Document:

EX-10.31 BTMU Capital Corp. Loan Agreement

 

			
	Private & Confidential
	 	EXHIBIT 10.31

 

 

 

 

JUNIOR LOAN AGREEMENT

for a Loan of up to US$21,500,000

to

ADVENTURE EIGHT S.A.

ADVENTURE FIVE S.A.

ADVENTURE SEVEN S.A.

and

ADVENTURE SIX S.A.

provided by

BTMU CAPITAL CORPORATION

 

 

 

 

 

 

Contents

	 	 	 	 	 	 	 	 	 
	Clause	 	 	Page	 
	 
	 	1	 	 	Purpose and definitions
	 	 	1	 
	 	 	 	 	 	 	 	 	 
	 	2	 	 	The Commitment and the Loan
	 	 	19	 
	 	 	 	 	 	 	 	 	 
	 	3	 	 	Interest and Interest Periods
	 	 	20	 
	 	 	 	 	 	 	 	 	 
	 	4	 	 	Repayment and prepayment
	 	 	21	 
	 	 	 	 	 	 	 	 	 
	 	5	 	 	Fees, commitment commission and expenses
	 	 	24	 
	 	 	 	 	 	 	 	 	 
	 	6	 	 	Payments and taxes; accounts and calculations
	 	 	25	 
	 	 	 	 	 	 	 	 	 
	 	7	 	 	Representations and warranties
	 	 	26	 
	 	 	 	 	 	 	 	 	 
	 	8	 	 	Undertakings
	 	 	31	 
	 	 	 	 	 	 	 	 	 
	 	9	 	 	Conditions
	 	 	37	 
	 	 	 	 	 	 	 	 	 
	 	10	 	 	Events of Default
	 	 	38	 
	 	 	 	 	 	 	 	 	 
	 	11	 	 	Indemnities
	 	 	42	 
	 	 	 	 	 	 	 	 	 
	 	12	 	 	Unlawfulness and increased costs
	 	 	43	 
	 	 	 	 	 	 	 	 	 
	 	13	 	 	Security and set-off
	 	 	44	 
	 	 	 	 	 	 	 	 	 
	 	14	 	 	Accounts
	 	 	45	 
	 	 	 	 	 	 	 	 	 
	 	15	 	 	Assignment, transfer and lending office
	 	 	46	 
	 	 	 	 	 	 	 	 	 
	 	16	 	 	Notices and other matters
	 	 	47	 
	 	 	 	 	 	 	 	 	 
	 	17	 	 	Governing law and jurisdiction
	 	 	50	 

 

 

	 	 	 	 	 
	Schedule 1 Form of Drawdown Notice
	 	 	51	 
	 
	 	 	 	 
	Schedule 2 Documents and evidence required as conditions precedent to the Loan being made
	 	 	53	 
	 
	 	 	 	 
	Schedule 3 Form of Corporate Guarantee
	 	 	60	 
	 
	 	 	 	 
	Schedule 4 Form of Collateral Guarantee
	 	 	61	 
	 
	 	 	 	 
	Schedule 5 Form of New Ship Mortgage
	 	 	62	 
	 
	 	 	 	 
	Schedule 6 Form of Collateral Ship Mortgage
	 	 	63	 
	 
	 	 	 	 
	Schedule 7 Form of New Ship General Assignment
	 	 	64	 
	 
	 	 	 	 
	Schedule 8 Form of Collateral Ship General Assignment
	 	 	65	 
	 
	 	 	 	 
	Schedule 9 Form of New Ship Charter Assignment
	 	 	66	 

	 	 	 	 	 
	Schedule 10 Form of Collateral Ship Charter Assignment
	 	 	67	 
	 
	 	 	 	 
	Schedule 11 Form of New Ship Manager’s Undertaking
	 	 	68	 
	 
	 	 	 	 
	Schedule 12 Form of Collateral Ship Manager’s Undertaking
	 	 	69	 
	 
	 	 	 	 
	Schedule 13 Form of Intercreditor Deed
	 	 	70	 
	 
	 	 	 	 
	Schedule 14 Form of Collateral Intercreditor Deed
	 	 	71	 

 

 

THIS AGREEMENT is dated 27 June 2007 and made BETWEEN:

     (1) ADVENTURE EIGHT S.A., ADVENTURE FIVE S.A., ADVENTURE SEVEN S.A. and ADVENTURE SIX S.A. as
joint and several Borrowers; and

     (2) BTMU CAPITAL CORPORATION as Bank.

IT IS AGREED as follows:

	1	 	Purpose and definitions
	 
	1.1	 	Purpose
	 
	 	 	This Agreement sets out the terms and conditions upon and subject to which the Bank agrees to
make available to the Borrowers, jointly and severally, a loan of up to Twenty one million
five hundred thousand Dollars ($21,500,000) in four (4) Advances, for the purpose of
financing part of the cost of the purchase of the New Ships.
	 
	1.2	 	Definitions
	 
	 	 	In this Agreement, unless the context otherwise requires:
	 
	 	 	“Acceptable Charter” means, in relation to a Ship, a charterparty entered into by the
relevant Owner in respect of such Ship, at a minimum Daily Charter Rate and a minimum term
(commencing (a) from the relevant Drawdown Date (in the case of a New Ship) or (b) from the
first Drawdown Date (in the case of a Collateral Ship)), as specified for such Ship in the
table below, and with such charterer and otherwise on such other terms and conditions, as
shall be in all respects acceptable to the Bank:

	 	 	 	 	 	 	 	 	 
	 
	 	New Ship	 	 	Minimum Daily Charter Rate	 	 	minimum term	 
	 	Harmony
	 	 	$17,000	 	 	2 years	 
	 	Phoenix
	 	 	$14,500	 	 	1 year	 
	 	Goddess
	 	 	$26,000	 	 	3 years	 
	 	Daisy
	 	 	$11,500	 	 	Spot	 
	 

	 	 	Provided that, in the case of Goddess, the minimum Daily Charter Rate for the purposes of
this table, may, at the Borrowers’ option notified to the Bank in writing, be substituted for
by an average net daily charterhire of $26,000 over the relevant minimum term of 3 years of
the relevant Acceptable Charter;

	 	 	 	 	 	 	 	 	 
	 
	 	Collateral Ships	 	 	Minimum Daily Charter Rate	 	 	minimum term	 
	 	Free Destiny
	 	 	$15,000	 	 	Spot	 
	 	Free Envoy
	 	 	$17,000	 	 	12 months less 2 weeks	 
	 

	 	 	“Account Bank” means HSH Nordbank AG of Gerhart-Hauptmann Platz 50, 20095 Hamburg, Germany
and includes its successors in title;
	 
	 	 	“Account Pledge” means the second priority pledge executed or (as the content may require) to
be executed between the Borrowers and the Bank in respect of the Earnings Accounts, the

1

 

	 	 	Excess Cash Account, the Operating Account and the Retention Account;
	 
	 	 	“Accounts” means, together, the Earnings Accounts, the Excess Cash Account and the Retention
Account and “Account” means any of them;
	 
	 	 	“Advance” means each borrowing of a proportion of the Commitment by the Borrowers or (as the
context may require) the principal amount of such borrowing and:

	 	(a)	 	in relation to Harmony and/or the Harmony Borrower, it means the Harmony Advance;
	 
	 	(b)	 	in relation to Phoenix and/or the Phoenix Borrower, it means the Phoenix Advance;
	 
	 	(c)	 	in relation to Goddess and/or the Goddess Borrower, it means the Goddess Advance;
or
	 
	 	(d)	 	in relation to Daisy and/or the Daisy Borrower, it means the Daisy Advance,

	 	 	and “Advances” means any or all of them;
	 
	 	 	“Agent” means HSH Nordbank AG of Gerhart-Hauptmann Platz 50, 20095 Hamburg, Germany in its
capacity as agent under the Senior Loan Agreement or such other person as may be appointed as
agent under the Senior Loan Agreement and includes its successors in title;
	 
	 	 	“Applicable Accounting Principles” means the most recent and up-to-date US GAAP applicable at
any relevant time;
	 
	 	 	“Approved Broker” means each of Arrow Research Ltd. of London, England, Astrup Fearnley A/S
of Oslo, Norway, H. Clarkson & Company Ltd. of London, England, Simpson Spence & Young Ltd.
of London, England, Maersk Broker K/S of Copenhagen and Barry Rogliano Salles of Paris and
includes their respective successors in title and “Approved Brokers” means any or all of
them;
	 
	 	 	“Assignee” has the meaning ascribed thereto in clause 15.3;
	 
	 	 	“Bank” means BTMU Capital Corporation, acting for the purposes of this Agreement through its
office at 111 Huntington Avenue, Boston, MA 02199, U.S.A. (or of such other address as may
last have been notified to the Borrowers pursuant to clause 15.6) and includes its successors
in title and Assignees and Transferees;
	 
	 	 	“Banking Day” means a day on which dealings in deposits in Dollars are carried on in the
London Interbank Eurocurrency Market and (other than Saturday or Sunday) on which banks are
open for business in London, Boston, Athens, Piraeus and New York City (or any other relevant
place of payment under clause 6);
	 
	 	 	“Borrowed Money” means Indebtedness in respect of (i) money borrowed or raised and debit
balances at banks, (ii) any bond, note, loan stock, debenture or similar debt instrument,
(iii) acceptance or documentary credit facilities, (iv) receivables sold or discounted
(otherwise than on a non-recourse basis), (v) deferred payments for assets or services
acquired, (vi) finance leases and hire purchase contracts, (vii) swaps, forward exchange
contracts, futures and other derivatives, (viii) any other transaction (including without
limitation forward sale or purchase agreements) having the commercial effect of a borrowing
or raising of money or of any of (ii) to (vii) above and (ix) guarantees in respect of
Indebtedness of any person falling within any of (i) to (viii) above;
	 
	 	 	“Borrowers” means, together, the Harmony Borrower, the Phoenix Borrower, the Goddess Borrower
and the Daisy Borrower and:

	 	(a)	 	in relation to the Harmony Advance and/or Harmony, it means the Harmony Borrower;
	 
	 	(b)	 	in relation to the Phoenix Advance and/or Phoenix, it means the Phoenix Borrower;

2

 

	 	(c)	 	in relation to the Goddess Advance and/or Goddess, it means the Goddess Borrower;
or
	 
	 	(d)	 	in relation to the Daisy Advance and/or Daisy, it means the Daisy Borrower,

	 	 	and “Borrower” means any of them;
	 
	 	 	“Borrowers’ Security Documents” means, at any relevant time, such of the Security Documents
as shall have been executed by the Borrowers or any of them at such time;
	 
	 	 	“Charter Assignment” means, in relation to each Ship and any charterparty in respect thereof
which would fall under clause 8.1.13, the second priority specific assignment of such
charterparty for such Ship executed or (as the context may require) to be executed by the
Owner owning such Ship in favour of the Bank in the form set out in schedule 9 (in the case
of New Ships) or schedule 10 (in the case of Collateral Ships) and “Charter Assignments”
means any or all of them;
	 
	 	 	“Classification” means, in relation to each Ship, the highest class available for a vessel of
her type with the relevant Classification Society or such other classification as the Bank
shall, at the request of an Owner, have agreed in writing shall be treated as the
Classification in relation to such Owner’s Ship for the purposes of the relevant Ship
Security Documents;
	 
	 	 	“Classification Society” means, in relation to each Ship, Lloyd’s Register or such other
classification society (being a member of the International Association of Classification
Societies (“IACS”)) which the Bank shall, at the request of an Owner, have agreed in writing
shall be treated as the Classification Society in relation to such Owner’s Ship for the
purposes of the relevant Ship Security Documents;
	 
	 	 	“Code” means the International Management Code for the Safe Operation of Ships and for
Pollution Prevention constituted pursuant to Resolution A. 741 (18) of the International
Maritime Organisation and incorporated into the International Convention on Safety of Life at
Sea 1974 (as amended) and includes any amendments or extensions thereto and any regulation
issued pursuant thereto;
	 
	 	 	“Collateral Excess Cash” means, in relation to each Collateral Ship and each Excess Cash
Calculation Period, the amount calculated by the Bank in its sole discretion pursuant to
clause 8.4 which is equal to:

	 	(a)	 	the aggregate Earnings of that Collateral Ship paid to the relevant Collateral
Owner, minus
	 
	 	(b)	 	any Permitted Operating Expenses actually paid by the relevant Collateral Owner
in respect of that Collateral Ship in a manner consistent with or permitted by the
Collateral Senior Security Documents, minus
	 
	 	(c)	 	any other amount paid by the relevant Collateral Owner of that Collateral Ship to
the Collateral Senior Lender under the Collateral Senior Loan Agreement,

	 	 	in each case, during such Excess Cash Calculation Period;
	 
	 	 	“Collateral Guarantee” means:

	 	(a)	 	in relation to Destiny, the Destiny Collateral Guarantee; or
	 
	 	(b)	 	in relation to Envoy, the Envoy Collateral Guarantee,

	 	 	and “Collateral Guarantees” means either or both of them;
	 
	 	 	“Collateral Intercreditor Deed” means, each of the two (2) agreements (one in respect of each
Collateral Ship) executed or (as the context may require) to be executed between (1) the
relevant Collateral Owner, (2) the Bank and (3) the Collateral Senior Lender in the form set
out

3

 

	 	 	in schedule 14 and “Collateral Intercreditor Deeds” means both or either of them;
	 
	 	 	“Collateral Owners” means, together, the Destiny Collateral Owner and the Envoy Collateral
Owner and:

	 	(a)	 	in relation to Destiny, means the Destiny Collateral Owner; or
	 
	 	(b)	 	in relation to Envoy, means the Envoy Collateral Owner,

	 	 	and it includes their respective successors in title and “Collateral Owner” means either or
both of them;
	 
	 	 	“Collateral Senior Encumbrances” means any Encumbrances created by or pursuant to the
Collateral Senior Security Documents as security for the Collateral Senior Indebtedness;
	 
	 	 	“Collateral Senior Indebtedness” means the aggregate Indebtedness of the Collateral Owners
owing under the Collateral Senior Security Documents or any of them at any relevant time;
	 
	 	 	“Collateral Senior Lender” means Hollandsche Bank-Unie N.V. of The Netherlands and includes
its successors in title;
	 
	 	 	“Collateral Senior Loan” the aggregate amount of principal outstanding under the Collateral
Senior Loan Agreement from time to time;
	 
	 	 	“Collateral Senior Loan Agreement” means, together:

	 	(a)	 	the credit agreement dated 23 September 2005 and a short-term loan agreement
dated 26 September 2005, both made between (1) the Destiny Collateral Owner as borrower
and (2) the Collateral Senior Lender, as lender, (together, the “First Credit
Agreement”) whereby the Collateral Senior Lender agreed to make available to the Destiny
Collateral Owner an overdraft facility of up to Three million seven hundred Dollars
($3,700,000), upon the terms and conditions therein contained; and
	 
	 	(b)	 	the credit agreement dated 24 June 2004 and a short-term loan agreement dated 8
September 2004, both made between (1) the Envoy Collateral Owner as borrower and (2) the
Collateral Senior Lender, as lender (together, the “Second Credit Agreement” and
together with the First Credit Agreement, the “Credit Agreements”), whereby the
Collateral Senior Lender agreed to make available to the Envoy Collateral Owner an
overdraft facility of up to Six million Dollars ($6,000,000), upon the terms and
conditions therein contained,

	 	 	as both facilities were amended and supplemented by a credit agreement dated 7 May 2007 made
between (1) the Collateral Owners as joint and several borrowers and (2) the Collateral
Senior Lender as lender (the “Final Credit Agreement”), pursuant to which the Collateral
Senior Lender made available to the Collateral Owners, jointly and severally, in continuation
of the Credit Agreements, an overdraft facility of up to Nine million Dollars ($9,000,000)
including any amounts available on the date of the Final Credit Agreement under the Credit
Agreements, upon the terms and conditions therein contained;
	 
	 	 	“Collateral Senior Security Documents” means the Collateral Senior Loan Agreement and any
other security or finance documents executed in respect thereof howsoever it may be
described;
	 
	 	 	“Collateral Ships” means, together, Destiny and Envoy and:

	 	(a)	 	in relation to the Destiny Owner, means Destiny; or
	 
	 	(b)	 	in relation to the Envoy Owner, means Envoy,

	 	 	and “Collateral Ship” means either of them;

4

 

	 	 	“Commitment” means the aggregate amount which the Bank has agreed to lend to the Borrowers
under clause 2.1 as reduced by any relevant term of this Agreement;
	 
	 	 	“Compulsory Acquisition” means, in relation to a Ship, requisition for title or other
compulsory acquisition, requisition, appropriation, expropriation, deprivation, forfeiture or
confiscation for any reason of such Ship by any Government Entity or other competent
authority, whether de jure or de facto, but shall exclude requisition for use or hire not
involving requisition of title;
	 
	 	 	“Contract” means:

	 	(a)	 	in relation to Harmony, the Harmony Contract;
	 
	 	(b)	 	in relation to Phoenix, the Phoenix Contract;
	 
	 	(c)	 	in relation to Goddess, the Goddess Contract; or
	 
	 	(d)	 	in relation to Daisy, the Daisy Contract,

	 	 	and “Contracts” means any or all of them;
	 
	 	 	“Contract Price” means:

	 	(a)	 	in relation to Harmony, the Harmony Contract Price;
	 
	 	(b)	 	in relation to Phoenix, the Phoenix Contract Price;
	 
	 	(c)	 	in relation to Goddess, the Goddess Contract Price; or
	 
	 	(d)	 	in relation to Daisy, the Daisy Contract Price,

	 	 	and “Contract Prices” means any or all of them;
	 
	 	 	“Corporate Guarantee” means the corporate guarantee executed or (as the context may require)
to be executed by the Corporate Guarantor in favour of the Bank in the form set out in
schedule 3;
	 
	 	 	“Corporate Guarantor” means FreeSeas Inc. of Trust Company Complex, Ajeltake Road, Ajeltake
Island, Majuro, Marshall Islands MH96960 and includes its successors in title;
	 
	 	 	“Creditors” means, together, the Arranger, the Agent, the Security Agent, the Swap Provider,
the Account Bank and the Banks and “Creditor” means any of them;
	 
	 	 	“Daily Charter Rate” means, in relation to a charterparty to which a Ship is subject, the net
daily charterhire (expressed in Dollars per day) payable to the relevant Owner under such
charterparty Provided that if such charterparty is not a time charterparty, then the Daily
Charter Rate in respect thereof shall be the net “time-charter equivalent” of the net daily
charterhire in respect of such charterparty, as determined by the Bank in its sole
discretion;
	 
	 	 	“Daisy” means the 1994-built, 14,379 dwt bulk carrier Ocean Daisy owned on the date of this
Agreement by the Daisy Seller and registered under the laws and flag of the Marshall Islands
with IMO Number 9120236 and to be registered, on or prior to the drawdown of the Daisy
Advance, in the ownership of the Daisy Borrower through the relevant Registry under the laws
and flag of the relevant Flag State with the name Free Gentleman;
	 
	 	 	“Daisy Advance” means an Advance of up to $3,097,500 made or (as the context may require) to
be made available to the Borrowers for the purpose of financing part of the acquisition cost
of Daisy by the Daisy Borrower pursuant to the Daisy Contract;
	 
	 	 	“Daisy Borrower” means Adventure Five S.A. of Trust Company Complex, Ajeltake Road, Ajeltake
Island, Majuro, Marshall Islands MH96960 and includes its successors in title;

5

 

	 	 	“Daisy Contract” means the memorandum of agreement dated 1 May 2007, as amended by an
addendum no. 1 dated 1 May 2007 and an addendum no. 2 dated 11 May 2007, each made between
the Daisy Seller and the Daisy Borrower, relating to the sale by the Daisy Seller, and the
purchase by the Daisy Borrower, of Daisy;
	 
	 	 	“Daisy Contract Price” means Fifteen Million Dollars ($15,000,000) or such other lesser sum
in Dollars as may be payable by the Daisy Borrower to the Daisy Seller under the Daisy
Contract, being the purchase price of Daisy thereunder;
	 
	 	 	“Daisy Earnings Account” means a Dollar account of the Daisy Borrower opened or (as the
context may require) to be opened with the Account Bank and includes any sub-accounts thereof
and any other account designated in writing by the Bank to be a Daisy Earnings Account for
the purposes of this Agreement;
	 
	 	 	“Daisy General Assignment” means the second priority general assignment collateral to the
Daisy Mortgage executed or (as the context may require) to be executed by the Daisy Borrower
in favour of the Bank in the form set out in schedule 7;
	 
	 	 	“Daisy Management Agreement” means the agreement made or (as the context may require) to be
made between the Daisy Borrower and the Manager in a form previously approved in writing by
the Bank providing (inter alia) for the Manager to manage Daisy;
	 
	 	 	“Daisy Manager’s Undertaking” means the second priority undertaking and assignment in respect
of Daisy executed or (as the context may require) to be executed by the Manager in favour of
the Bank in the form set out in schedule 11;
	 
	 	 	“Daisy Mortgage” means the second preferred Marshall Islands mortgage of Daisy executed or
(as the context may require) to be executed by the Daisy Borrower in favour of the Bank in
the form set out in schedule 5;
	 
	 	 	“Daisy Seller” means Daisy Shipping Ltd. of the Republic of the Marshall Islands and includes
its successors in title;
	 
	 	 	“Default” means any Event of Default or any event or circumstance which with the giving of
notice or lapse of time or the satisfaction of any other condition (or any combination
thereof) would constitute an Event of Default;
	 
	 	 	“Delivery Date” means, in relation to each New Ship, the date on which such New Ship is
delivered by the relevant Seller to the relevant Borrower in accordance with the relevant
Contract;
	 
	 	 	“Destiny” means the 1982-built, 25,240 dwt bulk carrier Free Destiny owned by the Destiny
Owner and registered in the ownership of the Destiny Owner through the relevant Registry
under the laws and flag of the relevant Flag State with IMO Number 8128157;
	 
	 	 	“Destiny Collateral General Assignment” means the second priority general assignment
collateral to the Destiny Collateral Mortgage executed or (as the context may require) to be
executed by the Destiny Collateral Owner in favour of the Bank in the form set out in
schedule 8;
	 
	 	 	“Destiny Collateral Guarantee” means the corporate guarantee executed or (as the context may
require) to be executed by the Destiny Collateral Owner in favour of the Bank in the form set
out in schedule 4;
	 
	 	 	“Destiny Collateral Manager’s Undertaking” means the second priority manager’s undertaking
and assignment in respect of Destiny executed or (as the context may require) to be executed
by the Manager in favour of the Bank in the form set out in schedule 12;
	 
	 	 	“Destiny Collateral Mortgage” means the second preferred Marshall Islands mortgage of Destiny
executed or (as the context may require) to be executed by the Destiny Collateral

6

 

	 	 	Owner in favour of the Bank in the form set out in schedule 6;
	 
	 	 	“Destiny Collateral Owner” means Adventure Two S.A. of Trust Company Complex, Ajeltake Road,
Ajeltake Island, Majuro, Marshall Islands MH96960 and includes its successors in title;
	 
	 	 	“Destiny Management Agreement” means the agreement made or (as the context may require) to be
made between the Destiny Collateral Owner and the Manager in a form previously approved in
writing by the Bank providing (inter alia) for the Manager to manage Destiny;
	 
	 	 	“DOC” means a document of compliance issued to an Operator in accordance with rule 13 of the
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 mean funds which are for same day
settlement in the New York Clearing House Interbank Payments System (or such other US dollar
funds as may at the relevant time be customary for the settlement of international banking
transactions denominated in U.S. dollars);
	 
	 	 	“Drawdown Date” means any date, being a Banking Day falling during the Drawdown Period, on
which an Advance is, or is to be, made available;
	 
	 	 	“Drawdown Notice” means, in relation to each Advance, a notice substantially in the form of
schedule 2 in respect of such Advance;
	 
	 	 	“Drawdown Period” means, in relation to each Advance, the period commencing on the date of
this Agreement and ending on the earlier of (a) the Termination Date, (b) the date (if any)
on which the aggregate amount of the Advances is equal to the Commitment or (c) the date on
which the Commitment is reduced to zero pursuant to clauses 4.3, 10.2 or 12;
	 
	 	 	“Earnings” means, in relation to a Ship, all moneys whatsoever from time to time due or
payable to an Owner during the Security Period arising out of the use or operation of such
Owner’s Ship including (but without limiting the generality of the foregoing) all freight,
hire and passage moneys, income arising out of pooling arrangements, compensation payable to
such Owner in the event of requisition of such Owner’s Ship for hire, remuneration for
salvage or towage services, demurrage and detention moneys and damages for breach (or payment
for variation or termination) of any charterparty or other contract for the employment of
such Owner’s Ship;
	 
	 	 	“Earnings Account” means:

	 	(a)	 	in relation to Harmony, the Harmony Earnings Account,
	 
	 	(b)	 	in relation to Phoenix, the Phoenix Earnings Account;
	 
	 	(c)	 	in relation to Goddess, the Goddess Earnings Account; or
	 
	 	(d)	 	in relation to Daisy, the Daisy Earnings Account,

	 	 	and “Earnings Accounts” means any or all of them;
	 
	 	 	“Encumbrance” means any mortgage, charge (whether fixed or floating), pledge, lien,
hypothecation, assignment, trust arrangement or security interest or other encumbrance of any
kind securing any obligation of any person or any type of preferential arrangement (including
without limitation title transfer and/or retention arrangements having a similar effect);
	 
	 	 	“Environmental Affiliate” means any agent or employee of any Owner or any other Relevant
Party or any person having a contractual relationship with any Owner or any other Relevant
Party in connection with any Relevant Ship or its operation or the carriage of cargo and/or
passengers thereon and/or the provision of goods and/or services on
or from any Relevant Ship;

7

 

	 	 	 
	 
	 	 	“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 its
operation or the carriage of cargo and/or passengers thereon and/or the provision 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 Pollutant from any Relevant Ship;
	 
	 	 	“Environmental Laws” means all national, international and state laws, rules, regulations,
treaties and conventions applicable to any Relevant Ship pertaining to the pollution or
protection of human health or the environment including, without limitation, the carriage of
Pollutants and actual or threatened emissions, spills, releases or discharges of Pollutants;
	 
	 	 	“Envoy” means the 1984-built, 26,318 dwt bulk carrier Free Envoy owned by the Envoy Owner and
registered in the ownership of the Envoy Owner through the relevant Registry under the laws
and flag of the relevant Flag State with IMO Number 8317150;
	 
	 	 	“Envoy Collateral General Assignment” means the second priority general assignment collateral
to the Envoy Collateral Mortgage executed or (as the context may require) to be executed by
the Envoy Collateral Owner in favour of the Bank in the form set out in schedule 8;
	 
	 	 	“Envoy Collateral Guarantee” means the corporate guarantee executed or (as the context may
require) to be executed by the Envoy Collateral Owner in favour of the Bank in the form set
out in schedule 4;
	 
	 	 	“Envoy Collateral Manager’s Undertaking” means the second priority manager’s undertaking and
assignment in respect of Envoy executed or (as the context may require) to be executed by the
Manager in favour of the Bank in the form set out in schedule 12;
	 
	 	 	“Envoy Collateral Mortgage” means the second preferred Marshall Islands mortgage of Envoy
executed or (as the context may require) to be executed by the Envoy Collateral Owner in
favour of the Bank in the form set out in schedule 6;
	 
	 	 	“Envoy Collateral Owner” means Adventure Three S.A. of Trust Company, Ajeltake Road, Ajeltake
Island, Majuro, Marshall Islands MH96960 and includes its successors in title;
	 
	 	 	“Envoy Management Agreement” means the agreement made or (as the context may require) to be
made between the Envoy Collateral Owner and the Manager in a form previously approved in
writing by the Bank providing (inter alia) for the Manager to manage Envoy;
	 
	 	 	“Event of Default” means any of the events or circumstances described in clause 10.1;
	 
	 	 	“Excess Cash” means, in relation to a New Ship and each Excess Cash Calculation Period, the
amount (calculated by the Agent in its sole discretion pursuant to clause 8.4 of the Senior
Loan Agreement and advised to the Bank in writing) which is equal to:

	 	(a)	 	the aggregate Earnings of that New Ship paid to the Borrower, minus
	 
	 	(b)	 	any Permitted Operating Expenses actually paid by the relevant Borrower in
respect of that New Ship in a manner consistent with, or permitted by, the Security
Documents and the Senior Security Documents, minus
	 
	 	(c)	 	any other amount withdrawn from the Earnings Account of that New Ship in
accordance with clauses 14.2.1 — 14.2.4 (inclusive) of the Senior Loan Agreement, minus

8

 

	 	(d)	 	any amount required to be held as minimum cash balance by the Borrowers under
clause 8.1.16 in respect of that Ship, and actually held throughout such Excess Cash
Calculation Period,

	 	 	in each case, during such Excess Cash Calculation Period;
	 
	 	 	“Excess Cash Account” means a Dollar account of the Borrowers opened or (as the context may
require) to be opened with the Account Bank and includes any sub-accounts thereof and any
other account designed in writing by the Bank to be an Excess Cash Account for the purposes
of this Agreement;
	 
	 	 	“Excess Cash Calculation Period” means:

	 	(a)	 	the period from the date of the Senior Loan Agreement until 30 September 2007;
and
	 
	 	(b)	 	each calendar quarter starting with the calendar quarter commencing on 1 October
2007;

	 	 	“Fee Letter” means the letter dated on the date of this Agreement made between the Borrower
and the Bank in relation to the fees payable under clause 5;
	 
	 	 	“Flag State” means, in relation to each Ship, the Marshall Islands or, in each such case,
such other state or territory agreed in writing by the Bank, at the request of an Owner, as
being the “Flag State” of such Owner’s Ship for the purposes of the relevant Ship Security
Documents;
	 
	 	 	“Fleet Daily Charter Rate” means, at any relevant time, the aggregate of the Daily Charter
Rate for all New Ships under all the Acceptable Charters at such time;
	 
	 	 	“General Assignment” means:

	 	(a)	 	in relation to Harmony, the Harmony General Assignment;
	 
	 	(b)	 	in relation to Phoenix, the Phoenix General Assignment;
	 
	 	(c)	 	in relation to Goddess, the Goddess General Assignment;
	 
	 	(d)	 	in relation to Daisy, the Daisy General Assignment,
	 
	 	(e)	 	in relation to Destiny, the Destiny Collateral General Assignment; or
	 
	 	(f)	 	in relation to Envoy, the Envoy Collateral General Assignment;

	 	 	and “General Assignments” means any or all of them;
	 
	 	 	“Goddess” means the 2002-built, 47,777 dwt bulk carrier Olympian Goddess owned on the date of
this Agreement by the Goddess Seller and registered under the laws and flag of the Marshall
Islands with IMO Number 9266037 and to be registered, on or prior to the drawdown of the
Goddess Advance, in the ownership of the Goddess Borrower through the relevant Registry under
the laws and flag of the relevant Flag State with the name Free Jupiter;
	 
	 	 	“Goddess Advance” means an Advance of up to $7,508,750 made or (as the context may require)
to be made available to the Borrowers for the purpose of financing part of the acquisition
cost of Goddess by the Goddess Borrower pursuant to the Goddess Contract;
	 
	 	 	“Goddess Borrower” means Adventure Eight S.A. of Trust Company Complex, Ajeltake Road,
Ajeltake Island, Majuro, Marshall Islands MH96960 and includes its successors in title;
	 
	 	 	“Goddess Contract” means the memorandum of agreement dated 1 May 2007, as amended by an
addendum no. 1 dated 1 May 2007 and an addendum no. 2 dated 11 May 2007, each made between
the Goddess Seller and the Goddess Borrower, relating to the sale by the Goddess Seller, and
the purchase by the Goddess Borrower, of Goddess;

9

 

	 	 	“Goddess Contract Price” means Forty seven million Dollars ($47,000,000) or such other lesser
sum in Dollars as may be payable by the Goddess Borrower to the Goddess Seller under the
Goddess Contract, being the purchase price of Goddess thereunder;
	 
	 	 	“Goddess Earnings Account” means a Dollar account of the Goddess Borrower opened or (as the
context may require) to be opened with the Account Bank and includes any sub-accounts thereof
and any other account designated in writing by the Bank to be a Goddess Earnings Account for
the purposes of this Agreement;
	 
	 	 	“Goddess General Assignment” means the second priority general assignment collateral to the
Goddess Mortgage executed or (as the context may require) to be executed by the Goddess
Borrower in favour of the Bank in the form set out in schedule 7;
	 
	 	 	“Goddess Management Agreement” means the agreement made or (as the context may require) to be
made between the Goddess Borrower and the Manager in a form previously approved in writing by
the Bank providing (inter alia) for the Manager to manage Goddess;
	 
	 	 	“Goddess Manager’s Undertaking” means the second priority undertaking and assignment in
respect of Goddess executed or (as the context may require) to be executed by the Manager in
favour of the Bank in the form set out in schedule 11;
	 
	 	 	“Goddess Mortgage” means the second preferred Marshall Islands mortgage of Goddess executed
or (as the context may require) to be executed by the Goddess Borrower in favour of the Bank
in the form set out in schedule 5;
	 
	 	 	“Goddess Seller” means Olympian Goddess Shipping of the Republic of the Marshall Islands and
includes its successors in title;
	 
	 	 	“Government Entity” means and includes (whether having a distinct legal personality or not)
any national or local government authority, board, commission, department, division, organ,
instrumentality, court or agency and any association, organisation or institution of which
any of the foregoing is a member or to whose jurisdiction any of the foregoing is subject or
in whose activities any of the foregoing is a participant;
	 
	 	 	“Group” means, together, the Corporate Guarantor and its Subsidiaries from time to time
(including, for the avoidance of doubt, the Owners) and “member of the Group” shall be
construed accordingly;
	 
	 	 	“Guarantees” means, together, the Corporate Guarantee and the Collateral Guarantees and
“Guarantee” means any or all of them;
	 
	 	 	“Harmony” means the 1996-built, 23,524 dwt bulk carrier Ocean Harmony owned on the date of
this Agreement by the Harmony Seller and registered under the laws and flag of the Marshall
Islands with IMO Number 9135432 and to be registered, on or prior to the drawdown of the
Harmony Advance, in the ownership of the Harmony Borrower through the relevant Registry under
the laws and flag of the relevant Flag State with the name Free Iris;
	 
	 	 	“Harmony Advance” means an Advance of up to $5,538,750 made or (as the context may require)
to be made available to the Borrowers for the purpose of financing part of the acquisition
cost of Harmony by the Harmony Borrower pursuant to the Harmony Contract;
	 
	 	 	“Harmony Borrower” means Adventure Seven S.A. of Trust Company Complex, Ajeltake Road,
Ajeltake Island, Majuro, Marshall Islands MH96960 and includes its successors in title;
	 
	 	 	“Harmony Contract” means the memorandum of agreement dated 1 May 2007, as amended by an
addendum no. 1 dated 1 May 2007 and an addendum no. 2 dated 11 May 2007, each made between
the Harmony Seller and the Harmony Borrower, relating to the sale by the Harmony Seller, and
the purchase by the Harmony Borrower, of Harmony;

10

 

	 	 	“Harmony Contract Price” means Twenty six million seven hundred and fifty thousand Dollars
($26,750,000) or such other lesser sum in Dollars as may be payable by the Harmony Borrower
to the Harmony Seller under the Harmony Contract, being the purchase price of Harmony
thereunder;
	 
	 	 	“Harmony Earnings Account” means a Dollar account of the Harmony Borrower opened or (as the
context may require) to be opened with the Account Bank and includes any sub-accounts thereof
and any other account designated in writing by the Bank to be a Harmony Earnings Account for
the purposes of this Agreement;
	 
	 	 	“Harmony General Assignment“ means the second priority general assignment collateral to the
Harmony Mortgage executed or (as the context may require) to be executed by the Harmony
Borrower in favour of the Bank in the form set out in schedule 7;
	 
	 	 	“Harmony Management Agreement” means the agreement made or (as the context may require) to be
made between the Harmony Borrower and the Manager in a form previously approved in writing by
the Bank providing (inter alia) for the Manager to manage Harmony;
	 
	 	 	“Harmony Manager’s Undertaking” means the second priority undertaking and assignment in
respect of Harmony executed or (as the context may require) to be executed by the Manager in
favour of the Bank in the form set out in schedule 11;
	 
	 	 	“Harmony Mortgage” means the second preferred Marshall Islands mortgage of Harmony executed
or (as the context may require) to be executed by the Harmony Borrower in favour of the Bank
in the form set out in schedule 5;
	 
	 	 	“Harmony Seller” means Harmony Shipping Ltd. of the Republic of the Marshall Islands and
includes its successors in title;
	 
	 	 	“Indebtedness” means any obligation for the payment or repayment of money, whether as
principal or as surety and whether present or future, actual or contingent;
	 
	 	 	“Intercreditor Deed” means the agreement executed or (as the context may require) to be
executed between (inter alios) (1) the Borrowers, (2) the Bank, (3) the Security Agent, (4)
the Manager and (5) the Corporate Guarantor in the form set out in schedule 13;
	 
	 	 	“Interest Payment Date” means the last day of an Interest Period;
	 
	 	 	“Interest Period” means in relation to each Advance or (as the case may be) the Loan, each
period for the calculation of interest in respect of such Advance or (as the case may be the
Loan) ascertained in accordance with clauses 3.2 and 3.3;
	 
	 	 	“ISPS Code” means the International Ship and Port facility Security Code constituted pursuant
to resolution A.924(22) of the International Maritime Organization now set out in Chapter
XI-2 of the International Convention for the Safety of Life at Sea 1974 (as amended) as
adopted by a Diplomatic conference of the International Maritime Organisation on Maritime
Security in December 2002 and includes any amendments or extensions thereto and any
regulation issued pursuant thereto;
	 
	 	 	“ISSC” means, in relation to a Ship, the International Ship Security Certificate issued in
respect of such Ship pursuant to the ISPS Code;
	 
	 	 	“LIBOR” means, in relation to a particular period, the rate for deposits of Dollars for a
period equivalent to such period at or about 11 a.m. (London time) on the Quotation Date for
such period displayed on the appropriate page of Bloomberg, provided that if on such date no
such rate is so displayed, LIBOR for such period shall be the offered rate for deposits in
Dollars for such amount and for such period which is the arithmetic mean of the rates quoted
to the Bank by each Reference Bank at the request of the Bank as such Reference 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 and for a period equivalent to such period to
prime banks in the London

11

 

	 	 	Interbank Market at or about 11 a.m. (London time) on the Quotation Date for such period;
	 
	 	 	“Loan” means the aggregate principal amount owing to the Bank under this Agreement at any
relevant time;
	 
	 	 	“Management Agreement” means:

	 	(a)	 	in relation to Harmony, the Harmony Management Agreement;
	 
	 	(b)	 	in relation to Phoenix, the Phoenix Management Agreement;
	 
	 	(c)	 	in relation to Goddess, the Goddess Management Agreement;
	 
	 	(d)	 	in relation to Daisy, the Daisy Management Agreement;
	 
	 	(e)	 	in relation to Destiny, the Destiny Collateral Management Agreement; or
	 
	 	(f)	 	in relation to Envoy, the Envoy Collateral Management Agreement,

	 	 	and “Management Agreements” means any or all of them;
	 
	 	 	“Manager” means Free Bulkers S.A. of Trust Company Complex, Ajeltake Road, Ajeltake Island,
Majuro, Marshall Islands MH96960 or any other person appointed from time to time by an Owner,
with the prior written consent of the Bank, as the manager of such Owner’s Ship and includes
its successors in title;
	 
	 	 	“Manager’s Undertaking” means:

	 	(a)	 	in relation to Harmony, the Harmony Manager’s Undertaking;
	 
	 	(b)	 	in relation to Phoenix, the Phoenix Manager’s Undertaking;
	 
	 	(c)	 	in relation to Goddess, the Goddess Manager’s Undertaking;
	 
	 	(d)	 	in relation to Daisy, the Daisy Manager’s Undertaking;
	 
	 	(e)	 	in relation to Destiny, the Destiny Collateral Manager’s Undertaking; or
	 
	 	(f)	 	in relation to Envoy, the Envoy Collateral Manager’s Undertaking,

	 	 	and “Manager’s Undertakings” means any or all of them;
	 
	 	 	“Margin” means:

	 	(a)	 	for the period commencing on the date of this Agreement and ending on the date
falling twelve (12) months thereafter (the “First Adjustment Date”), two point seven
five per cent (2.75%) per annum;
	 
	 	(b)	 	for the period commencing on the First Adjustment Date and ending on the date
falling twelve (12) months thereafter (the “Second Adjustment Date”), three point five
zero per cent (3.50%) per annum; and
	 
	 	(c)	 	for the period commencing on the Second Adjustment Date until the last day of the
Security Period, four point two five per cent (4.25%) per annum;

	 	 	“month” means a period beginning in one calendar month and ending in the next calendar month
on the day numerically corresponding to the day of the calendar month on which it started,
provided that (a) if the period started on the last Banking Day in a calendar month or if
there is no such numerically corresponding day, it shall end on the last Banking Day in such

12

 

	 	 	next calendar month and (b) if such numerically corresponding day is not a Banking Day, the
period shall end on the next following Banking Day in the same calendar month but if there is
no such Banking Day it shall end on the preceding Banking Day and “months” and “monthly”
shall be construed accordingly;
	 
	 	 	“Mortgage” means:

	 	(a)	 	in relation to Harmony, the Harmony Mortgage;
	 
	 	(b)	 	in relation to Phoenix, the Phoenix Mortgage;
	 
	 	(c)	 	in relation to Goddess, the Goddess Mortgage;
	 
	 	(d)	 	in relation to Daisy, the Daisy Mortgage;
	 
	 	(e)	 	in relation to Destiny, the Destiny Collateral Mortgage; or
	 
	 	(f)	 	in relation to Envoy, the Envoy Collateral Mortgage,

	 	 	and “Mortgages” means any or all of them;
	 
	 	 	“Mortgaged Ship” means, at any relevant time, any New Ship which is at such time subject to a
Mortgage and/or the Earnings, Insurances and Requisition Compensation (as each such term is
defined in the relevant Ship Security Documents) of which are subject to an Encumbrance
pursuant to the relevant Ship Security Documents and a New Ship shall, for the purposes of
this Agreement, be deemed to be a Mortgaged Ship as from whichever shall be the earlier of
(a) the Drawdown Date of the Advance for that New Ship and (b) the date that the Mortgage of
that New Ship shall have been executed and registered in accordance with this Agreement until
whichever shall be the earlier of (i) the payment in full of the amount required to be paid
by the Bank pursuant to clauses 4.3 and 4.5 following the sale or Total Loss of such New Ship
and (ii) the last day of the Security Period;
	 
	 	 	“New Ships” means, together, Harmony, Phoenix, Goddess and Daisy and:

	 	(a)	 	in relation to the Harmony Advance and/or the Harmony Borrower, it means Harmony;
	 
	 	(b)	 	in relation to the Phoenix Advance and/or the Phoenix Borrower, it means Phoenix;
	 
	 	(c)	 	in relation to the Goddess Advance and/or the Goddess Borrower, it means Goddess;
or
	 
	 	(d)	 	in relation to the Daisy Advance and/or the Daisy Borrower, it means Daisy,

	 	 	and “New Ship” means any of them;
	 
	 	 	“Offering” means the secondary offering of shares of the Corporate Guarantor on NASDAQ
scheduled to take place after the date of this Agreement with a view to raising gross capital
between $70,000,000 and $100,000,000;
	 
	 	 	“Offering Date” means the date when the Offering takes place;
	 
	 	 	“Offering Proceeds” means the actual net proceeds of the Offering;
	 
	 	 	“Operating Account” means a Dollar account of the Borrowers opened or (as the context may
require) to be opened jointly by the Borrowers with the Account Bank and includes any
sub-accounts thereof and any other account designated in writing by the Bank to be an
Operating Account for the purposes of this Agreement;
	 
	 	 	“Operator” means any person who is from time to time during the Security Period concerned in
the operation of a Ship and falls within the definition of “Company” set out in rule 1.1.2 of
the Code;

13

 

	 	 	“Owners” means, together, the Borrowers and the Collateral Owners and

	 	(a)	 	in relation to Harmony, it means the Harmony Borrower;
	 
	 	(b)	 	in relation to Phoenix, it means the Phoenix Borrower;
	 
	 	(c)	 	in relation to Goddess, it means the Goddess Borrower;
	 
	 	(d)	 	in relation to Daisy, it means the Daisy Borrower;
	 
	 	(e)	 	in relation to Destiny, it means the Destiny Collateral Owner; or
	 
	 	(f)	 	in relation to Envoy, it means the Envoy Collateral Owner,

	 	 	and “Owner” means any of them;
	 
	 	 	“Permitted Encumbrance” means any Senior Encumbrances, any Collateral Senior Encumbrances and
any Encumbrances in favour of the Bank created pursuant to the Security Documents and
Permitted Liens;
	 
	 	 	“Permitted Liens” means, in relation to a Ship, any lien on such Ship for master’s, officer’s
or crew’s wages outstanding in the ordinary course of trading, any lien for salvage and any
ship repairer’s or outfitter’s possessory lien for a sum not (except with the prior written
consent of the Bank) exceeding the Casualty Amount (as defined in the Ship Security Documents
for such Ship) for such Ship;
	 
	 	 	“Permitted Operating Expenses” means, in relation to each Ship, the actual monthly operating
expenses for that Ship, the actual monthly costs and expenses of administration of the
relevant Owner’s affairs and a fair proportion of the actual monthly general costs and
administrative expenses of the Corporate Guarantor, each actually incurred or (as the context
may require) to be incurred by the relevant Owner:

	 	(a)	 	in accordance with prudent and reasonable practice; and
	 
	 	(b)	 	additionally, from 1 January 2008 and at all times thereafter, in accordance with
the annual budgets submitted by the Borrowers to the Agent pursuant to clause 8.1.7;

	 	 	“Phoenix” means the 1995-built, 24,318 dwt bulk carrier Ocean Phoenix owned on the date of
this Agreement by the Phoenix Seller and registered under the laws and flag of the Marshall
Islands with IMO Number 9111591 and to be registered, on or prior to the drawdown of the
Phoenix Advance, in the ownership of the Phoenix Borrower through the relevant Registry under
the laws and flag of the relevant Flag State with the name Free Hero;
	 
	 	 	“Phoenix Advance” means an Advance of up to $5,355,000 made or (as the context may require)
to be made available to the Borrowers for the purpose of financing part of the acquisition
cost of Phoenix by the Phoenix Borrower pursuant to the Phoenix Contract;
	 
	 	 	“Phoenix Borrower” means Adventure Six S.A. of Trust Company Complex, Ajeltake Road, Ajeltake
Island, Majuro Marshall Islands MH96960 and includes its successors in title;
	 
	 	 	“Phoenix Contract” means the memorandum of agreement dated 1 May 2007, as amended by an
addendum no. 1 dated 1 May 2007 and an addendum no. 2 dated 11 May 2007, each made between
the Phoenix Seller and the Phoenix Borrower, relating to the sale by the Phoenix Seller, and
the purchase by the Phoenix Borrower, of Phoenix;
	 
	 	 	“Phoenix Contract Price” means Twenty five million two hundred and fifty thousand Dollars
($25,250,000) or such other lesser sum in Dollars as may be payable by the Phoenix Borrower

14

 

	 	 	to the Phoenix Seller under the Phoenix Contract, being the purchase price of Phoenix
thereunder;
	 
	 	 	“Phoenix Earnings Account” means a Dollar account of the Phoenix Borrower opened or (as the
context may require) to be opened with the Account Bank and includes any sub-accounts thereof
and any other account designated in writing by the Bank to be a Phoenix Earnings Account for
the purposes of this Agreement;
	 
	 	 	“Phoenix General Assignment“ means the second priority general assignment collateral to the
Phoenix Mortgage executed or (as the context may require) to be executed by the Phoenix
Borrower in favour of the Bank in the form set out in schedule 7;
	 
	 	 	“Phoenix Management Agreement” means the agreement made or (as the context may require to be
made) between the Phoenix Borrower and the Manager in a form previously approved in writing
by the Bank providing (inter alia) for the Manager to manage Phoenix;
	 
	 	 	“Phoenix Manager’s Undertaking” means the second priority undertaking and assignment in
respect of Phoenix executed or (as the context may require) to be executed by the Manager in
favour of the Bank in the form set out in schedule 11;
	 
	 	 	“Phoenix Mortgage” means the second preferred Marshall Islands mortgage of Phoenix executed
or (as the context may require) to be executed by the Phoenix Borrower in favour of the Bank
in the form set out in schedule 5;
	 
	 	 	“Phoenix Seller” means Ocean Phoenix Shipping Ltd. of the Republic of the Marshall Islands
and includes its successors in title;
	 
	 	 	“Pollutant” means and includes pollutants, contaminants, toxic substances, oil as defined in
the United States Oil Pollution Act of 1990 and all hazardous substances as defined in the
United States Comprehensive Environmental Response, Compensation and Liability Act 1980;
	 
	 	 	“Prohibited Jurisdiction” means any country or jurisdiction from time to time, (a) that is
subject of a prohibition order (or any similar order or directive), sanctions or restrictions
promulgated or administered by the Office of Foreign Assets Control of the United States
Treasury Department, or (b) in which, or for which, any Creditor, any Assignee or Transferee
or successor in title thereof is otherwise prohibited or restricted, under laws, regulations,
sanctions or restrictions applicable to its business, from extending credit, transferring
property or assets, engaging in or facilitating trade or other economic activity, or
otherwise doing business;
	 
	 	 	“Prohibited Person” means any person appearing on the Specially Designated Nationals List
compiled and disseminated by the Office of Foreign Assets Control of the United States
Treasury Department, as the same may be amended from time to time;
	 
	 	 	“Quotation Date” means, in relation to any period for which LIBOR is to be determined under
this Agreement, the date on which quotations would customarily be provided by leading banks
in the London Interbank Market for deposits in the relevant currency for delivery on the
first day of that period;
	 
	 	 	“Reference Banks” means the principal London office of such banks and financial institutions
nominated by the Bank from time to time in its discretion;
	 
	 	 	“Registry” means, in relation to each Ship, such registrar, commissioner or representative of
the relevant Flag State who is duly authorised and empowered to register such Ship, the
relevant Owner’s title to such Ship and the relevant Mortgage under the laws and flag of the
relevant 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 Jurisdiction” means any jurisdiction in which or where any Security Party is

15

 

	 	 	incorporated, resident, domiciled, has a permanent establishment, carries on, or has a place
of business or is otherwise effectively connected;
	 
	 	 	“Relevant Party” means each Owner, the Owner’s respective Related Companies, any other
Security Party and any Security Party’s Related Companies and “Relevant Parties” means any or
all of them;
	 
	 	 	“Relevant Ship” means each of the Ships and any other vessel from time to time (whether
before or after the date of this Agreement) owned, managed or crewed by, or chartered to, any
Relevant Party;
	 
	 	 	“Repayment Date” means, subject to clause 6.3, the earlier of (a) the date falling thirty six
(36) months after the date of this Agreement and (b) 31 August 2010;
	 
	 	 	“Restis Family” means each of Mr Victor Restis and any of Mrs Bella Resti and/or Ms Claudia
Resti and/or Ms Katia Resti, and includes their direct linear descendents;
	 
	 	 	“Retention Account” means a Dollar account of the Borrowers opened or (as the context may
require) to be opened jointly by the Borrowers with the Account Bank and includes any
sub-accounts thereof and any other account designated in writing by the Bank to be a
Retention Account for the purposes of this Agreement;
	 
	 	 	“Security Agent” means HSH Nordbank AG of Gerhart-Hauptmann Platz 50, 20095 Hamburg, Germany
as security agent and trustee under the Senior Loan Agreement or such other person as may be
appointed as security agent and trustee under the Senior Loan Agreement and includes its
successors in title;
	 
	 	 	“Security Documents” means this Agreement, the Fee Letter, the Mortgages, the General
Assignments, the Manager’s Undertakings, the Guarantees, the Account Pledge, the Charter
Assignments, the Intercreditor Deed, the Collateral Intercreditor Deeds and any other
documents as may have been or shall from time to time after the date of this Agreement be
executed to guarantee and/or secure all or any part of the Loan, interest thereon and other
moneys from time to time owing by the Borrowers or any of them pursuant to this Agreement or
any of them (whether or not any such document also secures moneys from time to time owing
pursuant to any other document or agreement);
	 
	 	 	“Security Party” means each Owner, the Manager, the Corporate Guarantor, or any other person
who may at any time be a party to any of the Security Documents (other than the Bank, the
Collateral Senior Lender and the Creditors (as defined in the Senior Loan Agreement));
	 
	 	 	“Security Period” means the period commencing on the date hereof and terminating upon the
discharge of the security created by the Security Documents by payment of all monies payable
actually or contingently thereunder;
	 
	 	 	“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
Borrowers) which is at any relevant time one hundred and twenty per cent (120%) 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 Borrowers and the
Bank) which is, at any relevant time, the aggregate of (a) the market value of the Mortgaged
Ships as most recently determined in accordance with clause 8.2.2 and (b) the value of any
additional security for the time being actually provided to the Bank pursuant to clause
8.1.16 as most recently determined in accordance with clause 8.2.5;
	 
	 	 	“Seller” means:

	 	(a)	 	in relation to Harmony, the Harmony Seller;
	 
	 	(b)	 	in relation to Phoenix, the Phoenix Seller;

16

 

	 	(c)	 	in relation to Goddess, the Goddess Seller; or
	 
	 	(d)	 	in relation to Daisy, the Daisy Seller,

	 	 	and “Sellers” means any or all of them;
	 
	 	 	“Senior Encumbrances” means the Encumbrances created by or pursuant to the Senior Security
Documents as security for the Senior Indebtedness;
	 
	 	 	“Senior Indebtedness” means the Indebtedness of the Borrowers, the Corporate Guarantor and
the Manager owing under the Senior Security Documents at any relevant time;
	 
	 	 	“Senior Lenders” has the meaning given to “Banks” in the Senior Loan Agreement;
	 
	 	 	“Senior Loan” means the aggregate principal amount owing to the Senior Lenders under the
Senior Loan Agreement at any relevant time;
	 
	 	 	“Senior Loan Agreement” means the loan agreement dated 2007 and made between (inter alios)
(1) the Senior Lenders as lenders, (2) the Agent, (3) the Security Agent, (4) the Account
Bank and (5) the Borrowers as joint and several borrowers, whereby the Senior Lenders agreed
to make available to the Borrowers a loan facility of up to $68,000,000 for the purpose of
financing part of the purchase cost of the New Ships;
	 
	 	 	“Senior Security Documents” means the Senior Loan Agreement and the documents defined as
“Security Documents” in clause 1.2 of the Senior Loan Agreement;
	 
	 	 	“Ships” means, together, the New Ships and the Collateral Ships and “Ship” means any of them;
	 
	 	 	“Ship Security Documents”:

	 	(a)	 	in relation to Harmony, means the Harmony Mortgage, the Harmony General
Assignment, the Harmony Manager’s Undertaking and any Charter Assignment in respect of
Harmony;
	 
	 	(b)	 	in relation to Phoenix, means the Phoenix Mortgage, the Phoenix General
Assignment, the Phoenix Manager’s Undertaking and any Charter Assignment in respect of
Phoenix;
	 
	 	(c)	 	in relation to Goddess, means the Goddess Mortgage, the Goddess General
Assignment, the Goddess Manager’s Undertaking and any Charter Assignment in respect of
Goddess;
	 
	 	(d)	 	in relation to Daisy, means the Daisy Mortgage, the Daisy General Assignment, the
Daisy Manager’s Undertaking and any Charter Assignment in respect of Daisy;
	 
	 	(e)	 	in relation to Destiny, means the Destiny Collateral Mortgage, the Destiny
Collateral General Assignment, the Destiny Collateral Manager’s Undertaking and any
Charter Assignment in respect of Destiny; or
	 
	 	(f)	 	in relation to Envoy, means the Envoy Collateral Mortgage, the Envoy Collateral
General Assignment, the Envoy Collateral Manager’s Undertaking and any Charter
Assignment in respect of Envoy;

	 	 	“SMC” means, in relation to each Ship, the safety management certificate issued in respect of
such Ship in accordance with rule 13 of the Code;
	 
	 	 	“Subsidiary” of a person means any company or entity directly or indirectly controlled by
such person, and for this purpose “control” means either the ownership of more than fifty per
cent (50%) of the voting share capital (or equivalent rights of ownership) of such company or
entity or the power to direct its policies and management, whether by contract or otherwise;

17

 

	 	 	“Taxes” includes all present and future taxes, levies, imposts, duties, fees or charges of
whatever nature together with interest thereon and penalties in respect thereof and
“Taxation” shall be construed accordingly;
	 
	 	 	“Termination Date” means 31 October 2007 or such later date as the Bank may in its absolute
discretion agree in writing;
	 
	 	 	“Total Loss” means, in relation to a Ship:

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

	 	 	“Transferee” has the meaning ascribed thereto in clause 15.4; and
	 
	 	 	“Underlying Documents” means, together, the Contracts and the Management Agreements.
	 
	1.3	 	Headings
	 
	 	 	Clause headings and the table of contents are inserted for convenience of reference only and
shall be ignored in the interpretation of this Agreement.
	 
	1.4	 	Construction of certain terms
	 
	 	 	In this Agreement, unless the context otherwise requires:
	 
	1.4.1	 	references to clauses and schedules are to be construed as references to clauses of, and
schedules to, this Agreement and references to this Agreement include its schedules;
	 
	1.4.2	 	references to (or to any specified provision of) this Agreement or any other document shall
be construed as references to this Agreement, that provision or that document as in force for
the time being and as amended in accordance with terms thereof, or, as the case may be, with
the agreement of the relevant parties;
	 
	1.4.3	 	references to a “regulation” include any present or future regulation, rule, directive,
requirement, request or guideline (whether or not having the force of law) of any agency,
authority, central bank or government department or any self-regulatory or other national or
supra-national authority;
	 
	1.4.4	 	words importing the plural shall include the singular and vice versa;
	 
	1.4.5	 	references to a time of day are to Boston time unless otherwise specified;
	 
	1.4.6	 	references to a person shall be construed as references to an individual, firm, company,
corporation, unincorporated body of persons or any Government Entity;
	 
	1.4.7	 	references to a “guarantee” include references to an indemnity or other assurance against
financial loss including, without limitation, an obligation to purchase assets or services as
a consequence of a default by any other person to pay any Indebtedness and “guaranteed” shall
be construed accordingly; and
	 
	1.4.8	 	references to any enactment shall be deemed to include references to such enactment as
re-enacted, amended or extended.

18

 

	2	 	The Commitment and the Loan
	 
	2.1	 	Agreement to lend
	 
	 	 	The Bank, relying upon each of the representations and warranties in clause 7, agrees to
advance by way of loan to the Borrowers, jointly and severally, upon and subject to the terms
of this Agreement, the principal sum of up to Twenty one million five hundred thousand
Dollars ($21,500,000) in four (4) Advances.
	 
	2.2	 	Drawdown
	 
	 	 	Subject to the terms and conditions of this Agreement, each Advance shall be made to the
Borrowers following receipt by the Bank from the Borrowers of a Drawdown Notice not later
than 10:00 a.m. on the third Banking Day before the date, which shall be a Banking Day
falling within the Drawdown Period, on which the Borrowers propose such Advance is made. A
Drawdown Notice shall be effective on actual receipt by the Bank and, once given, shall,
subject as provided in clause 3.6.1, be irrevocable.
	 
	2.3	 	Timing and limitation of Advances
	 
	2.3.1	 	The aggregate amount of the Loan shall not exceed the lower of (a) Twenty one million five
hundred thousand Dollars ($21,500,000), (b) such amount in Dollars which, when added to the
amount of the Senior Loan actually drawn down, will not exceed eighty per cent (80%) of the
aggregate market value of all the New Ships as determined by reference to the valuations
obtained pursuant to clause 9 and schedule 2 and (c) such amount in Dollars which, when added
to the amount of the Senior Loan actually drawn down, will not exceed Eighty nine million five
hundred thousand Dollars ($89,500,000).
	 
	2.3.2	 	Each Advance shall be made solely for the purpose of financing the payment of part of the
Contract Price for the relevant New Ship and shall only be made available on or after the
Delivery Date for such New Ship.
	 
	2.3.3	 	The amount of the Daisy Advance shall not exceed the lower of (a) $3,097,500 and (b) an
amount in Dollars which, when added to the amount of the Daisy Advance (as defined in the
Senior Loan Agreement) actually drawn down, will not exceed eighty per cent (80%) of the
market value of Daisy as determined by reference to the valuation of such Ship obtained
pursuant to clause 9 and schedule 3.
	 
	2.3.4	 	The amount of the Goddess Advance shall not exceed the lower of (a) $7,508,750 and (b) an
amount in Dollars which, when added to the amount of the Goddess Advance (as defined in the
Senior Loan Agreement) actually drawn down, will not exceed eighty per cent (80%) of the
market value of Goddess as determined by reference to the valuation of such Ship obtained
pursuant to clause 9 and schedule 3.
	 
	2.3.5	 	The amount of the Harmony Advance shall not exceed the lower of (a) $5,538,750 and (b) an
amount in Dollars which, when added to the amount of the Harmony Advance (as defined in the
Senior Loan Agreement) actually drawn down, will not exceed eighty per cent (80%) of the
market value of Harmony as determined by reference to the valuation of such Ship obtained
pursuant to clause 9 and schedule 3.
	 
	2.3.6	 	The amount of the Phoenix Advance shall not exceed the lower of (a) $5,355,000 and (b) an
amount in Dollars which, when added to the amount of the Phoenix Advance (as defined in the
Senior Loan Agreement) actually drawn down, will not exceed eighty per cent (80%) of the
market value of Phoenix as determined by reference to the valuation of such Ship obtained
pursuant to clause 9 and schedule 3.
	 
	2.4	 	Termination of Commitment
	 
	 	 	Any part of the Commitment which remains undrawn and uncancelled by the Termination Date

19

 

	 	 	shall thereupon be automatically cancelled.
	 
	2.5	 	Application of proceeds
	 
	 	 	Without prejudice to the Borrowers’ obligations under clause 8.1.3, the Bank shall have no
responsibility for the application of the proceeds of an Advance or any part thereof by the
Borrowers.
	 
	3	 	Interest and Interest Periods
	 
	3.1	 	Normal interest rate
	 
	 	 	The Borrowers shall pay interest on each Advance or (as the case may be) the Loan in respect
of each Interest Period relating thereto on each Interest Payment Date relating thereto (or,
in the case of Interest Periods of more than three (3) months, by instalments, the first
instalment three (3) months from the commencement of the relevant Interest Period and the
subsequent instalments at intervals of three (3) months or, if shorter, the period from the
date of the preceding instalment until the Interest Payment Date relative to such Interest
Period) at the rate per annum determined by the Bank to be the aggregate of (a) the Margin
and (b) LIBOR for such Interest Period.
	 
	3.2	 	Selection of Interest Periods
	 
	 	 	Subject to clause 3.3, the Borrowers may by notice received by the Bank not later than 10:00
a.m. on the third Banking Day before the beginning of each Interest Period specify whether
such Interest Period shall have a duration of one (1) month, three (3) months or six (6)
months or such other period as the Borrowers may select and the Bank may agree.
	 
	3.3	 	Determination of Interest Periods
	 
	 	 	Every Interest Period shall be of the duration specified by the Borrowers pursuant to clause
3.2, but so that:
	 
	3.3.1	 	the initial Interest Period in respect of each Advance shall commence on the Drawdown Date
for such Advance and each subsequent Interest Period for such Advance shall commence on the
last day of the previous Interest Period for such Advance;
	 
	3.3.2	 	the initial Interest Period for each Advance (other than the first Advance to be drawn down)
shall end on the last day of the then current Interest Period for the Loan and, on such day,
the drawn Advances shall be consolidated into and shall thereafter constitute the Loan;
	 
	3.3.3	 	if any Interest Period would otherwise overrun the Repayment Date, such Interest Period
shall end on the Repayment Date; and
	 
	3.3.4	 	if the Borrowers fail 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 Borrowers fail 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
Borrowers shall pay interest on such sum on demand from the due date up to the date of actual
payment (as well after as before judgment) at a rate determined by the Bank pursuant to this
clause 3.4. The period beginning on such due date and ending on such date of payment shall
be divided into successive periods of not more than three (3) months as selected by the Bank
each of which (other than the first, which shall commence on such due date) shall commence on
the last day of the preceding such period. The rate of interest applicable to each such
period shall be the aggregate (as determined by the Bank) of (a) two per cent (2%) per annum,
(b) the Margin and (c) LIBOR for such period. Such interest shall be due and payable on the
last day

20

 

	 	 	of each such period as determined by the Bank and, where the context so requires, for the
purposes of this Agreement each such period shall be treated as an Interest Period and each
such day shall be treated as an Interest Payment Date, provided that if such unpaid sum is an
amount of principal which became due and payable by reason of a declaration by the Bank under
clause 10.2.2 or a prepayment pursuant to clauses 4.3, 4.4, 8.2.1(a) or 12.1, on a date other
than an Interest Payment Date relating thereto, the first such period selected by the Bank
shall be of a duration equal to the period between the due date of such principal sum and
such Interest Payment Date and interest shall be payable on such principal sum during such
period at a rate of two per cent (2%) above the rate applicable thereto immediately before it
shall have become so due and payable. If, for the reasons specified in clause 3.6.1, the
Bank is unable to determine a rate in accordance with the foregoing provisions of this clause
3.4, interest on any sum not paid on its due date for payment shall be calculated at a rate
determined by the Bank to be two per cent (2%) per annum above the aggregate of the Margin
and the cost of funds to the Bank.
	 
	3.5	 	Notification of Interest Periods and interest rate
	 
	 	 	The Bank shall notify the Borrowers promptly of the duration of each Interest Period and of
each rate of interest (or, as the case may be, default interest) determined by it under this
clause 3.
	 
	3.6	 	Market disruption; non-availability
	 
	3.6.1	 	If and whenever, at any time prior to the commencement of any Interest Period, the Bank
shall have determined (which determination shall, in the absence of manifest error, be
conclusive):

	 	(a)	 	that adequate and fair means do not exist for ascertaining LIBOR during
such Interest Period; or
	 
	 	(b)	 	(if Reference Bank quotations are required having regard to the definition
of LIBOR in clause 1.2) that none or only one of the Reference Banks supplies the
Bank with a quotation for the purpose of calculating LIBOR; or
	 
	 	(c)	 	that deposits in Dollars are not available to the Bank in the London
Interbank Market in the ordinary course of business in sufficient amounts to fund the
Loan or any part thereof for such Interest Period,

	 	 	the Bank shall forthwith give notice (a “Determination Notice”) thereof to the Borrowers.
A Determination Notice shall contain particulars of the relevant circumstances giving rise
to its issue. After the giving of any Determination Notice the undrawn amount of the
Commitment shall not be borrowed until notice to the contrary is given to the Borrowers by
the Bank.
	 
	3.6.2	 	During the period of ten (10) days after any Determination Notice has been given by the
Bank under clause 3.6.1, the Bank shall certify an alternative basis (the “Substitute Basis”)
for maintaining the Loan. The Substitute Basis may at the Bank’s sole and unfettered
discretion (without limitation) include alternative interest periods, alternative currencies
or alternative rates of interest but shall include a margin above the cost of funds to the
Bank equivalent to the Margin. The Substitute Basis so certified shall be binding upon the
Borrowers 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 Borrowers that none of the
circumstances specified in clause 3.6.1 continues to exist whereupon the normal interest rate
fixing provisions of this Agreement shall apply.
	 
	4	 	Repayment and prepayment
	 
	4.1	 	Repayment
	 
	 	 	Subject to the other provisions of this Agreement, the Borrowers shall repay the Loan in full
on the Repayment Date.

21

 

	4.2	 	Voluntary prepayment
	 
	 	 	The Borrowers may prepay the Loan in whole or part (such part being in an amount of Five
hundred thousand Dollars ($500,000) or any larger sum which is an integral multiple of Five
hundred thousand Dollars ($500,000)), on any Interest Payment Date to be prepaid without
premium or penalty subject always to their obligations under clause 4.5.
	 
	4.3	 	Prepayment on Total Loss or sale
	 
	4.3.1	 	Before drawdown

	 	(a)	 	On a New Ship becoming a Total Loss (or suffering damage or being involved
in an incident which in the opinion of the Bank may result in such New Ship being
subsequently determined to be a Total Loss) or on a New Ship being sold, in each case
before the Advance for such New Ship is drawn down, the obligation of the Bank to
advance the Advance for such New Ship shall immediately cease and the Commitment
shall be reduced by the amount of such Advance.
	 
	 	(b)	 	On a Collateral Ship becoming a Total Loss (or suffering damage or being
involved in an incident which in the opinion of the Bank may result in such
Collateral Ship being subsequently determined to be a Total Loss) or on a Collateral
Ship being sold, in each case before any Advance is drawn down, the obligation of the
Bank to advance any Advance shall immediately cease and the Commitment shall be
reduced to zero.

	4.3.2	 	Thereafter

	 	(a)	 	If a New Ship which is a Mortgaged Ship is sold (with the prior consent of
the Bank pursuant to the relevant Ship Security Documents) or becomes a Total Loss,
then the Borrowers shall, on the Disposal Reduction Date for such New Ship, prepay
such part of the Loan as is equal to the higher of (i) the Relevant Amount and (ii)
such amount in Dollars as shall ensure that, immediately after the relevant
prepayment, the Security Value is not less than the Security Requirement.
	 
	 	(b)	 	If a Collateral Ship is sold (with the prior consent of the Bank pursuant
to the Ship Security Documents) or becomes a Total Loss after any Advance has been
drawn down, then the Borrowers shall, on the Disposal Reduction Date for that
Collateral Ship, prepay such amount of the Loan as the Bank may require in its
absolute sole discretion.

	4.3.3	 	Defined terms
	 
	 	 	For the purposes of this clause 4.3:

	 	(a)	 	“Applicable Fraction” means, in relation to a New Ship which is a Mortgaged
Ship, a fraction having a numerator of an amount equal to the market value of such
New Ship (as most recently determined in accordance with clause 8.2.2) and a
denominator of an amount equal to the aggregate market values of all of the New Ships
which are Mortgaged Ships (as most recently determined in accordance with clause
8.2.2), in each case as at the Disposal Reduction Date of such New Ship;
	 
	 	(b)	 	“Disposal Reduction Date” means:

	 	(i)	 	in relation to a Ship which has become a Total Loss, its Total
Loss Reduction Date; and
	 
	 	(ii)	 	in relation to a Ship which is sold in accordance with the
provisions of the relevant Ship Security Documents, the date of completion of
such sale (but immediately prior to such completion) by the transfer of title to
such Ship to the purchaser in exchange for payment of the relevant purchase
price;

22

 

	 	(c)	 	“Relevant Amount” means, in relation to a New Ship which is a Mortgaged
Ship and which has become a Total Loss or is sold, the amount in Dollars which is
equal to the amount of the Applicable Fraction multiplied by the amount of the Loan
outstanding as of the Disposal Reduction Date for such New Ship and multiplied
further by one point two (1.2); and
	 
	 	(d)	 	“Total Loss Reduction Date” means, in relation to a Ship which has become a
Total Loss, the date which is the earlier of:

	 	(i)	 	the date falling one hundred and twenty (120) days after that on
which such Ship became a Total Loss; and
	 
	 	(ii)	 	the date upon which the relevant insurance proceeds are or
Requisition Compensation is, received by the relevant Owner (or the Bank, as
such Owner’s assignees pursuant to the relevant Ship Security Documents).

	4.3.4	 	Interpretation
	 
	 	 	For the purpose of this Agreement, a Total Loss in respect of a Ship shall be deemed to
have occurred:

	 	(a)	 	in the case of an actual total loss of a Ship, on the actual date and at
the time such Ship was lost or, if such date is not known, on the date on which such
Ship was last reported;
	 
	 	(b)	 	in the case of a constructive total loss of a Ship, upon the date and at
the time notice of abandonment of such Ship is given to the insurers of such Ship for
the time being;
	 
	 	(c)	 	in the case of a compromised or arranged total loss of a Ship, on the date
upon which a binding agreement as to such compromised or arranged total loss has been
entered into by the insurers of such Ship;
	 
	 	(d)	 	in the case of Compulsory Acquisition of a Ship, on the date upon which the
relevant requisition of title or other compulsory acquisition of such Ship occurs;
and
	 
	 	(e)	 	in the case of hijacking, theft, condemnation, capture, seizure, arrest,
detention or confiscation of a Ship (other than where the same amounts to Compulsory
Acquisition of such Ship) by any Government Entity, or by persons purporting to act
on behalf of any Government Entity, which deprives the relevant Owner of the use of
such Ship for more than thirty (30) days, upon the expiry of the period of thirty
(30) days after the date upon which the relevant hijacking, theft, condemnation,
capture, seizure, arrest, detention or confiscation occurred.

	4.4	 	Mandatory prepayment on Offering; excess cash sweep
	 
	4.4.1	 	Offering
	 
	 	 	If the Offering takes place, the Borrowers shall forthwith prepay a part of the Loan equal
to the lower of (a) the total amount of the Loan then outstanding and (b) the Offering
Proceeds (and the Borrowers shall procure that the Corporate Guarantor shall advance
forthwith on receipt the Offering Proceeds to the Borrowers for application in accordance
with this clause 4.4.1).
	 
	4.4.2	 	Excess cash sweep
	 
	 	 	The Borrowers shall prepay on the last day (commencing with 31 December 2007) of each
Excess Cash Calculation Period, such part of the Loan as is equal to the balance then
standing to the credit of the Excess Cash Account on each such day (and the Borrowers
hereby irrevocably and unconditionally authorise the Bank to instruct the Account Bank to
effect each such transfer).

23

 

	4.5      	 	Amounts payable on prepayment
	 
	 	 	Any prepayment of all or part of the Loan under this Agreement shall be made together with:

	 	(a)	 	accrued interest on the amount to be prepaid to the date of such prepayment;
	 
	 	(b)	 	any additional amount payable under clauses 6.6 or 12.2; and
	 
	 	(c)	 	all other sums payable by the Borrowers to the Bank under this Agreement or any
of the other Security Documents including, without limitation, any accrued commitment
commission payable under clause 5.1 and any amounts payable under clause 11.

	4.6      	 	Notice of prepayment; reduction of repayment instalments
	 
	 	 	No prepayment may be effected under clause 4.2 unless the Borrowers shall have given the Bank
at least five (5) Banking Days prior written notice of their intention to make such
prepayment. Every notice of prepayment shall be effective only on actual receipt by the
Bank, shall be irrevocable, shall specify the amount to be prepaid and shall oblige the
Borrowers to make such prepayment on the date specified. No amount prepaid may be
reborrowed.
	 
	 	 	The Borrowers may not prepay the Loan or any part thereof save as expressly provided in this
Agreement.
	 
	5	 	Fees, commitment commission and expenses
	 
	5.1	 	Fees
	 
	 	 	The Borrowers shall pay to the Bank:
	 
	5.1.1	 	on the first Drawdown Date, an arrangement fee of such amount as is specified in the Fee
Letter;
	 
	5.1.2	 	an introductory fee of such amount and payable at such times as specified in the Fee Letter;
and
	 
	5.1.3	 	on each of the dates falling at three (3) monthly intervals after the date of this Agreement
until the last day of the Drawdown Period and on such day, commitment commission computed from
the date of this Agreement (in the case of the first payment of commission) and from the due
date of the preceding payment of commission (in the case of each subsequent payment), at the
rate per annum specified in the Fee Letter, on the daily undrawn amount of the Commitment.

	       	 	The fees and commission referred to in clause 5.1 shall be payable by the Borrowers to the Bank,
whether or not any part of the Commitment is ever advanced and shall be, in each case, non
refundable.
	 
	5.2     	 	Expenses
	 
	 	 	The Borrowers shall pay to the Bank on a full indemnity basis on demand all expenses
(including legal, printing and out-of-pocket expenses) incurred by the Bank:
	 
	5.2.1	 	in connection with the negotiation, preparation, execution and, where relevant, registration
of the Security Documents and of any amendment or extension of or the granting of any waiver
or consent under, any of the Security Documents and the syndication of the Loan; and
	 
	5.2.2	 	in contemplation of, or otherwise in connection with, the enforcement of, or preservation of
any rights under, any of the Security Documents, or otherwise in respect of the moneys owing
under any of the Security Documents,

24

 

	 	 	together with interest at the rate referred to in clause 3.4 from the date on which such
expenses were incurred to the date of payment (as well after as before judgment).
	 
	5.3      	 	Value added tax
	 
	 	 	All fees and expenses payable pursuant to this clause 5 shall be paid together with value
added tax or any similar tax (if any) properly chargeable thereon. Any value added tax
chargeable in respect of any services supplied by the Bank under this Agreement shall, on
delivery of the value added tax invoice, be paid by the Borrowers in addition to any sum
agreed to be paid by the Borrowers hereunder.
	 
	5.4	 	Stamp and other duties
	 
	 	 	The Borrowers shall pay all stamp, documentary, registration or other like duties or taxes
(including any duties or taxes payable by the Bank) imposed on or in connection with any of
the Underlying Documents, the Security Documents or the Loan and shall indemnify the Bank
against any liability arising by reason of any delay or omission by the Borrowers to pay such
duties or taxes.
	 
	6	 	Payments and taxes; accounts and calculations
	 
	6.1	 	No set-off or counterclaim
	 
	 	 	The Borrowers acknowledge that in performing their obligations under this Agreement, the Bank
will be incurring liabilities to third parties in relation to the funding of amounts to the
Borrowers, such liabilities matching the liabilities of the Borrowers to the Bank and that it
is reasonable for the Bank to be entitled to receive payments from the Borrowers 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 Borrowers under any
of the Security Documents shall be made in full, without any set-off or counterclaim
whatsoever and, subject as provided in clause 6.6, free and clear of any deductions or
withholdings, in Dollars on the due date to such account at such bank and in such place as
the Bank may from time to time specify for this purpose.
	 
	6.2	 	Payment by the Bank
	 
	 	 	All sums to be advanced by the Bank to the Borrowers under this Agreement shall be remitted
in Dollars on the Drawdown Date for the relevant Advance to the account specified in the
Drawdown Notice for such Advance.
	 
	6.3	 	Non-Banking Days
	 
	 	 	When any payment under any of the Security Documents would otherwise be due on a day which is
not a Banking Day, the due date for payment shall be extended to the next following Banking
Day unless such Banking Day falls in the next calendar month in which case payment shall be
made on the immediately preceding Banking Day.
	 
	6.4	 	Calculations
	 
	 	 	All interest and other payments of an annual nature under any of the Security Documents shall
accrue from day to day and be calculated on the basis of actual days elapsed and a three
hundred and sixty (360) days year.
	 
	6.5	 	Certificates conclusive
	 
	 	 	Any certificate or determination of the Bank as to any rate of interest or any other amount
pursuant to and for the purposes of any of the Security Documents shall, in the absence of
manifest error, be conclusive and binding on the Borrowers.

25

 

	6.6	 	Grossing-up for Taxes
	 
	 	 	If at any time the Borrowers or any of them are required to make any deduction or withholding
in respect of Taxes from any payment due under any of the Security Documents for the account
of the Bank, the sum due from the Borrowers or any of them in respect of such payment shall
be increased to the extent necessary to ensure that, after the making of such deduction or
withholding, the Bank receives on the due date for such payment (and retains, free from any
liability in respect of such deduction or withholding), a net sum equal to the sum which it
would have received had no such deduction or withholding been required to be made and the
Borrowers shall indemnify the Bank against any losses or costs incurred by it by reason of
any failure of the Borrowers or any of them 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
Borrowers shall promptly deliver to the Bank any receipts, certificates or other proof
evidencing the amounts (if any) paid or payable in respect of any deduction or withholding as
aforesaid.
	 
	6.7	 	Loan account
	 
	 	 	The Bank shall maintain, in accordance with its usual practice, an account evidencing the
amounts from time to time lent by, owing to and paid to it under the Security Documents.
Such account shall, in the absence of manifest error, be conclusive as to the amount from
time to time owing by the Borrowers under the Security Documents.
	 
	7	 	Representations and warranties
	 
	7.1	 	Continuing representations and warranties
	 
	 	 	The Borrowers jointly and severally represent and warrant to the Bank that:
	 
	7.1.1	 	Due incorporation
	 
	 	 	each of the Borrowers and each of the other Security Parties are duly incorporated and
validly existing in good standing, in the case of the Borrowers, the Collateral Owners,
the Manager and the Corporate Guarantor, under the laws of the Republic of the Marshall
Islands as Marshall Islands corporations and, in the case of each of the other Security
Parties, under the laws of their respective countries of incorporation as limited
liability companies, and have power to carry on their respective businesses as they are
now being conducted and to own their respective property and other assets;
	 
	7.1.2	 	Corporate power
	 
	 	 	each of the Borrowers has power to execute, deliver and perform its obligations under the
Underlying Documents and the relevant Borrowers’ Security Documents to which it is or is
to be a party and to borrow the Commitment and each of the other Security Parties has
power to execute and deliver and perform its obligations under the Security Documents to
which it is or is to be a party; all necessary corporate, shareholder and other action has
been taken to authorise the execution, delivery and performance of the same and no
limitation on the powers of any Borrower to borrow will be exceeded as a result of
borrowing the Loan;
	 
	7.1.3	 	Binding obligations
	 
	 	 	the Underlying Documents and the Security Documents constitute or will, when executed,
constitute valid and legally binding obligations of the relevant Security Parties
enforceable in accordance with their respective terms;
	 
	7.1.4	 	No conflict with other obligations
	 
	 	 	the execution and delivery of, the performance of their obligations under, and compliance
with the provisions of, the Underlying Documents and the Security Documents by the
relevant Security Parties will not (i) contravene any existing applicable law, statute,
rule or regulation or any judgment, decree or permit to which any of the Borrowers or any
other

26

 

	 	 	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 any of the
Borrowers or any other Security Party is a party or is subject or by which it or any of
its property is bound, (iii) contravene or conflict with any provision of the
constitutional documents of any of the Borrowers or any other Security Party or (iv)
result in the creation or imposition of or oblige any of the Borrowers or any of their
Related Companies or any other Security Party to create any Encumbrance (other than a
Permitted Encumbrance) on any of the undertakings, assets, rights or revenues of any of
the Borrowers or their Related Companies or any other Security Party;
	 
	7.1.5	 	No litigation
	 
	 	 	no litigation, arbitration or administrative proceeding is taking place, pending or, to
the knowledge of the officers of any of the Borrowers, threatened against any of the
Borrowers or any of their Related Companies or any other Security Party which could have a
material adverse effect on the business, assets or financial condition of any of the
Borrowers or any of their Related Companies or any other Security Party;
	 
	7.1.6	 	No filings required
	 
	 	 	save for the registration of the Mortgages under the laws of the relevant Flag State
through the relevant Registry, it is not necessary to ensure the legality, validity,
enforceability or admissibility in evidence of any of the Underlying Documents or any of
the Security Documents that they or any other instrument be notarised, filed, recorded,
registered or enrolled in any court, public office or elsewhere in any Relevant
Jurisdiction or that any stamp, registration or similar tax or charge be paid in any
Relevant Jurisdiction on or in relation to any of the Underlying Documents or the Security
Documents, and each of the Underlying Documents and the Security Documents is in proper
form for its enforcement in the courts of each Relevant Jurisdiction;
	 
	7.1.7	 	Choice of law
	 
	 	 	the choice of (a) English law to govern the Underlying Documents and the Security
Documents (other than the Mortgages and the Account Pledge), (b) the law of the Flag State
to govern the Mortgages and (c) German law to govern the Account Pledge, and the
submissions by the Security Parties to the non-exclusive jurisdiction of the English
courts or, as the case may be, the German courts are valid and binding;
	 
	7.1.8	 	No immunity
	 
	 	 	neither the Borrowers nor any other Security Party nor any of their respective assets is
entitled to immunity on the grounds of sovereignty or otherwise from any legal action or
proceeding (which shall include, without limitation, suit, attachment prior to judgement,
execution or other enforcement);
	 
	7.1.9	 	Consents obtained
	 
	 	 	every consent, authorisation, licence or approval of, or registration with or declaration
to, governmental or public bodies or authorities or courts required by any Security Party
to authorise, or required by any Security Party in connection with, the execution,
delivery, validity, enforceability or admissibility in evidence of each of the Underlying
Documents and each of the Security Documents to which it is or is to be a party or the
performance by each Security Party of its obligations under the Security Documents or the
Underlying Documents to which it is or is to be a party 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;
and
	 
	7.1.10	 	Shareholdings
	 
	 	 	each of the Owners and the Manager is a wholly-owned direct Subsidiary of the Corporate

27

 

	 	 	Guarantor, Mr Ion Varouxakis is the ultimate beneficial owner of at least twenty per cent
(20%) of the issued shares in the Corporate Guarantor and the Restis Family is the
ultimate beneficial owner of at least twenty per cent (20%) of the issued shares in the
Corporate Guarantor and all of the issued shares of the Manager are legally and ultimately
beneficially owned by such persons as disclosed by the Borrowers to the Bank in the
negotiation of this Agreement.
	 
	7.2	 	Initial representations and warranties
	 
	 	 	The Borrowers jointly and severally further represent and warrant to the Bank that:
	 
	7.2.1	 	Pari passu
	 
	 	 	the obligations of each Borrower under this Agreement are direct, general and
unconditional obligations of such Borrower and rank at least pari passu with all other
present and future unsecured and unsubordinated Indebtedness of such Borrower except for
obligations which are mandatorily preferred by operation of law and not by contract;
	 
	7.2.2	 	No default under other Indebtedness
	 
	 	 	none of the Borrowers nor any of their respective Related Companies nor any other Security
Party is (nor would with the giving of notice or lapse of time or the satisfaction of any
other condition or combination thereof be) in breach of or in default under any agreement
relating to Indebtedness to which it is a party or by which it may be bound;
	 
	7.2.3	 	Information
	 
	 	 	the information, exhibits and reports furnished by any Security Party to the Bank in
connection with the negotiation and preparation of the Security Documents are true and
accurate in all material respects and not misleading, do not omit material facts and all
reasonable enquiries have been made to verify the facts and statements contained therein;
there are no other facts the omission of which would make any fact or statement therein
misleading;
	 
	7.2.4	 	No withholding Taxes
	 
	 	 	no Taxes are imposed by withholding or otherwise on any payment to be made by any Security
Party under the Underlying Documents or the Security Documents to which such Security
Party is or is to be a party or are imposed on or by virtue of the execution or delivery
by the Security Parties of the Underlying Documents or the Security Documents or any other
document or instrument to be executed or delivered under any of the Security Documents;
	 
	7.2.5	 	No Default
	 
	 	 	no Default has occurred and is continuing;
	 
	7.2.6	 	The Ships

	 	(a)	 	each New Ship will, on the Delivery Date relevant to such New Ship, be:

	 	(i)	 	in the absolute ownership of the relevant Borrower who will, on
and after such Delivery Date, be the sole, legal and beneficial owner of such
New Ship;
	 
	 	(ii)	 	permanently registered through the offices of the relevant
Registry as a ship under the laws and flag of the relevant Flag State;
	 
	 	(iii)	 	operationally seaworthy and in every way fit for service; and
	 
	 	(iv)	 	classed with the relevant Classification free of all requirements
and

28

 

	 	 	 	recommendations of the relevant Classification Society; and

	 	(b)	 	each Collateral Ship will, on the first Drawdown Date, be:

	 	(i)	 	in the absolute ownership of the relevant Collateral Owner who
will, on and after such Drawdown Date, be the sole, legal and beneficial owner
of such Collateral Ship;
	 
	 	(ii)	 	permanently registered through the offices of the relevant
Registry as a ship under the laws and flag of the relevant Flag State;
	 
	 	(iii)	 	operationally seaworthy and in every way fit for service; and
	 
	 	(iv)	 	classed with the relevant Classification free of all requirements
and recommendations of the relevant Classification Society;

	7.2.7	 	Ships’ employment
	 
	 	 	save for any Acceptable Charter which has been disclosed by the Borrowers in writing to,
and accepted in writing by, the Bank prior to each Drawdown Date, (a) none of the Ships is
nor will, on or before the Drawdown Date of the Advance relevant to such Ship, and (b)
neither of the Collateral Ships is nor will, on or before the first Drawdown Date, be,
subject to any charter or contract or to any agreement to enter into any charter or
contract which, if entered into after the date of the relevant Ship Security Documents,
would have required the consent of the Bank and, (i) on or before the Drawdown Date of the
Advance relevant to a New Ship and (ii) on or before the first Drawdown Date (in the case
of a Collateral Ship), there will not be any agreement or arrangement whereby the Earnings
(as defined in the relevant Ship Security Documents) of such Ship may be shared with any
other person;
	 
	7.2.8	 	Freedom from Encumbrances
	 
	 	 	none of the Ships, nor their respective Earnings, Insurances or Requisition Compensation
(each as defined in the relevant Ship Security Documents) nor the Accounts nor any other
properties or rights which are, or are to be, the subject of any of the Security Documents
nor any part thereof will be, on the Drawdown Date of each Advance, subject to any
Encumbrance (other than any Permitted Encumbrances);
	 
	7.2.9	 	Compliance with Environmental Laws and Approvals
	 
	 	 	except as may already have been disclosed by the Borrowers in writing to, and acknowledged
in writing by, the Bank:

	 	(a)	 	the Owners and the other Relevant Parties and, to the best of the
Borrowers’ knowledge and belief, their respective Environmental Affiliates have
complied with the provisions of all Environmental Laws;
	 
	 	(b)	 	the Owners and the other Relevant Parties and, to the best of the
Borrowers’ knowledge and belief, their respective Environmental Affiliates have
obtained all Environmental Approvals and are in compliance with all such
Environmental Approvals; and
	 
	 	(c)	 	neither the Owners nor any other Relevant Party nor, to the best of the
Borrowers’ knowledge and belief, any of their respective Environmental Affiliates has
received notice of any Environmental Claim that the Owners or any other Relevant
Party or any such Environmental Affiliate is not in compliance with any Environmental
Law or any Environmental Approval;

	7.2.10	 	No Environmental Claims
	 
	 	 	except as may already have been disclosed by the Borrowers in writing to, and

29

 

	 	 	acknowledged in writing by, the Bank, there is no Environmental Claim pending or, to the
best of the Borrowers’ knowledge and belief, threatened against any of the Owners or any
of the Ships or any other Relevant Party or any other Relevant Ship or to the best of the
Borrowers’ knowledge and belief any of their respective Environmental Affiliates;
	 
	7.2.11	 	No potential Environmental Claims
	 
	 	 	except as may already have been disclosed by the Borrowers in writing to, and acknowledged
in writing by, the Bank, there has been no emission, spill, release or discharge of a
Pollutant from any of the Ships or any other Relevant Ship owned by, managed or crewed by
or chartered to any of the Owners nor, to the best of the Borrowers’ knowledge and belief,
from any Relevant Ship owned by, managed or crewed by or chartered to any other Relevant
Party which could give rise to an Environmental Claim;
	 
	7.2.12	 	ISPS Code

	 	(a)	 	as of the Drawdown Date of each Advance, the Borrower owning the New Ship
relevant to such Advance shall have a valid and current ISSC in respect of such Ship;
and
	 
	 	(b)	 	as of the first Drawdown Date, each of the Collateral Owners has a valid
and current ISSC in respect of its Collateral Ship;

	7.2.13	 	Application for DOC and SMC

	 	(a)	 	the Operator has applied for a DOC for itself and, on the Drawdown Date of
each Advance, it will have applied, for an SMC in respect of the New Ship relevant to
such Advance, and none of the Borrowers nor the Operator is aware of any reason why
any such application may be refused; and
	 
	 	(b)	 	the Operator has an SMC in respect of the Collateral Ships;

	7.2.14	 	No material adverse change
	 
	 	 	there has been no material adverse change in the financial position of the Security
Parties or any of them or the consolidated financial position of the Group, from that
described by the Borrowers to the Bank in the negotiation of this Agreement;
	 
	7.2.15	 	Copies true and complete
	 
	 	 	the copies of the Underlying Documents delivered or to be delivered to the Bank pursuant
to clause 9.1 are, or will when delivered be, true and complete copies of such documents;
and such documents constitute valid and binding obligations of the parties thereto
enforceable in accordance with their respective terms and there have been no amendments or
variations thereof or defaults thereunder; and
	 
	7.2.16	 	Borrowers’ own account
	 
	 	 	in relation to the borrowing by each Borrower of the Loan, the performance and discharge
of its obligations and liabilities under the Security Documents and the transactions and
other arrangements effected or contemplated by this Agreement, each Borrower is acting for
its own account and that the foregoing will not involve or lead to a contravention of any
law, official requirement or other regulatory measure or procedure which has been
implemented by any relevant regulatory authority or otherwise to combat “money laundering”
(as defined in Article 1 of the Directive (91/308/EEC) of the Council of the European
Communities (as amended)).
	 
	7.3	 	Repetition of representations and warranties
	 
	 	 	On and as of each Drawdown Date and (except in relation to the representations and warranties
in clause 7.2) on each Interest Payment Date, the Borrowers shall:

30

 

	 	(a)	 	be deemed to repeat the representations and warranties in clauses 7.1 and
7.2 as if made with reference to the facts and circumstances existing on such day;
and
	 
	 	(b)	 	be deemed to further represent and warrant to the Bank that the then latest
audited financial statements delivered to the Bank (if any) have been prepared in
accordance with the Applicable Accounting Principles which have been consistently
applied and present fairly and accurately the consolidated financial position of the
Group, as at the end of the financial period to which the same relate and the
consolidated results of the operations of the Group for the financial period to which
the same relate and, as at the end of such financial period, neither the Corporate
Guarantor nor any other member of the Group had any significant liabilities
(contingent or otherwise) or any unrealised or anticipated losses which are not
disclosed by, or reserved against or provided for in, such financial statements.

	8	 	Undertakings
	 
	8.1	 	General
	 
	 	 	The Borrowers jointly and severally undertake with the Bank that, from the date of this
Agreement and so long as any moneys are owing under any of the Security Documents and while
all or any part of the Commitment remains outstanding, each Borrower will:
	 
	8.1.1	 	Notice of Default
	 
	 	 	promptly inform the Bank of any occurrence of which any of them becomes aware which might
adversely affect the ability of any Security Party to perform its obligations under any of
the Security Documents or the Underlying Documents to which it is or is to be a party and,
without limiting the generality of the foregoing, will inform the Bank of any Default
forthwith upon becoming aware thereof and will from time to time, if so 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;
	 
	8.1.2	 	Consents and licences
	 
	 	 	without prejudice to clauses 7.1 and 9, obtain or cause to be obtained, maintain in full
force and effect and comply in all material respects with the conditions and restrictions
(if any) imposed in, or in connection with, every consent, authorisation, licence or
approval of governmental or public bodies or authorities or courts and do, or cause to be
done, all other acts and things which may from time to time be necessary or desirable
under applicable law for the continued due performance of all the obligations of the
Security Parties under each of the Security Documents and the Underlying Documents;
	 
	8.1.3	 	Use of proceeds
	 
	 	 	use the Advances exclusively for the purposes specified in clauses 1.1 and 2.3;
	 
	8.1.4	 	Pari passu
	 
	 	 	ensure that its obligations under this Agreement shall, without prejudice to the
provisions of clause 8.3 and the security intended to be created by the Security
Documents, 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;
	 
	8.1.5	 	Financial statements
	 
	 	 	prepare or cause to be prepared:

	 	(a)	 	consolidated financial statements of the Group in accordance with the
Applicable Accounting Principles consistently applied in respect of each financial
year and cause

31

 

	 	 	 	the same to be reported on by the Group’s auditors (starting with the financial year
ended 31 December 2006); and
	 
	 	(b)	 	unaudited financial statements of the Owners and unaudited consolidated
financial statements of the Group in accordance with the Applicable Accounting
Principles consistently applied in respect of each financial quarter (starting with
the financial quarter ended 31 March 2007),

	 	 	and deliver as many copies of the same to the Bank as the Bank may reasonably require as
soon as practicable but not later than one hundred and eighty (180) days (in the case of
audited financial statements) or sixty (60) days (in the case of unaudited financial
statements) after the end of the financial period to which they relate;
	 
	8.1.6	 	Delivery of reports
	 
	 	 	deliver to the Bank a copy of every report, circular, notice or like document issued by
any Security Party to its shareholders or creditors generally;
	 
	8.1.7	 	Provision of further information

	 	(a)	 	provide the Bank, and procure that the Corporate Guarantor and the Manager
shall provide the Bank, with such financial or other information concerning the
Owners or any of them, their respective Related Companies, the Group, the other
Security Parties and their respective commitments, operations and other affairs, the
Ships and their employment (including, without limitation, any Acceptable Charters
and information on the Collateral Senior Loan Agreement), as the Bank may from time
to time require and the Borrowers shall notify the Bank forthwith about any plans or
proposed plans to dispose of any of the New Ships or the Collateral Ships; and
	 
	 	(b)	 	provide the Bank with an annual budget of monthly expenditure on account of
operating expenses and general administration costs of each Ship and its Owner in
respect of each financial year on or before 15 December of the immediately preceding
financial year;

	 	8.1.8	 	Obligations under Security Documents
	 
	 	 	 	and will procure that each of the other Security Parties will, duly and punctually perform
each of the obligations expressed to be assumed by it under the Security Documents and the
Underlying Documents to which it is a party;
	 
	 	8.1.9	 	Compliance with Code
	 
	 	 	 	and will procure that any Operator will, comply with and ensure that the Ships comply with
the requirements of the Code, including (but not limited to) the maintenance and renewal
of valid certificates pursuant thereto throughout the Security Period;
	 
	 	8.1.10	 	Withdrawal of DOC and SMC
	 
	 	 	 	and will procure that any Operator will, immediately inform the Bank if there is any
threatened or actual withdrawal of any Owner’s or, as the case may be, such Operator’s DOC
or the SMC in respect of any of the Ships;
	 
	 	8.1.11	 	Issuance of DOC and SMC
	 
	 	 	 	and will procure that any Operator will, promptly inform the Bank upon the issuance to any
of the Owners or any Operator of a DOC and to any of the Ships of an SMC or the receipt by
any of the Owners or any Operator of notification that its application for the same has
been refused;

32

 

	8.1.12	 	ISPS Code compliance
	 
	 	 	and will procure that the Manager or any Operator will:

	 	(a)	 	from the Delivery Date relevant to a New Ship and at all times thereafter,
maintain a valid and current ISSC in respect of that New Ship;
	 
	 	(b)	 	immediately notify the Bank in writing of any actual or threatened
withdrawal, suspension, cancellation or modification of the ISSC in respect of a
Ship; and
	 
	 	(c)	 	procure that, from the Delivery Date relevant to a New Ship and at all
times thereafter, such New Ship complies with the ISPS Code; and
	 
	 	(d)	 	from the first Drawdown Date and at all times thereafter maintain a valid
and current ISSC in respect of each Collateral Ship; and
	 
	 	(e)	 	procure that, from the first Drawdown Date and at all times thereafter,
each Collateral Ship complies with the ISPS Code;

	8.1.13	 	Charters
	 
	 	 	provided it has first obtained the relevant consent of the Bank in accordance with the
relevant Ship Security Documents, (a) deliver, and procure that each Collateral Owners
shall deliver, to the Bank, a certified copy of each time charter or other contract of
employment of its Ship with a tenor (including any options to extend) exceeding twelve
(12) months, forthwith after its execution, (b) forthwith on the Bank’s request execute,
and procure that each Collateral Owner shall execute (1) a Charter Assignment of any such
time charter or other contract of employment in favour of the Bank in a form acceptable to
the Bank in its sole discretion and (2) any notice of assignment required in connection
therewith in a form acceptable to the Bank in its sole discretion, and promptly procure
the acknowledgement of any such notice of assignment by the relevant charterer in a form
acceptable to the Bank in its sole discretion, and (c) pay all legal and other costs
incurred by the Bank in connection with any such specific Charter Assignments, forthwith
following the Bank’s demand;
	 
	8.1.14	 	Trade sanction compliance
	 
	 	 	ensure that no Ship shall be traded, located, operated or used, directly or indirectly, in
a Prohibited Jurisdiction by a Prohibited Person and no charterer, sub-charterer or any
Security Party shall be a Prohibited Person or be organised in a Prohibited Jurisdiction;
	 
	8.1.15	 	“KYC”
	 
	 	 	Deliver to the Bank such documents and evidence as the Bank shall from time to time
require relating to the verification of identity and knowledge of the Bank’s customers and
the compliance by the Bank of all necessary “know your customer” or similar checks, always
on the basis of applicable laws and regulations or the Bank’s own internal guidelines that
apply from time to time; and
	 
	8.1.16	 	Minimum working capital
	 
	 	 	ensure that there are maintained at all times in the Operating Account minimum cash
balances of no less than $250,000 per Mortgaged Ship.
	 
	8.2	 	Security value maintenance
	 
	8.2.1	 	Security shortfall
	 
	 	 	If at any time the Security Value shall be less than the Security Requirement, the Bank
shall give notice to the Borrowers requiring that such deficiency be remedied and then the

33

 

	 	 	Borrowers shall either:

	 	(a)	 	prepay within a period of thirty (30) days of the date of receipt by the
Borrowers of the Bank’s said notice such sum in Dollars as will result in the
Security Requirement after such prepayment (taking into account any other repayment
of the Loan made between the date of the notice and the date of such prepayment)
being equal to the Security Value; or
	 
	 	(b)	 	within thirty (30) days of the date of receipt by the Borrowers of the
Bank’s said notice constitute to the satisfaction of the Bank such further security
for the Loan as shall be acceptable to the Bank having a value for security purposes
(as determined by the Bank in its absolute discretion) at the date upon which such
further security shall be constituted which, when added to the Security Value, shall
not be less than the Security Requirement as at such date.

	 	 	The provisions of clauses 4.5 and the relevant provisions of clause 4.6 shall apply to
prepayments under clause 8.2.1(a).
	 
	8.2.2	 	Valuation of Mortgaged Ships
	 
	 	 	Each Mortgaged Ship shall, for the purposes of this Agreement, be valued in Dollars as and
when the Bank shall require but in any case at least twice (2) a year, by two (2) Approved
Brokers selected by the Borrowers or, failing such selection by the Borrowers, appointed
by the Bank in its sole discretion. Each such valuation shall be made without, unless
required by the Bank, physical inspection, and on the basis of a sale for prompt delivery
for cash at arm’s length, on normal commercial terms, as between a willing buyer and a
willing seller, without taking into account the benefit of any charterparty or other
engagement concerning the relevant Mortgaged Ship. The arithmetic mean of such two (2)
valuations shall constitute the value of such Mortgaged Ship for the purposes of this
clause 8.2 and the other terms of this Agreement.
	 
	 	 	The value of each Mortgaged Ship determined in accordance with the provisions of this
clause 8.2.2 shall be binding upon the parties hereto until such time as any further such
valuation shall be obtained.
	 
	8.2.3	 	Information
	 
	 	 	The Borrowers jointly and severally undertake to supply to the Bank and to any Approved
Brokers such information concerning the relevant Mortgaged Ship and its condition as such
Approved Broker may require for the purpose of making any such valuation.
	 
	8.2.4	 	Costs
	 
	 	 	All costs in connection with the Bank obtaining any valuation of each of the Mortgaged
Ships referred to in clause 8.2.2, any valuation referred to in schedule 2 and any
valuation either of any additional security for the purposes of ascertaining the Security
Value at any time or necessitated by the Borrowers electing to constitute additional
security pursuant to clause 8.2.1(b), shall be borne by the Borrowers.
	 
	8.2.5	 	Valuation of additional security
	 
	 	 	For the purposes of this clause 8.1.16, 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 therefor.
	 
	8.2.6	 	Documents and evidence
	 
	 	 	In connection with any additional security provided in accordance with this clause 8.1.16,
the Bank shall be entitled to receive such evidence and documents of the kind referred to
in schedule 2 as may in the Bank’s opinion be appropriate and such favourable legal
opinions

34

 

	 	 	as the Bank shall in its absolute discretion require.
	 
	8.3	 	Negative undertakings
	 
	 	 	The Borrowers jointly and severally undertake with the Bank that, from the date of this
Agreement and so long as any moneys are owing under the Security Documents and while all or
any part of the Commitment remains outstanding, they will not, without the prior written
consent of the Bank:
	 
	8.3.1	 	Negative pledge
	 
	 	 	permit any Encumbrance (other than a Permitted Encumbrance) to subsist, arise or be
created or extended over all or any part of their respective present or future
undertakings, assets, rights or revenues to secure or prefer any present or future
Indebtedness or other liability or obligation of any Borrower or any other person;
	 
	8.3.2	 	No merger
	 
	 	 	merge or consolidate with any other person or enter into a demerger, amalgamation,
corporate reorganisation or re-domiciliation of any kind whatsoever;
	 
	8.3.3	 	Disposals
	 
	 	 	sell, transfer, abandon, lend or otherwise dispose of or cease to exercise direct control
over any part (being, either alone or when aggregated with all other disposals falling to
be taken into account pursuant to this clause 8.3.3, material in the opinion of the Bank
in relation to the undertaking, assets, rights and revenues of a Borrower taken as a
whole) of their present or future undertaking, assets, rights or revenues (otherwise than
by transfers, sales or disposals for full consideration in the ordinary course of trading,
which however shall exclude any assets, rights or revenues which are the subject of the
Security Documents) whether by one or a series of transactions related or not;
	 
	8.3.4	 	Other business
	 
	 	 	undertake any business other than the ownership and operation of the New Ships and will
procure that the Corporate Guarantor will not, without the prior written consent of the
Bank, undertake any business other than that conducted by the Guarantor at the date of
this Agreement;
	 
	8.3.5	 	Acquisitions
	 
	 	 	acquire any further assets other than the New Ships and rights arising under contracts
entered into by or on behalf of the Borrowers in the ordinary course of their businesses
of owning, operating and chartering the New Ships;
	 
	8.3.6	 	Other obligations
	 
	 	 	incur any obligations except for obligations arising under the Underlying Documents or the
Security Documents or contracts entered into in the ordinary course of their business of
owning, operating and chartering the New Ships;
	 
	8.3.7	 	No borrowing
	 
	 	 	incur any Borrowed Money except for Borrowed Money pursuant to the Security Documents and
the Senior Security Documents;
	 
	8.3.8	 	Repayment of borrowings
	 
	 	 	repay or prepay the principal of, or pay interest on or any other sum in connection with,
any of their Borrowed Money except for Borrowed Money pursuant to the Security Documents

35

 

	 	 	and the Senior Security Documents;
	 
	8.3.9	 	Guarantees
	 
	 	 	issue any guarantees or indemnities or otherwise become directly or contingently liable
for the obligations of any person, firm, or corporation except (a) pursuant to the
Security Documents, (b) guarantees or indemnities from time to time required in the
ordinary course by any protection and indemnity or war risks association with which a New
Ship is entered, (c) guarantees required to procure the release of a New Ship from any
arrest, detention, attachment or levy or (d) guarantees or undertakings required for the
salvage of a New Ship;
	 
	8.3.10	 	Loans
	 
	 	 	make any loans or grant any credit (save for normal trade credit in the ordinary course of
business) to any person or agree to do so;
	 
	8.3.11	 	Sureties
	 
	 	 	permit any Indebtedness of any Borrower to any person (other than the Bank pursuant to the
Security Documents or under the Senior Security Documents) to be guaranteed by any person
save for guarantees or indemnities from time to time required in the ordinary course by
any protection and indemnity or war risks association with which a New Ship is entered,
guarantees required to procure the release of a New Ship from any arrest, detention,
attachment or levy or guarantees or undertakings required for the salvage of a Ship;
	 
	8.3.12	 	Share capital and distribution
	 
	 	 	purchase or otherwise acquire for value any shares of their capital or distribute any of
their present or future assets, undertaking, rights or revenues or, following an Event of
Default, declare or pay any dividends to any of their shareholders;
	 
	8.3.13	 	Subsidiaries
	 
	 	 	
form or acquire any Subsidiaries;
	 
	8.3.14	 	Change in shareholdings
	 
	 	 	change, cause or permit any change in, the legal and/or ultimate beneficial ownership of
any of the shares in the Borrowers and/or the Manager and/or the Collateral Owners and/or
any of the shares in the Corporate Guarantor which are owned by Mr Ion Varouxakis and the
Restis Family, from that existing on the date of this Agreement as specified in clause
7.1.10 Provided however that following the Offering Date and provided always that the
outstanding amount of the Senior Loan has been reduced to the lower of (a) $39,500,000 and
(b) 50% of the market value of all the Mortgaged Ships (except the Collateral Ships) as
most recently determined by the Agent in accordance with clause 8.2.2 of the Senior Loan
Agreement, such restriction, insofar as it relates to the shares in the Corporate
Guarantor, shall only apply in respect of the ultimate beneficial ownership of:

	 	(a)	 	ten per cent (10%) of the shares in the Corporate Guarantor which shall at
all times after the Offering Date remain ultimately beneficially owned by Mr Ion G.
Varouxakis; and
	 
	 	(b)	 	another ten per cent (10%) of the shares in the Corporate Guarantor which
shall at all times after the Offering Date remain ultimately beneficially owned by
the Restis Family;

	8.3.15	 	Constitutional documents
	 
	 	 	agree to any amendment or variation of their constitutional documents.

36

 

	8.4	 	Excess Cash
	 
	8.4.1	 	The Bank shall, in relation to each Excess Cash Calculation Period, calculate in its sole
discretion the amount of the Collateral Excess Cash in respect of each Collateral Ship for
such Excess Cash Calculation Period by reference to the quarterly unaudited financial
statements delivered to it by the Borrowers pursuant to clause 8.1.5 in respect of such period
and, if such Collateral Excess Cash is a positive figure, notify the Borrowers thereof and of
the amount of such Collateral Excess Cash.
	 
	8.4.2	 	The Borrowers will procure that each Collateral Owner will (with the consent of the
Collateral Senior Lender) transfer to the Excess Cash Account on the last day of each Excess
Cash Calculation Period, an amount equal to the Collateral Excess Cash in respect of its
Collateral Ship for such period, as such amount is notified by the Bank to the Borrowers.
	 
	8.4.3	 	The Borrowers shall ensure that, on the last day of each Excess Cash Calculation Period (a
“Test Day”), the amount standing to the credit of the Excess Cash Account (the “Actual
Balance”) is no less than the aggregate of (a) the amount calculated by the Agent and notified
to the Bank and the Borrowers to be the Excess Cash for the immediately preceding Excess Cash
Calculation Period and (b) the amount notified by the Bank to the Agent and the Borrowers to
be the Collateral Excess Cash for the immediately preceding Excess Cash Calculation Period
((a) and (b) together the “Actual Excess Cash”). To the extent that the Actual Balance is, or
is at any time anticipated by the Borrowers to be, less than the Actual Excess Cash on the
Test Day, the Borrowers shall forthwith procure the transfer from other sources of such funds
to the Excess Cash Account as shall ensure that the Borrowers are and shall be in compliance
with this clause 8.4.3 on the Test Day.
	 
	8.4.4	 	If on the Test Day the Actual Balance is higher than the Actual Excess Cash, the Borrowers
may request the Agent and the Account Bank to transfer the surplus to the Operating Account in
accordance with the Senior Loan Agreement.
	 
	8.4.5	 	The Borrowers undertake that each Borrower will, on the last day of each month ending after
the Cut-off-Date (as defined in clause 14.2 of the Senior Loan Agreement), transfer from its
Earnings Account to the Excess Cash Account an amount equal to the Relevant Amount (as defined
in clause 14.2 of the Senior Loan Agreement) for its Ship Provided that (a) the Agent has not
given notice under clause 10.2 of the Senior Loan Agreement and (b) the Loan has not been
repaid or prepaid in full.
	 
	9	 	Conditions
	 
	9.1	 	Documents and evidence
	 
	 	 	The obligation of the Bank to make the Commitment available shall be subject to the condition
that:
	 
	9.1.1	 	the Bank, or its duly authorised representative, shall have received, not later than two (2)
Banking Days before the day on which the Drawdown Notice for the first Advance to be drawn
down is given, the documents and evidence specified in Part 1 of schedule 2 in form and
substance satisfactory to the Bank; and
	 
	9.1.2	 	the Bank, or its duly authorised representative, shall have received, on or prior to the
Drawdown Date for each Advance, the documents and evidence specified in Part 2 of schedule 2
in relation to the Ship relevant to such Advance, in form and substance satisfactory to the
Bank.
	 
	9.2	 	General conditions precedent
	 
	 	 	The obligation of the Bank to made any Advance shall be subject to the further conditions
that, at the time of the giving of the Drawdown Notice for such Advance, and at the time of
the making of such Advance:

37

 

	9.2.1	 	the representations and warranties contained in (a) clauses 7.1 and 7.2 and 7.3(b) and (ii)
clause 4 of each Guarantee, are true and correct on and as of each such time as if each was
made with respect to the facts and circumstances existing at such time; and
	 
	9.2.2	 	no Default shall have occurred and be continuing or would result from the making of the
relevant Advance.
	 
	9.3	 	Waiver of conditions precedent
	 
	 	 	The conditions specified in this clause 9 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.
	 
	9.4	 	Further conditions precedent
	 
	 	 	Not later than five (5) Banking Days prior to each Drawdown Date and not later than five (5)
Banking Days prior to each Interest Payment Date, the Bank may request and the Borrowers
shall, not later than two (2) Banking Days prior to such date, deliver to the Bank on such
request further relevant certificates and/or favourable opinions as to any or all of the
matters which are the subject of clauses 7, 8, 9 and 10 and clauses 4 and 5 of each
Guarantee.
	 
	10	 	Events of Default
	 
	10.1	 	Events
	 
	 	 	There shall be an Event of Default if:
	 
	10.1.1	 	Non-payment: any Security Party fails to pay any sum payable by it under any of the Security
Documents at the time, in the currency and in the manner stipulated in the Security Documents
or the Underlying Documents (and so that, for this purpose, sums payable on demand shall be
treated as having been paid at the stipulated time if paid within three (3) Banking Days of
demand); or
	 
	10.1.2	 	Breach of Insurance and certain other obligations: any of the Owners or, as the context may
require, the Manager fails to obtain and/or maintain the Insurances (as defined in, and in
accordance with the requirements of, the Ship Security Documents) for any of the Ships or if
any insurer in respect of such Insurances cancels the Insurances or disclaims liability by
reason, in either case, of mis-statement in any proposal for the Insurances or for any other
failure or default on the part of any of the Owners or any other person or any of the
Borrowers commits any breach of or omits to observe any of the obligations or undertakings
expressed to be assumed by it under clauses 8.1.5, 8.1.7, 8.1.16, 8.2, 8.3 or 8.4 or the
Corporate Guarantor commits any breach of or omits to observe any of the obligations or
undertakings expressed to be assumed by it under clauses 5.2 or 5.3 of the Corporate Guarantee
or any of the Collateral Owners commits any breach of or omits to observe any of the
obligations or undertakings expressed to be assured by it under clauses 5.2 or 5.3 of the
relevant Collateral Guarantee; or
	 
	10.1.3	 	Breach of other obligations: any Security Party commits any breach of or omits to observe
any of its obligations or undertakings expressed to be assumed by it under any of the Security
Documents (other than those referred to in clauses 10.1.1 and 10.1.2 above) and in respect of
any such breach or omission which in the opinion of the Bank is capable of remedy, such action
as the Bank may require shall not have been taken within fourteen (14) days of the Bank
notifying the relevant Security Party of such default and of such required action; or
	 
	10.1.4	 	Misrepresentation: any representation or warranty made or deemed to be made or repeated by
or in respect of any Security Party in or pursuant to any of the Security Documents or in any
notice, certificate or statement referred to in or delivered under any of the Security
Documents is or proves to have been incorrect or misleading in any material respect; or
	 
	10.1.5	 	Cross-default: any Borrowed Money of any Relevant Party is not paid when due or any Borrowed
Money of any Relevant Party becomes (whether by declaration or automatically in

38

 

	 	 	accordance with the relevant agreement or instrument constituting the same) due and payable
prior to the date when it would otherwise have become due (unless as a result of the
exercise by the relevant Relevant Party of a voluntary right of prepayment), or any
creditor of any Relevant Party becomes entitled to declare any such Borrowed Money due and
payable or any facility or commitment available to any Relevant Party relating to Borrowed
Money is withdrawn, suspended or cancelled by reason of any default (however described) of
the person concerned unless the relevant Relevant Party shall have satisfied the Bank that
such withdrawal, suspension or cancellation will not affect or prejudice in any way the
relevant Relevant Party’s ability to pay its debts as they fall due and fund its
commitments, or any guarantee given by any Relevant Party in respect of Borrowed Money is
not honoured when due and called upon; or
	 
	10.1.6	 	Legal process: any judgment or order made against any Security Party or other Relevant Party
is not stayed or complied with within fourteen (14) days or a creditor attaches or takes
possession of, or a distress, execution, sequestration or other process is levied or enforced
upon or sued out against, any of the undertakings, assets, rights or revenues of any Security
Party or other Relevant Party and is not discharged within fourteen (14) days; or
	 
	10.1.7	 	Insolvency: any Security Party or other Relevant Party is unable or admits inability to pay
its debts as they fall due; suspends making payments on any of its debts or announces an
intention to do so; becomes insolvent; has assets the value of which is less than the value of
its liabilities (taking into account contingent and prospective liabilities); or suffers the
declaration of a moratorium in respect of any of its Indebtedness; or
	 
	10.1.8	 	Reduction or loss of capital: a meeting is convened by any Security Party or other Relevant
Party for the purpose of passing any resolution to purchase, reduce or redeem any of its share
capital; or
	 
	10.1.9	 	Winding up: any corporate action, legal proceedings or other procedure or step is taken for
the purpose of winding-up any Security Party or other Relevant Party or an order is made or
resolution passed for the winding up of any Security Party or other Relevant Party or a notice
is issued convening a meeting for the purpose of passing any such resolution; or
	 
	10.1.10	 	Administration: any petition is presented, notice given or other step is taken for the
purpose of the appointment of an administrator of any Security Party or other Relevant Party
or the Bank believes that any such petition or other step is imminent or an administration
order is made in relation to any Security Party or other Relevant Party; or
	 
	10.1.11	 	Appointment of receivers and managers: any administrative or other receiver is appointed of
any Security Party or other Relevant Party or any part of its assets and/or undertakings or
any other steps are taken to enforce any Encumbrance over all or any part of the assets of any
Security Party or other Relevant Party; or
	 
	10.1.12	 	Compositions: any corporate action, legal proceedings or other procedures or steps are
taken, or negotiations commenced, by any Security Party or other Relevant Party or by any of
its creditors with a view to the general readjustment or rescheduling of all or part of its
indebtedness or to proposing any kind of composition, compromise or arrangement involving such
company and any of its creditors; or
	 
	10.1.13	 	Analogous proceedings: there occurs, in relation to any Security Party or other Relevant
Party, in any country or territory in which any of them carries on business or to the
jurisdiction of whose courts any part of their assets is subject, any event which, in the
reasonable opinion of the Bank, appears in that country or territory to correspond with, or
have an effect equivalent or similar to, any of those mentioned in clauses 10.1.6 to 10.1.12
(inclusive) or any Security Party or other Relevant Party otherwise becomes subject, in any
such country or territory, to the operation of any law relating to insolvency, bankruptcy or
liquidation; or
	 
	10.1.14	 	Cessation of business: any Security Party or any other Relevant Party suspends or ceases or
threatens to suspend or cease to carry on its business; or

39

 

	10.1.15	 	Seizure: all or a material part of the undertaking,
assets, rights or revenues of, or shares or other ownership interests in, any Security Party or other Relevant Party are seized,
nationalised, expropriated or compulsorily acquired by or under the authority of any
government; or
	 
	10.1.16	 	Invalidity: any of the Security Documents shall at any time and for any reason become
invalid or unenforceable or otherwise cease to remain in full force and effect, or if the
validity or enforceability of any of the Security Documents shall at any time and for any
reason be contested by any Security Party or which is a party thereto, or if any such Security
Party shall deny that it has any, or any further, liability thereunder; or
	 
	10.1.17	 	Unlawfulness: it becomes impossible or unlawful at any time for any Security Party, to
fulfil any of the covenants and obligations expressed to be assumed by it in any of the
Security Documents or for a Creditor to exercise the rights or any of them vested in it under
any of the Security Documents or otherwise; or
	 
	10.1.18	 	Repudiation: any Security Party repudiates any of the Security Documents or does or causes
or permits to be done any act or thing evidencing an intention to repudiate any of the
Security Documents; or
	 
	10.1.19	 	Encumbrances enforceable: any Encumbrance (other than Permitted Liens) in respect of any of
the property (or part thereof) which is the subject of any of the Security Documents becomes
enforceable; or
	 
	10.1.20	 	Material adverse change: there occurs, in the reasonable opinion of the Bank, a material
adverse change in the financial condition of any Borrower or any other Security Party or the
consolidated financial condition of the Group, in each case by reference to the financial
position of the Borrowers, such Security Parties and the Group, respectively, as described by
or on behalf of the Borrowers or any other Security Party to the Bank in the negotiation of
this Agreement, which would, in the reasonable opinion of the Bank, impair the ability of the
Security Parties (or any of them) to perform their respective obligations under this Agreement
and/or the other Security Documents to which they are a party; or
	 
	10.1.21	 	Arrest: any Ship is arrested, confiscated, seized, taken in execution, impounded,
forfeited, detained in exercise or purported exercise of any possessory lien or other claim or
otherwise taken from the possession of the relevant Owner and the Owners shall fail to procure
the release of such Ship within a period of twenty one (21) days thereafter; or
	 
	10.1.22	 	Registration: the registration of any Ship under the laws and flag of the relevant Flag
State is cancelled or terminated without the prior written consent of the Bank or, in the case
of a New Ship, if any such New Ship is, with the prior consent of the Bank, only provisionally
registered on its Delivery Date, such New Ship is not permanently registered under the laws
and flag of the relevant Flag State within ninety (90) days after the Drawdown Date of the
Advance relevant to such New Ship or if the registration of any Ship is not renewed at least
forty-five (45) days prior to the expiry of such registration; or
	 
	10.1.23	 	Unrest: the Flag State of any Ship becomes involved in hostilities or civil war or there is
a seizure of power in the Flag State by unconstitutional means if, in any such case, (a) such
event could in the opinion of the Bank reasonably be expected to have a material adverse
effect on the security constituted by any of the Security Documents; or
	 
	10.1.24	 	Environment: any Owner and/or any other Relevant Party and/or any of their respective
Environmental Affiliates fails to comply with any Environmental Law or any Environmental
Approval or any of the Ships or any other Relevant Ship is involved in any incident which
gives rise or may give rise to an Environmental Claim if, in any such case, such
non-compliance or incident or the consequences thereof could, in the opinion of the Bank,
reasonably be expected to have a material adverse effect on the business, assets, operations,
property or financial condition of any Borrower or any of its Related Companies or any other
Security Party or on the security constituted by any of the Security Documents; or

40

 

	10.1.25	 	P&I: any Owner or any other person fails or omits to comply with any requirements of the
protection and indemnity association or other insurer with which a Ship is entered for
insurance or insured against protection and indemnity risks (including oil pollution risks) to
the effect that any cover (including, without limitation, any cover in respect of liability
for Environmental Claims arising in jurisdictions where such Ship operates or trades) is or
may be liable to cancellation, qualification or exclusion at any time; or
	 
	10.1.26	 	Shareholdings: there is any change in the legal and/or ultimate beneficial ownership of any
of the shares of any of the Owners or the Manager or the Corporate Guarantor from that
existing on the date of this Agreement as specified in clause 7.1.10 save for any change in
respect of the shares in the Corporate Guarantor following the Offering Date which is not
prohibited by the terms of clause 8.3.14; or
	 
	10.1.27	 	Accounts: any moneys are withdrawn form any of the Accounts other than in accordance with
clause 14 and the Account Pledge; or
	 
	10.1.28	 	De-listing etc.: the shares of the Corporate Guarantor are de-listed or suspended from, or
cease to trade (whether temporarily or permanently) on, NASDAQ and, in the reasonable opinion
of the Bank, such event is likely materially and adversely to affect the ability of any
Security Party to perform all or any of its obligations under or otherwise to comply with the
terms of any of the Security Documents and/or any of the Underlying Documents; or
	 
	10.1.29	 	Drawdown of Advances: all four (4) Advances have not been drawn down by the Termination
Date unless the Borrowers shall prepay the Loan in full within thirty (30) Banking Days after
the Termination Date; or
	 
	10.1.30	 	Licenses, etc: any license, authorisation, consent or approval at any time necessary to
enable any Security Party to comply with its obligations under the Security Documents or the
Underlying Documents is revoked or withheld or modified or is otherwise not granted or fails
to remain in full force and effect or if any exchange control or other law or regulation shall
exist which would make any transaction under the Security Documents or the Underlying
Documents or the continuation thereof, unlawful or would prevent the performance by any
Security Party of any term of any of the Security Documents or the Underlying Documents; and
	 
	10.1.31	 	Material events: any other event occurs or circumstance arises which, in the opinion of the
Bank, is likely materially and adversely to affect either (i) the ability of any Security
Party to perform all or any of its obligations under or otherwise to comply with the terms of
any of the Security Documents or any of the Underlying Documents or (ii) the security created
by any of the Security Documents.
	 
	10.2	 	Acceleration
	 
	 	 	The Bank may at any time after the occurrence of an Event of Default by notice to the
Borrowers declare that:
	 
	10.2.1	 	the obligation of the Bank to make the Commitment available shall be terminated, whereupon
the Commitment shall be reduced to zero forthwith; and/or
	 
	10.2.2	 	the Loan and all interest and commitment commission accrued and all other sums payable under
the Security Documents have become due and payable, whereupon the same shall, immediately or
in accordance with the terms of such notice, become due and payable.
	 
	10.3	 	Demand basis
	 
	 	 	If, pursuant to clause 10.2.2, the Bank declares the Loan to be due and payable on demand,
the Bank may by written notice to the Borrowers (a) call for repayment of the Loan on such
date as may be specified whereupon the Loan shall become due and payable on the date so
specified together with all interest accrued and all other sums payable under this Agreement
or (b) withdraw such declaration with effect from the date specified in such notice.

41

 

	11	 	Indemnities
	 
	11.1	 	Miscellaneous indemnities
	 
	 	 	The Borrowers shall on demand indemnify the Bank, without prejudice to any of the Bank’s
other rights under any of the Security Documents, against any loss (including loss of Margin)
or expense which the Bank shall certify as sustained or incurred by it as a consequence of:
	 
	11.1.1	 	any default in payment of any sum under any of the Security Documents when due;
	 
	11.1.2	 	the occurrence of any other Event of Default;
	 
	11.1.3	 	any prepayment of the Loan or part thereof being made under clauses 4.3, 4.4, 8.2.1(a), or
12.1, or any other repayment or prepayment of the Loan or part thereof being made otherwise
than on an Interest Payment Date relating to the part of the Loan prepaid or repaid; or
	 
	11.1.4	 	any Loan not being made for any reason (excluding any default by the Bank) after the
Drawdown Notice for such Advance has been given,
	 
	 	 	including, in any such case, but not limited to, any loss or expense sustained or incurred by
the Bank in maintaining or funding the Loan or, as the case may be, the Commitment 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 or any other amount owing to the Bank.
	 
	11.2	 	Currency indemnity
	 
	 	 	If any sum due from any of the Borrowers under any of the Security Documents or any order or
judgment given or made in relation thereto has to be converted from the currency (the “first
currency”) in which the same is payable under the relevant Security Document or under such
order or judgment into another currency (the “second currency”) for the purpose of (a) making
or filing a claim or proof against the Borrowers or any of them, (b) obtaining an order or
judgment in any court or other tribunal or (c) enforcing any order or judgment given or made
in relation to any of the Security Documents, the Borrowers shall indemnify and hold harmless
the Bank from and against any loss suffered as a result of any difference between (i) the
rate of exchange used for such purpose to convert the sum in question from the first currency
into the second currency and (ii) the rate or rates of exchange at which the Bank may in the
ordinary course of business purchase the first currency with the second currency upon receipt
of a sum paid to it in satisfaction, in whole or in part, of any such order, judgment, claim
or proof. Any amount due from the Borrowers under this clause 11.2 shall be due as a
separate debt and shall not be affected by judgment being obtained for any other sums due
under or in respect of any of the Security Documents and the term “rate of exchange” includes
any premium and costs of exchange payable in connection with the purchase of the first
currency with the second currency.
	 
	11.3	 	Environmental indemnity
	 
	 	 	The Borrowers shall indemnify the Bank on demand and hold the Bank harmless from and against
all costs, expenses, payments, charges, losses, demands, liabilities, actions, proceedings
(whether civil or criminal), penalties, fines, damages, judgements, orders, sanctions or
other outgoings of whatever nature which may be suffered, incurred or paid by, or made or
asserted against the Bank at any time, whether before or after the repayment in full of
principal and interest under this Agreement, relating to, or arising directly or indirectly
in any manner or for any cause or reason whatsoever out of an Environmental Claim made or
asserted against the Bank if such Environmental Claim would not have been, or been capable of
being, made or asserted against the Bank if it had not entered into any of the Security
Documents and/or exercised any of its rights, powers and discretions thereby conferred and/or
performed any of its obligations thereunder and/or been involved in any of the transactions
contemplated by the Security Documents.

42

 

	11.4	 	Federal Reserve Bank reserve requirements indemnity
	 
	 	 	The Borrowers shall on demand promptly indemnify the Bank against any cost incurred or loss
suffered by it as a result of its complying with the Federal Reserve Bank minimum reserve
requirements and/or with respect to maintaining required reserves with the Federal Reserve
Bank to the extent that such compliance relates to the Commitment or the Loan or deposits
obtained by it to find or maintain all or part of the Loan and such costs or loss is not
recoverable by the Bank under clause 12.2.
	 
	12	 	Unlawfulness and increased costs
	 
	12.1	 	Unlawfulness
	 
	 	 	If it is or becomes contrary to any law or regulation for the Bank to make the Loan or to
maintain the Commitment or fund the Loan the Bank shall promptly give notice to the Borrowers
whereupon (a) the Commitment shall be reduced to zero and (b) the Borrowers shall be obliged
to prepay the Loan either (i) forthwith or (ii) on a future specified date not being earlier
than the latest date permitted by the relevant law or regulation together with interest
accrued to the date of prepayment and all other sums payable by the Borrowers under this
Agreement.
	 
	12.2	 	Increased costs
	 
	 	 	If the result of any change in, or in the interpretation or application of, or the
introduction of, any law or any regulation, request or requirement (whether or not having the
force of law, but, if not having the force of law, with which the Bank or, as the case may
be, its holding company habitually complies), including (without limitation) those relating
to Taxation, capital adequacy, liquidity, reserve assets, cash ratio deposits and special
deposits, is to:
	 
	12.2.1	 	subject the Bank to Taxes or change the basis of Taxation of the Bank with respect to any
payment under any of the Security Documents (other than Taxes or Taxation on the overall net
income, profits or gains of the Bank imposed in the jurisdiction in which its principal or
lending office under this Agreement is located); and/or
	 
	12.2.2	 	increase the cost to, or impose an additional cost on, the Bank or its holding company in
making or keeping the Commitment available or maintaining or funding all or part of the Loan;
and/or
	 
	12.2.3	 	reduce the amount payable or the effective return to the Bank under any of the Security
Documents; and/or
	 
	12.2.4	 	reduce the Bank’s or its holding company’s rate of return on its overall capital by reason
of a change in the manner in which it is required to allocate capital resources to the Bank’s
obligations under any of the Security Documents; and/or
	 
	12.2.5	 	require the Bank or its holding company to make a payment or forego a return on or
calculated by reference to any amount received or receivable by the Bank under any of the
Security Documents; and/or
	 
	12.2.6	 	require the Bank or its holding company to incur or sustain a loss (including a loss of
future potential profits) by reason of being obliged to deduct all or part of the Commitment
or the Loan from its capital for regulatory purposes,
	 
	 	 	then and in each such case (subject to clause 12.3):

	 	(a)	 	the Bank shall notify the Borrowers in writing of such event promptly upon
its becoming aware of the same; and
	 
	 	(b)	 	the Borrowers shall on demand made at any time whether or not the Loan has
been repaid, pay to the Bank the amount which the Bank specifies (in a certificate
setting forth the basis of the computation of such amount but not including any
matters which the Bank or its holding company regards as confidential) is required to
compensate the Bank and/or (as the case may be) its holding company for such
liability to Taxes, cost,
reduction, payment, foregone return or loss.

43

 

	 	 	For the purposes of this clause 12.2 “holding company” means the company or entity (if any)
within the consolidated supervision of which the Bank is included.
	 
	12.3	 	Exception
	 
	 	 	Nothing in clause 12.2 shall entitle the Bank to receive any amount in respect of
compensation for any such liability to Taxes, increased or additional cost, reduction,
payment, foregone return or loss to the extent that the same is the subject of an additional
payment under clause 6.6.
	 
	13	 	Security and set-off
	 
	13.1	 	Application of moneys
	 
	 	 	All moneys received by the Bank under or pursuant to any of the Security Documents and
expressed to be applicable in accordance with the provisions of this clause 13.1 shall be
applied by the Bank in the following manner:
	 
	13.1.1	 	first, in or towards payment of all unpaid costs, fees and expenses which may be owing to
the Bank under any of the Security Documents;
	 
	13.1.2	 	secondly, in or towards payment of any arrears of interest owing in respect of the Loan or
any part thereof;
	 
	13.1.3	 	thirdly, in or towards repayment of the Loan (whether the same is due and payable or not);
	 
	13.1.4	 	fourthly, in or towards payment to the Bank for any loss suffered by reason of any such
payment in respect of principal not being effected on an Interest Payment Date relating to the
part of the Loan repaid;
	 
	13.1.5	 	fifthly, in or towards payment to the Bank of any other sums owing to it under any of the
Security Documents; and
	 
	13.1.6	 	sixthly, the surplus (if any) shall be paid to the Borrowers or to whomsoever else may be
entitled to receive such surplus.
	 
	13.2	 	Set-off
	 
	 	 	Each Borrower authorises the Bank (without prejudice to any of the Bank’s rights at law, in
equity or otherwise), at any time and without notice to such Borrower, to apply any credit
balance to which such Borrower is then entitled standing upon any account of such Borrower
with any branch of the Bank in or towards satisfaction of any sum due and payable from the
Borrowers or any of them to the Bank under any of the Security Documents. For this purpose,
the Bank is authorised to purchase with the moneys standing to the credit of such account
such other currencies as may be necessary to effect such application. The Bank shall not be
obliged to exercise any right given to it by this clause 13.2. The Bank shall notify the
relevant Borrower forthwith upon the exercise or purported exercise of any right of set-off
giving full details in relation thereto. Nothing in this clause 13.2 shall be effective to
create a charge or other Encumbrance.
	 
	13.3	 	Further assurance
	 
	 	 	The Borrowers jointly and severally hereby undertake that the Security Documents shall both
at the date of execution and delivery thereof and so long as any moneys are owing under any
of the Security Documents be valid and binding obligations of the respective parties thereto
and rights of the Bank enforceable in accordance with their respective terms and that they
will, at

44

 

	 	 	their expense, execute, sign, perfect and do, and will procure the execution,
signing, perfecting and doing by each of the other Security Parties of, any and every such
further assurance, document, act or thing as in the reasonable opinion of the Bank may be necessary or desirable
for perfecting the security contemplated or constituted by the Security Documents.
	 
	13.4	 	Conflicts
	 
	 	 	In the event of any conflict between this Agreement and any of the other Borrowers’ Security
Documents, the provisions of this Agreement shall prevail.
	 
	14	 	Accounts
	 
	14.1	 	General
	 
	 	 	The Borrowers jointly and severally undertake with the Bank that they will:
	 
	14.1.1	 	on or before the Drawdown Date of the first Advance to be drawn down, open each of the
Earnings Accounts, the Excess Cash Account and the Retention Account; and
	 
	14.1.2	 	procure that all moneys payable to each Borrower in respect of the Earnings of such
Borrower’s New Ship shall, unless and until the Bank directs to the contrary pursuant to the
provisions of the relevant General Assignment, be paid to the such Borrower’s Earnings
Account.
	 
	14.2	 	Earnings Accounts: withdrawals
	 
	 	 	Unless the Bank otherwise agrees in writing, no Borrower shall be entitled to withdraw any
moneys from its Earnings Account at any time from the date of this Agreement and so long as
any moneys are owing under the Security Documents save that, unless and until a Default shall
occur and the Bank shall direct to the contrary, each Borrower may withdraw moneys from its
Earnings Account for the purposes and in the order of priority set out in clause 14.2 of the
Senior Loan Agreement.
	 
	14.3	 	Retention Account: credits and withdrawals
	 
	14.3.1	 	Unless the Bank otherwise agrees in writing, none of the Borrowers shall be entitled to
withdraw any moneys from the Retention Account at any time from the date of this Agreement and
so long as any moneys are owing under the Security Documents except pursuant to clause 14.3 of
the Senior Loan Agreement.
	 
	14.3.2	 	The Borrowers hereby jointly and severally undertake with the Bank that they will, from the
date of this Agreement and so long as any moneys are owing under the Security Documents and
the Senior Security Documents, comply with clause 14.3.1 and clause 14.3.2 of the Senior Loan
Agreement.
	 
	14.4	 	Excess Cash Account withdrawals
	 
	14.4.1	 	Unless the Bank otherwise agrees in writing, the Borrowers shall not be entitled to withdraw
any moneys from the Excess Cash Account at any time from the date of this Agreement and so
long as any moneys are owing under the Security Documents and the Senior Security Documents
save that, unless and until the Agent shall have given a notice in accordance with clause 10.2
of the Senior Loan Agreement or the Loan has been repaid or prepaid in full and the Bank shall
direct to the contrary, the Borrowers may withdraw moneys from the Excess Cash Account (a) for
the purpose of making any prepayments of the Loan at the times and in the manner required
under clause 4.4.2 (and the Borrowers hereby irrevocably and unconditionally authorise the
Bank to irrevocably and unconditionally instruct the Account Bank to make such payments on
their due date if and to the extent the Borrowers have not made such payments or issued the
appropriate instructions to the Account Bank on or before such due date) and (b) to the extent
permitted by clause 8.4.4.

45

 

	14.4.2	 	On the prepayment or repayment of the Loan in full, any amounts standing to the credit of
the Excess Cash Account shall be transferred to the Earnings Accounts in pro rata shares
between them (and the Borrowers hereby irrevocably and
unconditionally authorise the Bank to instruct the
Account Bank to effect each such transfer).
	 
	14.5	 	Operating Account withdrawals
	 
	 	 	Unless an Event of Default shall occur and the Bank directs to the contrary, the Borrowers
can withdraw moneys from the Operating Account at any time solely for the purpose of paying
the Permitted Operating Expenses of the New Ships subject always to complying with the
minimum cash balance requirement of clause 8.1.16.
	 
	14.6	 	Application of Accounts
	 
	 	 	At any time after the occurrence of an Event of Default, the Bank may, without notice to the
Borrowers, instruct the Account Bank to apply all moneys then standing to the credit of the
Accounts or any of them (together with interest from time to time accruing or accrued
thereon) in or towards satisfaction of any sums due to the Bank under the Security Documents
in the manner specified in clause 13.1.
	 
	14.7	 	Pledging of Accounts
	 
	 	 	The Accounts and all amounts from time to time standing to the credit thereof shall be
subject to the security constituted and the rights conferred by the Account Pledge.
	 
	15	 	Assignment, transfer and lending office
	 
	15.1	 	Benefit and burden
	 
	 	 	This Agreement shall be binding upon, and shall enure for the benefit of, the Bank and the
Borrowers and their respective successors in title.
	 
	15.2	 	No assignment by Borrowers
	 
	 	 	No Borrower may assign or transfer any of its rights or obligations under this Agreement.
	 
	15.3 	 	Assignment by Bank
	 
	 	 	The Bank may at any time assign all or any part of its rights under this Agreement or under
any of the other Security Documents to any other bank or financial institution (an
“Assignee”).
	 
	15.4	 	Transfer
	 
	 	 	The Bank may at any time transfer all or any part of its rights, benefits and/or obligations
under this Agreement and/or any of the other Security Documents, to any one or more banks or
other financial institutions (a “Transferee”) if the Transferee, by delivery of such
undertaking as the Bank may approve, becomes bound by the terms of this Agreement and request
to perform all or, as the case may be, part of the Bank’s obligations under this Agreement.
	 
	15.5	 	Documenting assignments and transfers
	 
	 	 	If the Bank assigns all or any part of its rights or transfers all or any part of its rights,
benefits and/or obligations as provided in clause 15.3 or clause 15.4, the Borrowers hereby
jointly and severally undertake, immediately on being requested to do so by the Bank and at
the cost of the Bank, to enter into, and procure that the other Security Parties shall (at
the cost of the Bank) enter into, such documents as may be necessary or desirable to transfer
to the Assignee or Transferee all or the relevant part of the Bank’s interest in the Security
Documents and all relevant references in this Agreement to the Bank shall thereafter be
construed as a reference to the Bank and/or its Assignee or Transferee (as the case may be)
to the extent of their respective interests.

46

 

	15.6	 	Lending office
	 
	 	 	The Bank shall lend through its office at the address specified in the definition of “Bank”
in clause 1.2 or through any other office of the Bank selected from time to time by it
through which the Bank wishes to lend for the purposes of this Agreement. If the office
through which the Bank is lending is changed pursuant to this clause 15.6, the Bank shall
notify the Borrowers promptly of such change.
	 
	15.7	 	Disclosure of information
	 
	 	 	The Bank may disclose to a prospective Assignee, Transferee or to any other person who may
propose entering into contractual relations with the Bank (in either case, provided they have
previously signed a confidentiality agreement with the Bank) in relation to this Agreement
such information about the Borrowers and/or the other Security Parties as the Bank shall
consider appropriate.
	 
	16	 	Notices and other matters
	 
	16.1	 	Notices
	 
	 	 	Every notice, request, demand or other communication under this Agreement or (unless
otherwise provided therein) under any of the other Security Documents shall:
	 
	16.1.1	 	be in writing delivered personally or by first-class prepaid letter (airmail if available)
or facsimile transmission or other means of telecommunication in permanent written form,
provided that such transmission or telecommunication is also delivered by first-class prepaid
letter (airmail if available);
	 
	16.1.2	 	be deemed to have been received, subject as otherwise provided in the relevant Security
Document, in the case of a letter, when delivered personally or three (3) days after it has
been put in to the post and, in the case of a facsimile transmission or other means of
telecommunication in permanent written form, at the time of despatch (provided that if the
date of despatch is not a business day in the country of the addressee or if the time of
despatch is after the close of business in the country of the addressee it shall be deemed to
have been received at the opening of business on the next such business day); and
	 
	16.1.3	 	be sent:

	 	(a)	 	if to the Borrowers or any of them at:

c/o Mr Ion Varouxakis

89 Akti Miaouli & Mavrokordatou Street

185 38 Piraeus

Greece

Fax no: +30 210 429 1010

Attention: Mr Ion Varouxakis

	 	(b)	 	if to the Bank at:

BTMU Capital Corporation

111 Huntington Avenue

Suite 400

Boston, Massachusetts, 02199,

U.S.A.

Fax No: +1 617 345 5604

Attention: Senior Vice President — Portfolio Services

47

 

	 	 	or to such other address and/or numbers as is notified by one party to the other parties
under this Agreement.
	 
	16.2	 	No implied waivers, remedies cumulative
	 
	 	 	No failure or delay on the part of the Bank to exercise any power, right or remedy under any
of the Security Documents shall operate as a waiver thereof, nor shall any single or partial
exercise by the Bank of any power, right or remedy preclude any other or further exercise
thereof or the exercise of any other power, right or remedy. The remedies provided in the
Security Documents are cumulative and are not exclusive of any remedies provided by law.
	 
	16.3	 	English language
	 
	 	 	All certificates, instruments and other documents to be delivered under or supplied in
connection with any of the Security Documents shall be in the English language or shall be
accompanied by a certified English translation upon which the Bank shall be entitled to rely.
	 
	16.4	 	Borrowers’ obligations
	 
	16.4.1	 	Joint and several
	 
	 	 	Notwithstanding anything to the contrary contained in any of the Security Documents, the
agreements, obligations and liabilities of the Borrowers herein contained are joint and
several and shall be construed accordingly. Each of the Borrowers agrees and consents to
be bound by the Security Documents to which it is, or is to be, a party notwithstanding
that the other Borrowers which are intended to sign or to be bound may not do so or be
effectually bound and notwithstanding that any of the Security Documents may be invalid or
unenforceable against any of the other Borrowers, whether or not the deficiency is known
to the Bank.
	 
	16.4.2	 	Borrowers as principal debtors
	 
	 	 	Each Borrower acknowledges and confirms that it is a principal and original debtor in
respect of all amounts which may become payable by the Borrowers in accordance with the
terms of this Agreement or any of the other Security Documents and agrees that the Bank
may also continue to treat it as such, whether or not the Bank is or becomes aware that
such Borrower is or has become a surety for another Borrower.
	 
	16.4.3	 	Indemnity
	 
	 	 	The Borrowers hereby agree jointly and severally to keep the Bank fully indemnified on
demand against all damages, losses, costs and expenses arising from any failure of any
Borrower to perform or discharge any purported obligation or liability of the other
Borrowers which would have been the subject of this Agreement or any other Security
Document had it been valid and enforceable and which is not or ceases to be valid and
enforceable against the other Borrowers 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 other Borrowers (or any legal or other limitation, whether under the
Limitation Acts or otherwise or any disability or death, bankruptcy, unsoundness of mind,
insolvency, liquidation, dissolution, winding up, administration, receivership,
amalgamation, reconstruction or any other incapacity of any person whatsoever (including,
in the case of a partnership, a termination or change in the composition of the
partnership) or any change of name or style or constitution of any Security Party)).
	 
	16.4.4	 	Liability unconditional
	 
	 	 	None of the obligations or liabilities of the Borrowers under this Agreement or any other
Security Document shall be discharged or reduced by reason of:

48

 

	 	(a)	 	the death, bankruptcy, unsoundness of mind, insolvency, liquidation,
dissolution,
winding-up, administration, receivership, amalgamation, reconstruction or other
incapacity of any person whatsoever (including, in the case of a partnership, a
termination or change in the composition of the partnership) or any change of name or
style or constitution of a Borrower or any other person liable;
	 
	 	(b)	 	the Bank granting any time, indulgence or concession to, or compounding
with, discharging, releasing or varying the liability of, a Borrower or any other
person liable or renewing, determining, varying or increasing any accommodation,
facility or transaction or otherwise dealing with the same in any manner whatsoever
or concurring in, accepting, varying any compromise, arrangement or settlement or
omitting to claim or enforce payment from a Borrower or any other person liable; or
	 
	 	(c)	 	anything done or omitted which but for this provision might operate to
exonerate the Borrowers or any of them.

	16.4.5	 	Recourse to other security
	 
	 	 	The Bank shall not be obliged to make any claim or demand or to resort to any Security
Document or other means of payment now or hereafter held by or available to it for
enforcing this Agreement or any of the Security Documents against a Borrower or any other
person liable and no action taken or omitted by the Bank in connection with any such
Security Document or other means of payment will discharge, reduce, prejudice or affect
the liability of the Borrowers under this Agreement and the Security Documents to which
any of them is, or is to be, a party.
	 
	16.4.6	 	Waiver of Borrowers’ rights
	 
	 	 	Each Borrower agrees with the Bank that, from the date of this Agreement and so long as
any moneys are owing under any of the Security Documents and while all or any part of the
Commitment remains outstanding, it will not, without the prior written consent of the
Bank:

	 	(a)	 	exercise any right of subrogation, reimbursement and indemnity against any
other Borrower or any other person liable under the Security Documents;
	 
	 	(b)	 	demand or accept repayment in whole or in part of any Indebtedness now or
hereafter due to such Borrower from any other Borrower or from any other person
liable or demand or accept any guarantee, indemnity or other assurance against
financial loss or any document or instrument created or evidencing an Encumbrance in
respect of the same or dispose of the same;
	 
	 	(c)	 	take any steps to enforce any right against any other Borrower or any other
person liable in respect of any such moneys; or
	 
	 	(d)	 	claim any set-off or counterclaim against any other Borrower or any other
person liable or claiming or proving in competition with the Bank in the liquidation
of any other Borrower or any other person liable or have the benefit of, or share in,
any payment from or composition with, any other Borrower or any other person liable
or any other Security Document now or hereafter held by the Bank for any moneys owing
under this Agreement or for the obligations or liabilities of any other person liable
but so that, if so directed by the Bank, it will prove for the whole or any part of
its claim in the liquidation of any other Borrower or other person liable on terms
that the benefit of such proof and all money received by it in respect thereof shall
be held on trust for the Bank and applied in or towards discharge of any moneys owing
under this Agreement in such manner as the Bank shall deem appropriate.

49

 

	17	 	Governing law and jurisdiction
	 
	17.1	 	Law
	 
	 	 	This Agreement is governed by, and shall be construed in accordance with, English law.

	17.2	 	Submission to jurisdiction
	 
	 	 	The Borrowers jointly and severally agree, for the benefit of the Bank, that any legal action
or proceedings arising out of or in connection with this Agreement against the Borrowers or
any of them or any of their respective assets may be brought in the English courts. Each of
the Borrowers irrevocably and unconditionally submits to the jurisdiction of such courts and
irrevocably designates, appoints and empowers Atlas Maritime Services Ltd. at present of
Enterprise House, 113-115 George Lane, London E18 1AJ, England (attention Mr. D. Bird) to
receive for it and on its behalf, service of process issued out of the English courts in any
such legal action or proceedings. The submission to such jurisdiction shall not (and shall
not be construed so as to) limit the right of the Bank to take proceedings against the
Borrowers or any of them in the courts of any other competent jurisdiction nor shall the
taking of proceedings in any one or more jurisdictions preclude the taking of proceedings in
any other jurisdiction, whether concurrently or not.
	 
	 	 	The parties further agree that only the courts of England and not those of any other State
shall have jurisdiction to determine any claim which the Borrowers or any of them may have
against the Bank arising out of or in connection with this Agreement.
	 
	17.3	 	Contracts (Rights of Third Parties) Act 1999
	 
	 	 	No term of this Agreement is enforceable under the provisions of the Contracts (Rights of
Third Parties) Act 1999 by a person who is not a party to this Agreement.

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

50

 

Schedule 1

Form of Drawdown Notice

(referred to in clause[•])

[               ] 2007

			
	To:	 	BTMU Capital Corporation

[•]

[•]

[•]

U.S.$21,500,000 Loan

Loan Agreement dated [                    ] 2007 (the “Loan Agreement”)

We refer to the Loan Agreement and hereby give you notice that we wish to draw down the
[Harmony] [Phoenix] [Goddess]
[Daisy] Advance namely $[•] on [                    ] 2007 and
select [a first Interest Period in respect thereof of [•] months] [the first interest period
in respect hereof to expire on [•] 200[•]. The funds should be credited to [name and
number of account] with [details of bank in New York City].

We confirm that:

	(a)	 	no event or circumstance has occurred and is continuing which constitutes a Default;
	 
	(b)	 	the representations and warranties contained in (i) clauses 7.1, 7.2 and 7.3(b) of the Loan
Agreement and (ii) clause [4] of each of the Guarantees, are true and correct at the date
hereof as if made with respect to the facts and circumstances existing at such date;
	 
	(c)	 	the borrowing to be effected by the drawdown of the [Harmony] [Phoenix] [Goddess] [Daisy]
Advance will be within our corporate powers, has been validly authorised by appropriate
corporate action and will not cause any limit on our borrowings (whether imposed by statute,
regulation, agreement or otherwise) to be exceeded; and
	 
	(d)	 	there has been no material adverse change in our financial position or in the consolidated
financial position of the Group, from that described by us to the Bank in the negotiation of
the Loan Agreement.

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

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

For and on behalf of

ADVENTURE EIGHT S.A.

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

For and on behalf of

ADVENTURE FIVE S.A.

51

 

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

For and on behalf of

ADVENTURE SEVEN S.A.

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

For and on behalf of

ADVENTURE SIX S.A.

52

 

Schedule 2

Documents and evidence required as conditions precedent to the Loan being made

(referred to in clause 9.1)

Part 1

	1	 	Constitutional documents
	 
	 	 	Copies, certified by an officer of each Security Party as true, complete and up to date
copies of all documents which contain or establish or relate to the constitution of that
Security Party;
	 
	2	 	Corporate authorisations
	 
	 	 	copies of resolutions of the directors and stockholders of each Security Party approving
such of the Underlying Documents and the Security Documents to which such Security Party is,
or is to be, party and authorising the signature, delivery and performance of such Security
Party’s obligations thereunder, certified (in a certificate dated no earlier than the date of
this Agreement) by an officer of such Security Party as:

	 	(a)	 	being true and correct;
	 
	 	(b)	 	being duly passed at meetings of the directors of such Security Party and of the
stockholders of such Security Party duly convened and held;
	 
	 	(c)	 	not having been amended, modified or revoked; and
	 
	 	(d)	 	being in full force and effect,

	 	 	together with originals or certified copies of any powers of attorney issued by any Security
Party pursuant to such resolutions;
	 
	3	 	Specimen signatures
	 
	 	 	copies of the signatures of the persons who have been authorised on behalf of each
Security Party to sign such of the Underlying Documents and the Security Documents to which
such Security Party is, or is to be, party and to give notices and communications, including
notices of drawing, under or in connection with the Security Documents, certified (in a
certificate dated no earlier than the date of this Agreement) by an officer of such Security
Party as being the true signatures of such persons;
	 
	4	 	Certificate of incumbency
	 
	 	 	a list of directors and officers of each Security Party specifying the names and
positions of such persons, certified (in a certificate dated no earlier than to the date of
this Agreement) by an officer of such Security Party to be true, complete and up to date;
	 
	5	 	Borrowers’ consents and approvals
	 
	 	 	a certificate (dated no earlier than the date of this Agreement) from an officer of each
of the Borrowers that no consents, authorisations, licences or approvals are necessary for
that Borrower to authorise, or are required by that Borrower in connection with, the
borrowing by that

53

 

	 	 	Borrower of the Loan pursuant to this Agreement or the execution, delivery and performance of
the Borrowers’ Security Documents;
	 
	6	 	Other consents and approvals
	 
	 	 	a certificate (dated no earlier than the date of this Agreement) from an officer of each
Security Party (other than the Borrowers) that no consents, authorisations, licences or
approvals are necessary for such Security Party to guarantee and/or grant security for the
borrowing by the Borrowers of the Commitment pursuant to this Agreement and execute, deliver
and perform the Security Documents insofar as such Security Party is a party thereto;
	 
	7	 	Certified Contracts
	 
	 	 	a copy, certified (in a certificate dated no earlier than five (5) Banking Days prior to
the date of this Agreement) as a true and complete copy by an officer of the relevant
Borrower of each of the Contracts (such Contracts to be on terms acceptable to the Bank);
	 
	8	 	Acceptable Charters
	 
	 	 	a copy, certified (in a certificate dated no earlier than five (5) Banking Days prior to
the date of this Agreement) as a true and complete copy by an officer of the relevant Owner,
of (a) the Acceptable Charter in respect of each New Ship (other than Daisy) evidencing a
minimum Fleet Daily Charter Rate of no less than $69,000 and (b) the Acceptable Charter in
respect of each Collateral Ship;
	 
	9	 	Fees
	 
	 	 	evidence that any fees due under clause 5.1 have been paid in full;

	 
	10 	 	Borrowers’ process agent
	 
	 	 	a letter from each Borrower’s agent for receipt of service of proceedings referred to in
clause 18.2 accepting its appointment under the said clause and under each of the other
Security Document in which it is or is to be appointed as such Borrower’s agent;
	 
	11	 	Security Parties’ process agent
	 
	 	 	a letter from each Security Party’s agent for receipt of service of proceedings
accepting its appointment under each of the Security Documents required under this Part 1 in
which it is or is to be appointed as such Security Party’s agent;
	 
	12	 	Marshall Islands opinion
	 
	 	 	an opinion of Cozen O’ Connor, special legal advisers on matters of Marshall Islands law
to the Bank;
	 
	13	 	Accounts
	 
	 	 	evidence that the Accounts have been opened and duly completed mandate forms in respect
thereof have been delivered to the Bank;
	 
	14	 	Security Documents
	 
	 	 	the Guarantees, the Fee Letter and the Account Pledge (together with the other documents
to be delivered to the Bank pursuant thereto), each duly executed;

54

 

	15	 	Evidence of ownership
	 
	 	 	evidence in writing and in form and substance satisfactory to the Bank in all respects
of the ultimate beneficial owner or owners of the shares in the Corporate Guarantor such that
the representation of clause 7.1.10 is verified as true and correct;
	 
	16	 	Registration forms
	 
	 	 	such statutory forms duly signed by the Borrowers and the other Security Parties as may
be required by the Bank to perfect the security contemplated by the Security Documents
required under this Part 1;
	 
	17	 	Intercreditor Deed and Collateral Intercreditor Deeds
	 
	 	 	the Intercreditor Deed and each Collateral Intercreditor Deed, each duly executed;

	 
	18	 	Certified Management Agreements
	 
	 	 	a copy certified (in a certificate dated no earlier than five (5) Banking Days prior to
the date of this Agreement) by an officer of the relevant Owner, of the Management Agreement
of each Collateral Ship;
	 
	19	 	Collateral Ship conditions
	 
	 	 	evidence that each Collateral Ship:

	 
	19.1	 	Registration and Encumbrances
	 
	 	 	is registered in the name of the relevant Collateral Owner under the laws and flag of the
relevant Flag State through the relevant Registry and that such Collateral Ship and its
Earnings, Insurances and Requisition Compensation (as defined in the relevant Ship Security
Documents) are free of Encumbrances (other than Permitted Encumbrances);
	 
	19.2	 	Classification
	 
	 	 	maintains the relevant Classification free of all requirements and recommendations of the
relevant Classification Society; and
	 
	19.3	 	Insurance
	 
	 	 	is insured in accordance with the provisions of the relevant Ship Security Documents and all
requirements of such Ship Security Documents in respect of such insurance have been complied
with (including without limitation, confirmation from the protection and indemnity
association or other insurer with which such Collateral Ship is, or is to be, entered for
insurance or insured against protection and indemnity risks (including oil pollution risks)
that any necessary declarations required by the association or insurer for the removal of any
oil pollution exclusion have been made and that any such exclusion does not apply to such
Collateral Ship);
	 
	20	 	Mortgage registration
	 
	 	 	evidence that the Mortgages over the Collateral Ships have been permanently or (as the
case may be) provisionally registered against the Collateral Ships under the laws and flag or
the relevant Flag State through the relevant registry;
	 
	21	 	Notices of assignment
	 
	 	 	copies of duly executed notices of assignment required by the terms of the relevant Ship

55

 

	 	 	Security Documents for the Collateral Ships and in the forms prescribed by such Ship Security
Documents;
	 
	22	 	Charters
	 
	 	 	if any Collateral Ship is subject to a charterparty that falls within clause 8.1.13
(including an Acceptable Charter), a Charter Assignment in respect of such charterparty and
any other related documents required by clause 8.1.13 in respect of such charterparty and
such Charter Assignment;
	 
	23	 	Insurance opinion
	 
	 	 	an opinion (at the expense of the Borrowers) from insurance consultants to the Bank, on
the insurances effected in respect of the Collateral Ships;
	 
	24	 	SMC/DOC
	 
	 	 	a copy, certified (in a certificate dated no earlier than five (5) Banking Days prior to
the date of this Agreement) as a true and complete copy by an officer of the relevant
Collateral Owner of the DOC issued to the Operator of the Collateral Ships and the SMC for
each Collateral Ship;
	 
	25	 	ISPS Code compliance

	 	(a)	 	evidence satisfactory to the Agent that each Collateral Ship is subject to a ship
security plan which complies with the ISPS Code; and
	 
	 	(b)	 	a copy, certified (in a certificate dated no earlier than five (5) Banking Days
prior to the date of this Agreement) as a true and complete copy by an officer of the
relevant Collateral Owner of the ISSC and the continuous synopsis record (as defined in
the ISPS Code) for each Collateral Ship;

	26	 	Minimum Liquidity
	 
	 	 	the Borrowers are in compliance with their minimum liquidity obligations under clause 8.1.16;

	 
	27	 	Collateral Senior Security Documents
	 
	 	 	copies of the Collateral Senior Loan Agreement and the Collateral Senior Security
Documents which shall be in form and substance satisfactory to the Bank in all respects,
including, without limitation, provisions evidencing that (a) the maximum annual scheduled
principal repayments thereunder do not exceed $2,000,000; and (b) the maximum amount secured
by the Collateral Senior Security Documents does not exceed $9,000,000;
	 
	28	 	Senior Loan
	 
	 	 	copies of the Senior Loan Agreement and the Senior Security Documents which shall be in
form and substance satisfactory to the Bank in all respects;
	 
	29	 	Know your customer
	 
	 	 	such documentation and other evidence as is reasonably requested by the Bank in order to
comply with all necessary “know your customer” or similar identification procedures in relation
to the transactions contemplated herein; and
	 
	30	 	Further matters/opinions
	 
	 	 	any such other matter or further opinion as may be required by the Bank.

56

 

Part 2

Documents and evidence required as conditions precedent to each Advance being made

	1	 	Drawdown Notice
	 
	 	 	The Drawdown Notice in respect of the relevant Advance duly executed;

	 
	2	 	Certified Management Agreements
	 
	 	 	a copy, certified (in a certificate dated no earlier than five (5) Banking Days prior to
the relevant Drawdown Date) as a true and complete copy by an officer of the relevant
Borrower of the Management Agreement in respect of relevant New Ship;
	 
	3	 	Ship conditions
	 
	 	 	evidence that the New Ship relevant to the Advance which is to be made:

	 
	3.1	 	Registration and Encumbrances
	 
	 	 	is registered in the name of the relevant Borrower under the laws and flag of the relevant
Flag State through the relevant Registry and that such New Ship and its Earnings, Insurances
and Requisition Compensation (as defined in the relevant Ship Security Documents) are free of
Encumbrances (except Permitted Encumbrances);
	 
	3.2	 	Classification
	 
	 	 	maintains the relevant Classification free of all requirements and recommendations of the
relevant Classification Society; and
	 
	3.3	 	Insurance
	 
	 	 	is insured in accordance with the provisions of the relevant Ship Security Documents and all
requirements of such Ship Security Documents in respect of such insurance have been complied
with (including without limitation, confirmation from the protection and indemnity
association or other insurer with which such New Ship is, or is to be, entered for insurance
or insured against protection and indemnity risks (including oil pollution risks) that any
necessary declarations required by the association or insurer for the removal of any oil
pollution exclusion have been made and that any such exclusion does not apply to such New
Ship);
	 
	4	 	Delivery documents
	 
	 	 	copies, certified by a person acceptable to the Bank, of the bill of sale, the
commercial invoice and the protocol of delivery and acceptance in respect of the New Ship
relevant to such Advance, each duly executed;
	 
	5	 	Title and no Encumbrances
	 
	 	 	evidence that the transfer of title to the New Ship relevant to such Advance from the
relevant Seller to the relevant Borrower pursuant to the relevant Contract has been duly
registered with the relevant Registry free from any Encumbrances;
	 
	6	 	Ship Security Documents
	 
	 	 	the Ship Security Documents for the New Ship relevant to such Advance duly executed;

57

 

	7	 	Mortgage registration
	 
	 	 	evidence that the Mortgage over the New Ship relevant to such Advance has been
permanently or (as the case may be) provisionally registered against such New Ship under the
laws and flag of the relevant Flag State through the relevant Registry;
	 
	8	 	Notices of assignment
	 
	 	 	copies of duly executed notices of assignment required by the terms of the relevant Ship
Security Documents for the New Ship relevant to such Advance and in the forms prescribed by
such Ship Security Documents;
	 
	9	 	Charters

	 	(a)	 	if the New Ship relevant to the Advance to be drawn down is subject to a
charterparty that falls within clause 8.1.13 (including an Acceptable Charter), a
Charter Assignment in respect of such charterparty and any other related documents
required by clause 8.1.13 in respect of such charterparty and such Charter Assignment;
and
	 
	 	(b)	 	in respect of the Daisy Advance only, a copy of the Acceptable Charter in respect
thereof;

	10	 	Marshall Islands opinion
	 
	 	 	an opinion Cozen O’ Connor, special legal advisers on matters of Marshall Islands law to
the Bank;
	 
	11	 	Further opinions
	 
	 	 	any such further opinion as may be required by the Bank;

	 
	12	 	Fees
	 
	 	 	evidence that any fees due under clause 5.1 have been paid in full;

	 
	13	 	Registration forms
	 
	 	 	such statutory forms duly signed by the relevant Borrower and the other Security Parties
as may be required by the Bank to perfect the security contemplated by the relevant Ship
Security Documents;
	 
	14	 	Security Parties’ process agent
	 
	 	 	a letter from each Security Party’s agent for receipt of service of proceedings
accepting its appointment under each of the relevant Security Documents required under this
Part 2 in respect of the New Ship relevant to such Advance and in which it is or is to be
appointed as such Security Party’s agent;
	 
	15	 	Insurance opinion
	 
	 	 	an opinion (at the expense of the Borrowers) from insurance consultants to the Bank, on
the insurances effected or to be effected in respect of the New Ship relevant to such
Advance, upon and following the relevant Drawdown Date;
	 
	16	 	SMC/DOC
	 
	 	 	a copy, certified (in a certificate dated no earlier than five (5) Banking Days prior to
the Drawdown Date of the relevant Advance which is to be made) as a true and complete copy by
an officer of the relevant Borrower of the DOC issued to the Operator and either (a) the SMC
for

58

 

	 	 	the New Ship relevant to such Advance or (b) an application for the issuance of the SMC for
such New Ship;
	 
	17	 	ISPS Code compliance

	 	(c)	 	evidence satisfactory to the Bank that the New Ship relevant to such Advance is
subject to a ship security plan which complies with the ISPS Code; and
	 
	 	(d)	 	a copy, certified (in a certificate dated no earlier than five (5) Banking Days
prior to the Drawdown Date of the relevant Advance which is to be made) as a true and
complete copy by an officer of the relevant Borrower of the ISSC and the continuous
synopsis record (as defined in the ISPS Code) for the New Ship relevant to such Advance;

	18	 	Valuation
	 
	 	 	a valuation (dated not more than ten (10) days prior to the Drawdown Date of the
relevant Advance of the New Ships made (at the expense of the Borrowers) in the manner
specified in clause 8.2.2);
	 
	19	 	Surveys
	 
	 	 	a technical survey (dated not more than thirty (30) days prior to the Drawdown Date of
the relevant Advance) of the New Ship in relation to which the relevant Advance is to be
drawn down, carried out (at the cost of Borrowers) by surveyors acceptable to the Bank in its
absolute discretion, and a report from such surveyors in respect of such survey, to be in
form and substance satisfactory to the Bank in all respects;
	 
	20	 	Equity
	 
	 	 	evidence satisfactory to the Bank that the part of the Contract Price of the relevant
New Ship which is not to be financed by the relevant Advance has been or will be, on the
relevant Drawdown Date, paid in full from other sources of the Borrowers; and
	 
	21	 	Further matters/opinions
	 
	 	 	any such other matter or further opinion as may be required by the Bank.

59

 

Schedule 3

Form of Corporate Guarantee

60

 

Schedule 4

Form of Collateral Guarantee

61

 

Schedule 5

Form of New Ship Mortgage

62

 

Schedule 6

Form of Collateral Ship Mortgage

63

 

Schedule 7

Form of New Ship General Assignment

64

 

Schedule 8

Form of Collateral Ship General Assignment

65

 

Schedule 9

Form of New Ship Charter Assignment

66

 

Schedule 10

Form of Collateral Ship Charter Assignment

67

 

Schedule 11

Form of New Ship Manager’s Undertaking

68

 

Schedule 12

Form of Collateral Ship Manager’s Undertaking

69

 

Schedule 13

Form of Intercreditor Deed

70

 

Schedule 14

Form of Collateral Intercreditor Deed

71

 

	 	 	 	 	 	 	 
	SIGNED by Ion Varouxakis

	 	 	)	 	 	/s/ Ion Varouxakis
	for and on behalf of
	 	 	)	 	 	Attorney-in-fact
	ADVENTURE EIGHT S.A.

	 	 	)	 	 	 
	as Borrower

	 	 	)	 	 	 
	 
	 	 	 	 	 	 
	SIGNED by Ion Varouxakis

	 	 	)	 	 	/s/ Ion Varouxakis
	for and on behalf of

	 	 	)	 	 	Attorney-in-fact
	ADVENTURE FIVE S.A.

	 	 	)	 	 	 
	as Borrower

	 	 	)	 	 	 
	 
	 	 	 	 	 	 
	SIGNED by Ion Varouxakis

	 	 	)	 	 	/s/ Ion Varouxakis
	for and on behalf of

	 	 	)	 	 	Attorney-in-fact
	ADVENTURE SEVEN S.A.

	 	 	)	 	 	 
	as Borrower

	 	 	)	 	 	 
	 
	 	 	 	 	 	 
	SIGNED by Ion Varouxakis

	 	 	)	 	 	/s/ Ion Varouxakis
	for and on behalf of

	 	 	)	 	 	Attorney-in-fact
	ADVENTURE SIX S.A.

	 	 	)	 	 	 
	as Borrower

	 	 	)	 	 	 
	 
	 	 	 	 	 	 
	SIGNED by

	 	 	)	 	 	/s/ [illegible]
	for and on behalf of

	 	 	)	 	 	Attorney-in-fact
	/s/
illegible

	 	 	)	 	 	 
	BTMU CAPITAL CORPORATION

	 	 	)	 	 	 
	as Bank

	 	 	)	 	 	 

72EX-10.32 Credit Agreement dated May 7, 2007

 

EXHIBIT 10.32

HOLLANDSCHE
BANK-UNIE N.V.

CREDIT AGREEMENT

The undersigned:

	1.	 	Adventure Two S.A., established in Majuro, Marshall Islands,

Adventure Three S.A., established in Majuro, Marshall Islands,

hereinafter (together and individually) referred to as ‘the Borrower’,
	 
	2.	 	HOLLANDSCHE BANK-UNIE N.V., having its registered office in Rotterdam, the Netherlands,
hereinafter referred to as ‘HBU’.

Have agreed as follows:

On the basis of the information supplied to HBU, the Borrower is granted a facility on the terms
and conditions and at the rates and charges stated in this agreement and the appendix hereto. The
facility is granted to finance the Borrower’s business activities.

	 	 	 	 	 	 	 
	Facility amount
	 	USD	 	9,000,000	 	(was USD 5,000,000)
	 
	 	 	 	 	 	 
	Breakdown of facility amount
	 	 	 	 	 	 
	Overdraft facility I
	 	USD	 	3,250,000	 	 
	Overdraft facility II
	 	USD	 	1,750,000	 	 
	Overdraft facility III
	 	USD	 	4,000,000	 	(new)

Overdraft facility I and II

These credits may also be used for drawing short-term loans in USD. The terms and conditions
governing these short-term loans are incorporated in separate short-term loan agreements.

Reduction scheme overdraft facility I

Except for earlier alteration, the limit of the overdraft facility will be reduced in successive
three-monthly instalments according to the below schedule:

2 instalments of USD 75,000, on 27 June 2007 and 27 September 2007,

1 instalment of USD 100,000 on 27 March 2008,

2 instalments of USD 500,000, on 27 June 2008 and 27 September 2008 and

1 instalment of USD 2,000,000 on 27 December 2008

Reduction scheme overdraft facility II

Except for earlier alteration, the limit of the overdraft facility will be reduced by USD 425,000
per three months and a last instalment of USD 900,000, the next instalment is due on 27 June 2007.

Reduction scheme overdraft facility III

Except for earlier alteration, the limit of the overdraft facility will be reduced to nil on 1 June
2008.

 

 

Rates and charges

Overdraft facility

	•	 	Current variable USD debit interest rate, based on the market rate, will be 7.57%.

                                                            (amendment)
	 
	•	 	Short term loans: libor + 1.95%.
	 
	•	 	Upfront fee:                              USD 32,000

The upfront fee will be charged after this Credit Agreement has been signed.

Security and covenants

	•	 	All moneys mortgage, on the vessel m.v. “Free Destiny”, registered under the flag of the Marshall Islands. IMO number
8128157, call letters V7GD8. Fuller details are included in the mortgage deed. On this mortgage the laws of the
Marshall Islands will be applicable.
As far as possible HBU’s General Conditions applicable to Ship Mortgages are incorporated in the mortgage deed.
	 
	•	 	First preferred mortgage of USD 6,000,000 on the vessel m.v. “Free Envoy”, registered under the flag of the Marshall
Islands. Official number 2161, call letters V7GR6. Fuller details are included in the mortgage deed. On this
mortgage the laws of the Marshall Islands will be applicable.
As far as possible HBU’s General Conditions applicable to Ship Mortgages are incorporated in the mortgage deed.
	 
	•	 	Joint and several liability of all parties named under 1. above, pursuant to 1.4 of the HBU General Credit Provisions.
	 
	•	 	Corporate guarantee of USD 500,000, plus interest and costs, from FreeSeas, Inc., established in Majuro, Marshall
Islands.
	 
	•	 	Pledge of rights and earnings under time charter contracts concluded or to be concluded.
	 
	•	 	Pledge of rights under hull and machinery insurance policy.
	 
	•	 	Pledge of rights under protection and indemnity risk insurance policy.
	 
	•	 	Letter of Comfort from FS Holdings S.A. and The Mida’s Touch S.A. and/or another entity according to the consent of
HBU, to be modelled according to the wording already indicated.
	 
	•	 	Statement to be provided by HSH Nordbank in which they declare that they fully respect the existing mortgages in
favour of HBU meaning that they accept to be second in rank on these two vessels MV “Free Envoy” and MV “Free
Destiny”.
	 
	•	 	To the extent the Borrower is not already obliged to do so on any other basis, the Borrower hereby further undertakes
to provide HBU with all of the following security as security for the obligations referred to in I.3.1 of the HBU
General Credit Provisions:

	 	•	 	a right of pledge on all assets referred to in Article 18 of the
General Banking Conditions of HBU.

2

 

	 	 	 	In order to effectuate the above, the Borrower hereby pledges to
HBU, to the extent not already pledged to HBU pursuant to Article 18
of the General Banking Conditions of HBU, the present and future
debts owing — as regards future debts, the pledge being made in
advance — by HBU to the Borrower as security as stated above. The
Borrower hereby grants HBU a power of attorney to pledge these
debts, at any time and repeatedly, to itself on behalf of the
Borrower. This power of attorney is unconditional and irrevocable.
	 
	 	•	 	a right of pledge on the rights of recourse and the subrogated
rights arising pursuant to the joint and several liability referred
to in I.4.3 of the HBU General Credit Provisions. In order to
effectuate the above, the Borrower hereby pledges to HBU, to the
extent not already pledged to HBU in accordance with I.4.3. of the
HBU General Credit Provisions, his aforementioned rights of recourse
as security as stated above. If the Borrower is subrogated to the
rights of HBU, HBU reserves a pledge on the subrogated rights as
security as stated above.

HBU hereby accepts the above rights of pledge. This Credit Agreement constitutes a notice of these
pledges to the other parties referred to as the Borrower and to HBU.

Other provisions

	•	 	The overdraft facility III will be repaid from the proceeds of a convertible loan to be privately placed.

(new)                    

	•	 	Before disbursement Borrower will provide HBU with a copy of the financing offer from HSH Nordbank. The contents
thereof must be acceptable to HBU.

(new)                    

	•	 	Before disbursement Borrower will provide HBU with his audited financials over 2006 which have to be to HBU’s
convenience.

(new)                    

	•	 	Borrower will give HBU the time charter agreements for inspection. The contents thereof must be acceptable to HBU.

	•	 	At any moment at least 52% of the value of the vessels must be covering the outstanding facility.

(amendment)                    

	•	 	Before granting the overdraft facility III HBU will receive a valuation report of the vessels from Anglo Dutch
Shipbrokers. The contents, including a value of at least USD 10,000,000 and USD 7,500,000, must be acceptable to
HBU.

(new)                    

	•	 	The Borrower will submit once a year to HBU a valuation report of the mortgaged vessels. The contents must be
acceptable to HBU.
	 
	•	 	There will be no change of ownership with respect to the shares in the companies of the Borrower.
	 
	•	 	All relations between the Borrower and HBU shall be subject to the General Banking Conditions of HBU. In addition,
the credit relationship concerned shall also be subject to the HBU General Credit Provisions of July 2006, attached
to this Credit Agreement. By signing this Credit Agreement the Borrower declares that he has received a copy of the
General Banking Conditions and the HBU General Credit Provisions and is fully aware of the contents thereof.

3

 

Signature:

Rotterdam, 7 May 2007

HOLLANDSCHE BANK-UNIE N.V.

/s/ Illegible

Majuro, ..................................2007

	 	 	 
	 

Adventure Two S.A.

	 	 

Adventure Three S.A.

4

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00130-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00130-of-00352.parquet"}]]