
given by the Bank under Clause 3.6(a) the Bank and the Borrowers shall negotiate in
good faith (but without incurring any legal obligations) with a view to arriving to an
acceptable alternative basis (the “Substitute Basis”), for maintaining the Loan,
failing which the Borrowers shall promptly, on first demand or within the time limit
which may be determined by the Bank, prepay the Loan together with accrued interest
thereon to the date of prepayment (calculated at the rate or rates most lately
applicable to the Loan) and all other sums payable by the Borrowers under the Security
Documents and the Commitment shall be reduced to zero. In such case the Borrowers
shall also reimburse to the Bank such amount as may be determined by the Bank to be
necessary to compensate it for the increased cost (if any) of maintaining the Loan
during the period of negotiation referred to in this Clause 3.6 until such prepayment.
In case the Bank agrees to a Substitute Basis for funding the Loan the Bank shall
certify such Substitute Basis to the Borrowers. The Substitute Basis may (without
limitation) include alternative interest period(s), alternative currencies or
alternative rates of interest but shall include a margin above the cost of funds to the
Bank equivalent to the Margin. Each Substitute
Basis so certified shall be binding upon the Borrowers and shall take effect in
accordance with its terms from the date specified in the Determination Notice until
such time as the Bank notifies the Borrowers that none of the circumstances
specified in clause 3.6(a) continues to exist whereupon the normal interest rate
fixing provisions of this Agreement shall apply.

	3.7	 	Swap Transactions

	 	(a)	 	If, at any time during the Security Period, the Borrowers wish to enter into
swap Transactions so as to (inter alia) hedge all or any part of its exposure under
this Agreement to interest rate fluctuations, they shall advise the Bank in writing.
	 
	 	(b)	 	Any such swap transaction shall be concluded with the Bank under the Master
Agreement provided, however, that no such swap transaction shall be concluded
unless the Bank first agrees to it in writing. If and when any such swap transaction
has been concluded, it shall constitute a Transaction, and the Borrowers shall sign a
Confirmation with the Bank.

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	4.	 	REPAYMENT — PREPAYMENT
	 
	4.1	 	Repayment
	 
	 	 	The Borrowers shall and it is expressly undertaken by the Borrowers to repay the Loan by:

	 	(a)	 	thirteen (13) consecutive semi-annual repayment instalments (the “Repayment
Instalments”), each to be repaid on each of the Repayment Dates so that the first be
repaid within six (6) months from the Drawdown Date and each of the subsequent ones
consecutively falling due for payment on each of the dates falling six (6) months after
the immediately proceeding Repayment Date with the last (the 13th) of such
Repayment Instalments falling due for payment on the Final Maturity Date; subject to
the provisions of this Agreement, the amount of each such Repayment Instalment shall be
as follows:

	 	(i)	 	1st to 2nd (both incl.) of such Repayment
Instalments, $4,000,000 (Four million Dollars) each;
	 
	 	(ii)	 	3rd to 4th (both incl.) of such Repayment
Instalments, $3,800,000 (Three million eight hundred thousand Dollars) each;
	 
	 	(iii)	 	5th to 6th (both incl.) of such
Repayment Instalments, $2,500,000 (Two million five hundred thousand Dollars)
each; and
	 
	 	(iv)	 	7th to 13th (both incl.) of such
Repayment Instalments, $1,125,000 (One million one hundred twenty five thousand
Dollars) each; and

	 	(b)	 	a balloon payment of Three million five hundred and twenty five thousand
Dollars ($3,525,000) (such balloon payment, the “Balloon Instalment”), which shall be
repayable together with the last (the 13th) Repayment Instalment on the
Final Maturity Date;

	 	 	provided, always, that (a) if the last Repayment Date would otherwise fall after the
Final Maturity Date, the last Repayment Date shall be the Final Maturity Date, (b) there
shall be no Repayment Dates after the Final Maturity Date (c) in the event that the
Commitment is not drawn down in full, the amount of each of the Repayment Instalments shall
be proportionally reduced and (d) on the Final Maturity Date the Borrowers shall also pay to
the Bank any and all other monies then payable and outstanding under this Agreement and the
other Security Documents.
	 
	4.2	 	Voluntary Prepayment
	 
	 	 	Prepayment The Borrowers shall have the right, upon giving the Bank not less than
ten (10) Banking Days’ notice in writing, to prepay part or all of the Loan in each case
together with all unpaid interest accrued thereon and all other sums of money whatsoever due
and owing from the Borrowers to the Bank hereunder or pursuant to the other Security
Documents and all interest accrued thereon, provided that:

	 	(a)	 	the giving of such notice by the Borrowers will irrevocably commit the
Borrowers to prepay such amount as stated in such notice;
	 
	 	(b)	 	such prepayment may take place only on the last day of an Interest Period in
respect of the Loan provided, however, that if the Borrowers shall request
consent to make such prepayment on another day and the Bank shall accede to such
request (it being in the sole discretion of the Bank to decide whether or

18

 

	 	 	 	not to do so)
the Borrowers will pay in addition to the amount to be prepaid, any such sum as may be
payable to the Bank pursuant to Clause 10.1;
	 
	 	(c)	 	each such prepayment shall be equal to $500,000 (Five hundred thousand Dollars)
or a whole multiple thereof or the balance of the Loan, provided however, that if the
balance of the Loan after such prepayment is to be less than $500,000 then the
Borrowers shall be obliged to repay the Loan in full;
	 
	 	(d)	 	any prepayment of less than the whole of the Loan will be applied towards
payment of the outstanding Repayment Instalments in inverse order of their due dates of
payment;
	 
	 	(e)	 	every notice of prepayment shall be effective only on actual receipt (including
by fax) by the Bank, shall be irrevocable and shall oblige the Borrowers to make such
prepayment on the date specified;
	 
	 	(f)	 	no amount prepaid may be re-borrowed; and
	 
	 	(g)	 	the Borrowers may not prepay the Loan or any part thereof save as expressly
provided in this Agreement.

	 	 	Prepayment indemnity If the Borrowers shall, subject always to Clause 4.2(a), make
a prepayment on a Banking Day other than the last day of an Interest Period in respect of
the whole of the Loan, it shall, in addition to the amount prepaid and accrued interest, pay
to the Bank any amount which the Bank may certify is necessary to compensate the Bank for
any Break Costs incurred by the Bank as a result of the making of the prepayment in
question.

	4.3	 	Compulsory Prepayment in case of Total Loss or sale of a Mortgaged Vessel

	 	(a)	 	On either Mortgaged Vessel becoming a Total Loss or suffering damage or being
involved in an incident which in the reasonable opinion of the Bank may result in such
Vessel being subsequently determined to be a Total Loss on or after the Drawdown Date,
the obligation of the Bank to advance the Commitment or any part thereof shall
immediately cease and the Commitment shall be reduced to zero. The Borrowers shall
prepay the Required Amount without penalty, premium or prepayment fee, the latest on
the date one hundred and eighty (180) days after that on which the incident which may
result in such Vessel being subsequently determined to be a Total Loss occurred or, if
earlier, on the date upon which the insurance proceeds in respect of such Total Loss
are or Requisition Compensation is received by the Borrowers (or the Bank pursuant to
the Security Documents).
	 
	 	 	 	For the purpose of this Agreement a Total Loss shall be deemed to have occurred:

	 	(i)	 	in the case of an actual total loss of a Vessel, at the actual
date and time such Vessel was lost but in the event of the date of the loss
being unknown then the actual total loss shall be deemed to have occurred on
the date on which such Vessel was last reported;
	 
	 	(ii)	 	in the case of a constructive total loss of a Vessel, at the
date and time notice of abandonment of such Vessel is given to the insurers of
such Vessel for the time being (provided a claim for such Total Loss is
admitted by such insurers) or, if such insurers do not admit such a claim, or,
in the event that such notice of abandonment is not given by the Owner of such
Vessel to the insurers of such Vessel, at the date and

19

 

	 	 	 	time on which occurred
the incident which may result, in the reasonable opinion of the Bank, in such
Vessel being subsequently determined to be a Total Loss;
	 
	 	(iii)	 	in the case of a compromised or arranged total loss shall be
deemed to have occurred on the date on which occurred the incident which may
result, in the reasonable opinion of the Bank, in the relevant Vessel being
subsequently determined to be a Total Loss;
	 
	 	(iv)	 	in the case of Compulsory Acquisition, on the date upon which
the relevant requisition of title or other compulsory acquisition occurs; and
	 
	 	(v)	 	in the case of hijacking, theft, condemnation, capture,
seizure, arrest, detention or confiscation of a Vessel (other than where the
same amounts to Compulsory Acquisition of a Vessel) by any Government Entity,
or by persons purporting to act on behalf of any Government Entity, which
deprives the Owner thereof of the use of such Vessel for more than thirty days,
upon the expiry of the period of thirty days after the date upon which the
relevant hijacking, theft, condemnation, capture, seizure, arrest, detention or
confiscation occurred.

	 	(b)	 	Immediately upon the sale of either Vessel to a third party on terms of a sale
at arms length terms with the prior written consent of the Bank the Borrowers
shall prepay to the Bank the Required Amount without penalty, premium or prepayment
fee.
	 
	 	 	 	and for the purpose of this Clause 4.3 “Required Amount” in relation to
either Mortgaged Vessel, means such part of the Loan as the Bank may, in its
absolute discretion, consider appropriate to reduce the Loan and provided,
further, that if the relevant Vessel so lost or sold or otherwise disposed of is
the last Mortgaged Vessel, then the full amount of the insurance or, as the case may
be, the sale proceeds shall apply against full repayment of the Outstanding
Indebtedness and additionally the Borrowers shall pay to the Bank the balance (if
any) of the Outstanding Indebtedness.
	 
	 	(c)	 	Any amount prepaid in accordance with Clauses 4.3(a) and 4.3(b) which is
less than the whole of the Loan will be applied by the Bank in or towards reduction of
the Repayment Instalments and/or the Balloon Instalment in such manner as the Bank may
in its sole discretion deem appropriate.

	4.4	 	Amounts payable on prepayment Any prepayment of all or part of the Loan under
this Agreement shall be made together with:
	 
	 	 	accrued interest on the Loan to the date of such prepayment (calculated, in the case of a
prepayment pursuant to Clause 3.6(b) at a rate equal to the aggregate of (i) the Margin and
(ii) the cost to the Bank of funding the Loan);

	 	(a)	 	in case the Borrowers requests the prepayment of the full amount of the Loan
and at the relevant time there are any Transaction(s) outstanding under the Master
Agreement, the Borrowers shall pay in addition to the above any and all amounts then
outstanding under such Transactions; and
	 
	 	(b)	 	any additional amount payable under Clause 5.3; and
	 
	 	(c)	 	all others sums due and payable by the Borrowers to the Bank under this
Agreement, the Master Agreement and any of the other Security Documents

20

 

	 	 	 	including,
without limitation, any accrued commitment commission payable under this Agreement and
any amounts payable under Clause 10.

	4.5	 	Master Agreement, Repayments and Prepayments

	 	(a)	 	Pursuant to a Master Agreement, the Bank and the Borrowers have entered, and/or
may during the Security Period enter, into one or more Transactions (pursuant to Clause
3.7), the terms and conditions of each of which shall be specified in a Confirmation
sent by the Bank to the Borrowers.
	 
	 	(b)	 	Notwithstanding any provision of the Master Agreement to the contrary, in the
case of a prepayment of all or part of the Loan (including, without limitation, upon a
Total Loss or sale in accordance with clause 4.3), then subject to Clause 4.5(c) 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
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 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 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.
	 
	 	(c)	 	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.
	 
	 	(d)	 	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 4.5.
	 
	 	(e)	 	Notwithstanding any provision of the Master 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 4.5(f) 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 Agreement or otherwise) to amend,
supplement, cancel, net out, terminate,

21

 

	 	 	 	liquidate, transfer or assign all or any part
of the rights, benefits and obligations created by such Transaction and/or the Master
Agreement and/or to obtain or re-establish any hedge or related trading position in any
manner and with any person the Bank in its absolute discretion may determine.
	 
	 	(f)	 	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 Agreement and/or otherwise.
	 
	 	(g)	 	Without prejudice to or limitation of the obligations of the Borrowers under
clause 4.5(c), in the event that the Bank exercises any of its rights under clauses 4.5
(b), 4.5(c), 4.5(e) or 4.5(f) and such exercise results in all or part of a Transaction
being terminated such termination shall be treated under the Master Agreement in the
same manner as if it were a Terminated Transaction (as defined in section 14 of the
Master Agreement) effected by the Bank after an Event of Default (as so defined in that
section 14) by the Borrowers and, accordingly, the Bank shall be 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 Agreement.
	 
	 	(h)	 	No Transaction will be entered into without the specific consent of the
Borrowers.

	5.	 	PAYMENTS, TAXES, LOAN ACCOUNT AND COMPUTATION
	 
	5.1	 	Payments — No set-off or Counterclaims

	 	(a)	 	The Borrowers jointly and severally acknowledge that, in performing
its obligations under this Agreement the Bank will be incurring liabilities to third
parties in relation to the funding of amounts to the Borrowers, such liabilities
matching the liabilities of the Borrowers to the Bank and that it is reasonable for the
Bank to be entitled to receive payments from the Borrowers gross on the due date in
order that the Bank is put in a position to perform its matching obligations to the
relevant third parties. Accordingly, all payments to be made by the Borrowers under
this Agreement and/or any of the other Security Documents shall be made in full,
without any set-off or counterclaim whatsoever and, subject as provided in Clause 5.3,
free and clear of any deductions or withholdings or Governmental Withholdings
whatsoever, as follows:

	 	(i)	 	in Dollars, not later than 10.00 a.m. (London time) on the
Banking Day (in Athens and New York City) on which the relevant payment is due
under the terms of this Agreement; and

22

 

	 	(ii)	 	to the Receiving Bank for the account of the Bank “GRAND
ESMERALDA INC. — Loan Agreement”, provided, however, that the Bank
shall have the right to change the place of account for payment, upon eight (8)
Banking Days’ prior written notice to the Borrowers.

	 	(b)	 	If at any time it shall become unlawful or impracticable for the Borrowers (or
either of them) to make payment under this Agreement to the relevant account or bank
referred to in Clause 5.1(a), the Borrowers may request and the Bank may agree to
alternative arrangements for the payment of the amounts due by the Borrowers to the
Bank under this Agreement or the other Security Documents.

	5.2	 	Payments on Banking Days All payments due shall be made on a Banking Day. If the
due date for payment falls on a day which is not a Banking Day, that payment or
payments due shall be made on 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.
	 
	5.3	 	Grossing-up for Taxes
	 
	 	 	If at any time any law, regulation, regulatory requirement or requirement of any
governmental authority, monetary agency, central bank or the like compels the Borrowers to
make payment subject to Governmental Withholdings, or any other deduction or withholding,
the Borrowers shall pay to the Bank such additional amounts as may be necessary to ensure
that there will be received by the Bank a net amount equal to the full amount which would
have been received had payment not been made subject to such Governmental Withholdings or
other deduction or withholding. The Borrowers shall indemnify the Bank against any losses
or costs incurred by the Bank 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, not later than thirty (30) days after each
deduction, withholding or payment of any Governmental Withholdings, forward to the Bank
official receipts and any other documentary receipts and any other documentary evidence
reasonably required by the Bank in respect of the payment made or to be made of any
deduction or withholding or Governmental Withholding. The obligations of the Borrowers
under this provision shall, subject to applicable law, remain in force notwithstanding the
repayment of the Loan and the payment of all interest due thereon pursuant to the provisions
of this Agreement.

	 	(b)	 	For the avoidance of doubt, Clause 5.3(a) does not apply in respect of sums due
from the Borrowers to the Bank under or in connection with the Master Agreement as to
which sums the provisions of section 2(d) (Deduction or Withholding for Tax) of the
Master Agreement shall apply.

	5.4	 	Loan Account All sums advanced by the Bank to the Borrowers under this Agreement and
all interest accrued thereon and all other amounts due under this Agreement and the Master
Agreement from time to time and all repayments and/or payments thereof shall be debited and
credited respectively to a separate loan account maintained by the Bank in accordance with its
usual practices in the name of the Borrowers. The Bank may, however, in accordance with its
usual practices or for its accounting needs, maintain more than one account, consolidate or
separate them but all such accounts shall be considered parts of one single loan account
maintained under this Agreement and/or the Master Agreement. In case that a Mortgage in the
form of Account Current is granted as security under this Agreement, the account(s) referred
to in this Clause shall be the Account Current referred to in such Mortgage.

23

 

	5.5	 	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.
	 
	5.6	 	Computation All interest and other payments payable by reference to a rate per annum
under this Agreement shall accrue from day to day and be calculated on the basis of actual
days elapsed and a 360 day year.
	 
	6.	 	REPRESENTATIONS AND WARRANTIES
	 
	6.1	 	The Borrowers hereby jointly and severally represent and warrant to the Bank that:
	 
	 	 	Continuing representations and warranties

	 	(a)	 	Due Incorporation/Valid Existence each of the Borrowers and each of
the other corporate Security Parties is duly incorporated and validly existing and in
good standing under the laws of their respective countries of incorporation as limited
liability companies, and have power to own their respective property and assets, to
carry on their respective business as the same are now being lawfully conducted and to
purchase, own, finance and operate vessels, or, as the case may be, manage vessels, as
well as to undertake the obligations which they have undertaken or shall undertake
pursuant to the Security Documents;
	 
	 	(b)	 	Due Corporate Authority each of the Borrowers has power to execute,
deliver and perform its obligations under the Security Documents 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, 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 the Borrowers (or either of them) to borrow will be exceeded as a result of
borrowing the Loan;
	 
	 	(c)	 	Litigation no litigation, arbitration, tax claim or administrative
proceeding involving a potential liability of the Borrowers (or either of them) or any
other Security Party in excess of $300,000 or equivalent thereof in any other currency
is current or pending or (to its or its officers’ knowledge) threatened against the
Borrowers (or either of them) or any other Security Party;
	 
	 	(d)	 	No conflict with other obligations the execution and delivery of, the
performance of its obligations under, and compliance with the provisions of, the
Security Documents by the relevant Security Parties will not (i) contravene any
existing applicable law, statute, rule or regulation or any judgment, decree or permit
to which either of the Borrowers or any other Security Party is subject, (ii) conflict
with, or result in any breach of any of the terms of, or constitute a default under,
any agreement or other instrument to which either of the Borrowers or any other
Security Party is a party or is subject to or by which it or any of its property is
bound, (iii) contravene or conflict with any provision of the memorandum and articles
of association/articles of incorporation/by-laws/statutes or other constitutional
documents of either of the Borrowers or any other Security Party or (iv) result in the
creation or imposition of or oblige the Borrowers (or either of them) 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 either of them) or
any other Security Party;

24

 

	 	(e)	 	Financial Condition to the knowledge of the Directors/Officers of the
Borrowers, the financial condition of the Borrowers (or either of them) and of the
other Security Parties has not suffered any material deterioration since that condition
was last disclosed to the Bank;
	 
	 	(f)	 	No Immunity neither the Borrowers (or either of them) nor any other
Security Party nor any of their respective assets are 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);
	 
	 	(g)	 	Shipping Company each of the Borrowers and the Corporate Guarantor is
a shipping company involved in the owning or, as the case may be, managing of ships
engaged in international voyages and earning profits in free foreign currency;
	 
	 	(h)	 	Licences/Authorisation 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 Security Documents or the performance by each
Security Party of its obligations under 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 so far as each of the Borrowers is aware;
	 
	 	(i)	 	Perfected Securities when duly executed, the Security Documents will
create a perfected security interest in favour of the Bank, with the intended priority,
in or over the assets and revenues intended to be covered, valid and enforceable
against each of the Borrowers, and the other Security Parties;
	 
	 	(j)	 	No Notarisation/Filing/Recording save for the registration of the
Mortgage in the Registry, it is not necessary to ensure the legality, validity,
enforceability or admissibility in evidence of this Agreement or any of the other
Security Documents that it or they or any other instrument be notarised, filed,
recorded, registered or enrolled in any court, public office or elsewhere or that any
stamp, registration or similar tax or charge be paid on or in relation to this
Agreement or the other Security Documents;
	 
	 	(k)	 	Validity and Binding effect the Security Documents constitute (or upon
their execution — and in the case of the Mortgage upon its registration at the Registry
 — will constitute) valid and legally binding obligations of the relevant Security
Parties enforceable against each of the Borrowers and the other Security Parties in
accordance with their respective terms and that there are no other agreements or
arrangements which may adversely affect or conflict with the Security Documents or the
security thereby created; and
	 
	 	(l)	 	Valid Choice of Law the choice of law agreed to govern this Agreement
and/or any other Security Document and the submission to the jurisdiction of the courts
agreed in each of the Security Documents are or will be, on execution of the Security
Documents valid and binding on the Borrowers and any other Security Party which is or
is to be a party thereto; and
	 
	 	(m)	 	Control each of the Borrowers is a fully owned Subsidiary of the
Corporate Guarantor.

25

 

	6.2	 	The Borrowers hereby further jointly and severally represent and warrant to the Bank that:
	 
	 	 	Initial representations and warranties

	 	(a)	 	Direct obligations — Pari Passu the obligations of the Borrowers under
this Agreement are direct, general and unconditional obligations of the Borrowers and
rank at least pari passu with all other present and future unsecured and unsubordinated
Indebtedness of the Borrowers with the exception of any obligations which are
mandatorily preferred by law;
	 
	 	(b)	 	Information all information, accounts, statements of financial
position, exhibits and reports furnished by or on behalf of any Security Party and the
Group to the Bank in connection with the negotiation and preparation of this Agreement
and each of the other 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; to the knowledge of the
Directors/Officers of each of the Borrowers, there are no other facts the omission of
which would make any fact or statement therein misleading and, in the case of accounts
and statements of financial position, they have been prepared in accordance with
International Accounting Principles which have been consistently applied;
	 
	 	(c)	 	No Default no Default has occurred and is continuing;
	 
	 	(d)	 	No Taxes no Taxes are imposed by deduction, withholding or otherwise
on any payment to be made by any Security Party under this Agreement and/or any other
of the Security Documents or are imposed on or by virtue of the execution or delivery
of this Agreement and/or any other of the Security Documents or any document or
instrument to be executed or delivered hereunder or thereunder. In case that any Tax
exists now or will be imposed in the future, it will be borne by the Borrowers;
	 
	 	(e)	 	No Default under other Indebtedness to the knowledge of the
Directors/Officers of each of the Borrowers and the other Security Parties, neither the
Borrowers (or either of them) nor any other Security Party is in Default under any
agreement relating to Indebtedness to which it is a party or by which it may be bound;
	 
	 	(f)	 	Ownership/Flag/Seaworthiness/Class/Insurance of the Vessels each
Vessel on the Drawdown Date will be:

	 	(i)	 	in the absolute and free from Encumbrances (other than in
favour of the Bank) ownership of the Owner thereof who will on and after the
Drawdown Date be the sole legal and beneficial owner of such Vessel;
	 
	 	(ii)	 	registered in the name of the Owner thereof through the
Registry under the laws and flag of the Flag State relative thereto;
	 
	 	(iii)	 	operationally seaworthy and in every way fit for service;
	 
	 	(iv)	 	classed with highest class available with American Bureau of
Shipping free of all overdue recommendations and qualifications of the
classification society specified in the Mortgage;
	 
	 	(v)	 	insured in accordance with the provisions of this Agreement;
and

26

 

	 	(vi)	 	managed by the Approved Manager;

	 	(g)	 	No Charter unless otherwise permitted in writing by the Bank, neither
Vessel will on or before the Drawdown Date be subject to any charter or contract nor to
any agreement to enter into any charter or contract which, if entered into after the
Drawdown Date would have required the consent of the Bank under any of the Security
Documents and there will not on or before the Drawdown Date be any agreement or
arrangement whereby the Earnings of either Vessel may be shared with any other person,
save for the use of such Vessel for the purpose of any pooling arrangement (the terms
of which pooling arrangement shall be subject to the prior written approval of the
Bank);
	 
	 	(h)	 	MOA Valid the copy of the MOA to be delivered to the Bank shall be a
true and complete copy of such document constituting valid and binding obligations of
the parties thereto enforceable in accordance with its terms and no amendments thereto
or variations thereof shall have been (or will be) agreed nor shall any action been
taken by the parties thereto which would in any way render such document inoperative or
unenforceable;
	 
	 	(i)	 	No Rebates there will be no commissions, rebates premiums or other
payments by or to or on account of the Fortuneship Borrower, any other Security Party
or, to the knowledge of the Borrowers, any other person in connection with the MOA
other than as shall be disclosed to the Bank by the Borrowers in writing;
	 
	 	(j)	 	No Encumbrances neither either of Vessels, nor its Earnings, Requisition
Compensation or Insurances nor any other properties or rights which are, or are to be,
the subject of any of the Security Documents nor any part thereof will, on the Drawdown
Date, be subject to any Encumbrances other than Permitted Encumbrances.
	 
	 	(k)	 	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:

	 	(i)	 	each of the Borrowers has complied with the provisions of all
Environmental Laws;
	 
	 	(ii)	 	each of the Borrowers has obtained all Environmental Approvals
and is in compliance with all such Environmental Approvals; and
	 
	 	(iii)	 	neither of the Borrowers has received notice of any
Environmental Claim that either of the Borrowers is not in compliance with any
Environmental Law or any Environmental Approval;

	 	(l)	 	No Environmental Claims
	 
	 	 	 	except as may already have been disclosed by the Borrowers in writing to, and
acknowledged in writing by, the Bank:

	 	(i)	 	there is no Environmental Claim pending or, to the best of the
Borrowers’ knowledge and belief, threatened against the Borrowers (or either of
them) or the Approved Manager or the Vessel (or either of them); and
	 
	 	(ii)	 	there has been no emission, spill, release or discharge of a
Material of Environmental Concern from the Vessels (or either of them) and or
any other vessel owned by, managed or crewed by or chartered to the

27

 

	 	 	 	Borrowers
(or either of them) or, as the case may be, the Approved Manager which could
give rise to an Environmental Claim;

	 	(m)	 	Copies true and complete the copy of each Management Agreement
delivered or to be delivered to the Bank pursuant to Clause 7.1(h) are, or will when
delivered be, true and complete copy of such document; such document will when
delivered constitute valid and binding obligations of the parties thereto enforceable
in accordance with their respective terms and there will have been no amendments or
variations thereof or defaults thereunder;
	 
	 	(n)	 	DOC and SMC the Operator has obtained a DOC for itself and an SMC in
respect of each of the Vessels;
	 
	 	(o)	 	ISPS Code each Owner has a valid and current ISSC in respect of its
Vessel and each Vessel is in full compliance with the ISPS Code;
	 
	 	(p)	 	Validity all governmental or other consents required by law and/or any
other steps required for the validity, enforceability and legality of this Agreement
and the other Security Documents have been appropriately taken;
	 
	 	(g)	 	Shipping Company each of the Borrowers and the Approved Manager
is a shipping company involved in the owning or (as the case may be) managing of ships
engaged in international voyages and earning profits in free foreign currency; and

	6.3	 	Money laundering — acting for own account Each of the Borrowers confirms that, by
entering into this Agreement and the other Security Documents, is acting on its own behalf and
for its own account and it is obtaining the Loan for its own account and the borrowing of the
Loan and the performance and discharge of the Borrowers’ and the other Security Parties’
obligations and liabilities under this Agreement and the other Security Documents to which
each Security Party is or is to be a party and other arrangements effected or contemplated by
this Agreement will not involve or lead to contravention of any law, official, requirement or
other regulatory measure or procedure implemented to combat “money laundering” (as defined in
Article 1 of the Directive (91/308/EEC) of the Council of the European Community) or any
Relevant Jurisdiction.
	 
	6.4	 	Representations Correct At the time of entering into this Agreement all above
representations and warranties or any other information given by the Borrowers to the Bank are
true and accurate;
	 
	6.5	 	Repetition of Representations and Warranties The representations and warranties in
this Clause 6 shall be deemed to be repeated by the Borrowers on the Drawdown Date and on each
Interest Payment Date throughout the Security Period.
	 
	7.	 	CONDITIONS PRECEDENT
	 
	7.1	 	Conditions precedent to the execution of this Agreement The Borrowers shall provide
the Bank prior to the execution of this Agreement the following documents and evidence in form
and substance satisfactory to the Bank:

	 	(a)	 	a duly certified true copy of the Articles of Incorporation and By-Laws or the
Memorandum and Articles of Association, or of any other constitutional documents, as
the case may be, of each corporate Security Party;

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	 	(b)	 	a recent certificate of incumbency of each corporate Security Party issued by
the appropriate authority or, as appropriate, signed by the secretary or a director
thereof, stating the officers and the directors of each of them;
	 
	 	(c)	 	minutes of separate meetings of the directors and shareholders of each
corporate Security Party at which there was approved (inter alia) the entry into,
execution, delivery and performance of this Agreement, the other Security Documents and
any other documents executed or to be executed pursuant hereto or thereto to which the
relevant corporate Security Party is or is to be a party;
	 
	 	(d)	 	the original of any power(s) of attorney and any further evidence of the due
authority of any person signing this Agreement, the other Security Documents, the
Management Agreements and any other documents executed or to be executed pursuant
hereto or thereto on behalf of any corporate person;
	 
	 	(e)	 	evidence that all necessary licences, consents, permits and authorisations
(including exchange control ones) have been obtained by any Security Party for the
execution, delivery, validity, enforceability, admissibility in evidence and the due
performance of the respective obligations under or pursuant to this Agreement and the
other Security Documents;
	 
	 	(f)	 	evidence that the arrangement fee and any commitment commission due under
Clause 10.8 have been paid in full;
	 
	 	(g)	 	any other documents or recent certificates or other evidence which would be
required by the Bank in relation to any corporate Security Party evidencing that the
relevant Security Party has been properly established, continues to exist validly and
to be in good standing; and
	 
	 	(h)	 	a certified true and complete copy of each Management Agreement.

	7.2	 	Conditions precedent to the advance of the Commitment The obligation of the Bank to
advance the Commitment or any part thereof and/or to allow any Transaction to be effected
under the Master Agreement is subject to the further condition that the Bank on or before the
Drawdown Date shall have received the following documents or evidence:

	 	(a)	 	each of the Security Documents (as set out in Clause 11.1) duly executed and
where appropriate duly registered with the Registry; and
	 
	 	(b)	 	evidence that each Vessel (in the case of the Fortune Vessel) upon her
Delivery) or prior to or simultaneously with the drawdown of the Commitment, shall be
duly registered in the ownership of the Owner thereof through the Registry and under
the laws and flag of the Flag State free from any Encumbrances save for Permitted
Encumbrances;
	 
	 	(c)	 	evidence in form and substance satisfactory to the Bank that each Vessel has
been insured in accordance with the insurance requirements provided for in
this Agreement and the other Security Documents (including Mortgagee’s Interest
Insurance (“MII”) and, if the Bank so requires, a Mortgagee’s Interest Additional
Perils (Pollution) Insurance (“MAPI”), each under the Bank’s wording or upon such
terms as shall from time to time be determined by the Bank but for an amount of, in
each case of 120% of the aggregate amount of the Loan and the Swap Exposure)
together with an opinion from insurance consultants (appointed by the Bank) as to
the adequacy of the insurances effected or to be effected in respect of each Vessel
;

29

 

	 	(d)	 	all necessary confirmations by insurers of each Vessel that they will issue
letters of undertaking and endorse notice of assignment and loss payable clauses on the
Insurances, in form and substance satisfactory to the Bank in its sole discretion;
	 
	 	(e)	 	evidence that each Vessel is classed with highest class available with
classification society specified in the Mortgage, or to a similar standard with another
classification society of like standing, member of IACS and to be specifically approved
by the Bank, at its reasonable opinion, and remains free from any requirements or
recommendations;
	 
	 	(f)	 	evidence that the trading certificates of each Vessel are valid and in force;
	 
	 	(g)	 	the Drawdown Notice duly executed and issued;
	 
	 	(h)	 	valuation of each Vessel, at the Borrowers’ expense, based on a valuation of
such Vessel carried out under Clause 8.4(b) and (d), in form and substance satisfactory
to the Bank in its sole discretion;
	 
	 	(i)	 	if the Bank so requires, a condition survey report satisfactory to the Bank
prepared at Borrowers’ expense by surveyors nominated by the Bank prior to the Drawdown
Date;
	 
	 	(j)	 	a copy of the MOA certified as true and complete by the legal counsel of the
Borrowers;
	 
	 	(k)	 	a copy of each of the Esmeralda Charterparty and the Fortune Charterparty
certified as true and complete by the legal counsel of the Borrowers;
	 
	 	(l)	 	true and complete copies of the DOC for the Operator and the SMC for each
Vessel issued or, as the case may be, to be issued pursuant to the ISM Code;
	 
	 	(m)	 	true and complete copy of the ISSC issued pursuant to the ISPS Code;
	 
	 	(n)	 	evidence that any prior registration of the Fortune Vessel in the name of the
Seller has been cancelled and that no Encumbrances are registered against such Vessel
on such register;
	 
	 	(o)	 	evidence to the full satisfaction of the Bank, proving the Seller’s title to
the Fortune Vessel free of any Encumbrances, debts or claims of any nature whatsoever;
	 
	 	(p)	 	duly certified copies of corporate documentation of the Seller — comparable at
the discretion of the Bank to that provided in Clause 7.1 — proving the due
incorporation and existence of the Seller and the due authorisation of the sale of
the Fortune Vessel and the execution of all documents required in connection
therewith;
	 
	 	(q)	 	duly certified copy of the Bill of Sale, the protocol of delivery and
acceptance of the Fortune Vessel as well as of all other Seller’s documents;
	 
	 	(r)	 	evidence that the ten per cent (10%) deposit in respect of the Fortune Vessel
and all other sums of money (other than the Loan proceeds) required to be paid by the
Fortuneship Borrower to the Seller pursuant to the MOA have been duly paid.

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	 	(s)	 	due authorisation in form and substance satisfactory to the Bank authorising
the Bank to have access and/or obtain any copies of class records or other information
at its discretion from the classification society of each Vessel specified in the
relevant Mortgage, provided, however, that the Bank shall not exercise such
right unless and until an Event of Default has occurred; and
	 
	 	(t)	 	evidence that the Earnings Accounts and the Retention Account have been duly
opened and all mandate forms, signature cards and authorities have been duly delivered
to the Bank;
	 
	 	(u)	 	evidence that the Charterparty on the Drawdown Date is in full force and
effect; and
	 
	 	(v)	 	evidence that each of the Borrowers has given irrevocable instructions to the
relevant charterer to pay any and all moneys whatsoever payable to such Borrower under
the Charterparty relative to its Vessel into the relevant Earnings Account.

	7.3	 	No change of circumstances The obligation of the Bank to advance the Commitment or
any part thereof and/or to allow any Transaction to be effected under the Master Agreement is
subject to the further condition that at the time of the giving of the Drawdown Notice and on
the Drawdown Date:

	 	(a)	 	the representations and warranties set out in Clause 6 and in each of the
Security Documents 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;
	 
	 	(b)	 	no Default shall have occurred and be continuing or would result from the
drawdown; and
	 
	 	(c)	 	the Bank shall be satisfied that there has been no change in the ownership,
management, operations and/or adverse change in the financial condition of any Security
Party which (change) might, in the sole opinion of the Bank, be detrimental to the
interests of the Bank.

	7.4	 	General Conditions The obligation of the Bank to advance the Commitment or any part
thereof and/or to allow any Transaction to be effected under the Master Agreement is subject
to the further condition that the Bank, prior to or simultaneously with the drawdown, shall
have received:

	 	(a)	 	opinions from lawyers appointed by the Bank as to all the matters referred to
in Clauses 6.1(a) and (b) and all such aspects of law as the Bank shall deem relevant
to this Agreement and the other Security Documents and any other documents executed
pursuant hereto or thereto and any further legal or other expert opinion as the Bank at
its sole discretion may reasonably require;
	 
	 	(b)	 	confirmation from any agents nominated in this Agreement and elsewhere in the
other Security Documents for the acceptance of any notice or service of process, that
they consent to such nomination; and
	 
	 	(c)	 	an undertaking of the Borrowers that they shall execute a receipt in writing in
form and substance satisfactory to the Bank including an acknowledgement and admission
of the Borrowers and/or any other Security Party to the effect that the Commitment or
the relevant part thereof (as the case may be) was drawn by the Borrowers and a
declaration by the Borrowers that all conditions precedent have been fulfilled, that
there is no Event of Default and that all the representations and warranties are true
and correct.

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	7.5	 	Waiver of conditions precedent The conditions specified in this Clause 7 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.
	 
	7.6	 	Further conditions precedent or subsequent
	 
	 	 	Not later than five (5) Banking Days prior to the 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 6, 7, 8 and 9.
	 
	8.	 	COVENANTS
	 
	 	 	The Borrowers hereby jointly and severally undertake with the Bank that, from the date of
this Agreement and as long as any moneys are due and/or owing and/or outstanding under this
Agreement or any of the other Security Documents, the Borrowers will:
	 
	8.1	 	Information Covenants

	 	(a)	 	Annual financial Statements prepare or cause to be prepared (a)
audited financial statements of the Borrowers and consolidated financial statements of
the Group, in accordance with IAS in respect of each financial year and cause the same
to be reported on by their auditors and (b) unaudited financial statements of the
Borrowers and the Group in respect of each financial semester on the same basis as the
annual statements and deliver as many copies of the same as the Bank may reasonably
require as soon as practicable but not later than one hundred and eighty (180) days (in
the case of audited financial statements) or ninety (90) days (in the case of unaudited
financial statements) (herein, the “Semester Date”) after the end of the financial
period to which they relate;
	 
	 	(b)	 	Financial Information provide the Bank annually and from time to time
as the Bank may reasonably request and in form and substance satisfactory to the Bank
with information on the financial conditions, cash flow position, commitments and
operations of each of the Borrowers, the other corporate Security Parties and the
Group, including cash flow analysis and voyage accounts of any vessels owned by any
such party with a breakdown of income and running expenses showing net trading profit,
trade payables and trade receivables, such financial details to be certified by one of
the directors of the relevant company as to their correctness;
	 
	 	(c)	 	Information on adverse change or Default promptly inform the Bank of
any occurrence which came to the knowledge of the Borrowers which might adversely
affect the ability of the Borrowers or any other Security Party to perform its
respective obligations under this Agreement and/or any of the other Security Documents
and 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;
	 
	 	(d)	 	Know your customer and money laundering compliance provide the Bank
with such documents and evidence as the Bank shall from time to time require, based on
law and regulations applicable from time to time and the Bank’s own internal guidelines
applicable from time to time to identify each of the Borrowers and the other Security
Parties, including the ultimate legal and

32

 

	 	 	 	beneficial owner or owners of such entities, and any other persons involved or
affected by the transaction(s) contemplated by this Agreement.

	8.2	 	No Further Financial Exposure
	 
	 	 	The Borrowers hereby jointly and severally undertake with the Bank that, from the date of
this Agreement and as long as any moneys are due and/or owing and/or outstanding under this
Agreement or any of the other Security Documents, the Borrowers, without the prior written
consent of the Bank it will;

	 	(a)	 	No further Indebtedness not incur further Indebtedness nor authorise
or accept any capital commitments (other than that normally associated with the day to
day operations of the relevant Vessel) nor enter into any agreement for payment on
deferred terms or hire agreement;
	 
	 	(b)	 	No Loans not make any loans or advances to, or any investments or pay
any interest thereon, in any person, firm, corporation, joint venture or other entity
including (without limitation) any loan or advance to any officer, director,
stockholder or employee directly or through the Approved Manager;
	 
	 	(c)	 	No Dividends upon the happening of an Event of Default which is
continuing, not declare or pay any dividends or other distributions to any of its
shareholders; and
	 
	 	(d)	 	No Payments except pursuant to this Agreement and the other Security
Documents (or as expressly permitted by the same), not pay out any funds to any company
or person except in connection with the administration of each of the Borrowers, the
operation, maintenance and/or repair of the relevant Vessel; and
	 
	 	(e)	 	Master Agreement Derivatives not enter into any transaction in a
derivative other than under the Master Agreement.

	8.3	 	Maintenance of Business and legal Structure
	 
	 	 	The Borrowers hereby jointly and severally undertake with the Bank that, from the date of
this Agreement and as long as any moneys are due and/or owing and/or outstanding under this
Agreement or any of the other Security Documents, each of the Borrowers will:

	 	(a)	 	Maintenance of Business Structure not change the nature, organisation
and conduct of its business as owner of its Vessel or carry on any business other than
the business carried on by it at the date hereof;
	 
	 	(b)	 	Maintenance of Legal Structure ensure that none of the documents
defining the constitution of the Borrowers (or either of them) shall be altered in any
manner whatsoever without the prior written consent of the Bank (such consent not to be
unreasonably withheld);
	 
	 	(c)	 	Control ensure that no change shall be made directly or indirectly in
the ownership, beneficial ownership, control or management of such Borrower or any
share therein or of its Vessel without the prior written consent of the Bank;
	 
	 	(d)	 	No merger enter into any form of merger or demerger or amalgamation or
any form of reconstruction, reorganization or consolidation without the Bank’s prior
written consent;

33

 

	 	(e)	 	Subsidiaries not form or acquire any Subsidiaries; and
	 
	 	(f)	 	Share capital and distribution  not purchase or otherwise acquire for
value any shares of its capital or distribute any of its present or future assets,
undertakings, rights or revenues to any of its shareholders;

	8.4	 	Pari passu/Value of Security
	 
	 	 	The Borrowers hereby jointly and severally undertake with the Bank that, from the date of
this Agreement and as long as any moneys are due and/or owing and/or outstanding under this
Agreement or any of the other Security Documents, the Borrowers will:

	 	(a)	 	Pari passu ensure that its obligations under this Agreement shall,
without prejudice to the provisions of this Clause 8.4 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;
	 
	 	(b)	 	Valuation of the Vessels at any time during the Security Period that
the Bank might consider to be (at the sole discretion of the Bank) necessary or useful
and at the expense of the Borrowers, have each Vessel valued in Dollars, without,
unless required by the Bank, physical inspection and on the basis of sale for prompt
delivery and free of Encumbrances for cash at arm’s length on normal commercial terms
as between a willing seller and a willing buyer without taking into account the benefit
of any Charterparty or other engagement concerning such Vessel (“the basis of
valuation”), by one (1) of the following independent major shipbrokers: (i) SSY (ii)
Braemar (iii) H. Clarkson & Company Limited and (iv) any other first class
international shipbroker acceptable to the Bank, in its sole discretion, appointed as
set out in Clause 8.4(d);
	 
	 	(c)	 	Vessel’s Value to Debt Ratio-Additional Security ensure and procure
that the Security Value shall be in excess of the Security Requirement and if at any
time 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 either:

	 	(i)	 	prepay within a period of thirty (30) 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 of the Loan made between the date of the notice and the
date of such prepayment) being equal to the Security Value; or
	 
	 	(ii)	 	within thirty (30) 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 absolute 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. Such additional security shall be constituted by:

	 	aa)	 	additional pledged cash deposits in favour of
the Bank in an amount equal to such shortfall with the Bank and in an
account and manner to be determined by the Bank; and/or

34

 

	 	bb)	 	any other security acceptable to the Bank to be
provided in a manner determined by the Bank;

	 	 	 	(the provisions of Clause 4.2, 4.3 and 4.4 shall apply to prepayments made under
Clause 8.4(c)(i));

	 	(d)	 	Valuation binding the value of each Vessel shall be determined for the
purpose of Clause 8.4(c) as provided in Clause 8.4(b) and shall be notified by the Bank
to the Borrowers and such valuation shall constitute the value of such Vessel for the
purposes of this Clause 8.4 and shall be binding upon the parties hereto until such
time as any further such valuations shall be obtained; aall costs in connection with
such valuations and any valuation of any additional security provided pursuant to
Clause 8.4(c) shall be borne by the Borrowers;
	 
	 	(e)	 	Valuation of additional security for the purpose of this Clause 8.4,
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 provided, always, that if the additional
security is in the form of a collateral vessel such collateral vessel shall be valued
in accordance with the provisions of Clause 8.4(b) or if the additional security is in
form of a cash deposit full credit shall be given for such cash deposit on a Dollar for
Dollar basis; and
	 
	 	(f)	 	Documents and evidence in connection with any additional security
provided in accordance with this Clause 8.4, the Bank shall be entitled to receive such
evidence and documents as may in the Bank’s reasonable opinion be appropriate and such
favourable legal opinions as the Bank shall in its absolute discretion require.

	8.5	 	Maintenance of Assets
	 
	 	 	The Borrowers hereby jointly and severally undertake with the Bank that, from the date of
this Agreement and as long as any moneys are due and/or owing and/or outstanding under this
Agreement or any of the other Security Documents, the Borrowers will:

	 	(a)	 	No Transfer of Assets not convey, assign, transfer, sell or otherwise
dispose of or deal with any of their real or personal property, assets or rights,
whether present or future, without the prior written consent of the Bank; and
	 
	 	(b)	 	No Encumbrance of Assets not allow any part of its undertaking,
property, assets or rights, whether present or future, to be mortgaged, charged,
pledged, used as a lien or otherwise encumbered (other than Permitted Encumbrances)
without the prior written consent of the Bank; and

	8.6	 	Covenants Concerning the Vessels
	 
	 	 	The Borrowers hereby jointly and severally undertake with the Bank that, from the date of
this Agreement and as long as any moneys are due and/or owing and/or outstanding under this
Agreement or any of the other Security Documents, each of the Borrowers will:

	 	(a)	 	Ownership/Management/Control ensure that its Vessel is registered on
the Drawdown Date under the laws and flag of the Flag State relative thereto and
thereafter maintain her present ownership, management, control and beneficial
ownership;

35

 

	 	(b)	 	Class ensure that its Vessel will maintain highest available class
free of recommendations, notations or average damage affecting class and provide the
Bank on demand with copies of all class and trading certificates of its Vessel;
	 
	 	(c)	 	Insurances ensure that all Insurances of its Vessel are maintained and
comply with all insurance requirements specified in this Agreement and in the Mortgage
and in case of failure to maintain its Vessel so insured authorise the Bank (and such
authorisation is hereby expressly given to the Bank) to have the right but not the
obligation to effect such Insurances on behalf of the Owner thereof (and in case that
its Vessel remains in port for an extended period to effect port risks insurances at
the cost of the Borrowers which, if paid by the Bank, shall be Expenses);
	 
	 	(d)	 	Transfer/Encumbrances not without the prior written consent of the
Bank sell or otherwise dispose of its Vessel or any share therein or create or agree to
create or permit to subsist any Encumbrance (other than Permitted Encumbrances) over
its Vessel (or any share or interest therein) other than Encumbrances created or to be
created pursuant to the Security Documents;
	 
	 	(e)	 	Not imperil Flag, Ownership, Insurances ensure that its Vessel is
maintained and trades in conformity with the laws of the Flag State relative thereto,
of its owning company or of the nationality of the officers, the requirements of the
Insurances and nothing is done or permitted to be done which could endanger the flag of
its Vessel or its unencumbered (other than Permitted Encumbrances) ownership or its
Insurances;
	 
	 	(f)	 	Mortgage Covenants always comply with all the covenants provided for
in the Mortgage;
	 
	 	(g)	 	Charter not enter into or agree to enter into a charterparty contract
of affreightment, agreement or related document in respect of the employment of its
Vessel,

	 	(i)	 	on demise charter for any period; or
	 
	 	(ii)	 	(without the prior written consent of the Bank) (aa) by any
time or consecutive voyage charter for a term which exceeds or which by virtue
of any optional extensions therein contained may exceed eleven (11) months’
duration; or (bb) on terms whereby more than two months’ hire (or the
equivalent) is payable in advance; or (cc) below the market rate prevailing at
the time when its Vessel is fixed,
	 
	 	 	 	provided, however, that the consent of the Bank shall be deemed
granted if it does not respond within three (3) Banking Days from the
Borrowers’ request for consent;

	 	(h)	 	Assignment of Earnings assign or agree to assign otherwise than to the
Bank the Earnings of its Vessel or any part thereof;
	 
	 	(i)	 	Vessel’s documents provide the Bank in respect of its Vessel with
certified copies of (i) the relevant class and trading certificates and (ii) the
Charterparty relative to its Vessel; and
	 
	 	(j)	 	Compliance with Environmental Laws comply with, and procure that all
Environmental Affiliates of the Borrowers comply with, all Environmental Laws including
without limitation, requirements relating to manning and establishment of financial
responsibility and to obtain and comply with, and

36

 

	 	 	 	procure that all Environmental Affiliates of the Borrowers
obtain and comply with, all Environmental Approvals applicable to and relating to each of the Vessels,
her operation or management and the business of the Borrowers from time to time and
notify the Bank forthwith:

	 	(i)	 	upon any Environmental Claim being or made against the
Borrowers (or either of them), the Approved Manager or otherwise in connection
with the Vessels (or either of them) for an amount or amounts in aggregate
exceeding $300,000 or equivalent thereof in any other currency;
	 
	 	(ii)	 	any Environmental Incident (for which the aggregate of the
Environmental Claims being or made in respect thereto exceeds five hundred
thousand Dollars ($300,000) or equivalent thereof in any other currency,
occurring and
	 
	 	(iii)	 	upon becoming aware of any Environmental Incident occurring,

	 	 	 	and keep the Bank promptly advised, in writing on such regular basis and in such
detail as the Bank shall require, of the Borrowers’ response to such Environmental
Claim or Environmental Incident and on such regular basis and in such detail as the
Bank shall require;

	8.7	 	Observance of Covenants— Validity of Securities — Taxes
	 
	 	 	The Borrowers hereby jointly and severally undertake with the Bank that, from the date of
this Agreement and as long as any moneys are due and/or owing and/or outstanding under this
Agreement or any of the other Security Documents, the Borrowers will:

	 	(a)	 	Use of the Loan use the Loan exclusively for the purpose specified in
this Agreement;
	 
	 	(b)	 	Compliance with Covenants duly and punctually perform each of the
obligations expressed to be assumed by it under this Agreement and the other Security
Documents;
	 
	 	(c)	 	Payment on Demand pay to the Bank on demand any sum of money which is
payable by the Borrowers to the Bank under this Agreement, but in respect of which it
is not specified in any other Clause when it is due and payable; and
	 
	 	(d)	 	Evidence of Compliance upon request by the Bank from time to time
provide such information and evidence to the Bank as the Bank would reasonably require
to demonstrate compliance with the covenants and undertakings set forth in this
Agreement and the other Security Document;
	 
	 	(e)	 	Validity ensure and procure that all governmental or other consents
required by law and/or any other steps required for the validity, enforceability and
legality of this Agreement and the other Security Documents are maintained in full
force and effect and/or appropriately taken;
	 
	 	(f)	 	Earnings ensure and procure that, unless and until directed by the Bank
otherwise (i) all the Earnings of its Vessel shall be paid to the relevant Earnings
Account and (ii) the persons from whom the Earnings are from time to time due are
irrevocably instructed to pay them to the relevant Earnings Account in accordance with
the provisions hereof and of the relevant Security Documents;

37

 

	 	(g)	 	Taxes pay all Taxes, assessments and other governmental charges when
the same fall due, except to the extent that the same are being contested in good faith
by appropriate proceedings and adequate reserves have been set aside for their payment
if such proceedings fail; and
	 
	 	(h)	 	Additional Documents from time to time and within ten (10) days after
the Bank’s request execute and deliver to the Bank or procure the execution and
delivery to the Bank of all such documents as shall be deemed desirable at the
reasonable discretion of the Bank for giving full effect to this Agreement, and for
perfecting, protecting the value of or enforcing any rights or securities granted to
the Bank under any one or more of this Agreement, the other Security Documents and any
other documents executed pursuant hereto or thereto and in case that any conditions
precedent (with the Bank’s consent) have not been fulfilled prior to the drawdown of
the Commitment, such conditions shall be complied with within fourteen (14) days of
drawdown of the Commitment (unless the Bank agrees otherwise in writing) and failure to
comply with this covenant shall be an Event of Default.
	 
	 	(i)	 	Covenants for the Security Parties Ensure and procure that all other
Security Parties and each of them duly and punctually comply, with the covenants in
Clauses 8.1 to 8.8 which are applicable to them mutatis mutandis.

	8.8	 	Compliance with ISM Code and ISPS Code The Borrowers hereby jointly and severally
undertake with the Bank that, from the date of this Agreement and as long as any moneys are
due and/or owing and/or outstanding under this Agreement or any of the other Security
Documents, they/it will procure that the Approved Manager and any Operator:

	 	(a)	 	will comply with and ensure that each of the Vessels and any Operator by no
later than the Drawdown Date complies with the requirements of the ISM Code, including
(but not limited to) the maintenance and renewal of valid certificates pursuant thereto
throughout the Security Period; and
	 
	 	(b)	 	immediately inform the Bank if there is any threatened or actual withdrawal of
the Owner’s, the Approved Manager’s or an Operator’s DOC or the SMC in respect of the
Vessel owned by such Owner; and
	 
	 	(c)	 	promptly inform the Bank upon the issue to the Owner, the Approved Manager or
any Operator of a DOC and to either Vessel of an SMC or the receipt by the Owner, the
Approved Manager or any Operator of notification that its application for the same has
been realised; and
	 
	 	(d)	 	maintain at all times a valid and current ISSC in respect of each of the
Vessels, (ii) immediately notify the Bank in writing of any actual or threatened
withdrawal, suspension, cancellation or modification of the ISSC in respect of each of
the Vessels and (iii) procure that each of the Vessels will comply at all times with
the ISPS Code.

	8.9	 	Banking operations — Liquidity — Excess Earnings
	 
	 	 	The Borrowers hereby jointly and severally undertake with the Bank that, from the date of
this Agreement and as long as any moneys are due and/or owing and/or outstanding under this
Agreement or any of the other Security Documents, they will:

	 	(a)	 	ensure that all banking operations in connection with the Vessels are carried
out through the Bank;

38

 

	 	(b)	 	ensure that at all times it will be maintained, in un-encumbranced accounts of
the Borrowers and/or the Corporate Guarantor maintained with the Bank, average annual
liquidity of no less than an amount equal to the following six (6) months Debt Service;
and
	 
	 	(c)	 	ensure that the Borrowers on the earlier of (i) receipt by the Bank of the
financial statements referred to in clause 8.1(a) and (ii) 180 days after the relevant
financial year shall on the last day of each Excess Earnings Calculation Period
transfer to the Reserve Account an amount equal to fifty percent (50%) of the Excess
Earnings for such Excess Earnings Calculation Period until an amount of no less than
$3,525,000 (Dollars Three million five hundred twenty five thousand) is deposited in
the Reserve Account whereupon the obligation of the Borrowers to cause the transfer of
the Excess Earnings to the Reserve Account shall cease. The Borrowers may apply amounts
accumulated in the Reserve Account in prepayment of the Balloon Instalment pursuant to
the provisions of Clause 4.2 and the said maximum amount of $3,525,000 shall be reduced
by any amount so prepaid.

	8.10	 	Additional Financial Covenants

	 	(a)	 	The Borrowers shall ensure that, throughout the Security Period the
financial condition of the Corporate Guarantor on a consolidated basis and as
evidenced by the most recent annual audited Accounting Information, shall be such that:

	 	(i)	 	there is maintained, at all times in accounts held in the names
of the Corporate Guarantor and/or the Borrowers and/or other members of the
Group or any of them cash balances of an amount at least equal 5% of the
Group’s total Indebtedness as at the relevant time;
	 
	 	(ii)	 	the market value adjusted net worth of the Group is at least
Sixty million Dollars ($60,000,000);
	 
	 	(iii)	 	the Total Liabilities of the Group do not exceed seventy five
per cent (75%) of its market value adjusted Total Assets;
	 
	 	(iv)	 	and at all times by reference to the semi-annual unaudited and
yearly audited financial statements of the Group; and
	 
	 	(v)	 	deliver to the Bank on each Semester Date a Compliance
Certificate;

	 	(b)	 	All accounting terms used in this clause 8.10 are to be determined on a
consolidated basis in respect of the Group and (except as items are expressly included
or excluded in the relevant definition or clause) are used and shall be construed in
accordance with the applicable accounting principles and as determined from the latest
consolidated financial statements of the Group delivered to the Bank pursuant to clause
8.1(a).
	 
	 	(c)	 	Any changes in the accounting principles for the valuation of the assets of the
Corporate Guarantor must be approved beforehand by the Bank for the purposes of the
financial ratios contained in this Clause 8.10.
	 
	 	(d)	 	The expressions used in this Clause 8.10 shall be construed in accordance with
law and IAS as used in the Accounting Information, and for the purposes of this
Agreement:

39

 

	 	(i)	 	“Accounting Information” means (1) the annual audited and (2)
the unaudited semi-annual financial statements to be provided by the Borrowers
to the Bank in accordance with Clause 8.1(a);
	 
	 	(ii)	 	“Accounting Period” means each consecutive period of twelve
(12) months falling during the Security Period (ending on the last day in
December of each year) for which annual Accounting Information is required to
be delivered pursuant to this Agreement; and
	 
	 	(iii)	 	“Total Assets” and “Total Liabilities” and all other
accounting terms not otherwise defined in this Agreement shall have the
meanings assigned to them in accordance with IAS.

	9.	 	EVENTS OF DEFAULT
	 
	9.1	 	There shall be an Event of Default if:

	 	(a)	 	Non-payment any Security Party fails to pay any sum payable by it
under any of the Security Documents at the time, in the currency and in the manner
stipulated in the Security 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
	 
	 	(b)	 	Breach of Insurance and certain other obligations either of the
Borrowers fails to obtain and/or maintain the Insurances (in accordance with the
requirements of the Security Documents) or if any insurer in respect of such Insurances
cancels the Insurances or disclaims liability by reason, in either case, of
mis-statement in any proposal for the Insurances or for any other failure or default on
the part of the Borrowers (or either of them) or any other person or either of the
Borrowers commits any breach of or omits to observe any of the obligations or
undertakings expressed to be assumed by it under Clauses 8.2, 8.3, 8.4 and 8.5; or
	 
	 	(c)	 	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 (other than those referred to in Clauses 10.1(a)
and 10.1 (b) 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, at its sole discretion
of the Bank, require shall not have been taken within fifteen (15) days of the Bank
notifying the relevant Security Party of such default and of such required action; or
	 
	 	(d)	 	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 is or proves to have been incorrect or
misleading in any material respect; or
	 
	 	(e)	 	Cross-default any Indebtedness (relating to an amount over $300,000 or
equivalent thereof in any other currency) of any Security Party is not paid when due or
any Indebtedness (relating to an amount over $300,000 or equivalent thereof in any
other currency) of any Security Party becomes (whether by declaration or automatically
in accordance with the relevant agreement or instrument constituting the same) due and
payable prior to the date when it would otherwise have become due (unless as a result
of the exercise by the relevant Security Party of a voluntary right of prepayment), or
any creditor of any Security Party becomes entitled to declare any such 

40

 

	 	 	 	Indebtedness
due and payable or any facility or commitment available to any Security Party relating
to Indebtedness is withdrawn, suspended or cancelled by reason of any default (however
described) of the person concerned unless the relevant Security Party shall have
satisfied the Bank that such withdrawal, suspension or cancellation will not affect or
prejudice in any way the relevant
Security Party ability to pay its debts as they fall due, or any guarantee given by
any Security Party in respect of Indebtedness (relating to an amount over $300,000
or equivalent thereof in any other currency) is not honoured when due and called
upon; or

	 	(f)	 	Legal process any judgment or order made or commenced in good faith by
a person against any Security Party relating to an amount over $300,000 or equivalent
thereof in any other currency is not stayed or complied with within thirty (30) days or
a good faith creditor attaches or takes possession of, or a distress, execution,
sequestration or other bonefide process is levied or enforced upon or sued out against,
any of the undertakings, assets, rights or revenues of any Security Party and is not
discharged within thirty (30) days; or
	 
	 	(g)	 	Insolvency any Security Party becomes insolvent or stops or suspends
making payments (whether of principal or interest) with respect to all or any class of
its debts or announces an intention to do so; or
	 
	 	(h)	 	Reduction or loss of capital a meeting is convened by any Security
Party for the purpose of passing any resolution to purchase, reduce or redeem any of
its share capital; or
	 
	 	(i)	 	Winding up any petition is presented or other step is taken for the
purpose of winding up any Security Party or an order is made or resolution passed for
the winding up of any Security Party or a notice is issued convening a meeting for the
purpose of passing any such resolution; or
	 
	 	(j)	 	Administration any petition is presented or other step is taken for
the purpose of the appointment of an administrator of any Security Party or the Bank,
at its reasonable discretion, believes that any such petition or other step is imminent
or an administration order is made in relation to any Security Party; or
	 
	 	(k)	 	Appointment of receivers and managers any administrative or other
receiver is appointed of any Security 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 Security Party; or
	 
	 	(l)	 	Compositions any steps are taken, or negotiations commenced, by any
Security 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,
provided, however, that if the Borrowers are able to provide such evidence as
is satisfactory in all respects to the Bank that such rescheduling will not relate to
any payment default or anticipated default the same shall not constitute an Event of
Default; or
	 
	 	(m)	 	Analogous proceedings there occurs, in relation to any Security 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(f) to (1) (inclusive) or any Security Party 

41

 

	 	 	 	otherwise becomes subject, in any such
country or territory, to the operation of any law relating to insolvency, bankruptcy or
liquidation; or

	 	(n)	 	Cessation of business any Security Party suspends or ceases or
threatens to suspend or cease to carry on its business; or
	 
	 	(o)	 	Seizure all or a material part of the undertaking, assets, rights or
revenues of, or shares or other ownership interests in, any Security Party are seized,
nationalised, expropriated or compulsorily acquired by or under the authority of any
government; or
	 
	 	(p)	 	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
	 
	 	(q)	 	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
	 
	 	(r)	 	Repudiation any Security Party repudiates any of the Security
Documents or does or causes or permits to be done any act or thing evidencing
repudiation of any of the Security Documents; or
	 
	 	(s)	 	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
	 
	 	(t)	 	Material adverse change there occurs, in the reasonable opinion of the
Bank, a material adverse change in the financial condition of any Security Party as
described by the Security Parties to the Bank in the negotiation of this Agreement; or
	 
	 	(u)	 	Other related events any other event or events (whether related or
not) occurs (including, without limitation, a material (in the opinion of the Bank)
adverse change, from the position applicable as at the date of this Agreement, in the
business, affairs or condition (financial or otherwise) of any Security Party or a
Credit Support Provider) (including any such change resulting from an Environmental
Incident) the effect of which is, in the opinion of the Bank, to impair, delay or
prevent the due fulfillment by any Security Party or a Credit Support Provider of any
of their respective obligations or undertakings contained in this Loan Agreement, the
Master Agreement or any of the Security Documents; or
	 
	 	(v)	 	Arrest either Vessel 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 Owner
thereof and such Owner shall fail to procure the release of its Vessel within a period
of thirty (30) days thereafter; or
	 
	 	(w)	 	Registration the registration of either Vessel under the laws and flag
of the Flag State relative thereto is cancelled or terminated without the prior written
consent of the Bank;

42

 

	 	(x)	 	Environment the Owner fails to comply with any Environmental Law or
any Environmental Approval or the Owner and/or any of its Environmental Affiliates or
either Vessel 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 the Borrowers (or either
of them) or any other Security Party or on the security constituted by any of the
Security Documents; or
	 
	 	(y)	 	P&I either Owner or any other person fails or omits to comply with any
requirements of the protection and indemnity association or other insurer with which
the Vessel owned by it 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 jurisdiction where such Vessel operates or trades) is or may be
liable to cancellation, qualification or exclusion at any time; or
	 
	 	(z)	 	Ownership there is any change in the legal and/or beneficial ownership
in the Borrowers (or either of them); or
	 
	 	(aa)	 	Total Loss either Vessel becomes a Total Loss or suffers damage or is
involved in an incident which in the reasonable opinion of the Bank may result in such
Vessel being subsequently determined to be a Total Loss and the insurance indemnity is
not paid by the insurers to the Bank under the General Assignment within a period of
one hundred eighty (180) days from the date on which the incident which may result in
such Vessel being subsequently determined to be a Total Loss occurred; or
	 
	 	(bb)	 	Change of Management either Vessel ceases to be managed by an Approved
Manager (for any reason other than the reason of a Total Loss or sale of such Vessel)
without the approval of the Bank and the Owner thereof fails to appoint an Approved
Manager prior to the termination of the relevant Management Agreement with the previous
Approved Manager; or
	 
	 	(cc)	 	ISM Code (without prejudice to the generality of sub-Clause 10.1(c))
for any reason whatsoever the provisions of Clause 8.8 are not complied with and/or
either Vessel ceases to comply with the ISM Code; or
	 
	 	(dd)	 	ISPS Code (without prejudice to the generality of sub-Clause 10.1(c))
for any reason whatsoever the provisions of Clause 8.8 are not complied with and/or
either Vessel ceases to comply with the ISPS Code; or
	 
	 	(ee)	 	Charterparty either of the Esmeralda Charterparty and the Fortune
Charterparty is terminated for any reason whatsoever prior to its contractual expiry
date and the Borrowers fail to, within thirty (30) days after such termination to
furnish to the Bank an acceptable to the Bank alternative employment for the relevant
Vessel or alternative security; or
	 
	 	(ff)	 	Master Agreement

	 	(i)	 	an Event of Default or Potential Event of Default (in each case
as defined in the Master Agreement) has occurred and is continuing under the
Master Agreement; or

43

 

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

	 	(gg)	 	Material events any other event occurs or circumstance arises which,
in the 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; or

	 	(hh)	 	Shareholdings without the prior written consent of the Bank there is
any change in the legal and beneficial shareholding of any of the Security Parties from
that evidenced to the Bank prior to the date of this Agreement.

	9.2	 	Consequences of Default The Bank may without prejudice to any other rights of the
Bank (which will continue to be in force concurrently with the following), at any time after
the happening of an Event of Default:

	 	(a)	 	by notice to the Borrowers declare that the obligation of the Bank to make the
Commitment or the relevant part thereof (as the case may be) available shall be
terminated, whereupon the Commitment shall be reduced to zero forthwith; and/or
	 
	 	(b)	 	by notice to the Borrowers declare that the Loan and all interest and any
commitment commission accrued and all other sums payable under this Agreement and the
other 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
without any further diligence, presentment, demand of payment, protest or notice or any
other procedure from the Bank which are expressly waived by the Borrowers; and/or
	 
	 	(c)	 	put into force and exercise all or any of the rights, powers and remedies
possessed by it under this Agreement and/or under any other Security Document and/or as
mortgagee of the Vessels, mortgagee, chargee or assignee or as the beneficiary of any
other property right or any other security (as the case may be) over the assets charged
or assigned to it under the Security Documents or otherwise (whether at law, by virtue
of any of the Security Documents or otherwise);

	9.3	 	Insolvency Events of Default If an event occurs in respect of the Borrowers (or
either of them) or the other Security Parties of the type described in Clause 9.1(g), (i),
(j), (k), (l), (o) (except (i) in the case when a petition was presented or proceedings were
commenced or a suit or writ were issued by a third party and the relevant 

44

 

	 	 	Borrower or the
relevant Security Party is defending itself in bona fide proceedings and (ii) in the case that
such events mentioned in Clause 9.1 relate to only a part of the undertakings, assets, rights
or revenues which in the opinion of the Bank does not affect the ability of the Borrowers (or
either of them) or the relevant Security Party to perform its respective obligations under
this Agreement and/or the other Security Documents) the obligation of the Bank to make the
Commitment or the relevant part thereof (as the case may be) available shall terminate
immediately upon receipt by the Bank of the relevant information (as such receipt shall be
conclusively certified by a certificate of the Bank) and all amounts payable under sub-clause 9.2(b) above shall become
immediately due and payable without any notice or other formality which is hereby expressly
waived by each of the Borrowers.

	9.4	 	Multiple notices; action without notice The Bank may serve notices under Clause
9.2(a) and (b) simultaneously or on different dates and it may take any action referred to in
that Clause if no such notice is served or simultaneously with or at any time after service of
both or either of such notices.
	 
	9.5	 	Demand basis If, pursuant to Clause 9.2(b), 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 any 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.
	 
	9.6	 	Proof of Default It is agreed that (i) the non-payment of any sum of money in time
will be proved conclusively by mere passage of time and (ii) the occurrence of this (non
payment) shall be proved conclusively by a mere written statement of the Bank (save for
manifest error).
	 
	9.7	 	Exclusion of Bank’s liability Neither the Bank nor any receiver or manager appointed
by the Bank, shall have any liability to the Borrowers or any other Security Party:

	 	(a)	 	for any loss caused by an exercise of rights under, or enforcement of an
Encumbrance created by, a Security Document or by any failure or delay to exercise such
a right or to enforce such an Encumbrance; or
	 
	 	(b)	 	as mortgagee in possession or otherwise, for any income or principal amount
which might have been produced by or realised from any asset comprised in such an
Encumbrance or for any reduction (however caused) in the value of such an asset,

	 	 	except that this does not exempt the Bank or a receiver or manager from liability for losses
shown to have been caused by the wilful misconduct of the Bank’s own officers and employees
or (as the case may be) such receiver’s or manager’s own partners or employees.

	10.	 	INDEMNITIES — EXPENSES — FEES
	 
	10.1	 	Indemnity The Borrowers shall on demand (and it is hereby expressly undertaken by
the Borrowers to) indemnify the Bank, without prejudice to any of the other rights of the Bank
under any of the Security Documents, against any loss (including, without limitation, loss of
Margin and any Break Costs) or expense which the Bank shall certify as sustained or incurred
as a consequence of:

	 	(a)	 	any default in payment by any of the Security Parties of any sum under any of
the Security Documents when due; or

45

 

	 	(b)	 	the occurrence of any Event of Default; or
	 
	 	(c)	 	any prepayment of the Loan or part thereof being made under Clauses 4.3, 8.4(c)
or 12 or any other repayment of the Loan or part thereof being made otherwise than on
an Interest Payment Date relating to the part of the Loan prepaid or repaid; or
	 
	 	(d)	 	the Commitment not being advanced for any reason (excluding any default by the
Bank) after the Drawdown Notice has been given,

	 	 	including, in any such case, but not limited to, any loss or expense sustained or incurred
in maintaining or funding the Loan or any part thereof or in liquidating or re-employing
deposits from third parties acquired to effect or maintain the Loan or any part thereof.
	 
	10.2	 	Expenses The Borrowers shall (and it is hereby expressly undertaken by the Borrowers
to) pay to the Bank on demand:

	 	(a)	 	Initial and Amendment expenses all reasonable expenses (including
legal, printing and out-of-pocket expenses) reasonably incurred by the Bank in
connection with the negotiation, preparation and execution of this Agreement and the
other Security Documents and of any amendment or extension of or the granting of any
waiver or consent under this Agreement and/or any of the Security Documents and/or in
connection with any proposal by the Borrowers to constitute additional security
pursuant to Clause 8.4(c), whether any such security shall in fact be constituted or
not;
	 
	 	(b)	 	Enforcement expenses all expenses (including legal and out-of-pocket
expenses) incurred by the Bank in contemplation of, or otherwise in connection with,
the enforcement of, or preservation of any rights under, this Agreement and/or any of
the other Security Documents, or otherwise in respect of the moneys owing under this
Agreement and/or any of the other Security Documents or the contemplation or
preparation of the above, whether they have been effected or not;
	 
	 	(c)	 	Mortgagees’ Insurances’ costs reimburse the Bank on demand for any and
all costs incurred by the Bank (as conclusively certified by the Bank) in effecting and
keeping effected a (a) a MII which the Bank may at any time effect for an amount of
120% of the aggregate of the Loan and the Swap Exposure under the Bank’s wording or
upon such terms as shall from time to time be determined by the Bank and (b) if the
Bank so requires, a MAPI, which the Bank may at any time effect for an amount of 120%
of the aggregate of the Loan and the Swap Exposure and upon such terms as shall from
time to time be determined by the Bank, provided, however, that the Bank shall
in its absolute discretion appoint and instruct in respect of any such MII and MAPI the
insurance brokers in respect of each such Insurance; and
	 
	 	(d)	 	Other expenses any and all other Expenses;

	 	 	All expenses payable pursuant to this Clause 10.2 shall be paid together with Value Added
Tax (if any) thereon.
	 
	10.3	 	Stamp duty The Borrowers shall pay any and all stamp, registration and similar taxes
or charges (including those payable by the Bank) imposed by governmental authorities in
relation to this Agreement and any of the other Security Documents, and shall indemnify the
Bank against any and all liabilities with respect to, or resulting 

46

 

	 	 	from delay or omission on
the part of the Borrowers to pay such stamp taxes or charges.

	10.4	 	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 out of an Environmental Claim made or asserted against the Bank.
	 
	10.5	 	Currencies If any sum due from the Borrowers (or either of them) under any of the
Security Documents or any order or judgement given or made in relation hereto has to be
converted from the currency (the “first currency”) in which the same is payable under the
relevant Security Document or under such order or judgement into another currency (the “second
currency”) for the purpose of (i) making or filing a claim or proof against the Borrowers (or
either of them) or any other Security Party, as the case may be, or (ii) obtaining an order or
judgement in any court or other tribunal or (iii) enforcing any order or judgement given or
made in relation to any of the Security Documents, the Borrowers shall (and it is hereby
expressly undertaken by the Borrowers to) indemnify and hold harmless the Bank from and
against any loss suffered as a result of any difference between (a) the rate of exchange used
for such purpose to convert the sum in question from the first currency into the second
currency and (b) 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, judgement, claim or proof. 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.
	 
	10.6	 	Maintenance of the Indemnities The indemnities contained in this Clause 10 shall
apply irrespective of any indulgence granted to the Borrowers (or either of them) or any other
party from time to time and shall continue to be in full force and effect notwithstanding any
payment in favour of the Bank and any sum due from the Borrowers (or either of them) under
this Clause 10 will be due as a separate debt and shall not be affected by judgement being
obtained for any other sums due under any one or more of this Agreement, the other Security
Documents and any other documents executed pursuant hereto or thereto.
	 
	10.7	 	Communications Indemnity It is hereby agreed in connection with communications that:

	 	(a)	 	Express authority is hereby given by each of the Borrowers to the Bank to
accept (at the sole discretion of the Bank) all tested or untested communications given
by facsimile, telex, cable or by email, regarding any or all of the notices, requests,
instructions or other communications under this Agreement, subject to any restrictions
imposed by the Bank relating to such communications including, without limitation (if
so required by the Bank), the obligation to confirm such communications by letter.
	 
	 	(b)	 	The Borrowers shall recognise any and all of the said notices, requests,
instructions or other communications as legal, valid and binding, when these notices,
requests, instructions or communications come from the telex and fax numbers mentioned
in Clause 15.1 or any other telex usually used by it or its managing company.

47

 

	 	(c)	 	Each of the Borrowers hereby assumes full responsibility for the execution of
the said notices, requests, instructions or communications by the Bank and promises and
recognises that the Bank shall not be held responsible for any loss, liability or
expense that may result from such notices, requests, instructions or other
communications. It is hereby undertaken by the Borrowers to indemnify in full the Bank
from and against all actions, proceedings, damages, costs, claims, demands, expenses
and any and all direct and/or indirect losses which the Bank may suffer, incur or
sustain by reason of the Bank following such notices, requests, instructions or
communications.
	 
	 	(d)	 	With regard to notices, requests, instructions or communications issued by
electronic and/or mechanical processes (e.g. by facsimile or telex), the risk of
equipment malfunction, including, without limitation, paper shortage, transmission
errors, omissions and distortions is assumed fully and accepted by each of the
Borrowers, save in case of Bank’s gross misconduct.
	 
	 	(e)	 	The risks of misunderstandings and errors of notices, requests, instructions or
communications being given as mentioned above, are for the Borrowers and the Bank will
be indemnified in full pursuant to this Clause save in case of Bank’s gross misconduct,
save for the Bank’s gross negligence and wilful misconduct
	 
	 	(f)	 	The Bank shall have the right to ask each of the Borrowers to furnish any
information the Bank may require to establish the authority of any person purporting to
act on behalf of the Borrowers (or either of them) for these notices, requests,
instructions or communications but it is expressly agreed that there is no obligation
for the Bank to do so. The Bank shall be fully protected in, and the Bank shall incur
no liability to the Borrowers (or either of them) for acting upon the said notices,
requests, instructions or communications which were believed by the Bank in good faith
to have been given by the Borrowers (or the relevant Borrower) or by any of their/its
authorised representative(s).
	 
	 	(g)	 	It is undertaken by each of the Borrowers to safeguard the function and the
security of the electronic and mechanical appliance(s) such as telex(es), fax(es) etc.,
as well as the code word list, if any, and to take adequate precautions to protect such
code world list from loss and to prevent its terms becoming known to any persons not
directly concerned with its use. Each of the Borrowers shall hold the Bank harmless
and indemnified from all claims, losses, damages and expenses which the Bank may incur
by reason of the failure of the Borrowers (or either of them) to comply with the
obligations under this Clause and/or this Agreement.

	10.8	 	Arrangement Fee

	 	(a)	 	The Borrowers shall pay to the Bank on the date hereof, an arrangement fee of
$70,000 (Seventy thousand Dollars).
	 
	 	(b)	 	The fee referred to in this Clause 10.8 shall be payable by the Borrowers to
the Bank whether or not any part of the Commitment is ever advanced.

	11.	 	SECURITY, APPLICATION, SET-OFF AND ACCOUNTS
	 
	11.1	 	Securities As security for the due and punctual repayment of the Loan and payment of
interest thereon as provided in this Agreement and of all other Outstanding Indebtedness, the
Borrowers shall ensure and procure that the following Security Documents are duly executed
and, where required, registered in favour of the Bank in

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	 	 	form and substance satisfactory to
the Bank at the time specified herein or otherwise as required by the Bank and ensure that
such security consists, on the Drawdown Date, of:

	 	(a)	 	each Mortgage duly registered over the relevant Vessel through the Registry;
	 
	 	(b)	 	the Charterparty Assignments;
	 
	 	(c)	 	the General Assignments;
	 
	 	(d)	 	the Corporate Guarantee;
	 
	 	(e)	 	the Accounts Pledge Agreement;
	 
	 	(f)	 	the Master Agreement Security Deed; and
	 
	 	(g)	 	the Approved Manager’s Undertaking.

	11.2	 	Maintenance of Securities It is hereby undertaken by the Borrowers that the Security
Documents shall both at the date of execution and delivery thereof and so long as any moneys
are owing and/or due under this Agreement or under the other Security Documents be valid and
binding obligations of the respective Security Parties thereto and rights of the Bank
enforceable in accordance with their respective terms and that they will, at the expense of
the Borrowers, execute, sign, perfect and do any and every such further assurance, document,
act, omission or thing as in the opinion of the Bank may be necessary or desirable for
perfecting the security contemplated or constituted by the Security Documents.
	 
	11.3	 	Application of funds All moneys received by the Bank under or pursuant to any of the
Security Documents and expressed to be applicable in accordance with this Clause 11.3 shall be
applied by the Bank in the following manner:

	 	(a)	 	Firstly in or towards payment of Expenses and all sums other than principal or
interest which may be due to the Bank under this Agreement and the other Security
Documents or any of them at the time of application;
	 
	 	(b)	 	Secondly in or towards payment of any default interest;
	 
	 	(c)	 	Thirdly 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;
	 
	 	(d)	 	Fourthly in or towards payment of any arrears of interest (other than default
interest) due in respect of the Loan or any part thereof;
	 
	 	(e)	 	Fifthly in or towards repayment of the Loan whether the same is due and payable
or not; and
	 
	 	(f)	 	Sixthly in or towards payment of the Master Agreement Liabilities; and
	 
	 	(g)	 	Seventhly the surplus (if any) shall be paid to the Borrowers or to whomsoever
else shall be entitled to receive such surplus.

	11.4	 	Set off

	 	(a)	 	Express authority is hereby given by each of the Borrowers to the Bank without
prejudice to any of the rights of the Bank at law, contractually or otherwise, at any
time after a Default has occurred and without notice to the Borrowers:

	 	(i)	 	to apply any credit balance standing upon any account of the
Borrowers (or either of them) with any branch of the Bank (including, without
limitation, the Earnings Accounts, the Retention Account and 

49

 

	 	 	 	the Reserve
Account) and in whatever currency in or towards satisfaction of any sum due to
the Bank from the Borrowers (or either of them) under this Agreement and/or any
of the other Security Documents;

	 	(ii)	 	in the name of each of the Borrowers and/or the Bank to do all
such acts and execute all such documents as may be necessary or expedient to
effect such application; and
	 
	 	(iii)	 	to combine and/or consolidate all or any accounts in the name
of each of the Borrowers with the Bank.

	 	(b)	 	For all or any of the above purposes authority is hereby given to the Bank to
purchase with the monies standing to the credit of any such account or accounts such
other currencies as may be necessary to effect such application. The Bank shall not be
obliged to exercise any right given by this Clause.
	 
	 	(c)	 	Without prejudice to its rights hereunder and/or under the Master 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 Agreement, set off any amount due
now or in the future from the Borrowers (or either of them) to the Bank under this
Agreement against any amount due from the Bank to the Borrowers (or either of them)
under the Master Agreement and apply the first amount in discharging the second amount.
The effect of any set off under this clause 11.4(c) shall be effective to extinguish
or, as the case may require, reduce the liabilities of the Bank under the Master
Agreement.
	 
	 	(d)	 	The rights conferred on the Bank by this Clause 11.4 shall be in addition to,
and without prejudice to or limitation of, the rights of netting and set off conferred
on the Bank by the Master Agreement. Each of he Borrowers acknowledges that the Bank
shall be under no obligation to make any payment to the Borrowers (or either of them)
under or pursuant to the Master Agreement if, at the time that payment becomes due,
there shall have occurred an Event of Default or Potential Event of Default, or an
Event of Default or Termination Event (as those terms are respectively defined in the
Master Agreement).

	11.5	 	Earnings Accounts and the Retention Account 

	 	(a)	 	The Borrowers shall procure that all moneys payable in respect of the Earnings
of each Vessel shall be paid to the relevant Earnings Account free from Encumbrances.
Unless and until an Event of Default shall occur (whereupon the provisions of Clause
11.3 shall be applicable) no monies shall be withdrawn from the Earnings Accounts save
as hereinafter provided:

	 	(i)	 	first: in payment of any and all sums whatsoever due
and payable to the Bank hereunder (such sums to be paid in such order as the
Bank may in its sole discretion elect);
	 
	 	(ii)	 	second: during each month of the Security Period (but
by no later than, in the case of the first such month, the date falling thirty
(30) days after the Drawdown Date and, in the case of each subsequent month,
the same date of that month), the Borrowers shall cause to be transferred from
the Earnings Accounts to the Retention Account of the aggregate amount of the
Earnings of the Vessels received in the Earnings Accounts during the preceding
month:

50

 

	 	aa)	 	one sixth (1/6th) of the amount of
the Repayment Instalment specified in Clause 4.1 falling due for
payment on the next following Repayment Date; and
	 
	 	bb)	 	the relevant fraction of the amount of interest
on the Loan falling due on the next due date for payment of interest
under this Agreement.

	 	 	 	The expression “relevant fraction” in relation to an amount of interest on
the Loan falling due for payment means a fraction (which shall be notified
by the Bank to the Borrowers at the beginning of each Interest Period) where
the numerator is always one and where the denominator shall always be six
(6) except in the case of an Interest Period of less than six (6) months, in
which case the denominator shall be the number of months comprised in such
Interest Period; and
	 
	 	(iii)	 	thirdly: any balance shall be freely available to the
Borrowers to be used for any purpose not inconsistent with the Borrowers’ other
obligations under the Loan Agreement.

	 	(b)	 	If the aggregate amount of the Earnings of the Vessels received in the Earnings
Accounts is insufficient in any month for the required transfer to be made from the
Earnings Accounts to the Retention Account in accordance with Clause 11.5(a), the
Borrowers shall make up the amount of such insufficiency on demand from the Bank, but,
without prejudice to its right to make such demand, the Bank may elect to make up the
whole or any part of such insufficiency by increasing the amount of any transfer to be
made in accordance with Clause 11.5(a)(ii) from the aggregate amount of such Earnings
received in the next or subsequent months.
	 
	 	(c)	 	Until the occurrence of an Event of Default, which is continuing (or an event
which, with the giving of notice and/or lapse of time or other applicable condition,
might constitute an Event of Default), the Bank shall on each Repayment Date and on
each due date for the payment of interest under this Agreement apply in accordance with
the provisions of Clause 5.1 the relevant part of the balance then standing to the
credit of the Retention Account as shall be required to make payment of the Repayment
Instalment specified in Clause 4.1 then due under the terms of this Agreement or
payment of interest then due under the terms of this Agreement and such transfer shall
constitute a pro tanto satisfaction of the Borrowers’ obligations to pay such repayment
instalment or interest (as the case may be) then due under this Agreement.
	 
	 	(d)	 	Any amounts for the time being standing to the credit of the Retention Account
shall bear interest at the rate from time to time offered by the Bank to its customers
for Dollar deposits of similar amounts and for periods similar to those for which such
amounts are likely to remain standing to the credit of the Retention Account. Such
interest shall, provided that the foregoing provisions of this Clause 11.5
shall have been complied with and provided that no Event of Default (or event
which, with the giving of notice and/or lapse of time or other applicable condition,
might constitute an Event of Default) shall have occurred and is continuing, be
released to the Borrowers.

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	 	(e)	 	Nothing herein contained shall be deemed to affect the absolute obligation of
the Borrowers to pay interest on and to repay the Loan as provided in Clauses 3 and 4
or shall constitute a manner or postponement thereof.
	 
	 	(f)	 	The Borrowers will comply with any written requirement of the Bank from time to
time as to the location or re-location of the Earnings Accounts and the Retention
Account (or any of them) and will from time to time enter into such documentation as
the Bank may reasonably require in order to create or maintain in favour of the Bank a
Security Interest in the Earnings Accounts and the Retention Account, all at cost and
expense of the Borrowers.
	 
	 	(g)	 	The Borrowers hereby jointly and severally covenant with the Bank that the
Earnings Accounts, the Retention Account and any moneys therein shall not be charged,
assigned, transferred or pledged nor shall there be granted by the Borrowers or
suffered to arise any third party rights over or against the whole or any part of the
Earnings Accounts (or either of them) other than in favour of the Bank.
	 
	 	(h)	 	Each Earnings Account shall be operated in accordance with the Bank’s usual
terms and conditions (full knowledge of which each of the Borrowers hereby
acknowledges) and subject to the Bank’s usual charges levied on such accounts and/or
transactions conducted on such accounts (as from time to time notified by the Bank to
the Borrowers).
	 
	 	(i)	 	Each of the Borrowers hereby warrants that sufficient monies to meet the next
Repayment Instalment plus interest thereon will be accumulated each and every month in
the Retention Account.
	 
	 	(j)	 	After the occurrence of an Event of Default, which is continuing, the balance
(if any) including any accrued interest standing to the credit of the Earnings Accounts
and the Retention Account (or any of them) shall be applied in accordance with the
provisions of Clause 11.3.
	 
	 	(k)	 	Upon payment in full of all principal, interest and all other amounts due to
the Bank under the terms of this Agreement and the other Security Documents, any
balance then standing to the credit of the Retention Account and/or the Earnings
Accounts (or either of them) shall be released and paid to the Borrowers or to
whomsoever else may be entitled to receive such balance.

	12.	 	UNLAWFULNESS, INCREASED COSTS
	 
	12.1	 	Unlawfulness If any change in, or introduction of, any law, regulation or regulatory
requirement or any request of any central bank, monetary, regulatory or other authority or any
order of any court renders it unlawful or contrary to any such regulation, requirement,
request or order for the Bank to advance the Commitment or the relevant part thereof (as the
case may be) or to maintain or fund the Loan, notice shall be given promptly by the Bank to
the Borrowers whereupon the Commitment shall be reduced to zero and the Borrowers shall be
obliged to prepay the Loan in accordance with such notice, together with accrued interest
thereon to the date of prepayment and all other sums payable by the Borrowers under this
Agreement.
	 
	12.2	 	Change of circumstances If any change in or in the interpretation of any applicable
law or regulation, by any government or governmental authority or agency, makes it unlawful
for the Bank to maintain or give effect to its obligations or to claim or receive any amount
payable to the Bank under this Agreement, then the Bank may

52

 

	 	 	serve written notice on the
Borrowers declaring its obligations under this Agreement terminated in whole or in part,
whereupon the same shall terminate forthwith and the Borrowers will immediately repay the Loan
and accrued interest to the date of prepayment together with all other Outstanding
Indebtedness to the Bank pursuant to the terms of the notice.

	12.3	 	Increased Cost If, as a result of (a) 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 or other banking or monetary controls or requirements
which affects the manner in which the Bank allocates capital resources to its obligations hereunder and those (“Basel II”) which shall
replace, amend and/or supplement the provisions set out in the statement (as in effect as of
the date of this Agreement) of the Basle I committee on banking supervision dated July 1988
and entitled “international convergence of capital measurement and capital structures” or
any amendatory or substitute agreement thereof, or (b) compliance by the Bank with any
request from any applicable fiscal or monetary authority (whether or not having the force of
law but, if not having the force of law, with which the Bank habitually complies) or (c) any
other set of circumstances affecting the Bank:

	 	(a)	 	the cost to the Bank of making the Commitment or any part thereof or
maintaining or funding the Loan is increased or an additional cost on the Bank is
imposed; and/or
	 
	 	(b)	 	subject the Bank to Taxes or the basis of Taxation (other than Taxes or
Taxation on the overall net income of the Bank) in respect of any payments to the Bank
under this Agreement or any of the other Security Documents is changed; and/or
	 
	 	(c)	 	the amount payable or the effective return to the Bank under any of the
Security Documents is reduced; and/or
	 
	 	(d)	 	the Bank’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 Document is reduced; and/or
	 
	 	(e)	 	require the Bank to make a payment or forgo a return on or calculated by
references to any amount received or receivable by it under any of the Security
Documents is required; and/or
	 
	 	(f)	 	require the Bank 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 case (subject to Clause 12.7) the Borrowers shall pay to the Bank, from
time to time, upon demand, such additional moneys as shall indemnify the Bank for any
increased or additional cost, reduction, payment, foregone return or loss whatsoever.
	 
	12.4	 	Claim for increased cost The Bank will promptly notify the Borrowers of any
intention to claim indemnification pursuant to Clause 12.3 and such notification will be a
conclusive and full evidence binding on the Borrowers as to the amount of any increased cost
or reduction and the method of calculating the same. A claim under Clause 12.3 may be made at
any time and must be discharged by the Borrowers 

53

 

	 	 	within seven (7) days of demand. It shall
not be a defence to a claim by the Bank under this Clause 12.3 that any increased cost or
reduction could have been avoided by the Bank. Any amount due from the Borrowers (or either
of them) under Clause 12.3 shall be due as a separate debt and shall not be affected by
judgement being obtained for any other sums due under or in respect of this Agreement.

	12.5	 	Central Bank or European Central Bank reserve requirements indemnity The Borrowers
shall on demand promptly indemnify the Bank against any cost incurred or loss suffered by the
Bank as a result of its complying with the minimum reserve requirements of the European
Central Bank and/or with respect to maintaining required reserves with the relevant national
Central Bank to the extent that such compliance relates to the Commitment or deposits obtained
by it to fund the whole or part of the Loan and to the extent such cost or loss is not
recoverable by the Bank under clause 12.2.
	 
	12.6	 	Option to prepay If any additional amounts are required to be paid by the Borrowers
to the Bank by virtue of Clause 12.3, the Borrowers shall be entitled, on giving the Bank not
less than five (5) days prior notice in writing, to prepay the Loan and accrued interest
thereon, together with all other Outstanding Indebtedness on the fifth (5th) day
from the date of receipt of such notice by the Bank. Any such notice, once given, shall be
irrevocable.
	 
	12.7	 	Exception Nothing in Clause 12.3 shall entitle the Bank to receive any amount in
respect of compensation for any such liability to Taxes, increased or additional cost,
reduction, payment, foregone return or loss to the extent that the same is subject of an
additional payment under Clause 5.3 in addition to any payments made under Clause 5.3.
	 
	13.	 	ASSIGNMENT, PARTICIPATION, LENDING OFFICE
	 
	13.1	 	Binding Effect This Agreement shall be binding upon and inure to the benefit of the
Bank and the Borrowers and their respective successors and permitted assigns.
	 
	13.2	 	No Assignment by the Borrowers None of the Borrowers and any other Security Parties
may assign or transfer any of its rights and/or obligations under this Agreement or any of the
other Security Documents or any documents executed pursuant to this Agreement and/or the other
Security Documents.
	 
	13.3	 	Assignment by the Bank The Bank may at any time (with the Borrowers’ consent, such
consent not to be unreasonably withheld and the request for which shall be promptly responded
to) assign, transfer, or offer participation to any other bank or financial institution, in
whole or in part, or in any manner dispose of all or any of its rights and/or obligations
arising or accruing under this Agreement or any of the other Security Documents or any
documents executed pursuant to this Agreement and/or the other Security Documents. Any cost
of such assignment or transfer or granting participation shall be for the account of the Bank.
	 
	13.4	 	Documentation If the Bank assigns, transfers or in any other manner grants
participation in respect of all or any part of its rights or benefits or transfers all or any
of its obligations as provided in this Clause 13 each of the Borrowers undertakes, immediately
on being requested to do so by the Bank, to enter into and procure that each Security Party
enters into such documents as may be necessary or desirable to transfer to the assignee,
transferee or participant all or the relevant part of the interest of the Bank 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 assignee, transferee or participant of the Bank to
the extent of their respective interests and, in the case of a transfer of all or part of the
obligations of the Bank, the Borrowers shall 

54

 

	 	 	thereafter look only to the assignee, transferee
or participant in respect of that proportion of the obligations of the Bank under this
Agreement assumed by such assignee, transferee or participant. Each of the Borrowers hereby
expressly consents to any subsequent transfer of the rights and obligations of the Bank and
undertakes that it shall join in and execute such supplemental or substitute agreements as may
be necessary to enable the Bank to assign and/or transfer and/or grant participation in
respect of its rights and obligations to another branch or to one or more banks or financial
institutions in a syndicate or otherwise.

	13.5	 	Disclosure of information The Bank may, without the consent of the Borrowers but
subject to prior consultation with the Borrowers, disclose to a prospective assignee,
substitute or 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 if the Bank first procures that the relevant prospective
assignee, substitute or transferee or other person (such person together with any prospective
assignee, substitute or transferee being hereinafter described as the “Prospective Assignee”) shall undertake to the Borrowers to
keep secret and confidential and, not without the prior written consent of the Borrowers,
disclose to any third party any of the information, reports or documents supplied by the
Bank provided, however, that the Prospective Assignee shall be entitled to disclose
such information, reports or documents in the following situations:

	 	(a)	 	in relation to any proceedings arising out of this Agreement or the other
Security Documents to the extent considered necessary by the Prospective Assignee to
protect its interest; or
	 
	 	(b)	 	pursuant to a court order relating to discovery or otherwise; or
	 
	 	(c)	 	pursuant to any law or regulation or to any fiscal, monetary, tax, governmental
or other competent authority; or
	 
	 	(d)	 	to its auditors, legal or other professional advisers.

	 	 	In addition the Prospective Assignee shall be entitled to disclose or use any such
information, reports or documents if the information contained therein shall have emanated
in conditions free from confidentiality, bona fide from some person other than the Bank or
the Borrowers.
	 
	13.6	 	Change of Lending Office The Bank shall be at liberty to transfer the Loan to any
branch or branches, and upon notification of any such transfer, the word “Bank” in this
Agreement and in the other Security Documents shall mean the Bank, acting through such branch
or branches and the terms and provisions of this Agreement and of the other Security Documents
shall be construed accordingly.
	 
	14.	 	MISCELLANEOUS
	 
	14.1	 	Cumulative Remedies The rights and remedies of the Bank contained in this Agreement
and the other Security Documents are cumulative and neither exclusive of each other nor of any
other rights or remedies conferred by law.
	 
	14.2	 	Waivers No failure, delay or omission by the Bank to exercise any right, remedy or
power vested in the Bank under this Agreement and/or the other Security Documents or by law
shall impair such right or power, or be construed as a waiver of, or as an acquiescence in any
default by the Borrowers (or either of them), 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. In the 

55

 

	 	 	event of the Bank on any occasion
agreeing to waive any such right, remedy or power, or consent to any departure from the strict
application of the provisions of this Agreement or of any other Security Document, such waiver
shall not in any way prejudice or affect the powers conferred upon the Bank under this
Agreement and the other Security Documents or the right of the Bank thereafter to act strictly
in accordance with the terms of this Agreement and the other Security Documents. No
modification or waiver by the Bank of any provision of this Agreement or of any of the other
Security Documents nor any consent by the Bank to any departure therefrom by any Security
Party shall be effective unless the same shall be in writing and then shall only be effective
in the specific case and for the specific purpose for which given. No notice to or demand on
any such party in any such case shall entitle such party to any other or further notice or
demand in similar or other circumstances.

	14.3	 	Integration of Terms This Agreement contains the entire agreement of the parties and
its provisions supersede the provisions of the commitment letter dated 3rd July, 2007 (save
for the provisions thereof which relate to fees) any and all other prior
correspondence and oral negotiation by the parties in respect of the matters regulated by
this Agreement.
	 
	14.4	 	Amendments This Agreement and any other Security Documents shall not be amended or
varied in their respective terms by any oral agreement or representation or in any other
manner other than by an instrument in writing of even date herewith or subsequent hereto
executed by or on behalf of the parties hereto or thereto.
	 
	14.5	 	Invalidity of Terms In the event of any provision contained in one or more of this
Agreement, the other Security Documents and any other documents executed pursuant hereto or
thereto being invalid, illegal or unenforceable in any respect under any applicable law in any
jurisdiction whatsoever, such provision shall be ineffective as to the jurisdiction only
without affecting the remaining provisions hereof or thereof. If, however, this event becomes
known to the Bank prior to the drawdown of the Commitment or of the relevant part thereof the
Bank shall be entitled to refuse drawdown until this discrepancy is remedied. In case that
the invalidity of a part results in the invalidity of the whole agreement, it is hereby agreed
that there will exist a separate obligation of the Borrowers for the prompt payment to the
Bank of all the Outstanding Indebtedness. Where, however, the provisions of any such
applicable law may be waived, they are hereby waived by the parties hereto to the full extent
permitted by the law to the intent that this Agreement, the other Security Documents and any
other documents executed pursuant hereto or thereto shall be deemed to be valid binding and
enforceable in accordance with their respective terms.
	 
	14.6	 	Inconsistency of Terms In the event of any inconsistency between the provisions of
this Agreement and the provisions of any other Security Document the provisions of this
Agreement shall prevail.
	 
	14.7	 	Language and genuineness of documents

	 	(a)	 	Language All certificates, instruments and other documents to be
delivered under or supplied in connection with this Agreement or any of the other
Security Documents shall be in the English language (or such other language as the Bank
shall agree) or shall be accompanied by a certified English translation upon which the
Bank shall be entitled to rely.
	 
	 	(b)	 	Certification of documents Any copies of documents delivered to the
Bank shall be duly certified as true, complete and accurate copies by appropriate
authorities or legal counsel practicing in Greece or otherwise as it will be acceptable
to the Bank at the sole discretion of the Bank.

56

 

	 	(c)	 	Certification of signature Signatures on Board or shareholder
resolutions, Secretary’s certificates and any other documents are, at the discretion of
the Bank, to be verified for their genuineness by appropriate Consul or other competent
authority.

	14.8	 	Further assurances Each of the Borrowers undertakes 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 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.
	 
	14.9	 	Conflicts In the event of any conflict between this Agreement and any of the other
Security Documents, and the provisions of this Agreement shall prevail.
	 
	14.10	 	Process of personal data The Bank may, with the consent of the Borrowers (and each
of the Borrowers hereby expressly gives such consent to the Bank) to communicate for process
(in the meaning of law 2472/97) the Borrowers’ personal data contained in this Agreement, the
Security Documents or any of them, in the Earnings Accounts, the Retention Account, the
Reserve Account and in any other account in its name held with the Bank and any accounts in
the Borrowers’ name kept with the Bank at any relevant time to an inter-banking database
record called “Teiresias” for the exclusive use of the banks and financial institutions. Each
of the Borrowers is entitled at any relevant time to revoke its consent given hereunder by
prior written notice to the registrar of “Teiresias A.E.” at 2, Alamanas street, 15125
Maroussi, Athens, Greece.
	 
	14.11	 	Third Party rights No term of this Agreement is enforceable under the Contracts
(Rights of Third Parties) Act 1999 by a person who is not a party to this Agreement.
	 
	15.	 	NOTICES AND OTHER MATTERS
	 
	15.1	 	Notices Every notice, request, demand or other communication under the Agreement or,
unless otherwise provided therein, under any of the other Security Documents shall.

	 	(a)	 	be in writing delivered personally or by first-class prepaid letter (airmail if
available), or shall be served through a process server or subject to Clause 10.7 by
fax;
	 
	 	(b)	 	be deemed to have been received, subject as otherwise provided in this
Agreement or the relevant Security Document, in the case of a fax, at the time of
dispatch as per transmission report (provided in either case that if the date of
despatch is not a business day 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 in
the case of a letter when delivered or served personally or five (5) days after it has
been put into the post; and
	 
	 	(c)	 	be sent:

	 	(i)	 	if to be sent to any Security Party, to:
	 
	 	 	 	c/o Newfront Shipping S.A.,

57

 

	 	 	 	83 Akti Miaouli and Flessa Street,

185 38 Piraeus, Greece,

Fax No.: +30210 4288503

Attention: Chief Financial Officer

	 	(ii)	 	in the case of the Bank at:
	 
	 	 	 	EFG EUROBANK ERGASIAS S.A.,

83 Akti Miaouli and Flessa Street,

Piraeus GR 185 38, Greece

Fax No.: (+30) 210 4587877

Attention: The Manager

	 	 	 	or to such other person, address or fax number as is notified by the relevant
Security Party or the Bank (as the case may be) to the other parties to this
Agreement and, in the case of any such change of address or fax number notified to
the Bank, the same shall not become effective until notice of such change is
actually received by the Bank and a copy of the notice of such change is signed by
the Bank.

	15.2	 	Process Agent Mr. George Livanos, presently c/o Newfront Shipping S.A., 83 Akti
Miaouli and Flessa Street, 185 38 Piraeus, Greece, is hereby appointed by each of the
Borrowers as agent to accept service (hereinafter “Process Agent”) upon whom any judicial or
extrajudicial process in Greece may be served (including but without limitation any documents
initiating legal proceedings in Greece) and any notice, request, demand payment order,
announcement of claim, any enforcement process in Greece or other communication under this
Agreement or any of the Security Documents. In the event that the Process Agent (or any
substitute process agent notified to the Bank in accordance with the foregoing) cannot be
found at the address specified above (or, as the case may be, notified to the Bank), which
will be conclusively proved by the affidavit of a process server to that effect, the authority
of the Process Agent as agent to accept service shall be deemed to have ceased and service of
documents may be effected in accordance with the procedure provided by the relevant provisions
on service of process provided by the Hellenic Procedural Code. In case, however, that such
Process Agent is found at any other address, the Bank shall have the right to serve the
documents either on the Process Agent at such address or in accordance with the procedure
provided by the relevant law.
	 
	15.3	 	Confidentiality

	 	(a)	 	Each of the parties hereto agrees and undertakes to keep confidential any
documentation and any confidential information concerning the business, affairs,
directors or employees of the other which comes into its possession during this
Agreement and not to use any such documentation, information for any purpose other than
for which it was provided.
	 
	 	(b)	 	Each of the Borrowers acknowledges and accepts that the Bank may be required by
law, regulation or regulatory requirement or any request of any central bank or any
court order to disclose information and deliver documentation relating to each of the
Borrowers and the transactions and matters in relation to this Agreement and/or the
other Security Documents to governmental or regulatory agencies and authorities.
	 
	 	(c)	 	Each of the Borrowers acknowledges and accepts that in case of occurrence of
any of the Events of Default the Bank may disclose information and deliver
documentation relating to each of the Borrowers and the transactions and matters in
relation to this Agreement and/or the other Security Documents to 

58

 

	 	 	 	third parties to the
extent that this is necessary for the enforcement or the contemplation of enforcement
of the Bank’s rights or for any other purpose for which in the opinion of the Bank,
such disclosure would be useful or appropriate for the interests of the Bank or
otherwise and each of the Borrowers expressly authorises any such disclosure and
delivery.

	 	(d)	 	Each of the Borrowers acknowledges and accepts that the Bank may be prohibited
to disclosing information to each of the Borrowers by reason of law or duties of
confidentiality owed or to be owed to other persons.

	16.	 	APPLICABLE LAW AND JURISDICTION
	 
	16.1	 	Law This Agreement shall be governed by and construed in accordance with English
Law.
	 
	16.2	 	Submission to Jurisdiction

	 	(a)	 	For the exclusive benefit of the Bank, each of the Borrowers agrees that any
legal action or proceedings arising out or in connection with this Agreement against
the Borrowers (or either of them) or any of its assets may be brought in the English
Courts. Each of the Borrowers irrevocably and unconditionally submits to the
jurisdiction of such courts and irrevocably designates, appoints and empowers Messrs.
Saville & Co. currently located at One Carey Lane, London EC2V 8AE, England (Attn: Richard Saville), or their successors to receive for
it and on its behalf, service of process issued out of the English courts in any
such legal action or proceedings and irrevocably undertakes to maintain such an
agent in England acceptable to the Bank, provided however, that each of the
Borrowers further agrees that in the event that (i) Messrs. Saville & Co.
(or any other agent appointed by the Borrowers in substitution of Messrs.
Saville & Co. and acceptable to the Bank) close or fail to maintain a
business presence in England, or (ii) the Bank, in its sole discretion, shall
determine that service of process on the said agents is not feasible or may be
insufficient under the Laws of England, then any summons, writ or other legal
process issued against the Borrowers (or either of them) in England may be served
upon Messrs. The Law Debenture Corporate Services Limited, currently located at
Fifth Floor, 100 Wood Street, London EC2V 7EX, England (hereinafter called the
“Process Agent for English Proceedings”), or their successors, who are hereby
authorised to accept such service, which shall be deemed to be good service on each
of the Borrowers, and each of the Borrowers hereby further agrees that in the event
that (aa) Messrs. The Law Debenture Corporate Services Limited close or fail to
maintain a business presence in England, or (bb) the Bank, in its sole discretion,
shall determine that service of process on Messrs. The Law Debenture Corporation
Ltd., is not feasible or may be insufficient under the Laws of England, then the
Borrowers, within five (5) days after written notice from the Bank, shall appoint a
substitute Process Agent for English Proceedings acceptable to the Bank and if the
Borrowers fail to make such appointment within the said five days period, the Bank
may appoint such substitute Process Agent for English Proceedings and the Bank is
hereby irrevocably authorised to effect such appointment on each Borrower’s behalf.
The appointment of the Process Agent for English Proceedings shall be valid and
binding on the parties hereto and to the other Security Parties from the date notice
of such appointment is given by the Bank to the Borrowers in accordance with Clause
15.1.
	 
	 	(b)	 	The submission to the jurisdiction of the English Courts shall not (and shall
not be construed so as to) limit the right of the Bank to take proceedings against the
Borrowers (or either of them) in the courts of any other competent

59

 

	 	 	 	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.

	 	(c)	 	The parties further agree that subject to Clause 16.2(b) the Courts of England
shall have exclusive jurisdiction to determine any claim which the Borrowers (or either
of them) may have against the Bank arising out of or in connection with this Agreement
and each of the Borrowers hereby waives any objections to proceedings with respect to
this Agreement in such courts on the grounds of venue or inconvenient forum.

	16.3	 	Proceedings in any other country If it is decided by the Bank that any such
proceedings should be commenced in any other country, then any objections as to the
jurisdiction or any claim as to the inconvenience of the forum is hereby waived by each of the
Borrowers and it is agreed and undertaken by each of the Borrowers to instruct lawyers in that
country to accept service of legal process and not to contest the validity of such proceedings
as far as the jurisdiction of the court or courts involved is concerned and each of the
Borrowers agrees that any judgement or order obtained in an English court shall be conclusive
and binding on each of the Borrowers and shall be enforceable without review in the courts of
any other jurisdiction.
	 
	16.4	 	In this Clause 16 “proceedings” means proceedings of any kind, including an application for a
provisional or protective measure.

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

	 	 	 	 	 	 	 

	SIGNED by

	 	 	)	 	 	 
	Mr. Michail Livanos

	 	 	)	 	 	 
	for and on behalf of

	 	 	)	 	 	 
	Grand Esmeralda Inc.,

	 	 	)	 	 	/s/ Michail Livanos
	 

	 	 	 	 	 	 
	of Liberia, in the presence of:

	 	 	)	 	 	Attorney-in-Fact

	 	 	 	 	 
	 	 	 
	Witness: 	/s/ Efstratios Kalantzis
 	 	 
	 	Name:  	Efstratios Kalantzis 	 	 
	 	Address: 	13 Defteras Merarchias Str.

Piraeus, Greece 	 	 
	 	Occupation: 	Attorney-at-law 	 	 
	 

	 	 	 	 	 	 	 

	SIGNED by

	 	 	)	 	 	 
	Mr. Michail Livanos

	 	 	)	 	 	 
	for and on behalf of

	 	 	)	 	 	 
	Grand Fortuneship Inc.,

	 	 	)	 	 	/s/ Michail Livanos
	 

	 	 	 	 	 	 
	of Liberia, in the presence of:

	 	 	)	 	 	Attorney-in-Fact

	 	 	 	 	 
	 	 	 
	Witness: 	/s/ Efstratios Kalantzis
 	 	 
	 	Name:  	Efstratios Kalantzis 	 	 
	 	Address: 	13 Defteras Merarchias Str.

Piraeus, Greece 	 	 
	 	Occupation: 	Attorney-at-law 	 	 
	 

60

 

	 	 	 	 	 	 	 

	SIGNED by

	 	 	)	 	 	 
	Mr. Athanassios Doudoulas and

	 	 	)	 	 	/s/ Athanassios Doudoulas
	 

	 	 	 	 	 	 
	Mrs. Stavroula Ydreou

	 	 	)	 	 	Attorney-in-Fact
	for and on behalf of

	 	 	)	 	 	 
	EFG Eurobank Ergasias S.A.

	 	 	)	 	 	/s/ Stavroula Ydreou
	 

	 	 	 	 	 	 
	in the presence of:

	 	 	)	 	 	Attorney-in-Fact

	 	 	 	 	 
	 	 	 
	Witness: 	/s/ Efstratios Kalantzis 
 	 	 
	 	Name:  	Efstratios Kalantzis 	 	 
	 	Address: 	13 Defteras Merarchias Street

Piraeus, Greece 	 	 
	 	Occupation: 	Attorney-at-law 	 	 
	 

61

 

	 	 	 	 	 

SCHEDULE 1

Form of Drawdown Notice

(referred to in Clause 2.2)

	To: 	 	EFG Eurobank Ergasias S.A.

83 Akti Miaouli and Flessa Street,

Piraeus GR 185 37, Greece

(the “Bank”)

[l] October, 2007

	Re: 	 	 US$32,000,000 Loan Agreement dated [l]October, 2007 made between (A)
Grand Esmeralda Inc., of Liberia and Grand Fortuneship Inc.,
of Liberia (the “Borrowers”) and (B) the Bank (the “Loan Agreement”).

We refer to the Loan Agreement and hereby give you notice that we wish to draw the Commitment in
the amount of ($32,000,000) (Thirty two million Dollars) on [l] October, 2007 and we select a
first Interest Period in respect of the Loan of [l] months/terminating on [l]. The
funds should be credited to ([l][l] [name and number of account] [l]) with
[l], New York, USA.

We confirm that:

	(a)	 	no event or circumstance has occurred and is continuing which constitutes a Default;
	 
	(b)	 	the representations and warranties contained in Clause 6 of the Loan Agreement and the
representations and warranties contained in each of the other Security Documents are true and
correct at the date hereof as if made with respect to the facts and circumstances existing at
such date;
	 
	(c)	 	the borrowing to be effected by the drawing of the Commitment will be within our corporate
powers, has been validly authorised by appropriate corporate action and will not cause any
limit on our borrowings (whether imposed by statute, regulation, agreement or otherwise) to be
exceeded; and
	 
	(d)	 	to the best of our knowledge and belief there has been no material adverse change in our
financial position or in the consolidated financial position of ourselves and the other
Security Parties from that described by us to the Bank in the negotiation of the Loan
Agreement.

Words and expressions defined in the Loan Agreement shall have the same meanings when used herein.

	 	 	 	 	 	 	 

	SIGNED by

	 	 	)	 	 	 
	Mr. Michael Livanos

	 	 	)	 	 	 
	for and on behalf of

	 	 	)	 	 	 
	GRAND ESMERALDA INC.,

	 	 	)	 	 	 
	 

	 	 	 	 	 	 
	of Liberia, in the presence of:

	 	 	)	 	 	Attorney-in-Fact

62

 

	 	 	 	 	 	 	 

	SIGNED by

	 	 	)	 	 	 
	Mr. Michael Livanos

	 	 	)	 	 	 
	for and on behalf of

	 	 	)	 	 	 
	GRAND FORTUNESHIP INC.,

	 	 	)	 	 	 
	 

	 	 	 	 	 	 
	of Liberia, in the presence of:

	 	 	)	 	 	Attorney-in-Fact

63

 

SCHEDULE 2

Form of Compliance Certificate

	To: 	 	EFG Eurobank Ergasias S.A.
	 
	From: 	 	Grandunion Inc.

Date [l] 200[ ]

	Re: 	 	US$18,500,000 loan agreement dated [l], 2007 (the “Loan Agreement”) made between (1)
Grand Esmeralda Inc. and Grand Fortuneship Inc. (as Borrowers) and (2) EFG Eurobank Ergasias S.A. (as Lender).

Dear Sirs

We refer to the Loan Agreement. Words and expressions whose meanings are defined in the Loan
Agreement shall have the same meanings when used herein.

We hereby confirm that [except as stated below] as at the date hereof to the best of our knowledge
and belief after due inquiry:-

	1.	 	all the Borrowers’ undertakings in the Loan Agreement set out in clause 8 are being fully
complied with and, in particular, by reference to the latest [audited][unaudited] financial
statements, management accounts and all other current relevant information available to us on
a consolidated basis:

	 	i)	 	the amount maintained as at the date hereof in accounts held in the names
of the Borrowers (or either of them) and/or the Corporate Guarantor and/or other
members of the Group as cash balances is $[l], which is at least equal 5% of
the Group’s total Indebtedness as at the relevant time;
	 
	 	ii)	 	the market value adjusted net worth of the Group is [l]; and
	 
	 	iii)	 	the ratio of market value adjusted Total Assets to Total Liabilities of the
Group is [l] :

	2.	 	no Default has occurred;
	 
	3.	 	appendix 1 hereto contains a comprehensive list of all Group Members as at the date hereof
and the jurisdictions in which they are incorporated and an up-to-date corporate structure
chart for the Group;
	 
	4.	 	the representations set out in clause 7 of the Loan Agreement are true and accurate with
reference to all facts and circumstances now existing and all required authorisations have
been obtained and are in full force and effect; and

[State any exceptions/qualifications to the above statements]

64

 

[Attach list of current Group Members and current corporate structure chart]

Yours faithfully,

	 	 	 	 	 	 	 	 	 

	GRANDUNION INC.
	 
	By	 	 	 	 	 	By	 	 
	 	 	 

	 	 	 	 	 	 
	 

	 	[Chief Financial Officer]
	 	 	 	 	 	Director:
	 

	 	[Director:]	 	 	 	 	 	 

65exv10w6

Exhibit 10.6

Private & confidential

Dated: 9th July, 2010

EFG EUROBANK ERGASIAS S.A.

(as lender)

- and -

GRAND ESMERALDA INC.

(as Borrower)

- and -

GRANDUNION INC.

(as Existing Corporate Guarantor)

- and -

NEWLEAD HOLDINGS LTD.

(as New Corporate Guarantor)

- and -

NEWLEAD BULKERS S.A.

(as Approved Manager)

 

 

THIRD SUPPLEMENTAL AGREEMENT

in relation to a Loan Agreement

dated 22nd October, 2007

for a loan facility of up to US$32,000,000

 

 

Theo V. Sioufas & Co.

Law Offices

Piraeus

(J35-350156/A)

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	CLAUSE	 	HEADINGS	 	PAGE	 
	 	 	 
	 	 	 	 
	1.	 	Definitions
	 	 	3	 
	 	 	 
	 	 	 	 
	2.	 	Representations and warranties
	 	 	4	 
	 	 	 
	 	 	 	 
	3.	 	Agreement of the Bank
	 	 	5	 
	 	 	 
	 	 	 	 
	4.	 	Conditions
	 	 	6	 
	 	 	 
	 	 	 	 
	5.	 	Variations to the Principal Agreement
	 	 	7	 
	 	 	 
	 	 	 	 
	6.	 	Entire agreement and amendment
	 	 	13	 
	 	 	 
	 	 	 	 
	7.	 	Continuance of Principal Agreement and the Security Documents
	 	 	13	 
	 	 	 
	 	 	 	 
	8.	 	Fees and expenses
	 	 	13	 
	 	 	 
	 	 	 	 
	9.	 	Miscellaneous
	 	 	13	 
	 	 	 
	 	 	 	 
	10.	 	Applicable law and jurisdiction
	 	 	 	 

 

 

THIS AGREEMENT is made this 9th day of July, 2010

BETWEEN

	(1)	 	EFG EUROBANK ERGASIAS S.A., a banking societe anonyme duly incorporated under the laws of
Greece, having its registered office at 8 Othonos Street, Athens, Greece, acting for the
purposes of this Agreement through its office at 83 Akti Miaouli & Flessa Street, Piraeus,
Greece (the “Bank”);
	 
	(2)	 	GRAND ESMERALDA INC., a company incorporated in the Republic of Liberia, having its
registered office at 80 Broad Street, Monrovia, Liberia, as borrower (hereinafter called the
“Borrower”, which expression shall include its successors); and
	 
	(3)	 	GRANDUNION INC., a company organised and existing under the laws of the Republic of
Marshall Islands and having its registered office a company incorporated in Marshall Islands
having its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro,
Marshall Islands MH 96960; (the “Existing Corporate Guarantor”);
	 
	(4)	 	NEWLEAD HOLDINGS LTD., a company duly incorporated under the laws of Bermuda, having its
registered office at Canon’s Court, 22 Victoria Street, Hamilton, Bermuda and listed and
trading in the NASDAQ Stock Exchange, New York (hereinafter called the “New Corporate
Guarantor”, which expression shall include its successors in title); and
	 
	(5)	 	NEWLEAD BULKERS S.A., a company duly incorporated under the laws of the Republic of
Liberia having its registered office at 80 Broad Street, Monrovia, Liberia and an office
established in Greece (83 Akti Miaouli and Flessa Street, GR 185.38 Piraeus) pursuant to the
Greek laws 89/67, 378/68, 27/75 and 814/79 (the “Approved Manager”, which expression shall
include its successors in title);

AND IS SUPPLEMENTAL to:

	(i)	 	a loan agreement dated 22nd October, 2007 made between (1) the Bank and (2) the
Borrower and others, as joint and several borrowers (the “Initial Borrowers”), as amended
and/or supplemented by:

	 	(a)	 	a First Supplemental Agreement dated 15th June, 2009 and made
between (inter alia) the Bank and the Initial Borrowers (the “First Supplemental
Agreement”); and

1

 

	 	(b)	 	a Second Supplemental Agreement dated 28th June, 2010 and made
between (inter alia) the Bank and the Initial Borrowers, (the “Second Supplemental
Agreement”)
	 
	 	 	 	on the terms and conditions of which the Bank has advanced to the Initial Borrowers, on a
joint and several basis, a loan of up to Thirty two million Dollars ($32,000,000) (the
“Loan”) for the purposes therein specified
	 
	 	 	 	(the said Loan Agreement as amended and/or supplemented by the First Supplemental Agreement
and the Second Supplemental Agreement is hereinafter called the “Principal Agreement”) (the
Principal Agreement as hereby amended and as the same may hereinafter be amended and/or
supplemented is hereinafter called the “Loan Agreement”);

	(ii)	 	a 1992 ISDA Master Agreement dated 22nd October 2007 as amended and/or
supplemented by the First Supplemental Agreement and the Second Supplemental Agreement (the
“Principal ISDA Master Agreement”) made between the Initial Borrowers, as Party B and the
Bank, as Party A.

WHEREAS :

	(A)	 	The Borrower, the Existing Corporate Guarantor and the Approved Manager hereby jointly and
severally acknowledge and confirm that (a) the Bank has advanced to the Initial Borrowers, on
a joint and several basis, the full amount of the Loan in the principal amount of United
States Dollars Thirty two million (US$32,000,000) in one advance and (b) as the date hereof
the amount of US$15,355,000 (United States Dollars Fifteen Million Three hundred Fifty Five
thousand) remains outstanding.
	 
	(B)	 	Pursuant to a Corporate Guarantee dated 22nd October 2007 and granted by the
Existing Corporate Guarantor (the “Existing Corporate Guarantee”) the Existing Corporate
Guarantor irrevocably and unconditionally guaranteed the due and timely repayment of the Loan
and interest and default interest accrued thereon and the performance of all the obligations
of the Initial Borrowers under the Principal Loan Agreement, the Principal ISDA Master
Agreement and the Security Documents executed in accordance thereto.
	 
	(C)	 	the Borrower and (inter alia) the New Corporate Guarantor have requested the Bank to consent
to:

	 	(a)	 	the amendment of the Margin;
	 
	 	(b)	 	the release of the Existing Corporate Guarantor from its obligations under the
Existing Corporate Guarantee;

2

 

	 	(c)	 	the transfer of the total number of the issued and outstanding shares of the
shareholders of the Borrower to the New Corporate Guarantor;
	 
	 	(d)	 	the non compliance by the Borrower of its covenants under Clause 8.4(c), and
8.9(b) for the whole Waiver Period (as hereinafter defined); and
	 
	 	(e)	 	the amendment of the Principal Agreement as set out in Clause 5 hereof;

and the Bank has agreed so to do conditionally upon terms that (inter alia) the Principal Agreement
shall be amended in the manner hereinafter set out.

NOW THEREFORE IT IS HEREBY AGREED AS FOLLOWS:

	1.	 	Definitions
	 
	1.1	 	Words and expressions defined in the Principal Agreement and not otherwise defined herein
(including the Recitals hereto) shall have the same meanings when used in this Agreement.
	 
	1.2	 	In addition, in this Agreement the words and expressions specified below shall have the
meanings attributed to them below:
	 
	 	 	“Effective Date” means the date, not being later than 1st July, 2010 (or such
later date as the Bank may agree) upon which all the conditions contained in Clause 4 shall
have been satisfied and this Agreement shall become effective;
	 
	 	 	“Loan Agreement” means the Principal Agreement as hereby amended and as the same may from
time to time be further amended and/or supplemented;
	 
	 	 	“Master Agreement” means the Principal ISDA Master Agreement as hereby amended and as the
same may from time to time be further amended and/or supplemented;
	 
	 	 	“Mortgage Amendment No. 2” in relation to the Vessel, means the amendment No. 2 to the first
preferred Liberian Ship mortgage registered over the Vessel in favour of the Bank, whereby
the said first mortgage shall be amended, executed or (as the context may require) to be
executed by the Borrower in favour of the Bank in form satisfactory to the Bank;
	 
	 	 	“New Corporate Guarantee” means a guarantee given or, as the context may require, to be
given by the New Corporate Guarantor in form and substance satisfactory to the Bank as
security for (inter alia) the Outstanding Indebtedness and any and all other obligations of
the Borrower under the Loan Agreement and the Master Agreement;

3

 

	 	 	“New Corporate Guarantor” means the person specified as New Corporate Guarantor at the
beginning of this Agreement;
	 
	 	 	“New Security Documents” means the New Corporate Guarantee and the Mortgage Amendment No. 2;
	 
	 	 	“Vessel” means the m/v “GRAND ESMERALDA” of approximately 36,725 gt and 23,310 nt, built in
1990 in Japan by TSU Works NKK in 1990, lawfully registered
under the laws and flag of the Republic of Liberia in the Ships’ Register of the Port of
Monrovia in the ownership of the Borrower and having Official No. 12671, IMO No. 8920062,
Call Sign A8GX9;
	 
	1.3	 	In this Agreement:

	 	(a)	 	Where the context so admits words importing the singular number only shall
include the plural and vice versa and words importing persons shall include firms and
corporations;
	 
	 	(b)	 	clause headings are inserted for convenience of reference only and shall be
ignored in construing this Agreement;
	 
	 	(c)	 	references to Clauses are to clauses of this Agreement save as may be otherwise
expressly provided in this Agreement; and
	 
	 	(d)	 	all capitalised terms used herein and not otherwise defined herein shall have
the meanings ascribed to them in the Principal Agreement.

	2.	 	Representations and warranties
	 
	2.1	 	The Borrower, the Existing Corporate Guarantor, the Approved Manager and the New Corporate
Guarantor hereby jointly and severally represent and warrant to the Bank as at the date hereof
that the representations and warranties set forth in the Principal Agreement and the Security
Documents (updated mutatis mutandis to the date of this Agreement) are (and will be on the
Effective Date) true and correct as if all references therein to “this Agreement” were
references to the Principal Agreement as amended and supplemented by this Agreement.
	 
	2.2	 	In addition to the above the Borrower, the Existing Corporate Guarantor, the Approved Manager
and the New Corporate Guarantor hereby jointly and severally represent and warrant to the Bank
as at the date of this Agreement that:

	 	a.	 	each of the corporate Security Parties is duly formed, is validly existing and
in good standing under the laws of the place of its incorporation has full power to
carry on its business as it is now being conducted and to enter into and perform its
obligations under the Principal Agreement, this Agreement and the

4

 

	 	 	 	New Security
Documents and has complied with all statutory and other requirements relative to its
business and does not have an established place of business in any part of the United
Kingdom or the USA;

	 	b.	 	all necessary licences, consents and authorities, governmental or otherwise
under this Agreement, the Principal Agreement and the New Security Documents have been
obtained and, as of the date of this Agreement, no
further consents or authorities are necessary for any of the Security Parties to
enter into this Agreement or otherwise perform its obligations hereunder;
	 
	 	c.	 	this Agreement constitutes, and each of the New Security Documents on the
execution thereof will constitute, the legal, valid and binding obligations of the
Security Parties thereto enforceable in accordance with its terms;
	 
	 	d.	 	the execution and delivery of, and the performance of the provisions of this
Agreement and the New Security Documents do not, and will not contravene any applicable
law or regulation existing at the date hereof or any contractual restriction binding on
any of the Security Parties or its respective constitutional documents;
	 
	 	e.	 	no action, suit or proceeding is pending or threatened against any of the
Borrower, the Approved Manager and the New Corporate Guarantor or its assets before any
court, board of arbitration or administrative agency which could or might result in any
material adverse change in the business or condition (financial or otherwise) of the
Borrower, the Approved Manager or the New Corporate Guarantor; and
	 
	 	f.	 	none of the Borrower, the Approved Manager and the New Corporate Guarantor is
and at the Effective Date will be in default under any agreement by which it is or will
be at the Effective Date bound or in respect of any financial commitment, or
obligation.

	3.	 	Agreement of the Bank
	 
	3.1	 	The Bank, relying upon each of the representations and warranties set out in Clause 2 hereby
agree with the Borrower, subject to and upon the terms and conditions of this Agreement and in
particular, but without limitation, subject to the fulfilment of the conditions precedent set
out in Clause 4, to consent to:

	 	a.	 	the amendment of the Margin;
	 
	 	b.	 	the transfer of the total number of the issued and outstanding shares of the
shareholders of the Borrower to the New Corporate Guarantor;

5

 

	 	c.	 	the release of the Existing Corporate Guarantor from its obligations under the
Existing Corporate Guarantee and the replacement of the Existing Corporate Guarantor by
the New Corporate Guarantor as Corporate Guarantor of the obligations of the Borrower
under the Principal Loan Agreement and the Principal ISDA Master Agreement as hereby
amended; and
	 
	 	d.	 	the non compliance by the Borrower of its covenants under Clause 8.4(c), and
8.9(b) for the whole Waiver Period (as hereinafter defined);

	 	 	and that the Principal Agreement and the Principal ISDA Master Agreement be amended in the
manner more particularly set out in Clause 5.1.
	 
	4.	 	Conditions
	 
	4.1	 	The agreement of the Bank contained in Clause 3.1 shall be expressly subject to the
fulfilment of the conditions set out in this Clause and further subject to the condition that
the Bank shall have received on or before the Effective Date in form and substance
satisfactory to the Bank and its legal advisers:

	 	a.	 	a certificate of good standing or equivalent document issued by the competent
authorities of the place of its incorporation in respect of each of the Borrower and
the New Corporate Guarantor;
	 
	 	b.	 	certified and duly legalised copies of resolutions passed at a meeting of the
Board of Directors of each of the Borrower and the New Corporate Guarantor and
certified and duly legalised copies of the resolutions passed at a meeting of the
shareholders of the Borrower (and of any corporate shareholder thereof) evidencing
approval of this Agreement and of such of the New Security Documents to which is or is
to be a party and authorising appropriate officers or attorneys to execute the same and
to sign all notices required to be given under this Agreement on its behalf or other
evidence of such approvals and authorisations as shall be acceptable to the Bank;
	 
	 	c.	 	all documents evidencing any other necessary action or approvals or consents
with respect to this Agreement and the New Security Documents;
	 
	 	d.	 	the original of any power(s) of attorney issued in favour of any person
executing this Agreement or any of the New Security Documents on behalf of each of the
Borrower and the New Corporate Guarantor;
	 
	 	e.	 	such favourable legal opinions from lawyers acceptable to the Bank and its
legal advisors on such matters concerning the laws of Bermuda and such other relevant
jurisdiction as the Bank shall require; and

6

 

	 	f.	 	each of the New Security Documents duly executed by the respective parties
thereto and, where appropriate, duly registered in favour of the Bank;

	5.	 	Variations to the Principal Agreement
	 
	5.1	 	In consideration of the agreement of the Bank contained in Clause 3.1, the Borrower, the
Approved Manager and the New Corporate Guarantor hereby jointly and severally agree with the
Bank that (subject to the satisfaction of the conditions precedent contained in Clause 4) with
effect from the Effective Date, the provisions of the Principal Agreement shall be varied
and/or amended and/or supplemented as follows:

	 	a.	 	The definitions of Clause 1.2 of the Principal Agreement referred to
hereinbelow shall be deleted and replaced by the following:

	 	i.	 	““Corporate Guarantor” by:
	 
	 	 	 	“Corporate Guarantor” means NewLead Holdings Ltd., a company duly
incorporated under the laws of Bermuda, whose registered office is at
Canon’s Court, 22 Victoria Street, Hamilton, Bermuda, and any other person
nominated by the Borrower and acceptable to the Bank which may give a
Corporate Guarantee;”;
	 
	 	ii.	 	““Margin” by:
	 
	 	 	 	“Margin” means three point seventy five per centum (3.75%) per annum”;
	 
	 	iii.	 	“Mortgage” by:
	 
	 	 	 	“Mortgage” in relation to the Vessel means the first preferred Liberian
mortgage executed by the Owner thereof in favour of the Bank as amended by
the First Mortgage Amendment and the Mortgage Amendment No. 2;
	 
	 	iv.	 	““Waiver Period” by:
	 
	 	 	 	“Waiver Period” means a period starting from the 1st July 2010
and terminating on the 30th June 2011;”

	b.	 	As from the Effective Date, the following new definitions, shall be added to Clause 1.2 of
the Principal Agreement reading as follows:
	 
	 	 	“Effective Date” means the date on which the Third Supplemental Agreement has been executed
by the relevant parties thereto;

7

 

	 	 	“Third Supplemental Agreement” means the agreement dated 1st July 2010
supplemental to this Agreement made between (1) the Borrower, (2) the Corporate Guarantor
(3) the Approved Manager and (4) the Bank;
	 
	 	 	“Mortgage Amendment No. 2” in relation to the Vessel, means the amendment No. 2 to the
first preferred Liberian Ship mortgage registered over the Vessel in favour of the Bank,
whereby the said first mortgage shall be amended, executed or (as the context may require)
to be executed by the Owner in favour of the Bank in form satisfactory to the Bank;
	 
	c.	 	with effect from the Effective Date the first paragraph of Clause 4.1 (Repayment) of the
Principal Agreement shall be deleted and shall be substituted by the following:

	 	“4.1	 	Repayment

	 	 	The Borrower shall and it is expressly undertaken by the Borrower to repay the Loan
amounting as of the Effective Date in the principal sum of US$15,355,000 (US Dollars Fifteen
Million Three hundred Fifty Five thousand) by:

	 	(a)	 	sixteen (16) consecutive quarterly repayment instalments (the “Repayment
Instalments”), each to be repaid on each of the Repayment Dates so that the first
Repayment Instalment be repaid on the 24th July, 2010 and each of the
subsequent ones consecutively falling due for payment on each of the dates falling
three (3) months after the immediately proceeding Repayment Date with the last (the
16st) of such Repayment Instalments falling due for payment on the Final
Maturity Date; subject to the provisions of this Agreement, the amount of each such
Repayment Instalment shall be $565,000 (five hundred sixty five thousand Dollars; and
	 
	 	(b)	 	a final balloon instalment of Six million three hundred fifteen thousand
Dollars ($6,315,000) (the “Balloon Instalment”), which shall be repayable together with
the last (the 16th) Repayment Instalment on the Final Maturity Date;

	d.	 	With effect from the Effective Date Clause 8.10 (a) shall be deleted;

	 	e.	 	With effect as from the Effective Date, paragraph (d) of sub-clause 8.9
(Banking Operations-Liquidity-Excess Earnings) shall be deleted and be replaced by the
following:
	 
	 	“(d)	 	the amount of Dollars One Million One Hundred Thirty Thousand ($1,130,000)
currently standing to the credit of the Retention Account shall remain credited
therein throughout the Security Period provided however that the Borrower shall have
the option to request the Bank to apply at any time

8

 

	 	 	said amount towards payment of the
Balloon Instalment referred to in Clause 4.1(b) hereof;”

	f.	 	With effect as from the Effective Date, a new Clause 8.11 heading (Additional
Covenants in respect of the New Corporate Guarantor) shall be added to Clause 8
(Covenants) reading as follows:

“8.11 Additional Covenants in respect of the Corporate Guarantor

The Borrower hereby undertakes with the Bank that, from the date of this Agreement and as
long as any moneys are due and/or owing and/or outstanding under this Agreement or any of
the other Security Documents, it will:

	(a)	 	Maintenance of the Business and Legal Structure of the New Corporate
Guarantor
	 
	 	 	ensure and procure that throughout the Security Period the Corporate Guarantor shall
continue to be (a) a holding company of ocean-going vessels, listed and trading in
the Nasdaq Stock Exchange, New York and (b) the legal and beneficial owner of 100%
of the issued shares in the capital of the Borrower, whether directly or indirectly;
	 
	(b)	 	Control of the Corporate Guarantor
	 
	 	 	ensure and procure that:

	 	(i)	 	at least ten percent (10%) of the total issued share capital
of the Corporate Guarantor is directly held by Grandunion Inc of the Marshall
Islands throughout the Security Period; and
	 
	 	(ii)	 	at least fifty point one per cent (50.1%) of the total issued
share capital of Grandunion Inc. of the Mashall Islands is directly held by
Messrs Nikolaos Fistes and Michael Zolotas throughout the Security Period;

	(c)	 	Management of the Corporate Guarantor
	 
	 	 	ensure that Messrs. Michael Zolotas and Nikolaos Fistes shall remain Chief Executive
Officer and Chairman respectively of the Corporate Guarantor throughout the Security
Period; and
	 
	(d)	 	Financial Covenants of the Corporate Guarantor

	 	(aa)	 	ensure that the Corporate Guarantor shall maintain a ratio of
EBITDA over Interest Expenses of not less than:

9

 

	 	(i)	 	in respect of the Accounting Period commencing
on 1st January 2013 until the Accounting Period ending on 30
December 2013, 2.0 to 1.00; and
	 
	 	(ii)	 	thereafter and until the end of the Security
Period, 2.5 to 1.00; and

	 	(bb)	 	ensure that the Corporate Guarantor shall maintain an
Equity Ratio of no less than:

	 	(i)	 	in respect of the Accounting Period commencing
on 1st January 2013 until the Accounting Period ending on 30
December 2013, 25%; and
	 
	 	(ii)	 	thereafter and until the end of the Security
Period,, 30% ; and

	 	(cc)	 	ensure and procure that the Corporate Guarantor shall maintain
throughout the Security Period a minimum unencumbered liquidity of no less than
5% of the Total Debt;

“Accounting Period”, “Accounting Information” and “Total Assets” shall have the meaning
given to them in Clause 8.10 of this Agreement ;

“EBITDA” means, in respect of an Accounting Period, the aggregate amount of consolidated
pre-tax profits of the Group before interest, taxes, depreciation and amortization;

“Equity Ratio” means Shareholders Equity as a percentage of Total Assets adjusted, in each
case, for the difference between Fleet Market Value and Fleet Book Value;

“Fleet Book Value” means, at the end of an Accounting Period, the aggregate book value of
the Fleet Vessels less depreciation as stated in the most recent financial statements
delivered pursuant to clause 8.10 of this Agreement;

“Fleet Market Value” means, as of the date of calculation, the aggregate market value of all
the Fleet Vessels, the value of each of which determined in accordance with the relevant
provisions of this Agreement;

“Fleet Vessels” means the vessels (including, but not limited to, the Vessel) from time to
time owned by a member of the Group (each a “Fleet Vessel”);

“Interest Expenses” means, in respect of an Accounting Period, the aggregate of all
interest incurred by any member of the Group (excluding any amounts owing by one member of
the Group to another member of the Group) and any net amounts payable under interest rate
hedge agreements;

10

 

“Total Debt” means, at any time, the aggregate outstanding principal, capital or nominal
amount of all Borrowed Money of the Group calculated on a consolidated basis at that time;

“Shareholders Equity” means, at any time in respect of the Group, the amount of shareholders
equity of the Group on a consolidated basis which would be included as shareholders equity in
the consolidated balance sheet of the Group drawn up at such time;

	 	 	The expressions used in this Clause 8.11 shall be construed in accordance with law and
accounting principles internationally accepted as used in the financial statements of the
Corporate Guarantor produced in accordance with sub-clause 8.1(a), and for the purposes of
this Agreement:
	 
	5.2	 	With effect from the Effective Date Sub-clause (c)(i) to clause 15.1 of the Principal
Agreement is hereby amended to read as follows:

	 	“(i)	 	if to be sent to any Security Party, to:

	 
	 	 	 	Newlead Bulkers S.A.

83 Akti Miaouli and Flessa Street,

185 38 Piraeus, Greece,

Fax No.: +30 213 014 8209

Attention: Chief Financial Officer”.

	5.3	 	As from the date of execution of the Principal Agreement sub clause 15.2 (Process Agent) of
the Loan Agreement shall be deleted and shall be substituted by the following:
	 
	 	 	“15.2 The Guarantor hereby appoints Mr. Peter- Panagiotis Kallifidas, an attorney-at-law,
whose present address is at c/o NEWLEAD BULKERS S.A, Akti Miaouli 83 and Flessa
Street as agent to accept service in Greece (hereinafter called the “Process Agent”) upon
whom any judicial process extra-judicial notice or protest, court documents, order for
payment, enforcement procedures announcement of claim or any other Court or out-of-court
procedure documents or any other documents may be served and any other notice, request,
demand or other communication under this Agreement or any of the Security Documents. In the
event that the Process Agent (or any substitute process agent notified to the Bank in
accordance with the foregoing) cannot be found at the address specified above (or, as the
case may be, notified to the Bank), which will be conclusively proved by the affidavit of a
process server to that effect, the authority of the Process Agent as agent to accept service
shall be deemed to have ceased and service of documents may be effected in accordance with
the procedure provided by the relevant law. In case, however, that such Process Agent is
found at any other address, the Bank shall have the right to serve the documents

11

 

	 	 	either on
the Process Agent at such address or in accordance with the procedure provided by the
relevant law.”
	 
	5.4	 	With effect from the Effective Date hereof, the definition and all references in the
Principal Agreement the Principal ISDA Master Agreement and the Security Documents, to:

	 	(a)	 	“Corporate Guarantor” shall be construed as references to the New Corporate
Guarantor;
	 
	 	(b)	 	“Mortgage” shall be construed as references to the Mortgage as amended by the
Second Mortgage Amendment;
	 
	 	(c)	 	“this Agreement”, “the Master Agreement” “hereunder” and the like and in the
Security Documents to the “Loan Agreement” “the Master Agreement” shall be construed as
references to the Principal Agreement, or as the case may be, the Principal ISDA Master
Agreement as amended and/or supplemented by this Agreement.

	5.5	 	With effect from the Effective Date the provisions of the Principal ISDA Master Agreement
shall be varied and/or amended and/or supplemented as follows:

	 	a.	 	by inserting after the words “Party A (as lender)” in the last
line of the definition of “Loan Facility” in Part 5, paragraph (e) of the
Schedule to the Principal ISDA Master Agreement the words:
	 
	 	 	 	“and as further amended by a First Supplemental Agreement dated
15th June 2009, a Second Supplemental Agreement dated 28th June,
2010 both made between Party B (as borrowers) and Party A (as lender) and a
Third Supplemental Agreement dated 1st July 2010 made between
Party B (as borrower) and Party A (as lender)”;

	5.6 	 	With effect from the Effective Date all obligations imposed upon the Corporate Guarantor
under the Principal Agreement shall be deemed to be imposed upon the New Corporate Guarantor.
	 
	5.7	 	The definition “Security Documents” with effect as from the date hereof shall be deemed to
include the Security Documents as amended and/or supplemented in pursuance to the terms hereof
as well as the New Security Documents and any document or documents (including if the context
requires the Loan Agreement) that may now or hereafter be executed as security for the
repayment of the Loan, interest thereon and any other moneys payable by the Borrower under the
Principal Agreement and the Security Documents (as herein defined) as well as for the
performance by the Borrower and the other Security Parties (as herein defined) of all

12

 

	 	 	obligations, covenants and agreements pursuant to the Principal Agreement this Agreement
and/or the Security Documents.
	 
	6.	 	Entire agreement and amendment
	 
	6.1	 	The Principal Agreement, the Security Documents, and this Agreement represent the entire
agreement among the parties hereto with respect to the subject matter hereof and supersede any
prior expressions of intent or understanding with respect to this transaction and may be
amended only by an instrument in writing executed by the parties to be bound or burdened
thereby.
	 
	6.2	 	This Agreement is supplementary to and incorporated in the Principal Agreement, all terms and
conditions whereof, including, but not limited to, provisions on payments, calculation of
interest and Events of Default, shall apply to the performance and interpretation of this
Agreement.
	 
	7.	 	Continuance of Principal Agreement and the Security Documents
	 
	7.1	 	Save for the alterations to the Principal Agreement made or deemed to be made pursuant to
this Agreement and such further modifications (if any) thereto as may be necessary to make the
same consistent with the terms of this Agreement the Principal Agreement shall remain in full
force and effect and the security constituted by the Security Documents executed by the
Borrower and the other Security Parties shall continue and remain valid and enforceable.
	 
	8.	 	Fees and expenses
	 
	8.1	 	The Borrower and the New Corporate Guarantor jointly and severally covenant and agree to pay
and discharge all upon demand on a full indemnity basis and from time to time all costs,
charges and expenses (including legal fees) incurred by the Bank in connection with the
negotiation, preparation, execution and enforcement or attempted enforcement of this Agreement
and any document executed pursuant thereto and/or in preserving or protecting or attempting to
preserve or protect the security created hereunder and/or under the Security Documents.
	 
	8.2	 	The Borrower and the New Corporate Guarantor jointly and severally covenant and agree to pay
and discharge all stamp duties, registration and recording fees and charges and any other
charges whatsoever and wheresoever payable or due in respect of this Agreement and/or any
document executed pursuant hereto.
	 
	9.	 	Miscellaneous
	 
	9.1	 	The provisions of clause 15.1 of the Principal Agreement shall extend and apply to the giving
or making of notices or demands hereunder as if the same were expressly stated herein save
that notices or demands hereunder as regards the Borrower should

13

 

	 	 	be sent to such address or
facsimile number as the Borrower have advised in writing to the Bank on the date of the
Principal Agreement.
	 
	9.2	 	No term of this Agreement is enforceable under the Contracts (Rights of Third Parties) Act
1999 by a person who is not party to this Agreement.
	 
	10.	 	Entire Agreement and Amendment; Effect on Principal Agreement
	 
	10.1	 	The Principal Agreement, the Principal ISDA Master Agreement, the Security Documents and this
Agreement represent the entire agreement among the parties hereto with respect to the subject
matter hereof and supersede any prior expressions of intent or
understanding with respect to this transaction and may be amended only by an instrument in
writing executed by the party or parties to be bound or burdened thereby.
	 
	10.2	 	Except to the extent that each of the Principal Agreement and the Principal ISDA Master
Agreement is expressly amended or supplemented by this Agreement, all terms and conditions of
the Principal Agreement remain in full force and effect. This Agreement is supplementary to
and incorporated in the Principal Agreement, all terms and conditions whereof, including, but
not limited to, provisions on payments, calculation of interest and Events of Default, shall
apply to the performance and interpretation of this Agreement.
	 
	10.3	 	No waiver of any such right, remedy or power, or any consent to any departure from the
strict application of the provisions of this Agreement, the Loan Agreement, Principal ISDA
Master Agreement or of any other Security Document shall in any way prejudice or affect the
powers conferred upon the Bank under this Agreement, the Loan Agreement, Principal ISDA Master
Agreement and the other Security Documents or the right of the Bank thereafter to act strictly
in accordance with the terms of this Agreement, the Loan Agreement, Principal ISDA Master
Agreement and the other Security Documents nor shall, any delay or omission by the Bank to
exercise any right, remedy or power vested in the Bank under this Agreement, the Loan
Agreement, Principal ISDA Master Agreement and/or the other Security Documents or by law,
impair such right or power, or be construed as a waiver of, or as an acquiescence in any
default by the Borrower and/or any other Security Party, 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.
	 
	11.	 	Applicable law and Jurisdiction

This Supplemental Agreement shall be governed by and construed in accordance with English law. The
provisions of Clause 15.2 (Process Agent) as hereby amended, Clause 16.1 (Law and Jurisdiction) and
Clause 16.2 (Submission to Jurisdiction) of the Principal

14

 

Agreement shall extend and apply to this
Supplemental Agreement as if the same were (mutatis mutandis) herein expressly set forth.

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

15

 

EXECUTION PAGE

THE BORROWER

	 	 	 	 	 	 	 

	SIGNED by

	 	 	)	 	 	 
	Mr. Panagiotis-Peter Kallifidas

	 	 	)	 	 	 
	for and on behalf of

	 	 	)	 	 	 
	Grand Esmeralda Inc.,

	 	 	)	 	 	/s/ Panagiotis-Peter Kallifidas
	of Liberia, in the presence of:

	 	 	)	 	 	Attorney-in-Fact

	 	 	 	 	 
	 	 	 
	Witness:  	/s/ Efstratios Kalantzis
 	 	 
	 	Name:  	Efstratios Kalantzis 	 	 
	 	Address:
	13 Defteras Merarchias Str.

Piraeus, Greece
	 	 
	 	Occupation: 	Attorney-at-law 	 	 
	 

THE EXISTING CORPORATE GUARANTOR

	 	 	 	 	 	 	 

	SIGNED by

	 	 	)	 	 	 
	Mr. Michail Livanos

	 	 	)	 	 	 
	for and on behalf of

	 	 	)	 	 	 
	Grand union Inc.,

	 	 	)	 	 	/s/ Michail Livanos
	of the Marshall Islands, in the presence of:

	 	 	) 	 	 	Attorney-in-Fact

	 	 	 	 	 
	 	 	 
	Witness:  	/s/ Efstratios Kalantzis
 	 	 
	 	Name:  	Efstratios Kalantzis 	 	 
	 	Address: 
	13 Defteras Merarchias Str.

Piraeus, Greece
	 	 
	 

THE NEW CORPORATE GUARANTOR

	 	 	 	 	 	 	 

	SIGNED by

	 	 	)	 	 	 
	Mr. Panagiotis-Peter Kallifidas

	 	 	)	 	 	 
	for and on behalf of

	 	 	)	 	 	 
	NewLead Holdings Ltd.,

	 	 	)	 	 	/s/ Panagiotis-Peter Kallifidas
	of Bermuda, in the presence of:

	 	 	)	 	 	Attorney-in-fact

16

 

	 	 	 	 	 
	 	 	 
	Witness:  	/s/ Efstratios Kalantzis
 	 	 
	 	Name:  	Efstratios Kalantzis 	 	 
	 	Address: 
	13 Defteras Merarchias Str.

Piraeus, Greece
	 	 
	 	Occupation: 	Attorney-at-law 	 	 
	 

THE APPROVED MANAGER

	 	 	 	 	 	 	 

	SIGNED by

	 	 	)	 	 	 
	Mr. Panagiotis-Peter Kallifidas

	 	 	)	 	 	 
	for and on behalf of

	 	 	)	 	 	 
	Newleads Bulkers S.A..,

	 	 	)	 	 	/s/ Panagiotis-Peter Kallifidas
	of Liberia, in the presence of:

	 	 	)	 	 	Attorney-in-Fact

	 	 	 	 	 
	 	 	 
	Witness:  	/s/ Efstratios Kalantzis
 	 	 
	 	Name:  	Efstratios Kalantzis 	 	 
	 	Address: 
	13 Defteras Merarchias Str.

Piraeus, Greece
	 	 
	 	Occupation: 	Attorney-at-law 	 	 
	 

THE BANK

	 	 	 	 	 	 	 

	SIGNED by

	 	 	)	 	 	 
	Mr. Stavroula — Sotiria Ydreou

	 	 	)	 	 	/s/ Stavroula-Sotiria Ydreou
	and Mr. Athanassios Doudoulas

	 	 	)	 	 	Attorney-in-Fact
	for and on behalf of

	 	 	)	 	 	 
	EFG EUROBANK ERGASIAS S.A.

	 	 	)	 	 	 
	in the presence of:

	 	 	)	 	 	/s/ Athanassios Doudoulas
	 

	 	 	 	 	 	Attorney-in-Fact

	 	 	 	 	 
	 	 	 
	Witness:  	/s/
Angela Arcadis
 	 	 
	 	Name:  	Angela Arcadis 	 	 
	 	Address: 
	13 Defteras Merarchias Str.

Piraeus, Greece
	 	 
	 	Occupation: 	Attorney-at-law 	 	 
	 

17

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