Document:

EX-4.42 First Preferred Mortgage

Exhibit 4.42

Private & Confidential

Dated                      April 2008

 

ADVENTURE EIGHT S.A.

in favour of

CREDIT SUISSE

(1)

 

 

 

(2)

 

 

FIRST PREFERRED MARSHALL ISLANDS SHIP MORTGAGE

on m.v. Free Jupiter

 

 

 

Contents

	 	 	 	 	 	 	 	 	 
	Clause	 	 	 	Page
	 	1	 	 	Definitions

	 	 	2	 
	 	 	 	 	 
	 	 	 	 
	 	2	 	 	Grant, conveyance and mortgage

	 	 	5	 
	 	 	 	 	 
	 	 	 	 
	 	3	 	 	Covenants to pay and perform

	 	 	5	 
	 	 	 	 	 
	 	 	 	 
	 	4	 	 	Continuing security and other matters

	 	 	6	 
	 	 	 	 	 
	 	 	 	 
	 	5	 	 	Covenants

	 	 	7	 
	 	 	 	 	 
	 	 	 	 
	 	6	 	 	Powers of Mortgagee to protect security and remedy defaults

	 	 	14	 
	 	 	 	 	 
	 	 	 	 
	 	7	 	 	Powers of Mortgagee on Event of Default

	 	 	14	 
	 	 	 	 	 
	 	 	 	 
	 	8	 	 	Application of moneys

	 	 	15	 
	 	 	 	 	 
	 	 	 	 
	 	9	 	 	Remedies cumulative and other provisions

	 	 	16	 
	 	 	 	 	 
	 	 	 	 
	 	10	 	 	Costs and indemnity

	 	 	16	 
	 	 	 	 	 
	 	 	 	 
	 	11	 	 	Attorney

	 	 	17	 
	 	 	 	 	 
	 	 	 	 
	 	12	 	 	Further assurance

	 	 	17	 
	 	 	 	 	 
	 	 	 	 
	 	13	 	 	Total amount and maturity

	 	 	17	 
	 	 	 	 	 
	 	 	 	 
	 	14	 	 	Law, jurisdiction and other provisions

	 	 	18	 
	 	 	 	 	 
	 	 	 	 
	 	15	 	 	Other provisions

	 	 	18	 
	 	 	 	 	 
	 	 	 	 
	 	16	 	 	Notices

	 	 	18	 
	 	 	 	 	 
	 	 	 	 
	Schedule 1 The Loan Agreement	 	 	22	 
	 	 	 	 	 
	 	 	 	 
	Schedule 2 The Master Swap Agreement	 	 	23	 
	 	 	 	 	 
	 	 	 	 
	Schedule 3 The Corporate Guarantee	 	 	24	 

 

 

THIS FIRST PREFERRED SHIP MORTGAGE is made the                 day of April 2008

BY:

	(1)	 	ADVENTURE EIGHT S.A., a company incorporated under the laws of the Republic of Marshall
Islands, whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island,
Majuro, Marshall Islands MH96960 (the “Owner”);

IN FAVOUR OF:

	(2)	 	CREDIT SUISSE of Paradeplatz 8, 8070 Zurich, Switzerland, acting for the purposes of this
Mortgage through its branch at St. Alban-Graben 1-3, 4002 Basel, Switzerland (the
“Mortgagee”).

WHEREAS:

	(A)	 	the Owner is the sole, absolute and unencumbered, legal and beneficial owner of the whole of
the m.v. Free Jupiter documented under the laws and flag of the Republic of the Marshall
Islands, Official Number 2506, of 27,176 gross tons and 15,533 net tons;
	 
	(B)	 	by a facility agreement dated 24 December 2007 (the “Loan Agreement”) made between (i)
FreeSeas Inc. (therein and herein referred to as the “Borrower”) as borrower and (ii) the
Mortgagee as lender (therein referred to as the “Bank”) (a copy of the form of which Loan
Agreement without its schedules is annexed hereto as schedule 1), the Mortgagee agreed (inter
alia) to make available to the Borrower, upon the terms and conditions therein contained, a
reducing revolving credit facility of up to $87,000,000;
	 
	(C)	 	by a 2002 ISDA master swap agreement dated as of 24 December 2007 (the “Master Swap
Agreement”) and made between the Borrower and the Mortgagee (a copy of the form of which
Master Swap Agreement with its Schedule is annexed hereto as schedule 2), the Mortgagee agreed
the terms and conditions upon which it would enter into (inter alia) derivative transactions
with the Borrower, whether in respect of the Loan (whether in whole or in part, as the case
may be, from time to time) or for any other purpose whatsoever. The Owner has agreed pursuant
to this Mortgage to secure the debts and obligations arising or that may arise in favour of
the Mortgagee under the Master Swap Agreement and the Owner and the Mortgagee agree for the
purpose of this Mortgage that the maximum amount of such obligations to be secured by this
Mortgage shall be seventeen million four hundred thousand Dollars ($17,400,000) (the “Swap
Obligations”);
	 
	(D)	 	pursuant to the said Loan Agreement, the Mortgagee as of the date hereof has advanced or has
agreed to advance to the Borrower (and the Borrower is indebted to the Mortgagee in) a total
principal amount of up to $87,000,000 which (together with interest (as provided in clause 3.1
of the said Loan Agreement) thereon and fees) is to be repaid and paid, as the case may be, as
provided in the Loan Agreement;
	 
	(E)	 	by a corporate guarantee (the “Corporate Guarantee”) dated            April 2008 and executed
by the Owner (therein referred to as the “Guarantor”) in favour of the Mortgagee (a copy of
the form of which Corporate Guarantee is annexed hereto as schedule 3), the Owner (inter alia)
guaranteed the payment of any moneys owing by the Borrower to the Mortgagee under the Loan
Agreement, the Master Swap Agreement and the other Security Documents;
	 
	(F)	 	the Owner, in order to secure the payment of all sums of money from time to time owing to the
Mortgagee under the said Corporate Guarantee and the performance and observance of and
compliance with all of the covenants, terms and conditions in this Mortgage and the said Loan
Agreement, the said Master Swap Agreement and the other Security Documents, has duly
authorised the execution and delivery of this First Preferred Mortgage under and pursuant to
Chapter 3 of the Maritime Act 1990 as amended of the Republic of the Marshall Islands; and
	 
	(G)	 	this Mortgage is the “Mortgage” referred to in the Loan Agreement.

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NOW THIS MORTGAGE WITNESSETH AND IT IS HEREBY AGREED as follows:

	1	 	Definitions
	 
	1.1	 	Defined expressions
	 
	 	 	Words and expressions defined in the Loan Agreement and/or the Corporate Guarantee shall,
unless the context otherwise requires or unless otherwise defined herein, have the same
meanings when used in this Mortgage.
	 
	1.2	 	Definitions
	 
	 	 	In this Mortgage unless the context otherwise requires:
	 
	 	 	“Approved Brokers” means such firm or firms of insurance brokers, appointed by the Owner, as
may from time to time be approved in writing by the Mortgagee for the purposes of this
Mortgage;
	 
	 	 	“Casualty Amount” means Two hundred and fifty thousand Dollars ($250,000) (or the equivalent
in any other currency);
	 
	 	 	“Collateral Instruments” means notes, bills of exchange, certificates of deposit and other
negotiable and non-negotiable instruments, guarantees, indemnities and other assurances
against financial loss and any other documents or instruments which contain or evidence an
obligation (with or without security) to pay, discharge or be responsible directly or
indirectly for, any indebtedness or liabilities of the Owner or any other person liable and
includes any documents or instruments creating or evidencing a mortgage, charge (whether
fixed or floating), pledge, lien, hypothecation, assignment, trust arrangement or security
interest of any kind;
	 
	 	 	“Earnings” means all moneys whatsoever from time to time due or payable to the Owner during
the Security Period arising out of the use or operation of the Ship including (but without
limiting the generality of the foregoing) all freight, hire and passage moneys, income
arising under pooling arrangements, compensation payable to the Owner in event of requisition
of the Ship 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 the Ship;
	 
	 	 	“Event of Default” means any of the events or circumstances described in clause 10.1 of the
Loan Agreement;
	 
	 	 	“Expenses” means the aggregate at any relevant time (to the extent that the same have not
been received or recovered by the Mortgagee) 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) suffered, incurred or paid by the Mortgagee in connection with
the exercise of the powers referred to in or granted by the Corporate Guarantee, the
Loan Agreement, this Mortgage, the General Assignment or any other of the Security
Documents or otherwise payable by the Owner in accordance with clause 10 of this
Mortgage or clause 8 of the General Assignment; and
	 
	 	(b)	 	interest on all such losses, liabilities, costs, charges, expenses, damages and
outgoings from the date on which the same were suffered, incurred or paid by the
Mortgagee until the date of receipt or recovery thereof (whether before or after
judgement) at a rate per annum calculated in accordance with clause 2.5 of the Corporate
Guarantee (as conclusively certified by the Mortgagee);

2

 

	 	 	“General Assignment” means a deed of assignment bearing even date herewith made between the
Owner and the Mortgagee whereby the Owner has assigned to the Mortgagee the Insurances, any
Requisition Compensation and the Earnings of the Ship;
	 
	 	 	“Guaranteed Liabilities” shall have the meaning ascribed thereto in the Corporate Guarantee;
	 
	 	 	“Insurances” means all policies and contracts of insurance (which expression includes all
entries of the Ship in a protection and indemnity or war risks association) which are from
time to time during the Security Period in place or taken out or entered into by or for the
benefit of the Owner (whether in the sole name of the Owner, or in the joint names of the
Owner and the Mortgagee or otherwise) in respect of the Ship and her Earnings or otherwise
howsoever in connection with the Ship and all benefits thereof (including claims of
whatsoever nature and return of premiums);
	 
	 	 	“Loan” means the total principal amount of up to Eighty seven million Dollars ($87,000,000)
referred to in recital (B) hereto advanced or to be advanced by the Mortgagee to the Borrower
pursuant to the Loan Agreement or (as the context may require) the amount thereof at any time
advanced and outstanding;
	 
	 	 	“Loan Agreement” means the agreement dated 24 December 2007 mentioned in recital (B) hereto;
	 
	 	 	“Loss Payable Clauses” means the provisions regulating the manner of payment of sums
receivable under the Insurances which are to be incorporated in the relevant insurance
documents, such provisions to be in the forms set out in schedule 1 to the General Assignment
or in such other form as may from time to time be required or agreed in writing by the
Mortgagee;
	 
	 	 	“Master Swap Agreement” means the 2002 ISDA Master Swap Agreement dated as of 24 December
2007 made between the Mortgagee and the Borrower mentioned in recital (C) hereto comprising
an ISDA Master Agreement (and a Schedule thereto) together with any Confirmations (as defined
therein) supplemental thereto;
	 
	 	 	“Master Swap Agreement Liabilities” means, at any relevant time, all liabilities, actual or
contingent, present or future, owing by the Borrower to the Mortgagee under the Master Swap
Agreement;
	 
	 	 	“Mortgagee” includes the successors in title and the Assignees and/or Transferees of the
Mortgagee;
	 
	 	 	“Notice of Assignment of Insurances” means a notice of assignment in the form set out in
schedule 2 to the General Assignment or in such other form as may from time to time be
required or agreed in writing by the Mortgagee;
	 
	 	 	“Outstanding Indebtedness” means the aggregate of the Guaranteed Liabilities and interest
accrued and accruing thereon, the Master Swap Agreement Liabilities up to the maximum amount
of Seventeen million four hundred thousand Dollars ($17,400,000), the Expenses and all other
sums of money from time to time owing to the Mortgagee, whether actually or contingently,
under the Corporate Guarantee, the Loan Agreement and the other Security Documents or any of
them;
	 
	 	 	“Owner” includes the successors in title of the Owner;
	 
	 	 	“Requisition Compensation” means all moneys or other compensation from time to time payable
during the Security Period by reason of the Compulsory Acquisition of the Ship;
	 
	 	 	“Security Documents” means the Corporate Guarantee, the Loan Agreement, the Master Swap
Agreement, this Mortgage, the General Assignment and any other such document as may have been
or may hereafter be executed to guarantee and/or secure all or any part of the Guaranteed
Liabilities, the Master Swap Agreement Liabilities, the Loan, interest thereon and other
moneys from time to time owing by the Owner and/or any other Security Party pursuant to the
Corporate Guarantee and/or the other Security Documents or any of them (whether or not any
such document also secures moneys from time to time owing pursuant to any other document or
agreement);

3

 

	 	 	“Security Period” means the period commencing on the date hereof and terminating upon
discharge of the security created by the Security Documents by payment of all moneys payable
thereunder;
	 
	 	 	“Ship” means the vessel described in Recital (A) hereto and includes any interest therein and
her engines, machinery, boats, tackle, outfit, spare gear, fuel, consumable or other stores,
belongings and appurtenances whether on board or ashore and whether now owned or hereafter
acquired and also any and all additions, improvements and replacements hereafter made in or
to such vessel or any part thereof or in or to her equipment and appurtenances aforesaid; and
	 
	 	 	“Total Loss” means:

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

	1.3	 	Insurance terms
	 
	 	 	In clause 5.1.1:
	 
	1.3.1	 	“excess risks” means the proportion (if any) of claims for general average, salvage and
salvage charges and under the ordinary collision clause not recoverable in consequence of the
value at which a vessel is assessed for the purpose of such claims exceeding her insured
value;
	 
	1.3.2	 	“protection and indemnity risks” means the usual risks (including oil pollution and
freight, demurrage and defence cover) covered by a protection and indemnity association which
is a member of the International Group of P&I Clubs (including, without limitation, the
proportion (if any) of any sums payable to any other person or persons in case of collision
which are not recoverable under the hull and machinery policies by reason of the
incorporation therein of Clause 8 of the Institute Time Clauses (Hulls) (1/11/95) or the
Institute Amended Running Down Clause (1/10/71) or any equivalent provision); and
	 
	1.3.3	 	“war risks” includes those risks covered by the standard form of English marine policy
with Institute War and Strikes Clauses Hulls — Time (1/11/95) attached or similar cover.
	 
	1.4	 	Headings
	 
	 	 	Clause headings and the table of contents are inserted for convenience of reference only and
shall be ignored in the interpretation of this Mortgage.
	 
	1.5	 	Construction of certain terms
	 
	 	 	In this Mortgage, unless the context otherwise requires:

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	1.5.1	 	references to clauses and schedules are to be construed as references to clauses of, and
schedules to, this Mortgage and references to this Mortgage include its schedules;
	 
	1.5.2	 	references to (or to any specified provision of) this Mortgage or any other documents
shall be construed as references to this Mortgage, that provision or that document as in
force for the time being and as amended in accordance with the terms thereof or, as the case
may be, with the agreement of the relevant parties;
	 
	1.5.3	 	words importing the plural shall include the singular and vice versa;
	 
	1.5.4	 	references to a person shall be construed as references to an individual, firm, company,
corporation, unincorporated body of persons or any Government Entity;
	 
	1.5.5	 	references to a “guarantee” include references to an indemnity or other assurance against
financial loss including, without limitation, an obligation to purchase assets or services as
a consequence of a default by any other person to pay any Indebtedness and “guaranteed” shall
be construed accordingly; and
	 
	1.5.6	 	references to statutory provisions shall be construed as references to those provisions as
replaced or amended or re-enacted from time to time.
	 
	2	 	Grant, conveyance and mortgage
	 
	 	 	For good and valuable consideration (receipt of which is hereby acknowledged by the Owner)
and, pursuant to the Corporate Guarantee and in order to secure the repayment of the
Outstanding Indebtedness and to secure the performance and observance of and compliance with
the covenants, terms and conditions contained in this Mortgage, the Corporate Guarantee, the
Loan Agreement and the Master Swap Agreement, express or implied, the Owner has granted,
conveyed and mortgaged and does by these presents grant, convey and mortgage unto the
Mortgagee, the whole of the Ship TO HAVE AND TO HOLD the same unto the Mortgagee forever,
upon the terms herein set forth, for the enforcement of the payment of the Outstanding
Indebtedness and to secure the performance and observance of and compliance with the
covenants, terms and conditions contained in this Mortgage, the Corporate Guarantee, the Loan
Agreement and the Master Swap Agreement, express or implied.
	 
	 	 	PROVIDED ONLY, and the condition of these presents is such that, if the Owner shall pay or
cause to be repaid to the Mortgagee, the Outstanding Indebtedness as and when the same shall
become due and payable in accordance with the terms of the Corporate Guarantee and this
Mortgage and shall observe and comply with the covenants, terms and conditions contained in
the Corporate Guarantee and this Mortgage, expressed or implied to be performed, observed or
complied with, by and on the part of the Owner, then these presents and the rights hereunder
shall cease, determine and be void, otherwise to be and remain in full force and effect.
	 
	 	 	IT IS NOT INTENDED that this Mortgage shall cover, and this Mortgage shall not cover,
property other than the Ship as the term “Vessel” is used in Section 308(2) of Chapter 3 of
the Maritime Act 1990 of the Republic of the Marshall Islands as amended.
	 
	3	 	Covenants to pay and perform
	 
	3.1	 	For the consideration aforesaid the Owner hereby covenants with the Mortgagee as follows:
	 
	3.1.1	 	the Owner will pay to the Mortgagee any sums payable by the Owner pursuant to the
Corporate Guarantee at the times and in the manner specified in the Corporate Guarantee;
	 
	3.1.2	 	the Owner will pay to the Mortgagee interest on any such sums and overdue interest or
other moneys payable under the Corporate Guarantee at the rates, at the times and in the
manner specified in the Corporate Guarantee;

5

 

	3.1.3	 	the Owner will pay all other moneys comprising the Outstanding Indebtedness as and when
the same shall become due and payable in accordance with the terms of the Corporate Guarantee
and this Mortgage;
	 
	3.1.4	 	the Owner will pay interest at a rate per annum calculated in accordance with clause 2.5
of the Corporate Guarantee (as conclusively certified by the Mortgagee) on any moneys which
are by this Mortgage expressed to be payable on demand and which are not paid forthwith on
demand being made as from the date of demand until payment (both before and after any
judgment) provided however that this provision shall not affect the
right of the Mortgagee to receive that part of its Expenses as comprises interest from such date prior to demand
being made as is referred to in the definition of Expenses; and
	 
	3.1.5	 	the Owner will keep, perform and observe the covenants and provisions of the Corporate
Guarantee.
	 
	4	 	Continuing security and other matters
	 
	4.1	 	Continuing security
	 
	 	 	The security created by this Mortgage shall:
	 
	4.1.1	 	be held by the Mortgagee as a continuing security for the payment of the Outstanding
Indebtedness and the performance and observance of and compliance with all of the covenants,
terms and conditions contained in the Corporate Guarantee, the Loan Agreement, the Master
Swap Agreement or this Mortgage, express or implied, and the security so created shall not be
satisfied by any intermediate payment or satisfaction of any part of the amount hereby and
thereby secured (or by any settlement of accounts between the Owner or any other person who
may be liable to the Mortgagee in respect of the Outstanding Indebtedness or any part
thereof, and the Mortgagee);
	 
	4.1.2	 	be in addition to, and shall not in any way prejudice or affect, and may be enforced by
the Mortgagee without prior recourse to, the security created by any other of the Security
Documents or by any present or future Collateral Instruments, right or remedy held by or
available to the Mortgagee or any right or remedy of the Mortgagee thereunder; and
	 
	4.1.3	 	not be in any way prejudiced or affected by the existence of any of the other Security
Documents or any such Collateral Instrument, rights or remedies or by the same becoming
wholly or in part void, voidable or unenforceable on any ground whatsoever or by the
Mortgagee dealing with, exchanging, varying or failing to perfect or enforce any of the same,
or giving time for payment or performance or indulgence or compounding with any other person
liable.
	 
	4.2	 	Rights additional
	 
	 	 	All the rights, powers and remedies vested in the Mortgagee hereunder shall be in addition to
and not a limitation of any and every other right, power or remedy vested in the Mortgagee
under the Corporate Guarantee, the Loan Agreement, the Master Swap Agreement, this Mortgage,
the other Security Documents or any Collateral Instrument or at law and all the rights,
powers and remedies so vested in the Mortgagee may be exercised from time to time and as
often as the Mortgagee may deem expedient.
	 
	4.3	 	No enquiry
	 
	 	 	The Mortgagee shall not be obliged to make any enquiry as to the nature or sufficiency of any
payment received by it under this Mortgage or to make any claim or take any action to collect
any moneys or to enforce any rights or benefits to which the Mortgagee may at any time be
entitled under this Mortgage.

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	4.4	 	Waiver of rights
	 
	 	 	The Owner hereby waives any rights under the provisions of the laws of a given country which
require the Mortgagee to levy execution against the Owner or make any demand or claim against
the Owner prior to the enforcement of rights under this Mortgage.
	 
	5	 	Covenants
	 
	5.1	 	The Owner further covenants with the Mortgagee and undertakes throughout the Security Period:
	 
	5.1.1	 	Insurance

	 	(a)	 	Insured risks, amounts and terms
	 
	 	 	 	to insure and keep the Ship insured free of cost and expense to the Mortgagee and in
the sole name of the Owner or, if so required by the Mortgagee, in the joint names of
the Owner and the Mortgagee (but without liability on the part of the Mortgagee for
premiums or calls and to procure that no other assured shall be additionally named
without the prior written consent of the Mortgagee):

	 	(i)	 	against fire and usual marine risks (including excess risks) and
war risks, on an agreed value basis, in such amounts (but not in any event less
than whichever shall be the greater of (A) the market value of the Ship for the
time being (as determined by the Mortgagee pursuant to clause 8.2 of the Loan
Agreement) and (B) of an amount which, when aggregated with the equivalent
insurance for all other Mortgaged Ships, shall be equal to at least one hundred
and twenty per cent (120%) of (1) the Loan and (2) the Swap Exposure) and upon
such terms as shall from time to time be approved in writing by the Mortgagee;
and
	 
	 	(ii)	 	against protection and indemnity risks (including pollution risks
for the highest amount in respect of which cover is or may become available for
ships of the same type, size, age and flag as the Ship) for the full value and
tonnage of the Ship (as approved in writing by the Mortgagee) and upon such
terms as shall from time to time be approved in writing by the Mortgagee; and
	 
	 	(iii)	 	in respect of such other matters of whatsoever nature and
howsoever arising in respect of which insurance would be maintained by a prudent
owner of the Ship,

	 	 	 	and to pay to the Mortgagee the cost (as conclusively certified by the Mortgagee) of
(aa) any mortgagee’s interest insurance (“MII”) (including, if the Mortgagee shall so
require, mortgagee’s additional perils (including all P&I risks) coverage (“MAP”))
which the Mortgagee may from time to time effect in respect of the Ship upon such
terms and in such amounts (not exceeding one hundred and ten per cent (110%) (in
respect of MII) and one hundred and ten per cent (110%) (in respect of MAP), in each
case, of (aa) the Loan and (bb) the Swap Exposure) as it shall deem desirable; and
(bb) any other insurance cover which the Mortgagee may from time to time effect in
respect of the Ship and/or in respect of its interest and potential third party
liability as mortgagee of the Ship as the Mortgagee shall deem desirable having
regard to any limitations in respect of amount or extent of cover which may from time
to time be applicable to any of the other insurances referred to in this clause
5.1.1(a);
	 
	 	(b)	 	Approved brokers, insurers and associations
	 
	 	 	 	to effect the insurances aforesaid in such currency as the Mortgagee may approve and
through the Approved Brokers (other than the said mortgagee’s interest insurance
which shall be effected through brokers appointed by the Mortgagee) and with such
insurance companies and/or underwriters having a Standard & Poor rating of at least
“BBB” or a comparable rating of another comparable rating agency as shall from time
to time be approved in writing by the Mortgagee; provided however that the insurances
against war risks and protection and indemnity risks may be effected by the entry of
the Ship with such war risks and protection and indemnity associations as shall from
time to time be approved in writing by the Mortgagee;

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	 	(c)	 	Fleet liens, set-off and cancellation
	 
	 	 	 	if any of the insurances referred to in clause 5.1.1(a) form part of a fleet cover,
to procure that the Approved Brokers shall undertake to the Mortgagee that they shall
neither set off against any claims in respect of the Ship any premiums due in respect
of other vessels under such fleet cover or any premiums due for other insurances, nor
cancel the insurance for reason of non-payment of premiums for other vessels under
such fleet cover or of premiums for such other insurances, and shall undertake to
issue a separate policy in respect of the Ship if and when so requested by the
Mortgagee;
	 
	 	(d)	 	Payment of premiums and calls
	 
	 	 	 	punctually to pay all premiums, calls, contributions or other sums payable in respect
of all such insurances and to produce all relevant receipts or other evidence of
payment when so required by the Mortgagee;
	 
	 	(e)	 	Renewal
	 
	 	 	 	at least fourteen (14) days before the relevant policies, contracts or entries
expire, to notify the Mortgagee of the names of the brokers and/or the war risks and
protection and indemnity associations proposed to be employed by the Owner or any
other party for the purposes of the renewal of such insurances and of the amounts in
which such insurances are proposed to be renewed and the risks to be covered and,
subject to compliance with any requirements of the Mortgagee pursuant to this clause
5.1.1, to procure that appropriate instructions for the renewal of such Insurances on
the terms so specified are given to the Approved Brokers and/or to the approved war
risks and protection and indemnity associations at least ten (10) days before the
relevant policies, contracts or entries expire, and that the Approved Brokers and/or
the approved war risks and protection and indemnity associations will at least seven
(7) days before such expiry (or within such shorter period as the Mortgagee may from
time to time agree) confirm in writing to the Mortgagee as and when such renewals
have been effected in accordance with the instructions so given;
	 
	 	(f)	 	Guarantees
	 
	 	 	 	to arrange for the execution and delivery of such guarantees or indemnities as may
from time to time be required by any protection and indemnity or war risks
association;
	 
	 	(g)	 	Hull policy documents, notices, loss payable clauses and brokers’
undertakings
	 
	 	 	 	to deposit with the Approved Brokers (or procure the deposit of) all slips, cover
notes, policies, certificates of entry or other instruments of insurance from time to
time issued in connection with such of the insurances referred to in clause 5.1.1(a)
as are effected through the Approved Brokers and procure that the interest of the
Mortgagee shall be endorsed thereon by incorporation of the relevant Loss Payable
Clause and, where the Insurances have been assigned to the Mortgagee, by means of a
Notice of Assignment of Insurances (signed by the Owner and by any other assured who
shall have assigned its interest in the Insurances to the Mortgagee) and that the
Mortgagee shall be furnished with pro forma copies thereof and a letter or letters of
undertaking from the Approved Brokers in such form as shall from time to time be
required by the Mortgagee;
	 
	 	(h)	 	Associations’ loss payable clauses, undertakings and certificates
	 
	 	 	 	to procure that any protection and indemnity and/or war risks associations in which
the Ship is for the time being entered shall endorse the relevant Loss Payable Clause
on the relevant certificate of entry or policy and shall furnish the Mortgagee with a
copy of such certificate of entry or policy and a letter or letters of undertaking in
such form as may from time to time be required by the Mortgagee;

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	 	(i)	 	Extent of cover and exclusions
	 
	 	 	 	to take all necessary action and comply with all requirements which may from time to
time be applicable to the Insurances (including, without limitation, the making of
all requisite declarations within any prescribed time limits and the payment of any
additional premiums or calls) so as to ensure that the Insurances are not made
subject to any exclusions or qualifications to which the Mortgagee has not given its
prior written consent and are otherwise maintained on terms and conditions from time
to time approved in writing by the Mortgagee;
	 
	 	(j)	 	Correspondence with brokers and associations
	 
	 	 	 	to provide to the Mortgagee, at the time of each such communication, copies of all
written communications between the Owner and the Approved Brokers and approved war
risks and protection and indemnity associations which relate to compliance with
requirements from time to time applicable to the Insurances including, without
limitation, all requisite declarations and payments of additional premiums or calls
referred to in clause 5.1.1(i);
	 
	 	(k)	 	Independent report
	 
	 	 	 	if so requested by the Mortgagee, but at the cost of the Owner, to furnish the
Mortgagee from time to time with a detailed report signed by an independent firm of
marine insurance brokers appointed by the Mortgagee dealing with the insurances
maintained on the Ship and stating the opinion of such firm as to the adequacy
thereof;
	 
	 	(l)	 	Collection of claims
	 
	 	 	 	to do all things necessary and provide all documents, evidence and information to
enable the Mortgagee to collect or recover any moneys which shall at any time become
due in respect of the Insurances;
	 
	 	(m)	 	Employment of Ship
	 
	 	 	 	not to employ the Ship or suffer the Ship to be employed otherwise than in conformity
with the terms of the Insurances (including any warranties express or implied
therein) without first obtaining the consent of the insurers to such employment and
complying with such requirements as to extra premium or otherwise as the insurers may
prescribe; and
	 
	 	(n)	 	Application of recoveries
	 
	 	 	 	to apply all sums receivable under the Insurances which are paid to the Owner in
accordance with the Loss Payable Clauses in repairing all damage and/or in
discharging the liability in respect of which such sums shall have been received;

	5.1.2	 	Ship’s name and registration
	 
	 	 	not to change the name of the Ship and to keep the Ship registered as a Marshall Islands
ship and not to do or suffer to be done anything, or omit to do anything the doing or
omission of which could or might result in such registration being forfeited or imperilled
or which could or might result in the Ship being required to be registered under any other
flag than the Marshall Islands flag and not to register the Ship or permit its
registration under any other flag without the prior written consent of the Mortgagee;

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	5.1.3	 	Repair
	 
	 	 	to keep the Ship in a good and efficient state of repair and to procure that all repairs
to or replacement of any damaged, worn or lost parts or equipment are effected in such
manner (both as regards workmanship and quality of materials) as not to diminish the value of the
Ship;
	 
	5.1.4	 	Modification; removal of parts; equipment owned by third parties
	 
	 	 	not without the prior written consent of the Mortgagee to or suffer any other person to:

	 	(a)	 	make any modification to the Ship in consequence of which her structure,
type or performance characteristics could or might be materially altered or her value
materially reduced; or
	 
	 	(b)	 	remove any material part of the Ship or any equipment the value of which is
such that its removal from the Ship would materially reduce the value of the Ship
without replacing the same with equivalent parts or equipment which are owned by the
Owner free from Encumbrances; or
	 
	 	(c)	 	install on the Ship any equipment owned by a third party which cannot be
removed without causing damage to the structure or fabric of the Ship;

	5.1.5	 	Maintenance of class; compliance with regulations
	 
	 	 	to maintain the Classification as the class of the Ship and to comply with and ensure that
the Ship at all times complies with the provisions of all laws, regulations and
requirements (statutory or otherwise) from time to time applicable to vessels registered
under the laws and flag of the Republic of the Marshall Islands or otherwise applicable to
the Ship and to procure that the Classification Society shall make available to the
Mortgagee upon its request such information and documents in respect of the Ship as are
maintained in the records of the Classification Society;
	 
	5.1.6	 	Surveys
	 
	 	 	to submit the Ship to continuous surveys and such periodical or other surveys as may be
required for classification purposes and if so required to supply to the Mortgagee copies
of all survey reports issued in respect thereof;
	 
	5.1.7	 	Inspection
	 
	 	 	to ensure that the Mortgagee, by surveyors or other persons appointed by it (at the
expense of the Owner) for such purpose, may board the Ship at all reasonable times for the
purpose of inspecting her and her records and to afford all proper facilities for such
inspections and for this purpose to give the Mortgagee reasonable advance notice of any
intended drydocking of the Ship (whether for the purpose of classification, survey or
otherwise) Provided that if no Event of Default has occurred the Owner shall only bear the
cost of no more than one (1) such inspection in every two (2) calendar years;
	 
	5.1.8	 	Prevention of and release from arrest
	 
	 	 	promptly to pay and discharge all debts, damages, liabilities and outgoings whatsoever
which have given or may give rise to maritime, statutory or possessory liens on, or claims
enforceable against, the Ship, her Earnings or Insurances or any part thereof and, in the
event of a writ or libel being filed against the Ship, her Earnings or Insurances or any
part thereof, or of any of the same being arrested, attached or levied upon pursuant to
legal process or purported legal process or in the event of detention of the Ship in
exercise or purported exercise of any such lien or claim as aforesaid, to procure the
release of the Ship, her Earnings and Insurances from such arrest, detention, attachment
or levy or, as the case may be, the discharge of the writ or libel forthwith upon
receiving notice thereof by providing bail or procuring the provision of security or
otherwise as the circumstances may require;

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	5.1.9	 	Employment
	 
	 	 	not to employ the Ship or permit her employment in any manner, trade or business which is
forbidden by Marshall Islands law or international law, or which is otherwise unlawful or
illicit under the law of any relevant jurisdiction, or in carrying illicit or prohibited
goods, or in any manner whatsoever which may render her liable to condemnation in a prize
court, or to destruction, seizure, confiscation, penalty or sanctions and, in the event of
hostilities in any part of the world (whether war be declared or not), not to employ the
Ship or permit her employment in carrying any contraband goods, or to enter or trade to or
to continue to trade in any zone which has been declared a war zone by any Government
Entity or by the Ship’s war risks insurers unless the prior written consent of the
Mortgagee is obtained and such special insurance cover as the Mortgagee may require shall
have been effected by the Owner and at its expense;
	 
	5.1.10	 	Information
	 
	 	 	promptly to furnish to the Mortgagee all such information as it may from time to time
require regarding the Ship, her employment, position and engagements, particulars of all
towages and salvages, and copies of all charters and other contracts for her employment or
otherwise howsoever concerning her;
	 
	5.1.11	 	Notification of certain events
	 
	 	 	to notify the Mortgagee forthwith by facsimile thereafter confirmed by letter of:

	 	(a)	 	any damage to the Ship requiring repairs the cost of which will or might
exceed the Casualty Amount;
	 
	 	(b)	 	any occurrence in consequence of which the Ship has or may become a Total
Loss;
	 
	 	(c)	 	any requisition of the Ship for hire;
	 
	 	(d)	 	any requirement or recommendation made by any insurer or the Classification
Society or by any competent authority which is not, or cannot be, complied with in
accordance with its terms;
	 
	 	(e)	 	any arrest or detention of the Ship or any exercise or purported exercise
of a lien or other claim on the Ship or the Earnings or Insurances or any part
thereof;
	 
	 	(f)	 	any petition or notice of meeting to consider any resolution to wind-up the
Owner (or any event analogous thereto under the laws of the place of its
incorporation);
	 
	 	(g)	 	the occurrence of any Default;
	 
	 	(h)	 	the occurrence of any Environmental Claim against the Owner, the Ship, any
other Relevant Party or any other Relevant Ship or any incident, event or
circumstance which may give rise to any such Environmental Claim; or
	 
	 	(i)	 	the occurrence of any other matter, event or incident, actual or
threatened, the effect of which will or could lead to the ISPS Code not being
complied with by the Owner;

	5.1.12	 	Payment of outgoings and evidence of payments
	 
	 	 	promptly to pay all tolls, dues and other outgoings whatsoever in respect of the Ship and
her Earnings and Insurances and to keep proper books of account in respect of the Ship and
her Earnings and, as and when the Mortgagee may so require, to make such books available
for inspection on behalf of the Mortgagee, and to furnish satisfactory evidence that the
wages and allotments and the insurance and pension contributions of the Master and crew
are being promptly and regularly paid and that all deductions from crew’s wages in respect
of any tax liability are being properly accounted for and that the Master has no claim for
disbursements
other than those incurred by him in the ordinary course of trading on the voyage then in
progress;

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	5.1.13	 	Encumbrances
	 
	 	 	not without the prior written consent of the Mortgagee (and then only subject to such
conditions as the Mortgagee may impose) to create or purport or agree to create or permit
to arise or subsist any Encumbrance (other than Permitted Liens) over or in respect of the
Ship, any share or interest therein or in the Insurances, Earnings or Requisition
Compensation or any part thereof or interest therein other than to or in favour of the
Mortgagee;
	 
	5.1.14	 	Sale or other disposal
	 
	 	 	not without the prior written consent of the Mortgagee (and then only subject to such
terms as the Mortgagee may impose) to sell, agree to sell, transfer, abandon or otherwise
dispose of the Ship or any share or interest therein;
	 
	5.1.15	 	Chartering
	 
	 	 	save under the Initial Charter, not without the prior written consent of the Mortgagee
(which the Mortgagee shall have full liberty to withhold) and, if such consent is given,
only subject to such conditions as the Mortgagee may impose, to let the Ship:

	 	(a)	 	on demise charter for any period;
	 
	 	(b)	 	by any time or consecutive voyage charter for a term which exceeds or which
by virtue of any optional extensions therein contained might exceed twelve (12)
months’ duration;
	 
	 	(c)	 	on terms whereby more than two (2) months’ hire (or the equivalent) is
payable in advance; or
	 
	 	(d)	 	below the market rate prevailing at the time when the Ship is fixed or
other than on arms’ length terms;

	5.1.16	 	Sharing of Earnings
	 
	 	 	not without the prior written consent of the Mortgagee (and then only subject to such
conditions as the Mortgagee may impose) to enter into any agreement or arrangement whereby
the Earnings may be shared with any other person;
	 
	5.1.17	 	Payment of Earnings
	 
	 	 	to procure that the Earnings are paid to the Operating Account for the Ship at all times
unless and until the Mortgagee shall have directed to the contrary pursuant to clause
2.1.1 of the General Assignment and that any Earnings which are so payable and which are
in the hands of the Owner’s brokers or agents are duly accounted for and paid over to the
Mortgagee forthwith on demand;
	 
	5.1.18	 	Repairers’ liens
	 
	 	 	not without the prior written consent of the Mortgagee to put the Ship into the possession
of any person for the purpose of work being done upon her in an amount exceeding or likely
to exceed the Casualty Amount unless such person shall first have given to the Mortgagee
in terms satisfactory to it, a written undertaking not to exercise any lien on the Ship or
her Earnings for the cost of such work or otherwise;
	 
	5.1.19	 	Manager
	 
	 	 	not without the prior written consent of the Mortgagee to appoint a manager of the Ship
other than the Manager, or terminate or amend the terms of the relevant Management
Agreement;

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	5.1.20	 	Compliance with Marshall Islands law
	 
	 	 	to cause this Mortgage to be recorded as prescribed by Chapter 3 of the Maritime Act 1990
of the Republic of the Marshall Islands as amended and otherwise to comply with and
satisfy all the requirements and formalities established by the said Maritime Act 1990 and
any other pertinent legislation of the Republic of the Marshall Islands to perfect this
Mortgage as a valid and enforceable first and preferred lien upon the Ship and to furnish
to the Mortgagee from time to time such proofs as the Mortgagee may reasonably request for
its satisfaction with respect to the Owner’s compliance with the provisions of this
sub-clause;
	 
	5.1.21	 	Notice of Mortgage
	 
	 	 	to place and at all times and places use due diligence to retain a properly certified copy
of this Mortgage (which shall form part of the ships documents) on board the Ship with her
papers and cause such certified copy of this Mortgage to be exhibited to any and all
persons having business with the Ship which might create or imply any commitment or
encumbrance whatsoever or in respect of the Ship (other than a lien for crew’s wages and
salvage) and to any representative of the Mortgagee and to place and keep prominently
displayed in the chart room and in the Master’s cabin of the Ship a framed printed notice
in plain type reading as follows:

“NOTICE OF MORTGAGE

	 	 	This Vessel is covered by a First Preferred Mortgage to CREDIT SUISSE of St. Alban-Graben
1-3, 4002 Basel, Switzerland under authority of Chapter 3 of the Maritime Act 1990 of the
Republic of the Marshall Islands as amended. Under the terms of the said Mortgage neither
the Owner nor any charterer nor the Master of this Vessel nor any other person has any
right, power or authority to create, incur or permit to be imposed upon this Vessel any
lien whatsoever other than for crew’s wages and salvage”;
	 
	5.1.22	 	Conveyance on default
	 
	 	 	where the Ship is (or is to be) sold in exercise of any power contained in this Mortgage,
to execute, forthwith upon request by the Mortgagee, such form of conveyance of the Ship
as the Mortgagee may require;
	 
	5.1.23	 	Anti-drug abuse
	 
	 	 	without prejudice to clause 5.1.9, to take all necessary and proper precautions to prevent
any infringements of the Anti-Drug Abuse Act of 1986 of the United States of America or
any similar legislation applicable to the Ship in any jurisdiction in or to which the Ship
shall be employed or located or trade or which may otherwise be applicable to the Ship
and/or the Owner and, if the Mortgagee shall so require, to enter into a “Carrier
Initiative Agreement” with the United States Customs and Border Protection and to procure
that such agreement (or any similar agreement hereafter introduced by any Government
Entity of the United States of America) is maintained in full force and effect and
performed by the Owner; and
	 
	5.1.24	 	Compliance with environmental laws
	 
	 	 	to comply with, and use all reasonable and proper endeavours to procure that all
Environmental Affiliates of the Owner comply with, all Environmental Laws in relation to
the Ship including, without limitation, requirements relating to manning, submission of
oil spill response plans, designation of qualified individuals and establishing financial
responsibility and to obtain and comply with, and procure that all Environmental
Affiliates of the Owner obtain and comply with, all Environmental Approvals in relation to
the Ship.

13

 

	6	 	Powers of Mortgagee to protect security and remedy defaults
	 
	6.1	 	Protective action
	 
	 	 	The Mortgagee shall, without prejudice to its other rights, powers and remedies, be entitled
(but not bound) at any time, and as often as may be necessary, to take any such action as it
may in its discretion think fit for the purpose of protecting or maintaining the security
created by this Mortgage and all Expenses attributable thereto shall be payable by the Owner
on demand.
	 
	6.2	 	Remedy of defaults
	 
	 	 	Without prejudice to the generality of the provisions of clause 6.1:
	 
	6.2.1	 	if the Owner fails to comply with any of the provisions of clause 5.1.1 the Mortgagee
shall be entitled (but not bound) to effect and thereafter to maintain all such insurances
upon the Ship as in its discretion it may think fit in order to procure the compliance with
such provisions or alternatively, to require the Ship (at the Owner’s risk) to remain in, or
to proceed to and remain in, a port designated by the Mortgagee until such provisions are
fully complied with;
	 
	6.2.2	 	if the Owner fails to comply with any of the provisions of clauses 5.1.3, 5.1.5 or 5.1.6,
the Mortgagee shall be entitled (but not bound) to arrange for the carrying out of such
repairs, changes or surveys as it may deem expedient or necessary in order to procure the
compliance with such provisions; and
	 
	6.2.3	 	if the Owner fails to comply with any of the provisions of clause 5.1.8 the Mortgagee
shall be entitled (but not bound) to pay and discharge all such debts, damages, liabilities
and outgoings as are therein mentioned and/or to take any such measures as it may deem
expedient or necessary for the purpose of securing the release of the Ship in order to
procure the compliance with such provisions,
	 
	 	 	and the Expenses attributable to the exercise by the Mortgagee of any such powers shall be
payable by the Owner to the Mortgagee on demand.
	 
	7	 	Powers of Mortgagee on Event of Default
	 
	7.1	 	Powers
	 
	 	 	Upon the happening of any Event of Default, the Mortgagee shall become forthwith entitled to
demand in accordance with the provisions of the Corporate Guarantee the payment of the
Outstanding Indebtedness immediately whereupon the Outstanding Indebtedness shall become so
due and payable and (whether or not the Mortgagee shall have made any such demand) the
Mortgagee shall become forthwith entitled as and when it may see fit, to put into force and
exercise all or any of the rights, powers and remedies possessed by it as mortgagee of the
Ship or otherwise (whether at law, by virtue of this Mortgage or otherwise) and in particular
(without limiting the generality of the foregoing):
	 
	7.1.1	 	to exercise all the rights and remedies in foreclosure and otherwise given to mortgagees
by the provisions of Chapter 3 of the Maritime Act 1990 of the Republic of the Marshall
Islands as amended and all applicable laws of any other jurisdiction;
	 
	7.1.2	 	to take possession of the Ship;
	 
	7.1.3	 	to require that all policies, contracts, certificates of entry and other records relating
to the Insurances (including details of and correspondence concerning outstanding claims) be
delivered forthwith to such adjusters and/or brokers and/or other insurers as the Mortgagee
may nominate;

14

 

	7.1.4	 	to collect, recover, compromise and give a good discharge for, all claims then outstanding
or thereafter arising under the Insurances or any of them or in respect of the Ship, her
Earnings or Requisition Compensation or any part thereof, and to take over or institute (if
necessary using the name of the Owner) all such proceedings in connection therewith as the Mortgagee
in its absolute discretion thinks fit, and, in the case of the Insurances, to permit any
brokers through whom collection or recovery is effected to charge the usual brokerage
therefor;
	 
	7.1.5	 	to discharge, compound, release or compromise claims in respect of the Ship, her Earnings,
Insurances or Requisition Compensation or any part thereof which have given or may give rise
to any charge or lien or other claim on the Ship, her Earnings, Insurances or Requisition
Compensation or any part thereof or which are or may be enforceable by proceedings against
the Ship, her Earnings, Insurances or Requisition Compensation or any part thereof;
	 
	7.1.6	 	to sell the Ship or any share or interest therein with or without prior notice to the
Owner, and with or without the benefit of any charterparty, and free from any claim by the
Owner (whether in admiralty, in equity, at law or by statute) by public auction or private
contract, at such place and upon such terms as the Mortgagee in its absolute discretion may
determine, with power to postpone any such sale, and without being answerable for any loss
occasioned by such sale or resulting from postponement thereof and with power, where the
Mortgagee purchases the Ship, to make payment of the sale price by making an equivalent
reduction in the amount of the Outstanding Indebtedness in the manner referred to in clause
8.1;
	 
	7.1.7	 	to manage, insure, maintain and repair the Ship, and to employ, sail or lay up the Ship in
such manner and for such period as the Mortgagee, in its absolute discretion, deems expedient
accounting only for net profits arising from any such employment; and
	 
	7.1.8	 	to recover from the Owner on demand all Expenses incurred or paid by the Mortgagee in
connection with the exercise of the powers (or any of them) referred to in this clause 7.1.
	 
	7.2	 	Dealings with Mortgagee
	 
	 	 	Upon any sale of the Ship or any share or interest therein by the Mortgagee pursuant to
clause 7.1.6 or pursuant to clause 11.1, the purchaser shall not be bound to see or enquire
whether the Mortgagee’s power of sale has arisen in the manner provided in this Mortgage or
whether the Mortgagee has made a demand for payment under the provisions of the Corporate
Guarantee and the sale shall be deemed to be within the power of the Mortgagee and the
receipt of the Mortgagee for the purchase money shall effectively discharge the purchaser who
shall not be concerned with the manner of application of the proceeds of sale or be in any
way answerable therefor and the sale shall operate to divest the Owner of all rights, title
and interest of any nature whatsoever in the Ship and to bar any such interest of the Owner,
and all persons claiming through or under the Owner.
	 
	8	 	Application of moneys
	 
	8.1	 	Application
	 
	 	 	All moneys received by the Mortgagee in respect of sale of the Ship or any share or interest
therein or in respect of the employment of the Ship pursuant to the provisions of clause
7.1.7 (or otherwise pursuant to the provisions of this Mortgage) and all moneys received and
retained by the Mortgagee in respect of the Insurances pursuant to this Mortgage shall be
held by it upon trust in the first place to pay or make good the Expenses and the balance
shall be applied in the manner specified in clause 2.10 of the Corporate Guarantee.
	 
	8.2	 	Shortfall
	 
	 	 	In the event that the balance referred to in clause 8.1 is insufficient to pay in full the
whole of the Outstanding Indebtedness, the Mortgagee shall be entitled to collect the
shortfall from the Owner or any other person liable therefor.

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	9	 	Remedies cumulative and other provisions
	 
	9.1	 	No implied waivers; remedies cumulative
	 
	 	 	No failure or delay on the part of the Mortgagee to exercise any right, power or remedy
vested in it under the Corporate Guarantee or this Mortgage shall operate as a waiver
thereof, nor shall any single or partial exercise by the Mortgagee of any right, power or
remedy nor the discontinuance, abandonment or adverse determination of any proceedings taken
by the Mortgagee to enforce any right, power or remedy preclude any other or further exercise
thereof or proceedings to enforce the same or the exercise of any other right, power or
remedy, nor shall the giving by the Mortgagee of any consent to any act which by the terms of
this Mortgage requires such consent prejudice the right of the Mortgagee to give or withhold
consent to the doing of any other similar act. The remedies provided in the Corporate
Guarantee and this Mortgage are cumulative and are not exclusive of any remedies provided by
law.
	 
	9.2	 	Preferred status
	 
	 	 	Anything herein to the contrary notwithstanding, it is intended that nothing herein shall
waive the preferred status of this Mortgage and that, if any provision or portion hereof
shall be construed to waive the preferred status of this Mortgage, then such provision or
portion to such extent shall be void and of no effect.
	 
	9.3	 	Delegation
	 
	 	 	The Mortgagee shall be entitled, at any time and as often as may be expedient, to delegate
all or any of the powers and discretions vested in it by the Corporate Guarantee or this
Mortgage (including the power vested in it by virtue of clause 11) in such manner, upon such
terms, and to such persons as the Mortgagee in its absolute discretion may think fit.
	 
	9.4	 	Incidental powers
	 
	 	 	The Mortgagee shall be entitled to do all acts and things incidental or conducive to the
exercise of any of the rights, powers or remedies possessed by it as mortgagee of the Ship
(whether at law, under this Mortgage or otherwise) and in particular (but without prejudice
to the generality of the foregoing), upon becoming entitled to exercise any of its powers
under clause 7.1, the Mortgagee shall be entitled to discharge any cargo on board the Ship
(whether the same shall belong to the Owner or any other person) and to enter into such other
arrangements respecting the Ship, her insurances, management, maintenance, repair,
classification and employment in all respects as if the Mortgagee was the owner of the Ship,
but without being responsible for any loss incurred as a result of the Mortgagee doing or
omitting to do any such acts or things as aforesaid.
	 
	10	 	Costs and indemnity
	 
	10.1	 	Costs
	 
	 	 	The Owner shall pay to the Mortgagee on demand on a full indemnity basis all expenses or
liabilities of whatsoever nature (including legal fees, fees of insurance advisers, printing,
out-of-pocket expenses, stamp duties, registration fees and other duties or charges) together
with any value added tax or similar tax payable in respect thereof, incurred by the Mortgagee
in connection with the exercise or enforcement of, or preservation of any rights under, the
Corporate Guarantee or this Mortgage or otherwise in respect of the Outstanding Indebtedness
and the security therefor, or in connection with the preparation, completion, execution or
registration of the Corporate Guarantee or this Mortgage.

16

 

	10.2	 	Mortgagee’s indemnity
	 
	 	 	The Owner hereby agrees and undertakes to indemnify the Mortgagee against all losses,
actions, claims, expenses, demands, obligations and liabilities whatever and whenever arising
which may now or hereafter be incurred by the Mortgagee or by any manager, agent, officer or
employee for whose liability, act or omission the Mortgagee may be answerable in respect of,
in relation to, or in connection with anything done or omitted in the exercise or purported
exercise of the powers contained in this Mortgage or otherwise in connection with such powers
or with this Mortgage or with the Ship, its Earnings, Requisition Compensation and Insurances
or otherwise howsoever in relation to, or in connection with, any of the matters dealt with
in the Corporate Guarantee or this Mortgage.
	 
	11	 	Attorney
	 
	11.1	 	Power
	 
	 	 	By way of security, the Owner hereby irrevocably appoints the Mortgagee to be its attorney
generally for and in the name and on behalf of the Owner, and as the act and deed or
otherwise of the Owner to execute, seal and deliver and otherwise perfect and do all such
deeds, assurances, agreements, instruments, acts and things which may be required for the
full exercise of all or any of the rights, powers or remedies conferred by the Corporate
Guarantee, this Mortgage or any of the other Security Documents, or which may be deemed
proper in or in connection with all or any of the purposes aforesaid (including, without
prejudice to the generality of the foregoing, the execution and delivery of a bill of sale of
the Ship). The power of attorney hereby conferred shall be a general power of attorney and
the Owner ratifies and confirms, and agrees to ratify and confirm, any deed, assurance,
agreement, instrument, act or thing which the Mortgagee may execute or do pursuant thereto.
Provided however that such power shall not be exercisable by or on behalf of the Mortgagee
until the happening of an Event of Default.
	 
	11.2	 	Dealings with attorney
	 
	 	 	The exercise of such power by or on behalf of the Mortgagee shall not put any person dealing
with the Mortgagee upon any enquiry as to whether any Event of Default has happened, nor
shall such person be in any way affected by notice that no such Event of Default has
happened, and the exercise by the Mortgagee of such power shall be conclusive evidence of the
Mortgagee’s right to exercise the same.
	 
	11.3	 	Filings
	 
	 	 	The Owner hereby irrevocably appoints the Mortgagee to be its attorney in its name and on its
behalf and as its act and deed or otherwise of it to agree the form of and to execute and do
all deeds, instruments, acts and things in order to file, record, register or enrol this
Mortgage in any court, public office or elsewhere which the Mortgagee may in its discretion
consider necessary or advisable, now or in the future, to ensure the legality, validity,
enforceability or admissibility in evidence thereof.
	 
	12	 	Further assurance
	 
	 	 	The Owner hereby further undertakes at its own expense from time to time to execute, sign,
perfect, do and (if required) register every such further assurance, document, act or thing
as in the opinion of the Mortgagee may be necessary or desirable for the purpose of more
effectually mortgaging and charging the Ship or perfecting the security constituted or
intended to be constituted by this Mortgage or contemplated by the Corporate Guarantee.
	 
	13	 	Total amount and maturity
	 
	 	 	For the purpose of recording this First Preferred Mortgage as required by Chapter 3 of the
Maritime Act 1990 of the Republic of the Marshall Islands as amended the maximum amount is
one hundred and four million four hundred thousand Dollars ($104,400,000) (of which Eighty
seven million Dollars ($87,000,000) represents the Loan and seventeen million four hundred
thousand Dollars ($17,400,000) represents the Swap Obligations) and interest on the Loan and
performance of mortgage covenants. The date of maturity is 31 October 2015 and the discharge
amount is the same as the total amount.

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	14	 	Law, jurisdiction and other provisions
	 
	14.1	 	Law
	 
	 	 	This Mortgage shall be construed and enforceable in accordance with the laws of the Republic
of the Marshall Islands.
	 
	14.2	 	Submission to jurisdiction
	 
	 	 	For the benefit of the Mortgagee, the Owner irrevocably agrees, that any legal action or
proceedings in connection with this Mortgage may be brought in the English courts, or in the
courts of any other country chosen by the Mortgagee, each of which shall have jurisdiction to
settle any disputes arising out of, or in connection with, this Mortgage. The Owner
irrevocably and unconditionally submits to the jurisdiction of the English courts and the
courts of any country chosen by the Mortgagee and irrevocably designates, appoints and
empowers Atlas Maritime Service Ltd. at present of Enterprise House, 113-115 George Lane,
London E18 1AB, England (attention: Mr D. Bird) to receive, for it and on its behalf, service
of process issued out of the English courts in any legal action or proceedings arising out of
or in connection with this Mortgage. The submission to such jurisdiction shall not (and
shall not be construed so as to) limit the right of the Mortgagee to take proceedings against
the Owner or the Ship in any other court of competent jurisdiction nor shall the taking of
proceedings in any one or more jurisdictions preclude the taking of proceedings in any other
jurisdiction, whether concurrently or not.
	 
	15	 	Other provisions
	 
	15.1	 	Severability
	 
	 	 	If any provision in the Corporate Guarantee, the Loan Agreement, the Master Swap Agreement,
this Mortgage or any of the other Security Documents be or becomes invalid or unenforceable
under any applicable law the provisions hereof shall in all other respects remain in full
force and effect and the provision in question shall be ineffective to the extent (but only
to the extent) of its disconformity with the requirement of the applicable law and if it is
competent to the parties to waive any requirements which would otherwise operate as aforesaid
those requirements are hereby waived to the extent permitted by such law to the end that the
Corporate Guarantee, the Loan Agreement, the Master Swap Agreement, this Mortgage and each of
the other Security Documents shall be valid, binding and enforceable in accordance with their
respective terms.
	 
	15.2	 	Counterparts
	 
	 	 	This Mortgage may be executed in any number of counterparts each of which shall be an
original but such counterparts shall together constitute one and the same instrument.
	 
	16	 	Notices
	 
	16.1	 	Every notice, request, demand or other communication under this Mortgage shall:
	 
	16.1.1	 	be in writing delivered personally or by first-class prepaid letter (airmail if available)
or facsimile transmission or other means of telecommunication in permanent written form;
	 
	16.1.2	 	be deemed to have been received in the case of a letter, when delivered personally or three
(3) days after it has been put in to the post and, in the case of a facsimile transmission or
other means of telecommunication in permanent written form, at the time of despatch (provided
that if the date of despatch is not a business day in the country of the addressee or if the
time of despatch is after the close of business in the country of the addressee it shall be
deemed to have been received at the opening of business on the next such business day); and

18

 

	16.1.3	 	be sent:

	 	(a)	 	if to the Owner at:

c/o Free Bulkers S.A.

89 Akti Miaouli

185 38 Piraeus

Greece

Fax no:          +30 210 429 1010

Attention: Mr Ion Varouxakis

	 	(b)	 	if to the Mortgagee at:

Credit Suisse

St. Alban-Graben 1-3

P.O. Box CH 4002

Basel

Switzerland

Fax:          +41 612 667 939

Attention: Mr Jean-Baptiste Bless

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

IN WITNESS whereof the Owner has executed this Mortgage the day and year first above written.

19

 

	 	 	 	 	 
	ADVENTURE EIGHT S.A.

 	 
	By:  	
 	 
	 	Name:  	 	 
	 	Title:  	 	 

20

 

	 	 	 	 	 

Acknowledgement of Mortgage

	 	 	 	 	 	 	 
	PIRAEUS

	 	 	)	 	 	 
	 

	 	 	)	 	 	S.S
	PREFECTURE OF ATTICA, REPUBLIC OF GREECE

	 	 	)	 	 	 

On this                      day of April 2008 before me personally appeared                                        
    
to me known who being by me duly sworn did depose and say that he resides
at                                                                  
that he is an attorney-in-fact of ADVENTURE EIGHT S.A. the corporation described
in and which executed the foregoing instrument; and that he signed his name thereto by order of the
Board of Directors of said Corporation.

 

Special Agent of the Republic of Marshall Islands

21

 

Schedule 1

The Loan Agreement

22

 

Schedule 2

The Master Swap Agreement

23

 

Schedule 3

The Corporate Guarantee

24EX-4.43 Loan Agreement

Private & confidential

Exhibit 4.43

 

 

 

 

 

Dated: 31st March 2008

FBB — FIRST BUSINESS BANK S.A.

- and -

ADVENTURE NINE S.A.

 

LOAN AGREEMENT

For a secured floating interest rate

Loan Facility of up to US$26,250,000

 

 

 

 

 

 

THEO V. SIOUFAS LAW OFFICES

13, Defteras Merarchias

185 35 Piraeus

Greece

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 	 
	CLAUSE	 	HEADINGS	 	PAGE
	 
	 	1.	 	 	PURPOSE, DEFINITIONS AND INTERPRETATION

	 	 	1	 
	 	 	 	 	 
	 	 	 	 
	 	2.	 	 	THE LOAN

	 	 	11	 
	 	 	 	 	 
	 	 	 	 
	 	3.	 	 	INTEREST

	 	 	14	 
	 	 	 	 	 
	 	 	 	 
	 	4.	 	 	REPAYMENT — PREPAYMENT

	 	 	17	 
	 	 	 	 	 
	 	 	 	 
	 	5.	 	 	PAYMENTS, TAXES, LOAN ACCOUNT AND COMPUTATION

	 	 	19	 
	 	 	 	 	 
	 	 	 	 
	 	6.	 	 	REPRESENTATIONS AND WARRANTIES

	 	 	21	 
	 	 	 	 	 
	 	 	 	 
	 	7.	 	 	CONDITIONS PRECEDENT

	 	 	26	 
	 	 	 	 	 
	 	 	 	 
	 	8.	 	 	COVENANTS

	 	 	30	 
	 	 	 	 	 
	 	 	 	 
	 	9.	 	 	EVENTS OF DEFAULT

	 	 	39	 
	 	 	 	 	 
	 	 	 	 
	 	10.	 	 	INDEMNITIES — EXPENSES — FEES

	 	 	45	 
	 	 	 	 	 
	 	 	 	 
	 	11.	 	 	SECURITY, APPLICATION, AND SET-OFF

	 	 	49	 
	 	 	 	 	 
	 	 	 	 
	 	12.	 	 	UNLAWFULNESS, INCREASED COSTS

	 	 	53	 
	 	 	 	 	 
	 	 	 	 
	 	13.	 	 	ASSIGNMENT, PARTICIPATION, LENDING BRANCH

	 	 	55	 
	 	 	 	 	 
	 	 	 	 
	 	14.	 	 	MISCELLANEOUS

	 	 	56	 
	 	 	 	 	 
	 	 	 	 
	 	15.	 	 	NOTICES AND OTHER MATTERS

	 	 	58	 
	 	 	 	 	 
	 	 	 	 
	 	16.	 	 	APPLICABLE LAW AND JURISDICTION

	 	 	59	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	SCHEDULES	 	 	 	 
	 	 	 	 	 
	 	 	 	 
	 	1.	 	 	FORM OF DRAWDOWN NOTICE

	 	 	61	 
	 	 	 	 	 
	 	 	 	 
	 	2.	 	 	INSURANCES

	 	 	62	 
	 	 	 	 	 
	 	 	 	 
	SIGNATURE PAGE	 	 	69	 

 

 

THIS AGREEMENT is dated the 31st day of March, 2008 made BETWEEN:

	(1)	 	FBB-FIRST BUSINESS BANK S.A., a bank incorporated in the Republic of Greece with its head
office at 91 Michalakopoulou Street, 11528 Athens, Greece, acting except otherwise herein
provided, through its office at 62, Notara and Sotiros Dios streets, 185 35 Piraeus, Greece
(the “Bank”); and
	 
	(2)	 	ADVENTURE NINE S.A., a company duly incorporated and validly existing under the laws of the
Republic of the Marshall Islands and having its registered office at Trust Company Complex,
Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 (hereinafter called the
“Borrower”); and

AND IT IS HEREBY AGREED as follows:

	1.	 	PURPOSE, DEFINITIONS AND INTERPRETATION
	 
	1.1	 	Amount and Purpose
	 
	 	 	This Agreement sets out the terms and conditions upon and subject to which the Bank agrees
to make available to the Borrower a loan of up to the lesser of (i) 70% of the Purchase
Price of the Vessel and (ii) $26,250,000 (United States Dollars twenty six million two
hundred and fifty thousand) by way of one (1) Advance, to be used for the purpose of
financing part of the acquisition cost of the 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, in this Clause:
	 
	 	 	“Accounts Pledge Agreement” means an agreement to be entered into between the Borrower and
the Bank for the creation of a pledge over the Earnings Account and the Retention Account in
favour of the Bank, in form and substance satisfactory to the Bank as the same may from time
to time be amended and/or supplemented;
	 
	 	 	“Advance” means each borrowing of a portion of the Commitment by the Borrower or (as the
context may require) the principal amount of such borrowing;
	 
	 	 	“Agreed Rate” means a rate agreed between the Bank and the Borrower on the basis of which
(instead of LIBOR) the interest rate is determined pursuant to Clause 3.6;
	 
	 	 	“Approved Manager” means for the time being Free Bulkers S.A., a company duly incorporated
in the Republic of the Marshall Islands and having an office established in Greece (at 89
Akti Miaouli & 4 Mavrokordatou street, Piraeus, Greece) pursuant to the Greek laws 378/68,
27/75 and 814/79 (as amended) or any other person appointed by the Borrower, with the prior
written consent of the Bank, as the manager of the Vessel and includes its successors in
title;
	 
	 	 	“Availability Period” means the period starting on the date hereof and ending on the
30th day of April, 2008 or until such later date as the Bank may agree in writing
or on such earlier date (if any): (i) on which the whole Commitment has been advanced by the
Bank to the Borrower, or (ii) on which the Commitment is reduced to zero pursuant to Clauses
3.6, 9.9, 12.1 or 12.2 or any other Clause of this Agreement;

1

 

	 	 	“Balloon Instalment” means the principal part of the Loan amounting to $5,250,000 (Dollars
five million two hundred fifty thousand);
	 
	 	 	“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,
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 of
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 and (vii) guarantees or other assurances
against financial loss in respect of Indebtedness of any person falling within any of
sub-paragraphs (i) to (vi) above;
	 
	 	 	“Borrower” means the Borrower as specified in the beginning of this Agreement;
	 
	 	 	“Charterparty” means any time or bareboat charterparty or contract of affreightment,
agreement or related document in respect of the employment of the Vessel for a period for
more than 12 months to be made between the Borrower and any charterer (and shall include
any addenda thereto);
	 
	 	 	“Charterparty Assignment” means the assignment of the Charterparty and after the termination
thereof the assignment of any charterparty which exceeds or is capable of exceeding twelve
(12) months in duration, executed or (as the context may require) to be executed by the
Borrower in favour of the Bank and the acknowledgement of notice of the assignment in
respect of the Charterparty to be given by a Charterer, both in form and substance
satisfactory to the Bank as the same may from time to time be amended and/or supplemented;
	 
	 	 	“Commitment” means the amount which the Bank has agreed to lend to the Borrower under
Clause 2.1 as reduced pursuant to any relevant term of this Agreement;
	 
	 	 	“Commitment Letter” means the Commitment Letter dated 07-02-2008 addressed by the Bank to
the Borrower and shall include any amendments or addenda thereto;
	 
	 	 	“Corporate Guarantee” means an irrevocable and unconditional 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 Borrower under this Agreement;
	 
	 	 	“Corporate Guarantor” means FREESEAS INC., a company duly incorporated in the Republic of
the Marshall Islands and listed and trading in the Nasdaq Stock

2

 

	 	 	 Exchange and/or any other person nominated by the Borrower and acceptable to the Bank which
may give a Corporate Guarantee;
	 
	 	 	“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 Vessel by the Seller and the acceptance of the Vessel
by the Owner pursuant to the MOA;
	 
	 	 	“Delivery Date” means the date upon which the Delivery occurs;
	 
	 	 	“DOC” means a document of compliance issued to an Operator in accordance with rule 13
of the ISM Code;
	 
	 	 	“Dollars” and “$” mean the lawful currency of the United States of America and in respect of
all payments to be made under any of the Security Documents 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 Borrower;
	 
	 	 	“Drawdown Notice” means a notice substantially in the terms of Schedule 1;
	 
	 	 	“Earnings” in relation to the Vessel, means all earnings of the Vessel, both present or
future, including all freight, hire and passage moneys, compensation payable to the Owner in
the event of requisition of the Vessel for hire, remuneration for salvage and towage
services, demurrage and detention moneys, contributions of any nature whatsoever in respect
of general average, damages for breach (or payments for variation or termination) of any
charterparty or other contract for the employment of the Vessel and any other earnings
whatsoever due or to become due to the Owner in respect of the Vessel and all sums
recoverable under the Insurances in respect of loss of Earnings and includes, if and
whenever the Vessel is employed on terms whereby any and all such moneys as aforesaid are
pooled or shared with any other person, that proportion of the net receipts of the relevant
pooling or sharing agreement which is attributable to the Vessel;
	 
	 	 	“Earnings Account” means the account to be opened and maintained with the Lending Branch or
with any other Branch of the Bank or with any other bank the Bank may designate to the
Borrower at the discretion of the Bank, to which (inter alia) all Earnings of the Vessel are
to be paid in accordance with the provisions of this Agreement;
	 
	 	 	“Encumbrance” means any mortgage, charge (whether fixed or floating), pledge, lien,
hypothecation, assignment, security interest, title retention, arrest, seizure, garnishee
order (whether nisi or absolute) or any other order or judgement having

3

 

	 	 	similar effect 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 the Borrower or any other Relevant
Party or any person having a contractual relationship with the Borrower or any other
Relevant Party in connection with any Relevant Ship or her operation or the carriage of
cargo thereon;
	 
	 	 	“Environmental Approval” means any consent, authorisation, licence or approval of any
governmental or public body or authorities or courts applicable to any Relevant Ship or her
operation or the carriage of cargo thereon and/or passengers therein and/or provisions of
goods and/or services on or from the Relevant Ship required under any Environmental Law;
	 
	 	 	“Environmental Claim” means any and all enforcement, clean up, removal or other governmental
or regulatory actions or orders instituted or completed pursuant to any Environmental Law or
any Environmental Approval together with claims made by any third party relating to damage,
contribution, loss or injury, resulting from any actual or threatened emission, spill,
release or discharge of a Material of Environmental Concern from any Relevant Ship;
	 
	 	 	“Environmental Laws” means all national, international and state laws, rules, regulations,
treaties and conventions applicable to any Relevant Ship pertaining to the pollution or
protection of human health or the environment including, without limitation, the carriage or
Materials of Environmental Concern and actual or threatened emissions, spills, releases or
discharges of Materials of Environmental Concern and actual or threatened emissions, spills,
releases or discharges of Materials of Environmental Concern from any Relevant Ship;
	 
	 	 	“Event of Default” means any event or circumstance set out in Clause 9 or described as such
in any other of the Security Documents;
	 
	 	 	“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 and seamen’s pension fund
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 Borrower in accordance with the terms of
any of the Security Documents;
	 
	 	(b)	 	the expenses referred to in Clause 10.2 (a) and (b); 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 Borrower 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

4

 

	 	 	 	 (whether before or after judgement) at the Default Rate (as conclusively certified
by the Bank);

	 	 	 “Final Maturity Date” means the date falling seven (7) years after the Drawdown Date;
	 
	 	 	“Flag State” means the Commonwealth of Bahamas or such other state or territory proposed in
writing by the Borrower to the Bank and approved (at its sole discretion) by the Bank, as
being the Flag State of the Vessel for the purposes of the Security Documents;
	 
	 	 	“General Assignment” means the assignment of the Earnings, Insurances and Requisition
compensation collateral to the Mortgage executed or (as the context may require) to be
executed by the Borrower in favour of the Bank in form satisfactory to the Bank;
	 
	 	 	“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 Borrower, the Approved Manager, the Corporate Guarantor and any other
shipping company substantially owned and/or controlled by the same beneficial owners as the
Borrower;
	 
	 	 	“Guarantees” means together the Corporate Guarantee and any other guarantee granted or to be
granted to the Bank and “Guarantee” means any of them;
	 
	 	 	“Guarantors” means together the Corporate Guarantor and any other person who has granted or
will grant a Guarantee to the Bank and “Guarantor” means either of them;
	 
	 	 	“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” includes all policies and contracts of insurance (which expression includes all
entries of the Vessel in a protection and indemnity or war risks association) which are from
time to time taken out or entered into in respect of the Vessel and her Earnings or
otherwise howsoever in connection with the Vessel;
	 
	 	 	“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 longer than three (3) months the date(s) falling at successive three
(3) monthly intervals during such longer Interest Period and the last day of such 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;
	 
	 	 	“ISM Code” means in relation to its application to the Borrower, the Vessel and her
operation:

5

 

	 	(a)	 	“The International Management Code for the Safe Operation of Ships and for
Pollution Prevention”, currently known or referred to as the “ISM Code”, adopted by the
Assembly of the International Maritime Organisation by Resolution A. 741(18) on 4th
November, 1993 and incorporated on 19th May, 1994 into chapter IX of the International
Convention for the Safety of Life at Sea 1974 (SOLAS 1974); and
	 
	 	(b)	 	all further resolutions, circulars, codes, guidelines, regulations and
recommendations which are now or in the future issued by or on behalf of the
International Maritime Organisation or any other entity with responsibility for
implementing the ISM Code, including without limitation, the “Guidelines on
implementation or administering of the International Safety Management (ISM) Code by
Administrations” produced by the International Maritime Organisation pursuant to
Resolution A. 788(19) adopted on 25th November, 1995;

	 	 	as the same may be amended, supplemented or replaced from time to time;
	 
	 	 	“ISM Code Documentation” includes:

	 	(a)	 	the DOC and SMC issued by a classification society in all respects acceptable
to the Bank in its absolute discretion pursuant to the ISM Code in relation to the
Vessel within the period specified by the ISM Code;
	 
	 	(b)	 	all other documents and data which are relevant to the ISM SMS and its
implementation and verification which the Bank may require by request; and
	 
	 	(c)	 	any other documents which are prepared or which are otherwise relevant to
establish and maintain the Vessel’s or the Borrower’s compliance with the ISM Code
which the Bank may require by request;

	 	 	“ISM SMS” means the safety management system which is required to be developed, implemented
and maintained under the ISM Code;
	 
	 	 	“ISPS Code” means the International Ship and Port facility Security Code constituted pursuant
to resolution A.924(22) of the International Maritime Organization now set out in Chapter
XI-2 of the International Convention for the Safety of Life at Sea 1974 (as amended) as
adopted by a Diplomatic Conference of the International Maritime Organisation on Maritime
Security in December 2002 and includes any amendments or extensions to it and any regulation
issued pursuant to it;
	 
	 	 	“ISSC” means an International Ship Security Certificate issued in respect of the Vessel
pursuant to the ISPS Code;
	 
	 	 	“LIBOR” means, in relation to a particular period and a particular amount the rate per
annum determined by the Bank to be equal to the London Interbank Offered Rate shown on Page
3750 of the Telerate Service for deposits in United States Dollars in amounts comparable to
the amount of the Loan for such Interest Period at or about 11:00 a.m. (London time) two (2)
business days prior to the commencement of such Interest Period, provided that, if there are
no such rates so appearing on such page at such time, LIBOR means the rate per annum
determined by the Bank to be equal to the rate (rounded upwards, if necessary, to the whole
multiple of one sixteenth of one

6

 

	   	 	percent) per annum at which deposits in Dollars in amounts comparable to the Loan are
offered by the Bank to prime banks in the London Interbank Market for such Interest Period
at or about 11:00 a.m. (London time) two (2) business days prior to the commencement of such
Interest Period;
	 
	 	 	“Loan” means the aggregate principal amount borrowed by the Borrower 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;
	 
	 	 	“Lending Branch” means the office of the Bank appearing at the beginning of this Agreement
or any other office of the Bank designated by the Bank as the Lending Branch by notice to
the Borrower;
	 
	 	 	“Major Casualty Amount” means any casualty to the Vessel in respect whereof the claim or the
aggregate of the claims against all insurers, before adjustment for any relevant franchise
or deductible, exceeds two hundred thousand Dollars ($200,000) or the equivalent in any
other currency;
	 
	 	 	“Management Agreement” means the agreement made between the Borrower and the Approved
Manager providing (inter alia) for the Approved Manager to manage the Vessel;
	 
	 	 	“Manager’s Undertaking” means a letter of undertaking and subordination to be executed by
the Approved Manager, as manager, whereby the Approved Manager shall subordinate any and all
claims it may have against the Borrower and/or the Vessel to the claims of the Bank
hereunder and the Security Documents;
	 
	 	 	“Margin” means one point three hundred seventy five (1.375%) per annum;
	 
	 	 	“Market Value” means the market value of the Vessel as determined in accordance with Clause
8.6(b);
	 
	 	 	“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 1988;
	 
	 	 	“MOA” means the Memorandum of Agreement dated 22nd January, 2008, as amended by
the Addendum No. 1 dated 22nd January 2008 and the Addendum No. 2 dated
4th February 2008, or as it may hereinafter be amended, supplemented or modified,
entered into between the Seller, as sellers and Adventure Seven S.A., of Marshall Islands,
who have nominated the Borrower as buyers in respect of the sale by such Seller and the
purchase by the Borrower of the Vessel; and
	 
	 	 	“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 such Banking Day it shall end on the preceding Banking Day
and “months” and “monthly” shall be construed accordingly;

7

 

	 	 	 “Mortgage” means the first preferred ship mortgage on the Vessel to be executed by the
Borrower in favour of the Bank in form and substance satisfactory to the Bank;
	 
	 	 	“Mortgaged Vessel(s)” means the Vessel and any vessel which is or remain mortgaged in favour
of the Bank pursuant to this Agreement at any relevant time hereunder;
	 
	 	 	“Operator” means any person who is from time to time during the Security Period concerned in
the operation of the Vessel and falls within the definition of “Company” set out in rule
1.1.2. of the ISM Code;
	 
	 	 	“Outstanding Indebtedness” means the aggregate of the Loan and interest accrued and accruing
thereon, the Expenses and all other sums of money from time to time owing by the Borrower to
the Bank, whether actually or contingently under this Agreement and the other Security
Documents;
	 
	 	 	“Owner” means the Borrower;
	 
	 	 	“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 Vessel 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 (as defined in the Mortgage);
	 
	 	 	“Purchase Price” means the amount referred to in Clause 1 of the MOA as purchase price of
the Vessel;
	 
	 	 	“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
Borrower;
	 
	 	 	“Registry” means the offices of such registrar, commissioner or representative of the Flag
State who is duly authorised to register the Vessel, the Borrower’s title to the Vessel and
the Mortgage over the Vessel under the laws and flag of the Flag State;
	 
	 	 	“Related Company” means any company member of the Group or other entity of which such
company is a Subsidiary and any Subsidiary of any such company or entity;
	 
	 	 	“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 Borrower, the Borrower’s Related Companies, any other Security
Party and any Security Party’s Related Companies;
	 
	 	 	“Relevant Ship” means the 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;

8

 

	 	 	“Repayment Date” means each of the dates specified in Clause 4.1 on which the Repayment
Instalments shall be payable by the Borrower to the Bank;
	 
	 	 	“Repayment Instalment” means each instalment of the Loan which becomes due for repayment by
the Borrower to the Bank on a Repayment Date pursuant to Clause 4.1;
	 
	 	 	“Requisition Compensation” means all sums of money or other compensation from time to time
payable by reason of requisition of the Vessel otherwise than by requisition for hire;
	 
	 	 	“Retention Account” means an interest bearing account of the Borrower opened (or as the
context may require) to be opened by the Borrower with the Bank or such other branch of the
Bank or any other bank as may be required by and at the discretion of the Bank and
designated “ADVENTURE NINE S.A. — 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 documents listed in Clause 11.1 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 Borrower 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 the Borrower, the Guarantor, the Approved Manager and any other
person (other than the Bank) which is or may become a party to any of the Security
Documents;
	 
	 	 	“Security Period” means the period commencing on the date hereof and terminating on the date
upon which the Loan together with all interest thereon and all other moneys payable to the
Bank under this Agreement and the other Security Documents 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 conclusively binding on the
Borrower) which is at any relevant time one hundred thirty percent (130%) of the Loan;
	 
	 	 	“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 Borrower) which,
at any relevant time is the aggregate of (a) the Market Value of the Mortgaged Vessel(s) as
most recently determined in accordance with Clause 8.6(b) and (b) the market value of any
additional security provided under Clause 8.6 (c) (if any);
	 
	 	 	“Seller” means Stella Shipping Co., of Marshall Islands;
	 
	 	 	“SMC” means a safety management certificate issued in respect of the Vessel in accordance
with rule 13 of the ISM 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

9

 

	 	 	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;
	 
	 	 	“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 Loss” in relation to the Vessel, means (a) actual, constructive, compromised or
arranged total loss of the Vessel; or (b) requisition for title or other compulsory
acquisition of the Vessel otherwise than by requisition for hire; or (c) hijacking, theft,
condemnation, capture, seizure, detention, arrest or confiscation of the Vessel by any
government or by any person acting or purporting to act on behalf of any government, unless
the Vessel is released and restored to the Borrower within thirty (30) days after the
occurrence thereof;
	 
	 	 	“Vessel” means the motor vessel “AFRICAN IMPALA”, of about 15,888 gt and 8,036 nt, presently
registered under the flag of the Commonwealth of the Bahamas in the ownership of the Seller
which upon delivery to the Borrower shall be re- registered under the laws and flag of the
Flag State in the ownership of the Borrower at the Ship’s Registry through Nassau Registry
with the name “FREE IMPALA”.
	 
	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 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;

10

 

	 	(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 Borrower;
	 
	 	(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)	 	references to a “guarantee” include references to an indemnity or other
assurance against financial loss including, without limitation, an obligation to
purchase assets or services as a consequence of a default by any other person to pay
any Indebtedness and “guaranteed” shall be construed accordingly; and
	 
	 	(m)	 	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 Borrower in one
(1) advance and upon and subject to the terms of this Agreement, the amount specified in
Clause 1.1 hereof.
	 
	2.2	 	Drawdown Notice and Commitment to Borrow
	 
	 	 	Subject to the terms and conditions of this Agreement, the Commitment shall be advanced to
the Borrower following receipt by the Bank from the Borrower 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 of Advances Agreed
	 
	 	 	The Commitment shall be advanced to the Borrower in one advance.
	 
	2.4	 	Disbursement

11

 

	 	 	Upon receipt of the Drawdown Notice complying with the terms of this Agreement the Bank
shall, subject to the provisions of Clause 7, on the date specified in the Drawdown Notice,
make the Commitment available to the Borrower.
	 
	2.5	 	Application of Proceeds
	 
	 	 	Without prejudice to the Borrower’s obligations under Clause 8.9, the Bank shall have no
responsibility for the application of the proceeds of the Loan (or any part thereof) by the
Borrower.
	 
	2.6	 	Termination Date of the Commitment
	 
	 	 	Any part of the Commitment undrawn and uncancelled at the end of the Availability Period
shall thereupon be automatically cancelled.
	 
	2.7	 	Evidence 
	 
	 	 	It is hereby expressly agreed and admitted by the Borrower 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, save for
manifest error, on the Borrower as to the existence and/or the amount of the at any time
Outstanding Indebtedness, of any amount due under this Agreement, of the applicable interest
rate or Default Rate or any other rate provided for or referred to in this Agreement, the
Interest Period, the value of additional securities under Clause 8.6(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	 	Cancellation
	 
	 	 	The Borrower may, cancel any undrawn part of the Commitment under this Agreement upon giving
the Bank not less than five (5) Banking Days’ notice in writing to that effect, provided
that no Drawdown Notice has been given to the Bank under Clause 2.2 for the full amount of
the Commitment or in respect of the portion thereof in respect of which cancellation is
required by the Borrower. Any such notice of cancellation, once given, shall be
irrevocable. Any amount cancelled may not be drawn. Notwithstanding any such cancellation
pursuant to this Clause 2.8 the Borrower shall continue to be liable for any and all amounts
due to the Bank under this Agreement including without limitation any amounts due to the
Bank under Clause 10.
	 
	2.9	 	Disbursement of Commitment to the Seller’s bank
	 
	 	 	Notwithstanding the foregoing provisions of this Clause 2, in the event that the Commitment
or any relevant part thereof (as the case may be) is required to be drawn down prior to the
satisfaction of the requirements of Clause 7 and remitted to the Seller’s Bank in accordance
with Clause 3 of the MOA (the “Seller’s Bank”), the Bank may in its absolute discretion
agree to remit such amount to the Seller’s Bank prior to the satisfaction of the
requirements of Clause 7 expressly subject to the following conditions:

12

 

	 	(a)	 	(i) such amount is remitted to the Seller’s Bank to be held by it in an account
in the Bank’s name (the “deposit account”) and to the order of the Bank;
	 
	 	(ii)	 	the principal amount (the “deposited amount”) of such funds will only be
released to the Seller upon the Seller’s presentation to the Seller’s Bank of a copy
of the protocol of delivery and acceptance for the Vessel in the form agreed between
the Seller and the Borrower and duly signed on behalf of the Seller and the Borrower
and countersigned by the Bank’s representative;
	 
	 	(iii)	 	the deposited amount so released may be used only for payment to the account
of the Seller with the Seller’s Bank in satisfaction of the balance of the purchase
price of the Vessel; and
	 
	 	(iv)	 	in the event that none of the said amount so remitted is released in
accordance with the Bank’s instructions or any part thereof is not so released, the
Bank may within no later than five (5) days from the expected Delivery Date, instruct
the Seller’s Bank to pay the said amount and any earned interest to another account of
the Bank and any amounts so remitted and returned pursuant to this Clause will be
applied in or towards prepayment of the Loan pursuant to Clause 4.2.
	 
	 	(b)	 	When either:

	 	(i)	 	the Commitment or any relevant part thereof (as the case may
be) is disbursed (whether on the expected Delivery Date or thereafter) in
accordance with Clause 2.9(a)(i) and (ii) or
	 
	 	(ii)	 	the Bank withdraws the deposited amount under Clause 2.9(d),

	 	 	the Borrower shall forthwith upon demand by the Bank pay to the Bank such amounts
that may be certified by the Bank as being the amount required to indemnify the Bank in
respect of the cost to the Bank of funding the deposited amount from the date of
payment thereof to the Seller’s Bank to the date of disbursement of the deposited
amount to the Seller or the refund of the deposited amount to the Bank less the amount
(if any) of the earned interest received by the Bank from the Seller’s Bank. For this
purpose, the cost of the Bank funding the deposited amount shall be deemed to be
interest at a rate equal to the aggregate of (i) the Margin and (ii) LIBOR for
comparable deposits on a call (day to day) basis.

	 	(c)	 	The Bank shall have no liability to the Borrower if the Seller’s Bank fails to
carry out any instructions given to it by the Bank to disburse or refund the deposited
amount.
	 
	 	(d)	 	If, upon being instructed to do so by the Bank, the Seller’s Bank fails either
to apply the deposited amount in full in accordance with Clause 2.9 (a)(ii) or to
refund the deposited amount in full in accordance with Clause 2.9 (a) (iii):

	 	(i)	 	the Bank shall cease to be obliged to make the Commitment or
relevant part thereof (as the case may be) available unless and until the
Seller’s Bank carries out such instructions;

13

 

	 	(ii)	 	the continued failure of the Seller’s Bank to do so for five
Banking Days after the giving of such instructions shall be deemed to be an
Event of Default for the purposes of this Agreement;
	 
	 	(iii)	 	the Borrower shall indemnify the Bank on demand in respect to
all loses certified by the Bank as suffered or incurred by the Bank as a
consequence of the Seller’s Bank failure to carry the Bank’s instructions; and
	 
	 	(iv)	 	without prejudice to the obligations of the Borrower so to
indemnify the Bank on demand, the Bank shall in good faith take reasonable and
proper steps diligently to seek recovery of the deposited amount from the
Seller’s Bank (provided that prior to taking such action the Borrower shall
have agreed to indemnify the Bank for all costs and expenses which may be
incurred in seeking recovery of such amount, including, without limitation, all
legal fees and disbursements reasonably and properly incurred) and if the Bank
shall recover any part of the deposited amount (and provided that it has
previously recovered full indemnification under Clause 2.9(d)(ii)) the Bank
shall, so long as no Event of Default has occurred and is continuing, pay to
the Borrower the amount so recovered after subtracting any tax suffered or
incurred thereon by the Bank.

	 	(e)	 	If, at the time prior to the deposit of funds by the Bank with the Seller’s Bank, the
Bank considers in its absolute discretion that the Seller’s Bank may be or will be unable
or unwilling for any reason (including, without limitation, by reason of the Seller’s
Bank’s financial position or regulatory requirements applicable to the Seller’s Bank) to
take and fully apply such deposit in accordance with the requirements of this Clause 2.9
the Bank may in its absolute discretion decide not to make such deposit and this Agreement
shall thereupon take effect as if this Clause 2.9 does not apply and the Commitment or
relevant part thereof (as the case may be) shall, without prejudice to Clause 7, be made
and disbursed in the manner set out in this Agreement.

	2.10	 	No security or lien from other person 
	 
	 	 	The Borrower has not taken or received, and the Borrower undertakes that until all moneys,
obligations and liabilities due, owing or incurred by the Borrower 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.
	 
	3.	 	INTEREST
	 
	3.1	 	Normal Interest Rate
	 
	 	 	The Borrower 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 three
(3) months interest shall be payable quarterly 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.

14

 

	3.2	 	Selection of Interest Period
	 
	 	 	The Borrower 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) or three (3) or six
(6) or nine (9) or twelve (12) months (or such other period as may be requested by the
Borrower 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 Borrower pursuant to Clause 3.2 but so that:

	 	(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 Borrower fails 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 Borrower provided always that such period 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 Borrower 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
Borrower, may determine.

	3.4	 	Default Interest 
	 
	 	 	If the Borrower fails 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 Borrower 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 six (6) months (or 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

15

 

	 	 	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) LIBOR. 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 9.9(b) of the Agreement. If for the reasons specified in Clause 3.6, the
Bank is unable to determine a rate in accordance with the foregoing provisions of this
Clause 3.4, interest on any sum not paid on its due date for payment shall be calculated at
a rate determined by the Bank to be two per cent (2%) per annum above the aggregate of the
Margin and costs of funds to the Bank as conclusively determined by the Bank save for
manifest error. Interest payable by the Borrower as aforesaid shall be compounded
semi-annually and shall be payable on demand.
	 
	3.5	 	Notification of Interest and Interest Rate
	 
	 	 	The Bank shall notify the Borrower 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 Borrower) will not constitute and
will not be interpreted as if to constitute a breach of obligation of the Bank except in
case of wilful misconduct.
	 
	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 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 Borrower. 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
Borrower by the Bank.
	 
	 	(b)	 	During the period of ten (10) days after any Determination Notice has been
given by the Bank under sub-Clause 3.6(a) the Bank and the Borrower shall negotiate in
good faith (but without incurring any legal obligations) with a view to arriving at an
acceptable alternative basis (the “Substitute Basis”), for maintaining the Loan,
failing which the Borrower 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

16

 

	 	 	 	sums payable by the Borrower under the Security Documents and the Commitment shall
be reduced to zero. In such case the Borrower 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 Borrower. 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 Borrower 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 Borrower that none of
the circumstances specified in sub-Clause 3.6(a) continues to exist whereupon the
normal interest rate fixing provisions of this Agreement shall apply.

	4.	 	REPAYMENT — PREPAYMENT
	 
	4.1	 	Repayment
	 
	 	 	The Borrower shall and it is expressly undertaken by the Borrower to repay the Loan by (a)
twenty eight (28) consecutive quarterly repayment instalments (the “Repayment Instalments”),
each to be repaid on each of the Repayment Dates so that the first be repaid three (3)
months from the Drawdown Date and each of the subsequent ones consecutively falling due for
payment on each of the dates falling three (3) months after the immediately preceding
Repayment Date with the last of such Repayment Instalments falling due for payment on the
Final Maturity Date and (b) the Balloon Instalment falling due for payment together with the
last (28th) Repayment Instalment on the Final Maturity Date; subject to the
provisions of this Agreement, each Repayment Instalment shall be in amounts as follows:

	 	(i)	 	1st to 28th (both inclusive) of such Repayment
Instalments shall be in the amount of Dollars seven hundred and fifty thousand
($750,000) each;

	 	 	Provided 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) in the event
that the Commitment is not drawn down in full, the amount of each of the Repayment
Instalments and the Balloon Instalment shall be proportionally reduced, (c) there shall be
no Repayment Dates after the Final Maturity Date and (d) on the Final Maturity Date the
Borrower shall also pay to the Bank any and all other moneys then due and payable under this
Agreement and the other Security Documents.
	 
	 	 	and Provided further that if any of the Repayment Instalments shall become due on a
day which is not a Banking Day, the due date therefor shall be extended to the next
succeeding Banking Day unless such Banking Day falls in the next calendar month in which
event such due date shall be the immediately preceding Banking Day.
	 
	4.2	 	Voluntary Prepayment
	 
	 	 	The Borrower shall have the right, upon giving the Bank not less than five (5) 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

17

 

	 	 	whatsoever due and owing from the Borrower 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 Borrower will irrevocably commit the Borrower
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 Borrower 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 not to do so) the Borrower 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 in an amount of no less than Dollars one hundred
thousand ($100,000) or a whole multiple thereof or the balance of the Loan and will be
applied by the Bank in or towards the pro-rata prepayment of the Balloon Installment
and the Repayment Instalments;
	 
	 	(d)	 	every notice of prepayment shall be effective only on actual receipt (including
by fax) by the Bank, shall be irrevocable and shall oblige the Borrower to make such
prepayment on the date specified;
	 
	 	(e)	 	no amount prepaid may be re-borrowed; and
	 
	 	(f)	 	the Borrower may not prepay the Loan or any part thereof save as expressly
provided in this Agreement.

	4.3	 	Compulsory Prepayment in case of Total Loss or sale of the Vessel 

	 	(a)	 	On the 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 the Vessel being
subsequently determined to be a Total Loss:

	 	(i)	 	prior to the advancing of the Commitment, the obligation of the
Bank to advance the Commitment shall immediately cease and the Commitment shall
be reduced to zero; or
	 
	 	(ii)	 	in case the Commitment has been already advanced, the Borrower
shall prepay the Outstanding Indebtedness the latest on the date falling one
hundred and eighty (180) days after that on which the incident which in the
reasonable opinion of the Bank may result in the 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 Borrower (or the Bank pursuant to the Security
Documents).

	 	 	 	 For the purpose of this Agreement:

	 	(aa)	 	an actual total loss of the Vessel shall be
deemed to have occurred at the actual date and time the 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 the
Vessel was last reported;

18

 

	 	(bb)	 	a constructive total loss shall be deemed to
have occurred at the date and time notice of abandonment of the Vessel
is given to the insurers of the Vessel for the time being (provided a
claim for total loss is admitted by such insurers) or, if such insurers
do not admit such a claim, at the date and time at which a total loss
is subsequently adjudged by a competent court of law to have occurred;
	 
	 	(cc)	 	a compromised or arranged total loss shall be
deemed to have occurred on the date on which a binding agreement as to
such compromised or arranged total loss has been entered into by the
insurers of the Vessel;
	 
	 	(dd)	 	requisition for title or other compulsory
acquisition of the Vessel shall be deemed to have occurred on the date
upon which the relevant requisition for title or other compulsory
acquisition occurs; and
	 
	 	(ee)	 	hijacking, theft, condemnation, capture,
seizure, detention, arrest, or confiscation of the Vessel by any
government or by any person acting or purporting to act on behalf of
any government, which deprives the Borrower of the use of the Vessel
for more than thirty (30) days shall be deemed to occur upon the expiry
of the period of thirty (30) days after the date upon which the
relevant hijacking, theft, condemnation, capture, seizure, detention,
arrest or confiscation occurred.

	 	(b)	 	In case of sale or other disposal of the Vessel, immediately upon completion of
such sale or other disposal, the Borrower shall prepay the Loan.

	4.4	 	Amounts payable on prepayment
	 
	 	 	Any prepayment of all or part of the Loan under this Agreement shall be made together with
(a) accrued interest on the amount to be prepaid to the date of such prepayment (calculated,
in the case of a prepayment pursuant to Clause 3.6 (b) at a rate equal to the aggregate of
the Margin and the cost to the Bank of funding the Loan), (b) any additional amount payable
under Clause 5 and (c) all other sums payable by the Borrower to the Bank under this
Agreement or any of the other Security Documents including, without limitation, any amounts
payable under Clause 10.
	 
	5.	 	PAYMENTS, TAXES, LOAN ACCOUNT AND COMPUTATION
	 
	5.1	 	Payments — No set-off or Counterclaims

	 	(a)	 	The Borrower acknowledges 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 Borrower, such liabilities matching the liabilities of the
Borrower to the Bank and that it is reasonable for the Bank to be entitled to receive
payments from the Borrower 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 Borrower

19

 

	 	 	 	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
	 
	 	(ii)	 	to the Receiving Bank for the account of the Bank, reference:
“ADVENTURE NINE S.A. — 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 Borrower.

	 	(b)	 	If at any time it shall become unlawful or impracticable for the Borrower to
make payment under this Agreement to the relevant account or bank referred to in Clause
5.1(a), the Borrower may request and the Bank may agree to alternative arrangements for
the payment of the amounts due by the Borrower 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, the 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	 	Gross Up 
	 
	 	 	If at any time any law, regulation, regulatory requirement or requirement of any
governmental authority, monetary agency, central bank or the like compels the Borrower to
make payment subject to Governmental Withholdings, or any other deduction or withholding,
the Borrower 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 Borrower shall indemnify the Bank against any losses or
costs incurred by the Bank by reason of any failure of the Borrower 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 Borrower 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 Borrower 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.
	 
	5.4	 	Certificates Conclusive 

20

 

	 	 	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 Borrower.
	 
	5.5	 	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 Borrower hereby represents and warrants to the Bank that:
	 
	 	 	Continuing representations and warranties

	 	(a)	 	Due Incorporation/Valid Existence 
	 
	 	 	 	the Borrower 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 (directly or indirectly) 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 Borrower and the other Security Parties has power to execute, deliver
and perform its obligations under the Security Documents to which it is a party and
to borrow the Commitment and each of the other Security Parties has power to execute
and deliver and perform its obligations under the Security Documents to which it is
or is to be a party; all necessary corporate, shareholder (if required) and other
action has been taken to authorise the execution, delivery and performance of the
same and no limitation on the powers of the Borrower 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 Borrower or any other Security Party is current or
pending or (to its or its officers’ knowledge) threatened against the Borrower or
any other Security Party, which, if adversely determined, would have a materially
adverse effect on the business assets or the financial condition of any of them;
	 
	 	(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

21

 

	 	 	 	Security Parties will not (i) contravene any existing applicable law, statute, rule
or regulation or any judgment, decree or permit to which the Borrower 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
the Borrower 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 the Borrower or
any other Security Party or (iv) result in the creation or imposition of or oblige
the Borrower 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
Borrower or any other Security Party;
	 
	 	(e)	 	Financial Condition 
	 
	 	 	 	the financial condition of the Borrower 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 Borrower 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 Borrower 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;
	 
	 	(h)	 	Licences/Authorisation
	 
	 	 	 	every consent, authorisation, license 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 the Borrower 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, over the assets and revenues
intended to be covered, valid and enforceable against the Borrower and the other
Security Parties;

22

 

	 	(j)	 	No Notarisation/Filing/Recording
	 
	 	 	 	save for the registration of any 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 any
mortgage upon its registration at the Registry — will constitute) valid and legally
binding obligations of the relevant Security Parties enforceable against the
Borrower 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 respective Security Documents, valid
and binding on the Borrower and any other Security Party which is or is to be a
party thereto.

	6.2	 	The Borrower hereby further represents and warrants to the Bank that:
	 
	 	 	Initial representations and warranties

	 	(a)	 	Direct obligations — Pari Passu 
	 
	 	 	 	the obligations of the Borrower under this Agreement are direct, general and
unconditional obligations of the Borrower and rank at least pari passu with all
other present and future unsecured and unsubordinated Indebtedness of the Borrower
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 the Borrower, 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
generally accepted accounting principles which have been consistently applied;

23

 

	 	(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 the Borrower 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 Borrower;
	 
	 	(e)	 	No Default under other Indebtedness
	 
	 	 	 	the Borrower is not 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 Vessel 
	 
	 	 	 	the Vessel on the Delivery Date will be:

	 	(i)	 	in the absolute and free from Encumbrances (other than in
favour of the Bank) ownership of the Borrower who will on and after the
Drawdown Date be the sole legal and beneficial owner of the Vessel;
	 
	 	(ii)	 	registered in the name of the Borrower through the Registry
under the laws and flag of the Flag State;
	 
	 	(iii)	 	operationally seaworthy and in every way fit for service;
	 
	 	(iv)	 	classed with a classification society which is a member of IACS
and which has been approved by the Bank in writing and such class will be free
of all requirements and recommendations of such classification society
affecting class;
	 
	 	(v)	 	insured in accordance with the provisions of this Agreement;
	 
	 	(vi)	 	managed by the Approved Manager; and
	 
	 	(vii)	 	in full compliance with the ISM Code and the ISPS Code;

	 	(g)	 	No Charter 
	 
	 	 	 	Save for any Charterparty, the Vessel will not 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 the
Vessel may be shared with any other person;

24

 

	 	(h)	 	No Encumbrances 
	 
	 	 	 	neither the Vessel, 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;
	 
	 	(i)	 	Compliance with Environmental Laws and Approvals
	 
	 	 	 	except as may already have been disclosed by the Borrower in writing to, and
acknowledged in writing by, the Bank:

	 	(i)	 	the Borrower and its Related Companies have complied with the
provisions of all Environmental Laws;
	 
	 	(ii)	 	the Borrower and its Related Companies have obtained all
Environmental Approvals and are in compliance with all such Environmental
Approvals; and
	 
	 	(iii)	 	neither the Borrower nor any of its Related Companies have
received notice of any Environmental Claim that the Borrower or any of its
Related Companies are not in compliance with any Environmental Law or any
Environmental Approval;

	 	(j)	 	No Environmental Claims

	 	(i)	 	except as may already have been disclosed by the Borrower in
writing to, and acknowledged in writing by, the Bank:

	 	(aa)	 	there is no Environmental Claim pending or, to
the best of the Borrower’s knowledge and belief, threatened against the
Borrower or the Vessel or the Borrower’s Related Companies or any other
Relevant Ship; and
	 
	 	(bb)	 	there has been no emission, spill, release or
discharge of a Material of Environmental Concern from the Vessel or any
other Related Ship or any vessel owned by, managed or crewed by or
chartered to the Borrower which could give rise to an Environmental
Claim;

	 	(k)	 	Copies true and complete
	 
	 	 	 	the copies of the Bill of Sale and the Management Agreement delivered or to be
delivered to the Bank pursuant to clause 7.4 are, or will when delivered be, true
and complete copies of such documents; such documents 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;
	 
	 	(l)	 	Application made for DOC and SMC

25

 

	 	 	 	the Operator has applied for a DOC for itself and an SMC in respect of the Vessel
and that neither the Borrower nor any Operator is aware of any reason why such
application may be refused;
	 
	 	(m)	 	Compliance with ISPS code 
	 
	 	 	 	the Vessel and any Operator complies or will on the Drawdown Date comply with the
requirements of the ISPS Code.
	 
	 	(n)	 	Acting for its own account
	 
	 	 	 	the Borrower by entering into this Agreement and the other Security Documents is
acting on its own behalf and for its own account.
	 
	 	(o)	 	No Money laundering
	 
	 	 	 	in relation to the borrowing by the Borrower of the Loan, the performance and
discharge of its obligations and liabilities under this Agreement and the
transactions and other arrangements effected or contemplated by this Agreement, the
Borrower is acting for its own account and that the foregoing 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 para (a) of
Article 1 of the Law 2331/1995 (as amended) of the Hellenic Republic.

	6.3	 	Representations Correct
	 
	 	 	At the time of entering into this Agreement all above representations and warranties or any
other information given by the Borrower and/or the Corporate Guarantor to the Bank are true
and accurate.
	 
	6.4	 	Repetition of Representations and Warranties
	 
	 	 	The representations and warranties in this Clause 6 (except in relation to the
representations and warranties in Clause 6.2) shall be deemed to be repeated by the Borrower
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 Borrower 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;
	 
	 	(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 and containing
specimens of their respective signatures;

26

 

	 	(c)	 	minutes of separate meetings of the directors and shareholders (if required) 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, 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; and
	 
	 	(f)	 	evidence that the arrangement fee due under Clause 10.9 has 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 other corporate Security Party evidencing that
the relevant Security Party has been properly established, continues to exist validly
and to be in good standing and stating respectively the full names and addresses of the
person or persons beneficially entitled as shareholders/ stockholders of the entire
issued and outstanding shares/ stock of each of them (in connection to the Corporate
Guarantor, this will apply to the shareholders controlling 25% of its issued share
capital);
	 
	 	(h)	 	evidence that the Earnings Account and the Retention Account have been duly
opened and all mandate forms, signature cards and authorities have been duly delivered;

	7.2	 	Conditions concerning the Vessel 
	 
	 	 	The obligation of the Bank to advance the Commitment is subject to the further condition
that the Bank shall have received prior to the drawdown or, where this is not possible, on
the Delivery Date:

	 	(a)	 	evidence that the Vessel will be duly registered in the ownership of the
Borrower through the Registry at the port of the Vessel’s port of registry under the
laws and flag of the Flag State free from any Encumbrances save for those in favour of
the Bank and otherwise as contemplated herein;
	 
	 	(b)	 	evidence in form and substance satisfactory to the Bank that the Vessel has
been or will — on the Drawdown Date — be insured in accordance with the insurance
requirements provided for in Schedule 2 this Agreement and the other Security Documents
including a Mortgagee’s Interest Insurance, (herein “MII”) for an amount equal to 110%
of the amount of the Loan, which the Bank may at any time effect on such terms and with
such insurers as shall from time to time be determined by the Bank, to be followed by
full copies of cover notes, policies, certificates of entry or other contracts of
insurance and

27

 

	 	 	 	irrevocable authority is hereby given to the Bank at any time at its discretion to
obtain copies of the policies, certificates of entry or other contracts of insurance
from the insurers and/or obtain any information in relation to the Insurances
relating to the Vessel;
	 
	 	(c)	 	certified true copy of the Management Agreement evidencing that the Vessel is
managed by the Approved Manager on terms acceptable to the Bank;
	 
	 	(d)	 	evidence that the trading certificates of the Vessel are valid and in force;
	 
	 	(e)	 	all necessary confirmations from the insurers of the 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 and ( — in the event of fleet cover — accompanied by waivers for liens for
unpaid premium of other vessels managed by the Approved Manager and which are not
subject to any mortgage in favour of the Bank) and an opinion signed by an independent
firm of marine insurance brokers appointed and/or approved by the Bank at the expenses
of the Borrower confirming the adequacy of the Insurances maintained on the Vessel;
	 
	 	(f)	 	each of the Security Documents (as set out in Clause 11.1) duly executed and
where appropriate duly registered with the appropriate Registry;
	 
	 	(g)	 	evidence (dated not more than three (3) days before the Drawdown Date) that the
Vessel is classed as specified in Clause 6.2(f)(iv) with the Bureau Veritas, or to a
similar standard with another classification society of like standing to be
specifically approved by the Bank, and remains free from any and all recommendations,
overdue notations or average damage affecting class;
	 
	 	(h)	 	the Drawdown Notice in respect of the Commitment duly executed and issued;
	 
	 	(i)	 	copies of the DOC and SMC referred to in paragraph (a) in the definition of the
ISM Code Documentation certified as true and in effect by the Borrower and the Approved
Manager; and
	 
	 	(j)	 	copies of such ISM Code Documentation as the Bank may by written notice to the
Borrower have requested not later than two (2) days before the Drawdown Date certified
as true and complete in all material respects by the Borrower and the Approved Manager;
	 
	 	(k)	 	copy of the ISSC in relation to the Vessel;
	 
	 	(l)	 	if the Bank so requires a report signed by an independent firm of marine
insurance brokers appointed by the Bank at the expense of the Borrower confirming the
adequacy of the Insurances maintained on the Vessel;
	 
	 	(m)	 	if the Bank so requires, a satisfactory to the Bank review of class records and
recent condition survey report on the Vessel together with a comprehensive record
inspection from a surveyor appointed by the Bank, at the Borrower’s expense;
	 
	 	(n)	 	certified true and complete copy of any Charterparty and any addenda thereto;

28

 

	 	(o)	 	valuation of the Vessel, at the Borrower’s expense, as at a date determined by
the Bank but in any event before the relevant drawdown, prepared on the basis specified
in Clause 8.6(b) by major shipbrokers appointed and/or approved by the Bank in form and
substance satisfactory to the Bank in its sole discretion;

	7.3	 	Conditions concerning the purchase of the Vessel 
	 
	 	 	The obligation of the Bank to advance the Commitment or any part thereof is subject to the
further condition that the Bank shall have received prior to or simultaneously with the
Delivery:

	 	(a)	 	a copy of the MOA certified as true and complete by the legal counsel of the
Borrower;
	 
	 	(b)	 	evidence to the full satisfaction of the Bank, proving the Seller’s title to
the Vessel free of any Encumbrances, debts or claims of any nature whatsoever;
	 
	 	(c)	 	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
Vessel and the execution of all documents required in connection therewith;
	 
	 	(d)	 	duly certified copy of the Bill of Sale, the protocol of delivery and
acceptance of the Vessel as well as of all other Seller’s documents; and
	 
	 	(e)	 	evidence that the ten per cent (10%) deposit in respect of the Vessel and all
other sums of money (other than the Commitment or any part thereof) required to be paid
by the Borrower to the Seller pursuant to the MOA have been duly paid.

	7.4	 	No change of circumstances
	 
	 	 	The obligation of the Bank to advance the Commitment or any part thereof 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.

	7.5	 	General Conditions

29

 

	 	 	The obligation of the Bank to advance the Commitment or any part thereof 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 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)	 	a receipt in writing in form and substance satisfactory to the Bank including
an acknowledgement and admission of the Borrower and/or any other Security Party to the
effect that the Commitment or relevant part thereof (as the case may be) was drawn by
the Borrower and a declaration by the Borrower 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.

	7.6	 	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. Without
prejudice to any of the other provisions of this Agreement, in the event that the Bank, in
its sole and absolute discretion, makes the Commitment available to the Borrower prior to
the satisfaction of all or any of the conditions referred to in Clause 7.1, 7.2 and 7.3, the
Borrower hereby covenants and undertakes to satisfy or procure the satisfaction of such
condition or conditions within such period as the Bank may, in its sole and absolute
discretion, agree or specify.
	 
	7.7	 	Further conditions precedent
	 
	 	 	The Bank may request and the Borrower shall within such period from the date of such request
as shall be reasonably determined by the Bank, 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 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, the Borrower will:
	 
	8.1	 	Information Covenants

	 	(a)	 	Annual financial Statements 
	 
	 	 	 	furnish the Bank, in form and substance satisfactory to the Bank, with consolidated
annual audited financial statements of the Borrower and the Group at latest within
180 days after the end of the financial year concerned, this obligation to commence
with the financial year ending 31st December,

30

 

	 	 	 	2007, prepared in accordance with generally accepted accounting principles
consistently applied;
	 
	 	(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 the Borrower 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; and
	 
	 	(c)	 	Information on adverse change or Default 
	 
	 	 	 	promptly inform the Bank of any occurrence which came to the knowledge of the
Borrower which might adversely affect the ability of the Borrower 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)	 	Information on the employment of the Vessel 
	 
	 	 	 	provide the Bank from time to time as the Bank may request with information on the
employment of the Vessel and of any Relevant Ship as well as on the terms and
conditions of any charterparty, contract of affreightment, agreement or related
document in respect of the employment of the Vessel and of any Relevant Ship, such
information to be certified by one of the directors of the Borrower as to their
correctness;
	 
	 	(e)	 	Information for the Securities and Exchange Commission (“SEC”)
	 
	 	 	 	Provide the Bank with copies of any filing with and reports to SEC by the Corporate
Guarantor;

	8.2	 	Banking operations-Liquidity 

	 	(a)	 	ensure that, all banking operations in connection with the Vessel are carried
out through the Lending Branch; and
	 
	 	(b)	 	ensure that at all times the Borrower will maintain to the Earnings Account an
average liquidity of no less than Dollars two hundred thousand ($200,000);

	8.3	 	Additional Financial Covenants
	 
	 	 	The Borrower 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
financial statements produced in accordance with sub-clause 8.1(a), shall be such that:

31

 

	 	(a)	 	ensure that, for the duration of the Security Period, the Leverage Ratio of the
Corporate Guarantor will not at any time exceed 68%;
	 
	 	(b)	 	ensure that, for the duration of the Security Period, the ratio of EBITDA over
Net Interest Expenses is not lower than 3x;
	 
	 	(c)	 	ensure that, for the duration of the Security Period, the Corporate Liquidity
of the Corporate Guarantor to be at least Dollars three million ($ 3,000,000);

	 	 	The expressions used in this Clause 8.3 shall be construed in accordance with law and
accounting principles internationally accepted as used in the most recent financial
statements produced in accordance with sub-clause 8.1(a), and for the purposes of this
Agreement:
	 
	 	 	“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 the annual
financial statements are required to be delivered pursuant to sub-clause 8.1(a);
	 
	 	 	“Leverage Ratio” means, in respect of each Accounting Period and on a consolidated basis of
the Group, Total Liabilities divided by the Total Assets (both net of cash adjusted to fair
market values of the Vessel) during such period.
	 
	 	 	“Corporate Liquidity” in relation to the Corporate Guarantor means, in respect of an
Accounting Period, the aggregate amount of cash deposits held in accounts of the Corporate
Guarantor free from any encumbrances;
	 
	 	 	“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;
	 
	 	 	“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;
	 
	 	 	“Total Assets” means, in respect of an Accounting Period, total assets (excluding cash and
cash equivalents) of the Group as stated in the most recent financial statements produced in
accordance with sub-clause 8.1(a); and
	 
	 	 	“Total Liabilities” means at any relevant time the total liabilities of the Group as
stated in the most recent financial statements produced in accordance with sub-clause
8.1(a).
	 
	8.4	 	No Further Financial Exposure
	 
	 	 	without the prior written consent of the Bank:

	 	(a)	 	No further Indebtedness 
	 
	 	 	 	incur no further Indebtedness nor authorise or accept any capital commitments (other
than that (i) normally associated with the day to day operations of the Vessel) and
(ii) associated with the issuance of letters of guarantee up to Dollars three
hundred thousand ($300,000) under normal course of business) nor enter into any
agreement for payment on deferred terms or hire agreement;

32

 

	 	(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 Disposal of Assets/Dividends 
	 
	 	 	 	not dispose of any assets without the prior written consent of the Bank; the payment
of dividends is permitted provided that no Event of Default has occurred and that no
Event of Default will result out of the distribution of dividends;
	 
	 	(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 the Borrower, the operation, maintenance
and/or repair of the Vessel;

	8.5	 	Maintenance of Business and legal Structure

	 	(a)	 	Maintenance of Business Structure 
	 
	 	 	 	not change the nature, organisation and conduct of its business as, owner of the
Vessel or carry on any business other than the business carried on at the date
hereof;
	 
	 	(b)	 	Maintenance of Legal Structure 
	 
	 	 	 	ensure that none of the documents defining the constitution of the Borrower and/or
any corporate shareholder shall be altered in any manner whatsoever;
	 
	 	(c)	 	Control 
	 
	 	 	 	ensure that no change shall be made directly or indirectly in the ownership,
beneficial ownership, control or management of the Borrower and the Corporate
Guarantor (as far as its controlling interest is concerned) or any share therein or,
of the Vessel without the prior written consent of the Bank;
	 
	 	(d)	 	No change of controlling interest 
	 
	 	 	 	ensure that, without the prior written consent of the Bank, no change will be made
in the shareholding of the Corporate Guarantor that may result in one shareholder
interest controlling 25% or more of the Corporate Guarantor’s issued share capital;
	 
	 	(e)	 	No merger
	 
	 	 	 	not merge or consolidate with any other company or person;
	 
	 	(f)	 	Subsidiaries

33

 

	 	 	 	not form or acquire any Subsidiaries; and
	 
	 	(g)	 	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;
	 
	 	(h)	 	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 the Borrower
and the other Security Parties, including the ultimate legal and beneficial owner or
owners of such entities (in respect to the Corporate Guarantor, this will apply to
the shareholders controlling 25% or more of its issued share capital), and any other
persons involved or affected by the transaction(s) contemplated by this Agreement.

	8.6	 	Pari passu/Value of Security

	 	(a)	 	Pari passu 
	 
	 	 	 	ensure that its obligations under this Agreement shall, without prejudice to the
provisions of this Clause 8.6 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 Vessel 
	 
	 	 	 	at any time (and at least once per year) that the Bank might consider to be (at the
sole discretion of the Bank) necessary or useful and at the expense of the Borrower,
have the 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 the Vessel (“the basis of valuation”), by a reputable
shipbroker as may from time to time be appointed by the Bank for this purpose;
	 
	 	(c)	 	Vessel’s Value to Debt Ratio-Additional Security 
	 
	 	 	 	ensure and procure that the Security Value shall be no less than the Security
Requirement at the relevant time and if at any relevant time the Security Value is
less than the Security Requirement, the Borrower shall within fifteen (15) days of
being advised by the Bank of such shortfall, either prepay or provide additional
security in form and substance in all respects acceptable to the Bank in an amount
at least equal to the amount of such shortfall. Such additional security shall be
constituted by:

34

 

	 	(i)	 	additional pledged cash deposits in favour of the Bank in an
amount equal to such shortfall with a bank and in an account and manner to be
determined by the Bank; and/or
	 
	 	(ii)	 	any other security acceptable to the Bank to be provided in a
manner determined by the Bank.

	 	(d)	 	Market Value
	 
	 	 	 	The Market Value of the Vessel shall be determined for the purpose of Clause 8.6(c)
and shall be notified by the Bank to the Borrower and the valuation of such
shipbroker shall constitute the value of the Vessel for the purposes of this
Agreement and shall be binding upon the parties hereto. All costs in connection with
such valuation and any valuation of any additional security provided pursuant to
Clause 8.6(c) shall be borne by the Borrower. Any valuation referred to in Clause
8.6 to be addressed to the Bank, but copies to be given to the Borrower after
relevant request by the Borrower.
	 
	 	 	 	Provided however that in the event that the Market Value of the Vessel (determined
in accordance with Clause 8.6(b)) shall be less than the Security Requirement then
the value of the Vessel shall be determined by three (3) out of the shipbrokers
referred to in Clause 8.6(b) (one of which shall be the initial valuator) and in
that case the mean of such three (3) valuations of such shipbrokers shall constitute
the value of the Vessel for the purposes of this Agreement and shall be binding upon
the parties hereto.
	 
	 	(e)	 	Valuation of additional security
	 
	 	 	 	For the purpose of this Clause 8.6, 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 8.6(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.
	 
	 	(f)	 	Documents and evidence
	 
	 	 	 	In connection with any additional security provided in accordance with this Clause
8.6, 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.

	8.7	 	Maintenance of Assets 

	 	(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 

35

 

	 	 	 	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
without the prior written consent of the Bank; and

	8.8	 	Covenants Concerning the Vessel

	 	(a)	 	Ownership/Management/Control
	 
	 	 	 	ensure that the Vessel will be registered on the Drawdown Date under the laws of the
Flag State and thereafter maintain her present ownership, management, control and
beneficial ownership and that no change of name, ownership or flag of the Vessel
will take place without the Bank’s prior written consent;
	 
	 	(b)	 	Class 
	 
	 	 	 	ensure that the Vessel will remain in class free of any and all recommendations,
overdue notations or average damage affecting class and provide the Bank on demand
with copies of all class and trading certificates of the Vessel;
	 
	 	(c)	 	Insurances 
	 
	 	 	 	ensure that all Insurances of the Vessel are maintained and comply with all
insurance requirements specified in this Agreement and in the Mortgage and in case
of failure to maintain the 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 Borrower (and in case that the
Vessel remains in port for an extended period to effect port risks insurances at the
cost of the Borrower 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 the
Vessel or any share therein or create or agree to create or permit to subsist any
Encumbrance over the Vessel (or any share or interest therein) other than Permitted
Encumbrances;
	 
	 	(e)	 	Not imperil Flag, Ownership, Insurances 
	 
	 	 	 	ensure that the Vessel is maintained and trades in conformity with the laws of the
Flag State, of its owning company or of the nationality of the officers of the
Vessel, the requirements of the Insurances and nothing is done or permitted to be
done which could endanger the flag of the 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 

36

 

	 	 	 	save for any Charterparty, not enter into a charterparty, contract of affreightment,
agreement or related document in respect of the employment of the Vessel (i) on
demise charterparty or (ii) without the prior written consent of the Bank, for a
period for more than twelve (12) months or below the market rate prevailing at the
time when the Vessel is fixed in or on terms which are not in accordance with the
commercial practice prevailing at the relevant time;
	 
	 	(h)	 	Assignment of Earnings 
	 
	 	 	 	not assign or agree to assign otherwise than to the Bank the Earnings or any part
thereof; and
	 
	 	(i)	 	Compliance with Environmental Laws 
	 
	 	 	 	comply with, and procure that all Environmental Affiliates of any Relevant Party
comply with, all Environmental Laws including without limitation, requirements
relating to manning and establishment of financial responsibility and to obtain and
comply with, and procure that all Environmental Affiliates of such Relevant Party
obtain and comply with, all Environmental Approvals and to notify the Bank
forthwith:

	 	(i)	 	of any Environmental Claim for an amount or amounts in
aggregate exceeding (a) $200,000 made against the Vessel and $500,000 made
against any Relevant Ship and/or her respective owner; and
	 
	 	(ii)	 	upon becoming aware of any incident which may give rise to an
Environmental Claim and to keep the Bank advised in writing of the Borrower’s
response to such Environmental Claim on such regular basis and in such detail
as the Bank shall require;

	 	(j)	 	Right of survey
	 
	 	 	 	the Bank shall have the right of inspection and/or survey of the Vessel at any time,
at the Borrower’s expense, and shall have the right to review the operating and
insurance records of the Borrower and the Corporate Guarantor;
	 
	 	(k)	 	Compliance with ISM and ISPS Codes
	 
	 	 	 	Ensure that the Vessel and the Approved Manager will always be in compliance with
the ISM and ISPS Codes;

	8.9	 	Observance of Covenants

	 	(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;

37

 

	 	(c)	 	Payment on Demand 
	 
	 	 	 	pay to the Bank on demand any sum of money which is payable by the Borrower 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
Documents;

	8.10	 	Validity of Securities — Taxes etc.

	 	(a)	 	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;
	 
	 	(b)	 	Earnings
	 
	 	 	 	ensure and procure that, unless and until directed by the Bank otherwise (i) all the
Earnings of the Vessel shall be paid to the Earnings Account and (ii) the persons
from whom the Earnings are from time to time due are irrevocably instructed to pay
them to such account in the name of the Borrower as shall be from time to time
agreed by the Bank in accordance with the provisions hereof and of the relevant
Security Documents;
	 
	 	(c)	 	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
	 
	 	(d)	 	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, such conditions shall be
complied with within fourteen (14) days of Drawdown (unless the Bank agrees
otherwise in writing) and failure to comply with this covenant shall be an Event of
Default.

	8.11	 	Compliance with the ISM Code 

38

 

	 	 	 Procure that the Approved Manager and any Operator:

	 	(a)	 	will comply with and ensure that the Vessel 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;
	 
	 	(b)	 	immediately inform the Bank if there is any threatened or actual withdrawal of
the Borrower’s, the Approved Manager’s or an Operator’s DOC or the SMC in respect of
the Vessel; and
	 
	 	(c)	 	promptly inform the Bank upon the issue to the Borrower, the Approved Manager
or any Operator of a DOC and to the Vessel of an SMC or the receipt by the Borrower,
the Approved Manager or any Operator of notification that its application for the same
has been realised.

	8.12	 	ISPS Code Compliance
	 
	 	 	Procure that the Approved Manager or any Operator will:

	 	(a)	 	maintain at all times a valid and current ISSC respect of the Vessel;
	 
	 	(b)	 	immediately notify the Bank in writing of any actual or threatened withdrawal,
suspension, cancellation or modification of the ISSC in respect of the Vessel; and
	 
	 	(c)	 	procure that the Vessel will comply at all times with the ISPS Code;

	8.13	 	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 8.12 which are applicable to them mutatis
mutandis.
	 
	9.	 	EVENTS OF DEFAULT
	 
	 	 	There shall be an Event of Default whenever an event described in Clauses 9.1 to 9.7 occurs:
	 
	9.1	 	Non Performance of Obligations

	 	(a)	 	the Borrower or any other Security Party fails to pay any sum due from the
Borrower or, as the case may be such Security Party, under this Agreement and/or any of
the other Security Documents at the time, in the currency and in the manner stipulated
herein and/or any of the other Security Documents, or, in the case of any sum payable
on demand, within three (3) Banking Days of such demand; or
	 
	 	(b)	 	the Borrower or any other Security Party fails to observe and perform any one
or more of the covenants, terms or obligations contained in this Agreement and/or any
other Security Document relating to the Insurances; or

39

 

	 	(c)	 	the Borrower or any other Security Party commits any breach of or omits to
observe any of the covenants, terms, obligations or undertakings under this Agreement
and/or any of the other Security Documents (other than failure to pay any sum when due
or to comply with any obligation concerning the Insurances) and, in respect of any such
breach or omission which in the opinion of the Bank is capable of remedy, such action
as the Bank may require shall not have been taken within five (5) days of the Bank
notifying the Borrower and/or the relevant Security Party of such required action to
remedy the breach or omission; or

	9.2	 	Events affecting the Security Parties

	 	(a)	 	any Security Party is adjudicated or found bankrupt or insolvent or any
judgement or order is made by any competent court or resolution passed or petition
(which is not in the reasonable opinion of the Bank frivolous and is not being
contested in good faith by such Security Party) presented for the winding-up or
dissolution of any Security Party or for the appointment of a liquidator, trustee,
receiver, administrator or conservator of the whole or any part of the undertakings,
assets, rights or revenues of any Security Party; or
	 
	 	(b)	 	any Security Party becomes or is deemed to be insolvent or suspends payment of
its debts or is (or is deemed to be) unable to or admits inability to pay its debts as
they fall due or proposes or enters into any composition, compromise or other
arrangement for the benefit of its creditors generally or good faith proceedings are
commenced in relation to any Security Party under any law, regulation or procedure
relating to reconstruction or readjustment of debts; or
	 
	 	(c)	 	an encumbrancer takes possession or a receiver or similar officer is appointed
of the whole or any part of the undertakings, assets, rights or revenues of any
Security Party or a distress, execution, sequestration or other process is levied or
enforced upon or sued out against any of the undertakings, assets, rights or revenues
of any Security Party and is not discharged within fifteen (15) days; or
	 
	 	(d)	 	all or a material part of the undertakings, assets, rights or revenues of any
Security Party are seized, nationalised, expropriated or compulsorily acquired by or
under the authority of any government; or
	 
	 	(e)	 	any event occurs or proceeding is taken with respect to any Security Party in
any jurisdiction to which it is subject which has an effect equivalent or similar to
any of the events mentioned in sub-Clauses 9.2(a) to 9.2(d); or
	 
	 	(f)	 	any Security Party suspends or ceases or threatens to suspend or cease to carry
on its business; or
	 
	 	(g)	 	there occurs, in the reasonable opinion of the Bank, a materially adverse
change in the financial condition of any Security Party; or
	 
	 	(h)	 	any other event occurs or circumstances arise which, in the reasonable opinion
of the Bank, materially and adversely affects 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 this Agreement and/or any of the other Security

40

 

	 	 	 	Documents, or (ii) the security created by this Agreement and/or any of the Security
Documents; or
	 
	 	(i)	 	there is any material change in the beneficial ownership of the shares in the
Borrower and/or in any other corporate Security Party (in respect to the Corporate
Guarantor, this to apply for the shareholders controlling 25% or more of its issued
share capital); or
	 
	 	(j)	 	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

	9.3	 	Representations Incorrect
	 
	 	 	any representation or warranty made or deemed to be made or repeated by or in respect of any
Security Party in or pursuant to this Agreement or any of the other Security Documents or in
any notice, certificate or statement referred to in or delivered under this Agreement or any
of the other Security Documents is or proves to have been incorrect in any material respect;
or
	 
	9.4	 	Cross-default of the Borrower 
	 
	 	 	any Indebtedness of the Borrower is not paid when due or becomes due and payable, or any
creditor of the Borrower becomes entitled to declare any such Indebtedness due and payable
prior to the date when it would otherwise have become due, or any guarantee or indemnity
given or any obligation or covenant undertaken or agreement made by the Borrower in respect
of Indebtedness is not honoured when due; or
	 
	9.5	 	Events affecting the Security Documents

	 	(a)	 	this Agreement or any of the other 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 party thereto (other than the Bank),
or if any such party shall deny that it has any, or any further, liability thereunder
or it becomes impossible or unlawful for the Borrower to fulfil any of its covenants
and obligations contained in this Agreement or any of the Security Documents or for the
Bank to exercise the rights vested in it thereunder or otherwise; or
	 
	 	(b)	 	any consent, authorisation, licence or approval of, or registration with or
declaration to, governmental or public bodies or authorities or courts required by the
Borrower to authorise or otherwise in connection with, the execution, delivery,
validity, enforceability or admissibility in evidence of this Agreement and/or any of
the other Security Documents or the performance by the Borrower of its obligations
under this Agreement and/or any of the other Security Documents is modified in a manner
unacceptable to the Bank or is not granted or is revoked or terminated or expires and
is not renewed or otherwise ceases to be in full force and effect; or
	 
	 	(c)	 	any Encumbrance (other than Permitted Liens) in respect of any of the property
(or part thereof) which is the subject of the Security Documents (or any of them)
becomes enforceable; or

41

 

	9.6	 	Events concerning the Security Parties

	 	(a)	 	any Security Party (other than the Borrower) fails to pay any sum due from it
under this Agreement and/or any of the Security Documents when due, or, in the case of
any sum payable on demand, within three (3) Banking Days of demand; or
	 
	 	(b)	 	any Security Party (other than the Borrower) fails to observe and perform any
one or more of the covenants, terms or obligations contained in this Agreement
(including Schedule 1) and/or the other Security Documents relating to the Insurances;
or
	 
	 	(c)	 	any Security Party (other than the Borrower) commits any breach of or omits to
observe any of the covenants, terms, obligations or undertakings expressed to be
assumed by it under this Agreement and/or any of the Security Documents (other than
failure to pay any sum when due or to observe or perform obligations relating to the
Insurances) and, in respect of any such breach or omission which in the opinion of the
Bank is capable of remedy, such action as the Bank may require shall not have been
taken within seven (7) days of the Bank notifying the relevant Security Party, of such
required action to remedy the breach or omission; or
	 
	 	(d)	 	any representation or warranty made or deemed to be made or repeated by or in
respect of any Security Party (other than the Borrower) in or pursuant to this
Agreement or any of the other Security Documents or in any notice, certificate or
statement referred to in or delivered under this Agreement or any of the other Security
Documents is or proves to have been incorrect in any material respect; or
	 
	 	(e)	 	any of the events referred to in Clauses 9.2 to 9.5 occurs (amended as
appropriate) in relation to any Security Party (other than the Borrower).

	9.7	 	Events concerning the Vessel

	 	(a)	 	the 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 the 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 and eighty
(180) days from the date such Total Loss or damage or incident occurred;
	 
	 	(b)	 	the Vessel ceases to be managed by the Approved Manager (for any reason other
than the reason of a Total Loss or sale of the Vessel) with the approval of the Bank,
and the Borrower fails to appoint an Approved Manager within seven (7) days after the
termination of the Management Agreement with the previous Approved Manager; or
	 
	 	(c)	 	the Vessel is arrested, confiscated, seized, taken in execution, impounded,
forfeited, detained in exercise or purported exercise of any possessory lien or other
claim and the Owner shall fail to procure the release of the Vessel within a period of
fourteen (14) days thereafter; or

42

 

	 	(d)	 	(without prejudice to the generality of sub-Clauses 9.1(b) and (c)) for any
reason whatsoever the Vessel ceases to comply with the ISM Code; or
	 
	 	(e)	 	(without prejudice to the generality of sub-Clauses 9.1(b) and (c)) for any
reason the Vessel ceases to comply with the ISPS Code; or
	 
	 	(f)	 	the registration of the Vessel under the laws and flag of the Flag State is
cancelled or terminated without the prior written consent of the Bank; or
	 
	 	(g)	 	the Flag State of the Vessel becomes involved in hostilities or civil war or
there is a seizure of power in such Flag State by unconstitutional means if, in any
such case, such event could in the reasonable opinion of the Bank reasonably be
expected to have a material adverse effect on the security constituted by any of the
Security Documents and alternative arrangements satisfactory to the Bank have not been
made promptly upon the Bank’s request; or
	 
	 	(h)	 	the registration of the Vessel under the laws and flag of the Flag State is
cancelled or terminated without the prior written consent of the Bank or, if the Vessel
is only provisionally registered on the Drawdown Date and is not permanently registered
under the laws and flag of the Flag State at least ninety (90) days prior to the
deadline for completing such permanent registration;
	 
	 	(i)	 	the Charterparty is at any time and for any reason terminated or becomes
invalid or unenforceable or otherwise ceases to remain in full force and effect, or if
the validity of the Charterparty shall at any time and for any reason be contested by
any party thereto, or it becomes impossible or unlawful for any party to the
Charterparty to fulfil any of its covenants and obligations contained therein and the
Borrower do not provide within 15 days of the Bank’s notice to the Borrower an
alternative charterparty in form and substance satisfactory to the Bank and/or
additional security as provided in Clause 8.6(c); or

	9.8	 	Environmental Events

	 	(a)	 	any Relevant Party and/or the Approved Manager and/or any of their respective
Environmental Affiliates fails to comply with any Environmental Law or any
Environmental Approval or the Vessel or any Relevant Ship is involved in any incident
which gives rise or which may give rise to any Environmental Claim, if in any such
case, such non compliance or incident or the consequences thereof could (in the
reasonable opinion of the Bank) be expected to have a material adverse effect on the
business assets, operations, property or financial condition of the Borrower or any
other Security Party or on the security created by any of the Security Documents; or
	 
	 	(b)	 	any Security Party 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 is entered for insurance or insured against protection and indemnity risks
(including oil pollution risks) to the effect that any cover in relation to the Vessel
(including without limitation, liability for Environmental

43

 

	 	 	 	 Claims arising in jurisdictions where the Vessel operates or trades) is or may be
liable to cancellation, qualification or exclusion at any time; or

	9.9	 	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 Borrower declare that the obligation of the Bank to make the
Commitment available shall be terminated, whereupon the Commitment shall be reduced to
zero forthwith; and/or
	 
	 	(b)	 	by notice to the Borrower declare that the Loan and all interest and 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 Borrower; 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 Vessel, 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).

	9.10	 	Insolvency Events of Default
	 
	 	 	If an event occurs in respect of the Borrower or the other Security Parties of the type
described in sub-Clauses 9.2(a) to (e) (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
Borrower or the relevant Security Party is defending itself in bona fide and (ii) in the
case that such events mentioned in Clause 9.2 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 Borrower 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 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 9.9(b) above shall become immediately due and
payable without any notice or other formality which is hereby expressly waived by the
Borrower.
	 
	9.11	 	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).

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	9.12	 	Exclusion of Bank’s liability 
	 
	 	 	Neither the Bank nor any receiver or manager appointed by the Bank, shall have any liability
to the Borrower 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 Borrower shall on demand (and it is hereby expressly undertaken by the Borrower to)
indemnify the Bank, without prejudice to any of the other rights of the Bank under any of
the Security Documents, against any loss 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;
	 
	 	(b)	 	the occurrence of any Event of Default;
	 
	 	(c)	 	any prepayment of the Loan or part thereof being made under Clauses 4.2(b) and
4.3, 8.6(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 Borrower shall (and it is hereby expressly undertaken by the Borrower to) pay to the
Bank on demand:

	 	(a)	 	Initial and Amendment expenses

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	 	 	 	all 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 Borrower to
constitute additional security pursuant to sub-Clause 8.6(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)	 	MII 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
Mortgagee’s Interest Insurance for an amount equal to 110% of the amount of the Loan
(herein “MII”) which the Bank may at any time effect on such terms and with such
insurers as shall from time to time be determined by the Bank) to be followed by full
copies of cover notes, policies, certificates of entry or other contracts of insurance
and irrevocable authority is hereby given to the Bank at any time at its discretion to
obtain copies of the policies, certificates of entry or other contracts of insurance
from the insurers and/or obtain any information in relation to the Insurances relating
to the Vessel; 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 Borrower 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 from delay or omission on the part of
the Borrower to pay such stamp taxes or charges.
	 
	10.4	 	Environmental Indemnity
	 
	 	 	The Borrower 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

46

 

	 	 	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 Borrower under any of the Security Documents or any order or
judgment 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 Borrower or any other Security Party, as the
case may be or (ii) obtaining an order or judgment 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 Borrower shall (and it is hereby expressly undertaken by the Borrower 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, judgment, 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	 	Central Bank or European Central Bank reserve requirements indemnity
	 
	 	 	The Borrower 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.
	 
	10.7	 	Maintenance of the Indemnities
	 
	 	 	The indemnities contained in this Clause 10 shall apply irrespective of any indulgence
granted to the Borrower 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 Borrower under this Clause 10 will be due as a separate debt and shall not be affected
by judgment 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.
	 
	10.8	 	Communications Indemnity
	 
	 	 	It is hereby agreed in connection with communications that:

	 	(a)	 	Express authority is hereby given by the Borrower to the Bank to accept (at the
sole discretion of the Bank) all tested or untested communications given by facsimile
or otherwise (but not e-mail), 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

47

 

	 	 	 	including, without limitation (if so required by the Bank), the obligation to
confirm such communications by letter.
	 
	 	(b)	 	The Borrower 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 fax number mentioned in Clause
15.1 or any other fax usually used by it or its managing company.
	 
	 	(c)	 	The Borrower 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 Borrower 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) (but not e-mail), the risk
of equipment malfunction, including, without limitation, paper shortage, transmission
errors, omissions and distortions is assumed fully and accepted by the Borrower, save
in case of Bank’s gross misconduct.
	 
	 	(e)	 	The risks of misunderstandings and errors resulting from notices, requests,
instructions or communications being given as mentioned above, are for the Borrower and
the Bank will be indemnified in full pursuant to this Clause save in case of Bank’s
gross misconduct.
	 
	 	(f)	 	The Bank shall have the right to ask the Borrower to furnish any information
the Bank may require to establish the authority of any person purporting to act on
behalf of the Borrower 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 Borrower 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 Borrower or by any of its
authorised representative(s).
	 
	 	(g)	 	It is undertaken by the Borrower to safeguard the function and the security of
the electronic and mechanical appliance(s) such as fax(es) etc., as well as the code
word list, if any, and to take adequate precautions to protect such code word list from
loss and to prevent its terms becoming known to any persons not directly concerned with
its use. The Borrower 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
Borrower to comply with the obligations under this Clause.
	 
	 	(h)	 	The Borrower hereby expressly gives its consent to the communication for
process in the meaning of law 2472/97 of their personal data contained in this
Agreement, the Security Documents or any of them, the Earnings Account or

48

 

	 	 	 	any accounts in its name kept with the Bank at any relevant time. Such personal data
may be communicated to an inter-banking database record and may be used only by
banks and financial institutions for the purposes of credit protection and
transactions improvement. The Borrower is authorised to revoke its consent given
hereunder at any relevant time by written notice to the registrar of “Teiresias
A.E.” at 2, Alamanas Street, 15125 Maroussi, Athens, Greece.

	10.9	 	Arrangement Fee
	 
	 	 	As an inducement for the Bank to enter into this Agreement the Borrower shall pay to the
Bank latest upon drawdown an arrangement fee in the amount of Dollars $130,000 (Dollars one
hundred thirty thousand).
	 
	 	 	The arrangement fee referred to in this Clause 10.9 shall be payable by the Borrower to the
Bank whether or not any part of the Commitment is ever advanced.
	 
	11.	 	SECURITY, APPLICATION, AND SET-OFF
	 
	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 Borrower shall
ensure and procure that the following Security Documents are duly executed and, where
required, registered in favour of the Bank in 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)	 	the Mortgage duly registered over the Vessel through the Registry;
	 
	 	(b)	 	the General Assignment;
	 
	 	(c)	 	the Guarantee;
	 
	 	(d)	 	the Accounts Pledge Agreement;
	 
	 	(e)	 	the Charterparty Assignment; and
	 
	 	(f)	 	the Manager’s Undertaking.

	11.2	 	Maintenance of Securities
	 
	 	 	It is hereby undertaken by the Borrower 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 Borrower, 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

49

 

	 	 	 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 of any arrears of interest (other than default
interest) due in respect of the Loan or any part thereof;
	 
	 	(d)	 	Fourthly: in or towards repayment of the Loan whether the same is due and
payable or not;
	 
	 	(e)	 	Fifthly: 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;
	 
	 	(f)	 	Sixthly: the surplus (if any) shall be paid to the Borrower, or to whomsoever
else shall be entitled to receive such surplus.

	11.4	 	Set off
	 
	 	 	Express authority is hereby given by the Borrower 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 Borrower:

	 	(a)	 	to apply any credit balance standing upon any account of the Borrower with any
branch of the Bank and in whatever currency in or towards satisfaction of any sum due
to the Bank from the Borrower under this Agreement and/or any of the other Security
Documents;
	 
	 	(b)	 	in the name of the Borrower 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
	 
	 	(c)	 	to combine and/or consolidate all or any accounts in the name of the Borrower
with the Bank.
	 
	 	(d)	 	For all or any of the above purposes authority is hereby given to the Bank to
purchase with the moneys 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.

	11.5	 	Earnings Account — Retention Account

	 	(a)	 	The Borrower shall procure that all moneys payable in respect of the Earnings
of the Vessel shall be paid to the Earnings Account free from Encumbrances and rights
of set off other than those created by or under the Security Documents. Unless and
until an Event of Default shall occur (whereupon the provisions of Clause 11.3 shall be
applicable) and subject to the terms and

50

 

	 	 	 	conditions of the Accounts Pledge Agreement no monies shall be withdrawn from the
Earnings Account 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 Borrower shall cause to be transferred from
the Earnings Account to the Retention Account out of the aggregate amount of
the Earnings of the Vessel received in the Earnings Account during the
preceding month:

	 	(aa)	 	one third (1/3rd) 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 Borrower at the beginning of each Interest Period) where
the numerator is always one (1) and where the denominator shall always be
three (3) except in the case of an Interest Period of less than three
months, in which case the denominator shall be the number of months
comprised in such Interest Period; and
	 
	 	(iii)	 	third: any balance shall be released to the Borrower.

	 	(b)	 	If the aggregate amount of the Earnings of the Vessel received in the Earnings
Account is insufficient in any month for the required transfer to be made from the
Earnings Account to the Retention Account in accordance with Clause 11.5(a), the
Borrower 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 (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 8.1
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

51

 

	 	 	 	satisfaction of the Borrower’ 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, be released to the Borrower.
	 
	 	(e)	 	Nothing herein contained shall be deemed to affect the absolute obligation of
the Borrower to pay interest on and to repay the Loan as provided in Clauses 3 and 6 or
shall constitute a manner or postponement thereof.
	 
	 	(f)	 	The Borrower hereby irrevocably authorises the Bank to make from the Earnings
Account any and all above payments and repayments as and when the same fall due or at
any time thereafter. The Bank shall advise the Borrower in respect of any such payment
or repayment.
	 
	 	(g)	 	The Borrower will comply with any written requirement of the Bank from time to
time as to the location or re-location of the Earnings Account and the Retention
Account (or either 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 an
Encumbrance in the Earnings Account and the Retention Account, all at cost and expense
of the Borrower.
	 
	 	(h)	 	The Borrower hereby covenants with the Bank that the Earnings Account, the
Retention Account and any moneys therein shall not be charged, assigned, transferred or
pledged nor shall there be granted by the Borrower or suffered to arise any third party
rights over or against the whole or any part of the Earnings Account other than in
favour of the Bank.
	 
	 	(i)	 	The Earnings Account shall be operated in accordance with the Bank’s usual
terms and conditions (full knowledge of which the Borrower 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 Borrower).
	 
	 	(j)	 	The Borrower 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.
	 
	 	(k)	 	After the occurrence of an Event of Default the Bank shall be entitled, but not
bound, to apply the balance (if any) including any accrued interest standing to the
credit of the Earnings Account and the Retention Account in accordance with the
provisions of Clause 11.3.
	 
	 	(l)	 	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,

52

 

	 	 	 	any balance then standing to the credit of the Retention Account and/or the Earnings
Account shall be released and paid to the Borrower 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 to maintain or fund the Loan, notice shall be
given promptly by the Bank to the Borrower whereupon the Commitment shall be reduced to zero
and the Borrower 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 Borrower under this Agreement.
	 
	 	 	In any such event the Borrower and the Bank shall (as per the provisions of sub-Clause 3.6)
negotiate in good faith (but without incurring any legal obligations) with a view to
agreeing the terms for making the Loan available from another jurisdiction or providing the
Loan from alternative sources.
	 
	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 serve written notice on the Borrower declaring its
obligations under this Agreement terminated in whole or in part, whereupon the same shall
terminate forthwith and the Borrower 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 of any law, regulation or
official directive (whether or not having the force of law but, if not having the force of
law, with which the Bank habitually complies) — including (without limitation) those
relating to Taxation, capital adequacy, liquidity, reserve assets, cash ratio deposits and
special deposits or those resulting from the implementation of any amendment of the “1988
Basel convergence agreement” or any amendatory or substitute agreement thereof (the “Basel
II”) by any governmental authority in any country the laws or regulations of which are
applicable on the Bank, 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

53

 

	 	(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 12.6) the Borrower 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 Borrower of any intention to claim indemnification
pursuant to Clause 12.3 and such notification will be a conclusive and full evidence binding
on the Borrower as to the amount of any increased cost or reduction and the method of
calculating the same and the Borrower shall be allowed to rebut such evidence by any means
of evidence save for witness. A claim under Clause 12.3 may be made at any time and must be
discharged by the Borrowers 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 Borrower under Clause 12.3 shall be due
as a separate debt and shall not be affected by judgment being obtained for any other sums
due under or in respect of this Agreement.
	 
	12.5	 	Option to prepay
	 
	 	 	If any additional amounts are required to be paid by the Borrower to the Bank by virtue of
Clause 12.3, the Borrower shall be entitled, on giving the Bank not less than fourteen (14)
days prior notice in writing, to prepay the Loan and accrued interest thereon, together with
all other Outstanding Indebtedness, on the next Repayment Date. Any such notice, once given,
shall be irrevocable.
	 
	12.6	 	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.

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	13.	 	ASSIGNMENT, PARTICIPATION, LENDING BRANCH
	 
	13.1	 	Binding Effect
	 
	 	 	This Agreement shall be binding upon and inure to the benefit of the Bank and the Borrower
and their respective successors and permitted assigns.
	 
	13.2	 	No Assignment by the Borrower
	 
	 	 	The Borrower and any other parties to the Security Documents other than the Bank may not
(without the prior written consent of the Bank) 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 (following sufficient notice being given to the Borrower and the
other Security Parties but without the consent of the Borrower) 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.
	 
	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 the Borrower 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 Borrower shall 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. The Borrower 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. The cost of any such assignment shall be borne by the Bank.
	 
	13.5	 	Disclosure of information
	 
	 	 	The Bank may, on a confidential basis, 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 Borrower and the other Security
Parties as the Bank shall consider appropriate.
	 
	13.6	 	Change of Lending Branch

55

 

	 	 	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 not 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 Borrower, 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 event of the Bank on any occasion agreeing to waive any such right,
remedy or power, or consenting 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 (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

56

 

	 	 	being invalid, illegal or unenforceable in any respect under any applicable law in any
jurisdiction whatsoever, such provision shall be ineffective as to that 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 any 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 Borrower 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 Greek or the English language (or such other language as the Bank shall agree)
or shall be accompanied by a certified Greek 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 practising
in Greece or otherwise as will be acceptable to the Bank at the sole discretion of
the Bank.
	 
	 	(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.
	 
	 	(d)	 	Further assurances
	 
	 	 	 	The Borrower 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.

57

 

	 	(e)	 	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.

	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 be 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 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 Free Bulkers S.A.

89 Akti Miaouli & 4 Mavrokordatou street

Piraeus Greece

Fax: (+30) 210 4291100

Attention: Mr. Ion Varouxakis
	 
	 	(ii)	 	in the case of the Bank at:

62, Notara & Sotiros Dios streets

185 35 Piraeus

Greece

Fax No. (+30) 210 41 32 058

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

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	 	 	Mr. Ioannis Fassolis, an Attorney-at-Law, whose present address is at 15 Sachtouri Street,
185 36, Piraeus, Greece, is hereby appointed by the Borrower as agent to accept service
(hereinafter “Process Agent”) upon whom any judicial process in respect of proceedings in
Greece may be served and any process notice, judicial or extra-judicial request, demand for
payment, payment order, foreclosure proceedings, notarial announcement of claim, 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 a deed
of a process server to the effect that the Process Agent was not found at such address, any
process notice, judicial or extra-judicial request, demand for payment, payment order,
foreclosure proceedings, notarial announcement of claim or other communication to be sent to
any Security Party may be validly notified in accordance with the relevant provisions of the
Hellenic Code on Civil Procedure.
	 
	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 in connection with
this Agreement and not to use any such documentation, information for any purpose other
than for which it was provided.
	 
	 	(b)	 	The Borrower 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 the Borrower and
the transactions and matters in relation to this Agreement and/or the other Security
Documents to governmental or regulatory agencies and authorities.
	 
	 	(c)	 	The Borrower 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 the Borrower and the transactions and matters in relation to this Agreement and/or
the other Security Documents to 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 the Borrower expressly
authorises any such disclosure and delivery.
	 
	 	(d)	 	The Borrower acknowledges and accepts that the Bank may be prohibited from
disclosing information to the Borrower 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. Moreover,
the Borrower hereby acknowledges and declares that it is fully familiar

59

 

	 	 	with the General Transaction Terms of the Bank and it is hereby agreed that the said General
Transaction Terms shall be deemed an integral part of this Agreement.
	 
	16.2	 	Submission to Jurisdiction

	 	(a)	 	For the exclusive benefit of the Bank, the Borrower hereby (i) irrevocably
submits to the non exclusive jurisdiction of the Courts of Piraeus in Greece and (ii)
agrees that any summons, writ, judicial or extra-judicial notice, protest, payment
order, order for payment, order for enforcement, announcement of claim or other legal
process issued against it in Greece shall be served upon the Process Agent, who is
hereby authorised to accept such service, which shall be deemed to be good service on
the Borrower.
	 
	 	(b)	 	The submission to the jurisdiction of the Courts of Piraeus shall not (and
shall not be construed so as to) limit the right of the Bank to take proceedings
against the Borrower in the courts of any other 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 sub-Clause 16.2(b) the Courts of
Piraeus shall have exclusive jurisdiction to determine any claim which the Borrower may
have against the Bank arising out of or in connection with this Agreement and the
Borrower hereby waives any objections to proceedings with respect to this Agreement in
such courts on the grounds of venue or inconvenient forum.

	 	 	 In this Clause 16 “proceedings” means proceedings of any kind, including an application for
a provisional or protective measure.

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SCHEDULE 1

FORM OF DRAWDOWN NOTICE

(referred to in Clause 2.2)

	 	 	 
	To:
	 	FBB-First Business Bank S.A.

	 	 	62, Notara and Sotiros Dios streets

	 	 	Piraeus, Greece

	 	 	(the “Bank”)

[ • ] 2008

	 	 	 
	Re:
	 	US$26,250,000 Loan Agreement dated 31st March., 2008 made between (A)
ADVENTURE NINE S.A. (the “Borrower”) 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 $(.. .. .. ) (Dollars .. .. .. .. ..) on [ • ], 2008. We select a first Interest
Period in respect of the Loan of [ • ] months. The funds should be credited to ([ • ] [ • ] [name
and number of account] [ • ]) with [ • ]

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 down 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.

	 	 	)	 	 	 
	for and on behalf of the Borrower

	 	 	)	 	 	                                        
	ADVENTURE NINE S.A.

	 	 	)	 	 	Attorney-in-Fact
	of the Marshall Islands, in the presence of:

	 	 	)	 	 	 

Witness:                                         

Name:

Address:

           Piraeus, Greece

Occupation: Attorney-at-law

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SCHEDULE 2

INSURANCE REQUIREMENTS

This Schedule is an integral part of the Agreement to which it is attached.

	1.	 	DEFINITIONS
	 
	1.1	 	Words and expressions used in this Schedule shall have the meanings given thereto in the
agreement to which this Schedule is attached and the following expressions shall have the
meanings listed below:
	 
	 	 	“Approved Brokers” means such firm of insurance brokers, appointed by the Owner, as may from
time to time be approved by the Bank in writing for the purposes of this Schedule;
	 
	 	 	“Excess risks” means the proportion (if any) of claims for general average, salvage and
salvage charges and under the ordinary collision clause not recoverable in consequence of
the value at which a vessel is assessed for the purpose of such claims exceeding its insured
value;
	 
	 	 	“Insurance Requirements” means all the terms and conditions in this Schedule or any other
provision concerning Insurances in any other Clause of the agreement to which this Schedule
is attached and all such terms and conditions are an integral part of the agreement to which
they are attached;
	 
	 	 	“Insurances” in respect of a vessel means all policies and contracts of insurance
(including, without limitation, all entries of such vessel in a protection and indemnity,
war risks or other mutual insurance association) which are from time to time in place or
taken out or entered into by or for the benefit of the Owner owning such vessel (whether in
the sole name of its Owner or in the joint names of its Owner and the Bank) in respect of
such vessel and its earnings or otherwise howsoever in connection with such vessel and all
benefits of such policies and/or contracts (including all claims of whatsoever nature and
return of premiums);
	 
	 	 	“Loss Payable Clauses” means the provisions regulating the manner of payment of sums
receivable under the Insurances which are to be incorporated in the relevant insurance
document, such Loss Payable Clauses to be in the forms set out in paragraph 4 of this
Schedule, or such other form as the Bank may from time to time agree in writing;
	 
	 	 	“Owner” means the owner of a vessel which should be insured and be maintained insured
pursuant to these Insurance Requirements in accordance with any agreement to which these
Insurance Requirements are attached;
	 
	 	 	“Protection and Indemnity Risks” means the usual risks covered by an English protection and
indemnity association including the proportion (if any) not recoverable in the case of
collision under the ordinary collision clause; and

62

 

	 	 	“War risks” includes the risk of mines and all risks excluded from the standard form of
English marine policy by the free of capture and seizure clause.
	 
	2.	 	INSURANCES TO BE EFFECTED AND MAINTAINED
	 
	2.1	 	The insurance which must be effected and maintained in accordance with the provisions of the
agreement to which these Insurance Requirements are attached should be in the name of the
Owner and as follows:

	 	(a)	 	Hull and Machinery 
	 
	 	 	 	insurance against fire and usual marine risks on an agreed value basis, on a full
cover/all risks basis according to English or American Hull Clauses with a
reasonable deductible and upon such terms as shall from time to time be approved in
writing by the Bank; and
	 
	 	(b)	 	War Risks Insurance 
	 
	 	 	 	insurance against War risks according to the London Institute War Clauses, on an
agreed value basis attaching also the so called war protection clauses. In this
case crew war liabilities insurance shall also have to be effected separately; and
	 
	 	(c)	 	Increased Value 
	 
	 	 	 	increased Value insurance (Total Loss only, including Excess Liabilities) as per the
applicable English or American Institute Clauses (Disbursement/Increased Value/
Excess Liabilities) up to an amount not exceeding the Insurance Amount specified in
Clause 3.3 below; and
	 
	 	(d)	 	Protection and Indemnity 
	 
	 	 	 	insurance against protection and indemnity risks for the full value and tonnage of
the vessel insured (as approved in writing by the Bank) according to the relevant
rules and deductibles provided thereof for all risks including Pollution (and if the
vessel is passenger ship including liability towards third parties which is not
covered by the War Risk Insurance) insured by P+I Clubs, members of the
International Group of Protection and Indemnity Associations. If any risks are
excluded or the deductibles as provided by the rules have been altered, the written
consent of the Bank shall have to be previously required. In case that crew
liabilities (including without limitation loss of life, injury or illness) have been
entirely excluded from the association cover or insured on a deductible excess
basis, (always subject to the prior written consent of the Bank) such liabilities
shall have to be further insured separately with other underwriters acceptable to
the Bank and upon such terms as shall from time to time be approved in writing by
the Bank; and
	 
	 	(e)	 	FD & D Insurance 
	 
	 	 	 	Freight, Demurrage and Defence insurance as per the terms and conditions of a mutual
club or association acceptable to the Bank; and
	 
	 	(f)	 	Pollution Liability Insurance 

63

 

	 	 	 	an extra insurance in respect of excess Oil Pollution Liability (including -if the
vessel insured is a tanker- the Civil Liability Convention certificate) including
full cover of pollution risks for the amount up to the maximum commercially
available limit and upon such terms as shall be commercially available and accepted
by the Bank; and
	 
	 	(g)	 	USA Pollution Risk Insurance 
	 
	 	 	 	(in case that the vessel is scheduled to operate within or nearby USA jurisdiction)
to cover and keep such vessel covered with an extra insurance in respect of oil
pollution liability for an amount and upon such terms as required by international
and national law regulations and shall from time to time be required by the Bank;
and
	 
	 	(h)	 	Mortgagee’s Interest Insurance — Mortgagee’s Additional Perils (Pollution)
Interest Insurance
	 
	 	 	 	Mortgagees’ Interest Insurance and Mortgagee’s Additional Perils (Pollution)
Interest Insurance each in an amount equal to 110% of the amount of the Loan
including Mortgagees’ asset protection (pollution) cover or other similar insurance
in respect of any pollution claims against the Vessel upon such terms as shall from
time to time be determined by the Bank; and
	 
	 	(i)	 	Other Insurance 
	 
	 	 	 	insurance in respect of such other matters of whatsoever nature and howsoever
arising in respect of which the Bank would at any time require at its discretion the
vessel to be insured.

	3.	 	TERMS AND OBLIGATIONS FOR EFFECTING AND MAINTAINING INSURANCES
	 
	3.1	 	The Insurances to be effected in such currency as the Bank may approve and through the
Approved Brokers (other than the mortgagee’s interest insurance which shall be effected
through brokers nominated by the Bank) and with such insurance companies and/or underwriters
as shall from time to time be approved in writing by the Bank, provided however that the
insurances against war risks, protection and indemnity, FD & D cover or other mutual insurance
risks may be effected by the entry of the vessel with such war, protection and indemnity or
other mutual insurance associations as shall from time to time be approved in writing by the
Bank.
	 
	3.2	 	The Insurances to be effected and maintained free of cost and expense to the Bank and in the
sole name of the Owner or, if so required by the Bank, in the joint names of the Owner and the
Bank (but without liability on the part of the Bank for premiums or calls). All insurances to
be in form and substance and under terms satisfactory to the Bank and with insurers acceptable
to the Bank.
	 
	3.3	 	Unless otherwise agreed in writing by the Bank:

	 	(a)	 	The amount in respect of which the Insurances should be effected shall be an
amount (Insurance Amount) which will be (aa) in respect of Hull and Machinery Insurance
the greater of the market value of the vessel insured for the time being and 125% of an
amount (the “Amount of Debt”) equal to (i) the

64

 

	 	 	 	Loan if the agreement to which these Insurance Requirements are attached is a Loan
Agreement or (ii) the Maximum Limit of the Facility if the agreement to which these
Insurance Requirements are attached is an Overdraft Facility or a Facility for Issue
of Guarantees or Letters of Credit; and (bb) in respect of Protection and Indemnity,
FD&D, Mortgagee’s Interest Insurance and/or Mortgagee’s Asset Additional Perils
(Pollution), 110% of the Amount of Debt.
	 
	 	(b)	 	In case that the Amount of Debt is secured by more than one vessels the above
percentages should be covered by the aggregate of the Insurances in respect of all such
vessels.
	 
	 	(c)	 	In case that the vessel insured secures by its Insurances Amounts of Debt under
more than one agreements then the above percentages apply to the aggregate of all the
Amounts of Debt under all the agreements.

	3.4	 	Any person which is obliged under the agreement to which these Insurance Requirements are
attached to effect and maintain the Insurances, it will be obliged and it hereby undertakes,
jointly and severally with any other person having the same obligation to (and will ensure
that the Owner, if it is a different person shall):

	 	(a)	 	procure and ensure that the Approved Brokers and/or the Club Managers, as the
case may be, shall send to the Bank a letter of undertaking in respect of the
Insurances in form and substance satisfactory to the Bank and Notice of Cancellation as
per Clause 4(d) below. The Approved Brokers’ Letter of Undertaking shall be compatible
with the form recommended by Lloyd’s Insurance Brokers Committee, or any subsequent
LIBC form. Such brokers to further undertake to give immediate notice of any insurance
being subject to the Condition Survey Warranty (J.H.II5) and/or Structural Conditions
Warranty (J.H.722) and/or the Classification Clause (Hulls) 29/6/89, 30 days prior to
the attachment date of any insurance bearing any of these warranties.
	 
	 	(b)	 	(if any of the Insurances form part of a fleet cover), procure that the
Approved Brokers shall undertake to the Bank that they shall neither set off against
any claims in respect of the vessel insured any premiums due in respect of other
vessels under such fleet cover or any premiums due for other insurances, nor cancel the
insurance for reasons of non-payment of premiums for other vessels under such fleet
cover or of premiums for such other insurances, and shall undertake to issue a separate
policy in respect of the vessel insured if and when so requested by the Bank;
	 
	 	(c)	 	punctually pay all premiums, calls, contributions or other sums payable in
respect of all Insurances and produce all relevant receipts or other evidence of
payment when so required by the Bank;
	 
	 	(d)	 	at least fourteen (14) days before the Insurances expire, notify the Bank of
the names of the brokers and/or the war risks and protection and indemnity risks
associations proposed to be employed by the Owner for the purposes of the renewal of
such Insurances and of the amounts in which such Insurances are proposed to be renewed
and the risks to be covered and, subject to compliance with any requirements of the
Bank under the Insurance Requirements, procure that appropriate instructions for the
renewal of such Insurances on the terms so specified are given to the Approved Brokers
and/or to the approved war risks

65

 

	 	 	 	and protection and indemnity risks associations at least ten (10) days before the
relevant Insurances expire, and that the Approved Brokers and/or the approved war
risks and protection and indemnity risks associations will at least seven (7) days
before such expiry (or within such shorter period as the Bank may from time to time
agree) confirm in writing to the Bank as and when such renewals have been effected
in accordance with the instructions so given;
	 
	 	(e)	 	arrange for the execution and delivery of such guarantees or indemnities as may
from time to time be required by any protection and indemnity or war risks association;
	 
	 	(f)	 	deposit with the Approved Brokers (or procure the deposit of) all slips, cover
notes, policies, certificates of entry or other instruments of insurance from time to
time issued and procure that the interest of the Bank shall be endorsed thereon by
incorporation of the relevant Loss Payable Clause and by means of a notice of
assignment (signed by the Owner) in the form set out in Paragraph 4 of this Schedule or
in such other form as may from time to time be agreed in writing by the Bank, and that
the Bank shall be furnished with pro forma copies thereof and a letter or letters of
undertaking from the Approved Brokers in such form as shall from time to time be
required by the Bank;
	 
	 	(g)	 	procure that any protection and indemnity and/or war risks associations and/or
Hull and Machinery and/or any other insurance company or underwriters in which the
vessel insured is for the time being entered and/or insured shall endorse the relevant
Loss Payable Clause on the relevant certificate of entry or policy and shall furnish
the Bank with a copy of such certificate of entry or policy and a letter or letters of
undertaking in such form as shall from time to time be required by the Bank;
	 
	 	(h)	 	(if so requested by the Bank, but at the cost of the Owner) furnish the Bank
from time to time with a detailed report signed by an independent firm of marine
insurance brokers appointed by the Bank dealing with the Insurances maintained on the
vessel insured and stating the opinion of such firm as to the adequacy thereof;
	 
	 	(i)	 	do all things necessary and provide all documents, evidence and information to
enable the Bank to collect or recover any moneys which shall at any time become due in
respect of the Insurances;
	 
	 	(j)	 	ensure that the vessel insured shall not be employed otherwise than in
conformity with the terms of the Insurances (including any warranties express or
implied therein) without first obtaining the consent of the insurers to such employment
and complying with such requirements as to extra premium or otherwise as the insurers
may prescribe;
	 
	 	(k)	 	apply all sums receivable under the Insurances which are paid to the Owner in
accordance with the Loss Payable Clauses in repairing all damage and/or in discharging
the liability in respect of which such sums shall have been received;

66

 

	 	(l)	 	(in case that the vessel is scheduled to operate or operates within or nearby
USA jurisdiction) make all the Protection & Indemnity Club US Voyage Quarterly
Declarations for each quarter in time and send copies of same to the Bank; and

	 	(m)	 	Fleet Cover is permitted only subject to the prior written approval of the
Bank, to the conditions set out in 3.4(b) above and the Bank’s prior express written
approval of fleet aggregate deductibles.

	4.	 	LOSS PAYABLE CLAUSES AND CANCELLATION CLAUSE
	 
	4.1	 	The Loss Payable Clauses to be attached to the relevant Insurances should be substantially in
the following form:

	 	(A)	 	Hull and Machinery (Marine and War Risks)

	 	 	It is noted that by a Deed of General Assignment and a first priority statutory .............. ship
Mortgage and a Deed of covenant supplemental thereto, both dated .... ...., 2008 granted by
        .........................,
of ........... (the “Owner”) in favour of FBB — FIRST BUSINESS BANK S.A., acting through its
office at 62, Notara and Sotiros Dios streets, Piraeus, Greece (the “Mortgagee”) all the
Owner’s rights, title and interest in and to all policies and contracts of insurance from
time to time taken out or entered into by or for the benefit of the Owner including all
claims of whatsoever nature and return or premia in respect of the .............................. flag m/v “....................” and
accordingly:

	 	(a)	 	all claims hereunder in respect of an actual or constructive or compromised or
arranged total loss, and all claims in respect of a major casualty (that is to say any
casualty the claim in respect of which exceeds the Major Casualty Amount inclusive of
any deductible) shall be paid in full to the Mortgagee or to its order; and
	 
	 	(b)	 	all other claims hereunder shall be paid in full to the Owner or to its order,
unless and until the Mortgagee shall have notified the insurers hereunder to the
contrary, whereupon all such claims shall be paid to the Mortgagee or to its order.

	 	(B)	 	Protection and Indemnity Risks

	 	 	Payment of any recovery which ............................, of ........................ (the “Owner”) is entitled to make out of the
funds of the Association in respect of any liability, costs or expenses incurred by the
Owner, shall be made to the Owner or to its order, unless and until the Association receives
notice to the contrary from FBB — FIRST BUSINESS BANK S.A., acting through its office at 62,
Notara and Sotiros Dios streets, Piraeus, Greece (the “Mortgagee”) in which event all
recoveries shall thereafter be paid to the Mortgagee or to its order; provided that no
liability whatsoever shall attach to the Association, its managers or its agents for failure
to comply with the latter obligation until the expiry of two clear business days from the
receipt of such notice.
	 
	4.2	 	Notice of Cancellation 

67

 

	 	 	 The Owner to procure that Notice of Cancellation of Insurances be given to the Mortgagee
along the following terms:
	 
	 	 	Notice of Cancellation of Insurances will be given to FBB — FIRST BUSINESS BANK S.A., acting
through its office at 62, Notara and Sotiros Dios streets, Piraeus, Greece (the “Mortgagee”)
in any of the following cases:

	 	(a)	 	immediately of any material changes which are proposed to be made in the terms
of the Insurances or if the insurers cease to be insurers for any purposes connected
with the Insurances;
	 
	 	(b)	 	not later than fourteen (14) days prior to the expiry of any of the Insurances
if instructions have not been received for the renewal thereof and, in the event of
instructions being received to renew, of the details thereof;
	 
	 	(c)	 	immediately of any instructions or notices received by insurers with regard to
the cancellation or invalidity of any of the Insurances aforesaid; and
	 
	 	(d)	 	immediately if the insurers give notice of their intention to cancel the
Insurances, provided that the insurers will not exercise any rights of cancellation by
reason of unpaid premiums without giving the Bank fourteen (14) days, from the receipt
of such notice in which to remit the sums due.

	4.3	 	Notice of Assignment 
	 
	 	 	The Notice of Assignment shall be in the following form:

Form of Notice of Assignment — First Mortgage

(for attachment by way of endorsement to the Policy)

...................................,
of .................... (the “Owner”) the owner of the m/v “....................” registered under ............. flag,
(the “Vessel”) HEREBY GIVE NOTICE that by a Deed of General Assignment made
the ...... day of ............., 2008 and entered into by us with FBB — FIRST BUSINESS BANK
S.A., acting through its office at 62, Notara and Sotiros Dios streets,
Piraeus, Greece (the “Mortgagee”) there has been assigned by us to the
Mortgagee, as first Mortgagee and first assignee of the Vessel all rights,
title and interest in and to all policies and contracts of insurance from
time to time taken out or entered into by or for the benefit of the Owner,
all insurances in respect thereof, including the insurances constituted by
the Policy whereon this notice is endorsed and the Owner has authorised the
Mortgage to have access and/or obtain any copies of the Policy(ies),
certificate(s) of entry and/or other information from the insurers.

Dated ...... ............., 2008

For and on behalf of

The Owner

By:                                         

Attorney-in-fact

68

 

SIGNATURE PAGE

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

	 	 	 	 	 	 	 
	THE BORROWER
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	SIGNED by

	 	 	)	 	 	 
	Mr.
                                        

	 	 	)	 	 	 
	for and on behalf of the Borrower

	 	 	)	 	 	                                        
	ADVENTURE NINE S.A.

	 	 	)	 	 	Attorney-in-Fact
	of the Marshall Islands, in the presence of:

	 	 	)	 	 	 
	 
	 	 	 	 	 	 
	Witness:                                         

	 	 		 	 	 
	Name: : Ioannis Fassolis
	 	 	 	 	 	 
	Address: 15 Sachtouri Street, Piraeus, Greece
	 	 	 	 	 	 
	Occupation: Attorney-at-law
	 	 	 	 	 	 

	 	 	 	 	 	 	 
	THE BANK
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	SIGNED

	 	 	)	 	 	 
	by Mr. Nikolaos Vougioukas

	 	 	)	 	 	 
	for and on behalf of

	 	 	)	 	 	 
	FBB-FIRST BUSINESS BANK S.A.

	 	 	)	 	 	 
	its duly authorised Attorney-in-fact

	 	 	)	 	 	                                        
	in the presence of:

	 	 	)	 	 	Attorney-in-Fact
	 
	 	 	 	 	 	 
	Witness:                                         
	 	 	 	 	 	 
	Name: Maria C. Galanopoulou
	 	 	 	 	 	 
	Address: Defteras Merarchias 13, Piraeus, Greece
	 	 	 	 	 	 
	Occupation: Attorney-at-law
	 	 	 	 	 	 

69

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