Document:

d1199286_ex4-32.htm

Exhibit 4.32

 

Date   28 December 2010

NOUMEA SHIPPING LTD

as Borrower

-and-

CRÉDIT AGRICOLE CORPORATE AND INVESTMENT BANK

as Lender

________________________________________________

LOAN AGREEMENT

________________________________________________

relating to a US$20,000,000 facility

to re-finance part of the acquisition cost of

m.v. "MAERSK NOUMEA"

  

WATSON, FARLEY & WILLIAMS  

  

INDEX

 

 

	Clause	Page

 

	
1

	
INTERPRETATION

	
1

	
2

	
FACILITY

	
13

	
3

	
DRAWDOWN

	
13

	
4

	
INTEREST

	
14

	
5

	
INTEREST PERIODS

	
14

	
6

	
DEFAULT INTEREST

	
15

	
7

	
REPAYMENT AND PREPAYMENT

	
16

	
8

	
CONDITIONS PRECEDENT

	
18

	
9

	
REPRESENTATIONS AND WARRANTIES

	
19

	
10

	
GENERAL UNDERTAKINGS

	
21

	
11

	
CORPORATE UNDERTAKINGS

	
24

	
12

	
INSURANCE

	
25

	
13

	
SHIP COVENANTS

	
29

	
14

	
SECURITY COVER

	
32

	
15

	
PAYMENTS AND CALCULATIONS

	
34

	
16

	
APPLICATION OF RECEIPTS

	
35

	
17

	
APPLICATION OF EARNINGS

	
36

	
18

	
EVENTS OF DEFAULT

	
37

	
19

	
FEES AND EXPENSES

	
41

	
20

	
INDEMNITIES

	
42

	
21

	
NO SET-OFF OR TAX DEDUCTION

	
43

	
22

	
ILLEGALITY, ETC

	
44

	
23

	
INCREASED COSTS

	
44

	
24

	
SET OFF

	
46

	
25

	
TRANSFERS AND CHANGES IN LENDING OFFICE

	
46

	
26

	
VARIATIONS AND WAIVERS

	
47

	
27

	
NOTICES

	
47

	
28

	
SUPPLEMENTAL

	
49

	
29

	
LAW AND JURISDICTION

	
49

	
SCHEDULE 1  DRAWDOWN NOTICE

	
51

	
SCHEDULE 2  CONDITION PRECEDENT DOCUMENTS

	
52

	
EXECUTION PAGE

	
55

  

  

  

LOAN AGREEMENT made on 28 December 2010

BETWEEN

	
(1)

	
NOUMEA SHIPPING LTD, a corporation incorporated in the Republic of Liberia and having its registered office at 80 Broad Street, Monrovia, Liberia (the "Borrower"); and

	
(2)

	
CRÉDIT AGRICOLE CORPORATE AND INVESTMENT BANK, acting through its office at 9 Quai du President Paul Doumer, 92400 Courbevoie, La Defense, Paris, France (the "Lender").

WHEREAS

The Lender has agreed to make available to the Borrower a loan facility of up to US$20,000,000 in two tranches for the purpose of re-financing part of the acquisition cost of m.v. "MAERSK NOUMEA".

IT IS AGREED as follows:

	
1

	
INTERPRETATION

	
1.1

	
Definitions.  Subject to Clause 1.5, in this Agreement:

"Accounting Information"  means the annual audited consolidated accounts of the Group referred to in Clause 10.6(a) or the quarterly unaudited accounts of the Group referred to in Clause 10.6(b) (as the context may require);

"Accounts Pledge"  means a deed creating security in respect of the Operating Account and the Retention Account in such form as the Lender may approve or require;

"Approved Manager"  means Eurobulk Ltd., a corporation incorporated in the Republic of Liberia and having a place of business at 4 Messogiou & Evropis Street, Maroussi 151 24, Greece or any other company which the Lender may approve from time to time as the manager of each Ship;

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

	
  

	
(a)

	
31 January 2011 (or such later date as the Lender may agree with the Borrower); or

	
  

	
(b)

	
if earlier, the date on which the Loan is fully borrowed or the Lender's obligation to advance the Loan is cancelled or terminated;

"Borrower"  means Noumea Shipping Ltd, a corporation incorporated in the Republic of Liberia and having its registered office at 80 Broad Street, Monrovia, Liberia;

"Business Day"  means a day on which banks are open in London and Paris and, in respect of a day on which a payment is required to be made under a Finance Document, also in New York City;

"Charter Conditions"  means each of the conditions referred to in Clause 7.12;

  

 

  

"Charter Guarantee"  means, in relation to the Initial Time Charter, any guarantee of the obligations of the Time Charterer under the Time Charter;

"Charter Guarantor"  means, in relation to the Initial Time Charter, the company which has or will enter into the Charter Guarantee;

"Collateral General Assignment"  means a second priority general assignment of the Earnings, the Insurances and the Requisition Compensation of the Collateral Ship made or to be made between the Collateral Owner and the Lender in such form as the Lender may approve or require;

"Collateral Guarantee"  means a guarantee by the Collateral Owner of the obligations of the Borrower under this Agreement in such form as the Lender may approve or require;

"Collateral Finance Documents"  means the Collateral Guarantee, the Collateral Mortgage and the Collateral General Assignment and in singular means any of them;

"Collateral Owner"  means Prospero Maritime Inc., a corporation incorporated in the Republic of the Marshall Islands and having its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands;

"Collateral Mortgage" means a second preferred Marshall Islands ship mortgage in respect of the Collateral Ship in such form as the Lender may approve or require;

"Collateral Ship"  means the 1993-built Panamax bulk carrier of 69,268 metric tons deadweight registered in the ownership of the Collateral Owner under Marshall Islands flag with the name "ARISTIDES N.P.";

"Contractual Currency" has the meaning given in Clause 20.5;

"Corporate Guarantee"  means the guarantee by the Corporate Guarantor of the obligations of the Borrower under this Agreement and the Finance Documents in such form as the Lender may approve or require;

"Corporate Guarantor"  means Euroseas Ltd., a corporation incorporated in the Republic of the Marshall Islands and having its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands in its capacity as Corporate Guarantor;

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

"Drawdown Date"  means, in relation to a Tranche, the date requested by the Borrower for that Tranche to be advanced, or (as the context requires) the date on which the Tranche is actually advanced;

"Drawdown Notice"  means a notice in the form set out in Schedule 1 (or in any other form which the Lender approves or reasonably requires);

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

  

2

  

	
  

	
(a)

	
all freight, hire and passage moneys, compensation payable to the relevant Owner 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 that Ship;

	
  

	
(c)

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

	
  

	
(d)

	
if and whenever that Ship is employed on terms whereby any moneys falling within paragraphs (a) or (c) 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 that Ship;

"Environmental Claim"  means:

	
  

	
(a)

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

	
  

	
(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:

	
  

	
(a)

	
any release of Environmentally Sensitive Material from a Ship; or

	
  

	
(b)

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

  

3

  

 

"Event of Default"  means any of the events or circumstances described in Clause 18.1;

"Finance Documents"  means:

	
  

	
(a)

	
this Agreement;

	
  

	
(b)

	
the Corporate Guarantee;

	
  

	
(c)

	
the Collateral Finance Documents;

	
  

	
(d)

	
the Mortgage;

	
  

	
(e)

	
the General Assignment;

	
  

	
(f)

	
the Accounts Pledge;

	
  

	
(g)

	
the Negative Pledge;

	
  

	
(h)

	
any Time Charter Assignment;

	
  

	
(i)

	
the Manager's Undertaking; and

	
  

	
(j)

	
any other document (whether creating a Security Interest or not) which is executed at any time by the Borrower 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 Lender under this Agreement or any of the documents referred to in this definition;

"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

  

4

  

 

	
  

	
(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;

 

"Financed Ship"  means the 2001-built fully cellular and geared container vessel of 2,556 TEU registered in the ownership of the Borrower under Liberian flag with the name "MAERSK NOUMEA";

"Financial Year"  means, in relation to each of the Borrower and the Group, each period of 1 year commencing on 1 January in respect of which its audited Accounting Information is or ought to be prepared;

 "General Assignment"  means the general assignment of the Earnings, the Insurances and any Requisition Compensation of the Financed Ship in such form as the Lender may approve or require;

"Group"  means the Borrower, the Collateral Owner, the Corporate Guarantor and all subsidiaries of the Corporate Guarantor from time to time during the Security Period and "member of the Group" shall be construed accordingly;

"Initial Time Charter"  means a time charterparty in relation to the Financed Ship, originally dated 21 March 2005 and made between King Power Limited as owner and the Time Charterer, as amended by an agreement named "Tripartite Agreement" and dated 27 May 2008 pursuant to which King Power Limited novated to the Borrower all its rights and obligations under the time charterparty, for a period expiring on 21 August 2011 and at a net daily hire rate of $16,800 with the following successive annual options exercisable by the Time Charterer:

	
  

	
(a)

	
a first option to extend the duration from 21 August 2011 to 20 August 2012 at a net daily hire rate of $18,735;

	
  

	
(b)

	
a second option to extend the duration from 21 August 2012 to 20 August 2013 at a net daily hire rate of $19,240; and

	
  

	
(c)

	
a third option to extend the duration from 21 August 2013 to 20 August 2014 at a net daily hire rate of $19,750;

"Initial Market Value"  means the Market Value of the Ship determined in accordance with the valuation referred to in paragraph 7 of Schedule 2, Part A;

"Insurances"  means:

	
  

	
(a)

	
all policies and contracts of insurance, including entries of a Ship in any protection and indemnity or war risks association, which are effected in respect of the Ship, its Earnings or otherwise in relation to a Ship; 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, in relation to a Tranche, a period determined in accordance with Clause 5;

"ISM Code" means in relation to its application to an Owner, the Approved Manager, a Ship and its operation:

  

5

  

	
  

	
(a)

	
'The International Management Code for the Safe Operation of Ships and for Pollution Prevention', currently known or referred to as the 'ISM Code', adopted by the Assembly of the International Maritime Organisation by Resolution A.741(18) on 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 Organisation 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 a Ship:

	
  

	
(a)

	
the document of compliance (DOC) and safety management certificate (SMC) issued pursuant to the ISM Code in relation to a 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 Lender may require; and

	
  

	
(c)

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

"ISM SMS" means, in relation to a Ship, the safety management system which is required to be developed, implemented and maintained by the Owner thereof 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") adopted by a Diplomatic conference of the IMO on Maritime Security on 13 December 2002 and now set out in Chapter XI-2 of the Safety of Life at Sea Convention (SOLAS) 1974 (as amended) to take effect on 1 July 2004;

	
  

	
"ISPS Code Documentation"  includes:

	
  

	
(a)

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

	
  

	
(e)

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

"Lender"  means:

  

6

  

 

 

	
  

	
(a)

	
Crédit Agricole Corporate and Investment Bank, acting through its branch at 9 Quai du President Paul Doumer, 92400 Courbevoie, La Defense, Paris, France (or through another branch notified to the Lender under Clause 25.6) or its direct or indirect successor;

	
  

	
(b)

	
a direct or indirect assignee of such bank or financial institution or of a successor of it; or

	
  

	
(c)

	
a direct or indirect successor of an assignee such as is mentioned in (b), unless any of the foregoing has assigned all its rights, and novated all its obligations and liabilities, under the Finance Documents;

"LIBOR"  means, for an Interest Period, the rate per annum determined by the Lender to be the rate at which deposits in Dollars are offered to the Lender by leading banks in the London Interbank Market at the Lender's request 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;

"Loan"  means the principal amount of the borrowing by the Borrower under this Agreement being in an amount of up to $20,000,000 or, as the context may require, the principal amount for the time being outstanding under this Agreement;

"Major Casualty"  means any casualty to a 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 $350,000 or the equivalent in any other currency;

"Management Agreement"  means the agreement (a certified true copy of which has been delivered to the Lender) made between the Approved Manager and the Borrower in respect of the management of the Financed Ship;

"Manager's Undertaking"  means the undertaking referred to in paragraph 3(a) of Schedule 2, Part B in such form as the Lender may approve or require;

"Margin"  means, in relation to:

	
(a)

	
Tranche A, 2.65 per cent. per annum; or

	
(b)

	
Tranche B:

	
  

	
(i)

	
2.65 per cent. per annum at all times when each of the Charter Conditions is satisfied; and

	
  

	
(ii)

	
4.00 per cent. per annum at all other times;

"Market Value"  means the market value of the Financed Ship at any date determined in accordance with Clause 14.5;

"Mortgage"  means the first preferred Liberian ship mortgage in respect of the Financed Ship in such form as the Lender may approve or require;

"Negative Pledge"  means the negative pledge in respect of the whole of the issued share capital of the Borrower to be executed by the Corporate Guarantor as shareholder in such form as the Lender may approve or require;

  

7

  

"Net Income"  means in relation to each Financial Year of the Borrower, the aggregate income of the Borrower appearing in the Accounting Information of the Borrower for that Financial Year, as determined in accordance with US GAAP consistently applied;

"Operating Account"  means an account in the name of the Borrower with the Lender designated "Noumea Shipping Ltd - Operating Account" or any other account (with that or another office of the Lender) which is designated by the Lender as the Operating Account for the purposes of this Agreement;

"Owner"  means, in relation to:

	
  

	
(a)

	
the Collateral Ship, the Collateral Owner; and

	
  

	
(b)

	
the Financed Ship, the Borrower,

and, in the plural, means both of them;

"Payment Currency" has the meaning given in Clause 20.5;

"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 Lender and/or the satisfaction of any other condition, would constitute an Event of Default;

"Prospero Loan Agreement" means the loan agreement dated 30 August 2006 and entered into between the Collateral Owner as borrower and the Lender pursuant to which the Lender has made available to the Collateral Owner a loan facility of (originally) $15,500,000;

  

8

  

 

"Relevant Person" has the meaning given in Clause 18.8;

"Repayment Date"  means a date on which a repayment is required to be made under Clause 7;

"Repayment Instalment"  means, in relation to each Tranche, each instalment relative thereto specified in Clause 7.1 (but excluding the Balloon Instalment);

"Replacement Charter"  means at any time when the Financed Ship is not operating under the Initial Time Charter for any reason whatsoever, a charter in respect of the Financed Ship of a duration in excess of 12 months, at a daily hire rate and with a charterer in all respects acceptable to the Lender (in its sole and absolute discretion);

"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";

"Retention Account"  means an account in the name of the Borrower with the Lender in Paris designated "Noumea Shipping Ltd - Retention Account" or any other account (with that or another office of the Lender) which is designated by the Lender as the Retention Account for the purposes of this Agreement;

"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 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 the Approved Manager, the Collateral Owner, the Corporate Guarantor and any other person (except the Lender) 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";

  

9

  

"Security Period"  means the period commencing on the date of this Agreement and ending on the date on which the Lender notifies the Borrower and the Security Parties 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 19, 20 or 21 below or any other provision of this Agreement or another Finance Document; and

	
  

	
(d)

	
the Lender,  in its reasonable judgement, does 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;

"Ship"  means each of the Financial Ship and the Collateral Ship and, in the plural, means both of them;

"Time Charter"  means each of the Initial Time Charter and any Replacement Charter and, in the plural, means all of them;

"Time Charter Assignment"  means, in relation to a Time Charter, an assignment of the rights of the Borrower thereunder and any guarantee given pursuant to the Time Charter (including, without limitation, the Charter Guarantee) in such form as the Lender may approve or require;

"Time Charterer" means A.. P Møller - Maersk A/S of Copenhagen, Denmark, or its subsidiary;

"Total Loss" means, in relation to a Ship:

	
  

	
(a)

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

	
  

	
(b)

	
any expropriation, confiscation, requisition or acquisition of the Ship, whether for full consideration, a consideration less than the Ship's 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 that Ship by any tribunal or by any person or person claiming to be a tribunal; and

  

10

  

 

 

	
  

	
(d)

	
any arrest, capture, seizure or detention of that Ship (including any hijacking or theft) unless she is within  30 days redelivered to the full control of the Borrower or the Collateral Owner (as the case may be);

"Total Loss Date" means, in relation to a Ship:

	
  

	
(a)

	
in the case of an actual loss of that 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 that 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 Owner thereof with that Ship's insurers in which the insurers agree to treat that Ship as a total loss; and

 

	
  

	
(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 Lender that the event constituting the total loss occurred;

"Tranche"  means, either Tranche A or Tranche B and in the plural means both of them;

"Tranche A" means an amount of up to the lesser of (a) $15,000,000 and (b) 55 per cent. of the Initial Market Value of the Financed Ship or, as the context may require, the aggregate principal amount thereof outstanding at the relevant time under this Agreement;

"Tranche B" means an amount of up to the lesser of (a) $5,000,000 and (b) 20 per cent. of the Initial Market Value of the Financed Ship or, as the context may require, the aggregate principal amount thereof outstanding at the relevant hire under this Agreement; and

"US GAAP"  means generally accepted accounting principles as from time to time in effect in the United States of America.

	
1.2

	
Construction of certain terms.  In this Agreement:

 

"approved" means, for the purposes of Clause 12, approved in writing by the Lender;

"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 or fax;

  

11

  

"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 a Ship in consequence of its insured value being less than the value at which the 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 is obliged to effect, under Clause 12 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;

"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 in them of clause 6 of the International Hull Clauses (1/11/02 or 1/11/03), clause 8 of the Institute Time Clauses (Hulls) (1/11/95) or clause 8 of the Institute Time Clauses (Hulls) (1/10/83) or the Institute Amended Running Down Clause (1/10/71) or any equivalent provision;

 "regulation" includes any regulation, rule, official directive, request or guideline whether or not having the force of law 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;

  

12

  

"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" includes the risk of mines and all risks excluded by clause 29 of the International Hull Clauses (1/11/02 or 1/11/03), clause 24 of the Institute Time Clauses (Hulls) (1/11/95) or clause 23 of the Institute Time Clauses (Hulls) (1/10/83).

	
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 attaching 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

 

	
(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; and

 

	
(c)

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

 

	
2

	
FACILITY

 

	
2.1

	
Amount of facility.  Subject to the other provisions of this Agreement, the Lender shall make available to the Borrower a loan facility of up to $20,000,000 divided into two Tranches, being each of Tranche A and Tranche B.

  

13

  

	
2.2

	
Purpose of Tranches.  The Borrower undertakes with the Lender to use each Tranche only for the purpose stated in the preamble to this Agreement.

 

	
3

	
DRAWDOWN

 

	
3.1

	
Request for Tranche.  Subject to the following conditions, the Borrower may request a Tranche to be advanced by ensuring that the Lender receives the completed Drawdown Notice not later than 11.00 a.m. (London time) 3 Business Days prior to the intended Drawdown Date.

 

	
3.2

	
Availability. The conditions referred to in Clause 3.1 are that relative to the relevant Tranche:

 

	
(a)

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

	
(b)

	
each Tranche shall be made available in a single amount and any amount undrawn under a Tranche shall be cancelled and may not be borrowed by the Borrower at a later date;

	
(c)

	
each Tranche shall not exceed:

	
  

	
(i)

	
in the case of Tranche A, an amount of up to the lesser of (a) $15,000,000 and (b) 55 per cent. of the Initial Market Value of the Financed Ship; and

	
  

	
(ii)

	
in the case of Tranche B, an amount of up to the lesser of (a) $5,000,000 and (b) 20 per cent. of the Initial Market Value of the Financed Ship; and

	
(d)

	
the aggregate principal amount of the Tranches shall not exceed $20,000,000.

	
3.3

	
Drawdown Notice irrevocable.  A Drawdown Notice must be signed by a director or a duly authorised attorney-in-fact of the Borrower; and once served, a Drawdown Notice cannot be revoked without the prior consent of the Lender.

 

	
3.4

	
Disbursement of Tranche.  Subject to the provisions of this Agreement, the Lender shall on each Drawdown Date advance the relevant Tranche to the Borrower; and payment to the Borrower shall be made to the account which the Borrower specifies in the relevant Drawdown Notice.

 

	
4

	
INTEREST

 

	
4.1

	
Payment of normal interest.  Subject to the provisions of this Agreement, interest on each Tranche in respect of each Interest Period applicable to it shall be paid by the Borrower on the last day of that Interest Period.

 

	
4.2

	
Normal rate of interest.  Subject to the provisions of this Agreement, the rate of interest on each Tranche in respect of an Interest Period applicable to it shall be the aggregate of the applicable Margin and LIBOR for that Interest Period.

 

	
4.3

	
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.

 

	
4.4

	
Notification of market disruption.  The Lender shall promptly notify the Borrower if for any reason the Lender is unable to obtain Dollars in the London Interbank Market in order to fund a Tranche (or any part of it) during any Interest Period, stating the circumstances which have caused such notice to be given.

 

	
4.5

	
Suspension of drawdown.  If the Lender's notice under Clause 4.4 is served before a Tranche is advanced, the Lender's obligation to advance that Tranche shall be suspended while the circumstances referred to in the Lender's notice continue.

 

	
4.6

	
Alternative rate of interest.  If, after a Tranche has been advanced, the Lender notifies that it is unable to obtain Dollars in the London Interbank Market to fund the Tranche (or any part of it) during any Interest Period or adequate and fair means do not exist for ascertaining the rate of interest, the Lender shall set an interest rate representing the cost of funding of the Lender in Dollars or in any available currency of the Tranche plus the applicable Margin.

  

14

  

	
5

	
INTEREST PERIODS

 

	
5.1

	
Commencement of Interest Periods.  The first Interest Period applicable to a Tranche shall commence on the Drawdown Date relative thereto and each subsequent Interest Period shall commence on the expiry of the preceding Interest Period.

 

	
5.2

	
Duration of normal Interest Periods.  Subject to Clauses 5.3 and 5.4, each Interest Period shall be:

 

	
(a)

	
3, 6 or 12 months as notified by the Borrower to the Lender not later than 11.00 a.m. (London time) 3 Business Days before the commencement of the Interest Period; or

 

	
(b)

	
in the case of the first Interest Period applicable to Tranche B, a period ending on the last day of the Interest Period applicable to Tranche A then current, whereupon both Tranches shall be consolidated and treated as a single Tranche;

 

	
(c)

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

 

	
(d)

	
such other period as the Lender may agree with the Borrower.

 

	
5.3

	
Duration of Interest Periods for Repayment Instalments.  In respect of an amount due to be repaid under Clause 7 on a particular Repayment Date, an Interest Period shall end on that Repayment Date.

 

	
5.4

	
Non-availability of matching deposits for Interest Period selected.  If, after the Borrower has selected an Interest Period longer than 6 months, the Lender notifies the Borrower by 11.00 a.m. (London time) on the third Business Day before the commencement of the Interest Period that it is not satisfied that deposits in Dollars for a period equal to the Interest Period will be available to it in the London Interbank Market when the Interest Period commences, the Interest Period shall be of 6 months.

 

	
6

	
DEFAULT INTEREST

 

	
6.1

	
Payment of default interest on overdue amounts.  The Borrower shall pay interest in accordance with the following provisions of this Clause 6 on any amount payable by the Borrower under any Finance Document which the Lender does not receive on or before the relevant date, that is:

 

	
(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 18.5, the date on which it became immediately due and payable.

 

	
6.2

	
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 Lender to be 1 per cent. above the applicable Margin plus LIBOR at which deposits in an amount equal to such overdue amount are offered on call or for successive periods of any duration of up to 3 months, as the Lender may determine from time to time.

	
6.3

	
Notification of interest periods and default rates.  The Lender shall promptly notify the Borrower of each interest rate determined by it under Clause 6.2 and of each period selected by it for the purposes 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 Lender's notification.

 

	
6.4

	
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.

 

	
6.5

	
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 be compounded every 3 months.

 

	
7

	
REPAYMENT AND PREPAYMENT

 

	
7.1

	
Amount of repayment instalments.  The Borrower shall repay each Tranche as follows:

  

15

  

(a)           in the case of Tranche A, by:

	
  

	
(i)

	
12 equal consecutive six-monthly instalments of $720,000 each; and

	
  

	
(ii)

	
a balloon instalment (the "Balloon Instalment") of $6,360,000; and

	
(b)

	
in the case of Tranche B, by:

	
  

	
(i)

	
subject to the satisfaction of each of the Charter Conditions, by 8 equal consecutive six-monthly instalments of $625,000 each; and

	
  

	
(ii)

	
if at any time either of the Charter Conditions is not satisfied, by one bullet instalment (the "Tranche B Bullet Instalment") in an amount equal to the amount of Tranche B at the time the Charter conditions (or either of them) cease to be satisfied,

Provided that if the amount of either Tranche drawdown hereunder is less than the maximum amount thereof, each of the Repayment Instalments applicable thereto and the Balloon Instalment shall be proportionately reduced.

	
7.2

	
Repayment Dates.

	
(a)

	
In the case of Tranche A, the first Repayment Instalment shall be repaid on the date falling 6 months after the Drawdown Date applicable thereto, each subsequent Repayment Instalment shall be repaid at six-monthly intervals thereafter and the last Repayment Instalment, together with the Balloon Instalment, shall be repaid on the date falling on the earlier of (a) the date falling 72 months after the Drawdown Date applicable thereto and (b) 31 January 2017; and

	
(b)

	
in the case of Tranche B:

	
  

	
(i)

	
if Tranche B is repaid in accordance with Clause 7.7(b)(i), the first Repayment Instalment shall be repaid on the date falling 6 months after the Drawdown Date applicable thereto, each subsequent Repayment Instalment shall be repaid at six-monthly intervals thereafter and the last Repayment Instalment shall be repaid on the date falling on the earlier of:

	
  

	
(A)

	
the date falling 48 months after the Drawdown Date applicable to Tranche B; and

	
  

	
(B)

	
31 January 2015; and

	
  

	
(ii)

	
if either of the Charter Conditions ceases to be satisfied at any time, the Tranche B Bullet Instalment shall be repaid on the date on which the last Repayment Instalment referred to in sub-paragraph (i) would have become due and payable if Tranche B continued to be repaid in accordance with that sub-paragraph.

	
7.3

	
Final Repayment Date.  On the final Repayment Date, the Borrower shall additionally pay to the Lender all other sums then accrued or owing under any Finance Document.

 

	
7.4

	
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.

  

16

  

	
7.5

	
Conditions for voluntary prepayment.  The conditions referred to in Clause 7.4 are that:

 

	
(a)

	
a partial prepayment shall be $200,000 or an integral multiple thereof;

 

	
(b)

	
the Lender has received from the Borrower at least 10 days' prior written notice specifying the amount to be prepaid and the date on which the prepayment is to be made; and

 

	
(c)

	
the Borrower has provided evidence satisfactory to the Lender 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 regulation relevant to this Agreement which affects the Borrower or any Security Party has been complied with.

 

	
7.6

	
Effect of notice of prepayment.  A prepayment notice may not be withdrawn or amended without the consent of the Lender 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.

 

	
7.7

	
Mandatory prepayment.  Without prejudice to the provisions of Clause 14, the Borrower shall be obliged to prepay:

 

	
(a)

	
the whole of the Loan if the Financed Ship is sold or becomes a Total Loss:

 

	
  

	
(i)

	
in the case of a sale, on or before the date on which the sale is completed; or

	
  

	
(ii)

	
in the case of Total Loss, on the earlier of the date falling 150 days after the Total Loss Date relative thereto and the date of receipt by the Lender of the proceeds of insurance relating to such Total Loss; and

	
(b)

	
pursuant to Clause 7.12, Tranche B if the Collateral Ship is sold or becomes a Total Loss:

 

	
  

	
(i)

	
in the case a sale, on or before the date on which the sale is completed; or

	
  

	
(ii)

	
in the case of Total Loss, on the earlier of the date falling 150 days after the Total Loss Date relative thereto and the date of receipt by the Lender of the proceeds of insurance relating to such Total Loss.

	
7.8

	
Shareholding and senior executive management of Borrower.  If at any time members of the Pittas family (either directly and/or through companies beneficially owned by the Pittas family and/or trusts or foundations of which the Pittas family are beneficiaries) (i) do not own the necessary shareholding to exercise executive power of the Corporate Guarantor or (ii) are not represented in the senior executive management of the Corporate Guarantor, the Borrower shall promptly advise the Lender of the occurrence of the circumstances referred to in this Clause 7.8.  If the Lender does not approve (in its sole and absolute discretion) the change in circumstances which has occurred, the Loan shall be prepaid in full subject to the Lender giving the Borrower and the Corporate Guarantor 60 days' prior written notice.

 

	
7.9

	
Amounts payable on prepayment.  A prepayment shall be made together with accrued interest (and any other amount payable under Clause 20  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 20.1(b) but without premium or penalty.

 

	
7.10

	
Application of partial prepayment.  Each partial prepayment shall, unless otherwise agreed by the Lender, be applied as follows:

 

	
(a)

	
firstly, in reducing pro rata any then outstanding Repayment Instalment in respect of Tranche B; and

	
(b)

	
secondly, in reducing the Balloon Instalment up to $1,500,000; and

	
(c)

	
thirdly, in inverse order of maturity against each of the Repayment Instalments specified

  

17

  

	
  

	
in Clause 7.1(a) which are outstanding at the relevant time.

	
7.11

	
No reborrowing.  No amount prepaid may be reborrowed.

 

	
7.12

	
Charter Conditions.  Subject to the other provisions of this Agreement, Tranche B may remain outstanding so long as:

 

	
(a)

	
the Financed Ship is subject to a valid and binding Time Charter and the Borrower's rights under that Time Charter (and any guarantee thereof) have been validly assigned to the Lender by a Time Charter Assignment  Provided that if at any time the Initial Time Charter is terminated, has expired or is not in full force and effect, the Borrower shall be in compliance with this Clause 7.12 if within 30 days of such event, it enters into a Replacement Charter and executes in favour of the Lender a Time Charter Assignment relative thereto (as well as any guarantee in respect of the Replacement Charter); and

	
(b)

	
the Collateral Finance Documents remain in full force and effect.

	
8

	
CONDITIONS PRECEDENT

 

	
8.1

	
Documents, fees and no default.  The Lender's obligation to advance a Tranche is subject to the following conditions precedent:

 

	
(a)

	
that, on or before the service of the Drawdown Notice in respect of Tranche A, the Lender receives the documents described in Part A of Schedule 2 in form and substance satisfactory to it and its lawyers;

 

	
(b)

	
that, on the Drawdown Date in respect of Tranche A but prior to the advance of that Tranche, the Lender receives the documents described in Part B of Schedule 2 in form and substance satisfactory to it and its lawyers;

 

	
(c)

	
that, on the Drawdown Date in respect of Tranche B but prior to the advance of that Tranche, the Lender receives the documents described in Part C of Schedule 2 in form and substance satisfactory to its lawyers:

 

	
(d)

	
that, on or before the Drawdown Date in respect of Tranche A, the Lender has received the management fee referred to in Clause 19.1 and has received payment of the expenses referred to in Clause 19.2;

 

	
(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 Tranche;

	
  

	
(ii)

	
the representations and warranties in Clause 9.1 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 4.4 has occurred and is continuing;

	
(f)

	
that, if the ratio set out in Clause 14.1 were applied immediately following the advance of a Tranche, the Lender would not be entitled to oblige the Borrower to provide additional security or prepay part of the Loan under that Clause; and

 

	
(g)

	
that the Lender has received, and found to be acceptable to it, any further opinions, consents, agreements and documents in connection with the Finance Documents which the Lender may reasonably request by notice to the Borrower prior to the applicable Drawdown Date.

 

	
8.2

	
Waivers of conditions precedent.  If the Lender, at its discretion, permits a Tranche to be borrowed before certain of the conditions referred to in Clause 8.1 are satisfied, the Borrower shall ensure that those conditions are satisfied within 5 Business Days after the applicable Drawdown Date (or such longer period as the Lender may specify).

 

 

 

  

18

  

 

 

	
9

	
REPRESENTATIONS AND WARRANTIES

 

	
9.1

	
General.  The Borrower represents and warrants to the Lender as follows.

 

	
9.2

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

 

	
9.3

	
Share capital and ownership.  The Borrower has an authorised share capital of 500 registered and/or bearer shares of $0.01 each, all of which shares have been issued in registered form, and the legal title and beneficial ownership of all the shares of the Borrower is held, free of any Security Interest or other claim, by the Corporate Guarantor.

 

	
9.4

	
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 and to make all the payments contemplated by, and to comply with, this Agreement and the other Finance Documents to which it is a party.

 

	
9.5

	
Consents in force.  All the consents referred to in Clause 9.4 remain in force and nothing has occurred which makes any of them liable to revocation.

 

	
9.6

	
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.

 

	
9.7

	
No third party Security Interests.  Without limiting the generality of Clause 9.6, 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 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.

 

	
9.8

	
No conflicts.  The execution by the Borrower of the Finance Documents and the borrowing of the Loan, and its compliance with each Finance Document 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.

 

	
9.9

	
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.

 

	
9.10

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

 

	
9.11

	
Information.  All information which has been provided in writing by or on behalf of the Borrower or any Security Party to the Lender in connection with any Finance Document satisfied the requirements of Clause 10.5; all audited and unaudited accounts which have been so provided satisfied the requirements of Clause 10.7; 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.

 

	
9.12

	
No litigation.  No legal or administrative action involving the Borrower (including action relating to any alleged or actual breach of the ISM Code and the ISPS Code) has been commenced or taken or, to the Borrower's knowledge, is likely to be commenced or taken which, in either case, would be likely to have a material adverse effect on the Borrower's financial position or profitability.

 

	
9.13

	
Compliance with certain undertakings.  At the date of this Agreement, the Borrower is in compliance with Clauses 10.2, 10.4, 10.9 and 10.12.

 

	
9.14

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

 

  

19

  

	
  

	
 

 

	
9.15

	
ISM Code and ISPS Code compliance.  All requirements of the ISM Code and the ISPS Code as they relate to the Borrower, the Approved Manager and the Financed Ship will on or prior to the Drawdown Date applicable to Tranche A have been complied with.

 

	
9.16

	
No money laundering.  Without prejudice to the generality of Clause 2.2, 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 (i) that it is acting for its own account, (ii) that it will use the proceeds of the Loan for its own benefit, under its full responsibility and exclusively for the purposes specified in this Agreement and (iii) 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 Directive 2005/60/EC of the European Parliament and of the Council).

 

	
10

	
GENERAL UNDERTAKINGS

 

	
10.1

	
General.  The Borrower undertakes with the Lender to comply with the following provisions of this Clause 10 at all times during the Security Period, except as the Lender may otherwise permit.

 

	
10.2

	
Title; negative pledge.  The Borrower will:

 

	
(a)

	
hold the legal title to, and own the entire beneficial interest in the Financed Ship, its Insurances and Earnings, free from all Security Interests and other interests and rights of every kind, except for those created by the Finance Documents and the effect of assignments contained in the Finance Documents; and

 

	
(b)

	
not create or permit to arise any Security Interest over any other asset, present or future.

 

	
10.3

	
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.

 

	
10.4

	
No other liabilities or obligations to be incurred.  The Borrower will not incur any liability or obligation except liabilities and obligations under the Finance Documents and liabilities or obligations reasonably incurred in the ordinary course of operating and chartering the Financed Ship.

 

	
10.5

	
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.

 

	
10.6

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

 

	
(a)

	
as soon as possible, but in no event later than 150 days after the end of each Financial Year of the Corporate Guarantor, the audited Accounting Information of the  Group for that Financial Year;

 

	
(b)

	
as soon as possible, but in no event later than 60 days after the end of each financial quarter (ending on 31 March, 30 June, 30 September and 31 December) in each Financial Year of each of the Borrower and the Corporate Guarantor the unaudited Accounting Information of the Group for that financial quarter, in each case, certified as to its correctness by the chief financial officer of the Corporate Guarantor; and

 

	
(c)

	
promptly, when requested, such other financial information and accounts relating to the business, undertaking, assets, liabilities, revenues, financial condition or affairs of any Security Party and such other further general information relating to any Security Party as the Lender from time to time may reasonably require including (without limitation) in relation to the each Ship, its Earnings, the Group, the Approved Manager and the Corporate Guarantor.

 

  

20

  

 

	
10.7

	

Form of financial statements.  All Accounting Information delivered under Clause 10.6 will:

 

	
(a)

	
be prepared in accordance with all applicable laws and US GAAP consistently applied and, in the case of audited financial statements, certified as to its correctness by auditors acceptable to the Lender;

 

	
(b)

	
give a true and fair view of the state of affairs of the Borrower or the Group (as the case may be) at the date of that Accounting Information and of the profit of the Borrower or, as the case may be, the Group for the period to which that Accounting Information relates; and

 

	
(c)

	
fully disclose or provide for all significant liabilities of the Borrower or, as the case may be, of the Group.

 

	
10.8

	
Creditor notices.  The Borrower will send the Lender, at the same time as they are despatched, copies of all communications which are despatched to all the Borrower's creditors or any class of them.

 

	
10.9

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

 

	
(a)

	
to perform its obligations under any Finance Document;

 

	
(b)

	
for the validity or enforceability of any Finance Document to which it is a party;

 

	
(c)

	
for the Borrower to continue to own and operate the Financed Ship,

 

and the Borrower will comply with the terms of all such consents.

 

	
10.10

	
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 may be 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.

 

	
10.11

	
Notification of litigation.  The Borrower will provide the Lender with details of any legal or administrative action involving the Borrower, any Security Party, either Approved Manager, either Ship, their Earnings or their Insurances 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.

 

	
10.12

	
Principal place of business.  The Borrower will maintain its place of business, and keep its corporate documents and records, at the address referred to in Clause 27.2(a); and will not establish, or do anything as a result of which it would be deemed to have, a place of business in the United Kingdom or the United States of America.

 

	
10.13

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

 

	
(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.

 

	
10.14

	
Notification of default.  The Borrower will notify the Lender 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 Lender fully up-to-date with all developments.

 

  

21

  

 

 

	
10.15

	

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

 

	
(a)

	
to the Borrower, the Collateral Owner, a Ship, the Approved Manager, the Corporate Guarantor, the Insurances, the Earnings, the Time Charterer or any member of the Group; or

 

	
(b)

	
to any other matter relevant to, or to any provision of, a Finance Document, which may be reasonably requested by the Lender at any time.

 

	
10.16

	
"Know your customer".  If:

 

	
(a)

	
the introduction of or any change in (or in the interpretation, administration or application of) any law or regulation made after the date of this Agreement;

 

	
(b)

	
any change in the status or the shareholding structure of the Borrower or any Security Party after the date of this Agreement; or

 

	
(c)

	
a proposed assignment or transfer by the Lender of any of its rights and obligations under this Agreement to a party that is not a Lender prior to such assignment or transfer, obliges the Lender (or, in the case of paragraph (c), any prospective new Lender) to comply with "know your customer" or similar identification procedures in circumstances where the necessary information is not already available to it, the Borrower shall promptly upon the request of the Lender supply, or procure the supply of, such documentation and other evidence as is reasonably requested by the Lender (for itself or, in the case of the event described in paragraph (c), on behalf of any prospective new Lender) in order for the Lender or, in the case of the event described in paragraph (c), any prospective new Lender to carry out and be satisfied it has complied with all necessary "know your customer" or other similar checks under all applicable laws and regulations pursuant to the transactions contemplated in the Finance Documents.

 

	
10.17

	
Minimum liquidity.  At all times during the Security Period, the Borrower will ensure that an amount of not less than $300,000 is standing to the credit of the Operating Account.

 

	
11

	
CORPORATE UNDERTAKINGS

 

	
11.1

	
General.  The Borrower also undertakes with the Lender to comply with the following provisions of this Clause 11 at all times during the Security Period except as the Lender may otherwise permit.

 

	
11.2

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

 

	
11.3

	
Negative undertakings.  The Borrower will not:

 

	
(a)

	
carry on any business other than the ownership, chartering and operation of the Finaced Ship; or

 

	
(b)

	
pay any dividend or make any other form of distribution or effect any form of redemption, purchase or return of share capital Provided that:

 

	
  

	
(i)

	
the Borrower may pay in any Financial Year dividends out of any Earnings which have been retained in any previous Financial Year; and/or

 

	
  

	
(ii)

	
the Borrower may pay in any Financial Year (no more frequently than on a quarterly basis during that Financial Year) dividends in an aggregate amount not exceeding 60 per cent. of the Net Income in that Financial Year if at the relevant time no Event of Default has occurred or is continuing or would result from the payment of such dividend; and/or

 

  

22

  

 

	
  

	
(iii)

	
with the prior written consent of the Lender (to be given or withheld in its sole and absolute discretion) the Borrower may pay dividends in any Financial Year in excess of the amount referred to in sub-paragraph (i);

 

	
(c)

	
repay any shareholder loans or any other loans advanced to it by any person (or, in either case, any interest thereon), nor make nay loans or advances to any person; 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; or

 

	
(e)

	
open or maintain any account with any bank or financial institution except the Operating Account and the Retention Account and any other account opened or to be opened with the Lender for the purposes of the Finance Documents; or

 

	
(f)

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

 

	
(g)

	
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; or

 

	
(h)

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

 

	
12

	
INSURANCE

 

	
12.1

	
General.  The Borrower also undertakes with the Lender to comply with the following provisions of this Clause 12 at all times during the Security Period except as the Lender may otherwise permit.

 

	
12.2

	
Maintenance of obligatory insurances.  The Borrower shall keep the Financed Ship insured at the expense of the Borrower against:

 

	
(a)

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

 

	
(b)

	
war risks;

 

	
(c)

	
protection and indemnity risks (all classes); and

 

	
(d)

	
any other risks against which the Lender considers, having regard to practices and other circumstances prevailing at the relevant time, it would in the opinion of the Lender be reasonable for the Borrower to insure and which are specified by the Lender by notice to the Borrower.

 

	
12.3

	
Terms of obligatory insurances.  The Borrower 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) the Market Value of the Financed Ship and (ii) 120 per cent. of the Loan and upon such terms as shall from time to time be approved in writing by the Lender;

 

	
(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 and the international marine insurance market for vessels of the same type and age as the Financed Ship;

 

	
(d)

	
in relation to protection and indemnity risks, in respect of the full tonnage of the Financed Ship;

 

  

23

  

 

	
(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.

 

	
12.4

	
Further protections for the Lender.  In addition to the terms set out in Clause 12.3, the Borrower shall procure that the obligatory insurances shall:

 

	
(a)

	
whenever the Lender requires name (or be amended to name) the Lender as additional named assured for its rights and interests, warranted no operational interest and with full waiver of rights of subrogation against the Lender, but without the Lender thereby being liable to pay (but having the right to pay) premiums, calls or other assessments in respect of such insurance;

 

	
(b)

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

 

	
(c)

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

 

	
(d)

	
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 Lender in respect of any rights or interests (secured or not) held by or available to the Lender 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 Lender, the Borrower or any other Security Party) in circumstances where the insurers have fully discharged their liabilities and obligations under the relevant obligatory insurances;

 

	
(e)

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

 

	
(f)

	
provide that the Lender may make proof of loss if the Borrower fails to do so; and

 

	
(g)

	
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 Lender, 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 Lender for 30 days (or 7 days in the case of war risks) after receipt by the Lender of prior written notice from the insurers of such cancellation, change or lapse.

 

	
12.5

	
Renewal of obligatory insurances.  The Borrower shall:

 

	
(a)

	
at least 14 days before the expiry of any obligatory insurance effected by it:

 

	
  

	
(i)

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

 

	
  

	
(ii)

	
obtain the Lender's approval to the matters referred to in paragraph (i) above;

 

	
(b)

	
at least 7 days before the expiry of any obligatory insurance effected by it, renew the insurance in accordance with the Lender's approval pursuant to paragraph (a) above; 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 Lender in writing of the terms and conditions of the renewal.

 

	
12.6

	
Copies of policies; letters of undertaking.  The Borrower shall ensure that all approved brokers provide the Lender with pro forma copies of all policies relating to the obligatory insurances which they are to effect or renew and of a letter or letters of undertaking in a form required by the Lender 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 12.4;

 

  

24

  

 

	
(b)

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

 

	
(c)

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

 

	
(d)

	
they will notify the Lender, 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 the Borrower or its agents and, in the event of their receiving instructions to renew, they will promptly notify the Lender of the terms of the instructions; and

 

	
(e)

	
they will not set off against any sum recoverable in respect of a claim relating to the Ship under such obligatory insurances any premiums or other amounts due to them or any other person whether in respect of the 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 Lender.

 

	
12.7

	
Copies of certificates of entry.  The Borrower shall ensure that any protection and indemnity and/or war risks associations in which the Financed Ship is entered provides the Lender with:

 

	
(a)

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

 

	
(b)

	
a letter or letters of undertaking in such form as may be required by the Lender; 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 the Borrower in relation to the Financed Ship 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 in relation to the Financed Ship.

 

	
12.8

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

 

	
12.9

	
Payment of premiums.  The Borrower shall punctually pay all premiums or other sums payable in respect of the obligatory insurances effected by it and produce all relevant receipts when so required by the Lender.

 

	
12.10

	
Guarantees.  The Borrower 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.

 

	
12.11

	
Restrictions on employment.  The Borrower shall not employ the Financed Ship, nor permit the Ship to be employed, outside the cover provided by any obligatory insurances.

 

	
12.12

	
Compliance with terms of insurances.  The Borrower shall not do nor omit to do (nor 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)

	
the Borrower 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 12.7(c) above) ensure that the obligatory insurances are not made subject to any exclusions or qualifications to which the Lender has not given its prior approval;

 

	
(b)

	
the Borrower shall not make any changes relating to the classification or classification society or manager or operator of the Financed Ship unless approved by the underwriters of the obligatory insurances;

 

	
(c)

	
the Borrower shall make (and promptly supply copies to the Lender of) all quarterly or other voyage declarations which may be required by the protection and indemnity risks association in which the Financed Ship 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

 

  

25

  

	
(d)

	
the Borrower shall not employ the Financed Ship, 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.

 

	
12.13

	
Alteration to terms of insurances.  The Borrower shall neither make or agree to any alteration to  theterms of any obligatory insurance nor waive any right relating to any obligatory insurance.

 

	
12.14

	
Settlement of claims.  The Borrower shall not 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 Lender to collect or recover any moneys which at any time become payable in respect of the obligatory insurances.

 

	
12.15

	
Provision of copies of communications.  The Borrower shall provide the Lender, at the time of each such communication, copies of all major written communications between itself 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)

	
the Borrower'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 the Borrower 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.

 

	
12.16

	
Provision of information.  In addition, the Borrower shall promptly provide the Lender (or any persons which it may designate) with any information which the Lender (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 12.17 below or dealing with or considering any matters relating to any such insurances, and the Borrower shall, forthwith upon demand, indemnify the Lender in respect of all fees and other expenses incurred by or for the account of the Lender in connection with any such report as is referred to in paragraph (a) above.

 

	
12.17

	
Mortgagee's interest and additional perils insurances.  The Lender shall be entitled from time to time to effect, maintain and renew a mortgagee's interest insurance policy and, at the discretion of the Lender, a mortgagee's interest additional perils policy in respect of the Financed Ship, each in such amount and otherwise on such terms, through such insurers and generally in such manner as the Lender may from time to time consider appropriate and the Borrower shall upon demand fully indemnify the Lender in respect of all premiums and other expenses which are incurred in connection with or with a view to effecting, maintaining or renewing such insurance or dealing with, or considering, any matter arising out of such insurance.

 

	
12.18

	
Review of insurance requirements.  The Lender shall be entitled to review the requirements of this Clause 12  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 Lender, significant and capable of affecting the Borrower or the Financed Ship and its insurance (including, without limitation, changes in the availability or the cost of insurance coverage or the risks to which the Borrower may be subject) and may appoint insurance consultants in relation to this review at the cost of the Borrower.

 

	
12.19

	
Modification of insurance requirements.  The Lender shall notify the Borrower of any proposed modification under Clause 12.18 to the requirements of this Clause 12 which the Lender considers 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 12 and shall bind the Borrower accordingly.

 

  

26

  

 

 

	
12.20

	
Compliance with mortgagee's instructions.  The Lender shall be entitled (without prejudice to or limitation of any other rights which it may have or acquire under any Finance Document) to require the Financed Ship to remain at any safe port or to proceed to and remain at any safe port designated by the Lender until the Borrower implements any amendments to the terms of the obligatory insurances and any operational changes required as a result of a notice served under Clause 12.19.

 

	
13

	
SHIP COVENANTS

 

	
13.1

	
General.  The Borrower also undertakes with the Lender to comply with the following provisions of this Clause 13 at all times during the Security Period except as the Lender may otherwise permit.

 

	
13.2

	
Ship's name and registration.  The Borrower shall keep the Financed Ship registered in its name as a Liberian flag ship; 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 the Financed Ship.

 

	
13.3

	
Repair and classification.  The Borrower shall keep the Financed Ship 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 Financed Ship's present class (namely, 100 A5 with fleetboard 5.240m, IW-SOLAS-II-2, Reg.19 C2P57, Container Ship, MC AUT, with Germanischer Lloyd) free of all overdue recommendations and conditions affecting the Ship's class; and

 

	
(c)

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

 

	
13.4

	
Modification.  The Borrower shall not make any modification or repairs to, or replacement of, the Financed Ship or equipment installed on the Financed Ship which would or might materially alter its structure, type or performance characteristics or materially reduce the Financed Ship's value.

 

	
13.5

	
Removal of parts.  The Borrower shall not remove any material part of the Financed Ship, or any item of equipment installed on it, 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 Lender and becomes on installation on the Financed Ship the property of the Borrower and subject to the security constituted by the Mortgage  Provided that the Borrower may install equipment owned by a third party if the equipment can be removed without any risk of damage to the Financed Ship.

 

	
13.6

	
Surveys.  The Borrower shall submit the Financed Ship regularly to all periodical or other surveys which may be required for classification purposes and, if so required by the Lender provide the Lender, with copies of all survey reports.

 

	
13.7

	
Inspection.  The Borrower shall permit the Lender (by surveyors or other persons appointed by it for that purpose at the Borrower's expense) to board the Financed Ship at all reasonable times to inspect its condition or to satisfy themselves about proposed or executed repairs and shall afford all proper facilities for such inspections.

 

	
13.8

	
Prevention of and release from arrest.  The Borrower shall promptly discharge:

 

	
(a)

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

 

	
(b)

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

 

	
(c)

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

 

and, forthwith upon receiving notice of the arrest of the Financed Ship, or of its detention in exercise or purported exercise of any lien or claim, the Borrower shall procure the Ship's release by providing bail or otherwise as the circumstances may require.

  

27

  

 

	
13.9

	
Compliance with laws etc.  The Borrower 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 Financed Ship, its ownership, operation and management or to the business of the Borrower;

 

	
(b)

	
not employ the Financed Ship nor allow its 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 Financed Ship to enter or trade to any zone which is declared a war zone by any government or by the Financed Ship's war risks insurers unless the prior written consent of the Lender has been given and the Borrower has (at its expense) effected any special, additional or modified insurance cover which the Lender may require.

 

	
13.10

	
Provision of information.  The Borrower shall promptly provide the Lender with any information which it requests regarding:

 

	
(a)

	
the Financed Ship, its employment, position and engagements;

 

	
(b)

	
the Earnings and payments and amounts due to the master and crew of the Financed Ship;

 

	
(c)

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

 

	
(d)

	
any towages and salvages;

 

	
(e)

	
its compliance, the Approved Manager's compliance or the compliance of the Financed Ship with the ISM Code and the ISPS Code,

 

and, upon the Lender's request, provide copies of any current charter relating to the Financed Ship, of any current charter guarantee and of the ISM Code Documentation and the ISPS Code Documentation in relation to the Financed Ship.

 

	
13.11

	
Notification of certain events.  The Borrower shall immediately notify the Lender by fax, confirmed forthwith 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 Financed Ship 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 Financed Ship, any exercise or purported exercise of any lien on the Financed Ship or its Earnings or any requisition of the Financed Ship for hire;

 

	
(e)

	
any intended dry docking of the Financed Ship;

 

	
(f)

	
any Environmental Claim made against the Borrower or in connection with the Financed Ship, or any Environmental Incident;

 

	
(g)

	
any claim for breach of the ISM Code or the ISPS Code being made against the Borrower, either of the Approved Managers or otherwise in connection with the Financed Ship; 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 Lender advised in writing on a regular basis and in such detail as the Lender shall require of the Borrower's and the Approved Managers' or any other person's response to any of those events or matters.

 

	
13.12

	
Restrictions on chartering, appointment of managers etc. The Borrower shall not:

 

	
(a)

	
let the Financed Ship on demise charter for any period;

 

	
(b)

	
other than pursuant to an Initial Time Charter, enter into any time or consecutive voyage charter in respect of the Financed Ship for a term which exceeds, or which by virtue of any optional extensions may exceed, 12 months;

 

  

28

  

 

	
(c)

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

 

	
(d)

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

 

	
(e)

	
appoint a manager of the Financed Ship other than the Approved Manager's or agree to any alteration to the terms of each of the Approved Managers' respective appointments;

 

	
(f)

	
de-activate or lay up the Financed Ship; or

 

	
(g)

	
put the Financed Ship into the possession of any person for the purpose of work being done upon the Financed Ship in an amount exceeding or likely to exceed $350,000 (or the equivalent in any other currency) unless that person has first given to the Lender and in terms satisfactory to it a written undertaking not to exercise any lien on the Financed Ship or its Earnings for the cost of such work or any other reason.

 

	
13.13

	
Notice of Mortgage.  The Borrower shall keep the Mortgage registered against the Financed Ship as a valid first priority mortgage, carry on board the Financed 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 Financed Ship a framed printed notice stating that the Financed Ship is mortgaged by the Borrower to the Lender.

 

	
14

	
SECURITY COVER

 

	
14.1

	
Minimum required security cover.  Clause 14.2 applies if the Lender notifies the Borrower that:

 

	
(a)

	
the aggregate of (i) the Market Value of the Financed Ship and (ii) at any time when Tranche B is outstanding, the Market Value of the Collateral Ship (after deducting from the same the amount of the Market Value for that Ship which is required for the Collateral Owner to satisfy the minimum security cover requirement in clause 14.1 of the Prospero Loan Agreement); plus

 

	
(b)

	
the net realisable value of any additional security previously provided under this Clause 14,

 

is below 130 per cent. of the Loan.

 

	
14.2

	
Provision of additional security cover; prepayment of Loan.  The Borrower will, within 1 month after the date on which the Lender's notice is served, either:

 

	
  

	
(i)

	
provide, or ensure that a third party provides, additional security which, in the opinion of the Lender, 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 Lender may approve or require; or

 

	
  

	
(ii)

	
prepay in accordance with Clause 7 such part (at least) of the Loan as will eliminate the shortfall.

 

	
14.3

	
Meaning of additional security.  In Clause 14.2 "security" means a Security Interest over an asset or assets (whether securing the Borrower's liabilities under the Finance Documents or a guarantee in respect of those liabilities), or a guarantee, letter of credit or other security in respect of the Borrower's liabilities under the Finance Documents.

 

	
14.4

	
Requirement for additional documents.  The Borrower shall not be deemed to have complied with sub-paragraph (i) of Clause 14.2 above until the Lender 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 2, Part A below and such legal opinions in terms acceptable to the Lender from such lawyers as it may select.

 

	
14.5

	
Valuation of Ship.  The Market Value of a Ship at any date is that shown by the valuation prepared:

 

  

29

  

	
(a)

	
as at a date not more than 14 days previously;

 

	
(b)

	
by one independent sale and purchase shipbroker which the Lender has approved or appointed for the purpose;

 

	
(c)

	
with or without physical inspection of that Ship (as the Lender 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 any other contract of employment in respect of that Ship; and

 

	
(e)

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

 

	
14.6

	
Valuation of additional security.  The net realisable value of any additional security which is provided under Clause 14.2 and which consists of a Security Interest over a vessel shall be that shown by a valuation complying with the requirements of Clause 14.5.

 

	
14.7

	
Valuations binding.  Any valuation under Clause 14.2, 14.5 or 14.6 shall be binding and conclusive as regards the Borrower, as shall be any valuation which the Lender makes of a security which does not consist of or include a Security Interest.

 

	
14.8

	
Provision of information.  The Borrower shall promptly provide the Lender and any shipbroker or expert acting under Clause 14.5 or 14.6 with any information which the Lender or the shipbroker 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 shipbroker or the Lender (or the expert appointed by it) consider prudent.

 

	
14.9

	
Payment of valuation expenses.  Without prejudice to the generality of the Borrower's obligations under Clauses 19.3 and 20.3, the Borrower shall, on demand, pay the Lender the amount of the fees and expenses of any shipbroker or expert instructed by the Lender under this Clause and all legal and other expenses incurred by the Lender in connection with any matter arising out of this Clause.

 

	
14.10

	
Application of prepayment.  Clause 7 shall apply in relation to any prepayment pursuant to Clause 14.2(b).

 

	
15

	
PAYMENTS AND CALCULATIONS

 

	
15.1

	
Currency and method of payments.  All payments to be made by the Borrower to the Lender under a Finance Document shall be made to the Lender:

 

	
(a)

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

 

	
(b)

	
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 Lender shall specify as being customary at the time for the settlement of international transactions of the type contemplated by this Agreement); and

 

	
(c)

	
to the account of the Lender at JPMorgan Chase Bank New York (Account No 786419036, Swift Code CHASUS33) or to such other account with such other bank as the Lender may from time to time notify to the Borrower.

 

	
15.2

	
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.

 

	
15.3

	
Basis for calculation of periodic payments.  All interest 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.

 

	
15.4

	
Lender accounts.  The Lender shall maintain an account showing the amounts advanced by the Lender and all other sums owing to the 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.

 

  

30

  

	
15.5

	
Accounts prima facie evidence.  If the account maintained under Clauses 15.4 shows an amount to be owing by the Borrower or a Security Party to the Lender, that account shall be prima facie evidence that that amount is owing to the Lender.

 

	
16

	
APPLICATION OF RECEIPTS

 

	
16.1

	
Normal order of application.  Except as any Finance Document may otherwise provide, any sums which are received or recovered by the Lender 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 in the following proportions:

 

	
  

	
(i)

	
first, in or towards satisfaction pro rata of all amounts then due and payable to the Lender under the Finance Documents other than those amounts referred to at (ii) and (iii) below (including, but without limitation, all amounts payable by the Borrower under Clauses 19, 20 and 21 of this Agreement or by the Borrower or any Security Party under any corresponding or similar provision in any other Finance Document);

 

	
  

	
(ii)

	
secondly, in or towards satisfaction of any and all amounts of interest or default interest payable to the Lender under the Finance Document; and

 

	
  

	
(iii)

	
thirdly, in or towards satisfaction of the Loan;

 

	
(b)

	
SECONDLY: (if at the relevant time an Event of Default or Potential Event of Default has occurred) in retention of an amount equal to any amount not then due and payable under any Finance Document but which the Lender, by notice to the Borrower and the Security 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 foregoing provisions of this Clause 16.1; and

 

	
(c)

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

 

	
16.2

	
Variation of order of application.  The Lender may, by notice to the Borrower and the Security Parties, provide for a different manner of application from that set out in Clause 16.1 either as regards a specified sum or sums or as regards sums in a specified category or categories.

 

	
16.3

	
Notice of variation of order of application.  The Lender may give notices under Clause 16.2 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.

 

	
16.4

	
Appropriation rights overridden.  This Clause 16 and any notice which the Lender gives under Clause 16.2 shall override any right of appropriation possessed, and any appropriation made, by the Borrower or any Security Party.

 

	
17

	
APPLICATION OF EARNINGS

 

	
17.1

	
Payment of Earnings.  The Borrower undertakes with the Lender to ensure that, throughout the Security Period subject only to the provisions of this Agreement and the General Assignment, all the Earnings of the Financed Ship are paid to the Operating Account and that payments made in relation to the Financed Ship are paid from the Operating Account.

 

  

31

  

 

 

	
17.2

	
Monthly retentions.  The Borrower undertakes with the Lender to ensure that, in each calendar month of the Security Period after the first Drawdown Notice is served, on such dates as the Lender may from time to time specify, there is transferred to the Retention Account out of the Earnings received in the Operating Account during the preceding calendar month:

 

	
(a)

	
one-sixth of the amount of the Repayment Instalment falling due under Clause 7 on the next Repayment Date; and

 

	
(b)

	
the relevant fraction of the aggregate amount of interest on each Tranche which is payable on the next due date for payment of interest under this Agreement.

 

The "relevant fraction" is, in relation to each Tranche, a fraction of which the numerator is one and the denominator the number of months comprised in the then current Interest Period applicable to that Tranche (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 and the last due date for payment of interest to the next date for payment of interest under this Agreement).

 

	
17.3

	
Shortfall in Earnings.  If the aggregate Earnings received in the Operating Account are insufficient in any month for the required amount to be transferred to the Retention Account under Clause 17.2, the Borrower shall make up the amount of the insufficiency on demand from the Lender; but, without thereby prejudicing the Lender's right to make such demand at any time, the Lender may permit the Borrower to make up all or part of the insufficiency by increasing the amount of any transfer under Clause 17.2 from the Earnings received in the next or subsequent months.

 

	
17.4

	
Application of retentions. Until an Event of Default or a Potential Event of Default occurs, the Lender shall on each Repayment Date and on each due date for the payment of interest under this Agreement apply in accordance with Clause 17.1 so much of the balance on the Retention Account as equals:

 

	
(a)

	
the Repayment Instalment due on that Repayment Date; or

 

	
(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.

 

	
17.5

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

 

	
17.6

	
Release of accrued interest.  Interest accruing under Clause 17.5 shall be released to the Borrower on each Repayment 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 17.1 (and Clause 17.3, if applicable) been transferred in that and each previous month.

 

	
17.7

	
Location of accounts.  The Borrower shall promptly:

 

	
(a)

	
comply with any requirement of the Lender as to the location or re-location of the Operating Account and the Retention Account (or either of them); and

 

	
(b)

	
execute any documents which the Lender specifies to create or maintain in favour of the Lender a Security Interest over (and/or rights of set-off, consolidation or other rights in relation to) the Operating Account and the Retention Account.

 

	
17.8

	
Debits for expenses etc.  The Lender shall be entitled (but not obliged) from time to time to debit the Operating Account without prior notice in order to discharge any amount due and payable to it under Clause 19 or 20 or payment of which it has become entitled to demand under Clause 19 or 20.

 

	
17.9

	
Borrower's obligations unaffected.  The provisions of this Clause 16.4 (as distinct from a distribution effected under Clause 17.4) do not affect:

 

	
(a)

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

 

  

32

  

 

	
(b)

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

 

	
18

	
EVENTS OF DEFAULT

 

	
18.1

	
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 7.8, 8.2, 10.2, 10.3, 10.15, 11.2, 11.3 or 14.2; 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 paragraph (a) or (b) above) if, in the opinion of the Lender, such default is capable of remedy and such default continues unremedied 10 days after written notice from the Lender requesting action to remedy the same; or

 

	
(d)

	
(subject to any applicable grace period specified in any Finance Document) any breach by the Borrower or any Security Party occurs of any provision of a Finance Document (other than a breach caused by paragraph (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 the 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

 

	
  

	
(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 Lender, 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, $500,000 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

 

  

33

  

 

	
 

	
(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 Lender 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 Lender, is similar to any of the foregoing; or

 

	
(h)

	
the Borrower ceases or suspends carrying on its business or a part of its business which, in the opinion of the Lender, 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 Lender considers material under a Finance Document; or

 

	
  

	
(ii)

	
for the Lender 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 the Borrower to own, operate or charter the Ship or to enable the Borrower or any Security Party to comply with any provision which the Lender considers 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)

	
it appears to the Lender that, without its prior consent, a change has occurred or probably has occurred after the date of this Agreement in the ultimate beneficial ownership of any of the shares in the Borrower or the Approved Manager or in the ultimate control of the voting rights attaching to any of those shares; or

 

	
(l)

	
any provision which the Lender considers 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

 

  

34

  

 

	
(m)

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

 

	
(n)

	
the Ship ceases to be managed by the Approved Manager on the terms of the Management Agreement, unless prior to such cessation, the Borrower has appointed a substitute manager or managers acceptable to the Lender in all respects; or

 

	
(o)

	
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 the Borrower, the Approved Manager or the Corporate Guarantor; or

 

	
  

	
(ii)

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

 

in the light of which the Lender  reasonably considers that there is a significant risk that any of the Borrower, the Collateral Owner, the Approved Manager or the Corporate Guarantor, is or will later become, unable to discharge its liabilities under the Finance Documents as they fall due.

 

	
18.2

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

 

	
(a)

	
serve on the Borrower a notice stating that all obligations of the Lender to the Borrower under this Agreement are terminated; and/or

 

	
(b)

	
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

 

	
(c)

	
take any other action which, as a result of the Event of Default or any notice served under paragraph (i) or (ii) above, the Lender is entitled to take under any Finance Document or any applicable law.

 

	
18.3

	
Existing rights unaffected.  The Lender shall not be obliged to exercise any of its rights under Clause 18.2; and those rights shall be without prejudice and in addition to any other right or remedy to which the Lender is entitled (whether under the general law or any document).

 

	
18.4

	
Termination of Loan.  On the service of a notice under paragraph (a) of Clause 18.2 all other obligations of the Lender to the Borrower under this Agreement, shall terminate.

 

	
18.5

	
Acceleration of Loan.  On the service of a notice under paragraph (b) of Clause 18.2, 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.

 

	
18.6

	
Multiple notices; action without notice.  The Lender may serve notices under paragraphs (a) and (b) of Clause 18.2 simultaneously or on different dates and it may take any action referred to in that Clause if no such notice is served or simultaneously with or at any time after the service of both or either of such notices.

 

	
18.7

	
Exclusion of Lender liability.  Neither the Lender nor any receiver or manager appointed by the Lender, 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 the Lender or a receiver or manager from liability for losses shown to have been by the gross negligence or the wilful misconduct of the Lender's own officers and employees or (as the case may be) such receiver's or manager's own partners or employees.

 

  

35

  

 

	
18.8

	
Relevant Persons.  In this Clause 18 "a Relevant Person" means the Borrower, each Security Party and any other member of the Group.

 

	
18.9

	
Interpretation.  In Clause 18.1(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 18.1(g) "petition" includes an application.

 

	
19

	
FEES AND EXPENSES

 

	
19.1

	
Management and commitment fees.  The Borrower shall pay to the Lender:

 

	
(a)

	
not later than the date falling 10 Business Days after the Drawdown Date in respect of Tranche A, a non-refundable management fee of $220,000 (representing 1.1 per cent. of the maximum amount of the Loan); and

 

	
(b)

	
quarterly in arrears during the period from and including the date of this Agreement to the earlier of (i) the Drawdown Date in respect of Tranche B and (ii) the last day of the Availability Period and on the last day of that period, a non-refundable commitment fee of 0.85 per cent. per annum of the undrawn amount of the Loan.

 

	
19.2

	
Costs of negotiation, preparation etc.  The Borrower shall pay to the Lender on its demand the amount of all expenses incurred by the Lender 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.

 

	
19.3

	
Costs of variations, amendments, enforcement etc.  The Borrower shall pay to the Lender, on the Lender's demand, the amount of all expenses incurred by the 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 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 14 or any other matter relating to such security; or

 

	
(d)

	
any step taken by the Lender 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 (d) 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.

 

	
19.4

	
Documentary taxes.  The Borrower shall promptly pay any tax payable on or by reference to any Finance Document, and shall, on the Lender's demand, fully indemnify the Lender against any liabilities and expenses resulting from any failure or delay by the Borrower to pay such a tax.

 

	
19.5

	
Certification of amounts.  A notice which is signed by two officers of the Lender, which states that a specified amount, or aggregate amount, is due to the Lender under this Clause 19 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.

 

	
20

	
INDEMNITIES

 

	
20.1

	
Indemnities regarding borrowing and repayment of Loan.  The Borrower shall fully indemnify the Lender on its demand in respect of all expenses, liabilities and losses which are incurred by the Lender, or which the Lender reasonably and with due diligence estimates that it will incur, as a result of or in connection with:

 

  

36

  

 

	
(a)

	
a Tranche not being borrowed on the date specified in the Drawdown Notice applicable thereto for any reason other than a default by the Lender;

 

	
(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 6);

 

	
(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 18,

 

and in respect of any tax (other than tax on its overall net income) for which the Lender is liable in connection with any amount paid or payable to the Lender (whether for its own account or otherwise) under any Finance Document.

 

	
20.2

	
Breakage costs.  Without limiting its generality, Clause 20.1 covers any liability, expense or loss, incurred by the Lender:

 

	
(a)

	
in liquidating or employing deposits from third parties acquired or arranged to fund or maintain all or any part of the Loan and/or any overdue amount (or an aggregate amount which includes the Loan 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) to hedge any exposure arising under this Agreement or a number of transactions of which this Agreement is one.

 

	
20.3

	
Miscellaneous indemnities.  The Borrower shall fully indemnify the Lender on its demand 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 Lender, 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 Lender or by any receiver appointed under a Finance Document; and

 

	
(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 and culpable negligence or the wilful misconduct of the Lender's own officers or employees.

 

	
20.4

	
Environmental indemnity.  Without prejudice to its generality, Clause 20.3 covers any liability items which arise, or are asserted, under or in connection with any law relating to safety at sea, the ISM Code or any Environmental Law.

 

	
20.5

	
Currency indemnity.  If any sum due from the Borrower or any Security Party to the Lender 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 Lender against the loss arising when the amount of the payment actually received by the Lender is converted at the available rate of exchange into the Contractual Currency.

 

In this Clause 20.5, the "available rate of exchange" means the rate at which the Lender is able at the opening of business (London time) on the Business Day after it receives the sum concerned to purchase the Contractual Currency with the Payment Currency.

 

  

37

  

 

This Clause 20.5 creates a separate liability of the Borrower which is distinct from their other liabilities under the Finance Documents and which shall not be merged in any judgment or order relating to those other liabilities.

 

	
20.6

	
Certification of amounts.  A notice which is signed by 2 officers of the Lender, which states that a specified amount, or aggregate amount, is due to the Lender 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

	
NO SET-OFF OR TAX DEDUCTION

 

	
21.1

	
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.

 

	
21.2

	
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 Lender 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; and

 

	
(c)

	
the amount due in respect of the payment shall be increased by the amount necessary to ensure that the Lender 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.

 

	
21.3

	
Evidence of payment of taxes.  Within one month after making any tax deduction, the Borrower shall deliver to the Lender documentary evidence satisfactory to the Lender that the tax had been paid to the appropriate taxation authority.

 

	
21.4

	
Exclusion of tax on overall net income.  In this Clause 21 "tax deduction" means any deduction or withholding for or on account of any present or future tax except tax on the Lender's overall net income.

 

	
22

	
ILLEGALITY, ETC

 

	
22.1

	
Illegality.  This Clause 22 applies if the Lender notifies the Borrower 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 Lender to maintain or give effect to any of its obligations under this Agreement in the manner contemplated by this Agreement.

 

	
22.2

	
Notification and effect of illegality.  On the Lender notifying the Borrower under Clause 22.1, the Lender's obligation to make the Loan available shall terminate; and thereupon or, if later, on the date specified in the Lender's notice under Clause 22.1 as the date on which the notified event would become effective the Borrower shall prepay the Loan in full in accordance with Clause 7.

 

	
22.3

	
Mitigation.  If circumstances arise which would result in a notification under Clause 22.1 then, without in any way limiting the rights of the Lender under Clause 22.3, the 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 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

 

  

38

  

 

	
(c)

	
involve it in any expense (unless indemnified to its satisfaction) or tax disadvantage.

 

	
23

	
INCREASED COSTS

 

	
23.1

	
Increased costs.  This Clause 23 applies if the Lender notifies the Borrower that it considers that as a result of:

 

	
(a)

	
the introduction or alteration after the date of this Agreement of a law, or an alteration after the date of this Agreement in the manner in which a law is interpreted or applied (disregarding any effect which relates to the application to payments under this Agreement of a tax on the Lender's overall net income); or

 

	
(b)

	
complying with any regulation (including any which relates to capital adequacy or liquidity controls or which affects the manner in which the Lender allocates capital resources to its obligations under this Agreement) which is introduced, or altered, or the interpretation or application of which is altered, after the date of this Agreement,

 

the Lender (or a parent company of it) has incurred or will incur an "increased cost".

 

	
23.2

	
Meaning of "increased costs".  In this Clause 23, "increased costs" means:

 

	
(a)

	
an additional or increased cost incurred as a result of, or in connection with, the Lender having entered into, or being a party to, this Agreement or having taken an assignment of rights under this Agreement, of funding or maintaining the Loan or performing its obligations under this Agreement, or of having outstanding all or any part of the Loan or other unpaid sums; or

 

	
(b)

	
a reduction in the amount of any payment to the Lender under this Agreement or in the effective return which such a payment represents to the Lender or on its capital;

 

	
(c)

	
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 Loan or (as the case may require) the proportion of that cost attributable to the Loan; or

 

	
(d)

	
a liability to make a payment, or a return foregone, which is calculated by reference to any amounts received or receivable by the Lender under this Agreement,

 

but not (aa) an item attributable to a change in the rate of tax on the overall net income of the Lender (or a parent company of it) or (bb) an item covered by the indemnity for tax in Clause 19.1 of by Clause 20 or (cc) an item arising directly out of compliance with the "International Convergence of Capital Standards, a Revised Framework" published by the Basle Committee on Banking Supervision in June 2004 as implemented in the EU by the Capital Requirements Directive (2006/48/EC and 2006/49/EC) (or any subsequent amendment or substitute  agreement) but only to the extent that the Lender determines it did or would have incurred the same level of increased cost as at the date of this Agreement and by reference to the facts and circumstances prevailing at that time.

 

For the purposes of this Clause 23.2 the Lender may in good faith allocate or spread costs and/or losses among its assets and liabilities (or any class of its assets and liabilities) on such basis as it considers appropriate.

 

  

39

  

 

	
23.3

	
Payment of increased costs.  The Borrower shall pay to the Lender, on its demand, the amounts which the Lender from time to time notifies the Borrower that it has specified to be necessary to compensate it for the increased cost.

 

	
23.4

	
Notice of prepayment.  If the Borrower is not willing to continue to compensate the Lender for the increased cost under Clause 23.2, the Borrower may give the Lender not less than 14 days' notice of its intention to prepay the Loan at the end of an Interest Period.

 

	
23.5

	
Prepayment  A notice under Clause 23.4 shall be irrevocable; and on the date specified in the Borrower's notice of intended prepayment, the Loan shall terminate and the Borrower shall prepay (without premium or penalty) the Loan, together with accrued interest thereon at the applicable rate plus the applicable Margin.

 

	
23.6

	
Application of prepayment.  Clause 7 shall apply in relation to the prepayment.

 

	
24

	
SET-OFF

 

	
24.1

	
Application of credit balances.  The Lender 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 the Lender in or towards satisfaction of any sum then due from the Borrower to the Lender 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; and

 

	
  

	
(iii)

	
enter into any other transaction or make any entry with regard to the credit balance which the Lender considers appropriate.

 

	
24.2

	
Existing rights unaffected.  The Lender shall not be obliged to exercise any of its rights under Clause 24.1; 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 the Lender is entitled (whether under the general law or any document).

 

	
24.3

	
No Security Interest.  This Clause 24 give the Lender a contractual right of set-off only, and does not create any equitable charge or other Security Interest over any credit balance of the Borrower.

 

	
25

	
TRANSFERS AND CHANGES IN LENDING OFFICE

 

	
25.1

	
Transfer by Borrower.  The Borrower may not, without the consent of the Lender:

 

	
(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.

 

	
25.2

	
Assignment by Lender.  The Lender may assign all or any of the rights and interests which it has under or by virtue of the Finance Documents without the consent of the Borrower.

 

	
25.3

	
Rights of assignee.  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, a direct or indirect assignee of any of the Lender's rights or interests under or by virtue of the Finance Documents shall be entitled to recover damages by reference to the loss incurred by that assignee as a result of the breach or misrepresentation irrespective of whether the Lender would have incurred a loss of that kind or amount.

 

	
25.4

	
Sub-participation; subrogation assignment.  The 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; and the Lender may assign, in any manner and terms agreed by it, all or any part of those rights to an insurer or surety who has become subrogated to them.

 

  

40

  

	
25.5

	
Disclosure of information.  The Lender may disclose to a potential assignee 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.

 

	
25.6

	
Change of lending office.  The Lender may change its lending office by giving notice to the Borrower and the change shall become effective on the later of:

 

	
(a)

	
the date on which the Borrower receives the notice; and

 

	
(b)

	
the date, if any, specified in the notice as the date on which the change will come into effect.

 

	
26

	
VARIATIONS AND WAIVERS

 

	
26.1

	
Variations, waivers etc. by Lender.  A document shall be effective to vary, waive, suspend or limit any provision of a Finance Document, or the Lender'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 and the Lender and, if the document relates to a Finance Document to which a Security Party is party, by that Security Party.

 

	
26.2

	
Exclusion of other or implied variations.  Except for a document which satisfies the requirements of Clause 26.1, no document, and no act, course of conduct, failure or neglect to act, delay or acquiescence on the part of the Lender (or any person acting on its behalf) shall result in the Lender (or any person acting on its behalf) 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,

 

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.

 

	
27

	
NOTICES

 

	
27.1

	
General.  Unless otherwise specifically provided, any notice under or in connection with any Finance Document shall be given by 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.

 

	
27.2

	
Addresses for communications.  A notice shall be sent:

 

 

	
(a)

	
to the Borrower:

	
c/o Eurobulk Ltd.

4 Messogiou & Evropis Street

Maroussi

Athens 151 24

Greece

 

Fax No: +30 211 18 04 097

	
(b)

	
to the Lender::

	
9 Quai du President Paul Doumer

92400 Courbevoie

La Defense, Paris

France

 

Fax No: +331 4189 2987

Attn: Shipping Department

 

or to such other address as the relevant party may notify the other.

 

  

41

  

 

	
27.3

	
Effective date of notices.  Subject to Clauses 27.4 and 27.5:

 

	
(a)

	
a notice which is delivered personally or posted shall be deemed to be served, and shall take effect, at the time when it is delivered; and

 

	
(b)

	
a notice which is sent by fax shall be deemed to be served, and shall take effect, 2 hours after its transmission is completed.

 

	
27.4

	
Service outside business hours.  However, if under Clause 27.3 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 27.5) be deemed to be served, and shall take effect, at 9 a.m. on the next day which is such a business day.

 

	
27.5

	
Illegible notices.  Clauses 27.3 and 27.4 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.

 

	
27.6

	
English language.  Any notice under or in connection with a Finance Document shall be in English.

 

	
27.7

	
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.

 

	
27.8

	
Meaning of "notice".  In this Clause "notice" includes any demand, consent, authorisation, approval, instruction, waiver or other communication.

 

	
28

	
SUPPLEMENTAL

 

	
28.1

	
Rights cumulative, non-exclusive.  The rights and remedies which the Finance Documents give to the Lender 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.

 

	
28.2

	
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.

 

	
28.3

	
Counterparts.  A Finance Document may be executed in any number of counterparts.

 

	
28.4

	
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

	
LAW AND JURISDICTION

 

	
29.1

	
English law.  This Agreement and any non-contractual obligations arising out of or in connection with it shall be governed by, and construed in accordance with, English law.

 

	
29.2

	
Exclusive English jurisdiction.  Subject to Clause 29.3, the courts of England shall have exclusive jurisdiction to settle any Dispute.

 

 

 

  

42

  

 

	
29.3

	
Choice of forum for the exclusive benefit of the Lender.  Clause 29.2 is for the exclusive benefit of the Lender, which reserves the rights:

 

	
(a)

	
to commence proceedings in relation to any Dispute in the courts of any country other than England and which have or claim jurisdiction to Dispute; 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 Dispute.

 

	
29.4

	
Process agent.  The Borrower irrevocably appoints Hill Dickinson Services Limited at their office for the time being, presently at Irongate House, Duke's Place, London EC3A 7LP, 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.

 

	
29.5

	
Lender's rights unaffected.  Nothing in this Clause 29 shall exclude or limit any right which the Lender 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.

 

	
29.6

	
Meaning of "proceedings".  In this Clause 29, "proceedings" means proceedings of any kind, including an application for a provisional or protective measure and a "Dispute" means any dispute arising out of or in connection with this Agreement (including a dispute relating to the existence, validity or termination of this Agreement) or any non-contractual obligations arising out of or in connection with this Agreement.

 

AS WITNESS the hands of the duly authorised officers or attorneys of the parties the day and year first before written.

 

  

43

  

SCHEDULE 1

DRAWDOWN NOTICE

To:          Crédit Agricole Corporate and Investment Bank

9 Quai du President Paul Doumer

92400 Courbevoie

La Defense

Paris

France

Attention: Shipping Department                                                                                                                                   2010

DRAWDOWN NOTICE

	
1

	
We refer to the loan agreement (the "Loan Agreement") dated [l] December 2010 and made between us, as Borrower, and you, as Lender, in connection with a facility of up to US$20,000,000.  Terms defined in the Loan Agreement have their defined meanings when used in this Drawdown Notice.

	
2

	
We request to borrow Tranche [A][B] as follows:

	
(a)

	
Amount: US$[l];

	
(b)

	
Drawdown Date:  [           ];

	
(c)

	
Duration of the first Interest Period shall be [        ] months;

	
(d)

	
Payment instructions : account in our name and numbered [                ] with [            ] of [                       ].

	
3

	
We represent and warrant that:

	
(a)

	
the representations and warranties in Clause 9 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 Lender.

.....................................

Director

for and on behalf of

NOUMEA SHIPPING LTD

  

44

  

SCHEDULE 2

CONDITION PRECEDENT DOCUMENTS

PART A

The following are the documents referred to in Clause 8.1(a).

 

	
1

	
A duly executed original of each of this Agreement, the Corporate Guarantee, the Accounts Pledge and the Negative Pledge.

	
2

	
Copies of the certificate of incorporation and constitutional documents of each of the Borrower and the Corporate Guarantor.

	
3

	
Copies of resolutions of the shareholders and directors of each of the Borrower and the Corporate Guarantor authorising the execution of each of the Finance Documents to which the Borrower or the Corporate Guarantor is a party and, in the case of the Borrower, authorising named officers or attorneys-in-fact to give each Drawdown Notice and other notices under this Agreement.

	
4

	
The original of any power of attorney under which any Finance Document is executed on behalf of each of the Borrower or the Corporate Guarantor.

	
5

	
Copies of all consents which the Borrower or any Security Party 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 the Operating Account and the Retention Account.

	
7

	
A valuation of the Financed Ship, addressed to the Lender, stated to be for the purposes of this Agreement and dated not earlier than 30 days before the Drawdown Date in respect of Tranche A, from an independent sale and purchase shipbroker selected by the Lender.

	
8

	
Such documents as the Lender may require for its know your customer and its other customary money laundering checks.

	
9

	
Documentary evidence that the agent for service of process named in Clause 29 has accepted its appointment.

	
10

	
Favourable legal opinions from lawyers appointed by the Lender on such matters concerning the laws of Liberia and such other relevant jurisdictions as the Lender may require.

	
11

	
If the Lender so requires, in respect of any of the documents referred to above, a certified English translation prepared by a translator approved by the Lender.

 

 

 

  

45

  

PART B

 

 

The following are the documents referred to in Clause 8.1(b).

	
1

	
A duly executed original of the Mortgage, the General Assignment and the Time Charter Assignment in respect of the Initial Time Charter and, if applicable, the Charter Guarantee.

 

	
2

	
Documentary evidence that:

 

	
(a)

	
the Financed Ship is definitively and permanently registered in the name of  the Borrower under Liberian flag;

 

	
(b)

	
the Financed Ship is in the absolute and unencumbered ownership of the Borrower save as contemplated by the Finance Documents;

 

	
(c)

	
the Financed Ship maintains the classification specified in Clause 13.3(b) with Germanischer Lloyd free of all recommendations and conditions of such classification society affecting the Financed Ship's class;

 

	
(d)

	
the Mortgage has been duly registered against the Financed Ship as a valid first preferred Liberian ship mortgage in accordance with the laws of the Republic of Liberia; and

 

	
(e)

	
the Financed Ship is insured in accordance with the provisions of this Agreement and all requirements therein in respect of Insurances have been complied with.

	
3

	
Documents establishing that the Financed Ship will, as from the Drawdown Date in respect of Tranche A, be managed by the Approved Manager on terms acceptable to the Lender, together with:

	
(a)

	
the Manager's Undertaking duly executed by the Approved Manager;

	
(b)

	
a copy of the Management Agreement;

	
(c)

	
copies of the Approved Manager's Document of Compliance and the Safety Management Certificate for the Financed Ship; and

	
(d)

	
copies of the ISPS Code Documentation in respect of the Financed Ship.

	
4

	
A favourable opinion from an independent insurance consultant acceptable to the Lender on such matters relating to the insurances for the Financed Ship as the Lender may require.

	
5

	
Favourable legal opinions from lawyers appointed by the Lender on such matters concerning the laws of Liberia and such other relevant jurisdictions as the Lender may require

Each 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 and the Approved Managers where relevant.

  

46

  

PART C

The following are the documents referred to in Clause 8.1(c).

	
1

	
A duly executed original of each of the Collateral Finance Documents (and of each document required to be delivered under each Finance Document).

	
2

	
Copies of the resolutions of the shareholders and directors of the Collateral Owner authorising the execution of each of the Collateral Finance Documents and authorising named officers and attorneys-in-fact to give any notices under the Collateral Finance Documents.

	
3

	
The original of any power of attorney under which any Collateral Finance Document is executed on behalf of the Collateral Owner.

	
4

	
Documentary evidence that:

	
(a)

	
the Collateral Ship is definitely and permanently registered in the name of the Collateral Owner under Marshall Islands flag;

	
(b)

	
the Collateral Ship is in the absolute and unencumbered ownership of the Collateral Owner save as contemplated by the Collateral Finance Documents and the Finance Documents (as that term is defined in the Prospero Loan Agreement);

	
(c)

	
the Collateral Mortgage has been duly registered against the Collateral Ship as a valid second preferred Marshall Islands ship mortgage in accordance with the laws of the Republic of the Marshall Islands;

	
(d)

	
the Collateral Ship is insured in accordance with the requirements of this Agreement and of the Prospero Loan Agreement and all requirements therein in respect of insurances have been complied with.

	
6

	
A copy of the Initial Time Charter duly executed by the parties thereto.

	
7

	
Evidence satisfactory to the Lender that the Financed Ship has been unconditionally delivered to, and accepted by, the Time Charterer for operation under the Initial Time Charter.

	
8

	
Confirmation from the Lender that the terms of the Initial Time Charter are in all respects acceptable to it and its legal advisers.

	
9

	
All financial information in relation to the Time Charterer and if applicable, the Charter Guarantor, as may be required by the Lender such financial information to be in form and substance satisfactory to the Lender.

	
10

	
Favourable legal opinions from lawyers appointed by the Lender on such matters concerning the laws of the Marshall Islands and such other relevant jurisdictions as the Lender may require.

  

47

  

 

EXECUTION PAGE

 

THE BORROWER

	
SIGNED by Stefania Karmiri

	
)

	/s/ Stefania Karmiri
	  	
)

	 
	
for and on behalf of

	
)

	 
	
NOUMEA SHIPPING LTD

	
)

	 
	
in the presence of: George Macheras

	
)

	/s/ George Macheras

THE LENDER

	
SIGNED by Dimitris Karamacheras 

	
)

	/s/ Dimitris Karamacheras 
	  	
)

	 
	
attorney-in-fact

	
)

	 
	
for and on behalf of

	
)

	 
	
CRÉDIT AGRICOLE CORPORATE

	
)

	 
	
AND INVESTMENT BANK

	
)

	 
	
in the presence of: George Macheras

	
)

	/s/ George Macheras

 

 

 

 

 

 

 

 

  

48d1199457_ex4-33.htm

Exhibit 4.33

 

DATED  5 November 2010

 

AGGELIKI SHIPPING LTD

(as Borrower)

- and -

DVB BANK SE

(as Lender)

 

__________________________________

US$8,500,000 SENIOR SECURED TERM

LOAN FACILITY AGREEMENT

m.s. "AGGELIKI P."

_________________________________

STEPHENSON HARWOOD

Piraeus Office

Ariston Building

2 Filellinon Street & Akti Miaouli

Piraeus 185 36

Greece

Tel: +30 210 4295 160

Fax: +30 210 4295 166/7

Ref: F21.096

 

  

  

  

CONTENTS

Page

	
1

	
Definitions and Interpretation

	
1

	
 

	
 

	
 

	
2

	
The Loan and its Purpose

	
11

	
 

	
 

	
 

	
3

	
Conditions of Utilisation

	
11

	
 

	
 

	
 

	
4

	
Advance

	
17

	
 

	
 

	
 

	
5

	
Repayment

	
12

	
 

	
 

	
 

	
6

	
Prepayment

	
13

	
 

	
 

	
 

	
7

	
Interest

	
14

	
 

	
 

	
 

	
8

	
Indemnities

	
17

	
 

	
 

	
 

	
9

	
Arrangement Fee

	
21

	
 

	
 

	
 

	
10

	
Security and Application of Moneys

	
21

	
 

	
 

	
 

	
11

	
Representations

	
24

	
 

	
 

	
 

	
12

	
Undertakings and Covenants

	
27

	
 

	
 

	
 

	
13

	
Events of Default

	
40

	
 

	
 

	
 

	
14

	
Assignment and Sub-Participation

	
44

	
 

	
 

	
 

	
15

	
Set-Off

	
45

	
 

	
 

	
 

	
16

	
Payments

	
45

	
 

	
 

	
 

	
17

	
Notices

	
47

	
 

	
 

	
 

	
18

	
Partial Invalidity

	
48

	
 

	
 

	
 

	
19

	
Remedies and Waivers

	
48

	
 

	
 

	
 

	
21

	
Miscellaneous

	
48

	
 

	
 

	
 

  

  

  

	
SCHEDULE 1: Conditions Precedent and Subsequent

	
51

	
Part I: Conditions precedent

	
51

	
Part II: Conditions subsequent

	
56

	
 

	
 

	
SCHEDULE 2: Repayment of Loan

	
57

	
 

	
 

	
SCHEDULE 3: Form of Drawdown Notice

	
58

	
 

	
 

	
SCHEDULE 4: Form of Compliance Certificate

	
59

	
 

	
 

	
SCHEDULE 5: Loans Administration Form

	
60

  

  

  

SENIOR SECURED TERM LOAN FACILITY AGREEMENT

Dated:  5 November 2010

BETWEEN:

	
(1)

	
AGGELIKI SHIPPING LTD, a company incorporated under the laws of Republic of Liberia whose registered address is at 80 Broad Street, Monrovia, Liberia (the "Borrower"); and

	
 

	
 

	
(2)

	
DVB BANK SE, acting through its office at Ballindamm 6, D20095 Hamburg, Federal Republic of Germany (the "Lender").

WHEREAS:

	
(A)

	
The Borrower has purchased the Vessel from the Seller on the terms of the MOA and is the registered owner of the Vessel under the flag of the Republic of Liberia.

	
 

	
 

	
(B)

	
The Lender has agreed to advance to the Borrower up to the lesser of (a) $8,500,000 and (b) 75% of the Fair Market Value of the Vessel (to be determined pursuant to the valuation(s) to be obtained under Clause 3.1 not earlier than two (2) weeks prior to the Drawdown Date) to assist the Borrower to re-finance part of the purchase price of the Vessel as evidenced by the MOA.

IT IS AGREED as follows:

	
1

	
Definitions and Interpretation

	
  

	
1.1

	
In this Agreement:

 

"Account Holder" means Nordea Bank Finland plc London Branch, acting through its office at 55 Basinghall Street, London EC2V 5NB, England or any other bank or financial institution acceptable to the Lender (in its reasonable discretion) which at any time, with the Lender's prior written consent, holds the Accounts.

"Account Charge" means the deed of charge referred to in Clause 10.1.4 (Security Documents).

"Actual Rate" has the meaning set out in Clause 7.10.

  

  

  

"Administration" has the meaning given to it in paragraph 1.1.3 of the ISM Code.

"Annex VI" means Annex VI (Regulations for the Prevention of Air Pollution from Ships) to the International Convention for the Prevention of Pollution from Ships 1973 (as modified in 1978 and 1997).

"Assignment" means the deed of assignment from the Borrower and any bareboat charterer (if any) referred to in Clause 10.1.2 (Security Documents).

"Availability Termination Date" means 5 November 2010 or such later date as the Lender may in its discretion agree.

"Break Costs" means all sums payable by the Borrower from time to time under Clause 8.3 (Break Costs).

"Business Day" means a day (other than a Saturday or Sunday) on which banks are open for general business in New York, London, Frankfurt-am-Main, Hamburg, Bergen and Athens.

"Charterer" means CMA CGM SA, a company incorporated under the laws of the Republic of France with its registered office at 4 Quai d'Arenc, 13002 Marseille, France or any other company that has entered into a Charter with the Borrower in respect of the Vessel, acceptable to the Lender in its sole discretion.

"Charter" means the charter dated 28 June 2010 entered into by and between the Borrower, as owner of the Vessel and the Charterer, as charterer for a continuous period of duration of twelve (12) months at a net daily rate of hire of six thousand five hundred and eighty Dollars ($6,580) or any other charter or contract of employment of the Vessel which has, or is, with any extensions or renewals, capable of having a duration of more than twelve (12) months, entered or to be entered into between the Borrower and a Charterer, on the terms and subject to the conditions of which the Borrower has chartered or may charter the Vessel to a Charterer and "Charters" means more than one of them.

"Compliance Certificate" means a certificate substantially in the form set out in Schedule 4 (Form of Compliance Certificate).

  

2

  

"Currency of Account" means, in relation to any payment to be made to the Lender under a Finance Document, the currency in which that payment is required to be made by the terms of that Finance Document.

"Default" means an Event of Default or any event or circumstance specified in Clause 13.1 (Events of Default) which would (with the expiry of a grace period, the giving of notice, the making of any determination under the Finance Documents or any combination of any of the foregoing) be an Event of Default.

"Determination Date" means, with respect to an Interest Period, the date which is (2) Business Days before the first day of that Interest Period.

"DOC" means, in relation to the ISM Company, a valid Document of Compliance issued for the ISM Company by the Administration under paragraph 13.2 of the ISM Code.

 

"Dollars" and "$" each means available and freely transferable and convertible funds in lawful currency of the United States of America.

"Drawdown Date" means the date on which the Loan is advanced under Clause 4 (Advance).

"Drawdown Notice" means a notice substantially in the form set out in Schedule 3 (Form of Drawdown Notice).

 

"Earnings" means all hires, freights, pool income and other sums payable to or for the account of the Borrower in respect of the Vessel including (without limitation) all remuneration for salvage and towage services, demurrage and detention moneys, contributions in general average, compensation in respect of any requisition for hire, and damages and other payments (whether awarded by any court or arbitral tribunal or by agreement or otherwise) for breach, termination or variation of any contract for the operation, employment or use of the Vessel.

"Earnings Account" means a bank account to be opened in the name of the Borrower with the Account Holder and designated "Aggeliki Shipping Ltd — Earnings Account".

  

3

  

"Encumbrance" means a mortgage, charge, assignment, pledge, lien, or other security interest securing any obligation of any person or any other agreement or arrangement having a similar effect.

"Eurobulk" means Eurobulk Ltd., of the Republic of Liberia with its principal office at Aethrion Center, 40 Agiou Konstantinou Avenue, Maroussi, 151-24, Greece.

"Euroseas" means Euroseas Ltd., of the Republic of the Marshall Islands whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960.

"Event of Default" means any of the events or circumstances set out in Clause 13.1 (Events of Default).

"Facility Period" means the period beginning on the date of this Agreement and ending on the date when the whole of the Indebtedness has been paid in full and the Security Parties have ceased to be under any further actual or contingent liability to the Lender under or in connection with the Finance Documents.

"Fair Market Value" means the fair market value of the Vessel which shall be conclusively determined on a charter-free basis by firms of shipbrokers approved and appointed by the Lender (and in a form approved by the Lender and addressed to the Lender) which shall include: (a) one valuation by a firm of shipbrokers appointed by the Lender (which shall be Maritime Strategies International Ltd. unless the Lender advises otherwise) and (b) if requested by the Borrower, one valuation to be obtained by a firm of shipbrokers selected by the Borrower from the Lender's approved list, in which case the fair marker value of the Vessel shall be conclusively determined by the average of the two valuations. If there is a difference of or in excess of 10% between the two valuations, the Borrower may select a third firm of shipbrokers from the Lender's approved list and the fair market value of the Vessel shall be determined by the average of the three valuations.

"Final Maturity Date" means the fifth (5th) anniversary of the Drawdown Date to occur.

"Finance Documents" means this Agreement, the Security Documents and any other document designated as such by the Lender and the Borrower and "Finance Document" means any one of them.

  

4

  

"Financial Indebtedness" means any obligation for the payment or repayment of money, whether present or future, actual or contingent, in respect of:

	
 

	
(a)

	
moneys borrowed;

	
 

	
 

	
 

	
 

	
(b)

	
any acceptance credit;

	
 

	
 

	
 

	
 

	
(c)

	
any bond, note, debenture, loan stock or similar instrument;

	
 

	
 

	
 

	
 

	
(d)

	
any finance or capital lease;

	
 

	
 

	
 

	
 

	
(e)

	
receivables sold or discounted (other than on a non-recourse basis);

	
 

	
 

	
 

	
 

	
(f)

	
deferred payments for assets or services;

	
 

	
 

	
 

	
 

	
(g)

	
any derivative transaction, including container freight derivatives protecting against or benefiting from fluctuations in any rate or price (and, when calculating the value of any derivative transaction, only the marked to market value shall be taken into account);

	
 

	
 

	
 

	
 

	
(h)

	
any amount raised under any other transaction (including any forward sale or purchase agreement) having the commercial effect of a borrowing;

	
 

	
 

	
 

	
 

	
(i)

	
any counter-indemnity obligation in respect of a guarantee, indemnity, bond, standby or documentary letter of credit or any other instrument issued by a bank or financial institution; and

	
 

	
 

	
 

	
 

	
(j)

	
the amount of any liability in respect of any guarantee or indemnity for any of the items referred to in paragraphs (a) to (i) above.

	
 

	
 

	
 

"GAAP" means generally accepted accounting principles in the United States of America.

"Guarantee" means the guarantee and indemnity referred to in Clause 10.1.3 (Security Documents).

"Guarantor" means Euroseas and/or (where the context permits) any other person who shall at any time during the Facility Period give to the Lender a guarantee and/or indemnity for the repayment of all or part of the Indebtedness.

  

5

  

"IAPPC" means a valid international air pollution prevention certificate for the Vessel issued under Annex VI.

"Indebtedness" means the aggregate from time to time of: the amount of the Loan outstanding; all accrued and unpaid interest on the Loan; and all other sums of any nature (together with all accrued and unpaid interest on any of those sums) payable to the Lender under all or any of the Finance Documents.

"Insurances" means all policies and contracts of insurance (including all entries in protection and indemnity or war risks associations) which are from time to time taken out or entered into in respect of or in connection with the Vessel or her increased value or her Earnings and (where the context permits) all benefits under such contracts and policies, including all claims of any nature and returns of premium.

"Interest Payment Date" means each date for the payment of interest in accordance with Clause 7.8 (Accrual and payment of interest).

"Interest Period" means each period for the determination and payment of interest selected by the Borrower or agreed or selected by the Lender pursuant to Clause 7 (Interest).

"ISM Code" means the International Management Code for the Safe Operation of Ships and for Pollution Prevention.

"ISM Company" means, at any given time, the company responsible for the Vessel's compliance with the ISM Code under paragraph 1.1.2 of the ISM Code.

"ISPS Code" means the International Ship and Port Facility Security Code.

"ISPS Company" means, at any given time, the company responsible for the Vessel's compliance with the ISPS Code.

"ISSC" means a valid international ship security certificate for the Vessel issued under the ISPS Code.

"LIBOR" means:

  

6

  

	
 

	
(a)

	
the rate per annum equal to the offered quotation for deposits in Dollars in an amount comparable to the Loan (or any relevant part of the Loan) 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. on the Determination Date of the relevant Interest Period (and, for the purposes of this Agreement, "BBA Page LIBOR 01" means the Reuters' page or such other page as may replace that page on that service for the purpose of displaying rates comparable to that rate or on such other service as may be nominated by the British Bankers' Association as the information vendor for the purpose of displaying British Bankers' Association Interest Settlement Rates for Dollars); or

	
 

	
 

	
 

	
 

	
(b)

	
if no rate is quoted on BBA Page LIBOR 01 on the Determination Date of the relevant Interest Period or if the Lender has provided a rate in compliance with Clause 7.10.1(a) for the relevant Interest Period, the Actual Rate for that Interest Period shall be the per annum rate used.

"Loan" means the aggregate amount advanced or to be advanced by the Lender to the Borrower under Clause 4 (Advance) or, where the context permits, the amount advanced and for the time being outstanding.

"Loans Administration Form" means a form substantially in the form of Schedule 5.

"Management Agreement" means the agreement for the commercial and/or technical management of the Vessel between Eurobulk and the Borrower dated 21 June 2010.

"Managers" means Eurobulk or such other commercial and/or technical managers of the Vessel nominated by the Borrower as the Lender may approve, such approval not to be unreasonably withheld.

"Margin" means two point eight five per cent (2.85%) per annum.

"Maximum Loan Amount" means an aggregate amount of up to the lesser of (a) $8,500,000 and (b) 75% of the Fair Market Value of the Vessel (to be determined pursuant to the valuation(s) to be obtained under Clause 3.1 not earlier than two (2) weeks prior to the Drawdown Date).

  

7

  

"MOA means the memorandum of agreement dated 20 May 2010 made between the Borrower and the Seller, as amended, supplemented and/or novated from time to time, on the terms and subject to the conditions of which the Seller has sold the Vessel to the Borrower for a purchase price of fifteen million eight hundred fifty thousand Dollars ($15,850,000).

"Mortgage" means the preferred mortgage referred to in Clause 10.1.1 (Security Documents).

"Original Financial Statements" means the balance sheets and profit and loss accounts of the Borrower for the financial year ending 31 December 2010 and the annual audited consolidated financial statements of the Guarantor for the financial year ended 31 December 2009.

"Relevant Documents" means the Finance Documents, the MOA, the Charters, the Management Agreement, the Managers' confirmation specified in Part I of Schedule 1 (Conditions precedent) and the Account Holder's confirmation specified in Part I of Schedule 1 (Conditions precedent).

"Repayment Date" means the date for payment of any Repayment Instalment in accordance with Clause 5.1 (Repayment of Loan) and Schedule 2 (Repayment of Loan).

"Repayment Instalment" means any instalment of the Loan to be repaid by the Borrower under Clause 5.1 (Repayment of Loan) and in accordance with Schedule 2 (Repayment of Loan).

"Requisition Compensation" means all compensation or other money which may from time to time be payable to the Borrower as a result of the Vessel being requisitioned for title or in any other way compulsorily acquired (other than by way of requisition for hire).

"Security Documents" means the Mortgage, the Assignment, the Guarantee, the Account Charge, the Share Pledge or (where the context permits) any one or more of them and any other agreement or document which may at any time be executed by any person as security for the payment of all or any part of the Indebtedness and "Security Document" means any one of them.

  

8

  

"Security Parties" means the Borrower, the Guarantor and any other person who may at any time during the Facility Period be liable for, or provide security for, all or any part of the Indebtedness, and "Security Party" means any one of them.

"Seller" means MS "Oder Trader" Shiffahrts GmbH & Co. KG of Germany.

"Share Pledge" means the pledge of shares referred to in Clause 10.1.5 (Security Documents).

"SMC" means a valid safety management certificate issued for the Vessel by or on behalf of the Administration under paragraph 13.7 of the ISM Code.

"SMS" means a safety management system for the Vessel developed and implemented in accordance with the ISM Code.

"Tax" means any tax, levy, impost, duty or other charge or withholding of a similar nature (including any penalty or interest payable in connection with any failure to pay or any delay in paying any of the same).

"Total Loss" means:

	 	
(a)

	
an actual, constructive, arranged, agreed or compromised total loss of the Vessel; or

	 	
 

	
 

	 	
(b)

	
the requisition for title or compulsory acquisition of the Vessel by any government or other competent authority (other than by way of requisition for hire); or

	 	
 

	
 

	 	
(c)

	
the capture, seizure, arrest, detention hijacking, theft, condemnation as prize, confiscation or forfeiture of the Vessel (not falling within (b) above), unless the Vessel is released and returned to the possession of the Borrower within sixty (60) days after the capture, seizure, arrest, detention, hijacking, theft, condemnation as prize, confiscation or forfeiture in question.

	 	
 

	
 

"Vessel" means the motor vessel, (IMO no. 9146302), of approximately 30,360 dwt, built in 1998, currently registered in the ownership of the Borrower under the flag of Liberia with the name "AGGELIKI P." and everything now or in the future belonging to her on board and ashore.

  

9

  

	
  

	
1.2

	
In this Agreement:

	 	 	 
	
 

	
1.2.1

	
words denoting the plural number include the singular and vice versa;

	
 

	
 

	
 

	
 

	
1.2.2

	
words denoting persons include corporations, partnerships, associations of persons (whether incorporated or not) or governmental or quasi-governmental bodies or authorities and vice versa;

	
 

	
 

	
 

	
 

	
1.2.3

	
references to Recitals, Clauses and Schedules are references to recitals, clauses and schedules to or of this Agreement;

	
 

	
 

	
 

	
 

	
1.2.4

	
references to this Agreement include the Recitals and the Schedules;

	
 

	
 

	
 

	
 

	
1.2.5

	
the headings and contents page(s) are for the purpose of reference only, have no legal or other significance, and shall be ignored in the interpretation of this Agreement;

	
 

	
 

	
 

	
 

	
1.2.6

	
references to any document (including, without limitation, to all or any of the Relevant Documents) are, unless the context otherwise requires, references to that document as amended, supplemented, novated or replaced from time to time;

	
 

	
 

	
 

	
 

	
1.2.7

	
references to "indebtedness" include any obligation (whether incurred as principal or as surety) for the payment or repayment of money, whether present or future, actual or contingent;

	
 

	
 

	
 

	
 

	
1.2.8

	
references to statutes or provisions of statutes are references to those statutes, or those provisions, as from time to time amended, replaced or re-enacted;

	
 

	
 

	
 

	
 

	
1.2.9

	
references to the Lender include its successors, transferees and assignees; and

	
 

	
 

	
 

	
 

	
1.2.10

	
a time of day (unless otherwise specified) is a reference to London time.

	
 

	
 

	
 

	
  

	
1.3

	
Offer letter

 

This Agreement supersedes the terms and conditions contained in any correspondence relating to the subject matter of this Agreement exchanged between the Lender and the Borrower or their representatives prior to the date of this Agreement.

  

10

  

2              The Loan and its Purpose

	
 

	
2.1

	
Amount  Subject to the terms of this Agreement. the Lender agrees to make available to the Borrower a term loan in an aggregate amount not exceeding the Maximum Loan Amount.

	
 

	
 

	
 

	
 

	
2.2

	
Purpose  The Borrower shall apply the Loan for the purposes referred to in Recital (B).

	 	 	 
	
 

	
2.3

	
Monitoring  The Lender shall not be bound to monitor or verify the application of any amount borrowed under this Agreement.

	
 

	
 

	
 

3              Conditions of Utilisation

	
 

	
3.1

	
Conditions precedent The Borrower is not entitled to have the Loan advanced unless the Lender has received all of the documents and other evidence listed in Part I of Schedule 1 (Conditions precedent).

	 	 	 
	 	
3.2

	
Further conditions precedent The Lender will only be obliged to advance the Loan if on the date of the Drawdown Notice and on the proposed Drawdown Date:

	
 

	
 

	
 

	
 

	
3.2.1

	
no Default is continuing or would result from the advance of the Loan; and

	
 

	
 

	
 

	
 

	
3.2.2

	
the representations made by the Borrower under Clause 11 (Representations) are true in all material respects; and

	
 

	
 

	
 

	
 

	
3.2.3

	
there are no events or series of events, which in the reasonable opinion of the Lender are likely to have a material adverse effect on the business, assets, financial condition or credit worthiness of a Security Party.

	
 

	
 

	
 

	
 

	
 

	
3.3

	Conditions subsequent  The Borrower undertakes to deliver or to cause to be delivered to the Lender on, or as soon as practicable after, the Drawdown Date the additional documents and other evidence listed in Part II of Schedule 1 (Conditions subsequent).
	
 

	
 

	
 

	
 

	
 

	
3.4

	No waiver  If the Lender in its sole discretion agrees to advance all or any part of the Loan to the Borrower before all of the documents and evidence required by Clause 3.1 (Conditions precedent) have been delivered to or to the order of the Lender, the Borrower undertakes to deliver all outstanding documents and evidence to or to the order of the Lender no later than the date specified by the Lender.

 

  

11

  

 

The advance of all or any part of the Loan under this Clause 3.4 shall not be taken as a waiver of the Lenders right to require production of all the documents and evidence required by Clause 3.1 (Conditions precedent).

	
  

	
3.5

	
Form and content  All documents and evidence delivered to the Lender under this Clause 3 shall:

	
 

	
3.5.1

	
be in form and substance acceptable to the Lender, such acceptance not to be unreasonably withheld; and

	
 

	
 

	
 

	
 

	
3.5.2

	
if required by the Lender, be certified, notarised, legalised or attested in a manner, acceptable to the Lender, such acceptance not to be unreasonably withheld.

	
 

	
 

	
 

4              Advance

The Borrower may request the Loan to be advanced in one amount on any Business Day prior to the Availability Termination Date by delivering to the Lender a duly completed Drawdown Notice not more than ten (10) and not fewer than three (3) Business Days before the proposed Drawdown Date. Any such Drawdown Notice shall be signed by an authorised signatory of the Borrower and, once delivered, is irrevocable.

5              Repayment

	
 

	
5.1

	
Repayment of Loan  The Borrower agrees to repay the Loan to the Lender in the Repayment Instalments and on the Repayment Dates set out in Schedule 2 and in any event the final Repayment Instalment for the Loan shall fall due not later than the Final Maturity Date. The Repayment Dates set out in Schedule 2 shall be adjusted in accordance with the actual Drawdown Date.

	
 

	
 

	
 

	
 

	
5.2

	
Reduction of Repayment Instalments  If the aggregate amount advanced to the Borrower is less than $8,500,000, the amount of each Repayment Instalment shall be reduced pro rata to the amount actually advanced.

	
 

	
 

	
 

	
 

	
5.3

	
Reborrowing  The Borrower may not reborrow any part of the Loan which is repaid or prepaid.

  

12

  

6              Prepayment

	 	
6.1

	
Illegality If it becomes unlawful in any jurisdiction for the Lender to perform any of its obligations as contemplated by this Agreement or to fund or maintain the Loan:

	
 

	
6.1.1

	
the Lender shall promptly notify the Borrower of that event; and

	
 

	
 

	
 

	
 

	
6.1.2

	
the Borrower shall repay the Loan (to the extent already advanced) on the last day of the current Interest Period or, if earlier, the date specified by the Lender in the notice delivered to the Borrower (being no earlier than the last day of any applicable grace period permitted by law).

	 	
6.2

	

Voluntary prepayment of Loan The Borrower may prepay the whole or any part of the Loan on any Interest Payment Date (but, if in part, being an amount that reduces the Loan by a minimum amount of $1,000,000 or an integral multiple thereof) subject as follows:

 

	
 

	
6.2.1

	
it gives the Lender not less than five (5) Business Days' (or such shorter period as the Lender may agree) prior notice;

	
 

	
 

	
 

	
 

	
6.2.2

	
it pays to the Lender, in addition to the amount prepaid, a fee of an amount equal to (a) two per cent (2%) of the amount prepaid if such prepayment occurs until the second anniversary of the Drawdown Date to occur and (b) one per cent (1 %) of the amount prepaid if such prepayment occurs from the second anniversary of the Drawdown Date until the end of the Facility Period;

	
 

	
6.2.3

	
any prepayment under this Clause 6.2 shall satisfy the obligations under Clause 5.1 (Repayment of Loan) in inverse order of maturity.

	 	
6.3

	

Mandatory prepayment on sale or Total Loss  If the Vessel is sold by the Borrower or becomes a Total Loss, the Borrower shall, simultaneously with any such sale or within ninety (90) days after any such Total Loss, prepay the whole of the Indebtedness. In the case of a sale, the Borrower shall, simultaneously with that sale, pay to the Lender, in addition to the amount prepaid, a fee of an amount equal to (a) two per cent (2%) of the amount prepaid if such prepayment occurs on or prior to the second anniversary of the Drawdown Date to occur and (b) one per cent (1%) of the amount prepaid if such prepayment occurs from the second anniversary of the Drawdown Date until the end of the Facility Period. For the avoidance of doubt, no prepayment fee is payable to the Lender in case prepayment is made in case of the Vessel becoming a Total Loss or in case of sale of the Vessel after the second anniversary of the Drawdown Date, or in case of all or any part of the Loan being re-financed with the Lender.

  

13

  

 

	
  

	
6.4

	
Restrictions  Any notice of prepayment given under this Clause 6 shall be irrevocable and, unless a contrary indication appears in this Agreement, shall specify the date or dates upon which the relevant prepayment is to be made and the amount of that prepayment.

Any prepayment under this Agreement shall be made together with accrued interest on the amount prepaid and, subject to any Break Costs and subject to Clause 6.2.2 (Voluntary prepayment of Loan) and Clause 6.3 (Mandatory prepayment on sale or Total Loss), without premium or penalty.

7              Interest

	
 

	
7.1

	
Interest Periods  The period during which the Loan shall be outstanding under this Agreement shall be divided into consecutive Interest Periods of three, six, nine or twelve months' duration, as selected by the Borrower by written notice to the Lender not later than 11.00 a.m. on the third Business Day before the beginning of the Interest Period in question, or such other duration as may be agreed by the Lender.

	
 

	
 

	
 

	
 

	
7.2

	
Beginning and end of Interest Periods   Each Interest Period shall start on the Drawdown Date or (if the Loan is already made) on the last day of the preceding Interest Period and end on the date which numerically corresponds to the Drawdown Date or the last day of the preceding Interest Period in the relevant calendar month except that, if there is no numerically corresponding date in that calendar month, the Interest Period shall end on the last Business Day in that month.

	
 

	
 

	
 

	
 

	
7.3

	
Interest Periods to meet Repayment Dates   If an Interest Period will expire after the next Repayment Date, there shall be a separate Interest Period for a part of the Loan equal to the Repayment Instalment due on that next Repayment Date and that separate Interest Period shall expire on that next Repayment Date.

  

14

  

	
 

	
7.4

	
Non-Business Days  If an Interest Period would otherwise end on a day which is not a Business Day, that Interest Period will instead end on the next Business Day in that calendar month (if there is one) or the preceding Business Day (if there is not).

	
 

	
 

	
 

	
 

	
7.5

	
Interest rate   During each Interest Period interest shall accrue on the Loan at the rate determined by the Lender to be the aggregate of (a) the Margin and (b) LIBOR or the Actual Rate (whichever is applicable).

	
 

	
 

	
 

	
 

	
7.6

	
Fixed interest rate option  The Borrower may, subject to giving the Lender not fewer than five (5) Business Days' prior written notice expiring on a Business Day of their intention to do so, and subject to availability and the Lender's prior written approval, request that the interest rate of all or a substantial part of the Loan be fixed for a period exceeding twelve (12) months. During such fixed interest rate period interest shall accrue on the part of the Loan on which interest rate has been fixed at the rate determined by the Lender to be the aggregate of (a) the Margin and (b) the actual interest rate which shall be available to the Lender for that interest period.

	
 

	
 

	
 

	
 

	
7.7

	
Failure to select Interest Period   If the Borrower at any time fail to select or agree an Interest Period in accordance with Clause 7.1 (Interest Periods), the interest rate applicable shall be the rate determined by the Lender in accordance with Clause 7.5 (Interest rate) for an Interest Period of such duration (not exceeding three (3) months) as the Lender may select.

	
 

	
 

	
 

	
 

	
7.8

	
Accrual and payment of interest  Interest shall accrue from day to day, shall be calculated on the basis of a 360 day year and the actual number of days elapsed (or, in any circumstance where market practice differs, in accordance with the prevailing market practice) and shall be paid by the Borrower to the Lender on the last day of each Interest Period and, if the Interest Period is longer than three (3) months, on the dates falling at three (3) monthly intervals after the first day of that Interest Period.

	
 

	
 

	
 

	
 

	
7.9

	
Default interest  If the Borrower fails to pay any amount payable by it under a Finance Document on its due date, interest shall accrue on the overdue amount from the due date up to the date of actual payment (both before and after judgment) at a rate which is two per cent (2%) higher than the rate which would have been payable if the overdue amount had, during the period of non-payment, constituted the Loan in the currency of the overdue amount for successive Interest Periods, each selected by the Lender (acting reasonably). Any interest accruing under this Clause 7.9 shall be immediately payable by the Borrower on demand by the Lender. If unpaid, any such interest will be compounded with the overdue amount at the end of each Interest Period applicable to that overdue amount but will remain immediately due and payable.

  

15

  

	 	
7.10

	
Actual rate

	
 

	
7.10.1

	
(a) If at any time the Lender determines at its absolute discretion (which determination shall be final and conclusive and binding on the Borrower) that the actual rate quoted to the Lender in the ordinary course of its business (including, without limitation, broker quotes to the Lender of funding rates available in the European financial markets) to fund the Loan (or any part of it) for the relevant Interest Period is higher than the rate appearing on BBA Page LIBOR 01 determined under paragraph (a) of the definition of LIBOR in Clause 1 for that Interest Period or (b) if no rate is quoted on BBA Page LIBOR 01 at 11:00 a.m. on the Determination Date for the relevant Interest Period, the Lender shall as soon as practicable, and in any event no later than the first day of that Interest Period, inform the Borrower of the rate quoted to that Lender in the ordinary course of its business (including, without limitation, broker quotes to the Lender of funding rates available in the European financial markets) to fund the Loan (or any part of it) for that Interest Period.

	
 

	
 

	
 

	
 

	
7.10.2

	
Where the Lender provides the Borrower with a rate under Clause 7.10.1, that rate (the "Actual Rate") shall apply for the relevant Interest Period.

	
 

	
 

	
 

	
 

	
7.10.3

	
For the purposes of this Clause 7.10, the Lender may determine its funding rate for the relevant Interest Period by obtaining one or more broker quotes in the ordinary course of its business and where more than one such quote is obtained then the weighted average of quotes obtained by the Lender shall prevail. For the avoidance of doubt, the funding rate determined by the Lender shall be deemed to be the benchmark in substitution of BBA Page LIBOR 01 for the relevant Interest Period, however, there shall be no obligation on the Lender to actually refinance on a back-to-back basis its funding for the relevant Interest Period as a condition to such substitution.

  

16

  

	
 

	
7.10.4

	
The Actual Rate that shall apply for the relevant Interest Period in accordance with this Clause 7.10 shall not be higher than the actual rate that has been quoted to the Lender under Clause 7.10.1.

	
 

	
 

	
 

	
  

	
7.11

	
Determinations conclusive  The Lender shall promptly notify the Borrower of the determination of a rate of interest under this Clause 7 and each such determination shall (save in the case of manifest error) be final and conclusive.

8              Indemnities

 

	
  

	
8.1

	
Transaction expenses  The Borrower will, within fourteen (14) days of the Lender's written demand, pay the Lender the amount of all costs and expenses (including legal fees and Value Added Tax or any similar or replacement tax if applicable) incurred by the Lender in connection with:

	
 

	
8.1.1

	
the negotiation, preparation, printing, execution and registration of the Finance Documents (whether or not any Finance Document is actually executed or registered and whether or not all or any part of the Loan is advanced);

	
 

	
 

	
 

	
 

	
8.1.2

	
any amendment, addendum or supplement to any Finance Document (whether or not completed); and

	
 

	
 

	
 

	
 

	
8.1.3

	
any other document which may at any time be reasonably required by the Lender to give effect to any Finance Document or which the Lender is entitled to call for or obtain under any Finance Document (including, without limitation, any valuation of the Vessel).

	
  

	
8.2

	
Funding costs  The Borrower shall indemnify the Lender on the Lender's written demand against all losses and costs incurred or sustained by the Lender if, for any reason, the Loan is not advanced to the Borrower after the relevant Drawdown Notice has been given to the Lender, or is advanced on a date other than that requested in the Drawdown Notice (unless, in either case, as a result of any default by the Lender).

 

	
  

	
8.3

	
Break Costs  The Borrower shall indemnify the Lender on the Lender's written demand against all costs, losses, premiums or penalties incurred by the Lender as a result of its receiving any prepayment of all or any part of the Loan (whether pursuant to Clause 6 (Prepayment) or otherwise) on a day other than the last day of an Interest Period for the Loan or relevant part of the Loan, or any other payment under or in relation to the Finance Documents on a day other than the due date for payment of the sum in question, including (without limitation) any losses or costs incurred in liquidating or re-employing deposits from third parties acquired to effect or maintain all or any part of the Loan, and any liabilities, expenses or losses incurred by the Lender in terminating or reversing, or otherwise in connection with, any interest rate and/or currency swap, transaction or arrangement entered into by the Lender to hedge any exposure arising under this Agreement, or in terminating or reversing, or otherwise in connection with, any open position arising under this Agreement.

 

  

17

  

 

	
  

	
8.4

	
Currency indemnity  In the event of the Lender receiving or recovering any amount payable under a Finance Document in a currency other than the Currency of Account, and if the amount received or recovered is insufficient when converted into the Currency of Account at the date of receipt to satisfy in full the amount due, the Borrower shall, on the Lender's written demand, pay to the Lender such further amount in the Currency of Account as is sufficient to satisfy in full the amount due and that further amount shall be due to the Lender as a separate debt under this Agreement.

 

	
  

	
8.5

	
Increased costs (subject to Clause 8.6 (Exceptions to increased costs))  If, by reason of the introduction of any law, or any change in any law, or any change in the interpretation or administration of any law, or compliance with any request or requirement from any central bank or any fiscal, monetary or other authority occurring after the date of this Agreement (including the implementation or application of or compliance with the Basel II Accord or any other Basel II Regulation (whether such implementation, application or compliance is by any central bank or any fiscal, monetary or other authority, the Lender or the holding company of the Lender)):

	
 

	
8.5.1

	
the Lender (or the holding company of the Lender) shall be subject to any Tax with respect to payment of all or any part of the Indebtedness (other than Tax on overall net income); or

	
 

	
 

	
 

	
 

	
8.5.2

	
the basis of Taxation of payments to the Lender in respect of all or any part of the Indebtedness shall be changed; or

	
 

	
 

	
 

  

18

  

	
 

	
8.5.3

	
any reserve requirements shall be imposed, modified or deemed applicable against assets held by or deposits in or for the account of or loans by any branch of the Lender; or

	
 

	
 

	
 

	
 

	
8.5.4

	
the manner in which the Lender allocates capital resources to its obligations under this Agreement or any ratio (whether cash, capital adequacy, liquidity or otherwise) which the Lender is required or requested to maintain shall be affected; or

	
 

	
 

	
 

	
 

	
8.5.5

	
there is imposed on the Lender (or on the holding company of the Lender) any other condition in relation to the Indebtedness or the Finance Documents;

	 	 	 
	 	and the result of any of the above shall be to materially increase the cost to the Lender (or to the holding company of the Lender) of the Lender making or maintaining the Loan, or to cause the Lender to suffer (in its reasonable opinion) a material reduction in the rate of return on its overall capital below the level which it reasonably anticipated at the date of this Agreement and which it would have been able to achieve but for its entering into this Agreement and/or performing its obligations under this Agreement, or to cause a reduction in any amount due and payable to the Lender under any of the Finance Documents, then, subject to Clause 8.6 (Exceptions to increased costs), the Lender shall notify the Borrower and the Borrower shall from time to time pay to the Lender on demand the amount which shall compensate the Lender (or the holding company of the Lender) for such additional cost or reduced return or reduced amount. A certificate signed by an authorised signatory of the Lender setting out the amount of that payment and the basis of its calculation shall be submitted to the Borrower and shall be conclusive evidence of such amount save for manifest error or on any question of law.
	 	 
	 	For the purposes of this Clause 8.5;
	 	 
	 	"Basel II Accord" means the "International Convergence of Capital Measurement and Capital Standards, a Revised Framework" published by the Basel Committee on Banking Supervision in June 2004 in the form existing on the date of this Agreement;
	 	 
	 	"Basel II Approach" means, in relation to the Lender, either the Standardised Approach or the relevant Internal Ratings Based Approach (each as defined in the Basel II Accord) adopted by the Lender (or its holding company) for the purpose of implementing or complying with the Basel II Accord;

 

  

19

  

 

 

	 	 	"Basel II Regulation" means (a) any law or regulation implementing the Basel II Accord or (b) any Basel II Approach adopted by the Lender; and
	 	 	 
	 	 	"holding company" means, in respect of the Lender, the company or entity (if any) within the consolidated supervision of which the Lender is included.
	 	 	 
	 	
8.6

	

Exceptions to increased costs  Clause 8.5 (Increased costs) does not apply to the extent any additional cost or reduced return referred to in that Clause is:

	 	 	 
	
 

	
8.6.1

	
compensated for by a payment made under Clause 8.10 (Taxes); or

	
 

	
 

	
 

	
 

	
8.6.2

	
compensated for by a payment made under Clause 16.3 (Grossing-up); or

	
 

	
 

	
 

	
 

	
8.6.3

	
attributable to the wilful breach or gross negligence of the Lender (or the holding company of the Lender) of any law or regulation.

 

	  	
8.7

	
Events of Default  The Borrower shall indemnify the Lender from time to time promptly on the Lender's written demand against all losses, costs and liabilities incurred or sustained by the Lender as a consequence of any Event of Default.

	  	  	  
	  	
8.8

	
Enforcement costs  The Borrower shall pay to the Lender promptly on the Lender's written demand the amount of all costs and expenses (including legal fees) incurred by the Lender in connection with the enforcement of, or the preservation of any rights under, any Finance Document including (without limitation) any losses, costs and expenses which the Lender may from time to time sustain, incur or become liable for by reason of the Lender being mortgagee of the Vessel and/or a lender to the Borrower, or by reason of the Lender being deemed by any court or authority to be an operator or controller, or in any way concerned in the operation or control, of the Vessel.

	  	  	  
	  	
8.9

	
Other costs  The Borrower shall pay to the Lender promptly on the Lender's written demand the amount of all sums which the Lender may pay or become actually or contingently liable for on account of the Borrower in connection with the Vessel (whether alone or jointly or jointly and severally with any other person) including (without limitation) all sums which the Lender may pay or guarantees which it may give in respect of the Insurances, any expenses incurred by the Lender in connection with the maintenance or repair of the Vessel or in discharging any lien, bond or other claim relating in any way to the Vessel, and any sums which the Lender may pay or guarantees which it may give to procure the release of the Vessel from arrest or detention.

  

20

  

	 	
8.10

	
Taxes  The Borrower shall pay all Taxes to which all or any part of the Indebtedness or any Finance Document may be at any time subject (other than Tax on the Lender's overall net income) and shall indemnify the Lender promptly on the Lender's written demand against all liabilities, costs, claims and expenses resulting from any omission to pay or delay in paying any such Taxes.

	
9

	
Arrangement Fee

The Borrower shall pay to the Lender an arrangement fee in the amount of one hundred and forty thousand two hundred and fifty Dollars ($140,250) on the Drawdown Date.

	
10

	
Security and Application of Moneys

	 	
10.1

	
Security Documents  As security for the payment of the Indebtedness, the Borrower shall execute and deliver to the Lender or cause to be executed and delivered to the Lender the following documents in such forms and containing such terms and conditions as the Lender shall require:

	
 

	
10.1.1

	
a first preferred mortgage over the Vessel;

	
 

	
 

	
 

	
 

	
10.1.2

	
a first priority deed or deeds of assignment of the Insurances, Earnings, Charters and Requisition Compensation of the Vessel from the Borrower and any bareboat charterer, including (in the case of a bareboat charterer) an agreement whereby its interests under a bareboat charter are subordinated to the interests of the Lender under the Mortgage;

	
 

	
 

	
 

	
 

	
10.1.3

	
a guarantee and indemnity from the Guarantor;

	
 

	
 

	
 

	
 

	
10.1.4

	
a first priority deed of charge over the Earnings Account and all amounts from time to time standing to the credit of the Earnings Account; and

	
 

	
 

	
 

	
 

	
10.1.5

	
a first priority pledge of all the issued shares of the Borrower.

 

  

21

  

	
  

	
10.2

	
Earnings Account  The Borrower shall maintain the Earnings Account with the Account Holder for the duration of the Facility Period free of Encumbrances and rights of set off other than those created by or under the Finance Documents.

 

	
  

	
10.3

	
Earnings  The Borrower shall procure that all Earnings and any Requisition Compensation are credited to the Earnings Account.

 

	
  

	
10.4

	
Application of Earnings Account   The Borrower shall procure that there is transferred from the Earnings Account to the Lender:

	
 

	
10.4.1

	
on each Repayment Date, the amount of the Repayment Instalment then due; and

	
 

	
 

	
 

	
 

	
10.4.2

	
on each Interest Payment Date, the amount of interest then due, 

	
 

	
 

	
 

	 	and the Borrower irrevocably authorise the Lender to instruct the Account Holder to make those transfers.

	
  

	
10.5

	
Borrower's obligations not affected   If for any reason the amount standing to the credit of the Earnings Account is insufficient to pay any Repayment Instalment or to make any payment of interest when due, the Borrower's obligation to pay that Repayment Instalment or to make that payment of interest shall not be affected.

	 	
10.6

	
Release of surplus  Any amount remaining to the credit of the Earnings Account following the making of any transfer required by Clause 10.4 (Application of Earnings Account) shall (unless a Default shall have occurred and be continuing) be released to or to the order of the Borrower.

	 	
10.7

	
Restriction on withdrawal  During the Facility Period no sum may be withdrawn from the Earnings Account (except in accordance with this Clause 10) without the prior written consent of the Lender, such consent not to be unreasonably withheld.

	 	
10.8

	
Access to information The Borrower agrees that the Lender (and its nominees) may from time to time during the Facility Period review the records held by the Account Holder (whether in written or electronic form) in relation to the Earnings Account, and irrevocably waives any right of confidentiality which may exist in relation to those records.

 

  

22

  

	
10.9

	
Statements  Without prejudice to the rights of the Lender under Clause 10.8 (Access. to information), the Borrower will procure that the Account Holder provides to the Lender, no less frequently than each calendar month during the Facility Period, written statements of account showing all entries made to the credit and debit of the Earnings Account during the immediately preceding calendar month.

	
10.10

	
Application after acceleration  From and after the giving of notice to the Borrower by the Lender under Clause 13.2 (Acceleration), the Borrower shall procure that all sums from time to time standing to the credit of the Earnings Account are immediately transferred to the Lender for application in accordance with Clause 10.11 (General application of moneys) and the Borrower irrevocably authorise the Lender to instruct the Account Holder to make those transfers.

	
10.11

	
General application of moneys  The Borrower, subject to Clause 10.12 (Application of moneys on sale or Total Loss), irrevocably authorises the Lender to apply all sums which the Lender may receive:

	
 

	
10.11.1

	
pursuant to a sale or other disposition of the Vessel or any right, title or interest in the Vessel; or

	
 

	
 

	
 

	
 

	
10.11.2

	
by way of payment of any sum in respect of the Insurances, Earnings, Charters or Requisition Compensation; or

	
 

	
 

	
 

	
 

	
10.11.3

	
by way of transfer of any sum from the Earnings Account; or

	
 

	
 

	
 

	
 

	
10.11.4

	
otherwise arising under or in connection with any Security Document,

	
 

	
 

	
 

in or towards satisfaction, or by way of retention on account, of the Indebtedness, in the following manner:

	
 

	
(a)

	
firstly in or towards payment of all sums other than principal or interest which may be due to the Lender under the Finance Documents;

	
 

	
 

	
 

	
 

	
(b)

	
secondly in or towards any arrears or interest (including interest at the rate determined in accordance with Clause 7.9) due in respect of the Loan;

	
 

	
 

	
 

	
 

	
(c)

	
thirdly in or towards interest due at the time of payment;

	
 

	
 

	
 

	
 

	
(d)

	
fourthly in or towards repayment of the Loan;

  

23

  

 

	
 

	
(e)

	
fifthly the surplus, (if any), shall be paid to the Borrower or to whoever else be entitled thereto.

	
 

	
 

	
 

	 	
10.12

	
Application of moneys on sale or Total Loss  The Borrower irrevocably authorises the Lender to apply all sums which the Lender may receive pursuant to a sale by the Borrower of the Vessel or a Total Loss in or towards satisfaction of the prepayment due and payable by virtue of that sale or Total Loss under Clause 6.3 (Mandatory prepayment on sale or Total Loss), but the Borrower's obligation to make that prepayment shall not be affected if those sums are insufficient to satisfy that obligation.

	 	
10.13

	
Additional security  If at any time the Fair Market Value of the Vessel and the value of any additional security (such value to be the face amount of the deposit (in the case of cash), determined conclusively by appropriate advisers appointed by the Lender (in the case of other charged assets), and determined by the Lender in its reasonable discretion (in all other cases)) for the time being provided to the Lender under this Clause 10.13 is less than one hundred and thirty three per cent (133%) of the amount of the Loan then outstanding, the Borrower or the Guarantor shall, within thirty (30) days of the Lender's request, at the Borrower's or the Guarantor's option (as the context requires):

	
 

	
10.13.1

	
pay to the Lender or to its nominee a cash deposit in the amount of the shortfall to be secured in favour of the Lender as additional security for the payment of the Indebtedness; or

	
 

	
 

	
 

	
 

	
10.13.2

	
give to the Lender other additional security in amount and form acceptable to the Lender in its reasonable discretion; or

	
 

	
 

	
 

	
 

	
10.13.3

	
prepay the Loan in the amount of the shortfall.

Clauses 5.3 (Reborrowing), 6.2 (Voluntary prepayment of Loan) and 6.4 (Restrictions) shall apply, mutatis mutandis, to any prepayment made under this Clause 10.13 and the value of any additional security provided shall be determined as stated above.

11           Representations

	 	
11.1

	
Representations  The Borrower makes the representations and warranties set out in this Clause 11.1 to the Lender on the date of this Agreement.

  

24

  

	
 

	
11.1.1

	
Status  Each Security Party (which is not an individual) is a corporation, duly incorporated and validly existing under the law of its jurisdiction of incorporation and has the power to own its assets and carry on its business as it is being conducted.

	
 

	
 

	
 

	
 

	
11.1.2

	
Binding obligations  The obligations expressed to be assumed by each Security Party in each Finance Document to which it is a party are legal, valid, binding and enforceable obligations.

	
 

	
 

	
 

	
 

	
11.1.3

	
Non-conflict with other obligations  The entry into and performance by each Security Party of, and the transactions contemplated by, the Finance Documents do not conflict with:

	
 

	
(a)

	
any law or regulation applicable to that Security Party;

	
 

	
 

	
 

	
 

	
(b)

	
the constitutional documents of that Security Party; or

	
 

	
 

	
 

	
 

	
(c)

	
any document binding on that Security Party or any of its assets, and in borrowing the Loan, the Borrower is acting for its own account.

 

	
  

	
11.1.4

	
Power and authority  Each Security Party has the power to enter into, perform and deliver, and has taken all necessary action to authorise its entry into, performance and delivery of, the Finance Documents to which it is a party and the transactions contemplated by those Finance Documents.

	
  

	
11.1.5

	
Validity and admissibility in evidence  All consents, licences, approvals, authorisations, filings and registrations required or desirable:

	
 

	
(a)

	
to enable each Security Party lawfully to enter into, exercise its rights and comply with its obligations in the Finance Documents to which it is a party or to enable the Lender to enforce and exercise all its rights under the Finance Documents; and

	
 

	
 

	
 

	
 

	
(b)

	
to make the Finance Documents to which any Security Party is a party admissible in evidence in its jurisdiction of incorporation, have been obtained or effected and are in full force and effect, with the exception only of the registrations referred to in Part II of Schedule 1 (Conditions subsequent).

  

25

  

	
 

	
11.1.6

	
Governing law and enforcement  The choice of a particular law as the governing law of any Finance Document expressed to be governed by that law will be recognised and enforced in the jurisdiction of incorporation of each relevant Security Party, and any judgment obtained in the jurisdiction submitted to in any Finance Document will be recognised and enforced in the jurisdiction of incorporation of each relevant Security Party.

	
 

	
 

	
 

	
 

	
11.1.7

	
Deduction of Tax   If a Security Party is required under the law of its jurisdiction of incorporation to make any deduction for or on account of Tax from any payment it may make under any Finance Document, it shall be grossed up in accordance with Clause 16.3.

	
 

	
 

	
 

	
 

	
11.1.8

	
No filing or stamp taxes  Under the law of jurisdiction of incorporation of each relevant Security Party it is not necessary that the Finance Documents be filed, recorded or enrolled with any court or other authority in that jurisdiction or that any stamp, registration or similar tax be paid on or in relation to the Finance Documents or the transactions contemplated by the Finance Documents.

	
 

	
 

	
 

	
 

	
11.1.9

	
No default   No Event of Default is continuing or might reasonably be expected to result from the advance of the Loan.

	
 

	
 

	
 

	
 

	
11.1.10

	
No misleading information  Any factual information provided by any Security Party to the Lender was true and accurate in all material respects as at the date it was provided.

	
 

	
 

	
 

	
 

	
11.1.11

	
Pari passu ranking  The payment obligations of each Security Party under the Finance Documents to which it is a party rank at least pari passu with the claims of all its other unsecured and unsubordinated creditors, except for obligations mandatorily preferred by law applying to companies generally.

	
 

	
 

	
 

	
 

	
11.1.12

	
No proceedings pending or threatened  No litigation, arbitration or administrative proceedings of or before any court, arbitral body or agency have been started or (to the best of the Borrower's knowledge threatened) which, if adversely determined, might reasonably be expected to have a materially adverse effect on the business, assets, financial condition or credit worthiness of any Security Party.

  

26

  

	
 

	
11.1.13

	
Disclosure of material facts  The Borrower is not aware of any material facts or circumstances which have not been disclosed to the Lender and which might, if disclosed, have adversely affected the decision of a person considering whether or not to make loan facilities of the nature contemplated by this Agreement available to the Borrower.

	
 

	
 

	
 

	
 

	
11.1.14

	
No established place of business in the UK or US   No Security Party has an established place of business in the United Kingdom or the United States of America.

	
 

	
 

	
 

	
 

	
11.1.15

	
Completeness of Relevant Documents  The copies of any Relevant Documents provided or to be provided by the Borrower to the Lender in accordance with Clause 3 (Conditions of Utilisation) are, or will be, true and accurate copies of the originals and represent, or will represent, the full agreement between the parties to those Relevant Documents in relation to the subject matter of those Relevant Documents and there are no commissions, rebates, premiums or other payments due or to become due in connection with the subject matter of those Relevant Documents other than in the ordinary course of business or as disclosed to, and approved in writing by, the Lender.

	
  

	
11.2

	
Repetition  Each representation and warranty in Clause 11.1 (Representations) is deemed to be repeated by the Borrower by reference to the facts and circumstances then existing on the date of the Drawdown Notice and the first day of each Interest Period.

12           Undertakings and Covenants

The undertakings and covenants in this Clause 12 remain in force for the duration of the Facility Period.

12.1         Information undertakings

  

27

  

	 	
12.1.1

	
Financial statements  The Borrower shall supply to the Lender as soon as the same become available, but in any event within 150 days after the end of each of its financial years, its balance sheets and profit and loss accounts for that financial year and shall procure that the Guarantor supplies to the Lender as soon as the same become available, but in any event within 150 days after the end of the Guarantor's financial years, the Guarantor's audited consolidated financial statements (including consolidated balance sheets and profit and loss accounts and explanatory notes from the auditors) for that financial year, in each case to be supplemented by updated details of all off-balance sheet and time charter hire commitments, together with a Compliance Certificate, signed by two directors of the Borrower or the Guarantor (as the context requires), setting out (in reasonable detail) computations as to compliance with Clause 12.2 (Financial covenants) as at the date as at which those financial statements or balance sheets and profit and loss accounts were drawn up.

	 	
 

	
 

	 	
12.1.2

	
Requirements as to financial statements  Each set of balance sheets and profit and loss accounts delivered by the Borrower and financial statements delivered by the Guarantor under Clause 12.1.1 (Financial statements):

	 	
 

	
 

	
 

	 	
 

	
(a)

	
shall be certified by a director of the Borrower or the Guarantor as fairly representing its financial condition as at the date as at which those financial statements and balance sheets and profit and loss accounts were drawn up; and

	 	
 

	
 

	
 

	 	
 

	
(b)

	
shall be prepared using GAAP, accounting practices and financial reference periods consistent with those applied in the preparation of the Original Financial Statements unless, in relation to any set of financial statements or balance sheets and profit and loss accounts, the Borrower or the Guarantor (as applicable) notifies the Lender that there has been a change in GAAP, the accounting practices or reference periods and the Borrower and the Guarantor's auditors deliver to the Lender:

	 	
 

	
 

	
 

	
 

	 	
 

	
 

	
(i)

	
a description of any change necessary for those financial statements or balance sheets and profit and loss accounts, to reflect the GAAP, accounting practices and reference periods upon which the Original Financial Statements were prepared; and

	 	
 

	
 

	
 

	
 

  

28

  

	 	
 

	
 

	
(ii)

	
sufficient information, in form and substance as may be reasonably required by the Lender, to enable the Lender to make an accurate comparison between the financial position indicated in those financial statements or balance sheets and profit and loss accounts and that indicated in the Original Financial Statements.

	 	
 

	
 

	 	
12.1.3

	
Interim financial statements  The Borrower shall supply to the Lender and shall procure that the Guarantor supplies to the Lender as soon as the same become available, but in any event within 45 days after the end of each quarter during each of its financial years, the Borrower's and the Guarantor's quarterly management accounts for that quarter, together in each case with a Compliance Certificate, signed by two directors of the Borrower or Guarantor (as the context requires), setting out (in reasonable detail) computations as to compliance with Clause 12.2 (Financial covenants) as at the date as at which those accounts were drawn up.

	 	
 

	
 

	 	
12.1.4

	
Information: miscellaneous  The Borrower shall supply to the Lender:

	
 

	
(a)

	
all material documents dispatched by the Borrower to its shareholders (or any class of them) or its creditors generally at the same time as they are dispatched;

	
 

	
 

	
 

	
 

	
(b)

	
promptly upon becoming aware of them, details of any litigation, arbitration or administrative proceedings which are current, threatened or pending against any Security Party, and which might, if adversely determined, have a materially adverse effect on the business, assets, financial condition or credit worthiness of that Security Party; and

	
 

	
 

	
 

	
 

	
(c)

	
promptly, such further information regarding the financial condition, business and operations of any Security Party as the Lender may reasonably request including, without limitation, cash flow analyses and details of the operating costs of the Vessel.

  

29

  

	
  

	
12.1.5

	
Notification of default

	
 

	
(a)

	
The Borrower shall notify the Lender of any Default (and the steps, if any, being taken to remedy it) promptly upon becoming aware of its occurrence.

	
 

	
 

	
 

	
 

	
(b)

	
Promptly upon a request by the Lender, the Borrower shall supply to the Lender a certificate signed by two of its directors or senior officers on its behalf certifying that no Default is continuing (or if a Default is continuing, specifying the Default and the steps, if any, being taken to remedy it).

	
  

	
1.2.1.6

	
"Know your customer" checks  If:

	
 

	
(a)

	
the introduction of or any change in (or in the interpretation, administration or application of) any law or regulation made after the date of this Agreement;

	
 

	
 

	
 

	
 

	
(b)

	
any change in the status of the Borrower after the date of this Agreement; or

	
 

	
 

	
 

	
 

	
(c)

	
a proposed assignment or transfer by the Lender of any of its rights and obligations under this Agreement,

	 	 	 
	 	obliges the Lender (or, in the case of (c) above, any prospective new Lender) to comply with "know your customer" or similar identification procedures in circumstances where the necessary information is not already available to it, the Borrower shall promptly upon the request of the Lender supply, or procure the supply of, such documentation and other evidence as is reasonably requested by the Lender (for itself or, in the case of (c) above, on behalf of any prospective new Lender) in order for the Lender (or, in the case of (c) above, any prospective new Lender) to carry out and be satisfied it has complied with all necessary "know your customer" or other similar checks under all applicable laws and regulations pursuant to the transactions contemplated in the Finance Documents.

 

  

30

  

	
  

	
12.2

	Financial covenants

	
  

	
12.2.1

	
Borrower's financial covenants  The Borrower shall at all times during the Facility Period maintain minimum Cash at least equal to three hundred thousand Dollars ($300,000).

	
  

	
12.2.2

	
Guarantor's financial covenants  The Borrower shall procure that the Guarantor shall at all times during the Facility Period maintain:-

	
 

	
(a)

	
Leverage of less than seventy five per cent (75%); and

	
 

	
 

	
 

	
 

	
(b)

	
Liquidity of an amount of not less than three hundred thousand Dollars ($300,000) per Fleet Vessel; and

	
 

	
 

	
 

	
 

	
(c)

	
Net Worth of not less than fifteen million Dollars ($15,000,000).

 

The expressions used in this Clause shall be construed in accordance with GAAP, and for the purposes of this Agreement:

 

"Cash" means cash in hand which is not subject to any charge back or other Encumbrance and to which the Borrower has free, immediate and direct access.

 

"Financial Statements" means the financial statements of the Guarantor and the Borrower provided in accordance with Clauses 12.1.1 and 12.1.3.

 

"Fleet Vessels" means any vessel (including the Vessel) from time to time wholly owned by the Guarantor (directly or indirectly) (each a "Fleet Vessel").

"Fleet Market Value" means in relation to a Fleet Vessel, the market value of such Fleet Vessel conclusively determined by the average of two valuations to be provided by reputable, independent and first class firms of shipbrokers acceptable to the Lender quarterly for each Fleet Vessel on the basis of a charter-free sale for prompt delivery for cash at arm's length on normal commercial terms as between a willing seller and a willing buyer and at the cost of the Borrower.

"Interest Payable" means, in relation to any financial accounting period during which the Guarantor is required to provide its most recent Financial Statements, all paid or payable interest, acceptance commission, and all other continuing, regular or periodic costs, charges and expenses in the nature of interest (whether paid, payable or capitalised) excluding finance costs and non-cash items incurred by the Guarantor in effecting, servicing or maintaining its Financial Indebtedness to the extent that they are taken into account in calculating the Net Income of the Guarantor during such financial accounting period.

  

31

  

 

"Leverage" means the ratio of Total Consolidated Liabilities to Value Adjusted Total Assets, as shown in the applicable Financial Statement of the Guarantor for any accounting period and determined in accordance with GAAP.

 

"Liquidity" means, in respect of each period during which Financial Statements are delivered by the Guarantor, Cash, as shown in the applicable Financial Statements of the Guarantor, for such accounting period and determined in accordance with GAAP.

 

"Net Income" means the aggregate profit after tax of the Guarantor calculated in accordance with the applicable Financial Statements for the Guarantor then most recently required to be delivered pursuant to Clauses 12.1.1 and 12.1.3.

 

"Net Worth" means equity payments already advanced in respect of the Fleet Vessel less accumulated dividends plus retained earnings of the Fleet Vessels, as each such term is defined in the applicable Financial Statements for the Guarantor determined in accordance with GAAP.

 

"Total Assets" means, in respect of the Guarantor, the amount of total assets of the Guarantor at any time on a consolidated basis which would be included in the applicable Financial Statements for the Guarantor as total assets determined in accordance with GAAP.

 

"Total Consolidated Liabilities" means, in respect of the Guarantor, the amount of total liabilities of the Guarantor (as such teen is defined in the applicable Financial Statements of the Guarantor) at any time on a consolidated basis which would be included in the applicable Financial Statements of the Guarantor as total liabilities in accordance with GAAP including the current portion of liabilities (as such term is defined in the applicable Financial Statements for the Guarantor).

 

"Value Adjusted Total Assets" means the Total Assets of the Guarantor adjusted in each case for the difference of the book value of the Fleet Vessels (as evidenced in the most recent Financial Statements) and the Fleet Market Value.

  

32

  

	
  

	
12.3

	
General undertakings

	
  

	
12.3.1

	
Authorisations  The Borrower shall promptly:

	
 

	
(a)

	
obtain, comply with and do all that is necessary to maintain in full force and effect; and

	
 

	
 

	
 

	
 

	
(b)

	
supply certified copies to the Lender of,

 

	
  

	
 

	
any consent, licence, approval or authorisation required under any law or regulation to enable each Security Party to perform its obligations under the Finance Documents to which it is a party and to ensure the legality, validity, enforceability or admissibility in evidence in the jurisdiction of incorporation of each relevant Security Party of any Finance Document.

 

	
  

	
12.3.2

	
Compliance with laws  The Borrower shall comply in all respects with all laws to which it may be subject, if failure so to comply would materially impair its ability to perform its obligations under the Finance Documents.

	
  

	
12.3.3

	
Conduct of business  The Borrower shall carry on and conduct its business in a proper and efficient manner, file all requisite tax returns and pay all tax which becomes due and payable (except where contested in good faith).

	
  

	
12.3.4

	
Evidence of good standing  The Borrower will from time to time if requested by the Lender provide the Lender with evidence in form and substance satisfactory to the Lender that the Security Parties and all corporate shareholders of any Security Party remain in good standing.

	
  

	
12.3.5

	
Negative pledge and no disposals  The Borrower shall not without the prior written consent of the Lender create nor permit to subsist any Encumbrance or other third party rights over any of its present or future assets or revenues or undertaking (other than Encumbrances created by operation of law which are immediately notified to the Lender and are discharged within ten (10) days from the date they are incurred) nor dispose of any of those assets or revenues or of all or part of that undertaking, unless reasonably incurred in the normal course of its business.

 

  

33

  

	
  

	
12.3.6

	
Merger The Borrower shall not without the prior written consent of the Lender enter into any amalgamation, demerger, merger or corporate reconstruction.

 

	
  

	
12.3.7

	
Change of business  The Borrower shall not without the prior written consent of the Lender make any substantial change to the general nature of its business from that carried on at the date of this Agreement.

	
  

	
12.3.8

	
No other business  The Borrower shall not without the prior written consent of the Lender engage in any business other than the ownership, operation, chartering and management of the Vessel.

 

	
  

	
12.3.9

	
No place of business in UK or US  The Borrower shall have an established place of business in the United Kingdom or the United States of America at any time during the Facility Period.

 

	
  

	
12.3.10

	
No borrowings  The Borrower shall not without the prior written consent of the Lender borrow any money (except for the Loan and unsecured Financial Indebtedness subordinated to the Loan) nor incur any obligations under leases.

 

	
  

	
12.3.11

	
No substantial liabilities  Except in the ordinary course of business, the Borrower shall not without the prior written consent of the Lender incur any liability to any third party which is in the Lender's reasonable opinion of a substantial nature.

 

	
  

	
12.3.12

	
No loans or other financial commitments  The Borrower shall not without the prior written consent of the Lender (such consent not to be unreasonably withheld) make any loan nor enter into any guarantee or indemnity or otherwise voluntarily assume any actual or contingent liability in respect of any obligation of any other person or enter into any transaction (including derivative transactions) that may result in the incurrence of any additional indebtedness (except for inter-company loans, interest rate swaps and container freight derivatives).

 

	
  

	
12.3.13

	
No dividends or non-arm's length transactions  The Borrower shall not without the prior written consent of the Lender (a) unless the Security Parties are in full compliance of all the provisions of the Finance Documents, pay any dividends or make any other distributions of revenue or capital nature to shareholders, issue any new shares or make any payments of principal or interest on amounts owed to related entities or persons or (b) enter into transactions with an affiliate other than on arm's length terms.

  

34

  

 

	
  

	
12.3.14

	
Inspection of records  The Borrower will permit the inspection of its financial records and accounts from time to time by the Lender or its nominee.

 

	
  

	
12.3.15

	
No change in Relevant Documents  The Borrower shall procure that, without the prior written consent of the Lender (such consent not to be unreasonably withheld) there shall be no termination of, alteration to, or waiver of any term of, any of the Relevant Documents which are not Finance Documents.

 

	
  

	
12.3.16

	
Loans Administration Form The Borrower shall provide a completed loans administration form (as provided by the Lender and substantially in the form set out in Schedule 5) which, inter alia, shall provide the Lender with the list of authorised persons ("Authorised Persons") who, on behalf of the Security Parties, may make any information request or communicate generally with the Lender in relation to the ongoing administration of the Loan by the Lender throughout the Facility Period. The Authorised Persons shall also be the point of first contact with the Security Parties for the Lender in relation to the administration of the Loan. The list of Authorised Persons may only be amended and/or varied by an Authorised Person or Director of the relevant Security Party.

 

	
  

	
12.3.17

	
Notification of Event of Default  The Borrower will immediately notify the Lender in writing of the occurrence of any Event of Default or a potential Event of Default.

	
  

	
12.3.18

	
No repayments The Borrower shall not without the prior written consent of the Lender (such consent not to be unreasonably withheld) repay any loans made to it, which shall include both principal and interest on debt to related entities or persons.

 

  

35

  

	
  

	
12.3.19

	
No change in ownership or control  The Borrower shall not permit and shall procure that no Security Party permits without the prior written consent of the Lender any change in its beneficial ownership and control from that advised to the Lender at the date of this Agreement, unless such change relates to the shareholders of the Guarantor trading shares in the normal course of business.

 

	
  

	
12.3.20

	
No change of Guarantor's CEO and Chairman  The Borrower shall procure that Mr. Aristides J. Pittas who is the CEO and Chairman of the Guarantor retains at least one of his capacities as CEO or Chairman.

 

	
  

	
12.3.21

	
No transaction with associated companies  The Borrower shall not without the prior written consent of the Lender, enter into any transactions (except on arm's length terms) with any associated companies or companies associated with the Guarantor, unless reasonably entered in the normal course of business.

 

	
  

	
12.3.22

	
Subordination of shareholder loans The Borrower shall procure that any shareholder loans and/or inter company borrowings and all claims of the Guarantor or the Managers against the Borrower are fully subordinated to the Loan.

 

	
  

	
12.3.23

	
No cross-default  The Borrower shall procure that no Security Party or any subsidiary of the Guarantor defaults under any Financial Indebtedness, including without limitation:

	
 

	
(a)

	
any non-payment of any Financial Indebtedness when due or within any originally applicable grace period; or

	
 

	
 

	
 

	
 

	
(b)

	
any Financial Indebtedness is declared to be, or otherwise becomes, due and payable before its specified maturity as a result of an event of default (however described); or

	
 

	
 

	
 

	
 

	
(c)

	
any Financial Indebtedness is capable of being declared by a creditor to be due and payable before its specified maturity as a result of such an event.

  

36

  

	
  

	
12.3.24

	
Ownership  The Borrower undertakes to remain 100% owned (directly or indirectly) by the Guarantor.

	
  

	
12.4

	
Vessel undertakings

 

	
  

	
12.4.1

	
No sale of Vessel  The Borrower shall not sell or otherwise dispose of the Vessel or any shares in the Vessel nor agree to do so without the prior written consent of the Lender.

 

	
  

	
12.4.2

	
No chartering  The Borrower shall not without the prior written consent of the Lender let the Vessel on a Charter or a bareboat charter or renew or extend any Charter or other contract of employment having a duration of more than 12 months (nor agree to do so).

 

	
  

	
12.4.3

	
No change in management  The Borrower shall procure that, without the prior written consent of the Lender, such consent not to be unreasonably withheld, there shall be no termination of, alteration to, or waiver of any term of, the Management Agreement in respect of the Vessel and the Borrower shall not without the prior written consent of the Lender, such consent not to be unreasonably withheld, permit the Managers to sub-contract or delegate the commercial or technical management of the Vessel to any third party.

	
  

	
12.4.4

	
Registration of Vessel  The Borrower undertakes to maintain the registration of the Vessel under the flag stated in Recital (A) for the duration of the Facility Period unless the Lender agrees otherwise in writing in its reasonable discretion.

 

	
  

	
12.4.5

	
Evidence of current COFR  The Borrower will, if and for so long as the Vessel trades in the United States of America and Exclusive Economic Zone (as defined in the United States Oil Pollution Act 1990), obtain and retain a valid Certificate of Financial Responsibility for the Vessel under that Act, will provide the Lender with evidence of that Certificate, and will comply strictly with the requirements of that Act.

	
  

	
12.4.6

	
ISM Code compliance  The Borrower will:

	
 

	
(a)

	
procure that the Vessel remains for the duration of the Facility Period subject to a SMS;

  

37

  

	
 

	
(b)

	
maintain a valid and current SMC for the Vessel throughout the Facility Period and provide a copy to the Lender;

	
 

	
 

	
 

	
 

	
(c)

	
procure that the ISM Company maintains a valid and current DOC throughout the Facility Period and provide a copy to the Lender; and

	
 

	
 

	
 

	
 

	
(d)

	
immediately notify the Lender in writing of any actual or threatened withdrawal, suspension, cancellation or modification of the SMC of the Vessel or of the DOC of the ISM Company.

	
  

	
12.4.7

	
ISPS Code compliance  The Borrower will:

	
 

	
(a)

	
for the duration of the Facility Period comply with the ISPS Code in relation to the Vessel and procure that the Vessel and the ISPS Company comply with the ISPS Code;

	
 

	
 

	
 

	
 

	
(b)

	
maintain a valid and current ISSC for the Vessel throughout the Facility Period and provide a copy to the Lender; and

	
 

	
 

	
 

	
 

	
(c)

	
immediately notify the Lender in writing of any actual or threatened withdrawal, suspension, cancellation or modification of the ISSC of the Vessel.

	
 

	
 

	
 

 

	
  

	
12.4.8

	
Annex VI compliance   The Borrower will:

 

	
 

	
(a)

	
for the duration of the Facility Period comply with Annex VI in relation to the Vessel and procure that the Vessel's master and crew are familiar with, and that the Vessel complies with, Annex VI;

	
 

	
 

	
 

	
 

	
(b)

	
maintain a valid and current IAPPC for the Vessel throughout the Facility Period and provide a copy to the Lender; and

	
 

	
 

	
 

	
 

	
(c)

	
immediately notify the Lender in writing of any actual or threatened withdrawal, suspension, cancellation or modification of the IAPPC of the Vessel.

	
  

	
12.4.9

	
Valuations  The Borrower shall procure that valuations of the Vessel will be carried out semi-annually for the purposes of determining the Fair Market Value, at the cost of the Borrower and at any other time, as determined in the absolute discretion of the Lender, at the cost of the Lender. However, in case of a Default valuations (which may be carried out at any time) shall be at the cost of the Borrower.

  

38

  

 

	
  

	
12.4.10

	
No change in class  The Borrower shall class the Vessel with a classification society acceptable to the Lender and shall maintain such classification free of all recommendations and qualification for the duration of the Facility Period unless otherwise agreed by the Lender in writing and shall not change such classification society without the prior written consent of the Lender, such consent not to be unreasonably withheld. The Borrower shall advise the Lender in writing of the class and the classification society with which the Vessel shall be classified at least 15 days prior to the Drawdown Date. The Borrower shall send to the classification society of the Vessel a letter in form and substance acceptable to the Lender granting the Lender permission to access class records and other information from the classification society in relation to the Vessel during the Facility Period. That letter should also specify that if the Vessel has a condition of class imposed or a class recommendation issued, the classification society shall immediately inform the Lender by email at techcom@dvbbank.com and at thibaud.ollivier@dvbbank.com. The Borrower shall arrange for the Lender to have electronic access to class records either (a) by way of the Lender being granted direct access from the classification society or (b) by way of indirect access via the Borrower's account manager and designating the Lender as a user or administrator of the system under its account.

 

	
  

	
12.4.11

	
Inspection of Vessel  The Borrower will permit the physical inspection of the Vessel by the Lender or its nominee at any time during the Facility Period, upon the request of the Lender. The Lender will use reasonable endeavours to ensure that the operation of the Vessel is not adversely affected as a result of any physical inspection. The Borrower will be liable for the cost of up to one physical inspection of the Vessel per calendar year, unless there is an Event of Default which is continuing, unremedied and unwaived, in which case the Borrower shall be liable for the costs of all such physical inspections. The Borrower shall comply with all reasonable requests from the Lender to repair the Vessel following a physical inspection.

  

39

  

 

	
  

	
12.4.12

	
Insurances  The Borrower shall advise the Lender at least 15 days prior to the Drawdown Date of the Vessel about the insurance brokers and clubs and about the main terms under which the Insurances shall be effected, all of which must be approved by the Lender and be acceptable to the Lender.

13           Events of Default

	
  

	
13.1

	
Events of Default  Each of the events or circumstances set out in this Clause 13.1 is an Event of Default.

 

	
  

	
13.1.1

	
Non-payment  The Borrower does not pay on the due date any amount payable by it under a Finance Document at the place at and in the currency in which it is expressed to be payable.

 

	
  

	
13.1.2

	
Other obligations  A Security Party does not comply with any provision of any of the Security Documents to which that Security Party is a party (other than as referred to in Clause 13.1.1 (Non-payment)).

 

No Event of Default under this Clause 13.1.2 will occur if the failure to comply is capable of remedy and is remedied within ten (10) Business Days of the Lender giving notice to the Borrower or the Borrower becoming aware of the failure to comply.

 

	
  

	
13.1.3

	
Misrepresentation  Any representation, warranty or statement made or deemed to be repeated by a Security Party in any Finance Document or any other document delivered by or on behalf of a Security Party under or in connection with any Finance Document is or proves to have been incorrect or misleading in any material respect when made or deemed to be repeated.

	
  

	
13.1.4

	
Cross default  Any Financial Indebtedness of a Security Party or any subsidiary of the Guarantor:

	
  

	
(a)

	
is not paid when due or within any originally applicable grace period; or

  

40

  

 

	  	
(b)

	
is declared to be, or otherwise becomes, due and payable before its specified maturity as a result of an event of default (however described); or

	  	  	  
	  	
(c)

	
is capable of being declared by a creditor to be due and payable before its specified maturity as a result of such an event.

 

	
  

	
13.1.5

	
Insolvency

 

	
 

	
(a)

	
A Security Party is unable or admits inability to pay its debts as they fall due, suspends making payments on any of its debts or, by reason of actual or anticipated financial difficulties, commences negotiations with one or more of its creditors with a view to rescheduling any of its Financial Indebtedness.

	
 

	
 

	
 

	
 

	
(b)

	
The value of the assets of a Security Party is less than its liabilities (taking into account contingent and prospective liabilities).

	
 

	
 

	
 

	
 

	
(c)

	
A moratorium is declared in respect of any Financial Indebtedness of a Security Party.

	
  

	
13.1.6

	
Insolvency proceedings   Any corporate action, legal proceedings or other procedure or step is taken for:

	
 

	
(a)

	
the suspension of payments, a moratorium of any Financial Indebtedness, winding-up, dissolution, administration, bankruptcy or reorganisation (by way of voluntary arrangement, scheme of arrangement or otherwise) of a Security Party;

	
 

	
 

	
 

	
 

	
(b)

	
a composition, compromise, assignment or arrangement with any creditor of a Security Party;

	
 

	
 

	
 

	
 

	
(c)

	
the appointment of a liquidator, receiver, administrative receiver, administrator, compulsory manager, or trustee or other similar officer in respect of any Security Party or any of its assets; or

	
 

	
 

	
 

	
 

	
(d)

	
enforcement of any Encumbrance over any assets of a Security Party, or any analogous procedure or step is taken in any jurisdiction.

  

41

  

	
  

	
13.1.7

	
Creditors' process  Any expropriation, attachment, sequestration, distress or execution affects any asset or assets of a Security Party, which shall include without limitation the sale of the Vessel by public auction, private auction, private treaty sale or any other similar proceedings having been initiated.

	
  

	
13.1.8

	
Change in ownership or control of a Security Party  There is any change in the beneficial ownership or control of a Security Party (other than the Guarantor) from that advised to the Lender by the Borrower at the date of this Agreement, unless such change relates to the shareholders of the Guarantor trading shares in the normal course of business.

 

	
  

	
13.1.9

	
Change of Guarantor's CEO and Chairman  There is change of Mr. Aristides J. Pittas from both of his capacities as CEO and Chairman of the Guarantor.

	
  

	
13.1.10

	
Repudiation A Security Party repudiates any of the Security Documents to which that Security Party is a party or evidences an intention to do so.

 

	
  

	
13.1.11

	
Impossibility or illegality  Any event occurs which would, or would with the passage of time, render performance of any of the Relevant Documents by a Security Party or any other party to any such document impossible, unlawful or unenforceable by the Lender or a Security Party.

 

	
  

	
13.1.12

	
Conditions subsequent   Any of the conditions referred to in Clause 3.3 (Conditions subsequent) is not satisfied within the time reasonably required by the Lender.

	
  

	
13.1.13

	
Revocation or modification of authorisation  Any consent, licence, approval, authorisation, filing, registration or other requirement of any governmental, judicial or other public body or authority which is now, or which at any time during the Facility Period becomes, necessary to enable a Security Party or any other person (except the Lender) to comply with any of its obligations under any of the Relevant Documents is not obtained, is revoked, suspended, withdrawn or withheld, or is modified in a manner which the Lender considers is, or may be, prejudicial to the interests of the Lender, or ceases to remain in full force and effect.

  

42

  

	
  

	
13.1.14

	
Curtailment of business  A Security Party ceases, or threatens to cease, to carry on all or a substantial part of its business or, as a result of intervention by or under the authority of any government, the business of a Security Party is wholly or partially curtailed or suspended, or all or a substantial part of the assets or undertaking of a Security Party is seized, nationalised, expropriated or compulsorily acquired.

 

	
  

	
13.1.15

	
Reduction of capital   A Security Party reduces its authorised or issued or subscribed capital.

 

	
  

	
13.1.16

	
Loss of Vessel The Vessel suffers a Total Loss or is otherwise destroyed, abandoned, confiscated, forfeited or condemned as prize, or a similar event occurs in relation to any other vessel which may from time to time be mortgaged to the Lender as security for the payment of all or any part of the Indebtedness, except that a Total Loss, or event similar to a Total Loss in relation to any other vessel, shall not be an Event of Default unless, the Borrower or the Guarantor shall not, within ten (10) days of the Lender's request, provide to the Lender additional security acceptable to the Lender in its reasonable discretion, which shall only be released either upon full prepayment of the Indebtedness under Clause 6.3 or upon return of the Vessel to the Borrower in satisfactory condition to the Lender's reasonable discretion.

 

	
  

	
13.1.17

	
Challenge to registration The registration of the Vessel or the Mortgage is contested or becomes void or voidable or liable to cancellation or termination, or the validity or priority of a Mortgage is contested.

	
  

	
13.1.18

	
War The country of registration of the Vessel becomes involved in war (whether or not declared) or civil war or is occupied by any other power or there is instability which may affect the country of the flag of the Vessel and the Lender in its discretion considers that, as a result, the security conferred by any of the Security Documents is materially prejudiced.

  

43

  

	
  

	
13.1.19

	
Notice of termination  The Guarantor gives notice to the Lender to determine its obligations under the Guarantee.

	
  

	
13.1.20

	
Material adverse change  Any event or series of events occurs which, in the reasonable opinion of the Lender, is likely to have a materially adverse effect on the business, assets, financial condition or credit worthiness of a Security Party or any subsidiary of the Guarantor.

	
  

	
13.1.21

	
Insurances There is breach of the main terms under which the Insurances shall be effected from that advised to the Lender by the Borrower at the date of this Agreement.

	
  

	
13.2

	
Acceleration  If an Event of Default is continuing the Lender may by notice to the Borrower cancel any part of the Maximum Loan Amount not then advanced and:

	
  

	
13.2.1

	
declare that the Loan, together with accrued interest, and all other amounts accrued or outstanding under the Finance Documents are immediately due and payable, whereupon they shall become immediately due and payable; and/or

	
  

	
13.2.2

	
declare that the Loan is payable on demand, whereupon it shall immediately become payable on demand by the Lender.

	
14

	
Assignment and Sub-Participation

	
  

	
14.1

	
Lender's rights The Lender may assign any of its rights under this Agreement or transfer by novation any of its rights and obligations under this Agreement to any other branch of the Lender or to any other bank or financial institution or (for the purpose of a securitisation of the Lender's rights or obligations under the Finance Documents or a similar transaction of broadly equivalent economic effect) to any special purpose vehicle, and may grant sub-participations in all or any part of the Loan.

	
  

	
14.2

	
Borrower's co-operation The Borrower will co-operate fully with the Lender in connection with any assignment, transfer or sub-participation; will execute and procure the execution of such documents as the Lender may require in that connection (at Lender's no material costs); and irrevocably authorise the Lender to disclose to any proposed assignee, transferee or sub-participant (whether before or after any assignment, transfer or sub-participation and whether or not any assignment, transfer or sub-participation shall take place) all information relating to the Security Parties, the Loan, the Relevant Documents and the Vessel which the Lender may in its discretion consider necessary or desirable.

  

44

  

 

	
  

	
14.3

	
Rights of assignee or transferee Any assignee or transferee of the Lender shall (unless limited by the express terms of the assignment or novation) take the full benefit of every provision of the Finance Documents benefitting the Lender.

	
  

	
14.4

	
No assignment or transfer by the Borrower  The Borrower may not assign any of its rights or transfer any of its rights or obligations under the Finance Documents.

	
  

	
14.5

	
Securitisation  The Lender may disclose the size and term of the Loan and the name of each of the Security Parties to any investor or potential investor in a securitisation (or similar transaction of broadly equivalent economic effect) of the Lender's rights or obligations under the Finance Documents.

15           Set-Off

The Lender may set off any matured obligation due from the Borrower under any Finance Document against any matured obligation owed by the Lender to the Borrower, regardless of the place of payment, booking branch or currency of either obligation. If the obligations are in different currencies, the Lender may convert either obligation at a market rate of exchange in its usual course of business for the purpose of the set-off.

16           Payments

	
  

	
16.1

	
Payments  Each amount payable by the Borrower under a Finance Document shall be paid to such account at such bank as the Lender may from time to time direct to the Borrower in the Currency of Account and in such funds as are customary at the time for settlement of transactions in the relevant currency in the place of payment. Payment shall be deemed to have been received by the Lender on the date on which the Lender receives authenticated advice of receipt, unless that advice is received by the Lender on a day other than a Business Day or at a time of day (whether on a Business Day or not) when the Lender in its discretion considers that it is impossible or impracticable for the Lender to utilise the amount received for value that same day, in which event the payment in question shall be deemed to have been received by the Lender on the Business Day next following the date of receipt of advice by the Lender.

 

  

45

  

 

	  	
16.2

	
No deductions or withholdings  Each payment (whether of principal or interest or otherwise) to be made by the Borrower under a Finance Document shall, subject only to Clause 16.3 (Grossing-up), be made free and clear of and without deduction for or on account of any Taxes or other deductions, withholdings, restrictions, conditions or counterclaims of any nature.

	  	  	  
	  	
16.3

	
Grossing-up   If at any time any law requires (or is interpreted to require) the Borrower to make any deduction or withholding from any payment, or to change the rate or manner in which any required deduction or withholding is made, the Borrower will promptly notify the Lender and, simultaneously with making that payment, will pay to the Lender whatever additional amount (after taking into account any additional Taxes on, or deductions or withholdings from, or restrictions or conditions on, that additional amount) is necessary to ensure that, after the deduction or withholding, the Lender receives a net sum equal to the sum which the Lender would have received had no deduction or withholding been made.

	  	  	  
	  	
16.4

	
Evidence of deductions  If at any time the Borrower is required by law to make any deduction or withholding from any payment to be made by it under a Finance Document, that Borrower will pay the amount required to be deducted or withheld to the relevant authority within the time allowed under the applicable law and will, no later than thirty (30) days after making that payment, deliver to the Lender an original receipt issued by the relevant authority, or other evidence acceptable to the Lender, evidencing the payment to that authority of all amounts required to be deducted or withheld.

	  	  	  
	  	
16.5

	
Adjustment of due dates  If any payment or transfer of funds to be made under a Finance Document, other than a payment of interest on the Loan, shall be due on a day which is not a Business Day, that payment shall be made on the next succeeding Business Day (unless the next succeeding Business Day falls in the next calendar month in which event the payment shall be made on the next preceding Business Day). Any such variation of time shall be taken into account in computing any interest in respect of that payment.

	  	  	  
	  	
16.6

	
Control account  The Lender shall open and maintain on its books a control account in the names of the Borrower showing the advance of the Loan and the computation and payment of interest and all other sums due under this Agreement. The Borrower's obligations to repay the Loan and to pay interest and all other sums due under this Agreement shall be evidenced by the entries from time to time made in the control account opened and maintained under this Clause 16.6 and those entries will, in the absence of manifest error, be conclusive and binding.

  

46

  

17           Notices

	
  

	
17.1

	
Communications in writing   Any communication to be made under or in connection with this Agreement shall be made in writing and, unless otherwise stated, may be made by fax or letter.

	
  

	
17.2

	
Addresses  The address and fax number (and the department or officer, if any, for whose attention the communication is to be made) of each party to this Agreement for any communication or document to be made or delivered under or in connection with this Agreement are:

	
 

	
17.2.1

	
in the case of the Borrower, c/o Eurobulk Ltd. at 4 Messogiou & Evropis, Maroussi, Athens, Greece (fax no: 211 180 4097) marked for the attention of Mr. Aristides Pittas; and

	
 

	
 

	
 

	
 

	
17.2.2

	
in the case of the Lender, at its address at the head of this Agreement (fax no: +49 40 3080 0412) marked for the attention of: Loans Administration Department;

or any substitute address, fax number, department or officer as either party may notify to the other by not less than five (5) Business Days' notice.

	
  

	
17.3

	
Delivery Any communication or document made or delivered by one party to this Agreement to the other under or in connection this Agreement will only be effective:

	
 

	
17.3.1

	
if by way of fax, when received in legible form; or

	
 

	
 

	
 

	
 

	
17.3.2

	
if by way of letter, when it has been left at the relevant address or five (5) Business Days after being deposited in the post postage prepaid in an envelope addressed to it at that address;

and, if a particular department or officer is specified as part of its address details provided under Clause 17.2 (Addresses), if addressed to that department or officer.

  

47

  

Any communication or document to be made or delivered to the Lender will be effective only when actually received by the Lender.

	
  

	
17.4

	
English language  Any notice given under or in connection with this Agreement must be in English. All other documents provided under or in connection with this Agreement must be:

	
 

	
17.4.1

	
in English; or

	
 

	
 

	
 

	
 

	
17.4.2

	
if not in English, and if so required by the Lender, accompanied by a certified English translation and, in this case, the English translation will prevail unless the document is a constitutional, statutory or other official document.

 

18           Partial Invalidity

If, at any time, any provision of a Finance Document is or becomes illegal, invalid or unenforceable in any respect under any law of any jurisdiction, neither the legality, validity or enforceability of the remaining provisions nor the legality, validity or enforceability of such provision under the law of any other jurisdiction will in any way be affected or impaired.

 

19           Remedies and Waivers

No failure to exercise, nor any delay in exercising, on the part of the Lender, any right or remedy under a Finance Document shall operate as a waiver, nor shall any single or partial exercise of any right or remedy prevent any further or other exercise or the exercise of any other right or remedy. The rights and remedies provided in this Agreement are cumulative and not exclusive of any rights or remedies provided by law.

 

20           Miscellaneous

	
  

	
20.1

	
No oral variations  No variation or amendment of a Finance Document shall be valid unless in writing and signed on behalf of the Lender.

	
  

	
20.2

	
Further assurance  If any provision of a Finance Document shall be invalid or unenforceable in whole or in part by reason of any present or future law or any decision of any court, or if the documents at any time held by or on behalf of the Lender are considered by the Lender for any reason insufficient to carry out the terms of this Agreement, then from time to time the Borrower will promptly, on demand by the Lender, execute or procure the execution of such further documents as in the reasonable opinion of the Lender are necessary to provide adequate security for the repayment of the Indebtedness.

 

  

48

  

 

	
  

	
20.3

	
Rescission of payments etc.  Any discharge, release or reassignment by the Lender of any of the security constituted by, or any of the obligations of a Security Party contained in, a Finance Document shall be (and be deemed always to have been) void if any act (including, without limitation, any payment) as a result of which such discharge, release or reassignment was given or made is subsequently wholly or partially rescinded or avoided by operation of any law.

 

	
  

	
20.4

	
Certificates  Any certificate or statement signed by an authorised signatory of the Lender purporting to show the amount of the Indebtedness (or any part of the Indebtedness) or any other amount referred to in any Finance Document shall, save for manifest error or on any question of law, be conclusive evidence as against the Borrower of that amount.

	
  

	
20.5

	
Counterparts  This Agreement may be executed in any number of counterparts each of which shall be original but which shall together constitute the same instrument.

	
  

	
20.6

	
Contracts (Rights of Third Parties) Act 1999 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.

 

	
  

	
20.7

	
Consent to disclosure The Borrower shall, and shall procure that the Guarantor shall, irrevocably and unconditionally authorise the Lender to give, divulge and reveal from time to time information and details relating to its account, the Vessel, the Facility Documents, the Relevant Documents, the Loan and any agreement entered into by the Borrower and/or the Guarantor or information provided by the Borrower or the Guarantor in connection with the Facility Documents to (i) any private, public or internationally recognised authorities, (ii) the Lender's head offices, branches and affiliates and professional advisors, (iii) any other parties to the Facility Documents, (iv) a rating agency or their professional advisors, (v) any person with whom they propose to enter (or contemplate entering) into contractual relations in relation to the Loan and (vi) any other person(s) regarding the funding, re-financing, transfer, assignment, sale, sub-participation or operational arrangement or other transaction in relation thereto, including without limitation, any enforcement, preservation, assignment, transfer, sale or sub-participation of any of the Lender's rights and obligations.

  

49

  

	
21

	
Law and Jurisdiction

	
  

	
21.1

	
Governing law   This Agreement and any non-contractual obligations arising from or in connection with it shall in all respects be governed by and interpreted in accordance with English law.

	
  

	
21.2

	
Jurisdiction   For the exclusive benefit of the Lender, the parties to this Agreement irrevocably agree that the courts of England are to have exclusive jurisdiction to settle any dispute (a) arising from or in connection with this Agreement or (h) relating to any non-contractual obligations arising from or in connection with this Agreement and that any proceedings may be brought in those courts.

	
  

	
21.3

	
Alternative jurisdictions   Nothing contained in this Clause 21 shall limit the right of the Lender to commence any proceedings against the Borrower in any other court of competent jurisdiction nor shall the commencement of any proceedings against the Borrower in one or more jurisdictions preclude the commencement of any proceedings in any other jurisdiction, whether concurrently or not.

	
  

	
21.4

	
Waiver of objections The Borrower irrevocably waives any objection which it may now or in the future have to the laying of the venue of any proceedings in any court referred to in this Clause 21, and any claim that those proceedings have been brought in an inconvenient or inappropriate forum, and irrevocably agrees that a judgment in any proceedings commenced in any such court shall be conclusive and binding on it and may be enforced in the courts of any other jurisdiction.

	
  

	
21.5

	
Service of process  Without prejudice to any other mode of service allowed under any relevant law, the Borrower:

	
 

	
21.5.1

	
irrevocably appoints Hill Dickinson LLP, London England as its agent for service of process in relation to any proceedings before the English courts in connection with this Agreement; and

	
 

	
 

	
 

	
 

	
21.5.2

	
agrees that failure by a process agent to notify the Borrower of the process will not invalidate the proceedings concerned.

  

50

  

SCHEDULE 1: Conditions Precedent and Subsequent

Part I: Conditions precedent

1           Security Parties

	
 

	
(a)

	
Constitutional Documents  Copies of the constitutional documents of each Security Party together with such other evidence as the Lender may reasonably require that each Security Party is duly incorporated in its country of incorporation and remains in existence with power to enter into, and perform its obligations under, the Relevant Documents to which it is or is to become a party.

	
 

	
 

	
 

	
 

	
(b)

	
Certificates of good standing  A certificate of good standing in respect of each Security Party (if such a certificate can be obtained).

	
 

	
 

	
 

	
 

	
(c)

	
Board resolutions  A copy of a resolution of the board of directors of each Security Party:

	
 

	
 

	
 

	
 

	
 

	
(i)

	
approving the terms of, and the transactions contemplated by, the Relevant Documents to which it is a party and resolving that it execute those Relevant Documents; and

	
 

	
 

	
 

	
 

	
 

	
 

	
(ii)

	
authorising a specified person or persons to execute those Relevant Documents (and all documents and notices to be signed and/or despatched under those documents) on its behalf.

	
 

	
 

	
 

	
 

	
(d)

	
Copy passports   A copy of the passport of each person authorised by the resolutions referred to in paragraph (c) above.

	
 

	
 

	
 

	
 

	
(e)

	
Shareholder resolutions   A copy of a resolution signed by all the holders of the issued shares in each Security Party, approving the terms of, and the transactions contemplated by, the Relevant Documents to which that Security Party is a party.

	
 

	
 

	
 

	
 

	
(f)

	
Officer's certificates   A certificate of a duly authorised officer of each Security Party certifying that each copy document relating to it specified in this Part I of Schedule 1 is correct, complete and in full force and effect and setting out the names of the directors, officers and shareholders of that Security Party and the proportion of shares held by each shareholder.

	
 

	
 

	
 

  

51

  

	
 

	
(g)

	
Evidence of registration  Where such registration is required or permitted under the laws of the relevant jurisdiction, evidence that the names of the directors, officers and shareholders of each Security Party are duly registered in the companies registry or other registry in the country of incorporation of that Security Party.

	
 

	
 

	
 

	
 

	
(h)

	
Powers of attorney  The notarially attested and legalised power of attorney of each Security Party under which any documents are to be executed or transactions undertaken by that Security Party.

	
 

	
 

	
 

	
 

	
(i)

	
Capital structure  Evidence, in form and substance satisfactory to the Lender, of the capital structure (equity and subordinated debt) of the Borrower and the Guarantor.

	
 

	
 

	
 

	
2

	
Security and related documents

	
 

	
 

	
 

	
 

	
(a)

	
Vessel documents  Photocopies, certified as true, accurate and complete by a director or the secretary or the legal advisers of the Borrower, of:

	
 

	
 

	
 

	
 

	
 

	
(i)

	
the MOA;

	
 

	
 

	
 

	
 

	
 

	
 

	
(ii)

	
such documents as the Lender may reasonably require to evidence the nomination of the Borrower as purchaser of the Vessel pursuant to the MOA;

	
 

	
 

	
 

	
 

	
 

	
 

	
(iii)

	
any charterparty or other contract of employment of the Vessel which will be in force on the Drawdown Date (including without limitation. the Charter);

	
 

	
 

	
 

	
 

	
 

	
 

	
(iv)

	
the Management Agreement;

	
 

	
 

	
 

	
 

	
 

	
 

	
(v)

	
the Vessel's current Safety Construction, Safety Equipment, Safety Radio, Oil Pollution Prevention and Load Line Certificates;

	
 

	
 

	
 

	
 

	
 

	
 

	
(vi)

	
evidence of the Vessel's current Certificate of Financial Responsibility issued pursuant to the United States Oil Pollution Act 1990;

	
 

	
 

	
 

	
 

	
 

	
 

	
(vii)

	
the Vessel's current SMC;

	
 

	
 

	
 

	
 

	
 

	
 

	
(viii)

	
the ISM Company's current DOC;

	
 

	
 

	
 

	
 

	
 

	
 

	
(ix)

	
the Vessel's current ISSC;

  

52

  

	
 

	
 

	
(x)

	
the Vessel's current IAPPC;

	
 

	
 

	
 

	
 

	
 

	
 

	
(xi)

	
the Vessel's current Tonnage Certificate; in each case together with all addenda, amendments or supplements.

	
 

	
 

	
 

	
 

	
 

	
(b)

	
Evidence of Borrower's title   Certificate of ownership and encumbrance (or equivalent) issued by the Registrar of Ships (or equivalent official) of the flag stated in Recital (A) confirming that (a) the Vessel is permanently registered under that flag in the ownership of the Borrower, (b) the Mortgage has been registered with first priority against the Vessel and (c) there are no further Encumbrances registered against the Vessel.

	
 

	
 

	
 

	
 

	
(c)

	
Evidence of insurance   Evidence that the Vessel is insured in the manner required by the Security Documents and that letters of undertaking will be issued in the manner required by the Security Documents, together with (if required by the Lender) the written approval of the Insurances by an insurance adviser appointed by the Lender.

	
 

	
 

	
 

	
 

	
(d)

	
Confirmation of class   A Certificate of Confirmation of Class for hull and machinery confirming that the Vessel is classed with the highest class applicable to vessels of her type with Lloyd's Register or such other classification society as may be acceptable to the Lender free of overdue recommendations affecting class.

	
 

	
 

	
 

	
 

	
(e)

	
Survey report   A report by a surveyor instructed by the Lender to inspect the Vessel confirming that the condition of the Vessel is in all respects acceptable to the Lender.

	
 

	
 

	
 

	
 

	
(f)

	
Valuation   Not less than two (2) weeks prior to her expected Delivery Date, the fair market value of the Vessel shall be conclusively determined on a charter-free basis by firms of shipbrokers approved and appointed by the Lender (and in a form approved by the Lender) which shall include: (a) one valuation by a firm of shipbrokers appointed by the Lender (which shall be Maritime Strategies International Ltd. unless the Lender advises otherwise) and (b) if requested by the Borrower, one valuation to be obtained by a firm of shipbrokers selected by the Borrower from the Lender's approved list, in which case the fair marker value of the Vessel shall be conclusively determined by the average of the two valuations. If there is a difference of or in excess of 10% between the two valuations, the Borrower may select a third firm of shipbrokers from the Lender's approved list and the fair market value of the Vessel shall be determined by the average of the three valuations.

  

53

  

	
 

	
(g)

	
Security Documents  The Mortgage and the Assignment in respect of the Vessel, the Guarantee, the Account Charge and the Share Pledge, together with all other documents required by any of them, including, without limitation, all notices of assignment and/or charge and evidence that those notices will be duly acknowledged by the recipients.

	
 

	
 

	
 

	
 

	
(h)

	
Mandates  Such duly signed forms of mandate, and/or other evidence of the opening of the Earnings Account, as the Lender may require.

	
 

	
 

	
 

	
 

	
(i)

	
Managers' confirmation   The written confirmation of the Managers that, throughout the Facility Period unless otherwise agreed by the Lender, they will remain the commercial and technical managers of the Vessel pursuant to the terms of the Management Agreement and that they will not, without the prior written consent of the Lender (such consent not to be unreasonably withheld), sub-contract or delegate the commercial or technical management of the Vessel to any third party and confirming in terms acceptable to the Lender that, following the occurrence of an Event of Default, all claims of the Managers against the Borrower shall be subordinated to the claims of the Lender under the Finance Documents.

	
 

	
 

	
 

	
 

	
(j)

	
No disputes  The written confirmation of the Borrower that there is no dispute under any of the Relevant Documents as between the parties to any such document.

	
 

	
 

	
 

	
 

	
(k)

	
The Account Holder's confirmation  The written confirmation of the Account Holder that the Earnings Account has been opened with the Account Holder and to its actual knowledge is free from Encumbrances and rights of set off other than as created by or pursuant to the Security Documents.

	
 

	
 

	
 

	
 

	
(l)

	
Technical information   Delivery of technical information to the Lender by the Borrower in respect of the Vessel in a form acceptable to the Lender, including without limitation (i) full history of class, (ii) details of statutory certificates, (iii) summaries of inspections (flag, port state control etc.) and (iv) any records of planned maintenance.

	
 

	
 

	
 

	
 

	
(m)

	
Other Relevant Documents   Copies of each of the Relevant Documents not otherwise comprised in the documents listed in this Part I of Schedule l .

	
 

	
 

	
 

  

54

  

3              Legal opinions

If a Security Party is incorporated in a jurisdiction other than England and Wales or if any Finance Document is governed by the laws of a jurisdiction other than England and Wales, a legal opinion of the legal advisers to the Lender in each relevant jurisdiction, substantially in the form or forms provided to the Lender prior to signing this Agreement or confirmation satisfactory to the Lender that such an opinion will be given.

4              Other documents and evidence

	
 

	
(a)

	
Drawdown Notice   A duly completed Drawdown Notice.

	
 

	
 

	
 

	
 

	
(b)

	
Process agent   Evidence that any process agent referred to in Clause 21.5 (Service of process) and any process agent appointed under any other Finance Document has accepted its appointment.

	
 

	
 

	
 

	
 

	
(c)

	
Other authorizations  A copy of any other consent, licence, approval, authorisation or other document, opinion or assurance which the Lender considers to be necessary or desirable (if it has notified the Borrower accordingly) in connection with the entry into and performance of the transactions contemplated by any of the Relevant Documents or for the validity and enforceability of any of the Relevant Documents.

	
 

	
 

	
 

	
 

	
(d)

	
Financial statements  Copies of the Original Financial Statements.

	
 

	
 

	
 

	
 

	
(e)

	
Fees  Evidence that the fees, costs and expenses then due from the Borrower under Clause 8 (Indemnities) and Clause 9 (Arrangement Fee) have been paid or will be paid by the Drawdown Date.

	
 

	
 

	
 

	
 

	
(f)

	
"Know your customer" documents  Such documentation and other evidence as is reasonably requested by the Lender in order for the Lender to comply with all necessary "know your customer" or similar identification procedures in relation to the transactions contemplated in the Finance Documents.

	
 

	
 

	
 

	
 

	
(g)

	
Loan Administration Form   A duly completed Loan Administration Form.

  

55

  

Part II: Conditions subsequent

	
1

	
Letters of undertaking  Letters of undertaking in respect of the Insurances as required by the Security Documents together with copies of the relevant policies or cover notes or entry certificates duly endorsed with the interest of the Lender.

	
 

	
 

	
2

	
Acknowledgements of notices  Acknowledgements of all notices of assignment and/or charge given pursuant to any Security Documents received by the Lender pursuant to Part I of this Schedule I.

	
 

	
 

	
3

	
Legal opinions  Such of the legal opinions specified in Part I of this Schedule 1 as have not already been provided to the Lender.

	
 

	
 

	
4

	
Master's receipt  The master's receipt for the Mortgage.

  

56

  

SCHEDULE 2: Repayment of Loan

 

 

	
Repayment Date

	
Repayment

Instalment

	
Outstanding Loan

	
01.09.2010

	
Repayment

	
$8,500,000

	
01.12.2010

	
$303,000

	
$8,197,000

	
01.03.2011

	
$303,000

	
$7,894,000

	
01.06.2011

	
$303,000

	
$7,591,000

	
01.09.2011

	
$303,000

	
$7,288,000

	
01.12.2011

	
$303,000

	
$6,985,000

	
01.03.2012

	
$303,000

	
$6,682,000

	
01.06.2012

	
$303,000

	
$6,379,000

	
01.09.2012

	
$303,000

	
$6,076,000

	
01.12.2012

	
$303,000

	
$5,773,000

	
01.03.2013

	
$303,000

	
$5,470,000

	
01.06.2013

	
$303,000

	
$5,167,000

	
01.09.2013

	
$303,000

	
$4,864,000

	
01.12.2013

	
$303,000

	
$4,561,000

	
01.03.2014

	
$303,000

	
$4,258,000

	
01.06.2014

	
$303,000

	
$3,955,000

	
01.09.2014

	
$303,000

	
$3,652,000

	
01.12.2014

	
$303,000

	
$3,349,000

	
01.03.2015

	
$303,000

	
$3,046,000

	
01.06.2015

	
$303,000

	
$2,743,000

	
01.09.2015

	
$2,743,000

	
$0

  

57

  

SCHEDULE 3: Form of Drawdown Notice

To:          DVB Bank SE

From:      Aggeliki Shipping Ltd

2010

Dear Sirs

Drawdown Notice

We refer to the Loan Agreement dated                        2010 made between ourselves and yourselves (the "Agreement").

Words and phrases defined in the Agreement have the same meaning when used in this Drawdown Notice.

Pursuant to Clause 4 of the Agreement, we irrevocably request that you advance the sum of [         ] to us on                   2010, which is a Business Day, by paying the amount of the advance to the Earnings Account.

We warrant that the representations and warranties contained in Clause 11.1 of the Agreement are true and correct at the date of this Drawdown Notice and will be true and correct on                  2010, that no Default has occurred and is continuing, and that no Default will result from the advance of the sum requested in this Drawdown Notice.

We select the period of                          months as the first Interest Period.

Yours faithfully

_______________________

For and on behalf of

Aggeliki Shipping Ltd

  

58

  

SCHEDULE 4: Form of Compliance Certificate

 

 

To:           DVB Bank SE

From:     Aggeliki Shipping Ltd

Euroseas Ltd.

Dated:

Dear Sirs

Aggeliki Shipping Ltd - US$8,500,000 Loan Agreement dated                         2010 (the "Agreement")

We refer to the Agreement. This is a Compliance Certificate. Terms defined in the Agreement have the same meaning when used in this Compliance Certificate unless given a different meaning in this Compliance Certificate.

 

	We confirm that:	[We maintain Cash equal to [        ] Dollars ($[            ]).]
	 	 
	 	
[We maintain:-

	 	 	 
	 	
(a)

	
Leverage of [       per cent ([        ]%); and

	 	
 

	
 

	 	
(b)

	
Liquidity of an amount of [         ] Dollars ($[       ]) per Fleet Vessel; and

	 	
 

	
 

	 	
(c)

	
Net Worth of [       ] Dollars ($[       ]).] [Guarantor]

 

We confirm that no Default is continuing.

 

	
Signed:

	  	  	  	  
	  	
Director

	  	
Director

	  
	  	
Of

	  	
Of

	  
	  	
[Borrower]

	  	
[Borrower]

	  

	
Signed:

	  	  	  	  
	  	
Director

	  	
Director

	  
	  	
Of

	  	
Of

	  
	  	
[Guarantor]

	  	
[Guarantor]

	  

  

59

  

SCHEDULE 5: Loans Administration Form

To: DVB Bank SE

We hereby appoint the following persons to act as our point of contact with regards to any issue arising in connection with the administration to the agreement dated [              ] 1 2010 made between (inter alia) yourselves and ourselves (the "Loan Agreement") or any other documents related to the Loan:

	
1.

	
[                                   ], of [                            ], Tel: [                     ],

	
 

	
Mobile [                     ], e-mail: [                     ].

	
 

	
 

	
2.

	

[                                   ], of [                            ], Tel: [                     ],

	
 

	
Mobile [                     ], e-mail: [                     ].

	
 

	
 

	
3.

	

[                                   ], of [                            ], Tel: [                     ],

	
 

	
Mobile [                     ], e-mail: [                     ].

No other persons other than the Directors of the Borrower or the persons listed above (the "Authorised Persons") are hereby authorised to request any information from you regarding the Loan Agreement or any other matter related to the Loan or the Borrower or communicate with you in any way regarding the foregoing in and under any circumstances.

For the avoidance of doubt, the following are the Directors of the Company:

	
1.

	

[                                   ], of [                            ], Tel: [                     ],

	
 

	
Mobile [                     ], e-mail: [                     ].

	
 

	
 

	
2.

	

[                                   ], of [                            ], Tel: [                     ],

	
 

	
Mobile [                     ], e-mail: [                     ].

	
 

	
 

	
3.

	

[                                   ], of [                            ], Tel: [                     ],

	
 

	
Mobile [                     ], e-mail: [                     ].

This list of authorised persons may only be amended, modified or varied in writing by an Authorised Person with copy to the other Authorised Persons.

We agree to indemnify you and hold you harmless in relation to any information you provide to any Authorised Person.

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

This letter shall be governed and construed in accordance with English law.

Yours sincerely

____________________

For and on behalf of

Aggeliki Shipping Ltd

  

60

  

IN WITNESS of which the parties to this Agreement have executed this Agreement the day and year first before written.

	
SIGNED by STEFANIA KARMIRI

	 	
)

	
as duly authorised attorney-in-fact

	 	
)   /s/ Stefania Karmiri

	
for and on behalf of

	
 

	
)

	
AGGELIKI SHIPPING LTD

	
 

	
)

	
in the presence of:  PINELOPI KARAMADOUKI

	 	
)   /s/Pinelopi Karamadouki

 

	
SIGNED by MARIA PAPALEXI

	 	
)

	
as duly authorised attorney-in-fact

	 	
)  /s/ Maria Papalexi

	
for and on behalf of

	
 

	
)

	
DVB BANK SE

	
 

	
)

	
in the presence of:  PINELOPI KARAMADOUKI

	 	
)  /s/Pinelopi Karamadouki

 

 

 

  

61

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