Document:

d879093_ex4-12.htm

    

      Dated:  16th April,
2008

      

      

      FBB
- FIRST BUSINESS BANK S.A.

      (as
Bank)

      

      - and
-

      

      PARAGON
SHIPPING INC.

       (as
borrower)

      

      - and -

      

      CAMELIA
NAVIGATION S.A.

      (as
corporate guarantor)

       

      
        	
                 

                 

                CREDIT
      AGREEMENT

                for
      a secured floating interest rate

                revolving
      credit facility of up to 

                US$30,000,000

                 

                 

              

      

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

      TABLE OF
CONTENTS

       

       

       

      CLAUSE                                                                          
                 HEADINGS          
               PAGE

      

      1.           PURPOSE,
DEFINITIONS AND INTERPRETATION

      

      2.           THE
FACILITY AND THE DRAWDOWN OF THE ADVANCES

      

      3.           INTEREST
AND INTEREST PERIODS

      

      4.           REPAYMENT
- PREPAYMENT OF THE FACILITY

      

      5.           PAYMENTS,
TAXES, LOAN ACCOUNT AND COMPUTATION

      

      6.           REPRESENTATIONS
AND WARRANTIES

      

      7.           CONDITIONS
PRECEDENT

      

      8.           COVENANTS

      

      9.           EVENTS
OF DEFAULT

      

      10.           INDEMNITIES
- EXPENSES - FEES

      

      11.           SECURITY
AND SET-OFF

      

      12           UNLAWFULNESS,
INCREASED COSTS

      

      13.           GUARANTEE

      

      14.           GENERAL

      

      15.           APPLICABLE
LAW AND JURISDICTION

      

      

      
         

         

        SCHEDULES

         

      

      

      1.           FORM
OF DRAWDOWN NOTICE

      

      2.           INSURANCES

      

      

      

      SIGNATURE
PAGE

      

      

      

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

      

      THIS AGREEMENT is
made this  16th day of
April, 2008

      

      BY
AND AMONG:

      

      
        	
                1.

              	
                FBB-FIRST BUSINESS BANK
      S.A., a bank incorporated in the Republic of Greece with its head
      office at 91 Michalakopoulou Street, 11528 Athens, Greece, acting
      except  otherwise herein provided, through its office at 62,
      Notara and Sotiros Dios streets, 185 35 Piraeus, Greece, as lender,
      (hereinafter called the “Bank”);

              

      

      

      
        	
                2.

              	
                PARAGON
      SHIPPING INC., a company duly incorporated under the laws of the
      Republic of The Marshall Islands having its registered office at Trust
      Company Complex, Ajeltake Island, Majuro, Marshall Islands MH 96960 and
      listed in the Nasdaq Global Select Market, as Borrower, hereinafter called
      the “Borrower”);
      and

              

      

      

      
        	
                3.

              	
                CAMELIA NAVIGATION
      S.A., a company duly
      incorporated under the laws of the Republic of The Marshall Islands having
      its registered office at Trust Company Complex, Ajeltake Island, Majuro,
      Marshall Islands MH 96960, as corporate guarantor (hereinafter called the
      “Corporate
      Guarantor”).

              

      

      

      AND IT IS
HEREBY AGREED as follows:

      

      
        	
                1.

              	
                PURPOSE, DEFINITIONS
      AND INTERPRETATION

              

      

      

      1.1           Purpose

      

      This
Agreement sets out the terms and conditions upon and subject to which it is
agreed that the Bank will make available to the Borrower a floating interest
rate revolving/reducing credit facility in an amount up to United States Dollars
thirty million (US$30,000,000) for the purpose of providing the Borrower with
working capital.

      

      
        	
                1.2

              	
                Definitions

              

      

      

      In this
Agreement, unless the context otherwise requires each term or expression defined
in the recital of the parties and in this Clause shall have the meaning given to
it in the recital of the parties and in this Clause and:

      

      “this Agreement” means this
Agreement as the same may from time to time be supplemented and/or
amended;

      

      “Account Pledge Agreement”
means an agreement to be entered into between the Corporate Guarantor and
the Bank for the creation of a pledge over the Earnings Account and the
Retention Account in favour of the Bank, in form and substance satisfactory to
the Bank as the same may from time to time be amended and/or
supplemented;

      

      “Advance” means the principal
amount of each borrowing by the Borrower under Clause 2 (together, the “Advances”);

      

      “Availability Period” means
the period starting on the date hereof and ending (i) on the earlier of: (a) the
date falling eight (8) years from the first Drawdown Date and (b) the date on
which the Facility is cancelled or terminated or (ii) such other later date as
the Bank may agree to, in its absolute discretion, subject to the terms of
Clause 4.1;

      

      
        
           

        

        
          1

          
            

          

        

        
           

        

      

      “Available Facility Amount”
means at any time the Facility less the aggregate amount of the Advances
outstanding at such time;

      

      “Bank” means the Bank specified
in the preamble of this Agreement;

      

      “Banking Day” means any day on
which banks and foreign exchange markets in New York, London, Athens and Piraeus
and in each country or place in or at which any act is required to be done under
this Agreement, banks are open for the transaction of business of the nature
contemplated in this Agreement;

      

      “Borrower” means the Borrower
specified in the preamble of this Agreement;

       

      
        “Charterparty” means (i) the
time charterparty dated Seoul, 20th April,
2007 entered into between the Corporate Guarantor, as owner and Korea Line
Corporation, of Seoul, Korea, as time charterer, and (ii) after redelivery under
such time charterparty, any time or bareboat charterparty or contract of
affreightment, agreement or related document in respect of the employment of
such Vessel for a period for more than 12 months to be made between the Borrower
and any charterer (and shall include any addenda thereto);

        

        Charterparty Assignment” means
in relation to the Vessel the second priority assignment of the Charterparty and
after the termination thereof the assignment of any Charterparty executed or (as
the context may require) to be executed by the Owner in favour of the Bank and
(in case of an Event of Default) the acknowledgement of notice of the assignment
in respect of such Charterparty to be given by the relevant charterer, both in
form and substance satisfactory to the Bank as the same may from time to time be
amended and/or supplemented;

        

        “Commitment Letter” means the
letter of offer addressed by the Bank to the Borrower dated 23rd
January, 2008 as amended;

        

        “Corporate Guarantee” means the
irrevocable and unconditional guarantee (contained in Clause 13) in respect of
the Borrower’s obligations under this Agreement and the other Security Documents
granted by the Corporate Guarantor in favour of the Bank;

        

        “Corporate Guarantor” means the
Corporate Guarantor specified in the preamble of this Agreement;

        

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

        

        “Dollars” and “$” mean the
lawful currency of the United States of America and in respect of all payments
to be made under any of the Security Documents means funds which are for same
day settlement in the New York Clearing House Interbank Payments System (or such
other U.S. dollar funds as may at the relevant time be customary for the
settlement of international banking transactions denominated in
Dollars);

      
        
           

        

        
          2

          
            

          

        

        
           

        

      

      “Drawdown Date” means each
Banking Day, not earlier than the date of this Agreement, during the
Availability Period, upon which the Borrower has requested that an Advance be
made available in the manner provided in Clause 3 or (as the context requires)
the date on which such Advance is actually made by the Bank to the Borrower
hereunder;

      

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

      

      “Earnings” means in relation to
the Vessel, all moneys whatsoever, due or to become due to the Owner at any time
during the Security Period arising out of the use or operation of the Vessel
including (but without prejudice to the generality of the foregoing), all
freight hire and passage monies, compensation payable to the Owner in the event
of requisition of the Vessel for hire, remuneration for salvage and towage
services, demurrage and detention monies, contributions of any nature whatsoever
in respect of general average, damages for breach (or payment for variation or
termination) of any charterparty or other contract for the employment of the
Vessel and all sums recoverable under any Insurances in respect of loss of
Earnings and includes, if and whenever the Vessel is employed on terms whereby
any and all such moneys as aforesaid are pooled or shared with any other person,
that proportion of the net receipts of the relevant pooling or sharing agreement
which is attributable to the Vessel;

      

      “Earnings
Account”  means, for the time being, an account opened or to be
opened in the name of the Corporate Guarantor with the Lending Branch or with
such other branch of the Bank as the Bank may in future notify the Corporate
Guarantor in writing at its discretion to which (inter alia) all the Earnings of
the Vessel are to be paid;

      

      “Encumbrance” means any
mortgage, charge (whether fixed or floating), pledge, lien, hypothecation,
assignment, security interest, title retention, arrest, seizure, garnishee order
(whether nisi or absolute) or any other order or judgement having similar effect
or other encumbrance of any kind securing or any right conferring a priority of
payment in respect of any obligation of any person;

      

      “Environmental Affiliate”
means any agent or employee of the Owner or any other Relevant Party or any
person having a contractual relationship with the Owner or any other Relevant
Party in connection with any Relevant Ship or her operation or the carriage of
cargo thereon;

      

      “Environmental Approval” means
any consent, authorisation, licence or approval of any governmental or public
body or authorities or courts applicable to any Relevant Ship or her operation
or the carriage of cargo thereon and/or passengers therein and/or provisions of
goods and/or services on or from the Relevant Ship required under any
Environmental Law;

      

      “Environmental Claim” means
any and all enforcement, clean up, removal or other governmental or regulatory
actions or orders instituted or completed pursuant to any Environmental Law or
any Environmental Approval together with claims made by any third party relating
to damage, contribution, loss or injury, resulting from any actual or threatened
emission, spill, release or discharge of a Material of Environmental Concern
from any Relevant Ship;

      

      
        
           

        

        
          3

          
            

          

        

        
           

        

      

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

      

      “Event of Default” means any
one of the events set out in Clause 9 or described or defined as such in any
other of the Security Documents;

      

      “Expenses” means the aggregate
at any relevant time (to the extent that the same have not been received or
recovered by the Bank) of:

      

      
        	
                 
      

              	
                (a)

              	
                all
      losses, liabilities, costs, charges, expenses, damages and outgoings of
      whatever nature, (including, without limitation, Taxes, repair costs,
      registration fees and insurance premiums, crew wages, repatriation
      expenses and seamen’s pension fund dues) suffered, incurred, charged to or
      paid or committed to be paid by the Bank in connection with the exercise
      of the powers referred to in or granted by any of the Security Documents
      or otherwise payable by the Borrower in accordance with the terms of any
      of the Security Documents;

              

      

      

      
        	
                 
      

              	
                (b)

              	
                the
      expenses referred to in Clause 10.2 (a) and (b);
  and

              

      

      

      
        	
                 
      

              	
                (c)

              	
                interest
      on all such losses, liabilities, costs, charges, expenses, damages and
      outgoings from, in the case of Expenses referred to in sub-paragraph (b)
      above, the date on which such Expenses were demanded by the Bank from the
      Borrower and in all other cases, the date on which the same were suffered,
      incurred or paid by the Bank until the date of receipt or recovery thereof
      (whether before or after judgement) at the Default Rate (as conclusively
      certified by the Bank);

              

      

      

      “Facility” means the total
amount of up to (but not exceeding) thirty (US$30,000,000) to be made available
by the Bank to the Borrower under this Agreement by the Advances and otherwise
subject to and on the terms and conditions herein contained as reduced and/or
repaid by any relevant term of this Agreement;

      

       “Final Maturity Date”
means the last day of the Availability Period;

      

      “Flag State” means the
Republic of Cayman Islands or such other state or territory proposed in writing
by an Owner to the Bank and approved (at its sole discretion) by the Bank, as
being the “Flag State” of the Vessel for the purposes of the Security
Documents;

      

       “General Assignment” means, in
relation to the Vessel, the second priority Deed of Assignment in favour of the
Bank to be executed by the Owner in respect of the Earnings, Insurances and
Requisition Compensation (as such terms are therein defined) of the Vessel in
such form as the Bank may approve or require;

      

      
        
           

        

        
          4

          
            

          

        

        
           

        

      

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

      

      “Indebtedness” means in
relation to any person (a) monies borrowed or raised by such person, (b) any
liability of such person under debenture, bond, note or other security, (c) any
liability of such person under acceptance credit facilities, financial leases,
deferred purchase consideration arrangements or any other agreement or
instrument having the commercial effect of a borrowing of money by such person
and (d) any guarantee, indemnity or other assurance against financial loss given
by such person in respect of any of the foregoing;

      

      “Insurances” in relation to the
Vessel means all policies and contracts of insurance (including all entries of
the Vessel in a protection and indemnity or war risks association) which are
from time to time taken out or entered into in respect of the Vessel or her
Earnings or otherwise howsoever in connection with the Vessel and her
Earnings;

      

      “Interest Payment Date” means
in respect of all Interest Periods the last day of each Interest Period on which
interest is due and payable by the Borrower to the Bank and in case of an
Interest Period longer than three (3) months the last day of each quarterly
period;

      

      “Interest Period” means, in
relation to each Interest Tranche, a period the commencement and length of which
shall be determined in accordance with the provisions of Clauses 3.2 and
3.3;

      

      “Interest Rate” means the rate
of interest payable in respect of the Loan or the relevant part thereof (as the
case may be) ascertained in accordance with the provisions of Clause
3.1;

      

      “Interest Tranche” means the
whole or, as the context requires, each portion of the Loan (including each
Advance thereof) which has a different Interest Period from that of any other
portion of the Loan;

      

      “ISM Code” means in relation
to its application to the Owner, the Vessel and her operation:

      

      
        	
                 
      

              	
                (a)

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

              

      

      

      
        	
                 
      

              	
                (b)

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

              

      

      

      
        
           

        

        
          5

          
            

          

        

        
           

        

      

      

      

      
        	
                 
      

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

              

      

      
         

             

      

       

      
        	 	 “ISM Code Documentation”
      includes:	 

      

       

      
        	
                 
      

              	
                (a)

              	
                the
      DOC and SMC issued by a classification society in all respects acceptable
      to the Bank in its absolute discretion pursuant to the ISM Code in
      relation to the Vessel within the period specified by the ISM
      Code;

              

      

      

      
        	
                 
      

              	
                (b)

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

              

      

      

      
        	
                 
      

              	
                (c)

              	
                any
      other documents which are prepared or which are otherwise relevant to
      establish and maintain the Vessel’s or the Owner’s compliance with the ISM
      Code which the Bank may require by
request;

              

      

      

      “ISM SMS” means the safety
management system which is required to be developed , implemented and maintained
under the ISM Code;

      

      “ISPS Code” means the
International Security of Ships and Port Safety Code and includes any amendments
or extensions thereto and any regulation issued pursuant thereto;

      

      “ISSC” means an International
Ship Security Certificate issued in respect of the Vessel pursuant to the ISPS
Code;

      

      “Lending Branch” means the
office of the Bank appearing at the beginning of this Agreement or any other
office of the Bank designated by the Bank as Lending Branch by notice to the
Borrower;

      

      “LIBOR” means in relation to
any amount and for any period:

      

      
        	
                 
      

              	
                (a)

              	
                the
      offered rate (if any) per annum for deposits in Dollars for such amount
      and for such period which is the rate, for such period, appearing on the
      relevant page of the Reuters Screen LIBOR01 at or about 11 a.m. London
      time on the Quotation Date (or, if the Bank shall have made a
      determination pursuant to Clause 3.6 such later time (not being later than
      1 p.m. (London time) on the first day of such period) as the Bank may
      determine) (and, for the purposes of this Agreement, “Reuters Screen
      LIBOR01” means the display designated as “LIBOR01” on the Reuters Service
      or such other page as may replace LIBOR01 on that service for the purpose
      of displaying rates comparable to that rate or on such other service as
      may be nominated by the British Bankers’ Association as the information
      vendor for the purpose of displaying the British Bankers’ Association
      Interest Settlement Rates for
  Dollars);  and

              

      

      

      
        	
                 
      

              	
                (b)

              	
                if
      on such date no such rate is so displayed, LIBOR for such period shall be
      the rate determined by the Bank in accordance with its usual practices to
      obtain similar deposit(s) in Dollars on the basis of the rates quoted by
      the Bank as the Bank’s offered rate for deposits in Dollars in an amount
      approximately equal to the amount in relation to which LIBOR is to be
      determined for a period equivalent to such period in the London Interbank
      Market at or about 11:00 a.m. (London time) on the second Banking Day
      before the first day of such
period;

              

      

      

      
        
           

        

        
          6

          
            

          

        

        
           

        

      

      “Loan” means the aggregate
principal amount of all Advances at any relevant time advanced to the Borrower
and outstanding under this Agreement;

      

      “Major Casualty Amount” in
relation to the Vessel means any casualty to such Vessel in respect whereof the
claim or the aggregate of the claims against all insurers, before adjustment for
any relevant franchise or deductible, exceeds the amount specified in the
definition “Major Casualty Amount” of the relevant Mortgage registered on such
Vessel

      

      “Management Agreement” means
in relation to the Vessel, the agreement made between the Owner and the Manager
providing (inter alia) for the Manager to manage such Vessel;

      

      “Manager” means for the time
being Allseas Marine S.A., of Liberia, having an office established in Greece
(15 Karamanli Ave., Voula, GR 166 73, Attiki) pursuant to the Greek laws 89/67,
378/68, 27/75 and 814/79 (as amended) or any other person appointed by an Owner,
with the prior written consent of the Bank, as the Manager of the Vessels and
includes its successors in title;

      

      “Margin” means one point two
percentum (1.2%) per annum;

      

      “Market Value” means the
market value of a Vessel as determined in accordance with Clause
8.5(b).

      

      “Maximum Amount of the Facility” means the total
amount of up to (but not exceeding) thirty million Dollars
($30,000,000);

      

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

      

      “Mortgage” in relation to the
Vessel means the first priority statutory ship mortgage and the Deed of covenant
supplemental thereto both to be executed by the Corporate Guarantor in favour of
the Bank in such form as the Bank may approve or require;

      

       “Operator” means any person who
is from time to time during the Security Period concerned in the operation of
the Vessel and falls within the definition of “Company” set out in rule 1.1.2.
of the ISM Code;

      

      

      
        
           

        

        
          7

          
            

          

        

        
           

        

      

      “Outstanding Indebtedness”
means the aggregate of (a) the Loan and interest thereon (and interest on any
unpaid interest  thereon and on any other sums of money on which
interest is stated in this Agreement to be payable) and (b) all such expenses,
claims, liabilities, losses, costs, duties, fees, charges or other moneys as are
stated in this
Agreement and the Security Documents to be payable by the Borrower to or
recoverable from the Borrower by the Bank (or in respect of which the Borrower
agree in this Agreement and the Security Documents to indemnify the Bank)
whether actually or contingently, presently or in the future together with
interest thereon as provided in this Agreement and (c) all other sums of money
from time to time owing to the Bank under the Security Documents or any of them
whether actually or contingently, presently or in the future;

    

    
      

      “Owner” means the owner of the
Vessel as specified in the definition of the Vessel in this Clause
1.2;

      

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

      

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

      

      “Receiving Bank” means
Deutsche Bank Trust Co. Americas, SWIFT address BKTRUS33, or such other bank in
New York as the Bank may notify to the Borrower;

      

      “Reduction/Repayment Dates”
means each of the quarterly dates specified in Clause 4.1(b) on which the
Facility shall be reduced and/or repaid;

      

      “Reductions/Repayment
Instalments” means each of the amounts specified in Clause 4.1(b) by
which the Facility shall be reduced and/or repaid on a Reduction/Repayment
Date;

      

       “Registry” means the
offices of such registrar, commissioner or representative of the Flag State who
is duly authorised to register the Vessels, the Owner’s title to its Vessel and
the Mortgage over the Vessels under the laws and flag of the Flag
State;

      

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

      

      “Relevant Party” means any of
the Borrower, the Corporate Guarantor, the Manager and any other Security
Party;

      

      “Relevant Ship” means the
Vessel and any other vessel owned by, managed by or chartered to any Relevant
Party;

      

      “Requisition Compensation”
includes all monies or other compensation payable during the Security Period by
reason of requisition for title or other compulsory acquisition of the Vessel,
otherwise than by requisition for hire;

      

      “Retention Account” means an
interest bearing account of the Corporate Guarantor opened (or as the context
may require) to be opened by the Corporate Guarantor with the Bank or such other
branch of the Bank or any other bank as may be required by and at the discretion
of the Bank and includes any other account designated by the Bank to be a
Retention Account for the purposes of this Agreement;

      

      
        
           

        

        
          8

          
            

          

        

        
           

        

      

      “Security Documents” means the
documents referred to in Clause 11 and any document or documents (including, if
the context so permits, this Agreement) that may now or hereafter be executed as
security for all or any part of the Loan, interest thereon and any other moneys
payable to the Bank under or in connection with this Agreement and/or any of the
documents referred to in this definition, as the same may from time to time be
amended and/or supplemented;

      

      “Security Interest” means a
mortgage, charge (whether fixed or floating), pledge, lien, hypothecation,
assignment, trust arrangement, title retention or other interest given by way of
security or arrangement of any kind whatsoever;

      

      “Security Party(ies)” means
each of the Borrower, the Corporate Guarantor, the Manager and all such other
persons as may from time to time have given guarantees or other security to the
Bank for the Outstanding Indebtedness (together the “Security
Parties”);

      

      “Security Period” means the
period commencing on the date hereof and terminating on the date upon which the
Loan together with all interest thereon and all other moneys payable to the Bank
under this Agreement and the Security Documents have been repaid in full to the
Bank;

      

      “Security Requirement” means
the amount in Dollars (as certified by the Bank, whose certificate shall, in the
absence of manifest error, be conclusive and binding on the Borrower) which, at
any relevant time is, in excess of one hundred and forty per cent (140%) of the
Loan;

      

      “Security Value” means the
amount in Dollars (as certified by the Bank whose certificate shall, in the
absence of manifest error, be conclusive and binding on the Borrower) which, at
any relevant time, is the aggregate of (a) the Market Value of the Vessel as
most recently determined in accordance with Clause 8.5(b) and (b) the market
value of any additional security provided under Clause 8.5 (c);

      

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

      

      “Subsidiary” means a body
corporate from time to time of which another (a) has direct or indirect control,
or (b) owns directly or indirectly more than fifty (50) percent of the
sharecapital or similar right of ownership (and in this definition “control”
means the power to direct the management and the policies of a body corporate,
whether through the ownership of voting capital, by contract or
otherwise);

      

      “Taxes” includes all present
and future income, corporation and value-added taxes and all stamp and other
taxes and levies, imposts, deductions, duties, contributions, charges and
withholdings whatsoever and any restrictions or conditions resulting in any
charge whatsoever and howsoever imposed, either now or hereafter, by any
sovereign state or by any political sub-division or taxing authority of any
sovereign state or any governmental or other authority whatsoever, together with
interest thereon and penalties with respect thereto, if any, and charges, fees
and other amounts imposed thereon or in respect thereof (but excluding any such
taxes levied on the overall net income of the Bank) (and references to
“Taxation” shall be construed accordingly);

      

      
        
           

        

        
          9

          
            

          

        

        
           

        

      

      “Total Loss” in relation to the
Vessel means (a) actual or constructive or compromised or arranged total loss,
(b) requisition for title or other compulsory acquisition otherwise than by
requisition for hire; or (c) capture, seizure, arrest detention or confiscation
by any government or by any person acting or purporting to act on behalf of any
government, unless the Vessel be released and restored to the Owner from such
seizure, capture, arrest or detention within sixty (60) days after the
occurrence thereof;

      

      “Vessel” means m/v “BLUE SEAS” of about 26,071 gt
and 14,872 nt built in 1995 and registered under the Cayman Islands flag at the
Ships Registry of the port of George Town in the ownership of the Corporate
Guarantor;

      

      
        	
                1.3

              	
                In
      this Agreement:

              

      

      

      
        	
                 
      

              	
                (a)

              	
                where
      the context so admits words importing the singular number only shall
      include the plural and vice versa and words importing persons shall
      include firms, bodies corporate and bodies
  unincorporate;

              

      

      

      
        	
                 
      

              	
                (b)

              	
                clause
      headings are inserted for convenience of reference only and shall be
      ignored in construing this Agreement and references to Clauses and
      Schedules are to Clauses of and Schedules to this Agreement save as may be
      otherwise expressly provided;

              

      

      

      
        	
                 
      

              	
                (c)

              	
                references
      to:

              

      

      

      
        	
                 
      

              	
                (i)

              	
                any
      document are to be construed as references to such document as amended
      and/or supplemented from time to time and references to any enactment
      shall include re-enactments, amendments and extension
    thereof;

              

      

      

      
        	
                 
      

              	
                (ii)

              	
                the
      Bank shall include its successors and assigns and references to the
      Borrower and the Corporate Guarantor shall include their respective
      successors and permitted assigns, if
any;

              

      

      

      
        	
                 
      

              	
                (iii)

              	
                persons
      include bodies corporate and unincorporate;
and

              

      

      

      
        	
                 
      

              	
                (iv)

              	
                assets
      include property, rights and assets of every
  nature.

              

      

      

      
        	
                 
      

              	
                (d)

              	
                all
      obligations imposed on, or assumed by the Borrower and the Corporate
      Guarantor are joint and several even if not so expressed;
    and

              

      

      

      
        	
                 
      

              	
                (e)

              	
                reference
      to the opinion of the Bank or a determination or acceptance of the Bank or
      to documents, acts or persons acceptable to the satisfaction of the Bank
      or the like, shall be construed as reference to opinion, determination,
      acceptance or satisfaction of the Bank at the sole discretion of the Bank
      and such opinion, determination, acceptance or satisfaction of the Bank
      shall be conclusive and binding on the
Borrower.

              

      

      

      
        
           

        

        
          10

          
            

          

        

        
           

        

      

      
        	
                2.

              	
                THE
      FACILITY
      AND THE DRAWDOWN OF THE
ADVANCES

              

      

      

      
        	
                2.1

              	
                Agreement to
      lend  Subject to and
      upon the terms of this Agreement and in reliance (inter alia) on the
      representations and warranties set forth in Clause 6 and at the request of
      the Borrower, the Bank agrees to lend to the Borrower a floating interest
      rate reducing credit facility of up to but not exceeding the principal
      amount of thirty million (US$30,000,000) for the purpose described in
      clause 1.1. The Facility shall be made available to the Borrower by the
      Advances at the time, in the amounts and in the manner specified in Clause
      2.3.

              

      

      

      
        	
                2.2

              	
                Drawdown
      Notice and Commitment to Borrow  Subject to the terms and
      conditions of this Agreement, an Advance may be made following receipt by
      the Bank from the Borrower of a Drawdown Notice not later than 14:00 a.m.
      (Athens time) on the second Banking Day before the date, which shall be a
      Banking Day falling within the Availability Period, on which such Advance
      is intended to be made. A Drawdown Notice shall be effective on actual
      receipt by the Bank and, once given, shall, subject as provided in Clause
      2.5, be irrevocable.  No Drawdown notice for an Advance may be
      given of an amount which is the subject of a notice of cancellation under
      Clause 2.7.

              

      

      

      2.3           Amounts
and limitation

      

      
        	
                 
      

              	
                (a)

              	
                the
      amount of an Advance shall, subject to the following provisions of this
      Clause 2.3, be for such amount as is specified in the Drawdown Notice for
      that Advance.

              

      

      

      
        	
                 
      

              	
                (b)

              	
                each
      Advance shall be a minimum of $1,000,000 or an integral multiple thereof
      or the balance of the Available Facility Amount, Provided that no Advance
      may be drawn down:

              

      

      

      
        	
                 
      

              	
                (i)

              	
                on
      any day of an amount exceeding the Available Facility Amount on such day,
      taking into account for this purpose any Advance to be repaid on such day
      and any other Advance which is the subject of a current Drawdown Notice on
      such day; or

              

      

      

      
        	
                 
      

              	
                (ii)

              	
                if
      a Default has occurred.

              

      

      

      
        	
                2.4

              	
                Availability  Upon
      receipt of a Drawdown Notice complying with the terms of this Agreement
      the Bank shall, subject to the provisions of Clause 7, on the date
      specified in such Drawdown Notice make available the relevant Advance to
      the Borrower.

              

      

      

      
        	
                2.5

              	
                Termination
      of the Facility The Facility shall be reduced to zero on the Final
      Maturity Date and no Advance shall be made to the Borrower under this
      Agreement thereafter.

              

      

      

      
        	
                2.6

              	
                Application
      of proceeds  Without prejudice to the Borrower’s
      obligations under Clause 8.8(a), the Bank shall have no responsibility for
      the application of proceeds of any Advance by the
  Borrower.

              

      

      

      
        	
                2.7

              	
                Cancellation
      of the Facility  The Borrower shall be entitled to cancel
      any undrawn part of the Facility under this Agreement upon giving the Bank
      not less than three (3) Business Days’ notice in writing to that effect,
      provided that no Drawdown Notice has been given to the Bank for the full
      amount of the Facility or in respect of the portion thereof in respect of
      which cancellation is required by the Borrower.  Any such notice
      of cancellation, once given, shall be irrevocable.  Any amount
      cancelled may not be drawn.

              

      

      

      
        
           

        

        
          11

          
            

          

        

        
           

        

      

      
        	
                3.

              	
                INTEREST
      AND INTEREST PERIODS

              

      

      

      
        	
                3.1

              	
                Normal
      interest rate  Subject to the terms of this Agreement,
      the Borrower shall pay interest on the amount of the Loan or any part
      thereof at the Interest Rate applicable to each Interest Tranche in
      respect of each Interest Period relating thereto on each Interest Payment
      Date at the rate per annum determined by the Bank to be the aggregate
      of:

              

      

      

      
        	
                 
      

              	
                (a)

              	
                the
      Margin; and

              

      

      

      
        	
                 
      

              	
                (b)

              	
                LIBOR
      for such Interest Period.

              

      

      

      
        	
                3.2

              	
                Selection
      of Interest Periods  The Borrower may by notice received
      by the  Bank not later than 10 a.m. on the second Banking Day
      before the beginning of each Interest Period for each Advance specify
      whether such Interest Period shall have a duration of one (1) month or a
      whole multiple thereof or 12 months or such other period as the Borrower
      may select and the Bank may, in its absolute discretion,
      agree.

              

      

      

      
        	
                3.3

              	
                Determination
      of Interest Periods  Every Interest Period shall be of
      the duration required by, or specified by the Borrower pursuant to, Clause
      3.2 but so that:

              

      

      

      
        	
                 
      

              	
                (a)

              	
                (i)

              	
                the
      first Interest Period in relation to each Advance shall commence on the
      Drawdown Date relative thereto and, shall end on the last day of the
      current Interest Period for any one (at the option of the Borrower) of the
      Interest Tranches outstanding immediately prior to the making of the
      relevant Advance.  Each Interest Period for an Interest Tranche
      not comprising a new Advance shall commence upon the expiry of the
      immediately preceding Interest Period for such Interest Tranche or for the
      Interest Tranche of which the relevant Interest Tranche formed
      part;

              

      

       

      
        	 	 	(ii)	
                the
      expiry of an Interest Period in respect of an Interest Tranche at least
      equal to any amount which is then due to be repaid under Clause 4.1 shall
      coincide with the Final Maturity
Date;

              

      

       

      
        	
                 
      

              	
                (b)

              	
                if
      the Borrower fails to specify the duration of an Interest Period in
      accordance with the provisions of Clause 3.2 and this Clause 3.3 such
      Interest Period shall have a duration of three (3) months or such other
      period as shall comply with this Clause
3.3.

              

      

      

      
        	
                3.4

              	
                Default
      interest  If the Borrower fails to pay any sum
      (including, without limitation, any sum payable pursuant to this Clause
      3.4) on its due date for payment under any of the Security Documents, the
      Borrower shall pay interest on such sum from the due date up to the date
      of actual payment (as well after as before judgement) at the rate
      determined by the Bank pursuant to this Clause 3.4.  The period
      beginning on such due date and ending on such date of payment shall be
      divided into successive periods of not more than six (6) months (or as
      selected by the Bank each of which (other than the first, which shall
      commence on such due date) shall commence on the last day of the preceding
      such period.  The rate of interest applicable to each such
      period shall be the aggregate (as determined by the Bank) of (i) two per
      cent (2%), per annum, (ii) the Margin and (iii) LIBOR.  Such
      interest shall be due and payable on the last day
  of

              

      

      

      
        
           

        

        
          12

          
            

          

        

        
           

        

      

      each such
period as determined by the Bank and each such day shall, for the purposes of
this Agreement, be treated as an Interest Payment Date.  In case that
a payment is made in default for any amount, the Interest Periods will be
determined by the Bank at its discretion including the amounts for which there
is no default, even if the Bank has not (yet) exercised its rights pursuant to
Clause 9.9(b) of the Agreement.  If for the reasons specified in
Clause 3.6, the Bank is unable to determine a rate in accordance with the
foregoing provisions of this Clause 3.4, interest on any sum not paid on its due
date for payment shall be calculated at a rate determined by the Bank to be two
per cent (2%) per annum above the aggregate of the Margin and costs of funds to
the Bank as conclusively determined by the Bank save for manifest error.
Interest payable by the Borrower as aforesaid shall be compounded semi-annually
(or if the period fixed by the Bank is shorter, at the end of such shorter
period) and shall be payable on demand.

      

      
        	
                3.5

              	
                Notification
      of Interest Periods and interest rate  The Bank shall
      notify the Borrower promptly of the duration of each Interest Period and
      of each rate of interest determined by it under this Clause 3 without
      prejudice to the right of the Bank to make determinations at its sole
      discretion. However, omission of the Bank to make such notification
      (without the application of the Borrower) will not constitute and will not
      be interpreted as if to constitute a breach of obligation of the Bank
      except in case of wilful
misconduct.

              

      

      

      
        	
                3.6

              	
                Market
      disruption; non-availability

              

      

      

      
        	
                 
      

              	
                (a)

              	
                If
      and whenever, at any time prior to the commencement of any Interest
      Period, the Bank shall have determined (which determination shall, in the
      absence of manifest error, be conclusive) (i) that adequate and fair means
      do not exist for ascertaining LIBOR in respect of Dollars during said
      Interest Period or (ii) that deposits in Dollars are not available to the
      Bank in the London Interbank Market in the ordinary course of business in
      sufficient amounts for any Interest Period or (iii) that by reason of
      circumstances affecting the London Interbank Market generally it is
      impracticable for the Bank to advance the Facility or fund or continue to
      fund the Loan during any Interest Period or (iv) that LIBOR for that
      Interest Period will not adequately reflect the cost of funding of the
      Loan for that Interest Period, the Bank shall forthwith give notice (a
      “Determination
      Notice”) thereof to the Borrower.  A Determination Notice
      shall contain particulars of the relevant circumstances giving rise to its
      issue.  After the giving of any Determination Notice the undrawn
      amount of the Facility shall not be borrowed until notice to the contrary
      is given to the Borrower by the
Bank

              

      

      

      
        	
                 
      

              	
                (b)

              	
                During
      the period of ten (10) days after any Determination Notice has been given
      by the Bank under sub-Clause 3.6(a) the Bank and the Borrower shall
      negotiate in good faith (but without incurring any legal obligations) with
      a view to arriving at an acceptable alternative basis (the “Substitute Basis”), for
      maintaining the Loan, failing which the Borrower shall promptly, on first
      demand or within the time limit which may be determined by the Bank,
      prepay the Loan together with accrued interest thereon to the date of
      prepayment (calculated at the rate or rates most lately applicable to the
      Loan) and all other sums payable by the Borrower under the Security
      Documents and the Facility shall be reduced to zero.  In such
      case the Borrower shall also reimburse to
the

              

      

      

      
        
           

        

        
          13

          
            

          

        

        
           

        

      

      Bank such
amount as may be determined by the Bank to be necessary to compensate it for the
increased cost (if any) of maintaining the Loan during the period of negotiation
referred to in this Clause 3.6 until such prepayment.  In case the
Bank agrees to a Substitute Basis for funding the Loan the Bank shall certify
such Substitute Basis to the Borrower.  The Substitute Basis may
(without limitation) include alternative interest period(s), alternative
currencies or alternative rates of interest but shall include a margin above the
cost of funds to the Bank equivalent to the Margin.  Each Substitute
Basis so certified shall be binding upon the Borrower and shall take effect in
accordance with its terms from the date specified in the Determination Notice
until such time as the Bank notifies the Borrower that none of the circumstances
specified in sub-Clause 3.6(a) continues to exist whereupon the normal interest
rate fixing provisions of this Agreement shall apply

      

      
        	
                4.

              	
                TERMINATION-REDUCTION/REPAYMENT
      - PREPAYMENT OF THE
      FACILITY

              

      

      

      4.1           Termination-Reduction/Repayment

      

      
        	
                 
      

              	
                (a)

              	
                Termination

              

      

      

      
        	
                 
      

              	
                Any
      part of the Facility undrawn and uncancelled at the end of the
      Availability Period shall be automatically cancelled. Any amount cancelled
      may not be drawn.

              

      

      

      
        	
                 
      

              	
                (b)

              	
                Reduction/Repayment

              

      

      

      
        	
                 
      

              	
                (i)

              	
                The
      principal amount of the Facility shall be reduced and/or repaid (and it is
      expressly undertaken by the Borrower to repay the Facility) by (aa) thirty
      two (32) Reductions/Repayment Instalments, the first twelve (12) whereof
      shall be in the amount of $850,000 (Dollars eight hundred fifty thousand)
      each and the remaining twenty (20) whereof shall be in the amount of
      $690,000 (Dollars six hundred ninety thousand) each, each falling due for
      payment on each of the Reduction/Repayment Dates the first whereof falling
      due for payment three (3) months from the Drawdown Date of the first
      Advance and each of the subsequent ones consecutively falling due for
      payment on each of the dates falling three (3) months after the
      immediately preceding Reduction/Repayment with the last falling due for
      payment on the Final Maturity Date and (bb) a final balloon
      Reduction/Repayment Instalment (the “Balloon Instalment”)
      equal to $6,000,000 (Dollars six million) or, as the case may be, an
      amount equal to the balance of the Loan outstanding on the Final Maturity
      Date falling due for payment together with the last (32nd)
      Reduction/Repayment Instalment on the Final Maturity
  Date;

              

      

      

      
        	
                 
      

              	
                (ii)

              	
                The
      Borrower shall (and it is expressly undertaken by the Borrower to) repay
      on each Reduction/Repayment Date such amount of the Advances as may be
      necessary to ensure that the aggregate amount outstanding hereunder does
      not exceed the amount of the Facility on such Reduction/Repayment Date
      (after taking into account the Reduction/Repayment Instalment made on such
      Reduction/Repayment Date pursuant to paragraph (b) of this Clause
      4.1);

              

      

      

      
        
           

        

        
          14

          
            

          

        

        
           

        

      

      Provided that (a) if
the last Reduction/Repayment Date would otherwise fall after the Final Maturity
Date, such last Reduction/Repayment Date shall be the Final Maturity Date, (b)
there shall be no Reduction/Repayment Dates after the Final Maturity Date, (c)
on the Final Maturity Date the Borrower shall also pay to the Bank any and all
other monies then and payable under this Agreement and the other Security
Documents, and (d) if any of the Reductions/Repayment Instalments shall become
due on a day which is not a Banking Day, the due date therefor shall be extended
to the next succeeding Banking Day unless such Banking Day falls in the next
calendar month, in which event such due date shall be the immediately preceding
Banking Day.

      

      
        	
                4.2

              	
                Voluntary
      prepayment  The Borrower may prepay the Loan in whole or
      part (on any Interest Payment Date without premium or penalty), Provided
      that:

              

      

      

      
        	
                 
      

              	
                (a)

              	
                the
      Bank shall have received from the Borrower not less than five (5) Banking
      Days’ prior notice (which shall be irrevocable) of its intention to make
      such prepayment and specifying the amount and date on which such
      prepayment is to be made, and the Bank will notify the Bank promptly upon
      receiving any such notice;

              

      

      

      
        	
                 
      

              	
                (b)

              	
                any
      Advance or part thereof which is prepaid (and not cancelled) may be
      re-borrowed subject to the re-borrowing not resulting in the aggregate
      amount of the Advances (including the Advance to be re-borrowed) exceeding
      the amount of the Facility at the relevant time or such lower amount as a
      result of any cancellation of the Facility pursuant to
    this;

              

      

      

      
        	
                 
      

              	
                (c)

              	
                each
      prepayment under this Agreement shall be made together with accrued
      interest on the amount prepaid and all other sums payable thereon under
      the terms of this Agreement and, if such prepayment is not made on the
      last day of an Interest Period relating to the amount prepaid, together
      with any sums payable pursuant to Clause 10 but without
      premium or penalty;

              

      

      

      
        	
                 
      

              	
                (d)

              	
                if
      any consent and authorisations are required in connection with any
      prepayment under this Agreement, the Borrower shall obtain any consents
      and authorisations which are required in relation
  thereto;

              

      

      

      
        	
                 
      

              	
                (e)

              	
                each
      partial prepayment shall be equal to the amount of a Reduction/Repayment
      Instalment or a whole multiple thereof or the balance of the
      Loan;

              

      

      

      
        	
                 
      

              	
                (d)

              	
                every
      notice of prepayment shall be effective only on actual receipt by the
      Bank, shall be irrevocable and shall oblige the Borrower to make such
      prepayment on the date specified;
and

              

      

      

      
        	
                 
      

              	
                (e)

              	
                the
      Borrower may not prepay the Facility or any part thereof save as expressly
      provided in this Agreement.

              

      

      

      
        
           

        

        
          15

          
            

          

        

        
           

        

      

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

      

      
        	
                 
      

              	
                (a)

              	
                On
      the Vessel becoming a Total Loss or suffering damage or being involved in
      an incident which may, in the reasonable opinion of the Bank, result in
      the Vessel being subsequently determined to be a Total Loss (i) prior to
      the advance of the first Advance, the obligation of the Bank to advance
      any Advance (or any part thereof) shall immediately cease and the Facility
      shall be reduced to zero, or (ii) in the event that an Advance has already
      been advanced, the Borrower shall prepay the Outstanding Indebtedness,
      without penalty, premium or prepayment fee, including, without limitation,
      any amounts payable under clause 10, the latest on the date falling one
      hundred and twenty (120) days after the date of the Total Loss or on which
      the incident or damage which may result in the Vessel being subsequently
      determined to be a Total Loss occurred or, if earlier, on the date upon
      which the insurance proceeds in respect of such Total Loss are or
      Requisition Compensation (as defined in the Mortgage is received by the
      Owner (or the Bank pursuant to the Security
  Documents).

              

      

      

      
        	
                 
      

              	
                (b)

              	
                Immediately
      upon the sale or other disposal of the Vessel to a third party on terms of
      a sale or other disposal at arms length terms, the Borrower shall pay to
      the Bank the Outstanding Indebtedness, without penalty, premium or
      prepayment fee;

              

      

      

      and for
the purpose of this Agreement, a Total Loss shall be deemed to have
occurred:

      

      
        	
                 
      

              	
                (i)

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

              

      

      

      
        	
                 
      

              	
                (ii)

              	
                a
      constructive total loss shall be deemed to have occurred at the date and
      time notice of abandonment of the Vessel is given to the insurers of the
      Vessel for the time being (provided a claim for total loss is admitted by
      such insurers) or, if such insurers do not admit such a claim, at the date
      and time at which a total loss is subsequently adjudged by a competent
      court of law to have occurred;

              

      

      

      
        	
                 
      

              	
                (iii)

              	
                a
      compromised or arranged total loss shall be deemed to have occurred on the
      date on which a binding agreement as to such compromised or arranged total
      loss has been entered into by the insurers of the
  Vessel;

              

      

      

      
        	
                 
      

              	
                (iv)

              	
                requisition
      for title or other compulsory acquisition of the Vessel shall be deemed to
      have occurred on the date upon which the relevant requisition for title or
      other compulsory acquisition occurs;
and

              

      

      

      
        	
                 
      

              	
                (v)

              	
                hijacking,
      theft, condemnation, capture, seizure, detention, arrest, or confiscation
      of the Vessel by any government or by any person acting or purporting to
      act on behalf of any government, which deprives the Owner of the use of
      the Vessel for more than thirty (30) days shall be deemed to occur upon
      the expiry of the period of thirty (30) days after the date upon which the
      relevant hijacking, theft, condemnation, capture, seizure, detention,
      arrest or confiscation occurred.

              

      

      

      
        
           

        

        
          16

          
            

          

        

        
           

        

      

      
        	
                4.4

              	
                Prepayment
      Compensation   Prepayment of the Loan made under
      Clause 4.2 and 4.3 shall be made together with accrued interest and all
      other amounts then payable hereunder and, in the event that the relevant
      prepayment is made other than on the last day of an Interest Period
      relative to the whole of the Loan, the Borrower shall also pay such
      additional amounts (if any) as may be necessary to compensate the Bank for
      any loss, premium and/or cost incurred or to be incurred by it on account
      of funds borrowed in order to make, fund or maintain the parts of the Loan
      prepaid as aforesaid from the date of such prepayment to the end of the
      then current Interest Period applicable thereto as more particularly
      specified in Clause 10.1 and the certificate of the Bank shall be
      conclusive and binding on the Borrower as to the extent of any such loss,
      premium and/or cost incurred by the
Bank.

              

      

      

      5.           PAYMENTS, TAXES, LOAN
ACCOUNT AND COMPUTATION

      

      5.1           Payments
– No set-off or Counterclaims

      

      
        	
                 
      

              	
                (a)

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

              

      

      

      
        	
                 
      

              	
                (i)

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

              

      

      

      
        	
                 
      

              	
                (ii)

              	
                to
      the Receiving Bank for the account of the Bank, reference: “PARAGON
      SHIPPING INC. - CREDIT AGREEMENT”, Provided however, that the Bank shall
      have the right to change the place of account for payment, upon eight (8)
      Banking Days’ prior written notice to the
  Borrower.

              

      

      

      
        	
                 
      

              	
                (b)

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

              

      

      

      
        	
                5.2

              	
                Payments
      on Banking Days   All payments due shall be made on
      a Banking Day.  If the due date for payment falls on a day which
      is not a Banking Day, the payment or payments due shall be made on the
      next following Banking Day unless such Banking Day falls in the next
      calendar month in which case payment shall be made on the immediately
      preceding Banking Day.

              

      

      

      
        
           

        

        
          17

          
            

          

        

        
           

        

      

      
        	
                5.3

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

              

      

      

      
        	
                5.4

              	
                Certificates
      Conclusive   Any certificate or determination of the
      Bank as to any rate of interest, rate of exchange or any other amount
      pursuant to and for the purposes of any of the Security Documents shall,
      in the absence of manifest error, be conclusive and binding on the
      Borrower.

              

      

      

      
        	
                5.5

              	
                Computation All
      interest and other payments payable by reference to a rate per annum under
      this Agreement shall accrue from day to day and be calculated on the basis
      of actual days elapsed and a 360 day
year.

              

      

      

      6.           REPRESENTATIONS AND
WARRANTIES

      

      6.1           The
Borrower hereby represents and warrants to the Bank that:

      

      Continuing representations
and warranties

      

      
        	
                 
      

              	
                (a)

              	
                Due
      Incorporation/Valid Existence    the Borrower
      and each of the other corporate Security Parties is duly incorporated and
      validly existing and in good standing under the laws of their respective
      countries of incorporation as limited liability companies, and have power
      to own their respective property and assets, to carry on their respective
      business as the same are now being lawfully conducted and to purchase,
      own, finance and operate vessels, or, as the case may be, manage vessels,
      as well as to undertake the obligations which they have undertaken or
      shall undertake pursuant to the Security
  Documents;

              

      

      

      
        	
                 
      

              	
                (b)

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

              

      

      

      
        
           

        

        
          18

          
            

          

        

        
           

        

      

      
        	
                 
      

              	
                (c)

              	
                Litigation    no
      litigation, arbitration, tax claim or administrative proceeding involving
      a potential liability of the Borrower or any other Security Party is
      current or pending or (to its or its officers’ knowledge) threatened
      against the Borrower or any other Security Party, which, if adversely
      determined, would have a materially adverse effect on the business assets
      or the financial condition of any of
them;

              

      

      

      
        	
                 
      

              	
                (d)

              	
                No
      conflict with other obligations  the execution and
      delivery of, the performance of its obligations under, and compliance with
      the provisions of, the Security Documents by the relevant Security Parties
      will not (i) contravene any existing applicable law, statute, rule or
      regulation or any judgment, decree or permit to which the Borrower or any
      other Security Party is subject, (ii) conflict with, or result in any
      breach of any of the terms of, or constitute a default under, any
      agreement or other instrument to which the Borrower or any other Security
      Party is a party or is subject to or by which it or any of its property is
      bound, (iii) contravene or conflict with any provision of the memorandum
      and articles of association/articles of incorporation/by-laws/statutes or
      other constitutional documents of the Borrower or any other Security Party
      or (iv) result in the creation or imposition of or oblige the Borrower or
      any other Security Party to create any Encumbrance (other than a Permitted
      Encumbrance) on any of the undertakings, assets, rights or revenues of the
      Borrower or any other Security
Party;

              

      

      

      
        	
                 
      

              	
                (e)

              	
                Financial
      Condition    the financial condition of the
      Borrower and of the other Security Parties has not suffered any material
      deterioration since that condition was last disclosed to the
      Bank;

              

      

      

      
        	
                 
      

              	
                (f)

              	
                No
      Immunity    neither the Borrower nor any other
      Security Party nor any of their respective assets are entitled to immunity
      on the grounds of sovereignty or otherwise from any legal action or
      proceeding (which shall include, without limitation, suit, attachment
      prior to judgement, execution or other
  enforcement);

              

      

      

      
        	
                 
      

              	
                (g)

              	
                Shipping
      Company   each of the Corporate Guarantor and the
      Manager is a shipping company involved in the owning or, as the case may
      be, managing of ships engaged in international voyages and earning profits
      in free foreign currency;

              

      

      

      
        	
                 
      

              	
                (h)

              	
                Licences/Authorisation   every
      consent, authorisation, license or approval of, or registration with or
      declaration to, governmental or public bodies or authorities or courts
      required by any Security Party to authorise, or required by any Security
      Party in connection with, the execution, delivery, validity,
      enforceability or admissibility in evidence of each of the Security
      Documents or the performance by each Security Party of its obligations
      under the Security Documents has been obtained or made and is in full
      force and effect and there has been no default in the observance of any of
      the conditions or restrictions (if any) imposed in, or in connection with,
      any of the same so far as the Borrower is
aware;

              

      

      

      
        	
                 
      

              	
                (i)

              	
                Perfected
      Securities  when duly executed, the Security Documents
      will create a perfected security interest in favour of the Bank, with the
      intended priority, over the assets and revenues intended to be covered,
      valid and enforceable against the Borrower and the other Security
      Parties;

              

      

      

      
        
           

        

        
          19

          
            

          

        

        
           

        

      

      
        	
                 
      

              	
                (j)

              	
                No
      Notarisation/Filing/Recording  save for the registration
      of any mortgage in the Registry, it is not necessary to ensure the
      legality, validity, enforceability or admissibility in evidence of this
      Agreement or any of the other Security Documents that it or they or any
      other instrument be notarised, filed, recorded, registered or enrolled in
      any court, public office or elsewhere or that any stamp, registration or
      similar tax or charge be paid on or in relation to this Agreement or the
      other Security Documents;

              

      

      

      
        	
                 
      

              	
                (k)

              	
                Validity
      and Binding effect   the Security Documents
      constitute (or upon their execution - and in the case of any mortgage upon
      its registration at the Registry - will constitute) valid and legally
      binding obligations of the relevant Security Parties enforceable against
      the Borrower and the other Security Parties in accordance with their
      respective terms and that there are no other agreements or arrangements
      which may adversely affect or conflict with the Security Documents or the
      security thereby created;

              

      

      

      
        	
                 
      

              	
                (l)

              	
                Fully
      owned Subsidiary: the Corporate
      Guarantor is a fully owned Subsidiary of the
  Borrower;

              

      

      

      
        	
                 
      

              	
                (m)

              	
                Public
      listing: the Borrower is a holding company of ocean-going vessels,
      listed and trading in the Nasdaq Global Select
      Market;
      and

              

      

      

      
        	
                 
      

              	
                (n)

              	
                Valid
      Choice of Law    the choice of law agreed to
      govern this Agreement and/or any other Security Document and the
      submission to the jurisdiction of the courts agreed in each of the
      Security Documents are or will be, on execution of the respective Security
      Documents, valid and binding on the Borrower and any other Security Party
      which is or is to be a party
thereto.

              

      

      

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

      

      Initial representations and
warranties

      

      
        	
                 
      

              	
                (a)

              	
                Direct
      obligations - Pari Passu  the obligations of the Borrower
      under this Agreement are direct, general and unconditional obligations of
      the Borrower and rank at least pari passu with all other present and
      future unsecured and unsubordinated Indebtedness of the Borrower with the
      exception of any obligations which are mandatorily preferred by
      law;

              

      

      

      
        	
                 
      

              	
                (b)

              	
                Information  all
      information, accounts, statements of financial position, exhibits and
      reports furnished by or on behalf of any Security Party and its Related
      Companies to the Bank in connection with the negotiation and preparation
      of this Agreement and each of the other Security Documents are true and
      accurate in all material respects and not misleading, do not omit material
      facts and all reasonable enquiries have been made to verify the facts and
      statements contained therein; to the knowledge of the Directors/Officers
      of the Borrower, there are no other facts the omission of which would make
      any fact or statement therein misleading and, in the case of accounts and
      statements of financial position, they have been prepared in accordance
      with generally accepted accounting principles which have been consistently
      applied;

              

      

       

      
        	 	(c)	
                No Default no
      Default has occurred and is continuing;

              
	 	 	 

      

      

       

      
        
           

        

        
          20

          
            

          

        

        
           

        

      

      

      
        	 	(d)	
                No Taxes no
      Taxes are imposed by deduction, withholding or otherwise on any payment to
      be made by the Borrower under this Agreement and/or any other of the
      Security Documents or are imposed on or by virtue of the execution or
      delivery of this Agreement and/or any other of the Security Documents or
      any document or instrument to be executed or delivered hereunder or
      thereunder. In case that any Tax exists now or will be imposed in the
      future, it will be borne by the
Borrower;

              

      

       

      
        	
                 
      

              	
                (e)

              	
                No
      Default under other Indebtedness the
      Borrower is not in Default under any agreement relating to Indebtedness to
      which it is a party or by which it may be
bound;

              

      

       

      
        	 	(f)	Ownership/Flag/Seaworthiness/Class/Insurance
      of the Vessel
	 	 	 
	 	 	the
      Vessel on the first Drawdown Date will
be:

      

       

      
        	
                 
      

              	
                (i)

              	
                in
      the absolute and free from Encumbrances (other than in favour of the Bank)
      ownership of the Owner thereof who will on and after the first Drawdown
      Date be the sole legal and beneficial owner of the
  Vessel;

              

      

      

      
        	
                 
      

              	
                (ii)

              	
                registered
      in the name of the Owner thereof through the Registry under the laws and
      flag of the Flag State;

              

      

      

      
        	
                 
      

              	
                (iii)

              	
                operationally
      seaworthy and in every way fit for
service;

              

      

      

      
        	
                 
      

              	
                (iv)

              	
                classed
      with a classification society which is a member of IACS and which has been
      approved by the Bank in writing and such class will be free of all
      requirements and recommendations of such classification society affecting
      class;

              

      

      

      
        	
                 
      

              	
                (v)

              	
                insured
      in accordance with the provisions of this
  Agreement;

              

      

      

      
        	
                 
      

              	
                (vi)

              	
                managed
      by the Manager; and

              

      

      

      
        	
                 
      

              	
                (vii)

              	
                in
      full compliance with the ISM and the ISPS
Code;

              

      

      

      
        	
                 
      

              	
                (g)

              	
                No
      Charter save for the
      Charterparty and unless otherwise
      permitted in writing by the Bank, the Vessel will not on or before the
      first Drawdown Date be subject to any charter or contract nor to any
      agreement to enter into any charter or contract which, if entered into
      after the first Drawdown Date would have required the consent of the Bank
      under any of the Security Documents and there will not on or before the
      first Drawdown Date be any agreement or arrangement whereby the Earnings
      of the Vessel may be shared with any other
  person;

              

      

      

      
        	
                 
      

              	
                (h)

              	
                No
      Encumbrances  neither the Vessel, nor its Earnings,
      Requisition Compensation or Insurances nor any other properties or rights
      which are, or are to be, the subject of any of the Security Documents nor
      any part thereof will, on the first Drawdown Date, be subject to any
      Encumbrances other than Permitted
Encumbrances;

              

      

       

       

      
        
          
          

        

        
          21

          
            

          

        

        
          
          

        

      

       

       

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

      

       

      
        	
                 
      

              	
                (i)

              	
                the
      Borrower, the Owner and their Related Companies have complied with the
      provisions of all Environmental
Laws;

              

      

      

      
        	
                 
      

              	
                (ii)

              	
                the
      Borrower, the Owner and their Related Companies have obtained all
      Environmental Approvals and are in compliance with all such Environmental
      Approvals; and

              

      

      

      
        	
                 
      

              	
                (iii)

              	
                neither
      the Borrower, the Owner nor any of its Related Companies have received
      notice of any Environmental Claim that the Borrower or any of its Related
      Companies are not in compliance with any Environmental Law or any
      Environmental Approval;

              

      

      

      (j)           No
Environmental Claims

      

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

      

      
        	
                 
      

              	
                (i)

              	
                there
      is no Environmental Claim pending or, to the best of the Borrower’s
      knowledge and belief, threatened against the Borrower, the Owner or the
      Vessel or the Borrower’s Related Companies or any other Relevant Ship;
      and

              

      

       

      
        	 	(ii)	there
      has been no emission, spill, release or discharge of a Material of
      Environmental Concern from the Vessel or any other Related Ship or any
      vessel owned by, managed or crewed by or chartered to the Owner which
      could give rise to an Environmental
Claim;

      

       

      
        	
                 
      

              	
                (k)

              	
                Copies
      true and complete the copy of the
      Management Agreement delivered -or to be delivered to the Bank pursuant to
      clause 7.4 are, or will when delivered be, true and complete copies of
      such documents; such documents will when delivered constitute valid and
      binding obligations of the parties thereto enforceable in accordance with
      their respective terms and there will have been no amendments or
      variations thereof or defaults
thereunder;

              

      

      

      
        	
                 
      

              	
                (l)

              	
                Compliance
      with ISM Code the Operator has a
      DOC for itself and an SMC in respect of the Vessel and the Vessel and any
      Operator complies or will on the drawdown of the Facility comply with the
      requirements of the ISM Code; 

              

      

      

      
        	
                 
      

              	
                (m)

              	
                Compliance
      with ISPS code     the Vessel and any
      Operator complies or will on the drawdown of the Facility or any part
      thereof comply with the requirements of the ISPS
  Code;

              

      

      

      
        	
                 
      

              	
                (n)

              	
                Acting
      for its own account   the
      Borrower by entering into this Agreement and the other Security Documents
      is acting on its own behalf and for its own
  account.

              

      

      

      
        	
                6.3

              	
                Representations
      Correct   At the time of entering into this
      Agreement all above representations and warranties or any other
      information given by the Borrower to the Bank are true and
      accurate.

              

      

      

      
        
           

        

        
          22

          
            

          

        

        
           

        

      

      
        	
                6.4

              	
                Repetition
      of Representations and Warranties   The
      representations and warranties in this Clause 6 (except in relation to the
      representations and warranties in Clause 6.2) shall be deemed to be
      repeated by the Borrower on each Drawdown Date and on each Interest
      Payment Date throughout the Security
Period.

              

      

      

      7.           CONDITIONS
PRECEDENT

      

      7.1           Conditions
precedent to the execution of this Agreement

      

      The
Borrower shall provide the Bank prior to the execution of this Agreement the
following documents and evidence in form and substance satisfactory to the
Bank:

      

      
        	
                 
      

              	
                (a)

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

              

      

      

      
        	
                 
      

              	
                (b)

              	
                a
      recent certificate of incumbency of each corporate Security Party issued
      by the appropriate authority or, as appropriate, signed by the secretary
      or a director thereof, stating the officers and the directors of each of
      them and containing specimens of their respective
    signatures;

              

      

      

      
        	
                 
      

              	
                (c)

              	
                minutes
      of separate meetings of the directors and shareholders of each corporate
      Security Party at which there was approved (inter alia) the entry into,
      execution, delivery and performance of this Agreement, the other Security
      Documents and any other documents executed or to be executed pursuant
      hereto or thereto to which the relevant corporate Security Party is or is
      to be a party;

              

      

      

      
        	
                 
      

              	
                (d)

              	
                the
      original of any power(s) of attorney and any further evidence of the due
      authority of any person signing this Agreement, the other Security
      Documents, and any other documents executed or to be executed pursuant
      hereto or thereto on behalf of any corporate
  person;

              

      

      

      
        	
                 
      

              	
                (e)

              	
                evidence
      that all necessary licences, consents, permits and authorisations
      (including exchange control ones) have been obtained by any Security Party
      for the execution, delivery, validity, enforceability, admissibility in
      evidence and the due performance of the respective obligations under or
      pursuant to this Agreement and the other Security
    Documents;

              

      

      

      
        	
                 
      

              	
                (f)

              	
                evidence
      that the arrangement fee and the commitment commission due under Clause
      10.9 have been paid in full;

              

      

      

      
        	
                 
      

              	
                (g)

              	
                the
      shareholders of all Security Parties shall be acceptable in all respects
      to the Bank.  In the event that the Bank agrees (at its sole
      discretion) that a Security Party may have a corporate shareholder, the
      conditions set out in sub-clauses (a), (b), (c) and (h) of this Clause 7.1
      shall apply (mutatis mutandis) to such corporate
    shareholder;

              

      

      

      
        
           

        

        
          23

          
            

          

        

        
           

        

      

      
        	
                 
      

              	
                (h)

              	
                any
      other documents or recent certificates or other evidence which would be
      required by the Bank in relation to any corporate Security Party
      evidencing that the relevant Security Party has been properly established,
      continues to exist validly and to be in good standing, which is the
      corporate body which binds the company, which is its present board of
      directors and shareholders, that the execution and performance of the
      Security Documents has been duly authorised and generally that the
      representations in Clause 6 are correct in all respects;
    and

              

      

      

      
        	
                 
      

              	
                (i)

              	
                a
      recent certificate as to the shareholding of any corporate Security Party
      issued by an appropriate authority or, at the discretion of the Bank,
      signed by the secretary or a director of each of them as the case may be,
      stating respectively the full names and addresses of the person or persons
      beneficially entitled as shareholders/ stockholders of the entire issued
      and outstanding shares/ stock of each of
them;

              

      

      

      
        	
                7.2

              	
                Conditions
      concerning the Vessel     The
      obligation of the Bank to advance the Facility or any part thereof is
      subject to the further condition that the Bank shall have received prior
      to the drawdown or, where this is not possible, simultaneously with the
      drawdown of the Facility:

              

      

      

      
        	
                 
      

              	
                (a)

              	
                evidence
      that the Vessel will be duly registered in the ownership of the Owner
      through the Registry at the port of the Vessel’s port of registry under
      the laws and flag of the Flag State free from any Permitted Encumbrances
      save for those in favour of the Bank and otherwise as contemplated
      herein;

              

      

      

      
        	
                 
      

              	
                (b)

              	
                evidence
      in form and substance satisfactory to the Bank that the Vessel has been or
      will - on drawdown - be insured in accordance with the insurance
      requirements provided for in Schedule 2 of this Agreement and the other
      Security Documents including a Mortgagee’s Interest Insurance (herein
      “MII”)  for an
      amount equal to 110% of the amount of the Facility at any relevant time
      which the Bank may at any time effect on such terms and with such insurers
      as shall from time to time be determined by the Bank, to be followed by
      full copies of cover notes, policies, certificates of entry or other
      contracts of insurance and irrevocable authority is hereby given to the
      Bank at any time at its discretion to obtain copies of the policies,
      certificates of entry or other contracts of insurance from the insurers
      and/or obtain any information in relation to the Insurances relating to
      the Vessel;

              

      

      

      
        	
                 
      

              	
                (c)

              	
                certified
      true copy of the Management Agreement evidencing that the Vessel is
      managed by the Manager on terms acceptable to the
  Bank;

              

      

      

      (d)           evidence
that the trading certificates of the Vessel are valid and in force;

      

      
        	
                 
      

              	
                (e)

              	
                all
      necessary confirmations from the insurers of the Vessel that they will
      issue letters of undertaking and endorse notice of assignment and loss
      payable clauses on the Insurances, in form and substance satisfactory to
      the Bank in its sole discretion and ( - in the event of fleet cover -
      accompanied by waivers for liens for unpaid premium of other vessels
      managed by the Manager and which are not subject to any mortgage in favour
      of the Bank) and (if required by the Bank) an opinion signed by an
      independent firm of marine insurance brokers appointed and/or approved by
      the Bank at the expenses of the Borrower confirming the adequacy of the
      Insurances maintained on the
Vessel;

              

      

      

      
        	
                 
      

              	
                (f)

              	
                each
      of the Security Documents (as set out in Clause 11.1) duly executed and
      where appropriate duly registered with the appropriate
      Registry;

              

      

      

      
        
           

        

        
          24

          
            

          

        

        
           

        

      

      
        	
                 
      

              	
                (g)

              	
                evidence
      that the Vessel is classed as specified in Clause 6.2(f)(iv) with Lloyds
      Register of Shipping, or to a similar standard with another classification
      society of like standing to be specifically approved by the
      Bank;

              

      

      

      
        	
                 
      

              	
                (h)

              	
                copies
      of the DOC and SMC referred to in paragraph (a) in the definition of the
      ISM Code Documentation certified as true and in effect by the Owner and
      the Manager; and

              

      

      

      
        	
                 
      

              	
                (i)

              	
                copies
      of such ISM Code Documentation as the Bank may by written notice to the
      Borrower have requested not later than two (2) days before the first
      Drawdown Date certified as true and complete in all material respects by
      the Borrower and the Manager;

              

      

      

      
        	
                 
      

              	
                (j)

              	
                copy
      of the ISSC in relation to the
Vessel;

              

      

      

      
        	
                 
      

              	
                (k)

              	
                if
      the Bank so requires a report signed by an independent firm of marine
      insurance brokers appointed by the Bank at the expense of the Borrower
      confirming the adequacy of the Insurances maintained on the
      Vessel;

              

      

      

      
        	
                 
      

              	
                (l)

              	
                if
      the Bank so requires, a satisfactory to the Bank physical condition survey
      report on the Vessel together with a comprehensive record inspection from
      a surveyor appointed by the Bank, at the Borrower’s
    expense;

              

      

      

      
        	
                 
      

              	
                (m)

              	
                valuation
      of the Vessel, at the Borrower’s expense, as at a date falling not earlier
      than ten (10) days prior to the first Drawdown Date, prepared on the basis
      specified in Clause 8.5(b) by major shipbrokers appointed and/or approved
      by the Bank in form and substance satisfactory to the Bank in its sole
      discretion; and

              

      

      

      
        	
                 
      

              	
                (n)

              	
                evidence
      that the Earnings Account has been duly opened and all mandate forms,
      signature cards and authorities have been duly
  delivered;

              

      

      

      
        	
                7.3

              	
                No
      change of circumstances The obligation of the Bank to advance the
      Facility or any part thereof is subject to the further condition that at
      the time of the giving of the Drawdown Notice and on each Drawdown
      Date:

              

      

      

      
        	
                 
      

              	
                (a)

              	
                the
      representations and warranties set out in Clause 6 and in each of the
      Security Documents are true and correct on and as of each such time as if
      each was made with respect to the facts and circumstances existing at such
      time;

              

      

      

      
        	
                 
      

              	
                (b)

              	
                no
      Default shall have occurred and be continuing or would result from the
      drawdown; and

              

      

      

      
        	
                 
      

              	
                (c)

              	
                the
      Bank shall be satisfied that there has been no change in the ownership,
      management, operations and/or adverse change in the financial condition of
      any Security Party which (change) might, in the sole opinion of the Bank,
      be detrimental to the interests of the
Bank.

              

      

      

      
        	
                7.4

              	
                General
      Conditions The
      obligation of the Bank to advance the Facility or any part thereof is
      subject to the further condition that the Bank, prior to or simultaneously
      with the drawdown, shall have
received:

              

      

      

      
        
           

        

        
          25

          
            

          

        

        
           

        

      

      
        	
                 
      

              	
                (a)

              	
                opinions
      from lawyers appointed by the Bank as to all the matters referred to in
      Clauses 6.1(a) and (b) and all such aspects of law as the Bank shall deem
      relevant to this Agreement and the other Security Documents and any other
      documents executed pursuant hereto or thereto and any further legal or
      other expert opinion as the Bank at its sole discretion may
      require;

              

      

      

      
        	
                 
      

              	
                (b)

              	
                confirmation
      from any agents nominated in this Agreement and elsewhere in the other
      Security Documents for the acceptance of any notice or service of process,
      that they consent to such nomination;
and

              

      

      

      
        	
                 
      

              	
                (c)

              	
                a
      receipt in writing in form and substance satisfactory to the Bank
      including an acknowledgement and admission of the Borrower and/or any
      other Security Party to the effect that the Facility or relevant part
      thereof (as the case may be) was drawn by the Borrower and a declaration
      by the Borrower that all conditions precedent have been fulfilled, that
      there is no Event of Default and that all the representations and
      warranties are true and correct.

              

      

      

      
        	
                7.5

              	
                Waiver
      of conditions precedent The conditions
      specified in this Clause 7 are inserted solely for the benefit of the Bank
      and may be waived by the Bank in whole or in part and with or without
      conditions.  Without prejudice to any of the other provisions of
      this Agreement, in the event that the Bank, in its sole and absolute
      discretion, makes the Facility available to the Borrower prior to the
      satisfaction of all or any of the conditions referred to in Clause 7.1,
      7.2, 7.3 and 7.4, the Borrower hereby covenants and undertakes to satisfy
      or procure the satisfaction of such condition or conditions within such
      period as the Bank may, in its sole and absolute discretion, agree or
      specify.

              

      

      

      8.           COVENANTS

      

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

      

      8.1           Information
Covenants

      

      
        	
                 
      

              	
                (a)

              	
                Annual
      financial Statements  furnish the Bank, in form and
      substance satisfactory to the Bank, with combined annual
      audited financial statements of the Borrower and its Subsidiaries at
      latest within 210 days after the end of the financial year concerned, this
      obligation to commence with the financial year ending 31st
      December, 2008, prepared in accordance with United States Generally
      Accepted Accounting Principals (herein “GAAP”) which have been
      consistently applied;

              

      

      

      
        	
                 
      

              	
                (b)

              	
                Financial
      Information   provide the Bank annually and from
      time to time as the Bank may reasonably request and in form and substance
      satisfactory to the Bank with information on the financial conditions,
      cash flow position, commitments and operations of the Borrower and its
      Related Companies and any corporate Security Party and its related
      Companies including cash flow analysis and voyage accounts of any vessels
      owned by any such party with a breakdown of income and running expenses
      showing net trading profit, trade payables and trade receivables, such
      financial details to be certified by one of the directors of the relevant
      company as to their correctness;
and

              

      

      

      
        
           

        

        
          26

          
            

          

        

        
           

        

      

      
        	
                 
      

              	
                (c)

              	
                Information
      on adverse change or Default  promptly inform the Bank of
      any occurrence which came to the knowledge of the Borrower which might
      adversely affect the ability of the Borrower or any other Security Party
      to perform its respective obligations under this Agreement and/or any of
      the other Security Documents and of any Default forthwith upon becoming
      aware thereof and will from time to time, if so requested by the Bank,
      confirm to the Bank in writing that, save as otherwise stated in such
      confirmation, no Default has occurred and is
  continuing;

              

      

      

      
        	
                 
      

              	
                (d)

              	
                Information
      on the employment of the Vessel    provide the
      Bank from time to time as the Bank may reasonably request with information
      on the employment of the Vessel and of any Relevant Ship as well as on the
      terms and conditions of any charterparty, contract of affreightment,
      agreement or related document in respect of the employment of the Vessel
      and of any Relevant Ship, such information to be certified by one of the
      directors of the Borrower as to their
  correctness;

              

      

      

      8.2           Banking
operations - Liquidity

      

      
        	
                 
      

              	
                (a)

              	
                ensure
      that all banking operations in connection with the Vessel are carried out
      through the Lending Branch of the
Bank;

              

      

      

      
        	
                 
      

              	
                (b)

              	
                ensure
      that at all times the Owner will maintain average balances of not less
      than Dollars five hundred thousand ($500,000) in the Earnings
      Account;

              

      

      

      
        	
                 
      

              	
                (c)

              	
                the
      ratio of Total Debt of the mortgaged vessels owned by the Group to EBITDA
      does not exceed 5:1;

              

      

      

      
        	
                 
      

              	
                (d)

              	
                procure
      that on a consolidated basis the Market Value Adjusted Net Worth of the
      Group is at least Fifty million Dollars
  ($50,000,000);

              

      

      

      
        	
                 
      

              	
                (e)

              	
                the
      ratio of Total Bank Debt of the Group to Total Capitalization shall not
      exceed 0.70:1;

              

      

      

      
        	
                 
      

              	
                (f)

              	
                The
      expressions used in this Clause 8.2 shall be construed in accordance with
      GAAP as used in the most recent financial statements produced in
      accordance with sub-clause 8.1(a),

              

      

      

      8.3           No
Further Financial Exposure   without the prior written
consent of the Bank:

      

      
        	
                 
      

              	
                (a)

              	
                No
      further Indebtedness   ensure that the Corporate
      Guarantor incur no further Indebtedness nor authorise or accept any
      capital commitments (other than that (i) normally associated with the day
      to day operations of the Vessel) and (ii) associated with the issuance of
      letters of guarantee up to Dollars five hundred thousand ($500,000) under
      normal course of business nor enter into any agreement for payment on
      deferred terms or hire agreement;

              

      

      

      
        	
                 
      

              	
                (b)

              	
                No
      Loans   ensure that the Corporate Guarantor not make
      any loans or advances to, or any investments or pay any interest thereon,
      in any person, firm, corporation, joint venture or other entity including
      (without limitation) any loan or advance to any officer, director,
      stockholder or employee directly or through the
  Manager;

              

      

      

      
        
           

        

        
          27

          
            

          

        

        
           

        

      

      
        	
                 
      

              	
                (c)

              	
                No
      Disposal of Assets/Dividends   ensure that in case
      of an Event of Default the Borrower and Corporate Guarantor will not
      dispose of any assets and not declare or pay any dividends or other
      distribution upon any of the issued shares, nor otherwise dispose of any
      assets to any of the shareholders of the Borrower;
  and

              

      

      

      
        	
                 
      

              	
                (d)

              	
                No
      Payments    ensure that the Corporate Guarantor
      except pursuant to this Agreement and the other Security Documents (or as
      expressly permitted by the same) not pay out any funds to any company or
      person except in connection with the administration of the Corporate
      Guarantor, the operation, maintenance and/or repair of the
      Vessel;

              

      

      

      8.4           Maintenance
of Business and legal Structure

      

      
        	
                 
      

              	
                (a)

              	
                Maintenance
      of Business Structure    not change the nature,
      organisation and conduct of its business as, owner of the Vessel, in the
      case of the Corporate Guarantor and as legal owner of vessels, in the case
      of the Borrower or carry on any business other than the business carried
      on at the date hereof;

              

      

      

      
        	
                 
      

              	
                (b)

              	
                CEO
      of the Borrower  ensure that Mr.
      Michael Bodouroglou will be the CEO of the Borrower with executive powers
      in the administration of the Borrower directly involved in the management
      of the vessels owned by companies ultimately and beneficially owned by the
      Borrower;

              

      

      

      
        	
                 
      

              	
                (c)

              	
                Maintenance
      of the Business and Legal Structure of the Borrower ensure that the
      Borrower shall continue to be a holding company of ocean-going vessels,
      listed and trading in the Nasdaq Global Select
      Market;

              

      

      

      
        	
                 
      

              	
                (d)

              	
                Know
      your customer and money
      laundering compliance provide the Bank with such documents and
      evidence as the Bank shall from time to time require, based on law and
      regulations applicable from time to time and the Bank’s own internal
      guidelines applicable from time to time to identify the Borrowers and the
      other Security Parties, including the ultimate legal and beneficial owner
      or owners of such entities, and any other persons involved or affected by
      the transaction(s) contemplated by this Agreement;
  and

              

      

      

      
        	
                 
      

              	
                (e)

              	
                Control   ensure
      that no change shall be made directly or indirectly in the ownership,
      beneficial ownership, control or management of the Corporate Guarantor or
      any share therein or, of the Vessel without the prior written consent of
      the Bank;

              

      

      

      (f)           No
merger not merge or
consolidate with any other company or person;

      

      (g)           Subsidiaries   not
form or acquire any Subsidiaries;

      

      
        	
                 
      

              	
                (h)

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

              

      

      

      
        
           

        

        
          28

          
            

          

        

        
           

        

      

      
        	
                 
      

              	
                8.5

              	
                Pari
      passu/Value of Security

              

      

      

      
        	
                 
      

              	
                (a)

              	
                Pari
      passu    ensure that its obligations under this
      Agreement shall, without prejudice to the provisions of this Clause 8.5 at
      all times rank at least pari passu with all its other present and future
      unsecured and unsubordinated Indebtedness with the exception of any
      obligations which are mandatorily preferred by law and not by
      contract;

              

      

      

      
        	
                 
      

              	
                (b)

              	
                Valuation
      of the Vessel    at any time (and at least once
      per year) that the Bank might consider to be (at the sole discretion of
      the Bank) necessary or useful and at the expense of the Borrower, have the
      Vessel valued in Dollars, without, unless required by the Bank, physical
      inspection and on the basis of sale for prompt delivery and free of
      Encumbrances for cash at arm’s length on normal commercial terms as
      between a willing seller and a willing buyer without taking into account
      the benefit of any charterparty or other engagement concerning the Vessel
      (“the basis of
      valuation”), by a reputable shipbroker (such as Arrow, BRS,
      Clarksons, Fearnleys, Platou, SSY, Galbraiths and Gibson) as may from time
      to time be appointed by the Bank for this
  purpose;

              

      

      

      
        	
                 
      

              	
                (c)

              	
                Security
      Value to Security Requirement-Additional
      Security    ensure and procure that the
      Security Value shall be no less than the Security Requirement at the
      relevant time and if at any relevant time the Security Value is less than
      the Security Requirement, the Borrower shall within thirty (30) days of
      being advised by the Bank of such shortfall, either prepay or provide
      additional security in form and substance in all respects acceptable to
      the Bank in an amount at least equal to the amount of such
      shortfall.  Such additional security shall be constituted
      by:

              

      

      

      
        	
                 
      

              	
                (i)

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

              

      

      

      
        	
                 
      

              	
                (ii)

              	
                any
      other security acceptable to the Bank to be provided in a manner
      determined by the Bank.

              

      

      

      
        	
                 
      

              	
                (d)

              	
                Market
      Value

              

      

      

      The
Market Value of the Vessel shall be determined for the purpose of Clause 8.5(c)
and shall be notified by the Bank to the Borrower and the valuation of such
shipbroker shall constitute the value of the Vessel for the purposes of this
Agreement and shall be binding upon the parties hereto. All costs in connection
with such valuation and any valuation of any additional security provided
pursuant to Clause 8.5(c) shall be borne by the Borrower. Any valuation referred
to in Clause 8.5 to be addressed to the Bank.

      

      
        	
                 
      

              	
                (e)

              	
                Valuation
      of additional security   For the purpose of this
      Clause 8.5, the market value of any additional security provided or to be
      provided to the Bank shall be determined by the Bank in its absolute
      discretion without any necessity for the Bank assigning any reason thereto
      provided always that if the additional security is in the form of a
      collateral vessel such collateral vessel shall be valued in accordance
      with the provisions of Clause 8.5(b) or if the additional security is in
      form of a cash deposit full credit shall be given for such cash deposit on
      a Dollar for Dollar basis.

              

      

      

      
        
           

        

        
          29

          
            

          

        

        
           

        

      

      

      

      
        	
                 
      

              	
                (f)

              	
                Documents
      and evidence   In
      connection with any additional security provided in accordance with this
      Clause 8.5, the Bank shall be entitled to receive such evidence and
      documents as may in the Bank’s reasonable opinion be appropriate and such
      favourable legal opinions as the Bank shall in its absolute discretion
      require.

              

      

      

      8.6           Maintenance
of Assets

      

      
        	
                 
      

              	
                (a)

              	
                No
      Transfer of Assets   ensure that the Owner shall not
      convey, assign, transfer, sell or otherwise dispose of or deal with any of
      their real or personal property, assets or rights, whether present or
      future, without the prior written consent of the Bank;
  and

              

      

      

      
        	
                 
      

              	
                (b)

              	
                No
      Encumbrance of Assets   ensure that the Owner shall
      not allow any part of its undertaking, property, assets or rights, whether
      present or future, to be mortgaged, charged, pledged, used as a lien or
      otherwise encumbered without the prior written consent of the Bank;
      and

              

      

      

      8.7           Covenants
Concerning the Vessel

      

      
        	
                 
      

              	
                (a)

              	
                Ownership/Management/Control    ensure
      that the Vessel is registered on the first Drawdown Date under the laws of
      the Flag State and thereafter maintain her present ownership, management,
      control and beneficial ownership;

              

      

      

      
        	
                 
      

              	
                (b)

              	
                Class    ensure
      that the Vessel will remain in class free of any and all recommendations,
      overdue notations or average damage affecting class and provide the Bank
      on demand with copies of all class and trading certificates of the
      Vessel;

              

      

      

      
        	
                 
      

              	
                (c)

              	
                Insurances    ensure
      that all Insurances of the Vessel are maintained and comply with all
      insurance requirements specified in this Agreement and in the Mortgage and
      in case of failure to maintain the Vessel so insured authorise the Bank
      (and such authorisation is hereby expressly given to the Bank) to have the
      right but not the obligation to effect such Insurances on behalf of the
      Borrower (and in case that the Vessel remains in port for an extended
      period to effect port risks insurances at the cost of the Borrower which,
      if paid by the Bank, shall be
Expenses);

              

      

      

      
        	
                 
      

              	
                (d)

              	
                Transfer/Encumbrances    not
      without the prior written consent of the Bank sell or otherwise dispose of
      the Vessel or any share therein or create or agree to create or permit to
      subsist any Encumbrance over the Vessel (or any share or interest therein)
      other than Permitted Encumbrances;

              

      

      

      
        	
                 
      

              	
                (e)

              	
                Not
      imperil Flag, Ownership, Insurances    ensure
      that the Vessel is maintained and trades in conformity with the laws of
      the Flag State, of its owning company or of the nationality of the
      officers of the Vessel, the requirements of the Insurances and nothing is
      done or permitted to be done which could endanger the flag of the Vessel
      or its unencumbered (other than Permitted Encumbrances) ownership or its
      Insurances;

              

      

      

      
        
           

        

        
          30

          
            

          

        

        
           

        

      

      
        	
                 
      

              	
                 (f)

              	
                Mortgage
      Covenants    always comply with all the
      covenants provided for in the
Mortgage;

              

      

      

      
        	
                 
      

              	
                (g)

              	
                Charter    not
      enter into a charterparty, contract of affreightment, agreement or related
      document in respect of the employment of the Vessel (i) on demise
      charterparty or (ii) without the prior written consent of the Bank, for a
      period for more than twelve (12) months or below the market rate
      prevailing at the time when the Vessel is fixed in or on terms which are
      not in accordance with the commercial practice prevailing at the relevant
      time;

              

      

      

      
        	
                 
      

              	
                (h)

              	
                Assignment
      of Earnings    not assign or agree to assign
      otherwise than to the Bank the Earnings or any part
    thereof;

              

      

      

      
        	
                 
      

              	
                (i)

              	
                Survey
      Report   upon request of the Bank and at any time
      the Bank (but no more than once a year save in case of an Event of
      Default) shall require provide the Bank with a physical condition survey
      report on the Vessel together with a comprehensive record inspection from
      a surveyor appointed by the Bank, at the Borrower’s
    expense;

              

      

      

      
        	
                 
      

              	
                (j)

              	
                Class
      records   upon request of the Bank provide the Bank
      with due authorisation in form and substance satisfactory to the Bank
      authorising the to have access and/or obtain any copies of class records
      or other information at its discretion from the classification society of
      the Vessel;

              

      

      

      (k)           Compliance
with Environmental Laws

      

      comply
with, and procure that all Environmental Affiliates of any Relevant Party comply
with, all Environmental Laws including without limitation, requirements relating
to manning and establishment of financial responsibility and to obtain and
comply with, and procure that all Environmental Affiliates of such Relevant
Party obtain and comply with, all Environmental Approvals and to notify the Bank
forthwith:

      

      
        	
                 
      

              	
                (i)

              	
                of
      any Environmental Claim for an amount or amounts in aggregate exceeding
      $100,000 made against the Vessel and any Relevant Ship and/or her
      respective owner; and

              

      

      

      
        	
                 
      

              	
                (ii)

              	
                upon
      becoming aware of any incident which may give rise to an Environmental
      Claim and to keep the Bank advised in writing of the Borrower’s response
      to such Environmental Claim on such regular basis and in such detail as
      the Bank shall require;

              

      

      

      8.8           Observance
of Covenants

      

      
        	
                 
      

              	
                (a)

              	
                Use
      of the Loan    use the Loan exclusively for the
      purpose specified in this
Agreement;

              

      

      

      
        
           

        

        
          31

          
            

          

        

        
           

        

      

      
        	
                 
      

              	
                (b)

              	
                Compliance
      with Covenants   duly and punctually perform each of
      the obligations expressed to be assumed by it under this Agreement and the
      other Security Documents;

              

      

      

      
        	
                 
      

              	
                (c)

              	
                Payment
      on Demand    pay to the Bank on demand any sum
      of money which is payable by the Borrower to the Bank under this Agreement
      but in respect of which it is not specified in any other Clause when it is
      due and payable; and

              

      

      

      
        	
                 
      

              	
                (d)

              	
                Evidence
      of Compliance    upon request by the Bank from
      time to time provide such information and evidence to the Bank as the Bank
      would reasonably require to demonstrate compliance with the covenants and
      undertakings set forth in this Agreement and the other Security
      Documents;

              

      

      

      8.9           Validity
of Securities – Taxes etc.

      

      
        	
                 
      

              	
                (a)

              	
                Validity    ensure
      and procure that all governmental or other consents required by law and/or
      any other steps required for the validity, enforceability and legality of
      this Agreement and the other Security Documents are maintained in full
      force and effect and/or appropriately
taken;

              

      

      

      
        	
                 
      

              	
                (b)

              	
                Earnings    ensure
      and procure that, unless and until directed by the Bank otherwise (i) all
      the Earnings of the Vessel shall be paid to the Earnings Account and (ii)
      the persons from whom the Earnings are from time to time due are
      irrevocably instructed to pay them to such account in the name of the
      Owner as shall be from time to time agreed by the Bank in accordance with
      the provisions hereof and of the relevant Security
    Documents;

              

      

      

      
        	
                 
      

              	
                (c)

              	
                Taxes     pay
      all Taxes, assessments and other governmental charges when the same fall
      due, except to the extent that the same are being contested in good faith
      by appropriate proceedings and adequate reserves have been set aside for
      their payment if such proceedings fail;
and

              

      

      

      
        	
                 
      

              	
                (d)

              	
                Additional
      Documents    from time to time and within ten
      (10) days after the Bank’s request execute and deliver to the Bank or
      procure the execution and delivery to the Bank of all such documents as
      shall be deemed desirable at the reasonable discretion of the Bank for
      giving full effect to this Agreement, and for perfecting, protecting the
      value of or enforcing any rights or securities granted to the Bank under
      any one or more of this Agreement, the other Security Documents and any
      other documents executed pursuant hereto or thereto and in case that any
      conditions precedent (with the Bank’s consent) have not been fulfilled
      prior to the Drawdown, such conditions shall be complied with within
      fourteen (14) days of Drawdown (unless the Bank agrees otherwise in
      writing) and failure to comply with this covenant shall be an Event of
      Default.

              

      

      

      
        	
                8.10

              	
                Covenants
      for the Security Parties Ensure and procure
      that all other Security Parties and each of them duly and punctually
      comply, with the covenants in Clauses 8.1 to 8.10 which are applicable to
      them mutatis mutandis.

              

      

      

      8.11           Compliance
with the ISM Code    Procure that the Manager and any
Operator:

      

      
        
           

        

        
          32

          
            

          

        

        
           

        

      

      
        	
                 
      

              	
                (a)

              	
                will
      comply with and ensure that the Vessel and any Operator by no later than
      the first Drawdown Date complies with the requirements of the ISM Code,
      including (but not limited to) the maintenance and renewal of valid
      certificates pursuant thereto throughout the Security
    Period;

              

      

      

      
        	
                 
      

              	
                (b)

              	
                immediately
      inform the Bank if there is any threatened or actual withdrawal of the
      Owner’s, the Manager’s or an Operator’s DOC or the SMC in respect of the
      Vessel; and

              

      

      

      
        	
                 
      

              	
                (c)

              	
                promptly
      inform the Bank upon the issue to the Borrower, the Manager or any
      Operator of a DOC and to the Vessel of an SMC or the receipt by the Owenr,
      the Manager or any Operator of notification that its application for the
      same has been realised.

              

      

      

      
        	
                8.12

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

              

      

      

      
        	
                 
      

              	
                (a)

              	
                maintain
      at all times a valid and current ISSC respect of the
    Vessel;

              

      

      

      
        	
                 
      

              	
                (b)

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

              

      

      

      
        	
                 
      

              	
                (c)

              	
                procure
      that the Vessel will comply at all times with the ISPS
    Code;

              

      

      

      9.           EVENTS OF
DEFAULT

      

      There
shall be an Event of Default whenever an event described in Clauses 9.1 to 9.9
occurs:

      

      9.1           Non
Performance of Obligations

      

      
        	
                 
      

              	
                (a)

              	
                the
      Borrower or any other Security Party fails to pay any sum due from the
      Borrower or, as the case may be such Security Party, under this Agreement
      and/or any of the other Security Documents at the time, in the currency
      and in the manner stipulated herein and/or any of the other Security
      Documents, or, in the case of any sum payable on demand, within three (3)
      Banking Days of such demand; or

              

      

      

      
        	
                 
      

              	
                (b)

              	
                the
      Borrower or any other Security Party fails to observe and perform any one
      or more of the covenants, terms or obligations contained in this Agreement
      and/or any other Security Document relating to the Insurances;
      or

              

      

      

      
        	
                 
      

              	
                (c)

              	
                the
      Borrower or any other Security Party commits any breach of or omits to
      observe any of the covenants, terms, obligations or undertakings under
      this Agreement and/or any of the other Security Documents (other than
      failure to pay any sum when due or to comply with any obligation
      concerning the Insurances) and, in respect of any such breach or omission
      which in the reasonable opinion of the Bank is capable of remedy, such
      action as the Bank may require shall not have been taken within ten (10)
      days of the Bank notifying the Borrower and/or the relevant Security Party
      of such required action to remedy the breach or omission;
    or

              

      

      

      
        
           

        

        
          33

          
            

          

        

        
           

        

      

      9.2           Events
affecting the Security Parties

      

      
        	
                 
      

              	
                (a)

              	
                any
      Security Party is adjudicated or found bankrupt or insolvent or any
      judgement or order is made by any competent court or resolution passed or
      petition (which is not in the reasonable opinion of the Bank frivolous and
      is not being contested in good faith by such Security Party) presented for
      the winding-up or dissolution of any Security Party or for the appointment
      of a liquidator, trustee, receiver, administrator or conservator of the
      whole or any part of the undertakings, assets, rights or revenues of any
      Security Party; or

              

      

      

      
        	
                 
      

              	
                (b)

              	
                any
      Security Party becomes or is deemed to be insolvent or suspends payment of
      its debts or is (or is deemed to be) unable to or admits inability to pay
      its debts as they fall due or proposes or enters into any composition,
      compromise or other arrangement for the benefit of its creditors generally
      or good faith proceedings are commenced in relation to any Security Party
      under any law, regulation or procedure relating to reconstruction or
      readjustment of debts; or

              

      

      

      
        	
                 
      

              	
                (c)

              	
                an
      encumbrancer takes possession or a receiver or similar officer is
      appointed of the whole or any part of the undertakings, assets, rights or
      revenues of any Security Party or a distress, execution, sequestration or
      other process is levied or enforced upon or sued out against any of the
      undertakings, assets, rights or revenues of any Security Party and is not
      discharged within fifteen (15) days;
or

              

      

      

      
        	
                 
      

              	
                (d)

              	
                all
      or a material part of the undertakings, assets, rights or revenues of any
      Security Party are seized, nationalised, expropriated or compulsorily
      acquired by or under the authority of any government;
  or

              

      

      

      
        	
                 
      

              	
                (d)

              	
                any
      event occurs or proceeding is taken with respect to any Security Party in
      any jurisdiction to which it is subject which has an effect equivalent or
      similar to any of the events mentioned in sub-Clauses 9.2(a) to 9.2(d);
      or

              

      

      

      
        	
                 
      

              	
                (e)

              	
                any
      Security Party suspends or ceases or threatens to suspend or cease to
      carry on its business; or

              

      

      

      
        	
                 
      

              	
                (f)

              	
                there
      occurs, in the reasonable opinion of the Bank, a materially adverse change
      in the financial condition of any Security Party;
  or

              

      

      

      
        	
                 
      

              	
                (g)

              	
                any
      other event occurs or circumstances arise which, in the reasonable opinion
      of the Bank, materially and adversely affects either (i) the ability of
      any Security Party to perform all or any of its obligations under or
      otherwise to comply with the terms of this Agreement and/or any of the
      other Security Documents, or (ii) the security created by this Agreement
      and/or any of the Security Documents;
or

              

      

      

      
        	
                 
      

              	
                (h)

              	
                there
      is any material change in the beneficial ownership of the shares in the
      Borrower and/or in any other corporate Security Party;
  or

              

      

      

      
        	
                 
      

              	
                (k)

              	
                a
      meeting is convened by any Security Party for the purpose of passing any
      resolution to purchase, reduce or redeem any of its share capital;
      or

              

      

      

      
        	
                 
      

              	
                (l)

              	
                Mr.
      Michael Bodouroglou ceases to be the CEO of the Borrower and have
      executive power in the administration of the Borrower;
  or

              

      

      

      
        
           

        

        
          34

          
            

          

        

        
           

        

      

      
      

      

      
        	9.3	Representations or Incorrect any
      representation or warranty made or deemed to be made or repeated by or in
      respect of any Security Party in or pursuant to this Agreement or any of
      the other Security Documents or in any notice, certificate or statement
      referred to in or delivered under this Agreement or any of the other
      Security Documents is or proves to have been incorrect in any material
      respect; or

      

       

      
        	
                9.4

              	
                Cross-default
      of the Borrower    any Indebtedness of the
      Borrower is not paid when due or becomes due and payable, or any creditor
      of the Borrower becomes entitled to declare any such Indebtedness due and
      payable prior to the date when it would otherwise have become due, or any
      guarantee or indemnity given or any obligation or covenant undertaken or
      agreement made by the Borrower in respect of Indebtedness is not honoured
      when due; or

              

      

      

      9.5           Events
affecting the Security Documents

      

      
        	
                 
      

              	
                (a)

              	
                this
      Agreement or any of the other Security Documents shall at any time and for
      any reason become invalid or unenforceable or otherwise cease to remain in
      full force and effect, or if the validity or enforceability of any of the
      Security Documents shall at any time and for any reason be contested by
      any party thereto (other than the Bank), or if any such party shall deny
      that it has any, or any further, liability thereunder or it becomes
      impossible or unlawful for the Borrower to fulfil any of its covenants and
      obligations contained in this Agreement or any of the Security Documents
      or for the Bank to exercise the rights vested in it thereunder or
      otherwise; or

              

      

      

      
        	
                 
      

              	
                (b)

              	
                any
      consent, authorisation, licence or approval of, or registration with or
      declaration to, governmental or public bodies or authorities or courts
      required by the Borrower to authorise or otherwise in connection with, the
      execution, delivery, validity, enforceability or admissibility in evidence
      of this Agreement and/or any of the other Security Documents or the
      performance by the Borrower of its obligations under this Agreement and/or
      any of the other Security Documents is modified in a manner unacceptable
      to the Bank or is not granted or is revoked or terminated or expires and
      is not renewed or otherwise ceases to be in full force and effect;
      or

              

      

      

      
        	
                 
      

              	
                (c)

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

              

      

      

      9.6           Events
concerning the Security Parties

      

      
        	
                 
      

              	
                (a)

              	
                any
      Security Party (other than the Borrower) fails to pay any sum due from it
      under this Agreement and/or any of the Security Documents when due, or, in
      the case of any sum payable on demand, within three (3) Banking Days of
      demand; or

              

      

      

      
        	
                 
      

              	
                (a)

              	
                any
      Security Party (other than the Borrower) fails to observe and perform any
      one or more of the covenants, terms or obligations contained in this
      Agreement (including Schedule 1) and/or the other Security Documents
      relating to the Insurances; or

              

      

      

      
        
           

        

        
          35

          
            

          

        

        
           

        

      

      
        	
                 
      

              	
                (b)

              	
                any
      Security Party (other than the Borrower) commits any breach of or omits to
      observe any of the covenants, terms, obligations or undertakings expressed
      to be assumed by it under this Agreement and/or any of the Security
      Documents (other than failure to pay any sum when due or to observe or
      perform obligations relating to the Insurances) and, in respect of any
      such breach or omission which in the opinion of the Bank is capable of
      remedy, such action as the Bank may require shall not have been taken
      within seven (7) days of the Bank notifying the relevant Security Party,
      of such required action to remedy the breach or omission;
    or

              

      

      

      
        	
                 
      

              	
                (c)

              	
                any
      representation or warranty made or deemed to be made or repeated by or in
      respect of any Security Party (other than the Borrower) in or pursuant to
      this Agreement or any of the other Security Documents or in any notice,
      certificate or statement referred to in or delivered under this Agreement
      or any of the other Security Documents is or proves to have been incorrect
      in any material respect; or

              

      

      

      
        	
                 
      

              	
                (d)

              	
                any
      of the events referred to in Clauses 9.2 to 9.5 occurs (amended as
      appropriate) in relation to any Security Party (other than the Borrower);
      or

              

      

      

      9.7           Events
concerning the Vessel

      

      
        	
                 
      

              	
                (a)

              	
                the
      Vessel becomes a Total Loss or suffers damage or is involved in an
      incident which in the reasonable opinion of the Bank may result in the
      Vessel being subsequently determined to be a Total Loss and the insurance
      indemnity is not paid by the insurers to the Bank under the General
      Assignment within a period of one hundred and twenty (120) days from the
      date such Total Loss or damage or incident
  occurred;

              

      

      

      
        	
                 
      

              	
                (b)

              	
                the
      Vessel ceases to be managed by the Manager (for any reason other than the
      reason of a Total Loss or sale of the Vessel) with the approval of the
      Bank, and the Owner fails to appoint a Manager within two (2) days after
      the termination of the Management Agreement with the previous Manager;
      or

              

      

      

      
        	
                 
      

              	
                (c)

              	
                the
      Vessel is arrested, confiscated, seized, taken in execution, impounded,
      forfeited, detained in exercise or purported exercise of any possessory
      lien or other claim and the Owner shall fail to procure the release of the
      Vessel within a period of fourteen (14) days thereafter;
  or

              

      

      

      
        	
                 
      

              	
                (d)

              	
                (without
      prejudice to the generality of sub-Clauses 9.1(b) and (c)) for any reason
      whatsoever the provisions of Clause 8.11 are not complied with and/or the
      Vessel ceases to comply with the ISM Code;
or

              

      

      

      
        	
                 
      

              	
                (e)

              	
                (without
      prejudice to the generality of sub-Clauses 9.1(b) and (c)) for any reason
      whatsoever the provisions of Clause 8.12 are not complied with and/or the
      Vessel ceases to comply with the ISPS Code;
or

              

      

      

      
        	
                 
      

              	
                (f)

              	
                the
      registration of the Vessel under the laws and flag of the Flag State is
      cancelled or terminated without the prior written consent of the Bank;
      or

              

      

      

      
        
           

        

        
          36

          
            

          

        

        
           

        

      

      
        	
                 
      

              	
                (g)

              	
                the
      Flag State of the Vessel becomes involved in hostilities or civil war or
      there is a seizure of power in such Flag State by unconstitutional means
      if, in any such case, such event could in the reasonable opinion of the
      Bank reasonably be expected to have a material adverse effect on the
      security constituted by any of the Security Documents and alternative
      arrangements satisfactory to the Bank have not been made promptly upon the
      Bank’s request; or

              

      

      

      
        	
                 
      

              	
                (h)

              	
                the
      registration of the Vessel under the laws and flag of the Flag State is
      cancelled or terminated without the prior written consent of the Bank or,
      if the Vessel is only provisionally registered on the first Drawdown Date
      and is not permanently registered under the laws and flag of the Flag
      State at least  ninety (90) days prior to the deadline for
      completing such permanent registration;
or

              

      

      

      9.8           Environmental
Events

      

      
        	
                 
      

              	
                (a)

              	
                any
      Relevant Party and/or the Manager and/or any of their respective
      Environmental Affiliates fails to comply with any Environmental Law or any
      Environmental Approval or the Vessel or any Relevant Ship is involved in
      any incident which gives rise or which may give rise to any Environmental
      Claim, if in any such case, such non compliance or incident or the
      consequences thereof could (in the reasonable opinion of the Bank) be
      expected to have a material adverse effect on the business assets,
      operations, property or financial condition of the Borrower or any other
      Security Party or on the security created by any of the Security
      Documents; or

              

      

      

      
        	
                 
      

              	
                (b)

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

              

      

      

      
        	
                9.9

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

              

      

      

      
        	
                 
      

              	
                (a)

              	
                by
      notice to the Borrower declare that the obligation of the Bank to make the
      Facility available shall be terminated, whereupon the Facility shall be
      reduced to zero forthwith; and/or

              

      

      

      
        	
                 
      

              	
                (b)

              	
                by
      notice to the Borrower declare that the Loan and all interest and
      commitment commission accrued and all other sums payable under this
      Agreement and the other Security Documents have become due and payable,
      whereupon the same shall, immediately or in accordance with the terms of
      such notice, become due and payable without any further diligence,
      presentment, demand of payment, protest or notice or any other procedure
      from the Bank which are expressly waived by the Borrower;
      and/or

              

      

      

      
        
           

        

        
          37

          
            

          

        

        
           

        

      

      
        	
                 
      

              	
                (c)

              	
                put
      into force and exercise all or any of the rights, powers and remedies
      possessed by it under this Agreement and/or under any other Security
      Document and/or as mortgagee of the Vessel, mortgagee, chargee or assignee
      or as the beneficiary of any other property right or any other security
      (as the case may be) over the assets charged or assigned to it under the
      Security Documents or otherwise (whether at law, by virtue of any of the
      Security Documents or otherwise).

              

      

      

      
        	
                9.10

              	
                Insolvency
      Events of Default   If an event occurs in respect of
      the Borrower or the other Security Parties of the type described in
      sub-Clauses 9.2(a) to (e) (except (i) in the case when a petition was
      presented or proceedings were commenced or a suit or writ were issued by a
      third party and the Borrower or the relevant Security Party is defending
      itself in bona fide and (ii) in the case that such events mentioned in
      Clause 9.2 relate to only a part of the undertakings, assets, rights or
      revenues which in the opinion of the Bank does not affect the ability of
      the Borrower or the relevant Security Party to perform its respective
      obligations under this Agreement and/or the other Security Documents) the
      obligation of the Bank to make the Facility available shall terminate
      immediately upon receipt by the Bank of the relevant information (as such
      receipt shall be conclusively certified by a certificate of the Bank) and
      all amounts payable under sub-Clause 9.9(b) above shall become immediately
      due and payable without any notice or other formality which is hereby
      expressly waived by the Borrower.

              

      

      

      
        	
                9.11

              	
                Proof
      of Default   It is agreed that (i) the non-payment
      of any sum of money in time will be proved conclusively by mere passage of
      time and (ii) the occurrence of this (non payment) shall be proved
      conclusively by a mere written statement of the Bank (save for manifest
      error).

              

      

      

      
        	
                9.12

              	
                Exclusion
      of Bank’s liability     Neither the Bank
      nor any receiver or manager appointed by the Bank, shall have any
      liability to the Borrower or any other Security
  Party:

              

      

      

      
        	
                 
      

              	
                (a)

              	
                for
      any loss caused by an exercise of rights under, or enforcement of an
      Encumbrance created by, a Security Document or by any failure or delay to
      exercise such a right or to enforce such an Encumbrance;
  or

              

      

      

      
        	
                 
      

              	
                (b)

              	
                as
      mortgagee in possession or otherwise, for any income or principal amount
      which might have been produced by or realised from any asset comprised in
      such an Encumbrance or for any reduction (however caused) in the value of
      such an asset, 

              

      

      

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

      

      
        
           

        

        
          38

          
            

          

        

        
           

        

      

      
        	
                10.

              	
                INDEMNITIES - EXPENSES
      - FEES

              

      

      

      
        	
                10.1

              	
                Indemnity   The
      Borrower shall on demand (and it is hereby expressly undertaken by the
      Borrower to) indemnify the Bank, without prejudice to any of the other
      rights of the Bank under any of the Security Documents, against any loss
      (including loss of Margin) or expense which the Bank shall certify as
      sustained or incurred as a consequence of (i) any default in payment by
      any of the Security Parties of any sum under any of the Security Documents
      when due, (ii) the occurrence of any Event of Default, (iii) any
      prepayment of the Loan or part thereof being made under Clauses 4.3,
      8.5(b) or 12 or any other repayment of the Loan or part thereof being made
      otherwise than on an Interest Payment Date relating to the part of the
      Loan prepaid or repaid or (iv) any drawdown not being made for any reason
      (excluding any default by the Bank) after a Drawdown Notice has been
      given, including, in any such case, but not limited to, any loss or
      expense sustained or incurred in maintaining or funding the Loan or any
      part thereof or in liquidating or re-employing deposits from third parties
      acquired to effect or maintain the Loan or any part
    thereof.

              

      

      

      
        	
                10.2

              	
                Expenses The
      Borrower shall (and it is hereby expressly undertaken by the Borrower) pay
      to the Bank on demand:

              

      

      

      
        	
                 
      

              	
                (a)

              	
                Initial
      and Amendment expenses   all expenses (including
      legal, printing and out-of-pocket expenses) incurred by the Bank in
      connection with the negotiation, preparation and execution of this
      Agreement and the other Security Documents and of any amendment or
      extension of or the granting of any waiver or consent under this Agreement
      and/or any of the Security Documents and/or in connection with any
      proposal by the Borrower to constitute additional security pursuant to
      Clause 8.5(b), whether any such security shall in fact be constituted or
      not;

              

      

      

      
        	
                 
      

              	
                (b)

              	
                Enforcement
      expenses   all expenses (including legal and out-of-
      pocket expenses) incurred by the Bank in contemplation of, or otherwise in
      connection with, the enforcement of, or preservation of any rights under,
      this Agreement and/or any of the other Security Documents, or otherwise in
      respect of the moneys owing under this Agreement and/or any of the other
      Security Documents or the contemplation or preparation of the above,
      whether they have been effected or not;
and

              

      

      

      
        	
                 
      

              	
                (c)

              	
                MII
      cost    reimburse the Bank on demand for any
      and all costs incurred by the Bank (as conclusively certified by the Bank)
      in effecting and keeping effected a Mortgagee’s Interest Insurance (herein
      “MII”)  for an
      amount equal to 110% of the Facility at any relevant time, which the Bank
      may at any time effect on such terms and with such insurers as shall from
      time to time be determined by the Bank) to be followed by full copies of
      cover notes, policies, certificates of entry or other contracts of
      insurance and irrevocable authority is hereby given to the Bank at any
      time at its discretion to obtain copies of the policies, certificates of
      entry or other contracts of insurance from the insurers and/or obtain any
      information in relation to the Insurances relating to a
      Vessel;

              

      

      

      
        	
                 
      

              	
                (d)

              	
                Other
      expenses

              

      

      

      any and
all other Expenses; and

      

      
        	
                 
      

              	
                (e)

              	
                Legal
      costs

              

      

      

      the legal
costs of the Bank’s appointed lawyer, in respect of the preparation of this
Agreement and the other Security Documents as well as the legal costs of the
foreign lawyers (if these are available) in respect of the registration of the
Security Documents or any search or opinion given to the Bank in respect of the
Security Parties or the Vessel or the Security Documents.  The said
legal costs to be due and payable on the date of drawdown.

      

      
        
           

        

        
          39

          
            

          

        

        
           

        

      

       

      
        	 	All
      expenses payable pursuant to this Clause 10.2 shall be paid together with
      Value Added Tax (if any) thereon.

      

       

      
        	
                10.3

              	
                Stamp
      duty   The Borrower shall (and it is hereby
      expressly undertaken by the Borrower to pay any and all stamp,
      registration and similar taxes or charges (including those payable by the
      Bank) imposed by governmental authorities in relation to this Agreement
      and any of the other Security Documents, and shall indemnify the Bank
      against any and all liabilities with respect to, or resulting from delay
      or omission on the part of the Borrower to pay such stamp taxes or
      charges.

              

      

      

      
        	
                10.4

              	
                Environmental
      Indemnity   The Borrower shall indemnify the Bank on
      demand and hold the Bank harmless from and against all costs, expenses,
      payments charges, losses, demands, liabilities, actions, proceedings
      (whether civil or criminal) penalties, fines, damages, judgements, orders,
      sanctions or other outgoings of whatever nature which may be suffered,
      incurred or paid by, or made or asserted against the Bank at any time,
      whether before or after the repayment in full of principal and interest
      under this Agreement, relating to, or arising directly or indirectly in
      any manner or for any cause or reason out of an Environmental Claim made
      or asserted against the Bank.

              

      

      

      
        	
                10.5

              	
                Currencies   If
      any sum due from the Borrower under any of the Security Documents or any
      order or judgement given or made in relation hereto has to be converted
      from the currency (the “first currency”) in which the same is payable
      under the relevant Security Document or under such order or judgment into
      another currency (the “second currency”) for the purpose of (i) making or
      filing a claim or proof against the Borrower or any other Security Party,
      as the case may be, (ii) obtaining an order or judgement in any court or
      other tribunal or (iii) enforcing any order or judgement given or made in
      relation to any of the Security Documents, the Borrower shall (and it is
      hereby expressly undertaken by the Borrower to) indemnify and hold
      harmless the Bank from and against any loss suffered as a result of any
      difference between (a) the rate of exchange used for such purpose to
      convert the sum in question from the first currency into the second
      currency and (b) the rate or rates of exchange at which the Bank may in
      the ordinary course of business purchase the first currency into the
      second currency and (b) the rate or rates of exchange at which the Bank
      may in the ordinary course of business purchase the first currency with
      the second currency upon receipt of a sum paid to it in satisfaction, in
      whole or in part, of any such order, judgement, claim or
      proof.  Any amount due from the Borrower under this Clause 10.5
      shall be due as a separate debt and shall not be affected by judgement
      being obtained for any other sums due under or in respect of any of the
      Security Documents, and the term “rate of exchange” includes any premium
      and costs of exchange payable in connection with the purchase of the first
      currency with the second currency.

              

      

      

      
        	
                10.6

              	
                Central
      Bank or European Central Bank reserve requirements indemnity The
      Borrower shall on demand promptly indemnify the Bank against any cost
      incurred or loss suffered by the Bank as a result of its complying with
      the minimum reserve requirements of the European Central Bank and/or with
      respect to maintaining required reserves with the relevant national
      Central Bank to the extent that such compliance relates to the Facility or
      deposits obtained by it to fund the whole or part of the Loan and to the
      extent such cost or loss is not recoverable by the Bank under clause
      12.2.

              

      

      

      
        
           

        

        
          40

          
            

          

        

        
           

        

      

      
        	
                10.7

              	
                Maintenance
      of the Indemnities   The indemnities contained in
      this Clause 10 shall apply irrespective of any indulgence granted to the
      Borrower or any other party from time to time and shall continue to be in
      full force and effect notwithstanding any payment in favour of the Bank
      and any sum due from the Borrower under this Clause 10 will be due as a
      separate debt and shall not be affected by judgement being obtained for
      any other sums due under any one or more of this Agreement, the other
      Security Documents and any other documents executed pursuant hereto or
      thereto.

              

      

      

      
        	
                10.8

              	
                Communications
      Indemnity It is hereby agreed in connection with communications
      that:

              

      

      

      
        	
                 
      

              	
                (a)

              	
                express
      authority is hereby given by the Borrower to the Bank to accept (at the
      sole discretion of the Bank) all tested or untested communications given
      by facsimile, telex, cable or otherwise, regarding any or all of the
      notices, requests, instructions or other communications under this
      Agreement, subject to any restrictions imposed by the Bank relating to
      such communications including, without limitation (if so required by the
      Bank), the obligation to confirm such communications by
      letter;

              

      

      

      
        	
                 
      

              	
                (b)

              	
                the
      Borrower shall recognise any and all of the said notices, requests,
      instructions or other communications as legal, valid and binding, when
      these notices, requests, instructions or communications come from the
      telex and fax numbers mentioned in Clause 14.9 or any other telex usually
      used by it or its managing company;

              

      

      

      
        	
                 
      

              	
                (c)

              	
                the
      Borrower hereby assumes full responsibility for the execution of the said
      notices, requests, instructions or communications by the Bank and promises
      and recognises that the Bank shall not be held responsible for any loss,
      liability or expense that may result from such notices, requests,
      instructions or other communications.  It is hereby undertaken
      by the Borrower to indemnify in full the Bank from and against all
      actions, proceedings, damages, costs, claims, demands, expenses and any
      and all direct and/or indirect losses which the Bank or any third party
      may suffer, incur or sustain by reason of the Bank following such notices,
      requests, instructions or
communications;

              

      

      

      
        	
                 
      

              	
                (d)

              	
                with
      regard to notices, requests, instructions or communications issued by
      electronic and/or mechanical processes (e.g. by facsimile, telex), the
      risk of equipment malfunction, including, without limitation, paper
      shortage, transmission errors, omissions and distortions is assumed fully
      and accepted by the Borrower;

              

      

      

      
        	
                 
      

              	
                (e)

              	
                the
      risks of misunderstandings and errors of notices, requests, instructions
      or communications being given as mentioned above, are for the Borrower and
      the Bank will be indemnified in full pursuant to this
    Clause;

              

      

      

      
        	
                 
      

              	
                (f)

              	
                the
      Bank shall have the right to ask the Borrower to furnish any information
      the Bank may require to establish the authority of any person purporting
      to act on behalf of the Borrower for these notices, requests, instructions
      or communications but it is expressly agreed that there is no obligation
      for the Bank to do so.  The Bank shall be fully protected in,
      and the Bank shall incur no liability to the Borrower for acting upon the
      said notices, requests, instructions or communications which were believed
      by the Bank in good faith to have been given by the Borrower or by any of
      their authorised representative(s);
and

              

      

      

      
        
           

        

        
          41

          
            

          

        

        
           

        

      

      

      

      
        	
                 
      

              	
                (g)

              	
                it
      is undertaken by the Borrower to safeguard the function and the security
      of the electronic and mechanical appliance(s) such as telex(es), fax(es)
      etc., as well as the code word list, if any, and to take adequate
      precautions to protect it from loss and to prevent its terms becoming
      known to any persons not directly concerned with its use.  The
      Borrower shall hold the Bank harmless and indemnified from all claims,
      losses, damages and expenses which the Bank may incur by reason of the
      failure of the Borrower to comply with the obligations under this Clause
      and/or this Agreement.

              

      

      

      
        	
                10.9

              	
                Fees  As
      an inducement for the Bank to enter into this Agreement the Borrower have
      to pay to the Bank:

              

      

      

      
        	
                 
      

              	
                (a)

              	
                a
      commitment commission at the rate of 0.375% per annum on the daily undrawn
      and uncancelled amount of the Available Facility Amount, payable in
      arrears, on each of the dates falling at three monthly intervals after the
      1st
      April, 2008 until the last day of the Availability Period (the “Facility Commission
      Period”), computed from the 1st
      April, 2008 (in the case of the first payment of commission) and from the
      date of the preceding payment of commission (in the case of each
      subsequent payment) until the last day of the Facility Commission
      Period.

              

      

      

      
        	
                 
      

              	
                (b)

              	
                an
      arrangement fee in the amount of $150,000 (Dollars one hundred fifty
      thousand) payable in equal parts on the date hereof and the first Drawdown
      Date  ;

              

      

      

      The
arrangement fee and the commitment commission referred to in this Clause 10.9
are not refundable and shall be payable by the Borrower to the Bank whether or
not any part of the Facility is ever advanced.

      

      
        	
                11.

              	
                SECURITY AND
      SET-OFF

              

      

      

      
        	
                11.1

              	
                Securities   As
      security for the due and punctual repayment of the Loan and payment of
      interest thereon as provided in this Agreement and of all other
      Outstanding Indebtedness, the Borrower shall ensure and procure that the
      following Security Documents are duly executed and, where required,
      registered in favour of the Bank in form and substance satisfactory to the
      Bank at the time specified herein or otherwise as required by the Bank and
      ensure that such security consists
of:

              

      

      

      
        	
                 
      

              	
                (a)

              	
                the
      Mortgage;

              

      

      

      
        	
                 
      

              	
                (b)

              	
                the
      General Assignment;

              

      

      

      
        	
                 
      

              	
                (c)

              	
                the
      Corporate Guarantee contained in Clause 13
  hereof;

              

      

      

      
        	
                 
      

              	
                (d)

              	
                the
      Account pledge Agreement;

              

      

      

      
        	
                 
      

              	
                (e)

              	
                the
      Manager’s Undertaking; and

              

      

      

      
        	
                 
      

              	
                (f)

              	
                the
      Charterparty Assignment

              

      

      

      
        
           

        

        
          42

          
            

          

        

        
           

        

      

       

      

      
        	 	Provided however
      that the Borrower may at any time throughout the Security Period
      request in writing from the Bank to provide as substitute security for the
      Vessel, another vessel of same type and size of the Vessel owned by a
      Subsidiary of the Borrower which shall be of the prior written approval of
      the Bank and on terms and conditions acceptable to the
  Bank.

      

       

      
        	
                11.2

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

              

      

      

      
        	
                11.3

              	
                Application
      of funds   Unless the Bank determines otherwise or
      except as is otherwise provided in Clauses 11.5(b) and 11.6(d), all moneys
      received or recovered by the Bank under or pursuant to any of the Security
      Documents shall be applied by the Bank in the following
      manner:

              

      

      

      
        	
                 
      

              	
                (i)

              	
                firstly in or
      towards payment of Expenses and all sums other than principal or interest
      which may be due to the Bank under this Agreement and the Security
      Documents or any of them, at the time of
  application;

              

      

      

      
        	
                 
      

              	
                (ii)

              	
                secondly in or
      towards payment of any default
interest;

              

      

      

      
        	
                 
      

              	
                (iii)

              	
                thirdly in or
      towards payment of any arrears of interest due in respect of the Loan or
      any part thereof;

              

      

      

      
        	
                 
      

              	
                (iv)

              	
                fourthly in or
      towards repayment of the Loan or any part thereof which is due and
      payable; and

              

      

      

      
        	
                 
      

              	
                (v)

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

              

      

      

      
        	
                 
      

              	
                (vi)

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

              

      

      

      
        	
                11.4

              	
                Waiver
      of right of appropriation     The Borrower
      hereby irrevocably waives any rights of appropriation to which it may be
      entitled.

              

      

      

      
        	
                11.5

              	
                Set
      off   Express authority is hereby given by the
      Borrower to the Bank without prejudice to any of the rights of the Bank at
      law contractually or otherwise, at any time and without notice to the
      Borrower:

              

      

      

      
        	
                 
      

              	
                (a)

              	
                to
      apply any credit balance standing upon any account of the Borrower with
      any branch of the Bank and in whatever currency in or towards satisfaction
      of any sum due to the Bank from the Borrower under this Agreement and/or
      any of the other Security
Documents;

              

      

      

      
        
           

        

        
          43

          
            

          

        

        
           

        

      

      
        	
                 
      

              	
                (b)

              	
                in
      the name of the Borrower and/or the Bank to do all such acts and execute
      all such documents as may be necessary or expedient to effect such
      application; and

              

      

      

      
        	
                 
      

              	
                (c)

              	
                to
      combine and/or consolidate all or any accounts in the name of the Borrower
      with the Bank.

              

      

      

      For all
or any of the above purposes authority is hereby given to the Bank to purchase
with the monies standing to the credit of any such account or accounts such
other currencies as may be necessary to effect such application.  The
Bank shall not be obliged to exercise any right given by this
Clause.

      

      
        	
                11.6

              	
                Earnings
      Account-Retention Account

              

      

      

      
        	
                 
      

              	
                (a)

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

              

      

      

      
        	
                 
      

              	
                (i)

              	
                first: in
      payment of any and all sums whatsoever due and payable to the Bank
      hereunder (such sums to be paid in such order as the Bank may in its sole
      discretion elect);

              

      

      

      
        	
                 
      

              	
                (ii)

              	
                second: during
      each month of the Security Period (but by no later than, in the case of
      the first such month, the date falling thirty (30) days after the Drawdown
      Date and, in the case of each subsequent month, the same date of that
      month), the Borrower shall, upon first demand of
      the Bank, cause to be transferred from the Earnings Account to the
      Retention Account out of the aggregate amount of the Earnings of the
      Vessel received in the Earnings Account during the preceding
      month:

              

      

      

      
        	
                 
      

              	
                ·

              	
                one
      third (1/3rd) of the amount of the Repayment Instalment specified in
      Clause 4.1 falling due for payment on the next following Repayment Date;
      and

              

      

      

      
        	
                 
      

              	
                ·

              	
                the
      relevant fraction of the amount of interest on the Loan falling due on the
      next due date for payment of interest under this
  Agreement.

              

      

      

      The
expression “relevant fraction” in relation to an amount of interest on the Loan
falling due for payment means a fraction (which shall be notified by the Bank to
the Borrower at the beginning of each Interest Period) where the numerator is
always one (1) and where the denominator shall always be three (3) except in the
case of an Interest Period of less than three months, in which case the
denominator shall be the number of months comprised in such Interest Period;
and

       

      
        	
                 
      

              	
                (iii)

              	
                third:  any
      balance shall be released to the
Borrower.

              

      

      

      
        
           

        

        
          44

          
            

          

        

        
           

        

      

      
        	
                 
      

              	
                (b)

              	
                If
      the aggregate amount of the Earnings of the Vessel received in the
      Earnings Account is insufficient in any month for the required transfer to
      be made from the Earnings Account to the Retention Account in accordance
      with Clause 11.6(a), the Borrower shall make up the amount of such
      insufficiency on demand from the Bank, but, without prejudice to its right
      to make such demand, the Bank may elect to make up the whole or any part
      of such insufficiency by increasing the amount of any transfer to be made
      in accordance with Clause 11.6(a)(ii) from the aggregate amount of such
      Earnings received in the next or subsequent
  months.

              

      

      

      
        	
                 
      

              	
                (c)

              	
                Until
      the occurrence of an Event of Default (or an event which, with the giving
      of notice and/or lapse of time or other applicable condition, might
      constitute an Event of Default), the Bank shall on each Repayment Date and
      on each due date for the payment of interest under this Agreement apply in
      accordance with the provisions of Clause 8.1 the relevant part of the
      balance then standing to the credit of the Retention Account as shall be
      required to make payment of the Repayment Instalment specified in Clause
      4.1 then due under the terms of this Agreement or payment of interest then
      due under the terms of this Agreement and such transfer shall constitute a
      pro tanto satisfaction of the Borrower’ obligations to pay such repayment
      instalment or interest (as the case may be) then due under this
      Agreement.

              

      

      

      
        	
                 
      

              	
                (d)

              	
                Any
      amounts for the time being standing to the credit of the Retention Account
      shall bear interest at the rate from time to time offered by the Bank to
      its customers for Dollar deposits of similar amounts and for periods
      similar to those for which such amounts are likely to remain standing to
      the credit of the Retention Account.  Such interest shall, provided that
      the foregoing provisions of this Clause 11.6 shall have been complied with
      and provided
      that no Event of Default (or event which, with the giving of notice
      and/or lapse of time or other applicable condition, might constitute an
      Event of Default) shall have occurred, be released to the
      Borrower.

              

      

      

      
        	
                 
      

              	
                (e)

              	
                Nothing
      herein contained shall be deemed to affect the absolute obligation of the
      Borrower to pay interest on and to repay the Loan as provided in Clauses 3
      and 6 or shall constitute a manner or postponement
  thereof.

              

      

      

      
        	
                 
      

              	
                (f)

              	
                The
      Corporate Guarantor hereby irrevocably authorises the Bank to make from
      the Earnings Account any and all above payments and repayments as and when
      the same fall due or at any time thereafter. The Bank shall advise the
      Corporate Guarantor and/or the Borrower in respect of any such payment or
      repayment.

              

      

      

      
        	
                 
      

              	
                (g)

              	
                The
      Borrower, or as the case may be, the Corporate Guarantor  will
      comply with any written requirement of the Bank from time to time as to
      the location or re-location of the Earnings Account and the Retention
      Account (or either of them) and will from time to time enter into such
      documentation as the Bank may reasonably require in order to create or
      maintain in favour of the Bank an Encumbrance in the Earnings Account and
      the Retention Account, all at cost and expense of the
      Borrower.

              

      

      

      
        
           

        

        
          45

          
            

          

        

        
           

        

      

      
        	
                 
      

              	
                (h)

              	
                Each
      of the Borrower and the Corporate Guarantor hereby covenants with the Bank
      that the Earnings Account, the Retention Account and any moneys therein
      shall not be charged, assigned, transferred or pledged nor shall there be
      granted by the Borrower and/or the Guarantor or suffered to arise any
      third party rights over or against the whole or any part of the Earnings
      Account other than in favour of the
Bank.

              

      

      

      
        	
                 
      

              	
                (i)

              	
                The
      Earnings Account shall be operated in accordance with the Bank’s usual
      terms and conditions (full knowledge of which the Corporate Guarantor
      hereby acknowledges) and subject to the Bank’s usual charges levied on
      such accounts and/or transactions conducted on such accounts (as from time
      to time notified by the Bank to the Corporate
  Guarantor).

              

      

      

      
        	
                 
      

              	
                (j)

              	
                The
      Borrower hereby warrants that sufficient monies to meet the next Repayment
      Instalment plus interest thereon will be accumulated each and every month
      in the Retention Account.

              

      

      

      
        	
                 
      

              	
                (k)

              	
                After
      the occurrence of an Event of Default the Bank shall be entitled, but not
      bound, to apply the balance (if any) including any accrued interest
      standing to the credit of the Earnings Account and the Retention Account
      in accordance with the provisions of Clause
  11.3.

              

      

      

      
        	
                 
      

              	
                (l)

              	
                Upon
      payment in full of all principal, interest and all other amounts due to
      the Bank under the terms of this Agreement and the other Security
      Documents, any balance then standing to the credit of the Retention
      Account and/or the Earnings Account shall be released and paid to the
      Borrower or to whomsoever else may be entitled to receive such
      balance.

              

      

      

      
        	
                12

              	
                UNLAWFULNESS,
      INCREASED COSTS

              

      

      

      
        	
                12.1

              	
                Unlawfulness If any change in,
      or introduction of, any law, regulation or regulatory requirement or any
      request of any central bank, monetary, regulatory or other authority or
      any order of any court renders it unlawful or contrary to any such
      regulation, requirement, request or order for the Bank to advance the
      Facility or to maintain or fund the Loan, notice shall be given promptly
      by the Bank to the Borrower whereupon the Facility shall be reduced to
      zero and the Borrower shall be obliged to prepay the Loan in accordance
      with such notice, together with accrued interest thereon to the date of
      prepayment and all other sums payable by the Borrower under this
      Agreement.

              

      

      

      In any
such event the Borrower and the Bank shall (as per the provisions of sub-Clause
3.6) negotiate in good faith (but without incurring any legal obligations) with
a view to agreeing the terms for making the Loan available from another
jurisdiction or providing the Loan from alternative sources.

      

      
        	
                12.2

              	
                Change
      of circumstances   If any change in or in the
      interpretation of any applicable law or regulation, by any government or
      governmental authority or agency, makes it unlawful for the Bank to
      maintain or give effect to its obligations or to claim or receive any
      amount payable to the Bank under this Agreement, then the Bank may serve
      written notice on the Borrower declaring its obligations under this
      Agreement terminated in whole or in part, whereupon the same shall
      terminate forthwith and the Borrower will immediately repay the Loan and
      accrued interest to the date of prepayment together with all other
      Outstanding Indebtedness to the Bank pursuant to the terms of the
      notice.

              

      

      

      
        
           

        

        
          46

          
            

          

        

        
           

        

      

      
        	
                12.3

              	
                Increased
      Cost   If, as a result of (a) any change in or in
      the interpretation of any law, regulation or official directive (whether
      or not having the force of law but, if not having the force of law, with
      which the Bank habitually complies) - including (without limitation) those
      relating to Taxation, capital adequacy, liquidity, reserve assets, cash
      ratio deposits and special deposits or those resulting from the
      implementation of any amendment of the “1988 Basle convergence agreement”
      or any amendatory or substitute agreement thereof (the “Basle II”)- by any
      governmental authority in any country the laws or regulations of which are
      applicable on the Bank, or (b) compliance by the Bank with any request
      from any applicable fiscal or monetary authority (whether or not having
      the force of law but, if not having the force of law, with which the Bank
      habitually complies) or (c) any other set of circumstances affecting the
      Bank:

              

      

      

      
        	
                 
      

              	
                (a)

              	
                the
      cost to the Bank of making the Facility or any part thereof or maintaining
      or funding the Loan is increased or an additional cost on the Bank is
      imposed; and/or

              

      

      

      
        	
                 
      

              	
                (b)

              	
                subject
      the Bank to Taxes or the basis of Taxation (other than Taxes or Taxation
      on the overall net income of the Bank) in respect of any payments to the
      Bank under this Agreement or any of the other Security Documents is
      changed; and/or

              

      

      

      
        	
                 
      

              	
                (c)

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

              

      

      

      
        	
                 
      

              	
                (d)

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

              

      

      

      
        	
                 
      

              	
                (e)

              	
                require
      the Bank to make a payment or forgo a return on or calculated by
      references to any amount received or receivable by it under any of the
      Security Documents is required;
and/or

              

      

      

      
        	
                 
      

              	
                (f)

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

              

      

      

      then and
in each case (subject to Clause 12.6) the Borrower shall pay to the Bank, from
time to time, upon demand, such additional moneys as shall indemnify the Bank
for any increased or additional cost, reduction, payment, foregone return or
loss whatsoever

      

      
        	
                12.4

              	
                Claim
      for increased cost   The Bank will promptly notify
      the Borrower of any intention to claim indemnification pursuant to Clause
      12.3 and such notification will be a conclusive and full evidence binding
      on the Borrower as to the amount of any increased cost or reduction and
      the method of calculating the same and the Borrower shall be allowed to
      rebut such evidence by any means of evidence save for
      witness.  A claim under Clause 12.3 may be made at any time and
      must be discharged by the Borrowers within seven (7) days of
      demand.  It shall not be a defence to a claim by the Bank under
      this Clause 12.3 that any increased cost or reduction could have been
      avoided by the Bank.  Any amount due from the Borrower under
      Clause 12.3 shall be due as a separate debt and shall not be affected by
      judgement being obtained for any other sums due under or in respect of
      this Agreement.

              

      

      

      
        
           

        

        
          47

          
            

          

        

        
           

        

      

      
        	
                12.5

              	
                Option
      to prepay   If any
      additional amounts are required to be paid by the Borrower to the Bank by
      virtue of Clause 12.3, the Borrower shall be entitled, on giving the Bank
      not less than fourteen (14) days prior notice in writing, to prepay the
      Loan and accrued interest thereon, together with all other Outstanding
      Indebtedness, on the next Repayment Date. Any such notice, once given,
      shall be irrevocable.

              

      

      

      
        	
                12.6

              	
                Exception Nothing
      in Clause 12.3 shall entitle the Bank to receive any amount in respect of
      compensation for any such liability to Taxes, increased or additional
      cost, reduction, payment, foregone return or loss to the extent that the
      same is subject of an additional payment under Clause
  5.3.

              

      

      

      13.           GUARANTEE

      

      
        	
                13.1

              	
                In
      consideration of the Bank's obligations under this Agreement, the
      Corporate Guarantor as primary obligor and not merely as surety, hereby
      jointly and severally with any other guarantor irrevocably and
      unconditionally guarantee to the Bank the full, complete and prompt
      performance by the Borrower of all its obligations under this Agreement
      and the Security Documents and the due and punctual payment to the Bank of
      all sums payable now or in the future by the Borrower under this Agreement
      and/or the Security Documents as and when the same shall become due,
      whether by acceleration or otherwise and jointly, severally and
      unconditionally undertake with the Bank that whenever the Borrower fails
      to make payment when due of any sum whatsoever under this Agreement and/or
      the Security Documents, the Corporate Guarantor shall, upon demand, pay
      all sums in respect of which default has been made in accordance with the
      provisions of this Agreement.  The liability of the Corporate
      Guarantor shall be to pay to the Bank the full amount from time to time
      owing to the Bank by the Borrower under the Agreement and/or the Security
      Documents and the Corporate Guarantor confirms and agrees (without
      prejudice to Clause 13.5) that the liability of the Corporate Guarantor
      hereunder shall not be discharged or diminished by any failure by any
      other guarantor to execute its or his guarantee or any release by the Bank
      of any other guarantor from its obligations
  thereunder.

              

      

      

      
        	
                13.2

              	
                Any
      statement of account of the Borrower signed as correct by an officer of
      the Bank, showing the amount owing by the Borrower under this Agreement
      and the Security Documents shall, in the absence of manifest error, be
      binding conclusive and full evidence on and against the Corporate
      Guarantor.

              

      

      

      
        	
                13.3

              	
                This
      guarantee is to be a continuing guarantee and shall remain in full force
      and effect until all moneys now or hereafter payable by the Borrower under
      this Agreement and the Security Documents shall have been paid or
      satisfied in full, and is in addition to and not in substitution for, and
      shall not be prejudiced or affected by, any other security or guarantee
      now or hereafter held by the Bank for the payment of such
      moneys.

              

      

      

      
        	
                13.4

              	
                The
      Corporate Guarantor shall not be exonerated and its liability hereunder
      shall not be lessened or impaired by any time, indulgence or relief being
      given by the Bank to the Borrower or any other guarantor or any other
      person, by any amendment of or supplement to this Agreement or any of the
      Security Documents or any other document, by the taking, variation,
      compromise, renewal or release of or refusal or neglect to perfect or
      enforce any right, remedies or securities against the Borrower, the
      Corporate Guarantor or any other guarantor or any other person or by
      anything done or omitted which but for this provision might operate to
      exonerate the Corporate Guarantor or the Borrower or any other
      guarantor.

              

      

      

      
        
           

        

        
          48

          
            

          

        

        
           

        

      

      
        	
                13.5

              	
                The
      obligations of the Corporate Guarantor hereunder shall not be affected by
      any legal limitation, disability, incapability (including without
      limitation death, unsoundness of mind, bankruptcy, administration,
      receivership, liquidation and dissolution) or other circumstances relating
      to the Borrower, any other guarantor or any other person, whether known or
      not to the Bank, by any invalidity in or irregularity or unenforceability
      of the obligations of the Borrower, any other guarantor or any other
      person under this Agreement or any of the Security Documents or otherwise
      or by any change in the constitution of, or any amalgamation or
      reconstruction of the Borrower, any other guarantor, the Bank or any other
      person.

              

      

      

      
        	
                13.6

              	
                The
      Corporate Guarantor hereby waives all rights the Corporate Guarantor may
      have of first requiring the Bank to proceed against or enforce any
      guarantee or security of, or claim payment from, the Borrower any other
      Guarantor or any other person before enforcing this Guarantee and no
      action taken or omitted by the Bank in connection with any other guarantee
      or security or other means of payment in respect of the Borrower's
      obligations under this Agreement shall discharge, reduce, prejudice or
      affect the liability of the Corporate Guarantor under this Guarantee nor
      shall the Bank be obliged to apply any money or other property received in
      consequence of any enforcement or realisation of any other guarantee or
      security or other means of payment in reduction of the liabilities of the
      Borrower under this Agreement and the other Security
      Documents.

              

      

      

      
        	
                13.7

              	
                Until
      all monies, obligations and liabilities due, owing or incurred by the
      Borrower to the Bank under this Agreement and the Security Documents have
      been paid or discharged in full, the Corporate Guarantor agrees not to
      exercise or enforce any of its rights of subrogation and indemnity or
      contribution against the Borrower and agrees not to claim any set-off or
      counter-claim against the Borrower or to claim or prove in competition
      with the Bank in the event of bankruptcy, insolvency or liquidation of any
      guarantor or the Borrower on terms that the benefit of such proof and of
      all moneys received by it in respect thereof shall be held on trust for
      the Bank and applied in such manner as the Bank shall deem appropriate or
      have any benefit of or any share in any other guarantee or security now or
      hereafter held by the Bank.  Any moneys received by the Bank
      from the Corporate Guarantor may be placed to the credit of a suspense
      account with a view to preserving any of its respective rights to prove
      for the whole of its claims against the
  Borrower.

              

      

      

      
        	
                13.8

              	
                Any
      release settlement or discharge between the Bank and the Corporate
      Guarantor shall be conditional upon no security or payment to the Bank by
      the Borrower or any other guarantor or any other person being avoided or
      set aside or ordered to be refunded or reduced by virtue of any provision
      or enactment relating to bankruptcy, insolvency or liquidation for the
      time being in force or for any other reason whatsoever and the Bank shall
      be entitled to recover from the Corporate Guarantor the value which the
      Bank have placed upon such security or the amount of any such payment as
      if such settlement or discharge had not occurred and any such payment has
      not been made.

              

      

      

      
        	
                13.9

              	
                The
      Corporate Guarantor agrees to pay interest (to the extent that such
      interest is not paid by the Borrower) from the date upon which the
      Borrower fails to make payment under this Agreement or any of the Security
      Documents (or, if earlier, from the
date

              

      

      

      
        
           

        

        
          49

          
            

          

        

        
           

        

      

      when the
legal liability of the Borrower to pay interest under this Agreement ceased by
reason of provisions or enactments relating to bankruptcy, insolvency,
liquidation or otherwise) until payment has been effected in full of all moneys,
obligations and liabilities hereby guaranteed, such interest to be payable
before and after judgement at such rate as would at that time be equal to the
rate of interest payable under this Agreement.

      

      
        	
                13.10

              	
                The
      Corporate Guarantor has not taken or received, and the Corporate Guarantor
      hereby undertakes that until all monies, obligations and liabilities due,
      owing or incurred by the Borrower under this Agreement and the Security
      Documents have been paid in full, the Corporate Guarantor will not take or
      receive, any security or lien from the Borrower or any other person in
      respect of the granting of this Guarantee or for any liability
      whatsoever.

              

      

      

      
        	
                13.11

              	
                In
      addition to the Guarantee contained herein and separate therefrom the
      Corporate Guarantor hereby irrevocably agrees to indemnify the Bank
      against all costs, charges and expenses (including legal expenses on a
      full indemnity basis) which the Bank may reasonably incur in proceeding
      against the Borrower and/or the Corporate
  Guarantor.

              

      

      

      
        	
                13.12

              	
                Any
      admission of debt by the Borrower will be binding automatically on the
      Corporate Guarantor.

              

      

      

      
        	
                13.13

              	
                Without
      prejudice to the generality of any waivers included in the preceding
      Clauses the Corporate Guarantor hereby specifically waives without
      reservation, absolutely and
unconditionally:

              

      

       

      
        	 	(i)	the benefit
      of discussion and any other rights, benefits or privileges granted to the
      Corporate Guarantor by any applicable law;
and

      

       

      
        	
                 
      

              	
                (ii)

              	
                any
      right to object to any payment to the Bank resulting from any counter
      claim which the Corporate Guarantor might have against the Bank;
      and

              

      

      

      
        	
                 
      

              	
                (iii)

              	
                any
      right to object to any payment, as a result of errors or omissions made by
      the Bank, which caused the Corporate Guarantor to lose any right or
      recourse against the Borrower or any third party;
  and

              

      

      

      
        	
                 
      

              	
                (iv)

              	
                any
      other right, benefit or privilege which the Corporate Guarantor has under
      the law and it subject to waiver.

              

      

      

      
        	
                13.14

              	
                As
      a separate and independent stipulation, the Corporate Guarantor agrees
      that if any purported obligation or liability of the Borrower which would
      have been the subject of this Guarantee had it been valid and enforceable
      is not or ceases to be valid or enforceable against the Borrower on any
      ground whatsoever whether or not known to the Bank (including, without
      limitation, any irregular exercise or absence of any corporate power or
      lack of authority of, or breach of duty by, any person purporting to act
      on behalf of the Borrower or any legal or other limitation or any
      disability or incapacity or any change in the constitution of the
      Borrower) the Corporate Guarantor shall, nevertheless, be liable to the
      Bank in respect of the purported obligation or liability as if the same
      were fully valid and enforceable and the Corporate Guarantor were the
      principal debtor in respect thereof.  The Corporate Guarantor
      hereby agrees to keep the Bank fully indemnified on demand against all
      damages, losses, costs, and expenses arising from any failure of the
      Borrower to perform or discharge any such purported obligation or
      liability.

              

      

      

      
        
           

        

        
          50

          
            

          

        

        
           

        

      

      
        	
                13.15

              	
                If,
      contrary to this Guarantee, the Corporate Guarantor takes or receives the
      benefit of any security or receives or recovers any money or other
      property, such security, money or other property shall be held on trust
      for the Bank and shall be delivered to the Bank on
  demand.

              

      

      

      
        	
                13.16

              	
                The
      Corporate Guarantor agrees to be bound by this Guarantee notwithstanding
      that any other person intended to execute or to be bound by any other
      guarantee or assurance under or pursuant to the Agreement may not do so or
      may not be effectually bound and notwithstanding that such other guarantee
      or assurance may be determined or be or become invalid or unenforceable
      against any other person, whether or not the deficiency is known to the
      Bank.

              

      

      

      
        	
                14.

              	
                GENERAL

              

      

      

      
        	
                14.1

              	
                Assignment,
      Participation, Change of Lending
Branch

              

      

      

      
        	
                 
      

              	
                (a)

              	
                Binding
      Effect This Agreement
      shall be binding upon and inure to the benefit of the Bank and the
      Borrower and their respective successors and
  assigns.

              

      

      

      
        	
                 
      

              	
                (b)

              	
                No
      Assignment by the Borrower The
      Borrower and any other parties to the Security Documents may not assign
      any rights and/or obligations under this Agreement or any of the other
      Security Documents or any documents executed pursuant to this Agreement
      and/or the other Security
Documents.

              

      

      

      
        	
                 
      

              	
                (c)

              	
                Assignment
      by the Bank The Bank
      may at any time (following consultation with the Borrower and adequate
      notice being given to the Borrower and the other Security Parties but
      without the consent of the Borrower), assign, transfer, or offer
      participation to any Subsidiary or holding company of the Bank or any
      Subsidiary of such holding company or (with the consent of the Borrower,
      such consent not to be unreasonably withheld) to any other bank or
      financial institution currently active in ship finance business, in whole
      or in part, or in any manner dispose of all or any of its rights and/or
      obligations arising or accruing under this Agreement or any of the other
      Security Documents or any documents executed pursuant to this Agreement
      and/or the other Security
Documents.

              

      

      

      
        	
                 
      

              	
                (d)

              	
                Documentation If the
      Bank assigns, transfers or in any other manner grants participation in
      respect of all or any part of its rights or benefits or transfers all or
      any of its obligations as provided in this Clause 14.1 the Borrower
      undertakes, immediately on being requested to do so by the Bank, to enter
      into and procure that each Security Party enters into (at the Bank’s
      expense) such documents as may be necessary or desirable to transfer to
      the assignee, transferee or participant all or the relevant part of the
      interest of the Bank in the Security Documents and all relevant references
      in this Agreement to the Bank shall thereafter be construed as a reference
      to the Bank and/or assignee, transferee or participant of the Bank to the
      extent of their respective interests and, in the case of a transfer of all
      or part of the obligations of the Bank, the Borrower shall thereafter look
      only to the assignee, transferee or participant
  in

              

      

      

      
        
           

        

        
          51

          
            

          

        

        
           

        

      

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

      

      
        	
                 
      

              	
                (e)

              	
                Disclosure
      of information The Bank
      may without the consent of the Borrower, disclose (on a confidential
      basis) to a prospective assignee, substitute or transferee or to any other
      person who may propose entering into contractual relations with the Bank
      in relation to this Agreement such information about the Borrower and the
      other Security Parties as the Bank shall consider
    appropriate.

              

      

      

      
        	
                 
      

              	
                (f)

              	
                Change
      of Lending Branch The Bank
      shall be at liberty to transfer the Loan to any branch or branches, and
      upon notification of any such transfer, the word “Bank” in this Agreement
      and in the other Security Documents shall mean the Bank, acting through
      such branch or branches and the terms and provisions of this Agreement and
      of the other Security Documents shall be construed
      accordingly.

              

      

      

      
        	
                14.2

              	
                Cumulative
      Remedies The
      rights and remedies of the Bank contained in this Agreement and the other
      Security Documents are cumulative and not exclusive of each other nor of
      any other rights or remedies conferred by
law.

              

      

      

      
        	
                14.3

              	
                Waivers   No delay
      or omission by the Bank to exercise any right, remedy or power vested in
      the Bank under this Agreement and/or the other Security Documents or by
      law shall impair such right or power, or be construed as a waiver of, or
      as an acquiescence in any default by the Borrower and/or any other
      Security Party, nor shall any single or partial exercise by the Bank of
      any power, right or remedy preclude any other or further exercise thereof
      or the exercise of any other power, right or remedy.  In the
      event of the Bank on any occasion agreeing to waive any such right, remedy
      or power, or consent to any departure from the strict application of the
      provisions of this Agreement or of any Security Document, such waiver
      shall not in any way prejudice or affect the powers conferred upon the
      Bank under this Agreement and the other Security Documents or the right of
      the Bank thereafter to act strictly in accordance with the terms of this
      Agreement and the other Security Documents.  No modification or
      waiver by the Bank of any provision of this Agreement or of any of the
      other Security Documents nor any consent by the Bank to any departure
      therefrom by any Security Party shall be effective unless the same shall
      be in writing and then shall only be effective in the specific case and
      for the specific purpose for which given.  No notice to or
      demand on any such party in any such case shall entitle such party to any
      other or further notice or demand in similar or other
      circumstances.

              

      

      

      
        	
                14.4

              	
                Integration
      of Terms This
      Agreement contains the entire agreement of the parties and its provisions
      supersede the provisions of the Commitment Letter (save for the provisions
      thereof which relate to fees) and any and all other prior correspondence
      and oral negotiation by the parties in respect of the matters regulated by
      this Agreement.

              

      

      

      
        
           

        

        
          52

          
            

          

        

        
           

        

      

      
        	
                14.5

              	
                Amendments
       This
      Agreement and any other Security Documents shall not be amended or varied
      in their respective terms by any oral agreement or representation or in
      any other manner other than by an instrument in writing of even date
      herewith or subsequent hereto executed by or on behalf of the parties
      hereto or thereto.

              

      

      

      
        	
                14.6

              	
                Invalidity
      of Terms In the
      event of any provision contained in one or more of this Agreement, the
      other Security Documents and any other documents executed pursuant hereto
      or thereto being invalid, illegal or unenforceable in any respect under
      any applicable law in any jurisdiction whatsoever, such provision shall be
      ineffective as to the jurisdiction only without affecting the remaining
      provisions hereof or thereof.  If, however, this event becomes
      known to the Bank prior to the Drawdown of the Facility or of any part
      thereof the Bank shall be entitled to refuse drawdown until this
      discrepancy is remedied. Where, however, the provisions of any such
      applicable law may be waived, they are hereby waived by the parties hereto
      to the full extent permitted by the law to the intent that this Agreement,
      the other Security Documents and any other documents executed pursuant
      hereto or thereto shall be deemed to be valid binding and enforceable in
      accordance with their respective
terms.

              

      

      

      
        	
                14.7

              	
                Inconsistency
      of Terms In the
      event of any inconsistency between the provisions of this Agreement and
      the provisions of a Security Document the provisions of this Agreement
      shall prevail.

              

      

      

      
        	
                14.8

              	
                Language
      and genuineness of documents

              

      

      

      
        	
                 
      

              	
                (a)

              	
                Language    All
      certificates, instruments and other documents to be delivered under or
      supplied in connection with this Agreement or any of the other Security
      Documents shall be in the Greek or the English language (or such other
      language as the Bank shall agree) or shall be accompanied by a certified
      Greek translation upon which the Bank shall be entitled to
      rely.

              

      

      

      
        	
                 
      

              	
                (b)

              	
                Certification
      of documents   Any
      copies of documents delivered to the Bank shall be duly certified as true,
      complete and accurate copies by appropriate authorities or legal counsel
      practising in Greece or otherwise as it will be acceptable to the Bank at
      the sole discretion of the Bank.

              

      

      

      
        	
                 
      

              	
                (c)

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

              

      

      

      
        	
                14.9

              	
                Notices

              

      

      

      
        	
                 
      

              	
                (a)

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

              

      

       

      
        	
                 
      

              	
                (i)

              	
                be
      in writing delivered personally or be first-class prepaid letter (airmail
      if available), or shall be served through a process server or subject to
      Clause 10.8 by or fax;

              

      

      

      
        	
                 
      

              	
                (ii)

              	
                be
      deemed to have been received, subject as otherwise provided in this
      Agreement or the relevant Security Document, in the case of a telex, at
      the time of despatch with confirmed answerback of the
      addressee

              

      

      

      
        
           

        

        
          53

          
            

          

        

        
           

        

      

      appearing
at the beginning and end of the communication, in the case of fax, at the time
of dispatch as per transmission report (provided that if the date of despatch is
not a business day in the country of the addressee it shall be deemed to have
been received at the opening of business on the next such business day), in the
case of a cable 24 hours after despatch and in the case of a letter when
delivered or served personally or five (5) days after it has been put into the
post; and

      

      
        	
                 
      

              	
                (iii)

              	
                be
      sent:

              

      

      

      
        	
                 
      

              	
                if
      to be sent to any Security Party, to:

                 

              

      

      
        	 
      	
                c/o
      Allseas Marine S.A.,

                15
      Karamanli Ave.,

                Voula,
      GR 166 73, Attiki, Greece,

                Fax
      No.:  +30210

                Attention:
      Mr.

                 

              
	 
      	
                if
      to be sent to the Bank, to

                 

              
	 
      	
                FBB-First
      Business Bank S.A.

                62,
      Notara and Sotiros Dios streets,

                185
      35 Piraeus, Greece

                Fax
      No. (+30 210) 4132 058

                Attention:
      The Manager

                 

              

      

       

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

      

      

      
        	
                14.10

              	
                Confidentiality

              

      

      

      
        	
                 
      

              	
                (a)

              	
                Each
      of the parties hereto agree and undertake to keep confidential any
      documentation and any confidential information concerning the business,
      affairs, directors or employees of the other which comes into its
      possession during this Agreement and not to use any such documentation,
      information for any purpose other than for which it was
      provided.

              

      

      

      
        	
                 
      

              	
                (b)

              	
                The
      Borrower acknowledges and accepts that the Bank may be required by law or
      that it may be appropriate for the Bank to disclose information and
      deliver documentation relating to the Borrower and the transactions and
      matters in relation to this Agreement and/or the other Security Documents
      to governmental or regulatory agencies and
  authorities.

              

      

      

      
        	
                 
      

              	
                (c)

              	
                The
      Borrower acknowledges and accepts that in case of occurrence of any of the
      Events of Default the Bank may disclose information and deliver
      documentation relating to the Borrower and the transactions and matters in
      relation to this Agreement and/or the other Security Documents to third
      parties to the extend that this is necessary for the enforcement or the
      contemplation of

              

      

      

      
        
           

        

        
          54

          
            

          

        

        
           

        

      

      enforcement
of the Bank’s rights or for any other purpose for which in the opinion of the
Bank, such disclosure should be useful or appropriate for the interests of the
Bank or otherwise and the Borrower expressly authorise any such disclosure and
delivery.

      

      
        	
                 
      

              	
                (d)

              	
                The
      Borrower acknowledges and accepts that the Bank may be prohibited or it
      may be inappropriate for the Bank to disclose information to the Borrower
      by reason of law or duties of confidentiality owed or to be owed to other
      persons.

              

      

      

      
        	
                 
      

              	
                (e)

              	
                The
      Borrower hereby grants its consent to the communication by the Bank for
      process in the meaning of law 2472/97 of its personal data contained in
      this Agreement, the Security Documents, in the Earnings Account and any
      accounts opened in their names with the Bank for onwards communication
      thereof to the inter-banking database record called “Teiresias” kept and
      solely used by banks and financial institutions. The Borrower is entitled
      at any relevant time throughout the Security Period to revoke its consent
      given hereunder by written notice addressed to the Bank and the Registrar
      of “Teiresias A.E.” at 2, Alamanas street, 15125 Maroussi, Athens,
      Greece.

              

      

      

      
        	
                15

              	
                APPLICABLE LAW AND
      JURISDICTION

              

      

      

      
        	
                15.1

              	
                Law

              

      

      

      
        	
                 
      

              	
                (a)

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

              

      

      

      
        	
                 
      

              	
                (b)

              	
                For
      the purposes of enforcement in Greece, it is hereby expressly agreed that
      English law as the governing law of the Facility Agreement and the
      Corporate Guarantee incorporated in Clause 13 hereof will be proved by an
      affidavit of a solicitor from an English law firm to be appointed by the
      Bank and the said affidavit shall constitute full and conclusive evidence
      binding on the Borrower and the Corporate Guarantor but the Borrower and
      the Corporate Guarantor shall be allowed to rebut such evidence save for
      witness.

              

      

      

      
        	
                15.2

              	
                Submission
      to Jurisdiction

              

      

      

      
        	
                 
      

              	
                (a)

              	
                For
      the exclusive benefit of the Bank, the Borrower and the Corporate
      Guarantor hereby (i) irrevocably submits to the non exclusive jurisdiction
      of the Courts of Piraeus in Greece and (ii) agrees that any summons, writ,
      judicial or extra-judicial notice, protest, payment order, order for
      payment, order for enforcement, announcement of claim or other legal
      process issued against it in Greece shall be served upon the Process
      Agent, who is hereby authorised to accept such service, which shall be
      deemed to be good service on the Borrower and the Corporate
      Guarantor.

              

      

      

      
        	
                 
      

              	
                (b)

              	
                The
      submission to the jurisdiction of the Courts of Piraeus shall not (and
      shall not be construed so as to) limit the right of the Bank to take
      proceedings against the Borrower and/or the Corporate Guarantor in the
      courts of any other jurisdiction nor shall the taking of proceedings in
      any one or more jurisdictions preclude the taking of proceedings in any
      other jurisdiction, whether concurrently or
not.

              

      

      

      
        
           

        

        
          55

          
            

          

        

        
           

        

      

      
        	
                 
      

              	
                (c)

              	
                The
      parties further agree that subject to sub-Clause 15.2(b) the Courts of
      Piraeus shall have exclusive jurisdiction to determine any claim which the
      Borrower may have against the Bank arising out of or in connection with
      this Agreement and each of the Borrower and the Corporate
      Guarantor hereby waives any objections to proceedings with respect
      to this Agreement in such courts on the grounds of venue or inconvenient
      forum.

              

      

      

      
        	
                15.2

              	
                Proceedings
      in any other country:  Clause 15.2 is for the exclusive
      benefit of the Bank which reserves the
rights:

              

      

      

      
        	
                 
      

              	
                (a)

              	
                to
      commence proceedings in relation to any matter which arises out of or in
      connection with this Agreement in the courts of any country other than
      Greece and which have or claim jurisdiction to that matter;
      and

              

      

      

      
        	
                 
      

              	
                (b)

              	
                to
      commence such proceedings in the courts of any such country or countries
      concurrently with or in addition to proceedings in Greece or without
      commencing proceedings in Greece.

              

      

      

      
        	
                15.3

              	
                Proceedings
      in any other country If it is decided
      by the Bank that any such proceedings should be commenced in any other
      country, then any objections as to the jurisdiction or any claim as to the
      inconvenience of the forum is hereby waived by the Borrower and the
      Corporate Guarantor and it is agreed and undertaken by the Borrower and
      the Corporate Guarantor to instruct lawyers in that country to accept
      service of legal process and not to contest the validity of such
      proceedings as far as the jurisdiction of the court or courts involved is
      concerned and the Borrower and the Corporate Guarantor agrees that any
      judgment or order obtained in an English court shall be conclusive and
      binding on the Borrower and the Corporate Guarantor and shall be
      enforceable without review in the courts of any other
      jurisdiction.

              

      

      

      
        	
                15.4

              	
                Process
      Agent Mrs.
      Maria Stefanou, an attorney-at-law, presently of Skoufa 3 street, Drafi,
      Athens, Greece, is hereby appointed by the Borrower and the Corporate
      Guarantor as agent to accept service in Greece (hereinafter “Process Agent for Hellenic
      Proceedings”) upon whom any judicial process in respect of
      proceedings in Greece may be served and any process notice, judicial or
      extra-judicial request, demand for payment, payment order, foreclosure
      proceedings, notarial announcement of claim, notice, request, demand or
      other communication under this Agreement or any of the Security
      Documents.  In the event that the Process Agent for Hellenic
      Proceedings (or any substitute process agent notified to the Bank in
      accordance with the foregoing) cannot be found at the address specified
      above (or, as the case may be, notified to the Bank), which will be
      conclusively proved by a deed of a process server to the effect that the
      Process Agent for Hellenic Proceedings was not found at such address, any
      process notice, judicial or extra-judicial request, demand for payment,
      payment order, foreclosure proceedings, notarial announcement of claim or
      other communication to be sent to any Security Party may be validly
      notified in accordance with the relevant provisions of the Hellenic Code
      on Civil Procedure.

              

      

      

      In this
Clause 15 “proceedings” means proceedings of any kind, including an application
for a provisional or protective measure.

      

      

      

      

      

      
        
           

        

        
          56

          
            

          

        

        
           

        

      

      

      SCHEDULE
1

      

      Form of
Drawdown Notice

      

      (referred to in Clause
3.1)

      

      To:           FBB-First
Business Bank S.A.

      
        	
                 
      

              	
                62,
      Notara and Sotiros Dios streets,

              

      

      
        	
                 
      

              	
                185
      35 Piraeus, Greece

              
	 	(the
      "Bank")

      

       

      Date: ........ .........., .......

      

      Dear
Sirs,

      
        	
                 

                Credit
      Facility Agreement dated .......... April, 2008 (the “Agreement”) for a
      floating interest rate revolving credit facility of US$30,000,000 made
      between (A) FBB-First Business Bank S.A, (B) PARAGON SHIPPING INC (the
      “Borrower”) and (C) CAMELIA NAVIGATION S.A.. (the “Corporate
      Guarantor”)

              

      

      

      

      (All
capitalised terms used herein and not defined herein shall have the meanings
given to them in the Agreement).

      

      We refer
to the Agreement and hereby:

      

      
        	
                (1)

              	
                give
      you notice that we wish to draw an Advance in the sum of $..........
      .......... (.......... .......... .......... .......... ..........
      .......... Dollars) on .......... .......... .......... ....... for value same
      date.  The funds should be paid for the purpose(s) set out in
      Clause 1.1 of the Agreement, as
follows:

              

      

      

      
        	
                (2)

              	
                select
      an Interest Period of .......... .......... months in respect of such
      Advance.

              

      

      

      
        	
                (3)

              	
                confirm
      that:

              

      

      

      
        	
                 
      

              	
                (a)

              	
                no
      event has occurred and is continuing which constitutes, or which with the
      giving of notice or lapse of time or both would constitute an Event of
      Default under the Agreement;

              

      

      

      
        	
                 
      

              	
                (b)

              	
                the
      representations and warranties contained in Clause 7 of the Agreement
      (updated mutatis mutandis to the date hereof) are true and correct as if
      made at the date hereof; and

              

      

      

      
        	
                 
      

              	
                (c)

              	
                the
      borrowing to be effected by the said Advance will be within our corporate
      powers, has been validly authorised by appropriate corporate action and
      will not cause any limit in our borrowings (whether imposed by statute,
      regulations, agreements or otherwise) to be
  exceeded.

              

      

      

      Yours
faithfully,

      

      THE
BORROWER

      

      For and
on behalf of

      

      
        
           

        

        
          57

          
            

          

        

        
           

        

      

      PARAGON
SHIPPING INC.

      

      

      

      By:________________________

      

      Name:

      

      Tittle:        Attorney-in-fact

      

      
        
           

        

        
          58

          
            

          

        

        
           

        

      

      

      

      SCHEDULE
2

      

      INSURANCE
REQUIREMENTS

      

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

      

      
        	
                1.

              	
                DEFINITIONS

              

      

      

      
        	
                1.1

              	
                Words
      and expressions used in this Schedule shall have the meanings given
      thereto in the agreement to which this Schedule is attached and the
      following expressions shall have the meanings listed
  below:

              

      

      

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

      

      “Excess risks” means the
proportion (if any) of claims for general average, salvage and salvage charges
and under the ordinary collision clause not recoverable in consequence of the
value at which a vessel is assessed for the purpose of such claims exceeding its
insured value;

      

      “Insurance Requirements” means
all the terms and conditions in this Schedule or any other provision concerning
Insurances in any other Clause of the agreement to which this Schedule is
attached and all such terms and conditions are an integral part of the agreement
to which they are attached;

      

      “Insurances” in respect of a
vessel means all policies and contracts of insurance (including, without
limitation, all entries of such vessel in a protection and indemnity, war risks
or other mutual insurance association) which are from time to time in place or
taken out or entered into by or for the benefit of the Owner owning such vessel
(whether in the sole name of its Owner or in the joint names of its Owner and
the Bank) in respect of such vessel and its earnings or otherwise howsoever in
connection with such vessel and all benefits of such policies and/or contracts
(including all claims of whatsoever nature and return of premiums);

      

      “Loss Payable Clauses” means
the provisions regulating the manner of payment of sums receivable under the
Insurances which are to be incorporated in the relevant insurance document, such
Loss Payable Clauses to be in the forms set out in paragraph 4 of this Schedule,
or such other form as the Bank may from time to time agree in
writing;

      

      “Owner” means the owner of a
vessel which should be insured and be maintained insured pursuant to these
Insurance Requirements in accordance with any agreement to which these Insurance
Requirements are attached;

      

      “Protection and Indemnity
Risks” means the usual risks covered by an English protection and
indemnity association including the proportion (if any) not recoverable in the
case of collision under the ordinary collision clause; and

      

      
        
           

        

        
          59

          
            

          

        

        
           

        

      

      “War risks” includes the risk
of mines and all risks excluded from the standard form of English marine policy
by the free of capture and seizure clause.

      

      
        	
                2.

              	
                INSURANCES TO BE
      EFFECTED AND MAINTAINED

              

      

      

      
        	
                2.1

              	
                The
      insurance which must be effected and maintained in accordance with the
      provisions of the agreement to which these Insurance Requirements are
      attached should be in the name of the Owner and as
  follows:

              

      

      

      
        	
                 
      

              	
                (a)

              	
                Hull and
      Machinery

              

      

      

      insurance
against fire and usual marine risks on an agreed value basis, on a full
cover/all risks basis according to English or American Hull Clauses with a
reasonable deductible and upon such terms as shall from time to time be approved
in writing by the Bank; and

      

      
        	
                 
      

              	
                (b)

              	
                War Risks
      Insurance

              

      

      

      insurance
against War risks according to the London Institute War Clauses, on an agreed
value basis attaching also the so called war protection clauses.  In
this case crew war liabilities insurance shall also have to be effected
separately; and

      

      
        	
                 
      

              	
                (c)

              	
                Increased
      Value

              

      

      

      increased
Value insurance (Total Loss only, including Excess Liabilities) as per the
applicable English or American Institute Clauses (Disbursement/Increased Value/
Excess Liabilities) up to an amount not exceeding the Insurance Amount specified
in Clause 3.3 below; and

      

      
        	
                 
      

              	
                (d)

              	
                Protection and
      Indemnity

              

      

      

      insurance
against protection and indemnity risks for the full value and tonnage of the
vessel insured (as approved in writing by the Bank) according to the relevant
rules and deductibles provided thereof for all risks including Pollution (and if
the vessel is passenger ship including liability towards third parties which is
not covered by the War Risk Insurance) insured by P+I Clubs, members of the
International Group of Protection and Indemnity Associations.  If any
risks are excluded or the deductibles as provided by the rules have been
altered, the written consent of the Bank shall have to be previously
required.  In case that crew liabilities (including without limitation
loss of life, injury or illness) have been entirely excluded from the
association cover or insured on a deductible excess basis, (always subject to
the prior written consent of the Bank) such liabilities shall have to be further
insured separately with other underwriters acceptable to the Bank and upon such
terms as shall from time to time be approved in writing by the Bank;
and

      

      
        	
                 
      

              	
                (e)

              	
                FD & D
      Insurance

              

      

      

      (If so
required by the Bank, at its absolute discretion, at any time throughout the
Security Period) Freight, Demurrage and Defence insurance as per the terms and
conditions of a mutual club or association acceptable to the Bank;
and

      

      
        
           

        

        
          60

          
            

          

        

        
           

        

      

      

      

      
        	
                 
      

              	
                (f)

              	
                Pollution Liability
      Insurance

              

      

      

      an extra
insurance in respect of excess Oil Pollution Liability (including -if the vessel
insured is a tanker- the Civil Liability Convention certificate) including full
cover of pollution risks for the amount up to the maximum commercially available
limit and upon such terms as shall be commercially available and accepted by the
Bank; and

      

      
        	
                 
      

              	
                (g)

              	
                USA Pollution Risk
      Insurance

              

      

      

      (in case
that the vessel is scheduled to operate within or nearby USA jurisdiction) to
cover and keep such vessel covered with an extra insurance in respect of oil
pollution liability for an amount and upon such terms as required by
international and national law regulations and shall from time to time be
required by the Bank; and

      

      
        	
                 
      

              	
                (h)

              	
                Mortgagee’s Interest
      Insurance - Mortgagee’s Additional Perils (Pollution) Interest
      Insurance

              

      

      

      Mortgagees’
Interest
Insurance and Mortgagee’s Additional Perils (Pollution) Interest Insurance (if
so required by the Bank which shall be effected by the Bank in its name but at
the expense of the Borrower and each in an amount equal to 125% of the Loan or
other similar insurance in respect of any pollution claims against the Vessel
for 360 days or upon such terms as shall from time to time be determined by the
Bank; and

      

      
        	
                 
      

              	
                (i)

              	
                Other
      Insurance

              

      

      

      insurance
in respect of such other matters of whatsoever nature and howsoever arising in
respect of which the Bank would at any time require at its discretion the vessel
to be insured.

      

      
        	
                3.

              	
                TERMS AND OBLIGATIONS
      FOR EFFECTING AND MAINTAINING
INSURANCES

              

      

      

      
        	
                3.1

              	
                The
      Insurances to be effected in such currency as the Bank may approve and
      through the Approved Brokers (other than the mortgagee’s interest
      insurance which shall be effected through brokers nominated by the Bank)
      and with such insurance companies and/or underwriters as shall from time
      to time be approved in writing by the Bank, provided however that the
      insurances against war risks, protection and indemnity, FD & D cover
      or other mutual insurance risks may be effected by the entry of the vessel
      with such war, protection and indemnity or other mutual insurance
      associations as shall from time to time be approved in writing by the
      Bank.

              

      

      

      
        	
                3.2

              	
                The
      Insurances to be effected and maintained free of cost and expense to the
      Bank and in the sole name of the Owner or, if so required by the Bank, in
      the joint names of the Owner and the Bank (but without liability on the
      part of the Bank for premiums or calls).  All insurances to be
      in form and substance and under terms satisfactory to the Bank and with
      insurers acceptable to the Bank.

              

      

      

      
        
           

        

        
          61

          
            

          

        

        
           

        

      

      
        	
                3.3

              	
                Unless
      otherwise agreed in writing by the
Bank:

              

      

      

      
        	
                 
      

              	
                (a)

              	
                The
      amount in respect of which the Insurances should be effected shall be an
      amount (Insurance Amount) which will be (aa) in respect of Hull and
      Machinery Insurance the greater of the market value of the Vessel and
      insured for the time being and 125% of an amount (the “Amount of Debt”)
      equal to (i) the aggregate amount of the Facility if the agreement to
      which these Insurance Requirements are attached is a Loan Agreement or
      (ii) the Maximum Limit of the Facility if the agreement to which these
      Insurance Requirements are attached is a Revolving/Overdraft Facility or a
      Facility for Issue of Guarantees or Letters of Credit; and (bb) in respect
      of Mortgagee’s Interest Insurance and/or Mortgagee’s Interest Additional
      Perils (Pollution), 110% of the Amount of the
  Facility..

              

      

      

      
        	
                 
      

              	
                (b)

              	
                In
      case that the Amount of Debt is secured by more than one vessel the above
      percentages should be covered by the aggregate of the Insurances in
      respect of all such vessels.

              

      

      

      
        	
                 
      

              	
                (c)

              	
                In
      case that the vessel insured secures by its Insurances Amounts of Debt
      under more than one agreements then the above percentages apply to the
      aggregate of all the Amounts of Debt under all the
    agreements.

              

      

      

      
        	
                3.4

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

              

      

      

      
        	
                 
      

              	
                (a)

              	
                procure
      and ensure that the Approved Brokers and/or the Club Managers, as the case
      may be, shall send to the Bank a letter of undertaking in respect of the
      Insurances in form and substance satisfactory to the Bank and Notice of
      Cancellation as per Clause 4(d) below. The Approved Brokers’ Letter of
      Undertaking shall be compatible with the form recommended by Lloyd’s
      Insurance Brokers Committee, or any subsequent LIBC form.  Such
      brokers to further undertake to give immediate notice of any insurance
      being subject to the Condition Survey Warranty (J.H.II5) and/or Structural
      Conditions Warranty (J.H.722) and/or the Classification Clause (Hulls)
      29/6/89, 30 days prior to the attachment date of any insurance bearing any
      of these warranties.

              

      

      

      
        	
                 
      

              	
                (b)

              	
                (if
      any of the Insurances form part of a fleet cover), procure that the
      Approved Brokers shall undertake to the Bank that they shall neither set
      off against any claims in respect of the vessel insured any premiums due
      in respect of other vessels under such fleet cover or any premiums due for
      other insurances, nor cancel the insurance for reasons of non-payment of
      premiums for other vessels under such fleet cover or of premiums for such
      other insurances, and shall undertake to issue a separate policy in
      respect of the vessel insured if and when so requested by the
      Bank;

              

      

      

      
        	
                 
      

              	
                (c)

              	
                punctually
      pay all premiums, calls, contributions or other sums payable in respect of
      all Insurances and produce all relevant receipts or other evidence of
      payment when so required by the
Bank;

              

      

      

      
        
           

        

        
          62

          
            

          

        

        
           

        

      

      
        	
                 
      

              	
                (d)

              	
                at
      least fourteen (14) days before the Insurances expire, notify the Bank of
      the names of the brokers and/or the war risks and protection and indemnity
      risks associations proposed to be employed by the Owner for the purposes
      of the renewal of such Insurances and of the amounts in which such
      Insurances are proposed to be renewed and the risks to be covered and,
      subject to compliance with any requirements of the Bank under the
      Insurance Requirements, procure that appropriate instructions for the
      renewal of such Insurances on the terms so specified are given to the
      Approved Brokers and/or to the approved war risks and protection and
      indemnity risks associations at least ten (10) days before the relevant
      Insurances expire, and that the Approved Brokers and/or the approved war
      risks and protection and indemnity risks associations will at least seven
      (7) days before such expiry (or within such shorter period as the Bank may
      from time to time agree) confirm in writing to the Bank as and when such
      renewals have been effected in accordance with the instructions so
      given;

              

      

      

      
        	
                 
      

              	
                (e)

              	
                arrange
      for the execution and delivery of such guarantees or indemnities as may
      from time to time be required by any protection and indemnity or war risks
      association;

              

      

      

      
        	
                 
      

              	
                (f)

              	
                deposit
      with the Approved Brokers (or procure the deposit of) all slips, cover
      notes, policies, certificates of entry or other instruments of insurance
      from time to time issued and procure that the interest of the Bank shall
      be endorsed thereon by incorporation of the relevant Loss Payable Clause
      and by means of a notice of assignment (signed by the Owner) in the form
      set out in Paragraph 4 of this Schedule or in such other form as may from
      time to time be agreed in writing by the Bank, and that the Bank shall be
      furnished with pro forma copies thereof and a letter or letters of
      undertaking from the Approved Brokers in such form as shall from time to
      time be required by the Bank;

              

      

      

      
        	
                 
      

              	
                (g)

              	
                procure
      that any protection and indemnity and/or war risks associations and/or
      Hull and Machinery and/or any other insurance company or underwriters in
      which the vessel insured is for the time being entered and/or insured
      shall endorse the relevant Loss Payable Clause on the relevant certificate
      of entry or policy and shall furnish the Bank with a copy of such
      certificate of entry or policy and a letter or letters of undertaking in
      such form as shall from time to time be required by the
    Bank;

              

      

      

      
        	
                 
      

              	
                (h)

              	
                (if
      so requested by the Bank, but at the cost of the Owner) furnish the Bank
      from time to time with a detailed report signed by an independent firm of
      marine insurance brokers appointed by the Bank dealing with the Insurances
      maintained on the vessel insured and stating the opinion of such firm as
      to the adequacy thereof;

              

      

      

      
        	
                 
      

              	
                (i)

              	
                do
      all things necessary and provide all documents, evidence and information
      to enable the Bank to collect or recover any moneys which shall at any
      time become due in respect of the
Insurances;

              

      

      

      
        	
                 
      

              	
                (j)

              	
                ensure
      that the vessel insured shall not be employed otherwise than in conformity
      with the terms of the Insurances (including any warranties express or
      implied therein) without first obtaining the consent of the insurers to
      such employment and complying with such requirements as to extra premium
      or otherwise as the insurers may
prescribe;

              

      

      

      
        
           

        

        
          63

          
            

          

        

        
           

        

      

      
        	
                 
      

              	
                (k)

              	
                apply
      all sums receivable under the Insurances which are paid to the Owner in
      accordance with the Loss Payable Clauses in repairing all damage and/or in
      discharging the liability in respect of which such sums shall have been
      received; and

              

      

      

      
        	
                 
      

              	
                (l)

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

              

      

      

      
        	
                 
      

              	
                (m)

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

              

      

      

      
        	
                4.

              	
                LOSS PAYABLE CLAUSES
      AND CANCELLATION CLAUSE

              

      

      

      The Loss Payable Clauses to be attached
to the relevant Insurances should be substantially in the following
form:

      

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

      

      It is noted that by a Deed of General
Assignment and a first preferred/priority [statutory] .............. ship Mortgage [and
a Deed of covenant supplemental thereto, both] dated ..... .................,
2006  granted by ......................................., of................... (the “Owner”) in favour of
FBB - FIRST BUSINESS BANK S.A. (the “Mortgagee”) all the Owner’s rights, title
and interest in and to all policies and contracts of insurance from time to time
taken out or entered into by or for the benefit of the Owner including all
claims of whatsoever nature and return or premia in respect of the .............. flag
m/v “....................” and accordingly:

      

      (a)           all
claims hereunder in respect of an actual or constructive or compromised or
arranged total loss, and all claims in respect of a major casualty (that is to
say any casualty the claim in respect of which exceeds US$300,000 (Three hundred
thousand United States Dollars) inclusive of any deductible) shall be paid in
full to the Mortgagee or to its order; and

      

      (b)           all
other claims hereunder shall be paid in full to the Owner or to its order,
unless and until the Mortgagee shall have notified the insurers hereunder to the
contrary, whereupon all such claims shall be paid to the Mortgagee or to its
order.

      

      (B)           Protection and Indemnity
Risks

      

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

      

      
        
           

        

        
          64

          
            

          

        

        
           

        

      

      4.2           Notice of
Cancellation

      

      The Owner to procure that Notice of
Cancellation of Insurances be given to the Mortgagee along the following
terms:

      

      Notice of Cancellation of Insurances
will be given to FBB - FIRST BUSINESS BANK S.A. (the “Mortgagee”) in any of the
following cases:

      

      (a)           immediately
of any material changes which are proposed to be made in the terms of the
Insurances or if the insurers cease to be insurers for any purposes connected
with the Insurances;

      

      (b)           not
later than fourteen (14) days prior to the expiry of any of the Insurances if
instructions have not been received for the renewal thereof and, in the event of
instructions being received to renew, of the details thereof;

      

      (c)           immediately
of any instructions or notices received by insurers with regard to the
cancellation or invalidity of any of the Insurances aforesaid; and

      

      (d)           immediately
if the insurers give notice of their intention to cancel the Insurances,
provided that the insurers will not exercise any rights of cancellation by
reason of unpaid premiums without giving the Bank fourteen (14) days, from the
receipt of such notice in which to remit the sums due.

      

      4.3           Notice of
Assignment

      

      The Notice of Assignment shall be in
the following form:

      

      Form of Notice of Assignment
– First Mortgage

      (for
attachment by way of endorsement to the Policy)

      ........................................., of .................. (the
“Owner”) the owner of the m/v “..................” registered under ............... flag, (the
“Vessel”) HEREBY GIVE NOTICE that by a Deed of General Assignment made the .....
day of ..............., 2006 and entered into by us with FBB - FIRST BUSINESS BANK S.A.
(the “Mortgagee”) there has been assigned by us to the Mortgagee, as first Mortgagee and
first assignee
of the Vessel all rights, title and interest in and to all policies and
contracts of insurance from time to time taken out or entered into by or for the
benefit of the Owner, all insurances in respect thereof, including the
insurances constituted by the Policy whereon this notice is endorsed and the
Owner has authorised the Mortgage to have access and/or obtain any copies of the
Policy(ies), certificate(s) of entry and/or other information from the
insurers.

      

      Dated
........ ................, 2006

      

      
        
           

        

        
          65

          
            

          

        

        
           

        

      

      SIGNATURE
PAGE

      

      IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their duly authorised officers or Attorneys on the day and year
first before written.

      
        	
                 

                THE BANK

              	 
      	 
      
	
                SIGNED

              	
                )

              	 
      
	
                for
      and on behalf of

              	
                )

              	 
      
	
                FBB-FIRST
      BUSINESS BANK S.A.

              	
                )

              	 
      
	
                by
      Mr. Nikolaos Vougioukas

              	
                )

              	 
      
	
                its
      duly authorised Attorney-in-fact

              	
                )

              	 
      
	
                in
      the presence of:

              	
                )

              	
                Attorney-in-Fact

              
	 
      	 
      	 
      
	 
      	 
      	 
      
	
                Witness:

              	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	
                Name:     

              	
                Efstratios
      Kalantzis

              	 
      	 
      
	
                Address:

              	
                13
      Defteras Merarchias Street

              	 
      	 
      
	 
      	
                Piraeus,
      Greece

              	 
      	 
      
	
                Occupation:

              	
                Attorney-at-law

              	 
      	 
      
	 
      	 
      	 
      	 
      

      

      

      
        	 
      	 
      	 
      
	
                THE BORROWER

              	 
      	 
      
	 
      	 
      	 
      
	
                Executed
      as a Deed

              	
                )

              	 
      
	
                for
      and on behalf of

              	
                )

              	 
      
	
                PARAGON
      SHIPPING INC.,

              	
                )

              	 
      
	
                of
      The Marshall Islands

              	
                )

              	 
      
	
                by
      Mrs. Maria Stefanou

              	
                )

              	 
      
	
                its
      duly authorised Attorney-in-fact

              	
                )

              	 
      
	
                in
      the presence of:

              	
                )

              	 
      
	 
      	 
      	 
      
	
                Witness:

              	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	
                Name:     

              	
                Efstratios
      Kalantzis

              	 
      	 
      
	
                Address:

              	
                13
      Defteras Merarchias Street

              	 
      	 
      
	 
      	
                Piraeus,
      Greece

              	 
      	 
      
	
                Occupation:

              	
                Attorney-at-law

              	 
      	 
      

      

      

      
        	
                THE CORPORATE GUARANTOR

              	 
      	 
      
	
                SIGNED
      by Mr.

              	
                )

              	 
      
	
                for
      and on behalf of

              	
                )

              	 
      
	
                CAMELIA
      NAVIGATION S.A..

              	
                )

              	 
      
	
                of
      the Marshall Islands, in the presence of:

              	
                )

              	 
      
	
                its
      duly authorised Attorney-in-fact

              	
                )

              	 
      
	
                in
      the presence of:

              	
                )

              	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	
                Witness:

              	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	
                Name:     

              	
                Efstratios
      Kalantzis

              	 
      	 
      
	
                Address:

              	
                13
      Defteras Merarchias Street

              	 
      	 
      
	 
      	
                Piraeus,
      Greece

              	 
      	 
      
	
                Occupation:

              	
                Attorney-at-lawUnassociated Document

    
      Exhibit
10(a)

      

      

      SEVENTH
AMENDMENT TO REIMBURSEMENT AGREEMENT

      

      THIS
SEVENTH AMENDMENT TO REIMBURSEMENT AGREEMENT, dated as of March 1, 2008 (this
“Amendment”),
to the Existing Reimbursement Agreement (as defined below) is made by PPL ENERGY
SUPPLY, LLC, a Delaware limited liability company (the “Account Party”), and
certain of the Lenders (such capitalized term and other capitalized terms used
in this preamble and the recitals below to have the meanings set forth in, or
are defined by reference in, Article I
below).

       

      W I T N E S S E T
H:

       

      WHEREAS,
the Account Party, the Lenders and The Bank of Nova Scotia, as the Issuer and as
Administrative Agent, are all parties to the Reimbursement Agreement, dated as
of March 31, 2005 (as amended or otherwise modified prior to the date hereof,
the “Existing
Reimbursement Agreement”, and as amended by this Amendment and as the
same may be further amended, supplemented, amended and restated or otherwise
modified from time to time, the “Reimbursement
Agreement”); and

       

      WHEREAS,
the Account Party has requested that the Lenders amend certain provisions of the
Existing Reimbursement Agreement and the Lenders are willing to modify the
Existing Reimbursement Agreement on the terms and subject to the conditions
hereinafter set forth;

       

      NOW,
THEREFORE, the parties hereto hereby covenant and agree as follows:

       

       

      ARTICLE
I

      DEFINITIONS

       

      SECTION
1.1.  Certain
Definitions.  The following terms when used in this Amendment
shall have the following meanings (such meanings to be equally applicable to the
singular and plural forms thereof):

       

      “Account Party” is
defined in the preamble.

       

      “Amendment” is defined
in the preamble.

       

      “Existing Reimbursement
Agreement” is defined in the first
recital.

       

      “Reimbursement
Agreement” is defined in the first
recital.

       

       

      SECTION
1.2.  Other
Definitions.  Terms for which meanings are provided in the
Existing Reimbursement Agreement are, unless otherwise defined herein or the
context otherwise requires, used in this Amendment with such
meanings.

       

       

      ARTICLE
II

      AMENDMENTS
TO THE EXISTING REIMBURSEMENT AGREEMENT

       

      Effective
as of the date hereof, but subject to the occurrence of the satisfaction of the
conditions in Article
III, the provisions of the Existing Reimbursement Agreement referred to
below are hereby amended in accordance with this Article
II.

       

       

      SECTION
2.1.  Amendment to Section
1.1.  Section 1.1 of the Existing Reimbursement Agreement is
hereby amended by

       

       

      (a)           
inserting the following definitions in the appropriate alphabetical
order:

       

      “Sanctioned Entity”
means (i) an agency of the government of, (ii) an organization directly or
indirectly controlled by, or (iii) a person resident in, a country that is
subject to a sanctions program identified on the list maintained by OFAC and
available at http://www.treas.gov/offices/enforcement/ofac/sanctions/index.html,
or as otherwise published from time to time as such program may be applicable to
such agency, organization or person.

       

      “Sanctioned Person”
means a person named on the list of Specially Designated Nationals or Blocked
Persons maintained by OFAC available at
http://www.treas.gov/offices/enforcement/ofac/sdn/index.html, or as otherwise
published from time to time.

       

       

      “Seventh Amendment”
means the Seventh Amendment to Reimbursement Agreement, dated as of March 1,
2008, among the Account Party and the Lenders party thereto.

       

       

      (b)           amending
and restating the definition of “Incorporated Agreement” in its entirety as
follows:

       

      “Incorporated
Agreement” means the $3,400,000,000 Second Amended and Restated Five-Year
Credit Agreement, dated as of May 4, 2007, among the Account Party, the lenders
from time to time party thereto, Wachovia Bank, National Association, as
administrative agent, issuing lender and swingline lender, certain financial
institutions, as syndication agents, certain financial institutions, as lead
arrangers, and certain financial institutions, as documentation agents, as in
effect on the date hereof and without giving effect to any subsequent
modification, supplement, amendment or waiver by the lenders under, or by other
parties to, the Incorporated Agreement, unless the Required Lenders agree in
writing that such modification, supplement, amendment or waiver shall apply to
such provisions or schedules incorporated herein.

       

       

      (c)           amending
and restating the definition of “Letter of Credit Commitment Amount” in its
entirety as follows:

       

      “Letter of Credit Commitment
Amount” means, on any date, a maximum amount of
$300,000,000.

       

       

      (d)           amending
and restating the definition of “Stated Maturity Date” in its entirety as
follows:

       

      “Stated Maturity Date”
means March 31, 2009.

       

       

      SECTION
2.2.  Amendment to Section
2.5.  Section 2.5 of the Existing Reimbursement Agreement is
hereby amended in its entirety to read as follows:

       

      SECTION
2.5  [INTENTIONALLY OMITTED.]

       

      SECTION
2.3.  Amendments to Article
VI.  Article VI of the Existing Reimbursement Agreement is
hereby amended in accordance with Sections 2.3.1
through 2.3.3.

       

       

      SECTION
2.3.1.  Clause (a) of Section 6.4 of the Existing Reimbursement Agreement
is hereby amended and restated in its entirety as follows:

       

      (a) The
consolidated balance sheet of the Account Party and its Consolidated
Subsidiaries as of December 31, 2007 and the related consolidated statements of
income and cash flows for the fiscal year then ended, reported on by Ernst &
Young LLP, copies of which have been delivered to each of the Administrative
Agent and the Lenders, fairly present, in conformity with GAAP, the consolidated
financial position of the Account Party as of such date and its consolidated
results of operations and cash flows for such fiscal year.

       

       

      SECTION
2.3.2.  A new Section 6.18 following Section 6.17 of the Existing
Reimbursement Agreement is hereby inserted which reads as follows:

       

      SECTION
6.18  Environmental
Matters. (a) Except (i) as disclosed in or contemplated by the Account
Party’s Form 10-K Report to the SEC for the year ended December 31, 2007 or in
any subsequent Form 10-Q or 8-K Report or otherwise furnished to the
Administrative Agent in writing, or (ii) to the extent that the liabilities of
the Account Party and its Subsidiaries, taken as a whole, that relate to or
could result from the matters referred to in clauses (i) through (iii) of this
Section 6.18, inclusive, would not reasonably be expected to result in a
Material Adverse Effect, to the Account Party’s or any of its Subsidiaries’
knowledge: (i) no notice, notification, citation, summons, complaint or order
has been issued, no complaint has been filed, no penalty has been assessed nor
is any investigation or review pending or threatened by any governmental or
other entity with respect to any (A) alleged violation by the Account Party or
any of its Subsidiaries of any Environmental Law, (B) alleged failure by the
Account Party or any of its Subsidiaries to have any environmental permit,
certificate, license, approval, registration or authorization required in
connection with the conduct of its business or (C) generation, storage,
treatment, disposal, transportation or release of Hazardous Substances; (ii) no
Hazardous Substance has been released (and no written notification of such
release has been filed) (whether or not in reportable or threshold planning
quantity) at, on or under any property now or previously owned, leased or
operated by the Account Party or any of its Subsidiaries; and (iii) no property
now or previously owned, leased or operated by the Account Party or any of its
Subsidiaries or any property to which the Account Party or any of its
Subsidiaries has, directly or indirectly, transported or arranged for the
transportation of any Hazardous Substances, is listed or, to the Account Party’s
or any of its Subsidiaries’ knowledge, proposed for listing, on the National
Priorities List promulgated pursuant to the CERCLA, as amended, on CERCLIS or on
any similar federal, state or foreign list of sites requiring investigation or
clean up. (b) Except as disclosed in or contemplated by the Account Party’s Form
10-K Report to the SEC for the year ended December 31, 2007 or in any subsequent
Form 10-Q or 8K Report or otherwise furnished to the Administrative Agent in
writing, to the Account Party’s or any of its Subsidiaries’ knowledge, there are
no Environmental Liabilities that have resulted or could reasonably be expected
to result in a Material Adverse Effect. (c) For purposes of this Section 6.18,
the terms “the Account Party” and “Subsidiary” shall include any business or
business entity (including a corporation) which is a predecessor, in whole or in
part, of the Account Party or any of its Subsidiaries from the time such
business or business entity became a Subsidiary of PPL Corporation, a
Pennsylvania corporation.

       

       

      SECTION
2.3.3.  A new Section 6.19 following Section 6.17 of the Existing
Reimbursement Agreement is hereby inserted which reads as follows:

       

      SECTION
6.19  OFAC.  None
of the Account Party, any Subsidiary of the Account Party or any Affiliate of
the Account Party: (i) is a Sanctioned Person, (ii) has more than 10% of its
assets in Sanctioned Entities, or (iii) derives more than 10% of its operating
income from investments in, or transactions with Sanctioned Persons or
Sanctioned Entities.  No Letter of Credit will be used, and no Letter
of Credit has been used, to fund any operations in, finance any investments or
activities in, or make any payments to, a Sanctioned Person or a Sanctioned
Entity.

       

       

      ARTICLE
III

      CONDITIONS
TO EFFECTIVENESS

       

      This
Amendment and the amendments contained herein shall become effective as of the
date hereof when each of the conditions set forth in this Article III shall
have been fulfilled to the satisfaction of the Administrative
Agent.

       

       

      SECTION
3.1.  Counterparts.  The
Administrative Agent shall have received counterparts hereof executed on behalf
of the Account Party and the each of the Lenders.

       

       

      SECTION
3.2.  Costs and
Expenses, etc.  The Administrative Agent shall have received
for the account of each Lender, all fees, costs and expenses due and payable
pursuant to Section 10.3 of the Reimbursement Agreement, if then
invoiced.

       

       

      SECTION
3.3.  Resolutions,
etc.  The Administrative Agent shall have received from the
Account Party (i) a copy of a good standing certificate, dated a date
reasonably close to the date hereof and (ii) a certificate, dated as of the
date hereof, duly executed and delivered by any vice president, the controller,
the treasurer, the assistant treasurer, secretary or assistant secretary of the
Account Party as to

       

      (a)  resolutions
of the Account Party’s Board of Managers then in full force and effect
authorizing the execution, delivery and performance of this Amendment and the
transactions contemplated hereby;

       

      (b)  the
incumbency and signatures of those of its officers authorized to act with
respect to this Amendment; and

       

      (c)  the
full force and validity of each Organic Document of the Account Party and copies
thereof;

       

      upon
which certificates the Administrative Agent and all Lenders may conclusively
rely until it shall have received a further certificate of any such officer of
the Account Party canceling or amending such prior certificate.

       

       

      SECTION
3.4.  Opinions of
Counsel.  The Administrative Agent shall have received
opinions, dated the date hereof and addressed to the Administrative Agent and
all Lenders, from Dewey & LeBoeuf LLP, New York counsel to the Account
Party, in form and substance satisfactory to the Administrative
Agent.

       

       

      SECTION
3.5.  Satisfactory Legal
Form.  The Administrative Agent and its counsel shall have
received all information, and such counterpart originals or such certified or
other copies of such materials, as the Administrative Agent or its counsel may
reasonably request, and all legal matters incident to the effectiveness of this
Amendment shall be satisfactory to the Administrative Agent and its
counsel.  All documents executed or submitted pursuant hereto or in
connection herewith shall be reasonably satisfactory in form and substance to
the Administrative Agent and its counsel.

      

       

      ARTICLE
IV

      MISCELLANEOUS

       

      SECTION
4.1.  Cross-References.  References
in this Amendment to any Article or Section are, unless otherwise specified, to
such Article or Section of this Amendment.

       

       

      SECTION
4.2.  Loan
Document Pursuant to Existing Reimbursement Agreement.  This
Amendment is a Loan Document executed pursuant to the Existing Reimbursement
Agreement and shall (unless otherwise expressly indicated therein) be construed,
administered and applied in accordance with all of the terms and provisions of
the Existing Reimbursement Agreement, as amended hereby, including
Article X thereof.

       

       

      SECTION
4.3.  Successors and
Assigns.  This Amendment shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and
assigns.

       

       

      SECTION
4.4.  Counterparts.  This
Amendment may be executed by the parties hereto in several counterparts, each of
which when executed and delivered shall be an original and all of which shall
constitute together but one and the same agreement.  Delivery of an
executed counterpart of a signature page to this Amendment by facsimile shall be
effective as delivery of a manually executed counterpart of this
Amendment.

       

       

      SECTION
4.5.  Governing
Law.  THIS AMENDMENT WILL BE DEEMED TO BE A CONTRACT MADE UNDER
AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING FOR SUCH
PURPOSE SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE
OF NEW YORK).

       

       

      SECTION
4.6.  Full
Force and Effect; Limited Amendment.  Except as expressly
amended hereby, all of the representations, warranties, terms, covenants,
conditions and other provisions of the Existing Reimbursement Agreement and the
Loan Documents shall remain unchanged and shall continue to be, and shall
remain, in full force and effect in accordance with their respective
terms.  The amendments set forth herein shall be limited precisely as
provided for herein to the provisions expressly amended herein and shall not be
deemed to be an amendment to, waiver of, consent to or modification of any other
term or provision of the Existing Reimbursement Agreement or any other Loan
Document or of any transaction or further or future action on the part of any
Obligor which would require the consent of the Lenders under the Existing
Reimbursement Agreement or any of the Loan Documents.

       

       

      SECTION
4.7.  Representations and
Warranties.  In order to induce the Lenders to execute and
deliver this Amendment, the Account Party hereby represents and warrants to the
Lenders, on the date this Amendment becomes effective pursuant to Article III, that
both before and after giving effect to this Amendment, all statements set forth
in clauses (a) and (b) of Section 5.2.1 of the Reimbursement Agreement are true
and correct as of such date, except to the extent that any such statement
expressly relates to an earlier date (in which case such statement was true and
correct on and as of such earlier date).

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

       

      IN
WITNESS WHEREOF, the parties hereto have executed and delivered this Amendment
as of the date first above written.

       

      

       

      PPL
ENERGY SUPPLY, LLC

      

      

      By:__________________________

            Title:

      

      

      

      THE BANK
OF NOVA SCOTIA

      

      

      By:__________________________

            Title:

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