Document:

EXHIBIT
      10.19

     

    Private
      & Confidential

     

    LOAN
      AGREEMENT

    for
      a Multicurrency Loan of up to US$36,000,000

    to

    PEMER
      SHIPPING LTD

    

    provided
      by

    BAYERISCHE
      HYPO- UND VEREINSBANK AKTIENGESELLSCHAFT

     

    

     

    
      
        
        

      

      

    
    
      
      

    

     

    Contents

     

    
      	
              Clause

            	 	
              Page

            
	 	 	 
	
              1

            	
              Purpose
                and definitions

            	
              1

            
	 	 	 
	
              2

            	
              The
                Commitment and the Loan

            	
              10

            
	 	 	 
	
              3

            	
              Interest
                and Interest Periods

            	
              11

            
	 	 	 
	
              4

            	
              Currencies

            	
              13

            
	 	 	 
	
              5

            	
              Repayment
                and prepayment

            	
              15

            
	 	 	 
	
              6

            	
              Commitment
                commission, fees and expenses

            	
              18

            
	 	 	 
	
              7

            	
              Payments
                and taxes; accounts and calculations

            	
              19

            
	 	 	 
	
              8

            	
              Representations
                and warranties

            	
              20

            
	 	 	 
	
              9

            	
              Undertakings

            	
              24

            
	 	 	 
	
              10

            	
              Conditions

            	
              30

            
	 	 	 
	
              11

            	
              Events
                of Default

            	
              31

            
	 	 	 
	
              12

            	
              Indemnities
                

            	
              34

            
	 	 	 
	
              13

            	
              Unlawfulness
                and increased costs

            	
              35

            
	 	 	 
	
              14

            	
              Security
                and set-off

            	
              37

            
	 	 	 
	
              15

            	
              Accounts

            	
              38

            
	 	 	 
	
              16

            	
              Assignment,
                transfer and lending office

            	
              38

            
	 	 	 
	
              17

            	
              Notices
                and other matters

            	
              39

            
	 	 	 
	
              18

            	
              Governing
                law and jurisdiction

            	
              40

            
	 	 	 
	
              Schedule
                1 Form of Drawdown Notice

            	
              41

            
	 	 
	
              Schedule
                2 Documents and evidence required as conditions precedent

            	
              42

            
	 	 
	
              Schedule
                3 Form of Mortgage

            	
              47

            
	 	 
	
              Schedule
                4 Form of Deed of Covenant

            	
              48

            
	 	 
	
              Schedule
                5 Form of General Assignment

            	
              49

            
	 	 
	
              Schedule
                6 Form of Manager’s Undertaking

            	
              50

            
	 	 
	
              Schedule
                7 Form of Master Swap Agreement

            	
              51

            
	 	 

    

     

    
      
        
        

      

      

    
    
      
      

    

     

    
      	
              Schedule
                8 Form of Master Agreement Security Deed

            	
              52

            
	 	 
	
              Schedule
                9 Calculation of Additional Cost

            	
              53

            

    

    
       

      
        
          
          

        

        

      

      
        
        

      

       

    
    THIS
      AGREEMENT
      is dated
      7 March 2007 and made BETWEEN:

     

    (1) PEMER
      SHIPPING LTD
      as
      Borrower; and

     

    (2) BAYERISCHE
      HYPO- UND VEREINSBANK AKTIENGESELLSCHAFT
      as
      Bank.

     

    IT
      IS AGREED
      as
      follows:

     

    
      	
              1

            	
              Purpose
                and definitions

            

    

     

    
      	1.1	
              Purpose

            

    

     

    This
      Agreement sets out the terms and conditions upon and subject to which the Bank
      agrees to make available to the Borrower a loan of up to Thirty six million
      Dollars ($36,000,000), or the equivalent in Optional Currencies, to be used
      for
      the purpose of financing the acquisition of the Ship by the
      Borrower.

     

    
      	1.2	
              Definitions

            

    

     

    In
      this
      Agreement, unless the context otherwise requires:

     

    “Account
      Pledges”
means,
      together, the Cash Collateral Account Pledge, the Multicurrency Cash Collateral
      Account Pledge and the Operating Account Pledge;

     

    “Accounts”
means,
      together, the Operating Account, the Cash Collateral Account and the
      Multicurrency Cash Collateral Account and includes any sub-accounts thereof
      and
“Account”
means
      any of them;

     

    “Additional
      Cost”
means
      in relation to any period a percentage calculated for such period at an annual
      rate determined by the application of the formula set out in
      schedule 9;

     

    “Advance”
means
      each separate portion of the Loan for the purposes of calculation of interest
      or, where the Loan is not divided into separate portions for such purpose,
      means
      the Loan;

     

    “Assignee”
has
      the
      meaning ascribed thereto in clause 16.3;

     

    “Bank”
means
      Bayerische Hypo- und Vereinsbank Aktiengesellschaft whose registered office
      is
      at Am Tucherpark 16, 13-80538, Munich, Germany, acting for the purposes of
      this
      Agreement through its office at 7 Heraklitou Street, 106 73 Athens, Greece
      (or
      of such other address as may last have been notified to the Borrower pursuant
      to
      clause 16.6) and includes its successors in title and Assignees and
      Transferees;

     

    “Banking
      Day”
means
      a
      day (other than Saturday or Sunday) and: 

     

    
      	 	
              (a)

            	
              for
                interest rate fixing purposes:

            

    

     

    
      	 	
              (i)

            	
              in
                relation to a rate fixing in respect of euro, a day on which the
                Trans-European Automated Real-Time Gross Settlement Express Transfer
                system (TARGET) is operating; or

            

    

     

    
      	 	
              (ii)

            	
              in
                relation to a rate fixing in respect of any other Optional Currency
                or
                Dollars, a day on which banks are open for business in the principal
                financial centre in, respectively, the jurisdiction of the relevant
                Optional Currency or, in the case of Dollars, New York City;
                and

            

    

    
       

      
        
          1

        

        

      

      
        
        

      

       

    
    
      	 	
              (b)

            	
              for
                all other purposes (including, but not limited to, payments and receiving
                notices):

            

    

     

    
      	 	
              (i)

            	
              on
                which banks are open for business in London, Munich and Athens;
                and

            

    

     

    
      	 	
              (ii)

            	
              in
                relation to payments in euros, a day on which banks are open for
                business
                in such other principal financial centre or centres of relevant
                Participating Member States as the Bank may nominate;
                or

            

    

     

    
      	 	
              (iii)
                

            	
              in
                relation to payments in any other Optional Currency or Dollars, a
                day on
                which banks are open for business in the principal financial centre
                in,
                respectively, the jurisdiction of the relevant Optional Currency
                or, in
                the case of Dollars, New York City;

            

    

     

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

     

    “Borrower” means
      Pemer Shipping Ltd of 80 Broad Street, Monrovia, Republic of Liberia and
      includes its successors in title;

     

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

     

    “Cash
      Collateral Account” means
      an
      interest bearing Dollar account of the Manager opened or (as the context may
      require) to be opened by the Manager with the Bank and includes any other
      account designated in writing by the Bank to be a Cash Collateral Account for
      the purposes of this Agreement;

     

    “Cash
      Collateral Account Pledge” means
      a
      pledge executed or (as the context may require) to be executed by the Manager
      in
      favour of the Bank in respect of the Cash Collateral Account in such form as
      will be agreed between the Bank and the Borrower;

     

    “Cash
      Collateral Deposit” means
      a
      deposit of Two million Dollars ($2,000,000) or the Equivalent Amount in an
      Optional Currency, made by the Borrower to the Cash Collateral
      Account;

     

    “Charter
      means
      any
      time charter or other contract of employment for the Ship for a period that
      exceeds twenty four (24) months’ duration and is entered into by the Borrower
      with a Charterer;

     

    “Charter
      Assignment” means
      a
      first priority specific assignment of any Charter executed or (as the context
      may require) to be executed by the Borrower in favour of the Bank in such form
      as will be agreed between the Bank and the Borrower;

     

    “Charterer” means
      any
      such person, company or organisation, which shall enter into a Charter in
      respect of the Ship during the Security Period (as defined in the Deed of
      Covenant);

     

    “Classification” means
      the
      Ship’s present classification, “+100A1 Bulk Carrier, BC-A, Strengthened for
      Heavy Cargoes, Hold Nos. 2, 4 and 6 may be empty, ESP, ShipRight (SDA, FDA,
      CM),
      ESN, LI, *IWS,” +LMC, UMS and with descriptive notes: Shipright (SCM), Pt.
      Higher Tensile Steel” with the Classification Society or, should the Borrower
      elect to change the 

    
       

      
        
          2

        

        

      

      
        
        

      

       

    
    Classification,
      such other classification as the Bank shall, at the request of the Borrower,
      agree in writing shall be treated as the Classification for the purposes of
      the
      Security Documents;

     

    “Classification
      Society” means
      the
      Ship’s present classification society, Lloyd’s Register of Shipping, or, should
      the Borrower elect to change the Classification Society such other
      classification society which the Bank shall, at the request of the Borrower,
      agree in writing shall be treated as the Classification Society for the purposes
      of the Security Documents;

     

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

     

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

     

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

     

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

     

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

     

    “Deed
      of Covenant” means
      the
      deed of covenant collateral to the Mortgage executed or (as the context may
      require) to be executed by the Borrower in favour of the Bank in the form set
      out in schedule 4 or in such other form as may be agreed between the Bank and
      the Borrower;

     

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

     

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

     

    “Dollar
      Amount” means
      (a)
      in relation to an Advance to be drawn down in Dollars or, as the case may be,
      in
      relation to the Loan if it is to be wholly drawn down in Dollars, the amount
      in
      Dollars so drawn down, (b) in relation to an Advance to be drawn down in an
      Optional Currency or, as the case may be, in relation to the Loan if it is
      to be
      wholly drawn down in an Optional Currency, the amount in Dollars specified
      in
      the Drawdown Notice which would be required to purchase the principal amount
      of
      that Advance or, as the case may be, the Loan as determined in accordance with
      clause 4.3 and (c) in relation to clause 5.1 where the Loan has been converted
      in whole or in part into one or more Optional Currencies pursuant to clause
      4.4,
      the amount in Dollars which would have been outstanding had the Loan been
      originally drawn down in, and remained outstanding at all times in, Dollars,
      as
      reduced by any repayment or prepayment under this Agreement;

     

    “Dollars” and
      “$”
mean
      the lawful currency for the time being of the United States of America and
      in
      respect of all payments to be made under any of the Security Documents mean
      funds which are for same day settlement in the New York Clearing House Interbank
      Payments System (or 

    
       

      
        
          3

        

        

      

      
        
        

      

       

    
    such
      other U.S. dollar funds as may at the relevant time be customary for the
      settlement of international banking transactions denominated in U.S.
      dollars);

     

    “Drawdown
      Date” means
      the
      date, being a Banking Day falling not later than the Termination Date, on which
      the Loan is, or is to be, drawn down;

     

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

     

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

     

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

     

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

     

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

     

    “Equivalent
      Amount” means,
      as
      at any date, the equivalent in one currency of an amount in another currency
      as
      converted at the rate determined by the Bank to be the spot rate of exchange
      ruling on the London Foreign Exchange Market for the purchase of the former
      currency with the latter currency at or about 11:00 a.m. on the second Banking
      Day before such date;

     

    “EURIBOR” shall
      mean, in relation to any amount in euros and any period, the offered rate for
      deposits for such amount and for such period which is:

     

    
      	 	
              (a)

            	
              the
                rate of interest for such period which appears on the Reuters page
                Euribor
                01 (or such other page on the Reuters screen as may customarily be
                used
                from time to time to display EURIBOR rates) at or about 11:00 a.m.
                (Brussels time) on the Quotation Date for such period;
                or

            

    

     

    
      	 	
              (b)

            	
              if
                the relevant rate of EURIBOR cannot be determined in accordance with
                paragraph (a) above, the rate (rounded upwards if necessary to the
                nearest
                one sixteenth of one per cent) the Bank offers for deposits in an
                amount
                approximately equal to the amount in relation to which EURIBOR is
                to be
                determined for a period equivalent to such period to prime banks
                in the
                London Interbank Market at or about 11:00 am. (London time) on the
                Quotation Date for such period;

            

    

    
       

      
        
          4

        

        

      

      
        
        

      

       

    
    “euro” and “euros” and
      “€” mean
      the
      single currency of Participating Member States introduced in accordance with
      the
      provisions of Article 109(1)4 of the Treaty and in respect of all payments
      to be
      made under this Agreement in euro means immediately available, freely
      transferable funds;

     

    “Event
      of Default” means
      any
      of the events or circumstances described in clause 11.1;

     

    “Flag
      State” means
      the
      Republic of Cyprus or such other state or territory designated in writing by
      the
      Bank, at the request of the Borrower, as being the “Flag
      State”
of
      the
      Ship for the purposes of the Security Documents;

     

    “Funding
      Cost” means
      (i)
      in respect of the Loan or, as the case may be, any Advance to be advanced or
      outstanding in euros, EURIBOR or (ii) in respect of the Loan or, as the case
      may
      be, any Advance to be advanced or outstanding in Dollars or an Optional Currency
      (other than euro), LIBOR;

     

    “General
      Assignment” means
      the
      assignment collateral to the Mortgage and the Deed of Covenant executed or
      (as
      the context may require) to be executed by the Borrower in favour of the Bank
      in
      the form set out in schedule 5 or in such other form as the Bank may in its
      absolute discretion require;

     

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

     

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

     

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

     

    “Interest
      Period” means
      each period for the calculation of interest in respect of the Loan or, as the
      case may be, an Advance thereof ascertained in accordance with clauses 3.2
      and
      3.3;

     

    “ISPS
      Code” means
      the
      International Ship and Port Facility Security Code constituted pursuant to
      resolution A.924(22) of the International Maritime Organisation now set out
      in
      Chapter XI-2 of the International Convention for the Safety of Life at Sea
      (SOLAS) 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 Ship pursuant
      to the ISPS Code;

     

    “Japanese
      Yen” and “¥” mean
      the
      lawful currency for the time being of Japan;

     

    “LIBOR” means,
      in
      relation to a particular period, the rate for deposits of the relevant currency
      for a period equivalent to such period at or about 11:00 a.m. (London time)
      on
      the Quotation Date for such period as displayed on Reuters page LIBOR 01
      (British Banks’ Association Interest Settlement Rates) (or such other page as
      may replace such page LIBOR 01 on such system or on any other system of the
      information vendor for the time being designated by the British Bankers’
Association to calculate the BBA Interest Settlement Rate (as defined in the
      British Bankers’ Association’s Recommended Terms and Conditions (“BBAIRS”
terms)
      applicable at the time)), provided that if on such date no such rate is so
      displayed, LIBOR for such period shall be the rate (rounded upward if necessary
      to five decimal places) quoted by the Bank as the Bank’s 

    
       

      
        
          5

        

        

      

      
        
        

      

       

    
    offered
      rate for deposits of the relevant currency in an amount approximately equal
      to
      the amount in relation to which LIBOR is to be determined for a period
      equivalent to such period to prime banks in the London Interbank Market at
      or
      about 11:00 a.m. (London time) on the Quotation Date for such
      period;

     

    “Loan” means
      the
      principal amount borrowed by the Borrower on the Drawdown Date or (as the
      context may require) the principal amount owing to the Bank under this Agreement
      at any relevant time;

     

    “Management
      Agreement” means
      the
      agreement entered or (as the context may require) to be entered into (in a
      form
      and substance acceptable to the Bank in its sole discretion) between the
      Borrower and the Manager providing (inter alia) for the Manager to manage the
      Ship;

     

    “Manager” means
      Safety Management Overseas S.A. of Edificio Torre Universal, Piso 12 Avenida
      Federico Boyd, P.O. Box 8807, Panama, Republic of Panama, or any other person
      appointed by the Borrower, with the prior written consent of the Bank, as the
      manager of the Ship and includes its successors in title;

     

    “Manager’s
      Undertaking” means
      an
      undertaking and assignment executed or (as the context may require) to be
      executed by the Manager in favour of the Bank as a condition precedent to the
      approval of the Management Agreement, such undertaking to be in the form set
      out
      in schedule 6 or in such other form as the Bank may in its absolute discretion
      require;

     

    “Margin” means
      zero point six five per cent (0.65%) per annum;

     

    “Master
      Agreement Security Deed” means
      the
      deed executed or (as the context may require) to be executed by the Borrower
      in
      favour of the Bank in the form set out in schedule 8 or in such other form
      as
      the Bank may in its absolute discretion require;

     

    “Master
      Swap Agreement” means
      the
      agreement made or (as the context may require) to be made between the Bank
      and
      the Borrower comprising an ISDA Master Agreement and the Schedule thereto in
      the
      form set out in schedule 7, and the Confirmations (as defined therein)
      supplemental thereto;

     

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

     

    “Mortgage” means
      the
      first priority statutory mortgage of the Ship executed or (as the context may
      require) to be executed by the Borrower in favour of the Bank in the form set
      out in schedule 3 or in such other form as the Bank may in its absolute
      discretion require;

     

    “Multicurrency
      Cash Collateral Account” means
      an
      interest bearing Dollar Account of the Manager opened or (as the context may
      require) to be opened by the Manager with the Bank, and includes any other
      account designated in writing by the Bank to be a Multicurrency Cash Collateral
      Account for the purposes of this Agreement;

     

    “Multicurrency
      Cash Collateral Account Pledge” means
      the
      pledge executed or (as the context may require) to be executed by the Manager
      in
      favour of the Bank in respect of the Multicurrency Cash Collateral Account
      in
      such form as the Bank may in its absolute discretion require;

    
       

      
        
          6

        

        

      

      
        
        

      

       

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

     

    “Operating
      Account Pledge” means
      the
      pledge executed or (as the context may require) to be executed by the Manager
      in
      favour of the Bank in respect of the Operating Account in such form as the
      Bank
      may in its absolute discretion require;

     

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

     

    “Optional
      Currency” means
      any
      of Swiss Francs, Japanese Yen, euros or Sterling so long as each such currency
      is freely transferable, freely convertible into Dollars and dealt in on the
      London Interbank Market and, in respect of all payments to be made under any
      of
      the Security Documents in an Optional Currency, means immediately available
      freely transferable cleared funds in that Optional Currency and “Optional
      Currencies”
means,
      together, all or any of them;

     

    “Participating
      Member State” means
      a
      member state of the European Union that has adopted a single currency in
      accordance with the Treaty;

     

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

     

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

     

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

     

    “Quotation
      Date” means,
      in
      relation to any period, the second Banking Day before the first day of such
      period;

     

    “Registry” means
      the
      Department of Merchant Shipping, Limassol, Cyprus or, as the case may be, the
      offices of the Cyprus Consulate in Piraeus;

     

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

     

    “Related
      Company” of
      a
      person means any Subsidiary of such person, any company or other entity of
      which
      such person 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;

     

    “Repayment
      Dates” means,
      subject to clauses 5.1.2 and 7.3, each of the dates falling at six (6) monthly
      intervals after the Drawdown Date up to and including the date falling one
      hundred and forty four (144) months after the Drawdown Date;

    
       

      
        
          7

        

        

      

      
        
        

      

       

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

     

    “Security
      Documents” means
      this Agreement, the Mortgage, the Deed of Covenant, the General Assignment,
      the
      Manager’s Undertaking, the Master Swap Agreement, the Master Agreement Security
      Deed, the Account Pledges, any Charter Assignment and any other documents as
      may
      have been or shall from time to time after the date of this Agreement be
      executed to guarantee and/or secure all or any part of the Loan, interest
      thereon and other moneys from time to time owing by the Borrower pursuant to
      this Agreement and/or the Master Swap 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 Manager or any other person who may at any time be a party to
      any
      of the Security Documents (other than the Bank);

     

    “Security
      Requirement” means
      the
      amount in Dollars (as certified by the Bank whose certificate shall, in the
      absence of manifest error, be conclusive and binding on the Borrower and the
      Bank) which shall be:

     

    
      	 	
              (a)

            	
              for
                the period commencing on the Drawdown Date and ending on the Third
                Anniversary, equal to one hundred and ten per cent (110%) of the
                amount
                which is the aggregate of (i) the Loan (or the Equivalent Amount
                in
                Dollars when the Loan or part thereof is denominated in an Optional
                Currency) and (ii) the cost (if any) (as certified by the Bank whose
                certificate shall, in the absence of manifest error, be conclusive
                and
                binding on the Borrower and the Bank) of terminating any Transaction
                entered into pursuant to the Master Swap Agreement;
                and

            

    

     

    
      	 	
              (b)

            	
              for
                the period commencing on the date falling immediately after the Third
                Anniversary and ending on the last day of the Security Period (as
                defined
                in the Deed of Covenant), equal to one hundred and twenty per cent
                (120%)
                of the amount which is the aggregate of (i) the Loan (or the Equivalent
                Amount in Dollars when the Loan or part thereof is denominated in
                an
                Optional Currency) and (ii) the cost (if any) (as certified by the
                Bank
                whose certificate shall, in the absence of manifest error, be conclusive
                and binding on the Borrower and the Bank) of terminating any Transaction
                entered into pursuant to the Master Swap
                Agreement;

            

    

     

    “Security
      Value” means
      the
      amount in Dollars (as certified by the Bank whose certificate shall, in the
      absence of manifest error, be conclusive and binding on the Borrower and the
      Bank) which, at any relevant time, is the aggregate of (i) the value of the
      Ship
      as most recently determined in accordance with clause 9.2.2, (ii) the value
      of
      any additional security for the time being actually provided to the Bank
      pursuant to clause 9.2 as most recently determined in accordance with clause
      9.2.5, (iii) the amount (if any) at the relevant time standing to the credit
      of
      the Cash Collateral Account and (iv) the amount (if any) at the relevant time
      standing to the credit of the Multicurrency Cash Collateral
      Account;

     

    “Ship” means
      m.v. Pedhoulas
      Merchant, a
      bulk
      carrier of 82,214 dwt constructed at Tsuneishi Corporation at Tadotsu shipyard,
      registered in the name of the Borrower under the laws and flag of the Flag
      State
      with IMO number 9279800;

     

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

     

    “Sterling” and “£” mean
      the
      lawful currency for the time being of the United Kingdom;

    
       

      
        
          8

        

        

      

      
        
        

      

       

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

     

    “Swiss
      Francs” or “CHF” mean
      the
      lawful currency for the time being of Switzerland;

     

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

     

    “Termination
      Date” means
      16
      March 2007 or such later date as the Bank may in its absolute discretion agree
      in writing;

     

    “Third
      Anniversary” means
      the
      date falling thirty-six (36) months from the Drawdown Date; 

     

    “Total
      Loss” means:

     

    
      	 	
              (a)

            	
              the
                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 Borrower from such
                hijacking, theft, condemnation, capture, seizure, arrest, detention
                or
                confiscation within thirty (30) days after the occurrence
                thereof;

            

    

     

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

     

    “Transferee” has
      the
      meaning ascribed thereto in clause 16.4; and

     

    “Treaty” means
      the
      Treaty establishing the European Economic Community, being the Treaty of Rome
      of
      25 March 1957 as amended by the Single European Act 1986 and Maastricht Treaty
      (which was signed on 7 February 1992 and came into force on 1 November 1993)
      as
      amended, varied or supplemented from time to time.

     

    
      	1.3	
              Headings

            

    

     

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

     

    
      	1.4	
              Construction
                of certain terms

            

    

     

    In
      this
      Agreement, unless the context otherwise requires:

     

    
      	1.4.1	
              references
                to clauses and schedules are to be construed as references to clauses
                of,
                and schedules to, this Agreement and references to this Agreement
                include
                its schedules;

            

    

     

    
      	1.4.2	
              references
                to (or to any specified provision of) this Agreement or any other
                document
                shall be construed as references to this Agreement, that provision
                or that
                document as in force for the time being and as amended in accordance
                with
                terms thereof, or, as the case may be, with the agreement of the
                relevant
                parties;

            

    

     

    
      
        9

      

      

    
    
      
      

    

     

    
      	1.4.3	
              references
                to a “regulation” include any present or future regulation, rule,
                directive, requirement, request or guideline (whether or not having
                the
                force of law) of any agency, authority, central bank or government
                department or any self-regulatory or other national or supra-national
                authority,

            

    

     

    
      	1.4.4	
              words
                importing the plural shall include the singular and vice
                versa;

            

    

     

    
      	1.4.5	
              references
                to a time of day are to London
                time;

            

    

     

    
      	1.4.6	
              references
                to a person shall be construed as references to an individual, firm,
                company, corporation, unincorporated body of persons or any Government
                Entity;

            

    

     

    
      	1.4.7	
              references
                to a “guarantee” include references to an indemnity or other assurance
                against financial loss including, without limitation, an obligation
                to
                purchase assets or services as a consequence of a default by any
                other
                person to pay any Indebtedness and “guaranteed” shall be construed
                accordingly; and

            

    

     

    
      	1.4.8	
              references
                to any enactment shall be deemed to include references to such enactment
                as re-enacted, amended or extended.

            

    

     

    
      	
              2

            	
              The
                Commitment and the Loan

            

    

     

    
      	2.1	
              Agreement
                to lend

            

    

     

    The
      Bank,
      relying upon each of the representations and warranties in clause 8, agrees
      to
      lend to the Borrower upon and subject to the terms of this Agreement up to
      Thirty six million Dollars ($36,000,000) or the equivalent in Optional
      Currencies calculated in accordance with clause 4.

     

    
      	2.2	
              Drawdown

            

    

     

    Subject
      to the terms and conditions of this Agreement, the Loan shall be advanced in
      full in one amount on the Drawdown Date following receipt by the Bank from
      the
      Borrower of a Drawdown Notice not later than 10 a.m. on the third Banking Day
      before the proposed Drawdown Date. A Drawdown Notice shall be effective on
      actual receipt by the Bank, shall specify the amount in Dollars and/or, as
      the
      case may be, Optional Currencies into which the Borrower wishes the Loan or
      an
      Advance thereof to be subdivided on such Drawdown Date and, once given, shall,
      subject as provided in clause 3.6.1, be irrevocable.

     

    
      	2.3	
              Amount

            

    

     

    The
      principal amount specified in the Drawdown Notice for borrowing on the Drawdown
      Date shall, subject to the terms and conditions of this Agreement, not exceed
      Thirty six million Dollars ($36,000,000) or the equivalent in Optional
      Currencies, calculated in accordance with clause 4, which sum may be advanced
      in
      up to three Advances of different currencies in accordance with clause 4
      provided that no Advance has a Dollar Amount of less than $1,000,000 on the
      Drawdown Date as a result. Each Advance shall be denominated in one currency
      only.

     

    
      	2.4	
              Availability

            

    

     

    Upon
      receipt of a Drawdown Notice complying with the terms of this Agreement the
      Bank
      shall, subject to the provisions of clause 10, on the Drawdown Date make the
      Loan available to the Borrower in accordance with clause 7.2.

    
       

      
        
          10

        

        

      

      
        
        

      

       

    
    
      	2.5	
              Termination
                of Commitment

            

    

     

    If
      the
      Loan is not drawn down by the Termination Date, the Commitment shall thereupon
      be automatically cancelled.

     

    
      	2.6	
              Application
                of Proceeds

            

    

     

    Without
      prejudice to the Borrower’s obligations under clause 9.1.3, the Bank shall have
      no responsibility for the application of proceeds of the Loan by the
      Borrower.

     

    
      	
              3

            	
              Interest
                and Interest Periods

            

    

     

    
      	3.1	
              Normal
                interest rate

            

    

     

    Subject
      to paragraph (i) of Part 5 of the Schedule to the Master Swap Agreement, the
      Borrower shall pay interest on each Advance, in the currency in which such
      Advance is outstanding, in respect of each Interest Period relating thereto
      on
      each Interest Payment Date (or, in the case of Interest Periods of more than
      six
      (6) months, by instalments, the first such instalment being payable six (6)
      months from the commencement of the relevant Interest Period and the subsequent
      instalments at intervals of six (6) months or, if shorter, the period from
      the
      date of the preceding instalment until the Interest Payment Date relative to
      such Interest Period) at the rate per annum determined by the Bank to be the
      aggregate of (a) the Margin, (b) the Additional Cost and (c) the Funding Cost
      for such Interest Period.

     

    
      	3.2	
              Selection
                of Interest Periods

            

    

     

    Subject
      to paragraph (i) of Part 5 of the Schedule to the Master Swap Agreement, the
      Borrower may by notice received by the Bank not later than 10 a.m. on the fifth
      Banking Day before the beginning of each Interest Period in relation to each
      Advance specify whether such Interest Period shall have a duration (subject
      to
      availability which shall be determined solely by the Bank) of one (1), two
      (2),
      three (3), six (6), nine (9) or twelve (12) months or such other period as
      the
      Borrower may select and the Bank may, in its absolute discretion,
      agree.

     

    
      	3.3	
              Determination
                of Interest Periods

            

    

     

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

     

    
      	3.3.1	
              the
                first Interest Period in respect of an Advance shall commence on
                the
                Drawdown Date and each subsequent Interest Period in respect of such
                Advance shall commence on the last day of the previous Interest Period
                in
                respect of such Advance;

            

    

     

    
      	3.3.2	
              if
                any Interest Period would otherwise overrun a Repayment Date, 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 Repayment
                Dates, the Advance or, if more than one, the aggregate of the Advances
                shall be divided into parts so that there is one part (in the case
                of more
                than one Advance to be calculated on pro-rata basis between the Advances
                in the aggregate Dollar Amount of all such Advances) in 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 (in the case of more than one Advance
                to
                be calculated on a pro-rata basis between the Advances in the aggregate
                Dollar Amount of all such Advances) in the amount of the balance
                of the
                Loan having an Interest Period ascertained 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

            

    

    
      
         

        
          
            11

          

          

        

        
          
          

        

         

      

    
    
      
        clause4
          and
          elsewhere in this Agreement refers to the Interest Period in respect of
          the
          balance of the Loan;

      

    

     

    
      	3.3.3	
              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 six (6) months or such other
                period as shall comply with this clause
                3.3.

            

    

     

    
      	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 on demand from
      the due date up to the date of actual payment (as well after as before judgment)
      at a rate determined by the Bank pursuant to this clause 3.4. The period
      beginning on such due date and ending on such date of payment shall be divided
      into successive periods of not more than three (3) months as selected by the
      Bank each of which (other than the first, which shall commence on such due
      date)
      shall commence on the last day of the preceding such period. The rate of
      interest applicable to each such period shall be the aggregate (as determined
      by
      the Bank) of (a) one per cent (2%) per annum, (b) the Margin, (c) the Additional
      Cost and (d) the Funding Cost for such period and applicable to such sum. Such
      interest shall be due and payable on the last day of each such period as
      determined by the Bank and each such day shall, for the purposes of this
      Agreement, be treated as an Interest Payment Date, provided that if such unpaid
      sum is an amount of principal which became due and payable, by reason of a
      declaration by the Bank under clause 11.2.2 or a prepayment pursuant to clauses
      5.3, 9.2.1(a) or 13.1, on a date other than an Interest Payment Date relating
      thereto, the first such period selected by the Bank shall be of a duration
      equal
      to the period between the due date of such principal sum and such Interest
      Payment Date and interest shall be payable on such principal sum during such
      period at a rate of one per cent (2%) above the rate applicable thereto
      immediately before it shall have become so due and payable. If, for the reasons
      specified in clause 3.6.1, the Bank is unable to determine a rate in accordance
      with the foregoing provisions of this clause 3.4, interest on any sum not paid
      on its due date for payment shall be calculated at a rate determined by the
      Bank
      to be one per cent (2%) per annum above the aggregate of the Margin and the
      cost
      of funds (including Additional Cost) to the Bank.

     

    
      	3.5	
              Notification
                of Interest Periods and interest
                rate

            

    

     

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

     

    
      	3.6	
              Market
                disruption;
                non-availability

            

    

     

    
      	3.6.1	
              If
                and whenever, at any time prior to the commencement of any Interest
                Period, the Bank shall have determined (which determination shall,
                in the
                absence of manifest error, be
                conclusive):

            

    

     

    
      	
            	(a)	
              that
                adequate and fair means do not exist for ascertaining LIBOR or, as
                the
                case may be, EURIBOR during such Interest Period;
                or

            

    

     

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

            

    

     

    the
      Bank
      shall forthwith give notice (a “Determination
      Notice”)
      thereof to the 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.

    
       

      
        
          12

        

        

      

      
        
        

      

       

    
    
      	3.6.2	
              During
                the period of ten (10) days after any Determination Notice has been
                given
                by the Bank under clause 3.6.1, the Bank shall certify an alternative
                basis (the “Substitute
                Basis”)
                for maintaining the Loan. The Substitute Basis may (without limitation)
                include alternative interest periods, alternative currencies or
                alternative rates of interest but shall include a margin above the
                cost of
                funds (including Additional Cost), if any, to the Bank equivalent
                to the
                Margin. Each Substitute Basis so certified shall be binding upon
                the
                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 clause 3.6.1
                continues to exist whereupon the normal interest rate fixing provisions
                of
                this Agreement shall apply.

            

    

     

    
      	
              4

            	
              Currencies

            

    

     

    
      	4.1	
              Selection
                of currencies

            

    

     

    Subject
      to clause 4.2, if the Borrower so requests in the Drawdown Notice or, in any
      case other than drawdown of the Loan, by notice received by the Bank not later
      than 10 a.m. on the second Banking Day before the beginning of an Interest
      Period in respect of the Loan or, as the case may be, an Advance, the Loan
      or
      part thereof may be drawn down in Dollars or in an Optional Currency or, on
      the
      first day of such Interest Period, the Loan or such Advance may be converted
      from an Optional Currency into Dollars or from Dollars into an Optional Currency
      but, if no such request is received by the Bank, the Loan will be drawn down
      in
      Dollars or, as the case may be, the Loan or such Advance will remain outstanding
      in the currency in which it was outstanding during its immediately preceding
      Interest Period.

     

    
      	4.2	
              Limit
                on currencies;
                non-availability

            

    

     

    
      	4.2.1	
              The
                Loan or any part thereof may not be drawn down in and may not be
                converted
                into or remain outstanding in an Optional Currency
                if:

            

    

     

    
      
        	
              	(a)	
                in
                  consequence thereof there would be more than three (3) Advances
                  outstanding at any time; or

              

      

    

     

    
      
        	
              	(b)	
                in
                  consequence thereof there would be more than two (2) Optional Currencies
                  outstanding at any time; or

              

      

    

     

    
      
        	
              	(c)	
                in
                  consequence thereof an Advance shall be denominated in more than
                  one
                  currency; or

              

      

    

     

    
      
        	
              	(d)	
                the
                  amount to be converted is less than $1,000,000 or an integral multiple
                  of
                  $1,000,000; or

              

      

    

     

    
      
        	
              	(e)	
                the
                  Bank notifies the Borrower not later than 3 p.m. on the fourth
                  Banking Day
                  before the date on which the Loan or the relevant part thereof
                  is to be
                  drawn down or the beginning of the relevant Interest Period, that
                  deposits
                  of such Optional Currency are not readily available to the Bank
                  in an
                  amount comparable with the Loan or the relevant part thereof;
                  or

              

      

    

     

    
      
        	
              	(f)	
                the
                  Bank determines (which determination shall be conclusive) at any
                  time
                  prior to 10 a.m. (local time in the place of payment) on the first
                  day of
                  the relevant Interest Period that by reason of any change in currency
                  availability, currency exchange rates or exchange controls it is
                  or will
                  be impracticable for the Loan or the relevant part thereof to be
                  drawn
                  down in, converted into or remain outstanding in that Optional
                  Currency;
                  or

              

      

    

    
       

      
        
          13

        

        

      

      
        
        

      

       

    
    
      
        	
              	(g)	
                a
                  Default has occurred and is continuing;
                  or

              

      

    

     

    
      
        	
              	(h)	
                a
                  Transaction is outstanding under the Master Swap
                  Agreement,

              

      

    

     

    
      accordingly,in
        any
        such event, the Loan or the relevant part thereof shall be drawn down in,
        remain
        outstanding in or be converted into Dollars.

    

     

    
      	4.3	
              Currency
                amounts on drawdown

            

    

     

    
      	4.3.1	
              Drawdown
                in Optional Currency

            

    

     

    
      	 	
              If
                the Loan is to be drawn down in full or in part in an Optional Currency,
                the Bank shall, subject to clauses 10.1 and 10.2, advance to the
                Borrower
                on the Drawdown Date the Equivalent Amount of such Optional Currency
                (as
                determined by the Bank) which can be purchased with the Dollar Amount
                of
                the Loan or the relevant part thereof as at the Drawdown
                Date.

            

    

     

    
      	4.3.2	
              Drawdown
                in Dollars

            

    

     

    
      
        	 	
                If
                  the Loan or part thereof is to be drawn down in Dollars, the Bank
                  shall,
                  subject to clauses 10.1 and 10.2, advance to the Borrower on the
                  Drawdown
                  Date, the Dollar Amount of the Loan or such part
                  thereof.

              

      

    

     

    
      	4.4	
              Currency
                amount on conversion

            

    

     

    Subject
      to clause 4.2, in the event the Borrower requests the Bank (in accordance with
      clause 4.1) to convert an Advance into an, or another Optional Currency (the
      “new
      currency”)
      or
      from an Optional Currency into Dollars, the amount into which such Advance
      is to
      be converted shall be the Equivalent Amount in the new currency of the currency
      in which such Advance was outstanding immediately prior to conversion (after
      taking into account any repayment or prepayment due on the date of
      conversion).

     

    
      	4.5	
              Notional
                obligations

            

    

     

    The
      obligation of the Bank to convert the Loan or, as the case may be, an Advance
      in
      accordance with clause 4.4 is notional only, and the same shall be deemed to
      be
      satisfied by the Bank making appropriate adjustments in the principal amount
      of
      the Loan in the account referred to in clause 7.7.

     

    
      	4.6	
              Currency
                Correction

            

    

     

    Where
      at
      any time the Loan or an Advance is outstanding in one or more Optional
      Currencies and the Bank by notice given to the Borrower pursuant to clause
      17 (a
“Currency
      Correction Notice”)
      certifies to the Borrower (which Currency Correction Notice shall in the absence
      of manifest error be conclusive and binding on the Borrower) that the Equivalent
      Amount in Dollars of the Loan then outstanding (less any amount standing to
      the
      credit of the Multicurrency Cash Collateral Account) exceeds by ten per cent
      (10%) or more (the “excess
      amount”),
      the
      Dollar Amount on the date of such Currency Correction Notice, the Borrower
      shall, within five (5) Banking Days from the date of such Currency Correction
      Notice, pay to the Multicurrency Cash Collateral Account, an additional (to
      any
      amount already standing to the credit of the Multicurrency Cash Collateral
      Account before such deposit being made) amount in Dollars equal to the excess
      amount.

    
       

      
        
          
            14

          

        

        

      

      
        
        

      

       

    
    
      	4.7	
              Release
                of moneys in Multicurrency Cash Collateral
                Account

            

    

     

    If
      at any
      time following a payment to the Multicurrency Cash Collateral Account in
      accordance with clause 4.6, the Equivalent Amount in Dollars of the Loan
      outstanding no longer exceeds one hundred and ten per cent (110%) of the Dollar
      Amount, the Bank shall, provided that (a) no Event of Default has occurred
      and
      is continuing and (b) the Security Value exceeds the Security Requirement at
      the
      time, release to the Manager the sums deposited in the Multicurrency Cash
      Collateral Account in accordance with clause 4.6 from the Multicurrency Cash
      Collateral Account. The Borrower shall procure that the Manager does not make
      any withdrawals from the Multicurrency Cash Collateral Account other than
      pursuant to this clause 4.7 and the terms of the Multicurrency Cash Collateral
      Account Pledge.

     

    
      	4.8	
              Incidental
                costs and expenses

            

    

     

    All
      costs
      and expenses incidental to any currency conversion pursuant to this clause
      4
      shall be borne by the Borrower.

     

    
      	
              5

            	
              Repayment
                and prepayment

            

    

     

    
      	5.1	
              Repayment

            

    

     

    
      	5.1.1	
              Subject
                to the terms of this Agreement, the Borrower shall repay the Loan
                by
                twenty four consecutive instalments, one such instalment to be repaid
                on
                each of the Repayment Dates Subject to the provisions of this Agreement,
                the amount of each such instalment other than the last instalment
                shall be
                One million Dollars ($1,000,000) or the equivalent amount in an Optional
                Currency calculated in accordance with clause 5.7 and the amount
                of the
                last instalment shall be Thirteen million Dollars ($13,000,000)
                (comprising a balloon repayment of Twelve million Dollars ($12,000,000)
                and a repayment instalment of One million Dollars ($1,000,000)) or
                the
                equivalent amount in an Optional Currency calculated in accordance
                with
                clause 5.7 PROVIDED
                ALWAYS THAT
                should the Loan be, for any reason (including enforcement), fully
                repaid
                or prepaid, notwithstanding anything to the contrary in this Agreement
                and
                in particular the repayment profile provided in this clause 5.1.1
                and the
                provisions of clauses 5.2 and 5.7, the Borrower shall pay to the
                Bank such
                an amount and in such currency or, as the case may be, currencies
                as is
                necessary to ensure that the Bank receives an amount equal to the
                Loan in
                the currencies outstanding immediately prior to the Loan being repaid
                or
                prepaid in full and the above repayment profile shall be disregarded
                for
                the purposes of such repayment or prepayment. If the Commitment is
                not
                drawn in full, the amount of each repayment instalment shall be reduced
                proportionately

            

    

     

    
      	5.1.2	
              The
                Borrower shall, at any time after the Third Anniversary have the
                right
                (subject to paragraphs (a) to (d) below) to request the Bank to defer
                the
                payment of up to two non-consecutive repayment instalments payable
                pursuant to clause 5.1.1 (other than the final instalment) in
                whole:

            

    

     

    
      	
            	(a)	
              such
                option shall be exercisable by a written notice to the Bank from
                the
                Borrower which specifies the instalment to be deferred and which
                is
                received by the Bank at least fifteen (15) days before the Repayment
                Date
                upon which the relevant instalment falls
                due;

            

    

     

    
      	
            	(b)	
              each
                such notice shall be irrevocable once
                given;

            

    

     

    
      	
            	(c)	
              upon
                each occasion that an instalment is deferred pursuant to this proviso,
                the
                amount of the balloon repayment shall be increased by the amount
                of the
                relevant instalment deferred; and

            

    

    
       

      
        
          15

        

        

      

      
        
        

      

       

    
    
      	
            	(d)	
              such
                option may only be exercised if (i) the written notice to the Bank
                has
                been received within the time period specified in paragraph (a) above
                and
                (ii) at the time the relevant notice is received by the Bank no Default
                has occurred.

            

    

     

    
      	5.2	
              Voluntary
                prepayment

            

    

     

    The
      Borrower may prepay the Loan or any Advance thereof in whole or part (being
      One
      million Dollars ($1,000,000) or any larger sum which is an integral multiple
      of
      One million Dollars ($1,000,000) or, in each case, the equivalent in the
      relevant Optional Currency) without premium or penalty, on any Interest Payment
      Date relating to the part of the Loan or as the case may be, an Advance thereof
      being prepaid together with any amounts payable under clause 12 and accrued
      interest to the date of prepayment and any other sums then payable under this
      Agreement and/or the Master Swap Agreement and/or the other Security Documents
      or any of them in respect of the Loan or an Advance thereof calculated in
      accordance with clause 5.7.

     

    
      	5.3	
              Master
                Swap Agreement, Repayments and
                Prepayments

            

    

     

    
      	5.3.1	
              Notwithstanding
                any provision of the Master Swap Agreement to the contrary, in the
                case of
                a prepayment of all or part of the Loan (including, without limit,
                upon a
                Total Loss in accordance with clause 5.4 and under clause 9.2) then,
                subject to clause 5.3.2, the Bank shall be entitled but not obliged
                (and,
                where relevant, may do without the consent of the Borrower, where
                it would
                otherwise be required whether under the Master Swap Agreement or
                otherwise) to amend, re-book, supplement, cancel, close out, net
                out,
                terminate, liquidate, transfer or assign all or any part of the rights,
                benefits and obligations created by any Transaction and/or the Master
                Swap
                Agreement and/or to obtain or re-establish any hedge or related trading
                position in any manner and with any person the Bank in its absolute
                discretion may determine and both the Bank’s and the Borrower’s continuing
                obligations under any Transaction and/or Master Swap Agreement shall,
                unless agreed otherwise by the Bank, be calculated so far as the
                Bank
                considers it practicable by reference to the amended repayment schedule
                for the Loan taking into account the fact that less than the full
                amount
                of the Loan remains outstanding.

            

    

     

    
      	5.3.2	
              If
                less than the full amount of the Loan remains outstanding, following
                a
                prepayment under this Agreement and the Bank in its absolute discretion
                agrees, following a written request of the Borrower, that the Borrower
                may
                be permitted to maintain all or part of a Transaction in an amount
                not
                wholly matched with or linked to all or part of the Loan, the Borrower
                shall within ten (10) days of being notified by the Bank of such
                requirement, provide the Bank with, or procure the provision to the
                Bank
                of, such additional security as shall in the opinion of the Bank
                be
                adequate to secure the performance of such Transaction, which additional
                security shall take such form, be constituted by such documentation
                and be
                entered into between such parties, as the Bank in its absolute discretion
                may approve or require, and each document comprising such additional
                security shall constitute a Credit Support
                Document.

            

    

     

    
      	5.3.3	
              The
                Borrower shall on the first written demand of the Bank indemnify
                the Bank
                in respect of all losses, costs and expenses (including, but not
                limited
                to, legal costs and expenses) incurred or sustained by the Bank as
                a
                consequence of or in relation to the effecting of any matter or
                Transactions referred to in this clause
                5.3.

            

    

     

    
      	5.3.4	
              Notwithstanding
                any provision of the Master Swap Agreement to the contrary, if for
                any
                reason a Transaction has been entered into but the Loan is not drawn
                down
                under this Agreement then, subject to clause 5.3.5 the Bank shall
                be
                entitled but not obliged (and, where relevant, may do so without
                the
                consent of the Borrower where it would otherwise be required whether
                under
                the Master Swap Agreement or otherwise) to amend, re-book, supplement,
                cancel, close out, net out, terminate, liquidate, transfer or assign
                all
                or any part of the rights, benefits and obligations created by such
                Transaction and/or the Master Swap 

            

    

    
      
         

        
          
            16

          

          

        

        
          
          

        

         

      

    
    
      Agreement
        and/or to obtain or re-establish any hedge or related trading position in
        any
        manner and with any person the Bank in its absolute discretion may
        determine.

    

     

    
      	5.3.5	
              If
                a Transaction has been entered into but the Loan is not drawn down
                under
                this Agreement and the Bank in its absolute discretion agrees, following
                a
                written request of the Borrower, that the Borrower may be permitted
                to
                maintain all or part of a Transaction, the Borrower shall within
                ten (10)
                days of being notified by the Bank of such requirement, provide the
                Bank
                with, or procure the provision to the Bank of, such additional security
                as
                shall in the opinion of the Bank be adequate to secure the performance
                of
                such Transaction, which additional security shall take such form,
                be
                constituted by such documentation and be entered into between such
                parties, as the Bank in its absolute discretion may approve or require,
                and each document comprising such additional security shall constitute
                a
                Credit Support Document for the purposes of the Master Swap Agreement
                and/or otherwise.

            

    

     

    
      	5.3.6	
              Without
                prejudice to or limitation of the obligations of the Borrower under
                clause
                5.3.3, in the event that the Bank exercises any of its rights under
                clauses 5.3.1, 5.3.2, 5.3.3 or 5.3.4 and such exercise results in
                all or
                part of a Transaction being terminated such Transaction or the part
                thereof terminated (which shall for the purposes hereof be treated
                as a
                separate Transaction) in each case shall be treated under the Master
                Swap
                Agreement in the same manner as if it were a Terminated Transaction
                (as
                defined in Section 14 of the Master Swap Agreement) pursuant to an
                Event
                of Default (as so defined in that Section 14) by the Borrower and,
                accordingly, the Bank shall be permitted to recover from the Borrower
                a
                payment for early termination calculated in accordance with the provisions
                of section 6(e)(i) of the Master Swap Agreement in respect of such
                Transaction.

            

    

     

    
      	5.4	
              Prepayment
                on Total Loss

            

    

     

    On
      the
      Ship becoming a Total Loss or suffering damage or being involved in an incident
      which in the opinion of the Bank may result in the Ship being subsequently
      determined to be a Total Loss, the obligation of the Bank to advance the Loan
      shall immediately cease and the Commitment shall be reduced to zero. On the
      date
      falling ninety (90) days after that on which the Ship became a Total Loss or,
      if
      earlier, on the date upon which the insurance proceeds in respect of such Total
      Loss are, or Requisition Compensation is, received by the Borrower (or the
      Bank
      pursuant to the Security Documents), the Borrower shall prepay the Loan. For
      the
      purpose of this Agreement, a Total Loss shall be deemed to have
      occurred:

     

    
      	5.4.1	
              in
                the case of an actual total loss of the Ship on the actual date and
                at the
                time the Ship was lost or, if such date is not known, on the date
                on which
                the Ship was last reported;

            

    

     

    
      	5.4.2	
              in
                the case of a constructive total loss of the Ship, upon the date
                and at
                the time notice of abandonment of the Ship is given to the insurers
                of the
                Ship for the time being (provided a claim for total loss is admitted
                by
                such insurers) or, if such insurers do not forthwith admit such a
                claim,
                at the date and at the time at which either a total loss is subsequently
                admitted by the insurers or a total loss is subsequently adjudged
                by a
                competent court of law or arbitration tribunal to have
                occurred;

            

    

     

    
      
        	5.4.3	
                in
                  the case of a compromised or arranged total loss, on the date upon
                  which a
                  binding agreement as to such compromised or arranged total loss
                  has been
                  entered into by the insurers of the
                  Ship;

              

      

    

     

    
      	5.4.4	
              in
                the case of Compulsory Acquisition, on the date upon which the relevant
                requisition of title or other compulsory acquisition occurs;
                and

            

    

     

    
      	5.4.5	
              in
                the case of hijacking, theft, condemnation, capture, seizure, arrest,
                detention or confiscation of the Ship (other than where the same
                amounts
                to Compulsory Acquisition of 

            

    

    
       

      
        
          17

        

        

      

      
        
        

      

       

    
    
      the
        Ship)
        by any Government Entity, or by persons purporting to act on behalf of any
        Government Entity, which deprives the Borrower of the use of the Ship for
        more
        than thirty (30) days, upon the expiry of the period of thirty (30) days
        after
        the date upon which the relevant hijacking, theft, condemnation, capture,
        seizure, arrest, detention or confiscation occurred.

    

    
       

    

    
      	
              5.5

            	
              Amounts
                payable on prepayment

            

    

     

    Any
      prepayment of all or part of the Loan under this Agreement shall be made
      together with (a) accrued interest on the amount to be prepaid to the date
      of
      such prepayment, (b) any additional amount payable under clauses 7.6 or 13.2
      and
      (c) all others sums payable by the Borrower to the Bank under this Agreement
      or
      any of the other Security Documents including, without limitation any accrued
      commitment commission payable under clause 6.1 and any amounts payable under
      clause 12.

     

    
      	5.6	
              Notice
                of prepayment; reduction of repayment
                instalments

            

    

     

    No
      prepayment may be effected under clause 5.2 unless the Borrower shall have
      given
      the Bank at least thirty (30) Banking Days notice of its intention to make
      such
      prepayment. Every notice of prepayment shall be effective only on actual receipt
      by the Bank, shall be irrevocable, shall specify the amount to be prepaid and
      shall oblige the Borrower to make such prepayment on the date specified. No
      amount prepaid may be reborrowed and any amount prepaid pursuant to clause
      5.2
      shall be applied in reducing the repayment instalments under clause 5.1 in
      direct order of their due dates for payment whilst any amount prepaid pursuant
      to clause 5.8 shall be applied in reducing the repayment instalments under
      clause 5.1 in inverse order of their due dates for payment and any amount
      prepaid pursuant to clause 9.2.1 shall be applied in reducing the repayment
      instalments under clause 5.1 proportionately. The Borrower may not prepay the
      Loan or any part thereof save as expressly provided in this
      Agreement.

     

    
      	5.7	
              Currency
                amounts repayable

            

    

     

    Save
      for
      the proviso of clause 5.1.1, each repayment or partial prepayment of any Advance
      and/or the Loan under this Agreement shall be made in the currency in which
      such
      Advance and/or the Loan was outstanding immediately prior to such repayment
      or
      prepayment and shall be in an amount equal to the Equivalent Amount in such
      currency.

     

    
      	5.8	
              Cash
                Collateral Deposit
                Prepayment

            

    

     

    The
      Borrower undertakes to the Bank that immediately upon the Manager withdrawing
      moneys from the Cash Collateral Deposit pursuant to the provisions of clause
      9.4, the Borrower shall prepay an amount of the Loan outstanding at the time
      of
      such withdrawal equal to the amount withdrawn by the Manager from the Cash
      Collateral Account.

     

    
      	
              6

            	
              Commitment
                commission, fees and
                expenses

            

    

     

    
      	6.1	
              Fees

            

    

     

    The
      Borrower shall pay to the Bank:

     

    
      	6.1.1	
              a
                total fee of Thirty six thousand Dollars ($36,000) on the date of
                this
                Agreement; and

            

    

     

    
      	6.1.2	
              a
                commitment commission computed (a) from 1 June 2006 until 23 November
                2006
                at the rate of 0.15% per annum on the amount of $27,000,000 and (b)
                from
                24 November 2006 until the earlier of (i) the Drawdown Date and (ii)
                the
                Termination Date at the rate of 0.15% per annum on the daily undrawn
                amount of the Commitment and in each case payable
                quarterly.

            

    

    
       

      
        
          18

        

        

      

      
        
        

      

       

    
    The
      fee
      referred to in clause 6.1.1 and the commitment commission referred to in clause
      6.1.2 shall be payable by the Borrower to the Bank, whether or not any part
      of
      the Commitment is ever advanced and shall, in either case, be
      non-refundable.

     

    
      	6.2	
              Expenses

            

    

     

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

     

    
      	6.2.1	
              in
                connection with the negotiation, preparation, execution and, where
                relevant, registration of the Security Documents and of any amendment
                or
                extension of or the granting of any waiver or consent under, any
                of the
                Security Documents (including, for the avoidance of doubt, the Master
                Swap
                Agreement); and

            

    

     

    
      	6.2.2	
              in
                contemplation of, or otherwise in connection with, the enforcement
                of, or
                preservation of any rights under, any of the Security Documents
                (including, for the avoidance of doubt, the Master Swap Agreement),
                or
                otherwise in respect of the moneys owing under any of the Security
                Documents (including, for the avoidance of doubt, the Master Swap
                Agreement), together with interest at the rate referred to in clause
                3.4
                from the date on which such expenses were incurred to the date of
                payment
                (as well after as before judgment).

            

    

     

    
      	6.3	
              Value
                Added Tax

            

    

     

    All
      fees
      and expenses payable pursuant to this clause 6 shall be paid together with
      value
      added tax or any similar tax (if any) properly chargeable thereon. Any value
      added tax chargeable in respect of any services supplied by the Bank under
      this
      Agreement shall, on delivery of the value added tax invoice, be paid in addition
      to any sum agreed to be paid hereunder.

     

    
      	6.4	
              Stamp
                and other duties

            

    

     

    The
      Borrower shall pay all stamp, documentary, registration or other like duties
      or
      taxes (including any duties or taxes payable by the Bank) imposed on or in
      connection with any of the Management Agreement, the Security Documents
      (including, for the avoidance of doubt, the Master Swap Agreement), or the
      Loan
      and shall indemnify the Bank against any liability arising by reason of any
      delay or omission by the Borrower to pay such duties or taxes.

     

    
      	
              7

            	
              Payments
                and taxes; accounts and
                calculations

            

    

     

    
      	7.1	
              No
                set-off or counterclaim

            

    

     

    Subject
      to paragraph (i) of Part 5 of the Schedule to the Master Swap Agreement, all
      payments to be made by the Borrower under any of the Security Documents shall
      be
      made in full, without any set-off or counterclaim whatsoever and, subject as
      provided in clause 7.6, free and clear of any deductions or withholdings, in
      Dollars or the relevant Optional Currency on the due date (for value on the
      day
      on which payment is due) to such account at such bank in such place as the
      Bank
      may from time to time specify for this purpose.

     

    
      	7.2	
              Payment
                by the Bank

            

    

     

    All
      sums
      to be advanced on the Drawdown Date by the Bank to the Borrower under this
      Agreement shall be remitted in Dollars or the relevant Optional Currency to
      the
      account of the Borrower specified in the Drawdown Notice.

    
       

      
        
          19

        

        

      

      
        
        

      

       

    
    
      	7.3	
              Non-Banking
                Days

            

    

     

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

     

    
      	7.4	
              Calculations

            

    

     

    All
      payments of interest in respect of the Loan and/or any Advance shall be made
      in
      the currency in which the Loan and/or such Advance is outstanding at the
      relevant time. All interest and other payments of an annual nature under any
      of
      the Security Documents shall accrue from day to day and be calculated on the
      basis of actual days elapsed and a 360 day year except for any part of the
      Loan
      denominated in Sterling where a 365 day year shall apply.

     

    
      	7.5	
              Certificates
                conclusive

            

    

     

    Any
      certificate or determination of the Bank as to any rate of interest 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.

     

    
      	7.6	
              Grossing-up
                for Taxes

            

    

     

    If
      at any
      time the Borrower is required to make any deduction or withholding in respect
      of
      Taxes from any payment due under any of the Security Documents, the sum due
      from
      the Borrower in respect of such payment shall be increased to the extent
      necessary to ensure that, after the making of such deduction or withholding,
      the
      Bank receives on the due date for such payment (and retains, free from any
      liability in respect of such deduction or withholding), a net sum equal to
      the
      sum which it would have received had no such deduction or withholding been
      required to be made and the Borrower shall indemnify the Bank against any losses
      or costs incurred by it 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 promptly deliver
      to
      the Bank any receipts, certificates or other proof evidencing the amounts (if
      any) paid or payable in respect of any deduction or withholding as
      aforesaid.

     

    
      	7.7	
              Loan
                account

            

    

     

    The
      Bank
      shall maintain, in accordance with its usual practice, an account (which shall
      be the “Account Current” referred to in the Mortgage) evidencing the amounts
      from time to time lent by, owing to and paid to it under the Security Documents.
      Such account shall, in the absence of manifest error, be conclusive as to the
      amount from time to time owing by the Borrower under the Security
      Documents.

     

    
      	
              8

            	
              Representations
                and warranties

            

    

     

    
      	8.1	
              Continuing
                representations and
                warranties

            

    

     

    The
      Borrower represents and warrants to the Bank that:

     

    
      	8.1.1	
              Due
                incorporation

            

    

     

    the
      Borrower and each of the other Security Parties are duly incorporated and
      validly existing in good standing under the laws of their respective countries
      of incorporation, in the case of the Borrower as a Liberian corporation and
      in
      the case of the other Security Parties as 

    
       

      
        
          20

        

        

      

      
        
        

      

       

    
    companies
      having limited liability and have power to carry on their respective businesses
      as they are now being conducted and to own their respective property and other
      assets;

     

    
      	8.1.2	
              Corporate
                power

            

    

     

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

     

    
      	8.1.3	
              Binding
                obligations

            

    

     

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

     

    
      	8.1.4	
              No
                conflict with other obligations

            

    

     

    the
      execution and delivery of, the performance of its obligations under, and
      compliance with the provisions of, the Management Agreement and the Security
      Documents by the relevant Security Parties will not (i) contravene any existing
      applicable law, statute, rule or regulation or any judgment, decree or permit
      to
      which 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 or by which it or any of its property is bound,
      (iii) contravene or conflict with any provision of the 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 of its Related Companies 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 its Related Companies or any other Security Party;

     

    
      	8.1.5	
              No
                litigation

            

    

     

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

     

    
      	8.1.6	
              No
                filings required

            

    

     

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

     

    
      	8.1.7	
              Choice
                of law

            

    

    
       

      
        
          21

        

        

      

      
        
        

      

       

    
    the
      choice of English law to govern the Management Agreement and the Security
      Documents (other than the Mortgage, the Deed of Covenant and the Account
      Pledges) and the choice of (i) Cypriot law to govern the Mortgage and the Deed
      of Covenant and (ii) Greek law to govern each of the Account Pledges and the
      submissions by the Security Parties to the non-exclusive jurisdiction of the
      English courts are valid and binding;

     

    
      	8.1.8	
              No
                immunity

            

    

     

    neither
      the Borrower nor any other Security Party nor any of their respective assets
      is
      entitled to immunity on the grounds of sovereignty or otherwise from any legal
      action or proceeding (which shall include, without limitation, suit, attachment
      prior to judgement, execution or other enforcement); and

     

    
      	8.1.9	
              Consents
                obtained

            

    

     

    every
      consent, authorisation, licence or approval of, or registration with or
      declaration to, governmental or public bodies or authorities or courts required
      by any Security Party to authorise, or required by any Security Party in
      connection with, the execution, delivery, validity, enforceability or
      admissibility in evidence of the Management Agreement and 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.

     

    
      	8.2	
              Initial
                representations and
                warranties

            

    

     

    The
      Borrower further represents and warrants to the Bank that:

     

    
      	8.2.1	
              Pari
                passu

            

    

     

    the
      obligations of the Borrower under this Agreement and the Master Swap 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;

     

    
      	8.2.2	
              No
                default under other Indebtedness

            

    

     

    neither
      the Borrower nor any of its Related Companies nor any other Security Party
      is
      (nor would with the giving of notice or lapse of time or the satisfaction of
      any
      other condition or combination thereof be) in breach of or in default under
      any
      agreement relating to Indebtedness to which it is a party or by which it may
      be
      bound;

     

    
      	8.2.3	
              Information

            

    

     

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

     

    
      	8.2.4	
              No
                withholding Taxes

            

    

     

    no
      Taxes
      are imposed by withholding or otherwise on any payment to be made by any
      Security Party under the Management Agreement or the Security Documents or
      are
      imposed on or by virtue of the execution or delivery by the Security Parties
      of
      the Management 

     

    
      
        22

      

      

    
    
      
      

    

     

    Agreement
      or the Security Documents or any other document or instrument to be executed
      or
      delivered under any of the Security Documents;

     

    
      	8.2.5	
              No
                Default

            

    

     

    no
      Default has occurred and is continuing;

     

    
      	8.2.6	
              the
                Ship

            

    

     

    the
      Ship
      will on the Drawdown Date be:

     

    
      	
            	(a)	
              in
                the absolute ownership of the Borrower who will on and after the
                Drawdown
                Date be the sole, legal and beneficial owner of the
                Ship;

            

    

     

    
      	
            	(b)	
              registered
                in the name of the Borrower through the Registry as a ship under
                the laws
                and flag of the Flag State;

            

    

     

    
      	
            	(c)	
              operationally
                seaworthy and in every way fit for service;
                and

            

    

     

    
      	
            	(d)	
              classed
                with the Classification free of all requirements and recommendations
                of
                the Classification Society;

            

    

     

    
      	8.2.7	
              Ship’s
                employment

            

    

     

    the
      Ship
      is not and will not on or before the Drawdown Date be subject to any charter
      or
      contract or to any agreement to enter into any charter or contract which, if
      entered into after the date of the Deed of Covenant would have required the
      consent of the Bank and on or before the Drawdown Date there will not be any
      agreement or arrangement whereby the Earnings (as defined in the General
      Assignment) may be shared with any other person;

     

    
      	8.2.8	
              Freedom
                from Encumbrances

            

    

     

    neither
      the Ship, nor her Earnings, Insurances or Requisition Compensation (each as
      defined in the General Assignment) nor the Accounts 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 be, on the Drawdown Date, subject to any
      Encumbrance;

     

    
      	8.2.9	
              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:

     

    
      	
            	(a)	
              the
                Borrower and to the best of the Borrower’s knowledge and belief (having
                made due enquiry) its Environmental Affiliates have complied with
                the
                provisions of all Environmental
                Laws;

            

    

     

    
      	
            	(b)	
              the
                Borrower and to the best of the Borrower’s knowledge and belief (having
                made due enquiry) its Environmental Affiliates have obtained all
                Environmental Approvals and are in compliance with all such Environmental
                Approvals; and

            

    

     

    
      	
            	(c)	
              neither
                the Borrower nor to the best of the Borrower’s knowledge and belief
                (having made due enquiry) any of its Environmental Affiliates has
                received
                notice of any Environmental Claim that the Borrower or any such
                Environmental Affiliate is not in compliance with any Environmental
                Law or
                any Environmental Approval;

            

    

     

    
      
        23

      

      

    
    
      
      

    

     

    
      	8.2.10	
              No
                Environmental Claims

            

    

     

    except
      as
      may already have been disclosed by the Borrower in writing to, and acknowledged
      in writing by, the Bank, there is no Environmental Claim pending or, to the
      best
      of the Borrower’s knowledge and belief, threatened against the Borrower or the
      Ship or to the best of the Borrower’s knowledge and belief (having made due
      enquiry) any of its Environmental Affiliates;

     

    
      	8.2.11	
              No
                potential Environmental Claims

            

    

     

    except
      as
      may already have been disclosed by the Borrower in writing to, and acknowledged
      in writing by, the Bank, there has been no emission, spill, release or discharge
      of a Pollutant from the Ship which could give rise to an Environmental
      Claim;

     

    
      	8.2.12	
              No
                material adverse change

            

    

     

    there
      has
      been no material adverse change in the financial position of the Borrower or
      the
      Manager from that described by the Borrower to the Bank in the negotiation
      of
      this Agreement;

     

    
      	8.2.13	
              ISPS
                Code

            

    

     

    As
      of the
      date of this Agreement, the Borrower shall have a valid and current ISSC in
      respect of the Ship and the Ship shall be in compliance with the ISPS Code;
      and

     

    
      	8.2.14	
              Copies
                true and complete

            

    

     

    the
      copy
      of the Management Agreement delivered or to be delivered to the Bank pursuant
      to
      clause 10.1, is or will when delivered be, a true and complete copy of such
      document; such document will when delivered constitute valid and binding
      obligations of the parties thereto enforceable in accordance with its terms
      and
      there will have been no amendments or variations thereof or defaults
      thereunder.

     

    
      	8.3	
              Repetition
                of representations and
                warranties

            

    

     

    On
      and as
      of the Drawdown Date and (except in relation to the representations and
      warranties in clause 8.2) on each Interest Payment Date the Borrower shall
      be
      deemed to repeat the representations and warranties in clauses 8.1 and 8.2
      as if
      made with reference to the facts and circumstances existing on such
      day.

     

    
      	
              9

            	
              Undertakings

            

    

     

    
      	9.1	
              General

            

    

     

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

     

    
      	9.1.1	
              Notice
                of Default

            

    

     

    promptly
      inform the Bank of any occurrence of which it becomes aware which might
      adversely affect the ability of any Security Party to perform its obligations
      under any of the Security Documents and, without limiting the generality of
      the
      foregoing, will inform the Bank of any Default forthwith upon becoming aware
      thereof and will from time to time, if so 

    
       

      
        
          24

        

        

      

      
        
        

      

       

    
    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;

     

    
      	9.1.2	
              Consents
                and licences

            

    

     

    without
      prejudice to clauses 8.1 and 10 obtain or cause to be obtained, maintain in
      full
      force and effect and comply in all material respects with the conditions and
      restrictions (if any) imposed in, or in connection with, every consent,
      authorisation, licence or approval of governmental or public bodies or
      authorities or courts and do, or cause to be done, all other acts and things
      which may from time to time be necessary or desirable under applicable law
      for
      the continued due performance of all the obligations of the Security Parties
      under each of the Security Documents;

     

    
      
        	9.1.3	
                Use
                  of proceeds

              

      

    

     

    use
      the
      Loan for its own benefit and under its full responsibility and exclusively
      for
      the purpose specified in clause 1.1;

     

    
      	9.1.4	
              Pari
                passu

            

    

     

    ensure
      that its obligations under this Agreement and the Master Swap Agreement shall,
      without prejudice to the provisions of clause 10.2, 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;

     

    
      	9.1.5	
              Financial
                statements

            

    

     

    provide
      the Bank, within ninety (90) days of the last day of each calendar year, with
      unaudited management accounts for the Ship showing the income and expenditure
      of
      the Ship for such calendar year, the first such management accounts to be
      provided by end of March 2007 for the calendar year 2006;

     

    
      	9.1.6	
              Delivery
                of reports

            

    

     

    deliver
      to the Bank as many copies as the Bank may reasonably require of every report,
      circular, notice or like document issued by the Borrower or the Manager to
      their
      respective shareholders or creditors generally;

     

    
      	9.1.7	
              Provision
                of further information

            

    

     

    provide
      the Bank with such financial and other information concerning the Borrower
      and
      its affairs as the Bank may from time to time reasonably require;

     

    
      	9.1.8	
              Obligations
                under Security Documents

            

    

     

    duly
      and
      punctually perform each of the obligations expressed to be assumed by it under
      the Borrower’s Security Documents;

     

    
      	9.1.9	
              Compliance
                with Code

            

    

     

    procure
      that the Manager and/or any Operator complies with and ensures that the Ship
      complies with the requirements of the Code, including (but not limited to)
      the
      maintenance and renewal of valid certificates pursuant thereto throughout the
      Security Period (as defined in the Deed of Covenant);

    
       

      
        
          25

        

        

      

      
        
        

      

       

    
    
      	9.1.10	
              Withdrawal
                of DOC and SMC

            

    

     

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

     

    
      	9.1.11	
              Issuance
                of DOC and SMC

            

    

     

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

     

    
      	9.1.12	
              ISPS
                Code compliance

            

    

     

    and
      will
      procure that the Manager or any Operator will, with effect on and from the
      date
      of this Agreement:

     

    
      
        	
              	(a)	
                maintain
                  at all times a valid and current ISSC in respect of the
                  Ship;

              

      

    

     

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

            

    

     

    
      	
            	(c)	
              procure
                that the Ship will comply at all times with the ISPS
                Code;

            

    

     

    
      	9.1.13	
              Employment

            

    

     

    
      
        
          	
                	(a)	
                  advise
                    the Bank of any contract of employment for the Ship which is
                    of a duration
                    of more than twelve (12)
                    months;

                

        

      

    

     

    
      
        	
              	(b)	
                deliver
                  to the Bank a copy of any Charter entered
                  into;

              

      

    

     

    
      
        	
              	(c)	
                (1)
                  execute a Charter Assignment in respect of any Charter and (2)
                  execute any
                  notice of assignment required in connection therewith and promptly
                  procure
                  the acknowledgement of any such notice of assignment by the relevant
                  Charterer; and

              

      

    

     

    
      	
            	(d)	
              pay
                all legal and other costs incurred by the Bank in connection with
                any such
                Charter Assignment;

            

    

     

    
      	9.1.14	
              Banking
                operations

            

    

     

    and
      will
      ensure that income in connection with the Ship will be deposited in the
      Operating Account; and

     

    
      	9.1.15	
              Know
                your customer information

            

    

     

    provide
      the Bank with information concerning the corporate structure and financial
      affairs of the Borrower as the Bank may reasonably require.

     

    
      	9.2	
              Security
                value maintenance

            

    

     

    
      	9.2.1	
              Security
                shortfall

            

    

     

    If
      at any
      time the Security Value shall be less than the Security Requirement, the Bank
      may give notice to the Borrower requiring that such deficiency be remedied
      and
      then the Borrower 

    
       

      
        
          26

        

        

      

      
        
        

      

       

    
    shall
      (unless the Ship has become a Total Loss) within a period of fifteen (15) days
      of the date of receipt by the Borrower of the Bank’s said notice
      either:

     

    
      
        	
              	(a)	
                prepay
                  such sum in Dollars as will result in the Security Requirement
                  after such
                  prepayment (taking into account any other repayment of the Loan
                  made
                  between the date of the notice and the date of such prepayment)
                  being
                  equal to the Security Value;
                  or

              

      

    

     

    
      	
            	(b)	
              constitute
                to the satisfaction of the Bank such further security for the Loan
                as
                shall be acceptable to the Bank having a value for security purposes
                (as
                determined by the Bank in its absolute discretion) at the date upon
                which
                such further security shall be constituted which, when added to the
                Security Value, shall not be less than the Security Requirement as
                at such
                date.

            

    

     

    Clause
      5.5 shall apply to prepayments under clause 9.2.1(a). 

     

    
      	9.2.2	
              Valuation
                of Ship

            

    

     

    The
      Ship
      shall at the discretion of the Bank from time to time, for the purposes of
      this
      clause 9.2, be valued in Dollars by an independent firm of shipbrokers appointed
      by the Bank in its sole discretion (each such valuation to be made without,
      unless required by the Bank, physical inspection and on the basis of a sale
      for
      prompt delivery for cash at arms length on normal commercial terms as between
      a
      willing buyer and a willing seller without taking into account the benefit
      of
      any charterparty or other engagement concerning the Ship). Such valuation shall
      constitute the value of the Ship for the purposes of this clause
      9.2.

     

    The
      value
      of the Ship determined in accordance with the provisions of this clause 9.2
      shall be binding upon the parties hereto until such time as any further such
      valuations shall be obtained.

     

    
      	9.2.3	
              Information

            

    

     

    The
      Borrower undertakes to the Bank to supply to the Bank and to any such
      shipbrokers such information concerning the Ship and its condition as such
      shipbrokers may reasonably require for the purpose of making any such
      valuation.

     

    
      	9.2.4	
              Costs

            

    

     

    All
      costs
      in connection with the Bank obtaining any valuation of the Ship twice per
      calendar year and any valuation either of any additional security for the
      purposes of ascertaining the Security Value at any time or necessitated by
      the
      Borrower electing to constitute additional security pursuant to clause 9.2.1(b)
      twice per calendar year, shall be borne by the Borrower. Also the cost of
      additional valuations of the Ship shall be for the account of the Borrower,
      whilst an Event of Default has occurred and is continuing.

     

    
      	9.2.5	
              Valuation
                of additional security

            

    

     

    For
      the
      purpose of this clause 9.2, the 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.

     

    
      	9.2.6	
              Documents
                and evidence

            

    

     

    In
      connection with any additional security provided in accordance with this clause
      9.2, the Bank shall be entitled to receive such evidence and documents of the
      kind referred to in 

    
       

      
        
          27

        

        

      

      
        
        

      

       

    
    schedule
      2 as may in the Bank’s opinion be appropriate and such favourable legal opinions
      as the Bank shall in its absolute discretion require.

     

    
      	9.2.7	
              Security
                release

            

    

     

    If
      the
      Security Value:

     

    
      	
            	(a)	
              at
                any time during the period commencing on the date of this Agreement
                and
                ending on the Third Anniversary, exceeds one hundred and ten per
                cent
                (110%) of the aggregate of (i) the Loan (or the Equivalent Amount
                in
                Dollars when the Loan or part thereof is denominated in one or more
                Optional Currencies) and (ii) the cost (if any) (as certified by
                the Bank
                whose certificate shall in the absence of manifest error, be binding
                on
                the Borrower) of terminating any Transaction entered into pursuant to the
                Master Agreement; and

            

    

     

    
      	
            	(b)	
              at
                any time after the Third Anniversary, exceeds one hundred and twenty
                per
                cent (120%) of the aggregate of (i) the Loan (or the Equivalent Amount
                in
                Dollars when the Loan or part thereof is denominated in one or more
                Optional Currencies) and (ii) the cost (if any) (as certified by
                the Bank
                whose certificate shall in the absence of manifest error, be binding
                on
                the Borrower) of terminating any Transaction entered into pursuant
                to the
                Master Agreement,

            

    

     

    and
      the
      Borrower shall previously have provided further security to the Bank pursuant
      to
      clause 9.2.1(b) then the Bank shall, as soon as reasonably practicable after
      receiving a written request from the Borrower to do so and subject to being
      indemnified to its satisfaction against the cost of doing so, release any such
      further security specified by the Borrower provided that the Bank is satisfied
      that, immediately following such release, the Security Value will be equal
      to or
      in excess of the Security Requirement.

     

    
      	9.3	
              Negative
                undertakings

            

    

     

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

     

    
      	9.3.1	
              Negative
                pledge

            

    

     

    permit
      any Encumbrance (other than a Permitted Encumbrance) to subsist, arise or be
      created or extended over all or any part of its present or future undertakings,
      assets, rights or revenues (including, but not limited to the Borrower’s rights
      against the Bank under any Transaction and/or the Master Swap Agreement or
      all
      or part of the Borrower’s interest in any amounts payable to the Borrower by the
      Bank under such Transaction and/or the Master Swap Agreement) to secure or
      prefer any present or future Indebtedness or other liability or obligation
      of
      the Borrower or any other person;

     

    
      	9.3.2	
              No
                merger

            

    

     

    merge
      or
      consolidate with any other person or enter into any demerger, amalgamation,
      restructuring or redomiciliation of any kind whatsoever;

     

    
      	9.3.3	
              Disposals

            

    

     

    sell,
      transfer, abandon, lend or otherwise dispose of or cease to exercise direct
      control over any part (being either alone or when aggregated with all other
      disposals falling to be taken into account pursuant to this clause 9.3.3
      material in the opinion of the Bank in relation to the 

    
       

      
        
          28

        

        

      

      
        
        

      

       

    
    undertakings,
      assets, rights and revenues of the Borrower) of its present or future
      undertaking, assets, rights or revenues whether by one or a series of
      transactions related or not;

     

    
      	9.3.4	
              Other
                business

            

    

     

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

     

    
      	9.3.5	
              Acquisitions

            

    

     

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

     

    
      	9.3.6	
              Other
                obligations

            

    

     

    incur
      any
      obligations except for obligations arising under the Management Agreement or
      the
      Security Documents or contracts entered into in the ordinary course of its
      business of owning, operating and chartering the Ship;

     

    
      	9.3.7	
              No
                borrowing

            

    

     

    incur
      any
      Borrowed Money except for Borrowed Money pursuant to the Security
      Documents;

     

    
      	9.3.8	
              Repayment
                of borrowings

            

    

     

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

     

    
      	9.3.9	
              Guarantees

            

    

     

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

     

    
      	9.3.10	
              Loans

            

    

     

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

     

    
      	9.3.11	
              Sureties

            

    

     

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

     

    
      	9.3.12	
              Share
                capital and distribution

            

    

    
       

      
        
          29

        

        

      

      
        
        

      

       

    
    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 provided however that, notwithstanding the provisions of this
      clause 9.3.12, the Borrower shall have the right to declare or pay cash
      dividends as long as no Event of Default has occurred and is continuing nor
      will
      an Event of Default occur because of such declaration or payment;

     

    
      
        	9.3.13	
                Shareholding
                  and structure

              

      

    

     

    permit
      any change in (a) the ultimate ownership of the shares in the Borrower and
      the
      Manager from that described to the Bank during the negotiation of this Agreement
      and (b) the corporate or legal or business structure of the Borrower and the
      Manager from that described to the Bank by the Borrower in the negotiation
      of
      this Agreement;

     

    
      	9.3.14	
              Subsidiaries

            

    

     

    form
      or
      acquire any Subsidiaries;

     

    
      	9.3.15	
              Manager

            

    

     

    appoint
      any manager of the Ship other than the Manager; and

     

    
      	9.3.16	
              Constitutional
                documents

            

    

     

    make
      any
      change to its constitutional documents.

     

    
      	9.4	
              Cash
                Collateral Account Balance

            

    

     

    The
      Borrower undertakes to procure that the Manager will deposit, on the date of
      this Agreement in the Cash Collateral Account, the Cash Collateral Deposit
      and
      maintain the same until the Third Anniversary following which, the Manager,
      only
      once per calendar year and only on an Interest Payment Date, shall be entitled
      to withdraw from the Cash Collateral Account such amount that following the
      said
      withdrawal the balance of the Cash Collateral Account shall be equal to the
      applicable fraction of the Cash Collateral Deposit (and for the purposes of
      this
      clause the expression “applicable fraction” means a fraction having as numerator
      the Equivalent Amount in Dollars of the Loan prior to such withdrawal and as
      denominator the original Dollar Amount of the Loan).

     

    
      	
              10

            	
              Conditions

            

    

     

    
      	10.1	
              Documents
                and evidence

            

    

     

    The
      obligation of the Bank to make the Commitment available shall be subject to
      the
      condition that:

     

    
      	10.1.1	
              the
                Bank, or its duly authorised representative, shall have received,
                not
                later than two (2) Banking Days before the day on which the Drawdown
                Notice is given, the documents and evidence specified in Part 1 of
                schedule 2 in form and substance satisfactory to the Bank;
                and

            

    

     

    
      	10.1.2	
              the
                Bank, or its duly authorised representative, shall have received,
                on or
                prior to the Drawdown Date, the documents and evidence specified
                in Part 2
                of schedule 2 in form and substance satisfactory to the
                Bank.

            

    

    
       

      
        
          30

        

        

      

      
        
        

      

       

    
    
      	10.2	
              General
                conditions precedent

            

    

     

    The
      obligation of the Bank to make the Loan shall be subject to the further
      condition that, at the time of the giving of the Drawdown Notice, and at the
      time of the making of the Loan:

     

    
      	10.2.1	
              the
                representations and warranties contained in clauses 8.1 and 8.2 are
                true
                and correct on and as of each such time as if each was made with
                respect
                to the facts and circumstances existing at such time;
                and

            

    

     

    
      	10.2.2	
              no
                Default shall have occurred and be continuing or would result from
                the
                making of the Loan.

            

    

     

    
      	10.3	
              Waiver
                of conditions precedent

            

    

     

    The
      conditions specified in this clause 10 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.

     

    
      	10.4	
              Further
                conditions precedent

            

    

     

    Not
      later
      than five (5) Banking Days prior to the Drawdown Date and not later than five
      (5) Banking Days prior to each Interest Payment Date, the Bank may request
      and
      the Borrower shall, not later than two (2) Banking Days prior to such date,
      deliver to the Bank on such request further favourable certificates and/or
      opinions as to any or all of the matters which are the subject of clauses 8,
      9,
      10 and 11;

     

    
      	
              11

            	
              Events
                of Default

            

    

     

    
      	11.1	
              Events

            

    

     

    There
      shall be an Event of Default if:

     

    
      	11.1.1	
              Non-payment:
                any Security Party fails to pay any sum payable by it under any of
                the
                Security Documents at the time, in the currency and in the manner
                stipulated in the Security Documents (and so that, for this purpose,
                sums
                payable on demand shall be treated as having been paid at the stipulated
                time if paid within three (3) Banking Days of demand);
                or

            

    

     

    
      	11.1.2	
              Master
                Swap Agreement: (i)
                an Event of Default or Potential Event of Default (in each case as
                defined
                in the Master Swap Agreement) has occurred and is continuing under
                the
                Master Swap Agreement or (ii) an Early Termination Date (as defined
                in the
                Master Swap Agreement) has occurred or been or become capable of
                being
                effectively designated under the Master Swap Agreement or (iii) a
                person
                entitled to do so gives notice of an Early Termination Date under
                section
                6(b)(iv) of the Master Swap Agreement or (iv) the Master Swap Agreement
                is
                terminated, cancelled, suspended, rescinded or revoked or otherwise
                ceases
                to remain in full force and effect for any reason;
                or

            

    

     

    
      	11.1.3	
              Breach
                of Insurance and certain other obligations:
                the Borrower fails to obtain and/or maintain the Insurances (as defined
                in, and in accordance with the requirements of, the Security Documents)
                or
                if any insurer in respect of such Insurances cancels the Insurances
                or
                disclaims liability by reason, in either case, of mis-statement in
                any
                proposal for the Insurances or for any other failure or default on
                the
                part of the Borrower or any other person or the Borrower commits
                any
                breach of or omits to observe any of the obligations or undertakings
                expressed to be assumed by it under clauses 9.2, 9.3 or 9.4;
                or

            

    

     

    
      
        	11.1.4	
                Breach
                  of other obligations: any
                  Security Party commits any breach of or omits to observe any of
                  its
                  obligations or undertakings expressed to be assumed by it under
                  any of the
                  

              

      

      
         

        
          
            31

          

          

        

        
          
          

        

         

      

      Security
        Documents (other than those referred to in clauses 11.1.1, 11.1.2 and 11.1.3
        above) and, in respect of any such breach or omission which in the opinion
        of
        the Bank is capable of remedy, such action as the Bank may require shall
        not
        have been taken within fourteen (14) days of the Bank notifying the relevant
        Security Party of such default and of such required action;
        or

    
     

    
      	11.1.5	
              Misrepresentation:
                any
                representation or warranty made or deemed to be made or repeated
                by or in
                respect of any Security Party in or pursuant to any of the Security
                Documents or in any notice, certificate or statement referred to
                in or
                delivered under any of the Security Documents is or proves to have
                been
                incorrect or misleading in any material respect;
                or

            

    

     

    
      	11.1.6	
              Cross-default:
                any
                Indebtedness of the Borrower is not paid when due or any Indebtedness
                of
                the Borrower becomes (whether by declaration or automatically in
                accordance with the relevant agreement or instrument constituting
                the
                same) due and payable prior to the date when it would otherwise have
                become due (unless as a result of the exercise by the Borrower of
                a
                voluntary right of prepayment) or any creditor of the Borrower becomes
                entitled to declare any such Indebtedness due and payable or any
                facility
                or commitment available to the Borrower relating to Indebtedness
                is
                withdrawn, suspended or cancelled by reason of any default (however
                described) of the person concerned unless the Borrower shall have
                satisfied the Bank that such withdrawal, suspension or cancellation
                will
                not affect or prejudice in any way the Borrower’s ability to pay its debts
                as they fall due and fund its commitments, or any guarantee given
                by any
                Security Party in respect of Indebtedness is not honoured when due
                and
                called upon; or

            

    

     

    
      	11.1.7	
              Legal
                process: any
                judgment or order made against the Borrower is not stayed or complied
                with
                within seven (7) days or a creditor attaches or takes possession
                of, or a
                distress, execution, sequestration or other process is levied or
                enforced
                upon or sued out against, any of the undertakings, assets, rights
                or
                revenues of the Borrower and is not discharged within seven (7) days;
                or

            

    

     

    
      	11.1.8	
              Insolvency:
                the
                Borrower is unable or admits inability to pay its debts as they fall
                due;
                suspends making payments on any of its debts or announces an intention
                to
                do so; becomes insolvent; has assets the value of which is less than
                the
                value of its liabilities (taking into account contingent and prospective
                liabilities); or suffers the declaration of a moratorium in respect
                of any
                of its Indebtedness; or

            

    

     

    
      	11.1.9	
              Reduction
                or loss of capital: a
                meeting is convened by the Borrower for the purpose of passing any
                resolution to purchase, reduce or redeem any of its share capital;
                or

            

    

     

    
      	11.1.10	
              Winding
                up: any
                corporate action, legal proceedings or other procedure or step is
                taken
                for the purpose of winding up or an order is made or resolution passed
                for
                the winding up of the Borrower or a notice is issued convening a
                meeting
                for the purpose of passing any such resolution;
                or

            

    

     

    
      	11.1.11	
              Administration:
                any
                petition is presented, notice is given or other step is taken for
                the
                purpose of the appointment of an administrator of the Borrower or the Bank
                believes that any such petition or other step is imminent or an
                administration order is made in relation to the Borrower;
                or

            

    

     

    
      	11.1.12	
              Appointment
                of receivers and managers: any
                administrative or other receiver is appointed of the Borrower or
                any part
                of its assets and/or undertaking or any other steps are taken to
                enforce
                any Encumbrance over all or any part of the assets of the Borrower;
                or

            

    

     

    
      	11.1.13	
              Compositions:
                any
                corporate action, legal proceedings or other procedures or steps
                are
                taken, or negotiations commenced, by the Borrower or by any of its
                creditors with a view to 

            

    

     

    
      
        32

      

      

    
    
      
      

    

     

    the
      general readjustment or rescheduling of all or part of its Indebtedness or
      to
      proposing any kind of composition, compromise or arrangement involving such
      company and any of its creditors; or

     

    
      	11.1.14	
              Analogous
                proceedings: there
                occurs, in relation to the Borrower, in any country or territory
                in which
                it carries on business or to the jurisdiction of whose courts any
                part of
                its assets is subject, any event which, in the reasonable opinion
                of the
                Bank, appears in that country or territory to correspond with, or
                have an
                effect equivalent or similar to, any of those mentioned in clauses
                11.1.7
                to 11.1.13 (inclusive) or any Security Party otherwise becomes subject,
                in
                any such country or territory, to the operation of any law relating
                to
                insolvency, bankruptcy or liquidation;
                or

            

    

     

    
      	11.1.15	
              Cessation
                of business: the
                Borrower suspends or ceases or threatens to suspend or cease to carry
                on
                its business; or

            

    

     

    
      	11.1.16	
              Seizure:
                all
                or a material part of the undertaking, assets, rights or revenues
                of, or
                shares or other ownership interests in, the Borrower are seized,
                nationalised, expropriated or compulsorily acquired by or under the
                authority of any government; or

            

    

     

    
      	11.1.17	
              Invalidity:
                any
                of the Security Documents shall at any time and for any reason become
                invalid or unenforceable or otherwise cease to remain in full force
                and
                effect, or if the validity or enforceability of any of the Security
                Documents shall at any time and for any reason be contested by any
                Security Party which is a party thereto, or if any such Security
                Party
                shall deny that it has any, or any further, liability thereunder;
                or

            

    

     

    
      	11.1.18	
              Unlawfulness:
                it
                becomes impossible or unlawful at any time for any Security Party,
                to
                fulfil any of the covenants and obligations expressed to be assumed
                by it
                in any of the Security Documents or for the Bank to exercise the
                rights or
                any of them vested in it under any of the Security Documents or otherwise;
                or

            

    

     

    
      	11.1.19	
              Repudiation:
                any
                Security Party repudiates any of the Security Documents or does or
                causes
                or permits to be done any act or thing evidencing an intention to
                repudiate any of the Security Documents;
                or

            

    

     

    
      	11.1.20	
              Encumbrances
                enforceable: any
                Encumbrance (other than Permitted Liens) in respect of any of the
                property
                (or part thereof) which is the subject of any of the Security Documents
                becomes enforceable; or

            

    

     

    
      	11.1.21	
              Material
                adverse change: there
                occurs, in the opinion of the Bank, a material adverse change in
                the
                financial condition of the Borrower by reference to the financial
                position
                of the Borrower as described by the Borrower to the Bank in the
                negotiation of this Agreement; or

            

    

     

    
      	11.1.22	
              Arrest:
                the
                Ship is arrested, confiscated, seized, taken in execution, impounded,
                forfeited, detained in exercise or purported exercise of any possessory
                lien or other claim or otherwise taken from the possession of the
                Borrower
                and the Borrower shall fail to procure the release of the Ship within
                a
                period of fourteen (14) days thereafter;
                or

            

    

     

    
      	11.1.23	
              Registration:
                the registration of the Ship under the laws and flag of the Flag
                State is
                canceled or terminated without the prior written consent of the Bank;
                or

            

    

     

    
      	11.1.24	
              Unrest:
                the Flag State becomes involved in hostilities or civil war or there
                is a
                seizure of power in the Flag State by unconstitutional means if,
                in any
                such case, such event could in the opinion of the Bank reasonably
                be
                expected to have a material adverse effect on the security constituted
                by
                any of the Security Documents; or

            

    

    
       

      
        
          33

        

        

      

      
        
        

      

       

    
    
      	11.1.25	
              Environment:
                the Borrower and/or any of its Environmental Affiliates fails to
                comply
                with any Environmental Law or any Environmental Approval or the Ship
                is
                involved in any incident which gives rise or may give rise to an
                Environmental Claim if, in any such case, such non-compliance or
                incident
                or the consequences thereof could, in the opinion of the Bank, reasonably
                be expected to have a material adverse effect on the business, assets,
                operations, property or financial condition of the Borrower or any
                other
                Security Party or on the security constituted by any of the Security
                Documents; or

            

    

     

    
      	11.1.26	
              P&I:
                the Borrower or any other person fails or omits to comply with any
                requirements of the protection and indemnity association or other
                insurer
                with which the Ship is entered for insurance or insured against protection
                and indemnity risks (including oil pollution risks) to the effect
                that any
                cover (including, without limitation, any cover in respect of liability
                for Environmental Claims arising in jurisdictions where the Ship
                operates
                or trades) is or may be liable to cancellation, qualification or
                exclusion
                at any time; or

            

    

     

    
      	11.1.27	
              Ownership:
                there is any change in the ultimate ownership of the shares in the
                Borrower or the Manager from that described to the Bank in the negotiation
                of this Agreement; or

            

    

     

    
      	11.1.28	
              Material
                events:
                any other event occurs or circumstance arises which, in the opinion
                of the
                Bank, is likely materially and adversely to affect either (i) the
                ability
                of any Security Party to perform all or any of its obligations under
                or
                otherwise to comply with the terms of any of the Security Documents
                (including, for the avoidance of doubt,) the Master Swap Agreement)
                or
                (ii) the security created by any of the Security
                Documents.

            

    

     

    
      	11.2	
              Acceleration

            

    

     

    The
      Bank
      may, without prejudice to any other rights of the Bank, at any time after the
      happening of an Event of Default so long as the same is continuing by notice
      to
      the Borrower declare that:

     

    
      	11.2.1	
              the
                obligation of the Bank to make the Commitment available shall be
                terminated, whereupon the Commitment shall be reduced to zero forthwith;
                and/or

            

    

     

    
      	11.2.2	
              the
                Loan and all interest and commitment commission accrued and all other
                sums
                payable under the Security Documents have become due and payable,
                whereupon the same shall, immediately or in accordance with the terms
                of
                such notice, become due and
                payable.

            

    

     

    
      	11.3	
              Demand
                basis

            

    

     

    If,
      pursuant to clause 11.2.2, the Bank declares the Loan to be due and payable
      on
      demand, the Bank may by written notice to the Borrower (a) call for repayment
      of
      the Loan on such date as may be specified whereupon the Loan shall become due
      and payable on the date so specified together with all interest and commitment
      commission accrued and all other sums payable under this Agreement or (b)
      withdraw such declaration with effect from the date specified in such
      notice.

     

    
      	
              12

            	
              Indemnities

            

    

     

    
      	12.1	
              Miscellaneous
                indemnities

            

    

     

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

     

    
      	12.1.1	
              any
                default in payment by the Borrower of any sum under any of the Security
                Documents when due;

            

    

    
       

      
        
          34

        

        

      

      
        
        

      

       

    
    
      	12.1.2	
              the
                occurrence of any other Event of
                Default;

            

    

     

    
      	12.1.3	
              any
                prepayment of the Loan or part thereof being made under clauses 5.3,
                9.2
                or 13.1, or any other repayment or prepayment 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

            

    

     

    
      	12.1.4	
              the
                Loan or part thereof not being made 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.

     

    
      	12.2	
              Currency
                indemnity

            

    

     

    If
      any
      sum due from the Borrower under any of the Security Documents or any order
      or
      judgment given or made in relation thereto 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 judgment into another currency (the “second
      currency”)
      for
      the purpose of (a) making or filing a claim or proof against the Borrower,
      (b)
      obtaining an order or judgment in any court or other tribunal or (c) enforcing
      any order or judgment given or made in relation to any of the Security
      Documents, the Borrower shall indemnify and hold harmless the Bank from and
      against any loss suffered as a result of any difference between (i) the rate
      of
      exchange used for such purpose to convert the sum in question from the first
      currency into the second currency and (ii) the rate or rates of exchange at
      which the Bank may in the ordinary course of business purchase the first
      currency with the second currency upon receipt of a sum paid to it in
      satisfaction, in whole or in part, of any such order, judgment, claim or proof.
      Any amount due from the Borrower under this clause 12.2 shall be due as a
      separate debt and shall not be affected by judgment being obtained for any
      other
      sums due under or in respect of any of the Security Documents and the term
“rate
      of exchange” includes any premium and costs of exchange payable in connection
      with the purchase of the first currency with the second currency.

     

    
      	12.3	
              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 to, or arising directly or indirectly in any manner
      or
      for any cause or reason whatsoever out of an Environmental Claim made or
      asserted against the Bank if such Environmental Claim would not have been,
      or
      been capable of being, made or asserted against the Bank if it had not entered
      into any of the Security Documents and/or exercised any of its rights, powers
      and discretions thereby conferred and/or performed any of its obligations
      thereunder and/or been involved in any of the transactions contemplated by
      the
      Security Documents.

     

    
      	
              13

            	
              Unlawfulness
                and increased costs

            

    

     

    
      	13.1	
              Unlawfulness

            

    

     

    If
      it is
      or becomes contrary to any law or regulation for the Bank to advance the Loan
      or
      an Advance or to, maintain the Commitment or fund the Loan or an Advance the
      Bank shall promptly give notice to the Borrower whereupon (a) the Commitment
      shall be reduced to zero and (b) the Borrower shall be obliged to prepay the
      Loan either (i) forthwith or (ii) on a future specified date 

    
       

      
        
          35

        

        

      

      
        
        

      

       

    
    not
      being
      earlier than the latest date permitted by the relevant law or regulation
      together with interest and commitment commission accrued to the date of
      prepayment and all other sums payable by the Borrower under this Agreement
      and/or the Master Swap Agreement;

     

    
      	13.2	
              Increased
                costs

            

    

     

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

     

    
      	13.2.1	
              subject
                the Bank to Taxes or change the basis of Taxation of the Bank with
                respect
                to any payment under any of the Security Documents (other than Taxes
                or
                Taxation on the overall net income, profits or gains of the Bank
                imposed
                in the jurisdiction in which its principal or lending office under
                this
                Agreement is located); and/or

            

    

     

    
      	13.2.2	
              increase
                the cost to, or impose an additional cost on, the Bank or its holding
                company in making or keeping the Commitment available or maintaining
                or
                funding all or part of the Loan;
                and/or

            

    

     

    
      	13.2.3	
              reduce
                the amount payable or the effective return to the Bank under any
                of the
                Security Documents; and/or

            

    

     

    
      	13.2.4	
              reduce
                the Bank’s or its holding company’s rate of return on its overall capital
                by reason of a change in the manner in which it is required to allocate
                capital resources to the Bank’s obligations under any of the Security
                Documents; and/or

            

    

     

    
      
        	13.2.5	
                require
                  the Bank or its holding company to make a payment or forego a return
                  on or
                  calculated by reference to any amount received or receivable by
                  the Bank
                  under any of the Security Documents;
                  and/or

              

      

    

     

    
      	13.2.6	
              require
                the Bank or its holding company to incur or sustain a loss (including
                a
                loss of future potential profits) by reason of being obliged to deduct
                all
                or part of the Commitment or the Loan from its capital for regulatory
                purposes,

            

    

     

    then
      and
      in each such case (subject to clause 13.3);

     

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

            

    

     

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

              

      

    

     

    For
      the
      purposes of this clause 13.2 “holding
      company”
means
      the company or entity (if any) within the consolidated supervision of which
      the
      Bank is included.

     

    
      	13.3	
              Exception

            

    

     

    Nothing
      in clause 13.2 shall entitle the Bank to receive any amount in respect of
      compensation for any such liability to Taxes, increased or additional cost,
      reduction, payment, foregone return or 

    
       

      
        
          36

        

        

      

      
        
        

      

       

    
    loss
      to
      the extent that the same is (a) taken into account in calculating the Additional
      Cost or (b) the subject of an additional payment under clause 7.6.

     

    
      	
              14

            	
              Security
                and set-off

            

    

     

    
      	14.1	
              Application
                of moneys

            

    

     

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

     

    
      	14.1.1	
              first
                in or towards payment of all unpaid fees, commissions and expenses
                which
                may be owing to the Bank under any of the Security Documents (including,
                for the avoidance of doubt, the Master Swap
                Agreement);

            

    

     

    
      
        	14.1.2	
                secondly
                  in or towards payment of any arrears of interest owing in respect
                  of the
                  Loan or any part thereof;

              

      

    

     

    
      	14.1.3	
              thirdly
                in or towards repayment of the Loan (whether the same is due and
                payable
                or not);

            

    

     

    
      
        	14.1.4	
                fourthly
                  in or towards payment to the Bank for any loss suffered by reason
                  of any
                  such payment in respect of principal not being effected on an Interest
                  Payment Date relating to the part of the Loan
                  repaid;

              

      

    

     

    
      	14.1.5	
              fifthly,
                in or towards payment to the Bank of any sum owing to the Bank under
                the
                Master Swap Agreement;

            

    

     

    
      	14.1.6	
              sixthly
                in or towards payment to the Bank of any other sums owing to it under
                any
                of the other Security Documents;
                and

            

    

     

    
      	14.1.7	
              seventhly
                the surplus (if any) shall be paid to the Borrower or to whomsoever
                else
                may be entitled to receive such
                surplus.

            

    

     

    
      	14.2	
              Set-off

            

    

     

    
      	14.2.1	
              The
                Borrower authorises the Bank (without prejudice to any of the Bank’s
                rights at law, in equity or otherwise), at any time and without notice
                to
                the Borrower, to apply any credit balance to which the Borrower is
                then
                entitled standing upon any account of the Borrower with any branch
                of the
                Bank in or towards satisfaction of any sum due and payable from the
                Borrower to the Bank under any of the Security Documents. For this
                purpose, the Bank is authorised to purchase with the moneys standing
                to
                the credit of such account such other currencies as may be necessary
                to
                effect such application.

            

    

     

    
      
        	14.2.2	
                Without
                  prejudice to its rights hereunder and/or under the Master Swap
                  Agreement,
                  the Bank may at the same time as, or at any time after, any Default
                  under
                  this Agreement or the Borrower’s default under the Master Swap Agreement,
                  set-off any amount due now or in the future from the Borrower to
                  the Bank
                  under this Agreement against any amount due from the Bank to the
                  Borrower
                  under the Master Swap Agreement and apply the first amount in discharging
                  the second amount. The effect of any set-off under this clause
                  14.2.2
                  shall be effective to extinguish or, as the case may require, reduce
                  the
                  liabilities of the Bank under the Master Swap Agreement. The Bank
                  shall
                  not be obliged to exercise any right given to it by this clause
                  14.2. The
                  Bank shall notify the Borrower forthwith upon the exercise or purported
                  exercise of any right of set-off giving full details in relation
                  thereto.

              

      

    

    
       

      
        
          37

        

        

      

      
        
        

      

       

    
    
      	14.3	
              Further
                assurance

            

    

     

    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 rights of the Bank enforceable in accordance with their
      respective terms and that it will, at its expense, execute, sign, perfect and
      do, and will procure the execution, signing, perfecting and doing by each of
      the
      other Security Parties of, any and every such further assurance, document,
      act
      or thing as in the reasonable opinion of the Bank may be necessary or desirable
      for perfecting the security contemplated or constituted by the Security
      Documents.

     

    
      	14.4	
              Conflicts

            

    

     

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

     

    
      	
              15

            	
              Accounts

            

    

     

    
      	15.1	
              General

            

    

     

    
      	15.1.1	
              The
                Borrower undertakes with the Bank that it will procure that all moneys
                payable to the Borrower in respect of the Earnings (as defined in
                the
                General Assignment) of the Ship shall, unless and until the Bank
                directs
                to the contrary pursuant to clause 2.1.1 of the General Assignment,
                be
                paid to the Operating Account; and

            

    

     

    
      	15.1.2	
              The
                Borrower undertakes with the Bank that it will procure that the Manager
                on
                or before the Drawdown Date opens each of the
                Accounts;

            

    

     

    
      	15.2	
              Charging
                of Accounts

            

    

     

    The
      Accounts and all amounts standing to the credit thereof shall be subject to
      the
      security constituted and the rights conferred by the Accounts
      Pledges.

     

    
      	
              16

            	
              Assignment,
                transfer and lending
                office

            

    

     

    
      	16.1	
              Benefit
                and burden

            

    

     

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

     

    
      	16.2	
              No
                assignment by Borrower

            

    

     

    The
      Borrower may not assign or transfer any of its rights or obligations under
      this
      Agreement.

     

    
      	16.3	
              Assignment
                by Bank

            

    

     

    The
      Bank
      may assign all or any part of its rights under this Agreement or under any
      of
      the other Security Documents to any other bank or financial institution (an
      “Assignee”)
      without
      the consent of the Borrower.

     

    
      	16.4	
              Transfer

            

    

     

    The
      Bank
      may transfer all or any part of its rights, benefits and/or obligations under
      this Agreement and/or the Master Swap Agreement and/or any of the other Security
      Documents to 

    
       

      
        
          38

        

        

      

      
        
        

      

       

    
    any
      one
      or more banks or other financial institutions (a “Transferee”)
      without
      the consent of the Borrower.

     

    
      	16.5	
              Documenting
                assignments and transfers

            

    

     

    If
      the
      Bank assigns all or any part of its rights or transfers all or any part of
      its
      rights, benefits and/or obligations as provided in clause 16.3 or 16.4, the
      Borrower undertakes, immediately on being requested to do so by the Bank and
      at
      the cost of the Bank, to enter into, and procure that the other Security Parties
      shall enter into, such documents as may be necessary or desirable to transfer
      to
      the Assignee or Transferee all or the relevant part of the Bank’s interest in
      the Security Documents and all relevant references in this Agreement to the
      Bank
      shall thereafter be construed as a reference to the Bank and/or its Assignee
      or
      Transferee (as the case may be) to the extent of their respective
      interests.

     

    
      	16.6	
              Lending
                office

            

    

     

    The
      Bank
      shall lend through its office at the address specified above or through any
      other office of the Bank selected from time to time by it through which the
      Bank
      wishes to lend for the purposes of this Agreement. If the office through which
      the Bank is lending is changed pursuant to this clause 16.6, the Bank shall
      notify the Borrower promptly of such change.

     

    
      	16.7	
              Disclosure
                of information

            

    

     

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

     

    
      	
              17

            	
              Notices
                and other matters

            

    

     

    
      	17.1	
              Notices

            

    

     

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

     

    
      	17.1.1	
              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,

            

    

     

    
      	17.1.2	
              be
                deemed to have been received, subject as otherwise provided in the
                relevant Security Document, in the case of a letter, when delivered
                personally or three (3) days after it has been put in 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

            

    

     

    
      	17.1.3	
              be
                sent:

            

    

     

    
      
        	
              	(a)	
                if
                  to the Borrower at:

              

      

    

     

    32
      Karamanli Avenue 

    166
      05
      Voula

    Greece

     

    Fax
      no:
      +30 210 895 6900 

    Attention:
      George Papadopoulos

     

    
      
        39

      

      

    
    
      
      

    

     

    
      	
            	(b)	
              if
                to the Bank at:

            

    

     

    Bayerische
      Hypo- und Vereinsbank Aktiengesellschaft

    7
      Heraklitou Street

    Athens
      106 73

    Greece

     

    Fax
      No:
      +30 210 412 6597 

    Attention:
      The Manager

     

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

     

    
      	17.2	
              No
                implied waivers, remedies
                cumulative

            

    

     

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

     

    
      	17.3	
              English
                language

            

    

     

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

     

    
      	
              18

            	
              Governing
                law and jurisdiction

            

    

     

    
      
        	18.1	
                Law

              

      

    

     

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

     

    
      	18.2	
              Submission
                to jurisdiction

            

    

     

    The
      Borrower agrees, for the benefit of the Bank, that any legal action or
      proceedings arising out of or in connection with this Agreement against the
      Borrower or any of its assets may be brought in the English courts. The Borrower
      irrevocably and unconditionally submits to the jurisdiction of such courts
      and
      irrevocably designates, appoints and empowers Cheeswrights at present of 10
      Philpot Lane, London EC3M 8BR, England to receive for it and on its behalf,
      service of process issued out of the English courts in any such legal action
      or
      proceedings. The submission to such jurisdiction shall not (and shall not be
      construed so as to) limit the right of the Bank to take proceedings against
      the
      Borrower in the courts of any other competent jurisdiction nor shall the taking
      of proceedings in any one or more jurisdictions preclude the taking of
      proceedings in any other jurisdiction, whether concurrently or not. The parties
      further agree that only the Courts of England and not those of any other State
      shall have jurisdiction to determine any claim which the Borrower may have
      against the Bank arising out of, or in connection with, this
      Agreement.

     

    
      	18.3	
              Contracts
                (Rights of Third Parties) Act
                1999

            

    

     

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

     

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

    
       

      
        
          40

        

        

      

      
        
        

      

       

    
    Schedule
      1

     

    Form
      of Drawdown Notice

     

    (referred
      to in clause 2.2)

     

    [Date]

     

    
      	To:	
              Bayerische
                Hypo- und Vereinsbank
                Aktiengesellschaft

            

    

    7
      Heraklitou Street

    Athens
      106 73

    Greece

     

    Thirty
      six million Dollars ($36,000,000) Loan 

    Loan
      Agreement dated [•] 2007

     

    We
      refer
      to the above Loan Agreement and hereby give you notice that we wish to draw
      down
      the Loan, namely Thirty six million Dollars ($36,000,000) on [·]
      [and
      select a first Interest Period in respect thereof of ·
      months]
      [the first Interest Period in respect thereof to expire on {date}].
      The
      funds should be credited to [name
      and number of account]
      with
[details
      of bank in [New York] [principal financial centre for relevant Optional
      Currency] [in
      the
      following Advances].

     

    
      
        	
                Dollar
                  Amount

              	 	
                Currency
                  in which Advance is 

                to
                  be outstanding

              	 	
                Interest
                  Period

              	 	
                Please
                  credit the funds to:

              
	 	 	 	 	 	 	
                [l]

              

      

    

     

    We
      confirm that:

     

    
      	
              (a)

            	
              no
                event or circumstance has occurred and is continuing which constitutes
                a
                Default;

            

    

     

    
      	
              (b)

            	
              the
                representations and warranties contained in clauses 8.1 and 8.2 of
                the
                Loan Agreement 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 drawdown of the Loan 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;

            

    

     

    
      	
              (d)

            	
              there
                has been no material adverse change in our financial position from
                that
                described by us to the Bank in the negotiation of the Loan Agreement;
                and

            

    

     

    
      	
              (e)
                

            	
              we
                will use the proceeds of the Loan for our benefit and under our full
                responsibility and exclusively for the purpose specified in the Loan
                Agreement.

            

    

     

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

     

    
      
        

      

    

    For
      and
      on behalf of 

    PEMER
      SHIPPING LTD

    
       

      
        
          41

        

        

      

      
        
        

      

       

      Schedule
        2

    
     

    Documents
      and evidence required as conditions precedent

     

    (referred
      to in clause 10.1)

     

    Part
      1

     

    
      	
              1

            	
              Ship
                conditions

            

    

     

    evidence
      that the Ship:

     

    
      	1.1	
              Registration
                and Encumbrances

            

    

     

    is
      registered in the name of the Borrower through the Registry under the laws
      and
      flag of the Flag State and that the Ship and its Earnings, Insurances and
      Requisition Compensation (as defined in the General Assignment) are free of
      Encumbrances;

     

    
      	1.2	
              Classification

            

    

     

    maintains
      the Classification free of all requirements and recommendations of the
      Classification Society; and

     

    
      	1.3	
              Insurance

            

    

     

    is
      insured in accordance with the provisions of the Security Documents and all
      requirements of the Security Documents in respect of such insurance have been
      complied with (including without limitation, confirmation from the protection
      and indemnity association or other insurer with which the Ship is, or is to
      be,
      entered for insurance or insured against protection and indemnity risks
      (including oil pollution risks) that any necessary declarations required by
      the
      association or insurer for the removal of any oil pollution exclusion have
      been
      made and that any such exclusion does not apply to the Ship);

     

    
      	
              2

            	
              Constitutional
                documents

            

    

     

    Photostat
      copies, certified by an officer of each Security Party as true, complete and
      up
      to date copies of all documents which contain or establish or relate to the
      constitution of that Security Party;

     

    
      	
              3

            	
              Corporate
                authorisations

            

    

     

    copies
      of
      resolutions of the directors of the Borrower and of the directors and
      shareholders of each other Security Party approving such of the Security
      Documents to which such Security Party is, or is to be, party and authorising
      the signature, delivery and performance of such Security Party’s obligations
      thereunder, certified (in a certificate dated no earlier than five (5) Banking
      Days prior to the date of this Agreement) by an officer of such Security Party
      as:

     

    
      	 	
              (i)

            	
              being
                true and correct;

            

    

     

    
      	 	
              (ii)

            	
              being
                duly passed at meetings of the directors of such Security Party and
                of the
                shareholders of such Security Party each duly convened and
                held;

            

    

     

    
      	 	
              (iii)

            	
              not
                having been amended, modified or revoked;
                and

            

    

     

    
      	 	
              (iv)

            	
              being
                in full force and effect,

            

    

    
       

      
        
          42

        

        

      

      
        
        

      

       

    
    together
      with originals or certified copies of any powers of attorney issued by any
      Security Party pursuant to such resolutions;

     

    
      	
              4

            	
              Specimen
                signatures

            

    

     

    copies
      of
      the signatures of the persons who have been authorised on behalf of each
      Security Party to sign such of the Security Documents to which such Security
      Party is, or is to be, party and to give notices and communications, including
      notices of drawing, under or in connection with the Security Documents,
      certified (in a certificate dated no earlier than five (5) Banking Days prior
      to
      the date of this Agreement) by an officer of such Security Party as being the
      true signatures of such persons;

     

    
      	
              5

            	
              Certificate
                of incumbency

            

    

     

    a
      list of
      directors and officers of each Security Party specifying the names and positions
      of such persons, certified (in a certificate dated no earlier than five (5)
      Banking Days prior to the date of this Agreement) by an officer of such Security
      Party to be true, complete and up to date;

     

    
      	
              6

            	
              Borrower’s
                consents and approvals

            

    

     

    a
      certificate (dated no earlier than five (5) Banking Days prior to the date
      of
      this Agreement) from an officer of the Borrower that no consents,
      authorisations, licences or approvals are necessary for the Borrower to
      authorise or are required by the Borrower in connection with the borrowing
      by
      the Borrower of the Loan pursuant to this Agreement or the execution, delivery
      and performance of the Borrower’s Security Documents;

     

    
      	
              7

            	
              Other
                consents and approvals

            

    

     

    a
      certificate (dated no earlier than five (5) Banking Days prior to the date
      of
      this Agreement) from an officer of each Security Party (other than the Borrower)
      that no consents, authorisations, licences or approvals are necessary for such
      Security Party to guarantee and/or grant security for the borrowing by the
      Borrower of the Commitment pursuant to this Agreement and execute, deliver
      and
      perform the Security Documents insofar as such Security Party is a party
      thereto;

     

    
      	
              8

            	
              Certified
                Management Agreement

            

    

     

    a
      copy,
      certified (in a certificate dated no earlier than five (5) Banking Days prior
      to
      the date of the Drawdown Notice) as a true and complete copy by an officer
      of
      the Manager of the Management Agreement;

     

    
      	
              9

            	
              Valuation

            

    

     

    a
      valuation (dated not more than five (5) days prior to the date of the Drawdown
      Notice) of the Ship demonstrating that the market value of the Ship, determined
      in accordance with clause 9.2.2, is acceptable to the Bank;

     

    
      	
              10

            	
              Insurance
                opinion

            

    

     

    an
      opinion from BankServe Insurance Services Limited insurance consultants to
      the
      Bank, on the insurances effected or to be effected in respect of the Ship upon
      and following the Drawdown Date;

    
      
         

        
          
            43

          

          

        

        
          
          

        

         

      

    
    
      	
              11

            	
              Accounts

            

    

     

    evidence
      that the Operating Account, the Cash Collateral Account and the Multicurrency
      Cash Collateral Account have been opened; and

     

    
      	
              12

            	
              Cash
                Collateral Account

            

    

     

    evidence
      that the Cash Collateral Deposit has been made.

    
       

      
        
          44

        

        

      

      
        
        

      

       

    
    Part
      2

     

    
      	
              1

            	
              Security
                Documents, letters and other
                documents

            

    

     

    the
      Mortgage, the Deed of Covenant, the General Assignment, the Manager’s
      Undertaking, the Master Swap Agreement, the Master Agreement Security Deed,
      the
      Account Pledges and any Charter Assignment all duly executed;

     

    
      	
              2

            	
              Mortgage
                registration

            

    

     

    evidence
      that the Mortgage and the Deed of Covenant have been registered against the
      Ship
      through the Registry under the laws and flag of the Flag State;

     

    
      	
              3

            	
              Notices
                of assignment

            

    

     

    copies
      of
      duly executed notices of assignment required by the terms of the Security
      Documents and in the forms prescribed by the Security Documents;

     

    
      	
              4

            	
              Cyprus
                opinion

            

    

     

    an
      opinion of Messrs. Chrysses Demetriades & Co., special legal advisers to the
      Bank on matters of Cyprus Law;

     

    
      	
              5

            	
              Liberian
                legal opinion

            

    

     

    an
      opinion of Seward & Kissel LLP, special legal advisers to the Bank on
      matters of Liberian Law;

     

    
      	
              6

            	
              Greek
                legal opinion

            

    

     

    an
      opinion of Law Office Gr. J. Timagenis, special legal advisers to the Bank,
      on
      matters of Greek law, the cost of which will be borne by the Bank;

     

    
      	
              7

            	
              Further
                opinions

            

    

     

    any
      such
      further opinion as may be required by the Bank;

     

    
      	
              8

            	
              Borrower’s
                process agent

            

    

     

    a
      letter
      from the Borrower’s agent for receipt of service of proceedings referred to in
      clause 18.2 accepting its appointment under the said clause and under each
      of
      the other Security Documents in which it is or is to be appointed as the
      Borrower’s agent;

     

    
      	
              9

            	
              Manager’s
                process agent

            

    

     

    a
      letter
      from the Manager’s agent for receipt of service of proceedings referred to in
      clause 7.2 of the Manager’s Undertaking accepting its appointment under the said
      clause;

     

    
      	
              10

            	
              Registration
                forms

            

    

     

    such
      statutory forms duly signed by the Borrower and the other Security Parties
      as
      may be required by the Bank to perfect the security contemplated by the Security
      Documents;

     

    
      
        45

      

      

    
    
      
      

    

     

    
      	
              11

            	
              Manager’s
                confirmation

            

    

     

    the
      Manager has confirmed in writing that the representations and warranties set
      out
      in clauses 8.2.9, 8.2.10 and 8.2.11 are true and correct;

     

    
      	
              12

            	
              Application
                for DOC and SMC

            

    

     

    a
      certified copy of the DOC and evidence satisfactory to the Bank that the
      Operator has applied to the relevant Regulatory Agency for an SMC for the Ship
      to be issued pursuant to the Code within any time limit required or recommended
      by such Regulatory Agency;

     

    
      	
              13

            	
              ISPS
                Code

            

    

     

    evidence
      satisfactory to the Bank that the Ship is subject to a ship security plan that
      complies with the ISPS Code and a copy of the ISSC for the Ship;

     

    
      	
              14

            	
              Fee

            

    

     

    evidence
      that the fees due under clause 6.1 have been paid in full; and

     

    
      	
              15

            	
              Due
                Diligence

            

    

     

    evidence
      that all information required in order for the Bank to complete its due
      diligence formalities required in connection with this Agreement has been
      provided and is satisfactory to the Bank in all respects.

    
       

      
        
          46

        

        

      

      
        
        

      

       

    
    Schedule
      3

     

    Form
      of Mortgage

    
       

      
        
          47

        

        

      

      
        
        

      

       

    
    Private
      & Confidential

     

    
      	
              Dated
                March
                2007

            

    

     

    
      	 	
              PEMER
                SHIPPING LTD

               

            	
              (1)

               

            
	 	
              and

               

            	 
	 	
              BAYERISCHE
                HYPO- UND VEREINSBANK AKTIENGESELLSCHAFT

               

            	
              (2)

               

            

    

     

    
      	
               
                

              

              MORTGAGE
                AND DEED OF COVENANT

               

              relating
                to m.v. Pedhoulas
                Merchant

              
                

              

            

    

    
      

      
         

        
          
            
            

          

          

        

        
          
          

        

         

      

    
    REPUBLIC
      OF CYPRUS

     

    The
      Merchant Shipping (Registration of Ships,
      Sales and Mortgages) Law, 1963, (as amended).

     

    FIRST
      STATUTORY MORTGAGE (TO SECURE ACCOUNT CURRENT)

    (BODY
      CORPORATE)

     

    
      	
              I.M.O.
                No. 

              CALL
                SIGN

            	 	
              Name
                of Ship

            	 	
              Year
                of Registry or Date of

              Provisional
                Registry/ Port of

              Registry

            
	 	 	 	 	 
	
              9279800

              C4JL2

            	 	
              Pedhoulas
                Merchant

            	 	
              92/2006,
                Limassol, Cyprus

            
	 	 	 	 	 
	
              Whether
                a Sailing, Steam or 

              Motor
                Ship

            	 	
              Horse
                Power of Engines, if any

            
	 	 	 
	
              Motor
                Ship

            	 	
              9400
                kw

            

    

    

    
      	
              Metres

            	 
	 	 
	
              Length
                (Article 2(8))

            	
              222,55

            
	
              Breadth
                (Regulation 2(3))

            	
              32,26

            
	
              Moulded
                depth amidships to Upper Deck (Regulation 2(2)) 

            	
              20,03

            

    

    

    
      	
              Number
                of Tons

            
	 
	
              Gross: 43151

            	
              Net: 27614

            
	 	 
	
              and
                as described in more detail in the Certificate of the Surveyor and
                the
                Register Book.

            

    

    
       

      
        
          
          

        

        

      

      
        
        

      

       

    
    WHEREAS
      there
      is
      an Account Current between PEMER
      SHIPPING LTD whose
      registered office is at 80 Broad Street, Monrovia, Liberia, (hereinafter
      sometimes called the “Mortgagor”)
      and
      BAYERISCHE HYPO- UND VEREINSBANK AKTIENGESELLSCHAFT, whose
      registered office is at Am Tucherpark 16, D-80538, Munich, Germany, acting
      for
      the purposes of this Deed through its office at 7 Heraklitou Street, 106 73
      Athens, Greece (hereinafter sometimes called the “Mortgagee” which
      expression shall include its successors, assignees and transferees), regulated
      by (i) a Loan Agreement (hereinafter, as the same may from time to time be
      amended, varied or supplemented called the “Loan
      Agreement”)
      dated

    March
      2007 made between the Mortgagor and the Mortgagee, (ii) an ISDA Master Agreement
      (together with the Schedule thereto) dated March 2007 made between the Mortgagor
      and the Mortgagee (the said ISDA Master Agreement and Schedule thereto, as
      the
      same may from time to time be amended, varied or supplemented and all
      Confirmations (as therein defined) from time to time exchanged under the said
      ISDA Master Agreement hereinafter together referred to as the “Master
      Swap Agreement”)
      and
      (iii)
      a Deed of Covenant bearing even date herewith made between the Mortgagor and
      the
      Mortgagee supplemental to this Mortgage (hereinafter, as the same may from
      time
      to time be amended, varied or supplemented called the “Deed
      of Covenant”)
      and
      WHEREAS pursuant to the Loan Agreement the Mortgagor has agreed to execute
      this
      Mortgage in favour of the Mortgagee for the purposes of securing payment by
      the
      Mortgagor to the Mortgagee of all sums for the time being owing by the Mortgagor
      to the Mortgagee under the Loan Agreement, the Master Swap Agreement and the
      Deed of Covenant (as each of the same may from time to time hereafter be
      amended, varied or supplemented) in the manner and the times set forth therein
      and WHEREAS the amount of principal and interest due at any given time and
      the
      manner and time for payment can be ascertained by reference to the Loan
      Agreement, the Master Swap Agreement and the Deed of Covenant (each as so
      amended, varied or supplemented) and/or to the books of account or other
      accounting records of the Mortgagee.

     

    NOW
      we
      the said PEMER
      SHIPPING LTD in
      consideration of the premises for ourselves and our successors, covenant with
      the said BAYERISCHE
      HYPO- UND VEREINSBANK AKTIENGESELLSCHAFT and
      its
      successors, assigns or transferees to pay to him, them or it the sums for the
      time being due to the Mortgagee whether by way of principal or interest or
      otherwise at the times and in the manner aforesaid.

     

    AND
      for
      the purpose of better securing to the said BAYERISCHE
      HYPO- UND VEREINSBANK AKTIENGESELLSCHAFT and
      its
      successors and assigns the payment of such sums as last aforesaid, we the
      Mortgagor do hereby mortgage to the said BAYERISCHE
      HYPO- UND VEREINSBANK AKTIENGESELLSCHAFT all
      one
      hundred one hundredth (100/100th) shares, of which we are the owner in the
      Ship
      above particularly described and in her boats and appurtenances.

     

    Lastly,
      we the Mortgagor for ourselves and our successors covenant with the Mortgagee
      and its successors, assigns or transferees that we have power to mortgage in
      the
      manner aforesaid the above mentioned shares, and that the same are free from
      encumbrances.

    
       

      
        
          
          

        

        

      

      
        
        

      

       

    
    I
      N W I T N E S S WHEREOF this
      Mortgage has been duly executed the
            day of
            Two Thousand
      and Seven.

     

    
      	
              SIGNED,
                SEALED AND DELIVERED

            	
              )

            	 
	
              as
                a DEED

            	
              )

            	 
	
              by

            	
              )

            	 
	
              as
                the duly authorised attorney-in-fact

            	
              )

            	 
	
              of

            	
              )

            	 
	
              PEMER
                SHIPPING LTD

            	
              )

            	
              ___________________________

            
	
              pursuant
                to a Power of Attorney

            	
              )

            	 
	
              dated

            	
              )

            	 
	
              in
                the presence of:-

            	
              )

            	 

    

    __________________________________

     

    MEMORANDUM
      OF RECORDING THE MORTGAGE

    BY
      THE REGISTRAR OF CYPRUS SHIPS

     

    Mortgage
      “                            ”
entered in the Register on the
             day of
           at    hours pursuant
      to Section 31(3) of the Merchant Shipping (Registration of Ships, Sales and
      Mortgages) Law, 1963 (as
      amended).

     

    ________________________
       (Seal)

    Registrar
      of Cyprus Ships

    
       

      
        
          
          

        

        

      

      
        
        

      

       

    
    INSTRUMENT
      OF TRANSFER OF MORTGAGE

     

    WE,
      the
      within-mentioned in consideration of ______________________________ this
      day
      paid to us by _________________ of __________________ hereby transfer to him
      /
      them the  benefit
      of the within-written security.

     

    IN
      WITNESS WHEREOF
      we have
      hereunto executed this Instrument of Transfer this ________ day of
      ___________

     

    
      	
              SIGNED,
                SEALED AND DELIVERED

            	
              )

            
	
              by

            	
              )

            
	
              as
                the duly authorised Attorney of

            	
              )

            
	 	
              )

            
	
              pursuant
                to a Power of Attorney

            	
              )

            
	
              dated

            	
              )

            
	
              in
                the presence of:-

            	
              )

            

    

     

    _____________________________________

    Name:

    Title:

    Seat:

    of
      Consular Officer/Notary Public/Certifying Officer

     

    MEMORANDUM
      OF RECORDING

    OF
      TRANSFER OF MORTGAGE BY REGISTRAR OF CYPRUS SHIPS 

     

    Transfer
      of Mortgage
“               ”
entered in the Register on the __________
      day of______________ 200____at ________ hours pursuant to Section 37 of the
      Merchant Shipping (Registration
      of Ships, Sales and Mortgages) Law, 1963, (as amended).

     

    ________________________   
      (Seal)

    Registrar
      of Cyprus Ships

    
       

      
        
          
          

        

        

      

      
        
        

      

       

    
    MEMORANDUM
      OF DISCHARGE OF MORTGAGE

     

    RECEIVED
      all
      sums
      due / the sum of ______________________________________________  in
      discharge of the within-written security.

     

    IN
      WITNESS WHEREOF we
      have
      hereunto executed this Memorandum this ____ day of
      _____________________

    

      
        	
                THE
                  COMMON SEAL OF

              	
                )

              	 
	 	
                )

              	 
	
                was
                  hereunto affixed

              	
                )

              	 
	
                in
                  the presence of:-

              	
                )

              	 

      

    

     

    _________________________

     

    _________________________

     

    or

     

    
      
        	
                SIGNED,
                  SEALED AND DELIVERED

              	
                )

              	 
	
                by

              	
                )

              	 
	
                and

              	
                )

              	 
	
                as
                  the duly authorised Attorney/

              	
                )

              	
                _________________________

              
	
                Signatories
                  of

              	
                )

              	 
	 	
                )

              	
                _________________________

              
	
                pursuant
                  to a Power of Attorney/

              	
                )

              	 
	
                Instruments
                  of Procuration dated

              	
                )

              	 
	
                in

              	
                )

              	 
	
                the
                  presence of:-

              	
                )

              	 

      

    

    
    

     

    _________________________

    Name:

    Title:

    Seat:

    of
      Consular Officer/Notary Public/Certifying Officer

     

    * Signature(s)
      and description of witnesses / sealing officers, i.e., Director, Secretary
      etc.
      (as the case may be).

    
       

      
        
          
          

        

        

      

      
        
        

      

       

    
    Schedule
      4

     

    Form
      of Deed of Covenant

    
       

      
        
          48

        

        

      

      
        
        

      

       

    
    Private
      & Confidential

     

    
      	
              Dated
                March
                2007

            

    

     

     

    
      	 	
              PEMER
                SHIPPING LTD

               

            	
              (1)

               

            
	 	
              and

               

            	 
	 	
              BAYERISCHE
                HYPO- UND VEREINSBANK AKTIENGESELLSCHAFT

               

            	
              (2)

               

            

    

    
      	
               
                

              

              MORTGAGE
                AND DEED OF COVENANT

               

              relating
                to m.v. Pedhoulas
                Merchant 
                

              

            

    

     

    

     

    
      
        
        

      

      

    
    
      
      

    

     

    REPUBLIC
      OF CYPRUS

     

    The
      Merchant Shipping (Registration of Ships, Sales and Mortgages) Law, 1963, (as
      amended).

     

    FIRST
      STATUTORY MORTGAGE (TO SECURE ACCOUNT CURRENT)

    (BODY
      CORPORATE)

     

    
      	
              I.M.O.
                No.

              CALL
                SIGN

            	 	
              Name
                of Ship

            	 	
              Year
                of Registry or Date of

              Provisional
                Registry/Port of

              Registry

            
	 	 	 	 	 
	
              9279800
                

              C4JL2

            	 	
              Pedhoulas
                Merchant

            	 	
              92/2006,
                Limassol, Cyprus

            
	 	 	 	 	 
	
              Whether
                a Sailing, Steam or 

              Motor
                Ship

            	 	
              Horse
                Power of Engines,

              if
                any

            
	 	 	 
	
              Motor
                Ship

            	 	
              9400
                kw

            

    

     

    
      
        	
                Metres

              	 
	 	 
	
                Length
                  (Article 2(8)) 

              	
                222,55

              
	
                Breadth
                  (Regulation 2(3))

              	
                32,26

              
	
                Moulded
                  depth amidships to Upper Deck (Regulation 2(2))

              	
                20,03

              

      

    

     

    
      	
              Number
                of Tons

            
	 
	
              Gross: 43151

            	
              Net: 27614

            
	 	 
	
              and
                as described in more detail in the Certificate of the Surveyor and
                the
                Register Book.

            

    

    
       

      
        
          
          

        

        

      

      
        
        

      

       

    
    WHEREAS
      there is
      an Account Current between PEMER
      SHIPPING LTD whose
      registered office is at 80 Broad Street, Monrovia, Liberia, (hereinafter
      sometimes called the “Mortgagor”)
      and
BAYERISCHE
      HYPO- UND VEREINSBANK AKTIENGESELLSCHAFT,
      whose
      registered office is at Am Tucherpark 16, D-80538, Munich, Germany, acting
      for
      the purposes of this Deed through its office at 7 Heraklitou Street, 106 73
      Athens, Greece (hereinafter sometimes called the “Mortgagee”
which
      expression shall include its successors, assignees and transferees), regulated
      by (i) a Loan Agreement (hereinafter, as the same may from time to time be
      amended, varied or supplemented called the “Loan
      Agreement”)
      dated

    March
      2007 made between the Mortgagor and the Mortgagee, (ii) an ISDA Master Agreement
      (together with the Schedule thereto) dated March 2007 made between the Mortgagor
      and the Mortgagee (the said ISDA Master Agreement and Schedule thereto, as
      the
      same may from time to time be amended, varied or supplemented and all
      Confirmations (as therein defined) from time to time exchanged under the said
      ISDA Master Agreement hereinafter together referred to as the “Master
      Swap Agreement”)
      and
      (iii) a Deed of Covenant bearing even date herewith made between the Mortgagor
      and the Mortgagee supplemental to this Mortgage (hereinafter, as the same may
      from time to time be amended, varied or supplemented called the “Deed
      of Covenant”)
      and
      WHEREAS pursuant to the Loan Agreement the Mortgagor has agreed to execute
      this
      Mortgage in favour of the Mortgagee for the purposes of securing payment by
      the
      Mortgagor to the Mortgagee of all sums for the time being owing by the Mortgagor
      to the Mortgagee under the Loan Agreement, the Master Swap Agreement and the
      Deed of Covenant (as each of the same may from time to time hereafter be
      amended, varied or supplemented) in the manner and the times set forth therein
      and WHEREAS the amount of principal and interest due at any given time and
      the
      manner and time for payment can be ascertained by reference to the Loan
      Agreement, the Master Swap Agreement and the Deed of Covenant (each as so
      amended, varied or supplemented) and/or to the books of account or other
      accounting records of the Mortgagee.

     

    NOW
      we
      the said PEMER
      SHIPPING LTD
      in
      consideration of the premises for ourselves and our successors, covenant with
      the said BAYERISCHE
      HYPO- UND VEREINSBANK AKTIENGESELLSCHAFT
      and its
      successors, assigns or transferees to pay to him, them or it the sums for the
      time being due to the Mortgagee whether by way of principal or interest or
      otherwise at the times and in the manner aforesaid.

     

    AND
      for
      the purpose of better securing to the said BAYERISCHE
      HYPO- UND VEREINSBANK AKTIENGESELLSCHAFT
      and its
      successors and assigns the payment of such sums as last aforesaid, we the
      Mortgagor do hereby mortgage to the said BAYERISCHE
      HYPO- UND VEREINSBANK AKTIENGESELLSCHAFT
      all one
      hundred one hundredth (100/100th) shares, of which we are the owner in the
      Ship
      above particularly described and in her boats and appurtenances.

     

    Lastly,
      we the Mortgagor for ourselves and our successors covenant with the Mortgagee
      and its successors, assigns or transferees that we have power to mortgage in
      the
      manner aforesaid the above mentioned shares, and that the same are free from
      encumbrances.

    
       

      
        
          
          

        

        

      

      
        
        

      

       

    
    I
      N W I T N E S S WHEREOF this
      Mortgage has been duly executed the
            day of
            Two Thousand
      and Seven.

     

    
      	
              SIGNED,
                SEALED AND DELIVERED

            	
              )

            	 
	
              as
                a DEED

            	
              )

            	 
	
              by

            	
              )

            	 
	
              as
                the duly authorised attorney-in-fact

            	
              )

            	 
	
              of

            	
              )

            	 
	
              PEMER
                SHIPPING LTD

            	
              )

            	
              ____________________________

            
	
              pursuant
                to a Power of Attorney

            	
              )

            	 
	
              dated

            	
              )

            	 
	
              in
                the presence of:-

            	
              )

            	 

    

    _________________________________

     

    MEMORANDUM
      OF RECORDING THE MORTGAGE

    BY
      THE REGISTRAR OF CYPRUS SHIPS

     

    Mortgage
      “                            ”
entered in the Register on the
             day of
           at hours
      pursuant
      to Section 31(3) of the Merchant Shipping (Registration of Ships, Sales and
      Mortgages) Law, 1963 (as
      amended).

     

    _______________________
      (Seal)

    Registrar
      of Cyprus Ships

    
       

      
        
          
          

        

        

      

      
        
        

      

       

    
    INSTRUMENT
      OF TRANSFER OF MORTGAGE

     

    WE,
      the
      within-mentioned in consideration of __________________ this
      day
      paid to us by______________ of ____________________ hereby transfer to him
      /
      them the benefit
      of the within-written security.

     

    IN
      WITNESS WHEREOF
      we have
      hereunto executed this Instrument of Transfer this ___________________ day
      of_______________

     

    
      	
              SIGNED,
                SEALED AND DELIVERED

            	
              )

            	 
	
              by

            	
              )

            	 
	
              as
                the duly authorised Attorney of

            	
              )

            	 
	 	
              )

            	 
	
              pursuant
                to a Power of Attorney

            	
              )

            	 
	
              dated

            	
              )

            	 
	
              in
                the presence of:-

            	
              )

            	 

    

     

    _______________________________________

    Name:

    Title:

    Seat:

    of
      Consular Officer/Notary Public/Certifying Officer

     

    MEMORANDUM
      OF RECORDING

    OF
      TRANSFER OF MORTGAGE BY REGISTRAR OF CYPRUS SHIPS 

     

    Transfer
      of Mortgage
“               ”
entered in the Register on the ________
      day of __________ 200___at ________ hours pursuant to Section 37 of the
      Merchant Shipping(Registration
      of Ships, Sales and Mortgages) Law, 1963, (as amended).

     

    ________________________
      (Seal)

    Registrar
      of Cyprus Ships

    
       

      
        
          
          

        

        

      

      
        
        

      

       

      MEMORANDUM
        OF DISCHARGE OF MORTGAGE

    
     

    RECEIVED
      all
      sums
      due / the sum of __________________________________  in discharge of
      the within-written security.

     

    IN
      WITNESS WHEREOF we
      have
      hereunto executed this Memorandum this ______ day of
      ____________________

     

    
      	
              THE
                COMMON SEAL OF

            	
              )

            	 
	 	
              )

            	 
	
              was
                hereunto affixed

            	
              )

            	 
	
              in
                the presence of:-

            	
              )

            	 

    

    

    _______________________

     

    _______________________

     

    or

     

    
      	
              SIGNED,
                SEALED AND DELIVERED

            	
              )

            	 
	
              by

            	
              )

            	 
	
              and

            	
              )

            	 
	
              as
                the duly authorised Attorney/

            	
              )

            	
              ________________________

            
	
              Signatories
                of

            	
              )

            	 
	 	
              )

            	
              
                ________________________

              

            
	
              pursuant
                to a Power of Attorney/

            	
              )

            	 
	
              Instruments
                of Procuration dated

            	
              )

            	 
	
              in

            	
              )

            	 
	
              the
                presence of:-

            	
              )

            	 

    

     

    _______________________

    Name:

    Title:

    Seat:

    of
      Consular Officer/Notary Public/Certifying Officer

     

    * Signature(s)
      and description of witnesses / sealing officers, i.e., Director, Secretary
      etc.
      (as the case may be).

    
       

      
        
          
          

        

        

      

      
        
        

      

       

      Contents

    
     

    
      	
              Clause

            	
               

            	
              Page

            
	 	 	 
	
              1

            	
              Definitions

            	
              1

            
	 	 	 
	
              2

            	
              Representations
                and warranties

            	
              5

            
	 	 	 
	
              3

            	
              Mortgage
                of the Ship

            	
              6

            
	 	 	 
	
              4

            	
              Covenant
                to pay

            	
              6

            
	 	 	 
	
              5

            	
              Continuing
                security and other matters

            	
              6

            
	 	 	 
	
              6

            	
              Covenants

            	
              7

            
	 	 	 
	
              7

            	
              Powers
                of Mortgagee to protect security and remedy defaults

            	
              15

            
	 	 	 
	
              8

            	
              Powers
                of Mortgagee on Event of Default

            	
              16

            
	 	 	 
	
              9

            	
              Application
                of moneys

            	
              18

            
	 	 	 
	
              10

            	
              Remedies
                cumulative and other provisions

            	
              18

            
	 	 	 
	
              11

            	
              Costs
                and indemnity

            	
              19

            
	 	 	 
	
              12

            	
              Attorney

            	
              19

            
	 	 	 
	
              13

            	
              Further
                assurance

            	
              20

            
	 	 	 
	
              14

            	
              Notices

            	
              20

            
	 	 	 
	
              15

            	
              Counterparts

            	
              20

            
	 	 	 
	
              16

            	
              Severability
                of provisions

            	
              20

            
	 	 	 
	
              17

            	
              Law,
                jurisdiction and language

            	
              20

            

    

    
       

      
        
          
          

        

        

      

      
        
        

      

       

    
    THIS
      DEED OF COVENANT
      is
      dated          March 2007 and
      made BETWEEN:

     

    
      	
              (1)

            	
              PEMER
                SHIPPING LTD whose
                registered office is at 80 Broad Street, Monrovia, Republic of Liberia
                (the “Owner”);
                and

            

    

     

    
      	
              (2)

            	
              BAYERISCHE
                HYPO- UND VEREINSBANK AKTIENGESELLSCHAFT whose
                registered office is at Am Tucherpark 16, D-80538, Munich, Germany,
                acting
                for the purposes of this Deed through its office at 7 Heraklitou
                Street,
                106 73 Athens, Greece (the “Mortgagee”).

            

    

     

    WHEREAS:

     

    
      	
              (A)

            	
              the
                Owner is the sole, absolute and unencumbered, legal and beneficial
                owner
                of one hundred one hundredth (100/100th) shares in the Ship described
                in
                clause 1.2;

            

    

     

    
      	(B)	
              by
                a Loan Agreement
                dated           
                March
                2007 and made between (1) the Owner (therein referred to as the
                “Borrower”)
                and (2) the Mortgagee (therein referred to as the “Bank”),
                the Mortgagee agreed (inter alia) to advance by way of a multicurrency
                loan to the Owner, upon the terms and conditions therein contained,
                a sum
                of up to Thirty six million Dollars ($36,000,000) or the Equivalent
                Amount
                in an Optional Currency or Optional
                Currencies;

            

    

     

    
      	
              (C)

            	
              by
                a Master Swap Agreement
                dated          March
                2007 and made between (1) the Owner and (2) the Mortgagee, the Mortgagee
                agreed the terms and conditions upon which it would enter into an
                interest
                rate swap transaction or transactions with the Owner in respect of
                the
                Loan (whether in whole or in part as the case may be from time to
                time);

            

    

     

    
      	
              (D)

            	
              the
                Owner has executed in favour of the Mortgagee a statutory mortgage
                of even
                date herewith in account current form constituting a first priority
                Cyprus
                mortgage of one hundred one hundredth (100/100th) shares in the Ship;
                and

            

    

     

    
      	
              (E)
                

            	
              this
                Deed is supplemental to the Loan Agreement, the Master Swap Agreement
                and
                the Mortgage and to the security thereby created and is the Deed
                of
                Covenant referred to in the Loan Agreement but shall nonetheless
                continue
                in full force and effect notwithstanding any discharge of the
                Mortgage.

            

    

     

    NOW
      THIS DEED WITNESSES AND IT IS HEREBY AGREED
      as
      follows:

     

    
      	
              1

            	
              Definitions

            

    

     

    
      	1.1	
              Defined
                expressions

            

    

     

    Words
      and
      expressions defined in the Loan Agreement shall, unless the context otherwise
      requires or unless otherwise defined herein, have the same meanings when used
      in
      this Deed.

     

    
      	1.2	
              Definitions

            

    

     

    In
      this
      Deed, unless the context otherwise requires:

     

    “Approved
      Brokers” means
      such firm 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
      Deed;

     

    “Casualty
      Amount” means
      Five hundred thousand Dollars ($500,000) (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

    
       

      
        
          1

        

        

      

      
        
        

      

       

    
    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;

     

    “Cyprus”
means
      the Republic of Cyprus;

     

    “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 the 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
      failure by the Owner or any other party to the Loan Agreement and the other
      Security Documents (other than the Mortgagee) to perform, observe, comply with
      or discharge any of the covenants, terms, conditions or obligations on their
      part to be performed, observed, complied with or discharged pursuant to the
      Loan
      Agreement and the other Security Documents or any of them in the manner, within
      the time (including the applicable grace period, if any) and otherwise in
      accordance with the terms and conditions of the Loan Agreement and the other
      Security Documents and includes, without limitation to the generality of the
      foregoing, any of the events set out in clause 11 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 or any Receiver) 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 or any Receiver in connection with the exercise of
                the
                powers referred to in or granted by this Deed or otherwise payable
                by the
                Owner in accordance with clause 11;
                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 or any Receiver until the date of receipt or recovery
                thereof (whether before or after judgment) at a rate per annum calculated
                in accordance with clause 3.4 of the Loan Agreement (as conclusively
                certified by the Mortgagee or such Receiver, as the case may
                be);

            

    

     

    “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
      principal amount advanced by the Mortgagee to the Owner pursuant to the Loan
      Agreement or, as the context may require, the amount thereof at any time
      outstanding;

     

    “Loan
      Agreement”
means
      the agreement
      dated           March
      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 

    
       

      
        
          2

        

        

      

      
        
        

      

       

    
    documents,
      such provisions to be in the forms set out in schedule 1 to the General
      Assignment, or in such other forms as may from time to time be agreed in writing
      by the Mortgagee;

     

    “Master
      Swap Agreement”
means
      the agreement made between the Mortgagee and the Owner
      dated          March 2007
      mentioned in recital (C) hereto, comprising an ISDA Master Agreement and the
      Schedule thereto in the form or substantially in the form set out in schedule
      7
      to the Loan Agreement, 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,
      of
      the Owner to the Mortgagee under the Master Swap Agreement at such
      time;

     

    “Mortgage”
means
      the statutory mortgage mentioned in recital (D); 

     

    “Mortgaged
      Property”
      means:

     

    
      	 	
              (a)

            	
              the
                Ship;

            

    

     

    
      	 	
              (b)

            	
              the
                Insurances;

            

    

     

    
      	 	
              (c)

            	
              the
                Earnings; and

            

    

     

    
      	 	
              (d)

            	
              any
                Requisition Compensation;

            

    

     

    “Mortgagee” includes
      the successors in title and assignees 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 Loan, and interest accrued and accruing thereon, the Expenses,
      the Master Swap Agreement Liabilities and all other sums of money from time
      to
      time owing by the Owner to the Mortgagee, whether actually or contingently,
      under the Security Documents or any of them;

     

    “Owner” includes
      the successors in title of the Owner;

     

    “Port
      of Registry” means
      the
      Port of Limassol or such other port of registry approved in writing by the
      Mortgagee which the Ship is, or is to be registered on, at any relevant time
      hereafter;

     

    “Receiver” means
      any
      receiver and/or manager appointed pursuant to clause 8.2;

     

    “Requisition
      Compensation” means
      all
      sums of money 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
      Loan Agreement, this Deed, the Mortgage, the General Assignment, the Manager’s
      Undertaking, the Cash Collateral Account Pledge, the Multicurrency Cash
      Collateral Account Pledge, the Master Swap Agreement and the Master Agreement
      Security Deed and any other such document as is defined in the Loan Agreement
      as
      a Security Document or as may have been or may hereafter be executed to
      guarantee and/or secure all or any part of the Loan, interest thereon and other
      moneys from time to time owing by the Owner pursuant to the Loan Agreement
      and/or the Master Swap Agreement (whether or not 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 Pedhoulas
      Merchant registered
      at the Port of Limassol under IMO Number 9279800 and includes any share or
      interest therein and her engines, machinery, boats, tackle, outfit, equipment,
      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;

     

    “Total
      Loss”
      means:

     

    
      	 	
              (a)

            	
              the
                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;
                and

            

    

     

    “United
      Kingdom”
means
      Great Britain, Northern Ireland, the Channel Islands and the Isle of
      Man.

     

    
      	1.3	
              Insurance
                terms

            

    

     

    In
      clause
      6.1.1:

     

    
      	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 the Ship 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 United Kingdom protection and indemnity
                association or a protection and indemnity association which is managed
                in
                London (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	
              Construction
                of Mortgage terms

            

    

     

    In
      the
      Mortgage:

     

    
      	1.4.1	
              references
                to “interest” shall be construed as references to interest covenanted to
                be paid in accordance with clause 4.1.2 and any interest specified
                in
                paragraph (b) of the definition of “Expenses” in clause
                1.2;

            

    

    
       

      
        
          4

        

        

      

      
        
        

      

       

    
    
      	1.4.2	
              references
                to “principal” shall be construed as references to all moneys (other than
                interest) for the time being comprised in the Outstanding
                Indebtedness;

            

    

     

    
      	1.4.3	
              the
                expression “all sums for the time being owing by the Mortgagor to the
                Mortgagee” means the whole of the Outstanding Indebtedness;
                and

            

    

     

    
      	1.4.4	
              the
                expression “Account Current” means an account or accounts which shall be
                kept by the Owner with the Mortgagee and from which the Mortgagee
                may
                (without giving notice or making any demand) debit any part of the
                Outstanding Indebtedness.

            

    

     

    
      	1.5	
              Headings

            

    

     

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

     

    
      	1.6	
              Construction
                of certain terms

            

    

     

    In
      this
      Deed, unless the context otherwise requires:

     

    
      	1.6.1	
              references
                to clauses and schedules are to be construed as references to clauses
                of,
                and schedules to, this Deed and references to this Deed include its
                schedules;

            

    

     

    
      	1.6.2	
              references
                to (or to any specified provision of) this Deed or any other document
                shall be construed as references to this Deed, 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;

            

    

     

    
      	1.6.3	
              words
                importing the plural shall include the singular and vice
                versa;

            

    

     

    
      	1.6.4	
              references
                to a person shall be construed as references to an individual, firm,
                company, corporation, unincorporated body of persons or any Government
                Entity;

            

    

     

    
      	1.6.5	
              references
                to a “guarantee” shall
                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

            

    

     

    
      	1.6.6	
              references
                to statutory provisions shall be construed as references to those
                provisions as replaced or amended or re-enacted from time to
                time.

            

    

     

    
      	1.7	
              Conflict
                with Loan Agreement

            

    

     

    This
      Deed
      shall be read together with the Loan Agreement but in case of any conflict
      between the two instruments, the provisions of the Loan Agreement shall
      prevail.

     

    
      	2	
              Representations
                and warranties

            

    

     

    
      	2.1	
              The
                Owner hereby represents and warrants to the Mortgagee
                that:

            

    

     

    
      	2.1.1	
              it
                is the sole, absolute, legal and beneficial owner of the
                Ship;

            

    

     

    
      	2.1.2	
              the
                Ship is not subject to any charter which, if entered into after the
                date
                of this Deed, would have required the consent of the Mortgagee under
                clause 6.1.15, and there is no existing or intended agreement or
                arrangement whereby the Earnings may be shared with any person other
                than
                the Mortgagee as provided in the General
                Assignment;

            

    

    
       

      
        
          5

        

        

      

      
        
        

      

       

    
    
      	2.1.3	
              neither
                the Mortgaged Property nor any part thereof is subject to any Encumbrance
                save as constituted by the Mortgage and this Deed and the General
                Assignment or otherwise permitted by the terms of this Deed;
                and

            

    

     

    
      	2.1.4	
              it
                has power and is entitled to register the Ship under the laws and
                flag of
                Cyprus.

            

    

     

    
      	3	
              Mortgage
                of the Ship

            

    

     

    By
      way of
      security for payment of the Outstanding Indebtedness the Owner as beneficial
      owner hereby mortgages and charges to and in favour of the Mortgagee all its
      rights, title and interest present and future in and to the Ship.

     

    
      	4	
              Covenant
                to pay

            

    

     

    
      	
              4.1

            	
              In
                consideration of the advance by the Mortgagee to the Owner on or
                before
                the date hereof of the total principal sum of Thirty six million
                Dollars
                ($36,000,000) or the Equivalent Amount in an Optional Currency or
                Optional
                Currencies (receipt of which sum the Owner hereby acknowledges) in
                accordance with the provisions of the Loan Agreement, the Owner hereby
                covenants with the Mortgagee:

            

    

     

    
      	4.1.1	
              to
                repay the Loan by the instalments and on the dates referred to and
                otherwise in the manner and upon the terms set out in the Loan
                Agreement;

            

    

     

    
      	4.1.2	
              to
                pay interest on the Loan, and on any overdue interest or other moneys
                payable under the Loan Agreement, at the rate or rates from time
                to time
                applicable thereto in the manner and upon the terms set out in the
                Loan
                Agreement;

            

    

     

    
      	4.1.3	
              to
                pay all other moneys payable by the Owner under the Security Documents
                or
                any of them at the times and in the manner therein specified;
                and

            

    

     

    
      	4.1.4	
              to
                pay and discharge to the Mortgagee the Master Swap Agreement Liabilities
                on their due date.

            

    

     

    
      	5	
              Continuing
                security and other matters

            

    

     

    
      	5.1	
              Continuing
                Security

            

    

     

    The
      security created by the Mortgage and this Deed shall:

     

    
      	5.1.1	
              be
                held by the Mortgagee as a continuing security for the payment of
                the
                Outstanding Indebtedness and the performance and observance of and
                compliance by the Owner with all of the covenants, terms and conditions
                contained in the Security Documents to which the Owner is or is to
                be a
                party, 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);

            

    

     

    
      	5.1.2	
              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

            

    

     

    
      	5.1.3	
              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 

            

    

    
       

      
        
          6

        

        

      

      
        
        

      

       

    
    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.

     

    
      	5.2	
              Rights
                additional

            

    

     

    All
      the
      rights, remedies and powers 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 Loan Agreement, this Deed, the other Security
      Documents or any Collateral Instrument or at law and all the powers so vested
      in
      the Mortgagee may be exercised from time to time and as often as the Mortgagee
      may deem expedient.

     

    
      	5.3	
              No
                enquiry

            

    

     

    Neither
      the Mortgagee nor any Receiver shall be obliged to make any enquiry as to the
      nature or sufficiency of any payment received by it under the Mortgage and/or
      this Deed or to make any claim or take any action to collect any moneys hereby
      assigned or to enforce any rights or benefits hereby assigned to the Mortgagee
      or to which the Mortgagee may at any time be entitled under the Mortgage and/or
      this Deed.

     

    
      	5.4	
              Obligations
                of Owner and Mortgagee

            

    

     

    The
      Owner
      shall remain liable to perform all the obligations assumed by it in relation
      to
      the Mortgaged Property and the Mortgagee shall be under no obligation of any
      kind whatsoever in respect thereof or be under any liability whatsoever in
      the
      event of any failure by the Owner to perform its obligations in respect
      thereof.

     

    
      	5.5	
              Discharge
                of Mortgage

            

    

     

    Notwithstanding
      that this Deed is expressed to be supplemental to the Mortgage it shall continue
      in full force and effect after any discharge of the Mortgage.

     

    
      	6	
              Covenants

            

    

     

    
      	
              6.1

            	
              The
                Owner hereby covenants with the Mortgagee and undertakes throughout
                the
                Security Period:

            

    

     

    
      	6.1.1	
              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):

     

    
      	
            	(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 the market value of the Ship for
                the
                time being and One hundred and twenty per cent (120%) of the aggregate
                of
                (1) the Loan and (2) the Master Swap Agreement Liabilities) and upon
                such
                terms as shall from time to time be approved in writing by the Mortgagee;
                and

            

    

    
       

      
        
          7

        

        

      

      
        
        

      

       

    
    
      	
            	(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 and a freight, demurrage
                and
                defence cover) 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 which the Mortgagee may from time to time
                effect in respect of the Ship upon such terms and in such amounts
                (not
                exceeding at any relevant time One hundred and ten per cent (110%)
                of the
                aggregate of (1) the Loan minus any sums standing to the credit of
                the
                Cash Collateral Account) and (2) the Master Swap Agreement Liabilities,
                in
                each case at such time) 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 or 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
                6.1.1.

            

    

     

    
      	
            	(b)	
              Approved
                brokers, insurers and associations

            

    

     

    to
      effect
      the insurances aforesaid in such currency as the Mortgagee may approve and
      through the Approved Brokers and with such insurance companies and/or
      underwriters as shall from time to time be approved 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 by the
      Mortgagee;

     

    
      	
            	(c)	
              Fleet
                liens, set-off and cancellation

            

    

     

    if
      any of
      the insurances referred to in clause 6.1.1(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;

    
       

      
        
          8

        

        

      

      
        
        

      

       

    
    
      	
            	(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 6.1.1, 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 6.1.1(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 shall from time to time be required
      by
      the Mortgagee;

     

    
      	
            	(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;

    
       

      
        
          9

        

        

      

      
        
        

      

       

    
    
      	
            	(j)	
              Information
                regarding insurances

            

    

     

    to
      advise
      the Mortgagee of any changes in the terms and conditions of the insurance cover
      of the Ship in relation to the war risks insurances, the protection and
      indemnity insurances and the hull and machinery insurances and of any changes
      in
      the Approved Brokers and to obtain consent from the Mortgagee to such changes,
      and to further advise the Mortgagee of any claims in relation to the Ship and
      to
      provide the Mortgagee, as and when requested by the Mortgagee, information
      in
      relation to the progress of such claims and the settlement of
      these;

     

    
      	
            	(k)	
              Independent
                report

            

    

     

    if
      so
      requested by the Mortgagee, 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;

     

    
      	
            	(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; and

     

    
      	
            	(o)	
              Assignment
                of Insurances

            

    

     

    forthwith
      upon being requested so to do by the Mortgagee, to assign to the Mortgagee
      (in
      such form as it may require) the Insurances and all benefits
      thereof;

     

    
      	6.1.2	
              Ship’s
                name and registration

            

    

     

    not
      to
      change the name of the Ship and to procure that the Ship is permanently
      registered within ninety (90) days of the date of this Deed by filing with
      or
      producing to the Cyprus Ship Registry (and/or any other appropriate authorities)
      all such documents or things as they may require for such purpose and thereafter
      to keep the Ship registered as a Cyprus Ship at the Port of Limassol and not
      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
      otherwise than as a Cyprus ship at the Port of Limassol and not to register
      the
      Ship or permit its registration under any other flag or at any other port
      without the prior written consent of the Mortgagee;

    
       

      
        
          10

        

        

      

      
        
        

      

       

    
    
      	6.1.3	
              Repair

            

    

     

    to
      keep
      the Ship in a good and efficient state of repair and 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;

     

    
      	6.1.4	
              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;

            

    

     

    
      	6.1.5	
              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 the Cyprus
      Merchant Shipping Laws and all regulations and requirements (statutory or
      otherwise) from time to time applicable to vessels registered at the Port of
      Limassol or otherwise applicable to the Ship;

     

    
      	6.1.6	
              Surveys

            

    

     

    to
      submit
      the Ship to continuous surveys and such periodical or other surveys as may
      be
      required for classification purposes and to supply to the Mortgagee copies
      of
      all survey reports issued in respect thereof;

     

    
      	6.1.7	
              Inspection

            

    

     

    to
      ensure
      that the Mortgagee, by surveyors or other persons appointed by it for such
      purpose, may board the Ship at all reasonable times for the purpose of
      inspecting her 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);

     

    
      	6.1.8	
              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 

    
       

      
        
          11

        

        

      

      
        
        

      

       

    
    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;

     

    
      	6.1.9	
              Employment

            

    

     

    not
      to
      employ the Ship or permit her employment in any manner, trade or business which
      is forbidden by international law, or which is 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 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;

     

    
      	6.1.10	
              Trading

            

    

     

    
      	
            	(a)	
              advise
                the Mortgagee of any contract of employment for the Ship which is
                of a
                duration of more than twelve (12)
                months;

            

    

     

    
      	
            	(b)	
              deliver
                to the Mortgagee a copy of any Charter entered
                into;

            

    

     

    
      	
            	(c)	
              (1)
                execute a Charter Assignment in respect of any Charter and (2) execute
                any
                notice of assignment required in connection therewith and promptly
                procure
                the acknowledgement of any such notice of assignment by the relevant
                Charterer; and

            

    

     

    
      	
            	(d)	
              pay
                all legal and other costs incurred by the Mortgagee in connection
                with any
                such Charter Assignment;

            

    

     

    
      	6.1.11	
              Notification
                of certain events

            

    

     

    to
      notify
      the Mortgagee forthwith by fax 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; or

            

    

    
       

      
        
          12

        

        

      

      
        
        

      

       

    
    
      	
            	(h)	
              the
                occurrence of any Environmental Claim against the Owner or the Ship
                or any
                incident, event or circumstances which may give rise to any such
                Environmental Claim;

            

    

     

    
      	6.1.12	
              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 applicable 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;

     

    
      	6.1.13	
              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
      any
      other part of the Mortgaged Property otherwise than to or in favour of the
      Mortgagee;

     

    
      	6.1.14	
              Sale
                or other disposal

            

    

     

    not
      without the prior written consent of the Mortgagee (and then only subject to
      such conditions as the Mortgagee may impose) to sell, agree to sell, transfer,
      abandon or otherwise dispose of the Ship or any share or interest
      therein;

     

    
      	6.1.15	
              Chartering

            

    

     

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

            

    

     

    
      	
            	(c)	
              below
                the market rate prevailing at the time when the Ship is fixed or
                other
                than on arms’ length terms;

            

    

     

    
      	6.1.16	
              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;

     

    
      	6.1.17	
              Payment
                of Earnings

            

    

     

    to
      procure that the Earnings are paid to the Mortgagee at all times if and when
      the
      same shall be or shall have become so payable in accordance with the Security
      Documents after the Mortgagee shall have directed pursuant to clause 2.1 of
      the
      General Assignment that the 

    
       

      
        
          13

        

        

      

      
        
        

      

       

    
    same
      shall be no longer receivable by the Owner 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;

     

    
      	6.1.18	
              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 the Earnings for the cost
      of
      such work or otherwise;

     

    
      	6.1.19	
              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 Management
      Agreement;

     

    
      	6.1.20	
              Registration
                of Mortgage

            

    

     

    to
      cause
      the Mortgage to be duly registered and otherwise to comply with and satisfy
      all
      the requirements and formalities established by the laws of Cyprus and to
      perfect the Mortgage and this Deed as a valid and enforceable first priority
      statutory mortgage upon the Ship and to furnish to the Mortgagee from time
      to
      time such proof as the Mortgagee may reasonably request in order to satisfy
      itself that the Owner has complied with the provisions of this clause
      6.1.20;

     

    
      	6.1.21	
              Notice
                of Mortgage

            

    

     

    to
      place
      and at all times and places to retain a properly certified copy of the Mortgage
      and this Deed (which shall form part of the Ship’s documents) on board the Ship
      with her papers and cause such certified copy of the Mortgage and this Deed
      to
      be exhibited to any and all persons having business with the Ship which might
      create or imply any commitment or encumbrance whatsoever on 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 navigation
      room and in the Master’s cabin of the Ship a framed printed notice in plain type
      reading as follows:

     

    “NOTICE
      OF MORTGAGE”

     

    This
      Ship
      is subject to a first priority mortgage and deed of covenant in favour of
BAYERISCHE
      HYPO- UND VEREINSBANK AKTIENGESELLSCHAFT of
      7
      Heraklitou Street, 106 75 Athens, Greece. Under the said mortgage and deed
      of
      covenant, neither the Owner nor any charterer nor the Master of this Ship has
      any right, power or authority to create, incur or permit to be imposed upon
      this
      Ship any commitments or encumbrances whatsoever other than for crew’s wages and
      salvage

     

    and
      in
      terms of the said notice it is hereby agreed that save and subject as otherwise
      herein provided, neither the Owner nor any charterer nor the Master of the
      Ship
      nor any other person has any right, power or authority to create, incur or
      permit to be imposed upon the Ship any lien whatsoever other than for crew’s
      wages and salvage;

    
      
         

        
          
            14

          

          

        

        
          
          

        

         

      

    
    
      	6.1.22	
              Conveyance
                on default

            

    

     

    where
      the
      Ship is (or is to be) sold in exercise of any power contained in this Deed
      or
      otherwise conferred on the Mortgagee, to execute, forthwith upon request by
      the
      Mortgagee, such form of conveyance of the Ship as the Mortgagee may
      require;

     

    
      	6.1.23	
              Anti-drug
                abuse

            

    

     

    without
      prejudice to clause 6.1.9, 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 Control and to procure that the same
      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;

     

    
      	6.1.24	
              Compliance
                with Environmental Laws

            

    

     

    to
      comply
      with, and procure that all Environmental Affiliates of the Owner 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 the Owner obtain and
      comply with, all Environmental Approvals; and

     

    
      	6.1.25	
              Compliance
                with Code

            

    

     

    to
      procure that the Manager and any Operator will, comply with and ensure that
      the
      Ship and any Operator comply with the requirements of the Code, including (but
      not limited to) the maintenance and renewal of valid certificates pursuant
      thereto throughout the Security Period.

     

    
      	
              7

            	
              Powers
                of Mortgagee to protect security and remedy
                defaults

            

    

     

    
      	
              7.1

            	
              Protective
                action

            

    

     

    The
      Mortgagee shall, without prejudice to its other rights, powers and remedies
      under any of the Security Documents, 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 Deed and the other Security Documents, and all Expenses
      attributable thereto shall be payable by the Owner on demand together with
      interest thereon at the rate provided for in clause 3.4 of the Loan Agreement
      from the date such expense or liability was incurred by the Mortgagee until
      the
      date of actual receipt whether before or after any relevant
      judgement.

     

    
      	
              7.2

            	
              Remedy
                of defaults

            

    

     

    Without
      prejudice to the generality of the provisions of clause 7.1:

     

    
      	7.2.1	
              if
                the Owner fails to comply with any of the provisions of clause 6.1.1
                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;

            

    

    
       

      
        
          15

        

        

      

      
        
        

      

       

    
    
      	7.2.2	
              if
                the Owner fails to comply with any of the provisions of clauses 6.1.3,
                6.1.5 or 6.1.6, 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

            

    

     

    
      	7.2.3	
              if
                the Owner fails to comply with any of the provisions of clause 6.1.8
                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.

     

    
      	
              8

            	
              Powers
                of Mortgagee on Event of
                Default

            

    

     

    
      	
              8.1

            	
              Powers

            

    

     

    Upon
      the
      happening of any Event of Default, the Mortgagee shall become forthwith entitled
      by notice given to the Owner in accordance with the provisions of clause 11.2
      of
      the Loan Agreement to declare the Outstanding Indebtedness to be due and payable
      immediately or in accordance with such notice and to terminate the Master Swap
      Agreement, whereupon the Outstanding Indebtedness shall become so due and
      payable and (whether or not the Mortgagee shall have given any such notice)
      the
      Mortgagee shall become forthwith entitled, as and when it may see fit, to put
      into force and exercise in relation to the Mortgaged Property or any part
      thereof all or any of the rights, powers and remedies possessed by it as
      mortgagee of the Mortgaged Property (whether at law, by virtue of the Mortgage
      and this Deed or otherwise) and in particular (without limiting the generality
      of the foregoing):

     

    
      	8.1.1	
              to
                take possession of the Ship;

            

    

     

    
      	8.1.2	
              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;

            

    

     

    
      	8.1.3	
              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 any other part of the Mortgaged Property, 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
                the
                brokers through whom collection or recovery is effected to charge
                the
                usual brokerage therefor;

            

    

     

    
      	8.1.4	
              to
                discharge, compound, release or compromise claims in respect of the
                Ship
                or any other part of the Mortgaged Property which have given or may
                give
                rise to any charge or lien or other claim on the Ship or any other
                part of
                the Mortgaged Property or which are or may be enforceable by proceedings
                against the Ship or any other part of the Mortgaged
                Property;

            

    

     

    
      	8.1.5	
              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, or otherwise to
                sell the
                Ship pursuant to the Mortgagee’s statutory power of sale under section 35
                of the Merchant Shipping (Registration of Ships Sales and Mortgages)
                Law
                of 1963 (as amended) and without being answerable for any loss
                

            

    

     

    
      
        16

      

      

    
    
      
      

    

     

    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 9.1;

     

    
      	8.1.6	
              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

            

    

     

    
      	8.1.7	
              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 8.1.

            

    

     

    
      	
              8.2

            	
              Receiver

            

    

     

    
      	8.2.1	
              Appointment

            

    

     

    At
      any
      time after the Outstanding Indebtedness shall have become due and payable in
      accordance with a notice given by the Mortgagee to the Owner pursuant to clause
      11.2 of the Loan Agreement, the Mortgagee shall be entitled (but not bound)
      by
      writing executed as a deed or under the hand of any Director or officer of
      the
      Mortgagee to appoint any person or persons to be a receiver and/or manager
      of
      the Mortgaged Property or any part thereof (with power to authorise any joint
      receiver and/or manager to exercise any power independently of any other joint
      receiver and/or manager) and may from time to time fix his remuneration, and
      may
      remove any receiver and/or manager so appointed and appoint another in his
      place. Any receiver and/or manager so appointed shall be the agent of the Owner
      and the Owner shall be solely responsible for his acts or defaults and for
      his
      remuneration, and such receiver and/or manager so appointed shall have all
      powers conferred by the United Kingdom Law of Property Act 1925 without the
      restrictions contained in sections 93 and 103 of that Act and, in addition,
      power on behalf of and at the cost of the Owner (notwithstanding any liquidation
      of the Owner) to do or omit to do anything which the Owner could do or omit
      to
      do in relation to the Mortgaged Property or any part thereof and in particular
      (but without prejudice to the generality of the foregoing) any such receiver
      and/or manager may exercise all the powers and discretions conferred on the
      Mortgagee by the Mortgage and this Deed.

     

    
      	8.2.2	
              Remuneration

            

    

     

    Any
      Receiver shall be entitled to remuneration appropriate to the work and
      responsibilities involved, upon the basis of charging from time to time adopted
      by the Receiver in accordance with the current practice of his firm, without
      being limited to the maximum rate specified in section 109(6) of the United
      Kingdom Law of Property Act 1925.

     

    
      	8.2.3	
              Liability
                of mortgagee in possession

            

    

     

    Neither
      the Mortgagee nor any Receiver shall be liable as mortgagee in possession in
      respect of all or any of the Mortgaged Property to account or be liable for
      any
      loss upon realisation or for any neglect or default of any nature whatsoever
      in
      connection therewith for which a mortgagee in possession may be liable as
      such.

     

    
      	
              8.3

            	
              Dealings
                with Mortgagee or Receiver

            

    

     

    Upon
      any
      sale of the Ship or any share or interest therein by the Mortgagee pursuant
      to
      clause 8.1.5 or pursuant to clause 12.1, or by any Receiver, the purchaser
      shall
      not be bound to see or enquire whether the Mortgagee’s (or the Receiver’s, as
      the case may be,) power of sale has arisen in the manner provided in this Deed
      and the sale shall be deemed to be within the power of the Mortgagee (or the
      Receiver, as the case may be) and the receipt of the Mortgagee (or the

    
       

      
        
          17

        

        

      

      
        
        

      

       

    
    Receiver,
      as the case may be) 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.

     

    
      	
              9

            	
              Application
                of moneys

            

    

     

    
      	
              9.1

            	
              Application

            

    

     

    All moneys
      received by the Mortgagee or any Receiver 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 8.1.6 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 14.1 of the Loan Agreement.

     

    
      	
              9.2

            	
              Shortfalls

            

    

     

    In
      the
      event that the balance referred to in clause 9.1 is insufficient to pay in
      full
      the whole of the Outstanding Indebtedness, the Mortgagee or the Receiver, as
      the
      case may be, shall be entitled to collect the shortfall from the Owner or any
      other person liable for the time being therefor.

     

    
      	
              10

            	
              Remedies
                cumulative and other
                provisions

            

    

     

    
      	
              10.1

            	
              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 any of the Security Documents 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
      Deed requires such consent prejudice the right of the Mortgagee to withhold
      or
      give consent to the doing of any other similar act. The remedies provided in
      the
      Security Documents are cumulative and are not exclusive of any remedies provided
      by law.

     

    
      	
              10.2

            	
              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 Mortgage
      and this Deed (including the power vested in it by virtue of clause 12) or
      any
      of the other Security Documents in such manner, upon such terms, and to such
      persons as the Mortgagee in its absolute discretion may think fit.

     

    
      	
              10.3

            	
              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 the Mortgage and/or this Deed
      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
      8.1, 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 in respect of 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.

    
       

      
        
          18

        

        

      

      
        
        

      

       

    
    
      	
              11

            	
              Costs
                and indemnity

            

    

     

    
      	
              11.1

            	
              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
      enforcement of, or preservation of any rights under, the Mortgage, this Deed
      or
      the Master Swap Agreement or otherwise in respect of the Outstanding
      Indebtedness and the security therefor or in connection with the preparation,
      completion, execution or registration of the Mortgage, this Deed or the Master
      Swap Agreement.

     

    
      	
              11.2

            	
              Mortgagee’s
                and Receiver’s indemnity

            

    

     

    The
      Owner
      hereby agrees and undertakes to indemnify the Mortgagee and any Receiver 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 any such Receiver, or by any manager, agent, officer or
      employee for whose liability, act or omission it or he 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 the Mortgage,
      this
      Deed or the Master Swap Agreement or otherwise in connection therewith and
      herewith or with any part of the Mortgaged Property or otherwise howsoever
      in
      relation to, or in connection with, any of the matters dealt with in the
      Mortgage, this Deed or the Master Swap Agreement.

     

    
      	
              12

            	
              Attorney

            

    

     

    
      	
              12.1

            	
              Power

            

    

     

    By
      way of
      security, the Owner hereby irrevocably appoints the Mortgagee and any Receiver,
      jointly and also severally, 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 Mortgage, this Deed, the Loan Agreement 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
      hereby conferred shall be a general power of attorney under the United Kingdom
      Powers of Attorney Act 1971, and the Owner ratifies and confirms, and agrees
      to
      ratify and confirm, any deed, assurance, agreement, instrument, act or thing
      which the Mortgagee or any Receiver may execute or do pursuant thereto. Provided
      always that such power shall not be exercisable by or on behalf of the Mortgagee
      or any Receiver until the happening of an Event of Default.

     

    
      	
              12.2

            	
              Exercise
                of power

            

    

     

    The
      exercise of such power by or on behalf of the Mortgagee or any Receiver shall
      not put any person dealing with the Mortgagee or the Receiver 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 or the Receiver of such power shall be conclusive
      evidence of the Mortgagee’s or such Receiver’s right to exercise the
      same.

    
       

      
        
          19

        

        

      

      
        
        

      

       

    
    
      	
              12.3

            	
              Filings

            

    

     

    The
      Owner
      hereby irrevocably appoints the Mortgagee and any Receiver jointly and also
      severally 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 the
      Mortgage and/or this Deed in any court, public office or elsewhere which the
      Mortgagee or the Receiver may in its or his discretion consider necessary or
      advisable, now or in the future, to ensure the legality, validity,
      enforceability or admissibility in evidence thereof and any other assurance,
      document, act or thing required to be executed by the Owner pursuant to clause
      13.

     

    
      	
              13

            	
              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 Mortgaged
      Property or perfecting the security constituted or intended to be constituted
      by
      the Mortgage and this Deed.

     

    
      	
              14

            	
              Notices

            

    

     

    The
      provisions of clause 17.1 of the Loan Agreement shall apply mutatis mutandis
      in
      respect of any certificate, notice, demand or other communication given or
      made
      under this Deed.

     

    
      	
              15

            	
              Counterparts

            

    

     

    This
      Deed
      may be entered into in the form of two counterparts, each executed by one of
      the
      parties, and, provided both the parties shall so execute this Deed, each of
      the
      executed counterparts, when duly exchanged or delivered, shall be deemed to
      be
      an original but, taken together, they shall constitute one
      instrument.

     

    
      	
              16

            	
              Severability
                of provisions

            

    

     

    Each
      of
      the provisions in this Deed are severable and distinct from the others, and
      if
      at any time one or more such provisions is or becomes invalid, illegal or
      enforceable, the validity, legality and enforceability of the remaining
      provisions of this Deed shall not in any way be affected or impaired
      thereby.

     

    
      	
              17

            	
              Law,
                jurisdiction and language

            

    

     

    
      	
              17.1

            	
              Law

            

    

     

    This
      Deed
      is governed by, and shall be construed in accordance with, the laws of
      Cyprus.

     

    
      	
              17.2

            	
              Submission
                to jurisdiction

            

    

     

    For
      the
      benefit of the Mortgagee, the parties hereto irrevocably agree that any legal
      action or proceedings in connection with the Mortgage and/or this Deed may
      be
      brought in the English courts, or in the Courts of Cyprus 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 the Mortgage and/or
      this Deed. The Owner irrevocably and unconditionally submits to the jurisdiction
      of the English courts, the Courts of Cyprus and the courts of any country chosen
      by the Mortgagee and irrevocably designates, appoints and empowers Cheeswrights
      at present of 10 Philpot Lane, London EC3M 8BR, England 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 

    
       

      
        
          20

        

        

      

      
        
        

      

       

    
    with
      the
      Mortgage and/or this Deed. 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 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.
      The parties further agree that only the courts of England and not those of
      any
      other State shall have jurisdiction to determine any claim which the Owner
      may
      have against the Mortgagee arising out of or in connection with the Mortgage
      and/or this Deed.

     

    IN
      WITNESS
      whereof
      this Deed has been duly executed as a deed the day and year first above
      written.

    
       

      
        
          21

        

        

      

      
        
        

      

       

    
    
      	
              EXECUTED
                as a DEED

            	
              )

            	 
	
              by

            	
              )

            	 
	
              for
                and on behalf of

            	
              )

            	 
	
              PEMER
                SHIPPING LTD

            	
              )

            	 
	
              pursuant
                to a power of attorney 

            	
              )

            	 
	
              dated

            	
              )

            	
              _____________________

            
	
              in
                the presence of:

            	
              )

            	
              Attorney-in-Fact

            

    

     

    ________________________

    Witness

    Name:

    Address:

    Occupation:

     

    
      	
              EXECUTED
                as a DEED

            	
              )

            	 
	
              by

            	
              )

            	
              
                _____________________

              

            
	
              and

            	
              )

            	
              Authorised
                signatory

            
	
              by

            	
              )

            	 
	
              for
                and on behalf of

            	
              )

            	 
	
              BAYERISCHE
                HYPO- UND VEREINSBANK

            	
              )

            	
              
                _____________________

              

            
	
              AKTIENGESELLSCHAFT

            	
              )

            	
              Authorised
                signatory

            
	
              in
                the presence of:

            	
              )

            	 

    

     

    ________________________

    Witness

    Name:

    Address:

    Occupation:

    
       

      
        
          22

        

        

      

      
        
        

      

       

    
    Schedule
      5

     

    Form
      of General Assignment

    
       

      
        
          49

        

        

      

      
        
        

      

       

    
    Private
      & Confidential

     

    
      
        	
                Dated
                  March 2007

              

      

    

     

     

    
      	 	
              PEMER
                SHIPPING LTD

            	
              (1)

            
	 	 	 
	 	
              and

            	 
	 	 	 
	 	
              BAYERISCHE
                HYPO- UND VEREINSBANK AKTIENGESELLSCHAFT

            	
              (2)

            

    

     

    
       
        
          

        

      

      GENERAL
        ASSIGNMENT

       

      relating
        to m.v. Pedhoulas
        Merchant

       

      
        

      

    

     

    

    
       

      
        
          
          

        

        

      

      
        
        

      

       

    
    Contents

     

    
      	
              Clause

            	 	
              Page

            
	 	 	 
	
              1

            	
              Definitions

            	
              1

            
	 	 	 
	
              2

            	
              Assignment
                and application of funds

            	
              4

            
	 	 	 
	
              3

            	
              Continuing
                security and other matters

            	
              6

            
	 	 	 
	
              4

            	
              Powers
                of Mortgagee to protect security and remedy defaults

            	
              7

            
	 	 	 
	
              5

            	
              Powers
                of Mortgagee on Event of Default

            	
              8

            
	 	 	 
	
              6

            	
              Attorney

            	
              8

            
	 	 	 
	
              7

            	
              Further
                assurance

            	
              9

            
	 	 	 
	
              8

            	
              Costs
                and indemnities 

            	
              9

            
	 	 	 
	
              9

            	
              Remedies
                cumulative and other provisions

            	
              10

            
	 	 	 
	
              10

            	
              Notices

            	
              10

            
	 	 	 
	
              11

            	
              Counterparts

            	
              10

            
	 	 	 
	
              12

            	
              Law
                and jurisdiction

            	
              10

            
	 	 	 
	
              Schedule
                1 Forms of Loss Payable Clauses

            	
              12

            
	 	 
	
              Schedule
                2 Form of Notice of Assignment of Insurances

            	
              13

            

    

    
       

      
        
          
          

        

        

      

      
        
        

      

       

    
    THIS
      DEED OF ASSIGNMENT
      is
      dated          March 2007 and made
BETWEEN:

     

    
      	
              (1)

            	
              PEMER
                SHIPPING LTD
                a
                corporation incorporated in Liberia whose registered office is at
                80 Broad
                Street, Monrovia, Republic of Liberia (the “Owner”);
                and

            

    

     

    
      	
              (2)

            	
              BAYERISCHE
                HYPO -UND VEREINSBANK AKTIENGESELLSCHAFT
                a
                company incorporated in Germany whose registered office is at Am
                Tucherpark 16, D-80538, Munich, Germany, acting for the purposes
                of this
                Deed through its office at 7 Heraklitou Street, 106 73 Athens, Greece
                (the
                “Mortgagee”).

            

    

     

    WHEREAS:

     

    
      	
              (A)

            	
              by
                an Agreement (the “Loan
                Agreement”)
                dated          March
                2007 and made between the Owner (1) (therein referred to as the
                “Borrower”) and the Mortgagee (2) (therein referred to as the
                “Bank”)
                the Mortgagee agreed (inter alia) to advance by way of a multicurrency
                loan to the Owner, upon the terms and conditions therein contained
                the sum
                of up to Thirty six million Dollars ($36,000,000) or the Equivalent
                Amount
                in an Optional Currency or Optional Currencies (the “Loan”);

            

    

     

    
      	(B)	
              by
                a Master Swap Agreement
                dated         March
                2007 and made between (1) the Owner and (2) the Mortgagee, the Mortgagee
                agreed the terms and conditions upon which it would enter into an
                interest
                rate swap transaction or transactions with the Owner in respect of
                the
                Loan (whether in whole or in part as the case may be from time to
                time);

            

    

     

    
      	
              (C)

            	
              pursuant
                to the Loan Agreement there has been or will be executed by the Owner
                in
                favour of the Mortgagee a first priority Cyprus statutory ship mortgage
                in
                account current form and deed of covenant collateral thereto (together
                the
                “Mortgage”)
                on the motor vessel Pedhoulas
                Merchant documented
                in the name of the Owner under the laws and flag of the Republic
                of Cyprus
                under IMO Number 9279800 (the “Ship”)
                and the Mortgage of even date herewith has been or will be registered
                in
                the Registry of Cyprus Ships as security for the payment by the Owner
                of
                the Outstanding Indebtedness (as that expression is defined in the
                Mortgage); and

            

    

     

    
      	
              (D)

            	
              this
                Deed is supplemental to the Loan Agreement, the Master Swap Agreement
                and
                the Mortgage and to the security thereby created and is the General
                Assignment referred to in the Loan Agreement but shall nonetheless
                continue in full force and effect notwithstanding any discharge of
                the
                Mortgage.

            

    

     

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

     

    
      	
              1.

            	
              Definitions

            

    

     

    
      	
              1.1

            	
              Defined
                expressions

            

    

     

    Words
      and
      expressions defined in the Loan Agreement or in the Mortgage shall, unless
      otherwise defined in this Deed, or the context otherwise requires, have the
      same
      meanings when used in this Deed.

     

    
      	
              1.2

            	
              Definitions

            

    

     

    In
      this
      Deed, unless the context otherwise requires:

     

    “Approved
      Brokers”
means
      such firm of insurance brokers, appointed by the Owner, as may from time to
      time
      be approved by the Mortgagee for the purposes of this Deed;

    
       

      
        
          1

        

        

      

      
        
        

      

       

    
    “Assigned
      Property”
      means:

     

    
      	 	
              (a)

            	
              the
                Earnings;

            

    

     

    
      	 	
              (b)

            	
              the
                Insurances; and

            

    

     

    
      	 	
              (c)

            	
              any
                Requisition Compensation;

            

    

     

    “Casualty
      Amount”
means
      Five hundred thousand Dollars ($500,000) (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;

     

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

     

    “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) or any charterparty or other contract
      for
      the employment of the Ship;

     

    “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 Loan Agreement, the Mortgage, this Deed or any
                other of
                the Security Documents or otherwise payable by the Owner in accordance
                with clause 11 of the Mortgage or clause 8;
                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 judgment) at a rate per annum calculated in accordance
                with clause 3.4 of the Loan Agreement (as conclusively certified
                by the
                Mortgagee);

            

    

     

    “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);

    
       

      
        
          2

        

        

      

      
        
        

      

       

    
    “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, or in such other
      forms
      as may from time to time be required or agreed in writing by the
      Mortgagee;

     

    “Master
      Swap Agreement”
means
      the agreement made between the Mortgagee and the Owner
      dated          March 2007
      mentioned in recital (B) hereto, comprising an ISDA Master Agreement and the
      Schedule thereto in the form or substantially in the form set out in schedule
      7
      to the Loan Agreement, 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,
      of the Owner to the Mortgagee under the Master Swap Agreement at such
      time;

     

    “Mortgagee”
      includes the successors in title and assignees of the Mortgagee;

     

    “Notice
      of Assignment of Insurances”
means
      a
      notice of assignment in the form set out in schedule 2, 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 Loan and interest accrued and accruing thereon, the
      Expenses, the Master Swap Agreement Liabilities and all other sums of money
      from
      time to time owing by the Owner to the Mortgagee, whether actually or
      contingently, under the Security Documents or any of them;

     

    “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 Loan Agreement, the Mortgage, the Deed of Covenant, the Manager’s
      Undertaking, the Cash Collateral Account Pledge, the Multicurrency Cash
      Collateral Account Pledge, the Master Swap Agreement, the Master Agreement
      Security Deed and this Deed 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 Loan,
      interest thereon and other moneys from time to time owing by the Owner pursuant
      to the Loan Agreement and/or the Master Swap Agreement (whether or not such
      document also secures moneys from time to time owing pursuant to any other
      document or agreement); and

     

    “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.

     

    
      	
              1.3

            	
              Headings

            

    

     

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

     

    
      	
              1.4

            	
              Construction
                of certain terms

            

    

     

    In
      this
      Deed, unless the context otherwise requires:

     

    
      	1.4.1	
              references
                to clauses and schedules are to be construed as references to clauses
                of
                and schedules to this Deed and references to this Deed include its
                schedules;

            

    

     

    
      	1.4.2	
              references
                to (or to any specified provision of) this Deed or any other document
                shall be construed as references to this Deed, that provision or
                that
                document as in force for the time 

            

    

    
       

      
        
          3

        

        

      

      
        
        

      

       

    
    being
      and
      as amended in accordance with the terms thereof, or, as the case may be, with
      the agreement of the relevant parties;

     

    
      	1.4.3	
              words
                importing the plural shall include the singular and vice
                versa;

            

    

     

    
      	1.4.4	
              references
                to a person shall be construed as references to an individual, firm,
                company, corporation, unincorporated body of persons or any Government
                Entity;

            

    

     

    
      	1.4.5	
              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

            

    

     

    
      	1.4.6	
              references
                to statutory provisions shall be construed as references to those
                provisions as replaced or amended or re-enacted from time to
                time.

            

    

     

    
      	
              1.5

            	
              Conflict
                with Loan Agreement

            

    

     

    This
      Deed
      shall be read together with the Loan Agreement but in case of any conflict
      between the two instruments, the provisions of the Loan Agreement shall
      prevail.

     

    
      	
              2

            	
              Assignment
                and application of funds

            

    

     

    
      	
              2.1

            	
              Assignment

            

    

     

    By
      way of
      security for payment of the Outstanding Indebtedness the Owner with full title
      guarantee hereby assigns and agrees to assign to the Mortgagee absolutely all
      its rights title and interest in and to the Assigned Property and all its
      benefits and interests present and future therein. Provided however
      that:

     

    
      	2.1.1	
              Earnings

            

    

     

    the
      Earnings shall be payable to the Operating Account until such time as a Default
      shall occur and the Mortgagee shall direct to the contrary whereupon the Owner
      shall forthwith, and the Mortgagee may at any time thereafter, instruct the
      persons from whom the Earnings are then payable to pay the same to the Mortgagee
      or as it may direct and any Earnings then in the hands of the Owner’s brokers or
      other agents shall be deemed to have been received by them for the use and
      on
      behalf of the Mortgagee;

     

    
      	2.1.2	
              Insurances

            

    

     

    unless
      and until a Default shall occur (whereupon all insurance recoveries, other
      than
      any moneys payable under any loss of earnings insurance, shall be receivable
      by
      the Mortgagee and applied in accordance with clause 2.3 or clause 2.6 (as the
      case may be)):

     

    
      	
            	(a)	
              any
                moneys payable under the Insurances, other than any moneys payable
                under
                any loss of earnings insurance, shall be payable in accordance with
                the
                terms of the relevant Loss Payable Clause and the Mortgagee will
                not in
                the meantime give any notification to the contrary to the insurers
                as
                contemplated by the Loss Payable
                Clauses;

            

    

     

    
      	
            	(b)	
              any
                insurance moneys received by the Mortgagee in respect of any major
                casualty (as specified in the relevant Loss Payable Clause) shall,
                unless
                prior to receipt or whilst such moneys are in the hands of the Mortgagee
                there shall have occurred a Default (whereupon such insurance monies
                shall
                be applied in accordance with 

            

    

    
       

      
        
          4

        

        

      

      
        
        

      

       

    
    clause
      2.3 or clause 2.6 (as the case may be)), be paid over to the Owner upon the
      Owner furnishing evidence satisfactory to the Mortgagee that all loss and damage
      resulting from such casualty has been properly made good and repaired, and
      that
      all repair accounts and other liabilities whatsoever in connection with the
      casualty have been fully paid and discharged by the Owner, provided however
      that
      the insurers with whom the fire and usual marine risks insurances are effected
      may, in the case of a major casualty, and with the previous consent in writing
      of the Mortgagee, make payment on account of repairs in the course of being
      effected; and

     

    
      	
            	(c)	
              any
                moneys payable under any loss of earnings insurance shall be payable
                in
                accordance with the terms of the relevant Loss Payable Clause and
                shall be
                subject to such provisions of this clause 2 as shall apply to Earnings
                and
                the Mortgagee will not give any notification to the insurers as
                contemplated in such Loss Payable Clause unless and until the Mortgagee
                shall have become entitled under clause 2.1.1 to direct that the
                Earnings
                be paid to the Mortgagee.

            

    

     

    
      	
              2.2

            	
              Notice

            

    

     

    The
      Owner
      hereby covenants and undertakes with the Mortgagee that it will from time to
      time upon the written request of the Mortgagee give written notice (in such
      form
      as the Mortgagee shall reasonably require) of the assignment herein contained
      to
      the persons from whom any part of the Assigned Property is or may be due and
      that it will procure that the interest of the Mortgagee in the Insurances shall
      be endorsed on the instruments of insurance from time to time issued in
      connection with such of the Insurances as are placed with the Approved Brokers
      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).

     

    
      	
              2.3

            	
              Application

            

    

     

    All
      moneys received by the Mortgagee in respect of:

     

    
      
        	2.3.1	
                recovery
                  under the Insurances (other than under any loss of earnings insurance
                  and
                  any such sum or sums as may have been received by the Mortgagee
                  in
                  accordance with the relevant Loss Payable Clause in respect of
                  a major
                  casualty as therein defined and paid over to the Owner as provided
                  in
                  clause 2.1.2(b) or which fall to be otherwise applied under clause
                  2.6);
                  and

              

      

    

     

    
      	2.3.2	
              Requisition
                Compensation

            

    

     

    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 14.1 of the
      Loan
      Agreement.

     

    
      	
              2.4

            	
              Shortfalls

            

    

     

    In
      the
      event that the balance referred to in clause 2.3 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 for the time
      being therefor.

     

    
      	
              2.5

            	
              Application
                of Earnings received by
                Mortgagee

            

    

     

    Any
      moneys received by the Mortgagee in respect of the Earnings shall:

     

    
      	2.5.1	
              if
                received by the Mortgagee, or in the hands of the Mortgagee, prior
                to the
                occurrence of an Event of Default be retained by the Mortgagee and
                shall
                be paid over by the Mortgagee to the Owner at such times, in such
                amounts
                and for such purposes and/or shall be applied by the
                

            

    

     

    
      
        5

      

      

    
    
      
      

    

     

    Mortgagee
      in or towards satisfaction of any sums from time to time accruing due and
      payable by the Owner under the Security Documents or any of them or by virtue
      of
      payment demanded thereunder, in each case as the Mortgagee may in its absolute
      discretion determine; and

     

    
      	2.5.2	
              if
                received by the Mortgagee, or in the hands of the Mortgagee, after
                the
                occurrence of an Event of Default, be applied by the Mortgagee in
                the
                manner specified in clause 2.3 and/or clause 2.5.1, as the Mortgagee
                may
                in its absolute discretion
                determine.

            

    

     

    
      	
              2.6

            	
              Application
                of Insurances received by
                Mortgagee

            

    

     

    Subject
      to clause 2.3, any moneys received by the Mortgagee in respect of the Insurances
      (other than in respect of recovery under any loss of earnings insurance or
      in
      respect of a Total Loss) shall:

     

    
      	2.6.1	
              if
                received by the Mortgagee, or in the hands of the Mortgagee, after
                the
                occurrence of a Default but prior to the occurrence of an Event of
                Default, be retained by the Mortgagee and shall be paid over by the
                Mortgagee to the Owner at such times, in such amounts and for such
                purposes and/or shall be applied by the Mortgagee in or towards
                satisfaction of any sums from time to time accruing due and payable
                by the
                Owner under the Security Documents or any of them or by virtue of
                payment
                demanded thereunder, in each case as the Mortgagee may in its absolute
                discretion determine; and

            

    

     

    
      	2.6.2	
              if
                received by the Mortgagee, or in the hands of the Mortgagee, after
                the
                occurrence of an Event of Default, be applied by the Mortgagee in
                the
                manner specified in clause 2.3 and/or clause 2.6.1, as the Mortgagee
                may
                in its absolute discretion
                determine.

            

    

     

    
      	
              2.7

            	
              Use
                of Owner’s name

            

    

     

    The
      Owner
      covenants and undertakes with the Mortgagee to do or permit to be done each
      and
      every act or thing which the Mortgagee may from time to time require to be
      done
      for the purpose of enforcing the Mortgagee’s rights under this Deed and to allow
      its name to be used as and when required by the Mortgagee for that
      purpose.

     

    
      	
              2.8

            	
              Reassignment

            

    

     

    Upon
      payment and discharge in full to the satisfaction of the Mortgagee of the
      Outstanding Indebtedness (which, for the avoidance of doubt, includes the Master
      Swap Agreement Liabilities), the Mortgagee shall, at the request and cost of
      the
      Owner, re-assign the Earnings, the Insurances and any Requisition Compensation
      to the Owner or as it may direct.

     

    
      	
              3

            	
              Continuing
                security and other matters

            

    

     

    
      	
              3.1

            	
              Continuing
                security

            

    

     

    The
      security created by this Deed shall:

     

    
      	3.1.1	
              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 Security Documents, express or implied, and that 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);

            

    

     

    
      
        6

      

      

    
    
      
      

    

     

    
      	3.1.2	
              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 of the other 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

            

    

     

    
      	3.1.3	
              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.

            

    

     

    
      	
              3.2

            	
              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 Loan Agreement, this Deed, 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.

     

    
      	
              3.3

            	
              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 the Mortgage and/or this Deed
      or
      to make any claim or take any action to collect any moneys hereby assigned
      or to
      enforce any rights or benefits hereby assigned to the Mortgagee or to which
      the
      Mortgagee may at any time be entitled under the Mortgage and/or this
      Deed.

     

    
      	
              3.4

            	
              Obligations
                of Owner and Mortgagee

            

    

     

    The
      Owner
      shall remain liable to perform all the obligations assumed by it in relation
      to
      the Assigned Property and the Mortgagee shall be under no obligation of any
      kind
      whatsoever in respect thereof or be under any liability whatsoever in the event
      of any failure by the Owner to perform it obligations in respect
      thereof.

     

    
      	
              3.5

            	
              Discharge
                of Mortgage

            

    

     

    Notwithstanding
      that this Deed is expressed to be supplemental to the Mortgage it shall continue
      in full force and effect after any discharge of the Mortgage.

     

    
      	
              4

            	
              Powers
                of Mortgagee to protect security and remedy
                defaults

            

    

     

    
      	
              4.1

            	
              Protective
                action

            

    

     

    The
      Mortgagee shall, without prejudice to its other rights, powers and remedies
      under any of the Security Documents, 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 Deed and the other Security Documents, and all Expenses
      attributable thereto shall be payable by the Owner on demand together with
      interest thereon at the rate provided for in clause 3.4 of the Loan Agreement
      from the date such expense or liability was incurred by the Mortgagee until
      the
      date of actual receipt whether before or after any relevant
      judgement.

    
       

      
        
          7

        

        

      

      
        
        

      

       

    
    
      	
              4.2

            	
              Remedy
                of defaults

            

    

     

    Without
      prejudice to the generality of the provisions of clause 4.1, if the Owner fails
      to comply with the provisions of clause 6.1.1(a) of the Deed of Covenant, the
      Mortgagee shall become forthwith 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 and the Expenses attributable to the exercise
      by the Mortgagee of any such powers shall be payable by the Owner on
      demand.

     

    
      	
              5

            	
              Powers
                of Mortgagee on Event of
                Default

            

    

     

    
      	
              5.1

            	
              Powers

            

    

     

    At
      any
      time after the occurrence of an Event of Default the Mortgagee shall forthwith
      become entitled (but not bound) as and when it may see fit, to exercise in
      relation to the Assigned Property or any part thereof all or any of the rights,
      powers and remedies possessed by it as assignee and/or chargee of the Assigned
      Property (whether at law, by virtue of this Deed or otherwise) and in particular
      (without limiting the generality of the foregoing):

     

    
      	5.1.1	
              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;

            

    

     

    
      	5.1.2	
              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 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;

            

    

     

    
      	5.1.3	
              to
                discharge, compound, release or compromise claims in respect of the
                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
                Earnings, Insurances or Requisition Compensation or any part thereof
                or
                which are or may be enforceable by proceedings against the Earnings,
                Insurances or Requisition Compensation or any part thereof;
                and

            

    

     

    
      	5.1.4	
              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 5.1.

            

    

     

    
      	
              6

            	
              Attorney

            

    

     

    
      	
              6.1

            	
              Appointment

            

    

     

    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 hereby or which may be deemed proper in or in
      connection with all or any of the purposes aforesaid. The power hereby conferred
      shall be a general power of attorney under the Powers of Attorney Act 1971,
      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 always that such power 

    
       

      
        
          8

        

        

      

      
        
        

      

       

    
    shall
      not
      be exercisable by or on behalf of the Mortgagee until the happening of any
      Event
      of Default.

     

    
      	
              6.2

            	
              Exercise
                of power

            

    

     

    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.

     

    
      	
              6.3

            	
              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 Deed 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.

     

    
      	
              7

            	
              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 Assigned
      Property or perfecting the security constituted or intended to be constituted
      by
      this Deed.

     

    
      	
              8

            	
              Costs
                and indemnities

            

    

     

    
      	
              8.1

            	
              Costs

            

    

     

    The
      Owners shall pay to the Mortgagee on demand on a full indemnity basis all
      expenses or liabilities of whatever 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, this Deed or otherwise in respect of the Outstanding Indebtedness, the
      Master Swap Agreement Liabilities and the security therefor, or in connection
      with the preparation, completion, execution or registration of this
      Deed.

     

    
      	
              8.2

            	
              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 Deed or otherwise in connection with such powers or with
      this
      Deed 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 this Deed.

    
       

      
        
          9

        

        

      

      
        
        

      

       

    
    
      	
              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 this Deed 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 Deed 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 this Deed are cumulative and
      are
      not exclusive of any remedies provided by law.

     

    
      	
              9.2

            	
              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 this Deed
      in
      such manner, upon such terms, and to such persons as the Mortgagee in its
      absolute discretion may think fit.

     

    
      	
              9.3

            	
              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 Deed 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 8.1 of the
      Mortgage, 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, the 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

            	
              Notices

            

    

     

    
      	
              10.1

            	
              The
                provisions of clause 17.1 of the Loan Agreement shall apply mutatis
                mutandis in respect of any certificate, notice, demand or other
                communication given or made under this Deed save that any references
                in
                clause 16.1 of the Loan Agreement to the “Borrower” and the “Bank” should
                be read as referring to the Owner and the Mortgagee,
                respectively.

            

    

     

    
      	
              11

            	
              Counterparts

            

    

     

    
      	
              11.1

            	
              This
                Deed may be entered into in the form of two counterparts, each executed
                by
                one of the parties, and, provided both the parties shall so execute
                this
                Deed, each of the executed counterparts, when duly exchanged or delivered,
                shall be deemed to be an original but, taken together, they shall
                constitute one instrument.

            

    

     

    
      	
              12

            	
              Law
                and jurisdiction

            

    

     

    
      	
              12.1

            	
              Law

            

    

     

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

    
       

      
        
          10

        

        

      

      
        
        

      

       

    
    
      	
              12.2

            	
              Submission
                to jurisdiction

            

    

     

    For
      the
      benefit of the Mortgagee, the parties hereto irrevocably agree that any legal
      action or proceedings in connection with this Deed 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 Deed. 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 Cheeswrights
      at
      present of 10 Philpot Lane, London EC3M 8BR, England 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 Deed. 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 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.

     

    The
      parties further agree that only the courts of England and not those of any
      other
      State shall have jurisdiction to determine any claim which the Owner may have
      against the Mortgagee arising out of or in connection with this
      Deed.

     

    
      	
              12.3

            	
              Contracts
                (Rights of Third Parties) Act
                1999

            

    

     

    Not
      terms
      of this Deed is enforceable under the Contracts (Right of Third Parties) Act
      1999 by a person who is not party to this Deed.

     

    IN
      WITNESS
      whereof
      this Deed has been duly executed as a deed the day and year first above
      written.

    
       

      
        
          11

        

        

      

      
        
        

      

       

    
    Schedule
      1
Forms
      of Loss Payable Clauses

     

    
      	
              1

            	
              Hull
                and machinery (marine and war
                risks)

            

    

     

    By
      a Deed
      of Assignment dated [·]
      2007
PEMER
      SHIPPING LTD
      (the
“Owner”)
      has
      assigned to BAYERISCHE
      HYPO -UND VEREINSBANK AKTIENGESELLSCHAFT
      of 7
      Heraklitou Street, 106 73 Athens, 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 in respect of m.v. Pedhoulas
      Merchant 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 US$500,000
                (or the equivalent in any other currency) 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.

            

    

     

    
      	
              2

            	
              Protection
                and indemnity risks

            

    

     

    Payment
      of any recovery which PEMER
      SHIPPING LTD
      of 80
      Broad Street, Monrovia, Republic of Liberia (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 BAYERISCHE
      HYPO -UND VEREINSBANK AKTIENGESELLSCHAFT
      of 7
      Heraklitou Street, 106 73 Athens, Greece (the “Mortgagee”)
      in
      which event all recoveries shall thereafter be paid to the Mortgagee or its
      order; provided always that no liability whatsoever shall attach to the
      Association, its Managers or their agents for failure to comply with the latter
      obligation until the expiry of two clear business days from the receipt of
      such
      notice.

     

    
      	
              3

            	
              War
                risks

            

    

     

    It
      is
      noted that BAYERISCHE
      HYPO -UND VEREINSBANK AKTIENGESELLSCHAFT
      of 7
      Heraklitou Street, 106 73 Athens, Greece (the “Mortgagee”)
      is
      interested as first mortgagee in the subject matter of this insurance. Save
      as
      hereinafter provided, all claims (whether in respect of actual, constructive,
      arranged or compromised total loss or otherwise) which, but for this Loss
      Payable Clause would be payable to PEMER
      SHIPPING LTD
      of 80
      Broad Street, Monrovia, Liberia (the “Owner”)
      shall
      be payable to the Mortgagee, provided always that unless and until notice in
      writing to the contrary has been received by the Association, claims (other
      than
      total loss claims) not exceeding US$500,000 (or the equivalent in any other
      currency) in respect of any one claim shall be paid direct to the Owner or
      to
      its order.

     

    
      	
              3

            	
              Loss
                of earnings

            

    

     

    By
      a Deed
      of Assignment dated [·]
      2007
PEMER
      SHIPPING LTD
      of 80
      Broad Street, Monrovia, Republic of Liberia (the “Owner”)
      has
      assigned to BAYERISCHE
      HYPO -UND VEREINSBANK AKTIENGESELLSCHAFT
      of 7
      Heraklitou Street, 106 73 Athens, Greece (the “Mortgagee”)
      its
      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
      in respect of m.v. Pedhoulas
      Merchant and
      her
      earnings and accordingly all claims hereunder shall be paid in full to the
      Operating Account designated [•] 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 its order.

    
       

      
        
          12

        

        

      

      
        
        

      

       

    
    Schedule
      2
Form
      of Notice of Assignment of Insurances

     

    (For
      attachment by way of endorsement to the Policy)

     

    PEMER
      SHIPPING LTD of
      80
      Broad Street, Monrovia, Republic of Liberia the owner of the m.v. Pedhoulas
      Merchant HEREBY
      GIVES NOTICE
      that by
      a Deed of Assignment dated [•] 2007 and entered into by us with BAYERISCHE
      HYPO -UND VEREINSBANK AKTIENGESELLSCHAFT
      of 7
      Heraklitou Street, 106 73 Athens, Greece there has been assigned by us to
BAYERISCHE
      HYPO - UND VEREINSBANK AKTIENGESELLSCHAFT
      as
      mortgagees of the said vessel all insurances in respect thereof, including
      the
      insurances constituted by the Policy whereon this notice is
      endorsed.

     

    _______________________________

    Signed

    For
      and
      on behalf of

    PEMER
      SHIPPING LTD

     

    Dated:
      [•] 2007

    
       

      
        
          13

        

        

      

      
        
        

      

       

    
    
      	
              EXECUTED
                as a DEED

            	
              )

            	 
	
              by

            	
              )

            	 
	
              for
                and on behalf of

            	
              )

            	
              _________________________

            
	
              PEMER
                SHIPPING LTD

            	
              )

            	
              Attorney-in-Fact

            
	
              in
                the presence of:

            	
              )

            	 

    

    

    _______________________________

    Witness

    Name:

    Address:

    Occupation:

     

    
      	
              EXECUTED
                as a DEED

            	
              )

            	 
	
              by

            	
              )

            	
              
                _________________________

              

            
	
              and
                by

            	
              )

            	
              Authorised
                signatory

            
	
              for
                and on behalf of

            	
              )

            	 
	
              BAYERISCHE
                HYPO -UND VEREINSBANK

            	
              )

            	
              
                _________________________

              

            
	
              AKTIENGESELLSCHAFT

            	
              )

            	
              Authorised
                signatory

            
	
              in
                the presence of:

            	
              )

            	 

    

     

    _______________________________
Witness

    Name:

    Address:

    Occupation:

    
       

      
        
          14

        

        

      

      
        
        

      

       

    
    Schedule
      6

Form
      of Manager’s Undertaking

     

    
      
        50

      

      

    
    
      
      

    

     

    Private
      & Confidential

     

    Manager’s
      Undertaking

     

    
      	
              To:
                

            	
              Bayerische
                Hypo- und Vereinsbank Aktiengesellschaft 

            
	 	
              7
                Heraklitou Street

            
	 	
              106
                73 Athens

            
	 	
              Greece

            
	 	 
	
              From:

            	
              Safety
                Management Overseas S.A.

            
	 	
              Edificio
                Torre Universal

            
	 	
              Piso
                12 Avenida Federico Boyd

            
	 	
              P.O.
                Box 8807

            
	 	
              Panama
                City

            
	 	
              Republic
                of Panama

            

    

     

    March
      2007

     

    Dear
      Sirs

     

    Multicurrency
      loan of up to $36,000,000 to Pemer Shipping Ltd

     

    
      	
              1

            	
              Loan
                Agreement

            

    

     

    We
      understand that under a Loan Agreement (the “Loan
      Agreement”)
      dated
                    
March 2007 made between (1) yourselves Bayerische Hypo- und Vereinsbank
      Aktiengesellschaft (the “Bank”
which
      expression includes the Bank’s successors in title, Assignees and/or Transferees
      and (2) Pemer Shipping Ltd (the “Borrower”)
      the
      Bank has agreed to make a multicurrency loan of up to $36,000,000 (the
“Loan”)
      to the
      Borrower and that it is a condition to the Bank’s agreement to make the Loan to
      the Borrower that we, Safety Management Overseas S.A. (the “Manager”),
      enter
      into this letter of undertaking (the “Letter”)
      in
      favour of the Bank.

     

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

     

    
      	
              2

            	
              Confirmation
                of appointment

            

    

     

    We
      hereby
      confirm that we have been appointed as the manager of m.v. Pedhoulas
      Merchant (the
      “Ship”)
      registered under Cyprus flag at the Port of Limassol pursuant to a Management
      Agreement (the “Management
      Agreement”)
      dated
      23 January 2006 made between ourselves and the Borrower and that we have
      accepted out appointment thereunder in accordance with the terms and conditions
      thereof.

     

    
      	
              3

            	
              Representation
                and warranty

            

    

     

    
      	
              3.1

            	
              We
                hereby represent and warrant that the copy of the Management Agreement
                set
                out in Appendix 1 to this letter is a true and complete copy of the
                Management Agreement, that the Management Agreement constitutes valid
                and
                binding obligations of the Manager enforceable in accordance with
                its
                terms and that there have been no amendments or variations thereto
                or
                defaults thereunder by the Manager or, to the best of the Manager’s
                knowledge and belief, the Borrower.

            

    

     

    
      	
              3.2

            	
              We
                hereby confirm that the representations and warranties set out in
                clauses
                8.2.9, 8.2.10 and 8.2.11 of the Loan Agreement are true and correct
                in all
                respects.

            

    

    
       

      
        
          
          

        

        

      

      
        
        

      

       

    
    
      	
              4

            	
              Undertakings

            

    

     

    The
      Manager undertakes with the Bank that throughout the Security Period (as such
      term is defined in the General Assignment
      dated          March 2007 (the
“General
      Assignment”)
      executed by the Owner in favour of the Bank):

     

    
      	
              4.1

            	
              the
                Manager will not agree or purport to agree to any amendment or variation
                of the Management Agreement without the prior written consent of
                the
                Bank;

            

    

     

    
      	
              4.2

            	
              the
                Manager will procure that any sub-manager appointed by it pursuant
                to the
                provisions of the Management Agreement will, on or before the date
                of such
                appointment enter into an undertaking in favour of the Bank in
                substantially the same form (mutatis
                mutandis) as
                this Letter;

            

    

     

    
      	
              4.3

            	
              the
                Manager will not, without the prior written consent of the Bank,
                take any
                action or institute any proceedings or make or assert any claim on
                or in
                respect of the Ship or its 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 (as such term is defined in the General Assignment) in place
                or
                taken out or entered into by or for the benefit of the Borrower (whether
                in the sole name of the Borrower or in the joint names of the Borrower
                and
                the Bank or otherwise) in respect of the Ship and her Earnings (as
                such
                term is defined below) or otherwise howsoever in connection with
                the Ship
                and all benefits thereof (including claims of whatsoever nature and
                return
                of premiums) (together the “Insurances”)
                or all moneys whatsoever from time to time due or payable to the
                Borrower
                during the Security Period (as such term is defined in the General
                Assignment) 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 Borrower in the 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 (the “Earnings”)
                or any other property or other assets of the Borrower which the Bank
                has
                previously advised the Manager are subject to any Encumbrance or
                right of
                set-off in favour of the Bank by virtue of any of the security documents
                executed in favour of the Bank pursuant to the Loan
                Agreement;

            

    

     

    
      	
              4.4

            	
              the
                Manager does hereby subordinate any claim that it may have against
                the
                Borrower or otherwise in respect of the Ship and its Earnings, Insurances
                and Requisition Compensation (as such term is defined in the General
                Assignment) to the claims of the Bank under the Loan Agreement and
                the
                other Security Documents (as such term is defined in the General
                Assignment) and undertakes to exercise no right to which it may be
                entitled in respect of the Borrower and/or the Ship and/or its Earnings
                and/or Insurances and/or Requisition Compensation (as such term is
                defined
                in the General Assignment) in competition with the
                Bank;

            

    

     

    
      	
              4.5

            	
              the
                Manager will discontinue any such action or proceedings or claim
                which may
                have been taken, instituted or made or asserted, promptly upon notice
                from
                the Bank to do so;

            

    

     

    
      	
              4.6

            	
              the
                Manager will promptly notify the Bank if at any time the amount owed
                by
                the Borrower to the Manager pursuant to the Management Agreement
                (whether
                in respect of the Manager’s remuneration or disbursements or otherwise)
                exceeds US$100,000 or the equivalent in other currencies;
                and

            

    

     

    
      	
              4.7

            	
              the
                Manager will provide the Bank with such information concerning the
                Ship as
                the Bank may from time to time reasonably
                require.

            

    

    
       

      
        
          2

        

        

      

      
        
        

      

       

    
    
      	
              5

            	
              Insurance
                assignment

            

    

     

    
      	
              5.1

            	
              By
                way of security for the aggregate of the Loan and interest accrued
                and
                accruing thereon, the Expenses (as such term is defined in the General
                Assignment) the Master Swap Agreement Liabilities (as such term is
                defined
                in the General Assignment) and all other sums of money from time
                to time
                owing by the Borrower to the Bank, whether actually or contingently,
                under
                the Security Documents (as such term is defined in the General Assignment)
                or any of them to which the Borrower is or is to be a party (the
                “Outstanding
                Indebtedness”)
                the Manager with full title guarantee hereby irrevocably and
                unconditionally assigns and agrees to assign to the Bank all of the
                Manager’s rights, title and interest in and to and the benefit of the
                Insurances.

            

    

     

    
      	
              5.2

            	
              The
                Manager hereby undertakes to procure that a duly completed notice
                in the
                form set out in Appendix 2 to this Letter is given to all insurers
                of the
                Ship and to procure that such notice is promptly endorsed on all
                policies
                and entries in respect of the Insurances and agrees promptly to authorise
                and/or instruct any broker, insurer or association with or through
                whom
                Insurances may be effected to endorse on any policy or entry or otherwise
                to give effect to such loss payable clause as may be stipulated by
                the
                Bank.

            

    

     

    
      	
              5.3

            	
              The
                Bank shall, at the Manager’s cost, re-assign to the Manager all the
                Manager’s right, title and interest in the Insurances upon the Outstanding
                Indebtedness being discharged in full to the satisfaction of the
                Bank.

            

    

     

    
      	
              5.4

            	
              Any
                moneys in respect of the Insurances which would (but for the assignment
                contained in clause 5.1 above) be payable to the Manager shall be
                applied
                in accordance with clause 2.3 of the General Assignment and/or (as
                the
                case may be) clause 2.6 of the General
                Assignment.

            

    

     

    
      	
              6

            	
              Acknowledgement

            

    

     

    The
      Manager hereby acknowledges that it has seen and has reviewed the Loan Agreement
      and the other Security Documents and agrees to (a) abide by and to observe
      the
      provisions thereof insofar as the same are applicable to it as therein provided
      and (b) not to take any action or make an omission that would cause the Borrower
      or any of the other Security Parties to be in breach of any of the terms of
      any
      Security Document.

     

    
      	
              7

            	
              Law
                and jurisdiction

            

    

     

    
      	
              7.1

            	
              The
                agreement constituted by this Letter shall be governed by and construed
                in
                accordance with English law.

            

    

     

    
      	
              7.2

            	
              The
                Manager agrees, for the benefit of the Bank, that any legal action
                or
                proceedings arising out of or in connection with this letter against
                the
                Manager or any of its assets may be brought in the English courts.
                The
                Manager irrevocably and unconditionally submits to the jurisdiction
                of
                such courts and whoever irrevocably designates, appoints and empowers
                Cheeswrights at present of 10 Philpot Lane, London EC3M 8BR, England,
                receive for it and on its behalf, service of process issued out of
                the
                English courts in any such legal action or proceedings. The submission
                to
                such jurisdiction shall not (and shall not be construed so as to)
                limit
                the rights of the Bank to take any proceedings against the Manager
                in the
                courts of any other competent jurisdiction nor shall the taking of
                proceedings in any one or more jurisdictions preclude the taking
                of
                proceedings in any other jurisdiction, whether concurrently or
                not.

            

    

    
       

      
        
          3

        

        

      

      
        
        

      

       

    
    
      	
              7.3

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

            

    

     

    Yours
      faithfully

     

    _______________________________

    For
      and
      on behalf of

    Safety
      Management Overseas S.A.

    
       

      
        
          4

        

        

      

      
        
        

      

       

      Appendix
        1

    
     

    Copy
      of the Management Agreement

    
       

      
        
          5

        

        

      

      
        
        

      

       

    
    Appendix
      2

     

    Notice
      of Assignment

     

    We,
      SAFETY
      MANAGEMENT OVERSEAS S.A., the
      managers of m.v. Pedhoulas
      Merchant, HEREBY
      GIVE NOTICE
      that by
      a first assignment dated [•] 2007 and entered into by us with BAYERISCHE
      HYPO- UND VEREINSBANK AKTIENGESELLSCHAFT there
      has
      been assigned by us to the said BAYERISCHE
      HYPO- UND VEREINSBANK AKTIENGESELLSCHAFT as
      first
      assignees all of our right, title and interest in and to the insurances in
      respect of the said Ship including the insurances constituted by the Policy
      whereon this notice is endorsed.

     

    _______________________________

    SIGNED

    for
      and
      on behalf of

    SAFETY
      MANAGEMENT OVERSEAS S.A.

     

    Dated:
      [•] 2007

     

    
      
        6

      

      

    
    
      
      

    

     

    Schedule
      7

Form
      of Master Swap Agreement

     

    
      
        51

      

      

    
    
      
      

    

     

    (Multicurrency-Cross
      Border)

     

    ISDA®

    International
      Swaps & Derivatives Association, Inc.

     

    MASTER
      AGREEMENT

     

    dated         
      March 2007

     

    Pemer
      Shipping Ltd and Bayerische Hypo- and Vereinsbank
      Aktiengesellschaft

     

    have
      entered and/or anticipate entering into one or more transactions (each a
“Transaction”) that are or will be governed by this Master Agreement, which
      includes the schedule (the “Schedule”), and the documents and other confirming
      evidence (each a “Confirmation”) exchanged between the parties confirming those
      Transactions.

     

    Accordingly,
      the parties agree as follows:-

     

    
      
        	1.	
                Interpretation

              

      

    

     

    (a) Definitions.
      The
      terms
      defined in Section 14 and in the Schedule will have the meanings therein
      specified for the purpose of this Master Agreement.

     

    (b) Inconsistency.
      In
      the
      event of any inconsistency between the provisions of the Schedule and the other
      provisions of this Master Agreement, the Schedule will prevail. In the event
      of
      any inconsistency between the provisions of any Confirmation and this Master
      Agreement (including the Schedule), such Confirmation will prevail for the
      purpose of the relevant Transaction.

     

    (c) Single
      Agreement. All
      Transactions are entered into in reliance on the fact that this Master Agreement
      and all Confirmations form a single agreement between the parties (collectively
      referred to as this “Agreement”), and the parties would not otherwise enter into
      any Transactions.

     

    
      	2.	
              Obligations

            

    

     

    
      	(a)	
              General
                Conditions.

            

    

     

    (i) Each
      party will make each payment or delivery specified in each Confirmation to
      be
      made by it, subject to the other provisions of this Agreement.

     

    (ii) Payments
      under this Agreement will be made on the due date for value on that date in
      the
      place of the account specified in the relevant Confirmation or otherwise
      pursuant to this Agreement, in freely transferable funds and in the manner
      customary for payments in the required currency. Where settlement is by delivery
      (that is, other than by payment), such delivery will be made for receipt on
      the
      due date in the manner customary for the relevant obligation unless otherwise
      specified in the relevant Confirmation or elsewhere in this
      Agreement.

     

    (iii) Each
      obligation of each party under Section 2(a)(i) is subject to (1) the condition
      precedent that no Event of Default or Potential Event of Default with respect
      to
      the other party has occurred and is continuing, (2) the condition precedent
      that
      no Early Termination Date in respect of the relevant Transaction has occurred
      or
      been effectively designated and (3) each other applicable condition precedent
      specified in this Agreement.

    
       

      
        
          
          

        

        

      

      
        
        

      

       

    
    (b) Change
      of Account. Either
      party may change its account for receiving a payment or delivery by giving
      notice to the other party at least five Local Business Days prior to the
      scheduled date for the payment or delivery to which such change applies unless
      such other party gives timely notice of a reasonable objection to such
      change.

     

    (c) Netting. If
      on any
      date amounts would otherwise be payable:-

     

    (i) in
      the
      same currency; and

     

    (ii) in
      respect of the same Transaction,

     

    by
      each
      party to the other, then, on such date, each party’s obligation to make payment
      of any such amount will be automatically satisfied and discharged and, if the
      aggregate amount that would otherwise have been payable by one party exceeds
      the
      aggregate amount that would otherwise have been payable by the other party,
      replaced by an obligation upon the party by whom the larger aggregate amount
      would have been payable to pay to the other party the excess of the larger
      aggregate amount over the smaller aggregate amount.

     

    The
      parties may elect in respect of two or more Transactions that a net amount
      will
      be determined in respect of all amounts payable on the same date in the same
      currency in respect of such Transactions, regardless of whether such amounts
      are
      payable in respect of the same Transaction. The election may be made in the
      Schedule or a Confirmation by specifying that subparagraph (ii) above will
      not
      apply to the Transactions identified as being subject to the election, together
      with the starting date (in which case subparagraph (ii) above will not, or
      will
      cease to, apply to such Transactions from such date). This election may be
      made
      separately for different groups of Transactions and will apply separately to
      each pairing of Offices through which the parties make and receive payments
      or
      deliveries.

     

    (d) Deduction
      or Withholding for Tax.

     

    (i) Gross-Up.
      All
      payments under this Agreement will be made without any deduction or withholding
      for or on account of any Tax unless such deduction or withholding is required
      by
      any applicable law, as modified by the practice of any relevant governmental
      revenue authority, then in effect. If a party is so required to deduct or
      withhold, then that party (“X”) will:-

     

    (1) promptly
      notify the other party (“Y”) of such requirement;

     

    (2) pay
      to
      the relevant authorities the full amount required to be deducted or withheld
      (including the full amount required to be deducted or withheld from any
      additional amount paid by X to Y under this Section 2(d)) promptly upon the
      earlier of determining that such deduction or withholding is required or
      receiving notice that such amount has been assessed against Y;

     

    (3) promptly
      forward to Y an official receipt (or a certified copy), or other documentation
      reasonably acceptable to Y, evidencing such payment to such authorities;
      and

     

    (4) if
      such
      Tax is an Indemnifiable Tax, pay to Y, in addition to the payment to which
      Y is
      otherwise entitled under this Agreement, such additional amount as is necessary
      to ensure that the net amount actually received by Y (free and clear of
      Indemnifiable Taxes, whether assessed against X or Y) will equal the full amount
      Y would have received had no such deduction or withholding been required.
      However, X will not be required to pay any additional amount to Y to the extent
      that it would not be required to be paid but for:-

     

    (A) the
      failure by Y to comply with or perform any agreement contained in Section
      4(a)(i), 4(a)(iii) or 4(d); or

     

    (B) the
      failure of a representation made by Y pursuant to Section 3(f) to be accurate
      and true unless such failure would not have occurred but for (I) any action
      taken by a taxing authority, or brought in a court of competent jurisdiction,
      on
      or after the date on 

    
       

      
        
          2

        

        

      

      
        
        

      

       

    
    which
      a
      Transaction is entered into (regardless of whether such action is taken or
      brought with respect to a party to this Agreement) or (II) a Change in Tax
      Law.

     

    (ii) Liability.
      If:-

     

    (1) X
      is
      required by any applicable law, as modified by the practice of any relevant
      governmental revenue authority, to make any deduction or withholding in respect
      of which X would not be required to pay an additional amount to Y under Section
      2(d)(i)(4);

     

    (2) X
      does
      not so deduct or withhold; and

     

    (3) a
      liability resulting from such Tax is assessed directly against X,

     

    then,
      except to the extent Y has satisfied or then satisfies the liability resulting
      from such Tax, Y will promptly pay to X the amount of such liability (including
      any related liability for interest, but including any related liability for
      penalties only if Y has failed to comply with or perform any agreement contained
      in Section 4(a)(i), 4(a)(iii) or 4(d)).

     

    (e) Default
      Interest; Other Amounts. Prior
      to
      the occurrence or effective designation of an Early Termination Date in respect
      of the relevant Transaction, a party that defaults in the performance of any
      payment obligation will, to the extent permitted by law and subject to Section
      6(c), be required to pay interest (before as well as after judgment) on the
      overdue amount to the other party on demand in the same currency as such overdue
      amount, for the period from (and including) the original due date for payment
      to
      (but excluding) the date of actual payment, at the Default Rate. Such interest
      will be calculated on the basis of daily compounding and the actual number
      of
      days elapsed. If, prior to the occurrence or effective designation of an Early
      Termination Date in respect of the relevant Transaction, a party defaults in
      the
      performance of any obligation required to be settled by delivery, it will
      compensate the other party on demand if and to the extent provided for in the
      relevant Confirmation or elsewhere in this Agreement.

     

    
      	3.	
              Representations

            

    

     

    Each
      party represents to the other party (which representations will be deemed to
      be
      repeated by each party on each date on which a Transaction is entered into
      and,
      in the case of the representations in Section 3(f), at all times until the
      termination of this Agreement) that:-

     

    
      	(a)	
              Basic
                Representations.

            

    

     

    (i) Status.
      It
      is
      duly organised and validly existing under the laws of the jurisdiction of its
      organisation or incorporation and, if relevant under such laws, in good
      standing;

     

    (ii) Powers.
      It
      has
      the power to execute this Agreement and any other documentation relating to
      this
      Agreement to which it is a party, to deliver this Agreement and any other
      documentation relating to this Agreement that it is required by this Agreement
      to deliver and to perform its obligations under this Agreement and any
      obligations it has under any Credit Support Document to which it is a party
      and
      has taken all necessary action to authorise such execution, delivery and
      performance;

     

    (iii)
       No
      Violation or Conflict. Such
      execution, delivery and performance do not violate or conflict with any law
      applicable to it, any provision of its constitutional documents, any order
      or
      judgment of any court or other agency of government applicable to it or any
      of
      its assets or any contractual restriction binding on or affecting it or any
      of
      its assets;

     

    (iv) Consents.
      All
      governmental and other consents that are required to have been obtained by
      it
      with respect to this Agreement or any Credit Support Document to which it is
      a
      party have been obtained and are in full force and effect and all conditions
      of
      any such consents have been complied with; and

    
       

      
        
          3

        

        

      

      
        
        

      

       

    
    (v) Obligations
      Binding. Its
      obligations under this Agreement and any Credit Support Document to which it
      is
      a party constitute its legal, valid and binding obligations, enforceable in
      accordance with their respective terms (subject to applicable bankruptcy,
      reorganisation, insolvency, moratorium or similar laws affecting creditors’
rights generally and subject, as to enforceability, to equitable principles
      of
      general application (regardless of whether enforcement is sought in a proceeding
      in equity or at law)).

     

    (b) Absence
      of Certain Events. No
      Event
      of Default or Potential Event of Default or, to its knowledge, Termination
      Event
      with respect to it has occurred and is continuing and no such event or
      circumstance would occur as a result of its entering into or performing its
      obligations under this Agreement or any Credit Support Document to which it
      is a
      party.

     

    (c) Absence
      of Litigation. There
      is
      not pending or, to its knowledge, threatened against it or any of its Affiliates
      any action, suit or proceeding at law or in equity or before any court,
      tribunal, governmental body, agency or official or any arbitrator that is likely
      to affect the legality, validity or enforceability against it of this Agreement
      or any Credit Support Document to which it is a party or its ability to perform
      its obligations under this Agreement or such Credit Support
      Document.

     

    (d) Accuracy
      of Specified Information. All
      applicable information that is furnished in writing by or on behalf of it to
      the
      other party and is identified for the purpose of this Section 3(d) in the
      Schedule is, as of the date of the information, true, accurate and complete
      in
      every material respect.

     

    (e) Payer
      Tax Representation. Each
      representation specified in the Schedule as being made by it for the purpose
      of
      this Section 3(e) is accurate and true.

     

    (f) Payee
      Tax Representations. Each
      representation specified in the Schedule as being made by it for the purpose
      of
      this Section 3(f) is accurate and true.

     

    
      	4.	
              Agreements

            

    

     

    Each
      party agrees with the other that, so long as either party has or may have any
      obligation under this Agreement or under any Credit Support Document to which
      it
      is a party:-

     

    (a) Furnish
      Specified Information. It
      will
      deliver to the other party or, in certain cases under subparagraph (iii) below,
      to such government or taxing authority as the other party reasonably
      directs:-

     

    (i) any
      forms, documents or certificates relating to taxation specified in the Schedule
      or any Confirmation;

     

    (ii) any
      other
      documents specified in the Schedule or any Confirmation; and

     

    (iii) upon
      reasonable demand by such other party, any form or document that may be required
      or reasonably requested in writing in order to allow such other party or its
      Credit Support Provider to make a payment under this Agreement or any applicable
      Credit Support Document without any deduction or withholding for or on account
      of any Tax or with such deduction or withholding at a reduced rate (so long
      as
      the completion, execution or submission of such form or document would not
      materially prejudice the legal or commercial position of the party in receipt
      of
      such demand), with any such form or document to be accurate and completed in
      a
      manner reasonably satisfactory to such other party and to be executed and to
      be
      delivered with any reasonably required certification, 

     

    in
      each
      case by the date specified in the Schedule or such Confirmation or, if none
      is
      specified, as soon as reasonably practicable.

     

    (b) Maintain
      Authorisations. It
      will
      use all reasonable efforts to maintain in full force and effect all consents
      of
      any governmental or other authority that are required to be obtained by it
      with
      respect to this Agreement or any 

    
       

      
        
          4

        

        

      

      
        
        

      

       

    
    Credit
      Support Document to which it is a party and will use all reasonable efforts
      to
      obtain any that may become necessary in the future.

     

    (c) Comply
      with Laws. It
      will
      comply in all material respects with all applicable laws and orders to which
      it
      may be subject if failure so to comply would materially impair its ability
      to
      perform its obligations under this Agreement or any Credit Support Document
      to
      which it is a party.

     

    (d) Tax
      Agreement. It
      will
      give notice of any failure of a representation made by it under Section 3(f)
      to
      be accurate and true promptly upon learning of such failure.

     

    (e) Payment
      of Stamp Tax. Subject
      to Section 11, it will pay any Stamp Tax levied or imposed upon it or in respect
      of its execution or performance of this Agreement by a jurisdiction in which
      it
      is incorporated, organised, managed and controlled, or considered to have its
      seat, or in which a branch or office through which it is acting for the purpose
      of this Agreement is located (“Stamp Tax Jurisdiction”) and will indemnify the
      other party against any Stamp Tax levied or imposed upon the other party or
      in
      respect of the other party’s execution or performance of this Agreement by any
      such Stamp Tax Jurisdiction which is not also a Stamp Tax Jurisdiction with
      respect to the other party.

     

    
      
        	5.	
                Events
                  of Default and Termination
                  Events

              

      

    

     

    (a) Events
      of Default.
      The
      occurrence at any time with respect to a party or, if applicable, any Credit
      Support Provider of such party or any Specified Entity of such party of any
      of
      the following events constitutes an event of default (an “Event of Default”)
      with respect to such party:-

     

    (i) Failure
      to Pay or Deliver.
      Failure
      by the party to make, when due, any payment under this Agreement or delivery
      under Section 2(a)(i) or 2(e) required to be made by it if such failure is
      not
      remedied on or before the third Local Business Day after notice of such failure
      is given to the party;

     

    (ii) Breach
      of Agreement.
      Failure
      by the party to comply with or perform any agreement or obligation (other than
      an obligation to make any payment under this Agreement or delivery under Section
      2(a)(i) or 2(e) or to give notice of a Termination Event or any agreement or
      obligation under Section 4(a)(i), 4(a)(iii) or 4(d)) to be complied with or
      performed by the party in accordance with this Agreement if such failure is
      not
      remedied on or before the thirtieth day after notice of such failure is given
      to
      the party;

     

    (iii) Credit
      Support Default.

     

    (1) Failure
      by the party or any Credit Support Provider of such party to comply with or
      perform any agreement or obligation to be complied with or performed by it
      in
      accordance with any Credit Support Document if such failure is continuing after
      any applicable grace period has elapsed;

     

    (2) the
      expiration or termination of such Credit Support Document or the failing or
      ceasing of such Credit Support Document to be in full force and effect for
      the
      purpose of this Agreement (in either case other than in accordance with its
      terms) prior to the satisfaction of all obligations of such party under each
      Transaction to which such Credit Support Document relates without the written
      consent of the other party; or

     

    (3) the
      party
      or such Credit Support Provider disaffirms, disclaims, repudiates or rejects,
      in
      whole or in part, or challenges the validity of, such Credit Support
      Document;

     

    (iv) Misrepresentation.
      A
      representation (other than a representation under Section 3(e) or (f)) made
      or repeated or deemed to have been made or repeated by the party or any Credit
      Support Provider of such party in this Agreement or any Credit Support Document
      proves to have been incorrect or misleading in any material respect when made
      or
      repeated or deemed to have been made or repeated;

    
       

      
        
          5

        

        

      

      
        
        

      

       

    
    (v) Default
      under Specified Transaction. The
      party, any Credit Support Provider of such party or any applicable Specified
      Entity of such party (1) defaults under a Specified Transaction and, after
      giving effect to any applicable notice requirement or grace period, there occurs
      a liquidation of, an acceleration of obligations under, or an early termination
      of, that Specified Transaction, (2) defaults, after giving effect to any
      applicable notice requirement or grace period, in making any payment or delivery
      due on the last payment, delivery or exchange date of, or any payment on early
      termination of, a Specified Transaction (or such default continues for at least
      three Local Business Days if there is no applicable notice requirement or grace
      period) or (3) disaffirms, disclaims, repudiates or rejects, in whole or in
      part, a Specified Transaction (or such action is taken by any person or entity
      appointed or empowered to operate it or act on its behalf);

     

    (vi) Cross
      Default. If
“Cross
      Default” is specified in the Schedule as applying to the party, the occurrence
      or existence of (1) a default, event of default or other similar condition
      or
      event (however described) in respect of such party, any Credit Support Provider
      of such party or any applicable Specified Entity of such party under one or
      more
      agreements or instruments relating to Specified Indebtedness of any of them
      (individually or collectively) in an aggregate amount of not less than the
      applicable Threshold Amount (as specified in the Schedule) which has resulted
      in
      such Specified Indebtedness becoming, or becoming capable at such time of being
      declared, due and payable under such agreements or instruments, before it would
      otherwise have been due and payable or (2) a default by such party, such Credit
      Support Provider or such Specified Entity (individually or collectively) in
      making one or more payments on the due date thereof in an aggregate amount
      of
      not less than the applicable Threshold Amount under such agreements or
      instruments (after giving effect to any applicable notice requirement or grace
      period);

     

    (vii) Bankruptcy.
      The
      party, any Credit Support Provider of such party or any applicable Specified
      Entity of such party:-

     

    (1) is
      dissolved (other than pursuant to a consolidation, amalgamation or merger);
      (2)
      becomes insolvent or is unable to pay its debts or fails or admits in writing
      its inability generally to pay its debts as they become due; (3) makes a general
      assignment, arrangement or composition with or for the benefit of its creditors;
      (4) institutes or has instituted against it a proceeding seeking a judgment
      of
      insolvency or bankruptcy or any other relief under any bankruptcy or insolvency
      law or other similar law affecting creditors’ rights, or a petition is presented
      for its winding-up or liquidation, and, in the case of any such proceeding
      or
      petition instituted or presented against it, such proceeding or petition (A)
      results in a judgment of insolvency or bankruptcy or the entry of an order
      for
      relief or the making of an order for its winding-up or liquidation or (B) is
      not
      dismissed, discharged, stayed or restrained in each case within 30 days of
      the
      institution or presentation thereof; (5) has a resolution passed for its
      winding-up, official management or liquidation (other than pursuant to a
      consolidation, amalgamation or merger); (6) seeks or becomes subject to the
      appointment of an administrator, provisional liquidator, conservator, receiver,
      trustee, custodian or other similar official for it or for all or substantially
      all its assets; (7) has a secured party take possession of all or substantially
      all its assets or has a distress, execution, attachment, sequestration or other
      legal process levied, enforced or sued on or against all or substantially all
      its assets and such secured party maintains possession, or any such process
      is
      not dismissed, discharged, stayed or restrained, in each case within 30 days
      thereafter; (8) causes or is subject to any event with respect to it which,
      under the applicable laws of any jurisdiction, has an analogous effect to any
      of
      the events specified in clauses (1) to (7) (inclusive); or (9) takes any action
      in furtherance of, or indicating its consent to, approval of, or acquiescence
      in, any of the foregoing acts; or

     

    (viii) Merger
      Without Assumption. The
      party
      or any Credit Support Provider of such party consolidates or amalgamates with,
      or merges with or into, or transfers all or substantially all its assets to,
      another entity and, at the time of such consolidation, amalgamation, merger
      or
      transfer:-

     

    (1) the
      resulting, surviving or transferee entity fails to assume all the obligations
      of
      such party or such Credit Support Provider under this Agreement or any Credit
      Support Document to which it or its predecessor was a party by operation of
      law
      or pursuant to an agreement reasonably satisfactory to the other party to this
      Agreement; or

    
       

      
        
          6

        

        

      

      
        
        

      

       

    
    (2) the
      benefits of any Credit Support Document fail to extend (without the consent
      of
      the other party) to the performance by such resulting, surviving or transferee
      entity of its obligations under this Agreement.

     

    (b) Termination
      Events. The
      occurrence at any time with respect to a party or, if applicable, any Credit
      Support Provider of such party or any Specified Entity of such party of any
      event specified below constitutes an Illegality if the event is specified in
      (i)
      below, a Tax Event if the event is specified in (ii) below or a Tax Event Upon
      Merger if the event is specified in (iii) below, and, if specified to be
      applicable, a Credit Event Upon Merger if the event is specified pursuant to
      (iv) below or an Additional Termination Event if the event is specified pursuant
      to (v) below:-

     

    (i)
      Illegality.
      Due
      to
      the adoption of, or any change in, any applicable law after the date on which
      a
      Transaction is entered into, or due to the promulgation of, or any change in,
      the interpretation by any court, tribunal or regulatory authority with competent
      jurisdiction of any applicable law after such date, it becomes unlawful (other
      than as a result of a breach by the party of Section 4(b)) for such party (which
      will be the Affected Party):-

     

    (1) to
      perform any absolute or contingent obligation to make a payment or delivery
      or
      to receive a payment or delivery in respect of such Transaction or to comply
      with any other material provision of this Agreement relating to such
      Transaction; or

     

    (2) to
      perform, or for any Credit Support Provider of such party to perform, any
      contingent or other obligation which the party (or such Credit Support Provider)
      has under any Credit Support Document relating to such Transaction;

     

    (ii)
      Tax
      Event. Due
      to
      (x) any action taken by a taxing authority, or brought in a court of competent
      jurisdiction, on or after the date on which a Transaction is entered into
      (regardless of whether such action is taken or brought with respect to a party
      to this Agreement) or (y) a Change in Tax Law, the party (which will be the
      Affected Party) will, or there is a substantial likelihood that it will, on
      the
      next succeeding Scheduled Payment Date (1) be required to pay to the other
      party
      an additional amount in respect of an Indemnifiable Tax under Section 2(d)(i)(4)
      (except in respect of interest under Section 2(e), 6(d)(ii) or 6(e)) or (2)
      receive a payment from which an amount is required to be deducted or withheld
      for or on account of a Tax (except in respect of interest under Section 2(e),
      6(d)(ii) or 6(e)) and no additional amount is required to be paid in respect
      of
      such Tax under Section 2(d)(i)(4) (other than by reason of Section 2(d)(i)(4)(A)
      or (B));

     

    (iii) Tax
      Event Upon Merger. The
      party
      (the “Burdened Party”) on the next succeeding Scheduled Payment Date will either
      (1) be required to pay an additional amount in respect of an Indemnifiable
      Tax
      under Section 2(d)(i)(4) (except in respect of interest under Section 2(e),
      6(d)(ii) or 6(e)) or (2) receive a payment from which an amount has been
      deducted or withheld for or on account of any Indemnifiable Tax in respect
      of
      which the other party is not required to pay an additional amount (other than
      by
      reason of Section 2(d)(i)(4)(A) or (B)), in either case as a result of a party
      consolidating or amalgamating with, or merging with or into, or transferring
      all
      or substantially all its assets to, another entity (which will be the Affected
      Party) where such action does not constitute an event described in Section
      5(a)(viii);

     

    (iv) Credit
      Event Upon Merger.
      If
“Credit Event Upon Merger” is specified in the Schedule as applying to the
      party, such party (“X”), any Credit Support Provider of X or any applicable
      Specified Entity of X consolidates or amalgamates with, or merges with or into,
      or transfers all or substantially all its assets to, another entity and such
      action does not constitute an event described in Section 5(a)(viii) but the
      creditworthiness of the resulting, surviving or transferee entity is materially
      weaker than that of X, such Credit Support Provider or such Specified Entity,
      as
      the case may be, immediately prior to such action (and, in such event, X or
      its
      successor or transferee, as appropriate, will be the Affected Party);
      or

     

    (v) Additional
      Termination Event. If
      any
“Additional Termination Event” is specified in the Schedule or any Confirmation
      as applying, the occurrence of such event (and, in such event, the Affected
      Party or Affected 

    
       

      
        
          7

        

        

      

      
        
        

      

       

    
    Parties
      shall be as specified for such Additional Termination Event in the Schedule
      or
      such Confirmation).

     

    (c) Event
      of Default and Illegality. If
      an
      event or circumstance which would otherwise constitute or give rise to an Event
      of Default also constitutes an Illegality, it will be treated as an Illegality
      and will not constitute an Event of Default.

     

    
      	6.	
              Early
                Termination

            

    

     

    (a) Right
      to Terminate Following Event of Default. If
      at any
      time an Event of Default with respect to a party (the “Defaulting Party”) has
      occurred and is then continuing, the other party (the “Non-defaulting Party”)
      may, by not more than 20 days notice to the Defaulting Party specifying the
      relevant Event of Default, designate a day not earlier than the day such notice
      is effective as an Early Termination Date in respect of all outstanding
      Transactions. If, however, “Automatic Early Termination” is specified in the
      Schedule as applying to a party, then an Early Termination Date in respect
      of
      all outstanding Transactions will occur immediately upon the occurrence with
      respect to such party of an Event of Default specified in Section 5(a)(vii)(
      1),
      (3), (5), (6) or, to the extent analogous thereto, (8), and as of the time
      immediately preceding the institution of the relevant proceeding or the
      presentation of the relevant petition upon the occurrence with respect to such
      party of an Event of Default specified in Section 5(a)(vii)(4) or, to the extent
      analogous thereto, (8).

     

    (b) Right
      to Terminate Following Termination Event.

     

    (i) Notice.
      If
      a
      Termination Event occurs, an Affected Party will, promptly upon becoming aware
      of it, notify the other party, specifying the nature of that Termination Event
      and each Affected Transaction and will also give such other information about
      that Termination Event as the other party may reasonably require.

     

    (ii) Transfer
      to Avoid Termination Event. If
      either
      an Illegality under Section 5(b)(i)(1) or a Tax Event occurs and there is
      only one Affected Party, or if a Tax Event Upon Merger occurs and the Burdened
      Party is the Affected Party, the Affected Party will, as a condition to its
      right to designate an Early Termination Date under Section 6(b)(iv), use all
      reasonable efforts (which will not require such party to incur a loss, excluding
      immaterial, incidental expenses) to transfer within 20 days after it gives
      notice under Section 6(b)(i) all its rights and obligations under this Agreement
      in respect of the Affected Transactions to another of its Offices or Affiliates
      so that such Termination Event ceases to exist.

     

    If
      the
      Affected Party is not able to make such a transfer it will give notice to the
      other party to that effect within such 20 day period, whereupon the other party
      may effect such a transfer within 30 days after the notice is given under
      Section 6(b)(i).

     

    Any
      such
      transfer by a party under this Section 6(b)(ii) will be subject to and
      conditional upon the prior written consent of the other party, which consent
      will not be withheld if such other party’s policies in effect at such time would
      permit it to enter into transactions with the transferee on the terms
      proposed.

     

    (iii) Two
      Affected Parties. If
      an
      Illegality under Section 5(b)(i)(1) or a Tax Event occurs and there are two
      Affected Parties, each party will use all reasonable efforts to reach agreement
      within 30 days after notice thereof is given under Section 6(b)(i) on action
      to
      avoid that Termination Event.

     

    (iv) Right
      to Terminate.
      If:-

     

    (1) a
      transfer under Section 6(b)(ii) or an agreement under Section 6(b)(iii), as
      the
      case may be, has not been effected with respect to all Affected Transactions
      within 30 days after an Affected Party gives notice under Section 6(b)(i);
      or

    
       

      
        
          8

        

        

      

      
        
        

      

       

    
    (2) an
      Illegality under Section 5(b)(i)(2), a Credit Event Upon Merger or an Additional
      Termination Event occurs, or a Tax Event Upon Merger occurs and the Burdened
      Party is not the Affected Party,

     

    either
      party in the case of an Illegality, the Burdened Party in the case of a Tax
      Event Upon Merger, any Affected Party in the case of a Tax Event or an
      Additional Termination Event if there is more than one Affected Party, or the
      party which is not the Affected Party in the case of a Credit Event Upon Merger
      or an Additional Termination Event if there is only one Affected Party may,
      by
      not more than 20 days notice to the other party and provided that the relevant
      Termination Event is then continuing, designate a day not earlier than the
      day
      such notice is effective as an Early Termination Date in respect of all Affected
      Transactions.

     

    
      (c)Effect
        of Designation.

    

     

    (i) If
      notice
      designating an Early Termination Date is given under Section 6(a) or (b), the
      Early Termination Date will occur on the date so designated, whether or not
      the
      relevant Event of Default or Termination Event is then continuing.

     

    (ii) Upon
      the
      occurrence or effective designation of an Early Termination Date, no further
      payments or deliveries under Section 2(a)(i) or 2(e) in respect of the
      Terminated Transactions will be required to be made, but without prejudice
      to
      the other provisions of this Agreement. The amount, if any, payable in respect
      of an Early Termination Date shall be determined pursuant to Section
      6(e).

     

    
      (d)Calculations.

    

     

    (i) Statement. On
      or as
      soon as reasonably practicable following the occurrence of an Early Termination
      Date, each party will make the calculations on its part, if any, contemplated
      by
      Section 6(e) and will provide to the other party a statement (1) showing, in
      reasonable detail, such calculations (including all relevant quotations and
      specifying any amount payable under Section 6(e)) and (2) giving details of
      the
      relevant account to which any amount payable to it is to be paid. In the absence
      of written confirmation from the source of a quotation obtained in determining
      a
      Market Quotation, the records of the party obtaining such quotation will be
      conclusive evidence of the existence and accuracy of such
      quotation.

     

    (ii) Payment
      Date. An
      amount
      calculated as being due in respect of any Early Termination Date under Section
      6(e) will be payable on the day that notice of the amount payable is effective
      (in the case of an Early Termination Date which is designated or occurs as
      a
      result of an Event of Default and on the day which is two Local Business Days
      after the day on which notice of the amount payable is effective (in the case
      of
      an Early Termination Date which is designated as a result of a Termination
      Event). Such amount will be paid together with (to the extent permitted under
      applicable law) interest thereon (before as well as after judgment) in the
      Termination Currency, from (and including) the relevant Early Termination Date
      to (but excluding) the date such amount is paid, at the Applicable Rate. Such
      interest will be calculated on the basis of daily compounding and the actual
      number of days elapsed.

     

    (e) Payments
      on Early Termination. If
      an
      Early Termination Date occurs, the following provisions shall apply based on
      the
      parties’ election in the Schedule of a payment measure, either “Market
      Quotation” or “Loss”, and a payment method, either the “First Method” or the
“Second Method”. If the parties fail to designate a payment measure or payment
      method in the Schedule, it will be deemed that “Market Quotation” or the “Second
      Method”, as the case may be, shall apply. The amount, if any, payable in respect
      of an Early Termination Date and determined pursuant to this Section will be
      subject to any Set-off.

     

    (i) Events
      of Default. If
      the
      Early Termination Date results from an Event of Default:-

     

    (1) First
      Method and Market Quotation. If
      the
      First Method and Market Quotation apply, the Defaulting Party will pay to the
      Non-defaulting Party the excess, if a positive number, of (A) the sum of the
      Settlement Amount (determined by the Non-defaulting Party) in respect of the
      

    
       

      
        
          9

        

        

      

      
        
        

      

       

    
    Terminated
      Transactions and the Termination Currency Equivalent of the Unpaid Amounts
      owing
      to the Non-defaulting Party over (B) the Termination Currency Equivalent of
      the
      Unpaid Amounts owing to the Defaulting Party.

     

    (2) First
      Method and Loss. If
      the
      First Method and Loss apply, the Defaulting Party will pay to the Non-defaulting
      Party, if a positive number, the Non-defaulting Party’s Loss in respect of this
      Agreement.

     

    (3) Second
      Method and Market Quotation. If
      the
      Second Method and Market Quotation apply, an amount will be payable equal to
      (A)
      the sum of the Settlement Amount (determined by the Non-defaulting Party) in
      respect of the Terminated Transactions and the Termination Currency Equivalent
      of the Unpaid Amounts owing to the Non-defaulting Party less (B) the Termination
      Currency Equivalent of the Unpaid Amounts owing to the Defaulting Party. If
      that
      amount is a positive number, the Defaulting Party will pay it to the
      Non-defaulting Party; if it is a negative number, the Non-defaulting Party
      will
      pay the absolute value of that amount to the Defaulting Party.

     

    (4)  Second
      Method and Loss. If
      the
      Second Method and Loss apply, an amount will be payable equal to the
      Non-defaulting Party’s Loss .in respect of this Agreement. If that amount is a
      positive number, the Defaulting Party will pay it to the Non-defaulting Party;
      if it is a negative number, the Non-defaulting Party will pay the absolute
      value
      of that amount to the Defaulting Party.

     

    (ii)
      Termination
      Events. If
      the
      Early Termination Date results from a Termination Event:-

     

    (1) One
      Affected Party. If
      there
      is one Affected Party, the amount payable will be determined in accordance
      with
      Section 6(e)(i)(3), if Market Quotation applies, or Section 6(e)(i)(4), if
      Loss
      applies, except that, in either case, references to the Defaulting Party and
      to
      the Non-defaulting Party will be deemed to be references to the Affected Party
      and the party which is not the Affected Party, respectively, and, if Loss
      applies and fewer than all the Transactions are being terminated, Loss shall
      be
      calculated in respect of all Terminated Transactions.

     

    (2) Two
      Affected Parties. If
      there
      are two Affected Parties:-

     

    (A) if
      Market
      Quotation applies, each party will determine a Settlement Amount in respect
      of
      the Terminated Transactions, and an amount will be payable equal to (I) the
      sum
      of (a) one-half of the difference between the Settlement Amount of the party
      with the higher Settlement Amount (“X”) and the Settlement Amount of the party
      with the lower Settlement Amount (“Y”) and (b) the Termination Currency
      Equivalent of the Unpaid Amounts owing to X less (II) the Termination Currency
      Equivalent of the Unpaid Amounts owing to Y; and

     

    (B) if
      Loss
      applies, each party will determine its Loss in respect of this Agreement (or,
      if
      fewer than all the Transactions are being terminated, in respect of all
      Terminated Transactions) and an amount will be payable equal to one-half of
      the
      difference between the Loss of the party with the higher Loss (“X”) and the Loss
      of the party with the lower Loss (“Y”).

     

    If
      the
      amount payable is a positive number, Y will pay it to X; if it is a negative
      number, X will pay the absolute value of that amount to Y.

     

    (iii) Adjustment
      for Bankruptcy. In
      circumstances where an Early Termination Date occurs because “Automatic Early
      Termination” applies in respect of a party, the amount determined under this
      Section 6(e) will be subject to such adjustments as are appropriate and
      permitted by law to reflect any payments or deliveries made by one party to
      the
      other under this Agreement (and retained by such other party) during

    
       

      
        
          10

        

        

      

      
        
        

      

       

    
    the
      period from the relevant Early Termination Date to the date for payment
      determined under Section 6(d)(ii).

     

    (iv)
       Pre-Estimate.
      The
      parties agree that if Market Quotation applies an amount recoverable under
      this
      Section 6(e) is a reasonable pre-estimate of loss and not a penalty. Such
      amount is payable for the loss of bargain and the loss of protection against
      future risks and except as otherwise provided in this Agreement neither party
      will be entitled to recover any additional damages as a consequence of such
      losses.

     

    
      	7.	
              Transfer

            

    

     

    Subject
      to Section 6(b)(ii), neither this Agreement nor any interest or obligation
      in or
      under this Agreement may be transferred (whether by way of security or
      otherwise) by either party without the prior written consent of the other party,
      except that:-

     

    (a) a
      party
      may make such a transfer of this Agreement pursuant to a consolidation or
      amalgamation with, or merger with or into, or transfer of all or substantially
      all its assets to, another entity (but without prejudice to any other right
      or
      remedy under this Agreement); and

     

    (b) a
      party
      may make such a transfer of all or any part of its interest in any amount
      payable to it from a Defaulting Party under Section 6(e).

     

    Any
      purported transfer that is not in compliance with this Section will be
      void.

     

    
      	8.	
              Contractual
                Currency

            

    

     

    (a) Payment
      in the Contractual Currency. Each
      payment under this Agreement will be made in the relevant currency specified
      in
      this Agreement for that payment (the “Contractual Currency”). To the extent
      permitted by applicable law, any obligation to make payments under this
      Agreement in the Contractual Currency will not be discharged or satisfied by
      any
      tender in any currency other than the Contractual Currency, except to the extent
      such tender results in the actual receipt by the party to which payment is
      owed,
      acting in a reasonable manner and in good faith in converting the currency
      so
      tendered into the Contractual Currency, of the full amount in the Contractual
      Currency of all amounts payable in respect of this Agreement. If for any reason
      the amount in the Contractual Currency so received falls short of the amount
      in
      the Contractual Currency payable in respect of this Agreement, the party
      required to make the payment will, to the extent permitted by applicable law,
      immediately pay such additional amount in the Contractual Currency as may be
      necessary to compensate for the shortfall. If for any reason the amount in
      the
      Contractual Currency so received exceeds the amount in the Contractual Currency
      payable in respect of this Agreement, the party receiving the payment will
      refund promptly the amount of such excess.

     

    (b) Judgments.
      To
      the
      extent permitted by applicable law, if any judgment or order expressed in a
      currency other than the Contractual Currency is rendered (i) for the payment
      of
      any amount owing in respect of this Agreement, (ii) for the payment of any
      amount relating to any early termination in respect of this Agreement or (iii)
      in respect of a judgment or order of another court for the payment of any amount
      described in (i) or (ii) above, the party seeking recovery, after recovery
      in
      full of the aggregate amount to which such party is entitled pursuant to the
      judgment or order, will be entitled to receive immediately from the other party
      the amount of any shortfall of the Contractual Currency received by such party
      as a consequence of sums paid in such other currency and will refund promptly
      to
      the other party any excess of the Contractual Currency received by such party
      as
      a consequence of sums paid in such other currency if such shortfall or such
      excess arises or results from any variation between the rate of exchange at
      which the Contractual Currency is converted into the currency of the judgment
      or
      order for the purposes of such judgment or order and the rate of exchange at
      which such party is able, acting in a reasonable manner and in good faith in
      converting the currency received into the Contractual Currency, to purchase
      the
      Contractual Currency with the amount of the currency of the judgment or order
      actually received by such party. The term “rate of exchange” includes, without
      limitation, any premiums and costs of exchange payable in connection with the
      purchase of or conversion into the Contractual Currency.

    
       

      
        
          11

        

        

      

      
        
        

      

       

    
    (c) Separate
      Indemnities. To
      the
      extent permitted by applicable law, these indemnities constitute separate and
      independent obligations from the other obligations in this Agreement, will
      be
      enforceable as separate and independent causes of action, will apply
      notwithstanding any indulgence granted by the party to which any payment is
      owed
      and will not be affected by judgment being obtained or claim or proof being
      made
      for any other sums payable in respect of this Agreement.

     

    (d) Evidence
      of Loss. For
      the
      purpose of this Section 8, it will be sufficient for a party to demonstrate
      that
      it would have suffered a loss had an actual exchange or purchase been
      made.

     

    
      	9.	
              Miscellaneous

            

    

     

    (a) Entire
      Agreement. This
      Agreement constitutes the entire agreement and understanding of the parties
      with
      respect to its subject matter and supersedes all oral communication and prior
      writings with respect thereto.

     

    (b) Amendments.
      No
      amendment, modification or waiver in respect of this Agreement will be effective
      unless in writing (including a writing evidenced by a facsimile transmission)
      and executed by each of the parties or confirmed by an exchange of telexes
      or
      electronic messages on an electronic messaging system.

     

    (c) Survival
      of Obligations. Without
      prejudice to Sections 2(a)(iii) and 6(c)(ii), the obligations of the parties
      under this Agreement will survive the termination of any
      Transaction.

     

    (d) Remedies
      Cumulative. Except
      as
      provided in this Agreement, the rights, powers, remedies and privileges provided
      in this Agreement are cumulative and not exclusive of any rights, powers,
      remedies and privileges provided by law.

     

    (e) Counterparts
      and Confirmations.

     

    (i) This
      Agreement (and each amendment, modification and waiver in respect of it) may
      be
      executed and delivered in counterparts (including by facsimile transmission),
      each of which will be deemed an original.

     

    (ii) The
      parties intend that they are legally bound by the terms of each Transaction
      from
      the moment they agree to those terms (whether orally or otherwise). A
      Confirmation shall be entered into as soon as practicable and may be executed
      and delivered in counterparts (including by facsimile transmission) or be
      created by an exchange of telexes or by an exchange of electronic messages
      on an
      electronic messaging system, which in each case will be sufficient for all
      purposes to evidence a binding supplement to this Agreement. The parties will
      specify therein or through another effective means that any such counterpart,
      telex or electronic message constitutes a Confirmation.

     

    (f) No
      Waiver of Rights. A
      failure
      or delay in exercising any right, power or privilege in respect of this
      Agreement will not be presumed to operate as a waiver, and a single or partial
      exercise of any right, power or privilege will not be presumed to preclude
      any
      subsequent or further exercise, of that right, power or privilege or the
      exercise of any other right, power or privilege.

     

    (g) Headings.
      The
      headings used in this Agreement are for convenience of reference only and are
      not to affect the construction of or to be taken into consideration in
      interpreting this Agreement.

     

    
      	10.	
              Offices;
                Multibranch Parties

            

    

     

    (a) If
      Section 10(a) is specified in the Schedule as applying, each party that enters
      into a Transaction through an Office other than its head or home office
      represents to the other party that, notwithstanding the place of booking office
      or jurisdiction of incorporation or organisation of such party, the obligations
      of such party are the same as if it had entered into the Transaction through
      its
      head or home office. This representation will be deemed to be repeated by such
      party on each date on which a Transaction is entered into.

    
       

      
        
          12

        

        

      

      
        
        

      

       

    
    (b) Neither
      party may change the Office through which it makes and receives payments or
      deliveries for the purpose of a Transaction without the prior written consent
      of
      the other party.

     

    (c) If
      a
      party is specified as a Multibranch Party in the Schedule, such Multibranch
      Party may make and receive payments or deliveries under any Transaction through
      any Office listed in the Schedule, and the Office through which it makes and
      receives payments or deliveries with respect to a Transaction will be specified
      in the relevant Confirmation.

     

    
      	11.	
              Expenses

            

    

     

    A
      Defaulting Party will, on demand, indemnify and hold harmless the other party
      for and against all reasonable out-of-pocket expenses, including legal fees
      and
      Stamp Tax, incurred by such other party by reason of the enforcement and
      protection of its rights under this Agreement or any Credit Support Document
      to
      which the Defaulting Party is a party or by reason of the early termination
      of
      any Transaction, including, but not limited to, costs of
      collection.

     

    
      	12.	
              Notices

            

    

     

    (a) Effectiveness. Any
      notice or other communication in respect of this Agreement may be given in
      any
      manner set forth below (except that a notice or other communication under
      Section 5 or 6 may not be given by facsimile transmission or electronic
      messaging system) to the address or number or in accordance with the electronic
      messaging system details provided (see the Schedule) and will be deemed
      effective as indicated:-

     

    (i) if
      in
      writing and delivered in person or by courier, on the date it is
      delivered;

     

    (ii) if
      sent
      by telex, on the date the recipient’s answerback is received;

     

    (iii) if
      sent
      by facsimile transmission, on the date that transmission is received by a
      responsible employee of the recipient in legible form (it being agreed that
      the
      burden of proving receipt will be on the sender and will not be met by a
      transmission report generated by the sender’s facsimile machine);

     

    (iv) if
      sent
      by certified or registered mail (airmail, if overseas) or the equivalent (return
      receipt requested), on the date that mail is delivered or its delivery is
      attempted; or

     

    (v) if
      sent
      by electronic messaging system, on the date that electronic message is received,
      unless the date of that delivery (or attempted delivery) or that receipt, as
      applicable, is not a Local Business Day or that communication is delivered
      (or
      attempted) or received, as applicable, after the close of business on a Local
      Business Day, in which case that communication shall be deemed given and
      effective on the first following day that is a Local Business Day.

     

    (b) Change
      of Addresses. Either
      party may by notice to the other change the address, telex or facsimile number
      or electronic messaging system details at which notices or other communications
      are to be given to it.

     

    
      	13.	
              Governing
                Law and Jurisdiction

            

    

     

    (a) Governing
      Law. This
      Agreement will be governed by and construed in accordance with the law specified
      in the Schedule.

     

    (b) Jurisdiction.
      With
      respect to any suit, action or proceedings relating to this Agreement
      (“Proceedings”), each party irrevocably:-

     

    (i) submits
      to the jurisdiction of the English courts, if this Agreement is expressed to
      be
      governed by English law, or to the non-exclusive jurisdiction of the courts
      of
      the State of New York and the United States District Court located in the
      Borough of Manhattan in New York City, if this Agreement is expressed to be
      governed by the laws of the State of New York; and

    
       

      
        
          13

        

        

      

      
        
        

      

       

    
    (ii) waives
      any objection which it may have at any time to the laying of venue of any
      Proceedings brought in any such court, waives any claim that such Proceedings
      have been brought in an inconvenient forum and further waives the right to
      object, with respect to such Proceedings, that such court does not have any
      jurisdiction over such party.

     

    Nothing
      in this Agreement precludes either party from bringing Proceedings in any other
      jurisdiction (outside, if this Agreement is expressed to be governed by English
      law, the Contracting States, as defined in Section 1(3) of the Civil
      Jurisdiction and Judgments Act 1982 or any modification, extension or
      re-enactment thereof for the time being in force) nor will the bringing of
      Proceedings in any one or more jurisdictions preclude the bringing of
      Proceedings in any other jurisdiction.

     

    (c) Service
      of Process. Each
      party irrevocably appoints the Process Agent (if any) specified opposite its
      name in the Schedule to receive, for it and on its behalf, service of process
      in
      any Proceedings. If for any reason any party’s Process Agent is unable to act as
      such, such party will promptly notify the other party and within 30 days appoint
      a substitute process agent acceptable to the other party. The parties
      irrevocably consent to service of process given in the manner provided for
      notices in Section 12. Nothing in this Agreement will affect the right of either
      party to serve process in any other manner permitted by law.

     

    (d) Waiver
      of Immunities. Each
      party irrevocably waives, to the fullest extent permitted by applicable law,
      with respect to itself and its revenues and assets (irrespective of their use
      or
      intended use), all immunity on the grounds of sovereignty or other similar
      grounds from (i) suit, (ii) jurisdiction of any court, (iii) relief by way
      of
      injunction, order for specific performance or for recovery of property, (iv)
      attachment of its assets (whether before or after judgment) and (v) execution
      or
      enforcement of any judgment to which it or its revenues or assets might
      otherwise be entitled in any Proceedings in the courts of any jurisdiction
      and
      irrevocably agrees, to the extent permitted by applicable law, that it will
      not
      claim any such immunity in any Proceedings.

     

    
      	14.	
              Definitions

            

    

     

    As
      used
      in this Agreement:-

     

    “Additional
      Termination Event” has
      the
      meaning specified in Section 5(b).

     

    “Affected
      Party” has
      the
      meaning specified in Section 5(b).

     

    “Affected
      Transactions” means
      (a)
      with respect to any Termination Event consisting of an Illegality, Tax Event
      or
      Tax Event Upon Merger, all Transactions affected by the occurrence of such
      Termination Event and (b) with respect to any other Termination Event, all
      Transactions.

     

    “Affiliate” means,
      subject to the Schedule, in relation to any person, any entity controlled,
      directly or indirectly, by the person, any entity that controls, directly or
      indirectly, the person or any entity directly or indirectly under common control
      with the person. For this purpose, “control” of any entity or person means
      ownership of a majority of the voting power of the entity or
      person.

     

    “Applicable
      Rate”
      means:-

     

    (a) in
      respect of obligations payable or deliverable (or which would have been but
      for
      Section 2(a)(iii)) by a Defaulting Party, the Default Rate;

     

    (b) in
      respect of an obligation to pay an amount under Section 6(e) of either party
      from and after the date (determined in accordance with Section 6(d)(ii)) on
      which that amount is payable, the Default Rate;

     

    (c) in
      respect of all other obligations payable or deliverable (or which would have
      been but for Section 2(a)(iii)) by a Non-defaulting Party, the Non-default
      Rate;
      and

     

    (d) in
      all
      other cases, the Termination Rate.

    
       

      
        
          14

        

        

      

      
        
        

      

       

    
    “Burdened
      Party” has
      the
      meaning specified in Section 5(b).

     

    “Change
      in Tax Law” means
      the
      enactment, promulgation, execution or ratification of, or any change in or
      amendment to, any law (or in the application or official interpretation of
      any
      law) that occurs on or after the date on which the relevant Transaction is
      entered into.

     

    “consent” includes
      a consent, approval, action, authorisation, exemption, notice, filing,
      registration or exchange control consent.

     

    “Credit
      Event Upon Merger” has
      the
      meaning specified in Section 5(b).

     

    “Credit
      Support Document”
means
      any agreement or instrument that is specified as such in this Agreement.

     

    “Credit
      Support Provider”
has
      the
      meaning specified in the Schedule.

     

    “Default
      Rate” means
      a
      rate per annum equal to the cost (without proof or evidence of any actual cost)
      to the relevant payee (as certified by it) if it were to fund or of funding
      the
      relevant amount plus 1% per annum.

     

    “Defaulting
      Party” has
      the
      meaning specified in Section 6(a).

     

    “Early
      Termination Date” means
      the
      date determined in accordance with Section 6(a) or 6(b)(iv).

     

    “Event
      of Default” has
      the
      meaning specified in Section 5(a) and, if applicable, in the
      Schedule.

     

    “Illegality” has
      the
      meaning specified in Section 5(b).

     

    “lndemnifiable
      Tax” means
      any
      Tax other than a Tax that would not be imposed in respect of a payment under
      this Agreement but for a present or former connection between the jurisdiction
      of the government or taxation authority imposing such Tax and the recipient
      of
      such payment or a person related to such recipient (including, without
      limitation, a connection arising from such recipient or related person being
      or
      having been a citizen or resident of such jurisdiction, or being or having
      been
      organised, present or engaged in a trade or business in such jurisdiction,
      or
      having or having had a permanent establishment or fixed place of business in
      such jurisdiction, but excluding a connection arising solely from such recipient
      or related person having executed, delivered, performed its obligations or
      received a payment under, or enforced, this Agreement or a Credit Support
      Document).

     

    “law” includes
      any treaty, law, rule or regulation (as modified, in the case of tax matters,
      by
      the practice of any relevant governmental revenue authority) and “lawful” and
“unlawful” will be construed accordingly.

     

    “Local
      Business Day” means,
      subject to the Schedule, a day on which commercial banks are open for business
      (including dealings in foreign exchange and foreign currency deposits) (a)
      in
      relation to any obligation under Section 2(a)(i), in the place(s) specified
      in
      the relevant Confirmation or, if not so specified, as otherwise agreed by the
      parties in writing or determined pursuant to provisions contained, or
      incorporated by reference, in this Agreement, (b) in relation to any other
      payment, in the place where the relevant account is located and, if different,
      in the principal financial centre, if any, of the currency of such payment,
      (c)
      in relation to any notice or other communication, including notice contemplated
      under Section 5(a)(i), in the city specified in the address for notice provided
      by the recipient and, in the case of a notice contemplated by Section 2(b),
      in
      the place where the relevant new account is to be located and (d) in relation
      to
      Section 5(a)(v)(2), in the relevant locations for performance with respect
      to
      such Specified Transaction.

     

    “Loss”
      means, with
      respect to this Agreement or one or more Terminated Transactions, as the case
      may be, and a party, the Termination Currency Equivalent of an amount that
      party
      reasonably determines in good faith to be its total losses and costs (or gain,
      in which case expressed as a negative number) in connection with this Agreement
      or that Terminated Transaction or group of Terminated Transactions, as the
      case
      may be, including any loss of bargain, cost of funding or, at the election
      of
      such party but without duplication, loss or cost incurred as a result of its
      terminating, liquidating, obtaining or re-establishing any hedge or related
      trading position (or any gain resulting 

    
       

      
        
          15

        

        

      

      
        
        

      

       

    
    from
      any
      of them). Loss includes losses and costs (or gains) in respect of any payment
      or
      delivery required to have been made (assuming satisfaction of each applicable
      condition precedent) on or before the relevant Early Termination Date and not
      made, except, so as to avoid duplication, if Section 6(e)(i)(1) or (3) or
      6(e)(ii)(2)(A) applies. Loss does not include a party’s legal fees and
      out-of-pocket expenses referred to under Section 11. A party will determine
      its
      Loss as of the relevant Early Termination Date, or, if that is not reasonably
      practicable, as of the earliest date thereafter as is reasonably practicable.
      A
      party may (but need not) determine its Loss by reference to quotations of
      relevant rates or prices from one or more leading dealers in the relevant
      markets.

     

    “Market
      Quotation” means,
      with respect to one or more Terminated Transactions and a party making the
      determination, an amount determined on the basis of quotations from Reference
      Market-makers. Each quotation will be for an amount, if any, that would be
      paid
      to such party (expressed as a negative number) or by such party (expressed
      as a
      positive number) in consideration of an agreement between such party (taking
      into account any existing Credit Support Document with respect to the
      obligations of such party) and the quoting Reference Market-maker to enter
      into
      a transaction (the “Replacement Transaction”) that would have the effect of
      preserving for such party the economic equivalent of any payment or delivery
      (whether the underlying obligation was absolute or contingent and assuming
      the
      satisfaction of each applicable condition precedent by the parties under Section
      2(a)(i) in respect of such Terminated Transaction or group of Terminated
      Transactions that would, but for the occurrence of the relevant Early
      Termination Date, have been required after that date. For this purpose, Unpaid
      Amounts in respect of the Terminated Transaction or group of Terminated
      Transactions are to be excluded but, without limitation, any payment or delivery
      that would, but for the relevant Early Termination Date, have been required
      (assuming satisfaction of each applicable condition precedent after that Early
      Termination Date is to be included. The Replacement Transaction would be subject
      to such documentation as such party and the Reference Market-maker may, in
      good
      faith, agree. The party making the determination (or its agent) will request
      each Reference Market-maker to provide its quotation to the extent reasonably
      practicable as of the same day and time (without regard to different time zones)
      on or as soon as reasonably practicable after the relevant Early Termination
      Date. The day and time as of which those quotations are to be obtained will
      be
      selected in good faith by the party obliged to make a determination under
      Section 6(e), and, if each party is so obliged, after consultation with the
      other. If more than three quotations are provided, the Market Quotation will
      be
      the arithmetic mean of the quotations, without regard to the quotations having
      the highest and lowest values. If exactly three such quotations are provided,
      the Market Quotation will be the quotation remaining after disregarding the
      highest and lowest quotations. For this purpose, if more than one quotation
      has
      the same highest value or lowest value, then one of such quotations shall be
      disregarded. If fewer than three quotations are provided, it will be deemed
      that
      the Market Quotation in respect of such Terminated Transaction or group of
      Terminated Transactions cannot be determined.

     

    “Non-default
      Rate” means
      a rate per
      annum
      equal to the cost (without proof or evidence of any actual cost) to the
      Non-defaulting Party (as certified by it) if it were to fund the relevant
      amount.

     

    “Non-defaulting
      Party” has
      the
      meaning specified in Section 6(a).

     

    “Office”
      means a
      branch
      or office of a party, which may be such party’s head or home
      office.

     

    “Potential
      Event of Default” means
      any
      event which, with the giving of notice or the lapse of time or both, would
      constitute an Event of Default.

     

    “Reference
      Market-makers” means
      four leading dealers in the relevant market selected by the party determining
      a
      Market Quotation in good faith (a) from among dealers of the highest credit
      standing which satisfy all the criteria that such party applies generally at
      the
      time in deciding whether to offer or to make an extension of credit and (b)
      to
      the extent practicable, from among such dealers having an office in the same
      city.

     

    “Relevant
      Jurisdiction” means,
      with respect to a party, the jurisdictions (a) in which the party is
      incorporated, organised, managed and controlled or considered to have its seat,
      (b) where an Office through which the party is acting for purposes of this
      Agreement is located, (c) in which the party executes this Agreement and (d)
      in
      relation to any payment, from or through which such payment is
      made.

     

    “Scheduled
      Payment Date” means
      a date
      on
      which a payment or delivery is to be made under Section 2(a){i) with respect
      to
      a Transaction.

    
       

      
        
          16

        

        

      

      
        
        

      

       

    
    “Set-off” means
      set-off, offset, combination of accounts, right of retention or withholding
      or
      similar right or requirement to which the payer of an amount under Section
      6 is
      entitled or subject (whether arising under this Agreement, another contract,
      applicable law or otherwise) that is exercised by, or imposed on, such
      payer.

     

    “Settlement
      Amount” means,
      with respect to a party and any Early Termination Date, the sum
      of:-

     

    (a) the
      Termination Currency Equivalent of the Market Quotations (whether positive
      or
      negative) for each Terminated Transaction or group of Terminated Transactions
      for which a Market Quotation is determined; and

     

    (b) such
      party’s Loss (whether positive or negative and without reference to any Unpaid
      Amounts) for each Terminated Transaction or group of Terminated Transactions
      for
      which a Market Quotation cannot be determined or would not (in the reasonable
      belief of the party making the determination) produce a commercially reasonable
      result.

     

    “Specified
      Entity” has
      the
      meaning specified in the Schedule.

     

    “Specified
      Indebtedness” means,
      subject to the Schedule, any obligation (whether present or future, contingent
      or otherwise, as principal or surety or otherwise) in respect of borrowed
      money.

     

    “Specified
      Transaction” means,
      subject to the Schedule, (a) any transaction (including an agreement with
      respect thereto) now existing or hereafter entered into between one party to
      this Agreement (or any Credit Support Provider of such party or any applicable
      Specified Entity of such party) and the other party to this Agreement (or any
      Credit Support Provider of such other party or any applicable Specified Entity
      of such other party) which is a rate swap transaction, basis swap, forward
      rate
      transaction, commodity swap, commodity option, equity or equity index swap,
      equity or equity index option, bond option, interest rate option, foreign
      exchange transaction, cap transaction, floor transaction, collar transaction,
      currency swap transaction, cross-currency rate swap transaction, currency option
      or any other similar transaction (including any option with respect to any
      of
      these transactions), (b) any combination of these transactions and (c) any
      other
      transaction identified as a Specified Transaction in this Agreement or the
      relevant confirmation.

     

    “Stamp
      Tax” means
      any
      stamp, registration, documentation or similar tax.

     

    “Tax” means
      any
      present or future tax, levy, impost, duty, charge, assessment or fee of any
      nature (including interest, penalties and additions thereto) that is imposed
      by
      any government or other taxing authority in respect of any payment under this
      Agreement other than a stamp, registration, documentation or similar
      tax.

     

    “Tax
      Event” has
      the
      meaning specified in Section 5(b).

     

    “Tax
      Event Upon Merger” has
      the
      meaning specified in Section 5(b).

     

    “Terminated
      Transactions” means
      with respect to any Early Termination Date (a) if resulting from a Termination
      Event, all Affected Transactions and (b) if resulting from an Event of Default,
      all Transactions (in either case) in effect immediately before the effectiveness
      of the notice designating that Early Termination Date (or, if “Automatic Early
      Termination” applies, immediately before that Early Termination
      Date).

     

    “Termination
      Currency” has
      the
      meaning specified in the Schedule.

     

    “Termination
      Currency Equivalent” means,
      in
      respect of any amount denominated in the Termination Currency, such Termination
      Currency amount and, in respect of any amount denominated in a currency other
      than the Termination Currency (the “Other Currency”), the amount in the
      Termination Currency determined by the party making the relevant determination
      as being required to purchase such amount of such Other Currency as at the
      relevant Early Termination Date, or, if the relevant Market Quotation or Loss
      (as the case may be), is determined as of a later date, that later date, with
      the Termination Currency at the rate equal to the spot exchange rate of the
      foreign exchange agent (selected as provided below) for the purchase of such
      Other Currency with the Termination Currency at or about 11:00 a.m. (in the
      city
      in which such foreign exchange agent is located) on such date as would be
      customary for the determination of such a rate for the purchase of such Other
      Currency for value on the relevant 

    
       

      
        
          17

        

        

      

      
        
        

      

       

    
    Early
      Termination Date or that later date. The foreign exchange agent will, if only
      one party is obliged to make a determination under Section 6(e), be selected
      in
      good faith by that party and otherwise will be agreed by the
      parties.

     

    “Termination
      Event” means
      an
      Illegality, a Tax Event or a Tax Event Upon Merger or, if specified to be
      applicable, a Credit Event Upon Merger or an Additional Termination
      Event.

     

    “Termination
      Rate” means
      a
      rate per annum equal to the arithmetic mean of the cost (without proof or
      evidence of any actual cost) to each party (as certified by such party) if
      it
      were to fund or of funding such amounts.

     

    “Unpaid
      Amounts” owing
      to
      any party means, with respect to an Early Termination Date, the aggregate of
      (a)
      in respect of all Terminated Transactions, the amounts that became payable
      (or
      that would have become payable but for Section 2(a)(iii)) to such party under
      Section 2(a)(i) on or prior to such Early Termination Date and which remain
      unpaid as at such Early Termination Date and (b) in respect of each Terminated
      Transaction, for each obligation under Section 2(a)(i) which was (or would
      have
      been but for Section 2(a)(iii)) required to be settled by delivery to such
      party
      on or prior to such Early Termination Date and which has not been so settled
      as
      at such Early Termination Date, an amount equal to the fair market value of
      that
      which was (or would have been) required to be delivered as of the originally
      scheduled date for delivery, in each case together with (to the extent permitted
      under applicable law) interest, in the currency of such amounts, from (and
      including) the date such amounts or obligations were or would have been required
      to have been paid or performed to (but excluding) such Early Termination Date,
      at the Applicable Rate. Such amounts of interest will be calculated on the
      basis
      of daily compounding and the actual number of days elapsed. The fair market
      value of any obligation referred to in clause (b) above shall be reasonably
      determined by the party obliged to make the determination under Section 6(e)
      or,
      if each party is so obliged, it shall be the average of the Termination Currency
      Equivalents of the fair market values reasonably determined by both
      parties.

     

    IN
      WITNESS WHEREOF the
      parties have executed this document on the respective dates specified below
      with
      effect from the date specified on the first page of this document.

     

    PEMER
      SHIPPING LTD

    (Name
      of
      Party)

     

    
      	
              By:

            	 	 
	 	
              Name:

            	 
	 	
              Title:

            	 
	 	
              Date:

            	 

    

     

    BAYERISCHE
      HYPO- UND VEREINSBANK AKTIENGESELLSCHAFT 

    (Name
      of
      Party)

     

    
      	
              By:

            	 	 	
              By: 

            	 
	 	
              Name:

            	 	Name:
	 	
              Title:

            	 	
              Title:

            
	 	
              Date

            	 	
              Date

            

    

     

    
      
        18

      

      

    
    
      
      

    

     

    SCHEDULE

     

    to
      the
ISDA
      Master Agreement (1992 edition)
dated           March
      2007 between
Bayerische
      Hypo- und Vereinsbank Aktiengesellschaft (“Party A”)
and
Pemer
      Shipping Ltd
(“Party
      B”)

     

    This
      Agreement is entered into in connection with the loan agreement dated
               March
      2007 (the “Loan
      Agreement”)
      entered into between (i) Party B as borrower and, (ii) Party A as bank relating
      to a multicurrency loan of up to US$36,000,000 for the purposes specified in
      clause 1.1 thereof. Capitalised terms used but not defined in this Agreement
      shall have the meanings given to them in the Loan Agreement.

     

    Part
      1.  Termination
      provisions.

     

    
      	(a)	
              “Specified
                Entity”
                means in relation to Party A for the purpose
                of:-

            

    

    

    Section
      5(a)(v), Not
      Applicable

    Section
      5(a)(vi), Not
      Applicable

    Section
      5(a)(vii), Not
      Applicable

    Section
      5(b)(iv), Not
      Applicable

     

    and
      in
      relation to Party B for the purpose of:-

     

    Section
      5(a)(v), Any
      Affiliate

    Section
      5(a)(vi), Any
      Affiliate

    Section
      5(a)(vii), Any
      Affiliate

    Section
      5(b)(iv), Any
      Affiliate

     

    
      	(b)	
              “Specified
                Transaction”
                will have the meaning specified in Section 14 of this Agreement,
                but shall
                include payment obligations of Party B under any term loan or facility
                agreement with Party A.

            

    

     

    
      	(c)	
              The
                “Cross
                Default”
                provisions of Section 5(a)(vi) will apply to Party A and will apply
                to
                Party B.

            

    

     

    If
      such
      provisions apply:-

     

    “Specified
      Indebtedness” means,
      instead of the definition thereof in Section 14 of this Agreement, any
      obligation (whether present or future, contingent or otherwise, as principal
      or
      surety or otherwise) (a) in respect of borrowed money, and/or (b) in respect
      of
      any Specified Transaction (except that, for this purpose only, the words “and
      any other person or entity” shall be substituted for the words “and the other
      party to this Agreement (or any Credit Support Provider of such other party
      or
      any applicable Specified Entity of such other party)” where they appear in the
      definition of Specified Transaction). The parties agree that indebtedness in
      respect of deposits received in the ordinary course of banking business shall
      not constitute Specified Indebtedness.

     

    “Threshold
      Amount”
      means:

     

    
      	 	
              (i)

            	
              in
                relation to Party A, 3% of shareholders’ equity of Party A as reported in
                its most recent audited financial statements or its equivalent in
                any
                other currency or currency unit or any combination thereof;
                and

            

    

     

    
      	 	
              (ii)

            	
              in
                relation to Party B, zero.

            

    

    
       

      
        
          19

        

        

      

      
        
        

      

       

    
    Technical
      Errors.
      The
      following proviso will be inserted at the end of Section 5(a)(vi):-

     

    “Provided,
      however, that notwithstanding the foregoing, an Event of Default shall not
      occur
      under either (1) or (2) above if: (aa) the event or condition referred to in
      (1)
      or the failure to pay referred to in (2) is a failure to pay caused by an error
      or omission of an administrative or operational nature; and (bb) funds were
      available to such party to enable it to make the relevant payment when due;
      and
      (cc) such relevant payment is made within three Business Days following receipt
      of written notice from an interested party of such failure to pay.”

     

    
      	(d)	
              The
                “Credit
                Event Upon Merger” provision
                of Section 5(b)(iv) will apply to Party A and will apply to Party
                B.

            

    

     

    
      	(e)	
              The
                “Automatic
                Early Termination” provision
                of Section 6(a) will apply to Party A and will apply to Party
                B.

            

    

     

    
      	(f)	
              Payments
                on Early Termination. For
                the purpose of Section 6(e) of this
                Agreement:-

            

    

     

    
      	 	
              (i)

            	
              Market
                Quotation will apply. Notwithstanding the foregoing, Loss will apply
                in
                respect of FX Transactions, Currency Option Transactions and
                FRAs.

            

    

     

    
      	 	
              (ii)

            	
              The
                Second Method will apply.

            

    

     

    
      	(g)	
              “Termination
                Currency”
                means:-

            

    

     

    
      	 	
              (i)

            	
              the
                currency of a Terminated Transaction which is selected (A) by the
                party
                that is not the Defaulting Party, the Affected Party, or the Burdened
                Party, as the case may be, or (B) in circumstances where there are
                two
                Affected Parties, by Party A in agreement with Party B;
                or

            

    

     

    
      	 	
              (ii)

            	
              failing
                such agreement or if any such currency determined in accordance with
                (i)
                above is not freely available,
                Euro.

            

    

     

    
      	
              (h)

            	
              Additional
                Termination Event will
                apply. Any repayment, prepayment or cancellation, howsoever described,
                in
                the Loan Agreement shall constitute an Additional Termination Event
                for
                the purpose of this Agreement. For the purpose of the foregoing,
                the
                Affected Party shall be Party B.

            

    

     

    
      	 	
              (a)

            	
              The
                rights of the parties to terminate outstanding Transactions in accordance
                with this Agreement will be limited to the amount of such repayment,
                prepayment, or cancellation, or such other amount as may be prescribed
                by
                any applicable terms of the Loan Agreement (such amount, in each
                case,
                being referred to as the “Relevant
                Amount”).

            

    

     

    
      	 	
              (b)

            	
              The
                Relevant Amount will, for purposes of the calculation of any payment
                to be
                made under Section 6(e)(ii), be considered as the Notional Amount
                of the
                relevant Terminated Transaction.

            

    

     

    
      	 	
              (c)

            	
              With
                effect from the Early Termination Date, the Notional Amount of the
                relevant Transaction will be reduced by an amount equal to the Relevant
                Amount.

            

    

     

    Part
      2.  Tax
      Representations.

     

    
      	
              (a)

            	
              Payer
                Representations. For
                the purpose of Section 3(e) of this Agreement, Party A and Party
                B will
                make the following representation:-

            

    

     

    It
      is not
      required by any applicable law, as modified by the practice of any relevant
      governmental revenue authority, of any Relevant Jurisdiction to make any
      deduction or withholding for or on account of any Tax from any payment (other
      than interest under Section 2(e), 6(d)(ii) or 6(e) of this Agreement) to be
      made
      by it to the other party under this Agreement. In making this representation,
      the relevant party may rely on:

    
       

      
        
          20

        

        

      

      
        
        

      

       

    
    (i) the
      accuracy of any representations made by the other party pursuant to Section
      3(f)
      of this Agreement,

     

    (ii) the
      satisfaction of the agreement contained in Section 4(a)(i) or 4(a)(iii) of
      this
      Agreement and the accuracy and effectiveness of any document provided by the
      other party pursuant to Section 4(a)(i) or 4(a)(iii) of this Agreement,
      and

     

    (iii) 
      the satisfaction of the agreement of the other party contained in Section 4(d)
      of this Agreement,

     

    provided
      that it shall not be a breach of this representation where reliance is placed
      on
      clause (ii) and the other party does not deliver a form or document under
      Section 4(a)(iii) by reason of material prejudice to its legal or commercial
      position.

     

    
      	
              (b)

            	
              Payee
                Representations.
                Not Applicable.

            

    

     

    Part
      3.  Agreement
      to Deliver Documents.

     

    
      	
              (a)

            	
              For
                the purpose of Sections 4(a)(i) and (ii) of this Agreement, each
                party
                agrees to deliver, in addition to such documents mentioned in Sections
                4(a)(i) and (ii), the following documents, as applicable:- Not
                Applicable.

            

    

     

    
      	
              (b)

            	
              For
                purposes of Section 3(d) other documents to be delivered by each
                party
                concurrently with the execution and delivery of this Agreement
                are:-

            

    

     

    
      	 	
              Party
                A:

            	
              Certified
                copy of relevant pages of Signature List, Certificate of Incumbency
                or
                such other evidence, satisfactory to Party B, of the power of the
                person(s) binding Party A to do so.

            

    

     

    
      	 	
              Party
                B:

            	
              (1)

            	
              Certified
                copy of relevant pages of Signature List, Certificate of Incumbency
                or
                such other evidence, satisfactory to Party A, of the power of the
                person(s) binding Party B to do so;

            

    

     

    
      	 	 	
              (2)

            	
              Duly
                executed Credit Support Documents;

            

    

     

    
      	 	 	
              (3)

            	
              Opinion
                of Liberian counsel confirming Party B’s authority, power and capacity to
                enter into this Agreement, such opinion to be in a form acceptable
                to
                Party A;

            

    

     

    
      	 	 	
              (4)

            	
              Process
                Agent Appointment Letter and, when available, the written acceptance
                of
                such Process Agent; and

            

    

     

    Party
      A
      and

    
      	 	
              Party
                B:

            	
              Upon
                request the most recently published and audited financial reports
                of the
                parties.

            

    

     

    Part
      4.  Miscellaneous.

     

    
      	(a)	
              Addresses
                for Notices. For
                the purpose of Section 12(a) of this
                Agreement:-

            

    

     

    Address
      for notices or communications to Party A:-

     

    Bayerische
      Hypo- und Vereinsbank AG
Arabellastraße
      12

    81925
      Munich

    Germany

    
       

      
        
          21

        

        

      

      
        
        

      

       

    
    UniCredit
      Markets & Investment Banking

    Head
      of
      Fixed Income Risk

    Telephone
      No.: +49 (0) 89 378 14317

    Facsimile
      No.: +49 (0) 89 378 12791

     

    Copies
      of
      all notices under Section 5 or 6 should be sent to:

     

    Bayerische
      Hypo- und Vereinsbank AG
Arabellastraße
      12
81925
      Munich
Germany

     

    Address
      for notices or communications to Party B:-

     

    32
      Karamanli Avenue
166
      73
      Voula
Greece

    
      	
            	Attention:	
              George
                Papadopoulos

            

      	
            	Tel:	+30
              210 895 7070

      	
            	Telefax
              No:	+30
              210 895 6900

    

     

    
      	
              (b)

            	
              Process
                Agent. For
                the purpose of Section 13(c) of this
                Agreement:-

            

    

     

    Party
      A
      irrevocably designates Bayerische Hypo- und Vereinsbank, London Branch with
      offices on the date of this Agreement at Moor House, 120 London Wall, London
      EC2Y 5ET, England, England, to receive for and on behalf of Party A Service
      of
      Process in England.

     

    Party
      B
      irrevocably designates Cheeswrights with offices on the date of this Agreement
      at 10 Philpot Lane, London EC3M 8BR, England to receive for and on behalf of
      Party B Service of Process in England.

     

    
      	
              (c)

            	
              Offices.
                The
                provisions of Section 10(a) will apply to this
                Agreement.

            

    

     

    
      	
              (d)

            	
              Multibranch
                Party. For
                the purpose of Section 10(c) of this
                Agreement:-

            

    

     

    Party
      A
      is a Multibranch Party and may act through the following offices: Munich and
      London.

     

    Party
      B
      is not a Multibranch Party.

     

    
      	
              (e)

            	
              Calculation
                Agent. The
                Calculation Agent is Party A.

            

    

     

    
      	
              (f)

            	
              Credit
                Support Document. Details
                of any Credit Support Document:-

            

    

     

    In
      respect of Party B: the Mortgage, the Manager’s Undertaking, the General
      Assignment, the Cash Collateral Account Pledge, the Multicurrency Cash
      Collateral Account Pledge, the Master Agreement Security Deed and any other
      Security Document.

     

    
      	
              (g)

            	
              Credit
                Support Provider. Credit
                Support Provider means in relation to Party A: Not
                Applicable

            

    

     

    Credit
      Support Provider means in relation to Party B: Safety Management Overseas
      S.A..

     

    
      	
              (h)

            	
              Governing
                Law. This
                Agreement will be governed by and construed in accordance with English
                law.

            

    

     

    
      	
              (i)

            	
              Netting
                of Payments. Subparagraph
                (ii) of Section 2(c) of this Agreement will apply to all
                Transactions.

            

    

    
       

      
        
          22

        

        

      

      
        
        

      

       

    
    
      	
              (j)

            	
              “Affiliate” will
                have the meaning specified in Section 14. For the purpose of Section
                3(c)
                “Affiliate” shall mean in relation to Party A any Bank Affiliate. “Bank
                Affiliate” means any bank controlled, directly or indirectly, by Party A.
                For this purpose “control” of any bank means ownership of a majority of
                the voting power of the bank, and a “bank” means any entity, which is
                recognised as a bank by the jurisdiction of its
                incorporation.

            

    

     

    Part
      5.  Other
      Provisions.

     

    
      	
              1.

            	
              Incorporation
                by reference. Reference
                is made to the 2000 ISDA Definitions, as published by the International
                Swap and Derivatives Association, Inc. as amended and restated from
                time
                to time, which are hereby incorporated by reference. In the event
                of an
                inconsistency between the provisions of this Agreement and the ISDA
                Definitions, this Agreement shall
                prevail.

            

    

     

    
      	
              2.

            	
              Scope
                of Agreement. Notwithstanding
                anything contained in this Agreement to the contrary, any transaction
                which may otherwise constitute a “Specified Transaction” for purposes of
                this Agreement which has been or will be entered into between the
                parties
                shall constitute a “Transaction” which is subject to, governed by, and
                construed in accordance with the terms of this Agreement, except
                when the
                parties expressly agree that this provision will not
                apply.

            

    

     

    
      	
              3.

            	
              Affected
                Parties in Termination Events. For
                purposes of Section 6(e) (Payments on Early Termination), both parties
                shall be deemed to be Affected Parties in connection with any Illegality
                or Tax Event, so that payments in connection with early termination
                shall
                be calculated as provided in Section
                6(e)(ii).

            

    

     

    
      	
              4.

            	
              Other
                Defaults

            

    

     

    The
      following additional Event of Default shall be inserted in Section 5(a) as
      new
      Section 5(a)(ix) and the occurrence of such event shall constitute an Event
      of
      Default with respect to Party B:

     

    (ix)
      Default
      under the Loan Agreement. Until
      no
      amount under the Loan Agreement is outstanding or capable of becoming
      outstanding the Events of Default specified in Sections 5(a)(iii) and 5(a)(v)
      to
      (viii) and the Termination Events specified in Section 5(b)(iv) of this
      Agreement will not apply with respect to Party B and its Credit Support
      Providers and, in substitute therefor, the occurrence of any of the Events
      of
      Default as defined in clause 11.1 of the Loan Agreement which result in the
      giving of a notice by Party A or the enforcement of any right of Party A
      pursuant to clause 11.2 of the Loan Agreement, shall constitute an Event of
      Default in relation to Party B for the purposes of this Agreement.

     

    
      	
              5.

            	
              Deferral
                of Payments in Connection with Illegality.
                If
                a party gives a notice of Illegality, the due date for any payment
                scheduled to be made by either party pursuant to Section 2 in connection
                with any Affected Transaction at any time after that notice is effective
                shall be deferred to the earliest to occur of (i) the date for settlement
                payments pursuant to Section 6(e) in connection with an Early Termination
                Date, (ii) the final Scheduled Payment Date for the Affected Transactions
                and (iii) the date on which arrangements made pursuant to Section
                6(b)(ii)
                to avoid the Illegality are effected. Any payments deferred pursuant
                to
                this provision shall be made on the deferred payment date together
                with
                interest accrued on each deferred amount from and including its originally
                scheduled due date to but excluding the deferred due date (or, if
                an Early
                Termination Date is designated, to but excluding the day it is designated)
                at the Non-default Rate.

            

    

     

    
      	
              6.

            	
              Recording
                of Conversations. Each
                party to this Agreement acknowledges and agrees to the tape recording
                of
                conversations of the trading personnel of the parties in connection
                with
                this Agreement.

            

    

     

    
      	
              7.

            	
              Indemnification.
                If
                an Early Termination Date shall be deemed to have occurred under
                Section 6(a) the Defaulting Party hereby agrees to indemnify the
                Non-defaulting Party on demand against all loss or damage the
                Non-defaulting Party may sustain or incur in respect of each Transaction
                as a result of movements in exchange rates and Market Quotations
                between
                the Early Termination Date and the date (“the Determination Date”) upon
                which the Non-defaulting Party first becomes aware that the Early
                Termination Date has been deemed to have occurred under Section
                6(a).

            

    

    
       

      
        
          23

        

        

      

      
        
        

      

       

    
    If
      the
      Non-defaulting Party shall determine that it would gain or benefit from the
      movement in exchange rates and Market Quotations between the Early Termination
      Date and the Determination Date, the amount of such gain or benefit shall be
      deducted from the Settlement Amount for the purposes of determining the amount
      payable by the Defaulting Party or be added to the Settlement Amount for the
      purposes of determining the amount payable by the Non-defaulting Party, pursuant
      to Section 6(e)(i)(3).

     

    The
      Determination Date shall be a date not later than the date upon which the
      creditors generally of the Defaulting Party are notified of the occurrence
      of
      the Event of Default leading to the deemed Early Termination Date.

     

    
      	
              8.

            	
              Relationship
                Between Parties. Each
                party will be deemed to represent to the other party on the date
                on which
                it enters into a Transaction that (absent a written agreement between
                the
                parties that expressly imposes affirmative obligations to the contrary
                for
                that Transaction):-

            

    

     

    
      	 	
              (a)

            	
              Non-Reliance.
                It
                is acting for its own account, and it has made its own independent
                decisions to enter into that Transaction and as to whether that
                Transaction is appropriate or proper for it based upon its own judgment
                and upon advice from such advisers as it has deemed necessary. It
                is not
                relying on any communication (written or oral) of the other party
                as
                investment advice or as a recommendation to enter into that Transaction;
                it being understood that information and explanations related to
                the terms
                and conditions of a Transaction shall not be considered investment
                advice
                or a recommendation to enter into that Transaction. No communication
                (written or oral) received from the other party shall be deemed to
                be an
                assurance or guarantee as to the expected results of that
                Transaction.

            

    

     

    
      	 	
              (b)

            	
              Assessment
                and Understanding. It
                is capable of assessing the merits of and understanding (on its own
                behalf
                or through independent professional advice), and understands and
                accepts,
                the terms, conditions and risks of that Transaction. It is also capable
                of
                assuming, and assumes, the risks of that
                Transaction.

            

    

     

    
      	 	
              (c)

            	
              Status
                of Parties. The
                other party is not acting as a fiduciary for or an adviser to it
                in
                respect of that Transaction.

            

    

     

    
      	
              9.

            	
              Subordination.
                The
                Borrower agrees that it shall not prove or claim for such an amount
                in any
                liquidation, administration, arrangement or similar procedure involving
                any other Security Party.

            

    

     

    If
      during
      the Security Period Party A, by notice to Party B, requires Party B to take
      any
      action referred to in the paragraph above, in relation to another Security
      Party, the Borrower shall take that action as soon as practicable after
      receiving Party A’s notice.

     

    
      	
              10.

            	
              Third
                Party Rights. Nothing
                in this Agreement is intended to confer on any person any right to
                enforce
                any term which that person would not have but for the Contracts (Rights
                of
                Third Parties) Act 1999.

            

    

     

    
      	
              11.

            	
              Hedging.
                Each
                party acknowledges and agrees that no Transaction may be entered
                into
                under this Agreement other than for the purpose of hedging the interest
                risk associated with the Loan
                Agreement.

            

    

     

    
      	
              12.

            	
              Escrow.
                If,
                whether by reason of the time difference between the cities in which
                payments are to be made or otherwise, it is not possible for simultaneous
                payments to be made on any date on which both parties are required
                to make
                payments hereunder, either party may at its option and in its sole
                discretion notify the other party that payments on that date are
                to be
                made in escrow. In this case deposit of the payment due earlier on
                that
                date shall be made by 2:00 p.m. (local time at the place for the
                earlier
                payment) on that date with an escrow agent selected by the party
                giving
                the notice, accompanied by irrevocable payment instructions (i) to
                release
                the deposited payment to the intended recipient upon receipt by the
                escrow
                agent of the required deposit of the corresponding payment from the
                other
                party on the same date accompanied by irrevocable payment instructions
                to
                the same effect or (ii) if the required deposit of the corresponding
                payment is not made on that same date, to return the payment deposited
                to
                the party that paid it into escrow.

            

    

    
       

      
        
          24

        

        

      

      
        
        

      

       

    
    The
      party
      that elects to have payments made in escrow shall pay the costs of the escrow
      arrangements and shall cause those arrangements to provide that the intended
      recipient of the payment due to be deposited first shall be entitled to interest
      on that deposited payment for each day in the period of its deposit at the
      rate
      offered by the escrow agent for that day (at 11;00 a.m. local time on that
      day)
      for overnight deposits in the relevant currency in the office where it holds
      that deposited payment if that payment is not released by 5:00 p.m. local time
      on the date it is deposited for any reason other than the intended recipient’s
      failure to make the escrow deposit it is required to make hereunder in a timely
      fashion.

     

    
      	
              13.

            	
              Pari
                Passu. Party
                B agrees that at all times its obligations under any Transactions
                shall
                rank at least pari passu in right of payment and security with all
                of
                Party B’s Specified Indebtedness other than Specified Indebtedness
                preferred by law. In addition, in the event Party B has pledged,
                or at any
                time hereafter does pledge, collateral as security for any of its
                outstanding Specified Indebtedness, then Party B’s obligations to Party A
                under any Transaction shall be secured on a pari passu basis with
                such
                Specified Indebtedness.

            

    

     

    Part
      6.  Additional
      Terms for FX Transactions and Currency Option
      Transactions.

     

    
      	1.	(a)	
              Reference
                is made to the 1998 FX and Currency Option Definitions as published
                by the
                International Swaps and Derivatives Association, Inc., the Emerging
                Markets Traders Association and The Foreign Exchange Committee and
                as
                amended from time to time (the “FX and Currency Option
                Definitions”), which are hereby incorporated by reference with
                respect to “FX Transactions” and
                “Currency Option Transactions” as defined by the
                FX and Currency Option Definitions, except as specifically provided
                herein
                or in the relevant Confirmation.

            

    

     

    In
      the
      event of an inconsistency between the provisions of this Agreement and the
      FX
      and Currency Option Definitions, this Agreement shall prevail. In the event
      of
      an inconsistency between the ISDA Definitions and the FX and Currency Option
      Definitions, the FX and Currency Option Definitions shall prevail with respect
      to FX and Currency Option Transactions.

     

    
      	 	
              (b)

            	
              Confirmations.
                Any
                FX and Currency Option Transaction into which the parties have or
                may
                enter will be governed by this Agreement in all circumstances except
                when
                the parties expressly agree that this provision will not apply. Each
                such
                transaction will be deemed to be a “Transaction”
                and each confirmation or other confirming evidence will be deemed
                to
                constitute a “Confirmation”
                for the purpose of this Agreement, even where not so specified in
                the
                confirmation or other confirming evidence for such
                transaction.

            

    

     

    
      	2.	
              Payment
                of Premium

            

    

     

    
      	 	
              (a)

            	
              Unless
                otherwise agreed in writing by the parties, the Premium related to
                a
                Currency Option Transaction shall be paid on its Premium Payment
                Date in
                immediately available funds.

            

    

     

    
      	 	
              (b)

            	
              If
                any Premium is not received on the Premium Payment Date, the Seller
                may
                elect: (i) to accept a late payment of such Premium; (ii) to give
                written
                notice of such non-payment and, if such payment shall not be received
                within three (3) Local Business Days of such notice, treat the related
                Currency Option Transaction as void; or (iii) to give written notice
                of
                such non-payment and, if such payment shall not be received within
                three
                (3) Local Business Days of such notice, treat such non-payment as
                an Event
                of Default under Section 5(a)(i) of this Agreement. If the Seller
                elects
                to act under either clause (i) or (ii) of the preceding sentence,
                the
                Buyer shall pay all out-of-pocket costs and actual damages incurred
                in
                connection with such unpaid or late Premium or void Currency Option
                Transaction, including, without limitation, interest on such Premium
                from
                and including the Premium Payment Date to but excluding the late
                payment
                date in the same currency as such Premium at overnight LIBOR and
                any other
                losses, costs or expenses incurred by the Seller in connection with
                such
                terminated Currency Option Transaction, for the loss of its bargain,
                its
                cost of funding, or the loss incurred as a result of terminating,
                liquidating, obtaining or re-establishing a delta hedge or related
                trading
                position with respect to such Currency Option
                Transaction.

            

    

    
       

      
        
          25

        

        

      

      
        
        

      

       

    
    
      	
              3.

            	
              Payment
                Instructions. All
                payments made hereunder in respect of FX Transactions and Currency
                Option
                Transactions shall be made in accordance with the standing payment
                instructions provided by the parties (or as otherwise specified in
                the
                relevant Confirmation).

            

    

     

    Part
      7.  Additional
      Terms for Forward Rate Agreements.

     

    
      	1.	
              FRABBA
                Transactions.

            

    

     

    Any
      forward rate agreement into which the parties have entered and in respect of
      which the confirmation or other confirming evidence refers to or incorporates
      the British Bankers’ Association London Interbank Forward Rate Agreements
      Recommended Terms and Conditions (1985 edition) (“FRABBA Terms”) will be
      governed by this Agreement. Any forward rate agreement into which the parties
      may enter and in respect of which the confirmation or other confirming evidence
      refers to or incorporates the FRABBA Terms will be governed by this Agreement
      in
      all circumstances except when the parties expressly agree that this provision
      will not apply. Each such transaction will be deemed to be a Transaction and
      each such confirmation or other confirming evidence will be deemed to constitute
      a Confirmation for purposes of this Agreement. Sections B, C and E and clauses
      1, 4, 5 and 6 of Section D of the FRABBA Terms are hereby incorporated by
      reference in this Agreement. Those Sections are applicable only to transactions
      to which this provision relates and will prevail in the event of any
      inconsistency with any other provision of this Agreement. In the event of any
      other inconsistency between the FRABBA Terms and this Agreement, this Agreement
      will govern. Clauses 2, 3, 7, 8, 9 and 10 of Section D of the FRABBA Terms
      are
      not applicable to any transaction to which this provision relates.

     

    
      	2.	
              For
                the avoidance of doubt:

            

    

     

    
      	 	
              (a)

            	
              the
                term “BBA Interest Settlement Rate” as used in the FRABBA Terms or the
                term “Settlement Rate” shall be understood to read “Floating Rate” as
                determined by the relevant Floating Rate Option as defined in the
                ISDA
                Definitions;

            

    

     

    
      	 	
              (b)

            	
              the
                terms “Contract Currency” and “FRABBA Currencies” as used in the FRABBA
                Terms shall be deemed to include all Currencies as defined in the
                ISDA
                Definitions; 

            

    

     

    
      	 	
              (c)

            	
              the
                term “Fixing Date” as defined in the FRABBA Terms shall be determined
                according to the relevant Floating Rate Option as defined in the
                ISDA
                Definitions; and 

            

    

     

    
      	 	
              (d)

            	
              the
                FRABBA Terms outlined in Part 7(1) above which are stated to be
                incorporated by reference in this Agreement shall be incorporated
                mutatis mutandis
                as
                though such terms were expressed in ISDA terminology as used in the
                ISDA
                Definitions and in this Agreement.

            

    

     

    IN
      WITNESS WHEREOF the
      parties have executed this document as of the date first above
      written.

    
       

      
        
          26

        

        

      

      
        
        

      

       

    
    BAYERISCHE
      HYPO- UND VEREINSBANK AKTIENGESELLSCHAFT

     

    
      	
              Signature

            	
               

            	 	
              Signature

            	
               

            
	 	 	 	 	 
	
              Name:

            	
               

            	 	
              Name:

            	
               

            
	 	 	 	 	 
	
              Title:

            	
               

            	 	
              Title:

            	
               

            
	 	 	 	 	 
	
              Date:

            	
               

            	 	
              Date:

            	
               

            

    

    

    PEMER
      SHIPPING LTD

    

    
      	
              Signature

            	
               

            	 	 
	 	 	 	 
	
              Name:

            	
               

            	 	 
	 	 	 	 
	
              Title:

            	
               

            	 	 
	 	 	 	 
	
              Date:

            	
               

            	 	 

    

    
       

      
        
          27

        

        

      

      
        
        

      

       

    
    Schedule
      8

     

    Form
      of Master Agreement Security Deed

    
       

      
        
          52

        

        

      

      
        
        

      

       

    
    Private
      & Confidential

     

    
      	
              Dated
                2007

            

    

     

    
      	 	
              PEMER
                SHIPPING LTD

            	
              (1)

            
	 	 	 
	 	
              and

            	 
	 	 	 
	 	
              BAYERISCHE
                HYPO
                -UND VEREINSBANK AKTIENGESELLSCHAFT

            	
              (2)

            

    

     

    
      
        

      

       

      MASTER
        AGREEMENT SECURITY DEED

       
        
          

        

         

      

      

      
         

        
          
            
            

          

          

        

        
          
          

        

         

      

    
    Contents

     

    
      	
              Clause

            	 	
              Page

            
	 	 	 
	
              1

            	
              Definitions

            	
              1

            
	 	 	 
	
              2

            	
              Restrictions

            	
              2

            
	 	 	 
	
              3

            	
              First
                fixed charge

            	
              3

            
	 	 	 
	
              4

            	
              Further
                documentation etc

            	
              3

            
	 	 	 
	
              5

            	
              Representations

            	
              4

            
	 	 	 
	
              6

            	
              Notices

            	
              4

            
	 	 	 
	
              7

            	
              Supplemental

            	
              4

            
	 	 	 
	
              8

            	
              Law
                and jurisdiction 

            	
              5

            

    

    
       

      
        
          
          

        

        

      

      
        
        

      

       

    
    THIS
      SECURITY DEED is
      made
      on the          day of March
      2007 BETWEEN:

     

    
      	
              (1)

            	
              PEMER
                SHIPPING LTD, a
                corporation incorporated in the Republic of Liberia having its registered
                office at 80 Broad Street, Monrovia, Liberia (the “Owner”);
                and

            

    

     

    
      	
              (2)

            	
              BAYERISCHE
                HYPO -UND VEREINSBANK AKTIENGESELLSCHAFT, a
                company incorporated in Germany whose registered office is at Am
                Tucherpark 16, D-80538 Munich, Germany, acting for the purposes of
                this
                Deed through its office at 7 Heraklitou Street, 106 73 Athens, Greece
                (the
                “Bank”).

            

    

     

    WHEREAS

     

    
      	
              (A)

            	
              By
                a loan agreement dated        March 2007 and
                made between (i) the Owner as borrower and (ii) the Bank as lender
                (the
                “Loan
                Agreement”),
                the Bank agreed to make available to the Owner upon the terms and
                conditions therein described a multicurrency loan of up to Thirty
                six
                million Dollars ($36,000,000) or the Equivalent Amount in an Optional
                Currency or Optional Currencies;

            

    

     

    
      	
              (B)

            	
              The
                Owner has entered into or may enter into one or more Transactions
                (as such
                term is defined in the 1992 ISDA Master Agreement dated
                       March 2007 between the Owner and the
                Bank (the “Master
                Swap Agreement”))
                as evidenced by one or more Confirmations (as such term is defined
                in the
                Master Swap Agreement) which are governed by the Master Agreement;
                and

            

    

     

    
      	
              (C)

            	
              It
                is a condition precedent to the Bank advancing the loan under the
                Loan
                Agreement that the Owner as security for, inter alia, its obligations
                under the Loan Agreement shall execute this
                Deed.

            

    

     

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

     

    
      	1	
              Definitions

            

    

     

    
      	
              1.1

            	
              In
                this Deed, unless the context otherwise requires, the following
                expressions shall have the following
                meanings:

            

    

     

    “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 suffered, incurred or paid by the Bank in connection
                with
                the exercise of the powers referred to in or granted by the Loan
                Agreement, the Master Swap Agreement, this Deed or any of the other
                Security Documents or otherwise payable by the Owner;
                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 Bank until the date of receipt or recovery thereof (whether
                before
                or after judgment) at a rate per annum calculated in accordance with
                clause 3.4 of the Loan Agreement (as conclusively certified by the
                Bank);

            

    

     

    “Loan” means
      the
      sum of up to Thirty six million Dollars (S36,000,000) or the Equivalent Amount
      in an Optional Currency or Optional Currencies first referred to in Recital
      (A)
      hereto advanced or to be advanced (as the context may require) or the principal
      amount of such sum outstanding at any relevant time;

     

    “Loan
      Agreement” means
      the
      loan agreement referred to in Recital (A) hereto as the same may from time
      to
      time hereafter be supplemented and/or amended;

    
       

      
        
          1

        

        

      

      
        
        

      

       

    
    “Master
      Swap Agreement” means
      the
      ISDA Master Swap Agreement (including all Transactions thereunder) referred
      to
      in Recital (B) hereto as the same may from time to time hereafter be
      supplemented and/or amended;

     

    “Master
      Swap Liabilities” means,
      at
      any relevant time, all liabilities actual or contingent, present or future
      of
      the Owner to the Bank under the Master Swap Agreement at such time;

     

    “Outstanding
      Indebtedness” means
      the
      aggregate of the Loan and interest accrued and accruing thereon, the Master
      Swap
      Liabilities, the Expenses and all other sums of money from time to time owing
      by
      the Owner to the Bank whether actually or contingently, under the Loan
      Agreement, the Master Swap Agreement, the other Security Documents or any of
      them;

     

    “Security
      Documents” means
      any
      such document as is defined in the Loan Agreement as a Security Document
      (including this Deed and, where the context so admits, the Loan Agreement
      itself) or as may from time to time be executed by any person as security for
      or
      as a guarantee of the Outstanding Indebtedness or any part thereof as the same
      may hereafter be supplemented and/or amended (whether or not any such documents
      also secures moneys from time to time owing pursuant to any other document
      or
      agreement), and references to the “Security
      Documents” shall
      mean all or any of them as the context so requires;

     

    “Security
      Interest” means
      a
      mortgage, charge (whether fixed or floating) pledge, lien, hypothecation,
      encumbrance, assignment, trust arrangement, title retention or other distress,
      execution, attachment, arrangement or process of any kind having the effect
      of
      conferring security;

     

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

     

    “Secured
      Property” means
      all
      rights, title, interest and benefits whatsoever of the Owner under or in
      connection with the Master Swap Agreement including, without limitation, all
      moneys payable by the Bank to the Owner thereunder (including without limitation
      any payment pursuant to termination provisions thereunder) and all claims for
      damages in respect of any breach by the Bank of the Master Swap
      Agreement.

     

    
      	
              1.2

            	
              For
                the purposes of this Deed an amount shall be deemed to be outstanding
                and
                to be due and payable to the Bank if the Bank is then entitled to
                demand
                payment of that amount, notwithstanding that it has not yet served
                a
                demand.

            

    

     

    
      	
              1.3

            	
              Clause
                1.1 (Purpose) and clause 1.2 (Definitions) of the Loan Agreement
                shall
                apply with any necessary modifications for the purposes of this
                Deed.

            

    

     

    
      	2	
              Restrictions

            

    

     

    During
      the Security Period the Owner shall not without the prior written consent of
      the
      Bank, assign or attempt to assign any right (present, future or contingent)
      relating to the Secured Property and the Owner irrevocably and unconditionally
      confirms to the Bank that no right (present, future or contingent) relating
      to
      the Secured Property shall be capable of being assigned to, or exercised by,
      a
      person other than the Owner without the Bank’s prior written
      consent.

     

    
      	
              2.1

            	
              In
                this clause references to assignment includes the creation, or permitting
                to arise, of any form of beneficial interest or Security Interest
                and
                every other kind of disposition.

            

    

     

    
      	
              2.2

            	
              An
                act or transaction which is contrary to, or inconsistent with, this
                clause
                shall be void as regards the Bank.

            

    

    
       

      
        
          2

        

        

      

      
        
        

      

       

    
    
      	3	
              First
                fixed charge

            

    

     

    
      	
              3.1

            	
              The
                Owner with full title guarantee, hereby charges and agrees to charge
                and
                releases and agrees to release.
                to
                the Bank as a continuing security for payment of the Outstanding
                Indebtedness, by way of first fixed charge, the Secured
                Property.

            

    

     

    
      	
              3.2

            	
              Upon
                the occurrence of a Default the charge shall become enforceable and
                the
                Bank shall be entitled then or at any later time or times to appropriate
                all or any part of the Secured Property in or towards discharge of
                the
                then Outstanding Indebtedness or any part thereof, and may do so
                notwithstanding that any maturity date attached to any part or parts
                of
                the Secured Property may not yet have
                arrived.

            

    

     

    
      	
              3.3

            	
              A
                certificate signed by a director or other senior officer of the Bank
                and
                which states that on a specified date and (if the certificate also
                states
                this) at a specified time the Bank exercised its rights under this
                clause
                to appropriate a specified amount of Secured Property in the discharge
                of
                a specified amount of the Outstanding Indebtedness shall be conclusive
                evidence that:

            

    

     

    
      	3.3.1	
              the
                Bank’s liabilities in respect of the specified amount of Secured Property;
                and

            

    

     

    
      	3.3.2	
              the
                specified amount of Outstanding Indebtedness,

            

    

     

    were
      extinguished and discharged on the specified date and, if so stated, at the
      specified time.

     

    
      	
              4

            	
              Further
                documentation etc.

            

    

     

    
      	
              4.1

            	
              The
                Owner shall execute forthwith any document which the Bank may specify
                for
                the purpose of: 

            

    

     

    
      	4.1.1	
              supplementing
                the rights which this Deed confers on the Bank in relation to the
                Secured
                Property; or

            

    

     

    
      	4.1.2	
              creating
                a mortgage of the Secured Property to replace or supplement the charge
                created in clause 3 above; or

            

    

     

    
      	4.1.3	
              registering
                or otherwise perfecting this Deed or any mortgage created under clause
                4.1.2 above; or

            

    

     

    
      	4.1.4	
              ensuring
                or confirming the validity of anything done or to be done under this
                Deed.

            

    

     

    
      	
              4.2

            	
              Any
                such document shall be in the terms specified by the Bank and, in
                the case
                of a mortgage of the Secured Property, those terms may include a
                provision
                entitling the Bank, on or after a Default, to appropriate, or otherwise
                deal with, the Secured Property for the purpose of discharging the
                Outstanding Indebtedness.

            

    

     

    
      	
              4.3

            	
              The
                Owner shall also forthwith do any act and execute any document (including
                a document which amends or replaces this Deed) which the Bank specifies
                for the purpose of enabling or assisting the Bank to comply, in relation
                to the Secured Property and/or the Outstanding Indebtedness, with
                any
                requirement (legally binding or not) applicable to the Bank and,
                in
                particular, the requirements of any banking supervisory authority
                with
                regard to netting of cash
                collateral.

            

    

     

    
      	
              4.4

            	
              For
                the purpose of securing performance of the Owner’s obligations under
                clauses 4.1 to 4.3, the Owner irrevocably appoints the Bank as its
                attorney, on its behalf and in its name or otherwise to sign or execute
                any document which, in the opinion of the Bank, the Owner is obliged,
                or
                could be required, to sign or execute under any of the said clauses,
                which
                the Bank considers necessary 

            

    

    
       

      
        
          3

        

        

      

      
        
        

      

       

    
    or
      convenient for or in connection with any exercise or intended exercise of any
      rights which the Bank has under this Deed or any other purpose connected with
      this Deed.

     

    
      	
              4.5

            	
              The
                Bank may appoint any person or persons as its substitute under that
                power
                of attorney referred to in clause 4.4 and may also delegate that
                power of
                attorney to any person or persons.

            

    

     

    
      	5	
              Representations

            

    

     

    
      	
              5.1

            	
              The
                Owner represents and warrants to the Bank as
                follows:

            

    

     

    
      	5.1.1	
              the
                Owner is the sole legal and beneficial owner of the Secured Property
                and
                has good marketable title to it;

            

    

     

    
      	5.1.2	
              no
                third party has or will have any interest, right or claim of any
                kind in
                relation to any of the Secured
                Property;

            

    

     

    
      	5.1.3	
              the
                Owner has the corporate power, and has taken all necessary corporate
                action to authorise the execution of this Deed, the Loan Agreement
                and the
                Master Swap Agreement; and

            

    

     

    
      	5.1.4	
              nothing
                in this Deed will or might result in the Owner contravening any law
                or
                regulation which is now in force or which has been published but
                not yet
                brought into force or any contractual or other obligation which the
                Owner
                now has to a third party.

            

    

     

    
      	6	
              Notices

            

    

     

    
      	
              6.1

            	
              Clause
                17 (Notices and other matters) of the Loan Agreement will apply to
                this
                Deed mutatis mutandis as if references to the Loan Agreement were
                references to this Deed save that references therein to the “Borrower”
                shall be construed as references to the
                Owner.

            

    

     

    
      	
              7

            	
              Supplemental

            

    

     

    
      	
              7.1

            	
              This
                Deed, including the charge created by clause 3, shall remain in force
                as a
                continuing security until the Security Period has
                ended.

            

    

     

    
      	
              7.2

            	
              The
                rights of the Bank under this Deed will not be discharged or prejudiced
                by:

            

    

     

    
      	7.2.1	
              any
                kind of amendment or supplement to the other Security
                Documents;

            

    

     

    
      	7.2.2	
              any
                arrangement or concession, including a rescheduling, which the Bank
                may
                make in relation to any of the Loan Agreement, the Master Swap Agreement
                and the other Security Documents, or any action by the Bank and/or
                the
                Owner and/or any other party thereto which is contrary to the terms
                of the
                Loan Agreement, the Master Swap Agreement and the other Security
                Documents;

            

    

     

    
      	7.2.3	
              any
                release or discharge, whether granted by the Bank or effected by
                the
                operation of any law, of all or any of the obligations of the Owner
                and/or
                any other party thereto under any of the Loan Agreement, the Master
                Swap
                Agreement and the other Security
                Documents;

            

    

     

    
      	7.2.4	
              any
                change in the ownership and/or control of the Owner and/or any other
                party
                thereto and/or merger, demerger or reorganisation involving the Owner
                and/or any other party thereto;

            

    

     

    
      	7.2.5	
              any
                event or matter which is similar to, or connected with, any of the
                foregoing;

            

    

     

    
      
        4

      

      

    
    
      
      

    

     

    and
      the
      rights of the Bank under this Deed do not depend on the Loan Agreement, the
      Master Swap Agreement or any of the Security Documents being or remaining
      valid.

     

    
      	
              7.3

            	
              Nothing
                in this Deed excludes or restricts any right of counterclaim, set-off,
                right to net payments, or any other right or remedy which the Bank
                would
                have had other than under the general law, the Loan Agreement, the Master
                Swap Agreement and the other Security
                Documents.

            

    

     

    
      	8	
              Law
                and jurisdiction

            

    

     

    
      	8.1	
              Law

            

    

     

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

     

    
      	
              8.2

            	
              Submission
                to jurisdiction

            

    

     

    For
      the
      benefit of the Bank, the parties hereto irrevocably agree that any legal action
      or proceedings in connection with this Deed may be brought in the English
      courts, or in the courts of any other country chosen by the Bank, each of which
      shall have jurisdiction to settle any disputes arising out of or in connection
      with this Deed. The Owner irrevocably and unconditionally submits to the
      jurisdiction of the English courts and the courts of any country chosen by
      the
      Bank and irrevocably designates, appoints and empowers Cheeswrights at present
      of 10 Philpot Lane, London EC3M 8BR, England to receive, for it and on its
      behalf, service of process issued out of the English courts in any such legal
      action or proceedings arising out of or in connection with this Deed. The
      submission to such jurisdiction shall not (and shall not be construed so as
      to)
      limit the right of the Bank to take proceedings against the Owner 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.

     

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

     

    
      	
              8.3

            	
              Contracts
                (Rights of Third Parties) Act
                1999

            

    

     

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

     

    IN
      WITNESS whereof
      the Owner has caused this Deed to be duly executed the day and year first above
      written.

    
       

      
        
          5

        

        

      

      
        
        

      

       

    
    
      	
              EXECUTED
                as a DEED

            	
              )

            
	
              by

            	
              )

            
	
              the
                duly authorised attorney of 

            	
              )

            
	
              PEMER
                SHIPPING LTD

            	
              )

            
	
              for
                it and on its behalf

            	
              )

            
	
              in
                the presence of:

            	
              )

            

    

     

    
      
        	
                ACCEPTED

              	
                )

              
	
                by

              	
                )

              
	
                and

              	
                )

              
	
                by

              	
                )

              
	
                the
                  duly authorised signatories of

              	
                )

              
	
                BAYERISCHE
                  HYPO -UND VEREINSBANK AKTIENGESELLSCHAFT 

              	
                )

              
	
                for
                  it and on its behalf

              	
                )

              
	
                in
                  the presence of:

              	
                )

              

      

      
         

        
          
            6

          

          

        

        
          
          

        

         

      

    
    Schedule
      9

     

    Calculation
      of Additional Cost

     

    
      	
              1

            	
              The
                Additional Cost is an addition to the interest rate to compensate
                the Bank
                for the cost of compliance with (a) the requirements of the Bank
                of
                England and/or the Financial Services Authority (or, in either case,
                any
                other authority which replaces all or any of its functions) or (b)
                the
                requirements of the European Central
                Bank.

            

    

     

    
      	
              2

            	
              On,
                or as soon as possible after, the first day of each Interest Period,
                the
                Bank shall calculate, as a percentage rate, its Additional Cost in
                accordance with the following paragraphs. The Additional Cost will
                be
                expressed as a percentage rate per annum and will be rounded up to
                four
                decimal places.

            

    

     

    
      	
              3

            	
              The
                Additional Cost when the Bank lends from an office in any member
                state of
                the European Union that has adopted or adopts the Euro as its lawful
                currency in accordance with legislation of the European Union relating
                to
                Economic and Monetary Union will be the percentage (expressed as
                a per
                annum rate) which is its reasonable determination of the cost of
                complying
                with the minimum reserve requirements of the European Central Bank
                in
                respect of loans made from that
                office.

            

    

     

    
      	
              4

            	
              The
                Additional Cost for the Bank lending from an office in the United
                Kingdom
                will be calculated as follows:

            

    

     

    
      	 	
              (a)

            	
              in
                relation to a sterling Loan:

            

    

     

    AB
      +
      C(B - D) + Ex
      0.01
 
      per
      cent
      per annum

    100
      - (A
      + C)

     

    
      	 	
              (b)

            	
              in
                relation to a Loan in any currency other than
                sterling:

            

    

     

      
        	
              	Ex0.01	
                per
                  cent per annum 

              

        	 	300	 

      

    

     

    Where:

     

    
      	 	
              A

            	
              is
                the percentage of Eligible Liabilities (assuming these to be in excess
                of
                any stated minimum) which that Lender is from time to time required
                to
                maintain as an interest free cash ratio deposit with the Bank of
                England
                to comply with cash ratio
                requirements.

            

    

     

    
      	 	
              B

            	
              is
                the percentage rate of interest (excluding the Margin and the Additional
                Cost and, if any part of the Loan has not been paid on its due date,
                the
                additional rate of interest specified in clause 3.4 payable for the
                relevant Interest Period on the
                Loan.

            

    

     

    
      	 	
              C

            	
              is
                the percentage (if any) of Eligible Liabilities which that Lender
                is
                required from time to time to maintain as interest bearing Special
                Deposits with the Bank of England.

            

    

     

    
      	 	
              D

            	
              is
                the percentage rate per annum payable by the Bank of England to the
                Agent
                on interest bearing Special
                Deposits.

            

    

     

    
      	 	
              E

            	
              is
                designed to compensate the Bank for amounts payable under the Fees
                Rules
                and is calculated by the Bank as being the most recent rate of charge
                payable by it to the Financial Services Authority under the Fees
                Rules in
                respect of the relevant financial year of the Financial Services
                Authority
                (calculated for this purpose by the Bank as being the
                

            

    

     

    
      
        53

      

      

    
    
      
      

    

     

    average
      of the Fee Tariffs applicable to the Bank for that financial year) and expressed
      in pounds per £1,000,000 of the Tariff Base of the Bank.

     

    
      	
              5

            	
              For
                the purposes of this schedule:

            

    

     

    
      	 	
              (a)

            	
              “Eligible
                Liabilities”
                and “Special
                Deposits”
                have the meanings given to them from time to time under or pursuant
                to the
                Bank of England Act 1998 or (as may be appropriate) by the Bank of
                England;

            

    

     

    
      	 	
              (b)

            	
              “Fees
                Rules”
                means the rules on periodic fees contained in the Supervision manual
                of
                the Financial Services Authority’s Handbook of rules and guidance or such
                other law or regulation as may be in force from time to time in respect
                of
                the payment of fees for the acceptance of
                deposits;

            

    

     

    
      	 	
              (c)

            	
              “Fee
                Tariffs”
                means the fee tariffs specified in the Fees Rules under the activity
                group
                A.1 Deposit acceptors (ignoring any minimum fee or zero rated fee
                required
                pursuant to the Fees Rules but taking into account any applicable
                discount
                rate);

            

    

     

    
      	 	
              (d)

            	
              “Tariff
                Base”
                has the meaning given to it in, and will be calculated in accordance
                with,
                the Fees Rules; and

            

    

     

    
      	 	
              (e)

            	
              “pounds”
                and “£”
                means the lawful currency of the United
                Kingdom.

            

    

     

    
      	
              6

            	
              In
                application of the above formulae, A, B, C and D will be included
                in the
                formulae as figures and not as percentages (i.e. 5 per cent will
                be
                included in the formula as 5 and not a 0.05). A negative result obtained
                by subtracting D from B shall be taken as zero. The resulting figures
                shall be rounded to four decimal
                places.

            

    

     

    
      	
              7

            	
              Any
                determination by the Bank in accordance with this schedule in relation
                to
                a formula, the Additional Cost or any amount payable to it shall,
                in the
                absence of manifest error, be conclusive and binding on the
                Borrower.

            

    

     

    
      	
              8

            	
              The
                Bank may from time to time, after consultation with the Borrowers,
                determine and notify the Borrowers of any amendments which need to
                be made
                to this schedule to comply with any change in law, regulation or
                any
                requirements from time to time imposed by the Bank of England, the
                Financial Services Authority or the European Central Bank (or, in
                any
                case, any other authority which replaces all or any of its functions)
                and
                any such determination shall, in the absence of manifest error, be
                conclusive and binding on the
                Borrowers.

            

    

    
       

      
        
          54

        

        

      

      
        
        

      

       

    
    
      	
              SIGNED

            	
              )

            	 
	
              by
                GEORGE PAPDOPOULOS

            	
              )

            	 
	
              for
                and on behalf of

            	
              )

            	
              /s/
                George Papdopoulos

            
	
              PEMER
                SHIPPING LTD

            	
              )

            	
              Attorney-in-fact

            
	 	 	 
	
              SIGNED

            	
              )

            	 
	
              by
                PEIKLIS LYKOUDIS

            	
              )

            	
              /s/
                Peiklis Lykoudis

            
	
              and
                by VASILEIOS ZAVINOS

            	
              )

            	
              Authorized
                Signatory

            
	
              for
                and on behalf of

            	
              )

            	 
	
              BAYERISCHE
                HYPO- UND VEREINSBANK

            	
              )

            	
              /s/
                Vasileios Zavinos

            
	
              AKTIENGESELLSCHAFT

            	
              )

            	
              Authorized
                Signatory

            

    

    
       

      
        
          55-- Converted by SEC Publisher, created by BCL Technologies Inc., for SEC Filing

EXHIBIT 10.20

	
To:		
Pemer Shipping Ltd	
	            	
32 Karamanli Avenue	
	 		
166 05 Voula	
	 		
Greece	
	 	
	 		
Fax no: +30 210 895 6900	
	 		
Attention: Mr. George Papadopoulos	

5th March 2008

Dear Sirs

Loan Agreement dated 7th March 2007 for a multi-currency loan of $36,000,000 to Pemer Shipping Ltd (the “Loan
Agreement”) 

We refer to the Loan Agreement and to the conversion request you have sent us dated 5th March 2008 (the “New Conversion Request”).
Please note that, pursuant to the New Conversion Request, Three Billion Nine Hundred Fifty Seven Million Six Hundred Thousand Japanese Yen (JPY3,957,600,000) (the “Funds”) have been converted with value 7th March 2008 to Thirty Eight Million One Hundred Sixty Seven Thousand Six Hundred Fifteen United States Dollars and One Cent (USD38,167,615.01) at an exchange rate of 103.69 $/JPY. 

We note your acknowledgment of the excess amount of Four Million One Hundred Sixty Seven Thousand Six Hundred Fifteen United States Dollars and One Cent (USD4,167,615.01) and agree to your request of waiving the requirement
for additional cash collateral to be deposited to the Multicurrency Cash Collateral Account pursuant to clause 4.6 of Loan Agreement. Such waiver shall not in any way prejudice or affect the powers conferred upon the Bank under the Loan Agreement
and the other Security Documents or the right of the Bank thereafter to act strictly in accordance with the terms of the Loan Agreement and the other Security Documents. 

In consideration of the above, we also hereby agree to your request that repayment of aforementioned excess amount be applied to the remaining repayment instalments and the balloon repayment so that the current balance of
the Loan being Thirty Eight Million One Hundred Sixty Seven Thousand Six Hundred Fifteen United States Dollars and One

Bayerische Hypo- und Vereinsbank 

Aktiengesellschaft 

Global Shipping - Piraeus Office 

62, Notara str. 

GR - 185 35 Piraeus, Greece 

Telephone: (0030) 210 4100506-8 

Fax: (0030) 210 4126597 

Cent (USD38,167,615.01) be repayable in twenty-one instalments of One Million One Hundred Thousand United States Dollars (USD1,100,000) each plus a final repayment of Fifteen Million Sixty Seven Thousand Six Hundred Fifteen
United States Dollars and One Cents (USD15,067,615.01), all repayable on each of the Repayment Dates. 

Finally, it is also hereby agreed that no further conversion of the Loan, currently denominated in United States Dollars, will be effected until the final maturity date of the Loan and hence the multicurrency option is
hereby cancelled and the Loan will remain in United States Dollars until the final maturity date. 

We further designate account number 117684 USD 2811 04 held with us in the name of Safety Management Overseas S.A. to be a “Cash Collateral Account” for the purposes of the Loan Agreement. 

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

This letter shall be governed by English law.

Please confirm your agreement to this letter by countersigning a duplicate copy of this letter. 

Yours sincerely 

/s/                                         

For and on behalf of

Bayerische Hypo-und Vereinsbank Aktiengesellschaft

We acknowledge and agree to the above

/s/                                         

for and on behalf Pemer Shipping Ltd

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