Document:

d710265_ex4-4.htm

    PARAGON
SHIPPING INC.

     

    2006
EQUITY INCENTIVE PLAN

     

     

    ARTICLE
I.

     

    General

     

    1.1.      Purpose

     

    The
Paragon Shipping Inc. 2006 Equity Incentive Plan (the “Plan”) is
designed to provide certain key persons, whose initiative and efforts are deemed
to be important to the successful conduct of the business of Paragon
Shipping Inc. (the “Company”), with incentives to (a) enter into
and remain in the service of the Company, (b) acquire a proprietary
interest in the success of the Company, (c) maximize their performance and
(d) enhance the long-term performance of the Company.

     

    1.2.      Administration

     

    (a)           Administration.  The
Plan shall be administered by the Compensation Committee of the Company’s Board
of Directors (the “Board”), or such other committee of the Board as may be
designated by the Board to administer the Plan (the “Administrator”); provided
that, in the event the Company is subject to Section 16 of the Securities
Exchange Act of 1934, as amended (the “1934 Act”), the Administrator
shall be composed of two or more directors, each of whom is a "Non-Employee
Director" (a “Non-Employee Director”) under Rule 16b-3 (as promulgated and
interpreted by the Securities and Exchange Commission (the “SEC”) under the
1934, or any successor rule or regulation thereto as in effect from time to
time); provided
further, however,
that, prior to the date of the consummation of the initial public offering of
the Company’s Common Stock (as defined below), the Administrator may be composed
of one or more members of the Board, as determined by the
Board.  Subject to the terms of the Plan and applicable law, and in
addition to other express powers and authorizations conferred on the
Administrator by the Plan, the Administrator shall have the full power and
authority to: (1) designate the persons to receive Awards (as defined
below) under the Plan; (2) determine the types of Awards granted to a
participant under the Plan; (3) determine the number of shares to be
covered by, or with respect to which payments, rights or other matters are to be
calculated with respect to, Awards; (4) determine the terms and conditions
of any Awards; (5) determine whether, and to what extent, and under what
circumstances, Awards may be settled or exercised in cash, shares, other
securities, other Awards or other property, or cancelled, forfeited or
suspended, and the methods by which Awards may be settled, exercised, cancelled,
forfeited or suspended; (6) determine whether, to what extent, and under
what circumstances cash, shares, other securities, other Awards, other property
and other amounts payable with respect to an Award shall be deferred, either
automatically or at the election of the holder thereof or the Administrator;
(7) construe, interpret and implement the Plan and any Award Agreement (as
defined below); (8) prescribe, amend, rescind or waive rules and
regulations relating to the Plan, including rules governing its operation;
(9) make all determinations necessary or advisable in administering the
Plan; (10) correct any defect, supply any omission and reconcile any
inconsistency in the Plan or any Award Agreement; and (11) make any other
determination and take any other action that the Administrator deems necessary
or desirable for the administration of the Plan.  Unless otherwise
expressly provided in the Plan, all designations, determinations,
interpretations and other decisions under or with respect to the Plan or any
Award shall be within the sole discretion of the Administrator, may be made at
any time and shall be final, conclusive and binding upon all
persons.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

     

    (b)           Administrator
Action.  Actions of the Administrator shall be taken by the
vote of a majority of its members.  Any action may be taken by a
written instrument signed by a majority of the Administrator members without
notice to the other members, and action so taken shall be fully effective as if
it had been taken by a vote at a meeting.  Except to the extent
prohibited by applicable law, the applicable rules of a stock exchange or any
charter, by-laws or other agreement governing the Administrator, the
Administrator may allocate all or any portion of its responsibilities and powers
to any one or more of its members and may delegate all or any part of its
responsibilities to any person or persons selected by it and may revoke any such
allocation or delegation at any time.

     

    (c)           Indemnification.  No
member of the Board, the Administrator or any employee of the Company (each such
person, a "Covered Person") shall be liable for any action taken or omitted
to be taken or any determination made in good faith with respect to the Plan or
any Award hereunder.  Each Covered Person shall be indemnified and
held harmless by the Company against and from (i) any loss, cost, liability
or expense (including attorneys' fees) that may be imposed upon or incurred by
such Covered Person in connection with or resulting from any action, suit or
proceeding to which such Covered Person may be a party or in which such Covered
Person may be involved by reason of any action taken or omitted to be taken
under the Plan or any Award Agreement and (ii) any and all amounts paid by such
Covered Person, with the Company's approval, in settlement thereof, or paid by
such Covered Person in satisfaction of any judgment in any such action, suit or
proceeding against such Covered Person; provided
that the Company shall have the right, at its own expense, to assume and defend
any such action, suit or proceeding and, once the Company gives notice of its
intent to assume the defense, the Company shall have sole control over such
defense with counsel of the Company's choice.  The foregoing right of
indemnification shall not be available to a Covered Person to the extent that a
court of competent jurisdiction in a final judgment or other final adjudication,
in either case not subject to further appeal, determines that the acts or
omissions of such Covered Person giving rise to the indemnification claim
resulted from such Covered Person's bad faith, fraud or willful criminal act or
omission or that such right of indemnification is otherwise prohibited by law or
by the Company's Articles of Incorporation or Bylaws.  The foregoing
right of indemnification shall not be exclusive of any other rights of
indemnification to which Covered Persons may be entitled under the Company's
Articles of Incorporation or Bylaws, as a matter of law, or otherwise, or any
other power that the Company may have to indemnify such persons or hold them
harmless.

     

    (d)           Delegation
of Authority to Senior Officers.  The Administrator may
delegate, on such terms and conditions as it determines, to one or more senior
officers of the Company the authority to make grants of Awards to key employees
(other than officers) of the Company and its Affiliates (including any such
prospective key employee) and consultants of the Company and its
Affiliates.

     

    (e)           Awards
to Non-Employee Directors.  Notwithstanding anything to the
contrary contained herein, the Board may, in its sole discretion, at any time
and from time to time, grant Awards to Non-Employee Directors or administer the
Plan with respect to such Awards.  In any such case, the Board shall
have all the authority and responsibility granted to the Administrator
herein.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

     

    1.3.      Persons
Eligible for Awards

     

    The
persons eligible to receive Awards under the Plan are those directors of the
Company (as defined below) and those officers and key employees (including any
prospective officer or key employee) and consultants of the Company and its
Affiliates (collectively, “Key Persons”) as the Administrator shall
select.

     

    1.4.      Types
of Awards

     

    Awards
may be made under the Plan in the form of (a) stock options, (b) stock
appreciation rights, (c) restricted stock, (d) restricted stock units
and (e) unrestricted stock, all as more fully set forth in the
Plan.  The term “Award” means any of the foregoing that are granted
under the Plan.

     

    1.5.      Shares
Available for Awards; Adjustments for Changes in Capitalization

     

    (a)           Maximum
Number.  Subject to adjustment as provided in
Section 1.5(c), the aggregate number of shares of Class A common stock
of the Company, par value $0.001 (“Common Stock”), with respect to which
Awards may at any time be granted under the Plan shall be
1,500,000.  The following shares of Common Stock shall again become
available for Awards under the Plan: (i) any shares that are subject to an
Award under the Plan and that remain unissued upon the cancellation or
termination of such Award for any reason whatsoever; (ii) any shares of
restricted stock forfeited pursuant to the Plan or the applicable Award
Agreement; provided
that any dividend equivalent rights with respect to such shares that have not
theretofore been directly remitted to the grantee are also forfeited; and
(iii) any shares in respect of which a stock appreciation right or
restricted stock unit is settled for cash.

     

    (b)           Source
of Shares.  Shares issued pursuant to the Plan may be
authorized but unissued Common Stock or treasury shares.  The
Administrator may direct that any stock certificate evidencing shares issued
pursuant to the Plan shall bear a legend setting forth such restrictions on
transferability as may apply to such shares.

     

    (c)           Adjustments.  (i)  In
the event that the Administrator determines that any dividend or other
distribution (whether in the form of cash, Company shares, other securities or
other property), recapitalization, stock split, reverse stock split,
reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase or exchange of Company shares or other securities of the Company,
issuance of warrants or other rights to purchase Company shares or other
securities of the Company, or other similar corporate transaction or event
affects the Company shares such that an adjustment is determined by the
Administrator to be appropriate or desirable, then the Administrator shall, in
such manner as it may deem equitable or desirable, adjust the number of shares
or other securities of the Company (or number and kind of other securities or
property) with respect to which Awards may be granted under the
Plan.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (ii)          The
Administrator is authorized to make adjustments in the terms and conditions of,
and the criteria included in, Awards in recognition of unusual or nonrecurring
events (including the events described in Section 1.5(c)(i) or the
occurrence of a Change in Control (as defined below)) affecting the Company, any
Affiliate, or the financial statements of the Company or any Affiliate, or of
changes in applicable rules, rulings, regulations or other requirements of any
governmental body or securities exchange, accounting principles or law, whenever
the Administrator determines that such adjustments are appropriate or desirable,
including providing for (A) adjustment to (1) the number of shares or
other securities of the Company (or number and kind of other securities or
property) subject to outstanding Awards or to which outstanding Awards relate
and (2) the Exercise Price (as defined below) with respect to any Award and
(B) a substitution or assumption of Awards, accelerating the exercisability
or vesting of, or lapse of restrictions on, Awards, or accelerating the
termination of Awards by providing for a period of time for exercise prior to
the occurrence of such event, or, if deemed appropriate or desirable, providing
for a cash payment to the holder of an outstanding Award in consideration for
the cancellation of such Award (it being understood that, in such event, any
option or stock appreciation right having a per share Exercise Price equal to,
or in excess of, the Fair Market Value of a share subject to such option or
stock appreciation right may be cancelled and terminated without any payment or
consideration therefor).

     

    (iii)           In
the event of (A) a dissolution or liquidation of the Company, (B) a
sale of all or substantially all the Company’s assets or (C) a merger,
reorganization or consolidation involving the Company or one of its Affiliates
(as defined below), the Administrator shall have the power to:

     

    (1)  provide
that outstanding options, stock appreciation rights and restricted stock units
(including any related dividend equivalent right) shall either continue in
effect, be assumed or an equivalent award shall be substituted therefor by the
successor corporation or a “parent corporation” (as defined in
Section 424(e) of the Internal Revenue Code of 1986, as amended
(the “Code”)) or “subsidiary corporation” (as defined in
Section 424(f) of the Code);

     

    (2)  cancel,
effective immediately prior to the occurrence of such event, options, stock
appreciation rights and restricted stock units (including each dividend
equivalent right related thereto) outstanding immediately prior to such event
(whether or not then exercisable) and, in full consideration of such
cancellation, pay to the holder of such Award a cash payment in an amount equal
to the excess, if any, of the Fair Market Value (as of a date specified by the
Administrator) of the shares subject to such Award over the aggregate Exercise
Price of such Award (it being understood that, in such event, any option or
stock appreciation right having a per share Exercise Price equal to, or in
excess of, the Fair Market Value of a share subject to such option or stock
appreciation right may be cancelled and terminated without any payment or
consideration therefor); or

     

    (3)  notify
the holder of an option or stock appreciation right in writing or electronically
that each option and stock appreciation right shall be fully vested and
exercisable for a period of 30 days from the date of such notice, or such
shorter period as the Administrator may determine to be reasonable, and the
option or stock appreciation right shall terminate upon the expiration of such
period (which period shall expire no later than immediately prior to the
consummation of the corporate transaction).

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

     

    1.6.     
Definitions of Certain Terms

     

    (a)           The
“Fair Market Value” of a share of Common Stock on any day shall be the closing
price on the Nasdaq Stock Market, as reported for such day in The Wall Street
Journal, or, if no such price is reported for such day, the average of the high
bid and low asked price of Common Stock as reported for such day or if not
quoted on the Nasdaq National Market, the average of the high bid and low asked
price on the OTC Bulletin Board.  If no quotation is made for the
applicable day, the Fair Market Value of a share of Common Stock on such day
shall be determined in the manner set forth in the preceding sentence for the
next preceding trading day.  Notwithstanding the foregoing, if there
is no reported closing price or high bid/low asked price that satisfies the
preceding sentences, or if otherwise deemed necessary or appropriate by the
Administrator, the Fair Market Value of a share of Common Stock on any day shall
be determined by such methods or procedures as shall be established from time to
time by the Administrator.  The “Fair Market Value” of any property
other than Common Stock shall be the fair market value of such property
determined by such methods or procedures as shall be established from time to
time by the Administrator.

     

    (b)           Unless
otherwise set forth in an Award Agreement, in connection with a termination of
employment or consultancy relationship or a dismissal from Board membership, for
purposes of the Plan, the term “for Cause” shall be defined as
follows:

     

    (i)           if
there is an employment, severance, change in control or other agreement
governing the relationship between the grantee, on the one hand, and the Company
or an Affiliate, on the other hand, that contains a definition of “cause” (or
similar phrase), for purposes of the Plan, the term “for Cause” shall mean those
acts or omissions that would constitute “cause” under such agreement;
or

     

    (ii)           if
the preceding clause (i) is not applicable to the grantee, for purposes of
the Plan, the term "for Cause" shall mean any of the following:

     

        (A)       any
failure by the grantee substantially to perform the grantee’s employment or
Board membership duties;

     

        (B)       any
excessive unauthorized absenteeism by the grantee;

     

        (C)       any
refusal by the grantee to obey the lawful orders of the Board or any other
person to whom the grantee reports;

     

        (D)       any
act or omission by the grantee that is or may be injurious to the Company or any
Affiliate, whether monetarily, reputationally or otherwise;

     

        (E)        any
act by the grantee that is inconsistent with the best interests of the Company
or any Affiliate;

     

        (F)        the
grantee’s gross negligence that is injurious to the Company or any Affiliate,
whether monetarily, reputationally or otherwise;

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

     

        (G)        the
grantee’s material violation of any of the Company’s policies, including,
without limitation, those policies relating to discrimination or sexual
harassment;

     

        (H)        the
grantee’s material breach of his or her employment or service contract with the
Company or any Affiliate;

     

        (I)         
the grantee’s unauthorized (1) removal from the premises of the Company or
an Affiliate of any document (in any medium or form) relating to the Company or
an Affiliate or the customers or clients of the Company or an Affiliate or
(2) disclosure to any person or entity of any of the Company’s, or any
Affiliate’s, confidential or proprietary information;

     

        (J)         
the grantee’s being convicted of, or entering a plea of guilty or nolo
contendere to, any crime that constitutes a felony or involves moral turpitude;
and

     

        (K)         the
grantee’s commission of any act involving dishonesty or fraud.

     

    Any
rights the Company may have under the Plan in respect of the events giving rise
to a termination or dismissal “for Cause” shall be in addition to any other
rights the Company may have under any other agreement with a grantee or at law
or in equity.  Any determination of whether a grantee’s employment,
consultancy relationship or Board membership is (or is deemed to have been)
terminated “for Cause” shall be made by the Administrator.  If,
subsequent to a grantee’s voluntary termination of employment or consultancy
relationship or voluntarily resignation from the Board or involuntary
termination of employment or consultancy relationship without Cause or removal
from the Board other than “for Cause”, it is discovered that the grantee’s
employment or consultancy relationship or Board membership could have been
terminated “for Cause”, the Administrator may deem such grantee’s employment or
consultancy relationship or Board membership to have been terminated “for Cause”
upon such discovery and determination by the Administrator.

     

    (c)           “Affiliate”
shall mean (i) any entity that, directly or indirectly, is controlled by,
controls or is under common control with, the Company and (ii) any entity
in which the Company has a significant equity interest, in either case as
determined by the Administrator.

     

    (d)           “Subsidiary”
shall mean any entity in which the Company, directly or indirectly, has a 50% or
more equity interest.

     

    (e)           “Exercise
Price” shall mean (i) in the case of options, the price specified in the
applicable Award Agreement as the price-per-share at which such share can be
purchased pursuant to the option or (ii) in the case of stock appreciation
rights, the price specified in the applicable Award Agreement as the reference
price-per-share used to calculate the amount payable to the
grantee.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

     

     

    ARTICLE
II.

     

    Awards
Under The Plan

     

    2.1.      Agreements
Evidencing Awards

     

    Each
Award granted under the Plan shall be evidenced by a written certificate (“Award
Agreement”), which shall contain such provisions as the Administrator may deem
necessary or desirable and which may, but need not, require execution or
acknowledgment by a grantee.  The Award shall be subject to all of the
terms and provisions of the Plan and the applicable Award
Agreement.

     

    2.2.      Grant
of Stock Options and Stock Appreciation Rights

     

    (a)           Stock
Option Grants.  The Administrator may grant stock options
(“options”) to purchase shares of Common Stock from the Company to such Key
Persons, and in such amounts and subject to such vesting and forfeiture
provisions and other terms and conditions, as the Administrator shall determine,
subject to the provisions of the Plan.  No option will be treated as
an “incentive stock option” for purposes of the Code.

     

    (b)           Stock
Appreciation Right Grants; Types of Stock Appreciation Rights.  The
Administrator may grant stock appreciation rights to such Key Persons, and in
such amounts and subject to such vesting and forfeiture provisions and other
terms and conditions, as the Administrator shall determine, subject to the
provisions of the Plan.  The terms of a stock appreciation right may
provide that it shall be automatically exercised for a payment upon the
happening of a specified event that is outside the control of the grantee and
that it shall not be otherwise exercisable.  Stock appreciation rights
may be granted in connection with all or any part of, or independently of, any
option granted under the Plan.

     

    (c)           Nature
of Stock Appreciation Rights.  The grantee of a stock
appreciation right shall have the right, subject to the terms of the Plan and
the applicable Award Agreement, to receive from the Company an amount equal to
(i) the excess of the Fair Market Value of a share of Common Stock on the
date of exercise of the stock appreciation right over the Exercise Price of the
stock appreciation right, multiplied by (ii) the number of shares with
respect to which the stock appreciation right is exercised.  Each
Award Agreement with respect to a stock appreciation right shall set forth the
Exercise Price of such Award and, unless otherwise specifically provided in the
Award Agreement, the Exercise Price of a stock appreciation right shall equal
the Fair Market Value of a share of Common Stock on the date of grant; provided
that in no event may such Exercise Price be less than the greater of
(A) the Fair Market Value of a share of Common Stock on the date of grant
and (B) the par value of a share of Common Stock.  Payment upon
exercise of a stock appreciation right shall be in cash or in shares of Common
Stock (valued at their Fair Market Value on the date of exercise of the stock
appreciation right) or both, all as the Administrator shall
determine.  Upon the exercise of a stock appreciation right granted in
connection with an option, the number of shares subject to the option shall be
reduced by the number of shares with respect to which the stock appreciation
right is exercised.  Upon the exercise of an option in connection with
which a stock appreciation right has been granted, the number of shares subject
to the stock appreciation right shall be reduced by the number of shares with
respect to which the option is exercised.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

     

    (d)           Option
Exercise Price.  Each Award Agreement with respect to an option
shall set forth the Exercise Price of such Award and, unless otherwise
specifically provided in the Award Agreement, the Exercise Price of an option
shall equal the Fair Market Value of a share of Common Stock on the date of
grant; provided
that in no event may such Exercise Price be less than the greater of
(i) the Fair Market Value of a share of Common Stock on the date of grant
and (ii) the par value of a share of Common Stock.

     

    2.3.      Exercise
of Options and Stock Appreciation Rights

     

    Subject
to the other provisions of this Article II and the Plan, each option and
stock appreciation right granted under the Plan shall be exercisable as
follows:

     

    (a)           Timing
and Extent of Exercise.  Options and stock appreciation rights
shall be exercisable at such times and under such conditions as determined by
the Administrator and set forth in the corresponding Award Agreement, but in no
event shall any portion of such Award be exercisable subsequent to the tenth
anniversary of the date on which such Award was granted.  Unless the
applicable Award Agreement otherwise provides, an option or stock appreciation
right may be exercised from time to time as to all or part of the shares as to
which such Award is then exercisable.

     

    (b)           Notice
of Exercise.  An option or stock appreciation right shall be
exercised by the filing of a written notice with the Company or the Company’s
designated exchange agent (the “Exchange Agent”), on such form and in such
manner as the Administrator shall prescribe.

     

    (c)           Payment
of Exercise Price.  Any written notice of exercise of an option
shall be accompanied by payment for the shares being purchased.  Such
payment shall be made: (i) by certified or official bank check (or the
equivalent thereof acceptable to the Company or its Exchange Agent) for the full
option Exercise Price; (ii) with the consent of the Administrator, which
consent shall be given or withheld in the sole discretion of the Administrator,
by delivery of shares of Common Stock having a Fair Market Value (determined as
of the exercise date) equal to all or part of the option Exercise Price and a
certified or official bank check (or the equivalent thereof acceptable to the
Company or its Exchange Agent) for any remaining portion of the full option
Exercise Price; or (iii) at the sole discretion of the Administrator and to the
extent permitted by law, by such other provision, consistent with the terms of
the Plan, as the Administrator may from time to time prescribe (whether directly
or indirectly through the Exchange Agent).

     

    (d)           Delivery
of Certificates Upon Exercise.  Subject to the provision of
Sections 3.2, 3.4 and 3.13, promptly after receiving payment of the
full option Exercise Price, or after receiving notice of the exercise of a stock
appreciation right for which the Administrator determines payment will be made
partly or entirely in shares, the Company or its Exchange Agent shall (i)
deliver to the grantee, or to such other person as may then have the right to
exercise the Award, a certificate or certificates for the shares of Common Stock
for which the Award has been exercised or, in the case of stock appreciation
rights, for which the Administrator determines will be made in shares or (ii)
establish an account evidencing ownership of the stock in uncertificated form.
 If
the method of payment employed upon an option exercise so requires, and if
applicable law permits, an optionee may direct the Company or its Exchange
Agent, as the case may be, to deliver the stock certificate(s) to the optionee’s
stockbroker.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

     

    (e)           No
Stockholder Rights.  No grantee of an option or stock
appreciation right (or other person having the right to exercise such Award)
shall have any of the rights of a stockholder of the Company with respect to
shares subject to such Award until the issuance of a stock certificate to such
person for such shares.  Except as otherwise provided in
Section 1.5(c), no adjustment shall be made for dividends, distributions or
other rights (whether ordinary or extraordinary, and whether in cash, securities
or other property) for which the record date is prior to the date such stock
certificate is issued.

     

    2.4.      Termination
of Employment; Death Subsequent to a Termination of Employment

     

    (a)           General
Rule.  Except to the extent otherwise provided in
paragraphs (b), (c), (d), (e) or (f) of this Section 2.4 or
Section 3.5(b)(iii), a grantee who incurs a termination of employment or
consultancy relationship or dismissal from the Board may exercise any
outstanding option or stock appreciation right on the following terms and
conditions: (i) exercise may be made only to the extent that the grantee
was entitled to exercise the Award on the date of termination of employment or
consultancy relationship or dismissal from the Board, as applicable; and
(ii) exercise must occur within three months after termination of
employment or consultancy relationship or dismissal from the Board but in no
event after the original expiration date of the Award.

     

    (b)           Dismissal
“for Cause”.  If a grantee incurs a termination of employment
or consultancy relationship or dismissal from the Board, in either case “for
Cause”, all options and stock appreciation rights not theretofore exercised
shall terminate upon the grantee’s termination of employment or consultancy
relationship or dismissal from the Board.

     

    (c)           Retirement.  If
a grantee incurs a termination of employment as the result of his or her
retirement (as defined below), then any outstanding option or stock appreciation
right shall, to the extent exercisable at the time of such retirement, remain
exercisable for a period of three years after such termination of employment;
provided
that in no event may such option or stock appreciation right be exercised
following the original expiration date of the Award.  For this
purpose, “retirement” shall mean a grantee’s resignation of employment, with the
Company’s prior consent, on or after (i) his or her 65th birthday,
(ii) the date on which he or she has attained age 60 and completed at
least five years of service with the Company (using any method of calculation
the Administrator deems appropriate) or (iii) if approved by the
Administrator, on or after his or her having completed at least 20 years of
service with the Company (using any method of calculation the Administrator
deems appropriate).

     

    (d)           Disability.  If
a grantee incurs a termination of employment or a dismissal from the Board by
reason of a disability (as defined below), then any outstanding option or stock
appreciation right shall, to the extent exercisable at the time of such
termination, remain exercisable for a period of one year after such termination
of employment; provided
that in no event may such option or stock appreciation right be exercised
following the original expiration date of the Award.  For this
purpose, “disability” shall mean any physical or mental condition that would
qualify the grantee for a disability benefit under the long-term disability plan
maintained by the Company or, if there is no such plan, a physical or mental
condition that prevents the grantee from performing the essential functions of
the grantee’s position (with or without reasonable accommodation) for a period
of six consecutive months.  The existence of a disability shall be
determined by the Administrator.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

     

    (e)           Death.

     

    (i)           Termination
of Employment as a Result of Grantee’s Death.  If a grantee
incurs a termination of employment or leaves the Board as the result of his or
her death, then any outstanding option or stock appreciation right shall, to the
extent exercisable at the time of such termination, remain exercisable for a
period of one year after such termination of employment; provided
that in no event may such option or stock appreciation right be exercised
following the original expiration date of the Award.

     

    (ii)         Restrictions
on Exercise Following Death.  Any such exercise of an Award
following a grantee’s death shall be made only by the grantee’s executor or
administrator or other duly appointed representative reasonably acceptable to
the Administrator, unless the grantee’s will specifically disposes of such
Award, in which case such exercise shall be made only by the recipient of such
specific disposition.  If a grantee’s personal representative or the
recipient of a specific disposition under the grantee’s will shall be entitled
to exercise any Award pursuant to the preceding sentence, such representative or
recipient shall be bound by all the terms and conditions of the Plan and the
applicable Award Agreement which would have applied to the grantee.

     

    (f)           Administrator
Discretion.  The Administrator, in the applicable Award
Agreement, may waive or modify the application of the foregoing provisions of
this Section 2.4.

     

    2.5.      Transferability
of Options and Stock Appreciation Rights

     

    Except as
otherwise provided in an applicable Award Agreement evidencing an option or
stock appreciation right, during the lifetime of a grantee, each such Award
granted to a grantee shall be exercisable only by the grantee, and no such Award
shall be assignable or transferable other than by will or by the laws of descent
and distribution.  The Administrator may, in any applicable Award
Agreement evidencing an option or stock appreciation right, permit a grantee to
transfer all or some of the options or stock appreciation rights to (a) the
grantee’s spouse, children or grandchildren (“Immediate Family Members”),
(b) a trust or trusts for the exclusive benefit of such Immediate Family
Members or (c) other parties approved by the
Administrator.  Following any such transfer, any transferred options
and stock appreciation rights shall continue to be subject to the same terms and
conditions as were applicable immediately prior to the transfer.

     

    2.6.      Grant
of Restricted Stock

     

    (a)           Restricted
Stock Grants.  The Administrator may grant restricted shares of
Common Stock to such Key Persons, in such amounts and subject to such vesting
and forfeiture provisions and other terms and conditions as the Administrator
shall determine, subject to the provisions of the Plan.  A grantee of
a restricted stock Award shall have no rights with respect to such Award unless
such grantee accepts the Award within such period as the Administrator shall
specify by accepting delivery of a restricted stock agreement in such form as
the Administrator shall determine and, in the event the restricted shares are
newly issued by the Company, makes payment to the Company or its Exchange Agent
by certified or official bank check (or the equivalent thereof acceptable to the
Company and the Administrator) in an amount at least equal to the par value of
the shares covered by the Award.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

     

    (b)           Issuance
of Stock Certificate.  Promptly after a grantee accepts a
restricted stock Award in accordance with Section 2.6(a), subject to
Sections 3.2, 3.4 and 3.13, the Company or its Exchange Agent shall issue
to the grantee a stock certificate or stock certificates for the shares of
Common Stock covered by the Award or shall establish an account evidencing
ownership of the stock in uncertificated form.  Upon the issuance of
such stock certificates, or establishment of such account, the grantee shall
have the rights of a stockholder with respect to the restricted stock, subject
to: (i) the nontransferability restrictions and forfeiture provision
described in the Plan (including paragraphs (d) and (e) of this
Section 2.6); (ii) in the Administrator’s sole discretion, a
requirement that any dividends paid on such shares shall be held in escrow and
shall remain forfeitable until all restrictions on such shares have lapsed; and
(iii) any other restrictions and conditions contained in the applicable
Award Agreement.

     

    (c)           Custody
of Stock Certificate.  Unless the Administrator shall otherwise
determine, any stock certificates issued evidencing shares of restricted stock
shall remain in the possession of the Company until such shares are free of any
restrictions specified in the applicable Award Agreement.  The
Administrator may direct that such stock certificates bear a legend setting
forth the applicable restrictions on transferability.

     

    (d)           Nontransferability.  Shares
of restricted stock may not be sold, assigned, transferred, pledged or otherwise
encumbered or disposed of prior to the lapsing of all restrictions thereon,
except as otherwise specifically provided in this Plan or the applicable Award
Agreement.  The Administrator at the time of grant shall specify the
date or dates (which may depend upon or be related to the attainment of
performance goals and other conditions) on which the nontransferability of the
restricted stock shall lapse.

     

    (e)           Consequence
of Termination of Employment.  A grantee’s termination of
employment or consultancy relationship or dismissal from the Board for any
reason (including death) shall cause the immediate forfeiture of all shares of
restricted stock that have not yet vested as of the date of such termination of
employment or consultancy relationship or dismissal from the
Board.  All dividends paid on such shares that have not theretofore
been directly remitted to the grantee shall also be forfeited, whether by
termination of any escrow arrangement under which such dividends are held or
otherwise.

     

    2.7.      Grant
of Restricted Stock Units

     

    (a)           Restricted
Stock Unit Grants.  The Administrator may grant restricted
stock units to such Key Persons, and in such amounts and subject to such vesting
and forfeiture provisions and other terms and conditions, as the Administrator
shall determine, subject to the provisions of the Plan.  A restricted
stock unit granted under the Plan shall confer upon the grantee a right to
receive from the Company, upon the occurrence of such vesting event as shall be
determined by the Administrator and specified in the Award Agreement, the number
of such grantee’s restricted stock units that vest upon the occurrence of such
vesting event multiplied by the Fair Market Value of a share of Common Stock on
the date of vesting.  Payment upon vesting of a restricted stock unit
shall be in cash or in shares of Common Stock (valued at their Fair Market Value
on the date of exercise of the stock appreciation right) or both, all as the
Administrator shall determine.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

     

    (b)           Dividend
Equivalents.  The Administrator may include in any Award
Agreement with respect to a restricted stock unit a dividend equivalent right
entitling the grantee to receive amounts equal to the ordinary dividends that
would be paid, during the time such Award is outstanding and unvested, on the
shares of Common Stock underlying such Award if such shares were then
outstanding.  In the event such a provision is included in a Award
Agreement, the Administrator shall determine whether such payments shall be
(i) paid to the holder of the Award either (A) at the same time as the
underlying dividends are paid, regardless of the fact that the restricted stock
unit has not theretofore vested, or (B) at the time at which the Award’s
vesting event occurs, conditioned upon the occurrence of the vesting event,
(ii) made in cash, shares of Common Stock or other property and
(iii) subject to such other vesting and forfeiture provisions and other
terms and conditions as the Administrator shall deem appropriate and as shall
set forth in the Award Agreement.

     

    (c)           Consequence
of Termination of Employment.  A grantee’s termination of
employment or consultancy relationship or dismissal from the Board for any
reason (including death) shall cause the immediate forfeiture of all restricted
stock units that have not yet vested as of the date of such termination of
employment or consultancy relationship or dismissal from the
Board.  Any dividend equivalent rights that have not theretofore been
directly remitted to the grantee shall also be forfeited, whether by termination
of any escrow arrangement under which such dividends are held or
otherwise.

     

    (d)           No
Stockholder Rights.  No grantee of a restricted stock unit
shall have any of the rights of a stockholder of the Company with respect to
such Award unless and until a stock certificate is issued with respect to such
Award upon the vesting of such Award (it being understood that the Administrator
shall determine whether to pay any vested restricted stock unit in the form of
cash or Company shares or both).  Except as otherwise provided in
Section 1.5(c), no adjustment to any restricted stock unit shall be made
for dividends, distributions or other rights (whether ordinary or extraordinary,
and whether in cash, securities or other property) for which the record date is
prior to the date such stock certificate, if any, is issued.

     

    (e)           Transferability
of Restricted Stock Units.  Except as otherwise provided in an
applicable Award Agreement evidencing a restricted stock unit, no restricted
stock unit granted under the Plan shall be assignable or
transferable.  The Administrator may, in any applicable Award
Agreement evidencing a restricted stock unit, permit a grantee to transfer all
or some of the restricted stock units to (i) the grantee’s Immediate Family
Members, (ii) a trust or trusts for the exclusive benefit of such Immediate
Family Members or (iii) other parties approved by the
Administrator.  Following any such transfer, any transferred
restricted stock units shall continue to be subject to the same terms and
conditions as were applicable immediately prior to the transfer.

     

    2.8.      Grant
of Unrestricted Stock

     

    The
Administrator may grant (or sell at a purchase price at least equal to par
value) shares of Common Stock free of restrictions under the Plan to such Key
Persons and in such amounts and subject to such forfeiture provisions as the
Administrator shall determine.  Shares may be thus granted or sold in
respect of past services or other valid consideration.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

     

     

    ARTICLE
III.

     

    Miscellaneous

     

    3.1.      Amendment
of the Plan; Modification of Awards

     

    (a)           Amendment
of the Plan.  The Board may from time to time suspend,
discontinue, revise or amend the Plan in any respect whatsoever, except that no
such amendment shall materially impair any rights or materially increase any
obligations under any Award theretofore made under the Plan without the consent
of the grantee (or, upon the grantee’s death, the person having the right to
exercise the Award).  For purposes of this Section 3.1, any
action of the Board or the Administrator that in any way alters or affects the
tax treatment of any Award shall not be considered to materially impair any
rights of any grantee.

     

    (b)           Stockholder
Approval Requirement.  If required by applicable rules or
regulations of a national securities exchange or the SEC, the Company shall
obtain stockholder approval with respect to any amendment to the Plan that
(i) materially increases the benefits under the Plan to persons whose
transactions in Common Stock are subject to Section 16(b) of the 1934 Act,
(ii) increases the number of shares which may be issued under the Plan
(except as permitted pursuant to Section 1.5(c)), (iii) has the effect
of a “re-pricing” of any outstanding Award or (iv) modifies the eligibility
requirements of persons eligible to receive Awards under the Plan.

     

    (c)           Modification
of Awards.  The Administrator may cancel any Award under the
Plan.  The Administrator also may amend any outstanding Award
Agreement, including, without limitation, by amendment which would:
(i) accelerate the time or times at which the Award becomes unrestricted,
vested or may be exercised; (ii) waive or amend any goals, restrictions or
conditions set forth in the Award Agreement; or (iii) waive or amend the
operation of Section 2.4 with respect to the termination of the Award upon
termination of employment or consultancy relationship or dismissal from the
Board.  However, any such cancellation or amendment that materially
impairs the rights or materially increases the obligations of a grantee under an
outstanding Award shall be made only with the consent of the grantee (or, upon
the grantee’s death, the person having the right to exercise the
Award).  In making any modification to an Award, the Administrator may
consider the implications under Section 409A of the Code of such
modification.

     

    3.2.      Consent
Requirement

     

    (a)           No
Plan Action Without Required Consent.  If the Administrator
shall at any time determine that any Consent (as defined below) is necessary or
desirable as a condition of, or in connection with, the granting of any Award
under the Plan, the issuance or purchase of shares or other rights thereunder,
or the taking of any other action thereunder (each such action being hereinafter
referred to as a “Plan Action”), then such Plan Action shall not be taken, in
whole or in part, unless and until such Consent shall have been effected or
obtained to the full satisfaction of the Administrator.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (b)           Consent
Defined.  The term “Consent” as used herein with respect to any
Plan Action means (i) any and all listings, registrations or qualifications
in respect thereof upon any securities exchange or under any federal, state or
local law, rule or regulation, (ii) any and all written agreements and
representations by the grantee with respect to the disposition of shares, or
with respect to any other matter, which the Administrator shall deem necessary
or desirable to comply with the terms of any such listing, registration or
qualification or to obtain an exemption from the requirement that any such
listing, qualification or registration be made and (iii) any and all
consents, clearances and approvals in respect of a Plan Action by any
governmental or other regulatory bodies.

     

    3.3.      Nonassignability

     

    Except as
provided in Sections 2.4(e), 2.5, 2.6(d) or 2.7(e), (a) no
Award or right granted to any person under the Plan or under any Award Agreement
shall be assignable or transferable other than by will or by the laws of descent
and distribution and (b) all rights granted under the Plan or any Award
Agreement shall be exercisable during the life of the grantee only by the
grantee or the grantee’s legal representative or the grantee’s permissible
successors or assigns (as authorized and determined by the
Administrator).  All terms and conditions of the Plan and the
applicable Award Agreements will be binding upon any permitted successors or
assigns.

     

    3.4.      Taxes

     

    (a)           Withholding.  A
grantee or other Award holder under the Plan shall be required to pay, in cash,
to the Company, and the Company and Affiliates shall have the right and are
hereby authorized to withhold from any Award, from any payment due or transfer
made under any Award or under the Plan or from any compensation or other amount
owing to such grantee or other Award holder, the amount of any applicable
withholding taxes in respect of an Award, its grant, its exercise, its vesting,
or any payment or transfer under an Award or under the Plan, and to take such
other action as may be necessary in the opinion of the Company to satisfy all
obligations for payment of such taxes.  Whenever shares of Common
Stock are to be delivered pursuant to an Award under the Plan, with the approval
of the Administrator, which the Administrator shall have sole discretion whether
or not to give, the grantee may satisfy the foregoing condition by electing to
have the Company withhold from delivery shares having a value equal to the
amount of minimum tax required to be withheld.  Such shares shall be
valued at their Fair Market Value as of the date on which the amount of tax to
be withheld is determined.  Fractional share amounts shall be settled
in cash.  Such a withholding election may be made with respect to all
or any portion of the shares to be delivered pursuant to an Award.

     

    (b)           Liability
for Taxes.  Grantees and holders of Awards are solely
responsible and liable for the satisfaction of all taxes and penalties that may
arise in connection with Awards (including, without limitation, any taxes
arising under Section 409A of the Code), and the Company shall not have any
obligation to indemnify or otherwise hold any such person harmless from any or
all of such taxes.  The Administrator shall have the discretion to
organize any deferral program, to require deferral election forms, and to grant
or to unilaterally modify any Award in a manner that (i) conforms with the
requirements of Section 409A of the Code, (ii) voids any participant
election to the extent it would violate Section 409A of the Code and
(iii) for any distribution event or election that could be expected to
violate Section 409A of the Code, make the distribution only upon the
earliest of the first to occur of a "permissible distribution event" within the
meaning of Section 409A of the Code or a distribution event that the
participant elects in accordance with Section 409A of the
Code.  The Administrator shall have the sole discretion to interpret
the requirements of the Code, including, without limitation, Section 409A,
for purposes of the Plan and all Awards.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

     

    3.5.      Change
in Control

     

    (a)           Change
in Control Defined.  For purposes of the Plan, “Change in
Control” shall mean the occurrence of any of the following:

     

    (i)          any
“person” (as defined in Section 13(d)(3) of the 1934 Act), corporation
or other entity (other than (A) the Company, (B) any trustee or other
fiduciary holding securities under an employee benefit plan of the Company or an
Affiliate, (C) any company or other entity owned, directly or indirectly,
by the holders of the voting stock of the Company in substantially the same
proportions as their ownership of the aggregate voting power of the capital
stock ordinarily entitled to elect directors of the Company or (D) any
entity which Mr. Michael Bodouroglou directly or indirectly “controls” (as
defined in Rule 12b-2 under the 1934 Act)) acquires “beneficial
ownership” (as defined in Rule 13d-3 under the 1934 Act), directly or
indirectly, of more than 50% of the aggregate voting power of the capital stock
ordinarily entitled to elect directors of the Company;

     

    (ii)          the
sale of all or substantially all the Company’s assets in one or more related
transactions to a person or group of persons, other than such a sale (A) to
a Subsidiary which does not involve a change in the equity holdings of the
Company, (B) to an entity which Mr. Michael Bodouroglou directly or
indirectly controls or (C) to an entity which has acquired all or
substantially all the Company’s assets (any such entity described in
clause (A), (B) or (C), the “Acquiring Entity”) if, immediately following
such sale, 50% or more of the aggregate voting power of the capital stock
ordinarily entitled to elect directors of the Acquiring Entity (or, if
applicable, the ultimate parent entity that directly or indirectly has
beneficial ownership of more than 50% of the aggregate voting power of the
capital stock ordinarily entitled to elect directors of the Acquiring Entity) is
beneficially owned by the holders of the voting stock of the Company, and such
voting power among the persons who were holders of the voting stock of the
Company immediately prior to such sale is, immediately following such sale, held
in substantially the same proportions as the aggregate voting power of the
capital stock ordinarily entitled to elect directors of the Company immediately
prior to such sale;

     

    (iii)          any
merger, consolidation, reorganization or similar event of the Company or any
Subsidiary as a result of which the holders of the voting stock of the Company
immediately prior to such merger, consolidation, reorganization or similar event
do not directly or indirectly hold 50% or more of the aggregate voting power of
the capital stock of the surviving entity (or, if applicable, the ultimate
parent entity that directly or indirectly has beneficial ownership of more than
50% of the aggregate voting power of the capital stock ordinarily entitled to
elect directors of the surviving entity) and such voting power among the persons
who were holders of the voting stock of the Company immediately prior to such
sale is, immediately following such sale, held in substantially the same
proportions as the aggregate voting power of the capital stock ordinarily
entitled to elect directors of the Company immediately prior to such
sale;

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (iv)          the
approval by the Company’s stockholders of a plan of complete liquidation or
dissolution of the Company; or

     

    (v)          during
any period of 24 consecutive calendar months, individuals:

     

    
      	
               
      

            	
              (A)

            	
              who
      were directors of the Company on the first day of such period,
      or

            

    

     

    
      	
               
      

            	
              (B)

            	
              whose
      election or nomination for election to the Board was recommended or
      approved by at least a majority of the directors then still in office who
      were directors of the Company on the first day of such period, or whose
      election or nomination for election were so
  approved,

            

    

     

    shall
cease to constitute a majority of the Board;

     

    provided,
however,
that in no event shall a Change in Control be deemed to have occurred in
connection with an initial public offering of Common Stock.

     

    (b)           Effect
of a Change in Control.  Unless the Administrator provides
otherwise in a Award Agreement, upon the occurrence of a Change in
Control:

     

    (i)           notwithstanding
any other provision of this Plan, any Award then outstanding shall become fully
vested and any Award in the form of an option or stock appreciation right shall
be immediately exercisable;

     

    (ii)           to
the extent permitted by law and not otherwise limited by the terms of the Plan,
the Administrator may amend any Award Agreement in such manner as it deems
appropriate;

     

    (iii)           a
grantee who incurs a termination of employment or consultancy relationship or
dismissal from the Board for any reason, other than a termination or dismissal
“for Cause”, concurrent with or within one year following the Change in Control
may exercise any outstanding option or stock appreciation right, but only to the
extent that the grantee was entitled to exercise the Award on the date of his or
her termination of employment or consultancy relationship or dismissal from the
Board, until the earlier of (A) the original expiration date of the Award
and (B) the later of (x) the date provided for under the terms of
Section 2.4 without reference to this Section 3.5(b)(iii) and
(y) the first anniversary of the grantee’s termination of employment or
consultancy relationship or dismissal from the Board.

     

    (c)           Miscellaneous.  Whenever
deemed appropriate by the Administrator, any action referred to in
paragraph (b)(ii) of this Section 3.5 may be made conditional upon the
consummation of the applicable Change in Control transaction.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    3.6.      Operation
and Conduct of Business

     

    Nothing
in the Plan or any Award Agreement shall be construed as limiting or preventing
the Company or any Affiliate from taking any action with respect to the
operation and conduct of their business that they deem appropriate or in their
best interests, including any or all adjustments, recapitalizations,
reorganizations, exchanges or other changes in the capital structure of the
Company or any Affiliate, any merger or consolidation of the Company or any
Affiliate, any issuance of Company shares or other securities or subscription
rights, any issuance of bonds, debentures, preferred or prior preference stock
ahead of or affecting the Common Stock or other securities or rights thereof,
any dissolution or liquidation of the Company or any Affiliate, any sale or
transfer of all or any part of the assets or business of the Company or any
Affiliate, or any other corporate act or proceeding, whether of a similar
character or otherwise.

     

    3.7.      No
Rights to Awards

     

    No Key
Person or other person shall have any claim to be granted any Award under the
Plan.

     

    3.8.      Right
of Discharge Reserved

     

    Nothing
in the Plan or in any Award Agreement shall confer upon any grantee the right to
continue his or her employment with the Company or any of its Affiliates, his or
her consultancy relationship with the Company or any of its Affiliates or his or
her position on the Board or affect any right that the Company or any of its
Affiliates may have to terminate such employment or consultancy relationship or
Board membership.

     

    3.9.      Non-Uniform
Determinations

     

    The
Administrator’s determinations and the treatment of Key Persons and grantees and
their beneficiaries under the Plan need not be uniform and may be made and
determined by the Administrator selectively among persons who receive, or who
are eligible to receive, Awards under the Plan (whether or not such persons are
similarly situated).  Without limiting the generality of the
foregoing, the Administrator shall be entitled, among other things, to make
non-uniform and selective determinations, and to enter into non-uniform and
selective Award Agreements, as to (a) the persons to receive Awards under
the Plan, (b) the types of Awards granted under the Plan, (c) the
number of shares to be covered by, or with respect to which payments, rights or
other matters are to be calculated with respect to, Awards and (d) the
terms and conditions of Awards.

     

    3.10.    Other
Payments or Awards

     

    Nothing
contained in the Plan shall be deemed in any way to limit or restrict the
Company from making any award or payment to any person under any other plan,
arrangement or understanding, whether now existing or hereafter in
effect.

     

    3.11.    Headings

     

    Any
section, subsection, paragraph or other subdivision headings contained herein
are for the purpose of convenience only and are not intended to expand, limit or
otherwise define the contents of such subdivisions.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

     

    3.12.    Effective
Date and Term of Plan

     

    (a)           Adoption;
Stockholder Approval.  The Plan was adopted by the Board on
[●], 2006.  The Board may, but need not, make the granting of any
Awards under the Plan subject to the approval of the Company’s
stockholders.

     

    (b)           Termination
of Plan.  The Board may terminate the Plan at any
time.  All Awards made under the Plan prior to its termination shall
remain in effect until such Awards have been satisfied or terminated in
accordance with the terms and provisions of the Plan and the applicable Award
Agreements.  No Awards may be granted under the Plan following the
tenth anniversary of the date on which the Plan was adopted by the
Board.

     

    3.13.    Restriction
on Issuance of Stock Pursuant to Awards

     

    The
Company shall not permit any shares of Common Stock to be issued pursuant to
Awards granted under the Plan unless such shares of Common Stock are fully paid
and non-assessable under applicable law.  Notwithstanding anything to
the contrary in the Plan or any Award Agreement, at the time of the exercise of
any Award, at the time of vesting of any Award or at the time of grant of any
unrestricted shares under the Plan, the Company and the Administrator may, if
either shall deem it necessary or advisable for any reason, require the holder
of an Award (a) to represent in writing to the Company that it is the Award
holder’s then-intention to acquire the shares with respect to which the Award is
granted for investment and not with a view to the distribution thereof or
(b) to postpone the date of exercise until such time as the Company has
available for delivery to the Award holder a prospectus meeting the requirements
of all applicable securities laws; and no shares shall
be issued or transferred in connection with any Award unless and until all legal
requirements applicable to the issuance or transfer of such shares have been
complied with to the satisfaction of the Company and the
Administrator.  The Company and the Administrator shall have the right
to condition any issuance of shares to any Award holder hereunder on such
person’s undertaking in writing to comply with such restrictions on the
subsequent transfer of such shares as the Company or the Administrator shall
deem necessary or advisable as a result of any applicable law, regulation or
official interpretation thereof, and all share certificates delivered under the
Plan shall be subject to such stop transfer orders and other restrictions as the
Company or the Administrator may deem advisable under the Plan, the applicable
Award Agreement or the rules, regulations and other requirements of the SEC, any
stock exchange upon which such shares are listed, and any applicable securities
or other laws, and certificates representing such shares may contain a legend to
reflect any such restrictions.  The Administrator may refuse to issue
or transfer any shares or other consideration under an Award if it determines
that the issuance or transfer of such shares or other consideration might
violate any applicable law or regulation or entitle the Company to recover the
same under Section 16(b) of the 1934 Act, and any payment tendered to
the Company by a grantee or other Award holder in connection with the exercise
of such Award shall be promptly refunded to the relevant grantee or other Award
holder.  Without limiting the generality of the foregoing, no Award
granted under the Plan shall be construed as an offer to sell securities of the
Company, and no such offer shall be outstanding, unless and until the
Administrator has determined that any such offer, if made, would be in
compliance with all applicable requirements of any applicable securities
laws.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

     

    3.14.    Requirement
of Notification of Election Under Section 83(b) of the Code

     

    If an
Award recipient, in connection with the acquisition of Company shares under the
Plan, makes an election under Section 83(b) of the Code (to include in
gross income in the year of transfer the amounts specified in Section 83(b)
of the Code), the grantee shall notify the Administrator of such election within
ten days of filing notice of the election with the U.S. Internal Revenue
Service, in addition to any filing and notification required pursuant to
regulations issued under Section 83(b) of the Code.

     

    3.15.    Severability

     

    If any
provision of the Plan or any Award is or becomes or is deemed to be invalid,
illegal, or unenforceable in any jurisdiction or as to any person or Award, or
would disqualify the Plan or any Award under any law deemed applicable by the
Administrator, such provision shall be construed or deemed amended to conform to
the applicable laws or, if it cannot be construed or deemed amended without, in
the determination of the Administrator, materially altering the intent of the
Plan or the Award, such provision shall be stricken as to such jurisdiction,
person or Award and the remainder of the Plan and any such Award shall remain in
full force and effect.

     

    3.16.    Governing
Law

     

    The Plan
will be construed and administered in accordance with the laws of the State of
New York, without giving effect to principles of conflict of laws.d976100_ex4-9.htm

    

     

    Date  November
2007

     

    PARAGON
SHIPPING INC.

    as
Borrower

     

    - and
-

     

    THE
BANKS AND FINANCIAL INSTITUTIONS

    listed
in Schedule 1

    as
Lenders

     

    - and
-

     

    COMMERZBANK
AG

    as Agent,
Arranger and as Security Trustee

     

    - and
-

     

    COMMERZBANK
AG

    as Swap
Bank

     

    __________________________________

     

    LOAN
AGREEMENT

    __________________________________

     

    relating
to a secured revolving credit facility of

    up to
US$250,000,000 to be secured on certain vessels

     

    
      
        
          WATSON
FARLEY & WILLIAMS

          Piraeus

        

         

      

      
         

        
          

        

      

      
         

      

    

    INDEX

     

    Clause                                                                                                                                                              Page

    

      
        	
                1

              	
                INTERPRETATION

              	
                1

              
	
                2

              	
                FACILITY

              	
                18

              
	
                3

              	
                POSITION
      OF THE LENDERS, THE SWAP BANK AND THE MAJORITY LENDERS

              	
                19

              
	
                4

              	
                DRAWDOWN

              	
                20

              
	
                5

              	
                INTEREST

              	
                21

              
	
                6

              	
                INTEREST
      PERIODS

              	
                23

              
	
                7

              	
                DEFAULT
      INTEREST

              	
                23

              
	
                8

              	
                REPAYMENT
      AND PREPAYMENT

              	
                24

              
	
                9

              	
                CONDITIONS
      PRECEDENT

              	
                26

              
	
                10

              	
                REPRESENTATIONS
      AND WARRANTIES

              	
                27

              
	
                11

              	
                GENERAL
      UNDERTAKINGS

              	
                29

              
	
                12

              	
                CORPORATE
      UNDERTAKINGS

              	
                33

              
	
                13

              	
                INSURANCE

              	
                35

              
	
                14

              	
                SHIP
      COVENANTS

              	
                40

              
	
                15

              	
                SECURITY
      COVER

              	
                44

              
	
                16

              	
                PAYMENTS
      AND CALCULATIONS

              	
                46

              
	
                17

              	
                APPLICATION
      OF RECEIPTS

              	
                47

              
	
                18

              	
                APPLICATION
      OF EARNINGS

              	
                48

              
	
                19

              	
                EVENTS
      OF DEFAULT

              	
                50

              
	
                20

              	
                FEES
      AND EXPENSES

              	
                54

              
	
                21

              	
                INDEMNITIES

              	
                55

              
	
                22

              	
                NO
      SET-OFF OR TAX DEDUCTION

              	
                57

              
	
                23

              	
                ILLEGALITY,
      ETC

              	
                57

              
	
                24

              	
                INCREASED
      COSTS

              	
                58

              
	
                25

              	
                SET
      OFF

              	
                59

              
	
                26

              	
                TRANSFERS
      AND CHANGES IN LENDING OFFICES

              	
                60

              
	
                27

              	
                VARIATIONS
      AND WAIVERS

              	
                63

              
	
                28

              	
                NOTICES

              	
                64

              
	
                29

              	
                SUPPLEMENTAL

              	
                65

              
	
                30

              	
                LAW
      AND JURISDICTION

              	
                66

              
	
                SCHEDULE
      1

              	
                LENDERS
      AND COMMITMENTS

              	
                67

              
	
                SCHEDULE
      2

              	
                DETAILS
      OF EXISTING SHIPS AND OWNERS

              	
                68

              
	
                SCHEDULE
      3

              	
                DRAWDOWN
      NOTICE

              	
                69

              
	SCHEDULE
      4	CONDITION
      PRECEDENT DOCUMENTS	70
	SCHEDULE
      5	TRANSFER
      CERTIFICATE	74
	SCHEDULE
      6	FORM
      OF COMPLIANCE CERTIFICATE	78
	SCHEDULE
      7	MANDATORY
      COST FORMULA	79
	SCHEDULE
      8	DESIGNATION
      NOTICE	81
	EXECUTION
      PAGES	 	82

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

THIS LOAN AGREEMENT is made
on  November 2007

     

    BETWEEN:

     

    
      	
              (1)

            	
              PARAGON SHIPPING INC. a
      corporation incorporated in the Marshall Islands whose registered office
      is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, The
      Marshall Islands MH 96960 as Borrower;

            

    

     

    
      	
              (2)

            	
              THE BANKS AND FINANCIAL
      INSTITUTIONS  listed in Schedule 1, as Lenders;

            

    

     

    
      	
              (3)

            	
              COMMERZBANK AG acting
      through its office at Ness 7-9, D-20457, Hamburg, Germany, as Agent;

            

    

     

    
      	
              (4)

            	
              COMMERZBANK AG acting
      through its office at Ness 7-9, D-20457, Hamburg, Germany, as Arranger;

            

    

     

    
      	
              (5)

            	
              COMMERZBANK AG acting
      through its office at Ness 7-9, D-20457, Hamburg, Germany, as Security Trustee;

            

    

     

    
      	
              (6)

            	
              COMMERZBANK AG acting
      through its office at Kaiserstrasse 16, 60621 Frankfurt am Main, Germany,
      as Swap
      Bank.

            

    

     

    WHEREAS

     

    
      	
              (A)

            	
              The
      Lenders have agreed to make available to the Borrower a secured revolving
      credit facility in an amount of up to US$250,000,000 to finance up to 50%
      of the lesser of (a) the aggregate Initial Value of the Ships and (b) the
      aggregate Market Value of the Ships.  The Borrower will on-lend
      the loan to the Owners to assist them in refinancing the indebtedness
      secured on the Existing Ships and in part-financing the purchase price of
      Target Ships.

            

    

     

    
      	
              (B)

            	
              The
      Swap Bank has agreed to enter into interest rate swap transactions with
      the Borrower from time to time to hedge at least 50 per cent. of the
      Borrower’s exposure under this Agreement to interest rate
      fluctuations.

            

    

     

    
      	
              (C)

            	
              The
      Lenders and the Swap Bank have agreed to share pari passu in the security
      to be granted to the Security Trustee pursuant to this
      Agreement.

            

    

     

    IT IS AGREED as
follows:

     

    
      	
              1

            	
              INTERPRETATION

            

    

     

    
      	
              1.1

            	
              Definitions.  Subject
      to Clause 1.5, in this Agreement:

            

    

     

    “Acquisition Advance” means any
Advance to be made available to the Borrower in accordance with the terms of
this Agreement which is to be used in financing part of the balance of the
acquisition cost payable pursuant to the MOA applicable to a Target Ship on
delivery of that Ship to its Owner and in the plural means all of
them;

     

    “Advances” means the Existing
Ships Advance and each Acquisition Advance and in the singular means any of
them;

     

    “Affected Lender” has the
meaning given in Clause 5.5;

     

    “Agency and Trust Deed” means
the agency and trust deed executed or to be executed between the Borrower, the
Lenders, the Agent, the Security Trustee, the Arranger and the Swap Bank in such
form as the Lenders may approve or require;

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    “Agent” means Commerzbank AG
and any of its successors including, without limitation, any successor appointed
under clause 5 of the Agency and Trust Deed;

     

    “Applicable Accounts” means, as at the
date of calculation or, as the case may be, in respect of an accounting period,
the annual audited consolidated accounts and financial statements of the Group
or the quarterly unaudited accounts and financial statements of the Group, in
each case, which the Borrower is obliged to deliver to the Agent pursuant to
Clause 11.6;

     

    “Approved Broker” means each of
H. Clarkson & Company Limited of London, England, Barry Rogliano Salles S.A.
of Paris, France, R.S. Platou Shipbrokers A.S. of Oslo, Norway, Arrow Sale &
Purchase (UK) Ltd. of London, England, Simpson Spence & Young of London,
England, Fearnley AS of Oslo, Norway and Galbraith’s Limited of London,
England;

     

    “Approved Flag” means the
Marshall Islands flag, the Liberian flag, the Cayman Islands flag or such other
flag as the Agent may, in its sole and absolute discretion, approve as the flag
on which a Ship shall be registered;

     

    “Approved Flag State” means the
Marshall Islands, Liberia, the Cayman Islands or any other country in which the
Agent, may in its sole and absolute discretion, approve that a Ship be
registered;

     

    “Approved Manager” means, in
relation to each Ship, Allseas Marine S.A. a corporation organised and existing
under the laws of the Republic of Liberia, having its registered office at 80
Broad Street, Monrovia, Liberia and maintaining a ship management office at 15,
Karamanli Avenue, 166 73 Voula, Greece or any other company which the Agent may,
with the authorisation of the Majority Lenders, approve from time to time as the
technical and/or commercial manager of a Ship;

     

    “Arranger” means Commerzbank AG
acting through its office at Ness 7-9, D-20457, Hamburg, Germany,

     

    “Availability Period” means the
period commencing on the date of this Agreement and ending on:

     

    
      	
               
      

            	
              (a)

            	
              (i)
      in the case of each Existing Ships Advance, 31 December 2007 and (ii) in
      the case of each Acquisition Advance, the date falling on the first
      anniversary of the date of this Agreement or (in the case of any Advance)
      such later date as the Agent may, with the authorisation of all the
      Lenders, agree with the Borrower;
or

            

    

     

    
      	
               
      

            	
              (b)

            	
              if
      earlier, the date on which the Total Commitments are fully borrowed,
      cancelled or terminated;

            

    

     

    “Borrower” means Paragon
Shipping Inc., a corporation incorporated in the Marshall Islands and having its
registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island,
Majuro, The Marshall Islands MH 96960;

     

    “Bridge Facility Agreement”
means a loan agreement dated 25 July 2007 and entered into between (i) the
Borrower, (ii) the banks and financial institutions listed therein as lenders
and (iii) Commerzbank AG as Agent, Arranger and Security Trustee in respect of a
bridge facility of (initially) up to $300,000,000;

     

    “Business Day” means a day on
which banks are open in London, Athens, Hamburg and any other city in which a
Lender is incorporated or maintains its lending office and, in respect of a day
on which a payment is required to be made under a Finance Document, also in New
York City;

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    “Charterparty Assignment”
means, in relation to each Ship, an assignment of the rights of the Owner of
that Ship under any charterparty or other contract of employment referred to in
Clause 14.16 executed or to be executed by the relevant Owner in favour of the
Security Trustee, in each case, in such form as the Lenders may approve or
require and, in the plural, means all of them;

     

    “Commitment” means, in relation
to a Lender, the amount set opposite its name in the Schedule 1 or, as the case
may require, the amount specified in the relevant Transfer Certificate, as that
amount may be reduced, cancelled or terminated in accordance with this Agreement
(and “Total Commitments”
means, subject to Clause 2.4, the aggregate of the Commitments of all the
Lenders);

     

    “Compliance Certificate” means
a certificate in the form set out in Schedule 6 (or in any other form which the
Agent approves or reasonably requires) to be provided at the times and in the
manner set out in Clauses 12.5 and 12.9;

     

    “Compliance Date” means 31
March, 30 June, 30 September and 31 December in each calendar year (or such
other dates as of which the Borrower prepares the consolidated financial
statements which it is required to deliver pursuant to Clause
11.6);

     

    “Contractual Currency” has the
meaning given in Clause 21.5;

     

    “Confirmation” and “Early Termination
Date”  in relation to any continuing Designated Transaction,
have the meanings given in the Master Agreement;

     

    “Contribution” means, in
relation to a Lender, the part of the Loan which is owing to that
Lender;

     

    “Creditor Party” means the
Agent, the Arranger, the Security Trustee, the Swap Bank or any Lender, whether
as at the date of this Agreement or at any later time;

     

    “Deed of Covenant” means a deed
of covenant collateral to a mortgage on a Ship to be executed in favour of the
Security Trustee by the Owner of the relevant Ship in such form as the Lenders
may approve or require and, in the plural means all of them;

     

    “Designated Transaction” means
a Transaction which fulfils the following requirements:

     

    
      	
               
      

            	
              (a)

            	
              it
      is entered into by the Borrower pursuant to the Master Agreement with the
      Swap Bank which, at the time the Transaction is entered into, is also a
      Lender;

            

    

     

    
      	
               
      

            	
              (b)

            	
              its
      purpose is the hedging of the Borrower’s exposure under this Agreement to
      fluctuations in LIBOR arising from the funding of the Loan (or any part
      thereof) for a period expiring no later than the final Repayment Date;
      and

            

    

     

    
      	
               
      

            	
              (c)

            	
              it
      is designated by the Borrower, by delivery by the Borrower to the Agent of
      a notice of designation in the form set out in Schedule 8, as a Designated
      Transaction for the purposes of the Finance
  Documents;

            

    

     

    “Dividend Declaration Date”
means, in respect of each quarterly period during each Financial Year, a date
(being a Business Day) falling no later than 60 days after the end of the
relevant preceding financial quarter but in any event not later than 10 days
prior to any intended declaration by the Borrower to its shareholders of any
dividend;

     

    “Dollars” and “$” means the lawful currency
for the time being of the United States of America;

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    “Drawdown Date” means, in
relation to an Advance, the date requested by the Borrower for the Advance to be
made, or (as the context requires) the date on which the Advance is actually
made;

     

    “Drawdown Notice” means a
notice in the form set out in Schedule 3 (or in any other form which the Agent
approves or reasonably requires);

     

    “Earnings” means, in relation
to each Ship, all moneys whatsoever which are now, or later become, payable
(actually or contingently) to the Owner thereof or the Security Trustee and
which arise out of the use or operation of that Ship, including (but not limited
to):

     

    
      	
               
      

            	
              (a)

            	
              all
      freight, hire and passage moneys, compensation payable to the relevant
      Owner or the Security Trustee in the event of requisition of that 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;

            

    

     

    
      	
               
      

            	
              (b)

            	
              all
      moneys which are at any time payable under Insurances in respect of loss
      of earnings; and

            

    

     

    
      	
               
      

            	
              (c)

            	
              if
      and whenever the Ship is employed on terms whereby any moneys falling
      within paragraphs (a) or (b) above are pooled or shared with any other
      person, that proportion of the net receipts of the relevant pooling or
      sharing arrangement which is attributable to the
  Ship;

            

    

     

    “Earnings Accounts” means,
together, the Existing Ships Earnings Accounts and the Target Ships Earnings
Accounts and, in the singular, means any of them;

     

    “EBITDA” means, as at the date
of calculation or, as the case may be, for any accounting period, the
consolidated net income of the Group for that accounting period:

     

    
      	
               
      

            	
              (a)

            	
              plus,
      to the extent deducted in computing consolidated net income of the Group
      for that accounting period, the sum, without duplication,
    of:

            

    

     

    
      	
               
      

            	
              (i)

            	
              all
      federal, state, local and foreign taxes and tax
    distributions;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              Net
      Interest Expenses; and

            

    

     

    
      	
               
      

            	
              (iii)

            	
              depreciation,
      depletion, amortisation of intangibles and other non-cash charges or
      non-cash losses (including non-cash transaction expenses and the
      amortisation of debt discounts) and any extraordinary losses not incurred
      in the ordinary course of business;

            

    

     

    
      	
               
      

            	
              (b)

            	
              minus,
      to the extent added in computing consolidated net income of the Group for
      that accounting period, any non-cash income or non-cash gains and any
      extraordinary gains not incurred in the ordinary course of
      business;

            

    

     

    all
determined on a consolidated basis in accordance with GAAP and as shown in the
consolidated statements of income for the Group in the Applicable
Accounts;

     

    “Environmental Claim”
means:

     

    
      	
               
      

            	
              (a)

            	
              any
      claim by any governmental, judicial or regulatory authority which arises
      out of an Environmental Incident or an alleged Environmental Incident or
      which relates to any Environmental Law;
or

            

    

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              (b)

            	
              any
      claim by any other person which relates to an Environmental Incident or to
      an alleged Environmental Incident,

            

    

     

    and
“claim” means a claim
for damages, compensation, fines, penalties or any other payment of any kind
whether or not similar to the foregoing; an order or direction to take, or not
to take, certain action or to desist from or suspend certain action; and any
form of enforcement or regulatory action, including the arrest or attachment of
any asset;

     

    “Environmental Incident” means,
in relation to each Ship:

     

    
      	
               
      

            	
              (a)

            	
              any
      release of Environmentally Sensitive Material from that Ship;
      or

            

    

     

    
      	
               
      

            	
              (b)

            	
              any
      incident in which Environmentally Sensitive Material is released from a
      vessel other than the Ship and which involves a collision between the Ship
      and such other vessel or some other incident of navigation or operation,
      in either case, in connection with which the Ship is actually or
      potentially liable to be arrested, attached, detained or injuncted and/or
      the Ship or the Owner thereof and/or any operator or manager is at fault
      or allegedly at fault or otherwise liable to any legal or administrative
      action; or

            

    

     

    
      	
               
      

            	
              (c)

            	
              any
      other incident in which Environmentally Sensitive Material is released
      otherwise than from the Ship and in connection with which the Ship is
      actually or potentially liable to be arrested and/or where the Owner
      thereof and/or any operator or manager of the Ship is at fault or
      allegedly at fault or otherwise liable to any legal or administrative
      action;

            

    

     

    “Environmental Law” means any
law relating to pollution or protection of the environment, to the carriage of
Environmentally Sensitive Material or to actual or threatened releases of
Environmentally Sensitive Material;

     

    “Environmentally Sensitive
Material” means oil, oil products and any other substance (including any
chemical, gas or other hazardous or noxious substance) which is (or is capable
of being or becoming) polluting, toxic or hazardous;

     

    “Epic”  means Epic
Investments Inc., a corporation incorporated in the Marshall Islands and having
its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island,
Majuro, The Marshall Islands MH 96960;

     

    “Epic Account”  means
an account in the name of Epic with the Agent in Hamburg designated “Epic
Investments Inc. - Cash Management Account” or any other account (with that or
another office of the Agent) which is designated by the Agent as the Epic
Account for the purposes of the Loan Agreement;

     

    “Epic Account
Pledge”  means an agreement creating security in favour of the
Security Trustee over the Epic Account in such form as the Lenders may approve
or require;

     

    “Epic
Guarantee”  means a guarantee of the obligations of the
Borrower under (inter alia) this Agreement in such form as the Lenders may
approve or require;

     

    “Event of Default” means any of
the events or circumstances described in Clause 19.1;

     

    “Existing Ships” means,
together, the Ships referred to in Schedule 2 and, in the singular, means any of
them;

     

    “Existing Ships Advance” means
the Advance to be made available to the Borrower in accordance with the terms of
this Agreement which shall be applied in refinancing the acquisition cost of the
Existing Ships;

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    “Existing Ship Earnings
Account” means, in relation to each Existing Ship, an account in the name
of the Owner of that Ship with the Agent designated “[name of Ship] - Earnings
Account”, or any other account (with that or another office of the Agent which
is designated by the Agent as the Earnings Account for that Existing Ship for
the purposes of this Agreement and in the plural means all of them;

     

    “Existing Ship Earnings Account
Pledge” means, in relation to each Existing Ship Earnings Account, an
agreement creating security in favour of the Security Trustee over that account
in such form as the Lenders may approve or require;

     

    “Fee Letter” means a letter
issued or to be issued by the Borrower to the Agent in which the Borrower agrees
to pay certain fees to the Agent in connection with this Agreement;

     

    “Final Maturity Date” means 31
December 2010;

     

    “Finance Documents”
means:

     

    
      	
               
      

            	
              (a)

            	
              this
      Agreement;

            

    

     

    
      	
               
      

            	
              (b)

            	
              the
      Master Agreement;

            

    

     

    
      	
               
      

            	
              (c)

            	
              the
      Agency and Trust Deed;

            

    

     

    
      	
               
      

            	
              (d)

            	
              the
      Fee Letter;

            

    

     

    
      	
               
      

            	
              (e)

            	
              the
      Guarantees;

            

    

     

    
      	
               
      

            	
              (f)

            	
              the
      Master Agreement Assignment;

            

    

     

    
      	
               
      

            	
              (g)

            	
              the
      Mortgages;

            

    

     

    
      	
               
      

            	
              (h)

            	
              the
      General Assignments;

            

    

     

    
      	
               
      

            	
              (i)

            	
              the
      Deeds of Covenant;

            

    

     

    
      	
               
      

            	
              (j)

            	
              the
      Existing Ship Earnings Accounts
Pledges;

            

    

     

    
      	
               
      

            	
              (k)

            	
              the
      Target Ship Earnings Accounts
Pledges;

            

    

     

    
      	
               
      

            	
              (l)

            	
              the
      Retention Account Pledge;

            

    

     

    
      	
               
      

            	
              (m)

            	
              the
      Reserve Account Pledge;

            

    

     

    
      	
               
      

            	
              (n)

            	
              the
      Epic Account Pledge;

            

    

     

    
      	
               
      

            	
              (o)

            	
              the
      Epic Guarantee;

            

    

     

    
      	
               
      

            	
              (p)

            	
              any
      Charterparty Assignment;

            

    

     

    
      	
               
      

            	
              (q)

            	
              the
      Manager’s Undertakings; and

            

    

     

    
      	
               
      

            	
              (r)

            	
              any
      other document (whether creating a Security Interest or not) which is
      executed at any time by the Borrower, any Owner or any other person as
      security for, or to establish any form of subordination or priorities
      arrangement in relation to, any amount payable to the Lenders under this
      Agreement or any of the documents referred to in this
      definition;

            

    

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              “Financial Indebtedness”
      means, in relation to a person (the “debtor”),  a
      liability of the debtor:

            

    

     

    
      	
               
      

            	
              (a)

            	
              for
      principal, interest or any other sum payable in respect of any moneys
      borrowed or raised by the debtor;

            

    

     

    
      	
               
      

            	
              (b)

            	
              under
      any loan stock, bond, note or other security issued by the
      debtor;

            

    

     

    
      	
               
      

            	
              (c)

            	
              under
      any acceptance credit, guarantee or letter of credit facility made
      available to the debtor;

            

    

     

    
      	
               
      

            	
              (d)

            	
              under
      a financial lease, a deferred purchase consideration arrangement or any
      other agreement having the commercial effect of a borrowing or raising of
      money by the debtor;

            

    

     

    
      	
               
      

            	
              (e)

            	
              under
      any interest or currency swap or any other kind of derivative transaction
      entered into by the debtor or, if the agreement under which any such
      transaction is entered into requires netting of mutual liabilities, the
      liability of the debtor for the net amount;
or

            

    

     

    
      	
               
      

            	
              (f)

            	
              under
      a guarantee, indemnity or similar obligation entered into by the debtor in
      respect of a liability of another person which would fall within (a) to
      (e) if the references to the debtor referred to the other
      person;

            

    

     

    “Financial Year” means, in
relation to the Group, each period of 1 year commencing on 1 January in respect
of which its consolidated accounts are or ought to be prepared;

     

    “Fleet Vessels” means,
together, all of the vessels (including, but not limited to, the Ships) from
time to time owned by members of the Group;

     

    “GAAP” means generally accepted
accounting principles as from time to time in effect in the United States of
America;

     

    “General Assignment” means, in
relation to each Ship, a general assignment of the Earnings, the Insurances and
any Requisition Compensation of that Ship in such form as the Lenders may
approve or require and in plural means all of them;

     

    “Group” means the Borrower and
its subsidiaries (whether direct or indirect and including, but not limited to,
the Owners) from time to time during the Security Period  and “member of the Group” shall be
construed accordingly;

     

    “Guarantee” means, in relation
to each Owner, a guarantee to be given by that Owner in favour of the Security
Trustee guaranteeing the obligations of the Borrower under (inter alia) this
Agreement and the other Finance Documents in such form as the Lenders shall
approve or require and in the plural means all of them;

     

    “Hedge Strategy Letter” means
each letter issued or to be issued by the Borrower to the Agent in a form and on
terms acceptable to the Agent which letter shall be prepared in consultation
with, and with the assistance of, the Agent in accordance with Clause 11.20 and
in the plural means all of them;

     

    “HSH Loan Agreement” means the
loan agreement dated 18 December 2006 (as the same has been supplemented,
amended and restated) made between (i) the Borrower (ii) the banks and financial
institutions referred to therein as lenders and (iii) HSH Nordbank AG as (inter
alia) agent, security trustee and swap bank in respect of a revolving credit
facility of (originally) $109,538,620;

     

    “IACS” means the International
Association of Classification Societies;

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    “Initial Borrowing Date” means
a Business Day falling not later than 31 December 2007;

     

    “Initial
Value”  means, in relation to each Ship, the lesser of (a) the
acquisition cost of that Ship and (b) the Market Value of the Ship determined on
the date on which the acquisition of the Ship is or was completed by delivery
thereof to its Owner;

     

    “Insurances”  means,
in relation to each Ship:

     

    
      	
               
      

            	
              (a)

            	
              all
      policies and contracts of insurance, including entries of that Ship in any
      protection and indemnity or war risks association, which are effected in
      respect of the Ship, her Earnings or otherwise in relation to her;
      and

            

    

     

    
      	
               
      

            	
              (b)

            	
              all
      rights and other assets relating to, or derived from, any of the
      foregoing, including any rights to a return of a
  premium;

            

    

     

    “Interest Period” means a
period determined in accordance with Clause 6;

     

    “ISM Code” means:

     

    
      	
               
      

            	
              (a)

            	
              ‘The
      International Management Code for the Safe Operation of Ships and for
      Pollution Prevention’, currently known or referred to as the ‘ISM Code’,
      adopted by the Assembly of the International Maritime Organisation by
      Resolution A.741(18) on 4 November 1993 and incorporated on 19 May 1994
      into chapter IX of the International Convention for the Safety of Life at
      Sea 1974 (SOLAS 1974); and

            

    

     

    
      	
               
      

            	
              (b)

            	
              all
      further resolutions, circulars, codes, guidelines, regulations and
      recommendations which are now or in the future issued by or on behalf of
      the International Maritime Organisation or any other entity with
      responsibility for implementing  the ISM Code, including without
      limitation, the ‘Guidelines on implementation or administering of the
      International Safety Management (ISM) Code by Administrations’ produced by
      the International Maritime Organisations pursuant to Resolution A.788(19)
      adopted on 25 November 1995,

            

    

     

    as the
same may be amended, supplemented or replaced from time to time;

     

    “ISM Code Documentation”
includes, in relation to each Ship:

     

    
      	
               
      

            	
              (a)

            	
              the
      document of compliance (DOC) and safety management certificate (SMC)
      issued pursuant to the ISM Code in relation to that Ship within the
      periods specified by the ISM Code;
and

            

    

     

    
      	
               
      

            	
              (b)

            	
              all
      other documents and data which are relevant to the ISM SMS and its
      implementation and verification which the Agent may require;
      and

            

    

     

    
      	
               
      

            	
              (c)

            	
              any
      other documents which are prepared or which are otherwise relevant to
      establish and maintain the Ship’s or the compliance of its Owner with the
      ISM Code which the Agent may
require;

            

    

     

    “ISM SMS” means, in relation to
each Ship, the safety management system for that Ship which is required to be
developed, implemented and maintained under the ISM Code;

     

    “ISPS Code” means the
International Ship and Port Facility Security Code constituted pursuant to
resolution A.924(22) of the International Maritime Organisation (“IMO”) now set
out in Chapter XI-2 of the Safety of Life at Sea Convention (SOLAS) 1974 (as
amended) and the mandatory ISPS Code as adopted by a Diplomatic Conference of
the IMO on Maritime Security in December 2002 and includes any amendments or
extensions to it and any regulation issued pursuant to it but shall only apply
insofar as it is applicable law in the relevant Ship’s flag state and any
jurisdiction on which such Ship is operated;

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

     

     

    “ISPS Code Documentation”
includes:

     

    
      	
               
      

            	
              (a)

            	
              the
      International Ship Security Certificate issued pursuant to the ISPS Code
      in relation to each Ship within the period specified in the ISPS Code;
      and

            

    

     

    
      	
               
      

            	
              (b)

            	
              all
      other documents and data which are relevant to the ISPS Code and its
      implementation and verification which the Agent may
    require;

            

    

     

    
      	
               
      

            	
              “Lender” means, subject
      to Clause 26.6:

            

    

     

    
      	
               
      

            	
              (a)

            	
              a
      bank or financial institution listed in Schedule 1 and acting through its
      branch indicated in Schedule 1 (or through another branch notified to the
      Borrower under Clause 26.14) unless it has delivered a Transfer
      Certificate or Certificates covering the entire amounts of its Commitment
      and its Contribution; and

            

    

     

    
      	
               
      

            	
              (b)

            	
              the
      holder for the time being of a Transfer
  Certificate;

            

    

     

    “Leverage Ratio” means, at any
relevant time, the ratio (expressed as a percentage) of:

     

    
      	
               
      

            	
              (a)

            	
              the
      Total Liabilities (including, without limitation, all amounts outstanding
      from time to time under this Agreement, the Master Agreement and the other
      Finance Documents); and

            

    

     

    
      	
               
      

            	
              (b)

            	
              the
      Market Value Adjusted Total Assets (including, without limitation, the
      Ships);

            

    

     

    “LIBOR” means, for an Interest
Period:

     

    
      	
               
      

            	
              (a)

            	
              the
      rate per annum equal to the offered quotation for deposits in Dollars for
      a period equal to, or as near as possible equal to, the relevant Interest
      Period which appears on REUTERS BBA Page LIBOR 01 at or about 11.00 a.m.
      (London time) on the second Business Day prior to the commencement of that
      Interest Period (and, for the purposes of this Agreement, “REUTERS BBA
      Page LIBOR 01” means the display designated as “REUTERS BBA Page LIBOR 01”
      on the Reuters Money News Services or such other page as may replace
      REUTERS BBA Page LIBOR 01 on that service for the purpose of displaying
      rates comparable to that rate or on such other service as may be nominated
      by the British Bankers’ Association for the purpose of displaying British
      Bankers’ Association Interest Settlement Rates for Dollars);
      or

            

    

     

    
      	
               
      

            	
              (b)

            	
              if
      no rate is quoted on REUTERS BBA Page LIBOR 01, the rate per annum
      determined by the Agent to be the arithmetic mean of the rates per annum
      notified to the Agent by each Lender to be the rate per annum at which
      deposits in Dollars are offered to that Lender by leading banks in the
      London Interbank Market at or about 11.00 a.m. (London time) on the second
      Business Day prior to the commencement of that Interest Period for a
      period equal to that Interest Period and for delivery on the first
      Business Day of it;

            

    

     

    “Liquid
Assets”  means, at any relevant time hereunder, the aggregate
of:

     

    
      	
               
      

            	
              (a)

            	
              cash
      in hand or held with banks or other financial institutions of the Borrower
      and/or any other member of the Group (other than restricted cash) in
      Dollars or another currency freely convertible into
    Dollars;

            

    

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              (b)

            	
              the
      market value of transferable certificates of deposit in a freely
      convertible currency acceptable to the Lenders (being for the purposes of
      this Agreement, Dollars, Japanese Yen, Swiss Francs, Euros or Sterling)
      issued by a prime international bank;
and

            

    

     

    
      	
               
      

            	
              (c)

            	
              the
      market value of equity securities (if and to the extent that the Agent is
      satisfied that such equity securities are readily saleable for cash and
      that there is a ready market therefor) and investment grade debt
      securities which are publicly traded on a major stock exchange or
      investment market (valued at market value as at any applicable date of
      determination);

            

    

     

    in each
case owned by the Borrower or any other member of the Group where:

     

    
      	
               
      

            	
              (i)

            	
              the
      market value of any asset specified in paragraph (b) and (c) shall be the
      bid price quoted for it on the relevant calculation date by the Agent;
      and

            

    

     

    
      	
               
      

            	
              (ii)

            	
              the
      amount or value of any asset denominated in a currency other than Dollars
      shall be converted into Dollars using the Agent’s spot rate for the
      purchase of Dollars with that currency on the relevant calculation
      date;

            

    

     

    “Loan” means the principal
amount for the time being outstanding under this Agreement;

     

    “Major Casualty” means, in
relation to each Ship, any casualty to that Ship in respect of which the claim
or the aggregate of the claims against all insurers, before adjustment for any
relevant franchise or deductible, exceeds $500,000 or, the equivalent in any
other currency;

     

    “Majority Lenders”
means:

     

    
      	
               
      

            	
              (a)

            	
              before
      an Advance has been made, Lenders whose Commitments total at least 66 2/3
      per cent. of the Total Commitments;
and

            

    

     

    
      	
               
      

            	
              (b)

            	
              after
      an Advance has been made, Lenders whose Contributions total 66 2/3 per
      cent. of the Loan;

            

    

     

    “Manager’s Undertaking” means,
in relation to each Ship, a letter of undertaking executed or to be executed by
the Approved Manager in favour of the Security Trustee in such form as the
Lenders may approve or require agreeing certain matters in relation to the
management of that Ship and subordinating the rights of the Approved Manager
against the Ship and the Owner thereof to the rights of the Creditor Parties
under the Finance Documents and, in the plural, means all of them;

     

    “Management Agreement” means,
in relation to each Ship, an agreement made or to be made between the Owner of
that Ship and the Approved Manager in respect of the commercial and technical
management of the Ship and, in the plural, means all of them;

     

    “Mandatory Cost” means the percentage
rate per annum calculated by the Agent in accordance with Schedule
7;

     

    “Margin” means:

     

    
      	
               
      

            	
              (a)

            	
              at
      any time when the Leverage Ratio is above 55 per cent. per annum, 1.10 per
      cent. per annum; and

            

    

     

    
      	
               
      

            	
              (b)

            	
              at
      all other times, 0.95 per cent. per
annum;

            

    

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

     

         

    “Market Value” means, in
relation to each Ship and each Fleet Vessel, the market value thereof calculated
in accordance with Clause 15.4;

     

    “Market Value Adjusted Net
Worth” means Paid-Up Capital plus General Reserves plus Retained Earnings
adjusted to reflect the difference between the book values of the Fleet Vessels
and the Market Values of all Fleet Vessels at any relevant time;

     

    “Market Value Adjusted Total
Assets”  means, at any time, Total Assets adjusted to reflect
the difference between the book values of all Fleet Vessels and the aggregate
Market Value of all Fleet Vessels and lease transactions relating to any Fleet
Vessels;

     

    “Master Agreement” means the
master agreement (on the 1992 or, as the case may be, 2001 ISDA (Multicurrency -
Crossborder) form) made between the Borrower and the Swap Bank and includes all
Designated Transactions from time to time entered into and Confirmations from
time to time exchanged under the master agreement;

     

    “Master Agreement Assignment”
means, the assignment of the Master Agreement in such form as the Lenders may
approve or require and, in the plural, means both of them;

     

    “MOA” means, in relation to a
Target Ship, a memorandum of agreement made or to be made between the Seller of
that Ship and the Owner which is the buyer of that Ship on terms and conditions
acceptable to the Agent and, in the plural, means all of them;

     

    “Mortgage” means, in relation
to a Ship, the first preferred or, as the case may be, priority ship mortgage on
the Ship under the relevant Approved Flag executed by the Owner of that Ship in
favour of the Security Trustee, each in such form as the Lenders may approve or
require and, in plural, means all of them;

     

    “Negotiation Period” has the
meaning given in Clause 5.8;

     

    “Net Interest
Expenses”  means, in respect of any relevant period, the
aggregate of all interest, commitment and other fees, commissions, discounts and
other costs, charges or expenses accruing due from all the members the Group
during that accounting period less interest income received, determined on a
consolidated basis in accordance with GAAP and as shown in the consolidated
statements of income for the Group in the Applicable Accounts;

     

    “Notifying Lender” has the
meaning given in Clause 23.1 or Clause 24.1 as the context
requires;

     

    “Owner” means:

     

    
      	
               
      

            	
              (a)

            	
              in
      relation to each Existing Ship, in the case of Donna Marine Co., a
      corporation incorporated in the Republic of the Marshall Islands having
      its registered office at Trust Company Complex, Ajeltake Road, Ajeltake
      Island, Majuro, The Marshall Islands MH 96960 and in the case of each of
      Protea International Inc. and Reading Navigation Co., each a corporation
      incorporated in the Republic of Liberia having its registered office at 80
      Broad Street, Monrovia, Republic of Liberia;
and

            

    

     

    
      	
               
      

            	
              (b)

            	
              in
      relation to a Target Ship, any corporation which is or will be the owner
      of that Target Ship incorporated in a jurisdiction approved by the
      Agent,

            

    

     

    each
being a corporation which is a direct or indirect wholly-owned subsidiary of the
Borrower and, in the plural, means all of them;

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    “Paid-Up Capital”, “General Reserves” and “Retained Earnings” have the meanings
ascribed to them in the Applicable Accounts;

     

    “Payment Currency” has the
meaning given in Clause 21.5;

     

    
      “Permitted Security Interests”
means:

    

     

    
      	
               
      

            	
              (a)

            	
              Security
      Interests created by the Finance
Documents;

            

    

     

    
      	
               
      

            	
              (b)

            	
              liens
      for unpaid crew’s wages in accordance with usual maritime
      practice;

            

    

     

    
      	
               
      

            	
              (c)

            	
              liens
      for salvage;

            

    

     

    
      	
               
      

            	
              (d)

            	
              liens
      arising by operation of law for not more than 2 months’ prepaid hire
      under any charter in relation to a Ship not prohibited by this
      Agreement;

            

    

     

    
      	
               
      

            	
              (e)

            	
              liens
      for master’s disbursements incurred in the ordinary course of trading and
      any other lien arising by operation of law or otherwise in the ordinary
      course of the operation, repair or maintenance of a Ship, provided such
      liens do not secure amounts more than 30 days overdue (unless the
      overdue amount is being contested by the relevant Owner in good faith by
      appropriate steps) and subject, in the case of liens for repair or
      maintenance, to
Clause 14.13(f);

            

    

     

    
      	
               
      

            	
              (f)

            	
              any
      Security Interest created in favour of a plaintiff or defendant in any
      action of the court or tribunal before whom such action is brought as
      security for costs and expenses where the relevant Owner is prosecuting or
      defending such action in good faith by appropriate steps;
    and

            

    

     

    
      	
               
      

            	
              (g)

            	
              Security
      Interests arising by operation of law in respect of taxes which are not
      overdue for payment other than taxes being contested in good faith by
      appropriate steps and in respect of which appropriate reserves have been
      made;

            

    

     

    “Pertinent Jurisdiction”, in
relation to a company, means:

     

    
      	
               
      

            	
              (a)

            	
              England
      and Wales;

            

    

     

    
      	
               
      

            	
              (b)

            	
              the
      country under the laws of which the company is incorporated or
      formed;

            

    

     

    
      	
               
      

            	
              (c)

            	
              a
      country in which the company’s central management and control is or has
      recently been exercised;

            

    

     

    
      	
               
      

            	
              (d)

            	
              a
      country in which the overall net income of the company is subject to
      corporation tax, income tax or any similar
tax;

            

    

     

    
      	
               
      

            	
              (e)

            	
              a
      country in which assets of the company (other than securities issued by,
      or loans to, related companies) having a substantial value are situated,
      in which the company maintains a permanent place of business, or in which
      a Security Interest created by the company must or should be registered in
      order to ensure its validity or priority;
and

            

    

     

    
      	
               
      

            	
              (f)

            	
              a
      country the courts of which have jurisdiction to make a winding up,
      administration or similar order in relation to the company or which would
      have such jurisdiction if their assistance were requested by the courts of
      a country referred to in paragraphs (b) or (c)
  above;

            

    

     

    “Potential Event of Default”
means an event or circumstance which, with the giving of any notice, the lapse
of time, a determination of the Majority Lenders and/or the satisfaction of any
other condition, would constitute an Event of Default;

     

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

    “Relevant Dividend Distribution
Date”  has the meaning given in Clause 8.2;

     

    “Relevant Person” has the
meaning given in Clause 19.9;

     

    “Requisition Compensation”
includes all compensation or other moneys payable by reason of any act or event
such as is referred to in paragraph (b) of the definition of “Total
Loss”;

     

    “Reserve Account” means an
account in the name of the Borrower with the Agent in Hamburg designated
“Paragon Shipping Inc. - Reserve Account”, or any other account (with that or
another office of the Agent) which is designated by the Agent as the Reserve
Account for the purposes of this Agreement;

     

    “Reserve Account Pledge” means
a pledge agreement creating security in favour of the Security Trustee in
respect of the Reserve Account in such form as the Lenders may approve or
require;

     

    “Retention Account “ means an
account in the name of the Borrower with the Agent in Hamburg designated
“Paragon Shipping Inc. - Retention Account”, or any other account (with that or
another office of the Agent) which is designated by the Agent as the Retention
Account for the purposes of this Agreement;

     

    “Retention Account Pledge”
means a pledge agreement creating security in favour of the Security Trustee in
respect of the Retention Account in such form as the Lenders may approve or
require;

     

    “Secured Liabilities” means all
liabilities which the Borrower, the Security Parties or any of them have, at the
date of this Agreement or at any later time or times, under or by virtue of the
Finance Documents or any judgment relating to the Finance Documents; and for
this purpose, there shall be disregarded any total or partial discharge of these
liabilities, or variation of their terms, which is effected by, or in connection
with, any bankruptcy, liquidation, arrangement or other procedure under the
insolvency laws of any country;

     

    “Security Cover Percentage”
means, at any relevant time, the aggregate of the Market Value of all the Ships
subject to a Mortgage expressed as a percentage of the Loan;

     

    “Security Interest”
means:

     

    
      	
               
      

            	
              (a)

            	
              a
      mortgage, charge (whether fixed or floating) or pledge, any maritime or
      other lien or any other security interest of any
  kind;

            

    

     

    
      	
               
      

            	
              (b)

            	
              the
      rights of the plaintiff under an action in rem in which the
      vessel concerned has been arrested or a writ has been issued or similar
      step taken; and

            

    

     

    
      	
               
      

            	
              (c)

            	
              any
      arrangement entered into by a person (A) the effect of which is to place
      another person (B) in a position which is similar, in economic terms, to
      the position in which B would have been had he held a security interest
      over an asset of A; but (c) does not apply to a right of set off or
      combination of accounts conferred by the standard terms of business of a
      bank or financial institution;

            

    

     

    “Security Party” means each
Owner, the Approved Manager, Epic and any other person (except a Creditor Party)
who, as a surety or mortgagor, as a party to any subordination or priorities
arrangement, or in any similar capacity, executes a document falling within the
final paragraph of the definition of “Finance Documents”;

     

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

    “Security Period” means the
period commencing on the date of this Agreement and ending on the date on which
the Agent notifies the Borrower, the Security Parties and the Lenders
that:

     

    
      	
               
      

            	
              (a)

            	
              all
      amounts which have become due for payment by the Borrower or any Security
      Party under the Finance Documents have been
  paid;

            

    

     

    
      	
               
      

            	
              (b)

            	
              no
      amount is owing or has accrued (without yet having become due for payment)
      under any Finance Document;

            

    

     

    
      	
               
      

            	
              (c)

            	
              neither
      the Borrower nor any Security Party has any future or contingent liability
      under Clause 20, 21 or 22 below or any other provision of this Agreement
      or another Finance Document; and

            

    

     

    
      	
               
      

            	
              (d)

            	
              the
      Agent, the Security Trustee and the Majority Lenders do not consider that
      there is a significant risk that any payment or transaction under a
      Finance Document would be set aside, or would have to be reversed or
      adjusted, in any present or possible future bankruptcy of the Borrower or
      a Security Party or in any present or possible future proceeding relating
      to a Finance Document or any asset covered (or previously covered) by a
      Security Interest created by a Finance
Document;

            

    

     

    “Security Trustee” means
Commerzbank AG and any of its successors including, without limitation, any
successor appointed under clause 5 of the Agency and Trust Deed;

     

    “Seller” means, in relation to
each Target Ship, the company which is a party to the MOA for that Ship in its
capacity as the seller of the Ship;

     

    “Swap Bank” means Commerzbank
AG acting through its office at Kaiserstrasse
16, 60621 Frankfurt am Main, Germany;

     

    “Swap Exposure” means, as at
any relevant date, the amount certified by the Swap Bank to the Agent to be the
aggregate net amount in Dollars which would be payable by the Borrower to the
Swap Bank under (and calculated in accordance with) section 6(e) (Payments on
Early Termination) of the Master Agreement if an Early Termination Date had
occurred on the relevant date in relation to all continuing Designated
Transactions entered into between the Borrower and the Swap Bank;

     

    “Ships” means, together, the
Existing Ships and the Target Ships which may be subject to a Mortgage at any
time and, in the singular, means any of them;

     

    “Target Ship” means a Ship
which satisfies the following criteria:

     

    
      	
               
      

            	
              (a)

            	
              it
      is a handymax, panamax or capesize bulk carrier or any other type of
      vessel as may be approved by the Lenders (in their sole and absolute
      discretion);

            

    

     

    
      	
               
      

            	
              (b)

            	
              its
      age is such that, when combined with the age of all the other Ships then
      subject to a Mortgage, the average age of all such Ships at all times
      during the Security Period shall not be more than 8
  years;

            

    

     

    
      	
               
      

            	
              (c)

            	
              it
      is purchased on normal arm’s length commercial
  terms;

            

    

     

    
      	
               
      

            	
              (d)

            	
              it
      maintains the highest classification with a first-class classification
      society which is a member of the IACS as the Agent may approve free of any
      overdue recommendations and
conditions;

            

    

     

    
      	
               
      

            	
              (e)

            	
              it
      is to be registered on an Approved Flag;
and

            

    

     

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              (f)

            	
              the
      Owner thereof is a wholly-owned subsidiary of the
  Borrower,

            

    

     

    and in
the plural, means all of them;

     

    “Target Ship Earnings Account” means, in
relation to each Target Ship, an account in the name of the Owner of that Ship
with the Agent in Hamburg designated “[name of Ship] - Earnings Account”, or any
other account (with that or another office of the Agent) which is designated by
the Agent as the Earnings Account for that Ship for the purposes of this
Agreement and, in the plural means all of them;

     

    “Target Ship Earnings Accounts Pledge”
means, in relation to each Target Ship Earnings Account, a pledge agreement
creating security in favour of the Security Trustee over that account in such
form as the Lenders may approve or require and in the plural means all of
them;

     

    “Total Assets” means, as at the
relevant date, the aggregate value of all current assets, fixed assets, and
other assets and restricted cash of the Group (valued in accordance with GAAP),
but excluding any assets held on trust;

     

    “Total
Equity”  means, as at the relevant date, the value of the
stockholders’ equity of the Group determined on a consolidated basis in
accordance with GAAP and as shown in the consolidated balance sheets for the
Group in the Applicable Accounts;

     

    “Total Liabilities” means, as
at the date of calculation, the aggregate Financial Indebtedness of the
Group;

     

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

     

    
      	
               
      

            	
              (a)

            	
              actual,
      constructive, compromised, agreed or arranged total loss of that
      Ship;

            

    

     

    
      	
               
      

            	
              (b)

            	
              any
      expropriation, confiscation, requisition or acquisition of the Ship,
      whether for full consideration, a consideration less than her proper
      value, a nominal consideration or without any consideration, which is
      effected by any government or official authority or by any person or
      persons claiming to be or to represent a government or official authority,
      excluding a requisition for hire for a fixed period not exceeding one year
      without any right to an extension;

            

    

     

    
      	
               
      

            	
              (c)

            	
              any
      condemnation of the Ship by any tribunal or by any person or person
      claiming to be a tribunal;

            

    

     

    
      	
               
      

            	
              (d)

            	
              any
      arrest, capture, seizure or detention of the Ship (including any hijacking
      or theft) unless she is within 30 days redelivered to the full control the
      relevant Owner;

            

    

     

    “Total Loss Date”
means:

     

    
      	
               
      

            	
              (a)

            	
              in
      the case of an actual loss of a Ship, the date on which it occurred or, if
      that is unknown, the date when that Ship was last heard
  of;

            

    

     

    
      	
               
      

            	
              (b)

            	
              in
      the case of a constructive, compromised, agreed or arranged total loss of
      a Ship, the earliest of:

            

    

     

    
      	
               
      

            	
              (i)

            	
              the
      date on which a notice of abandonment is given to the insurers;
      and

            

    

     

    
      	
               
      

            	
              (ii)

            	
              the
      date of any compromise, arrangement or agreement made by or on behalf of
      the relevant Owner, with the Ship’s insurers in which the insurers agree
      to treat the Ship as a total loss;
and

            

    

     

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

     

    
      	
              
      

            	
              (c)

            	
              in
      the case of any other type of total loss, on the date (or the most likely
      date) on which it appears to the Agent that the event constituting the
      total loss occurred;

               

            

    

    “Transfer
Certificate”  has the meaning given in Clause
26.2;

     

    “Transaction” has the meaning
given in the Master Agreement; and

     

    “Trust Property” has the
meaning given in clause 3.1 of the Agency and Trust Deed.

     

    
      	
              1.2

            	
              Construction of certain
      terms.  In this
Agreement:

            

    

     

    “approved” means, for the
purposes of Clause 13, approved in writing by the Agent;

     

    “asset” includes every kind of
property, asset, interest or right, including any present, future or contingent
right to any revenues or other payment;

     

    “company” includes any
partnership, joint venture and unincorporated association;

     

    “consent” includes an
authorisation, consent, approval, resolution, licence, exemption, filing,
registration, notarisation and legalisation;

     

    “contingent liability” means a
liability which is not certain to arise and/or the amount of which remains
unascertained;

     

    “document” includes a deed;
also a letter, fax or telex;

     

    “excess risks” means, in
relation to a Ship, the proportion of claims for general average, salvage and
salvage charges not recoverable under the hull and machinery policies in respect
of the Ship in consequence of her insured value being less than the value at
which that Ship is assessed for the purpose of such claims;

     

    “expense” means any kind of
cost, charge or expense (including all legal costs, charges and expenses) and
any applicable value added or other tax;

     

    “law” includes any form of
delegated legislation, any order or decree, any treaty or international
convention and any regulation or resolution of the Council of the European
Union, the European Commission, the United Nations or its Security
Council;

     

    “legal or administrative
action” means any legal proceeding or arbitration and any administrative
or regulatory action or investigation;

     

    “liability” includes every kind
of debt or liability (present or future, certain or contingent), whether
incurred as principal or surety or otherwise;

     

    “months” shall be construed in
accordance with Clause 1.3;

     

    “obligatory insurances” means,
in relation to a Ship, all insurances effected, or which the Borrower and/or the
Owner owning the Ship is obliged to effect, under Clause 13 below or any other
provision of this Agreement or another Finance Document;

     

    “parent company” has the
meaning given in Clause 1.4;

     

    “person” includes any company;
any state, political sub-division of a state and local or municipal authority;
and any international organisation;

     

    “policy”, in relation to any
insurance, includes a slip, cover note, certificate of entry or other document
evidencing the contract of insurance or its terms;

     

    
      
         

      

      
        16

        
          

        

      

      
         

      

    

    “protection and indemnity
risks” means the usual risks covered by a protection and indemnity
association managed in London, including pollution risks and 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 1 of the Institute Time Clauses (Hulls)(1/10/83)
or clause 8 of the Institute Time Clauses (Hulls) (1/11/1995) or the Institute
Amended Running Down Clause (1/10/71) or any equivalent provision;

     

    “regulation” includes any
regulation, rule, official directive, request or guideline (either having the
force of law or compliance with which is reasonable in the ordinary course of
business of the party concerned) of any governmental, intergovernmental or
supranational body, agency, department or regulatory, self-regulatory or other
authority or organisation;

     

    “subsidiary” has the meaning
given in Clause 1.4;

     

    “successor” includes any person
who is entitled (by assignment, novation, merger or otherwise) to any other
person’s rights under this Agreement or any other Finance Document (or any
interest in those rights) or who, as administrator, liquidator or otherwise, is
entitled to exercise those rights; and in particular references to a successor
include a person to whom those rights (or any interest in those rights) are
transferred or pass as a result of a merger, division, reconstruction or other
reorganisation of it or any other person;

     

    “tax” includes any present or
future tax, duty, impost, levy or charge of any kind which is imposed by any
state, any political sub-division of a state or any local or municipal authority
(including any such imposed in connection with exchange controls), and any
connected penalty, interest or fine; and

     

    “war risks” means the risks
according to Institute War and Strike Clauses (Hull Time) (1/10/83) or
(1/11/95), or equivalent conditions, including, but not limited to risk of
mines, blocking and trapping, missing vessel, confiscation, vandalism, sabotage
and malicious mischief and all risks excluded from the standard form of English
or other marine policy.

     

    
      	
              1.3

            	
              Meaning of “month”.  A
      period of one or more “months” ends on the day in the relevant calendar
      month numerically corresponding to the day of the calendar month on which
      the period started (“the
      numerically corresponding day”),
but:

            

    

     

    
      	
              (a)

            	
              on
      the Business Day following the numerically corresponding day if the
      numerically corresponding day is not a Business Day or, if there is no
      later Business Day in the same calendar month, on the Business Day
      preceding the numerically corresponding day;
or

            

    

     

    
      	
              (b)

            	
              on
      the last Business Day in the relevant calendar month, if the period
      started on the last Business Day in a calendar month or if the last
      calendar month of the period has no numerically corresponding
      day;

            

    

     

    and
“month” and “monthly” shall be construed
accordingly.

     

    
      	
              1.4

            	
              Meaning of “subsidiary”.  A
      company (S) is a subsidiary of another company (P)
  if:

            

    

     

    
      	
              (a)

            	
              a
      majority of the issued shares in S (or a majority of the issued shares in
      S which carry unlimited rights to capital and income distributions) are
      directly owned by P or are indirectly attributable to P;
  or

            

    

     

    
      	
              (b)

            	
              P
      has direct or indirect control over a majority of the voting rights
      attached to the issued shares of S;
or

            

    

     

    
      	
              (c)

            	
              P
      has the direct or indirect power to appoint or remove a majority of the
      directors of S; or

            

    

     

    
      
         

      

      
        17

        
          

        

      

      
         

      

    

    
      	
              (d)

            	
              P
      otherwise has the direct or indirect power to ensure that the affairs of S
      are conducted in accordance with the wishes of
  P;

            

    

     

    and any
company of which S is a subsidiary is a parent company of S.

     

    
      	
              1.5

            	
              General
      Interpretation.

            

    

     

    
      	
              (a)

            	
              In
      this Agreement:

            

    

     

    
      	
               
      

            	
              (i)

            	
              references
      to, or to a provision of, a Finance Document or any other document are
      references to it as amended or supplemented, whether before the date of
      this Agreement or otherwise;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              references
      to, or to a provision of, any law include any amendment, extension,
      re-enactment or replacement, whether made before the date of this
      Agreement or otherwise; and

            

    

     

    
      	
               
      

            	
              (iii)

            	
              words
      denoting the singular number shall include the plural and vice
      versa.

            

    

     

    
      	
              (b)

            	
              Clauses
      1.1 to 1.4 and paragraph (a) of this Clause 1.5 apply unless the contrary
      intention appears.

            

    

     

    
      	
              (c)

            	
              References
      in Clause 1.1 to a document being in the form of a particular Appendix or
      Schedule include references to that form with any modifications to that
      form which the Agent (with the authorisation of the Majority Lenders in
      the case of substantial modifications) approves or reasonably
      requires.

            

    

     

    
      	
              (d)

            	
              The
      clause headings shall not affect the interpretation of this
      Agreement.

            

    

     

    
      	
              2

            	
              FACILITY

            

    

     

    
      	
              2.1

            	
              Amount and purpose of
      facility.  Subject to the other provisions of this
      Agreement, the Lenders shall make available to the Borrower a revolving
      credit facility in an amount not exceeding the lesser of (a) $250,000,000,
      (b) the Total Commitments at the relevant time and (c) the lesser of 50
      per cent. of (i) the aggregate Initial Value of the Ships and (ii) the
      aggregate Market Value of the Ships.  The Loan shall be used in
      refinancing the indebtedness secured on the Existing Ships and in
      part-financing the purchase price of the Target
  Ships.

            

    

     

    
      	
              2.2

            	
              Lenders’ participations in
      Loan.  Subject to the other provisions of this Agreement,
      each Lender shall participate in each Advance in the proportion which, as
      at the relevant Drawdown Date, its Commitment bears to the Total
      Commitments.

            

    

     

    
      	
              2.3

            	
              Purpose of
      Advances.  The Borrower undertakes with each Creditor
      Party to use each Advance only for the purpose stated in the preamble to
      this Agreement.

            

    

     

    
      	
              2.4

            	
              Limit
      of initial Total Commitments.

            

    

     

    
      	
              (a)

            	
              The
      Borrower hereby acknowledges that until Commerzbank AG transfers
      $50,000,000 of its Commitments (“Excess Commitment”) the
      maximum principal amount of the revolving credit facility which shall be
      available to the Borrower hereunder is $200,000,000 and the reference to
      Total Commitments in this Agreement shall be construed to mean
      $200,000,000.

            

    

     

    
      	
              (b)

            	
              As
      from the date of this Agreement the Agent and the Borrower shall endeavour
      to find banks or financial institutions to whom Commerzbank AG will
      transfer its Excess Commitment in order to increase the maximum amount of
      the revolving credit facility to be made available hereunder to
      $250,000,000.  The Borrower agrees that
  if

            

    

     

    
      
         

      

      
        18

        
          

        

      

      
         

      

    

    Commerzbank
AG is unable to transfer its Excess Commitment within [l] days of the date of
this Agreement, the Borrower will negotiate in good faith with the Agent an
increase in the Margin and the fees payable to the Creditor Parties pursuant to
Clause 20.1 in order to facilitate the transfer of the Excess Commitment and
shall enter into such documentation as may be required by the Agent in order to
document the amendments to this Agreement and any other Finance
Documents.

     

    
      	
              3

            	
              POSITION
      OF THE LENDERS, THE SWAP BANK AND THE MAJORITY
  LENDERS

            

    

     

    
      	
              3.1

            	
              Interests of Lenders and Swap
      Bank several.  The rights of the Lenders and the Swap
      Bank under this Agreement and the Master Agreement are several;
      accordingly (a) each Lender shall be entitled to sue for any amount which
      has become due and payable by the Borrower to it under this Agreement; and
      (b) the Swap Bank shall be entitled to sue for any amount which has become
      due and payable by the Borrower to it under the Master Agreement without
      joining the Agent, the Security Trustee or any other Lender or the Swap
      Bank as additional parties in the
proceedings.

            

    

     

    
      	
              3.2

            	
              Proceedings by individual
      Lender or Swap Bank.  However, without the prior consent
      of the Majority Lenders, neither a Lender nor a Swap Bank may bring
      proceedings in respect of:

            

    

     

    
      	
              (a)

            	
              any
      other liability or obligation of the Borrower or a Security Party under or
      connected with a Finance Document or the Master Agreement;
    or

            

    

     

    
      	
              (b)

            	
              any
      misrepresentation or breach of warranty by the Borrower or a Security
      Party in or connected with a Finance Document or the Master
      Agreement.

            

    

     

    
      	
              3.3

            	
              Obligations
      several.  The obligations of the Lenders under this
      Agreement and of the Swap Bank under the Master Agreement are several; and
      a failure of a Lender to perform its obligations under this Agreement or
      of the Swap Bank to perform its obligations under the Master Agreement
      shall not result in:

            

    

     

    
      	
              (a)

            	
              the
      obligations of the other Lenders being increased;
  nor

            

    

     

    
      	
              (b)

            	
              the
      Borrower, any Security Party or any other Creditor Party being discharged
      (in whole or in part) from its obligations under any Finance
      Document;

            

    

     

    and in no
circumstances shall a Lender have any responsibility for a failure of another
Lender or the Swap Bank to perform its obligations under this Agreement and the
Master Agreement.

     

    
      	
              3.4

            	
              Parties bound by certain
      actions of Majority Lenders.  Every Lender, the Swap
      Bank, the Borrower and each Security Party shall be bound
    by:

            

    

     

    
      	
              (a)

            	
              any
      determination made, or action taken, by the Majority Lenders under any
      provision of a Finance Document;

            

    

     

    
      	
              (b)

            	
              any
      instruction or authorisation given by the Majority Lenders to the Agent or
      the Security Trustee under or in connection with any Finance
      Document;

            

    

     

    
      	
              (c)

            	
              any
      action taken (or in good faith purportedly taken) by the Agent or the
      Security Trustee in accordance with such an instruction or
      authorisation.

            

    

     

    
      
         

      

      
        19

        
          

        

      

      
         

      

    

    
      	
              3.5

            	
              Reliance on action of
      Agent.  However, the Borrower and each Security
      Party:

            

    

     

    
      	
              (a)

            	
              shall
      be entitled to assume that the Majority Lenders have duly given any
      instruction or authorisation which, under any provision of a Finance
      Document, is required in relation to any action which the Agent has taken
      or is about to take; and

            

    

     

    
      	
              (b)

            	
              shall
      not be entitled to require any evidence that such an instruction or
      authorisation has been given.

            

    

     

    
      	
              3.6

            	
              Construction.  In
      Clauses 3.4 and 3.5 references to action taken include (without
      limitation) the granting of any waiver or consent, an approval of any
      document and an agreement to any
matter.

            

    

     

    
      	
              4

            	
              DRAWDOWN

            

    

     

    
      	
              4.1

            	
              Request for
      Advance.  Subject to the following conditions, the
      Borrower may request an Advance to be made by ensuring that the Agent
      receives a completed Drawdown Notice not later than 11.00 a.m. (Hamburg
      time) 3 Business Days prior to the intended Drawdown
  Date.

            

    

     

    
      	
              4.2

            	
              Availability.  The
      conditions referred to in Clause 4.1 are
that:

            

    

     

    
      	
              (a)

            	
              a
      Drawdown Date has to be a Business Day during the Availability
      Period;

            

    

     

    
      	
              (b)

            	
              the
      first Drawdown Date shall be a Business Day falling on or before the
      Initial Borrowing Date;

            

    

     

    
      	
              (c)

            	
              each
      Advance shall be made available in a single amount of not less than
      $10,000,000;

            

    

     

    
      	
              (d)

            	
              the
      Existing Ships Advance shall be in an amount which does not exceed 50 per
      cent. of the lesser of (i) the aggregate Initial Value of the Existing
      Ships and (ii) the aggregate Market Value of the Existing Ships
      (determined by reference to the valuations referred to in paragraph 5 of
      Schedule 4, Part B);

            

    

     

    
      	
              (e)

            	
              each
      Acquisition Advance shall be in an amount which does not exceed 50 per
      cent. of the lesser of (i) the Initial Value of the Target Ship whose
      acquisition is being part-financed by that Advance and (ii) the Market
      Value of that Target Ship (determined by reference to the valuations
      referred to in paragraph 6 of Schedule 4, Part C) and such Advance shall
      be applied in part-financing the acquisition of that Target Ship upon
      delivery of that Ship to its Owner;

            

    

     

    
      	
              (f)

            	
              each
      Acquisition Advance may, subject to the other conditions of this
      Agreement, be drawn down on or after the Initial Borrowing Date until the
      date falling on the first anniversary of the date of this Agreement (but
      in any event not later than 31 December
2008);

            

    

     

    
      	
              (g)

            	
              no
      Acquisition Advance may be made available to the Borrower prior to the
      Drawdown Date of the Existing Ships Advance;
and

            

    

     

    
      	
              (h)

            	
              the
      aggregate of the Advances shall not exceed the Total
      Commitments.

            

    

     

    
      	
              4.3

            	
              Notification to Lenders of
      receipt of a Drawdown Notice.  The Agent shall promptly
      notify the Lenders that it has received a Drawdown Notice and shall inform
      each Lender of:

            

    

     

    
      	
              (a)

            	
              the
      amount of the Advance and the Drawdown
Date;

            

    

     

    
      	
              (b)

            	
              the
      amount of that Lender’s participation in the Advance;
  and

            

    

     

    
      
         

      

      
        20

        
          

        

      

      
         

      

    

    
      	
              (c)

            	
              the
      duration of the first Interest Period applicable to that
      Advance.

            

    

     

    
      	
              4.4

            	
              Drawdown Notice
      irrevocable.  A Drawdown Notice must be signed by a
      director of the Borrower; and once served, a Drawdown Notice cannot be
      revoked without the prior written consent of the Agent, acting on the
      authority of the Majority Lenders.

            

    

     

    
      	
              4.5

            	
              Lenders to make available
      Contributions.  Subject to the provisions of this
      Agreement, each Lender shall, on and with value on each Drawdown Date,
      make available to the Agent for the account of the Borrower the amount due
      from that Lender on that Drawdown Date under Clause
  2.2.

            

    

     

    
      	
              4.6

            	
              Disbursement of
      Advance.  Subject to the provisions of this Agreement,
      the Agent shall on each Drawdown Date pay to the Borrower the amounts
      which the Agent receives from the Lenders under Clause 4.5; and that
      payment to the Borrower shall be
made:

            

    

     

    
      	
              (a)

            	
              to
      the account which the Borrower specifies in the relevant Drawdown Notice;
      and

            

    

     

    
      	
              (b)

            	
              in
      the like funds as the Agent received the payments from the
      Lenders.

            

    

     

    
      	
              4.7

            	
              Disbursement of Advance to
      third party.  The payment by the Agent under Clause 4.6
      to a third party specified in the relevant Drawdown  Notice
      shall constitute the making of the Advance and the Borrower shall
      thereupon become indebted, as principal and direct obligor, to each Lender
      in an amount equal to that Lender’s
  Contribution.

            

    

     

    
      	
              5

            	
              INTEREST

            

    

     

    
      	
              5.1

            	
              Payment of normal
      interest.  Subject to the provisions of this Agreement,
      interest on each Advance and the Loan and each part thereof in respect of
      each Interest Period shall be paid by the Borrower on the last day of that
      Interest Period.

            

    

     

    
      	
              5.2

            	
              Normal rate of
      interest.  Subject to the provisions of this Agreement,
      the rate of interest on each Advance and the Loan and each part thereof in
      respect of an Interest Period shall be the aggregate of (i) the applicable
      Margin, (ii) the Mandatory Cost (if any) and (iii)
  LIBOR.

            

    

     

    
      	
              5.3

            	
              Payment of accrued
      interest.  In the case of an Interest Period longer than
      3 months, accrued interest shall be paid every 3 months during that
      Interest Period and on the last day of that Interest
    Period.

            

    

     

    
      	
              5.4

            	
              Notification of Interest
      Periods and rates of normal interest.  The Agent shall
      notify the Borrower and each Lender
of:

            

    

     

    
      	
              (a)

            	
              each
      rate of interest; and

            

    

     

    
      	
              (b)

            	
              the
      duration of each Interest Period;

            

    

     

    as soon
as reasonably practicable after each is determined.

     

    
      	
              5.5

            	
              Market
      disruption.  The following provisions of this Clause 5
      apply if:

            

    

     

    
      	
              (a)

            	
              no
      rate is quoted on Reuters BBA Page LIBOR 01 and at least half of the total
      number of Lenders at any time do not, before 1.00 p.m. (Hamburg time) on
      the second Business Day before the commencement of an Interest Period,
      provide quotations to the Agent in order to fix LIBOR;
  or

            

    

     

    
      	
              (b)

            	
              at
      least one Business Day before the start of an Interest Period, Lenders
      having Contributions together amounting to more than 50 per cent. of the
      Loan (or, if an Advance has not been made, Commitments amounting to more
      than 50 per cent. of the Total Commitments) notify the Agent that LIBOR
      fixed by the Agent would not accurately reflect the cost to those Lenders
      of funding their respective Contributions
(or

            

    

     

    
      
         

      

      
        21

        
          

        

      

      
         

      

    

    any part
of them) during the Interest Period in the London Interbank Dollar Market at or
about 11.00 a.m. (London time) on the second Business Day before the
commencement of the Interest Period; or

     

    
      	
              (c)

            	
              at
      least one Business Day before the start of an Interest Period, the Agent
      is notified by a Lender (the “Affected Lender”) that
      for any reason it is unable to obtain Dollars in the London Interbank
      Market in order to fund its Contribution (or any part of it) during the
      Interest Period.

            

    

     

    
      	
              5.6

            	
              Notification of market
      disruption.  The Agent shall promptly notify the Borrower
      and each of the Lenders stating the circumstances falling within Clause
      5.5 which have caused its notice to be
given.

            

    

     

    
      	
              5.7

            	
              Suspension of
      drawdown.  If the Agent’s notice under Clause 5.6 is
      served before an Advance is made:

            

    

     

    
      	
              (a)

            	
              in
      a case falling within paragraphs (a) or (b) of Clause 5.5, the Lenders’
      obligations to make the Advance;

            

    

     

    
      	
              (b)

            	
              in
      a case falling within paragraph (c) of Clause 5.5, the Affected Lender’s
      obligation to participate in the
Advance;

            

    

     

    shall be
suspended while the circumstances referred to in the Agent’s notice
continue.

     

    
      	
              5.8

            	
              Negotiation of alternative rate
      of interest.  If the Agent’s notice under Clause 5.6 is
      served after an Advance is made, the Borrower, the Agent and the Lenders
      or (as the case may be) the Affected Lender shall use reasonable
      endeavours to agree, within the 30 days after the date on which the Agent
      serves its notice under Clause 5.6 (the “Negotiation Period”), an
      alternative interest rate or (as the case may be) an alternative basis for
      the Lenders or (as the case may be) the Affected Lender to fund or
      continue to fund their or its Contribution to the relevant Advance or
      Advances during the Interest Period
concerned.

            

    

     

    
      	
              5.9

            	
              Application of agreed
      alternative rate of interest.  Any alternative interest
      rate or an alternative basis which is agreed during the Negotiation Period
      shall take effect in accordance with the terms
  agreed.

            

    

     

    
      	
              5.10

            	
              Alternative rate of interest in
      absence of agreement.  If an alternative interest rate or
      alternative basis is not agreed within the Negotiation Period, and the
      relevant  circumstances are continuing at the end of the
      Negotiation Period, then the Agent shall, with the agreement of each
      Lender or (as the case may be) the Affected Lender, set an interest period
      and interest rate representing the cost of funding of the Lenders or (as
      the case may be) the Affected Lender in Dollars or in any available
      currency of their or its Contribution to the relevant Advance or Advances
      plus the Mandatory Cost (if any) and the applicable Margin; and the
      procedure provided for by this Clause 5.10 shall be repeated if the
      relevant circumstances are continuing at the end of the interest period so
      set by the Agent.

            

    

     

    
      	
              5.11

            	
              Notice of
      prepayment.  If the Borrower does not agree with an
      interest rate set by the Agent under Clause 5.10, the Borrower may give
      the Agent not less than 15 Business Days’ notice of its intention to
      prepay the relevant Advance or Advances at the end of the interest period
      set by the Agent.

            

    

     

    
      	
              5.12

            	
              Prepayment; termination of
      Commitments.  A notice under Clause 5.11 shall be
      irrevocable; the Agent shall promptly notify the Lenders or (as the case
      may require) the Affected Lender of the Borrower’s notice of intended
      prepayment; and:

            

    

     

    
      
         

      

      
        22

        
          

        

      

      
         

      

    

    
      	
              (a)

            	
              on
      the date on which the Agent serves that notice, the Total Commitments or
      (as the case may require) the Commitment of the Affected Lender shall be
      cancelled; and

            

    

     

    
      	
              (b)

            	
              on
      the last Business Day of the interest period set by the Agent, the
      Borrower shall prepay (without premium or penalty) the Loan or, as the
      case may be, the Affected Lender’s Contribution, together with accrued
      interest thereon at the applicable rate plus the applicable Margin and the
      Mandatory Cost (if any).

            

    

     

    
      	
              5.13

            	
              Application of
      prepayment.  The provisions of Clause 8 shall apply in
      relation to the prepayment.

            

    

     

    
      	
              5.14

            	
              Determination of Leverage
      Ratio.  The Agent shall calculate the Leverage Ratio on
      the first Drawdown Date and on each Compliance Date thereafter (each a
      “Margin Calculation
      Date”) for the purposes of calculating the Margin and shall advise
      the Borrower and the Lenders in writing, within 10 Business Days of each
      Margin Calculation Date, of the Margin which will apply for the 3-month
      period commencing on the relevant Margin Calculation Date  Provided
      that  in respect of each Margin Calculation Date other
      than the first Margin Calculation Date, the Agent shall only be obliged to
      advise the Borrowers and the Lenders of the Margin which will apply for
      the 3-month period commencing on the relevant Margin Calculation Date if
      that Margin will be different to the Margin which applies immediately
      prior to the relevant Margin Calculation
Date.

            

    

     

    For the
purposes of calculating the Leverage Ratio pursuant to this Clause 5.14, the
Market Value of the Ships shall be determined no more than 15 days prior to the
relevant Margin Calculation Date.

     

    
      	
              6

            	
              INTEREST
      PERIODS

            

    

     

    
      	
              6.1

            	
              Commencement of Interest
      Periods.  The first Interest Period applicable to an
      Advance shall commence on the Drawdown Date relative to that Advance and
      each subsequent Interest Period shall commence on the expiry of the
      preceding Interest Period.

            

    

     

    
      	
              6.2

            	
              Duration of normal Interest
      Periods.  Each Interest Period in respect of each Advance
      shall be:

            

    

     

    
      	
              (a)

            	
              1,
      3, 6 or 12 months as notified by the Borrower to the Agent not later than
      11.00 a.m. (Hamburg time) 3 Business Days before the commencement of the
      Interest Period  Provided that there may
      be no more than 6 Interest Periods having a duration of 1 month in any
      calendar year; or

            

    

     

    
      	
              (b)

            	
              in
      the case of the first Interest Period applicable to the second and any
      subsequent Advance, a period ending on the last day of the then current
      Interest Period whereupon all of the Advances shall be consolidated and
      treated as a single Advance;

            

    

     

    
      	
              (c)

            	
              3
      months, if the Borrower fails to notify the Agent by the time specified in
      paragraph (a) above; or

            

    

     

    
      	
              (d)

            	
              such
      other period as the Agent may, with the Majority Lenders’ authority, agree
      with the Borrower.

            

    

     

    
      	
              7

            	
              DEFAULT
      INTEREST

            

    

     

    
      	
              7.1

            	
              Payment of default interest on
      overdue amounts.  The Borrower shall pay interest in
      accordance with the following provisions of this Clause 7 on any amount
      payable by the Borrower under any Finance Document which the Agent, the
      Security Trustee or the other designated payee does not receive on or
      before the relevant date, that is:

            

    

     

    
      
         

      

      
        23

        
          

        

      

      
         

      

    

    
      	
              (a)

            	
              the
      date on which the Finance Documents provide that such amount is due for
      payment; or

            

    

     

    
      	
              (b)

            	
              if
      a Finance Document provides that such amount is payable on demand, the
      date on which the demand is served;
or

            

    

     

    
      	
              (c)

            	
              if
      such amount has become immediately due and payable under Clause 19.4, the
      date on which it became immediately due and
  payable.

            

    

     

    
      	
              7.2

            	
              Default rate of
      interest.  Interest shall accrue on an overdue amount
      from (and including) the relevant date until the date of actual payment
      (as well after as before judgment) at the rate per annum determined by the
      Agent to be 2 per cent. above:

            

    

     

    
      	
              (a)

            	
              in
      the case of an overdue amount of principal, the higher of the rates set
      out at paragraphs (a) and (b) of Clause 7.3;
or

            

    

     

    
      	
              (b)

            	
              in
      the case of any other overdue amount, the rate set out at paragraph (b) of
      Clause 7.3.

            

    

     

    
      	
              7.3

            	
              Calculation of default rate of
      interest.  The rates referred to in Clause 7.2
      are:

            

    

     

    
      	
              (a)

            	
              the
      rate applicable to the overdue principal amount immediately prior to the
      relevant date (but only for any unexpired part of any then current
      Interest Period);

            

    

     

    
      	
              (b)

            	
              the
      aggregate of the Mandatory Cost (if any) and the applicable Margin plus,
      in respect of successive periods of any duration (including at call) up to
      3 months which the Agent may select from time to
  time:

            

    

     

    
      	
               
      

            	
              (i)

            	
              LIBOR;
      or

            

    

     

    
      	
               
      

            	
              (ii)

            	
              if
      the Agent determines that Dollar deposits for any such period are not
      being made available to a Lender or (as the case may be) Lenders by
      leading banks in the London Interbank Market in the ordinary course of
      business, a rate from time to time determined by the Agent by reference to
      the cost of funds to the Agent from such other sources as the Agent may
      from time to time determine.

            

    

     

    
      	
              7.4

            	
              Notification of interest
      periods and default rates.  The Agent shall promptly
      notify the Lenders and the Borrower of each interest rate determined by
      the Agent under Clause 7.3 and of each period selected by the Agent for
      the purposes of paragraph (b) of that Clause; but this shall not be taken
      to imply that the Borrower is liable to pay such interest only with effect
      from the date of the Agent’s
notification.

            

    

     

    
      	
              7.5

            	
              Payment of accrued default
      interest.  Subject to the other provisions of this
      Agreement, any interest due under this Clause shall be paid on the last
      day of the period by reference to which it was determined; and the payment
      shall be made to the Agent for the account of the Creditor Party to which
      the overdue amount is due.

            

    

     

    
      	
              7.6

            	
              Compounding of default
      interest.  Any such interest which is not paid at the end
      of the period by reference to which it was determined shall thereupon be
      compounded.

            

    

     

    
      	
              7.7

            	
              Application to Master
      Agreement.  For the avoidance of doubt, this Clause 7
      does not apply to any amount payable under the Master Agreement in respect
      of any continuing Designated Transaction as to which section 2(e) (Default
      Interest; Other Amounts) of the Master Agreement shall
    apply.

            

    

     

    
      	
              8

            	
              REPAYMENT
      AND PREPAYMENT

            

    

     

    
      	
              8.1

            	
              Amount of repayment
      instalments.  If, on the date falling 3 days prior to a
      Dividend Declaration Date, the Security Cover Percentage is less than 145
      per cent., then the

            

    

     

    
      
         

      

      
        24

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              Borrower
      shall repay the Loan in an amount which, once repaid, shall eliminate the
      shortfall.

            

    

     

    
      	
              8.2

            	
              Repayment
      dates.  If a repayment is required pursuant to Clause 8.1
      on any Dividend Declaration Date (being the “Relevant Dividend Declaration
      Date”), then the Borrower shall transfer the amount of the
      repayment due under Clause 8.1 into the Retention Account by no later than
      3 Business Days after the Relevant Dividend Declaration
      Date.  On the last day of the Interest Period current as at the
      Relevant Dividend Declaration Date the Agent shall apply all amounts
      standing to the credit of the Retention Account in or towards repayment of
      the Loan and the payment of interest thereon in accordance with Clause
      18.4.

            

    

     

    
      	
              8.3

            	
              Final Maturity
      Date.  On the Final Maturity Date, the Borrower shall
      additionally pay to the Agent for the account of the Creditor Parties all
      principal and other sums then accrued or owing under any Finance
      Document.

            

    

     

    
      	
              8.4

            	
              Voluntary
      prepayment.  Subject to the following conditions, the
      Borrower may prepay the whole or any part of the Loan on the last day of
      an Interest Period.

            

    

     

    
      	
              8.5

            	
              Conditions for voluntary
      prepayment.  The conditions referred to in Clause 8.4 are
      that:

            

    

     

    
      	
              (a)

            	
              any
      partial prepayment to be applied against the Loan shall be $1,000,000 or a
      higher multiple thereof;

            

    

     

    
      	
              (b)

            	
              the
      Agent has received from the Borrower at least 15 days’ prior written
      notice specifying the amount to be prepaid and the date on which the
      prepayment is to be made (such date shall be the last day of an Interest
      Period); and

            

    

     

    
      	
              (c)

            	
              the
      Borrower has provided evidence satisfactory to the Agent that any consent
      required by the Borrower or any Security Party in connection with the
      prepayment has been obtained and remains in force, and that any
      requirement relevant to this Agreement which affects the Borrower or any
      Security Party has been complied
with.

            

    

     

    
      	
              8.6

            	
              Effect of notice of
      prepayment.  A prepayment notice may not be withdrawn or
      amended without the consent of the Agent, given with the authority of the
      Majority Lenders, and the amount specified in the prepayment notice shall
      become due and payable by the Borrower on the date for prepayment
      specified in the prepayment notice.

            

    

     

    
      	
              8.7

            	
              Notification of notice of
      prepayment.  The Agent shall notify the Lenders promptly
      upon receiving a prepayment notice, and shall provide any Lender which so
      requests with a copy of any document delivered by the Borrower under
      Clause 8.5(c).

            

    

     

    
      	
              8.8

            	
              Voluntary Commitment
      reductions.  Subject to the following conditions, the
      Total Commitments may be permanently reduced, cancelled or terminated by
      the Borrower.

            

    

     

    
      	
              8.9

            	
              Conditions for voluntary
      Commitment reduction.  The conditions referred to in
      Clause 8.8 are that:

            

    

     

    
      	
              (a)

            	
              any
      partial reduction, cancellation or termination of the Total Commitments
      shall be for an amount of $1,000,000 or a higher integral multiple
      thereof;

            

    

     

    
      	
              (b)

            	
              the
      Agent has received from the Borrower at least 3 Business Days prior
      written notice specifying the amount of the Total Commitments to be
      reduced, cancelled or terminated and the date on which such reduction,
      cancellation or termination is to apply;
and

            

    

     

    
      	
              (c)

            	
              a
      notice served under paragraph (b) may not be given after expiry of the
      Availability Period and may not be withdrawn or amended without the
      consent of the Agent given with the authority of the Majority
      Lenders.

            

    

     

    
      
         

      

      
        25

        
          

        

      

      
         

      

    

    
      	
              8.10

            	
              Notification of notice of
      Commitment reduction.  The Agent shall notify the Lenders
      promptly upon receiving a notice under Clause 8.9(b), and shall notify
      each Lender of the amount by which its Commitment shall be reduced
      pursuant thereto.

            

    

     

    
      	
              8.11

            	
              Mandatory
      prepayment.  The Borrower shall be obliged to prepay the
      Relevant Amount of the Loan:

            

    

     

    
      	
              (a)

            	
              if
      a Ship is sold, on or before the date on which the sale is completed by
      delivery of the Ship to the buyer;
or

            

    

     

    
      	
              (b)

            	
              if
      a Ship becomes a Total Loss, on the earlier of the date falling 120 days
      after the relevant Total Loss Date and the date of receipt by the Security
      Trustee of the proceeds of insurance relating to such Total
      Loss.

            

    

     

    In this
Clause 8.11, “Relevant
Amount” means an amount which after giving credit for the amount of the
prepayment made pursuant to this Clause 8.11, results in the Security Cover
Percentage being equal to the higher of (i) the Security Cover Percentage
maintained immediately prior to the prepayment made pursuant to this Clause 8.11
and (ii) the Security Cover Percentage required to be maintained at that time
pursuant to Clause 15.1.

     

    
      	
              8.12

            	
              Amounts payable on
      prepayment.  A prepayment shall be made together with
      accrued interest (and any other amount payable under Clause 21 below or
      otherwise) in respect of the amount prepaid and, if the prepayment is not
      made on the last day of an Interest Period together with any sums payable
      under Clause 21.1(b) but without premium or
  penalty.

            

    

     

    
      	
              8.13

            	
              Application of partial
      prepayment.  Any sum received by the Agent pursuant to
      Clauses 8.4 and 8.11 shall be applied in prepayment of the Loan and,
      subject to no Event of Default being in occurrence or continuing at the
      time a prepayment is made under Clause 8.11, any balance arising from the
      sale or Total Loss proceeds of a Ship which is sold or becomes a Total
      Loss after the prepayment required by Clause 8.11 has been made shall be
      released to the Borrower or to such other person (including, without
      limitation, the Owner of the relevant Ship) as the Borrower may
      direct.

            

    

     

    
      	
              8.14

            	
              Reborrowing
      permitted.  Subject to the terms of this Agreement,
      amounts prepaid in respect of the Loan may be
  reborrowed.

            

    

     

    
      	
              8.15

            	
              Unwinding of Designated
      Transactions.  On or prior to any repayment or prepayment
      of the Loan under this Clause 8 or any other provision of this Agreement,
      the Borrower shall wholly or partially reverse, offset, unwind or
      otherwise terminate one or more of the continuing Designated Transactions
      to the extent necessary to ensure that the notional principal amount of
      the continuing Designated Transactions thereafter remaining does not and
      will not in the future (taking into account the scheduled amortisation)
      exceed the amount of the Loan as reducing from time to time thereafter
      pursuant to Clause 8.1.

            

    

     

    
      	
              8.16

            	
              Prepayment of Swap
      Benefit.  If a Designated Transaction is terminated in
      circumstances where the Swap Bank would be obliged to pay an amount to the
      Borrower under the Master Agreement, the Borrower hereby agrees that such
      payment shall be applied in prepayment of the Loan and authorises the Swap
      Bank to pay such amount to the Agent for such
  purpose.

            

    

     

    
      	
              9

            	
              CONDITIONS
      PRECEDENT

            

    

     

    
      	
              9.1

            	
              Documents, fees and no
      default.  Each Lender’s obligation to contribute to an
      Advance is subject to the following conditions
  precedent:

            

    

     

    
      
         

      

      
        26

        
          

        

      

      
         

      

    

    
      	
              (a)

            	
              that,
      on or before the date of this Agreement, the Agent receives the documents
      described in Part A of Schedule 4 in a form and substance satisfactory to
      the Agent and its lawyers;

            

    

     

    
      	
              (b)

            	
              that,
      on or before the service of the first Drawdown Notice, the Agent receives
      the documents described in Part B of Schedule 4 in a form and substance
      satisfactory to the Agent and its
lawyers

            

    

     

    
      	
              (c)

            	
              that,
      on or before the Drawdown Date in respect of each Acquisition
      Advance:

            

    

     

    
      	
               
      

            	
              (i)

            	
              the
      Agent receives the documents described in Part C of Schedule 4 in form and
      substance satisfactory to the Agent and its
  lawyers;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              the
      Agent receives satisfactory evidence that the Borrower has fully drawn the
      revolving credit facility which is the subject of the HSH Loan Agreement
      or that it has fully refinanced such facility;
  and

            

    

     

    
      	
               
      

            	
              (iii)

            	
              the
      existing Financial Indebtedness of the Borrower under the Bridge Facility
      Agreement has been fully repaid;

            

    

     

    
      	
              (d)

            	
              that,
      on or before each Drawdown Date, the Agent receives all facility fees
      referred to in Clause 20.1 which are payable at that time (including,
      without limitation, any accrued commitment fee) and has received payment
      of the expenses referred to in Clause
20.2;

            

    

     

    
      	
              (e)

            	
              that
      both at the date of each Drawdown Notice and at each Drawdown
      Date:

            

    

     

    
      	
               
      

            	
              (i)

            	
              no
      Event of Default or Potential Event of Default has occurred and is
      continuing or would result from the borrowing of the relevant
      Advance;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              the
      representations and warranties in Clause 10 and those of the Borrower or
      any Security Party which are set out in the other Finance Documents would
      be true and not misleading if repeated on each of those dates with
      reference to the circumstances then existing;
  and

            

    

     

    
      	
               
      

            	
              (iii)

            	
              none
      of the circumstances contemplated by Clause 5.5 has occurred and is
      continuing;

            

    

     

    
      	
              (f)

            	
              that,
      if the ratio set out in Clause 15.1 were applied immediately following the
      making of each Advance, the Borrower would not be obliged to provide
      additional security or prepay part of the Loan under that Clause;
      and

            

    

     

    
      	
              (g)

            	
              that
      at each Drawdown Date the Agent has received, and found to be acceptable
      to it, any further opinions, consents, agreements and documents in
      connection with the Finance Documents which the Agent may, with the
      authorisation of the Majority Lenders, request by notice to the Borrower
      prior to the relevant Drawdown
Date.

            

    

     

    
      	
              9.2

            	
              Waiver of conditions
      precedent.  If the Majority Lenders, at their discretion,
      permit an Advance to be borrowed before certain of the conditions referred
      to in Clause 9.1 are satisfied, the Borrower shall ensure that those
      conditions are satisfied within 5 Business Days after the Drawdown Date
      relative to that Advance (or such longer period as the Agent may, with the
      authority of the Majority Lenders,
specify).

            

    

     

    
      	
              10

            	
              REPRESENTATIONS
      AND WARRANTIES

            

    

     

    
      	
              10.1

            	
              General.  The
      Borrower represents and warrants to each Creditor Party as
      follows.

            

    

     

    
      	
              10.2

            	
              Status.  The
      Borrower is duly incorporated and validly existing and in good standing
      under the laws of the Marshall
Islands.

            

    

     

    
      
         

      

      
        27

        
          

        

      

      
         

      

    

    
      	
              10.3

            	
              Share capital and
      ownership.  The Borrower has an authorised share capital
      divided into 150,000,000 registered shares of $0.001 each, 25,744,983 of
      which shares have been issued each fully
paid.

            

    

     

    
      	
              10.4

            	
              Corporate
      power.  The Borrower has the corporate capacity, and has
      taken all corporate action and obtained all consents necessary for
      it:

            

    

     

    
      	
              (a)

            	
              to
      execute the Finance Documents to which it is a party;
  and

            

    

     

    
      	
              (b)

            	
              to
      borrow under this Agreement, enter into Designated Transactions under the
      Master Agreement and to make all the payments contemplated by, and to
      comply with, those Finance Documents to which the Borrower is a
      party.

            

    

     

    
      	
              10.5

            	
              Consents in
      force.  All the consents referred to in Clause 10.4
      remain in force and nothing has occurred which makes any of them liable to
      revocation.

            

    

     

    
      	
              10.6

            	
              Legal validity; effective
      Security Interests.  The Finance Documents to which the
      Borrower is a party, do now or, as the case may be, will, upon execution
      and delivery (and, where applicable, registration as provided for in the
      Finance Documents):

            

    

     

    
      	
              (a)

            	
              constitute
      the Borrower’s legal, valid and binding obligations enforceable against
      the Borrower in accordance with their respective terms;
  and

            

    

     

    
      	
              (b)

            	
              create
      legal, valid and binding Security Interests enforceable in accordance with
      their respective terms over all the assets to which they, by their terms,
      relate

            

    

     

    subject
to any relevant insolvency laws affecting creditors’ rights
generally.

     

    
      	
              10.7

            	
              No third party Security
      Interests.  Without limiting the generality of Clause
      10.6, at the time of the execution and delivery of each Finance
      Document:

            

    

     

    
      	
              (a)

            	
              the
      Borrower will have the right to create all the Security Interests which
      that Finance Document purports to create;
and

            

    

     

    
      	
              (b)

            	
              no
      third party will have any Security Interest (except for Permitted Security
      Interests) or any other interest, right or claim over, in or in relation
      to any asset to which any such Security Interest, by its terms,
      relates.

            

    

     

    
      	
              10.8

            	
              No
      conflicts.  The execution by the Borrower of each Finance
      Document to which it is a party, and the borrowing by the Borrower of the
      Loan, and its compliance with each Finance Document to which it is a party
      will not involve or lead to a contravention
of:

            

    

     

    
      	
              (a)

            	
              any
      law or regulation; or

            

    

     

    
      	
              (b)

            	
              the
      constitutional documents of the Borrower;
or

            

    

     

    
      	
              (c)

            	
              any
      contractual or other obligation or restriction which is binding on the
      Borrower or any of its assets.

            

    

     

    
      	
              10.9

            	
              No withholding
      taxes.  All payments which the Borrower is liable to make
      under the Finance Documents may be made without deduction or withholding
      for or on account of any tax payable under any law of any Pertinent
      Jurisdiction.

            

    

     

    
      	
              10.10

            	
              No
      default.  No Event of Default or Potential Event of
      Default has occurred and is
continuing.

            

    

     

     

    
      
         

      

      
        28

        
          

        

      

      
         

      

    

     

    
      	
              10.11

            	
              Information.  All
      information which has been provided in writing by or on behalf of the
      Borrower or any Security Party to any Creditor Party in connection with
      any Finance Document
      satisfied the requirements of Clause 11.5; all audited and unaudited
      accounts which have been so provided satisfied the requirements of Clause
      11.7; and there has been no material adverse change in the financial
      position or state of affairs of the Borrower from that disclosed in the
      latest of those accounts.

            

    

    
    

     

    
      	
              10.12

            	
              No
      litigation.  No legal or administrative action involving
      the Borrower has been commenced or taken or, to the Borrower’s knowledge,
      is likely to be commenced or taken.

            

    

     

    
      	
              10.13

            	
              No rebates
      etc.  There is no agreement or understanding to allow or
      pay any rebate, premium, commission, discount or other benefit or payment
      (howsoever described) to a third party in connection with the purchase by
      each Owner of the Target Ship to be owned by it, other than as disclosed
      to the Lenders in writing on or prior to the date of this
      Agreement.

            

    

     

    
      	
              10.14

            	
              Compliance with certain
      undertakings.  At the date of this Agreement, the
      Borrower is in compliance with Clauses 11.2, 11.4, 11.9 and
      11.13.

            

    

     

    
      	
              10.15

            	
              Taxes
      paid.  The Borrower has paid all taxes applicable to, or
      imposed on or in relation to the Borrower or its
  business.

            

    

     

    
      	
              10.16

            	
              ISM and ISPS Code
      compliance.  The Borrower will procure that the Owners
      and the Approved Manager obtain all necessary ISM Code Documentation and
      ISPS Code Documentation in connection with the Ships and comply with the
      ISM Code and the ISPS Code on or
before:

            

    

     

    
      	
              (a)

            	
              the
      date of this Agreement, in the case of each Existing Ship;
    and

            

    

     

    
      	
              (b)

            	
              the
      date on which each Ship is delivered to its Owner pursuant to the MOA
      relative to that Ship, in the case of each other
  Ship.

            

    

     

    
      	
              10.17

            	
              No money
      laundering.  Without prejudice to the generality of
      Clause 2.3, in relation to the borrowing by the Borrower of the Loan, the
      performance and discharge of its obligations and liabilities under the
      Finance Documents, and the transactions and other arrangements effected or
      contemplated by the Finance Documents to which the Borrower is a party,
      the Borrower confirms that it is acting for its own account and that the
      foregoing will not involve or lead to contravention of any law, official
      requirement or other regulatory measure or procedure implemented to combat
      “money laundering” (as defined in Article 1 of the Directive (91/308/EEC)
      of the Council of the European
Communities).

            

    

     

    
      	
              11

            	
              GENERAL
      UNDERTAKINGS

            

    

     

    
      	
              11.1

            	
              General.  The
      Borrower undertakes with each Creditor Party to comply with the following
      provisions of this Clause 11 at all times during the Security Period
      except as the Agent may, with the authority of the Majority Lenders,
      otherwise permit.

            

    

     

    
      	
              11.2

            	
              Title; negative pledge and pari
      passu ranking.  The Borrower
  will:

            

    

     

    
      	
              (a)

            	
              own
      (directly or indirectly) the entire beneficial interest in each Owner free
      from all Security Interests and other interests and rights of every kind,
      except for those created by the Finance
  Documents;

            

    

     

    
      	
              (b)

            	
              not
      create or permit to arise any Security Interest (except for Permitted
      Security Interests) over any other asset, present or future (including,
      but not limited to the Borrower’s rights against the Swap Bank under the
      Master Agreement or all or any part of the Borrower’s interest in any
      amount payable to the Borrower by the Swap Bank under the Master
      Agreement); and

            

    

     

    
      
         

      

      
        29

        
          

        

      

      
         

      

    

    
      	
              (c)

            	
              procure
      that its liabilities under the Finance Documents to which it is a party do
      and will rank at least pari passu with all its other present and future
      unsecured liabilities, except for liabilities which are mandatorily
      preferred by law.

            

    

     

    
      	
              11.3

            	
              No disposal of
      assets.  The Borrower will not transfer, lease or
      otherwise dispose of:

            

    

     

    
      	
              (a)

            	
              all
      or a substantial part of its assets, whether by one transaction or a
      number of transactions, whether related or not;
  or

            

    

     

    
      	
              (b)

            	
              any
      debt payable to it or any other right (present, future or contingent
      right) to receive a payment, including any right to damages or
      compensation.

            

    

     

    
      	
              11.4

            	
              Restriction on other
      liabilities or obligations to be incurred.  The Borrower
      will not incur, and will procure that none of the Owners will, incur, any
      liability or obligation except liabilities and
  obligations:

            

    

     

    
      	
              (a)

            	
              under
      the MOAs and the Finance Documents to which each is a
    party;

            

    

     

    
      	
              (b)

            	
              under
      the Master Agreement (but in such case, only in connection with Designated
      Transactions); and

            

    

     

    
      	
              (c)

            	
              (in
      the case of each Owner) incurred in the normal course of its business of
      operating its Ship.

            

    

     

    
      	
              11.5

            	
              Information provided to be
      accurate.  All financial and other information which is
      provided in writing by or on behalf of the Borrower under or in connection
      with any Finance Document will be true and not misleading and will not
      omit any material fact or
consideration.

            

    

     

    
      	
              11.6

            	
              Provision of financial
      statements.  The Borrower will send to the
      Agent:

            

    

     

    
      	
              (a)

            	
              as
      soon as possible, but in no event later than 120 days after the end of
      each Financial Year (commencing with the Financial Year ended 31 December
      2006), the audited consolidated Financial Statements of the Group for that
      Financial Year;

            

    

     

    
      	
              (b)

            	
              as
      soon as possible, but in no event later than each Dividend Declaration
      Date (commencing with the first Dividend Declaration Date falling within
      2007 after the date of this Agreement), the unaudited consolidated
      accounts of the Group for the most recent financial quarter which has
      ended before that Dividend Declaration Date and additionally, in the case
      of each of the second, third and fourth financial quarters, the unaudited
      consolidated accounts of the Group for the period 1 January up to the end
      of the relevant financial quarter certified in each case as to their
      correctness by the chief financial officer of the
  Borrower;

            

    

     

    
      	
              (c)

            	
              together
      with the quarterly financial statements referred to in paragraph (b) above
      for each of the financial quarters in each Financial Year, at least two
      valuations of each Fleet Vessel each prepared by an Approved Broker (at
      the cost of the Borrower) in accordance with Clause 15.4, which valuations
      shall be used in determining the Security Cover Percentage pursuant to
      Clause 15.1, the financial covenants referred to in Clause 12.4, the
      ability of the Borrower to declare a dividend in accordance with Clause
      12.8 and whether a repayment of the Loan needs to be made in accordance
      with Clause 8.1; and

            

    

     

    
      	
              (d)

            	
              promptly
      after each request by the Agent, such further financial information about
      the Borrower, the Group, the Ships, the other Fleet Vessels and the Owners
      (including, but not limited to, charter arrangements, Financial
      Indebtedness and operating expenses) as the Agent may
    require.

            

    

     

    
      
         

      

      
        30

        
          

        

      

      
         

      

    

    
      	
              11.7

            	
              Form of financial
      statements.  All accounts (audited and unaudited)
      delivered under Clause 11.6 will:

            

    

     

    
      	
              (a)

            	
              be
      prepared in accordance with all applicable laws and GAAP consistently
      applied;

            

    

     

    
      	
              (b)

            	
              in
      the case of the annual audited financial statements of the Group, be
      audited by an internationally renowned auditing firm and such financial
      statements shall not include any material
  qualifications;

            

    

     

    
      	
              (c)

            	
              give
      a true and fair view of the state of affairs of the Group at the date of
      those accounts and of its profit for the period to which those accounts
      relate; and

            

    

     

    
      	
              (d)

            	
              fully
      disclose or provide for all significant liabilities of the
      Group.

            

    

     

    
      	
              11.8

            	
              Shareholder and creditor
      notices.  The Borrower will send the Agent, at the same
      time as they are despatched, copies of all communications which are
      despatched to all of the Borrower’s shareholders or creditors or any class
      of them.

            

    

     

    
      	
              11.9

            	
              Consents.  The
      Borrower will maintain in force and promptly obtain or renew, and will
      promptly send certified copies to the Agent of, all consents
      required:

            

    

     

    
      	
              (a)

            	
              for
      the Borrower to perform its obligations under any
      Finance  Document;

            

    

     

    
      	
              (b)

            	
              for
      the validity or enforceability of any Finance
  Document;

            

    

     

    
      	
              (c)

            	
              for
      each Owner to continue to own and operate the Ship owned by
      it,

            

    

     

    and the
Borrower will comply (or procure compliance) with the terms of all such
consents.

     

    
      	
              11.10

            	
              Maintenance of Security
      Interests.  The Borrower
will:

            

    

     

    
      	
              (a)

            	
              at
      its own cost, do all that it reasonably can to ensure that any Finance
      Document validly creates the obligations and the Security Interests which
      it purports to create; and

            

    

     

    
      	
              (b)

            	
              without
      limiting the generality of paragraph (a) above, at its own cost, promptly
      register, file, record or enrol any Finance Document with any court or
      authority in all Pertinent Jurisdictions, pay any stamp, registration or
      similar tax in all Pertinent Jurisdictions in respect of any Finance
      Document, give any notice or take any other step which, in the opinion of
      the Majority Lenders, is or has become necessary or desirable for any
      Finance Document to be valid, enforceable or admissible in evidence or to
      ensure or protect the priority of any Security Interest which it
      creates.

            

    

     

    
      	
              11.11

            	
              Notification of
      litigation.  The Borrower will provide the Agent with
      details of any legal or administrative action involving the Borrower, any
      Security Party, the Approved Manager, any Ship or the Earnings or the
      Insurances of any Ship as soon as such action is instituted or it becomes
      apparent to the Borrower that it is likely to be instituted, unless it is
      clear that the legal or administrative action cannot be considered
      material in the context of any Finance
Document.

            

    

     

    
      	
              11.12

            	
              Principal place of
      business.  The Borrower will maintain its place of
      business, and keep its corporate documents and records, at the address
      stated in Clause 28.2(a);  and the Borrower will not establish,
      or do anything as a result of which it would be deemed to have, a place of
      business in any country other than the Marshall
  Islands.

            

    

     

    
      	
              11.13

            	
              Confirmation of no
      default.  The Borrower will, within 2 Business Days after
      service by the Agent of a written request, serve on the Agent a notice
      which is signed by 2 directors of the Borrower and
  which:

            

    

     

    
      
         

      

      
        31

        
          

        

      

      
         

      

    

    
      	
              (a)

            	
              states
      that no Event of Default or Potential Event of Default has occurred;
      or

            

    

     

    
      	
              (b)

            	
              states
      that no Event of Default or Potential Event of Default has occurred,
      except for a specified event or matter, of which all material details are
      given.

            

    

     

    The Agent
may serve requests under this Clause 11.13 from time to time but only if asked
to do so by a Lender or Lenders having Contributions exceeding 10 per cent. of
the Loan or (if no Advance has been made) Commitments exceeding 10 per cent of
the Total Commitments; and this Clause 11.13 does not affect the Borrower’s
obligations under Clause 11.14.

     

    
      	
              11.14

            	
              Notification of
      default.  The Borrower will notify the Agent as soon as
      the Borrower becomes aware of:

            

    

     

    
      	
              (a)

            	
              the
      occurrence of an Event of Default or a Potential Event of Default;
      or

            

    

     

    
      	
              (b)

            	
              any
      matter which indicates that an Event of Default or a Potential Event of
      Default may have occurred;

            

    

     

    and will
thereafter keep the Agent fully up-to-date with all developments.

     

    
      	
              11.15

            	
              Provision of further
      information.  The Borrower will, as soon as practicable
      after receiving the request, provide the Agent with any additional
      financial or other information
relating:

            

    

     

    
      	
              (a)

            	
              to
      the Borrower, any Owner, any Ship, the Approved Manager or any other
      Security Party, the Insurances or the Earnings;
  or

            

    

     

    
      	
              (b)

            	
              to
      any other matter relevant to, or to any provision of, a Finance
      Document

            

    

     

    which may
be requested by the Agent, the Security Trustee or any Lender at any
time.

     

    
      	
              11.16

            	
              Provision of copies and
      translation of documents.  The Borrower will supply the
      Agent with a sufficient number of copies of the documents referred to
      above to provide 1 copy for each Creditor Party; and if the Agent so
      requires in respect of any of those documents, the Borrower will provide a
      certified English translation prepared by a translator approved by the
      Agent.

            

    

     

    
      	
              11.17

            	
              Ownership.  The
      Borrower shall ensure that (a) it shall remain the direct or indirect
      owner of the whole of the issued share capital of each Owner and (b) there
      shall be no change in the legal and beneficial ownership of the shares in
      each Owner.

            

    

     

    
      	
              11.18

            	
              General and administrative
      costs.  The Borrow shall ensure that the payment of all
      the general and administrative costs of the Borrower and the Owners in
      connection with the ownership and operation of the Ships (including,
      without limitation, the payment of the management fees pursuant to the
      Management Agreements) shall be fully subordinated to the payment
      obligations of the Borrower and the Owners under this Agreement and the
      other Finance Documents throughout the Security
  Period.

            

    

     

    
      	
              11.19

            	
              No amendment to Master
      Agreement;  Transactions.  The Borrower will
      not:

            

    

     

    
      	
              (a)

            	
              agree
      to any amendment or supplement to, or waive or fail to enforce, the Master
      Agreement or any of its provisions;
or

            

    

     

    
      	
              (b)

            	
              enter
      into any Transaction pursuant to the Master Agreement except Designated
      Transactions.

            

    

     

    
      
         

      

      
        32

        
          

        

      

      
         

      

    

    
      	
              11.20

            	
              Hedging of interest rate
      risks.  The Borrower shall deliver to the Agent by no
      later than 60 days from the Drawdown Date in relation to each Advance a
      duly signed Hedge Strategy Letter, and shall from time to time, enter into
      such Designated Transactions with the Swap Bank in order to implement the
      hedging strategy outlined in the Hedge Strategy Letter whereby for the
      period on and from the date of this Agreement up to and including the
      Final Maturity Date, it will hedge all or the major part of the interest
      risk under this Agreement (but in any event not less than 50 per cent. of
      the interest rate risk under this Agreement outstanding at any time during
      the aforesaid period).

            

    

     

    
      	
              12

            	
              CORPORATE
      UNDERTAKINGS

            

    

     

    
      	
              12.1

            	
              General.  The
      Borrower also undertakes with each Creditor Party to comply with the
      following provisions of this Clause 12 at all times during the Security
      Period except as the Agent may, with the authority of the Majority
      Lenders, otherwise permit.

            

    

     

    
      	
              12.2

            	
              Maintenance of
      status.  The Borrower will maintain its separate
      corporate existence and remain in good standing under the laws of the
      Marshall Islands.

            

    

     

    
      	
              12.3

            	
              Negative
      undertakings.  The Borrower will
  not:

            

    

     

    
      	
              (a)

            	
              change
      the nature of its business; or

            

    

     

    
      	
              (b)

            	
              declare
      or pay any dividend or effect any other form of distribution save as
      permitted pursuant to Clause 12.8:

            

    

     

    
      	
              (c)

            	
              effect
      any form of redemption, purchase or return of share capital;
      or

            

    

     

    
      	
              (d)

            	
              provide
      any form of credit or financial assistance
to:

            

    

     

    
      	
               
      

            	
              (i)

            	
              a
      person who is directly or indirectly interested in the Borrower’s share or
      loan capital; or

            

    

     

    
      	
               
      

            	
              (ii)

            	
              any
      company in or with which such a person is directly or indirectly
      interested or connected;

            

    

     

    or enter
into any transaction with or involving such a person or company on terms which
are, in any respect, less favourable to the Borrower than those which it could
obtain in a bargain made at arms’ length  Provided that this shall not
prevent or restrict the Borrower from on-lending the Loan to the Owners or
granting credit or financial assistance to its wholly-owned direct or indirect
subsidiaries;

     

    
      	
              (e)

            	
              issue,
      allot or grant any person a right to any shares in its capital or
      repurchase or reduce its issued share
capital;

            

    

     

    
      	
              (f)

            	
              acquire
      any shares or other securities other than US or UK Treasury bills and
      certificates of deposit issued by major North American or European banks
      or enter into any transaction in a derivative other than Designated
      Transactions;

            

    

     

    
      	
              (g)

            	
              enter
      into any form of amalgamation, merger or de-merger or any form of
      reconstruction or reorganisation.

            

    

     

    
      	
              12.4

            	
              Financial
      Covenants.  The Borrower shall ensure that at all
      times:

            

    

     

    
      	
              (a)

            	
              the
      ratio of Total Liabilities to EBITDA shall not exceed
  5:1;

            

    

     

    
      	
              (b)

            	
              the
      Market Value Adjusted Net Worth of the Group shall not be less than
      $100,000,000;

            

    

     

    
      
         

      

      
        33

        
          

        

      

      
         

      

    

    
      	
              (c)

            	
              there
      is available to the Borrower and all the other members of the Group an
      amount of not less than $500,000 per Fleet Vessel (excluding, for the
      avoidance of doubt, any amount standing to the credit of the Retention
      Account which has been transferred thereto in accordance with Clause 18.2
      or any other restricted account) in Liquid Assets of which, all amounts in
      respect of the Ships, shall be held in the Reserve Account;
      and

            

    

     

    
      	
              (d)

            	
              the
      Leverage Ratio shall not exceed
0.7:1.

            

    

     

    
      	
              12.5

            	
              Compliance
      Check.  Compliance with the undertakings contained in
      Clause 12.4 shall be determined in each Financial
  Year:

            

    

     

    
      	
              (a)

            	
              at
      the time the Agent receives the audited consolidated accounts of the Group
      and the unaudited consolidated accounts of the Group (pursuant to Clauses
      11.6(a) and 11.6(b) respectively), by reference to the unaudited
      consolidated accounts in the case of the first three financial quarters in
      each Financial Year and for the fourth financial quarter in each Financial
      Year, initially by reference to the unaudited consolidated accounts for
      the relevant fourth quarter and, once available, by reference to the
      audited consolidated accounts for that Financial Year of the Group;
      and

            

    

     

    
      	
              (b)

            	
              at
      any other time as the Agent may reasonably request by reference to such
      evidence as the Lenders may require to determine and calculate the
      financial covenants referred to in Clause
12.4.

            

    

     

    At the
same time as it delivers the consolidated accounts referred to in this Clause
12.5, the Borrower shall deliver to the Agent a Compliance Certificate
demonstrating its compliance (or not, as the case may be) with the provisions of
Clause 12.4 signed by the chief financial officer of the Borrower.

     

    
      	
              12.6

            	
              Change in accounting
      expressions and policies.  If, by reason of change in
      format or GAAP or other relevant accounting policies, the expressions
      appearing in any accounts and financial statements referred to in Clause
      11.6 alter from those in the accounts and financial statements for the
      Borrower for the year ended 31 December 2006, the relevant definitions
      contained in Clause 1.1 and the provisions of Clause 12.4 shall be deemed
      modified in such manner as the Agent, acting with the authorisation of the
      Majority Lenders, shall require to take account of such different
      expressions but otherwise to maintain in all respects the substance of
      those provisions.

            

    

     

    
      	
              12.7

            	
              Subordination of rights of
      Borrower.  All rights which the Borrower at any time has
      (whether in respect of the Loan or any other transaction) against any
      Owner or its assets shall be fully subordinated to the rights of the
      Creditor Parties under the Finance Documents; and in particular, the
      Borrower shall not during the Security
Period:

            

    

     

    
      	
              (a)

            	
              claim,
      or in a bankruptcy of any Owner or prove for any amount payable to the
      Borrower by an Owner, whether in respect of the Loan or any other
      transaction;

            

    

     

    
      	
              (b)

            	
              take
      or enforce any Security Interest for any such amount;
  or

            

    

     

    
      	
              (c)

            	
              claim
      to set-off any such amount against any amount payable by the Borrower to
      any Owner.

            

    

     

    
      	
              12.8

            	
              Dividend
      payment.  Subject to the following conditions, the
      Borrower may pay dividends in any Financial
  Year.

            

    

     

    
      	
              12.9

            	
              Conditions for dividend
      payment.  The conditions referred to in Clause 12.8 are
      as follows:

            

    

     

    
      
         

      

      
        34

        
          

        

      

      
         

      

    

    
      	
              (a)

            	
              that
      the Agent has received from the Borrower by no later than the relevant
      Dividend Declaration Date at least 10 days’ prior written notice of its
      intention to announce a dividend payment (such notice hereinafter a “Dividend
      Declaration”);

            

    

     

    
      	
              (b)

            	
              each
      Dividend Declaration is accompanied by a completed Compliance Certificate
      (evidencing the Borrower is in compliance with the financial covenants
      referred to in Clause 12.4) and evidence that the payment of the proposed
      dividend will not result in the Borrower being in breach of any of the
      said financial covenants or in the occurrence of an Event of Default or a
      Potential Event of Default;

            

    

     

    
      	
              (c)

            	
              each
      completed Compliance Certificate referred to in paragraph (b) above shall
      be accompanied by the latest Applicable Accounts evidencing, together with
      the details of the aggregate Market Value of the Ships referred to in
      paragraph (d) below, the compliance of the Borrower with the financial
      covenants referred to in Clause
12.4;

            

    

     

    
      	
              (d)

            	
              each
      Dividend Declaration is accompanied by details of the Market Value of each
      Ship determined in accordance with Clause 15.4 and evidence that the
      Security Cover Percentage as at the Dividend Declaration Date is no less
      than 145 per cent.; and

            

    

     

    
      	
              (e)

            	
              the
      Agent has confirmed to the Borrower in writing that the Borrower is in
      compliance with paragraphs (b) and (c) prior to the Borrower’s
      announcement of such dividend
payment.

            

    

     

    
      	
              13

            	
              INSURANCE

            

    

     

    
      	
              13.1

            	
              General.  The
      Borrower also undertakes with each Creditor Party to procure that each
      Owner will comply with the following provisions of this Clause 13 at all
      times during the Security Period (other than in the case of each Target
      Ship, in which case the provisions of this Clause 13 shall apply to that
      Ship as from the date on which the Target Ship which is owned or to be
      owned by that Owner is delivered to it under the relevant MOA) except as
      the Agent may, with the authority of the Majority Lenders, otherwise
      permit.

            

    

     

    
      	
              13.2

            	
              Maintenance of obligatory
      insurances.  The Borrower shall procure that each Owner
      keep the Ship owned by it insured at the expense of that Owner
      against:

            

    

     

    
      	
              (a)

            	
              fire
      and usual marine risks (including hull and machinery and excess
      risks);

            

    

     

    
      	
              (b)

            	
              war
      risks (including protection and indemnity war
  risks);

            

    

     

    
      	
              (c)

            	
              in
      the case of protection and indemnity war risks, in an amount equal to the
      amount for which the war risks under the hull policies are
      effected;

            

    

     

    
      	
              (d)

            	
              protection
      and indemnity risks including protection and indemnity war risks cover in
      excess of the amount for war risks (hull) and including cover for oil
      pollution liability risks; and

            

    

     

    
      	
              (e)

            	
              any
      other risks against which the Majority Lenders consider, having regard to
      practices and other circumstances prevailing at the relevant time, it
      would in the opinion of the Majority Lenders be reasonable for the
      relevant Owner to insure and which are specified by the Security Trustee
      by notice to the relevant Owner.

            

    

     

    
      	
              13.3

            	
              Terms of obligatory
      insurances.  The Borrower shall procure that each Owner
      shall effect such insurances:

            

    

     

    
      	
              (a)

            	
              in
      Dollars;

            

    

     

    
      	
              (b)

            	
              in
      the case of fire and usual marine risks and war risks, in an amount on an
      agreed value basis at least the greater of (i) an amount, which when
      aggregated with the insured value of
      the other Ships at the relevant time subject to a Mortgage, is equal to
      120 per cent. of the Loan and (ii) the Market Value of the Ship owned by
      it; and

            

    

     

    
      
         

      

      
        35

        
          

        

      

      
         

      

    

    
    

     

    
      	
              (c)

            	
              in
      the case of oil pollution liability risks, for an aggregate amount equal
      to the highest level of cover from time to time available under basic
      protection and indemnity club entry (with the international group of
      protection and indemnity clubs) and the international marine insurance
      market (currently $1,000,000,000);

            

    

     

    
      	
              (d)

            	
              in
      relation to protection and indemnity risks, in respect of the full value
      and tonnage of the Ship owned by
it;

            

    

     

    
      	
              (e)

            	
              on
      approved terms; and

            

    

     

    
      	
              (f)

            	
              through
      approved brokers and with approved insurance companies and/or underwriters
      or, in the case of war risks and protection and indemnity risks, in
      approved war risks and protection and indemnity risks
      associations.

            

    

     

    
      	
              13.4

            	
              Further protections for the
      Creditor Parties.  In addition to the terms set out in
      Clause 13.3, the Borrower shall procure that the obligatory insurances
      shall:

            

    

     

    
      	
              (a)

            	
              name
      the Security Trustee as sole loss payee with such directions for payment
      as the Security Trustee may
specify;

            

    

     

    
      	
              (b)

            	
              provide
      that all payments by or on behalf of the insurers under the obligatory
      insurances to the Security Trustee shall be made without set-off,
      counterclaim or deductions or condition
  whatsoever;

            

    

     

    
      	
              (c)

            	
              provide
      that the insurers shall waive, to the fullest extent permitted by English
      law, their entitlement (if any) (whether by statute, common law, equity,
      or otherwise) to be subrogated to the rights and remedies of the Security
      Trustee in respect of any rights or interests (secured or not) held by or
      available to the Security Trustee in respect of the Secured Liabilities,
      until the Secured Liabilities shall have been fully repaid and discharged,
      except that the insurers shall not be restricted by the terms of this
      paragraph (d) from making personal claims against persons (other than the
      relevant Owner or any Creditor Party) in circumstances where the insurers
      have fully discharged their liabilities and obligations under the relevant
      obligatory insurances;

            

    

     

    
      	
              (d)

            	
              provide
      that such obligatory insurances shall be primary without right of
      contribution from other insurances which may be carried by the Security
      Trustee;

            

    

     

    
      	
              (e)

            	
              provide
      that the Security Trustee may make proof of loss if the relevant Owner
      fails to do so;  and

            

    

     

    
      	
              (f)

            	
              provide
      that if any obligatory insurance is cancelled, or if any substantial
      change is made in the coverage which adversely affects the interest of the
      Security Trustee, or if any obligatory insurance is allowed to lapse for
      non-payment of premium, such cancellation, charge or lapse shall not be
      effective with respect to the Security Trustee for 30 days (or 7 days in
      the case of war risks) after receipt by the Security Trustee of prior
      written notice from the insurers of such cancellation, change or
      lapse.

            

    

     

    
      	
              13.5

            	
              Renewal of obligatory
      insurances.  The Borrower shall procure that each Owner
      shall:

            

    

     

    
      	
              (a)

            	
              at
      least 21 days before the expiry of any obligatory
    insurance:

            

    

     

    
      	
               
      

            	
              (i)

            	
              notify
      the Security Trustee of the brokers (or other insurers) and any protection
      and indemnity or war risks association through or with whom that Owner
      proposes to renew that insurance and of the proposed terms of renewal;
      and

            

    

     

    
      
         

      

      
        36

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              (ii)

            	
              in
      case of any substantial change in insurance cover, obtain the Security
      Trustee’s approval to the matters referred to in paragraph (i)
      above;

            

    

     

    
      	
              (b)

            	
              at
      least 14 days before the expiry of any obligatory insurance, renew the
      insurance in accordance with the Security Trustee’s approval pursuant to
      paragraph (a); and

            

    

     

    
      	
              (c)

            	
              procure
      that the approved brokers and/or the war risks and protection and
      indemnity associations with which such a renewal is effected shall
      promptly after the renewal notify the Security Trustee in writing of the
      terms and conditions of the
renewal.

            

    

     

    
      	
              13.6

            	
              Copies of policies; letters of
      undertaking.  The Borrower shall procure that each Owner
      shall ensure that all approved brokers provide the Security Trustee with
      copies of all policies relating to the obligatory insurances which they
      effect or renew and of a letter or letters of undertaking (in the event of
      fleet cover, together with waivers for liens for unpaid premiums of other
      vessels not mortgaged to the Security Trustee) in a form required by the
      Security Trustee and including undertakings by the approved brokers
      that:

            

    

     

    
      	
              (a)

            	
              they
      will have endorsed on each policy, immediately upon issue, a loss payable
      clause and a notice of assignment complying with the provisions of Clause
      13.4;

            

    

     

    
      	
              (b)

            	
              they
      will hold such policies, and the benefit of such insurances, to the order
      of the Security Trustee in accordance with the said loss payable
      clause;

            

    

     

    
      	
              (c)

            	
              they
      will advise the Security Trustee immediately of any material change to the
      terms of the obligatory insurances;

            

    

     

    
      	
              (d)

            	
              they
      will notify the Security Trustee, not less than 14 days before the expiry
      of the obligatory insurances, in the event of their not having received
      notice of renewal instructions from that Owner or its Agents and, in the
      event of their receiving instructions to renew, they will promptly notify
      the Security Trustee of the terms of the
  instructions;

            

    

     

    
      	
              (e)

            	
              they
      will notify the Security Trustee if any person other than the Owner is
      named as assured or co-assured in any of the obligatory insurances and
      shall procure that, upon the written request of the Security Trustee, such
      additional assured or co-assured executes in favour of the Security an
      assignment (in such form as the Lenders may approve or require) of its
      interest in the obligatory insurances;
and

            

    

     

    
      	
              (f)

            	
              they
      will not set off against any sum recoverable in respect of a claim
      relating to the Ship owned by the relevant Owner under such obligatory
      insurances any premiums or other amounts due to them or any other person
      whether in respect of that Ship or otherwise, they waive any lien on the
      policies or, any sums received under them, which they might have in
      respect of such premiums or other amounts, and they will not cancel such
      obligatory insurances by reason of non-payment of such premiums or other
      amounts, and will arrange for a separate policy to be issued in respect of
      the Ship forthwith upon being so requested by the Security
      Trustee.

            

    

     

    If any of
the obligatory insurances referred to in Clause 13.6 form part of a fleet cover,
the Borrower will procure that any letter of undertaking referred to in this
Clause is amended to provide that the relevant brokers shall undertake to the
Security Trustee that they shall neither set-off against any claims in respect
of a Ship any premiums due in respect of other vessels under such fleet cover of
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.

     

    
      	
              13.7

            	
              Copies of certificates of
      entry.  The Borrower shall procure that each Owner shall
      ensure that any protection and indemnity and/or war risks associations in
      which the Ship owned by that Owner is entered provides the Security
      Trustee with:

            

    

     

    
      
         

      

      
        37

        
          

        

      

      
         

      

    

    
      	
              (a)

            	
              a
      certified copy of the certificate of entry for that
  Ship;

            

    

     

    
      	
              (b)

            	
              a
      letter or letters of undertaking in such form as may be required by the
      Security Trustee; and

            

    

     

    
      	
              (c)

            	
              where
      required to be issued under the terms of insurance/indemnity provided by
      the Borrower’s protection and indemnity association, a certified copy of
      each United States of America voyage quarterly declaration (or other
      similar document or documents) made by that Owner in accordance with the
      requirements of such protection and indemnity association;
    and

            

    

     

    
      	
              (d)

            	
              a
      certified copy of each certificate of financial responsibility for
      pollution by oil or other Environmentally Sensitive Material issued by the
      relevant certifying authority.

            

    

     

    
      	
              13.8

            	
              Deposit of original
      policies.  The Borrower shall procure that each Owner
      shall ensure that all policies relating to obligatory insurances are
      deposited with the approved brokers through which the insurances are
      effected or renewed.

            

    

     

    
      	
              13.9

            	
              Payment of
      premiums.  The Borrower shall procure that each Owner
      shall punctually pay all premiums or other sums payable in respect of the
      obligatory insurances and produce all relevant receipts when so required
      by the Security Trustee.

            

    

     

    
      	
              13.10

            	
              Guarantees.  The
      Borrower shall procure that each Owner shall ensure that any guarantees
      required by a protection and indemnity or war risks association are
      promptly issued and remain in full force and
  effect.

            

    

     

    
      	
              13.11

            	
              Restrictions on
      employment.  The Borrower shall procure that no Owner
      employ the Ship owned by it, nor permit her to be employed, outside the
      cover provided by any obligatory
insurances.

            

    

     

    
      	
              13.12

            	
              Compliance with terms of
      insurances.  The Borrower shall procure that no Owner
      shall do or omit to do (or permit to be done or not to be done) any act or
      thing which would or might render any obligatory insurance invalid, void,
      voidable or unenforceable or render any sum payable thereunder repayable
      in whole or in part; and, in
particular:

            

    

     

    
      	
              (a)

            	
              each
      Owner shall take all necessary action and comply with all requirements
      which may from time to time be applicable to the obligatory insurances,
      and (without limiting the obligation contained in Clause 13.7(c) above)
      ensure that the obligatory insurances are not made subject to any
      exclusions or qualifications to which the Security Trustee has not given
      its prior approval;

            

    

     

    
      	
              (b)

            	
              no
      Owner shall make any changes relating to the classification or
      classification society or manager or operator of the Ship owned by it
      unless approved by the underwriters of the obligatory
      insurances;

            

    

     

    
      	
              (c)

            	
              each
      Owner shall make all quarterly or other voyage declarations which may be
      required by the protection and indemnity risks association in which the
      Ship owned by it is entered to maintain cover for trading to the United
      States of America and Exclusive Economic Zone (as defined in the United
      States Oil Pollution Act 1990 or any other applicable legislation);
      and

            

    

     

    
      	
              (d)

            	
              no
      Owner shall employ the Ship owned by it, nor allow it to be employed,
      otherwise than in conformity with the terms and conditions of the
      obligatory insurances, without first obtaining the consent of the insurers
      and complying with any requirements (as to extra premium or otherwise)
      which the insurers specify.

            

    

     

    
      	
              13.13

            	
              Alteration to terms of
      insurances.  The Borrower shall procure that no Owner
      shall either make or agree to any alteration to the terms of any
      obligatory insurance or waive any
      right relating to any obligatory insurance without the prior written
      consent of the Security
Trustee.

            

    

     

    
      
         

      

      
        38

        
          

        

      

      
         

      

    

    
    

     

    
      	
              13.14

            	
              Settlement of
      claims.  The Borrower shall procure that no Owner shall
      settle, compromise or abandon any claim under any obligatory insurance for
      Total Loss or for a Major Casualty, and shall do all things necessary and
      provide all documents, evidence and information to enable the Security
      Trustee to collect or recover any moneys which at any time become payable
      in respect of the obligatory
insurances.

            

    

     

    
      	
              13.15

            	
              Provision of copies of
      communications.  The Borrower shall procure that each
      Owner shall provide the Security Trustee, at the time of each such
      communication, copies of all written communications between that Owner
      and:

            

    

     

    
      	
              (a)

            	
              the
      approved brokers; and

            

    

     

    
      	
              (b)

            	
              the
      approved protection and indemnity and/or war risks associations;
      and

            

    

     

    
      	
              (c)

            	
              the
      approved insurance companies and/or underwriters, which relate directly or
      indirectly to:

            

    

     

    
      	
               
      

            	
              (i)

            	
              that
      Owner’s obligations relating to the obligatory insurances including,
      without limitation, all requisite declarations and payments of additional
      premiums or calls; and

            

    

     

    
      	
               
      

            	
              (ii)

            	
              any
      credit arrangements made between that Owner and any of the persons
      referred to in paragraphs (a) or (b) above relating wholly or partly to
      the effecting or maintenance of the obligatory
  insurances.

            

    

     

    
      	
              13.16

            	
              Provision of
      information.  In addition, the Borrower shall procure
      that each Owner shall promptly provide the Security Trustee (or any
      persons which it may designate) with any information which the Security
      Trustee (or any such designated person) requests for the purpose
      of:

            

    

     

    
      	
              (a)

            	
              obtaining
      or preparing any report from an independent marine insurance broker as to
      the adequacy of the obligatory insurances effected or proposed to be
      effected; and/or

            

    

     

    
      	
              (b)

            	
              effecting,
      maintaining or renewing any such insurances as are referred to in Clause
      13.17 below or dealing with or considering any matters relating to any
      such insurances

            

    

     

    and the
Borrower shall, forthwith upon demand, indemnify the Security Trustee in respect
of all fees and other expenses incurred by or for the account of the Security
Trustee in connection with any such report as is referred to in paragraph (a)
above.

     

    
      	
              13.17

            	
              Mortgagee’s interest and
      additional peril insurances.  The Security Trustee shall
      be entitled from time to time to effect, maintain and renew all or any of
      the following insurances in such amounts, on such terms, through such
      insurers and generally in such manner as the Security Trustee may from
      time to time consider appropriate:

            

    

     

    
      	
              (a)

            	
              a
      mortgagee’s interest insurance in an amount equal to 120 per cent. of the
      Loan;

            

    

     

    
      	
              (b)

            	
              a
      mortgagee’s interest additional perils (pollution) insurance in an amount
      equal to 110 per cent. of the Loan.

            

    

     

    and the
Borrower shall upon demand fully indemnify the Security Trustee in respect of
all premiums and other expenses which are incurred in connection with or with a
view to effecting, maintaining or renewing any such insurance or dealing with,
or considering, any matter arising out of any such insurance.

     

    
      
         

      

      
        39

        
          

        

      

      
         

      

    

                          

    
      	 13.18	Review
      of insurance requirements.  The Majority Lenders shall
      be entitled to review the requirements of this Clause 13 from time to time
      in order to take account of any changes in circumstances after the date of
      this Agreement which are, in the opinion of the Majority Lenders,
      significant and capable of affecting the Owners or the Ships and their
      insurance (including, without limitation, changes in the availability or
      the cost of insurance coverage or the risks to which the Owners may be
      subject), and may appoint insurance consultants in relation to this review
      at the cost of the Borrower.

    

     

    
      	
              13.19

            	
              Modification of insurance
      requirements.  The Security Trustee shall notify the
      Borrower of any proposed modification under Clause 13.18 to the
      requirements of this Clause 13 which the Majority Lenders consider
      appropriate in the circumstances, and such modification shall take effect
      on and from the date it is notified in writing to the Borrower as an
      amendment to this Clause 13 and shall bind the Borrower
      accordingly.

            

    

     

    
      	
              13.20

            	
              Compliance with mortgagee’s
      instructions.  The Security Trustee shall be entitled
      (without prejudice to or limitation of any other rights which it may have
      or acquire under any Finance Document) to require any Ship to remain at
      any safe port or to proceed to and remain at any safe port designated by
      the Security Trustee until the Owner of that Ship implements any
      amendments to the terms of the obligatory insurances and any operational
      changes required as a result of a notice served under Clause
      13.19.

            

    

     

    
      	
              14

            	
              SHIP
      COVENANTS

            

    

     

    
      	
              14.1

            	
              General.  The
      Borrower also undertakes with each Creditor Party to procure that each
      Owner shall comply with the following provisions of this Clause 14 at all
      times during the Security Period (after the Ship has been delivered to it
      under the relevant MOA) except as the Agent, with the authority of the
      Majority Lenders, may otherwise
permit.

            

    

     

    
      	
              14.2

            	
              Ship’s name and
      registration.  The Borrower shall procure that each Owner
      shall keep the Ship owned by it registered in its ownership under an
      Approved Flag; shall not do or allow to be done anything as a result of
      which such registration might be cancelled or imperilled; and shall not
      change the name or port of registry of any
Ship.

            

    

     

    
      	
              14.3

            	
              Repair and
      classification.  The Borrower shall procure that each
      Owner shall keep the Ship owned by it in a good and safe condition and
      state of repair:

            

    

     

    
      	
              (a)

            	
              consistent
      with first-class ship ownership and management
  practice;

            

    

     

    
      	
              (b)

            	
              so
      as to maintain the highest class with a first-class classification society
      which is a member of IACS acceptable to the Agent free of overdue
      recommendations and conditions of such classification society;
      and

            

    

     

    
      	
              (c)

            	
              so
      as to comply with all laws and regulations applicable to vessels
      registered at ports in the relevant Approved Flag State or to vessels
      trading to any jurisdiction to which the Ship may trade from time to time,
      including but not limited to the ISM Code, the ISPS Code, the ISM Code
      Documentation and the ISPS Code
Documentation.

            

    

     

    
      	
              14.4

            	
              Classification society
      undertaking.  The Borrower shall procure that each Owner
      shall instruct the classification society referred to in Clause 14.3 (and
      procure that the classification society undertakes with the Security
      Trustee):

            

    

     

    
      	
              (a)

            	
              to
      send to the Security Trustee, following receipt of a written request from
      the Security Trustee, certified true copies of all original class records
      and any other related records held by the classification society in
      relation to the Ship owned by that
Owner;

            

    

     

    
      
         

      

      
        40

        
          

        

      

      
         

      

    

    
      	
              (b)

            	
              to
      allow the Security Trustee (or its agents), at any time and from time to
      time, to inspect the original class and related records of that Owner and
      its Ship at the offices of the classification society and to take copies
      of them;

            

    

     

    
      	
              (c)

            	
              to
      notify the Security Trustee immediately in writing if the classification
      society:

            

    

     

    
      	
               
      

            	
              (i)

            	
              receives
      notification from the Owner or any person that the Ship’s classification
      society is to be
changed;  or

            

    

     

    
      	
               
      

            	
              (ii)

            	
              becomes
      aware of any facts or matters which may result in or have resulted in a
      change, suspension, discontinuance, withdrawal or expiry of the Ship’s
      class under the rules or terms and conditions of the Owner’s or the Ship’s
      membership of the classification
society;

            

    

     

    
      	
              (d)

            	
              following
      receipt of a written request from the Security
  Trustee:

            

    

     

    
      	
               
      

            	
              (i)

            	
              to
      confirm that the Owner is not in default of any of its contractual
      obligations or liabilities to the classification society and, without
      limiting the foregoing, that it has paid in full all fees or other charges
      due and payable to the classification
    society;  or

            

    

     

    
      	
               
      

            	
              (ii)

            	
              if
      the Owner is in default of any of its contractual obligations or
      liabilities to the classification society, to specify to the Security
      Trustee in reasonable detail the facts and circumstances of such default,
      the consequences thereof, and any remedy period agreed or allowed by the
      classification society.

            

    

     

    
      	
              14.5

            	
              Modification.  The
      Borrower shall procure that no Owner shall make any modification or
      repairs to, or replacement of, the Ship owned by it or equipment installed
      on her which would or might materially (in the sole opinion of the Agent)
      alter the structure, type or performance characteristics of the Ship or
      materially reduce her value.

            

    

     

    
      	
              14.6

            	
              Removal of
      parts.  The Borrower shall procure that no Owner shall
      remove any material part of the Ship owned by it, or any item of equipment
      installed on, the Ship unless the part or item so removed is forthwith
      replaced by a suitable part or item which is in the same condition as or
      better condition than the part or item removed, is free from any Security
      Interest or any right in favour of any person other than the Security
      Trustee and becomes on installation on the Ship the property of the Owner
      and subject to the security constituted by the Mortgage and if applicable,
      the Deed of Covenant, relative to the Ship Provided that the Owner
      may install equipment owned by a third party if the equipment can be
      removed without any risk of damage to the
Ship.

            

    

     

    
      	
              14.7

            	
              Surveys.  The
      Borrower shall procure that each Owner shall submit the Ship owned by it
      regularly to all periodical or other surveys which may be required for
      classification purposes and, if so required by the Majority Lenders,
      provide the Security Trustee (at the expense of the Borrower) with copies
      of all survey reports.

            

    

     

    
      	
              14.8

            	
              Inspection.  The
      Borrower shall procure that:

            

    

     

    
      	
              (a)

            	
              each
      Owner shall permit the Security Trustee (by surveyors or other persons
      appointed by it for that purpose) to board the Ship owned by it at all
      reasonable times to inspect her condition or to satisfy themselves about
      proposed or executed repairs and shall afford all proper facilities for
      such inspections Provided
      that so long as no Event of Default has occurred and is continuing
      at the relevant time and a Ship is found to be in a satisfactory condition
      (in the opinion of the Security Trustee) the Borrower shall be obliged to
      pay the fees and expenses of one inspection of that Ship in any calendar
      year; and

            

    

     

    
      
         

      

      
        41

        
          

        

      

      
         

      

    

    
      	
              (b)

            	
              if
      any survey report for a Target Ship (as referred to at paragraph 5 of
      Schedule 4, Part C) indicates that the Ship is not in a satisfactory
      condition (in the sole discretion of the
Agent):

            

    

     

    
      	
               
      

            	
              (i)

            	
              the
      necessary improvements shall be made to the Ship by no later than the date
      falling 180 days after the date of the survey report so that the Ship is
      in a condition satisfactory to the Agent;
and

            

    

     

    
      	
               
      

            	
              (ii)

            	
              there
      shall be sent to the Agent within 5 Business Days after receipt by the
      Agent of the survey report for the Ship referred to at paragraph 5 of
      Schedule 4, Part C an estimate of the costs required to improve the
      condition of the Ship and the Borrower shall within 20 Business Days of
      providing such estimate to the Agent deposit in an account with the Agent
      an amount equal to the estimated costs to improve the condition of the
      Ship and such deposit shall only be applied in meeting the improvement
      costs.

            

    

     

    
      	
              14.9

            	
              Prevention of and release from
      arrest.  The Borrower shall procure that each Owner shall
      promptly discharge:

            

    

     

    
      	
              (a)

            	
              all
      liabilities which give or may give rise to maritime or possessory liens on
      or claims enforceable against the Ship owned by it, her Earnings or her
      Insurances;

            

    

     

    
      	
              (b)

            	
              all
      taxes, dues and other amounts charged in respect of the Ship, her Earnings
      or her Insurances; and

            

    

     

    
      	
              (c)

            	
              all
      other outgoings whatsoever in respect of the Ship, her Earnings or her
      Insurances

            

    

     

    and,
forthwith upon receiving notice of the arrest of the Ship, or of her detention
in exercise or purported exercise of any lien or claim, the relevant Owner shall
forthwith procure her release by providing bail or otherwise as the
circumstances may require.

     

    
      	
              14.10

            	
              Compliance with laws
      etc.  The Borrower shall procure that each Owner and the
      Approved Manager shall:

            

    

     

    
      	
              (a)

            	
              comply,
      or procure compliance with the ISM Code, the ISPS Code, all Environmental
      Laws and all other laws or regulations relating to the Ship owned by the
      relevant Owner, its ownership, operation and management or to the business
      of that Owner;

            

    

     

    
      	
              (b)

            	
              not
      employ the Ship nor allow her employment in any manner contrary to any law
      or regulation in any relevant jurisdiction including but not limited to
      the ISM Code and the ISPS Code; and

            

    

     

    
      	
              (c)

            	
              in
      the event of hostilities in any part of the world (whether war is declared
      or not), not cause or permit the Ship to enter or trade to any zone which
      is declared a war zone by any government or by the Ship’s war risks
      insurers unless the prior written consent of the Majority Lenders has been
      given and the Owner has (at its expense) effected any special, additional
      or modified insurance cover which the Majority Lenders may
      require.

            

    

     

    
      	
              14.11

            	
              Provision of
      information.  The Borrower shall procure that each Owner
      shall promptly provide the Security Trustee with any information which the
      Majority Lenders request regarding:

            

    

     

    
      	
              (a)

            	
              the
      Ship owned by it, her employment, position and
  engagements;

            

    

     

    
      	
              (b)

            	
              the
      Earnings and payments and amounts due to the master and crew of the Ship
      owned by it;

            

    

     

    
      
         

      

      
        42

        
          

        

      

      
         

      

    

    
      	
              (c)

            	
              any
      expenses incurred, or likely to be incurred, in connection with the
      operation, maintenance or repair of the Ship owned by it and any payments
      made in respect of that Ship;

            

    

     

    
      	
              (d)

            	
              any
      towages and salvages;

            

    

     

    
      	
              (e)

            	
              its
      compliance or the compliance of the Ship owned by it with the ISM Code and
      the ISPS Code,

            

    

     

    and, upon
the Security Trustee’s request, provide copies of any current charter relating
to the Ship and of any current charter guarantee, and copies of the ISM Code
Documentation and the ISPS Code Documentation.

     

    
      	
              14.12

            	
              Notification of certain
      events.  The Borrower shall procure that each Owner shall
      immediately notify the Security Trustee by letter
  of:

            

    

     

    
      	
              (a)

            	
              any
      casualty which is or is likely to be or to become a Major
      Casualty;

            

    

     

    
      	
              (b)

            	
              any
      occurrence as a result of which the Ship owned by it has become or is, by
      the passing of time or otherwise, likely to become a Total
      Loss;

            

    

     

    
      	
              (c)

            	
              any
      requirement or recommendation made by any insurer or classification
      society or by any competent authority which is not immediately complied
      with;

            

    

     

    
      	
              (d)

            	
              any
      arrest or detention of the Ship owned by it, any exercise or purported
      exercise of any lien on that Ship or her Earnings or any requisition of
      that Ship for hire;

            

    

     

    
      	
              (e)

            	
              any
      intended dry docking of the Ship;

            

    

     

    
      	
              (f)

            	
              any
      Environmental Claim made against that Owner or in connection with the Ship
      owned by it, or any Environmental
Incident;

            

    

     

    
      	
              (g)

            	
              any
      claim for breach of the ISM Code or the ISPS Code being made against the
      Owner, the Approved Manager or otherwise in connection with the Ship owned
      by it; or

            

    

     

    
      	
              (h)

            	
              any
      other matter, event or incident, actual or threatened, the effect of which
      will or could lead to the ISM Code or the ISPS Code not being complied
      with

            

    

     

    and the
Borrower shall keep the Security Trustee advised in writing on a regular basis
and in such detail as the Security Trustee shall require of the Owner’s, the
Approved Manager’s  or any other person’s response to any of those
events or matters.

     

    
      	
              14.13

            	
              Restrictions on chartering,
      appointment of managers etc.  The Borrower shall procure
      that no Owner shall:

            

    

     

    
      	
              (a)

            	
              change
      the terms on which the Ship is employed or the identity of the person by
      whom the Ship is employed;

            

    

     

    
      	
              (b)

            	
              enter
      into any charter in relation to the Ship under which more than 2 months’
      hire (or the equivalent) is payable in
advance;

            

    

     

    
      	
              (c)

            	
              charter
      the Ship otherwise than on bona fide arm’s length terms at the time when
      the Ship is fixed;

            

    

     

    
      	
              (d)

            	
              appoint
      a manager of the Ship other than the Approved Manager or agree to any
      alteration to the terms of the Approved Manager’s
    appointment;

            

    

     

    
      	
              (e)

            	
              de-activate
      or lay up the Ship; or

            

    

     

    
      
         

      

      
        43

        
          

        

      

      
         

      

    

    
      	
              (f)

            	
              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 $500,000 (or the
      equivalent in any other currency) unless that person has first given to
      the Security Trustee and in terms satisfactory to it a written undertaking
      not to exercise any lien on the Ship or her Earnings for the cost of such
      work or otherwise.

            

    

     

    
      	
              14.14

            	
              Notice of
      Mortgage.  The Borrower shall procure that each Owner
      shall keep the Mortgage applicable to the Ship owned by it registered
      against that Ship as a valid first priority or first preferred mortgage,
      carry on board that Ship a certified copy of the Mortgage and place and
      maintain in a conspicuous place in the navigation room and the Master’s
      cabin of that Ship a framed printed notice stating that that Ship is
      mortgaged by the relevant Owner to the Security
  Trustee.

            

    

     

    
      	
              14.15

            	
              Sharing of
      Earnings.  The Borrower shall procure that no Owner
      shall:

            

    

     

    
      	
              (a)

            	
              enter
      into any agreement or arrangement for the sharing of any
      Earnings;

            

    

     

    
      	
              (b)

            	
              enter
      into any agreement or arrangement for the postponement of any date on
      which any Earnings are due; the reduction of the amount of any Earnings or
      otherwise for the release or adverse alteration of any right of that Owner
      to any Earnings; or

            

    

     

    
      	
              (c)

            	
              enter
      into any agreement or arrangement for the release of, or adverse
      alteration to, any guarantee or Security Interest relating to any
      Earnings.

            

    

     

    
      	
              14.16

            	
              Charterparty
      Assignment.  If any Owner enters into any bareboat
      charter or any time charterparty or other contract of employment for a
      term which exceeds or is capable of exceeding 11 months in respect of its
      Ship that Owner shall, at the request of the Agent, execute, or, as the
      case may be, procure the execution in favour of the Security Trustee of a
      Charterparty Assignment in respect of that charter or other contract of
      employment, and shall deliver to the Agent such other documents equivalent
      to those referred to at paragraphs 3, 4 and 5 of Schedule 4, Part A as the
      Agent may require.

            

    

     

    
      	
              15

            	
              SECURITY
      COVER

            

    

     

    
      	
              15.1

            	
              Provision of additional
      security cover; prepayment of Loan.  The Borrower
      undertakes with each Creditor Party that if the Agent notifies the
      Borrower that:

            

    

     

    
      	
              (a)

            	
              the
      aggregate Market Value of the Ships subject to a Mortgage;
      plus

            

    

     

    
      	
              (b)

            	
              the
      net realisable value of any additional security previously provided under
      this Clause 15;

            

    

     

    is below
the Relevant Percentage. of the Loan, the Borrower will on the first Business
Day after the date on which the Agent’s notice is served prepay in accordance
with Clause 8 such part (at least) of the Loan as will eliminate the
shortfall.

     

    If the
Borrower satisfies the Majority Lenders that it is unable to make the prepayment
of the Loan required pursuant to this Clause 15.1, the Agent (acting upon the
instructions of the Majority Lenders) may (in its sole and absolute discretion)
agree instead to accept within 14 days after the date on which its notice is
served, additional security from the Borrower or a third party which, in the
opinion of the Majority Lenders, has a net realisable value at least equal to
the shortfall and which, if it consists of or includes a Security Interest,
covers such asset or assets and is documented in such terms as the Agent may,
with authorisation from the Majority Lenders, approve or require.

     

    In this
Clause 15.1, “Relevant
Percentage” means (i) on any Dividend Declaration Date, 145 per cent. and
(ii) at any other time, 140 per cent.

     

    
      
         

      

      
        44

        
          

        

      

      
         

      

    

               

    
      	 15.2	Meaning
      of additional security.  In Clause 15.1 “security” means a
      Security Interest over an asset or assets (including, without limitation a
      vessel (other than a Ship)) (whether securing the Borrower’s liabilities
      under the Finance Documents or a guarantee in respect of those
      liabilities), or a guarantee, letter of credit, cash deposit or other
      security acceptable to the Majority Lenders (in their sole and absolute
      discretion) in respect of the Borrower’s liabilities under the Finance
      Documents.

    

     

    
      	
              15.3

            	
              Requirement for additional
      documents.  The Borrower shall not be deemed to have
      complied with Clause 15.1 above until the Agent has received in connection
      with the additional security certified copies of documents of the kinds
      referred to in paragraphs 3, 4 and 5 of Schedule 5, Part A and such legal
      opinions in terms acceptable to the Majority Lenders from such lawyers as
      they may select.

            

    

     

    
      	
              15.4

            	
              Valuation of
      Ship.  The market value of a Ship at any date is that
      shown by taking the arithmetic mean of two valuations each
      prepared:

            

    

     

    
      	
              (a)

            	
              as
      at a date not more than 30 days
previously;

            

    

     

    
      	
              (b)

            	
              in
      the case of the first valuation, by an Approved Broker appointed by the
      Borrower and, in the case of the second valuation, by an Approved Broker
      appointed by the Agent;

            

    

     

    
      	
              (c)

            	
              with
      or without physical inspection of the Ship (as the Agent may
      require);

            

    

     

    
      	
              (d)

            	
              on
      the basis of a sale for prompt delivery for cash on normal arm’s length
      commercial terms as between a willing seller and a willing buyer, free of
      any existing charter or other contract of employment;
  and

            

    

     

    
      	
              (e)

            	
              after
      deducting the estimated amount of the usual and reasonable expenses which
      would be incurred in connection with the
sale,

            

    

     

    Provided that  if
the two valuations provided pursuant to this Clause 15.4 differ by more than 15
per cent., a third valuation shall be obtained from a third Approved Broker
appointed by the Agent and prepared on the basis described in paragraphs (a),
(c), (d) and (e) of this Clause 15.4 and the Market Value of the relevant Ship
which is the subject of the third valuation shall be the arithmetic mean of the
three valuations obtained pursuant to this Clause 15.4.

     

    
      	
              15.5

            	
              Value of additional
      security.  The net realisable value of any additional
      security which is provided under Clause 15.1 and which consists of a
      Security Interest over a vessel shall be that shown by a valuation
      complying with the requirements of Clause
15.4.

            

    

     

    
      	
              15.6

            	
              Valuations
      binding.  Any valuation under Clause 15.1(i), 15.4 or
      15.5 shall be binding and conclusive as regards the Borrower, as shall be
      any valuation which the Majority Lenders make of a security which does not
      consist of or include a Security
Interest.

            

    

     

    
      	
              15.7

            	
              Provision of
      information.  The Borrower shall promptly provide the
      Agent and any Approved Broker or expert acting under Clause 15.4 or 15.5
      with any information which the Agent or the Approved Broker or expert may
      request for the purposes of the valuation; and, if the Borrower fails to
      provide the information by the date specified in the request, the
      valuation may be made on any basis and assumptions which the Approved
      Broker or the Majority Lenders (or the expert appointed by them) consider
      prudent.

            

    

     

    
      	
              15.8

            	
              Payment of valuation
      expenses.  Without prejudice to the generality of the
      Borrower’s obligations under Clauses 20.2, 20.3 and 21.3, the Borrower
      shall, on demand, pay the Agent the amount of the fees and expenses of any
      Approved Broker instructed by the Agent under this
  Clause.

            

    

     

    
      
         

      

      
        45

        
          

        

      

      
         

      

    

    
      	
              16

            	
              PAYMENTS
      AND CALCULATIONS

            

    

     

    
      	
              16.1

            	
              Currency and method of
      payments.  All payments to be
  made:

            

    

     

    
      	
              (a)

            	
              by
      the Lenders to the Agent; or

            

    

     

    
      	
              (b)

            	
              by
      the Borrower to the Agent, the Security Trustee or any
    Lender

            

    

     

    under a
Finance Document shall be made to the Agent or to the Security Trustee, in the
case of an amount payable to it:

     

    
      	
               
      

            	
              (i)

            	
              by
      not later than 11.00 a.m. (New York City time) on the due
      date;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              in
      same day Dollar funds settled through the New York Clearing House
      Interbank Payments System (or in such other Dollar funds and/or settled in
      such other manner as the Agent shall specify as being customary at the
      time for the settlement of international transactions of the type
      contemplated by this Agreement);

            

    

     

    
      	
               
      

            	
              (iii)

            	
              to
      the account designated “Paragon financing account” with Commerzbank AG,
      Hamburg Branch (Account No. 620346700USD; SWIFT Code: COBADEFF208 via
      correspondent bank Commerzbank AG, New York COBAUS3XX) under reference
      “Paragon Shipping Inc. - US$250 million facility”), or to such other
      account with such other bank as the Agent may from time to time notify to
      the Borrower and the other Creditor Parties;
and

            

    

     

    
      	
               
      

            	
              (iv)

            	
              in
      the case of an amount payable to the Security Trustee, to such account as
      it may from time to time notify to the Borrower and the other Creditor
      Parties.

            

    

     

    
      	
              16.2

            	
              Payment on non-Business
      Day.  If any payment by the Borrower under a Finance
      Document would otherwise fall due on a day which is not a Business
      Day:

            

    

     

    
      	
              (a)

            	
              the
      due date shall be extended to the next succeeding Business Day;
      or

            

    

     

    
      	
              (b)

            	
              if
      the next succeeding Business Day falls in the next calendar month, the due
      date shall be brought forward to the immediately preceding Business
      Day

            

    

     

    and
interest shall be payable during any extension under paragraph (a) at the rate
payable on the original due date.

     

    
      	
              16.3

            	
              Basis for calculation of
      periodic payments.  All interest and commitment fee and
      any other payments under any Finance Document which are of an annual or
      periodic nature shall accrue from day to day and shall be calculated on
      the basis of the actual number of days elapsed and a 360 day
      year.

            

    

     

    
      	
              16.4

            	
              Distribution of payments to
      Creditor Parties.  Subject to Clauses 16.5, 16.6 and
      16.7:

            

    

     

    
      	
              (a)

            	
              any
      amount received by the Agent under a Finance Document for distribution or
      remittance to a Lender, the Swap Bank or the Security Trustee shall be
      made available by the Agent to that Lender or, as the case may be, the
      Swap Bank or the Security Trustee by payment, with funds having the same
      value as the funds received, to such account as the Lender, the Swap Bank
      or the Security Trustee may have notified to the Agent not less than 5
      Business Days previously; and

            

    

     

    
      	
              (b)

            	
              amounts
      to be applied in satisfying amounts of a particular category which are due
      to the Lenders or the Swap Bank generally shall be distributed by the
      Agent to each Lender or the Swap Bank pro rata to the amount in that
      category which is due to it.

            

    

     

    
      
         

      

      
        46

        
          

        

      

      
         

      

    

    
      	
              16.5

            	
              Permitted deductions by
      Agent.  Notwithstanding any other provision of this
      Agreement or any other Finance Document, the Agent may, before making an
      amount available to a Lender or the Swap Bank, deduct and withhold from
      that amount any sum which is then due and payable to the Agent from that
      Lender or the Swap Bank under any Finance Document or any sum which the
      Agent is then entitled under any Finance Document to require that Lender
      or the Swap Bank to pay on demand.

            

    

     

    
      	
              16.6

            	
              Agent only obliged to pay when
      monies received.  Notwithstanding any other provision of
      this Agreement or any other Finance Document, the Agent shall not be
      obliged to make available to the Borrower or any Lender or the Swap Bank
      any sum which the Agent is expecting to receive for remittance or
      distribution to the Borrower or that Lender or the Swap Bank until the
      Agent has satisfied itself that it has received that
  sum.

            

    

     

    
      	
              16.7

            	
              Refund to Agent of monies not
      received.  If and to the extent that the Agent makes
      available a sum to the Borrower or a Lender or the Swap Bank, without
      first having received that sum, the Borrower or (as the case may be) the
      Lender or the Swap Bank concerned shall, on
  demand:

            

    

     

    
      	
              (a)

            	
              refund
      the sum in full to the Agent; and

            

    

     

    
      	
              (b)

            	
              pay
      to the Agent the amount (as certified by the Agent) which will indemnify
      the Agent against any funding or other loss, liability or expense incurred
      by the Agent as a result of making the sum available before receiving
      it.

            

    

     

    
      	
              16.8

            	
              Agent may assume
      receipt.  Clause 16.7 shall not affect any claim which
      the Agent has under the law of restitution, and applies irrespective of
      whether the Agent had any form of notice that it had not received the sum
      which it made available.

            

    

     

    
      	
              16.9

            	
              Creditor Party
      accounts.  Each Creditor Party shall maintain accounts
      showing the amounts owing to it by the Borrower and each Security Party
      under the Finance Documents and all payments in respect of those amounts
      made by the Borrower and any Security
Party.

            

    

     

    
      	
              16.10

            	
              Agent’s memorandum
      account.  The Agent shall maintain a memorandum account
      showing the amounts advanced by the Lenders and all other sums owing to
      the Agent, the Security Trustee and each Lender from the Borrower and each
      Security Party under the Finance Documents and all payments in respect of
      those amounts made by the Borrower and any Security
  Party.

            

    

     

    
      	
              16.11

            	
              Accounts prima facie
      evidence.  If any accounts maintained under Clauses 16.9
      and 16.10 show an amount to be owing by the Borrower or a Security Party
      to a Creditor Party, those accounts shall, absent manifest error, be prima
      facie evidence that that amount is owing to that Creditor
      Party.

            

    

     

    
      	
              17

            	
              APPLICATION
      OF RECEIPTS

            

    

     

    
      	
              17.1

            	
              Normal order of
      application.  Except as any Finance Document may
      otherwise provide, any sums which are received or recovered by any
      Creditor Party under or by virtue of any Finance Document shall be
      applied:

            

    

     

    
      	
              (a)

            	
              FIRST:
      in or towards satisfaction of any amounts then due and payable under the
      Finance Documents and the Master Agreement in the following order and
      proportions:

            

    

     

    
      	
               
      

            	
              (i)

            	
              first,
      in or towards satisfaction pro rata of all amounts then due and payable to
      the Creditor Parties under the Finance Documents other than those amounts
      referred to at paragraphs (ii) and (iii) (including, but without
      limitation, all amounts payable by the Borrower under Clauses 20, 21 and
      22 of this Agreement or by the Borrower
      or any Security Party under any corresponding or similar provision in any
      other Finance Document or in the Master
  Agreement);

            

    

     

    
      
         

      

      
        47

        
          

        

      

      
         

      

    

    
    

     

    
      	
               
      

            	
              (ii)

            	
              secondly,
      in or towards satisfaction pro rata of any and all amounts of interest or
      default interest payable to the Creditor Parties under the Finance
      Documents  and the Master Agreement (and, for this purpose, the
      expression “interest” shall include
      any net amount which the Borrower shall have become liable to pay or
      deliver under section 2(e) (Obligations) of the Master Agreement but shall
      have failed to pay or deliver to the relevant Swap Bank at the time of
      application or distribution under this Clause 17);
  and

            

    

     

    
      	
               
      

            	
              (iii)

            	
              thirdly,
      in or towards satisfaction pro rata of the Loan and the Swap Exposure of
      the Swap Bank (in the case of the latter, calculated as at the actual
      Early Termination Date applying to each particular Designated Transaction,
      or if no such Early Termination Date shall have occurred, calculated as if
      an Early Termination Date occurred on the date of application or
      distribution hereunder);

            

    

     

    
      	
              (b)

            	
              SECONDLY:
      in retention of an amount equal to any amount not then due and payable
      under any Finance Document or the Master Agreement but which the Agent, by
      notice to the Borrower, the Security Parties and the other Creditor
      Parties, states in its opinion will or may become due and payable in the
      future and, upon those amounts becoming due and payable, in or towards
      satisfaction of them in accordance with the provisions of Clause 17.1(a);
      and

            

    

     

    
      	
              (c)

            	
              THIRDLY:
      any surplus shall be paid to the Borrower or to any other person appearing
      to be entitled to it.

            

    

     

    
      	
              17.2

            	
              Variation of order of
      application.  The Agent may, with the authorisation of
      the Majority Lenders and the Swap Bank by notice to the Borrower, the
      Security Parties and the other Creditor Parties provide for a different
      manner of application from that set out in Clause 17.1 either as regards a
      specified sum or sums or as regards sums in a specified category or
      categories.

            

    

     

    
      	
              17.3

            	
              Notice of variation of order of
      application.  The Agent may give notices under Clause
      17.2 from time to time; and such a notice may be stated to apply not only
      to sums which may be received or recovered in the future, but also to any
      sum which has been received or recovered on or after the third Business
      Day before the date on which the notice is
  served.

            

    

     

    
      	
              17.4

            	
              Appropriation rights
      overridden.  This Clause 17 and any notice which the
      Agent gives under Clause 17.3 shall override any right of appropriation
      possessed, and any appropriation made, by the Borrower or any Security
      Party.

            

    

     

    
      	
              18

            	
              APPLICATION
      OF EARNINGS

            

    

     

    
      	
              18.1

            	
              Payment of
      Earnings.  The Borrower undertakes with each Creditor
      Party to ensure that throughout the Security Period (subject only to
      provisions of the relevant General Assignment), all the Earnings of each
      Ship are paid to the Earnings Account for that
  Ship.

            

    

     

    
      	
              18.2

            	
              Transfers to Retention
      Account.  The Borrower undertakes with each Creditor
      Party to ensure that:

            

    

     

    
      	
              (a)

            	
              no
      later than 3 days after a Relevant Dividend Declaration Date, there shall
      be transferred to the Retention Account out of the aggregate Earnings
      received in the Earnings Accounts, the repayment instalment falling due
      under Clause 8.1 at that time; and

            

    

     

    
      	
              (b)

            	
              in
      each calendar month of the Security Period commencing on the date falling
      1 month after the first Drawdown Date and on the same day in each
      subsequent month, there is

            

    

     

    
      
         

      

      
        48

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              transferred
      to the Retention Account out of the aggregate Earnings received in the
      Earnings Accounts during the preceding calendar month the relevant
      fraction of the amount of interest on the Loan which is payable on the
      next due date for payment of interest for the Loan under this
      Agreement.

            

    

     

    The
“relevant fraction” in
paragraph (b) above, is a fraction of which the numerator is 1 and the
denominator the number of months comprised in the then current Interest Period
applicable to the Loan (or, if the current Interest Period ends after the next
date for payment of interest under this Agreement, the number of months from the
later of the commencement of the current Interest Period or the last due date
for payment of interest to the next date for payment of interest under this
Agreement).

     

    
      	
              18.3

            	
              Shortfall in
      Earnings.  If the aggregate Earnings received are
      insufficient in any month for the required amount to be transferred to the
      Retention Account under Clause 18.2, the Borrower shall make up the amount
      of the insufficiency on demand from the Agent; but, without thereby
      prejudicing the Agent’s right to make such demand at any time, the Agent
      may, if so authorised by the Majority Lenders, permit the Borrower to make
      up all or part of the insufficiency by increasing the amount of any
      transfer under Clause 18.2 from the Earnings received in the next or
      subsequent months.

            

    

     

    
      	
              18.4

            	
              Application of
      retentions.  Until an Event of Default occurs, the Agent
      shall on each due date for the payment of interest under this Agreement
      distribute to the Lenders in accordance with Clause 16.4 so much of the
      then balance on the Retention Account as
equals:

            

    

     

    
      	
              (a)

            	
              any
      repayment instalment due in accordance with Clause 8.1 on that interest
      payment date; and

            

    

     

    
      	
              (b)

            	
              the
      amount of interest payable on that interest payment
  date

            

    

     

    
      	
               
      

            	
              in
      discharge of the Borrower’s liability for that repayment instalment or
      that interest.

            

    

     

    
      	
              18.5

            	
              Interest accrued on Retention
      Account.  Any credit balance on the Retention Account
      shall bear interest at the rate from time to time offered by the Agent to
      its customers for Dollar deposits of similar amounts and for periods
      similar to those for which such balances appear to the Agent likely to
      remain on the Retention Account.

            

    

     

    
      	
              18.6

            	
              Release of accrued
      interest.  Interest accruing under Clause 18.5 shall be
      released to the Borrower on each interest payment date unless an Event of
      Default or a Potential Event of Default has occurred or the then credit
      balance on the Retention Account is less than what would have been the
      balance had the full amount required by Clause 18.2 (and Clause 18.3, if
      applicable) been transferred in that and each previous
    month.

            

    

     

    
      	
              18.7

            	
              Location of
      accounts.  The Borrower shall
  promptly:

            

    

     

    
      	
              (a)

            	
              comply,
      and ensure that the Owners comply, with any requirement of the Agent as to
      the location or re-location of any Earnings Account or the Retention
      Account;

            

    

     

    
      	
              (b)

            	
              execute,
      and ensure that the Owners execute, any documents which the Agent
      specifies to create or maintain in favour of the Security Trustee a
      Security Interest over (and/or rights of set-off, consolidation or other
      rights in relation to) the Earnings Accounts (or any of them) and the
      Retention Account.

            

    

     

    
      	
              18.8

            	
              Debits for expenses
      etc.  The Agent shall be authorised by the Borrower (but
      not obliged) from time to time to debit the Earnings Account without prior
      notice in order to discharge any amount due and payable under Clause 20 or
      21 to a Creditor Party or payment of which any Creditor Party has become
      entitled to demand under Clause 20 or
21.

            

    

     

    
      
         

      

      
        49

        
          

        

      

      
         

      

    

    
      	
              18.9

            	
              Borrower’ obligations
      unaffected.  The provisions of this Clause 18 do not
      affect:

            

    

     

    
      	
              (a)

            	
              the
      liability of the Borrower to make payments of principal and interest on
      the due dates; or

            

    

     

    
      	
              (b)

            	
              any
      other liability or obligation of the Borrower or any Security Party under
      any Finance Document.

            

    

     

    
      	
              18.10

            	
              Epic
      Account.  The Owners may from time to time transfer
      credit balances on the Earnings Accounts to the Epic Account subject to
      the Borrower being in compliance with its obligations under this Agreement
      (including, without limitation, Clause
18.2).

            

    

     

    
      	
              19

            	
              EVENTS
      OF DEFAULT

            

    

     

    
      	
              19.1

            	
              Events of
      Default.  An Event of Default occurs
  if:

            

    

     

    
      	
              (a)

            	
              the
      Borrower or any Security Party fails to pay when due or (if so payable) on
      demand any sum payable under a Finance Document or under any document
      relating to a Finance Document; or

            

    

     

    
      	
              (b)

            	
              any
      breach occurs of Clause 9.2, 11.2, 11.3, 11.4, 11.6, 11.7, 12.2, 12.3,
      12.4, 12.5, 12.8, 12.9, 13.2, 15.1 or 18.1;
or

            

    

     

    
      	
              (c)

            	
              any
      breach by the Borrower or any Security Party occurs of any provision of a
      Finance Document (other than a breach covered by paragraphs (a) or (b)
      above) if, in the opinion of the Majority Lenders, such default is capable
      of remedy, and such default continues unremedied 10 days after written
      notice from the Agent requesting action to remedy the same;
    or

            

    

     

    
      	
              (d)

            	
              (subject
      to any applicable grace period specified in the Finance Document) any
      breach by the Borrower or any Security Party occurs of any provision of a
      Finance Document (other than a breach covered by paragraphs (a), (b) or
      (c) above); or

            

    

     

    
      	
              (e)

            	
              any
      representation, warranty or statement made by, or by an officer of, the
      Borrower or a Security Party in a Finance Document or in a Drawdown Notice
      or any other notice or document relating to a Finance Document is untrue
      or misleading when it is made; or

            

    

     

    
      	
              (f)

            	
              any
      of the following occurs in relation to any Financial Indebtedness of a
      Relevant Person:

            

    

     

    
      	
               
      

            	
              (i)

            	
              any
      Financial Indebtedness of a Relevant Person is not paid when due or, if so
      payable, on demand; or

            

    

     

    
      	
               
      

            	
              (ii)

            	
              any
      Financial Indebtedness of a Relevant Person becomes due and payable or
      capable of being declared due and payable prior to its stated maturity
      date as a consequence of any event of default;
  or

            

    

     

    
      	
               
      

            	
              (iii)

            	
              a
      lease, hire purchase agreement or charter creating any Financial
      Indebtedness of a Relevant Person is terminated by the lessor or owner or
      becomes capable of being terminated as a consequence of any termination
      event; or

            

    

     

    
      	
               
      

            	
              (iv)

            	
              any
      overdraft, loan, note issuance, acceptance credit, letter of credit,
      guarantee, foreign exchange or other facility, or any swap or other
      derivative contract or transaction, relating to any Financial Indebtedness
      of a Relevant Person ceases to be available or becomes capable of being
      terminated as a result of any event of default, or cash cover is required,
      or becomes capable of being required, in respect of such a facility as a
      result of any event of default; or

            

    

     

    
      
         

      

      
        50

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              (v)

            	
              any
      Security Interest securing any Financial Indebtedness of a Relevant Person
      becomes enforceable; or

            

    

     

    
      	
              (g)

            	
              any
      of the following occurs in relation to a Relevant
  Person:

            

    

     

    
      	
               
      

            	
              (i)

            	
              a
      Relevant Person becomes, in the opinion of the Majority Lenders, unable to
      pay its debts as they fall due; or

            

    

     

    
      	
               
      

            	
              (ii)

            	
              any
      assets of a Relevant Person are subject to any form of execution,
      attachment, arrest, sequestration or distress in respect of a sum of, or
      sums aggregating, $100,000 or more or the equivalent in another currency;
      or

            

    

     

    
      	
               
      

            	
              (iii)

            	
              any
      administrative or other receiver is appointed over any asset of a Relevant
      Person; or

            

    

     

    
      	
               
      

            	
              (iv)

            	
              a
      Relevant Person makes any formal declaration of bankruptcy or any formal
      statement to the effect that it is insolvent or likely to become
      insolvent, or a winding up or administration order is made in relation to
      a Relevant Person, or the members or directors of a Relevant Person pass a
      resolution to the effect that it should be wound up, placed in
      administration or cease to carry on business, save that this paragraph
      does not apply to a fully solvent winding up of a Relevant Person other
      than the Borrower which is, or is to be, effected for the purposes of an
      amalgamation or reconstruction previously approved by the Majority Lenders
      and effected not later than 3 months after the commencement of the winding
      up; or

            

    

     

    
      	
               
      

            	
              (v)

            	
              a
      petition is presented in any Pertinent Jurisdiction for the winding up or
      administration, or the appointment of a provisional liquidator, of a
      Relevant Person unless the petition is being contested in good faith and
      on substantial grounds and is dismissed or withdrawn within 30 days of the
      presentation of the petition; or

            

    

     

    
      	
               
      

            	
              (vi)

            	
              a
      Relevant Person petitions a court, or presents any proposal for, any form
      of judicial or non-judicial suspension or deferral of payments,
      reorganisation of its debt (or certain of its debt) or arrangement with
      all or a substantial proportion (by number or value) of its creditors or
      of any class of them or any such suspension or deferral of payments,
      reorganisation or arrangement is effected by court order, contract or
      otherwise; or

            

    

     

    
      	
               
      

            	
              (vii)

            	
              any
      meeting of the members or directors of a Relevant Person is summoned for
      the purpose of considering a resolution or proposal to authorise or take
      any action of a type described in paragraphs (iii), (iv), (v) or (vi)
      above; or

            

    

     

    
      	
              (viii)

            	
              in
      a Pertinent Jurisdiction other than England, any event occurs or any
      procedure is commenced which, in the opinion of the Majority Lenders, is
      similar to any of the foregoing; or

            

    

     

    
      	
              (h)

            	
              the
      Borrower or any Security Party ceases or suspends carrying on or changes
      the nature of its business or a part of its business which, in the opinion
      of the Majority Lenders, is material in the context of this Agreement;
      or

            

    

     

    
      	
              (i)

            	
              it
      becomes unlawful in any Pertinent Jurisdiction or
    impossible:

            

    

     

    
      	
               
      

            	
              (i)

            	
              for
      the Borrower or any Security Party to discharge any liability under a
      Finance Document or to comply with any other obligation which the Majority
      Lenders consider material under a Finance Document;
  or

            

    

     

    
      
         

      

      
        51

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              (ii)

            	
              for
      the Agent, the Security Trustee or the Lenders to exercise or enforce any
      right under, or to enforce any Security Interest created by, a Finance
      Document; or

            

    

     

    
      	
              (j)

            	
              any
      consent necessary to enable any Owner to own, operate or charter a Ship or
      to enable the Borrower or any Security Party to comply with any provision
      which the Majority Lenders consider material of a Finance Document is not
      granted, expires without being renewed, is revoked or becomes liable to
      revocation or any condition of such a consent is not fulfilled;
      or

            

    

     

    
      	
              (k)

            	
              without
      the prior written consent of the Majority Lenders, a change has occurred
      or probably has occurred after the date of this Agreement in the ownership
      of any of the shares in any Owner or in the ultimate control of the voting
      rights attaching to any of those shares;
or

            

    

     

    
      	
              (l)

            	
              any
      provision which the Majority Lenders consider material of a Finance
      Document proves to have been or becomes invalid or unenforceable, or a
      Security Interest created by a Finance Document proves to have been or
      becomes invalid or unenforceable or such a Security Interest proves to
      have ranked after, or loses its priority to, another Security Interest or
      any other third party claim or interest;
or

            

    

     

    
      	
              (m)

            	
              the
      security constituted by a Finance Document is in any way imperilled or in
      jeopardy;

            

    

     

    
      	
              (n)

            	
              any
      other event occurs or any other circumstances arise or develop including,
      without limitation:

            

    

     

    
      	
               
      

            	
              (i)

            	
              a
      change in the financial position, state of affairs or prospects of any
      Security Party; or

            

    

     

    
      	
               
      

            	
              (ii)

            	
              any
      accident or other event involving any Ship or another vessel owned,
      chartered or operated by a Relevant
Person;

            

    

     

    in the
light of which the Majority Lenders consider that there is a significant risk
that the Borrower or any Security Party is, or will later become, unable to
discharge its liabilities under the Finance Documents as they fall due;
or

     

    
      	
              (o)

            	
              the
      Master Agreement is terminated, cancelled, suspended, rescinded or revoked
      or otherwise ceases to remain in full force and effect for any reason
      except with the consent of the Agent, acting with the authorisation of the
      Majority Lenders.

            

    

     

    
      	
              19.2

            	
              Actions following an Event of
      Default.  On, or at any time after, the occurrence of an
      Event of Default:

            

    

     

    
      	
              (a)

            	
              the
      Agent may, and if so instructed by the Majority Lenders, the Agent
      shall:

            

    

     

    
      	
               
      

            	
              (i)

            	
              serve
      on the Borrower a notice stating that the Commitments and all other
      obligations of each Lender to the Borrower under this Agreement are
      terminated; and/or

            

    

     

    
      	
               
      

            	
              (ii)

            	
              serve
      on the Borrower a notice stating that the Loan, all accrued interest and
      all other amounts accrued or owing under this Agreement are immediately
      due and payable or are due and payable on demand;
  and/or

            

    

     

    
      	
               
      

            	
              (iii)

            	
              take
      any other action which, as a result of the Event of Default or any notice
      served under paragraph (i) or (ii) above, the Agent and/or the Lenders are
      entitled to take under any Finance Document or any applicable law;
      and/or

            

    

     

    
      	
              (b)

            	
              the
      Security Trustee may, and if so instructed by the Agent, acting with the
      authorisation of the Majority Lenders, the Security Trustee shall take any
      action which, as a result of

            

    

     

    
      
         

      

      
        52

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              the
      Event of Default or any notice served under paragraph (a) (i) or (ii)
      above, the Security Trustee, the Agent and/or the Lenders are entitled to
      take under any Finance Document or any applicable
  law.

            

    

     

    
      	
              19.3

            	
              Termination of
      Commitments.  On the service of a notice under paragraph
      (a)(i) of Clause 19.2, the Commitments and all other obligations of each
      Lender to the Borrower under this Agreement shall
    terminate.

            

    

     

    
      	
              19.4

            	
              Acceleration of
      Loan.  On the service of a notice under paragraph (a)(ii)
      of Clause 19.2, the Loan, all accrued interest and all other amounts
      accrued or owing from the Borrower or any Security Party under this
      Agreement and every other Finance Document shall become immediately due
      and payable or, as the case may be, payable on
  demand.

            

    

     

    
      	
              19.5

            	
              Multiple notices; action
      without notice.  The Agent may serve notices under
      paragraphs (a) (i) and (ii) of Clause 19.2 simultaneously or on different
      dates and it and/or the Security Trustee may take any action referred to
      in that Clause if no such notice is served or simultaneously with or at
      any time after the service of both or either of such
    notices.

            

    

     

    
      	
              19.6

            	
              Notification of Creditor
      Parties and Security Parties.  The Agent shall send to
      each Lender, the Security Trustee and each Security Party a copy of the
      text of any notice which the Agent serves on the Borrower under Clause
      19.2; but the notice shall become effective when it is served on the
      Borrower, and no failure or delay by the Agent to send a copy of the text
      of the notice to any other person shall invalidate the notice or provide
      the Borrower or any Security Party with any form of claim or
      defence.

            

    

     

    
      	
              19.7

            	
              Lender’s rights
      unimpaired.  Nothing in this Clause shall be taken to
      impair or restrict the exercise of any right given to individual Lenders
      under a Finance Document or the general law; and, in particular, this
      Clause is without prejudice to Clause
3.1.

            

    

     

    
      	
              19.8

            	
              Exclusion of Creditor Party
      Liability.  No Creditor Party, and no receiver or manager
      appointed by the Security Trustee, shall have any liability to the
      Borrower or a Security Party:

            

    

     

    
      	
              (a)

            	
              for
      any loss caused by an exercise of rights under, or enforcement of a
      Security Interest created by, a Finance Document or by any failure or
      delay to exercise such a right or to enforce such a Security Interest;
      or

            

    

     

    
      	
              (b)

            	
              as
      mortgagee in possession or otherwise, for any income or principal amount
      which might have been produced by or realised from any asset comprised in
      such a Security Interest or for any reduction (however caused) in the
      value of such an asset;

            

    

     

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

     

    
      	
              19.9

            	
              Relevant
      Persons.  In this Clause 19 “a Relevant Person” means
      the Borrower, a Security Party and any other member of the Group; but
      excluding any company which is dormant and the value of whose gross assets
      is $50,000 or less.

            

    

     

    
      	
              19.10

            	
              Interpretation.  In
      Clause 19.1(f) references to an event of default or a termination event
      include any event, howsoever described, which is similar to an event of
      default in a facility agreement or a termination event in a finance lease;
      and in Clause 19.1(g) “petition” includes an
  application.

            

    

     

    
      	
              19.11

            	
              Position of the Swap
      Bank.  Neither the Agent nor the Security Trustee shall
      be obliged, in connection with any action taken or proposed to be taken
      under or pursuant to the

            

    

     

    
      
         

      

      
        53

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              foregoing
      provisions of this Clause 19, to have any regard to the requirements of
      the Swap Bank except to the extent that the Swap Bank is also a
      Lender.

            

    

     

    
      	
              20

            	
              FEES
      AND EXPENSES

            

    

     

    
      	
              20.1

            	
              Facility and commitment
      fees.  The Borrower shall pay to the
    Agent:

            

    

     

    
      	
              (a)

            	
              a
      commitment fee for distribution among the Lenders pro rata to their
      Commitments at the rate of 0.25 per cent. per annum on the amount of the
      Total Commitments less the amount of the Loan for the period from (and
      including) the date of this Agreement up to and including the earlier of
      (i) the Drawdown Date in respect of the final Advance and (ii) the last
      day of the Availability Period, such fee to be paid quarterly in arrears
      and on the last day of such period;
and

            

    

     

    
      	
              (b)

            	
              such
      other facility fees as are referred to in the Fee Letter, such fees being
      payable at the times and in the manner referred to in the Fee
      Letter.

            

    

     

    
      	
              20.2

            	
              Costs of negotiation,
      preparation etc.  The Borrower shall pay to the Agent on
      its demand the amount of all expenses incurred by the Agent or the
      Security Trustee in connection with the negotiation, preparation,
      execution or registration of any Finance Document or any related document
      or with any transaction contemplated by a Finance Document or a related
      document (including, without limitation, any legal fees (which shall
      include, for the avoidance of doubt, the fees incurred by the Agent with
      respect to the legal opinions referred to in Schedule 4) or out of pocket
      expenses and printing expenses).

            

    

     

    
      	
              20.3

            	
              Costs of variations,
      amendments, enforcement etc.  The Borrower shall pay to
      the Agent, on the Agent’s demand, the amount of all expenses (including,
      without limitation, any legal fees or expenses) incurred by a Lender in
      connection with:

            

    

     

    
      	
              (a)

            	
              any
      amendment or supplement to a Finance Document, or any proposal for such an
      amendment to be made;

            

    

     

    
      	
              (b)

            	
              any
      consent or waiver by the Lenders, the Majority Lenders or the Lender
      concerned under or in connection with a Finance Document, or any request
      for such a consent or waiver;

            

    

     

    
      	
              (c)

            	
              the
      valuation of any security provided or offered under Clause 15 or any other
      matter relating to such security;

            

    

     

    
      	
              (d)

            	
              such
      circumstances where the Agent, in its absolute opinion, considers that
      there has been a material change to the insurances in respect of a Ship,
      the review of the insurances of that Ship pursuant to Clause
      13.18;

            

    

     

    
      	
              (e)

            	
              any
      step taken by the Lender concerned or the Swap Bank concerned with a view
      to the protection, exercise or enforcement of any right or Security
      Interest created by a Finance Document or for any similar
      purpose.

            

    

     

    There
shall be recoverable under paragraph (e) the full amount of all legal expenses,
whether or not such as would be allowed under rules of court or any taxation or
other procedure carried out under such rules.

     

    
      	
              20.4

            	
              Documentary
      taxes.  The Borrower shall promptly pay any tax payable
      on or by reference to any Finance Document, and shall, on the Agent’s
      demand, fully indemnify each Creditor Party against any liabilities and
      expenses resulting from any failure or delay by the Borrower to pay such a
      tax.

            

    

     

    
      
         

      

      
        54

        
          

        

      

      
         

      

    

    
      	
              20.5

            	
              Certification of
      amounts.  A notice which is signed by two officers of a
      Creditor Party, which states that a specified amount, or aggregate amount,
      is due to that Creditor Party under this Clause 20 and which indicates
      (without necessarily specifying a detailed breakdown) the matters in
      respect of which the amount, or aggregate amount, is due shall be prima
      facie evidence that the amount, or aggregate amount, is
    due.

            

    

     

    
      	
              21

            	
              INDEMNITIES

            

    

     

    
      	
              21.1

            	
              Indemnities regarding borrowing
      and repayment of Loan.  The Borrower shall fully
      indemnify the Agent and each Lender on the Agent’s demand and the Security
      Trustee on its demand in respect of all expenses, liabilities and losses
      which are incurred by that Creditor Party, or which that Creditor Party
      reasonably and with due diligence estimates that it will incur, as a
      result of or in connection with:

            

    

     

    
      	
              (a)

            	
              an
      Advance not being borrowed on the date specified in the Drawdown Notice
      for that Advance for any reason other than a default by the Lender
      claiming the indemnity;

            

    

     

    
      	
              (b)

            	
              the
      receipt or recovery of all or any part of the Loan or an overdue sum
      otherwise than on the last day of an Interest Period or other relevant
      period;

            

    

     

    
      	
              (c)

            	
              any
      failure (for whatever reason) by the Borrower to make payment of any
      amount due under a Finance Document on the due date or, if so payable, on
      demand (after giving credit for any default interest paid by the Borrower
      on the amount concerned under Clause
7);

            

    

     

    
      	
              (d)

            	
              the
      occurrence and/or continuance of an Event of Default or a Potential Event
      of Default and/or the acceleration of repayment of the Loan under Clause
      19;

            

    

     

    and in
respect of any tax (other than tax on its overall net income) for which a
Creditor Party is liable in connection with any amount paid or payable to that
Creditor Party (whether for its own account or otherwise) under any Finance
Document.

     

    
      	
              21.2

            	
              Breakage
      costs.  Without limiting its generality, Clause 21.1
      covers any liability, expense or loss, including a loss of a prospective
      profit, incurred by a Lender:

            

    

     

    
      	
              (a)

            	
              in
      liquidating or employing deposits from third parties acquired or arranged
      to fund or maintain all or any part of its Contribution and/or any overdue
      amount (or an aggregate amount which includes its Contribution or any
      overdue amount); and

            

    

     

    
      	
              (b)

            	
              in
      terminating, or otherwise in connection with, any interest and/or currency
      swap or any other transaction entered into (whether with another legal
      entity or with another office or department of the Lender concerned) to
      hedge any exposure arising under this Agreement or that part which the
      Lender concerned determines is fairly attributable to this Agreement of
      the amount of the liabilities, expenses or losses (including losses of
      prospective profits) incurred by it in terminating, or otherwise in
      connection with, a number of transactions of which this Agreement is
      one.

            

    

     

    
      	
              21.3

            	
              Miscellaneous
      indemnities.  The Borrower shall fully indemnify each
      Creditor Party severally on their respective demands in respect of all
      claims, demands, proceedings, liabilities, taxes, losses and expenses of
      every kind (“liability
      items”) which may be made or brought against, or incurred by, the
      relevant Creditor Party, in any country, in relation
  to:

            

    

     

    
      	
              (a)

            	
              any
      action taken, or omitted or neglected to be taken, under or in connection
      with any Finance Document by the Agent, the Security Trustee or any other
      Creditor Party or by any receiver appointed under a Finance
      Document;

            

    

     

    
      
         

      

      
        55

        
          

        

      

      
         

      

    

    
      	
              (b)

            	
              any
      other event, matter or question which occurs or arises at any time during
      the Security Period and which has any connection with, or any bearing on,
      any Finance Document, any payment or other transaction relating to a
      Finance Document or any asset covered (or previously covered) by a
      Security Interest created (or intended to be created) by a Finance
      Document;

            

    

     

    other
than liability items which are shown to have been caused by the gross negligence
or the wilful misconduct of the relevant Creditor Party’s own officers or
employees.

     

    
      	
              21.4

            	
              Extension of indemnities;
      environmental indemnity.  Without prejudice to its
      generality, Clause 21.3 covers:

            

    

     

    
      	
              (a)

            	
              any
      matter which would be covered by Clause 21.3 if any of the references in
      that Clause to a Lender were a reference to the Agent or (as the case may
      be) to the Security Trustee; and

            

    

     

    
      	
              (b)

            	
              any
      liability items which arise, or are asserted, under or in connection with
      any law relating to safety at sea, pollution, the protection of the
      environment, the ISM Code or the ISPS
Code.

            

    

     

    
      	
              21.5

            	
              Currency
      indemnity.  If any sum due from the Borrower or any
      Security Party to a Creditor Party under a Finance Document or under any
      order or judgment relating to a Finance Document has to be converted from
      the currency in which the Finance Document provided for the sum to be paid
      (the “Contractual
      Currency”) into another currency (the “Payment Currency”) for
      the purpose of:

            

    

     

    
      	
              (a)

            	
              making
      or lodging any claim or proof against the Borrower or any Security Party,
      whether in its liquidation, any arrangement involving it or otherwise;
      or

            

    

     

    
      	
              (b)

            	
              obtaining
      an order or judgment from any court or other tribunal;
  or

            

    

     

    
      	
              (c)

            	
              enforcing
      any such order or judgment;

            

    

     

    the
Borrower shall indemnify the Creditor Party concerned against the loss arising
when the amount of the payment actually received by that Creditor Party is
converted at the available rate of exchange into the Contractual
Currency.

     

    In this
Clause 21.5, the “available
rate of exchange” means the rate at which the Creditor Party concerned is
able at the opening of business (Hamburg time) on the Business Day after it
receives the sum concerned to purchase the Contractual Currency with the Payment
Currency.

     

    This
Clause 21.5 creates a separate liability of the Borrower which is distinct from
its other liabilities under the Finance Documents and which shall not be merged
in any judgment or order relating to those other liabilities.

     

    
      	
              21.6

            	
              Certification of
      amounts.  A notice which is signed by 2 officers of a
      Creditor Party, which states that a specified amount, or aggregate amount,
      is due to that Creditor Party under this Clause 21 and which indicates
      (without necessarily specifying a detailed breakdown) the matters in
      respect of which the amount, or aggregate amount, is due shall be prima
      facie evidence that the amount, or aggregate amount, is
    due.

            

    

     

    
      	
              21.7

            	
              Sums deemed due to a
      Lender.  For the purposes of this Clause 21, a sum
      payable by the Borrower to the Agent or the Security Trustee for
      distribution to a Lender shall be treated as a sum due to that
      Lender.

            

    

     

    
      	
              21.8

            	
              Application to Master
      Agreement.  For the avoidance of doubt, Clause 21.5 does
      not apply in respect of sums due from the Borrower to the Swap Bank under
      or in connection

            

    

     

    
      
         

      

      
        56

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              with
      the Master Agreement as to which sums the provisions of section 8
      (Contractual Currency) of the Master Agreement shall
  apply.

            

    

     

    
      	
              22

            	
              NO
      SET-OFF OR TAX DEDUCTION

            

    

     

    
      	
              22.1

            	
              No
      deductions.  All amounts due from the Borrower under a
      Finance Document shall be paid:

            

    

     

    
      	
              (a)

            	
              without
      any form of set-off, cross-claim or condition;
  and

            

    

     

    
      	
              (b)

            	
              free
      and clear of any tax deduction except a tax deduction which the Borrower
      is required by law to make.

            

    

     

    
      	
              22.2

            	
              Grossing-up for
      taxes.  If the Borrower is required by law to make a tax
      deduction from any payment:

            

    

     

    
      	
              (a)

            	
              the
      Borrower shall notify the Agent as soon as it becomes aware of the
      requirement;

            

    

     

    
      	
              (b)

            	
              the
      Borrower shall pay the tax deducted to the appropriate taxation authority
      promptly, and in any event before any fine or penalty
    arises;

            

    

     

    
      	
              (c)

            	
              the
      amount due in respect of the payment shall be increased by the amount
      necessary to ensure that each Creditor Party receives and retains (free
      from any liability relating to the tax deduction) a net amount which,
      after the tax deduction, is equal to the full amount which it would
      otherwise have received.

            

    

     

    
      	
              22.3

            	
              Evidence of payment of
      taxes.  Within 1 month after making any tax deduction,
      the Borrower concerned shall deliver to the Agent documentary evidence
      satisfactory to the Agent that the tax had been paid to the appropriate
      taxation authority.

            

    

     

    
      	
              22.4

            	
              Exclusion of tax on overall net
      income.  In this Clause 22 “tax deduction” means any
      deduction or withholding for or on account of any present or future tax
      except tax on a Creditor Party’s overall net
  income.

            

    

     

    
      	
              22.5

            	
              Application to the Master
      Agreement.  For the avoidance of doubt, Clause 22 does
      not apply in respect of sums due from the Borrower to the Swap Bank under
      or in connection with the Master Agreement as to which sums the provisions
      of section 2(d) (Deduction or Withholding for Tax) of the Master Agreement
      shall apply.

            

    

     

    
      	
              23

            	
              ILLEGALITY,
      ETC

            

    

     

    
      	
              23.1

            	
              Illegality.  This
      Clause 23 applies if a Lender (the “Notifying Lender”)
      notifies the Agent that it has become, or will with effect from a
      specified date, become:

            

    

     

    
      	
              (a)

            	
              unlawful
      or prohibited as a result of the introduction of a new law, an amendment
      to an existing law or a change in the manner in which an existing law is
      or will be interpreted or applied;
or

            

    

     

    
      	
              (b)

            	
              contrary
      to, or inconsistent with, any
regulation,

            

    

     

    for the
Notifying Lender to maintain or give effect to any of its obligations under this
Agreement in the manner contemplated by this Agreement.

     

    
      	
              23.2

            	
              Notification of
      illegality.  The Agent shall promptly notify the
      Borrower, the Security Parties, the Security Trustee and the other Lenders
      of the notice under Clause 23.1 which the Agent receives from the
      Notifying Lender.

            

    

     

    
      
         

      

      
        57

        
          

        

      

      
         

      

    

    
      	
              23.3

            	
              Prepayment; termination of
      Commitment.  On the Agent notifying the Borrower under
      Clause 23.2, the Notifying Lender’s Commitment shall terminate; and
      thereupon or, if later, on the date specified in the Notifying Lender’s
      notice under Clause 23.1 as the date on which the notified event would
      become effective the Borrower shall prepay the Notifying Lender’s
      Contribution in accordance with Clause
8.

            

    

     

    
      	
              23.4

            	
              Mitigation.  If
      circumstances arise which would result in a notification under
      Clause 23.1 then, without in any way limiting the rights of the
      Notifying Lender under Clause 23.3, the Notifying Lender shall use
      reasonable endeavours to transfer its obligations, liabilities and rights
      under this Agreement and the Finance Documents to another office or
      financial institution not affected by the circumstances but the Notifying
      Lender shall not be under any obligation to take any such action if, in
      its opinion, to do would or might:

            

    

     

    
      	
              (a)

            	
              have
      an adverse effect on its business, operations or financial condition;
      or

            

    

     

    
      	
              (b)

            	
              involve
      it in any activity which is unlawful or prohibited or any activity that is
      contrary to, or inconsistent with, any regulation;
  or

            

    

     

    
      	
              (c)

            	
              involve
      it in any expense (unless indemnified to its satisfaction) or tax
      disadvantage.

            

    

     

    
      	
              24

            	
              INCREASED
      COSTS

            

    

     

    
      	
              24.1

            	
              Increased
      costs.  This Clause 24 applies if a Lender (the “Notifying Lender”)
      notifies the Agent that the Notifying Lender considers that as a result
      of:

            

    

     

    
      	
              (a)

            	
              the
      introduction or alteration after the date of this Agreement of a law or
      regulation or an alteration after the date of this Agreement in the manner
      in which a law or regulation is interpreted or applied (disregarding any
      effect which relates to the application to payments under this Agreement
      of a tax on the Notifying Lender’s overall net income);
  or

            

    

     

    
      	
              (b)

            	
              the
      effect of complying with any law or regulation (including any which
      relates to capital adequacy or liquidity controls or which affects the
      manner in which the Notifying Lender allocates capital resources to its
      obligations under this Agreement (including, without limitation, any laws
      or regulations which shall replace, amend and/or supplement those set out
      in the statement of the Basle Committee on Banking Regulations and
      Supervisory Practices dated July 1988 and entitled “International
      Convergence of Capital Management and Capital Structures”)) which is
      introduced, or altered, or the interpretation or application of which is
      altered, after the date of this
Agreement,

            

    

     

    is that
the Notifying Lender (or a parent company of it) has incurred or will incur an
“increased cost”, that
is to say:

     

    
      	
               
      

            	
              (i)

            	
              an
      additional or increased cost incurred as a result of, or in connection
      with, the Notifying Lender having entered into, or being a party to, this
      Agreement or a Transfer Certificate, of funding or maintaining its
      Commitment or Contribution or performing its obligations under this
      Agreement, or of having outstanding all or any part of its Contribution or
      other unpaid sums; or

            

    

     

    
      	
               
      

            	
              (ii)

            	
              a
      reduction in the amount of any payment to the Notifying Lender under this
      Agreement or in the effective return which such a payment represents to
      the Notifying Lender or on its
capital;

            

    

     

    
      	
               
      

            	
              (iii)

            	
              an
      additional or increased cost of funding all or maintaining all or any of
      the advances comprised in a class of advances formed by or including the
      Notifying Lender’s Contribution or (as the case may require) the
      proportion of that cost attributable to the Contribution;
    or

            

    

     

    
      
         

      

      
        58

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              (iv)

            	
              a
      liability to make a payment, or a return foregone, which is calculated by
      reference to any amounts received or receivable by the Notifying Lender
      under this Agreement;

            

    

     

    but not
an item attributable to a change in the rate of tax on the overall net income of
the Notifying Lender (or a parent company of it) or an item covered by the
indemnity for tax in Clause 21.1 or by Clause 22.

     

    For the
purposes of this Clause 24.1 the Notifying Lender may in good faith allocate or
spread costs and/or losses among its assets and liabilities (or any class
thereof) on such basis as it considers appropriate.

     

    
      	
              24.2

            	
              Notification to Borrower of
      claim for increased costs.  The Agent shall promptly
      notify the Borrower and the Security Parties of the notice which the Agent
      received from the Notifying Lender under Clause
  24.1.

            

    

     

    
      	
              24.3

            	
              Payment of increased
      costs.  The Borrower shall pay to the Agent, at the end
      of any Interest Period during which the Agent makes demand, for the
      account of the Notifying Lender, the amounts which the Agent from time to
      time notifies the Borrower that the Notifying Lender has specified to be
      necessary to compensate the Notifying Lender for the increased
      cost.

            

    

     

    
      	
              24.4

            	
              Notice of
      prepayment.  If the Borrower is not willing to continue
      to compensate the Notifying Lender for the increased cost under Clause
      24.3, the Borrower may give the Agent not less than 14 days’ notice of its
      intention to prepay the Notifying Lender’s Contribution at the end of an
      Interest Period.

            

    

     

    
      	
              24.5

            	
              Prepayment; termination of
      Commitment.  A notice under Clause 24.4 shall be
      irrevocable; the Agent shall promptly notify the Notifying Lender of the
      Borrower’s notice of intended prepayment;
and:

            

    

     

    
      	
              (a)

            	
              on
      the date on which the Agent serves that notice, the Commitment of the
      Notifying Lender shall be cancelled;
and

            

    

     

    
      	
              (b)

            	
              on
      the date specified in its notice of intended prepayment, the Borrower
      shall prepay (without premium or penalty) the Notifying Lender’s
      Contribution, together with accrued interest thereon at the applicable
      rate plus the applicable Margin and the Mandatory Cost (if
      any).

            

    

     

    
      	
              24.6

            	
              Application of
      prepayment.  Clause 8 shall apply in relation to the
      prepayment.

            

    

     

    
      	
              25

            	
              SET-OFF

            

    

     

    
      	
              25.1

            	
              Application of credit
      balances.  Each Creditor Party may without prior
      notice:

            

    

     

    
      	
              (a)

            	
              apply
      any balance (whether or not then due) which at any time stands to the
      credit of any account in the name of the Borrower at any office in any
      country of that Creditor Party in or towards satisfaction of any sum then
      due from the Borrower to that Creditor Party under any of the Finance
      Documents; and

            

    

     

    
      	
              (b)

            	
              for
      that purpose:

            

    

     

    
      	
               
      

            	
              (i)

            	
              break,
      or alter the maturity of, all or any part of a deposit of the
      Borrower;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              convert
      or translate all or any part of a deposit or other credit balance into
      Dollars;

            

    

     

    
      	
               
      

            	
              (iii)

            	
              enter
      into any other transaction or make any entry with regard to the credit
      balance which the Creditor Party concerned considers
      appropriate.

            

    

     

    
      
         

      

      
        59

        
          

        

      

      
         

      

    

    
    

     

    
      	25.2	Existing rights
      unaffected.  No Creditor Party shall be obliged to
      exercise any of its rights under Clause 25.1; and those rights shall be
      without prejudice and in addition to any right of set-off, combination of
      accounts, charge, lien or other right or remedy to which a Creditor Party
      is entitled (whether under the general law or any
    document).

    

     

    
      	
              25.3

            	
              Sums deemed due to a
      Lender.  For the purposes of this Clause 25, a sum
      payable by the Borrower to the Agent or the Security Trustee for
      distribution to, or for the account of, a Lender shall be treated as a sum
      due to that Lender; and each Lender’s proportion of a sum so payable for
      distribution to, or for the account of, the Lenders shall be treated as a
      sum due to such Lender.

            

    

     

    
      	
              26

            	
              TRANSFERS
      AND CHANGES IN LENDING OFFICES

            

    

     

    
      	
              26.1

            	
              Transfer by
      Borrower.  The Borrower may not, without the prior
      written consent of the Agent, given on the instructions of all the
      Lenders:

            

    

     

    
      	
              (a)

            	
              transfer
      any of its rights or obligations under any Finance Document;
      or

            

    

     

    
      	
              (b)

            	
              enter
      into any merger, de-merger or other reorganisation, or carry out any other
      act, as a result of which any of its rights or liabilities would vest in,
      or pass to, another person.

            

    

     

    
      	
              26.2

            	
              Transfer by a
      Lender.  Subject to Clause 26.5, a Lender (the “Transferor Lender”) may
      at any time, cause:

            

    

     

    
      	
              (a)

            	
              its
      rights in respect of all or part of its Contribution;
  or

            

    

     

    
      	
              (b)

            	
              its
      obligations in respect of all or part of its Commitment;
  or

            

    

     

    
      	
              (c)

            	
              a
      combination of (a) and (b)

            

    

     

    to be (in
the case of its rights) transferred to, or (in the case of its obligations)
assumed by, another bank or financial institution which is experienced in ship
financing (a “Transferee
Lender”) by delivering to the Agent a completed certificate in the form
set out in Schedule 4 with any modifications approved or required by the Agent
(a “Transfer
Certificate”) executed by the Transferor Lender and the Transferee
Lender.

     

    However
any rights and obligations of the Transferor Lender in its capacity as Agent or
Security Trustee will have to be dealt with separately in accordance with the
Agency and Trust Deed.

     

    
      	
               
      

            	
              A
      transfer pursuant to this Clause 26.2
shall:

            

    

     

    
      	
               
      

            	
              (i)

            	
              require
      the prior written consent of the
Agent;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              be
      effected without the consent of, but with notice to, the Borrower and
      without any cost to the Borrower:

            

    

     

    
      	
               
      

            	
              (A)

            	
              following
      the occurrence of an Event of
Default;

            

    

     

    
      	
               
      

            	
              (B)

            	
              if
      such transfer is to a subsidiary or any other company or financial
      institution which is in the same ownership or control as the Transferor
      Lender; and

            

    

     

    
      	
               
      

            	
              (iii)

            	
              require
      the consent of the Borrower (such consent not to be unreasonably withheld
      or delayed) in all circumstances (other than those referred to in
      sub-paragraph (ii) above).

            

    

     

    
      
         

      

      
        60

        
          

        

      

      
         

      

    

     

    
      	
                    
                26.3

              

            	
              Transfer Certificate, delivery
      and notification.  As soon as reasonably practicable
      after a Transfer Certificate is delivered to the Agent, it shall (unless
      it has reason to believe that the Transfer Certificate may be
      defective):

            

    

     

    
      	
              (a)

            	
              sign
      the Transfer Certificate on behalf of itself, the Borrower, the Security
      Parties, the Security Trustee and each of the
  Lenders;

            

    

     

    
      	
              (b)

            	
              on
      behalf of the Transferee Lender, send to the Borrower and each Security
      Party letters or faxes notifying them of the Transfer Certificate and
      attaching a copy of it; and

            

    

     

    
      	
              (c)

            	
              send
      to the Transferee Lender copies of the letters or faxes sent under
      paragraph (b) above.

            

    

     

    
      	
              26.4

            	
              Effective Date of Transfer
      Certificate.  A Transfer Certificate becomes effective on
      the date, if any, specified in the Transfer Certificate as its effective
      date Provided that
      it is signed by the Agent under Clause 26.3 on or before that
      date.

            

    

     

    
      	
              26.5

            	
              No transfer without Transfer
      Certificate.  No assignment or transfer of any right or
      obligation of a Lender under any Finance Document is binding on, or
      effective in relation to, the Borrower, any Security Party, the Agent or
      the Security Trustee unless it is effected, evidenced or perfected by a
      Transfer Certificate.

            

    

     

    
      	
              26.6

            	
              Lender re-organisation; waiver
      of Transfer Certificate.  However, if a Lender enters
      into any merger, de-merger or other reorganisation as a result of which
      all its rights or obligations vest in another person (the “successor”), the
      successor shall automatically and without any further act being necessary
      become a Lender with the same Commitment and Contribution as were held by
      the predecessor Lender.

            

    

     

    
      	
              26.7

            	
              Effect of Transfer
      Certificate.  A Transfer Certificate takes effect in
      accordance with English law as
follows:

            

    

     

    
      	
              (a)

            	
              to
      the extent specified in the Transfer Certificate, all rights and interests
      (present, future or contingent) which the Transferor Lender has under or
      by virtue of the Finance Documents are assigned to the Transferee Lender
      absolutely, free of any defects in the Transferor Lender’s title and of
      any rights or equities which the Borrower or any Security Party had
      against the Transferor Lender;

            

    

     

    
      	
              (b)

            	
              the
      Transferor Lender’s Commitment is discharged to the extent specified in
      the Transfer Certificate;

            

    

     

    
      	
              (c)

            	
              the
      Transferee Lender becomes a Lender with the Contribution previously held
      by the Transferor Lender (or the part thereof specified in the Transfer
      Certificate) and a Commitment of an amount specified in the Transfer
      Certificate;

            

    

     

    
      	
              (d)

            	
              the
      Transferee Lender becomes bound by all the provisions of the Finance
      Documents which are applicable to the Lenders generally, including those
      about pro-rata sharing and the exclusion of liability on the part of, and
      the indemnification of, the Agent and the Security Trustee and, to the
      extent that the Transferee Lender becomes bound by those provisions (other
      than those relating to exclusion of liability), the Transferor Lender
      ceases to be bound by them;

            

    

     

    
      	
              (e)

            	
              any
      part of the Loan which the Transferee Lender advances after the Transfer
      Certificate’s effective date ranks in point of priority and security in
      the same way as it would have ranked had it been advanced by the
      transferor, assuming that any defects in the transferor’s title and any
      rights or equities of the Borrower or any Security Party against the
      Transferor Lender had not existed;

            

    

     

    
      
         

      

      
        61

        
          

        

      

      
         

      

    

    
      	
              (f)

            	
              the
      Transferee Lender becomes entitled to all the rights under the Finance
      Documents which are applicable to the Lenders generally, including but not
      limited to those relating to the Majority Lenders and those under Clause
      5.5 and Clause 20, and to the extent that the Transferee Lender becomes
      entitled to such rights, the Transferor Lender ceases to be entitled to
      them; and

            

    

     

    
      	
              (g)

            	
              in
      respect of any breach of a warranty, undertaking, condition or other
      provision of a Finance Document or any misrepresentation made in or in
      connection with a Finance Document, the Transferee Lender shall be
      entitled to recover damages by reference to the loss incurred by it as a
      result of the breach or misrepresentation, irrespective of whether the
      original Lender would have incurred a loss of that kind or
      amount.

            

    

     

    The
rights and equities of the Borrower or any Security Party referred to above
include, but are not limited to, any right of set off and any other kind of
cross-claim.

     

    
      	
              26.8

            	
              Maintenance of register of
      Lenders.  During the Security Period the Agent shall
      maintain a register in which it shall record the name, Commitment,
      Contribution and administrative details (including the lending office)
      from time to time of each Lender holding a Transfer Certificate and the
      effective date (in accordance with Clause 26.4) of the Transfer
      Certificate; and the Agent shall make the register available for
      inspection by any Lender, the Security Trustee and the Borrower during
      normal banking hours, subject to receiving at least 5 Business Days prior
      notice.

            

    

     

    
      	
              26.9

            	
              Reliance on register of
      Lenders.  The entries on that register shall, in the
      absence of manifest error, be conclusive in determining the identities of
      the Lenders and the amounts of their Commitments and Contributions and the
      effective dates of Transfer Certificates and may be relied upon by the
      Agent and the other parties to the Finance Documents for all purposes
      relating to the Finance Documents.

            

    

     

    
      	
              26.10

            	
              Authorisation of Agent to sign
      Transfer Certificates.  The Borrower, the Security
      Trustee and each Lender irrevocably authorise the Agent to sign Transfer
      Certificates on its behalf.

            

    

     

    
      	
              26.11

            	
              Registration
      fee.  In respect of any Transfer Certificate, the Agent
      shall be entitled to recover a registration fee of $2,000 from the
      Transferor Lender or (at the Agent’s option) the Transferee
      Lender.

            

    

     

    
      	
              26.12

            	
              Sub-participation; subrogation
      assignment.  A Lender may sub-participate all or any part
      of its rights and/or obligations under or in connection with the Finance
      Documents without the consent of, or any notice to, the Borrower, any
      Security Party, the Agent or the Security Trustee; and the Lenders may
      assign, in any manner and terms agreed by the Majority Lenders, the Agent
      and the Security Trustee, all or any part of those rights to an insurer or
      surety who has become subrogated to
them.

            

    

     

    
      	
              26.13

            	
              Disclosure of
      information.  A Lender may disclose to a potential
      Transferee Lender or sub-participant any information which the Lender has
      received in relation to the Borrower, any Security Party or their affairs
      under or in connection with any Finance Document, unless the information
      is clearly of a confidential
nature.

            

    

     

    
      	
              26.14

            	
              Change of lending
      office.  A Lender may change its lending office by giving
      notice to the Agent and the change shall become effective on the later
      of:

            

    

     

    
      	
              (a)

            	
              the
      date on which the Agent receives the notice;
and

            

    

     

    
      	
              (b)

            	
              the
      date, if any, specified in the notice as the date on which the change will
      come into effect.

            

    

     

    
      
         

      

      
        62

        
          

        

      

      
         

      

    

    
      	
              26.15

            	
              Notification.  On
      receiving such a notice, the Agent shall notify the Borrower and the
      Security Trustee; and, until the Agent receives such a notice, it shall be
      entitled to assume that a Lender is acting through the lending office of
      which the Agent last had notice.

            

    

     

    
      	
              27

            	
              VARIATIONS
      AND WAIVERS

            

    

     

    
      	
              27.1

            	
              Variations, waivers etc. by
      Majority Lenders.  Subject to Clause 27.2, a document
      shall be effective to vary, waive, suspend or limit any provision of a
      Finance Document, or any Creditor Party’s rights or remedies under such a
      provision or the general law, only if the document is signed, or
      specifically agreed to by fax, by the Borrower, by the Agent on behalf of
      the Majority Lenders, by the Agent and the Security Trustee in their own
      rights, and, if the document relates to a Finance Document to which a
      Security Party is party, by that Security
Party.

            

    

     

    
      	
              27.2

            	
              Variations, waivers etc.
      requiring agreement of all Lenders.  However, as regards
      the following, Clause 27.1 applies as if the words “by the Agent on behalf
      of the Majority Lenders” were replaced by the words “by or on behalf of
      every Lender and the Swap Bank”:

            

    

     

    
      	
              (a)

            	
              a
      change in the applicable Margin or in the definition of
    LIBOR;

            

    

     

    
      	
              (b)

            	
              a
      change to the date for, or the amount of, any payment of principal,
      interest, fees, or other sum payable under this
  Agreement;

            

    

     

    
      	
              (c)

            	
              a
      change to any Lender’s Commitment;

            

    

     

    
      	
              (d)

            	
              an
      extension of the Availability
Period;

            

    

     

    
      	
              (e)

            	
              a
      change to the definition of “Majority Lenders” or “Finance
      Documents”;

            

    

     

    
      	
              (f)

            	
              a
      change to the preamble or to Clause 2, 3, 4, 5.1, 8.1, 8.2, 17, 18, 19 or
      30;

            

    

     

    
      	
              (g)

            	
              a
      change to this Clause 27;

            

    

     

    
      	
              (h)

            	
              any
      release of, or material variation to, a Security Interest, guarantee,
      indemnity or subordination arrangement set out in a Finance Document;
      and

            

    

     

    
      	
              (i)

            	
              any
      other change or matter as regards which this Agreement or another Finance
      Document expressly provides that each Lender’s consent is
      required.

            

    

     

    
      	
              27.3

            	
              Exclusion of other or implied
      variations.  Except for a document which satisfies the
      requirements of Clauses 27.1 and 27.2, no document, and no act, course of
      conduct, failure or neglect to act, delay or acquiescence on the part of
      the Creditor Parties or any of them (or any person acting on behalf of any
      of them) shall result in the Creditor Parties or any of them (or any
      person acting on behalf of any of them) being taken to have varied,
      waived, suspended or limited, or being precluded (permanently or
      temporarily) from enforcing, relying on or
  exercising:

            

    

     

    
      	
              (a)

            	
              a
      provision of this Agreement or another Finance Document;
  or

            

    

     

    
      	
              (b)

            	
              an
      Event of Default; or

            

    

     

    
      	
              (c)

            	
              a
      breach by the Borrower or a Security Party of an obligation under a
      Finance Document or the general law;
or

            

    

     

    
      	
              (d)

            	
              any
      right or remedy conferred by any Finance Document or by the general
      law;

            

    

     

    
      
         

      

      
        63

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              and
      there shall not be implied into any Finance Document any term or condition
      requiring any such provision to be enforced, or such right or remedy to be
      exercised, within a certain or reasonable
time.

            

    

     

    
      	
              28

            	
              NOTICES

            

    

     

    
      	
              28.1

            	
              General.  Unless
      otherwise specifically provided, any notice under or in connection with
      any Finance Document shall be given by registered letter or fax; and
      references in the Finance Documents to written notices, notices in writing
      and notices signed by particular persons shall be construed
      accordingly.

            

    

     

    
      	
              28.2

            	
              Addresses for
      communications.  A notice shall be
  sent:

            

    

     

    
      	
              (a)

            	
              to
      the Borrower:

            	
              Paragon
      Shipping Inc.

            
	 	 	15
      Karamanli Avenue
	 	 	166
      73 Voula
	 	 	Greece
	 	 	Fax
      No: +(30) 210 899 5085
	 	 	Attn:
      the Chief Financial Officer

    

     

    
      	
              (b)

            	
              to
      a Lender:

            	
              At
      the address opposite its name in Schedule 1 or (as the case may require)
      in the relevant Transfer Certificate;
and

            

    

     

     

    
      	
              (c)

            	
              the
      Agent and

            	
              Commerzbank
      AG

            

    

    
      	
               
      

            	
              the
      Security Trustee:

            	
              Global
      Shipping

            

    

    
      	
               
      

            	
              Ness
      7-9

            

    

    
      	
               
      

            	
              D-20457
      Hamburg

            

    

    
      	
               
      

            	
              Germany

            
	 	Fax
      No: +(49) 40 36 83 4068
	 	Attn:
      Julia Schormann/Claas Ringleben

    

     

    or to
such other address as the relevant party may notify the Agent or, if the
relevant party is the Agent or the Security Trustee, the Borrower, the Lenders
and the Security Parties.

     

    
      	
              28.3

            	
              Effective date of
      notices.  Subject to Clauses 28.4 and
    28.5:

            

    

     

    
      	
              (a)

            	
              a
      notice which is delivered personally shall be deemed to be served, and
      shall take effect, at the time when it is
  delivered;

            

    

     

    
      	
              (b)

            	
              a
      notice which is delivered by registered letter shall be deemed to be
      served, and shall take effect, 5 Business Days after being deposited in
      the post postage prepaid in an envelope addressed to it at the relevant
      address; and

            

    

     

    
      	
              (c)

            	
              a
      notice which is sent by fax shall be deemed to be served, and shall take
      effect, 2 hours after its transmission is
  completed.

            

    

     

    
      	
              28.4

            	
              Service outside business
      hours.  However, if under Clause 28.3 a notice would be
      deemed to be served:

            

    

     

    
      	
              (a)

            	
              on
      a day which is not a business day in the place of receipt;
    or

            

    

     

    
      	
              (b)

            	
              on
      such a business day, but after 5 p.m. local
  time;

            

    

     

    the
notice shall (subject to Clause 28.5) be deemed to be served, and shall take
effect, at 9 a.m. on the next day which is such a business day.

     

    
      
         

      

      
        64

        
          

        

      

      
         

      

    

              

    
      	28.5 	Illegible
      notices.  Clauses 28.3 and 28.4 do not apply if the
      recipient of a notice notifies the sender within one hour after the time
      at which the notice would otherwise be deemed to be served that the notice
      has been received in a form which is illegible in a material
      respect.

    

     

    
      	
              28.6

            	
              Valid
      notices.  A notice under or in connection with a Finance
      Document shall not be invalid by reason that its contents or the manner of
      serving it do not comply with the requirements of this Agreement or, where
      appropriate, any other Finance Document under which it is served
      if:

            

    

     

    
      	
              (a)

            	
              the
      failure to serve it in accordance with the requirements of this Agreement
      or other Finance Document, as the case may be, has not caused any party to
      suffer any significant loss or
  prejudice;  or

            

    

     

    
      	
              (b)

            	
              in
      the case of incorrect and/or incomplete contents, it should have been
      reasonably clear to the party on which the notice was served what the
      correct or missing particulars should have
been.

            

    

     

    
      	
              28.7

            	
              English
      language.  Any notice under or in connection with a
      Finance Document shall be in
English.

            

    

     

    
      	
              28.8

            	
              Meaning of
      “notice”.  In this Clause “notice” includes any demand,
      consent, authorisation, approval, instruction, waiver or other
      communication.

            

    

     

    
      	
              28.9

            	
              Electronic
      communication

            

    

     

    
      	
              (a)

            	
              Any
      communication to be made between the Agent or the Security Trustee and a
      Lender or the Swap Bank under or in connection with the Finance Documents
      may be made by electronic mail or other electronic means, if the Agent,
      the Security Trustee and the relevant Lender or the Swap
    Bank:

            

    

     

    
      	
               
      

            	
              (i)

            	
              agree
      that, unless and until notified to the contrary, this is to be an accepted
      form of communication;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              notify
      each other in writing of their electronic mail address and/or any other
      information required to enable the sending and receipt of information by
      that means; and

            

    

     

    
      	
               
      

            	
              (iii)

            	
              notify
      each other of any change to their address or any other such information
      supplied by them.

            

    

     

    
      	
              (b)

            	
              Any
      electronic communication made between the Agent and a Lender or the
      Security Trustee or the Swap Bank will be effective only when actually
      received in readable form and in the case of any electronic communication
      made by a Lender or the Swap Bank to the Agent or the Security Trustee
      only if it is addressed in such a manner as the Agent or Security Trustee
      shall specify for this purpose.

            

    

     

    
      	
              29

            	
              SUPPLEMENTAL

            

    

     

    
      	
              29.1

            	
              Rights cumulative,
      non-exclusive.  The rights and remedies which the Finance
      Documents give to each Creditor Party
are:

            

    

     

    
      	
              (a)

            	
              cumulative;

            

    

     

    
      	
              (b)

            	
              may
      be exercised as often as appears expedient;
and

            

    

     

    
      	
              (c)

            	
              shall
      not, unless a Finance Document explicitly and specifically states so, be
      taken to exclude or limit any right or remedy conferred by any
      law.

            

    

     

    
      
         

      

      
        65

        
          

        

      

      
         

      

    

    
      	
              29.2

            	
              Severability of
      provisions.  If any provision of a Finance Document is or
      subsequently becomes void, unenforceable or illegal, that shall not affect
      the validity, enforceability or legality of the other provisions of that
      Finance Document or of the provisions of any other Finance
      Document.

            

    

     

    
      	
              29.3

            	
              Third party
      rights.  A person who is not a party to this Agreement
      has no right under the Contracts (Rights of Third Parties) Act 1999 to
      enforce or to enjoy the benefit of any term of this
    Agreement.

            

    

     

    
      	
              29.4

            	
              Counterparts.  A
      Finance Document may be executed in any number of
      counterparts.

            

    

     

    
      	
              30

            	
              LAW
      AND JURISDICTION

            

    

     

    
      	
              30.1

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

            

    

     

    
      	
              30.2

            	
              Exclusive English
      jurisdiction.  Subject to Clause 30.3, the courts of
      England shall have exclusive jurisdiction to settle any disputes which may
      arise out of or in connection with this
  Agreement.

            

    

     

    
      	
              30.3

            	
              Choice of forum for the
      exclusive benefit of the Creditor Parties.  Clause 30.2
      is for the exclusive benefit of the Creditor Parties, each of which
      reserves the right:

            

    

     

    
      	
              (a)

            	
              to
      commence proceedings in relation to any matter which arises out of or in
      connection with this Agreement in the courts of any country other than
      England and which have or claim jurisdiction to that matter;
      and

            

    

     

    
      	
              (b)

            	
              to
      commence such proceedings in the courts of any such country or countries
      concurrently with or in addition to proceedings in England or without
      commencing proceedings in England.

            

    

     

    The
Borrower shall not commence any proceedings in any country other than England in
relation to a matter which arises out of or in connection with this
Agreement.

     

    
      	
              30.4

            	
              Process
      Agent.  The Borrower irrevocably appoints HTD Services
      Limited at their office for the time being, presently at Irongate House,
      Duke’s Place, London EC3A 7HX, England, to act as its Agent to receive and
      accept on its behalf any process or other document relating to any
      proceedings in the English courts which are connected with this
      Agreement.

            

    

     

    
      	
              30.5

            	
              Creditor Party rights
      unaffected.  Nothing in this Clause 30 shall exclude or
      limit any right which any Creditor Party may have (whether under the law
      of any country, an international convention or otherwise) with regard to
      the bringing of proceedings, the service of process, the recognition or
      enforcement of a judgment or any similar or related matter in any
      jurisdiction.

            

    

     

    
      	
              30.6

            	
              Meaning of
      “proceedings”.  In this Clause 30, “proceedings” means
      proceedings of any kind, including an application for a provisional or
      protective measure.

            

    

     

    AS WITNESS the hands of the
duly authorised officers or attorneys of the parties the day and year first
before written.

     

    
      
         

      

      
        66

        
          

        

      

      
         

      

    

    

    SCHEDULE
1

     

    

     

    LENDERS
AND COMMITMENTS

     

    

    
      	
              Lender

            	
              Lending
      Office

            	
              Commitment

              (US
      Dollars)

            
	 	 	 
	
              Commerzbank
      AG

            	
              Ness
      7-9

              D-20457
      Hamburg

              Germany

            	
              250,000,000
      *

            

    

    

     

    *
Please refer to Clause 2.4 pursuant to which the Commitment of Commerzbank AG is
limited to $200,000,000

     

    
      
         

      

      
        67

        
          

        

      

      
         

      

    

    SCHEDULE
2

    DETAILS
OF EXISTING SHIPS AND OWNERS

     

    
      
        	
                1

              	
                Name
      of Ship:

              	
                “PEARL
      SEAS”

              
	 
      	
                Flag:

              	
                Marshall
      Islands

              
	 
      	
                IMO
      Number:

              	
                393260

              
	 
      	
                Official
      Number:

              	
                2965

              
	 
      	
                Dwt:

              	
                74,473

              
	 
      	
                Class
      Society and notation:

              	
                RINA
      (C; Bulk Carrier ESP; AUT-UMS)

              
	 
      	
                Year
      built:

              	
                2006

              
	 
      	
                Owner:

              	
                Donna
      Marine Co.

              
	 	 	 
	
                2

              	
                Name
      of Ship:

              	
                “SAPPHIRE
      SEAS”

              
	 
      	
                Flag:

              	
                Liberia

              
	 
      	
                IMO
      Number:

              	
                9301146

              
	 
      	
                Official
      Number:

              	
                13497

              
	 
      	
                Dwt:

              	
                53,702

              
	 
      	
                Class
      Society and notation:

              	
                Germanischer
      Lloyd Hull 100 A5 ESP IW C1D11 Bulk Carrier, Machinery MC
    AUT

              
	 
      	
                Year
      built:

              	
                2005

              
	 
      	
                Owner:

              	
                Protea
      International Inc.

              
	 	 	 
	
                3

              	
                Name
      of Ship:

              	
                “DIAMOND
      SEAS”

              
	 
      	
                Current
      Flag:

              	
                Malta

              
	 
      	
                Flag
      when acquired by Owner:

              	
                Liberia

              
	 
      	
                IMO
      Number:

              	
                9244219

              
	 
      	
                Official
      Number:

              	
                13494

              
	 
      	
                Dwt:

              	
                74,274

              
	 
      	
                Class
      Society and notation:

              	
                Lloyd’s
      Register 100A1 bulk carrier, strengthened for heavy cargoes, holds 2,4,6
      may be empty, ESN ESP, LI LMC UMS

              
	 
      	
                Year
      built:

              	
                2001

              
	 
      	
                Owner:

              	
                Reading
      Navigation Co.

              
	 	 	 
	
                4

              	
                Name
      of Ship:

              	
                “CLEAN
      SEAS”

              
	 
      	
                Flag:

              	
                Cayman
      Islands

              
	 
      	
                IMO
      Number:

              	
                9109366

              
	 
      	
                Official
      Number:

              	
                739766

              
	 
      	
                Dwt:

              	
                46,640

              
	 
      	
                Class
      Society and notation:

              	
                Nippon
      Kaiji Kyokai NS*(BC)(ESP)/MNS*

              
	 
      	
                Year
      built:

              	
                1995

              
	 
      	
                Owner:

              	
                Explorer
      Shipholding Limited

              
	 	 	 
	
                5

              	
                Name
      of Ship:

              	
                “KIND
      SEAS”

              
	 
      	
                Flag:

              	
                Marshall
      Islands

              
	 
      	
                IMO
      Number:

              	
                9205847

              
	 
      	
                Official
      Number:

              	
                2172

              
	 
      	
                Dwt:

              	
                72,493

              
	 
      	
                Class
      Society and notation:

              	
                Nippon
      Kaiji Kyokai NS*(BC, SHC 2,4,6 E)(ESP)/MNS*

              
	 
      	
                Year
      built:

              	
                1999

              
	 
      	
                Owner:

              	
                Fairplay
      Maritime Ltd.

              

      

    

    
      
         

      

      
        68

        
          

        

      

      
         

      

    

    

    SCHEDULE
3

     

    

     

    DRAWDOWN
NOTICE

     

    To:          Commerzbank
AG

    Ness
7-9

    D-20457
Hamburg

    Germany

     

    Attention:
Loans
Administration                                                                                                           [                                   
] 2007

     

    DRAWDOWN
NOTICE

     

    
      	
              1

            	
              We
      refer to the loan agreement (the “Loan Agreement”) dated
      [l] 2007 and
      made between ourselves as Borrower, the Lenders referred to therein
      yourselves as Agent, Arranger, Swap Bank and as Security Trustee in
      connection with a revolving credit facility of up to
      US$250,000,000.  Terms defined in the Loan Agreement have their
      defined meanings when used in this Drawdown
  Notice.

            

    

     

    
      	
              2

            	
              We
      request to borrow [the Existing Ships Advance] [an Acquisition [l] Advance in
      relation to [l]] as
      follows:

            

    

     

    
      	
              (a)

            	
              Amount
      of Advance: $[  ];

            

    

     

    
      	
              (b)

            	
              Drawdown
      Date:  [  ];

            

    

     

    
      	
              (c)

            	
              Duration
      of the first Interest Period shall be [  ]
    months;

            

    

     

    
      	
              (d)

            	
              Payment
      instructions : account of [  ] and numbered [  ] with
      [  ] of [  ].

            

    

     

    
      	
              3

            	
              We
      represent and warrant that:

            

    

     

    
      	
              (a)

            	
              the
      representations and warranties in Clause 10 of the Loan Agreement would
      remain true and not misleading if repeated on the date of this notice with
      reference to the circumstances now
existing;

            

    

     

    
      	
              (b)

            	
              no
      Event of Default or Potential Event of Default has occurred or will result
      from the borrowing of the Loan.

            

    

     

    
      	
              4

            	
              This
      notice cannot be revoked without the prior consent of the Majority
      Lenders.

            

    

     

    
      	
              5

            	
              [We
      authorise you to deduct all accrued commitment fee and all other facility
      fees applicable to the Advance referred to in Clause 20.1 from the amount
      of the Advance].

            

    

     

    [Name of
Signatory]

     

    ________________________________

    for and
on behalf of

    PARAGON
SHIPPING INC.

    
      
         

      

      
        69

        
          

        

      

      
         

      

    

    SCHEDULE
4

     

    

     

    CONDITION
PRECEDENT DOCUMENTS

     

    PART
A

     

    The
following are the documents referred to in Clause 9.1(a).

     

    
      	
              1

            	
              A
      duly executed original of each of:

            

    

     

    
      	
              (a)

            	
              this
      Agreement;

            

    

     

    
      	
              (b)

            	
              the
      Agency and Trust Deed;

            

    

     

    
      	
              (c)

            	
              the
      Fee Letter;

            

    

     

    
      	
              (d)

            	
              the
      Master Agreement;

            

    

     

    
      	
              (e)

            	
              the
      Guarantees;

            

    

     

    
      	
              (f)

            	
              the
      Master Agreement Assignment;

            

    

     

    
      	
              (g)

            	
              the
      Existing Ship Earnings Accounts
Pledges;

            

    

     

    
      	
              (h)

            	
              the
      Retention Account Pledge;

            

    

     

    
      	
              (i)

            	
              the
      Reserve Account Pledge;

            

    

     

    
      	
              (j)

            	
              the
      Epic Account Pledge; and

            

    

     

    
      	
              (k)

            	
              the
      Epic Guarantee.

            

    

     

    
      	
              2

            	
              Copies
      of the certificate of incorporation and constitutional documents of the
      Borrower, each Owner and Epic.

            

    

     

    
      	
              3

            	
              Copies
      of resolutions of the shareholders and directors of the Borrower, of each
      Owner and Epic authorising the execution of each of the Finance Documents
      to which the Borrower, that Owner and Epic is a party and, in the case of
      the Borrower, authorising named officers to give the Drawdown Notices and
      other notices under this Agreement.

            

    

     

    
      	
              4

            	
              The
      original of any power of attorney under which any Finance Document is
      executed on behalf of the Borrower, an Owner and
  Epic.

            

    

     

    
      	
              5

            	
              Copies
      of all consents which the Borrower, any Owner and Epic requires to enter
      into, or make any payment under, any Finance
  Document.

            

    

     

    
      	
              6

            	
              The
      originals of any mandates or other documents required in connection with
      the opening or operation of each Target Ship Earnings Account, the
      Retention Account, the Reserve Account and the Epic
    Account.

            

    

     

    
      	
              7

            	
              Evidence
      satisfactory to the Agent that each Owner is a direct or indirect
      wholly-owned subsidiary of the
Borrower.

            

    

     

    
      
         

      

      
        70

        
          

        

      

      
         

      

    

    
      	
              8

            	
              All
      documentation required by each Creditor Party in relation to the Borrower
      and any Security Party pursuant to that Creditor Party’s “know your
      customer” requirements.

            

    

     

    
      	
              9

            	
              Documentary
      evidence that the Agent for service of process named in Clause 30 has
      accepted its appointment.

            

    

     

    
      	
              10

            	
              Favourable
      legal opinions from lawyers appointed by the Agent on such matters
      concerning the laws of the Marshall Islands and Liberia, and such other
      relevant jurisdictions as the Agent may
require.

            

    

     

    
      	
              11

            	
              If
      the Agent so requires, in respect of any of the documents referred to
      above, a certified English translation prepared by a translator approved
      by the Agent.

            

    

     

    PART
B

     

    The
following are the documents referred to in Clause 9.1(b).

     

    
      	
              1

            	
              Evidence
      that an amount of not less than $2,500,000 is standing to the credit of
      the Reserve Account.

            

    

     

    
      	
              2

            	
              Documentary
      evidence that:

            

    

     

    
      	
              (a)

            	
              each
      Existing Ship is definitively and permanently registered in the name of
      its Owner under the applicable Approved
Flag;

            

    

     

    
      	
              (b)

            	
              each
      Existing Ship is in the absolute and unencumbered ownership of its Owner
      save as contemplated by the Finance Documents to which that Owner is a
      party;

            

    

     

    
      	
              (c)

            	
              each
      Existing Ship maintains the highest available class with such first-class
      classification society which is a member of IACS as the Agent may approve
      free of all overdue recommendations and conditions of such classification
      society;

            

    

     

    
      	
              (d)

            	
              each
      Mortgage relative to an Existing Ship has been duly registered against
      that Existing Ship as a valid first preferred or, as the case may be,
      priority statutory mortgage in accordance with the laws of applicable
      Approved Flag State; and

            

    

     

    
      	
              (e)

            	
              each
      Existing Ship is insured in accordance with the provisions of this
      Agreement and all requirements therein in respect of such insurances have
      been complied with.

            

    

     

    
      	
              3

            	
              A
      copy of the Management Agreement and a duly executed original of the
      Manager’s Undertaking in relation to each Existing
  Ship.

            

    

     

    
      	
              4

            	
              Copies
      of:

            

    

     

    
      	
              (a)

            	
              the
      document of compliance (DOC) and safety management  certificate
      (SMC) referred to in paragraph (a) of the definition of the ISM Code
      Documentation in respect of each Existing Ship and the applicable Approved
      Manager certified as true and in effect by the Owner of such Existing
      Ship; and

            

    

     

    
      	
              (b)

            	
              the
      ISPS Code Documentation in respect of each Existing Ship and the Owner
      thereof certified as true and in effect by that
  Owner.

            

    

     

    
      	
              5

            	
              Two
      valuations (at the cost of the Borrower) of each Existing Ship addressed
      to the Agent, stated to be for the purpose of this Agreement and dated not
      earlier than 15 days

            

    

     

    
      
         

      

      
        71

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              before
      the Drawdown Date for the Existing Ships Advance, each from an Approved
      Broker.

            

    

     

    
      	
              6

            	
              A
      compliance certificate (in the form set out in Schedule 6) demonstrating
      the compliance by the Borrower (or not, as the case may be) with the
      provisions of Clause 12.4 (such compliance to be determined by reference
      to the audited annual consolidated accounts of the Group for the Financial
      Year ended 31 December 2006) signed by the chief financial officer of the
      Borrower.

            

    

     

    
      	
              7

            	
              Favourable
      legal opinions from lawyers appointed by the Agent on such matters
      concerning the laws of the Marshall Islands,  Liberia and the
      Cayman Islands and such other relevant jurisdictions as the Agent may
      require.

            

    

     

    
      	
              8

            	
              A
      favourable opinion (at the cost of the Borrower) from an independent
      insurance consultant acceptable to the Agent on such matters relating to
      the insurances of the Existing Ships as the Agent may
    require.

            

    

     

    
      	
              9

            	
              If
      the Agent so requires, in respect of any of the documents referred to
      above, a certified English translation prepared by a translator approved
      by the Agent.

            

    

     

    PART
C

     

    The
following are the documents referred to in Clause 9.1(c).

     

    “Relevant Ship” means, in
relation to an Acquisition Advance, the Ship which is to be part-financed by
that Advance.

     

    
      	
              1

            	
              A
      duly executed original of the Mortgage, the Deed of Covenant (if
      applicable), the General Assignment, the Target Ship Earnings Account
      Pledge and (if applicable) the Charterparty Assignment for the Relevant
      Ship (and of each document to be delivered under each of
      them).

            

    

     

    
      	
              2

            	
              Documentary
      evidence that:

            

    

     

    
      	
              (a)

            	
              the
      Relevant Ship has been unconditionally delivered to, and accepted by, the
      relevant Owner under the relevant MOA and the full purchase price payable
      under that MOA has been duly paid;

            

    

     

    
      	
              (b)

            	
              the
      Relevant Ship is definitively and permanently registered in the name of
      the relevant Owner under an Approved
Flag;

            

    

     

    
      	
              (c)

            	
              the
      Relevant Ship is in the absolute and unencumbered ownership of the
      relevant Owner save as contemplated by the Finance
    Documents;

            

    

     

    
      	
              (d)

            	
              the
      Relevant Ship maintains the highest available class with such first-class
      classification society which is a member of IACS as the Agent may approve
      free of all recommendations and conditions of such classification
      society;

            

    

     

    
      	
              (e)

            	
              the
      Mortgage relative to the Relevant Ship has been duly registered or
      recorded (as the case may be) against the Relevant Ship as a valid first
      priority or preferred ship mortgage in accordance with the laws of the
      relevant Approved Flag State; and

            

    

     

    
      	
              (f)

            	
              the
      Relevant Ship is insured in accordance with the provisions of this
      Agreement and all requirements therein in respect of insurances have been
      complied with.

            

    

     

    
      	
              3

            	
              A
      copy of the Management Agreement and a duly executed original of the
      Manager’s Undertaking in relation to the Relevant
  Ship.

            

    

     

    
      	
              4

            	
              Copies
      of:

            

    

     

    
      
         

      

      
        72

        
          

        

      

      
         

      

    

    
      	
              (a)

            	
              the
      document of compliance (DOC) and safety management certificate (SMC)
      referred to in paragraph (a) of the definition of the ISM Code
      Documentation in respect of the Relevant Ship and the Approved Manager
      certified as true and in effect by the Owner of the Relevant Ship;
      and

            

    

     

    
      	
              (b)

            	
              the
      ISPS Code Documentation in respect of the Relevant Ship and the Owner
      thereof certified as true and in effect by the relevant
    Owner.

            

    

     

    
      	
              5

            	
              If
      the Relevant Ship is on the relevant Drawdown Date more than 3 years old,
      a survey report in respect of that Relevant Ship dated not later than 5
      days prior to the relevant Drawdown Date in form, scope and substance
      satisfactory to the Agent and its legal and technical
      advisers.

            

    

     

    
      	
              6

            	
              Two
      valuations of the Relevant Ship and of all other Ships subject to a
      Mortgage at the relevant Drawdown Date, addressed to the Agent, stated to
      be for the purpose of this Agreement and dated not earlier than 30 days
      before the relevant Drawdown Date, each prepared (at the expense of the
      Borrower) by an Approved Broker in accordance with Clause 15.4 which shows
      the value of the Relevant Ship and each other Ship in an amount acceptable
      to the Agent.

            

    

     

    
      	
              7

            	
              Evidence
      satisfactory to the Agent that the Owner of the Relevant Ship remains a
      direct or indirect wholly-owned subsidiary of the
  Borrower.

            

    

     

    
      	
              8

            	
              Documentary
      evidence that there is standing in the credit of the Reserve Account an
      amount not less than (a) $500,000 multiplied by (b) the number of Ships
      subject to a Mortgage at that time (including, without limitation, the
      Relevant Ship).

            

    

     

    
      	
              9

            	
              A
      favourable legal opinion from lawyers appointed by the Agent on such
      matters concerning the laws of the Approved Flag State where the Relevant
      Ship is registered and such other relevant jurisdictions as the Agent may
      require.

            

    

     

    
      	
              10

            	
              A
      favourable opinion (at the cost of the Borrower) from an independent
      insurance consultant acceptable to the Agent on such matters relating to
      the insurances for the Relevant Ship as the Agent may
    require.

            

    

     

    
      	
              11

            	
              If
      the Agent so requires, in respect of any of the documents referred to
      above, a certified English translation prepared by a translator approved
      by the Agent.

            

    

     

    Every
other copy document delivered under this Schedule shall be certified as a true
and up to date copy by a director or the secretary (or equivalent officer) of
the Borrower or any other person acceptable to the Agent in its sole
discretion.

    
      
         

      

      
        73

        
          

        

      

      
         

      

    

    SCHEDULE
5

     

    

     

    TRANSFER
CERTIFICATE

     

    The
Transferor and the Transferee accept exclusive responsibility for ensuring that
this Certificate and the transaction to which it relates comply with all legal
and regulatory requirements applicable to them respectively.

     

    
      	
              To:

            	
              Commerzbank
      AG for itself and for and on behalf of the Borrower, each Security Party,
      the Security Trustee and each Lender, as defined in the Loan Agreement
      referred to below.

            

    

     

    [  ]

     

    
      	
              1

            	
              This
      Certificate relates to a Loan Agreement (the “Loan Agreement”) dated
      [l]2007 and
      made between (1) Paragon Shipping Inc. as borrower (the “Borrower”), (2) the
      banks and financial institutions named therein as Lenders, (3) Commerzbank
      AG as Agent, (4) Commerzbank AG as Arranger, (5) Commerzbank AG as
      Security Trustee and (6) Commerzbank AG as Swap Bank in respect of a
      revolving credit facility of up to
  US$250,000,000.

            

    

     

    
      	
              2

            	
              In
      this Certificate:

            

    

     

    “the Relevant Parties” means
the Agent, the Borrower, each Security Party, the Security Trustee, the Swap
Bank and each Lender;

     

    “the Transferor” means [full
name] of [lending office];

     

    “the Transferee” means [full
name] of [lending office].

     

    Terms
defined in the Loan Agreement shall, unless the contrary intention appears, have
the same meanings when used in this Certificate.

     

    
      	
              3

            	
              The
      effective date of this Certificate is .........200  Provided that this
      Certificate shall not come into effect unless it is signed by the Agent on
      or before that date.

            

    

     

    
      	
              4

            	
              The
      Transferor assigns to the Transferee absolutely all rights and interests
      (present, future or contingent) which the Transferor has as Lender under
      or by virtue of the Loan Agreement and every other Finance Document in
      relation to [  ] per cent. of the Contribution outstanding to
      the Transferor (or its predecessors in title) which is set out
      below:

            

    

     

    
      	
              Contribution

            	
              Amount
      transferred

            
	 
      	 
      
	 
      	 
      
	 
      	 
      
	 
      	 
      

    

    
      	
              5

            	
              By
      virtue of this Transfer Certificate and Clause 26 of the Loan Agreement,
      the Transferor is discharged [entirely from its Commitment which amounts
      to $[  ]] [from [  ] per cent. of its Commitment,
      which percentage represents $[  ]] and the Transferee acquires a
      Commitment of $[  ].

            

    

     

    
      
         

      

      
        74

        
          

        

      

      
         

      

    

    
      	
              6

            	
              The
      Transferee undertakes with the Transferor and each of the Relevant Parties
      that the Transferee will observe and perform all the obligations under the
      Finance Documents which Clause 26 of the Loan Agreement provides will
      become binding on it upon this Certificate taking
  effect.

            

    

     

    
      	
              7

            	
              The
      Agent, at the request of the Transferee (which request is hereby made)
      accepts, for the Agent itself and for and on behalf of every other
      Relevant Party, this Certificate as a Transfer Certificate taking effect
      in accordance with Clause 26 of the Loan
  Agreement.

            

    

     

    
      	
              8

            	
              The
      Transferor:

            

    

     

    
      	
              (a)

            	
              warrants
      to the Transferee and each Relevant
Party:

            

    

     

    
      	
               
      

            	
              (i)

            	
              that
      the Transferor has full capacity to enter into this transaction and has
      taken all corporate action and obtained all consents which are in
      connection with this transaction;
and

            

    

     

    
      	
               
      

            	
              (ii)

            	
              that
      this Certificate is valid and binding as regards the
      Transferor;

            

    

     

    
      	
              (b)

            	
              warrants
      to the Transferee that the Transferor is absolutely entitled, free of
      encumbrances, to all the rights and interests covered by the assignment in
      paragraph 4 above;

            

    

     

    
      	
              (c)

            	
              undertakes
      with the Transferee that the Transferor will, at its own expense, execute
      any documents which the Transferee reasonably requests for perfecting in
      any relevant jurisdiction the Transferee’s title under this Certificate or
      for a similar purpose.

            

    

     

    9           The
Transferee:

     

    
      	
              (a)

            	
              confirms
      that it has received a copy of the Loan Agreement and each other Finance
      Document;

            

    

     

    
      	
              (b)

            	
              agrees
      that it will have no rights of recourse on any ground against either the
      Transferor, the Agent, the Security Trustee, the Swap Bank or any Lender
      in the event that:

            

    

     

    
      	
               
      

            	
              (i)

            	
              the
      Finance Documents prove to be invalid or
  ineffective,

            

    

     

    
      	
               
      

            	
              (ii)

            	
              the
      Borrower or any Security Party fails to observe or perform its
      obligations, or to discharge its liabilities, under the Finance
      Documents;

            

    

     

    
      	
               
      

            	
              (iii)

            	
              it
      proves impossible to realise any asset covered by a Security Interest
      created by a Finance Document, or the proceeds of such assets are
      insufficient to discharge the liabilities of the Borrower or any Security
      Party under the Finance Documents;

            

    

     

    
      	
              (c)

            	
              agrees
      that it will have no rights of recourse on any ground against the Agent,
      the Security Trustee, the Swap Bank or any Lender in the event that this
      Certificate proves to be invalid or
ineffective;

            

    

     

    
      	
              (d)

            	
              warrants
      to the Transferor and each Relevant Party (i) that it has full capacity to
      enter into this transaction and has taken all corporate action and
      obtained all official consents which it needs to take or obtain in
      connection with this transaction; and (ii) that this Certificate is valid
      and binding as regards the Transferee;
and

            

    

     

    
      	
              (e)

            	
              confirms
      the accuracy of the administrative details set out below regarding the
      Transferee.

            

    

     

    
      
         

      

      
        75

        
          

        

      

      
         

      

    

    
      	
              10

            	
              The
      Transferor and the Transferee each undertake with the Agent and the
      Security Trustee severally, on demand, fully to indemnify the Agent and/or
      the Security Trustee in respect of any claim, proceeding, liability or
      expense (including all legal expenses) which they or either of them may
      incur in connection with this Certificate or any matter arising out of it,
      except such as are shown to have been mainly and directly caused by the
      gross and culpable negligence or dishonesty of the Agent’s or the Security
      Trustee’s own officers or
employees.

            

    

     

    
      	
              11

            	
              The
      Transferee shall repay to the Transferor on demand so much of any sum paid
      by the Transferor under paragraph 10 above as exceeds one-half of the
      amount demanded by the Agent or the Security Trustee in respect of a
      claim, proceeding, liability or expense which was not reasonably
      foreseeable at the date of this Certificate; but nothing in this paragraph
      shall affect the liability of each of the Transferor and the Transferee to
      the Agent or the Security Trustee for the full amount demanded by
      it.

            

    

     

    
      	
              [Name
      of Transferor]

            	
              [Name
      of Transferee]

            
	 	 
	By: 	 By:
	 	 
	 	 
	Date:	Date:
	 	 

    

     

    Agent

     

    Signed
for itself and for and on behalf of itself

    as Agent
and for every other Relevant Party

     

    COMMERZBANK
AG

     

    By:

     

    Date:

     

    
      
         

      

      
        76

        
          

        

      

      
         

      

    

    

    Administrative
Details of Transferee

     

    Name of
Transferee:

     

    Lending
Office:

     

    Contact
Person

    (Loan
Administration Department):

     

    Telephone:

     

    Telex:

     

    Fax:

     

    Contact
Person

    (Credit
Administration Department):

     

    Telephone:

     

    Telex:

     

    Fax:

     

    Account
for payments:

     

    
      	
              Note:

            	
              This
      Transfer Certificate alone may not be sufficient to transfer a
      proportionate share of the Transferor’s interest in the security
      constituted by the Finance Documents in the Transferor’s or Transferee’s
      jurisdiction.  It is the responsibility of each Lender to
      ascertain whether any other documents are required for this
      purpose.

            

    

    
      
         

      

      
        77

        
          

        

      

      
         

      

    

    

    SCHEDULE
6

     

    

     

    FORM
OF COMPLIANCE CERTIFICATE

     

    To:          Commerzbank
AG

    Ness
7-9

    D-20457
Hamburg

    Germany

     

    [l] 200[l]

     

    Dear
Sirs,

     

    We refer
to a loan agreement dated [l] 2007 (the “Loan Agreement”) made between
(amongst others) yourselves and ourselves in relation to a revolving credit
facility of up to $250,000,000.

     

    Words and
expressions defined in the Loan Agreement shall have the same meaning when used
in this compliance certificate.

     

    We
enclose with this certificate a copy of the [audited]/[unaudited] consolidated
accounts for the Group for the [Financial Year] [3-month period] ended [l].  The
accounts (i) have been prepared in accordance with all applicable laws and GAAP
all consistently applied, (ii) give a true and fair view of the state of affairs
of the Group at the date of the accounts and of its profit for the period to
which the accounts relate and (iii) fully disclose or provide for all
significant liabilities of the Group.

     

    We also
enclose copies of the valuations of all the Fleet Vessels which were used in
calculating the Market Value Adjusted Total Assets of the Group as at [l].

     

    The
Borrower represents that no Event of Default or Potential Event of Default has
occurred as at the date of this certificate [except for the following matter or
event [set out all material
details of matter or event]].  In addition as of [l], the Borrower confirms
compliance with the financial covenants set out in Clause 12.4 of the Loan
Agreement for the 3 months ending as of the date to which the enclosed accounts
are prepared.

     

    We now
certify that, as at [l]:

     

    
      	
              (a)

            	
              the
      ratio of Total Liabilities to EBITDA is [l]:[l];

            

    

     

    
      	
              (b)

            	
              the
      Market Value Adjusted Net Worth of the Group is $[l];

            

    

     

    
      	
              (c)

            	
              Liquid
      Assets available to the Group are $[l] in aggregate of
      which an aggregate amount of $[l] is standing to
      the credit of the Reserve Account;

            

    

     

    
      	
              (d)

            	
              the
      Leverage Ratio is [l]:[l];
    and

            

    

     

    
      	
              (e)

            	
              the
      Security Cover Percentage is [l] per
      cent.

            

    

     

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

     

    ______________________________

    [l]

    Chief
Financial Officer of

    Paragon
Shipping Inc.

    
      
         

      

      
        78

        
          

        

      

      
         

      

    

    SCHEDULE
7

     

    

     

    MANDATORY
COST FORMULA

     

    
      	
              1

            	
              The
      Mandatory Cost is an addition to the interest rate to compensate Lenders
      for the cost of compliance with (a) the requirements of the Financial
      Services Authority (or any other authority which replaces all or any of
      its functions) or (b) the requirements of the European Central
      Bank.

            

    

     

    
      	
              2

            	
              On
      the first day of each Interest Period (or as soon as possible thereafter)
      the Agent shall calculate, as a percentage rate, a rate (the “Additional Cost Rate”)
      for each Lender, in accordance with the paragraphs set out
      below.  The Mandatory Cost will be calculated by the Agent as a
      weighted average of the Lenders’ Additional Cost Rates (weighted in
      proportion to the percentage participation of each Lender in the Loan) and
      will be expressed as a percentage rate per
  annum.

            

    

     

    
      	
              3

            	
              The
      Additional Cost Rate for any Lender lending from a lending office in a
      Participating Member State will be the percentage notified by that Lender
      to the Agent.  This percentage will be certified by that Lender
      in its notice to the Agent to be its reasonable determination of the cost
      (expressed as a percentage of that Lender’s participation in the Loan) of
      complying with the minimum reserve requirements of the European Central
      Bank in respect of loans made from that lending
  office.

            

    

     

    
      	
              4

            	
              The
      Additional Cost Rate for any Lender lending from a lending office in the
      United Kingdom will be calculated by the Agent as
  follows:

            

    

     

    

      
        	 
      	 
      	
                E x
0.01

              	 
      	
                per
      cent. per annum

              	 
      
	 
      	 
      	
                300

              	 
      	 
      

      

    

     

    Where:

     

    
      	
               
      

            	
              E

            	
              is
      designed to compensate Lenders for amounts payable under the Fees Rules
      and is calculated by the Agent as being the average of the most recent
      rates of charge supplied by the Lenders to the Agent pursuant to paragraph
      6 below and expressed in pounds per
£1,000,000.

            

    

     

    
      	
              5

            	
              For
      the purposes of this Schedule:

            

    

     

    
      	
              (a)

            	
              “Special Deposits” has
      the meaning given to it 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 FSA Supervision Manual 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;

            

    

     

    
      	
              (f)

            	
              “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);

            

    

     

    
      	
              (g)

            	
              “Participating Member
      State” means any member state of the European Union that adopts or
      has adopted the euro as its lawful currency in accordance with legislation
      of the European Union relating to European Monetary Union;
    and

            

    

     

    
      
         

      

      
        79

        
          

        

      

      
         

      

    

    
      	
              (h)

            	
              “Tariff Base” has the
      meaning given to it in, and will be calculated in accordance with, the
      Fees Rules.

            

    

     

    
      	
              6

            	
              If
      requested by the Agent, each Lender lending from a lending office in the
      United Kingdom shall, as soon as practicable after publication by the
      Financial Services Authority, supply to the Agent, the rate of charge
      payable by that Lender to the Financial Services Authority pursuant to the
      Fees Rules in respect of the relevant financial year of the Financial
      Services Authority (calculated for this purpose by that Lender as being
      the average of the Fee Tariffs applicable to that Lender for that
      financial year) and expressed in pounds per £1,000,000 of the Tariff Base
      of that Lender.

            

    

     

    
      	
              7

            	
              Each
      Lender shall supply any information required by the Agent for the purpose
      of calculating its Additional Cost Rate.  In particular, but
      without limitation, each Lender shall supply the following information in
      writing on or prior to the date on which it becomes a
    Lender:

            

    

     

    
      	
              (a)

            	
              the
      jurisdiction of its lending office;
and

            

    

     

    
      	
              (b)

            	
              any
      other information that the Agent may reasonably require for such
      purpose.

            

    

     

    Each
Lender shall promptly notify the Agent in writing of any change to the
information provided by it pursuant to this paragraph.

     

    
      	
              8

            	
              The
      rates of charge of each Lender lending from a lending office in the United
      Kingdom for the purpose of calculating E shall be determined by the Agent
      based upon the information supplied to it pursuant to paragraph 6 above
      and on the assumption that, unless a Lender notifies the Agent to the
      contrary, each Lender’s obligations in relation to cash ratio deposits and
      Special Deposits are the same as those of a typical bank from its
      jurisdiction of incorporation with a lending office in the same
      jurisdiction as its lending office.

            

    

     

    
      	
              9

            	
              The
      Agent shall have no liability to any person if such determination results
      in an Additional Cost Rate which over or under compensates any Lender and
      shall be entitled to assume that the information provided by any Lender
      pursuant to paragraphs 3, 6 and 7 above is true and correct in all
      respects.

            

    

     

    
      	
              10

            	
              The
      Agent shall distribute the additional amounts received as a result of the
      Mandatory Cost to the Lenders on the basis of the Additional Cost Rate for
      each Lender based on the information provided by each Lender pursuant to
      paragraphs 3, 6 and 7 above.

            

    

     

    
      	
              11

            	
              Any
      determination by the Agent pursuant to this Schedule in relation to a
      formula, the Mandatory Cost, an Additional Cost Rate or any amount payable
      to a Lender shall, in the absence of manifest error, be conclusive and
      binding on all parties.

            

    

     

    The Agent
may from time to time, after consultation with the Borrower and the Lenders,
determine and notify to all parties any amendments which are required to be made
to this Schedule in order to comply with  any change in law,
regulation or any requirements from time to time imposed by 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 all
parties

    
      
         

      

      
        80

        
          

        

      

      
         

      

    

    

     

    SCHEDULE
8

     

     

    DESIGNATION
NOTICE

     

    To:          Commerzbank
AG

    Kaiserstrasse
16,

    60621
Frankfurt am Main

    Germany

     

    [l]

     

    Dear
Sirs

     

    Loan
Agreement dated [l]
2007 made between (inter alia) (i) ourselves as Borrower, (ii) the Lenders,
(iii) yourselves as Agent, Arranger and Security Trustee and (iv) yourselves as
Swap Bank (the “Loan Agreement”)

     

    We refer
to:

     

    
      	
              1

            	
              the
      Loan Agreement;

            

    

     

    
      	
              2

            	
              the
      Master Agreement dated [l] made between
      ourselves and [l];
    and

            

    

     

    
      	
              3

            	
              a
      Confirmation delivered pursuant to the said Master Agreement dated [l] and addressed by
      [l] to
      us.

            

    

     

    In
accordance with the terms of the Loan Agreement, we hereby give you notice of
the said Confirmation and hereby confirm that the Transaction evidenced by it
will be designated as a “Designated Transaction” for the purposes of the Loan
Agreement and the Finance Documents.

     

    Yours
faithfully,

     

    .................................................

     

    for and
on behalf of

    PARAGON
SHIPPING INC.

    
      
         

      

      
        81

        
          

        

      

      
         

      

    

    EXECUTION
PAGES

    
 

    
      	
              BORROWER

            	 
      	 
      
	 
      	 
      	 
      
	SIGNED
      by 	
              )

            	 
      
	for
      and on behalf of 	
              )

            	 
      
	 PARAGON
      SHIPPING INC. 	
              )

            	 
      

    

     

    
      	
              LENDERS

            	 
      	 
      
	 
      	 
      	 
      
	SIGNED
      by 	
              )

            	 
      
	for
      and on behalf of 	
              )

            	 
      
	COMMERZBANK
      AG 	
              )

            	 
      

    

     

    
      	
              SWAP
      BANK

            	 
      	 
      
	 
      	 
      	 
      
	SIGNED
      by 	
              )

            	 
      
	for
      and on behalf of 	
              )

            	 
      
	COMMERZBANK
      AG 	
              )

            	 
      

    

     

    
      	
              AGENT

            	 
      	 
      
	 
      	 
      	 
      
	SIGNED
      by 	
              )

            	 
      
	for
      and on behalf of 	
              )

            	 
      
	COMMERZBANK
      AG 	
              )

            	 
      

    

     

    
      	
              SECURITY
      TRUSTEE

            	 
      	 
      
	 
      	 
      	 
      
	SIGNED
      by 	
              )

            	 
      
	for
      and on behalf of 	
              )

            	 
      
	COMMERZBANK
      AG 	
              )

            	 
      

    

    

    
      
        
           

        

        
          82

          
            

          

        

        
           

        

      

    

    

b

    
      	ARRANGER	 	 
	 
      	 
      	 
      
	SIGNED
      by 	
              )

            	 
      
	for
      and on behalf of 	
              )

            	 
      
	COMMERZBANK
      AG 	
              )

            	 
      

      

        
          	SIGNED
      by 	
                  )

                	 
      
	for
      and on behalf of 	
                  )

                	 
      
	COMMERZBANK
      AG 	
                  )

                	 
      

        

        

          
            	Witness
      to all the  	
                    )

                  	 
      
	above
      signatures	
                    )

                  	 
      
	 	
                    )

                  	 
      
	Name:	 	 
	 	 	 
	Address:	 	 

          

          
SK 25744
0001 876100

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00141-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00141-of-00352.parquet"}]]